Value Chain | Ferragamo Sustainability

VALUE CHAIN PROFILE

Ferragamo’s procurement strategy is anchored in Made In Italy’s exceptional technical expertise and enduring partnerships with time-honored companies. This approach reflects the brand’s unwavering dedication to Italian craftsmanship, with 97% of supplier turnover in 2024 sourced from prestigious Italian companies. Demonstrating a profound commitment to its roots, Ferragamo partners closely with Tuscan manufacturers, who represent 52.4% of turnover in finished product processing—embodying the brand’s passion for excellence and local heritage. With respect to contract manufacturers, the Group works exclusively with highly specialized manufacturing companies that meet the most demanding quality standards. The selection and retention of external contract manufacturers is key to the Brand, mainly for the purposes of maintaining the world-class quality standards of its products as well as protecting Ferragamo's extensive know-how developed over many years. Approximately 43% of contract manufacturers have worked with Salvatore Ferragamo S.p.A. for over 11 years. The retention of external workshops has been traditionally guaranteed by ongoing partnerships, the frequent exchange of information and skills between the Group and the contract manufacturers, and the highly specialized products and production processes involved.

VALUE CHAIN MONITORING

Ferragamo constantly monitors the risks related to the violation of regulations, with particular attention to the supply chain and procurement model, to ensure high ethical and sustainable development standards. Assessment is made of risks with respect to human rights, child labor, forced and compulsory labor, non-discrimination, freedom of association and collective bargaining, occupational health and safety, working time, remuneration and regularity of working conditions and applied disciplinary practices. Ferragamo requires its direct suppliers (Tier 1) not to exceed the first level of subcontracting (Tier 2) and directly manages the product development and industrialization phases, including the selection processes and quality and safety controls throughout the production process. In fact, the direct supplier qualification process focuses on technical evaluation, verification of documentation and compliance with various standards to assess whether the supplier can meet the brand’s requirements in terms of quality, capacity, financial stability, adherence to ethical principles, compliance with behavioral standards and relevant regulations. To streamline the supplier qualification process, the brand uses the Ferragamo Link tool to manage information and documents with suppliers. This platform makes it easier to register new suppliers and promotes positive relationships within the supply chain. Direct suppliers are also required to sign a package of documents that includes, in addition to the Supplier Code of Conduct, the General Terms and Conditions of Purchase, Self-Certification of Compliance with Contractual Regulations and Applicable Laws, the Animal Welfare Policy, the Group's Restricted Substances List (RSL) and the Technical Performance Requirements, depending on the area of activity. Suppliers are also required to sign agreements guaranteeing brand protection and compliance and to provide a list of their sub-suppliers. To monitor compliance with the ethical and social standards characterizing its supply chain, the brand carries out regular audits of its direct suppliers and sub-suppliers, assessing their actual compliance with the principles set out in its Code of Conduct and generally with applicable laws and regulations. To this end, a risk-based approach is used to prioritize audits based on criteria that consider the level of potential risk. The following specific criteria for Tier 1 and for Tier 2 suppliers have been identified:

Tier 1 audit criteria, in order of relevance

Supply typology;
Order amount in relation to supplier's total turnover;
Audits performed or to be performed;
Number of employees;
Relationship start date;
Geographical area (risk assessment based on the percentage of irregularities found in inspections carried out by the labor inspectorate).

Tier 2 audit criteria, in order of relevance

Type of processing;
Risk inherited from prevailing Tier 1;
Audit activities performed or to be performed;
Number of employees;
Relationship start date;
Geographical area (risk assessment based on the percentage of irregularities found in inspections carried out by the labor inspectorate).

Criteria – both for Tier 1 and Tier 2 suppliers - are subject to change in priority findings reported by the Operations Department (e.g., following inspections, visits to suppliers, or production capacity analyses). Ferragamo continuously updates the control system on the supply chain.

During audits, interviews are conducted with both workers and management, and site inspections are conducted to ensure compliance with the required standards. In the event of non-compliance, suppliers are required to implement the necessary actions to prevent, mitigate or solve the identified issues within agreed time frames. In the event of serious violations of the Code, or in the event of lack of collaboration or failure to implement improvement plans, Ferragamo immediately terminates its business relationship with the suppliers involved. The effective implementation of corrective actions is monitored through follow-up activities, which can be conducted on-site or remotely, to verify that the agreed upon times and methods are being followed.

200 audits were carried out during 2024 on both direct suppliers and sub-suppliers, prioritizing Tier 1 and Tier 2 suppliers carrying out labor-intensive processes (significant suppliers). The non-conformities found were also followed up in order to verify their accomplishment. In 19 cases, significant or repeated violations of the Code by sub-suppliers led to requests to terminate business relations with direct suppliers. In 2024, no reports or complaints were received with reference to issues related to human rights or violations of the Supplier Code of Conduct. In no case have critical issues been identified that present real or potential risks related to respect for human rights (e.g. child labor, forced labor, freedom of association and collective bargaining).

WATER AND CHEMICAL MANAGEMENT

Ferragamo has formalized its commitment to the management of water and marine resources through the Sustainability Policy. Water resources are addressed together with other cross-cutting issues such as water pollution and the protection of marine ecosystems throughout the entire value chain. In the Supplier Code of Conduct, Ferragamo requires the highest standards in the management of water withdrawal and discharge. Among the key initiatives on this topic, the quantification of the direct impact on water resources led to an increase in the collection of primary data from global stores in 2024, with the aim of mapping at least 30% of local units with a specific focus on areas located in areas at “extremely high water risk” in 2025 and to gradually increase this coverage in the following years. In parallel, a detailed effort was made to quantify indirect impacts by mapping key suppliers (T1), including both suppliers of raw materials and finished products, with a focus on those located in areas of high water stress. In 2024, this approach has already made it possible to monitor the water consumption of 80% of the Group's suppliers in terms of expenditure, helping to identify hotspots and align actions with the objectives of the Water Action Plan.

Moreover, since 2016 the issue of chemical safety has been addressed through the presentation of the Group's Restricted Substances List (RSL), which establishes even stricter criteria than REACH, in line with the restrictions imposed by the other geographical areas where Ferragamo products are marketed. The list, which has been drawn up on a voluntary basis with the aim of eliminating or restricting the use of certain chemical substances in the production phases, indicates the maximum concentration thresholds for substances of concern. In 2024 the RSL has been updated to include new substances, limits and methods, and all suppliers and contract manufacturers, both with direct and indirect relationships with the Group, were asked to sign it. Furthermore, Ferragamo has adopted the ZDHC methodology as its implementation reference standard. As a result, information was collected from the supply chain for 63% of the value of leather purchased and for 56% of the value of fabrics purchased, thus covering the most representative portion of its supply chain. Findings show that in 2024, approximately 47% of the value of leather (+10% compared to 2023) and 48% of the value of fabrics (+23% compared to 2023) has been purchased from certified Level 1 or 2 suppliers adhering to the Supplier To Zero Program. Moreover, limited to the suppliers involved in data collection and for which wastewater analysis was applicable, 50% of the value of leather and 80% of the value of textiles was purchased from companies that completed a ClearStream report aimed at examining the performance of their facilities in wastewater management.