(HONG KONG STOCK CODE: 1913)

2 0 17 S O C I A L R E S P O N S I B I L I T Y R E P O R T

TA B L E O F C O N T E N T S

HISTORIC PRADA STOREIN GALLERIA VITTORIO EMANUELE II, MILAN
Ph. Armin Linke

LETTER TO THE STAKEHOLDERS										31 . T H E P R A D A G R O U P 												 44. THE PRADA UNIVERSE: CULTURAL INITIATIVES			 494.1 Shaping a creative future										504.2 Fondazione Prada													504.3 Prada and architecture: Rong Zhai Residence			 554.4 Other special projects				 							571.1 History																51.2 2017 highlights													91.3 Value chain															91.4 Ethics, governance, compliance andrisk management														145 . A T O N E W I T H T H E C O M M U N I T Y 						 592 . S T R I V I N G F O R E X C E L L E N C E 								 196 . N O T E S O N T H E M E T H O D O L O G Y 							 663 . W O R K P L A C E E T H I C S 											 397. GRI CONTENT INDEX

2.1 Know-How															192.2 Customer experience											343.1 The Workforce														403.2 Employee relations												423.3 Diversity and equal opportunity								463.4 Worker safety throughout the supply chain				 475.1 Environmental protection 										595.2 Preservation of the local territory							636.1 The material aspects identification							666.2 The reporting process 										69F O R “ I N A C C O R D A N C E ” C O R E O P T I O N 			

71

L E T T E R T O S TA K E H O L D E R S

The people of the Prada Group are watchingwith care and respect the profoundchanges taking place in civil society and inindividual lifestyles,
effects of the crisis ensuing from the gap between technology and social
institutions.

This constantly evolving scenario calls fordrastic adaptationof our organizational structures, which has been initiated by engaging
all the business areas in a rapid digitalization process under the Group’s
long-term growth strategy.

Meanwhile, we need to preserve yet innovate
the Prada’s core values ,represented by constructive dialogue between a wealth of internal knowhow, intellectual curiosity, an acute spirit of observation, which enable
to interpret the complex situation by cultivating the creative capacity on
which our work is based, and adapting it to the new paradigms introducedby the progression of our culture: foremost, sustainability to protect
future generations.

Prada intends to demonstrate its social
commitment with a contribution of indepth analysis of this theme in the evolving
scenario of the contemporary world.
Carlo Mazzi
Milan, March 9, 2018
Chairman of PRADA S.p.A .
3

1 . THE PRADA GROUPHISTORIC PRADA STOREIN GALLERIA VITTORIO EMANUELE II, MILAN
Ph. Agostino OsioT h e Pr a da Grou p i s o n e of th e wor l d l eaders i n th e lu xur y goods se ctor whe re it ope r ate s with the Pr ada, M iu M iu,
Chu rch’s a n d Ca r Sh o e br ands i n th e des i gn, produc t i on and distr ibut ion of luxur y handbags, le athe r goods, foot we ar,a p p a rel a n d a cces so r i e s .
T h e G rou p a l so o p er ates i n th e eyewear and fr agr ance i ndustr ie s unde r spe cif ic lice nsing agre e me nt s st ipulate d withi ndu s tr y l e a d e rs , a n d wi th th e acqu i s i t i on of Pas t i ccer i a Marche si 1 8 24 , it has made it s e ntr y into the food industr y,w he re i t i s p o s i t i o n ed at th e h i gh es t l evel s of qu al i t y.
At D e ce m b e r 31, 201 7, product s were sol d i n 70 cou ntr i e s wor ldwide through 6 2 5 Dire ctly Ope r ate d Store s (DOS)a nd a sel ec ted n et wo r k of lu xur y depar tment s tores , i ndepe nde nt re t aile rs and fr anchise store s.

1.1 HISTORY
The Prada brand dates back to the beginning of the last century. In 1913,
Mario Prada opened a luxury store in the Galleria Vittorio Emanuele II in
Milan, selling leather handbags, travelling trunks, beauty cases, refined
luxury accessories, jewels and ar ticles of value. Thanks to its exclusively
designed goods, handcrafted using fine materials and sophisticatedtechniques, Prada rapidly became a reference point for aristocracy and themost elegant members of the haute-bourgeoisie in Europe.
In 1919, Prada became an official supplier to the Italian Royal Family. Since
then, Prada has been able to display the House of Savoy coat of arms andknotted rope design on its trademark logo.
Over the years, the Prada name gained increasing renown and prestige.
The Group saw a turning point in the development of its activities at theend of the Seventies, when Miuccia Prada, Mario Prada’s granddaughter,launched a par tnership with Tuscan businessman Patrizio Ber telli. Thispar tnership combined creativity and business ideas laying the foundationsof the international expansion that was to come. Patrizio Ber telli broke new
ground in the luxury goods sector, introducing a business model in which hekept direct, internal control over all processes, applying excellent quality
criteria across the entire production cycle. Miuccia Prada’s creative talent
and avant-garde approach attracted the attention of the global fashionindustry, while her ability to look at the world from an unconventional
vantage point allowed her not only to anticipate but, quite often, to set new
trends.
In 197 7, Patrizio Ber telli consolidated the production resources that hehad built up over the previous ten years in the leather goods segment andobtained an exclusive license from Miuccia Prada to produce and distributeleather goods bearing the Prada brand name. In the following years, theactivities of the two families were gradually brought together within a single
Group.
5

In 1983, the Prada family opened a second store in the prestigious Via della
Spiga in Milan, one of Europe’s key shopping destinations. The new store
showcased the new brand image as it blended traditional elements with amodern architectural setting: a revolution and a true benchmark for luxury
retail.
In response to the growing appreciation for the offer of Prada products,
the women’s range was extended from leather goods to include the first
footwear collection in 1979 and the first apparel collection as presented in
Milan in 1988. At the same time, a process of internalization begins withthe first openings in New York and Madrid, followed by London, Paris andTokyo.
In 1993 Prada made its debut in the men’s segment with its first men’s
apparel and footwear collection. That same year, Miuccia Prada’s creative
inspiration led to the establishment of a new brand ― Miu Miu ― designed
for women who are trendy, sophisticated and par ticularly fashion-forward
and aware of avant-garde. Miu Miu now offers women’s ready-to-wear,
bags, accessories, footwear, eyewear and fragrances and is an impor tantcomponent of the Group’s sales.
Also in 1993, alongside their entrepreneurial activity, Miuccia Prada andPatrizio Ber telli created “Milano Prada Ar te”, then become “Fondazione
Prada”, to pursue their interests in ar t and culture in general.
In 1997, inspired by his passion for spor ts, Patrizio Ber telli created the“Prada Challenge for the America’s Cup 2000” sailing team. Prada’s leisureproducts, with the distinctive “Linea Rossa” (“red line”), were also launched
in 1997.
In 1999, the prestigious Church’s brand, established in 1873 in Nor thampton,
became par t of the Prada Group; the investment was initially shared with a
private equity firm, and then Prada completed the acquisition in 2007.
The brand, specialized in handmade high-end footwear, is a worldwide
recognized symbol of top quality British tradition and sophisticated elegance.
M I U C C I A P R A DA A N D PAT R I Z I O B E R T E L L I
Ph. Brigitte Lacombe6In 2001, the Prada “Epicenter ” store, designed in collaboration with Rem

Miu fragrance. The commercial development of the Marchesi brand began

Koolhaas, opened on Broadway, New York. This was the first store of theto take shape in September with the opening of the first patisserie in via“Epicenters” project whose purpose was to rethink the shopping conceptMontenapoleone, Milan.

with a new approach and to try out innovative interactions with customers.
A second “Epicenter ” store was opened in Aoyama, Tokyo, followed by a2016 featured extensive manufacturing investments leading to the completion

third, on Rodeo Drive, Beverly Hills in 2004.

of the Scandicci leather production site and to the renovation of several
factories between Tuscany and Umbria, Italy. The first construction phase

During the same year, Prada acquired control of Car Shoe, an historic Italianof the new logistics hub for finished products was completed in Tuscany. In

brand renowned for its exclusive driving moccasins.

the retail, the launch of new concepts were implemented for Prada and Miu
Miu stores.

In 2003, Prada entered into a licensing agreement, then renewed in 2012,
with the Italian eyewear manufacturer Luxottica, world leader in the eyewear

In 2017 the restyling plan of the Prada and Miu Miu stores continued andindustry. The Luxottica Group currently produces and distributes eyewear

a broad program of pop-up events was launched to fur ther suppor t retailfor the Prada and Miu Miu brands. That same year, the Group also began

activities. The new Prada e-commerce platform was also unveiled in China,

its par tnership with Spanish cosmetics manufacturer Puig Beauty & Fashion

an impor tant step forward for the Group’s digital strategy, under which theGroup and the first fragrance, Amber, was launched at the end of 2004.

new e-commerce experience will go live on a global level in 2018. Also in
2017, the Prada Group was admitted to the cooperative compliance regime

In 2006, Miu Miu organized its first fashion show in Paris to better represent

introduced with Italian Law Decree 128 of 2015. Under the cooperative

its own identity.

compliance regime, the Group has set up a systematic, open communication
channel with the Italian tax authorities based on reciprocal transparency

The first Prada Phone by LG was launched in March 2007; it was the world’s

and trust, which will enable to minimize uncer tainties about the tax aspects

first touch screen cell phone. The successful par tnership was renewed inof its business operations.

2008 and in 2011 with two fur ther releases.
On June 24, 2011, Prada spa was successfully listed on the Main Board of
the Hong Kong Stock Exchange.
In March 2014, Prada spa announced the acquisition of control of thecompany Angelo Marchesi srl, owner of the historical Milanese patisserie
founded in 1824, thus marking the entry into the food segment.
In 2015, the Prada Group completed the acquisition of the French Tannerie
Mégisserie Hervy to fur ther strengthen its integrated production know-how.
That same year, the Prada Group and Coty Inc. launched the first Miu
7

1919

1977

1988

1993

1997

1999

2001

2003

2006

2007

2014

2015

2017

1919 - Prada, official supplier of the italian royal house | 197 7 - Miuccia Prada and Patrizio Ber telli par tnership | 1988 - Prada Womenswear |1 9 9 3 - Fo n d a z i o n e Pr a d a | 1 9 9 7 - Lu n a Ro s s a | 1 9 9 9 - C h u rc h’s a c q u i s i t i o n | 2 0 0 1 - S o h o e p i c e n t e r | 2 0 0 3 - Pr a d a Fr a g a n c e s | 2 0 0 6 - M i u M i u s h ow s i t scollection in Paris | 2007 - Prada touchscreen phone | 2014 - Acquisition of Pasticceria Marchesi | 2015 - Miu Miu Fragrances | 2017 - Prada chinese
e-commerce launch
81.2 2017 HIGHLIGHTS

CORE BUSINESS(Pro-forma economic data*)
PROCESSC R E AT I V I T Y

2017 Revenues€3.1
Billion*21
Industrial sites

Employees at

62%

December 31,

Women at2017

December 31,

12,844

Investments in
2017

at December 31,

€302

2017

Milion*2017

DEVELOPMENT AREA

31, 2017

625

the community

in 2017:in 2017:

Milion*STYLE, DESIGN AND PRODUCTDOS at December

Economic value
distributed to
stakeholders**€2,886

AREA

Investments in€26
Milion*Fashion Show

Showroompresentation

COLLECTION OF ORDERS

BuyingSessionR E TA I L A N D W H O L E S A L E
D E PA R T M E N T S

Sales
campaign

SOURCING

Pro Forma data January 31 - december 31, 2017: this year statutory accounts refers to 11 months
following to the shift of the closing date from January 31 to December 31.
** Economic value distributed to stakeholders in compliance with GRI-G4 indicator EC1(reference on page 13).

INDUSTRIAL AND*

1 . 3 VA L U E C H A I NLOGISTICPRODUCTION

QualitycontrolWorkersafetyThe Group’s business model is based on a value creation chain that combines
ar tisanal skills with the industrialization of production processes. Thanks
to this integration the Group, leveraging on its stylistic skills, is able to

DISTRIBUTION

translate avant-garde concepts into innovative exclusive products, combining

R E TA I L A N D W H O L E S A L E
D E PA R T M E N T S

production capacity with rigorous control over qualitative standards. At thesame time, Prada is par ticularly dedicated to the development of know-how

1 . 3 .1 C R E AT I V I T Y

and the protection of ethical values along its entire supply chain. The goal

Creativity is the first step of the value creation process.

has always been to offer customers a sophisticated, exclusive and excellent

Miuccia Prada, together with a qualified team of designers, has the ability toquality product that exemplifies the integrity and prestige of the Prada

combine intellectual curiosity, the pursuit of new and unconventional ideas,

world.

and cultural and social interests with a strong sense of fashion. This has
9made it possible to establish in Prada a genuine “in house” design culture,

1. 3.4 S O U R C I N G

also based on method and discipline, which guides everyone in the creative

Selecting the right suppliers is fundamental for achieving the highest quality

process.

standards. Historically, the Group has always worked with the best suppliersof raw materials, in their own right leaders and reference points in theirThis unique approach enables Prada to anticipate and often influence

sectors. In most cases, these are long-term relationships, initiated following

trends, continually experimenting with new designs, fabrics, leathers anda rigorous selection process, whose strict parameters are intended to ensure

production techniques. This experimentation and exchange of ideas are thethe highest standards of technical, economical and ethical reliability. The

essential components of the design content found in each of the Group’s

Prada Group has always valued long-term relationships built on everyday

products. The time spent at the “drawing board” and in the “fitting room” oninteraction: these par tnerships are crucial not only for the growth andresearch and stylistic development for the brands is fundamental to defining

improvement of the par ticipants but also for sharing a single, strategiceach collection in which apparel, footwear and accessories complement one

objective hinging on quality, excellence and the creation of value over the

another, defining a consistent and representative image of the brands.

medium to long-term.

Prada’s flair and the strong appeal of the Company’s tradition and standards

1.3.5 PRODUCTION

continue to attract talented people from all over the world who want to

The Prada Group’s products are manufactured in the 21 directly owned

share Prada’s experience in many different creative fields. This results in

production sites (18 in Italy, 1 in England, 1 in France and 1 in Romania), inteams involved in all aspects of the creative process: from fashion design toaddition to a wide network of suppliers. Most of the Group’s par tners are craft

manufacture, from architecture to communication and photography, fromar tisan workshops with extensive experience and a strong sense of tradition.

store interior design to all unique and special projects in which the Prada

They are provided with carefully selected materials and with all technicalGroup is involved.

specifications — from patterns to data sheets — needed to produce first the
samples and then the merchandise. The Group’s experienced technicians

1 . 3 . 2 FA S H I O N S H OW S A N D C O L L E C T I O N S

provide constant suppor t throughout the production process.

