Social Responsibility Report2013Index

1- The PRADA Group at a glance7

1.1 Our ethical values

8

1.2 2013 Key figures

92- The value of Human Resources

11

2.1 The PRADA Group profile

12

2.2 Compensation and benefits

16

2.3 Staff training and development

17

2.4 Workplace quality

19

3- Environmental Protection

21

3.1 Reduction in consumption

22

3.2 Waste reduction

23

3.3 Use of recycled and certified paper

23

3.4 Environmental travel policy

24

3.5 Attention to the environment in our production

24

3.6 Sustainable use of raw materials

25

4- Relationship with the community

27

4.1 Customers

28

4.2 Suppliers29

4.3 Sector initiatives

30

4.4 The Prada Academy

31

4.5 Investment in the Community

31

5- 2014 Main Projects at a glance

35

Appendix - PRADA Group’s Code of Ethics

37

Message from the Chairman
The PRADA Group has built its history by drawing inspiration from beauty,
which is translated into products universally recognized as unique in styleand excellent for their quality. We have always tended to take inspirationfrom the regions where we were born and where we operate, therefore it’sa natural attitude for us to respect and safeguard the environment.
For this reason our history has always had a strong emotional and tangible
connection with our stakeholders: the customers with a passion for our
products, the employees who ensure our success with their daily
contribution to excellence, the communities and territories where we live
which are a constant source of inspiration and enrichment, the financial
community which is a partner and a spur to continuous improvement.
Listening to and developing the various demands of our stakeholders
represent an essential guideline for our progress.
A luxury product, along with its quality, must incorporate intangible
elements such as creativity and innovation, culture expressed in the form ofstyle. At the same time it must incorporate social and environmental values,
as harmony with the environment and society is a fundamental element of
excellence.
The PRADA Group, positioned at the top of the luxury industry, operates inmore than 70 countries and our brands are a source of inspiration for
millions of people worldwide. This means that we have the responsibility to
pursue ethical business management and promote a behavior which
contributes to the sustainable development of the world we live in.
We strive to be an example to our partners, not only for the outstanding
quality we require, but also for the ethical and environmental standards we
set across the value chain, thus creating the conditions for their diffusion
within the industry.
This report is our first on social responsibility, which has always been part ofour core values, endorsed by the Board of Directors and translated into
actions and concrete results thanks to the daily contribution of all
employees. It is the start of a process which will lead the company to giveincreasing importance and visibility to such initiatives, highlighting theresults achieved year by year and setting new objectives for the future.
Chairman of the Board of Directors
Carlo Mazzi

1- The PRADA Group at a glance

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THE PRADA GROUP AT A GLANCE

7

We strive for continuous improvement in what we do in order to create value for our
stakeholders. We do this by combining economic results with employee and client
satisfaction, as well as respect for ethical and environmental values. We consider thisapproach to be essential to guarantee the competitiveness of our Group in the longterm.
1.1 Our ethical values
We consider respect for ethical principles to be a fundamental pillar of our Company
and at the basis of the success of the enterprise. This respect is fundamental to ourGroup image and values.
Our values are:
 compliance with the legislative and regulatory provisions in all countries in which
the PRADA Group operates; legitimacy, loyalty, correctness and transparency;
 confidentiality; respect for the value of the person and human resources;
 respect for competition, as a crucial instrument in the development of the economic
system; respect for the environment and raising awareness regarding environmental
protection.
Since 2007 these principles have been formalized in the PRADA Group’s Code of Ethics(as attached under Appendix). The Code sets the guiding principles of our organization,is one of the main pillars of the Group’s Governance model and is also supported by aset of procedures in order to turns these values into daily actions.
The Code is shared by all employees and parties who support us in developing,
manufacturing, promoting, distributing and selling our products. We promote its
awareness through various means such as online publications, direct communications
and as part of the supply contract with most of our partners. Finally, we verify its
implementation through an extended auditing program.
The adoption and application of the Code of Ethics to our activity is essential for theachievement of our primary objective, consisting in the creation of value for ourshareholders, employees, customers and for the community as a whole.

8

THE PRADA GROUP AT A GLANCESOCIAL RESPONSIBILITY REPORT 2013

1.2 2013 Key Figures
Brand portfolio:
Prada, Miu Miu, Church’s, Car Shoe
Net revenues:€3,587 million
People:11,518 employees (3,700 people hired in 2013)
40 different nationalities~90% of the workforce are permanent employees
62% of the workforce are women
35.5 years is the average age of Group employees
International footprint:
Presence in over 70 countries
Direct workforce in 40 Countries
540 directly operated stores
12 production sites (11 in Italy and 1 in the UK)
Environment:~70% of waste produced in the manufacturing sites and headquarters is recycled orreused.
68% of product packaging is FSC certified or made from recycled materials
Suppliers:
1,146 audits on external manufacturers during the year
Community:€11.4 Million invested in the Community

SOCIAL RESPONSIBILITY REPORT 2013

THE PRADA GROUP AT A GLANCE

9

10

THE PRADA GROUP AT A GLANCESOCIAL RESPONSIBILITY REPORT 2013

2- The Value of Human Resources

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THE VALUE OF HUMAN RESOURCES

11

We are a people business. Innovation and top quality stem from individuals’ passion
and artisanal know-how; at the same time exclusive costumer relationships derive fromthe trust we build with clients. We look for people that can combine these exceptional
qualities with the values of our Group.
Human relations are a key factor across the whole PRADA Group and among all
employees, regardless of their job position and responsibilities. This is expressed
through team management and internal relations, and helps the whole organization toeffectively achieve expected results.
That is why we search for individuals who have a clear and visible social intelligence,
being able to always interpret the environment where they operate in the correct way
and to use empathy to create a meaningful and effective communication channel witheveryone.
Working with people means being capable of improving everyone’s performance andbringing each individual’s potential to full expression. This represents the first step of
the Company towards excellence.
Information is nothing if not well transmitted. As a matter of fact, policies andprocedures are effective only if all employees make them concrete and real throughtheir daily conduct.
2.1 The PRADA Group profile
We operate through PRADA Spa, the operating holding Company, and its subsidiaries
with a direct presence in 40 countries worldwide, 12 in-house production facilities, ofwhich 11 are located in Italy and 1 in the United Kingdom, and a network of 540
directly operated stores. The Group headquarters are located in Milan.
As at January 31, 2013, the PRADA Group employed 11,518 people, +15.1% compared
to 2012, 34.5% of which work in Italy, while 65.5% are based in the rest of the world. In
Italy, most employees (62% of the total) work in the industrial area. Conversely, inforeign countries our people mainly work in Sales and Retail activities (87% of thetotal).
The distribution of the workforce in the various geographic regions outside Italy
showed a strong prevalence of Asia Pacific, followed by Europe. In the track record
period1 we have entered South America and the Middle East through directly operated
stores, with an increasing number of employees in those areas.
Employees by region

11,518+1,509+1,198

8,811
22
1.129

242
1.241

10,009165
1.188

Middle East and Other Countries
2.809

2.216

Asia Pacific

1.756
674

1

Japan

1.060
825
2.195

1.679

1.930

3.551

3.685

3.971

Actual 2011

Actual 2012

Actual 2013

Americas
EuropeItaly

Track record period: Fiscal Years 2011, 2012, 201312

THE VALUE OF HUMAN RESOURCES

SOCIAL RESPONSIBILITY REPORT 2013

In 2013 there was an increase of 1,210 employees in the retail division of the Group, asa result of 79 net store openings during the year.
Employees by division

11,51810,009
8,811

15.1%

13.6%
Retail

7.499
6.289

19.2%

Corporate

5.229

Industrial

903

972

12.4%

2.679

2.748

6.5%

Actual 2011

Actual 2012

1.093
2.926

Actual 2013

In 2013, the PRADA Group incurred in employee remuneration costs of approximately€584 million, representing 16.3% of its turnover for the period.
Age structure
We invest in young people through training and professional development, consistent
with their attitudes and aspirations. Our Group appreciates and gives credit tocommitted individuals who take responsibility and take on board others’ opinions,
thereby contributing to the PRADA Group’s success.
In 2013 the average age of our employees was 35.5. Retail is the sector with theyoungest employees (32.1 years of age), while the Industrial division has a higher
average age (43.6 years), benefit from a decades-long experience in the craftsmanshipand manufacturing skills.
Average age by division

