(Hong Kong Stock Code: 1913)

2016 Social Responsibility ReportINDEXLETTER TO THE STAKEHOLDERS

3

� the prada Group�.�
History�.�
2016 highlights		
�.�
Value chain
�.�
Ethics, governance, compliance and risk management

4
4
9
9
13

� STRIVING FOR EXCELLENCE
�.�
Know-how�.�
Customer experience

16
16
28

� WORKPLACE ETHICS
�.�
The workforce
�.�
Employee relations
�.�
Diversity and equal opportunity
�.�
Worker safety throughout the supply chain

32
32
33
34
35

� THE PRADA UNIVERSE		�.�
Fondazione Prada�.�
Gruppo Prada and FAI
�.�
Other special projects

37
37
39
40

� AT ONE WITH THE COMMUNITY
�.�
Environmental protection
�.�
Preservation of the local territory

41
41
43

� NOTES ON THE METHODOLOGY�.�
The material aspects identification
�.�
The reporting process

46
46
49

� GRI CONTENT INDEX FOR IN ACCORDANCE CORE OPTION		

50

LETTER TO THE STAKEHOLDERS
Contemporary society finds itself facing profound, rapid changes in every part of
the world, where the boundaries of nations and cultures, which once constituted aprotective barrier, have been knocked down by new technologies.
As in all great revolutions throughout history, such transformations accentuate thecontradictions of today's world, with the socioeconomic models of the past century
being undermined, widening inequality, eroding values that are becoming distorted tothe point of instigating violent conflict.
Everyone, and especially those responsible for guiding large organizations, in which
we include the Prada Group, has the duty to question the value of one's work in termsof purpose and prospective. No less important, a positive result of our advancement
is the widespread, shared awareness of sustainability, which embraces all aspects ofsociety: economic, political and ethical.
All should provide a contribution, to the extent possible: the Prada Group interprets
this responsibility by aiming to continue to evolve its work in terms of increasing
cooperativeness, using at best its talents: creativity, understood as an expression of
the harmony underlying beauty, quality, innovation and passion transfused by all
those who work, along with the fruits of their labor.
In 2016 the Prada Group embarked on many business initiatives, where importantinvestments were dedicated to quality, strengthening controls over the value chain
and reduction of its environmental impact.
The Group invested in the growth potential of its resources, a fundamental source ofinnovation and excellence, while designing new ways to develop professional skills.
The traditional inclination toward the world of art continues to represent the primarysource of inspiration; at the same time the Group considers it fundamental tocontribute to the promotion of various artistic expressions, dedicating commitment
and resources to such purpose. It renewed its support to the Fondazione Prada,
which used the resources made available for new initiatives in Milan and Venice, ofinternational relevance. Important cultural projects were financed, most importantly
to complete the restoration of the Last Supper by Giorgio Vasari, which returned to its
original splendor for public viewing in Florence.
In perspective, the Prada Group intends to continue along its growth path to offer
its employees the achievement of their aspirations in the workplace, its customers
products of excellent quality, and the community a contribution equaling at least thatwhich Prada has received from civil society.

Milan, June 29, 2017 				Carlo Mazzi
Chairman of PRADA S.p.A.

3

1. THE PRADA GROUP
The Prada Group is one of the world leaders in
the luxury goods sector where it operates with
the Prada, Miu Miu, Church’s and Car Shoe brands
in the design, production and distribution ofluxury handbags, leather goods, footwear, appareland accessories. The Group also operates in theeyewear and fragrance industries under specificlicensing agreements stipulated with industry
leaders, and with the recent acquisition (2014) ofPasticceria Marchesi 1824, it has made its entry
into the food industry, where it is positioned at
the highest levels of quality.
At January 31, 2017, products are sold in 70
countries

worldwide

through620

Directly

Operated Stores (DOS) and a selected network ofluxury department stores, independent retailers
and franchise stores.

�.� HISTORY
The Prada brand dates back to the beginning of
the last century. In 1913, Mario Prada opened aluxury store in the Galleria Vittorio Emanuele II in
Milan, selling leather handbags, travelling trunks,
beauty cases, refined luxury accessories, jewels
and articles of value. Thanks to its exclusively
designed goods, handcrafted using fine materials
and sophisticated techniques, 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 beenable to display the House of Savoy coat of arms
and knotted rope design on its trademark logo.
Over the years, the Prada name gained increasing
renown and prestige.

4The Group saw a turning point in the development of its activities at the end of theSeventies, when Miuccia Prada, Mario Prada’s granddaughter, launched a partnershipwith Tuscan businessman Patrizio Bertelli. This partnership combined creativity andbusiness ideas laying the foundations of the international expansion that was to come.
Patrizio Bertelli broke new ground in the luxury goods sector, introducing a businessmodel in which he kept direct, internal control over all processes, applying excellent
quality criteria across the entire production cycle. Miuccia Prada's creative talent andavant-garde approach attracted the attention of the global fashion industry, 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 1977, Patrizio Bertelli consolidated the production resources that he had built up
over the previous ten years in the leather goods segment and obtained an exclusive
license from Miuccia Prada to produce and distribute leather goods bearing the Pradabrand name. In the following years, the activities of the two families were gradually
brought together within a single Group.
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 a modern architectural setting: a
revolution and a true benchmark for luxury retail.

5Commencing in 1986, new stores were opened in
New York and Madrid, followed by London, Parisand Tokyo.
In response to the growing appreciation for theoffer of Prada products, the women’s range was
extended from leather goods to include the first
footwear collection in 1979 and the first apparelcollection as presented in Milan in 1988.
In 1993 Prada made its debut in the men’ssegment 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 particularly fashionforward and aware of avant-garde. Miu Miu now
offers women’s ready-to-wear, bags, accessories,
footwear, eyewear and fragrances and is an
important component of the Group’s sales.
Also in 1993, alongside their entrepreneurial
activity, Miuccia Prada and Patrizio Bertelli
created “Milano Prada Arte”, then become“Fondazione Prada”, to pursue their interests in
art and culture in general.
In 1997, inspired by his passion for sports, Patrizio
Bertelli created the “Prada Challenge for theAmerica’s Cup 2000” sailing team. Prada’s leisureproducts, with the distinctive “Linea Rossa” ("redline"), were also launched in 1997.
In

1999,

the

prestigious

Church’sbrand,

established in 1873 in Northampton, became partof the Prada Group; the investment was initiallyshared with a private equity firm, and then Prada
completed the acquisition in 2007.

6

The brand, specialized in handmade high-end footwear, is a worldwide recognizedsymbol of top quality British tradition and sophisticated elegance.
In 2001, the Prada “Epicenter” store, designed in collaboration with Rem Koolhaas,
opened on Broadway, New York. This was the first store of the “Epicenters” project
whose purpose was to rethink the shopping concept with a new approach and to try
out innovative interactions with customers. A second “Epicenter” store was opened in
Aoyama, Tokyo, followed by a third, on Rodeo Drive, Beverly Hills in 2004.
During the same year, Prada acquired control of Car Shoe, an historic Italian brandrenowned for its exclusive driving moccasins.

7In 2003, Prada entered into a licensing agreement, then renewed in 2012, with the
Italian eyewear manufacturer Luxottica, world leader in the eyewear industry. The
Luxottica Group currently produces and distributes eyewear for the Prada and Miu
Miu brands. That same year, the Group also began its partnership with Spanish
cosmetics manufacturer Puig Beauty & Fashion Group and the first fragrance, Amber,
was launched at the end of  2004.
In 2006, Miu Miu organized its first fashion show in Paris to better represent its own
identity.
The first Prada Phone by LG was launched in March 2007; it was the world’s first touch
screen cell phone. The successful partnership was renewed in 2008 and in 2011 with
two further releases.
The Prada e-store first went live in 2010 while Miu Miu was launched in 2011.
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 the company 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 further strengthen its integrated production know-how. That same year,
the Prada Group and Coty Inc. launched the first Miu Miu fragrance. The commercial
development of the Marchesi brand began to take shape in September with the openingof the first patisserie in via Montenapoleone, Milan.
2016 featured extensive manufacturing investments leading to the completion of the
Scandicci leather production site and to the renovation of several factories between
Tuscany and Umbria, Italy. The first construction phase of the new logistics hub forfinished products was completed in Tuscany. In the retail, the launch of new concepts
were implemented for Prada and Miu Miu stores.

8�.� ���� highlights

Area
INVESTMENTS
IN 20162016 REVENUES€ 252

DOS ATJANUARY 31, 2017

€ 3.2

620

BILLION

CORE BUSINESSSTYLE AND DESIGNPROCESS
STyLE and DESIGNMILLIONECONOMIC VALUE
DISTRIBUTED TOSTAKEHOLDERS* IN 2016

• Fashion Show
• Showroom Presentation€ 2,926MILLIONEMPLOYEES ATJANUARY 31, 201712,579RETAIL AND WHOLESALEDEPARTMENTS

18

INDUSTRIAL SITES
AT JANUARY 31, 2017

COLLECTION
OF ORDERSINVESTMENTS
INTO THE COMMUNITY
IN 2016€ 22
MILLION• Buying Session• Sales Campaign*Economic value distributed to stakeholders in compliance with GRI-G4 indicator EC1 - reference at page 12.

INDUSTRIAL AND
LOGISTIC

SOURCING AND
PRODUCTION

�.� value chain
The Group's business model is based on a value creation chain that combines
production process technologies with artisanal skills. Thanks to this integration the• Quality Control• Logistic

Group, leveraging on its stylistic skills, is able to translate avant-garde concepts into
innovative exclusive products, combining production capacity with rigorous control
over qualitative standards; at the same time, Prada dedicates a special commitment
towards the development of know-how and the protection of ethical values along
its entire supply chain. The goal has always been to offer customers a sophisticated,

RETAIL AND WHOLESALEDEPARTMENTS

DISTRIBUTION

exclusive and excellent quality product that exemplifies the integrity and prestige of
the Prada world.

9

STYLE AND DESIGN

materials, in their own right leaders and reference in their sectors. In most cases, these

Creativity is the first step of the value creation process.

are long-term relationships, initiated following a rigorous selection process, whose
strict parameters are intended to ensure the highest standards of technical, economic

Miuccia Prada, together with a qualified team of designers, has the ability to combine

and ethical reliability. The Prada Group has always valued long-term relationships

intellectual curiosity, the pursuit of new and unconventional ideas, cultural and social

built on everyday interaction: these partnerships are crucial not only for the growthinterests with a strong sense of fashion. This has made it possible to establish in Pradaand improvement of the participants but also for sharing a single, strategic objective

a genuine “in house” design culture, also based on method and discipline, which guides

hinging on quality, excellence and the creation of value over the medium to long-term.

everyone working in the creative process.
PRODUCTION
This unique approach enables Prada always to anticipate and, often influence,

The Prada Group’s products are manufactured in the 18 directly owned production

trends, continually experimenting with new designs, fabrics, leathers and production

sites (151 in Italy, 1 in England, 1 in France and 1 in Romania), in addition to a wide

techniques. This experimentation and exchange of ideas are the essential components

network of suppliers. Most of the Group’s partners are craft artisan workshops withof the design content found in each Group’s product. The time spent at the “drawing

extensive experience and a strong sense of tradition. They are provided with carefully

board” and in the “fitting room” on research and stylistic development for the brands

selected materials and with all technical specifications—from pattern-making to theis fundamental in defining each collection in which apparel, footwear and accessories

data sheet—needed to produce first the samples and then the merchandise.

complement one another defining a consistent and representative image of the brands.

The Group’s experienced technicians provide constant support throughout the
production process.

Prada’s flair and the strong appealing power exercised by the tradition and company’s
standards continue to attract talented people from all over the world who want to

The production sites represent the best expression of the manufacturing tradition ofshare Prada’s experience in many different creative fields. This results in teams in all

the Prada Group, combining the preservation of traditional artisanal skills with state

aspects of the creative process: from fashion design to manufacture, from architectureof the art technological processes, designed to achieve and maintain uncompromised

to communication and photography, from interior design of the stores to all uniquestandards of excellence, quality and workmanship.

and special projects in which the Prada Group is involved.
In the framework of the Group's industrial development strategy, aimed at
FASHION SHOWS AND COLLECTIONS

maintaining and enhancing the most delicate and specific production processes

The collections are inspired by the fashion shows, which are always rich in content

inside the Company, 2016 has been characterized by an intense activity that led to theand impeccably executed, transforming innovative fashion concepts into commercial

completion of several industrial re-qualification projects, and especially in Italy during

products.

the year, aimed at strengthening control over the production cycle and improving
environmental performance. In addition, the first construction phase of the new

ORDER COLLECTION

logistics hub for finished products of the Group was completed.

New collections are unveiled at the Group's brand-specific showrooms, where a numberof presentations and analyses are held with in-house and independent merchandisers

CONTROLand buyers from all over the world. By sharing the process that led to their creation

The Group employs considerable resources to ensure excellence in the quality of raw

and producing variations through the lens of local markets, each consumer is given

materials and its products processing materials, also protecting the health and safety

access to the innovation, exclusivity and quality that are the hallmarks of the Group’sof final consumers. Each industrial division employs technicians that have the task tomerchandise.

ensure the achievement of these goals through strict checks on incoming and outgoingmaterials and daily visits to external production sites. Product and process control not

SOURCING

only ensures that standards are being met, but contributes to ongoing improvement.

