Non-financial statement 2023

Here below are some excerpts from the Letter to the stakeholders, signed by the Chairman of the Sella Group, which opens the consolidated Non-Financial Statement.

Maurizio Sella: letter of the Chairman

The Sella Group Annual Report and Non-Financial Statement that you are about to read and which I introduce with this short letter show the results that we have achieved during 2023. The results are extremely positive, delivering us a picture of a solid and healthy Group, growing rapidly in all the areas of its business, supported by an optimal strategic vision that is - when the facts are proven – successful and effective, with a team of skilled and talented people.

To them in particular, we are grateful for the excellent work they have done, thanks to which our Group can boast of being a quality reference point in asset, savings and investment management consulting, banking and financial services and payment systems to support the activities of families and businesses, and in the technological and innovative solutions that contribute to being prompt and effective in providing answers to our clients.

The ability to best meet customers' needs and good results have been achieved in a complex global scenario characterized by uncertainties arising from geopolitical tensions and military escalations that have also affected areas geographically close to us and relevant to our economy. The extension of existing conflicts and the arising of new ones have taken their toll on the development of the economy. In the following pages you will find the results we have achieved by engaging daily-as people, as a company and through the levers of our brokerage activity-in being a positive player in the transition to a more environmentally, socially and economically sustainable world. The matter is crucial. The future of all of us literally depends on it.

In point of fact, 2023 was the warmest year ever, with a temperature 1.48 degrees Celsius higher than the pre-industrial period. Almost half of the days, 173 days to be precise, experienced temperatures at least 1.5 degrees above the average for that period, a trend that continues into the beginning of this 2024.This is why sustainability-and more generally the ability to generate a positive impact, at all levels, as people, as companies, as institutions-is an issue from which we can no longer ignore. That's why the section dedicated to the Non-Financial Statement illustrates our strategy to generate positive impact, which is also the basis of our new Strategic Plan."

The Economic Value generated by the Group in 2023 amounted to 1.179.484.277 euro (up by 173.684.825 euro against 2022) 80% of which was distributed, worth a shared value of 946.443.755 euro, up by about 138.867.298 euro against the previous year. Much of the shared economic value (50,6 %) was used for employees and collaborators in the form of salaries, variable remuneration and social security contributions (about 479 million euro), 26,2 % was used for the payment and support of the supply chain business system: overall the Group made purchases for over 248 million euro. Economic impacts of the Group are also measured in supporting public spending through the sharing of tax revenues (17,6 %) and in the remuneration of the share capital (5,5 %), thus fostering further investments. In 2023 as it was previously stated, the Group distributed around 1 million euro as contributions to organizations and associations, in particular to Sella Foundation and to Umberto Veronesi Foundation), as well as to universities, non-profit organizations, Unicef, the Italian Red Cross and the Ca Sella corporate Recreational Club of the employees.

The remaining part, i.e. 20% of the generated value, amounting to euro 233 million, was retained in the company. It should be noted that depreciation and amortisation, amounting to euro 87 million, and deferred taxes, amounting to euro 30 million, are also included in the retained value. These benefit Suppliers and the Public Administration, but this occurs in a time period other than the current financial year and are therefore not considered in this calculation (i.e. they are not included in the distributed value). Taking these two components into account, the final retained value would decrease to euro 120 million.

Over the past 7 years, the Group has steadily increased the amount of distributed value, recording an increase between 2017 and 2023 of over 429 million euro. The distributed value in 2023, amounting to 946,4 million euro, increased from the previous year by 138 million euro.

Education, work-life balance, corporate welfare, involvement, and performance management: in the current context of strong acceleration of digital transformation and innovation, all these topics become essential areas for the good management and development of people in the company. The attention to people, to "human resources" is one of the chapters of the Non-Financial Statement that we have just published.