The collections are inspired by the fashion shows, which are always rich incontent and impeccably executed, transforming innovative fashion concepts

The production sites represent the best expression of the manufacturing

into commercial products.

tradition of the Prada Group, combining the preservation of traditionalar tisanal skills with state-of-the-ar t technological processes, designed to1.3.3 ORDER COLLECTION

achieve and maintain uncompromised standards of excellence, quality andNew collections are unveiled at the Group’s brand-specific showrooms,

workmanship.

where a number of presentations and analyses are held with in-house andindependent merchandisers and buyers from all over the world. By sharing

Within the framework of the Group’s industrial development strategy, inthe process that led to their creation and producing variations through the2017 the new industrial site of Valvigna (Tuscany) began operating at fulllens of local markets, each end consumer is given access to the innovation,

capacity where, during the year, all the structures suppor ting the industrial

exclusivity and quality that are the hallmarks of the Group’s merchandise.

processes were added to the cutting and raw materials warehouse; a workforceof 700 people is now employed at the site. Also in Tuscany, the second10par t of the new finished products logistics hub was completed, the centercontact point with the customer. The stores serve as more than a primary

for the worldwide distribution of Prada and Miu Miu products, and a thirdsales function as they are also an impor tant means of communication: they

raw materials cutting facility was inaugurated. These sites, in addition to

are the true ambassadors of the brand, conveying its image consistently

tangible benefits in terms of economies of scale and process control, standand categorically, and providing services that protect the products’ quality

out for the quality of the spaces and for the high technology used by every

and durability over time. The DOS allow the Group to monitor in real time

single function.

the sales per formance of the various markets for each brand and productcategory.

1.3.6 CONTROLThe Group employs considerable resources to ensure excellence in the

The wholesale channel (depar tment stores, multi-brand stores, franchisees

quality of its raw materials and processing of its products, and in suchand e-tailers) provides additional venues selected for their prestige ofmanner also protects the health and safety of the end consumers. Eachlocation and enables direct, immediate comparison with other brands.

industrial division employs technicians whose responsibility is to ensure

In recent years, the overhaul of this channel has gradually reduced thethe achievement of these goals through strict controls over incoming andnumber of accounts, in keeping with the Group’s retail strategies and brandoutgoing materials and daily visits to external production sites. Productpositioning. In addition, the Group’s developments in the digital world haveand process controls not only ensure that standards are being met, but also

led to new par tnerships with top electronic retailers (“e-tailers”).

contribute to ongoing improvement.
1.3.8 TRADEMARK PROTECTION
Prada has set up an Industrial Compliance Committee to ensure that the

The Group’s Intellectual Proper ty Depar tment is engaged in its trademark

production and distribution of its products worldwide always complies withprotection and in the fight against counter feiting and intellectual proper ty

applicable laws. The Committee’s objective is not only compliance with all

infringement. In pursuing this goal, the Group systematically adopts

current legislation, but also the development of standards and procedures

preventive and defensive measures worldwide, and constantly monitors thethat are often more stringent than those required by law. The ultimate goal

registration by third par ties of trademarks, patterns or designs that areis to be proactive with respect to the entire system, made up of consumers,

identical to or likely to be confused with the Prada Group’s distinguishing

manufacturers and the outside environment as a whole.

marks. The Group is constantly on the lookout for illegal appropriation of
its trademarks, patterns and designs, and monitors both the traditional and1.3.7 DISTRIBUTION

online retail and wholesale channels. Any infringement of Prada’s intellectual

The retail network is regularly studied and improved in order to make theproper ty rights is challenged with opposition or cancellation proceedings

stores more attractive to customers and the product displays more impressive.

before the competent authorities.

Over the years, the Group has expanded its distribution network to 625

Prada collaborates on a daily basis with national and international customs

Directly Operated Stores (DOS) in the most prestigious locations of theagencies and with Italy’s Guardia di Finanza (Revenue Guard Corps) and Policemajor international shopping destinations, consistent with the image,for the purpose of intercepting and confiscating counter feit merchandise

heritage and exclusivity of each brand. This extensive network is a true

and assessing progress made in the fight against counter feiting. The Groupasset for the Group as it showcases the new collections and represents aalso work with organizations on this theme, including the World Intellectual
Proper ty Organization, the International Anti-Counter feiting Coalition,
11

France’s Union des Fabriquants, and the Istituto di Centromarca per la

1 . 3 .1 0 O P E R AT I N G P E R F O R M A N C E A N D B U S I N E S S S T R AT E G Y

Lotta alla Contraffazione.
CHANGE OF THE END OF THE ANNUAL REPORTING PERIODOver time, these controls have enabled the Group to make an impor tantcontribution to tackling a wide range of criminal activities that are often
associated with cases of counter feiting, such as child labor, forced labor,
tax evasion and money laundering.
Through close cooperation with the authorities, over the past three years
Prada’s anti-counter feiting measures have led globally to the seizure of 2.5
million fakes, disputes over more than 335,000 e-commerce ads, and theremoval of illegal content from more than 4,737 websites.

On May 31, 2017 the Company’s General Meeting approved By-Law Ar ticle
27, which changed the end of the annual repor ting period from January
31 to December 31. For the past few years the propor tion of consolidated
revenues from the wholesale channel, whose seasonality is concentrated in
the middle and at the end of the calendar year, has decreased considerablywhile the one of the retail channel has grown. Therefore, the reasons forchanging the end of the repor ting period in 2004 to January are no longer
applicable.
2017 HIGHLIGHTSThe Prada Group pays close attention to the increasing illegal sale ofDuring the year, the Prada Group focused on a series of initiatives designed

counter feit products on social networks, with over 11,000 unlawful postings

to bolster its commercial per formance with strategic prospects of increasing

canceled in the last six months of 2017. In Italy, the precious collaboration

volumes and profitability in the medium term.

with the Guardia di Finanza has allowed interrupting the activities of illicit
websites with extended ramifications not only in Italy, but also in the restof Europe and in China. In addition, the Prada Group has contributed inrecent years to the international In Our Sites (IOS) operation coordinated byInterpol and Europol by communicating hundreds of websites that offeredcounter feit products for sale. The operation led to the deactivation of 4,500
websites in 2016 and more than 20,520 websites in 2017.
1.3.9 SPECIAL PROJECTS
Ar t, architecture, literature and film are just some of the cultural disciplinesthat represent continuous sources of inspiration for the Group. A networkof connections that broaden horizons to subver t schemes, boldly challenge
expectations and create scenarios able to cross over ordinary territories.
Interaction with these apparently distant environments has led to therealization of special projects that, over the years, helped define the many
facets of the Prada universe and which are described in detail in the following
chapter 4.

With this goal in mind, the Group rebalanced the merchandise mix at stores
to feature newer products developed thanks to the creative talents of thedesign team, inspired, as always, by experimentation with shapes, materials
and production techniques. The new mix concerns all product categories
and is suppor ted by numerous effor ts to fur ther enhance the shopping
experience and strengthen relationships with the customers. Fur ther progress
was made on the 2016 plan to update the concept of Prada and Miu Miu
stores according to the brands’ new aesthetic concepts; Church’s stores arenext in line for restyling. Meanwhile, the Group’s sales plan was suppor ted
by bold action on the digital front even as physical retail remained at thecenter of its omnichannel strategy. During the year the Group strengthened
its par tnerships with the major online sales operators. Moreover, the direct
e-commerce channel is growing: it has been enlarged in scope and the
new graphic and functional version of the prada.com website, unveiled in
December in China, will be gradually expanded to all countries in 2018.
The new platform is designed to provide a shopping experience reconceived
down to the smallest details, while integrating with brick & mor tar stores andsocial networks. The digital strategy has also involved sizable investments
12

in adver tising and communications, in the form of additional media

In October the Group reopened Rong Zhai Residence, an old Liber ty-stylecontent for social networks and the online world in general.

mansion, following a long, elaborate restoration; it is now the Group’s
cultural venue in China. Late in the year, Prada officialized its run for theIn various markets the Group has been busy promoting “pop-up” events:

36th America’s Cup, where it will sponsor the Luna Rossa team and taketemporary displays in the world’s most prestigious shopping malls thaton an additional, first-time role as naming and presenting sponsor of thelaunch new products and emphasize brand identity. The pop-up concept,

entire sailing competition.

which will be expanded and evolve throughout 2018, brings in valuable
information on consumption patterns that are immediately transferred

Considerable investments were made in various business areas in 2017. At

to the management and stocking of retail stores.

the same time it was possible to achieve an operating profit in line with thatof the previous period.

The market’s response to the range of marketing initiatives has beenencouraging yet varied, both geographically and in terms of products.
Overall, sales trends for the year indicate gradual volume growth overthe months, and on the profitability front, a greater contribution of full-

EC1 INDICATOR - DIRECT ECONOMIC
VALUE GENERATED AND DISTRIBUTED

2015
2016
12 months
12 months
from Feb. 1, 2015 to from Feb. 1, 2016 toJan. 31, 2016
Jan. 31, 20172017
12 months pro-forma
from Jan. 1 to
Dec. 31, 2017

Euro/1000

Euro/1000

Economic Value Generated

3,553,898

3,190,896

3,062,866

Economic Value Distributed

3,207,289

2,925,740

2,885,678

Operating costs

2,014,073

1,831,423

1,753,276

Value distributed to Employees

702,543

677,144696,759

a view to strengthening and optimizing production and distribution. The

Value distributed to Banks and Bond Holders

19,42017,293

16,876new cutting facility and materials warehouse in Valvigna (Tuscany) is

Value distributed to Government Authorities

159,367

95,647

85,156fully up and running and has been expanded to include all manufacturing

Value distributed to Investors

284,699

282,180

308,073

suppor t operations, for a current workforce of 700. Also in Tuscany,

Value distributed to the Community

27,18722,05325,538the Group has completed the second par t of the new logistics hub, theEconomic Value Retained

346,609265,155

177,188

price items with respect to 2016. These signals reinforce management’s
confidence in the ability to achieve the medium/long-term goals.
With respect to manufacturing, additional investments were made withcentral facility from which Prada and Miu Miu merchandise is shipped
to all corners of the globe, and has opened a third cutting facility.
This latter investment is par t of a broader project aimed at keeping a
crucial phase of the production process within company walls, for thesake of ensuring top quality. The new manufacturing facilities enable
to obtain impor tant benefits in terms of controls over processes andquality, and they stand out for their advanced technologies and theEuro/1000

The consolidated income statement for the pro-forma 12 months of 2017,presented according to the model of economic value generated and distributed
defined by the EC1 (GRI-G4) indicator, shows a retained economic valueof Euro 17 7.2 million, lower by Euro 88 million compared to the twelve
months of 2016. The contraction, as well being a consequence of the shor ter
duration of the repor ting period, is mainly due to the decrease in retailutmost consideration for the work environment.

sales and, therefore, in the economic value generated. At the same time,2017 was a year of special strategic projects regarding image andrespectively 10.1% and 22.7% of the value generated (8.8% and 21.2% in

customer relations.

the greater impact of the value distributed to shareholders and employees,2016), fur ther diluted the portion of value retained (down from 8.3% in 2016
to 5.8% in 2017).
13

The graph below presents the economic value distributed to the stakeholders:Since 2007, these principles have been given formal expression in the Prada

3%

Group’s Code of Ethics. The Code contains the guiding principles of the10%

Organization, being one of the main pillars of the Group’s governance model,

Government
authorities

Investors

1%

61%
Suppliers

Community

and is suppor ted by a set of procedures in order to turn these values into
daily actions.
The adoption and application of the Code of Ethics is essential for theachievement of the Company’s primary objective, consisting of the creationof value for shareholders, employees, customers and for the community as
a whole.
The Code of Ethics is distributed to all employees and par ties who work

24%
Employees

toward developing, manufacturing, promoting, distributing and selling theOrganization’s products of the brands in the por tfolio. The Group promotes
knowledge of the Code through various means such as online publications,

1%Banks andbond holders

direct communications and, by procedure, as par t of the supply contract withmost of the par tners, as it is considered a prerequisite for the establishmentof all contractual relationships.

1.4 ETHICS, GOVERNANCE, COMPLIANCE AND RISKMANAGEMENT
1 . 4 .1 C O D E O F E T H I C S
The Prada Group considers respect for ethical principles to be a basic pillarof its values and success. The Group believes in and operates with:•compliance with legislative and regulatory provisions in all countries inwhich it operates;•

legitimacy, loyalty, correctness and transparency;•

respect for privacy;•

respect for the value of human beings;•

respect for competition, as a crucial instrument in the development of
the economic system;•

respect for the environment and awareness about environmental
protection.
14

1.4.2 GOVERNANCE MODELSHAREHOLDER’S MEETING

Board Of Statutor y Auditors

External Auditors

Audit Commitee
Committees

Corporate Affairs
Internal Audit

Institutional Area

Nomination
CommiteeRemunerationcommitee

Board of Directors
Super visor y Board

Investor Relations
Chief Executive Officers

Management

The corporate governance model adopted by the Group consists of a set

its strategic objectives. All Board appointments are based on meritocracyof rules, regulations, practices and procedures structured to govern theand candidates have been selected based on objective criteria and theCompany establishing efficient and transparent operations within the Group,

professional contribution that each of them can make to the operation ofwith the aim of protecting the rights of the Company’s shareholders and to

the Board of Directors itself. The Board diversity policy has been consideredenhance shareholder value. The corporate governance model adopted by

and adopted by the Board since 2013 and encompasses a wide range of

the Company is also in compliance with the applicable regulations, and infactors, including but not limited to gender, age, cultural and educational

par ticular with the principles of the Corporate Governance Code contained

background, professional experience, skills, knowledge and nationality.

in Appendix 14 of the Listing Rules of the Hong Kong Stock Exchange.
The Company has adopted a “traditional” governance system, in compliancewith the Italian Civil Code, consisting of a management body, the Boardof Directors, a supervisory body, the Board of Statutory Auditors, and anauditing and accounting control body, the audit firm. The Company has also
adopted a system of proxies and powers based on criteria of responsibility
and aimed at ensuring an efficient and regular per formance of the activity
in accordance with the procedures adopted by the Company itself.

The Board of Directors in office until the approval of the financial statements
for the eleven months ended December 31, 2017 is made up of nine directors
and was appointed at the Shareholders’ Meeting held on May 26, 2015
for a term of three financial years (2015 -2017). Specifically, the Boardof Directors is composed of four executive Directors, two non-executive
Directors and three independent non-executive Directors.
All Directors have distinguished themselves in their respective areas ofWith a view to achieving sustainable and balanced development, theexper tise and have provided suppor t to the Board of Directors in theirCompany views diversity at the Board level as an essential element to reach

respective functions.
15

The Board of Directors is responsible for the ordinary and extraordinary

The Board of Directors is suppor ted by the mainly preliminary and consultative

management of the Company. The Board has the power to carry out all

activity conducted by the committees it sets up, namely the Audit Committee,

acts it deems advisable to implement and attain the Company’s corporate

the Remuneration Committee and the Nomination Committee. Eachpurpose, except for those acts reserved by laws or by the By-laws for theCommittee is constituted for the majority by Independent Non-Executive

competence of the Shareholders’ General Meeting.

Directors including the relative Presidents.

In par ticular, the Board of Directors is responsible for defining the overall

The primary duties of the Audit Committee are to provide the Board with an

strategy of the Group and for approving annual budgets, extraordinary

independent view of the effectiveness of the Company’s financial repor tingtransactions, transactions with related par ties and all other initiatives withprocess and its internal control and risk management systems.

a significant financial impact. The Board is also responsible for reviewing
the operational and financial per formances of the Company and the Group;

AUDIT COMMIT TEE

it examines in detail the economic per formances at each quar ter, updating,

Gian Franco Oliviero Mattei

if necessary, the Budget.
The Chairman of the Board of Directors is the Company’s legal representative.
The Chairman guarantees the proper application of corporate governancepractices and procedures and supervises their application, he also convenes
the meetings and presides over the activities of the Board of Directors.
The Chief Executive Officers are responsible for managing the Company’sbusiness through the implementation of the strategies adopted by the Board.