Selecting the right suppliers is fundamental for achieving the highest quality
standards. Historically, the Group has always worked with the best suppliers of raw

1 The 15 industrial sites do not include 3 facilities that coordinate and support production.

10

Prada has set up an Industrial Compliance Committee to ensure that the production

The Group is constantly on the lookout for illegal appropriation of its trademarks,

and distribution of its products worldwide always complies with applicable laws. The

patterns and designs and monitor both the traditional and online retail and wholesale

Committee has the task not only to respect local legislation but also to developing

channels. Prada collaborates on a daily basis with national and international customs

standards and procedures that are often more stringent than those required by law.

agencies and with Italy's Guardia di Finanza (Revenue Guard Corps) and Police, so

The ultimate goal is to be proactive with respect to the entire system, made up of

they can intercept and confiscate illegal merchandise and assess progress in the

consumers, manufacturers and the outside environment as a whole.

battle against counterfeiting. We also work with organizations including the WorldIntellectual Property Organization, the International Anti-Counterfeiting Coalition,

DISTRIBUTIONFrance's Union des Fabriquants, and the Istituto di Centromarca per la Lotta alla

The recipe of the Prada Group’s success lies in its ability to innovate along every step

Contraffazione.

of the value chain, including distribution.
Over time, these control activities have enabled the Group to make an important
Over the years, the Group has expanded its distribution network to 620 stores operated

contribution to tackling a wide range of criminal activities that are often associateddirectly (DOS - Directly Operated Store) in the most prestigious location of the mainwith cases of counterfeiting, such as child labor, forced labor, tax evasion and money

destinations for international shopping, consistently with the image, heritage andlaundering.

exclusivity of each brand. This extensive network is a real asset for the Group, thus
providing an important showcase for the launch of collections and an essential vehicle

Through close cooperation with the authorities, over the past three years Prada'sof contact with the client. The shops transcend their primary function of sale andanti-counterfeiting measures have led globally to the seizure of 1.2 million fakes, theare also an important tool of communication; true ambassadors of the brand, convey

contestation of more than 360,000 e-commerce ads (of which 327,000 have been taken

the image of each brand in a consistent and unique way. The directly operated storesdown), and the removal of illegal content from more than 4,845 websites.

also allow the Group to monitor in real time the progress of sales performances in thevarious markets for each brand and each single product.

SPECIAL PROJECTSConvinced of the need to combine a range of varied creative experiences to ensure

The wholesale channel (department stores, multi-brand stores, franchisees andthat its style, image and communications activities are renewed and updated

e-tailers) provides a number of additional stores selected according to the prestige of

constantly, the Prada Group has always had strong links with other fields, especiallythe location on the different markets and allows a direct and immediate comparison

art and culture. Interaction with these apparently distant environments has led to thewith the competitors. In recent years, this channel has been the subject of carefulrealization of architectural, artistic and cultural projects and sponsorships of sports

review, aimed at further selection of the network of shops, greatly reduced in number,

events. All these initiatives have, over the years, helped define the many facets of theso as to be more consistent with the retail network expansion and to respect the right

Prada universe.

position and the international brand image. At the same time, the Group's evolution
in the digital world has led to launching new partnerships with major online sales

�.�.� ECONOMIC PERFORMANCE AND BUSINESS STRATEGY

operators (e-tailers).
2016 was a challenging year for the Prada Group, as it made concrete plans for brand
TRADEMARK PROTECTION

development and launched an overhaul of its main operating processes.

The Intellectual Property Department is committed in the protection of trademarks
and in the fight against counterfeiting and intellectual property infringement. It has

This transition phase coincides with the completion of the long-term plan for thesystematic preventive and defensive measures in place worldwide, and constantly

geographical expansion of its retail network and the beginning of efforts to streamline

monitors the registration by third parties of trademarks, patterns or designs that areoperations and achieve an innovative form of integration with the digital universe.

identical to or likely to be confused with the Prada Group's distinguishing marks.

The business climate was mired in uncertainty, due to ongoing geopolitical tensions

Any infringement of Prada’s intellectual property rights is contested by opposingof global impact, as well as new events that have suddenly altered economic balances

registration or petitioning for cancellation before the competent authorities.

around the world.

11

Meanwhile, the stabilization of some currency trends paved the way for a recovery in

EC1 INDICATOR - DIRECT ECONOMIC VALUEGENERATED AND DISTRIBUTED

2014

2015

2016

Euro/1000

Euro/1000

Euro/1000

Economic Value Generated

3,555,465

3,553,898

3,190,896

Economic Value Distributed

3,157,435

3,207,289

2,925,740

Against this backdrop, the Group took the initiative on several fronts, starting as

Operating costs

1,941,045

2,014,073

1,831,423

always from the development of new products that stand out for their innovative style

Value distributed to Employees

638,947

702,543

677,144and outstanding quality. New items were designed for Prada and Miu Miu in every

Value distributed to Banks and Bond Holders

16,427

19,42017,293

Value distributed to Government Authorities

254,468

159,367

95,647

Value distributed to Investors

290,849

284,699

282,180

Value distributed to the Community

15,69927,18722,053

Economic Value Retained

398,030

346,609265,155

domestic consumption, as in China and Russia, although growth in these markets has
not yet compensated for the decrease in cross-border tourism.

category, particularly leather goods, with the creation of new, iconic handbag designs
as well as special editions. With the same dedication, the Group also focused on store
renovation with a view to enhancing the shopping experience. The massive restylingprogram launched during the year has begun to create more intimate, exclusive
environments, updated to meet Prada's and Miu Miu's new aesthetic guidelines, wherefeatures of the various local cultures have been given.
The recent redefinition of the Group's digital strategy, with the formation of a highly
qualified team, is the foundation of a new global vision whereby brands will beempowered to express their full potential. These efforts will generate organic growth
based on product quality, strong innovation, and distribution/communication channels
that permanently evolve in line with the habits of new generations of consumers.
Moreover, in 2016 the Group made some industrial changes under a three-year plan
launched in 2015, which aims to strengthen control over the production process by

The consolidated income statement for 2016, presented according to the GRI modelof the economic value generated and distributed, shows an economic value retained
amounting to Euro 265.2 million, down by Euro 81.5 million compared to 2015. The
contraction in the economic value generated (-10.2%), essentially due to the retail sales
contraction, caused a slightly lower decrease (-8.8%) in the economic value distributed
whereas the most significant reduction was recorded towards the Government
Authorities following the contraction of taxable income.
The table below gives a representation of the economic value distributed to thestakeholders:insourcing some of the most delicate phases. These investments will help preserve
the craftsmanship at the heart of the Group's business model, while underscoring

9%1%
3%

its ties especially to the Italian community and the will to responsibly control its
manufacturing cycle.

10%

SUPPLIERSEMPLOYEES

Finally, efforts to streamline facilities and simplify processes took the form of new,63%

transversal projects involving every unit and department while strengthening thecost reduction targets identified in 2015.

INVESTORSGOVERNMENT AUTHORITHIESCOMMUNITY

23%

As for performance, cost-cutting programs managed to keep profitability from being
further diluted by the decline in retail sales. The year closed with EBIT (Earnings Before
Interest and Taxes) of Euro 431.2 million, 13.5% of net revenues, while the Group's shareof net income came to Euro 278.3 million (8.7% of net revenues).
The financial objectives set by the Group helped optimize working capital management;
the resulting increase in operating cash flow brought the net financial position topositive territory by the end of the year.

12SHAREHOLDER’S
MEETING

1.4 ETHICS, GOVERNANCE, COMPLIANCE AND RISK MANAGEMENT
�.�.� CODE OF ETHICS
The Prada Group considers respect for ethical principles to be a basic pillar of its values
and success. The Group believes and act in:•compliance with legislative and regulatory provisions in all countries

CORPORATEAFFAIRSin which it operates;•

legitimacy, loyalty, correctness and transparency;•

respect of the privacy;•

respect for the value of the person and human resources;•

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

respect for the environment and raising awareness about its protection.

INTERNAL AUDIT

EXTERNAL
AUDITORS

BOARD OFSTATUTORY AUDITORS

AUDIT COMMITEEINSTITUTIONAL
AREA

COMMITTEESBOARD OFDIRECTORSSUPERVISORY BOARD

INVESTORRELATIONSNOMINATIONCOMMITEEREMUNERATIONCOMMITEECHIEF EXECUTIVEOFFICERS

Since 2007, these principles have been given formal expression in the Prada Group’s
Code of Ethics. The Code sets out the guiding principles of the Organization, being oneof the main pillars of the Group’s governance model, and is also supported by a set of

MANAGEMENT

procedures in order to turn these values into daily actions.
The adoption and application of the Code of Ethics is essential for the achievement of
the Company’s primary objective, consisting in the creation of value for shareholders,

The Company has adopted a "traditional" governance system, in compliance with the
Italian Civil Code, consisting of a management body, the Board of Directors, an internal

employees, customers and for the community as a whole.

supervisory body, the Board of Statutory Auditors, and an external one, the Audit firm,

The Code is shared by all employees and parties who support in developing,organized by level of accountability and designated to ensure that the business is run

manufacturing, promoting, distributing and selling the Organization’s products of thebrands in the portfolio. The Group promotes its awareness through various means
such as online publications, direct communications and as part of the supply contract
with most of the partners, as it is considered a prerequisite for the establishment of
the contractual relationship.
�.�.� GOVERNANCE MODELin addition to the above-mentioned committees, and a system of proxies and powers,
according to the business procedures laid down by the Company.
With a view to achieving a sustainable and balanced development, the Company hasviewed diversity at the Board level as an essential element in supporting the attainmentof its strategic objectives and its development. All Board appointments are based on
meritocracy and candidates are proposed and selected based on objective criteria,with due regard for the benefits of diversity within the Board. The Board diversity
policy has been considered and adopted by the Board since 2013  and encompasses a

The corporate governance model adopted by the Company consists in a set ofwide range of factors, including but not limited to gender, age, cultural and educationalrules, regulations, practices and procedures aimed toward establishing efficient

background, professional experience, skills, knowledge and nationality.

and transparent operations within the Group, to protect the rights of the Company’s
shareholders and to enhance shareholder value. The corporate governance model
adopted by the Company is in compliance with the applicable regulations, and inparticular with the principles of the Corporate Governance Code contained in Appendix
14 of the Listing Rules of the Hong Kong Stock Exchange.

At the Shareholders' meeting held on May 26, 2015, the Board of Directors, consistingof nine members, was appointed for a term of three fiscal years (2015-2017). Following
the resignation of two Directors in the first months of 2016, the Shareholders' meeting
held on May 24, 2016, has appointed two new Directors for the period corresponding to
the duration of the other Directors in office at present.

13

Specifically, the Board of Directors is composed of four executive Directors, two

The primary duties of the Audit Committee are to assist the Board in providing an

non-executive and three independent non-executive Directors. All Directors have

independent view of the effectiveness of the Company’s financial reporting process

distinguished themselves in their respective areas of expertise and have provided

and its internal control and risk management systems.

support to the Board of Directors in their respective functions.
The Board of Directors is responsible for the ordinary and extraordinary management

AUDIT COMMITTE

Role

GenderAge

Gian Franco Oliviero Mattei

Chairman

Male

> 50

of the Company. The Board has the power to carry out all acts it deems advisable to

Giancarlo Forestieri

Male

> 50

implement and attain the Company’s corporate purpose, except for those acts reserved

Sing Cheong Liu

Male

> 50

by laws or by the By-laws for resolution at a Shareholders' general meeting.

The primary duties of the Remuneration Committee are to make recommendations to

In particular, the Board of Directors is responsible for defining the overall strategy of
the Group and for approving annual budgets, extraordinary transactions, transactions

the Board on the policy for the remuneration of the Company’s Directors and senior
management.

with related parties and all other initiatives with a significant financial impact. The

REMUNERATION COMMITTEE

Role

GenderAge

Board is also responsible for constantly reviewing the operational and financial

Gian Franco Oliviero Mattei

Chairman

Male

> 50

performance of the Company and the Group.

Giancarlo Forestieri

Male

> 50

Carlo Mazzi

Male

> 50

The Chairman of the Board of Directors is the Company’s legal representative. The
Chairman coordinates the Board of Directors’ activities and verifies the proper
application of corporate governance practices and procedures. The Chief Executive
Officers are responsible for managing the Company’s business, including theimplementation of major strategies and other initiatives adopted by the Board.
The table below shows the data on the composition of the Board of Directors.
BOARD OF DIRECTORSThe Nomination Committee has the primary duties to determine and revise the policy
for the nomination of Directors, to assess the independence of Independent NonExecutive Directors on an annual basis, and to make recommendations to the Board
regarding the structure, size and composition of the Board itself.
NOMINATION COMMITTEE

Role

GenderAge

Gian Franco Oliviero Mattei

Chairman

Male

> 50

Sing Cheong Liu

Male

> 50

Carlo Mazzi

Male

> 50

EXECUTIVE DIRECTORS

Role

GenderAge

Carlo Mazzi

Chairman

Male

> 50

Miuccia Prada Bianchi

Chief Executive Officer

Female> 50

Patrizio Bertelli

Chief Executive Officer

Male

> 50

Alessandra Cozzani (1)Chief Financial Officer

Female> 50

The Board of statutory auditors is the supervisory body in charge of verifying

Male

> 50

compliance with applicable laws, regulations and the By-laws, as well as compliance

Role

GenderAge

Stefano Simontacchi (3)Male

30 - 50

with the principles of sound management and, in particular, on the adequacy of theMaurizio Cereda (4)

Male

> 50

Gaetano Micchichè (5)

Male

> 50

GenderAge

Gian Franco Oliviero Mattei

Male

> 50

The Shareholders' meeting held on May 26, 2015 appointed the current Board of

Giancarlo Forestieri

Male

> 50

statutory auditors that consists of three statutory auditors and two alternate statutory

Sing Cheong Liu

Male

> 50

auditors for a term of three fiscal years (2015-2017).

Donatello Galli(2)

NON-EXECUTIVE DIRECTORSINDEPENDENT NON-EXECUTIVEDIRECTORSRole

The recommendations made by the advisory committees are periodically presented
to the Board of Directors for discussion and possible adoption.

organizational, administrative and accounting structure adopted by the Company andits proper functioning.

