— 2024
ANNUAL REPORT
Pirelli & C. S.p.A. – 2024 Annual Report
1
CONTENTS
CORPORATE BODIES ..................................................................................................................... 4
DIRECTORS’ REPORT ON OPERATIONS ..................................................................................... 7
MACROECONOMIC AND MARKET SCENARIO...................................................................... 8
SIGNIFICANT EVENTS OF 2024 ............................................................................................ 12
GROUP PERFORMANCE AND RESULTS ............................................................................. 16
RESEARCH AND DEVELOPMENT ACTIVITIES .................................................................... 29
PARENT COMPANY HIGHLIGHTS ........................................................................................ 37
RISK FACTORS AND UNCERTAINTY ................................................................................... 39
OUTLOOK FOR 2025 .............................................................................................................. 55
SIGNIFICANT EVENTS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR .............. 57
ALTERNATIVE PERFORMANCE INDICATORS .................................................................... 58
OTHER INFORMATION .......................................................................................................... 61
CONSOLIDATED SUSTAINABILITY REPORTING - PURSUANT TO LEGISLATIVE
DECREE OF SEPTEMBER 6, 2024, N. 125 ........................................................................... 69
GENERAL INFORMATION ............................................................................................... 69
ENVIRONMENTAL INFORMATION ............................................................................... 126
SOCIAL INFORMATION ................................................................................................. 221
GOVERNANCE INFORMATION .................................................................................... 344
REPORT ON THE CORPORATE GOVERNANCE AND SHARE OWNERSHIP OF PIRELLI &
C. S.p.A. PURSUANT TO ARTICLE 123-BIS TUF ....................................................................... 368
GLOSSARY ........................................................................................................................... 369
PREAMBLE ........................................................................................................................... 373
COMPANY PROFILE ............................................................................................................ 373
INFORMATION ON THE OWNERSHIP STRUCTURE ......................................................... 376
COMPLIANCE ....................................................................................................................... 386
BOARD OF DIRECTORS ...................................................................................................... 386
PROCESSING OF CORPORATE INFORMATION ............................................................... 407
BOARD COMMITTEES ......................................................................................................... 408
APPOINTMENTS AND SUCCESSIONS COMMITTEE ........................................................ 413
REMUNERATION COMMITTEE AND DIRECTORS’ REMUNERATION .............................. 414
Pirelli & C. S.p.A. – 2024 Annual Report
2
INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM - CONTROL, RISK AND
CORPORATE GOVERNANCE COMMITTEE ....................................................................... 415
INTERESTS OF THE DIRECTORS AND RELATED-PARTY TRANSACTIONS .................. 429
BOARD OF STATUTORY AUDITORS .................................................................................. 430
CORPORATE GENERAL MANAGEMENT ........................................................................... 435
INFORMATION FLOWS TO THE DIRECTORS AND STATUTORY AUDITORS ................. 435
RELATIONS WITH SHAREHOLDERS AND OTHER RELEVANT STAKEHOLDERS ......... 436
SHAREHOLDERS’ MEETINGS ............................................................................................. 437
CHANGES SINCE THE END OF THE YEAR........................................................................ 440
THE PIRELLI WEBSITE ........................................................................................................ 440
CONSIDERATIONS ON THE LETTER BY THE CHAIRMAN OF THE CORPORATE
GOVERNANCE COMMITTEE ............................................................................................... 440
REPORT ON THE REMUNERATION POLICY AND COMPENSATION PAID ............................ 454
REMUNERATION POLICY FOR THE 2025 FINANCIAL YEAR ........................................... 459
REPORT ON COMPENSATION PAID IN 2024 ..................................................................... 499
CONSOLIDATED FINANCIAL STATEMENTS ............................................................................. 525
FINANCIAL STATEMENTS ................................................................................................... 526
EXPLANATORY NOTES ....................................................................................................... 530
SCOPE OF CONSOLIDATION .............................................................................................. 650
PIRELLI & C. S.p.A. SEPARATE FINANCIAL STATEMENTS ..................................................... 657
FINANCIAL STATEMENTS ................................................................................................... 658
EXPLANATORY NOTES ....................................................................................................... 663
ANNEXES TO THE EXPLANATORY NOTES ....................................................................... 730
REPORT OF THE BOARD OF STATUTORY AUDITORS TO THE SHAREHOLDERS’
MEETING ............................................................................................................................... 735
RESOLUTIONS ............................................................................................................................ 759
PROPOSAL FOR THE ALLOCATION OF THE RESULT ..................................................... 760
CERTIFICATIONS ........................................................................................................................ 762
a.
Certification of the Consolidated Financial Statements pursuant to art. 154 bis of
Legislative Decree 58 of February 24, 1998, and pursuant to article 81-ter of Consob
Regulation No. 11971 of May 14, 1999, as amended and supplemented ...................... 762
b.
Independent auditors report on the Consolidated Financial Statements ........................ 764
Pirelli & C. S.p.A. – 2024 Annual Report
3
c.
Certification of the Separate Financial Statements pursuant to art. 154 bis of
Legislative Decree 58 of February 24, 1998, and pursuant to article 81-ter of Consob
Regulation No. 11971 of May 14, 1999, as amended and supplemented ...................... 771
d.
Independent auditors report on Separate Financial Statements ..................................... 773
e.
SASB Content Index ....................................................................................................... 779
f.
Certification of the Sustainability Reporting pursuant to art. 154 bis of
Legislative Decree 58 of February 24, 1998, as amended and supplemented ............... 780
g.
Independent auditor’s limited assurance report on the consolidated sustainability
report ............................................................................................................................... 781
ESEF OBLIGATIONS (EUROPEAN SINGLE ELECTRONIC FORMAT)
This document has not been prepared pursuant to the EU Delegated Regulation 2019/815 (ESEF
Regulation), which was adopted with the implementation of the Transparency Directive. This
document which has been prepared pursuant to the ESEF Regulation, is available (in Italian only)
on the authorised eMarket Storage mechanism (emarketstorage.com) and on the Company’s
website www.pirelli.com.
Pirelli & C. S.p.A. – 2024 Annual Report
Corporate bodies
4
CORPORATE BODIES
The Board of Directors1
Chairman
Jiao Jian
Executive Vice Chairman
Marco Tronchetti Provera
Chief Executive Officer
Andrea Casaluci
Director
Chen Aihua
Director
Zhang Haitao
Director
Chen Qian
Independent Director
Alberto Bradanini
Independent Director
Michele Carpinelli
Independent Director
Domenico De Sole
Independent Director
Fan Xiaohua
Independent Director
Marisa Pappalardo
Independent Director
Grace Tang
Independent Director
Roberto Diacetti
Independent Director
Paola Boromei
Independent Director
Giovanni Lo Storto
Secretary of the Board
Alberto Bastanzio
Board of Statutory Auditors2
Chairman
Riccardo Foglia Taverna
Statutory Auditor
Maura Campra
Statutory Auditor
Francesca Meneghel
Statutory Auditor
Teresa Naddeo
Statutory Auditor
Riccardo Perotta
Alternate Auditor
Franca Brusco
Alternate Auditor
Roberta Pirola
Alternate Auditor
Enrico Holzmiller
1
Appointment: July 31, 2023. Expiry: Shareholders’ Meeting convened for the approval of the Financial Statements at December 31, 2025.
2
Appointment: May 28, 2024. Expiry: Shareholders’ Meeting convened for the approval of the Financial Statements at December 31, 2026.
Corporate bodies
Pirelli & C. S.p.A. – 2024 Annual Report
5
Audit, Risk and Corporate Governance Committee
Chairman - Independent Director
Fan Xiaohua
Independent Director
Giovanni Lo Storto
Independent Director
Roberto Diacetti
Independent Director
Michele Carpinelli
Chen Aihua
Committee for Related Party Transactions
Chairman - Independent Director
Marisa Pappalardo
Independent Director
Giovanni Lo Storto
Independent Director
Michele Carpinelli
Nominations and Successions Committee
Chairman
Marco Tronchetti Provera
Independent Director
Domenico De Sole
Chen Aihua
Zhang Haitao
Remuneration Committee
Chairman - Independent Director
Grace Tang
Independent Director
Michele Carpinelli
Independent Director
Paola Boromei
Independent Director
Alberto Bradanini
Chen Aihua
Pirelli & C. S.p.A. – 2024 Annual Report
Corporate bodies
6
Strategies Committee
Chairman
Marco Tronchetti Provera
Jiao Jian
Andrea Casaluci
Independent Director
Domenico De Sole
Independent Director
Alberto Bradanini
Independent Director
Roberto Diacetti
Chen Qian
Zhang Haitao
Sustainability Committee
Chairman
Marco Tronchetti Provera
Jiao Jian
Andrea Casaluci
Independent Director
Giovanni Lo Storto
Corporate General Manager3
Francesco Tanzi
Manager responsible for the preparation
of the Corporate Financial Documents4
Fabio Bocchio
Independent Auditing Firm5
PricewaterhouseCoopers S.p.A.
The Supervisory Board (as provided for by the Organisational Model 231, adopted by the Company),
is chaired by Prof. Carlo Secchi.
3 Appointment: August 3, 2023.
4 Position confirmed by the Board of Directors’ Meeting of August 3, 2023.
5
Appointment: August 1, 2017, effective from the date of the commencement of trading of Pirelli shares on the stock exchange (October
4, 2017). Expiry: Shareholders’ Meeting convened for the approval of the Financial Statements at December 31, 2025.
Directors’ Report on Operations
Pirelli & C. S.p.A. – 2024 Annual Report
7
DIRECTORS’ REPORT ON OPERATIONS
AT DECEMBER 31, 2024
Pirelli & C. S.p.A. – 2024 Annual Report
Directors’ Report on Operations
8
MACROECONOMIC AND MARKET SCENARIO
Economic Overview
The global economy grew by +2.7% during 2024 (+2.9% for the fourth quarter of the year), despite
persistent geopolitical tensions. The global inflation rate stood at 4.5% for 2024 (5.6% for 2023),
which improved during the fourth quarter of the year (+3.7%), compared to both previous quarters
and the fourth quarter of 2023.
Economic Growth, Year-On-Year Percentage Change in GDP
Consumer Prices, Change in Year-on-Year Percentages
In the European Union, growth in GDP was more contained compared to other geographic regions:
+1.0% for 2024, compared to +0.4% for the previous year. Trends differed between the various EU
countries, such as Spain (+3.2%) and France (+1.2%) - the latter thanks to the positive effect of the
Olympic Games - which compensated for the more contained performances in Italy (+0.7%) and the
fall in GDP in Germany (-0.2% for 2024). In 2024, inflation for the year stood at 2.6%, a marked
improvement compared to 6.4% for 2023. Based on this trend, the European Central Bank decided
to ease its monetary restrictions. Following the interest rate cut of 25 basis points in June, three
further cuts were carried out for a total 100 basis points, which reduced the deposit facility rate to
3.0% at the end of December 2024.
In the United States, the positive performance of the labour market and consumer spending
sustained GDP growth, which recorded an increase of +2.8% for 2024 (+2.9% for 2023). Inflation
1Q 2024
2Q 2024
3Q 2024
4Q 2024
2024
2023
EU
0.6
0.8
1.1
1.4
1.0
0.4
US
2.9
3.0
2.7
2.5
2.8
2.9
China
5.3
4.7
4.6
5.4
5.0
5.4
Brazil
2.2
2.8
3.5
3.3
2.9
3.2
World
2.7
2.7
2.7
2.9
2.7
2.9
Note: Percentage change compared to the same period of the previous year. Preliminary data for 2024 for the EU, the US, China and Brazil and estimates for the World.
Source: National statistics offices and S&P Global M arket Intelligence, February 2025.
1Q 2024
2Q 2024
3Q 2024
4Q 2024
2024
2023
EU
2.8
2.6
2.4
2.5
2.6
6.4
US
3.2
3.2
2.6
2.7
2.9
4.1
China
0.0
0.3
0.5
0.2
0.2
0.2
Brazil
4.3
3.9
4.4
4.8
4.4
4.6
World
4.5
4.4
4.0
3.7
4.5
5.6
Source: National statistics offices and S&P Global M arket Intelligence for World estimate, February 2025
Directors’ Report on Operations
Pirelli & C. S.p.A. – 2024 Annual Report
9
fell gradually from 3.2% for the first quarter, to 2.7% for the fourth quarter, with the rate for the year
falling to 2.9%, compared to 4.1% for 2023, which allowed the Fed to reduce interest rates during
the course of the year by 100 basis points and bring the benchmark rate to 4.25% - 4.50%.
GDP growth in China for 2024 stood at +5.0%, having fallen slightly compared to +5.4% for 2023,
due to weak domestic demand caused by the crisis in the real estate sector. During the second half
of the year, China announced several measures in support of the economy, which led to an economic
recovery during the fourth quarter (+5.4% year-on-year).
Economic performance in Brazil was positive, recording GDP growth of +2.9% for 2024, a slight
decrease compared to 2023. The economy benefited from the positive dynamics of domestic
demand and state aid policies, which limited the impact of the floods in Rio Grande do Sul.
Depreciation of the real during the second and third quarters of the year, however, rekindled inflation
which stood at 4.4% for 2024, after peaking at 4.8% for the fourth quarter. The Brazilian Central
Bank decided to intervene by raising interest rates by 175 basis points from September to the end
of the year, bringing the benchmark rate to 12.25%.
Exchange Rates
The euro averaged US$ 1.08 in 2024, which was more or less stable compared to the previous year,
albeit with some volatility over the course of the year. The euro/US dollar exchange rate was weighed
down, in the final months of 2024, by reduced expectations of a more significant drop in US interest
rates. The euro/US Dollar exchange rate of US$ 1.12 per euro at the end of September, settled at
US$ 1.04 at the end of December, averaging US$ 1.07 in the fourth quarter (compared to US$ 1.10
in the third quarter).
The slowdown in the Chinese economy in 2024, coupled with the gradual cut in interest rates during
the year, weakened the renminbi which averaged 7.12 against the US dollar, having depreciated by
-1.1% compared to the same period in 2023 (-1.2% against the euro). Expectations of the imposition
of new US duties on the import of goods from China as of 2025, as well as changed forecasts on the
evolution of US interest rates, led to a weakening in the renminbi during the fourth quarter of the
year to an average of 7.16 against the US dollar, compared to an average of 7.11 for the previous
quarter.
The Brazilian real averaged 5.39 in 2024 against the US dollar, with a depreciation of -7.3%
compared to the same period in 2023 (a depreciation of -7.4% for the real against the euro for the
same period). The narrowing of the differential between US and euro interest rates and increasing
Key Exchange Rates
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
US$ per euro
1.09
1.07
1.08
1.09
1.10
1.09
1.07
1.08
1.08
1.08
Chinese renminbi per US$
7.10
6.85
7.11
7.01
7.11
7.17
7.16
7.15
7.12
7.05
Brazilian real per US$
4.95
5.20
5.22
4.95
5.54
4.88
5.84
4.95
5.39
5.00
Note: Average exchange rates for the period. Source: National central banks.
4Q
3Q
Full year average
1Q
2Q
Pirelli & C. S.p.A. – 2024 Annual Report
Directors’ Report on Operations
10
risks on the fiscal and monetary front in Brazil, gradually weakened the value of real over the course
of the year: from 4.95 real per US dollar for the first quarter, to 5.84 for the fourth quarter.
Raw Materials Prices
During the course of 2024, geopolitical and climatic factors, as well as supply and demand trends,
influenced the prices of the main raw materials.
In 2024, the average price of Brent crude stood at US$ 79.8 per barrel, down by -3% from US$ 82.3
per barrel in 2023. Despite protracted tensions in the Middle East and prolonged production cuts by
OPEC countries, Brent crude fell to US$ 74 per barrel during the course of the fourth quarter, down
by -11% compared to the fourth quarter of 2023, based on expectations of a weakening in global
demand, and an increase in US oil production which is supported by the Trump administration.
Natural gas prices in Europe averaged euro 35 per MWh in 2024, a drop of -16% compared to euro
41 per MWh in 2023. For the fourth quarter of 2024, the average price for natural gas equalled euro
43 per MWh, which was consistent with the same period of 2023, due to the decrease in natural gas
reserves at the beginning of winter (below the levels of the same period of the previous year), the
non-renewal of the natural gas transit agreement between Ukraine and Russia, as well as the growth
in demand particularly from the Asian markets.
The price of butadiene, the main raw material for the production of synthetic rubber, rose by +13%
in 2024 to euro 959 per tonne on the European market. During the fourth quarter, the price of
butadiene rose to an average of 1,018 per tonne, an increase of +32% compared to the same period
of 2023, albeit slightly lower than for the previous quarter. This slight decrease was mainly due to
low demand and destocking at the end of the year in Europe, and falling prices in the other related
markets (USA and China). The US market, in particular, saw a fall in prices due partly to destocking,
but also due to a recovery in supply.
The average price of natural rubber rose by +27% to US$ 1,744 per tonne in 2024 (compared to
US$ 1,378 per tonne in 2023,) due to stronger demand in the key sectors as a result of China’s
recovery, regulatory factors and limitations in global supply in the rubber producing areas. Natural
rubber prices reached US$ 1,959 per tonne in the fourth quarter, a rise of +35% compared to the
same quarter of the previous year, the highest level in more than seven years.
Raw Materials Prices
2024
2023
% chg.
2024
2023
% chg.
2024
2023
% chg.
2024
2023 % chg.
2024
2023 % chg.
Brent (US$ / barrel)
81.8
82.2
0%
85.0
78.0
9%
78.4
86.1
-9%
74.0
82.8
-11%
79.8
82.3
-3%
European natural gas (€ / MWh)
28
53
-48%
32
35
-9%
36
34
5%
43
43
0%
35
41
-16%
Butadiene (€ / tonne)
812
970
-16%
978
937
4%
1,027
722
42%
1,018
772
32%
959
850
13%
Natural rubber TSR20 (US$ / tonne)
1,574
1,373
15%
1,684
1,345
25%
1,757
1,338
31%
1,959
1,454
35%
1,744
1,378
27%
Note: Data are averages for the period. Source: Reuters, ICIS.
Annual average
3Q
4Q
1Q
2Q
Directors’ Report on Operations
Pirelli & C. S.p.A. – 2024 Annual Report
11
Trends in Car Tyre Markets
During the course of 2024, the car tyre market recorded a global level growth in volumes of +1.0%,
compared to the same period of 2023.
Volume performance per channel differed:
-1% for the Original Equipment channel, (-1% for the fourth quarter), weighed down by a
sharp drop in demand in Europe and sluggish production in North America;
+2% for the Replacement channel, (+1% for the fourth quarter), sustained by a strong
recovery in demand in Europe and a growing North American market.
Demand was more robust for Car ≥18”, which recorded growth of +4% compared to 2023 (+1% for
Original Equipment, +6% for Replacement), with a positive fourth quarter driven by the Replacement
channel. Demand for Original Equipment however was weak, particularly in Europe and North
America.
Market demand for Car ≤17” was stable during 2024, compared to the previous year.
Trends in Car Tyre Markets
% change year-on-year
1Q 2024
2Q 2024
3Q 2024
4Q 2024
2024
Total Car Tyre Market
Total
2.1
1.1
0.2
0.6
1.0
Original Equipment
1.2
0.5
-3.4
-0.9
-0.7
Replacement
2.5
1.3
1.4
1.2
1.6
Market ≥ 18"
Total
6.5
5.6
2.8
1.4
4.1
Original Equipment
1.5
3.2
-0.4
-1.7
0.7
Replacement
10.1
7.5
5.0
3.4
6.4
Market ≤ 17"
Total
0.8
-0.2
-0.6
0.4
0.1
Original Equipment
1.1
-0.9
-4.9
-0.5
-1.3
Replacement
0.7
-0.0
0.7
0.7
0.5
Source: Pirelli estimates.
Pirelli & C. S.p.A. – 2024 Annual Report
Directors’ Report on Operations
12
SIGNIFICANT EVENTS OF 2024
On January 30, 2024, the European Commission announced the launch of an investigation into
certain tyre manufacturers active in the European Economic Area, for alleged violations of the
European Union competition laws, through the possible collusion on prices for new replacement
tyres for cars and trucks, to be sold in the European Economic Area. At the same time, it conducted
inspections at the offices of the aforementioned tyre manufacturers, including those of Pirelli. The
latter, affirmed the probity of its operations and to have always acted in full compliance with the
applicable laws and regulations, and assured the authority of its full cooperation during the
investigations.
On February 6, 2024, Pirelli was confirmed for the sixth consecutive year as being amongst the
global leaders in the fight against climate change, earning a place on the 2023 Climate A List drawn
up by the CDP, the international non-profit organisation that collects, disseminates, and promotes
information on environmental issues. The “A” rating is the highest possible score attainable in the
Climate section, and was awarded to only 346 companies out of more than 21,000 participants, who
were assessed based on their decarbonisation strategy, the effectiveness of their efforts to reduce
emissions and climate risks and in developing a low carbon emissions economy, as well as on the
completeness and transparency of the information provided and the adoption of best practices
associated with environmental impacts.
On February 7, 2024, Pirelli was confirmed as one of the best companies in the world for
sustainability, obtaining a “Top 1%” ranking - the only company in the Auto Components and
Automotive Sectors at global level – which is the highest recognition in the 2024 Sustainability
Yearbook published by S&P Global, following its examination of the sustainability profile of 9,400
companies. This result follows the score achieved by Pirelli in the 2023 Corporate Sustainability
Assessment for the Dow Jones Sustainability Indexes of S&P Global, where the Company was
awarded first place in the Auto Components and Automotive sectors of the Dow Jones Sustainability
World and Europe Indexes, with a score of 84 points (revised from the initial 83).
On March 6, 2024, Pirelli approved the results for the 2023 financial year, which closed with
revenues of euro 6.65 billion, an EBIT adjusted of just slightly more than euro 1 billion and a net
income of euro 495.9 million. On the same date, the Board of Directors approved and disclosed the
2024-’25 Industrial Plan Update to the market, which represents the update to the 2021-2022|2025
Industrial Plan presented on March 31, 2021. Together with the presentation of the 2024-’25
Industrial Plan Update, Pirelli published its Sustainability Plan with its targets for 2025-2030-2040,
which was developed around four pillars: Climate, Product, Nature and People. All the sustainability
targets contained in the Plan for “People”, “Climate”, “Product”, “Nature”, “Global Value Chains” and
“Finance”, can be viewed on the page dedicated to the Industrial Plan in the “Investors” section of
the website at www.pirelli.com.
On March 22, 2024, Pirelli signed an agreement with a selected pool of international banks, for a
term loan credit facility for the amount of euro 600 million, which matures in October 2028. The credit
facility, entered into as part of the usual activity of managing and optimising the financial structure,
allowed for the early repayment of a portion of debt maturing in 2025, the strengthening of the liquidity
Directors’ Report on Operations
Pirelli & C. S.p.A. – 2024 Annual Report
13
margin and the extension of debt maturities. The credit facility is parameterised to be consistent with
the sustainability targets which Pirelli has set for itself, as part of the 2024-’25 Industrial Plan Update.
On May 7, 2024, Pirelli parametrised the revolving credit facility signed on December 21, 2023, to
the sustainability targets announced in the 2024-’25 Industrial Plan Update, which were not yet
available in December at the time of signing.
On May 16, 2024, Pirelli made a disclosure document available to the public, which concerns the
revision of some of the terms and conditions of the existing licences between the Pirelli Group, the
Aeolus Tyre Co., Ltd. and the Prometeon Tyre Group S.r.l. This document was prepared on a
voluntary basis in accordance with the provisions of Article 5 of the Regulation approved by
CONSOB with Resolution No. 17221 of March 12, 2010, as subsequently amended and integrated,
and in accordance with the Procedure for Related Party Transactions adopted by the Company.
On May 28, 2024, the Shareholders’ Meeting approved, with more than 99.8% of the capital
represented, the Financial Statements for the 2023 financial year, which closed with a net income
for the Parent Company of euro 242.9 million and a consolidated net income of euro 495.9 million,
and resolved to distribute a dividend of euro 0.198 per ordinary share, equal to a dividend pay-out
of euro 198 million. The dividend was placed in payment on June 26, 2024 (with an ex-dividend date
of June 24, and a record date of June 25).
The Shareholders’ Meeting appointed the new Board of Statutory Auditors for the 2024-2025-2026
financial years, based on the lists submitted prior to May 3, 2024. The Shareholders’ Meeting also
assigned KPMG S.p.A. the mandate for the statutory audit of the Pirelli & C. S.p.A. accounts for the
2026-2034 period and determined the relevant fee. It also approved the remuneration policy for
2024, and expressed its favourable opinion on the Report on remunerations paid for the 2023
financial year. Furthermore, the Shareholders’ Meeting approved the adoption of the 2024-2026
three-year monetary Long Term Incentive Plan (LTI Plan) for the Management sector of the Pirelli
Group.
On June 14, 2024, the S&P Global Ratings agency improved the outlook for Pirelli to “positive” from
“stable” and confirmed its BBB- investment grade rating. In explaining its upward revision of the
outlook, the agency pointed out that Pirelli was well positioned to execute its Industrial Plan, has a
solid costs discipline and a strong positioning in High Value tyres, which allows it to generate a stable
operating cash flow with a consequent reduction in financial leverage.
On June 24, 2024 Pirelli announced that - with reference to the non-interest-bearing bond loan, the
“EUR 500 million Senior Unsecured Guaranteed Equity-linked Bonds due 2025” - the conversion
price of the bonds was changed from euro 6.0173 to euro 5.9522 in accordance with the regulations
of the bond loan itself, effective as of June 24, 2024 following the resolution of the Shareholders’
Meeting of May 28, 2024, to distribute a dividend of euro 0.198 per ordinary share.
On June 25, 2024, Pirelli placed a sustainability-linked bond with international institutional investors
for a total nominal amount of euro 600 million, parameterised to Pirelli’s sustainability targets which
were validated by the Science Based Targets initiative (SBTi) on September 19, 2024 (please refer
Pirelli & C. S.p.A. – 2024 Annual Report
Directors’ Report on Operations
14
to the subsequent relevant event), and are consistent with Pirelli’s “Sustainability-linked Financing
Framework”. The issuance saw demand equal to more than 4.6 times the supply, which amounted
to approximately euro 2.8 billion. The transaction, which took place as part of the current EMTN
Programme (Euro Medium Term Note Programme), enabled the optimisation of the debt structure
by extending maturities and diversifying funding sources. The transaction, which allowed for an
improvement in the liquidity margin, had a settlement date of July 2, 2024. The issuance has a
maturity date of five years and an effective yield-to-maturity of 3.950%, which corresponds to a yield
of 115 basis points above the benchmark rate (mid swap). These securities are listed on the
Luxembourg Stock Exchange.
On July 15, 2024, Fitch Ratings revised Pirelli’s Long-Term Issuer Default Rating (IDR) and senior
unsecured debt rating upwards from “BBB-” to “BBB”. The outlook for the IDR rating was stable. The
upward revision reflects Pirelli’s high profitability and the solidity of its cash flow generation (free
cash flow), which are elements that have allowed for a reduction in financial leverage in keeping with
the parameters required for the new rating.
On September 10, 2024, Pirelli and Bosch GmbH announced a joint technology development
agreement with the aim of creating new software-based solutions and new driving functionalities,
through sensors installed in the tyres also known as “in-tyre” sensors. The collaboration joins Bosch’s
expertise in systems hardware, software and MEMS (Micro Electro Mechanical Systems) sensors,
to Pirelli’s CyberTM Tyre technologies, which includes algorithms, modelling and sensors
incorporated into the tyres.
On September 19, 2024, Pirelli announced that the Science Based Targets initiative (SBTi) had
approved Pirelli’s short and long-term targets for the reduction in absolute greenhouse gas (GHG)
emissions, which had been announced in March during the presentation of the 2024-2025 Industrial
Plan Update. In particular, the SBTi - which defines and promotes science-based best practices for
reducing emissions - validated Pirelli’s “long-term” target of Net Zero by 2040, the most ambitious
among tyre manufacturers, which is to reduce Scopes 1, 2 and 3 absolute greenhouse gas emissions
by at least -90%, in comparison to 2018 as the base year. These measures were deemed to be
compliant with the Paris Agreement goal to limit global warming to within 1.5°C. The SBTi also
approved the other “near-term” decarbonisation targets which provide for an -80% reduction in
absolute greenhouse gas emissions (Scopes 1 and 2) by 2030, in comparison to 2018, and for a
-30% reduction in emissions derived from the purchases of raw materials and from services and
transport by 2030, in comparison to 2018 (Scope 3).
On November 6, 2024, Pirelli announced that Marco Polo International Italy S.r.l. (“MPI”), also on
behalf of the China National Tyre and Rubber Corporation, Ltd. (“CNRC”), had forwarded a copy to
Pirelli of the provision dated October 31, 2024, that had been communicated to the CNRC by the
Presidency of the Council of Ministers, stating that it had considered it appropriate to commence
administrative proceedings on the possible violation by the CNRC, of the prescriptions contained in
the Decree of the Presidency of the Council of Ministers dated June 16, 2023, by which special
powers had been exercised through the imposition of specific prescriptions pursuant to Article 2 of
Legislative Decree No. 21 of March 15, 2012 (“DPCM Golden Power”). Specifically, the proceedings
concern a possible violation of the requirement to guarantee the absence of organisational and
Directors’ Report on Operations
Pirelli & C. S.p.A. – 2024 Annual Report
15
functional links between Pirelli on the one hand, and the CNRC on the other. The order sets the
deadline for the conclusion of the proceedings at 120 days starting from the date of notification of
the order. The CNRC has informed Pirelli that it maintains that, it has always complied with the
requirements of the DPCM Golden Power and is confident that it will clarify its position during the
proceedings.
On December 12, 2024, the Pirelli Shareholders’ Meeting, convened on November 8, 2024, met in
an ordinary and extraordinary session. In the extraordinary session, the Shareholders’ Meeting
approved some proposals to amend the Articles of Association aimed at adopting some of the recent
changes to the regulatory framework. Specifically, the Shareholders’ Meeting approved the
amendment of Articles 7 and 8 of the Articles of Association in order to provide that intervention in
the Shareholders’ Meeting and the exercise of voting rights may take place, following a resolution of
the Board of Directors, exclusively through the designated representative. The Shareholders’
Meeting also approved the amendment of Articles 11 and 12 of the Articles of Association so that
the declaration of compliance in sustainability reporting can be rendered, if appointed, by a subject
other than the Manager responsible for the preparation of the Corporate Financial Documents. The
Shareholders’ Meeting, in its ordinary session, also approved the amendment of the Regulation of
Shareholders’ Meetings in order to adapt its contents to the new text of the Articles of Association.
On December 23, 2024, Pirelli was reconfirmed as the global leader, taking first place in the Auto
Components and Automobiles sectors in the Dow Jones Sustainability World and European Indexes.
Pirelli, the only tyre company included in both the “World” and “Europe” indexes, achieved a score
of 84 points in S&P Global’s Corporate Sustainability Assessment for 2024, the highest in both the
Auto Components and Automobiles sectors, and significantly higher than the sector average of 29
points for Auto Components and 35 points for Automobiles. Pirelli achieved the highest scores in
several areas, including Business Ethics, Commitment to Human Rights, Occupational Health and
Safety Policies and Programmes, Taxonomy and ESG Supply Chain Management. Top scores were
also achieved in the areas that are integral to the Company’s path towards its ambitious Net Zero by
2040 target, such as low-carbon products, climate change management, environment and
biodiversity.
Pirelli & C. S.p.A. – 2024 Annual Report
Directors’ Report on Operations
16
GROUP PERFORMANCE AND RESULTS
In this document, in addition to the financial measures provided for by the International Financial
Reporting Standards (IFRS), alternative performance indicators derived from the IFRS were used,
in order to allow for a better assessment of the Group’s operating and financial performance.
Reference should be made to the section “Alternative Performance Indicators” for a more analytical
description of these indicators.
* * *
Pirelli closed 2024 with results showing growth, which exceeded the targets announced on
November 7th. The results are evidence of the effectiveness of the business model, and reflect the
implementation of the key programmes of the Industrial Plan.
On the Commercial front:
the strengthened positioning of Car High Value. During the course of 2024, Pirelli recorded
volume growth for Car ≥18” of +5%, outperforming the market (+4%). The gain in market share
affected both the Replacement channel (+7% for Pirelli, +6% for the market), and the Original
Equipment channel, (+3% for Pirelli volumes, +1% for the market);
a further reduction in exposure to Standard (-4% for Pirelli Car ≤17” volumes, compared to a
stable market), consistent with the Group’s strategy of greater selectivity.
For Pirelli, this overall performance translated into a +2% growth in Car volumes (+1% for the
market).
On the Innovation front:
approximately 306 new homologations were obtained for the Car sector, concentrated mainly
in ≥19” and Specialties;
for electric vehicles, Pirelli can count on a portfolio of approximately 810 homologations at
global level, and a market share of 30% among Premium EV Original Equipment
Manufacturers.
the product range in the various business segments was expanded. Seven new products
were introduced in the Car segment, five of which at regional level (the Cinturato All Season
SF3, the ICE Zero Asimmetrico, the Powergy All Season and Winter tyre in Europe, and the
Scorpion MS in APAC), and two at global level (the P Zero Winter 2 and the P Zero MS). The
offer for two wheelers was enriched with two new motorbike products (the Pirelli Scorpion
Directors’ Report on Operations
Pirelli & C. S.p.A. – 2024 Annual Report
17
Trail III and the Metzeler Roadtec 02), and three new cycling products (the P Zero Race TLR
RS, the P4 Sport and the Cinturato Road);
a strategic agreement was signed with Bosch GmbH, for the development of new software
based solutions and driving functionalities, thanks to sensors installed in the tyres and to
Pirelli’s proprietary software, with the aim of providing useful information to the vehicle in
order to further improve the safety and efficiency of driving.
In the Operations Programme:
gross benefits from efficiencies amounting to euro 143.2 million were achieved, consistent
with expectations;
the saturation level of the manufacturing plants stood at approximately 86%, 95% for High
Value;
the programme to decarbonise manufacturing plants through the use of renewable energy
sources and the energy efficiency programmes continued.
On the Sustainability front, Pirelli further improved its performance during 2024.
The Plan to decarbonise the value chain continued, in line with the targets.
Absolute CO2 emissions results for the Group showed a decrease of -22% compared to 2023,
and of -57% compared to 2018, (the SBTi near-term target for Scopes 1+2 is equal to -80% by
2030, in comparison to 2018). Absolute emissions from the supply chain were reduced by -26%
compared to 2018 (the SBTi near term target for Scope 3 is equal to -30% by 2030, in comparison
to 2018). At a global level, 96% of electricity purchased from the grid was certified as being from
renewable sources (80% in 2023).
In 2024, the Science Based Targets initiative (SBTi) also validated Pirelli’s “long-term” target of
Net Zero by 2040, the most ambitious among tyre makers, which is to reduce Scope 1, 2 and 36
absolute greenhouse gas emissions by at least -90%, in comparison to 2018 as the base year,
which is compliant with the Paris Agreement to limit global warming to within 1.5°C.
The roadmap for Product side sustainability also continued.
6 Scope 1: Direct greenhouse gas emissions from the direct combustion of fossil fuels by the organisation within its confines. Scope 2:
Indirect greenhouse gas emissions from the use of electricity, heat and steam imported and consumed by the organisation within its
confines. Scope 3: Indirect emissions from upstream and downstream activities of the organisation’s operations, calculated according
to the GHG Protocol and in accordance with SBTi requirements.
Pirelli & C. S.p.A. – 2024 Annual Report
Directors’ Report on Operations
18
To support the reduction of emissions in the use-phase (decarbonisation of mobility and transport),
34.5% of tyres (29.8% in 2023) placed on the market were in compliance with the highest classes
(A or B) in European labelling, both in terms of rolling resistance (an environmental aspect with an
indirect impact on vehicle CO2 emissions), and braking on the wet, which is consistent with Pirelli’s
target of 35% by 2025.
The commitment to the Research & Development of innovative materials of natural and
recycled origin was significant.
The P Zero Winter 2 was presented at “The Tire Cologne 2024” trade fair, along with part of the
range equipped with Elect technology, which is made from more than 50% of natural or recycled
material7, (a claim which has been verified by a third party in accordance with ISO 14021). The
version of the P Zero Winter 2 made specifically for the BMW 7 Series, also has the distinction,
unique in the market at the time of its launch, of being the first winter tyre for vehicles with a
“Class A” rating in rolling resistance.
In turn, the P Zero E, a summer tyre designed for UHP electric vehicles, in addition to the triple A
Class rating under European labelling (rolling resistance, wet braking and noise), contains more than
55% of materials from a natural or recycled origin (a claim which has been verified by a third party
in accordance with ISO 14021), and in 2024, in the 255/50R20 size, contained as much as 58.5%
of materials from a natural or recycled origin7.
At the 2024 Goodwood Festival of Speed, Pirelli announced a partnership with Jaguar Land Rover
(JLR), to supply tyres made with materials derived from FSC™ Certified forests for a wide
selection of luxury vehicles, which is an important step towards the widespread use of certified
rubber, which follows Pirelli’s presentation in 2021 of the world’s first road tyre containing FSC™
Certified natural rubber and rayon. Other significant milestones in this journey were the introduction
of tyres with FSC™ Certified natural rubber in the Formula One championship, starting with
the first GP for 2024, and the debut of the certification also in the cycling world with the new Pirelli
P Zero Race RS8. The FSC™ Certification for forest management is a confirmation that plantations
are managed in a way that preserves biodiversity and benefits the people who live and work in those
areas. The FSC™ Chain of Custody certification process ensures that FSC™ certified material is
segregated from non-certified material, from the plantation to the tyre manufacturer.
In accordance with the Sustainability Plan, Pirelli continued on the path that will see its European
factories use only FSC™ Certified natural rubber by 2026.
The proactive commitment to protect Biodiversity in 2024 has led to the establishment of
Biodiversity Action Plans that cover 55% of Pirelli’s production sites and test tracks, consistent with
the target of 100% coverage by 2025. These plans are based on the impacts and dependencies
7 Thanks to a combination of physical segregation and mass balance. The materials of natural origin are natural rubber, textile
reinforcements (only the P Zero E), natural origin chemicals, bio-resins and lignin (only the P Zero E), while the recycled materials are
metal reinforcements, chemical products and - through a mass balance approach - synthetic rubber, silica and carbon black.
8 Natural rubber accounts for the following percentage of the tyre’s total weight: approximately 16% in the tyres for the BMW X5
xDrive45e Plug-In Hybrid; approximately 15% in the Formula One tyres; approximately 23% in the P Zero Race RS.
Directors’ Report on Operations
Pirelli & C. S.p.A. – 2024 Annual Report
19
of Pirelli locations that were assessed according to the four core criteria of the TNFD LEAP
approach (Locate, Evaluate, Assess, Prepare), and address the five main drivers of biodiversity
loss and ecosystem degradation as identified by IPBES9. The reduction in the specific
abstraction of water has been significant both at Group level, recording -11% compared to 2023,
and reached which -51% in comparison to 2015 (the base year for the Group’s target), both in the
high water stress areas where abstraction fell by -5.5% compared to 2023, reaching -34.6% in
comparison to 2015 (the base year for the target for high water stress areas).
Furthermore, since 2024, biodiversity has been integrated into the Life Cycle Assessment (LCA) of
100% of new products.
In 2024, Pirelli also confirmed its commitment to engaging and valuing its people, recording an
engagement rate of 83% (the Global Sustainable Engagement Index), exceeding the target of
maintaining this rate at ≥80% at all times. The focus on employee Health and Safety protection, led
to a further decrease in the accident frequency index10, which in 2024 fell by -16.6% compared to
2023. The presence of women in management positions has increased globally, touching 28.3%
in 2024 (27% in 2023).
Pirelli’s sustainability performance in 2024, was recognised by the main sustainable finance
indexes. Following the annual review of the Dow Jones Sustainability Indexes by S&P Global, the
Company achieved the top score in the Auto Components and Automotive Sectors at global
level. This was followed, at the beginning of the year, by the highest recognition of “Top 1%” in the
2025 Sustainability Yearbook. Pirelli was re-confirmed as a leader in the fight against climate
change by being placed on the CDP “Climate A List”, in addition to achieving a Top Score Tyre
Industry ranking and a “Negligible Risk” assessment in the Sustainalytics ratings, Top Score in
the Auto Components sector, Prime Status in the ISS (Institutional Shareholder Services Inc.)
ESG assessment, and a Platinum rating from Ecovadis.
Pirelli’s results for 2024 were characterised by:
net sales which equalled euro 6,773.3 million, in excess of the target of euro 6.7 billion, had
increased by +1.9% compared to 2023 (euro 6,650.1 million), with organic growth of +4.4%. This
performance was supported by a positive volume performance (+1.9%) and by an improvement
in the price/mix (+2.5%). The impact of the exchange rate effect was instead negative (-2.5%);
EBIT adjusted which equalled euro 1,060.5 million (euro 1,040 million was implied by the
November guidance), up by +5.9% compared to 2023 (euro 1,001.8 million), with profitability at
15.7% (a target of ~15.5%), an improvement of +0.6 percentage points year-on-year, thanks to
the effectiveness of internal levers (price/mix and efficiencies);
9 Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services.
10 The number of work-related accidents for every one million hours worked. If calculated on 200,000 hours worked, the frequency rate
for 2024 would be equal to 0.28.
Pirelli & C. S.p.A. – 2024 Annual Report
Directors’ Report on Operations
20
net income/loss which amounted to an income of euro 501.1 million, an increase of +1.0%
compared to 2023 (euro 495.9 million). The improved operating performance more than offset
the impacts of the hyperinflation accounting used by some Group companies. Net income/loss
adjusted amounted to euro 613.5 million (euro 595.4 million in 2023), net of one-off, restructuring
and non-recurring expenses, and the amortisation of the intangible assets recognised in the PPA;
Net Financial Position which at December 31, 2024 showed a debt of euro 1,925.8 million (a
debt of euro 2,261.7 million at December 31, 2023), with a cash generation before dividends of
euro 533.9 million, which exceeded the target (between euro 500 and 520 million) and the figure
for 2023 (euro 508.9 million). Cash generation before dividends for the fourth quarter stood at
euro 890.7 million, an improvement compared to the fourth quarter of 2023 (euro 876.6 million);
a liquidity margin equal to euro 3,168.7 million, which covers debt maturities until the third
quarter of 2029.
The Group’s Consolidated Financial Statements can be summarised as follows:
(in millions of euro)
2024
2023
Net sales
6,773.3
6,650.1
EBITDA adjusted (°)
1,519.5
1,446.1
% of net sales
22.4%
21.7%
EBITDA
1,475.7
1,366.3
% of net sales
21.8%
20.5%
EBIT adjusted
1,060.5
1,001.8
% of net sales
15.7%
15.1%
Adjustments: - amortisation of intangible assets included in PPA
(113.7)
(113.7)
- one-off, non-recurring and restructuring expenses
(43.8)
(79.8)
EBIT
903.0
808.3
% of net sales
13.3%
12.2%
Net income/(loss) from equity investments
31.4
15.9
Financial income/(expenses)
(286.6)
(194.1)
Net income/(loss) before taxes
647.8
630.1
Taxes
(146.7)
(134.2)
Tax rate %
22.6%
21.3%
Net income/(loss)
501.1
495.9
Net income/(loss) attributable to owners of the Parent Company
468.0
479.1
Earnings/(loss) per share (in euro per basic share)
0.47
0.48
Net income/(loss) adjusted
613.5
595.4
(°) The adjustments refer to one-off non-recurring and restructuring expenses to the amount of euro 43.8 million (euro 79.8 million for 2023).
Directors’ Report on Operations
Pirelli & C. S.p.A. – 2024 Annual Report
21
For a better understanding of the Group’s performance, the following quarterly performance
figures are provided below:
Net sales amounted to euro 6,773.3 million, an increase of +1.9% compared to 2023, +4.4%
excluding the combined impact of the exchange rate effect and the adoption of hyperinflation
accounting (totalling -2.5%).
(in millions of euro)
12/31/2024
12/31/2023
Fixed assets
8,771.6
8,812.1
Inventories
1,467.7
1,371.4
Trade receivables
622.9
649.4
Trade payables
(2,081.6)
(1,999.4)
Operating net working capital
9.0
21.4
% of net sales
0.1%
0.3%
Other receivables/other payables
42.2
45.8
Net working capital
51.2
67.2
% of net sales
0.8%
1.0%
Net invested capital
8,822.8
8,879.3
Equity
5,912.3
5,619.6
Provisions
984.7
998.0
Net financial (liquidity)/debt position
1,925.8
2,261.7
Equity attributable to owners of the Parent Company
5,756.1
5,494.4
Investments in intangible and owned tangible assets (CapEx)
414.9
405.7
Increases in right of use
118.8
101.2
Research and development expenses
289.5
288.5
% of net sales
4.3%
4.3%
Research and development expenses - High Value
272.8
269.4
% of High Value sales
5.3%
5.4%
Employees (headcount at end of period)
31,219
31,072
Tyre production sites (number)
18
18
(in millions of euro)
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
Net sales
1,695.5
1,699.7
1,752.0
1,737.8
1,737.0
1,722.7
1,588.8
1,489.9
6,773.3
6,650.1
yoy
-0.2%
0.8%
0.8%
6.6%
1.9%
organic yoy *
4.6%
4.5%
5.5%
2.3%
4.4%
EBITDA adjusted
376.3
359.7
392.0
379.4
388.7
376.7
362.5
330.3
1,519.5
1,446.1
% of net sales
22.2%
21.2%
22.4%
21.8%
22.4%
21.9%
22.8%
22.2%
22.4%
21.7%
EBITDA
368.6
350.7
384.1
367.9
381.5
368.3
341.5
279.4
1,475.7
1,366.3
% of net sales
21.7%
20.6%
21.9%
21.2%
22.0%
21.4%
21.5%
18.8%
21.8%
20.5%
EBIT adjusted
262.6
248.1
276.5
269.3
276.8
265.1
244.6
219.3
1,060.5
1,001.8
% of net sales
15.5%
14.6%
15.8%
15.5%
15.9%
15.4%
15.4%
14.7%
15.7%
15.1%
Adjustments: - amortisation of intangible assets included in PPA
(28.4)
(28.4)
(28.5)
(28.5)
(28.4)
(28.4)
(28.4)
(28.4)
(113.7)
(113.7)
- one-off, non-recurring and restructuring expenses
(7.7)
(9.0)
(7.9)
(11.5)
(7.2)
(8.4)
(21.0)
(50.9)
(43.8)
(79.8)
EBIT
226.5
210.7
240.1
229.3
241.2
228.3
195.2
140.0
903.0
808.3
% of net sales
13.4%
12.4%
13.7%
13.2%
13.9%
13.3%
12.3%
9.4%
13.3%
12.2%
Net income/(loss) from equity investments
6.0
2.3
9.9
3.9
6.6
2.7
8.9
7.0
31.4
15.9
Financial income/(expenses)
(110.1)
(52.2)
(66.0)
(54.7)
(49.4)
(43.3)
(61.1)
(43.9)
(286.6)
(194.1)
Net income/(loss) before taxes
122.4
160.8
184.0
178.5
198.4
187.7
143.0
103.1
647.8
630.1
Taxes
(22.0)
(45.8)
(53.1)
(50.9)
(58.6)
(19.3)
(13.0)
(18.2)
(146.7)
(134.2)
Tax rate %
18.0%
28.5%
28.9%
28.5%
29.5%
10.3%
9.1%
17.7%
22.6%
21.3%
Net income/(loss)
100.4
115.0
130.9
127.6
139.8
168.4
130.0
84.9
501.1
495.9
*before exchange rate effect and hyperinflation in Argentina and Turkey.
1 Q
2 Q
Total year
3 Q
4 Q
Pirelli & C. S.p.A. – 2024 Annual Report
Directors’ Report on Operations
22
High Value sales accounted for 76% of total Group revenues (75% in 2023).
The following table shows the changes in net sales performance compared to the same period of
the previous year:
The positive volume performance (+1.9%) reflected, as already illustrated, the performance of High
Value which was superior to that of the market, and the progressive and gradual reduction in
exposure to Standard, which has lower profitability.
The improvement in the price/mix (+2.5%), was mainly driven by the product mix, thanks to the
gradual shift from Standard to High Value and the improved mix within both.
The exchange rate effect was negative (-2.5%), impacted mainly by the volatility of the currencies
of emerging countries against the euro.
Net sales for the fourth quarter amounted to euro 1,588.8 million, with organic growth of +2.3%
compared to the same period of 2023 (euro 1,489.9 million), +6.6% including the impact of the
exchange rate effect. Pirelli recorded:
volumes which grew by +0.5%. For the Car business, volume growth was +1%, consistent
with the market trend. Performance was similar with Car ≥18’’ (+1% for Pirelli, +1% for the
market), with gains in market share in the Replacement channel (+4% for Pirelli compared to
+3% for the market), while in the Original Equipment channel (-3% for Pirelli, -2% for the
market), Pirelli’s performance was impacted by both the weakness in automobile production
in Europe and North America and the comparison with the performance in the fourth quarter
of 2023 in China, where Pirelli reported strong sales growth thanks to new contracts with
local Premium electric vehicle manufacturers. Performance was positive for Car ≤17” (+1%
for Pirelli, stable for the market), where Pirelli benefited from the recovery in demand in the
Original Equipment channel in South America;
an improvement in the price/mix (+1.8%);
a positive impact from the exchange rate effect (+4.3%), thanks to a favourable year-on-year
comparison (-10.6% for the fourth quarter of 2023), and the appreciation of the US dollar and
the currencies of emerging countries against the euro.
1Q
2Q
3Q
4Q
Total year
Volume
2.3%
1.2%
3.0%
0.5%
1.9%
Price/mix
2.3%
3.3%
2.5%
1.8%
2.5%
Change on a like-for-like basis
4.6%
4.5%
5.5%
2.3%
4.4%
Exchange rate effect /Hyperinflation accounting in Argentina and Turkey
-4.8%
-3.7%
-4.7%
4.3%
-2.5%
Total change
-0.2%
0.8%
0.8%
6.6%
1.9%
2024
Directors’ Report on Operations
Pirelli & C. S.p.A. – 2024 Annual Report
23
The performance for net sales according to geographical region was as follows:
EBITDA adjusted amounted to euro 1,519.5 million (euro 1,446.1 million for 2023), with a margin of
22.4% (21.7% for 2023), which reflected the dynamics described in the following paragraph in terms
of the EBIT adjusted.
EBIT adjusted for 2024 amounted euro 1,060.5 million (euro 1,001.8 million for 2023), with an EBIT
margin adjusted of 15.7%, an improvement compared to 15.1% for 2023, thanks to the contribution
of internal levers.
More specifically, the improved EBIT adjusted reflected:
the positive contribution of the price/mix (euro +110.0 million) and of efficiencies (euro
+143.2 million) which more than offset inflation in the cost of production factors (euro
-142.5 million), the increase in the cost of raw materials (euro -23.7 million) and the negative
impact of the exchange rate effect (euro -24.6 million);
the positive effect of volumes (euro +48.7 million), which limited the impact of higher
depreciation and amortisation (euro -22.4 million) and the increase in other costs (euro
-30.0 million), which were mainly related to Marketing and Research and Development.
EBIT adjusted for the fourth quarter amounted to euro 244.6 million (+11.5% compared to euro 219.3
million for the fourth quarter of 2023), with the margin improving to 15.4% (14.7% for the fourth
quarter of 2023). The positive effect of the price/mix, efficiencies and the exchange rate effect more
than offset the negative impact of raw materials and inflation.
2023
(in millions of euro)
%
%
Europe
2,643.8
39.0%
38.9%
North America
1,706.3
25.2%
25.8%
APAC
1,149.0
17.0%
16.8%
South America
798.8
11.8%
12.0%
Russia and MEAI
475.4
7.0%
6.5%
Total
6,773.3
100.0%
100.0%
2024
Pirelli & C. S.p.A. – 2024 Annual Report
Directors’ Report on Operations
24
EBIT for 2024 amounted to euro 903.0 million (an increase of euro 94.7 million compared to euro
808.3 million in 2023), and included the amortisation of intangible assets identified in the PPA to the
amount of euro 113.7 million, consistent with 2023, and one-off, non-recurring and restructuring
expenses of euro 43.8 million, which was an improvement compared to euro 79.8 million in 2023.
Net income/(loss) from equity investments amounted to an income of euro 31.4 million, (positive
to the amount of euro 15.9 million for 2023), and mainly refers to the pro-rata result of the investment
in the joint venture Xushen Tyre (Shanghai) Co., Ltd., which was positive to the amount of euro 25.1
million (positive to the amount of euro 9.5 million for 2023), and in the joint venture PT Evoluzione
Tyres in Indonesia which was positive to the amount of euro 1.0 million (positive to the amount of
euro 0.8 million for 2023). Net income/(loss) from equity investments also included euro 3.9 million
in dividends received from non-controlling interests (euro 4.3 million in 2023).
Net financial expenses for 2024 amounted to euro 286.6 million, compared to euro 194.1 million
for 2023, and included the negative impact of approximately euro 53 million linked to phenomena of
currency depreciation and hyperinflation, without any impact on cash generation.
At December 31, 2024, the cost of debt, calculated as the average cost of debt for the last twelve
months, stood at 5.06%, which was substantially consistent with 5.08% at December 31, 2023.
Taxes for 2024 amounted to euro 146.7 million, and reflected the positive effect of euro 30 million
mainly in the fourth quarter of the year, relative to the positive development in some tax disputes
concerning previous years. The tax rate for 2024 stood at 22.6%, compared to 21.3% for 2023 which
included the benefits of the Patent Box for the 2020-2022 three-year period of approximately euro
40 million.
Net income/(loss) amounted to an income of euro 501.1 million, compared to an income of euro
495.9 million in 2023.
The net income for the fourth quarter increased by +53.1%, compared to the fourth quarter of 2023,
and reflected the lower taxes for the period as described previously.
(in millions of euro)
1 Q
2 Q
3 Q
4 Q
Total year
2023 EBIT adjusted
248.1
269.3
265.1
219.3
1,001.8
- Internal levers:
Volumes
15.0
8.6
21.2
3.9
48.7
Price/mix
27.0
33.4
31.0
18.6
110.0
Amortisation and depreciation
(7.3)
(6.8)
(3.7)
(4.6)
(22.4)
Efficiencies
32.0
39.4
36.8
35.0
143.2
Other
(13.9)
(11.4)
(7.9)
3.2
(30.0)
- External levers:
Cost of production factors (commodities)
29.4
6.9
(16.6)
(43.4)
(23.7)
Cost of production factors (labour/energy/other)
(29.1)
(39.2)
(40.9)
(33.3)
(142.5)
Exchange rate effect
(38.6)
(23.7)
(8.2)
45.9
(24.6)
Total change
14.5
7.2
11.7
25.3
58.7
2024 EBIT adjusted
262.6
276.5
276.8
244.6
1,060.5
Directors’ Report on Operations
Pirelli & C. S.p.A. – 2024 Annual Report
25
Net income/(loss) adjusted amounted to an income of euro 613.5 million, (euro 595.4 million for
2023). The following table shows the calculations:
Net income/(loss) attributable to the owners of the Parent Company amounted to an income of
euro 468.0 million, compared to an income of euro 479.1 million in 2023.
Equity went from euro 5,619.6 million at December 31, 2023 to euro 5,912.3 million at December
31, 2024.
Equity attributable to the owners of the Parent Company at December 31, 2024 equalled euro
5,756.1 million, compared to euro 5,494.4 million at December 31, 2023.
This change is shown in the table below:
(in millions of euro)
2024
2023
Net income/(loss)
501.1
495.9
Amortisation of intangible assets included in PPA
113.7
113.7
One-off, non-recurring and restructuring expenses
43.8
79.8
Taxes
(45.1)
(94.0)
Net income/(loss) adjusted
613.5
595.4
(in millions of euro)
Group Non-controlling
interests
Total
Equity at 12/31/2023
5,494.4
125.2
5,619.6
Translation differences
(167.7)
2.8
(164.9)
Net income/(loss)
468.0
33.1
501.1
Fair value adjustment of financial assets / derivative instruments
(2.2)
-
(2.2)
Actuarial gains/(losses) on employee benefits
(29.2)
-
(29.2)
Dividends approved
(198.0)
(5.1)
(203.1)
Effect of hyperinflation in Turkey
16.5
-
16.5
Effect of hyperinflation in Argentina
175.2
-
175.2
Other
(0.9)
0.2
(0.7)
Total changes
261.7
31.0
292.7
Equity at 12/31/2024
5,756.1
156.2
5,912.3
Pirelli & C. S.p.A. – 2024 Annual Report
Directors’ Report on Operations
26
The table below shows the reconciliation between the Equity of the Parent Company and the
Consolidated Equity attributable to the Owners of the Parent Company:
Net financial position showed a debt of euro 1,925.8 million, compared to a debt of euro 2,261.7
million at December 31, 2023. It was composed as follows:
(in millions of euro)
Share
Capital
Treasury
reserves
Net income/
(loss)
Total
Equity of Pirelli & C. S.p.A. at 12/31/2024
1,904.4
2,847.1
302.0
5,053.5
Net income/(loss) of consolidated companies (before consolidation adjustments)
-
-
484.3
484.3
Share capital and reserves of consolidated companies (before consolidation adjustments)
-
4,795.2
-
4,795.2
Consolidation adjustments:
- carrying amount of equity investments in consolidated companies
-
(4,574.3)
-
(4,574.3)
- intragroup dividends
-
341.2
(341.2)
-
- other
-
(25.4)
22.8
(2.6)
Consolidated Group Equity attributable to Owners of the Parent Company at
12/31/2024
1,904.4
3,383.8
467.9
5,756.1
(in millions of euro)
12/31/2024
12/31/2023
Current borrowings from banks and other financial institutions
760.9
789.5
- of which lease liabilities
105.2
99.1
Current derivative financial instruments (liabilities)
3.5
18.2
Non-current borrowings from banks and other financial institutions
3,068.6
3,174.7
- of which lease liabilities
380.5
383.4
Non-current derivative financial instruments (liabilities)
-
-
Total gross debt
3,833.0
3,982.4
Cash and cash equivalents
(1,502.7)
(1,252.8)
Other financial assets at fair value through Income Statement
(166.0)
(228.8)
Current financial receivables **
(113.3)
(106.1)
Current derivative financial instruments (assets)
(16.6)
(7.3)
Net financial debt *
2,034.4
2,387.4
Non-current derivative financial instruments (assets)
(4.3)
(12.9)
Non-current financial receivables **
(104.3)
(112.8)
Total net financial (liquidity) / debt position
1,925.8
2,261.7
* Pursuant to CONSOB Notice dated July 28, 2006 and in compliance with the ESMA guidelines regarding disclosure requirements pursuant to
the Prospectus Regulation applicable from May 5, 2021.
** The item "Financial receivables " is reported net of the relative provisions for impairment which amounted to euro 8.4 million at December 31,
2024 (euro 11.0 million at December 31, 2023).
Directors’ Report on Operations
Pirelli & C. S.p.A. – 2024 Annual Report
27
The structure of gross debt which amounted to euro 3,833.0 million, was as follows:
At December 31, 2024, the Group had a liquidity margin of euro 3,168.7 million consisting of euro
1,500.0 million in unutilised committed credit facilities, euro 1,502.7 million in cash and cash
equivalents, and euro 166.0 million in financial assets at fair value through the Income Statement.
The liquidity margin guarantees coverage for maturities for borrowings from banks and other financial
institutions, until the third quarter of 2029.
Net cash flow for the year, in terms of change in the net financial position, can be summarised as
follows:
Net cash flow before dividends for 2024 amounted to euro 533.9 million, an improvement of euro
25.0 million, compared to euro 508.9 million for 2023. Excluding the impact of extraordinary
transactions of approximately euro 33 million - due to the acquisition of Hevea-Tec for the amount
euro 20.9 million which occurred in the first quarter, and to the payment which occurred in the fourth
quarter of euro 12 million into the capital account of the Middle East and North Africa Tyre Company,
a joint venture with Saudi Arabia’s Public Investment Fund (PIF) - net cash flow before dividends
improved by approximately euro 58 million compared to 2023.
Operating net cash flow in 2024 was positive to the amount of euro 988.8 million, (euro 1,024.6
million in 2023), and reflected:
the improved operating performance compared to the previous year, (EBITDA adjusted in
2024 amounted to euro 1,519.5 million, compared to euro 1,446.1 million in 2023);
within 1 year
between 1 and 2
between 2 and 3
between 3 and 4
between 4 and 5 more than 5 years
Club Deal EUR 1.6bn ESG 2022 5y
598.8
-
-
598.8
-
-
-
Club Deal EUR 600m ESG 2024 4.5y
598.0
-
-
-
598.0
-
-
Bond SLB EUR 600m 4.25% due 01/28
596.1
-
-
-
596.1
-
-
Bond SLB EUR 600m 3.875% due 07/29
593.8
-
-
-
-
593.8
-
Convertible bond
490.1
490.1
-
-
-
-
-
Bilateral EUR 300m ESG 2023 2.5y facility
299.7
-
299.7
-
-
-
-
Bank debt held by subsidiaries
81.8
81.7
0.1
-
-
-
-
Other financial debt
89.0
87.4
-
1.6
-
-
-
Lease liabilities
485.7
105.2
88.6
75.0
57.4
41.5
118.0
Total gross debt
3,833.0
764.4
388.4
675.4
1,251.5
635.3
118.0
19.9%
10.1%
17.6%
32.7%
16.6%
3.1%
Maturity date
(in millions of euro)
12/31/2024
(in millions of euro)
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
EBIT adjusted
262.6
248.1
276.5
269.3
276.8
265.1
244.6
219.3
1,060.5
1,001.8
Amortisation and depreciation (excluding PPA amortisation)
113.7
111.6
115.5
110.1
111.9
111.6
117.9
111.0
459.0
444.3
Investments in intangible and owned tangible assets (CapEx)
(53.4)
(53.2)
(90.2)
(70.3)
(92.1)
(77.7)
(179.2)
(204.5)
(414.9)
(405.7)
Increases in right of use
(15.3)
(15.1)
(26.1)
(26.5)
(47.8)
(27.5)
(29.6)
(32.1)
(118.8)
(101.2)
Change in working capital and other
(845.8)
(868.8)
(16.9)
(6.8)
63.3
(0.4)
802.4
961.4
3.0
85.4
Operating net cash flow
(538.2)
(577.4)
258.8
275.8
312.1
271.1
956.1
1,055.1
988.8
1,024.6
Financial income / (expenses) paid
(63.2)
(60.2)
(45.7)
(58.1)
(70.9)
(49.3)
(69.6)
(104.0)
(249.4)
(271.6)
Taxes paid
(24.7)
(29.0)
(44.8)
(32.3)
(48.0)
(43.8)
(41.0)
(33.9)
(158.5)
(139.0)
Cash-out for one-off, non-recurring and restructuring expenses
(20.4)
(12.6)
(9.5)
(10.2)
(6.9)
(8.8)
(10.6)
(8.5)
(47.4)
(40.1)
Dividends paid to minority shareholders
(1.3)
-
(5.2)
(3.9)
-
0.3
0.1
0.1
(6.4)
(3.5)
Differences from foreign currency translation and other
(2.6)
(12.2)
0.1
(14.8)
(24.0)
(2.3)
66.8
(32.2)
40.3
(61.5)
Net cash flow before dividends, extraordinary transactions and
investments
(650.4)
(691.4)
153.7
156.5
162.3
167.2
901.8
876.6
567.4
508.9
Hevea-Tec acquisition
(23.0)
-
0.5
-
0.8
-
0.8
-
(20.9)
-
Middle East and North Africa Tyre Company capital subscription
-
-
-
-
-
-
(12.0)
-
(12.0)
-
Other extraordinary transactions
-
-
-
-
(0.7)
-
0.1
-
(0.6)
-
Net cash flow before dividends paid by the Parent Company
(673.4)
(691.4)
154.2
156.5
162.4
167.2
890.7
876.6
533.9
508.9
Dividends paid by the Parent Company
-
-
(197.1)
-
(0.6)
(217.8)
(0.3)
(0.2)
(198.0)
(218.0)
Net cash flow
(673.4)
(691.4)
(42.9)
156.5
161.8
(50.6)
890.4
876.4
335.9
290.9
3Q
4Q
Total
1 Q
2 Q
Pirelli & C. S.p.A. – 2024 Annual Report
Directors’ Report on Operations
28
investments in property, plant and equipment and intangible assets to the amount of euro
414.9 million in 2024, (euro 405.7 million in 2023), aimed mainly at High Value activities, at
technology upgrades and at the automation of factories;
“increases in the right of use” to the amount of euro 118.8 million in 2024, (euro 101.2 million
in 2023). The difference compared to 2023, was mainly due to projects initiated in the third
quarter of 2024 aimed at improving warehouse efficiency in Romania;
a lower contribution to cash generation, related to the change in “working capital and other”,
by euro 82.4 million (positive to the amount of euro 3.0 million compared to euro 85.4 million
in 2023), due to the sudden unexpected appreciation of the US dollar during the final weeks
of the year, to an adjustment in inventory levels mainly in North America in order to guarantee
the correct availability of goods for the first quarter of 2025 (21.7% of revenues for the year,
20.6% in 2023), to the usual seasonality of trade receivables (9.2% of revenues for the year)
and to trade payables (30.7% of revenues for the year).
Net cash flow for 2024 also highlighted the following performances, compared to 2023:
financial expenses paid were lower by euro 22.2 million;
taxes paid were higher by euro 19.5 million;
payments related to non-recurring and restructuring expenses for the restructuring
programmes of the 2023 financial year, were higher by euro 7.3 million;
dividends paid to minority shareholders were higher by euro 2.9 million.
Net cash flow before dividends for the fourth quarter of 2024 was positive to the amount of euro
890.7 million, and higher compared to the fourth quarter of 2023 by euro 14.1 million (euro 876.6
million).
Directors’ Report on Operations
Pirelli & C. S.p.A. – 2024 Annual Report
29
RESEARCH AND DEVELOPMENT
Research and Development plays a central role at Pirelli. The activity, which involves approximately
2,100 people, (equal to approximately 7% of the total workforce of the Group) spread between its
Milan headquarters and its twelve technology centres located all over the world, is based on an
“Open Innovation” model, which involves external partners - suppliers, universities and the vehicle
manufacturers themselves - in order to anticipate technological innovations in the sector and meet
the needs of the end consumer. Central to Pirelli’s innovation strategy is the Eco-Safety Design
approach, which focuses on maximising both environmental performance and people’s safety, and
embraces the entire life cycle of the product with a view to a circular economy. A part of this is the
collaboration between Pirelli and the Milan Polytechnic, which continued during the course of 2024,
and which involved the integrated use of the university’s dynamic simulator alongside the static
simulator at Pirelli’s R&D centre in Milan, for the virtual development of tyres which is fundamental
to Pirelli’s Eco-Safety strategy. In addition, Pirelli and the University of Milano-Bicocca continued
their partnership in CORIMAV for Research into Eco-Friendly Materials and Processes. Expenses
for Research and Development in 2024 totalled euro 289.5 million (4.3% of net sales), of which
euro 272.8 million was allocated to High Value activities (5.3% of High Value revenues). The
development of CYBER™ technologies also continued, which, thanks to sensor technology that is
implantable inside the tyre, will help in collecting and making essential information available to
increase vehicle performance and driving safety.
In this regard, it should be recalled that the Council of Ministers, within the framework of the “Golden
Power Procedure” – which was initiated in relation to the renewal of the Shareholders’ Agreement
concerning the governance of Pirelli, signed on May 16, 2022 by the China National Tire & Rubber
Corporation Ltd., Marco Polo International Italy S.r.l., Camfin S.p.A. and Marco Tronchetti Provera
& C. S.p.A. - with the adoption of the provision by which it exercised its special powers pursuant to
Legislative Decree No. 21/2012, communicated to Pirelli on June 16, 2023 (the “Provision”), that it
had determined, amongst other things, that the CYBER™ technology which is implantable in tyres,
constitutes an asset of strategic importance pursuant to and for the purposes of the aforementioned
Legislative Decree, for the protection of which Pirelli has implemented a range of measures,
including a Strategic Industrial Security Clearance (“NOSIS”) and an autonomous organisational unit
for security (“Security Organisation”).
The CYBER™ sensor is able to collect data and transmit it to the vehicle, which, through the 5G
network and in a geo-localised format, makes it available to cloud processing systems and
supercomputers for the creation, by means of artificially intelligent algorithms, of complex digital
models that can be applied, among other things, to state-of-the-art use cases such as smart cities
and digital twins.
The acceleration in the process of introducing driver assist systems (which in the future will evolve
towards systems for autonomous driving), reinforces the need to obtain data from the vehicle and,
in particular from the tyre, which as the vehicle’s only point of contact with the road, is able to provide
a range of valuable information for the control and safety of the car (such as, for example, the amount
of friction available). It is evident, in fact, that in future a self-driving car will necessarily require a
Pirelli & C. S.p.A. – 2024 Annual Report
Directors’ Report on Operations
30
real-time understanding of the behaviour of the vehicle, of the surrounding vehicles and the
infrastructure system, and so require new functionalities from the tyre.
Pirelli, a pioneer in the development and production of sensorised tyres through the use of CYBER™
technology, is already supplying this technology to a leading electric vehicle manufacturer, with the
objective of enabling the use of sensorised tyre data to optimise the safety performance of the
vehicles themselves.
At the same time, with a view to implementation on a larger scale, Pirelli signed a joint development
agreement for the integration of CYBER™ data directly into vehicle control systems, through a
collaboration with Bosch. The CYBER™ technology will therefore not have to be integrated into the
vehicle each time through dedicated projects with each Original Equipment Manufacturer (car
manufacturers), but will instead be available embedded directly in the vehicle’s central control unit
supplied by Bosch, in this way making the complete system available to all client car manufacturers.
The objective is that of creating new software-based solutions and new driving functions, using
sensors installed in the tyres also known as “in-tyre” sensors. For drivers, this means greater safety,
comfort, and sustainability, along with improved driving dynamics. Bosch and Pirelli share a vision
of a long-term path, to jointly explore the use of the data streams from tyres as inputs for the control
systems of the vehicle’s dynamics.
The Pirelli CyberTM Tyre is the world’s first tyre-based system with integrated sensors that collect
data and transmit it to the vehicle, processing it in real time. Bosch has already developed an ESP
(stability control) application specifically adapted to Pirelli tyres, in an initial joint project with the high
performance car manufacturer Pagani. In fact, the “Pirelli CyberTM Tyre” technology on the Pagani
Utopia Roadster transmits key information from the tyres to the ESP control unit. This guarantees
not only the optimal utilisation of the tyre’s specific properties and performance, but also the highest
levels of safety and personalised driving comfort in all conditions.
As part of the new collaboration agreement, Bosch will provide the hardware and software expertise
it has developed over time as a technology and service provider on a global scale. Bosch is also a
leader in MEMS (Micro-Electro-Mechanical Systems) sensor technologies, and develops and
manufactures tyre pressure sensors using the BLE (“Bluetooth Low Energy”) standard. By combining
this expertise with Pirelli’s integrated systems technologies – which range from hardware to software,
to algorithms and modelling - it will be possible to collect, process and transmit data from the tyres
in real time to provide parameters to the vehicle’s electronics control systems, via BLE in order to
reduce energy consumption. Pirelli and Bosch are now aiming to exploit Bosch’s MEMS technology
for in-tire applications.
The P Zero Corsa, P Zero Trofeo RS and P Zero Winter are the fitments specifically developed for
the Pagani Utopia, all of which are equipped with sensors located on the inner side of the tread.
These tyres, which are connected via Bluetooth to the electronic control unit which manages the
vehicle’s dynamics, supply useful information so that the car can select the ideal settings for the
control systems based in the tyre mounted, fully exploiting its potential. This dialogue between the
tyres and the car is made possible by the software developed and integrated by Pirelli into the
vehicle’s electronic “brain”. For example, when the car is fitted with winter tyres, the ABS will know
Directors’ Report on Operations
Pirelli & C. S.p.A. – 2024 Annual Report
31
how to best exploit them in order to minimise the stopping distance. Conversely, when the vehicle is
equipped with semi-slick tyres, the stability and traction controls will operate knowing that they can
count on a higher reserve of grip. In the absence of such information, the systems that manage the
dynamics of the vehicle operate in a conservative manner, based on settings that do not take into
account the characteristics and performance of the tyres fitted. This technical “awareness”, will
therefore allow the automobile’s controls to work at their best, while simultaneously enhancing both
performance and safety.
Pirelli CyberTM Tyre is unique on the market, is already present on a number of available vehicles,
and now gains from this new function, which makes it possible to increase the level of specialisation
in the electronics of vehicles, also with a view towards autonomous driving.
Pirelli is also the exclusive partner of Audi Sport for equipping the Audi RS4 Edition 25 Years. This
special anniversary edition created for the sporty station wagon’s birthday, has two available tyre
options: the Pirelli P Zero Corsa as Original Equipment and a dedicated set of Pirelli P Zero Trofeo
RS tyres for track use, which are equipped with CyberTM technology combined with the Track
Adrenaline system, which is designed for track driving enthusiasts who, thanks to the sensors inside
the tyres, will have access to a “virtual assistant” via an app to make the most of the tyre’s potential
during sportier uses.
The data collection system, based on CYBER™ technology, is then able to interact with the
infrastructure/smart city. To date, in particular, it is already possible to detect and process data on
road surface conditions. This enables motorway operators to: (a) increase the frequency and
thoroughness of monitoring the state of the infrastructure; (b) plan maintenance effectively and
efficiently, and; (c) inform consumers of possible hazardous conditions on motorways, and also
provide their geolocation. Following the technical tests completed in 2024, the execution of an initial
experimental phase of the service on a limited set of vehicles is planned for early 2025, with the
possibility of extending it to a larger number of vehicles.
The ability to collect important information from vehicles on the market regarding the actual usage
of tyres and process this data through artificially intelligent algorithms, and to then integrate it into
the virtual development process, is a crucial competitive product factor. In particular, artificial
intelligence and machine learning are used to work in synergy with the models developed for
processing the data obtained from the sensors, in order to adequately refine the results obtained.
An example of this is the “Tyre Wear” algorithm for the determination of the state of tyre wear, which
is currently in use on a fleet of rental cars with drivers. Furthermore, the data collected from the
sensors installed in the tyres of the vehicles of a given fleet or of individual users, are used in the
virtual design of new products. Nowadays, the development of all new product ranges in fact, passes
through an initial virtual phase followed by a scaled down physical validation phase.
Essentially, the widespread knowledge of tyre behaviour in a multiplicity of real world conditions of
use, makes it possible to refine and train virtual simulation models, which are used in the first design
phase of new products, making them increasingly capable of simulating the performance they will
deliver under real usage conditions.
Pirelli & C. S.p.A. – 2024 Annual Report
Directors’ Report on Operations
32
Taking the Provision into account, the competent body of the Company appointed for this task, in
the application of the Provision itself, that is to say, the Director with sole authority over the Security
Organisation, in compliance with the obligations imposed upon it, has carried out the necessary
in-depth investigations to precisely identify the relevant sectors related to CYBER™ technology, in
order to ensure the proper implementation of the prescriptions contained in the said Provision.
As a result of these in-depth analyses, it emerged that the relevant technologies connected to the
CYBER™ sensor include the Digital business functions based in Italy related to Data Science
activities, such as the Digital Solutions Centre in Bari, as well as the activities and functions of
Research and Development Digital Systems, Industrial IoT and Innovation, and digital products. In
addition, the activities and functions of Research and Development based in Milan, which are related
to Modelling, Product Pre-development and Experimentation, are closely linked and connected to
CYBER™ technology.
For further details on the Golden Power Procedure, the prescriptions of the Provision and on the role
of the Security Organisation, please refer to the Report on the Corporate Governance and Ownership
Structure contained in the 2024 Annual Report.
INNOVATION IN PRODUCTS AND MATERIALS
During the course of 2024, collaborations with the leading manufacturers of Prestige and Premium
vehicles continued, and more than 300 new technical homologations were obtained, mainly
concentrated in ≥19” rim diameters. More than 500 homologations have been obtained by Pirelli for
Elect tyres, since their launch in 2019, which are distinguished by a package of technologies
designed to enhance the specifities of electric and plug-in hybrid cars. One milestone that confirms
Pirelli’s leadership in the EV segment is that seven out of ten car manufacturers in the Premium and
Prestige segments have chosen the Pirelli tyres dedicated to BEVs and PHEVs, which are available
for all seasons in all Pirelli product families.
In the Prestige segment, Pirelli has been confirmed as the Original Equipment on the new Porsche
Cayenne. The latest facelift for the sporty SUV, expands the collaboration between Pirelli and
Porsche and brings the P Zero trademark to all tyre sizes designated for the vehicle.
The Pirelli P Zero R and the P Zero Trofeo RS were also chosen by Porsche for the restyling of the
Taycan and will be the only tyres available on the Taycan Turbo GT, the sportiest version in the
range. Both tyres bear the Elect marking on the sidewall, that is, the package of technological
solutions designed to enhance the unique characteristics of electric vehicles, and which debuted in
2019 on the very first generation of the Porsche Taycan.
In addition, the P Zero Trofeo RS and the P Zero Corsa for the Porsche 911 GT3 RS, along with the
P Zero Trofeo R and the P Zero Corsa for the 911 GT3, are four sporty tyres born out of the teamwork
between Pirelli and Porsche, aimed at offering safe and rewarding driving both on the road and on
the track. From among them, the P Zero Trofeo RS, the highest-performing product in the Pirelli
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range, was judged the best semi-slick road tyre for track use by the German magazine Auto Bild
Sportscars, which compared different tyres on its own 911 GT3 RS.
From 2019 to date, on average, Pirelli has achieved more than one record per year at the
Nürburgring Nordschleife, equipping different categories of cars, from electric supercars, to SUVs
and compact cars. All tyres in the P Zero range, not counting the new tyres recently introduced to
the market, can boast a record lap on the legendary “Ring” in the last five years, the most recent in
2024, being the P Zero Trofeo R on the Audi RS 3 and the P Zero on the Audi RS Q8 Performance.
Lastly, a long and intense development journey has taken Pirelli and Lamborghini from speeds of
over 300 km/h on the Nardò circuit, to -30° in the Arctic Circle, which has led to the creation of the
21”, 22” and 23” P Zero and the 22” Scorpion Winter 2, designed for the new Urus SE, the brand’s
first plug-in hybrid version of the SUV.
Instead for the Premium segment, the privileged relationship with companies such as Alfa Romeo,
Audi, BMW, Mercedes, Jaguar, Land Rover and Ford continued.
At the 2024 Goodwood Festival of Speed, Pirelli announced a partnership with Jaguar Land Rover
(JLR), for the supply of tyres made with materials derived from FSC™ Certified forests, for a wide
selection of luxury vehicles.
Pirelli has developed a dedicated version of the P Zero for the new IONIQ 5 N, Hyundai’s first high
performance electric vehicle. The tyre, designed in collaboration with Hyundai, meets the car’s
dynamic requirements, delivering sporty performance, reliability and everyday driving comfort.
Developed using virtual simulation tools, the P Zero was later tested on the Nürburgring circuit.
Pirelli and the BMW Group worked side by side to develop customised winter tyres for the BMW 7
Series. What distinguishes the 20” P Zero Winter 2 is the “Class A” level rolling resistance rating on
its European label, a feature that enhances the autonomy of the vehicle.
The Cinturato All Season SF3, a new 2024 product which has been refined using virtual development
techniques, provides enhanced control when braking in different climatic situations. Starting with wet
conditions, to the extent that all the sizes in the range have been awarded the highest classification
(Class “A”) in European labelling for wet grip; on snow, as guaranteed by the 3PMSF marking, which
indicates tyres that have passed rigorous testing in severe winter conditions; and on dry surfaces,
where it offers levels of stability, acoustic comfort and rolling resistance closer to that of a summer
rather than winter tyre. This versatility was confirmed by the Dekra tests, which voted the Cinturato
All Season SF3 the best in its category for combined braking performance (the sum of results on
dry, wet and snowy surfaces), and was recognised by TÜV SÜD, which awarded it the Performance
Mark, thanks to its high performance across different driving conditions. The Cinturato All Season
SF3 was also voted the best four season tyre by two major magazines in the sector, the German
Auto Bild Sportscars and the Italian alVolante, which compared the main products on the market.
The Pirelli tyre proved to be the safest on both dry and wet surfaces, also receiving highly positive
reviews for its performance in the snow. It also earned the highest score in the comparative test
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conducted by Tyre Reviews on the main products on the All Season market, published in September
2024.
At “The Tire Cologne 2024”, Europe’s leading trade fair for the industry, Pirelli presented the P Zero
Winter 2, the winter tyre for high performance models, which boasts the highest wet grip rating under
European labelling for all the tyre sizes at the launch. The thirteen sizes in the range will be equipped
with Elect technology, specifically designed for BEV and PHEV vehicles, and which also bear the
distinction of being made from more than 50% natural or recycled materials (third-party certified).
In 2024, the Powergy Winter and Powergy All Season SF will flank the summer version that has
already been on the market for three years, completing the Powergy range, which is designed for
motorists looking for an affordable solution to tyre changes without sacrificing safety, efficiency and
comfort.
Pirelli has also launched the new P Zero MS, a high performance All Season tyre designed for
Premium and Prestige car manufacturers, who require an Original Equipment tyre for their cars that
is efficient all year round. The new product is part of Pirelli’s All Season UHP tyre offering, which
flanks the Scorpion MS launched last year, itself dedicated to latest generation SUVs. Several auto
makers have already chosen the P Zero MS for certain models, including Audi for the new A4 and
A6 e-trons. Among the main qualities of the new P Zero MS are cornering grip on both dry and wet
surfaces, an exceptional resistance to aquaplaning and high mileage, as demanded by customers
in North America, the product’s main target market.
For motorbikes, Pirelli announced the arrival of two new tyres in 2025 that will enrich its already
extensive range: the DIABLO POWERCRUISER and the new SCORPION MX32 MID SOFT.
The DIABLO POWERCRUISER represents the completely new Custom Touring line of high
performance Pirelli tyres designed specifically for select sport cruisers and bagger models. Thanks
to its sporty performance, in terms of grip and handling, this tyre allows riders to fully exploit the
potential of the most powerful custom bikes, offering stability during acceleration, braking and
cornering, even at high speeds, and an abundance of grip even on wet surfaces. All this is combined
with a mileage performance that is in line with other tyres in this segment.
The new SCORPION MX32 MID SOFT, on the other hand, is the motocross racing tyre which is the
successor to Pirelli’s most successful product in the FIM Motocross World Championship. It was
developed thanks to Pirelli’s decades of experience at the highest levels of motocross competitions
and is a completely new design compared to its predecessor. The new front tyre offers enhanced
handling when braking and improved corner entry, while the rear tyre offers even greater traction at
race starts and when exiting curves.
Lastly, in Cycling, the P Zero Race TLR RS tyre became the first in the sector to use FSC™ (Forest
Stewardship Council™ - a globally recognised NGO for responsible forest management) Certified
natural rubber. This tyre manufactured at Pirelli’s Milan-Bollate plant, marks the beginning of a range,
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Pirelli & C. S.p.A. – 2024 Annual Report
35
with this certification, which indicates that the natural rubber used comes from plantations managed
in a way that preserves biological diversity and benefits the lives of local communities and workers.
COMMITMENT TO MOTORSPORTS
In the history of Pirelli, motorsports have always played a major role, starting with the feat achieved
in 1907 by Prince Scipione Borghese, who won the Paris-Beijing motor race in an Itala fitted with
Pirelli tyres. Nowadays, there are more than 350 competitions in which Pirelli participates each year.
Thanks to its commitment to sustainability in Motorsport, Pirelli is the first and only tyre manufacturer
in the world to have been awarded Three Star Certification from the Environmental Accreditation
Programme promoted by the FIA. With Spain’s decisive victory, succeeding Italy in the hall of fame,
the third edition of the FIA Motorsport Games, the only motorsport event in the world that sees
national teams compete against each other in multiple disciplines, came to a close in Valencia for
the season. Pirelli was among the protagonists of the event which is managed by the SRO
Motorsports Group in collaboration with the FIA, not only as the exclusive supplier of the event’s
most eagerly awaited competitions, but also as the unique ‘glue’ between very different cars and
races: the GT, Touring Car, F4, modern rally, electric road cars and the Ferrari Challenge, supported
not only with the supply of dedicated tyres, but also with the assistance of technicians, thanks to a
logistical organisation and deployment of vehicles and personnel, that was one of the most
demanding of the season for the Company.
Pirelli is the Global Tyre Partner for Formula One, at least until 2027 (with the possibility of an
extension for a further season), a partnership that puts sustainability at the centre and which, starting
from 2024, has seen that all tyres used in the FIA Formula One World Championship events are
FSC™ (Forest Stewardship Council™) Certified, which guarantees that all the natural rubber used
in the tyres meets all the environmental and social sustainability criteria set by the world’s leading
non-governmental, multi-stakeholder organisation in sustainable forest management. Pirelli is the
first company to produce a complete range of FSC™ (Forest Stewardship Council™) Certified tyres,
and for use in motorsport competitions. Pirelli has also been present in rally racing since the
inaugural season of the World Championship in 1973, and in the role of exclusive tyre supplier from
2021 to 2024: a thrilling season that remained unpredictable until the very end.
Pirelli is also the tyre supplier in more than 400 races, in over 70 championships, for Gran Turismo
cars, contested in Europe, North America, South America, Asia and Oceania. The long and intense
2024 season has seen the engagement of more than 200 technicians, engineers and staff members.
Pirelli launched the latest evolution of the Cinturato WHB wet weather tyre, completely renewed in
its design and optimised in its main performance features. In the GTWC, the by now regular brands
(Audi, BMW, Ferrari, Lamborghini, McLaren, Mercedes AMG, Porsche), were joined in 2024 by
Aston Martin with the Vantage AMR GT3 EVO and Ford, with the eagerly awaited Mustang GT3. At
the Spa-Francorchamps circuit, considered by all to be the university of motorsport, the 100th edition
of the CrowdStrike 24 Hours of Spa took place, one of the largest events in the world with a single
tyre supplier, which required an unparalleled organisational and personnel effort from Pirelli: more
than 150 Pirelli personnel, from branches located on three different continents, belonging to different
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36
corporate departments. The ratio of Pirelli personnel present at Spa-Francorchamps to managed
cars equipped with P Zero tyres, was almost 1 to 1. For the Ferrari Challenge, 2024 was the year of
the debut of the 296 Challenge and the tyres specifically developed for this car, such as the P Zero
DH for dry weather and the WH for wet weather, and the year of the debut of the Sport Prototipi
Clienti programme, supported from the outset by Pirelli and dedicated to the 499P Modificata, which
is equipped with custom developed tyres.
In 2024, Pirelli once again participated in over 100 of the most important international and
national motorbike competitions, both on the track and off-road, either as the sole supplier or
in open competition with other tyre manufacturers.
Pirelli will be the sole Official Tyre Supplier for all classes of the FIM Superbike World
Championship up to and including the 2026 season. This technical partnership, which began in
2004, can claim the record for the longest running single tyre supplier ever in the history of
international level motorsports, and has been continuously supported by intense research and
development work. In 2024, BMW became the seventh manufacturer to win the Riders’ World
Championship in the WorldSBK. This means that, in the Pirelli era, practically every manufacturer
has won a world title, further confirming the universal effectiveness of their solutions. The
development objective for the season, was to introduce improvements to the rear tyres in order to
maintain high performance in terms of grip, while at the same time increasing resistance and
durability.
In 2024, Pirelli successfully completed its first season as the exclusive supplier to the Moto2™ and
Moto3™ World Championships. Thanks also to the performance of the tyres, out of a total of 40
Grand Prix races held, 20 for each class, 37 absolute lap records on the track and 32 new fastest
race laps were achieved, improving the race pace on 34 occasions.
Pirelli’s also confirmed its commitment to off-road competitions, primarily in the FIM Motocross
World Championship where Pirelli boasts a record of 82 world titles, and will remain the official
tyre supplier until 2025. In 2024, out of a total of 20 races, Pirelli won 19 Grand Prix events, secured
18 pole positions and won 37 heats out of 40.
For further information on the sustainability aspects of products – including for Motorsports – and on
new materials, reference should be made to the section of the Annual Report entitled “Consolidated
Sustainability Reporting” pursuant to Legislative Decree No. 125 of September 6, 2024.
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Pirelli & C. S.p.A. – 2024 Annual Report
37
PARENT COMPANY HIGHLIGHTS
The table below shows a summary of the main Income Statement and Statement of Financial
Position figures:
Operating income/loss of the Parent Company was positive to the amount of euro 5.0 million
compared to the euro 11.3 million loss recorded for 2023 This improvement in the result is mainly
attributable to the increase in royalties accrued through companies of the Group for the use of the
trademark, due to the increase in sales and lower restructuring expenses.
Net financial expenses amounted to euro 43.8 million, which is more or less consistent with the
previous financial year.
Net income from equity investments amounted to euro 319.9 million compared to euro 277.3
million for the previous financial year. The increase was mainly attributable to higher dividends
distributed by the subsidiary Pirelli Tyre S.p.A (euro 325 million in 2024 compared to euro 275 million
in 2023), which was partially offset by higher impairments on equity investments (euro 23 million in
2024 compared to euro 6.6 million in 2023).
Taxes for 2024 were positive to the amount of euro 20.9 million, compared to the positive amount of
euro 22.6 million in 2023.
(in millions of euro)
12/31/2024
12/31/2023
Operating income/(loss)
5.0
(11.3)
Financial income/(expenses)
(43.8)
(45.7)
Net income/(loss) from equity investments
319.9
277.3
Taxes
20.9
22.6
Net income/(loss)
302.0
242.9
Financial assets
4,682.6
4,681.6
Equity
5,053.5
4,950.7
Net Financial Position
1,272.2
1,374.7
Pirelli & C. S.p.A. – 2024 Annual Report
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The following is a summary of the values of the main financial assets:
Equity went from euro 4,950.7 million at December 31, 2023 to euro 5,053.5 million at December
31, 2024, as detailed below:
The following table shows the composition of equity:
(in millions of euro)
12/31/2024
12/31/2023
Investments in subsidiaries
- Pirelli Tyre S.p.A.
4,528.2
4,528.2
- Pirelli Ltda.
5.9
8.4
- Pirelli UK Ltd.
-
-
- Pirelli Group Reinsurance Company S.A.
6.3
6.3
- Pirelli Servizi Amministrazione e Tesoreria S.p.A.
3.2
3.2
- Pirelli International Treasury S.p.A.
75.0
75.0
- Other companies
3.6
3.3
Total equity investments in subsidiaries
4,622.2
4,624.4
Investments in associates and other financial assets at fair value
through Other Comprehensive Income
- Fin. Priv S.r.l.
29.2
23.4
- RCS MediaGroup S.p.A.
21.9
18.3
- Istituto Europeo di Oncologia S.r.l.
8.6
8.4
- Eurostazioni S.p.A.
-
6.3
- Fondo Comune di Investimento Immobiliare Anastasia
-
0.1
- Other
0.7
0.7
Total investments in associates and other financial assets at fair
value through Other Comprehensive Income
60.4
57.2
Total financial assets
4,682.6
4,681.6
(in millions of euro)
Equity at 12/31/2023
4,950.7
Net income/(loss) for the financial year
302.0
Dividends approved
(198.0)
Other components of Comprehensive Income
(1.2)
Equity at 12/31/2024
5,053.5
(in millions of euro)
12/31/2024
12/31/2023
Share capital
1,904.4
1,904.4
Legal reserve
380.9
380.9
Share premium reserve
630.4
630.4
Concentration reserve
12.5
12.5
Merger reserve
1,022.9
1,022.9
Other reserves
133.7
133.7
Other O.C.I. reserves
27.3
28.5
Retained earnings reserve
639.4
594.5
Net income/(loss) for the financial year
302.0
242.9
Total Equity
5,053.5
4,950.7
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Pirelli & C. S.p.A. – 2024 Annual Report
39
RISK FACTORS AND UNCERTAINTY
The uncertainty of the macroeconomic environment, the instability of the financial markets, the
complexity of management processes and ongoing regulatory changes, require the capacity to
protect and maximise the tangible and intangible sources of value that characterise the Company’s
business model. Pirelli adopts a proactive risk governance model, that through the systematic
identification, analysis and assessment of risk areas, provides the Board of Directors and
management with the necessary tools to anticipate and manage the effects of such risks. The Pirelli
Risk Model systematically assesses three categories of risks:
External Risks
Risks whose occurrence is outside the sphere of influence of the Company. This category includes
risk areas related to macroeconomic trends, to the evolution of demand, to competitor strategies, to
technological innovation, to the introduction of new regulations and to country specific risks
(economic, security related, political and environmental risks).
Strategic Risks
Risks that are characteristic of the relevant business, the proper management of which is a source
of competitive advantage, or conversely, a cause of failure to achieve economic and financial
objectives. This category includes areas of risk linked to markets, to innovation in products and
processes, to human resources, to production processes, to financial risks and the risks associated
with mergers and acquisitions.
Operational Risks
Risks generated by the corporate organisation and its processes, whose assumption does not
provide any competitive advantage. These types of risks include amongst others, risks related to
Information Technology, Business Interruption, Legal & Compliance, Health, Safety & Environment
and Security.
Emerging Risks
Cutting across the aforementioned categories are emerging risks, that is those elements of volatility
whose manifestation is expected mainly in the medium to long-term period, and for which the speed
and potential of ramifications for the Group are not yet fully known.
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For further details on risk governance, assessment techniques and mitigation measures, reference
should be made to Pirelli’s corporate website.
EXTERNAL RISKS
Risk Related to the Macroeconomic Outlook
Global growth in 2024 was moderate, influenced by a still high, albeit declining, consumer price
pressures, restrictive monetary policies and rising geopolitical tensions. The United States,
sustained in particular by the resilience of its labour market and domestic consumption, along with
China’s gradual recovery despite the fragility of its real estate sector, nevertheless represented the
growth drivers for the global economy.
As regards 2025, the trade policies of the new US administration, together with the potential
reactions from its main trading partners, could have an impact on the global economy. This could
lead to lower than expected growth, an increase in consumer prices and a slowdown in the expected
easing of monetary policies. Consequently, the next year could see a global growth rate still below
the trend for the long term.
Significant elements of uncertainty also persist, which could lead to a marked deterioration in the
currently projected macroeconomic outlook. In fact, in addition to the ongoing war between Russia
and Ukraine and the Israeli-Palestinian tensions, a possible worsening in relations between the
United States and China could have lasting repercussions on international logistics streams, with
ripple effects on consumer goods prices and on the manufacturing sector. The Group is closely
monitoring developments in these areas in order promptly adopt the necessary measures to mitigate
any potential impacts on its operations.
Geopolitical Risks
There is a high degree of uncertainty regarding the implications of the changing geopolitical
landscape on international trade and on supply chains. The escalation of trade tensions could lead
to a revision of international trade agreements and treaties, as well as to the increasing introduction
of tariffs and customs duties in the United States, in China and in the European Union, thus altering
the balance in key markets for the Group’s operations.
Furthermore, Pirelli operates in countries such as Argentina, Brazil, Mexico and Russia, where the
general political-economic context, tax regime, business conditions and circulation of monetary flows
may prove to be unstable. These factors could affect the Group’s ability to fully benefit from locally
generated monetary flows.
Pirelli mainly adopts a “local for local” strategy with the aim of overcoming potential protectionist
measures (customs barriers or other requirements such as technical prerequisites, product
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41
certification, and administrative costs related to import procedures, etc.). Lastly, the Group closely
monitors the developments that could impact its value chain, and adopts strategies for diversifying
supply sources and managing logistics flows.
Regulatory Risks in Countries where Pirelli operates
The Group is exposed to the risk of changes in the relevant regulatory framework, which could result
in restrictions on the Group’s activities, with possible repercussions on its image and its reputation
and on its strategic positioning. Specifically, the Group is subject, in the various jurisdictions in which
it operates, to the legal provisions and technical standards, both national and international, which
are applicable to the products it manufactures and/or markets.
The adoption, implementation or entry into force of restrictive or unfavourable regulatory measures,
or the imposition of compliance obligations or additional requirements connected to the performance
of business activities, could result in changes in the operational conditions, which may require
increased investments, higher production costs, or delay the development of operations.
In this regard, it is of particular note that the entry into force or implementation of new regulations in
the North American market could negatively impact the ability to access this market and could also
affect operations in other countries. Similarly, given the current context, it cannot be ruled out that
the tightening of regulations already in force or those that may be implemented in the future, could
in turn also have a negative impact on business activities and on the economic, asset and financial
situation and/or growth prospects.
Pirelli continuously monitors these risk factors and their developments in order to implement
measures to mitigate the potential impacts arising from such changes.
Risks Associated with the Shortage in Semi-Conductors
The automotive sector, which is closely tied to the availability of semi-conductors and to just-in-time
strategies, is particularly exposed to geopolitical dynamics. Any disruptions or slowdowns in the
supply of semi-conductors, whose production is geographically concentrated, similar to other
strategic equipment, could have significant consequences on production volumes and, indirectly, on
the demand for tyres by Original Equipment customers. The Group continuously monitors these risk
factors, together with the current distortions in global logistics routes linked to the Middle East crisis,
in order to promptly implement measures aimed at mitigating the potential impacts on demand.
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Pandemic Risk
Pirelli markets its products globally in over 160 countries and operates industrial sites located in
various regions of the world, some of which have been significantly impacted in the recent past by
the COVID-19 pandemic and its subsequent variants. Any new epidemiological emergencies caused
by highly critical pathogenic agents that might spread regionally and/or globally, could lead to a
disruption in the normal market dynamics and, more generally, in business operating conditions. In
terms of operational risks, Pirelli monitors, among other factors, potential risk events relative to both
the resilience of the supply chain and the widespread use of new technological tools associated with
remote working.
Risks Associated with the Evolution of Long-Term Demand
Mobility has undergone an unprecedented transformation in recent years, driven by technological
changes (the electrification of propulsion, the automation of driving and digital connectivity), cultural
shifts (such as the rising average age of obtaining a driving licence and the decreasing importance
of owning a car, etc.) and regulatory measures, often aimed at restricting the presence of polluting
vehicles in and around metropolitan areas.
In addition to this, the sudden spread of smart-working as a consequence of the COVID-19
pandemic, brought about further rapid change in people’s mobility habits, creating an overlap of
effects that are still in the process of stabilising.
Daily commuting has declined in many places, while travel related to non-systematic trips, especially
those related to recreation and leisure, seem to have increased.
Also, as a result of this, the use of public transport, declined sharply at first and then slowly recovered
without, however, returning to pre-pandemic levels in many cases. Meanwhile all means of individual
travel (cars, motorbikes, mopeds, bicycles, e-scooters), both private and shared, have experienced
a considerable boost in most cities.
The complete recovery of public transport and its further development, as desired by the policies of
all major cities, will depend on the ability to respond effectively to peoples’ new mobility needs. In
the medium to long-term period, a reduction in the presence of the private car in urban areas seems
very likely, which could be more than compensated by their increased use over long distances, both
due to the factors mentioned earlier and due to the increasing automation in driving, which could
bring about a competitiveness with flights and trains for medium-distance travel.
In light of these opposing trends, it is not easy to predict the potential impacts on the tyre sector.
Pirelli constantly monitors these trends by analysing studies and data available at global and local
level, by participating in both international projects (such as the Transport and Mobility Pathways
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43
initiative promoted by the World Business Council for Sustainable Development - WBCSD), along
with national and international webinars and conferences on the topic.
Risks Related to Price Trends and the Availability of Raw Materials
Natural rubber, synthetic rubber and petroleum related raw materials (particularly chemicals and
carbon black), will continue to be a source of uncertainty within the Group’s cost structure, given the
high volatility recorded in past years and their impact on the cost of the finished product. For the
main raw materials purchased by the Group, potential price scenarios are constantly simulated
based on historical volatility and/or the best information available on the market (e.g., forward prices).
Based on the different scenarios, the necessary sales price increases and/or various internal
cost efficiency recovery measures (use of alternative raw materials, reduction of product weight,
process quality improvement and the reduction of waste levels), are identified in order to guarantee
the expected profitability levels.
Risks Linked to the Competitive Positioning of the Group and to the Competitive Dynamics
of the Sector
The market in which the Group operates is characterised by the presence of numerous operators,
some of which have significant financial and industrial resources and own brands that enjoy strong
international or local recognition. To date, Pirelli is the only player in the tyre industry entirely focused
on the Consumer market on a global scale, with its single brand positioned in the segment of interest
to the manufacturers and users of Prestige and Premium vehicles. Intensification in the level of
competition in the sector in which the Group operates could, in the medium to long-term, impact its
economic, asset, and financial situation. High barriers to entry - both technological and productive -
provide structural mitigation against the potential intensification of competition in the Group’s target
market sectors. In addition to this is Pirelli’s unique strategy which is built on, among other factors,
an extensive homologation parc focused on the Prestige and Premium segments, along with an ever
increasing emphasis on High Value.
STRATEGIC RISKS
Exchange Rate Risk
The diverse geographical distribution of Pirelli’s manufacturing and commercial activities entails
exposure to exchange rate risk, both transactional and translational. Transactional exchange rate
risk is generated by transactions of a commercial and financial nature carried out by individual
companies in currencies other than the functional currency, due to fluctuations in exchange rates
between the time when the commercial/financial relationship is initiated and the time when the
transaction is settled (collection/payment).
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The Group’s policy is to minimise - where the financial market allows it in an efficient manner - the
impacts of transactional exchange rate risk linked to volatility, and for this reason, the Group’s
procedures provide that the Operating Units are responsible for gathering all the information relevant
to positions exposed to transactional exchange rate risk (mainly represented by receivables and
payables in foreign currency), which are hedged in the form of forward contracts which are entered
into where possible, with the Group’s Treasury. The managed positions subject to exchange rate
risk are mainly represented by the receivables and payables in foreign currency. The Group Treasury
is responsible for hedging the resulting net position for each currency and, in accordance with the
established guidelines and predetermined restrictions, it in turn closes out all risk positions by
negotiating hedging derivative contracts on the market, typically forward contracts. Of note is that,
as part of the annual and three-year planning process, the Group formulates exchange rate forecasts
based on the best information available on the market. Any fluctuation in an exchange rate between
the time of planning and the time when a commercial or financial transaction occurs, determines a
transactional exchange rate risk on future transactions. The Group assesses, on a case by case
basis, the opportunity to carry out hedging transactions on future transactions, for which it typically
uses both forward buy or sell transactions and optional risk-reversal type instruments. (e.g., zero
cost collars). Pirelli holds controlling interests in companies that prepare their financial statements in
currencies other than the euro, which is the currency used to prepare the consolidated Financial
Statements. This exposes the Group to translational exchange rate risk, due to the conversion into
euro of the assets and liabilities of subsidiaries operating in currencies other than the euro. The main
exposures to translational exchange rate risk are continuously monitored, and at present it has been
deemed appropriate to not adopt specific hedging policies for these exposures.
Liquidity Risk
In order to monitor the management of the risk of insufficient financial resources available to meet
its own financial and commercial obligations within the established terms and deadlines, the Group
implements both annual and three-year financial plans as well as treasury plans, with the aim of
ensuring a comprehensive and accurate detection and measurement of incoming and outgoing cash
flows. The differences between the planned and actual final data are subjected to constant analysis.
The Group has implemented a centralised system for the management of collection and payment
flows in compliance with the various local currency and tax regulations. The negotiation and
management of banking relationships is carried out centrally, in order to ensure coverage for short
and medium-term financial needs at the lowest possible cost. The procurement of medium to
long-term resources on the capital market is also optimised through centralised management. The
prudent management of the aforementioned risk requires the maintenance of an adequate level of
cash or cash equivalents and/or easily liquidated short-term securities, and the availability of funds
obtainable through an adequate amount of committed credit facilities and/or the recourse to the
capital market. In addition to the committed credit facilities (Revolving Credit Facilities) totalling euro
1.5 billion, which December 31, 2024 resulted as being entirely unutilised, the Pirelli Group accesses
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the capital market to diversify both financial products and maturities in order to seize the best
opportunities available.
Interest Rate Risk
Interest rate risk is represented by exposure to the variability in the fair value or in the future cash
flows of financial assets or liabilities, due to changes in the market interest rates. The Group
assesses, based on market conditions, whether to enter into derivative contracts, typically interest
rate swaps and cross currency interest rate swaps.
Price Risk Associated with Financial Assets
The Group’s exposure to price risk is limited to the volatility of financial assets such as equity
securities and bonds, both listed and unlisted, which represented 1.8% of the Group’s total assets,
and were subdivided as follows;
financial assets represented by listed equity securities and securities indirectly associated with
listed equity securities, to the amount of euro 41.7 million. Any changes in the fair value of these
securities is recognised under Other Comprehensive Income;
financial assets represented by Argentine dollar-linked bond instruments, with the objective of
mitigating the effects of the depreciation of the local currency, to the amount of euro 196.2 million.
Any changes in the fair value of these securities is recognised in the Income Statement.
Derivatives are not typically placed on these assets to hedge their volatility.
Credit Risk
Credit risk represents the Group’s exposure to potential losses resulting from the non-fulfilment of
the commercial and financial obligations undertaken by counterparties. As regards these commercial
counterparties, in order to limit this risk, Pirelli has put in place procedures to assess the potential
and financial creditworthiness of its customers, to monitor expected cash flows and to take any
recovery action. The aim of these procedures is to define customer credit limits, whereby in the event
that those limits are exceeded, the rule to withhold further supplies is activated. In some cases,
customers are asked to provide guarantees, mainly bank guarantees issued by parties of the highest
credit or personal standing. Less frequently, mortgage guarantees may be requested. Another
instrument used to manage commercial credit risk is the stipulation of insurance policies: for more
than 10 years, a master agreement has been in place, and was renewed for the two-year 2024-2025
period, with a leading insurance company with an AA credit rating according to the ratings of
Standard & Poor’s, for the worldwide coverage of credit risk mainly related to sales in the
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Replacement channel (the coverage ratio at December 31, 2024 was approximately 70%). However,
as regards the financial counterparties for the management of its temporary cash surpluses, or for
the negotiation of derivative instruments, the Group deals only with entities of the highest credit
standing. Pirelli constantly monitors its net credit exposure to the banking system and, does not have
any significant concentrations of credit risk.
Risks Associated with Human Resources
The Group is exposed to the risk of loss of human resources in key positions or in possession of
critical know how. To mitigate this risk, the Group implements remuneration policies that are
periodically updated, also based on changes in the general macroeconomic environment as well as
on salary benchmarks. There are also long-term incentive plans and specific non-compete
agreements (designed also as retention measures) tailored, among other things, to the risk profiles
of business related activities. Furthermore, specific “management” policies are in place, which
provide for career plans, internal and external training programmes and upskilling/reskilling initiatives
aimed at developing, motivating and retaining talent.
OPERATIONAL RISKS
Risks Related to Environmental Issues
The activities and products of the Pirelli Group are subject to numerous environmental laws linked
to the specificities of the different countries in which the Group operates. These regulations have in
common a tendency to evolve and provide for increasingly restrictive requirements, also due to the
growing attention of the international community to the issue of environmental sustainability. Pirelli
expects the gradual introduction of increasingly stringent regulations on the various environmental
aspects (atmospheric emissions, waste generation, soil impacts, water use, etc.), that may impact
on companies. As a consequence, the Group expects to have to continue to make investments
and/or incur costs that could be significant.
Employee Health and Safety Risks
In carrying out its activities, the Pirelli Group incurs charges and costs for the measures necessary
to ensure full compliance with the obligations provided for by the regulations on health and safety in
the workplace. Similarly, to what happens with regard to the environment, in the field of occupational
health and safety increasingly stringent regulations and policies are being developed - both at the
national and international level - that inevitably impact the operational management of activities at
Group sites, technical investments and the models for allocating responsibilities. In this respect,
Pirelli plans to continue making investments and/or incurring costs to ensure the highest levels of
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worker health and safety protection and the compliance with all applicable regulations in the
countries where it operates.
Defective Product Risk
Like all manufacturers of goods for sale to the public, Pirelli may be subject to liability claims related
to the alleged defects in products sold, or be required to initiate product recall campaigns. Although
such events are covered from an insurance perspective, their occurrence could negatively impact
the reputation of the Pirelli Brand, if not prevented or appropriately managed. For this reason, tyres
marketed by Pirelli undergo rigorous quality analyses before being released to the market. The entire
production process is governed by specific quality assurance procedures with safety and
performance targets that are continuously updated and upgraded.
Litigation Risks
In carrying out its activities, Pirelli may become involved in legal, fiscal, commercial, labour law
disputes. The Group takes the necessary measures to prevent and mitigate any potential
consequences that may arise from any such proceedings.
Personal Data Processing Risks
In the normal course of Pirelli’s business activities, personal data on employees, customers (B2C
and B2B) and suppliers are supplied. The treatment of personal data collected by the Group
companies is subject to the laws and regulations applicable in the countries in which these
companies operate or are present. The Group has therefore implemented measures to achieve full
compliance with all data protection regulations in force (while maintaining the Regulation (EU)
2016/679, known as the “General Data Protection Regulation” or “GDPR”, which came into effect in
May 2018, as its legislative reference framework), in this way mitigating the risk of regulatory
proceedings and/or privacy-related disputes. Nevertheless, any changes to applicable legislation,
the introduction of new regulations, the launch of new products or services onto the market and,
more generally, any new initiative involving the processing of personal data (or substantial
modifications to the existing treatments of personal data), could result in the need to incur specific
expenses, or require the Group to reassess its own approach to compliance in this area.
Cyber and Information Security Risks
The continued escalation of cyber security risk, which may be further heightened by the use of
artificial intelligence technologies to carry out attacks, and the complexity of the international
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environment in which the Group operates, exposes it to cyber threats (e.g., ransomware, malware,
attacks on internet faced systems), that could lead to the interruption of business activities for more
or less prolonged periods of time, or events involving the loss of confidentiality of data critical to the
Group (e.g., Data Exfiltration, Insider Threat, Social Engineering). In accordance with the Strategic
Roadmap for Information Security, which is based on international standards, initiatives have been
implemented to enhance the Group’s cyber security position in response to identified risks.
Monitoring these risks through an information security management system that is integrated with
the Company’s operational risk management process, including the monitoring of cyber security risks
within the supply chain, is an essential part of their proper management. From a technological
standpoint, having visibility and the active monitoring of security events within the manufacturing
plant environment is a necessary prerequisite for protecting the Group’s infrastructures, such as the
continuous upgrading of technology and operating systems, in order to reduce vulnerabilities and
the risks of outages and incidents that could impact business activities. The execution of cyber
security awareness initiatives through testing, customised training, educational programmes and
communication to update users on key cyber security risks, enhances the human factor, which
provides an additional layer of protection in addition to processes and technologies.
Business Interruption Risks
The territorial fragmentation of operating activities and their interconnection expose the Group to risk
scenarios that could lead to the interruption of its business activities for periods more or less
prolonged periods of time, with the consequent impact on the operational capabilities and results of
the Group itself. Risk scenarios related to natural or accidental events (fires, floods, earthquakes,
etc.), to malicious acts (vandalism, sabotage, etc.), to malfunctions in the auxiliary production plants
or to interruptions in the supply of utilities, can in fact cause significant property damage and the
reduction and/or interruption of production, particularly if the event affects high volume or specialised
product (high-end range) production sites. Pirelli monitors their vulnerability to catastrophic natural
events (particularly floods, hurricanes and earthquakes) and assesses any potential damage (based
on the probability of occurrence) for all the Group’s production sites. The analyses confirm an
adequate management of business interruption risks, thanks to a comprehensive set of security
measures, systems for the prevention of harmful events and for the mitigation of the potential impacts
on the business, also in light of the current business continuity plans, as well as the insurance policies
in place to cover property damages and business interruptions that could potentially impact the
Group’s production plants, (the Group’s insurance coverage might, however, not be sufficient to
compensate for all potential losses and liabilities in the event of catastrophic events). The Pirelli
supply chain is also regularly assessed for potential business interruption risks.
Risks Relative to the Financial Reporting Process
Pirelli has also implemented a specific and articulated risk management and internal control system,
supported by a dedicated software application, for the preparation of the half-yearly and annual
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consolidated Financial Statements, in order to safeguard the Company’s assets, its compliance with
laws and regulations, the efficiency and effectiveness of corporate operations, as well as the
reliability, accuracy and timeliness of its financial reporting. The process of preparing financial
documentation, in particular, is carried out through the appropriate administrative and accounting
procedures, developed in accordance with the criteria established by the Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organisations of the Tradeway Commission.
The administrative/accounting procedures for the preparation of the Financial Statements and all
other financial communications, are prepared under the responsibility of the Manager responsible
for the preparation of the Corporate Financial Documents, who verifies their adequacy and effective
application on a half-yearly basis. In order to allow for the attestation by the Manager responsible for
the preparation of the Corporate Financial Documents, a mapping of the companies and the relevant
processes that contribute to and generate economic, asset, and financial information, was carried
out. The identification of the companies that belong to the Group and the relevant processes, is
carried out annually, on the basis of quantitative and qualitative criteria. The quantitative criteria
consists of the identification of those Group companies which, in relation to the selected processes,
represent an aggregate value which exceeds a defined materiality threshold. The qualitative criteria
consists of the examination of those processes and companies which, according to the assessment
of the Manager responsible for the preparation of Corporate Financial Documents, may present
potential areas of risk even though they do not fall within the quantitative parameters described
above. For each selected process, the control risks/objectives associated with the preparation of the
Financial Statements and related disclosures, as well as with the efficiency of the internal control
system in general, were identified. For each control objective, specific verification measures were
planned and specific responsibilities were assigned. A system of supervision over the controls
performed by way of a “chain” attestation mechanism, extending all the way to the Chief Executive
Officers of each company within the scope of control. Any critical issues that emerge within the
evaluation process are subject to a plan of actions whose implementation is then verified within the
subsequent half-year. In addition, the Chief Executive Officer and the Chief Financial Officer of the
subsidiaries, are required to provide a half-yearly declaration, on the reliability and accuracy of the
data submitted for the purposes of preparing the Group’s consolidated Financial Statements. In the
lead up to the dates of the Board of Directors’ Meetings which approve the consolidated data at June
30 and December 31, the results of the audit procedures are discussed with the Manager responsible
for the preparation of the corporate financial documents. Lastly, the Internal Audit Department carries
out periodic audits aimed at verifying the adequacy of the design and operability of the controls
carried out on sample companies and processes, which are selected based on materiality criteria.
In addition, with the entry into force of the Corporate Sustainability Reporting Directive (CSRD) and
the consequent changes in the process of preparing the Group’s Sustainability Disclosure, Pirelli has
extended and strengthened the internal control system for Sustainability Disclosure (compared to
what had already been implemented in previous years with regard to the Non-Financial Declaration,
prepared pursuant to Legislative Decree No. 254/2016). In particular, the new control framework is
now more closely aligned with the requirements for Financial Disclosure. For further details,
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reference should be made to the section dedicated to the control system, contained in the
Sustainability Disclosure itself.
SOCIAL - ENVIRONMENTAL RESPONSIBILITY RISKS
Risks Relative to Social and Environmental Responsibility and Business Ethics
Risk management at Pirelli is enterprise-wide and includes the identification, analysis and monitoring
of environmental, social, economic/financial and business ethics risks that are directly or indirectly
linked to the Company, through Pirelli affiliates or in dealings with them, such as those related to the
sustainability of the supply chain. Before investing in a specific market or initiating new business
relations (e.g., M&A, joint ventures), Pirelli conducts ad hoc assessments, including through due
diligence, on potential political, financial, environmental and social risks, with a particular focus on
the compliance with human and labour rights. In countries where the Group is already present, a
systematic monitoring of the internal and external scenario is carried out to mitigate the risks
associated with the environments in which it operates and the value chain. This approach makes it
possible to prevent any negative impacts, and to undertake to remedy them where necessary.
Alongside the continuous monitoring of the application of internal prescriptions regarding financial,
social, environmental sustainability and business ethics at Group sites, which occurs through the
periodic audits performed by the Internal Audit Department, Pirelli has adopted an ESG
(Environmental and Social Governance) risk mitigation strategy for its own supply chain. For further
information, on the model used for managing sustainability risks along the supply chain, reference
should be made to the paragraph “Our Suppliers”. For the corporate governance aspects of human
rights issues, reference should be made to the paragraph “Compliance of Human Rights”. For the
management of internal risk within the subsidiaries, reference should be made to the paragraph
“Compliance with the Legislative-Contractual Requirements on Overtime, Rest, Association and
Bargaining, Equal Opportunities and Non-Discrimination, Prohibition of Child and Compulsory
Labour”. For the management of climate change risks, reference should be made to the section of
the Annual Report entitled “Consolidated Sustainability Reporting”, pursuant to Legislative Decree
No. 125 of September 6, 2024.
EMERGING RISKS
Having joined the Task Force on Climate Related Financial Disclosures (TCFD) in September 2018,
Pirelli applies all the recommendations made by the TCFD, and is committed, on a voluntary basis,
to the dissemination of transparent accounting and the disclosure of any relevant information on
climate change related risks and opportunities. To this end, Pirelli monitors these elements of
uncertainty along its value chain through sensitivity analyses and risk assessments, to assess and
quantify the financial impacts (risks and opportunities) related to climate change and water stress,
and to put in place appropriate prevention and mitigation measures to protect its business. One
instrument to support these analyses is the Group’s Climate Change and Risk Assessment, which
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is updated periodically to integrate these analyses with forecasts for the medium to long-term time
frame, with respect to the IPPC11 (Intergovernmental Panel on Climate Change) climate scenarios,
(RCP 1.9, RCP 2.6, RCP 4.5, and RCP 8.5)12 and the IEA13 (International Energy Agency) for energy
transition (NZE, APS and STEPS)14.
For the full description of the eleven TCFD recommendations, reference should be made to the
“Consolidated Sustainability Reporting” section and the paragraph “Management of Greenhouse
Gas Emissions and Climate Transition Plan”, and to Pirelli’s public responses to the CDP Climate
Change questionnaire.
Risks related to Increasing Costs relative to Climate Changing Gas Emissions
Consistent with the findings of the Group’s latest Climate Change Risk Assessment, the introduction
and/or tightening of the current CO2 emission pricing schemes in the countries where the Group
operates, could entail the risk of increased production costs for the Company’s operations.
This phenomenon could materialise not only at a European level, where the Emissions Trading
System (ETS) mechanism has already been active for years, with impacts that are already evident
in the Group’s factories in the EU, but also in other economies that already have carbon taxation
policies in place or are in the policy evaluation phase (China, Brazil, Mexico and the UK, amongst
others).
For the purposes of monitoring the possible impacts, different evolutions of the price of CO2 have
been hypothesised, both on the basis of the forecasts published by the IEA for the STEPS, APS,
NZE scenarios, taking into consideration the pathways for the carbon emission intensity of the
production sites which are consistent with the Group’s objectives, and assuming three different
scenarios with respect to the climate scenarios and the time frames under consideration:
NZE: the implementation of ETS (the Emissions Trading System) in countries that already
have an existing framework (e.g., the EU, Mexico, China and Brazil) in the medium-term
(2030) and with an extension of the application of an ETS framework to all Group countries
in the long-term period (2050);
APS: the implementation of ETS only in the European manufacturing plants without installed
power constraints in the medium-term (2030), and the application of ETS to countries that
already have an existing framework (e.g., the EU, Mexico, China and Brazil), in the long-term
period (2050);
11 Intergovernmental Panel on Climate Change.
12 The group of scenarios which represent a projected end-of-century global temperature increase of between <1.5°C (RCP1.9) and >4°C
(RCP8.5).
13 International Energy Agency.
14 Stated Policies Scenario (STEPS), Announced Pledges Scenario (APS), Net Zero emissions by 2050 (NZE).
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STEPS: the implementation of ETS only in manufacturing plants where it is currently already
applied without free allowance allocation quotas, in the medium (2030) and long-term period
(2050).
The impact of the risk was assessed in economic terms for the 2024-2050 time period, by calculating
the potential additional costs for the Group based on the options described above, in the event of
introductions and/or escalations to the carbon pricing system currently in place.
No material impact emerged from the assessment for the short-term (2024-2025) and medium-term
(2030). However, elements of uncertainty remained as to the significance of the long-term period
impacts (2050) in the event of the NZE scenario occurring.
In addition, due to the potential impacts on production related aspects, Pirelli constantly monitors
potential developments in the carbon pricing policies of the main countries in which it operates, so
as to proactively intercept any deviations from the announced targets, and be able to implement
mitigation measures. In this regard, Pirelli has already adapted its production strategy concerning
energy procurement with a plan, that by 2025, it aims to achieve 100% of electricity purchased from
the grid to be sourced from renewable energy, the improvement of energy efficiency in its
manufacturing plants, and the progressive electrification of its processes.
Risks related to Changes in the Energy Requirements of Production Plants
The global rise in temperature due to climate change determines, among other things, shifts in
energy demand at the Group’s production plants. This phenomenon could lead to an increase in the
energy consumption used for cooling the plants and in the production processes, with a consequent
increase in costs. As part of the most recent Climate Change Risk Assessment, Pirelli conducted a
study to quantify changes in the net energy demand, availing itself with specialised tools for mapping
the exposure to chronic physical hazards (e.g., a heatwave) by taking into account, starting from the
current energy requirements of the manufacturing plants, the potential changes in consumption
under different RCP scenarios. Although it emerged that some production sites will require a greater
supply of energy, the impact of the risk did not result as material in either the short or medium to
long-term period (2025-2050).
Risks related to Potential Volatility and Unavailability of Natural Rubber
In context of climate change, drier seasons, significant changes in temperature and extreme rainfall
events could threaten natural rubber production in the South-East Asian plantations. Furthermore,
climatic and environmental changes could influence the spread of pests and diseases that affect
rubber, putting harvests at risk. This scenario could affect the production of the raw material in the
region, possibly leading to its reduction in the long-term period.
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Through Climate Change Risk Assessment, the Group assesses the effects of climate change to
anticipate and mitigate the consequences on the supply chain, and adopting strategies for
diversifying its sources of supply. Pirelli scrupulously monitors the impact of the risk associated with
price volatility and natural rubber availability in South-East Asia, as well as potential changes in the
geographical distribution of production at global level.
Physical Risks due to Climate Change impacting Production Plants and Supply Chains
Current climate change involves, among other things, an increase both in terms of the frequency as
well as the severity of catastrophic natural events (such as floods, droughts, wildfires, hailstorms and
tornadoes), which could impact both Pirelli’s production sites and those of its suppliers.
The Group’s Climate Change Risk Assessment takes into account the main climate risk assessment
models (IPCC) availing itself with specialised tools for mapping the exposure to physical hazards,
as well as with risk mitigation and adaptation measures already in place at various production sites,
and then estimates the potential damage to assets and the number of business interruption days for
the Group’s plants and for strategic suppliers, resulting from the main risks (floods, droughts,
wildfires and storms, among others). Where possible, risks have been projected up until 2050, based
on the different degrees of global temperature increases as defined by the IPCC climate scenarios
(RCP 1.9, RCP 2.6, RCP 4.5 and RCP 8.5).
The analysis of physical risks was carried out both in terms of potential damage to assets (Property
Damage) and in terms of potential business Interruption days, by calibrating the climate models to
historical events, and thereby correlating the intensity of the events with consequent production
downtime. In terms of potential criticality for the Group, no significant impacts are foreseen in the
short-medium term (2024-2030), while elements of uncertainty remain on the horizon towards 2050.
The Pirelli Group constantly monitors these risk elements both in terms of production plants and the
supply chain, in order to proactively pursue mitigation strategies both in terms of CapEx, as well as
scouting and compounding for the supply chain to reduce the risk of damage to its strategic assets
and the risk of business interruption.
Risks associated with the Evolution of Mobility Models
Given the evolution of climate patterns, market preferences and urban policies in the medium to
long-term, an element of uncertainty exists with regard to trends in mobility demands. In fact, an
upward trend can be observed in the market shares gained by electric and shared vehicles, which
are increasingly perceived as commodities. These vehicle types require tyres with ever increasing
durability, and have a lower impact on the demand for ancillary services.
The risk therefore is dependent on the unpredictability of possible sudden accelerations or
decelerations in the evolution of demand, with a consequent impact on the speed of adaptation of
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tyre manufacturing technologies and/or related services, or, alternatively, in the risks associated with
converting production processes and/or services that are not aligned with market demand.
In this context, Pirelli has already integrated product lines dedicated to these markets, while
continuing to produce tyres for internal combustion vehicles, which to date still represent the majority
of vehicles on the market. Therefore, in order to ensure a growing market presence, avoid a decline
in sales and maintain leadership in the relevant segment, the Company:
closely monitors demand trends in order to anticipate any changes in the market
environment;
tracks technological trends in order to promptly offer the correct product in alignment with
market needs;
guarantees the constant oversight of homologations (Original Equipment requests), with a
particular focus on electric vehicles;
prioritises a just-in-time approach that combines production speed and flexibility, in order to
promptly accommodate new specific requests.
Furthermore, considering that the new types of vehicles and mobility will feature lower maintenance
requirements, greater autonomy and therefore increased safety in the event of unforeseen events
(e.g., punctures), the Company:
sets targets for wear rate reduction for all new product lines;
applies extended mobility technologies, self-supporting tyres (e.g., run flat, run forward), self-
sealing tyres (seal inside), which increase safety levels in the event of punctures;
provides all season tyres to minimise seasonal tyre replacement activities (summer - winter
change overs) and therefore reduce vehicle downtime.
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55
OUTLOOK FOR 2025
Pirelli, in light of the high uncertainties regarding US tariffs, confirms the targets communicated to
the market on February 26. The group has nonetheless defined a plan to mitigate the impact of US
tariffs – should the currently announced measures come into effect – with the aim of ensuring the
Adjusted Ebit and cash targets at the lower end of the guidance range, thereby achieving the
deleverage objective.
Market Outlook for 2025
The global scenario for 2025 is constantly evolving and is characterised by increasing risk at
geopolitical level, due to trade uncertainties linked to the potential introduction of tariffs, with
consequent impacts on economic growth, inflation and consumption.
For 2025, the trend in global demand for Car tyres is expected to be in the range of ~-1% ÷ ~+1%.
For Original Equipment, a “low-single digit” decline is expected, due to weak automobile production
in the EU and in North America. Expectations for the Replacement channel are for stable/slight
growth.
Car ≥18” confirms its resilience, with an expected “mid-single digit” growth in demand, compared to
a “low single digit” decline in demand for Car ≤17”.
In light of the results achieved in 2024, Pirelli has confirmed the 2025 targets set out in the Industrial
Plan, despite strong volatility in the macroeconomic environment.
(in billions of euro)
2024
2025E
Revenues
6.77
~6.8 ÷ ~7.0
EBIT margin adjusted
15.7%
~16%
Investments (CapEx)
0.42
~0.42
% of revenues
6.1%
~6%
Net cash flow
0.53
~0.55 ÷ ~0.57
before dividends
Net Financial Position
-1.93
~-1.6
NFP/EBITDA adj.
1.27x
~1.0x
ROIC
23.2%
~23%
post taxes
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Pirelli expects to outperform the market, especially with High Value and to continue to reduce its
exposure to Standard.
Specifically, expectations are as follows:
Revenues in the range of euro ~6.8 and ~7.0 billion, with:
o volumes which are expected to grow between ~+1% and ~+2%;
o price/mix improvement in the range of ~+2% / ~+3%, primarily driven by the product
mix;
o the impact of the exchange rate effect expected to be between ~-2.5% / ~-1.5%;
EBIT margin adjusted of ~16%, also thanks to a strengthened efficiency plan, estimated at
approximately euro 150 million for 2025, compared to the euro 135 million forecast in the
Industrial Plan;
Net cash generation before dividends expected to be between euro ~550 and ~570
million;
Investments of euro ~420 million (~6% of revenues);
Net Financial Position of euro ~-1.6 billion, with a ratio between the NFP/EBITDA adjusted,
equal to ~1 times.
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SIGNIFICANT EVENTS SUBSEQUENT TO THE END OF THE YEAR
On February 7, 2025, Pirelli announced that it has been confirmed - for the seventh consecutive
year - as among the global leaders in the fight against climate change, earning a place on the 2024
Climate A list compiled by the CDP, the international non-profit organisation that has collected and
analysed the environmental information of more than 24,800 companies. The “A” rating is the highest
possible score attainable in the Climate section, and was awarded to Pirelli based on its
decarbonisation strategy, the effectiveness of its efforts to reduce emissions and climate risks and
in developing a low carbon emissions economy, as well as on the completeness and transparency
of the information provided and on the adoption of best practices associated with environmental
impacts.
On February 11, 2025, Pirelli announced that it had been ranked as one of the “Top 1%” companies
in the 2025 Sustainability Yearbook - the only global tyre manufacturer - thus obtaining the highest
possible recognition following the sustainability analysis carried out by S&P Global on approximately
7,700 companies. The result follows Pirelli’s top score in the 2024 Corporate Sustainability
Assessment by S&P Global, where the Company ranked first (84 points), in both the Auto
Components and Automotive sectors, securing its place in the Dow Jones Sustainability World and
Europe Indexes.
In April 2025, the US administration announced the introduction of tariffs for the Auto & Parts sector
starting from May 3, 2025, and reciprocal tariffs on various countries, the latter being temporarily
suspended. Additionally, tariffs on products compliant with the USMCA agreements from Mexico and
Canada are also temporarily suspended. Pirelli, in light of the high uncertainties regarding US tariffs,
confirms the targets communicated to the market on February 26. The group has nonetheless
defined a plan to mitigate the impact of US tariffs – should the currently announced measures come
into effect – with the aim of ensuring the Adjusted Ebit and cash targets at the lower end of the
guidance range, as stated in the paragraph “Outlook for 2025” of this document, thereby achieving
the deleverage objective.
On April 23, 2025, Pirelli and CTS, an independent operator specializing in retail and services in the
tire industry active in Northern Europe, signed a preliminary agreement for a long-term strategic
partnership. This partnership will enable Pirelli to strengthen its commercial presence and High Value
strategy in the region, while CTS will further enhance its ability to serve customers throughout
Sweden. The operation involves CTS acquiring Däckia AB from Pirelli, which currently consists of a
network of 60 directly owned stores and 42 affiliates operating in Sweden. The preliminary value of
the acquisition is approximately 260 million SEK (around 24 million euros). The transaction, subject
to customary closing conditions and regulatory approvals, is expected to be finalized by July 2025.
Simultaneously, an agreement between Pirelli and Däckia for the supply of tires until 2030 will come
into effect. This agreement will ensure the distribution of Pirelli products and its role as the main
supplier. The alliance will allow Pirelli to rely on a more structured distribution system, with an
expected greater market coverage, and on the retail specialization that distinguishes CTS in the
region.
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58
ALTERNATIVE PERFORMANCE INDICATORS
This document, in addition to the financial measures provided for by the International Financial
Reporting Standards (IFRS), also includes measures derived from the latter, even though not
provided for by the IFRS (Non-GAAP Measures), in compliance with the ESMA Guidelines on
Alternative Performance Indicators (ESMA/2015/1415 Guidelines) published on October 5, 2015.
These measures are presented in order to allow for a better assessment of the results of the Group’s
operations, and should not be considered as alternatives to those required by the IFRS.
Specifically, the Non-GAAP Measures used were as follows:
-
EBITDA: equal to the EBIT but excludes the depreciation and amortisation of property, plant
and equipment and intangible assets. The EBITDA is used to measure the ability to generate
earnings, excluding the impacts deriving from investments;
-
EBITDA adjusted: an alternative measure to the EBITDA which excludes non-recurring,
restructuring and one-off expenses;
-
EBITDA margin: calculated by dividing the EBITDA by revenues from sales and services. This
measure is used to evaluate operating efficiency, excluding the impacts deriving from
investments;
-
EBITDA margin adjusted: calculated by dividing the EBITDA adjusted by revenues from sales
and services. This measure is used to evaluate operating efficiency, excluding the impacts
deriving from investments and the operating costs attributable to non-recurring, restructuring
and one-off expenses;
-
EBIT: an intermediate measure which is derived from the net income/(loss), but which excludes
taxes, financial income and financial expenses and the net income/(loss) from equity
investments. The EBIT is used to measure the ability to generate earnings, including the impacts
deriving from investments;
-
EBIT adjusted: an alternative measure to the EBIT which excludes the amortisation of
intangible assets relative to assets recognised as a consequence of Business Combinations
and the operating costs attributable to non-recurring, restructuring and one-off expenses;
-
EBIT margin: calculated by dividing the EBIT by revenues from sales and services. This
measure is used to evaluate operating efficiency;
-
EBIT margin adjusted: calculated by dividing the EBIT adjusted by revenues from sales and
services. This measure is used to evaluate operating efficiency, excluding the amortisation of
intangible assets relative to assets recognised as a consequence of Business Combinations
and the operating costs attributable to non-recurring, restructuring and one-off expenses;
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-
Net income/(loss) adjusted: calculated by excluding the following items from the net
income/(loss):
o
the amortisation of intangible assets relative to assets recognised as a consequence
of Business Combinations and the operating costs attributable to non-recurring,
restructuring and one-off expenses;
o
non-recurring expenses/income recognised under financial income and expenses;
o
non-recurring expenses/income recognised under taxes, as well as the tax impact
relative to the adjustments referred to in the previous points;
-
Fixed assets: this measure is constituted by the sum of the Financial Statement items,
“Property, plant and equipment”, “Intangible assets”, “Investments in associates and joint
ventures”, “Other financial assets at fair value through other Comprehensive Income” and “Other
non-current financial assets at fair value through the Income Statement”. Fixed assets represent
the non-current assets included in the net invested capital;
-
Net operating working capital: this measure is constituted by the sum of “Inventory”, “Trade
receivables” and “Trade payables”;
-
Net working capital: this measure is constituted by the net operating working capital and by
other receivables and payables, including tax receivables and payables, and by the derivative
financial instruments not included in the net financial position. This measure represents the
short-term assets and liabilities included in the net invested capital, and is used to measure
short-term financial stability;
-
Net invested capital: this measure is constituted by the sum of (i) fixed assets, and (ii) net
working capital. Net invested capital is used to represent the investment of financial resources;
-
Provisions: this measure is constituted by the sum of “Provisions for liabilities and charges
(current and non-current)”, “Provisions for employee benefit obligations (current and
non-current)”, “Other non-current assets”, “Deferred tax liabilities” and “Deferred tax assets”;
-
Net financial debt: calculated pursuant to the CONSOB Notice dated July 28, 2006 and in
compliance with the ESMA Guidelines regarding disclosure requirements pursuant to the
Prospectus Regulation applicable as of May 5, 2021. Net financial debt represents borrowings
from banks and other financial institutions net of cash and cash equivalents, of other current
financial assets at fair value through the Income Statement, of current financial receivables
(included in the Financial Statements under “Other receivables”), and of the derivative hedging
instruments for items included in the net financial position and included in the Financial
Statements under “Derivative financial instruments” as current assets, current liabilities and
non-current liabilities;
-
Net Financial Position: this measure represents the net financial debt less the non-current
financial receivables (included in the Financial Statements under “Other receivables”) and the
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non-current derivative financial hedging instruments for items included in the net financial
position and included in the Financial Statements under “Derivative financial instruments” as
non-current assets. The net financial position is an alternative measure to net financial debt but
which includes non-current financial assets;
-
Liquidity margin: this measure is constituted by the sum of the Financial Statement items,
“Cash and cash equivalents”, “Other financial assets at fair value through the Income Statement”
and the committed but unutilised credit facilities;
-
Operating net cash flow: calculated as the change in the net financial position relative to
operations management;
-
Net cash flow before dividends, extraordinary transactions and investments: is calculated
by adding the change in the net financial position due to financial and tax management, to the
operating net cash flow;
-
Net cash flow before dividends paid by the Parent company: calculated by adding the
change in the net financial position due to extraordinary transactions and the management of
investments, to the net cash flow before dividends, extraordinary transactions and investments;
-
Net cash flow: calculated by subtracting the dividends paid by the Parent company from the
net cash flow before dividends paid by the Parent company;
-
Investments in intangible and owned tangible assets (CapEx): calculated as the sum of
investments (increases) in intangible assets and investments (increases) in property, plant and
equipment excluding any increases relative to the right of use;
-
Increases in the right of use: calculated as the increases in the right of use relative to lease
contracts;
-
ROIC: calculated as the ratio between the EBIT adjusted net of tax effects and the average net
invested capital net of provisions which does not include, “Investments in associates and joint
ventures”, “Other financial assets at fair value through Other Comprehensive Income”, “Other
non-current financial assets at fair value through the Income Statement”, “Other non-current
assets”, the intangible assets relative to assets recognised as a consequence of Business
Combinations, the deferred tax liabilities relative to the latter and the “Provisions for employee
benefit obligations, current and non-current”.
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61
OTHER INFORMATION
ROLE OF THE BOARD OF DIRECTORS
For more information on the role of the Board of Directors, reference should be made to the Report
on Corporate Governance and Ownership Structure contained in the 2024 Annual Report group of
documents, as well as to the additional information published on the Pirelli website (www.pirelli.com)
in the Governance section.
INFORMATION ON THE SHARE CAPITAL AND OWNERSHIP STRUCTURE
The subscribed and paid-up share capital at the date of approval of this Financial Report was euro
1,904,374,935.66, represented by 1,000,000,000 registered ordinary shares without indication of
their nominal value. Each share entitles the holder to one vote. There are no other categories of
shares.
The Extraordinary Pirelli Shareholders’ Meeting held on March 24, 2021, resolved to increase the
share capital in cash, by payment in one or more tranches, excluding option rights pursuant to Article
2441, paragraph 5, of the Italian Civil Code, for a total countervalue, including any share premium,
of euro 500,000,000.00 to service the conversion of the “EUR 500 million Senior Unsecured
Guaranteed Equity-linked Bonds due 2025”, to be paid in one or more tranches through the issue of
ordinary shares of the Company, with regular dividend entitlements, up to a maximum amount of
euro 500,000,000.00, to exclusively service the “EUR 500 million Senior Unsecured Guaranteed
Equity-linked Bonds due 2025” issued by the Company, in accordance with the criteria provided for
in the relevant Regulation, with the understanding that the final subscription date for the newly issued
shares is set as December 31, 2025 and that, in the event that the capital increase has not been
fully subscribed by that date, the same shall in any case be deemed to have been increased by an
amount equal to the subscriptions received and as of that date, with the express authorisation for
the Directors to issue the new shares as they are subscribed. No fractions of shares will be issued
or delivered and no cash payments or adjustments shall be made in lieu of any such fractions.
On 16 June 2023, the Prime Minister’s Office adopted a measure containing some prescriptions
pertaining to Pirelli’s corporate governance (the “Golden Power Prime Ministerial Decree”). These
prescriptions, addressed both to the shareholder National Chemical Corporation Limited (“CNRC”)
and to Pirelli itself, entail, inter alia, the obligation to adopt both “structural safeguards independent
of the temporary nature of the shareholders’ agreement” and “a network of measures operating
together to protect the autonomy of Pirelli & C. S.p.A. and its management, and to protect the
information of strategic importance held by the Company”.
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62
The Golden Power Prime Ministerial Decree prohibits CNRC from exercising management and
coordination activities over Pirelli pursuant to Articles 2497 et seq. of the Italian Civil Code and
requires it, inter alia, by way of example only:
(i)
to ensure Pirelli complete autonomy in the management of relations with customers and
suppliers;
(ii)
to ensure that Pirelli independently prepares the strategic, industrial and financial plans and/or
budgets of the Company and the Group;
(iii)
to guarantee that Pirelli shall not be subject to instructions by the Sinochem Group;
(iv)
not to adopt any deeds, resolutions or communications that may suggest that Pirelli’s decisions
are the consequence of desires and instructions imposed upon it by CNRC;
(v)
not to centralise treasury services or other financial assistance or coordination functions (e.g.
cash pooling) or other technical coordination functions (e.g. integration of Pirelli’s IT systems
into those of Sinochem Holdings Corporation Ltd., including those of Pirelli’s Chinese
subsidiaries);
(vi)
not to issue any orders or instructions and in any case not to coordinate the initiatives regarding
financial and credit-related decisions and research and development in Pirelli;
(vii) not to issue directives regarding any special transactions carried out by Pirelli including, for
example, the listing of financial instruments, acquisitions, disposals, concentrations,
contributions, mergers, spin-offs;
(viii) not to make any crucial decisions regarding the operating strategies of Pirelli or formulate
group strategic guidelines;
(ix)
to guarantee the absence of any organisational-functional connections between Pirelli, on the
one hand, and CNRC, on the other.
The Golden Power Prime Ministerial Decree also requires the CNRC to undertake to ensure that:
(i)
the Chief Executive Officer of Pirelli, drawn from the majority slate submitted by CNRC, is
indicated by Camfin;
(ii)
out of 12 Directors drawn from the majority slate, 4 are appointed by Camfin;
(iii)
the position of General Manager is introduced, to whom the power to implement Pirelli’s
business plan, budget and ordinary management is delegated;
(iv)
all of Pirelli’s Delegated Bodies are to be appointed exclusively from among the Directors
designated by Camfin;
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Pirelli & C. S.p.A. – 2024 Annual Report
63
(v)
the power to appoint and dismiss Managers and Deputy Managers of Pirelli is deferred to the
Executive Vice Chairman or to the Chief Executive Officer;
(vi)
Pirelli’s Bylaws are amended so that, in relation to Board resolutions pertaining to the assets
of strategic importance (as identified in the Golden Power Prime Ministerial Decree) in addition
to the appointment and dismissal from the office of Key Managers, the proposal is reserved
for the Chief Executive Officer and any decision contrary thereto may only be adopted with the
vote against of at least 4/5 of the Board of Directors (thereby attributing veto power over such
resolutions to the Directors elected by Camfin).
Considering the above, the majority of the Pirelli Board of Directors is now composed of independent
directors, and the majority of the Directors drawn from the list submitted by the CNRC (8 out of 12)
are also independent directors or directly designated by Camfin; limiting to 4 (four) the (non-
executive) “non-independent” directors designated by CNRC who, in turn, will have to comply with
the requirements dictated by the Golden Power Prime Ministerial Decree, including the one aimed
at “ensuring the absence of organisational-functional links between Pirelli on the one hand and
CNRC on the other”.
Adoption of the Golden Power Prime Ministerial Decree made it necessary to carry out a number of
in-depth investigations to ascertain the continued existence of MPI Italy control over Pirelli pursuant
to the international accounting standard IFRS 10 “Consolidated Financial Statements”. On this point,
a question was submitted to Consob by the Board of Statutory Auditors and management on 15
February 2024 (“Question”). On 31 July 2024, Consob, following proceedings initiated as a result of
the Question: (a) communicated the relative results to Pirelli, envisaging the obligation for the
Company Board of Directors to assess the existence or otherwise of a controlling entity in
accordance with IFRS 10; (b) recalled the commitment required by the Golden Power Prime
Ministerial Decree on the part of CNRC not to exercise direction and coordination, and therefore the
commitment not to provide directors with indications; (c) emphasised the mandatory nature of certain
provisions of said Prime Ministerial Decree concerning the role of Camfin S.p.A. (e.g. regarding the
appointment of the Chief Executive Officer who proposes the strategic plan, and the Executive Vice
Chairman who outlines the strategies) that strengthen the autonomy of the Company’s Board of
Directors and that “prevent the shareholder [Marco Polo International Italy S.r.l (“MPI Italy”)] from
being able – even if not exercised – to influence the significant decisions of the Issuer”.
The Company conducted in-depth studies assisted by opinions from leading auditing firms with
reference to the correct application of the accounting standard IFRS 10, as well as additional
opinions received from external legal advisors, and took into account the additional documentation
submitted in the proceedings initiated by Consob following the Question, and the documentation
(including briefs and opinions) provided by the other intervening parties, MPI Italy and Camfin S.p.A.
(“Camfin S.p.A.”).
While conducting these investigations, in order to assess the existence of control by an entity
pursuant to IFRS 10, the Company focused on the three requirements of that standard, namely
whether an entity has simultaneously (i) power over the investee entity; (ii) exposure or rights to
variable returns arising from the relationship with the investee entity; and (iii) the ability to exercise
Pirelli & C. S.p.A. – 2024 Annual Report
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its power over the investee entity in order to affect the amount of its returns. More specifically,
focusing on the first requirement, the decisions that generally represent exercise of the power of an
investor over another entity were analysed, with an indication for each one of whether MPI Italy can
unilaterally take the aforesaid decisions through the rights resulting from the 2023 Shareholders’
Agreement Renewal, as amended to incorporate the provisions of the Golden Power Prime
Ministerial Decree. Please find below the outcome of these analyses for each decision:
Appointment and dismissal of executive directors (Executive Vice Chairman and Chief Executive
Officer): the two executive directors were assigned the first one by the parties upon appointment
by Camfin and the second one by express provision of the Golden Power Prime Ministerial
Decree, upon indication by Camfin. The dismissal or replacement of the CEO can only take
place upon the proposal of the Executive Vice Chairman (a Camfin person), also delegated to
propose a replacement who must be a director representing Camfin;
Preparation of the budget and the business plan and any significant amendments to be
submitted for approval by the Board of Directors: the proposal to the Board of Directors of the
budget and business plan and any possible changes must be formulated by the CEO, appointed
by Camfin. The Board of Directors has the sole right to approve the CEO proposal or to vote
against it, giving adequate reasons and taking the best interests of Pirelli into account. Although
MPI Italy has the right to appoint the majority of directors (four of whom “independent”), the MPI
Italy right to provide guidelines to the directors it appoints is severely limited by the provisions
of the Golden Power Prime Ministerial Decree; so the MPI rights do not appear to be substantive
rights, in accordance with IFRS 10 provisions;
Appointment and dismissal of key managers: the appointment or dismissal of key managers
must be put forward by the CEO and any resolution against that proposal requires the favourable
vote of at least 4/5 of the members of the Board of Directors – a qualified quorum higher than
the number of directors appointed by MPI Italy;
Matters reserved for the Board of Directors: although the 2023 Shareholders’ Agreement
envisages that certain decisions are taken by the Board of Directors with a simple majority, and
thus potentially by MPI Italy through its directors, this right is severely limited by the provisions
of the Golden Power Prime Ministerial Decree. So MPI rights do not appear to be substantive
ones, in accordance with the provisions in IFRS 10;
Decisions pertaining to the Pirelli strategic assets as identified by the Golden Power Prime
Ministerial Decree: in accordance with provisions in the Golden Power Prime Ministerial Decree,
the Bylaws envisage that in relation to board resolutions pertaining to assets of strategic
importance as identified by the Prime Ministerial Decree, the proposal is reserved for the CEO
and any resolution against that proposal requires the favourable vote of at least 4/5 of the
members of the Board of Directors – a qualified quorum higher than the number of directors
appointed by MPI Italy.
Furthermore, the Company considered that in the aforementioned provision, Consob asked the
Board of Directors to assess, for the purposes of resulting decisions on the permanence of control,
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Pirelli & C. S.p.A. – 2024 Annual Report
65
whether MPI Italy has the concrete capacity to dismiss the management body in the event of a
disagreement with the Board of Directors on the strategic directions taken and, ultimately, on the
returns that the investee generates. To this end, the Company has assessed that in the Ordinary
Shareholders’ Meetings held from 2018 to 2023 there was a shareholding of over 80% and in the
2024 Shareholders’ Meeting it was 88%, which does not allow MPI Italy to independently decide the
outcome of the Shareholders’ Meeting and dismiss the administrative body in its entirety; nor can
MPI Italy influence the appointment and dismissal of the Company managing bodies, devolved to
Camfin, pursuant to the Golden Power Prime Ministerial Decree and the Shareholders’ Agreement
between Camfin and CNRC.
The result of all these considerations is that the issuance of the Golden Power Prime Ministerial
Decree resulted in the loss of the unilateral control of MPI Italy (and, as a result, that of
Sinochem) over Pirelli pursuant to IFRS 10 and, at the same time, Pirelli is not subject to the
unilateral control of any entity under the aforementioned accounting standard.
Updated excerpts of the existing agreements between some of the Shareholders, including the
indirect Shareholders of the Company, which contain the provisions of the Shareholders’
Agreements regarding, amongst other things, the corporate governance of Pirelli, are available on
the Company’s website. For further details on the Company’s corporate governance and ownership
structure, reference should be made to the Report on Corporate Governance and Ownership
Structure contained in the 2024 Annual Report group of documents, as well as to the additional
information available on the Pirelli website (www.pirelli.com), in the Governance and Investor
Relations sections.
WAIVER OF THE PUBLICATION OF INFORMATION DOCUMENTS
The Board of Directors, taking into account the simplification of the regulatory requirements
introduced by CONSOB in the Issuer’s Regulation No. 11971/99, resolved to exercise the option to
derogate, pursuant to the provisions of Article 70, paragraph 8, and Article 71, paragraph 1-bis of
the aforesaid Regulation, from the obligation to publish the prescribed disclosure documents at the
time of significant mergers, de-mergers, capital increases through contributions of assets in kind,
acquisitions and disposals.
FOREIGN SUBSIDIARIES NOT BELONGING TO THE EUROPEAN UNION (EXTRA-EU
COMPANIES)
Pirelli & C. S.p.A. directly or indirectly controls some companies based in countries which do not
belong to the European Community (“Extra-EU Companies”), which hold particular significance
pursuant to Article 15 of CONSOB Regulation No. 20249 of December 28, 2017, concerning Market
Regulations.
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With reference to data at December 31, 2024, the Extra-EU Companies controlled directly or
indirectly by Pirelli & C. S.p.A., which are of relevance pursuant to Article 15 of the Market
Regulations, are:
LLC Pirelli Tyre Russia (Russia); Pirelli Pneus Ltda. (Brazil); Pirelli Comercial de Pneus Brasil Ltda.
(Brazil); Comercial e Importadora de Pneus Ltda. (Brazil); Pirelli Tire LLC (USA); Pirelli Tyre Co.,
Ltd. (China); Pirelli Otomobil Lastikleri A.S. (Turkey); Pirelli Neumaticos S.A.I.C. (Argentina); Pirelli
Neumaticos S.A. de C.V. (Mexico); Pirelli UK Tyres Ltd. (United Kingdom); Pirelli Tyre (Suisse) S.A.
(Switzerland) and Pirelli Tyre (Jiaozuo) Co., Ltd. (China).
Also pursuant to the same aforementioned regulatory provision, the Company has specific and
appropriate Group Operating Regulations in place that ensures the immediate, constant and full
compliance with the provisions of the aforementioned CONSOB Regulation. In particular, the
competent Company managements carry out the timely and periodic identification and disclosure of
the Extra-EU Companies deemed relevant to the Market Regulation and - with the necessary and
appropriate collaboration of the companies concerned – they guarantee the collection of data and
information as well as the verification of the circumstances referred to in the aforementioned Article
15, ensuring the availability of the information and data provided by the subsidiaries in the event of
a request by CONSOB. A periodic flow of information is also provided for in order to ensure that the
Board of Statutory Auditors of the Company, can carry out the prescribed and appropriate checks.
Lastly, the aforementioned Operating Regulation, consistent with regulatory provisions, governs the
public disclosure of the Financial Statements (that is the Statement of Financial Position and Income
Statement), of the relevant Extra-EU companies, which are prepared for the purpose of drafting the
consolidated Financial Statements of Pirelli & C. S.p.A. It is therefore noted that, the Company has
fully complied, with the provisions of Article 15 of the aforementioned CONSOB Regulation No.
20249 of December 28, 2017 and that the required conditions set forth therein, have been met.
RELATED PARTY TRANSACTIONS
During the periodic review of existing procedures which occurred on May 9, 2024, the Company’s
Board of Directors - subject to the unanimous opinion of the Committee for Related Party
Transactions (“RPT Committee”) which deliberated with the presence of all its members - updated
the Procedure for Related Party Transactions (“RPT Procedure”), with amendments of a formal
nature, which mainly refer to the changes to the Company’s organisational structure which took place
following the last revision.
The RPT Procedure is available on the Company’s website (www.pirelli.com). For further details,
reference should be made to the section “Directors’ Interests and Related Party Transactions”
included in the Report on Corporate Governance and Ownership Structure, contained in the 2024
Annual Report.
Related Party Transactions do not qualify as either atypical or unusual, but are instead part of the
ordinary course of business for the companies of the Group, and are carried out in the interest of the
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individual companies. These transactions are carried out in accordance with conditions that are
standard or market equivalent. Furthermore, they are carried out in compliance with the RPT
Procedure.
Pursuant to Article 5, paragraph 8 of CONSOB Regulation No. 17221 of March 12, 2010, as
subsequently amended and integrated, (the most recent, by CONSOB Resolution No. 22144 of
December 22, 2021), concerning Related Party Transactions, it should be noted that during the
course of the 2024 financial year, that no transaction of significant importance as defined by Article
3, paragraph 1, letter b) of the aforesaid Regulation, was submitted to the Pirelli Board of Directors
for approval.
It is to be noted that on May 9, 2024, the Company’s Board of Directors, after having received the
favourable opinion of the RPT Committee, approved amongst other things, the signing of the
agreements to revise certain terms and conditions of the existing technology and trademark licences
between the Pirelli Group and the Aeolus Tyre Co., Ltd. (“Aeolus”) and the Prometeon Tyre Group
S.r.l. (“PTG”), aimed, amongst other things, at the renegotiation of the duration and amounts for
royalties due. These agreements are part of a broader negotiation context, that also includes other
agreements with Aeolus and PTG that were originally signed as part of the industrial business
segregation, carried out by the Group between 2016 and 2017. As already stated, these agreements
do not affect the targets of the 2024-’25 Industrial Plan Update announced on March 6, 2024. The
overall transaction, even if in terms of its value would qualify as a transaction of minor significance,
has been treated by the Company, on a prudential and voluntary basis, in the same way as a
transaction of major significance. Therefore, on May 16, 2024, the Company - in keeping with this
approach - made available, again on a voluntary basis, a specific disclosure document which was
prepared in compliance with CONSOB regulations and with its own internal procedures on the
matter.
The figures relevant to Related Party Transactions included in this present document, already reflect
the impacts of the renegotiated royalties described above.
The information on Related Party Transactions as required pursuant to CONSOB Notice No.
DEM/6064293 of July 28, 2006 is presented in the Financial Statements, and in the Note entitled
“Related Party Transactions” contained in the 2024 Annual Report group of documents. Related
Party Transactions do not qualify as either atypical or unusual, but are instead part of the ordinary
course of business for the companies of the Group, and are carried out in the interest of the individual
companies. Such transactions, when not settled under standard conditions or are dictated by specific
regulatory conditions, are in any case regulated by conditions consistent with those of the market. In
addition, they are carried out in compliance with the RPT Procedure.
Furthermore, there were no Related Party Transactions - or changes or developments to the
transactions described in the preceding Financial Report - that have significantly affected the Group’s
financial position or results for the 2024 financial year.
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ATYPICAL AND/OR UNUSUAL OPERATIONS
Pursuant to CONSOB Notice No. DEM/6064293 of July 28, 2006, it should be noted that during the
2024 financial year, the Company did not carry out any atypical and/or unusual transactions, as
defined in the aforementioned Notice.
COMPLIANCE WITH THE REGULATIONS ON THE PROTECTION OF PERSONAL DATA
It is to be noted, that the Company regularly carries out all activities necessary to fulfil the
requirements of the regulations on the protection of personal data, and in particular of EU Regulation
2016/679 and Legislative Decree No. 196/2003 (introduced by Legislative Decree No. 101/2018).
These activities are subject to a periodical annual review with the support of the relevant
departments. The Data Protection Officer (“DPO”), appointed in the person of lawyer Alberto
Bastanzio, whose contact details were duly communicated to the Guarantor for the Protection of
Personal Data on July 25, 2018, can be contacted not only at the Company’s registered office, but
also at the following e-mail address: dpo_pirelli@pirelli.com. The activities carried out by the DPO
during the relevant financial year are described in detail in the “Annual Report of the DPO”, which is
available at the Company’s office, to which reference should be made for further details.
Consolidated Sustainability Reporting
Pirelli & C. S.p.A. – 2024 Annual Report
69
CONSOLIDATED SUSTAINABILITY REPORTING - PURSUANT TO
LEGISLATIVE DECREE OF SEPTEMBER 6, 2024, N. 125
GENERAL INFORMATION
Methodological note
Reporting Principles
This “Consolidated Sustainability Report”, prepared in accordance with the provisions of Legislative
Decree no. 125 of 6 September 2024, which transposed Directive (EU) no. 2022/2464 – Corporate
Sustainability Reporting Directive (CSRD), provides the information needed to understand the
Group’s impact on sustainability issues15, as well as how these factors influence the Group’s
performance, its results and its financial position.
References to the SASB Auto Parts Sustainability Accounting Standard have also been retained in
the Consolidated Sustainability Report.
The 2024 Consolidated Sustainability Report is subject to a limited review by the auditing firm
PricewaterhouseCoopers S.p.A., which is also responsible for the statutory audit of the financial
statements, and provides its conclusions regarding compliance with:
− the provisions of Legislative Decree no. 125/2024 that govern the reporting criteria;
− the compliance with the disclosure obligations set out in Article 8 of Regulation (EU) 2020/852
(Taxonomy Regulation).
For further information, please refer to the related Audit Report, based on the criteria outlined in the
International Standard on Assurance Engagements 3000 – Assurance Engagements other than
Audits or Reviews of Historical Financial Information (ISAE 3000 Revised), issued by the
International Auditing and Assurance Standards Board, and included at the end of the Annual Report.
Corporate reporting boundary
The Report, published annually, covers the time period from 1 January 2024 to 31 December 2024
and covers the same scope of consolidation as the Group’s consolidated financial statements as
expressed in the Notes to the Consolidated Financial Statements at 31 December 2024 included in
Note 2 - Basis of Presentation - Scope of Consolidation of this Annual Report. In particular, it is noted
that on 3 January 2024, 100% of Hevea-Tec, the largest independent Brazilian operator in natural
rubber processing, was acquired.
15 Environmental, social, human rights and governance factors, including sustainability factors as defined in Article 2, point 24) of
Regulation (EU) 2019/2088 of the European Parliament and of the Council
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There are no companies within this scope that are subject to the regulatory obligation to prepare an
individual Sustainability Statement for the financial year 2024.
Scope of activities subject to reporting
Where possible, this report provides information regarding the Group’s value chain, in addition to
information on its own operations. This includes an assessment of the relevance of impacts, risks
and opportunities (IROs) along the upstream and downstream value chain, an explanation of the
policies, the objectives adopted, and the actions implemented to manage these impacts, as well as
any metrics that also cover the players in the value chain.
Time frames
The definitions of short-, medium- and long-term time horizons adopted by the Company for defining
the Plans and for the Risk Assessment, are the same as those used for the preparation of this report
defined by the European Sustainability Reporting Standard 1 (ESRS 1) and therefore:
•
Short period: one year from the reference period of this report (annual budget);
•
medium term: up to five years from the end of the short-term reference period defined in the
previous point (medium-term planning);
•
long term: over five years (beyond the strategic plan).
Use of estimates
The use of estimates or proxies in this document has been limited as much as possible, including
with respect to data concerning the value chain. Whenever such estimates or proxies are used, they
are duly indicated and accompanied by contextual information.
In the ‘Environmental Information’ section, it should be noted that the information subject to estimates
mainly concerns:
•
scope 3 emissions where, in the absence of primary data, secondary emission factors are
used, including those relating to emissions associated with the use phase of the tyre,
calculated according to the PCR methodology
•
the calculation of a part of the emissions offset through carbon credits (for further details,
please refer to the paragraph ‘Greenhouse gas emission management and climate transition
plan’, ‘Metrics - Scope 1, 2, 3 GHG emissions and total GHG emissions’ and ‘Metrics - GHG
removals and GHG emission mitigation projects financed with carbon credits’)
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•
the amount of Tire Wear Loss (whose calculation methodology is illustrated in the section
‘Metrics - Measuring Absolute Emissions of Particulate Matter in the Environment’)
•
the share of end-of-life tyres (ELT) sent for recovery/recycling, calculated from literature data
on the average recovery and recycling rates of ELTs in the markets in which Pirelli tyres are
sold (for details see section “Circular Economy”, paragraph “Management of end-of-life
tyres”).
Finally, it should be noted that for some offices with shared utilities, as specific data is not available,
the values for energy consumption, water withdrawal and discharge were estimated by taking the
number of employees present on the site as a proxy.
Comparative data
This Consolidated Sustainability Report of the Pirelli Group represents the first reporting exercise in
accordance with the ESRS standards. For this reason, the Group has utilised the option provided by
the transitional provisions of the ESRS standards (ESRS 1, paragraph 136), and the quantitative
information related to the metrics has been presented with reference only to the year 2024.
Incorporation by reference
This Consolidated Sustainability Report for the year 2024 does not include incorporation by
reference to other documents.
Structure of the document
This Sustainability Report is structured in four macro-sections, as illustrated in Appendix F of the
ESRS 1:
•
General Information;
•
Environmental Information, which also includes the information required by Article 8 of
Regulation (EU) 2020/852 (Taxonomy Regulation);
•
Social Information;
•
Governance Information.
