Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental Responsibility
• Social Engagement
• Governance
• Italian Manufacturing
• Human Rights
• Innovation

Environmental Achievements

• Reduced energy consumption per seat from 79 kWh (2011) to 62 kWh (2015), saving the equivalent CO2 emissions of 4,300 cars.
• 52% of energy requirements from renewable sources in the Romanian plant in 2015.
• 78% of energy for heating the Romanian plant from wood processing waste.
• Reduced CO2 emissions by 52,718 tonnes over the last 5 years.

Social Achievements

• 1,061 employees involved in training schemes totaling 52,718 hours.
• Launched “Count Me Out” campaign against unfair competition and illegal practices.
• Sponsored various community events, including Special Olympics and Race for the Cure.
• Implemented the Natuzzi ASSIST project to support laid-off workers.
• Signed a major trade-union agreement aimed at retrieving competitiveness and safeguarding workers’ rights in Italian plants.

Governance Achievements

• ISO 9001, 14001, and OHSAS 18001 certifications.
• Included on the list of Companies with an outstanding Legality Rating awarded by the Italian Antitrust Authority.
• SOX compliance training for relevant departments.

Climate Goals & Targets

Environmental Challenges

• Unfair competition from companies outsourcing manufacturing to third parties with substandard practices and exploitation of workers.
• International economic crisis impacting the wood-furnishings sector.

Mitigation Strategies

• Launched the “Count Me Out” campaign to raise awareness about unfair competition.
• Invested €600 million in product innovation, product range, brand stores, advertising, and integrated management system.
• Signed agreements with trade unions to improve competitiveness and protect workers' rights.
• Implemented the Natuzzi ASSIST project to support laid-off workers.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Supplier selection based on quality, price, reliability, and professional standards.
• Strict controls on raw materials, ensuring compliance with European Community legislation.
• Traceability requirements for timber, including documentation of origin and legal harvesting.

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: AA1000APS

Certifications: ISO 9001, ISO 14001, OHSAS 18001

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Ecoflex polyurethane padding (manufactured without Freon).

Awards & Recognition

• Special mention at the Industria Felix Prize Awards.
• Italian Talent Award 2015 for Pasquale Natuzzi.
• “Italy Speaks Up” prize for the “Count Me Out” campaign.

Environmental Metrics

Social Achievements

• Implemented incentive plan for workers who voluntarily terminate their employment relationship.

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to the COVID-19 pandemic and geopolitical tensions (including the war in Ukraine).
• Increased prices of raw materials (especially hides) and energy costs.
• Redundant workers at Italian operations.
• High order backlog and slow order fulfillment.
• Increased competition in the furniture market.

Mitigation Strategies

• Expanding supply base.
• Implementing price increases.
• Restructuring operations (including workforce reduction programs).
• Outsourcing production to Vietnam.
• Implementing the "Factory 4.0" program to improve efficiency.
• Selling non-strategic assets.
• Focusing on controlled distribution through mono-brand stores.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather conditions (hurricanes, tornadoes, wildfires, flooding)

Transition Risks

• Regulatory changes addressing climate change.
• Market shifts towards sustainable products.

Opportunities

• Development of energy-efficient products.

Environmental Metrics

ESG Focus Areas

• environmental sustainability
• social responsibility
• diversity and inclusion

Environmental Achievements

• ISO 14001 certified (Environment)
• ISO 9001 and 14001 certified (Quality and Environment)
• ISO 45001 certified (Safety in the Workplace)
• FSC® Chain of Custody, CoC (FSCC131540)

Social Achievements

• implemented incentive plan for workers who voluntarily terminate their employment relationship
• implemented stricter procedures to manage liquidity and working capital

Governance Achievements

• adopted the Natuzzi 2022-2026 Stock Option Plan
• adopted a compliance program to prevent certain criminal offenses, according to the Italian Decree 231/2001
• adopted a new code of ethics that applies to all employees and officers of the Company