(1) Appointed as CFO on February 19, 2016; (2) Resigned on February 19, 2016; (3) Appointed on April 8, 2016 and re-elected on
May 24, 2016; (4) Appointed on May 24, 2016; (5) Resigned on April 15, 2016;

BOARD OF STATUTORY AUDITORS

Role

GenderAge

The Board of Directors is supported by the mainly consultative activity conducted

Antonino Parisi

Chairman

Male

> 50

by the committees established by the same, in particular, the Audit Committee, theRoberto Spada

Male

> 50

Remuneration Committee and the Nomination Committee. Each Committee is chaired

David Terracina

Male

30 - 50by an Independent Non-Executive Director.
14

In compliance with Italian Legislative Decree no. 231 of June 8, 2001, the Company

The internal control system helps ensure protection of the company's assets, thehas established a supervisory body whose primary duty is to ensure the functioning,

efficiency and effectiveness of its processes, the reliability of the information provided

effectiveness and enforcement of the Company’s Model of Organization, adopted by

to its governing bodies and the market, and compliance with laws and regulations as

the Company pursuant to the Decree. The Supervisory Body consists of three members

well as by-laws and internal procedures.

selected among qualified and experienced people and nominated by the Board of
Directors.

The bodies involved in internal control and risk management are the Board of Directors,
the Audit Committee, the Supervisory Body and the Board of Statutory Auditors, asSUPERVISORY BODY

Role

GenderAgeDavid Terracina

ChairmanMale

30 - 50

well as all the management, that has the primary task to implement all the necessary

Paolo De Paoli

Male

30 - 50

processes and procedures to achieve the Company’s goals through an appropriate

Gian Franco Oliviero Mattei

Male

> 50

system of controls that minimizes the risks for the organization.

In 2016, the Corporate Social Responsibility Committee was set up to promote
initiatives and projects in the social responsibility area and the sharing with senior
management of the guidelines for its implementation. The Committee met twice
during 2016 and started a systematic dialogue with the various departments on thosesocial responsibility issues considered more strategic for the Group.
More detailed information on corporate governance is provided in the Corporate

Moreover, the Internal Auditing department works in close collaboration with theaforementioned bodies, which, in addition to the typical assurance activities, currently
supports the Board of Directors and the Internal Audit Committee for risk management
activities also. Furthermore, the Industrial Compliance Committee sets guidelines for
implementing laws and regulations that affect the import and export of raw materials
and finished goods, while providing various forms of industrial compliance assistance

Governance section contained in the Annual Report 2016.

to the manufacturing divisions.

�.�.�.COMPLIANCE AND RISK MANAGEMENT

Risk assessment consists of identifying and analyzing the factors that might make it
difficult to reach business goals, and is completed with the process that determines

Given the complex regulatory environment, the Prada Group assigns various

how these risks should be avoided, accepted, mitigated or shared. The fact that the

departments and hires external specialists to keep abreast of changing laws andeconomic, regulatory and operating environment is in constant flux raises the need forregulations so that it can adapt its procedures in a timely manner and reduce non-mechanisms that help identify and deal with the specific risks posed by such changes.

compliance risks to an acceptable level.

For the Prada Group, risks can be grouped as follows:

The Group has structured the internal control system as a process carried out by the

1. risks relating to the international luxury goods market or related to the general

governing bodies of the Group’s subsidiaries, by management and by the corporation

state of the economy,  the protection of intellectual property rights, image and brandin general, with a view to providing reasonable certainty that control objectives willrecognition, and the ability to anticipate trends and respond to the changing tastes ofbe met.

consumers;

More specifically, the Board of Directors of Prada spa, referring to internationallyrecognized models such as the CoSO Report (Committee of Sponsoring Organizationsof the Treadway Commission - international best practice), is engaged in the continuousrefinement of the Internal Control system and Risk Management by verifying theoperation of its main components consisting of:•control environment;•risk assessment;•

control activities;•

information and communication;•

control system.

2. risks specific to the Prada Group related to the importance of key personnel, strategy
implementation, outsourcing, legal and regulatory compliance and processing of dataand information;
3. financial risk factors specific to the Prada Group related to fluctuations in exchange
rates, interest rate fluctuations, credit risk and liquidity risk.
Further information is provided in the financial review and corporate governancesections of the Annual Report 2016.
In addition to the information presented in the Annual Report 2016 in particular withrespect to Note 26 ("Provisions for risks and charges") on the subject of tax audits anddisputes, no significant fines or non-monetary penalties were imposed on the PradaGroup during the year.
15

2. STRIVING FOR EXCELLENCE
�.� KNOW-HOW
Prada's defining asset, know-how creates continuity and balance between creativity
and discipline, tradition and technological progress, craftsmanship and industrial
production.
All manufacturing activities preserve the artisanal spirit of quality care in every detail,within an industrial organization made up of 18 proprietary plants (152 in Italy, 1 in the
United Kingdom, 1 in France and 1 in Romania) and an external network of suppliers
that are carefully selected and monitored.
Coexistence between design, product development, direct and outsourced production,
allows Prada to maintain strong control over its know-how, quality standards
throughout the manufacturing process, and the planning of production activities.
The vast majority of prototypes and samples, and a portion of finished goods, areproduced at the Group's own facilities.
�.�.� SOURCING AND USE OF RAW MATERIALSThe quality of raw materials is fundamental to the Prada product and a toppriority for the Group. This is why the Group’s apparel, footwear and leather goods
manufacturing divisions select their own suppliers directly, coordinate and supervise
the manufacturing process right through to the finished product. Since the outset, thisapproach has been a defining element of Prada's industrial strategy and ensures fullcontrol 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 andcompliance with standards, and certification regarding the parameters stated on theGroup's Restricted Substances List (RSL).
The Group scrupulously complies with local and international regulations on
the procurement, importation, use and exportation of raw materials, such as theConvention on International Trade in Endangered Species (CITES).
For Prada, sustainable management of raw materials is synonymous of optimizationin the use of resources, following an approach that aims to eliminate waste andtherefore minimizing the consumption of leather and fabrics. Investments inindustrial development realized in recent years have led to the internalization of
2 The 15 industrial sites do not include 3 facilities that coordinate and support production.

16

different production phases with the aim of maintaining quality at the highest levelsof excellence, while improving control on consumption at the same time (refer tochapter 5 for further details).
The materials Prada uses in the manufacturing process can be broken down into
primary materials, such as leathers, fabrics and yarns, and ancillary materials suchas soles, heels, zippers, buttons, yarns and ribbon. Their transformation into leather
goods, apparel and footwear also involves the use of semi-finished products from third
parties, which may include buckles, clasps, straps, name plates, etc.
The most relevant information relating to materials from 2014 to 2016 are listed below,
each shown in its typical unit of measure.
RAW MATERIAL

Units

AMOUNTS
2014

2015

2016

LEATHERFeet

56,218,606

36,245,611

20,319,996

FABRICS

Meter

3,866,650

2,862,145

2,427,903

YARNS

Kilo

98,05990,984

91,995SHOES' SOLES

Pair

1,104,471

940,641

941,903

The strategy of reduction of the finished products inventories adopted during theyear resulted in lower consumption of raw materials, especially for the production ofleather goods. Overall, purchases of the aforementioned raw materials accounted forapproximately 60% of the economic value of all raw and semi-finished purchases ofthe year 2016.
�.�.� TIES WITH THE COMMUNITY DURING THE MANUFACTURING PROCESSThe international success of the Prada Group is deeply rooted in Italy, also withrespect to the supply chain. In 2016 the Group purchased materials from about 500
suppliers3, about 81% of them located in Italy, 10% in other European Union countries
and the remaining 9% in other Non-U.E. countries. In many cases these are materials
produced expressly for Prada, according to strict technical and design specifications,by long-established partners: 57% of them have been working with the Group for morethan 10 years, and 19% for 5 to 10 years.
The focus on this origin of raw materials is demonstrated by the procurement data
regarding leather for footwear and accessories.

3 For the purposes of this analysis, suppliers of raw materials with purchases of more than Euro 30 thousand in 2016 have been considered.
Overall, these suppliers account for more than 98% of the total value of the Group raw materials’ purchases.

17

include environmental sustainability, given the heavy impact of the tanning processespecially in terms of water consumption and emissions.
In outsourcing, too, the Prada Group stands out for its strong ties with the artisanalcraft experience typical of the Italian tradition. In 2016 the Group worked with about
400 suppliers4 that are joined by the aforementioned 500 suppliers of raw materials.
79% of manufacturing suppliers are Italian, 10% from European Union countries and
10% from other Non-U.E. countries. 38% of the suppliers have been collaborating with
the Group for more than 10 years and 25% for 5 to 10 years. These are relationships
built on mutual trust, by working together on a daily basis with a view to constantly
improving and learning.
�.�.� GROUP’S QUALIFIED VENDOR LIST PROCEDURE
In 2016 the Group started to renew the "Group’s qualified vendor list" procedure
to redefine the responsibilities and operational behaviors required to evaluate
ethical, technical and economic reliability. Moreover, further controls to start andcontinue a supply relationship are also set out by the procurement policy as risks
of non-compliance are mitigated through additional checks and assumptions ofresponsibility.
In terms of quantity, in 2016, 88% of the leather came from Italian tanneries renowned

Specifically for ethical issues, the accreditation and maintenance of a supplier's

for their quality and old tradition. Another 9% came from European suppliers, while

qualification is based on the collection of documents, attestations and self-certifications

the remaining 3% from outside Europe.

that ensure compliance with the law on remuneration, social security, taxation, healthand safety, environment, privacy and governance model. Finally, the subscription to21%

the Code of Ethics is a fundamental prerequisite for working with Prada.
This information is subject to periodic updates and systematic checks to ensure

9%88%

LEATHER (q.ty)

49%

3%

LEATHER ITALY (q.ty)

veracity and consistency. Such controls, operated by purchasing structures or11%business areas focused on various topics are made on a sample basis or when a
Italy-Santa Croce

Italy
EuropeRest of the world

19%

Italy-Arzignano
Italy-Solofra
Italy Other

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

problem is encountered. The procedure may include further inquiries in case of lackof self-certification of compliance with labour, safety in the workplace and social
security contribution laws. This type of controls is coupled with visits by industrial
divisions to suppliers (almost daily for the most important ones) that, other thanensuring compliance with technical and commercial agreements, provides additionalcomfort regarding working conditions.

for 49% and 19% of all leather purchased by the Prada Group in Italy. These are specialized
leather districts that set the standards for the production of high-quality leathers

In the case of non-compliance which can be remedied, the supplier may be temporarily

around the world. Santa Croce in particular is an organized cluster of traditional small

suspended, while for more serious cases of non-compliance with ethical, technicaland medium-size businesses known for their excellent work, whose shared values

and economic requirements, contract resolution might be immediate.
4 For the purposes of this analysis, manufacturing suppliers with purchases of more than Euro 30 thousand in 2016 have been considered.
Overall, these suppliers account for more than 99% of the total value of the Group semi-finished goods’ purchases.

18

�.�.� PRODUCT RESPONSIBILITY
Product quality and the health and safety of customers are central to the Prada Group's
manufacturing processes. The products must meet uniform quality standards andsatisfy all current regulations in the more than 70 countries where they are sold.
To achieve these goals, the Group employs some 290 technicians, each with at leastten years’ experience, who run strict quality controls on every material used in the
production process, from sourcing to the finishing touches. They make periodic visits
to the manufacturing sites of raw material suppliers and subcontractors to assess
their processes, the quality of their goods and the general workplace conditions.
In 2010 the Group formed a Committee to assist the manufacturing divisions in mattersof legal compliance. Comprised of managers from the industrial area, the Committee
sets guidelines regarding all aspects of compliance with national and international
legislation on the nature and proof of origin of raw materials, creation of the finishedproduct, and consumer health and safety in general.
In the context of these control and guidance activities, since 2014 the Prada Group has
kept a Restricted Substances List ("RSL"), a procedure that sets limits on the presenceof chemicals in its products. In 2016, Prada took the additional step of aligning its
RSL limits with the more stringent, proactive approach outlined in the "Guidelines on
ecotoxicological requirements for clothing, leather goods, footwear and accessories"
endorsed by the Camera Nazionale della Moda Italiana (“CNMI”).
These limits are the most virtuous in international practice and aim to ensure
higher chemical safety standards than those prescribed by the strictest national
and international laws. Prada's 1,000 or so suppliers of raw materials, packaging andmanufacturing services, which represent Prada's production chain, have all received
the Group's RSL and those that as of January 31, 2017 had formally accepted and signed
the procedure accounted for 72% of purchasing by volume. The aim is to increase thatpercentage through outreach activities aimed at encouraging its other suppliers tosign on. Extending the reach of the RSL is important to improving the sustainabilityof the Group's production cycle, as is Prada's ongoing commitment to CNMI programson chemicals, for which in-depth studies have been initiated on the application of theguidelines to manufacturing processes, and other matters.

In 2016 there were 2 cases (3 in 2015) of non-compliance with health and safety
regulations concerning products sold in China, which resulted in total fines ofapproximately Euro 7,000.
There were 2 cases of non-compliance with information and/or labeling requirements,
also in China, leading to fines of approximately Euro 3,500.

To ensure the RSL is being followed, in addition to requiring certification and testingfrom every supplier, the Prada Group verifies these standards internally by conducting
spot checks on all sourced materials through accredited laboratories.