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The “General Information” section illustrates how Pirelli prepares its Consolidated Sustainability
Report, and describes:
•
the elements of the Group’s strategy that relate to or influence sustainability issues, the
business model and the value chain,
•
the ways in which the interests and views of the company’s stakeholders are taken into
account in the strategy and business model,
•
the double materiality analysis process to identify the impacts, risks, and opportunities
relevant to the Group, including how these shape its strategy and business model,
•
the governance structure established with regard to sustainability issues.
The Environmental Information, Social Information and Governance Information sections are divided
into:
•
information related to the management of impacts, risks, and opportunities, with reference to
sustainability issues identified as material following the double materiality analysis;
•
metrics required by the relevant standard;
•
additional information specific to the Pirelli Group, in particular as required by the Dow Jones
Sustainability Index (DJSI).
At the end of the Annual Report 2024, before the Independent Auditors’ Report, the following
summary table is also provided:
•
the SASB Content Index, showing the complete list of indicators reported according to the
SASB Auto Parts Sustainability Accounting Standard, indicating the relevant page in this
Consolidated Sustainability Report.
SBM-1 Strategy, business model and value chain
Strategy
Founded in 1872, Pirelli is one of the world’s leading tyre manufacturers, with 18 production plants,
including two joint venture plants in Subang (ID) and Shenzhou (CN), in 12 countries and has a
commercial presence in over 160 countries. As of December 31, 2024, the Group has 30,999
employees, of which 13,665 are based in Europe, 2,039 in Russia & MEAI, 3,812 in the APAC, 3,961
in North America, and 7,522 in South America.
The Group specialises exclusively in the Consumer market, which includes tyres for cars,
motorcycles and bicycles, it is positioned in the High Value segment (76% of 2024 turnover), with
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products designed to achieve the highest levels in terms of performance, safety, quietness and road
grip, and is also characterised by a significant technological component.
Pirelli produces tyres both in the Original Equipment sector (23% of 2024 revenues) for new cars
and motorcycle production, as well as for the Replacement Channel (77% of 2024 revenues).
Pirelli has a distinguished industrial tradition of over 150 years, which has always combined
innovation, product quality and brand strength. It is even recognised outside the world of cars and
motorcycles, and considered internationally as an icon of Italian technology, style and excellence,
and is synonymous with safety and reliability.
Through a consolidated partnership with the most prestigious car manufacturers, Pirelli has a wide
range of High Value tyres, which – as at 31 December 2024 – have over 300 approvals obtained
during 2024, which ~90% ≥19’’ and >50% specialities/EV. Pirelli has a vast commercial presence,
with a network of approximately 20,200 loyal retailer points of sale in about 50 countries, and a high
exposure to the three main High Value markets: Europe, North America and APAC (which as at 31
December 2024 together accounted for 81% of Pirelli’s revenues).
The Pirelli Group is not directly involved in the fossil fuel sector, the manufacture of chemical
products, controversial weapons or the cultivation and production of tobacco, nor does it offer goods
or services that are prohibited in any given market.
Ever with an eye on environmental and social issues, Pirelli, the first company in the tyre sector to
set itself the target of Net Zero by 2040 (approved by SBTi), has adopted a sustainability model since
2004 that is inspired by the 10 principles of the United Nations Global Compact and the ISO 26000
Guidelines.
As already disclosed to the market, on 26 February 2025 the Board of Directors of Pirelli & C.
approved the 2025 Budget, confirming the Economic and Financial Targets of the Industrial Plan
presented in March 2024, as well as the Sustainability targets for 2025, 2030, and 2040.
Pirelli integrates sustainability into its business and development model. As evidence of this, the
Group’s Industrial Plan, and in particular its sustainability targets, take into account the Company’s
material impacts and their interconnection with the sustainable development challenges arising from
global scenarios in the medium and long term, including the technological and innovation challenges
related to sustainable mobility, decarbonisation, the evolution of consumer and worker expectations,
the resilience required of global supply chains, competition for innovative materials, competition for
talent in the labour market, and last but not least, key regulations that will impact the plan’s time
horizon both with reference to the product (e.g. EURO 7) and management processes (e.g. EUDR).
The approach taken by the Pirelli strategy is to transform these challenges into opportunities for
growth, resilience and competitiveness, through measurable objectives that impact the entire value
chain.
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The objectives of the sustainability plan impact multiple stakeholders, from the Environment to
Customers, from Suppliers to Collaborators, to the communities where the company operates, and
are divided into five main pillars: Climate, Product, Nature, People, Supply Chain.
Climate: acceleration towards Net Zero
Net Zero emissions target for the entire value chain (Scopes 1+2+3)16 by 2040, with targets in line
with the Paris Agreement to keep global warming below 1.5°C, approved by the Science Based
Targets initiative (SBTi) in 2024. The decarbonisation process will involve a reduction of at least 90%
in absolute Scope 1, 2 and 3 greenhouse gas (GHG) emissions by 2040 compared to the reference
year 2018. In particular, Pirelli provides for:
- Scope 1 and 2: 60% reduction in absolute CO2 emissions by 2025 and an 80% reduction by 2030
compared to 2018;
- Scope 3: 27% reduction in absolute CO2 emissions by 2025 and a 30% reduction by 2030
compared to 2018.
An intermediate target has also been set, which aims to reduce absolute greenhouse gas emissions
by 62% for Scope 1 and 2, and by 28% for Scope 3 by 2027 compared to 2018.
In 2030, for Scope 1+2 emissions, in addition to the previously mentioned 80% reduction compared
to 2018, the remaining 20% will be offset through appropriate carbon offsetting measures, using the
best available solutions and technologies on the market at that time. This path will lead to the
achievement of carbon neutrality, supported by numerous energy efficiency projects, as well as the
purchase of 100% renewable electricity purchased from the grid by 2025 for all factories globally,
and the electrification of 75% of curing presses by 2030.
The actions supporting the decarbonisation process for Scope 1, 2, and 3 are thoroughly described
in the “Environmental Information” section, paragraph “Management of greenhouse gas emissions
and climate transition plan”, to which reference is made.
Product: performance and innovative materials
Within the scope of its Eco&Safety approach to Product Design, which involves designing products
to maximise environmental performance and safety, Pirelli has confirmed in 2024, and will further
strengthen in the coming years, its continued commitment to developing and marketing a range of
16 Scope 1: direct greenhouse gas emissions from the direct combustion of fossil fuels by the organisation within its boundaries.
Scope 2: indirect greenhouse gas emissions from the use of imported electricity, heat and steam consumed by the organisation within
its boundaries.
Scope 3: indirect emissions related to upstream and downstream activities of the company’s operations, calculated according to the
GHG Protocol and in line with SBTi criteria.
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tyres with greater durability, lower rolling resistance, greater use of innovative materials, better
performance in the wet, optimal braking distances throughout the product’s lifecycle, and capable of
guaranteeing puncture protection for those tyres equipped with the new Runforward technology. For
more details on Pirelli’s Eco&Safety strategy, please refer to the “Environmental Information” section,
and the “Management of greenhouse gas emissions and climate transition plan” paragraph and the
“Management and Circular Economy” paragraph for topics related to product environmental
performance, and the “Social Information” section, under the paragraph “Product safety,
performance and sustainability, for product safety issues”.
In terms of raw materials, Pirelli plans to steadily increase the amount of non-fossil materials in its
products, which will also help achieve Scope 3 decarbonisation targets for emissions related to raw
materials. In particular:
•
Pirelli will use over 70% bio-based and recycled materials for its best product17 by 2025. A value
that will exceed 80% by 2030 with the long-term goal of reaching 100% non-fossil materials. Pirelli
has already produced a tyre, P ZeroTM E, that contains more than 55% natural and recycled
materials, a result that exceeds the target of the previous plan, which called for the use of 43%
renewable materials by 2025 on selected product lines.
•
For the total amount of raw materials consumed, Pirelli will use 27% natural and recycled
materials by 2025 and 40% by 2030, with a commitment to progressively extend the use of bio-
based and recycled raw materials across its entire product range.
Pirelli’s Eco&Safety strategy also contributes to strengthening Pirelli’s competitive advantage,
making it attractive to investors as the development of new, high-tech solutions capable of
anticipating emerging customer needs offers new opportunities for business growth, while at the
same time reducing the Company’s risk profile.
Further details on the specific targets are provided in the “Environmental Information” section,
paragraph “Resource use and Circular economy” of this Report.
Nature: redefining the interactions between business and natural capital
•
By 2025, 100% of Pirelli’s factories and test tracks will have a biodiversity plan in line with the
LEAP (Locate, Evaluate, Assess and Prepare) approach and the five IPBES (Intergovernmental
Science-Policy Platform on Biodiversity and Ecosystem Services) drivers.
•
In 2021, in line with its commitment to protecting the forests that provide the natural rubber, Pirelli
became the first company in the world to equip a standard car with FSCTM-certified tyres, and
starting from the 2024 season, it has introduced the same certification on all tyres produced and
17 Pirelli product available on the market with the highest content of materials of natural or recycled origin in the reporting year
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used in F1®. By 2026, the goal is to use 100% FSCTM-certified natural rubber in European
production.
•
In addition, to support the goal of protecting natural resources, Pirelli has set targets aimed at
preserving the quality of water and reducing its use, favouring practices such as reuse and
recycling.
Further details on the specific targets are provided in the “Environmental Information” section,
paragraph “Biodiversity and Ecosystems” of this report.
People: the heart of growth
The culture of safety and the goal of having zero accidents at work are the pillars of Pirelli’s strategy.
Following a steady decline over the years, efforts continue to further reduce the accident frequency
rate to ~1 by 2025 and <1 by 2030, compared to 1.4118 in 2024 (expressed per million hours worked),
which represents a reduction of 71% from the base year 2015 and 17% compared to 2023.
Furthermore, specific targets have been outlined in the Company’s plan in terms of training, welfare,
gender equality (and specifically the gender pay gap and women in management), and employee
engagement.
Further details on the specific targets are provided in the “Social Information” section, paragraph “S1
Own workforce” of this report.
Supply Chain
With reference to the supply chain, Pirelli is committed to ensuring responsible business conduct
and mitigating risk along its value chain, as well as accelerating its active involvement in the
sustainable transition. Specifically, Pirelli has set targets in terms of risk assessment of its high and
medium ESG risk suppliers, of supplier involvement in training and capacity building programmes,
in order to cascade its targets to its most strategic partners.
Further details on the specific targets are provided in the “Environmental Information”, “Social
Information”, “Governance Information” sections of this report.
Finally, in line with the plan already launched in 2021, which saw the introduction of the first
Sustainability-Linked Financing framework in the sector in 2022, and the first Sustainability-Linked
Bond in benchmark size in the sector in 2023, Pirelli is committed to achieving 100% HQ Funding in
the Sustainability-Linked Format by 2025 and, as of 2024, has already reached 84.6%.
18 If calculated on the basis of 200,000 hours worked, the index value in 2024 is 0.28, the target in 2025 is ~0.2 and the target in 2030 is
<0.2.
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It should also be noted that all targets related to environmental aspects are defined on a voluntary
basis, but are also designed to anticipate potential future legislative obligations.
Business model and value chain
The wide range of products offered by Pirelli is designed, produced, controlled and marketed
following an integrated supply chain organisational model that extends from product development to
marketing.
The first phase of Pirelli’s operating model consists of product development in close collaboration
with the car manufacturers of Prestige and Premium Cars. The distinctive feature of the High Value
segment is the high degree of technological content that vehicle manufacturers require from tyre
manufacturers through product specifications. Great attention is also paid to the needs of customers
in the Replacement channel, with a range of products developed based on the needs of end
consumers in the various markets.
Pirelli pays great attention to technological innovation and carries out continuous research and
development in relation to materials, products and production processes. In the financial year 2024,
research and development costs amounted to 289.5 million euros, mainly allocated to High Value
and equal to 4.3% of group revenues (5.3% of High Value revenues).
The Group has a sales system that can reach the main markets thanks to a qualified sales network
that operates in over 160 Countries. The customers of the Group in the Original Equipment sector
are vehicle manufacturers. In the Replacement sector, the main customers of the Group are retailers,
specialised distributors and car dealers.
Pirelli’s value chain includes the procurement of goods and services (including in and out logistics),
research & development, management models and processes, production processes, product
positioning on the market, and its use and end-of-life phase. The value chain did not register any
significant change during 2024, same as for business relations.
Pirelli’s supply chain is global and includes suppliers of goods and services all over the world. With
a view to risk reduction, Pirelli favours a local-for-local supply approach.
Geographically speaking, there is slightly more interference in OECD areas than in non-OECD
areas, both in terms of the value of purchases and the number of suppliers. The value of purchases,
as well as the number of suppliers, is concentrated in OECD countries, and in particular in Europe,
while with regard to non-OECD countries, Latin America is the main supply country.
As reconfirmed over the years, the most relevant and significant purchase category is raw materials.
On the other hand, Suppliers of consumables and services, account for the majority of the total
number of suppliers, although the total value of purchases is lower than, for example, purchases of
raw materials, which, show a substantial concentration on a few operators.
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Lastly, further analysing the percentage composition in value of the mix of raw materials purchased
by Pirelli in the three-year period 2022-2024, it can be noticed that there are no particular fluctuations
over the years and that natural and synthetic rubber stably make up more than 1/3 of the raw
materials purchased.
The natural rubber supply chain - from upstream to downstream - includes producers/growers,
traders, processing plants, distribution companies and manufacturing facilities. Pirelli is at the end of
the chain, as a tyre manufacturer, and has no plantations. Pirelli intends to play an active role in the
aforementioned context, contributing to the efforts that are globally dedicated to the sustainable
management of natural rubber.
The economic, social and environmental sustainability of the natural rubber supply chain is among
the priorities of Pirelli, with the full awareness that the origins of its rubber supply chain impact in
forestry terms. With global demand for natural rubber expected to increase, sustainable
management of the related supply chain is essential to preserve forests, biodiversity and to enable
sustainable development for local communities and economies.
With reference to the downstream value chain, the sales channels include:
•
Original Equipment, addressed directly to the world’s leading car and truck makers;
•
Replacement, for the replacement of tyres on vehicles already in circulation.
Within Replacement, there are two broad types of Pirelli customers: Specialised Resellers and
Distributors.
Specialised Dealers are tyre specialists operating on the market in the role of independent
businesses and constitute a fundamental point of contact between the Group and the end consumer.
Particular attention is devoted to specialised dealers in terms of shared development to enhance the
products offering integrated with a high-quality level of service, in compliance with Pirelli values and
consumer expectations. In 2024, Pirelli can count on more than 20,000 loyal resellers globally, with
a particular concentration in Europe, Asia-Pacific and South America (over 75% of the total points of
sale). The degree of affiliation varies according to the market and the very presence of Pirelli, ranging
from a softer loyalty (Fidelity Club), which has as main objective for Pirelli territorial coverage and for
the dealer sales support, to franchise programmes, in which through the exclusive nature of the
partnership there is strong focus on business development point of sale overall, up to the maximum
degree of affiliation, represented by the presence of points of sale owned by Pirelli (290 points of
sale worldwide).
Distributors are partners who are fundamental to guaranteeing continuity in the supply of tyres to
other specialised and non-specialised resellers. They do so by offering local delivery and distribution
services throughout the entire territory. With this in mind, Pirelli is activating several programmes of
close cooperation with the most important market distributors worldwide.
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Stakeholder engagement
The role of Pirelli in an economic and social context is tied to its capacity to create value through a
multi-stakeholder approach, i.e. by sustainable and lasting growth that can reconcile the interests
and expectations of those with whom the Company interacts and especially:
•
the collaborators, who are the driving force of the Group and constitute its wealth of
knowledge;
•
customers, since the Pirelli way of doing business is based on customer satisfaction;
•
shareholders, investors and the financial community;
•
suppliers, with which it shares a responsible approach to business;
•
competitors, because improved customer service depend on fair competition;
•
institutions, government and non-government bodies;
•
local communities, starting with those in the various Countries where the Group operates on
a stable basis, while being aware of its responsibilities as a Corporate Global Citizen.
The existing interactions between stakeholders are analysed in detail in order to effectively manage
relationships with them and with a view to creating lasting and shared value.
Dialogue, interaction and involvement are calibrated to meet the specific needs for consultation with
the various types of stakeholders and include meetings, interviews, surveys, joint analyses,
roadshows and focus groups. Furthermore, the existing interactions between stakeholders are
analysed in detail in order to effectively manage relationships with them with a view to creating lasting
and shared value.
The feedback received from stakeholders contributed to the corporate evaluation of the priorities for
action, influencing the materiality of sustainability topics and the development strategy outlined in
the Industrial Plan.
In fact, the interests and views of the main stakeholders were analysed in the Double Materiality
analysis process, as detailed in the related paragraph, and within which the identification of impacts
was fuelled by the due diligence activities implemented by the Group to identify, prevent and mitigate
the negative impacts on the environment and people connected to its activities and to the value
chain, as well as the results that emerged from the stakeholder engagement activities carried out
during the year.
The Company’s dialogue with stakeholders, together with constant monitoring of studies, analyses
and research on the evolution of stakeholder expectations at a global level, on the legislation as well
as on the related best governance practices, also inform the Group’s sustainable development
strategies, its plan and related targets, with a view to meeting stakeholder expectations in a fair and
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balanced manner, in both the short and long term. In particular, the update of the Industrial Plan was
guided, among other macroeconomic factors and market trends, by the analysis of stakeholders’
expectations in the context of evolving global scenarios, as gathered through dialogue at various
levels and by international companies and ESG analysis. For further information, please refer to the
sections where the targets are discussed, in the various parts of this Report.
The interests and perspectives of stakeholders, as incorporated into the actions and targets of the
Plan, are brought to the attention of the governance, management, and control bodies and approved
by the Board of Directors, after being shared by the Strategies Committee and the Sustainability
Committee for matters within their remit. These interests and perspectives are also represented in
the analysis of Double Significance submitted to the Audit, Risk and Corporate Governance
Committee and the Board of Directors.
The latter bodies receive an annual update on the results of the Double Materiality analysis and the
final list of IROs, resulting from the consultation and collection of stakeholders’ expectations. The
Board of Statutory Auditors attends the meetings of the Audit, Risk and Corporate Governance
Committee and the Board of Directors at which the double materiality analysis is reviewed and
approved.
For more details about the specific methods of engaging with collaborators, suppliers, customers
and local communities, please refer to the sections dedicated to the main categories of stakeholders
in the following chapters, in particular collaborators (own workforce) suppliers (workers in the value
chain), local communities (affected communities) and customers (consumers and end users).
Double materiality analysis and management of impacts, risks and opportunities
In order to provide its stakeholders with an adequate representation of the Group’s activities and the
sustainability issues most relevant to the business, according to the dual “inside-out” and “outside-
in” approach, Pirelli conducted the first double materiality analysis, in accordance with the EFRAG
guidelines on the double materiality analysis process, the ESRS standards, in particular ESRS 1,
and the EFRAG IG 1: Materiality Assessment Implementation Guidance.
The impact materiality, corresponding to the “inside-out” perspective, concerns the significant
impacts of Pirelli connected to the company’s operations and the value chain, negative or positive,
actual or potential, on people or the environment, in the short, medium or long term.
Conversely, the “outside-in” perspective corresponds to the financial materiality, i.e. it takes into
account how external factors, expressed as risks and opportunities, have, or can be reasonably
expected to have, a significant influence on the development of the company, on its financial position,
economic result, cash flows, access to financing or the cost of capital in the short, medium or long
term.
Pirelli’s double relevance analysis and the relative list of material IROs, resulting from the opinions
of internal and external stakeholders, was analysed by the Strategic Sustainability Committee
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(management committee), then submitted to the Audit, Risks and Corporate Governance Committee
and approved by the Board of Directors.
The Board of Statutory Auditors attended the meetings of the Audit, Risks and Corporate
Governance Committee and the Board of Directors, where the double materiality analysis was
approved. The Pirelli Group’s double materiality analysis is updated annually.
In methodological terms, the analysis included the following main steps:
1) Analysis and understanding of the internal and external context
In the first step, in order to gain an in-depth understanding of the sustainability context in which
the organisation operates, a series of internal documents containing information on the company
profile, values and the Group’s Industrial Plan were analysed, as well as the Group’s activities,
business relationships and stakeholders. In addition, a benchmark analysis was carried out that
included comparable companies in the sector and others, in particular car and car parts
manufacturers, and companies in the manufacturing and chemical sectors. The expectations of
the main sustainability standards, sustainable finance indexes and major international
organisations (such as SASB, S&P Global Indices for Dow Jones Sustainability and the World
Economic Forum) were then analysed. Finally, the external context was analysed, taking into
account the evolution of norms and regulations in order to intercept the main trends and relevant
factors related to sustainability aspects in the tyre sector.
In addition, a mapping of the Company’s business relationships and its upstream and
downstream value chain was also carried out, identifying the key players involved, such as
suppliers of raw materials and services, distributors and specialised retailers, original equipment
customers and end customers. The mapping carried out also took into account the phases of the
product life cycle, identifying the most relevant and involved players in each phase.
With regard to the supply relationships identified, an analysis of the main raw materials and
services offered by suppliers was also conducted, with the aim of obtaining a detailed mapping
of business relationships and the most sensitive areas of the value chain.
2) Identification of potentially material impacts, risks and opportunities
The second step, aimed at identifying potentially material impacts, risks and opportunities (IRO)
for Pirelli, involved the integration of different sources and multiple company departments,
competent and expert with respect to the Company’s activities and business. This also allowed
the interests and effects of the company’s activities on stakeholders to be taken into account.
Starting from the results of the context analysis, the process of identifying the IROs considered
the characteristics of the business, the types of products, the markets and the geographical areas
in which it operates, as well as focusing on the analysis of the regulatory landscape, and on the
indications and suggestions provided by ESG indexes and standards and associations relevant
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to the sector. This process was integrated with an analysis of the different phases of the Pirelli
product life cycle. In particular, each phase of the life cycle was analysed taking into
consideration the respective geographies, resources used (raw materials, human resources),
services and activities that characterise them, as well as their respective positioning in the value
chain, the actors involved and their interests.
For the identification of impacts (impact materiality perspective), the sustainability topics, sub-
topics, and sub-sub-topics indicated by the ESRS (ESRS 1, AR 16) were taken into
consideration. This made it possible to draw up a preliminary list of impacts associated with each
topic, sub-topic, sub-sub-topic, taking into account the context analysis, the mapping of the value
chain and the product life cycle. This list was then submitted to the relevant departments for
review, in order to identify the main impacts, positive and negative, current and potential, as
relevant as possible to the Group’s business. By integrating the list of impacts with the mapping
of the Pirelli product life cycle, it was possible to identify at which stage each impact occurs or
may occur, as well as the actors in the value chain involved.
In identifying both current and potential impact, the company considered gross impact (i.e. before
mitigation actions) so as to distinguish between gross impact and impact management (i.e.
policies, actions and targets).
To identify risks and opportunities (financial materiality perspective), an analysis was carried out
of the results of the Annual Operational Risk Assessment and the Climate Change and related
Water Stress Risk Assessment, conducted by the Enterprise Risk Management (ERM)
Department. In particular, among the risks resulting from these assessments, those of
sustainability and associated with specific sustainability issues were identified, while the list of
opportunities resulting from the Climate Change and related Water Stress Risk Assessment was
supplemented with a series of opportunities identified from the analysis of reports and
documentation relevant to the Auto Parts sector. The list of impacts and opportunities was then
refined with the support of the relevant company departments.
3) Impact, risk and opportunity assessment
In the third step, the IROs identified were submitted for internal and external stakeholder
assessment to determine their relevance to Pirelli.
The impacts were evaluated, according to the impact materiality perspective, through an
anonymous survey in which the magnitude (in terms of entity, extent and irremediable nature,
the latter only for negative impacts) and the probability of occurrence in the short, medium and
long term were evaluated for each impact, based on a scale from 1 to 4.
Various categories of internal and external stakeholders were involved in the survey based on
the relevance of their expertise to the impact area of reference. Internal stakeholders are
represented by Pirelli’s senior management, composed of representatives from the various
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company departments. The main external stakeholders include suppliers, distributors, original
equipment customers, Pirelli’s partner universities and associations specific to the tyre sector.
As required by EFRAG guidelines, the so-called Affected Stakeholders and Silent Stakeholders
were involved, which are stakeholders who could be directly or indirectly affected by the activity
of the Group or its value chain, including Pirelli employees and environmental NGOs
(representing the “Nature” stakeholder).
The evolution of impact is monitored by the Company through the annual update of the Double
Materiality Analysis, as well as by periodic monitoring of performance indicators, key targets and
the safeguards in place for managing relevant sustainability issues.
The risks were evaluated using the Pirelli Enterprise Risk Management model, which is applied
at three key moments in the decision-making process aimed at achieving strategic objectives:
strategic planning (medium-/long-term); operational planning (annual and periodic); new
investment projects. It should also be noted that the Enterprise Risk Management model goes
beyond the scope of these three steps, through continuous monitoring and management of
operational risks and assessment of potential reputational and ESG risks that could affect the
company’s strategic assets (tangible and intangible).
The model requires that, at least once a year and with the involvement and support of all
company departments, an ERM assessment is carried out to identify the main risk areas. The
assessment scales range from 1 to 4 and are used to evaluate the impact, in economic-financial
terms (EBIT, Contribution Margin, Net Sales, Net Cash Flow), and the likelihood of the event
occurring. Risks are therefore “prioritised” based on exposure for the Group regardless of the
risk category (e.g. Sustainability, Cyber or other). Following the assessment, continuous
monitoring is carried out by the ERM Department, assisted by the Risk Owners, to monitor the
progress of the mitigation plans and any emerging risks that may arise after the annual
assessment cycle. The overall risk register resulting from the assessment was then analysed to
understand which risks come directly from the impacts, from the external context and which are
generated by the presence of dependencies on human or natural resources; this was useful to
verify the completeness of the list of identified risks and to propose hypotheses for future
additions.
The evaluation of sustainability opportunities already included in the ERM Risk Assessment
process, represented by the opportunities linked to the topic of “Climate Change”, followed the
same methodology as the risks. The additional sustainability opportunities identified in previous
analyses and perfected with the involvement of the various relevant corporate departments were,
instead, assessed by Pirelli’s Senior Management within the survey, using the same assessment
scales as the ERM model.
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The double materiality analysis aimed to capture stakeholder perspectives on issues relevant to
their areas of interest or in representation of silent stakeholders. In fact, the categories of
stakeholders were involved:
-
in issues that directly or indirectly affect them (affected stakeholder, or representatives
for silent stakeholders);
-
in topics relevant to their skills and knowledge.
This method of involvement was used to avoid possible alterations in the assessment results,
which would have been caused by the evaluations of stakeholder categories that were not
experts or impacted by the topic in question.
The final results were elaborated by aggregating the evaluations provided by the different
categories of stakeholders involved, to which a different weight was assigned based on factors
such as the relevance of the stakeholder category to the Group and the knowledge of the specific
characteristics of the business.
In order to determine a materiality threshold for impacts and opportunities, as a starting point
Pirelli considered the thresholds already in use in the Enterprise Risk Management risk
assessment process.
The thresholds were identified by adopting a conservative and precautionary approach, i.e.
applying a more inclusive threshold for impacts and a higher threshold for opportunities.
Material IROs are IROs whose magnitude and likelihood scores exceed the following thresholds:
-
Impacts: Magnitude ≥ 3 or Magnitude ≥ 2.5 and Likelihood ≥ 2.5
-
Risks: Magnitude = 4, or Magnitude = 3 and Likelihood ≥ 3, or Magnitude = 2 and
Likelihood = 4
-
Opportunities: Magnitude ≥ 3 and Likelihood ≥ 3
4) Definition of material impacts, risks and opportunities
The result of the assessment process was analysed with the support of the competent corporate
departments and Senior Management, in order to verify the completeness and consistency of
the material IROs.
This process allowed us to identify the Pirelli Group’s material sustainability issues, prioritised
according to the criterion of significance and illustrated in the table below.
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Impact table
ESRS
Impact19
Time
horizon
Own
operations /
Value Chain
Effects on the
environment and
people and involvement
with respect to impacts
Topic
Subtopic
Sub-subtopic
Climate
Change
Climate
change
mitigation
- A | CO2 emissions from
Pirelli sites (scopes 1 + 2)
Short,
Medium
Own
operations
Contribution to climate
change due to
greenhouse gas
emissions from the
combustion of
hydrocarbons within
production sites during
tyre manufacturing and
from the supply chain.
- A | CO2 emissions from
Pirelli’s Suppliers (Scope 3),
for quotas related to goods
and services supplied to
Pirelli
Short,
Medium,
Long
Upstream
value chain
+ A | CO2 emissions by
Pirelli’s customers (Scope 3)
for quotas related to tyres
purchased by Pirelli
Short,
Medium,
Long
Downstream
value chain
Contribution to the
reduction of vehicle
consumption, and
consequently to CO2
emissions during use,
resulting from the
efficiency of the A/B class
tyre (rolling resistance)
Energy
- A | Use of energy from fossil
sources by Pirelli sites
(Scope 1 + 2)
Short
Own
operations
Contribution to climate
change through
atmospheric emissions
from fossil energy
consumption during tyre
manufacturing and by the
supply chain.
- P | Use of energy from fossil
sources by Pirelli suppliers
Short,
Medium,
Long
Upstream
value chain
Pollution
Pollution of air
- P | Release of pollutants
into the air by Pirelli suppliers
Short,
Medium
Upstream
value chain
Potential impact on
climate change and air
quality degradation
resulting from the
activities of Pirelli
suppliers
Microplastics
- A | Release of tread material
during tyre consumption in
the use phase
Short,
Medium,
Long
Downstream
value chain
Potential pollution of
water, air, soil, and
ecosystems due to the
release of tread material
during tyre consumption
in the use phase
Water and
marine
resources
Water
Water
consumption
Water withdrawals
Water discharges
- A | Water consumption at
Pirelli sites, including in
water-stress areas
Medium Own
operations
Contribution to the
depletion of natural
resources
- P | Water consumption by
Pirelli suppliers, including in
water-stress areas
Short,
Medium,
Long
Upstream
value chain
Biodiversity
and
ecosystems
Direct impact
drivers of
biodiversity loss
Land use change
Direct exploitation
- P | Ecosystem degradation /
land exploitation by raw
material suppliers
Short
Upstream
value chain
Contribution to
biodiversity loss and
potential damage to
ecosystems resulting
from supplier activities
19 In the “Impact” column, the letter A indicates a actual impact, while the letter P stands for potential impact
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ESRS
Impact19
Time
horizon
Own
operations /
Value Chain
Effects on the
environment and
people and involvement
with respect to impacts
Topic
Subtopic
Sub-subtopic
Circular
economy
Resources
inflows,
including
resource use
+ A | Use of recycled or
recyclable materials by Pirelli,
with a potential positive
impact on resources
conservation
Short,
Medium,
Long
Own
operations
Contribution to the
conservation of natural
resources
Resource outflows
related to products
and services
+ P | Potential contribution of
Pirelli to resource
conservation, such as
through product durability,
recyclability, etc.
Short,
Medium,
Long
Own
operations
Reduced exploitation of
natural resources through
the design of tyres with
increasingly higher
content of natural or
recycled raw materials
- P | In the downstream value
chain, waste generation,
namely end-of-life tires
(ELTs)
Short,
Medium,
Long
Downstream
value chain
Potential contribution to
human health and
environmental impacts
caused by poor
management of end-of-
life tyres (ELTs), such as
unregulated dumping, fire
risks from tyre piles, and
illegal reuse of ELTs
without safety standards.
Own
workforce
Working
conditions
Worker well-being
(Health and
safety, Work-life
balance)
+ A | Well-being of workers in
the company, in relation to
health and safety in the
workplace, existence of
working arrangements
favouring work-life balance
Short,
Medium,
Long
Own
operations
Contribution to the well-
being, satisfaction, and
improvement of working
conditions for the
company’s workforce
Working time
+ A | Efficient work
organisation, including
adherence to time limits set
by contracts, regulations,
standards and characteristics
of the business sector
Short,
Medium,
Long
Own
operations
Secure
employment
+ A | Permanent employment
contracts and employment
stability at Pirelli
Short,
Medium,
Long
Own
operations
Adequate wages
+ A | Wages of the Pirelli
workforce aligned with
contracts, regulations,
standards and characteristics
of the business sector
Short,
Medium,
Long
Own
operations
Social dialogue
Freedom of
association, […]
Collective
bargaining,
including
percentage of
workers covered
by collective
agreements
+ A | Presence of collective
agreements and opportunities
of participation for Pirelli’s
workforce
Short,
Medium,
Long
Own
operations
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ESRS
Impact19
Time
horizon
Own
operations /
Value Chain
Effects on the
environment and
people and involvement
with respect to impacts
Topic
Subtopic
Sub-subtopic
Equal treatment
and opportunities
for all
Gender equality
and equal pay for
work of equal
value
Diversity
+ A | Equal Opportunities in
the workplace at Pirelli,
respect for gender diversity
and other minorities, equal
pay for work of equal value
between genders
Short,
Medium,
Long
Own
operations
Psycho-physical
wellbeing of employees,
influence on people’s
culture with positive
impact both within the
company and in the
community outside the
company due to the
values conveyed.
+ A | Commitment to
achieving gender balance at
Pirelli
Short,
Medium,
Long
Own
operations
Training and skills
development
+ A | Training and skills
development of Pirelli
workers throughout their
working lives
Short,
Medium,
Long
Own
operations
Growth prospects,
improving employee skills
and maintaining a high-
quality workforce with
benefits for both the
company and the
economic and social
context in which it
operates
Workers in
the value
chain
Working
conditions
Equal treatment
and opportunities
for all
Secure
employment
Working time
Adequate wages
Social dialogue
Freedom of
association,
including the
existence of works
councils
Collective
bargaining
Work-life balance
Health & Safety
Gender equality
and equal pay for
work of equal
value
The employment
and inclusion of
persons with
disabilities
Measures against
violence and
harassment in the
workplace
Diversity
+ A | Compliance with
contractual rules, freedom of
association, job stability,
adequate working conditions,
and equal treatment for the
workforce of Pirelli suppliers
Short,
Medium,
Long
Upstream
value chain
Contribution to the well-
being, satisfaction, and
improvement of working
conditions for the
workforce throughout
Pirelli’s supply chain
Training and skills
development
+ A | Training and
development of skills
throughout the entire working
life of employees of suppliers
Short,
Medium,
Long
Upstream
value chain
Improvement of
employee skills and
maintenance of a high-
quality workforce along
the supply chain
Other work-related
rights
Child Labour
Forced labour
Adequate housing
- P | Violation of human rights
at Pirelli suppliers, e.g.
through the use of child or
forced labour
Short,
Medium,
Long
Upstream
value chain
Potential violation of
human dignity and
compromise of workers’
fundamental rights along
the supply chain.
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ESRS
Impact19
Time
horizon
Own
operations /
Value Chain
Effects on the
environment and
people and involvement
with respect to impacts
Topic
Subtopic
Sub-subtopic
Affected
communities
Communities’
economic, social
and cultural rights
Land-related
impacts
+ A | Community
development in areas where
Pirelli operates through
specific initiatives
Short,
Medium,
Long
Downstream
value chain
Contribution to the well-
being and improvement
of the quality of life of
local communities
Consumers
and end
users
Information-related
impacts on
consumers and/or
end-users
Freedom of
expression
+ A | Dedicated channels for
listening of customers
Short,
Medium,
Long
Downstream
value chain
Contribution to customer
satisfaction and the ability
to make informed choices
Access to (quality)
information)
+ A | Availability of adequate
information about Pirelli
products for customers
Short,
Medium,
Long
Downstream
value chain
Personal
safety of
consumers
and/or end
users
Health & Safety
Security of a
person
- P | Occurrence of accidents
caused by product
characteristics/defects
Short,
Medium,
Long
Downstream
value chain
Contribution to road
safety by reducing
possible car accidents
thanks to tyres that meet
the highest quality and
safety standards.
Business
conduct
Corporate culture
+ A | Sharing and
dissemination of the
company’s rules and
principles with internal and
external stakeholders
Short,
Medium,
Long
Own
operations
Management of
relations with
suppliers including
payment practices
+ A | Development of local
supply chains
Medium,
Long
Upstream
value chain
Corruption
and bribery
Prevention and
detection including
training
Incidents
- P | Corruption, illegal
conduct within Pirelli’s
operations
Short,
Medium,
Long
Own
operations
The topics marked with the symbol are topics that have been identified as relevant based on the
double perspective of Impact and Financial Materiality and have therefore been deemed by the
Group to be of greater importance. In particular, the topics of Climate Change, Circular Economy,
Consumer Safety and Corruption are considered the most relevant for the Group, given that these
are the topics for which material impacts, risks and opportunities have been jointly identified. To this
end, Pirelli has taken steps to implement appropriate controls and activities to manage impacts,
mitigate risks and seize opportunities with a view to sustainable development.
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Risks and opportunities table
ESRS
Risk/opportunity20
Own operations /
Value Chain
Topic
Subtopic
Sub-subtopic
Climate
Change
Climate change
mitigation
R: Risk of delays by the supply chain in achieving the
CO2 targets communicated to the market and the
consequent impact on sustainable finance/claims by
investors
Own operations -
Upstream value
chain
R: Tightening of carbon taxes in countries where Pirelli
manufactures
Own operations
O: Increased market share related to the ability to
respond quickly to requests for low-emission products
before competitors
Own operations
O: Increase in market share related to the rapid growth of
the electric market
Own operations
Circular
economy
Resources inflows,
including resource
use
R: Increase in the cost of “carbon-intensive” goods (e.g.
steel, aluminium) following introduction of the Carbon
Border Adjustment Mechanism (CBAM)
Own operations
O: Competitive advantage from early adoption of circular
economy solutions and technologies such as
management of resource scarcity and product end-of-life.
Own operations -
Downstream value
chain
O: Cost reduction as a result of AI “predictive
maintenance” measures that minimise errors and failures
on machinery, resulting in reduced material waste.
Own operations
Consumers
and end users
Personal safety of
consumers and/or
end users
Health & Safety
Security of a
person
O: Increased market share due to increasingly safe
products, for example thanks to intelligent and connected
tyres that transmit useful information for safe mobility in
real time
Own operations -
Downstream value
chain
Business
conduct
Corruption and
bribery
Prevention and
detection
including training
Incidents
R: Non-compliance with company criminal regulations
(e.g. 231/2001)
Own operations
R: Non-compliance with anti-corruption rules and
regulations
Own operations
The findings of the analysis, together with stakeholder assessments and expectations, are
considered in updating Group objectives and strategies.
For each relevant issue, Pirelli implements a series of actions, in order to adequately manage
impacts and/or risks and pursue opportunities, in addition to its policies and existing targets. The
business model, strategy and decision-making processes take into account risks and opportunities,
leading to the adoption of the mitigation and adaptation measures described in this Report. They
also affect the value chain, determining the evolution of relationships with suppliers and partners,
and promoting sustainable practices throughout the production cycle.
With specific reference to environmental issues, the process of identifying the IROs included a
particular focus on the product life cycle and on the activities carried out by the actors in the upstream
and downstream value chain, as illustrated in step 2 “Identification of potentially material impacts,
risks and opportunities” described above.
20 In the “Risk/Opportunity” column, the letter R stands for risk, while the letter O stands for opportunity
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Specific chapters below are dedicated to the dimensions of Climate change and Biodiversity, while
the following paragraphs provide information on pollution, water resources, and resource use and
circular economy.
In particular, the tyre use phase was analysed in order to identify any polluting emissions deriving
from the downstream value chain.
As regards the identification of the IROs connected to the size of the water resource, particular
attention was paid to the analysis of the Group’s Water Footprint, which Pirelli monitors periodically
with a view to medium-long term management and the progressive reduction of its impact on the
resource throughout the product life cycle. Particular attention was paid to evaluating water use in
Pirelli’s own operations and in the activities of the upstream value chain, since water is a part of the
production processes.
Furthermore, the main monitoring indicators were taken into account, including water consumption,
water withdrawal and water depletion, in order to identify potential impacts, including in specific
geographical areas (“water-stressed areas”).
Finally, a series of activities were carried out to examine the circular economy issue for the Pirelli
Group and identify any positive/negative impacts, with the aim of analysing the effects of the activities
carried out and the resources used in its own operations, and in the upstream and downstream value
chain. Once again, the analysis of the product life cycle phases was the starting point, followed by
the identification of the main raw materials acquired and used in the production processes, verifying
which are recycled or recyclable.
The identification of climate-related IROs
Pirelli adopts a structured approach to identify and assess the Impacts, Risks and Opportunities
(IROs) related to climate change that is fully integrated into Pirelli’s risk governance model. In order
to identify these impacts, the Group conducted an in-depth analysis of its operational activities and
value chain, examining the characteristics of the business and the Group’s Industrial Plan. This
process made it possible to identify the main sources of CO2 emissions and define the activities
necessary for their mitigation.
The analysis focused on an integrated assessment of direct emissions (Scope 1), indirect emissions
from energy consumption (Scope 2) and emissions along the value chain (Scope 3), ensuring a
complete overview of the environmental impacts associated with the Group’s operations and
products.
Pirelli periodically updates the Group’s Climate Change and related Water Risk Assessment analysis
to identify, assess, mitigate and monitor the climate risks that may affect the objectives and
operations of the Group and its value chain (both upstream and downstream).
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This process is aligned with international frameworks, such as the recommendations of the Task
Force on Climate-related Financial Disclosures (TCFD) and the European Taxonomy Regulation,
and includes a catalogue of risks that takes into account:
-
Acute and chronic physical risks: for example, extreme weather events or long-term climate
changes that can affect production sites and supply chain operations.
-
Transition risks: including technological, reputational, policy/regulatory (e.g. tightening of
carbon taxes) and market risks.
Given the different nature of the risks assessed, the metrics are adjusted to three different time
horizons in which the risk event could occur and/or have an impact on the Group. For each risk event
evaluated, three different assessments are therefore provided for the equivalent scenarios
considered: short term (by 2025), medium term (2026-30), long term (2031-50).
The Group’s exposure to acute physical risks (resulting from extreme weather events such as more
frequent and/or intense extreme weather events – e.g. cyclones, storms, floods, droughts) and
chronic physical risks (progressive changes in climate or environmental variables – e.g. increase in
average temperatures, changes in rainfall patterns, rising sea levels, degradation of ecosystems,
loss of biodiversity, water stress and scarcity of resources), is assessed globally by collecting specific
data on exposure to these events over time for each site and quantifying the potential economic
impacts for the Group with quantitative analyses, where applicable. In particular, the analysis of
physical risks was carried out both in terms of potential damage to assets (Property Damage) and
in terms of potential business Interruption days, by calibrating the climate models to historical events,
and thereby correlating the intensity of the events with consequent production downtime. In terms of
potential criticality for the Group, no significant impacts are foreseen in the short-medium term (2024-
2030), while elements of uncertainty remain on the horizon towards 2050.
The process adopted by Pirelli for the identification and assessment of the physical risks associated
with climate change involves the analysis of different climate scenarios, in line with the models
developed by the IPCC21, which include RCP 1.9/ RCP 2.6 (SSP1), RCP 4.5 (SSP2) and the high
emission scenario RCP 8.5 (SSP5)22.
Pirelli assesses the risks over three time horizons – short, medium and long term – considering the
relevance and applicability of each risk in relation to the climate scenarios under consideration. This
method allows the company to better understand the evolution of physical risks, both acute and
chronic, taking into account a wide range of possible future climate conditions.
With regard to the Group’s exposure to climate transition risks (arising from the evolution of the
regulatory, technological and market context in which Pirelli operates) at a global level, variables that
may impact the Group’s activities in terms of revenues and operating costs (such as, for example,
21 Intergovernmental Panel on Climate Change
22 RCPs (Representative Concentration Pathways) are climate change scenarios that consider different future concentrations of
greenhouse gases in the atmosphere and that imply a projected increase in global temperature at the end of the century of between
<1.5°C (RCP 1.9) and >4°C (RCP 8.5).
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the tightening of current CO2 emission pricing schemes in the countries where Pirelli operates) are
collected and analysed. The identification and assessment of transition risks related to climate
change considers the analyses on short-, medium- and long-term time horizons, with respect to three
energy transition scenarios developed by the IEA23 that include the STEPS, APS and NZE24
scenarios. This methodology allows the company to monitor the evolution of transition risks with
respect to scenarios that consider different levels of ambition and speed in implementing climate
policies.
In this regard, the introduction and/or tightening of the current CO2 emission pricing schemes in the
countries where the Group operates, could entail the risk of increased production costs for the
Company’s operations. This phenomenon could materialise not only at a European level, where the
Emissions Trading System (ETS) mechanism has already been active for years, with impacts that
are already evident in the Group’s factories in the EU, but also in other economies that already have
carbon taxation policies in place or are in the policy evaluation phase (China, Brazil, Mexico and the
UK, amongst others). The impact of the risk was evaluated in financial terms for the 2024-2050 time
period, by calculating the potential added costs for the Group based on the options described above,
should the current carbon pricing system be introduced and/or worsened.
No material impact emerged from the assessment for the short (2024-2025) and medium-term
(2030). However, uncertainty remains as to the significance of the long-term period impacts (2050)
in the event of the NZE scenario occurring. Due to the potential impacts on aspects of production,
Pirelli constantly monitors potential developments in the carbon pricing policies of the main countries
in which it operates, so as to proactively intercept any deviations from the announced targets, and
to be able to implement mitigation measures.
The potential impacts of the aforementioned physical and transition risks have been considered in
the formulation of internal short-medium term estimates. These estimates have been evaluated in
the context of the recoverability of the group’s main assets and considered in the assessment of any
potential liabilities to be recorded in the financial statements. For more information on the impacts
on the consolidated financial statements as of December 31, 2024, please refer to explanatory note
43 ‘information related to climate change’”.
The identification of biodiversity-related IROs
Pirelli considers risks and opportunities related to Biodiversity in the value chain from upstream to
downstream.
With reference to upstream activities, Pirelli requires that its suppliers implement a management
model at their sites and along their supply chain to protect biodiversity and ecosystems, with
23 International Energy Agency
24 Stated Policies Scenario (STEPS), Announced Pledges Scenario (APS), Net Zero emissions by 2050 (NZE).
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particular attention to the conservation and responsible use of natural resources, in compliance with
international standards and the laws and regulations of the countries where they operate.
With regard to the issue of Non-Deforestation, the greatest risks of deforestation in the value chain
are found in the supply chain and are related to materials of forest origin and in particular, by
materiality of use, to natural rubber.
During 2024, all Pirelli production sites and test tracks were subjected to an assessment of their
impact on and dependence on surrounding ecosystems, as well as site-specific risks and
opportunities.
In particular, the ENCORE tool was used for the impact assessment, thanks to which the impacts
were analysed for each site based on the specific product sector. In addition, environmental
indicators collected by Pirelli on site were analysed, such as water withdrawal and consumption, as
well as the concentration of substances released into the atmosphere and present in waste water.
The assessment of dependencies on neighbouring ecosystems was also conducted using public
tools and datasets; in this case, the use of ENCORE was integrated with the templates provided by
the Taskforce for Nature-related Financial Disclosure (TNFD) to determine the dependence on
ecosystem services. Based on the commodity sector to which each site belongs, the corresponding
dependencies were analysed and each one was assigned a qualitative value (low, medium, high) to
determine how relevant the loss or depletion of a specific ecosystem service was for the site, as well
as how decisive it was from an economic point of view. The site-specific analysis confirmed the water
resource as the main natural resource used by Pirelli, as well as one of the main natural assets on
which various ecosystem services depend, such as the regulation of water flows and water quality
for the local community.
In order to conduct the site-specific assessment, and understand the exposure of Pirelli’s assets to
various physical risks (such as drought, landslides, floods, water storage capacity, fires, soil, air and
water pollution) and transition risks (legislative and reputational), tools such as the Global Facility for
Disaster Reduction and Recovery (GFDRR), the Global Wildfire Information System (GWIS) and,
when available, local documents such as vegetation maps, urban development plans and/or
environmental conservation and restoration plans were used. The various tools made it possible to
assess the state of biodiversity and the condition of the ecosystems surrounding Pirelli sites. The
time period taken into consideration for the above analysis corresponds to 20 years, covering the
timeframe from 2030 to 2050. For the Pirelli sites (warehouses, production plants and test tracks),
the potential systemic risks associated with the company’s activities were not considered or analysed
in this first step of analysis. Over the next few years, the adopted analysis scenario will be updated
when new data collected by Pirelli regarding the possible impacts of company activities becomes
available, new data provided by the scientific community regarding the degradation of ecosystems
and the loss of biodiversity becomes available and/or when there are new developments from a
regulatory point of view.
In addition, for the same Pirelli sites, site-specific opportunities have been identified aimed at
improving environmental conditions near the relevant Pirelli sites and at trying to guarantee the
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continuity of the use of ecosystem services and, in particular, the reduction of water use. By way of
example, the following actions have been planned: actions to reduce water consumption through
efficiency processes; actions to reduce the withdrawal of water from natural water bodies through
processes for the recovery of rainwater and/or industrial water downstream of the processes; actions
to monitor and/or filter waste water beyond what is required by law; actions for energy efficiency,
energy conversion and renewable energy production to reduce the emission of pollutants into the
atmosphere.
Finally, an analysis was conducted on how each site of interest interacts with Key Biodiversity Areas
(KBAs), which are critical areas from a biodiversity perspective, and Protected Areas (PAs), which
correspond to protected areas.
A Biodiversity Action Plan (BAP) has been drawn up for each Pirelli site. The sites have been
analysed and prioritised to identify areas where mitigation actions could lead to the most significant
results. The extent of the impacts/dependencies and risks/opportunities related to nature were
quantified, and these in turn were linked to the five drivers of biodiversity loss and ecosystem
degradation identified by IPBES25, namely changes in land/water/sea use, resource exploitation,
climate change, pollution and invasive alien species.
Risk mitigation actions and opportunities (Key Opportunities) have been identified to address each
factor of biodiversity loss and ecosystem degradation. These actions have been recorded and
associated with specific objectives for the site in relation to the company vision of No Net Loss of
Biodiversity and the mitigation hierarchy indicated by international frameworks (avoid, reduce,
regenerate, restore) in order to contribute to the Group Biodiversity Strategy.
No consultations were held with the local communities that depend on the same natural resources
and ecosystems as the Pirelli sites during the aforementioned analyses. However, BAPs provide a
series of suggestions on local stakeholders that can be contacted for projects aimed at
environmental conservation and the sustainable use of natural resources, with the aim of involving
local communities and local stakeholders in future analysis steps.
Interaction between the material IROs and Pirelli’s strategy and business model
The interaction between the IROs, which are material for Pirelli, and the Group’s business strategy
is bidirectional. On the one hand, they influence strategic planning and the definition of short-,
medium- and long-term objectives, and on the other hand, they derive from the conduct of the
characteristic activities of the business and the implementation of the Industrial Plan.
More specifically, the results of the double materiality analysis, together with the expectations of
stakeholders identified during other engagement activities, as described in the chapter “Stakeholder
engagement”, are taken into consideration, among other factors, in strategic planning, as illustrated
25 Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services
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in the chapter “Strategy” with reference to the update of the Industrial Plan in 2024. Furthermore, in
response to each relevant issue, Pirelli implements a series of actions, in order to adequately
manage impacts and/or risks and pursue opportunities, in accordance with its policies and with a
view to achieving the Plan’s targets.
This process directly contributes to the resilience of Pirelli’s strategy and business model, as the
active management of impact and risks allows the company to adapt and respond to emerging
environmental and social challenges in a proactive manner, taking advantage of the opportunities
related to such dynamics.
The material negative impacts that emerged from the analysis mainly concern the environmental
sphere. Most of these impacts are caused by the Group’s ordinary activities, such as CO2 emissions
or water consumption, or are related to the specific nature of the business, such as the release of
microplastics from the use of tyres produced by Pirelli or the deterioration of ecosystems resulting
from the sourcing of natural rubber. These impacts, and in particular the reduction of vehicle
emissions, are addressed by the company strategy, described in the chapter “Strategy”, aimed at
producing tyres that are increasingly efficient and have less impact on the environment.
Pirelli’s ability to adapt and reduce its environmental impact, in line with global expectations, is
testimony to the resilience of its long-term strategy. Pirelli tackles environmental risks not only to
minimise damage but also to innovate and create value, exploiting the opportunities arising from
sustainable growth.
The impacts relating to the social sphere – which are mainly positive – are primarily attributable to
the implementation of the strategy and the pursuit of the targets of the Industrial Plan, which are
detailed in the sections that follow in the chapters dedicated to the discussion of the targets. This
demonstrates the Group’s strong emphasis on social responsibility throughout the value chain,
showing the ability of the business strategy and model to adapt to new challenges.
As regards the life cycle of the operational risks included in the analysis, the significant issues in
terms of exposure for the Group are monitored on a six-monthly basis in order to assess the progress
of the recovery plans.
With reference to the risks and opportunities identified within the scope of the Double Materiality
analysis, it should be noted that the relative impact on the economic-financial data mainly concerns
the effects of climate change-related risks and opportunities, and the opportunities related to the
increase in market share thanks to safer products. In particular, these issues are considered in
assessing the recoverability of goodwill and the Pirelli brand as at 31 December 2024: considering
that the Group expects in the medium term, net benefits on operating cash flows, the latter were not
considered in carrying out the impairment test while the negative effects for the failure to achieve the
targets of the plan and the related physical and transition risks were considered, with reference to
the period of the plan, in the new cash flows forecast by management for 2025 while, with reference
to the medium-long term, the impact was assessed through stress tests to assess the sustainability
of the recoverable value of goodwill and the Pirelli Brand.
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It should also be noted that as at 31 December 2024, there were no risks of probable cash outflows
emerged with respect to these risks, such as to require a specific provision in the balance sheet.
For further information, see Notes 11 ‘Intangible Assets’ and 45 ‘Other Information – Information on
Climate Change’ to the Consolidated Financial Statements.
For further details about the relationship between the material IROs and Pirelli’s strategy and
business model, please refer to the specific sections, and in particular in the section “Environmental
Information”, with reference to the dimensions of climate change and biodiversity, and in the section
“Social Information”, with reference to the company’s own workforce, workers in the value chain,
affected communities, and consumers and end users.
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Disclosure requirements in ESRS covered by the company’s sustainability statement
After having clarified, in section IRO-1 Double Materiality Analysis and Management of Impact, Risks
and Opportunities, how Pirelli determines the information to be disclosed with regard to the IROs it
has assessed as material, the disclosure requirements the Group has fulfilled in preparing its
sustainability statement, including the information deriving from other EU legislation listed in
Appendix B of Annex II of the CSRD, are set out below.
Duty of disclosure and/or
corresponding information
Obligations from other EU
legislation26;27;28;29
Disclosure
Non-material / phase-in
ESRS 2 – General information
ESRS 2 BP-1 General basis for
preparation of sustainability statement
Par. [BP-1] Methodological note,
pg. 69-72
ESRS 2 BP-2 Disclosures in relation
to specific circumstances
Par. [BP-2] Methodological note,
pg. 69-72
ESRS 2 GOV-1 The role of the
administrative, supervisory and
management bodies
Par. Sustainability Governance –
[GOV-1] Governance Structure,
pg. 113-118
ESRS 2 GOV-1 Gender diversity on
the board, paragraph 21 d)
SFDR Annex I, table 1, indicator No.
13
Commission Delegated Regulation
(EU) 2020/181630, annex II
Par. Sustainability Governance –
[GOV-1] Governance Structure,
pg. 113-118
ESRS 2 GOV-1 Percentage of board
members who are independent,
paragraph 21 e)
Commission Delegated Regulation
(EU) 2020/1816, annex II
Par. Sustainability Governance –
[GOV-1] Governance Structure,
pg. 113-118
ESRS 2 GOV-2 Information provided
to and sustainability matters
addressed by the undertaking’s
administrative, management and
supervisory bodies
Par. Sustainability Governance –
[GOV-2] Governance Structure,
pg. 113-118
ESRS GOV-3 Integration of
sustainability-related performance in
incentive schemes
Par. Sustainability Governance -
[GOV-3] Integration of
sustainability-related performance
in incentive schemes, pg. 118-119
ESRS 2 GOV-4 Statement on due
diligence
Par. Sustainability Governance -
[GOV-4] Statement on due
diligence, pg. 120-121
ESRS 2 GOV-4 Statement on due
diligence, paragraph 30
Annex I, table 3, indicator No. 10
Par. Sustainability Governance -
[GOV-4] Statement on due
diligence, pg. 120-121
26 SFDR Reference: Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability
reporting in the financial services sector (SFDR) (OJ L 317, 9.12.2019, pg. 1).
27 Pillar 3 Reference: Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential
requirements for credit institutions and amending Regulation (EU) No 648/2012 (Capital Requirements Regulation) (OJ L 176,
27.6.2013, pg. 1).
28 Benchmark Regulation reference: Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices
used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending
Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (OJ L 171, 29.6.2016, pg. 1).
29 EU Climate Law reference: Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing
the framework for achieving climate neutrality and amending Regulation (EC) no. 401/2009 and Regulation (EU) 2018/1999 (“European
Climate Law”) (OJ L 243 of 9.7.2021, page 1).
30 Commission Delegated Regulation (EU) 2020/1816 of 17 July 2020supplementing Regulation (EU) 2016/1011 of the European
Parliament and of the Council as regards the explanation in the benchmark statement of how environmental, social and governance
factors are reflected in each benchmark provided and published (OJ L 406, 3.12.2020, p. 1).
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Duty of disclosure and/or
corresponding information
Obligations from other EU
legislation26;27;28;29
Disclosure
Non-material / phase-in
ESRS 2 GOV-5 Risk management and
internal controls over sustainability
reporting
Par. Sustainability Governance -
[GOV-5] Internal Control System
on Sustainability Reporting, pg.
122-124
ESRS 2 SBM-1 Strategy, business
model and value chain
-
Par. Strategy, business model
and value chain - [SBM-1]
Strategy, pg. 72-77Par.
Strategy, business model and
value chain - [SBM-1]
Business model and value
chain, pg. 77-78
ESRS 2 SBM-1 Involvement in
activities related to fossil fuel activities,
paragraph 40 d) point i)
SFDR Annex I, table 1, indicator No. 4
Article 449 bis of Regulation (EU) No
575/2013; Commission Implementing
Regulation (EU) 2022/245331, Table 1
- Qualitative information on
environmental risk and Table 2 -
Qualitative information on social risk
Commission Delegated Regulation
(EU) 2020/1816, annex II
Not material as the Group
is not involved in activities
related to those indicated.
ESRS 2 SBM-1 Involvement in
activities related to the production of
chemicals, paragraph 40 d), point ii)
SFDR Annex I, table 2, indicator No. 9
Commission Delegated Regulation
(EU) 2020/1816, annex II
Not material as the Group
is not involved in activities
related to those indicated.
ESRS 2 SBM-1 Involvement in
activities related to controversial
weapons, paragraph 40 d), point iii)
SFDR Annex I, table 1, indicator No.
14
Article 12, paragraph 1 of Delegated
Regulation (EU) 2020/181832 and
Annex II to Delegated Regulation (EU)
2020/1816
Not material as the Group
is not involved in activities
related to those indicated.
ESRS 2 SBM-1 Involvement in
activities related to growing and
producing tobacco, paragraph 40 d)
point iv)
SFDR Article 12, paragraph 1 of
Delegated Regulation (EU) 2020/1818
and annex II of Delegated Regulation
(EU) 2020/1816
Not material as the Group
is not involved in activities
related to those indicated.
ESRS 2 SBM-2 Interests and views of
stakeholders
Par. [SBM-2] Stakeholder
engagement, pg. 79- 80
ESRS 2 SBM-3 Material impacts, risks
and opportunities and their interaction
with strategy and business model
Par. [SBM-3] Interaction between
the material IROs and Pirelli’s
strategy and business model, pg.
94-96
Phase-in: For FY 2024, the
company omitted the
information prescribed in
ESRS-2 SBM-3 (anticipated
financial effects), as
provided in Appendix C
(ESRS 1) of Delegated
Regulation (EU) 2023/2772.
ESRS 2 IRO-1 Description of the
processes to identify and assess
material impacts, risks and
opportunities
Par. [IRO-1] Double materiality
analysis and management of
impacts, risks and opportunities,
pg. 80-90
31 Commission Implementing Regulation (EU) 2022/2453 of 30 November 2022amending the implementing technical standards laid
down in Implementing Regulation (EU) 2021/637 as regards the disclosure of environmental, social and governance risks (OJ L
324,19.12.2022, p.1.).
32 Commission Delegated Regulation (EU) 2020/1818 of 17 July 2020supplementing Regulation (EU) 2016/1011 of the European
Parliament and of the Council as regards minimum standards for EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks
(OJ L 406, 3.12.2020, p. 17).
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Duty of disclosure and/or
corresponding information
Obligations from other EU
legislation26;27;28;29
Disclosure
Non-material / phase-in
ESRS 2 IRO-2 Disclosure
requirements in ESRS covered by the
undertaking’s sustainability statement
Par. [IRO-2] Disclosure
requirements in ESRS covered
by the company’s sustainability
statement, pg. 97-112
MDR-P - Policies adopted to manage
material sustainability matters
Par. [MDR-P] Main policies for
the management of IRO
materials, pg. 124-125
ESRS E1 – Climate Change
ESRS 2 GOV-3 E1 Integration of
sustainability-related performance in
incentive schemes
Par. Sustainability Governance -
[GOV-3] Integration of
sustainability-related performance
in incentive schemes, pg. 118-119
ESRS E1-1 Transition plan for climate
change mitigation
Par. Management of greenhouse
gas emissions and climate
transition plan – [E1-1] Transition
plan for climate change
mitigation, pg. 127-130
ESRS E1-1 Transition plan to reach
climate neutrality by 2050, paragraph
14
Article 2 paragraph 1 of Regulation
(EU) 2021/1119
Par. Management of greenhouse
gas emissions and climate
transition plan – [E1-1] Transition
plan for climate change
mitigation, pg. 127-130
ESRS E1-1 Undertakings excluded
from Paris-aligned Benchmarks,
paragraph 16 g)
Article 449 bis of Regulation (EU) No
575/2013; Commission Implementing
Regulation (EU) 2022/2453, Model 1:
Bank portfolio - Indicators of potential
transition risk related to climate
change: Credit quality of exposure by
sector, emissions and residual maturity
Article 12, paragraph 1, letters d) to g)
and paragraph 2 of Delegated
Regulation (EU) 2020/1818
Not relevant as the Group
is not among the
companies excluded from
the benchmarks aligned
with the Paris Agreement.
ESRS 2 SBM-3 E-1 Material impacts,
risks and opportunities and their
interaction with strategy and business
mode
Par [E1 SBM-3] Climate Change
Risk assessment and strategy
resilience, pag. 131-132
ESRS 2 IRO-1 - Description of the
processes to identify and assess
relevant climate-related impacts, risks
and opportunities
Par. Double materiality analysis
and management of impacts,
risks and opportunities - [E1 IRO-
1] The identification of climate-
related IROs, pg. 90-92
ESRS E1-2 Policies related to climate
change mitigation and adaptation
-
Par. Management of
greenhouse gas emissions
and climate transition plan –
[E1-2] Policies for managing
greenhouse gas emissions,
pg. 132-133
-
Par. Energy management –
[E1-2] Policies, pg. 151
ESRS E1-3 Actions and resources in
relation to climate change policies
-
Par. Management of
greenhouse gas emissions
and climate transition plan -
[E1-3] Actions, pg. 139-143
-
Par. Energy management –
[E1-3] Actions, pg. 154-157
ESRS E1-4 Targets related to climate
change mitigation and adaptation
-
Par. Management of
greenhouse gas emissions
and climate transition plan -
[E1-4] Targets, pg. 133-139
-
Par. Energy management –
[E1-4] Targets, pg. 151-153
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Duty of disclosure and/or
corresponding information
Obligations from other EU
legislation26;27;28;29
Disclosure
Non-material / phase-in
ESRS E1-4 GHG emission reduction
targets, paragraph 34
SFDR Annex I, table 2, indicator No. 4
Article 449 bis of Regulation (EU) No
575/2013; Commission Implementing
Regulation (EU) 2022/2453, Model 3:
Bank portfolio - Indicators of potential
transition risk related to climate
change: alignment metrics
Article 6 of delegated regulation (EU)
2020/1818
Par. Management of greenhouse
gas emissions and climate
transition plan - [E1-4] Targets,
pg. 133-139
ESRS E1-5 Energy consumption and
mix
Par. Energy management – [E1-
5] Metrics – Energy consumption
and mix, pg. 158-159
ESRS E1-5 Energy consumption from
fossil sources disaggregated by
sources (high climate impact sectors
only), paragraph 38
SFDR Annex I, table 1, indicator No. 5
and annex I, table 2, indicator No. 5
Par. [E1-5] Energy management
– Metrics – Energy consumption
and mix, pg. 157-158
ESRS E1-5 Energy consumption and
mix, paragraph 37
SFDR Annex I, table 1, indicator No. 5
Par. Energy management – [E1-
5] Metrics – Energy consumption
and mix, pg. 157-158
ESRS E1-5 Energy intensity
associated with activities in high
climate impact sectors, paragraphs 40
to 43
SFDR Annex I, table 1, indicator No. 6
Par. Energy management – [E1-
5] Metrics – Energy consumption
and mix, pg. 157-158
ESRS E1-6 Gross Scopes 1, 2, 3 and
Total GHG emissions
Par. Management of greenhouse
gas emissions and climate
transition plan – [E1-6] Metrics –
Scope 1, 2, 3 GHG emissions
and Total GHG emissions, pg.
143-148
ESRS E1-6 Gross Scopes 1, 2, 3 and
Total GHG emissions, paragraph 44
SFDR Annex I, table 1, indicators No.
1 and 2
Article 449 bis of Regulation (EU) No
575/2013; Commission Implementing
Regulation (EU) 2022/2453, Model 1:
Bank portfolio - Indicators of potential
transition risk related to climate
change: Credit quality of exposure by
sector, emissions and residual maturity
Articles 5 paragraph 1, articles 6 and 8
paragraph 1 of Delegated Regulation
(EU) 2020/1818
Par. Management of greenhouse
gas emissions and climate
transition plan – [E1-6] Metrics –
Scope 1, 2, 3 GHG emissions
and Total GHG emissions, pg.
143-148
ESRS E1-6 Gross GHG emissions
intensity, paragraphs 53 to 55
SFDR Annex I, table 1, indicator No. 3
Article 449 bis of Regulation (EU) No
575/2013; Commission Implementing
Regulation (EU) 2022/2453, Model 3:
Bank portfolio - Indicators of potential
transition risk related to climate
change: alignment metrics
Article 8, paragraph 1 of Delegated
Regulation (EU) 2020/1818
Par. Management of greenhouse
gas emissions and climate
transition plan – [E1-6] Metrics –
Scope 1, 2, 3 GHG emissions
and Total GHG emissions, pg.
143-148
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Duty of disclosure and/or
corresponding information
Obligations from other EU
legislation26;27;28;29
Disclosure
Non-material / phase-in
ESRS E1-7 GHG removals and GHG
mitigation projects financed through
carbon credits
Par. Management of greenhouse
gas emissions and climate
transition plan – [E1-7] Metrics –
GHG removals and GHG
mitigation projects financed
through carbon credits, pg. 148-
150
ESRS E1-7 GHG removals and
carbon credits, paragraph 56
Article 2 paragraph 1 of Regulation
(EU) 2021/1119
Par. Management of greenhouse
gas emissions and climate
transition plan – [E1-7] Metrics –
GHG removals and GHG
mitigation projects financed
through carbon credits, pg. 148-
150
ESRS E1-8 Internal carbon pricing
Par. Management of greenhouse
gas emissions and climate
transition plan – [E1-8] Metrics –
Setting the internal carbon
pricing, pg. 150-151
ESRS E1-9 Anticipated financial
effects from material physical and
transition risks and potential climate-
related opportunities
-
Phase-in: For FY 2024, the
company omitted the
information required in
ESRS E1-9, as provided for
in Appendix C (ESRS 1) of
Delegated Regulation (EU)
2023/2772.
ESRS E1-9 Exposure of the
benchmark portfolio to physical
climate-related risks, paragraph 66
Annex II of Delegated Regulation (EU)
2020/1818 and Annex II of Delegated
Regulation (EU) 2020/1816
ESRS E1-9 Disaggregation of
monetary amounts by acute and
chronic physical risk, paragraph 66 a)
ESRS E1-9 Location of significant
assets at material physical risk,
paragraph 66 c)
Article 449 bis of Regulation (EU) No
575/2013; points 46 and 47 of the
Commission Implementing Regulation
(EU) 2022/2453; model 5: Bank
portfolio- Indicators of potential
physical risk related to climate change:
exposures subject to physical risk
ESRS E1-9 Breakdown of the carrying
value of its real estate assets by
energy-efficiency classes, paragraph
67 c)
Article 449 bis of Regulation (EU) No
575/2013; point 34 of the Commission
Implementing Regulation (EU)
2022/2453 of the Commission; Model
2:
Bank portfolio - Indicators of potential
climate change-related transition risk:
loans secured by real estate - Energy
efficiency of secured guarantees
ESRS E1-9 Degree of exposure of the
portfolio climate-relate to
opportunities, paragraph 69
Annex II of Delegated Regulation (EU)
2020/1818
ESRS E2 - Pollution
ESRS 2 IRO-1 E2 Description of the
processes to identify and assess
relevant pollution-related impacts,
risks and opportunities
Par. [IRO-1] Double materiality
analysis and management of
impacts, risks and opportunities,
pg. 80-90
ESRS E2-1 Policies related to
pollution
Par. Air pollution along the supply
chain - [E2-1] Pirelli’s policies for
managing pollution throughout
the supply chain, pg. 165
ESRS E2-2 Actions and resources
related to pollution
-
Par. Air pollution along the
supply chain - [E2-2] Actions,
pg. 166-167
-
Par. The phenomenon of
particulate emissions from
tread wear – [E2-2] Pirelli’s
commitment, pg. 161-163
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Duty of disclosure and/or
corresponding information
Obligations from other EU
legislation26;27;28;29
Disclosure
Non-material / phase-in
ESRS E2-3 Targets related to pollution
-
Par. Air pollution along the
supply chain - [E2-3] Target,
pg. 166
-
Par. The phenomenon of
particulate emissions from
tread wear – [E2-3] Pirelli’s
commitment, pg. 161-163
ESRS E2-4 Pollution of air, water and
soil
Par. The phenomenon of
particulate emissions from tread
wear – [E2-3] Measuring absolute
particulate emissions in the
environment, pg. 163-164
ESRS E2-4 Amount of each pollutant
listed in Annex II of E-PRTR
(European Pollutant Release and
Transfer Register) emitted in air, water
and land, paragraph 28
SFDR Annex I, table 1, indicator no 8;
Annex I, table 2, indicator no 2; Annex
1, table 2, indicator no 1; Annex I,
table 2, indicator no 3
ESRS E2-5 Substances of concern
and substances of very high concern
Not material
ESRS E2-6 Anticipated financial
effects from pollution-related impacts,
risks and opportunities
Not material
ESRS E3 -Water and marine resources33
ESRS 2 IRO-1 E3 Description of the
processes to identify and assess
relevant water and marine resources-
related impacts, risks and
opportunities
Par. [IRO-1] Double materiality
analysis and management of
impacts, risks and opportunities,
pg. 80-90
ESRS E3-1 Policies related to water
and marine resources
Par. Water resource management
- [E3-1] Water management
policies, pg. 168-169
ESRS E3-1 Water and marine
resources, paragraph 9
SFDR Annex I, table 2, indicator No. 7
Par. Water resource management
- [E3-1] Water management
policies, pg. 168-169
ESRS E3-1 Dedicated policy,
paragraph 13
SFDR Annex I, table 2, indicator No. 8
Par. Water resource management
- [E3-1] Water management
policies, pg. 168-169
ESRS E3-1 Sustainability of the
oceans and seas, paragraph 14
SFDR Annex I, table 2, indicator No.
12
Not material
ESRS E3-2 Actions and resources
related to water and marine resources
Par. Water resource management
– [E3-2] Actions, pg. 171-172
ESRS E3-3 TArgets related to water
and marine resources
Par. Water resource management
– [E3-3] Targets, pg. 171-172
ESRS E3-4 Water consumption
Par. Water resource management
– [E3-4] Metrics – Water
resource, pg. 171-172
ESRS E3-4 Total recycled and reused
water, paragraph 28 c)
SFDR Annex I, table 2, indicator No.
6.2
ESRS E3-4 Total water consumption
in m3 per net revenue on own
operations, paragraph 29
SFDR Annex I, table 2, indicator No.
6.1
ESRS E3-5 Anticipated financial
effects from impact, risks and
opportunities related to water and
marine resources
Not material
ESRS E4 – Biodiversity and ecosystems34
ESRS E4-1 Transition plan and focus
on biodiversity and ecosystems in the
business strategy and model
Par. [E4-1] Biodiversity Strategy,
pg. 174-178
33 Marine resources not relevant, the information given relates only to water.
34 Topic found to be relevant only with reference to the upstream value chain
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Duty of disclosure and/or
corresponding information
Obligations from other EU
legislation26;27;28;29
Disclosure
Non-material / phase-in
ESRS 2 SBM-3 E4 Material impacts,
risks and opportunities and their
interaction with strategy and business
model
Par. [E4 SBM-3] Biodiversity
strategy, pg. 174-178
ESRS 2 IRO-1 E4 Description of the
processes to identify and assess
relevant biodiversity and ecosystem-
related impacts, risks and
opportunities
Par. Double materiality analysis
and management of impacts,
risks and opportunities - [E4 IRO-
1] The identification of
biodiversity-related IROs, pg. 92-
94
ESRS 2 IRO-1 E4 paragraph 16, letter
a), point i)
SFDR Annex I, table 1, indicator No. 7
Par. Double materiality analysis
and management of impacts,
risks and opportunities - [E4 IRO-
1] The identification of
biodiversity-related IROs, pg. 92-
94
ESRS 2 IRO-1 E4 paragraph 16, letter
b)
SFDR Annex I, table 2, indicator No.
10
Par. Double materiality analysis
and management of impacts,
risks and opportunities - [E4 IRO-
1] The identification of
biodiversity-related IROs, pg. 92-
94
ESRS 2 IRO-1 E4 paragraph 16, letter
c)
SFDR Annex I, table 2, indicator No.
14
Par. Double materiality analysis
and management of impacts,
risks and opportunities - [E4 IRO-
1] The identification of
biodiversity-related IROs, pg. 92-
94
ESRS E4-2 Policies related to
biodiversity and ecosystems
Par. E4 Biodiversity and
ecosystems - [E4-2] Policies, pg.
178-180
ESRS E4-2 Sustainable
agricultural/land-use practices or
policies, paragraph 24 b)
SFDR Annex I, table 2, indicator No.
11
Not material
ESRS E4-2 Sustainable sea/ocean
use practices or policies, paragraph 24
c)
SFDR Annex I, table 2, indicator No.
12
Not material
ESRS E4-2 Policies to address
deforestation, paragraph 24 d)
SFDR Annex I, table 2, indicator No.
15
Par. E4 Biodiversity and
ecosystems - [E4-2] Policies, pg.
178-180
ESRS E4-3 Actions and resources
related to biodiversity and ecosystems
Par. E4 Biodiversity and
ecosystems - [E4-3] Actions, pg.
182-185
ESRS E4-4 Targets related to
biodiversity and ecosystems
Par. E4 Biodiversity and
ecosystems - [E4-4] Targets, pg.
180-182
ESRS E4-5 Impact metrics related to
changes in biodiversity and
ecosystems
Not material
ESRS E4-6 Anticipated financial
effects of relevant biodiversity and
ecosystem-related risks and
opportunities
Not material
ESRS E5 – Circular Economy
ESRS 2 IRO-1 E5 Description of the
processes to identify and assess
material resource use and circular
economy-related impacts, risks and
opportunities
Par. [IRO-1] Double materiality
analysis and management of
impacts, risks and opportunities,
pg. 80-90
Pirelli & C. S.p.A. – 2024 Annual Report
Consolidated Sustainability Reporting
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Duty of disclosure and/or
corresponding information
Obligations from other EU
legislation26;27;28;29
Disclosure
Non-material / phase-in
ESRS E5-1 Policies related to
resource use and circular economy
Par. Resource use and Circular
economy - [E5-1] Policies for
sustainable resource
management and the circular
economy, pg. 187-188
ESRS E5-2 Actions and resources
related to resource use and the
circular economy
Par. Resource use and Circular
economy - [E5-2] Actions, pg.
191-200
ESRS E5-3 Objectives related to
resource use and the circular
economy
Par. Resource use and Circular
economy - [E5-3] Targets, pg.
189- 190
ESRS E5-4 Resource inflows
Par. Resource use and Circular
economy - [E5-4] Metrics -
Resource inflows, pg. 200
ESRS E5-5 Resource outflows
Par. Resource use and Circular
economy - [E5-5] Metrics -
Resource outflows, pg. 200-201
ESRS E5-5 Non-recycled waste,
paragraph 37 d)
SFDR Annex I, table 2, indicator No.
13
Not material
ESRS E5-5 Hazardous waste and
radioactive waste, paragraph 39
SFDR Annex I, table 1, indicator No. 9
Not material
ESRS E5-6 Anticipated financial
effects from resource use and circular
economy-related risks and
opportunities
Phase-in: For FY 2024, the
company omitted the
information required in
ESRS E5-6, as provided for
in Appendix C (ESRS 1) of
Delegated Regulation (EU)
2023/2772.
Disclosure pursuant to Article 8 of Regulation (EU) 2020/852 (Taxonomy)
EU regulation (2020/852): Purpose
and regulatory context
Par. EU regulation 2020/852:
Purpose and regulatory context,
pg. 202-204
Par. The taxonomy for the Pirelli
group, pg. 204
Par. Eligible economic activities
of the Pirelli Group, pg. 205-206
Par. Aligned business activities of
the Pirelli Group, pg. 207-209
Par. Social Minimum safeguards,
pg. 210-212
Par. Performance indicators, pg.
212-219
Par. Future developments, pg.
219- 220
ESRS S1- Own workforce
ESRS 2 SBM-2 S1 Interests and
views of stakeholders
Par. [SBM-2 & SBM-3]
Stakeholders’ interests and views
and interaction between IROs
and the strategy and business
model, pg. 221-222
ESRS 2 SBM-3 S1 Material impacts,
risks and opportunities and their
interaction with strategy and business
model
Par. [SBM-2 & SBM-3]
Stakeholders’ interests and views
and interaction between IROs
and the strategy and business
model, pg. 221-222
ESRS 2 SBM-3 S1 Risk of forced
labour, paragraph 14 f)
SFDR Annex I, table 3, indicator No.
13
Not relevant
ESRS 2 SBM-3 S1 Risk of child
labour, paragraph 14 g)
SFDR Annex I, table 3, indicator No.
12
Not relevant
Consolidated Sustainability Reporting
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Duty of disclosure and/or
corresponding information
Obligations from other EU
legislation26;27;28;29
Disclosure
Non-material / phase-in
ESRS S1-1 Policies related to own
workforce
-
Par. Respect for human rights
– [S1-1] Global Human Rights
Policy, pg. 231-233
-
Par. Working Conditions - [S1-
1] Policies for the Protection
of Working Conditions, pg.
235
-
Par. Diversity, Equity &
Inclusion – [S1-1] Diversity,
Equity & Inclusion Policy, pg.
238-239
-
Par. Skills Development -
Performance Management
and Training [S1-1] Policies,
pg. 247-248
-
Par. Welfare and initiatives for
the internal community - [S1-
1] Policies, pg. 255-256
-
Par. Occupational Health &
Safety – [S1-1] Pirelli’s
workforce health and safety
management Policies, pg.
266-267
ESRS S1-1 Human rights policy
commitments, paragraph 20
SFDR Annex I, table 3, indicator no. 9
and annex I, table 1, indicator no. 11
Par. Respect for human rights –
[S1-1] Global Human Rights
Policy, pg. 231-233
ESRS S1-1 Due diligence policies on
issues addressed by the fundamental
International Labor Organisation
Conventions 1 to 8, paragraph 21
Commission Delegated Regulation
(EU) 2020/1818, annex II
Par. Respect for human rights –
[S1-1] Global Human Rights
Policy, pg. 231-233
ESRS S1-1 Procedures and measures
to prevent human trafficking,
paragraph 22
SFDR Annex I, table 3, indicator No.
11
Par. Respect for human rights –
[S1-1] Global Human Rights
Policy, pg. 231-233
ESRS S1-1 Workplace accident
prevention policy or management
system, paragraph 23
SFDR Annex I, table 3, indicator No. 1
Par. Occupational Health &
Safety – [S1-1] Pirelli’s workforce
health and safety management
Policies, pg. 266-267
ESRS S1-2 Processes for engaging
with own workers and workers’
representatives about impacts
Par. [S1-2] Processes for
engaging the Company’s
workers, pg. 222-224
ESRS S1-3 Processes to remediate
negative impacts and channels for
own workers to raise concerns
Par. [S1-3] Channels for
employees to raise concerns, pg.
225-226
ESRS S1-3 Grievance/complaints
handling mechanisms, paragraph 32
c)
SFDR Annex I, table 3, indicator No. 5
Par. [S1-3] Channels for
employees to raise concerns, pg.
225-226
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Duty of disclosure and/or
corresponding information
Obligations from other EU
legislation26;27;28;29
Disclosure
Non-material / phase-in
ESRS S1-4 Taking action on material
impacts on own workforce, and
approaches to mitigating material risks
and pursuing material opportunities
related to own workforce, and
effectiveness of those actions
-
Par. Working conditions - [S1-
4] Actions, pg. 236-237
-
Par. Diversity, equity and
inclusion – [S1-4] DE&I
Actions, pg. 240-244
-
Par. Skills development -
Performance Management
and Training - [S1-4] Training
and development, pg. 248-
255
-
Welfare and initiatives for the
internal community - [S1-4]
Welfare activities, pg. 256-262
-
Welfare and initiatives for the
internal community - [S1-4]
MORE Programme (Pirelli
Global Welfare Program), pg.
262-263
-
Occupational Health & Safety
– [S1-4] Actions, pg. 268-274
ESRS S1-5 Targets related to
managing material negative impacts,
advancing positive impacts, and
managing material risks and
opportunities
-
Par. Own labour force -
Working conditions - [S1-5]
Target, pg. 236
-
Par. Diversity, equity and
inclusion – [S1-5] Target, pg.
240
-
Par. Skills Development -
Performance Management
and Training [S1-5] Target,
pg. 248
-
Par. Welfare and initiatives for
the internal community - [S1-
5] Target, pg. 256
-
Par. Occupational Health &
Safety – Target, pg. 267-268
ESRS S1-6 Characteristics of the
undertaking’s employees
Par. Pirelli employees around the
world - [S1-6] Metrics –
Characteristics of own workforce,
pg. 227-228
ESRS S1-7 Characteristics of non-
employee workers in the undertaking’s
own workforce
ESRS S1-8 Collective bargaining
coverage and social dialogue
Par. Working conditions – [S1-8]
Metrics – Collective bargaining,
pg. 237
Phase-in (for non-EEA
countries): For FY 2024, the
company omitted the
information prescribed in
ESRS S1-8, as provided in
Appendix C (ESRS 1) of
Delegated Regulation (EU)
2023/2772
ESRS S1-9 Diversity metrics
Par. Diversity, Equity and
Inclusion - Metrics - DE&I, pg.
244-245
ESRS S1-10 Adequate wages
Par. Working conditions – [S1-10]
Metrics – Adequate wages, pg.
237
Consolidated Sustainability Reporting
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Duty of disclosure and/or
corresponding information
Obligations from other EU
legislation26;27;28;29
Disclosure
Non-material / phase-in
ESRS S1-11 Social protection
Phase-in: For FY 2024, the
company omitted the
information prescribed in
ESRS S1-11, as provided in
Appendix C (ESRS 1) of
Delegated Regulation (EU)
2023/2772
ESRS S1-12 Persons with disabilities
Not material
ESRS S1-13 Training and skills
development metrics
Par. Skills development -
Performance Management and
Training - [S1-13] Training and
development, pg. 248-255
ESRS S1-14 Health and safety
metrics
Par. Occupational Health &
Safety – [S1-14] Metrics – Health
and Safety, pg 274
Phase-in: For FY 2024, the
company omitted the
information on cases of
work-related ill-health
required in ESRS S1-14, as
provided for in Appendix C
(ESRS 1) of Delegated
Regulation (EU) 2023/2772.
ESRS S1-14 Number of fatalities and
number and rate of work-related
accidents, paragraph 88 b) and c)
SFDR Annex I, table 3, indicator No. 2
Commission Delegated Regulation
(EU) 2020/1818, annex II
Par. Occupational Health &
Safety – [S1-14] Metrics – Health
and Safety, pg 274
ESRS S1-14 Number of days lost due
to injury, accident, fatality or illness,
paragraph 88 e)
SFDR Annex I, table 3, indicator No. 3
Phase-in: For FY 2024, the
company omitted the
information on number of
days lost required in ESRS
S1-14, as provided for in
Appendix C (ESRS 1) of
Delegated Regulation (EU)
2023/2772.
ESRS S1-15 Work-life balance metrics
Par. Welfare and initiatives for the
internal community - [S1-15]
Metrics – Work-life balance, pg.
263-264
ESRS S1-16 Remuneration metrics
(pay gap and total remuneration)
Diversity, equity and inclusion –
[S1-16] Metrics - DE&I, pg. 244-
245
ESRS S1-16 Unadjusted gender pay
gap, paragraph 97 a)
SFDR Annex I, table 1, indicator No.
12
Commission Delegated Regulation
(EU) 2020/1818, annex II
Diversity, equity and inclusion –
[S1-16] Metrics - DE&I, pg. . 244-
245
ESRS S1-16 Excessive CEO pay
ratio, paragraph 97 b)
SFDR Annex I, table 3, indicator No. 8
Diversity, equity and inclusion –
[S1-16] Metrics - DE&I, pg. . 244-
245
ESRS S1-17 Incidents, complaints
and severe human rights impacts
Par. Respect for human rights –
[S1-17] Metrics – Human Rights,
pg. 233-234
ESRS S1-17 Incidents of
discrimination, paragraph 103 a)
SFDR Annex I, table 3, indicator No. 7
Par. Respect for human rights –
[S1-17] Metrics – Human Rights,
pg. 233-234
ESRS S1-17 Non-respect of UNGPs
on Business and Human Rights and
OECD paragraph 104 a)
SFDR Annex I, table 1, indicator no.
10 and annex I, table 3, indicator no.
14
Annex II of Delegated Regulation (EU)
2020/1816 and Article 12, paragraph 1
of Delegated Regulation (EU)
2020/1818
Par. Respect for human rights –
[S1-17] Metrics – Human Rights,
pg. 233-234
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Duty of disclosure and/or
corresponding information
Obligations from other EU
legislation26;27;28;29
Disclosure
Non-material / phase-in
ESRS S2 – Workers in the value chain
ESRS 2 SBM-2 S2 Interests and
views of stakeholders
Par. [SBM-2] Interests and views
of stakeholders, pg. 276-277
ESRS 2 SBM-3 S2 Material impacts,
risks and opportunities and their
interaction with strategy and business
model
Par. [SBM-3] Material impacts,
risks and opportunities related to
workers in the value chain and
their interaction with the strategy
and the business model, pg. 277-
278
ESRS 2 SBM-3 S2
Significant risk of child labour or forced
labour in the value chain, paragraph
11 b)
SFDR Annex I, table 3, indicators No.
12 and 13
Par. Working conditions and
respect for human rights along
the Supply chain –. [SBM-3]
Actions, pg. 282-283
ESRS S2-1 – Policies related to value
chain workers
-
Par. Working conditions and
respect for human rights along
the Supply chain – [S2-1]
Policies for the management
of working conditions and
respect for human rights along
the Supply chain, pg. 280-282
-
Par. Training along the supply
chain - [S2-1] Policies for the
managing training throughout
the supply chain, pg. 287-288
ESRS S2-1 Human rights policy
commitments, paragraph 17
SFDR Annex I, table 3, indicator no. 9
and annex I, table 1, indicator no. 11
-
Par. Working conditions and
respect for human rights along
the Supply chain – [S2-1]
Policies for the management
of working conditions and
respect for human rights along
the Supply chain, pg. . 280-
282
ESRS S2-1 Policies related to value
chain workers, paragraph 18
SFDR Annex I, table 3, indicators No.
11 and 4
-
Par. Working conditions and
respect for human rights along
the Supply chain – [S2-1]
Policies for the management
of working conditions and
respect for human rights along
the Supply chain, pg. . 280-
282
ESRS S2-1 Non-respect of UNGPs on
Business and Human Rights principles
and OECD guideline paragraph 19
SFDR Annex I, table 1, indicator No.
10
Annex II of Delegated Regulation (EU)
2020/1816 and article 12, paragraph 1
of Delegated Regulation (EU)
2020/1818
-
Par. Working conditions and
respect for human rights along
the Supply chain – [S2-1]
Policies for the management
of working conditions and
respect for human rights along
the Supply chain, pg. . 280-
282
ESRS S2-1 Due diligence policies on
issues addressed by the fundamental
International Labor Organisation
Conventions 1 to 8, paragraph 19
Commission Delegated Regulation
(EU) 2020/1818, annex II
-
Par. Working conditions and
respect for human rights along
the Supply chain – [S2-1]
Policies for the management
of working conditions and
respect for human rights along
the Supply chain, pg. . 280-
282
ESRS S2-2 – Processes for engaging
with value chain workers about
impacts
Par. [S2-2] Processes to involve
workers in the value chain and to
remedy negative impacts,
including channels for workers in
the value chain to raise concerns
pg. 277-279
Consolidated Sustainability Reporting
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Duty of disclosure and/or
corresponding information
Obligations from other EU
legislation26;27;28;29
Disclosure
Non-material / phase-in
ESRS S2-3 Processes to remediate
negative impacts and channels for
value chain workers to raise concerns
Par. [S2-3] Processes to involve
workers in the value chain and to
remedy negative impacts,
including channels for workers in
the value chain to raise concerns
pg. . 277-279
ESRS S2-4 Taking action on material
impacts on value chain workers, and
approaches to managing material risks
and pursuing material opportunities
related to value chain workers, and
effectiveness of those actions
-
Par. Working Conditions and
Respect for Human Rights
along the Supply Chain – [S2-
4] Actions, pg. 283-287
-
Par. Training along the supply
chain – [S2-4] Actions,
pg.288-289
ESRS S2-4 Human rights issues and
incidents connected to its upstream
and downstream value chain,
paragraph 36
SFDR Annex I, table 3, indicator No.
14
-
Par. Working Conditions and
Respect for Human Rights
along the Supply Chain – [S2-
4] Actions, pg. 283-287
-
Par. Training along the supply
chain – [S2-4] Actions, pg.
288-289
ESRS S2-5 Targets related to
managing material negative impacts,
advancing positive impacts, and
managing material risks and
opportunities
-
Par. Working Conditions and
Respect for Human Rights
along the Supply Chain – [S2-
5] Targets, pg.287-288
-
Par. Training along the supply
chain – [S2-5] Targets,
pg.289-290
ESRS S3 – Affected communities
ESRS 2 SBM-2 Interests and views of
stakeholders
Par. S3 Affected communities, pg.
291-292
ESRS 2 SBM-3 Material impacts, risks
and opportunities and their interaction
with strategy and business model
Par. S3 Affected communities, pg.
291-292
S3-1 Policies related to affected
communities
Par. Pirelli’s commitment to the
external community - [S3-1]
Policies for managing relations
with the external community, pg.
294-295
ESRS S3-1 Human rights policy
commitments, paragraph 16
SFDR Annex I, table 3, indicator no. 9
and annex I, table 1, indicator no. 11
Not material
ESRS S3-1 Non-respect of UNGPs on
Business and Human Rights, ILO
principles or and OECD guidelines
paragraph 17
SFDR Annex I, table 1, indicator No.
10
Annex II of Delegated Regulation (EU)
2020/1816 and
article 12, paragraph 1 of Delegated
Regulation (EU) 2020/1818
Not material
S3-2 Processes for engaging with
affected communities about impacts
Par. [S3-2] Processes for
engaging with affected
communities about impacts,
pg.292-293
S3-3 Processes to remediate negative
impacts and channels for affected
communities to raise concerns
Par [S3-3] Processes to
remediate negative impacts and
channels for affected
communities to raise concerns,
pg.293-294
S3-4 Taking action on material impacts
on affected communities, and
approaches to managing material risks
and pursuing material opportunities
related to affected communities, and
effectiveness of those actions
Par. Pirelli’s commitment to the
external community - [S3-4]
Actions, pg. 295-321
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Duty of disclosure and/or
corresponding information
Obligations from other EU
legislation26;27;28;29
Disclosure
Non-material / phase-in
ESRS S3-4 Human rights issues and
incidents, paragraph 36
SFDR Annex I, table 3, indicator No.
14
Not material
S3-5 Targets related to managing
material negative impacts, advancing
positive impacts, and managing
material risks and opportunities
(affected communities)
Par. Pirelli’s commitment to the
external community - [S3-5]
Target, pg. 295
ESRS S4 – Consumers and end users
ESRS 2 SBM-2 S4 Interests and
views of stakeholders
Par. [SBM-2] Interests and views
of stakeholders, pg. 324-325
ESRS 2 SBM-3 S4 Material impacts,
risks and opportunities and their
interaction with strategy and business
model
Par. [SBM-3] Interests and views
of stakeholders, pg. 324-325
ESRS S4-1 Policies related to
consumers and end-users
-
Par. Transparency and
customer information - [S4-1]
Policies, pg. 329-330
-
Par. Product safety,
performance and sustainability
- [S4-1] Policies, pg. 336-338
ESRS S4-1 Policies related to
consumers and end-users, paragraph
16
SFDR Annex I, table 3, indicator no. 9
and annex I, table 1, indicator no. 11
-
Par. Transparency and
customer information - [S4-1]
Policies, pg. 329-330
-
Par. Product safety,
performance and sustainability
- [S4-1] Policies, pg. 336-338
ESRS S4-1 Non-respect of UNGPs on
Business and Human Rights and
OECD guidelines paragraph 17
SFDR Annex I, table 1, indicator No.
10
Annex II of Delegated Regulation (EU)
2020/1816 and
article 12, paragraph
1 of Delegated Regulation (EU)
2020/1818
Not material
ESRS S4-2 Processes for engaging
with consumers and end-users about
impacts
Par. [S4-2] Consumer and end
user engagement processes in
respect of impacts, pg.325-327
ESRS S4-3 Processes to remediate
negative impacts and channels for
consumers and end-users to raise
concerns
Par. [S4-3] S4-3 Channels
allowing consumers to express
concerns, pg. 327-328
ESRS S4-4 Taking action on material
impacts on consumers and end-users,
and approaches to managing material
risks and pursuing material
opportunities related to consumers
and end- users, and effectiveness of
those actions
-
Par. Transparency and
customer information - [S4-4]
Actions, pg. 331-332
-
Par. Product safety,
performance and sustainability
- [S4-4] Actions, pg. 338-343
ESRS S4-4 Human rights issues and
incidents, paragraph 35
SFDR Annex I, table 3, indicator No.
14
Not material
ESRS S4-5 Targets related to
managing material negative impacts,
advancing positive impacts, and
managing material risks and
opportunities (consumers and end
users)
-
Par. Transparency and
customer information - [S4-5]
Targets, pg. 330
-
Par. Product safety,
performance and sustainability
- [S4-5] Target, pg. 338
ESRS G1 – Business conduct
ESRS 2 GOV-1 G1 The role of the
administrative, supervisory and
management bodies
Par. Sustainability Governance -
[GOV-1] Governance Structure,
pg. 113-118
Consolidated Sustainability Reporting
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Duty of disclosure and/or
corresponding information
Obligations from other EU
legislation26;27;28;29
Disclosure
Non-material / phase-in
ESRS 2 GOV-1 G1 Description of the
processes to identify and assess
material impacts, risks and
opportunities
Par. [IRO-1] Double materiality
analysis and management of
impacts, risks and opportunities,
pg. 80-90
ESRS G1-1 Corporate culture and
Business conduct policies and
corporate culture
-
Par. Pirelli’s corporate culture
and its management model -
[G1-1] The Code of Ethics, pg.
344-345
-
Par. Pirelli’s corporate culture
and its management model -
[G1-1] Whistleblowing Policy,
pg. 345-348
-
Par. Anti-Corruption - [G1-1]
Group Anti-Corruption
Compliance Programme, pg.
351-353
ESRS G1-1 United Nations
Convention against corruption,
paragraph 10 b)
SFDR Annex I, table 3, indicator No.
15
- Par. Anti-Corruption - [G1-1]
Group Anti-Corruption
Compliance Programme, pg.
351-353
ESRS G1-1 Protection of
Whistleblowers, paragraph 10 d)
SFDR Annex I, table 3, indicator No. 6
Not material
ESRS G1-2 Management of relations
with suppliers
- Par. Management of relations
with suppliers - [G1-2] Supply
chain sustainable management
system pg. 356-360
- Par. Management of relations
with suppliers - [G1-2]
Sustainability elements in the
purchasing process: Labour,
Human Rights, Environment,
and Business Ethics, pg. 357-
362
- Par. Management of relations
with suppliers - [G1-2] Policies
for sustainable supply chain
management, pg. 362-363
- Par. Management of relations
with suppliers – [G1-2]
Targets, pg. 363-364
- Par. Management of relations
with suppliers – [G1-2] Actions,
pg. 364-366
ESRS G1-3 Prevention and detection
of corruption and bribery
- Par. [G1-3] Anti-corruption, pg.
351-352Par. Anti-Corruption -
[G1-3] Group Anti-Corruption
Compliance Programme, pg.
351-353
- Par. Anti-corruption – [G1-3]
Actions pg. 353
- Par. Anti-corruption – [G1-3]
Targets pg. 353
ESRS G1-4 Incidents of corruption or
bribery
Par. Anti-corruption – [G1-4]
Incidents of corruption or bribery,
pg. 355
ESRS G1-4 Fines for violation of anti-
corruption and anti-bribery laws,
paragraph 24 a)
Annex I, table 3, indicator No. 17
Annex II of Delegated Regulation (EU)
2020/1816
Par. Anti-corruption – [G1-4]
Incidents of corruption or bribery,
pg. 355
ESRS G1-4 Standards anti-corruption
of and anti-bribery, paragraph 24 b)
Annex I, table 3, indicator No. 16
Par. Anti-corruption – [G1-4]
Incidents of corruption or bribery,
pg. 355
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Duty of disclosure and/or
corresponding information
Obligations from other EU
legislation26;27;28;29
Disclosure
Non-material / phase-in
ESRS G1-5 Political influence and
lobbying activities
Not material
ESRS G1-6 Payment practices
Par. Management of relations
with suppliers - [G1-6] Metrics -
Payment practices, pg. 366-367
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Sustainability Governance
Governance Structure
Pirelli’s governance structure, hinged on the very best international practices, as ruled by Art. 3.4 of
the Bylaws, is structured according to the traditional model of administration and control.
The Board of Directors in office as of the date of this report was appointed by Pirelli Shareholders’
Meeting held on 31 July 2023. Its term of office will end with the approval of the financial statements
as at 31 December 2025. The Board of Directors is composed of: Jiao Jian (Chairman), Marco
Tronchetti Provera (Executive Vice Chairman), Andrea Casaluci (Chief Executive Officer), Chen
Aihua, Zhang Haitao, Chen Qian, Alberto Bradanini, Michele Carpinelli, Domenico De Sole, Fan
Xiaohua, Marisa Pappalardo, Grace Tang, Giovanni Lo Storto, Roberto Diacetti and Paola Boromei.
60% of the members of the Board of Directors are independent. Within the Board of Directors 2
members have executive roles, while there are 13 non-executive members. Furthermore, 60% of
members of the members of the Board of Directors are men, while women make up the remaining
40%, with a gender diversity ratio of 66.67%. Considering the entirety of the management and control
bodies, including the Board of Statutory Auditors, 55% of the members are men, while women
constitute the remaining 45%.
Taking into account the recommendations and principles contained in the Corporate Governance
Code, to which Pirelli adheres, the Board of Directors, at its meeting on 3 August 2023, confirmed
the establishment of the following Board Committees: Strategies Committee, Related-Party
Transactions Committee, Appointments and Successions Committee, Remuneration Committee,
Audit, Risks and Corporate Governance Committee and established the Sustainability Committee.
In particular, the Sustainability Committee – composed of the Directors Marco Tronchetti Provera
(Chairman of the Committee), Jiao Jian, Andrea Casaluci and Giovanni Lo Storto – has a supporting
role vis-à-vis the Board of Directors in the analysis of sustainability issues related to the exercise of
business activities, corporate social responsibility and the analysis of issues relevant to the
generation of long-term value, and the Audit, Risks and Corporate Governance Committee –
composed of the Directors Fan Xiaohua (Chairman of the Committee), Chen Aihua, Roberto Diacetti,
Giovanni Lo Storto and Michele Carpinelli – incorporates the roles of the control and risk committee,
with the duty of supporting the Board of Directors in its assessments and decisions regarding the
internal control and risk management system, as well as in those regarding the approval of periodic
financial and sustainability reports. With reference to sustainability reports, the Audit, Risks and
Corporate Governance Committee assesses the suitability of non-financial information to correctly
represent the business model, the Company’s strategies, the impact of its activities and the
performance results achieved, examining its content relevant to the internal control and risk
management system.
When choosing the Committee members, the Board of Directors considered as a priority the skills
and experience acquired by each director in the subjects under discussion, distributing the
appointments in order to avoid an excessive concentration of appointments being held by a limited
number of people and to encourage the exchange of multiple viewpoints and perspectives.
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The Board of Statutory Auditors in office at the Report Date was appointed by the Pirelli
Shareholders’ Meeting held on 28 May 2024. Its term of office will end with the approval of the
financial statements as at 31 December 2026. The Board of Statutory Auditors is composed of:
Riccardo Foglia Taverna (Chairman of the Board of Statutory Auditors), Maura Campra, Francesca
Meneghel, Teresa Naddeo and Riccardo Perotta as Standing Auditors, and Franca Brusco, Roberta
Pirola and Enrico Holzmiller as Alternate Auditors. The Board of Statutory Auditors carries out
supervisory activities in accordance with the terms of the regulations in force at the time.
In accordance with art. 11 of the Bylaws, the Board of Directors manages and supervises the overall
business activity, pursuing its sustainable development, and to this end is assigned powers of
administration, except those that the law or Bylaws demand be assigned to the Shareholders’
Meeting and without prejudice to the prerogatives granted to the Executive Vice Chairman (EVC)
and Chief Executive Officer, also taking into account the provisions of the Decree of the President of
the Council of Ministers dated 16 June 2023. The role of the board committees is to offer support to
the Board in relation to matters deemed worthy of further investigation, in order to ensure that there
is an effective and informed exchange of opinions about them.
On the sustainability-related matters, the Board of Directors:
-
approves the sustainability plan, integrated into the company’s strategic plans, the
implementation of which is subject to periodic monitoring.
-
approves the Double Materiality analysis, that includes the material IROs
-
includes ESG indicators in its remuneration policy, consistent with the objectives included in
the Company’s strategic plans for measuring the management performance in its annual and
medium/long-term remuneration plans;
-
has identified the Chief Executive Officer as the director in charge of sustainability matters
with the task of overseeing sustainability issues related to the company’s activities and its
dynamics of interaction with all stakeholders and implementing the guidelines defined by the
Board of Directors;
-
has set up the Sustainability Committee, a board committee with the duty of supporting the
Board of Directors in the analysis of sustainability issues related to the exercise of business
activities, corporate social responsibility and the analysis of issues relevant to the generation
of long-term value.
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The following chart illustrates the overall experience per sector of the members of the Board of
Directors:
With reference to Sustainability Governance, the Board of Directors, supported by the Sustainability
Committee, approves, upon the proposal of the Chief Executive Officer and in coordination with the
Executive Vice Chairman, the strategies and objectives for sustainable management integrated in
the Strategic Plans of the Company with reference to all areas of management, including, inter alia,
those relating to human rights, health and safety, climate change and decarbonisation, reduction of
environmental impacts of products and processes, supply chain sustainability, cyber security,
diversity and inclusion, and ESG risks and opportunities, mapping of impacts on the economy,
society, environment and human rights.
The competences of the administrative, management, and supervisory bodies on sustainability
issues and the impacts, risks, and opportunities (IROs) relevant to the Company is fostered through
induction activities, to which they have access, as well as through the systematic examination of
these issues during the meetings of the Board Committees, with the support of the Company’s
relevant management and third parties, invited for training and/or in-depth exploration of specific
topics. During 2024, the management – and in particular the Corporate General Manager, the Head
of Corporate Affairs & Governance, the Head of Compliance & Rules, the Manager responsible for
the preparation of the corporate financial documents, the Head of Financial Statements and
Administration, the Head of Consolidated Financial Statements & Accounting governance, the Head
of Sustainability and New Mobility, the Head of ESG Rating and Reporting, the Head of Internal
Audit, the EVP Sustainability, New Mobility and Motorsport, the Head of Finance, M&A and Risk
Management, the Risk Manager, the Head of Information Security, the Chief Digital Officer and the
Head of Corporate Security – regularly participated in the meetings of the Audit, Risks and Corporate
Governance Committee, contributing to the periodic and updated reporting of the Committee on
topics such as corporate governance, internal audit, compliance, corruption, sustainability reporting,
ongoing projects to ensure compliance with new obligations introduced by Legislative Decree no.
125/2024 for sustainability reporting, double materiality analysis, control framework for sustainability
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reporting, operating procedures for sustainability reporting, review plan for sustainability reporting,
risk analysis, and cybersecurity.
During 2024, management – and in particular the Head of Corporate Affairs & Governance, the EVP
& Chief Human Resources & Organisation Officer, the Head of Compensation & Benefits and the
Head of International Mobility & HR Administration – took part assiduously in the meetings of the
Remuneration Committee, contributing to a periodic and updated information of this Committee
regarding the variable components of the remuneration of Directors holding specific offices, the
General Manager and Key Managers, and the related objectives, which include those relating to
sustainability.
The Audit, Risks and Corporate Governance Committee, in the meeting held on 18 December 2024,
in support of the assurance that the members of the Board of Directors and the Board of Statutory
Auditors possess the necessary expertise in sustainability matters, including relevant impacts, risks,
and opportunities (IROs) for Pirelli in the environmental, social and governance areas, also reviewed
the progress of the induction programme aimed at the administrative, management, and control
bodies. The programme was also shared on that same date with the Board of Directors. Training
was delivered by the Company’s competent managers, supported by an external consultant expert
on the subject, before approval of the financial statements at 31 December 2024.
In addition to the above, throughout 2024, the members of the Audit, Risks and Corporate
Governance Committee were consistently informed about the initiatives carried out by the Company
to ensure compliance with the new regulations on sustainability reporting, including the update of
the operating standard aimed at defining the ESG data collection model, as well as the roles and
responsibilities of the relevant functions within the Company in the process of preparing the
consolidated sustainability reporting pursuant to Legislative Decree no. 125 of 06 September 2024.
With regard to the risk management process, the Board of Directors – with the support of the Audit,
Risks and Corporate Governance Committee – periodically and constantly assesses the risks
associated with the business in order to create long-term value for the benefit of shareholders.
Pirelli performs risk assessment and due diligence activities to identify its current and potential
impacts on economy, society, the environment, and human rights along the value chain, with a view
to identifying, preventing, mitigating and managing these impacts responsibly. The results of risk
assessments on Human Rights, Climate Change, as well as the materiality mapping of Impacts and
the related mitigation and responsible management strategies are submitted to the Audit, Risk, and
Corporate Governance Committee.
The Audit, Risks and Corporate Governance Committee, on 18 December 2024, following the
analysis of the objectives, the methodology adopted for conducting the double materiality analysis,
and the related outcomes, expressed a positive assessment of the double materiality analysis
concerning the 2024 consolidated sustainability reporting, particularly regarding the IROs (Impacts,
Risks, and Opportunities) identified as relevant at the conclusion of the double materiality analysis
and presented in the tables in the previous chapter titled “Double materiality analysis and
management of impacts, risks and opportunities”. Subsequently, the Board of Directors, considering
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the evaluations and opinion expressed by the Audit, Risks and Corporate Governance Committee,
approved the update of the results of the double materiality analysis.
The Audit, Risks and Corporate Governance Committee also took positive note of the update of the
operating procedure, originally drafted to regulate the process of preparing the non-financial
disclosure, which defines the model for collecting ESG data as well as the roles and responsibilities
of the relevant departments within the Company in the process of preparing the consolidated
sustainability report, in compliance with Legislative Decree No. 125 of 6 September 2024. This
operating procedure was subsequently approved by the Board of Directors.
Pirelli has also set up a supervisory body (the “Supervisory Body”), with the aim of creating a system
of rules to prevent the occurrence of illegal behaviour considered potentially relevant for the
purposes of application of the organisation and management model envisaged by Decree no. 231
of 8 June 2001, as subsequently amended from time to time (the “Model 231”).
The Supervisory Body in office was appointed by the Board of Directors on 3 August 2023, in
continuity with the previous body. Currently, the Supervisory Body is made up of 3 members,
specifically: Carlo Secchi (Chairman), Maura Campra (Standing Auditor, appointed by the Board of
Directors on 1 August 2024 to replace Antonella Carù, who ceased to be a Standing Auditor following
the completion of her term of office) and Alberto Bastanzio (by virtue of the office held as Executive
Vice President of Corporate Affairs, Compliance, Internal Audit, Corporate Security and Company
Secretary). The Supervisory Body satisfies the autonomy, independence, professionalism and
continuity of action requirements specified by law for that body. The Supervisory Body will remain in
office until expiry of the mandate of the Board of Directors and, therefore, until Shareholders’ Meeting
approval of Pirelli’s annual financial statements at 31 December 2025.
The strategic evolution of Group Sustainability is entrusted to the Strategic Sustainability Committee
(management committee), a body appointed in 2004, chaired by the Executive Vice Chairman and
that includes the Chief Executive Officer and the Company’s top management representing all the
organisational and functional responsibilities. The Committee holds ordinary meetings at least twice
a year and has strategic competence on sustainability issues, including human rights, health and
safety, climate change and decarbonisation, reduction of environmental impacts from products and
processes, supply chain sustainability, cybersecurity, diversity and inclusion, and ESG risks and
opportunities.
The Strategic Sustainability Committee is supported by an Operational Sustainability Committee
(management committee), chaired by the Chief Executive Officer and including the Company’s top
management, with responsibility for the operational management of the Group’s sustainability
issues, including, among others, human rights, health and safety, climate change and
decarbonisation, reduction of environmental impacts of products and processes, supply chain
sustainability, cyber security, diversity and inclusion, ESG risks and opportunities.
The organisational structure is thus made up of a Sustainability and New Mobility Department
reporting directly to the Chief Executive Officer of the company, which has oversight of the
management at a Group level and proposes plans for sustainable development to the Sustainability
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Strategic Committee (management committee). The Department avails itself of the support of: i) a
Sustainability Working Group, made up of sustainability representatives within the various central
company departments, in order to guarantee constant monitoring and coordination of strategic
programmes with an impact on the areas of competence of the specific departments; ii) the Country
Sustainability and Diversity Managers for the monitoring of activities covering all the Group’s
affiliates. The role of the Country Sustainability Manager is currently held by Country CEOs, who rely
on their direct reports for the operational management of sustainability plans at the country level.
Integration of sustainability-related performance in incentive schemes
The principles that the Group follows in order to determine and monitor the application of the
Remuneration Guidelines for Directors holding specific offices, to General Managers, Executives
with strategic responsibilities, Senior Managers and other Group Executives, are described in the
Remuneration Policy (published in the Governance section of the Pirelli website, in the
“Remuneration” subsection, and as an integral part of the Annual Report).
The remuneration policies adopted aim to fairly and appropriately reward individual contributions to
Pirelli’s success, recognising performance and the quality of professional contributions.
The purpose is twofold: on the one hand to attract, retain and motivate employees, while on the other
to reward and promote conduct that is consistent with the corporate culture and values.
Compensation policies and processes for Group management (intended as the overall Executives)
are managed by the Human Resources and Organisation department, while for non-executive
personnel they are handled on an individual Country basis, albeit with centralised supervision.
In defining the Remuneration Policy, both at the level of Short-Term Incentives (STI) and Long-Term
Incentives (LTI), the Group’s sustainability objectives aimed at managing the impacts on the
economy, the environment and people, including Human Rights, are considered, with a weighting of
15% of the STI bonus and 25% of the LTI bonus.
The Annual Incentive Plan (STI) is linked to the achievement of both economic-financial and
functional annual objectives, in addition to three sustainability objectives:
-
“Eco & Safety Volumes” placed on the market (the volume of Eco & Safety Performance tyres
out of the total tyre sales volume of the Group; Eco & Safety Performance products are the
car tyres that Pirelli produces globally and that fall into the rolling resistance and wet grip
classes A, B, as measured according to the labelling parameters established by European
standards), with a weight of 5% of the total;
-
“Accident Frequency Index” (the index measures the incidence of accidents at work in
relation to the hours worked in the year) with a weight of 5%; and
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-
“Diversity, Equity, and Inclusion: percentage of women in managerial positions” (the index
measures the number of women in managerial roles as a proportion of the total managerial
positions within the company) with a weighting of 5% of the total.
The table below shows the payout percentages for the Executive Vice Chairman and the Chief
Executive Officer, as well as the portion deriving from ESG objectives and, in particular, details of
the Climate component.
STI
Performance
Payout
Of which ESG
EVC:
Targets
125% of the GAR
19%(climate 6%)
Maximum
250% of the GAR
38%(climate 13%)
CEO
Targets
110% of the GAR
17%(climate 6%)
Maximum
220% of the GAR
33%(climate 11%)
Almost all of the Executives are also entitled to a long-term incentive plan (LTI); of the total
incentivised population, 47% are within two levels of the Chief Executive Officer, while the remaining
population (52%) is positioned from level three downwards.
The LTI Plan is based on a rolling mechanism, which does not have an ON/OFF access condition
and has the following objectives:
•
Net Cash Flow of the Group (before dividends) with a weighting of 35%:
•
Total Shareholder Return (TSR) relative to a panel of competitors (TIER 1) with a weighting of
40%;
•
CO2 emissions reduction with a weighting of 15%.
•
Positioning in the Dow Jones Sustainability Index World with a weighting of 10%;
The table below shows the payout percentages for the Executive Vice Chairman and the Chief
Executive Officer as well as the portion deriving from ESG objectives and, in particular, details of the
Climate component.
LTI
Performance
Payout
Of which ESG
EVC:
Targets
70% of the GAR
18%(climate 11%)
Maximum
200% of the GAR
50%(climate 30%)
CEO
Targets
65% of the GAR
16%(climate 10%)
Maximum
180% of the GAR
45%(climate 27%)
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Statement on due diligence
Pirelli has established and manages due diligence processes and systems in the areas of social,
environmental, and business conduct, aligned with the most advanced industry standards. The social
due diligence system is in compliance with the United Nations Guiding Principles on Business and
Human Rights and the OECD Guidelines for Multinational Enterprises, ensuring continuous
alignment between business practices and key international frameworks.
Through these processes, Pirelli is able to identify, assess, and manage the actual and potential
negative impacts arising from its operations and value chain, both upstream and downstream, also
considering the role of its products, services, and business relationships. The integration of due
diligence into governance and corporate strategy ensures that Pirelli’s activities are in line with
national and international regulations, while promoting the adoption of responsible business
practices.
Below is an overview of the information contained in the Consolidated Sustainability Report related
to the due diligence processes in the social and environmental areas, with reference to the ongoing
activities.
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Key elements of the due
diligence procedure
Sustainability Reporting Paragraphs
Integration of Due Diligence into
the Governance, Strategy and
Business Model
- ESRS-2 General Information – Sustainability Governance – Governance Structure
- Governance information - G1 Business conduct - Elements of sustainability in the
procurement process: Labour, Human Rights, Environment, and Business Ethics
Stakeholder engagement
- Social information – S1 Own workforce – Processes for the involvement of workers
in the value chain
- Social information – S2 Workers in the value chain – Processes to involve workers
in the value chain and to remedy negative impacts, including channels for workers
in the value chain to raise concerns
- Social information – S3 Affected communities – Processes to remediate adverse
impacts and channels for communities to express concerns
Identify and assess negative
impacts on people and the
environment
- Social Information – S1 Own Workforce, Respect for Human Rights
- Social Information – S2 Workers in the value chain - Working conditions and respect
for human rights along the supply chain, Policies for the management of working
conditions and respect for human rights along the supply chain
- Social information – S3 Affected communities – Processes to remediate adverse
impacts and channels for communities to express concerns
- Environmental information - E2 Pollution - Air pollution along the supply chain -
Assessment of supplier impact and corrective plan
- Environmental information - E3 Water and Marine Resources - Water resource
Management - Water Management Policies
Intervention to address negative
impacts on people and the
environment
- Social Information – S1 Own Workforce, Respect for Human Rights
- Social information – S2 Workers in the value chain - Working conditions and respect
for human rights along the supply chain – Actions
- Governance information - G1 Business conduct - Anti-Corruption, Actions
- Governance Information - G1 Business conduct – Management of relations with
suppliers, Actions
Monitoring the effectiveness of
these efforts
- Environmental information - Air pollution along the supply chain - Assessment of
supplier impact and corrective plan
- Social Information – S1 Own Workforce, Respect for Human Rights, Metrics
- Social Information - S2 Workers in the Value Chain - Working Conditions and
Respect for Human Rights along the Supply Chain, Actions
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Internal Control System on Sustainability Reporting
In order to guarantee the completeness and reliability of the information reported in this Sustainability
Statement, during 2024 the Group updated the Internal Control System on Sustainability Reporting
(hereinafter referred to as “SCIIS”) already in place for the purposes of the Non-Financial Disclosure
(pursuant to Legislative Decree 254/2016), taking the leading practices in the field of internal control
systems as a reference, including the “Internal Control Integrated Framework” issued by the
Committee of Sponsoring Organisations of the Treadway Commission (COSO).
The Pirelli control system consists of:
An Operating Procedure that defines the roles and responsibilities of the various
departments involved in the process of drafting and controlling the Sustainability
Statement;
A framework of first-level controls, aimed at guaranteeing greater assurance regarding
the correct reporting of non-financial information (as detailed below);
Second-level controls, aimed at verifying the correct and effective implementation of the
above-mentioned first level controls – through independent random testing;
Verification, following a circulation activity, of the quantitative data contained in the
Sustainability Statement;
Certification by the Group department managers (and, insofar as within their remit, by the
CEOs of the subsidiaries) of the information included in the Sustainability Statement.
Furthermore, in order to comply with the new regulations introduced by the Corporate Sustainability
Reporting Directive and implemented within Legislative Decree 125/2024 and, in particular, to ensure
ever greater integration between Sustainability Reporting and Financial Reporting, Pirelli has
included the certification of sustainability information among the responsibilities of the Manager
Responsible to certify the sustainability reporting, who is already in charge of the financial reporting
processes.
In particular, the implementation of SCIIS has provided for:
•
Identification of risks (based on mapping the processes of generation, collection and
consolidation of information relevant to the Group);
•
the definition of controls to cover all identified risks, at local and HQ level;
•
the definition of a testing strategy (which considers: relevance of the data, probability of error and
contribution of local entities to the consolidated Group total), aimed at defining the scope of
second-level control activities on the effective implementation of the SCIIS.
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The main risks identified with respect to the drafting of the Sustainability Statement are:
•
the risk of inaccuracy and/or incompleteness of the data, monitored through the definition of
controls aimed at verifying:
•
the validity of the primary source of the data,
•
the calculations and/or estimates made in the processing of the data,
•
the presence of adequate approval/review flows by management,
•
the presence of adequate supporting documentation,
all referring to the phases of generation, retrieval, processing, consolidation and reporting;
•
the risk of non-compliance with ESRS requirements, monitored through specific certifications by
the management of the departments responsible for the data; the Group has also prepared a
reporting manual as a reference for management in analysing data compliance with the
requirements of the standards.
Any critical issue detected within the SCIIS is analysed and its impact (current or potential) on the
data included in the Sustainability Statement is evaluated, adopting the appropriate corrective
actions, which consist of:
Definition of an action plan to analyse the causes of the critical issues detected and
implement the appropriate corrective actions, involving the departments responsible for
the processes;
Evaluation of the opportunity to modify the defined control framework (for example,
possible modification to the design of existing controls and/or definition of additional
compensatory controls);
Updating of the risk assessment and therefore of the testing strategy for the following
year.
The Board of Directors, with the support of the Audit, Risks and Corporate Governance Committee:
defines the guidelines for the internal control and risk management system, in line with the
Group’s strategies;
assesses the adequacy of the internal control and risk management system;
examines the periodic reports prepared by the Manager Responsible to certify the
sustainability reporting on the effectiveness of the internal control system and in particular on
the critical issues that emerged from the second-level control activities and/or the circulation
activity (independent verification of the data reported and the related information sources).
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The Board of Statutory Auditors attends the meetings of the Audit, Risks and Corporate Governance
Committee and the Board of Directors.
Main policies for the management of material IROs
At the end of 2024, the Group consolidated the body of the Main Sustainable Management Policies
in the following documents:
-
Pirelli’s Code of Ethics
-
The “Group Code of Conduct”
-
the “Global Human Rights” Policy
-
the “Health, Safety and Environment” Policy
-
the “Social Responsibility for Health, Safety and Rights at Work, Environment” Policy
-
the “Diversity, Equity & Inclusion” Policy
-
the “Product Stewardship” Policy
-
the “Global Quality” Policy
-
the “Supplier Code of Conduct”
-
the “Green Sourcing” Policy
-
the “Sustainable Natural Rubber Management Policy”
-
The “Group Code of Conduct”
-
The “Anti-Corruption” Programme
-
the “Whistleblowing” Policy
The Policies and updates of existing Policies are approved by the Executive Vice-Chairman or the
Chief Executive Officer or by the Board of Directors of Pirelli & C. S.p.A. (supported by the
Committees set up within the Board of Directors).
The Code of Ethics and Policies apply to all Pirelli operations, including commercial relations with
third parties. All business partners (joint ventures, suppliers, etc.) are also required to respect the
principles contained in the Code.
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In accordance with the approval process for company regulations established by Pirelli, the contents
of the Code of Ethics and Policies were shared with all company departments involved in their
implementation and validated by top management before approval and issuance.
The implementation of the Code of Ethics and Policies is the responsibility of Pirelli’s top
management, which operates with the support of the competent company departments and in
coordination with the various other departments involved in different capacities.
The Code of Ethics and the Policies are made available to employees in the corresponding section
of the company Intranet and, whenever a new Policy or an update to the current ones is published,
it is promptly communicated to employees via email. Depending on the circumstances and the type
of Policy in question, initiatives to strengthen communication and awareness may be undertaken,
such as publishing news on the company intranet and posting on the noticeboards of the Group’s
offices. These initiatives are aimed at supporting the implementation of the Policies, considering the
materiality of the impacts based on the roles of the specific departments, with a view to maximum
effectiveness. Moreover, the Group has implemented processes aimed at providing new employees,
upon their hiring, with a copy of the most relevant Policies in force (via email or hard copy), for their
acknowledgement and acceptance.
In the event of a violation of the established principles of company Policies, or related Procedures,
by its employees (by way of example and not limited to the context of: health and safety, anti-
corruption, antitrust, information security, etc.), Pirelli applies the sanctions provided for by the
company disciplinary system in compliance with collective labour agreements, company procedures
and applicable regulations in the countries where Pirelli operates.
All the documents listed are also published and made available to all interested stakeholders on the
Pirelli website in the languages of the main countries where Pirelli operates.
The plans and performances in the areas covered by all the Policies referred to here are discussed
and approved by the Sustainability Strategic Committee (management committee) and are included
in the Sustainability Plans as well as the results presented, discussed and approved by the Board of
Directors. Furthermore, Pirelli reports the plans and results in these areas in this Group Annual
Report, subject to approval by the Board of Directors.
More details about the policies mentioned are contained in the sections Environmental Information,
Social Information and Governance Information.
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ENVIRONMENTAL INFORMATION
E1 Climate change
Management of greenhouse gas emissions and climate transition plan
Following the Double Materiality analysis, the following material impacts, risks and opportunities
related to the management of CO2 emissions along Pirelli’s entire value chain were identified.
Impacts:
CO2 emissions from Pirelli sites (Scope 1 + 2).
CO2 emissions from Pirelli’s suppliers (Scope 3) for quotas related to goods and services
supplied to Pirelli.
CO2 emissions from Pirelli customers (Scope 3) for quotas related to tyres purchased from Pirelli.
Risks:
Risk of delays by the supply chain in achieving the CO2 targets communicated to the market,
with the consequent impact on sustainable finance and possible disputes by investors.
Tightening of carbon taxes in countries where Pirelli manufactures.
Opportunities:
Increased market share linked to the ability to quickly respond to the demand for low-emission
products before competitors.
With respect to the issue of climate change, Pirelli’s commitment to transparent corporate reporting
on the issue has been a priority since it formally joined the Task Force on Climate-related Financial
Disclosures (TCFD) in September 2018.
To this end, following the guidelines of this standard (which in 2023 were fully incorporated into the
IFRSs35 of the International Sustainability Standards Board, thus concluding the work of the Task
Force), Pirelli publicly reports this information both in its Annual Report and through the CDP Climate
Change programme where, again in 2024, it was confirmed as one of the leading companies, having
been awarded the “A list”.
35 International Financial Reporting Standards
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In detail, the coverage of climate change issues covers all 4 areas and 11 recommendations
identified by the TCFD, as detailed in the following sections of this report:
GOVERNANCE (Oversight by the Board of Directors; Role of Management) in “General
Information” – “Governance Structure”.
STRATEGY (Climate-related risks and opportunities in the short, medium and long term;
Impacts of climate-related risks and opportunities; Resilience of strategy) in “Environmental
Information” – “E1 Climate Change”, “Transition Plan for Climate Change Mitigation” and
“Climate Change Risk assessment and strategy resilience”.
RISK MANAGEMENT (Identification and assessment processes; Management processes;
Integration into overall risk management) in “General Information” – “The identification of
climate-related IROs”.
METRICS AND TARGETS (Metrics Used; GHG Emissions; Targets) in “Environmental
Information” – “E1 Climate Change”, “Transition Plan for Climate Change Mitigation”, “Targets”
and the various paragraphs referring to the metrics.
In particular, with regard to governance, the Board of Directors of Pirelli & C. S.p.A., supported in its
activities by the Sustainability Committee, approves, at the proposal of the Chief Executive Officer
and in coordination with the Executive Vice Chairman, the environmental management strategy and
targets integrated into the Industrial Plan, including those relating to climate change and
decarbonisation, and discusses their performance at least once a year during the approval of the
financial results.
In turn, Pirelli’s top management also plays a strategic role in the full implementation of Pirelli’s
Environmental Management Model and related strategic objectives on this matter.
Transition plan for climate change mitigation
The Pirelli Group has adopted a specific Transition Plan for climate change mitigation in order to
support the strategic evolution of the business model with respect to the objectives of the Paris
Agreement. The Transition Plan is included in Pirelli’s Industrial Plan, being integrated into the
Company’s general strategy, and follows its approval process, for which see section “General
information, the paragraph “Strategy, business model and value chain”.
In line with the ambition to limit global warming to 1.5°C, Pirelli has defined new short-to-medium-
and long-term decarbonisation targets for the reduction of climate-altering gas emissions, which
concern both the Group (at the level of production processes, raw materials and products) and the
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value chain, expecting to reach Net Zero emissions by 2040, 10 years ahead of the indications given
by the EU36 with the European Climate Law.
In detail, compared to 2018 values, absolute greenhouse gas emissions of Scopes 1 and 2 are
expected to be reduced by 60% by 2025 and 80% by 2030, while for Scope 337 by 27% by 2025 and
30% by 2030. The achievement of the Net Zero target is set, as mentioned, to 2040 and requires
the absolute greenhouse gas emissions of Scopes 1, 2 and 338 to be decreased by at least 90%
compared to the values of the base year 2018.
In 2024, all of these targets were approved by the Science Based Targets initiative (SBTi), in line
with the most ambitious scenario of the Paris Agreement to keep global warming within 1.5°C,
following Pirelli’s achievement of the previous targets already validated by SBTi two years in
advance.
In the decarbonisation path towards Net Zero, Pirelli also envisages intermediate targets to 2027 to
reduce absolute greenhouse gas emissions by 62% for Scopes 1 and 2 and by 28% for Scope 3,
compared to 2018. Moreover, by 2030 it is committed to achieving Group Carbon Neutrality (Scope
1 and 2) by neutralising the remaining emissions related to the expected 80% reduction compared
to 2018, with high quality carbon credits, generated by projects to reduce and prevent greenhouse
gas emissions or to permanently remove carbon from the atmosphere, which will be certified and
internationally recognised when purchased as best practice for compliance and effectiveness.
Pirelli’s Transition Plan includes investment programmes to innovate products and production
processes from a low-carbon perspective, energy efficiency projects and initiatives to promote
access to renewable energy sources in order to accelerate the gradual phase-out from fossil fuels
(gas and oil derivatives), in line with the recommendations that emerged at COP28 in Dubai.
The levers identified by Pirelli to achieve the decarbonisation targets include numerous transversal
initiatives at the level of production processes, raw materials and products. These include:
•
at production processes level, these include the use by all the Group’s factories of 100%
renewable electricity purchased from the grid by 2025, a programme to implement more than 90
energy efficiency projects over the period 2022-2025, and the electrification of 75% of the tyre
curing presses in the Group’s factories by 2030. In addition to these, recurring actions are
implemented in the factories to reduce energy consumption, the gradual transition to the use of
36 Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving
climate neutrality and amending Regulation (EC) no. 401/2009 and Regulation (EU) 2018/1999 (“European Climate Law”)
37 Scope 3 emissions of categories 1, 3 and 4 according to the GHG Protocol, respectively generated by the purchase of raw materials,
activities linked to fuel and energy use, and the transport and distribution of raw materials and finished products.
38 Scope 1: direct greenhouse gas emissions from the direct combustion of fossil fuels by the organisation within its boundaries; Scope
2: indirect greenhouse gas emissions from the use of electricity, heat and steam imported and consumed by the organisation within its
boundaries; Scope 3: indirect emissions related to the upstream and downstream activities of the company’s operations, calculated
according to the GHG Protocol (which includes all categories of the value chain excluding the “use phase” charged to Car Manufacturer
Customers) and in line with SBTi requirements.
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non-fossil fuels, the improvement and streamlining of production processes with a focus on
resource efficiency.
•
in terms of raw materials, Pirelli aims to increase the quantity of natural-origin (bio-based39) and
recycled40 materials in its products, with a target by weight on its best product41 of more than
70% in 2025 and more than 80% in 2030, with the ambition of reaching 100% non-fossil origin
in the long term. At the same time, Pirelli is committed to promoting decarbonisation throughout
the supply chain and optimising the efficiency of material use by reducing its consumption.
•
at product level, in line with Pirelli’s Eco & Safety Design42 strategy, the goal is to have, by 2025,
over 70% of new car products, i.e. the new labelled IP Codes, considered at Group level,
classified A or B for rolling resistance, i.e. highest (A) and high (B) tyre energy efficiency classes
according to the highest European labelling standards. These tyres offer highly energy efficiency
during use, contributing to lower fuel consumption for traditional vehicles or increasing the battery
range for electric vehicles, with a positive impact on climate change mitigation along the
downstream value chain.
In order to reach these targets, specific projects are envisaged for the production of Class A and B
Rolling Resistance tyres, contributing to the gradual alignment of its economic activities with the
criteria set forth in the Delegated Regulation EU 2021/2139, as better detailed in the “Disclosure
pursuant to Article 8 of Regulation (EU) 2020/852 (Taxonomy)” paragraph.
In order to implement its Transition Plan, Pirelli started a series of programmes, expenditures and
investments in manufacturing and product development. These include the multi-year CAPEX Plans
set out in the Industrial Plan for the electrification of curing presses and for the implementation of the
over 90 energy efficiency projects in the factories. Additional CapEx and OpEx linked to the
Transition Plan result from the implementation of the individual Actions, as reported in the following
paragraphs.
By the end of 2024, implementation of the climate transition plan had made significant progress with
respect to the reduction of the Group’s environmental impacts, with performance progressing in line
with all targets set out in the plan, as described below. Pirelli undertakes to review its performance
annually and implement actions to support the achievement of targets.
Pirelli assesses the potential greenhouse gas emissions that will inevitably be released in
atmosphere in the future due to existing infrastructure and policies (locked-in GHG), considering
39 Bio-based material: Material fully or partially of biogenic origin. (source: ISO 16620 – 2 2019)
40 Recycled material: material that has been reprocessed from recovered material through a manufacturing process and transformed into
a final product or component for incorporation into a product. (source: ISO 14021 – paragraph 7.8.1.1).
41 Pirelli’s commercially available product with the highest content of bio-based and recycled materials in the reporting year.
42 The Eco-Safety Design approach aims to maximise environmental performance while maximising safety for people, embracing the
entire product life cycle with a view to a circular economy.
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those arising both from existing or planned assets under its control and from the use of products
sold. Specifically, with reference to:
•
company assets, GHG emissions related to production infrastructure, such as plant and
equipment, were assessed. The decarbonisation strategy includes the gradual electrification of
production lines, which will reduce gas consumption in steam boilers and favour the use of
renewable energy. No new installations of fossil fuel plants for energy production are planned
and the only gas-fired cogeneration plant, currently operated by the service and utilities supplier
of the Pirelli plant in Germany, will be phased out before 2030. In some Group factories,
interventions on gas afterburners in order to abate volatile organic compounds (VOCs) are being
evaluated, to guarantee atmospheric emissions limits imposed by some local regulations.
•
products sold, the use phase of the tyres was analysed to assess the GHG emissions linked to
the use of the products. According to the specific standard of the GHG Protocol43, and as recalled
by the Science Based Targets initiative, emissions from the tyre use phase are considered
“indirect” for Pirelli, as the tyre manufacturer, since they are already included in the use phase of
the vehicle, of which the tyre is a component (with indirect responsibility for the energy
consumption of the vehicle during use depending on the rolling resistance class to which the tyre
belongs). These emissions, already accounted for in the overall emissions balance of the vehicle,
should not be included in the emissions scope considered for value chain reduction targets by
tyre manufacturers. However, in order to monitor the efficiency of its products in terms of their
indirect contribution to the use phase of vehicles, Pirelli annually calculates the potential impact
of tyres placed on the market, following the Product Category Rules (PCR version 3.05),
developed by the Tire Industry Project Group44 of the WBCSD45.
This integrated vision allows Pirelli to mitigate locked-in emissions, both by reducing those related
to the manufacturing assets and by improving product efficiency to minimise their indirect
contribution to vehicle energy consumption. In this way, the company ensures consistency between
its operational strategies and GHG emission reduction targets, efficiently contributing to the transition
towards a low-emission model for greenhouse gases.
43 GHG Protocol Corporate Value Chain – Scope 3
44 Established in 2005, the Tire Industry Project (TIP) is a voluntary initiative led by the CEOs of member companies with the mission of
anticipating, understanding and addressing environmental, social and governance (ESG) issues relevant to the tyre industry and its
value chain. The TIP members are: Bridgestone, Continental, Goodyear, Hankook, Kumho Tire, Michelin, Pirelli, Sumitomo Rubber,
Toyo Tires and Yokohama Rubber
45 World Business Council for Sustainable Development
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Climate Change Risk assessment and strategy resilience
Pirelli periodically performs sensitivity analyses and risk assessments for its own operations and the
value chain with respect to scenarios of transition towards a low-carbon economy and climate
scenarios, in order to have a constantly updated overview of potential risks and opportunities linked
to climate change and water stress, relevant to the business, with the relative quantification of
potential financial impacts. The information gathered is used to support the analysis of the strategy
and business model in order to strengthen the resilience to climate change.
The analysis is conducted using the Group’s Climate Change and related Water Stress Risk
Assessment, which uses scenario analyses referring to short- (2025), medium- (2030) and long-term
(2050) time horizons, consistent with the timeframes considered in the company’s sustainability
strategy, in order to assess the risks related to climate change. The scenarios considered are both
the IPCC climate scenarios46 (RCP 1.9, RCP 2.6, RCP 4.5 and RCP 8.5)47 and the IEA energy
transition scenarios48 (STEPS, APS and NZE-2050)49.
The risks and opportunities identified as most relevant are assessed and ranked against internal
metrics of potential financial impact and, for those recognised as significant, a plan for risk mitigation
or adaptation is being prepared or an internal discussion is initiated to maximise the benefit of the
opportunity.
In line with the results of the latest analyses, in the short to medium term (up to 2030), no significant
impacts from physical and transitional risks were found in relation to the production activities of
Pirelli’s factories and its suppliers (upstream value chain), or to the markets in which the Group
operates (downstream value chain). Elements of uncertainty remain in the long term, when Pirelli’s
plants could be subject to a series of both physical risks (extreme weather events with potential
impacts on plant production continuity) and regulatory risks (possible effects on operating costs). As
regards opportunities, on the other hand, potential growth in the sale of low-emission products was
identified.
With reference to the Double Materiality process, the risks identified as material are both transitional
and respectively point to “the tightening of carbon taxes in countries where Pirelli manufactures” and
the “risk of delays by the supply chain in achieving the CO2 targets communicated to the market with
a consequent impact on sustainable finance and possible disputes by investors”.
Within the framework of the publication of the Group’s Industrial Plan, the results of the scenario
analyses updated in 2024 (broken down by assets, markets, and geographies) were considered in
defining the “Net Zero” decarbonisation strategy by 2040, validated by the Science Based Targets
initiative, in line with the objective of limiting global warming to 1.5°C (as validated by SBTi), and with
46 Intergovernmental Panel on Climate Change
47 RCPs (Representative Concentration Pathways) are climate change scenarios that consider different future concentrations of
greenhouse gases in the atmosphere and that imply a projected increase in global temperature at the end of the century of between
<1.5°C (RCP 1.9) and >4°C (RCP 8.5).
48 International Energy Agency
49 STEPS: Stated Policies Scenario; APS: Announced Pledges Scenario; NZE-2050: Net Zero emissions by 2050.
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a view to business growth, which aims to seize market opportunities related to products developed
specifically for the electric vehicle market (tyres marked ElectTM) and to meet the demand for low-
emission goods and services (tyres with very high and high energy efficiency values, identified
respectively as class A and B of Rolling Resistance according to the labelling parameters established
by European regulations).
Policies for managing greenhouse gas emissions
Pirelli’s approach to managing greenhouse gas emissions is set out in its Health, Safety and
Environment Policy and Product Stewardship Policy, under which the company undertakes to:
- promote positive impacts in terms of lower CO2 emissions both by Pirelli sites (Scope 1 and 2
emissions) and Pirelli suppliers (upstream Scope 3 emissions) and customers during the vehicle
use phase (downstream Scope 3 emissions), for the portion attributable to the efficiency of the
tyres (Rolling Resistance class) purchased from Pirelli;
- mitigate the risk of carbon tax hikes in countries where Pirelli manufactures;
- seize the opportunity of an increased market share linked to both the ability to respond quickly to
the demand for low-emission products before competitors and the rapid growth of the electric
vehicle market.
In particular, the Health, Safety and Environment Policy describes how Pirelli is engaged in the
development of products and production processes in compliance with circular economy principles,
in order to pursue climate change mitigation, gradual decarbonisation along the value chain and the
minimisation of polluting emissions.
As mentioned above, Pirelli’s commitment to reducing emissions extends to its supply chain, and
this implies, among other things, asking Pirelli’s suppliers to adopt the same responsible approach
at their sites and along the supply chain, as set out in the Health, Safety and Environment Policy.
Specifically, suppliers are required to comply with Pirelli’s Supplier Code of Conduct which, with
reference to the topic, urges them to prevent, reduce and mitigate all forms of environmental
pollution, including air pollution, also setting scientifically valid Greenhouse Gas reduction targets,
aimed at the gradual decarbonisation of their operations and supply chain. Upon express request,
suppliers, who are asked to be transparent about data on emissions from their own operations and
upstream activities, are also required to share information with Pirelli on GHG emissions from
products and/or services (Scopes 1, 2 and 3), from origin to Pirelli’s gate and calculated according
to international standards recognised worldwide (GHG Protocol, ISO 14064, ISO 14067, etc.).
The Sustainable Natural Rubber Management Policy, with express reference to suppliers of this raw
material, also requires their commitment to manage operations by minimising the amount of energy
used as well as minimising and mitigating carbon emissions.
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The issue of emissions reduction in the supply chain is therefore at the core of the business
relationship between Pirelli and its suppliers and this, among other things, helps mitigate the risk of
delay by the supply chain in achieving the decarbonisation targets announced to the market with a
consequent impact on sustainable finance/claims by investors.
The Sustainable Natural Rubber Management Policy, with express reference to suppliers of this raw
material, explicitly requires their commitment to manage operations by minimising the amount of
energy used as well as minimising and mitigating carbon emissions.
The aforementioned Policies reaffirm Pirelli’s commitment to manage environmental aspects in
compliance with applicable international standards and in accordance with the envisaged
Sustainability Models, including, with reference to the management of greenhouse gas emissions,
the European Union’s growth strategy (known as the “Green Deal”).
Targets
Pirelli is committed to significantly reducing its absolute greenhouse gas emissions along the entire
value chain, in line with the GHG Protocol, with the goal of achieving Net Zero emissions by 2040
(developed in accordance with the Corporate Net Zero Standard of SBTi and validated by the
initiative in 2024). This commitment supports the content of the Global Health, Safety and
Environment Policy, to which Pirelli pays attention in carrying out its activities and production
processes in order to pursue climate change mitigation and gradual decarbonisation along the value
chain both upstream and downstream.
In order to pursue this goal, in line with international best practices for climate change mitigation,
Pirelli has defined short to medium and long-term decarbonisation targets to reduce CO2 emissions,
which concern both its own operations (Scopes 1 and 2) and the entire value chain (Scope 3). All
these targets were developed following the models proposed by SBTi, which formally approved them
in 2024 in line with the most ambitious scenario in the Paris Agreement to keep global warming within
1.5°C. These expectations were also cross-referenced with the results of scenarios used for climate
risk assessments (Climate Change and related Water Stress Risk Assessments), in order to ensure
that emission reduction strategies are not only scientifically sound, but also resilient in the face of
possible climate change impacts.
In detail, compared to 2018 values, a reduction in absolute greenhouse gas emissions, approved by
SBTi, is planned as follows:
1) for Scopes 1+250, 60% by 2025 and 80% by 2030
50 Target on aggregated Scope 1 and Scope 2 “Market-based” emissions
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2) for Scope 351, 27% by 2025 and 30% by 2030
3) for Scopes 1+2+352, at least 90% by 2040 (Net Zero target)
The first is a Group target covering the whole of the Group’s own operations, while the second covers
part of the upstream value chain (purchase of goods and services, inbound and outbound transport,
emissions from the production of purchased and consumed fuels and energy). Both are applicable
to the period 2018-2030. These are relative and measurable targets, as they monitor the reduction
percentage with respect to the base year value and have been confirmed in the current Industrial
Plan, in continuity with the previous one. The 2018 values, expressed in tonnes of CO2 equivalent,
amounted to 852,866 tonnes for Scope 1+2 and 3,689,019 tonnes for Scope 3 (referring to the GHG
Protocol categories included in the target as mentioned above) respectively. In addition to the 2025
and 2030 targets, Pirelli has also set interim targets to 2027 to reduce absolute greenhouse gas
emissions by 62% for Scope 1+2 and 28% for Scope 3, compared to 2018.
The third target, the Net Zero target, was introduced in the new Industrial Plan and covers the entire
value chain. It is spread over the period 2018-2040 and is also a relative and measurable target, as
it calculates the percentage reduction compared to the 2018 base year value of 4,858,988 tonnes
for Scopes 1, 2 and 3 (all categories of the value chain according to the GHG Protocol excluding the
“use phase” charged to the Car Manufacturer Customers). The Net Zero target is complemented by
both previous near-term targets, which serve as intermediate milestones towards 2040.
The targets just described apply to the Group’s consolidated scope.
At the end of 2024, the Group’s absolute Scope 1 and 2 emissions were 57.1% lower than in 2018,
the year on which the SBTi-validated target for absolute emission reductions to 2025 and 2030 is
based.
In terms of absolute Scope 3 emissions53, the reduction in 2024 compared to 2018 is 26.2%.
The methodology for setting decarbonisation targets followed the guidelines of the Science Based
Targets initiative (SBTi), assessing the emission reduction actions described in the Climate Transition
Plan. The process involved both external stakeholder categories, such as SBTi, and internal
stakeholder categories, such as the relevant company departments (in particular Manufacturing,
Sustainability, Procurement and Logistics). The SBTi validation criteria for alignment to the 1.5°C
51 Scope 3 emissions of categories 1, 3 and 4 according to the GHG Protocol, respectively generated by the purchase of raw materials,
activities linked to fuel and energy use, and the transport and distribution of raw materials and finished products.
52 Scope 3 emissions related to all upstream and downstream activities of the company’s operations, calculated according to the GHG
Protocol (which includes all categories of the value chain excluding the “use phase” charged to Car Manufacturer Customers) and in
line with SBTi requirements.
53 Scope 3 emissions of categories 1, 3 and 4 according to the GHG Protocol
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scenario also ensure that targets are consistent with Pirelli’s GHG inventory scope, including at least
95% of absolute Scope 1 and 2 emissions and over 90% of Scope 3 emissions54.
With regard to the definition of the 2018 base year, the reference emission values are representative
with respect to the targets set, due to a complete and thorough quantification of the company’s
greenhouse gas inventory, along its value chain, including all GHG Protocol Scope 3 categories. The
data collected for Scopes 1, 2 and 3 in the year 2018 are third-party verified (SGS Italia S.p.A.) and
are accurate, reliable and verifiable, providing a solid basis for analysing progress and identifying
areas for improvement. For the calculation of the emission inventory and definition of the relative
targets, the contribution of biogenic emissions and emissions from land use change (LUC55) are also
considered.
Not only are these targets an essential component of the company’s climate strategy, but they also
demonstrate a willingness to actively contribute to a fair and sustainable transition to a low-carbon
future. Transparency and reporting on the results achieved are also an integral part of the path taken,
ensuring that commitments are met.
To support its commitment to reduce greenhouse gas emissions and transition to more sustainable
mobility, Pirelli also integrates strategies aimed at improving the energy performance of its tyres into
its decarbonisation objectives. In particular, the company defined growth targets in the Industrial Plan
for low and very low rolling resistance tyres. In fact, tyre rolling resistance has an indirect impact on
fuel consumption / battery life of vehicles. Therefore, improved performance in terms of low rolling
resistance of the tyre contributes to the reduction of the CO₂ emissions of vehicles.
At Product level, Pirelli expects that:
35% of the volume of car tyres sold in 2025, and over 50% in 2030, belong to classes A
and B for rolling resistance taking into account the parameters set out in the European tyre
labelling legislation.
by 2025, over 70% of new car products (new IP Code labelled) placed on the market must
fall within rolling resistance classes A and B, in accordance with the parameters set by
European tyre labelling regulations56.
The first target applies to car tyres sold in the reporting year and is measured as a percentage share
of the total sales volume of products conforming to rolling resistance classes A and B. To ensure the
54 The 2030 target includes the most emission-impacting Scope 3 categories (Category 1 – purchased goods and services, Category 3
– fuels and energy not included in Scope 1 and 2, Category 4 – upstream transportation and distribution), while the 2040 Net Zero
target includes all Scope 3 categories of the value chain, excluding the “use phase” charged to Car Manufacturer Customers, as
required by the GHG Protocol and in line with SBTi requirements.
55 Land Use Change
56 The benchmarks are the European labelling values for rolling resistance according to Regulation (EU) 2020/740 of the European
Parliament and of the Council of 25 May 2020 on the labelling of tyres with respect to fuel efficiency and other parameters,
amending Regulation (EU) 2017/1369 and repealing Regulation (EC) No 1222/2009 (Text with EEA relevance), in which the
rolling resistance classes indicate the energy efficiency level of the tyre and range from A (highest energy efficiency) to E (lowest
energy efficiency).
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comparability of the ratings outside the European Union, the rating scales adopted in non-European
markets are converted into the corresponding EU scale levels. The baseline is 30%, calculated for
the year 2023. The performance recorded in 2024 exceeded internal forecasts, standing at 34.5%
of volumes, confirming the validity of the strategy implemented. This progress represents a
significant step towards achieving the goals set, reinforcing the company’s commitment to promoting
increasingly sustainable and safe mobility solutions.
The baseline for the second target is 39% in the year 2020, with a target validity covering the five-
year period 2020-2025. The target scope includes new car products (new IP Codes) that made their
first sales on the market57 in the reporting year. The performance figures for 2024 indicate progress
in line with the set target, highlighting the success of the initiatives taken for innovation and the
energy efficiency of next-generation products. This is confirmed by the fact that, in 2024, the new IP-
labelled tyres placed on the market by Pirelli worldwide recorded 55.4% A or B Rolling Resistance
labels and 90.5% A or B Wet Grip labels, according to the European classification, including ice grip
(which is indicated by the presence of the ICE pictogram).
With reference to the entire range of tyres sold by Pirelli in 2024, 59.1% of the Group’s revenue
comes from markets where product labelling is required, such as the European Regulation 2020/740
on tyre labelling in relation to fuel consumption and other parameters (“eco-safety label”). The
company continues to invest in the development of advanced solutions, with the aim of further
improving performance and contributing to more sustainable mobility. More details on this can be
found in the “Circular Economy” section, “Research and Development for Material Sustainability and
Open Innovation” paragraph.
Product and production process objectives, included in the Climate Change Mitigation Transition
Plan, contribute to managing the impacts, risks and opportunities identified as material with respect
to climate change. In fact, the reduction of emissions at Pirelli’s production sites (Scope 1+2
emissions from its own operations) limits the potential exposure to present and future carbon taxation
mechanisms (Emission Trading System, Carbon tax, etc.) and mitigates the risk with respect to any
cost increase. Moreover, product efficiency targets, for the reduction in rolling resistance, on the one
hand favour the reduction of fuel consumption and therefore vehicle emissions in the in-use phase
(Scope 3 downstream emissions) to the benefit of Pirelli Customers, and on the other hand support
the Group’s positioning with respect to the low-emission products and electric vehicles markets, with
an opportunity to increase sales.
In line with the commitments expressed in the Global Health, Safety and Environment Policy and the
principles of the Supplier Code of Conduct, Pirelli sets responsible sourcing objectives aimed at
reducing the supply chain’s impact on the carbon footprint of its products. To this end, the Company
has defined specific targets for its suppliers to reduce the emission impact of material and products
purchased and used for tyre production.
57 sales of at least 50 units
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Among these objectives, the following stand out:
by 2025, a direct request will be made to 100% of raw material suppliers to use exclusively
renewable electricity in the production of materials supplied to Pirelli.
To ensure the achievement of this goal, in 2024, the process was completed through which 100%
of raw material suppliers are formally required to use certified renewable electricity for the entire
production of materials supplied to Pirelli, thereby ensuring alignment with global decarbonisation
standards.
by 2025, the objective is to extend the requirement to 100% of raw material suppliers to
define decarbonisation targets that are validated by SBTi.
To ensure alignment with international standards, 100% of raw material suppliers have been
formally required to apply the Science-Based Targets initiative guidelines for setting their targets,
based on emission data certified according to the GHG Protocol. In fact, a generic request for
“science-based” targets that does not specify which methodology they refer to is not considered
sufficient. This approach ensures compliance with global emission reduction targets, as set out
in the Paris Agreement, and supports the transition to a low-carbon economy.
The increase in the availability of primary data on the emissions of raw material suppliers.
Starting with 90% coverage of the Scope 3 category 1 emissions of the GHG Protocol
(Purchased goods and services), measured in the base year 2023 using primary data, the
company aims to strengthen the quantity and quality of the information by collecting information
directly from the suppliers, thereby fostering greater transparency and reliability in environmental
impact data along the supply chain. Thanks to this approach, in 2024, primary data coverage
was confirmed to exceed 90%, reinforcing Pirelli’s commitment to this objective. The
engagement and involvement of suppliers are key to achieving the aforementioned objectives.
To this end, Pirelli formally submitted requests to all raw material suppliers, offering the support
of its decarbonisation and procurement teams to facilitate the adoption and implementation
process as well as to ensure the accuracy and reliability of the data collected and monitored.
These targets reflect Pirelli’s commitment to ensuring transparency and accountability throughout
the supply chain, in accordance with international standards such as the GHG Protocol and relevant
ISO standards.
The graph below summarises the contributions, in terms of Scope 1 and 2 emission reductions, of
Pirelli’s main decarbonisation levers with respect to Group targets.
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Actions
The Group’s strategy is embodied in actions aimed at reducing climate-altering gas emissions both
in its own operations (Scope 1 and 2) and along the supply chain (Scope 3), through strategic
investments, technological innovation, the energy transition and partnerships with its stakeholders.
The actions are part of a long-term strategy described in the Group Industrial Plan, approved by the
Board of Directors in March 2024, and are subject to an internal evaluation, approval and planning
process.
The actions implemented as shown below, in addition to those indicated in the “Energy Management”
section, resulted in a reduction of absolute emissions of about 100 kton for Scope 1+2 and about 38
kton for Scope 3 in 2024 compared to the previous year.
Decarbonisation in its own operations
To support the objectives of reducing climate-altering gas emissions with reference to its own
operations (Scope 1 and 2), as specified in the previous paragraphs, Pirelli has defined a specific
Climate Transition Plan based on a detailed programme of actions and investments at production
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sites which include, among other things, energy efficiency projects, the gradual electrification of
production processes (linked to the target of 75% electric curing presses by 2030) and the
simultaneous switch to the supply of renewable energy in factories (linked to the target of 100%
renewable electricity purchased from the grid by 2025) for a gradual transition away from fossil fuels.
The actions, investments and operating expenses identified at Group level to reduce Scope 1 and 2
emissions all fall within the scope of energy management. Therefore, for a detailed discussion of the
specific initiatives including, if significant, an indication of the related investments and operating
expenditures incurred during the year and expected in future years, see “Energy Management”
paragraph, “Target” and “Actions” sections.
Decarbonisation along the supply chain
To support the reduction of Scope 3 emissions from its upstream value chain, Pirelli has several
engagement and capacity building initiatives underway with its suppliers on the topics of monitoring
and reducing their carbon footprint and the potential decarbonisation levers available for their
business sectors. The actions suppliers have taken over the year, including the introduction of
technologies and the implementation of more efficient production practices, contributed to Pirelli’s
2024 performance in reducing Scope 3 emissions.
For raw material suppliers, in particular, Pirelli requested the definition of a decarbonisation roadmap
and targets in line with the criteria required by SBTi for their validation, and the adoption of 100%
renewable electricity in the production of materials supplied to Pirelli, to reduce emissions related to
the most energy-intensive production processes.
Work also continued in 2024 to collect primary emissions data from its suppliers, replacing secondary
data from literature data sets, in order to improve the accuracy of the Group’s GHG inventory and
ensure a timelier assessment of each supplier’s progress with respect to Pirelli’s targets. To date,
the coverage of indirect upstream Scope 3 emissions with primary data has reached more than 90%.
The ongoing activities to replace the raw materials used in the production of tyres with alternative
materials with lower carbon footprints also make a significant contribution to the decarbonisation
targets for the supply chain. For a detailed discussion of the material switch initiatives, see the
“Circular Economy” paragraph.
Moreover, for years Pirelli has been involved in the Climate Change, Forest and Water Security
programmes promoted by the CDP. Since 2014 Pirelli has in turn decided to extend the CDP
assessment request to its key suppliers at the Group level, identified according to environmental and
economic materiality criteria. In 2024, the selection concerned the suppliers with the greatest impact
on the Group’s Carbon Footprint in the Raw Materials, Logistics and Energy categories. The CDP
Supply Chain supports Pirelli in monitoring the Scope 3 emissions of its supply chain and ensures
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that suppliers are adequately sensitised on issues related to Climate Change, in order to identify and
activate all possible opportunities to reduce climate-changing gas emissions.
Climate change training activities
On the topic of emissions and effects on Climate Change, in 2024 the company introduced new
training activities for all employees, in addition to the numerous awareness-raising campaigns
already in place.
With the new Industrial Plan, in fact, Pirelli has defined emission reduction targets that are the most
ambitious in the tyre industry and require the involvement and active participation of all colleagues
in order to achieve them.
To this end, the “Climate Change Challenge” programme was initiated, aimed at spreading the
culture and awareness of the issue of Climate Change throughout the company so as to engage all
participants in the challenge of achieving Net Zero emissions by 2040. This, as mentioned, will be
achieved through massive engagement and training of 100% of employees on company’s goals, so
that everyone can contribute to them with conscious behaviour and daily actions within the scope of
his or her competencies.
The training and engagement campaign, launched and completed in 2024, brought Pirelli’s
decarbonisation strategy and plans to the Group’s factories around the world, through a thorough
cascading programme. To cover the four regions where Pirelli has manufacturing sites, as many
training workshops were organised during the year, involving, among others, the local Health, Safety
and Environment, Energy Management, Sustainability and Human Resources departments.
After this first training phase, a subsequent time is planned for the implementation of energy
transition projects and initiatives suggested by employees and collected at factory level to support
the Scope 1 and 2 emission reduction targets. This second phase will end at the end of 2025 with
an award from Headquarters to the most virtuous factory in the Group.
As part of the long-term strategy to decarbonise the manufacturing processes, the Climate Change
Challenge Programme will be ongoing for years to come, as an integral part of employee
engagement, training and awareness activities.
Product Innovation
In line with its position in the Premium and Prestige segments, Pirelli develops and introduces
increasingly innovative products and services on the market, responding to a macroeconomic
scenario in constant and rapid evolution.
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As stated in Pirelli’s Product Stewardship Policy, during the design and development of new
products, potential risks on health, safety, environment and society are systematically assessed
throughout their life cycle, including analysis of the geopolitical context of reference and ESG impacts
in the supply chain. This assessment is also supported by Life Cycle Assessment analyses
performed in accordance with the industry Product Category Rules and adopting the latest
methodologies for calculating potential environmental impacts.58
Pirelli’s ‘Eco-Safety’ strategy aims to maximise environmental performance while keeping safety
at the centre. The company’s significant operating costs incurred in research and development on
materials, compounds, structures and tread patterns allows Pirelli products to achieve extremely
high performance in terms of braking in dry and wet conditions and, at the same time, improved
environmental performance such as:
lower rolling resistance, resulting in lower CO2 emissions for traditional vehicles or increased
mileage per recharge for electric vehicles;
less noise, which implies reduced noise pollution;
increased mileage, which lengthens tyre life and reduces the exploitation of resources.
The targets to improve the environmental performances adopted by Pirelli for its products are
objective, measurable and they consider the level of materiality of the impacts along the life cycle of
the product with a perspective of the maximum effectiveness of the action. In particular, it was seen
how the tyre’s rolling resistance - thus its energy efficiency - during the vehicle’s use phase impacts
the vehicle’s fuel consumption / battery life and, thus, its CO2 emissions. In this respect Pirelli is
constantly striving to reduce the rolling resistance of its car products, with a continuous reduction on
all car products.
Among the products that best reflect the Eco-Safety approach, it is worth mentioning the P ZeroTM
E, the new tyre that integrates the latest technological innovations developed by Pirelli, put at the
service of the new electrified and sustainable mobility.
Thanks to years of research into new materials and careful selection of suppliers, Pirelli was the first
to be able to make a high-performance tyre with more than 55%59 bio-based and recycled materials
across the entire launch range, a claim validated by Bureau Veritas according to the ISO14021
reference standard.
The Pirelli study on the life cycle of the P ZeroTM E, also verified by Bureau Veritas, shows, among
other things, a 24% reduction in CO2 equivalent emissions compared to a previous generation Pirelli
58 Such as the EF (Environmental Footprint) method, provided for in EU Commission Recommendation 2021/2279, and all impact
categories therein.
59 Percentage achieved with a combination of physical segregation and mass balance. Bio-based materials are natural rubber, textile
reinforcements, bio-resins, bio-chemicals and lignin. The recycled materials are metal, chemical and – through mass balance –
synthetic rubber, silica and carbon black reinforcements
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tyre60. Moreover, this attention to the materials used has made it possible to reduce the use of
materials of fossil and mineral origin, replaced by natural and recycled raw materials (12 kg less than
a standard set of P Zero tyres of the same size).
Pirelli P ZeroTM E has been awarded, for all available sizes, class A in all three parameters of the
European label (best performance for rolling resistance, wet braking and noise). Among the
development areas that contributed to this result are the tread pattern, designed using motorsport-
derived virtualisation and simulation techniques, and the adoption of specific compounds (Rolling
Reduction Compounds) capable of reducing rolling resistance, favouring the autonomy of battery-
powered vehicles, extending tyre life through reduced wear, and improving car control in particular
driving situations, such as when braking on wet roads.
The Group incurred significant operating expenses in 2024 with reference to research and
development related to product “sustainability” features, i.e. aimed at reducing environmental
impacts (e.g. development of products with rolling resistance class A and B, Cycling products) and
increasing safety for people (e.g. projects in the Pirelli Cyber Tyre area, development of products
with wet grip class A and B). For information on the main projects in these areas see the specific
sections within this report.