2023 was a year of important developments in initiatives concerning Team Sella, that is the people whose work contributes to the Group's success; in this sense, we highlight some particularly significant projects and agreements, which aim to make the management and development of people within a quality work environment increasingly meritocratic, fair and efficient: the launch of Lynfa, the Sella Group's academy; the implementation of a new information system for Human Resources management; the signing of a Group agreement with Labor Unions, extended until June 2024, which expands and consolidates the possibility of using smart working as a working mode, facilitating the transition to the new hybrid work model and promoting the balancing of productivity goals with the different personal needs of employees. The agreement, among the most innovative in the industry, allows, on a trial basis, each employee to enjoy up to 13 or 15 average days per month in smart working mode. In addition, the Trust Index has been measured and related certification has been obtained in all countries where the Group operates.

The achievements and the generated value by the Sella Group resulted from the work of a team that, in December 2023, reached 6209 members, including employees and partners part of the Sella Team. By taking into account employees of the Group's joint venture company Hype as well, the total Sella Team amounts to 6.389 people.

The average age is about 43 years old, diversity is one the winning factor. There is, indeed, a substantial balance between female and male components and by cultural exchanges favoured by working contacts among colleagues in India and Romania, England, Spain and Switzerland. In addition, the people who make up our team come from 36 countries.

In 2023, the Group adhered to the Memorandum of Understanding signed between the Minister for Family, Natality and Equal Opportunities and the President of the Italian Banking Association for the prevention and fight against violence against women and domestic violence, committing itself directly to supporting the initiatives developed by the category association and thus continuing on the path already undertaken in 2020 with the signing of the "Women in Banking Charter" and the active participation in the activities promoted by the related ABI working group. The Group also participated in the work of ValoreD, an association of companies that promotes gender balance and an inclusive culture for the growth of companies and the Country. Finally, since 2021, the Group has adhered to the proposal launched by the M&M association aimed at making a public commitment to gender equality in the events in which the Group is called to participate.

The Group believes that offering its services accessible to all, is an essential aspect, therefore, also in compliance with the provisions of the recent Guidelines on the accessibility of IT tools of the Agenzia per l'Italia Digitale - AgID, in 2023 it has started a path to make its websites, applications, web and non-web documentation accessible and break down "virtual" barriers.

In 2023, moreover, the Group's commitment to training employees has grown further through constant investments in developing its people's skills as a crucial factor to keep high competitiveness and offer a quality service to customers. Training activities continued according to logic and guidelines consistent with 2021. Overall at the Group level, in 2023, the hours of training provided were more than 248,286.

To achieve sustainable development, attention to the environmental impact of one's activities is an essential aspect to guide one's decisions to meet present needs without compromising the ability of future generations to meet their own.
To achieve this important goal, as reported in the Non-Financial Statement, the Sella group has for years chosen to focus on solutions with greater energy efficiency and at a lower environmental impact, to pursue a progressive reduction of its own carbon dioxide emissions.

This constant commitment resulted, in 2021, in writing-off the impact of the Group's CO2 emissions, allowing it to be among the first banking groups in Italy to have achieved "carbon neutrality". This significant milestone has taken shape thanks to the sustainable initiatives implemented in recent years, the current plan to mitigate carbon dioxide emissions and the financing of some international projects to offset the residual emissions.

In order to pursue a progressive reduction in own carbon dioxide emissions, in continuity with what has already been achieved in previous years, actions and initiatives aimed at adopting more energy-efficient solutions with a lower environmental impact continued in 2023. In particular:

work was completed on the installation of 3 new heat pumps in some of the Group's main Branches (total heat output 702 kW) with a consequent reduction in the contribution of the related gas boilers to heating;
in the branches, the renovation of air conditioning systems continued with the conversion of boilers to heat pumps and, in general, the replacement of dated systems and with lower efficiencies. Specifically, there were 12 conversions of boilers to heat pumps in 2023, and there were 12 efficiency upgrades on old systems;
at the building complex in Biella Via Italia 2, works were also completed to connect a significant portion of the buildings, the one dedicated to guest quarters and commercial spaces, to the city district heating (350 thermal kW), whose heat is produced by cogeneration;
replacement of lighting with LED transition continued: during the year work was carried out in 35 commercial branches, and work was completed in the Biella Headquarters Piazza Gaudenzio Sella 1, where 1,150 lamps were replaced.