Role

GenderAgeChairmanM> 50

Giancarlo Forestieri

M

> 50

Sing Cheong Liu

M

> 50

The

primary

duties

of

the

Role

GenderAge

Executive Directors
Carlo Mazzi

Committee

are

to

make

recommendations to the Board on the policy for the remuneration of theCompany’s Directors and senior management.
REMUNERATION COMMIT TEE

Role

GenderAgeChairmanM> 50

Giancarlo Forestieri

M

> 50

Carlo Mazzi

M

> 50

Gian Franco Oliviero Mattei
BOARD OF DIRECTORS

Remuneration

ChairmanM> 50

Miuccia Prada Bianchi

Chief Executive Officer

W

> 50

The Nomination Committee is primarily responsible for determining

Patrizio Ber telli

Chief Executive Officer

M

> 50

and revising the policy for the nomination of Directors, assessing the

Alessandra Cozzani

Chief Financial Officer

W

> 50

independence of Independent Non-Executive Directors on an annual basis,and making recommendations to the Board regarding the structure, size

Non-Executive Directors
Stefano SimontacchiM

30 - 50

Maurizio Cereda

M

> 50

Independent Non-Executive Directors

and composition of the Board.

NOMINATION COMMIT TEE

Role

GenderAgeChairmanM> 50

Gian Franco Oliviero Mattei

M

> 50

Gian Franco Oliviero Mattei

Giancarlo Forestieri

M

> 50

Sing Cheong Liu

M

> 50

Sing Cheon Liu

M

> 50

Carlo Mazzi

M

> 50
16

The recommendations made by the advisory committees are periodicallyMore detailed information on corporate governance is provided in thesubmitted to the Board of Directors for discussion and adoption.

Corporate Governance section contained in the 2017 Annual Repor t.

The Board of Statutory Auditors is the supervisory body in charge of verifying
compliance with applicable laws, regulations and the By-laws, as well ascompliance with the principles of sound management and, in par ticular, theadequacy of the organizational, administrative and accounting structure
adopted by the Company and the proper operation thereoff.

1.4.3 COMPLIANCE AND RISK MANAGEMENT
Given the complex regulatory environment, the Prada Group assigns various
depar tments and hires external specialists to keep abreast of changing laws
and regulations so that it can adapt its procedures in a timely manner andreduce non-compliance risks to an acceptable level.

The Shareholders’ Meeting held on May 26, 2015 appointed the current Boardof Statutory Auditors, consisting of three statutory auditors and two alternate

The Group has structured the internal control system as a process carriedstatutory auditors for a term of three fiscal years (2015-2017), i.e. until theout by the governing bodies of the Group’s subsidiaries, by management andapproval of the financial statements for the year ended December 31, 2017.

by the corporation in general, with a view to providing reasonable cer tainty
that control objectives will be met.

BOARD OF STATUTORY AUDITORS

Role

GenderAgeChairmanM> 50

Rober to Spada

M

> 50

David Terracina

M

30 - 50

Antonino Parisi

In compliance with Italian Legislative Decree no. 231 of June 8, 2001,
the Company has established a supervisory body whose primary duty is toMore specifically, the Board of Directors of Prada spa, referring tointernationally recognized models such as the CoSO Repor t (Committeeof Sponsoring Organizations of the Treadway Commission - international
best practices), is engaged in the continuous refinement of the Internal
Control and Risk Management systems by checking the operation of its
main components consisting of:ensure the functioning, effectiveness and enforcement of the Company’s•control environment;

Model of Organization, adopted by the Company pursuant to the Decree.

•risk assessment;

The Supervisory Body consists of three members selected among qualified•

control activities;

and experienced people and nominated by the Board of Directors.

•

information and communication;•

control system.

SUPERVISORY BODY

Role

GenderAge

The internal control system helps ensure protection of the Company’s

ChairmanM

30 - 50

assets, the efficiency and effectiveness of its processes, the reliability of the

Paolo De Paoli

M

30 - 50

information provided to its governing bodies and the market, and compliance

Gian Franco Oliviero Mattei

M

> 50

with laws and regulations as well as by-laws and internal procedures.

David Terracina

In 2016, the Corporate Social Responsibility Committee was set up to

The bodies involved in internal control and risk management are the Board

promote initiatives and projects in the social responsibility area and toof Directors, the Audit Committee, the Supervisory Body and the Board of

share with senior management the guidelines for their implementation. The

Statutory Auditors, as well as the entire management, which has the primaryCommittee star ted a systematic dialogue with the various depar tments on

task of implementing all the necessary processes and procedures to achieve

those social responsibility issues considered more strategic for the Group.

17

the Company’s goals minimizing the risks for the organization through an

general state of the economy, the protection of intellectual proper ty

appropriate system of controls.

rights, image and brand recognition, and the ability to anticipate trends
and respond to the changing tastes of consumers;

Moreover, the Internal auditing depar tment works in close collaboration
with the aforementioned bodies, which, in addition to the typical assurance

2.

risks specific to the Prada Group relating to the impor tance of key

activities, currently assists the Board of Directors and the Internal Audit

personnel, strategy implementation, outsourcing, legal and regulatory

Committee in risk management activities among others. Fur thermore, thecompliance and processing of data and information. With regard to

Industrial Compliance Committee sets guidelines for implementing laws

the approach that the Company has towards risks, for example, theand regulations that affect the impor ting and expor ting of raw materials

decision adopted regarding tax risks can be mentioned: the Prada Groupand finished goods, while providing various forms of industrial compliance

was admitted to the “cooperative compliance” regime introduced withassistance to the manufacturing divisions.

Italian Law Decree 128 of 2015 to which a limited number of Italiancompanies have been admitted. The process of joining international

In compliance with the provisions of Legislative Decree n. 231 of 8 June

“cooperative compliance” is currently under way;

2001, the Company has established a Supervisory Body whose primaryattribution is to ensure the functioning, effectiveness and implementation of
the organizational, management and control model adopted by the Company
pursuant to the aforementioned legislative decree for the control of risks andthe prevention of the commission of crimes provided for therein - including
but not limited to bribery and money laundering - by directors, employees
and third par ties involved in the Company’s activities.
During the financial period the Company did not observe any material
instances of non-compliance with the applicable laws and regulations
regarding bribery, extor tion, fraud and money laundering in the per formance3.

financial risks specific to the Prada Group relating to exchange rate
fluctuations, interest rate fluctuations, credit risk and liquidity risk.

Fur ther information is provided in the financial review and corporate
governance sections of the 2017 Annual Repor t.
In addition to the information presented in the 2017 Annual Repor t
specifically in Note 26 (“Provisions for risks and charges”) on the subjectof tax audits and disputes, no significant fines or non-monetary penalties
were imposed on the Prada Group during the year.

of the activities of the Prada Group.
Risk assessment consists of identifying and analyzing factors that mightmake it difficult to reach business goals, and concludes with the process that
determines how those risks should be avoided, mitigated or accepted. The
fact that economic, regulatory and operating environments are in constantflux raises the need for mechanisms that help identify and deal with thespecific risks posed by such changes.
For the Prada Group, risks can be broken down as follows:1.

risks relating to the international luxury goods market or related to the18

2 . STRIVING FOR EXCELLENCE

2.1 K N O W - H O W
Pr a da’s d e f i n i n g a s set , know- h ow, creates cont i nu i t y and balance be t we e n cre at ivit y and discipline, tr adit ion andte chn o l o g i ca l p ro g res s , cr af t s mans h i p and i ndus tr i al product ion.
Al l m a nu fa ct u r i n g a ct ivi t i es preser ve th e s pi r i t of qu al i t y care and de t ail t ypical of the ar t isanal he r it age, andth ey are w i sel y co m b i ned wi th i n an i ndus tr i al organi z at i o n made up of 2 1 propr ie t ar y plant s (1 8 in It aly, 1 in theUni te d K i n g d o m , 1 i n Fr ance and 1 i n Romani a) and an ex te r nal ne t wor k of supplie rs that are care fully se le cte d andmoni to re d.

The strong integration of design, product development and direct andoutsourced production allows Prada to maintain strong control over its
know-how and quality standards throughout the supply chain.
The vast majority of the prototypes, samples and a par t of the finishedproducts are produced at the Group’s own facilities, as well as the mostdelicate phases of production, such as the controls over all raw materials
and the cutting of hides.
2 .1 .1 S O U R C I N G A N D U S E O F R A W M AT E R I A L S
The quality of raw materials is fundamental to the Prada product and a
top priority for the Group. This is why the Group’s apparel, footwear andleather goods manufacturing divisions select their own suppliers directly,
and coordinate and supervise the manufacturing process right through tothe finished product. Since the outset, this approach has been a defining
element of Prada’s industrial strategy and ensures full control of a crucial
link in the value chain.
The main raw materials used are leathers, fabrics and yarns. One hundred
percent of the leathers come with a certificate of origin, a data sheet
guaranteeing quality and compliance with standards, and certification regarding
the parameters stated on the Group’s Restricted Substances List (RSL).
The Group scrupulously complies with local and international regulations on
the procurement, impor tation, use and expor tation of raw materials, suchas the Convention on International Trade in Endangered Species (CITES).
For Prada, sustainable management of raw materials is synonymous with
optimization of the use of resources, following an approach that aims toeliminate waste and therefore minimize the consumption of leather andfabrics. Investments in industrial development realized in recent years
have led to the internalization of different production phases with the aimof maintaining quality at the highest levels of excellence, while improving
controls over consumption (section 5 for fur ther details).
The materials Prada uses in the manufacturing process can be broken down
20

into primary materials such as leathers, fabrics and yarns, and ancillary

the leather came from Italian tanneries renowned for their quality and time

materials or semi-finished products such as soles, heels, zippers, buttons,

honored tradition. Another 8% came from European suppliers, while thethreads, ribbons, buckles, clasps and name plates.

remaining 12% came from outside Europe.
Leather(qty)

The most significant information relating to raw materials utilized from

Leather Italy(qty)

2015 to 2017 1 is listed below, including the related unit of measure.

Raw Material

units

2015
(12 months)

2016(12 months)

2017(12 months)

Leatherfeet

36,245,611

20,319,996

25,015,850

Fabrics

meter

2,862,145

2,427,903

2,813,776

Yarns

kilo

90,984

91,995

130,664

Shoes’ soles

pair940,641

941,903

916,516

35%

Italy
Arzignano

6%

80%

Italy
Other

Italy

11%

Italy
Solofra8%
Europe12%

Purchases for 2017, despite referring to just 11 months, shows an increase in

Rest of theworld

line with the planned expansion of the product range at the stores. Overall,

48%

Italy
Santa Croce

purchases of the aforementioned raw materials accounted for approximately
56% of the economic value of all raw and semi-finished materials purchased

The clusters of Santa Croce (Tuscany) and Arzignano (Veneto) accounted,

in 2017.

respectively, for 48% and 35% of all leather purchased by the Prada Groupin Italy. These are specialized leather districts that set the standards for the

2.1.2 TIES WITH THE COMMUNITY DURING

production of high-quality leathers around the world. Both districts share a

THE MANUFACTURING PROCESS

strong focus on environmental sustainability, also given the strong impacts

The international success of the Prada Group is deeply rooted in Italy, also

- especially in terms of water consumption and atmospheric emissions - ofwith respect to the supply chain. In 2017 the Group purchased materials

production processes related to tanning.

from about 530 suppliers 2 , about 82% of them located in Italy, 9% in other
European Union countries and the remaining 9% in other Non-U.E. countries.

In outsourcing, too, the Prada Group stands out for its strong ties with the

In many cases the materials are produced expressly for Prada, accordingar tisanal craft experience typical of Italian tradition. In 2017 the Groupto strict technical and design specifications, by long-established par tners:

worked with approximately 400 3 suppliers in addition to the aforementioned

60% of them have been working with the Group for more than 10 years, and530 suppliers of raw materials. 76% of manufacturing suppliers are located in

16% for 5 to 10 years.

Italy, 12% in the rest of the European Union and 12% in non-U.E. countries.
42% of the suppliers have been collaborating with the Group for more thanThe focus on Italian origin is demonstrated by the procurement data regarding

10 years and 22% for 5 to 10 years. These are relationships built on mutual

leather for footwear and accessories. In terms of quantity, in 2017, 80% oftrust, by working together on a daily basis with a view toward constantimprovement and learning.

12

Due to the change in the end-of-period date to December 31, the data for 2017 refers to theeleven-month period from February 1 to December 31, 2017.
For the purposes of this analysis, only raw materials suppliers with which purchases of more than Euro
30 thousand were conducted in 2017 have been considered.from February 1 to December 31, 2017.

3

For the purposes of this analysis, only manufacturing suppliers with which purchases of more thanEuro 30 thousand were conducted in 2017 have been considered.

21

2.1.3 GROUP’S QUALIFIED VENDOR LIST PROCEDURE

completed to ensure regularity on issues related to social responsibility.

The Prada Group has adopted the “Group’s qualified vendor list” procedure to

The extension of coverage to the remaining par t is currently underway andredefine the responsibilities and operational behaviors required to evaluate

the management is confident of increasing it in the shor t-term. During the

ethical, technical and economical reliability. Additional controls needed toperiod of application of the procedure, no cases of non-compliance emerged

initiate and continue with supply relationships are set out in the procurement

which led to the suspension of the collaboration relationship.

policy, which calls for mitigating risks of non-compliance through additional
controls and accountability.