These costs cover about 75% of the research and development costs, which in 2024 amounted to a
total of 289.5 million euros, or 4.3% of the Group’s consolidated revenues - a percentage in line with
the forecast for 2025.
Metrics – Scope 1, 2, 3 GHG emissions and total GHG emissions
Pirelli monitors and reports its emissions of greenhouse gases through the calculation of CO2-
equivalent (CO2e) – unit of measurement used for the emissions reported here below –, which takes
into account the contribution of carbon dioxide, methane (CH4) and nitrous oxide (N2O).
Biogenic and land use change (LUC) emissions are quantified and included in the greenhouse gas
(GHG) inventory and within the scope of the targets in accordance with the GHG Protocol guidelines
(FLAG-C5).
For the purpose of quantifying Scope 1 and Scope 2 emissions, fully covering the same corporate
perimeter of the Group’s consolidated financial statement, energy consumption data (fuel, electricity
and thermal energy) is collected annually for all local units through the HSE-DM information system,
which, multiplied by the respective emission factors, returns the value of CO2 equivalent.
These greenhouse gases are mainly generated by the combustion of hydrocarbons at production
sites, mainly used to operate heat generators that power the plants, and particularly those that
produce steam for vulcanisers, or generated by the consumption of electrical or thermal energy. The
60 P Zero E, Size 235/45R18 (IP 42865) compared to the same size as the previous generation product (PZ4 IP 27429) according to ISO
14067 and ISO 14026 verified by Bureau Veritas.
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former are defined as “direct emissions”, or Scope 1 emissions, insofar as produced at the
Company’s production sites, while the latter represent the “indirect emissions”, or Scope 2
emissions, as they are generated in the energy plants that produce the electricity and/or steam
purchased and consumed by Pirelli. Scope 2 emissions are reported in two separate ways: “location-
based” and “market-based” (methodology defined by the “GHG Protocol Scope 2 Guidance” and
current reference for Pirelli’s emission reduction targets).
Performance concerning greenhouse gas emissions, in relation to Scope 1 and 2, is calculated on
the basis of emission factors obtained from the following sources:
IPCC61: Guidelines for National Greenhouse Gas Inventories (2006)62;
Within location-based Scope 2:
o National emission factors63 taken from IEA Emission factors 202464:
Within market-based Scope 2:
o Specific emission factors of suppliers where available;
o Residual-mix emission factors65 taken from AIB European Residual Mixes (EU)66 and
Green-e Residual Mix Emissions Rates (US)67;
o Emission factors used in the context of location-based method if other sources of data
are not available;
and are reported according to the models proposed by:
GHG Protocol: Corporate Accounting and Reporting Standard;
GHG Protocol Scope 2 Guidance.
Regarding Scope 2 emissions, the national average coefficients are defined with respect to the last
year available on the above reports. It should be noted that the tyre production industry is not a
carbon-intensive industry; in fact, it falls within the European Emission Trading Scheme only with
reference to thermal power plants above 20 MW of installed capacity. The Company is not subject
to other specific regulations at the global level.
61 Intergovernmental Panel on Climate Change
62 Emission factors expressed in CO2 equivalent, obtained by considering the GWP (Global Warming Potential) coefficients based on
100 years of the IPCC Sixth Assessment Report, 2021 (AR6).
63 Emission factors expressed in CO2e /kWh.
64 2024 Publication with update to the 2023 figure.
65 Emission factors expressed in CO2e /kWh.
66 2024 Publication with update to the 2023 figure.
67 2023 Publication with update to the 2021 figure.
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To quantify indirect Scope 3 emissions, Pirelli uses, when available, primary data collected directly
from the various stakeholders along the value chain, such as suppliers of goods and services,
employees, logistics providers and other relevant partners. In these cases, emission factors based
on supplier-specific data or verified life cycle assessments are used, ensuring the accuracy and
precision of quantified emissions. Specifically, over 90% of Scope 3 emissions was calculated using
primary data.
In the absence of primary data, secondary emission factors, based on industrial market averages
from recognised sources, are applied to ensure consistent estimates.
Pirelli calculates greenhouse gas (GHG) emissions for Scope 1, Scope 2 and Scope 3 following
international guidelines and standards for GHG emission accounting and life cycle assessment, such
as those defined by the World Business Council for Sustainable Development and the World
Resources Institute.
Moreover, Pirelli’s GHG calculation methodology and reduction targets (validated by SBTi) were
subject to third-party verification by an accredited environmental verifier, in compliance with the
methodology for verifying and validating GHG declarations set out in ISO 14064, following the criteria
established by the GHG Protocol Corporate Standard.
In particular, for the Scope 3 emissions inventory, the calculation methodology also follows the
guidelines of the GHG Protocol Corporate Value Chain and the ISO 14067 standard. The defined
criteria allow emissions to be monitored in a systematic and integrated manner, considering all
stages of the life cycle, from production to distribution and final consumption. Pirelli is committed to
collecting reliable data and continuously improving the accuracy of the calculation, with the aim of
reducing the overall environmental impact and ensuring transparency in the reporting process.
When available, primary emission factors such as supplier-specific data or verified life cycle
assessments are used. In the absence of such data, secondary emission factors, based on industry
average data from recognised sources, are used to ensure consistency and accuracy in emission
calculations.
The Scope 3 greenhouse gas (GHG) emissions inventory includes all the categories.
This table sets out the distribution of greenhouse gas (GHG) emissions of Scope 1, Scope 2 and
Scope 3, including market- and location-based totals, in accordance with relevant reporting
standards.
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Base year Retrospective
Goals and target years
GHG emissions68
2018
2024
2025
2030
(2040)
Target % per
annum / Base
year
GHG scope 1 emissions
Gross GHG scope 1 (tonCO2e) emissions
190,046
215,247
Percentage of GHG scope 1 emissions covered by
regulated emissions trading schemes (%)
%
26.2%
GHG scope 1 biogenic emissions
0
0
GHG scope 2 emissions
Gross GHG scope 2 location-based (tonCO2e) emissions
598,311
479,475
Gross GHG scope 2 market-based (tonCO2e) emissions
661,347
150,949
GHG scope 2 biogenic emissions
1,473
95
Scope 1 GHG emissions + Scope 2 market-based GHG
emissions
851,393
366,196
Scope 1 GHG emissions + Scope 2 market-based GHG
emissions including biogenic emissions
852,866
366,291
341,147
170,573
-
9.5%
Significant scope 3 GHG target emissions
GHG emission target categories (categories 1;3;4)
including biogenic emissions
3,689,019
2,722,328 2,692,984 2,582,313
-
4%
Significant scope 3 GHG emissions
Total gross indirect GHG scope 3 (tonCO2e) emissions
24,350,960
20,683,324
1 Goods and services purchased
3,049,578
2,300,135
Scope 3 biogenic emissions
45,755
47,520
[Optional subcategory: Cloud computing and data centre
services
2 Capital goods
245,000
186,709
3 Fuel and energy-related activities (not included in scope
1 or 2)
375,793
135,100
4 Upstream transport and distribution
217,893
239,483
5 Waste generated during processing
35,751
34,021
6 Business travels
10,434
9,595
7 Employee commuting
23,450
23,618
8 Upstream leased assets
0
0
9 Downstream transport
0
0
10 Processing of products sold
-
1,660
11 Use of products sold
20,344,838
17,659,952
12 End-of-life treatment of products sold
2,468
2,469
13 Downstream Leased Assets
-
8,000
14 Franchising
-
1,851
15 Capital expenditure
-
33,211
Total GHG emissions
Total GHG emissions (location-based) (tonCO2e)
25,140,790
21,378,141
Total GHG emissions (market-based) (tonCO2e)
25,203,826
21,049,615
Total GHG emissions – Net Zero target scope (Scope 1 +
Scope 2 Market-based + Scope 3 (classes 1, 2, 3, 4, 5, 6,
7, 8, 9, 10, 12, 13, 14, 15)
4,858,988
3,389,663
485,899
5%
Considering the life phases of the product according to the GHG Protocol standard (Corporate Value
Chain – Scope 3) and as reflected in the Science Based Targets initiative, the emissions of the use
phase of the tyre (Category 11 - Use of products sold) are assessed as “indirect” because they are
already included in the use phase of the vehicle (and therefore in the Scope 3 emissions charged to
68 Greenhouse Gases
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Car Manufacturer Customers), of which the tyre is a component with indirect responsibility for the
energy consumption of the vehicle during use. These emissions, therefore, do not fall within the
emission perimeter to be considered by tyre manufacturers for value chain reduction targets, which,
instead, includes Scope 1 and 2 emissions, generated by the group’s production activities, and
Scope 3 emissions mainly related to the supply chain, logistics and product end-of-life.
However, in order to provide an estimate of the magnitude of the use phase of the tyre, the figure
was calculated according to the PCR (Product Category Rules69) for tyres developed by the Tire
Industry Project Group of the World Business Council for Sustainable Development. In particular,
emissions attributable to the rolling resistance of tyres put on the market by Pirelli in 2024, refer to
the version70 of the new PCR.
Scope 1 emissions from stationary combustion amount to 200,023 tonCO2e, from mobile combustion
15,224 tonCO2e, process 0 tonCO2e and fugitive 0 tonCO2e.
In addition to the emissions of the subsidiaries, the own emissions of the units under operational
control71, as required by the E1-6 disclosure obligation, amount to:
-
Scope 1, 7,435 tonCO2e
-
Scope 2 calculated using the Location-Based method: 69,141 tonCO2e and Scope 2
calculated using the Market-Based method: 25,776 tonCO2e
For the following units, an operational control was found to be in place, in line with the indications of
ESRS and EFRAG IG 2: Value Chain Implementation Guidance, according to which Pirelli can direct
the activities and operational relations of the aforementioned entities. For the sake of completeness,
it should be noted that the requirements considered in order to determine the operational control
required by ESRS do not correspond to the requirements verified to determine the existence of
control for the purposes of full consolidation according to the IFRS in the Group’s financial
statements, where the two companies are classified as joint ventures and consolidated using the
equity method.
Biogenic CO2 emissions from the combustion or biodegradation of biomass in Scope 1 are 0
tonCO2e, Scope 2 95.39 tonCO2e and Scope 3 47,520 tonCO2e.
In 2024, there were no significant changes to the reporting scope that significantly impacted the CO2
emissions inventory.
Pirelli calculated the emission intensity for 2024 considering the total GHG emissions calculated
using the market-based and location-based method, compared to the Group’s net revenues, which
69 Set of specific rules, requirements and guidelines for the development of environmental declarations, for one or more product
categories, defined according to ISO 14025.
70 PCR version 3.05
71 Two production units held by Pirelli in the form of joint ventures,
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amount to 6,773,324 thousand euros, in line with “Revenues from sales and services” in the
consolidated income statement.
GHG intensity versus net revenue
2024
Total GHG emissions (market-based) versus net revenues [tonCO2e/€]
0.003108
Total GHG emissions (location-based) versus net revenues [tonCO2e/€]
0.003156
With reference to the scope of emissions included in the Group targets approved by SBTi, the GHG
intensity indicator relative to net revenues recorded in 2024 is as follows:
for Scopes 1+2 (market-based) equal to 0.000054 [tonCO2e/€]
for Scope 3 (categories 1, 3 and 4 of the GHG Protocol) equal to 0.000402 [tonCO2e/€]
for Scopes 1+2+372 (target Net Zero) equal to 0.000500 [tonCO2e/€]
Metrics – GHG removals and GHG mitigation projects financed through carbon credits
In 2024 Pirelli continued in the compensation project of CO2 emissions produced by its Italian fleet
of company cars, by purchasing and retiring carbon credits certified in accordance with the most
important VCM (Voluntary Carbon Market) standards. In order to ensure the credibility and integrity
of carbon credits, the following key criteria apply in the process of identifying and purchasing them:
climate relevance, environmental integrity, transparency, accountability, duration (continuity),
additionality, social and environmental sustainability, compliance with regulations and standards,
independent monitoring and verification, as well as the prevention of double counting.
Direct issuance of the Pirelli auto policy, which introduces an Internal Carbon Price model for the
economic quantification of the impacts associated with car emissions, this initiative aims to promote
the choice of vehicles with less impact on the environment and support environmental protection
projects.
The car emissions of the corporate fleet subject to offsetting amounted to 852 tonnes of CO2.
In addition, by purchasing credits, Pirelli also neutralised the emissions from the travel and
commuting of the participants in the “Climate Change Challenge” training activity, estimated at 230
tonnes of CO2.
72 Scope 3 emissions related to all upstream and downstream activities of the company’s operations, calculated according to the GHG
Protocol (which includes all categories of the value chain excluding the “use phase” charged to Car Manufacturer Customers) and in
line with SBTi requirements.
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In 2024, therefore, Pirelli offset the climate impact of a total of 1,082 tonnes of CO2, respectively
supporting:
in China, an afforestation project for the planting of native plant species on arid and degraded
land (for 43% of the credits purchased), with a view to fostering an initiative that ensures the
permanent removal of atmospheric CO2 according to a principle of addition;
in Brazil, a Fuel Switching technology project for a renewable energy source from biomass (for
36% of credits) for a local production company;
in India, a further technological project for the production of energy from renewable photovoltaic
sources (for the remaining 21% of the credits) to be allocated to the Indian electricity grid, which
is mainly powered by electricity produced from fossil fuels.
The activities financed with Pirelli’s contribution (by purchasing and retiring credits belonging to the
VCS73 VERRA standard) were all carried out in 2024 and concern mitigation initiatives that are
outside its value chain, following the BVCM (Beyond Value Chain Mitigation) principle.
Future purchases of carbon credits to offset CO2 emissions outside the value chain are not currently
contracted.
As part of the Group’s commitments to Carbon Neutrality by 2030 (Scope 1 and 2) and Net Zero by
2040 (Scope 1, 2 and 3 approved by SBTi), in order to neutralise residual emissions that cannot be
reduced, Pirelli plans to adopt a strategy focused on projects for the permanent removal of carbon
from the atmosphere that are associated with high quality carbon removal that will be certified and
internationally recognised as best practice, for compliance and effectiveness, when purchased.
To complement the actions already underway to achieve its short- and long-term reduction targets,
Pirelli will undertake actions or make investments outside its value chain to mitigate greenhouse gas
(GHG) emissions. The company will support projects, programmes and solutions with quantifiable
climate benefits, prioritising those that generate additional co-benefits for people and nature.
73 Verified Carbon Standard
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Carbon credits cancelled in the reference year
2024
Total (tonCO2e)
1082
Share from reduction projects (%)
57%
Share from absorption projects (%)
43%
Recognised quality standard 1 (%)
100%
Share from projects within the EU (%)
0%
Share of carbon credits that can be considered matching adjustments (%)
0%
Metrics – Setting the internal carbon pricing
As part of its climate strategy, Pirelli adopts different types of internal carbon prices that are used for
different application purposes, targets and GHG emission coverage, as described below.
To evaluate new investments at Group level in the Operations area, the Company internally adopts
a carbon price in order to integrate the potential medium-term (2030) benefits of avoided Scope 1
and 2 GHG emissions into the feasibility analysis of the individual project. The introduction of an
internal carbon price, in addition to supporting the Company in navigating the emerging greenhouse
gas regulations, has the main aims of promoting low-carbon investments, energy efficiency and
identifying opportunities. The environmental efficiency associated with projects is in fact one of the
guiding criteria to be considered in investment management, as governed by the related internal
Group operating rule. For this type of analysis, Pirelli adopts as a reference for the entire Group,
regardless of the location of the project, an internal carbon price linked to the trading value of
emission allowances in the European Union’s Emission Trading System (EU ETS) market and used
in the form of a shadow price (a monetary value assigned to a tonne of CO₂ for the economic
quantification of impacts). The average internal carbon price used in 2024 amounts to 65 €/tonCO2e.
It is noted that, for the valuation in the financial statements of emission allowances purchased
through the ETS by certain Group subsidiaries, the market price at the date of purchase is used
instead of the aforementioned price.
Pirelli also adopts a different internal carbon price model, used as an internal fee in its car policy, for
an economic quantification of the impacts associated with car emissions (Pirelli Scope 1 and 3)
aimed at influencing user behaviour in the conscious choice of vehicles that have less impact on the
environment. In this case, the internal carbon price takes the market value of voluntary carbon credits
as a reference.
The economic contribution required to the users of company vehicles goes into a fund (carbon offset
budget) used to offset the CO2 emissions produced by the company’s fleet of cars through the
purchase and retirement of carbon credits certified according to the most important VCM (Voluntary
Carbon Market) standards. For details of the initiative, please refer to the paragraph above “Metrics
– GHG removals and GHG emission mitigation projects financed through carbon credits”.
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The table shows the estimated volumes, expressed as percentages, of Scope 1, 2 and 3 GHG
emissions affected by carbon pricing systems in 2024.
Percentage of gross Scope 1 GHG emissions covered by the internal carbon pricing system
4%
Percentage of gross Scope 2 GHG emissions covered by the internal carbon pricing system
9%
Percentage of gross Scope 3 GHG emissions covered by the internal carbon pricing system
0.001%
Energy management
Policies
Pirelli’s Product Stewardship Policy also highlights, among the various aspects regulated, Pirelli’s
commitment to fostering positive impacts in terms of reduced energy use by Pirelli sites and, in
particular, it reaffirms Pirelli’s commitment to invest resources in research and development to
reduce its environmental impact, also focusing on increasing the use of renewable energy and
reducing the use of energy from fossil fuels.
With its Health Safety and Environment Policy, Pirelli is committed to developing products and
production processes that respect the principles of the circular economy in order to pursue climate
change mitigation and gradual decarbonisation along the value chain, with the responsible use and
reduced consumption of natural resources, in addition to minimising polluting emissions.
Pirelli’s commitment to energy efficiency and reducing energy from fossil fuels also extends to its
supply chain: the Pirelli Supplier Code of Conduct requires them to improve their energy efficiency,
increase the use of energy from renewable sources, as well as set greenhouse gas reduction targets.
Upon request, Suppliers must make products and services made from renewable energy available
to Pirelli and provide the certificate of origin of the renewable energy assigned to Pirelli’s supply.
Targets
The foregoing with regard to the specific commitments made by Pirelli with its policies, translates
into a series of strategic objectives to improve energy efficiency, promote the use of renewable
sources and reduce the environmental impact throughout the supply chain.
In fact, the targets published in the Group’s Industrial Plan integrate targeted actions both within the
company’s own operations, through energy efficiency projects, and along the supply chain,
encouraging the adoption of responsible practices.
These were defined starting from the Group’s Climate Transition Plan, which is based on specific
investment programmes aimed at improving products and industrial processes from a low-carbon
perspective, increasing energy efficiency and fostering access to renewable energy sources in order
to accelerate the gradual phase-out from fossil fuels.
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Renewable Electricity
At Group level, Pirelli is committed to achieving 100% renewable electricity purchased from
the grid by 2025, relying on established market instruments and additional elements to ensure the
transparency and effectiveness of the path.
In 2024, 95.6% of the total grid electricity purchased by Pirelli came from renewable sources.
This is an absolute Group target, covering all of its own operations, regarding the share of electricity
purchased from the grid and applicable to the period 2020-2025. The target was confirmed in the
current Industrial Plan, in line with the previous one, with a baseline referring to 2020 and a value of
31%.
The methodology used to define the target included assessing the accessibility of the various market
tools for the procurement of renewables in the electricity markets in which Pirelli operates (Energy
Attribute Certificates, Green Supply Contracts, Power Purchase Agreements, etc.), based on the
expected evolution of the Group’s electricity consumption. The process involved categories of
interested internal stakeholders such as business departments, in particular Manufacturing and
Purchasing.
The target, monitored by measuring the renewable share of total electricity consumed and expressed
in percentage terms, reflects the company’s commitment to the energy transition and the
strengthening of its contribution to reducing the environmental impact of its operations.
For all production sites in North America, South America, Europe, Turkey and China, 100% of the
electricity purchased from the grid in 2024 was from certified renewable sources.
Electrification of curing presses
With a view to the gradual decarbonisation of the production phase, one of the main levers identified
by the company lies in the electrification of industrial processes.
To this end, Pirelli is committed to achieving the goal of electrifying 75% of curing presses
globally by 2030, with 100% coverage in Europe.
This is an absolute group target, covering all of its own operations, applicable to the period 2024-
2030. The target also aims to improve the energy efficiency of curing presses by more than 80%,
with a significant reduction in energy consumption associated with the production process, and
reflects the roadmap for implementing the programmes and investments required for this
transformation by identifying specific plans for each factory.
In the target setting methodology, the electrification of presses is considered a decarbonisation lever
for reducing emissions. Consequently, centralised planning was developed, which was then
translated into specific plans for each factory. The process involved relevant internal stakeholder
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categories, such as business departments, in particular Manufacturing, Research & Development,
Sustainability and Purchasing.
Performance against the target is monitored by measuring the number of electrified presses against
the total installed and expressed in percentage terms, ensuring a transparent and results-oriented
approach.
In 2024, out of the total number of curing presses installed in the Group’s factories74, 5% were
electrified, against an investment of 27.1 million euros, and is expected to reach 16% in 2025 with a
further investment of 26.1 million euros. The electrification process will continue in the following years
according to the plan to cover 75% of the electrified presses in 2030, with an almost linear distribution
over the coming years.
In terms of production sites in Europe only, the share of electrified curing presses in 2024 was 10%.
Energy efficiency projects
Pirelli set the target of implementing over 90 energy efficiency projects in the period 2022-
2025, with a total CapEx investment of 50 million euros.
This target, which is absolute and can be measured by monitoring the number and the cost of
projects implemented, applies to the company’s operations, confirming the company’s commitment
to continuously improve energy management and reduce the environmental impact of its activities.
As it is not based on values or reference years, the target reflects a direct and solid approach, geared
towards generating tangible progress over the implementation period.
The target-setting methodology assessed the potential reduction of energy consumption related to
energy efficiency projects also identified by energy audits carried out periodically at operational units.
The process involved categories of interested internal stakeholders such as business departments,
in particular Manufacturing and Purchasing.
The investment in projects included in the Multi-Year Energy Efficiency Plan, implemented from 2022
to the end of 2024, amounts to a total of 39.7 million euros in CapEx of which 9 million euros in
2024 alone and a further 9 million euros planned for 2025.
74 Total number of presses in Group factories as at 31/12/2023
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Actions
Energy efficiency
During 2024 the energy efficiency plan continued at all Group plants, already initiated in recent years
and characterised by actions aimed at:
improving and accelerating the digitalisation in an Industry 4.0 perspective of energy
measurement and management systems through monitoring of consumption;
designing a global platform aimed at generating technical indicators and continuous
improvement also through the use of artificial intelligence tools;
optimising the procurement of energy resources, direct or indirect;
improving the quality of energy transformation;
improving the efficiency of distribution plants;
improving the efficiency of production plants;
recovering energy for secondary uses;
applying targeted maintenance plans in order to reduce energy waste.
The energy efficiency plan includes a series of ongoing actions implemented on a recurring basis at
the Group’s various production units.
With regard to Life Cycle Assessment, the specific consumption of the industrial plants is mapped,
whether those dedicated to production or dedicated to the generation of energy carriers in order to:
increase the standard reference indicators, compare similar families of machinery, evaluate in detail
the energy content of the plants’ different families of products and sub-products and implement
actions to improve their energy performance.
In terms of compliance, every industrial facility completely fulfils the indications of law regarding
energy consumption and management. The legislative situation affecting the Company includes the
introduction of periodic audit mechanisms on energy management and use, as well as possible tariff
incentives. In this respect, there are no critical issues or non-compliances.
In order to pursue the continuous improvement of the Group’s energy performance, production sites
are equipped with an Energy Management System. Opportunities for efficiency in energy use are
identified from energy audits at the operating units and contribute to the definition of targets for
reducing consumption and saving energy with targets defined both at Group level and specific to
each site (local targets). The plants in Breuberg (Germany), Izmit (Turkey) and Yanzhou (China) are
already certified according to the ISO 50001 standard, the plants in Campinas (Brazil), Feria de
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Santana (Brazil) and Slatina (Romania) have started the certification procedure, which will be
progressively implemented by the Group’s other plants.
Actions and investments for energy efficiency are alongside the assessment of environmental
impacts to economic sustainability criteria normally applied to all Pirelli projects. In addition to
innovation in production processes, driven by Research & Development, the areas for technical
action both concern the traditional themes applied to each industrial area such as modernisation of
thermal insulation, maintenance of distribution plants, use of technologies using inverters,
implementation of optimised control systems - and special projects assessed according to the needs
of each manufacturing site. There are also regular employee awareness campaigns dedicated to
energy issues, which are also addressed in the “Climate Change Challenge” training program
described in the previous paragraphs.
During 2024, great emphasis was placed on the digitisation of energy consumption management
through Building Energy Management Systems (BEMS). This activity includes the installation of
smart systems (Green Buttons) on production equipment to modulate energy consumption according
to the operating state of the machinery, the modulation of ventilation in a smart and automatic
manner, and the development of forecasting systems to assess in advance any deviations of energy
consumption from the forecast. The expansion of the real-time energy carrier measurement network
and its interconnection with Building Energy Management Systems (BEMS) is also continuing, and
is already underway in Slatina (Romania), Breuberg (Germany), Settimo Torinese (Italy) and Carlisle
(UK), and is in the start-up phase for the Group’s other plants.
In addition to the aforementioned electrification of the vulcanisation process, another area of focus
in 2024 was the electrification of production processes that traditionally use natural gas such as
thermal control units in the mixing and semi-finished products area.
The implementation of projects related to efficiency in the transformation of thermal energy and the
recovery of thermal waste for space heating and the improvement of steam generation performance
through flue gas recovery and combustion air preheating systems continued. Efficiency activities
were also in the field for both compressed air generation, using high-efficiency compressors, and
energy flows, with a focus on cold management, starting to expand the pilot projects developed in
previous years. Efficiency in electricity consumption was continued through the replacement of
motors with more efficient models or power modulation.
Activities also continued in the area of reducing compressed air and steam leaks on both machinery
(generators and users) and distribution lines, through monitoring and periodic maintenance of the
elements most at risk of malfunctioning (leak management) or through their replacement with more
reliable and efficient models.
Electricity absorption measurements performed on individual plants are also continuing in order to
correlate the specific consumption to production in greater detail, in order to optimise the operating
conditions.
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The application of energy management geared towards maximising industrial efficiency, by
implementing continuous improvement logics, has led to a reduction in specific energy consumption
per tonne of finished product compared to the previous year.
The costs for the actions listed above mainly refer to capitalisation of tangible fixed assets, recorded
as an increase in the relevant item of the balance sheet, particularly for the electrification of curing
presses and energy efficiency projects in factories. As reported in the previous paragraphs, the
Group incurred capital expenditure of 27.1 million euros and 9.1 million euros, respectively,
substantially in line with the investments planned for 2025. It should be noted that the press
electrification project is expected to be completed in 2030 with an annual investment spread linearly
over the years beyond 2026.
Energy efficiency investments in factories are reflected in the amounts reported under the Taxonomy,
attributable to the activities (7.3 Installation, maintenance and repair of energy efficiency devices,
7.5 Installation, maintenance and repair of metering, regulation and energy performance control
devices and instruments of buildings and 7.6 Installation, maintenance and repair of renewable
energy technologies, 3.20 Manufacture, installation, and servicing of high, medium and low voltage
electrical equipment for electrical transmission and distribution that result in or enable a substantial
contribution to climate change mitigation) that contribute to achieving the objective of climate change
mitigation. The electrification project was partly included in Activity 3.6 Manufacture of other low-
carbon technologies.
With reference to the electrification of the presses, it should be noted that the Group obtained public
financing in Italy and the UK in the amount of 13.5 million euros, which has not yet been received.
Renewable Energy
In line with Pirelli’s Transition Plan, a number of initiatives were implemented in 2024 to promote
access to renewable energy sources in order to accelerate the gradual phase-out of all fossil fuels.
Among the actions completed in 2024, the following initiatives can be highlighted for the procurement
of renewable electricity and biomass-derived steam75.
the supply of steam generated by biomass plant, fuelled with waste wood from local supply
chains, activated for the Campinas (Brazil) plant;
the procurement of electricity through Power Purchase Agreements for the dedicated supply
from renewable sources at the Merlo (Argentina), Campinas (Brazil) and Feira de Santana
(Brazil) sites;
the supply of 100% of electricity purchased from the grid from renewable sources at the sites
of Silao (Mexico), Rome (US), Slatina (Romania), Burton and Carlisle (UK), Breuberg
75 The share of indirect (Scope 2) emissions generated by these projects was reported according to the procedures set out in the GHG
Protocol Guidelines.
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(Germany), Izmit (Turkey), Yanzhou and Jiaozuo (China), Campinas and Feira de Santana
(Brazil) and Merlo (Argentina), Bollate and Settimo Torinese (Italy) and Headquarters (Italy);
the start of the transition process towards the purchase of grid-certified electricity from
renewable sources for Voronezh and Kirov (Russia) sites as well, which enabled them to
cover more than half of their electricity consumption in factories in 2024.
With reference to the aforementioned initiatives, the Group recorded 6.4 million euros within Other
Expenses in the 2024 income statement. A total cost of approximately 14.7 million euros is expected
in 2025. The increase on 2024 takes into account the growth in volumes of renewable energy
sources, and it should be noted that these volumes and costs are not incremental in absolute terms,
but replace volumes and costs from fossil fuels phased out under the Group’s energy transition plan,
which also includes benefits from increased energy efficiency.
Metrics – Energy consumption and mix
For the purposes of quantifying Pirelli’s energy consumption, fully covering the same corporate
perimeter of the Group’s consolidated financial statement, data relating to the use of fuels and energy
(electrical76 and thermal) are calculated using direct measurements and collected annually for all
local units via the HSE-DM information system.
Energy consumption and mix
2024
1) Consumption of coal and coal-derived fuels (MWh)
0
2) Fuel consumption from crude oil and petroleum products (MWh)
48,213
3) Fuel consumption from natural gas (MWh)
980,841
4) Fuel consumption from other fossil sources (MWh)
0
5) Consumption of purchased or acquired electricity, heat, steam, or cooling from fossil sources (MWh)
607,596
6) Total energy consumption from fossil sources (MWh) (sum of rows 1 to 5)
1,636,650
Share of fossil sources out of total energy consumption (%)
57.6%
7) Consumption from nuclear sources (MWh)
12,164
Share of nuclear sources out of total energy consumption (%)
0.4%
8) Fuel consumption for renewable sources, including biomass (also includes industrial and municipal waste
of biological origin, biogas, hydrogen from renewable sources, etc.) (MWh)
0
9) Consumption of purchased or acquired electricity, heat, steam, and cooling from renewable sources (MWh) 1,191,740
10) Consumption of self-generated non-fuel renewable energy (MWh)
152
11) Total energy consumption from renewable sources (MWh) (sum of rows 8 to 10)
1,191,892
12) Share of renewable sources out of total energy consumption (%)
42%
13) Total energy consumption (MWh) (sum of rows 6, 7 and 11)
2,840,706
76 On total energy consumption, electricity accounts for 44.7% in 2024 (41.6% considering electricity taken from national distribution
networks).
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With reference to the calculation of the energy intensity index, the total consumption in the activities
classified as high climate impact, a sector identified on the basis of the NACE codes77 of each
subsidiary, amounted to 2,506,688 MWh.
The energy intensity in these sectors, measured as total energy consumption per net revenue, is
182.60. The revenues considered refer to the “Revenues from sales and services” of each subsidiary
with a NACE code identifying a high-impact sector, including both third-party and intra-group
revenues. The difference between the value considered for the purposes of this indicator and the
consolidated value of Revenues from sales and services of 6,773,324 thousand euros corresponds
to the elimination of intra-group revenues and revenues from third parties of companies with NACE
codes other than those identifying a high climate impact sector.
Focusing more on electricity, Pirelli purchases renewable electricity through the following
instruments: Energy Attribute Certificate, Green Supply Contract, PPA on-site and PPA off-site.
Energy Attribute Certificates can be bundled or unbundled with respect to the electricity supply
contract.
Therefore, 35.5% of the electricity consumed is covered by bundled contractual instruments (such
as renewable energy certificates) while 53.6% comes from unbundled contracts. Therefore, a total
of 89.1% of the electricity consumed by the Group comes from the certified instruments described
above (up from previous years).
Environmental management system and factory environmental performance monitoring
100% Pirelli tyre production sites, the test track in Vizzola Ticino and the Milan headquarters are
equipped with Environmental Management Systems and are certified according to the ISO 14001
International Standard. The International Standard ISO 14001 was adopted by Pirelli as a reference
from 1997. All the ISO 14001 certificates have been issued with international accreditation ANAB
(ANSI-ASQ National Accreditation Board: accrediting entity of the United States). The certification of
the environmental management system according to the ISO 14001 Standard is part of Pirelli’s
Environmental Policy and, as such, is extended also to new settlements that become part of the
Group. The certification activity, together with control and maintenance of previously certified and
implemented systems, is coordinated on a centralised basis by the Health, Safety and Environment
Department.
In addition, as a result of the environmental certification of its motorsport tyre factory management
systems, Pirelli was the first tyre manufacturer in the world to have been awarded three stars by the
Environmental Accreditation Programme promoted by the FIA (International Automobile Federation).
77 The following NACE Codes were identified as applicable to Pirelli: 22.11 Manufacture of rubber tyres and tubes; retreading and
rebuilding of rubber tyres, 33.2 Installation of industrial machinery and equipment, 45.2 Maintenance and repair of motor vehicles,
Wholesale trade of motor vehicle parts and accessories, 45.32 Retail trade of motor vehicle parts and accessories, 46.18 Agents
specialised in the sale of other particular products, 52.29 Other transportation support activities, 68.1 Buying and selling of own real
estate.
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The three stars represent the maximum score level awarded by the programme, whose aim is to
propose a series of measures that participants must implement to achieve the highest environmental
standards.
The environmental performance of every tyre manufacturing site is monitored with the HSE-DM
(Health, Safety and Environment Data Management) system, which is processed and managed
centrally by the Health, Safety and Environment Department.
As a result of the environmental management systems implemented in the production units, and the
implementation of procedures dedicated to emergency prevention and response, constant and
timely monitoring and intervention is ensured on potential emergency situations that may occur, as
well as on reports received from stakeholders.
During 2024, there were no significant incidents, complaints or penalties related to environmental
issues.
E2 Pollution
Following the Double materiality analysis, the following material impacts related to pollution
management along Pirelli’s entire value chain were identified:
Release of tread material during tyre usage;
Release of pollutants into the air by Pirelli suppliers (tier 1).
An in-depth analysis of Pirelli’s value chain, with a particular focus on the activities and actors in the
upstream and downstream value chain, has led to the identification of these impacts. For further
details, please refer to the “General Information” section.
With reference to its own operations, as a matter of policy, Pirelli produces compounds and tyres
without the use of “Substances of Very High Concern” (SVHCs), i.e. those substances that give rise
to high concern for their potential effects on human health and/or the environment. Furthermore, in
its production Pirelli does not use substances that fall under the category internationally recognised
as POPs78, as defined by the Stockholm Convention, nor mercury and its derivatives as per the
Minamata Convention, nor those substances that are limited or subject to restrictions by the REACH
regulation.
The phenomenon of particulate emissions from tread wear
Tyres are a product that must adhere to the road in order to guarantee safety and braking capacity.
78 Persistent Organic Pollutants
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In turn, the tyre’s grip on the road is responsible for the physical phenomenon of abrasion of the
tread and the road. The combined abrasion of tread and road results in the release of the abraded
material into the environment in the form of particles, the so-called tyre and road wear particle
(TRWP) emissions, a combination of abraded tread particles (tyre wear particle, TWP, ~50%) and
road surface particles (Road Wear Particle, ~50%).
Although the tread material is rubber (an elastomer), it is increasingly common to refer to the
particulate matter generated by tread abrasion as “unintentionally released microplastics”. However,
the properties of TWPs are quite different from the microplastics derived from commonly used plastic
objects – e.g. bottles, glasses, synthetic textiles/clothes, or the microplastics contained in hygiene
and body care products – or even the microplastics derived from paints (including, in order of
importance, those used for ships, buildings and road markings)79.
TRWPs have dimensions of around 80-100 micrometres and, once emitted, have a density that
causes them to sediment quickly when transported in an aqueous or gaseous environment,
significantly reducing the quantity of dispersed particles.
The factors that influence the wear of the tyre tread, and the consequent release of material, are
many and concurrent, and are listed below in decreasing order of impact (according to the source
Contribution of Road Vehicle Tyre Wear to Microplastics and Ambient Air Pollution80): driving style
(aggressive or relaxed, at high or moderate speed, with sudden or progressive braking, etc.), road
characteristics (road surface and roughness, whether the road is straight or winding, uphill or
downhill, etc.), vehicle characteristics and conditions of use (weight, mass distribution, correct tyre
pressure, etc.), tyre design and, finally, environmental conditions (dry or wet, hot or cold weather).
The various causal factors extrinsic to the tyre and belonging to the sphere of influence of multiple
stakeholders require combined action by all actors in order to define and implement the most
effective mitigation actions.
Based on scientific data collected by TIP studies81, about three quarters of the TWP generated is
deposited in the soil or in sediments, just under 20% is intercepted and removed (for example by
water water treatment plants) and only a minimal part is present in airborne form (about 2%) or is
found in surface water at river mouths (less than 5%)82.
79 EU Impact Assessment Report Combatting microplastic pollution in the European Union
80 Sustainability 2024, 16(2), 522; https://doi.org/10.3390/su16020522
81 The TIP (Tire Industry Project) was set up in 2005 and operates under the umbrella of the WBCSD, with the aim of advancing the
scientific study of issues common to the tyre industry (particulate emissions and tyre recycling), with a scientific approach and
commissioning independent research that can then be published in peer-reviewed scientific journals. It includes ten of the largest tyre
manufacturers (covering 60% of the world’s tyre production capacity).
82 Tire
Industry
Project
-
Tire
and
Road
Wear
Particles
-
Home
page;
https://tireparticles.info/wp-
content/uploads/2021/02/zWBCSD_TIP_TRWP_infographic.pdf
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With particular regard to the contribution of TWPs to airborne particulate matter in urban
environments, published studies show that it is very low compared to other sources, accounting for
less than 1% of the total PM10 and less than 0.3% of the total PM2.5 in the air83.
The order of magnitude of these data has also been confirmed by other independent studies.
Although the quantity of TRWPs that can be traced in surface water is limited, in recent years some
studies have identified the presence of a substance known as 6PPD-quinone, which is toxic to a
specific fish species (Coho Salmon), while studies carried out on other fish species, to date, have
not highlighted significant effects.
6PPD-quinone is the transformation product of a substance (6PPD) used in tyres with the specific
aim of guaranteeing their safety, avoiding the degradation of the properties of the rubber due to the
oxidative action of ozone. The mechanism underlying the effect of 6PPD-quinone on Coho Salmon
is still unclear, however several studies are underway, promoted by TIP, to investigate the causes,
and Pirelli is actively searching for alternative substances.
Pirelli’s commitment
Pirelli is tackling the challenge of particulate emissions from its tyres through an innovation strategy
on multiple fronts simultaneously:
Particulate reduction at source, reducing the wear rate of the tread while maintaining road safety:
-
Objective to improve the average wear rate by:
o 23% compared to previous tyre lines of reference, for lines launched in the years between
2023 and 2025. In this regard, the new lines launched in the period between 2023 and
2024 recorded a reduction in the abrasion index of 24.8% compared to the lines of
reference
o 30% compared to previous tyre lines of reference, for lines launched in the years between
2025 and 2030.
Performance is evaluated based on the results of tests conducted on products representative
of the new lines compared to those of previous reference lines, which measure tyre wear,
considering the mass of the tread that has been worn away.
83 Measurement of airborne concentrations of tire and road wear particles in urban and rural areas of France, Japan, and the United
States)
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Research and Innovation on the “size” of particulate matter
Pirelli collaborates with Italian and European Research Centres to develop methods that allow the
emission of particulate from tyres to be monitored, both qualitatively and quantitatively, and to
differentiate it, by comparison with “generic” particulate from other sources. Particular attention is
focused on representativeness in terms of generation, capture and analysis.
With reference to the operating expenses and capitalisations recorded in 2024 and expected in 2025,
reference is mainly made to the Smart Electric project, mentioned in the following paragraphs.
Research and Innovation on the “biodegradability” of particulate matter
As part of a special collaboration with a university, Pirelli is studying the difference in biodegradability
between elastomeric matrices based on synthetic polymers and those based on naturally-occurring
polymers, in particular natural rubber. The studies are proceeding through targeted experiments in
water, soil and specific biological matrices.
The acquisition of Hevea-Tec, the leading natural rubber processor in Brazil, by Pirelli provides
opportunities for the development of new grades of biodegradable polymers based on natural rubber
technology, which could potentially replace the synthetic polymers used in tread compounds.
For further information on the acquisition cost of Hevea-Tec, please refer to the Consolidated
Financial Statements, Explanatory Note No. 8 – “Hevea-Tec Acquisition (Brazil)”.
Capture of generated particles
Pirelli continues to monitor the solutions that allow the collection of TRWP from the points where
accumulation is expected and to study and propose solutions on how to monitor the evolution of
TRWPs, in terms of size and chemistry in these contexts.
Industry initiatives
Pirelli actively participates in industry initiatives (Tire Industry Project and regional/national industry
associations) aimed at conducting and supporting scientific research to identify and fill data gaps
related to the potential impacts of TRWPs and the chemicals they potentially release. Within the
scope of these initiatives, particular attention is also dedicated to the development and
standardisation of methods for measuring tyre abrasion, both in terms of tyre wear rate and airborne
TRWP emissions. In addition, through dedicated projects in cooperation with regional associations
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(e.g. USTMA, ETRMA), TIP is monitoring the most effective TRWP mitigation strategies, and has
also launched pilot projects to support these strategies.
Measuring absolute particulate emissions in the environment
Pirelli has been actively supporting for years the definition of regulations that set limit thresholds on
tyre abrasion rates, as an essential tool for controlling particulate emission levels in the environment,
and supports the European Commission’s recommendations included in the Euro 7 standard for the
adoption of tyre abrasion limits.
In terms of measuring the impact, it is necessary to distinguish between the “specific” or “relative”
performance impact, i.e. weighted by various other factors such as, for example, an indication of
how much tread mass is abraded per km in relation to the weight of the vehicle, and the “absolute”
or “total” impact of particulate generation from tyres during vehicle use.
It should be noted that the CSRD Regulation, with reference to ESRS E2-4, requires reporting of the
absolute/total, and not specific/relative, amount of microplastics generated by the tyre during use,
with an approach similar to that adopted by bodies such as SBTi, for example, when dealing with
total absolute CO2 emissions.
To date, Pirelli and its competitors who are members of the European Tyre and Rubber
Manufacturers’ Association (ETRMA) and the European Tyre and Rim Technical Organisation
(ETRTO), and who participate in the “Task Force on Tyre Abrasion” (TFTA), within the UNECE World
Forum for Harmonisation of Vehicle Regulations (WP.29), are working on finalising the globally
harmonised methodology for measuring tyre abrasion, defined in 2024 and to be validated in 2025,
in support of possible future regulatory activities related to tyre abrasion.
This methodology will provide a measurement of the specific or relative performance of the tyre by
correlating the abraded mass weight of the tyre to the distance travelled and the vehicle weight.
Therefore, it is a calculation method that does not comply with the requirements of ESRS E2-4,
which mandates reporting on the absolute amount, rather than the relative amount, of particles (so-
called microplastics) generated during the use phase by products placed on the market in the
reporting year.
The existing methodology that best meets the ESRS E2-4 requirement can be found in the Product
Category Rules (PCRs) developed by tyre manufacturers who are members of the WBCSD’s Tire
Industry Project. PCRs are the globally-applicable rules that aim to standardise the Life Cycle
Assessment of tyres. PCRs are a public document, currently available in version 3.05, and include
a section specifically dedicated to the calculation of total/absolute “Tire Wear Loss” (TWL) for car
and truck & bus tyres (paragraph 5.2 “Tire Abrasion Calculation Guidelines”), that is the total and
nominal quantity of the mass of the tread that can be abraded, throughout the entire use phase of
the tyre.
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This involves assuming that all the abradable mass is actually abraded and therefore the tyre is fully
worn down to its legal limit of use: it is therefore a very conservative quantity but it is the one that
comes closest to what is required by the CSRD.
The TWL value calculated in this way represents the amount of abradable tread determined on the
basis of geometric and physical parameters alone. It is a conservative estimate that is not influenced
by all the factors that can determine variations in specific performance indices, such as the abrasion
index.
The estimated quantity, relative to all car tyres released on the market in 2024, is equal to 148,625
tonnes.
Other Projects:
“Sister” Project
As part of its participation in MOST, the National Centre for Sustainable Mobility (Italian), funded
under the PNRR (National Recovery and Resilience Plan), Pirelli is a Private Partner of the Flagship
Project “Sister”, in collaboration with universities and research centres. The project is structured
around the following activities:
development of a laboratory machine for the generation/collection and analysis of PM
(Particulate Matter) from tread compounds;
development of an equipment for the generation/collection and analysis of PM in the indoor
machine for measuring abrasion;
preparation of electric cars to be able to generate/collect and analyse PM during track tests
and to be able to link the results collected on PM with the parameters of the tests themselves;
definition of a test procedure for the generation/collection and analysis of PM from tyres with
indoor tests on dynamometric rollers.
In addition to Pirelli Tyre, the Flagship Project B “Sister” also involves the University of Naples, the
Polytechnic University of Turin, CNR-STEMS in Naples, and Pirelli Digital Solutions in Bari, which
provides support for data processing, the development of software tools, and AI solutions relevant
to the project.
The “Sister” Project was scheduled to end in August 2025, but an extension, already formalised, has
postponed its conclusion to December 2025
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“Smart Electric” Project
Pirelli has also launched the “Smart Electric” Project, funded by the Ministry of Enterprises and Made
in Italy (MMIT).
The project will last three years, starting in June 2022 and ending (with an extension that has already
been formalised) in December 2025.
The project aims to develop technologies to make electric mobility more efficient and have less
impact on the environment.
In particular, as part of the project, Pirelli is developing technologies for tyres specifically designed
for electric mobility, which will make it possible to overcome the performance conflicts inherent in the
technology of electrification of mobility.
Electric and hybrid cars tend to be heavier, have greater torque and have range as a critical point.
Actions aimed at reducing tread abrasion, such as the study of wear and particulate emissions,
associated with equal or improved rolling resistance, are the ultimate goal of Pirelli’s activity in the
project.
It should be noted that, with reference to this project, MIMIT has granted a non-repayable contribution
for the period 2022–2025, up to a maximum of 5.9 million euros, which has not yet been received.
Air pollution along the supply chain
Pirelli recognises the importance of monitoring and managing the environmental impact generated
along the entire supply chain, including the release of pollutants into the atmosphere by tier 1
suppliers. The Group is committed to actively collaborating with its business partners to promote
responsible practices and reduce polluting emissions, in line with the principles of its Policies. This
approach reflects Pirelli’s commitment to addressing global environmental challenges by
continuously improving transparency, efficiency and sustainability throughout the entire value chain.
Pirelli’s policies for managing pollution throughout the supply chain
Pirelli requires suppliers to commit to understanding, respecting, and implementing the Supplier
Code of Conduct, which, with reference to pollution, urges them to prevent, reduce, and mitigate all
forms of environmental pollution, including air pollution, as well as to prevent environmental incidents
and to promptly undertake recovery and restoration in the event of their occurrence. They are also
required to monitor, record, document, and, upon request, provide Pirelli with quantitative data and
environmental performance. Suppliers are also required to identify the significant environmental
impacts associated with their activities, develop and implement plans for their improvement, and
establish specific key indicators to monitor their performance. Finally, suppliers must monitor, record,
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document and, upon request, provide Pirelli with quantitative data and environmental performance,
life cycle inventories/assessment reports or environmental footprints. In the specific case of natural
rubber supply, in addition to the Code of Conduct, the Policy on Sustainable Management of Natural
Rubber also applies. This policy explicitly requires natural rubber suppliers to commit to managing
their operations using processes and technologies designed to reduce odours generated during
rubber processing, while ensuring compliance with laws and regulations related to the use of
chemicals in the relevant industrial sector.
Targets
In order to strengthen its commitment to involving suppliers in the sustainable transition, Pirelli will
include pollution-related issues in the “Nature & Biodiversity” training course which, in line with the
objectives set out in the Industrial Plan, will be offered to 100% of raw material suppliers and strategic
CapEx suppliers by 2025.
Actions
Assessment of supplier impacts and corrective plan
In 2024, as part of the systematic environmental due diligence process, the desk-based assessment
of potential environmental risk was updated (greenhouse gases and energy consumption; water,
biodiversity; air pollution; materials, chemicals and waste; product use; product end of life; customer
health and safety; environmental services and advocacy) along the entire supply chain (12,773
unique suppliers), which forms the basis of the risk-based approach on which Pirelli’s Due Diligence
process is founded.
To assess the potential risk of pollution in the supply chain, the Ecovadis IQ+ tool was used, which
analyses the sector risk and country risk for each supplier. With regard to this topic, the Ecovadis
methodology allows for the assessment of potential risk detected in those suppliers for which the
pollution issue is material according to the model.
The risk assessment was conducted by the Purchasing, Enterprise Risk Management, Compliance
and Sustainability Departments, in line with the Group’s ERM model, and applies a risk scale from 1
to 4 (where 1 = low risk, 2 = medium risk, 3 = high risk and 4 = very high risk). For more detailed
information on the risk assessment process, please refer to the “Governance Information” section,
“ESG Risk Assessment” paragraph.
The assessment made it possible to identify the suppliers that require priority intervention through
the most appropriate mitigation and prevention actions.
The results of the risk assessment show that the countries with the highest incidence of suppliers
associated with a high/very high potential environmental risk are mainly concentrated in the LATAM
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region, while in the Europe, MEAI, North America and APAC regions, the risk was generally medium.
As regards the potential risk associated with the purchasing categories, it should be noted that the
mould & off take, energy, indirect, auxiliary materials and R&D categories show a higher incidence
of high/very high potential risk.
The desk-based assessment of potential risk is then incorporated into the assessment of current risk
through supplier assessments, conducted both during the initial selection phase and updated
periodically. The assessment tools adopted are guided by specialised third parties and include both
on-site audits conducted by leading companies in inspection, verification, and certification services
(including environmental certifications) and the services of the EcoVadis platform, which encompass
assessments, improvement plans, and opportunities for training and capacity building.
The activity—both for on-site audits and assessments conducted by EcoVadis—includes the
definition of a remediation plan in case of non-compliance, whose implementation is monitored
through follow-ups, either on-site or documentary-based.
Supply chain assessment through Life Cycle Assessment
In addition to the assessments mentioned, Pirelli annually monitors the environmental impact
generated by its supply chain by applying the Life Cycle Assessment methodology. In particular, the
impact categories relating to air pollution are quantified on the basis of the methods and secondary
data currently available. Some examples of impact categories evaluated are the potential for the
formation of atmospheric particulate matter, ionising radiation, photochemical smog, and the
potential for degradation of the stratospheric ozone layer.
E3 Water and marine resources
Water resource management
Following the Double materiality analysis, the following material impacts related to water resource
management along Pirelli’s entire value chain were identified:
Water consumption by Pirelli sites, including those located in water-stressed areas.
Water consumption along the supply chain, with particular attention to suppliers operating in
water-stressed areas.
Sustainable water management is a priority for Pirelli, which is committed to monitoring and
progressively reducing its water impact throughout the entire product life cycle.
In this context, Pirelli monitors the Group Water Footprint periodically and, with a view to medium-
/long-term management, is committed to progressively reducing its impact on water resources
throughout the product life cycle. This with special attention for water quantity and quality, and the
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local contextualisation of water use, including water-stressed areas, also through the use of specific
analysis tools (such as the WBCSD84 Global Water Tool and the WRI85 Aqueduct Water Risks Atlas)
and specific action plans.
The environmental management systems implemented in the operating units, besides water
resources, ensure management of relations with relevant stakeholders (local communities,
authorities, etc.) and the potential impacts of the local contexts in which each production plant is
located. Indeed, environmental management, and its continuous improvement, are also addressed
by mapping the main stakeholders, their interests and expectations. These management systems
also aim to ensure that the qualitative-quantitative characteristics of emissions are in line with the
context and regulations in force.
Water resource management is also central to the Group’s Biodiversity Plans, and is analysed in
terms of risks, opportunities and the level of Pirelli site dependence on this resource. More
specifically, water is the main dependency and the resource used the most by Pirelli sites. On this
point, a number of actions to reduce water use have been identified. For a more complete discussion,
with specific reference to Biodiversity Plans, please refer to the paragraph “Biodiversity Strategy” in
the “Biodiversity and Ecosystems” section.
Thanks in part to its performance in water resource management, Pirelli was awarded an ‘A-’ rating
in the CDP Water Security programme in 2024.
In terms of governance, the Board of Directors of Pirelli & C. S.p.A., supported in its activities by the
Sustainability Committee, approves, at the proposal of the Chief Executive Officer and in
coordination with the Executive Vice Chairman, the environmental management strategies and
targets integrated in the Industrial Plan, which include those pertaining to the use of water in
processes and the risks associated with it (as identified by the Group’s Climate Change and related
Water Stress Risk Assessment). In turn, Pirelli’s top management also plays a strategic role in the
full implementation of Pirelli’s Environmental Management Model and related strategic objectives on
this matter.
Water management policies
Pirelli commitment to responsible water management is addressed in several Group Policies.
With its Health, Safety and Environment Policy, Pirelli is committed to developing products and
production processes applying circular economy principles. These include the responsible use and
reduced consumption of natural resources including water. It is also committed to setting
environmental targets to reduce the impact of the life cycle of its products and services on water, the
air and soil.
84 World Business Council for Sustainable Development
85 World Resources Institute
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In turn, the Product Stewardship Policy reaffirms the Pirelli commitment to invest resources in
research and development to reduce its environmental impact, also paying attention to water
consumption.
Pirelli’s commitment to reducing water consumption extends to its supply chain, as outlined in the
Supplier Code of Conduct and the Policy on Sustainable Management of Natural Rubber.
Under the Pirelli Supplier Code of Conduct, Suppliers are required to conserve and manage water
resources responsibly (“Water Stewardship”), optimise their use of water, set targets to reduce its
exploitation and return water with a quality suitable for the ecosystem concerned, with special
attention to those located in water-stressed areas or those with high environmental and biodiversity
value, possibly exceeding legal requirements. Suppliers are also called on to adopt solutions to reuse
waste water, including through specific treatment.
The Sustainable Natural Rubber Management Policy, with further verticalisation on this important
raw material, expressly requires the commitment of Suppliers to take all necessary actions to
conserve freshwater bodies and aquifers, protecting water quality and preventing its contamination.
In order to make these commitments fully operational on the supply chain, Pirelli implements a
sustainable supply chain management system that envisages, among other aspects, the
assessment of their environmental responsibility both at the selection stage and periodically, through
specific ESG assessments and due diligence. More information can be found in the section
“Governance Information”, paragraph “Management of relations with suppliers”.
Targets
In order to manage the material impacts identified regarding the water resource issue, i.e. the water
consumption of both its own business operations and those of its suppliers, Pirelli has established
the following goals.
With reference to its own operations, the Pirelli Industrial Plan includes targets to reduce specific
water withdrawal, measured in cubic metres per tonne of finished product. More specifically, Pirelli
has established two targets, one at Group level and one, further, for its sites located in areas
classified as ‘high water stress’:
-
a 60% reduction in specific water withdrawal by 2030, compared to the 2015 base year.
This is a Group target, covering all own operations, applicable to the 2015-2030 period. The
target monitors the percentage of reduction compared to the base year figure, and has been
confirmed in the current Industrial Plan, in continuity with the previous one, with a baseline
referred to 2015 and a value of 12.9 cubic metres per tonne of finished product.
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-
for High/Extremely High water-stressed areas only86, a 36% reduction in specific water
withdrawal by 2025 (intermediate target) and 45% by 2030, compared to 2015 values. The
target, applicable to the 2015-2030 period, covers the sites owned by Pirelli located in the areas
identified as having high water stress and is included in the current Industrial Plan with a base
value of 2015, equal to 7.8 cubic metres per tonne of finished product.
In 2024, the Group recorded a specific water withdrawal ratio of 6.27 cubic metres per tonne of
finished product, a value 51.4% lower than in 2015, and a specific water withdrawal ratio in water-
stressed areas of 5.12 cubic metres per tonne of finished product, a value 34.6% lower than 2015.
Both figures also show a substantial improvement also with respect to 2023, continuing the positive
trend already recorded in previous years.
The volume of water withdrawn from water stress areas in 2024 was 61% of the total.
The methodology used to define both targets assessed the reduction in water withdrawals, due to
efficiency actions in management of this resource compared to the expected change in production
volumes for the different factories of the Group. For the intermediate targets, in particular, the
investment plans established for the individual sites were also assessed.
The process involved internal stakeholder categories, such as corporate departments, in particular
Health, Safety and Environment, Manufacturing and Sustainability.
Pursuit of the targets illustrated enables positive effects on the control of volumes withdrawn from
the environment and therefore on consumption, thanks to actions identified to make the use of water
resources more efficient.
In particular, a site-specific target is defined for each production site every year; this enables
resources to be allocated effectively and contribute to achieving the overall Group target. The site-
specific targets relating to water management are also linked to the annual remuneration of the Site
and HQ management, ensuring a direct link between the Group’s sustainability objectives and the
performance assessments of individual company positions.
As part of its water resource management strategy, Pirelli pays attention to safeguarding water
quality and maximising its reuse and recycling, as expressed in its Industrial Plan.
86 It includes all those areas characterised by a level of “water stress” equal to or greater than “high” according to the WRI Aqueduct
(Water Risk Atlas) classification, as at 31 December 2023. As at that date, the Pirelli sites falling within these areas are: Campinas,
Feira de Santana and Elias Fausto (BR), Silao (MX), Voronezh (RU), Slatina (RO), Breuberg (GE), Izmit (TR), Jiaozuo and Yanzhou
(CN).
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Actions
Water management and efficiency of use
In order to promote efficient and responsible use of water in production processes and at work sites,
water efficiency management programmes are adopted as part of the environmental management
systems implemented at sites and certified ISO 14001.
The strategy for achieving water resource efficiency goals starts with carrying out specific water
assessments. These assessments are carried out with the support of specialised external companies
and aim to identify opportunities for water resource efficiency, update water use and consumption
flow charts and define quantitative and qualitative site-specific targets and improvement plans. A
new water assessment campaign was started on factories in 2024 and is expected to be finished by
2026.
Actions on this resource concern the management of water use, focusing primarily on reducing
water withdrawal and use, recycling water and improving its quality when discharged through
periodic monitoring and sampling of wastewater, as required by internal procedures, as well as the
aforementioned systems for treating effluents to safeguard the quality of discharges. Facility
management and machinery design are an integral part of these actions. Moreover, in order to keep
employees’ awareness and attention on water management high, during the year some sessions for
updating the results achieved and for training/sharing the improvement activities underway on the
water topic at Group level are organised, such as at the global HSE meeting, held in Milan in October
2024.
These activities are applied to the Group’s production plants and test tracks, because of the greater
contribution in terms of water consumption (which account for approximately 96.6% of the group’s
entire water withdrawal) and because the actions envisaged in the related management plans are
ongoing and are implemented on a recurring basis on these sites.
On this point, in 2024:
At Group level, about 525,244 cubic metres of water used, equivalent to about 11% of the
total withdrawal, were derived from the treatment of from production process waste water,
aimed at water recycling and a more sustainable management of the resource.
About 2,200 cubic metres of rainwater were collected at the Silao site in Mexico and, after
appropriate treatment, were used in production processes, contributing to the reduction of
groundwater withdrawal.
A revamping of the water treatment plant was completed at the Feira site in Brazil in order to
optimise water management and improve system efficiency.
Several improvements were made to the cooling systems at the Merlo site in Argentina and
the Breuberg site in Germany, to ensure a more efficient, sustainable use of water.
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These actions are in line with the Group reference targets and link directly to the goals set out in the
Pirelli HSE Policy, envisaging achievement of environmental targets to reduce the life cycle impact
of products and services on water, air and soil.
In line with the company commitment to the issue of access to drinking water, sanitation and hygiene,
in 2024 assessments were also started, in accordance with the WASH (Water Sanitation Hygiene)
standard for the Group facilities.
With reference to the areas with water stress, at the end of 2024 the specific withdrawal of the Pirelli
plants located in these areas is lower than the Group average, thanks to initiatives such as the
efficiency of the Breuberg cooling lines and the aforementioned rainwater recovery implemented in
Silao in Mexico, which contribute significantly to reaching the specific target. These actions represent
a key element of the Pirelli environmental strategy to promote the sustainable management of water
resources and reduce the overall impact of its production processes.
Assessment of the water impact of the supply chain through Life Cycle Assessment
As stated in Pirelli’s Product Stewardship Policy, during the design and development of new
products, potential risks on health, safety, environment and society are systematically assessed
throughout their life cycle, including analysis of the geopolitical context of reference and ESG impacts
in the supply chain. This assessment is also supported by LCA analyses performed in accordance
with the industry Product Category Rules and adopting the latest methodologies for calculating
potential environmental impacts.
This assessment method enables Pirelli to periodically monitor the environmental footprint generated
by its supply chain. In particular, impact categories related to water resource consumption are
quantified based on the basis of the methods and secondary data available to date. An example of
an impact category assessed is the potential for water use (formerly water depletion).
Metrics – Water resource
As already mentioned in the “Environmental management system and factory environmental
performance monitoring” section, water management data at each production site is monitored
through the HSE-DM data management system, which is developed and managed centrally by the
Health, Safety and Environment Department.
The data below are reported to provide an overall view of Pirelli’s performance in terms of water
resource management, covering the same corporate perimeter as the Group’s consolidated financial
statements, collected through direct or indirect measurements and communicated by the local units.
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The reported indicators are the following:
absolute water consumption, measured in cubic metres, which indicates the total water
consumption of the Group, including areas with water stress, calculated as the difference
between water withdrawal and discharge into the sewer system or surface water body;
reused and recycled water, measured in cubic metres (this means the water deriving from the
treatment of wastewater carried out at internal Pirelli plants, in order to guarantee a level of
quality that allows its reuse within the site);
stored water, measured in cubic metres, which for Pirelli represents the reserve available for fire-
fighting purposes. Specifically due to the purpose for which water is stored at Pirelli sites, any
changes in storage that occur during the year are not accounted for as they are not related to
the production process;
specific consumption, measured by comparing absolute water consumption (in cubic metres) to
net revenues (in millions of euros);
specific withdrawal, measured in cubic metres, in relation to the quantity of finished product
(m3/ton);
absolute withdrawal, measured in cubic metres, which indicates the total withdrawal of water by
the Group;
water discharge, measured in cubic metres, which indicates the Group’s total discharge of water
into the sewer system or a surface water body, partially metered, while the remainder, where the
discharge point does not have a meter, is calculated using estimates based on the consumption
attributed to individual plants.
2024
Water consumption [m3]
1,823,386
Water consumption in water risk areas, including those under high water stress [m3]
1,492,696
Recycled and reused water [m3]
525,244
Stored water [m3]
89,087
Water intensity [Total water consumption m3/ net revenue in million €]
269.20
Specific withdrawal per tonne of finished product [m3/ton]
6.27
Water withdrawals [m3]
4,724,586
Water discharges [m3]
2,901,200
In absolute terms, the water withdrawal amounted to approximately 4.7 million cubic metres, against
a total discharge of approximately 2.9 million cubic metres of domestic and industrial wastewater.
Before being discharged into the final recipient, wastewater – adequately treated as necessary – is
periodically subjected to analytical tests that certify substantial compliance with locally applicable
statutory limits.
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E4 Biodiversity and ecosystems
Following the Double Materiality analysis, the following material impact related to biodiversity
management along Pirelli’s entire value chain has been identified:
Deterioration of ecosystems and exploitation of land by raw material suppliers.
Pirelli has developed a structured, integrated, strategic approach to monitor this issue in its business
processes, as outlined in the following paragraphs.
Pirelli is committed to achieving “No net loss of biodiversity” in its websites through the “mitigation
hierarchy” (avoid, reduce, regenerate, restore) and intends to set targets in line with the Science
Based Targets Network (SBTN) and with the relevant information and methodologies made
progressively available by the SBTN itself.
Particular attention is given to minimising operations in protected areas and/or in sites relevant to
biodiversity87 and/or of particular interest/value. Pirelli also ensures that the choice of each new
production site takes place in compliance with protected areas, guaranteeing the preservation of
biodiversity, ecosystem services and the prevention of deforestation.
The company’s commitment extends to the value chain, with particular attention to increasing
transparency and traceability in the natural rubber supply chain. To this end, the Company is
exploring the tools being developed in the market, both individually and at the industry level, with the
aim of best meeting stakeholders’ expectations and, at the same time, supporting the sustainable
development of the value chain (both upstream and downstream) in an evolving regulatory context,
primarily ensuring compliance with the European Union Deforestation Regulation (EUDR), which will
come into effect starting 30 December 2025.
A significant achievement, also in terms of innovation, was Pirelli’s 2021 milestone with the
introduction of Forest Stewardship Council™ (FSC™) certification for tyres and the production of the
world’s first FSC™-certified tyre line for natural rubber and rayon. FSCTM forest management
certification confirms that plantations are managed in such a way as to preserve biological diversity
and bring benefits to the lives of local communities and workers, while ensuring economic
sustainability.
In terms of governance, the Board of Directors of Pirelli & C. S.p.A., supported in its activities by the
Sustainability Committee, approves, upon the proposal of the Chief Executive Officer (CEO) and in
coordination with the Executive Vice Chairman, the environmental management strategies and
objectives integrated into the Industrial Plan, including those related to biodiversity. In turn, Pirelli’s
87 “Biodiversity-relevant sites” are defined as sites that contain globally, regionally or nationally significant biodiversity (‘Critical
Biodiversity’) and thus include protected areas/habitats/species, species classified as critically endangered, threatened or vulnerable
on the IUCN Red List, endemic species, areas internationally recognised as World Heritage Sites, Ramsar Wetlands, UNESCO’s Man
and Biosphere.
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top management also plays a strategic role in the full implementation of Pirelli’s Environmental
Management Model and related strategic objectives on this matter.
Biodiversity strategy
Pirelli starts with a risk assessment to define the Biodiversity action strategy along the value chain
from upstream to downstream, in line with the company’s Enterprise Risk Management methodology,
and integrated in the company’s multidisciplinary risk management processes, as illustrated in the
paragraph “The Identification of biodiversity-related IROs” in the “General information” section.
The Pirelli Group has recognised Nature as relevant in its Sustainability Strategy and has committed
to developing Biodiversity Action Plans (BAPs) for all of the Pirelli industrial sites and test tracks,
as mentioned in the “General Information” section.
The methodology adopted for site-specific analyses is based on the TNFD88 LEAP89 framework. The
site analysis addressed the five main factors of the biodiversity loss and ecosystem degradation
identified by IPBES90 and was conducted also considering setting targets in compliance with the
Science Based Targets Network (SBTN). In order to cascade the strategy into the BAPs, the state
of biodiversity in the natural areas surrounding all Pirelli Group operating sites was analysed,
together with impacts and dependencies linked to these areas. Each Pirelli operating site was
assessed using the basic criteria in the LEAP approach: biodiversity importance, ecosystem
integrity, water stress and potentially material dependencies or impacts. The assessment was carried
out using public tools and datasets (for example ENCORE, WRI Aqueduct, WWF Biodiversity and
Water Risk Filter, IBAT). In addition to these criteria, STAR indicators91 and site-specific indicators
(location-specific approach) for the localisation of environmental performance (e.g. environmental
KPIs) were considered and applied. The sites analysed were then prioritised to identify the areas
where mitigation actions could lead to the most significant results; the magnitude of Nature-related
impacts/dependencies and risks/opportunities were quantified and, in turn, linked to the five factors
of biodiversity loss and ecosystem degradation identified by IPBES, namely land-/water-/sea-
use change, resource exploitation, climate change, pollution and invasive alien species. Risk
mitigation actions and opportunities have been identified to address each biodiversity loss and
ecosystem degradation factor, recorded and associated with site-specific goals related to the “No
Net Loss of Biodiversity” and the “Mitigation Hierarchy” (avoid, reduce, regenerate, restore) and
contributing to the Group’s overall Nature Strategy, set out in the Pirelli Global Health, Safety and
Environment Policy.
The risk assessment was carried out following the TNFD methodology, and the levels used in the
assessment to assign probability of occurrence and magnitude were aligned with those used by
88 Task Force on Nature-related Financial Disclosures
89 Locate, Evaluate, Assess, Prepare
90 Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services
91 Species Threat Abatement and Restoration Metric
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Pirelli Enterprise Risk Management. For Pirelli sites, particularly production plants and test tracks,
physical risks (such as droughts, landslides, floods, water retention capacity, fires, soil, air, and
water pollution) and transitional risks (legislative and reputational) have been analysed. The
opportunities identified for Pirelli sites themselves are manifold and mainly include actions to
reduce water use, through adoption of viable, sustainable alternatives, decreasing energy
consumption, and actions to restore or preserve local ecosystems.
The analysis considered the following assumptions:
Days of site closure following the occurrence of an extreme natural event (such as flood and fire)
Costs, obtained from literature available, associated with restoring the Pirelli site operations (e.g.
cost of factory clean-up following a flood) and the area surrounding the sites following the
occurrence of an extreme natural event
Hectares of local natural territory for restoration and conservation work. The land portions
earmarked for these works were estimated at 10, 20 or 100 hectares, depending on specific site
or surrounding territory characteristics. The cost associated with restoration/conservation was
identified from the literature available.
Reputational damage estimated for the Group
A 20-year time horizon (2030-2050) was adopted for the risk assessment. The choice of a long-term
period is motivated by wanting to include the probability of damage occurring over a sufficiently long-
time span, to allow ecological dynamics to develop.
With reference to the scope of the Group, all tyre production sites and test tracks owned by Pirelli
were subjected to a qualitative and quantitative assessment of impacts, dependencies, risks
and opportunities, involving local departments to understand how site activities influence and
impact the surrounding environment and related ecosystem services. In particular, impacts on
natural resources and the environment, dependencies – i.e. the main ecosystem services on which
site activities depend or to which they are linked – were identified, and the main risks and related
opportunities and site-specific improvement actions that could be implemented were assessed.
As for the impacts identified, these relate to water consumption, greenhouse gas emissions, and
the discharge of wastewater containing substances with a potential to contaminate water and soil.
The main dependency, and the resource Pirelli sites use most, appears to be water92, for which
quantitative data were analysed on water withdrawals, the source (whether from watercourses or
wells), and whether it is treated and controlled after use and at discharge. As for risks, these can
be divided into two main categories: physical and transitional. The former concern flood, landslide
and drought risks, whereas the latter are related to legislative aspects, such as the risk of incurring
fines or penalties in any non-compliance with environmental regulations, and reputational aspects,
92 Raw materials are excluded from the scope of analysis at this early stage.
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for example the risk of incurring bad publicity if, for example, the site has to respond to pollution
events caused by site actions. Lastly, opportunities have been identified that mainly include actions
to reduce water use by adopting viable, sustainable alternatives, monitoring and/or filtering
wastewater going beyond what is required by law, decreasing energy consumption, and those to
restore or preserve local ecosystems.
When assessing risks and opportunities for each site, the local Sustainability and Environment
departments were involved to better understand and characterise the context. The project
identification stage for environmental upgrading and the implementation envisages involvement of
local communities and stakeholders, in line with SBTN expectations.
For each Pirelli site (production plants, test tracks), a site-specific analysis was conducted to identify
the presence of protected areas and “Key Biodiversity Areas” (KBAs) adjacent to the site, within
ranges of 5 km, 10 km, and 20 km. This analysis contributed to assessing impacts, dependencies,
risks, and opportunities. Currently, across Pirelli’s entire footprint, a non-production site is located
within protected areas of high biological diversity value: this is the Vizzola Ticino test track (Italy).
To ensure the utmost protection of the natural environment in which the Vizzola test track is located,
Pirelli has implemented an ISO 14001 certified Environmental Management System in accordance
with the Parco del Ticino. In the area (0.37 square kilometres included in the Lombardy area of the
Ticino Park, a UNESCO MAB reserve93) there are 7 endangered (CR), 21 endangered (EN) and 61
vulnerable (VU) species on the IUCN red list within 50 km of the site, while 8 protected areas and 1
key biodiversity areas are located within 5 km of the site. Environmental impact on biodiversity in the
area is not significant. However, several actions were carried out, both by the Company directly and
by the Park Authority, to mitigate and improve the interactions of Pirelli activities with the natural
environment, as stipulated in the multi-year agreement signed by the parties and valid until 2033. In
2016, a campaign to monitor air quality was also carried out and highlighted the substantial
negligibility of the impacts of the activity compared to the context the test field is part of. In addition,
the site was subject to a new site-specific analysis in 2023, which formed the basis for the definition
of the relevant Biodiversity Action Plan.
Lastly, for all the sites analysed, no material negative impacts were identified concerning land
degradation, desertification and soil sealing.
With reference to the supply chain, the impacts on biodiversity concern the deterioration of
ecosystems and the exploitation of land by suppliers, with particular reference to deforestation risk
linked to materials of forest origin and in particular, by materiality of use of the commodity in the
Pirelli product, to natural rubber.
There are many measures to mitigate the risk of deforestation in the natural rubber chain: from direct
support for capacity building projects at GPSNR, to on-site third-party audits at suppliers (followed
by specific recovery plans), to engaging suppliers to adopt good agricultural practices in line with
93 Man and Biosphere is a set of biosphere reserves in numerous countries around the world protected by UNESCO with the aim of
promoting socio-economic development and the conservation of ecosystems and biological diversity.
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GPSNR’s desired state and with FSCTM certification standards (Pirelli produced the world’s first
FSCTM tyre in 2021 and from 2024 F1® tyres have also been certified), and engaging with local
communities. All this is in addition to compliance with the EUDR regulation, which will come into
effect in December 2025.
Policies
Pirelli pays the utmost attention to ensuring that corporate activities do not interfere with the
biodiversity characteristic of both the areas bordering the operating sites and along the entire value
chain, upstream and downstream, in which the Company operates.
The Company commitment to minimising impact on biodiversity, ecosystems and related ecosystem
services is expressed in the Health, Safety & Environment Policy (HSE Policy). It is also set out in
the Sustainable Natural Rubber Policy for the specific commodity, the impacts of which are focused
on in the Double Materiality Analysis.
The HSE Policy applies to all Group operations conducted by Pirelli and, where Pirelli does not have
operational control, all business partners (e.g. joint ventures, suppliers, etc.) are required to comply
with the principles set out in the Policy. Pirelli is committed to action on several fronts to protect
biodiversity throughout the entire product life cycle, from the upstream supply chain to the
downstream impacts.
With reference to upstream activities, Pirelli requires its suppliers to implement a management model
at their sites and along their supply chain to protect biodiversity and ecosystems with conservation
and responsible use of natural resources, in accordance with international standards and the laws
and regulations of the countries where they operate.
More specifically, through the Pirelli Supplier Code of Conduct, which forms an integral part of the
contractual purchasing clauses, Pirelli requires its suppliers to undertake to prevent, reduce and
mitigate all forms of environmental pollution (including soil pollution) and to contribute actively to the
protection of natural ecosystems, biodiversity and ecosystem services, to prevent the overuse of
natural resources, to promote the restoration of ecosystems, to stop any contribution to
deforestation, degradation and/or conversion of forests, and to act in line with the internationally
recognised “High Conservation Value” (HCV) and “High Carbon Stock” (HCS) approaches. Suppliers
operating in sites containing critical biodiversity are also called on to adopt the hierarchical model of
mitigation (avoid, reduce, regenerate, restore) to protect and enhance biodiversity.
Among the materials that have always been valuable for tyre production is natural rubber.
In view of how precious the material is and, at the same time, the need to support its “vertical” (i.e.
in terms of productivity) and not “horizontal” development (i.e. with a view to preventing
deforestation), in 2017 Pirelli issued its Policy on Sustainable Natural Rubber Policy, after a long
development process based on consultation with key stakeholders and companies, which have
historical experience in the sustainable procurement of materials. Pirelli’s Policy is aligned with the
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Policy Framework of the Global Platform for Sustainable Natural Rubber (GPSNR), of which Pirelli
is also a founding member.
As stated in the Policy, Pirelli undertakes to promote, develop and implement the sustainable and
responsible sourcing and use of natural rubber throughout its value chain. In particular, with
reference to biodiversity, the Policy emphasises the positioning of the Company and what is required
to the natural rubber suppliers, namely:
protection of ecosystems, flora and fauna;
no deforestation, no exploitation of peatlands, no use of fire, and adoption of the “High
Conservation Value (HCV)” and “High Carbon Stock (HCS)” methodologies;
efficient use of resources;
ethics and anti-corruption;
traceability and mapping of socio-environmental risks along the supply chain;
encouraging its suppliers and sub-suppliers to adopt robust, internationally recognised and third-
party verified certification systems at all levels of the supply chain (e.g. FSCTM, a certification
system for the entire upstream chain introduced, for the first time in the tyre world, by Pirelli in
2021).
In terms of the Company’s commitment to non-deforestation, it should be noted that the date and
cut-off year for the non-deforestation target is 1 April 2019, as stated in the Policy in line with the
dictates of the Global Platform for Sustainable Natural Rubber (GPSNR), of which Pirelli is a founding
member.
To verify suppliers’ compliance with these commitments, Pirelli conducts annual on-site audits
performed by third-party entities, based on a targeted selection of suppliers each year. Suppliers to
be audited are chosen based on specific parameters, such as the following points:
the supplier has never been audited, as in the case of new suppliers, or has not been audited for
more than 2 years,
significance of the volumes supplied,
results of previous audits and potential risks.
The audits, conducted by an independent external auditor, assess compliance with the Pirelli
Sustainable Natural Rubber Policy, as well as with the Code of Conduct, local legal requirements
and international standards.
The audits also provide a gap analysis for suppliers, helping them implement corrective action plans
if necessary, thereby supporting them to strengthening biodiversity protection along the supply chain.
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For more information on the procurement process, please refer to the section titled “Governance
Information”, paragraph “Supplier relationship management”.
Targets
The Pirelli commitment to the protection of biodiversity and the responsible management of natural
resources and biodiversity is expressed in clear, measurable goals, set out in the Company’s
Industrial Plan, consistent with the Health, Safety and Environment Policy and the Sustainable
Natural Rubber Management Policy.
These objectives are aligned with the recommendations of the Global Biodiversity Framework
post-2020 (GBF) and the 2022 Kunming-Montreal Global Biodiversity Framework, which aim
to halt biodiversity loss and restore degraded ecosystems.
Actions have been identified to mitigate risks and exploit opportunities related to the drivers of
biodiversity loss and ecosystem degradation. These actions have been recorded and associated
with specific objectives for each site, in line with the “No net Loss of Biodiversity” principle of the
“Mitigation Hierarchy” (avoid, reduce, regenerate, restore) and thus contributing to the Group’s
overall Strategy for Nature.
Biodiversity in the LCA for 100% of new product lines from 2024 onwards
With reference to life-cycle impacts, biodiversity risks are considered to be part of product design
with a view to mitigating the related impacts along the life cycle and, from 2024, biodiversity
parameters will be systematically included in the Life Cycle Assessment (LCA) of new products.
In this context, Pirelli has planned, through its Industrial Plan, to integrate biodiversity assessments
into 100% of the LCA analyses conducted on car product lines by 2024. This absolute target is based
on 2023 and is applied extensively and annually to all new passenger car tyre lines of the Group. In
2024, 100% performance was achieved, proving complete alignment with the target set.
Fundamental is the ongoing scientific research activity for the mitigation of impacts, such as
emissions from tyres in use, which Pirelli conducts through its own Research & Development and
related partnerships, the activity within the Tire Industry Project of the WBCSD94, which aims to
identify and proactively address the potential impacts on human health and the environment
associated with the life cycle of tyres, as well as through other trade associations active in this regard
94 World Business Council for Sustainable Development
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(ETRMA and USTMA). For more information on the emissions from tyres in use, please refer to
paragraph “The phenomenon of particulate emissions from tread wear”.
Biodiversity Action Plan for all industrial sites and test tracks: 100% by 2025
Pirelli has set a target to implement a Biodiversity Action Plan by 2025 for 100% of its industrial sites
and test tracks of fully consolidated Group companies95. The objective is to define mitigation,
conservation, and restoration actions based on the assessed impacts, dependencies, and risks.
This goal is based on the TNFD framework which required an analysis of all Pirelli sites to identify
the actions needed for each area to mitigate impacts on biodiversity and promote conservation.
The target has 2023 as its baseline year, the year in which the analysis activity began, and the
performance recorded in 2024, calculated as the number of sites with a complete BAP out of all
sites, is 55% in line with the expected target of 100% by 2025.
The target related to the Biodiversity Action Plans is aligned with all four principles of the Mitigation
Hierarchy, as each Biodiversity Action Plan includes guidelines, mitigation actions, and opportunities
per each Pirelli site.
FSC™-certified natural rubber in European plants: 100% by 2026
As part of Pirelli’s strategy for the responsible sourcing of natural rubber, the company targets to use
100% FSC™-certified natural rubber in its European plants by 2026. This path was started in
Europe in 2023 with the production of F1® tyres with FSC™ certified rubber. This is measured by
calculating the percentage of natural rubber from FSC™-certified sources compared to the natural
rubber requirement in European plants. By 2024, progress is in line with the Group’s plans with a
17% share of FSC™ -certified natural rubber. This target is in line with the last principle of the
“Mitigation Hierarchy”, i.e. “compensate and regenerate”, as it aims to preserve forests and local
biodiversity.
Biodiversity training for 100% of raw material and Capex suppliers
By 2025, in line with the Group Industrial Plan, Pirelli will deliver a dedicated training course to 100%
of raw material suppliers and Capex suppliers on Nature and Biodiversity issues, with the aim of
strengthening capacity in the supply chain by providing a comprehensive overview of regulations
and management tools, both at supplier sites and in the upstream supply chain.
95 16 production sites, 1 natural rubber processing operator and 3 test tracks
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The objective related to training on Nature and Biodiversity (for which reference is also made to the
“Social Information” section, “Training along the Supply Chain” paragraph) aligns with the first two
principles of the Mitigation Hierarchy—”avoid” and “minimise”—as it aims to equip raw material
producers with the necessary tools to minimise waste or eliminate it entirely during production,
storage, and transportation to Pirelli’s production sites.
In support of biodiversity and ecosystem services along the value chain from upstream to
downstream, it is also worth mentioning the Group’s decarbonisation targets (Scope 1 and 2
emissions on the Pirelli perimeter side, and Scope 3 on the upstream value chain side), validated by
SBTi in line with the 1.5°C Scenario, the targets for reducing water withdrawals from Pirelli factories,
the targets for recycling materials and reducing the rolling resistance of tyres at the downstream
level.
Actions
Biodiversity Action Plans
As stated in the paragraph related to the biodiversity strategy, Pirelli is committed to achieving No
Net Loss of Biodiversity and to minimising its operations in protected areas and/or “biodiversity-
relevant sites” and/or of special interest/value. In light of this, Pirelli has started developing
Biodiversity Action Plans to cover 100% of its industrial sites and test tracks by 2025. These plans
are based on identifying the dependencies/impacts of its operations on nature and establishing
effective actions to reduce these dependencies/impacts, in line with LEAP expectations. During
2024, 12 Biodiversity Action Plans were started, finalised and approved. The remaining sites will
have a finalised, approved plan by 2025 in accordance with the Group target. The actions identified
concern: reducing water consumption and withdrawal, reducing water pollution and increasing the
quality of water leaving the sites, reducing CO2 emissions and energy consumption, restoring
degraded ecosystems and eradicating alien species, considering the IPBES drivers of biodiversity
loss as reference.
As part of its support of biodiversity, Pirelli also actively collaborates with multiple stakeholders
including its suppliers for whom a training programme is planned, focused on Nature & Biodiversity
issues, in line with the Group’s target. For more details on the programme and the target, please
refer to the “Social information” section, “Training along supply chain” paragraph.
Further multi-stakeholder actions are reported below.
Project: Living Rubber
In 2021, Pirelli in partnership with BMW and BirdLife International launched a multi-year project
called “Living Rubber”, which aims to promote long-term sustainable and deforestation-free natural
rubber production in Indonesia.
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Pirelli aims to preserve more than two thousand hectares of rainforest in Hutan Harapan (Sumatra
Island) from deforestation, as well as protecting the indigenous community and protecting
endangered animal species. The different activities are implemented in coherence with the “Desired
State” of the Global Platform for Sustainable Natural Rubber (GPSNR).
More precisely, the Project sets precise performance KPIs with respect to economic development
for natural rubber farming families, community rights, collaboration with institutions, healthy
ecosystems and resilient agro-ecosystems for an ecologically sustainable supply chain.
In 2024, the following progress was monitored through surveys and interviews (i) Agricultural
services: capacity building for good agricultural practices, improvement of the rubber supply chain
through digitisation, its compliance with the EUDR, warehouses for storage, and improvement of on-
site management of rubber agro-forestry by strengthening community-based natural resource
management agreements (CRMAs); (ii) provision of financial services: Cooperatives established
have capital to buy rubber from farmers, provided that the latter comply with the EUDR. All
transactions are digitally recorded and monitored. (iii) Market access: With the establishment of the
cooperatives, including development of the abilities needed to run them, they should be able to
stabilise prices and ensure favourable trading conditions. (iv) Gender equality: inclusion of women
in agricultural activities. The studies were followed by concrete measures to improve the role of
women in decision-making positions and to encourage taking an active part in activities such as
training, in the cooperative and as community guardians. (v) Provision of basic services: Although
not directly related to agriculture, this initiative has allocated resources for a literacy programme,
reproductive health and a clean, healthy environment programme. These are requirements that
create a favourable environment for communities to carry out social and economic activities. (vi)
Protection and conservation of biodiversity: Given the importance of biodiversity in this area, the
“Batin Sembilan” were hired as community guardians to patrol an area of 2,794 hectares and prevent
illegal activities. In addition, surveys were conducted on four key species threatened with extinction:
the Sumatran tiger, the agile gibbon, the helmeted hornbill and the greater green leafbird.
Reforestation of the Cuenca de la Esperanza natural area
In 2024, a further agreement was signed in Mexico with local government institutions for the
conservation of biodiversity and the reforestation of the Cuenca de la Esperanza protected natural
area, located in the Guanajuato Region. With this initiative, in addition to the environmental
protection of flora and fauna, there is preservation of an area that is an important water resource for
the population of the capital of Guanajuato and Silao, the city where the Pirelli plant is located. This
new agreement intends to restore a further 100 hectares to the 50 hectares already preserved by
Pirelli.
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Reforestation of Neptune grass with One Ocean Foundation
Pirelli is engaged with One Ocean Foundation in the Blue Forest Project, dedicated to the
reforestation of Posidonia oceanica in the Mediterranean Sea, a basin with unique ecological
characteristics that is highly delicate and fragile, where this plant has its exclusive growth range.
Posidonia is an endemic marine plant that forms extensive underwater forests (meadows) and plays
an important role in the ecosystem, comparable to terrestrial plants. It has a high capacity to absorb
atmospheric carbon dioxide and then store it in sediments. Pirelli is positioning itself as the
forerunner and first mover for reforestation activities in the bay of Cala di Volpe, Sardinia: an area
that extends about 80 hectares and where there is a regulated buoy field. To date, activities in the
area potentially represent the largest protection and restoration area of Posidonia oceanica
in the Mediterranean Sea.
The reforestation activity consists in identifying degraded stretches of seabed that have been
damaged by anthropogenic and/or natural activities and are suitable for restoration and planting.
Over the period 2025-2026, Pirelli has a reforestation target of 600 m2 of Posidonia oceanica
seagrass meadows, 300 m2 per year. The project is being developed in collaboration with the
University of Sassari, its scientific partner, in charge of monitoring the reforested sites and studying
marine biodiversity, but also of a preliminary seabed mapping activity to quantify and identify
potential areas for intervention. The planting activity is led by a team of certified scientific technical
divers; it involves the selection and collection of Posidonia oceanica cuttings and seeds and
subsequent transplanting onto coconut fibre mats and metal stakes.
Together for the sustainability of natural rubber - the GPSNR platform
In line with the stated approach, in 2017 Pirelli played a proactive role in the creation of the Global
Platform for Sustainable Natural Rubber - GPSNR, together with tyre manufacturers which are also
part of the Tyre Industry Project Group, within the World Business Council for Sustainable
Development. The development of the Platform benefited from the contribution, ideas and
suggestions of the main categories of Stakeholders involved in the value chain, such as rubber
producers, processors, automobile manufacturers, and from the fundamental contribution deriving
from the experience of major international NGOs.
The Platform, launched in Singapore in October 2018 with the participation of the first “founding
members”, including Pirelli, is independent, based on multi-stakeholder dialogue and aims to support
the sustainable development of the natural rubber business globally, for the benefit of the entire value
chain through shared tools and initiatives based on respect for human and labour rights, prevention
of land grabbing, respect for biodiversity and increased plant productivity, especially those of small
owners. The first GPSNR General Assembly was held in March 2019.
In 2021, the General Assembly stipulated that from 2022 onwards, members must annually provide
the status of implementation of the GPSNR Policy (status provided by Pirelli to GPSNR)
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Also in 2024, Pirelli actively participated as in several working groups of the platform, in particular:
the “Smallholders Representation and Capacity Building (SCB) Working Group” combined with
the Smallholder Representation and Capacity Building working groups, in 2024 continued its
activities aimed at developing a capacity building strategy for smallholder farmers and industrial
plantations, identifying potential sources of funding and supporting ongoing capacity building
projects for smallholder farmer;
the “Shared Responsibility Working Group” which aims to define the principles and framework
for the implementation of shared responsibility within the platform. Work continued in 2024 with
the finalisation of the SIM and the development of the transfer of value;
the “Assurance Taskforce Working Group”, which focuses on the development of an assurance
system that supports GPSNR in demonstrating its long-term positive impact on the natural rubber
industry, allowing member companies to validate their sustainability claims and commitments.
Support for small farmers
Pirelli continues to actively support initiatives that improve the livelihoods of small farmers, promoting
the sustainability of the natural rubber supply chain. As a member of the GPSNR Smallholder
Capacity Building Working Group, Pirelli reviews and provides feedback on GPSNR capacity building
projects, including training materials, implementation plans, and interim results.
In 2024, these projects included the Good Agricultural Practices Coaching Programme implemented
by Koltiva in Thailand, launched for smallholder farmers in Bueng Kan and Chiang Rai. This
programme helps smallholders adopt good agricultural practices (GAPs) in line with GPSNR
environmental and social standards and compliant with the Thai agricultural standard set by the
Ministry of Agriculture and Cooperatives.
2024 also saw the completion of Phase I of the GAP Coaching Programme implemented by Koltiva
in Indonesia, co-sponsored by Pirelli. During the project period from 2022 to 2024, the programme
successfully registered and trained 5,000 smallholder farmers (approximately 45% women) on Good
Agricultural Practices in 2 provinces, 4 districts and 14 sub-districts in South Sumatra. Through these
efforts, Pirelli helps strengthen smallholder communities and support sustainable practices in the
natural rubber supply chain. For more details, see the GPSNR96 website on capacity building
projects.
96 Link to the website: https://sustainablenaturalrubber.org/capacity-building-projects/
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E5 Circular Economy
Resource use and Circular economy
Following the Double Materiality analysis, material impacts, risks and opportunities associated with
the topic of Circular Economy emerged, guiding the Pirelli commitment to an increasingly sustainable
and circular model.
Material impacts:
Use of recycled or recyclable materials by Pirelli, with a potential positive impact on
preserving resources.
Contributing to preserving resources through product durability and recyclability.
In the downstream value chain, waste generation, i.e. end-of-life tyres (ELTs).
Material risks:
Increase in the cost of “carbon-intensive” goods (e.g. steel, aluminium) following introduction
of the Carbon Border Adjustment Mechanism (CBAM).
Material opportunities:
Competitive advantage from early adoption of circular economy solutions and technologies
such as management of resource scarcity and product end-of-life.
Reduced costs through use of artificial intelligence solutions for predictive maintenance, to
minimise errors and machine breakdowns, thus reducing material waste.
Pirelli is strongly committed to integrating circular economy principles throughout the product life
cycle, adopting innovative and sustainable solutions to reduce the environmental impact and
maximise resource efficiency.
Pirelli’s approach to the circular economy: The 5Rs
In Pirelli’s strategy, a decisive role is played by the continuous focus on the definition and
implementation of increasingly circular solutions.
It is in this context that Pirelli has developed its own approach to the Circular Economy, which is
based on rethinking (Rethink) the way products, processes and services are developed, with the
goal of achieving ever-higher performance, continuously reducing environmental impacts and
protecting the health and safety of people throughout the life cycle of the product.
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Rethink is supported by the other four commitments of Pirelli’s 5R approach:
Refuse: avoiding processes, products, services and materials that are redundant, while at the
same time promoting an increase in the safety of the products used, through the replacement of
those that are not considered suitable, as a preventive measure and even going beyond
legislative requirements.
Reduce: reducing the use of resources, especially non-renewable ones, both in terms of energy
carriers and natural resources, and of raw materials, with the aim of reducing the Group’s
Environmental Footprint, also with a view to decarbonisation. Reducing also means developing
tyres with increasingly less rolling resistance that can help reduce vehicle consumption, as well
as production processes that use fewer resources and generate less and more easily recyclable
waste. Pirelli has expressed several public targets to support its reduction commitment. They
include those on product performance, process efficiency for Pirelli factories and suppliers, as
specified in the “Environmental Information” section, “Management of greenhouse gas emissions
and climate transition plan” paragraph.
Reuse: maximising the reuse of resources and products, consistent with the quality and safety
levels required for tyres, with the aim of preventing waste generation and unnecessary
consumption of resources, especially non-renewable resources. This commitment is reflected,
for example, in the design of tyres with an increasing content of recycled raw materials, with
targets defined at product level, as expressed in the Group Industrial Plan. These products will
see the increased use of third-party certifications to guarantee the increased sustainability of
these materials along the supply chain and verify the proportion of reported “bio-based and
recycled” materials.
Recycle: to recycle residues from production processes, promoting material recovery as much
as possible over energy recovery, and to promote the recovery of end-of-life tyres (ELTs),
including through research and development to maximise the quality of the secondary raw
material resulting from ELT recycling; thus facilitating its use both in closed-loop applications
(from tyre to tyre), and in other phases of the value chain by promoting industrial ecosystems.
Policies for sustainable resource management and the circular economy
The Group approach to the circular economy and end of life is highlighted in the Health, Safety and
Environment Policy, in the Product Stewardship Policy and the Sustainable Natural Rubber
Management Policy, in light of which Pirelli is committed to:
- promoting positive impacts on resource conservation by using recycled or recyclable materials as
well as in terms of the potential Pirelli contribution to preserving resources, for example through
product durability and recyclability;
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- addressing the risks and seizing the opportunities associated with the transition to a low-carbon
and circular economy, including impacts on raw material costs and the competitive advantage of
early adoption of innovative solutions.
More specifically, the Health, Safety and Environment Policy reaffirms how Pirelli is committed to
developing products and production processes that comply with circular economy principles
translated into the “5Rs” approach (Rethink – Refuse – Reduce – Reuse – Recycle), referred to in
the previous paragraph, in order to pursue the responsible use and reduction of natural resource
consumption and minimise polluting emissions. The Group also sets environmental targets and goals
to reduce the life cycle impact of its products and services on air, soil and water, such as towards
“Zero Waste to Landfill”, aiming to maximise recovery and recycling.
In addition, the Product Stewardship Policy also makes explicit the Pirelli responsibility to invest
resources in research and development to design innovative products with a lower environmental
impact and to inform customers and end consumers on the safest ways to use its products, while
guaranteeing respect for the environment during their use and during disposal, facilitating recycling
or reuse wherever possible.
The Pirelli approach to the circular economy extends to its supply chain, enforcing safety
requirements and including them in its contractual provisions with suppliers. In the process of
selecting raw materials, particular attention is paid to any potential impacts, including via the use of
LCA analyses, that materials may have on the health of people and the environment, with a view to
their progressive minimisation.
In line with the Suppliers’ Code of Conduct, suppliers are required to support the use and
development of renewable and recycled raw materials and to develop processes and
products/services clearly designed to optimise the use of resources; progressively replacing non-
renewable resources with natural or recycled ones, to be recyclable and recoverable, to prevent the
production of waste, to reduce its hazardousness and to maximise the amount of waste sent to
recovery operations and preferably to material recycling, compliant with the circular economy model.
For products and services provided to Pirelli, suppliers are also strongly encouraged to use reusable,
returnable packaging.
The Sustainable Natural Rubber Management Policy also requires the same quality and
efficiency approach from suppliers of this raw material as Pirelli; in order to reduce pressure on
biodiversity, increase product efficiency and reduce disposal costs.
In order to make these supply chain commitments fully operational, Pirelli implements a sustainable
supply chain management system, which includes, among other aspects, the assessment of
suppliers’ environmental responsibility both at the selection stage and periodically. For more
information, please refer to the “Information on Governance” section, “Supply chain Sustainable
Management System” paragraph.
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Targets
The Company has set targets for increasing the use of natural (bio-based)97 and recycled98 materials
in its tyres and is committed to increasing the use of third-party certified materials for key
sustainability aspects such as, for example, FSCTM materials of forest origin (e.g. natural rubber) and
ISCC+99 for materials under the scheme (bio-based, circular or recycled). The certification roadmap
in Pirelli’s factories is being extended and at the end of 2024 all European factories were already
certified according to FSC™ and ISCC+ standards, as well as other non-EU factories FSC™ or
ISCC+ certified.
Concerning raw materials100, Pirelli expects to increase the amount of non-fossil origin materials in
its products.
More specifically, the targets included in the Industrial Plan envisage achieving:
for its best product101, more than 70% in weight of natural (bio-based) and recycled
materials in 2025 and more than 80% in 2030, with the vision of reaching 100% of non-
fossil origin materials in the long term.
The target refers to the Pirelli product, which is commercially available on the market, with the highest
content of bio-based and recycled materials in the reporting year and is based on a starting value of
33% in 2021; this is the baseline against which progress is monitored. The methodology adopted for
the calculation of the share of bio-based and recycled materials involves the combination of physical
segregation and mass balance (according to the ISCC+ standard) and takes into account only the
percentages declared by the suppliers verified by a third party. Pirelli has also designed a logo to
identify products that contain at least 50% natural and recycled materials, which can be used as a
hallmark and to enhance of this type of tyres, in order to guarantee the utmost transparency toward
users.
With reference to Pirelli tyres produced in 2024, the highest share of bio-based and recycled
materials in a single product on the market reached 58.5%102. The result, obtained on a specific
measure of the new P ZeroTM E line, was checked by a third party against ISO 14021, to guarantee
maximum communication transparency and solidity for Customers and Stakeholders in general.
97 Bio-based material: Material fully or partially of biogenic origin. (source: ISO 16620 – 2 2019)
98 Recycled material: material that has been reprocessed from recovered material through a manufacturing process and transformed into
a final product or component for incorporation into a product. (source: ISO 14021 – paragraph 7.8.1.1).
99 International Sustainability and Carbon Certification
100 The Pirelli product targets refer to tyre consumers so are therefore only to be compared, where relevant, to targets related to consumer
tyres and not to other tyre categories or consolidated production segments.
101 Pirelli’s commercially available product with the highest content of natural (bio-based) and recycled materials in the reporting year.
102 P Zero E, size 255/50R20 (IPcode 42871).
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•
for the total of raw materials used by the Pirelli Group, 27% in weight of bio-based and
recycled materials in 2025 and 40% in 2030.
The target regards the entire scope of raw materials used by Pirelli to manufacture tyres in the
reporting year and refers to a baseline value of 21% in 2021. This is measured by analysing the
percentages of bio-based and recycled materials declared by suppliers and calculated by comparing
the value of all raw materials, natural and recycled, to the raw material total used for all tyre
production.
Regarding the total 2024 production, considering the total volume of raw materials used, 23.7% are
of natural or recycled origin103. Performance compared to targets recorded in 2024 is in line with
expectations, confirming the effectiveness of actions taken.
These targets reflect the ongoing company commitment to promoting a circular economy and
reducing the environmental impact of its products through sustainable innovation and responsible
resource management.
In line with this commitment, the company introduced a dedicated Life-Cycle Assessment (LCA)
target for the new car tyre lines. The goal is to conduct an LCA on all new lines launched in the
reporting period, with 100% coverage by 2025. As at 2024, the performance recorded is in line with
expectations, confirming the path towards the final target, covering half the new lines launched in
the year.
In addition to new car tyre lines, products already launched on the market are also subject to LCA
assessment. By the end of 2024, about 55% of Pirelli products had an LCA and the remaining 45%
are covered by a simplified LCA approach104.
Moreover, as specified in the “Biodiversity and Ecosystems” section, Pirelli is committed to the
responsible sourcing of natural rubber, in order to use 100% FSCTM-certified natural rubber
in its European plants by the end 2026. This path was started in Europe in 2023 with the
production of F1® tyres. This is measured by calculating the percentage of natural rubber from
FSCTM-certified sources compared to the natural rubber requirement in European plants. By 2024,
progress is in line with the Group’s plans with a 17% share of FSC™-certified natural rubber.
These targets reflect the Company’s concrete commitment to sustainable innovation through
responsible resource management and a reduction of environmental and social impact throughout
the supply chain.
103 Of which 4.4% is recycled material and 19.3% is material from natural origin (bio-based)
104 LCA used for the screening assessment of products based on values representative of group production
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Actions
In line with the Pirelli Eco-Safety Design Strategy and Product Stewardship Policy commitments, the
research and development of innovative materials is essential in order to design and manufacture
tyres, that guarantee lower social and environmental impacts throughout their life cycle while
ensuring greater driving safety and high performance.
Pirelli’s policy with reference to the materials used in the tyre manufacturing process is stringent.
Pirelli applies safety and acceptability requirements to minimise negative sustainability impacts from
raw materials, adding these requirements to contractual provisions with suppliers. In the raw material
selection process, special attention is paid to any potential impacts, including by using LCA analyses,
that they could have on the health of people and the environment, aimed at their progressive
minimisation.
Collaboration with external stakeholders with a view to research, innovation and best practices plays
a particularly important role in the development of more sustainable materials. In particular, Pirelli
has many Joint Development Partnerships with strategic suppliers, research agreements with
universities (for example, the Joint Labs agreement between Pirelli and the Politecnico of Milan for
research on increasingly sustainable materials, such as bio-polymers), collaborations at the sector
level for scientific research as part of the WBCSD’s Tire Industry Project, with the aim of proactively
identifying and addressing potential human health and environmental impacts associated with tyre
life cycle impacts, and multi-stakeholder collaborations such as the Global Platform for Sustainable
Natural Rubber (GPSNR), in order to support sustainable development of the Natural Rubber
business.
More specifically, Pirelli focused on the following activities, discussed in more detail in the following
paragraphs:
-
setting a clear target for the introduction of “bio-based” and recycled raw materials;
-
increased use of recycled materials, especially recycled steel and silica from rice husks;
-
increased use of carbon black recovered from end-of-life tyres;
-
scouting for suppliers of carbon black from end-of-life tyres that meet the high-quality Pirelli
standards;
-
improved tread compound wear, with the aim of ensuring greater mileage for the same
material usage.
These apply to the entire group and involve and engage both upstream (supply chain) and
downstream (customers and tyre end-of-life managers) value chain players.
The aforementioned actions are recurring and aimed at achieving the material targets described in
the previous section and the tyre-wear targets described in the paragraph “Pollution”, section “The
phenomenon of particulate emissions from tread wear”.
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The operating costs of the actions listed below, which relate to research and development, are
included in the 75% expenditure share allocated to activities linked to product sustainability features,
as described in the “Climate Change” paragraph, “Product Innovation” sections, to which reference
is made.
Assessment of products and chemical substances
All chemical substances and products used by Pirelli in tyre production are subject to prior
assessment and prioritisation by the Health, Safety and Environment Department. Traceability of
materials to their origin is an effort conducted on multiple materials, starting with those whose
impacts may be most material (such as natural rubber for the environment or conflict minerals for
society), all with a view to reducing their negative environmental and social impacts.
As a matter of policy, compounds and tyres are produced by Pirelli without the use of “Substances
of Very High Concern” (SVHCs), i.e., those substances that give rise to high concern due to their
potential effects on human health and/or the environment. Furthermore, in its production Pirelli does
not use any substance falling into the internationally recognised category of POPs (Persistent
Organic Pollutants) as defined by the Stockholm Convention, nor does it use mercury and its by-
products as defined by the Minimata Convention, nor limited substances or those restricted by
REACH regulations.
In-house training
On the in-house training side, during 2024 sustainability was a key focus of multiple product courses
for marketing and sales people, and on the Company’s decarbonisation goals, with training sessions
for staff and workers in all facilities. On the external training side, material and product sustainability
were the focus of many sharing moments: from the Driver Convention in Switzerland, Germany and
Italy, to the Dackia Convention in Sweden; from the French Dealer Convention, to the one for
business partners in Benelux and Turkey. The events with Tire Cologne and Goodwood were also
important, highlighting the Pirelli commitment to the use of bio-based and recycled materials and
related third-party certification
Research and Development for material sustainability and Open Innovation
With reference to material sustainability, the Pirelli R&D activities focus on:
high-dispersion silica for wet grip, rolling resistance and durability;
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new technologies applied to developing polymers, fillers and plasticisers to improve the wear
rate of tyres, involving selected partner suppliers in dedicated Joint Development Agreements
running in the 2024-2026 three-year period;
materials of natural origin, bio-fillers such as lignin, cellulose and sepiolite, and plasticisers/resins
of vegetable origin; more specifically, the development of latex pre-dispersion technology,
conducted both in-house and involving selected partner suppliers;
textile reinforcements with fibres from natural and/or recycled sources;
nanofillers for more stable compounds, lighter structures and highly impermeable liners;
new silica surfactants to ensure performance stability, processability and improved efficiency
curing cycles;
new chemicals to reduce the emission of volatile organic compounds (VOCs) both in the process
and on the finished product, in addition to Serinol Pirrolo already under joint development with
the Politecnico of Milan and an external supplier selected for industrial scale-up.
In the field of biomaterials, in addition to the introduction of resins and plasticisers from natural origin,
Pirelli continued its focus on silica deriving from the rice husk, i.e. the outer shell of rice grain. The
husk constitutes 20% of the rough rice by weight and is the main waste product of this crop. Thanks
to a partnership with various producers, Pirelli is evaluating the diversified supply of high-
performance silica from processes that start precisely from rice husks used as feedstocks,
contributing to the industrial application of a circular economy model concerning waste materials.
The combustion of the carbon part of the husk also allows a significant reduction in the amount of
CO2 emitted per kilogram of silica, compared to the conventional process that instead uses fossil
energy sources.
During 2024, Pirelli was especially focused on expanding its supplier base, while making itself
available for new collaboration to study further alternatives for the supply of silica from sustainable
sources; such as taking part in the LIFE-SYNFLUOR project, selected under the European
Commission’s LIFE programme, for the recovery of silica from fertiliser industry waste, and
collaborating with silica producers searching for alternative sources to rice husks such as sugar cane
bagasse.
In the context of the new nano-fillers, Pirelli has consolidated the industrial use of materials of mineral
origin, in a partial substitution of precipitated silica and carbon black.
Staying within the scope of circular economy, in 2024, based on proprietary patents, Pirelli has
extended the industrialisation of recycled PET105 and resins from plant sources into regular
production tyres. It has also continued to develop tyres using vegetable oils, lignin and, in
cooperation with the Politecnico of Milan, pyrroles from ligno-cellulosic biomass materials. Lignin is
105 Polyethylene Terephthalate
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an environmentally friendly additive of natural origin obtained from waste in the cellulose production
process.
Pirelli Research and Development constantly monitors the growing opportunities for the use, in
increasing proportions, of materials from recycling. The development of innovative technologies for
the production of materials from recycled end-of-life tyre (ELT), such as regenerated rubber obtained
through the thermo-mechanical treatment of end-of-life tyre or carbon black obtained by tyre
pyrolysis, allows them to be used in increasing proportions without compromising performance or
safety, unlike the technologies of the past. In 2023, Pirelli completed the industrialisation stage of
recovered Carbon Black (denoted by rCB, and obtained from the pyrolysis of end-of-life tyres) at its
plant in Mexico, introducing it in a normal production compound across the entire range of car tyres
at the Silao factory. During 2024, Pirelli intensified its research and development on recovered
carbon black. This effort involved a wide range of actions, including identifying the best suppliers in
the European and APAC regions, followed by a rigorous qualitative and quantitative assessment of
their production capacities. Extensive laboratory assessments were conducted on various
compound applications, to technically validate the use of rCB as a partial replacement for virgin
carbon black (vCB) and extend its use in Pirelli products. In addition, prototype tests have already
been planned for 2025 in our plants, demonstrating our commitment to sustainable innovation. These
activities not only highlight the company’s considerable operating costs incurred in global research
and development, but also the significant contribution to the circular economy, promoting the use of
recycled materials and reducing environmental impact.
Some materials in use in compound formulations (synthetic polymers, carbon-black and synthetic
oils) can in turn be produced by feeding the synthesis process with certain proportions of feedstock
from recycled materials (recycled polystyrene / recycled butadiene from cracking oil from pyrolysis
of ELTs): during 2024, Pirelli expanded its collaboration with partners to increase its use in new
product ranges.
There is constant research and effort into material efficiency, which makes it possible to reduce the
volumes purchased, as well as the weight of the finished product, with a significant positive
environmental impact throughout the entire life cycle of the material and the product.
Research is also continuing aimed at diversifying the potential supply sources of natural rubber, to
reduce pressure on biodiversity in producer Countries and allow the Company to manage the
potential scarcity of raw materials with greater flexibility. The sustainable management of the natural
rubber chain, conflict minerals and the cobalt and mica chain are specifically discussed in the
“Biodiversity and eco-systems” section and in the “Information on Governance” section, “Managing
Conflict Minerals” paragraph.
Pirelli has also signed several partnerships with strategic suppliers and Universities for the
development of innovative, environmentally friendly materials. As part of the activity to develop new
nanofillers, for example, pursued since the early 2000s through research contracts with universities
and collaborations with suppliers, Pirelli has begun to industrially introduce materials of mineral origin
to partially replace precipitated silica and carbon black. Compared to the substitute raw materials,
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production processes, the innovations mentioned have ensured water savings as well as a reduction
in CO2 emissions.
Moreover, as part of the development of bio-based raw materials, the first car product containing at
least one compound with a significant lignin content, P ZeroTM E, was industrialised in 2023. Lignin
is not only a plant origin product, but also obtained as a co-product of the paper industry and normally
intended for burning. Pirelli research, conducted with an Open Innovation approach through projects
with universities and exclusive suppliers, has made it possible for the first time to obtain a form of
Lignin compatible with use in high performance compounds.
Among the Open Innovation initiatives, the Joint Labs agreement between Pirelli, the Politecnico of
Milan and the Politecnico Foundation of Milan should be highlighted. The collaboration, which began
in 2011 and has been renewed for 2024-2026, focuses on research projects for the continuous
technological innovation of tyres, specifically on nanotechnology, the development of new synthetic
polymers, new bio-polymers and new bifunctional chemical materials. In addition to exploring the
potential of virtual environments, thanks to the static simulator installed at Pirelli’s R&D centre in
Milan and the dynamic simulator at the Politecnico of Milan, the new phase of the agreement focuses
on two research macro-strands: the area of materials, with the development of innovative solutions
and the modelling of mixing processes, and the area of Product Development and Cyber, with
integrated static-dynamic simulation and innovative modelling.
Specific projects for the development of new materials from natural sources, mainly focused on the
use of waste feedstocks, are the subject of the framework agreement between Pirelli, CORIMAV
(Consortium for Materials Research Advanced) and Bicocca University (collaboration renewed in
2022 for a further 6 years).
As part of the collaboration, 44 scholarships were funded and awarded in the period 2001-2005 and
61 PhD scholarships have been funded since 2005. This collaboration was established with the aim
of developing cutting-edge technologies in the field of materials, supporting research and
experimentation activities with a view to patenting, and promoting training and professional
development initiatives for young researchers. The joint activity will continue by financing 3 new PhD
scholarships each year, for research activities aimed at projects focused on sustainability, through
studies on new materials obtained from renewable sources and new materials obtained from waste
products from the agricultural-industrial supply chain, innovative solutions with a lower environmental
impact in the tyre production process, and environmental degradability of tyres with a view to the
circular economy. CORIMAV’s research activities led, for example, to the patent that led to Pirelli’s
use of lignin in the production of tyres. Lignin is a natural material derived from waste biomass and
with intrinsic antioxidant properties that, with appropriate chemical-physical modifications, makes it
possible to improve the tyre’s mechanical properties and replace synthetic materials of fossil origin.
The research activity carried out by CORIMAV, besides the patenting of nano-silicates (SmartNet
Silica), i.e. a special silica that, when used in compounds, allows high grip and sliding performance
on dry and wet surfaces, is structured in the development of new antioxidants with reduced
environmental impact.
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After 2024, also in 2025, Pirelli will conduct collaboration under the NRRP106 by joining the National
Centre for Sustainable Mobility (MOST), taking part in 2 Flagship B projects and numerous Spokes,
in collaboration with various universities (e.g. Politecnico of Turin, Politecnico of Bari) and research
centres (e.g. CNR-STEMS Naples). In particular, the Flagship B project “Sister” focused on the study
of TRWP and Spokes 2 and 11 focused on material lightening and innovation, are relevant to the
issues of improving the environmental impact of the Product.
CORIMAV was included in 2018 in the European Commission’s final Report Study on Fostering
Industrial Talents in Research at European Level, which focuses on the promotion of inter-sectoral
mobility (Ism) and reports examples of good practice for every country in the Union. An award that
confirm the attention of the institutions and the European Union for a path that succeeds in
transforming the fruits of research into products of commercial interest with increasing attention to
the development and dissemination of more environmentally friendly solutions. A virtuous process of
continuous exchange of knowledge between the industrial and university spheres, which leads to
the consolidation of learning and development methods, with an enhancement of the growth paths
of young researchers that enables them to quickly embark on professional paths in companies,
including Pirelli.
For more information on the subsidies received for the Research and Development projects
mentioned above, see the “Information required by Law No. 124/2017 Article 1 subsections 125-129”
section within the Consolidated Financial Statements.
Management of end-of-life tyres
When a tyre no longer has the indispensable characteristics for safe and efficient performance on
the vehicle, it becomes “end-of-life” (ELT) - i.e. waste - and must be collected for recovery and
recycling in special facilities. The rubber from which the tyre is made is in fact a mix of top-quality
polymers with exceptional chemical and physical characteristics. This highlights two main aspects:
on the one hand, ELTs are a source of waste that must be properly managed to avoid being dispersed
into the environment; on the other hand, they are a valuable source of the circular economy.
In fact, properly managed end-of-life tyres represent a valuable source of resources when it comes
to circular economy (secondary raw materials such as rubber and steel), which are already
successfully used in several sectors of the value chain (e.g. in tyre manufacturing, in construction,
infrastructure, asphalt, manufacturing of rubber products) and with a considerable potential for
developing further applications in different industrial ecosystems, aimed at increasingly exploiting
their properties.
106 National Recovery and Resilience Plan
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In the world, it is estimated that one billion tyres reach the end-of-life each year. On a global scale,
about 60%107 of all out-of-use tyres (ELTs) generated are recovered, while in Europe and the United
States the recovery stands at 97%108 and 81%109.
For years, Pirelli has been engaged in the management of ELTs. The Company actively collaborates
with the main reference entities at national and international level, promoting the identification and
development of solutions to enhance and promote the sustainable recovery of ELTs, shared with the
various stakeholders and based on the Circular Economy model. In particular, Pirelli is active in the
Tyre Industry Project (TIP) of the WBCSD110, and in the End of Life Tyres (ELTs) working groups of
ETRMA111 and USTMA112 and, at a national and local level, interacts directly with leading
organisations active in ELTs recovery and recycling, such as the consortia set up to comply with
Extended Producer Responsibility regulations.
As a member of the Tire Industry Project of the WBCSD, Pirelli has collaborated on the publication
of guidelines on the management of ELTs (WBCSD “A framework for effective management systems”
in 2008 and “Managing End-of-Life Tires” in 2010) and a toolkit (“End-of-life tire – ELT – management
Toolkit” in 2021), taking a proactive approach to raising the awareness both within Emerging
Countries and those that do not yet have a system for ELTs recovery, in order to promote their
recovery according to “best practices”, i.e. defined management models which have already been
launched successfully.
100% of tyres produced and sold by Pirelli are recoverable, both in material and energy terms. The
actual recovery/recycling rate varies depending on the markets and ELT management models in the
various countries. Based on the recovery and recycling rates of ELTs in markets where Pirelli tyres
are sold and where there are organisations for the collection and management of ELTs, it is estimated
that the share sent for material recycling is 46%, a value that rises to over 70% if both energy and
material recovery are considered.
With regard to “closed-loop” Circular Economy applications, tyres are a mixture of many valuable
materials that at end-of-life allow two paths of recovery: recovery of material (such as “secondary
raw materials”) or energy. In the recovery of material, regenerated rubber, micronised rubber and
carbon black derived from the pyrolysis of ELTs are increasingly used by Pirelli in the compounds for
new tyres, thus contributing to the reduction of their environmental impact.
In order to increase this recovery rate, research activities following our Open Innovation model are
continuing, aimed at improving the quality of recovered secondary raw materials in terms of affinity
107 WBCSD 2019 – “Global ELT Management – A global state of knowledge on regulation, management systems, impacts of recovery
and technologies”
108 ETRMA 2021.
109 USTMA - 2023 US Scrap Tire Management Summary.
110 World Business Council for Sustainable Development
111 European Tyres and Rubber Manufacturers’ Association
112 US Tire Manufacturers Association
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with the other raw materials and the other ingredients present in our ultra-high performance
compounds, as well as in the search for innovative recovery solutions (such as pyrolysis).
Finally, in terms of materiality of Carbon and Water Footprints, the end-of-life phase of the product
has a low proportion of the total impact of the tyre on the environment.
Virtual Development Center
In 2024, virtual development was consolidated by leveraging the 3 Virtual Development Centres
(VDCs) in Italy (HQ), Germany and China, enabling us to support the demands of Original Equipment
Customers and product development teams for both Original Equipment and Replacement markets.
Pirelli capabilities in terms of simulations have been improved in the NVH (Noise, Vibration and
Harshness) area, in particular for External and Internal noise and for Comfort (taking advantage of
the availability of the Dynamic Simulator at the Politecnico of Milan), in the handling area with
development of tyre models with thermal module, and in tyre mechanics for predictions of durability
and tyre/rim contact mechanics.
Through use of the virtual 360° approach, starting with the tyre-related characteristics and ending
with the driving simulator, we have consolidated the best practice of reducing the time and number
of physical prototypes for development by up to 30 %, with advantages in terms of resources,
sustainability, in line with the Responsible Artificial Intelligence Policy, and the possibility to achieve
more competitive designs thanks to understanding tyre behaviour.
Cyber tyre
Pirelli’s high-tech products include the development of technologies based on the introduction of
sensors inside the tyre. The Pirelli Cyber Tyre system, consisting of a sensor in the tyre that collects
fundamental information for safe driving, and a software integrated in the car’s electronics, was the
first in the world to be fitted as original equipment on a standard car, the McLaren Artura and is now
approved on several models in North America and Europe. Thanks to information provided by the
Pirelli Cyber Tyre system, the car’s electronics can intervene promptly, improving safety and vehicle
performance. In addition, Pirelli and Bosch recently signed a joint development agreement to create
new solutions based on software and driving functions, thanks to tyre-integrated sensors. The first
vehicle to use Cyber Pirelli + Bosch technology will be the Pagani Utopia in 2025.
Another future development will see tyres networked, both with other vehicles and with the road
infrastructure. Pirelli was the first tyre company in the world to share information about the road
surface on the 5G network from smart tyres equipped with sensors, presenting in Turin the use-case
“World-first 5G enhanced ADAS (Advanced Driver Assistance Systems) services”. This is a
continuously evolving system that will become essential as the level of autonomy of cars increases.
In fact, the driver’s current ability to perceive the grip conditions given by the type of road surface
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and weather conditions will have to be fulfilled by the tyres, and the car will be able to slow down if
the asphalt is found to be slippery, adapt the electronic controls to increase safety and, with inter-
vehicle connectivity, warn other self-driving cars of a potential imminent danger. This is a true tactile
sense offered by the only point of contact between the car and the road: the tyres. For more
information on Cyber™ technologies, please refer to the “Social Information” section, “Product
safety, performance and sustainability” paragraph.
Supplier Certification
Together with the increasing use in production of materials of natural and recycled origin, in 2024
Pirelli continued its commitment to request assertions from suppliers on the amount of materials of
natural and recycled origin supplied to Pirelli verified by third-party certification; in order to check,
through third-party certification, the effective truth of the numbers communicated, with a view to
maximum final transparency to consumers. This process is ongoing and involves the progressive
coverage of raw materials purchased by the group. It is also the base of the distinctive positioning of
P ZeroTM E, the first tyre whose declaration of the amount of material of natural and recycled origin
has been verified by a third party based on ISO 14021.
With reference to certifications and with a view to increasing them, partnerships are being
consolidated with suppliers of certified natural rubber FSCTM (Forest Stewardship CouncilTM), the use
of which in 2024 increased considerably, in line with the goal of using only FSCTM certified natural
rubber in its European factories by the end of 2026; on this, please see the “Target” section of this
chapter.
In addition, the group introduced FSCTM-certified natural rubber into the production specification of
F1® tyres. Today, in addition to the plant in Rome (US) and the Motorsport production facility in Slatina
(EU), FSCTM-certified natural rubber is being progressively introduced at European production sites
including Bollate (Italy), where the first Cycling tyre with FSCTM-certified natural rubber presented at
the Tour de France 2024 was produced.
FSCTM certification, which perfectly summarises the combination of sustainability and innovation,
ensures that the supply chain of raw materials from forest management, starting with the upstream
plantations from which the natural components for tyres come, is managed in a way that preserves
their biological diversity and benefits the lives of local communities and workers, while promoting
their economic sustainability.
Pirelli’s far-sighted decision to introduce FSCTM-certified natural rubber with specific FSCTM Claim on
the tyre, guarantees third-party timely control of the supply chain, also in support of EUDR113
expectations.
113 European Regulation on Deforestation-free Products
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Still in 2024, development of the product lines where production will start in 2025 and 2026 saw an
increasing use of natural (bio-based) and recycled materials such as recovered carbon black, bio-
resins, cellulose derivatives, and a gradual increase of natural rubber partially replacing synthetic
rubber.
Metrics – Resource inflows
With reference to material input streams (technical and organic materials and products)114 used in
2024 to manufacture the company’s products and services, the total amount of bio-based material
was 152,657 tonnes, with a share of certified sustainably sourced biological materials (and biofuels
used for non-energy purposes) amounting to 10.6%, represented by FSCTM-certified natural rubber.
The quantity of reused or recycled secondary components, secondary intermediate products and
secondary materials amounted to 34,765 tonnes, 4.4% of the total materials used. The total amount
of plastic materials in the products was 25,023 tonnes, with 0.012% coming from recycled sources,
while the amount of raw materials derived from metals and minerals in the products was 97,938
tonnes of Iron/Steel115 accounting for 12% of the total.
The figures are calculated from the raw material codes falling into the various categories reported,
multiplied by the volume of material consumed. The uniqueness of the codes prevents materials
from being counted twice.
Metrics – Resource outflows
Pirelli, has mainly focused on the development, manufacture and marketing of tyres with higher
added value, with special technical characteristics associated with high performance, advanced
technology and safety, and characterised by an averagely deeper tread. Acknowledged by
consumers for its high-value products, Pirelli’s range includes innovative tyres for cars, motorbikes
and bicycles, as well as a growing portfolio of tyres that meet the needs of specific applications or
consumer customisation. These include the Pirelli Cyber™ Tyre system, the result of several years
of research and technological innovation that, thanks to the sensors inside the tyre (the only element
of the car capable of “sensing” the conditions of the surface on which it travels), helps make essential
information available to enhance vehicle performance and driving safety.
In this context, one important aspect is the concept of durability, in which applied to tyres does not,
to date, find an unambiguous and shared interpretation neither at regulatory level nor at the level of
technical standards. It can, in fact, be due to various different concepts, including: the overall
distance a tyre can guarantee, the consistency of traction and safety performance on particular
114 Raw materials, CapEx, Moulds and picking, Ancillary materials, Logistics services, ICT, Motorsport, Energy
115 Other metals (Aluminium, Cobalt, Copper, Nickel, Lithium, Titanium) register 0 tonnes
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surfaces (e.g. winter tyres), the resistance to particular conditions of use (e.g. tyres for off-the-road
applications).
Pirelli performs all the analyses and provides all the declarations required by specific regulations in
order to ensure regulatory compliance and demonstrate the required performance levels.
In addition to performance and durability, safety is also a key aspect in tyre regulation. The tyre is
one of the vehicle components subject to a large number of regulations, mainly determined by the
key function it has to fulfil: to ensure the safety of the vehicles on which it is installed. This is why
Pirelli does not recommend tyre repair. Any repairs must be assessed by experienced point-of-
sale/service technicians according to local standards and regulations, where such exist.
In 2024, the amount of finished product produced by Pirelli was approximately 790,696 tonnes, 100%
of which is recyclable as stipulated in the UN133 agreement116. Note that the only product sold with
packaging is bicycle tyres and it is made of paper and cardboard. The packaging used had a 100%
recyclable content rate.
116 Agreement Concerning the Adoption of Uniform Technical Prescriptions for Wheeled Vehicles, Equipment and Parts which can be
Fitted and/or be Used on Wheeled Vehicles and the Conditions for Reciprocal Recognition of Approvals Granted on the Basis of these
Prescriptions unece.org/fileadmin/DAM/trans/main/wp29/wp29regs/2015/R133e.pdf
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DISCLOSURE PURSUANT TO ARTICLE 8 OF REGULATION (EU) 2020/852 (TAXONOMY)
EU REGULATION 2020/852: PURPOSE AND REGULATORY CONTEXT
The European Union has long established a strategic framework for the implementation of actions
and policy initiatives consistent with the objectives of the UN 2030 Agenda. In this context, in March
2018 the European Commission formalised for the first time an Action Plan for Financing Sustainable
Growth, with the stated aim of redirecting capital flows towards sustainable investments, integrating
sustainability into risk management and promoting transparency and long-term vision, in awareness
of the important role that the financial sector can play in channelling private investment in support of
sustainable development.
The European Union’s commitment to sustainable finance also includes EU Regulation 2020/852
(the so-called “Taxonomy”), which aims to provide investors and the market with a common language
of sustainability metrics that can ensure comparability between operators, reduce the risks of
greenwashing, and increase the quantity and quality of information on the environmental and social
impacts of business, thereby promoting more responsible investment decisions.
Currently, the Taxonomy is focused on the identification of economic activities that are considered
environmentally sustainable, defined as those economic activities that contribute substantially to the
achievement of at least one of the following environmental and climate-related117 objectives,
provided that they do not cause significant harm to any of the other environmental objectives and
that they are carried out in compliance with social minimum safeguards:
climate change mitigation;
climate change adaptation;
the sustainable use and protection of water and marine resources;
the transition to a circular economy;
pollution prevention and control;
the protection and restoration of biodiversity and ecosystems.
With the Delegated Acts adopted in 2021 (“Climate Delegated Act”) and in 2023 (“Environmental
Delegated Act”), the European Commission has defined the list of sectors and economic activities
currently included in the Taxonomy and the related technical screening criteria that allow verification
of whether they make a substantial contribution to achieving one or more of the six objectives set
out in the Regulation.
117 Article 9 of EU Regulation 2020/852, which defines the environmental objectives under the Taxonomy.
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The process of verifying the environmental sustainability of an economic activity (so-called alignment
to the Taxonomy) involves the following steps of analysis:
verification of substantial contribution criteria (Technical Screening Criteria) to assess the actual
contribution of the economic activity to a given environmental objective, respecting the principle
of technology neutrality, and taking into account the long-term and short-term impact of the
economic activity;
verification of the “DNSH” (Do No Significant Harm) criteria to ensure that the economic activity
does not cause significant harm to any of the other environmental objectives; and
verification of compliance with Social Minimum Safeguards, which are designed to ensure that
economic activities are conducted in compliance with the main international guidelines and
treaties related to human rights, including labour rights, anti-corruption and anti-competitive
practices, and in compliance with tax laws.
Article 8 of EU Regulation 2020/852 defines the reporting obligations under the Taxonomy and
clarifies that these obligations fall on any company subject to the obligation to publish non-financial
information pursuant to Article 19-bis or Article 29-bis of Directive 2013/34/EU. From 1 January 2023,
therefore, these companies will have to include information in their non-financial reporting (or in their
consolidated non-financial reporting) on how and to what extent their activities are associated with
economic activities considered environmentally sustainable within the meaning of the Regulation.
Regarding non-financial corporations, the disclosure focuses on the following metrics (so-called “key
performance indicators” or “KPIs”):
a) the share of turnover coming from products or services associated with economic activities
considered to be environmentally sustainable;
b) the share of capital expenditure and the share of operating expenditure related to assets or
processes associated with economic activities considered environmentally sustainable.
For KPI reporting for the year 2024, Pirelli is required to report on eligible and aligned economic
activities for all six climate and environmental objectives, where there are activities attributable to
the economic activities defined for each objective.
Non-financial undertakings118 are required to determine KPIs in accordance with the requirements
of Regulation (EU) 2021/2178, by ensuring general consistency with financial reporting and by using
the same currency as for the annual or consolidated financial statements, with the additional
118 Pursuant to the legislation, a “non-financial undertaking” is defined as an undertaking subject to the disclosure requirements set out in
Articles 19-bis and 29-bis of Directive 2013/34/EU which is not a financial asset manager, credit institution, investment firm, insurance
undertaking or reinsurance undertaking (see EU Regulation 2021/2178 Article 1(9)).
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requirement to include references to the relevant balance sheet items for turnover and capital
expenditure indicators in their non-financial statements.
THE TAXONOMY FOR THE PIRELLI GROUP
The Pirelli Group has launched a dedicated Taxonomy worksite starting in 2021, to understand the
regulatory obligations, monitor updates and plan the preparatory activities for the reporting process
within its consolidated non-financial statement in a timely and effective manner.
The methodological approach in the initial phase focused on the regulatory analysis and
contextualisation of the tyre sector for the purpose of its application. This preliminary activity
immediately brought to light some unclear application and interpretation aspects both with reference
to the general discipline119 and above all about the tyre sector, whose framework in the Climate
Delegated Act on Taxonomy appears difficult to read.
Within the manufacturing activities included in the Delegated Acts, there is currently no activity
dedicated to tyre manufacturing. The regulatory updates of 2023, specifically Delegated Regulation
(EU) 2023/2485120, recognise the potential role of the tyre sector in contributing positively to the
climate change mitigation goals and the transition towards a circular economy, although they do not
define an economic activity dedicated to the production of tyres, which therefore remains eligible
under activity 3.6 - “Manufacture of other low-carbon technologies”, defined in Annex I of Delegated
Regulation (EU) 2021/2139.
The clarifications of the European Commission published during 2024 did not entail updates to the
approach adopted by Pirelli in past years. An analysis of the investments made by the various plants
of the Group has nevertheless been conducted, which led to an expansion of the activities
considered “eligible” under the Taxonomy, compared to previous years. More details on this are
provided in the following paragraphs.
The Pirelli Group reserves the right to reconsider its assessments and interpretations in future
reporting periods, to take into account any changes in the regulatory framework or any further
clarifications that may arise in the meantime from national and European authorities or trade
associations.
119 In the Assonime Circular no. 1/2022 “The European Regulation on the taxonomy of eco-sustainable activities: advertising obligations
for companies” a series of aspects are explained for which clarification is requested from the European Commission.
120 In the introductory remarks of Delegated Regulation 2023/2486, the Commission states the following: “As tyres are responsible for
20% of a vehicle’s energy consumption, leveraging innovation in their manufacture can reduce the share of greenhouse gas emissions
borne by the entire transport sector. Tyres can also contribute to a more circular economy. Although tyre manufacturing is not part of
the activity of manufacturing components that are essential for ensuring and improving the environmental performance of low-carbon
vehicles, it will need to be assessed in more detail in order to set specific criteria for technical screening, taking due account of the
legal obligations enshrined in the most recent EU legislative proposals and best practices, in particular with regard to microplastic
release, air pollution, noise, direct greenhouse gas emissions and end-of-life.’
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ELIGIBLE ECONOMIC ACTIVITIES OF THE PIRELLI GROUP
By virtue of these considerations by the Commission, Pirelli continues to consider eligible under
enabling activity 3.6 the share of production of tyres dedicated to environmentally friendly and
energy-efficient vehicles, taking as a benchmark the rolling resistance values of the European
labelling.
European tyre labelling121 provides a clear and common classification of their performance for (i)
rolling resistance, (ii) wet braking and (iii) exterior noise. Consistent with the specifications of
Delegated Regulation (EU) 2023/2485, the labelling parameter used is rolling resistance, which has
an indirect impact on vehicle fuel consumption and related greenhouse gas emissions. Therefore, a
better performance in terms of low rolling resistance has a positive impact on the environmental
objective of mitigating climate change122.
In particular, the rolling resistance classes indicate the energy efficiency level of the tyre, ranging
from A (maximum energy efficiency) to E (minimum energy efficiency). In continuity with previous
years, car and van tyres produced by the Group with European labelling in rolling resistance classes
A, B and C were considered for eligibility, where “C” is the most widespread on the market123.
Furthermore, as bicycles are zero-emission means of transport, tyres dedicated to them are also
considered ‘eligible’.
In 2024, in continuity with 2023, they were also considered eligible:
•
the electric bicycle rental and management service CYCL-e around™, eligible under Activity 6.4
Operation of personal mobility devices, cycle logistics, defined for the Climate Change Mitigation
objective;
•
the Pirelli CARE™ service, eligible under Activity 5.5 Product-as-a-service and other circular use-
and result-oriented service models, defined for the Transition to a Circular Economy objective.
In addition to the activities that are characteristic of Pirelli’s business, the eligibility assessment also
included interventions carried out by individual Group plants, which are referrable to economic
activities defined under the Taxonomy. In this regard, the plants falling within the scope of
consolidation were involved in the assessment of individual investments made during the year to
identify those eligible for Taxonomy purposes.
121 Regulation (EU) 2020/740.
122 Regulation (EU) 2020/740 “(4) [...] Tyres, mainly due to their rolling resistance, account for between 20% and 30% of vehicle fuel
consumption. A reduction of the rolling resistance of tyres would therefore contribute significantly to the fuel efficiency of road transport
and thus to the reduction of greenhouse gas emissions and the decarbonisation of the transport sector’.
123 EPREL - European Product Registry for Energy Labelling (extraction 07/02/2025). Focusing on the three most efficient classes of
Rolling Resistance (those identified as “permissible”), one finds that tyres labelled A and B cover 10.4% of sales, while those labelled
C cover 45% (the remaining 44.6% are tyres labelled D and E).
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Specifically, a number of initiatives were eligible in the following objectives and sectors:
OBJECTIVE
ECONOMIC ACTIVITIES ACCORDING TO THE
TAXONOMY
DESCRIPTION OF PIRELLI’S
ACTIVITIES
Climate change
mitigation (CCM)
3.20 Manufacture, installation, and servicing of high,
medium and low voltage electrical equipment for
electrical transmission and distribution that result in or
enable a substantial contribution to climate change
mitigation
Installation and maintenance of
electrical equipment for the
transmission and distribution of
electricity from photovoltaic
systems
4.15 District heating/cooling distribution
Interventions on pipelines and
related infrastructure for the
distribution of heating and cooling,
which end at the substation or heat
exchanger
4.25 Production of heat/cool using waste heat
Investments in plants that produce
heat/cool using waste heat
5.1 Construction, expansion and operation of water
collection, treatment and supply systems
Modernisation of the water supply
system
5.2 Renewal of water collection, treatment and supply
systems
Improvement of rainwater collection
systems
5.4 Renewal of waste water collection and treatment
Upgrading of industrial effluent
treatment stations and separation
systems in the sewage systems
7.1 Construction of new buildings
Construction of a new building,
renovation of structures, and
expansion of laboratories
7.2 Renovation of existing buildings
Renovation of existing buildings
7.3 Installation, maintenance and repair of energy
efficiency equipment
Different kinds of measures aimed
at improving the energy efficiency
of buildings
7.4 Installation, maintenance and repair of charging
stations for electric vehicles in buildings (and in parking
spaces pertaining to buildings)
Installation of charging stations for
electric vehicles in parking spaces
pertaining to buildings
7.5 Installation, maintenance and repair of instruments
and devices for measuring, regulation and controlling
energy performance of buildings
Installation, maintenance, and
repair of the buildings of energy
management systems
7.6 Installation, maintenance and repair of renewable
energy technologies
Installation, maintenance and repair
of heat transfer equipment and
energy recovery systems
Sustainable use and
protection of water
and water and marine
resources (WTR)
4.1 Provision of IT/OT (information
technologies/operational technologies) data-driven
solutions for leakage reduction
Installation of flow meters for
monitoring water consumption
Transition to a circular
economy (CE)
4.1 Provision of data-driven IT/OT (information
technologies/operational technologies) solutions
Installation of remote monitoring
systems and predictive
maintenance
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ALIGNED BUSINESS ACTIVITIES OF THE PIRELLI GROUP
The Pirelli Group assessed the eco-sustainability of eligible activities pursuant to Article 3 of
Regulation (EU) 2020/852 as supplemented by Commission Delegated Regulation (EU) 2021/2139.
Following the analysis process, the Pirelli Group has identified aligned activities. Below is the
analysis and the related findings. It should be noted that, at present, none of the Pirelli Group’s
eligible activities contributes to more than one environmental objective (as verified on activities
deemed eligible for multiple objectives); therefore, the risk of potential double counting linked to this
circumstance is excluded.
Activity 3.6 CCM Manufacture of other low-carbon technologies
Concerning activity 3.6, in continuity with previous years, the rolling resistance parameter was used
as the best reference currently available to demonstrate the tyre’s contribution to the reduction of
greenhouse gas emissions of the entire transport sector124. In general, the tyre industry considers
that moving up to a higher Rolling Resistance class (reduction in rolling resistance) results in a
reduction of between 3% and 4%125 in CO2 emissions. Among the Rolling Resistance classes
considered permissible, with class C being the most common on the market126, rolling resistance
classes A and B, which express levels of very ‘high’ and ‘high’ energy efficiency and can, therefore,
lead to lower emissions than the best alternatives available on the market.
The compliance with the “Do No Significant Harm” (DNSH) principle has been verified based on the
environmental procedures adopted by the Group, as well as through ad hoc initiatives such as the
Climate Change and related Water Stress Risk Assessment, already described in the paragraphs
“Climate Change Risk Assessment and strategy resilience” and “Emerging risks related to climate
change and water stress”. The main evidence for compliance with the DNSH criteria is reported
below.
Climate change adaptation
Compliance with Appendix A of Delegated Regulation 2021/2139 is required for the DNSH
verification on the Climate Change Adaptation objective. The Pirelli Group periodically carries out an
analysis of the risks related to climate change, the Climate Change and related Water Stress Risk
124 Report from the Expert Group on laboratory alignment for the measurement of tyre rolling resistance installed under Regulation (EC)
No 1222/2009 and listed on the Commission registry of Expert Groups to the European Commission - 2021
125 Regulation (EU) 2020/740 of the European Parliament and of the Council of 25 May 2020 on the labelling of tyres with respect to fuel
efficiency and other parameters, amending Regulation (EU) 2017/1369 and repealing Regulation (EC) No 1222/2009 (Text with EEA
relevance)”.
126 EPREL - European Product Registry for Energy Labelling (extraction 07/02/2025). Focusing on the three most efficient classes of
Rolling Resistance (those identified as “permissible”), one finds that tyres labelled A and B cover 10.4% of sales, while those labelled
C cover 45% (the remaining 44.6% are tyres labelled D and E).
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Assessment, in accordance with the process described in Appendix A. The analysis was conducted
in line with the recommendations of the TCFD, in order to assess the main operational risks, strategic
risks and opportunities connected to market trends and technology, linked to climate change. Risk
projections were assessed against IPCC climate and IEA transition scenarios, also taking into
account contextual information related to the Group (e.g. data on plants and the historical incidence
of adverse climate events on them, data on suppliers, mitigation measures in place, decarbonisation
plans). Based on best practices available in the literature, the days of interruption of activities and/or
slowdown of the supply chain due to extreme events and the potential associated economic impacts
were estimated. For risks related to extreme natural events exacerbated by climate change, the
Group has implemented a specific investment plan to reduce its exposure to such events (e.g.,
installation of flood barriers to minimise impacts in case of adverse events). More generally, in line
with an adaptation approach, Pirelli aims to anticipate the negative effects of climate change and
undertake appropriate actions to prevent or minimise potential damages, or to seize opportunities
that may arise, where feasible. Therefore, this DNSH criterion is considered to be met for the activity
in question, as well as for the other reported activities.
The sustainable use and protection of water and marine resources
For the DNSH verification regarding the objective of protecting water and marine resources,
compliance with Appendix B of Delegated Regulation 2021/2139 is required. All of the Group’s
facilities are equipped with an ISO 14001-certified environmental management system, through
which the responsible use and protection of water resources are monitored and guaranteed.
Additionally, the Group conducts the Climate Change and related Water Stress Risk Assessment
and periodically monitors its Water Footprint. Therefore, this DNSH criterion is considered to be met
for the activities reported.
Transition to a circular economy
Regarding the objective of transitioning to a circular economy, DNSH compliance is guaranteed for
activity 3.6 through the increasing use of recycled and renewable materials, as well as product
design aimed at ensuring high durability and recyclability. See paragraph “Circular Economy” for
further details.
Pollution prevention and control
For the DNSH verification regarding the objective of pollution prevention and reduction, the main
requirement to verify is, where applicable, compliance with Appendix C of Regulation 2021/2139,
which requires that activities do not involve the manufacturing, marketing, or use of substances
mapped within specific European Regulations and Directives. Regarding activity 3.6, the majority of
products comply with the criteria outlined in the aforementioned Appendix. In fact, as a matter of
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policy, compounds and tyres are produced by Pirelli without the use of “Substances of Very High
Concern” (SVHCs), i.e., those substances that give rise to high concern due to their potential effects
on human health and/or the environment. Furthermore, in its production Pirelli does not use any
substance falling into the internationally recognised category of POPs (Persistent Organic
Pollutants) as defined by the Stockholm Convention, nor does it use mercury and its by-products as
defined by the Minimata Convention, nor limited substances or those restricted by REACH
regulations. For more details, see the paragraphs “Pollution” and “Circular Economy”.
Protection and restoration of biodiversity and ecosystems
For the DNSH verification regarding the objective of protecting and restoring biodiversity and
ecosystems, all identified eligible activities require, where applicable, compliance with Appendix D
of Delegated Regulation 2021/2139. Biodiversity is subject to risk assessment in line with the
Group’s Enterprise Risk Management methodology, both with reference to company sites and the
supply chain, allowing for the continuous identification, assessment, prevention and mitigation of
environmental risks along the value chain, and ensuring compliance with the DNSH. See paragraph
“Biodiversity and Ecosystems” for further details.
Other economic activities
Regarding the other considered economic activities:
•
the CYCL-e around™ electric bicycle rental and management service, which meets both criteria
for substantial contribution to climate change, as well as the DNSH criteria;
•
the Pirelli CARE™ service, related to the objective of transitioning to a Circular Economy, does
not meet the criteria for substantial contribution; therefore, the activity is reported as admissible
but not aligned.
Finally, with reference to the investments made by the facilities, each production site has provided
information regarding the verification of the technical screening criteria for the substantial
contribution of each activity, including the analysis of DNSH criteria.
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SOCIAL MINIMUM SAFEGUARDS
Article 18.1 of the EU Taxonomy Regulation describes social minimum safeguards as procedures
implemented by a company to ensure that its business activities are conducted in accordance with
the internationally recognised principles set out in the OECD Guidelines for Multinational Enterprises
and the United Nations Guiding Principles on Business and Human Rights (UNGPs).
Compliance with the minimum safeguards, for the purposes of alignment, was assessed at Group
level. Specifically, the Pirelli Group considered all the issues set out in the principles contained in the
above documents, analysing both compliance and the presence of any sanctions in this regard and,
where appropriate, the relative management and remedial methods.
In order to identify, manage and mitigate risks related to the above issues, the Pirelli Group has
adopted Policies, Management Models, prevention actions and remedial mechanisms in the areas
of human rights, labour, environment, corruption, consumer protection, science, technology and
innovation, competition, taxation.
In particular, Pirelli promotes respect for human rights and adherence to applicable international
standards among its partners and stakeholders. Pirelli aligns its governance with the United Nations
Global Compact, the ISO 26000 Guidelines, the dictates of the SA8000® Standard and underlying
international ILO regulations, the International Charter of Human Rights, the OECD Guidelines on
Due Diligence and the recommendations contained in the United Nations Guiding Principles on
Business and Human Rights, implementing the Protect, Respect and Remedy Framework.
In line with international standards, Human Rights due diligence at Pirelli includes the following
activities:
Adoption and integration of a human rights due diligence commitment within company policies
and procedures;
Identification and assessment of risks and negative impacts, including through stakeholder
involvement;
Commitment to interrupt, prevent, mitigate and remedy negative impacts;
Monitoring of the implementation of these actions and their results;
Public communication of the approach to human rights due diligence and the actions taken to
avoid and address negative impacts;
Commitment to remedy any negative impacts, including establishing or participating in grievance
mechanisms where individuals and groups can voice grievances and human rights concerns.
With regard to matters concerning privacy, in 2024, the update and discussions with the individual
regions continued regarding the regulatory changes to which compliance is required. The update
activities focused on issues such as, for example, data transfer, DPA, DPIA, and requests for the
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exercise of rights concerning the management of personal data by the users themselves. Special
attention was also given to the entry into force of the new European regulation on artificial intelligence
(the AI Act). During 2024, Pirelli was not involved in any proceedings for alleged violation of privacy
regulations.
During 2024, on the basis of the reports received through the whistleblowing reporting channel, one
case of fraud to the detriment of the Company was ascertained, while, as at 31 December 2024, 2
cases were in the process of being verified and investigated.
On the subject of Antitrust and in line with the provisions of its Global Antitrust and Fair Competition
Policy, Pirelli operates in accordance with fair and proper competition for the purpose of Company
and at the same time, market development. In this context, Pirelli constantly updates the Group’s
Antitrust Programme in line with international best practices.
On 30 January 2024, the European Commission announced the start of an investigation against
certain tyre manufacturers active in the European Economic Area, for alleged violations of EU
competition law, with reference to the possible coordination of prices of new replacement tyres for
cars and trucks intended for sale in the European Economic Area. At the same time, the Commission
conducted inspections at the offices of the above-mentioned tyre manufacturers, including Pirelli.
The same Commission confirmed the correctness of its actions and that it has always acted in
compliance with the applicable antitrust legislation.
On 4 December 2024, the Turkish Antitrust Authority notified certain tyre manufacturers operating in
Turkey, including Pirelli Otomobil Lastikleri A.Ş., of the initiation of an investigation into the tyre
production and distribution market, in particular regarding a hypothetical exchange of information
between competitors, aimed at coordinating prices.
For more in-depth information on the Policies adopted, risk analysis, mitigation and prevention
actions and remedial mechanisms, please refer to the sections dedicated to this in this Report, in
particular:
Principal Policies
Respect for human rights
Diversity, Equity and Inclusion
Skills Development - Performance Management and Training
Workers in the value chain
Business conduct
Management of relations with suppliers
Whistleblowing Policy
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Anti-corruption
PERFORMANCE INDICATORS
Turnover, operating expenditure and capital expenditure data relating to eligible activities and
Taxonomy-aligned activities for the calculation of key performance indicators (KPIs) and shares in
the consolidated financial statements were extracted from the general accounting and cost
accounting systems used in the preparation of the consolidated financial statements.
Therefore, the data used for the calculation of KPIs under the Taxonomy are the same data used in
the preparation of the Group’s consolidated financial statements, avoiding the potential risk of double
counting.
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TURNOVER INDICATOR
Pirelli is among the world’s leading tyre manufacturers, the only one to be entirely focused on the
consumer market, which includes car, motorbike and bicycle tyres, from which it derives almost all
of its turnover.
The portion of turnover referred to in Article 8(2)(a) of Regulation (EU) 2020/852 “Turnover KPI” is
calculated as the portion of net revenues obtained from products or services associated with
economic activities aligned to the Taxonomy (numerator), divided by the Group’s consolidated
revenues (denominator). The allocation of turnover to the numerator, as regards the sale of tyres,
was made thanks to the system tracking of European labelling for each tyre produced. It should also
be noted that the turnover from the sale of car and van tyres produced by the Group with rolling
resistance values consistent with the European labelling parameters was also taken into account by
tracing the non-European labelling to the European labelling values. The turnover attributable to
CYCL-E™ and Pirelli CARE® services are accounted for in specific, uniquely identifiable accounting
items. In detail, the revenues relating to the CYCL-E™ service were considered eligible under
taxonomic activity 6.4 with reference to the Climate Change Mitigation objective, while the revenues
relating to Pirelli CARE® were considered eligible with reference to activity 5.5 with a contribution to
the objective of transitioning to a Circular Economy. The risk of double counting with reference to the
turnover KPI is therefore excluded.
The denominator of the KPI is the consolidated revenues of the year 2024 as indicated in the
explanatory note no. 30 “Revenues from sales and services” within the consolidated financial
statements.
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SHARE OF TURNOVER127 DERIVING FROM PRODUCTS OR SERVICES ASSOCIATED WITH
ECONOMIC ACTIVITIES ALIGNED TO THE TAXONOMY - INFORMATION FOR THE YEAR 2024,
REPRESENTED IN ACCORDANCE WITH THE TEMPLATE IN ANNEX V OF DELEGATED
REGULATION (EU) 2023/2486
127 Values reported according to the template (“model”) in Annex V of Delegated Regulation (EU) 2023/2486 (“MODELS FOR THE KEY
PERFORMANCE INDICATORS (KPIs) OF NON-FINANCIAL COMPANIES”). Shaded cells refer to information not applicable for the
current financial year to the Group’s business activities.
Financial Year N
Economic Activities (1)
Code (2)
Turnover (3)
Proportio
n of
Turnover,
year N (4)
Climate Change Mitigation (5)
Climate Change Adaptation (6)
Water (7)
Pollution (8)
Circular Economy (9)
Biodiversity (10)
Climate Change Mitigation (11)
Climate Change Adaptation (12)
Water (13)
Pollution (14)
Circular Economy (15)
Biodiversity (16)
Minimum Safeguards (17)
Proportion of
Taxonomy-
aligned (A.1.)
or -eligible
(A.2.) turnover,
year N-1 (18)
Category
enabling
activity (19)
Category
transitional
activity (20)
€/mln
%
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
T
Manufacture of other low carbon technologies
CCM 3.6
2.422,5
35,8%
Y
N
N/EL
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
Y
31,5%
E
-
Operation of personal mobility devices, cycle
logistics
CCM 6.4
0,6
0,01%
Y
N
N/EL
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
Y
0,01%
-
-
2.423,1
35,8%
35,8%
0%
0%
0%
0%
0%
Y
Y
Y
Y
Y
Y
Y
31,51%
2.422,5
35,8%
35,8%
0%
0%
0%
0%
0%
Y
Y
Y
Y
Y
Y
Y
31,5%
E
-
0%
0%
Y
Y
Y
Y
Y
Y
Y
-
T
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
%
Manufacture of other low carbon technologies
CCM 3.6
CCA 3.6
2.221,3
32,8%
EL
EL
N/EL
N/EL
N/EL
N/EL
35,50%
Product-as-a-service and other circular use- and
result-oriented service models
CE 5.5
0,1
0,00%
N/EL
N/EL
N/EL
N/EL
EL
N/EL
0,01%
2.221,4
32,8%
32,8%
0%
0%
0%
0%
0%
35,51%
4.644,4
68,6%
68,6%
0%
0%
0%
0%
0%
67,0%
2.128,9
31,4%
6.773,3
100,0%
A. Turnover of Taxonomy- eligible activities (A.1+A.2)
Turnover of Taxonomy-non- eligible activities
TOTAL
Optional
Substantial contribution criteria
DNSH criteria (‘Does Not Significantly Harm’)
A.1. Environmentally sustainable activities (Taxonomy-aligned)
A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
A. TAXONOMY-ELIGIBLE ACTIVITIES
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Year
Turnover of environmentally sustainable activities (Taxonomy-
aligned) (A.1)
of which enabling
of which transitional
Turnover of Taxonomy-eligible but not environmentally sustainable
activities (not Taxonomy-aligned activities) (A.2)
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CAPITAL EXPENDITURE INDICATOR
Capital expenditures incurred by the Pirelli Group attributed to eligible and environmentally
sustainable economic activities include costs accounted for on the basis of:
(a) IAS 16 “Property, Plant and Equipment”, paragraph 73(e), sub-paragraphs (i) and (iii);
(b) IAS 38 “Intangible Assets”, paragraph 118(e)(i);
(c) IFRS 16 “Leases”, paragraph 53(h).
The share of “aligned” economic activities with reference to capital expenditure refers mainly to
production investments directly related to the above-mentioned “aligned” income. Since most of the
tyre production plants are jointly used for the production of tyres of different rolling resistance classes,
the figures for these plants have been allocated in proportion to the volumes of tyres in the classes
identified for alignment. To this amount was added the total investment in the development of cycling
products. The “aligned” shares of specific investments made by the Group’s factories, attributable to
the eligible economic activities defined under the Taxonomy illustrated in the preceding paragraphs,
were also considered.
The denominator of the KPI is the sum of the gross additions recognised in the year 2024 with
reference to owned tangible fixed assets, rights of use and intangible fixed assets, as indicated in
Note 10.1 “Tangible assets” and Note 11 “Intangible assets” within the consolidated financial
statements.
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SHARE OF CAPITAL EXPENDITURE128 RESULTING FROM PRODUCTS OR SERVICES
ASSOCIATED WITH ECONOMIC ACTIVITIES ALIGNED WITH THE TAXONOMY -
INFORMATION FOR THE YEAR 2024, REPRESENTED IN ACCORDANCE WITH THE
TEMPLATE IN ANNEX V OF DELEGATED REGULATION (EU) 2023/2486.
128 Values reported according to the template set out in Annex II of Delegated Regulation (EU) 2023/2486 (“MODELS FOR KEY
PERFORMANCE INDICATORS (KPIs) OF NON-FINANCIAL COMPANIES”). Shaded cells refer to information not applicable for the
current financial year to the Group’s business activities.
Financial Year N
Economic Activities (1)
Code (2)
Turnover (3)
Proportion of
Turnover, year
N (4)
Climate Change Mitigation (5)
Climate Change Adaptation (6)
Water (7)
Pollution (8)
Circular Economy (9)
Biodiversity (10)
Climate Change Mitigation (11)
Climate Change Adaptation (12)
Water (13)
Pollution (14)
Circular Economy (15)
Biodiversity (16)
Minimum Safeguards (17)
Proportion of
Taxonomy-
aligned (A.1.)
or -eligible
(A.2.) CapEx,
year N-1 (18)
Category
enabling
activity (19)
Category
transitional
activity (20)
€/mln
%
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
T
Manufacture of other low carbon technologies
CCM 3.6
194,25
36,4%
Y
N
N/EL
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
Y
33,0%
E
-
District heating/cooling distribution
CCM 4.15
0,01
0,00%
Y
N
N/EL
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
Y
-
-
-
Production of heat/cool using waste heat
CCM 4.25
0,04
0,01%
Y
N
N/EL
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
Y
-
-
-
Installation, maintenance and repair of energy
efficiency equipment
CCM 7.3
0,50
0,1%
Y
N
N/EL
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
Y
0,3%
E
-
Installation, maintenance and repair of instruments
and devices for measuring, regulation and
controlling energy performance of buildings
CCM 7.5
0,23
0,04%
Y
N
N/EL
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
Y
0,1%
E
-
Installation, maintenance and repair of renewable
energy technologies
CCM 7.6
0,37
0,07%
Y
N
N/EL
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
Y
0,2%
E
-
195,40
36,6%
36,6%
0%
0%
0%
0%
0%
Y
Y
Y
Y
Y
Y
Y
33,6%
195,35
36,6%
36,6%
0%
0%
0%
0%
0%
Y
Y
Y
Y
Y
Y
Y
34,0%
E
-
0%
0%
Y
Y
Y
Y
Y
Y
Y
-
T
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
%
Manufacture, installation, and servicing of high,
medium and low voltage electrical equipment for
electrical transmission and distribution that result
in or enable a substantial contribution to climate
change mitigation
CCM 3.20
1,60
0,3%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0,30%
Manufacture of other low carbon technologies
CCM 3.6
CCA 3.6
189,64
35,5%
EL
EL
N/EL
N/EL
N/EL
N/EL
39,10%
Provision of IT/OT data-driven solutions
CE 4.1
0,41
0,1%
N/EL
N/EL
N/EL
N/EL
EL
N/EL
0,01%
District heating/cooling distribution
CCM 4.15
2,51
0,5%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
-
Production of heat/cool using waste heat
CCM 4.25
3,76
0,7%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
-
Construction, extension and operation of water
collection, treatment and supply systems
CCM 5.1
0,24
0,05%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0,10%
Renewal of water collection, treatment and supply
systems
CCM 5.2
0,56
0,1%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
-
Renewal of waste water collection and treatment
CCM 5.4
0,37
0,1%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
-
Construction of new buildings
CCM 7.1/ CE3.1
1,32
0,2%
EL
N/EL
N/EL
N/EL
EL
N/EL
-
Renovation of existing buildings
CCM 7.2/ CE 3.2
0,50
0,1%
EL
N/EL
N/EL
N/EL
EL
N/EL
-
Installation, maintenance and repair of energy
efficiency equipment
CCM 7.3
0,56
0,1%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0,90%
Installation, maintenance and repair of charging
stations for electric vehicles in buildings (and
parking spaces attached to buildings)
CCM 7.4
0,04
0,01%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
-
Installation, maintenance and repair of instruments
and devices for measuring, regulation and
controlling energy performance of buildings
CCM 7.5
0,84
0,2%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0,20%
Installation, maintenance and repair of renewable
energy technologies
CCM 7.6
1,18
0,2%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0,05%
Provision of IT/OT data-driven solutions for leakage
reduction
WTR 4.1
0,01
0,00%
N/EL
N/EL
EL
N/EL
N/EL
N/EL
-
203,54
38,1%
37,8%
36%
0%
0%
0,3%
0%
40,66%
398,94
74,8%
74,4%
36%
0%
0%
0,3%
0%
74,27%
134,73
25,2%
533,67
100,0%
A. CapEx of Taxonomy-eligible activities (A.1+A.2)
CapEx of Taxonomy-non-eligible activities (B)
TOTAL
Optional
Substantial contribution criteria
DNSH criteria (‘Does Not Significantly Harm’)
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Year
CapEx of environmentally sustainable activities (Taxonomy-aligned)
(A.1)
of which enabling
of which transitional
CapEx of Taxonomy-eligible but not environmentally sustainable
activities (not Taxonomy-aligned activities) (A.2)
Consolidated Sustainability Reporting
Pirelli & C. S.p.A. – 2024 Annual Report
217
OPERATING EXPENSES INDICATOR
The numerator of the KPI comprises the “aligned” share of the costs incurred for research and
development related to activity 3.6 and the operating costs related to the investments illustrated
above.
The denominator of the KPI, as required by law, is composed of the following elements:
-
Research and development expenses, as reported in the Group’s consolidated financial
statements.
-
Maintenance, described in Explanatory Note 32, “Other costs”, from which the portion relating
to research and development (R&D) costs has been subtracted in order to avoid double
counting with respect to the previous item.
-
Leases and rentals, limited to the portion relating to leasing contracts with a duration of less
than 12 months, as indicated in Explanatory Note 32, “Other costs”.
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SHARE OF OPERATING EXPENDITURE129 ARISING FROM PRODUCTS OR SERVICES
ASSOCIATED WITH ECONOMIC ACTIVITIES ALIGNED TO THE TAXONOMY - DISCLOSURE
FOR THE YEAR 2024, REPRESENTED IN ACCORDANCE WITH THE TEMPLATE IN ANNEX V
OF DELEGATED REGULATION (EU) 2023/2486.
129 Values reported according to the template (model) set out in Annex II of Delegated Regulation (EU) 2023/2486 (“MODELS FOR KEY
PERFORMANCE INDICATORS (KPIs) OF NON-FINANCIAL COMPANIES”). Shaded cells refer to information not applicable for the
current financial year to the Group’s business activities.