19�.�.� CREATIVITY AND PRODUCT EXCELLENCE“For Prada, fashion, luxury and style have always
been core aspects of a wider project than a simple
and large production of clothes, footwear andhandbags.
Careful observation and interest in the world,society, and culture are at the core of Prada’s
creativity and modernity. This has pushed Prada
beyond the physical limitations of boutiques andshowrooms, leading us to interact with diverse,
seemingly distant worlds, and introduce, very
naturally, a new way of creating fashion.”(Miuccia Prada and Patrizio Bertelli)
Outstanding quality, innovation respecting a
century-old history, and values rooted in finecraftsmanship are the foundations of the PradaGroup’s value chain and of the efforts that overtime have turned a family-run business into
one of the world's leading luxury powerhouses:from the creative idea to design, manufacturing,
distribution and communication. Prada is andwill always be a world of infinite exploration andexperimentation.  
Guided by the style inspiration of Miuccia Prada,
universally acknowledged as a pioneer of the
fashion industry, the team of designers andcraftspeople keep the Group’s values and brandidentities alive, yet constantly re-interpret themin a contemporary light without forsaking theirunique concept.
Here is a selection of the most iconic products of
the latest collections that testify to the spirit withwhich they were designed, inspired by values
that go beyond the simple aesthetic purpose.

20

Prada Esplanade
The Esplanade represents the natural evolutionof the timeless Galleria model, of which someof aspects have been taken and developed. The
classic design with a zip fastening, double handle
and shoulder strap stands out thanks to theway the leather on the quadrants is broken up,
highlighted by the juxtaposition of two materials,
and is available in four sizes and a wide variety ofcolors and combinations.
Prada Cahier
The Cahier bag symbolizes a notebook withdetails referring to ancient books. The bronze
metal elements recall the protective corners ofold volumes, while the use of the “saffiano” leather
and the top of the flap are a clear reference to thebook's hard covers and coast.
Prada BibliotHèque
With its five-pleat sides that recall the spines ofvolumes on a library shelf, this Prada’s tote bag
is available in two sizes, both with double handle
and adjustable shoulder strap, and in different
materials always matched to the softest hides of
the hips that allows perfect folding.
Prada Corsaire
The name evokes dynamicity and adventure
and the shape is reminiscent of travels withgame bags and saddle bags. This sporty practicalbag with balanced proportions is perfect for a
dynamic, active woman who exudes unfailingelegance with a touch of irony, provided by thesequence of rings.

22

23

MiuLady
Realized with some of the Miu Miu’s iconic type of leather, its classic closure isembellished with a handmade jewel backle made of precious stones with brightcolors.
Miu Miu ballet laces
The new Ballet Laces are featured by suede, woven madras leather, denim, laminatednappa leather, cheetah print and plaid print. Miu Miu ballerina comes with straps,
metal hardware, and ankle ribbons and reveal unexpected combinations of materials.
Miu Miu slippers
Miu Miu slipper made in soft eco shearling realized in pastel colors and embellishedwith an embroidery of pearls, swarovski and studs typical for the brand.
Church’s Shanghai
In 2009 at the Northampton factory in the UK, Church's found an original modelof a 1929 style that had redefined men's footwear. This innovative shoe was thenrecreated for contemporary tastes. It is deliberately "aged" by hand, and reproducing
the typical rubber sole with logo took more than a year to accomplish.

24

Historical Archive finished products
The historical archive of finished products is one of the best expressions of thebalance that Prada has always promoted between creativity and innovation
representing a real strategic asset for the Group as well as a tangible evidence of thehistory of its brands and of a century of Italian fashion. Ever changing at the handsof the style department to serve as a constant source of inspiration, the archivereconstructs Prada's complex and often elaborate reflections and experiments inthe world of fashion and culture in general. The archive, constantly updated withthe products of new collections, is located at 5 warehouses between Tuscany and
Milan and, at the date of this Report, consists of about 138,000 items at the reporting
date. The contents of the archive are summarized below.

Archive offinished Product(number of models)

50,285

Ready-to-wear

44,81571%

Shoes

12,35524%

Leather goods

30,641

PRADA

Other

138,096
TOTAL

5%

MIU MIUOTHER

Historical Archive of fabrics
The archive dedicated to fabrics represents another distinctive excellence of theknow-how of the Prada Group and is located in one of the warehouses in Tuscany. The
archive is made up of a total of 23,130 samples of original fabrics, representing over
5,000 different designs, covering a volume of over 300 m3: unique and exclusive prints,
lace, macramè and more.
All the Prada and Miu Miu fabrics have been filed in 1.5 meter rolls, each of them with
their respective variants of color, and cataloged with all the information about the
manufacturer and the technical characteristics. The totality of the archive, constantly
expanding as it is constantly integrated with the fabrics of the new collections, hasbeen photographed and inserted into a computer system to speed up research andvisualization.

25

PRADA ACADEMY
Prada Academy aims to share with today's employees, and pass down to tomorrow's
new ones, a corporate culture built on combining creativity and innovation withmethod and discipline. Founded as a training center, the Academy offers diversified
content and teaching methods for each of Prada's three macro-areas: Craftsmanship,
Corporate and Retail.

PRADA ACADEMY

craftmanshipschoolBUSINESS PLACEMENT
AND POSITION

corporate
training

SPECIALIZEDTRAINING

MANAGEMENT
AND BEHAVIOUR
MANAGEMENT TRAINING

retailtraining

TECHNICAL AND
PROFESSIONALUPDATING

At the Craftsmanship School, the first three courses were designed in 2016 on
footwear, leather goods and clothing, which began in the spring of 2017. With a view tosafeguarding and passing down Prada's distinctive heritage of knowledge and artistry,the courses will be offered to 35-40 young people aged 18 to 24 who are interested
in becoming leather cutters, shoemakers, hemmers and dressmakers. The courses
include both theory (raw materials, manufacturing processes and techniques, businessprocesses, and basic skills such as technology, computers and English) and practical
�.�.� PRESERVING TRADITIONAL EXPERTISE AND DEVELOPING SKILLS

training in the field, including visits to raw material suppliers.

The preservation and advancement of expertise is fundamental to the Prada Group,
which prides itself on transmitting skills from generation to generation.

The first course to be offered is for future leather cutters and will take place overseven weeks. Next, the footwear course will last twelve weeks and will train students

Back in the 1990s, the Group began to codify all its industrial and handcraftingin cutting, sewing, assembly (footwear production line) and finishing. Finally, theprocesses in manuals and written procedures so they would be accessible within the

dressmaking course will cover cutting and tailoring skills. Because Prada wishes toGroup. Even now, details are constantly added to these documents, which ensure thepreserve and transmit not only job skills, but also craftsmanship and corporate culture,continuity and consistency of the know-how and serve as inspiration for the corporate

all instructors will come from the Prada Group's workshops and manufacturing sites.

activities.

26

With respect to internal training, over the past three years Prada Academy has

The program for the Group's existing employees in Italy lasts two days and promotes

developed retail training programs that reinforce store management techniques

deeper knowledge of Prada's business by demonstrating the complex processes usedand help guide and serve the Group’s international clientele. In 2016 retail personnel

to make clothing, footwear and leather goods and the mastery behind each product.

also benefited from investments in digital technology for customer relations, which
provides quick and easy updates on individual products, new collections, and major

During the year, 39 employees took part in the Induction course and 44 in the know-market indicators. Meanwhile, corporate employees enjoyed a wide range of courses

your-company program. Both are evolving constantly and are likely to be extended toon behavior and interpersonal skills, aimed at effectively handling the complexity of

employees in other countries.

the business environment.
In addition to traditional classroom teaching, the Prada Group is developing quickly
and easily accessible digital tools for continuous, permanent learning. These include
the Learning Management System, an online platform where all Prada Group
employees can manage their courses, consult course materials, and access a wide
range of content on the Group's manufacturing and business processes.
To develop skills, broaden knowledge, and thereby increase employees' value as
professionals, 44,734 training hours5 were provided in 2016 to 5,899 participants. Below
is a summary of training hours by gender.
WORLDWIDE TRAINING

TOTAL

WOMEN

MEN

NUMBER OF PARTICIPANTS

5,899

3,421

2,478

NUMBER OF TRANING HOURS

44,73425,946

18,788

3.60

3.30

3.90

12,579

7,799

4,780

AVERAGE NUMBER OF HOURS PER EMPLOYEEIN THE YEARNUMBER OF EMPLOYEESFrom the comparison with 2015, an increase of 5.6% in the number of hours of training
was recorded.
Two important initiatives were launched within the training programs in 2016: the firstfor new hires in the corporate and manufacturing divisions in Italy, and the second for
those who already work for the Group in Italy but in a capacity that has denied themthe chance to share the creative and production processes behind every new product.
The program for new hires envisions three "Induction Days" spent partly in theclassroom and partly on-site at the Group's industrial facilities, the goal being tohelp new employees integrate with the company through an understanding of its
philosophy and organization. There is a specific section on the Prada Group's values
that guide its efforts in terms of corporate social responsibility.

5 Hours of training do not include health and safety training.

27

�.� CUSTOMER EXPERIENCE
Productvalue

isenhancedbytargetedcommunication, which is crucial to building
and transmitting a strong, consistent brandimage. From fashion shows to advertising
campaigns, Prada and all the brands of the
Prada Group continue to create an attractive,
trendy image, which is most appreciated by ahigh-end, international clientele and the mostinfluential critics and observers. Ultimately itbuilds exclusive, personal relationships withcustomers, who understand how the elements of
the luxury items can help define their own image
and identity.
�.�.� RETAIL NETWORKThe Prada Group owns 620 directly operated
stores, in exclusive locations selected on thebasis of its growth strategies. About 84% of
net consolidated sales take place through thischannel.
Much more than simple points of sale, thestores are important communication tools as"ambassadors" of the brand, its identity andthe latest collections. All shops are run by
meticulously selected personnel who take partin periodic training activities, designed not only
to provide customers with the best shopping
experience and insight into the style content of
the collections, but to communicate the values,
culture and heritage the products represent.
Sales personnel provide clear information on the
products and their care, as well as repair services,which enhances Prada merchandise by ensuring
its quality and durability over time.
Every shop is designed, built and managed
according to highly detailed internal policies,
whichhighlight

innovative

conceptsof28

distribution and communication and ensure the unique positioning of each brand.

A BIM project also offers the possibility to virtually process a building's life cycle so

Their interior design and their layout in terms of furnishings and fittings are defined bythat it is easier to monitor the materials that have been used and plan in the best

the Engineering division, in close collaboration with international architecture firms.

way their maintenance.

Store windows and displays are created internally by retail and visual merchandising
teams, so that products are always represented effectively, fashionably, andSo far, this technology is considered to be an excellence and an important innovationconsistently with the vision behind the collection and the corresponding advertisingin building processes and facility management.

campaign.
In 2016 a restyling plan was launched for Prada and Miu Miu stores, in line with theSince 2016, the Prada Group has begun implementing an integrated and synergic

brands' new aesthetic guidelines.

design process called Building Information Modeling (BIM). This process allows
pursuing high levels of sustainability by avoiding, or reducing, possible waste of both

Prada has unveiled its new image following renovations or reopenings, such as

materials and costs.

in Plaza 66 in Shanghai and Canton Road in Hong Kong, two of the Group's iconic
flagship stores. The design, materials used and complex details that represent the

BIM is not a product or software but a "container of building information". Born from the

new image reflect Prada's longstanding commitment to aesthetics and luxury.

desire to go towards the integration between processes and sustainability, it is in fact

The stores' highly personal atmosphere underlines the importance the Groupa "collaborative" design method that collects the useful information of architectural,

attributes to the growing sophistication of the luxury consumer, especially in the

structural, plant, energy or management planning into one tool.

Chinese market.

29

For Miu Miu, a fresh interpretation of the "Minimal-Aristocratic" theme that has
defined the store concept since 2006 radically transformed its appearance in 2016 interms of colors used, lighting, and interior layout. Some of the earliest stores to beconverted to this new image are the ones in Via Sant'Andrea in Milan, Canton Road in
Hong Kong, and New Bond Street in London.
In 2016, Marchesi 1824 opened a third patisserie in the heart of Milan, inside the iconic
Galleria Vittorio Emanuele II that symbolizes the city. The new space reinterprets theatmosphere and allure of the original location, in a magnificent setting looking out
onto the Galleria’s extraordinary frescoes and floor.
The history of the Group's retail development includes partnerships with some of theworld's most influential architecture firms. In 2015 Herzog & de Meuron, winners of the
Pritzker Architecture Prize, worked with the Group on the Miu Miu flagship store in
the Aoyama district in Tokyo, the core of the brand's Japanese operations. A few years
earlier, from 2000 to 2004, Herzog & de Meuron and another Pritzker Prize winner, Rem
Koolhaas, had partnered with Prada on the Epicenter Concept Stores in New York, Los
Angeles and Tokyo. Still central to the Group's retail strategy, the Epicenters reflect
profound insight into the concept of shopping, which is revisited to inspire uniquestores where luxury goods, technology, design and architecture combine seamlessly
with an extensive range of exclusive services and sensory and audiovisual experiences.
Every so often, the Epicenters transcend their primary function to host movie
screenings, exhibitions, debates and other cultural events.
In recent years the Prada Group has
redefined

its

digitalcommunications

INFormation aboutsocial networks(AT JANUARY 31, 2017)

strategy. The traditional approach toretail has been enriched by the increasing
availability of Group brands online. In thenear future, e-commerce will extend to
more products, countries and brands, and
the Prada and Miu Miu retail websites

INSTAGRAM
14.6

MILLIONFOLLOWERS

will be revamped. Meanwhile, additional

facebook

investments have been made in thecreation and dissemination of digital

7.2

content to keep up with the constant flux

MILLIONFOLLOWERSof consumer behavior and technologicalplatforms. With this strategy, social media
channels have become an important way
to interact with customers and fans.

twitter
AROUND1MILLIONFOLLOWERS30

31

3. WORKPLACE ETHICSat all staff and is drafted simultaneously in four languages - Italian, English, Chinese/
Mandarin and Japanese - and updates about the activities undertaken by the Group,also providing selected news about the luxury industry. During the year, 21 newsletterswere sent out.