2.1.4 PRODUCT RESPONSIBILITY
Product quality and customer health and safety are central to the Prada

Specifically for ethical issues, the accreditation and maintenance of aGroup’s manufacturing processes. The products must meet uniform quality

supplier ’s qualification are based on the collection of documents, attestations

standards and satisfy all current regulations in the more than 70 countries

and self-cer tifications that ensure compliance with the law on remuneration,

where they are sold.

social security, taxation, health and safety, the environment, privacy and thegovernance model. Finally, the signing of the Code of Ethics is a fundamental

To achieve these goals, the Group employs some 291 technicians, each

prerequisite for working with Prada.

with at least ten years’ experience, who run strict quality controls on every
material used in the production process, from sourcing to the finishingThis information is subject to periodic updates and systematic checks totouches. They make periodic visits to the manufacturing sites of raw material

ensure veracity and consistency. Such controls, conducted by purchasing

suppliers and subcontractors to assess their processes, the quality of theirstructures or business areas focused on various topics, are carried out on a

goods and the general workplace conditions.

sample basis or when a problem is encountered. The procedure may include
fur ther inquiries in the case of doubt of lack of self-cer tification of compliance

In 2010 the Group formed a Committee to assist the manufacturing divisions

with labor, safety in the workplace and social security contribution laws.

in matters of legal compliance. Comprised of top managers from the industrial

This type of control is coupled with visits by industrial divisions to suppliersarea, the Committee sets guidelines regarding all aspects of compliance(almost daily for the most impor tant ones) which, apar t from ensuringwith national and international legislation on the nature and proof of origin

compliance with technical and commercial agreements, provide additionalof raw materials, the creation of the finished product, and consumer healthcomfor t regarding working conditions. In the case of non-compliance thatand safety in general.

can be remedied, the supplier may be temporarily suspended, while for more
serious cases of non-compliance with ethical, technical and economical

Within the scope of these control and guidance activities, since 2014

requirements, the contract may be terminated immediately.

the Prada Group has drawn up and updated a Restricted Substances List(“RSL”), the procedure that sets limits on the presence of chemicals in its

The application of this procedure, which was the subject of a major overhaul

products. In 2016, Prada took the additional step of aligning its RSL limits

in 2016, was launched in early 2017 with suppliers operating in the industrial

with the more stringent, proactive approach outlined in the “Guidelinesarea of the parent company (representing about 80% of manufacturing

on ecotoxicological requirements for clothing, leather goods, footwear

collaborations). At the repor ting date, on a por tion of just under 2/3 of theand accessories” endorsed by the Camera Nazionale della Moda Italiana

suppliers, the checks requested by the Qualified Vendor List procedure were(“CNMI”). These limits are the most vir tuous in international practice and22aim to ensure higher chemical safety standards than those prescribed by thestrictest national and international laws. Prada’s suppliers of raw materials,
packaging and manufacturing services, which represent Prada’s production
chain, have all received the Group’s RSL: those that as of January 31,2017 had formally accepted and signed the procedure accounted for 72%
of purchasing volumes, while at December 31, 2017, the “proactive” levelof the RSL was guaranteed for 92% of the purchasing volumes relating toPrada’s industrial suppliers and 100% of the work per formed in the Group’s
production sites.
The goal is to increase the former percentage through outreach activities
aimed at encouraging other suppliers to sign on. Extending the reach of the
RSL is impor tant for improving the sustainability of the Group’s production
cycle, as is Prada’s ongoing commitment to CNMI programs on chemicals,
for which in-depth studies have been initiated on the application of theguidelines to manufacturing processes, and on other matters.
To ensure that the RSL is being followed, in addition to requiring cer tificationand testing from every supplier, the Prada Group monitors observance ofthe guidelines and the supplier cer tifications through an additional internal
control process by conducting spot checks on all sourced materials throughaccredited laboratories.
In 2017 there was 1 case (2 in 2016) of non-compliance with health andsafety regulations concerning products sold in China, which resulted in
total fines of approximately Euro 6,000. There were few cases of noncompliance with information and/or labeling requirements requested bysome depar tment stores in Nor th America where the Group operates throughDOS, leading to fines of approximately Euro 16,000. However, at the dateof this repor t, investigations by Prada are ongoing and the Group estimatesthat compensation can be obtained.

23

2.1.5 CREATIVITY AND PRODUCT EXCELLENCE“Close observation and curiosity
about the world are at the very originof the Prada Group’s creativity andmodern outlook.
In society - and therefore in fashion, which in many ways
reflects it - the only constant is change.
The transformation and innovation of conventions, underlying
all evolution, have led us to interact with different cultural
spheres both near and apparently far, helping us capture andanticipate the spirit of the times.
Today this is no longer enough:we must be the agents of change,
with the flexibility to translate the demands of the market andsociety into tangible actions that guide us every day in ourbusiness. ”

Miuccia Prada and Patrizio Ber telli

While maintaining a soul rooted in fine craftsmanship, Prada has turned
from a family-run business into one of the world leaders in the luxury sector.
Guided by the style inspiration of Miuccia Prada, universally acknowledged
as a pioneer of the fashion industry, the team of designers and craftspeople
keep the Group’s values and brand identities alive, yet constantly re-interpretthem in a contemporary light without forsaking their unique concept.
Here is a selection of the most iconic products of the latest collections that
testify to the spirit with which they were designed, inspired by values that
go beyond the simple aesthetic purpose.

24

PRADA ETIQUET TE
The Etiquette handbag plays with the rules of fashion in pure Prada style: theexaltation of craftsmanship, the questioning of the relationship between thebrand identity, the product and the inside-out principle. What is normallyconcealed is revealed and so the iconic blue label, usually inside the garments
and therefore only visible to the wearer, is now audaciously displayed.
PRADA MONOCROME
Pure and modernist, the Prada Monochrome handbag stands out for its threedimensional logo in relief in the same tone as the Saffiano leather, with logo
appearing and disappearing. The Monochrome is a sleek representation of
the brand’s aesthetics.
PRADA CLOUDBUSTThe Cloudbust is a lightweight sneaker made from cutting-edge technicalfabrics, a curvilinear rubber sole, ornamental details likewise also in rubber
and a velcro closure; the well thought-out ensemble gives the Cloudbust a
futuristic allure, bridging sophisticated athleticism and contemporary design.
MY MIUThe My Miu handbag marks the first occasion in which the name of thebrand features prominently in the form of a large turn-lock closure. With its
bright jewel buckles, the My Miu combines respect for handcraftsmanshipwith a sense of femininity and fun typical of the brand.
MIU RIDER
A belt bag that effor tlessly combines a timeless spor tswear design with theluxurious materials and fine craftsmanship the brand is known for. Made asa lively patchwork of soft signature matelassé leather, the bag has a single
zip closure that is easy to open even on the move.
MIU RUNA new sneaker, joyfully feminine, characterized by light-hear ted andirreverent design that plays on the juxtaposition between form and function,
signature Miu Miu fabrics and efficient technical design.
CHURCH’S SHANNON
The derby Shannon, a classic model for Church’s in brushed calfskin, isdistinguished by its smooth upper constructed with a single piece of leather
and for the seams that enclose the entirely handmade lacing.

PRADA ETIQUETTE

P h . W i l l y Va n d e r p e r re25

PRADA MONOCROME
P h . W i l l y Va n d e r p e r re

PRADA CLOUDBUST
P h . W i l l y Va n d e r p e r re

MY MIU
Courtesy Miu Miu

MIU RUN

Courtesy Miu Miu

27

MIU RIDER

Ph. Alasdair McLellan28

H I S TO R I CA L A R C H I V E S : F I N I S H E D P R O D U C T S A N D FA B R I C SARCHIVE OFFINISHED PRODUCTS(number of models)

52,30247,657

13,173

33,111

Ready-to wear

Shoes

Leather goods

Other146,243T O TA L

FINISHED PRODUCTS
The historical archive of finished products
represents a real strategic asset for theGroup as well as a tangible evidence of thehistory of its brands. A constant source

25%
Miu Miuof inspiration, the archive reconstructs
Prada’s complex and often elaborate
reflections and experiments in the world

5%of fashion and culture in general.

Other

The archive, constantly updated with the
products of new collections, is located in
5 warehouses between Tuscany and Milan
and, at the date of this Repor t, consists

70%
Prada

of 146,000 items.

CHURCH’S SHANNON
Ph. Lachlan Bailey

29

30

FABRICS
The archive dedicated to fabrics represents the distinctive excellence Prada’s
know-how and is made up of 24,272 samples of original fabrics, with over
5,200 different designs: unique and exclusive prints, lace, macramè andmore.
The total archive, constantly expanding as it is constantly integrated withthe fabrics of the new collections, has been photographed and entered into
a computer system to speed up research and visualization.
ENGINEERING DESIGN ARCHIVEThe Engineering Design archive, occupying more than 6,000 m 2 , is used todevelop 1:1 scale reproduction of concepts for new stores, and to arrange
store window displays. The archive is divided into:•

the samples archive, a collection of some 10,000 exemplars of researchmaterials used for the development of stores and brand designs. An extensive
range of wood, metals, fabrics, paints, encaustic paintings, glass, plastic
materials, marble and stones;•

the models archive, consisting of hundreds of architectural models,complete with furniture and fixtures. It includes an operating Model
Laboratory featuring state-of-the ar t computer equipment that allows
modeling and 3D printing;•the historic furniture archive, which includes unique fine furniture andfurnishing accessories, providing a precious source of inspiration for all
design activities.
THE LIBRARY
The Library was created as a small collection of volumes kept in Tuscany andsubsequently moved to Milan in 2001. It houses more than 40,000 volumes
to date, including books, look books, DVDs, catalogues and magazines some of which date back to 1894 - mostly feature fashion, customs, ar t,
photography, architecture, design, jewelry, fabrics and prints.
Methodical research and acquisitions allow its precious heritage to constantly
expand, representing an irreplaceable value for the Group.
31

32

2.1.6 PR ES ERVING TRAD ITIO NAL E X PE R TIS E A ND DE V E LO PING S K IL L S

characterize the industry, as well as their transmission to new generations

The preservation and advancement of exper tise is fundamental to theof ar tisans.

Prada Group, which prides itself on transmitting skills from generation to
generation.

Each path includes theoretical training (raw materials, manufacturing
processes and techniques, such as technology, information technology

Back in the 1990s, the Group began to codify all its industrial and handcrafting

and the English language) as well as practice applied on the field throughprocesses in manuals and written procedures so they would be accessible

activities hosted by the Group and its suppliers.

within the Group. Even now, details are constantly added to these documents,
which ensure the continuity and consistency of the know-how and serve as

RETAIL TRAINING

inspiration for the corporate activities.

In addition to the daily suppor t of experienced personnel, the activities
conceived for the retail staff include Prada Academy institutional training

PRADA ACADEMY

courses designed to consolidate professional skills, knowledge of the productPrada Academy is the physical and vir tual place in which knowledge, skills,

and customer service.

techniques, practices and innovative ideas are shared and developed tofoster talent and ensure the Group’s future growth.

A par ticular focus is put on the adoption of new ways of communication
and relations with customers, resulting from recent investments in digital

The Prada Academy aims to development human capital and convey

technology involving the Group’s entire retail network and allowing the sales

professional exper tise with projects, tools and training modalities diversified

staff instant access to a wide range of useful information and materials.

for three macro areas: Craftsmanship School, Retail Training and Corporate
Training.

CORPORATE TRAINING
Professional training for members of the corporate area is centered oncourses geared towards the enhancement of relational and behavioral skills

CRAFTMANSHIP SCHOOL

E d u cat i o n a l P at h s :F o ot w e a r
R e a dy -T o -W e a r

C O R P O R AT E T R A I N I N G

M a n ag e r i a l
T e c h n i ca l
Induction program

R E TA I L T R A I N I N G

B r a n d k n ow l e d g e
S e ll i n g a n d c u s to m e r e x p e r i e n c e
Induction program

L e at h e r g o o d s

aimed to achieve more effective management of operational complexities.
Besides traditional theoretical training, each employee can access a digitalplatform that allows continuous and social training and development,
through online courses, multimedia libraries, tutorials, blogs and online
communities. This tool provides every single employee with easy and ‘on
demand’ access to educational material.

CRAF TSMANSHIP SCHOOL
Educational paths related to industrial production take place at the

Fur thermore, within the program for the integration of new employees in

Craftsmanship School through courses dedicated to acquisition of footwear,

the Corporate and Manufacturing areas in Italy, the Prada Group organizes

leather goods and clothing manufacturing know-how. The main goal is thecustomized courses in which classroom time – to know the Company’s history,

protection and conservation of the wealth of knowledge and exper tise that

culture and main processes - alternates with visits to the industrial sites.
33

RETAIL AND CORPORATE TRAINING HOURS
To develop skills, broaden knowledge, and thereby increase employees’ value
as professionals, 87,403 training hours 4 were provided in 2017 to 13,335
par ticipants. Below is a summary of the training hours by gender.
Training Worldwide

Total

F

M

Number of training hours

87,40358,08929,314

Average number of hours
per employee in the year

6.80

7.34

5.95

Number of employees

12,844

7,914

4,930

2.2 CUSTOMER EXPERIENCE
Product value is enhanced by targeted communication activities that aim
to convey a strong, consistent image of the brands using all the available
channels to seize oppor tunities to forge customer relationships. Ultimately
exclusive, personal relationships are built with customers, who understandhow the elements of the luxury items can help define their own image andidentity.
2 . 2 .1 R E TA I L N E T W O R K A N D T H E O M N I C H A N N E L S T R AT E G Y
The Prada Group owns 625 directly operated stores in exclusive locations;they consist of long-established stores, experimental stores and more
traditional ones. About 81% of net sales take place through this channel.
Much more than simple points of sale, the stores are impor tant communication
tools and function as “ambassadors” of the brand, the brand’s identity andthe latest collections. Each store is designed, built and managed according
to very precise internal guidelines, defined to convey innovative distribution
and communication concepts and respect the different positioning of eachbrand. All shops are run by meticulously selected personnel who take part inperiodic training activities, designed not only to provide customers with the best
shopping experience and insight into the style content of the collections, but also
to communicate the values, culture and heritage that the products represent.
Sales personnel provide clear information on the products and their care,
4

Hours of training do not include health and safety training

34

P R A D A S T. B A R T H

35

P R A D A S T. B A R T H

PRADA MIAMI36

PRADA MIAMI

as well as repair services, which enhances Prada merchandise by ensuring
its quality and durability over time.
In order to investigate diverse shopping languages and to allow its brands tobenefit from ever-contemporary stores, the Prada Group has collaborated
with some of the most prestigious international architecture firms to develop
innovative retail solutions. These encounters give life to experimental
concepts, developed simultaneously with tradition sales channels, toinvestigate the multiple universes that enhance the shopping experience.
Not just spaces that celebrate the selling and service ceremony, but also
stages for communication and culture.
As par t of the search for alternative shopping experiences, 2017 wascharacterized by numerous pop-up projects, i.e. temporary installations
with unique concepts aimed at enhancing the brand identity and thecharacteristics of the products. Among the latest ones, Prada presented“Prada Silver Line” (December 2017), an itinerant project initiating in Macau.
This pop-up represents the image of Prada on the move, drawing inspirationfrom the brand and its fundamental codes such as travel and modernity.
The concept is a reconstruction of par t of an ideal train in which the various
aesthetic themes are combined in a single design. The exterior is a metalshell reminiscent of the American “Streamliners” of the 1930s and 1950s,
while the interior features walls covered in red floral silk brocade fabric fora luxurious and romantic look. The setting is completed by the iconic black
and white checkered floor that has characterized Prada stores around theworld since 1913. In 2018 “Prada Silver Line” will involve several of themost impor tant cities in Asia, Europe and the United States.
In 2017 the restyling plan of the Prada and Miu Miu stores continued, inline with the new aesthetic codes of the brands and aimed at creating amore personalized shopping experience.
The new Prada concept is based on a modular design capable of creatingnovelty elements and obtaining more intimate spaces dedicated to eachindividual product category. Also par t of the restyling program are the37

P R A DA S I LV E R L I N E

number of independent shops and depar tment stores and, on the on-line
front, with the e-commerce sites of the Group and a select number ofleading online sales operators (e-tailers). The integration of physical storeswith the digital sales channel fur ther enriches the shopping experience bystrengthening the direct link between sales staff and customers throughpersonalized marketing services and initiatives.