Financial Year N
Economic Activities (1)
Code (2)
Turnover (3)
Proportio
n of
Turnover,
year N (4)
Climate Change Mitigation (5)
Climate Change Adaptation (6)
Water (7)
Pollution (8)
Circular Economy (9)
Biodiversity (10)
Climate Change Mitigation (11)
Climate Change Adaptation (12)
Water (13)
Pollution (14)
Circular Economy (15)
Biodiversity (16)
Minimum Safeguards (17)
Proportion of
Taxonomy-
aligned (A.1.)
or -eligible
(A.2.) OpEx,
year N-1 (18)
Category
enabling
activity (19)
Category
transitional
activity (20)
€/mln
%
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
T
Manufacture of other low carbon technologies
CCM 3.6
131,44
34,4%
Y
N
N/EL
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
Y
22,30%
E
-
Renewal of water collection, treatment and supply
systems
CCM 5.2
0,005
0,0%
Y
N
N/EL
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
Y
-
-
-
Operation of personal mobility devices, cycle
logistics
CCM 6.4
0,94
0,2%
Y
N
N/EL
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
Y
0,20%
-
-
Installation, maintenance and repair of energy
efficiency equipment
CCM 7.3
0,10
0,03%
Y
N
N/EL
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
Y
0,10%
E
-
132,48
34,7%
34,7%
0%
0%
0%
0%
0%
Y
Y
Y
Y
Y
Y
Y
22,60%
131,54
34,4%
34,4%
0%
0%
0%
0%
0%
Y
Y
Y
Y
Y
Y
Y
22,43%
E
-
-
Y
Y
Y
Y
Y
Y
Y
-
T
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
%
Manufacture of other low carbon technologies
CCM 3.6
CCA 3.6
79,01
20,7%
EL
EL
N/EL
N/EL
N/EL
N/EL
6,6%
Construction, extension and operation of water
collection, treatment and supply systems
CCM 5.1
0,14
0,04%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
-
Renovation of existing buildings
CCM 7.2 / CE 3.2
0,05
0,01%
EL
N/EL
N/EL
N/EL
EL
N/EL
-
Installation, maintenance and repair of energy
efficiency equipment
CCM 7.3
0,21
0,06%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0,1%
79,41
20,8%
20,8%
21%
0%
0%
0%
0%
6,7%
211,89
55,4%
55,4%
21%
0%
0%
0%
0%
29,3%
170,26
44,55%
382,16
100,00%
A. OpEx of Taxonomy-eligible activities (A.1+A.2)
OpEx of Taxonomy-non-eligible activities
TOTAL
Optional
Substantial contribution criteria
DNSH criteria (‘Does Not Significantly Harm’)
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Year
OpEx of environmentally sustainable activities (Taxonomy-aligned) (A.1)
of which enabling
of which transitional
OpEx of Taxonomy-eligible but not environmentally sustainable
activities (not Taxonomy-aligned activities) (A.2)
Consolidated Sustainability Reporting
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219
GAS AND NUCLEAR ACTIVITIES
In accordance with Regulation 2021/2178 and in light of the clarifications by the Commission130,
Template 1 of Annex XII to Delegated Regulation 2021/2178 with respect to the activities of the Pirelli
Group is set forth below.
Activities related to nuclear energy
1. The company carries out, finances or has exposure to research, development, demonstration and
implementation of innovative power generation facilities that produce energy from nuclear processes with a
minimum amount of fuel cycle waste.
NO
2. The company carries out, finances or has exposure to the construction and safe operation of new nuclear power
plants for the generation of electricity or process heat, including for district heating purposes or for industrial
processes such as hydrogen production, and improvements in their safety using the best available technology.
NO
3. The company carries out, finances or has exposure to the safe operation of existing nuclear installations that
generate electricity or process heat, including for district heating or industrial processes such as the production
of hydrogen from nuclear energy, and improvements in their safety.
NO
Fossil Gas Activities
4. The company carries out, finances or has exposure to the construction or operation of power generation facilities
using fossil gas fuels.
NO
5. The company carries out, finances or has exposure to the construction, upgrading and operation of combined
heat/cool and power generation plants using gaseous fossil fuels.
NO
6. The enterprise carries out, finances or has exposure to the construction, upgrading and operation of combined
heat/cool power generation plants using gaseous fossil fuels.
NO
FUTURE DEVELOPMENTS
The Taxonomy regulation is constantly evolving and the list of eligible sectors and activities may be
supplemented in the coming years. Specifically, the introductory considerations to Delegated
Regulation 2023/2486 suggest the possible future introduction of an activity dedicated to tyre
production131.
In addition, a Social Taxonomy is expected to be drawn up, which may make it possible to broaden
the sustainability assessment of economic activities by considering additional aspects such as the
health and safety of workers, human rights, inclusion policies and attention to staff growth and
training opportunities.
130 The FAQs published in December 2023 confirm that non-financing companies, which do not conduct the listed activities, are only
required to publish template 1, omitting templates 2 to 5, of Annex XII to Delegated Regulation 2021/2178.
131 In the introductory remarks of Delegated Regulation 2023/2486, the Commission states the following: “As tyres are responsible for 20
% of a vehicle’s energy consumption, leveraging innovation in their manufacture can reduce the share of greenhouse gas emissions
borne by the entire transport sector. Tyres can also contribute to a more circular economy. Although tyre manufacturing is not part of
the activity of manufacturing components that are essential for ensuring and improving the environmental performance of low-carbon
vehicles, it will need to be assessed in more detail in order to set specific criteria for technical screening, taking due account of the
legal obligations enshrined in the most recent EU legislative proposals and best practices, in particular with regard to microplastic
release, air pollution, noise, direct greenhouse gas emissions and end-of-life.”
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Awaiting further regulatory developments, the Pirelli Group is committed to continuous improvement
of the activities necessary to ensure complete and accurate reporting in accordance with regulatory
requirements.
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SOCIAL INFORMATION
S1 Own workforce
Stakeholders’ interests and views and interaction between IROs and the strategy and business
model
Pirelli has always promoted and implemented an inclusive culture that values the individual, a sense
of belonging and participation in the corporate community and social dialogue, which are considered
essential elements for achieving corporate goals and organisational well-being. It views the individual
and collective cultural development of its people as an ongoing investment aimed at preventing the
creation of cultural and organisational barriers that hinder effective participation in meeting the
company’s challenges, in the belief that the most innovative ideas and the best solutions emerge
from a working environment where everyone can express their potential.
Dialogue and discussion with employee representatives, along with gathering individual feedback
through internal employee satisfaction surveys, are the two main channels used to actively engage
people and their representatives, helping the company manage and improve all aspects of work. As
a result, the outcomes of these ongoing discussions, dialogue and listening efforts are actively
incorporated into the Group’s strategic decisions. This is evident in the employee targets outlined in
the 2025-2030 Industrial Plan, which are structured around five pillars that translate into: safety first;
people care and well-being; diversity, equity and inclusion; skills development; involvement and
loyalty.
The Company’s management and planning model also includes ongoing monitoring of studies,
analyses and research on the evolving expectations of workers globally, as well as on employment
governance best practices, in order to create a model of continuous improvement and anticipation
of regulatory trends, particularly in relation to organisational behaviour and direct engagement in the
labour market.
All of the Company’s own workers who may be affected by the relevant impacts identified in the
double materiality analysis, and illustrated in the General Information section, “Double materiality
analysis and management of impacts, risks and opportunities” paragraph, are included in the
disclosure pursuant to ESRS2, within the regulatory limits. Specifically, with regard to non-employee
workers, labour regulations are in place that assign certain actions, which may in turn be linked to
impacts exclusively attributable to the respective employer (third party with respect to Pirelli).
Specifically, Pirelli’s own workforce comprises employees of the company and so-called non-
employees. With reference to the Pirelli Group’s workforce, the second category includes agency
workers.
In terms of materiality, Pirelli has identified positive impacts generated by its activities and business
model on employees. The areas of activity that have a positive impact on the own workforce can be
traced mainly to:
-
protection of human and labour rights
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-
dialogue and industrial relations to ensure continuous improvement of working conditions
-
continuous improvement of health and safety conditions at work
-
initiatives to promote diversity, equity and inclusion
-
skills development programmes, with a focus on performance management and training
-
welfare programmes and initiatives for the internal community
Further details of the policies and specific actions implemented by Pirelli to create positive impacts
on its own workforce are provided in the dedicated sections of the following paragraphs.
Processes for engaging the Company’s workers
The views of the workforce on the current and potential impacts that affect them are central to the
dialogue between the company and employee representatives. Collective bargaining is as the key
tool for informing the company’s decisions and activities.
A central element in building a strong relationship with workers and protecting their rights is Pirelli’s
industrial relations model, which is organised on two levels. Relations and negotiations with trade
unions are managed locally by the Human Resources and Organisation Department within each
affiliate, always in compliance with local laws, national and/or company collective agreements,
customs and practices in each country. This local approach is supported by the central functions,
which coordinate activities and ensure that the above principles are upheld throughout the Group.
The Industrial Relations department, responsible for ensuring the involvement of workers’
representatives and informing the Company of the findings in order to integrate the relevant aspects
into the management approach, also plays an active role in the Group’s commitment to health and
safety, an area in which trade unions and workers are also actively involved. Collective
representation bodies regularly work with the company to monitor and address current issues, as
well as to implement awareness and intervention plans/programmes aimed at enhancing activities
and safeguarding workers’ health and safety.
At the international level, Pirelli has also set up the European Works Council (EWC) back in 1998,
which focuses mainly on economic performance, financial forecasts, realised and planned
investments, and research progress. The Pirelli EWC holds an annual meeting after the presentation
of the Group Financial Statement. The agreement establishing the EWC also allows for additional
extraordinary sessions if needed to meet the obligation of informing delegates about significant
events with transnational impact, such as the opening, restructuring or closing of premises, or
widespread changes in the organisation of work. The Company has always ensured a constant
exchange of information whenever there have been extraordinary situations regarding European
production structures.
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223
Moreover, in all cases of corporate reorganisation and restructuring, in line with the principle of
constructive and prompt dialogue with employees and a commitment to reducing social impacts,
workers and their representatives are notified in advance. This is done within the minimum
timeframes, fully adhering to local laws, collective agreements, and union practices, ensuring the full
involvement of all relevant institutional stakeholders.
For details on the processes used to monitor the effectiveness of this approach, please refer to the
section on the annual audits conducted by Internal Audit and the monitoring of grievance
mechanisms available in the “Governance Information” section.
In addition to Industrial Relations activities, further initiatives to involve and listen to people at Pirelli
include the global engagement survey, described below.
FOCUS: NEXTOYOU - the Global Engagement Survey on corporate climate
For many years, Pirelli has used the climate survey tool to actively listen to its employees worldwide,
using the feedback to develop both group-wide and local improvement plans.
Since 2022, the global survey has been both rebranded (replacing the previous name ‘My Voice’
with ‘NEXTOYOU’) and revised in terms of content, in order to ensure better alignment with the new
employee experience focus of Pirelli’s Human Resources and Organisation team.
The survey, covering the entire workforce, is conducted annually in two phases: for white-collar
workers in even-numbered years (2024, 2026, 2028, and so on) and for blue-collar workers in odd-
numbered years (2025, 2027, 2029, and so on). This biennial approach for each employee category
enables Affiliates to develop a targeted and consistent action plan for their location, based on the
results of the previous survey.
At the core of the climate survey model is the Sustainable Engagement index, made up of five
questions. This index measures both active engagement and satisfaction, along with additional
factors like Energy and Empowerment, which are also key indicators of the long-term sustainability
of employee engagement. This model is based on the idea that when a work environment fosters
individual performance, supports employees’ well-being, and actively engages them in achieving
company goals, the engagement is more likely to be sustained in the long term. In fact, the
company’s ultimate goal is to maintain Sustainable Engagement at consistently high values and
above 80%. This objective was included in the Strategic Targets concerning People in the Industrial
Plan with a 2030 horizon.
In addition to Sustainable Engagement, the questionnaire, consisting of a total of 29 questions, also
investigates the level of job satisfaction of the employees on the following dimensions of the
employee experience, with some differences between the staff and worker population: Health, Safety
and well-being, stress level, work-life balance, relationships between People, teamwork, support at
work, Purpose, Trust, Quality, social responsibility, Diversity, Inclusion, Leadership, as well as
Capability and Empowerment. There are also open questions to gather comments and suggestions.
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For the results of the 2023-2024 global surveys, the climate survey targeting the global blue-collar
population in 2023, and the climate survey targeting the global white-collar population in 2024, are
considered. Details of the results of each survey are shown below.
The blue-collar climate survey (2023) achieved an overall participation rate of 74%, with an overall
Sustainable Engagement Index of 85% (+9% compared to the previous survey). This result
significantly outperforms the benchmarks of equivalent similar surveys conducted in manufacturing
companies. Based on the results collected, specific improvement actions were identified and
implemented, as usual, at local level with respect to the identified areas of attention. The next climate
survey for blue-collar workers will be carried out in 2025.
The climate survey targeting the white-collar population (2024) achieved an overall participation rate
of 83% (+4% compared to the previous survey) and a global Sustainable Engagement Index of 80%
(in line with the previous survey). This means that “total favourable” responses in the category of
Sustainable Engagement, i.e., ratings 4 and 5 on a scale of 1 to 5 (1-total disagreement to 5-total
agreement) were 80%. This strong and positive Sustainable Engagement result is in line with
external benchmarks (white-collar manufacturing standard), as confirmed by the external company
that supported the company in conducting the global surveys.
Of the questions in the white-collar survey categories, 92% recorded a positive response rate of over
70%, testifying to a generally very positive and favourable working, professional and engagement
climate.
In addition, multiple open comments were gathered: “Welfare & Benefits” was the most commented
category overall in the open question “What do you value most about working here?”, followed by
the “Flexible working arrangements” and “Training and development opportunities” categories, a sign
that these areas represent a strength of our company, particularly appreciated by employees.
The results of this climate survey were communicated to senior management in December 2024,
and the results are communicated to employees in February 2025. The action plans of all countries
in the group are expected to be gathered by the first quarter of 2025. The overall Sustainable
Engagement and Global response rate data annually consolidate the current and previous year’s
results in a weighted manner. For the two-year period 2023-2024, the Global Overall Sustainable
Engagement score is 83%, with a global participation rate of 76%.
Sustainable Engagement remains higher among the blue-collar population than among the white-
collar population, a trend that contrasts with what is typically seen in such surveys. This reflects the
company’s strong focus on colleagues working in manufacturing.
In general, the surveys of the last two years reveal some characteristic traits of Pirelli’s corporate
culture, including pride and a sense of belonging, trust in the company’s choices and recognition of
the high quality of its products, showing how these are now common traits of the company around
the world.
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Channels for employees to raise concerns
Pirelli is committed to preventing or minimising any negative effects or impacts on its people. The
Company operates in compliance with the United Nations Guiding Principles on Business and
Human Rights, and is constantly striving to refine processes aimed at identifying, assessing,
preventing and mitigating any risks of negative impact on people, and taking timely remedial action
should they occur. Remedial measures depend on the type of impact that occurs but always include
actions to address the root causes. These measures are also accompanied by proactive support for
those affected and, when appropriate, dialogue with workers’ representatives.
To allow employees, as well as other stakeholders, to report potential violations of internal policies
or legal obligations anonymously and confidentially, the company has for the last several years
implemented a whistleblowing system designed to address reports related to working conditions,
discrimination and harassment, and health and safety. This system is based on the Group’s
Whistleblowing Policy, described in the section on Governance, paragraph “The Whistleblowing
Policy”.
In addition to Group channel, Pirelli provides dedicated channels at the level of individual
Companies, where foreseen and in line with local regulations, as well as a channel reserved to
reporting Breaches concerning the Internal Audit function managed by independent parties internal
to the Company, who would engage an external party to handle the report. The external party would
then be responsible for reporting to the Audit, Risks and Corporate Governance Committee.
This channel is available to anyone, whether internal or external to the Group, who wishes to submit
a report, either in writing or orally, regarding any company within the Group.
The procedures for reporting and filing complaints are available internally through the intranet and
company noticeboards in the local language, as well as externally on the company’s website, where
they are published in multiple languages to ensure easy accessibility.
Reports received through the Group channel are centrally managed by the Group Internal Audit
function, which reports functionally to the Audit, Risk, and Corporate Governance Committee (made
up mainly of independent directors), and to the Board of Statutory Auditors of Pirelli & C. S.p.A and
meets the requirements of impartiality and independence for the performance of this activity by EU
regulations132 and best practices in general.
The Internal Audit Function receives and analyses reports obtained from Stakeholders in accordance
with the whistle-blowing procedures established by the Group and regarding any cases of
corruption/violation of the principles of internal control and/or the precepts of the Code of Ethics,
equal opportunities, corporate rules and regulations, or any other actions or omissions that, directly
or indirectly, might result in economic or financial losses for or damage to the reputation of the Group
and/or its subsidiaries.
132 Legislative Decree No. 24 of 10 March 2023 (the so-called “Whistleblowing Decree”), which transposed Directive (EU) 2019/1937
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Whistleblowing Managers are in charge of analysing all the whistleblowing cases received and
providing feedback to the whistleblower on their acceptance, management and results. The
Whistleblowing Manager, during the analysis, may, where necessary, involve the corporate functions
deemed competent for verification activities, as well as request any specific action plans. If the report
is found to be well-founded, the appropriate disciplinary measures and/or legal action will be taken
to protect the Company and the whistleblower.
Finally, Internal Audit periodically reports to the relevant Pirelli & C. S.p.A. bodies on the reports
received and the progress of the analyses performed.
At the end of 2024, the Group launched a global communication campaign to make employees
aware of the possibility of activating the whistleblowing process and how to report it, through posters
displayed in offices and plants and a video published on the company intranet. Workers’ awareness
of these structures and processes, and their confidence in using them to communicate concerns or
address needs, is reflected in the activations of the Whistleblowing procedure during 2024.
The whistleblowing channels are structured in accordance with the principles of ‘privacy by design’
and ‘privacy by default and minimisation’. Reports may be made also in an anonymous form and
protection of the principles of confidentiality, proportionality, impartiality and good faith is at all times
guaranteed, as is zero tolerance in respect of acts of reprisal of any kind against whoever makes a
report or is the subject of the report. The handling of reports is, in fact, guided by respect for the
confidentiality of the persons concerned and of any third parties involved, while also ensuring
anonymity, in the case of anonymous reports, and the principles of necessity and proportionality.
It should be noted that in 2024 no reports of violations of fundamental Human Rights were received,
nor was the Company subject to any proceedings or convictions relating to violations of Human
Rights.
Pirelli employees around the world
As of 31 December 2024, Pirelli’s total own workforce, expressed in Full-Time Equivalent (FTE) and
including temporary workers, stands at 31,219, comprising 30,999 employees and 220 temporary
workers133.
The following tables, pertaining to 2024, provide a detailed breakdown of employees by gender,
geographical area and type of contract, as well as the employee flow by gender and age group. All
quantitative information provided is expressed in FTE.
133 Agency workers are the workforce that is taken on to meet temporary work peaks, linked to market demand. This workforce is
intermediated through employment agencies, in compliance with company policies, legal regulations and trade union agreements.
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The cost incurred by the Group in 2024 for employees, including salaries and wages, social charges,
and other labour-related expenses, is recorded under the “Personnel Cost” item in the consolidated
income statement and amounts to 1,301,297 thousand euros.
Additional quantitative information with specific reference to the issue of diversity is provided in the
“Diversity, Equity and Inclusion” section of this Report.
Metrics - Characteristics of own workforce
Gender
Number of employees (in number of persons)
Men
26,024
Women
4,975
Other
0
Not disclosed
0
Total employees
30,999
Country
Number of employees (in number of persons)
Brazil
6,351
China
3,639
Italy
3,354
Mexico
3,598
Romania
4,701
Total employees in countries with significant employment134
21,643
2024
WOMEN
MEN OTHER (*) NOT DISCLOSED TOTAL
Number of employees (in number of persons/FTE)
alternative
4,975 26,024
0
0
30,999
Number of permanent employees (in headcount/FTE)
4,774 25,053
0
0
29,827
Number of fixed-term employees (in headcount/FTE)
198
870
0
0
1,068
Number of variable-hour employees (in headcount/FTE)
1
103
0
0
104
Number of full-time employees (in headcount/FTE)
4,860 25,781
0
0
30,641
Number of part-time employees (in headcount/FTE)
113
245
0
0
358
(*) Gender as self-identified by employees.
134 Defined by ESRS as “at least 50 employees, representing at least 10% of the total number of employees”
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2024
Europe
North
America
South
America
APAC
Area
Russia &
MEAI
Number of employees (in number of persons/FTE)
alternative
13,665
3,961
7,522
3,812
2,039
Number of permanent employees (in
headcount/FTE)
12,651
3,961
7,408
3,805
2,001
Number of fixed-term employees (in
headcount/FTE)
926
0
114
7
22
Number of variable-hour employees (in
headcount/FTE)
104
0
0
0
0
Number of full-time employees (in headcount/FTE)
13,445
3,960
7,406
3,812
2,018
Number of part-time employees (in
headcount/FTE)
236
1
116
0
5
The following data refer to incoming/outgoing employees (all incoming and outgoing movements of
employees with permanent and fixed-time contract, such as retirements, resignations, expiry of fixed-
term contracts). The entry and exit rates are calculated by comparing the number of entries and exits
of each category to the total number of employees belonging to that category as at 31 December.
The disposals and acquisitions of companies or business units, and changes in work schedules from
full-time to part-time are not considered.
Overall, the number of employees who left the company is 5,011. For more details, the overall
turnover and flows by age and gender are shown below.
In 2024, the total turnover rate is 16.2%, of which 7.8% is voluntary. The data in question relates to
the entire company population, which includes white- and blue-collar workers and refers to voluntary
resignations and retirements.
NEW HIRES BY AGE BRACKET
<30*
30 - 50
>50
Total
TOTAL
2,649
1,722
278
4,649
OVER THE TOTAL REFERENCE POPULATION
42.1%
9.1%
4.7%
15.0%
NEW HIRES BY GENDER
Men
Women
Other
Not disclosed
Total
TOTAL
3,855
794
0
0
4,649
OVER THE TOTAL REFERENCE POPULATION
14.8%
16.0%
15.0%
*At Pirelli there are 42 young people older than 15 and under 18 - before birthday - years old (22 in
Germany, 13 in Switzerland, 4 in Sweden, 2 in UK, 1 in Brazil), each for training and integration
plans, in harmony with local laws.
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Respect for human rights
Pirelli bases its activities on compliance with the universally established Human Rights, as
fundamental and indispensable values of its culture and business strategy, working to manage and
reduce potential risks of violations and in order to avoid causing – or contributing to causing –
adverse impacts to these rights in the international, multicultural, socially and economically diverse
context in which it operates.
In addition to adhering to the United Nations Global Compact, ISO 26000 Guidelines, the SA8000®
Standard, and relevant ILO international regulations, Pirelli also follows the OECD Guidelines on
due diligence and the recommendations outlined in the United Nations Guiding Principles on
Business and Human Rights. By implementing the Protect, Respect and Remedy Framework, the
company promotes the respect of Human Rights and encourages the adoption of applicable
international standards among its Partners and Stakeholders.
Pirelli is committed to monitoring and preventing any impact on the human rights of employees and
members of its value chain. To identify, assess, prevent, and mitigate the risks of violation of Human
Rights, Pirelli has implemented a Due Diligence system that crosses the value chain and integrates
attention to human rights in all the Company’s activities.
In 2023, Pirelli updated the Human Rights Risk Assessment (HRRA) analysis for its locations to
identify the geographical areas most at risk of human rights violations. The assessment was
conducted in line with the Company’s Enterprise Risk Management (ERM) model and allowed the
identification of subsidiaries on which to intervene as a priority through the most appropriate
mitigation and prevention actions.
The first step in the Due Diligence process is to identify human rights relevant to the Company’s
activities along its value chain, based on an analysis of internal documentation and the due diligence
framework. The 12 human rights identified by the analysis as priorities are: the right to equality and
non-discrimination, child right, the right to an adequate standard of living and equal and adequate
remuneration, working hours and overtime, health and safety right, freedom from modern slavery,
forced labour, inhumane treatment, and human trafficking, the right to privacy, the right to association
and collective bargaining, land and natural resources protection, indigenous peoples and minorities
right, access to justice and the right to education.
For each of the relevant human rights, public indices were analysed to determine the level of potential
country risk for the 32 countries in which Pirelli operates, taking into account the geopolitical, socio-
cultural and legislative conditions of the countries, assessed on the basis of the probability of
occurrence of cases of human rights violations, and the Business risk, taking into account the
Company’s operations; the riskiness was then defined for the production facilities, assembly units,
logistics and offices.
Both analyses were put on a risk scale of 1 to 4 (where 1 = remote risk, 2 = low risk, 3 = medium risk
and 4 = high risk).
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The results of the analysis show that countries with a medium-high potential risk level are mainly
concentrated in the Asian, African and some Latin American countries; while in the European
continent, North America and Oceania in general the risk was low-remote.
Finally, in order to identify the level of current risk, further analyses were carried out to assess the
current risk situation in the subsidiaries, investigating the effectiveness of the controls adopted by
the Company in the countries most at risk, highlighting how the level of potential risk in some
countries is significantly lower than the potential level precisely because of the commitments
undertaken by the Company, which, in any case, maintains a high level of attention in the field of
human rights in all the countries where it operates.
The Human Rights Risk Assessment (HRRA) allows Pirelli to systemise all the mitigation and
prevention actions adopted with the aim of prioritising verification, monitoring, awareness-raising and
training actions to intervene in an increasingly targeted manner on subsidiaries that might not be in
line with Pirelli’s human rights provisions.
Furthermore, the Company is aware that international frameworks on Business and Human Rights
insist on the need for companies to involve stakeholders in assessing the negative impacts that may
be caused by their activities along the value chain through a Human Rights Impact Assessment
(HRIA). For this reason, following the risk analysis, Pirelli carried out a stakeholder engagement
exercise involving internal company functions and external organisations with expertise in human
rights, including NGOs, in order to understand the extent of the negative impacts linked to the 12
human rights identified as relevant. The assessment was based on international standards, asking
respondents to rate the likelihood and severity of negative impacts (the latter understood as the
scale, scope and irremediable character of the impact). The involvement of the corporate functions
made it possible to make this assessment in the subsidiaries, finding an overall remote impact due
to the effectiveness of the safeguards adopted. These affect not only the probability of occurrence,
but also lower the level of severity, since even in the remote possibility of a violation occurring, the
company’s management and control system would allow for immediate action, limiting the severity
of the possible negative impact.
In the course of 2025, the company will update the Human Rights Risk Assessment on its sites in
order to intercept and manage any updates of the risk of human rights violations.
In addition, before investing in a specific market, in new business relationships (e.g., M&As, joint
ventures), Pirelli conducts ad hoc assessments on possible political, financial, environmental and
social risks, including those related to respect for human and labour rights, and carries out systematic
monitoring of the internal and external context in the countries where the Company operates, aimed
at preventing negative impacts on human rights and, if necessary, remedying them.
With reference to its Affiliates, the Company also continuously monitors the application of the
provisions on respect for human and labour rights, through audits performed by the Internal Audit
department, as well as through the “Country Sustainability Plans” active at all the Affiliates and in
which ongoing compliance with the dictates of SA8000 is monitored (the latter standard has been
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used by Pirelli as a benchmark tool for managing social responsibility, including human rights, since
2004).
Please refer to the paragraph of this report entitled “Periodic Audits on Labour Rights and Working
Conditions” for more details.
In terms of governance, plans, Risk Assessment results, and Human Rights performance are
discussed and approved within the Sustainability Operations Committee (a managerial committee),
chaired by the Chief Executive Officer and meeting monthly, and subsequently within the Strategic
Sustainability Committee (a managerial committee), chaired by the Executive Vice Chairman and
meeting quarterly. These elements are incorporated into the strategic plans approved by the Board
of Directors, supported by the Sustainability Committee, based on a proposal from the CEO and in
coordination with the Executive Vice Chairman, and are reflected in the Sustainability results
approved by the Board of Directors.
To continually update Best Practices in human rights protection, Pirelli works with governmental and
non-governmental organisations, industry bodies and academic institutions on the development of
global policies and principles. For example, the Group CEO signed the “CEO Guide on Human
Rights” promoted by the WBCSD in 2019, Pirelli is active within the UN Global Compact Working
Group on “Decent Work in Global Supply Chains”, launched in 2018 and continued in the following
years, participated in the UN Global Compact “Target Gender Equality” initiative in 2023, and
sponsored the UN Global Compact Business and Human Rights Accelerator programme in 2024.
Additionally, Pirelli actively contributes to the creation and maintenance of the Global Platform for
Sustainable Natural Rubber (GPSNR) and is a member of this platform.
Pirelli’s commitment to human rights is dealt with extensively in the ‘Global Human Rights’ Group
Policy, detailed below.
Global Human Rights Policy
Pirelli’s commitment to guarantee respect for human rights is governed by the Global Human Rights
Policy, through which Pirelli promotes respect for human rights and adherence to applicable
international standards also among its partners and stakeholders, including suppliers. Even in cases
where Pirelli does not have operational control, all commercial partners (e.g., joint ventures,
suppliers, etc.) are required to uphold the principles outlined in the Policy.
The Policy describes the management model adopted by the Company with reference to key Rights
and Values, such as:
•
opposing any form of direct or indirect discrimination and preventing it in all areas of working
life;
•
recognising the right of its workers to freely form trade unions and to bargain collectively;
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•
rejecting all forms of exploitation of workers, including child, forced or compulsory labour, and
strongly condemning all forms of trafficking and exploitation of human beings;
•
promoting a working environment based on trust, dialogue and mutual respect and protecting
the well-being of its workers;
•
ensuring fair and decent wages;
•
ensuring equal pay, e.g. between men and women, for work of equal value;
•
ensuring reasonable working hours and providing adequate compensation for overtime;
•
taking a proactive role in maintaining a safe and healthy working environment and
continuously promoting and disseminating a health and safety-oriented corporate culture;
•
respecting local cultures and indigenous peoples and protecting the environmental and
cultural heritage as well as the traditions and customs of local communities.
The Policy reaffirms Pirelli’s commitment to respect and protect fundamental human rights under the
laws and regulations of the individual countries in which it operates and applicable international
standards, including:
•
the United Nations International Bill of Human Rights, including the Universal Declaration of
Human Rights, the International Covenant on Civil and Political Rights and the International
Covenant on Economic, Social and Cultural Rights;
•
the United Nations Convention on the Rights of the Child;
•
the Declaration on Fundamental Principles and Rights at Work of the International Labour
Organisation (ILO) and its applicable conventions;
•
the European Convention on Human Rights;
•
the United Nations Convention against Corruption.
Pirelli’s top management, supported by the Sustainability function, which is responsible for Human
Rights Governance, and with the involvement of the functions involved in various ways (including
but not limited to the Compliance, Purchasing, Human Resources and Organisation, Health Safety
and Environment, and Legal Affairs functions) plays a strategic role in the full implementation of the
Policy, ensuring the involvement of all Pirelli workers and collaborators so that they express
behaviour consistent with the values contained therein.
Further references to respect for human rights and its application to the supply chain are also found
in other company documents: “Code of Ethics”, the “Health, Safety and Environment” Policy, the
“Global Personal Data Protection” (Privacy Policy), the “Diversity, Equity & Inclusion” Policy, the
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“Code of Conduct of Pirelli Suppliers”, the “Sustainable Natural Rubber Management” Policy and the
“Whistleblowing” Policy (Complaint Procedure).
Metrics - Human rights
With regard to work-related incidents, globally there were 64 cases of discrimination and/or
harassment in 2024, of which 39 cases and 25 reports were received through company channels
(whistleblowing), 3 of which were substantiated (2 relating to Discrimination cases and 1 relating to
a Harassment case), while 3 were still being analysed as at 31 December 2024.
There were 103135 reports through company channels (whistleblowing) concerning other labour
issues, excluding discrimination and harassment.
There were no complaints to the company at national contact points for OECD MNEs.
The total amount of fines, penalties and compensation for damages resulting from the incidents and
complaints reported above and received in 2024 corresponds to 2,041 thousand euros (of which
89.57% related to the country Brazil) compared to a total value recorded in the consolidated income
statement that includes amounts also related to litigation notified in previous years is 8,040 thousand
euros (of which 94.02% related to the Brazil).
In 2024, as in previous years, the level of work and social security litigation at Group level remained
low. There is still a high level of litigation in Brazil, where labour disputes are a widespread
phenomenon and are linked to the specificities of the local culture; as such, it does not only concern
Pirelli but also other multinationals operating in the territory. Labour lawsuits are generally initiated
when an employment contract is terminated, and they usually involve the interpretation of regulatory
and contractual issues that have long been controversial. The Company has made a major
commitment to prevent and resolve these conflicts – to the extent possible – including through
settlement procedures.
It should be pointed out that in 2024, in relation to Pirelli’s Plant in Mexico (Silao), a procedure was
activated to verify the respect of trade union and bargaining freedoms, provided for by the 2018
USMCA agreement between USA, Canada and Mexico.
This procedure in 2024 was activated by a union outside the Company, claiming representativeness
within the Plant in dispute with the union elected by the workers and legitimated by the Mexican
Labour Authorities.
The first phase of this procedure involved an investigation at the Plant by the Labour Authorities of
Mexico, and ended with the formal declaration, by the Authorities, of Pirelli’s total respect for trade
135 Coming from both inside and outside the Group.
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union freedoms and the right to collective bargaining. At the end of 2024, the process of confrontation
between the Mexico and the USA is still ongoing.
There were no serious human rights incidents related to the company’s workforce (including child
labour, forced labour, human trafficking) or in violation of the UN Guiding Principles on Business and
Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work, the OECD
Guidelines for MNEs. Accordingly, there are no provisions for such cases.
Also with reference to serious incidents concerning human rights related to the company’s workforce,
it should be noted that no substantiated reports were received of serious violations of the ILO Core
Labour Standards, with specific reference to forced labour, child labour, discrimination, freedom of
association and bargaining.
Human rights training
Pirelli believes that training, access to knowledge and understanding of the rules and principles
relating to human rights, the values underlying them and the mechanism for their protection is of
fundamental importance, both within the company and in the value chain.
With reference to Pirelli employees, in the fourth quarter of 2023 Pirelli made available a course in
which the contents of Pirelli’s Policy on Human Rights Management, the regulations underpinning
the management model, risk analysis activities and reaction in the event violations are identified are
explored point by point. During 2024 the course was translated into the languages most used by the
group and was shared with all employees, so that they could learn more about Pirelli’s Global Human
Rights policy and the behaviours to be observed to maintain a respectful and inclusive work
environment. In 2025, the training programme will continue with further training sessions for
company departments that, due to the nature of their activities, may have a significant impact on
managing human rights issues or are responsible for specific risks related to human rights.
Working conditions
Following the Double Materiality analysis, the following material impacts related to the management
and welfare of Pirelli’s workforce were identified:
•
Efficient work organisation, including adherence to time limits set by contracts, regulations,
standards and characteristics of the business sector.
•
Permanent employment contracts and employment stability at Pirelli.
•
Wages of the Pirelli workforce aligned with contracts, regulations, standards and characteristics
of the corporate sector.
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•
Presence of collective agreements and opportunities for involvement for Pirelli’s workforce.
Pirelli is committed to guaranteeing working conditions that are fair, inclusive and respectful of
current regulations, promoting employment stability, safety and the well-being of its workers through
policies and practices aimed at valuing people and their contribution to the sustainable growth of the
company.
Policies for the Protection of Working Conditions
Pirelli’s commitment to Fundamental Labour Rights is dealt with extensively in the Global Human
Rights Policy, described in the preceding chapters, which regulates, among other aspects, Pirelli’s
commitment to fostering positive impacts in terms of (i) efficient work organisation, including
compliance with time limits set by contracts, regulations, standards and company sector
characteristics; (ii) permanent employment contracts and employment stability at Pirelli; (iii) Pirelli
workforce wages aligned with contracts, regulations, standards and company sector characteristics;
(iv) presence of collective agreements and opportunities for participation for Pirelli employees.
In particular, the Policy reaffirms Pirelli’s commitment to respect workers’ rights and to provide for
written employment contracts, reasonable working hours, fair and decent wages and equal pay, e.g.
between men and women, for work of equal value, and adequate overtime compensation for its
employees in accordance with applicable laws and regulations and collective bargaining
agreements, where applicable. In any case, regardless of the applicable local laws, remuneration
must always be at least sufficient to meet the basic needs of employees and to ensure a decent
standard of living for them and their families. In addition, Pirelli’s Policy explicitly acknowledges the
firm recognition of the right of their workers to freely form trade union associations and to bargain
collectively and, in this regard, to engage in open and constructive dialogue with recognised trade
union representatives.
In turn, the Diversity Equity and Inclusion Policy reaffirms Pirelli’s firm commitment to offering
equal opportunities in every aspect of working life, and to scrupulously adhering to the principle that
work of equal value should be paid for with equal pay (“equal pay for work of equal value”). For
additional information, please refer to the dedicated section “Diversity, Equity and Inclusion”.
The Health, Safety and Environment Policy also fosters positive impacts in terms of participation
opportunities for Pirelli’s workforce, expressly providing for consultation and participation of workers
and their representatives on occupational health and safety. For additional information, please refer
to the dedicated section “Occupational Health & Safety”.
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Targets
The Company’s goal has always been, and will continue to be, to foster an environment of effective
and open dialogue with employees and their representatives, while ensuring strict adherence to the
terms of contracts, regulations, adopted policies, and applicable laws.
The Pirelli approach has always promoted compliance with all legal and/or contractual requirements
concerning working hours, the use of overtime and the right to regular days of rest. These matters
are often the subject of agreements at the union level, in compliance with the specific regulatory
requirements of each country. At the Group level, the right to paid leave is guaranteed in accordance
with applicable regulations and company agreements.
During 2024, there were no rationalisation and/or restructuring operations. In the case of
rationalisation or organisational restructuring of the employment level, the company uses tools to
minimise the social impact in full compliance with local legislation, current collective agreements and
trade union agreements.
Actions
Renewal of Collective Agreements
Pirelli is actively engaged in ongoing negotiations for the renewal of collective agreements,
maintaining an open dialogue in multiple countries, each with its own specific contract renewal dates.
In particular, during 2024, collective agreements expiring in Mexico, Argentina, Romania and Turkey
were renewed without conflict.
Periodic Audits of Labour Rights and Working Conditions
In addition to the trade union dialogue and coordination between the Headquarters and local
functions, Pirelli verifies the application of the provisions on the respect of human and labour rights
to its affiliates through audits performed by the Internal Audit function, on the basis of an ongoing
Risk Assessment.
Normally every audit is carried out by two auditors, either on-site or remotely, and lasts about three
weeks. The Internal Audit Team received training on the environmental, social, labour and business
ethics elements of an audit from central function directors to enable them to carry out an effective,
clear and structured audit, granting Pirelli effective control over all aspects of sustainability. Based
on the results of these audits, an action plan is agreed between the local managers and central
management, with precise implementation dates and responsibilities and follow-up verification.
The auditors carry out verifications on the basis of a checklist of sustainability parameters deriving
from the SA8000® Standard and the Pirelli Policies mentioned above. All managers from the
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affiliates involved in the audits are adequately trained and informed on the audit purpose and
procedures by the applicable central functions, in particular Sustainability, Purchasing, Health, Safety
and Environment, Human Resources and Organisation, and Compliance.
It should be noted that in 2024 none of the audits revealed any breach of ILO Core Labour Standards,
with specific reference to forced labour or child labour, freedom of association and bargaining, and
discrimination. As a result, it was not necessary to establish remedial plans and associated corrective
actions.
Metrics – Collective bargaining
78% (almost constant percentage over the four-year period 2021-2024) of the Group’s employees
are covered by trade union representation bodies.
In line with the requirements of the ESRS reporting standards, the table below provides details by
country within the EEA where Pirelli has a significant level of employment, where significant level is
defined by ESRS as “at least 50 employees representing at least 10% of the total number of
employees”. The countries with such characteristics are Italy and Romania, where the percentage
of employees covered by collective agreements and workers’ representatives is around 100%.
Collective bargaining coverage
Social dialogue
Coverage
rate
Employees – EEA
(for countries with > 50 employees representing
> 10% of total employees)
Workplace representation (EEA only)
(for countries with > 50 employees representing
> 10% of total employees)
0 – 19%
20 – 39%
40 - 59%
60- 79%
80 - 100%
Italy; Romania
Italy; Romania
Metrics - Adequate wages
All employees receive an adequate salary, in line with collective agreements, applicable regulations
and market benchmarks.
Diversity, equity and inclusion
The subject of Diversity, Equity and Inclusion is linked to the following material impacts:
•
Equal opportunities in the workplace at Pirelli, respect for gender diversity and other minorities,
equal pay for work of equal value between genders
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•
Commitment to achieving gender balance at Pirelli
Diversity, Equity & Inclusion Policy
Pirelli is characterised by a multinational context where individuals express a great diversity, whose
conscious management simultaneously creates a competitive advantage for the Company and a
shared social value.
Pirelli’s commitment to respecting equal opportunities and valuing diversity and inclusion in the
workplace is expressed in the Pirelli Global Policy “Diversity, Equity and Inclusion”, last updated in
August 2023. The centrality of the issue for Pirelli also sees equal opportunities covered in other
relevant Group sustainability documents, including the “Code of Ethics” and the “Global Human
Rights” Policy, also updated in August 2023.
With specific reference to Diversity and Independence of the Board of Directors and the Board of
Statutory, please refer to the related Policy “Statement on Diversity and Independence” published
on Pirelli’s website, in the Governance section.
Pirelli’s DE&I Policy stresses its commitment to offering equal opportunities in every aspect of
working life, in the selection stages as well as in decisions regarding remuneration, assignment of
duties, training and career progression. In particular, Pirelli scrupulously adheres to the principle that
work of equal value should be equally remunerated (“equal pay for work of equal value”), e.g.
between women and men, and actively works to promote gender equality. These decisions are made
exclusively on the basis of people’s skills, experience and professional potential and achievements,
without any distinction on the grounds of gender, gender identity and expression, sexual orientation,
marital status, pregnancy status, parental or care-giving status, age, disability (wether mental or
physical), skin colour, ethnic origin, nationality, religious belief, socio-economic and/or cultural
background, trade union affiliation, political or other opinions.
The Policy also reaffirms Pirelli’s commitment to guaranteeing a working environment in which each
person is treated and treats others with dignity and respect, free from all forms of verbal,
psychological, physical – sexual or non-sexual – harassment, abuse, constraint or violence, and any
discrimination against individuals or groups by other individuals or groups, committing itself to
preventing and intervening to put an end to such behaviour, should it occur.
The implementation of Policy DE&I passes through the active support of Group employees at all
levels, in compliance with internal guidelines and the tools Pirelli makes available so to:
take decisions concerning the employment and development of people free from any form of
discrimination and harassment;
continue to maintain a high level of sensitivity and awareness in the organisation towards
Diversity, Equity and Inclusion issues, including with a view to preventing potential
unconscious bias;
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maintain an inclusive and respectful working environment both within Pirelli and in relations
with external Stakeholders, free from all forms of discrimination and sexual and non-sexual
harassment;
grant gender pay equity on an equal meritocratic basis, identify gaps and progressively close
them, if found, and transparent reporting in this regard;
bolster of people’s motivation through dialogue, participation, services and initiatives
supporting mental and physical wellbeing and work-life balance, including, for example,
through flexible working options, the dissemination of a culture of sharing family
responsibilities, the adoption of health support programmes, and support for parenthood.
The Policy also details the reporting procedure under DE&I, available to employees as well as to the
external community, respecting confidentiality and ensuring non-retaliation. The Company
responded in all cases, intervening with actions aimed at removing the causes of the complaints
and/or aimed at improving the internal control system. For further information on the reports received,
please refer to the paragraph “Whistleblowing Policy” in the “Governance information” section.
In terms of Governance, for years Pirelli has had an Equal Opportunities Manager who works in
coordination with the different corporate departments according to their respective expertise,
considering the impact of the issue on the value chain. Plans and performance in the area of
Diversity, Equity and Inclusion are discussed and approved by the Sustainability Strategic
Committee, chaired by the Executive Vice Chairman and which includes the Chief Executive Officer
and the top management of the Company representing all organisational and functional
responsibilities, and are part of the Sustainability Plans and results presented and discussed by the
competent Board Committee and then presented, discussed and approved by the Board of Directors.
The centrality of Diversity, Equity and Inclusion in the commitment of top management is also
reflected in the remuneration policies. In the Company’s short-term incentive schemes (STI) in 2024,
there are ESG KPIs focused on Diversity & Inclusion and, specifically, targets have been set on the
number of women in managerial positions relative to the total number of managerial positions in the
company. This KPI, broken down in the different geographies, was assigned to the Executive Vice-
President, Chief Executive Officer, Region Senior, Executives with strategic responsibility and Group
Senior Management with a weight equal to 5% of the entire incentive. For evidence on the target
setting and results achieved in the financial year 2024, please refer to the Report on compensation
paid 2024.
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Targets
As an integral part of the Diversity, Equity and Inclusion Policy, as well as of the Global Human Rights
Policy, Pirelli pursues the following objectives, set out in the People dimension section of the
Industrial Plan:
Percentage of women in management ≥33% by 2030 (compared to a baseline of 27%
in 2023)
Gender pay gap +/- 2% related to the White-Collar population in favour of either gender
by 2030 (compared to a base value of 2.7% in favour of women in 2023).
The targets, established on the basis of historical trend analyses, span the period from 2023 to 2030,
with annual milestones in place to track and monitor performance.
As of 31 December 2024, the percentage of women in management stands at 28.3%, reflecting
progress that aligns closely with the target set.
With reference to the gender pay gap target, in 2024 the value stands at 0.4% in favour of women.
This Pay Gap is calculated on a country-by-country basis, taking into account the weight given to
each organisational position based on various factors, thus enabling an analysis that highlights pay
gaps for comparable roles and jobs, and is based on the Base Salary of the Group’s White-Collar
workforce.
DE&I Actions
The implementation of the Group’s objectives programmes and actions for employees is assigned
to the Group Human Resources and Organisation department, which, with the support of a dedicated
team, develops an annual work plan. This plan is shared with the countries, allowing them to act
autonomously while ensuring alignment with the guidelines provided. Through regular meetings with
Human Resources and Organisation teams, the central team monitors, supports and encourages all
Group companies to take action to ensure that these initiatives are implemented worldwide.
Established practices and activities include, but are not limited to:
as part of the selection processes, the use of shortlists with a balance of male and female
profiles;
continuous monitoring of the presence of female profiles in the succession plans for
managerial positions shared with senior management;
a commitment to maintaining parity in remuneration with a focus on reducing the Gender Pay
gap where it exists;
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welfare and work-life balance initiatives (in regard, refer to the section “Welfare and initiatives
in favour of the Internal Community” in this report);
global and local awareness programmes on various diversity and inclusion issues;
performance management process for all staff employees aimed at ensuring a fair evaluation
of job performance.
Diversity, equity and inclusion initiatives for employees
In 2024 Pirelli continued implement initiatives aimed at promoting a more inclusive work environment
for its employees. Demonstrating this commitment, in the climate NEXTOYOU survey conducted on
the global Staff population in 2024, questions in the Diversity and Inclusion categories scored
positively, an improvement on the previous survey conducted in 2022.
Here are some examples of initiatives globally:
-
Expansion of the ‘Diversity, Equity & Inclusion Hub’ section of the corporate internet, which
is accessible to all employees and is dedicated to raising awareness and providing training,
with the addition of new pages managed by individual countries;
-
guidelines on job announcements with a view to promoting equal opportunities;
-
a module dedicated to the management of cross-cultural communication during the ‘Plunga’
international onboarding programme for new recruits;
-
the international webinar ‘Inspiring inclusion: allying up for gender equity’ on the occasion of
International Women’s Day (8 March);
-
two international meetings on the topic of generational differences: “The kids are alright:
collaborating in multi-generational teams” addressed to the entire staff population and
“Bridge the gap: embracing generational diversity” dedicated to Human Resources and
Organisation staff;
-
Training entitled “A deep dive into: Pirelli Global Diversity Equity and Inclusion Policy” for all
Group countries, aimed at deepening the Company’s approach and commitment to the issue
of Diversity, Equity and Inclusion, as well as the actions implemented by the Group to foster
increasingly welcoming work environments.
In addition, at local level, several Group affiliates delivered specific initiatives. By way of example,
here are some of them.
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Italy
In 2024, Pirelli’s commitment to gender equality was certified with the achievement of the
UNI 125/22 certification (for Pirelli & C).
Thematic webinars with the aim of offering moments of reflection to employees on the
following international days: International Women’s Day, International Day against
Homophobia, Biphobia and Transphobia, International Day against Violence against Women,
International Day of People with Disabilities. In particular, the theatrical performance ‘Perché
anche io sono una donna’ (Because I too am a woman), organised in the Headquarters on
the occasion of International Women’s Day.
Training for personnel managers on how to approach an inclusive interview.
A 7-episode podcast ‘Di gomma e di cuore’ (Of rubber and heart), dedicated to the stories of
diversity and inclusion of the people working in the Settimo Torinese plant.
10 annual scholarships for female STEM university students who are daughters of Pirelli
employees (in addition to the scholarships already provided under the 30-year welfare
initiative for employees’ children).
A financial planning course in collaboration with SDA Bocconi, aimed at reducing the gender
gap in financial asset management skills.
Germany
Girls’ Day: female students can visit the company and discover technical skills through tours,
workshops, information on training opportunities.
USA
Training programme for Atalanta and Rome managers on the topics of diversity, inclusive
recruiting process, bias during the recruitment process and also relevant legislation in the
US.
Brazil
ERGs (Employee Resource Groups) with monthly meetings (‘Pirellianas em movimento’,
‘Orguglio Pirelli’, ‘Soul Black Pirelli’).
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Compulsory online training for the Human Resources and Organisation team on “Anti-Racist
and Anti-Ableist HR”.
Argentina
-
Pirelli sponsored the inclusive fashion show organised by the non-profit organisation ‘Cilsa’
for the second time, supporting its mission to raise awareness about disability.
-
STEM Women: partnership with secondary technical institutes for the STEM Women
initiative, offering a two-and-a-half-month internship to 50% of female students with a
secondary education.
Mexico
-
ALVA certification: recognition of a safe and fair environment for women.
The financial resources allocated to these activities were centrally monitored, though they are not
significant.
Beyond internal programmes, Pirelli is deeply committed to promoting equal opportunities outside of
its organisation, recognising the important role the company plays in driving cultural change within
its communities.
As the parent company, Pirelli actively participates in several working groups on Diversity, Equity
and Inclusion issues. Among these we note:
The Valore D network, the first business association in Italy aimed at promoting gender
balance and an inclusive corporate culture. The working tables and peer sharing
opportunities organised by the network deepen the concrete and positive impacts of
inclusiveness on employees and the community, the definition of improvement plans and
targets, and the measurement of Diversity, Equity and Inclusion results.
The DE&I committee of MUNER, Motorvehicle University of Emilia-Romagna, of which Pirelli
is a partner company.
“Females in motorsport’, a group aimed at creating a women’s community with the objective
of enhancing and promoting the role of women in motorsport.
The association ‘PARI.’ involves companies and institutions to combat gender-based
violence. The association will be formalised in 2025.
Regarding synergies with schools and universities, the company renewed its involvement in 2024 in
the “Inspiring Girls” project, promoted by ValoreD. This initiative brought the stories of employees
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with STEM backgrounds to middle schools in Lombardy, inspiring students to pursue their aspirations
free from gender stereotypes.
In the area of social cooperation initiatives, it is worth mentioning the project run in collaboration with
the social enterprise ‘bee.4’ and the social cooperative ‘Cascina Biblioteca’. This initiative creates
work reintegration opportunities for inmates at Bollate prison and individuals with disabilities,
respectively.
Metrics - DE&I
The tables below provide information on the composition of the workforce for 2024, breaking down
employees by age group. In addition, the distribution of top management staff is reported,
understood as employees with managerial status with a breakdown by gender and the relative
percentage incidence on the total.
Number of employees
2024
Under 30 years
6,287
Percentage of employees under 30
20.3%
Between 30 and 50 years
18,854
Percentage of employees between 30 and 50
60.8%
Over 50 years
5,858
Percentage of employees over 50
18.9%
Number of employees in senior management
2024
Women
38
% of women among members of senior management
14.5
Men
225
% of men among members of senior management
85.5
Other gender
0
% of employees of “other genders” among members of senior management
0
Not disclosed
0
% of employees of “non-disclosed” gender among members of senior management
0
Total
263
With regard to the proportion of women in the various professional categories in 2024, the data show
a gradual increase, with a steady growth in the number of female executives, currently at 14.5% of
total Executives. The percentage of women in managerial positions (executives + middle managers),
at 28.3% in 2024, is also growing, and for middle managers only at 30%. While the incidence of the
female population in the total number of employees stands at 33.8% and the incidence among blue-
collar workers rises to 11,9%. The percentage of women in the total population has grown to 16%.
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For the breakdown of the corporate bodies by gender and Diversity Policies, please refer to the
“Report on Corporate Governance and Ownership Structure of Pirelli & C. S.p.A.”, within the present
Annual Report.
FOCUS: THE FIGURES ON DIVERSITY
Internationality and multiculturalism are the distinguishing features of the Group: Pirelli operates in
over 160 countries on five continents, and as of 31 December 2024 Pirelli’s employees came from
90 nationalities. The following table shows nationalities most present in the total population
calculated in relation to Management positions.
Share in total workforce (in % of total work force)
Nationality
%
Brazilian
20.5
Chinese
11.7
Italian
11.2
Mexican
11.6
Romanian
15.3
Russian
6.4
Other
23.3
Total
100
Share in all managerial positions (as % of total workforce)
including junior, middle and senior positions (as % of total managerial workforce)
Nationality
%
Brazilian
9.8
Chinese
4.3
Italian
51.5
Mexican
3.0
Romanian
2.2
Russian
1.0
Other
28.2
Total
100
In the context of equal opportunities, Pirelli is particularly attentive to remuneration equality,
constantly monitoring and publishing the figures transparently for more than 10 years.
The countries considered in the analysis at the end of 2024, were all the countries in which Pirelli
operates. The pay gaps between men and women are calculated for each country and for the same
roles, taking into account the “grade” assigned to each (i.e., the weight given to each organisational
position on the basis of different factors) and the statistical significance of each cluster. This
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methodology of data collection allows for an objective investigation and assessment, taking into
account the structural differences of the various local markets and their specific remuneration logic.
With reference to all the Group’s executives, middle managers and white-collar workers, the average
pay gap measured between men and women is 0.4% in favour of women. More specifically, with
reference to white-collar workers, the average pay gap between men and women measured is 1.4%
in favour of women. For middle managers, on the other hand, there is an average pay differential of
1.9% in favour of men. A few examples:
→ Italy, where there is a difference between average pay for men and women of around 5.6% in
favour of women in the white-collar category and 3.3% in favour of men in the middle
management category;
→ Romania, where for the white-collar category there is a 0.6% in favour of women and for the
managerial category a 4.5% in favour of men;
→ Brazil, where there is a 2.0% pay gap in favour of men in the white-collar category and a 6.0%
gap in favour of men in the middle management category;
→ Germany, which has a difference between average male and average female salary of 0.8% in
favour of men for the white-collar category and 2.5% in favour of men for the managerial
category.
With reference to the population of executives, of which women make up 14.5%, there is an average
pay gap of 3.9% in favour of men.
With regard to the population of blue-collars, all countries where Pirelli has an industrial presence
were analysed. For each of these countries the pay gap between men and women has been
calculated. The average, weighted by the number of employees, showed 3.0% in favour of men. A
few examples:
→ China has a 7.6% difference between average male and average female wages in favour of
men;
→ Brazil has a 13.8% wage gap in favour of men;
→ Italy shows a 2.8% difference in favour of men;
→ Romania shows a 0.7% difference in favour of men.
With reference to all Group employees, the difference between the average remuneration of men
and the average remuneration of women was 4.0% in favour of men. This calculation is based on
the simple average of the remuneration of all male employees compared with the simple average of
the remuneration of all female employees without any weighting or adjustment.
Pirelli also monitors the annual total remuneration ratio (i.e. the ratio of the compensation of the
Executive Vice Chairman, as the person who receives the highest compensation, to the median of
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the compensation of all other group employees), which stood at 614 in 2024. The ratio is “adjusted”
with the Purchasing Power Parity136 correction factor, so as to take into account the different
purchasing power of the various countries in which Pirelli is present. For more information on the
Compensation of the Executive Vice Chairman, please refer to the 2024 Report on Compensation
Paid.
Skills Development - Performance Management and Training
The Skills Development - Performance Management and Training topic is linked to the following
material impact:
•
Training and skills development of Pirelli employees throughout their working lives
The training of the company’s own workforce is an integral part of the company’s strategies to ensure
professional growth and continuous improvement of skills, in line with development and performance
management objectives.
Policies
Pirelli’s commitment to skills development is clearly outlined across multiple Policies that, among the
various aspects covered, address Pirelli’s commitment to promoting positive impacts by fostering the
training and development of its employees’ skills throughout their careers, in particular:
•
the Global Quality Policy, which explicitly emphasises the promotion of Pirelli’s corporate culture
focused on quality, inclusiveness and ethics among its employees, achieved through continuous
and targeted dialogue, communication, motivation and training;
•
the Global Human Rights Policy, which highlights Pirelli’s commitment to raising awareness
among its employees through information and training, ensuring they conduct their business
activities with respect for human rights;
•
the Health, Safety and Environment Policy, which expresses Pirelli’s commitment to empower,
train and motivate its workers to work safely and in respect of the environment, making them
responsible and involving all levels of the organization in a continuous training and information
programme designed to promote a culture of occupational health and safety and respect for the
136 Conversion rate that seeks to equalise the purchasing power of different currencies, eliminating differences in price levels between
countries.
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environment, as well as to ensure that the company’s responsibilities and procedures in these
areas are appropriately updated, communicated and understood.
Targets
As a key element of its training policy and to confirm its commitment to promoting the training and
development of its outside workers, Pirelli aims to maintain a constant average of more than five
training days per employee annually, as outlined in the Industrial Plan.
This target, which is based on historical trend analysis, market benchmarking and internal skills
development programmes, applies to the entire Pirelli workforce globally for the period 2024-2030.
In 2024, the annual performance monitoring confirmed a result above the target threshold, with 6.9
average training days per employee, calculated by dividing the total training hours in the year 2024
by the average headcount for the year and transforming the resulting figure into days.
Training and Development
All Pirelli affiliates have adopted the Learning@Pirelli training model, structured and equipped
system to respond to Group training needs as well as any more specific needs that may emerge
locally at any time. The Pirelli training offering is based on one hand on the strategic priorities of the
organisation and the different functions, and on the other on the needs that arise each year from the
Performance Management process, as well as the training needs that arise from the contingencies
of the socio-economic context. In 2024, despite the variety of training topics covered, the focus on
health and safety issues, IT security awareness programmes and general professional upskilling
activities, including those required by the advancement of the company’s digital transformation
process, is confirmed. The content delivery modes are distributed between presence, virtual and
online self-paced consistent with the learning objectives of each initiative. The Pirelli training model
is based on four pillars: Professional Academy, School of Management, Global Activities and Local
Education. The first three are designed centrally and provided centrally and/or locally, while Local
Education is fully managed and implemented in the individual countries to meet the specific local
needs, a large part of which is dedicated to training blue-collar workers.
Pirelli Professional Academy
The Pirelli Professional Academy target the entire corporate population with the aim of
providing continuous technical-professional training, accompanying the development of
specialist skills, encouraging cross-functional collaboration, ensuring the exchange of expertise
and know-how among countries and supporting the implementation of tools and procedures
within the organisation.
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The Pirelli Academies are as follows: R&D Product, Manufacturing, Commercial, Quality, Supply
Chain, Purchasing, Finance and Administration, Planning & Control, Human Resources and
Organisation, Digital and Health Safety and Environment. Despite the specificity of the individual
training offerings, many academies collaborate with each other in the dissemination and
promotion of topics of growing and transversal across functions and process steps relevance,
including, for example, compliance, environmental protection, human rights, including health and
safety, IT and digitisation of business processes. The teaching staff of the Academy is mainly
composed of internal trainers, experts from the specific functions who, based on the training
needs and logistical needs, provide training at central, regional and local level. The Academy
model envisages a function contact person leading each Academy, supported by the Group
Training function, which guarantees uniformity in the methods of setting up, delivering and
evaluating learning as well as ensuring liaison with local training teams.
From year to year, the Professional Academies’ training offerings are expanded to include new
initiatives aimed at meeting strategy and business needs. Below are some examples of initiatives
delivered in 2024:
In the R&D Academy context, a global mapping of skills has been launched for colleagues
working in the Materials teams of all Pirelli sites. The initiative builds on the experience gained
from the previous upskilling course for colleagues in the Materials area and aims to assess
the proficiency levels of skills deemed crucial for tackling future challenges in product
development. By analysing the results, it will be possible to design a training programme
focused on supporting the development of these skills throughout 2025. In addition to the
usual Academy training offerings, training was also organised in the area of Digital Tools to
support the function’s technologists.
The upskilling training initiatives dedicated to professionals in the Logistics and Purchasing
function continued on a global scale, aimed at providing the necessary tools and skills to face
business challenges, in line with the evolution of market demands and professional trends.
In particular, 2024 saw the launch of the third Supply Chain Essentials training course. This
involved a group of young departmental colleagues from across various Pirelli offices and
focused on key areas such as Warehouse & Distribution, Planning and Data Analytics.
Thanks to the alternation of theoretical and practical modules, during the training course the
participants had the opportunity to experiment with application exercises of corporate
interest. Among the projects carried out in 2024, which the previous year’s course
participants worked on in the classroom, is the project titled “Data Analytics, Management by
Exception”. The goal of this project is to develop digital algorithms using Python that can
assist in management decisions and prioritise actions by analysing how changes in market
availability levels and logistics costs are affected by variations in goods transit and unloading
times. As part of the training programme supporting the Digital Transition, the project was
carried out by the Supply Chain Essentials participants in collaboration with the Data
Analytics team. It is estimated that the potential savings, resulting from cost control and
improved service levels due to the digital and automated management of logistics priorities,
could amount to approximately 0.5 million euros following its implementation.
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In the Digital Academy area, the digital awareness campaign was launched for Italy, with the
aim of providing a non-specialist audience with increasing opportunities to stay updated on
the latest trends in the sector and on the company’s approach to managing these trends and
leveraging their full potential. The programme was structured across multiple sessions, where
external professionals and company management discussed AI, Machine Learning, and
Generative AI. In 2024, the Digital Academy also globally launched the ‘Digipedia’
programme, a portal designed for sharing internal documentation and training resources
developed in cooperation with different corporate functions related to the main processes
and tools implemented for digital transformation. This initiative was developed in
collaboration with various business functions. The Digipedia, accessible to all Pirelli
employees, has expanded opportunities for quick and instant updates on the various
technological features offered by digital tools. Inside Digipedia, for example, a space was
dedicated to the CRM project, the first internal digitisation process launched together with
the Commercial Academy, to enhance the sales experience and optimise sales performance.
Within this space are the CRM video pills, a series of 7 mini e-learning modules designed to
help CRM users, as well as sales and marketing colleagues from all Pirelli countries, fully
leverage the platform’s capabilities. 150 colleagues viewed the online mini-tutorials and more
than 90 were involved in face-to-face or virtual workshops dedicated to CRM platform
updates. This training initiative undoubtedly contributed to improving the adoption of the CRM
tool, which, for example, saw an average increase of 4% in adoption across Europe alone.
Among the activities launched in 2024 by the Health Safety and Environment Academy is the
“Leading with Health & Safety Value Programme”, a global programme aimed at further
strengthening the company’s health and safety culture through workshops, meetings and
training activities. After the kick-off at the end of 2024, the programme will continue by
gradually involving the Regions and production sites.
In the Manufacturing sector, the “Pirelli Manufacturing Excellence” programme was
launched. This global continuous improvement initiative aims to develop skills, promote best
practices, and share knowledge to achieve operational excellence. The implementation of
the programme began in 2024 at plants in Romania, Brazil, Italy, China and Germany. It
involved several training workshops that helped spread the new methodology and develop
the technical skills needed for successful implementation.
Pirelli School of Management
The School of Management comprises the training offering dedicated to the development of the
managerial culture within Pirelli and is aimed at the entire staff corporate population.
The focus of management training is oriented each year based on the business challenges that the
Company is required to face. The training model provides for a training offering consistent with the
six Key Behaviours identified in the global performance management system, to which a paragraph
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is dedicated in this section. This also includes onboarding courses for new recruits and development
courses to support managerial roles.
In 2024, the traditional two-year Warming Up programme, designed for all new graduates of the
Group, was redesigned to make the course more engaging and impactful for the participants. The
redesign included an expanded number of training modules focused on soft skills, such as Systemic
Thinking and Innovative Problem Solving. It also introduced a systematic alternation of business and
soft skills modules, in order to better support the synergy between technical expertise and supporting
soft skills. The course, even in this new version, remains an international programme with plenary
modules where colleagues from all Pirelli locations have the chance to interact and exchange ideas.
In 2024, it involved numerous colleagues from most of the countries where the Group operates.
As part of the School of Management’s offering, the traditional “Plunga” on boarding programme was
held in digital format for all new employees in the Pirelli Group, involving many colleagues from
different countries. Also in 2024, the School of Management organised courses in English, with the
aim of involving more and more foreign colleagues in training programmes dedicated to key
behaviour, soft skills and managerial competences. For the Group’s new executives, the traditional
annual “Developing Managerial Excellence” programme was also conducted in 2024.
2024 also saw the completion of the first Lead Beyond management development programme and
the launch of a new one. This year, the programme continues to involve colleagues from various
locations and functions within the Group, aiming to support their growth as they take on increasingly
complex professional challenges. As in the previous edition, the programme consists of several
modules, spread over a total period of 6 months, organised in both virtual and face-to-face modes.
The programmes mentioned are part of recurring initiatives, which are repeated annually. Given the
extended duration of these training courses, both the Warming Up and Lead Beyond programs
include an annual transition, where one wave concludes and the next wave begins, with a new group
of participants getting involved.
Global Activities
Global Activities include all training campaigns launched globally and designed to promote
awareness of corporate guidelines while respecting local diversity. Topics such as Information
Security and Inclusiveness were, among others, the focus of these activities.
In 2024, a new version of the Cyber Security training course was launched. This online module,
called “Cyber Security Awareness”, further enhanced the company’s already extensive offerings on
the topic. The global awareness-raising and training campaign on diversity, equity and inclusion
issues also continued. A training pill entitled “A deep dive into: Pirelli Global Diversity Equity and
Inclusion Policy” was launched to deepen understanding of Pirelli’s commitment to inclusiveness
and the actions taken by the group to foster increasingly welcoming work environments, which is in
addition to the one launched in 2023 and expanded in 2024 on the Pirelli Global Human Rights
Policy, for more details see the chapter on ‘Human Rights Training’. This is also the context for an
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international awareness initiative focused on generational differences, which included a meeting for
the entire staff population, as well as a dedicated training event for Human Resources and
Organisation staff.
Among the global initiatives focused on sustainability, in 2024 the Climate Change Challenge
campaign stands out. This global programme, implemented at both Regional and country levels, was
designed to raise awareness of climate change across the entire Company workforce, spread
knowledge of Pirelli’s decarbonisation strategy, and encourage concrete actions in the area of energy
transition.
Local Education
The training provided at the local level responds to the specific training needs of the Pirelli affiliates
operating in the different countries and is addressed to the entire company population.
In Italy, a significant training campaign was conducted in 2024 to support managers during the
feedback phase of the Performance Management process.
Other notable activities include training for more than 2,300 colleagues in China in 2024 on the topic
of social responsibility, as well as manager training in Sweden focused on the working environment,
in line with local legislation.
In many countries including Mexico, UK, USA, Romania and Brazil, local leadership programmes
have been created to support the managerial development of team leaders and supervisors in plants.
A large part of the training at the local level is represented by the training provided within the plants
and mainly dedicated to the continuous updating of the skills of departmental operators. In addition,
all courses related to the implementation of new local regulations and procedures fall within this
cluster.
Talent Development
The Talent Development programme aims to ensure business continuity by supporting the
identification and development of people with the potential to cover the positions of greater
complexity, those who already hold strategic positions and so-called critical know-how (that is,
people with key skills that are difficult to replace).
In 2024, global Talent Review meetings were held as usual, attended by department and business
unit managers, together with their direct reports and relevant Huma Resources managers. As in
previous years, the goal was to support the identification of targeted development paths and ensure
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a consistent and effective process across the Group. As far as training programmes for 2024 are
concerned, the following are worth mentioning in particular:
•
Global Mentoring Programme: an initiative dedicated to the youngest segment of the talent
population, the third one of which was launched in 2024. Each of the participants, or mentees, is
paired with a senior leader in the role of mentor. Mentors and mentees were supported with some
training sessions aimed at sharing methodologies and tools to support the effectiveness of the
programme. The main objectives of the course, in continuity with previous editions, were: the
transfer of experience and vision between current leaders and the next generation of leaders,
the support for the professional development goals of young talent, and the development of
greater awareness of corporate culture and context.
•
Lead Beyond – Pirelli Global Managerial Program: a training programme that consists of several
modules, both in-person and virtual, spread over six months and intended to support participants
in developing their managerial skills. The second wave of the programme started in 2024 and is
currently underway.
The total training provided in 2024 amounted to 6.9 days (55.1 hours) of average training per capita.
This figure, which was calculated by dividing the total training hours in the year 2024 by the average
head count for the year and transforming the resulting figure into days, confirms the centrality of
training in Pirelli’s culture. The investments made for the various categories of the company
population (blue-collar workers, middle management and white-collar workers, and executives) are
balanced in proportion to the overall training strategies: the strong focus on manufacturing
improvement processes in addition to the usual attention to health and safety issues, particularly
significant in 2024, explain the larger investments on the blue-collar worker population.
Health, Safety and Environment topics accounted for 24% of total global training in 2024, calculated
by taking the total number of training hours on HSE topics carried out in 2024 and dividing the
resulting figure by the total training hours in the year in question. For more information, please refer
to the chapter “Health and Safety and Environmental Training”, HSE Academy.
GROUP
WOMEN
MEN
Other
Not disclosed
Average per capita training hours
55.1
49.8
56.1
0
0
Blue-collars
White-collars
Middle Managers
Executives
Average training hours per level
61.7
31.2
27
16.9
Performance Management
Through the Performance Management process, which mainly involves the staff population
(executives, managers and employees) worldwide on an annual basis, Pirelli defines and evaluates
each employee’s contribution to achieving company objectives, assessing both results achieved and
behaviour acted upon. The process supports the definition and sharing of key indicators for the
realisation of the corporate strategy and represents an important opportunity for the professional
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development and orientation of each individual. A key element of the process is the transparent,
open, and agile dialogue between the boss and the employee, from the phase of sharing individual
objectives to that of evaluating the results achieved and the behaviours expressed in achieving them.
The main features of the process are:
•
the process and the platform are open all year, so as to better support the continuity of dialogue
between boss and employee and alignment on priorities;
•
the assessment is based on two dimensions: ‘what’ (results) and ‘how’ (behaviours expressed);
•
key behaviours, applicable to the entire corporate population, reflect and represent the
company’s values outlined in the Code of Ethics and are essential for achieving the strategic
objectives of the company. Key Behaviours are: Accountability, Teamwork and collaboration,
Forward thinking, Agility, Cross-functional approach, Initiative and drive;
•
the entire process is managed within a platform accessible from all company devices.
In support of the quality of the performance evaluations, as part of the process Pirelli includes so-
called Calibration Meetings, i.e., meetings attended by the heads of the individual functions,
Business Units and Countries, with their respective first reports and the relevant Human Resources
and Organisation managers. During these meetings, the assessments of the people belonging to a
specific organisational unit are put into common use with the aim of ensuring a shared and balanced
distribution of the evaluations, enrich the assessment by supplementing it with feedback
complementary to that of the manager and thus guarantee a process that is as coherent,
homogeneous and objective as possible.
In 2024, alongside the usual digital training resources focused on the evaluation and feedback
process, dedicated training sessions for managers were also organised to offer additional support,
guidelines and clarifications on how to effectively handle evaluation and feedback meetings.
The performance management process mainly involves staff worldwide (Executives, Middle
Managers and employees). In 2024, the employee participation rate was 19.2%, calculated by
dividing the total number of people who participated in the performance review process in the year
by the total head count as at 31.12.23 (the year to which the performance review relates, so the
2023 performance was assessed at the start of 2024). This figure corresponds to the total number
of eligible persons for the year under consideration according to the process defined at Group level.
Below are the percentages of completion by gender and level calculated as above but considering,
each time, the reference population always as at 31 December 2023:
Women
Men Other Not disclosed
Total
2024
2024
2024
2024
2024
Percentage of employees who participated in regular performance
and career development reviews
37.6% 15.8%
0%
0% 19.2%
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White-collars Middle Managers Executives Blue-Collars
Total
2024
2024
2024
2024
2024
Percentage of employees who participated in
regular performance and career development
reviews
87.2%
96.5%
99.1%
1.1% 19.2%
Welfare and initiatives for the internal community
The following material impact can be attributed to corporate welfare:
•
Well-being of workers in the company, in relation to health and safety in the workplace, existence
of working arrangements favouring work-life balance
This theme is part of the company’s policies aimed at promoting employee well-being, through
initiatives that ensure a safe, healthy and caring work environment with a balance between
professional and personal life. In addition, the material impact also refers to health and safety
aspects, which will be discussed in more detail in the next paragraph.
Policies
The well-being of workers is addressed through both the Global Human Rights Policy and the
Health, Safety, and Environment Policy, which among other aspects, reflect Pirelli’s commitment
to fostering positive impacts for the well-being of its workers, particularly through working methods
designed to promote a balance between professional and personal life.
The Diversity, Equity and Inclusion Policy also places well-being at the centre, ensuring that
people’s motivation is bolstered through dialogue, participation, services and initiatives supporting
psycho-physical well-being and work-life balance, including, for example, through flexible working
options, the dissemination of a culture of sharing family burdens, the adoption of health support
programmes, and support for parenthood.
Pirelli’s commitment to promoting welfare can be categorised into four main areas:
•
health, lifestyle and wellbeing (e.g. health care, information and awareness campaigns, specific
initiatives to improve the well-being of employees);
•
working life and working environments (e.g. flexible working hours, individual development
training, cultural growth and group celebrations);
•
family support (e.g. company-integrated parental leave, scholarships and summer camps for
employees’ children, inter-company crèches and specific activities to support parents);
•
free time (e.g. open days, sports and cultural initiatives, online portals of products and services
with important conventions and discounts for employees).
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Since years Pirelli has introduced the organisational figure of the “Group Welfare Manager”, who is
entrusted with the supervision of welfare activities, jointly with the many central and local functions
concerned, including Health and Safety at Work, Industrial Relations, Sustainability, Human
Resources and Organisation. New Welfare guidelines for the Human Resources and Organisation
functions of the countries were introduced in 2024. These guidelines outline the key areas of
intervention at the global level, to be translated into a portfolio of specific programmes tailored to
local needs.
Targets
In reviewing its Industrial Plan, Pirelli set a new target aligned with its strategy and policy
commitments, aimed at building an increasingly ‘engaged, diverse and talented’ global workforce.
The goal is to engage 100% of permanent employees by 2026 in the new MORE welfare programme,
launched in November 2024 and explained in the following paragraphs. The target is monitored
through the metrics of the level of employee coverage achieved by the programme in the various
countries, expressed as a percentage.
The global Human Resources and Organisation team defined this target by assessing the current
situation in each country and setting a minimum number of initiatives to be implemented where they
are not already in place. These initiatives are intended to complement existing or planned initiatives
within local welfare plans in all countries where Pirelli operates.
The initiative applies to the period 2025-2026, with a review milestone at the end of 2025 to assess
progress and take corrective action if necessary to ensure full achievement of the target by 2026.
As of 2024, the percentage of employees covered by the MORE programme is 60%.
Welfare Activities
The welfare initiatives that Pirelli offers to its employees vary from country to country, in accordance
with the specific regulatory, social and cultural environments in which the affiliates operate and with
the global guidelines. In general, all offices worldwide are gradually committed to adopting welfare
activities, tools, and processes aimed at creating collaborative environments and providing adequate
support for personal life needs.
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The welfare activities implemented at Pirelli affiliates around the world align with the following macro-
areas of intervention outlined in the global guidelines:
1. Health, wellness and well-being, including health care, information and awareness campaigns,
specific initiatives to improve the health and well-being of employees, with a focus on stress
prevention and the promotion of healthy lifestyles.
Mental Well-being
In 2024, within the area of mental well-being and stress prevention, key activities at the Group’s
various affiliates included courses aimed at promoting physical well-being and encouraging “healthy
lifestyles”, including yoga, Pilates, total body workouts, mindfulness and wellness training courses,
all offered online to ensure maximum accessibility. Additionally, local awareness and information
initiatives on mental health continued to be organised annually by countries on Mental Health Day
(October 10).
The following is a non-exhaustive list of the mental well-being initiatives carried out in different
countries in 2024:
(Italy)
international webinar on the recognition and prevention of emotional and psychological distress
activation of individual psychological counselling with specialists available for all Italian
employees
(Mexico)
•
launch in 2024 of monthly meetings aimed at raising awareness of stress reduction through
practical activities (e.g. painting, creating with clay, etc.), with some sessions open to employees’
families.
(Argentina)
•
distribution to all staff employees of a special issue of the ‘E-News Wellness’ Newsletter on
‘Invisible Stress’, with tips and recommendations for preventing stress. Blue-collar employees
were also engaged through dedicated notices displayed on notice boards in common areas.
(Brazil)
•
Continuation of the “Plenamente” mental health programme, which provides 24/7 telephone
assistance from professionals and various initiatives, both for employees and managers, for the
prevention of mental distress. In 2024 in particular, training was provided involving more than 60
managers. New training is planned in 2025 to address Burnout prevention.
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•
Presence at the Feira and Campinas plants of a psychologist available to employees (6 hours
per week)
(Germany)
•
Training programme ‘The Secret of Inner Strength’ aimed at managing professional challenges
and stress in everyday working life. The programme will continue in 2025.
It should also be noted that some countries have progressively introduced, over the past few years,
dedicated listening areas for employees, to whom they can turn for individual problems and be
supported by specialists in order to preserve their psycho-emotional well-being (Argentina, Germany,
Russia, Mexico, Brazil, Italy).
Sport & health initiatives
The main activities in the Group’s various affiliates in this area include: online courses dedicated to
promoting physical well-being, sports activity and a “healthy lifestyle”, such as yoga, Pilates, total
body workout, mindfulness and - wellness training courses.
The following are some of the new initiatives introduced by countries in 2024:
(Mexico)
During the summer months, football and basketball tournaments were organised, including inter-
company ones.
(Italy)
In 2024, Pirelli participated for the first time in the Milano Marathon with 35 relays (a total of 140
colleagues and runners) who ran in support of the Italian League for the Fight against Cancer
(Lilt) and cancer prevention.
(China)
A ‘Father and Son Sports Day’ was organised in September, attended by employees from
Yanzhou.
(Germany)
8-week programme with nutritional support and fitness training.
At the affiliates there are many initiatives such as Pirelli employee sport teams and awards for those
people who have particularly distinguished themselves in the year.
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An example of this is the Open Day in Rome (USA), which took place in a museum in October 2024,
involving both employees and their families.
The various supplementary health plans provided by the company are available at the affiliates and
are designed to enhance and expand social protection beyond what is provided by government and
state welfare systems, while also addressing local needs. These healthcare schemes always vary
from country to country in terms of allocation levels and the types of coverage provided. The plans
are managed by insurance companies or funds created ad hoc, in which the Company participates
by paying a fixed amount as is done in Italy, or an insurance premium as is done in Brazil and the
United States. For the economic-equity measurement of the above benefits, reference is made to
the Consolidated Financial Statements, notes “Employee funds” and “Personnel Costs” within this
Annual Report.
As part of the MORE Global Welfare Programme, it is expected that all countries will have minimum
coverage under the new Group standards by the end of 2026.
The social benefits implemented by Pirelli in favour of employees (including life insurance,
invalidity/disability insurance and additional parental leave) were generally granted to all employees,
regardless of the type of permanent, fixed-time or part-time contract, in compliance with company
policies and local union agreements.
More specifically, the MORE programme, analysed in detail in the next paragraph, will lead Pirelli to
ensure that by the end of 2026, all countries will have supplementary health plans with globally
consistent coverage areas. Additionally, “life programmes” to cover the risks of premature death and
permanent disability will be made available, if not already provided, to all permanent employees.
2. Working life and working environments, including flexible working hours, working-from-home
arrangements, individual development training, cultural growth and group celebrations.
In order to improve work-life balance and offer employees a greater degree of flexibility, remote and
flexible working arrangements between the social partners were formalised in most of the countries
where Pirelli operates in recent years, including, for example, Italy, Germany, Brazil and the USA.
The following are cited, purely as examples and not exhaustively, as some of the initiatives
introduced in 2024 to promote a better work-life balance:
(USA)
Granting from 2024 of a day off on Martin Luther King Day, celebrated annually across the USA on
the third Monday in January.
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Other previously implemented initiatives include:
(Argentina)
Provision of a “kit” for all remote workers, including a backpack, headset, keyboard, mouse and
ergonomic laptop holder.
(Italy)
Remote Working Regulation providing 8 days per month of remote working, increased to 10
days/month for caregivers and parents of children under 14.
Granting of meal vouchers for remote working days worked.
Part-time solutions are also in place in many countries. In Argentina, there is an interesting best
practice from 2023 that provides for substantial leave in the event of adoptions, infertility treatment
and multiple births, disability and chronic illness.
3. Family support, including company-integrated parental leave, scholarships and summer camps
for employees’ children, inter-company crèches and other specific activities to support
parenthood.
With regard to parenting, Pirelli has long supported its employees’ childcare commitments by offering
maternity and parental leave that goes beyond local regulatory requirements.
From 2023, all Pirelli industrial countries recognise at least 14 weeks of fully paid maternity leave
regardless of local legislation. In addition, in many countries Pirelli recognises at least 10 days of
mandatory fully paid leave for non-primary caregivers.
In addition to this in some industrial countries: additional paid leave for special family needs,
including accompaniment to medical appointments, school placements, specific programmes to
support parenting, such as, for example, facilities or contributions for access to nurseries, merit
scholarships, part-time for specific needs, training courses for new parents.
To further support new mothers when they return from maternity leave in addition to the
breastfeeding breaks provided by local regulations, Pirelli is going to set up a “lactation room”, where
requested.
In many countries, a “birth kit” for new parents containing basic necessities for the newborn is also
provided. Other countries provide, alternatively or additionally, a monetary bonus for the birth or
adoption of a child.
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With reference to the 2024 innovations in support of parenting, the following initiatives are mentioned
as examples and not exhaustive:
(Italy)
- All white and blue collar workers: previous agreement on scholarships for sons and daughters of
employees. New features include an increase in the number and value of scholarships (for both
secondary school and university), additional scholarships for the daughters of employees attending
university with S.T.E.M. study paths.
- All Staff: information/training course for parents by age group of their children, with webinars
dedicated to the various stages of development.
- Headquarter Bicocca: Additional 10 days of fully paid paternity leave, which can be taken after the
end of compulsory paternity leave.
- Polo Settimo Torinese: Introduction, following the renewal of the three-year supplementary
agreement with the social partners, of leave for the purpose of accompanying children to medical
appointments (up to 12 years of age) and leave for nursery or kindergarten placement.
(Argentina)
-Initiative on the occasion of “Fathers’ Day” to raise awareness on the issue of co-responsibility for
parenthood and emphasise the importance of shared and conscious fatherhood.
(Romania)
-’Child safety: in the vehicle and on the road’ campaign conducted in November 2024 offering all
Staff employees free access to an e-learning platform with modules on road safety for children
(Brazil)
-Provision of parenting courses through the SER FAMILIA programme
-Awareness-raising activities on the occasion of Mother’s and Father’s Day
Other initiatives for families include open days, sports and cultural initiatives, online portals of
products and services with important conventions and discounts for employees and family members.
In addition, various programmes were implemented to support better work-life balance management,
such as the support desk for care-givers on care issues, courses for new parents and care-givers,
actions to support remote work and work-life balance.
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4. Leisure time, promoting a healthy lifestyle.
The company promotes a healthy lifestyle by offering various initiatives for the well-being of its
employees also in their leisure time. In addition, many of these activities have the function of fostering
involvement and socialisation:
(Italy)
Pirelli supports employee participation in the Charity Program (relay race) of the Milan Marathon;
participation with one’s own team in inter-company football tournaments;
out-of-hours offer of strong total body and Pilates sports classes at special rates in the company’s
well-being area.
(Mexico)
Organisation of football tournaments and non-competitive races (the latter are also open to
employees’ families).
(USA)
opportunities to participate in football and basketball tournaments.
(Argentina)
staff employees benefit from discounts at major gym chains.
(Brazil)
all employees have access to an online platform with nutritional programmes and access to
discounts at various sports centres.
MORE Programme (Pirelli Global Welfare Program)
As mentioned in the “Targets” chapter, at the end of 2024 Pirelli launched MORE, a new global
welfare programme designed to provide a common welfare and well-being services platform for all
countries, in continuity with the approach adopted by the company in expanding social protection
beyond national welfare programmes.
With MORE, Pirelli reaffirms its commitment to caring for the well-being of its people, promoting a
global approach that characterises its corporate culture. In fact, MORE establishes solid minimum
standards, complementing, where not already in place, existing and future local welfare plans with a
view to harmonisation across the Group.
In 2025, the Global Welfare Guidelines will be revised in line with the new MORE architecture.
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The MORE programme has 3 strands of intervention: FOR YOU, FOR YOUR FAMILY, FOR YOUR
COMMUNITY.
FOR YOU: aimed at promoting the well-being and inclusion of people in open and stimulating work
environments, as well as offering preventive health and life integration plans; includes:
Company “life programme”: guaranteeing a monetary amount to the employee’s family in the
event of the employee’s premature death.
Preventive health programme: providing partial reimbursement to the employee for a
common package of preventive services
FOR YOUR FAMILY: aimed at supporting people at various stages of life (e.g. parenting, caregiving)
and families with targeted initiatives and promoting a culture of parenthood and a balanced
integration of life and work; includes:
Parental leave: ensuring minimum leave standards for all working parents in Pirelli:
mothers (primary caregivers), 14 weeks on full pay; fathers (or non-primary-caregivers), 10
days on full pay
Birth Bonus: a bonus for every child born to or adopted by all parents working at Pirelli.
FOR YOUR COMMUNITY: aimed at engaging people in supporting the local communities in which
Pirelli operates, through volunteering initiatives and projects in the educational, environmental and
cultural fields; includes:
Corporate volunteering: allowing employees to volunteer 4 hours per year at a local
charity/social organisation.
“Adopt a school” (for industrial countries): supporting a secondary school close to Pirelli’s
factories, promoting educational and technical training activities and creating a bridge to the
world of work.
MORE initiatives, where not already in place, are to be implemented in all countries where Pirelli
operates and made accessible to all permanent employees by December 2026.
In 2025 and 2026, the progress of the programme will be monitored and reported on. For more
information, please refer to the “Targets” paragraph.
Metrics – Work-life balance
In 2024, the percentage of employees entitled to family leave (understood as maternity, paternity,
parental and family care leave) stands at 54%, taking into account the coverage of countries with all
these types of leave. Considering only maternity and paternity leave, the entitlement would rise to
100% and 98% respectively.
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It should be noted that, with regard to the variable incentive system (STI and LTI), months of
maternity and paternity leave do not count as periods of absence for the purposes of calculating any
bonus at global level.
Percentage of employees entitled who took family leave
2024
Women
7%
Men
7%
Other gender
0%
Not disclosed
0%
Total
14%
Finally, in 2024, the average in weeks of fully paid parental leave offered to primary caregivers was
20.1 weeks, while that offered to non-primary caregivers was 4.5 weeks.
Occupational health and safety
The top management of Pirelli, supported by the Health, Safety and Environment function and with
the participation of the functions involved in various ways (including but not limited to the Human
Resources and Organisation, Research & Development, Sustainability, Purchasing, Quality,
Manufacturing, Enterprise Risk Management functions) plays a strategic role in the full
implementation of the “Health, Safety and Environment” Policy, ensuring the involvement of all
Pirelli’s workers and collaborators so that they express behaviour consistent with the values
contained herein.
Strategic Plans, which also include health and safety aspects, are approved by the Board of
Directors, supported by the Sustainability Committee at the proposal of the Chief Executive Officer
and in coordination with the Executive Vice Chairman. Results are approved by the Board of
Directors as well as the reporting in the Annual Report.
In addition to the role of top management, the above-mentioned functions and the Board of Directors,
the Health and Safety Governance provides for:
a bi-monthly HSE committee convened by the Pirelli Chief Executive Officer in the presence
of the front line where performance updates against targets and competitors, ongoing
projects and investments, analysis of major incidents, and improvement strategies are
presented and discussed;
business review meetings at local, regional and global level, which are held monthly and
have health and safety and environmental issues, performance and improvement
programmes at the top of the agenda, in order to ensure continuous comparison and
monitoring. These meetings involve the cross-sectional sharing of information and include
the participation of the Human Resources and Organisation, Health, Safety and Environment
functions and top management on several levels (local, regional and global).
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the work of the local HSE Committee, set up at each site and composed of the heads of
functions including Human Resources and Organisation, Health, Safety and Environment,
and of which the Plant Manager is the coordinator. This Committee, which meets at least
quarterly, analyses health, safety and environmental issues, directs the actions and governs
their progress. In a co-ordinated manner, various thematic sub-committees are also
established, which carry out continuous work in relation to the characteristic themes of the
site.
the involvement of workers’ representatives, at the intervals provided for by legislation,
collective bargaining and specific requirements, in Health & Safety Committees at each site
with the aim of illustrating, on the basis of the Health and Safety Management System, the
activities carried out and those planned and to provide the results of workplace risk
assessments.
Specific procedures for the identification, mitigation and management of health and safety risks are
developed in accordance with international standards and reference norms that are applied and
translated at each site, integrating compliance with local regulations. The procedures, also
developed with the cooperation of the relevant functions, systematically define the requirements for
risk analysis, risk management methods, and design requirements to ensure that hazards are
reduced at source. Preventive analysis and release processes on new projects are implemented to
ensure risk management at all stages of development and implementation of new machines and
plants. Such approaches allow the implementation of risk elimination and reduction logics in priority
to the mitigation and containment strategies implemented in any case. Procedures are reviewed and
updated in the event of regulatory changes, technological or process changes and following the
analysis of incidents.
Risk analysis allows the identification of priorities and leads to the definition of risk reduction
programmes, actions and targets pursued at each site level, whose implementation and
effectiveness are monitored by the specific local HSE Committees set up at each site. Plans are also
defined to respond to emergency situations, which are periodically the subject of specific drills
involving all workers. The Management Model also makes use of internal inspections.
Alongside establishing specific guidelines and procedures for implementing management systems,
Pirelli uses the web-based Health, Safety and Environment Data Management (HSE-DM) system,
prepared and managed centrally by the Health, Safety and Environment Department. This system
makes it possible to monitor performance relative to accidents, near misses, unsafe conditions and
behaviour, and illnesses and prepare numerous types of reports as necessary for management or
operating purposes.
The HSE-DM system collects all the information related to accidents and to the particular situations
that occurred in factories, fitting units, sales centres and warehouses directly managed by Pirelli,
including the different categories of workers (internal and external workers operating at Pirelli sites).
According to the Procedure, when an incident occurs, the site where it occurred immediately carries
out an “Incident Investigation” to search for root causes and the immediate implementation of
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countermeasures to eliminate the element of risk and/or that caused the incident. At the same time,
all establishments have access to information on the most significant accidents or near misses and
receive a Safety Alert from the HSE-DM system, against which they conduct an internal analysis to
verify whether conditions similar to those that led to the accident exist, so that, if necessary,
appropriate preventive and corrective actions can be implemented.
The management of safety in supplier activities on sites is governed by procedures specifying
requirements for coordination, prior risk analysis and work authorisation.
Pirelli’s workforce health and safety management policies
Pirelli’s approach to responsible management of occupational health, safety and hygiene is based
on the principles and commitments expressed in the Code of Ethics of the Group, in the “Health,
Safety and Environment Policy” in the “Global Human Rights Policy” and in the “Quality Policy”, in
accordance with the Sustainability Model envisaged by the Global Compact of the United Nations,
with the “Declaration of the International Labour Organization on fundamental Principles and rights
at Work” (ILO) and with the “Universal Declaration of Human Rights” of the United Nations. The
reference tool since 2004 is also the SA8000® standard.
In particular, the “Health, Safety and Environment Policy”, updated in 2023, makes explicit and
confirms Pirelli’s commitment to:
manage its activities in the field of occupational health and safety protection in full compliance
with the applicable international, national and local regulations on the subject and with all the
voluntary commitments entered into, as well as in accordance with the most qualified
international management standards;
pursuing the objectives of “zero accidents” and “no harm to persons” in healthy and safe
working environments, through the continuous identification, assessment, prevention and
protection from occupational health and safety risks, the timely removal of potential causes
of accidents, and the implementation of staff health surveillance plans in relation to specific
tasks;
support the development of programmes to improve psycho-physical well-being and work-
life balance;
promote consultation and participation of workers and their representatives in matters of
health and safety at work;
develop and implement emergency management programmes designed to prevent harm to
people and the environment in the event of accidents;
define, monitor and communicate to its Stakeholders specific objectives of continuous
improvement of health and safety at work;
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empower, train and motivate its workers to work safely, involving all levels of the organisation
in a continuous programme of training and information, aimed at promoting an occupational
health and safety culture and ensuring that the company’s responsibilities and procedures in
these areas are appropriately updated, communicated and understood;
actively collaborate at national and international level with institutional, academic, non-
governmental, industry bodies concerned with the regulation, study and sustainable
management of occupational health and safety issues;
requires its suppliers to implement an occupational health and safety management model at
their sites and along their supply chain in compliance with international standards and the
laws and regulations of the countries where they operate;
make available to all its Stakeholders a channel (the “Whistleblowing Policy” published on
Pirelli’s website) dedicated to reporting, even anonymously, of any situations that constitute
or may constitute a risk for the protection of the health, safety and well-being of people
(reference is made to the section “Whistleblowing Policy” for an outline of reports received,
none of which regarding health and safety).
Additionally, the Global Human Rights Policy reflects Pirelli’s commitment to prioritising the health
and safety of workers as a core value. It emphasises the company’s proactive approach in
maintaining a safe and healthy work environment by adopting high standards for the prevention,
assessment and management of related risks. Pirelli is also dedicated to continuously promoting
and fostering a corporate culture focused on occupational health and safety.
Target
As a key component of the HSE Policy, Pirelli is committed to achieving the goals of “zero accidents”
and “no harm to people” in the workplace. This is accomplished through the ongoing identification,
assessment, prevention and protection from health and safety risks. The company focuses on
promptly eliminating potential accident causes and implementing health surveillance plans for
employees, tailored to specific tasks. Furthermore, Pirelli sets, monitors and communicates specific
objectives to its stakeholders aimed at the continuous improvement of occupational health and
safety, as well as the environmental performance associated with its processes, products and
services throughout their entire life cycle.
As indicated in the 2024-2025 Industrial Plan, Pirelli aims to reduce the Accident Frequency Index
to a value of about 1 by 2025 and to maintain a value of less than 1137 by 2030. The work
accident frequency index is a key measure for monitoring and improving safety conditions at work,
calculated as the number of accidents recorded per million hours worked.
137 Frequency Index (FI): ∑(Fatal incidents + Serious lost-time incidents + Lost-time incidents) x 1,000,000 / hours worked If calculated
based on 200,000 hours worked, the index value is ~ 0.2 at 2025 and <0.2 at 2030.
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It applies to all group companies, covering 100% of employees, ensuring an integrated and uniform
approach to safety management.
The target is measurable and absolute, as it is based on a well-defined quantitative metric, which
makes monitoring easy and comprehensible and aims at a specific and tangible value, without
comparisons to other periods.
The reference period for this target is 2025 to 2030, with an intermediate target for 2025 and a
maintenance target for 2030: a significant time frame for monitoring progress, implementing
corrective actions and consolidating achievements.
For the performance of the target to 2024, please refer to the “S1 Metrics” section below.
In the pursuit of this goal of zero accidents, through a path of continuous improvement and constant
prevention, all leaders are involved and given responsibility and a target accident frequency index to
pursue through action plans within their sites.
The accident frequency index targets are also linked to the annual remuneration of Site and HQ
management, ensuring a direct link between the Group’s sustainability goals and the performance
evaluations of individual company figures.
Actions
The main actions underpinning the above strategy implemented to achieve the defined objectives
are listed below.
The effectiveness of the actions taken is continuously monitored through a number of tools, including
regular audits, field inspections, employee feedback and analysis of accident and incident data.
Ongoing evaluation makes it possible to identify any critical issues and make the necessary changes
to procedures in good time.
These activities are carried out in collaboration between several departments involved (Health Safety
& Environment, Human Resources and Organisation, Research & Development, Sustainability,
Purchasing, Quality, Manufacturing, Enterprise Risk Management). This multidisciplinary approach
ensures effective management and continuous improvement of the company’s health and safety
policies.
Management system
Pirelli has voluntarily adopted an occupational health and safety management system, structured
and certified according to the ISO 45001:2018 Standard, both at headquarters and at all Group tyre
production sites. All certificates are issued with ANAB international accreditation (ANSI-ASQ
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National Accreditation Board - US accrediting body). The occupational safety management system,
applied without exclusion to all processes and activities at each tyre production site, has been
developed in accordance with procedures and guidelines drawn up centrally in order to consolidate
a “common language” that guarantees sharing, alignment and management effectiveness across
the Group.
The development and continuous improvement of the management system is conducted both
centrally and locally by the internal Health & Safety functions with the involvement of all relevant
functions. Improvement is based on the continuous application of cycles of action planning,
programme implementation, verification of results and, on the basis of these, implementation of
improvement. In particular, in line with the provisions of the management system, Pirelli carries out
hazard and risk assessments in order to identify what could cause damage to health and safety in
the workplace, with subsequent prioritisation and related targets integrated into action plans.
Similarly, actions in preparation and response to emergencies are defined. Progress in terms of
prevention and reduction of health and safety impacts against the actions and plans undertaken and
targets set is evaluated and measured. Internal inspections are also performed.
In 2024, the coverage of the safety management system (certified to ISO Standard 45001:2018),
subject to internal and third-party audits, is as follows: 88% of employees, 80% of non-employees,
and 93% of the contractors working at Pirelli sites are covered by the Pirelli HSE management
system (all production sites are ISO 45001 certified).
Improving the working environment and machinery
In keeping with its strategy of continuous technological innovation, projects are planned annually
focusing on machines and systems, as well as the overall working environment. These projects
include, but are not limited to, optimising microclimatic and lighting conditions, making layout
changes for ergonomic improvements in activities, and implementing measures to ensure the health
and safety of the infrastructure. These projects mainly relate to factories throughout the Group.
In 2024, the Group invested 31.2 million euros in property, plant and equipment, while 26.4 million
euros are planned for 2025 and are expected to continue beyond 2025.
Enforcement of stringent safety requirements on purchased and used materials
With reference to the materials purchased, Pirelli applies stringent safety and acceptability
requirements to raw materials, services and equipment, including these requirements in the
contractual provisions.
Pirelli applies and supports the technical indications for a development model based on sustainable
chemistry provided by the Organisation for Economic Co-operation and Development (OECD).
Sustainable chemistry is a scientific concept that aims to improve the efficiency with which natural
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resources are used to meet human needs for chemical products and services. Sustainable chemistry
encompasses the design, production and use of chemical products and processes that are efficient,
effective, safe and more environmentally friendly’. All chemical substances and products used are
subject to prior HSE assessment (see section “Governance Information”, paragraph “ESG elements
in the purchasing process”). This activity is continuous, ensuring constant updating and strict control
to maintain high standards of safety and compliance.
Furthermore, as per policy, compounds and tyres are produced by the Pirelli Group without the use
of the following chemicals:
substances or mixtures belonging to the so-called SVHC (‘Substances of Very High
Concern’) list, as set out in Article 57 (‘Substances to be included in Annex XIV’) of Regulation
(EC) No 1907/2006 of the European Parliament and of the Council of 18 December 2006
(also known as the REACH Regulation); of the so-called SVHCs (Substances of Very High
Concern), i.e. those substances that give rise to high concern for their potential effects on
human health and/or the environment.
substances or mixtures in concentrations above the threshold limits laid down in Annex XVII
(“Restrictions on the manufacture, placing on the market and use of certain dangerous
substances, preparations and articles”) of the aforementioned Regulation (EC) No
1907/2006;
substances or mixtures classified by the IARC (‘International Agency for Research on
Cancer’) as belonging to Group 1 (‘Carcinogenic to humans’) or Group 2A (‘Probably
Carcinogenic to humans’) or Group 2B (‘Possibly Carcinogenic to Humans’);
substances or mixtures classified by the ACGIH (‘The American Conference of Governmental
Industrial Hygienists’) as belonging to Category A1 (‘Confirmed human carcinogen’) or
Category A2 (‘Suspected human carcinogen’) or Category A3 (‘Confirmed animal carcinogen
with unknown relevance to humans’);
substances or mixtures belonging to the so-called POPs (‘Persistent Organic Pollutants’),
PFHxS (‘perfluorohexanesulphonic acid’) and PFHxS-related substances, PFCA C9-C21
(‘perfluorocarboxylic acids containing 9 to 21 carbon atoms in the chain’), PFOA
(‘perfluorooctanesulphonic acid’) and their inorganic or organic salts (‘PFOS’), isomers and
derivatives;
any substance or mixture belonging to the recognised categories of polybrominated
biphenyls (‘PBBs’) and polybrominated diphenyl ethers (‘PBDEs’), as well as short-chain
chlorinated paraffins (‘SCCPs’) or medium-chain chlorinated paraffins (‘MCCPs’),
pentachlorobenzene,
pentachlorothiophenol,
hexachlorobutadiene,
hexabromocyclododecane and dichlorane plus;
any substance belonging to the phthalate family, including - but not limited to - dibutyl
phthalate, bis(2-ethylhexyl)phthalate, benzyl butyl phthalate and diisobutyl phthalate;
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any substance or mixture recognised internationally as belonging to the bisphenol family,
including but not limited to bisphenol A, bisphenol B, bisphenol F, bisphenol S and bisphenol
AF;
any substance or mixture classified as “Prohibited” by the GADSL (‘Global Automotive
Declarable Substance List’);
any substance or mixture containing mercury and its derivatives as defined by the Minimata
Convention.
Pirelli requires 100% declaration of all substances contained in all products delivered to Pirelli.
Based on international standards and regulations, Suppliers must properly identify hazardous
substances and chemical mixtures and communicate them to Pirelli, also ensuring that they are
handled, used, transported, stored, recycled and disposed of safely. Suppliers are required to
educate and train employees and material suppliers on the health, safety and environmental aspects
of hazardous materials through the tools and documents required by the above international
standards and regulations.
In order to promote social responsibility and business ethics in the management of materials, Pirelli
requires its suppliers of materials and substances to go beyond compliance with legal provisions by
adopting best manufacturing practices and addressing their potential environmental, health and
safety issues as required by the highest internationally recognised standards and regulations.
Health & Safety and Environmental Training, HSE Academy
Training is an essential tool to support the culture of safety at work and the achievement of the
Group’s objectives.
24% of the total training provided by Pirelli in 2024 concerned occupational health and safety and
environmental issues. Each site designs, plans and delivers training with regard to the specific risks
present, particular needs for updating and fulfilling regulatory obligations, trends in indicators and
changes in site activities and processes. The characteristic topics of this training covered general
safety and environmental concepts including obligations, responsibilities and protection concepts,
the treatment of all work hazards present at the site, operating procedures, life-saving rules (golden
rules), emergency procedures, and accident reporting and management procedures.
In addition to training offered locally at every Pirelli location, special mention should be made of
Group activities and projects, which simultaneously target several Countries and which allow an
alignment of culture and vision, fully benefiting pursuit of the Company’s own improvement targets.
In this regard, in 2023 the HSE Academy was born, the Pirelli Professional Academy dedicated to
the in-depth study of HSE topics and aimed at all countries. The Academy offers the “A Day Into
HSE” course to the entire company, designed to raise awareness and provide insights into the
function’s key issues. In addition, it offers in-depth training through e-learning courses or virtual
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sessions on specific topics such as ergonomics, industrial hygiene, machine safety and
environmental matters. In particular, a specialised technical training course with specific certification
has been implemented for machine safety, primarily targeting factory operators.
Health and safety training is ongoing and regularly updated to ensure maximum preparedness and
compliance with regulatory and operational requirements and developments.
Programmes for the improvement of safety culture
The “Zero Accidents Objective” represents a precise and firm corporate position. From an industrial
point of view, this objective is pursued through investments aimed at technical improvement of work
conditions, while constantly insisting on the cultural and behavioural aspect of all Company players.
This approach, together with the involvement and continuous internal dialogue between
management and workers, has led over time to a sharp decline in injury rates.
To support the model, in 2013 the company signed an agreement with DuPont Sustainable Solutions
for the global implementation of the “Excellence in Safety” programme. The Programme began in
2014 and is being gradually extended to all Group production sites. In 2022, the programme was
expanded by adding an in-depth focus on risk assessment with a related campaign of site
assessments concluded in the first half of 2023.
The most relevant areas of Intervention of the “Excellence in Safety” programme are related to
improving safety governance, clarity of tasks and roles, empowerment of all workers, improving
communication in the organisation, sharing of objectives, motivation with respect to a common
strategy: all of these are substantial issues for a work environment that is appropriate and
stimulating, where workers feel involved and valued in safety management. Through information,
communication and training, everyone is encouraged to report any anomaly and/or unsafe condition
in order to encourage participation in continuous improvement and the removal of any potential
cause of accidents. All reports as well as actual or potential incidents are handled according to
specific procedures aimed at analysing the causes and defining corrective and risk mitigation
actions, involving all functions.
In 2024 Pirelli launched a collaboration with the LHS Foundation to develop the “Leading Health and
Safety Value” programme. This initiative aims to enhance leadership in safety among company
leaders and production teams, recognising it as a crucial factor in positively influencing behaviour
and fostering a stronger safety culture towards achieving the goal of zero accidents. The programme
includes a top-down and bottom-up approach through workshops aimed at top management,
supervisors, safety champions and workers, who are engaged through specially trained in-house
trainers. Initially, the programme will be implemented at the Headquarters level, with plans to expand
it to regional and production sites over the next two years.
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Involvement and engagement
Every year Pirelli organises initiatives to raise awareness and promote health and safety issues on
the occasion of World Day for Safety and Health at Work (28 April), promoted by the International
Labour Organisation (ILO), as well as on World Environment Day (5 June) designated by the United
Nations. In 2024, the initiative was promoted through a motivational video with a message from the
Chief Executive Officer addressed to the entire Pirelli population. Each site was thus able to organise,
following common guidelines, events that addressed emotional, rational and communicative
aspects, with some countries also involving employees’ families. Additionally, in 2024, the
engagement and involvement of the workforce were driven by the global communication campaign,
“Safety is Our Value”, which highlights the people and safe behaviours introduced in 2023.
First aid and occupational health care
All Pirelli production sites are served by occupational first aid and medicine units with free access by
employees managed by specialised medical and/or paramedical personnel with autonomous
management (guaranteeing privacy) of the doctor-patient relationship. These services work in
coordination with safety management and emergency functions and company management to
provide the necessary support for general risk prevention actions and ensure the necessary health
surveillance to protect workers. These garrisons do not only focus on occupational medicine issues
but also offer health care to all personnel in compliance with local regulations.
This activity is ongoing, ensuring the constant presence and availability of health services to support
the health and well-being of employees at all times.
Adoption of Artificial Intelligence
In the second half of 2023, a project was launched in collaboration with the Data Science team to
apply Artificial Intelligence to the safety alert database. The goal of this project is to enhance the
analytical capabilities of HSE users, particularly by identifying significant events that might otherwise
go unnoticed due to the large volume of alerts. This approach is aimed at making the data, collected
from all the sites of the Group, manageable and useful for predictive and preventive activities as well
as the extraction of key information, indicative of the areas of greatest risk, aimed at improving
analysis at both local and overall Group level.
The tool took a year to develop, involving training with a technical glossary, multiple hours of end-
user interviews, and a labelling phase. In July 2024, the summarisation tool was released. Thanks
to the integration of AI into our centralised database, there is an opportunity to collect and analyse
data on operational risks and workplace behaviour in real time. This innovative approach is aimed
at improving the timeliness of emergency responses and making it possible to intercept critical
situations, enabling preventive action. The integrated system enables a comprehensive and
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continuous view of safety, enabling quick, evidence-based decisions that support a safer working
environment for all employees.
Metrics – Health and Safety
The performance reported below is for 2024 and covers the same scope as the Group’s
consolidation.
As indicated in the Industrial Plan and described in the “Target” paragraph above, Pirelli has set the
goal of achieving a value of about 1 for the injury frequency index by 2025 and maintaining a value
of less than 1 by 2030108.
The Injury Frequency Index is calculated as the “Lost Time Index Frequency Rate - LTIFR”, i.e.
considering the sum of injuries with at least one lost working day.
In 2024 Pirelli recorded an LTIFR of incidents of 1.41 per 1,000,000 hours worked138, which
represents a 17% reduction compared to 2023.
The most representative injuries concern events related to contusions, cuts, fractures and sprains.
Employees Non-employees
2024
2024
Percentage of personnel in the company’s workforce that are covered by a health and
safety management system based on legal requirements and/or recognised standards or
guidelines
88%
80%
Number of deaths in the workforce due to work-related injuries and illnesses
0
0
Number of recordable work-related injuries for the company’s workforce
81
0
Rate of recordable work-related injuries for the company’s workforce
1.41
0
In 2024, the number of commuting accidents that occurred during transport organised by the
company was 23.
It is also reported that there were no work-related deaths among contractors.
The LTIFR injury index for contractors, which stood at 1.02 (employees of suppliers operating at the
Group’s production sites) recorded a decrease of approximately 18% compared to 2023 (1.24).
138 Frequency Index (FI): ∑(Fatal incidents + Serious lost-time incidents + Lost-time incidents) x 1,000,000 / hours worked; if calculated
based on 200,000 hours worked, the 2024 index is 0.28.
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S2 Workers in the value chain
Material impacts, risks and opportunities related to workers in the value chain and their
interaction with the strategy and the business model
Pirelli bases its activities on compliance with the universally established Human Rights, as
fundamental and indispensable values of its culture and business strategy, working to manage and
reduce potential risks of violations and in order to avoid causing – or contributing to causing –
adverse impacts to these rights in the international, multicultural, socially and economically diverse
context in which it operates.
“Workers in the value chain” refers to employees of Pirelli’s suppliers, including contractors, i.e.
employees of suppliers involved in operations at the Group’s production sites (e.g. maintenance
workers, canteen services).
Particular attention is paid to the workers of suppliers of raw materials and high value-added goods,
as these suppliers can become long-term development partners for the Company. A significant
portion of purchasing spending is allocated to them, and they often operate in regions (mainly MEAI,
LATAM and APAC) and sectors with a higher incidence of risk of human rights violations, as well as
environmental protection regulations and business ethics. In this regard Pirelli’s participation as a
founding member in the Global Platform for Sustainable Natural Rubber (GPSNR) is particularly
relevant. This platform is based on multi-stakeholder dialogue and collaboration between tyre
manufacturers, companies in the rubber supply chain and international NGOs and aims, among
other things, to support the sustainable development of the natural rubber business globally,
benefiting the entire value chain through shared tools and initiatives based on respect for human
and labour rights. This platform promotes dialogue and joint projects, gathering input from key
stakeholders in the value chain to improve working conditions and ensure sustainable management.
Each year, the results of these activities capture the perspectives and feedback of supply chain
workers, which guide Pirelli’s decision-making processes and strategy to improve the management
of actual and potential impacts throughout the supply chain. For more information on the activities of
this platform, see the “Environmental Information” section, “Biodiversity and Ecosystems” paragraph.
In general, Pirelli’s strategy, which integrates sustainability and respect for human rights as
fundamental principles in its procurement processes, aims to generate positive impacts on workers
in the value chain, as demonstrated by the findings of the double materiality analysis. Company
policies, including the Supplier Code of Conduct, provide for monitoring and control mechanisms,
such as on-site ESG audits, to verify that working conditions are adequate and to prevent any human
rights violations along the value chain.
At the same time, the results of the audits and the dialogue with stakeholders make it possible to
identify areas for improvement and to define increasingly targeted initiatives and concrete activities,
which make it possible to verify compliance with contractual rules and promote the protection of
freedom of association, employment stability, adequate working conditions and equal treatment for
the workforce of Pirelli’s suppliers, as well as to disseminate positive practices concerning training
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and skills development throughout workers’ working lives. These initiatives, detailed below, are
mainly implemented through:
On-site audits of suppliers to check compliance with regulations on human rights, labour,
contracts and health and safety as well as the requirements contained in the Supplier Code
of Conduct and Pirelli’s Policies
Direct advice during audits to identify and implement plans to remedy non-conformities
ESG training sessions on human rights and sustainable management for suppliers of raw
materials and strategic goods
Adoption of a sustainable supply chain management model, compliant with ISO 20400
standards
Further details on the policies and specific actions implemented by Pirelli to create positive impacts
on workers in the value chain are provided in the dedicated sections in the following paragraphs. For
an in-depth look at the supply chain management model, the content of sustainability clauses, details
of on-site audits, as well as information on Conflict Minerals and Natural Rubber, please refer to the
“Management of relations with suppliers” paragraph in the “Governance Information” section.
Interests and views of stakeholders
To incorporate the interests and perspectives of workers in the value chain into the company’s
strategies and business model, Pirelli aligns with initiatives and frameworks designed to ascertain
market expectations and best practices. These include the United Nations Global Compact, which
supports the ongoing coverage and updating of human and labour rights governance, as well as the
SA8000® Standard and relevant international ILO regulations. Additionally, Pirelli integrates the UN
Protect, Respect and Remedy Framework into its strategies, draws the OECD Guidelines on Due
Diligence and the recommendations contained in the United Nations Guiding Principles on Business
and Human Rights.
Moreover, in conducting the double materiality analysis, Pirelli annually engages suppliers, along
with other key stakeholders such as customers and NGOs, through surveys designed to identify the
material issues in Pirelli’s supply chain, i.e. those with the most significant positive and negative
impacts.
The feedback received guides the corporate strategy, supporting the Sourcing Excellence function
in identifying priority areas for action, with a focus on issues such as human rights, occupational
health and safety.
Respect for Human Rights and management of the related risk of violation are integrated into all
purchasing processes, with specific monitoring of suppliers in higher risk countries. This approach
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protects workers, strengthens sustainability and drives the business model towards a responsible
and inclusive system.
Furthermore, the Company is aware that international frameworks on Business and Human Rights
insist on the need for companies to involve stakeholders in assessing the negative impacts that may
be caused by their activities along the value chain through a Human Rights Impact Assessment
(HRIA). For this reason, following the 2023 risk analysis, Pirelli carried out a stakeholder engagement
exercise involving internal company functions and external organisations with expertise in human
rights, including NGOs, in order to understand the extent of the negative impacts linked to the 12
human rights identified as relevant. The assessment was based on the international and main
available Standards, asking respondents to rate the likelihood and severity of negative impacts (the
latter understood as the scale, scope and irremediable character of the impact).
With regard to the workers of suppliers of raw materials and high value-added goods, among the
activities of the Global Platform for Sustainable Natural Rubber - GPSNR, Pirelli’s participation in
the “Smallholders Representation and Capacity Building (SCB) Working Group” to represent
small landowners is of particular relevance in 2024 in terms of integrating the interests and views of
workers in the Natural Rubber supply chain, which in 2024 continued activities aimed at developing
a capacity-building strategy for smallholder farmers and industrial plantations.
More details on the Company’s involvement with GPSNR activities can be found in the
“Environmental Information” section, “Biodiversity and Ecosystems” paragraph.
Processes to involve workers in the value chain and to remedy negative impacts, including
channels for workers in the value chain to raise concerns
As already stated, Pirelli has clear and structured processes to identify and address any negative
impacts that could affect workers in the value chain. In fact, by conducting due diligence, the
Company is committed to identifying critical issues related to labour rights and international
regulatory compliance, and where non-compliances are identified it requires suppliers to develop
remedial plans to address the issues raised. These plans include actions and deadlines designed to
improve working conditions and restore appropriate standards. The implementation of these plans
is monitored through regular follow-ups, conducted by independent auditors, to ensure the full
implementation of the agreed measures.
In the context of Due Diligence, the Company implements structured initiatives that serve as tools
for engaging with its suppliers and aim to assess the social responsibility of its suppliers both at the
selection stage as well as periodically, and to address the actual and potential impacts on workers
in the supply chain. These include:
Human Rights Risk Assessment
The Human Rights Risk Assessment is the tool used to assess the potential Human Rights and
Labour risk of the entire supply chain, cross-referencing sector and country risk. This tool allows
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Pirelli to identify priority areas on which to intervene through the most appropriate mitigation and
prevention actions. For more information, see the dedicated section “Human Rights Risk
Assessment” in this chapter.
Specialised third-party assessment
On-site ESG audits of the Annual Audit Campaign are an essential tool for gathering information
from suppliers, through observations, interviews with workers and process analysis. These audits
conducted at suppliers include direct interviews with workers and their representatives, collecting
feedback on working conditions and respect for human rights. This process is a crucial tool to
monitor and evaluate the impact of Pirelli’s activities on workers in the value chain. The results
of these interviews are incorporated into the ESG risk assessment to evaluate the current risk
associated with the supplier and guide the development of appropriate mitigation measures to
be implemented by the company.
Moreover, on potential suppliers of raw materials and high value-added goods, in particular,
Pirelli carries out a preliminary on-site third-party audit right from the qualification stage to verify
the level of compliance of the potential supplier with respect to the main national and international
regulations on Human Rights and Labour (as well as Environment and business ethics) and
initiates, where necessary, recovery plans followed by third-party follow-up.
Ecovadis assessments are in turn an essential tool to extensively investigate a supplier’s
sustainability profile from management systems to performance in the areas of human and
labour rights, ethics and social practices applied by the supplier at its own premises as well as
in its supply chain.
Training and capacity building
Pirelli promotes ongoing training initiatives for suppliers, rolled out in phases based on the
associated risk category, to raise awareness of human rights and improve working conditions.
These activities help to strengthen the awareness and skills of workers along the value chain.
Reporting Channels
Pirelli ensures that its suppliers are aware of the reporting mechanisms by indicating in the
Supplier Code of Conduct, which all suppliers must read and understand at the qualification
stage, the presence of the Group Whistleblowing Policy, published on Pirelli’s website, and by
integrating the Whistleblowing channel and procedure into the supply contractual conditions.
Through this channel, suppliers and their employees can report any actual or suspected
violations of the Pirelli Suppliers’ Code of Conduct and/or any applicable legislation to
ethics@pirelli.com.
For more detailed information on the Whistleblowing procedure and on the control, monitoring
and management of whistleblowing reports, see the section “Governance Information”,
paragraph “Pirelli’s corporate culture and its management model” – “Whistleblowing Policy”.
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Through the Suppliers’ Code of Conduct, Suppliers are also required to adopt whistleblowing
and/or reporting mechanisms that allow for complaints and comments from both internal and
external stakeholders to be raised, even anonymously, without any retaliation, and to take
appropriate action to resolve identified problems.
Within the reporting channels, there is also a specific Complaints Procedure for complaints
related to the Natural Rubber supply chain, available in Pirelli’s Sustainable Natural Rubber
Management Policy, published on the website.
Finally, with particular attention to the health and safety aspects of people, specific occupational
health and safety management criteria are also applied to all suppliers, detailed in Article 2.7 of the
Pirelli Suppliers’ Code of Conduct, which is published on the company website and forms an integral
part of the purchase contract clauses, as described in the paragraph “Management of relations with
suppliers” to which reference is made. Based on international standards and regulations, Suppliers
must properly identify hazardous substances and chemical mixtures and communicate them to
Pirelli, also ensuring that they are handled, used, transported, stored, recycled and disposed of
safely. Suppliers are required to educate and train employees and material suppliers on the health,
safety and environmental aspects of hazardous materials through the tools and documents required
by the above international standards and regulations.
Operational responsibility for Supplier involvement lies with the Group Purchasing Department,
which works together with the Sustainability Department. Within the Sourcing Excellence function,
Pirelli manages the ESG aspects of the supply chain, monitoring performance and risks,
implementing training and capacity building initiatives for suppliers, and supporting them in mitigating
ESG risks.
In addition to the frameworks already mentioned in the previous section, with specific reference to
possible global framework agreements, please refer to the information on the European Works
Council (EWC) described in the “S1 Own workforce” - “Processes for engaging the Company’s
workers” paragraph, which deals with transnational agreements related to human rights and relations
with workers’ representatives.
Working Conditions and Respect for Human Rights along the Supply Chain
Pirelli is committed to responsible sourcing practices, respecting human rights and decent working
conditions throughout the supply chain. In this context, the following material impacts emerged from
the Double Materiality analysis:
Efficient work organisation for suppliers’ workers, including adherence to working time limits
set by contracts, regulations, standards and corporate sector characteristics.
Violation of human rights at Pirelli suppliers, e.g. through the use of child or forced labour.
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The following paragraphs describe Pirelli’s strategy to manage material impacts.
Policies for the management of working conditions and respect for human rights along the
Supply Chain
The activities described in the preceding paragraph are also aimed at making the commitments
contained in Pirelli’s Policies fully operational, which underpin the Company’s sustainable supply
chain management system.
Pirelli Policies are prescriptive with respect to the requirements of respect for human and labour
rights by suppliers. In particular, the Pirelli Suppliers Code of Conduct, which is an integral part of
the purchasing contract applied by Pirelli, requires suppliers to operate in compliance with national,
international, regional and/or local laws, including collective labour agreements, where applicable,
as well as international standards defined by the United Nations and the International Labour
Organisation or other organisations (e.g. local International Organisation for Standardisation, the
“ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up” and to align their
due diligence process with the requirements of the United Nations Guiding Principles on Business
and Human Rights. The Code details, among other things, what is required of Pirelli’s suppliers in
the area of human and labour rights and, specifically, in the areas of labour contracts, working hours,
prohibition of child labour, prohibition of forced labour and modern slavery (so-called Modern Slavery:
human trafficking, serfdom, debt bondage,...), passport management, occupational health, safety
and hygiene (including in terms of the use of materials and chemicals that may be hazardous), non-
discrimination, equal pay for work of equal value, freedom of association and collective bargaining,
rights of indigenous peoples and prevention of conflicts over land, privacy, internal security
regulations. The Supplier Code of Conduct details the due diligence system applied by Pirelli,
including, as described above, the reporting system - Whistleblowing - that Pirelli makes available to
Stakeholders, and, at the same time, that required of suppliers and throughout the supply chain. The
clauses also require confirmation that the Goods and Services supplied or to be supplied to Pirelli
under the Contract and/or Orders do not contain and will not contain for the entire duration of the
supply any Conflict Minerals (3TG, Mica, Cobalt, etc.). Pirelli contractually reserves the right to
suspend or terminate the contractual relationship in the event of non-compliance with the Code of
Conduct, and/or refusal to enter into a repayment plan, or failure to implement an agreed repayment
plan.
In addition to the Pirelli Supplier Code of Conduct, the issue is dealt with in the Sustainable
Natural Rubber Management Policy, whose content, in line with the Policy Framework of the
Global Platform for Sustainable Natural Rubber (GPSNR), expressly calls for a commitment to
respect universal human rights and protect the health, safety and welfare of workers. For more
details on the policy and on the commitment with the GPSNR see the “Environmental Information”
section, “Biodiversity and Ecosystems” paragraph.
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Further Pirelli Policies, whose principles suppliers are required to respect, recall these commitments,
in particular:
- the Global Human Rights Policy, which requires respect for workers’ rights and the provision of
written employment contracts, reasonable working hours, fair and decent wages (including
providing for equal pay, e.g. between men and women, for work of equal value) and adequate
compensation for overtime for employees in accordance with applicable laws and regulations and
collective bargaining agreements, where applicable. In addition, the Policy requires suppliers to
recognise the right of their workers to freely form trade union associations and to bargain
collectively and, in this regard, to engage in open and constructive dialogue with recognised trade
union representatives. Through this Policy, Pirelli also undertakes to manage its supply chain in
a responsible manner and specifically to include respect for human rights in its assessment
parameters.
- the Health, Safety and Environment Policy which requires to protect the health and safety of
workers and, in particular, to:
o govern its activities in full compliance with the applicable international, national and local laws
and regulations on health and safety at work and all the voluntary commitments signed, as well
as in line with the highest international management standards;
o pursue the objectives of ‘zero accidents’ and ‘no personal injury’ in the workplace;
o define, monitor and communicate to its Stakeholders specific objectives for continuous
improvement of health and safety at work;
o develop and implement emergency management programmes aimed at preventing harm to
the environment in the event of accidents;
o empower, train and motivate its workers to work safely, involving all levels of the organisation
in a continuous programme of training and information, aimed at promoting an occupational
health and safety culture and ensuring that the company’s responsibilities and procedures in
these areas are appropriately updated, communicated and understood;
o promote consultation and participation of workers and their representatives in matters of health
and safety at work;
o provide for consultation and participation of workers and their representatives in matters of
occupational health and safety.
The Policy explicitly requires Pirelli’s suppliers to adopt their own responsible approach at their
sites and throughout the supply chain, ensuring occupational health and safety in compliance
with international standards and the laws and regulations of the countries where they operate,
as detailed in the Pirelli Suppliers’ Code of Conduct.
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These policies reaffirm Pirelli’s commitment to manage these areas in compliance with applicable
international standards, including but not limited to the United Nations International Bill of Human
Rights and the International Labour Organisation’s (ILO) Declaration on Fundamental Principles and
Rights at Work, as well as the relevant applicable conventions, which all suppliers are required to
respect.
Actions
Human rights risk assessment
In 2024, as part of its commitment to the systematic periodic review of the human and labour rights
due diligence process, Pirelli updated the potential human and labour rights risk assessment along
the entire supply chain (12,773 unique suppliers), which forms the basis of the risk-based approach
underpinning Pirelli’s Due Diligence process.
The Ecovadis IQ+ tool was used for desk risk assessment of the potential Human Rights and Labour
risk of the supply chain, which, for each supplier, evaluates sector and country risk by considering
issues such as human rights; child labour, forced labour and human trafficking; diversity, equity &
inclusion(including pay equity), discrimination and harassment; human rights of external
stakeholders; employee health and safety; working conditions; social dialogue, which considers the
presence of recognised worker representatives and collective bargaining; career management and
training.
The risk assessment was conducted by the Purchasing, Enterprise Risk Management, Compliance
and Sustainability Departments, in line with the Group’s ERM model, and applies a risk scale from 1
to 4 (where 1 = low risk, 2 = medium risk, 3 = high risk and 4 = very high risk). For more detailed
information on the risk assessment process, please refer to the “Governance Information” section,
“ESG Risk Assessment” paragraph.
This analysis specifically enabled the identification of geographical areas and production categories
(sector risk) most exposed to potential risks of human and labour rights violations. The assessment
made it possible to identify the suppliers that required priority intervention by implementing the most
appropriate mitigation and prevention actions.
The results of the analysis show that the countries with the highest incidence of suppliers with an
associated high/very high potential risk are mainly concentrated in the MEAI, LATAM and APAC
regions; while in the Europe and North America regions the risk was generally medium to low. With
regard to the potential risk related to purchasing categories, it is important to note that the raw
materials, energy and auxiliary materials categories show a higher incidence of high potential risk.
This is because the raw materials in these categories often come from riskier supply chains based
on geography and sector of activity. In contrast, the ICT and marketing categories tend to have a
higher proportion of low-risk suppliers.
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For further information on suppliers identified as having an ESG risk and the percentage covered by
mitigation actions, please refer to the “Governance Information” section, “Supplier Relationship
Management” paragraph.
The results of the Risk Assessment conducted in 2024 are at the base of 2025 mitigation and
prevention actions, with the aim of prioritising verification, monitoring, awareness-raising and training
actions to intervene in an increasingly targeted manner on suppliers that might not be in line with
Pirelli’s provisions, and required in the Supplier Code of Conduct, regarding human rights and labour
protection, in line with Pirelli Due Diligence process.
The effectiveness of ESG audits is monitored through non-compliance follow-ups by third party and
corrective actions; specifically, remedial plans are checked to ensure that they are implemented
correctly and in a timely manner. Finally, audits conducted in subsequent periods, and their findings,
allow the assessment of the effectiveness of the remedial actions that have been implemented.
Specifically, 1073 contractors and Tier 1 suppliers were subjected to third-party human rights
assessments in the last three years, and in 22% of the cases current risks were identified, with 100%
of the latter triggering remedial plans.
The results of the risk assessment are fully integrated into the activities that the Company has
planned for 2025, which will see the continuation of on-site audits of potential suppliers of raw and
high added value materials from the selection phase, periodic on-site audits for active suppliers,
Ecovadis assessments and with the provision of training on both human rights and biodiversity. For
details on qualitative and quantitative supply chain targets, please refer to the “Governance
Information” section, paragraph “ESG elements in the purchasing process” and the paragraph
“Working conditions and respect for human rights along the supply chain” of this section.
Managing Conflict Minerals
Conflict minerals are normally defined as any mineral mined, refined or traded under conditions of
armed conflict and human rights violations, mainly in the Democratic Republic of the Congo, but also
in any conflict-affected or high-risk area.
The concept of Conflict Minerals was introduced by Section 1502 of the Dodd-Frank Act, a United
States federal law, in 2010. “Conflict minerals” means gold, columbite-tantalite (coltan) cassiterite,
wolframite and their derivates like tantalum, tin and tungsten that come from (or are extracted in) the
Democratic Republic of Congo and/or bordering Countries. Such minerals are commonly called
“3TG” (Tungsten, Tin, Tantalum, Gold).
The objective of the Conflict Mineral Rules is to discourage the use of minerals whose sale might
finance violent conflicts in Central Africa where serious violations of human rights have been
recorded for many years. Under Conflict Mineral Rules, listed companies in the United States are
required to perform reasonable due diligence in tracing the provenance of these materials and
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reporting the findings to the SEC and publishing them on their website, with the first report to be
published by 31 May 2014 (relating to 2013) and subsequently updated each year.
In turn, the European Institutions in May 2017 approved the 2017/821 Regulation (subsequently
amended by Regulation (EU) 2020/1588), which “establishes duties in terms of due diligence in the
supply chain for EU importers of tin, tantalum and tungsten, their minerals, and gold, originating in
conflict zones or at high risk”. The new provisions came into force in January 2021.
Pirelli addresses the management of this issue through a process of risk identification and mitigation.
This process is aligned with that indicated by the Organisation for Economic Co-operation and
Development (OECD), with particular reference to the “OECD Due Diligence Guidance for
Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas”.
This process consists of different points:
annual traceability of conflict minerals in the raw materials in the supply chain, aimed at
identifying the origin of the minerals up to the mines or smelters and the existence of any
conflict minerals. The scope of perimeter refers to raw materials received in the Group’s
production plants and approved, according to the quality system, to be used in the production
cycle as defined by the BOM (Bill of Material) for Pirelli tyres.
assessment of the real necessity for use according to the safety and performance
requirements of Pirelli products.
annual survey of suppliers eligible for reporting associated with Conflict Minerals, using the
tools defined by the Responsible Minerals Initiative (RMI), in particular through tools such as
the Conflict Minerals Reporting Template (CMRT) for 3TG and the Extended Minerals
Reporting Template (EMRT) for other conflict minerals such as Cobalt and Natural Mica. The
survey is launched in July of the tax year, based on raw material input data from the first six
months of the year, and completed in the first months of the following year when raw material
and supplier data are consolidated for the tax year of interest.
analysis and mitigation of risks at Smelter/Refiner (SOR; Smelters Or Refiners) level by
verifying compliance with the standards set by the Responsible Minerals Assurance Program
(RMAP), also considering the search for alternative sources of supply to support risk
mitigation.
In addition to the Conflict Minerals Policy, Pirelli expresses its position on the management of the
issue in a section dedicated to it in its Global Human Rights Policy, where it is stated that the
Company “requires its suppliers to ensure the commitment to carry out proper due diligence as part
of its supply chain in order to certify that products and materials provided to Pirelli are “conflict free”
along the entire supply chain (i.e. that they do not come from mines or foundries operating in conflict
zones identified as such by the applicable legislation on “conflict minerals” unless they are certified
as “conflict free”). Pirelli reserves the right to discontinue the relationship with suppliers in case of
clear evidence of supply of minerals from conflict and in any event in the case of violation of Human
Rights”.
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The above is further set out in the Pirelli Suppliers’ Code of Conduct, which is in turn an integral part
of the General Terms and Conditions of Purchase. Purchasing (of both Materials and Goods and
Services) whose objective is not to purchase Materials, Goods or Services containing “Minerals from
Conflict Zones” unless they are certified as “conflict free”. All this is explicitly highlighted by a
dedicated clause that Pirelli asks Suppliers to sign: for example, in the case of Materials, this clause
reads:
The Supplier represents and warrants that the Goods and Services supplied or to be supplied to
Pirelli under the Contract and/or the Orders do not contain and shall not contain for the entire duration
of the supply any Conflict Zone Minerals.
The Supplier undertakes:
(i) to provide Pirelli with a comprehensive description of the procedures and tools that have been
implemented to ensure that the Goods and Services and the parties involved in the supply of the
different components of the Goods and Services do not contain Conflict Minerals;
(ii) to maintain an active due diligence programme to identify and track all Minerals from Conflict
Zones in its supply chain based on Organisation for Economic Cooperation and Development
(OECD) and Responsible Minerals Initiative (RMI) procedures and tools;
(iii) to supply 3TG Minerals, Cobalt and Natural Mica from smelters that have been classified as
“Conformant” (as described in https://www.responsiblemineralsinitiative.org/responsible-minerals-
assurance-process/ and https://www.responsiblemineralsinitiative.org/facilities-lists/);
(iv) to complete, for each type of Good and Service provided under the Contract or Orders, the latest
version
of
the
“Conflict
Minerals
Reporting
Template”
(CMRT),
downloadable
at
https://www.responsiblemineralsinitiative.org/reporting-templates/cmrt/, and the “Extended Minerals
Reporting
Template”
(EMRT),
downloadable
at
https://www.responsiblemineralsinitiative.org/reporting-templates/emrt/, and to send the same by e-
mail to conflictminerals@pirelli.com;
(v) to send the documents referred to in (iv) updated annually (always) or in the event of any change
in the composition and/or parts/components and/or production process of the Goods and/or Services
supplied, and/or any change in the list of foundries and/or the “Conformant” classification status
referred to in (iii).
In the event of breach by the Supplier of any of its obligations under this clause 1.15, Pirelli may
suspend performance of the Contract and/or Order with immediate effect, without prejudice to its
right to terminate the Contract(s) and/or Order(s) and exercise any remedy provided by law.
Over the years, Pirelli has progressively strengthened its model of management and mitigation of
the risk associated with Conflict Minerals, extending its scope from the so-called “3TG” minerals (tin,
tantalum and tungsten, their ores, and gold) to include, on a voluntary basis, first Cobalt (from 2019)
and, from 2022, also Natural Mica.
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This extension has been linked to an increasing focus on Cobalt, used in the Lithium-ion batteries
that are an integral part of electric vehicles, mobile phones and laptops. The focus on Cobalt is
motivated by three main reasons: the growing worldwide demand for this mineral, the fact that its
extraction is concentrated in the Democratic Republic of Congo, which holds about 60% of the
world’s reserves139, and the existence of numerous reports associating Cobalt mining with the risk
of negative social (e.g., child labour, human rights violations) and environmental impacts.
Similarly with regard to Natural Mica (used on a large scale in cosmetics and paints), numerous
reports indicate that the extraction and processing of the mineral, concentrated in India and
Madagascar and heavily reliant on manual often artisanal and low-scale processes, is often
associated with illegal activities, child labour and dangerous and unhealthy working conditions.
In relation to the aforementioned conflict minerals, in any case, it is useful to point out that the
materiality of the subject for Pirelli products is decidedly small: e.g., the volume of minerals (3TG)
used by Pirelli Tyre in a year weighs, in fact, less than one tonne, a quantity less than one millionth
of the volume of raw materials used annually by the Company and which is equally distributed among
most tyres produced. To give an example, a tyre weighing 10 kg contains about 10 mg (milligrams)
equivalent of tin, in the extremely low concentration of 1 ppm (one part per million).
Despite the negligible amount of these minerals in relation to the volume of raw materials used, their
presence inside tyres is of significant technical importance, contributing to their safety and
performance.
The suppliers surveyed in 2024 cover the entire “conflict minerals” risk associated with the tyres
produced by the Group. All of the suppliers involved have provided precise indications as to the
source of the materials in question, listing all foundries as required by the procedure. The
investigation led to no evidence of critical issues in the supply chain related to 3TG, Natural Mica
and Cobalt.
Targets
As part of its supplier relationship management, Pirelli established a target for managing suppliers
identified as having medium and high ESG risk in the March 2024 update of its Strategic Plan. This
target is based on the findings of the ESG risk assessment conducted in 2023, as well as the
materiality of the expenditure with the assessed suppliers.
This target foresees that by 2025, 96% of the total expenditure related to suppliers detected materials
per spend and classified as medium-high ESG potential risk will undergo an ESG assessment. This
percentage will rise to 100% by end 2027, guaranteeing the complete and systematic monitoring of
these suppliers.
139 Global Critical Minandrals Outlook 2024
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The 2024 update of the Risk Assessment enabled the collection of additional information specifically
related to respect for human and labour rights. This information will be integrated into the broader
ESG performance monitoring target for the supply chain in 2025.
More information on the ESG Supplier Assessment target can be found in the section “Governance
Information”, paragraph “Supplier relationship management”.
Training along the supply chain
The material impact that emerged from the double materiality analysis in terms of training and skills
development throughout the working life of the suppliers’ workers reflects Pirelli’s commitment to the
growth and awareness of its suppliers on sustainability issues, fostering a positive impact on people
and communities.
The existing activities and controls are outlined in the following paragraphs.
Policies for the management of training throughout the supply chain
The issue in question is covered by:
-
the Supplier Code of Conduct requires suppliers to establish training measures for their
employees and along the supply chain that ensure an adequate level of knowledge and
understanding of the contents of the Code, as well as to provide adequate training and
information programmes to educate and engage their workforce on risk management and
health and safety protection measures.t
-
the Policy on Sustainable Natural Rubber, the contents of which explicitly state, among
the various aspects covered, Pirelli’s commitment to fostering positive impacts in terms of
training and skills development throughout the working life of workers of suppliers. The Policy
highlights how Pirelli offers training courses and materials to the various levels of its natural
rubber supply chain, as well as to its employees involved in the purchasing process.
In addition, Pirelli activated internally, through its Purchasing Academy, specific training sessions on
ESG management addressed to the Purchasing Department and its buyers, as well as to other
internal stakeholders involved in the procurement process.
Finally, among the various initiatives launched in this regard, Pirelli ran a training course on Business
and Human Rights, which involved 100% of the Group’s raw material suppliers. For more detailed
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information, see the next section, “Training, Capacity Building & Engagement – Business and Human
Rights & Nature and Biodiversity”.
Actions
Training, Capacity building & Engagement – Business and Human Rights & Nature and Biodiversity
Pirelli believes that training, access to knowledge and understanding of the rules and principles
relating to human rights, the values underlying them and the mechanism for their protection is of
fundamental importance, both within the company and in the value chain.
With reference to the Supply ChainPirelli activated a training course on Business and Human
Rights which was offered to 100% of the Group’s raw material suppliers – in line with the results of
the Risk Assessment concluded in 2023, which saw the risk materiality (resulting from the
intersection of Country Risk and Business Sector Risk) position raw material suppliers significantly
higher than other purchase categories – and all Capital Goods suppliers considered to be continuous
and strategic. In particular, all these suppliers were asked to participate in the training, involving the
three internal corporate functions considered key in the management of Human Rights, namely
Purchasing, Human Resources and Sustainability.
The course was structured in three modules, with the objective of building “capacity” among
suppliers, giving them the essential information that will enable them to effectively manage the issue
in compliance with current international regulations and guidelines, and of which Pirelli calls for
application, such as the ILO international regulations, the OECD Guidelines on the duty of vigilance,
and the recommendations contained in the United Nations Guiding Principles on Business and
Human Rights, implementing the Protect, Respect and Remedy Framework.
The course focused on explaining how to create a Management Model, from Governance to Policies,
including identifying the necessary processes, how to carry out risk assessments, how to perform
due diligence, and providing practical examples of remedial measures, explaining the importance of
engagement with stakeholders, and illustrating reporting practices through tangible examples.
At the end of the course, which ended in February 2024, an Attestation Form was issued to each
participant supplier.
Pirelli has also asked Suppliers to cascade the course within their organisation and their supply
chain. To this end, and to facilitate this activity, Pirelli offered to Suppliers who have completed the
course the opportunity to download free of charge all the material, insert their own logo and make it
their own, so that they can capitalise on the result of a significant training investment, without having
to recreate it, so that they have the course ready for application within their own organisation and to
their supply chain. This approach aims to facilitate the extension of the positive impact of training in
terms of reach.
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In 2025, as foreseen by the Industrial Plan, the company will deliver the same Human Rights
Management training in to all suppliers of the other product categories identified as having potential
high or medium risk based on the risk assessment.
Equally important are the “capacity building” activities that were carried out in 2024, for about 268
suppliers, both in the area of training on human rights management and in the area of management
strategy and reduction of carbon emissions impacts. Of these, 38% falls within the scope of
significant suppliers, meaning those with potential ESG risk and/or those considered business-
critical.
A decarbonisation capacity-building and Engagement plan is also underway for suppliers of raw
materials with the greatest impact in terms of CO2 emissions, aimed at supporting them in fully
understanding Pirelli’s expectations and defining low-carbon development plans.
To complement the already consolidated Business and Human Rights training and capacity building
programme, Pirelli has also developed a further training programme for 100% of raw materials and
strategic capital goods suppliers, focused on Nature & Biodiversity, covering the main
environmental impact issues, with a particular focus on natural resource management and the
protection of ecosystems and biodiversity., to be delivered in 2025 according to the Group Industrial
Plan The aim of the programme is to broaden and strengthen the skills and knowledge of its suppliers
and workers in the value chain, providing them with the knowledge they need to understand the
difference between Biodiversity and Nature, the economic importance of proper management of
nature’s services, the TNFD scheme and the consequent guidelines for setting targets in line with
SBTi, as well as sharing Pirelli’s commitments and its biodiversity strategy with suppliers.
Targets
As part of the 2024-2025 Strategic Plan, Pirelli has set a clear and measurable goal to promote
respect for workers’ rights in its supply chain: to offer human rights training to 100% of suppliers
classified as High Risk (all categories excluding raw materials and strategic capital goods to
which training was delivered in 2024) by 2025 and 100% of suppliers classified as Medium
Risk (all categories excluding raw materials and strategic capital goods to which training was
delivered in 2024) by 2027 on the subject of Business & Human Rights.
This objective includes online training programmes designed to strengthen suppliers’ knowledge of
Pirelli’s human rights requirements and improve their ESG performance.
For the definition of High Risk and Medium Risk suppliers, please refer to what has already been
described with reference to the ESG Assessment target in the “Governance Information” section,
“Management of relations with suppliers” paragraph.
In parallel, Pirelli has set a second target to offer 100% of Raw Materials suppliers and CapEx
Strategic Suppliers by 2025 training on the topic of Nature & Biodiversity. This target, of an
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absolute nature, will be monitored through the number of suppliers in the selected categories who
complete the training programme.
The focus is on enhancing the capacity and knowledge of suppliers in the field of sustainability and
biodiversity, with the intention of strengthening their skills through specific initiatives.
The entire programme will be implemented in 2025, and has been defined by adopting a
methodology aimed at improving the ability of suppliers to integrate sustainable practices into their
operational processes.
Pirelli is committed to constantly monitoring progress towards this goal, reinforcing the importance
of nature protection and biodiversity across the entire supply chain.
Both targets were defined in collaboration between the Sustainability and Purchasing departments,
reflecting Pirelli’s ongoing commitment to promoting sustainability, biodiversity protection and
respect for human rights throughout the supply chain.
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S3 Affected communities
With reference to the affected communities, the positive impact Pirelli has on the development of the
communities in which it operates was found to be material, with dedicated social, educational and
cultural initiatives.
Pirelli’s operations and its value chain, both up and downstream, generate significant impacts on
various types of communities. Since its foundation, Pirelli has been aware of its important role in
promoting civil progress in all the communities where it operates and is committed to engaging in
dialogue with local communities and NGOs to identify targeted and measurable interventions,
ensuring that its contributions uphold ethical principles and fundamental rights.
Pirelli also participates actively in local and international institutional relations, promoting social
progress and sustainability in the territories in which it operates, as well as the understanding of the
affected communities through a structured process of dialogue and monitoring. The Pirelli Group
engages in lobbying activities, including through the industry associations of which it is a member,
ensuring alignment with all Pirelli policies, including those related to climate change, as detailed in
the “Institutional Commitments to the Community and Collaboration with Industry Associations to
Combat Climate Change” paragraph.
The analysis of the socio-economic and environmental contexts in which Pirelli operates, together
with the involvement of experts and strategic partners, also allows for the assessment of the potential
impacts of its business and the adoption of targeted measures to mitigate them. This is also achieved
through collaboration with local NGOs, institutions, and regional stakeholders, enabling the
identification of the specific vulnerabilities of the affected communities.
Taking into account its strengths, history, and culture, Pirelli has identified four key focus areas for
its commitment to the wider community: road safety, technical training, inclusion through sports
activities for young people, and culture. These commitments are realised both through Pirelli’s direct
actions, including those of the Pirelli Foundation, and through institutional relations, always in
alignment with the company’s ethical principles and strategic objectives. The goal is always to ensure
that initiatives are effective, measurable and responsive to the real needs of the local areas.
As regards direction action, Pirelli for some years now has adopted an internal procedure to regulate
the distribution of gifts and contributions to the External Community, which also explains the roles
and responsibilities of the functions involved, the operational process of planning, realising and
monitoring the initiatives and the disclosures regarding the same. The internal procedure also
specifies that no initiatives may be taken in favour of beneficiaries for whom there is direct or indirect
evidence of violation of human rights, worker rights, environmental protection or business ethics.
Direct support for communities is also reinforced by initiatives from Pirelli HangarBicocca and the
Pirelli Foundation.
Pirelli Hangar Bicocca, a museum of contemporary art in Milan, allows the Company to reach various
types of communities, of different geographic origin, training and professional areas, thanks to
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exhibitions, cultural activities, debates and analyses of the main social-political aspects linked to both
their history and current day.
In turn, the Fondazione Pirelli established in 2008, is the preservation of the Group’s historic and
cultural heritage and the enhancement of corporate culture through initiatives with a strong social
and cultural impact, exhibitions, as well as in collaboration with other cultural institutions. In particular,
with reference to educational initiatives for the external community, the Fondazione Pirelli also
actively spreads the values of the corporate culture among the younger generations with a structured
programme of free educational courses.
For a discussion of the activities of Pirelli Hangar Bicocca and Fondazione Pirelli, see the specific
paragraphs later in this section.
The contributions made by Group companies to the external community come as part of a more
extensive strategy seeking to support achievement of the Group Objectives and, in particular, the
approach to the transformation of sustainable development challenges deriving from global
scenarios, in the medium-/long-term, into opportunities for growth, resilience and competitiveness
and the broader management of impacts throughout the value chain.
Processes for engaging with affected communities about impacts
The goal of the Institutional and Regulatory Affairs Department is to create corporate value through
the management of structured relationships with reference stakeholders in all the countries in which
Pirelli is present. Pirelli’s institutional relations are underpinned by criteria of maximum transparency,
legitimisation and responsibility, both with regard to information disseminated in public offices, and
to relationships managed with institutional interlocutors in line with the Code of Ethics, the
Institutional Relations - Corporate Lobbying Policy and the Group Anti-Corruption Compliance
Programme (documents published on the Pirelli website) as well as in line with the principles of the
International Corporate Governance Network (ICGN) and in compliance with the laws and
regulations in force in the countries where Pirelli operates.
In the area of institutional relations, Pirelli acts above all via active monitoring and in-depth analysis
of the institutional and legislative context, as well as identifying the applicable Stakeholders. The
activity of Institutional Affairs also includes an in-depth analysis of the global political and economic
dynamics, linked to the development of the main topics of corporate interest, and benefits from
collaborations with selected think tanks of international prestige. Among these are the collaborations
with the Institute for International Policy Studies, the Institute for International Affairs, the Trilateral
Commission and the Aspen Institute.
At an international level, Pirelli interacts with the main interlocutors present in the countries in which
it operates with its own production sites. When necessary, the Group promotes initiatives directed
towards mutual understanding and with the purpose of promoting representation of its values and
interests through a strategy based on a clear perception of the industrial objectives and the
development of the business.
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These activities are carried out at different stages, including strategic planning, goal setting, and
action management, and may include formal consultations, face-to-face meetings, and collaborative
actions, with the frequency depending on the specificity of the topic and the urgency of the issues
addressed.
Institutional Relations contribute to the creation of corporate value through a structured and stable
system of external relations directed at persons belonging to the Public Administration in order to
ensure adequate representation of the Group’s interests, following the various phases of the public
decision-making process. All the activities carried out are marked by criteria of legitimacy,
correctness and transparency, both with respect to the information disseminated in public venues
and also with respect to the relations managed directly with institutional interlocutors. Pirelli assesses
the effectiveness of these activities by periodically analysing the results obtained to ensure that they
are in line with company expectations.
The Senior Vice President Institutional and Regulatory Affairs has the ultimate responsibility for
Institutional Relations in the Pirelli Group. The Institutional and Regulatory Affairs Department is
responsible at the global level for supervising advocacy and corporate lobbying activities, to ensure
they are carried out in compliance with the principles enshrined in the Group’s Code of Ethics and
Anti-Corruption Compliance Programme, in line with the International Corporate Governance
Network principles and in accordance with the laws and regulations in force in the countries where
Pirelli operates.
Furthermore, Pirelli is inspired, in carrying out its Institutional Relations activities, by the criteria of
legitimacy, fairness and transparency, as detailed in the Institutional Relations Policy - Corporate
Lobbying available on the Pirelli corporate website.
The Pirelli Group is listed, among others, in the European Transparency Register, managed jointly
by the European Parliament, the Council of the European Union and the European Commission.
The Register provides information on interest representatives which contribute to EU decision-
making processes. By joining the Register, Pirelli undertakes to respect the relevant code of conduct
as part of the Inter-Institutional Agreement that defines ethical and behavioural principles with which
members must comply in the course of their interest representation activities with EU institutions.
In the United States of America, December 2024 saw Pirelli engage the company Ballard Partners
as lobbyist. Ballard Partners therefore registered in this role, submitting its registration for lobbying
in accordance with the 1995 Lobbying Disclosure Act, indicating Pirelli Tire LLC as its client and the
related trade and duties activities as lobbying topics. (Link: LD-1 Disclosure Form)
Processes to remediate negative impacts and channels for affected communities to raise
concerns
In line with its commitment to the community, Pirelli adopts a structured approach to identify, prevent
and, if necessary, remedy any potential significant negative impacts for the communities in which it
operates.
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In this context, Pirelli guarantees the accessibility of its whistleblowing channel to external
communities too, thereby allowing all those who may become aware of a potential relevant violation
to make the proper report.
The channel is open not only to employees, suppliers and business partners but also to the members
of the communities in which Pirelli operates, allowing them to make verbal or written reports,
potentially also anonymous, of any conduct that is not compliant with the Company’s standards or
current regulations. All reports are treated with the utmost confidentiality and impartiality,
guaranteeing the protection of the whistleblowing from any form of retaliation.
Reports are handled by the Group’s Internal Audit Department in compliance with standards of
independence and transparency, ensuring adequate analysis and, if grounded, the adoption of
suitable corrective or disciplinary measures.
For more detailed information, refer to the section on “Information on Governance”, “Whistleblowing
Policy” paragraph.
Pirelli has implemented a Due Diligence system that crosses the value chain and integrates attention
to human rights in all the Company’s activities. Specifically, Pirelli systematically monitors the internal
and external context of the countries in which it operates, to prevent negative impacts on human
rights and, if so, to remedy such.
In addition, before investing in a specific market, in new business relationships (e.g., acquisitions,
M&As, joint ventures), Pirelli conducts ad hoc assessments on possible political, financial,
environmental and social risks, including those related to respect for human and labour rights, while
in countries where the Company operates, internal and external context systematic monitoring is
carried out to prevent negative impacts on human rights and, if necessary, remedy them.
Pirelli’s commitment to the external community
Policies for managing relations with the external community
Relations with the external community are an integral part of the Global Human Rights Policy,
which sets out Pirelli’s commitment to fostering positive impacts in terms of social cohesion,
individual and community development and the general well-being of people within the community
in which Pirelli operates, through the development of dedicated initiatives.
More specifically, the Policy expresses Pirelli’s active commitment to disseminating and promoting
the values that permeate its action, in respect of local cultures and indigenous populations, protecting
the environmental and cultural heritage and traditions and customs of the local communities and
helping ensure the economic well-being, respect for human rights and growth of the communities in
which it operates, supporting social, cultural and educational initiatives focussed on personal
promotion and the improvement of living conditions. In this regard, Pirelli holds dialogue with
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institutions and the competent non-government organisations to be essential in identifying priority
areas in which to support local communities.
The Group’s Code of Ethics also expresses Pirelli’s commitment to contributing towards the
economic well-being and growth of the communities in which it works through the supply of efficient,
technologically-advanced services and the support of social, cultural and educational initiative
focussed on personal promotion and the improvement of living conditions.
In line with what is set forth in the Code of Ethics, Pirelli “does not make contributions, advantages
or other benefits to political parties and workers’ trade unions, or to their representatives or
candidates, without prejudice to compliance with any applicable legislation”. The political affiliation
of an employee or a financial contribution by an employee is to be considered a personal matter and
is an action completely independent of Pirelli.
The Supplier Code of Conduct, in turn, reminds suppliers to ensure respect of local communities,
safeguarding their cultural and natural heritage, traditions and local customs.
The Sustainable Natural Rubber Policy, with express reference to suppliers of this raw material,
also calls for a commitment to promote the development of local communities. More specifically,
Pirelli expects all players in its natural rubber supply chain to act responsibly, supporting dignified
living conditions for local communities and promoting their cultural development.
The above Policies are in line with the applicable international standards governing human rights,
including the United Nations Universal Declaration of Human Rights and the European Convention
on Human Rights.
For a complete list of international standards, refer to the paragraphs on “S1 Own Workforce” and
“Workers in the value chain”.
Targets
Pirelli is committed to constantly contributing to the economic well-being and growth of the
communities in which it operates, as explained in the previous paragraphs and detailed in the specific
actions reported below merely by way of example. More specifically, the initiatives pursued meet
with the objectives of the Group to disseminate the key values of the Group’s business culture,
including to external stakeholders.
Actions
Company initiatives for the external community
As specified in the Group “Code of Ethics”, with the involvement of all the company departments,
which can themselves promote such initiatives both globally and locally, Pirelli supports social,
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cultural and educational initiatives aimed at personal promotion and the improvement of living
conditions. The amount of the disbursements in support of the External Community incurred by Pirelli
in 2024 is shown in the section “Contributions to the Community”, of this report.
Road Safety
Around the world, Pirelli is synonymous with safety and high performance. Together with
environmental protection, road safety is the key element of the Eco & Safety Performance strategy
that inspires the Group’s industrial and commercial choices. Pirelli’s commitment to road safety
includes numerous training and information activities, resulting in the research for and continuous
application of innovative technological solutions in favour of sustainable mobility but odes not only
regard product innovation, rather it extends to include the promotion of principles of road safety and
safe driving through the participation in dedicated projects and campaigns.
Bearing witness to this commitment, Pirelli in 2018 joined the United Nations “Road Safety Fund”
which aims to support States to reduce the number of deaths and injuries caused by road accidents.
The Fund supports the implementation of national plans, as well as concrete actions and projects
aimed at improving the safety of infrastructure and vehicles, promoting the correct behaviour of road
users and managing the post-accident period efficiently.
Numerous road safety initiatives have been implemented in the countries where the Group operates,
of which the following is a non-exhaustive list.
In Italy, in 2024 the partnership with the University of Milan Bicocca and participation in the informal
round table on the topic of mobility management and road safety in the area continued, issues on
which representatives of the city administration are constantly involved. This scope also includes the
meeting held at the Istituto Tecnico Don Orione di Fano (PU) secondary school for year 11s and at
the Istituto I.P.S.S.I.A. Attilio Odero secondary school in Genoa for the 18/19-year-olds, where tyres
were discussed along with their characteristics, with a particular focus on safety and efficiency. The
topic of safe, sustainable mobility for the younger members of society was the focus of the “Siamo
Nati per Camminare” initiatives supported by Pirelli and promoted by the Genitori Antismog
association, which involved primary and nursery school children in Milan (12th edition), Verona (5th
edition) and Genoa (1st edition), who for two weeks, were asked, together with their families, to make
the journey to school in a sustainable manner and duly record it. The most virtuous schools were
then rewarded during the final event organised in each of the three cities, attended by the local
authorities and sponsors.
In addition, in 2024, work continued on two important regional and national Italian projects, both with
a particular focus on sustainable mobility, understood here as safer, environmentally-friendly,
efficient and accessible mobility that strengthens national competitiveness through practical and
scalable solutions: the MOST (National Centre for Sustainable Mobility) and MUSA (Multilayered
Urban Sustainability Actions). Both are part of the actions envisaged within the PNRR and have a
multi-year horizon, but while the MOST is totally focused on sustainable mobility at a national level,
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the second has a broader scope on the theme of urban regeneration, where mobility is in any case
a fundamental aspect but not the only one, and has a local perimeter focused on the Lombardy
region and more specifically on Milan. Pirelli in these projects acts on the one hand by contributing
to the development of sustainable tyres in terms of rolling resistance reduction, material sustainability
and digital integration, and on the other hand by foreshadowing the main characteristics of the city
of the future and identifying the mobility services that will enable its increasingly sustainable
development.
In the United States and Canada, “Tire Safety Week” was organised, a series of initiatives on safe
driving that also involved other tyre manufacturers. Again in the United States of America, Pirelli
continued its partnership with The Ray for the advancement of road infrastructures and technologies
to improve safety and reduce the environmental impact.
In 2024, Pirelli continued to believe in and thus invest in various initiatives in favour of road safety
education on two wheels. With a particular focus on collaborations with driving schools for the
training and development of practical and safe experience on the road, track and off-road. Among
the various initiatives we can mention the Enduro Republic, Motorace People, Tutti Pazzi per la Pista
and GS Academy, as well as the track test days organised directly by Pirelli: the Pirelli Trackdays.
With the Metzeler brand, the company is also a partner of the main “adventouring” events that bring
participants closer to the off-road world.
Lastly, as in previous years, a section of the website was dedicated to driving tips, for summer and
winter, highlighting the important role played by the tyres in the active safety of vehicles and its
occupants.
Training
The promotion of technical education at all levels and training are long-standing values that are well-
established in the history of Pirelli. The Group continues to benefit from technical and research
cooperation with various Universities in the world including the Politecnico of Milan, the Politecnico
of Turin, Bocconi University and the SDA Bocconi Business School and the Bicocca University of
Milan in Italy, the University of Craiova, the University of Pitesti in Romania, the University of Qingdao
in China, and the Technical University of Darmstadt, the University of Applied Sciences in Darmstadt,
to name a few.
The Company supports educational and didactic programmes that are able to give less fortunate
young people the tools to improve their condition; it contributes scholarships and research projects,
firmly believing in training as vital to individual growth and the economic growth of a country.
In China, Pirelli has for years sponsored the study grant for the School of Science and Polymer
Engineering (engineering of rubber and plastics and synthesis of polymers) of the Qingdao University
of Science & Technology (QUST). Both are located in the province of Shandong and boast an
excellent reputation in the respective sectors, with rubber engineering as the institute’s traditional
course.
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In Turkey, rubbers were donated to the engineering clubs of various universities for the international
competitions of single-seat cars built by the respective clubs; Pirelli also took part in the university
Formula Club Middle East. Donations were also made to the Pirelli Secondary School and Materials
Science Club of the University of Yildiz.
In Canada, a donation was made to the Global Schoolhouse Initiative, a non-profit that provides
education and support for children in the poorest areas, worse struck by crises.
In Mexico, 2024 saw Pirelli once again support disadvantaged communities, focussing on children
through the United Way Association. The children were offered workshops divided into five areas:
socio-emotional development, educational reinforcement, hygiene and health, environment, and life
projects (to stimulate the children to set short- and long-term goals and learn discipline and decision-
making). In the United States of America too, Pirelli contributed to United Way.
Pirelli Romania continued its support activities for the main technical schools in Slatina, offering more
than 200 students the chance to choose their career path as early as high school. In 2024, Pirelli
Romania continued the project developed together with the Pitesti faculty of Mechanics on the
advanced techniques of tyre manufacture with the support of Pirelli R&D specialists. In addition to
the University of Pitesti, the University of Craiova also took part in this project with 45 masters
students. In Slatina, Pirelli continued its study grant program, where it supported 48 mechanics and
electricians through in-factory training sessions and meal vouchers. The Io Tifo Positivo programme
involved 200 students from schools in the Slatina area to teach how to deal with bullying and how to
cheer in a positive way.