In continuity with the previous year, in 2023:

the optimization of work spaces in the building continued to reduce waste in terms of heating and lighting;-reduced hours of sign lighting in the Group's headquarters and branches have been maintained;
continuous monitoring has been done in order to timely verify compliance with the legal temperature inside the Group's offices and branches and the activation times of air conditioning systems, ensuring in any case the optimal comfort conditions for the staff;
the massive shutdown of PCs during night hours at the offices and branches has been maintained.

It should also be noted that:

in the Biella Headquarters Piazza Gaudenzio Sella 1, where significant initiatives regarding eco sustainability and energy efficiency had already been taken during the construction phase, the activities related to the certification process "LEED® O+M (Operations and Maintenance) for existing buildings were concluded and the "Gold" certification was obtained in early 2024;
following the complete architectural and plant renovation the building in Milan - S32, during 2018 it obtained the "LEED® - Leadership in Energy and Environmental Design "Platinum" certification;- the 100% of the electricity purchased and used by Sella Group in Italy and Romania is "green energy" certified with "Guarantee of Origin" from renewable sources. Globally, the percentage of "green energy" certified with "Guarantee of Origin" from renewable sources is 99.01%;
during 2023, the Group started 2 new photovoltaic plants, bringing the number of owned plants to 20. Specifically:
- at the Group's headquarters in Biella, the "Photovoltaic Parking" was built and started up in August. The system consists of 5 photovoltaic canopies on which 632 panels were installed, with standard size (1,769x1,052mm) and rated power of 385 Wp/cad. The total rated power of the photovoltaic parking lot is 243.34 kWp. The parking lot is equipped with drainage beds, perennial grasses, and medium-trunked trees. The total CO2 saved is about 129 tons/year, 0.66 tons due to the green project and 128 tons due to energy production;
- at Selir's headquarters in Galati, Romania, a 68 kWp photovoltaic system was installed and started up in March.

The 20 photovoltaic systems at the Group's buildings and branches produced 475,841 kWh (+17% vs 2022) resulting in 252,672 kg of CO2 avoided . The plants mentioned above are equipped with timely monitoring systems that record kWh production and also "avoided" CO2 emissions.

During the year, the Group initiated the project for a major growth of self-generation of energy from photovoltaic plants. The goal for the three-year period 2024-2026 is to build photovoltaic plants until reaching a total installed capacity of about 17 MW.
The construction of the hydroelectric plant on the Cervo Stream, whose concession is held by the Immobiliare Lanificio Maurizio Sella, has been completed. The total rated power of the system, which exploits the historic irrigation ditch still present within the former Maurizio Sella Wool Mill complex for the derivation, is 143.6 kW, with a maximum effective production of 245.6 kW, for an energy output of 976,502 kWh/year.

From 2021 the appointment of mobility managers has started within the Group i.e. professionals who must foster forms of sustainable mobility from an environmental, economic and social point of view, which lead to a consequent change in users' attitudes and habits.

The Group's goal is to allow for a structural and permanent reduction of the environmental impact deriving from motor traffic. To better implement this commitment, the Group is working on the following areas:

spreading and fostering remote work;
light mobility support through various initiatives, including company spaces reserved for sheltering bikes;
supporting the use of remote communication tools to avoid travel related to face-to-face meetings;
progressive renewal of the company car fleet with a view to reducing environmental impact;
installation at the Group's headquarters of electric car charging station.

The attention to the environment of the Sella Group also applies to the supply chain. Just think that in 2023 over 60.11 % of the office material used is low environmental impact, and digital subscriptions to newspapers and magazines reached 96,17 % of the total. Support for the territory is also reflected in the choice of local suppliers in Italy 84,58 %, India 88 %, and Romania 69 %. In addition, all paper purchased for office use is FSC, Ecolabel e ECF. certified, which guarantees that it comes from a responsibly managed forest and a supply chain.