Within the broader strategy of redefining its digital communication, in2017 the Prada Group strengthened its investments in the creation andcommunication of digital content.
As at December 31, 2017 the data relating to social networks was as follows:

M I U M I U AYO H A M A

Ph. Nacása & Par tners

achievements of unique concepts, such as the Prada Miami Design District,

I N S TAG R A M

FAC E B O O K

19.2

7.6

milion followers

milion followers

TWITTERaround1.1

milion followers

and concepts dedicated to holiday resor ts, such as Prada Saint Bar th.
The restyling of Miu Miu involved revisiting the brand design that has
defined the store concept since 2006, radically transforming it in 2016Engagement in digital communication has also affected the Group’s corporate

in terms of colors used, lighting, and interior layout. Also for this brand,

profile through the creation of a new website, www.pradagroup.com, atogether with the restyling plan of all existing stores, unique concepts havemodern HUB website that allows visitors to explore all the different aspects

been created such as that of Miu Miu Aoyama. The latter, like the threeof the Prada Group. It was designed to communicate the Group’s values,

Prada Epicenters in New York, Los Angeles and Tokyo, was born from therecount the main brand projects, promote the “company’s reputation” andcollaboration with some of the most prestigious architectural firms on an

foster the circularity of information among the various digital channels ofinternational scale (e.g. Herzog & de Meuron and Rem Koolhaas) and is one

the Prada Group.

of the most significant projects in terms of the innovation of the shopping
experience concept.
Directly operated stores are at the center of the Group’s omni-channel
business strategy, which is completed, on the off-line front, with a select38

3 . WORKPLACE ETHICS

T h e Pr a da Grou p’s bu s i nes s approac h i s based i n th e promot ion of dive rsit y, prote ct ion of e mployme nt and tre atme nt
of s t a ff w i th ca re a n d res pect . Pr ada h as al ways cons i de re d human capit al to be key to it s compe t it ive e dge andma ke s ever y effo r t to promote and reward profes s i onal s k ills and te amwor k, with an e mphasis on re sult s.
T h e e m p l oye e s’ en thu s i as m, c r af t s mans h i p and i ntel l ect u al cur iosit y are the e le me nt s that unde r pin the innovat ion
a nd qu a l i t y o f th e Group’s produc t s . Over t i me, th e goal has be e n to build and for tif y an ope n wor king e nvironme nt
w he re hu m a n relat i o n s hi ps are i ns pi red by empathy and mut ual unde rst anding, including by way of spe cially de signe dcommu n i cat i o n ch a n n el s .

In order to strengthen the sense of belonging to the Prada Group, a corporate
newsletter is drafted simultaneously in four languages (Italian, English,
Chinese/Mandarin and Japanese) for all staff; it provides updates on theGroup’s activities and news about the luxury industry. During the year, 16
newsletters were sent out.

3.1 THE WORKFORCE
As of December 31, 2017, the Group had 12,844 employees, of whom 37%
work in Italy. 2.1% growth was recorded compared to the previous year
mainly due to the expansion of the retail organization.

22%
Middle East

12,5792%
Africa37%

12,844Italy

12,46722%
Asia pacific

10%
America
2015

2016

2017

Number of
Employees

21%
EuropeEmployees per
Geographical Area

Outside Italy, the most sizable par t of the workforce is in Asia-Pacific (22%)
followed by the rest of Europe (21%).
40

In Italy, where 18 of the 21 production facilities are located, most employees

and craftsmanship is particularly important, 54% of the workforce belonged(63%) work in the industrial division, while in other countries, where 568 out

to the 30 - 50 year old range and 35% to the over 50 year old range.

of 625 directly operated stores are located, 84% of employees are in retail.

Employees
by Gender

61%
femaleEmployees
per Age Range

62%

62%

femalefemale

39%

38%

38%

male

male

male

56%

56%

56%

30 - 50

30 - 50

30 - 50

33%
< 30

25%

25%

< 30

19%

11%

< 30

19%

> 50

> 50

> 50

2015

2016

2015

2017

2016

2017

A breakdown of the workforce by age shows that in 2017, 25% of Prada

In 2017, the breakdown of employees by age and gender remained

employees were under 30 years old and 56% were aged 30 to 50. Further

quite stable. In the “Staff ” and “Executive and Managers” categories,

analysis shows that 33% of the retail workforce were under 30 years old, whilefemales accounted for 23.3% (vs. 12.7% of males) and 5.5% (vs. 4.1%

in the industrial division, where at least ten years of experience in productionof males) of the total workforce respectively in the category 30 – 50
year old.

year

LABOR
FemaleSTAFF
MaleEXECUTIVES AND MANAGERS

FemaleMale

FemaleMale< 30

30 - 50

> 50

< 30

30 - 50

> 50

< 30

30 - 50

> 50

< 30

30 - 50

> 50

< 30

30 - 50

> 50

< 30

30 - 50

> 50

2015

0.4%

5.6%

5.7%

1.2%

4.4%

3.2%

11.7%

23.8%

7.1%

6.6%

12.8%

4.3%

0.2%

5.9%

1.1%

0.2%

4.5%

1.3%

2016

0.9%

5.8%

4.5%

1.8%

4.5%

2.5%

13.8%

23.4%

6.3%

7.9%

12.6%

3.5%

0.2%

5.5%

1.0%

0.2%

4.3%

1.2%

2017

1.2%

5.7%

4.7%

2.1%

4.4%

2.6%

13.7%

23.3%

6.1%

7.4%

12.7%

3.5%

0.3%

5.5%

1.1%

0.3%

4.1%

1.3%
41

Permanent
Employees

61%

61%

female61%

female

39%

39%

male

2015

female

male

2016

39%
male

2017
T O TA L 1 1 , 2 1 6

In terms of contract type, just over 87% of international employees arepermanent hires, proving the Group’s commitment to stability and longterm investment in human resources.
Most of the fixed-term contracts concern younger (under 30) staff in theretail area. 64% of the contracts are for females.
97% of employees work full time. In 2017 there were no differences inbenefits between full-time and par t-time contracts.

3 . 2 E M P L OY E E R E L AT I O N S
To recruit and attract talent, the Group collaborates with universities andentities that organize post-graduate programs focusing on marketing andretail. Prada also offers internships to new graduates to enable them toobtain experience and demonstrate their skills, and have the oppor tunity towork in the business afterward.

42

The selection process, which consists of various evaluation approaches
according to the position offered and experience of the candidates, is basedon transparent internal policies and ensures equal oppor tunity.
New college or high-school graduates and candidates with up to three yearsof experience are screened through individual and collective testing, whereas
those with strong experience undergo an individual screening process.
The Prada Group’s remuneration and retention policy is designed to reward
and retain highly professional staff and skilled managers, with the convictionthat value is created in the medium and long-term, through constantorganizational learning and consolidation of experience and competence.
The policy features a balanced combination of components that are fixedand variable, direct and deferred, tailored to the position and professional
qualifications, and consistent with the needs of the various geographical areas.
The remuneration system is formulated by the Human Resource Management
using constant comparisons of the central and peripheral staff, and by
external firms that carry out salary surveys on international markets andare specialized in the fashion and luxury industry.
The Group’s remuneration policy is based on:•a periodic salary review that takes into consideration the overallmarket competitiveness with respect to company positions and internal
remuneration fairness;•an annual incentive plan linking remuneration to the Company’s earnings
and to individual per formance;•long-term incentive plans, for key managers, linked to the three-year
profit growth, aligning individual targets to those of the shareholders;•specific incentive plans for the sales team; similarly, bonuses relating to thedevelopment of seasonal collections are awarded to technical specialists;
43•

specific benefit plans for each country, which supplement in whole orin par t the mandatory entitlements (healthcare, insurance, etc.), andbenefits including social services and assistance to families (public
transpor tation, cars, school subsidies, subsistence allowances, etc.).

The Prada Group collaborates with trade unions to improve the working
conditions of its employees and to foster the medium/long-term well-beingof its employees and thus its surrounding communities. Over the years theGroup has stipulated many supplementary agreements especially in Italy,
in the United Kingdom and in France, whereby it offers better benefits thanthose in the local collective bargaining agreements. For instance, 80% of theemployees in Italy and 100% in France can benefit from the supplementaryagreements. Employees in the UK of the industrial division also benefit
from supplementary agreements.
The most significant benefits of such agreements for this year are as follows:•

per formance bonus: variable bonus linked to production, sales andprofit targets;•

vacation bonus: fixed amount equivalent to one month’s pay as definedin the collective bargaining agreement;••

flexible working hours enabling employees to achieve a more productive

Supplementary Healthcare Fund: supplementary health insurance with
an option to include immediate family at a special rate;•

In 2017, a preliminary study was begun to introduce a new corporate welfare
system to the supplementary bargaining agreement for the Italian structure,with the aim of giving employees access to a cohesive package of services
for health, leisure, education, culture and more. The use of these services
can also be financed by additional resources made available as par t of the
supplementary agreements.

special leave of absence for illnesses of employee’s children (up to 12
years of age) in France;•labor strikes occurred in the year, just as none occurred in 2016.

easy access to severance pay advances;

work-life balance;•

unions (of which 26% of the Group’s employees were members in 2017), no

regulations, employment protection and better conditions in terms of
Sunday premium pay in the stores in France.

Thanks to the respect, dialogue and cooperation in place with Italian trade

The Board of Directors, together with the Remuneration Committee, isactively involved in determining the top management remuneration taking
into account the roles and responsibilities assigned, and considering themarket compensation applicable to similar positions in businesses ofcomparable size and complexity to the Prada Group.

44

45

3.3 DIVERSITY AND EQUAL OPPORTUNITY

Employees per gender
per geographical area

The vast global presence of the Prada Group reflects a multitude of different
cultures, skills, nationalities and religions. The communities and areas in

68%

61%

which it operates are a constant source of inspiration and growth.
The Group firmly believes in the value of diversity as inspiration for the businessand as a form of cultural richness, well-being and creativity, which enables it

femalefemale42%

53%

female 47%

45%
male

male

to forge close relationships with a diversified, global customer base.

femalefemalefemale

55%

58%

72%

male

39%
male

32%
male

The statistics on employee origin are evidence of the various backgrounds

28%
male

of the workforce. In fact, persons of 100 different nationalities (101 in
2016) work for the Group.
The strong female presence is demonstrated by the ratio between males andfemales for each job category: women not only represent the majority ofLabor (56%) and Staff Workers (65%); they are also the largest component(55%) of Executives and Managers.
year

LABOR

EXECUTIVES AND
MANAGERS

STAFF
Male

FemaleMale

Female

Male

2015

54%

46%

64%

36%

54%

46%

2016

56%

44%

64%

36%

54%

46%

2017

56%

44%

65%

35%

55%

45%

Another distinctive characteristic is the prevalence of females in all divisions
INDUSTRIALAMERICAEUROPEA S I A PA C I F I C

J A PA N

MIDDLE EAST

Equal oppor tunity is also reflected in the compensation and benefit system,

Femaleyear

I TA LYCORPORATE

based on the enhancement of skills and on merit, which ensures consistenttreatment of genders, seniority and positions.
The gender pay gap with respect to men’s and women’s average salaries isshown below. In line with the data on the female presence by qualification,
substantial equality in the remuneration treatment typical of the PradaGroup is evident, with a ratio almost always equal to 100% for all types ofqualification.

EXECUTIVES AND
MANAGERS

FemaleMale

FemaleMale

Female

Male

2015

65%

35%

64%

36%

64%

36%

2016

59%

41%

54%

46%

64%

36%

2017

59%

41%

55%

45%

64%

36%

Even at a geographical level females represent more than half of workers in

PAY GAP (with the median as 100%)
year

LABOR

EXECUTIVES AND
MANAGERS

STAFF

FemaleMale

FemaleMale

Female

Male

2015

101%

98%

102%

106%

102%

98%

2016

102%

95%

101%

97%

100%

97%

2017

97%

102%

91%

104%

98%

103%

all areas, with peaks in Japan and the Asia Pacific, where females accountfor 72% and 68% of employees respectively.
46

3 . 4 W O R K E R S A F E T Y T H R O U G H O U T T H E S U P P LY C H A I N

Moreover, safety of the manufacturing facilities is the focus of targeted
initiatives. Following the tragic ear thquake that struck Italy's Emilia

Personal protection is of key significance to the Group: internal policies

Romagna region in 2012, the Prada Group engaged a team of professionals

safeguard the health and safety of employees at all Company locations

to assess the seismic vulnerability of all its owned production facilities inaccording to the highest standards and in full compliance with local and

Italy. Afterward, voluntary improvements to safety standards beyond thoseinternational regulations.

prescribed by the Building Code were made to all structures built before
seismic laws were in effect. In addition to the work already under taken,

In most locations (offices, warehouses and stores), risks associated with thesome of which has been completed, in 2017 the seismic improvement wereGroup’s operations are limited. Manufacturing facilities present the greatest

made to the factory in Torgiano, Umbria.

risk in terms of health and safety, but still to a small degree.
Generally, the industrial investments take into account the need to ensure
workers high safety standards and high work environment quality throughyear

INJURY RATEGRAVIT Y RATE

the upgrading of areas both inside and outside the buildings.

(number of accidents/hours worked)*1,000,000(days lost for accidents/hours worked)*1,000

2015

11.08

0.19

2016

11.02

0.21

The Group makes effor ts to guarantee that its products are created in

2017

11.34

0.29

conditions reflecting its commitment for the respect of human rights in the*The data only refers to Italy where there are 18 of the Group’s 21 industrial sites

The indicators highlight the almost total absence of injuries, also thanks totraining activities and updated safety measures, especially in the industrial
areas. In Italy there were 85 incidents, 62% of which involved females.
40% occurred during commuting and 60% at Company premises (25% due
to tripping/slipping). There was one case of occupational disease in Italy inthe period.
In order to promote widespread safety awareness, thanks in par t to regulatory
developments on this matter, the Company uses on-line safety courses withspecific IT platforms that are easy and simple to use. In 2017 training wasprovided to more than 1,632 people in Italy.
There are no committees within the Group responsible for creating andmonitoring occupational health and safety programs, whereas the positions
and internal organization structures required by the local legislation of thevarious countries in which Prada is present do exist.

workplace and its compliance with international rules for the safety andwell-being of workers.
The Group's business par tners are encouraged to go beyond the minimum
regulatory requirements and foster dialogue among all par ties involved tofacilitate the implementation of and compliance with the standards in orderto create positive work relationships. In relationships with suppliers, social
awareness is encouraged and regulatory knowledge and the adoption ofenvironmental, social and quality cer tifications are promoted.
Prada's commitment is realized in par t by the promotion, disseminationand signing of the Group's Code of Ethics, which is often included within
business agreements.
The Code of Ethics sets minimum standards for suppliers regarding:•employee rights of and working conditions (including number of regular/
over time/vacation hours, salaries and zero tolerance for child labor andforced labor);47•

the safety, health and well-being of employees;•

equal oppor tunities for employees;•

freedom of association;•

health insurance for employees;•

environmental protection in the sourcing of materials and in manufacturing
activities;•

the protection of intellectual proper ty and the fight against counter feiting.

Factories and external suppliers are required to ensure that any third par tythat provides them with materials and/or labor for making the products is
authorized and complies with the Code of Ethics.