In Spain, Pirelli continues to support the UPC Manresa polytechnic university, giving students the
chance to take part in the program Dynamics UPC Manresa, each year constructing a single-seat
car to compete in the international Formula Student championship, against many other teams from
all over the world. Also in 2024, Pirelli Spain organised visits to Pirelli’s old production plants for high
school and university students teaching the tyre manufacturing process and the distribution logistics
component.
In Germany, Pirelli donated a ceramic furnace and new fencing to the nursery school
Kindertagesstätte Kleine Strolche, as well as a variety of tools and equipment for sports to the Carl-
Weyprecht-Schule Bad König school. In addition, donations were made to three local associations
supporting the school ecosystem in the area of Breuberg. Finally, donations were made to the
Technical University of Darmstadt and the German Institute for Rubber Technology.
In the Arab Emirates, Pirelli has created a training session for three secondary school students to
ensure visibility of the various company departments.
In the United States of America, Pirelli contributed to projects at several schools in the Rome,
Georgia area, including at a College & Career Academy, for technical training.
In Greece, Pirelli donated second-hand computers to the Hatzikyriakio Institution for Child Protection
to support the education of numerous boys and girls. Dozens of Pirelli employees represented the
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company during the distribution of the equipment, thereby helping ensure achievement of the
organisation’s mission to supply essential tools for the future of the children hosted.
Sport and inclusion
There is a close link between solidarity and sport, in a virtuous circle where commitment to sports
becomes synonymous with the commitment to promoting solidarity and ethics, especially amongst
young people. Getting young people involved in sport is a way to teach the notion of integration to
children from different social groups and helps prevent negative situations like isolation and solitude.
Since 1997, Inter Campus has developed social, flexible cooperation and long-term actions, in 30
countries around the world with the support of 300 local operators, using football as an educational
tool to offer needy boys and girls aged between 6 and 13 the right to play.
Since 2008, Inter and Pirelli, along with a local partner, have been running the Inter Campus social
project in Slatina, Romania. The sports and recreational activities are organised for the entire year,
involving around a hundred children from different social contexts who have been learning team
spirit, social integration and the values of friendship through football for years.
Since 2012, Pirelli and Inter have replicated the experience of Inter Campus in Mexico: Inter Campus
Silao, near the Pirelli factory, inaugurated by President Felipe Calderon, involves numerous children
from the area. Pirelli has also collaborated with the León baseball team Bravos to promote
community and environmental initiatives. Through the “Home Run con Causa” program, each home
run contributes towards the donation of wheelchairs in a partnership with the León family
development entity.
In Brazil, 2024 saw Pirelli support football, volleyball and judo programs with various donations.
In the United States of America, Pirelli sponsored a football programme at the Rome YMCA, Georgia.
Pirelli Germany made a donation to support the construction of a sports field for a secondary school
in Ukraine.
Social Solidarity
In Spain, the company supports the Fundacio del Convent de Santa Clara, which runs programmes
to supply food to needy families. Pirelli has permanently made available a warehouse for storing
food for those most in need and has made a donation to Caritas Española of both resources from
the Company and employees, collected through internal fund-raising, to support the area of Valencia
and province after the devastating October flooding.
In Argentina, for Children’s Day, organised by the social solidarity club Avellaned, Pirelli donated
snacks and cinema tickets to families in need.
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In Romania, various disadvantaged children received a school rucksack from Pirelli employees by
way of Christmas gift, including other donations: toys, clothes, personal hygiene products and food.
In Turkey Pirelli made a Mother’s Day donation to an association that works to protect children.
In China, Pirelli has for many years supported the Yanzhou Charity Institute, an association that aims
to help children in difficult situations locally, and has also made donations to the Jiaozuo Red Cross.
In Germany, Pirelli made a donation to the association for the elderly of the region of Odenwald to
support essential services and the shelter of Erbach in support of women suffering from domestic
violence, in addition to various other local associations, including the fire brigade.
In Singapore, in 2024, Pirelli, partnering with Porsche and the non-profit association Act of Kindness,
organised an event for children with learning difficulties and their families, who received a gift pack
with larder articles.
In Greece, Pirelli donated the Athens Sales Office furniture to the “Agia Sofia” Paidon National
Children’s Hospital to help support the hospital and give the furniture a second life. This donation
contributes towards the mission of the famous hospital.
In Brazil, Pirelli supported several social solidarity activities: “Aprender Brincando”, an after-school
project, “Educandario”, a programme for a public school for children from kindergarten to middle
school, and “Projeto Guri”, an important musical activity involving children and teenagers. Finally, in
a partnership with the Ingo Hoffman institute of Campinas, Pirelli has sponsored a program of cultural
activities involving cinema, music and literature for children being treated for cancer.
In Hungary, in 2024, Pirelli organised the charity event DreamRace to mark the Children’s Day, in
favour of the Save Lives Public Benefit Foundation. The foundation supports the healing and social
integration of children suffering from serious illnesses. During the event, the children were able to
enjoy exciting experiences such as a trip in a high performance car at the Hungaroring, driving
simulators with Zengő Motorsport and traffic-themed games.
Finally, in Mexico, Pirelli, facing an emergency following an increase in stray dogs, created an
adoption service. A team of Pirelli volunteers took care of collecting the dogs, their hygiene and
vaccinations, and an adoption programme with local families.
Health
In Brazil, Pirelli has been supporting the Pequeno Principe children’s hospital, one of the most
important paediatric complexes with an advanced surgery and oncology centre, since 2011. In
addition, a donation was made to Casa da Crianca Paralitica, a non-profit association that offers free
rehabilitation for children and teenagers with disabilities.
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In Argentina, Pirelli sponsored the “Avon Walk for Breast Health”, helping fund the event
organisation, the creation of materials and campaigns for the early diagnosis of breast cancer, along
with free mammographies for those at risk without medical cover.
Environmental initiatives
In line with the company’s vision of sustainability, Pirelli supports various environmental projects
around the world.
In Mexico, Pirelli coordinated a “llantaton” (a “tyre-a-thon”), i.e. the collection of end-of-life tyres in
the municipality of Leon, to promote local hygiene. The collected tyres were used as fuel for cement
factories. Pirelli also sponsored the annual International Sustainability Forum, strengthening the
sustainable approach and its commitment. The event, organised by the Mexico-USA Chamber of
Commerce in León, promotes the main initiatives and objectives of the group’s sustainability plan.
In Greece, in 2024, Pirelli donated to the We4All initiative, to plant olive trees in the Greek regions
struck by fire and to support environmental education in two schools.
In Turkey, around 30 employees and their families participated in the Istanbul marathon, contributing
to TEMA, the institution promoting sustainability and environmental awareness.
In the US, Pirelli partnered with Berry College in Rome, Georgia, to restore the Longleaf Pine species
to the local mountains. In addition, Pirelli has increased its donation to the Coosa River Basin
Initiative, which monitors and safeguards the local waterways.
Culture and social value
The internationality of Pirelli also emerges from its projects to promote corporate culture, with
initiatives that again in 2024 found a place in a number of countries around the world. The attention
to culture, and even more the commitment to preserve it, spread it and enhance it, are part of the
DNA of the creation of social value.
In Italy, the company’s commitment to activities that generate value for the territory is demonstrated
by its numerous and consolidated partnerships with prestigious national and international bodies and
institutions: in particular, in the world of art, culture and history with FAI (Fondo Ambiente Italiano),
Premio Campiello and Campiello Junior, Fondazione ISEC - Istituto per la Storia dell’Età
Contemporanea; in the world of theatre with Piccolo Teatro di Milano, Teatro Franco Parenti and
Teatro No’hma Teresa Pomodoro; in the world of music, with Fondazione del Teatro alla Scala,
Orchestra da Camera Italiana, Orchestra Sinfonica di Milano Symphony Orchestra, the Portofino
International Opera Competition, the Ravenna Festival and the MITO SettembreMusica Festival.
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In the UK Pirelli supported the Carlisle Santa Dash through the donation of prizes and medals and
sponsored the Carlisle Youth Club.
In the United States of America, Pirelli supported various activities, including the Davies Shelter for
women in difficulty in the area of Rome, Georgia; Girls Who Code, an initiative whereby computer
science teaching is offered free of charge to women; United Way, a charity to help with poverty; and,
finally, One Community United, 100 Black Men Rome GA and Harbor House Rome GA.
In the field of music, Pirelli sponsors the Mozarteum project in Brazil, which in addition to organising
concerts promotes training programmes for new talent. Pirelli also made a donation to the 19th Italian
Cinema Festival in Brazil.
Pirelli Mexico supported the state artisan creativity competition promoted by the Government of
Guanajuato and La Salle Bajío University, with the aim of valuing local artisan culture and traditions.
The donation helps ensure the relaunch of the region’s cultural and artisan identity.
In the Arab Emirates, Pirelli hosted an event at P Zero World (PZW) Dubai in collaboration with Lotus
to celebrate the Emirati Women’s Day. The initiative presented the PZW to a group of women and
strengthened Pirelli’s roadmap towards female empowerment. The event also highlighted the
company’s commitment to sustainability, positioning Pirelli as a reference brand for women in the
industry.
Pirelli Foundation Educational: Educational and training projects for students and teachers.
One of the missions of the Fondazione Pirelli, or Pirelli Foundation, established in 2008, is the
preservation of the Group’s historic and cultural heritage and the enhancement of its corporate
culture through initiatives with a strong social and cultural impact, exhibitions, as well as in
collaboration with other cultural institutions.
More specifically, with reference to the training initiatives run for the external community, the Pirelli
Foundation seeks to disseminate the values of the business culture, including to the younger
generations, with a structured program of free “Pirelli Educational Foundation” teaching courses,
which since 2013 has each year involved more than 3,800 primary and secondary school students
and teachers and with workshops and meetings dedicated to university students, refresher courses
for teachers and special events linked to the world of teaching, also organised in collaboration with
other cultural institutions. Since 2020, activities have also been carried out on-line through the
sharing of digital contents such as videos, podcasts and virtual tours.
The courses offered are aimed to using digital contents, interactive pathways and guided tours
themed around subjects such as the history and technology of the tyre, to investigate social and
environmental sustainability, design and graphics, the world of work and production: these are just
some of the goals of the teaching program that brings students to approach the key values of the
Pirelli business culture.
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The teaching courses for the primary and secondary schools relative to the period January-May
2024 and the new 2024/2025 laboratory program “L’officina delle idee. La cultura d’impresa per
scuole e università” (October-December 2024) involved a total of 2,622 students and 233 teachers.
The lessons were held both digitally and in person, with guided tours of the Pirelli Foundation and
company headquarters. Where requested, and after stipulating the relevant agreement, some of the
courses proposed (4 hours per student) have been recognised as Percorsi per le Competenze
Trasversali e per l’Orientamento (PCTO). Collaborations were set up with the Research and
Development Department for visits to experimental and indoor laboratories. During the period
February-March 2024, more than 200 teachers attended live, on-line, the 12th edition of the training
and refresher course for teachers “Cinema & Storia” entitled “Il cosmo: la prossima frontiera”
organised in collaboration with the ISEC Foundation and Cinema Beltrade. Again in 2024, the
Foundation took part in the “A scuola d’impresa” project, which stemmed from the collaboration
between LIUC-Cattaneo University and Museimpresa, and in the Settimo Torinese Festival of
Innovation and Science, this year focussed on the topic of borders, with the meeting “Oltre il
traguardo: storie di sfide sportive e tecnologiche”, dedicated to secondary schools.
Around 569 students are involved in the initiatives organised by the Pirelli Foundation, also in
collaboration with other Departments (HR and R&D) on the following topics: technological
innovations, business culture and history, visual communication and design, management and digital
optimisation of archives. Among the institutions involved: Università Cattolica del Sacro Cuore,
Boston University MBA, University of Liverpool, University of Milan Bicocca, Milan Polytechnic,
Bocconi University.
Initiatives to promote reading
In October 2024, Pirelli attended the 76th edition of the Frankfurt International Book Fair, as
supporting sponsor of Italy and Fair Guest of Honour. Within the Italy Pavilion “Radici nel futuro”, the
company used a dedicated to space and videos and books to highlight the various components of
its business culture: innovation, technology, art and literature. Pirelli’s various publications were
displayed, such as the editorial projects curated by the Pirelli Foundation, the Pirelli HangarBicocca
catalogues, a book dedicated to the Pirelli Calendar and the Annual Reports.
Pirelli was also a sponsor of the 2024 edition of the Campiello Prize; in particular, its commitment to
promoting reading among the younger generations continued with the Campiello Junior, an award
for Italian works of fiction and poetry for children between the ages of 7 and 14. On 26 March 2024
at the Municipal Theatre of Vicenza, the winners of the third edition of the Prize, Daniela Palumbo
and Angelo Petrosino, were announced at the Final Ceremony of the 61st edition of the Campiello
Prize. In December, Pirelli HQ hosted the ceremony for the selection of the finalist panels of the 4th
edition of the Prize, also streamed live. The 4th edition will come to a close on 10 April 2025 in
Vicenza.
The Pirelli libraries were present at the international “Occupy Library” conference held on 29 May
2024 at the Sforza Castle, with an intervention on libraries as a tool for welfare. Pirelli and the Pirelli
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Foundation also supported the illustrations exhibition dedicated to the life of author Jella Lepman,
opened during the international Ibby International conference held in Trieste from 30 August to 1
September 2024.
The shared library holdings of the Bicocca and Bollate libraries number over 9,800 titles in the
catalogue; the Bicocca library has over 2,000 loans, more than 2,850 total movements and over 770
users registered between the two libraries. The sending of the newsletter Biblionews, with reviews
and periodical updates on books and libraries, reached 546 subscribers. A brochure was also printed
and distributed on the history of the Pirelli libraries and on reading promotion projects. A number of
meetings dedicated to Pirelli employees were organised for the cycle “Parole Insieme. Le
conversazioni dalle Biblioteche Pirelli” with writers Marco Balzano, Federica Manzon and Alessandro
Robecchi.
Pirelli Hangar Bicocca
Pirelli Hangar Bicocca is a non-profit foundation dedicated to the production and promotion of
contemporary art.
Founded in 2004, Pirelli HangarBicocca is today an institution of reference for the international art
community, local residents and the territory. A totally free, accessible and open museum complex,
it is a place for experimentation, research and dissemination where art is the cue for reflection on
the most topical issues of contemporary culture and society.
The activities, which target an extensive, heterogeneous audience, include a calendar of important
personal exhibitions of Italian and international artists, a multidisciplinary program of collateral events
and analyses, a scientific disseminating publishing activity, educational and training proposals.
The artists are the main reference persons and together make up the community of greatest interest
for the institution, as their work is essential for it to have a public and museum function. Some
commissions and productions are launched in collaboration with important institutes of various types:
museums, galleries, foundations, research centres, technological poles and public entities. At a
national and international level, the world of art and culture has acknowledged Pirelli HangarBicocca
accreditation through press releases published in important, authoritative newspapers – such as the
Financial Times, the New York Times, Il Corriere della Sera, Frankfurter Allgemeine and many other
on-lines options, radio, TV and both generalist and art magazines, also thanks to the continuous
commitment to disseminating through specific audio, video and textual analyses (such as interviews
with artists, performance documentation, concerts, events, etc.) present in the “Bubbles” section of
the website, which have also facilitated remote access to the many cultural topics pursued by Pirelli
HangarBicocca. The attention paid to the communities of the city of Milan, the Bicocca district and
the outlying towns is made tangible by a structured dissemination, education and training proposal,
conceived in correlation with the exhibitions, which makes Pirelli HangarBicocca a resource for the
achievement of considerable positive impacts on the community. The main general beneficiaries of
the collaboration or use of Pirelli HangarBicocca cultural projects are: employees of Pirelli and Pirelli
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HangarBicocca, the intake linked to the exhibitions and activities as suppliers, businesses, artisans,
professionals, artistic and cultural institutions, associations, independent spaces, charities,
universities of all fields of knowledge, both humanistic and scientific, and schools, those working in
the world of art, art enthusiasts and those enjoying a first approach to art.
As further confirmation of the institution’s strong connection with the community, Pirelli
HangarBicocca also features dedicated public service areas within its building, including a spacious
entrance with a reception area, a space for educational activities, a workshop room for conferences
and meetings, a bookshop, and a bistro with a pleasant outdoor area.
2024 saw the celebration of twenty years of Pirelli HangarBicocca with a presentation to the press
and main stakeholders held in December 2023 in the exhibition spaces of I Sette Palazzi Celesti –
a work created precisely in 2004. The conference, during which the 2024-25 plans were unveiled,
was organised with the contribution of Chairman Marco Tronchetti Provera, Artistic Director Vicente
Todolí, the Mayor of Milan, Giuseppe Sala, and The New York Times moderator and reporter Farah
Nayeri.
Exhibitions
In 2024, Pirelli HangarBicocca hosted solo exhibitions by leading national and international artists in
the context of a programme that has distinguished itself for its curatorial rigour and for its attention
to site-specific projects capable of “talking” to the unique characteristics of the surrounding context
and space. The artistic programming of 2024, curated by Artistic Director Vicente Todolí, presented
artists with a high profile, alternating solo exhibitions by well-established names with exhibitions of
younger, more experimental artists. In the Navate Space: Nari Ward, Jean Tinguely. In the Shed
Space: Chiara Camoni, Saodat Ismailova.
In addition, the public was able to visit the permanent installations I Sette Palazzi Celesti 2004-
2015 by Anselm Kiefer (Donaueschingen, Germany, 1945, lives and works in Paris and Barjac,
France), La Sequenza by Fausto Melotti (Rovereto, 1901 – Milan, 1986) and the murals developed
on the outside walls of the Cube Waves Only Exist Because the Wind Blows by eL Seed (Le
Chesnay, France, 1981, lives and works in Paris and Dubai), opened on 4 July 2024.
During the year, the following temporary exhibitions were held:
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Chiara Camoni (Piacenza, 1974; lives and works in Seravezza, Italy) “Chiamare a raduno.
Sorelle. Falene e fiammelle. Ossa di leonesse, pietre e serpentesse” held from 15 February
to 21 July 2024. The exhibition presented the most extensive corpus of works of the artist
ever displayed, including a series of new productions.
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Nari Ward (St. Andrew, Jamaica, 1963; lives and works in New York) “Ground Break” held
from 28 March to 28 July 2024. The retrospective gathered together, for the very first time,
an extensive selection of works to investigate the artist’s approach through projects focussed
on the collaboration and performance.
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Saodat Ismailova (Tashkent, Uzbekistan, 1981, lives and works in Paris and Tashkent) “A
Seed Under Our Tongue” held from 12 September 2024 to 12 January 2025. The exhibition
was the first anthology in Italy devoted to one of the most innovative contemporary artists
and film-makers of her generation, who works at the crossroads of cinema, sound and visual
art.
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Retrospective dedicated to Jean Tinguely (Fribourg, 1925 – Bern, 1991) held from 10
October 2024 to 2 February 2025. The exhibition, organised in collaboration with the Tinguely
Museum of Basel, was the largest to be organised in Italy after the artist’s death and included
numerous seminal works and works from his artistic career.
To facilitate a better understanding of the art themes, visitors were given free printed and digital
guides, available online, to the exhibitions and permanent installations in Italian and English. For
each of the four exhibitions, a bilingual catalogue was produced, in Italian and English, published by
Marsilio Arte with Pirelli HangarBicocca. The publications are available at the institution’s bookshop
and e-shop as well as through the publisher, distributed in a capillary fashion, nationally and
internationally. The catalogues are also given as gifts to directors of international institutions, art
historians, curators, journalists, as well as to libraries, archives and persons of reference in the field
of culture and contemporary art in order to spread awareness of the research carried out by Pirelli
HangarBicocca and to contribute to the study and cultural debate of today.
Educational projects
The training projects run by the Education Department of Pirelli HangarBicocca include activities that
meet with the requests submitted by the world of education and groups of interest. The principles
inspiring the project are: to make available to the schooling community and graduates the
competences of Pirelli HangarBicocca; to develop lasting partnerships with universities; to create
models that can become a resource for research and development and to allow everyone to make
on-line use of such. Under the scope of teacher training, the Education Department ran the course
Ho pensato a un titolo, ma te lo dico all’orecchio, for primary school teachers, designed together with
the artist Serena Vestrucci, with the collaboration of the Degree Course in Primary Training and
Sciences, “Riccardo Massa” Department of Human Sciences for Training of the University of Milano-
Bicocca. Course participants took part in various meetings, which alternated in-person lessons with
participated design meetings.
All the School activities of the Education Department were designed in presence, intensifying the
number of courses with the workshop part taking place directly in the exhibition space. The School
planning, intended for all levels of schools, intends to optimise the artistic language of contemporary
art, which may involve and concern subjects that would, at first glance, appear to be unrelated to art.
The project is directed towards all teachers, allowing them to play a leading role in collaborating
towards the reading of works of art connected to their subjects and current topics. For the permanent
installation and for all temporary exhibitions hosted within the exhibition space, courses are planned,
divided up into two phases: one during which the work is observed and one of laboratory testing.
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From 2015, moreover, the Education Department of HangarBicocca and the “Riccardo Massa”
Department of Human Sciences for Training of the University of Milano-Bicocca collaborate under
the scope of research and action methods mainly referring to education through art and art-based
research, functional methods both for training-related topics and those relating to guidance.
The initiatives developed within the Kids program are also particularly important, designed to
involve children aged between 4 and 12 years old, along with their families, in creative laboratories
aiming to ensure the discovery of the languages of contemporary art with activities organised in
person in connection with all the exhibitions hosted.
The programme is structured over three projects:
“Edu Summer 2024”, lasting approximately one month, included both free-access weekend
workshops and weekly in-person summer camps for primary and first-year secondary school
children. The project was carried out in collaboration with the artist Chiara Camoni, the group
of the Trial Centre, botanist Anna Roberti and artist, musician and performer Justin Randolph
Thompson.
“Winter is coming”, a series of free workshops devoted to children aged between 6 and 10
years old, conceived in collaboration with the illustrator and creative mind Anna Resmini and
actress and singer Viginia Zini, to explore and discover the works of the Jean Tinguely
exhibition through theatre experimentation and a multisensory activity for all visitors;
“Percorsi creativi”, activities and workshops offered throughout the year to children,
teenagers and their families, designed to explore the exhibitions through movement and play,
listening to emotions, trials with unusual techniques and materials and the exploration of the
exhibition space.
In addition, the production of Kids Guides for temporary exhibitions continued, integrating texts and
images with interactive and explorative activities for the whole family.
Mediation
The desire to convey the contents of contemporary art to a broad, diversified public is right at the
heart of the work of Pirelli HangarBicocca. The museum mediation is based on the constant
dialogue of staff present at the exhibition and visitors. The museum mediators have been trained to
foster an open, curious approach to the languages of art and to solicit the analysis of the topics
addressed by the artists and are on-hand to answer questions from the public, creating dialectic
relations. The museum mediators also lead guided tours, at pre-established times, of the exhibitions
and permanent installations.
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Accessibility
The work based on the inclusion of the public, an open-mind and the possibility of use with any
ability and diversity has also been extended.
A guide to the museum and Jean Tinguely exhibition has also been published, designed to be “easy
to read” for persons with intellectual disabilities. The initiative is part of the “Museo per tutti” project
conceived by the L’abilità onlus association, with the aim of encouraging social participation by
persons with intellectual disabilities and facilitating their access to the world of museums and culture.
The guide, which has been created with the contribution of the Regional Authority of Lombardy,
presents the Pirelli HangarBicocca museum and its access procedures, the concept of contemporary
art and the temporary exhibition dedicated to Jean Tinguely through brief texts accompanied by a
wealth of images, maps and pictographic symbols of the ARASAAC standard. The design, texts,
images and graphics of the accessible guide have been produced with reference to the “European
standards for making information easy to read and understand”, an Inclusion Europe project.
An audio-video guide in ISL (Italian Sign Language), which explains the permanent installation I
Sette Palazzi Celesti 2004-2015 by Anselm Kiefer and the ISL video guides discussing the exhibition
space and the work La Sequenza (1971-81) by Fausto Melotti, are also available on the official Pirelli
HangarBicocca website.
The contents of the audio/video guide, comprising a video in which Carlo di Biase, ISL art historian,
discusses the artist Anselm Kiefer and the elements making up the permanent installation, are in
ISL, accompanied by subtitles, audio tracks, music and supporting images, so as to make for a
pleasant experience for all visitors.
The ISL video guides on the space and work of Fausto Melotti, involving ISL art historian Nicola Della
Maggiora, were prepared in collaboration with the Istituto dei Sordi di Torino under the scope of the
No Barriere alla Comunicazione service offered by Milan City Council.
Cultural events
The events organised by the institution include:
The Public Programmes, a calendar of cultural events – meetings, conversations, guided
tours, workshops, projections, musical events and performances – that complete the artistic
proposal of Pirelli HangarBicocca, stressing the multidisciplinary and transversal nature of
contemporary art and expanding the reflection to include other contemporary disciplines and
languages. In 2024, the following Public Programmes were held:
o Public Programme James Lee Byars
11 January: a walk through the exhibition with Els Hoek, curator of teaching
at the Boijmans Van Beuningen Museum of Rotterdam;
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8-10 February: James Lee Byars: Performance works 1967-1994, a
programme that brought some of the most iconic performances conceived by
the artist back live to the stage.
o Public Programme Chiara Camoni
8 March: Chiara Camoni in conversation with Cecilia Canziani, independent
curator;
30 May: symposium Tracce Impermanenti. Riflessioni sull’effimero nell’arte e
nella quotidianità on the topic of the processes of creation and sharing;
20 June: sung performance of Ombra Solida by a group of members of the
public who have attended a preparatory workshop together with Soledad
Nicolazzi, author, actress, director and pedagogist of the theatre and Camilla
Barbarito, singer and performer.
o Public Programme Nari Ward
10 April: Nari Ward in conversation with Elvira Dyangani Ose, director of the
MACBA, Contemporary Art Museum of Barcelona;
27 June: The Apollo, projection of the documentary film by Roger Ross
Williams.
To mark the occasion of “Ground Break”, the artist Nari Ward has also invited
Justin Randolph Thompson, artist, performer and musician, to prepare a series of
performances, which interacted with the ground work “Ground Break” (2024).
During the exhibition, this was activated through sound, the reading of texts and
movements, with instruments inspired and in dialogue with the materials of the
sculptures and installations of Ward on display. For the performance cycle,
entitled Groundings, Thompson brought together artists and musicians to give rise
to rooting rituals, divided up into various performances and a sound environment.
o Public Programme Saodat Ismailova
7 November: Saodat Ismailova in conversation with Daniel Blanga Gubbay,
artistic
director
of
the
international
performing
arts
festival
Kunstenfestivaldesarts of Brussels;
12 December: a walk through the exhibition with Saodat Ismailova and Sheida
Ghomashchi, independent curator.
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o Public Programme Jean Tinguely
24 October: a walk through the exhibition with Camille Morineau, co-curator
of the exhibition and co-founder of AWARE: Archives of Women Artists,
Research and Exhibitions;
21 November: Tinguely e Milano, a meeting with Lucia Pesapane, co-curator
of the exhibition;
28 November: Jean Tinguely: Happenings, collaborazioni, opere effimere,
readings by Annalisa Rimmaudo, curator of the contemporary art collections
of the Centre Georges Pompidou.
The Special Projects, appointments or initiatives designed and organised by Pirelli
HangarBicocca involving artists and contexts other than those exhibited in the museum
spaces. These events aim to extend the cultural proposal, offering the public performance,
research and dissemination projects.
The following are mentioned in particular:
o Sul curvare il tempo, a conversation with ISL interpreters working simultaneously with
the artist, performer and author Chiara Bersani and director of GAMeC Lorenzo Giusti
on the work Deserters, which reflects the stereotypes linked to the intimate, identifying
sphere of persons with disabilities;
o The third edition of the festival linked to the Milano Re-Mapped project, pursued in
collaboration with the University of Milano-Bicocca with the support of the Cariplo
Foundation and the involvement of various cultural entities of the territory: DOPO?
and Milano Mediterranea, operating in the area of visual and performance arts and
music;
o To mark the Grand Prix, of which Pirelli is title sponsor, the development by artist
Andrea Sala (Como, 1976, lives and works in Milan) of the trophies, helping create a
tangible link between contemporary expressiveness and the constant trend for
innovation in Formula 1.
The Guest Projects, appointments or initiatives organised by national and international
entities and institutions at Pirelli HangarBicocca. These events open up to other disciplinary
areas, beyond that of contemporary art, enriching the institution’s cultural offer and
networking it with other subjects and communities. In 2024, Pirelli HangarBicocca hosted two
appointments of the 33rd edition of the Milano Musica Festival L’Ascolto Inquieto, and the
live performance of saxophonist and performer Bendik Giske, by Threes Productions.
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The activities of Pirelli Hangar Bicocca are managed through a Pirelli Group company that in 2024
incurred a total amount of operating expense of approximately 5 million euros.
Initiatives for Pirelli employees
In 2024, Pirelli HangarBicocca also expanded and fostered the involvement of Pirelli employees in
its activities with a view to “Workforce Training & Welfare”:
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In collaboration with Pirelli’s Learning division, in-person events were organised in April and
November for those enrolled in the Plunga training course, during which participants had the
opportunity to learn more about the relationship that binds Pirelli HangarBicocca to the
company and to visit the temporary exhibitions and the permanent installation by Anselm
Kiefer.
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During the year, trips were organised to the exhibition space dedicated to Pirelli dealers and
the company’s international divisions. During the Pirelli Party, held in the areas of Pirelli
HangarBicocca, all employees also had the opportunity to visit the exhibitions of Saodat
Ismailova and Jean Tinguely accompanied by the museum mediation.
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All the catalogues and books published by Pirelli HangarBicocca are in the library at Pirelli’s
Bicocca headquarters, available to employees.
Charity Events
In 2024, Pirelli HangarBicocca made available, free of charge, the spaces of the permanent
installation I Sette Palazzi Celesti 2004-2015 by Anselm Kiefer and the museum foyer for charities
organising charity fund-raising events.
On 15 May, the fund-raising dinner was held, organised by the Telethon Foundation, attended by
guests from the world of entertainment, industry and sport.
On 16 June, the annual Itaca project event was hosted, the organisation dealing with mental health.
The charity dinner, held in Pirelli HangarBicocca since 2018, was attended by guests from the world
of industry and entrepreneurship.
International commitments for the community
The attention of Pirelli to sustainability is also expressed through participation in numerous projects
and programmes promoted by international organisations and institutions in the area of Sustainability
and social responsibility.
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A number of the main commitments made by Pirelli worldwide are illustrated as follows.
Associations and sustainability membership
UN GLOBAL COMPACT
Pirelli has been an active member of the Global Compact since 2004 and endorses the “Blueprint
for Corporate Sustainability Leadership”, which offers leadership guidelines envisaged in the Global
Compact to inspire advanced and innovative sustainability performance in terms of management
capacity for the creation of sustainable value.
Since December 2019, Pirelli has been on the Board of the Global Compact Network Italia. Of
particular note in 2023, was the Chief Executive Officer’s signing of the Manifesto ‘Companies for
People and Society’. By signing the Manifesto, Pirelli pledged to strengthen the role of the Social
Dimension in its business strategies to generate long-term value also in the supply chain and in the
communities where it operates. The Manifesto was presented during “La Dimensione Sociale:
l’impegno delle imprese per People e Prosperity”, the eighth edition of the Business & SDGs High-
Level Meeting, the annual event promoted by UN Global Compact Network Italy and dedicated to
the Presidents and CEOs of the Italian companies adhering to the initiative.
This is the context of Pirelli’s participation in the ‘Sustainable Finance’ action platform. The
commitment over the years has taken the form of several publications, followed by the first 2018
“SDGs Bonds & Corporate Finance - A Roadmap to Mainstream Investments”, and the launch of the
“CFO Taskforce for the SDGs”, officially presented during the 2021 United Nations General
Assembly, which Pirelli joined as a Founding Member. The taskforce is a collaborative platform that
brings together leaders from different sectors and aims to develop innovative strategies for mobilising
finance towards sustainable development. In 2022, the “CFOs Coalition for the SDGs”, in which
Pirelli participates, was launched with the aim of further accelerating progress in aligning corporate
investments with the SDGs and linking corporate finance to relevant and credible targets.
The main initiatives organised by the network in which Pirelli took part are:
in 2022, Target Gender Equality, a 9-month international course during which the participating
companies investigate the importance of promoting gender equality, not only for society as a whole
but also to enrich companies;
in 2023, and continuing in 2024, the Round Table on Sustainable Procurement, a path designed to
build a space for thematic insights, exchange of experiences and peer learning on the topic of
sustainable supply chain management. Management of environmental, ethical-social, governance
and economic-financial impacts of supply chains and integration of sustainability strategies and
objectives, were the topics the companies discussed;
in 2024, the UN Global Compact Business and Human Rights Accelerator course, sponsored by
Pirelli, a 6-month program for companies of all sizes and segments, which provides participants with
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training and tools to effectively manage due diligence processes and allow companies to “know and
demonstrate” their risks and commitment - aware of the fundamental leverage and influence on all
its stakeholders and the communities in which they operate.
WBCSD – World Business Council For Sustainable Development
Pirelli for years has been a member of the WBCSD (World Business Council for Sustainable
Development). This is a Geneva-based association of multinational companies with a global
presence, voluntarily committed to link economic growth to sustainable development. In particular,
Pirelli endorses two projects: Tire Industry Project and Nature Action:
The Tire Industry Project (TIP), whose members account for more than 60% of global production
capacity of tyres, was founded in 2005 with the aim of meeting and anticipating the challenges related
to the potential impacts on health and the environment of tyres throughout their life cycle, through
assessments of raw materials, nanomaterials, Tyre-Road Wear Particles (TRWPs) and granules
obtained from end of life tyres.
The publication in May 2021 of the “Sustainability Driven – Accelerating Impact with the Tire Sector
SDG Roadmap”, which is a Sustainable Roadmap for the sector, which identified how the value
chain interacts with the UN Sustainable Development Goals (SDGs), also led to the highlighting of
the need to evolve the TIP by revising its mission and organisational and governance structure.
Indeed, the mission from 2023, in addition to reaffirming its founding objectives, aims to anticipate,
understand and address global Environmental, Social and Governance (SDG) issues relevant to the
industry and its value chain. The organisational structure was expanded with the creation of a new
“Action & Engagement” area, which complements the “Research” area, with which TIP aims to target
actions on key ESG issues and coordinate interaction with Tyre Trade Associations (TTAs)
associated to the TIP and with the stakeholders. Starting from 2022, within this area, activities have
already been launched on two topics considered key for the sector: “TRWP Impacts Mitigation”
(Action Strategy), which aims to map all possible TRWP impact mitigation actions and their potential
worldwide, and “UN Treaty on Plastics Pollution” (Engagement Strategy), which aims to participate
in the negotiations on the UN Intergovernmental Negotiating Committee (INC), preparing industry
position papers and identifying alternative circular economy solutions.
On the subject of raw materials, the sharing of knowledge and collaboration mainly with ETRMA and
USTMA on the 6PPD-Quinone, the transformation product of 6PPD, continued in 2024. Activities
have also been launched linked to the assessment of the opportunities to mitigate the TRWPs
released to the environment, including with two pilot projects involving the water segment, which will
continue in 2025.
On the topic of nanomaterials, the TIP initiated the development of a method to simulate and analyse
the potential release of nanomaterials during the use phase of tyres: the preliminary results on the
development of this method will be shared with the scientific community through the publication of
an article in a scientific magazine with a scientific editorial board (“peer-reviewed editorial board”)
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(Ref. Method development and analysis of nanoparticle size fractions from tire-wear emissions –
Environmental Science: Atmospheres (RSC Publishing) DOI:10.1039/D4EA00048J)
On the topic of TRWPs, in 2024, TIP continued its work on how to characterise TRWPs in support of
their identification and quantification in the environmental segments (air, water, soil), also including
TRWP ageing studies and studies on the chemical substances potentially released by the TRWP:
the results of these activities were then shared, as is tradition for TIP studies, with the scientific
community, both through various presentations at the international conference of the Society of
Environmental Toxicology and Chemistry (SETAC North America 45th Annual Meeting, 20-24
October 2024, Fort Worth TX), and through the publication of “peer-reviewed journals”. Finally, from
4 to 6 December 2024 in Munich (Germany), TIP has organised the ‘Tyre Emissions Research
Conference’140, which, supported by an international Scientific Committee, was the first international
scientific conference specifically focused on tyre emissions, with a focus on discussing the most
recent scientific research and promoting solutions for the mitigation of these emissions.
With reference to aggregate industry environmental reporting, TIP published the report
“Sustainability Driven: Key Performance Indicators for the Tire Sector, 2019-2023” in which TIP
members’ performance against KPIs related to environmental, social and governance (ESG) issues
is presented, while reporting TIP’s established key performance indicators such as energy
consumption, CO2 emissions, water use, waste generation and ISO 14001 certification. The KPIs
include the rate of adoption of responsible sourcing policies, the percentage of members with
scientifically validated targets, the percentage of water withdrawals from water-stressed areas, and
the percentage of female representation in the workforce and on Boards of Directors.
In 2024 too, the TIP dialogue continued with the Tire Trade Associations (TTAs) associated, which,
in addition to the participation of the founding TTAs ETRMA/USTMA/KOTMA/JATMA, has now also
been extended to the TTAs TRAC (Canada), BTMA (UK), ATMA (India) and ATIC (Australia). The
dialogue takes place within the ad-hoc Global Dialogue Forum platform, with the aim of sharing the
progress and results of TIP’s activities and supporting them in interacting with their stakeholders.
Furthermore, in 2024, Pirelli joined the Nature Action project, which aims to promote action by
companies to halt and reverse the loss of nature/biodiversity by 2030. The project supports
companies in setting scientifically validated targets to achieve a net positive impact on nature, with
a focus on restoring biodiversity and mitigating climate change. Within this project, the WBCSD
promotes the adoption of nature-based solutions (NbSs) and provides companies with roadmaps to
integrate nature-related considerations into their operations, helping them to manage nature-related
risks and seize sustainability-related opportunities. Through collaborative efforts, the project aims to
foster a healthier planet, benefiting both companies and society.
As part of Pirelli’s participation in the project, the WBCSD conducted a detailed assessment of the
company’s documents on nature and biodiversity issues (various policies, annual reports,
sustainability strategy, etc.) to analyse the company’s level of maturity in managing nature-related
issues and identify key steps for continuing on its “nature journey”. This assessment, based on
140 https://tireemissionsresearchconference.org/
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publicly available information such as the Pirelli 2023 Annual Report, provided an overview of Pirelli’s
performance against four main actions: Assess, Commit, Transform and Disclose. The results
showed that Pirelli achieved a Leading score in Assess, Commit and Disclose, with an Advancing
score in Transform, reflecting the company’s strong progress while as well as potential improvement
opportunities.
EU-OSHA – EUROPEAN OCCUPATIONAL SAFETY AND HEALTH AGENCY
In 2024, for the sixteenth consecutive year, Pirelli continued to be an official partner of the European
Occupational Safety and Health Agency (EU-OSHA), which addresses a different problem every two
years. In particular, in 2023 Pirelli adhered to the 2023-2025 campaign “Safe and Healthy work in
the digital age” which is dedicated to raising awareness of the impact of new digital technologies on
the workplace and the related occupational health and safety challenges and opportunities.
Campaigns in which the company has participated in recent years include the 2020-2022 Healthy
Workplaces Lighten the Load campaign aimed at raising awareness of ergonomic risks in the
workplace and the prevention of related musculoskeletal disorders, the 2018-2019 “Healthy
Workplaces Manage Dangerous Substances” campaign aimed at raising awareness of the risks
posed by hazardous substances in the workplace, the 2016-2017 “Healthy Workplaces for all Ages”
campaign dedicated to the importance of a sustainable working environment that ensures the health
and safety of employees throughout their lives, and the 2014-2015 “Healthy Workplaces Manage
Stress” campaign, focused on the issue of stress and psycho-social risks in the workplace, the main
aim of which was to encourage employers, managers and workers and their representatives to work
together to manage these risks.
CSR EUROPE
Since 2010 Pirelli has been a member of the Board of CSR Europe, the leading European network
of companies for sustainability and corporate responsibility. CSR Europe supports companies and
industries in their transformation and collaboration towards practical solutions and sustainable
growth. The goal is systemic change both to achieve the SDGs and to build with European leaders
and stakeholders a global strategy for a sustainable Europe 2030.
Since 2024 Pirelli serves as Chair of CSR Europe Board of Directors.
Among the activities carried out with the support of CSR Europe over the years, of particular interest
and relevance have been the Stakeholder Dialogues that the Company has held at the local Affiliate
level and at the international level at the Headquarters.
In this regard, reference should be made to the two multi-stakeholder consultations held by Pirelli at
its Headquarters for the definition of the Company’s Sustainable Natural Rubber Policy, the related
Implementation Manual and the Activity Roadmap, and the local Stakeholder consultations held in
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Romania, Mexico, Germany, Turkey, Russia, Argentina, the United Kingdom and the United States
for the discussion of issues relevant to the company’s sustainability strategy.
For more information on CSR Europe’s many areas of activity, see www.csreurope.org.
Institutional activities of the Pirelli Group
Through dialogue with institutions, industry associations, and regulatory advocacy, Pirelli represents
and supports policies to address major sustainability challenges, particularly those related to climate
change.
Institutional Commitments to the Community and Collaboration with Industry Associations
to Combat Climate Change
As a member of various industry associations, the Pirelli Group is also committed to contributing to
the development of policies, regulations and standards for the industry. It actively participates in
institutional and public discussions on key challenges facing the sector, including climate change
and decarbonisation.
In particular, the Institutional and Regulatory Affairs function focuses on raising the awareness of
institutional stakeholders, public opinion and international organisations with regard to:
the importance of key issues linked to the Pirelli Group’s product strategy, such as
sustainability, in all its facets along the entire value chain, for example the reduction of
emissions in production processes, as well as digitalisation and safety.
The Pirelli Group’s corporate positioning on sustainability, climate change, renewable
energy, circular economy, transport systems, safety and product innovation.
In 2024, to promote public debate and policy-making on the most relevant sustainability issues, such
as climate change, Pirelli organised and actively participated in institutional webinars, conferences,
working groups, roundtables and sectoral initiatives.
The fight against climate change at national and global level also includes playing an active role as
a member of various sector and multi-stakeholder associations, organisations, business networks
and thinktanks, as part of our commitment to decarbonising the Pirelli Group value chain, in
accordance with the objectives of the Paris Agreement.
Below are some examples of the main industry associations with which we have engaged during the
year and which share Pirelli’s position on climate change.
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ETRMA – European Tyre And Rubber Manufacturers Association
Pirelli is member of the ETRMA, which is the main partner of the EU institutions for the sustainable
development of new European policies for the sector, and for their proper implementation as well.
With the institutional support of the Pirelli Group, in 2024, ETRMA carried out intense advocacy,
consolidating dialogue with the Commission, Parliament and Council on the topics of more
environmentally-friendly, safer and more efficient mobility, as defined by the Green Deal. Specifically
on the contribution to CO2 reduction through improved rolling resistance of tyres, improved road
safety through new wet grip performance limits also for worn tyres, which also leads to a positive
impact on the Circular Economy. The sector is also very much involved, under the scope of UNECE
World Forum for Harmonisation of Vehicle Regulations (WP29), in developing a robust tyre abrasion
test method and in assessing the state-of-the-art to support the new EURO 7 regulation mitigating
particle emissions into the environment.
The association continued to raise awareness among the European Commission and European
Union Member Countries on the implementation of market surveillance for monitoring compliance
with regulations on the general safety of vehicles and tyres and on energy efficiency, as well as the
labelling of tyres in European Countries, a labelling system which was fully renewed in 2021; also
continuing was the strengthening of the partnership with the national associations of the sector of
which Pirelli is an active member.
In 2024, the intensive work of the Digital Mobility Group (DMG) continued to respond to the new
technological challenges affecting the mobility sector (e.g. digitalisation, connectivity, autonomous
driving, cyber security, implementation of the Data Act) and their impact on tyres and the
development of value-added services for the consumer in the Tyre-as-a-Service (TaaS) mode, which
requires a particular focus on the methods for managing and exchanging data between the various
players in the system; awareness-raising of MEPs and the European Commission continued, liaising
with Independent Service Providers (ISPs), on the need for the issue of the relevant legislation on
vehicle data access.
In addition, the DMG has recently been involved in the development of the Digital Product Passport
(DPP), an integral part of the Ecodesign for Sustainable Products Regulation (ESPR), as well as in
supporting ETRMA in connection with the Ecodesign Forum Implementing Act.
To monitor and respond to the European Commission’s supply chain and sustainable finance impact
legislation, the Taxonomy and Sustainable Supply Chain working groups are active with the support
of Pirelli. The latter assisted the European Commission in defining the proposed requirements on
deforestation, which have a strong impact on the production, marketing and use of natural rubber,
and the corresponding delegated acts.
The ETRMA association continues to work alongside the European Commission in defining policies
on the Circular Economy with an impact on the sector and continues successfully to promote
sustainable practices of producer responsibility for the management of tyres at the end of their life,
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thanks to which Europe maintains a recovery rate of over 90%141, through strong collaboration with
the various management consortia present in European countries. ETRMA’s (and European) best
practices in fact continue to be an international benchmark.
ETRMA plays a proactive role in the development of knowledge-based studies on environmental
issues, such as Tire and Road Wear Particles (TRWP), which are micrometric particles generated
by the combined wear of roads and tyres during vehicle operation. With regard to TRWPs, ETRMA
launched in 2018, with the support of CSR Europe, the “European TRWP Platform”, a multi-
stakeholder initiative that aims to share the State of Scientific Knowledge (e.g. “Scientific Report on
Tyre and Road Wear Particles, TRWP, in the aquatic environment”) and to involve the relevant
Sectors and Organisations in the definition of policy and of possible actions to mitigate the impacts
of TRWPs (e.g. “The Way Forward Report”). In this regard, ETRMA has completed a study with the
aim of mapping and assessing all the solutions available today, in collaboration with the US Tire
Manufacturers Association (USTMA), of which Pirelli is an active member. A micro-site142 was also
created to provide information on TRWPs to the general public, information ranging from root causes
of TRWP generation to the definition and implementation of mitigation actions, highlighting the multi-
stakeholder nature of the phenomenon. The Platform’s activities continued in 2024, with a meeting
on the challenges and opportunities in quantifying and mitigating TRWP. Within the established
framework for sharing topics related to the scientific and policy aspects of TRWP, the meeting aimed
to exchange best management practices and identify potential synergies. On this topic, ETRMA also
coordinates with the TIP (WBCSD) and its member trade associations to exchange technical and
policy information.
A dedicated paragraph on TRWP can also be found in the Environmental Information section of this
report, to which reference is made for further details.
ETRMA’s position on climate change
The European Tyre and Rubber Manufacturers Association (ETRMA) supports the ambitious new
European climate targets. ETRMA welcomes the EU’s commitment to allocate more than 30% of the
Next Generation EU to support green projects. This commitment is part of the EU’s ambitious goal
to become the first climate neutral continent by 2050. The European tyre industry is committed to
reducing its CO2 footprint throughout the tyre lifecycle and investing in innovation.
ETRMA has carried out intensive advocacy work, presenting to the European Commission the
industry’s contribution in pursuing the goals of the Green Deal, highlighting the industry’s role in
creating greener, safer and more efficient mobility. In particular, the contribution to the reduction of
CO2 emissions through the improvement of tyre rolling resistance, the improvement of road safety
141 Data reported for 2019
142 https://www.tyreandroadwear.com/.
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through new wet grip limits even for worn tyres, which also leads to a positive impact on the Circular
Economy.
ETRMA’s commitment to promoting a circular economy and sustainability within the tyre industry is
in line with the Ecodesign for Sustainable Products Regulation (ESPR) and related delegated acts,
currently being defined by the European Commission. To avoid any regulatory overlay, ETRMA asks
for clear, consistent definitions. In addition, in 2024, ETRMA supported the procedure and related
implementation of the decision made in the European Deforestation Regulation (EUDR), which lays
down due diligence obligations for all operators releasing to the EU market, or exporting, a series of
raw materials associated with deforestation and forest deterioration, including rubber and certain
derivatives, including tyres.
The industry is also strongly committed to the development of a robust tyre abrasion test
methodology to support the European Commission’s targets, defined in the new EURO 7 regulation,
to mitigate the emission of particulate matter into the environment.
USTMA – Us Tire Manufacturers Association
USTMA is the association of tire manufacturers with manufacturing facilities located in the United
States. The main USTMA committees deal with regulatory policies for tire safety and on the
environmental impacts of tires in the United States. USTMA also coordinates with ETRMA and TIP
(WBCSD) to exchange useful information.
The Association maintains a proactive role in monitoring studies on environmental issues, e.g. Tire
and Road Wear Particles (TRWP), and has continued to make cryo-milled tire tread (CMTT) samples
available to researchers. USTMA has an open dialogue approach, particularly with the states of
California and Washington, regarding planned investigations into the chemical 6PPD, which is widely
used to protect car tyres from ozone, and the impacts of the transformation chemical substance
6PPD-quinone, for which it has launched a coalition, of which Pirelli is a member, to jointly participate
in the process of analysis by the authorities of possible alternative chemical substances to 6PPD in
compliance with California state legislation. In collaboration with the U.S. Geological Survey (USGS),
the USTMA is working on a research project to analyse and refine evaluation methods for potential
alternatives to 6PPD for use in tyres.
USTMA was active in 2024 with a strategy for end-of-life tire management. Every two years, the
Association publishes ELT market data, then proposes solutions for the tyre circular economy and
convenes stakeholders on the matter. USTMA has also launched, together with the Tire Industry
Association, which brings together and represents tyre sellers, the Tire Recycling Foundation. This
foundation’s mission is to advance the circular economy of tyres at the end of their life, supporting
new markets, through research, education, the allocation of funds and pilot projects. In this context,
USTMA has sponsored a study on tarmac with the addition of ELT materials, and another on Tyre
Derived Aggregate, a material used in civil engineering projects.
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The association is also active on issues related to infrastructure and connected and autonomous
vehicles.
USTMA does not have a Political Action Committee (PAC) and does not fund political candidates.
USTMA’s position on climate change
Pirelli participates in the USTMA board of directors, committees and working groups, sharing the
association’s vision for a sustainable tyre future in the context of the Paris Agreement’s goal of
reducing CO2 emissions. The Association supports policies for the development of low-carbon
products, such as fuel-efficient tyres and tyres containing sensors or other performance monitoring
and communication technologies, as well as policies that promote the development of materials with
a lower carbon footprint than virgin raw materials, and research aimed at better understanding and
improving the environmental impact of tyres. The USTMA supports the flexibility of alternative fuels,
such as tyre-derived fuel (TDF), and pyrolysis, which is key to building a circular economy for tyres.
The Association supports investment in research to develop sustainable infrastructure such as
asphalt with the addition of materials obtained from tyres at the end of their useful life, to better
understand the long-term benefits, performance and environmental impacts. The USTMA supports
the development of electric vehicles and the infrastructure that supports them. USTMA’s committees
and technical working groups are composed of experts from member companies, including Pirelli,
who work directly on issues related to tyre efficiency and decarbonisation, safety, materials and
chemicals.
Other associations MEMA – Motor & Equipment Manufacturers Association
MEMA is the voice of the automotive and commercial vehicle supplier industry in the United States
of America. It represents the largest manufacturing sector in the United States. Across the spectrum
of innovative new vehicles, from autonomous technologies to zero emissions, vehicle suppliers are
leading the way. MEMA member companies conceive, design and manufacture the original
equipment systems and technologies that make up two-thirds of a new vehicle’s value. Member
companies also supply the global replacement service market with the technologies that keep
millions of vehicles on the road, driving sustainability and supporting transportation.
During 2024, MEMA analysed issues of free trade and tariffs, research tax credits proposals,
environmental regulation proposals and green incentive proposals, proposals to strengthen key
supply chains for the car industry, and many other topics. Priorities for the association include policies
governing vehicle safety, policies on zero emissions and electrification, sustainability, international
trade flows, tax policies, supply chain resilience, and workforce and training.
MEMA has a privately funded Political Action Committee (PAC), with no contribution from Pirelli.
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Pirelli is also a member of the Automotive Industry Action Group (AIAG), a U.S. association with no
lobbying activities, where Pirelli is active in the Corporate Responsibility Steering Committee.
Other positions on climate change: Assolombarda
Pirelli joins Assolombarda in espousing its initiatives on combating climate change and its vision for
a sustainable future. Pirelli, in fact, sits on both the President’s Council and the Advisory Board of
Assolombarda, contributing substantially to defining new strategies for the decarbonisation of the
main national industrial realities. Climate change, in fact, is a global challenge that requires collective
action and a multilateral approach. For this reason, Assolombarda has set up technical working
groups, composed of experts from member companies directly involved in sustainability, climate
change, safety, materials, chemicals and trade. Furthermore, through six focus groups with the top
management of large manufacturing companies in Lombardy, the strategies of the most advanced
companies were examined in detail in order to identify more clearly the special characteristics and
possible developments of the ecological transition in the manufacturing sector. It emerged from the
survey that the intensity of energy consumption and its incidence on the corporate cost structure
certainly represent an impacting variable on the strategies for making production processes more
efficient and on investment choices aimed at environmental sustainability. In fact, for particularly
energy-hungry companies, energy supply management and energy saving can be not only a lever
to decrease production costs, but also the most effective way to promote greater environmental
sustainability.
Metrics - Community Contributions
Referring to the contributions made to the External Community, Pirelli has for many years adopted
internal procedures defining the roles and responsibilities of the involved functions and the
operational process of planning, achieving, monitoring and control of results of the initiatives
supported. Pirelli procedure specifies that it may not promote initiatives for the benefit of beneficiaries
in respect of whom there is direct or indirect evidence of failure to abide by human rights, workers’
rights, environmental rights or business ethics.
In 2024, the ratio of expenses for corporate initiatives in favour of the external community to the
Group’s net result is 0.8% (0.9% in 2023).
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The table below shows the expenses incurred in 2024:
CONTRIBUTIONS FOR THE BENEFIT OF THE EXTERNAL COMMUNITY (In thousands of €)
2024
Training and research
1,457
Social-cultural initiatives
2,050
Sports and solidarity
574
Total contributions for the benefit of the external community
4,081
For more information about the main initiatives supported with the above disbursements and the
related governance model, refer to the actions described in the previous paragraphs.
In 2024, the Pirelli Group’s costs for annual membership of trade associations, advocacy activities,
etc. amount to approximately 1,677 thousands euros globally.
Next is the expenditure for trade associations, which are part of the lobbying activities and also
interact with policy makers.
MEMBERSHIP, COLLABORATIONS AND OTHER EXPENSES (IN THOUSANDS OF EUR)
2024
Trade associations143
1,677
Lobbying, representation of interests144
27
Political parties (campaigns/candidates)
0
Total
1,704
In line with what is specified in the paragraph on “Policies”, Pirelli does not disburse contributions to
political parties and therefore makes no contributions in these areas (zero).
The most important association costs were paid to USMTMA for 336 thousand euros and to
Assolombarda for 313 thousand euros, and to Unione Industriale for 300 thousand euros.
143 Membership in trade associations includes, on a voluntary basis, companies operating in the same sector or region to strengthen
advocacy activities and to promote or defend key interests with institutions and key players; for this reason, several trade associations
participate in public affairs activities such as lobbying, in accordance with legislation and the local context.
144 Operating expenses to third parties exclusively engaged in lobbying.
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TRADE ASSOCIATIONS (in thousands of €)
2024
USTMA - U.S. Tire Manufacturers Association (United States)
336
Assolombarda (Italy)
313
Unione Industriale (Italy)
300
ANIP - National Association of Tire Manufacturers (Brazil)
68
Assogomma (Italy)
119
ETRMA – European Tyre and Rubber Manufacturers Association (Italy)
139
wdk - Wirtschaftsverband der deutschen Kautschukindustrie e.V. (Germany)
75
Assonime (Italy)
100
CIN - Camara de la Industria del Neumatico (Argentina)
42
Other145
185
Total Trade associations
1,677
At the level of Associations in the United States, namely United States Tire Manufacturers
Association (USTMA) and MEMA, the Vehicle Suppliers Association, the share dedicated exclusively
to lobbying activities in 2024 amounts to 44 thousand dollars and 3 thousand dollars, respectively.
For the other Trade Associations mentioned it is not possible to indicate the share they dedicated
exclusively to lobbying activities, Pirelli pays an all-inclusive membership fee.
For more details on the lobbying activities of the two trade associations in the United States and of
which Pirelli is a member, USTMA and MEMA, please refer to the paragraphs “USTMA” and “MEMA”
of this Report.
For more details on lobbying activities with European institutions, please refer to the paragraph
“ETRMA – European Tyre and Rubber Manufacturers Association” of this Report.
145 Includes the membership fee for the Motor and Equipment Manufacturers Association (MEMA)
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S4 Consumers and end users
Interests and views of stakeholders
Customer focus
Customer focus is a central element of the Group “Values” and “Ethical Code” and the “Quality”
Policy and “Product Stewardship” Policy of Pirelli. These documents outline the company positioning
and are therefore communicated to all employees in the local language and are available in many
languages on the Pirelli website.
Among the essential elements of the Pirelli approach, the following are highlighted:
consideration of the impact of its actions and behaviour on the customer;
exploitation of every opportunity offered by doing business to satisfy the customer’s needs;
anticipation of customer needs;
safety, reliability, high performance of products and services offered, in accordance with local
regulations and more developed national and international standards applicable, as well as
excellence of production systems and processes;
information to customers and end users to guarantee an adequate understanding of the
environmental impacts and safety features of Pirelli products, as well as of the safest ways of
using the product.
Pirelli’s end consumers are identified as the users of fleet or private vehicles, specifically: owners of
cars, motorcycles and bicycles.
All end consumers (i.e. those using or consuming the product) who may suffer the significant impacts
resulting from the Double Materiality analysis are included in the disclosure in accordance with
ESRS-2.
Pirelli closely monitors the potential negative impacts linked to the use of its products by end
consumers, with a particular focus on matters such as environmental pollution and product safety.
The Group’s main activities in this respect are described in the section “Environmental information”,
“Circular economy” as well as in this section in the paragraph “Product safety, performance and
sustainability”.
Road safety impacts can be linked to individual incidents, for example to a specific flaw of a certain
product or to the use of inadequately maintained tyres, which can increase the risk of incident.
To mitigate these impacts, Pirelli promotes significant investments in research and development of
materials, compounds, structures, and tread patterns, as part of its Eco-Safety Strategy. These
improvements allow the Pirelli product to achieve extremely high performance in terms of dry and
wet braking.
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In addition, Pirelli adopts a rigorous quality management system, supported by numerous
certifications and tests, including ISO 9001, IATF 16949, and ISO/IEC 17025, for which reference is
made to the paragraph “Product safety, performance and sustainability”, which guarantee the
compliance of the processes with the highest international standards and make sure that the
products comply with the safety standards and performance required. These certifications, which are
constantly monitored and renewed, reflect the company’s commitment to the quality and safety of its
products.
In line with its customer approach, Pirelli develops a series of initiatives aimed at improving the
customer experience, including:
use of digital tools to provide the customer with information (e-mail);
product training.
Moreover, starting in 2016, and in line with Pirelli’s “Prestige” strategy, a new retail concept called P
Zero WORLD™ was created, with the aim of offering top-class services aimed at satisfying the most
demanding consumers. P Zero WORLD™ offers its customers the full range of Pirelli products (Car,
P Zero™ Trofeo® and Trofeo RS, Pirelli Collection, Moto and Cycling) and a series of customer-
oriented services such as car valet and courtesy car, all immersed in an environment that allows to
fully experience Pirelli World, being able to touch the most important assets such as F1®, the
Calendar and the continuous partnerships of Pirelli Design. In 2024, the P Zero WORLD™ network
reached around a hundred stores selected in the highest potential Premium & Prestige areas in the
main countries worldwide. Of these, four are already active Flagship Stores (Munich, Monte Carlo,
Dubai and Melbourne), while the remainder are authorised dealers, with more than 30 new openings
planned for 2025.
Further details of the specific actions implemented by Pirelli to create positive impacts on its
customers are provided in the dedicated sections of the following paragraphs.
Consumer and end user engagement processes in respect of impacts
Listening and exchanging ideas with the customer as a source of continuous improvement
Consumer relationships are managed by Pirelli principally through two channels:
the local sales organisation, which has direct contact with the customer network and which,
thanks to advanced information management systems, is able to process and respond to all
information requirements of the interlocutor on-site;
the Pirelli Contact Centres, more than 20 worldwide with over a hundred employees, performing
information support and order management (inbound), telemarketing and teleselling (outbound).
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Also in 2024 direct customer listening activities were carried out both through the Brand Tracking
survey in Pirelli’s Top Market (Italy, Germany, China and United States) and through surveys to
consumers with whom Pirelli has a direct and constant dialogue thanks to structured CRM activities.
The ongoing changes made to the Brand Tracking study over the years have made it possible to
refine and improve the precision of business insights into the brand role, image profile and factors
that influence the end customer’s purchase decision. Brand Tracking, handled under the scope of
the Marketing team’s activities, ensures the continuous monitoring of brand performance indicators
through weekly surveys conducted throughout the year. Data can be analysed on demand once a
month or on a cumulative basis of multiple months. Once a year, reports will be prepared offering a
detailed analysis of the performance of the main tyre brands by country.
This monitoring helps Pirelli understand the consumer’s point of view with respect to potential market
trends and monitor the perception of the brand with respect to the competition. In terms of
performance indicators, Pirelli considers Brand Awareness and Brand Consideration as effective
indicators of consumer engagement with tyre brands. Brand Awareness indicates to what extent tyre
brands are spontaneously recalled and, therefore, their relevance in the consumer’s mind. Brand
Consideration, on the other hand, indicates to what extent brands with which the consumer is familiar
are considered for an upcoming purchase.
With reference to the Target Premium 18” Up represented by owners of cars that can fit tyres of 18”
and over, the analysis carried out in 2024 saw Pirelli positioned among the main tyre brands: in first
place for Brand Awareness and in second place for Brand Consideration in Italy, in second place for
Brand Awareness and in third place for Brand Consideration in Germany. Outside Europe, Pirelli
ranks fifth for Brand Awareness and Brand Consideration in the USA, while in China it ranks fourth
for Brand Consideration, fifth for Brand Awareness.
To listen to the consumer, their opinions and mindset, websites and social networks are equally
essential, on which the Company boasts a structured, capillary presence. The analysis of trends
recorded on the company’s social profiles makes it possible to monitor variations of the reference
market, both in personal terms (age, gender, etc.) and geopolitically, for each product category
offered (car, motorcycle and cycling).
In 2024, the overall fanbase of Pirelli’s social media channels increased in followers compared to
the previous year. Considering all Pirelli profiles, Facebook is confirmed as the most relevant
channel, having recorded the same increase in Instagram users during the year, three times lower
than that seen on LinkedIn, whose growth was significant. The Instagram Threads channel also
continues to grow, followed by TikTok, which records slower growth. Pirelli’s followers on YouTube
remain essentially stable compared with last year, while the only fanbase that has reduced is that of
X.
As regards motorcycles, both the Pirelli brand and Metzeler have been active for years now on
Facebook and Instagram channels.
Immediately active in Instagram, Pirelli Cycling bases its communication on digital activation in line
with the propensities of its target consumer.
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As regards the website www.pirelli.com, Pirelli’s digital magazine, of the articles published in 2024,
the vast majority discuss product and motorsport topics, while the remainder relate to brand and
company dimensions – gathering over 5 millions of one-time users. The publication of editorial
content supports the telling of the story of the different dimensions of the company: from people to
sustainability, from technology to innovation, from products (cars, motorbikes, cycling) to activities in
motorsport and competition, from sponsorships to the Pirelli Calendar.
In addition to the group website, consumers can contact or gather specific information for the
motorcycle and cycling world, on dedicated websites. As regards the motorcycle world, moreover, in
addition to the website, for the business, the mobile application DIABLOTM Super Biker is particularly
important, having now been further renewed and improved in its graphics, usability and functions
offered to motorcyclists, along with the CRM (Customer Relationship Management) project, which is
seen as a priority considering the passion for Pirelli products demonstrated by the community of
registered bikers.
Channels allowing consumers to express concerns
Pirelli adopts a structured, transparent approach to identify, manage and mitigate any significant
negative impacts caused by its products on consumers and end users, in line with its commitment
to product safety and environmental sustainability.
In the event of negative impacts linked to product characteristics, Pirelli will take action to promptly
respond to and assess the effectiveness of remedies through a rigorous complaints analysis
process, data monitoring and continuous improvement of its procedures and its products.
Pirelli has adopted a clear procedure to provide feedback to any end consumer complaint, which
involves immediate intervention to solve the problem reported.
Consumers can access a series of channels to raise concerns, including the whistleblowing channel,
for which reference is made to the section, “Information on Governance”, paragraph “Whistleblowing
Policy”, which, as envisaged by the Policy, is open to all Group stakeholders.
The complaint channels available to end consumers also include B2B platforms and contact centres
accessible through the retailers from which they purchased the products. Through the B2B platform,
retailers can send complaints to SAP directly, where all market complaints are recorded, launching
automated operating complaint management flows, which significantly reduce handling time.
Once the complaint has been received, the contact centre organises collection of the tyre to send it
to the dedicated complaints centre, where a specialised technician will analyse the tyre. The process
concludes with the approval or rejection of the complaint, recorded in the system. If the complaint
should be found to be true, the consumer is then compensated.
All data relating to complaints is available on Qlik for analysis at a market, manufacturer or specific
site level. Each month, Pirelli monitors the number of complaints accepted from the start of the year.
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Around 25% of complaints are managed through the B2B platform, guaranteeing greater efficiency
in the support and management of the impact involving the consumer.
Transparency and customer information
Following the Double Materiality analysis performed by Pirelli, the following have been identified as
material impacts:
•
channels dedicated to listening to customers
•
availability of adequate information on Pirelli Products for customers
These aspects are at the heart of Pirelli’s commitment to guarantee transparency and build relations
of trust with its customers.
Transparency and customer information run on multiple specific channels, adapted to the type of
customer, which may be original equipment, distributor or end customer.
In the context of advertising communication, Pirelli has defined a traceable and transparent process
for decisions relating to advertising campaigns and related media planning, both in the case of
promotional activities managed centrally and locally with central supervision.
In terms of production of advertising campaigns and media planning, Pirelli uses specific auditing
and certification structures that place the Company at the highest levels in terms of transparency
and traceability in its investment strategies.
The Pirelli Group endorses the IAB (Interactive Advertising Bureau) and is associated with the UPA
(Associated Advertising Users), among other things dedicating ongoing commitment to support the
Advertising Code of Corporate Governance of the association. Through the UPA, Pirelli is a member
of the WFA (World Federation of Advertisers), which commits participating firms to pursue honest,
truthful and fair competition and communication in compliance with the code of conduct and self-
regulation which they adopt. Consumer protection is also guaranteed by the choice of suppliers in
the communication sector (creative agencies, media centres, production companies) that in turn
belong to business and professional associations governed by ethical codes regarding
communication.
Pirelli provides information to customer-distributors and end customers on a continual basis. This
information concerns both the product and related initiatives, and is disseminated in a variety of
ways, including digital channels, and this is complemented by information distributed in hard copy
format, as well as the range of offline and online training activities.
With 50 Car websites (in 23 languages), 39 Moto websites (19 Pirelli websites in 12 languages and
20 Metzeler websites in 11 languages), and 6 Cycling websites (in 5 languages), the online presence
represents a fundamental touchpoint for Pirelli in the tyre purchasing process. These product
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websites, localised not only in terms of language, but also for content, offer and promotional
activities, aim to inform consumers about product characteristics and applied technologies, and
direct them, in all countries where Pirelli markets its products, to points of sale where they can
purchase tyres or to purchase them online on partner e-commerce platforms.
The Retail sites, present in numerous countries, offer an additional digital touchpoint, which takes
the consumer to the threshold of the sales point.
Particularly relevant in terms of engagement and training on sustainability issues is the Convention
dedicated to European Dealers in the various reference markets. To name just a few: in February, in
Barcelona, involving Driver Italia, in June in Sweden for the Dackia network and in Cologne for
German drivers and in September in the Camargue for French dealers. The plenary sessions offer
an overview of Pirelli’s sustainability strategy, while a series of vertical workshops were devoted to
the new P Zero E, product eco-safety-design, sustainable materials, Pirelli Elect technology for the
electric market, and certifications.
2024 was a year filled with static and dynamic launches of new cars in the Prestige segment, which
chose Pirelli as their original equipment tyre.
The year started with a new collaboration with Porsche for the launch of the new Taycan Turbo GT,
which led to the production of multiple communication contents, including a historic article devoted
to the collaboration with Pirelli on this vehicle, published by Porsche in their Newsroom.
This was followed by the new Lamborghini Urus SE, the first hybrid SUV to be produced by the
company from Sant’Agata Bolognese, which has chosen Pirelli as its technical partner for the whole
of the Urus range, and the new Lotus electric hypercar, the Emeya, unveiled to the media during a
global test drive in Germany with Pirelli P Zero R on the highest performing version, the “R” model.
The release of the new Pagani Utopia Roadster, equipped with Pirelli’s new Cyber Tyre Technology
developed in collaboration with Bosch closed the year, along with the new Aston Martin Vanquish on
P Zero and the new McLaren supersports model, the W1, which fits Pirelli’s Trofeo RS as standard.
In terms of events, the highlight of the year was once again the Goodwood Festival of Speed, of
which Pirelli was the Official Tyre Partner for the second year running, and the P Zero Experience,
which this year saw Pirelli’s track driving platform reach the historic milestone of a first appointment
in China, at the Shanghai International Circuit, in collaboration with McLaren.
Policies
The importance of the transparency and adequacy of the information supplied to customers is
stressed not only by the Pirelli Group Code, the Global Quality Policy and the Product Stewardship
Policy, the contents of which include, amongst the various aspects regulated, Pirelli’s commitment
to fostering positive impacts in terms of making available to customers both dedicated channels for
listening and suitable information on Pirelli products.
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Customer guidance is first and foremost a key element of the Pirelli Group Code of Ethics, which
recalls Pirelli’s commitment to base the excellence of the products and services offered on constant
innovation, with the aim of anticipating the needs of its customers and meeting their requirements
with an immediate and competent response, operating with integrity, courtesy and maximum
collaboration.
The Product Stewardship Policy confirms Pirelli’s commitment to promoting continuous, open, loyal
dialogue with all its stakeholders, including customers and end consumers, aimed at constructing
sustainable relations that ensure reciprocal benefits and the sharing of common responsibilities, as
well as to communicating information to stakeholders about its products and the approach taken to
the management of their life cycle.
More specifically, Pirelli undertakes to support customers and end consumers to guarantee that they
understand the environmental impacts and safety characteristics of the products and inform them as
to how to make safe use of such.
In addition, the Global Quality Policy stresses how quality, an essential value for Pirelli, is also
pursued by the Group through: i) promotion towards the internal and external communities (including
customers and end consumers) of its quality-orientated business culture, inclusivity and ethics,
disseminated through a constant, focussed activity of dialogue, communication, motivation and
training; ii) the timeliness of response and collaboration with customers, with a view to creating
shared value.
Targets
Although Pirelli has no specific targets in relation to the topic of Transparency, Information and
Customer training, the Group constantly monitors the effectiveness of its policies and actions through
the collection of feedback from customers through dedicated investigations, and undertakes to
maintain continuous monitoring of the end consumer’s perception of the Pirelli brand through Brand
Tracking.
In addition, Pirelli’s performance on the social networks is a tool to verify the degree of consumer
engagement with respect to the Pirelli brand, flanked by the implementation of CRM systems to track
consumer preferences and improve the purchasing experience.
These activities aim to ensure the continuous improvement of presence on digital and social
channels, with the aim of providing transparent, up-to-date, high quality information about Pirelli
products and technologies, increasing customer engagement through targeted communication
campaigns.
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Actions
Direct E-mail Marketing (DEM)
Pirelli’s Direct E-mail Marketing (DEM) programme is developed to strengthen the relationship with
its customers through a direct, immediate and easily-accessible communication channel, in line with
the objectives of the Code of Ethics and the Product Stewardship Policy.
This tool has been designed to:
-
inform retailers about the main new features of the product and corporate updates.
-
provide details on training opportunities, as well as courses to become Pirelli Product
Experts, contributing to the professional growth of partners.
-
guarantee continuous, customised contact, strengthening the connection between the
Company and its interlocutors (retailers and/or consumers).
Following the 2020 intervention for the digitisation of Pirelli’s Digital E-mail Marketing (DEM)
programme, in 2024 it involved 20 markets (+3% vs 2023), recording a positive impact on the results
generated by engagement actions and conversion of the CRM customer base. No further extensions
are envisaged in the short-term, but the activity will continue over the next few years.
The programme is managed in complete respect of the rights of consumers and other interlocutors
involved, in compliance with data processing and privacy regulations, offering a customised, but non-
invasive experience. Pirelli undertakes to guarantee a constant balance of marketing effectiveness
and respect for consumers, promoting a relationship based on trust and transparency.
Measurement of the effectiveness of Digital E-mail Marketing (DEM) initiatives is based on a
combination of quantitative (opening rates, clicks, conversion, unsubscriptions, etc.) and qualitative
(consumer feedback, NPS) metrics.
On-line customer training
In line with the provisions of the Group’s Product Stewardship Policy, according to which Pirelli
undertakes to support customers and end consumers to guarantee that they understand the
environmental impacts and safety characteristics of its products.
In 2024, the Company decided to further strengthen the tools for training and informing customers
and consumers, thanks to the development of a technological platform designed specifically to host
the Tyre campus, a virtual on-line training tool on the Pirelli product, technology, sustainability and
tyre sales.
This initiative was launched in consideration of the feedback collected from the market on the tools
previously available and aims to guarantee a greater understanding of the product by retailers,
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particularly in respect of the innovative performance and sustainability of the new products, and that
these messages reach the end consumers, thanks to the ease of use and presence of materials
prepared with the help of all the competent departments, such as Research&Development and
Marketing.
Thanks to the automatic preparation of reports and insights, the new platform also facilitates the
monitoring of the effectiveness of such tools and internal sharing for potential revisions of training
and information strategies.
During the first year of the platform’s launch, the US and UK markets were active but the platform is
already prepared to best serve 42 different markets, as it has been translated into 17 languages and
by end 2026, it is expected to be activated for all reference markets.
Accessible directly from Pirelli’s B2B portal, the 3rd generation Tyre Campus will thus enable the
more than 31,000 users worldwide to complete product information courses, offering the local market
considerable management autonomy, such as, for example, the preparation and making available
to the end consumer of exclusively local relevant documents. In addition, the focus is on gamification,
which enables the trainee to compare notes with national and international colleagues, thereby
stimulating platform engagement. Upon completing each themed training course, the participant
receives a badge and certificate of attendance, available for download, which will automatically be
shared on their personal social networks, thereby promoting the Tyre Campus.
Product safety, performance and sustainability
Following the Double Relevance analysis, Pirelli has identified material opportunities and impacts
linked to product safety and innovation, including
•
incidents deriving from product characteristics or flaws (focus on wet grip)
•
increase in market share thanks to ever safer products, such as smart and connected tyres that
transmit information useful to safe mobility in real time.
In line with these results, Pirelli’s Eco&Safety strategy places safety for people and technological
solutions in support of the environment among the essential values of the Company’s product
offering and commitment. In 2024, the Company confirmed its continued focus on the development
and marketing of tyres and technologies that aim to increase safety and enhance the potential of
cars in tandem with attention to the environment.
With reference to the opportunity to increase market share thanks to ever safer products, such as
smart, connected tyres that transmit information useful to safe mobility in real time, this can become
particularly important for specific groups of end users and consumers. More specifically, such
innovations may have a significant impact on categories like more demanding drivers seeking
advanced technology to improve safety and performance or company fleets requiring proactive
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monitoring solutions. Innovation in this area responds to the growing expectations of those privileging
high added value products, combining safety, efficiency and connectivity.
In 2023, Pirelli introduced the P Zero E to the market, the new tyre that integrates the latest
technological innovations developed by Pirelli, put at the service of the new electrified and
sustainable mobility. Characterising the new product are several elements:
Manufactured with more than 55% natural and recycled materials, over the whole launch
range, as validated by Bureau Veritas, world leader in services verifying compliance and
certification for quality, the environment, health, safety and social responsibility.
Pirelli P Zero E achieved the highest class (A) in all parameters of the European label for all
available sizes (energy efficiency-rolling resistance, safety – wet braking and acoustic
impact-external noise). Starting with rolling resistance, thanks to specific compounds (Rolling
Reduction Compounds) that favour greater autonomy of battery-powered vehicles, prolong
tyre life thanks to reduced wear and play a fundamental role in controlling the car in various
driving situations and in particular wet braking. As of 2023, Pirelli P Zero E was the first UHP
product with this label category.
The entire P Zero E range is marked Elect, which identifies the package of technologies
developed by Pirelli to enhance the characteristics of electric cars.
The new Pirelli RunForward technology, making its debut on the P Zero E, is designed to keep control
of the car in the event of a puncture and allow you to continue driving. This system is made up of
reinforcing bezels on the tyre’s sidewalls, which provide support for the tyre and allow it to travel up
to 40 km at a maximum speed of 80 km/h even at zero pressure. The advantages of tyres equipped
with Pirelli RunForward are many, including: a level of driving and acoustic comfort comparable to
that of a traditional tyre, while maintaining low rolling resistance and the convenience of not requiring
special rims to benefit from this technology, designed especially for BEV cars.
Pirelli also continues to invest in highly-sustainable products. In 2024, it introduced the new P Zero
Winter 2, manufactured with more than 50% natural origin and recycled materials on select sizes of
the ELECT™ range for electric and plug-in vehicles. The P Zero Winter 2 is Pirelli’s latest proposal
and boasts the highest classification of the European label (“class A”) in adherence in the wet and
excellent braking on snow, on all sizes. To find the best technical solutions when developing the P
Zero Winter 2, Pirelli’s R&D team employed virtual design until obtaining a product that was entirely
different from its predecessor, which had already achieved excellent results in the various conditions
of use. One of the first car manufacturers to have chosen this new product is BMW, which has
approved the P Zero Winter 2 for its winter fittings for the M5 and i7. The version designed for this
latter model is the first “class A” rolling resistance winter model. The P Zero Winter 2 has also played
a key role in collaborations with other prestigious car manufacturers, such as Ferrari with the
Daytona SP3. In 2024, Pirelli also launched the new P Zero MS, a high-performance all-season tyre
designed for Premium and Prestige car manufacturers requiring original equipment for their vehicles
that is effective all year round. The new product comes within the offer of Pirelli’s UHP all-season
tyres, flanking the Scorpion MS launched last year, in turn dedicated to latest generation SUVs.
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The European market is now offered the new Cinturato All Season SF3, a safe, comfortable tyre for
all year round, designed for drivers above all in and around the city, but who also want complete
peace of mind when encountering snow. Pirelli’s new all season has been recognised by the
certification body Dekra as the best tyre of its category for cumulative braking in the dry, on snow
and in the wet and for having obtained the Performance Mark of TÜV SÜD for having shown excellent
performance in the various driving situations. It is above all when it comes to control in the wet that
the new Cinturato really comes into its own: all the sizes in the range boast the highest classification
on the European label (“class A”) in wet grip.
In 2024, Pirelli’s range was also enhanced by the new Powergy Winter and Powergy All Season SF,
which flank the summer version already available on the market, thereby completing the Powergy
range, designed for drivers looking for an accessible solution for tyre changes, without renouncing
safety, efficiency and comfort. The Powergy™ All Season SF offers a versatile solution for all
seasons. Designed for urban drivers, this tyre offers constant safety and comfort from the summer
heat and winter cold, reinforcing Pirelli’s commitment to the highest standards. For winter conditions,
the Powergy™ Winter tyre is the best choice. Perfect for both trips away in the mountains and
everyday commutes, this tyre has been designed to cope with the challenges of winter roads,
guaranteeing superior comfort and safety, supported by the famous Pirelli quality.
In terms of results in tests conducted by the European press, several satisfying milestones were
achieved in 2024 (22 podiums and 10 victories in total).
More specifically, of all the All Season tyres, the Cinturato All Season SF3 has obtained a total of six
podiums (of which five victories) in magazines/on websites such as Auto Bild, Tyre Reviews and Al
Volante.
Of the Winter tyres, the UHP P Zero Winter 2 took first place in the test run by the website Tyre
Reviews.
In the HP segment, the Cinturato Winter 2 and the Scorpion Winter 2 each obtained a podium in the
Teknikens Varld test and Auto Motor und Sport respectively, while the Studded Ice Zero 2 won in the
Teknikens Varld test.
Equally noteworthy results were obtained by Pirelli products for the NAFTA market.
In the test for the Grand Touring All Season segment carried out by Tire Rack, the Cinturato
Weatheractive took fourth place, thanks to its excellent handling qualities on road, where it came
first.
In the test for the UHP All Season segment, the P Zero AS Plus 3 took first place, thanks to excellent
results on all the performances tested.
In this regard, it is worth mentioning that most Pirelli products are at the top of the consumer
satisfaction rankings published by Tire Rack (@Feb 2025):
Scorpion Zero All Season Plus in 1st place in the Street/Sport Truck All Season category;
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Scorpion Zero All Season in 4th place in the same category;
Scorpion Weatheractive ranked 1st in the Crossover/SUV Touring All Season category;
Scorpion AS Plus 3 in 1st place in the Crossover/SUV Touring All Season category, considering
only M+S All Season products;
Scorpion Winter ranked 2nd in the Light Truck/SUV Winter/Snow performance category;
P Zero AS Plus in 1st place in the Ultra High Performance All Season category (Elect version
2nd place);
P7 AS Plus 3 ranked in 1st place in the Grand Touring All Season category, considering only All
Season M+S products.
Cinturato Weatheractive ranked 2nd in the Grand Touring All Season category.
The focus on the evolution of mobility and the environment is also expressed in the Elect-labelled
tyre offering, which distinguishes all tyres developed specifically, together with car manufacturers,
for electric vehicles. The marking represents the clear identification of a tyre built through
technological solutions and material packages capable of enhancing the technical peculiarities of
electric cars, particularly in terms of:
low rolling resistance, to increase the life of the car battery;
low acoustic emissions, for greater driving comfort, in line with the silence of electric traction;
greater resistance of the carcass to better support the weight increase of the car given by the
batteries and at the same time guaranteeing better handling;
greater resistance of the tread compound to support the higher torque generated by the electric
motor, ensuring the necessary road holding.
Pirelli’s growing role within the Elect segment and strategic development partner is also made even
clearer by the achievement of more than 660 homologations (pure BEV, of which 190 obtained in
2024 alone) on 31 different carmakers, including numerous activities also within the OE BEV APAC
world, which is undergoing strong expansion and represents an element of diversification of Pirelli’s
OE presence. Pirelli’s strong OE investment was reflected in a strong increase in original equipment
sales with Elect technology: in 2024 Elect sales in the OE channel accounted for 18% of the channel
total (vs. 16% in 2023); almost 100% of Elect sales in the OE channel is for 18’’ up and account for
24% of 18’’ up sales in the OE channel. In the replacement channel, thanks to Pirelli’s pull-through
strategy, Elect sales grew by more than 50% vs. 2023 to account for 4% of total replacement.
Particularly suitable for electric vehicles, but not only, is the PNCSTM technology, a decisive
innovation for the reduction of interior noise generated by tyre rolling as a result of stress between
the road surface and the tread pattern. Benefits have been recognised by car manufacturers such
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as Volkswagen, Jeep, Alpina, Karma, Enovate, Jaguar-Land Rover, BMW, Audi, Volvo, Polestar,
Mercedes, Ford, Tesla, Lucid, Porsche, Bentley, McLaren, Aston Martin and Rolls Royce, with 549
approvals. PNCSTM technology in the OE channel accounts for 22% of the total (vs 19% in 2023)
and 29% of the 18” up (vs 25% in 2023). In the spare parts channel there is a continuous sales
growth driven by the pull through strategy of +23% vs. 2023 and accounting for 10% of the total 18’’
up spare parts.
Policies
Product safety is first and foremost recalled by the Pirelli Group Code of Ethics, which stresses, as
an essential value for Pirelli, the fact of offering top product quality, excellence of systems and
production processes, while maintaining a constant focus on performance in order to meet customer
expectations in terms of performance and safety.
Product safety and quality is stressed not only by the Pirelli Group Code of Ethics but also by the
Global Quality Policy and the Product Stewardship Policy, the contents of which also set forth,
amongst the various aspects regulated, Pirelli’s commitment to fostering positive impacts in terms of
the prevention of incidents caused by product characteristics/flaws, at the same time also making it
possible to make the most of the opportunity to increase market share thanks to ever safer products,
for example smart, connected tyres that transmit information useful to safe mobility in real time.
The Product Stewardship Policy confirms how Pirelli has chosen to systematically assess any
potential safety risk during each phase of the product life cycle and take timely action as necessary
to prevent or mitigate any negative impacts in this respect, as well as to invest in research and
development to design innovative, ever safer products and reduce the environmental impact.
The Policy also stresses Pirelli’s commitment to supporting customers and end consumers to
guarantee that they understand the environmental impacts and safety characteristics of the products
and to inform them about the safest ways to use them, at the same time assuring respect for the
environmental during their use and at disposal, facilitating recycling or reuse wherever possible.
Finally, the Global Quality Policy stresses how quality, an essential value for Pirelli, is also pursued
by the Group through: i) the safety, reliability and high performance of the products and services
supplied, in compliance with current regulations and the highest national and international standards,
guaranteeing a continuous alignment of business processes with the requirements of quality
standards (ISO 9001 and IATF 16949 – automotive sector); ii) the anticipation, satisfaction and
tendency to exceed the expectations of both internal and external stakeholders (including customers)
across the world, benefiting from the high level of skills and professionalism of its people; iii) the
identification, prevention and management of the various types of risks, both in business processes
and throughout the value chain and the capacity to make the most of development opportunities; iv)
continuous evolution and innovation of products, services, processes and systems with a view to
excellence and guaranteeing a perfect customer experience.
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In addition, Pirelli’s tyres undergo a careful quality analysis before being released to the market, with
a view to preventing or solving the problem of faulty products before they are delivered to customers
and thereby avoid product recalls. The entire production process is subject to specific internal quality
assurance procedures with safety and performance targets that are constantly updated and raised.
The Pirelli Quality Management System involves annual first party audits (i.e. internal audits) to
guarantee and validate the quality management system, in compliance with standards ISO 9001 and
IATF 16949 for the automotive sector, assessing the implementation, maintenance and effectiveness
of the Quality Management System.
These audits assess compliance with the IATF standard, specific customer requirements and our
internal policies.
The areas of interest include management’s commitment, risk management, change management
and continuous improvement processes.
In addition to the management system audits, audits are also run on the process and product.
Guided by VDA 6.3 and VDA 6.7, process audits examine the solidity and capacity of key processes
throughout the value chain of production and services. The audit scope covers project management,
the planning and development of products and processes, supplier management and production
processes. The key focus is on identifying potential risks, guaranteeing process controls and
improving the efficiency and quality of results. To assess compliance with the predefined criteria and
identify areas for improvement, the specific VDA standard is used. According to the guidelines of
VDA 6.5, on the other hand, product audits assess whether or not the end products satisfy customers
expectations, legal and regulatory requirements and internal quality standards. These audits entail
detailed inspections, function tests and the assessment of specific product characteristics. The
results of product audits are used to guide corrective and preventive actions.
The approach described is structured in such a way as to cover all Group sites, processes and
products with Pirelli system, process and product audits, in line with the requirements and frequency
laid down by standard ISO 9001 – IATF 16949 (system audits), VDA 6.3 and VDA 6.7 (process
audits), VDA 6.5 (product audits) or in respect of Customer requests.
For some years now, Pirelli has also adopted an internal procedure to regulate the periodic delivery
of training on the Group Quality Management System, in relation to the roles and responsibilities of
the functions involved, the operational process of planning, realising and monitoring the initiatives
and the disclosures regarding the same. The content delivery modes are distributed between in-
person, virtual and on-line self-paced courses or “on-the-job training”, consistent with the learning
objectives of each initiative. The first method described is used for white-collar training, while the
second is preferred for blue-collar workers. The aim of these training sessions on Quality is to ensure
that the people are able to apply knowledge and skills (abilities and know-how) learned to effectively
fulfil their current and future responsibilities.
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In 2024, Pirelli voluntarily decided to proceed with a market recall of motorcycle tyres, without any
enforcement by regulatory authorities, as it was not linked to homologation compliance violations
and was therefore not subject to penalties.
The costs accrued in 2024 for this recall amount to approximately 3 million euros.
Targets
Under the scope of the 2024-2025 Strategic Plan, Pirelli has defined the goal of improving
performance in car tyre wet grip, making the commitment to ensure that more than 90% of
the new IP Codes fall within classes A and B of European labelling by 2025.
In addition to aiming to improve rolling resistance, for which reference is made to the addressing of
product targets in the Environmental information section, Climate Change, the target comes as part
of the Eco & Safety strategy, which combines the need for high quality products with high safety
characteristics and a constant commitment to improving the environmental impact.
This measurable, relative target applies to the period 2020-2025, with a baseline year set at 2020.
The target scope includes new car products (new IP Codes) that made their first sales on the
market146 in the reporting year. In addition, the values for wet grip, assessed on non-European
scales, are converted to the equivalent EU scale, thereby guaranteeing a consistent comparison with
current regulations.
At 2024, the value recorded is already in line with a percentage of new IP Codes produced with wet
grip labelling classes A/B equal to 90.5%, thereby showing the effectiveness of the Pirelli product
development and technological innovation strategies in improving tyre safety performance.
Actions
The operating costs of the actions listed below, which relate to research and development activities,
are included in the 75% expenditure share allocated to activities linked to product sustainability
features, as described in the Environmental Information section, under the “E1 Climate Change” and
“Product Innovation” paragraphs, to which reference is made.
High Speed Testing Machine
In Milan, in 2021, Pirelli installed a new machine in its Research and Development site, which can
test tyres in controlled conditions at up to 500 km/h and with realistic operating cycles that can
146 sales of at least 50 units
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reproduce effective stress during the extreme use of products on the track or on the road, the “High
Speed Testing Machine”. The main purpose of this test is to further increase the safety of tyres for
the fastest cars: with the advent of increasingly high-performance road hypercars, also as a result of
the perfection of electric engines, high speed is becoming a crucial factor in the development of
different categories of tyres, not only those specifically for motorsport, but also those intended for
road use.
Joint Development Partnerships
Collaboration with external stakeholders with a view to research, innovation and best practices plays
a particularly important role in the development of more sustainable materials. More specifically,
Pirelli has multiple Joint Development Partnerships in place with strategic suppliers, two- or three-
year collaborations, research agreements with universities (such as the Joint Labs agreement
stipulated by Pirelli and the Polytechnic University of Milan for the research of ever more sustainable
materials, such as bio-polymers). Collaborations with universities are often associated with cycles of
financed PhD qualifications, which therefore last at least three years, but as a rule they last for
multiple cycles. There are then also collaborations at the sector level for scientific research as part
of the WBCSD’s Tire Industry Project, with the aim of proactively identifying and addressing potential
human health and environmental impacts associated with tyre life cycle impacts, and multi-
stakeholder collaborations such as the Global Platform for Sustainable Natural Rubber (GPSNR), in
order to support sustainable development of the Natural Rubber business.
Quality, product and sustainability certifications
The main management systems adopted by Pirelli under the scope of quality management include
ISO 9001, IATF 16949, ISO/IEC 17025.
ISO 9001: since 1970, the Group has had its own Quality Management System introduced gradually
at all Plants and, since 1993, Pirelli has obtained certification of its quality system under the ISO
9001 standard. The transition process of its Plants and the Headquarters to certification according
to the new ISO 9001: 2015 ended in September 2018. In 2020, following the Covid-19 pandemic
situation, the IAF (International Accreditation Forum) admitted the possibility of implementing remote
audits and extending the validity of expiring certificates. Pirelli ensured that surveillance and
recertification audits were carried out remotely and, in the field, where possible, in accordance with
IAF rules and in compliance with the rules for the preservation of personnel health, established by
the country and the company itself. In 2021, due to the continuation of the pandemic situation, the
Company continued to carry out surveillance audits in accordance with the procedures laid down by
the relevant third-party bodies, guaranteeing the continuity of the certifications obtained. Starting in
2022 and continuing through 2023 and 2024, following the re-establishment of the general conditions
of normality and in accordance with the procedures laid down by the appointed third-party bodies,
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the Company resumed carrying out surveillance audits in presence, guaranteeing the continuity of
the certifications achieved.
IATF 16949:2016: since 1999 the Group has obtained the certification of its Quality Management
System according to the automotive scheme and subsequent evolutions. Following the evolution of
ISO 9001:2015 and the new IATF 16949:2016 (Automotive Scheme became private), Pirelli
achieved the Quality Management System certification in 100% of its eligible Plants as at 31
December 2018. In 2020, due to the pandemic situation, the International Automotive Task Force
allowed remote audits from 30 October 2020. Once again, Pirelli ensured that surveillance and
recertification audits were carried out in the field, and then remotely, in accordance with IATF rules
and in compliance with the rules for the preservation of personnel health, established by the country
and the company itself. In 2021, due to the continuation of the pandemic situation, the Company
continued to carry out surveillance audits in accordance with the procedures laid down by the
relevant third-party bodies, guaranteeing the continuity of the certifications obtained. Starting in 2022
and continuing through 2023 and 2024, following the re-establishment of the general conditions of
normality and in accordance with the procedures laid down by the appointed third-party bodies, the
Company resumed carrying out surveillance audits in presence, guaranteeing the continuity of the
certifications achieved.
ISO/IEC 17025: since 1993 the Materials and Experimentation Laboratory of the Pirelli Tyre S.p.A.
and since 1996 the Experimentation Laboratory of Pirelli Pneus (Latin America) and since 2023 the
Materials and Testing Laboratory of Jining Shenzhou Tire Co. have had a Quality Management
System, and have been accredited under the ISO/IEC 17025 standard. This system is maintained in
accordance with the standard in force and the ability of the laboratories to perform accredited tests
is evaluated annually. In 2020, the Laboratory carried out its annual surveillance audit remotely, in
2021 and 2022 in hybrid mode, as stipulated by the Accreditation Body Accredia. In 2024, the
laboratory performed the renewal of the certificate with an in-person audit, guaranteeing the
continuity of accreditation.
Laboratories participate in proficiency tests organised by the International Standard Organisation,
the European Tyre and Rim Technical Organisation (ETRTO) or international circuits organised by
car manufacturers. Specifically in regard to car tyres, the focus on quality is confirmed by Pirelli’s
supremacy in numerous product tests. It is also guaranteed by its collaboration on product
development and experimentation with the most prestigious partners (auto manufacturers,
specialised magazines, driving schools, etc.).
The Product Certifications, which allow the marketing of the same in the various markets in
accordance with the regulations laid down by the different Countries, are coordinated and, for some
markets managed, directly by the Quality Function. The prevailing certifications, obtained in the
Pirelli Group, cover the markets of Europe, North America, South America, China, the Gulf States,
India, Indonesia, South Korea, Africa, Argentina and Australia (the latter only ‘on demand’, as it
considers both the DOT - Department of Transportation - marking and the UNECE certificate valid),
and involve all Pirelli plants. These Certifications periodically require factory audits by ministerial
bodies from the countries concerned or bodies delegated by them, with the aim of verifying product
compliance at the Pirelli production sites.
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As of 2023, all Governmental Authorities and/or Type Approval Authorities performed in-person
audits for production conformity verification.
Sustainability certifications, carried out on an entirely voluntary basis, allow Pirelli’s plants to comply
with standards ISCC+ and/or FSC™. These standards entail site-specific certification; therefore, all
plants involved in the process must implement all activities, criteria and responsibilities to respect
the rules of segregation and/or calculation of mass balance and, finally, must show the traceability
and sustainability of their outputs: tyres, compounds/semi-finished products and raw materials.
In addition, in order to provide an effective response to its stakeholders’ expectations, Pirelli has
found itself addressing standards RBA and RSCI, both in Mexico and in China. This strengthens
Pirelli’s commitment to the promotion of a responsible, sustainable value chain, taking into account
not only the social but also the environmental and economic impacts of its business. Participation in
these initiatives can also help Pirelli identify and manage the risks in its value chain, improve the
transparency and traceability of its products and services and collaborate with other industry
operators to promote sustainable practices.
High value approach to the mobility of the future
Pirelli closely monitors the evolution of mobility and its main trends such as digitalisation,
electrification, servitisation, mobility sharing and automated driving, elements that were already
present before the health emergency and are expected to evolve strongly in the coming years. In
fact, the health emergency has highlighted the importance of personal health and safety, and the
path to recovery is clearly geared towards greater focus on sustainability for people and the planet,
and the fundamental role that technologies can play in making mobility safer, more accessible,
efficient and with less environmental impact.
The mobility of the future cannot be separated from digitalisation, and in this area Pirelli is present
with the CyberTM TYRE project. Tyre ‘sensorisation’ is an integral part of the Group’s strategy that
makes technological innovation a distinctive and key element in responding to the major themes that
will transform the concept of mobility: autonomous driving, electric, sharing and 5G connectivity. In
this context, the Company takes a proactive approach in identifying the necessary and most
appropriate way to respond to potential or actual significant negative impacts on consumers or end
users. This process is based on a continuous analysis of market trends, the regulatory framework
and emerging customer demands, with a view to guaranteeing a range of products and services that
is increasingly safe, sustainable and in line with end consumer expectations.
While the development of Cyber Tyre technology in 2021 saw the market launch of the McLaren
Artura, the first car with tyres natively integrated with the vehicle’s electronic systems in2022 and
2023, new iconic models of future mobility have been equipped with Cyber Tyre sensorised tyres,
providing useful information for vehicles to improve safety, performance and features. In 2024, Pirelli
added Audi Sport to its customers and reached a joint development agreement with Bosch to be
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able to improve the vehicle stability control systems, exploiting information obtained from sensors
positioned in the tyre, suitably processed by Pirelli SW resident in the electronic control panels.
Applying the market demand for mobility in the form of a service (Tyre As A Service) to tyres, Pirelli
continued the delivery of the new product introduced in 2022: PIRELLI Care. The new and innovative
way of purchasing tyres and car care services, via app with monthly payment, has gathered the
interest and adhesion of new users within the Italian market.
The mobility of the future also partly consists of a return to the past, where bicycles, now electrified,
play an important role, especially in urban mobility. This is why, since 2017, Pirelli has returned to
the world of bicycle tyres (consider that the first Pirelli tyre at the end of the 19th century was a
bicycle tyre), in which it is present with several product lines: P ZeroTM for high-performance racing
bicycles, designed for users devoted to maximum performance; CINTURATOTM for Endurance and
Gravel bicycles, where the more playful component of exploration and sporting activity understood
as well-being and lifestyle flanks pure performance, yet extending the surfaces where light off-road
cycling is also possible; SCORPIONTM, the line dedicated to the world of Mountain Biking, with all its
variants from Cross Country to Downhill, including all the various traditional options or with the
support of an electric motor (E-MTBs); and finally the AngelTM Urban line of tyres, ideal for all
situations, urban and otherwise, of commuting by pushbike, with or without electrical assistance.
A complete range of products developed by R&D Pirelli also in collaboration with the best
international professional teams in each category, to achieve maximum performance.
Added to this is the start-up of bicycle tyre production at the Pirelli plant in Bollate, which thus
becomes the only factory to produce ‘Made in Italy’ bicycle tyres on an industrial scale. The historic
facility, a few kilometres from Milan and inaugurated by Pirelli in 1962, has undergone a process of
modernisation and reorganisation to house the production of Pirelli Cycling’s high-end lines.
In the field of urban mobility, Pirelli is committed on several fronts to promoting and developing
modern and sustainable solutions. One of the main projects launched in recent years has been
CYCL-e around, an important service innovation within the emerging business models of
Micromobility.
Pirelli’s CYCL-e around project proposes a model of active, shared, sustainable and digital mobility
to private customer communities, particularly companies and hotels. Members of client communities
can rent high-end electric bikes at their place of work or holiday for daily commuting or for discovering
the territory. This proposal complements existing public and private forms of mobility and, in addition
to responding to the growing needs of smart citizens, workers and active tourists, contributes to
overcoming the challenges of contemporary urban mobility in a sustainable way.
In 2024, growth of the national customer network continued, both in the hotels and corporate
segments. One of the most prestigious partnerships is without doubt that with ARVAL Italia, a
collaboration that will allow Arval’s business customers to access Pirelli e-bikes, thereby offering
employees a turnkey sustainable mobility solution for both their professional lives and recreation.
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2024 also saw completion of the second year of design dedicated to New Mobility as part of the
National Recovery and Resilience Plan (NRRP). Within these research units, Pirelli is studying,
testing and developing new supply innovations, which will flank the “CYCL-e around” proposal
already available on the market. The main tests run within the scope of the National Sustainable
Mobility Centre (MOST) and the MUSA Ecosystem for Innovation, regarded innovations in respect
of sustainable materials, new services and data-enabled solutions based on tyre connectivity and
the bicycle; new techniques employed for studying and monitoring district mobility flows to promote
urban sustainable mobility; tests of digital programs based on gamification to encourage use of
sustainable means of transport. The aim of these initiatives is to develop Proofs of Concept (POCs)
and define an innovation scope in new mobility that can foster the development of new sustainable
mobility services and solutions promoted by Pirelli and developed in collaboration with industry
partners.
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GOVERNANCE INFORMATION
G1 Business conduct
Pirelli’s corporate culture and its management model
Pirelli promotes the development of plans and policies to ensure the presence of a solid and
responsible governance framework capable of planning, implementing, and monitoring the
company’s strategic directions over the medium to long term. It encourages responsible behaviour
and fosters awareness of the importance of effective governance throughout the organisation. In line
with this approach, the sharing and dissemination of rules and principles with internal and external
stakeholders was found to be relevant in the Double Materiality analysis, in terms of the positive
impact generated by Pirelli.
The main policies through which Pirelli expresses and disseminates its corporate culture are
described in the chapter “Main policies for IRO management”. The following is a detailed description
of the Pirelli Group Code of Ethics and the Whistleblowing Policy, as well as the initiatives put in
place to implement the commitments set out therein.
The Code of Ethics
The sharing and dissemination of the Company’s rules and principles with internal and external
stakeholders is addressed by the Pirelli Group Code of Ethics and, more generally, reflected in all
the Policies adopted by Pirelli.
More specifically, the Code of Ethics stresses how Pirelli adopts a multi-stakeholder approach,
pursuing sustainable, lasting growth aimed at balancing the expectations of all those who interact
with the Group and the businesses that are a part of it, and expressly states that it shall be
disseminated as much as possible so that the values and rules of conduct it contains are known to
employees and available for consultation by all.
The Code of Ethics sets out the values and standards of conduct with which all recipients must
comply. More specifically and amongst other aspects, Pirelli’s commitment is stressed to:
- condemn unlawful or in any case unfair conduct and respect and ensure that the laws in force
in the countries in which it operates are respected internally and in relations with the outside
world;
- promote fair competition, acknowledging that correct and fair competition is essential to business
and market development;
- require all Code of Ethics recipients to ensure the utmost confidentiality of information acquired
or processed on the basis of or during fulfilment of their duties;
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- pursue the protection of internationally-affirmed human rights and respect for the principle of
equal opportunities in the workplace, without any distinction based on gender, marital status,
sexual orientation, religious faith, opinions concerning politics and trade unions, skin colour,
ethnic origin, nationality, age, disability;
- manage activities in respect of the environment and public health and make responsible use of
resources, in line with the objective of achieving sustainable, environmentally-friendly
development;
- protect health, safety and hygiene in the workplace, both through continuously improved
management systems and by promoting a health and safety culture based on prevention and
on the need to effectively manage occupational risks.
In supplementation of the contents of the Code of Ethics, the Pirelli Group has also adopted the
Code of Conduct with which all Pirelli Group directors, statutory auditors, managers and employees
and, in general, all those operating in Italy and abroad for and on behalf of and/or in the interests of
the Pirelli Group, or who entertain business relations with it, must comply. Through the Code of
Conduct, Pirelli asks its recipients to behave ethically including seeking to avoid any situation of
conflict of interests. In the event of a conflict arising, they are obliged to report it immediately.
Moreover, unlawful conduct (such as insider trading) is strictly prohibited.
The Code of Conduct also stipulates that an adequate training and continuous awareness
programme on matters related to the Code of Ethics must be implemented.
Whistleblowing Policy
The Group’s Whistleblowing Policy defines the procedures and channels that can be used to notify
any violations, including of the values and principles established in the Pirelli Group Code of Ethics
and Code of Conduct, as well as, more generally, any violations of the principles set forth in the
Group’s Policies. In addition to the Group Policy, a Whistleblowing Policy has been issued, applicable
to companies based in European Union countries. The Policy in the EU area in particular, in
compliance with the general principles already included in the Group Policy, guarantees the
compliance of the whistleblowing system with the regulations included in the EU Directive 2019/1937
and in the national transposition laws adopted by the EU countries in which the Group operates.
The Whistleblowing Policies govern the manner of reporting breaches, suspected breaches and
inducement to breaches of the law and other regulations (local, regional, national and international),
principles ratified by the Code of Ethics, including reports relating to equal opportunities,
discrimination and mobbing, in addition to all that is dealt with in the Group Policies, internal auditing
principles, corporate policies, rules and procedures, and any other behaviour involving commission
or omission of acts that might directly or indirectly lead to economic-equity or reputational detriment
for the Group and/or its stakeholders (all without prejudice to any extensions or limitations imposed
by locally applicable whistleblowing regulations).
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The portal (accessible at https://pirelli.integrityline.com) and the e-mail box ethics@pirelli.com is
made available to anyone internal or external to the Group, who would like to make a report, whether
written or oral, concerning any Group company.
The references to the Policies and/or reporting channel also constitute part of the General Conditions
of Purchase included in supply orders/contracts, in the Pirelli Supplier Code of Conduct, as well as
in the text of the different Group policies published on the Company’s website.
Reports may be made in different ways (in writing or verbally), and also in an anonymous form; in
any case, protection of the principles of confidentiality, proportionality, impartiality and good faith is
guaranteed at all times, as is zero tolerance in respect of acts of reprisal of any kind against whoever
makes a report or is involved in the report in any capacity. Reports may concern directors, statutory
auditors, management, employees of the Company and, in general, anyone operating in Italy or
abroad for Pirelli or who engages in business relations with the Group, including partners, customers,
suppliers, consultants, collaborators, auditing companies, institutions and public entities, including
the affected communities.
Reports submitted through the Group channel are centrally managed by the Group Internal Audit
function, which reports functionally to the Audit, Risk, and Corporate Governance Committee (made
up mainly of independent directors), and to the Board of Statutory Auditors of Pirelli & C. S.p.A and
meets the requirements of impartiality and independence. In addition to the Group channel, Pirelli
provides dedicated channels at the level of individual companies (where required by local
regulations) and a channel reserved for reporting Breaches concerning the Internal Audit function,
managed by an autonomous person and/or department within the Company. Whistleblowing
Managers are in charge of analysing all the whistleblowing cases received and providing feedback
to the whistleblower on their acceptance, management and results. The Whistleblowing Manager,
during the analysis, may, where necessary, involve the corporate functions deemed competent for
verification activities, as well as schedule specific action plans. In the report is found to be well-
founded, the appropriate disciplinary measures and/or legal action will be taken to protect the
Company.
The whistleblowing channels are structured in accordance with the principles of ‘privacy by design’
and ‘privacy by default and minimisation’. The handling of reports is guided by respect for the
confidentiality of the persons concerned and of any other third parties involved, while also ensuring
anonymity, in the case of anonymous reports, and the principles of necessity and proportionality.
More specifically, the Whistleblowing Policy envisages a “prohibition of retaliatory acts”, stressing
the non-tolerance of any form of threat, retaliation or discrimination, whether attempted or effective,
against whistleblowers, facilitators, related persons, reported persons and anyone who has
collaborated with investigations into the grounds of the report. As explained in the Policy, Pirelli aims
to eliminate (wherever possible) or offset the effects of any retaliation against the above persons and
reserves the right to take suitable action against anyone who threatens to or implements any acts of
retaliation against the persons listed above. If a report should be found to be valid, it undertakes to
eliminate the causes.
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Furthermore, in the event of a violation of the established principles of company Policies, or related
Procedures, by its employees (by way of example and not limited to the context of: health and safety,
anti-corruption, antitrust, information security, etc.), Pirelli applies the sanctions provided for by the
company disciplinary system in compliance with collective labour agreements, company procedures
and applicable regulations in the countries where Pirelli operates.
During the course of 2024 the Whistleblowing procedure was activated 170 times. Specifically:
the reports were received from 10 different countries (Saudi Arabia, Argentina, Brazil, Germany,
Italy, Mexico, Poland, Czech Republic, Romania, and the UK);
of the reports received, 31 were found to be substantiated, including 24 related to Human Rights
& Labour Conditions and 7 concerning cases of Mismanagement.
the reports received are partly signed and partly anonymous. It is objectively not possible to
confirm the total number of reports from internal or external stakeholders because some
complaints, as mentioned, were received anonymously;
of the 68 signed reports received, 13 were submitted by external whistleblowers.
no reports were received concerning the Internal Audit function.
the majority of the reports were submitted via the ethics@pirelli.com email inbox, while the
remaining
reports
were
received
through
the
dedicated
whistleblowing
platform
(https://pirelli.integrityline.com), which was introduced in 2024;
the Internal Audit function periodically reported the reports received and the progress of the
analyses carried out to the competent corporate bodies of Pirelli & C. S.p.A.
Below is the subject matter alleged in the relevant reports received. For more information about
reports regarding working conditions, discrimination and health and safety matters, refer to the
section “Social Information” and, in particular, the chapter “Own workforce - Respect for human
rights”.
Alleged subject matter
2024
Total no. of reports received
170
Labour Conditions
95
Discrimination or Harassment
25
Health & Safety issues
7
Customer privacy data
0
Conflicts of interest
0
Money laundering or insider trading
0
Corruption or Bribery
3
Other
40
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The Company took action in all cases, intervening with disciplinary sanctions (reprimands and/or
dismissals) and with actions aimed at removing the causes of the complaints and/or aimed at
improving the internal control system.
With specific reference to the Grievance Procedure for reporting violations of the Policy on
Sustainable Natural Rubber Management, no reports were received in 2024.
These reporting mechanisms allow Pirelli to monitor the effectiveness of its policies and actions
aimed at sharing and disseminating the Company’s rules and principles with internal and external
stakeholders.
Actions
During 2024, the company continued to provide training and communication activities on the current
Organisational Model to the population of the Group’s Italian companies. More specifically, in 2024,
the on-line training course was flanked by specific training sessions aimed at investigating specific
topics in greater detail, including in regard to staff operating at various plants. In addition, in 2024
the Company also launched a communication campaign in connection with the Whistleblowing
mechanism, aimed at all employees of the countries in which it operates.
Projects for the enhancement of the company’s historical heritage and its corporate culture
To spread its business culture, Pirelli undertakes to optimise the historic, cultural and document
heritage through specific projects implemented by the Pirelli Foundation.
In particular, in 2024, the work of the Pirelli Foundation, which had begun back in 2008, continued
with the aim of preserving documentation on the company’s history since its foundation, in 1872,
through today.
The Pirelli Foundation implements numerous activities to optimise the company heritage, such as
the curating of publications, the organisation of exhibitions and conferences, as well as guided tours
involving thousands of people each year, also availing itself of the collaboration of other cultural
institutions. The Foundation carries out research, in support of the company management and
scholars at a national and international level, in areas that range from economic and industrial history,
through to architecture, from the history of work and industrial relations through to graphics and
design.
In 2024, the Foundation further strengthened the digital tools and communication activities already
adopted. The Pirelli Foundation website has been optimised with the implementation of assistive
technologies and activities that improve access for users with disabilities and, together with the other
digital hubs of the ecosystem, it has recorded significant growth in visits. The monthly newsletter
“Fondazione Pirelli e-news” has continued to reach an ample public, becoming a consolidated,
effective communication tool. The “Fondazione Consiglia” (Foundation Suggests) section of the
website has been enriched with new book reviews, extending the cultural offer.
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In addition, during the year, the Pirelli Foundation made a considerable contribution towards the
management of editorial plans for the Pirelli Corporate channels.
Initiatives, events and tours to promote corporate culture
During 2024, activities relating to the Pirelli Group Archives and the enhancement of corporate
culture were developed in a programme divided into various work sections. The main initiatives
include:
the “L’officina dello sport” publishing project: in bookshops from June 2024, in both Italian and
English, published by Marsilio Arte, the volume, illustrated by unprecedented works by the artist
Lorenzo Mattotti, interprets the world of sport as competition, knowledge, competence,
community, investigating what is “behind the scenes”.
the “L’officina dello sport” exhibition: the new exhibition of spaces of the Pirelli Foundation returns
to the topics of the volume by the same name – an exhibition path on the world of sport, which
accompanies visitors through iconic objects, archived documents and testimonials of the
company welfare and visual communication.
the “Il Premiolino” journalism award: again in 2024, Pirelli supported the historic award given to
journalists from print, radio, television and new media as a career prize and for their contribution
in the field of press freedom. The Pirelli Prize for School has also been established, intended for
journalists who have stood out for the best article or investigation regarding the world of school.
Stati Generali Cultura Sole 24 Ore event: in 2024, Pirelli hosted the 2nd step of the “Stati Generali
della Cultura 2024” event organised by “Il Sole 24 Ore”, at its headquarters.
Processing of Pirelli Group historical archive materials and asset management: restoration,
digitisation and publication on the website fondazionepirelli.org of a selection of documentary,
iconographic, audiovisual and photographic materials and company magazines; cataloguing of
specialised magazines of the technical-scientific library.
Loans of materials to the external community, historical and iconographic research and
production of editorial content to support the brand. Some of the main items include: loan of
historical materials for the celebrations of the hundredth year anniversary of the former Pirelli
plant in Manresa (Spain), for the commemorative event of the hundredth year anniversary of the
Italian Embassy in Buenos Aires and the competition of elegance for period cars “Total look
Rallies – Flower Power 70s”; fitting out of Pirelli sales outlets in Palermo and Pristina (Kosovo),
of Driver stores in Switzerland, of Pirelli offices in São Paulo (Brazil) and of the R&D Innovation
Center in China; update of the interactive contents of Casa Pirelli.
For the exhibitions: “Identitalia – The Iconic Italian Brands” and “L’Italia dei Brevetti: Invenzioni e
Innovazioni di Successo”, held at Palazzo Piacentini in Rome; “Torino Al Futuro”. La Cultura
d’Impresa, la Cultura dell’Innovazione” at the Turin Renaissance Museum; “ATM Manifesto”, at
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the ADI Design Museum of Milan; “125 volte Fiat. La modernità attraverso l’immaginario FIAT”
at the Turin Automobile Museum; “L’Alba dell’Autostrada del Sole” at the National Gallery of
Modern and Contemporary Art of Rome.
For the publications: “Questa è la nostra città” (Bompiani/Giunti); “Cose molto italiane” (Ultra
editions); “Alessandro Mendini” (Phaidom publisher).
In 2024, a large number of people took part in on-line and in-person activities, including:
•
Museocity with “Obiettivo Milano: Pirelli e la città attraverso lo sguardo dei fotografi”;
•
“Cosa FAI Oggi”, an initiative organised in collaboration with the FAI Delegation of Milan, with
guided tours of the headquarters, the Bicocca degli Arcimboldi and the Pirelli Foundation;
•
Open Archives with guided tours of the exhibition “Esercizi di stile: la fotografia sportiva e il
mondo editoriale, dagli house-organ Pirelli a L’officina dello sport”;
•
the XXIII Business Culture Week, organised by Confindustria and Museimpresa, featuring guided
tours of the Pirelli Foundation, activities for families and the event “Il cinema racconta l’impresa”,
held at Anteo Spazio Cinema, in collaboration with Muse Factory of Projects. The initiative
confirms the Pirelli Foundation’s active role in all the activities of Confindustria’s Culture Group
and Museimpresa, of which the Pirelli Foundation is one of the founding members, to enhance
the role of history and corporate heritage as an asset of identity, education and competitiveness.
Also in 2024, the Foundation supported the PLunga training course, organised by the Human
Resources and Organisation Department, welcoming numerous colleagues. For more information
on this course, refer to the section ‘Social Information’, paragraph ‘S1 Own workforce’.
Anti-corruption
The results of the Double Materiality analysis revealed that the topic of active and passive corruption
emerged as material whether certain unlawful conduct was implemented in this respect while
carrying out business, with annexed risks of non-compliance with anti-corruption regulations and
rules and/or criminal corporate regulations (e.g. Italian Legislative Decree no. 231/2001).
Therefore, as regards the corporate liability of companies and entities, envisaged by Italian
Legislative Decree no. 231/2001 (hereinafter also the “Decree”), Pirelli has had an Organisation and
Management Model (hereinafter the “Model 231”) in place for years now. The Model is structured in
a General Section, which includes a review of the regulations contained in the Decree, of the crimes
relevant to the Italian companies of the Group and the procedures for adopting and implementing
the Model, and in a Special Section, which indicates the corporate processes and the corresponding
sensitive activities for the Group’s Italian companies pursuant to the Decree, as well as the principles
and internal control plans to supervise these activities.
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In addition, as regards anti-corruption, Pirelli has adopted the ISO 37001 management system: in
2024, the certification entity audited the Anti-Corruption Management System and issued ISO 37001
certification of the companies Pirelli & C. S.p.A. and Pirelli Tyre S.p.A. and the Affiliates in Russia
and Brazil, which now join those already valid for the Affiliate in Spain.
Again with reference to processes, procedures and mechanisms in place, Pirelli carries out period
internal audits that also include a focus on anti-corruption. In particular, the audits carried out by
Internal Audit Function at Group subsidiaries include monitoring of crime risks, among which
corruption and fraud figure. With reference to the Group’s Italian companies, in order to prevent the
criminal liability of entities envisaged by Italian Legislative Decree no. 231/2001, specific information
flows are in place to identify any anomalous situations.
Finally, the whistleblowing channel, explained in the chapter “Whistleblowing Policy”, allows for the
identification and investigation of episodes of business conduct, including corruption and
concussion, in a timely, independent and objective manner.
Pirelli has envisaged a dedicated channel in the event that the reporting of unlawful conduct should
regard a representative of the Internal Audit Department; reports are therefore handled by an
autonomous person and/or department within the Company, who/which is independent of the
Internal Audit Department.
The next chapter provides details of the policies setting out Pirelli’s commitment to anti-corruption
matters and the action taken to fulfil these commitments and manage any IROs found to be material.
Group Anti-Corruption Compliance Programme
The topic of anti-corruption is covered not only by the Pirelli Group Code and Code of Conduct, but
also by the Group Anti-Corruption Compliance Programme, the contents of which set forth
Pirelli’s commitment to fostering positive impacts in terms of the prevention of corruption and
unlawful conduct in Pirelli’s business, as well as to mitigating the risks of non-compliance with
corporate criminal legislation (e.g. Legislative Decree 231/2001) and anti-corruption rules and
regulations.
The Group Anti-Corruption Compliance Programme was adopted with a view to establishing a
reference framework, thereby further strengthening the anti-corruption policy that Pirelli has
implemented over time, first and foremost with the Code of Ethics and then through specific
programmes and models in the various countries in which Pirelli operates, also aiming to mitigate
the risk of the perpetration of crime (for example, the 231 Organisational Model, applicable to Italian
companies).
In the document, the Pirelli principles already set out in the Code of Ethics and the Code of Conduct,
including zero tolerance of any type of corruption in any form or manner, in any jurisdiction, not even
where activities of this kind are in practice admitted, tolerated or not judicially pursued are restated.
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Specifically, the Anti-Corruption Compliance Programme identifies the areas that Pirelli has
considered as being at risk of corruption and, in particular: relations with intermediaries and
suppliers; relations with the public administration; management of gifts and entertainment expenses;
management of sponsorships and promotional activities; disbursement of contributions to the
external community; research and selection of human resources; management of facilitation
payments and the related principles and rules that must be applied to avoid the risk of corruption.
More specifically, referring to the Pirelli Group’s Code of Ethics, the Anti-Corruption Compliance
Programme reaffirms that Pirelli does not provide contributions, benefits, or any other advantages to
political parties, trade unions, or their representatives or candidates, while ensuring compliance with
any applicable regulations.
Lastly, the Compliance Programme recalls the procedures for reporting any corruption and the
protections envisaged for whistleblowers, in compliance with the Whistleblowing Policy, the
sanctions envisaged in the event of violation of the contents of the document and the training and
information activities promoted by Pirelli to oversee anti-corruption topics.
As envisage by the Anti-Corruption Compliance Program, in the event of violation thereof, Pirelli
applies the sanctions provided for by the company disciplinary system in compliance with the
collective labour agreements, procedures and regulations applicable in the countries where Pirelli
operates.
For positions exposed to a risk of corruption classified as higher than “low”, insofar as they operate
in the sensitive areas identified in the Anti-corruption programme, and for the compliance department
for the prevention of corruption in accordance with ISO 37001, the regular deposit has been
envisaged of a declaration confirming their observance of the corruption prevention policy. The
company regularly conducts an audit to check that at-risk persons required to make the declaration
are correctly identified.
In compliance with the provisions of the company regulations approval process established by Pirelli,
the contents of the Policies referred to herein have been shared with all the company departments
involved in their implementation and validated by top management before their approval and issue.
In 2024, following the update of the corruption risk assessment, the Group launched the adjustment
of the Group Anti-corruption programme, with the support of external consultants. This revision,
aimed at guaranteeing a constant efficiency and adequacy of the Programme, will be completed in
2025. Following approval by the Board of Directors, Pirelli will ensure the greatest possible
dissemination of the document so that it can continue to represent a guide to identifying the principles
and conduct to be adopted in the fight against corruption. The implementation of the updated
programme also involves the definition of specific corruption prevention frameworks suited to the
needs of the various countries and areas within which Pirelli operates.
In order to ensure the effectiveness of the Group Anti-Corruption Programme, Pirelli delivers
mandatory training courses on the subject to employees of companies in the various countries in
which it operates. More specifically, the Pirelli Group has developed specific mandatory anti-
corruption courses for employees of companies subject to ISO 37001 certification (i.e. Pirelli & C.
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S.p.A. and Pirelli Tyre S.p.A., and the Affiliates in Russia, Brazil and Spain). In addition, the Group
has provided for the implementation of further anti-corruption courses due to local regulatory
specificities or organisational characteristics. Finally, note that the communication process of the
Group Anti-corruption Programme involves making the Programme available to all employees, who
can consult it via notice boards, the company intranet or the website, where the programme has
been published in several languages.
More details on training can be found in the paragraph below entitled “Training on anti-corruption
and awareness-raising”.
Targets
Pirelli is committed to promoting ethical and responsible business conduct, in compliance with laws,
regulations, standards and guidelines, applicable to business in the countries where it operates and
refuses all forms of corruption, whether direct or indirect, in both the public and private sectors.
Pirelli monitors the effectiveness of its policies and actions in relation to material impacts and risks
through a structured system that includes, as previously mentioned, training, communication, and
monitoring activities. These activities aim to prevent the risks of corruption, promoting ethical,
responsible behaviour and guaranteeing the knowledge of applicable regulations and rules of
conduct relative to the prevention of corruption and compliance with the applicable laws, regulations,
standards and guidelines in the countries in which the Company operates.
To assess progress against these commitments, the company uses qualitative and quantitative
indicators such as the number and type of reports received, the results of the audits and risk
assessments, participation in training and communication programmes and the progress made on
legal proceedings pending in connection with corruption matters. These measures allow for the
verification of the adequacy and effectiveness of the Anti-corruption Programme and internal
policies, promoting a corporate culture based on ethics and accountability. The system of information
flows is designed to promptly identify the most relevant risks in the countries in which Pirelli operates,
while risk assessment, the mechanisms for reporting unlawful conduct and audit activities can verify
the compliance of corporate operations with the anti-corruption policies and identify any critical
issues. In addition, the monitoring of reports received and legal proceedings pending in regard to
corruption constitutes a key tool to assess the effectiveness of the action taken.
Actions
Update of the corruption risk analysis
The activity aimed at analysing the profiles of corruption risk continued through the assessment of
conformity with local regulations in force in the Countries where the Company is present, the
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verification of the adequacy of the corporate oversight and, where necessary, the updating of the
risk analysis.
More specifically, in 2024, Pirelli updated the risk assessment in respect of corruption in connection
with the various countries in which it operates, in order to identify the risks to which it is exposed and
define suitable mitigating measures. This was carried out in connection with the specific risk areas
identified and following a mapping of the applicable corruption regulations as well as the assessment
of the existing control system. The assessment, which was completed during the year with the
assistance of external consultants, has made it possible to identify the countries and areas of activity,
as well as the departments most exposed to the risk and to define any improvements in terms of
preventing potential critical situations.
Training on anti-corruption and awareness-raising
During 2024, training and communication activities on the current Organisational Model were
completed for the entire population of the Group’s Italian companies. More specifically, in 2024, the
on-line training course was flanked by specific training sessions aimed at investigating specific topics
in greater detail. This training involved employees of the Group’s Italian companies, including some
employees who work at the plants, in order to provide the stakeholders involved with a code of
conduct, control systems and measures to ensure, insofar as possible, the prevention of the
perpetration of crime in accordance with Italian Legislative Decree 231/01 and corruption.
Specifically, this is ongoing training aimed at covering the entire Italian corporate population.
As part of the Anti-Corruption Programme implementation process, mandatory country-specific
training courses have been made available through an e-learning platform.
A specific anti-corruption training course has been implemented for employees in the UK, given the
relevance of the applicable legislation.
In Italy, on-line training on the Organisational Model pursuant to Italian Legislative Decree 231/01
delivered to the population of the Group’s Italian companies is flanked by in-person training for the
most relevant departments. Finally, training is dedicated to the Group Purchasing Department, which
receives a specific course given the relevance and potential riskiness of the activities.
In addition, a Group-wide anti-corruption training course was prepared for the Purchasing
Department to raise awareness of the issue so as to make it easier for employees to identify potential
critical situations and activate the procedures set out in the internal rules. Specifically, this is ongoing
training delivered after hiring to all employees of the countries in which specific training is envisaged
in line with regulatory requirements, or who hold a role in the Purchasing Department.
Anti-corruption awareness-raising is extensive given that, under the scope of the ISO 37001 anti-
corruption management system, it is directed not only towards key managers but also members of
the Board of Directors and Board of Statutory Auditors, who give regular declarations confirming
their compliance with the corruption prevention policy.
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It should be pointed out that the Group’s training activities do not only concern the white-collar
employees of the companies but also the blue-collar workers. Specifically, Pirelli has also started
training and communication activities for staff working at some of the Group’s plants (i.e. Italy and
Brazil).
In addition, the awareness process of the Group’s Anti-Corruption Programme in the main countries
where Pirelli operates also continued. The Programme, available in several different languages on
the Pirelli website, is the corporate benchmark for the prevention of corruptive practices and
represents a collection of principles and rules aimed at preventing or reducing the risk of corruption.
In the document, the Pirelli principles already set out in the Code of Ethics and the Code of Conduct,
including zero tolerance of “any type of corruption in any form or manner, in any jurisdiction, not even
where activities of this kind are in practice admitted, tolerated or not judicially pursued” are restated.
In 2025, training focussed on corruption topics will continue. More specifically, in addition to on-line
training tools, Pirelli has, where necessary, also envisaged in-person training and communication to
both dedicated departments and those operating at certain Group production plants.
Due diligence of third parties
Pirelli only entertains business relations with parties of proven integrity and honesty. In this regard,
specific procedures have been defined to formalise the roles and responsibilities and operating
procedures of the third-party due diligence process through the analysis of the activities, conducted
in the main Countries, of gathering and verifying information of ethical, legal and reputational nature
relating to counterparties and aimed at identifying potential Compliance risks in advance.
Specifically, in its relationships with various Business Partners, Pirelli constantly verifies the
experience and technical requirements and asks that the absence of investigations or judgements
related to corruption be declared. In addition, in-depth assessments are conducted on counterparties
who provide relevant compliance answers to the questionnaire available on the qualification platform.
In this regard, with specific reference to the suppliers with which Pirelli collaborates, in order to
ensure an effective assessment of stakeholders, Pirelli conducts periodic analyses aimed at verifying
completion of the qualification process at the dedicated platform.
Incidents of corruption or bribery
In 2024, Pirelli was not sentenced for any violation of anti-corruption laws and was not involved in
any legal action. Therefore, no penalties were imposed for violations.
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Management of relations with suppliers
The Double Materiality analysis revealed the following material impact, which can be linked to the
issue of business conduct:
Development of local supply chains
The following paragraphs detail the Company’s strategy in sustainable procurement processes, as
well as the main safeguards and activities in place to manage Pirelli’s relations with its suppliers.
Supply chain sustainable management system
The Supply Chain Management Model adopted by Pirelli fully meets the requirements dictated by
the international guidelines for sustainable procurement ISO 20400 - “Sustainable Procurement
Guidance”, as attested by a third party (SGS Italia S.p.A. in 2018 and again in 2021, next update
foreseen for 2025), following an in-depth assessment of the Pirelli Procurement Model, the related
corporate policies and strategies and the internal processes applied to implement sustainability
requirements in purchasing dynamics and management of suppliers’ ethical performance. The
assurance on full compliance with the guidelines of ISO 20400 is flanked and complemented by the
certification of compliance obtained by the Company with respect to the guidelines on social
responsibility dictated by ISO 26000, issued by the auditor of this Report.
The Group’s relations with suppliers are based on fairness, impartiality and respect for equal
opportunities towards all those involved in the purchasing processes as prescribed by the Group
Values and Code of Ethics and in line with the OECD Guidelines on Duty of Care.
The mission of Pirelli’s Purchasing Department is to promote best practices and to purchase services
and goods for the effective and efficient operation of the Company and to ensure the best supply
base in line with the following priorities: best market value, quality, on-time delivery, speed,
innovation, compliance with local and international regulations and internal procedures.
The sustainable management of the supply chain at Executive level is headed by the Group
Purchasing Director, who works in constant coordination with the Sustainability Department. Starting
in 2022, Pirelli’s Purchasing Department has also been further structured to manage ESG aspects
along the supply chain, with the creation of a dedicated Unit, Sourcing sustainability & risk
management. Within the Sourcing Excellence function, the unit is dedicated to monitoring the
performance and risks of the supply chain, implementing training and supplier engagement &
capacity building initiatives, and supporting suppliers in closing areas for improvement and thus ESG
risk mitigation along the supply chain.
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Sustainability elements in the purchasing process: Labour, Human Rights, Environment, and
Business Ethics
On the basis of the supply chain characteristics, for which reference is made to the section “General
Information”, paragraph “Business model and value chain”, Pirelli builds its own supplier screening
model (ESG risk assessment). Screening is the initial analysis step, carried out to identify potential
ESG risks in the areas of Labour, Human Rights, Environment, and Business Ethics within the supply
chain. The result is a risk assessment that integrates various “desk” analyses relative to the ESG
risk associated with the country, sector, specific goods/materials and, therefore, the potential risk of
negative ESG impacts that can be associated with the suppliers. Considering the relevance for the
business (like the weight of spending and ease of replacement of supplies) and the results of the
ESG desk analysis, Pirelli identifies the significant suppliers, which are also the main recipients of
development, training and engagement & capacity building initiatives.
In 2024, there are 456 significant suppliers in the above terms, corresponding to 40.5% of the
Group’s total spending. The total number of suppliers was 12,773.
Pirelli uses the same approach to assessing ESG performance throughout the entire process of
interactions with a supplier, although in different ways among them, consistently with the intensity of
the interactions characterising the specific procedural stages.
During the initial scouting phase, which involves evaluating potential suppliers of a good or service,
the buyer, who is adequately trained, can form a first impression of whether the potential supplier is
likely to meet product or service requirements, as well as compliance with Labour, Human Rights,
Environment, and Business Ethics standards. This makes it possible to eliminate potential future
suppliers that are clearly in possible violation of Pirelli expectations.
Screening phase goes on with the on boarding. Pirelli asks all potential suppliers who gain access
during the on-boarding phase (pre-qualification and qualification) to fill in a questionnaire through
which the supplier can view and simultaneously accept Pirelli’s requests in terms of economic, social,
environmental and business ethics responsibilities. The approach considers country, sector and
commodity-specific economic and ESG risks (for example, the specific risks related to natural rubber
from the different countries). Among the questions asked of the potential supplier, for example in the
area of Human and labour Rights, is the request to certify that its company: checks workers’ ages
before hiring them and it ascertains that all of its employees satisfy the minimum legal working age;
uses workers provided with a written labour contract and who work on a voluntary basis exclusively;
abides by workers’ rights of freedom of association and participation in trade-union activities; pays
wages that meet the minimum legal standards; manages disciplinary practices, if any, abiding by the
law; abides by and applies legislative/contract provisions in the matter of work schedules, overtime
and rest periods. Further questions are aimed at identifying potential integrity and corruption risks in
advance. The EcoVadis is also used to extensively investigate the supplier’s sustainability profile,
from management systems to environmental performance, human and labour rights, ethics and
sustainable procurement.
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Considerations of relevance to the business, country, sector and commodity specific risks are also
at the origin of the on-site audit approach to potential suppliers of raw materials and high value-
added parts. The process of assessing the compliance of the supplier with the principles shared in
the Pirelli Code of Conduct proceeds with onboarding. Indeed for all potential new suppliers and/or
facilities of raw material and high value-added parts, which by their nature can become
development/long-term partners for the Company, and which are also granted much of the spending
of purchases, while often coming from countries and sectors presenting specific ESG risks, Pirelli
conducts a third-party preliminary on-site audit during the qualification phase to verify the level
of compliance of the potential supplier with respect to the principal national and international
regulations on Labour, Human Rights (including health and safety), Environment, and Business
Ethics. Loss prevention information is also analysed as a key element to prevent future cases of
business interruption. The non-acceptance of the audit and/or not entering into a reinstatement plan
of any non-compliance shall block the qualification of the supplier. The assessment of the potential
and actual risk of the supplier constitutes the basis for the selection for supplier development, training
and engagement & capacity building initiatives.
With a view to safeguarding the health of workers and the environment, for many years now Pirelli
has been carrying out preventive evaluations of new raw materials and process aids before these
materials can be used extensively by the Group’s operating units.
On the basis of specific documents made available by the Suppliers (the so-called “Safety Data
Sheet” and the relative “Technical Data Sheet”) and by virtue of the requirements provided not only
by the most restrictive European regulations on the management of hazardous substances (see, for
example, the “REACH” and “CLP” Regulations), but also in consideration of the highest international
technical standards and the most up-to-date scientific knowledge (specific United Nations
databases, etc.), these internal assessments provide an up-to-date picture of the potential risks to
human health and/or the environment.
Furthermore, independently of and in addition to the requirements provided for by current laws, Pirelli
requires suppliers of raw materials and process aids used by the Group to detail and quantify the
residual impurities contained in the products sold to the Group, beyond mere compliance with the
limits imposed by current regulations (where present).
Finally, of note are the well-established monitoring activities of producers and suppliers of raw
materials with regard to compliance with the requirements of Regulation (EU) 2017/821 (as amended
by Regulation (EU) 2020/1588) concerning so-called ‘conflict minerals’ (to which a section is
dedicated below). The process of managing ‘conflict minerals’ activities starts out from the
qualification phase of potential new suppliers associated with the issue and continues throughout
the duration of the supply as dully described in the dedicated section within this Report.
With regard to the contractual stage, for more than a decade the Sustainability and Business Ethics
Clauses (including anti-corruption) have been included systematically by Pirelli in contracts and
orders for the purchase of goods and/or services and/or works, both with private suppliers and with
the Public Administration (or institutes/enterprises under public control) or NGOs, worldwide.
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In particular, the clauses require all suppliers to accept the principles of the Pirelli Suppliers’ Code of
Conduct, the contents of which, as mentioned above, govern Pirelli’s requirements in terms of human
and labour rights, the environment, decarbonisation, biodiversity, sustainable management of
materials and conflict minerals, business ethics and the obligation of due diligence on the supply
chain, up to upstream, as well as Pirelli’s right to carry out audits and subject to termination in the
event of violation. The clause, published in the “Suppliers Area” within the “General Terms and
Conditions of Purchase”, reads:
The Supplier declares to have read and understood the Pirelli Suppliers’ Code of Conduct,
published and accessible at Supplier_CoC_EN.pdf (amazonaws.com), which sets out the
principles by which Pirelli conducts its business and relations with third parties.
In light of the above, the Supplier undertakes, in connection with the performance of each
Contract(s) and/or Order(s), to manage its business in compliance with the Pirelli Suppliers’ Code
of Conduct.
Pirelli has the right to verify, throughout the duration of the Contract, directly or through third
parties, the Supplier’s compliance with the Pirelli Suppliers’ Code of Conduct, subject to
confidentiality and reasonable notice.
In case of breach by the Supplier of the obligations set forth in the Pirelli Suppliers’ Code of
Conduct, or in case of refusal by the Supplier to implement an action plan required by Pirelli or
in case of failure to implement an action plan agreed with Pirelli in relation to the Pirelli Suppliers’
Code of Conduct, Pirelli may suspend with immediate effect performance of the Contract and/or
Order, without prejudice to its right to terminate the Contract(s) and/or Order(s) pursuant to Article
6.2 and exercise any other remedy provided by law.
The Supplier is entitled to report to ethics@pirelli.com any violation or suspected violation of the
Pirelli Suppliers’ Code of Conduct and/or of any applicable legislation; reports may be made
anonymously, but must contain a description of the facts constituting even a suspected violation
of the provisions contained in the Pirelli Suppliers’ Code of Conduct, including information on the
time and place of the facts represented, and the persons involved. Pirelli will not tolerate threats
or retaliation of any kind against the whistleblower or anyone who has collaborated in the
activities of verifying the validity of the report, and reserves the right to take all appropriate action
against anyone who carries out or threatens to carry out such acts of retaliation. Pirelli
guarantees the anonymity of the whistleblower in compliance with the law.
In addition, always in line with the consideration of business relevance, country, sector and
commodity specific risks:
Suppliers associated with the Conflict Minerals issue are required to sign an additional dedicated
clause, which is detailed in the “Conflict Minerals” paragraph within the “Social Information”
section, under the “S2 Workers in the value chain” paragraph. Specific sustainability clauses are
applied to Natural Rubber Suppliers, which implement the requirements of the Policy on
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Sustainable Management of Natural Rubber, without prejudice to Pirelli’s right to audit and
terminate the contract (as set out in the Policy).
At the level of supplier performance and risk monitoring and evaluation, Pirelli adopts a vendor
rating system to assess performance in the areas of Labour, Human Rights, Environment, and
Business Ethics, through the use of the EcoVadis platform. The system, adopted to monitor the
sustainability performance of vendors and propose improvement plans on environmental, human
rights, ethics and sustainable sourcing, also offers access to ESG benchmarks. Through Scorecard
clear it is possible to monitor the company’s positioning with respect to the reference industry,
manage/prioritise improvement actions, and compare performance within the EcoVadis network.
FOCUS: ESG Assessments, ESG Audits and Corrective Actions
By 2024, 1,208 suppliers underwent sustainability assessments to identify current (versus potential)
risk in environmental, social and governance terms through Ecovadis assessments and on-site third-
party audits.
Of these, approximately 47% fall within the scope of “significant suppliers”, meaning they are
suppliers with potential ESG risk and/or those considered business-critical.
Of the suppliers assessed in the last 3 years, 234 were found to have current ESG non-compliance
risks, and 100% of them have been provided with a non-compliance remediation plan including
specific actions and timelines, and for all of them Pirelli offers multiple tools to support them in the
implementation of their remediation plans. Overall, in 2024, 741 unique suppliers were supported in
the implementation of corrective action plans.
The Pirelli management model has been characterised by third-party on-site audits since 2009.
Compared to self-assessment or remote assessments, this approach allows for a very high level of
reliability of the audit results, as they are carried out on-site and in person by a specialised third
party.
The on-site audit, the costs of which are covered by Pirelli, represents an opportunity for the supplier
to engage in capacity building, by assessing the compliance of its operations with local and
international regulations on environmental standards, human rights and labour rights, and business
ethics. In turn, support is provided for the development of a remediation plan in response to any non-
compliance, based on dialogue between the auditor and the supplier.
The on-site audit is carried out already in the pre-qualification phase for all potential new suppliers
and/or plants of raw materials and high value-added goods that, by their nature, can become
development/long-term partners for the company, to which, moreover, a large part of the
procurement spending is allocated.
In addition, every year Pirelli conducts an on-site third-party ESG audit campaign at active suppliers’
sites to cover all product and geographic areas of purchase.
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The annual Audit Campaign covers suppliers considered critical and significant based on the results
of economic materiality and ESG risk criteria of the country, sector and commodity.
The parameters considered in assessing critical and significant suppliers, are multiple:
the supplier is bound to Pirelli by multi-year contracts;
the replacement of the supplier and/or related product may be complex;
the supplier holds a high percentage of Pirelli’s purchase for the specific product category;
the economic burden of the purchase is significant;
the supplier plays a relevant role in terms of impact on innovation;
the supplier operates in a Country, sector and/or supplies a commodity, good or service
considered to be at risk under environmental, human rights and/or labour terms;
the supplier has not yet undergone an ESG audit by Pirelli or special critical issues have been
detected in previous audits;
there is information, a perception or doubt concerning possible violations by the supplier in the
matter of social, environmental and/or business ethics responsibilities.
The ESG risk assessment is performed annually with the engagement of Purchasing Managers in
consultation with the relevant departments, involving Enterprise Risk Management and Sustainability
Managers.
Each on-site audit has an average duration of two days in the field and includes a factory visit,
interviews with workers, management and trade union representatives.
The external auditors carry out the audits on respect for Human and Labour Rights, compliance with
environmental regulations, the level of sustainable management of the supply chain by the supplier,
and the codes of conduct and policies adopted and implemented, following a checklist of parameters
derived from the SA8000® standard (a reference tool officially adopted by the Group for managing
social responsibility since 2004), from the Pirelli Suppliers’ Code of Conduct (in turn consistent with
the areas of social, environmental and governance sustainability dictated by the United Nations
Global Compact and underlying based on the findings of the audit and ILO regulations) and from the
Pirelli Policies “Global Health, Safety and Environment”, “Global Human Rights”, “Diversity, Equity
and Inclusion”, and “Sustainable Natural Rubber Management”. Since 2019, KPIs related to loss
prevention issues have been added. For natural rubber suppliers, the on-site Audit checklist is
enriched with additional and specific parameters, deriving from Pirelli’s Policy for the Sustainable
Management of Natural Rubber and in line with the expectations of the Global Platform for
Sustainable Natural Rubber (a specific section is dedicated to the topic of Natural Rubber
Sustainability below).
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On the basis of audit findings, and where non-conformities are found, the supplier signs off a
corrective action plan suggested by the independent auditor, to be implemented within specific
deadlines. The actual return from non-compliance within the prescribed time limit is then verified
through follow-up activities followed by the third-party auditor who reports to Pirelli. In the event of
refusal by the Supplier to implement an action plan requested by Pirelli or failure to implement an
agreed action plan, Pirelli may suspend with immediate effect the execution of the Contract and/or
the Order, and/or terminate the contractual relationship. In 2024, no supplier contracts were
terminated.
In the last three years, Pirelli has carried out a significant number of ESG audits of third parties,
showing its commitment to assessing and continuously monitoring suppliers in order to guarantee
compliance with the environmental, social and governance standards.
Suppliers where non-conformities (and Medium or High associated risk) have been found have
signed a remedial plan to be implemented within specific deadlines, which, as per the Procedure,
entails follow-up by the third-party Auditor to evidence and confirm that remedial action has been
taken.
The results of the on-site ESG Audit together with the additional evaluations carried out during the
on-boarding of the supplier are integrated into the annual Vendor Rating process whereby a rating
is given to the supplier that sums up ESG performance, the qualitative level of supplies, the quality
of the commercial relationship and the technical-scientific collaboration.
Finally, the Group Internal Audit function verifies, as part of ESG audits, the adequacy of the
management and oversight of the ESG Audit process on suppliers by the designated functions.
Policies for sustainable supply chain management
Sustainable supply chain management is addressed in the “Global Health, Safety and Environment”
Policy, the “Global Human Rights” Policy, the “Quality” Policy, the “Product stewardship” Policy, the
“Sustainable Natural Rubber Management” Policy, the “Green Sourcing” Policy, the “Social
Responsibility for Occupational Health, Safety and Rights, and Environment” Policy, published in
several languages on the Company’s website so that they are fully accessible to the general public.
The Policies are in turn the source of the details of what Pirelli requires of its Suppliers, expressed
in the Pirelli Suppliers’ Code of Conduct, also published on the Company’s website, both among
the Policies and in the “Suppliers Area”.
The Supplier Code of Conduct is an integral part of relations between Pirelli and its suppliers. In light
of the documents mentioned, with reference to the specific social and environmental issues
addressed by the individual Policies, Pirelli undertakes to establish and maintain the procedures
necessary to evaluate and select its suppliers on the basis of their level of social and environmental
responsibility, and to require them to implement a similar management model in order to extend
responsible management in the supply chain as far as possible to its origin.
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In 2025, Pirelli has planned to update the Green Sourcing Policy, also in order to set forth Pirelli’s
commitment to fostering positive impacts in terms of the development of the local supply chains.
More specifically, the update of the Green Sourcing Policy will explain the responsibility accepted by
Pirelli to manage relations with its suppliers in a transparent, impartial and fair manner, prioritising
the use of local suppliers wherever possible – so as to make a concrete contribution to the local
economy – and to purchase materials, goods and services exclusively from counterparties that make
an effort to operate according to the best production processes and the highest standards and
regulations of sustainability and that undertake to know, respect and implement the Supplier Code
of Conduct adopted by Pirelli and expressly referred to in the Policy.
In addition, this update will aim to highlight Pirelli’s commitment to make every effort to ensure fair
prices and payment terms in line with market practices.
Purchasing policies and practices are subject to monitoring to ensure alignment with the Supplier
Code of Conduct and to prevent any conflicts with ESG expectations and objectives.
Targets
As outlined in the General Information section, Pirelli operates according to a local-for-local supply
approach, which is consistently applied across the Group.
The “Increasing local-for-local sourcing” commitment, included in the Industrial Plan, reflects the
Group’s commitment to strengthening local sourcing in the various operative areas, in line with the
commitment to optimise supply chain management.
This objective is implemented through the execution of the specific strategy of each goods category
and the activities vary according to the specificities of the individual goods categories and local
needs.
This approach allows Pirelli to adapt its strategies to the characteristics of the reference markets,
guaranteeing flexibility and greater effectiveness in pursuing the commitment to local sourcing.
Moreover, as part of the management of relations with its suppliers, Pirelli, in the March 2024 update
of its Strategic Plan, defined a target of suppliers identified as having medium and high
potential ESG risk, to be subjected to an ESG assessment.
This target foresees that by 2025, 96% of the total expenditure related to suppliers detected materials
per spend and classified as medium-high ESG potential risk will undergo an ESG assessment. This
percentage will rise to 100% by end 2027, guaranteeing the complete and systematic monitoring of
these suppliers.
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The Risk Assessment update, described in the following section, enabled the collection of further
information which will be integrated into the ESG performance monitoring target of the supply chain
in 2025.
These targets also included an intermediate target to 2023, according to the ESG risk assessment
completed in 2023 and the materiality of the expenditure of assessed suppliers exceeding
100k, which consisted of 90% of the total expenditure associated with high-risk suppliers subjected
to an ESG assessment and 82% for mid-risk suppliers. The milestones set for 2023 have been
achieved, and in 2024, there was a further increase of 93% in spending related to suppliers identified
as having high potential ESG risk, and 86% for those with medium potential ESG risk, based on
spending materiality. This progress shows the company’s commitment to constructing an ever more
sustainable and responsible supply chain.
The target was developed to identify and mitigate the risk of violations of the provisions set out in
the Supplier Code of Conduct regarding Human Rights and Labour across Pirelli’s supply chain. This
is achieved through a specific evaluation system for Tier 1 suppliers, based on tools such as
EcoVadis Rating or on-site audits.
Monitoring and assessment are carried out in close collaboration by the company Sustainability and
Purchasing Departments in order to guarantee strategic and operative alignment.
Actions
ESG RISK ASSESSMENT
In 2024, continuing on from what has been done during previous years, a systematic research desk
was carried out of negative supplier ESG impacts and their corporate relevance, considering the
data sources available, like ESG risks per country, sector or commodity, the expense, the company
relevance, etc., updating the potential and actual risk assessment associated with the whole chain
(12,773 tier-1) and further strengthening the due diligence process and underlying risk-based model
for the management of ESG aspects. Thanks to the implementation of the Ecovadis IQ+ package,
which allows for systematic desk research to be carried out of the potential risk of negative ESG
impacts of suppliers and their commercial relevance, overseen by the Purchasing, Enterprise Risk
Management, Compliance and Sustainability Departments, Pirelli has assessed the potential risk
associated with the chain and each supplier, according to the following 3 risk factors:
The supplier’s sustainability risk is assessed based on four categories, divided into the following
21 criteria: Environment (Energy consumption and greenhouse gas; water, biodiversity;
atmospheric pollution; materials, chemical substances and waste; use of products; product end
of life; customer health and safety; environmental services and advocacy), Human and labour
rights (Health and social; human rights; child labour, forced labour and human trafficking;
diversity, equity and inclusion; human rights of external stakeholders; health and safety of
employees; working conditions; social dialogue; management of careers and training), Ethics
(anti-competitive practices; responsible information management) and Sustainable Management
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of the supplier’s own supply chain (social and environmental practices). For each of these items,
the sector risk is measured, according to the materiality analysis carried out by Ecovadis and the
statistical analysis of average performance achieved by industry players, and the country risk,
measured according to internationally recognised indices;
Procurement Risk: determined by the level of expense and/or criticality of the partners;
Scan Risk: verification from public sources of the presence of reports, certifications and policies
and assessment on the basis of the validity period and type of document.
The assessment was carried out in line with the Group’s Enterprise Risk Management (ERM) model
and applies a risk scale from 1 to 4 (where 1 = low risk, 2 = medium risk, 3 = high risk and 4 = very
high risk).
Thanks to this analysis, it has been possible to identify the geographic areas and production
categories most exposed to risk of violation of the provisions of the Suppliers’ Code of Conduct. The
assessment made it possible to identify the suppliers that require priority intervention through the
most appropriate mitigation and prevention actions.
The results of the analysis indicate that, in general, the category with the highest concentration of
potential risk is the Sustainable Management of the supplier’s own supply chain, which is also
characterised by a uniform risk distribution across different geographical areas. The countries with
the highest incidence of suppliers associated with a high/medium-high risk of ESG violations are,
instead, mainly concentrated in the regions of MEAI, LATAM and APAC; while in the regions of
Europe and North America, as a rule the potential risk was found to be medium. The goods
categories with the highest incidence of potentially high/very high risk suppliers are energy, auxiliary
materials, indirect, R&D, moulds & off-take and raw materials.
An analysis of the non-conformities revealed by the audits of the last four years shows that the actual
risk level of the company’s suppliers is significantly lower even in regions with medium-high potential
risk, such as MEAI and LATAM, whilst it remains high in APAC.
The Risk Assessment performed will make it possible in 2025 to further strengthen the mitigation
and prevention actions adopted with the aim of prioritising verification, monitoring, awareness-raising
and training actions to intervene in an increasingly targeted manner on suppliers that might not be
in line with Pirelli’s provisions, and required in the Suppliers’ Code of Conduct, thus reinforcing the
Due Diligence process already implemented.
In 2024, on-site audits involved Pirelli suppliers across all product categories operating in Brazil,
China, Germany, Indonesia, Malaysia, Mexico, Romania, Thailand, Turkey, the UK, and the US.
The results of audits carried out during 2024 show 27% of audited suppliers without any non-
conformities. Suppliers where non-conformities (and Medium or High associated risk) have been
found have signed a remedial plan to be implemented within specific deadlines, which, as per the
Procedure, entails follow-up by the third-party Auditor to evidence and confirm that remedial action
has been taken.
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The results of the on-site ESG Audit together with the additional evaluations carried out during the
on-boarding of the supplier are integrated into the annual Vendor Rating process whereby a rating
is given to the supplier that sums up ESG performance, the qualitative level of supplies, the quality
of the commercial relationship and the technical-scientific collaboration.
The results of the risk assessment are fully integrated into the activities that the Company has
planned for 2025, which will see the continuation of on-site audits of potential suppliers of raw and
high added value materials from the selection phase, periodic on-site audits for active suppliers,
Ecovadis assessments and with the provision of training on both human rights and biodiversity. For
details on qualitative and quantitative supply chain targets, please refer to ‘Social Information’,
section ‘S2 Workers in the value chain’ - ‘Training along the supply chain’ and the paragraph ‘Supplier
relationship management’, ‘Targets’ of this section.
Supplier award
Every year Pirelli recognises the contribution of its best suppliers, putting sustainability, continuous
innovation, quality, impeccable service and competitiveness at the heart of Pirelli Supplier Day.
The 2024 event was held at the company’s headquarters in Milan, in the presence of the Executive
Vice President and the Chief Executive Officer. It involved a selection of large, medium and small
companies from all over the world, most of which were considered ‘strategic suppliers’. The seven,
who distinguished themselves during the year for sustainability, quality, innovation, service level and
performance, were awarded by Pirelli’s Chief Purchasing Officer.
Supplier Day 2024 was also an opportunity to reaffirm Pirelli’s Open Innovation approach, which
envisages the involvement of suppliers, universities and innovation hubs in the continuous process
of innovation and the development of new products, making the most of new bio-based, recycled
and nanopolymer materials.
A special spotlight was shone on the excellence and commitment of the entire supply chain that
helps Pirelli achieve its goals. Sustainability was at the forefront, for example, in the company’s 2030
goal of carbon neutrality and reduction of fossil-based materials, thanks to innovation and research
on renewable or recycled sources.
Metrics – Payment practices
Payment terms with Group suppliers are defined on the basis of various factors, including the nature
of the contract, the relationship with the supplier and market conditions. Once the terms have been
set, payments are made according to the agreed deadlines, thereby ensuring transparent and
reliable financial management in order to guarantee a good relationship with counterparties and
ensure continuity of supply.
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With reference to the required disclosure on payment practices, it should be noted that the Group,
in the absence of specific guidelines and considering the difficulty in obtaining all the necessary
information, considered the invoices recorded in 2024 in the accounting systems through the Group’s
standard process of the main subsidiaries, including all production companies.
The average actual payment days, calculated as the difference between the payment date and the
invoice date, was 93, while the average payment terms resulting from purchase orders based on
negotiations with suppliers was 81. The data represents a weighted average over the value of the
relevant invoices. It should be noted that the invoices considered are representative of the main
goods and services purchased by the Group (purchases of raw materials, logistics services,
purchases of tangible fixed assets, indirect purchases and industrial services, such as maintenance
and auxiliary materials).
Purchases recognised as above cover about 65% of the sum of purchases from third parties included
in the cost items of the Profit and Loss Account and investments in the Group’s consolidated financial
statements as at 31 December 2024. It should also be noted that, in order to verify the consistency
of the above-mentioned results on the sample described with respect to the overall cost population,
DPO (days of payment outstanding) was calculated on the consolidated data by applying the formula
as per market practice, obtaining a value substantially in line with the results deriving from the
sample.
It is specified that, as of the date of this document, there are no relevant legal proceedings pending
due to late payment.
The Board of Directors
Milan, April 28, 2025
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REPORT ON CORPORATE GOVERNANCE
AND SHARE OWNERSHIP OF PIRELLI & C. S.P.A.
PURSUANT TO ART. 123-BIS OF THE CONSOLIDATED LAW ON FINANCE (TUF)
(TRADITIONAL MODEL OF ADMINISTRATION AND CONTROL)
(REPORT APPROVED BY THE BOARD OF DIRECTORS OF PIRELLI & C. S.P.A. ON 28 APRIL 2025 IN
RELATION TO THE YEAR ENDED ON 31 DECEMBER 2024. THE REPORT IS ALSO AVAILABLE ON THE
WEBSITE WWW.PIRELLI.COM)
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GLOSSARY
Borsa Italiana: Borsa Italiana S.p.A.
Camfin: Camfin S.p.A., a company established under Italian law indirectly controlled by Marco
Tronchetti Provera through MTP&C, with registered offices in Milan, Via Larga no. 2, Tax Code, VAT
and Milan-Monza Brianza-Lodi Companies Register number 00795290154.
ChemChina: China National Chemical Corporation Limited, a company established under Chinese
law, directly controlled by Sinochem Holdings, with registered offices at 62 Beisihuan Xilu, Haidian
district, Beijing (People’s Republic of China), registered with the State Administration of Industry and
Commerce of the People’s Republic of China, registration number 91110000710932515R.
CNRC: China National Tire & Rubber Corporation Ltd., a company established under Chinese law,
directly controlled by ChemChina, with registered offices at 62 Beisihuan Xilu, Haidian district, Beijing
(People’s Republic of China), registered with the State Administration of Industry and Commerce of
the People’s Republic of China, registration number 91110000100008069M.
Civil Code: the Italian Civil Code approved by Royal Decree no. 262 of 16 March 1942 (as
subsequently amended and supplemented).
Corporate Governance Code: refers to the Corporate Governance Code of listed companies
prepared and approved in January 2020 by the Corporate Governance Committee and effective from
1 January 2021.
Code of Ethics: the Group’s Code of Ethics, of which the current version was most recently adopted
in 2023 and which sets out the general principles (transparency, correctness and loyalty) that inspire
the conduct and operation of the Group’s business. The Code of Ethics is available on the Website.
Corporate Governance Committee: the Italian Corporate Governance Committee for listed
companies, promoted by Borsa Italiana, as well as by ABI, Ania, Assogestioni, Assonime and
Confindustria.
Board of Directors: the Board of Directors of Pirelli & C. S.p.A.
Consob: the National Commission for Companies and the Stock Exchange.
Report Date: indicates 28 April 2025, the date on which the Board of Directors approved this Report.
CSRD Decree: Italian Legislative Decree no. 125 of 06 September 2024, which incorporates and
implements the CSRD Directive into the Italian system.
Golden Power Decree: Italian Decree-Law no. 21 of 15 March 2012, setting out rules governing
special powers over corporate structures in the sectors of national security and defence and for
activities of strategic relevance in the sectors of energy, transport and communications, and
converted into Italian Law no. 56 of 11 May 2012, as subsequently amended and supplemented.
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CSRD Directive: Directive (EU) 2022/2464 of the European Parliament and of the Council of 14
December 2022, the “Corporate Sustainability Reporting Directive”, adopted on sustainability
reporting.
Key Managers: the persons identified in accordance with Art. 11.12 of the Bylaws, namely Pirelli’s
managers who, by virtue of the duties and powers assigned to them, directly or indirectly have the
power and responsibility for planning, directing and controlling the Company’s business and making
decisions that can impact its evolution and future prospects.
Golden Power DPCM or the Decision: the Decree of the President of the Council of Ministers
adopted following conclusion of the Golden Power Proceedings and notified to the Company on 16
June 2023, whereby the special powers were exercised in accordance with the Golden Power
Decree.
Year: the financial year to which this Report relates, i.e. the year ending 31 December 2024.
ESRS: indicates the principles of sustainability reporting defined in Delegated Regulation (EU)
2023/2772 of the Commission of 31 July 2023.
Group: collectively Pirelli and its subsidiaries, as defined in art. 2359 of the Civil Code and art. 93
TUF.
Capital Law: indicates Law no. 21 of 5 March 2024 containing measures to support the
competitiveness of capital and delegation of powers to the Government for the organic reform of the
provisions on capital markets set out in the TUF, and of the provisions on joint stock companies
contained in the Civil Code also applicable to issuers.
MPI Italy: Marco Polo International Italy S.r.l., a company established under Italian law indirectly
controlled by Sinochem Holdings through ChemChina with registered offices at Piazzetta Umberto
Giordano 4, Milan-Monza Brianza-Lodi, Tax Code, VAT and Milan Companies Register number
10449990968.
MTP&C: Marco Tronchetti Provera & C. S.p.A., a company established under Italian law directly
controlled by Marco Tronchetti Provera, with registered offices at via Bicocca degli Arcimboldi 3,
Milan, with Tax Code, VAT and Milan-Monza Brianza-Lodi Companies Register number
11963760159.
Pirelli or the Company: Pirelli & C. S.p.A., a company established under Italian law with registered
offices at viale Piero e Alberto Pirelli 25, Milan, with Tax Code, VAT and Milan-Monza Brianza-Lodi
Companies Register number 00860340157.
Pirelli Tyre: Pirelli Tyre S.p.A., a company established under Italian law controlled by Pirelli, with
registered offices at viale Piero e Alberto Pirelli 25, Milan, with Tax Code, VAT and Milan-Monza
Brianza-Lodi Companies Register number 07211330159.
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Pirelli International Treasury: Pirelli International Treasury S.p.A., a company established under
Italian law, controlled by Pirelli with registered offices at viale Piero e Alberto Pirelli 25, Milan, with
Tax code and Milan-Monza Brianza-Lodi Companies Register number 10523850963.