Retail32,1

Corporate

37,6

Industrial

SOCIAL RESPONSIBILITY REPORT 2013

43,6

THE VALUE OF HUMAN RESOURCES

13

“Labor” are on average older (42.2 years), while “Staff” employees are younger (33.2
years).
Average age by employment status

Executives and Managers

39,9

Staff

33,2

Labor

42,2

By age group, 44% of the Company’s employees are 26-35 years of age, while 26% are
36-45 years of age.
Workforce by age group

17%

13%
18-25
26-35
36-45
> 45

26%

44%

Importance of diversity and equal opportunities
Our strong presence worldwide reflects a multitude of different cultures, skills,
nationalities and religions. 40 different nationalities work for our Group.
We believe strongly in the importance of diversity within our workforce as a source of
cultural richness, well-being, creativity, lateral thinking, progress and affinity with ourcustomer base, which is also extremely diverse.
In order to meet and attract talents, we work with the most prestigious universities andentities worldwide to offer post-graduate programs. Particular focus is onmarketing/retail and internships for new graduates, enabling them to gain experienceand be appreciated with a subsequent enhancement of the employment relationship.
The selection process is defined by clear internal procedures and guarantees equal
opportunity of admittance to candidates. It involves different assessment procedures
depending on candidates’ abilities, attitudes and experience.

14

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New graduates, newly qualified applicants and those with less than three years’
experience take part in selection assessments conducted via individual and collective
tests, while senior candidates undergo an individual selection process.
We have a strong prevalence of women in all professional areas. As a whole, 62% of theworkforce is made up of women. This is even higher in Retail (65%).
Workforce by gender and function
PRADA Group

38%

62%

Industrial

Corporate

42%

58%

Retail
35%

43%
57%

65%

This gender split is also confirmed by the analysis of the men vs. women ratio by
status:Executives and Managers

Staff

Labor
34%

44%

50%
50%

56%
66%

Respect for equal opportunities is supported by the Compensation & Benefit system,
based on the promotion of skills and merit, ensuring equal treatment of genders,seniority and role.
For example, in 2013 the average fixed salaries of PRADA Group male and female
employees were substantially in line.

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THE VALUE OF HUMAN RESOURCES

15

Compensation gap by employment status

102%

97%

102%

99%

105%
95%

Male
FemaleExecutives and Managers

Staff

Labor

2.2 Compensation and benefits
Our remuneration policy seeks to attract, reward and retain high-level professionals
and skilled managers, as well as to align the interests of the management with theprimary objective of creating value over the medium and long term.
The common structure of the remuneration policy, characterized by a balanced mix of
fixed and variable components, is defined locally in accordance with the principles ofinternal equality and external competitiveness. Comparison with the external market isensured by surveys conducted by qualified companies, internationally recognized in the
fashion and luxury sector.
The Remuneration Committee oversees the remuneration of our top management,
taking into account the position and responsibilities assigned and benchmarking similar
positions in a panel of companies comparable with Prada in terms of size andcomplexity.
The Group’s compensation policy is based on:-a salary review taking into account the overall market competitiveness andcomplexity of a particular role;-

an incentive system that links compensation with the annual performance of theCompany;-

a cash long- term incentive plan, for a wide group of key people (~350), that
promotes the growth of business profitability over the long term, aligning individual
objectives with those of stakeholders;-

other incentive schemes specific to sales staff are also in place and technicians of
the Group may receive a bonus that is provided to them after the development of aseasonal collection.

We grant several benefits to our staff or particular categories of staff, including
medical benefits, group life insurance, corporate housing (or housing allowance),
discretionary bonus, home leave allowance, children’s education allowance, free public
transport or at a reduced price and use of corporate vehicles.
As confirmation of our commitment to stability and long-term investment in humanresources, permanent employment contracts are the reference contract type. 90% of
the workforce worldwide is permanent.

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SOCIAL RESPONSIBILITY REPORT 2013

Labor standards and trade unions relationships
The protection of workers’ rights is of preeminent importance to us; we promote andendorse the respect for human rights and labor provisions regarding child andinvoluntary labor, as well as health and safety throughout our value chain.
We collaborate with Trade Unions to evaluate any opportunity to enhance the working
conditions of our employees. In Italy, where the PRADA Group has historical roots,
several supplementary agreements have been reached with trade unions over the last
few years thanks to regular communication and dialogue, thus improving employees’
working conditions in terms of benefits compared to the reference national collective
agreements. They mainly concern the following:-

performance bonus: variable bonus linked to production, commercial and economic
objectives.

-

holiday bonus: a fixed compensation equal to one month’s gross salary establishedby the national collective agreement.

-

improved access to advance payment of Severance Indemnity-

flexible working start time: allowing, in most offices, to better reconcile family andworking needs- supplementary Health Fund: supplementary health insurance with the option to also
extend it to family members at reduced cost.

Thanks to our policy which ensures respect for, dialogue and cooperation with Italian
Unions (of which 30% of our employees are members), the number of strike hours
during the track record periods was extremely limited and decreasing.
Incidence of strike hours on working hours in Italy
3,00%
2,50%
2,00%
1,50%
1,19%
1,00%
0,52%
0,50%
0,17%

0,00%
Actual 2011

Actual 2012

Actual 2013

2.3 Staff training and development
The continuous development of internal know-how and product knowledge is the best
possible guarantee of our commitment to product innovation, production process
improvement, retail excellence and global growth.
Thanks to our widespread presence in foreign markets and our business development
strategy, we offer our professionals international working opportunities in addition to
specific training programs. This supports internal growth in managerial and internationalroles.
Our policy promotes internal over external recruitment. International job rotation,
which represents a key tool for vocational development, is increasing strongly, involving
people in all positions and from all different professional areas. Middle management andstaff employees represent the majority of people involved in the project, 42% and 35%of the total respectively.

SOCIAL RESPONSIBILITY REPORT 2013

THE VALUE OF HUMAN RESOURCES

17

International job rotation by employment status
Top Executives
9%
Directors
14%
Staff Employees
35%

MiddleManagement
42%
This program optimizes Group synergies and work flow, but also represents an effective
tool for the dissemination of the Company culture and know-how at all levels.
Transmission of know-how
We have always recognized the strategic importance of an effective and structured
transmission of know-how.
In particular, back in the nineties, at the beginning of the Group’s formation, eachprocess was described and coded in manuals, so that both know-how and work
procedures might be easily imparted and accessible to all people involved.
These Manuals are still up to date and are highly detailed. These documents ensure
continuity and consistency of our know-how and represent a source of inspiration for ouractivities.
Corporate staff training
We invest in continuous education and training programs for our employees to enhancetheir performance and improve their skills and knowledge by utilizing internal orexternal resources.
We focus on corporate staff training. In particular, consistent with our internal
development strategy, we invest in the development of language, technical andmanagerial skills. For example, in 2013 we implemented an extensive language training
program worldwide.
At the same time, we support professionals by offering them the opportunity ofattending managerial training programs that provide them with tools to tackle thechallenges faced by a complex and ever-evolving organization.
Special focus is placed on leadership. The corporate training program includes different
levels of courses aimed at those who have to make the transition from single contributor
to team leader.
We constantly train our Executives on Corporate Governance practices and rules;
similarly the Memebers of the Board of Directos of PRADA spa are continuously involvedin specific sessions on this important subject.