48

4 . T H E P R A DA U N I V E R S E : C U LT U R A L I N I T I AT I V E SCARNE Y ARENA

Credit: ©Legendar yGraphic design: Neil KellerhouseT h e Pr a da Grou p’s c l o se t i es wi th th e f i el ds of ar t and cu lt ure are an inte gr al par t of the br and value s. Inte r act ion
w i th th ese se e m i n g l y d i s t ant wor l ds h as l ed to th e real i z at ion of spe cial proje ct s that ove r the ye ars have contr ibute d
to th e ma k i n g o f th e mul t i faceted wor l d of Pr ada.

4 . 1 S H A P I N G A C R E AT I V E F U T U R E

The conversation focused on four engaging topics:•“Brand heritage and market value”, i.e. the influence of the history ofa brand over its products and the preservation of ar tisanal skills;•“Design for sustainability through innovation and tradition”, the marriageof tradition and innovation to achieve sustainable results;•“Sustainability and value creation”, innovation and sustainability as key
factors for the creation of value;•“Driving creative excellence”, which examines leadership as an inspiring
element for creativity and innovation.

The conference was preceded by a dynamic work session, resumed in thediscussion of the next day, in which representatives of companies andassociations met with the professors and students of the two Universities todevelop a critical perspective on sustainability and innovation.
With this conference the Prada Group reaffirmed its commitment topromoting discussion on some of the main issues raised by civil society
regarding the search for more sustainable solutions.

4.2 FONDAZIONE PRADAOn March 20 and 21, 2017, the “Shaping a Creative Future” conference
was held in Milan in front of an audience of over 300 students, professors,
professionals, entrepreneurs and journalists. The conference organized by
the Prada Group, in collaboration with Yale University School of Management
and the Politecnico University of Milan, represented an oppor tunity to explore
new connections possible between creativity, sustainability and innovation.
For the first time, the debate saw the participation of numerous businessleaders from different sectors discussing with representatives of institutions
and international organizations, lecturers and students, on sustainability issues
which today represent one of the most difficult challenges to overcome forcompanies wanting to achieve growth and success in the medium to long-term.

The interests and the passions of Miuccia Prada and Patrizio Ber telli have
led the Prada Group to suppor t Fondazione Prada’s activities in the fields
of ar t and culture since 1993.
Fondazione Prada was created as a platform to conceive and develop ar t
exhibitions along with architecture, cinema and philosophy projects. Since
2011 the Fondazione has also been operating from its venetian venue, Ca’
Corner della Regina, an 18th century palazzo which so far has hosted 5
research shows, an experimental cinema platform and a transmedia exhibition
project entitled “ The Boat is Leaking. The Captain Lied”, the result of thecollaboration between ar tist Thomas Demand, director and writer Alexander
Kluge and stage designer Anna Viebrock.
50

FAMOUS ARTISTS FROM CHICAGO. 1965-1975
Ph. Rober to Marossi
Cour tesy Fondazione Prada

LEON GOLUB

Ph. Rober to Marossi
Cour tesy Fondazione Prada

51

“FAMOUS ARTISTS FROM CHICAGO. 1965-1975”
Ph. Rober to Marossi
Cour tesy Fondazione Prada

In its permanent headquar ters in Milan, opened in 2015 and designed byarchitecture firm OMA, a series of anthological and retrospective shows washeld throughout 2017, along with site-specific installations, film festivals andan experimental vir tual reality installation. The second and third chaptersof the “Slight Agitation” exhibition was presented, which was conceived by
the Fondazione’s Thought Council, with installations realized by Pamela
Rosenkranz and by the Gelitin group, and a show devoted to the Chicago ar t
scene after WWII, curated by Germano Celant, with sections about Leon
Golub, H.C. Westermann and the group known as Chicago Imagists. The
Cinema at the Milan venue hosted two film festivals, one about the worksof Alexander Kluge, the other devoted to the experimentation carried out
by the New American Cinema authors.
The Fondazione developed the “ TV 70: Francesco Vezzoli guarda la Rai”
exhibition in collaboration with RAI, a project that explored Italian television
production during the 1970’s, through the eye of ar tist Francesco Vezzoli.
TV 70: FRANCESCO VEZZOLI GUARDA LA RAI
Ph. Delfino Sisto Legnani and Marco Cappelletti
Cour tesy Fondazione Prada52

TV 70: FRANCESCO VEZZOLI GUARDA LA RAI
Ph. Delfino Sisto Legnani and Marco Cappelletti
Cour tesy Fondazione Prada

53

The show was accompanied by “Maratone TV 70”, a selection of the mostpopular TV shows of the time.
Director Alejandro G. Iñárritu realized “CARNE y ARENA (Vir tually Present,
Physically Invisible)”, a vir tual reality installation produced by LegendaryEnter tainment and Fondazione Prada. Included in the Official Selection at the70th Cannes Film Festival, this innovative multimedia project, harmonious
symbiosis between the ar tistic talent of the director and advanced tools oftechnology, received a special Oscar by the Academy of Motion Picture Ar ts
and Sciences in Los Angeles.
Fondazione Prada’s program also included the three Curate Award winning
projects (“Extinct in the Wild” by Michael Wang presented in Milan,“Driftwood, or how we sur faced through currents” by Evelyn Simons inAthens and “Mutterzunge” by Adnan Misal in Berlin) and the “ The Prada
Double Club Miami”, an installation conceived by Carsten Höller as a realnight club, opened in Miami for three nights.
Along with its exhibition and cultural activities, Fondazione Prada hascontinued to promote a new workshop series at the Accademia dei bambini,each conceived by a different “master ” from a specific discipline, amongwhom were ar tist Mario Airò and calligrapher Chen Li.
The program at the Osservatorio, the exhibition space opened in December
2016 at the Galleria Vittorio Emanuele II and devoted to photography, hascontinued with solo shows by Japanese ar tist Satoshi Fujwara and Italianphotographer Stefano Graziani.

QUESTIONING PICTURES: STEFANO GRA ZIANI
Ph. Delfino Sisto Legnani and Marco Cappelletti
Cour tesy Fondazione Prada

54

4.3 PRADA AND ARCHITECT URE: RONG ZHAI RESIDENCE
Demonstrating Miuccia Prada and Patrizio Ber telli’s respect and admiration
for Chinese cultural heritage, in 2011 Prada initiated the restoration of theRong Zhai residence, historical building of 1918 in the central district ofShanghai, which was completed in 2017. The Rong Zhai renovation embodies
truly global cultural collaboration among Prada, Western architects, scholars
and Chinese craftsmen.

“Architecture has always been a sourceof inspiration for Prada.
The analysis of practical, commercial and historic implicationsof buildings has always had a crucial role in the developmentof Prada’s activity, through a profound commitment tocontemporary architectural experimentation projects andrigorous historic preservation.

Notably, China — the country andhow Europeans perceive it — has
always been part of the brand’s
imagery.
Through the expansion of the various cultural activities of
the company and the Fondazione Prada, we have sought
oppor tunities to expand our explorations in architecture andother ar tistic fields in China.

This was the principle that led us toRong Zhai,

the historic residence capable to properly embody our ongoingcommitment to Chinese culture and Sino-European dialogue”
Miuccia Prada and Patrizio Ber telli

RONG ZHAI RESIDENCE
Ph. Agostino Osio

55

RONG ZHAI RESIDENCE
Ph. Agostino Osio56

Declared a cultural landmark in 2004 and included in the list of Shanghai’s
most impor tant historic buildings in 2005, Rong Zhai was unveiled for the
first time with a calendar of events taking place in October 2017, which
included an exhibition illustrating the restoration process of the mansion as
well as Prada’s previous architectural explorations.
This project, as well as the restoration of the Galleria Vittorio Emanuele in
Milan and Ca’ Corner della Regina in Venice, testifies to the Group’s interestin the recovery and requalification of historic buildings.

4.4 OTHER SPECIAL PROJECTS
Miuccia Prada’s interest in cinema, as a contemporary form of ar t, has
led to creative collaborations through which numerous shor t-films. The
series, called “ The Miu Miu Women’s Tales”, include four teen shor t movies
at December 2017, with which internationally renowned female directors
with different intellectual backgrounds explored the female universe.
The interaction with the world of cinema has given rise to several otherinitiatives, including film productions on specific topics with international
directors such as Thunder Per fect Mind by Jordan and Ridley Scott in 2006,
A Therapy by Roman Polanski in 2012, Castello Cavalcanti by Wes Anderson
in 2013 and, most recently, Past Forward by Oscar-winning director David
O. Russell in 2016.

RONG ZHAI RESIDENCE
Ph. Agostino Osio57

M I U M I U W O M E N ’ S TA L E
CARMENPh. Brigitte Lacombe
Courtesy Miu Miu

58

5 . AT O N E W I T H T H E C O M M U N I T Y

5.1 E N V I R O N M E N TA L P R O T E C T I O N
Env i ro n m e n t a l p rote c t ion i s one of th e i nteres t s of th e Pr ada Group, which fe e ls re sponsible for e ngaging in andcu l t i vat i n g v i r t uou s b e havi ors th at contr i bute to i t s sus t ai nable grow th and are example s of good pr act ice within thee nt i re i n du s tr y.

The commitment to respect the environment is a key element of the Code of

CO 2 emissions

Ethics, applied without distinction both within the organization, by constantly
raising staff awareness, and with third par ties working with the Group.
The main direct impact of the Group’s business originates from the useof energy for offices, factories, logistics centers and stores in the various
par ts of the world. The objective is to reach ever higher levels of energy
efficiency and continuously pursue new ways to reduce waste.
In terms of compliance towards environment laws and regulations, the PradaGroup did not receive significant fines or non-monetary sanctions during
the year.

units

2015

2016

2017**

Direct emissions (Scope 1)

ton CO2

5,381

5,431

5,456

Buildings

ton CO2

4,464

4,616

4,651

Means of transport (owned)

ton CO2

917

815

806

Energy – indirect emissions(Scope 2)*

ton CO2

73,83573,617

71,240

Other indirect emissions –Means of transport (leasing)(Scope 3)

ton CO2

2,799

2,443

2,381

* The data on CO 2 emissions deriving from electricity consumption for 2016 and 2015 differ from thosepublished in the Prada Group 2016 Corporate Responsibility Report, following the update of the emission
factors (source: terna 2015).
** The data for 2017 are re-proportioned over a 12-month period in order to make them comparable withprevious years.

In the past few years, a long-term plan has been implemented to makeenergy consumption in both the industrial and retail environment increasingly

5 .1 .1 E N E R G Y C O N S U M P T I O N A N D C O 2 E M I S S I O N S
In 2017 5 the Prada Group repor ted electricity consumption of 148,108 MWh,down over the three-year period (-3.5%); gas consumption for 2,367,905 m 3 ,slightly up compared to 2015 (+3.7%). Diesel and kerosene consumption,
mainly used for transpor tation (owned and leased), amounted to 1,203,669
liters, down compared to 2015 (-14.2%).

The initiatives of the plan include:
•

units

2015

2016

2017**

Gas*m

2,283,624

2,361,125

2,367,905

Diesel and Kerosenel1,403,059

1,230,361

1,203,669

Electricity energy*

KWh

153,502,779

153,049,412

148,107,827

maximization of self-generated energy through the development ofprojects focused on photovoltaics;•

evaluation of energy efficiency projects in ESCo (Energy Saving Company)
par tnerships;•

installation of digital multimeters for monitoring and optimization ofelectricity consumption;* Data on electricity and gas consumption are estimated.
** The data for 2017 are re-proportioned over a period of 12 months in order to make them comparablewith previous years•

The CO 2 emissions from electricity, natural gas and fuel consumption are•

a strong campaign to definitively and completely light areas with lowconsumption LED bulbs;

repor ted in the table below: direct emissions (scope 1), i.e. those derivingfrom the consumption of natural gas and fuel for vehicles owned, amounted

purchasing electricity from traders using cer tified renewable sources(100%);•

Energy Consumption

3

sustainable through efficiency measures and greater use of renewable energy.

gradual replacement of all air conditioners with latest-generation highenergy efficiency systems;•

gradual installation of inver ters on the electric motors that lack them.

to 5,456 tons, slightly up compared to 2015 (+1.4%) above all due to higher
gas consumption; indirect energy emissions (scope 2) amounted to 71,240

P H O T O V O LTA I C S Y S T E M

tons, down compared to 2015 (-3.5%) due to lower electricity consumption;

At December 31, 2017 there were 7 photovoltaic plants in operation, on

the other indirect emissions (scope 3), relating to the fuel consumption of

the coverage of the same number of industrial buildings, for 1.2 MW of

the leased fleet, amounted to 2,381 tons, down compared to 2015 (-14.9%).

total power and, in the eleven-month period, produced energy equal to5

In order to compare the data on energy consumption and emissions over the three-year period, the following
are the figures for the 2017 period, re-proportioned over 12 months.

60

1,232.6 MWh, of which 63% was self-consumed and the remaining 37%
was fed into the grid. Approximately 86% of the energy was produced by
the Scandicci production site and the new Logistics Hub, both located in
Tuscany. Fur thermore, the expansion of the plant in the Logistics Hub wascompleted for an additional 880 kWp, and the connection is expected in thefirst quar ter of 2018. The renewable energy investment plan involves theconstruction of new plants in the coming years.
F A C T O R Y H E AT I N G A N D A I R C O N D I T I O N I N G S Y S T E M S
In 2017 the plan to replace the cooling and heating systems of industrial andcorporate buildings continued through the installation of new machinerythat guarantees a reduction in energy consumption. In addition to theseinvestments, during the year corrective actions were taken on the remaining
equipment to optimize the hours of operation. Personnel training was carriedout focusing on appropriate, rational electricity use.
RELAMPING PROJECT
Since 2014 the Group has been pursuing an impor tant project to replace store
lighting systems with LED technology (“Relamping” project). The program
initially led to the replacement of fluorescent lamps in furnishings anddisplays, while in a second phase, still in progress, also involves interventions
on halogen and metal halide lamps in the ceiling lighting.
Thanks to this initiative, by December 31, 2017 almost all the Group’s directly
operated stores were using LED lamps in the furnishings and displays, while
about a third of them were using LED lamps for all the store lighting.
Approximately 10% direct energy savings were obtained for furnishings and
70% for ceilings. Finally, indirect energy savings result from the reduced
heat produced by the lamps, which enables Prada to use less air conditioning
in the summer, and from the reduced waste because LED lamps last much
longer on average than fluorescent or halogen lamps, and in contrast to thelatter do not contain any mercury.

61

MONTEGRANARO

In 2017 the “Relamping” project was extended to the industrial sites in

The Prada Group focuses on promoting internal industrial waste collection

Tuscany and the corporate sites in Milan and the savings achieved in terms

methods and standards that can ensure their reuse and recycling or disposalof energy consumption were around 55%.

in accordance with the best practices.

L E E D ( L e a d e rs h i p i n En e rg y a n d En v i ro n m e n t a l D e s i g n )5 .1 . 3 U S E O F R E C Y C L E D A N D C E R T I F I E D PA P E R

In 2017, the Prada Group achieved LEED Gold cer tification for 2 PradaIn the eleven-month period ended at December 31, 2017 the Prada Group

stores, in Swit zerland and Malaysia. As at December 31, 2017 the Group

used 3,437 tons of material to package products worldwide, while in thereached a total of 9 cer tifications and estimates that it will be able to obtain

twelve-month period ended January 31, 2017 the consumption was 3,460

others in 2018.

tons. In the eleven months, 84% of the total packaging consumption was
represented by paper cer tified by the Forest Stewardship Council (FSC) and

ENERGY BOX PROJECT

recycled paper.