Golden Power Proceedings: the administrative proceedings established by the Golden Power
Decree on 6 March 2023 following notification of the indirect shareholder of Pirelli CNRC, in
connection with the Shareholders’ Agreement Renewal and which concluded with the Company’s
notification of the Golden Power DPCM.
Regulations of the Board: the Regulations, adopted by the Board of Directors on 3 August 2023,
which govern the methods of organisation and internal functioning of the Board of Directors itself, in
line with the recommendations of the Corporate Governance Code.
Issuers’ Regulation: the Regulation approved by Consob resolution 11971/1999 (as amended and
supplemented) on the subject of issuers.
Related Parties Regulation: the Regulation approved by Consob resolution 17221 dated 12 March
2010 (as amended and supplemented) on the subject of related-party transactions.
Report: this Report on the corporate governance and share ownership prepared pursuant to art.
123-bis TUF.
Remuneration Report: the report on the Remuneration Policy and compensation paid, approved
by the Board of Directors on 28 April 2025, on the proposal of the Remuneration Committee, having
consulted with the Board of Statutory Auditors, drafted in accordance with Art. 123-ter of the TUF
and Art. 84-quater of the Issuers’ Regulation and published on the Website.
Consolidated Sustainability Reporting: indicates the reporting of sustainability-related
information, as regulated by the CSRD Decree, contained in the directors’ report on operations,
inside the 2024 annual financial report published on the Website.
Shareholders’ Agreement Renewal: the shareholders’ agreement entered into on 16 May 2022 by
ChemChina, CNRC, SPV HK 1, SPV Lux, MPI Italy, Camfin and MTP&C, which came into force on
19 May 2023, the date of publication of the notice convening the Pirelli Shareholders’ Meeting for
the approval of the financial statements as at 31 December 2022 and the effect of which was
suspended from 19 May 2023 to 16 June 2023, the date on which the Government notified the
Company and the other parties concerned of the Decision. The essential content of the
Shareholders’ Agreement Renewal, to which reference is made for further information, is available
on the Website.
Sinochem Holdings: Sinochem Holdings Corporation Ltd., a Chinese state-owned enterprise
(SOE), under the supervision of the State-owned Assets Supervision and Administrative
Commission of the State Council (SASAC) of the People’s Republic of China, with its registered
office at Xiong’an New Area (People’s Republic of China), No. 001, Enterprise Headquarters Area,
Start-up Zone, Hebei Province, registered with the State Administration of Industry and Commerce
of the People’s Republic of China under no. 91133100MA0GBL5F38.
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Website: the institutional website of Pirelli containing inter alia information about the Company, can
be found at the Internet domain www.pirelli.com.
Auditing Firm: PricewaterhouseCoopers S.p.A.
SPV HK1: CNRC International Limited, limited company under Hong Kong law (People’s Republic
of China), indirectly controlled by Sinochem Holdings through ChemChina, with registered offices at
4611 46/F Office Tower Convention Plaza Wanchai G, Hong Kong (People’s Republic of China),
Hong Kong Companies Register number 2222516.
SPV Lux: Fourteen Sundew S.à r.l., a limited liability company (société à responsabilité limitée)
under Luxembourg law, indirectly controlled by Sinochem Holdings through ChemChina, with
registered offices at 15 Boulevard F.W.Raiffeisen 2411, Luxembourg (Grand Duchy of Luxembourg),
with Luxembourg Companies and Commerce Register number B195.473.
Bylaws: indicates Pirelli’s current Bylaws, available on the Website, most recently amended by the
extraordinary Shareholders’ Meeting held on 12 December 2024.
TUF: Legislative decree 58 of 24 February 1998, as subsequently amended and integrated (the
Consolidated Law on Finance).
Please refer to the Consolidated Sustainability Reporting for any information concerning
Pirelli’s corporate governance in compliance with ESRS.
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PREAMBLE
The Report presents the corporate governance system adopted by the Company. This system is
consistent with the principles and the recommendations contained in the Corporate Governance
Code. Pirelli is aware that an efficient system of corporate governance is an essential element for
achieving the objective of sustainable value creation.
The Report was examined on 20 March 2025 by the Control, Risks and Corporate Governance
Committee, which ruled in favour of it and it was approved by the Board of Directors on 28 April
2025.
The information contained in the Report refers, where not expressly indicated, to the Financial Year.
1.
COMPANY PROFILE
Pirelli, with its 31 thousand employees and revenues of around 6.8 billion euros in 2024, ranks
among the principal global manufacturers of tyres and supplier of ancillary services, being the only
operator in the sector exclusively specialised in the Consumer segment (tyres for cars, motorcycles
and bicycles), with a globally-recognised brand. The Company has a distinctive positioning with
regard to High Value tyres, which are manufactured to achieve the highest levels of performance,
safety, quietness and road grip, with significant input from technology and/or customisation (i.e. ≥18”,
Specialities, Super Specialities and Premium Motorcycle tyres). In addition, the Company currently
holds a leadership position in the Car Prestige tyres segment, and in the radial segment of the
motorcycle tyre replacement market. Pirelli is also a leader in Europe, China and Brazil in the Car
≥18” tyre market in the replacement channel. At the end of the financial year, Pirelli boasts
geographically diversified production, with 18 production plants in 12 different countries and a
commercial presence in more than 160 countries.
Pirelli also pursues the development of CYBER™ technologies, which, thanks to the sensors that
can be installed inside the tyre, will help make essential information available to enhance vehicle
driving safety and performance. To this end, under the scope of the Golden Power Proceedings,
within the adoption of the Measure, the Council of Minsters also noted that, amongst other aspects,
the CYBER™ technology for installation in the tyres constitutes an asset of strategic importance in
accordance with and pursuant to the Golden Power Decree. For more details on the Decision and
the special government powers under the Golden Power Decree, see section 2.5 of the Report. The
CYBER™ sensor can collect data and transmit it to the vehicle, which, through the 5G network and
in geolocalised format, makes it available to cloud processing systems and supercalculators for the
creation, using artificial intelligence algorithms, of complex digital models that can, amongst others,
be used in cutting-edge contexts such as smart cities and digital twins.
The Company has an organisational structure that reflects its business strategy and business model.
For more details on Pirelli’s organisational structure, refer to the Website.
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For the sake of completeness, it should be noted that, pursuant to the Corporate Governance Code,
the Company falls within the definition of “concentrated ownership company” and “large company”.
Moreover, the Company did not use any flexibility options admitted by the Corporate Governance
Code for such companies.
For more details on Pirelli’s profile, also see the Website.
1.1
MODEL OF CORPORATE GOVERNANCE
Pirelli’s governance structure, hinged on the very best international practices, as ruled by Art. 3.4 of
the Bylaws, is structured according to the traditional model of administration and control.
The following diagram summarises the Company’s current governance structure.
In compliance with the Corporate Governance Code and the Bylaws, the Board of Directors has
established five board Committees appointed to offer support and specifically:
-
Strategies Committee;
-
Appointments and Successions Committee;
-
Remuneration Committee;
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-
Sustainability Committee;
-
Audit, Risks and Corporate Governance Committee.
The Board of Directors has also established the Related-Party Transactions Committee, with duties
that include authorising related party transactions.
For further details on board Committees, see section 6 of the Report.
The external audit of the accounts is entrusted to PricewaterhouseCoopers S.p.A.147, a registered
auditing firm (see section 9.5 of the Report for further details). The Company’s Governance Structure
is completed by a Board of Statutory Auditors (made up of five standing and three alternate
members) with the functions of supervising administration and compliance with the law and Bylaws
(see section 11 of the Report for further details), and a Supervisory Body (made up of three
members, of whom one is also a Standing Auditor) with the functions of supervising the operation of
and compliance with the organisation, management and control model adopted pursuant to Italian
Legislative Decree 231/2001 (see section 9.8 of the Report for further details).
In fulfilling its duties, the Board of Directors has defined the Group companies’ corporate governance
rules and system. Moreover, Key Managers and managers with sector and function expertise sit on
the Boards of Directors of the subsidiaries in order to pursue the strategies and policies adopted by
the Parent Company.
1.2
SUSTAINABILITY IN PIRELLI
For Pirelli, sustainability is a factor that is integrated into the Group’s growth strategies and business
and, with this in mind, Pirelli is constantly committed to promoting, developing and implementing a
sustainable business model for all its stakeholders in all aspects of its business.
On the sustainability-related matters, the Board of Directors:
-
draws up a sustainability plan which integrates the Company’s strategic plans and monitoring
of their implementation (for more details, see the Consolidated Sustainability Reporting);
-
includes ESG indicators in its Remuneration Policy, consistent with the objectives included
in the Company’s strategic plans for measuring the management performance in its annual
and medium/long-term remuneration plans (for more details see the Remuneration Report);
-
chooses a director in charge of sustainability issues (for more details see section 9.2 of the
Report);
147 Following the proposal of the Board of Statutory Auditors, the Shareholders’ Meeting held on 28 May 2024 appointed KPMG S.p.A. to
perform the statutory audit of Pirelli & C. S.p.A.’s accounts for the period 2026-2034, determining the relative fees.
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-
establishes a Board Committee offering support in analysing sustainability topics linked to
the corporate business, to corporate social responsibility and the analysis of topics relevant
to generating value in the long-term (for more details, see section 6.4 of the Report);
-
periodically assesses, on an ongoing basis, the risks associated with business activities so
as to create long-term value for the benefit of shareholders (for more details see section 9 of
the Report);
-
adopts a specific policy for dialogue with shareholders and the main stakeholders in the
financial market in which the Company operates (for more details see section 14.1 of the
Report);
-
sets up a board Committee and supports it in evaluating and making decisions in relation to
the internal control and risk management system (for further details see section 9.3 of the
Report).
The Company’s commitment to pursuing sustainable development is further confirmed by the
establishing of specific policies and procedures adopted by Pirelli, as better detailed in the
Consolidated Sustainability Reporting, to which reference is made for any additional information.
2.
INFORMATION ON THE OWNERSHIP STRUCTURE
2.1
STRUCTURE OF SHARE CAPITAL
On the Report Date, the issued share capital of Pirelli amounts to 1,904,374,935.66 euros fully paid,
and is represented by 1,000,000,000 ordinary shares without nominal value. Each share grants the
right to one vote. There are no other categories of shares.
It should be noted that the extraordinary Shareholders’ Meeting of Pirelli held on 24 March 2021
resolved to increase the share capital for cash for payment, in a divisible manner, with exclusion of
the option rights pursuant to art. 2441, paragraph 5 of the Italian Civil Code, for a total maximum
amount, including any premium, of 500,000,000.00 euros, to service the conversion of the “EUR 500
million Senior Unsecured Guaranteed Equity-linked Bonds due 2025”, to be paid up in one or more
tranches by the issue of ordinary shares of the Company with regular dividend entitlement, for a
maximum amount of 500,000,000.00 euros, exclusively to service the bond issued by the Company
named “EUR 500 million Senior Unsecured Guaranteed Equity-linked Bonds due 2025”, in
accordance with the criteria determined by the relevant bond regulations (the “Regulations”),
without prejudice to the fact that the final deadline for subscription of the newly issued shares is
established as 31 December 2025 and that if, as of that date, the share capital increase has not
been fully subscribed it will in any case be intended as increased by an amount equal to the
subscriptions collected and as of that date, with the specific authorisation for the directors to issue
the new shares as they are subscribed. Fractions of shares shall not be issued, transferred or
delivered and no payment in cash or adjustment shall be made in lieu thereof.
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As of 24 June 2024, the conversion price of the bonds is 5.9522 euros, calculated in accordance
with the methods provided for in the Regulations148.
Additionally, the Bylaws do not provide for the possibility of increased voting rights or the issue of
shares with multiple voting rights.
2.2
SIGNIFICANT SHAREHOLDINGS OF CAPITAL
Regarding the significant shareholdings of Pirelli’s capital, please refer to Table n. 1 attached to this
Report.
2.3
MANAGEMENT AND COORDINATION ACTIVITIES
The Golden Power DPCM has ruled that CNRC, the indirect parent company of MPI Italy, must
specifically respect the commitment, inter alia, not to manage and coordinate Pirelli, as better
detailed in section 2.5 of the Report.
Conversely, Pirelli exercises direction and coordination of numerous subsidiaries, having made the
relevant publication where necessary.
2.4
RESTRICTIONS ON THE TRANSFER OF SECURITIES: SECURITIES THAT CARRY
SPECIAL RIGHTS; EMPLOYEE SHARE OWNERSHIP: THE MECHANISM FOR
EXERCISING VOTING RIGHTS; RESTRICTIONS ON VOTING RIGHTS
The Bylaws do not impose any restrictions on the transferability of the shares issued by the Company
nor do they envisage any limitations to possession of Company shares nor any need to obtain
approval from the Company or other holders of securities.
No securities have been issued that carry special rights of control nor do the Bylaws envisage any
increased voting rights or the issue of multiple vote shares.
With regard to the shares owned by employees, there are no specific procedures or restrictions
governing the exercise of their voting rights.
There are no restrictions to shareholders’ voting rights.
148 The conversion price stems from the adjustment made following the resolution of the Company’s Shareholders’ Meeting of 28 May
2024 to distribute a dividend of 0.198 euros per ordinary share.
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It is noted that with the adoption of the Golden Power DPCM, the Council of Ministers has deemed
that the Company holds technologies of strategic relevance for national interests, as identified by
the Golden Power Decree and the related transposition regulations.
2.5
SPECIAL GOVERNMENT POWERS
The Golden Power Decree regulates the special powers that can be exercised by the President of
the Council of Ministers in order to safeguard businesses and assets considered as strategic by
reference legislation149.
With the adoption of the Golden Power DPCM, the Council of Ministers deemed that the Company
holds technology of strategic relevance to national interests, as identified by the Golden Power
Decree and related transposition regulations, and considered that the risks relating to such called
for structural measures that went beyond the temporary nature of the Shareholders’ Agreement
Renewal.
The Decision therefore envisaged, differently in respect of Pirelli and CNRC, a series of rules aiming
to set up a network of measures that together act to protect Pirelli’s autonomy and that of its
management team, as well as the technologies and information of strategic relevance held by the
Company. For more details on the provisions, refer to the Company’s press release issued on 18
June 2023 and to the Report on the Corporate Governance and Share Ownership for FY 2023.
In compliance with the measures, Pirelli has equipped itself with a series of tools by which to protect
the assets of strategic importance, including Strategic Industrial Security Clearance (NOSIS), which
envisages limits to the accessibility of information and has established an autonomous security
organisational unit.
The Golden Power DPCM also established that any change to Pirelli’s corporate governance must
be notified in accordance with the Golden Power Decree.
Finally, the Decision envisaged that the implementation of the measures shall be monitored by the
Ministry for Enterprises and Made in Italy (“MIMIT”).
149 The applicable legislation grants the Presidency of the Council of Ministers intervention powers should it deem that a serious threat to
the public interests identified in the Golden Power Decree exists, assessed in light of the principles of proportionality, reasonableness,
and non-discrimination. To this end, by decree of the President of the Council of Ministers: (a) a veto may be imposed on the adoption
of shareholders’ or board resolutions; (b) conditions and requirements may be imposed; (c) opposition to the acquisition of
shareholdings may be expressed.
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2.6
SHAREHOLDERS’ AGREEMENTS
With reference to the shareholders’ agreements known to the Company in accordance with Art. 122
TUF, we note:
-
the Shareholders’ Agreement Renewal, which aims, amongst other aspects, to regulate Pirelli’s
governance, in line with the terms and conditions of the previous shareholders’ agreement signed
on 1 August 2019 between ChemChina, CNRC, SPV HK1, CNRC International Holding (HK)
Limited, SPV Lux, MPI Italy, Silk Road Fund Co., Ltd. (“SRF”), MTP&C and Camfin, which had
reached expiry of the three-year term on 28 April 2023 (the “Shareholders’ Agreement”). The
Shareholders’ Agreement Renewal came into force on 19 May 2023 with the publication of the
notice convening the meeting of the Company’s shareholders, called to approve the financial
statements at 31 December 2022 and its effect was temporarily suspended until the date of the
notification to Pirelli and CNRC of the Golden Power DPCM in accordance with the Golden Power
Decree, insofar as the Golden Power Proceedings were still ongoing at the date on which it came
into effect;
-
the shareholders’ agreement signed on 28 February 2023 by Brembo N.V. (formerly Brembo
S.p.A.) and Next Investment S.r.l., with the parent company Nuova FourB S.r.l., on the one hand,
and Camfin, with the parent company MTP&C., on the other hand, concerning prior consultation
both with respect to the exercise of voting rights in Shareholders’ Meetings and with respect to
any purchases of Pirelli ordinary shares.
For more information on the provisions contained in the shareholders’ agreements referred to the
relevant essential information available on the Site, pursuant to Article 122 of the TUF and Article
130 of the Issuers’ Regulation.
2.7
CHANGE OF CONTROL CLAUSES
The most significant contracts containing clauses of this type, at the Report Date, are summarised
below.
2.7.1
PT EVOLUZIONE TYRES JOINT VENTURE
On 24 April 2012, Pirelli Tyre and PT Astra Otoparts tbk, an Indonesian company, signed a Joint
Venture Agreement in relation to PT Evoluzione Tyres, an Indonesian company incorporated on 6
June 2012 and operating in the production of motorcycle tyres in the plant of Subang, West Java.
Pursuant to this contract, in the event of a change in the ownership structure of one of the
shareholders that is deemed to be a change of control event, a put&call procedure could be activated
that, in the extreme case, might lead to the acquisition by Pirelli Tyre of the entire equity investment
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held by PT Astra Otoparts tbk in PT Evoluzione Tyres, with the consequent termination of the joint
venture agreement.
2.7.2
SUPPLY CONTRACT WITH BEKAERT
The Company, which sold the steelcord business unit to Bekaert in 2014, stipulated a contract with
Bekaert for the supply of steelcord, which expired at end 2024. The contract was stipulated also in
consideration of the contractual peculiarities connected with the sale transaction.
Said contract envisaged a change of control clause whereby Bekaert had the right, inter alia, to
withdraw from the contract within 90 days after becoming aware of a situation in which a third party
acquires control of Pirelli.
The Company is negotiating a new steelcord supply contract with Bekaert, for which the inclusion of
a similar clause is envisaged.
2.7.3
SCHULDSCHEIN: MULTITRANCHE LOAN FOR A TOTAL OF 525,000,000 EUROS
On 26 July 2018 Pirelli concluded a “schuldschein” loan - guaranteed by Pirelli Tyre - for an original
total of 525 million euros (as subsequently amended, the “Schuldschein”), divided as follows: (i) 82
million euros maturing in July 2021 (fully repaid in advance in January 2021); (ii) 423 million euros
maturing in July 2023 (fully repaid in advance in several instalments, the last of which in January
2023); and (iii) 20 million euros maturing in July 2025 (fully repaid in advance in July 2024).
The Schuldschein prescribed, inter alia, that Pirelli shall repay the loan in advance, if certain events
occurred, including the case of a change in the control structures of Pirelli, according to the provisions
of the report on corporate governance and share ownership for FY 2023.
2.7.4
CLUB DEAL EUR 800 MLN ESG 2020 5Y
On 31 March 2020, Pirelli signed a new credit line in the amount of 800 million euros, guaranteed by
Pirelli Tyre, with a pool of leading Italian and international banks, with a maturity of five years. The
new bank facility is entirely sustainable, i.e. it is subject to economic and environmental sustainability
targets. The loan was paid back in full and in advance in several instalments, of which the last was
paid in October 2024.
The loan agreement stated, inter alia, that Pirelli shall be required to make early repayment of the
part made available by each lender should certain events occur, including changes in Pirelli’s control
structure, as specified in the report on corporate governance and share ownership for FY 2023.
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2.7.5
EQUITY-LINKED BOND CALLED “EUR 500 MILLION SENIOR UNSECURED
GUARANTEED EQUITY-LINKED BONDS DUE 2025”
On 22 December 2020, Pirelli completed the placement reserved for institutional investors of an
equity-linked bond with a nominal amount of 500,000,000 euros, maturing on 22 December 2025,
called “EUR 500 million Senior Unsecured Guaranteed Equity-linked Bonds due 2025” guaranteed
by Pirelli Tyre. The bonds were admitted for trading on the Vienna MTF – a multilateral trading facility
managed by the Vienna Stock Exchange.
The bonds, which are non-interest-bearing, can be converted into ordinary shares of Pirelli, following
the Pirelli Shareholders’ Meeting of 24 March 2021 that approved the capital increase, with the
exclusion of option rights pursuant to art. 2441, paragraph 5, of the Italian Civil Code, to be reserved
exclusively to service the conversion of said bonds.
The rules of the loan contained in the Regulations provide, inter alia, that during the period of time
set out in the Regulations, each bondholder shall be granted, at their choice, if a certified Company
change of control should occur or if the free float of the Company’s ordinary shares (calculated as
specified in the Regulations) should drop below a pre-set threshold and should remain there for a
certain number of open market days from the first day on which it has dropped below such level (so
called free float event), alternatively: (i) the right to request early reimbursement at the bonds’
nominal value, by exercising a put option; or (ii) acknowledgement of a new conversion price (if
applicable even regulated based on the so-called cash settlement amount mechanism), lower than
the original and based on the time between the event and the bonds expiring; all based on terms
and procedures established in the Regulations.
In particular, the change of control can only be triggered (except in specific cases permitted under
the Regulation) if any entity, other than ChemChina, Sinochem Group Co., Ltd (“Sinochem Group”),
SRF, Camfin, MTP&C (or any other company controlled by Mr Marco Tronchetti Provera or his family
members) and/or their subsidiaries and/or any person or persons acting in concert with some of
them, acquires the absolute majority of the shares with voting rights following a public offering to the
shareholders, such that they hold or control the absolute majority of the voting rights that can be
exercised in Pirelli’s Shareholders’ Meeting; or if any person or persons acting in concert with any of
them, other than ChemChina, Sinochem Group, SRF or Camfin, MTP&C, or any other company
controlled by Mr Marco Tronchetti Provera or his family members, and/or by their subsidiaries and/or
by any person or persons acting in concert with the latter, holds/controls the absolute majority of the
voting rights of Pirelli’s Shareholders’ Meeting.
For clarification, the Regulation states that there will be no change of control if Camfin, MTP&C (or
any other company controlled by Marco Tronchetti Provera or by one or more of his family members)
participate, directly or indirectly, in the control of Pirelli, or is entitled, directly or indirectly, individually
or in concert with one or more subjects, to designate the CEO of Pirelli.
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2.7.6
BILATERAL ESG FACILITY EUR 400 MLN 2021 3Y
On 11 November 2021, the Board of Directors authorised Pirelli to enter into a medium-long term
variable-rate bilateral loan in the amount of 400 million euros. The new credit line is secured by Pirelli
Tyre and subject to predetermined economic and environmental sustainability targets. The loan was
paid back in full, early, in July 2024.
The loan agreement - signed on 23 December 2021 - stipulated, inter alia, that Pirelli must repay the
credit early should certain events occur, including changes in Pirelli’s control structure as described
in the report on corporate governance and share ownership relative to FY 2023.
2.7.7
CLUB DEAL EUR 1,6 BLN ESG 2022 5Y
On 11 November 2021, the Board of Directors also authorised Pirelli and Pirelli International
Treasury to enter into a new medium/long-term unsecured variable-rate loan, divided into two credit
lines guaranteed by Pirelli Tyre: one ‘Term’ (for 600 million euros) and two ‘Revolving’ (for a total of
1,000 million euros), based on predetermined economic and environmental sustainability objectives,
for a total amount no greater than 1.6 billion euros, with a pool of lending banks.
On 21 February 2022, the respective loan agreement was signed with 16 national and international
lending banks; the agreement provides – inter alia – that Pirelli and Pirelli International Treasury
shall be required to repay in advance the portion of the loan made available by each lender should
certain events occur, including a change in Pirelli’s control structure.
In particular, the change of control can only be triggered (except in specific cases permitted under
the loan agreement) if any entity, other than ChemChina, Sinochem Group, SRF, Camfin, MTP&C
(or any other company controlled by Mr. Marco Tronchetti Provera or his family members) and/or
their subsidiaries and/or any person or persons acting in concert with some of them, becomes the
owner, in aggregate, of more than 50% of the voting rights granted by the Company shares.
For clarification, the loan contract states that there will be no change of control if Camfin, MTP&C
(or any other company controlled by Marco Tronchetti Provera or by one or more of his family
members) participate, directly or indirectly, in the control of Pirelli, or is entitled, directly or indirectly,
individually or in concert with one or more subjects, to designate the CEO of Pirelli.
2.7.8
EMTN PROGRAMME AND NOTES ISSUED IN 2023
On 23 February 2022, the Board of Directors, in the context of the Company’s refinancing strategy,
approved an EMTN (Euro Medium Term Note) programme for the issue of non-convertible, senior
unsecured bonds for a maximum value of 2 billion euros (“EMTN Programme”). In the context of
the EMTN Programme, the Board of Directors authorised the issue of one or more bonds - to be
performed within 12 months of finalisation of the documentation - to be placed with institutional
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investors by May 2023, for a maximum total amount of up to 1 billion euros. The newly issued
securities may be listed on one or more regulated markets and guaranteed by Pirelli Tyre.
On 11 January 2023, in the context of the EMTN Programme, Pirelli started and successfully
completed the placement of its first sustainability-linked bond with international institutional investors,
for a total nominal amount of 600 million euros.
Pursuant to the EMTN Programme, bondholders will have the right to request early repayment of
securities (the so-called “Put option”) in the event of a Change of Control, under the same terms and
conditions provided for in the Club Deal Eur 1.6 bln ESG 2022 5y, as per section 2.7.7.
2.7.9
BILATERAL FACILITY EUR 300 MLN ESG 2023 2.5Y
On 11 May 2023, Pirelli’s Board of Directors approved the subscription of a bilateral loan for a
maximum amount of 400 million euros, maturing in February 2026.
This loan agreement - signed on 30 June 2023 for an amount of 300 million euros - states, inter alia,
that the facility can be cancelled and that Pirelli is required to repay the relevant drawdowns should
certain events occur, including a change in Pirelli’s control structure under terms and conditions that
are the same as those provided for in the Club Deal Eur 1,6 bln ESG 2022 5y, referred to in section
2.7.7.
2.7.10
RCF EUR 500 MLN 2023 4Y
On 9 November 2023, Pirelli’s Board of Directors approved the signing of a revolving committed
credit facility with a select pool of international banks, for an amount of 500 million euros, maturing
in 4 years.
The agreement, signed on 21 December 2023, was subsequently amended in May 2024 to bring
the credit facility into line with the new, more challenging science-based target the Company set
itself as part of the 2024-2025 Industrial Plan Update.
The loan agreement stipulates, inter alia, that the facility can be cancelled and that Pirelli must repay
any drawdowns made against it should certain events occur, including changes in Pirelli’s control
structure.
In particular, the change of control can only be triggered (except in specific cases permitted under
the loan agreement) if any entity, other than Camfin (or any other company controlled by Mr Marco
Tronchetti Provera or his family members) and/or their subsidiaries and/or any person or persons
acting in concert with some of them, becomes the owner of, or controls, in aggregate, more than
50% of the voting rights granted by the Company shares.
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For clarification, the loan contract states that there will be no change of control if Camfin (or any
other company controlled by Marco Tronchetti Provera or by one or more of his family members)
participate, directly or indirectly, in the control of Pirelli, or is entitled, directly or indirectly, individually
or in concert with one or more subjects, to designate the CEO of Pirelli.
2.7.11
EMTN PROGRAMME AND NOTES ISSUED IN 2024
On 11 May 2023, amongst others the Board of Directors approved the update and amendment of
the EMTN Programme pursuant to section 2.7.8. The Board of Directors has also authorised the
issue, to be executed within 12 months of the date of approval of the annual update by the competent
authority (this took place on 30 January 2024), of one or more debenture loans, to be placed with
institutional investors, for a maximum total amount of up to 1 billion euros. The new issues may be
settled in accordance with English or Italian law and the securities can be listed on one or more
regulated markets and will be guaranteed by Pirelli Tyre.
On 25 June 2024, in the context of the updated EMTN Programme, Pirelli started and successfully
completed the placement of another sustainability-linked bond with institutional investors, for a total
nominal amount of 600 million euros.
Pursuant to the updated EMTN Programme, bondholders will have the right to request early
repayment of securities (the so-called “Put option”) in the event of a Change of Control under the
same terms and conditions provided for in the RCF EUR 500 MLN 2023 4Y pursuant to section
2.7.10.
2.7.12
EUR 600 MLN 4Y TERM LOAN CREDIT FACILITY
On 6 March 2024, Pirelli’s Board of Directors approved the signing of a term loan credit facility with
a select pool of international banks, for an amount of 600 million euros, maturing in October 2028.
The new facility, stipulated on 22 March 2024, is brought into line with the new, more challenging
objectives, subject to the Science-Based Targets initiative (SBTi), which Pirelli established in the
2024-2025 Industrial Plan Update.
This loan agreement also envisages, inter alia, possible early repayment if certain events should
occur, including certain types of change of control in line with those agreed in the context of the RCF
EUR 500 MLN 2023 4Y and the updated EMTN Programme, as respectively discussed in sections
2.7.10 and 2.7.11.
* * *
For the sake of completeness, it should be noted that, in addition to the foregoing, as is customary,
some companies in the Pirelli Group have entered into contracts in the commercial sector (including
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contracts for the purchase of goods and services and contracts for the sale of products) that provide
for a change of control clause concerning the interest held, directly or indirectly, by Pirelli in them.
This clause would therefore only apply if the Pirelli Group company left the Group. It should also be
noted that, under the terms of certain local loans, any change of control of Pirelli could potentially
trigger, in the absence of appropriate liability management initiatives, the early repayment of the
respective amount disbursed locally and – in certain remote circumstances – may have a “cascading”
effect on the central loan agreements, entailing the requirement to make early repayment of the
respective amounts disbursed at Group level by virtue of the usual cross default/acceleration clauses
provided therein. With respect to such scenarios, the Group maintains available committed lines, in
the amount of 1.5 billion euros, sufficient to meet any liability management needs.
2.8
CLAUSES IN THE BYLAWS ABOUT PUBLIC OFFERS
The Bylaws do not envisage, in the event of a public takeover bid or exchange regarding Pirelli
securities, any derogations from the provisions governing the passivity rule envisaged by Art. 104,
paragraphs 1 and 1-bis of the TUF, nor the application of the rule of neutralisation set forth in Art.
104-bis, paragraphs 2 and 3 of the TUF.
It is also noted that with the adoption of the Golden Power DPCM, the Council of Ministers has
considered the Company as holding technologies of strategic relevance for national interests, as
defined by the Golden Power Decree.
2.9
MANDATE TO INCREASE SHARE CAPITAL AND AUTHORISATIONS TO PURCHASE
OWN SHARES
Refer to sections 2.1 and 2.7.5 of the Report for details on the capital increase resolved by Pirelli’s
Shareholders’ Meeting on 24 March 2021, to serve the conversion of the debenture loan issued by
the Company named “EUR 500 million Senior Unsecured Guaranteed Equity-linked Bonds due
2025”.
It is specified that during such Shareholders’ Meeting, a mandate was conferred upon the Board of
Directors - and, on its behalf its legal representatives pro tempore, including separately - to carry out
the resolved share capital increase determining, inter alia and each time, in compliance with the
provisions of the Regulations (i) the exact issue price of the Pirelli shares, and, (ii) as a consequence
of the determination of the issue price, the exact number of Pirelli shares to be issued, and, therefore,
the exact exchange ratio, as necessary for the application of the provisions and criteria of the
Regulations; it being understood that, should the share capital increase referred to above not be fully
subscribed on 31 December 2025, Pirelli’s share capital shall be deemed to be increased by an
amount equal to the subscriptions received.
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The Shareholders’ Meeting of the Company did not authorise any purchases of treasury shares in
accordance with Articles 2357 et seq. of the Italian Civil Code.
3.
COMPLIANCE
Pirelli adheres to the Corporate Governance Code, published on 31 January 2020 and in force since
1 January 2021, which is available to the public on the website of the Corporate Governance
Committee,
at
the
following
link:
https://www.borsaitaliana.it/comitato-corporate-
governance/codice/2020eng.en.pdf.
The Company also took into account in the Report the collection of useful Q&As for the application
of the Corporate Governance Code; these were published by the Corporate Governance Committee
on 4 November 2020.
The corporate governance system implemented by the Company is compliant with the principles and
recommendations of the Corporate Governance Code, as was also seen during the financial year,
in which the Company, with the support of the Audit, Risks and Corporate Governance Committee,
examined and constantly monitored the contents of the Corporate Governance Code itself.
According to the “comply or explain” principle envisaged by the Code of Corporate Governance, the
Report provides an account of the recommendations the Company has, presently, decided that there
is no need to fully or partially follow.
The Report is also drafted on the basis of the specific format originally proposed by Borsa Italiana
and which is now updated by the Corporate Governance Committee Technical Secretariat with the
coordination of Borsa Italiana.
On the Report Date, Pirelli is not subject to any non-Italian laws that might influence the corporate
governance structure of the Company.
4.
BOARD OF DIRECTORS
4.1
ROLE OF THE BOARD OF DIRECTORS
In accordance with art. 11 of the Bylaws, the Board of Directors manages and supervises the overall
business activity, pursuing its sustainable development, and to this end is assigned powers of
administration, except those that the law or Bylaws demand be assigned to the Shareholders’
Meeting and without prejudice to the prerogatives granted to the Executive Vice Chairman and Chief
Executive Officer, also taking into account the provisions of the Golden Power DPCM.
For more details on the prerogatives granted to the Executive Vice Chairman and Chief Executive
Officer, also with regard to outlining the Company and Group’s strategies and monitoring their
implementation, reference is made to sections 4.5.1 and 4.5.2 of the Report.
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For a detailed explanation of the role of the Board of Directors in the management of sustainability
matters in accordance with the CSRD Decree and ESRS, refer to the Consolidated Sustainability
Reporting.
4.2
APPOINTMENT AND REPLACEMENT OF DIRECTORS
The provisions contained in the Bylaws, to which reference is made for more details, regarding the
appointment and replacement of Pirelli’s Directors are summarised below.
4.2.1 APPOINTMENT AND REPLACEMENT
Pursuant to art. 10 of the Bylaws, the Company is managed by a Board of Directors made up of a
maximum of fifteen members, who remain in office for three years and who may be re-elected.
The Board of Directors is appointed on the basis of slates presented by the shareholders, taking into
account, inter alia, the provisions of the Golden Power DPCM, in which the candidates are listed by
consecutive number. The Bylaws do not allow the outgoing Board of Directors to submit a slate for
the appointment of directors.
The slates presented by shareholders, signed by those submitting them, must be filed at the
registered offices of the Company at least twenty-five days prior to the date fixed for the
Shareholders’ Meeting called to resolve in that regard. These slates are made available to the public
at the registered offices, on the Website and in other ways prescribed by Consob regulation, at least
twenty-one days prior to the date of the Meeting.
Each shareholder may present or take part in the presentation of only one slate and each candidate
may appear on only one slate on penalty of losing the right to be elected.
The Bylaws acknowledge that shareholders are only entitled to present slates if, alone or together
with other shareholders, they own shares in total representing at least 1% of the share capital entitled
to vote at an Ordinary Meeting, or any lower amount specified in the applicable regulations, with the
obligation to evidence their ownership of the number of shares needed for the presentation of slates
within the deadline envisaged for the publication of such slates by the Company.
Each slate filed must be accompanied by acceptances of nomination and declarations from each
candidate confirming, under their own responsibility, that there are no reasons that would make them
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ineligible for or incompatible with the role, and that they satisfy any requirements established for the
role concerned. Together with such statements, a curriculum vitae must be filed for each candidate,
including their relevant personal and professional data and mentioning the offices held in
management and supervisory bodies of other companies and their satisfaction of the requisites of
independence prescribed for directors of listed companies by the law or by the governance code
endorsed by the Company. In order to ensure gender balance, slates that contain three candidates
must include candidates of different genders, whilst slates containing a number of candidates equal
to or higher than four must contain a number of candidates of different gender at least matching the
minimum laid down in current regulations, in accordance with the content of the notice of the
Shareholders’ Meeting. Any changes arising prior to the actual date of the Meeting must be promptly
notified to the Company.
Any slates presented that do not comply with the above bylaw provisions will be treated as if not
presented.
Each party entitled to vote may only vote for one slate.
The Board of Directors is appointed as follows:
a) four-fifths of the directors to be elected are drawn from the slate that obtains the majority of the
votes expressed by the shareholders, rounded down to the nearest whole number in the case
of a fractional number;
b) the remaining directors are drawn from the other slates, using the quotient method described in
the Bylaws.
If more than one candidate obtains the same quotient, the candidate from the slate that has not yet
elected a director or that has elected the lowest number of directors is elected.
If none of those slates has elected a director yet or all of them have elected the same number of
directors, the candidate elected will be drawn from the slate that obtains the largest number of votes.
In the event of a voting tie, again with more than one candidate obtaining the same quotient, the
Shareholders’ Meeting will vote again and the candidate who receives the largest number of votes
will be elected.
If only one slate is presented, all the directors will be elected from that slate.
Should application of the slate voting mechanism not ensure the minimum number of directors
belonging to the less represented gender set out by applicable law, the candidate belonging to the
most represented gender and elected, indicated in the slate that obtained the largest number of
votes, shall be replaced by the first candidate belonging to the less represented gender not already
elected, drawn from that slate pursuant to the sequential order of presentation and so on, for each
slate (solely for slates that contain three or more candidates) until the minimum number of directors
belonging to the less represented gender has been obtained. If the above procedure does not ensure
the result specified above, the replacement shall be made by resolution of the Shareholders’
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Meeting, adopted by the relative majority of the votes expressed, following presentation of the
candidacies of persons belonging to the less represented gender.
Should application of the slate voting mechanism not obtain the minimum number of independent
directors envisaged by applicable law, the non-independent candidate elected indicated with the
highest progressive number in the slate that obtained the largest number of votes shall be replaced
by the first independent candidate not already elected from that slate following the sequential order
of presentation, and so on for each slate until the minimum number of independent directors has
been obtained, in all cases in compliance with the applicable law governing gender balance.
In the event a director ceases to comply with the independence requirements, this does not cause
his/her ceasing to be a director provided that the directors in office complying with legal
independence requirements are a number at least equal to the minimum number requested by laws
and/or regulations.
For the appointment of directors who, for any reason, were not appointed in accordance with the
slate voting mechanism, the Shareholders’ Meeting shall adopt resolutions with the majorities
required by law, without prejudice in all cases to compliance with the independence and gender
balance requirements.
Should one or more directors cease to hold office during the financial year, they shall be replaced
pursuant to art. 2386 of the Civil Code, without prejudice in any event to respect for the legislation
on gender balance and the independence of the directors.
4.3
COMPOSITION
The Board of Directors in office at the Report Date was appointed by the Pirelli Shareholders’
Meeting held on 31 July 2023. Its term of office will end with the approval of the financial statements
as at 31 December 2025.
As of the Report Date, the Board of Directors is composed of 15 Directors, namely:
-
Jiao Jian (Chairman), Marco Tronchetti Provera (Executive Vice Chairman), Andrea Casaluci
(Chief Executive Officer), Chen Aihua, Zhang Haitao, Chen Qian, Alberto Bradanini, Michele
Carpinelli, Domenico De Sole, Fan Xiaohua, Marisa Pappalardo and Grace Tang were
appointed based on the slate submitted by MPI Italy, also on behalf of Camfin, which obtained
approximately 84% of the share capital votes represented at the Shareholders’ Meeting. Four
Directors specified on such slate, including the Chief Executive Officer, were designated by
Camfin pursuant to the Golden Power DPCM, specifically: Marco Tronchetti Provera
(Executive Vice Chairman), Andrea Casaluci (Chief Executive Officer), Domenico De Sole
and Michele Carpinelli;
-
Directors Giovanni Lo Storto, Roberto Diacetti and Paola Boromei were appointed based on
a slate submitted by a group of asset management companies and institutional investors that
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gained approximately 16% of the share capital votes represented at the Shareholders’
Meeting.
At the Report Date, 40% of the members of the Board of Directors in office were female150 and the
remaining 60% were male. Moreover, 7% are under the age of 50. The average age of the members
of the Board of Directors is approximately 61 years of age and the average age of the female
members is approximately 56 years of age. The Directors’ average time in office as at 31 December
2024 is 4.467 years. The Board of Directors is comprised of executive and non-executive directors.
All Directors ensure professional skills and competence that are appropriate to their tasks.
At the Report Date, the majority of the members of the Board of Directors in office are independent
directors, ensuring that they have significant weight in the adoption of board resolutions and
guaranteeing effective monitoring of operations.
For more details on the composition of the Board of Directors in accordance with the CSRD Decree
and ESRS, also refer to the Consolidated Sustainability Reporting.
Table 2, annexed, provides the significant information on the members of the Company’s current
Board of Directors, with reference to each Director in office at the Report Date. In addition, a
summary of their professional profiles, periodically updated, is available on the Website.
The following charts illustrate (i) the composition of the Board of Directors at the Report Date, as
well as (ii) the average duration of the meetings of the Board of Directors and Committees, (iii) the
average attendance at the meetings, (iv) the number of meetings of the Board of Directors and
Committees held during the Financial Year and (v) the comprehensive competences per sector of
the members of the Board of Directors.
For more details on the competences and capacity of the administrative, management and control
bodies on matters of sustainability in accordance with the CSRD Decree and ESRS, refer to section
4.3.3 of the Report and the Consolidated Sustainability Reporting.
150 The representation requirement for the least represented gender in the corporate bodies of listed companies in force at the date on
which the Board of Directors of Pirelli in office at the Report Date was appointed, is at least two fifths of the least represented gender,
in accordance with Art. 147-ter, paragraph 1-ter, of the TUF, as most recently amened by Art. 1, paragraph 302 of Italian Law no. 160
of 27 December 2019.
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4.3.1 DIVERSITY POLICIES
The pursuit and implementation of diversity policies is one of the Pirelli Group’s pillars and features
heavily in the corporate governance model adopted by the Company.
Pirelli’s approach to diversity policies is, in fact, based on the fundamental principles of non-
discrimination, equal opportunities and inclusion of all forms of diversity, as well as integration and
balancing of work with personal and family needs, with a constant focus on respect for and protection
of human rights, as also ruled by the Company’s Code of Ethics.
Pirelli is characterised by a multinational context in which people express a huge heritage of diversity.
Conscious management of this diversity generates competitive advantages, opportunities for the
development and enrichment of the business, and shared corporate values.
The respect of these values has always been guaranteed by the shareholders during the renewal of
the Board of Directors - including the renewal with the Shareholders’ Meeting held on 31 July 2023
- in terms of age, gender, nationality, seniority in role, education and professional background and
experience. This enables the Board to perform its duties in the most effective way, making use of
the contributions made from different points of view, and to analyse individual situations from multiple
perspectives.
On 3 August 2023, the Board of Directors confirmed the adoption of a statement on diversity and
independence, adopted for the first time by the Company’s Board of Directors on 14 February 2019
on the proposal of the Audit, Risks, Sustainability and Corporate Governance Committee151 and
following the favourable opinion of the Appointments and Successions Committee. The same
statement was updated on 17 March 2022 in connection with the members of the Board itself and
the Board of Statutory Auditors (the “Diversity and Independence Statement”) and is available on
the Website.
In line with current regulations, the Diversity and Independence Statement reflects the Company’s
aim of guaranteeing integration of different professional profiles in the Board of Directors and the
Board of Statutory Auditors, which also takes into account the importance of a balanced presence
of independent members and a fair representation of genders. This statement lists the criteria that
the Board of Directors recommends be observed in the composition of the Board of Directors and
the Board of Statutory Auditors:
-
age and seniority of office;
-
training and professional background;
-
nationality and ethnic origin;
151 It is noted that the Audit, Risks, Sustainability and Corporate Governance Committee has, since 3 August 2023, operated as the “Audit,
Risks and Corporate Governance Committee”.
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-
representation of gender and independence.
Having consulted the Audit, Risks and Corporate Governance Committee and the Appointments and
Successions Committee, the Board of Directors is responsible for any update and amendment of the
Diversity and Independence Statement.
In compliance with the Corporate Governance Code, the Board of Directors, which is also
responsible for the qualitative and quantitative assessment of the Board members, and taking into
account the results of the self-assessment carried out by the Board during its three-year term of
office, draws up a guideline on the size and composition of the administrative body to be submitted
to Shareholders in view of the submission of the slates of candidates for the appointment of the
Company’s new Board of Directors. The board guidelines are published on the Website before the
publication of the notice of the Shareholders’ Meeting convened for the board’s renewal. The
outgoing Board of Directors invites the shareholders who intend to submit slates for the renewal of
the Board of Directors to take the guidelines into consideration.
In addition to the administration, management and control bodies, the value of diversity is upheld by
the entire corporate organisation.
For more details, in accordance with the CSRD Decree and ESRS, refer to the Consolidated
Sustainability Reporting.
4.3.2 LIMITATIONS ON THE NUMBER OF OFFICES HELD
The guidelines to the maximum number of offices, confirmed by the Board of Directors on 3 August
2023 and adopted for the first time on 14 February 2019, following the favourable opinion of the
Audit, Risks, Sustainability and Corporate Governance Committee152 and the Appointments and
Successions Committee, and subsequently amended on 17 March 2022, states that it is not
compatible with the duties of a Company director to be a director or statutory auditor of more than 4
(four) other companies other than those subject to the direction and coordination of the Company,
or its subsidiaries or affiliates, in the case of: (i) companies listed on the FTSE/MIB index (or
equivalent foreign index); or (ii) Italian or foreign companies, subject to the supervision of the
competent authorities, that carry out financial, banking or insurance activities. Furthermore, it is not
considered compatible for the same director to hold more than three executive positions in
companies of the types indicated in points (i) and (ii) above.
Positions held in several companies belonging to the same group are considered to be a single
position and an executive position prevails over a non-executive position.
152 It is noted that the Audit, Risks, Sustainability and Corporate Governance Committee has, since 3 August 2023, operated as the “Audit,
Risks and Corporate Governance Committee”.
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The Board of Directors is entitled to make a different assessment, properly motivated, to be
published in the Report and explained appropriately therein.
Following review by the Audit, Risks and Corporate Governance Committee, at the time of
appointment and thereafter once a year during a board meeting (the last being that held on 28 April
2025), the Board of Directors examines the positions held by each Director (based on the information
provided by that person and/or on the other information available to the Company). At the Report
Date, no Director holds a number of position higher than the number set out in the policy adopted by
the Company.
Annex A indicates the principal appointments held by the Directors in companies that do not belong
to the Group at the Report Date.
4.3.3 INDUCTION PROGRAMME
The Directors perform their duties autonomously and with competence, pursuing the priority
objective of creating sustainable value over the medium-long term. They are aware of the
responsibilities pertaining to their role and, like the Statutory Auditors, they are kept periodically
informed by the competent business functions about the principal regulatory and self-regulatory
changes affecting the Company and the performance of their duties.
Also during the Financial Year, induction sessions were arranged, also with the support of the
management, aimed at providing explanations and additional information about the main
characteristics of the activities of Pirelli and its Group and (including through the work of the
Committees) the reference legislative and regulatory framework and the specific procedures and
rules adopted by the Company.
More specifically, it is noted that on 17 October 2024, the Audit, Risks and Corporate Governance
Committee took part in an induction meeting organised by the Company, held with the support of an
external expert, concerning the recent reforms relating to listed companies and, in particular:
-
the new features introduced by the Capital Law, with a particular focus on the following topics:
(i) possible holding of Shareholders’ Meetings behind “closed doors”, i.e. where shareholders
would attend and vote through a designated representative only, pursuant to art. 135-
undecies of the TUF and consequent amendment of the Bylaws, (ii) abrogation of art. 114,
paragraph 7 of the TUF and impacts on the market abuse procedure adopted by the
Company (the “Market Abuse Procedure”);
-
the new sustainability reporting duties introduced by the CSRD Decree and the possibility of
envisaging in the Bylaws that a manager, other than the manager responsible for the
preparation of the corporate financial documents for the purpose of attesting sustainability
reporting, may be appointed as Attesting Manager.
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On 18 December 2024, with a view to guaranteeing that the members of the Board of Directors and
the Board of Statutory Auditors have competences in matters of sustainability, related to the impacts,
risks and opportunities (IROs) relevant to Pirelli in the environmental, social and governance area,
the Audit, Risks and Corporate Governance Committee shared the induction programme addressed
to the administrative, management and control bodies. The induction programme was also shared
on that same date with the Board of Directors. Training was delivered by the Company’s competent
managers, supported by one or more external consultants during the first quarter of the year, before
approval of the financial statements at 31 December 2024.
Furthermore, during 2024, the Audit, Risks and Corporate Governance Committee received in-depth
and constant updates from the Company departments involved in relation to sustainability issues
and ongoing projects aimed at ensuring compliance with the new obligations introduced by the
CSRD Decree for the preparation of sustainability reporting.
For more details on the competences and capacity of the administrative, management and control
bodies on matters of sustainability in accordance with the CSRD Decree and ESRS, refer to the
Consolidated Sustainability Reporting.
4.4
FUNCTIONING OF THE BOARD OF DIRECTORS
Pursuant to the Bylaws, meetings of the Board of Directors are called by the Chairman or his deputy
and held at the registered offices, or in any another location specified in the notice of call, whenever
deemed appropriate by the Chairman in the interests of the Company, or when requested in writing
by the Chief Executive Officer or by one-fifth of the appointed Directors. Meetings of the Board of
Directors may also be called by the Board of Statutory Auditors, or by each Standing Auditor,
following notification sent to the Chairman of the Board of Directors.
During the year the Board of Directors met nine times. The average duration of each meeting was
approximately 100 minutes, with attendance by around 96% of the Directors and 97% of the
Independent Directors. In accordance with the provisions of the Bylaws and regulations, meetings
were predominantly conducted in hybrid format, using audio/video links.
For the Financial Year and for the current year, Pirelli disclosed a calendar of the main corporate
events to the market suitably in advance (also available on the Website)153. For the 2025 financial
year, as per the Board Regulations, it is scheduled to meet at least 6 times (at the Date of the Report
5 meetings had already been held).
The means of organisation and the internal functioning of the Board of Directors are governed by
the Board Regulations, available on the Website, which, inter alia, establish the deadlines for the
prior submission of information and procedures for protecting the confidentiality of the data and
153 Annually - as a rule by the end of the year - the Company publishes the calendar of principal corporate events for the next financial
year and promptly updates this calendar in the event of subsequent amendments.
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information provided so as not to compromise the timeliness and completeness of the information
flows.
In line with the Board Regulations, the Directors and Statutory Auditors received in advance the
documentation and information needed to express an informed opinion on the matters submitted for
discussion. In particular, during the Financial Year, the documentation was, as a rule, sent to the
Board within 10 days prior to the meeting date. In the exceptional cases in which documentation
could not be transmitted so far in advance (also to take into account the work of the Committees),
full information on the issue to be considered was provided as soon as possible or directly during
the meeting, thus ensuring that the Directors could make informed decisions. Particular attention is
paid to ensuring that information remains confidential, by sending the documentation relating to the
activities of the Board and its Committees using specific software that guarantees that access is
reserved to the Directors and Statutory Auditors only. This is in line with best practice and with the
recommendations of the Corporate Governance Committee.
Taking account of the international composition of the Board of Directors, with the presence of
multiple nationalities, it is also the Company’s practice to proceed to send the documents to be
considered by the Board and its Committees in the three languages (Italian, English and Chinese)
commonly spoken by the Directors. Furthermore, for each meeting of the Board of Directors and
Committees, participants are able to use a simultaneous translation of interventions made into the
languages commonly spoken by the participants.
In order to facilitate minute taking, the Board meetings may be recorded; said recordings shall then
be destroyed once the minutes have been transcribed into the applicable corporate register.
If the Chairman is absent or unavailable, upon request by the Chairman, the meeting may be chaired
by the Vice Chairman or Chief Exectuive Officer; should the latter also be absent or unavailable,
another Director, appointed by the majority of the attendees, may assume the Chair.
For resolutions passed by the Board of Directors to be valid, the majority of members must be in
attendance and the majority of votes cast must be in favour, save for the specific matters governed
by the Bylaws, for which a qualified majority is required.
The Directors’ growing awareness of the business reality and dynamics of the Company and the
Group is enhanced by the attendance of management at their meetings, which allows them to
explore the matters on the agenda in appropriate depth.
All the Key Managers always attended all the meetings of the Board of Directors during the Financial
Year, thus contributing to periodic and up-to-date reporting to the Board of Directors. The Key
Managers do not attend any meetings in which matters relating to them are discussed or that do not
require them to be present.
Other managers and persons external to the Company may also be invited to attend the meetings
in connection with specific items on the agenda.
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It is understood that all such subjects are in any case required to comply with the confidentiality
obligations laid down for board meetings.
The Bylaws establish that, until decided differently at a Shareholders’ Meeting, the Directors are not
bound by the prohibition contained in art. 2390 of the Civil Code.
4.4.1 SECRETARY OF THE BOARD
In line with the recommendations of the Corporate Governance Code, the Board Regulations allow
the Board of Directors to appoint, in compliance with the provisions of the Bylaws, the Secretary by
assessing that he/she satisfies the necessary professional requirements (the “Board Secretary”).
The Board Secretary supports the activities of the Chairman and/or Vice Chairman and/or Chief
Executive Officer and provides impartial assistance and advice to the Board of Directors on all
aspects relevant to the proper functioning of the corporate governance system. More specifically,
and in accordance with the Board Regulations, the Board Secretary ensures that:
a) the pre-meeting information is accurate, complete and clear and the additional information
provided during the meetings is suitable to allow the Directors to act in an informed manner in
compliance with the provisions of the Golden Power DPCM on information of strategic
importance;
b) the activities of the Board Committees are coordinated with the activities of the Board of
Directors;
c)
the top management of the Company and of companies of the same Group may participate in
board meetings, as well as the heads of the company departments in order to provide
appropriate updates on the items on the agenda;
d) after their appointment and during the mandate of the Board, all Directors may participate in
specific induction activities;
e) the board evaluation is adequate and transparent.
The Board Secretary shall provide Directors with independent legal advice and assistance on
corporate governance matters and in relation to their rights, powers, duties and obligations to ensure
the regular performance of their duties.
The Board Secretary, in performing the duties of this role, shall have an organisational structure and
personnel fit to perform the assignment.
It is specified that under the appointment held, in accordance with the Bylaws, the Board Secretary
is classified as a Key Manager.
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4.4.2 BOARD OF DIRECTORS SELF-ASSESSMENT PROCESS
As a rule, the Board of Directors starts an annual process to evaluate its operation and the operation
of its Committees (board performance evaluation) for the reference financial year. The aim of this
work - appreciated by the Directors - is to perform a structured survey of the efficiency of the Board
of Directors at operational level and to identify, if needed, opportunities for improvement so that it
can best perform its role of managing and controlling a complex and continuously evolving company
like Pirelli, operating in several geographical areas.
During the Financial Year, the Board of Directors – in its second year of mandate - started the
process, assisted, as usual, by a primary consulting firm specialised in this area (SpencerStuart).
The self-assessment process was carried out through individual interviews held by the appointed
consulting firm, with questions about the effectiveness, size, composition and operation of the Board
of Directors. All members of the Board of Directors participated in the self-assessment process.
In 2024 board discussions were gradually enriched and became significantly more intense than in
the first year of the term, driven by exchanges of diverse perspectives on key issues for the Group.
This dynamic fostered debate and constructive dialogue, ultimately enhancing the Board’s
effectiveness compared to the previous year of the term.
The analysis of the results confirmed the Directors’ satisfaction and appreciation of the size and the
composition of the Board of Directors and its Committees, with specific regard to the diversity of
gender, age and seniority. The survey revealed a desire to increase opportunities for meetings,
including informal ones, in order to solidify interpersonal relationships between directors, an essential
element for optimising the effectiveness of board dynamics. The survey also highlighted an interest
in a deeper exploration of certain governance issues, in view of their complexity and significant
impact on the Company’s business. In addition to this, strong sensitivity was shown to issues such
as sustainability, the Company’s typical management and market scenarios, also taking into account
the evolving geopolitical context and the structure of the Group.
The financial year was also influenced by the context outlined in the Golden Power DPCM, through
which the Italian Government, recognising the Company as a holder of technologies of strategic
importance to the national interests, exercised the special powers envisaged by the Golden Power
Decree154. Also in 2024, therefore, the Board of Directors found itself facing, a particularly complex
governance issue, while at the same time having to ensure the best possible guidance and control
of the executive’s activities. In this context, some Directors expressed the need to further explore
certain aspects, particularly in light of the scenario outlined by the aforementioned Golden Power
Decree. In addition to those typically related to governance, namely those concerning business
strategies and risk management, along with the related need to enrich the Board with appropriate
expertise, while fostering a broader discussion within the relevant committees and the Board.
154 For further details, see paragraph 2.5 of the Report.
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Overall, what emerged, however, is that all the Directors have a clear sense of belonging and a
strong interest in being able to participate as best they can in the Group’s policy and control activities.
4.4.3 MATTERS WITHIN THE COMPETENCE OF THE BOARD OF DIRECTORS
In accordance with the Bylaws, the Shareholders’ Meeting requires a qualified majority (i.e.
favourable votes by shareholders representing at least 90% of the share capital of the Company) for
the Board of Directors to be authorised to resolve on the following issues:
-
transfer of the operational and administrative headquarters outside of the municipality of Milan;
-
any transfer and/or act of disposition of Pirelli’s Know How, under any form, (including the grant
of licences), pursuant to the provision of article 3.2 of the Bylaws.
More specifically, in addition to the matters reserved to the Board of Directors in accordance with
the law and the Bylaws, on 3 August 2023, the Board of Directors established that all resolutions
regarding the following matters, proposed by Pirelli and/or by any other company subject to direction
and coordination by Pirelli (excluding intergroup transactions), must be approved by the Board of
Directors of the Company:
(i)
assumption or concession of loans worth more than 200,000,000 euros and with a term of
more than 12 months;
(ii)
issue of financial instruments for listing on a European or non-European stock market for a
value in excess of 100,000,000 euros and revocation from listing of such instruments;
(iii)
concession of guarantees in favour of third parties for amounts in excess of 100,000,000 euros.
For the sake of completeness, please note that the concession of guarantees in the interests
of third parties other than the Company, its subsidiaries and joint ventures, must be subject, in
any case, to the approval of the Pirelli Board of Directors;
(iv)
signing derivative contracts (a) with a notional value higher than 250,000,000, euros and (b)
except for those having the sole object and/or effect of hedging corporate risks (e.g. interest-
rate risk, exchange-rate risk, commodity market risk). For the sake of completeness, please
note that the stipulation of speculative derivative contracts is in any case subject to the
approval of the Pirelli Board of Directors;
(v)
purchase or sale of equity investments in subsidiary and affiliates for an amount higher than
40,000,000 euros, which involve entering into (or exiting from) geographical and/or commodity
markets;
(vi)
purchase or sale of equity investments other than those described at point (v) above for an
amount higher than 40,000,000 euros;
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(vii) purchase or sale of businesses or business units that have strategic importance or, in any
case, a value of more than 40,000,000 euros;
(viii) purchase or sale of fixed and other assets that have strategic importance or, in any case, a
value of more than 40,000,000 euros;
(ix)
investment in fixed assets with a total value of more than 40,000,000 euros;
(x)
carrying out transactions of greater significance with related parties, using the term “related
party transactions” to mean those satisfying the conditions envisaged in Annex 1 to the Related
Party Transactions Procedure (“RPT procedure”), available on the Website;
(xi)
definition of Pirelli’s remuneration policy;
(xii) determination, in compliance with Pirelli’s internal policies and the applicable regulations, the
remuneration of the managing directors and the directors with specific responsibilities and,
where required, allocating the total remuneration authorised by the Shareholders’ Meeting
among the members of the Board of Directors;
(xiii) approval of the strategic, industrial and financial plans of Pirelli and the group;
(xiv) adoption of corporate governance rules for Pirelli and defining guidelines for the corporate
governance of the group;
(xv) definition of guidelines for the internal control system, including the appointment of a Director
responsible for overseeing the internal control system, determining the related powers and
duties;
(xvi) any other matter deemed to be responsibility of the Board of Directors of a listed company by
the Corporate Governance Code, as amended from time to time.
It being understood that the approval of the transactions listed above is reserved solely to the Board
of Directors not only if the threshold indicated for each matter has been reached, but also if the
matters listed from (i) to (ix) – whether considered a single action or as a series of coordinated
actions (carried out in the context of a common executive programme or a strategic project) – exceed
the amounts indicated in the annual budget/business plan or (solely for the matters listed from (i) to
(viii) above) if they were not included, listed or envisaged in the annual budget/business plan.
Furthermore, in accordance with the Bylaws, as amended following the Golden Power DPCM, the
Board of Directors is competent in connection with board resolutions relating to:
(i)
the Company’s assets of strategic importance, as identified by the Decision155; and
155 Art. 3.3 of the Bylaws.
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(ii)
the appointment and revocation from office of Key Managers156.
The proposal relating to such matters is reserved to the Chief Executive Officer and any decision to
the contrary can only be made with the vote of at least 4/5 of the Board of Directors (for more
information on the powers assigned to the Chief Executive Officer, see section 4.5.2 of the Report).
Decisions relating to Significant Matters (as defined below) and in particular the approval and/or
amendment of Pirelli’s and the Group’s budget and/or business plan are also reserved to the
competence of the Board of Directors (and/or Shareholders’ Meeting, as applicable), on the proposal
of the Chief Executive Officer. With reference to the Significant Matters, any possible decision
adopted by the Pirelli Board of Directors against the relative proposal submitted by the Chief
Executive Officer must be motivated and, in any case, must consider the best interests of Pirelli.
As required by the Corporate Governance Code157, the Board of Directors gave a positive
assessment of the adequacy of the organisational, administrative and accounting systems and
structure of the Company and the Group, with particular reference to the system of internal control
and risk management, also referring to the analytical work carried out by the Audit, Risks and
Corporate Governance Committee.
The Board of Directors has also evaluated the general results of operations, taking into particular
account the information received from delegated bodies and comparing periodically, at least every
quarter, the results obtained with those planned.
The Board of Directors – also in light of the considerations set out in the Letter from the Chairman of
the Borsa Italiana Corporate Governance Committee (for further details, please refer to paragraph
18 of the Report) – deemed the Company’s current Bylaw provisions and practices to be adequate
for effective governance of the Company and for achieving the Company’s interests.
4.5
EXECUTIVE DIRECTORS
The Executive Vice Chairman Marco Tronchetti Provera and the Chief Executive Officer Andrea
Casaluci are classified as executive Directors of the Company.
156 Art. 11.12 of the Bylaws.
157 See Recommendation 33 (a).
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4.5.1 EXECUTIVE VICE CHAIRMAN
Also in compliance with the provisions of the Golden Power DPCM, on 3 August 2023, the Board of
Directors assigned the Executive Vice Chairman the following powers:
a) legal representation of the Company;
b) powers related to the general strategies of the Company (also referring to the Significant
Matters, as defined below);
c)
supervisory power over implementation of the business plan, the annual budget, by the Chief
Executive Officer of Pirelli, of the General Manager and management;
d) powers related to relations with shareholders, institutions and the media;
e) the power to propose to the Pirelli Board of Directors revocation from the position of Chief
Executive Officer designated and his/her replacement with a new CEO (or appointment of a new
CEO if the previous CEO should cease to hold office for any reason);
f)
the power to appoint and revoke other senior figures in the organisation.
On the same date, in compliance with the provisions of the Golden Power DPCM, the Board of
Directors also conferred upon the Executive Vice Chairman the exclusive delegation on the
autonomous security organisational unit to manage all Pirelli’s assets and businesses considered to
be of strategic relevance to the protection of national interests.
4.5.2 CHIEF EXECUTIVE OFFICER
Also in compliance with the provisions of the Golden Power DPCM, on 3 August 2023 the following
powers were assigned to the Chief Executive Officer Andrea Casaluci:
a) legal representation of the Company;
b) all the powers necessary to carry out deeds relating to all aspects of corporate activity, without
any exceptions aside from those that the law or the Bylaws reserve to the Board of Directors; all
with the power to grant special and general powers of attorney that give the representative the
right to sign on behalf of the Company, either separately or together with others, and all other
powers deemed appropriate by him in the best interests of the Company, including the right to
sub-delegate;
c)
the power to propose to the Board of Directors, coordinating with the Executive Vice Chairman,
adoption of the following resolutions (together, the “Significant Matters”):
(i)
approval of the business plan and the annual budget of Pirelli and its Group, as well as
all significant changes to those documents. The annual budget and business plan must
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(I) regard the operational and financial areas of Pirelli’s business, including, merely by
way of example, the sources of finance and the decisions on the industrial initiatives
underlying the annual budget and business plan; and (II) be complete and supported by
suitable, appropriate annexes that explain the items of the annual budget and business
plan;
(ii)
to carry on monitoring the opportunities offered by the market to create value, in the
interest of all Pirelli stakeholders;
(iii)
any resolution concerning industrial partnerships or strategic joint ventures of Pirelli
and/or any subsidiary, parent company or subject to the joint control of Pirelli, in any
case following examination and discussion in the Pirelli Strategies Committee.
d) together with the General Manager of Pirelli the power to (i) implement the business plan and
the budget – under Executive Vice Chairman supervision – and (ii) the ordinary management of
Pirelli and the Pirelli Group, except for the powers the matters reserved for the Pirelli Board of
Directors;
e) the power to appoint and revoke other senior figures in the organisation.
In accordance with Art. 11.12 of the Bylaws, the Chief Executive Officer also has the power to
propose the appointment and revocation from office of Key Managers of Pirelli to the Board, and any
decision contrary to such a proposal may only be adopted with the approval of at least four-fifths of
the Board of Directors.
In accordance with Art. 3.3 of the Bylaws, the Chief Executive Officer also has the power to propose
board resolutions relating to the Company’s assets of strategic importance, as identified by the
Decision.
The Chief Executive Officer regularly reports on the activity carried out during board meetings.
4.5.3 CHAIRMAN OF THE BOARD OF DIRECTORS
In compliance with the Corporate Governance Code, the office of the Chairman of the Board of
Directors does not qualify as ‘executive’ given the governance structure and powers granted to the
Executive Vice Chairman and Chief Executive Officer. The Chairman of the Board of Directors is
assigned the legal representation of the Company and the other powers envisaged by the Bylaws.
4.5.4 OTHER EXECUTIVE DIRECTORS
At the Report Date, in addition to the Executive Vice Chairman and the Chief Executive Officer, Pirelli
classifies as executive directors those directors who at the same time qualify as Key Managers of
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the Company with strategic responsibilities, if there should be such Directors, or Directors who also
hold office as Chief Executive Officer or Executive Chairman of the principal subsidiaries of Pirelli.
At the Report Date, there were no other executive directors apart from the Executive Vice Chairman
and the Chief Executive Officer within the Company’s Board of Directors.
A list of the Company’s Key Managers is available on the Website.
4.6
INDEPENDENT DIRECTORS
Since 2006158, Pirelli’s Board of Directors has been characterised by a number of independent
directors who usually make up the absolute majority of its members, with a more rigorous approach,
not only than the law, but also than the new Corporate Governance Code (and previously the old
Corporate Governance Code).
At the Report Date, nine of the fifteen members - and therefore 60% of the Board of Directors -
satisfied the requirements to qualify as independent pursuant to the Corporate Governance Code
and the TUF, namely: Paola Boromei, Domenico De Sole, Roberto Diacetti, Giovanni Lo Storto,
Marisa Pappalardo, Fan Xiaohua, Grace Tang, Michele Carpinelli and Alberto Bradanini. Upon
appointment and thereafter on at least an annual basis, the Board evaluates whether or not members
meet and/or retain the requirements of independence specified in the Corporate Governance Code
and the TUF for non-executive directors who qualify as independent, disclosing the outcome of the
assessment through a press release and/or on the occasion of the annual publication of the Report.
This check – which takes account not only of the information provided by the directors themselves
but also further information that might be available to the Company, referring to the requirements set
out in the TUF, as well as to those recommended in the Corporate Governance Code – was most
recently carried out during the Board meeting on 28 April 2025.
In making its assessments, the Board did not derogate from any of the independence criteria
prescribed by the Corporate Governance Code.
At the same time as the assessments made by the Board of Directors, on 28 April 2025 the Board
of Statutory Auditors verified, in line with the recommendations of the Corporate Governance Code,
the proper application of the assessment criteria and ascertainment procedures adopted by the
Board of Directors to assess the continued validity of independence requirements for directors,
pursuant to the “Independence Criteria” disclosing to the market the results of the controls performed
under the scope of the Report on the Corporate Governance and Share Ownership of Pirelli
pertaining to the relevant financial year or its annual report to the Company’s Shareholders’ Meeting.
158 With the exception of the period between the delisting of the Company (in late 2015) and its relisting (on 4 October 2017).
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On 25 February 2021, in fact, the Board of Directors – upon the proposal of the Audit, Risks,
Sustainability and Corporate Governance Committee159 – approved the “Independence Criteria” to
pre-establish the qualitative and quantitative criteria to be used in assessing the independence of
Directors and Statutory Auditors, which was subsequently confirmed by the Board of Directors on 3
August 2023.
Said document, available on the Website: (i) establishes the qualitative and quantitative criteria used
to assess the independence of directors for the purposes of the Corporate Governance Code and,
in particular, the parameters of significance of any economic, professional or financial relationships
pertaining to directors whose independence is being assessed; and (ii) explains in detail certain
interpretative criteria relating to the other cases of independence referred to in the Corporate
Governance Code, including the notion of “significant additional remuneration”.
In particular, the Company’s Board of Directors has set the following thresholds of significance for
the relationships under examination in respect of the independence requirements:
-
with reference to the concept of “significant business, financial or professional relationship”
as per letter c) of Recommendation no. 7 of the Corporate Governance Code, this includes
advisory roles or any other role – with the exception of non-executive corporate offices held
within the group, relevant for the significant additional remuneration according to the criteria
indicated below – that has led, for the director or statutory auditor whose independence is
being examined, or their close family members, to economic compensation in the calendar
year greater than (i) 300 thousand euros in the case of relationships held with undertakings
or organisations, over which the director, statutory auditor or close family member has control
or is a relevant member, or of the professional firm or association or advisory company where
such individuals are a partner, shareholder or associate, in the case of a relationship held
with these undertakings, organisations, advisory companies or professional firms and
associations; (ii) 100 thousand euros for relationships held directly with natural persons. In
the case of a partnership in a professional firm or consulting company, the possible impacts
on the position and role of the person under examination should be assessed;
-
with regard to the concept of “additional significant remuneration” referred to in
Recommendation 7(d) of the Corporate Governance Code, this includes all remuneration
paid for whatever reason during the calendar year, by the Company, by a (direct or indirect)
subsidiary or parent company of the Company, that cumulatively exceeds the total amount
of remuneration for the office or remuneration for participation in board committees paid to
the director, and of remuneration for the office of member of the Board of Statutory Auditors,
whose independence is being assessed.
At the Report Date, no consultancy relationships of any kind were ongoing with directors qualified
as independent.
159 The Audit, Risks, Sustainability and Corporate Governance Committee has, since 3 August 2023, operated as the “Audit, Risks and
Corporate Governance Committee”.
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None of the directors qualified as independent at the date of their appointment had lost this status
during their term of office.
Considering the above, the powers system, the share ownership structure and the provisions on this
subject set out in the Corporate Governance Code, independent directors have not yet deemed it
necessary to make a proposal to the Board of Directors to appoint a lead independent director.
The independent and non-executive directors contribute to the Board and committee discussions,
bringing their specific skills, and, given their number, have a decisive weight in the decision-making
process of the Board of Directors and the committees in which they take part.
Independent directors meet at least once a year in the absence of the other directors, in order to
analyse issues of particular importance, such as the functioning of the Board of Directors or company
management.
During the Financial Year, the members of the Audit, Risks and Corporate Governance Committee,
the majority of whom are independent directors, also met in an induction session organised by the
Company, as per section 4.3.3 of the Report.
5.
PROCESSING OF CORPORATE INFORMATION
Pirelli has adopted and consolidated over time a compendium of rules and procedures for the proper
management of corporate information, in compliance with the regulations applicable to the various
types of data and information.
With reference to the prevention of market abuses, the Board of Directors of Pirelli has adopted the
Market Abuse Procedure for defining the principles and rules for preventing such abuses by Pirelli,
Group companies and their related parties.
In particular, the Market Abuse Procedure governs: (a) the management of “relevant information”,
thereby meaning information that may become “inside” information in accordance with art. 7 of
Regulation EU no. 596/2014 (“Inside Information”); (b) the management and disclosure to the
public of Inside Information; (c) the establishment, keeping and update of the register of persons
who, by virtue of their work or professional activities or role held, have access to Inside Information;
(d) the obligations connected with operations on the Company’s shares, the credit securities it issues
and derivatives or other financial instruments related to them by certain subjects holding senior
positions (referred to as “internal dealing”); (e) the operating procedures and area of application of
the ban imposed on the Company and subjects exercising administrative, control or managerial
duties at the Company in regard to the execution of operations on Pirelli shares, the credit securities
it issues and derivatives or other financial instruments related to them in predetermined periods
(“black-out periods”); (f) any conducting or receipt of market surveys in compliance with the
provisions of art. 11 of Regulation EU no. 596/2014 and the related implementing rules.
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The Market Abuse Procedure envisages a black-out period of 30 calendar days prior to the
announcement by the Company of the data contained in the annual financial report, the half-yearly
financial report and the other periodic financial reports whose publication is mandatory in accordance
with legislation in force at the time160, during which the relevant persons referred to in the procedure
are expressly forbidden from carrying out transactions on such financial instruments.
The Market Abuse Procedure is available on the Website, in the version most recently approved by
resolution passed by the Board of Directors on 07 November 2024, in order to standardise its
contents with the changes made with the coming into force of the Capital Law, which abrogated
certain regulatory provisions.
6.
BOARD COMMITTEES
The role of the Board Committees is to offer support to the Board in relation to matters deemed
worthy of further investigation, in order to ensure that there is an effective and informed exchange of
opinions about them.
Also taking into account the recommendations and principles contained in the Corporate
Governance Code, in its meeting held on 3 August 2023, the Company’s Board of Directors (i)
confirmed the establishing of the following board Committees: Strategies Committee, Related-Party
Transactions Committee, Appointments and Successions Committee, Remuneration Committee,
Audit, Risks and Corporate Governance Committee and (ii) established the Sustainability
Committee.
On that same date, the Board of Directors adopted a regulation defining the functions and rules of
operation of its committees, also available on the Website. The main contents of the regulation are
summarised in section 6.1 of the Report.
The composition of Committees during the year is detailed in Table 3. When choosing the Committee
members, the Board of Directors considered as a priority the skills and experience acquired by each
Director in the subjects under discussion, distributing the appointments in order to avoid an
excessive concentration of appointments being held by a limited number of people and to encourage
the exchange of multiple viewpoints and perspectives.
6.1
FUNCTIONING OF COMMITTEES
The Board Committees are appointed by the Board of Directors (which also indicates the relevant
Chairman) and remain in office for the entire mandate of the Board, meeting whenever deemed
appropriate by the Committee Chairman, or when requested by at least one member, by the
160 Annually - as a rule by the end of the year - the Company publishes the calendar of principal corporate events for the next financial
year and promptly updates this calendar in the event of subsequent amendments.
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Chairman of the Board of Directors or, if appointed, the Vice Chairman, the Chief Executive Officer
and, in any case, with the frequency necessary in order to properly carry out their functions.
The Secretary of each Committee is the Secretary of the Board.
The meetings of the Committees shall be convened by notice sent to the participants by its Chairman
or by the Secretary of the relevant Committee by the relevant Chairman.
The documentation and information available is sent out to all members of the relevant Committee
in multiple languages, taking into account the members’ nationalities and sufficiently ahead of time
to allow them to attend in an informed manner and express opinions in the meeting (as a rule 10
days in advance).
For each Committee meeting participants shall have access to a simultaneous translation of the
interventions in the languages commonly used by the members of the Committees.
Committee meetings are quorate when attended by the majority of appointed members and
resolutions are adopted by the majority of those present. With regard to meetings of the
Appointments and Successions Committee, in the event of a tie, the vote of the Executive Vice
Chairman prevails (i.e. the “casting vote”).
Committee meetings may be held by conference call; their minutes are taken by the Committee
Secretary and recorded in the related minute book.
Committees - which may make use of external advisers in carrying out their functions - are granted
adequate financial resources to perform their tasks with spending autonomy.
Committees are entitled to access relevant business information and company departments in the
performance of their tasks, with support from the Secretary of the Board for this purpose.
The Committee members’ growing awareness of the business reality, dynamics of the Company and
the Group and of specific issues relevant to Pirelli is enhanced by the regular attendance of Company
management and external experts at their meetings, who may be invited for training and/or in-depth
analysis.
The entire Board of Statutory Auditors is entitled to participate in the activities of the Audit, Risks and
Corporate Governance Committee, Remuneration Committee and RPT Committee.
One member of the Board of Statutory Auditors is invited to attend the meetings of the Appointments
and Successions Committee, the Sustainability Committee and the Strategies Committee (usually
the Chairman). Further information about the number of meetings held by each Committee during
the Year and about the attendance of each member at those meetings can be found in Table 3
annexed to the Report.
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6.2
STRATEGIES COMMITTEE
At the Report Date, the Strategies Committee is made up of 8 Directors (including 3 independent
directors) as follows:
The Strategies Committee supports the Board of Directors in examining the “Significant Matters” (for
more information in this regard, see section 4.5.2) and, in particular, in examining:
-
business plan and annual budget;
-
industrial partnerships and strategic JVs of Pirelli and/or any of its subsidiaries.
It is required that the Strategies Committee be the recipient of a specific and continuous flow of
information from the Chief Executive Officer, assisted by the Secretary of the Board for such
purposes.
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6.3
RELATED-PARTY TRANSACTIONS COMMITTEE
At the Report Date, the Related-Party Transactions Committee is made up of 3 independent
Directors as follows:
The Related-Party Transactions Committee advises and makes recommendations to the Board of
Directors on related-party transactions. In accordance with the provisions of the Related Parties
Regulation and the RPT Procedure, the Committee expresses reasoned opinions on the Company’s
interest in carrying out related parties transactions, as well as on the appropriateness and
substantive fairness of the related conditions. Additionally, it has the power to request information
from and make comments to the delegated bodies and persons authorised to conduct negotiations
or the due diligence for related-party transactions of greater significance (see section 10).
During the year, it was noted that management attended the Related-Party Transactions Committee
meetings in order to provide adequate information support for the adoption of the relevant
resolutions.
The Related-Party Transactions Committee is also entitled to obtain assistance, at the expense of
the Company, from one or more independent experts selected by the Committee.
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6.4
SUSTAINABILITY COMMITTEE
At the Report Date, the Sustainability Committee is made up of 4 Directors (including 1 independent
Director) as follows:
The Sustainability Committee supports the Board of Directors in the analysis of sustainability issues
related to business operations, corporate social responsibility and the analysis of issues relevant to
the creation of long-term value.
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7.
APPOINTMENTS AND SUCCESSIONS COMMITTEE
At the Report Date, the Appointments and Successions Committee is made up of 4 members
(including 1 independent director) as follows:
Taking into account the fact that the Appointments and Successions Committee in question deals
not only with aspects relating to appointments but also the succession of company senior
management, by way of derogation from the Corporate Governance Code, a majority of non-
executive directors (even if not independent) has been appointed as members of such committee.
The Appointments and Successions Committee supports the Board of Directors on appointments
and succession matters, and in particular:
-
assists the Board of Directors in identifying candidates for the office of director in the event of
co-optation;
-
provides the Board of Directors with opinions on the adoption and/or amendment by the Board
of its orientation towards the number of appointments considered compatible with the effective
performance of the role of director.
It should be noted that the oversight of the self-assessment process of the administrative body and
control body has been assigned to the Audit, Risks and Corporate Governance Committee, while
the Appointments and Successions Committee’s duties do not include assisting the outgoing Board
of Directors in the possible presentation of its own slate, since this is not envisaged by the Bylaws.
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7.1
SUCCESSION PLANS
The succession plan for Pirelli’s Chief Executive Officer envisaged by the Shareholders’ Agreement
was carried out and achieved with the appointment to the position of Chief Executive Officer by the
Board of Directors on 3 August 2023 of Andrea Casaluci.
Considering the Company’s governance structures and the provisions of the Shareholders’
Agreement Renewal, as well as the provisions of the Golden Power DPCM, it is noted that the Chief
Executive Officer is designated by the shareholder Camfin.
The Executive Vice Chairman also has the power to propose to the Pirelli Board of Directors the
revocation of the designated Chief Executive Officer and his/her replacement with a new CEO (or
appointment of a new CEO if the previous CEO should cease to hold office for any reason).
As Executive Vice Chairman, Marco Tronchetti Provera maintains a key role in directing top
management and guaranteeing continuity in Pirelli’s business culture.
In order to assure complete information, note that the Company has adopted a contingency plan and
a method by which to identify successors to Key Managers and senior management positions.
8.
REMUNERATION COMMITTEE AND DIRECTORS’ REMUNERATION
At the Report Date, the Remuneration Committee is composed of 5 directors (including 4
independent directors) as follows:
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For information on the 2025 remuneration policy, the compensation paid in 2024 and the duties
performed by the Remuneration Committee, reference is made to the Remuneration Report. It
should be noted that said document also includes the information required by Article 123-bis,
paragraph 1, letter i) of the TUF. For a focus on the sustainability targets in the incentive plans
adopted by the Company, reference is also made to the Consolidated Sustainability Reporting.
Management - and in particular the EVP & Chief Human Resources Officer, the Head of
Compensation & Benefits and the Head of International Mobility and HR Administration - regularly
and diligently attended the meetings of the Committee during the Financial Year, thereby contributing
to periodic and up-to-date reporting to the Committee.
9.
INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM - CONTROL, RISK AND
CORPORATE GOVERNANCE COMMITTEE
In compliance with Recommendation 32 of the Corporate Governance Code, the Company has
implemented an internal control and risk management system that envisages the involvement of
multiple players with different roles and duties, who act in a coordinated, complementary manner in
order to guarantee the adequacy and efficiency of the system.
The Company’s internal control and risk management system is designed to contribute to the
operation of a healthy and proper business, consistent with its strategies, by identifying, managing
and monitoring the main risks that may impact the Company. The internal control and risk
management system allows the principal risks, and the reliability, accuracy, trustworthiness and
timeliness of financial and sustainability reporting to be identified, measured, managed and
monitored.
Responsibility for the adoption of an adequate internal control and risk management system lies with
the Board of Directors which, with the support of the Audit, Risks and Corporate Governance
Committee, carries out the tasks assigned to it in the Corporate Governance Code. In particular,
after consulting with the Audit, Risks and Corporate Governance Committee, the Board of Directors:
(i) analyses and approves the compliance and audit plans scheduled for the following financial year;
(ii) supervises the risk management process to ensure that the risks assumed in the course of
business are in line with the Company’s strategies; to this end, it establishes a risk appetite and sets
guidelines for managing risks that may jeopardise the achievement of the Company’s objectives,
assessing their adequacy at least once a year;
(iii) takes note of the risk analysis carried out by the Company’s offices on a quarterly basis and of
the risk assessment at least on the launch of the annual business plans and budgets;
(iv) takes note of the progress of the tax risk monitoring and mitigation activities, as well as (at least
annually) the tax operating plan and (every three years) the strategic tax plan.
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The implementation of the strategies and guidelines adopted by the Board of Directors is then
ensured by a pyramid structure of the departments involved in drafting the plans and activities
mentioned above, thanks to constant interaction between the Board itself and the Company’s top
management which directs its work.
Pirelli’s internal control system has been developed in a bid to pursue the values of substantive and
procedural fairness, transparency and accountability, assuring: (i) efficiency, transparency and
traceability of the transactions and, more in general, of management related activities, (ii) the
dependability of the accounting and management data and of the information on finance and
sustainability, (iii) compliance with the applicable laws and regulations and (iv) protecting the
Company’s integrity, also for the purpose of preventing fraud to the detriment of the Company and
the financial markets.
During the Financial Year, once every six months and most recently on 26 February 2025, the
Company’s Board of Directors, with the support of the Audit, Risks and Corporate Governance
Committee and in compliance with the Corporate Governance Code161, acknowledges that the
internal control, risk management and corporate governance system of the Company and Group is
suitable in respect of the nature, dimension and characteristics of the business, expressing its
positive assessment of its effectiveness and effective operation.
It is also reported that, with reference to the other company departments involved in the controls, on
06 March 2024 and most recently on 28 April 2025, the Board of Directors acknowledged that no
measures were necessary to guarantee the effectiveness and impartiality of the company
departments involved in the internal control and risk management system, notably, the Internal Audit
Department, the Compliance & Rules Department, the Information Security, the Enterprise Risk
Management and the Tax Risk Officer. For more details on the company departments involved in
the internal control and risk management system, refer to paragraphs 9.4 and 9.7 of the Report.
A more complete description of Pirelli’s internal control system can be found in the directors’ report
on operations at 31 December 2024, within the 2024 annual financial report.
For more details on sustainability reporting within the scope of the internal control and risk
management system in accordance with the CSRD Decree and ESRS, refer to the Consolidated
Sustainability Reporting.
9.1
ROLE OF THE DIRECTOR RESPONSIBLE FOR THE INTERNAL CONTROL AND RISK
MANAGEMENT SYSTEM
In its meeting of 3 August 2023, the Board of Directors appointed, in continuity with the previous
mandate, the Chief Executive Officer as the person in charge of setting up and maintaining the
internal control and risk management system.
161 Recommendation no. 33, lett. a).
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The Chief Executive Officer is tasked with supervising the functioning of the system of internal control
and risk management and implementing the related guidelines formulated by the Board of Directors,
with support from the Audit, Risk and Corporate Governance Committee, ensuring that all actions
necessary for the implementation of the system are taken. In particular, in line with the
recommendations of the Corporate Governance Code, the Chief Executive Officer:
-
ensures that the principal business risks are identified, taking account of the characteristics of
the activities carried out by the Company and its subsidiaries, and submits them periodically to
the Board of Directors for review;
-
authorises execution of the guidelines formulated by the Board of Directors, supervising the
design, implementation and management of the internal control and risk management system
and constantly monitoring its adequacy and effectiveness;
-
ensures that this system is adapted to any changes in operating conditions and the legislative
and regulatory framework;
-
may ask the Internal Audit Department to carry out checks on specific operational areas and on
compliance with internal rules and procedures in the execution of corporate transactions, while
simultaneously notifying the Chairman of the Board of Directors, the Executive Vice Chairman,
the Chairman of the Audit, Risks and Corporate Governance Committee and the Chairman of
the Board of Statutory Auditors; and
-
reports promptly to the Audit, Risks and Corporate Governance Committee on issues and critical
situations identified during his work or otherwise brought to his attention, so that the Audit, Risks
and Corporate Governance Committee can take appropriate action.
9.2
DIRECTOR RESPONSIBLE FOR SUSTAINABILITY ISSUES
On 3 August 2023, in continuity with the previous mandate, the Board of Directors identified the Chief
Executive Officer as being the Director in charge of sustainability issues.
In that role, he will be responsible for supervising sustainability issues associated with the conduct
of the activities of the Company, and its dynamics of interaction with all the stakeholders, and for
implementing the guidelines defined by the Board of Directors. For more details on the Group’s
sustainability governance and the internal control and risk management process in respect of
sustainability in accordance with the CSRD Decree and ESRS, refer to the Consolidated
Sustainability Reporting.
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9.3
AUDIT, RISKS AND CORPORATE GOVERNANCE COMMITTEE
At the Report Date, the Audit, Risks and Corporate Governance Committee was made up of 5
Directors (four of whom are independent) as follows:
All members have adequate experience in accounting and finance or in risk management.
The Audit, Risks and Corporate Governance Committee, which incorporates the functions of the
“control and risks committee” as per the Corporate Governance Code, helps the Board of Directors
to assess and make decisions relating to the internal control and risk management system, as well
as the approval of periodic financial and sustainability reports.
More specifically, in compliance with the Corporate Governance Code, the Audit, Risk and Corporate
Governance Committee:
-
assists the Board of Directors with:
a) defining guidelines for the internal control and risk management system, in keeping with the
Company’s strategies;
b) evaluating, at least once a year, the adequacy of the internal control and risk management
system with respect to the characteristics of the business and the risk profile assumed, as
well as its effectiveness;
c) appointing and removing the head of the Internal Audit department, defining the remuneration
of this figure in line with the company’s policies, ensuring that the same has adequate
resources to perform its duties;
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d) approving, at least once a year, the work plan prepared by the head of the Internal Audit
department, having consulted the supervisory body and the Chief Executive Officer, and by
the head of the Compliance & Rules department;
e) assessing the adoption of measures aimed to ensure the effectiveness and impartiality of
judgement of the other company departments involved in the controls, checking that they
have adequate professionalism and resources;
f) assessing, having consulted the Board of Statutory Auditors, the results presented by the
external auditor in any letter of recommendations and in the additional report addressed to
the Board of Statutory Auditors;
g) describing, in the report on corporate governance, the main characteristics of the internal
control and risk management system and the methods used to coordinate the various parties
involved in said system, indicating the models and best national and international practices
of reference, expressing its opinion on the overall adequacy of the same;
-
having consulted the manager responsible for the preparation of the corporate financial
documents as well as the firm appointed to undertake the external audit of the accounts and the
Board of Statutory Auditors, it assesses the proper and consistent application of the accounting
standards within the Group when preparing the consolidated financial statements;
-
assesses the suitability of the periodic, financial and sustainability information, correctly
representing the business model, the Company’s strategies, the impact of its activities and the
performances achieved in coordination with the Strategies Committee;
-
examines the content of the periodic sustainability information relevant for the internal control
and risk management system;
-
expresses opinions on specific aspects concerning identification of the main company risks and
supporting the assessments and decisions of the Board of Directors on the management of risks
deriving from adverse facts that have come to the attention of the Committee;
-
examines the periodic reports prepared by the Internal Audit manager and the manager of the
Compliance & Rules department;
-
monitors the autonomy, adequacy, effectiveness and efficiency of the Internal Audit function;
-
requesting that the Internal Audit department, if deemed appropriate, perform checks in specific
operational areas, notifying the Chairman of the Board of Statutory Auditors at the same time;
-
reporting to the Board of Directors on the work performed and on the adequacy of the internal
control and risk management system, at least at the time of approving the annual financial
statements and the half-year report;
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-
monitoring compliance with and the periodic update of corporate governance rules, as well as
compliance with any codes of conduct adopted by the Company and its subsidiaries; in particular,
it is responsible for proposing the procedures and timeframes for the Board of Directors’ annual
self-assessment;
-
defines the optimum composition of the Board of Directors and its Committees, providing
opinions for the Board of Directors on the size and composition of the Board, and makes
recommendations about the professional roles whose presence on the Board of Directors is
deemed appropriate.
During the Financial Year, it was noted that the management - and, in particular, the Head of
Compliance & Rules, the Manager responsible for the preparation of the corporate financial
documents, the Head of Financial Statements and Administration, the Head of Sustainability and
Future Mobility, the Head of ESG Rating & Reporting, the Head of Internal Audit, the Executive Vice
President Sustainability New Mobility and Motorsport, the Chief Digital Officer, the Head of
Information Security, the Head of Finance, M&A and Risk Management and the Risk Manager -
assiduously attended the meetings of the Audit, Risks and Corporate Governance Committee,
helping ensure that the Committee was regularly kept up-to-date and informed.
For more details on the work of the Audit, Risks and Corporate Governance Committee in drafting
the regular sustainability reports, refer to Consolidated Sustainability Reporting.
9.4
INTERNAL AUDIT DEPARTMENT
The Company has an Internal Audit Department, which has been assigned functions that are
essentially in line with those provided for by the Corporate Governance Code.
More specifically, the Internal Audit Department is tasked with assessing the adequacy and
functioning of the audit, risk management and corporate governance processes, by providing
independent and objective assurance and advice.
The Internal Audit Department also:
-
audits, both on a continuous basis and in relation to specific needs and in accordance with
international standards, the effective operation and suitability of the internal control and risk
management system - suggesting any corrective actions required - by implementing an audit
plan approved by the Board of Directors, based on an ongoing structured process of analysis
and prioritisation of the principal risks;
-
carries out audits, also at the request of the Audit, Risks and Corporate Governance Committee,
of the Board of Statutory Auditors, the Supervisory Body and the Director responsible for the
internal control system of specific operating areas, to verify compliance with the internal
procedures and rules in the execution of business operations;
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-
prepares periodic reports on its assessment of the suitability of the internal control and risk
management system. These reports are sent, at least quarterly, to the Board of Statutory
Auditors, the Control, Risk and Corporate Governance Committee, as well as to the Director in
charge of the internal control system and the Board of Directors, which assesses the adequacy
of the internal control and risk management system with respect to the characteristics of the
Company and the risk profile assumed, as well as its effectiveness;
-
receives and analyses incoming reports arriving in line with the Group’s Whistleblowing
procedure and relating to any corruption/breach of internal control principles and/or precepts set
out in the Ethical Code, corporate standards and regulations, or any other acts or omissions that
may directly or indirectly lead to an economic-equity or even reputational loss for the Group
and/or for its companies;
-
provides adequate support to the Supervisory Bodies of the Group companies established
pursuant to art. 6 of Decree 231/2001;
-
provides advice and support to the relevant Company departments – without exercising any
decision-making or authorisation responsibilities – regarding inter alia: (i) the reliability of the
systems safeguarding the Company’s assets; (ii) the adequacy of the accounting, control and
reporting procedures for administrative operations.
As mentioned in section 9.3 of the Report, it should be noted that, in line with the Corporate
Governance Code, the Audit, Risks and Corporate Governance Committee expresses an opinion on
proposals concerning the appointment, revocation, assignment of duties and determination of the
remuneration, consistent with Company policies, of the head of the Internal Audit Department, as
well as on the adequacy of the resources allocated to the department in order to carry out the
assigned functions.
The Head of the Internal Audit Department reports hierarchically to the Executive Vice President of
Corporate Affairs, Compliance, Internal Audit, Corporate Security and Company Secretary and
functionally to the Audit, Risks and Corporate Governance Committee and the Board of Statutory
Auditors.
During the meeting held on 07 November 2024, after considering the positive assessments of the
Audit, Risks and Corporate Governance Committee and of the Board of Statutory Auditors, the Board
of Directors approved the internal audit plan for FY 2025.
9.5
EXTERNAL AUDITOR
The
firm
engaged
to
perform
the
external
audit
of
the
Company
accounts
is
PricewaterhouseCoopers S.p.A., with registered and administrative offices at Piazza Tre Torri 2,
Milan, recorded on the Register of Auditors established pursuant to arts. 6 et seq. of Legislative
Decree no. 39 of 27 January 2010 (“Legislative Decree No. 39/2010”).
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Pirelli’s Ordinary Shareholders’ Meeting held on 1 August 2017 confirmed the firm’s appointment to
perform the external audit of the accounts (originally made for three financial years on 27 April 2017),
establishing that, with effect from the admission of Pirelli shares to trading on the MTA (now Euronext
Milan), which occurred on 4 October 2017, such appointment would entail: (i) the external audit of
the accounts (including verification that the accounting records are properly kept and that the results
of operations are properly reflected in the accounting entries) pursuant to articles 13 and 17 of
Legislative Decree 39/2010 for the financial years 2017-2025, in relation to the separate financial
statements of the Company, the consolidated financial statements of the Group and the additional
related activities; and (ii) the limited examination of the condensed half-year consolidated financial
statements of Pirelli for the six-month periods ending on 30 June 2018-2025.
In addition to carrying out the statutory audit, the Auditing Firm is also responsible for the limited
audit of the Consolidated Sustainability Reporting, which is an integral part of the Directors’ Report
on Operations, in accordance with the criteria set out in the CSRD Decree and the Principle of
Assurance of Sustainability Reporting: Standard on Sustainability Assurance Engagement - SSAE
(Italy) issued by determination of the State Accountant General on 30 January 2025, which states
that it should be used in conjunction with International Standard on Assurance Engagements (ISAE)
3000 (Revised)162.
For the sake of completeness, it should be noted that the Company has adopted Internal Operating
Rules to assign tasks to the Auditing Firm163 which concerns – among other things – the procedures
for assigning tasks other than the statutory audit to PricewaterhouseCoopers S.p.A. and members
of its network (“Other Engagements”; i.e. other audit services, audit-related services and non-audit
services). The Operating Procedure establish a detailed procedure that requires prior approval of
the Board of Statutory Auditors for the assignment of Other Engagements. In compliance with the
provisions of Article 17 of Legislative Decree No. 39/2010 on the independence of the Auditing Firm,
the Company also has a procedure in place to ensure compliance with the thresholds set out in art.
4, paragraph 2 of EU Regulation 537/2014164. In that regard, during the meetings of the Board of
Statutory Auditors regarding the approval of Other Engagements, specific documentation is provided
to certify compliance with said thresholds. Details of the remuneration assigned during the financial
year to which the financial statements refer to the auditing firm in charge of the statutory audit and
its network are disclosed to the Audit, Risks and Corporate Governance Committee and the Board
162 International Standard on Assurance Engagements 3000 - Assurance Engagements other than Audits or Reviews of Historical
Financial Information (ISAE 3000 Revised), issued by the International Auditing and Assurance Standards Board. For further
information, please refer to the relevant Auditor’s Report attached to the Annual Financial Report for the Year.
163 Operating Procedure “Engagement of Auditing Firms” adopted pursuant to Directive 2006/43/EC, as amended by Directive
2014/56/EU, and EU Regulation 537/2014. Directive No. 2014/56 was transposed by Legislative Decree No. 135/2016, which amended
Legislative Decree No. 39/2010.
164 “Where the statutory auditor or auditing firm supplies the entity being audited, its parent company or companies it controls – for a period
of three or more consecutive financial years – with non-audit services other than those referred to in art. 5, paragraph 1 herein, the
total fees for said services shall be limited to 70% of the average fees paid during the preceding three consecutive financial years for
the statutory audit of the entity being audited and, where applicable, its parent company, controlled companies and the consolidated
financial statements of said group of companies. For the purposes of the limitations set out in the first paragraph of this section,
certification of conformity of the sustainability reporting and non-audit services other than those referred to in art. 5, paragraph 1
required by EU or Italian law are excluded”.
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of Statutory Auditors at least once a year, and reported in the notes to Pirelli’s annual financial
statements.
With the approval of the financial statements relative to FY 2025, the statutory auditing appointment
conferred upon the independent auditing firm will reach its end; in order to guarantee a liaison period
between the current statutory auditor and the new statutory auditor, in line with the dimensions and
complexity of the Group and also taking into account the “cooling-in” period envisaged by European
Regulation no. 537/2014, in compliance with national best practices, on 28 May 2024, based on the
proposal formulated by the Board of Statutory Auditors, the Shareholders’ Meeting appointed KPMG
S.p.A. to act as statutory auditors for the nine-year period 2026-2034.
9.6
MANAGER RESPONSIBLE FOR THE PREPARATION OF THE CORPORATE FINANCIAL
DOCUMENTS
In its meeting of 3 August 2023, with the favourable opinion of the Board of Statutory Auditors, the
Board of Directors confirmed Fabio Bocchio as Executive Vice President and Chief Financial Officer,
who is responsible for the Administration, Budget and Control departments, as well as being the
Manager responsible for the preparation of the corporate financial documents pursuant to art. 154-
bis of the TUF (the “Manager Responsible”). The appointment of the Manager Responsible has the
same term as the mandate of the Board of Directors, which also verified that the Manager
Responsible met the requirements of professionalism and integrity that are necessary for the
assignment pursuant to Article 11 of the Bylaws.
In regard to this task, the Manager Responsible puts suitable administrative and accounting
procedures in place for the preparation of the separate and consolidated financial statements, as
well as of all other financial communications. The Board of Directors ensures that the Manager
Responsible avails of the proper means and powers to exercise the duties conferred, and ensures
effective compliance with administrative and accounting procedures.
The Manager Responsible is endowed with all the organisational and management powers that are
essential to exercise the powers attributed by current legislation, the Bylaws and the Board of
Directors.
With the coming into force of the CSRD Decree, during the meeting held on 7 November 2024, after
obtaining the express favourable opinion, for all intents and purposes, of the Board of Statutory
Auditors, the Board of Directors included amongst the tasks of the Manager Responsible, Fabio
Bocchio - starting from approval of the financial statements as at 31 December 2024 and without
prejudice to the duties assigned him on 3 August 2023 - that of certifying, by means of a specific
report prepared in accordance with the model established by Consob regulation, that the
consolidated sustainability reporting included in the management report has been prepared in
accordance with the reporting standards pursuant to Directive 2013/34/EU of the European
Parliament and of the Council of 26 June 2013 and the legislative decree adopted in implementation
of Article 13 of Law no. 15 of 21 February 2024 and with the specifications adopted pursuant to
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Article 8, paragraph 4, of Regulation (EU) 2020/852 of the European Parliament and of the Council
of 18 June 2020.
With reference to this duty, the Manager Responsible:
-
is expected to refer without delay to the delegated administrative body and Board of
Directors, also via the internal board committee competent on the matter, on any aspects of
significant importance which he believes, if not correct, must be stated in the declaration
required by art. 154-bis, paragraph 5-ter, of the Consolidated Law on Finance;
-
has direct access to all the information necessary for the production of relevant sustainability
data pursuant to the CSRD Decree, without the need for any authorisation; participates in
internal flows pertaining to Consolidated Sustainability Reporting and approves all the
corporate procedures that have an impact on the Consolidated Sustainability Reporting.
It is specified that under the appointment held, in accordance with the Bylaws, the Manager
Responsible is classified as a Key Manager.
For the sake of offering a complete overview, note that on 12 December 2024, the Shareholders’
Meeting approved the proposal to amend Art. 11 of the Bylaws, introducing the provision that the
Board of Directors may appoint a manager other than the Manager Responsible to certify the
sustainability reporting (the “Attesting Manager”), after consulting with the Board of Statutory
Auditors. It was also clarified that the term of office of the Attesting Manager expires with the Board
of Directors that appointed him/her and that the Attesting Manager must have specific expertise in
sustainability reporting and meet the integrity requirements established for directors.
9.7
OTHER COMPANY DEPARTMENTS AND ROLES INVOLVED
9.7.1 COMPLIANCE & RULES DEPARTMENT
Operating within the Corporate Affairs, Compliance & Rules, Internal Audit, Corporate Security and
Company Secretary Department, the Pirelli Compliance Department works with the Legal
departments and other competent company departments to ensure that the company’s internal
regulations, processes and activities are constantly aligned with the applicable regulatory framework,
playing an active role in identifying any non-compliance risks that might give rise to judicial or
administrative penalties, resulting in reputational damage.
9.7.2 ENTERPRISE RISK MANAGEMENT & INSURANCE DEPARTMENT
Pirelli adopts a “proactive” risk governance model, which, in a systematic and structured manner,
enables the identification, analysis and assessment of the risk areas that may compromise the
achievement of strategic objectives and that, at the same time, provides the Board of Directors and
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top management with the tools they need to make decisions aimed at anticipating and handling the
effects of such risks, as well as proactively making the most of business opportunities as they arise.
In this context, the Enterprise Risk Management & Insurance Department is also appointed to: (i)
ensure that the policy guidelines of the risk management system are defined in such a way that the
principal risks of the Company and its subsidiaries are effectively and efficiently identified, measured,
managed and monitored and (ii) make it possible to verify the compatibility of the considered risks
with company management that is consistent with the strategic objectives identified during the
approval of the Business Plan.
9.7.3 INFORMATION SECURITY FUNCTION
The number of cyber attacks is increasing globally and Pirelli aims to provide suitable levels of
protection to safeguard data and continuity of operational processes.
To this end, Pirelli has established an Information Security Department with the task of paying
particularly close attention to assessing the risks linked to cybersecurity, including in respect of the
supply chain, and of guaranteeing the preparation of adequate, effective organisational and technical
measures to mitigate the risks and handle any critical events.
More specifically, the Information Security Department supports the Company in:
-
pursuing the corporate strategy by making information security an enabling factor for its
business;
-
safeguarding the Group’s asset;
-
ensuring compliance with internal and external information security regulations;
-
responding proactively and effectively to the increase in cyber threats;
-
assessing risks, significant events, updating the Information Security strategy of the Group
accordingly.
9.7.4 TAX RISK CONTROL SYSTEM
The Group’s management of and approach to the tax risk are defined and indicated in the principles
and values of its Global Tax Policy, the document approved by the Board of Directors and made
public on the website. The Board of Directors is periodically informed, through the Audit, Risks and
Corporate Governance Committee, about the progress of the monitoring, management and
mitigation of the tax risks identified as part of the business activities carried out by the Group.
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Since 2017, the Company has adopted a Tax Control Framework (“TCF”) in line with international
best practice and the Principles dictated by the OECD, i.e. a system for the detection, management,
mitigation and control of tax risks based on rules, principles and processes, which reaffirms the
Group’s commitment to strict compliance with tax regulations.
The solidity of the Company’s TCF has been endorsed by the Italian Revenue Agency and certified
with its admission, starting 2017, to the “Cooperative Compliance” system (“Cooperative
Compliance”).
The results of the risk management, control and mitigation activities, and the progress of dialogue
with the Italian tax authorities are periodically reported through the Tax Risk Officer – a position
provided for under the Collaborative Compliance scheme, who is responsible for implementing and
overseeing the TCF for the purpose of controlling and mitigating tax risks – and the Tax Affairs
Department to the Audit, Risks and Corporate Governance Committee which, in turn, reports to the
Board of Directors.
9.8
MODEL 231, CODE OF ETHICS AND CODE OF CONDUCT
The Company has adopted the organisation, management and control model envisaged by Decree
231 of 8 June 2001, as subsequently amended from time to time (the “Model 231”), in order to create
a system of rules designed to prevent unlawful conduct that might be significant for the purposes of
applying the above regulations and, as a consequence, has established a supervisory body (the
“Supervisory Body”).
Model 231 – periodically updated by the Company in light of legislative developments – is made up
of: (a) a general part covering topics relating, inter alia, to the applicability and application of Decree
231/2001, the composition and functioning of the Supervisory Body, and the system of penalties
applicable in the event of breaches of the standards of conduct specified in Model 231, and (b) a
special part containing the general principles of conduct and the control protocols for each type of
identified offence deemed significant for the Company.
The Supervisory Body in office was appointed by the Board of Directors on 3 August 2023, in
continuity with the previous body. Currently, the Supervisory Body consists of 3 members,
specifically: Carlo Secchi (Chairman), Maura Campra (Standing Auditor, appointed by the Board of
Directors on 1 August 2024 to replace Antonella Carù, who ceased to be a Standing Auditor following
the completion of her term of office) and Alberto Bastanzio (by virtue of the office held as Executive
Vice President of Corporate Affairs, Compliance, Internal Audit, Corporate Security and Company
Secretary). The Supervisory Body satisfies the autonomy, independence, professionalism and
continuity of action requirements specified by law for that body.
The Supervisory Body will remain in office until expiry of the mandate of the Board of Directors and,
therefore, until Shareholders’ Meeting approval of Pirelli’s annual financial statements at 31
December 2025.
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Pirelli has adopted a Code of Ethics that sets out principles for the required conduct of directors,
statutory auditors, managers and employees of the Group and, in general, all those working in Italy
and abroad on behalf or for the benefit of the Group, or engaging in business relations with the
Group, each in the context of their own functions and responsibilities. This includes any conduct with
reference to the sustainability issues as described in more detail in the Consolidated Sustainability
Reporting.
For the sake of completeness, note that the Company has adopted a Code of Conduct governing
the operative structure of the Code of Ethics and which represents a guideline to good practices in
business conduct, in compliance with the laws and regulations in force in the countries in which Pirelli
operates, and in order to avoid the arising of environmental situations favourable to the perpetration
of offences. The Code of Conduct applies in reference to three areas: (i) in relations with the Public
Administration; (ii) in corporate matters and market disclosures; and (iii) in relations with internal
subjects and third parties to the Company.
An extract of Model 231, the Code of Ethics and the Code of Conduct are available on the Website.
9.9
SYSTEM OF RISK MANAGEMENT AND CONTROL OVER FINANCIAL INFORMATION
Pirelli has implemented a specific and structured risk management and internal control system
supported by a dedicated IT application, in relation to the process to prepare the consolidated half-
yearly and annual financial reports. In particular, the financial reporting process is carried out by
applying appropriate administrative and accounting procedures created in accordance with the
criteria established by the Internal Control – Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
The administrative/accounting procedures adopted for the preparation of financial statements and
all other financial disclosures are created under the responsibility of the Manager Responsible (as
defined in section 9.6 of the Report), who – with support from the Compliance & Rules Department
– periodically (and in any case, at least when the separate/consolidated financial statements are
drawn up) checks their adequacy and proper application.
In order to allow certification by the Manager Responsible, the companies and the significant
processes that feed into and generate information of an economic and financial nature have been
mapped. These maps are updated on an annual basis taking account of quantitative and qualitative
criteria. Quantitative criteria consist in identifying those Group companies which, in relation to the
selected processes, represent an aggregate value above a certain materiality threshold. Qualitative
criteria, on the other hand, involve reviewing those processes and companies that, according to the
Manager Responsible’s final assessment, may present potential areas of risk despite not falling
within the quantitative parameters described above.
Risks/control objectives have been identified for each selected process involved in the preparation
of the financial statements and related disclosures, as well as with regard to the
effectiveness/efficiency of the internal control system in general.
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Detailed verification work has been planned, and specific responsibilities have been defined for each
control objective.
A half-yearly system for supervising the verification work undertaken has been implemented through
a chain-of-certifications mechanism, which is traced back to the Chief Executive Officers or
alternative person of equal management responsibility of each Group company identified as
“relevant” according to the criteria set out above; any problems emerging during the assessment
process are subject to action plans whose implementation is monitored within the following half year.
Moreover, the Chief Executive Officers or alternative person of equal management responsibility and
Chief Financial Officers of subsidiaries issue half-yearly statements attesting the reliability and
accuracy of the data submitted for the preparation of the Group’s consolidated financial statements.
Shortly before the Board meetings held to approve the consolidated data as of 30 June and 31
December, the results of the verification work are shared with the Group’s Manager Responsible,
who then reports to the Audit, Risks and Corporate Governance Committee and, subsequently, to
the Board of Directors.
Finally, the Internal Audit Department periodically verifies the adequacy of the design and the
effective operation of the controls carried out on samples of companies and processes, selected
applying materiality criteria.
9.10 COORDINATION BETWEEN THE PARTIES INVOLVED IN THE INTERNAL CONTROL
AND RISK MANAGEMENT SYSTEM
As part of the internal control and risk management system, the Company provides for and promotes
close coordination between the parties involved in the system, scheduling meetings at least once
every six months for the Audit, Risks and Corporate Governance Committee, during which
Committee members are able to interact directly with the managers of the departments involved
(Compliance & Rules, Internal Audit, Enterprise Risk Management, Information Security and Tax
Risk Officer). The results of the Committee meetings are reported directly to the meetings of the
Board of Directors on a regular basis.
In order to ensure coordination between the Company’s control systems, the meetings of the Audit,
Risks and Corporate Governance Committee are held periodically jointly with the Supervisory Board
and the Board of Statutory Auditors.
For further information, please refer to the dedicated section in the directors’ report on operations at
31 December 2024, within the 2024 annual financial report.
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10.
INTERESTS OF THE DIRECTORS AND RELATED-PARTY TRANSACTIONS
In compliance with the provisions of art. 2391-bis of the Italian Civil Code and the Related Parties
Regulation, on 09 May 2024, as part of its regular checks on the adequacy of the procedure adopted
by the Company and after seeking the opinion of the Related Party Transactions Committee given
unanimously, with the participation of all members in office, the Board of Directors updated the RPT
Procedure with formal interventions mainly referring to the changes made to the Company’s
organisational structure since the last revision.
The latest update of the RPT Procedure is available for consultation on the Website.
The RPT Procedure establishes rules for the approval and execution of the related-party transactions
arranged directly by Pirelli or by its subsidiaries.
Periodically and at least every three years, the Board of Directors - having received the opinion of
the Related-Party Transactions Committee - considers the need to revise the RPT Procedure.
The substantial changes to the RPT Procedure are approved by the Board of Directors after
obtaining the favourable opinion from the Related Party Transactions Committee. The Executive
Vice Chairman and/or Chief Executive Officer may supplement and/or make changes to the RPT
Procedure, informing the Related Party Transactions Committee in advance, if purely formal
adjustments should be appropriate, including those to incorporate changes to the Company’s
organisational structure.
A special section of the financial statements shows the principal transactions with related parties
undertaken by the Company.
Every six months, a report on the application of the RPT Procedure, drawn up by the Compliance &
Rules Department, is submitted to the Related-Party Transactions Committee and subsequently the
Board of Directors. The analyses carried out to date have shown, also for financial year 2024, due
compliance with and the correct application of the aforementioned procedure in all cases falling
within its scope of application.
For more information on the Related-Party Transactions Committee, see section 6.3 of the Report.
By virtue of the existing measures under the provisions of art. 2391 of the Italian Civil Code and the
RPT Procedure, the Board of Directors did not hold it to be necessary to adopt any additional
operative solutions to identify and suitably manage situations in which a Director has an interest on
his/her own behalf or that of third parties.
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11.
BOARD OF STATUTORY AUDITORS
11.1 APPOINTMENT, REPLACEMENT AND DURATION IN OFFICE
At the Report Date, the Board of Statutory Auditors is composed of five standing auditors and three
alternate auditors who all satisfy current legislative and regulatory requirements; in this regard the
activities indicated in the corporate purpose, with particular reference to companies or entities
operating in the financial, industrial, banking, insurance and real estate fields and services in general,
are qualified as subjects and sectors of activity closely related to those of the company.
In accordance with Art. 16, paragraph 2 of the Bylaws, the Ordinary Shareholders’ Meeting appoints
the Board of Statutory Auditors and determines its remuneration.
The statutory auditors act with autonomy and independence, also with regard to the shareholders
that elected them.
In order to enable the minority to elect a standing auditor (who will be the Chairman of the Board of
Statutory Auditors) and an Alternate Auditor, the Board of Statutory Auditors is appointed on the
basis of slates presented by the shareholders, in which each candidate is listed with a sequence
number. Each slate contains a number of candidates that does not exceed the number of members
to be elected.
Shareholders are only entitled to present a slate if, alone or together with other shareholders, they
hold at least 1% of the shares entitled to vote at an Ordinary Shareholders’ Meeting, or any lower
amount required by a regulation issued by Consob for the presentation of slates of candidates for
appointment to the Board of Directors. Each shareholder may present or contribute to the
presentation of just one slate.
The slates of candidates, signed by those presenting them, must be filed at the registered offices of
the Company at least twenty-five days prior to the date fixed for the Meeting called to appoint the
members of the Board of Statutory Auditors, without prejudice to any extension in the cases
envisaged by the applicable legislation. These slates are made available to the public at the
registered offices, on the Website and in other ways prescribed by Consob regulation, at least
twenty-one days prior to the date of the Meeting.
Each candidate may be included on just one slate, subject otherwise to becoming ineligible.
Each slate comprises two sections: one for candidates for the office of standing auditor and the other
for candidates to the position of alternate auditor. The first candidate in each section shall be selected
from among those registered in the Register of Chartered Accountants who has worked on external
audits for a period of not less than three years. In order to ensure gender balance, slates that - taking
account of both sections - present a number of candidates equal to or exceeding three, must include
candidates of each gender at least to the minimum extent required by law and / or pro tempore
regulations in force, as specified in the notice of call of the Shareholders’ Meeting, both in the section
for standing auditors and in the section for alternates.
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Each party entitled to vote may only vote for one slate. The members of the Board of Statutory
Auditors are elected as follows:
1) four standing auditors and two alternate auditors are drawn, in the sequence listed, from the
slate that obtained the largest number of votes (the majority slate);
2) the remaining standing auditor and alternate auditor are drawn, in the sequence listed, from the
slate that obtained the second largest number of votes (the minority slate); should several slates
obtain the same number of votes, a new vote limited to just those slates is held by all those
entitled to vote that are present at the Shareholders’ Meeting, and the candidates on the slate
which obtains the simple majority of the votes will be elected.
Should application of the slate voting mechanism not obtain, considering the standing and alternate
auditors separately, the minimum number of statutory auditors belonging to the less represented
gender envisaged by the regulations in force at the time, the candidate belonging to the most
represented gender and elected, indicated with the highest sequential number of each section from
the slate that obtained the largest number of votes, will be replaced by the candidate belonging to
the less represented gender not already elected from the same section of that slate, according to
the sequential order of presentation.
An auditor is replaced, in the event of death, resignation or forfeiture, by the first alternate auditor
drawn from the same slate. If this replacement does not allow the Board of Statutory Auditors to be
reconstructed in compliance with current regulations, including those governing gender balance,
recourse is made to the second alternate auditor drawn from the same slate. If, subsequently, it
becomes necessary to replace another Auditor drawn from the slate that obtained the largest number
of votes, recourse is made to the other alternate auditor drawn from the same slate. Should it be
necessary to replace the Chairman of the Board of Statutory Auditors, the chair is taken by the
second auditor on the same slate as the Chairman to be replaced, following the order of that slate,
always provided that the replacement satisfies the requirements for the position established by law
and/or the Bylaws and complies with the gender balance requirements envisaged by the regulations
in force; if it is not possible to make replacements in accordance with the above criteria, a
Shareholders’ Meeting will be called to supplement the Board of Statutory Auditors with resolutions
adopted by a relative majority of the votes cast.
When the Shareholders’ Meeting must appoint the standing and/or alternate auditors necessary for
the supplementing of the Board of Statutory Auditors, the procedure is the following: if it is necessary
to replace auditors elected from the majority slate, the appointment is made by a relative majority of
the votes cast, without any slate requirements and without prejudice, in all cases, to compliance with
the gender balance requirements envisaged by the regulations in force; if, on the other hand, it is
necessary to replace auditors elected from the minority slate, the Shareholders’ Meeting replaces
them by a relative majority of the votes cast, choosing them - where possible - from among the
candidates indicated on the slate from which the auditor to be replaced was drawn and, in all cases,
in compliance with the principle guaranteeing representation for the minorities that, pursuant to the
Bylaws, are entitled to participate in the appointment of the Board of Statutory Auditors, without
prejudice in all cases to compliance with the gender balance requirements envisaged by the
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regulations in force. The principle guaranteeing representation for the minorities is respected if the
auditors elected were previously candidates on the minority slate or on slates other than that which,
at the time of appointing the Board of Statutory Auditors, obtained the largest number of votes.
If only one slate is presented, the Shareholders’ Meeting votes on it; if the slate obtains a relative
majority of the votes cast, the candidates named in the respective sections of the slate are elected
as standing auditors and alternate auditors; the person named first on the above slate becomes the
Chairman of the Board of Statutory Auditors.
For the appointment of statutory auditors who, for any reason, were not appointed in accordance
with the above procedure, the Shareholders’ Meeting adopts resolutions with the majorities required
by law, without prejudice in all cases to compliance with the gender balance requirements envisaged
by the regulations in force. Outgoing Statutory Auditors may be re-elected.
11.2 COMPOSITION
The Board of Statutory Auditors in office at the Report Date was appointed by the Ordinary
Shareholders’ Meeting on 28 May 2024 - and until the date of the Shareholders’ Meeting convened
to approve the financial statements for the financial year ended at 31 December 2026 - with the
following members: Riccardo Foglia Taverna (Chairman of the Board of Statutory Auditors,
appointed by the minorities), Maura Campra, Francesca Meneghel, Teresa Naddeo and Riccardo
Perotta as standing auditors and Franca Brusco (appointed by the minorities), Roberta Pirola and
Enrico Holzmiller as alternate auditors.
In compliance with rule Q.1.5 of the Rules of Conduct of the Board of Statutory Auditors of Listed
Companies published by the Italian national association of chartered accountants and auditors, most
recently updated in December 2024 (the “Rules of Conduct”), the outgoing Board of Statutory
Auditors makes available to the Company’s shareholders, with reasonable notice and in advance of
the Shareholders’ Meeting, a complete picture of the activities that the next Pirelli Board of Statutory
Auditors will be required to perform and, in addition to this, a summary of its assessments regarding
the optimum qualitative/quantitative composition of the control body (in addition to the regulatory or
statutory requirements) for the purposes of the effective operation of that same Boar and in sufficient
time to allow the shareholders to take it into account when selecting the candidates to be included
in the lists for the Board of Statutory Auditors’ renewal to be presented to the Shareholders’ Meeting.
The professional profiles of the members of the incumbent Board of Statutory Auditors are
summarised on the Website.
The Ordinary Shareholders’ Meeting also determined the gross annual fees due to Statutory
Auditors, in respect of which reference is made to the Report on Remuneration for further details.
All Statutory Auditors may be qualified as independent based on the criteria specified for Directors
as set out in the Corporate Governance Code and regulations in force at the time, as expressly
ascertained by the Board of Statutory Auditors based on the information provided by the Statutory
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Auditors and the information available thereto. This verification was performed at the time of
appointment (as on 27 June 2024) and is carried out once a year and most recently during the
meeting held on 18 March 2025 of the Board of Statutory Auditors, during which compliance to the
independence requirements, in accordance with the TUF and the Corporate Governance Code, has
been verified, also taking into account the “Diversity and Independence Statement” and the
“Independence Criteria” adopted by the Board of Directors.
As concerns the limit to appointments held by members of the Board of Statutory Auditors, the
Company checked that such limit was respected both at the time of appointment by the Pirelli
Shareholders’ Meeting and once a year, on the basis of the declarations made by the individual
members of the Board of Statutory Auditors, in accordance with Annex 5-bis of the Issuers’
Regulation. The results of the check for the Financial Year are given in Table 4 of the Report.
During the Year, the Board of Statutory Auditors of Pirelli met 17 times165, with each meeting having
an average duration of about 90 minutes and attendance being 94% of Standing Auditors. The
percentage attendance by Auditors of the meetings of the Board of Directors and Shareholders
during the Financial Year was, respectively, 96% and 80%. For more information on the activities of
the Board of Statutory Auditors during the FY, please refer to the report of the Board of Statutory
Auditors to the Shareholders’ Meeting pursuant to Article 153 TUF and Article 2429, Paragraph 2 of
the Italian Civil Code, within the 2024 Annual Financial Report.
The members of the Board of Statutory Auditors present such characteristics as to ensure an
adequate level of diversity with regard to aspects such as age, gender composition and educational
and professional background. In particular, at the Report Date, in compliance with “gender equality”
regulations, of the eight members of the Board of Statutory Auditors (five standing auditors and three
alternate auditors), approximately 63% were female (the percentage is 60% of the standing Auditors
only). The average age of the current members of the Board of Statutory Auditors is approximately
65 years. For more details on the competences and capacity of the administrative, management and
control bodies on matters of sustainability in accordance with the CSRD Decree and ESRS, refer to
section 4.3.3 of the Report and the Consolidated Sustainability Reporting.
During the course of the Year, the Board of Statutory Auditors, like the Board of Directors, has again
carried out the process for assessing its performance, with assistance from the independent
consulting firm SpencerStuart, in line with what was done in the previous year and in compliance
with the Rules of Conduct. That self-assessment process, like the process in place for the Board of
Directors, is carried out through individual interviews, with questions about the suitability, size,
composition and functioning of the Board of Statutory Auditors itself, in order to verify suitability,
fairness and effectiveness in its functioning. Positive outcomes of the Board of Statutory Auditors’
self-assessment process are included in the Statutory Auditors’ report at 31 December 2024.
165 The Board of Statutory Auditors met 11 times in its previous composition.
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The relevant information about each member of the Board of Statutory Auditors - also in respect of
the members in office until 28 May 2024 - is summarised in Table 4 of the Report.
11.3 ROLE OF THE BOARD OF STATUTORY AUDITORS
The Board of Statutory Auditors monitors compliance with the law and the Bylaws, as well as
adherence to the principles of proper management and, in particular, the adequacy of the
organisational structure, the internal control and risk management system and the administrative-
accounting system adopted by the Company and their actual functioning. In addition, it verifies the
procedures to implement effectively the corporate governance rules envisaged by the rules of
conduct to which the Company adheres. The Board of Statutory Auditors also monitors the adequacy
of the instructions issued by the Company to its subsidiaries pursuant to Article 114, paragraph 2 of
the TUF and compliance with the applicable regulations on transactions with related parties.
The Board of Statutory Auditors also acts as “internal control and accounts auditing committee” in
accordance with Directive 2006/43 EC and EU Regulation No. 537/2014.
In accordance with Italian Legislative Decree 39/2010, the Board of Statutory Auditors monitors the
statutory auditing process of the annual financial statements and the consolidated financial
statements, the results of which it then discloses to the Board of Directors, to which it also submits
the report by the independent auditor pursuant to Art. 11 of EU Regulation No. 537/2014 and also
verifies the independence of the independent auditing firm, also with reference to non-audit services.
In addition, in accordance with the CSRD Decree, the Board of Statutory Auditors monitors to ensure
that the consolidated sustainability reporting is drafted and published in compliance with the
provisions of reference legislation. It also oversees the adequacy of the organisational,
administrative, reporting and control system adopted to ensure a correct, complete representation
in the sustainability reporting of all information necessary to understanding both the business impact
on sustainability matters and the manner in which sustainability aspects impact the company’s
performance, its results and position. A detailed description of the supervisory activities of the Board
of Statutory Auditors in regard to consolidated sustainability reporting is included in its report to the
Shareholders’ Meeting.
Finally, one Auditor is called to be part of the Supervisory Body, as detailed in section 9.8 of the
Report.
The Board of Statutory Auditors carries out its duties by exercising all the powers conferred on it by
law and by being able to rely on a constant and detailed information flow from the Company, also
outside
the
periodic
meetings
of
the
Board
of
Directors
and
the
Committees.
In going about its duties, the Board of Statutory Auditors not only attends all meetings of the Board
of Directors and Shareholders’ Meetings, but also has the faculty to take part in the work of the Audit,
Risks and Corporate Governance Committee, the Related-Party Transactions Committee and the
Remuneration Committee. One member of the Board of Statutory Auditors is invited to attend the
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meetings of the Appointments and Successions Committee, the Strategies Committee and the
Sustainability Committee, (usually the Chairman).
As part of the monitoring of compliance with the provisions of the Golden Power DPCM by the
Company, it is envisaged that the Board of Statutory Auditors shall draft an explanatory report of the
measures adopted in compliance with the Decision and any other relevant corporate or business
measure in relation to such, to be sent to the MIMIT.
During the Financial Year, the Board of Statutory Auditors performed its supervisory duties in
accordance with the terms set forth above (for more details, refer to the report by the Board of
Statutory Auditors to the Shareholders’ Meeting pursuant to article 153 TUF and article 2429,
subsection 2 of the Italian Civil Code, within the 2024 annual financial report).
For a detailed explanation of the role of the Board of Statutory Auditors in the management of
sustainability matters in accordance with the CSRD Decree and ESRS, refer to the Consolidated
Sustainability Reporting.
12.
CORPORATE GENERAL MANAGEMENT
It is noted that, also in compliance with the provisions of the Golden Power DPCM, on 3 August 2023
the Corporate General Management was established, entrusted to Mr Francesco Tanzi, who, as a
result, the Bylaws have also classified as Key Manager. The Board of Directors conferred
appropriate responsibilities and operational powers to perform the assignment on the Corporate
General Manager.
13.
INFORMATION FLOWS TO THE DIRECTORS AND STATUTORY AUDITORS
The Board of Directors of Pirelli adopted a procedure for information flows to the Directors and
Statutory Auditors, in order to (i) guarantee the transparent management of the business, (ii)
establish conditions for the effective and efficient management and control of the activities of the
Company and the operations of the business by the Board of Directors, and (iii) provide the Board
of Statutory Auditors with the sources of information needed for the efficient performance of its
supervisory role.
The flow of information to the Directors and Statutory Auditors is assured, preferably, by the
transmission of documents on a timely basis and, in any case, with sufficient frequency to ensure
compliance with the disclosure requirements, and in accordance with deadlines consistent with the
timetables set for each board meeting. These documents may be supplemented by explanations
provided in the context of the board meetings, or at specific informal meetings organised to examine
topics of interest relating to the management of the company.
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When the information flows relate to Inside Information and/or Significant Information, they must take
place in accordance and compliance with the procedures indicated in the Market Abuse Procedure.
The procedure on information flows, in the version most recently confirmed by the Board of Directors
on 03 August 2023, is available on the Website, to which reference is made for any additional
information.
14.
RELATIONS WITH SHAREHOLDERS AND OTHER RELEVANT STAKEHOLDERS
Pirelli attributes strategic importance to financial reporting. In accordance with the Group’s values
and Code of Ethics, Pirelli maintains constant dialogue with Shareholders, Bondholders, Institutional
and Individual Investors and Analysts from major investment banks through the Investor Relations
department and the Group’s top management in order to promote fair, transparent, timely and
accurate reporting.
In line with international best practice, the “Investors” section of the website is constantly updated
with content of interest to the financial market, including: strategy (“Equity Story”), economic-financial
data on previous years, analysts’ opinions of Pirelli, and their estimates for the principal economic-
financial indicators (“Consensus”), monthly developments in the principal automotive tyre market
(“Tyre Market Watch”). The Investor Relations Department also promotes periodic meetings with
Shareholders and Investors in Italy and abroad.
For more details on relevant stakeholder relations in respect of sustainability topics in accordance
with the CSRD Decree and ESRS, refer to the Consolidated Sustainability Reporting.
14.1 POLICY FOR MANAGING DIALOGUE WITH SHAREHOLDERS AND THE MAIN
FINANCIAL MARKET STAKEHOLDERS
On 3 August 2023, the Board of Directors confirmed a policy166 which governs the rules for managing
the dialogue held by the Board of Directors, through the Executive Vice Chairman and with the
assistance of the departments concerned (primarily Investor Relations and Corporate Affairs), with
shareholders and with the main Stakeholders of the financial market in which the Company operates
(“Engagement Policy”).
This policy covers – inter alia – the following issues:
-
business and financial strategies and performance;
166 Adopted for the first time on 23 February 2022, following the favourable opinion of the Audit, Risks, Sustainability and Corporate
Governance Committee, changing the existing practices and in compliance with Recommendation 3 of the Corporate Governance
Code.
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-
corporate governance (e.g. appointment and composition of the administrative body, even in
size, professional aspects, respectability, independence and diversity, and of board committees,
etc.);
-
social and environmental sustainability;
-
policies on the remuneration of directors and Key managers and on their implementation; and
-
system of internal control and risk management.
The Board of Directors receives a six-monthly update on the requests for meetings or relevant
information in accordance with the Engagement Policy.
Please see the Website for more information on the Engagement Policy, including references to the
criteria and procedures used by the Board of Directors to promote dialogue with shareholders and
other stakeholders.
It should be noted that, during the Financial year, the Investor Relations Department carried out
ordinary financial reporting activities, which do not fall within the scope of application of the
Engagement Policy. To this end, it is noted that no requests for meetings or information were
received from relevant financial market stakeholders, nor did the Company deem it appropriate to
organise meetings with them on specific issues within the scope of the policy.
15.
SHAREHOLDERS’ MEETINGS
Pursuant to art. 7 of the Bylaws, ordinary and extraordinary Shareholders’ Meetings of the Company
are held in single call. Their resolutions are adopted with the majority required by law, with the sole
exception of the authorisation of the Board of Directors to carry out the deeds listed below, which
requires a qualified majority (votes in favour of shareholders representing at least 90% of the share
capital of the Company):
-
transfer of the operational and administrative headquarters outside of the municipality of Milan;
-
any transfer and/or act of disposition of Pirelli Know How, under any form, (including the grant
of licences), pursuant to the provision of article 3.2 of the Bylaws.
Parties entitled to vote may be represented by proxy, given in accordance with the procedures
envisaged by law and the regulations in force and specified in the call notice.
The Company designates, for each Shareholders’ Meeting, one person who may be appointed as a
proxy holder by those entitled to vote, with voting instructions for all or some of the items on the
agenda (“Designated Representative”). The proxy has no effect with respect to the items for which
no voting instructions have been given. The Designated Representative, the method and time limits
for the issue of proxies are set out in the notice of call.
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Where allowed by applicable laws and/or regulations, the Board of Directors may specify in the call
notice that participation and the exercise of voting rights at the Shareholders’ Meeting may occur
exclusively through a proxy (or sub-proxy) granted to the Designated Representative. If the Board of
Directors opts to exercise this faculty, and where permitted by applicable laws and/or regulations,
the Board may also indicate in the call notice that participation in the Shareholders’ Meeting by
entitled persons may occur exclusively via telecommunications, provided that the conditions set forth
in Article 7, paragraph 5 of the Bylaws are met.
The ordinary Shareholders’ Meeting must be called in accordance with the law within a maximum of
180 days after the end of the Company’s financial year.
In the situations envisaged by law and in accordance with the related procedures, the directors must
call a Shareholders’ Meeting without delay when requested by shareholders representing at least
one-twentieth of share capital.
The shareholders requesting the Meeting must prepare a report on their proposals regarding the
matters to be discussed. At the time of publishing the notice of call for the Meeting and in accordance
with the procedures envisaged by law, the Board of Directors must make the report prepared by the
shareholders available to the public, together with its considerations, if any.
In the cases, in the manner and with the timing envisaged by law, shareholders that, individually or
together, represent at least one-fortieth of share capital may request the integration of the items of
the agenda, indicating in their request the additional topics proposed by them, or proposing
resolutions on matters already on the agenda.
A notice is published about the addition of items to the agenda or the presentation of additional
proposed resolutions on matters already on the agenda, by the legal deadlines, in the manner
established for publication of the notice of call.
Shareholders requesting additions to the agenda must prepare and send to the Board of Directors,
by the final deadline for the presentation of requests for additions, a report explaining their reasons
for the proposed resolutions on the matters they wish to discuss, or their reasons for the additional
proposed resolutions presented in relation to matters already on the agenda. At the time of publishing
the notice about the additions to the agenda and in accordance with the procedures envisaged by
law, the Board of Directors must make the report prepared by the shareholders available to the
public, together with its considerations, if any.
The right to attend Meetings and vote is governed by the relevant current legislation and is certified
by a communication sent to the Company, by an authorised intermediary with reference to its
accounting records, on behalf of the party entitled to vote. This certification is based on the evidence
existing at the end of the accounting day on the seventh trading day prior to the date fixed for the
Meeting. The additions and deductions recorded on those counts subsequent to that deadline are
not relevant when determining the legitimacy of the right to vote at the Meeting. The communication
must be received by the Company by the end of the third trading day prior to the date fixed for the
Meeting, or by any different deadline established by the applicable regulations. Shareholders are
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439
still entitled to attend and vote if the communication is received by the Company after the above
deadlines, on condition that it is received before business commences at the Meeting.
Ordinary and extraordinary Shareholders’ Meetings shall be chaired by the Chairman of the Board
of Directors, or, in case the Chairman is absent or unable to perform his/her duties, in turn by the
Vice Chairman or by the Chief Executive Officer. If the above persons are absent, the chair is taken
by another person appointed by a majority of the share capital represented at the Meeting.
The Chairman of the Meeting is assisted by a Secretary, appointed by a majority of the share capital
represented at the Meeting, who does not need to be a shareholder; assistance from the Secretary
is not necessary when the minutes of the Meeting are taken by a Notary.
The Chairman of the Shareholders’ Meeting shall chair the meeting and govern its proceedings in
compliance with the law and the Bylaws. For this purpose, the Chairman - inter alia - verifies that the
Meeting has been properly convened, verifies the identity of those attending and their right to attend,
directly or by proxy; verifies the legal quorum for voting; directs the proceedings, with the right to
change the order of discussion of the items indicated in the notice of call. The Chairman also adopts
suitable measures to ensure orderly discussions and voting, determining the related procedures and
checking the results.
Meeting resolutions are evidenced by the minutes signed by the Chairman of the Meeting and by
the Secretary of the Meeting or the Notary. The minutes of Extraordinary Meetings must be taken by
a Notary designated by the Chairman of the Meeting. All copies of and extracts from minutes not
prepared by a Notary are certified true by the Chairman of the Board of Directors.
The organisation of Shareholders’ Meetings is regulated not only by the law and the Bylaws but also
by the Shareholders’ Meeting Regulation, of which the latest version was approved by the
Shareholders’ Meeting on 12 December 2024, in order to govern the orderly, regular conduct of
meetings, consequent to the amendments of the Bylaws relating to the possibility that intervention
in Shareholders’ Meetings and the exercise of voting rights may, following resolution passed by the
Board of Directors, happen exclusively through the Designated Representative. Said regulations are
available on the Website.
The Board of Directors has taken action to ensure that shareholders receive suitable information
about the elements necessary for them to make informed decisions where they come under the
Shareholders’ Meeting’s competence.
During the Financial Year, two shareholders’ meetings were held, respectively on 28 May 2024 and
12 December 2024. Reference is made to the minutes of the respective meetings, available on the
Website, for more details on attendance by Directors and Statutory Auditors.
For the sake of completeness, it should be noted that, for both Shareholders’ Meetings, the Company
(in compliance with the provisions of the Bylaws and the law167) used the option, inter alia, (i) to
167 Art. 106 of Decree-Law no. 18 of 17 March 2020, converted with Law no. 27 of 24 April 2020, the effects of which were subsequently
extended.
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440
conduct the Shareholders’ Meeting solely in remote form, without the physical attendance of those
entitled to attend, and (ii) to allow those entitled to vote in the Shareholders’ Meeting to attend solely
through a representative appointed pursuant to art. 135-undecies of the TUF.
16.
CHANGES SINCE THE END OF THE YEAR
There have not been any changes to the structure of corporate governance since the end of the
Year, except as already indicated in the previous sections, if applicable.
17.
THE PIRELLI WEBSITE
For Pirelli, the Website - in English and in Italian - represents a fundamental tool to ensure the prompt
and total dissemination of information about the Company and the Group to all stakeholders.
Pirelli ensures that it is promptly and thoroughly updated, so as to guarantee the transparency of
information and compliance with the current laws and regulations applicable to companies listed on
the Italian Stock Exchange.
The Company’s objective is to provide simple and clear information for investors and, in general, all
its Stakeholders, through the Site, in line with common practice. For this reason, also taking account
of the periodic results of assessments by independent agencies and in line with the Stakeholders’
expectations, the Company uses its best endeavours to constantly implement the Website.
18.
CONSIDERATIONS ON THE LETTER BY THE CHAIRMAN OF THE CORPORATE
GOVERNANCE COMMITTEE
With a letter of 17 December 2024 (the “Chairman’s Letter”), in the context of the usual monitoring
of the application of the provisions of the Corporate Governance Code, the Chairman of the
Corporate Governance Committee has provided listed companies with further recommendations (the
“Committee Recommendations for 2025”) listed below:
1. in relation to completeness and timeliness of pre-meeting information, to provide any useful
information on how Recommendation 11 of the Corporate Governance Code is applied and in
particular: (i) terms for the early submission of information to the Board of Directors and board
committees, (ii) effective compliance with such terms, (iii) possibility - if envisaged in the
regulation of the Board of Directors or adopted in practice - to derogate from the timeliness of
pre-board information for confidentiality reasons;
2. in matters of transparency and effectiveness of the remuneration policy, provide all information
useful on how Recommendation 27 of the Corporate Governance Code is applied and, in
particular, the specific parameters for assessing the sustainability goals envisaged under the
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441
scope of the variable components of remuneration Policy and the nature, objectives and
adequate decision-making procedures for any extraordinary one-off disbursements;
3. as regards the executive role of the Chairman of the Board of Directors, provide all information
useful on how Recommendation 4 of the Corporate Governance Code is applied and, in
particular, explain in detail the choice to assign the Chairman of the Board of Directors significant
management delegations;
The Chairman’s Letter also envisages that in the event of a lack of application of such
Recommendations, the report on corporate governance and share ownership shall expressly explain
the reasons for this non-application, how such decision was made within the company and how the
company intends to give assurance about the effective functioning of the administrative body, the
transparency and effectiveness of the remuneration policy and/or the transparency of the structure
of duties between executive and non-executive directors within the administrative body, as well as
the effective pursuit of the tasks of the Chairman of the Board of Directors.
The Committee’s Recommendations for 2025 were, as usual, brought to the attention of (i) the Audit,
Risks and Corporate Governance Committee and Board of Statutory Auditors on 20 February 2025
and (ii) the Board of Directors on 26 February 2025.
The Board of Directors of the Company – having also obtained the favourable opinions of the
members of the Audit, Risks and Corporate Governance Committee and of the Board of Statutory
Auditors on this subject – believes that, as also accurately detailed in the Report, no specific
interventions to its own corporate governance system are needed in relation to the issues highlighted
in the Committee’s Recommendations for 2025, as the recommendations contained therein are
already substantially implemented by the Company.
TABLE 1: SIGNIFICANT SHAREHOLDINGS OF CAPITAL
The subjects which, according to the information published by Consob at the date of publication of this Report and/or according to further
information available to the Company, possess shares with voting rights in Ordinary Shareholders’ Meetings that represent more than 3%
of the ordinary share capital are listed below.
SIGNIFICANT SHAREHOLDINGS OF CAPITAL
Declaring party
Direct Shareholder
% of ordinary capital
% of voting capital
SINOCHEM HOLDINGS CORPORATION LTD
MARCO POLO INTERNATIONAL ITALY S.R.L.
37.015
37.015
TRONCHETTI PROVERA MARCO
CAMFIN S.P.A.
LONGMARCH HOLDING S.R.L.
CAMFIN ALTERNATIVE ASSETS S.R.L.
14.825
3.679
7.878
26.382
14.825
3.679
7.878
26.382
Note: The data relating to shareholders who, directly or indirectly, hold ordinary shares representing more than 3% of the share capital with voting rights in ordinary meetings of the Company,
are also taken from Consob’s website. In this regard, it is deemed useful to point out that the information reported herein is taken from the information published by Consob on its website,
pursuant to the notifications made by the entities required to comply with the obligations ex Article 120 of the TUF, and from the information published on the issuer’s website in relation to the
obligations ex Article 122 of the TUF and Article 130 of the Issuers’ Regulation and the regulations on market abuse. It should be noted that the information may differ appreciably from the real
situation, because the obligations to communicate changes in the percentages of holdings arise not when there is a simple change in this percentage but only when the holdings exceed or fall
below predetermined thresholds (3%, 5%, and subsequent multiples of 5% up to a 30% threshold and, beyond this threshold, 50%, 66.6% and 90%). It follows, for example, that a shareholder
(i.e. a declaring subject) that has declared ownership of 5.1% of the share capital with voting rights may increase their stake up to 9.9% without thereby having any obligation to notify Consob
under Article 120 of the TUF.
Finally, the Bylaws do not provide for the possibility of increased voting rights or the issue of shares with multiple voting rights.
Pirelli & C. S.p.A. – Annual Report 2024
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442
TABLE 2: STRUCTURE OF THE BOARD OF DIRECTORS AT THE END OF THE FINANCIAL YEAR
Board of Directors
Office
Components
Year of
birth
Date first
appointed (*)
In office since In office until
Slate
(**)
Exec.
Non
exec.
Indep.
Code
Indep.
TUF
No. other
offices
(***)
(****)
Chairman
Jiao Jian
1968
31 July 2023
31 July 2023
Shareholders’ meeting to approve financial statements
at 31 Dec. 2025
M
X
Cf. Annex A
8/9
Executive Vice
Chairman
Marco Tronchetti
Provera
1948
7 May 2003168
31 July 2023
Shareholders’ meeting to approve financial statements
at 31 Dec. 2025
M(C)
X
Cf. Annex A
9/9
CEO •
Andrea Casaluci
1973
31 July 2023
31 July 2023
Shareholders’ meeting to approve financial statements
at 31 Dec. 2025
M(C)
X
Cf. Annex A
9/9
Director
Chen Qian
1971
31 July 2023
31 July 2023
Shareholders’ meeting to approve financial statements
at 31 Dec. 2025
M
X
Cf. Annex A
8/9
Director
Chen Aihua
1972
31 July 2023
31 July 2023
Shareholders’ meeting to approve financial statements
at 31 Dec. 2025
M
X
Cf. Annex A
9/9
Director
Zhang Haitao
1971
18 June 2020169 31 July 2023
Shareholders’ meeting to approve financial statements
at 31 Dec. 2025
M
X
Cf. Annex A
9/9
Director
Grace Tang
1959
31 July 2023
31 July 2023
Shareholders’ meeting to approve financial statements
at 31 Dec. 2025
M
X
X
X
Cf. Annex A
8/9
Director
Paola Boromei
1976
18 June 2020
31 July 2023
Shareholders’ meeting to approve financial statements
at 31 Dec. 2025
m
X
X
X
Cf. Annex A
9/9
Director
Domenico De Sole
1944
1 August 2017
31 July 2023
Shareholders’ meeting to approve financial statements
at 31 Dec. 2025
M(C)
X
X
X
Cf. Annex A
8/9
Director
Roberto Diacetti
1973
18 June 2020
31 July 2023
Shareholders’ meeting to approve financial statements
at 31 Dec. 2025
m
X
X
X
Cf. Annex A
9/9
Director
Giovanni Lo Storto
1970
15 May 2018
31 July 2023
Shareholders’ meeting to approve financial statements
at 31 Dec. 2025
m
X
X
X
Cf. Annex A
8/9
Director
Marisa Pappalardo
1960
1 August 2017
31 July 2023
Shareholders’ meeting to approve financial statements
at 31 Dec. 2025
M
X
X
X
Cf. Annex A
9/9
Director
Michele Carpinelli
1948
31 July 2023
31 July 2023
Shareholders’ meeting to approve financial statements
at 31 Dec. 2025
M(C)
X
X
X
Cf. Annex A
9/9
Director
Fan Xiaohua
1974
1 August 2017
31 July 2023
Shareholders’ meeting to approve financial statements
at 31 Dec. 2025
M
X
X
X
Cf. Annex A
9/9
Director
Alberto Bradanini
1950
31 July 2023
31 July 2023
Shareholders’ meeting to approve financial statements
at 31 Dec. 2025
M
X
X
X
Cf. Annex A
9/9
Number of meetings of the Board of Directors held during the year: 9
Indicate the quorum required for minority shareholders to submit a slate for the election of one or more directors (pursuant to art. 147-ter TUF): 1% of the share capital with the right to vote in ordinary
shareholders’ meetings.
168 Marco Tronchetti Provera assumed the office of General Partner of Pirelli & C. Accomandita per Azioni on 29 April 1986. On 7 May 2003 it was resolved to transform the Company from a
“joint stock partnership” to a “limited liability company”, and in consequence, there no longer being the role of general partner, directors were appointed.
169 Zhang Haitao was a Director of Pirelli from 15 March 2016 to 31 August 2017.
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443
NOTES
The following symbols must be inserted in the “Office” column:
• This symbol indicates the director responsible for the internal control and risk management system.
○ This symbol indicates the Lead Independent Director (LID).
* The date of first appointment of each director means the date on which the director was appointed for the first time (in absolute terms) to the BoD of the Issuer.
(**) This column indicates whether the slate from which each director was drawn is a majority slate (“M”), or minority slate (“m”). For Directors co-opted or appointed by the Shareholders’
Meeting without application of the slate voting mechanism, “-” is indicated.
(***) This column shows the number of offices as director or statutory auditor held by the person in question in other listed companies or companies of significant size. The offices are shown in
full in the Report on Corporate Governance.
(****) This column shows the directors’ attendance at Board of Director meetings (specify the number of meetings the person attended out of the total number of meetings he or she could have
attended, e.g. 6/8, 8/8, etc.).
(C) This symbol indicates the Directors designated by Camfin S.p.A., included on the slate submitted by Marco Polo International Italy S.r.l.
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TABLE 3: STRUCTURE OF THE BOARD COMMITTEES AT THE END OF THE FINANCIAL YEAR
BoD
Strategies
Committee
RPT
Committee
Audit, Risks
and
Corporate
Governance
Committee
Remuneration
Committee
Appointments
and
Successions
Committee
Sustainability
Committee
Office/Qualification
Components
(*)
(**)
(*)
(**)
(*)
(**)
(*)
(**)
(*)
(**)
(*)
(**)
Chairman of the BoD
non-executive - non-independent
Jiao Jian
1/1
M
(-)
M
Executive Vice Chairman
Marco Tronchetti Provera
1/1
C
(-)
C
(-)
C
CEO
Andrea Casaluci
1/1
M
(-)
M
Non-executive director - non-independent
Chen Aihua
6/6
M
2/2
M
(-)
M
Non-executive director - non-independent
Chen Qian
1/1
M
Non-executive director - non-independent
Zhang Haitao
1/1
M
(-)
M
Non-executive Director – independent as per the TUF and Code
Grace Tang
2/2
C
Non-executive Director – independent as per the TUF and Code
Paola Boromei
2/2
M
Non-executive Director – independent as per the TUF and Code
Domenico De Sole
1/1
M
(-)
M
Non-executive Director – independent as per the TUF and Code
Roberto Diacetti
1/1
M
6/6
M
Non-executive Director – independent as per the TUF and Code
Giovanni Lo Storto
5/5
M
5/6
M
(-)
M
Non-executive Director – independent as per the TUF and Code
Marisa Pappalardo
5/5
C
Non-executive Director – independent as per the TUF and Code
Michele Carpinelli
5/5
M
5/6
M
2/2
M
Non-executive Director – independent as per the TUF and Code
Fan Xiaohua
6/6
C
Non-executive Director – independent as per the TUF and Code
Alberto Bradanini
1/1
M
2/2
M
No. of meetings held:
1
5
6
2
(-)
(-)
NOTES
(*) This column shows the directors’ attendance at committee meetings (specify the number of meetings the person attended out of the total number of meetings he or she could have attended,
e.g. 6/8, 8/8, etc.).
(**) The office held by the person on the Committee is indicated in this column: “C”: chairman; “M”: member.
(-) This symbol indicates that no committee meetings were held during the reporting period.
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TABLE 4: STRUCTURE OF THE BOARD OF STATUTORY AUDITORS
Board of Statutory Auditors
Office
Components
Year
of
birth
Date first
appointed (*)
In office
since
In office until
Slate
(**)
Indep.
Code
Attendance
at
meetings
of the
Board of
Statutory
Auditors
(***)
Attendance
at
meetings
of the BoD
Attendance
at
meetings
of the
ARCGC
Attendance at
meetings of
the
Remuneration
Committee
Attendance at
meetings of
the
Appointments
Committee170
Attendance
at
meetings
of the
Strategies
Committee
Attendance
at
meetings
of the RPT
Committee
Attendance
at meetings
of the
Sustainability
Committee171
No.
other
offices
(****)
Chairman Riccardo Foglia
Taverna
1966
15 June 2021 28 May 2024 Shareholders’ meeting to approve
financial statements at 31 December 2026
m
X
17/17
9/9
6/6
2/2
-
1/1
4/5
-
Cf.
Annex A
Standing
auditor
Maura Campra
1961
28 May 2024
28 May 2024 Shareholders’ meeting to approve
financial statements at 31 December 2026
M
X
4/6
3/4
2/3
-
-
-
1/1
-
Cf.
Annex A
Standing
auditor
Francesca
Meneghel
1961
15 June 2021 28 May 2024 Shareholders’ meeting to approve
financial statements at 31 December 2026
M
X
15/17
9/9
5/6
2/2
-
-
5/5
-
Cf.
Annex A
Standing
auditor
Teresa Naddeo
1958
15 June 2021 28 May 2024 Shareholders’ meeting to approve
financial statements at 31 December 2026
M
X
17/17
8/9
6/6
2/2
-
-
4/5
-
Cf.
Annex A
Standing
auditor
Riccardo Perotta
1949
28 May 2024
28 May 2024 Shareholders’ meeting to approve
financial statements at 31 December 2026
M
X
6/6
4/4
3/3
-
-
-
1/1
-
Cf.
Annex A
Alternate
auditor
Franca Brusco
1971
15 May 2018
28 May 2024 Shareholders’ meeting to approve
financial statements at 31 December 2026
m
X
-
-
-
-
-
-
-
-
Cf.
Annex A
Alternate
auditor
Roberta Pirola
1971
28 May 2024
28 May 2024 Shareholders’ meeting to approve
financial statements at 31 December 2026
M
X
-
-
-
-
-
-
-
-
Cf.
Annex A
Alternate
auditor
Enrico Holzmiller
1968
28 May 2024
28 May 2024 Shareholders’ meeting to approve
financial statements at 31 December 2026
M
X
-
-
-
-
-
-
-
-
Cf.
Annex A
--------AUDITORS WHO CEASED TO HOLD OFFICE DURING THE YEAR--------
Standing
auditor
Antonella Carù
1961
10 May 2012
15 June 2021 Shareholders’ meeting to approve
financial statements at 31 December 2023
M
X172
11/11
5/5
3/3
2/2
-
-
2/4
-
Cf.
Annex A
Standing
auditor
Alberto Villani
1962
05 September
2017
15 June 2021 Shareholders’ meeting to approve
financial statements at 31 December 2023
M
X
10/11
5/5
2/3
2/2
-
-
4/4
-
Cf.
Annex A
Alternate
auditor
Marco Taglioretti
1960
15 June 2021 15 June 2021 Shareholders’ meeting to approve
financial statements at 31 December 2023
M
X
-
-
-
-
-
-
-
-
Cf.
Annex A
Alternate
auditor
Maria Sardelli
1965
15 June 2021 15 June 2021 Shareholders’ meeting to approve
financial statements at 31 December 2023
M
X
-
-
-
-
-
-
-
-
Cf.
Annex A
Number of meetings of the Board of Statutory Auditors held during the year: 17173
Indicate the quorum required for minority shareholders to submit a slate for the election of one or more directors (pursuant to art. 148 TUF): 1% of the shares with the right to vote in ordinary shareholders’ meetings.
NOTES
* The date of first appointment of each auditor means the date on which the auditor was appointed for the first time (in absolute terms) to the Board of Statutory Auditors of the issuer.
** Slate from which each auditor was elected (“M”: majority slate; “m”: minority slate).
*** This column shows the attendance of the auditors at meetings of the Board of Statutory Auditors (number of meetings the person attended out of the total number of meetings he or she
could have attended, e.g. 6/8, 8/8, etc.).
170 No meetings of the Appointments and Successions Committee were held during the financial year.
171 No meetings of the Sustainability Committee were held during the financial year.
172 For more details, please see the Report on the Corporate Governance and Share Ownership for financial years 2023 and 2022.
173 It should be noted that the Board of Statutory Auditors in its current composition met 6 times during the year (the Board of Statutory Auditors 2021-2023 therefore met 11 times).
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**** The number of offices as director or statutory auditor held by the person in question pursuant to art. 148-bis TUF and its implementing provisions in the Consob Issuers’ Regulation and
the Code of Corporate Governance. The complete list of offices is published by Consob on its website, pursuant to art. 144-quinquiesdecies of the Consob Issuers’ Regulation. The Consob
reporting obligation does not apply if the statutory auditor is a member of the control body of only one issuer pursuant to Article 144-quaterdecies of the Consob Issuers’ Regulation.
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ANNEX A
SECTION I: LIST OF PRINCIPAL OFFICES HELD BY DIRECTORS, AT THE REPORT DATE, IN OTHER COMPANIES THAT ARE NOT
PART OF THE PIRELLI GROUP
First and last name
Company
Office held in the company
Jiao Jian
Sinochem Holdings Corporation Ltd
Sinochem Group Co., Ltd.
Sinochem Corporation Ltd.
Director, President
Director, President
Director, President
Syngenta Group Co. Ltd.
Director
Marco Tronchetti Provera
Marco Tronchetti Provera & C. S.p.A.
Camfin S.p.A.
Camfin Alternative Assets S.r.l.
Longmarch Holding S.r.l.
RCS MediaGroup S.p.A.
Chairman of the Board of Directors
Chairman of the Board of Directors
Chairman of the Board of Directors
Chairman of the Board of Directors
Director
Andrea Casaluci
-
-
Paola Boromei
Intercos S.p.A.
Director
Domenico De Sole
Ermenegildo Zegna S.p.A.
TOD’S S.p.A.
Thom Browne Inc.
Director
Director
Director
Roberto Diacetti
Banca IFIS S.p.A.
Saipem S.p.A.
Masi Agricola S.p.A.
Director
Director
Director
Giovanni Lo Storto
Banca Mediolanum S.p.A.
Director
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448
First and last name
Company
Office held in the company
Zhang Haitao
Marco Polo International Italy S.r.l.
TP Industrial Holding S.p.A.
Fourteen Sundew S.à.r.l.
Director
Director
Director
Marisa Pappalardo
-
-
Fan Xiaohua
Bohai Automotive Systems Co.Ltd.
Beijing PARATERA Technology Co., Ltd.
Director
Director
Michele Carpinelli
Camfin S.p.A.
Fininvest S.p.A.
Director
Director
Alberto Bradanini
-
-
Chen Aihua
Sinochem Group Co., Ltd.
Sinochem Corporation Ltd.
China National Chemical Corporation Ltd.
Sinochem Energy Co., Ltd.
China Jinmao Holdings Group Limited
Sinochem Petroleum Exploration & Production Co., Ltd.
Sinochem International Corporation Ltd
Sinochem Finance Co., Ltd
Sinochem Investment and development Co., Ltd.
Sinochem Investment (Lioacheng) Co., Ltd.
Supervisor
Chairman of the Supervisory Committee
Supervisor
Chairman of the supervisory committee
Director
Supervisor
Chairman of the supervisory committee
Chairman of the supervisory committee
Supervisor
Supervisor
Chen Qian
-
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First and last name
Company
Office held in the company
Grace Tang
Netease Inc.
Ecarx Holdings Inc.
Brii Biosciences Limited
Elkem Asa
Director
Director
Director
Director
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SECTION II: LIST OF OFFICES HELD BY STATUTORY AUDITORS IN OTHER COMPANIES AT THE DATE OF THE REPORT
First and last name
Company
Office held in the company
Riccardo Foglia Taverna
Arec Neprix S.p.A.
Standing Auditor
B&C Speakers S.p.A.
Chairman of the Board of Statutory Auditors
Cabeco S.r.l.
Sole Auditor
Cedis S.r.l.
Director
Double R S.r.l.
Standing Auditor
Gamma Topco S.p.A.
Chairman of the Board of Statutory Auditors
Gamma Bidco S.p.A.
Chairman of the Board of Statutory Auditors
Jakil S.p.A.
Standing Auditor
Lampugnani Farmaceutici S.p.A.
Standing Auditor
MTW Holding S.p.A.
Standing Auditor
Mengoni e Nassini S.r.l.
Standing Auditor
Metalstudio S.r.l.
Standing Auditor
Metalworks S.p.A.
Standing Auditor
Ou(R) Group S.r.l.
Sole Auditor
Ruffini Partecipazioni Holding S.r.l.
Standing Auditor
Scrigno S.r.l.
Sole Director
Sella Fiduciaria S.p.A.
Standing Auditor
Sigla S.r.l.
Chairman of the Board of Statutory Auditors
Si Collection S.p.A.
Chairman of the Board of Statutory Auditors
Maura Campra
Enel S.p.A.
Standing Auditor
Cassa di Risparmio di Asti S.p.A.
Chairman of the Board of Statutory Auditors
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First and last name
Company
Office held in the company
Francesca Meneghel
Agenzia Libraria Internazionale S.r.l.
Standing Auditor
Adtech Ventures S.p.A.
Standing Auditor
Arnoldo Mondadori Editore S.p.A.
Standing Auditor
Digitalia’08 S.r.l.
Chairman of the Board of Statutory Auditors
Dolcedrago S.p.A.
Standing Auditor
Elettronica Industriale S.p.A.
Standing Auditor
Electa S.p.A.
Standing Auditor
Fascino S.r.l.
Standing Auditor
Boing S.p.A.
Standing Auditor
Medusa Film S.p.A.
Chairman of the Board of Statutory Auditors
Publitalia’80 S.p.A.
Chairman of the Board of Statutory Auditors
Immobiliare Idra S.p.A.
Chairman of the Board of Statutory Auditors
Mediamond S.p.A.
Chairman of the Board of Statutory Auditors
PBF S.r.l.
Standing Auditor
Videowall S.r.l.
Standing Auditor
RTI S.p.A.
Standing Auditor
Vacanze Italia S.p.A. in liquidation
Standing Auditor
MFE Advertising S.p.A.
Chairman of the Board of Statutory Auditors
Teresa Naddeo
Webuild S.p.A.
Independent Director
Banca Mediolanum S.p.A.
Standing Auditor
Mediolanum Vita S.p.A.
Chairman of the Board of Statutory Auditors
Mediolanum Assicurazioni S.p.A.
Chairman of the Board of Statutory Auditors
Riccardo Perotta
Boing S.p.A.
Standing Auditor
Cassa Lombarda S.p.A.
Chairman of the Board of Statutory Auditors
Creset S.p.A.
Chairman of the Board of Statutory Auditors
Fire S.p.A.
Chairman of the Board of Statutory Auditors
Fire Group S.p.A.
Chairman of the Board of Statutory Auditors
FSI Sgr S.p.A.