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Retail staff training
We offer our retail store staff comprehensive training, including product knowledge,
sales techniques, communication skills, leadership and management skills.
In particular, we provide specialized training to our frontline sales staff, covering topics
such as etiquette, customer service techniques and product knowledge to enable themto provide first-class service to our customers.
Providing the store staff with all information that is essential to understand theenvironment and for appropriate management is crucial. Special focus is placed on thedevelopment of managers’ leadership skills and customer care sensibility throughinstitutional courses in order to ensure that the same contents are transmitted
worldwide.
In 2013, a new program was defined and 100% of our boutiques staff took part in thistraining (3-6 days for store managers, 2-4 days for sales assistants, 5-7 days for new
openings staff). In this spirit, each new hire takes part in a standard induction program
which includes institutional training days.
Moreover in 2013, 2,200 sales people received classroom or in-store product knowledge
and sales technique courses, accounting for approximately 37.400 days.
2.4 Workplace quality
We guarantee working conditions, which are respectful of individual dignity, safety andhealth in accordance with different workplace regulations. We have policies
guaranteeing a superior standard of health and safety at all of our premises, in fullcompliance with local and international regulations. These are key elements in our
Company.
Nevertheless, for the vast majority of our premises such as offices, warehouses andboutiques, the threat of serious risks is considered limited. The manufacturing sites
represent the area with a wider range of health and safety issues albeit still scarce.
% injuries on total working hours in Italy
1,00%
0,80%
0,60%
0,40%

0,31%
0,19%

0,20%

0,12%
0,00%
Actual 2011

SOCIAL RESPONSIBILITY REPORT 2013

Actual 2012

THE VALUE OF HUMAN RESOURCES

Actual 2013

19

20

THE VALUE OF HUMAN RESOURCES

SOCIAL RESPONSIBILITY REPORT 2013

3- Environmental Protection

SOCIAL RESPONSIBILITY REPORT 2013

ENVIRONMENTAL PROTECTION

21

We are strongly committed to raise awareness of environmental protection; this is a
key part of our Code of Ethics that applies equally to our Group and any party thatcooperates with us.
Even if the industry in which we operate is not regulated by industry-specificenvironmental regulations, we make it our priority to care about environmental issues.
3.1 Reduction in consumption
The main direct impact of our activities is the use of energy for our offices, plants,
logistic hubs and stores around the world. Our goal is to increase efficiency in the useof energy so as to mitigate the impact of the growing number of locations belonging to
our Group. In 2013 we recorded power consumptions 2 of 93.2 gigawatt-hour, equal to a
production of approximately 49,500 tons of CO2, of which 62.0 gigawatt-hour derivingfrom electricity, 19.2 from natural gas and 12.0 from oil.
Our sector is characterized by a low level of water requirement; our water
consumption2 was equal to 439 thousand cubic meters. Despite the fact that our
premises are not located in high water stress zones, we pay a lot of attention to a
conscious and efficient use of water both for our heating and cooling systems and in thedaily use by our employees.
We continue working on improving our infrastructure, energy and materials’
management in order to improve energy efficiency and minimize our impact on theenvironment. A long-term plan for energy efficiency enhancement has been
implemented in the last few years, involving all of our factories and offices. This plan
provides for the progressive replacement of all cooling and heating machines with stateof the art systems and the replacement of fluorescent lamps with low-consumption LED
lights.
Cooling-Heating system
We have replaced the cooling and heating systems in 3 of our Italian premises (Dolo,
Levanella and Fucecchio) with new machinery that guarantee a 24% reduction in CO2emissions. In spite of the enlargement of our factory in Dolo, in 2013 these sites
recorded a decrease of 41,564 kg in CO2 emissions.
We also implemented a more efficient, combined air-conditioning and heating systemthat allows for a reduction in energy consumption of 30% and of CO2 emissions of 28%.
In 2013 this new equipment was used to replace the system in some of our Group
offices (via Orobia, Milan, Italy), allowing for a reduction of 24,000 kg in CO2 emissions.
Deployment of LED lighting
We decided to renew the lighting systems of 3 of our premises located in Levanella(Arezzo – Italy) with a low energy system based on the use of LEDs. This action
guarantees a yearly reduction of approximately 1.0 million KWh (equal to 73% of its
energy consumption) and 535,050 Kg of CO2 emissions.
In addition to the low emission performances, LED lights last longer and generate lessheat, which yield further advantages in terms of waste production and conditioning
need.

2

Referred to the activities based in Italy, USA and Far East, equal to 74% of the Group’s expense for utilities

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SOCIAL RESPONSIBILITY REPORT 2013

3.2 Waste reduction
We are aware of the importance of the use of natural resources and waste
management, especially in a growing business such as the PRADA Group.
We aim to achieve continuous improvement in environmental management thanks to adaily process within our organization that raises awareness in our employees. In 2013
waste production3 amounted to 1,429 tons, of which 71.0% was recycled or reused,while only 1.1% of our waste consisted of hazardous materials or substances.
With regard to our manufacturing site in the UK, in accordance with the Group’s
approach, Church’s puts a significant effort in minimizing the impact of its waste
production. All waste is sorted into recyclable and non-recyclable items, and mostrecyclable items, such as natural leather, rubber and crepe, metals, cardboard andmachine oils are 100% recycled.
We have different procedures to enhance the recycling of paper, plastic, glass, ink
cartridges, etc. All our employees are daily fully involved in waste reduction. An
important example of this is the implementation of an information and training
program for the employees of our shoe factory in Buresta (Arezzo, Italy), manufacturingsite that represents 10% of the recorded waste production. This program is aimed atincreasing the awareness of correct sorting of industrial hazardous waste materials andimprove their treatment. This project has allowed a careful identification,
management and disposal of hazardous substances, representing 7.5% of waste in thisplant.
3.3 Use of recycled and certified paper
In 2013, in order to manage our growing sales across the world (where we deliver 6,414
tons of product packaging), we decided to enhance our use of sustainable packaging byencouraging the use of certified and recycled paper within our operations and by our
suppliers.
We kept increasing the consumption of Forest Stewardship Council (FSC) certified andrecycled paper which grew by 4 point percent in 2013, from 64% to 68% of the total.
Product packaging consumption (tons)
6,414
5,726
32%

4,534

36%

39%

Other paper
Recycled or certified paper
68%
64%

61%

Actual 2011

Actual 2012

Actual 2013

We supported our suppliers in getting the FSC certification; today ten out of twelve ofour packaging suppliers have obtained it, guaranteeing us sourcing from sustainablymanaged forests.

3

Referred to Italian manufacturing sites and Milan headquarters

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ENVIRONMENTAL PROTECTION

23

In 2013, we launched an eco-friendly shopping bag in the USA made with 40% of
recycled paper; by 2015 we aim to spread this project across our entire network,
adopting recycled bags around the world for all our brands.
By 2015, we have also scheduled to have 100% of the boxes and tissues certified by FSC,
thus ensuring that none of the product packaging paper we use will contribute to
deforestation.
3.4 Environmental travel policy
We adopted a travel policy aimed at encouraging the use of public transport for
employees’ trips.
At a global level, we have several agreements in place to encourage employees to use
public transport to go to work. For example, employees in our Milan offices canpurchase a public transport season ticket for the whole city at a reduced price, to be
used not only to go to work, but also for private trips. Similarly a free shuttle service
from Florence to our plants in the region has been made available for employees of theGroup.
We are also committed to minimizing the impact of employee’s business travels. We
have reduced non-essential business travel through alternative communication such asvideoconferencing. In case of business needs requiring employees to travel, we have a
specific procedure encouraging the use of train instead of cars, while cars are admitted
to reach areas which are not effectively reachable by public transport.
3.5 Attention to the environment in our production
We pay specific attention to the impact of our activity on the environment. The way wedevelop and manufacture products always takes into account the most innovative style,long lasting quality and customers’ health and safety.
Our products are distributed and sold across more than 70 Countries and must comply
with the existing differing norms and regulations. In order to ensure respect of laws andallow each of our stores to have the same items, with the same high quality, at thesame time, we design, develop and manufacture our products in accordance with thestrictest global quality standards requirements.
In order to oversee this very important matter properly, the PRADA Group establishedan Industrial Compliance Committee in 2010. Its task is to assure a permanent updatingof the international legislative framework concerning the manufacturing anddistribution of our products worldwide.
Throughout each production stage we carefully comply with the strictest international
regulations on the risks deriving from the use of chemicals such as, for example, theREACH regulation, California Proposition 65, Safety Quality Act South Korea andChinese GB Standards.
In order to achieve these standards, we identified a harmonized Restricted Substances
List (“RSL”) in 2013. This defines the strictest parameter to be submitted to all theentities involved in the production chain. Each party involved must ensure and provethat all products and activities are carried out in compliance with the RSL andconsequently with the REACH regulation and the main international laws andregulations in force.
In order to supervise the implementation of the RSL guidelines, in addition to thecertifications and test reports required from each supplier, we carry out several tests
at certified laboratories to check compliance of purchased items with our guidelines
and suppliers’ certifications.