In 2017 the Group also launched the “Energy Box” project, which is a longterm plan for industrial sites, offices and stores aimed at optimizing energy
consumption. The project is based on the installation of multi-meters thatallow constant monitoring and the understanding of consumption information

Packagingconsumption (tons)

through accurate comparisons between periods. The data obtained from thesetools can reduce waste, identify discrepancies between actual consumption
and consumption in the bill, optimize maintenance and simplify spending
forecasts. As at December 31, 2017, there were 112 multi-meters installedin Europe and 114 in Asia Pacific. The Group estimates that in 2018 the

84%

82%

77%

Recycled or
Cer tified paper

Recycled or
Cer tified paper

Recycled or
Cer tified paper

installation plan will continue also in America.
5 .1 . 2 W A S T E
The Group recognizes the impor tance of responsible natural resource use
and waste management.

23%

Other paper

18%

Other paper

16%

Other paper

The Company conducted an analysis of the processes carried out and waste
produced in each manufacturing phase of the factories, and subsequently
set up a system to manage the internal cycle of waste transpor t, collection,

2015

2016

2017

temporary storage and disposal. The analysis enabled to optimize theavailable resources, thereby reducing waste production and increasing waste
recycling. Moreover, the new procedures implemented enabled the PradaGroup to recycle more paper, plastic, glass and printer car tridges not justat the factories but also at the Group’s offices.
62

5 . 2 P R E S E R VAT I O N O F T H E T E R R I T O R Y
Respect for the places has been a guiding principle for the Prada Group fromthe star t.Reducing land take, renovating existing structures and working
toward building requalification have inspired the decisions made in morethan thir ty years of the industrial development.
With the belief that new construction can impact an area considerably, and thatsuch a decision must be taken only when necessary, the Prada Group prefers
to purchase and salvage existing buildings. Indeed, the few newly constructedbuildings fit harmoniously into the local areas, without causing disruption.
The Prada Group has more than 200,000 m 2 of production facilities andwarehouse space, including more than 181,000 m 2 in Italy. Among these, 4
are new buildings, 3 are renovations of industrial archaeology and many arecases of salvage of degraded sites that had been abandoned for many years.
Four of the most impor tant industrial projects were assigned to architect
Guido Canali, master in Italy of sustainable architecture.
5 . 2 .1 VA L O R I Z AT I O N I N T H E I N D U S T R I A L D E V E L O P M E N T
In 2015 a three-year investment plan was implemented to re-qualify andreorganize the Group’s manufacturing structure in order to preserve ar tisanal
know-how, suppor t the technical development of production processes andimprove the quality of work environments. In 2015 and 2016, numerous
renovations were carried out, followed in 2017 by the refurbishment of thefactories in Città di Castello, Montone and Arezzo, Italy.
EXPANSION O F THE M ONTEGRANARO F ACTORY
IN THE M ARCHE REGION , ITA LY
The Montegranaro project involved the complete renovation of the interior,a total of 3,600 m 2 , and wide-ranging modifications to the outdoor
environment, with the installation of a terraced system providing spacefor maneuvering vehicles and for 75 new car parking spaces. To complete
the refurbishment plan, the plant will host a raw materials warehouse, two
63

MONTEGRANARO

service laboratories for finished product quality control, a manufacturing
workshop and a staff canteen.
At December 31, 2017 the factory employed 197 employees.
T O R G I A N O ( P E R U G I A ) F A C T O R Y, I TA LY
At the Torgiano factory in Perugia, the Prada Group’s historic knitwear
manufacturing hub, an extensive restructuring and internal reorganization
project has been completed including the opening of a new 2000 m 2 building.
The aim of this operation was to bring in a few production lines and activities
previously outsourced in order to obtain greater efficiency and quality control
for the production process and the finished product. This was achieved byexpanding the existing structure through both the acquisition of equipment
and machinery and staff hiring.
The project, implemented in steps, was first realized with the opening of the
new building, designed with a special focus on work quality, in terms of space,fixtures and lighting, with overhead lighting and floor-to-ceiling windows
fitted for this purpose. The second step entailed thorough restoration of theexisting building - now connected to the new one - involving the structures,new fixtures, floors and windows.
At December 31, 2017 the factory had 105 employees.
N E W L E VA N E L L A A N D B U R E S TA C A N T E E N S I N A R E Z Z O , I TA LY
Glass walls, gardens, relaxation areas, exquisite finishing touches, furnishingsand cutting-edge technology are the key features of the new staff canteensin the Levanella and Buresta industrial sites, both located in the provinceof Arezzo in Tuscany and designed to offer the highest quality service andbest possible use of space.
The Levanella canteen is now able to serve an average of 400 meals per day,and in addition to the catering area it has a newly designed relaxation area
64

MONTEGRANARO

with cafeteria equipment, seating and foosball that is completely separate
from the other spaces, and whose purpose is to encourage communicationand socialization among colleagues.
The Buresta canteen has undergone refurbishment by Studio Canali thathas led to the creation of a garden, used as a relaxation area, green areas
and a garden roof.
5.2.2 LOGISTICS HUB
The new Levanella logistics hub, located in Tuscany, is part of a major plan toreorganize the warehousing and distribution of finished products. Designed by
Guido Canali, it is environmentally friendly, worker friendly, and responsibly
integrated into the community thanks to border plantings, artificial dunes,roof gardens, reflecting pools, picture windows and nature paths.
Green areas cover more than 70% of the total sur face of this facility.
Specifically, 1,030 poplar trees were used to make a 1,200 m pedestrianring that surrounds the entire area and 35 mulberry trees provide shade to
the employee parking lots. Finally, a 1,000 meter-long hedge was created,consisting of shrubs typical of Mediterranean vegetation and which, once
finished, will surround all the buildings and shield them from view. As of
December 31, 2017 about 360 m has been built.
In terms of energy-efficiency features, the logistics hub is a reference point
for the Group’s cutting-edge industrial structure since it was built using asolar panel roof (expected to generate some 561 MWh/year), LED lighting,an energy-saving smar t home system, low-loss transformers, high-efficiency
generators and a geothermal plant. Construction began in 2016 and in thesame year the first of the two warehouses was finished; the second will becompleted in 2018.

65

L E VA N E L L A

6 . NOTES ON THE METHODOLOGY

6 . 1 T H E M AT E R I A L A S P E C T S I D E N T I F I CAT I O N
I n con duc t i n g i t s bu s i nes s th e Pr ada G roup i nter ac t s wi th many stake holde rs, all of which can dire ctly or indire ctly
i nf lue n ce o r b e i n f luenced by th e ach i evement of bus i nes s obje ctive s.
Af te r m a p p i n g ou r s t a keh ol ders from th e begi nni ng to th e e nd of the value chain, the Group de te r mine d which aremost i m p o r t a n t o n th e bas i s of th ei r :• i nf luen ce o n Pr a da: abi l i t y to affec t th e Company ’s s tr ate gic or ope r at ional de cisions;• dependence on Prada: extent to which the stakeholder depends on the Company’s decisions, products and activities.

This process identified many key stakeholders in the following categories:

The depth and detail given to the various topics reflect the outcome ofa materiality analysis carried out in the last months of 2015: a processof identifying, evaluating and ranking the sustainability aspects that are

Licensees andBusiness Par tners
Landlords

relevant to our stakeholders and that influence our ability to create value

Customers

Suppliersin the shor t, medium and long-term.

Universities

The materiality analysis is a two-phase process that involves:
Employees

Associations

Lenders andFinancial Community

1.

understanding Prada's business and strategic context and to describing

Authorities andRegulatory Bodies

Shareholders

Ta x A u t h o r i t i e s

Tr a d e U n i o n s

its main environmental, economic and social impacts;
2.

Distributors
Media andInfluencers

To identify the material aspects that favor the achievement of long-term

stakeholders (external materiality).
A comprehensive list of sustainability issues for the Prada Group was
identified by:•mapping the key stakeholders and analyzing their concerns;•

per forming a benchmark analysis against Italian and international fashionand luxury firms, producing a list of the most common sustainability

goals – which for the Prada Group consist of business growth with continuous

issues in the industry;

improvement in product quality and work organization - while satisfying
the interests of our stakeholders, Prada gathered perspectives from the

Ranking: putting these aspects in order on the basis of their relevancefor achieving business goals (internal materiality) and concern toCommunity

Competitors

Identifying sustainability issues: determining which issues are key to•per forming a sector-based press review to present the perception ofvarious depar tment heads who interact with stakeholders on a daily basis.

public opinion for each sustainability issue. The analysis was per formed

Together with the materiality analysis (see following paragraph), this helped

so that each issue could also be assessed in terms of its impact outside

determine the sustainability issues of relevance both for the Company andthe Company;

its stakeholders.

•and procedures) to understand the business point of view with respect

MATERIALIT Y ANALYSIS

to various sustainability issues;

For 2017, the Prada Group has drawn up its Social Responsibility Repor t
according to the latest sustainability repor ting guidelines of the Global

reviewing internal documents (Annual Repor t, Code of Ethics, policies•

analyzing the sustainability issues included in the GRI-G4 guidelines.

Repor ting Initiative (GRI-G4) and following the "ESG Repor ting Guide" ofthe Hong Kong Stock Exchange.

Once the sustainability issues were defined, they were ranked for materiality
in order to include the most significant ones in this repor t. This was achieved67

by interviewing key depar tment heads, who assigned priority rankings to
the issues according to their significance for Prada and its stakeholders.

Of the more notable results:•

the most significant aspect proved to be product creativity and excellence,

In accordance with the GRI-G4 guidelines, the aspects were ranked in terms

which demonstrates the fundamental impor tance—for the Group andof their impact both within and outside the organization, i.e. by extending

its stakeholders alike—of the high standards of quality and style thatthe analysis to the entire value chain.

accompany Prada merchandise along the entire value chain;

The input from the depar tment heads was then integrated with other criteria•

from outside the management team's perspective. In par ticular:•(business strategy and economic per formance, trademark protection),
as is the management of human capital (know-how preservation andinternal materiality was also assessed considering the Prada Group’s

skill development, quality of the working environment, attraction andcommitment to the individual issues and their impact on its various forms

retention of talent) and the customer experience;of “capital”, as defined in the Integrated Repor t (financial, manufactured,
natural, human, intellectual and social and relationship capital);•

aspects relating to long-term value creation are among the most significant•

aspects associated with the production process and its impact
throughout the supply chain are the most impor tant for stakeholders

in assessing external materiality (significance for stakeholders), the(product responsibility, human rights and employee well-being along theanalysis focused on the various aspects relevant to the Prada Group’s specificsupply chain, occupational health and safety, raw materials sourcing,

sector.

traceability and responsible supply chain management).

The material aspects for the Prada Group were defined as the intersectionof significance for the Company and significance for the stakeholders, as
shown in the following matrix.

Significance for Stakeholders

more

more

Significance for Pradavarious business divisions, the relevant issues highlighted above were also
confirmed as such for the 2017 fiscal year to which this repor t refers.BasedMaterial aspects

less

During the meetings that the CSR working group carried out with the- Product creativity and excellence- Product responsability- Know-how preservation andskills development- Relationship with the territory- Attraction and retention of talents- raw materials sourcing- Trademark protection- Business strategy and economic
per formance- Human rights and employee
wellbeing in the supply chain- Occupational health and safety- Energy and climate change- Traceability and responsible supply
chain management - social impacts- Quality of the working environment- Compliance and risk prevention- Diversity and equal oppor tunity- Protection and enhancement of thear tistic and cultural heritage- Customer experienceon the current coverage of the GRI’s General Standard Disclosures andSpecific Standard Disclosures relating to material aspects, we have chosen
to implement the GRI-G4 standard using the “In accordance - Core” option.
References to the Hong Kong Stock Exchange’s ESG Repor ting Guide (Main
Board Listing Rules - Appendix 27) are listed in the Content Index 6 .
The following table sets for th the material aspects defined in the Global
Repor ting Initiative (GRI) G4 Sustainability Repor ting Guidelines (Standard
Specific Disclosures): it repor ts the material aspects for Prada with therelated aspect boundaries and any limitations regarding non-extension of
the disclosures to outside the organization.
6

No reference is made to General Disclosure A3 (Environment and Natural Resources) and to Comply or Explain
provisions A2.2 and A2.4 (related to the management of water resources) of the ESG Reporting Guide of theHong Kong Stock Exchange as, currently, these topics have not been classified as material for the Organizationaccording to the GRI – G4 materiality assessment. On the contrary, for information completeness, the General
Disclosure B7 (Anti-corruption) is treated in the paragraph “Compliance and risk management”, although the
aspects related to corruption are not material for the Group.

68

ASPECT BOUNDARIESGRI - G4 MATERIAL ASPECTSASPECT BOUNDARIES LIMITATION

6.2 THE REPORTING PROCESSWITHIN THE
ORGANIZATIONOUTSIDE THE
ORGANIZATIONWITHIN THE
ORGANIZATIONOUTSIDE THE
ORGANIZATION

Economic Per formance

Group

-

-

-

Procurement practices

Group

-

-

-

Materials

Group

-

-

-

Group

Independent
clients (*) and
Suppliers-

Not extended to
Independent clients (*)
and Suppliers

EnergyGroup

Independent
clients (*) and
Suppliers-

Not extended to
Independent clients (*)
and Suppliers

Environmental compliance

Group

-

-

-

Employment

Group

-

-

-

Diversity and equal
oppor tunity

Group

-

-

-

Equal remuneration for
women and men

Group

-

-

-

it should be noted that the repor ting period for 2017 consists of eleven

Training and education

Group

Industrial Suppliers-

Not extended to Industrial
Suppliers

months and not twelve as for 2016 and 2015. For this reason, for some

Occupational health andsafetyGroup

Independent
clients (*) and
Suppliers-

Not extended to
Independent clients (*)
and Suppliers

Supplier assessment for labor
practices

Group

-

-

-

The per formance indicators were collected on an annual basis for 2015 andSupplier human rights
assessment

Group

-

-

-

2016 years, while for 2017 the repor ting is for eleven months (February

Non - discrimination-

Industrial Suppliers-

Not extended to Industrial
Suppliers

Emissions

SCOPE
This document is the Prada Group’s fifth - third according to the GRI - G4
principles - Social Responsibility Repor t and provides a description of themain initiatives under taken in fiscal year 2017, i.e. from February 1, 2017,
to December 31, 2017, and the per formance trends for the three-year period
2015-2017 where available; par ticularly significant initiatives and eventsof fiscal year 2018 already known at the repor ting date are also included.
During the year, the Shareholders’ Meeting of Prada spa approved the changeof the end of the annual repor ting period from January 31 to December 31
of each year, thus realigning the fiscal year to the calendar year. Therefore,

per formance indicators it was not possible to return a correct interpretationof the three-year trend.