Climate Goals & Targets

Environmental Challenges

• Uncertain global macro-economic and political conditions
• Price of raw materials difficult to predict
• COVID-19 pandemic impact
• History of operating losses
• Redundant workers at Italian operations
• Debt obligations
• Securitization program termination risk
• Labor relations matters
• Budget execution challenges
• Product diversification challenges
• Cyclical furniture market
• High market competition
• Currency exchange rate and interest rate fluctuations
• International operations risks
• Compliance with laws
• Government incentive program dependence
• Increased ESG expectations
• Climate change impacts
• Intellectual property protection
• Information technology disruptions
• Dependence on qualified personnel
• Changes in tax laws

Mitigation Strategies

• Implemented price-list adjustments to protect margins
• Revised supply chain processes and planning systems
• Established a “control tower” for supply chain visibility
• Implemented initiatives to divest non-strategic assets
• Streamlined overall cost structure
• Broadened product lines
• Developed new models, materials, and colors
• Invested in Natuzzi’s style center
• Revised industrial footprint
• Launched “Natuzzi Editions Quick Program”
• Implemented Factory 4.0 program
• Improved supply chain processes and planning systems
• Implemented stricter procedures to manage liquidity and working capital
• Implemented incentive plan for workers who voluntarily terminate their employment relationship
• Adopted a compliance program to prevent certain criminal offenses
• Adopted a new code of ethics

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• extreme weather conditions

Transition Risks

• regulatory changes

Reporting Standards

Frameworks Used: IFRS

Certifications: ISO 9001, ISO 14001, ISO 45001, FSC® Chain of Custody

Third-party Assurance: KPMG S.p.A.

Sustainable Products & Innovation

• eco-fibers

Environmental Metrics

ESG Focus Areas

• Environmental sustainability
• Social responsibility
• Governance

Environmental Achievements

• ISO 14001 certified (Environment)
• Achieved The Responsibility Award from Bureau Veritas confirming commitment to responsible management of Quality, Environment, and Corporate Social Responsibility.
• Implemented programs aimed at reducing energy and raw material consumption; economic evaluation of using best available technologies to minimize pollution; prioritizing recovery and recycling of waste; raising employee awareness and training on environmental sustainability; promoting correct environmental behavior by suppliers.

Social Achievements

• ISO 45001 certified (Safety in the Workplace)
• Early Retirement Agreement implemented in July 2023, including early retirement for employees, hiring of new employees, implementation of training programs, and access to CIGS for redundant employees.
• Solidarity Facility extended until November 3, 2024.

Governance Achievements

• Compliance program adopted to prevent certain criminal offenses (Italian Decree 231/2001).
• Code of ethics applies to all employees and officers, including the board of directors and board of statutory auditors, CEO, CFO, and principal accounting officer.
• Insider trading policy in place for all employees, officers, and directors.

Climate Goals & Targets

Environmental Challenges

• High levels of inflation and increases in interest rates affecting clients’ disposable incomes and resulting in decreased demand for products.
• Redundant workers at Italian operations.
• Geopolitical tensions (Russia-Ukraine conflict, Israel-Hamas conflict) and related macroeconomic instability.
• Increased competition in the upholstered furniture market, including from foreign producers with lower manufacturing costs.
• Fluctuations in currency exchange rates and interest rates.
• Supply chain disruptions.
• Increased expectations relating to environmental, social, and governance (ESG) factors.
• Climate change and related risks (extreme weather, regulatory changes).

Mitigation Strategies

• Sequential price-list adjustments to protect margins.
• Temporary workforce reduction programs (CIGS, Solidarity Facility).
• Restructuring of operations, including reducing Italian workforce and revising industrial footprint.
• Outsourcing of unbranded production to Vietnam to avoid customs duties.
• Hedging activities to manage foreign currency risk.
• Implementation of cost control measures.
• Investment in retail expansion and restructuring programs.
• Development of alternative sourcing strategies.
• Implementation of Factory 4.0 program to improve efficiency.
• Focus on branded sales and efficient go-to-market model for unbranded products.
• Continuous improvement of the Natuzzi global website and omnichannel strategy.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather conditions

Transition Risks

• Regulatory changes

Awards & Recognition

• The Responsibility Award