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3.6 Sustainable use of raw materials
The primary raw materials we use include leather, fabrics and yarns. We purchasetanned leather skins made from calf, sheep, goat and deer. 100% of our raw materials
have a certification of origin to guarantee their quality in accordance with the law. We
also purchase crocodile, lizard, ostrich and python skins, in compliance with thestrictest international regulations on the import and use of skins of endangered species.
We fully comply with local and international regulations on procurement, import, usage
and export of raw materials such as the Convention on International Trade inEndangered Species (“CITES”).
The high quality of hides has traditionally allowed us – and still does - to highlight thenatural appearance of the leather, avoiding chemical products or sprays, thus leaving
intact the natural patina and softness of the leather. This enhances the natural ageing
process, which, over time, only adds style and elegance to the finished product.
We have introduced a state-of-the-art system to optimize the use and cutting of raw
materials during the product development stage of our business cycle. This preparatory
study is sent to the industrial manufacturers and allows them to use the smallest
leather or fabric components to produce small sized products and consequently
minimize waste of raw materials.

SOCIAL RESPONSIBILITY REPORT 2013

ENVIRONMENTAL PROTECTION

25

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ENVIRONMENTAL PROTECTION

SOCIAL RESPONSIBILITY REPORT 2013

4- Relationship with the community

SOCIAL RESPONSIBILITY REPORT 2013

RELATIONSHIP WITH THE COMMUNITY

27

In the development of our business, we value the safeguarding and strengthening of ourrelationship with the Community highly: our exclusive relationships with our customers,
ensuring a level of quality and service exceeding their expectations; the partnershipwith our suppliers, built from years of daily cooperation and aimed at constantimprovement; the institutional initiatives focused on the growth of our sector; ourinvestments in the regions where we are present, in recognition of the irreplaceablerole of communities in the development of our Company.
4.1 Customers
We believe we are known for our leadership in design and excellence of our products
and customer service. With this goal in mind, we pay close attention both to ourindustrial process which allows our Group to offer high-quality and exclusive products,
and to all the activities essential to guarantee the originality of our products to ourclients.
Our industrial management team coordinates and supervises the entire production
process from the sourcing of raw materials to internal and external productions todeliver quality of craftsmanship in our products to our customers.

We have approximately 1,500 employees in our in-house production divisions andapproximately 950 people in the product development department, allowing us to
produce the vast majority of our prototypes and samples and a portion of our finishedproducts in our factories. The remaining production is outsourced to external
manufacturers under strict quality monitoring by ourselves.
We employ 200 dedicated technicians, with at least 10 years of experience, for quality
control of the raw materials received from our suppliers and our finished products.
Inspectors regularly visit each of our raw material suppliers and their production sites,
as well as those of our external manufacturers and our own production units to assess
the production processes, the quality of the materials used for our products and thequality of the finished products.
Raw materials are an essential part of product quality, making them a primary concern
in the PRADA Group. They are sourced by an in-house division, which selects suppliers
directly without compromise of quality. We select our suppliers strictly and procurematerials mainly from those with whom we have a well-established relationship. In
many cases, the materials are made especially for Prada, in line with stringent
technical and style specifications guaranteeing both the excellence of the material andits exclusive nature.
This approach gives us full control over quality and service in a crucial phase of thevalue chain, guaranteeing the same standards in case of change of suppliers andensuring that the know-how of production techniques and core values are handed onsmoothly to younger generations.
As a result of this close cooperation and quality control measures, we did not track any
health or safety problem caused by our products, nor did we recall any product fromthe market during the track record period.
In order to guarantee the excellence of our products to our clients, we are active inanti-counterfeiting activities around the world, as well as on the web. We are amember of the World Customs Organization and have a daily relationship with law
enforcement authorities, such as customs and polices, which provide their support inrespect of seizures of infringing products. With regard to our on line anti-counterfeiting
strategy, in 2013 the enforcement activities allowed us to close down approximately
200,000 infringing cases, allowing us to also stem criminal activities, such as child andinvoluntary labor, often associated with these cases.

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We provide clear information about our products to our customers; from product careadvice in our stores, to correct labeling in compliance with the strictest international
and local laws, up to complete after-sales facilities for all our products, providing
product care and repair services both in stores and in our manufacturing sites. This
ensures our clients have long lasting qualitative products and promotes a more
responsible use of them. Finally we have strict procedures to collect and use thepersonal information on our clients in order to safeguard their identity and protect
their privacy.
4.2 Suppliers
During the financial year ended January 31, 2013, we purchased materials fromapproximately 500 relevant raw material suppliers and 450 external manufacturers 4.
Most of our suppliers are based in Italy, while the European partners mainly supply
Church’s production facilities.
N. of suppliers

Italy

EuropeOther

Raw material

75%

17%

8%

External manufacturer

83%

9%

8%

We are strict in selecting our suppliers. We procure materials mainly from those withwhom we have a well-established relationship and have a track record of reliable
quality and compliance with our Code of Ethics.
We have been in partnership with more than half of our raw material suppliers (58%)
for more than 10 years, while we have been working with the 23% for 5 to 10 years.
We have been partnering with almost one third of our external manufacturer (29%) for
more than 10 years, and for more than 5 years with 31% of them.
Code of Business Conduct
We are dedicated to ensuring that our products are manufactured under conditions
which reflect our commitment to human rights in the workplace. As a global
Corporation, we support internationally-recognized norms for the safety and well-beingof the employees who are responsible for the manufacture of our products.
We have a Code of Business Conduct applied to all factories and external manufacturersof the Group which sets standards which are fair and appropriate to the variety ofcultures and people which are an important part of our success. Specifically the Codeof Business Conduct identifies standards on:-

employee rights and working conditions (including number of hours
work/overtime/holidays, wages, and zero tolerance for forced and child labor),-

safety, health and welfare of employees,-

health and life insurance for employees,-

equal opportunities for employees,-

freedom of association,-

environment preservation in material sourcing and production activities-

intellectual properties defense and fight against counterfeitingof

We encourage our partners to exceed the minimum requirements set in the Code ofBusiness Conduct. We also encourage communication among the parties to facilitate
the implementation and compliance with the standards, thus creating a positive
working environment.

4

Including any suppliers with a single VAT number and a total recorded invoiced sales of over €30,000 during
the fiscal year ending 2014, January 31st. Suppliers that have changed their VAT number over the years arereported as new suppliers

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29

Factories and suppliers must ensure that any party supplying them with materials
and/or labor in the manufacture of our products is authorized by us and also abides by
the provisions of the PRADA Group’s Code of Business Conduct.
We verify our factories and external manufacturers’ compliance with the Code ofBusiness Conduct with free and full access to all facilities, all business records and all
employee documentation.
In our relationships with suppliers, we encourage their awareness on social
responsibility, promoting knowledge of rules and regulations and the adoption of the
major environmental, social and quality certifications. Many of our suppliers possess
the main certifications such as ISO9001, ISO14001, SA8000, OEKO, UNI11239. We areconfident that an increasing number of suppliers will be willing to certify theirbusinesses as we have raised awareness of this important matter.
Attention to work conditions throughout the value chain
We encourage responsible behavior among our suppliers through the promotion,
distribution and signature of the PRADA Group’s Code of Ethics and Code of BusinessConduct or also incorporating the Codes in their terms and conditions of businessagreements.
We also verify that our suppliers abide by these ethics. Our external manufacturers areaudited as part of the regular relationship with us to supervise the entire production
process, respect of our Codes, health and safety in the workplaces and compliance withapplicable laws.
In 2013, our dedicated team of inspectors carried out 1,146 audits covering the
majority of our suppliers and sub-suppliers. In 2014 we issued new procedures aimed at
auditing 100% of our Italian suppliers at least once per year.
We have not received any notification by any authority in the track record period on
the health and safety conditions of our network. This serves as significant evidence of
our superior level of control and commitment by all our suppliers.
4.3 Sector initiatives
We actively contribute to various initiatives promoted by the Camera Nazionale della
Moda Italiana (The National Chamber for Italian Fashion) and Fondazione Altagamma inorder to define, together with many other players of the industry, a common platformof environmental and quality standards to be promoted and applied throughout the
fashion value chain.
We support the “Manifesto of Sustainability for Italian Fashion”, in partnership with the
National Chamber of Italian Fashion. It is based on the following statements:
1- DESIGN. Design quality products that can last for a long time and can minimize theirimpact on ecosystems
2- THE CHOICE OF RAW MATERIALS. Use raw materials, materials and fabrics with ahigh environmental and social value
3- PROCESSING OF RAW MATERIALS AND PRODUCTION: reduce the environmental andsocial impact of activities and acknowledge everyone’s contribution to the productvalue
4- DISTRIBUTION, MARKETING AND SALES: Include criteria of sustainability throughout
the journey of your product to the customer
5- MANAGEMENT SYSTEMS: Committed to continuous improvement in company
performance6- FASHION AND THE NATIONAL ECONOMIC SYSTEM: Support your territory and “Madein Italy” products
7- BUSINESS ETHICS: Integrate universal values into your brand
8- TRANSPARENCY: Communicate to stakeholders your commitment to sustainability ina transparent way