2017 - December 2017), if not differently indicated in the text; the repor tingcycle is set according to an annual frequency. The repor ting boundary is theFreedom of association andcollective bargaining-

Industrial Suppliers-

Not extended to Industrial
Suppliers

Child labor-

Industrial Suppliers-

Not extended to Industrial
Suppliers

Forced or compulsor y labor-

Industrial Suppliers-

Not extended to Industrial
Suppliers

Compliance - productresponsibility

Group

-

-

-

Prada spa, together with its subsidiaries collectively the “Prada Group”, is a

Product and service labelling

Group

-

-

-

joint-stock company incorporated and domiciled in Italy with headquar ters

Customer health and safety

Group

-

-

-

in Via Antonio Fogazzaro 28, 20135 Milan, whose share capital is 80%-owned

Compliance - society

Group

-

-

-

by Prada Holding spa, a company domiciled in Italy, while the remaining(*) Independent clients mean Department stores, multi-brand stores and Franchiseessame as the information repor ted in the 2017 Annual Repor t, or Prada spa
and its subsidiaries, with the exception of some data expressly indicated in
the text.

shares (20%) are listed on the Main Board of the Hong Kong Stock Exchange.
PRINCIPLES FOR ENSURING SUSTAINABILIT Y REPORTING QUALIT YThis document was drawn up with the purpose of repor ting both thesuccessful aspects and the weaknesses of the Prada Group, with a view
toward prospective improvement.
69

The information and indicators included aim to provide a balanced por trayal

became available after such Repor ts were published. For the same reason,of the Group’s sustainability per formance and initiatives.

the 2017 data reflects the best possible estimate using the data available
when the 2017 Social Responsibility Repor t was published.

The process of repor ting, collecting and aggregating the data was structured
with the ultimate purpose of enabling stakeholders to compare andcomprehend fully the information contained herein.
CALCULATION METHODOLOGYThe Prada Group involved all corporate functions and engaged Ernst &Young Italy’s Climate Change and Sustainability Service team to determine
the contents of the sustainability repor t.
With respect to the calculation methodology:- the injury rate is the ratio between the total number of hours lost due toinjuries and the total number of working hours;- where environmental data was unavailable, conservative estimates wereused that resulted in choosing assumptions associated with the least
positive environmental per formance for the Company;- greenhouse gas emissions were calculated using the following emission factors:• emissions scope 1: emission factors taken from the list of Italianstandard parameters published by the Ministry of Environment andProtection of Land and Sea;
• emissions scope 2: emission factors taken from the Terna International
Comparison on 2015 Enerdata data;• emissions scope 3: emission factor taken from the list of Italian standard
parameters published by the Ministry of Environment and Protectionof Land and Sea.
Finally, carbon dioxide is the only greenhouse gas considered.
The 2015 and 2016 data may differ slightly from the data published in the2015/2016 Social Responsibility Repor ts due to the aggregation of data that70

7. GRI CONTENT INDEXFOR “IN ACCORDANCE” CORE OPTIONINDICATOR

References toHKEx ESG
reporting guide

DESCRIPTIONREFERENCESOMISSIONSINDICATOR

References toHKEx ESG
reporting guideStatement from the most seniordecision-maker about the relevanceof sustainability to the organizationand the organization's strategy

G4-1

Pag. 3

G4-18

Pag. 66-69

G4-19

List of all the material aspects
identified

Pag. 69

G4-20

Organizational profile
G4-3

Name of organization

Pag. 69

G4-4

Primary brands, products and/or
services

Pag. 4; 9-12; 24-31

G4-5

Location of the organization’s
headquarters

G4-6

Number of countries where
the organization operates, andnames of countries where either
the organization has significant
operations or that are specifically
relevant to the sustainability topics
covered in the Social Responsibility
ReportPag. 4; 19-21

G4-7

Nature of ownership and legal form

Pag. 69

G4-8

Markets served

Pag. 4; 9-12

G4-9

Scale of the organization

Pag. 9; 12-14; 19;
34-38

G4-10

Total number of employees by
employment contract, employment
type, region and gender

Pag. 39-42

G4-11

Percentage of total employees
covered by collective bargaining
agreements

Pag. 42-44

G4-12

Describe the organization’s supply
chain (number of suppliers, volumes
and sourcing markets)

Pag. 9-12; 19-22

Significant changes during thereporting period regarding theorganization’s size, structure,
ownership, or its supply chain

Pag. 9; 12-14; 69

G4-14

Explanation of whether and how the
precautionary approach or principle
is addressed by the organization

Pag. 17-18; 70

G4-15

Externally developed economic,
social and environmental codes ofconduct, principles and charters to
Pag. 14; 22-23
which the organization subscribes or
which it endorses

G4-13

G4-16

KPI B1.1

KPI B5.1

Memberships of national and/orinternational trade associations

Pag. 69

The Group's main
partnerships are
with: Assonime,
CameraNazionale della
Moda Italiana,
Assolombarda
and Confindustria
Toscana

G4-21

G4-17

Pag. 69

Aspect boundary within theorganization for each material
aspectAspect boundary outside theorganization for each material
aspectOMISSIONS

Pag. 69
Pag. 69

G4-22

Effect of any restatements of
information provided in previous
reports, and the reasons for such
restatements

Pag. 69

G4-23

Significant changes in the scope andaspect boundaries

Pag. 69

G4-24

List of stakeholders groups engaged
by the organization

Pag. 66-67

G4-25

Basis for identification and selectionof stakeholders with whom to engage

Pag. 66-67

G4-26

Approach to stakeholders
engagement

Pag. 66-67

G4-27

Key topics and concerns that havebeen raised through stakeholders
engagement, and how theorganization has responded to those
key topics and concerns, including
through its reporting

Pag. 66-69

G4-28

Reporting period for information
provided

Pag. 69

G4-29

Date of most recent previous Social
Responsibility Report

Pag. 69

G4-30

Reporting cycle

Pag. 69

G4-31

Contact points and useful
information for questions regarding
the Social Responsibility Report andits contents

Pag. 74

G4-32

Choice of "in accordance" option
and GRI Content Index for the
chosen option

Pag. 68

G4-33

Policy and current practice withThis document isregard to seeking external assurance not submitted tofor the report
external assurance.

Stakeholder engagement

Report profile

Governance

G4-34

Identified material aspects and boundaries
List of all entities included in the
consolidated financial statements
and those not covered by the Social
Responsibility Report

REFERENCES

Explanation of the process fordefining the report content and how
the organization has implemented
the related reporting principles

GENERAL STANDARD DISCLOSURE
Strategy and analysis

DESCRIPTION

Governance structure of theorganization, including committeesof the highest governance bodyCommittees responsible fordecision-making on economic,
environmental and social impacts

Pag. 15-17

Internally developed mission,values, codes of conduct,significant principles for the
economic, environmental and social
performance, and progress of theirimplementation

Pag. 14; 22-23

Ethics and integrity

G4-56

72

MATERIAL ASPECTS
INDICATOR

References toHKEx ESG
reporting guide

DESCRIPTIONREFERENCES

SPECIFIC STANDARD DISCLOSURESOMISSIONS

References toHKEx ESG
reporting guide

INDICATORREFERENCES

G.D. B2
KPI B2.3

Disclosures on Management Approach

Pag. 47-48

G4-LA5KPI B2.3

Percentage of total workforce
represented in formal joint
management–worker health andsafety committees that help monitor
and advise on occupational healthand safety programs

Pag. 47

G4-LA6KPI B2.1
KPI B2.2

Rate of injury, occupational
diseases, lost days, absenteeism,and total number of work-related
fatalities, by region and by gender

Pag. 47

Disclosures on Management Approach

Pag. 33-34

G4-DMAECONOMIC PERFORMANCE
G4-DMA

G.D. B8

Disclosures on Management Approach

Pag. 12-14; 50-57

G4-EC1KPI B8.2

Direct economic value generated
and distributed

Pag. 13-14

G4-DMA

Disclosures on Management Approach

Pag. 20-22

G4-EC9Percentage of the procurement
budget used for significant locations
Pag. 21of operation spent on suppliers local
to that operation

PROCUREMENT PRACTICESENVIRONMETAL PERFORMANCE INDICATORSTRAINING AND EDUCATION
G4-DMA

RAW MATERIALS
G4-DMA

G.D. A2

Disclosures on Management Approach

Pag. 20-21; 62

G4- EN1

KPI A2.5

Total weight or volume of raw
materials used

Pag. 21; 62

ENERGY

G4-LA9

G.D. A2

Disclosures on Management Approach

Pag. 59-65

G4-EN3

KPI A2.1

Energy consumption within theorganization

Pag. 60

G4-EN6KPI A2.3

Reduction of energy consumption

Pag. 60-65

EMISSIONS

G.D. B3
KPI B3.1
KPI B3.2

Average hours of training per year
per employee, by employee category Pag. 34
and by gender

G4-LA12

G.D. B1

Disclosures on Management Approach

Pag. 16-17; 40-42; 46

KPI B1.1

Composition of governance bodies
and breakdown of employees per
employee category according to
Pag. 16-17; 41-42;
gender, age group, minority group46
membership, and other indicators ofdiversity

EQUAL REMUNERATION FOR WOMEN AND MEN

G4-DMA

G.D. A1

Disclosures on Management Approach

Pag. 59-65

G4-EN15KPI A1.1
KPI A1.2

Direct greenhouse gas emissions(scope 1)

Pag. 60

G4-EN16KPI A1.1
KPI A1.2

Energy indirect greenhouse gas
emissions (scope 2)

Pag. 60

G4-EN17KPI A1.1
KPI A1.2

Other indirect greenhouse gas
emissions (scope 3)

Pag. 60

G4-DMA

G.D. B1

G4-LA13Disclosures on Management Approach

Pag. 46

Ratio of basic salary andremuneration of women to men by
employee category, by significant
locations of operation

Pag. 46

SUPPLIER ASSESSMENT FOR LABOR PRACTICES
G4-DMA

G.D. B5
KPI B5.2

Disclosures on Management Approach

Pag. 14; 22; 47-48

COMPLIANCE
G4-DMA

G.D. A1

Disclosure on Management Approach

Pag. 59-60

G4- EN29

G.D. A1

Cases of non-compliance withenvironmental laws and regulations

Pag. 60

Significant actual and potential
negative impacts for labor practices
in the supply chain and actions
taken

Pag. 22

G4-DMA

Disclosures on Management Approach

Pag. 14; 22; 47-48

G4-HR3

Total number of incidents of
discrimination and corrective
actions taken

G4-LA15KPI B5.2

SOCIAL PERFORMANCE INDICATORSLABOR PRACTICESIn 2017, after the review of thequalified vendor list procedureaccording to criteria that include
labor practices, the Prada Group has
begun its gradual application to its
own supply chain. At the date of thisdocument, the information collected
is yet not complete, therefore theindicator is partially covered

HUMAN RIGHTSEMPLOYMENTG4-LA2At the moment the informationon the average number of training
hours by category is not available.
Prada is committed to collect the
information for the future.

DIVERSITY AND EQUAL OPPORTUNITY
G4-DMA

G4-DMA

G4-DMAOMISSIONSOCCUPATIONAL HEATH AND SAFETYECONOMIC PERFORMANCE INDICATORSKPI B5.1

DESCRIPTIONNON-DISCRIMINATION
G.D. B1

Disclosures on Management Approach

Pag. 39-45

G.D. B1

Benefits provided to full-time
employees that are not provided totemporary or part-time employees,
by significant locations of operation

Pag. 42At this time the information needed
to cover the indicator (aspectboundary outside the organization)is unavailable

73

INDICATOR

References toHKEx ESG
reporting guide

DESCRIPTIONREFERENCESOMISSIONS

References toHKEx ESG
reporting guide

INDICATOR

G4-DMA

Disclosures on Management Approach Pag. 14; 22; 47-48

G4-HR4

Operations and main suppliers
identified in which the right toexercise freedom of associationand collective bargaining may beviolated or at significant risk, andmeasures taken to support theserights

G4-HR5KPI B4.1
KPI B4.2

At this time the information needed
to cover the indicator (aspectboundary outside the organization)is unavailable

G4-DMA

G4-PR2

G.D. B6

Disclosures on Management Approach

Pag. 22-23

G.D. B6

Total number of incidents of
non-compliance with regulationsand voluntary codes concerning
the health and safety impacts ofproducts and services during theirlife cycle, by type of outcomes

Pag. 23

PRODUCT AND SERVICE LABELING

Disclosures on Management Approach Pag. 14; 22; 47-48

Operations and main suppliers
identified as having significant risk
for incidents of child labor, andmeasures taken to contribute to theeffective abolition of child labor

Pag. 22

G4-DMAIn 2017, after the review of thequalified vendor list procedureaccording to criteria that include
labor practices, the Prada Group has
begun its gradual application to its
own supply chain. At the date of thisdocument, the information collected
is yet not complete, therefore theindicator is partially covered

G4-PR4

G.D. B6

Disclosures on Management Approach

G.D. B6

Total number of incidents of
non-compliance with regulationsand voluntary codes concerning
Pag. 23
product and service information andlabeling, by type of outcomes

G4-HR6

G.D. B4KPI B4.1
KPI B4.2

KPI B4.1
KPI B4.2

Disclosures on Management Approach Pag. 14; 22; 47-48

Operations identified as having
significant risk for incidents offorced or compulsory labor, andmeasures to contribute to theirelimination

Pag. 22

Pag. 23COMPLIANCE
G4-DMA

Disclosures on Management Approach

Pag. 23

G4-PR9

Monetary value of significant fines
for non-compliance with laws andregulations concerning the provisionand use of products and services

Pag. 23

FORCED OR COMPULSORY LABOR
G4-DMAOMISSIONSCONSUMER HEALTH AND SAFETY

CHILD LABOR
G4-DMA

REFERENCES

PRODUCT RESPONSIBILITY

FREEDOM OF ASSOCIATION

G.D. B4KPI B4.1
KPI B4.2

DESCRIPTION

G.D. B6

In 2017, after the review of thequalified vendor list procedureaccording to criteria that include
labor practices, the Prada Group has
begun its gradual application to its
own supply chain. At the date of thisdocument, the information collected
is yet not complete, therefore theindicator is partially covered

SUPPLIER HUMAN RIGHTS ASSESSMENT
G4-DMAG4- HR11

G.D. B5
KPI B5.2

KPI B5.2

Disclosures on Management Approach Pag. 14; 22; 47-48

Significant actual and potential
negative human rights impacts inthe supply chain and actions taken

Pag. 22SOCIETY

Additional information on this Social Responsibility Repor t may be requested to:

COMPLIANCE
G4-DMAG4 - SO8

In 2017, after the review of thequalified vendor list procedureaccording to criteria that include
labor practices, the Prada Group has
begun its gradual application to its
own supply chain. At the date of thisdocument, the information collected
is yet not complete, therefore theindicator is partially covered

Disclosures on Management Approach Pag. 17-18
G.D. B1
G.D. B2
G.D. B4
G.D. B7

Monetary value of significant fines
and total number of non-monetary
sanctions for non-compliance withlaws and regulations

Pag. 18

PRADA S.p.A.
Via Antonio Fogazzaro, 28
20135 Milan
Italye-mail: csr @pradagroup.com

74

CREDITS:
Pag: 3-19-20-23-24-29-30-31-32-39-42-43-44-45-66-71
Ph. Agostino Osio
Pag: 59-61-63-64
Ph. Francesco Castagna
75