Chairman of the Board of Statutory Auditors
Mittel S.p.A.
Independent Director
Mondadori S.p.A.
Independent Director
Saipem Offshore Construction S.p.A.
Chairman of the Board of Statutory Auditors
Servizi Energia Italia S.p.A.
Standing Auditor
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First and last name
Company
Office held in the company
Franca Brusco
ENAV S.p.A.
Director
Ulisse S.p.A
Standing Auditor
Itaca S.p.A.
Standing Auditor
Cassa Depositi e Prestiti S.p.A.
Standing Auditor
Simest S.p.A.
Standing Auditor
Garofalo Health Care S.p.A.
Director
Sacal GH S.p.A.
Standing Auditor
Absolute Energy S.p.A.
Standing Auditor
Banor SIM S.p.A.
Standing Auditor
Great Lenghts S.p.A.
Standing Auditor
Enrico Holzmiller
Synergia Consulting Group S.r.l.
Director
FHP S.r.l.
Chairman of the Board of Directors
Roberta Pirola
AMH Urban Regeneration S.p.A.
Standing Auditor
Antonello Manuli Holdings S.p.A.
Standing Auditor
Banca Santa Giulia S.p.A.
Standing Auditor
Borgo del Sole S.p.A.
Chairman of the Board of Statutory Auditors
Cordusio Fiduciaria S.p.A.
Standing Auditor
Esse Immobiliare S.p.A.
Standing Auditor
Fin Borgo S.p.A.
Chairman of the Board of Statutory Auditors
Manuli Ryco S.p.A.
Standing Auditor
Mettler Toledo S.p.A.
Standing Auditor
Rovagnati S.p.A.
Standing Auditor
Olon S.p.A.
Standing Auditor
P. & R. S.p.A.
Standing Auditor
P. & R. Principi Attivi S.p.A.
Standing Auditor
Sir Industriale S.p.A.
Standing Auditor
VHV Italia Assicurazioni S.p.A.
Chairman of the Board of Statutory Auditors
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Remuneration Report
454
REPORT ON THE REMUNERATION POLICY AND COMPENSATION PAID
PREAMBLE
This report on the remuneration policy and the compensation paid (the “Report” or the
“Remuneration Report”), approved by the Board of Directors on 28 April 2025, on a proposal from
the Remuneration Committee, subject to the opinion of the Board of Statutory Auditors, is divided
into two sections:
- Section I: “Remuneration Policy” for FY 2025 (the “2025 Policy” or the “Policy”) and
- Section II: “Report on Compensation Paid” in FY 2024 (the “2024 Compensation Report” or the
“Compensation Report”).
The Report is prepared in accordance with Art. 123-ter of the Consolidated Law on Finance (“TUF”),
as amended and supplemented by Art. 3 of Italian Legislative Decree no. 49 of 10 May 2019 (the
“Decree”), as well as art. 84-quater and Scheme 7-bis of Annex 3A to the Consob regulation no.
11971 of 14 May 1999 on issuers, as subsequently amended (the “Issuers’ Regulation”).
For the purposes of the Report, due consideration was given to the European Commission
recommendations on the remuneration of directors of listed companies, as well as to the
recommendations on remuneration adopted by the Corporate Governance Code, to which Pirelli
adheres, as well as the more recent recommendations of the Corporate Governance Committee on
remuneration.
The Policy has also been drafted in accordance with and for the effects of Pirelli Related Party
Transactions Procedure (the “RPT Procedure”).
The 2025 Policy submitted for the binding vote to the Shareholders’ Meeting called to approve the
financial statements for the year ended 31 December 2024 pursuant to art. 123-ter TUF, paragraph
3-bis and 3-ter, defines the principles and guidelines for the 2025 financial year:
- for determining the remuneration of the Directors of Pirelli & C., in particular Directors holding
specific offices, General Managers and KMs, as well as, without prejudice to the provisions of art.
2402 of the Italian Civil Code, for determining the remuneration of members of the control body;
- to which Pirelli & C. refers in defining the remuneration of Senior Managers and, more generally,
Group Executives.
The 2025 Policy: (i) contributes towards the company strategy, the pursuit of long-term interests and
the sustainable success of Pirelli & C., understood as the creation of long-term value to the benefit
of shareholders, taking into account the other relevant stakeholders of the Company; (ii) also takes
account of the need to have, retain and motivate people with the expertise and professional standing
required by the role held in the Company; and (iii) indicates the purposes, methods of operation and
the beneficiaries of the remuneration, as well as the bodies involved and the procedures used for its
adoption and implementation.
Remuneration Report
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455
The 2024 Report on Compensation Paid, submitted for the advisory and non-binding vote of the
Shareholders’ Meeting in accordance with art. 123-ter, paragraph 6, TUF, provides, by name, for the
Directors, Statutory Auditors and General Managers and, in aggregate form, for the KMs:
- adequate information about each component of their remuneration, including payments
prescribed in the event of resignation from office or termination of employment, pointing out their
compliance with the remuneration policy adopted by the Company for the 2024 financial year;
- an analytical indication of the sums paid in respect of the 2024 financial year for any reason and
in any form by the Company and its subsidiaries or affiliates, indicating any components of
payments that are referable to activities undertaken in years preceding 2024 (and also highlighting
the payments to be made in one or more subsequent years for activity undertaken in the 2024
financial year, providing, if applicable, estimates for the components that cannot be objectively
quantified in the 2024 financial year);
- an illustration of how the Company took account of the votes cast by the Shareholders’ Meeting
in 2024.
The Report is made available to the public at the company’s registered office (Viale Piero e Alberto
Pirelli, 25, Milan), at the authorised storage mechanism (www.emarketstorage.com) and on the
website of Pirelli & C. at www.pirelli.com.
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Remuneration Report
456
EXECUTIVE SUMMARY
Purposes and
principles of
the Policy
The Policy aims to achieve long-term interests of Pirelli & C., thereby contributing to the achievement of strategic
objectives and sustainable growth of the company as well as bringing the interests of the Management into line with
those of the stakeholders.
PURPOSE
HOW IT OPERATES
BENEFICIARIES IN OFFICE ON THE
DATE OF THE REPORT
Fixed
Remuneration
Rewards managerial and professional
competence and experience, and the
contribution made to the office held.
It is defined in relation to the
characteristics, responsibilities and
any powers assigned to the role,
taking into account market references
(determined on the basis of periodic
benchmarks) in order to ensure its
competitiveness.
Chairman: € 400,000174
Executive Vice Chairman: €
2,400,000
Chie Executive Officer: € 1,100,000
General Manager: € 750,000
KM, Senior Manager and Executive:
determined according to the
responsibility assigned and the skills
required by the role.
174 At the request of Chairman Jiao Jian, on 13 September 2023, the Board of Directors resolved not to allocate any remuneration for the
offices he held during his term of office at Pirelli, specifically Director, Chairman of the Board of Directors and member of the
Committees.
Remuneration Report
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457
Annual variable
remuneration
(STI)
Motivates Management to achieve the
Company’s annual objectives,
maintaining a strong alignment with
the company’s medium-long term
strategy, KPIs associated with the
2024-2025 Business Plan, medium-
long term interests and sustainability
of the business, also through ESG
objectives and partial corporate
deferral/matching mechanisms.
Directly linked to the achievement of
performance objectives, assigned to
each beneficiary in coherence with the
role they cover:
Adjusted EBIT (Group/Region/BU)
Net Cash Flow (before dividends)
(Group/Region)
Group Net Income
Three sustainability objectives
Unit/department objectives (for
Senior Managers and Executives)
In addition to an on-off condition
(which determines access to the
Plan), represented by a cash indicator
(typically Net Cash Flow).
There will be a minimum level for each
objective, below which the related pro-
quota of the incentive is not accrued.
There is also a maximum cap to the
incentive that can be achieved (if all
maximum performance objectives are
achieved), equal to twice the incentive
that can be achieved at target
performance.
Finally, for General Manager, KMs
and selected Senior Managers, with a
view to retention, a portion of the
incentive accrued ranging from a
minimum of 25% to a maximum of
50% is subject to three-year deferral.
The relative payment, together with a
corporate matching component, is
subject to the continuation of
employment at the company at the
end of this period.
For the rest of the Management, with
the exception of the Chairman of the
Board of Directors, on the other hand,
25% of the incentive accrued is
deferred and its payment, together
with any corporate matching, is
subject to the achievement of the
following year’s STI Plan objectives.
Chairman: not one of the
beneficiaries of the plan.
Executive Vice Chairman:
target: 125%
cap: 250%
Chief Executive Officer:
target: 110%
cap: 220%
General Manager:
target: 75%
cap: 150%
KMs:
target: 60%
cap: 120%
Senior Managers and Executives:
target: 15% to 40%
cap: 30% to 80%
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Remuneration Report
458
Medium-long
term variable
remuneration
(LTI)
Promotes the creation of long-term
sustainable success and the
achievement of the objectives of the
Company’s strategic plans, through
business, market and ESG KPIs,
while at the same time promoting
Management retention and
engagement.
2025-2027 LTI Plan: an incentive
dependent on the achievement of the
following, independent long term
objectives:
Cumulative Group Net Cash Flow
(before dividends)
Relative TSR versus TIER1 peers
(Continental, Nokian, Michelin,
Goodyear and Bridgestone)
two sustainability objectives: Dow
Jones Sustainability World Index
ATX Auto Component sector and
CO2 Emissions Reduction.
There will be a minimum level for each
objective, below which the related pro-
quota of the incentive is not accrued.
There is also a maximum cap to the
incentive that can be achieved, if all
maximum performance objectives are
achieved.
The plan does not have an access
gate, is rolling and provides for a 3-
year vesting period.
Chairman: not one of the
beneficiaries of the plan.
Executive Vice Chairman:
target: 70%
cap: 200%
Chief Executive Officer:
target: 65%
cap: 180%
General Manager:
target: 60%
cap: 160%
KMs:
target: 55%
cap: 145%
Senior Managers and Executives:
target: 15% to 50%
cap: 40% to 130%
Other tools
Assure organisational stability and the
contribution made to the
implementation of the Company’s
strategic plans, also for the purpose of
promoting sustainable success over
the long-term.
Safeguard company know-how and
protect it from competitors.
Promote attractiveness of the
Company and loyalty of managerial
staff.
Non-competition agreements:
restriction applicable to the product
sector and the territory in which the
Group operates. The extent varies
according to the role covered.
Welcome bonus: one-off bonuses
that can be assigned with a view to
attracting managerial resources
during the hiring phase.
Benefit: non-monetary benefits
currently assigned on the basis of
market practices.
Allowance in the event of
termination of office: provided for
in specific events of leaving office or
termination of employment.
Claw-backs: contractual
agreements that enable the
Company to recover all or part of
the incentives that were accrued
and paid, in cases where fraudulent
behaviour or significant errors are
proven.
Non-competition agreements
Executive Vice Chairman: not one of
the beneficiaries of the non-
competition agreements.
Compensation for the two-year term of
the restriction, based on the role held,
technical skills, specialised know-how
and the reason for leaving.
Chief Executive Officer: 170% if
good leaver, 70% if bad leaver
General Manager: 170% if good
leaver, 70% if bad leaver.
KM: 130% to 170% if good leaver,
50% to 70% if bad leaver.
Allowance in case of departure:
Executive Vice Chairman: 24
months of gross remuneration.
Chief Executive Officer: 24 months
of gross remuneration.
General Manager, KMs and Group
Executives: amounts determined
with reference to the applicable
category national collective
bargaining agreements.
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REMUNERATION POLICY FOR THE 2025 FINANCIAL YEAR
1.
STAKEHOLDERS IN THE PROCESS OF POLICY PREPARATION, ADOPTION AND
IMPLEMENTATION
Stakeholders in the process
The definition of the remuneration policy and any amendments made thereto are the result of a clear
and transparent process in which the Remuneration Committee and the Board of Directors play a
central role. It is adopted and approved by the Board of Directors annually – based on a proposal by
the Remuneration Committee – and the Board then submits it to the Shareholders’ Meeting for a
vote.
The Board of Statutory Auditors issued its opinion on the policy, including the part regarding the
remuneration of Directors holding specific offices.
The Remuneration Committee, the Board of Statutory Auditors and the Board of Directors supervise
the application thereof. To this end, at least once per year, when the second section of the report on
compensation paid for the respective year is submitted, the Head of the Human Resources &
Organisation Department reports on the application of the remuneration policy to the Remuneration
Committee, the chairman of which in turn reports to the Board of Directors.
For the sake of completeness, it should be noted that, in accordance with current legislation, it is the
role of the Board of Directors to propose to the Shareholders’ Meeting the adoption of incentive
mechanisms for members of the board of directors, employees or collaborators based on financial
instruments, which, if approved, are later made public by the legal deadline (without prejudice to any
further transparency requirements laid down in the applicable regulations)175.
As at the date of this Report, the Company has no incentive plans in place that provide for the
allocation of financial instruments or options on financial instruments.
In preparing the 2025 Policy, the Company was assisted by the independent consultancy firms Willis
Towers Watson and Korn Ferry for the preparation of national and international benchmarks used to
define the structure of the remuneration of the Directors holding specific offices, the General
Manager and KMs, in addition to Senior Managers and Executives.
Amongst the measures aimed at avoiding or managing conflicts of interest, in compliance with the
recommendations of the Corporate Governance Code, no member of the Board of Directors shall
attend meetings of the Remuneration Committee during which proposals are made to the Board of
Directors regarding their remuneration.
175 Note that the Board of Directors’ meeting of 28 April 2025 established the objectives of the 2025-2027 LTI Plan. Such LTI plan will be
submitted for approval of the Shareholders’ Meeting as regards the part establishing determination of the incentive on the basis of a
total shareholder return objective, calculated as the performance of the Pirelli share, compared to the Tier 1 peers. For a more extensive
description, reference is made to paragraphs 2, 4, 5 and 6 below.
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Below is a list of the activities carried out by the parties involved in the process of devising, adopting
and implementing the policy:
Remuneration Committee
The Remuneration Committee is appointed by the Board of Directors (which also appoints the
chairman thereof) and remains in office for the entire duration of the mandate granted by the Board
of Directors.
As at the date of this Report, the Committee, consistently with the recommendations of the Corporate
Governance Code, is composed of five members, all of whom are non-executive and the majority of
whom are independent. The Chairman of the Committee is an independent director.
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As at the date of this Report, the Committee members are as follows:
Chairman Grace Tang and Director Paola Boromei were by the Board of Directors on 3 August 2023
as having sufficient experience in matters of finance and remuneration policies.
The entire Board of Statutory Auditors is entitled to participate in the work of the Remuneration
Committee.
The Secretary to the Board of Directors acts as the Secretary to the Remuneration Committee.
The Committee has support functions to ensure the definition and application within the Group of
remuneration policies aimed at, on the one hand, pursuing the sustainable success of the
Company/Group in aligning the interests of management with those of the shareholders and, on the
other hand, at having, retaining and motivating human resources with the expertise and professional
standing required by the role held in the Company.
In particular, the Remuneration Committee:
assists the Board of Directors with preparing the Group remuneration policy, assessing its overall
consistency;
with regard to the Executive Directors, other Directors holding specific offices and General
Managers, it expresses opinions to the Board of Directors:
o about their remuneration, in compliance with the remuneration policy;
o about setting performance objectives linked to the variable component of that remuneration;
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o about the definition of any no-competition agreements;
o about the definition of any agreements for the termination of working relationships, on the
basis of the principles established in the remuneration policy;
monitors the correct application of the remuneration policy and checks the actual achievement
of performance objectives;
checks the conformity of the remuneration of the Executive Directors, other Directors holding
specific offices, General Managers and KMs with the remuneration policy and expresses an
opinion on this, where required by the relative procedure adopted within the company, also in
accordance with the RPT Procedure;
helps the Board of Directors to examine proposals to the Shareholders’ Meeting for the adoption
of compensation plans based on financial instruments;
monitors application of the decisions adopted by the Board of Directors, checking in particular
the effective achievement of the established performance objectives;
examines and submits the remuneration report to the Board of Directors;
in any case, provides opinions in relation to transactions with related parties on matters
concerning the remuneration of Executive Directors, including Directors holding specific offices,
General Managers and KMs, within the limits and according to the criteria allowed by the RPT
Procedure;
assesses whether there are exceptional circumstances that allow for a derogation from the
remuneration policy.
The cycle of the Remuneration Committee’s main activities in 2025 is shown below, along with the
relevant events that are relevant to the Policy.
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2025
SUBJECT
ACTIVITY
1Q
2025 Policy and Variable
Incentive Plans
Presentation of the timetable.
Draft 2025 Policy
Approval of incentive plans:
2024 STI finalisation and 2025 STI plan objective setting;
2022-2024 LTI finalisation and 2025-2027 LTI objective setting.
Analysis of market remuneration benchmarks.
2Q
Shareholders’ Meeting and
publication of 2025 Policy
Approval of 2025 Policy and 2024 Report on Compensation Paid
Shareholders’ Meeting vote on the 2025-2027 LTI plan.
3Q
Analysis of votes received
from
Shareholders
and
review of Governance
Analysis of votes received from Shareholders.
Analysis of 2025 Policy and quality benchmark
Analysis of 2025 Policy and assessment of potential changes
In relation to the operating methods of the Remuneration Committee, see the Report on the
Corporate Governance and Share Ownership.
2.
PURPOSES AND PRINCIPLES OF THE 2025 REMUNERATION POLICY
Purposes of the 2025 Policy and contribution to corporate strategies
The purpose of the Policy, established in line with the corporate governance framework adopted by
the Company and in accordance with the principles and recommendations of the Corporate
Governance Code, is to attract, motivate and retain individuals with the professional qualities
necessary to achieve the Company’s objectives. In addition, through the medium-long term variable
components assigned, in particular, to Directors holding specific offices to whom specific duties are
also delegated, the General Manager, KMs, Senior Managers and Executives, it aims to achieve
long-term interests and the sustainable success of the company.
As shown below, the Policy seeks to reinforce the “pay for performance” connection by setting clear
performance goals – predefined, measurable, and focused on the long-term – that determine the
allocation of variable components. It helps drive the achievement of corporate objectives through
incentive plans tied to both financial and non-financial targets, all aligned with the Company’s
strategic goals and designed to foster sustainable success.
The Policy is valid for one year and in any case until the Shareholders’ Meeting approves a new
remuneration policy.
The Policy is defined taking into account various factors such as remuneration, which in turn is
defined on the basis of market benchmarks aiming at a level of attractiveness differentiated
according to the company role and skills, the compensation mix and the working conditions of
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Company employees. With reference to this last aspect, the 2025 Policy also in fact refers to the
remuneration of the Senior Managers and Executives of the Group. Moreover, Pirelli:
applies and respects any existing and applicable national collective bargaining agreements
to which it adheres;
adopts for all the Group’s managers and the remaining employees meritocratic policies,
variable incentive systems, welfare initiatives and services to benefit employees or their
families, as well as, in order to protect the company assets, non-competition agreements for
specific individuals;
is committed to ensuring respect for equal opportunities in the work environment, in
accordance with the Group’s Diversity, Equity & Inclusion Policy, endeavours to manage and
reduce potential risks of human rights violations, to avoid producing - or contributing to
producing - negative effects on these rights in the international, multi-ethnic, socially and
economically diversified context in which it operates, in accordance with the Group’s Human
Rights Policy;
is attentive to pay equity, in the context of gender diversity, as highlighted in more detail in
the Consolidated Sustainability Report. Specifically, pay gaps between men and women are
calculated for each country by considering the value assigned to each organisational position
based on various factors, an approach that allows for an analysis that highlights pay
disparities for comparable roles and jobs. This method of data collection allows for objective
investigation and evaluation while also taking into account the structural differences of the
various local markets and their peculiar remuneration logics. For 2024, the pay gap for the
Group’s white-collar employees is calculated at 0.4% in favour of women based on basic pay.
When factoring in Annual Total Direct Compensation, the gap shifts to 2.7% in favour of men.
Across the entire Group population, the pay gap stands at 2.3% in favour of men when
calculated on base salary, and 4.4% in favour of men when considering Annual Total Direct
Compensation. For further details and supporting evidence, please refer to the Consolidated
Sustainability Report in the 2024 Annual Report file.
Shareholder Engagement, results of the voting and feedback from investors
Pirelli believes that an ongoing dialogue with shareholders and, more generally, the main Financial
Market Stakeholders contributes to creating sustainable value for the Company. The adoption of a
specific Engagement Policy, inspired by international best practices, confirms the Company’s
commitment to ensuring equal, transparent, timely and accurate communication. In particular, the
discussion with its Shareholders on remuneration issues allows their involvement in the definition of
the remuneration policy, aligning the interests of Management with those of the Shareholders and
contributing to the achievement of the Company’s strategic objectives and sustainable success.
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With this in mind, Pirelli & C. makes available to its stakeholders, Shareholders and investors, in a
special section of its website, complete and accurate information on remuneration issues and also
examines the results of the Shareholders’ Meeting vote as a starting point for the continuous
improvement of its remuneration policy.
The 2025 Policy is therefore established taking into account the analysis and investigations made of
the results of the Shareholders’ Meeting vote and the feedback received from Shareholders and key
proxy advisors on the 2024 Policy and the Report on Compensation paid in 2023. The diagram below
presents the result of the binding vote expressed by the Shareholders’ Meeting on 28 May 2024
compared to the result of the voting in 2023.
Pirelli attaches great importance to analysing this voting result and the feedback received and,
following the analysis of the results of the votes cast at the Shareholders’ Meeting of 28 May 2024
and the main rationale for the votes against, took the action required to ensure the consistency of
the 2025 Policy with the Shareholders’ expectations for the future.
Description of the changes compared to the 2024 Remuneration Report
With respect to the 2024 Policy, in response to the voting results, feedback received and analyses
of the voting results and the main reasons behind the votes cast against proposals, as well as to
take into account the long-term interests of Pirelli & C., the composition of the panel used to compare
the Annual Total Direct Compensation with the Target for the Executive Vice Chairman and the Chief
Executive Officer has been revised. The revised panel excludes Renault, Stellantis and Gestamp
Automoción, and introduces new companies in the automotive components and assembly sectors:
Advance Auto Parts, Hella, and TI Fluid Systems, along with Nokian, a direct competitor in the tyre
industry.
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Additionally, to enhance transparency:
the companies included in the comparison panel for the Chairman of the Board of Directors’
remuneration are now explicitly listed;
in the section on variable incentive instruments, the weight of the ESG component, along
with the climate change portion, within the pay mix is now clearly highlighted, in compliance
with the Corporate Sustainability Reporting Directive (CSRD) and its related implementation
decree (6 September 2024, no. 125).
Finally, the possibility of defining a new compensation allowances framework for the Chief Executive
Officer consistent in structure but still not exceeding what is provided for the Executive Vice
Chairman has been introduced.
The 2025 Policy also reflects the appointment of the new Board of Statutory Auditors on 28 May
2024.
Regarding the 2024 Report on Compensation Paid, it is important to highlight that the high level of
transparency in Section II of the document has been preserved. This includes detailed information
on the performance metrics tied to variable incentives, as well as a comprehensive overview of the
various components of the remuneration package paid in different forms throughout 2024.
Market references and peer group
With regard to the Annual Total Direct Compensation on-Target, Pirelli defines and applies a policy
which, in relation to the reference market, targets the third quartile for the Executive Vice Chairman,
the General Manager, the KMs and the Senior Management, the median for the Chairman of the
Board of Directors, Chief Executive Officer and Group Executives.
The analysis of the positioning, the make-up and more generally the competitiveness of the
remuneration of Directors holding specific offices is conducted by the Remuneration Committee and
the Board of Directors with the assistance of companies specialised in executive compensation, on
the basis of methodological approaches that allow the full assessment, if within the typical limits of
benchmark analyses, of the complexity of their positions from an organisational point of view, any
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specific duties assigned thereto and the individual’s impact on the final business results. In particular,
with the assistance of the company Willis Tower Watson, Pirelli defines:
a sample of 12 companies listed on the Euronext Milan176 used to analyse competitiveness and
potentially revise the remuneration of the Chairman of the Board of Directors of Pirelli & C.,
consisting of the following:
a sample of reference companies defined by taking into account key recommendations on pay
for performance, used to analyse competitiveness and potentially revise the remuneration of the
Executive Vice Chairman and Chief Executive Officer of Pirelli & C..
With regard to the comparative market, in defining the panel of reference companies analysed
annually by the Remuneration Committee, various components are taken into account and pre-
established criteria are applied that are consistent with those considered by investors and proxy
advisors.
The table below shows the criteria used to define the panel:
Sector
Geography
Dimension
The panel includes direct competitors,
automotive manufacturers as well as
companies from the Auto Components
sector.
The panel consists of multinational
companies, based in major European
countries and North America.
The dimension is assessed in
relation to the following criteria:
- market capitalisation;
- revenues;
- number of employees.
Through the review process conducted over the past few years, the panel has gradually included
companies from the Auto Components sector while excluding companies that did not meet the
176 Financial companies are excluded from the sample.
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established criteria. The selected companies, listed below, share similar characteristics in terms of
production, technology and market orientation.
Finally, the remuneration structure and related analysis for the General Manager and the KMs,
shared with the Remuneration Committee and annually reviewed and disclosed in the report on
compensation paid, are also defined for Senior Managers and Executives. These are based on
national and European benchmarks, which are prepared annually by Korn Ferry through a survey
that includes over 480 companies. The method used is “Job Grading”, which compares the roles on
the basis of three different components (know-how, problem solving and accountability), whereby
the weighting of each role is determined within the company.
Elements of the policy
In keeping with previous remuneration policies, the 2025 Policy provides for the Management
remuneration to consist of various elements:
gross annual base salary;
an annual variable component (STI);
medium-long term variable component (LTI);
non-monetary benefits.
Fixed component
The base salary is established on the basis of the complexity of the position, professional seniority,
the skills required to perform in the role, performance over time, and the trend in the comparison
remuneration market related to the position held by the individual.
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Variable components
The STI and LTI variable components are established - taking account of the benchmarks for each
- as a percentage of base salary which increases according to the position held by the beneficiary.
The full cost of the variable incentive plans, both short and medium-long term, is included in the
economics of the strategic plans, so that their impact is “self-funded” by achievement of the expected
results.
The risk governance process is fully integrated into the strategic planning process in order to ensure
that the objectives envisaged for achieving the variable incentive do not expose Pirelli to managerial
behaviour inconsistent with an acceptable level of risk (“risk appetite”) as defined by the Board of
Directors when approving the plans.
Annual variable component (STI)
The STI component, except for specific cases, is extended to all the Management - except for the
Chairman of the Board of Directors - and is intended to reward the beneficiaries’ short term
performance; moreover, it can be extended to managers who joined the Group during the year. The
2025 STI Plan objectives for Directors holding specific offices to whom specific duties are also
delegated, for the General Manager and for KMs are established by the Board of Directors upon a
proposal by the Remuneration Committee (see §4 and §5).
The objectives underlying the STI Plan represent performance consistent with the corresponding
objectives disclosed to the market, in particular the objectives for achieving the incentive at “target”
level are set as equal to the value disclosed to the market.
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The objectives assigned to Directors holding specific offices to whom specific duties are also
delegated, to the General Manager and KMs in the context of the 2025 STI Plan are the following:
2025 STI Plan
Objective
Description
Weight
ON/OFF
condition
Group Net Cash
Flow (before
dividends)
Business
Objectives
Group adjusted
EBIT
This is the acronym for Earnings Before Interests and Taxes and is an
interim result of the profit and loss. This indicator does not consider the
financial structure of the company (i.e. how the company is financed, as
it is independent of financial management).
35%
Group Net Cash
Flow (before
dividends)
It represents the cash flow available to the company and is the
difference between cash flow from operating activities and cash flow
from investments in fixed assets.
30%
Net income
It represents the total profit made by the company, as reported in its
financial statements.
20%
Sustainability
Objectives
Eco & Safety
Volumes
Volumes of Eco & Safety Performance tyres out of the Group’s total car
tyre sales volumes. Eco & Safety Performance products identify car
tyres that Pirelli produces worldwide and that fall within the rolling
resistance and wet grip classes A, B, measured according to the
labelling parameters established by European standards.
5%
Women in
Management
positions
The index measures the number of women in managerial positions out
of the total number of managerial positions in the company.
5%
Frequency Index
The index measures the incidence of accidents at work in relation to
the hours worked in the year.
5%
The 2025 STI Plan objectives of the Senior Managers and Executives are, instead, defined by the
hierarchical manager in accordance with the Human Resources & Organisation and Administration,
Planning & Controlling departments and envisage, amongst others, also objectives connected with
the economic performance of the relevant business unit/geography/department (cf. §6).
At the end of the year and based on the finalised performance figures (and included in the draft
financial statements approved by the Board of Directors), the Department of Human Resources &
Organization, with the assistance of the Administration, Planning & Controlling Department, checks
the level to which the objectives have been achieved, on which basis the Board of Directors then
resolves, after examination by the Remuneration Committee, having obtained the opinion of the
Board of Statutory Auditors, on the amount of the variable compensation to be disbursed.
In the event of extraordinary transactions affecting the scope of the Group and/or major changes in
the macroeconomic and geopolitical scenario, the Remuneration Committee may adjust the targets
in the 2025 STI plan, in order to protect the Plan’s value and aims and ensure that the objectives of
the company and the objectives that underpin the Management incentive systems are constantly
aligned, or close the plan early.
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Achievement of the individual objectives will be assessed by the Remuneration Committee,
neutralising the effects of any extraordinary decisions that could have impacted the results (either
positively or negatively). The Board of Directors resolves on any review proposal submitted for its
examination.
The 2025 STI plan provides that for the General Manager, KMs and selected Senior Managers, part
of the remuneration accrued as a STI, from a minimum of 25% to a maximum of 50%, is deferred,
with a view to retention, and disbursed at the end of a three-year period subject to the continuation
of employment and together with a corporate matching component which can vary from a minimum
of 0.8 times to a maximum of 1.2 times the amount of the deferred STI (see the diagram below).
For the rest of the Management, on the other hand, part of the variable remuneration accrued as STI
is deferred to the benefit of continued results over time and thereby the creation of sustainable value
for Shareholders in the medium-long term. Indeed, 75% of any STI accrued is paid, since the
remaining 25% is deferred by 12 months and subject to achievement of the STI objectives for the
following year. More specifically (see diagrams below):
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Medium-long term variable component (LTI)
As for the medium to long term variable remuneration (LTI), it is assigned to Top Management –
except for the Chairman of the Board of Directors – and extended, except in specific cases, to all
Executives whose Grade, determined with the Korn Ferry method, is equal to or above 20.
The medium-long term incentive plans (LTI) are intended to:
link Management remuneration with the medium-long term performance of the Group;
promote the creation of shareholder value and sustainable success for the Company;
align the interests of shareholders with those of the Management;
promote Management retention.
The LTI plans are structured with a “rolling” mechanism which guarantees flexibility by ensuring that,
for each new three-year period, the performance indicators are aligned with the evolution of the
market and the company and, therefore, the Company’s strategic plans.
Below is an explanatory diagram showing how it works:
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The LTI plans assign each beneficiary an incentive opportunity (the “LTI Bonus”), equal to a
percentage of the gross annual fixed component in place in the first year of the plan. This incentive
percentage increases in relation to the position held and takes into account the benchmarks for each
role.
The objectives set in the LTI plans represent a performance consistent with the corresponding
objectives in the business plans disclosed to the market. In particular, the objectives for obtaining
the incentive at “target” level will be in line with what will be disclosed to the market.
The objectives assigned to the Directors holding specific offices to whom specific duties are also
delegated, to the General Manager and KMs in the context of the 2025-2027 LTI Plan are the
following:
2025-2027 LTI Plan
Objectives
Description
Weight
Business Objectives
Cumulative Group Net Cash
Flow (before dividends)
It represents the accumulated cash flow
available to the company and is the difference
between cash flow from operating activities
and cash flow from investments in fixed
assets.
35%
Related TSR vs TIER 1
It is a measure of Pirelli’s share performance
over time. It combines share price appreciation
and dividends paid to show the total return to
the shareholder expressed as an annualised
percentage. This indicator is then compared
with the average of Tier1 peers (Continental,
Michelin, Nokian, Goodyear and Bridgestone).
40%
Sustainability
Objectives
DJS Index
It represents Pirelli’s positioning in the Dow
Jones
Sustainability
World
(ATX
Auto
Components) index, which includes global
sustainability leaders identified by S&P Global
through
the
Corporate
Sustainability
Assessment.
10%
CO2 Emissions
It represents the reduction of direct (Scope
1+2) greenhouse gas emissions from plants,
vehicles and other activities managed directly
by Pirelli.
15%
In the event of extraordinary transactions affecting the Group’s perimeter and/or profound changes
in the macroeconomic and geopolitical scenario, the Board of Directors, on a proposal from the
Remuneration Committee, subject to the opinion of the Board of Statutory Auditors, may decide:
any adjustment of the targets (both upward or downward) of the 2025-2027 LTI Plans, so as to
protect their value and relative targets, thus ensuring constant alignment between the company’s
objectives and the objectives underlying the Management incentive schemes;
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a potential early termination of the 2025-2027 LTI Plan.
The 2024-2025 Business Plan confirms the core elements at the basis of Pirelli’s business model;
the graph below shows the link between the corporate strategy and the KPIs of the incentive
systems.
Pillars of the 2024-2025 Business Plan
STI
LTI
High-end, specialties and EV focus
Net income
Relative TSR
Group adjusted EBIT
Innovation and connectivity
Cumulative Group Net Cash Flow
(before dividends)
Cost Transformation & Digitalization
Group Net Cash Flow (before
dividends)
Sustainability
Eco & Safety Volumes
DE&I: Women in Management
positions
HSE: Frequency Index
CO2 Emissions Reduction
DJS Index
Each pillar will be undertaken with an approach based on:
-
centrality of environmental sustainability; and
-
an increasing push towards innovation and digitisation.
More specifically, through innovation and connectivity, new technologies will be introduced into
products inspired by eco-safety design and efforts will continue on connected tyres capable of
generating data that can be used to strengthen data-driven product development and process
optimisation. Digitisation and sustainability will be the key drivers for increasing efficiency and quality
levels thanks to programmes such as electrification and the Industrial IoT. The electrification of the
presses, part of the technological transition that will phase out steam generation boilers, combined
with specific recirculation programs, will help achieve the targets for reducing water consumption,
aiming for a 43% reduction by 2025 and 60% by 2030, compared to 2015 consumption levels.
The cost transformation programme, which includes automation, predictive maintenance through
Industrial IoT, optimisation of the logistics network, and modular product design, among other
initiatives, will serve as a comprehensive plan to enhance competitiveness across all company
departments.
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475
Insights into the Company’s strategy, governance and target, if sustainable management model,
along with the materiality of impacts, risks and opportunities, as well as projects and recorded
sustainability performance, can be found in the Consolidated Sustainability Report.
Non-monetary benefits
Non-monetary elements of remuneration are benefits provided to beneficiaries, depending on the
position held, as a result of contractual provisions/company policies or aimed at reinforcing attraction
during the recruitment phase (e.g. accommodation and student grants for limited periods of time).
Furthermore, when a new General Manager or a KM is hired, the Company reserves the right to
define, in line with market practice, the experience gained and the conventional seniority that may
be due to such person.
3.
REMUNERATION OF THE BOARD OF DIRECTORS, THE SUPERVISORY BODY AND
THE BOARD OF STATUTORY AUDITORS
The Board of Directors
Within the Board of Directors, a distinction can be made between:
i.
Directors holding specific offices to further specific duties are also delegated;
ii.
Directors holding no specific offices.
The attribution to directors of powers in respect of specific matters not included in the duties assigned
to them under art. 2381 of the Italian Civil Code, does not per se make them Directors to whom
specific duties are also attributed.
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The total gross annual remuneration established by the Shareholders’ Meeting177 was allocated by
the Board of Directors on 3 August 2023 for the years 2023, 2024 and 2025:
In line with best practice, Directors holding no specific offices do not receive a variable component
of their remuneration. Expenses incurred for official reasons are also reimbursed to the Directors.
In any case, the remuneration paid to Directors, other than those holding specific offices with
delegated powers, is set to ensure it reflects the skills, professionalism and commitment required by
their role. In deciding said allocation, the Board of Directors takes into account the effort required for
the Directors’ attendance of the individual Board Committees, on the basis of the previous mandate.
In the event that the Board of Directors is called on to resolve again on the allocation of the
remuneration established by the Shareholders’ Meeting, and unless the Shareholders’ Meeting
provides otherwise, an allocation of said remuneration that envisages the attribution (i) of a
remuneration that is at most +25% of the Directors’ remuneration attributed during the previous term
of office and (ii) +25% of the remuneration for the office held in the previous term of office for Board
Committee members, should be considered compliant with the policy. If new Board Committees
should be established, the maximum limit is that of the highest remuneration envisaged for the
corresponding office in other Board Committees.
In line with best practices, a Directors & Officers Liability (D&O) insurance policy is in place to cover
the third-party liability of members of corporate bodies, i.e. Directors and Statutory Auditors.
Consequent to the rules governing mandates, this policy aims to indemnify Pirelli & C. from any
177 On 31 July 2023, the Pirelli & C. Shareholders’ Meeting resolved to establish, for the years 2023, 2024, 2025 and until cessation of
office with the approval of the financial statements as at 31 December 2025, a maximum of 2.5 million euros as the total annual
remuneration of the Board of Directors in accordance with Art. 2389, paragraph 1 of the Italian Civil Code, excluding the remuneration
to be assigned, by the Board of Directors, to Directors holding specific offices, as envisaged by Art. 2389 of the Italian Civil Code.
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expenses deriving from the related compensation, excluding cases of wilful misconduct or gross
negligence.
Lastly, for Directors who do not hold specific offices with delegated powers, no additional insurance
coverage, social security, or pension benefits beyond compulsory coverage are provided.
The Supervisory Body
On 3 August 2023, the Board of Directors confirmed, in continuity with the previous term of office,
the members of the Supervisory Body178 and resolved to pay the Chairman and the other members
of the Supervisory Body the following remuneration for the financial years 2023, 2024 and 2025:
For completeness, it is reported that the remuneration assigned to members of the Supervisory Body
is not included in the total gross annual remuneration established by the Shareholders’ Meeting.
The Board of Statutory Auditors
The remuneration of members of the control body is determined by the Shareholders’ Meeting as a
fixed annual amount, appropriate to the competence, professionalism and commitment required by
the importance of the position held and the size and sector characteristics of the company.
The Shareholders’ Meeting of 28 May 2024 approved the renewal of the Board of Statutory Auditors
for the three-year period 2024-2026 and until the approval of the financial statements as at 31
December 2026, following the expiry of its term with the approval of the financial statements as of
31 December 2023. The Shareholders’ Meeting also determined, in accordance with Article 2402 of
the Italian Civil Code, a fixed annual gross remuneration of 135,000 euros for the Chairman of the
Board of Statutory Auditors and 95,000 euros for the other standing members.
Expenses incurred for official reasons are also reimbursed to the Statutory Auditors.
The Shareholders’ Meeting of 28 May 2024 also resolved to allocate to the members of the Board
of Statutory Auditors, who may be called upon to join the Supervisory Body, the remuneration due to
the members of this body, as determined by the Board of Directors. In line with best practices, a
178 On 1 August 2024, the Board of Directors resolved to appoint Ms Maura Campra, in her capacity as a member of the Board of Statutory
Auditors (appointed by the Shareholders’ Meeting of 28 May 2024), to the Supervisory Board, replacing Ms Antonella Carù, who
ceased to be a member of the Board of Statutory Auditors following the completion of her term of office.
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D&O insurance policy is envisaged to cover the third party liability of the corporate bodies, including
the members of the Board of Statutory Auditors.
4.
REMUNERATION OF DIRECTORS HOLDING SPECIFIC OFFICES
The remuneration of Directors holding specific offices is proposed by the Remuneration Committee
to the Board of Directors when they are appointed, or at the first useful meeting thereafter, following
consultation with the Board of Statutory Auditors.
Chairman of the Board of Directors
If a Director has been appointed to a specific office or offices, but no specific duties have been
assigned to them (at the date of this Report, this applies to Chairman of the Board of Directors Jiao
Jian) the remuneration consists solely of a fixed gross annual component, as well as the
compensation for the office of Director and any participation in Committees.
At the time of appointment, the Board of Directors determines the remuneration for the Chairman of
the Board of Directors, considering the remuneration assigned during the previous mandate (if the
same holder) and the market benchmark.
The Chairman of the Board of Directors, who receives a gross annual remuneration of 400,000 euros
for his office, has expressed his wish not to receive any remuneration from the Company for the
offices held. Therefore, the Board of Directors’ meeting of 13 September 2023 resolved not to
allocate any remuneration under the 2023 Policy for the offices held by him179.
In the event that the Board of Directors is called on to resolve again on the remuneration of the
Chairman of the Board of Directors during the current term of office, a remuneration that is at most
equal to +10% of the remuneration payable during the previous term of office (in the case of the
same holder) or consistent with the market benchmark median (in the case of a different person), is
considered compliant with the Policy. No non-monetary benefits are provided for the Chairman of
the Board of Directors.
179 On 13 September 2023, the Board of Directors, at the request of Chairman Jiao Jian, resolved not to allocate any remuneration for the
offices held by him during his term at Pirelli & C., specifically Chairman of the Board of Directors, Director (75,000 euros), member of
the Strategies Committee (35,000 euros), and member of the Sustainability Committee (35,000 euros).
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Directors holding specific offices to whom specific duties are also delegated
The remuneration of Directors holding specific offices to whom specific duties are also delegated (as
of the date of this Report this applies to the Executive Vice Chairman Marco Tronchetti Provera and
the Chief Executive Officer Andrea Casaluci) consists of the following elements:
Directors holding specific offices to whom specific duties are also delegated, shall also be due the
compensation for the office of Director and any participation in Board Committees180.
With regard to the incidence of the various components, the structure of the compensation package
for the Executive Vice Chairman and the Chief Executive Officer, in the event that the objectives of
the 2025 STI Plan and the 2025-2027 LTI Plan are achieved at the minimum, target and maximum
levels, is shown below, with a particular focus on the impact of the ESG objectives on the pay mix.
180 The Executive Vice Chairman is also entitled to the remuneration for serving as a Director (75,000 euros) and as Chairman of the
Strategies Committee (50,000 euros), the Appointments and Successions Committee (35,000 euros) and the Sustainability Committee
(50,000 euros). The Chief Executive Officer is entitled to remuneration for serving as Director (75,000 euros) and for his role as a
member of the Strategies Committee (35,000 euros) and the Sustainability Committee (35,000 euros).
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As illustrated in the graphs above, as regards the ESG objectives within the incentive schemes, it is
important to note that if the performance reaches the target level, the corresponding payout will
account for 12.2% of the compensation package for the Executive Vice Chairman (with 5.8% related
to climate change KPIs) and 10.4% for the Chief Executive Officer (with 4.8% related to climate
change KPIs).
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Fixed Remuneration
Remuneration for Directors holding specific offices to whom specific duties are also delegated is
determined at the time of appointment, taking into account the market benchmark in an amount that
ensures a balance between the fixed component and the variable component that is adequate and
consistent with the strategic objectives and the risk management policy of the Company, taking into
account the characteristics of the business and the sector in which the Company operates, in any
case establishing that the variable component represents a significant part of the total remuneration.
The gross annual fixed remuneration for the financial years 2023, 2024 and 2025 and until the
approval of the financial statements as at 31 December 2025 assigned to (i) the Executive Vice
Chairman is 2,400,000 euros and (ii) the Chief Executive Officer is 1,100,000 euros.
In the event that the Board of Directors is again called upon to resolve on the gross annual fixed
remuneration of Directors holding specific offices to whom specific duties are also delegated, the
following shall comply with the Policy:
for the Executive Vice Chairman, a fixed gross annual remuneration or a review thereof which,
taking into account the annual and medium to long-term incentive percentages, determines an
Annual Total Direct Compensation on-Target equal to a maximum of +5% respectively of the
value awarded in the previous term of office (if the same holder) or of the market benchmark
(third quartile);
for the Chief Executive Officer, a fixed gross annual remuneration or a review thereof which,
taking into account the annual and medium-long term incentive percentages, determines an
Annual Total Direct Compensation on-Target equal to a maximum of +10% respectively of the
value awarded in the previous term of office (if the same holder) or of the market benchmark
(median).
Annual variable component (STI)
The Directors holding specific offices to whom specific duties are also delegated receive an annual
variable component (STI) equal to a percentage of the fixed remuneration determined at the time of
appointment and thereafter when the individual annual plans are launched.
If the Board of Directors is again called to resolve on the STI incentive percentages for Directors
holding specific offices to whom specific duties are also delegated, the Policy allows the allocation
of an STI incentive percentage of no more than 125% on target and 250% maximum.
For each objective there is a minimum and a maximum (cap) to the amount of the incentive that can
be achieved; for performance below the minimum level, no payment is envisaged.
The on/off condition is the Group’s Net Cash Flow (before dividends) and failure to achieve it results
in the cancellation of the STI incentive, regardless of the level of achievement of the other objectives.
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The finalisation of the bonus between the minimum value and target and between the target and
maximum is carried out by linear interpolation.
Depending on the level of performance achieved, the Executive Vice Chairman will be paid an
incentive of 80% of fixed remuneration for minimum level performance, amounting to 125% of the
fixed remuneration in the event of on-target performance and 250% for maximum level performance.
Depending on the level of performance achieved, the Chief Executive Officer will be paid an incentive
of 70% of fixed remuneration for minimum level performance, amounting to 110% of the fixed
remuneration in the event of on-target performance and 220% for maximum level performance.
Once the on/off condition has been achieved, all the objectives envisaged on the STI scorecard shall
apply independently, according to the incentive curve shown below. Therefore, according to the
performance achieved, each objective will go towards calculating the total payout, on the basis of
the weighting shown on the scorecard.
Example curve if all objectives are achieved at minimum, target and maximum level by the Executive
Vice Chairman and Chief Executive Officer.
Part of the variable component accrued by the Executive Vice Chairman and Chief Executive Officer
as STI is deferred to support the continuity of results over time and, therefore, the creation of
sustainable value in the medium to long term for the Shareholders, as stated in paragraph 2 of this
Policy. In the event that the payout percentage of the STI accrued in the following year is equal to or
higher than target value, the STI share deferred from the previous year is paid, together with an
additional amount equal to the portion deferred (matching).
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In the event of termination of office, the STI Bonus is paid on a pro-quota basis for the effective
months of tenure in office181.
Medium-long term variable component (LTI)
In order to contribute to the corporate strategy, the pursuit of the long-term interests and the
sustainability of the Company, the Directors holding specific offices to whom specific duties are also
delegated receive a medium-long term variable component (LTI) equal to a percentage of the fixed
remuneration determined at the time of appointment and thereafter when the individual annual plans
are launched.
For 2025, the Executive Vice Chairman and Chief Executive Officer are beneficiaries of the 2025-
2027 LTI Plans and the 2023-2025 and 2024-2026 LTI Plans.
If the Board of Directors is again called to resolve on the LTI incentive percentages for Directors
holding specific offices to whom specific duties are also delegated, the Policy allows the allocation
of an LTI incentive percentage of no more than 70% on target and 200% maximum.
A minimum level – associated with payment of 75% of the bonus achievable on-target – and a
maximum (cap) are envisaged for each objective of the LTI plans.
The performance range for the economic-financial objectives is defined as the more challenging of
the target and maximum level with respect to that envisaged between the minimum and target levels.
In order to offer an incentive to achieving results above target, the incentive curve is fixed in such a
way that the incentive opportunities grow faster between the target and the maximum than in the
range between the minimum and the target (see diagram below). All the objectives envisaged on the
LTI scorecard shall apply independently, according to the incentive curve shown below. Therefore,
according to the performance achieved, each objective will go towards calculating the total payout,
on the basis of the weighting shown on the scorecard.
Example curve if all objectives are achieved at minimum, target and maximum level by the Executive
Vice Chairman and Chief Executive Officer.
181 Note that Andrea Casaluci was appointed Chief Executive Officer of the Company by the Board of Directors on 3 August 2023. For the
periods prior to him taking on this role, the pro-rata payment of the STI is based on the incentive percentages and calculation basis set
for the General Manager Operations, pursuant to the 2023 Policy.
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For the TSR (Total Shareholder Return), cumulative Group Net Cash Flow (before dividends) and
CO2 Emissions objectives, for results falling between the minimum and the target, or between the
target and the maximum, performance will be calculated by linear interpolation.
For the Dow Jones Sustainability Index sustainability target, there will be a three-step reporting:
minimum, target and maximum, without considering intermediate performance levels.
Within the scope of the 2025-2027 LTI Plan, depending on the level of performance achieved, the
Executive Vice Chairman is granted a bonus opportunity of 70% of fixed remuneration for on-target
performance, 52.5% of fixed remuneration if the minimum performance is achieved (75% of the on-
target bonus), and 200% of the fixed remuneration (cap) in the event of maximum performance.
Depending on the level of performance achieved, the Chief Executive Officer is granted an annual
bonus opportunity of 65% of fixed remuneration for on-target performance, 48.75% if the minimum
performance is achieved (75% of the on-target bonus), and 180% (cap) in the event of maximum
performance. These incentive opportunities are applicable to the 2025-2027 LTI Plan, the 2024-2026
LTI Plan and, pro-rata, to the 2023-2025 LTI Plan.
In the event of termination of office, the LTI Bonus is paid on a pro-quota basis for the effective
months of tenure in office182.
182 Note that Andrea Casaluci was appointed Chief Executive Officer of the Company by the Board of Directors on 3 August 2023. For the
periods prior to him taking on this role, the pro-rata payment of the LTI Bonus is based on the incentive percentages and calculation
basis set for the General Manager Operations, pursuant to the 2023 Policy.
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Office Termination Payment and non-monetary benefits
In addition, the Board of Directors has made the following provision for Directors holding specific
offices to whom specific duties are also delegated, in the event that said duties are not related to
their executive employment relationship (on the date of this Report, the Executive Vice Chairman
Marco Tronchetti Provera and Chief Executive Officer Andrea Casaluci), analogously to the
treatment guaranteed pursuant to the law and/or national collective employment agreement for the
Group’s Italian managers:
an Office Termination Payment (T.F.M.) pursuant to Art. 17, paragraph 1, letter c) of the TUIR
(Italian consolidated law on income tax) no. 917/1986, with similar characteristics to those typical
of Severance Indemnity Payment (TFR) pursuant to Art. 2120 of the Italian Civil Code,
comprising:
a) an amount equal to the amount that would be due as manager by way of TFR; the basis for
calculation consists of the gross annual fixed remuneration received for the specific role held
in the Company;
b) an amount equal to the contributions paid by the employer that would be due to social security
and welfare institutes or funds in the event of a contract of employment as manager ex lege
and/or National Collective Bargaining Agreement for the Italian Managers of the Group with
the same degree of seniority of employment; the basis for calculation consists of the gross
annual fixed remuneration received for the specific role held in the Company, in addition to
any other payments due by way of medium/long-term annual variable component.
The T.F.M., including the relevant value adjustment of such amounts, will be due as a lump sum
at the request of the beneficiary at any time after expiry of each mandate or, in the event of
premature death, of his/her assignees. It is understood that in the event that the T.F.M. relates
to several expired mandates, the beneficiary shall be entitled to request its disbursement even
for only one or some of the expired mandates; for the amounts or the mandates for which
disbursement has not been requested, the right to the relevant sums shall accrue in the year in
which disbursement is requested by the beneficiary or his/her assignees.
a compensation allowance for death from any cause and permanent invalidity following illness
as well as a compensation allowance for death from any cause and permanent invalidity following
accidents, the terms, limits and conditions of which are in line with what was guaranteed for the
previous mandate for the Executive Vice Chairman and with Pirelli policies for managers for the
Chief Executive Officer. With regard to the Chief Executive Officer, the Policy allows the definition
by the Board of Directors of a new compensation allowances framework consistent in structure
but still not exceeding what is provided for the Executive Vice Chairman;
further benefits typical of the role and currently paid within the Group to the General Manager,
KMs and Executives (e.g. company car).
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5.
REMUNERATION OF THE GENERAL MANAGER AND KEY MANAGERS
The remuneration of the General Manager (at the date of this Report the Corporate General Manager
is Francesco Tanzi) and the other KMs has the following elements:
With regard to the incidence of the various components, the structure of the remuneration package
for the Corporate General Manager and the KMs, in the event of achieving the objectives of the 2025
STI Plan and the 2025-2027 LTI Plan at the minimum, target and maximum levels, is shown below,
with a particular emphasis on the impact of the ESG objectives on the pay mix.
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In the case of hiring a new General Manager, in addition to the companies mentioned in paragraph
2, Pirelli may also use the services of other leading companies specialised in executive
compensation with the relative methodology and comparison market in view of the complexity and
specific nature of the role, after obtaining the agreement of the Remuneration Committee.
In line with best practices, a D&O insurance policy is in place to cover third-party liability for the
General Manager and the KMs in the performance of their duties. Consequent to the provisions
established on the matter by the applicable National Collective Bargaining Agreement, this policy
aims to indemnify Pirelli & C. from any expenses deriving from the related compensation, excluding
cases of wilful misconduct or gross negligence.
Fixed remuneration of the General Manager and KMs
The fixed remuneration of the General Manager is determined at the time of appointment by the
Board of Directors, based on an opinion provided by the Remuneration Committee, in line with the
Policy.
The fixed remuneration of KMs is determined by top management, also in accordance with the Policy,
assessed by the Remuneration Committee.
If a new General Manager or a new KM is appointed, the Remuneration Committee determines the
Grade and benchmark of reference based on their role and responsibilities, with the support of
selected external partners.
For a new General Manager, a fixed remuneration not exceeding 85% of that of the Chief Executive
Officer and an Annual Total Direct Compensation on-Target which, taking into account the annual
and medium-long term percentages, does not exceed 80% of the Annual Total Direct Compensation
on-Target of the Chief Executive Officer.
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If KMs are hired, the Policy allows a fixed remuneration not exceeding that of the Corporate General
Manager and an Annual Total Direct Compensation on-Target not exceeding +20% of the market
benchmark (third quartile).
The proposed revisions of the fixed remuneration are carried out with reference to the purpose of
the Policy to attract, retain and motivate key resources to achieve the company’s objectives. Subject
to the above, a review that, considering the annual and medium/long-term incentive percentages,
determines an Annual Total Direct Compensation on-Target equal to at most + 10% of the market
benchmark (third quartile), is compliant with the Policy. Otherwise, in the event of non-compliance,
the RPT Procedure is applicable.
Annual variable component (STI)
The General Manager and KMs are beneficiaries of the 2025 STI plan defined according to the same
objectives as those set for the Directors holding specific offices to whom specific duties are also
delegated.
Depending on the level of performance achieved, the table below shows the percentage of the
incentive on the gross annual salary:
Performance
Payout
ESG component
Corporate General Manager
Target
75% of the GAR
11% of payout (climate 4%)
Maximum
150% of the GAR
23% of payout (climate 8%)
KMs
Target
60% of the GAR
9% of payout (climate 3%)
Maximum
120% of the GAR
18% of payout (climate 6%)
In the event of hiring a new General Manager, the Remuneration Committee, having as reference
the purpose of the Policy to attract key resources for the achievement of corporate objectives, may
set incentive percentages higher than those indicated above, provided that they are not higher than
those of the Chief Executive Officer. In that case, the RPT Procedure is applicable.
For the General Manager and KMs a percentage of the STI accrued, from a minimum of 25% to a
maximum of 50%, is deferred at the end of the three-year period, as stated in paragraph 2 of this
2025 Policy.
Medium-long term variable component (LTI)
In order to contribute to the Company’s strategy, the pursuit of long-term interests and the
sustainability of the Company, also the General Manager and KMs are beneficiaries of medium/long-
term incentive plans and, in particular, of the 2023-2025, 2024-2026 and 2025-2027 LTI Plans. The
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LTI plans have the same structure, mechanism and objectives as those set for Directors holding
specific offices to whom specific duties are also delegated.
Within the scope of the LTI Plan for the period 2025-2027, depending on the level of performance
achieved, the table below shows the percentage of the incentive on the gross annual salary.
Performance
Payout
ESG component
Corporate General Manager
Target
60% of the GAR
15% of payout (climate 9%)
Maximum
160% of the GAR
40% of payout (climate 24%)
KMs
Target
55% of the GAR
14% of payout (climate 8%)
Maximum
145% of the GAR
36% of payout (climate 22%)
In the event of the appointment of a new General Manager, the Remuneration Committee may set
incentive percentages higher than those indicated above, provided that they are not higher than
those of the Chief Executive Officer. In that case, the RPT Procedure is applicable.
The General Manager and KMs shall cease their participation in the LTI plans and consequently
shall not accrue the right to receive bonus payments, not even pro-rata, in the event of (i) termination
of employment occurring for any reason before the end of the three-year period and (ii) voluntary
resignation without just cause or dismissal for just cause (Bad Leaver) occurring before the payment
date.
Non-monetary benefits, conventional seniority and welcome bonus
Non-monetary elements of remuneration are benefits provided to the General Manager and KMs as
a result of contractual provisions/company policies or aimed at reinforcing attraction during the
recruitment phase (e.g. accommodation and student grants for limited periods of time).
Moreover, if a new General Manager or KM is hired, the Remuneration Committee may establish (i)
an agreed seniority recognised on the basis of previous experience in similar roles, (ii) the allocation
of a one-off bonus not exceeding the beneficiary’s fixed gross annual remuneration.
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6.
REMUNERATION OF SENIOR MANAGERS AND EXECUTIVES
The remuneration of Senior Managers and Executives consists of the following elements:
The remuneration structure for Senior Managers and Executives (as a whole) with evidence of the
incidence of the various parts of their compensation packages, in the event that they achieve the
minimum, target and maximum levels of the objectives of the 2025 STI Plan and those of the 2025-
2027 LTI Plan, together with evidence of the incidence of ESG objectives on the pay mix, is shown
below.
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In line with best practice, a D&O insurance policy is also in place to cover the third-party liability of
Senior Managers and Executives in the performance of their duties. Consequent to the provisions
established on the matter by the applicable National Collective Bargaining Agreement, this policy
aims to indemnify Pirelli & C. from any expenses deriving from the related compensation, excluding
cases of wilful misconduct or gross negligence.
For the managers of the Internal Audit department, there is a higher incidence of the fixed component
than of the variable component.
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Annual variable component (STI)
Senior Managers and Executives are beneficiaries of the 2025 STI Plan, defined according to the
same structure as for the Executive Vice Chairman, the Chief Executive Officer, the General
Manager and the KMs. For the year 2025, the objectives assigned to Senior Managers and
Executives are as shown in the table below:
* If the on/off NCF Region or DSO condition is not met, the on/off Group condition will apply with a 25% reduction of the payout accrued.
** The Senior Managers and Heads of Region have all three sustainability objectives, each with a 5% weighting. The other Executives
can have between one and three sustainability objectives still guaranteeing at least 15 points, depending on the professional family they
belong to.
According to the performance level achieved, the Senior Managers and Executives are assigned the
following incentive percentages:
Range
ESG component
% at target
15% - 40%
2% - 6% (climate 1% - 2%)
% at maximum
30% - 80%
5% - 12% (climate 2% - 4%)
For selected Senior Managers, as for General Manager and KMs, a percentage of the STI accrued
is deferred as stated in paragraph 2 of this 2025 Policy.
For the remaining Senior Managers and Executives, 75% of the accrued bonus is paid, and the
remaining 25% is deferred for 12 months and subject to achievement of the STI Plan objectives for
the following year, according to the same mechanism envisaged for the Directors holding specific
offices to whom specific duties are also delegated.
Medium-long term variable component (LTI)
Senior Managers and Executives (with a Korn Ferry Grade of 20 or more) are beneficiaries of the
medium/long-term incentive plan so as to contribute to the Company’s strategy and sustainability,
and the pursuit of its long-term interests. The 2023-2025, 2024-2026 and 2025-2027 LTI Plans are
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defined according to the same structure, mechanisms and objectives as envisaged for the Directors
holding specific offices to whom specific duties are also delegated, General Manager and KMs.
Within the scope of the LTI Plan for the period 2025-2027, on the basis of the performance level
achieved, Senior Managers and Executives are paid the following incentive percentages:
Range
ESG component
% at target
15% - 50%
4% - 13% (climate 2% - 8%)
% at maximum
40% - 130%
10% - 33% (climate 6% - 20%)
Senior Managers and Executives shall cease their participation in the LTI plans and consequently
shall not accrue the right to receive bonus payments, not even pro-rata, in the event of (i) termination
of employment occurring for any reason before the end of the three-year period and (ii) voluntary
resignation without just cause or dismissal for just cause (Bad Leaver) occurring before the payment
date.
Non-monetary benefits
Non-monetary elements of remuneration are benefits provided to Senior Managers and Executives
as a result of contractual provisions/company policies or aimed at reinforcing attraction during the
recruitment phase (e.g. accommodation and student grants for limited periods of time).
7.
CLAWBACK CLAUSES
The annual STI and medium-long term (LTI) incentive plans for Directors holding specific offices to
whom specific duties are also delegated, the General Manager and KMs provide inter alia for
clawback mechanisms.
In particular, without prejudice to the possibility of any other action permitted by the order to protect
the interests of the Company, contractual agreements will be signed with the aforementioned
persons, enabling Pirelli to claim back (in whole or in part), within three years of the payment thereof,
incentives paid to persons who, due to wilful misconduct or gross negligence, are held responsible
for (or are accomplices to) the facts, as indicated below, related to economic and financial indicators
included in the annual financial report that involve subsequent comparative information adopted as
parameters for the determination of the variable awards in the aforementioned incentive plans:
proven significant errors resulting in non-compliance with the accounting standards applied by
Pirelli, or;
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proven fraudulent conduct aimed at obtaining a specific representation of Pirelli’s financial and
equity situation, economic result, or cash flow.
8.
COMPENSATION IN THE EVENT OF RESIGNATION, DISMISSAL OR TERMINATION OF
RELATIONS
It is Pirelli Group policy not to enter into with Directors, General Managers, KMs, Senior Managers
or Executives agreements regulating economic aspects related to any early termination of relations
in retrospect at the initiative of the Company or the individual.
Pirelli aims at agreements to “terminate” relations in a consensual manner. Without prejudice to any
legal and/or contractual obligations, agreements to end relations with the Pirelli Group are inspired
by the benchmarks in the matter and are within the limits laid down in case law and by the practices
in the country in which the agreement was signed.
The company sets its owns internal criteria, with which the other Group companies also comply, for
managing early termination agreements of relations with managers and/or those of Directors holding
specific offices. If Directors holding special offices with delegated powers or a General Manager
should cease to hold office and/or their employment be terminated, the Company will, upon
completion of the internal processes that lead to the attribution or award of indemnities and/or other
benefits, provide detailed information on the issue, by means of a press release disseminated to the
market.
As regards Directors holding specific offices to whom specific duties are also delegated, and who
are not bound by executive employment contracts, Pirelli provides for the payment of a specific
benefit, following evaluation by the competent corporate bodies, in the cases described below.
Regarding the Executive Vice Chairman:
early termination of office by the Company for other than just cause;
early termination by the director for just cause, including but not limited to substantial changes
to the role or duties attributed and/or cases of a “hostile” takeover bid.
In such cases, the indemnity amounts to 24 months of gross salary, i.e. the sum of (i) the base
remuneration for the duties performed in the Group, (ii) the average variable remuneration (STI)
accrued in the previous three years and (iii) severance pay on the aforementioned amounts.
With regard to the Chief Executive Officer Andrea Casaluci, a benefit is payable in the following
cases:
early termination of office by the Company for other than just cause;
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early termination by the director for just cause, including but not limited to substantial changes
to the role or duties attributed and/or cases of a “hostile” takeover bid;
termination of office due to completion of term of office without a subsequent re-appointment
proposal.
This benefit amounts to 24 months of the gross remuneration, meaning the sum of (i) the fixed
remuneration for the main office and (ii) the STI variable remuneration at target.
As regards the General Manager and KMs, agreements for consensual termination of employment
are submitted to the Remuneration Committee (also acting as the Related-Party Transactions
Committee on remuneration) which, after assessing compliance with the Policy, authorises the
negotiation and determines the maximum amount payable, including the potential retention of non-
monetary benefits for a predetermined period of time.
The closure amounts are determined with reference to the applicable category national collective
bargaining agreements. In particular, reference is made to the contract for Industry managers in Italy
and the incentive to take voluntary redundancy is determined with reference to the number of months
of notice reimbursable by entities and supplementary indemnity in the event of arbitration, depending
on the employee’s length of service in the Group. Below is an explanatory table:
No. months
Arbitration Panel
Years of seniority
at Pirelli
Notice
Min
Max
more than 15 years
12
18
24
up to 15 years
10
12
18
up to 10 years
8
8
12
up to 6 years
6
4
8
up to 2 years
6
4
4
Subject to the review, evaluation and approval of the Remuneration Committee (also acting as the
Related-Party Transactions Committee on remuneration), the General Manager and the KMs may
also be granted:
an additional amount by way of general and novative transaction, within the limits of the low
thresholds established for related party transactions;
a period of paid leave or equivalent substitute indemnity between the stipulation of the exit
agreement and the effective date of termination of employment.
A consultancy (or collaboration) contract may be entered into between Directors holding specific
offices to whom specific powers are also delegated, the General Manager and the KMs and a Group
company, for a predefined period following the termination of their office and/or employment
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relationship and subject, also in this case, to evaluation and approval by the Remuneration
Committee (also acting as Related-Party Transactions Committee on remuneration).
The remuneration due to the General Manager and the KMs for any positions held on the Board of
Directors is not included in the calculation of severance pay.
Finally, as regards the short term incentive (STI) and medium-long term (LTI) incentive system:
for Directors holding specific offices to whom specific duties are also delegated and who cease
to hold office a pro-rata payment of the STI Bonus, and LTI Bonus for the actual months of tenure
of the office is provided for;
for the General Manager, the KMs, Senior Managers and Executives, in the event of termination
of employment, the STI Bonus will be paid pro-rata, for the actual months of employment, subject
to a minimum period of 9 months in the year, except in the case of dismissal for just cause, where
no amount will be paid. There is no payment of the LTI bonus, not even pro rata, in the event of
termination for any reason before the end of the three-year period; there is also no payment in
the event of voluntary resignation without just cause or dismissal for just cause (Bad Leaver)
before the payment date.
9.
NON-COMPETITION AGREEMENT
The Group enters into non-competition agreements providing for a payment to the General Manager,
KMs and, Senior Managers and Executives183 for particularly crucial duties, in proportion to the GAR
in relation to the duration and extent of the constraints arising from the agreement itself. The Group
also reserves the right, subject to authorisation by the Board of Directors, to enter into non-
competition agreements with Directors holding specific offices to whom specific duties are also
delegated.
The constraints refer to the market sector in which the Group was operating when the agreement
was made and to territorial size. The extent varies according to the role held when the agreement is
finalised and may go as far, in certain cases deemed particularly critical, such as in the case of
Directors holding specific offices to whom specific duties are also delegated, the General Manager
and KMs, as to have a geographical extension covering all the main countries in which the Group
operates.
The Executive Vice Chairman is not subject to a non-competition agreement.
183 Reference is made, in particular, to critical know-how in terms of technical skills in research and development and manufacturing as
well as in sales.
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In the case of the Chief Executive Officer, the General Manager and KMs, the non-competition
agreement has the following characteristics:
the list of competitors: companies operating in the tyre sector and, according to the role held,
identification of more specific clusters;
geography: all the main countries in which the Pirelli Group operates;
the duration of the non-competition agreement: 24 months from the termination of office/contract;
the fee: from a minimum of 50% to a maximum of 170% of the fixed remuneration on the basis
of the role held, the technical skills, the specialised know-how and the reason for leaving, for the
period of the restriction, less any portion paid during the contract of employment, amounting to
between 10% and 15% of the fixed remuneration per year of validity of the agreement (usually 5
years). When hiring a new General Manager, the consideration for the non-competition
agreement may be determined as a percentage also above 170% of the fixed remuneration and
in any case not above 200% and, in this case, the annual payment during employment may be
a maximum of 20% of the fixed remuneration.
Bad Leaver Range
Good Leaver Range
Fee for the restriction period
50% - 70%
130% - 170%
Annual payment
10% - 15%
10.
EXCEPTIONS TO THE REMUNERATION POLICY
In compliance with Art. 123-ter of the TUF and Art. 84-quater of the Issuers’ Regulation, the Company
may adopt any decisions that temporarily make an exception to the Policy.
With reference to parties for whom the Board of Directors defines remuneration in accordance with
the Policy, in the presence of exceptional circumstances, it is possible to make a temporary exception
to the fixed or variable remuneration criteria indicated in the Policy or the structure of non-competition
agreements and the attribution of non-monetary benefits.
Exceptional circumstances are situations in which an exception to the Policy is necessary for the
purposes of pursuing the long-term interests and sustainability of the Company as a whole or to
ensure its ability to stay on the market, such as, for example (i) the need to replace, due to
unforeseen events, the Chief Executive Officer, General Manager or KMs and to negotiate a
remuneration package quickly, without limits to the possibility of attracting managers with the most
suitable professional skills to manage the business and to ensure that the same levels of sustainable
success and market positioning are at least maintained; (ii) significant changes in the scope of the
company’s business during the term of the policy, such as the sale of a company/business unit or
acquisition of a significant business.
The Remuneration Committee assesses the existence of exceptional circumstances that allow for a
derogation from the Policy. In exceptional circumstances, derogations to the Policy are approved in
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compliance with the procedures adopted by the Company for related party transactions, in
implementation of the applicable current Consob regulation pro-tempore.
The Company provides information about any derogations to the Policy applied in exceptional
circumstances, in accordance with the terms and conditions of current provisions of law and
regulations pro-tempore.
11.
OTHER INFORMATION
Pursuant to Scheme 7-bis of Annex 3A of the Issuers’ Regulation, note that:
Pirelli has no shareholder incentive plans in place;
in defining the 2025 Policy, Pirelli has not used the specific remuneration policies of other
companies as a benchmark. The Policy has been prepared on the basis of scheme no. 7-bis
adopted by Consob and in force as at the date on which the Policy was approved. This scheme
establishes that the section of the Report provided for by Art. 123-ter with reference to members
of the governing bodies, General Manager and KMs, shall contain at least the information set out
in the scheme referred to above.
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REPORT ON COMPENSATION PAID IN 2024
1.
ILLUSTRATION OF REMUNERATION COMPONENTS
The Report on Compensation Paid illustrates the remuneration policy approved by the Shareholders’
Meeting of Pirelli & C. on 28 May 2024, implemented by the Pirelli Group during the 2024 financial
year in relation to remuneration. In particular, the 2024 Report on Compensation Paid provides an
overview of the remuneration paid to the different types of stakeholders, in accordance with the
transparency obligations of the applicable legal or regulatory provisions, and gives evidence of
compliance with the 2024 Policy.
The subject appointed to carry out the external audit of the financial statements verifies that the
Directors have prepared the Report on Compensation paid. The Shareholders’ Meeting resolves on
the second section of the Report (i.e. the 2024 Report on Compensation Paid) with an advisory vote.
In implementing the 2024 Policy, the Company took into account the vote cast by the Shareholders’
Meeting held on 28 May 2024, which voted in favour of the Report on Compensation Paid in 2023.
The chart below shows the result of the advisory vote in 2024 on the compensation paid in 2023 and
in 2023 on the compensation paid in 2022.
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1.1
TOTAL REMUNERATION
The following are represented in this Report on Compensation Paid:
-
the remuneration paid with reference to the financial year 2024 to the members of the Board
of Directors in office;
-
the remuneration paid with reference to the financial year 2024 to the KMs;
-
the remuneration paid with reference to the financial year 2024 to the members of the Board
of Statutory Auditors appointed by the Shareholders’ Meeting on 28 May 2024 (the “2024-
2026 Term of Office”);
-
the remuneration paid with reference to the financial year 2024 to the members of the Board
of Statutory Auditors whose term of office ended with the approval of the financial statements
as of 31 December 2023 (the “2021-2023 Term of Office”).
Fixed Remuneration
Directors holding no specific offices
Pursuant to the 2023 Policy, for Directors not holding specific offices, the Shareholders’ Meeting of
31 July 2023 resolved to establish, for the years 2023, 2024, 2025 and until the end of their term of
office coinciding with the approval of the financial statements as at 31 December 2025, a total annual
Board of Directors’ remuneration in accordance with Art. 2389, paragraph 1 of the Italian Civil Code,
of up to 2.5 million euros, excluding the remuneration to be allocated by the Board to Directors
holding specific offices, as envisaged by Art. 2389 of the Italian Civil Code. This total remuneration
includes remuneration for the office held and the fees due for participation in the board Committees,
as resolved by the Board of Directors on 3 August 2023.
On 3 August 2023, the Company’s Board of Directors resolved to grant each Director not holding
specific offices a gross annual remuneration of 75,000 euros.
Directors holding specific offices
Chairman Jiao Jian, appointed by the Shareholders’ Meeting on 31 July 2023, expressed his
willingness not to receive any remuneration from the Company for the offices held. Therefore, the
Board of Directors’ meeting of 13 September 2023 resolved not to proceed with the allocation of any
remuneration as provided for the 2023 Policy for the offices held by him (Director, Chairman of the
Board of Directors and member of the Strategies Committee and Sustainability Committee) during
his term of office.
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In accordance with the 2024 Policy, the Executive Vice Chairman Marco Tronchetti Provera was
allocated a gross annual fixed remuneration for the office of 2,400,000 euros, as approved by the
Board of Directors on 13 September 2023, as well as the remuneration for the offices of Director,
Chairman of the Strategies Committee, Chairman of the Appointments and Successions Committee
and Chairman of the Sustainability Committee approved by the Board of Directors on 3 August
2023184.
In accordance with the 2024 Policy, the Chief Executive Officer Andrea Casaluci was paid a gross
annual fixed remuneration for the office of 1,100,000 euros, approved by the Board of Directors on
13 September 2023, as well as remuneration for the offices of Director and member of the Strategies
Committee and Sustainability Committee, approved by the Board of Directors on 3 August 2023.
KMs
The Corporate General Manager Francesco Tanzi, in line with the resolution passed by the Board
of Directors on 3 August 2023 and as provided for by the 2024 Policy, was paid a gross annual
remuneration of 750,000 euros.
The other KMs were paid an aggregate gross annual salary of 2,665,000 euros185.
Auditors
Term of Office 2021-2023
The Statutory Auditors appointed by the Shareholders’ Meeting of 15 June 2021 were paid
remuneration in the amount of 90,000 euros gross per annum for the Chairman and 75,000 euros
gross per annum for the Statutory Auditors - received pro-rata until the date of termination of office
due to completion of their term of office - as approved by the aforementioned Shareholders’ Meeting
and without prejudice to the provisions of Article 2402 of the Italian Civil Code. The Statutory Auditor
appointed as a member of the Supervisory Board - as resolved by the Board of Directors on 3 August
2023 - was also paid an annual gross remuneration of 50,000 euros, received pro-rata until the date
of termination of office due to completion of his term of office.
Term of Office 2024-2026
The Statutory Auditors appointed by the Shareholders’ Meeting of 28 May 2024 were paid
remuneration in the amount of 135,000 euros gross per annum for the Chairman and 95,000 euros
gross per annum for the Statutory Auditors - received pro-rata from the date of appointment - as
approved by the aforementioned Shareholders’ Meeting and without prejudice to the provisions of
184 Note that this remuneration was paid to the relevant company.
185 As of 31 December 2024, in addition to the Corporate General Manager (Francesco Tanzi), 6 KMs were in office.
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Article 2402 of the Italian Civil Code. The Statutory Auditor appointed as a member of the
Supervisory Board - as resolved by the Board of Directors on 1 August 2024 - was also allocated an
annual gross remuneration of 50,000 euros, received pro-rata from the date of appointment186.
The fixed remuneration amounts described above are shown in the respective columns of Table 1.
For further details, please refer to paragraphs 3, 4 and 5 of the 2024 Policy, paragraphs 3 and 4 of
the 2023 Policy and paragraph 3 of the 2022 Policy.
Variable remuneration
Management remuneration - with the exception of the Chairman of the Board of Directors - accrued
with reference to the 2024 financial year contributed to the sustainability of the Company’s long-term
results thanks to its variable components (both short-term and medium-long term) represented by
the 2024 STI plan, including the deferral/matching mechanism, and the 2022-2024 LTI Plan.
In this regard, with reference to the final figures of the 2024 STI and the 2022-2024 LTI, results
exceeded expectations despite a macro-economic context characterised by continuing geopolitical
tensions, with consequent volatility of the external scenario, as reported in the directors’ report on
operations.
186 On 1 August 2024, the Board of Directors resolved to appoint Ms Maura Campra, in her capacity as a member of the Board of Statutory
Auditors (appointed by the Shareholders’ Meeting of 28 May 2024), to the Supervisory Board, replacing Ms Antonella Carù, who
ceased to be a member of the Board of Statutory Auditors following the completion of her term of office.
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Annual variable remuneration STI
With reference to the 2024 STI Plan, the table below summarises the final figures of the performance
targets for the year in relation to the targets set.
In light of the results achieved, the payout percentage accrued by each beneficiary in respect of the
2024 STI plan stands at the values shown in the table below.
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Note that the amounts accrued under the 2024 STI shall be paid in accordance with the procedures
and mechanisms indicated below, in accordance with the 2024 Policy.
Directors holding specific offices to whom specific duties are also delegated
In accordance with the 2024 Policy, during the financial year 2025, the Executive Vice Chairman will
be paid 75% of the accrued incentive upfront, while the payment of the remaining 25% is deferred
for 12 months and put at risk/opportunity as it is subject to the achievement of the STI targets for the
year 2025 as defined in the 2025 Policy. For this reason, neither the deferral quota nor any company
matching are shown in the “Bonuses and other incentives” column of Table 1. Also note that, in
accordance with the 2023 Policy and based on the level of achievement of the 2024 STI results, the
2023 STI portion that had been deferred together with the company matching component (both
components shown in the “Bonuses and other incentives” column of Table 1) is also disbursed.
In accordance with the 2024 Policy, during the financial year 2025, the Chief Executive Officer
Andrea Casaluci will be paid 75% of the accrued incentive upfront, while the payment of the
remaining 25% is deferred for 12 months and put at risk/opportunity as it is subject to the
achievement of the STI targets for the year 2025 as defined in the 2025 Policy. For this reason,
neither the deferral quota nor any company matching are shown in the “Bonuses and other
incentives” column of Table 1. Also note that, in accordance with the 2023 Policy and based on the
level of achievement of the 2024 STI results, the 2023 STI portion, accrued pro-rata temporis from
the date of appointment187, that had been deferred together with the company matching component
(both components shown in the “Bonuses and other incentives” column of Table 1) is also disbursed.
Finally, it is important to note that, in line with the 2021 Policy and the Board of Directors’ resolution
of 13 September 2023, during the 2025 financial year, the portion of the 2021 STI earned as General
Manager Operations, which had been deferred along with the company matching component, will
also be paid to the Chief Executive Officer. These amounts are not shown in the ‘Bonuses and other
incentives’ column of Table 1, as they have already been accounted for in the 2021 Remuneration
Report.
KMs
The 2024 STI of Corporate General Manager Francesco Tanzi, and the other KMs is subject to the
co-investment mechanism as defined in the 2024 Policy, which provides for the deferral of a portion
of the accrued incentive that can vary from a minimum of 25% to a maximum of 50%, depending on
the individual choice. This deferred portion will be paid in 2028 subject to continued employment up
to 31 December 2027, together with a company matching component that can vary from a minimum
of 0.8 to a maximum of 1.2 times the deferred amount. Since the amount of the deferred portion and
187 Note that the Board of Directors meeting of 3 August 2023 appointed Andrea Casaluci as Chief Executive Officer.
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the company matching are already determined as they are not subject to further performance
conditions, both components are shown in the “Bonuses and other incentives” column of Table 1.
It should be noted that, in line with the 2021 Policy and given the fulfilment of the continued
employment condition in 2024, the portion of the 2021 STI that was deferred, along with the company
matching component, will also be paid to the incumbent KMs in the 2025 financial year. These
components are not included in the ‘Bonuses and other incentives’ column of Table 1, as they have
already been accounted for in the same table of the 2021 Remuneration Report.
For further details, please refer to paragraphs 2, 4 and 5 of Policy 2024, paragraphs 2 and 4 of Policy
2023 and paragraphs 2 and 5 of Policy 2021.
Medium-long term variable remuneration (LTI)
With reference to the 2022-2024 LTI Plan, the table below summarises the final figures of the
performance targets for the three-year period in relation to the targets set. Note that the LTI 2022-
2024 Plan did not provide for an ON/OFF condition.
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In light of the results achieved, the payout percentage accrued by each beneficiary in respect of the
2022-2024 LTI Plan stands at the values shown in the table below.
Note that the amounts accrued under the 2022-2024 LTI plan are disbursed in a single payment
during the financial year 2025, in accordance with the 2022 Policy.
The above amounts for the STI 2024 and LTI 2022-2024 Plans are shown in the respective items in
Tables 1 and 2.
Finally, the following graph shows the proportion of fixed and variable remuneration188 achieved in
relation to the 2024 results for STI and of 2022-2024 results for LTI for top management figures.
188 Corresponding for the fixed part to the items represented in the “Fixed remuneration” and “Remuneration for participation in
committees” columns and for the variable part to the items represented in the “Bonuses and other incentives” column of Table 1.
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Other remuneration
It should be noted that for the Chief Executive Officer, the Corporate General Manager, KMs and
more generally other selected Senior Managers and Executives, Pirelli has introduced non-
competition agreements to protect the Group’s strategic and operational know-how.
On the other hand, it should be noted that the Executive Vice Chairman is not subject to a non-
competition agreement.
For further details, see paragraph 9 of the 2024 Policy and Table 1 for further details of the other
remuneration.
1.2
INDEMNITY IN THE EVENT OF TERMINATION OF OFFICE AND/OR TERMINATION OF
EMPLOYMENT DURING THE YEAR 2024
In 2024 there were no cases of termination of office of directors or members of the Board of Statutory
Auditors and/or termination of employment of General Managers or KMs leading to the allocation of
indemnities and/or other benefits.
Regarding the termination of the office of Executive Vice Chairman and Chief Executive Officer at
the Shareholders’ Meeting on 31 July 2023, it should be noted that Executive Vice Chairman Marco
Tronchetti Provera has the right to request partial or total disbursement of his T.F.M.. During the
2024 financial year, he requested the partial disbursement of a portion amounting to 4 million euros
gross, as shown in Table 1. For amounts or mandates for which disbursement has not yet been
requested, the right to the relevant sums shall accrue in the year in which disbursement is requested.
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1.3
EXCEPTIONS TO THE 2024 POLICY
It should be noted that there were no exceptions to the 2024 Policy for Directors, General Managers,
KMs and members of the Board of Statutory Auditors.
1.4
CLAWBACK CLAUSES
It should also be noted that during the year the conditions for the application of the mechanisms for
ex post repayment of the variable component (claw-back clause) envisaged by the annual STI and
medium-long term (LTI) incentive plans did not occur.
1.5
COMPARISON INFORMATION
Below is a summary of the comparative information for the last five years: (i) of the remuneration of
the Executive Vice Chairman, the Chief Executive Officer and the Corporate General Manager, (ii)
of the Company’s results, (iii) of the average remuneration of Pirelli & C. employees.
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Annual variation in remuneration and performance
Values in €
2024
2024 vs 2023
2023 vs 2022
2022 vs 2021
2021 vs 2020
2020 vs 2019
Executive Vice Chairman
Actual Total Cash [1]
Marco Tronchetti Provera
13.423.002
-7%
-28%
167%
234%
-47%
CEO
Actual Total Cash [1]
Andrea Casaluci
4.562.294
16%
-17%
69%
292%
-33%
Corporate General Manager
Actual Total Cash [1]
Francesco Tanzi
2.805.830
154%
-
-
-
-
Board of Directors
Name
Office
Actual Total Cash [1]
Jiao Jian [2]
Chairman
0
-
-
-
-
-
Chen Aihua
Director
170.000
140%
-
-
-
-
Chen Qian
Director
110.000
140%
-
-
-
-
Haitao Zhang
Director
135.000
21%
18%
0%
100%
-
Paola Boromei
Director
110.000
9%
7%
0%
100%
-
Alberto Bradanini
Director
145.000
140%
-
-
-
-
Domenico De Sole
Director
135.000
-4%
-3%
0%
19%
-19%
Michele Carpinelli
Director
190.000
140%
-
-
-
-
Grace Tang
Director
115.000
140%
-
-
-
-
Roberto Diacetti
Director
145.000
25%
22%
0%
100%
-
Giovanni Lo Storto
Director
190.000
5%
4%
0%
38%
15%
Marisa Pappalardo
Director
140.000
-20%
-13%
0%
58%
27%
Fan Xiaohua
Director
115.000
-7%
-5%
0%
34%
8%
Board of Statutory Auditors
Name
Office
Actual Total Cash [1]
Riccardo Foglia Taverna
Chairman
116.434
29%
0%
85%
-
-
Francesca Meneghel
Standing auditor
86.701
16%
0%
85%
-
-
Teresa Naddeo
Standing auditor
86.701
16%
0%
85%
-
-
Riccardo Perotta
Standing auditor
56.325
-
-
-
-
-
Maura Campra
Standing auditor
77.158
-
-
-
-
-
Antonella Carù [3]
Standing Auditor (outgoing)
93.900
-21%
4%
6%
8%
0%
Alberto Villani [4]
Standing Auditor (outgoing)
66.373
-12%
0%
18%
27%
0%
Results
Actual Result
Relative TSR [5]
-
23.9 p.p
12.4 p.p
8.3 p.p
2.3 p.p
-12.1 p.p
Group Adjusted EBIT (mln euros)
1.060,5
5,9%
2,5%
20%
62,8%
-45,4%
Average remuneration of employees
Actual Total Cash [1]
Employees of Pirelli & C. S.p.A. active at 31/12 [6]
124.634
-5,6%
-13%
40%
38,6%
-11%
[1]
Corresponds to the sum of "Fixed remuneration", "Fees for participation in committees" and "Bonuses and other incentives" of Table 1.
[2]
[3]
[4]
[5]
[6]
Excluding the Executive Vice Chairman, Chief Executive Officer and Corporate General Manager, represented by name in the table.
Change
Change
Change
Calculated as [(average share value 2nd half year n - average share value 2nd half year n-1 + dividends paid in year n ) / average share value 2nd half year n-1 ].
The percentages indicated represent, for each year, the difference in percentage points between Pirelli's TSR and the peers’ average: Nokian, Michelin, Continental, Goodyear and Bridgestone.
Goodyear's TSR was normalised following the acquisition of Cooper.
Change
Change
Change
Change
Chairman Jiao Jian expressed his wish not to receive any remuneration for the positions held in Pirelli & C. S.p.A.. Therefore, the Board of Directors' meeting of 13 September 2023 resolved not to allocate any remuneration
under the 2023 Policy for the offices held by him (Director of Pirelli & C. S.p.A., Chairman of the Board of Directors of Pirelli & C. S.p.A.,member of the Strategies Committee and Sustainability Committee of Pirelli & C. S.p.A.)
during his term of office.
Ceased to be a member of the Board of Statutory Auditors of Pirelli & C. S.p.A. due to completion of term of office on 28 May 2024. Appointed as Chairman of the Board of Statutory Auditors of Pirelli Tyre S.p.A. on 27 May
2024. The amount represents remuneration accrued pro rata for the respective offices.
Ceased to be a member of the Board of Statutory Auditors due to completion of term of office on 28 May 2024 and therefore to be a member of the Supervisory Board of Pirelli & C. S.p.A.. Appointed as Chairman of the
Pirelli Tyre S.p.A. Supervisory Board on 6 June 2024. The amount represents remuneration accrued pro rata for the respective offices.
Pirelli & C. S.p.A. – Annual Report 2024
Remuneration Report
510
The graph below shows the changes to the Executive Vice Chairman and Chief Executive Officer
remuneration, to the average remuneration of Pirelli & C. employees and the Group’s Relative TSR
and Adjusted EBIT performance. Please note that the values are not represented in scale.
2.
THE “TABLE”: REMUNERATION PAID TO MEMBERS OF THE ADMINISTRATIVE AND
CONTROL BODIES, GENERAL MANAGERS AND KEY MANAGERS.
The following tables set out:
-
by name, the remuneration paid to Directors, Statutory Auditors and General Managers;
Remuneration Report
Pirelli & C. S.p.A. - Annual Report 2024
511
-
in aggregate form, that of KMs189. As of 31 December 2024, in addition to the Corporate
General Manager (Francesco Tanzi), 6 KMs were in office.
Remuneration is reported on an accruals basis and the notes to the tables indicate the office for
which the remuneration is received (for example, where a director is a member of more than one
Board Committee) and the company - Pirelli & C. or subsidiary and/or investee company - thereof
paying it (not for remuneration waived or transferred to the Company, for which information is in any
case provided).
The tables include all those individuals who held the aforementioned positions during all or even only
part of the 2024 financial year190. Non-monetary benefits, where received, are also identified on an
accruals basis, and reported according to the “taxable income criterion” of the benefit assigned.
189 Section II of Scheme 7-bis of Annex 3 A of the so-called Issuers’ Regulations provides that the Report on compensation paid is
structured into two parts:
a) the remuneration of members of the administrative and control bodies and the General Managers;
b) the remuneration of any other Key Managers with strategic responsibilities who have received, in the reporting year, total
remuneration (obtained by adding their salary and any remuneration based on financial instruments) that exceeded the highest total
remuneration attributed to the persons indicated in point a).
For Executives with strategic responsibilities other than those indicated in point b) information is provided at aggregate level in special
tables, indicating the number of persons to whom it refers in place of names”.
190 In this case the remuneration is shown pro rata temporis.
First and last
name
Office
Period office
held
Expiry of term of
office
Fixed
remuneration
Remuneration for
membership of
committees
Variable non-equity
remuneration
Non-
monetary
benefits
Other
remuneration
Total
Fair Value of
equity
remuneration
End of
employment or
office indemnity
Bonus and other
incentives
Profit
sharing
Marco
Tronchetti
Provera
Executive Vice
Chairman
01/01/2024 -
31/12/2024
AGM to approve the
financial statements
for the year to 31
December 2025
2,475,000
135,000
10,813,002
0
527,772
13,950,773
4,000,000
Of which remuneration in Pirelli & C. S.p.A.
2,475,000
(1)
135,000
(2)
10,813,002
(3)
527,772
(4)
13,950,773
4,000,000
(5)
Of which remuneration by subsidiary and affiliated Companies
0
Jiao Jian
Chairman
01/01/2024 -
31/12/2024
AGM to approve the
financial statements
for the year to 31
December 2025
0
0
0
0
0
0
0
0
0
Of which remuneration in Pirelli & C. S.p.A.
0
(6)
0
(6)
0
(6)
Of which remuneration by subsidiary and affiliated Companies
0
Andrea
Casaluci
CEO
01/01/2024 -
31/12/2024
AGM to approve the
financial statements
for the year to 31
December 2025
1,175,000
70,000
3,317,294
0
24,993
165,000
4,752,287
0
0
Of which remuneration in Pirelli & C. S.p.A.
1,175,000
(7)
70,000
(8)
3,317,294
(9)
24,993
(10)
165,000 (11)
4,752,287
Of which remuneration by subsidiary and affiliated Companies
0
Chen Aihua
Director
01/01/2024 -
31/12/2024
AGM to approve the
financial statements
for the year to 31
December 2025
75,000
95,000
0
0
0
0
170,000
0
0
Of which remuneration in Pirelli & C. S.p.A.
75,000
(12)
95,000
(13)
170,000
(14)
Of which remuneration by subsidiary and affiliated Companies
0
Haitao Zhang Director
01/01/2024 -
31/12/2024
AGM to approve the
financial statements
for the year to 31
December 2025
75,000
60,000
0
0
0
0
135,000
0
0
Of which remuneration in Pirelli & C. S.p.A.
75,000
(12)
60,000
(15)
135,000
(14)
Of which remuneration by subsidiary and affiliated Companies
0
Chen Qian
Director
01/01/2024 -
31/12/2024
AGM to approve the
financial statements
for the year to 31
December 2025
75,000
35,000
0
0
0
0
110,000
0
0
Of which remuneration in Pirelli & C. S.p.A.
75,000
(12)
35,000
(16)
110,000
(14)
Of which remuneration by subsidiary and affiliated Companies
0
Alberto
Bradanini
Director
01/01/2024 -
31/12/2024
AGM to approve the
financial statements
for the year to 31
December 2025
75,000
70,000
0
0
0
0
145,000
0
0
Of which remuneration in Pirelli & C. S.p.A.
75,000
(12)
70,000
(17)
145,000
Of which remuneration by subsidiary and affiliated Companies
0
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512
First and last
name
Office
Period office
held
Expiry of term of
office
Fixed
remuneration
Remuneration for
membership of
committees
Variable non-equity
remuneration
Non-
monetary
benefits
Other
remuneration
Total
Fair Value of
equity
remuneration
End of
employment or
office indemnity
Bonus and other
incentives
Profit
sharing
Michele
Carpinelli
Director
01/01/2024 -
31/12/2024
AGM to approve the
financial statements
for the year to 31
December 2025
75,000
115,000
0
0
0
0
190,000
0
0
Of which remuneration in Pirelli & C. S.p.A.
75,000
(12)
115,000
(18)
190,000
Of which remuneration by subsidiary and affiliated Companies
0
Domenico De
Sole
Director
01/01/2024 -
31/12/2024
AGM to approve the
financial statements
for the year to 31
December 2025
75,000
60,000
0
0
0
0
135,000
0
0
Of which remuneration in Pirelli & C. S.p.A.
75,000
(12)
60,000
(15)
135,000
Of which remuneration by subsidiary and affiliated Companies
0
Paola
Boromei
Director
01/01/2024 -
31/12/2024
AGM to approve the
financial statements
for the year to 31
December 2025
75,000
35,000
0
0
0
0
110,000
0
0
Of which remuneration in Pirelli & C. S.p.A.
75,000
(12)
35,000
(19)
110,000
Of which remuneration by subsidiary and affiliated Companies
0
Roberto
Diacetti
Director
01/01/2024 -
31/12/2024
AGM to approve the
financial statements
for the year to 31
December 2025
75,000
70,000
0
0
0
0
145,000
0
0
Of which remuneration in Pirelli & C. S.p.A.
75,000
(12)
70,000
(20)
145,000
Of which remuneration by subsidiary and affiliated Companies
0
Fan Xiaohua
Director
01/01/2024 -
31/12/2024
AGM to approve the
financial statements
for the year to 31
December 2025
75,000
40,000
0
0
0
0
115,000
0
0
Of which remuneration in Pirelli & C. S.p.A.
75,000
(12)
40,000
(21)
115,000
Of which remuneration by subsidiary and affiliated Companies
0
Giovanni Lo
Storto
Director
01/01/2024 -
31/12/2024
AGM to approve the
financial statements
for the year to 31
December 2025
75,000
115,000
0
0
0
0
190,000
0
0
Of which remuneration in Pirelli & C. S.p.A.
75,000
(12)
115,000
(22)
190,000
Of which remuneration by subsidiary and affiliated Companies
0
Marisa
Pappalardo
Director
01/01/2024 -
31/12/2024
AGM to approve the
financial statements
for the year to 31
December 2025
75,000
65,000
0
0
0
0
140,000
0
0
Of which remuneration in Pirelli & C. S.p.A.
75,000
(12)
65,000
(23)
140,000
Of which remuneration by subsidiary and affiliated Companies
0
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Pirelli & C. S.p.A. - Annual Report 2024
513
First and last
name
Office
Period office
held
Expiry of term of
office
Fixed
remuneration
Remuneration for
membership of
committees
Variable non-equity
remuneration
Non-
monetary
benefits
Other
remuneration
Total
Fair Value of
equity
remuneration
End of
employment or
office indemnity
Bonus and other
incentives
Profit
sharing
Grace Tang
Director
01/01/2024 -
31/12/2024
AGM to approve the
financial statements
for the year to 31
December 2025
75,000
40,000
0
0
0
0
115,000
0
0
Of which remuneration in Pirelli & C. S.p.A.
75,000
(12)
40,000
(24)
115,000
Of which remuneration by subsidiary and affiliated Companies
0
Francesco
Tanzi
Corporate
General
Manager
01/01/2024 -
31/12/2024
/
750,000
0
2,055,830
0
24,196
365,000
3,195,026
0
0
Of which remuneration in Pirelli & C. S.p.A.
750,000
(25)
2,055,830
(26)
24,196
(27)
365,000 (28)
3,195,026
Of which remuneration by subsidiary and affiliated Companies
0
No. 6 Key
Managers
(29)
/
/
2,665,000
50,000
6,745,845
0
98,263
326,154
9,885,262
0
0
Of which remuneration in Pirelli & C. S.p.A.
1,445,000
50,000
(30)
3,511,011
(31)
51,118
(32)
180,654 (33)
5,237,783
Of which remuneration by subsidiary and affiliated Companies
1,220,000
0
3,234,834
47,146
145,500
4,647,479
Riccardo
Foglia
Taverna
Chairman of the
Board of
Statutory
Auditors
01/01/2024 -
31/12/2024
AGM to approve the
financial statements
for the year to 31
December 2026
116,434
0
0
0
0
0
116,434
0
0
Of which remuneration in Pirelli & C. S.p.A.
116,434
(34)
116,434
Of which remuneration by subsidiary and affiliated Companies
0
Francesca
Meneghel
Standing
auditor
01/01/2024 -
31/12/2024
AGM to approve the
financial statements
for the year to 31
December 2026
86,701
0
0
0
0
0
86,701
0
0
Of which remuneration in Pirelli & C. S.p.A.
86,701
(35)
86,701
Of which remuneration by subsidiary and affiliated Companies
0
Teresa
Naddeo
Standing
auditor
01/01/2024 -
31/12/2024
AGM to approve the
financial statements
for the year to 31
December 2026
86,701
0
0
0
0
0
86,701
0
0
Of which remuneration in Pirelli & C. S.p.A.
86,701
(35)
86,701
Of which remuneration by subsidiary and affiliated Companies
0
Antonella
Carù
Standing
auditor
01/01/2024 -
28/05/2024
AGM to approve the
financial statements
for the year to 31
December 2023
30,635
63,265
0
0
0
0
93,900
0
0
Of which remuneration in Pirelli & C. S.p.A.
30,635
29,167
(30)
59,802
Of which remuneration by subsidiary and affiliated Companies
34,098
(36)
34,098
Alberto
Villani
Standing
auditor
01/01/2024 -
28/05/2024
AGM to approve the
financial statements
for the year to 31
December 2023
30,635
35,738
0
0
0
0
66,373
0
0
Of which remuneration in Pirelli & C. S.p.A.
30,635
30,635
Of which remuneration by subsidiary and affiliated Companies
35,738
(37)
35,738
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514
First and last
name
Office
Period office
held
Expiry of term of
office
Fixed
remuneration
Remuneration for
membership of
committees
Variable non-equity
remuneration
Non-
monetary
benefits
Other
remuneration
Total
Fair Value of
equity
remuneration
End of
employment or
office indemnity
Bonus and other
incentives
Profit
sharing
Maura
Campra
Standing
auditor
28/05/2024 -
31/12/2024
AGM to approve the
financial statements
for the year to 31
December 2026
56,325
20,833
0
0
0
0
77,158
0
0
Of which remuneration in Pirelli & C. S.p.A.
56,325
20,833
(30)
77,158
Of which remuneration by subsidiary and affiliated Companies
0
Riccardo
Perotta
Standing
auditor
28/05/2024 -
31/12/2024
AGM to approve the
financial statements
for the year to 31
December 2026
56,325
0
0
0
0
0
56,325
0
0
Of which remuneration in Pirelli & C. S.p.A.
56,325
56,325
Of which remuneration by subsidiary and affiliated Companies
0
* * * * *
Total remuneration in Pirelli & C. S.p.A.
7,208,756
1,105,000
19,697,137
0
628,078
710,654
29,349,625
0
4,000,000
Total remuneration by subsidiary and affiliated Companies
1,220,000
69,836
3,234,834
0
47,146
145,500
4,717,315
0
0
Total
8,428,756
1,174,836
22,931,970
0
675,224
856,154
34,066,940
0
4,000,000
(1) Of which: 75,000 euros as a Director of Pirelli & C. S.p.A. and 2.4 million euros as Executive Vice Chairman of Pirelli & C. S.p.A. These fees are paid to Marco Tronchetti Provera & C. S.p.A..
(2) Of which: 35,000 euros as Chairman of the Appointments and Successions Committee, 50,000 euros as Chairman of the Strategy Committee and 50,000 euros as Chairman of the Sustainability Committee of Pirelli & C. S.p.A..
These fees are paid to Marco Tronchetti Provera & C. S.p.A..
(3) The amount includes: 75% of the 2024 STI incentive paid out (upfront amount), 25% of the 2023 STI incentive deferred together with the company matching component due to the level of achievement of the results of the 2024 STI
and the 2022-2024 LTI incentive (see the table below for details of the amounts). These fees are paid to Marco Tronchetti Provera & C. S.p.A..
(4) Of which: 523,155 euros for insurance policies in line with the provisions of the 2024 Policy, and 4,617 euros for a company car.
(5) Represents a partial disbursement of severance pay accrued for the executive office of Executive Vice Chairman and Chief Executive Officer held at Pirelli & C. S.p.A. in the last three mandates and ceased on 31 July 2023, the
disbursement of which was requested in 2024. It is specified, in fact, that the beneficiary of the severance pay is entitled to request even its partial disbursement and for the amounts or the mandates for which disbursement has not
been requested, the right to the relevant sums shall accrue in the year in which disbursement is requested.
(6) Chairman Jiao Jian expressed his wish not to receive any remuneration for the positions held in Pirelli & C. S.p.A.. Therefore, the Board of Directors’ meeting of 13 September 2023 resolved not to allocate any remuneration under
the 2023 Policy for the offices held by him (Director of Pirelli & C. S.p.A., Chairman of the Board of Directors of Pirelli & C. S.p.A., member of the Strategies Committee and Sustainability Committee of Pirelli & C. S.p.A.) during his term
of office.
(7) Of which 75,000 euros as a Director of Pirelli & C. S.p.A. and 1.1 million as CEO of Pirelli & C. S.p.A.
(8) Of which: 35,000 euros as member of the Strategies Committee and 35,000 euros as member of the Sustainability Committee of Pirelli & C. S.p.A.
(9) The amount includes: 75% of the STI 2024 incentive paid (upfront portion), 25% of the deferred STI 2023 incentive (accrued pro rata as of the date of his appointment as Chief Executive Officer) together with the related company
matching component based on the level of achievement of the STI 2024 results and the LTI 2022-2024 incentive including the portion accrued as General Manager Operations until the date of his appointment as Chief Executive
Officer resolved by the Board of Directors of Pirelli & C. S.p.A. on 3 August 2023.
(10) Of which: 10,867 euros for a company car, 3,600 euros for supplementary pension contributions, 3,336 euros for health insurance and 7,190 euros for insurance policies.
(11) The amount refers to the payment, during the term of office, of part of the consideration for the non-competition agreement granted as Chief Executive Office of Pirelli & C. S.p.A.
(12) As a Director of Pirelli & C. S.p.A.
(13) Of which: 35,000 euros as a member of the Audit, Risks and Corporate Governance Committee, 35,000 euros as a member of the Remuneration Committee and 25,000 euros as a member of the Appointments and Successions
Committee of Pirelli & C. S.p.A..
(14) Remuneration transferred to employer company.
(15) Of which 25,000 euros as member of the Appointments and Successions Committee and 35,000 euros as member of the Strategies Committee of Pirelli & C. S.p.A.
(16) As a member of the Strategies Committee of Pirelli & C. S.p.A.
(17) Of which: 35,000 euros as member of the Strategies Committee and 35,000 euros as member of the Remuneration Committee of Pirelli & C. S.p.A.
(18) Of which 35,000 euros as a member of the Audit, Risks and Corporate Governance Committee, 35,000 euros as a member of the Remuneration Committee and 45,000 euros as a member of the Related-Party Transactions
Committee of Pirelli & C. S.p.A..
(19) As member of the Remuneration Committee of Pirelli & C. S.p.A.
(20) Of which: 35,000 euros as member of the Audit, Risks and Corporate Governance Committee and 35,000 euros as member of the Strategies Committee of Pirelli & C. S.p.A..
(21) As Chairman of the Audit, Risks and Corporate Governance Committee of Pirelli & C. S.p.A.
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(22) Of which: 35,000 euros as a member of the Audit, Risks and Corporate Governance Committee, 45,000 euros as a member of the Related-Party Transactions Committee and 35,000 euros as a member of the Sustainability
Committee of Pirelli & C. S.p.A..
(23) As Chairman of the Related-Party Transactions Committee of Pirelli & C. S.p.A..
(24) As Chairman of the Remuneration Committee of Pirelli & C. S.p.A.
(25) As General Manager Corporate of Pirelli & C. S.p.A..
(26) The amount includes: the STI 2024 incentive accrued including the deferred portion and the related company matching component that will be paid at the end of the deferral period (3 years) and the LTI 2022-2024 incentive
accrued pro-rata from the date of hire (see table below for details of amounts).
(27) Of which: 10,867 euros for a company car, 7,200 euros for supplementary pension contributions, 3,336 euros for health insurance and 2,793 euros for insurance policies.
(28) The amount includes: 75,000 euros by way of payment during the employment relationship of part of the consideration for the non-competition agreement and 290,000 euros as the second and final instalment of a welcome bonus
linked to hiring.
(29) As of 31 December 2024, in addition to the Corporate General Manager, 6 ESRs were in office. It should be noted that the remuneration paid to the Corporate General Manager is not included in this item, as it is indicated
separately in the table.
(30) As a member of the 231 Supervisory Body.
(31) The amount includes, for the respective holders, the accrued 2024 STI incentive including the deferred portion, the related company matching component that will be paid at the end of the deferral period (3 years) and the 2022-
2024 LTI incentive (see table below for details on amounts).
(32) The amounts, for the respective holders, are for a company car, supplementary pension contributions, health insurance and insurance policies.
(33) The amounts relate, for the respective holders, to the payment of part of the consideration for the non-competition agreement and a seniority bonus paid in accordance with the specific company practice.
(34) Of which: (i) 36,762 euros for the period 01/01/2024 - 28/05/2024 and (ii) 79,672 euros for the period 28/05/2024 - 31/12/2024.
(35) Of which: (i) 30,635 euros for the period 01/01/2024 - 28/05/2024 and (ii) 56,066 euros for the period 28/05/2024 - 31/12/2024.
(36) As Chairman of the Pirelli Tyre S.p.A. Supervisory Board.
(37) As Chairman of the Board of Statutory Auditors of Pirelli Tyre S.p.A..
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3.
MONETARY INCENTIVE PLANS FOR MEMBERS OF THE BOARD OF DIRECTORS,
GENERAL MANAGERS AND KEY MANAGERS
For a description of Pirelli’s monetary incentive plans, please refer to the 2024 Policy.
For a description of Pirelli’s monetary incentive plans, please refer to the Remuneration
Policy for 2024.
First and last
name
Office
Plan
Bonus for the year
Bonus for the previous years
Other
bonuses
Payable/
Paid out
Deferred
Deferment
period
No longer
payable
Payable
Still
deferred
/Paid out
Marco Tronchetti
Provera
Executive Vice
Chairman
STI 2023
-
-
-
-
2,881,440 (1)
-
-
STI 2024
3,957,220
(2) 1,319,073 (3)
1 year
-
-
-
-
2022-2024
LTI Plan
3,974,341
(4)
-
-
-
-
-
-
2023-2025
LTI Plan
-
-
-
-
-
-
-
2024-2026
LTI Plan
-
-
-
-
-
-
-
Andrea Casaluci
CEO
STI 2021
-
-
-
-
1,406,250 (5)
STI 2022
-
-
-
-
-
653,373
(6)
STI 2023
-
-
-
-
-
693,337
(7)
STI 2023
-
-
-
-
440,206
(8)
-
STI 2024
1,596,079
(2)
532,026
(3)
1 year
-
-
-
2022-2024
LTI Plan
1,281,009
(9)
-
-
-
-
-
2023-2025
LTI Plan
-
-
-
-
-
-
2024-2026
LTI Plan
-
-
-
-
-
-
Francesco Tanzi
Corporate General
Manager
STI 2023
-
-
-
-
-
360,175
(10)
290,000 (14)
STI 2024
494,653
(11) 1,088,236 (12)
3 years
-
-
-
2022-2024
LTI Plan
472,942
(13)
-
-
-
-
-
2023-2025
LTI Plan
-
-
-
-
-
-
2024-2026
LTI Plan
-
-
-
-
-
-
No. 6 Key
Managers
(15)
STI 2021
-
-
-
-
2,123,763 (16)
-
-
STI 2022
-
-
-
-
-
1,825,680 (17)
STI 2023
-
-
-
-
-
1,900,981 (18)
STI 2024
1,653,063
(11) 2,420,605 (12)
3 years
-
-
-
2022-2024
LTI Plan
2,672,177
(4)
-
-
-
-
-
2023-2025
LTI Plan
-
-
-
-
-
-
2024-2026
LTI Plan
-
-
-
-
-
-
Pirelli & C. S.p.A. – Annual Report 2024
Remuneration Report
518
First and last
name
Office
Plan
Bonus for the year
Bonus for the previous years
Other
bonuses
Payable/
Paid out
Deferred
Deferment
period
No longer
payable
Payable
Still
deferred
/Paid out
(I) Remuneration in the Company that
has prepared the financial statements
STI 2021
2,456,310
290,000
STI 2022
1,326,132
STI 2023
3,321,646
2,141,593
STI 2024
7,004,543
4,087,562
2022-2024
LTI Plan
7,134,485
2023-2025
LTI Plan
2024-2026
LTI Plan
(II) Remuneration from Subsidiary and
Affiliated Companies
STI 2021
1,073,703
STI 2022
1,152,921
STI 2023
812,902
STI 2024
696,471
1,272,378
2022-2024
LTI Plan
1,265,985
2023-2025
LTI Plan
2024-2026
LTI Plan
(III) Total
16,101,484
5,359,940
-
-
6,851,659
5,433,548
290,000
(1) The amount refers to the sum of the deferred portion of the 2023 STI (25%) and the respective company matching component paid out for achievement of the 2024
STI objectives as defined in the 2023 Policy. This amount is shown in the “Bonuses and other incentives” column of Table 1.
(2) The amount in the “Payable/Paid out Year Bonus” column refers to the 75% of the 2024 STI paid out (upfront amount). This amount is shown in the “Bonuses and
other incentives” column of Table 1.
(3) The amount in the “Deferred Year Bonus” column refers to 25% of the 2024 STI deferred and assigned to risk/opportunity subject to the results of the 2025 STI. This
amount is not shown in the “Bonuses and other incentives” column of Table 1.
(4) The amount in the “Payable/Paid out Year Bonus” column refers to the 2022-2024 LTI Plan. This amount is shown in the “Bonuses and other incentives” column of
Table 1.
(5) The amount in the “Previous Years Bonuses Payable/Paid” column refers to the sum of the deferred 2021 STI portion accrued as General Manager Operations, and
the company matching component paid at the end of the deferral period (3 years). This amount is not shown in the “Bonuses and other incentives” column of Table 1.
(6) The amount in the “Previous Years Bonuses Still Deferred” column refers to the sum of the deferred 2022 STI portion, accrued as General Manager Operations, and
the company matching component, which will be paid at the end of the deferral period (3 years). This amount is not shown in the “Bonuses and other incentives” column
of Table 1.
(7) The amount in the “Previous Years Bonuses Still Deferred” column refers to the sum of the deferred 2023 STI portion, accrued as General Manager Operations until
the date of appointment as CEO, and the company matching component, which will be paid at the end of the deferral period (3 years). This amount is not shown in the
“Bonuses and other incentives” column of Table 1.
(8) The amount refers to the sum of the deferred portion of the 2023 STI (25%), accrued pro-rata as of the date of appointment as CEO, and the respective company
matching component paid out for achievement of the 2024 STI objectives as defined in the 2023 Policy. This amount is shown in the “Bonuses and other incentives”
column of Table 1.
(9) The amount in the “Payable/Paid out Year Bonus” column refers to the 2022-2024 LTI Plan including the amount accrued as General Manager Operations until the
date of appointment as CEO. This amount is shown in the “Bonuses and other incentives” column of Table 1.
(10) The amount in the “Previous Years Bonuses Still Deferred” column refers to the sum of the deferred 2023 STI portion and the company matching component, which
will be paid at the end of the deferral period (3 years). This amount is not shown in the “Bonuses and other incentives” column of Table 1.
(11) The amount in the “Payable/Paid out Year Bonus” column refers to the portion of the 2024 STI paid out (upfront amount) based on personal choice. This amount is
shown in the “Bonuses and other incentives” column of Table 1.
(12) The amount in the “Deferred Year Bonus” column refers to the sum of the 2024 STI portion and the related company matching component that will be paid at the
end of the deferral period (3 years). This amount is shown in the “Bonuses and other incentives” column of Table 1.
(13) The amount in the “Payable/Paid out Year Bonus” column refers to the 2022-2024 LTI Plan accrued pro-rata from the hire date. This amount is shown in the “Bonuses
and other incentives” column of Table 1.
(14) The amount refers to the second and last instalment of a welcome bonuslinked to hiring. This amount is shown in the “Other remuneration” column in Table 1.
(15) As of 31 December 2024, in addition to the Corporate General Manager, 6 ESRs were in office. It should be noted that the remuneration paid to the Corporate
General Manager is not included in this item, as it is indicated separately in the table.
(16) The amount in the “Previous Years Bonuses Payable/Paid” column refers to the sum of the deferred 2021 STI portion and the company matching component, which
will be paid at the end of the deferral period (3 years). This amount is not shown in the “Bonuses and other incentives” column of Table 1.
(17) The amount in the “Previous Years Bonuses Still Deferred” column refers to the sum of the deferred 2022 STI portion and the company matching component, which
will be paid at the end of the deferral period (3 years). This amount is not shown in the “Bonuses and other incentives” column of Table 1.
(18) The amount in the “Previous Years Bonuses Still Deferred” column refers to the sum of the deferred 2023 STI portion and the company matching component, which
will be paid at the end of the deferral period (3 years). This amount is not shown in the “Bonuses and other incentives” column of Table 1.
Remuneration Report
Pirelli & C. S.p.A. - Annual Report 2024
519
4.
TABLE OF EQUITY INVESTMENTS OF THE MEMBERS OF THE ADMINISTRATIVE AND
CONTROL BODIES, GENERAL MANAGERS AND KEY MANAGERS.
The table below provides disclosures on any equity investments held in Pirelli & C. and in its
subsidiary companies, by those who, even for a fraction of the year, have held the position of:
-
member of the Board of Directors;
-
member of the Board of Statutory Auditors;
-
General Manager;
-
KMs.
In particular, it indicates, for each member of the Board of Directors and Board of Statutory Auditors
and General Managers, by name, and cumulatively for KMs, with regard to each company in which
shares are held, the number of shares, by category:
-
held at the end of the prior year;
-
purchased during the reporting year;
-
sold during the reporting year;
-
held at the end of the reporting year.
In this regard, the title of possession and the manner in which it is held are also specified.
It includes all the persons who, during the reporting year, held positions as members of the
administrative and control bodies, General Manager or as KM, even for a fraction of the year.
1) Equity investments of the members of the administrative and control bodies and General
Managers
First and last name
Office
Investee
company
No of shares
held at
31/12/2023
No of shares
purchased/
underwritten
No. of
shares
sold
No of shares
held at
31/12/2024
Marco Tronchetti Provera
Executive
Vice
Chairman
Pirelli & C.
S.p.A.
140,959,399 (i)
119,563,672 (ii)
-
260,523,071
(iii)
(i) Shares held indirectly through Camfin S.p.A..
(ii) Total shares acquired during the reporting year through the following indirect subsidiaries: Longmarch Holding S.r.l. for no. 36,788,672,
Camfin Alternative Assets S.r.l. for no. 78,775,000 and Camfin S.p.A. for no. 4,000,000.
(iii) Shares held indirectly through Camfin S.p.A. for 144,959,399 shares, Camfin Alternative Assets S.r.l. for 78,775,000 shares and
Longmarch Holding S.r.l. for 36,788,672 shares. A guarantee is pledged on these shares, with voting rights remaining with the
shareholders.
Pirelli & C. S.p.A. – Annual Report 2024
Remuneration Report
520
2) Equity investments of other key managers
Number of key
managers
Investee
company
No of shares
held at
31/12/2023
No of shares
purchased/
underwritten
No. of
shares
sold
No of shares held
at 31/12/2024
-
-
-
-
-
-
Remuneration Report
Pirelli & C. S.p.A. - Annual Report 2024
521
ANNEX 1– GLOSSARY
2024-2025 Business Plan: refers to the update of the 2021-2022|2025 Strategic Plan (approved by
the Board of Directors of Pirelli & C. on 31 March 2021) approved by the Board of Directors of Pirelli
& C. on 6 March 2024.
2022-2024 LTI Plan: refers to the LTI plan relating to the 2022-2024 three-year cycle, approved by
the Board of Directors on 17 March 2022 and, subsequently, by the Shareholders’ Meeting held on
18 May 2022.
2023-2025 LTI Plan: refers to the LTI plan relating to the 2023-2025 three-year cycle, approved by
the Board of Directors on 05 April 2023 and, subsequently, by the Shareholders’ Meeting held on 31
July 2023.
2024-2026 LTI Plan: refers to the LTI plan relating to the 2024-2026 three-year cycle, approved by
the Board of Directors on 06 March 2024 and, subsequently, by the Shareholders’ Meeting held on
28 May 2024.
2025-2027 LTI Plan: refers to the LTI plan relating to the 2025-2027 three-year cycle, approved by
the Board of Directors on 28 April 2025.
2021 Policy: refers to the Remuneration Policy for the year 2021 approved by the Board of Directors
on 31 March 2021 and, subsequently, by the Shareholders’ Meeting held on 15 June 2021.
2022 Policy: refers to the Remuneration Policy for the year 2022 approved by the Board of Directors
on 17 March 2022 and, subsequently, by the Shareholders’ Meeting held on 18 May 2022.
2023 Policy: refers to the Remuneration Policy for the year 2023 approved by the Board of Directors
on 5 April 2023 and, subsequently, by the Shareholders’ Meeting held on 31 July 2023.
2024 Policy: refers to the Remuneration Policy for the year 2024 approved by the Board of Directors
on 6 March 2024 and, subsequently, by the Shareholders’ Meeting held on 28 May 2024.
Annual Total Direct Compensation: means the sum total of the following components, regardless
of whether they were paid by Pirelli & C. or by another Group company:
gross annual base salary of the remuneration;
annual variable component STI actual;
medium-long term variable component comprising:
o actual annual value of the LTI plan;
o value of the deferred STI pro-rata, if accrued based on the fulfilment of the underlying
conditions;
Pirelli & C. S.p.A. – Annual Report 2024
Remuneration Report
522
o an additional value of an equal or higher amount in respect of the pro-rata of the STI
accrued and deferred, to be paid if the underlying conditions are met.
Annual Total Direct Compensation on-Target: means the sum total of the following components,
regardless of whether they were paid by Pirelli & C. or by another Group company:
gross annual base salary of the remuneration;
annual variable short-term incentive (STI), if target objectives are achieved;
medium-long term variable component consisting of:
o annual value of the LTI plan if multi-year target objectives are achieved;
o pro quota value of the STI accrued and deferred, to be paid if the underlying
conditions are met;
o an additional value of an equal or higher amount in respect of the pro-rata of the STI
accrued and deferred, to be paid if the underlying conditions are met.
Bad Leaver: when the relationship with the Company is terminated due to a case other than those
listed in the definition of Good Leaver.
Board of Directors: the Board of Directors of Pirelli & C..
Consolidated Sustainability Report: refers to the reporting of information related to sustainability
issues, as regulated by Legislative Decree No. 125 of 6 September 2024, included in the Directors’
Report on Operations, which is part of the 2024 Annual Financial Report published on the Company’s
website.
Corporate Governance Code: refers to the Corporate Governance Code of listed companies
approved by the Corporate Governance Committee of Borsa Italiana S.p.A. in January 2020.
Director(s): refers to members of the Board of Directors of Pirelli & C..
Directors holding specific offices: these are the Directors of Pirelli & C. holding the office of
Chairman, Executive Vice Chairman and Chief Executive Officer. The Directors holding specific
offices in other Group companies, who are also managers, are, for the purpose of the Policy,
Executives or Senior Managers, depending on the role held and, unless otherwise resolved by the
Board of Directors of Pirelli & C. which classifies them as KMs.
Directors holding specific offices to whom specific duties are also delegated: the Directors of
Pirelli & C. who hold the office of Executive Vice Chairman and Chief Executive Officer.
Directors with no specific offices: are the Directors of Pirelli & C. other than those holding specific
offices. Directors not holding special offices in other Group companies, who are also managers, are,
Remuneration Report
Pirelli & C. S.p.A. - Annual Report 2024
523
for the purpose of the Policy, Executives or Senior Managers, depending on the role held and unless
otherwise resolved by the Board of Directors of Pirelli & C., which classifies them as KMs.
Executives: managers of the Italian companies or employees of the Group’s foreign companies with
a position or role that is comparable to that of an Italian manager.
GAR: refers to the gross annual base remuneration of the compensation for those employed by a
Pirelli Group company.
General Manager(s): the persons chosen by the Pirelli & C. Board of Directors to be assigned
extensive powers of business segment management. The subjects holding the office of General
Manager in other Group companies are, for the purpose of the Policy, Executives or Senior
Managers, depending on the role held and unless otherwise resolved by the Board of Directors of
Pirelli & C., which classifies them as KMs.
Grade: weight assigned to each organisational position based on factors such as the level of
knowledge and skills required, the complexity of the problems the role must address, the degree of
responsibility and the impact of decisions made. The grade system is used to determine appropriate
salary ranges at each level, ensuring internal equity within the organisation. It also allows for an
objective comparison of different roles within the company or across different companies.
Good Leaver: when the relationship with the Company is terminated by mutual termination,
retirement, death or resignation for good cause.
KMs: indicates the persons identified pursuant to Article 11, paragraph 12 of the Bylaws, i.e. Pirelli’s
managers who, by reason of the tasks and powers attributed to them, have the power and
responsibility, directly or indirectly, of planning, directing and controlling the Company’s activities and
of adopting decisions that may affect its development and future prospects (key manager).
Management: means all Directors holding specific offices, General Manager, KMs, Senior Managers
and Executives.
Pirelli Group or Pirelli or Group: all the companies included in the consolidation scope of Pirelli &
C..
Pirelli & C. or the Company: refers to Pirelli & C. S.p.A.
Remuneration Committee or Committee: the Remuneration Committee of Pirelli & C..
Senior Managers or Senior Management: refers to the persons to whom the following shall first
report, except where they are KMs (i) Directors holding specific offices to whom specific duties are
also delegated; (ii) General Manager, where the work of the Senior Manager significantly impacts
business results.
Shareholders’ Meeting: means the meeting of the shareholders of Pirelli & C..
Statutory Auditors: refers to the members of the Board of Statutory Auditors of Pirelli & C.
Pirelli & C. S.p.A. – Annual Report 2024
Remuneration Report
524
STI: refers to the annual variable component of remuneration that can be achieved if the predefined
corporate objectives are achieved, as more fully described in paragraphs 2, 4, 5 and 6.
Top Management: refers to all Directors holding specific offices, General Manager and KMs.
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
525
CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2024
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
526
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (in thousands of euro)
Note
of which related
parties (note 43)
of which related
parties (note 43)
Property, plant and equipment
10
3,427,756
3,409,114
Intangible assets
11
5,159,729
5,263,787
Investments in associates and joint ventures
12
120,790
86,397
Other financial assets at fair value through other Comprehensive Income
13
63,294
52,837
Deferred tax assets
14
228,740
202,849
Other receivables
16
309,526
7,791
408,625
7,240
Tax receivables
17
9,973
11,318
Other assets
23
93,838
115,894
Derivative financial instruments
28
4,326
12,886
Non-current assets
9,417,972
9,563,707
Inventories
18
1,467,707
1,371,436
Trade receivables
15
622,915
10,976
649,406
9,358
Other receivables
16
444,010
90,954
419,249
98,729
Other financial assets at fair value through Income Statement
19
165,965
228,759
Cash and cash equivalents
20
1,502,741
1,252,769
Tax receivables
17
36,989
32,574
Derivative financial instruments
28
22,323
13,027
Current assets
4,262,650
3,967,220
Total Assets
13,680,622
13,530,927
Equity attributable to the owners of the Parent Company:
21.1
5,756,071
5,494,393
Share capital
1,904,375
1,904,375
Reserves
3,383,715
3,110,938
Net income / (loss)
467,981
479,080
Equity attributable to non-controlling interests:
21.2
156,183
125,201
Reserves
123,060
108,376
Net income / (loss)
33,123
16,825
Total Equity
21
5,912,254
5,619,594
Borrowings from banks and other financial institutions
24
3,068,598
15,825
3,174,678
8,322
Other payables
26
79,947
-
77,932
212
Provisions for liabilities and charges
22
101,123
19,437
109,548
22,144
Deferred tax liabilities
14
990,250
990,870
Provisions for employee benefit obligations
23
184,040
7,812
180,218
3,181
Tax payables
27
4,001
14,391
Derivative financial instruments
28
-
-
Non-current liabilities
4,427,959
4,547,637
Borrowings from banks and other financial institutions
24
760,857
3,707
789,527
2,242
Trade payables
25
2,081,617
129,000
1,999,418
126,064
Other payables
26
392,744
22,945
412,173
21,371
Provisions for liabilities and charges
22
31,363
-
35,323
-
Provisions for employee benefit obligations
23
557
-
820
-
Tax payables
27
63,150
105,193
Derivative financial instruments
28
10,121
21,242
Current liabilities
3,340,409
3,363,696
Total Liabilities and Equity
13,680,622
13,530,927
12/31/2024
12/31/2023
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
527
Note
of which related
parties (note 43)
of which related
parties (note 43)
Revenues from sales and services
30
6,773,324
61,480
6,650,063
31,045
Other income
31
346,455
80,472
328,994
60,058
Changes in inventories of unfinished, semi-finished and finished products
72,455
37,925
Raw materials and consumables used (net of change in inventories)
(2,177,416)
(18,060)
(2,216,053)
(10,983)
Personnel expenses
32
(1,301,297)
(16,688)
(1,225,311)
(17,365)
Amortisation, depreciation and impairment
33
(574,950)
(588,463)
Other costs
34
(2,227,399)
(326,947)
(2,175,943)
(324,968)
Net impairment of financial assets
35
(10,303)
(5,263)
Increases in fixed assets due to internal works
2,121
2,378
Operating income/(loss)
902,990
808,327
Net income/(loss) from equity investments
36
31,388
15,879
- share of net income/(loss) of associates and joint ventures
27,456
27,456
11,646
11,646
- gains on equity investments
-
(35)
- losses on equity investments
-
(1)
- dividends
3,932
4,269
Financial income
37
136,326
3,505
225,661
3,065
Financial expenses
38
(422,911)
(3,275)
(419,764)
(838)
Net income / (loss) before taxes
647,793
630,103
Taxes
39
(146,689)
(134,198)
Net income / (loss)
501,104
495,905
Attributable to:
Owners of the Parent Company
467,981
479,080
Non-controlling interests
33,123
16,825
Total basic/diluted earnings / (losses) per share (in euro)
40
0.468
0.479
CONSOLIDATED INCOME STATEMENT (in thousands of euro)
2024
2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (in thousands of euro)
Note
2024
2023
A
Total Net income / (loss)
501,104 495,905
- Remeasurement of employee benefits
23
(38,637) (30,025)
- Tax effect
9,451 7,383
- Fair value adjustment of other financial assets at fair value through Other
Comprehensive Income
13
9,822 4,627
B
Total items that may not be reclassified to Income Statement
(19,364) (18,015)
Exchange rates differences from translation of foreign Financial Statements
- Gains / (losses)
21
(169,298) (170,427)
Fair value adjustment of derivatives designated as cash flow hedges:
- Gains / (losses)
28
1,273 (4,776)
- (Gains) / losses reclassified to Income Statement
28
(17,071) (17,642)
- Tax effect
3,773 5,309
Share of Other Comprehensive Income related to associates and joint ventures
12
4,358 (3,832)
C
Total items reclassified / that may be reclassified to Income Statement
(176,965) (191,368)
D
Total Other Comprehensive Income (B+C)
(196,329) (209,383)
A+D
Total Comprehensive Income / (loss)
304,775 286,522
Attributable to:
- Owners of the Parent Company
268,873
287,062
- Non-controlling interests
35,902
(540)
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
528
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AT 12/31/2024
(in thousands of euro)
Total
Share Capital
Translation
reserve
Other reserves
with changes in
the statement of
comprehensive
income *
Other reserves/
retained earnings
Total attributable to
the Parent Company
(note 21)
Total at 12/31/2023
1,904,375
(667,280)
(22,600)
4,279,898
5,494,393
125,201
5,619,594
Other components of comprehensive income
-
(167,719)
(31,389)
-
(199,108)
2,779
(196,329)
Net income / (loss)
-
-
-
467,981
467,981
33,123
501,104
Total comprehensive income / (loss)
-
(167,719)
(31,389)
467,981
268,873
35,902
304,775
Dividends approved
-
-
-
(198,000)
(198,000)
(5,134)
(203,134)
Effects of hyperinflation accounting in Turkey
-
-
-
16,500
16,500
-
16,500
Effects of hyperinflation accounting in Argentina
-
-
-
175,233
175,233
-
175,233
Other
-
-
(449)
(479)
(928)
214
(714)
Total at 12/31/2024
1,904,375
(834,999)
(54,438)
4,741,133
5,756,071
156,183
5,912,254
Attributable to the Parent Company (note 21.1)
Non-
controlling
interests
(note 21.2)
(in thousands of euro)
Reserve for fair value
adjustment of financial
assets at fair value through
Other Comprehensive
Income
Reserve for cash flow
hedge
Remeasurement of
employee benefits
Tax effect
Other reserves with
changes in the
statement of
comprehensive income
Total at 12/31/2023
(6,666)
31,958
8,653
(56,545)
(22,600)
Other components of Comprehensive Income
9,822
(15,798)
(38,637)
13,224
(31,389)
Other changes
-
-
(414)
(35)
(449)
Total at 12/31/2024
3,156
16,160
(30,398)
(43,356)
(54,438)
BREAKDOWN OF OTHER RESERVES WITH CHANGES IN THE STATEMENT OF COMPREHENSIVE INCOME*
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AT 12/31/2023
(in thousands of euro)
Share Capital
Translation
reserve
Other reserves
with changes in
the statement of
comprehensive
income *
Other reserves/
retained earnings
Total attributable to
the Parent Company
Total at 12/31/2022
1,904,375
(510,386)
12,768
3,917,037
5,323,794
130,034
5,453,828
Other components of Comprehensive Income
-
(156,894)
(35,124)
-
(192,018)
(17,365)
(209,383)
Net income / (loss)
-
-
-
479,080
479,080
16,825
495,905
Total comprehensive income / (loss)
-
(156,894)
(35,124)
479,080
287,062
(540)
286,522
Dividends approved
-
-
-
(218,000)
(218,000)
(4,871)
(222,871)
Effects of hyperinflation accounting in Turkey
-
-
-
16,109
16,109
-
16,109
Effects of hyperinflation accounting in Argentina
-
-
-
86,749
86,749
-
86,749
Other
-
-
(244)
(1,077)
(1,321)
578
(743)
Total at 12/31/2023
1,904,375
(667,280)
(22,600)
4,279,898
5,494,393
125,201
5,619,594
Attributable to the Parent Company (note 21.1)
Non-
controlling
interests (note
21.2)
Total
(note 21)
(in thousands of euro)
Reserve for fair value
adjustment of financial
assets at fair value through
other Comprehensive
Income
Reserve for cash flow
hedge
Remeasurement of
employee benefits
Tax effect
Other reserves with
changes in the
statement of
comprehensive income
Total at 12/31/2022
(11,074)
54,376
38,703
(69,237)
12,768
Other components of Comprehensive Income
4,627
(22,418)
(30,025)
12,692
(35,124)
Other changes
(219)
-
(25)
-
(244)
Total at 12/31/2023
(6,666)
31,958
8,653
(56,545)
(22,600)
BREAKDOWN OF OTHER RESERVES WITH CHANGES IN THE STATEMENT OF COMPREHENSIVE INCOME*
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
529
CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands of euro)
2024
2023
Net income / (loss) before taxes
647,793
630,103
Reversal of amortisation, depreciation, impairment losses and restatement of property,
plant and equipment and intangible assets
574,950
588,463
Reversal of Financial (income) / expenses
286,585
194,103
Reversal of Dividends
(3,932)
(4,269)
Reversal of gains / (losses) on equity investments
-
36
Reversal of share of net result from associates and joint ventures
(27,456)
(11,646)
Reversal of accruals to provisions and other accruals
69,459
62,717
Net Taxes paid
(158,488)
(138,988)
Change in Inventories
(132,479)
29,277
Change in Trade receivables
2,520
(51,467)
Change in Trade payables
119,255
132,729
Change in Other receivables
(43,978)
(23,963)
Change in Other payables
1,105
(12,526)
Uses of Provisions for employee benefit obligations
(18,978)
(16,634)
Uses of Provisions for liabilities and charges
(23,792)
(18,074)
A
Net cash flow provided by / (used in) operating activities
1,292,564
1,359,861
of which related parties
(226,505)
(290,100)
Investments in owned tangible assets
(376,076)
(377,413)
Disposal of owned tangible assets
2,233
2,207
Investments in intangible assets
(27,597)
(21,623)
Disposal of intangible assets
4
-
Investments in other financial assets at fair value through Other Comprehensive
Income
(555)
-
Acquisition of investments in subsidiaries
(20,268)
-
Acquisition of investments in associates and joint ventures
(12,071)
-
Change in Financial receivables from associates and joint ventures
(513)
(299)
Dividends and reserves received from associates and joint ventures
9,650
-
Dividends received from other financial non-current assets at FVTOCI
3,932
4,269
B
Net cash flow provided by / (used in) investing activities
(421,261)
(392,859)
of which related parties
962
(299)
Change in Borrowings from banks and other financial institutions due to draw downs
1,366,477
1,127,752
Change in Borrowings from banks and other financial institutions due to repayments
and other
(1,497,803)
(1,634,195)
Change in Financial receivables / Other current financial assets at fair value through
Income Statement
60,128
212,596
Financial income / (expenses)
(206,173)
(342,410)
Dividends paid
(204,400)
(222,871)
Repayment of principal and payment of interest for lease liabilities
(128,929)
(120,455)
C
Net cash flow provided by / (used in) financing activities
(610,700)
(979,583)
of which related parties
(4,130)
(3,992)
D
Total cash flow provided / (used) during the period (A+B+C)
260,603
(12,581)
E
Cash and cash equivalents at the beginning of the financial year
1,248,850
1,283,386
F
Exchange rate differences from translation of cash and cash equivalents
(8,179)
(21,955)
G
Cash and cash equivalents at the end of the period (D+E+F) (°)
1,501,274
1,248,850
(°)
of which:
cash and cash equivalents
1,502,741
1,252,769
bank overdrafts
(1,467)
(3,919)
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
530
EXPLANATORY NOTES
1.
GENERAL INFORMATION
Pirelli & C. S.p.A. is a company whose legal status is governed by the laws of the Italian Republic.
Founded in 1872, Pirelli & C. S.p.A. – also through its subsidiaries in Italy and abroad – is a Pure
Consumer Tyre Company (which includes tyres for cars, motorcycles, and bicycles) and is primarily
focused on the High Value tyre market, which are products designed to achieve the highest levels
in terms of performance, safety, quietness, and grip on the road surface.
The registered Head Office of the Company is located in Milan, Italy at Viale Piero e Alberto Pirelli
n. 25.
These Consolidated Financial Statements have been prepared using the euro as the functional
currency, and all values are rounded to the nearest thousand euro unless otherwise stated.
The audit of the Consolidated Financial Statements has been entrusted to PricewaterhouseCoopers
S.p.A. pursuant to Legislative Decree No. 39 of January 27, 2010 in execution of the resolution of
the Shareholders’ Meeting of August 1, 2017, which assigned the mandate to the aforementioned
company for each of the nine financial years closing from December 31, 2017 to December 31, 2025.
On 16 June 2023, the Prime Minister’s Office adopted a measure containing some prescriptions
pertaining to Pirelli’s corporate governance (the “Golden Power Prime Ministerial Decree”). These
prescriptions, addressed both to the shareholder National Chemical Corporation Limited (“CNRC”)
and to Pirelli itself, entail, inter alia, the obligation to adopt both “structural safeguards independent
of the temporary nature of the shareholders’ agreement” and “a network of measures operating
together to protect the autonomy of Pirelli & C. S.p.A. and its management, and to protect the
information of strategic importance held by the Company”.
The Golden Power Prime Ministerial Decree prohibits CNRC from exercising management and
coordination activities over Pirelli pursuant to Articles 2497 et seq. of the Italian Civil Code and
requires it, inter alia, by way of example only:
(i)
to ensure Pirelli complete autonomy in the management of relations with customers and
suppliers;
(ii)
to ensure that Pirelli independently prepares the strategic, industrial and financial plans and/or
budgets of the Company and the Group;
(iii)
to guarantee that Pirelli shall not be subject to instructions by the Sinochem Group;
(iv)
not to adopt any deeds, resolutions or communications that may suggest that Pirelli’s decisions
are the consequence of desires and instructions imposed upon it by CNRC;
(v)
not to centralise treasury services or other financial assistance or coordination functions (e.g.
cash pooling) or other technical coordination functions (e.g. integration of Pirelli’s IT systems
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
531
into those of Sinochem Holdings Corporation Ltd., including those of Pirelli’s Chinese
subsidiaries);
(vi)
not to issue any orders or instructions and in any case not to coordinate the initiatives regarding
financial and credit-related decisions and research and development in Pirelli;
(vii) not to issue directives regarding any special transactions carried out by Pirelli including, for
example, the listing of financial instruments, acquisitions, disposals, concentrations,
contributions, mergers, spin-offs;
(viii) not to make any crucial decisions regarding the operating strategies of Pirelli or formulate
group strategic guidelines;
(ix)
to guarantee the absence of any organisational-functional connections between Pirelli, on the
one hand, and CNRC, on the other.
The Golden Power Prime Ministerial Decree also requires the CNRC to undertake to ensure that:
(i)
the Chief Executive Officer of Pirelli, drawn from the majority slate submitted by CNRC, is
indicated by Camfin;
(ii)
out of 12 Directors drawn from the majority slate, 4 are appointed by Camfin;
(iii)
the position of General Manager is introduced, to whom the power to implement Pirelli’s
business plan, budget and ordinary management is delegated;
(iv)
all of Pirelli’s Delegated Bodies are to be appointed exclusively from among the Directors
designated by Camfin;
(v)
the power to appoint and dismiss Managers and Deputy Managers of Pirelli is deferred to the
Executive Vice Chairman or to the Chief Executive Officer;
(vi)
Pirelli’s Bylaws are amended so that, in relation to Board resolutions pertaining to the assets
of strategic importance (as identified in the Golden Power Prime Ministerial Decree) in addition
to the appointment and dismissal from the office of Key Managers, the proposal is reserved
for the Chief Executive Officer and any decision contrary thereto may only be adopted with the
vote against of at least 4/5 of the Board of Directors (thereby attributing veto power over such
resolutions to the Directors elected by Camfin).
Considering the above, the majority of the Pirelli Board of Directors is now composed of independent
directors, and the majority of the Directors drawn from the list submitted by the CNRC (8 out of 12)
are also independent directors or directly designated by Camfin; limiting to 4 (four) the (non-
executive) “non-independent” directors designated by CNRC who, in turn, will have to comply with
the requirements dictated by the Golden Power Prime Ministerial Decree, including the one aimed
at “ensuring the absence of organisational-functional links between Pirelli on the one hand and
CNRC on the other”.
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
532
Adoption of the Golden Power Prime Ministerial Decree made it necessary to carry out a number of
in-depth investigations to ascertain the continued existence of MPI Italy control over Pirelli pursuant
to the international accounting standard IFRS 10 “Consolidated Financial Statements”. On this point,
a question was submitted to Consob by the Board of Statutory Auditors and management on 15
February 2024 (“Question”). On 31 July 2024, Consob, following proceedings initiated as a result of
the Question: (a) communicated the relative results to Pirelli, envisaging the obligation for the
Company Board of Directors to assess the existence or otherwise of a controlling entity in
accordance with IFRS 10; (b) recalled the commitment required by the Golden Power Prime
Ministerial Decree on the part of CNRC not to exercise direction and coordination, and therefore the
commitment not to provide directors with indications; (c) emphasised the mandatory nature of certain
provisions of said Prime Ministerial Decree concerning the role of Camfin S.p.A. (e.g. regarding the
appointment of the Chief Executive Officer who proposes the strategic plan, and the Executive Vice
Chairman who outlines the strategies) that strengthen the autonomy of the Company’s Board of
Directors and that “prevent the shareholder [Marco Polo International Italy S.r.l (“MPI Italy”)] from
being able – even if not exercised – to influence the significant decisions of the Issuer”.
The Company conducted in-depth studies assisted by opinions from leading auditing firms with
reference to the correct application of the accounting standard IFRS 10, as well as additional
opinions received from external legal advisors, and took into account the additional documentation
submitted in the proceedings initiated by Consob following the Question, and the documentation
(including briefs and opinions) provided by the other intervening parties, MPI Italy and Camfin S.p.A.
(“Camfin S.p.A.”).
While conducting these investigations, in order to assess the existence of control by an entity
pursuant to IFRS 10, the Company focused on the three requirements of that standard, namely
whether an entity has simultaneously (i) power over the investee entity; (ii) exposure or rights to
variable returns arising from the relationship with the investee entity; and (iii) the ability to exercise
its power over the investee entity in order to affect the amount of its returns. More specifically,
focusing on the first requirement, the decisions that generally represent exercise of the power of an
investor over another entity were analysed, with an indication for each one of whether MPI Italy can
unilaterally take the aforesaid decisions through the rights resulting from the 2023 Shareholders’
Agreement Renewal, as amended to incorporate the provisions of the Golden Power Prime
Ministerial Decree. Please find below the outcome of these analyses for each decision:
Appointment and dismissal of executive directors (Executive Vice Chairman and Chief Executive
Officer): the two executive directors were assigned the first one by the parties upon appointment
by Camfin and the second one by express provision of the Golden Power Prime Ministerial
Decree, upon indication by Camfin. The dismissal or replacement of the CEO can only take
place upon the proposal of the Executive Vice Chairman (a Camfin person), also delegated to
propose a replacement who must be a director representing Camfin;
Preparation of the budget and the business plan and any significant amendments to be
submitted for approval by the Board of Directors: the proposal to the Board of Directors of the
budget and business plan and any possible changes must be formulated by the CEO, appointed
by Camfin. The Board of Directors has the sole right to approve the CEO proposal or to vote
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
533
against it, giving adequate reasons and taking the best interests of Pirelli into account. Although
MPI Italy has the right to appoint the majority of directors (four of whom “independent”), the MPI
Italy right to provide guidelines to the directors it appoints is severely limited by the provisions
of the Golden Power Prime Ministerial Decree; so the MPI rights do not appear to be substantive
rights, in accordance with IFRS 10 provisions;
Appointment and dismissal of key managers: the appointment or dismissal of key managers
must be put forward by the CEO and any resolution against that proposal requires the favourable
vote of at least 4/5 of the members of the Board of Directors – a qualified quorum higher than
the number of directors appointed by MPI Italy;
Matters reserved for the Board of Directors: although the 2023 Shareholders’ Agreement
envisages that certain decisions are taken by the Board of Directors with a simple majority, and
thus potentially by MPI Italy through its directors, this right is severely limited by the provisions
of the Golden Power Prime Ministerial Decree. So MPI rights do not appear to be substantive
ones, in accordance with the provisions in IFRS 10;
Decisions pertaining to the Pirelli strategic assets as identified by the Golden Power Prime
Ministerial Decree: in accordance with provisions in the Golden Power Prime Ministerial Decree,
the Bylaws envisage that in relation to board resolutions pertaining to assets of strategic
importance as identified by the Prime Ministerial Decree, the proposal is reserved for the CEO
and any resolution against that proposal requires the favourable vote of at least 4/5 of the
members of the Board of Directors – a qualified quorum higher than the number of directors
appointed by MPI Italy.
Furthermore, the Company considered that in the aforementioned provision, Consob asked the
Board of Directors to assess, for the purposes of resulting decisions on the permanence of control,
whether MPI Italy has the concrete capacity to dismiss the management body in the event of a
disagreement with the Board of Directors on the strategic directions taken and, ultimately, on the
returns that the investee generates. To this end, the Company has assessed that in the Ordinary
Shareholders’ Meetings held from 2018 to 2023 there was a shareholding of over 80% and in the
2024 Shareholders’ Meeting it was 88%, which does not allow MPI Italy to independently decide the
outcome of the Shareholders’ Meeting and dismiss the administrative body in its entirety; nor can
MPI Italy influence the appointment and dismissal of the Company managing bodies, devolved to
Camfin, pursuant to the Golden Power Prime Ministerial Decree and the Shareholders’ Agreement
between Camfin and CNRC.
The result of all these considerations is that the issuance of the Golden Power Prime Ministerial
Decree resulted in the loss of the unilateral control of MPI Italy (and, as a result, that of
Sinochem) over Pirelli pursuant to IFRS 10 and, at the same time, Pirelli is not subject to the
unilateral control of any entity under the aforementioned accounting standard.
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
534
On April 28, 2025, the Board of Directors approved these Consolidated Financial Statements and
authorised their publication.
2.
BASIS OF PRESENTATION
Information on the Macroeconomic Environment
In 2024, despite ongoing geopolitical tensions, the global economy demonstrated substantial overall
resilience. Moderate GDP growth in the European Union was flanked by a more positive economic
performance in the United States – thanks to the performance of the labour market and consumer
spending - and in China and Brazil, thanks to the various growth supporting measures implemented
by governments.
Global inflation steadily declined over the course of the year, allowing the central banks of the
European Union and the United States to ease up on monetary tightening. Inflation trends, central
bank monetary policies and new geopolitical situations drove the exchange rate dynamics in 2024,
with the US dollar stable against the euro and volatility in the currencies of emerging countries
against the euro.
Geopolitical and climatic factors as well as supply and demand trends led to diverging trends in the
prices of the main raw materials used by the Group, with an increase in the price of natural rubber
and butadiene (with Brent crude prices remaining substantially stable year-on-year) and a decrease
in the price of natural gas.
During the course of 2024, the global car tyre market recorded a volume growth of +1.0% compared
to the same period in 2023.
Pirelli’s results for 2024 highlighted a solid operating performance, with EBIT adjusted which
amounted to euro 1,060.5 million, which mainly reflected the positive contribution of the price/mix, of
volumes, and of efficiencies which more than offset inflation in the cost of production factors including
raw materials, the negative exchange rate effect, depreciation and amortisation and other costs.
For further details on this performance in 2024, reference should be made to the section “Group
Performance and Results” in the Directors’ Report on Operations, while for information on the
management of external risks, reference should be made to the section “Risk Factors and
Uncertainty” in the same document.
The global scenario in 2025 is continuously evolving and is characterized by uncertainties regarding
tariffs and their consequent impacts on economic growth, exchange rates, inflation and consumption.
The most up-to-date forecasts available have been taken into account for the formulation of the
prospective results in 2025 as reported in the “Outlook for 2025” section of the Directors’ Report on
Operations.
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
535
The group, in light of the high uncertainties regarding US tariffs, confirms the targets communicated
to the market on February 26. A plan has nonetheless been defined to mitigate the impact of US
tariffs – should the currently announced measures come into effect – with the aim of ensuring the
Adjusted Ebit and cash targets at the lower end of the guidance range mentioned in the
aforementioned paragraph, thereby achieving the deleverage objective.
The same targets reported in the “Outlook for 2025” section, have been considered in the estimates
and assumptions, particularly in the evaluation of the recoverability of goodwill and other intangible
assets with an indefinite useful life.
These impacts are described in the explanatory notes of reference, to which further details are
referred.
Financial Statements
The Consolidated Financial Statements at December 31, 2024 consist of the Statement of Financial
Position, the Income Statement, the Statement of Comprehensive Income, the Statement of
Changes in Equity, the Statement of Cash Flows and the Explanatory Notes, which are accompanied
by the Directors’ Report on Operations.
This document has not been prepared in accordance with the EU Delegated Regulation 2019/815
(ESEF Regulation), which was adopted pursuant to the Transparency Directive. The document
which has been prepared pursuant to the ESEF Regulation, is available (in Italian only), on the
authorised eMarket Storage mechanism (emarketstorage.com) and on the Company’s website
www.pirelli.com.
The format adopted for the Statement of Financial Position provides for the distinction between
current and non-current assets and liabilities.
The Group has opted to present the components of the gains/losses for the financial year in a
separate Income Statement, rather than including them directly in the Statement of Comprehensive
Income. The Income Statement format which has been adopted provides for the classification of
costs by nature.
The Group has opted to present the tax effects and the reclassifications to the Income Statement of
the gains/losses recognised under Other Comprehensive Income from previous financial years,
directly in the Statement of Comprehensive Income and not in the explanatory Notes.
The Statement of Changes in Equity includes, in addition to the total gains/losses for the period, the
amounts for transactions with equity holders and the movements which occurred in reserves during
the financial year.
In the Statement of Cash Flow, the cashflows from operating activities are reported using the indirect
method, whereby the gains or losses for the financial year are adjusted by the effects of non-
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
536
monetary transactions, by any deferrals or accruals of previous or future operating collections or
payments and by revenue or expense items related to cash flows derived from any investment or
financing activity.
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
537
Scope of Consolidation
The scope of consolidation includes subsidiaries, associated and joint control agreements (joint
arrangements).
Subsidiaries are defined as all the companies over which the Group simultaneously holds:
-
the power of decision-making, or rather the ability to direct the relevant activities of the
investee, that is those activities that have a significant influence on the results of the investee
company itself;
-
the exposure or the right to the variable (positive or negative) results from the investment in
the entity;
-
the ability to exercise its decision making power to determine the amount of the results
deriving from the investment in the entity.
The financial statements of subsidiaries are included in the Consolidated Financial Statements as of
the date when control is assumed, until such time when control ceases to exist. The portion of equity
and of the results attributable to minority shareholders, are reported separately and respectively in
the Statement of Financial Position, the Income Statement, the Statement of Comprehensive Income
and in Equity.
All companies over which the Group is able to exercise significant influence as defined by IAS 28 -
Investments in Associates and Joint Ventures, qualify as associates. This influence is legally
presumed to exist when the Group holds a percentage of voting rights of between 20% and 50%, or
when - even in the case of a lower share of voting rights – it has the power to participate in
determining financial and operating policies by virtue of specific legal relationships, such as, for
example, the participation in Shareholders’ Agreements together with other forms of the significant
exercise of corporate governance rights.
Joint arrangements are agreements under which two or more parties have joint control under a
contract. Joint control is the shared control of a business activity, established by an agreement, and
which exists only when decisions relative to the activity, require the unanimous consent of all parties
who share control. These agreements may give rise to joint ventures or joint operations.
A joint venture is an agreement for the joint control of an entity whereby the parties that have joint
control, have rights to the net assets of the said entity. Joint ventures are distinguished from joint
operations which instead are configured as agreements which give the parties of the agreement,
which have joint control of the initiative, the rights to the individual assets and the obligations of the
individual liabilities relative to the agreement. The Group does not currently have any agreements in
place for joint operations.
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
538
The following is a summary of the changes in the scope of consolidation, with reference to the
subsidiaries:
-
the acquisition, on January 3, 2024, of the subsidiary Hevea-Tec Industria E Comércio Ltda.;
-
the liquidation, on March 12, 2024, of the company Pirelli General Executive Pension
Trustees Ltd. and of the company Pirelli Tyres Executive Pension Trustees Ltd.;
-
the liquidation, on May 17, 2024, of the company the Pirelli Trading (Beijing) Co., Ltd.;
-
the incorporation, on August 11, 2024, of the company Pirelli Middle East Limited;
-
the incorporation on October 28, 2024 of the company Pirelli Tyre (Thailand) Ltd.
Furthermore, on May 19, 2024, the company the Middle East and North Africa Tyre Company (Joint
Stock Company) was incorporated and in which Pirelli has subscribed to 25% of the share capital.
The company is included in the attachment “SCOPE OF CONSOLIDATION – List of Investments
Accounted for using the Equity Method”, and is classified as a joint venture.
Information on Subsidiaries
The Consolidated Financial Statements include the assets and liabilities of 86 legal entities. The
significant subsidiaries are listed below:
A complete list of subsidiaries is contained in the attachment, “SCOPE OF CONSOLIDATION – List
of Companies included in Consolidation using the Line-by-Line Method”.
Non-controlling interests in the subsidiaries of the Group are not significant either individually or in
aggregate form.
Headquarters
% Group
% non-controlling interests
% Group
% non-controlling interests
Pirelli Tyre Co. Ltd.
Yanzhou (China)
90.00%
10.00%
90.00%
10.00%
Pirelli Deutschland GmbH
Breuberg/Odenwald (Germany)
100.00%
100.00%
Pirelli Tyre S.p.A.
Milan (Italy)
100.00%
100.00%
Pirelli Industrie Pneumatici S.r.l.
Settimo Torinese (Italy)
100.00%
100.00%
Pirelli International Treasury S.p.A.
Milan (Italy)
100.00%
100.00%
Pirelli Neumaticos S.A. de C.V.
Silao (Mexico)
100.00%
100.00%
Pirelli Pneus Ltda.
Santo Andrè (Brazil)
100.00%
100.00%
Pirelli Comercial de Pneus Brasil Ltda.
Sao Paulo (Brazil)
100.00%
100.00%
Pirelli UK Tyres Ltd.
Burton-on-Trent (United Kingdom)
100.00%
100.00%
Pirelli Tire LLC
Rome (USA)
100.00%
100.00%
Pirelli Neumaticos S.A.I.C.
Buenos Aires (Argentina)
100.00%
100.00%
S.C. Pirelli Tyres Romania S.r.l.
Slatina (Romania)
100.00%
100.00%
12/31/2024
12/31/2023
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
539
Consolidation Standards
For consolidation purposes, the financial statements of the companies included in the Scope of
Consolidation prepared at the reporting date of the Parent Company’s financial statements are used
and are appropriately adjusted to render them compliant with the IAS/IFRS standards, as applied by
the Group.
The financial statements expressed in foreign currencies have been translated into euro by applying
period-end exchange rates for the items in the Statement of Financial Position, and at average
exchange rates for the items of the Income Statement, with the exception of the financial statements
of companies operating in hyperinflationary countries whose Income Statements have been
translated at period-end exchange rates.
Differences arising from the translation of the initial equity at the period-end exchange rates are
recognised in the translation reserve, together with the difference arising from the translation of the
result for the period at the period-end exchange rate compared to at the average exchange rate. The
translation reserve is reversed to the Income Statement at the time of the disposal of the company
which generated the reserve.
The criteria for consolidation can be summarised as follows:
subsidiaries are consolidated using the line-by-line method on the basis of which:
- the assets and liabilities, costs and revenues of the financial ftatements of subsidiaries are
assumed in their entirety, regardless of the percentage of investment held;
- the carrying amount of investments is eliminated against the relevant portion of equity;
- the Statement of Financial Position and Income Statement transactions carried out between
fully consolidated companies, including dividends distributed within the Group and the
unrealised margin on intercompany transactions, are eliminated;
- non-controlling interests are represented in the appropriate items under equity, and similarly,
the portion of gains or losses attributable to non-controlling interests is shown separately in
the Income Statement and in the Statement of Comprehensive Income;
- at the time of disposal of an investee and the consequent loss of control, any goodwill that
can be allocated to the investee is taken into account when determining the capital gains or
capital losses from the disposal;
- in the case of an investment stake acquired subsequent to the acquisition of control, any
difference between the acquisition cost and the corresponding fraction of equity acquired is
recognised in equity. Similarly, the effects deriving from the disposal of non-controlling
interests without the loss of control are recognised in equity.
Pirelli & C. S.p.A. – Annual Report 2024
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investments in associates and joint ventures are accounted for using the equity method, funder
which, the carrying amount of the investments is adjusted to take into account:
-
the investor’s share of the financial results of the investee realised after the acquisition date;
-
the investor’s share of gains and losses are recognised directly in the investee’s equity, in
accordance with the applicable accounting standards;
-
the dividends distributed by the investee;
-
if the Group’s share, if any, of the losses of an associate/joint venture exceeds the carrying
amount of the investment in the financial statements, the carrying amount of the investment
is written down to zero, and the share of any additional losses is recognised under “Provisions
for liabilities and charges”, if and to the extent that the Group is contractually or implicitly
obligated to cover them;
-
the margins resulting from sales carried out by subsidiaries to joint ventures or associates
are eliminated only to the extent of the ownership stake held in the purchasing entity.
3.
ADOPTED ACCOUNTING STANDARDS
Pursuant to Regulation No. 1606 issued by the European Parliament and the European Council in
July 2002, the Consolidated Financial Statements of the Pirelli & C. Group have been prepared in
accordance with IFRS - the International Financial Reporting Standards in force, issued by the
International Accounting Standards Board (“IASB”) and endorsed by the European Union at
December 31, 2024, as well as with the provisions issued in the implementation of Article 9 of
Legislative Decree No. 38/2005. The terms IFRS and IAS refer to the IFRS - International Financial
Reporting Standards and IAS - International Accounting Standards in force, issued by the
International Accounting Standards Board (“IASB”) and endorsed by the European Union at
December 31, 2024, as well as all interpretations of the International Financial Reporting
Interpretations Committee (“IFRIC”), previously known as the Standing Interpretations Committee
(“SIC”).
The Consolidated Financial Statements have been prepared based on the historical cost convention.
The following items have instead been measured at fair value:
-
derivative financial instruments;
-
pension fund assets;
-
other financial assets at fair value through Other Comprehensive Income;
-
other financial assets at fair value through the Income Statement.
Consolidated Financial Statements
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Business Combinations
Business acquisitions are accounted for using the acquisition method.
In the case of acquiring control of a company, goodwill is calculated as the difference between:
-
the fair value of the consideration plus any non-controlling interests in the acquired company
measured at fair value (if this option is chosen for the acquisition in question) or in proportion to
the investment stake held by the non-controlling interest in the net assets of the acquired
company;
-
the fair value of the assets acquired and the liabilities assumed.
In cases where the aforementioned difference is negative, this difference is immediately recognised
in the Income Statement under income.
In the case of acquiring control of a company in which a non-controlling interest was previously held
(acquisition in phases - step acquisition), the previously held investment is measured at fair value,
and the effects of this adjustment is recognised in the Income Statement.
Costs related to Business Combination transactions are recognised in the Income Statement.
Contingent considerations, that is, the buyer’s obligations to transfer additional assets or shares to
the seller if certain future events occur or specific conditions are met, are recognised at fair value at
the acquisition date as part of the consideration transferred in exchange for the acquisition itself. Any
subsequent changes in the fair value of such agreements are recognised in the Income Statement.
Intangible assets
Intangible assets refer to assets without an identifiable physical form, which are controlled by the
Group and are capable of producing future economic benefits.
Intangible assets with a finite useful life are measured at cost, net of any accumulated amortisation
and impairment losses, and include costs for services provided by third parties.
Amortisation is calculated on a straight-line basis and begins when the asset becomes available for
use or is capable of operating as intended by management, and ceases on the date when the asset
is classified as held for sale or is de-recognised from the accounts.
Capital gains and capital losses arising from the divestment, disposal or retirement of an intangible
asset are determined as the difference between the net proceeds from disposal and the carrying
amount of the asset.
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542
Goodwill
Goodwill is an intangible asset with an indefinite useful life and is therefore not subject to
amortisation. Goodwill is subject to an evaluation aimed at identifying any impairment, at least
annually or whenever there are indicators of impairment.
Trademarks and Licenses
Trademarks and licenses for which the conditions for classification as intangible assets with an
indefinite useful life have not been met, are measured at cost, net of amortisation and net of any
accumulated impairment. This cost is amortised for whichever period is shorter between, the
contractual duration and the useful life of the asset. Instead, the trademarks for which the conditions
for classification as intangible assets with an indefinite useful life have been met, are not
systematically amortised, and are subjected to an impairment test at least once a year.
Software
Software license costs, including incidental expenses, are capitalised and recorded in the financial
statements net of amortisation and net of any accumulated impairment. Software is amortised on
the basis of its useful life.
Software as a service (“SaaS”), for which the Group does not control the underlying software, but
only holds the right to access the software on a third-party cloud infrastructure, is not capitalised.
Customer Relationships
Customer relationships mainly refer to intangible assets acquired during Business Combinations,
and are recognised in the financial statements at their fair value at the acquisition date, and
amortised on the basis of their useful life.
Technology
The value of Technology refers mainly to product, process and product development technology
acquired during Business Combinations. It is recognised in the financial statements at fair value at
the date of acquisition, and is amortised on the basis of its useful life.