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9- EDUCATION: Promote ethics and sustainability with consumers and all otherstakeholders
10- Make the Manifesto come alive
4.4 The Prada Academy
We consider Italian craftsmanship and manufacturing know-how as a strategic andunique element to be preserved and promoted, so that it can be transmitted fromgeneration to generation while guaranteeing the development of the Country and thecommunity itself.
For this reason, we have announced the foundation of the Prada Academy in 2015. This
will be a training hub founded on the experience and skills acquired over many years ofindustrial and commercial activity in Italy and abroad.
The project aims to create a pool of young technicians that ensures a flow of
specialized skills in the field of luxury manufacturing, aiming to become a constant andspecific reference point for know-how in the field of luxury leather goods, footwear
and ready-to-wear.
The project includes the creation of a school in Tuscany, halfway between the PRADA
Group industrial headquarters and the leading area of specialized Italian manufacturing
in Tuscany.
This projects is oriented towards 16-21 years old students, will attend a 6-9 months
specialized full time course in very close contact with the technological andmanufacturing heart of the Group.
4.5 Investment in the Community
Interest in the world, society and culture is at the core of PRADA Group’s creativity andmodernity. This is expressed, not only in the luxury fashion industry, but also throughthe role we want to have in the progress of society.
We aim to contribute to the evolution of society, well-being and cultural and social
interests in the territories reached by our activities. For this purpose, we sponsor anumber of local and international initiatives across the world to the tune of €11.4
million. The most significant projects supported in 2013 were:
Prada and the Art
Fondazione Prada
We have been supporting the Fondazione Prada’s activities in the arts and other areasof culture since 1993. The Fondazione Prada was created in order to promote
contemporary art by supporting contemporary artists, as well as organize exhibitions
and collecting art. The first exhibition dedicated to contemporary sculpture was“PradaMilanoArte”. Its program sought to present the city of Milan and theinternational public with a profound and provoking art project.
In 2013, the Fondazione Prada organized the exhibition “When Attitudes Become Form:
Bern 1969/Venice 2013”, a surprising and original reconstruction by Germano Celant, in
dialogue with Thomas Demand and Rem Koolhaas, of the legendary “When Attitudes
Become Form” exhibition organized by Harald Szeemann in Bern in 1969.
In 2013 the Fondazione Prada and Qatar Museum Authority also launched the “CurateAward”, a global competition aimed at uncovering new curatorial talents. In 2014 aworld-renowned jury will evaluate ideas on their creativity and social importance,
rewarding those with a contemporary and culturally relevant point of view. They will
be looking for an exemplary exhibition that is both far-sighted and critical of the
future. The jury will select 20 finalists from which the overall winner will be decided.
The winning curatorial idea will be realized in an exhibition in either or (but not limitedto) Qatar and Italy.
The new Prada Foundation headquarters and permanent exhibition in Milan, - a 17,500
square meter, early 20th century industrial site, currently being revamped and restored
by architect Rem Koolhaas - is scheduled to open in Spring 2015.

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31

Prada Journal
We continued in a quest for new talents, launching a literary contest in cooperation
with Giangiacomo Feltrinelli Editore, a publishing house with fifty years of experience.
The creative challenge consisted in sending manuscripts to respond to the query posedby the Prada Journal: “What are the realities that our eyes give back to us? And how
are these realities filtered through lenses?”This contest also encouraged the exploration of innovative languages by means of formsof expression leading to the written word, thus creating an independent platform ofinterest and an unprecedented reserve for literary research.
The Prada Journal drew participation of 1.313 new talents from all over the world. In
October 2013 5 winners were unveiled during a gala in our New York Epicenter,receiving €5,000 each and obtaining the opportunity to have their story published as adigital book available on our website prada.com.
Prada and the Cultural and Artistic Heritage
Fondo Ambiente Italiano
We are also proactive in supporting our cultural heritage, especially in Italy.
We have collaborated with F.A.I. (Fondo Ambiente Italiano – the Italian National Trust)since 2010. Together we promote a culture of respect for Italy's natural heritage, art,
history and tradition through different activities, among them the preservation andenhancement of some fine examples of Italy's artistic heritage.
In 2013 we undertook the restoration of a polyptych by Antonio Vivarini in the city’s
Pinacoteca Provinciale and of the well in the Abbey of Santa Maria di Cerrate, a few
kilometers from Lecce.
The polyptych, dated 1467, is of high artistic quality, featuring refined colors anddelicate figures; on the back of the panels there are some charcoal drawings done in
the workshop of Vivarini, if not by the artist himself. The restoration, took place invarious stages, including the complete disinfection of the panels, so as to restore theoriginal chromatic scheme through the removal of oxidized paints, which had
diminished the color intensity and brilliance.
The abbey complex of Santa Maria di Cerrate was presumably established in the 12th
Century by the Normans. The well located on the side of the church, at the centre of
the courtyard and in front of the 12th Century cloister, was built in 1585 by the
Ospedale degli Incurabili. Over time the well has suffered major material loss due toerosion, which has consequently modified decorative sculptured patterns and which has
created fractures in the structure. The intervention was aimed at restoring thedamages to the well, which was outdoors, without any protection from the elements.
Archaeological site of the Fortezza Medicea - Arezzo
We supported the municipality of Arezzo in the works on the archaeological site of theFortezza Medicea aimed at recovering and preserving the ruins of the church of San
Donato in Cremona, the most ancient church of the city destroyed in the Nineteenth
century.
This intervention, started in 2008, has already brought to light part of the perimeter
walls of the church, and allowed experts to establish its exact orientation anddimension. During the works, a 67 square meters area has emerged, whose perimeter
walls were well preserved, used as a crypt in its most recent period.
Other Charity Activities
Vogue Fashion Night Out
In September 2013, 43 of our stores in 13 countries participated in the Vogue Fashion
Night Out donating part of their takings for the evening to several organizations
operating in the territory:-

32

Italy: “FAI – Fondo Ambiente Italiano”, for the restoration of the altar of the Virgin
Mary in the Abbey of Cerrate (Lecce);

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SOCIAL RESPONSIBILITY REPORT 2013

-France: “La Voix de l’Enfant”, protecting children who had suffered psychologicaldistress or were victims of abuse;-

Germany: “Die Tafel”, distributing food to disadvantaged people across the Country;“Kinderhospiz Regenbogenland”, a shelter for abandoned children;-

Spain: “Ayuda en Acciòn”, supporting the economic development in Latin America,
Asia and Africa;-

Russia: “Give The Life”, supporting children and young people with serious bloodrelated diseases;-

U.A.E: “Dubai Cares”, increasing children’s access to quality primary education-

Brazil: “Instituto Verdescola”, increasing sustainability awareness and respect for
the environment;-

Japan: “K.n.K - Kokkyo Naki Kodomotachi (Children Without Borders)”, supporting
projects in favor of orphaned children after the earthquake and the tsunami ofMarch 2011;-

China: “One Foundation”, assisting children with cerebral palsy;-

Taiwan: Child Welfare League Foundation, offering childcare services and services
for the protection of children’s rights;-

Korea: “Good Neighbors Community”, helping disadvantaged children in all Korea;-

Thailand: “Rama Foundation”
disadvantaged children;-

Australia: “Starlight Foundation”, providing financial and psychological support toterminally ill children and their families.

promotingassistanceandmedicalcare

toOther organizations supported
Other relevant organizations supported in 2013 were: Unicef, Veronesi Foundation, IEO
Foundation, Oxfam Italia, New Yorker for Children, Voices for Children, Dream for
Future Africa, Born Free.