�.� THE WORKFORCE
As of January 31, 2017, the Group had 12,579 employees, of whom 38% work in Italy.
A slight growth (+0.9%) was recorded compared to previous year mainly due to thestrategy of strengthening of the organization in the industrial area.
NUMBER OF EMPLOYEESEMPLOYEES PER GEOGRAFICAL AREA

8%12,5792%

12,467
ITALY

12,173

22%

38%

EUROPEAMERICAASIAPACIFIC

10%

JAPAN

20%
2014

2015

MIDDLE
EAST

2016

Outside Italy, the most sizable part of the workforce is in Asia-Pacific (22%) followed by
the rest of Europe (20%).
In Italy, where 15 of the 18 production

EMPLOYEES BY GENDER

facilities
62% 38%

61% 39%62% 38%arelocated,mostemployees(66%) work in the industrial division, whilein other countries, where 567 out of 620
directly operated stores are located, 88% of

The Prada Group’s business approach is based in the promotion of diversity, protectionof employment and treatment of staff with care and respect. Prada has always
considered human capital to be key to its competitive edge and makes every effort topromote and reward productivity, professional skills, teamwork, with an emphasis on
results. The employees’ enthusiasm, craftsmanship and intellectual curiosity are theemployees are in retail.
2014

under 30 years old and 56% were aged 30 to 50. A further analysis reports that 34%
EMPLOYEES PER AGE RANGE

the goal has been to build and fortify an open working environment where humanspecially designed communication channels.
At the beginning of 2016, in order to strengthen the sense of belonging to the Prada

2016

A breakdown of the workforce by age shows that in 2016, 25% of Prada employees wereelements that underpin the innovation and quality of the Group’s products. Over time,
relationships are inspired by empathy and mutual understanding, including by way of

2015of the retail workforce were under 30 years
old, while in the industrial division, where at

< 30

30-50

> 50

least ten years of experience in production

2014

36%

54%

10%

and craftsmanship is particularly important,

2015

33%

56%

11%

59% of the workforce belonged to the range

2016

25%

56%

19%

between 30 and 50 years old.

Group, a corporate system of newsletter was inaugurated. The initiative is addressed
32

LABOR

YEAR

STAFF

EXECUTIVES AND MANAGERS

The Prada Group's remuneration and retention policy is designed to reward and retain

FEMALEMALE

FEMALEMALE

FEMALE

MALE

highly professional staff and skilled managers, with the conviction that value is< 30 30 - 50 > 50

< 30 30 - 50 > 50

< 30 30 - 50 > 50

< 30 30 - 50 > 50

< 30 30 - 50 > 50

< 30 30 - 50 > 50

created in the medium and long-term, through constant organizational learning andconsolidation of experience and competence.

2014

0.3% 5.2% 5.3% 1.1% 4.3% 3.0% 13.2% 23.8% 6.8% 7.3% 12.2% 4.1% 0.3% 6.0% 1.0% 0.3% 4.6% 1.2%

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%

The policy features a balanced combination of fixed and variable, direct and deferred

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%

components, tailored to the position and professional qualifications and consistent
with the needs of the various geographical areas.

In 2016, the breakdown of employees by age and gender remained quite stable, with agreater presence of women in the 30-50 age group, mainly in "Staff" and "Executives
and Managers". In these categories, women accounted for 23.4% (vs. 12.6% of men) and5.5% (vs. 4.3% of men) of the total workforce respectively.
PERMANENT EMPLOYEES

61% 39%61% 39%constant comparisons of the central and peripheral staff, and by external firms thatcarry out salary surveys on international markets and are specialized in the fashionand luxury industry.

In terms of contract type, 88% of international
employees are permanent hires, proving the

62% 38%The remuneration system is formulated by the Human Resource Management using

The Group's remuneration policy is based on:Group's commitment to stability and longterm investment in human resources.

•a periodic salary review that takes into consideration the overall market
competitiveness with respect to company positions and internal remuneration
fairness;

Most of the fixed-term contracts concern
2014

2015

2016

younger (under 30) staff in the retail area.

•

individual performance;

63% of the contracts are for women.
•

long-term incentive plans, for key managers, linked to the three-year profit growth,  aligning individual targets to those of the shareholders;

98% of employees work full time. In 2016 there were no differences in benefits between
full-time and part-time contracts.

an annual incentive plan linking remuneration to the Company's earnings and to•

specific incentive plans for the sales team; similarly, bonuses relating to thedevelopment of seasonal collections are awarded to technical specialists;

�.� EMPLOYEE RELATIONS•

specific benefit plans for each country, which supplement in whole or in part the
mandatory entitlements (healthcare, insurance, etc.), and benefits including social

To recruit and attract talent, the Group collaborates with universities and entities that

services and assistance to families (public transportation, cars, school subsidies,organize post-graduate programs focusing on marketing and retail. Prada also offers

subsistence allowances, etc.).

internships to new graduates to enable them to obtain experience and demonstrate
their skills, and have the opportunity to work in the business afterward.

The Prada Group collaborates with trade unions to improve the working conditionsof its employees and to foster the medium/long-term well-being of its employees

The selection process, which consists of various evaluation approaches according toand thus its surrounding communities. Over the years the Group has stipulated

the position offered and experience of the candidates, is based on transparent internalmany supplementary agreements especially in Italy, in the United Kingdom and inpolicies and ensures equal opportunity.

France, whereby it offers better benefits than those in the local collective bargaining
agreements. For instance, 82% of the employees in Italy and 100% in France can benefit

New college or high-school graduates and candidates with up to three years offrom the supplementary agreements. In the UK, employees of the industrial divisionexperience are screened through individual and collective testing, whereas those with

benefit from supplementary agreements.

strong experience undergo an individual screening process.

33

The most significant benefits of such agreements for this year are as follows:•

performance bonus: variable bonus linked to production, sales and profit targets;•

vacation bonus: fixed amount equivalent to one month's pay as defined in thecollective bargaining agreement;•easy access to severance pay advances;•flexible working hours enabling employees to achieve a more productive work-lifebalance;•

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

special leave of absence for illnesses of employee's children (up to 12 years of age)in France;•

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 unions (ofwhich 29% of the Group’s employees were members in 2016), no labor strikes occurredin the year (no labor strikes also in 2015).
The Board of Directors, together with the Remuneration Committee, is actively involved
in determining the top management remuneration taking into account the roles andresponsibilities assigned, and considering the market compensation applicable tosimilar positions in businesses of comparable size and complexity to the Prada Group.

�.� DIVERSITY AND EQUAL OPPORTUNITY
The vast global presence of the Prada Group reflects a multitude of different cultures,
skills, nationalities and religions. The communities and areas in which it operates area constant source of inspiration and growth.
The Group firmly believes in the value of diversity as inspiration for the business andas a form of cultural richness, well-being, creativity, innovation and progress, whichenables it to forge close relationships with a diversified, global customer base.
The statistics on employee origin are evidence of the various backgrounds of theworkforce. In fact, persons of 101 different nationalities (109 in 2015) work for the Group.
The strong female presence is demonstrated by the ratio between males and females
for each job category: women not only represent the majority of Labor (56%) and Staff
workers (64%); they are also the largest component (54%) of Executives and Managers.

34

LABOR

YEAR

STAFF

EXECUTIVES AND MANAGERSFEMALEMALE

FEMALEMALE

FEMALE

MALE

2014

53%

47%

65%

35%

55%

45%

2015

54%

46%

64%

36%

54%

46%

2016

56%

44%

64%

36%

54%

46%

INDUSTRIALCORPORATEMALE

FEMALEMALE

FEMALE

MALE

2014

57%

43%

55%

45%

55%

45%

2015

65%

35%

64%

36%

64%

36%

2016

59%

41%

54%

46%

64%

36%

Even at a geographical level: women represent more than half of workers in all areasin which the Group operates, with peaks in Japan and the Asia Pacific, where females
account for 74% and 67% of employees respectively.

EUROPE

standards and in full compliance with local and international regulations.

terms of health and safety, but still to a low extent.
INJURY RATE
(number of accidents/hours worked)*1,000,000

GRAVITY RATE
(days lost for accidents/hours worked)*1,000

2014

12.96

0.27

2015

11.08

0.19

2016

11.02

0.21

YEAR

In the three-year period, the injury indicators for Italian companies declined steadily:
the injury rate declined by 15% (from 12.96 in 2014 to 11.02 in 2016), while the gravity
rate decreased by 22% (from 0.27 in 2014 to 0.21 in 2016). As a result of training and

EMPLOYEES PER GENDER AND GEOGRAFICAL AREAAMERICAthe health and safety of employees at all Company locations according to the highest

Group's operations are limited. Manufacturing facilities present the greatest risk in

RETAIL

FEMALE

ITALY

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

In most locations (offices, warehouses and boutiques), risks associated with theAnother distinctive characteristic is the prevalence of women in all divisions.
YEAR

�.� WORKER SAFETY THROUGHOUT THE SUPPLY CHAINASIA PACIFIC

updated safety measures, especially implemented in the industrial areas, the injury

JAPAN

MIDDLE EAST

rate remained at very low level in 2016. In Italy there were 80 incidents, 70% of which

FEMALEMALE

FEMALEMALE

FEMALEMALE

FEMALEMALE

FEMALEMALE

FEMALE

MALE

involved females. 51% occurred during commuting and 49% at the Company (46% due

58%

42%

55%

45%

60%

40%

67%

33%

74%

26%

50%

50%

to tripping/slipping). There were no cases of occupational disease in Italy.

Equal opportunity is reflected in the compensation and benefit system, based on the

In order to promote and raise widespread safety awareness, the Company, also thanks

enhancement of skills and on merit, which ensures consistent treatment of genders,

to the legislation evolution on this matter, uses on-line safety courses with specific IT

seniority and positions.

platforms that are easy and simple to use. In 2016 training was provided to more than
1,020 people in Italy.

The gender pay gap with respect to men's and women's average salaries is shown
below. In line with the data on the female presence by qualification, the substantial

There are no committees within the Group responsible for creating and monitoring

equality in the remuneration treatment typical of the Prada Group is evident, with aoccupational health and safety programs, whereas the positions and internalratio almost always equal to 100% for all types of qualification.

organization structures required by the local legislation of the various countries inwhich Prada is present do exist.

PAY GAP (with the median as 100% )
LABOR

YEAR

STAFF

EXECUTIVES AND MANAGERSFEMALEMALE

FEMALEMALE

FEMALE

MALE

2014

99%

102%

99%

100%

100%

103%

2015

101%

98%

102%

106%

102%

98%

2016

102%

95%

101%

97%

100%

97%

Moreover, safety of the manufacturing facilities is the focus of targeted projects.
Following the tragic earthquake that struck Italy's Emilia Romagna region in 2012, thePrada Group engaged a team of professionals to assess the seismic vulnerability of allits owned production facilities in Italy. Afterward, voluntary improvements to safety
standards beyond those prescribed by the Building Code were made to all structures
built before seismic laws were in effect. To the initiatives already undertaken, some ofwhich completed, in 2016 the improvement works of the factory in Montone, Umbria
took place.

35

implementation of and compliance with the standards in order to create positive
work relationships. In relationships with suppliers, social awareness is encouraged
and regulatory knowledge and the adoption of environmental, social and quality
certifications are promoted.
Prada's commitment is realized in part by the promotion, dissemination and signingof the Group's Code of Ethics, which is often included within business agreements.
The Code of Ethics sets minimum standards for suppliers regarding:•rights of employees and working conditions (including number of regular/overtime/
vacation hours, salaries and zero tolerance for child labor and forced labor);•

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

equal opportunities for employees;•

freedom of association;•

health insurance for employees;•

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

the protection of intellectual property and the fight against counterfeiting.

Factories and external suppliers are required to assure that any third party thatprovides them with materials and/or labor for making the products is authorized andcomplies with the Code of Ethics.
During the year, the Group started to renew the "Group’s qualified vendor list" procedure
also with the aim of defining responsibilities and operational behaviors to ensureethical reliability of the suppliers (paragraph 2.1.3).
Finally, for the 2016 fiscal period, the Prada Group published its first statement in
The industrial investments made in 2016 took into account the need to assure workers
high safety standards and high environmental quality in the work environment
through the upgrading of all the spaces inside and outside the buildings.

accordance with UK MSA – Modern Slavery Act – describing its commitment to the
management and control of the risk of forced labour, human trafficking and slavery
along its supply chain.

The Group is engaged in guaranteeing that its products are created in conditions
reflecting its commitment for the respect of human rights in the workplace and of theinternational rules for the safety and well-being of workers.
The Group's business partners are encouraged to go beyond the minimum regulatory
requirements and foster dialogue among all parties involved to facilitate the36

4. THE PRADA UNIVERSE
The Prada Group’s close ties with the fields ofart and culture are an integral part of the brandvalues. Interaction with these seemingly distantworlds has led to the realization of special
projects that over the years have contributed tothe making of the multifaceted world of Prada.

�.� FONDAZIONE PRADA
Since 1993, the interests and passions of Miuccia
Prada and Patrizio Bertelli have led the Groupto sponsor Fondazione Prada’s activities in thefields of art and culture.
Fondazione Prada was set up in Milan as a spacefor contemporary art exhibitions as well as
projects in architecture, cinema and philosophy.
By 2010 it had staged 24 solo shows in Milan
devoted to important Italian and international
artists. Since 2011 the Fondazione has hosted 5group shows at its venue in an eighteenth-century
Venetian palace in Ca’ Corner della Regina, and in2016 it hosted “Belligerent Eyes”, an experimental
project dedicated to cinema.
In May 2015 Fondazione Prada inaugurated its
new permanent facility in Milan, designed by the
OMA architects led by Rem Koolhaas. Situatedin the southern part of Milan, it was converted
from a distillery dating back to the early 1900s.
The complex has a surface area of 19,000 m²
capable of holding many exhibitions and cultural
events, enabling the foundation to develop its
multidisciplinary vocation.
In 2016 it hosted important anthological andretrospective exhibitions dedicated to international
artists, a choreographic performance, and a film
festival curated by Alejandro González Iñárritu.

37During the year it also continued its educational program for Children's Academy
activities and began the first part of the site-specific project, “Slight Agitation”, withartist Tobias Putrih.
The Osservatorio, Fondazione Prada’s new photography exhibition center in Galleria
Vittorio Emanuele II in Milan, opened in December 2016.

38�.� PRADA GROUP AND FAI
Knowledge, concreteness, consistency, independence,
quality: these are the five inspirational principles that
led Prada to find in FAI (Fondo Ambiente Italiano:
Italian National Trust) a sensitive and attentive
interlocutor with which to design and develop
initiatives for the common good.
The two players began a long-term, continuous
partnership consisting of initiatives chosen withgreat care: from the restoration of three arches in
the Palazzo of the Archiginnasio in Bologna, andthe donation of a new curtain to the Teatro Regioin Turin, to the renovation of the lighting system
for the Shrine of Prosdocimus Abbey of Santa
Giustina in Padua.
From 2014 and 2016 the Prada Group supported
the Laboratorio at Opificio delle Pietre Dure in
Florence during the completion of the restorationof Giorgio Vasari's Last Supper, overrun with waterand mud during the flood of Florence in 1966
and long considered to be virtually impossible
recovery.
In details, Giorgio Vasari’s Last Supper, painted ona wooden panel and dated 1546, was so severely
damaged by the Arno river flooding in 1966
that it was left untouched and shifted from one
warehouse to another for almost forty years.
The Laboratorio dell’Opificio delle Pietre Dure,in Florence, started in 2004 the delicate work of
restoration, originally sponsored by the ordinary
planning of the Ministry for Cultural andEnvironmental Heritage, through a special fundof Protezione Civile and also by a fund managed
by the Getty Foundation as part of the Panel
Paintings Initiative.

39

Since 2014, the Prada Group and FAI have contributed to reaching the final stages of theskillful and patient restoration of the painting, that represents not only an important
action for the safeguard of the artistic heritage, but also an opportunity to devise andimplement innovative preservation techniques.
On November 4, 2016, on the occasion of the fiftieth anniversary of the Florence flood,
the President of the Italian Republic, accompanied by the Minister for Cultural Heritage
and the Mayor of Florence, celebrated the return of the Last Supper to the Cenacle atSanta Croce in Florence, where it once again took up its original position inside therefectory.
This circumstance represented the occasion to emphasize the importance andexceptional nature of this achievement, an extraordinary story of studies, hopes,
restoration and technological development which made the return of a masterpieceto the world possible.

�.� OTHER SPECIAL PROJECTS
Cinema, as a contemporary form of art, has led to creative collaborations of Pradawith film directors of international caliber through which numerous films were made,including Thunder Perfect Mind directed by Jordan and Ridley Scott in 2006, A Therapy
directed by Roman Polanski in 2012, Castello Cavalcanti by Wes Anderson in 2013 and,last in order of time, Past Forward by the Oscar-winning director David O. Russell in
2016. Miuccia Prada's interest has also resulted in the production of a series of shortfilms - "The Miu Miu Women's Tales" - by directors of international fame with different
intellectual backgrounds which explored the world of women.
In November 2016, Prada presented the "Past Forward" multi-platform film project bornfrom a unique collaboration between Miuccia Prada and the American director David
O. Russell. In their presence, on November 15, the film was screened for the first timeat the new Hauser Wirth & Schimmel Gallery in Los Angeles and in the following twodays the film was simultaneously screened for a selected audience in Tokyo, London,
Beijing , Moscow, Istanbul, Berlin, Milan, Paris, New York and Sydney.

40

5. AT ONE WITH THE COMMUNITY
The main direct impact of the Group's business originates from the use of energy for
offices, factories, logistics centers and stores in the various parts of the world. The
objective is to reach ever higher levels of energy efficiency and continuously pursue
new ways to reduce waste.
�.�.� ENERGY CONSUMPTION AND CO2 EMISSIONSIn 2016, the Prada Group recorded electricity consumption of 153,049 MWh, up
compared to 2014 (+16%) and slightly down compared to 2015 (-0.3%). However, in the
period of 3 years considered, there is a growing trend in gas consumption, which goesfrom 2,043,513 m3 in 2014 to 2,361,125 m3 in 2016 (+16%). Gasoline and Kerosene fuelconsumption, mainly used for fuel (owned and leased), amounted to 1,230,361 liters in
2016, down 12% compared to 2015.
ENERGY CONSUMPTION

2014

2015

2016

GAS1

m3

2,043,513

2,283,624

2,361,125

DIESEL AND KEROSENE

l1,025,337

1,403,059

1,230,361

KWh

132,324,893

153,502,779

153,049,412

ELECTRIC ENERGY1

1. The figures for electricity and gas consumption for 2014 and 2015 are different from those published in the previous edition of the
Prada Group's Social Responsibility Report as data and information were made available after its publication.

The CO2 emissions from electricity, natural gas and fuel consumption are reported in
the following table: direct emissions (scope 1), i.e. those deriving from the consumptionof natural gas and fuel for vehicles owned, amounted to 5,431 tons, up by 1% from 2015
due primarily to greater fuel consumption; indirect emissions (scope 2) were 75,300
tons, slightly down from 2015; the other indirect emissions (scope 3), relating to the fuelconsumption of the leased fleet, amounted to 2,443 tons of CO2, down 13% from 2015.

CO2 EMISSIONS

2014

2015

2016

ton CO2

4,327

5,381

5,431

Buildings

ton CO2

3,997

4,464

4,616

�.� ENVIRONMENTAL PROTECTION

Means of transport (owned)

ton CO2

329

917

815

Environment is one of the interests of the Prada Group, which feels responsible for

ENERGY - INDIRECT EMISSIONS(scope 2)

ton CO2

65,10475,52375,300OTHER INDIRECT EMISSIONSMEANS OF TRANSPORT(Leasing) (scope 3)

ton CO2

2,403

2,799

2,443

engaging in and cultivating virtuous behaviors that contribute to its sustainablegrowth and are examples of good practice within the entire industry.

DIRECT EMISSIONS(scope 1)

Commitment to environmental respect is a key element of the Code of Ethics, applied

In the past few years, energy consumption controls and testing have been used towithout distinction both within the organization, by constantly raising staff awareness,

design a long-term plan to improve energy efficiency both in the industrial and retailand to third parties working with the Group.

environment.

41

The initiatives of the plan include:•

development of projects focusing on photovoltaics and evaluation of the installationof cogeneration and/or trigeneration systems;•

gradual replacement of all air conditioners and cooling machines with latestgeneration systems;•

a strong campaign to definitively and completely light areas with low-consumption
LED bulbs;  

•gradual replacement of all heat engines and pumps with ones of a high energy
efficiency class;•gradual installation of inverters on the electric motors that lack them;•

installation of digital multimeters to measure electricity;•purchasing 100% renewable energy.

The Group also embarked on a new energy policy aimed at maximizing self-generated
energy and the new plant in Scandicci is an example of this approach. In 2016 thisindustrial site consumed around 1,439 MWh annually out of which approximately
1,099 MWh annually were purchased from the network (100% coming from renewablesources) and about 340 MWh annually was self-generated. The remaining part of selfgenerated energy (76 MWk annually) was put into the network.
FACTORY HEATING AND AIR CONDITIONING SYSTEMS
After replacing the heating and air conditioning equipment at Ancona, Montegranaro,
Buresta, Carducci, San Zeno and Amiata factories with new machinery granting
a reduction in energy consumption, in 2016 air conditioning was upgraded in the
Arezzo and Montone factories. New machineries were then placed on the site of Cittàdi Castello which, after being closed for many years and used as a simple deposit,
returned to be a complete production cycle factory for the production of shirts.
In addition to these investments, during the year corrective actions were taken on
the remaining equipment to optimize the hours of operation. Personnel training was
carried out focusing on appropriate, rational electricity use.
LED
Since 2014 the Group is pursuing an important project to replace store6 lighting systems
with LED technology ("Relamping" project) which at the end of 2015 already involved 81
stores, mainly in Europe, where most of the Group's historic stores are located, and in
North America. Replacement operations continued in 2016 by extending LED lighting
to other 34 stores, mainly in China.
In most cases the replacement of light fixtures regarded furnishings and displays withfluorescent lights, whereas in some stores it also regarded halogen and master color
lamps in the ceiling lighting. Approximately 10% direct energy savings were obtainedfor furnishings and 70% for ceilings. Indirect energy savings result from the reduced
heat produced by the lamps, which enables Prada to use less air conditioning in thesummer, and from the reduced waste because LED lamps last much longer on averagethan fluorescent lamps, and in contrast to the latter do not contain any mercury.
LEED (Leadership in Energy and Environmetal Design)
In 2016 the Prada Group achieved LEED Gold certification on 7 stores: 6 Prada stores
between China, Australia and Switzerland and 1 Miu Miu store in China. The Groupestimates to achieve other certifications in 2017.
PHOTOVOLTAIC SYSTEM
During 2016 active photovoltaic plants are as follows:•

Scandicci, active from October 2015, produced about 415 MWh for 2016;•

The first building of the Logistic Hub has been active from March 2017 and will selfproduce about 1,490 MWh annually;•

Arezzo plant has been active from March 2017 and will self-produce about 95 MWhannually;•

Arezzo (San Zeno warehouse) has been active from April 2017 and will self-produce
about 65 MWh annually.

Further facilities are planned for 2017.
�.�.� WASTE
The Group recognizes the importance of responsible natural resource use and waste
management.
The Company conducted an analysis of the processes carried out and waste producedin each manufacturing phase of the factories, and subsequently set up a system
to manage the internal cycle of waste transport, collection, temporary storage anddisposal. The analysis enabled to optimize the available resources, thereby reducing
waste production and increasing waste recycling. Moreover, the new procedures
implemented enabled the Prada Group to recycle more paper, plastic, glass and printercartridges not just at the factories but also at the Group's offices.
Since 2016, the Prada Group has further focused on promoting internal industrial
waste collection methods and standards that can ensure their reuse and recycling or
disposal in accordance with the best practices. The main materials involved are paper,
cardboard, plastic and wood.

6 The "Relamping" project refers to the stores opened before 2013, as those that were inaugurated afterward already used LED lighting systems.

42

�.�.� USE OF RECYCLED AND CERTIFIED PAPER
In 2016 the Prada Group used 3,460 tons of material to package products worldwide,
down by 27% from 2015 mainly as a result of the reduction of the volumes and therationalizing and optimizing of the packaging used for certain types of products.
PACKAGING CONSUMPTION (tons)
Recycled or certified paper
Other paper

5,812
4,731
3,460

74%
77%

82%

26%

23%

18%

2014

2015

2016

The use of paper certified by the Forest Stewardship Council (FSC) and of recycled
paper in packaging grew by 5% in 2016, from 77% to 82% of the total.

�.� PRESERVATION OF THE TERRITORY
The respect for the places where its operations are located has been a guiding principle
for the Prada Group since its beginnings. Reducing land take, renovating existing
structures and working toward building requalification have inspired the decisions
made in more than thirty years of the industrial development.
The Prada Group, in agreement with local authorities and the Superintendence ofArtistic and Cultural Heritage, has directed its utmost efforts and abilities toward
recovering what had previously existed.
With the belief that new construction can impact an area considerably, and that such a
decision must be taken only when necessary, the Prada Group prefers to purchase andsalvage existing buildings. Even in the case that this option is unavailable, the Group
ensures that the construction work planned does not take the land, but rather builds
the landscape, with the help of master architects that it is used to work with. Indeed,
the few newly constructed buildings fit harmoniously into the local areas, withoutcausing disruption.

43

The Prada Group has more than 192,000 m2 of production facilities and warehouse
space, including 175,000 m2 in Italy. Among these, 4 are new buildings, 3 are recoveries ofindustrial archaeology and several are the cases of reuse of degraded sites abandoned
for many years. In details, 4 of the most important projects in the industrial area wereassigned to architect Guido Canali, master in Italy of a sustainable architecture.
�.�.� VALORIZATION IN THE INDUSTRIAL DEVELOPMENT
Last year a three-year investment plan started to re-qualify and reorganize theGroup's manufacturing structure in order to preserve artisanal know-how, support
the technical development of production processes and improve the quality ofwork environments. Specifically, in 2015 the Group finalized the restructuring of thelaboratories in Terranuova, the construction of a mechanized plant in Levanella and a
cutting center at Valvigna, the complete renovation of the new plant in Scandicci, therenovation of two factories near Siena and Arezzo, the renovation of a warehouse near
Arezzo and the acquisition of a tannery in France.
During 2016 the projects continued and are reported below.
INDUSTRIAL SITE: CITTA’ DI CASTELLO (PERUGIA), ITALYIn May 2016 the industrial site in Città di Castello, which incorporates all stages ofthe design and production of men’s shirts, reopened following major renovation andrestructuring work.
Acquired in 2001, after being a simple supplier and partner for many years, the plant,
which boasts a long tradition and offers the very highest quality, has been developed
to increase its production capacity for the Made-To-Measure demand, and expanded
to cover an area of over 2,000 m2.

INDUSTRIAL SITE: AREZZO, ITALYThis historic plant, founded in the 1960s by Patrizio Bertelli under the name ‘Sir
Robert”, has recently undergone major restructuring work with alterations made to thelogistics, technology and production. The work was completed in September 2016. The

Space rationalization also allowed optimizing production processes, creating an

project involved the entire 1,600 m² complex, and focused on modernizing the cutting

efficient and dynamic flow. The whole structure has also been upgraded both in indoor

machinery, introducing LED lighting and energy-efficient air conditioning, as well as

and outdoor spaces.

updating the furnishings and completely relaying the floor.

At January 31, 2017 the factory employed 50 shirt-making specialists.

Operations have also been made more efficient, with production now dedicatedexclusively to sampling and to the production of belts - the plant’s historic specialism

INDUSTRIAL SITE: MONTONE (PERUGIA), ITALY- and small leather goods.