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34

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5- 2014 Main Projects at a glance

SOCIAL RESPONSIBILITY REPORT 20132014 MAIN PROJECTS AT A GALNCE

35

Training
To more than double training hours dedicated to Corporate and Retail staff.
Workplace quality
End of construction of the new Valvigna factory (Arezzo, Italy), designed and built inorder to represent the highest expression of our care on workplace quality andattention to the environment. The factory is surrounded by nature and green,maximizes the benefits of natural lighting and has different systems of energy
efficiency such as the use of LED lights, cooling and heating systems and cogeneration
system for the production of electricity and heat recovery. Opening scheduled in Spring
2015.
Reduction in consumption
Renovation of the newly-acquired factory in Scandicci (Florence, Italy), in accordancewith the LEED protocol and implementation of our first photovoltaic system
Replacement of the fluorescent lighting system with low-consumption LED lights in 4
factories
Increase of recycled and certified paper
Global deployment of boxes and tissues certified FSC and of the eco-friendly shoppingbag; aiming to cover our entire store network by 2015
Supplier audit
Auditing program reaching 100% of Italian supplier at least once per year
Investment in the Community
The restoration and conservation of Milan's Galleria Vittorio Emanuele II, a project
covering a period of 13 months of works to be completed in April 2015
The Fondazione Prada - “Art or Sound” exhibition, curated by Germano Celant, at Ca’
Corner della Regina. The exhibition explores the relationship between art and soundand the way it has developed from the 16th century to the present day
FAI – supporting the restoration work of Laboratorio dell’Opificio delle Pietre Dure in its
restoration of Vasari’s “Last Supper”
The second edition of the Prada Journal, the literary prize reserved for emerging
literary voices

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2014 MAIN PROJECTS AT A GLANCESOCIAL RESPONSIBILITY REPORT 2013

Appendix
PRADA Group’s Code of Ethics

APPENDIX - PRADA GROUP’S CODE OF ETHICSSOCIAL RESPONSIBILITY REPORT 201337

IndexIntroduction

39

1. Sphere of application and addressees

40

2. Ethical principles

41

2.1 Application of the ethical principles: obligations of the addressees

41

2.2 Value of the person and of human resources

42

2.3 Confidentiality

43

2.4 Correctness and transparency of the accounting and internal control

43

3. Relations with third parties

44

3.1 Relations with customers

44

3.2 Relations with suppliers and external consultants

44

3.3 Relations with the public sector

44

3.4 Relations with the judiciary and other institutional authorities

45

3.5 Relations with political organisations and trade unions

45

3.6 Relations with other interlocutors

45

3.6.1.Sponsorship45

3.7 Relations with shareholders and operations with related parties

45

4. External communications

46

5. Violations and sanctionary consequences

47

6. Approval of the Code of Ethics and related amendments

48

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Introduction
PRADA spa, the operating holding company of the PRADA Group (hereinafter the“PRADA Group” or simply the “Group”), active in the luxury goods sector, and inparticular in the creation, production, promotion and distribution of superior bags andaccessories, clothing, footwear, eyewear and cosmetics, has always based the conductof its activities on principles of ethical integrity. In furtherance thereof, PRADA spa
considers it appropriate to provide the Company itself, and the Group, with a code
(hereinafter “Code of Ethics”) that expresses these values and establishes theprinciples and rules of conduct deriving from them. The corporate bodies, themanagement, the employees, the external collaborators and any other individual orentity that co-operates with the PRADA Group in any manner whatsoever, are required
to abide by the rules of this Code.
The Code of Ethics of PRADA spa and the companies of the Group, therefore, comprises
the principles and the general rules of conduct which must be observed in order toguarantee the good functioning, reliability and reputation of PRADA spa and of thecompanies directly or indirectly affiliated to the same.
PRADA spa, like all the companies of the Group, is particularly concerned to promote
the application of the principles contained in the Code of Ethics to its activity, in theconviction that ethics in the conduct of business is at the basis of the success of theenterprise and represents the best expression of its image, an element which is a
primary and essential value for the Group.
In drafting the Code of Ethics, PRADA spa has also taken into consideration theprevention and countering of criminal offences to which all Italian companies are
subject pursuant to Legislative Decree no 231 of 8 June 2001 of Italy governing theadministrative liability of legal entities (hereinafter also the “Decree”). Hence theCode of Ethics represents a fundamental component of support for the Organisational,
Management and Control Model adopted by PRADA spa in compliance with the abovementioned law for the prevention of offences as envisioned in the Decree.

APPENDIX - PRADA GROUP’S CODE OF ETHICSSOCIAL RESPONSIBILITY REPORT 201339

1- Sphere of application and addressees
This Code of Ethics is addressed to all corporate bodies and the components of thesame, to the management, the employees, the external collaborators, the consultants
and assistants of any kind, the agents, proxies and any other entity that may act in thename and on behalf of PRADA spa and, in general, to all those with whom PRADA spa
and the other companies of the Group may come into contact in the course of theiractivity (hereinafter the “Addressees”).
The PRADA Group considers compliance with the laws and regulations applicable in all
the countries in which it operates, and correctness and transparency in the conduct ofbusiness, as an essential principle of its activity.
Consequently, the PRADA Group fosters the creation of an environment characterisedby a strong sense of ethical integrity, in the conviction that this also makes a decisive
contribution to the efficacy of the policies and the systems of control.
More specifically, the managers of the companies of the Group are bound to takeinspiration from the principles of the Code of Ethics in establishing the corporate
objectives, in proposing investments and in implementing projects, and in any decisionor action whatsoever relating to management.
Similarly, in materially implementing the management activities of the companies of
the Group, the directors and the corporate function managers must take inspirationfrom the same principles, both internally – thus reinforcing cohesion and the spirit ofreciprocal collaboration – and in relation to third parties, with the explicit prohibition
on resorting to illegitimate favouritism, collusion, corruption and/or the solicitation of
personal advantages for oneself or for others.
PRADA spa and the companies of the Group undertake to ensure the maximum
dissemination of this Code of Ethics, preparing any instruments that may appear usefulfor fostering knowledge and performing a process of awareness-raising regarding its
contents, as well as constantly monitoring the degree of observance within the Group
itself, and finally to take care of the updating in line with the organisational,
commercial and financial developments of the Group.
The Addressees must therefore contribute actively to the implementation of the Codeof Ethics and report any problems or deficiencies to PRADA spa’s Supervisory Body or tothe competent controlling body of the other companies of the Group.

40

APPENDIX - PRADA GROUP’S CODE OF ETHICSSOCIAL RESPONSIBILITY REPORT 2013

2- Ethical Principles
PRADA spa considers the respect for the ethical principles set forth in the present Codeof Ethics to be an essential condition for the achievement of the primary objective of
the PRADA Group, consisting of the creation of value for its shareholders, for those whowork in the PRADA Group, for the customers and for the community as a whole. This is
the direction in which the industrial and financial strategy and the operational conduct
is oriented, inspired by transparency and efficiency in the utilisation of resources.
In the achievement of its objectives, PRADA spa and the companies of the Groupadhere to the following ethical principles (hereinafter also the “Principles”):-

compliance with the legislative and regulatory provisions in all countries in which
the PRADA Group operates;-

legitimacy, loyalty, correctness, transparency;-

confidentiality;-

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

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

respect for the environment and raising awareness regarding environmental
protection.