In November 2016, the major renovation of Prada’s historic plant in Montone, central
Italy, which specialized in producing men’s trousers, was completed. Built on a total

At January 31, 2017 the plant employed 30 people.

10,000 m² site, the trouser factory has a floor space of 2,900 m².
The recent work involved all areas of the plant and has significantly improved its
inside spaces, restructuring workflows and optimizing the manufacturing processes.
At January 31, 2017 the factory had a total of 50 employees.

44�.�.� LOGISTIC HUB
The new 102,000 m2 logistics hub in Levanella (outside Arezzo) was designed byrenowned industrial architect Guido Canali, who also designed Prada's headquarters
in Valvigna and its shoe factories in Buresta and Montegranaro.
The hub is part of a major plan to reorganize the warehousing and distribution offinished products, which will ultimately allow the Group to have the control over allphases of the logistics process.
The complex initially include the realization of two warehouses, an office building
and an employee cafeteria, as well as equipment and service rooms, for a totalindoor area of 28,000 m2. If needed, a third structure may be built in the future.
Like all of Canali's designs, the complex is environmentally friendly, worker
friendly, and responsibly integrated into the community thanks to border plantings,
roof gardens, water features, picture windows and nature paths. Green areas cover
more than 70% of the total surface of this facility.
The complex has been designed with the following energy-efficiency features:•

solar roof panels (expected to generate some 561 MWh/year);•

LED lighting;•energy-saving smart home system;•

low-loss transformers;•

high-efficiency generators;•

geothermal plant.

Construction began in February 2016 and reached the completion of Phase 1 during
the year. The first of the two warehouses that has been realized has a surface areaof 11,000 m2 and is already open for shipping (5,500 m2) and services (300 m2).

In addition to the above-mentioned projects, in 2016 the Prada Group continued the renovation of a warehousein Arezzo, completed the renovation of the Scandicci plant, launched the ambitious reorganization of its
logistics (see next paragraph for more information) and acquired 3 production sites within the broader
vertical integration strategy and consequent shortening of its value creation chain.
In 2016 the design of the Prada Headquarters – located in Valvigna, Arezzo, Tuscany – by architect Guido
Canali has been awarded the “Brand&Landscape Award 2016”, promoted by the National Council of
Architects, Planners, Landscape Architects and Conservators and the international magazine PAYSAGETOPSCAPE. The jury noted the industrial complex’s “special quality in the relationship between corporate
image and landscape design that promotes harmony and development in the working environment. Indeed,
the work expresses equal respect for nature, which is looked after and preserved, as it does for work, withboth afforded dignity and value”.

45

6. NOTES ON THE METHODOLOGY
�.� THE MATERIAL ASPECTS IDENTIFICATION
THE PRADA GROUP'S STAKEHOLDERS
In conducting its business the Prada Group interacts with many stakeholders, all ofwhich can directly or indirectly influence or be influenced by the achievement ofbusiness objectives.
After mapping our stakeholders from beginning to end of the value chain, the Group
determined which are most important on the basis of their:•

influence on Prada: ability to affect the company's strategic or operational decisions;•dependence on Prada: extent to which the stakeholders depends on the company's
decisions, products and activities.

This process identified many key stakeholders in the following categories:

CUSTOMERSLANDLORDSSUPPLIERS

LICENSEES AND
BUSINESS PARTNERS
UNIVERSITIESASSOCIATIONSEMPLOYEESTAX AUTHORITIESTRADE UNIONSSHAREHOLDERSAUTHORITIES AND
REGULATORY BODIESLENDERS AND
FINANCIAL COMMUNITYCOMMUNITYCOMPETITORSDISTRIBUTORSMEDIA AND
INFLUENCERS

To identify the material aspects that favor the achievement of long-term goals –which for the Prada Group consist of business growth with continuous improvementin product quality and work organization - while satisfying the interests of our46

stakeholders, Prada gathered perspectives from the various department heads who

Once sustainability issues were defined, they were ranked for materiality so thatinteract with stakeholders on a daily basis. Together with the materiality analysis

the more significant of them would be included in this report. This was achieved by(please refer to the following paragraph), this helped determine the sustainability

interviewing key department heads, who assigned priority rankings to the issues

issues of relevance both for the Company and its stakeholders.

according to their significance for Prada and its stakeholders.

MATERIALITY ANALYSISIn accordance with the GRI-G4 guidelines, the aspects were ranked in terms of their

The Prada Group has written the 2016 Social Responsibility Report according to theimpact both within and outside the organization, i.e. extending the analysis to thelatest sustainability reporting guidelines of the Global Reporting Initiative (GRI-G4).

entire value chain.

Moreover, this year, for the preparation of the Report, the Group also followed the "ESG
Reporting Guide" of the Hong Kong Stock Exchange.

The input from the department heads was then integrated with other criteria fromoutside the management team's perspective. In particular:

The depth and detail given to the various topics reflect the outcome of a materiality
analysis carried out in the last months of 2015: a process of identifying, evaluating•internal materiality was also assessed considering the Prada Group’s commitment

and ranking the sustainability aspects that are relevant to our stakeholders and thatto the individual issues and their impact on its various forms of “capital”, as defined

influence our ability to create value in the short, medium and long-term.

in the Integrated Reporting (financial, manufactured, natural, human, intellectualand social and relationship capital);

The materiality analysis is a two-phase process that involves:•in assessing external materiality (significance for stakeholders), the analysis
focused on the various aspects relevant to the Prada Group’s specific sector.

1. Identifying sustainability issues: determining which issues are key to understanding
Prada's business and strategic context and to describing its main environmental,

The material aspects for the Prada Group were defined as the intersection of

economic and social impacts;

significance for the Company and significance for the stakeholders, as shown in the

2. Ranking: putting these aspects in order on the basis of their relevance for achieving

following matrix.
MATERIAL Aspects

business goals (internal materiality) and concern to stakeholders (externalmateriality).

• PRODUCT CREATIVITY AND EXCELLENCE+• PRODUCT RESPONSIBILITY

A comprehensive list of sustainability issues for the Prada Group was identified by:• KNOW-HOW PRESERVATION AND SKILLS•

mapping the key stakeholders and analyzing their concerns;• RELATIONSHIP WITH THE TERRITORY•

performing a benchmark analysis against Italian and international fashion andluxury firms, producing a list of the most common sustainability issues in theindustry;•

conducting a press review to present the perception of public opinion for eachsustainability issue. The analysis was performed so that each issue could also beassessed in terms of its impact outside the company;•

reviewing internal documents (Annual Report, Code of Ethics, policies andprocedures) to understand the business point of view with respect to various•

SIGNIFICANCE FOR THE STAKEHOLDERS

DEVELOPMENT• ATTRACTION AND RETENTION OF TALENTS• RAW MATERIALS SOURCING• TRADEMARK PROTECTION• BUSINESS STRATEGY AND ECONOMICPERFORMANCE• HUMAN RIGHTS AND EMPLOYEESWELLBEING IN THE SUPPLY CHAIN• OCCUPATIONAL HEALTH AND SAFETY• ENERGY AND CLIMATE CHANGE• TRACEABILITY AND RESPONSIBLE SUPPLYCHAIN MANAGEMENT - SOCIAL IMPACTS

sustainability issues;• QUALITY OF THE WORKING ENVIRONMENT

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

• COMPLIANCE AND RISK PREVENTION-SIGNIFICANCE FOR PRADA GROUP+• DIVERSITY AND EQUAL OPPORTUNITY• PROTECTION AND ENHANCEMENT OF THE
ARTISTIC AND CULTURAL HERITAGE• CUSTOMER EXPERIENCE
47

Of the more notable results:•

alike—of the high standards of quality and style that accompany Prada merchandise
along the entire value chain;
aspects relating to long-term value creation are among the most significant

OUTSIDE THE
ORGANIZATIONWITHIN THE
ORGANIZATIONOUTSIDE THE
ORGANIZATION

Economic Performance

Group

-

-

-

Procurement practices

Group

-

-

-

Materials

Group

-

-

-

EmissionsGroup

Independent
clients (*) and
Suppliers-

Not extended to
Independent clients (*)
and Suppliers

EnergyGroup

Independent
clients (*) and
Suppliers-

Not extended to
Independent clients (*)
and Suppliers

Employment

Group

-

-

-

Diversity and equal
opportunity
Equal remuneration for
women and men

Group

-

-

-

Group

-

-

-

Training and education

Group

Industrial Suppliers-

Not extended to
Industrial Suppliers

Occupational health andsafetyGroup

Independent
clients (*) and
Suppliers-

Not extended to
Independent clients (*)
and Suppliers

Supplier assessment forlabor practices

Group

-

-

-

Supplier human rights
assessment

Group

-

-

-

Non - discrimination-

Industrial Suppliers-

Not extended to
Industrial Suppliers

Freedom of associationand collective bargaining-

Industrial Suppliers-

Not extended to
Industrial SuppliersChild labor-

Industrial Suppliers-

Not extended to
Industrial Suppliers

Forced or compulsory
labor

-

Industrial Suppliers-

Not extended to
Industrial Suppliers

Compliance - productresponsibility
Product and service
labelling
Customer health andsafety

Group

-

-

-

Group

-

-

-

Group

-

-

-

Compliance - society

Group

-

-

-

(business strategy and economic performance, trademark protection), as is the
management of human capital (know-how preservation and skills development,
quality of the working environment, attraction and retention of talent) and thecustomer experience;•

aspects associated with the production process and its impact throughout the
supply chain are the most important for stakeholders (product responsibility,
human rights and employee well-being along the supply chain, occupational
health and safety, raw materials sourcing, traceability and responsible supply
chain management).

The above mentioned material aspects have been also confirmed for the 2016 financial
period to which this report refers.
Based on the current coverage of the GRI’s General Standard Disclosures and SpecificStandard Disclosures related 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 Reporting Guide (Main Board Listing Rules - Appendix 27) arelisted in the Content Index7 (page 50).
The following table sets forth the material aspects defined in the Global Reporting
Initiative (GRI) G4 Sustainability Reporting Guidelines (Standard Specific Disclosures):it reports the material aspects for Prada with the related aspect boundaries and any

ASPECT BOUNDARIES
LIMITATIONASPECT BOUNDARIESWITHIN THE
ORGANIZATION

the most significant aspect proved to be product creativity and excellence, which
demonstrates the fundamental importance—for the Group and its stakeholders•

GRI - G4 MATERIALASPECTSlimitations regarding non-extension of the disclosures to outside the organization.  

7   No reference to General Disclosure A3 - the Environment and Natural Resources - of the ESG Reporting Guide of the Hong Kong Stock
Exchange as, currently, this topic has not been classified as material for the Organization according to GRI – G4 materiality assessment.

(*) Independent clients mean Department stores, multi-brand stores and Franchisees48

PRINCIPLES FOR ENSURING SUSTAINABILITY REPORTING QUALITY
This document was drawn up with the purpose of reporting both the successful aspects
and the weaknesses of the Prada Group, with a view toward prospective improvement.
The information and indicators included aim to provide a balanced portrayal of theGroup's sustainability performance and initiatives.  
The process of reporting, collecting and aggregating the data was structured withthe ultimate purpose of enabling stakeholders to compare and comprehend 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 thesustainability report.
With respect to the calculation methodology:-

the injury rate is the ratio between the total number of hours lost due to injuries andthe total number of working hours;-

where environmental data was unavailable, conservative estimates were used that

resulted in choosing assumptions associated with the least positive environmental

�.� THE REPORTING PROCESS

performance for the Company;

SCOPE

-

This document is the Prada Group's fourth Social Responsibility Report and provides agreenhouse gas emissions were calculated using the following emission factors:•

emissions scope 1: emission factors taken from the list of Italian standard

description of the main initiatives undertaken in fiscal year 2016, i.e. from February 1,

parameters published by the Ministry of Environment and Protection of Land2016, to January 31, 2017, and the 2014-2016 performance trends; particularly significant

and Sea;

initiatives and events of fiscal year 2017 already known at the reporting date are also•

emissions scope 2: emission factors taken from the Terna International
Comparison on 2014 Enerdata data;

included (see pages 26 and 42).
•emissions scope 3: emission factor taken from the list of Italian standard

The performance indicators were obtained on an annual basis; the reporting cycle isparameters published by the Ministry of Environment and Protection of Landannual. The reporting boundary is the perimeter referred to in the 2016 Annual Report,

and Sea.

i.e. Prada spa and its subsidiaries, excluding the data specified in the text.
Finally, carbon dioxide is the only greenhouse gas considered.
Prada spa, together with its subsidiaries collectively the “Prada Group”, is a joint-

The 2014 and 2015 data may differ slightly from the data published in the 2014/2015

stock company incorporated and domiciled in Italy with headquarters in Via Antonio

Social Responsibility Reports due to the aggregation of data that became available

Fogazzaro 28, 20135 Milan, whose share capital is 80%-owned by Prada Holding spa, aafter such Reports were published. For the same reason, the 2016 data reflects the bestcompany domiciled in Italy, while the remaining shares (20%) are listed on the Main

possible estimate using the data available when the 2016 Social Responsibility Report

Board of the Hong Kong Stock Exchange.

was published.