2.1 Application of the ethical principles: obligations of the addressees
The directors, auditors, managers and heads of departments and/or divisions of PRADA
spa and the companies of the Group are required to comply with the present Code of
Ethics and to conform their activities to values of loyalty, honesty and good faith,correctness and integrity. They are required to abstain from any activity which may beconsidered, even potentially, in conflict with the interests of PRADA spa and thecompanies of the Group, making timely communication to PRADA spa’s Supervisory
Body or to the competent controlling body of the other companies of the Group, for thenecessary appraisal, of the emergence of a personal interest in the performance of thecorporate activity.
The employees and collaborators, contributing to the achievement of the corporate
purpose, must work with professional rigour, loyalty, honesty and good faith,correctness, commitment and reciprocal spirit of collaboration.
The relations between employees of whatever level, and between them and the third
parties with whom they come into contact in the course of the working activities
performed, must be marked by criteria of collaboration, loyalty and reciprocal respect.
All actions, operations, negotiations and, more generally, any activity performed by
employees and collaborators must comply with the rules of transparency, completenessand truthfulness of the information, as well as with the corporate procedures.
More specifically, employees and collaborators are required to:-know and comply with the internal procedures in respect of permits, holidays,
expense refunds, ensuring in the latter case to supply adequate documentation;-know and implement all the corporate provisions on regarding the security anddissemination of the information concerning the PRADA Group and its competitors;-

utilise the corporate assets with diligence and solely for purposes connected withthe performance of the tasks entrusted to them;-utilise the information systems with care, with an absolute prohibition on tamperingwith the data contained in the same;-

not utilise the name or reputation of the PRADA Group for personal ends;-

diligently observe the provisions of the present Code of Ethics, abstaining from any
conduct in violation of the same;-offer the utmost collaboration in the ascertainment of possible and/or alleged
violations of the present Code of Ethics;

APPENDIX - PRADA GROUP’S CODE OF ETHICSSOCIAL RESPONSIBILITY REPORT 201341-

inform the third parties who enter into relations with the Group of the provisions of
the Code of Ethics, requesting them to abide by the same.

2.2 Value of the person and of human resources
PRADA spa promotes the value of the human person through the respect for physical,
cultural and moral integrity, protecting its own employees and collaborators fromdiscriminations on ground of nationality, race, ethnic group, religious belief, politicaland trade union affiliation, language, age, gender and sexuality. In this sense, theAddressees must actively collaborate to maintain a climate of reciprocal respect for the
dignity and competencies of each individual.
The PRADA Group considers its own employees and collaborators a precious andindispensable resource for its very existence and for its future development. It
considers essential to ensure management uniformity and consistency in all thecompanies and countries where the Group operates, in compliance with local culture
and laws.
The PRADA Group pursues the excellence and valorisation of the spirit of innovation, in
accordance with the limits of responsibility of each individual and, at the same time,
promotes people’s involvement in their own professional growth project. Management
and employees are encouraged to assume responsibilities and to work to win challenges
and achieve corporate objectives. The Group’s entrepreneurial culture recognizes,
promotes and rewards individual proactiveness and teamwork.
In order to valorise the skills and competencies of its own employees, the PRADA Group
adopts criteria of merit and guarantees equal opportunities to all, without
discrimination of any kind, such as:-

personnel selection and assessment are performed on the basis of objective criteria
founded on the correspondence of professional profiles and candidates’
competencies with corporate needs, ensuring candidates equal opportunities;-

the information collected within the scope of the selection process is strictly related
to the verification of the professional profile being sought, respecting the private
sphere of candidates and their personal opinions;-the personnel are recruited in conformity with the types of contract envisioned by
the laws in force in the countries where the Group operates and by any national
labour agreements if applicable;-

the attribution of tasks is defined considering the competencies and skills of theindividuals, on the basis of the requirements of the companies of the PRADA Groupand of the professional growth of its own employees;-

the Group’s management, training and development policies are aimed at
supporting employees during their professional growth path and at constantly
updating their managerial and technical skills in order to allow individuals to best
perform their roles and to achieve corporate objectives;-

the remuneration system is defined on the basis of the role of employees and of therequired skills and competencies, as well as of the results achieved and of thecontinuous and systematic interaction with the external reference market;-

the collection of information, and the collection and production of documents
during the selection and management process, as well as their preservation on
paper or computer support are in compliance with privacy laws in force in thevarious countries.

PRADA spa and the companies of the Group guarantee working conditions that respect
the dignity of the person, and in this sense censure any conduct that is damaging or
discriminatory towards the person, even in relation to his or her convictions andpreferences, and expressly condemn any form whatsoever of psychological, physicaland sexual harassment.
PRADA spa and the companies of the Group exert themselves to embed a culture ofhealth and safety for the workers in the workplace, fostering risk awareness andstimulating individual responsibility.
The PRADA Group acts towards its employees and collaborators in complete compliancewith the provisions of Italian laws on health and safety at work, laid down in Italian

42

APPENDIX - PRADA GROUP’S CODE OF ETHICSSOCIAL RESPONSIBILITY REPORT 2013

Legislative Degree no. 81 of 9 September 2008 and subsequent amendments andadditions, or with local laws and regulations applicable in the various countries.
2.3 Confidentiality
In compliance with Legislative Decree 196/2003 of Italy, the “Personal Data Protection
Code”, and with the individual local laws in the case of foreign companies, the PRADA
Group protects the personal data processed in the framework of its activities so as to
avoid improper or even illegal use of the same, adopting to this end specific procedures
aimed at:-adequate information for the data subjects;-

acquisition of the consent of the data subjects where necessary.

PRADA spa and the companies of the Group apply and constantly update policies andspecific procedures for the protection of the information.
Each Addressee must moreover adopt the utmost confidentiality in his or her conduct,even outside working hours, in order to protect the technical, financial, legal,
administrative, personnel management and commercial know-how of the company.
Moreover, all those who, as a consequence of the performance of their duties, have attheir disposal confidential and significant information, are bound to avoid any improperuse or undue dissemination of such information.
More specifically, each Addressee is bound:-to process only the data and information necessary for the purposes of the area inwhich he or she performs his or her activity;-

to communicate the data and information in compliance with corporate proceduresin force;-

to conserve the data and information so that the same are inaccessible tounauthorised entities.

2.4. Correctness and transparency of accounting and internal control
In its bookkeeping, the PRADA Group maintains strict compliance with the applicablelegislation and regulations regarding the drafting of the financial statement, and moregenerally, the obligatory management and accounts documentation.
The accounting records of the management and the corporate information and data aresupplied to third parties in compliance with criteria of transparency, correctness,accuracy and completeness.
All actions, operations and transactions must be correctly registered in the corporate
accounting system in line with the criteria laid down by law and the applicableaccounting principles and must, moreover, be duly authorised, verifiable, legitimate,consistent and congruent in compliance with internal procedures.
The Addressees are bound to provide the utmost collaboration so that the management
affairs are correctly and rapidly recorded in the corporate accounts, and to conserve all
the appropriate supporting documentation so as to render it easily available for
consultation by the entities appointed to supervision and control.
The PRADA Group requires and promotes full compliance with the processes of internal
control as a tool for the improvement of corporate efficiency.
The internal control system consists of the activities of control performed by theindividual corporate functions on their own processes in order to protect the corporate
assets, effective management of corporate activities and provide clear information on
the equity, economic and financial status of the PRADA Group, and of the activities
aimed at the identification and containment of corporate risks.
The Addressees are bound, to the extent of their competence, to collaborate actively
in the correct and efficacious functioning of the system of internal control.
The appointed corporate functions are guaranteed free access to the data, thedocumentation and any other information pertinent to the performance of theactivities of control.