49

7. GRI CONTENT INDEX FOR “IN
ACCORDANCE” CORE OPTION
INDICATORREFERENCES TOHKEX ESGREPORTING GUIDEDESCRIPTIONREFERENCESOMISSIONSINDICATORREFERENCES TOHKEX ESGREPORTING GUIDEDESCRIPTIONREFERENCESOMISSIONSGENERAL STANDARD DISCLOSURE

STAKEHOLDER ENGAGEMENTSTRATEGY AND ANALYSIS

G4-24

List of stakeholders groups engaged by the organization

Pag. 46

G4-25

Basis for identification and selection of stakeholders with whomto engage

Pag. 46-47

G4-26

Approach to stakeholders engagement

Pag. 46-48

G4-27

Key topics and concerns that have been raised throughstakeholders engagement, and how the organization has
responded to those key topics and concerns, including throughits reporting

Pag. 46-48

G4-28

Reporting period for information provided

Pag. 49

G4-29

Date of most recent previous Social Responsibility Report

Pag. 49

G4-30

Reporting cycle

Pag. 49

G4-31

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

Pag. 52

G4-32

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

Pag. 50-52

G4-33

Policy and current practice with regard to seeking external
assurance for the report

Pag. 49
This document is not submitted toexternal assurance

Governance structure of the organization, including committeesof the highest governance body Committees responsible fordecision-making on economic, environmental and social impacts

Pag. 13-15

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

Pag. 13

Statement from the most senior decision-maker about
the relevance of sustainability to the organization and theorganization's strategy

Pag. 3G4-3

Name of organization

Pag. 49

G4-4

Primary brands, products and/or services

Pag. 4; 9-11;
20-24

G4-5

Location of the organization’s headquarters

Pag. 49

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 Report

Pag. 4; 16-18

G4-7

Nature of ownership and legal form

Pag. 49

G4-8

Markets served

Pag. 4; 9-11

G4-9

Scale of the organization

Pag. 9; 11-12;
16; 28; 32

G4-10

Total number of employees by employment contract, employment Pag. 9; 32-33;
type, region and gender
34-35

G4-1
ORGANIZATIONAL PROFILEKPI B1.1

REPORT PROFILE

GOVERNANCE

G4-11

Percentage of total employees covered by collective bargaining
agreements

Pag. 33

G4-12

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

Pag. 9-11;
16-18

G4-34

G4-13

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

Pag. 4; 8; 49

ETHICS AND INTEGRITY

G4-14

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

Pag. 15

G4-56

G4-15

Externally developed economic, social and environmental codesof conduct, principles and charters to which the organization
subscribes or which it endorses

Pag. 13; 19

G4-16

Memberships of national and/or international trade associations

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

KPI B5.1

IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES
G4-17

List of all entities included in the consolidated financial statements
Pag. 49
and those not covered by the Social Responsibility Report

G4-18

Explanation of the process for defining the report content and how
Pag. 46-48
the organization has implemented the related reporting principles

G4-19

List of all the material aspects identified

G4-20

Aspect boundary within the organization for each material aspect Pag. 47-48

G4-21

Aspect boundary outside the organization for each material aspect Pag. 47-48

G4-22

Effect of any restatements of information provided in previous
Pag. 49
reports, and the reasons for such restatements

G4-23

Significant changes in the scope and aspect boundaries

Pag. 47-48

Pag. 4; 8; 41; 49

50

MATERIAL ASPECTS
INDICATORREFERENCES TOHKEX ESGREPORTING GUIDEDESCRIPTIONREFERENCESOMISSIONSINDICATORREFERENCES TOHKEX ESGREPORTING GUIDESPECIFIC STANDARD DISCLOSURESTRAINING AND EDUCATIONECONOMIC PERFORMANCE INDICATORS

G4-DMA

G.D. B3DESCRIPTION

Disclosures on Management Approach

REFERENCES

Pag. 26-27

ECONOMIC PERFORMANCE
G4-DMA

G.D. B8

Disclosures on Management Approach

Pag. 11-12; 37-40

G4-EC1KPI B8.2

Direct economic value generated and distributed

Pag. 12Disclosures on Management Approach

Pag. 9-11; 18

G4-LA9KPI B3.1
KPI B3.2

Average hours of training per year per employee, by employee
Pag. 27
category and by gender

PROCUREMENT PRACTICES
G4-DMA
G4-EC9KPI B5.1

Percentage of the procurement budget used for significant
Pag. 18
locations of operation spent on suppliers local to that operation

G4-DMA

G.D. A2

Disclosures on Management Approach

Pag. 16-18;
42-43

G4- EN1

KPI A2.5

Total weight or volume of raw materials used

Pag. 17; 43

G4-DMA

G.D. B1

Disclosures on Management Approach

G4-LA12KPI B1.1

Composition of governance bodies and breakdown of employees
Pag. 14-15;
per employee category according to gender, age group, minority
33-35.
group membership, and other indicators of diversity

G4-DMA

G.D. B1

Disclosures on Management Approach

G.D. A2

Disclosures on Management Approach

Pag. 41-45

SUPPLIER ASSESSMENT FOR LABOR PRACTICES

G4-EN3

KPI A2.1

Energy consumption within the organization

Pag. 41

G4-DMA

G4-EN6KPI A2.3

Reduction of energy consumption

Pag. 41

G.D. B5
KPI B5.2

Disclosures on Management Approach

Pag. 18-19; 36

Percentage of new suppliers that were screened using labor
practices criteria

In 2016 the Prada Group started
to renew a procedure to qualify andevaluate its suppliers according tocriteria including work practices. At the
moment the number of suppliers thathave been evaluated is not available.

G4-DMA

Disclosures on Management Approach

Pag. 13; 18;
35-36

G4-HR3At this time the information needed toTotal number of incidents of discrimination and corrective actions
cover the indicator (aspect boundary
taken
outside the organization) is unavailable

EMISSIONS
G.D. A1

Disclosures on Management Approach

Pag. 41-45

G4-EN15KPI A1.1
KPI A1.2

Direct greenhouse gas emissions (scope 1)

Pag. 41

G4-EN16KPI A1.1
KPI A1.2

Energy indirect greenhouse gas emissions (scope 2)

Pag. 41

G4-EN17KPI A1.1
KPI A1.2

Other indirect greenhouse gas emissions (scope 3)

Pag. 41

SOCIAL PERFORMANCE INDICATORSLABOR PRACTICES

Pag. 34-35

Ratio of basic salary and remuneration of women to men by
Pag. 35
employee category, by significant locations of operation

G4-DMA

G4-DMA

Pag. 13-15; 32-35

EQUAL REMUNERATION FOR WOMEN AND MEN

G4-LA13

ENERGYAt the moment the
information on the
average numberof training hours
by category is notavailable. Prada iscommitted to collectthe information for the
future.

DIVERSITY AND EQUAL OPPORTUNITYENVIRONMETAL PERFORMANCE INDICATORSRAW MATERIALSOMISSIONS

G4-LA14KPI B5.2

HUMAN RIGHTSNON-DISCRIMINATIONEMPLOYMENT
G4-DMA

G.D. B1

Disclosures on Management Approach

Pag. 32-35

FREEDOM OF ASSOCIATION

G4-LA2

G.D. B1

Benefits provided to full-time employees that are not provided
to temporary or part-time employees, by significant locations ofoperation

Pag. 33-34

G4-DMA

Disclosures on Management Approach

Pag. 13; 18;
35-36

G4-HR4

Operations and main suppliers identified in which the right toexercise freedom of association and collective bargaining may
be violated or at significant risk, and measures taken to support
these rights

At this time the information needed tocover the indicator (aspect boundary
outside the organization) is unavailable

OCCUPATIONAL HEATH AND SAFETY
G4-DMA

G.D. B2
KPI B2.3

Disclosures on Management Approach

Pag. 35-36

G4-LA5KPI B2.3

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

Pag. 35

G4-LA6KPI B2.1
KPI B2.2

Rate of injury, occupational diseases, lost days, absenteeism, andPag. 35
total number of work-related fatalities, by region and by gender

51

REFERENCES TOHKEX ESGREPORTING GUIDEINDICATORDESCRIPTIONREFERENCESOMISSIONSCHILD LABOR
G4-DMA

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

Disclosures on Management Approach

G4-HR5KPI B4.1
KPI B4.2

Operations and main suppliers identified as having significant
At this time the information needed torisk for incidents of child labor, and measures taken to contribute cover the indicator (aspect boundary
to the effective abolition of child laboroutside the organization) is unavailable

Pag. 13; 18;
35-36

FORCED OR COMPULSORY LABOR
G4-DMA

G4-HR6

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

KPI B4.1
KPI B4.2

Disclosures on Management Approach

Pag. 13; 18;
35-36

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

For the 2016 fiscal period the PradaGroup published its first statement inaccordance with UK MSA – Modern
Slavery Act – committing to the
management and control the risk offorced labour, human trafficking andslavery along its supply chain.
Currently the information needed
to satisfy the indicator (outside theorganization) are not available.

SUPPLIER HUMAN RIGHTS ASSESSMENT
G4-DMAG4- HR10

G.D. B5
KPI B5.2

KPI B5.2

Disclosures on Management Approach

Pag. 18; 35-36

Percentage of new suppliers that were screened using humanrights criteria

In 2016 the Prada Group started
to renew a procedure to qualify andevaluate its suppliers according tocriteria including work practices. At the
moment the number of suppliers thathave been evaluated is not available.

Disclosures on Management Approach

Pag. 15SOCIETYCOMPLIANCE
G4-DMA

G4-SO8G.D. B1
G.D. B2
G.D. B4
G.D. B7

Monetary value of significant fines and total number of nonPag. 15
monetary sanctions for non-compliance with laws and regulations

PRODUCT RESPONSIBILITYCONSUMER HEALTH AND SAFETY
G4-DMA

G.D. B6

Disclosures on Management Approach

Pag. 19

G4-PR2

G.D. B6

Total number of incidents of non-compliance with regulationsand voluntary codes concerning the health and safety impacts of Pag. 19
products and services during their life cycle, by type of outcomes

PRODUCT AND SERVICE LABELING
G4-DMA

G.D. B6

Disclosures on Management Approach

Pag. 19

G4-PR4

G.D. B6

Total number of incidents of non-compliance with regulations andvoluntary codes concerning product and service information and Pag. 19
labeling, by type of outcomes

COMPLIANCE

PRADA S.p.A.
Via Antonio Fogazzaro, 28
20135 Milan
Italy

G4-DMA

Disclosures on Management Approach

G4-PR9

Monetary value of significant fines for non-compliance with laws
and regulations concerning the provision and use of products and Pag. 19
services

G.D. B6

Additional information on this Social Responsibility Report may be requested to:Pag. 19e-mail: csr@pradagroup.com

52

CREDITS
Cover/Back cover: Guests attending Prada Men’s Spring/Summer 2010 Fashion Show
Courtesy Prada
Index: Paper patterns. Ph. credit Brigitte Lacombe / Courtesy Prada
Pag. 3: Prada craftsman ready to cut the skin. Ph. credit Birgitte Lacombe / Courtesy Prada
Pag. 4: Historic Prada store in Galleria Vittorio Emanuele II Milan.
Ph. credit Agostino Osio / Courtesy Prada
Pag. 5: A brief history of Prada.
Ph. credit Alfredo Albertone/Monica Feudi, Baganz/Dieter Baganz,

Pag. 40: Stills from Past Forward by David O. Russell / Courtesy Prada
Pag. 41: Prada factory in Valvigna, Arezzo. Project by Guido Canali.
Ph. credit Gabriele Croppi / Courtesy Prada
Pag. 43: Prada factory in Valvigna, Arezzo. Project by Guido Canali.
Ph. credit Francesco Castagna / Courtesy Prada
Pag. 44: Prada Arezzo plant / Courtesy Prada
Pag. 45: Prada factory in Valvigna, Arezzo. Project by Guido Canali.
Ph. Credit Francesco Castagna / Courtesy Prada

Adriano Biondo, Antonio Calabrese, Mikio Matsuo, Patrick McMullan,

Pag. 46: Courtesy Church's

Nacasa & Partners, Franco Rossi, Albert Watson, Robert Wyatt / Courtesy Prada

Pag. 49: Courtesy Prada

Pag. 6: Miu Miu Dhalia bag / Courtesy Miu Miu
Pag. 7: (left) Driving shoes Car Shoe(right) Church's Shannon derby / Courtesy Prada - Church’s
Pag. 8: Courtesy Marchesi 1824
Pag. 16: Church's craftsman / Courtesy Church’s
Pag. 17: Laces for Prada / Courtesy Prada
Pag.18: Prada Men’s accessories in saffiano leather / Courtesy Prada
Pag. 19: Courtesy Prada
Pag. 20: Prada Corsaire handbag / Courtesy Prada
Pag. 21: Prada handbags: Prada Esplanade, Prada Bibliothèque / Courtesy Prada
Pag. 22: Prada Cahier handbag / Courtesy Prada
Pag. 23: Miu Miu Ballet Laces / Courtesy Miu Miu
Pag. 24: (left) MiuLady bag and Miu Miu Slippers / Courtesy Miu Miu(right) Church's Shanghai / Courtesy Church's
Pag. 25: Prada looks / courtesy Prada
Pag. 26: Prada Group fabric archive/Courtesy Prada
Pag. 28: Prada St. Barth store / Courtesy Prada
Pag. 29: Prada new store concept / Courtesy Prada
Pag. 30: Prada Shanghai Plaza 66 and Prada Moscow Gum / Courtesy Prada
Pag. 31: New Miu Miu store Hong Kong Canton Road/Courtesy Miu Miu
Pag. 32: Seamstress embroidering a Prada dress. Ph. credit Birgitte Lacombe / Courtesy Prada
Pag. 34: Prada Group Levanella Quality Control Centre, Arezzo (Italy) / Courtesy Prada.
Pag. 36: Prada Group trousers plant in Montone, Italy / Courtesy Prada
Pag. 37: Billy Cowie: Attraverso i muri di bruma, Images of the performances.
Ph. credit OKNOstudio / Courtesy Fondazione Prada
Pag. 38: (left) Edward & Nancy Reddin Kienholz: The Caddy Court, 1986–87.
Ph. credit Delfino Sisto Legnani Studio / Courtesy Fondazione Prada(right) Goshka Macuga: To the Son of Man Who Ate the Scroll, 2016
Ph. credit Delfino Sisto Legnani Studio / Courtesy Fondazione Prada
Pag. 39: Giorgio Vasari’s Last Supper painting / Courtesy Prada

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