APPENDIX - PRADA GROUP’S CODE OF ETHICSSOCIAL RESPONSIBILITY REPORT 201343

3- Relations with third parties
The PRADA Group is particularly attentive to developing a relationship of trust with allits potential interlocutors.
In the performance of its activities, PRADA spa and the companies of the Group adhere
to principles of loyalty and correctness, requiring honest, transparent and legitimate
conduct from all those operating on their behalf, and not tolerating corruption or
collusion or undue favouritism.
In the performance of any activity connected with PRADA spa or other companies
belonging to the Group, employees and collaborators are prohibited fromgiving/offering and/or accepting/receiving gifts, benefits and/or any other utility,
personal or otherwise, with the exception of gifts of modest value incident to normal
courtesy or commercial practice.
3.1 Relations with customers
The relations with the customer must further, as far as possible and in compliance withthe corporate procedures, the maximum satisfaction of the customer.
The customers must be provided with exhaustive and accurate information about the
products supplied, such as to enable them to make informed decisions.
PRADA spa and the companies of the Group guarantee adequate standards of quality forthe products offered, and are engaged in periodically monitoring product quality.
3.2 Relations with suppliers and external consultants
The selection of suppliers and external consultants is performed according to criteria ofcompetence/professionalism, economic expediency, correctness and transparency.
In the selection of the suppliers and external consultants, as in the determination of
the purchase terms for goods and services, or the commissioning of professional
services, the Addressees must seek to obtain the maximum competitive advantage for
the Group, selecting the supplier or consultant that is in a position to supply goods andservices of the quality required on the most economic terms and conditions.
The drawing up of a contract with a supplier must always be based on relations of theutmost clarity, avoiding where possible the adoption of contractual commitments thatentail forms of dependence for the contracting supplier or for the company of theGroup involved.
Fees and sums paid to the suppliers and external consultants, under whatsoever
entitlement, for supplies and professional assignments must be consistent with market
conditions and adequately documented.
3.3 Relations with the public sector
Relations with the Public Sector are restricted to those: (i) instrumental to obtaining
any authorisations that may be necessary for the performance of the corporate
activity, (ii) aimed at assessing the implications of laws and regulations for the
corporate activities, (iii) necessary in response to requests made to PRADA spa and/or
the companies of the Group by the Public Sector, in the performance of its institutional
activity.
Relations with the Public Sector must always be clear, transparent and correct, andsuch as not to be susceptible to ambiguous or misleading interpretations.
More specifically, the Addressees must not seek to influence improperly the decisionsof the Public Sector by offering money or other utilities, such as work or commercial
opportunities which could benefit the public officials or the persons appointed by apublic service, or members of their families.
PRADA spa and the companies of the Group are not permitted to make direct orindirect contributions of any kind, nor allocate funds for the support of public entities
that are part of the Public Sector, excepting what is allowed and provided for by thelegislation and regulations in force, and on condition that: (i) they are regularly
approved by the competent corporate functions, (ii) they are regularly documented in

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terms of accounts and management, (iii) they do not place any of the Addressees in aposition of conflict of interests.
3.4 Relations with the judiciary and other institutional authorities
Management of relations with the judiciary and the other institutional authorities isrestricted exclusively to the corporate functions appointed to the same.
The Addressees are bound to display the utmost helpfulness and collaboration in
relation to the judicial authorities and/or the other institutional authorities in thecourse of any audits or inspections ordered by the same.
Any Addressees who, for matters connected with the working relationship, aresubjected, even personally, to investigations or inspections or receive a summons,
and/or those who are served notice of other judicial proceedings, must inform theSupervisory Body of PRADA spa or the competent controlling body of the othercompanies of the Group.
3.5 Relations with political organisations and trade unions
The PRADA Group contributes to the economic wellbeing and growth of the community
in which it operates.
To this end, in performing its activities the PRADA Group conforms these to the respectof the local and national specificities, encouraging dialogue with the trade unions andassociations of other kinds.
The relations of PRADA spa and the companies of the Group with political parties ortheir representatives or candidates are marked by the strictest compliance with thelegislation in force.
The Addressees are forbidden from promising or offering payments or benefits of any
kind, in the name and on the behalf of the PRADA Group, to political or trade union
organisations or representatives of the same, excepting what is allowed and provided
for by the legislation and regulations in force.
3.6 Relations with other interlocutors
The relations of the PRADA Group with private bodies, such as ONLUS and other nonprofit organisations, must be inspired by the strictest compliance with the applicablelegal provisions, and must not, in any way, compromise the integrity and the reputationof the PRADA Group.
The undertaking of commitments and the management of relations of any kind withprivate bodies are restricted exclusively to the corporate functions appointed to thesame and to the personnel thus authorised, in line with the system of mandates andcorporate procedures.
3.6.1 Sponsorship
PRADA spa and the companies of the Group may accept requests for sponsorship for
events that offer guarantees of quality and seriousness.
Such sponsorship may relate to the social or environmental sphere, or to the world ofsport, entertainment or art.
3.7 Relations with shareholders and operations with related parties
The PRADA Group exerts itself so that all shareholders are treated equally.
The advantages deriving from belonging to a Group are pursued not only in compliancewith the applicable legislation, but in respect of the interests of each company inprofitability and the creation of value for the shareholders.
The operations with related parties, including intergroup operations, comply with
criteria of substantial and procedural correctness, according to pre-established rules ofconduct.

APPENDIX - PRADA GROUP’S CODE OF ETHICSSOCIAL RESPONSIBILITY REPORT 201345

4- External Communications
All external communication of documents and information concerning the PRADA Groupor other entities with which PRADA spa or the companies of the Group have relations,must be performed in compliance with the legislation, regulations and professional
conduct practices in force.
Strictly prohibited, under all circumstances, are:-the disclosure of any confidential information acquired in the performance of thecorporate activities;-

the disclosure of false or misleading information regarding the PRADA Group orother entities with which PRADA spa and the companies of the Group have relationsin the performance of their activities;-

any form of pressure aimed at obtaining preferential attitudes from the organs ofpublic communication/information.

In order to guarantee the completeness and consistency of the information, therelations of PRADA spa and the companies of the Group with the organs of public
information are restricted to the functions appointed to the same.

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5- Violations and sanctionary consequences
Should any suspected violation of the present Code of Ethics, or behaviour notcompliant with the rules of conduct adopted by PRADA spa and the companies of theGroup, come to the knowledge of any Addressee, he or she must inform the Supervisory
Body of PRADA spa or the competent controlling body of the other companies of theGroup without delay.
The Supervisory Body of PRADA spa or the controlling body of the other companies of
the Group shall proceed to verify the grounds of the alleged violations, if necessary
arranging for the interview of the person who has made the notification and/or the
alleged perpetrator of the violation.
Furthermore, information relating to official actions deriving from infringements oflaws and regulations (e.g. measures taken by the organs of the judicial police, requests
for legal assistance forwarded by managers and/or employees in the case of initiationof legal proceedings) must mandatorily be transmitted to the Supervisory Body of
PRADA spa or to the controlling body of the other companies of the Group.
Measures considered opportune will be adopted in relation to the perpetrators of
unlawful conduct, independently of eventual criminal proceedings taken up by the
judiciary, and shall proceed to communicate to the competent corporate functions the
sanctionary measures imposed.
Compliance with the provisions of the present Code of Ethics is to be considered anessential part of the contractual obligations assumed by employees. Any infringementof the provisions of the Code of Ethics constitutes breach of the obligations of the work
contract and/or a disciplinary offence, in compliance with applicable local laws and, inparticular for Italian companies, in accordance with the procedures laid down by art. 7of the Workers’ Statute and the applicable collective bargaining, with all the legal
consequences, also in relation to the maintenance of the working relationship, and may
entail the compensation for damages deriving from the same.
Compliance with the provisions of the present Code of Ethics constitutes part of thecontractual obligations undertaken by collaborators, by consultants and by otherentities in business relations with the companies of the Group. The eventual
infringement of the provisions contained in the same can constitute breach of thecontractual obligations undertaken, with all the legal consequences as regards thetermination of the contract or appointment assigned and the compensation of thederiving damages.
PRADA spa and the companies of the Group undertake to insert in the contracts with
suppliers, collaborators and external consultants, express termination clauses related
to eventual infringements of the Code of Ethics.

APPENDIX - PRADA GROUP’S CODE OF ETHICSSOCIAL RESPONSIBILITY REPORT 201347

6- Approval of the Code of Ethics and related amendments
The present Code of Ethics was adopted by resolution of the Board of Directors of
PRADA spa on 18.12.2007, with immediate effect.
The other companies of the Group also receive and adopt the present Code of Ethics
through resolution of the competent management body. Any additional specific conduct
rules deriving from local practices or laws may be included in specific conduct codes tobe adopted in addition to the present Code of Ethics.
The Code of Ethics does not replace current and future corporate procedures which
continue to have effect to the extent that the same are not in conflict with the Code of
Ethics.

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APPENDIX - PRADA GROUP’S CODE OF ETHICSSOCIAL RESPONSIBILITY REPORT 2013