Consolidated Financial Statements
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Research and Development Expenses
Research costs refer to product innovation, innovation in production processes and research into
new materials. These are expensed as they are incurred. There were no product development costs
that satisfied the requisites for capitalisation as provided for by IAS 38.
Owned Tangible Assets
Property, plant and equipment are recognised at their acquisition cost or production cost, including
any directly attributable incidental expenses.
Any costs incurred subsequent to the acquisition of assets and the cost for replacing certain parts of
the assets recognised in this category, are capitalised only if they increase the future financial
benefits inherent in the asset to which they relate. All other costs are recognised in the Income
Statement as they are incurred. When the replacement cost of certain parts of assets is capitalised,
the residual value of the replaced parts is recognised in the Income Statement.
Property, plant and equipment are measured at cost, net of depreciation and net of any accumulated
impairment, except for land which is not depreciated but is valued at cost net of any accumulated
impairment.
Depreciation is accounted for starting from the month in which the asset is available for use, or is
potentially capable of providing the financial benefits associated with it.
Depreciation is recognised on a monthly basis using the straight-line method at rates that allow
assets to be depreciated until the end of their useful life or, in the case of disposals, until the final
month of use.
Depreciation rates were as follows:
The Group annually revises the expected useful life of property, plant and equipment.
Leasehold improvements are classified as tangible assets, consistent with the nature of the cost
incurred. The depreciation period corresponds to whichever is shorter between the remaining useful
life of the tangible asset and the remaining duration of the lease contract.
Buildings
3% - 10%
Plants
7% - 20%
Machinery
5% - 20%
Equipment
10% - 33%
Office equipment
25% - 50%
Furniture
10% - 33%
Motor vehicles
10% - 25%
Pirelli & C. S.p.A. – Annual Report 2024
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Spare parts of significant value are capitalised and depreciated based on the useful life of the asset
to which they relate.
Any decommissioning costs are estimated and added to the tangible assets, with a corresponding
entry to a provision for liabilities and charges, if the requirements for the creation of a provision for
liabilities and charges are met. They are then depreciated for the duration of the remaining useful
life of the respective asset.
Property, plant and equipment are de-recognised from the Statement of Financial Position at the
time of their disposal or their permanent withdrawal from use and as a consequence, no future
financial benefits are expected to be derived from their disposal or use.
Capital gains or capital losses arising from the divestment or disposal of property, plant and
equipment are determined as the difference between the net proceeds from disposal, and the
carrying amount of the asset.
Property, plant and equipment under construction are recognised at cost, net of any impairment.
When property, plant and equipment under construction is ready for use, it is reclassified to the
relevant category, and begins to be depreciated based of the useful lives of the Group.
Right of Use
At the date when the assets subject to the lease contract become available for use by the Group,
lease contracts are recognised as right-of-use assets in non-current assets, with a corresponding
entry for the financial liability.
The cost of lease payments is split into its financial expense component which is recognised in the
Income Statement for the duration of the contract and the duration of the capital repayment period,
which is recorded as a reduction of the financial liability.
The right of use is depreciated on a monthly basis using the straight-line method, for whichever
period is shorter, between the useful life of the asset and the duration of the contract.
Right of use and financial liabilities are initially measured at the present value of future payments.
The present value of the financial liabilities for lease contracts includes the following payments:
-
fixed payments;
-
variable payments based on an index or rate;
-
the exercise price of a redemption option, if the exercise of the option is considered
reasonably certain;
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
545
-
the payment of penalties for terminating the contract, if the exercise of the option is
considered reasonably certain;
-
optional payments subsequent to the non-cancellable period, if the extension of the contract
beyond the non-cancellable period is considered reasonably certain.
Future payments are discounted using the incremental borrowing rate. This rate consists of the
risk-free rate of the country in which the contract is negotiated and is based on the duration of the
contract. It is then adjusted according to the Group’s credit spread and the local credit spread.
The right is use is measured at cost, and is composed of the following elements:
-
the initial amount of the financial liability;
-
the payments made before the start of the contract net of the lease incentives received;
-
the directly attributable incidental expenses;
-
the estimated costs for dismantling or restoration.
The lease payments associated with the following types of lease contracts are recognised in the
Income Statement on a straight-line basis over the duration of the respective contracts:
-
contracts with a duration of less than twelve months for all asset classes;
-
contracts for which the underlying asset is configured as a low-value asset, that is, the unit
value of the underlying assets is not greater than euro 8 thousand when new;
-
contracts where the payment for the right of use of the underlying asset varies due to
changes in the facts or circumstances (not linked to an index or a rate), that were not
foreseeable at the start date.
Low-value contracts are mainly related to the following categories of goods:
-
computers, telephones and tablets;
-
office and multi-function printers;
-
other electronic devices.
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Impairment of Assets
Property, Plant and Equipment, Intangible Assets and Right of Use
In the presence of specific indicators of impairment, and at least on an annual basis, intangible
assets with an indefinite useful life, including goodwill, property, plant and equipment, intangible
assets and right of use are subject to an impairment test.
The test involves estimating the recoverable amount of the asset and comparing it with its carrying
amount.
The recoverable amount of an asset corresponds to the higher amount between the fair value less
the costs of sale, and the value in use.
It is not necessary to estimate both value configurations as, to verify the absence of impairment of
the asset, it is sufficient for one of the two value configurations to exceed the carrying amount.
The value in use for property plant and equipment and intangible assets, is the present value of the
estimated future financial flows generated by the use of the asset and those arising from its disposal
at the end of its useful life, net of taxes and the application of a discount rate which reflects the
current market assessment of the time-value of money and the specific risks of the asset.
For the right of use, the value in use is the present value of the estimated future financial flows
originating from the right of use asset for the duration of the lease contract, and those outflows for
the replacement of the right of use asset at the end of the lease term (for example, the acquisition
cost of an asset to replace the one that is leased).
If the recoverable amount of an asset is lower than its carrying amount, the carrying amount is
reduced and adjusted to the recoverable amount. This reduction in value constitutes an impairment
loss which is recognised in the Income Statement.
For the purpose of assessing impairment losses, assets are aggregated at the lowest level at which
independent cash flows can be separately identified (cash generating unit).
With specific reference to goodwill, for the purpose of the impairment test, the allocation is made at
the Group level of the “Consumer Activities” CGU. The latter represents the minimum level at which
goodwill is monitored for internal management control purposes.
In the presence of indications that an impairment loss recognised in previous years relating to
tangible or intangible assets other than goodwill or the right of use may no longer exist or may have
decreased, the recoverable amount of the asset is re-estimated, and if it results as exceeding the
carrying amount, the carrying amount is increased up to the recoverable amount.
The reversal of an impairment cannot exceed the carrying amount that would have been determined
(net of depreciation and amortisation) had no impairment loss been recognised in previous financial
years.
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
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The reversal of the impairment of an asset other than goodwill is recognised in the Income
Statement.
An impairment loss recognised for goodwill cannot be reversed in subsequent periods.
An impairment loss recognised in an interim (half-yearly) financial statement for goodwill cannot be
reversed in the Income Statement in the following financial year.
Investments in Associates and Joint Ventures
Subsequent to the application of the equity method, in the presence of indicators of impairment, the
value of investments in associates and joint ventures must be compared with the recoverable amount
(the impairment test). The recoverable amount corresponds to the higher amount between the fair
value minus the selling costs, and the value in use.
For the purpose of the impairment test, the fair value of an investment in an associate or joint venture
with shares listed on an active market is always equal to its market value. In the case of investments
in unlisted companies, the fair value is determined based on estimates using the best available
information.
For the purposes of determining the value in use of an associate or joint venture, the estimate for
future net operating cash flows is discounted, net of the net financial position of the company in
question, at the date of the estimate (the so-called Discounted Cash Flow - Asset Side method).
In the presence of indications that an impairment loss recognised in previous years may no longer
exist or may have decreased, the recoverable amount of the investment is re-estimated and, if it
exceeds the carrying amount of the investment, the latter is increased up to the recoverable amount.
The reversal of impairment cannot exceed the carrying amount of the investment that would have
been determined (net of impairment) had no impairment loss been recognised in previous years.
The reversal of impairment for investments in associates and joint ventures is recognised in the
Income Statement.
Other Financial Assets at Fair Value through Other Comprehensive Income (FVOCI)
This category includes the equity instruments for which the Group, at initial recognition, has
exercised the irrevocable option to present gains and losses arising from changes in their fair value
in equity (FVOCI), as these are financial assets that do not belong to the Group’s core business.
They are classified as non-current assets under the item “Other financial assets at fair value through
Other Comprehensive Income”.
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They are initially recognised at fair value, including transaction costs directly attributable to the
acquisition.
They are subsequently measured at their fair value, and any gains and losses arising from any
changes in their fair value are recognised in a specific equity reserve. This reserve is not reclassified
to the Income Statement. In the event of the disposal of the financial asset, the amount suspended
in equity is reclassified to retained earnings.
Dividends arising from such financial assets are recognised in the Income Statement when the right
to receive payment arises.
Other Financial Assets at Fair Value through the Income Statement (FVPL)
The items which fall within this assessment category are:
equity instruments for which the Group - at the time of initial recognition - has not exercised
the irrevocable option to present the gains and losses arising from changes in their fair value
in equity. These are classified as non-current assets under the item “Other financial assets
at fair value through the Income Statement”;
debt instruments, for which the Group’s asset management business model provides that the
sale of the debt instruments and the cash flows associated with the financial asset, represent
the payment of the outstanding principal. These are classified as current assets under the
item “Other financial assets at fair value through the Income Statement”;
debt instruments for which the fair value option has been exercised to eliminate an
accounting mismatch;
derivative instruments, except those designated as hedging instruments;
These are initially recognised at fair value. Transaction costs directly attributable to the acquisition
are recognised in the Income Statement.
They are subsequently measured at fair value, and any gains or losses arising from any changes in
their fair value are recognised in the Income Statement.
Inventories
Warehouse inventories are valued at whichever is lower, between their cost and their presumed
realisable value.
Consolidated Financial Statements
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The cost is calculated using the FIFO method, and in the case of finished and semi-finished products,
in addition to the costs of materials, the direct costs of labour as well as indirect costs, are also
included.
The cost of inventories also includes the transfer from Other Comprehensive Income, of the gains
and losses arising from qualified cash flow hedging transactions related to the purchase of raw
materials, typically natural rubber.
The cost is increased by incremental expenses, in the same way as described for property, plant
and equipment.
The realisable value represents the estimated selling price, net of all estimated costs to complete
the asset and the costs of selling and distribution that will be incurred.
Provisions for the impairment of inventories are calculated for items considered to be obsolete or
slow-moving, taking into account their estimated future use and their realisable value.
Receivables
Receivables are initially recognised at their fair value, which is normally represented by the agreed
consideration or the present value of the amount to be collected. They are subsequently measured
at amortised cost, which is reduced in the event of impairment losses. The amortised cost is
calculated by using the effective interest rate method, which is equivalent to the discount rate which,
when applied to the future cash flows, results in the present carrying amount of those cash flows
being equal to the initial fair value. Receivables denominated in a currency other than the functional
currency of the individual entities, are adjusted to the period-end exchange rates with the
corresponding entry in the Income Statement.
Receivables are de-recognised when the right to receive cash flows is extinguished, when all the
risks and benefits associated with the holding of the receivable have been substantially transferred,
or in cases where the receivable is considered definitively irrecoverable after all necessary recovery
procedures have been completed.
Impairment of Receivables
For trade receivables, the Group applies a simplified approach, which calculates the expected credit
losses over the life of the receivables from the moment of initial recognition. The Group uses a matrix
based on historical experience, linked to the ageing of the receivables themselves and the credit
rating of the customers, adjusted to take into account forecast factors specific to certain creditors.
Trade receivables are grouped on the basis of similar risk characteristics. The grouping is based on
the original due date of the receivable and the creditworthiness of the customers as assigned by
independent market operators. For financial receivables, the impairment calculation is made with
Pirelli & C. S.p.A. – Annual Report 2024
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550
reference to the expected credit losses over the next twelve months. This calculation is based on a
matrix that includes the credit rating of customers provided by independent market operators. In the
case of a significant increase in credit risk subsequent to the origination date of the receivable, the
expected loss is calculated over the entire life of the receivable. The Group assumes that the credit
risk of a financial instrument has not increased significantly after its initial recognition, if it is
determined that the financial instrument has a low credit risk at the reporting date of the Financial
Statements. The Group assesses whether there has been a significant increase in credit risk when
the customer’s rating, assigned by independent market operators, changes in a way that indicates
an increase in the probability of default. The Group considers a financial asset to be in default when
internal or external information indicates that it is unlikely the Group will receive the full contractual
amount that is past due (for example, when receivables have been referred to the legal department).
Payables
Payables are initially recorded at their fair value, which is normally represented by the agreed
consideration or the present value of the amount to be paid. They are subsequently measured at the
amortised cost. Amortised cost is calculated by using the effective interest rate method, which is
equivalent to the discount rate that, when applied to the future cash flows, results in the present
carrying amount of those cash flows which is equal to the initial fair value. Payables, denominated
in a currency other than the functional currency of the individual entities are adjusted to the exchange
rates at the period-end, with the corresponding entry in the Income Statement.
Payables are de-recognised from financial statements when the specific contractual obligation is
extinguished. In the event of a change in a financial liability that does not result in its cancellation,
the gain or loss resulting from the change is calculated by discounting the change in the contractual
cash flows using the original effective interest rate and is immediately recognised in the Income
Statement.
The fair value of the debt component of a convertible bond is equal to the fair value of a liability
issued under substantially equivalent market terms, without the right of conversion. This component
is subsequently measured at amortised cost until extinguished at the time of conversion or until the
maturity of the bonds. The remaining portion, up to the value equal to the amount collected, is
recognised as a component of equity. Issuance costs are allocated proportionally to the debt
component and to the equity component.
Cash and Cash Equivalents
Cash and cash equivalents include bank deposits, postal deposits, cash and valuables on hand, and
other forms of short-term investments with an original maturity of three months or less, which are
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
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readily convertible into a given amount of cash and subject to an insignificant risk of changes in
value. Overdrafts are classified as financial payables under current liabilities.
The items included in cash and cash equivalents are measured at their fair value, and any related
changes are recognised in the Income Statement.
For the purposes of their representation in the Consolidated Statement of Cash Flow, cash and cash
equivalents are represented by the liquid assets as previously defined, net of current account
overdrafts.
Contingent Assets
Any contingent assets, which arise from past events and whose realisation depends on the
occurrence or non-occurrence of unforeseeable future events, are not recognised in the financial
statements unless the realisation of revenue is virtually certain.
Contingent Liabilities
Contingent liabilities, that is, contingent or present obligations that are not probable or cannot be
reliably measured, are not recognised in the financial statements but are given disclosure, unless
the possibility of an outflow of economic resources is remote.
Provisions for Liabilities and Charges
The provisions for liabilities and charges include the provisions for present obligations (legal or
implicit) arising from a past event, for the settlement of which it is probable that the use of resources
will be required, the amount of which can be reliably estimated. Changes in estimates are recognised
in the Income Statement for the financial year in which the change occurred. If the effect of
discounting is significant, provisions are stated at their present value. A provision for restructuring is
only recognised if, in addition to meeting the requisite conditions for the accrual of provisions for
liabilities and charges, there is a detailed formal plan for the restructuring, and the third parties
involved have a valid expectation that the restructuring will take place.
Employee Benefits
Employee benefits paid after the termination of the employment relationship, of the defined benefit
plan type (defined benefit plans) and other long-term benefits (other long-term benefits) are subject
to actuarial valuations. The liability recognised in the financial statements represents the present
value of the Group’s obligation, net of the fair value of any plan assets. For defined benefit plans,
Pirelli & C. S.p.A. – Annual Report 2024
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552
the actuarial gains and losses arising from adjustments based on past experience and from any
changes in the actuarial assumptions, are recognised in full under Other Comprehensive Income.
For other long-term benefits, actuarial gains and losses are recognised immediately in the Income
Statement.
The provision for employees’ leaving indemnities (TFR) of Italian companies with at least 50
employees is considered a defined benefit plan solely for the amounts accrued before January 1,
2007 (and not yet settled at the reporting date), while amounts accrued after that date qualify under
the defined benefit plan.
The net interest calculated on the net liability is classified under financial expenses.
Costs relative to the defined contribution plans are recognised in the Income Statement when
incurred.
In the event that the plan assets of defined benefits exceed the liabilities, the asset is recognised to
the extent that the economic benefit, in the form of a refund or a reduction of future contributions and
is available to the Group under the regulations of the plan itself and pursuant to the provisions in
force in the jurisdiction where the plan operates.
This refund is considered available to the Group, if the Group has an unconditional right to the
reimbursement in any of the following circumstances:
during the life of the plan, without assuming that the plan’s liabilities must be settled in order
to obtain the refund (for example, in some jurisdictions, the entity may may be entitled to a
refund during the life of the plan, regardless of whether the plan’s liabilities are settled);
assuming the gradual settlement of the plan’s liabilities over time until all members have left
the plan; or
assuming the full settlement of the plan’s liabilities in a single event (for example, the
liquidation/closure of the plan).
In the case of the purchase of qualifying insurance policies through the use of plan assets, any
additional contributions required by the insurance company are recognised under Other
Comprehensive Income.
Insurance policies are recognised in the financial statements as plan assets and are measured on
the same basis as the liabilities to which they relate.
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Derivative Financial Instruments designated as Hedging Instruments
In accordance with the provisions of IFRS 9, derivative financial instruments are accounted for in
accordance with the methods established for hedge accounting only when:
-
the hedged items and the hedging instruments meet the eligibility criteria;
-
at the inception of the hedging relationship, there is the formal designation and
documentation of the hedging relationship, of the Group’s risk management objectives, and
of the strategy for undertaking the hedge cover;
-
the hedging relationship meets all the following effectiveness requirements:
o there is a financial relationship between the hedged item and the hedging instrument;
o the effect of credit risk is not dominant in relation to the changes associated with the
risk being hedged;
o the hedge ratio defined in the hedging relationship is adhered to, including through
rebalancing actions, and is consistent with the risk management strategy adopted by
the Group.
These derivative instruments are measured at fair value.
The following accounting treatments are applied on the basis of the type of coverage:
-
Fair value hedge - if a derivative financial instrument is designated as a hedge against exposure
to any changes in the fair value of an asset or liability attributable to a specific risk, the gain or
loss arising from any subsequent changes in the fair value of the hedging instrument is
recognised in the Income Statement. The gain or loss on the hedged item, for the portion
attributable to the hedged risk, adjusts the carrying amount of the asset or liability (basis
adjustment) and is also recognised in the Income Statement.
-
Cash flow hedge - if a derivative financial instrument is designated as a hedge against exposure
to the variability in the cash flows of an asset or liability recognised in the financial statements or
against a highly probable future transaction, the effective portion of the change in the fair value
of the hedging derivative is recognised directly under Other Comprehensive Income, while the
ineffective portion is immediately recognised in the Income Statement. The amounts recognised
directly under Other Comprehensive Income are reclassified to the Income Statement for the
financial year in which the hedged item produces an effect on the Income Statement. If the hedge
of a highly probable future transaction subsequently results in the recognition of a non-financial
asset or liability, the amounts that are suspended under Other Comprehensive Income are
included in the initial carrying amount of the non-financial asset or liability.
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554
When future transactions are hedged by forward contracts, the Group may designate to hedge
accounting:
-
the full fair value (including forward points): the effective portion of changes in the fair
value of the entire derivative instrument is recognised under Other Comprehensive
Income (cash flow hedge reserve);
-
the spot component only (excluding the forward points): the effective portion of the
changes in the fair value of the single spot component, is recognised under Other
Comprehensive Income in the cash flow hedge reserve, while change in the forward
points related to the hedged item is recorded in the cost of hedging reserve, always under
Other Comprehensive Income.
When a hedging instrument reaches maturity or is disposed of, terminated early, exercised, or no
longer meets the conditions to be designated as a hedging instrument, hedge accounting is
discontinued. The fair value adjustments accumulated under Other Comprehensive Income (both in
the cash flow hedge reserve and the cost of hedging reserve), remain suspended under Other
Comprehensive Income until the hedged item produces an effect on the Income Statement. They
are subsequently reclassified to the Income Statement, for the financial years during which the
acquired asset or the assumed liability produces an effect on the Income Statement. If it is expected
that the hedged item will not generate any effect on the Income Statement, the fair value adjustments
accumulated under Other Comprehensive Income (both in the cash flow hedge reserve and in the
cost of hedging reserve) are immediately recognised in the Income Statement. For the derivative
instruments that do not satisfy the requisites provided for by IFRS 9 for the adoption of hedge
accounting, reference should be made to the paragraph “Financial assets at fair value through the
Income Statement”. The purchases and sales of derivative financial instruments are recognised at
the settlement date.
The hedges of net investments in foreign assets (net investment hedges) are accounted for in a
manner similar to cash flow hedges.
Gains or losses on the hedging instrument related to the effective portion of the hedge are recognised
in Other Comprehensive Income, while those related to the ineffective portion are immediately
recognised in the Income Statement.
Gains and losses accumulated under Other Comprehensive Income are reclassified to the Income
Statement when the foreign operation is disposed either partially or entirely.
Consolidated Financial Statements
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Determination of the Fair Value of Financial Instruments
Financial instruments measured at fair value are classified on the basis of the hierarchy of levels
provided for by IFRS 13, which reflects the significance of the inputs used in determining the fair
value. The levels are defined as follows:
-
level 1 – unadjusted quoted prices in active markets for the assets or liabilities being valued;
-
level 2 – inputs other than the quoted prices referred to in the previous point, which are
observable on the market either directly (such as prices), or indirectly (that is, derived from
prices);
-
level 3 - inputs that are not based on observable market data.
The fair value of financial instruments traded in active markets is based on the published price
quotations at the reporting date of the Financial Statements. The market prices used for financial
assets are the bid prices, while for financial liabilities, they are the ask prices.
The fair value of financial instruments that are not traded in active markets is determined by using
valuation techniques that maximise the use of available observable market data, using valuation
techniques that are widely used in the financial industry:
-
market prices for similar instruments;
-
the fair value of interest rate swaps is calculated by discounting estimated future cash flows
based on observable yield curves;
-
the fair value of foreign exchange derivatives (forward contracts) is determined by using the
forward exchange rate at the reporting date of the Financial Statements;
-
the fair value of foreign exchange derivatives (average rate forward) is determined based on the
difference between the agreed forward price and the average spot rate for the reporting period;
-
the fair value of cross currency interest rate swaps is calculated by discounting the estimated
future cash flows based on observable yield curves and converting them into euro using the
exchange rate at the reporting date of the Financial Statements;
-
the fair value of natural rubber futures is determined using the closing price of the contract at the
reporting date of the Financial Statements;
-
the fair value of the unlisted equity securities classified in Level 3 of the fair value hierarchy is
mainly determined on the basis of data from the most recent available financial statements.
Pirelli & C. S.p.A. – Annual Report 2024
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Income Taxes
Current taxes are determined on the basis of a realistic forecast of the liabilities to be settled in
accordance with the applicable tax regulations of the country.
The Group periodically reviews the choices made in the determination of taxes in situations where
the applicable tax legislation is subject to interpretation, and, where appropriate, adjusts its exposure
to the tax authority based on the taxes it expects to pay. Any interest and penalties accrued on these
taxes are recognised under Income tax in the Income Statement.
Deferred taxes are determined on the basis of the temporary differences existing between the
carrying amounts of assets and liabilities in the financial statements and their tax base (global
allocation method), and are classified under non-current assets and liabilities.
Deferred tax assets on tax losses carried forward, as well as on temporary differences, are only
recognised when there is a likelihood of future recovery.
Current and deferred tax assets and liabilities are offset when income taxes are levied by the same
tax authority and when there is a legal right to offset. Deferred tax assets and liabilities are
determined using the tax rates that are expected to apply in the respective jurisdictions where the
Group operates, for the financial years during which the temporary differences are expected to be
realised or settled.
With regard to taxable temporary differences associated with investments in subsidiaries,
associates, and joint ventures, the related deferred tax liability is not recognised if the investing entity
is able to control the reversal of the temporary differences and it is probable that such a reversal will
not occur in the foreseeable future.
Deferred taxes are not discounted.
Deferred tax assets and liabilities are credited or debited to Other Comprehensive Income if they
relate to items that are credited or debited directly to Other Comprehensive Income during the current
or previous financial years.
Indirect Taxes
Costs, revenues, assets, and liabilities are recognised net of indirect taxes, such as value-added tax
(IVA), with the following exceptions:
the tax is non-deductible: in which case, it is recognised as part of the acquisition cost of the
asset or as part of the cost recorded in the Income Statement;
trade receivables and trade payables, which include the applicable indirect tax.
Consolidated Financial Statements
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The net amount of indirect taxes that are recoverable or payable is recognised under other
receivables or other payables, respectively.
International Tax Reform – Pillar Two Model
The Organisation for Economic Co-operation and Development (OECD) published the new tax rules
(known as “GloBe rules”) of European origin for the Pillar Two model in December 2021 to implement
the Global Minimum Tax. These rules aim to ensure that large multinational companies are subject
to a minimum tax rate of 15%. The Pillar Two rules have been adopted by several jurisdictions where
the Group operates and are applicable from January 1, 2024.
With reference to the Pillar Two regulations, please note that calculation of the related taxes for the
financial statements as of December 31, 2024, was made considering that Pirelli & C. S.p.A. is the
Ultimate Parent Entity (UPE) following the loss of control of MPI Italy (and, as a result, that of
Sinochem) over Pirelli pursuant to IFRS No. 10 following the issuance of the Golden Power Decree
on June 16, 2023 - as reported in Note 1 - General Information.
Given the novelty and complexity underlying the determination of the effective tax level, the Pillar
Two legislation provides, for the first three effective periods (the so-called transitional regime valid
for periods starting before December 31, 2026, and ending no later than June 30, 2028), the
possibility of applying a simplified regime (the so-called transitional safe harbour tests, also known
as “Transitional Safe Harbours” - “TSHs”), mainly based on available accounting information for each
relevant jurisdiction. If at least one of the three tests is passed, it results in the reduction of
compliance burdens and the elimination of Pillar Two taxes.
The Group has decided to opt for these TSHs and, based on the 2024 data sent by the individual
subsidiaries for consolidation purposes, at least one of the related tests (i.e., de minimis test,
simplified ETR test, and routine profit test) has been passed; therefore, for the 2024 financial year,
no material exposure to this additional tax is due by the Group.
Regarding the accounting of deferred taxes arising from the aforementioned new tax rules, the Group
as of December 31, 2024, makes use of the temporary exception provided by IAS 12.
Equity
Treasury Shares
Treasury shares are classified as a reduction to equity.
In the event of sale, re-issue or cancellation, the resulting gains or losses are recognised under
equity.
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Costs of Capital Transactions
Costs that are directly attributable to the capital transactions of the Parent Company are recognised
as a reduction to equity.
Share Based Payments (Cash Settled)
The additional monetary benefits (cash-settled) granted to certain executives of the Group are
recognised under Provisions for employee benefit obligations with a corresponding entry in
“Personnel expenses”. The cost is estimated at fair value and is recognised over the duration of the
plan in accordance to the extent to which the vesting conditions have been met at the reporting date
of the Financial Statements. The estimate is reviewed at each reporting date until the settlement
date.
Revenue Recognition
Revenue is recognised to the amount that reflects the consideration the Group believes it is entitled
to in exchange for the transfer of goods and/or services to customers. The variable considerations
that the Group expects to grant to direct or indirect customers are recognised as a reduction of
revenue.
The Group generally acts as the principal for most for most of the agreements that generate
revenues. However, there are contracts with customers in which the Group acts as an agent and
these revenues are recognised net of costs incurred under the commercial agreements.
Product Sales
Revenues from product sales are recognised when the performance obligations towards customers
have been satisfied. Performance obligations are satisfied when control of the goods is transferred
to the customer, which generally occurs when the goods are delivered to the customer.
If the products are ready to be delivered, but delivery is postponed to a future date, sales revenues
is recognised only if control of the products has been transferred to the customer. Control is
considered to be transferred to the customer when the following conditions are met:
the reasons for delivering at a future date are real (for example: the customer has requested
delivery at a future date in writing);
the products in the warehouse are separately identified as being owned by the customer;
the products are ready for physical delivery to the customer;
Consolidated Financial Statements
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the Group does not have the ability to use the product or deliver it to other customers.
Retrospective discounts apply to product sales based on the achievement of targets defined within
commercial agreements. Revenues from sales are recognised net of these discounts, which are
estimated based on historical experience using the expected value method and net of amounts that
are not expected to be reversed. They are also recognised net of products returned and received.
These sales do not include a financing component, as the average payment terms applied to
customers fall within the standard commercial terms for the relevant country. It should be noted that
customers are not offered additional guarantees beyond those generally recognised by market
standards.
Provision of Services
Revenues from services rendered are recognised when the rendered service has been completed,
or based on the stage of completion of the service, at the reporting date.
Royalties
Royalties are recognised over time in accordance with the terms of the relevant agreement, which
provides the customer with the right to access intellectual property. The amounts for royalties is
estimated using the output method, and the royalties invoiced in each period are directly correlated
to the value transferred to the customer.
Financial Income and Expenses
Financial income and expenses are recognised on an accrual basis.
Dividends
Dividends are recognised when the right to receive payment arises, which typically corresponds to
a resolution of the Shareholders’ Meeting to distribute dividends.
Government Grants
Government grants are recognised on an accrual basis in relation to the costs incurred when a formal
resolution approving the grant exists, and when entitlement to the grant is assured, meaning it is
Pirelli & C. S.p.A. – Annual Report 2024
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reasonably certain that the Group will comply with the conditions for obtaining it and that the grant
will be received.
Capital grants are recognised as deferred income under “other payables” and classified as current
or non-current depending on whether they relate to the short-term or long-term portion of the grant
respectively. Deferred income is subsequently recognised in the Income Statement under “other
income” on a straight-line basis over the useful life of the asset to which the grant relates.
Operating grants are recognised in the Income Statement under “other income” except for support
schemes intended to offset specific costs (e.g., grants to mitigate energy costs), which are
recognised as a deduction to the related expense.
Earnings/(Losses) per Share
Earnings/(loss) per share - basic: basic earnings/(losses) per share is calculated by dividing the net
income/(loss) of the Group by the weighted average number of ordinary shares outstanding during
the financial year, excluding treasury shares.
Earnings/(loss) per share - diluted: diluted earnings/(losses) per share is calculated by dividing the
net income/(loss) of the Group by the weighted average number of ordinary shares outstanding
during the financial year, excluding treasury shares. For the purpose of calculating diluted
earnings/(loss) per share, the weighted average number of shares outstanding is adjusted by
assuming the exercise by all assignees of the rights that could potentially have a dilutive effect, while
the Group’s net income/(loss) is adjusted to account for any effects, net of tax, arising from the
exercise of such rights.
Operating Segments
The operating segment is a part of the Group that engages in business activities that generate
revenues and costs, whose operating results are periodically reviewed by the Chief Executive
Officer, in his role as Chief Operating Decision Maker (CODM), for the purposes of taking decisions
on the allocation of resources to the segment, and the evaluation of the results, and for which
financial information is made available.
The Group’s activities are identifiable in a single operating “Consumer Activities” segment.
Transactions in Foreign Currency
Transactions in a foreign currency are recorded at the prevailing exchange rate on the date of the
transaction. Monetary assets and liabilities in foreign currencies are translated at the prevailing
exchange rates at the reporting date. Exchange rate differences arising from the settlement of
Consolidated Financial Statements
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monetary items or their conversion at rates different from those at which they were initially
recognised during the financial year or at the end of the previous financial year, are recognised in
the Income Statement.
If the conditions for the designation of intercompany monetary items such as “Net Investment in
Foreign Operations” are met, the differences from foreign currency translation, starting from the date
of the designation, are recognised directly in the Consolidated Statement of Comprehensive Income.
Accounting Standards for Hyperinflationary Countries
Companies, operating in countries where the cumulative inflation rate over a three-year period
approximates or exceeds 100%, adopt hyperinflation accounting and discontinue it in the event that
the cumulative inflation rate over a three-year period falls below 100%.
Group companies operating in hyperinflationary economies restate the values of non-monetary
assets and liabilities in their original financial statements to eliminate the distortive effects of the loss
of purchasing power of the currency, with a corresponding entry recognised under financial
income/(expenses).
The inflation rate used for inflation accounting purposes corresponds to the consumer price index.
Gains or losses on the net monetary position are recognised in the Income Statement.
The financial statements of Group companies operating in hyperinflationary countries and prepared
in a currency other than the euro are translated into euros by applying the period-end exchange
rates to the items of both the Statement of Financial Position and the Income Statement.
During the course of the third quarter of 2018, Argentina’s cumulative three-year inflation rate
exceeded 100% This, together with other economic characteristics of the country, led the Group to
adopt, starting from July 1, 2018, the accounting standard IAS 29 - Financial Reporting in
Hyperinflationary Economies for the Argentine subsidiary, Pirelli Neumaticos S.A.I.C. The same
accounting standard has been applied, starting from December 15, 2022, to the newly established
Argentine subsidiary Latam Servicios Industriales S.A.
During the course of the second quarter of 2022, Turkey’s cumulative three-year inflation rate also
exceeded 100%. This, together with other economic characteristics of the country, led the Group to
adopt, starting from June 30, 2022, the accounting standard IAS 29 - Financial Reporting in
Hyperinflationary Economies for the Turkish subsidiaries Pirelli Otomobil Lastikleri A.S. and Pirelli
Lastikleri Dis Ticaret A.S.
Pirelli & C. S.p.A. – Annual Report 2024
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562
Environmental Certificates and Contracts for the Supply of Energy
In some European countries, the Group receives greenhouse gas emission allowances free of
charge, consistent with the provisions of the European Emission Trading Schemes. These rights are
allocated annually and must be delivered to the relevant national authority based on the actual
emissions produced in each country.
If the freely allocated allowances are insufficient to cover the actual emissions produced in the
country, the Group purchases the necessary additional allowances, which are recognised at cost
under deferred assets.
Costs related to greenhouse gas emissions are recognised on an accrual basis, in proportion to the
emissions produced in the relevant country during the financial year, and are recognised under other
costs with a corresponding entry for a provision for liabilities and charges.
Prepaid expenses (deferred assets) corresponding to the purchased certificates are eliminated with
a corresponding entry for a reduction to the provision for liabilities and charges, when the certificates
are delivered to the competent authority.
The Group also purchases renewable electrical energy certificates of differing types depending on
the regulations applicable in the country of consumption, (for example, Guarantees of Origin – GO
in the European Union, Renewable Energy Certificates – REC in the United States, Renewable
Energy Guarantee of Origin - REGO in the United Kingdom, International Renewable Energy
Certificates - IREC in the remaining countries where Pirelli operates), which are instruments that
certify the renewable origin of the electrical energy sources, in order to offset the electricity
consumption of the Group’s companies. The related cost is recognised under other costs.
With reference to electrical energy supply contracts, the Group has the option to fix the purchase
price for predefined periods (monthly, quarterly, annually) through the stipulation of Power Purchase
Agreements (PPAs. For these contracts, an analysis is conducted to determine whether they fall
within the scope of IFRS 16 - Leases or IFRS 9 - Financial Instruments. Since the purpose of these
contracts is to meet the Company’s own energy purchase requirements, they do not fall within the
scope of IFRS 9, as the Company benefits from the “own use exemption”. The cost of purchasing
energy is recognised in the Income Statement on an accrual basis, including the cost of energy origin
certification for the energy purchased.
Consolidated Financial Statements
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3.1
Approved Accounting Standards and Interpretations in Force as of January 1, 2024
Pursuant to IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”, the IFRS
standards that became effective as of January 1, 2024, are listed below:
Amendments to IAS 1 - Presentation of Financial Statements - Classification of Liabilities as
Current or Non-current.
The amendments clarify the criteria to be applied for classifying liabilities as current or non-
current and specify that the classification of a liability is not influenced by the likelihood that the
settlement of the liability will be postponed for twelve months following the financial year in
question. The Group’s intention to liquidate the liability in the short-term, had no impact on their
classification. There were no impacts on the classification of financial liabilities as a result of
these amendments.
Amendments to IAS 1 - Presentation of Financial Statements - Non-current Liabilities with
Covenants.
These amendments specify that the covenants to be complied with after the reporting date do
not affect the classification of debt as current or non-current at the reporting date. Instead, the
amendments require the company to disclose information about such covenants in the Financial
Statements.
There were no impacts on the classification of financial liabilities or in terms of disclosure as a
result of these amendments.
Amendments to IFRS 16 - Leases: Lease Liability in a Sale and Leaseback.
These amendments specify the requirements for accounting for a sale and leaseback after the
transaction date.
In particular, when subsequently evaluating the liability arising from the lease contract, the
seller-lessee determines the “lease payments” and “revised lease payments” in such a way as
to not recognise gains or losses related to the retained right of use. Since no sale & leaseback
transactions occurred during 2024, these amendments had no impact on the Group’s
Consolidated Financial Statements at December 31, 2024.
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Amendments to IAS 7 - Statement of Cash Flows and IFRS 7 - Financial Instruments:
Supplementary Information - Supplier Finance Arrangements.
These amendments introduce new disclosure requirements to improve the transparency of
information provided on supplier financing arrangements, particularly with regard to the effects
of such arrangements on the entity’s liabilities, cash flows and exposure to liquidity risk.
These amendments had no impact on the Group’s Consolidated Financial Statements at
December 31, 2024.
Amendments to IAS 12 - Income Taxes: International Tax Reform - Pillar Two Model Rules
These amendments offer a temporary exemption to the accounting of deferred taxes resulting
from the application of the new tax rules (the so-called “GloBE Rules”) of European origin, for
the implementation of the Global Minimum Tax, introduced by the Organisation for Economic
Co-operation and Development (OECD). The OECD published the Pillar Two Model Rules in
December 2021, to ensure that large multinational companies are subjected to a minimum tax
rate of 15%.
The Group’s Financial Statements at December 31, 2024 make use of the above-mentioned
temporary exception.
3.2 International Accounting Standards and/or Interpretations Issued but not yet in Force in
2024
Pursuant to IAS 8 – “Accounting Policies, Changes in Accounting Estimates and Errors” - the new
standards or interpretations that had already been issued, but had not yet entered into force or had
not yet been approved by the European Union at December 31, 2024 and were therefore not
applicable, as well as their foreseeable impact on the Consolidated Financial Statements, are
indicated below.
None of these standards and interpretations were adopted in advance by the Group.
Amendments to IAS 21 - Effects of Changes in Foreign Exchange Rates: Lack of
Exchangeability.
These amendments clarify when a currency is exchangeable for another currency and,
consequently, when it is not. When one currency is not exchangeable for another, these
amendments define the method for determining the exchange rate to be applied. The
amendments also specify the information that must be provided when a currency is not
exchangeable.
Consolidated Financial Statements
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565
These amendments, approved by the European Union, came into effect on January 1, 2025. No
impact on the Consolidated Financial Statements is expected as a result of these amendments.
Amendments to IFRS 9 and FRS 7 - Amendments to the Classification and Measurement of
Financial Instruments.
These amendments:
clarify the date of recognition and de-recognition of certain financial assets and financial
liabilities, by providing a new exception for certain financial liabilities settled through
electronic money transfer systems. By applying this exception, a financial liability may be
de-recognised at an earlier date, if the money transfer is made through an electronic
payment system and if specific conditions are met. In particular, the entity making the
payment must not have:
o the practical ability to withdraw, interrupt, or cancel the instruction for payment;
o the practical ability to access cash;
o a significant settlement risk.
This exception does not apply to payment methods, such as cheques, and must be
selected for each payment system used.
clarify and provide further guidance on assessing whether a financial asset meets the
“principal and interest payments only” criterion (the SPPI test). The amendments concern
financial assets which have the following characteristics and for which a careful
assessment must be performed:
o contractual terms that can change cash flows based on contingent events (for
example, interest rates linked to ESG objectives);
o non-recourse features, that is, financial assets where the creditor has the right of
recovery limited only to the assets pledged as collateral, with no further rights over
the debtor’s other assets;
o contractually-linked instruments (CLIs).
introduces new disclosure requirements for financial instruments whose cash flows may
vary due to events not directly related to changes in the credit risk, (for example, certain
instruments with features linked to the achievement of ESG objectives);
introduces new disclosure requirements for equity instruments designated as FVOCI.
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566
These amendments, which will enter into force on January 1, 2026, have not yet been endorsed
by the European Union. The impact of these amendments on the Group’s Consolidated Financial
Statements and disclosures is currently being analysed.
IFRS 18 - Presentation and Disclosure in Financial Statements.
The key points of the new standard are as follows:
structure of the Income Statement: all revenue and cost items must be classified into five
categories and grouped into three subtotals. The standard provides precise guidance on
the classification of the various items within each category;
definition of Management Performance Measures (MPM), that is, performance indicators
defined by management and used in public disclosures. These indicators must be
explained in detail in the Notes, and a reconciliation with the comparable subtotals as
specified by the IFRS, must be provided;
guidance on how to aggregate and disaggregate information: items with similar
characteristics must be aggregated, while those with dissimilar characteristics must be
disaggregated.
This standard, which will enter into force on January 1, 2027, has not yet been approved by the
European Union. The impacts of these amendments on the Consolidated Financial Statements
is currently under analysis.
IFRS 19 –Subsidiaries without Public Accountability: Disclosures.
The new standard reduces and simplifies the disclosure requirements for the IFRS separate
financial statements for companies that have a parent company which prepares their
consolidated financial statements pursuant to the IFRS, resulting in operational relief and lower
costs. Entities that may apply IFRS 19, are those whose equity or debt instruments are not traded
on a public market.
This standard, which will enter into force on January 1, 2027, has not yet been approved by the
European Union. The impact on the financial statements of subsidiaries which apply the IFRS
standards in separate financial statements, is currently being analysed.
Annual Improvements, Volume 11 (issued in July 2024).
These amendments are limited to clarifying the wording of an IFRS accounting standard or
correcting unintended consequences or relatively minor oversights in accounting standards.
Consolidated Financial Statements
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567
Additionally, they resolve minor conflicts between the requirements of different accounting
standards.
The amended standards are as follows:
IFRS 1 - First-time Adoption of International Financial Reporting Standards;
IFRS 7 - Financial Instruments: Disclosures, and the related guidance to the
application of IFRS 7;
IFRS 9 - Financial Instruments;
IFRS 10 - Consolidated Financial Statements;
IAS 7 - Statement of Cash Flows.
These amendments, which will come into force on January 1, 2026, have not yet been
approved by the European Union. There were no impacts on the Consolidated Financial
Statements as a result of these amendments.
Amendments to IFRS 9 and to IFRS 7 – Contracts Referencing Nature-dependent Electricity.
These amendments:
introduce guidelines for determining whether contracts to purchase electricity from
natural sources fall within the definition of “own use” contracts. In particular, the
amendments specify that such contracts fall within the definition of “own use”
contracts if the entity is, and expects to continue to be, a “net purchaser” of
electricity during a maximum period of 12 months, meaning if it purchases
sufficient electricity to offset the sales of unused electricity on the same relevant
market;
introduce an exception to the requirement of IFRS 9, according to which a future
transaction must be highly probable in order to be designated as a hedged
instrument in a hedging relationship;
require additional disclosures for physical “Power Purchase Agreements” which
are accounted for as “own use” contracts.
These amendments, which will come into force on January 1, 2026, have not yet been approved by
the European Union. The impact of these amendments on the Consolidated Financial Statements is
currently under analysis.
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568
4.
FINANCIAL RISK MANAGEMENT POLICIES
The financial risks to which the Group is exposed are mainly related to foreign exchange rate
fluctuations, interest rates fluctuations, the price of financial assets held in portfolio, the ability of its
customers to meet their obligations to the Group (credit risk), and the availability of financial
resources in the market (liquidity risk).
The management of financial risks is an integral part of the Group’s operations and is carried out
centrally based on guidelines defined by the Finance Department, within the broader risk
management strategies established by the Risk Management Committee.
4.1
Types of Financial Risks
Exchange Rate Risk
The diverse geographical distribution of the Group’s production and commercial activities results in
exposure to exchange rate risk, both transactional and translational.
a) Transactional Exchange Rate Risk
This risk is generated by the commercial and financial transactions executed by the individual
companies in currencies other than the functional currency of the company executing the transaction.
Fluctuations in the exchange rate between the time when the commercial/financial relationship is
initiated and the time when the transaction is completed (collection/payment), can result in exchange
rate gains or losses.
The Group aims to minimise the impact of transactional exchange rate risk associated with volatility.
In order to achieve this objective, the Group’s procedures provide that the Operating Units are
responsible for the collection of all information inherent to the positions subject to transactional
exchange rate risk, for which hedging in the form of forward contracts is entered into with the Group
Treasury.
The positions subject to managed exchange rate risk are mainly represented by receivables and
payables in foreign currencies.
The Group Treasury is responsible for hedging the resulting net position for each currency and, in
accordance with the established guidelines and predetermined restrictions, it in turn closes out all
risk positions by negotiating hedging derivative contracts on the market, typically forward contracts.
For these contracts, the Group does not deem it appropriate to activate the hedge accounting option
as provided for by IFRS 9, in that the recognition of the effects on the Income Statement and on the
Statement of Financial Position, of the hedging strategy for transactional exchange rate risk is in any
case substantially guaranteed, even without the Group availing itself of the aforementioned option.
Consolidated Financial Statements
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It should also be noted that, as part of the annual and three-year planning process, the Group
formulates exchange rate forecasts based on the best information available on the market.
Fluctuations in the exchange rate between the time the forecast is made and the time the commercial
or financial transaction takes place, represents the transactional exchange rate risk on future
transactions.
The Group assesses, on a case by case basis, the opportunity to carry out hedging transactions on
future transactions, for which it typically uses both forward buy or sell transactions (including average
rate forwards) and optional risk-reversal type instruments (for example; zero cost collars). If the
requirements as provided for by IFRS 9 are met, hedge accounting is activated.
The impacts on the Group’s equity and Income Statement, arising from changes in the exchange
rates calculated on outstanding hedging instruments at December 31, 2024, are described in Note
28, “Derivative Financial Instruments”.
b) Translational Exchange Rate Risk
The Group holds controlling interests in companies that prepare their financial statements in
currencies other than the euro, which is the currency used to prepare the Consolidated Financial
Statements. This exposes the Group to translational exchange rate risk, due to the conversion into
euro of the assets and liabilities of subsidiaries operating in currencies other than the euro. The main
exposures to translational exchange rate risk are continuously monitored.
At December 31, 2024, approximately 31.7% of the total consolidated equity was expressed in euro
(approximately 33.9% at December 31, 2023). The most significant currencies for the Group, in
terms of the absolute value of net assets, other than the euro were the Brazilian real (10.4%; 10.0%
at December 31, 2023), the Turkish lira (0.7%; 0.7%; at December 31, 2023), the Chinese renminbi
(16.9%; 14.9% at December 31, 2023), the Romanian leu (11.5%; 12.0% at December 31, 2023),
the Russian rouble (2.3%; 2.2% at December 31, 2023); the British pound sterling (2.5%; 3.2% at
December 31, 2023), the Argentine peso (4.6%; 3.2% at December 31, 2023); the US dollar (6.4%;
5.2% at December 31, 2023) and the Mexican peso (4.6%; 12.4% at December 31, 2023).
The effects on consolidated equity deriving from a hypothetical appreciation/depreciation of the euro
against the aforementioned currencies - all other conditions being equal, were as follows:
Appreciation of 10%
Appreciation of 10%
Depreciation of 10%
Depreciation of 10%
12/31/2024
12/31/2023
12/31/2024
12/31/2023
Brazilian Real
68,575
62,300
(56,107)
(50,972)
Turkish Lira
4,739
4,145
(3,877)
(3,391)
Chinese Renminbi
111,249
92,820
(91,022)
(75,943)
Romanian Leu
75,428
74,624
(61,714)
(61,056)
Russian Rouble
15,097
13,495
(12,352)
(11,042)
British Pound Sterling
16,408
20,192
(13,425)
(16,521)
Argentinian Peso
30,251
19,942
(24,750)
(16,316)
US Dollar
42,063
32,578
(34,415)
(26,655)
Mexican Peso
70,577
77,423
(57,745)
(63,346)
Total impact on consolidated equity
434,386
397,519
(355,407)
(325,242)
(in thousands of euro)
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
570
It should be noted that, during 2024, the Turkish lira and the Argentine peso depreciated by more
than -10% (the Turkish lira by -13% and the Argentine peso by -20%), which more than offset
hyperinflation accounting. For information on the effect on equity, reference should be made to Note
21, “Equity”.
Interest Rate Risk
Interest rate risk is represented by exposure to the variability in the fair value or in the future cash
flows of financial assets or liabilities, due to changes in the market interest rates. The Group
assesses, based on market conditions, whether to enter into derivative contracts, to hedge interest
rate risk, for which hedge accounting is activated when the conditions as provided for by IFRS 9 are
met.
The table below shows the effects on the net income/(loss) resulting from an increase or decrease
of 0.50% in the level of interest rates of all currencies to which the Group is exposed – all other
conditions being equal:
The effects on the Group’s equity resulting from changes in the EURIBOR rate, calculated on interest
rate hedging instruments in place at December 31, 2024, are described in Note 28, “Derivative
Financial Instruments”. The Group has no derivatives or other optional structures in place that impact
the linearity of the interest rate sensitivity on debt.
Risk of Failure to achieve the Sustainability Targets expected in Borrowings from Banks and
Bond Loans
As reported in Note 24, “Borrowings from Banks and Other Financial Institutions” to which reference
should be made for further details, the Group has outstanding “sustainable” bank facilities of euro
3.0 billion, of which euro 1.5 billion resulted as used at December 31, 2024, and euro 1.5 billion was
available in the form of a revolving committed credit facility, as well as bonds linked to sustainability
targets (so-called Sustainability Linked Bonds, SLBs) in the amount of euro 1.2 billion.
The failure to meet these targets would result in an increase in the contractually agreed interest rate
and, consequently, an increase in financial expenses and future cash flows compared to those
expected if the sustainability targets were achieved, which is not material for the Group.
12/31/2024
12/31/2023
12/31/2024
12/31/2023
Impact on Net income/(loss)
(5,993)
(5,042)
5,993
5,042
(in thousands of euro)
+0,50%
-0,50%
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
571
Price Risk Associated with Financial Assets
The Group’s exposure to price risk is limited to the volatility of financial assets such as listed equity
securities and bonds or financial assets indirectly associated with listed equity securities, which
amounted to approximately 1.45% of the total consolidated assets at December 31, 2024, (1.76% at
December 31, 2023). These assets were classified as other financial assets at fair value through
Other Comprehensive Income and other financial assets at fair value through the Income Statement.
No derivatives were entered into for these assets to limit the risk of volatility.
Financial assets are subdivided as follows:
-
financial assets at fair value through Other Comprehensive Income which consisted of listed
equity securities (the RCS MediaGroup S.p.A.) which amounted to euro 21,929 thousand (euro
18,299 thousand at December 31, 2023), and securities indirectly associated with listed equity
securities (Fin. Priv. S.r.l.), which amounted to euro 29, 297 thousand (euro 23,416 thousand at
December 31, 2023);
-
financial assets at fair value through the Income Statement which amounted to euro 147,079
thousand and consisted of Argentine dollar-linked bonds (euro 196,198 thousand at December
31, 2023).
Financial assets at fair value through Other Comprehensive Income constituted 25.8% of the total
financial assets subject to price risk (17.5% at December 31, 2023). A positive change of +5% in the
price of the aforesaid listed securities, all other conditions being equal, would result in a positive
change to the Company’s equity of euro 2,561 thousand (a positive change of euro 915 thousand at
December 31, 2023, while a negative change of -5% in the price of the aforesaid listed equities, all
other conditions being equal, would result in a negative change to the Company’s equity of euro
2,561 thousand (a negative change of euro 915 thousand to the Group’s equity at December 31,
2023).
Financial assets at fair value through the Income Statement constituted 74.2% of the total financial
assets subject to price risk (82.5% at December 31, 2023). A change of +10% in the price of the
aforesaid listed securities, all other conditions being equal, would result in a positive change to the
Group’s net income of euro 16,769 thousand (euro 22,111 thousand at December 31, 2023), while
a change of -10% in the price of the aforesaid listed equities, all other conditions being equal, would
result in a negative change to the Group’s net income of euro 16,769 thousand (euro 22,111
thousand at December 31, 2023).
Credit Risk
Credit risk represents the Group’s exposure to potential losses resulting from the non-fulfilment of
the commercial and financial obligations undertaken by counter-parties. As regards these
commercial counter-parties, in order to limit this risk, Pirelli has put in place procedures to assess
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
572
the potential and financial creditworthiness of its customers, to monitor expected cash flows and to
take any recovery action. The aim of these procedures is to define customer credit limits, whereby
in the event that those limits are exceeded, the rule to withhold further supplies is activated. In some
cases, customers are asked to provide guarantees, mainly bank guarantees issued by parties of the
highest credit or personal standing. Less frequently, mortgage guarantees may be requested.
Another instrument used to manage commercial credit risk is the stipulation of insurance policies:
for more than 10 years, a master agreement has been in place, and was renewed for the two-year
2025-’26 period, with a leading insurance company with an AA credit rating according to the ratings
of Standard & Poor’s, for the worldwide coverage of credit risk mainly related to sales in the
Replacement channel (the coverage ratio at December 31, 2024 was approximately 70%).
However, as regards the financial counter-parties for the management of its temporary cash
surpluses, or for the negotiation of derivative instruments, the Group deals only with entities of the
highest credit standing. Pirelli continuously monitors its net credit exposure to the banking system
and, does not have any significant concentrations of credit risk.
Expected losses on trade receivables are calculated throughout the life of the receivables, starting
from the moment of initial recognition, using a matrix based on the customer’s credit rating and the
ageing of the receivables which is adjusted to account for forward looking factors specific to certain
debtors and the presence of any collateral and other credit risk mitigation instruments, such as the
aforementioned insurance coverages. The calculation of expected losses is based on (i) a matrix
which includes the credit ratings of customers provided by independent market assessors, and on
(ii) the value of receivables, which takes the collateral and related insurance coverage into account.
The credit ratings of customers takes into account, among other factors, the effects of exogenous
risks, including, if customers are exposed in the specific markets in which they operate, risks related
to climate change, which determines the probability of default used in the calculation, and impacts
the credit limits granted by the insurance company to each counterparty. The bad debt provision at
December 31, 2024, was calculated according to the method described above, and was composed
as follows:
The positioning at December 31, 2023 was as follows:
At December 31, 2024, the exposure gross of credit enhancements amounted to euro 896,842
thousand. The bad debt provision, which was calculated without taking into account the presence of
(in thousands of euro)
Current
Past due
> 30 days
Past due
> 90 days
Past due
> 180 days
Total
Expected loss rate
4.1%
8.4%
9.7%
81.7%
10.5%
Exposure net of credit enhancements
601,981
26,998
14,778
55,064
698,820
Bad debt provision
(24,610)
(2,265)
(1,433)
(44,974)
(73,283)
(in thousands of euro)
Current
Past due
> 30 days
Past due
> 90 days
Past due
> 180 days
Total
Expected loss rate
3.0%
11.4%
6.2%
70.6%
10.1%
Exposure net of credit enhancements
579,934
31,756
25,571
68,478
705,738
Bad debt provision
(17,478)
(3,611)
(1,589)
(48,321)
(71,000)
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
573
any collateral securities and other credit enhancement instruments, amounted to euro 79,420
thousand.
The difference between the exposure gross of credit enhancements amounting to euro 896,842
thousand and the value of the trade receivables amounting to euro 696,198 thousand reported in
Note 15, “Trade Receivables”, was mainly due to credit notes to be issued, which are not considered
for the calculation of the provision for bad debts.
Liquidity Risk
Liquidity risk represents the risk that available financial resources may not be sufficient to meet
financial and commercial obligations within the due terms and deadlines.
The main instruments used by the Group to manage liquidity risk consist of annual and multi-year
financial plans as well as treasury plans, to allow for the complete and accurate recording and
measurement of monetary inflows and outflows. The variances between the plans and actual data
are subject to constant analysis.
The Group has implemented a centralised system for the management of collection and payment
flows in compliance with local currency and tax regulations. The negotiation and management of
banking relationships are handled centrally, in order to ensure coverage of short and medium-term
financial needs at the lowest possible cost. The raising of medium to long-term resources on the
capital market is also optimised through centralised management.
The prudent management of the risk described above involves maintaining an adequate level of
cash or cash equivalents and/or easily liquidated short-term securities, the availability of funds
obtainable through an adequate amount of committed credit lines and/or the possibility of resorting
to the capital market, and diversifying products and maturities to seize the best opportunities
available.
Furthermore, the Group has adopted an extremely prudent approach to the maturities of its financial
debt, refinancing them well in advance in order to minimise the risks associated with liquidity crises
or market shut-downs.
At December 31, 2024, the Group had a liquidity margin of euro 3,168,706 thousand, calculated as
the sum of cash and cash equivalents which equalled euro 1,502,741 thousand (euro 1,252,769
thousand at December 31, 2023), other current financial assets at fair value through the Income
Statement to the amount of euro 165,965 thousand (euro 228,759 thousand at December 31, 2023)
and unutilised credit facilities of euro 1,500,000 thousand. The above-mentioned liquidity margin is
sufficient in covering financial debt maturities until the third quarter of 2029.
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
574
Maturities for financial liabilities at December 31, 2024 can be summarised as follows:
Maturities for financial liabilities at December 31, 2023 can be summarised as follows:
(in migliaia di euro)
within 1 year
1 to 2 years
2 to 5 years
over 5 years
Total
Trade payables
2,081,617
-
-
-
2,081,617
Other payables
392,744
14,266
23,710
41,971
472,691
Derivative financial instruments
10,121
-
-
-
10,121
Borrowings from banks and other financial institutions
842,541
492,207
2,773,163
148,663
4,256,574
of which lease liabilities
124,866
104,185
206,944
148,663
584,658
3,327,022
506,473
2,796,874
190,634
6,821,002
(in thousands of euro)
within 1 year
1 to 2 years
2 to 5 years
over 5 years
Total
Trade payables
1,999,418
-
-
-
1,999,418
Other payables
412,173
3,129
6,761
31,090
453,153
Derivative financial instruments
21,242
-
-
-
21,242
Borrowings from banks and other financial institutions
884,755
1,476,954
1,799,506
193,316
4,354,531
of which lease liabilities
119,163
102,574
203,049
157,722
582,508
3,317,588
1,480,083
1,806,267
224,406
6,828,344
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
575
5.
INFORMATION ON FAIR VALUE
5.1
Fair Value Measurement
The following table shows the assets and liabilities measured at fair value at December 31, 2024,
subdivided into three levels:
The following table shows the assets and liabilities measured at fair value at December 31, 2023,
subdivided into the three levels defined above:
(in thousands of euro)
Note
Carrying amount
at 12/31/2024
Level 1
Level 2
Level 3
FINANCIAL ASSETS:
Financial assets at fair value through Income Statement:
Other current financial assets at fair value through Income Statement
19
165,965
147,079
18,886
-
Current derivative financial instruments
28
22,323
-
22,323
-
Derivative hedging instruments:
Current derivative financial instruments
28
-
-
-
-
Non-current derivative financial instruments
28
4,326
-
4,326
-
Other financial assets at fair value through Other Comprehensive Income:
Securities and shares
63,294
21,929
29,297
12,068
13
63,294
21,929
29,297
12,068
TOTAL ASSETS
255,908
169,008
74,832
12,068
FINANCIAL LIABILITIES:
Financial assets at fair value through Income Statement:
Current derivative financial instruments
28
(8,816)
-
(8,816)
-
Derivative hedging instruments:
Current derivative financial instruments
28
(1,305)
-
-
-
TOTAL LIABILITIES
(10,121)
-
(10,121)
-
(in thousands of euro)
Note
Carrying amount
at 12/31/2023
Level 1
Level 2
Level 3
FINANCIAL ASSETS:
Financial assets at fair value through Income Statement:
Other current financial assets at fair value through Income Statement
19
228,759
196,198
32,561
-
Current derivative financial instruments
28
13,027
-
13,027
-
Derivative hedging instruments:
Current derivative financial instruments
28
-
-
-
-
Non-current derivative financial instruments
28
12,886
-
12,886
-
Other financial assets at fair value through Other Comprehensive Income:
Securities and shares
52,813
18,299
23,416
11,098
Investment funds
24
-
24
-
13
52,837
18,299
23,440
11,098
TOTAL ASSETS
307,509
214,497
81,914
11,098
FINANCIAL LIABILITIES:
Financial assets at fair value through Income Statement:
Current derivative financial instruments
28
(21,242)
-
(21,242)
-
TOTAL LIABILITIES
(21,242)
-
(21,242)
-
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
576
The financial instruments, included in level 1, include the equity investments classified as financial
assets at fair value through Other Comprehensive Income, and the listed Argentine dollar-linked
bond instruments classified as financial assets at fair value through the Income Statement. Since
the objective of the Argentine instruments was to mitigate the effects of depreciation in the local
currency, which was recorded as a loss/gain in the net monetary position, the option was exercised
to also recognise the change in the fair value of these instruments in the Income Statement. For
further information, reference should be made to Note 37, “Financial Income” and Note 38, “Financial
Expenses”.
The following table shows changes that occurred in the financial assets classified in level 3,
during the course of 2024:
These financial assets are mainly represented by equity investments in the Istituto Europeo di
Oncologia (European Institute of Oncology) (euro 8,580 thousand), in Telco S.r.l. (euro 450
thousand), in Genextra S.p.A. (euro 284 thousand) and in Tlcom I LP (euro 199 thousand).
The fair value adjustments through Other Comprehensive Income amounted to a positive net
amount of euro 320 thousand, and mainly refers to the fair value adjustment of the investment in the
Istituto Europeo di Oncologia, (positive to the amount of euro 223 thousand), in Nomisma (positive
to the amount of euro 63 thousand) and in Genextra S.p.A., (positive to the amount of euro 26
thousand).
During the course of 2024 there were no transfers from level 1 to level 2 or vice versa, nor from level
3 to other levels and vice versa.
(in thousands of euro)
Opening balance 01/01/2024
11,098
Translation differences
9
Increases
644
Fair value adjustments through Other Comprehensive Income
312
Other changes
6
Closing balance 12/31/2024
12,068
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
577
5.2
Categories of Financial Assets and Liabilities
The table below shows the carrying amounts for each class of financial assets and liabilities as
identified by IFRS 9:
6.
CAPITAL MANAGEMENT POLICY
The Group’s objective is to maximise the return on invested equity while maintaining the ability to
operate over time, guaranteeing adequate returns for shareholders and benefits for other
stakeholders. This foresees a gradual deleveraging of the Group’s financial structure to be achieved
(in thousands of euro)
Note
Carrying
amount at
12/31/2024
Carrying
amount at
12/31/2023
FINANCIAL ASSETS
Financial assets at fair value through Income Statement
Other financial assets at fair value through Income Statement
19
165,965
228,759
Current derivative financial instruments
28
22,323
13,027
188,288
241,786
Financial assets at amortised cost
Other non-current receivables
16
238,279
408,625
Current trade receivables
15
622,915
649,406
Other current receivables
16
515,256
419,249
Cash and cash equivalents
20
1,502,741
1,252,769
2,879,191
2,730,049
Financial assets at fair value through Other Comprehensive Income (FVOCI)
Other financial assets at fair value through Other Comprehensive Income
13
63,294
52,837
Financial hedging derivative instruments
Non-current financial derivative instruments
28
4,326
12,886
TOTAL FINANCIAL ASSETS
3,135,099
3,037,558
FINANCIAL LIABILITIES
Financial liabilities at fair value through Income Statement
Current derivative financial instruments
28
1,810
21,242
Financial liabilities valuated at amortised cost
Non-current borrowings from banks and other financial institutions (excl. lease liabilities)
24
2,688,132
2,791,289
Other non-current payables
26
79,947
77,932
Current borrowings from banks and other financial institutions (excl. lease liabilities)
24
655,695
690,431
Current trade payables
25
2,081,617
1,999,418
Other current payables
26
392,744
412,173
5,898,135
5,971,243
Lease liabilities
Non-current lease liabilities
24
380,467
383,389
Current lease liabilities
24
105,161
99,096
485,628
482,485
Derivative financial hedging instruments
Current derivative financial instruments
28
1,305
-
TOTAL FINANCIAL LIABILITIES
6,385,573
6,474,970
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
578
within a short-term time frame, as reported in the “Outlook for 2025” section of the Directors’ Report
on Operations.
The main indicator that the Group uses for capital management is the R.O.I.C., which is calculated
as the ratio between the EBIT adjusted net of tax effects and the average net invested capital, which
does not include “Investments in associates and joint ventures”, “Other financial assets at fair value
through Other Comprehensive Income”, “Other non-current financial assets at fair value through the
Income Statement”, “Other non-current assets”, the intangible assets relative to assets recognised
as a consequence of Business Combinations, the deferred tax liabilities relative to the latter and the
“Provisions for employee benefit obligations current and non-current”.
R.O.I.C. for the 2024 financial year equalled 23.2%, compared to 20.3% in 2023.
7.
ESTIMATES AND ASSUMPTIONS
The preparation of the Consolidated Financial Statements requires management to make estimates
and assumptions that, in certain circumstances, are based on difficult and subjective valuations and
estimates based on historical experience, and assumptions that are, from time to time, considered
reasonable and realistic under the circumstances. The results that are realised may therefore differ
from these estimates. The estimates and assumptions are reviewed periodically and the effects of
any changes made to them are reflected in the Income Statement for the period in which the estimate
is revised. If in the future the estimates and assumptions, based on the best available valuation at
the time, should differ from the actual circumstances, they are modified accordingly for the period in
which the circumstances change. The estimates and assumptions mainly refer to the assessment of
the recoverability of goodwill and other intangible assets with an indefinite useful life, as well as
tangible assets, and the determination of the useful lives of tangible and intangible assets, the
recoverability of receivables, the determination of taxes (current and deferred), the valuation of
pension plans and other post-employment benefits, and the recognition/valuation of provisions for
liabilities and charges.
Goodwill
In accordance with the accounting standards adopted for the preparation of the Financial
Statements, goodwill is tested at least annually in order to ascertain the existence of any impairment.
Specifically, testing involves the allocation of goodwill to the groups of cash generating units (which
for the Group coincides with the only operating segment) and the subsequent determination of the
related recoverable amount, being the higher amount between the fair value and the value in use.
If the recoverable amount is lower than the carrying amount of the group of cash generating units to
which goodwill has been allocated, an impairment of the goodwill allocated to those units is
recognised.
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
579
The value configuration used to determine the recoverable amount for Consumer Activities at
December 31, 2024 is the value in use, which corresponds to the present value of the future financial
cash flows which are expected to be generated by the group of CGUs, using a discount rate that
reflects the specific risks of the group of CGUs at the valuation date.
The key assumptions used by management were the estimated future increases in sales, in
operating cash flows and in the growth rate of operating cash flows beyond the explicit forecast
period, for the estimation of the terminal value and the weighted average cost of capital (discount
rate).
Pirelli Brand (Intangible Asset with an Indefinite Useful Life)
The Pirelli Brand is an intangible asset with an indefinite useful life, which is not subject to
amortisation, but pursuant to IAS 36, is tested for impairment on an annual basis or more frequently,
if specific events or circumstances arise that may suggest a potential impairment.
The configuration of the recoverable amount for impairment testing purposes at December 31, 2024,
was the fair value calculated on the basis of the income approach (the so-called level 3 of the IFRS
13 – Fair Value Measurement hierarchy).
The key assumptions used by management the estimate of future increases in sales and operating
cash flows, and the related growth rates beyond the explicit forecast period for the purpose of
estimating the terminal value, as well as the discount rate, which is based on the weighted average
cost of capital plus a premium determined according to the risk profile of the specific asset.
Owned Tangible Assets
In accordance with the relevant accounting standards, fixed assets are subject to an impairment test
in order to ascertain whether an impairment loss has occurred, whenever there are indicators that
predict difficulties in recovering the carrying amount of the asset through its use. The verification of
the existence of the aforementioned impairment indicators, requires the Directors to make subjective
judgements based on the information available from both internal and external sources, as well as
on historical experience. In addition, if it is determined that a potential impairment loss may have
been generated, the impairment is calculated using appropriate evaluation techniques. The accurate
identification of the indicators of a potential impairment loss, as well as the estimates for determining
it, depend on subjective judgements and factors that may change over time and which influence the
valuations and estimates made by Management.
For the determination of the useful lives of tangible assets, many factors must be taken into account,
including for example, obsolescence, and any legal restrictions on the use of assets due to climatic
factors. The estimation of useful lives also requires judgement on the part of management.
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
580
For these reasons, the useful lives of assets are reviewed and, if necessary, adjusted at the end of
each relevant reporting period.
Right of Use and Lease Liabilities
The accurate identification of indicators of a potential impairment loss, as well as the estimates for
determining it, depend on subjective judgements and factors that may change over time, influencing
the assessments and estimates made by management.
The main ones are summarised as follows:
renewal clauses in contracts are taken into account for the purposes of determining the duration
of the contract, that is, when the Group has the option to exercise these clauses without the need
to obtain the consent of the other party, and when their exercise is considered reasonably certain.
In the case of clauses which provide for multiple renewals that can be exercised unilaterally by
the Group, only the first extension period is considered;
automatic renewal clauses in contracts, in which both parties have the right to terminate the
contract, are not taken into account for the purposes of determining the duration of the contract,
as the ability to extend the duration is not under the unilateral control of the Group, and the
penalty to which the lessor could be exposed is considered insignificant. However, in the event
that the lessor is exposed to a significant penalty, the Group evaluates the inclusion of the
renewal option in the determination of the duration of the contract. This assessment is also made
by considering the degree of customisation of the leased asset. If the customisation is high, the
lessor may incur a significant penalty if it opposes renewal;
early termination clauses: such clauses are not taken into account in determining the duration of
the contract if they are exercisable only by the lessor or by both parties. In cases where they can
be unilaterally exercised by the Group, specific assessments are made on a contract-by-contract
basis, (for example, the Group is already negotiating a new contract or has already given notice
to the lessor);
the incremental borrowing rate is the risk-free rate of the country in which the contract is
negotiated and is based on the duration of the contract itself. It is then adjusted according to the
Group’s credit spread and the local credit spread.
Income Taxes (current and deferred)
Income taxes (current and deferred) are determined in each country where the Group operates in
accordance with a prudent interpretation of the applicable tax regulations. This process sometimes
involves complex estimates in determining taxable income and deductible and taxable temporary
differences between carrying amounts and tax amounts. In particular, deferred tax assets are
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
581
recognised to the extent that it is probable that future taxable income will be available against which
they can be utilised. The assessment of the recoverability of deferred tax assets, recognised in
relation to both tax losses that can be carried forward to subsequent financial years and deductible
temporary differences, takes into account the estimates of future taxable income and is based on
prudent tax planning. With regard to situations in which the applicable tax legislation in force lends
itself to interpretation, if the Group considers it probable (greater than 50%), that the tax authority
will accept the tax treatment adopted, the net income/(loss) before tax and taxes are determined in
accordance with the tax treatment applied in the tax return. If this is not the case, the effect of any
uncertainty is reflected in the determination of the net income/(loss) before tax. The probability refers
to the likelihood that the tax authority will not accept the tax treatment adopted, and not to the
likelihood of the assessment.
Pension Funds
Some of the companies of the Group have put in place, pension plans, health insurance plans and
other defined benefit plans for their employees, primarily in the United Kingdom and the United
States. These funds were closed to new entrants, and therefore the actuarial risk refers only to past
obligations. Management, with the assistance of a leading actuarial services firm, uses actuarial
assumptions to calculate the liabilities and assets servicing these pension plans. The actuarial
assumptions of a financial nature concern the discount rate, the inflation rate, and trends in medical
care costs. The actuarial assumptions of a demographic nature primarily concern mortality rates.
The Group has identified discount rates that it considered balanced, given the context.
Provisions for Liabilities and Charges
Provisions are recognised for legal and tax risks related to indirect taxes, representing the risk of
losing legal cases. The value of the provisions recognised in the financial statements for these risks
represents the best estimate made by Management for potential legal and tax disputes concerning
a wide range of issues, which fall under the jurisdiction of various countries.
8.
ACQUISITION HEVEA-TEC (BRAZIL)
On January 3, 2024, 100% of Hevea-Tec, Brazil’s largest independent operator in natural rubber
processing was acquired, for a consideration of euro 25.7 million.
With the acquisition of Hevea-Tec, Pirelli will increase its share of natural rubber resources in LatAm,
and ensure the continuity of its own supply in the Region, with therefore greater efficiency. The
transaction will enable the Company to launch innovative natural rubber projects, with the aim of
increasing the use of non-fossil materials in tyres, in keeping with the Company’s objectives, and will
allow for further improvement in the control of the natural rubber supply chain, the reduction of CO2
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
582
emissions, thanks to the “local for local” supply, and the launch of new FSC™ Certification projects.
The agreement also provides for the payment of an additional consideration (the so-called earn-out),
that will be paid to the counter-party at the achievement of the contractually defined levels of
profitability and production capacity, for a maximum of euro 2.4 million (at January 3, 2024 exchange
rates).
The fair value of the assets and liabilities acquired that were identifiable at the acquisition date, is
shown in the table below:
The process of allocating the purchase price paid to the fair value of the assets and liabilities acquired
in the Business Combination (Purchase Price Allocation - PPA), pursuant to the provisions of IFRS
3 (Business Combinations), has been completed. The resulting determination of the goodwill arising
from the acquisition is therefore to be considered as definitive.
(in thousands of euro)
Fair value as of the
acquisition date
Tangible assets
10,389
- Lands
3,439
- Buildings
4,906
- Plant and Machinery
1,982
- Other tangible assets
62
Intangible assets
2,606
- Trademarks
2,118
- Customer relationship
462
- Other intangible assets
26
Investments in non-Group Companies
98
Inventories
7,892
Trade Receivables
2,779
Cash and Cash Equivalents
2,989
26,753
Trade Payables
(2,082)
Deferred Tax Liabilities
(440)
Provision for employees
(17)
Provision for risk and expenses
(2,213)
(4,752)
TOTAL ASSETS ADQUIRED
22,001
Goodwill
3,669
TOTAL PAID
25,670
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
583
9.
OPERATING SEGMENTS
IFRS 8 - Operating segments, defines an operating segment as a component:
which involves entrepreneurial activities which generate revenues and costs;
whose operating results are periodically reviewed by the Chief Executive Officer, in his role
as Chief Operating Decision Maker (CODM);
for which separate Income Statement, Statement of Financial Position and other financial
Statements data is available.
For the purposes of IFRS 8, the activities performed by Consumer Activities are identifiable in a
single operating segment.
Revenues from sales and services according to geographical region were as follows:
Tangible and intangible assets by geographic region allocated on the basis of the country in
which the assets are located, were as follows.
The non-current allocated assets reported in the preceding table consist of property, plant and
equipment and intangible assets, excluding goodwill. The non-current unallocated assets are
relative to goodwill.
(in thousands of euro)
2023
Europe
2,643,756
2,591,904
North America
1,706,278
1,714,923
APAC
1,149,044
1,114,560
South America
798,807
795,467
Russia and MEAI
475,439
433,209
Total
6,773,324
6,650,063
2024
( in thousands of euro )
Europe
5,092,403
59.30%
5,125,651
59.10%
North America
572,200
6.66%
601,589
6.94%
APAC
475,152
5.53%
476,559
5.49%
South America
457,761
5.33%
475,836
5.49%
Russia and MEAI
103,258
1.20%
108,341
1.25%
Non-current unallocated assets
1,886,711
21.98%
1,884,925
21.73%
Total
8,587,485
100.00%
8,672,901
100.00%
12/31/2024
12/31/2023
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
584
10.
PROPERTY, PLANT AND EQUIPMENT
Their composition was as follows:
10.1 Owned Tangible Assets
Their composition and changes were as follows:
The item Hyperinflation Argentina and Turkey refers to the revaluation of the assets held by the
Argentine and Turkish subsidiaries as a consequence of the application of the IAS 29 accounting
standard - Financial Reporting in Hyperinflationary Economies, (euro 50,103 thousand for Argentina
and euro 10,274 thousand for Turkey). The effect was partially offset by negative foreign currency
translation differncies (euro 8,866 thousand for Argentina and euro 2,921 thousand for Turkey).
Increases, totalling euro 387,308 thousand, were primarily aimed at the High Value segment, at the
continuous improvement in the mix and quality in the manufacturing plants, as well as projects for
greater energy efficiency and the electrification of the vulcanisation presses.
(in thousands of euro)
12/31/2024
12/31/2023
Total Net Value:
3,427,756
3,409,114
- Owned tangible assets
2,984,811
2,968,578
- Right of use
442,945
440,536
(in thousands of euro)
Gross Value
Accumulated
Depreciation
Net Value
Gross Value
Accumulated
Depreciation
Net Value
Land
152,576
-
152,576
150,747
-
150,747
Buildings
945,388
(293,133)
652,255
910,760
(264,911)
645,849
Plants and machinery
3,343,289
(1,497,737)
1,845,552
3,198,867
(1,325,128)
1,873,739
Industrial and trade equipment
784,134
(535,709)
248,425
722,625
(496,244)
226,381
Other assets
169,483
(83,480)
86,003
149,367
(77,505)
71,862
Total
5,394,870
(2,410,059)
2,984,811
5,132,366
(2,163,788)
2,968,578
12/31/2024
12/31/2023
NET VALUE
(in thousands of euro)
12/31/2023
Hyperinflation
Argentina and
Turkey
Currency
translation
differences
Businnes
combination
Increases
Decreases
Depreciation
Reinstatement
Devaluation
Recl./Other
12/31/2024
Land
150,747
2,085
(10,127)
3,440
7,081
(653)
-
-
-
3
152,576
Buildings
645,849
9,263
(29,138)
4,906
60,713
338
(35,625)
-
-
(4,051)
652,255
Plants and machinery
1,873,739
33,281
(66,451)
1,982
196,410
(3,037)
(204,409)
3,192
(1,756)
12,601
1,845,552
Industrial and trade equipment
226,381
9,130
(9,898)
-
97,797
(803)
(69,954)
-
(8)
(4,220)
248,425
Other assets
71,862
6,618
(2,164)
61
25,307
(87)
(13,037)
-
(1)
(2,556)
86,003
Total
2,968,578
60,377
(117,778)
10,389
387,308
(4,242)
(323,025)
3,192
(1,765)
1,777
2,984,811
NET VALUE
(in thousands of euro)
12/31/2022
Hyperinflation
Argentina and
Turkey
Currency
translation
differences
Increases
Decreases
Depreciation
Devaluation
Recl./Other
12/31/2023
Land
147,977
1,464
605
1,163
(333)
-
(32)
(97)
150,747
Buildings
674,758
5,905
(17,564)
25,149
(48)
(36,415)
(148)
(5,788)
645,849
Plants and machinery
1,830,411
25,117
(26,267)
271,891
(2,074)
(199,576)
(29,083)
3,320
1,873,739
Industrial and trade equipment
229,239
5,664
(13,540)
74,998
(449)
(71,384)
(725)
2,578
226,381
Other assets
70,395
3,639
(7,718)
10,925
(185)
(10,224)
-
5,030
71,862
Total
2,952,780
41,789
(64,484)
384,126
(3,089)
(317,599)
(29,988)
5,043
2,968,578
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
585
For 2024, the ratio of investments to depreciation was equal to 1.20 (1.21 for the 2023 financial
year).
The item devaluation totalling euro 1,765 thousand, refers mainly to plants and machinery in
operation in the subsidiary in Germany (euro 1,145 thousand). The devaluation for 2023 (euro
29,998 thousand) was mainly related to the reduction, which amounted to euro 24,600 thousand, in
the recoverable amount for the Kirov CGU.
Property, plant and equipment in progress at December 31, 2024, included in the individual fixed
asset categories, amounted to euro 247,636 thousand, (euro 298,600 thousand at December 31,
2023). The main projects included under property, plant and equipment in progress relate to High
Value activities, the ongoing technological upgrade of factories and machinery aimed at enhancing
safety from an Environmental, Health and Safety (EHS) perspective, and investments in machinery
for the development of new product lines and the improvement of existing products. These
investments were concentrated in Mexico, Romania, China, Germany and Italy.
It should be noted that the companies of the Group did not pledge any property, plant and equipment
as collateral.
10.2 Right of Use
The net value of the assets for which the Group has entered into lease contracts, is detailed as
follows:
The item right of use buildings mainly refers to contracts relative to offices, warehouses and points
of sale.
The item right of use other assets mainly refers to contracts relative to motor vehicles and transport
equipment. These contracts also include a service component (non-lease component).
Lease contracts are negotiated on an individual basis and include a wide variety of terms and
conditions.
(in thousands of euro)
12/31/2024
12/31/2023
Right of use land
15,475
16,807
Right of use buildings
348,884
347,227
Right of use plants and machinery
15,020
18,362
Right of use other assets
63,566
58,140
Total net right of use
442,945
440,536
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
586
Increases in the right of use for the 2024 financial year, also including remeasurements, amounted
to euro 118,762 thousand (euro 101,188 thousand for 2023) and were mainly due to:
-
a new lease contract for a warehouse in Romania for approximately euro 24,000 thousand;
-
new contracts for car hire and forklift hires for euro 19,742 thousand;
-
the signing of a new contract with the Prometeon Tyre Group for the lease of the production
site in Izmit (Turkey) for euro 10,638 thousand. The contract replaces the previous leasing
agreement that had a residual value at the date of signing of euro 534 thousand;
-
new rental contracts for two warehouses in Canada for euro 6,209 thousand.
The increase also includes the adjustment for inflation where contractually foreseen.
In 2024, there were no contracts subject to reassessment or significant changes.
Depreciation of the right of use recognised in the Income Statement and included under the item
“Depreciation, Amortisation and Impairments” (Note 33), was composed as follows:
For interest on lease liabilities, reference should be made to Note 38, “Financial Expenses”.
Information on the costs for lease contracts with a duration of less than twelve months, lease
contracts for assets with a low unit value, and lease contracts with variable rates, is included in Note
34, “Other Costs”.
11.
INTANGIBLE ASSETS
Their composition and changes were as follows:
(in thousands of euro)
2024
2023
Land
1,633
1,515
Buildings
82,192
74,474
Plants and machinery
4,823
4,882
Other assets
23,053
20,416
Total depreciation of right of use
111,701
101,287
NET VALUE
(in thousands of euro)
12/31/2023
Currency
translation
differences
Business
combination
Increase
Decrease
Amortisation
Impairment
Recl./Other
12/31/2024
Concessions, licenses and trademarks - finite useful life
64,613
314
2,118
262
-
(4,064)
-
575
63,818
Pirelli Brand - indefinite useful life
2,270,000
-
-
-
-
-
-
-
2,270,000
Goodwill
1,884,925
(1,883)
3,669
-
-
-
-
-
1,886,711
Customer relationships
169,453
(479)
462
-
-
(34,419)
-
130
135,147
Technology
814,917
-
-
-
-
(76,850)
-
-
738,067
Software applications
45,020
(245)
26
23,461
-
(20,246)
(319)
2,051
49,748
Patents and design patent rights
14,455
-
-
3,874
-
(2,157)
-
-
16,172
Other intangible assets
404
(50)
-
-
(4)
(258)
(13)
(13)
66
Total
5,263,787
(2,343)
6,275
27,597
(4)
(137,994)
(332)
2,743
5,159,729
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
587
Intangible assets were composed as follows:
the Pirelli Brand (indefinite useful life) to the amount of euro 2,270,000 thousand. It should be
noted that the valuation of the useful life of trademarks is based on a number of factors, including:
the competitive environment, market share, history of the Brand, life cycles of the underlying
product, operational plans, and the macroeconomic environment of the countries in which the
related products are sold. Specifically, the useful life of the Pirelli Brand was assessed as
indefinite on the basis of its history of one hundred and fifty years of success (established in
1872), and on the intention and ability of the Group to continue investing in order to support and
maintain the Brand;
the Metzeler Brand (useful life of 20 years) to the amount of euro 39,307 thousand which is
included under the item “Concessions, licenses and trademarks – finite useful life”;
Customer Relationships (useful life of 10 - 20 years) which mainly includes the value of
commercial relationships for both the Original Equipment and Replacement channel;
Technology which includes the value of both product and process technologies as well the value
of the In-Process R&D (being formed at the time of the acquisition of the Group in 2015 by Marco
Polo Industrial Holding S.p.A.) amounted to euro 713,067 thousand and euro 25,000 thousand
respectively. The useful life of product and process technology was determined to be 20 years,
while the useful life of In-Process R&D was determined to be 10 years;
Goodwill to the amount of euro 1,886,711 thousand, of which euro 1,877,363 thousand was
recognised at the time of the acquisition of the Group in September 2015. The remaining portion
refers to the goodwill determined as part of the acquisition of the company JMC Pneus Comércio
Importação e Exportação Ltda. which occurred in 2018, and the acquisition of the company
Hevea-Tec Indústria E Comércio Ltda. at the beginning of 2024.
The item “Increase”, which totalled euro 27,597 thousand, mainly refers to application software (euro
23,461 thousand), and mainly carried out to implement the Company’s digitisation programme.
NET VALUE
(in thousands of euro)
12/31/2022
Currency
translation
differences
Increase
Amortisation
Impairment
Recl./Other
12/31/2023
Concessions, licenses and trademarks - finite useful life
69,711
(2,063)
432
(3,574)
-
107
64,613
Pirelli Brand - indefinite useful life
2,270,000
-
-
-
-
-
2,270,000
Goodwill
1,884,629
296
-
-
-
-
1,884,925
Customer relationships
204,289
(340)
14
(34,482)
-
(28)
169,453
Technology
891,767
-
-
(76,850)
-
-
814,917
Software applications
49,620
(8)
17,347
(22,182)
-
243
45,020
Patents and design patent rights
12,457
-
3,747
(1,749)
-
-
14,455
Other intangible assets
364
(154)
84
(254)
(98)
462
404
Total
5,382,837
(2,269)
21,624
(139,091)
(98)
784
5,263,787
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
588
Impairment Testing of Goodwill
Pursuant to IAS 36, goodwill is not subject to amortisation, but is tested for impairment on an annual
basis or more frequently, if specific events or circumstances arise that might indicate a potential
impairment.
Goodwill, which amounted to euro 1,886,711 thousand was allocated to the “Consumer Activities”
group of CGUs, which represent the only business segment in which the Group operates, and
considers to be the minimum level at which goodwill is monitored for internal management control
purposes.
The impairment test consists of comparing the recoverable amount for Consumer Activities with their
carrying amount, including both their operational assets and goodwill.
The value configuration used to determine the recoverable amount for Consumer Activities at
December 31, 2024 is the value in use, which corresponds to the present value of the future financial
flows which are expected to be generated by the group of CGUs, using a discount rate that reflects
the risks specific to the group of CGUs at the valuation date.
The forecasts are based on the adjusted EBITDA flows from the 2025 management plan approved
by the Board of Directors of the Company on February 26, 2025 - subsequently confirmed as of the
date of this document - drafted based on the new market context. The 2025 data have been adjusted
downwards to take into account the consensus estimates of analysts updated after the presentation
of the plan, as these are external evidence. For 2026, the consensus estimates of analysts have
been used.
The forecast flows, which reflect the Group’s market positioning thanks to its strategy of focusing on
High Value, have been sterilised in pursuant to IAS 36.44, to exclude cash flows related to expansion
investments, restructuring expenses and related benefits, to which the Company had not yet
committed at December 31, 2024.
The flows used for the determination of the recoverable amount, reflect a compound annual growth
rate (CAGR) for the revenues of the 2025-2026 two-year period, of 2.7%, compared to 2024, and an
average EBITDA margin adjusted for the period of 22.9%.
The impairment test at December 31, 2024 was performed using the assistance of an independent
third-party professional.
The discount rate, defined as the weighted average cost of capital (WACC) net of taxes, applied to
the prospective cash flows was equal to 8.14%. The pre-tax rate that equates the value in use,
estimated using cash flows net of taxes discounted at the WACC net of taxes, to the value in use,
estimated by using pre-tax flows discounted at the pre-tax WACC, was equal to 12.1%. The growth
rate of operating cash flows, for the purpose of estimating the terminal value (g) was equal to 0.44%.
The capitalisation rate for operating cash flows (WACC - g) was therefore equal to 7.70%, consistent
with the capitalisation rate of the consensus estimates of analysts.
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
589
Based on the results of the tests carried out, no impairment emerged.
The recoverable amount is greater than the carrying amount for Consumer Activities by 19%. For
the value in use to be equal to the carrying amount, a downward change in the key parameters is
necessary and in particular:
an increase by 145 basis points in the discount rate in the explicit forecast period and in the
terminal value;
a decrease of the annual growth rate beyond the explicit forecast period (“g”) equal to -158
basis points;
a decrease by 237 basis points in the average EBITDA margin adjusted in the explicit
forecast period and in the terminal value.
With regard to climate change issues, given that, the Group expects net benefits from operating cash
flows in the medium term, based on the internal estimates of the impacts of climate change, these
benefits were not included in the flows used for the impairment test. Additionally, a stress test was
carried out to assess the sustainability of the recoverable amount by using, in the calculation of the
terminal value, the most conservative cash flow forecast from analysts as a negative scenario, which
is assumed to also incorporate the effects of climate change. The calculation used is based on the
assumption that, once the scenario occurs, it will persist over time.
From the above-mentioned calculation, a recoverable amount emerges that is 8% higher than the
carrying amount of the Consumer Activities.
Impairment Testing of the Pirelli Brand (Intangible Asset with an Indefinite Useful Life):
The Pirelli Brand, valued at euro 2,270,000 thousand is an intangible asset with an indefinite useful
life, and as such is not subject to amortisation, but pursuant to IAS 36, is tested for impairment on
an annual basis or more frequently, if specific events or circumstances arise that may indicate a
potential impairment.
The impairment test at December 31, 2024 was performed using the assistance of an independent
third-party professional.
The configuration of the recoverable amount for impairment testing purposes at December 31, 2024,
was the fair value calculated using the income approach (the so-called level 3 of the IFRS 13 Fair
Value Measurement hierarchy). The fair value estimate is therefore based on:
-
the same flows used for the impairment testing of goodwill, that is, the forecasts made by
management based on the flows of the EBITDA adjusted from the 2025 Management
Plan, that were adjusted downwards without sterilising the effects of expansion
investments, in order to take into account the consensus estimates of analysts that were
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
590
updated after the presentation of the Plan and the consensus estimates of analysts for
2026;
-
valuation criterion based on the sum of parts, which also takes into account the
contribution of royalties from the Prometeon Tyre Group for the use of the Pirelli Brand in
relation to the Industrial segment, as expected in the forecasts made by management;
-
the excess earnings attributable to the Pirelli Brand which are derived by deducting the
notional rent or royalty rate of the Group’s operating activities other than the Brand,
expressed at fair value, from the prospective operating income;
-
a discount rate of 10.06%, which includes a premium relative to the WACC, determined
based on the riskiness of the specific asset and the growth rate “g” in the terminal value
of 0.04%. The pre-tax rate that equates the fair value, estimated using cash flows net of
taxes discounted at the net-of-tax discount rate, to the fair value estimated by using pre-
tax cash flows discounted at the pre-tax discount rate, was equal to 15.06%.
-
the TAB (Tax Amortisation Benefit) that is, the tax benefit that a market participant would
receive if they were to acquire the asset separately, due to the possibility of amortising
the asset for tax purposes.
For the purposes of impairment testing, the recoverable amount of the Pirelli Brand including theTAB
was compared with its respective carrying amount (including the TAB) and no impairment losses
emerged.
The recoverable amount is greater than the carrying amount of the Brand by 27.4%. For the fair
value to be equal to the carrying amount, a downward change in the key parameters is necessary,
and in particular:
a percentage decrease in revenues by 629 basis points in the explicit forecast period and in
the terminal value;
a decrease in the EBITDA margin adjusted of 111 basis points in the explicit forecast period
and in the terminal value;
an increase by 235 basis points in the discount rate in the explicit forecast period and in the
terminal value;
a decrease by 340 basis points in the growth rate “g” beyond the explicit forecast period.
With reference to climate change issues, the same stress test for goodwill was also carried out
for the Brand, and from which emerged a recoverable amount that was higher than the carrying
amount of the Pirelli Brand by 14.3%.
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
591
12.
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
The changes in investments in associates and joint ventures were as follows:
12.1 Investments in Associates
The details were as follows:
The decrease in Eurostazioni S.p.A. refers to the repayment of a significant portion of the share
capital.
The investments in associates were accounted for using the equity method, not material in terms of
their impact on the total consolidated assets, either individually or in aggregate form.
12.2 Investments in Joint Ventures
The details of the item were as follows:
The Group holds:
-
a 49% stake in the company Xushen Tyre (Shangai) Co., Ltd. a joint venture which, through
the company Jining Shenzhou Tyre Co., Ltd. owns a Consumer tyre manufacturing plant in
China. The plant provides the necessary production flexibility for the High Value segment,
given the evolution of the Chinese market, the expected developments in the electric car
segment and the increasing share of homologations obtained for the Original Equipment
(in thousands of euro)
Associates
JV
Total
Associates
JV
Total
Opening balance
7,469
78,928
86,397
7,812
72,415
80,227
Decreases
(5,201)
-
(5,201)
-
-
-
Increases
-
12,071
12,071
-
-
-
Distribution of dividends
(2,974)
-
(2,974)
(1,648)
-
(1,648)
Share of net income / (loss)
1,818
25,638
27,456
1,301
10,345
11,646
Share of other components recognised in Equity
-
3,040
3,040
-
(3,832)
(3,832)
Other
1
-
1
4
-
4
Closing balance
1,113
119,677
120,790
7,469
78,928
86,397
12/31/2024
12/31/2023
(in thousands of euro)
12/31/2023
Decreases
Distribution of
dividends
Share of net
income / (loss)
Other
12/31/2024
Eurostazioni S.p.A.
6,281
(5,201)
(2,808)
1,767
-
39
Investments in other associates
1,188
-
(166)
51
1
1,074
Total
7,469
(5,201)
(2,974)
1,818
1
1,113
(in thousands of euro)
12/31/2023
Increases
Share of net
income / (loss)
Share of other components
recognised in Equity
12/31/2024
Xushen Tyre (Shanghai) Co., Ltd.
64,538
-
25,137
4,071
93,746
PT Evoluzione Tyres
14,390
-
1,001
287
15,678
Middle East and North Africa Tyre Company
-
12,071
(500)
(1,318)
10,253
Total
78,928
12,071
25,638
3,040
119,677
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
592
channel in China, Japan and Korea. As announced on August 1, 2018, the joint venture
agreement relative to Xushen Tyre (Shanghai) Co., Ltd. provides for a for a Call Option in
favour of Pirelli Tyre S.p.A., exercisable from January 1, 2021 until March 31, 2026, which - if
exercised - would allow Pirelli Tyre S.p.A. to increase its stake in the company to up to 70%.
Pirelli Tyre S.p.A. has notified the shareholders of Xushen Tyre (Shanghai) Co., Ltd. of its
intention to not exercise the option until December 31, 2025, without prejudice to the right to
exercise the option thereafter, and in any case, by March 31, 2026;
-
a 63.04% stake of in PT Evoluzione Tyres, an entity which operates in Indonesia and is active
in the production of tyres for motorcycles. Even though the company is 63.04% owned, due to
the contractual agreements between the Shareholders, it falls under the definition of a joint
venture, in that the governance rules explicitly provide for the unanimous approval of decisions
regarding significant business activities.
-
a 25% investment stake in the Middle East and North Africa Tyre Company, with the remaining
75% owned by Saudi Arabia’s Public Investment Fund (PIF). Even though the company is only
25% owned, due to the contractual agreements between the Shareholders it falls under the
definition of a joint venture, in that the governance rules explicitly provide for the unanimous
consent of decisions regarding significant business activities. The joint venture, which includes
the construction of a manufacturing plant, will produce high quality car tyres under the Pirelli
brand, and will produce and market the tyres under a new local brand for the national and
regional market.
The investments in joint ventures were not relevant in terms of their impact on the total consolidated
assets, either individually or in aggregate form.
13.
OTHER FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE
INCOME
Other financial assets at fair value through Other Comprehensive Income amounted to euro 63,294
thousand at December 31, 2024 (euro 52,837 thousand at December 31, 2023). Movements were
as follows:
(in thousands of euro)
Opening balance at 01/01/2024
52,837
Translation differences
9
Increases
644
Decreases
(27)
Fair Value adjustment through Other Comprehensive Income
9,822
Other
9
Closing balance 12/31/2024
63,294
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
593
The composition of the item by individual security is as follows:
The fair value adjustments through Other Comprehensive Income equalled a positive net
amount of euro 9,822 thousand, and mainly refers to the RCS MediaGroup S.p.A. (positive to the
amount of euro 3,630 thousand) and Fin. Priv. S.r.l. (positive to the amount of euro 5,881 thousand).
For listed securities, the fair value corresponds to the stock market price at December 31, 2024. For
unlisted securities, the fair value was determined by using estimates based on the best available
information.
14.
DEFERRED TAX ASSETS AND LIABILITIES
Their composition is as follows:
Deferred tax assets and deferred tax liabilities are offset when the deferred taxes refer to the same
legal entity and the same taxation authority.
The item deferred tax liabilities mainly refers to the difference between the tax value and the
carrying amount of assets identified at the date of acquisition of the Pirelli Group by Marco Polo
Industrial Holding S.p.A., recorded in the Consolidated Financial Statements following the merger
(in thousands of euro)
12/31/2024
12/31/2023
RCS MediaGroup S.p.A.
21,929
18,299
Total
21,929
18,299
Unlisted securities
Fin. Priv. S.r.l.
29,297
23,416
Fondo Anastasia
-
24
Istituto Europeo di Oncologia S.r.l.
8,580
8,357
Tlcom I LP
199
190
Telco S.r.l.
450
450
Other companies
2,839
2,101
Total
41,365
34,538
Total other financial assets at Fair Value through
Other Comprehensive Income
63,294 52,837
(in thousands of euro)
12/31/2024
12/31/2023
Deferred tax assets
228,740
202,849
Deferred tax liabilities
(990,250)
(990,870)
Total
(761,510)
(788,021)
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
594
by incorporation of the Parent company, Marco Polo Industrial Holding S.p.A. into Pirelli, which took
place during the course of 2016.
Their composition of deferred taxes gross of the offsets carried out, was as follows:
The composition of deferred taxes related to temporary differences and tax losses carried forward,
is shown in the following table:
The item “Other” related to deferred tax assets, mainly includes deferred tax assets recognised
on surplus non-deducted interest expenses (euro 5,523 thousand) and on the benefit derived from
ACE (Allowance for Corporate Equity) (euro 11,872 thousand).
The item “Other” related to deferred tax liabilities, mainly includes deferred tax liabilities recorded
on the undistributed gains of the subsidiaries for which distribution in future financial years is
probable (euro 70,386 thousand).
(in thousands of euro)
12/31/2024
12/31/2023
Deferred tax assets
447,653
428,504
- of which within 12 months
223,268
242,113
- of which beyond 12 months
224,385
186,391
Deferred tax liabilities
(1,209,163)
(1,216,525)
- of which within 12 months
(209,360)
(190,225)
- of which beyond 12 months
(999,803)
(1,026,300)
Total
(761,510)
(788,021)
(in thousands of euro)
12/31/2024
12/31/2023
Deferred tax assets
Provisions for liabilities and charges
64,725
78,740
Property, plant and equipment
10,968
14,851
Leases
52,529
46,611
Provision for employee benefit obligations
59,015
44,751
Inventories
61,215
58,546
Tax losses carried forward
130,396
86,447
Trade receivables and other receivables
36,980
41,331
Trade payables and other payables
10,891
11,686
Other
20,934
45,541
Total
447,653
428,504
Deferred tax liabilities
Intangible assets
(871,193)
(907,594)
Property, plant and equipment
(150,802)
(150,979)
Leases
(50,005)
(45,699)
Provision for employee benefit obligations
(47,481)
(35,880)
Derivatives
(3,575)
(7,035)
Other
(86,107)
(69,338)
Total
(1,209,163)
(1,216,525)
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
595
The tax effect of gains and losses recognised directly in equity was positive to the amount of euro
13,224 thousand (euro 12,692 thousand for 2023), and is reported in the Statement of
Comprehensive Income. These changes were mainly due to tax effects connected to actuarial
gains/losses on employee benefits, and to the fair value adjustment of cash flow hedge derivatives.
At December 31, 2024 the value of unrecognised deferred tax assets on tax losses amounted to
euro 104,770 thousand, while those related to temporary differences amounted to euro 58,653
thousand. The latter item mainly includes unrecognised deferred tax assets on interest payables.
Deferred tax assets were not recognised, in that no taxable income was expected in order to justify
their recoverability.
The amounts for tax losses according to their expiry date, for which no deferred tax assets were
recognised, are shown below:
Of the total tax losses with no expiry date, euro 473,890 thousand refers to losses attributable to
subsidiaries in the UK, Spain and Brazil.
15.
TRADE RECEIVABLES
Trade receivables were as follows:
The gross value of trade receivables amounted to euro 696,198 thousand (euro 720,406 thousand
at December 31, 2023). At the reporting date, receivables which were past due by more than 30
days gross of credit notes to be issued and net of credit enhancement instruments, amounted to
14% of the total exposure (18% at December 31, 2023).
(in thousands of euro)
Year of expiry
2025
7,180
7,180
2026
5,077
5,090
2027
3,648
3,648
2028
424
424
2029
675
675
2030
20
20
2031
33
33
With no expiry date
479,403
530,278
Total
496,460
547,348
12/31/2024
12/31/2023
Total
Non-current
Current
Total
Non-current
Current
Trade receivables
696,198
-
696,198
720,406
-
720,406
Bad debt provision
(73,283)
-
(73,283)
(71,000)
-
(71,000)
Total
622,915
-
622,915
649,406
-
649,406
(in thousands of euro)
12/31/2024
12/31/2023
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
596
Receivables which were past due and not yet due were evaluated in accordance to the Group’s
policy described in the section on the adopted accounting standards.
The impaired receivables include both significant individual positions subject to individual impairment
and positions with similar credit risk characteristics which were grouped and impaired on a collective
basis. The calculation of the impairment is based on (i) a matrix which includes the credit ratings of
customers, provided by independent market assessors and on (ii) the value of receivables, which
takes the collateral and related insurance coverage into account. The credit ratings of customers
takes into account, among other factors, the effects of exogenous risks, including if the customers
are exposed, in the specific markets in which they operate, to risks related to climate change, which
determines the probability of default used in the calculation, and impacts the credit limits granted by
the insurance company to each counterparty. This influences the probability of default used in the
calculation, and impacts the credit limits set by the insurance company for each counter-party.
The changes in the bad debt provision were as follows:
Accruals to the bad debt provision are recognised net of releases, in the Income Statement under
“Net Impairment of Financial Assets”, (Note 35).
The carrying amount of trade receivables is considered to approximate their fair value.
Of the trade receivables that were fully impaired and subject to legal action, it is estimated that an
amount not exceeding 10% of their gross value could be recovered.
16.
OTHER RECEIVABLES
Other receivables were as follows:
(in thousands of euro)
12/31/2024
12/31/2023
Opening balance
71,000
69,877
Translation differences
(3,220)
(2,553)
Accruals
20,075
11,419
Decreases
(4,731)
(1,921)
Releases
(9,841)
(5,822)
Closing balance
73,283
71,000
Total
Non-current
Current
Total
Non-current
Current
Financial receivables
225,955
112,600
113,355
229,856
122,430
107,426
Trade accruals and deferrals
41,531
6,251
35,280
33,447
3,986
29,461
Receivables from employees
6,244
589
5,655
8,579
459
8,120
Receivables from social security and welfare institutions
941
-
941
2,168
-
2,168
Receivables from tax authorities not related to income taxes
388,198
161,203
226,995
473,852
253,513
220,339
Other receivables
99,529
37,195
62,334
91,687
37,839
53,848
762,398
317,838
444,560
839,589
418,227
421,362
Bad debt provision for other receivables and financial receivables
(8,862)
(8,312)
(550)
(11,715)
(9,602)
(2,113)
Total
753,536
309,526
444,010
827,874
408,625
419,249
(in thousands of euro)
12/31/2024
12/31/2023
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
597
Financial receivables non-current (euro 112,600 thousand) refers mainly to euro 60,523
thousand, the sum deposited as guarantees for tax and legal disputes in relation to the subsidiary
Pirelli Pneus Ltda. (Brazil) and remunerated at market rates, to euro 15,451 thousand, the sum
deposited in escrow accounts in favour of the pension funds of Pirelli UK Ltd., to euro 14,960
thousand in contributions paid in cash at the time of signing an association in participation contract
and to euro 7,791 thousand in loans, disbursed in favour of the Indonesian joint venture PT
Evoluzione Tyres.
Financial receivables current (euro 113,355 thousand) refers mainly to euro 78,552 thousand for
the short-term portion of loans disbursed to the joint venture, Jining Shenzhou Tyre Co., Ltd., for
which there was no significant increase in credit risk compared to the date of disbursement.
The item bad debt provision for other receivables and financial receivables (euro 8,862
thousand) mainly includes euro 8,369 thousand related to the impairment of financial receivables.
The item receivables from tax authorities not related to income taxes (euro 388.198 thousand
compared to euro 473,852 thousand for at December 31, 2023) is mainly comprised of receivables
for IVA (value added tax) and other indirect taxes whose recoverability is expected in future financial
years. This decrease compared to December 31, 2023 mainly refers to the impact of the exchange
rate effect (negative to the amount of euro 59,718 thousand), especially for the Brazilian subsidiaries
whose currencies depreciated during the course of the year, and to the reclassification to other
receivables - current of euro 13,894 thousand related to the sale of tax receivables to third parties
by the Brazilian subsidiary Pirelli Comercial de Pneus Brasil Ltda.
Other receivables non-current (euro 37,195 thousand) refers mainly to amounts deposited as
guarantees for legal and tax disputes for the Brazilian companies (euro 34,965 thousand).
Other receivables current (euro 62,334 thousand) includes:
-
advances to suppliers amounting to euro 17,935 thousand;
-
receivables from the sale of tax receivables to third parties by the Brazilian affiliate Pirelli
Comercial de Pneus Brasil Ltda. to the amount of euro 13,894 thousand. These
receivables were fully collected in January 2025;
-
receivables from associates and joint ventures to the amount of euro 7,766 thousand,
mainly for royalties and the sale of materials and moulds;
-
receivables to the amount of euro 6,715 thousand in yet to be collected state grants.
-
receivables from the Prometeon Group to the amount of euro 3,830 thousand mainly for
royalties;
-
receivables for insurance reimbursements and other indemnities to the amount of euro
2,064 thousand;
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
598
For other receivables current and non-current, the carrying amount is considered to approximate
their fair value.
17.
TAX RECEIVABLES
Tax receivables refer to income taxes which amounted to euro 46,962 thousand (of which euro
9,973 thousand was non-current) compared to euro 43,892 thousand at December 31, 2023 (of
which euro 11,318 thousand was non-current).
18.
INVENTORIES
Inventories were as follows:
The impairment loss on inventories, expressed net of reversals, amounted to euro 17,826 thousand
(an impairment loss of euro 6,383 thousand in 2023).
Inventories were not subject to any guarantee restrictions.
19.
OTHER FINANCIAL ASSETS AT FAIR VALUE THROUGH THE INCOME STATEMENT
Other financial assets at fair value through the Income Statement - current amounted to euro 165,965
thousand at December 31, 2024, compared to euro 228,759 thousand at December 31, 2023.
The amount at December 31, 2024 included euro 147,079 thousand (euro 196,198 thousand at
December 31, 2023), relative to investments made by the Argentine subsidiary in listed dollar-linked
bond instruments, to mitigate the effects of depreciation on the local currency. The decrease
compared to the amount at December 31, 2023, was due, in addition to the change in fair value of
the instruments, to the divestment carried out during the first half-year amounting to approximately
US$ 60 million, which was used by the Argentine subsidiary to settle trade payables and other
outstanding intra-group debts and payables towards third-party suppliers.
For unlisted securities, the fair value was determined by using estimates based on the best available
information.
(in thousands of euro)
12/31/2024
12/31/2023
Raw and auxiliary materials and consumables
217,797
198,585
Sundry materials
23,750
16,294
Unfinished and semi-finished products
100,285
83,580
Finished products
1,125,814
1,072,160
Advances to suppliers
61
817
Total
1,467,707
1,371,436
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
599
Changes in the fair value for the period were recognised in the Income Statement under “Financial
Income” (Note 37).
20.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents went from euro 1,252,769 thousand at December 31, 2023 to euro
1,502,741 thousand at December 31, 2024, and refer to current bank account balances and short-
term bank deposits.
Details of the change in the balance are provided in the Consolidated Statement of Cash Flows.
They are concentrated in the treasury centres of the Group, and in companies that generate liquidity
and use it locally. They are mainly deployed, in accordance with risk diversification principles and in
compliance with minimum rating levels, on the market for deposits withshort-term maturities with
bank counter-parties at interest rates that are aligned with the prevailing market conditions. The
credit risk associated with cash and cash equivalents is considered to be limited as the counter-
parties are represented by leading national and international banking institutions.
For the purposes of the Statement of Cash Flow, the balance of cash and cash equivalents was
recorded net of bank overdrafts, in the amount of euro 1,469 thousand at December 31, 2024 (euro
3,918 thousand at December 31, 2023).
21.
EQUITY
21.1 Attributable to the Owners of the Parent Company
Equity attributable to the Owners of the Parent Company went from euro 5,494,393 thousand at
December 31, 2023 to euro 5,756,071 thousand at December 31, 2024.
The subscribed and paid-up share capital at December 31, 2024 amounted to euro 1,904,375
thousand and was represented by 1,000,000,000 registered ordinary shares without indication of
their nominal value.
The translation reserve, generated by the conversion into euro of the financial statements of
subsidiaries that use a currency other than the euro as their functional currency, was negative to the
amount of euro 834,999 thousand at December 31, 2024. Movements for the year included a
negative change of euro 167,719 thousand, mainly related to the subsidiaries in Brazil, Mexico and
Argentina, which was partially offset by a positive change in China and the United States.
Other reserves with changes in the Statements of Comprehensive Income went from a negative
euro 22,600 thousand at December 31, 2023 to a negative euro 54,438 thousand at December 31,
2024, mainly due to the negative effect of actuarial losses on pension funds (euro 39,051 thousand)
and of the cash flow hedge reserve (euro 15,798 thousand), which was partially offset by financial
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
600
assets at fair value through Other Comprehensive Income (positive changes to the amount of euro
9,822 thousand), and the tax effect related to actuarial losses on pension funds and to the fair value
adjustment of derivatives designated as cash flow hedges (positive to the amount of euro 13,189
thousand).
Other reserves/retained earnings went from euro 4,279,898 thousand at December 31, 2023 to
euro 4,741,133 thousand at December 31, 2024, essentially due to the net result for the financial
year (positive to the amount of euro 467,981 thousand), to hyperinflation in Argentina and Turkey
(positive changes to the amount of euro 175,233 thousand and euro 16,500 thousand, respectively,
which was counterbalanced by a negative translation reserve of euro 29,897 thousand and euro
4,561 thousand, respectively) and by approved dividends (negative to the amount of euro 198,000
thousand).
21.2 Attributable to Non-Controlling Interests
Equity attributable to Non-Controlling Interests went from euro 125,201 thousand at December
31, 2023 to euro 156,183 thousand at December 31, 2024, an increase due to the positive change
attributable to the results for the period to the amount of euro 33,123 thousand, and gains from
foreign currency translation differences which amounted to euro 2,779 thousand, net of dividends
paid to minority shareholders to the amount of euro 5,134 thousand.
22.
PROVISIONS FOR LIABILITIES AND CHARGES
Movements in the non-current portion of provisions that occurred during the period are shown
below:
Increases mainly refer to accruals to the provisions for labour disputes particularly for the Brazilian
subsidiaries to the amount of euro 7,079 thousand. With regard to other risks, the increase for the
period mainly refers to the STI (Short Term Incentive) and LTI (2023-2025 and 2024-2026 Long
Term Incentive) Plans for the Directors participating in the plan.
Uses were mainly attributable to labour disputes for the settlement of ongoing litigation. With regard
to other risks, the use resulted from the partial liquidation of the provision for severance indemnities
paid to Directors.
PROVISION FOR LIABILITIES AND CHARGES -
NON-CURRENT PORTION (in thousands of euro)
12/31/2023
Currency
translation
differences
Increases
Uses
Releases
Reclass.
12/31/2024
Provision for labour disputes
16,929
(2,654)
8,470
(5,147)
(2,675)
-
14,923
Provision for tax risks not related to income taxes
4,218
(522)
44
(292)
(868)
-
2,580
Provision for environmental risks
35,748
(1,315)
-
(447)
(30)
-
33,956
Provision for other risks and expenses
52,653
417
9,852
(9,510)
(324)
(3,424)
49,664
Total
109,548
(4,074)
18,366
(15,396)
(3,897)
(3,424)
101,123
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
601
Reclassifications refer mainly to the reclassification from non-current provisions to other payables,
of the portions of the 2022-2024 LTI and STI Plan accrued in previous years, which will be paid out
during the first half-year of 2025.
Movements in the current portion of provisions that occurred during the period, are shown below:
Increases to the provisions for other risks were mainly attributable to the purchase of greenhouse
gas emission allowances, consistent with the provisions of the European Emission Trading Schemes
to the amount of euro 6,622 thousand, and to provisions for insurance risks.
Uses refer to greenhouse gas emission allowances, consistent with European Emission Trading
Schemes, to the amount of euro 6,125 thousand.
The releases related to other risks mainly refer to provisions for work place accidents and
commercial risks.
23.
PROVISIONS FOR EMPLOYEE BENEFIT OBLIGATIONS AND OTHER ASSETS
Provisions for Employee Benefit Obligations and Other Assets – non-current portion
The item is composed as follows:
PROVISION FOR LIABILITIES AND CHARGES -
CURRENT PORTION (in thousands of euro)
12/31/2023
Currency
translation
differences
Increases
Uses
Releases
Business
combination
12/31/2024
Provision for labour disputes
394
(40)
177
-
(322)
-
209
Provision for tax risks not related to income taxes
2,439
(418)
657
(12)
(1,276)
2,213
3,603
Provision for environmental risks
2,424
(46)
199
(527)
-
-
2,050
Provision for restructuring and reorganisation
1,827
(150)
-
(1,677)
-
-
-
Provision for product claims and warranties
12,874
152
1,029
(312)
(1,751)
-
11,992
Provision for other risks and expenses
15,365
6
9,017
(7,478)
(3,401)
-
13,509
Total
35,323
(496)
11,079
(10,006)
(6,750)
2,213
31,363
(in thousands of euro)
31/12/2024
31/12/2023
Pension funds in surplus
93,838
115,894
Total other assets
93,838
115,894
Pension funds in deficit
63,577
68,554
Employees' leaving indemnities (TFR - Italian companies)
20,978
19,830
Healthcare plans
11,434
12,079
Other benefits
88,051
79,755
Total provisions for employee benefit obligations
184,040
180,218
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
602
Pension Funds
The following table shows the composition of pension funds at December 31, 2024:
The following table shows the composition of pension funds at December 31, 2023:
The characteristics of the main pension funds in place at December 31, 2024 were as follows:
Germany: this is an unfunded defined benefits plan based on final salary. This fund guarantees
a pension in addition to the state pension. The plan was closed in October 1982. Consequently,
the participants to this plan are employees who were hired prior to that date;
USA: this is a funded defined benefits plan based on final salary, and is administered through a
Trust. This fund guarantees a pension in addition to the state pension. The plan was closed in
2001 and frozen in 2003 for employees who then transferred to a defined contribution scheme.
All the participants of the plan are non-active;
UK: these are funded defined benefits plans based on salary trends. These funds guarantee a
pension in addition to the state pension and are administered through Trust. The plans, managed
by the subsidiary Pirelli Tyres Ltd. were closed in 2001 to new entrants and frozen during the
course of 2010 for employees hired prior to 2001, who were then offered a transfer to defined
contribution schemes. The plan managed by the subsidiary Pirelli UK Ltd., which includes
employees from the Cables and Systems division sold in 2005, had already been frozen in 2005
at the date of the disposal. The surplus recognised at December 31, 2024 relative to provisions
still outstanding was equal to the recoverable amount, assuming the gradual extinguishing of the
plan liabilities over time. All the participants of the plan are non-active;
Sweden: this a defined benefits plan (ITP2), which is closed to new entrants. The only
participants are retired employees (pensioners) and holders of deferred pensions. It is based on
Germany
Sweden
Total unfunded
pension funds
USA
UK
Switzerland
Total funded
pension funds
Total
Present value of liabilities
59,483
2,068
61,551
75,160
685,282
34,084
794,526
856,077
Fair value of plan assets
(76,571)
(777,709)
(32,058)
(886,338)
(886,338)
Total Assets in surplus
(1,411)
(92,427)
(93,838)
(93,838)
Total Liabilities in deficit
59,483
2,068
61,551
2,026
2,026
63,577
Total pension funds
(30,261)
(in thousands of euro)
12/31/2024
Germany
Sweden
Total unfunded
pension funds
USA
UK
Switzerland
Total funded
pension funds
Total
Present value of liabilities
62,115
2,229
64,344
78,358
719,618
35,077
833,053
897,397
Fair value of plan assets
(77,526)
(835,512)
(31,699)
(944,737)
(944,737)
Total Assets in surplus
(115,894)
(115,894)
(115,894)
Total Liabilities in deficit
62,115
2,229
64,344
832
3,378
4,210
68,554
Total pension funds
(47,340)
(in thousands of euro)
12/31/2023
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
603
percentages applied to different wage and salary brackets. All the participants in the plan are
non-active;
Switzerland: these are funded defined benefit plans that guarantee a pension in addition to the
state pension and are open to new employees. The pension is based on contributions paid.
Movements for 2024 in the defined benefits pension funds (refers to funded and unfunded
pension funds), were as follows:
Movements for 2023 in the defined benefits pension funds (refers to funded and unfunded
pension funds), were as follows:
(in thousands of euro)
Present value of
gross liabilities
Fair value of plan
assets
Total
Opening balance at January 1, 2024
897,397
(944,737)
(47,340)
Currency translation differences
37,192
(42,351)
(5,159)
Movements through Income Statement:
- current service costs
1,033
-
1,033
- past service costs
3,282
-
3,282
- interest expense / (income)
40,731
(44,622)
(3,891)
45,046
(44,622)
424
Remeasurements recognised in equity:
- actuarial (gains) / losses from change in demographic assumptions
(2,381)
-
(2,381)
- actuarial (gains) / losses from change in financial assumptions
(57,737)
-
(57,737)
- experience adjustment (gains) / losses
(238)
-
(238)
- return on plan assets, net of interest income
-
96,322
96,322
(60,356)
96,322
35,966
Employer contributions
-
(14,057)
(14,057)
Employee contributions
588
(588)
-
Benefits paid
(63,790)
58,507
(5,283)
Other
-
5,188
5,188
Closing balance at December 31, 2024
856,077
(886,338)
(30,261)
(in thousands of euro)
Present value of
gross liabilities
Fair value of plan
assets
Impact of minimum
funding
requirement/asset
ceiling
Total
Opening balance at January 1, 2023
907,014
(957,552)
228
(50,310)
Currency translation differences
14,034
(16,394)
4
(2,356)
Movements through Income Statement:
- current service costs
874
-
874
- past service costs
(20)
-
(20)
- interest expense / (income)
43,187
(47,031)
(3,844)
44,041
(47,031)
-
(2,990)
Remeasurements recognised in equity:
- actuarial (gains) / losses from change in demographic assumptions
(24,757)
-
(24,757)
- actuarial (gains) / losses from change in financial assumptions
22,365
-
22,365
- experience adjustment (gains) / losses
(3,032)
-
(3,032)
- return on plan assets, net of interest income
-
35,539
35,539
- change in asset ceiling
-
-
(232)
(232)
(5,424)
35,539
(232)
29,883
Employer contributions
-
(21,763)
(21,763)
Employee contributions
618
(618)
-
Benefits paid
(62,894)
57,480
(5,414)
Employer settlement payment
-
-
-
Other
8
5,602
5,610
Closing balance at December 31, 2023
897,397
(944,737)
-
(47,340)
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
604
Current and past service costs are included under “Personnel Expenses” (Note 32), and net interest
payables are included under “Financial Expenses” (Note 38).
The following table shows the composition of funded pension fund assets:
The main risks to which the Group is exposed in relation to the pension funds are detailed as follows:
the volatility of the pension fund assets: in order to be able to balance liabilities, the investment
strategy cannot limit its horizons exclusively to risk free assets. This implies that some
investments, such as listed securities represent high volatility in the short-term, and this exposes
the plans to the risk of short-term declines in asset values and consequently increased
imbalances. However, this risk is mitigated by diversifying investments into numerous investment
classes, through different investment managers, through different investment styles and with
exposures to multiple factors which are not perfectly correlated to each other. Moreover, the
investments are continuously revised in response to market conditions, and adjusted in order to
maintain the overall risk at acceptable levels;
variations in bond yields and expected inflation: expectations of falling bond yields and/or rising
inflation lead to an increase in the value of liabilities. The plans reduce this risk through
investments in liability hedging assets. In the UK, the protection provided by a portfolio of this
type has been built up over the past few years and, since the second quarter of 2014, has
reached a coverage level of approximately 100% of the liabilities covered by assets.
life expectancy: the increase in life expectancy leads in an increase in the value of the liabilities
for defined benefit plans. The UK plans completed a process during the course of 2016 that
allowed them, through so-called longevity swaps which were entered into with a pool of insurers,
to cover approximately 100% of this risk. However, prudent assumptions are still used to assess
residual risks and the adequacy of these assumptions is reviewed periodically.
In the UK the management of the plan assets has been delegated, under the supervision and within
a precise mandate assigned by the Trustees, to a Fiduciary Manager who operates in accordance
with a Liability Driven Investment (LDI) model, that is, using the liabilities as the benchmark, in order
to minimise the volatility (and therefore the risk) of the deficit, which has in fact been reduced by
more than one third compared to the levels which existed prior to its introduction (at the beginning
of 2011).
(in thousand of euro)
listed
unlisted
total
%
listed
unlisted
total
%
Shares
18,275
113,171
131,446
14.8%
22,660
142,736
165,396
17.5%
Bonds
453,548
17,450
470,998
53.1%
426,206
36,332
462,538
49.0%
Insurance policies
-
4,734
4,734
0.5%
-
5,409
5,409
0.6%
Deposits
86,919
5,812
92,731
10.5%
46,134
25,065
71,199
7.5%
Balanced funds
13,828
13,899
27,727
3.1%
14,386
34,085
48,471
5.1%
Real Estate
9,576
42,601
52,177
5.9%
7,993
43,253
51,246
5.4%
Derivatives
130,119
(23,594)
106,525
12.1%
130,853
9,625
140,478
14.9%
Total
712,265
174,073
886,338
100.0%
648,232
296,505
944,737
100.0%
12/31/2024
12/31/2023
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
605
The key parameters of this mandate were as follows:
a mix of assets that is managed dynamically over time rather than through a fixed strategic
allocation;
hedged coverage of approximately 100%-115% (of the asset value) of the risk associated with
interest rates and inflation expressed as a percentage of the asset value - through the use of
debt instruments (government bonds) and derivatives;
the management of exchange rate risk, with the objective of hedging at least 70% of the exposure
to the foreign currencies in the portfolio, through the use of forward contracts.
In the UK, the funding arrangements and funding policies are reviewed every three years. The last
review was completed in June 2024, and the next one will begin in April 2026. In the United States
funding assessments are carried out on an annual basis.
The contributions which are expected to be paid into unfunded pension funds during the 2025
financial year amount to euro 5,134 thousand, while for funded pension funds the amount expected
is euro 7,505 thousand.
Employees’ Leaving Indemnities (TFR)
Movements for the year in the provision for employees’ leaving indemnities were as follows:
The current service cost, for services rendered by employees, is included under “Personnel
Expenses” (Note 32) and interest payables are included under “Financial Expenses” (Note 38).
(in thousands of euro)
12/31/2024
12/31/2023
Opening balance
19,830
20,064
Movements through Income Statement:
- current service cost
155 121
- interest expense
769 917
Remeasurements recognised in equity:
- actuarial (gains) / losses from changes in financial assumptions
231
598
- effect of experience adjustments
1,281
-
Liquidation/advances
(1,140) (1,772)
Other
(148) (98)
Closing balance
20,978
19,830
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
606
Healthcare Plans
This item refers exclusively to the healthcare plan in place in the United States.
Movements for the period were as follows:
The service cost is included under “Personnel Expenses” (Note 32), and interest payables are
included under “Financial Expenses” (Note 38).
The contributions which are expected to be paid into the healthcare plan during the 2025 financial
year, amount to euro 1,353 thousand.
Additional Information on Post-Employment Benefits
Net actuarial losses accrued during 2024 and recorded directly in Other Comprehensive Income
amounted to euro 38,637 thousand, (net actuarial losses for 2023 had amounted to euro 30,025
thousand).
The main actuarial assumptions used at December 31, 2024 were the following:
The main actuarial assumptions used at December 31, 2023 were the following:
(in thousands of euro)
USA
Liabilities recognised in the Financial Statements at 12/31/2024
11,434
Liabilities recognised in the Financial Statements at 12/31/2023
12,079
(in thousands of euro)
12/31/2024
12/31/2023
Opening balance
12,079
13,075
Translation differences
712
(442)
Movements through Income Statement:
- current service cost
1
1
- interest expense
544
634
Remeasurements recognised in equity:
- actuarial / (gains) losses from changes in financial assumptions
1
221
- effect of experience adjustments
(904)
(471)
Grant/benefits paid
(999)
(939)
Closing balance
11,434
12,079
Italy
Germany
Sweden
UK
USA
Switzerland
Discount rate
3.25%
3.35%
3.40%
5.60%
5.30%
0.95%
Inflation rate
2.00%
2.00%
1.80%
3.37%
N/A
0.75%
Italy
Germany
Sweden
UK
USA
Switzerland
Discount rate
3.40%
3.50%
3.10%
4.80%
4.90%
1.45%
Inflation rate
2.00%
2.00%
1.60%
3.29%
N/A
1.75%
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
607
The following table presents an analysis of the payment deadlines relative to post-employment
benefits:
The weighted average duration of post-employment benefit obligations equalled 10.85 years for
pension funds (11.19 years at December 31, 2023), 6.52 years for employees’ leaving indemnities
(8.00 years at December 31, 2023) and 6.52 years for medical assistance plans (6.68 years at
December 31, 2023).
The following table shows a sensitivity analysis for the relevant actuarial assumptions at the end of
the financial year:
At the end of the 2023 financial year the situation was as follows:
The sole purpose of the above analysis is to estimate the change in the liabilities, based on changes
in the discount rates and in the inflation rate in the UK, which are close to the central assumption for
those rates, rather than referring to an alternative set of assumptions.
This sensitivity analysis on the liability for post-employment benefits is based on the same
methodology used to calculate the liability recognised in the Financial Statements.
Other Long-Term Benefits
The composition of other benefits was as follows:
(in thousands of euro)
within 1 year
1 to 2 years
3 to 5 years
6 to 10 years
Total
Pension funds
63,373
63,810
194,668
332,213
654,064
Employees' leaving indemnities (TFR)
2,344
2,089
6,308
10,271
21,012
Healthcare plans
1,353
1,317
3,650
4,795
11,115
Total
67,070
67,216
204,626
347,279
686,191
(in %)
Change in
assumptions
Discount rate
0.25%
decrease of
2.50%
increase of
2.64%
Inflation rate (only UK plans)
0.25%
increase of
1.94%
decrease of
1.91%
Impact on post employment benefits
Increase in assumptions
Decrease in assumptions
(in %)
Change in
assumptions
Discount rate
0.25%
decrease of
2.67%
increase of
2.80%
Inflation rate (only UK plans)
0.25%
increase of
2.13%
decrease of
2.10%
Impact on post employment benefits
Increase in assumptions
Decrease in assumptions
(in thousands of euro)
12/31/2024
12/31/2023
Long Term Incentive plans
32,403
24,532
Jubilee awards and other long-term benefits
44,554
43,961
Leaving indemnities
11,094
11,262
Total
88,051
79,755
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
608
The item Long-Term Incentive Plans refers to the amount allocated for the 2023-2025 and 2024-
2026 three-year monetary LTI Plans for the Group’s management, while the portion related to the
2022 - 2024 Plan was reclassified from provisions for employee benefit obligations to payables to
employees under the item “Other Payables” (Note 26), as it will be settled during the first half-year
of 2025. It should be noted that the existing incentive plans are based on a rolling mechanism (a
new three-year Incentive Plan will therefore be reintroduced each year). For further details, reference
should be made to the Remuneration Report in the 2024 Annual Report.
24.
BORROWINGS FROM BANKS AND OTHER FINANCIAL INSTITUTIONS
Borrowings from banks and other financial institutions were as follows:
The item bonds refers to:
-
the non-interest-bearing senior unsecured guaranteed equity-linked bond loan (“Convertible
Bond Loan”), [ISIN: XS2276552598] with a nominal value of euro 500 million maturing on
December 22, 2025. This bond loan, reserved for institutional investors, was issued by Pirelli
& C. S.p.A. on December 22, 2020, guaranteed by Pirelli Tyre S.p.A. and admitted to trading
on the Vienna MTF, a multilateral trading facility operated by the Vienna Stock Exchange
The bond is convertible, at the discretion of the bondholders, into new ordinary shares of the
Company at a price of euro 5.9522 per share (originally euro 6.235 per share), subject to
further anti-dilutive adjustments provided for in the bond agreement. At December 31, 2024,
the transaction was fully classified under financial payables - current to the amount of euro
490.1 million. The difference from the nominal value refers to the fair value of the option held
by the bond subscribers to convert the bond into new ordinary shares of the Company at a
predefined price. This value was recorded at inception under equity reserves in the amount
of euro 41.2 million (net of transaction costs);
-
the rated sustainability-linked bond loan the “Bond SLB EUR 600m 4.25% due 01/28” [ISIN:
XS2577396430] with a nominal value of euro 600 million, placed on January 11, 2023 with
international institutional investors, with a fixed coupon of 4.25% and maturing in January
2028. The transaction, fully classified under financial payables - non-current, was issued as
part of the EMTN Programme (Euro Medium Term Note Programme), and approved by the
Board of Directors on February 23, 2022. These securities are listed on the Luxembourg
Stock Exchange. The agreement governing these securities provides for a coupon increase
of 0.25% for each of the two contractually stipulated sustainability parameters (linked to the
Total
Non-current Current
Total
Non-current
Current
Bonds
1,679,980
1,189,839
490,141
1,095,029
1,095,029
-
Borrowings from banks
1,578,285
1,496,460
81,825
2,316,825
1,696,123
620,702
Borrowings from other financial institutions
27,820
-
27,820
29,494
-
29,494
Lease liabilities
485,628
380,467
105,161
482,485
383,389
99,096
Accrued financial expenses and deferred financial income
51,282
409
50,873
37,759
-
37,759
Other financial payables
6,460
1,423
5,037
2,614
137
2,476
Total
3,829,455
3,068,598
760,857
3,964,205
3,174,678
789,527
(in thousands of euro)
12/31/2024
12/31/2023
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
609
Group’s sustainability targets), in the event that either of the respective targets is not met by
2025. At December 31, 2024, the rating assigned by the rating agency Fitch on this
instrument was BBB, revised upwards in July 2024, while the rating assigned by the rating
agency Standard & Poor’s was BBB-.
-
rated sustainability-linked bond “Bond SLB EUR 600m 3.875% due 07/29” [ISIN:
XS2847641961] with a nominal value of euro 600 million, placed on July 2, 2024 with
international institutional investors, with a fixed coupon of 3.875% and maturing in July 2029.
The transaction, fully classified under financial payables non-current, was issued as part of
the EMTN Programme (Euro Medium Term Note Programme). These securities are listed on
the Luxembourg Stock Exchange. The agreement governing the bonds provides for a coupon
increase of 0.25% for each of the two contractually stipulated sustainability parameters
(linked to the Group’s new sustainability targets that were validated by SBTi in September
2024) in the event that either of the respective targets is not met by 2027. At December 31,
2024, the rating assigned by the rating agency Fitch on this instrument was BBB, revised
upwards during July 2024, while the rating assigned by the rate agency Standard & Poor’s
was BBB-.
It should also be noted that at December 31, 2023, the item “bonds” included the “Schuldschein”
financing to the amount of euro 20.0 million. This financing was fully repaid in July 2024.
The carrying amount for the item bonds was determined as follows:
The item borrowings from banks, which amounted to euro 1,578,285 thousand, is subdivided as
follows:
(in thousands of euro)
12/31/2024
12/31/2023
Nominal value
1,700,000
1,120,000
Equity component of the convertible bond
(41,791)
(41,791)
Transaction costs
(16,048)
(11,244)
Bond discount
(3,780)
(1,776)
Amortisation of effective interest rate
8,294
5,085
Non-monetary interest convertible bond loan
33,305
24,755
Total
1,679,980
1,095,029
(in thousands of euro)
12/31/2024
Due Date
Interest rate
Nominal value
Balance
Non - current
Current
Club Deal EUR 1.6bn ESG 2022 5y
02/22/2027 EURIBOR + spread
600,000
598,778
598,778
-
Bilateral ESG EUR 300m 2023 2,5y facility
02/27/2026 EURIBOR + spread
300,000
299,715
299,715
-
Club Deal EUR 600m ESG 2024 4,5y
10/20/2028 EURIBOR + spread
600,000
597,967
597,967
-
Borrowings from banks of foreing companies
81,825
-
81,825
Total borrowings from banks
1,578,285
1,496,460
81,825
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
610
The item mainly refers to:
the use of the “Club Deal EUR 1.6bn ESG 2022 5y” financing by Pirelli & C. S.p.A. to the
amount of euro 598,778 thousand, and classified under financial payables - non-current. This
financing facility, with a floating interest rate (EURIBOR + spread), is guaranteed by Pirelli
Tyre S.p.A, and was signed on February 21, 2022, with a pool of leading Italian and
international banks, with a five-year maturity. This facility, which is parametrised to the
Group’s ESG objectives, consists of three tranches totalling euro 1.6 billion, distributed as
follows:
o the Pirelli & C. S.p.A. term loan with a nominal value of euro 600,000 thousand which
was fully utilised and a revolving cash credit facility for euro 100,000 thousand, which
at December 31, 2024 had not been utilised;
o the Pirelli International Treasury S.p.A. revolving cash credit facility for euro 900,000
thousand, which at December 31, 2024 had not been utilised.
It should be noted that following the most recent reporting for the sustainable KPIs and having
achieved the objectives for the year, the Group is benefiting from the related incentives to
reduce the cost of the credit facility.
the “Bilateral ESG 300m 2023 2.5y facility” for euro 299,715 thousand related to the bilateral
financing for a nominal amount of euro 300 million, disbursed in July 2023 in favour of Pirelli
& C. S.p.A. by a leading bank, maturing in February 2026 and guaranteed by Pirelli Tyre
S.p.A. This financing, at a floating rate (EURIBOR + spread), is parametrised to some of the
Group’s sustainability targets and is classified under financial payables - non-current. It
should be noted that following the most recent reporting for the sustainable KPIs and having
achieved the objectives for the year, starting in June 2024, the Group began to benefit from
the related incentives to reduce the cost of the credit facility.
the “Club Deal EUR 600m ESG 2024 4.5y” financing for euro 597,967 thousand, related to
the euro 600 million credit facility at a floating rate (EURIBOR + spread), guaranteed by Pirelli
Tyre S.p.A., and signed on March 22, 2024 with a pool of leading Italian and international
banks, and maturing in four and a half years. This financing - classified under financial
payables – non current - is parametrised to some of the Group’s sustainability targets, with
annual reporting to commence with the publication of the Consolidated Financial Statements
for 2024;
euro 31,007 thousand (euro 141,175 thousand at December 31, 2023) related to financing
disbursed in Brazil by local and international banks, and entirely classified under borrowings
from banks - current;
borrowings from banks and the use of credit facilities disbursed to subsidiaries in China to
the amount of euro 17,751 thousand and classified under current borrowings from banks
(euro 27,322 thousand at December 31, 2023), and in Turkey to the amount of euro 27,861
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
611
thousand and classified under current borrowings from banks (euro 20,240 thousand at
December 31, 2023).
It should also be noted that in December 2023, a revolving committed credit facility the “Club Deal
EUR 500m ESG 2023 4y RCF” for euro 500 million was signed with a select pool of international
banks, maturing in four years (December 2027), guaranteed by Pirelli Tyre S.p.A. and parameterised
to the Group’s new sustainability targets (reporting to commence with the data for 2024). At
December 31, 2024, the credit facility was unutilised;
It should be noted that at December 31, 2023, the item “Borrowings from banks of foreign companies”
included euro 25,204 thousand related to the Russian subsidiary. These credit facilities resulted as
unutilised at December 31, 2024.
It should also be noted that since July 2024 the Group has been benefiting from a reduction in the
margins of the bank debt facilities held by Pirelli & C S.p.A. and Pirelli International Treasury S.p.A.,
thanks to the improvement of the Group’s credit rating to BBB by the Fitch rating agency.
At December 31, 2023, the item borrowings from banks included the “Club Deal EUR 800m ESG
2020 5y” financing for euro 798.4 million and the “Bilateral ESG 400m 2021 3y facility” for euro 399.6
million. These credit facilities were fully repaid during the course of 2024.
At December 31, 2024, the Group had a liquidity margin of euro 3,168,706 thousand, calculated as
the sum of cash and cash equivalents which equalled euro 1,502,741 thousand, other current
financial assets at fair value through the Income Statement to the amount of euro 165,965 thousand
and unutilised credit facilities to the amount of euro 1,500,000 thousand. The above-mentioned
liquidity margin is sufficient to cover financial debt maturities, until the third quarter of 2029.
With regard to lease liabilities the change compared to the previous financial year, refers to the
remeasurement of existing contracts, which was more than offset by the payment of leasing fees.
Non-discounted future payments for lease contracts, for which the exercise of extension options is
not considered to be reasonably certain, and which were therefore not included in the item lease
liabilities, amounted to euro 145,379 thousand (euro 148,501 thousand at December 31, 2023).
Accrued financial expenses and deferred financial income (euro 51,282 thousand), mainly
refers to accrued interest on bond loans to the amount of euro 35,972 thousand (euro 24,780
thousand at December 31, 2023), and to accrued interest on borrowings from banks to the amount
of euro 13,533 thousand (euro 11,939 thousand at December 31, 2023).
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
612
The change in total borrowings from banks and other financial institutions for 2024 is
composed as follows:
The change in total borrowings from banks and other financial institutions for 2023 is
composed as follows:
At December 31, 2024, there were no financial payables secured by collateral guarantees (pledges
and mortgages).
For current financial payables, it is considered that their carrying amount approximates their relative
fair value.
(in thousands of euro)
Borrowings from banks and other financial institutions at December 31, 2023
3,964,205
Repayment of "Club Deal EUR 800m ESG 2020 5y" financing
(800,000)
Bond repayment "Schuldschein"
(20,000)
Repayment of "Bilateral EUR 400m ESG 2021 3y" financing
(400,000)
Transaction cost
(9,353)
Issuance of "Club Deal EUR 600m ESG 2024 4.5y" financing
600,000
Issuance of "SLB EUR 600m 3.875% due 07/29"
600,000
Financial inflows for the local credit facilties of Group companies
122,888
Financial outflows for the local credit facilties of Group companies
(268,450)
Repayment of lease liabilities
(128,929)
Cash changes
(303,844)
Amortised cost for the period
15,036
Translation differences and other changes for the period
11,430
Increases in lease liabilities
112,948
Remeasurement and early termination
29,680
Non-cash changes
169,094
Borrowings from banks and other financial institutions at December 31, 2024
3,829,455
(in thousands of euro)
Borrowings from banks and other financial institutions at December 31, 2022
4,490,500
Bond repayment "EMTN program"
(125,000)
Bond repayment "Schuldschein"
(223,000)
Repayment Bilateral EUR 600m 2019 facility
(600,000)
Repayment “Club Deal EUR 400m ESG 2022 19m” financing
(400,000)
Transaction costs
6,866
Issuance of bilateral 300m 2023 facility
300,000
Issuance of "SLB notes" EUR 600m
600,000
Financial inflows for the local credit facilties of Group companies
204,726
Financial outflows for the local credit facilties of Group companies
(293,061)
Repayment of lease liabilities
(120,455)
Cash changes
(649,925)
Amortised cost for the period
14,959
Translation differences and other changes for the period
(13,799)
Increases in lease liabilities
70,110
Remeasurement and early termination
52,360
Non-cash changes
123,630
Borrowings from banks and other financial institutions at December 31, 2023
3,964,205
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
613
For non-current financial payables, their fair value is shown below, compared with their carrying
amount:
The fair value of the two rated sustainability-linked bonds issued by Pirelli & C. S.p.A. under the
EMTN programme are listed, and therefore were measured with reference to year-end prices. The
fair values are classified as level 1 of the hierarchy provided for by IFRS 13 - Fair Value
Measurement.
The fair value of borrowings from banks, was calculated by discounting each expected debt cash
flow at the market swap-rate for the currency and the relevant maturity date, increased by the
Group’s credit rating for other debt instruments that are similar in nature and technical
characteristics, and therefore rank in level 2 of the hierarchy as provided for by IFRS 13 - Fair Value
Measurement.
The apportionment of borrowings from banks and other financial institutions according to
the currency of origin of the debt, was as follows:
At December 31, 2024, there were outstanding interest rate derivatives on some floating-rate debt.
Carrying amount
Fair value Carrying amount
Fair value
Bonds
1,189,840
1,237,350
1,095,029
1,114,812
Borrowings from banks
1,496,460
1,522,611
1,696,123
1,724,866
Accrued financial expenses and
deferred financial income
409
409
-
-
Other financial payables
1,423
1,423
137
137
Total
2,688,132
2,761,793
2,791,289
2,839,815
12/31/2024
12/31/2023
(in thousands of euro)
(in thousands of euro)
12/31/2024
12/31/2023
EUR
3,413,219
3,592,999
GBP (British Pound Sterling)
148,134
22,265
BRL (Brasilian Real)
76,646
50,872
CNY (Chinese Renminbi)
57,600
48,487
SEK (Swedish Krona)
38,189
25,742
USD (US Dollar)
33,299
157,047
TRY (Turkish Lira)
29,600
23,306
AUD (Australian Dollar)
9,933
3,107
CAD (Canadian Dollar)
6,596
321
RUR (Russian Rouble)
1,879
28,584
Other currencies
14,359
679
Total
3,829,455
3,964,205
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
614
Considering the effects of hedging derivatives, the Group’s exposure to changes in interest rates on
financial payables, both in terms of the type of interest rate and in terms of the date of the
renegotiation of the same (resetting), was subdivided between:
floating rate payables to the amount of euro 1,042,066 thousand, whose interest rate is
subject to a reset during the course of 2025;
fixed rate payables to the amount of euro 2,696,612 thousand, (euro 2,210,984 thousand
excluding lease liabilities), whose interest rate is not subject to any reset until the natural
maturity of the debt to which it refers (euro 626,305 thousand with maturity in the next twelve
months and euro 2,070,307 thousand euro with maturity beyond twelve months).
With reference to the cost of debt, the year-on-year figure at December 31, 2024, (calculated as the
average for the last twelve months), stood at 5.06%, substantially in line with the level of the previous
year (5.08% at December 31, 2023).
With reference to the presence of financial covenants, it should be noted that two bank facilities held
by the Russian subsidiary LLC “Pirelli Tyre Russia” carry the following financial covenants:
a) Facility 1 unutilised at 12/31/2024: a maximum ratio between the net debt and the gross
operating margin, and a maximum ratio of net debt to equity;
b) Facility 2 unutilised at 12/31/2024: a maximum ratio between the net debt and the gross
operating margin, and a maximum ratio between short-term debt plus interest paid and the
gross operating margin.
The failure to comply with the above mentioned financial covenants is identified as an event of default
or non-performance.
Specifically, an event of default or non-performance will result in the termination of the contract and
the early repayment of the financing. It should be noted that at December 31, 2024, no event of
default or non-performance event had occurred.
With regard to other financial payables, at December 31, 2024, the Group was not subject to financial
covenants.
The “Club Deal EUR 16bn ESG 2022 5y”, the “Bilateral EUR 300m ESG 2023 2.5y facility”, the “Club
Deal EUR 500m ESG 2023 4y RCF”, the “Club Deal EUR 600m ESG 2024 4.5y”, the “Convertible
Bond Loan”, the “Bond SLB EUR 600m 4.25% due 01/28” and the “Bond SLB EUR 600m 3.875%
due 07/29” contain Negative Pledge clauses and other customary provisions whose terms are
consistent with the market standards for each of the above types of financial instrument.
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
615
25.
TRADE PAYABLES
Trade payables were composed as follows:
For trade payables, it is considered that their carrying amount approximates their relative fair value.
The increase in trade payables, compared to the previous financial year, was consistent with the
growth of the business, and the concentration of the capitalisation of investment projects in the last
quarter of the year. Trade payables accounted for 30.7% of sales, essentially in alignment with the
percentage at December 2023 (30.1%).
26.
OTHER PAYABLES
Other payables were as follows:
Accrued expenses and deferred income - non-current refers to euro 41,570 thousand in capital
contributions received for investments made mainly in Romania, whose benefits are recognised in
the Income Statement in proportion to the costs for which the contribution was disbursed.
Accrued expenses and deferred income - current includes euro 14,396 thousand in government
grants and tax incentives received mainly in Italy and Romania and euro 1,480 thousand for
insurance coverage costs in some European countries.
The item tax payables not related to income taxes is mainly comprised of IVA (value added tax)
payables and other indirect taxes, withholding taxes for employees and other taxes not related to
income taxes.
The item payables to employees mainly includes amounts matured during the period but not yet
paid.
Total
Non-current
Current
Total
Non-current
Current
Trade payables
1,948,169
-
1,948,169
1,864,417
-
1,864,417
Bill and notes payable
133,448
-
133,448
135,001
-
135,001
Total
2,081,617
-
2,081,617
1,999,418
-
1,999,418
12/31/2023
12/31/2022
(in thousands of euro)
(in thousands of euro)
Total
Non-current
Current
Total
Non-current
Current
Accrued expenses and deferred income
64,941
43,392
21,549
58,149
38,664
19,485
Tax payables not related to income taxes
94,166
8,954
85,212
98,643
7,209
91,434
Payables to employees
173,408
1,532
171,876
187,192
2,458
184,734
Payables to social security and welfare intitutions
74,004
25,198
48,806
77,112
28,436
48,676
Dividends approved
81
-
81
1,374
-
1,374
Contract liabilities
6,161
10
6,151
3,222
10
3,212
Other payables
59,930
861
59,069
64,413
1,155
63,257
Total Other payables
472,691
79,947
392,744
490,105
77,932
412,173
12/31/2024
12/31/2023
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
616
The item contract liabilities from contracts with customers, refers to advance payments received
from customers for which the performance obligation had not yet been completed, pursuant to the
provisions of IFRS 15.
The item other payables (euro 59,930 thousand) mainly includes:
euro 15,398 thousand in payables to Directors, Auditors and supervisory bodies;
euro 14,470 thousand in payables to representatives, agents, professionals and consultants;
euro 8,215 thousand in refunds received from the tax authorities, for tax disputes;
whose outcome in the final judgement remains uncertain;
euro 5,734 thousand for payables related to customs duties, import and transport costs.
27.
TAX PAYABLES
Tax payables were for the most part for national and regional income taxes in different countries
and amounted to euro 67,151 thousand, (of which euro 4,001 thousand was for non-current
payables), compared to euro 119,584 thousand at December 31, 2023, (of which euro 14,391
thousand was for non-current payables). Income tax payables included the assessments made by
Management, regarding any potential effects of uncertainty the treatment of income taxes.
28.
DERIVATIVE FINANCIAL INSTRUMENTS
The item includes the fair value measurement of derivative instruments. The details are as follows:
(in thousands of euro)
Non-current
assets
Current
assets
Non-current
liabilities
Current
liabilities
Non-current
assets
Current
assets
Non-current
liabilities
Current
liabilities
Derivative Financial Instruments not in Hedge Accounting
Foreign exchange derivatives - commercial positions
5,746
(5,313)
5,667
(3,058)
Foreign exchange derivatives - included in net financial position
16,577
(3,503)
7,360
(18,184)
Derivative Financial Instruments in Hedge Accounting
- cash flow hedge:
Foreign exchange derivatives - commercial positions
(1,305)
Interest rate derivatives - included in net financial position
4,326
12,886
4,326
22,323
-
(10,121)
12,886
13,027
-
(21,242)
Total derivatives included in net financial position
4,326
16,577
-
(3,503)
12,886
7,360
-
(18,184)
12/31/2024
12/31/2023
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
617
Derivative Financial Instruments not in Hedge Accounting
The value of foreign exchange derivatives included in current assets and liabilities corresponds to
the fair value measurement of forward foreign exchange buy/sell contracts outstanding at the closing
date for the period. These are transactions which mirror the commercial and financial transactions
of the Group, and for which the hedge accounting option has not been adopted. Their fair value was
determined by using the forward exchange rate at the reporting date.
Derivative Financial Instruments in Hedge Accounting
The value of interest rate derivatives recognised under non-current assets to the amount of euro
4,326 thousand, refers to the fair value of five interest rate swaps used to hedge the following
financing contracts:
Cash flow hedge accounting was adopted. The object of the hedge is the future interest flows on
floating-rate liabilities in EUR.
The change in the fair value for the period was positive to the amount of euro 3,393 thousand. This
change was entirely suspended under Other Comprehensive Income.
Income to the amount of euro 17,887 thousand was reversed to the Income Statement under the
item “Financial Expenses” (Note 38), correct the financial expenses recognised on the hedged
liability. This amount was mainly composed of:
euro 11,882 thousand in interest receivables on the IRS in hedge accounting;
euro 5,466 thousand, which corresponds to the positive portion of the cash flow hedge
reserve matured on the forward start pre-hedge receive floating EURIBOR/pay fixed
EURIBOR IRSs that were closed early in 2022. This amount corrects the financial expenses
of the relative hedge item, a sustainability-linked bond issued in January 2023, for the total
nominal amount of euro 600 million;
euro 488 thousand, which corresponds to the fair value of two IRSs closed early in July 2024,
following the early repayment of the hedged item which was represented by the
“Schuldschein” bond loan.
A change of +0.5% in the EURIBOR curve, all other conditions being equal, would result in a positive
change of euro 1,801 thousand in the equity of the Group, while a change of -0.5% in the same
EURIBOR curve, all other conditions being equal, would result in a negative change of euro 1,845
thousand in the equity of the Group. Both amounts are reported net of the tax effect.
Derivative
Hedged element
Notional amount
Start date
Maturity
(Millions of EUR)
IRS
Club Deal EUR 1.6bn ESG 2022 5y
500.0
February 2023
February 2026
receive floating / pay fixed
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
618
Hedging relationships relative to any IRS are considered prospectively effective when the following
conditions are met:
-
there exists a financial relationship between the hedging instrument and the hedged item, in that
the characteristics of the hedging instrument (the nominal interest rate, the reset of the interest
rate and the frequency of interest liquidation), are substantially aligned with those of the hedged
item. As a consequence, any changes in the fair value of the hedging instrument regularly offsets
that of the hedged item;
-
the effect of credit risk is not dominant within the hedging relationship: under the Group’s
operating regulations, derivatives are traded only with counter-parties with a high credit standing,
and the credit quality of the portfolio of outstanding derivatives is constantly monitored;
-
the designated hedge ratio is aligned with that used for financial risk management purposes and
is equal to 100% (1:1).
The ineffectiveness of the hedging relationship is calculated at each reporting date using the Dollar
Offset method, which involves comparing any changes in the risk-adjusted fair value of the hedging
instrument with changes in the risk-free fair value of the hedged item, by identifying a hypothetical
derivative with the same characteristics as the underlying financial liability.
The possible causes of ineffectiveness are as follows:
-
the application of credit risk adjustments only to the hedging instrument but not to the hedged
item;
-
the hedged item incorporates a floor that is not reflected in the hedging instrument;
-
the misalignment between the effective contractual conditions of the future transaction and those
of the hedging instrument.
The value of foreign exchange derivatives, recognised under current liabilities to the amount of
euro 1,305 thousand, refers to the fair value measurement of six Average Rate Forwards (ARF):
Cash flow hedge accounting was adopted for these derivatives. The object of the hedge is the
exchange rate risk connected with the variability in revenues generated by future sales denominated
in a foreign currency and the related collection cash flows. Particularly, the risk is attributable to the
variability of the EUR/USD exchange rate.
The change in the fair value for the period was negative to the amount of euro 1,305 thousand. This
change was entirely suspended under Other Comprehensive Income. The ARF contracts are
designated as hedging instruments in their entirety (full Fair Value Approach).
Derivative
Hedged element
Notional amount
Start date
Maturity
(millions of USD)
Average Rate Forward
Highly probable forecast sales in USD
75.0
November 2024
February to July 2025
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
619
For each designated hedging relationship, the amounts that accumulate in the cash flow hedge
reserve are reversed to the Income Statement, when the underlying hedged item is recognised (in
other words, at the end of the month of the sale), and are included in the item “Revenues from sales
and services”.
At December 31, 2024, losses of euro 816 thousand were reversed to the Income Statement.
All other conditions being equal, a change in the EUR/USD exchange rate of +10 basis points would
result in a positive change of euro 6,302 thousand in the equity of the Group, while a change of -10
basis points would result in a negative change of euro 7,625 thousand in the equity of the Group.
Hedging relationships related to ARFs are considered prospectively effective when the following
conditions are met:
-
there is a financial relationship between the hedging instrument and the hedged item, as the
characteristics of the hedging instrument (notional amounts, the underlying exchange rate and
maturities) are substantially aligned with those of the hedged item and, consequently, changes
in the fair value of the hedging instrument will offset those of the hedged item on a regular basis;
-
the effect of credit risk is not dominant within the hedging relationship: under the Group’s
operating regulations, derivatives are traded only with counter-parties with a high credit standing,
and the credit quality of the portfolio of outstanding derivatives is constantly monitored;
-
the designated hedge ratio is aligned with that used for financial risk management purposes and
is equal to 100% (1:1).
In addition to the qualitative assessment of forward-looking effectiveness, in order to demonstrate
the actual effectiveness of hedging relationships, a verification is performed on a periodic basis, as
to whether the total amount of effective sales in a foreign currency is equal to or greater than the
total projected foreign currency exposure designated as the hedged item. Any designated amounts
in excess of effective foreign currency sales recorded in a given month are considered as over-
hedging, only if such amount cannot be reasonably attributed to recognised sales in a foreign
currency in the following two months.
Based on current risk management practices, the only potential source of ineffectiveness for
designated hedging relationships is represented by any over-hedging situation, which may occur
when effective sales volumes in foreign currencies are less than those hedged and the excess
amounts cannot be attributed to recognised sales in the following two months. The change in the fair
value of over-hedged amounts, which were previously deferred to the cash flow hedge reserve, is
reclassified to the Income Statement without any adjustment to revenues.
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
620
29.
COMMITMENTS AND RISKS
COMMITMENTS FOR THE PURCHASE OF PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
The commitments to purchase property, plant and equipment and intangible assets amounted to
euro 152,568 thousand and euro 1,442 thousand respectively, and refer mainly to subsidiaries in
Romania, Italy, Germany, Mexico, the UK and the United States.
COMMITMENTS FOR LEASE CONTRACTS
At December 31, 2024, the total amount for non-discounted future payments for lease contracts not
yet in force and against which no financial debt was recognised, equalled euro 63,465 thousand,
and mainly refers to the lease contracts for new warehouses in Brazil, Thailand and Poland, and
new offices and points of sale in Sweden.
COMMITMENTS FOR FUTURE CAPITAL SUBSCRIPTIONS
They refer to the commitment of Pirelli Tyre S.p.A. for the subscription of the share capital of the joint
venture Middle East and North Africa Tyre Company for a total amount of payments in Saudi riyals
equivalent to 56 million dollars, of which 12.5 million were already paid in 2024 (see Note 12.2) and
an additional 13.25 million paid in February 2025.
OTHER RISKS
Litigations against the Companies of the Prysmian Group before the Milan Court of Appeal
In June 2024, Pirelli appealed to the Court of Appeal of Milan against the ruling of the Court of Milan
published in May 2024, concerning the dispute between Pirelli and some companies of the Prysmian
Group. The Court ruled that Pirelli and Prysmian Cavi e Sistemi S.r.l. (“Prysmian CS”) must jointly
bear an equal share of the European Commission’s sanction (already paid by these parties) as well
as any damages that they may be ordered to pay jointly and severally in the follow-on proceedings
brought by Terna, (see below - Other Disputes Consequent to the Decision of the European
Commission), rejecting the reciprocal requests for full indemnification made by the parties.
This dispute is a consequence of the decision issued on April 2, 2014 by the European Commission
(later confirmed in the final instance by the Court of Justice of the European Union on October 28,
2020) at the conclusion of the antitrust investigation into restrictive conduct in the European high
voltage electrical cable market. The Commission’s decision had imposed a sanction on Prysmian
CS, as it was directly involved in the cartel, a portion of which (euro 67 million) Pirelli, despite not
having been found to be directly involved in the activities of the cartel, had been held to be jointly
and severally liable with Prysmian CS, based solely on the application of the EU principle, the so-
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
621
called “parental liability”, since during part of the period of the infraction, the share capital of the
current Prysmian CS was held, either directly or indirectly by Pirelli.
On December 31, 2020, Pirelli proceeded to pay its share of the aforementioned sanction to the
European Commission (corresponding to 50% of the sanction, plus interest), for which it had
previously made appropriate provisions.
Pending the settlement of the aforementioned EU Court proceedings, in 2014 and in 2019, Pirelli
brought two proceedings before the Court of Milan, (the first) against Prysmian CS and (the second)
against Prysmian CS and Prysmian S.p.A., to obtain, in addition to the reimbursement of the sanction
imposed by the European Commission, a judgment requiring that these parties hold Pirelli harmless
and indemnified against any charges, expenses, costs and/or damages arising from claims by public
and/or private third parties in connection with and/or consequential to the facts that are the subject
of the European Commission’s decision.
Pirelli has also requested that the liabilities of Prysmian CS and Prysmian S.p.A. be determined in
relation to certain unlawful conduct connected with the aforesaid anti-competitive cartel put in place
by them and, as a consequence, be ordered to pay compensation for all damages suffered and to
be suffered by Pirelli.
Prysmian CS and Prysmian S.p.A. entered an appearance in the above proceedings, seeking the
dismissal of Pirelli’s claims and, by way of a counter-claim, to be held harmless and indemnified by
Pirelli against any consequences arising from claims by private and/or public third parties relating to,
connected with and/or consequential to the facts that are the subject of the decision of the European
Commission.
In April 2021, the two lawsuits (that of 2014 and that of 2019) were joined, and, in 2022, two
segments of the proceedings brought by Terna S.p.A. - Rete Elettrica Nazionale (“Terna”), against
amongst others, Pirelli, Prysmian CS and Prysmian S.p.A., were also joined. With regard to these
segments, Pirelli, on the one hand, and Prysmian CS and Prysmian S.p.A., on the other, have
submitted reciprocal indemnity claims with regard to what they were ordered to pay to Terna (refer
to the section below - Other Disputes Consequent to the Decision of the European Commission).
Based on careful analyses supported by authoritative external legal opinions, the assessment of the
risk related to the disputes described above is such as to not require the allocation of any specific
provision in the Consolidated Financial Statements at December 31, 2024.
Other Disputes Consequent to the Decision of the European Commission
In November, 2015, a number of companies of Prysmian Group served Pirelli with a summons in a
lawsuit for the compensation of damages brought before the London High Court of Justice against
them and other defendants of the Decision of the European Commission of April 2, 2014, by National
Grid and Scottish Power, the companies who claim to have been harmed by the cartel. Specifically,
the companies of the Prysmian Group have requested that Pirelli, by reason of its role as Parent
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
622
Company for part of the period of the cartel, hold them harmless with respect to any obligations to
pay damages (as yet unquantifiable) to the National Grid and Scottish Power. As the aforementioned
action, brought before the Court of Milan in November 2014, is still pending, Pirelli has challenged
the lack of jurisdiction of the London High Court of Justice claiming that, that any decision on the
merits must be referred to the Court that had previously heard the case. In April 2016, the High Court
of Justice, at the request of Pirelli and the companies in the Prysmian Group, suspended the lawsuit
against Pirelli until final judgement is passed, that would settle the already pending Italian
proceedings.
In April 2019, Terna filed a lawsuit before the Court of Milan, jointly and severally against Pirelli, three
Prysmian Group companies and another company named in the aforementioned European
Commission decision, in order to obtain compensation for the damage allegedly suffered as a
consequence of the anti-competitive conduct, currently quantified by the plaintiff as totalling euro
199.9 million. Pirelli entered the proceedings, disputing Terna’s claims, and similar to the other
defendants and against them filed a counter-claim for recourse in the unlikely event that it is held
jointly and severally liable for the
anti-competitive cartel.
In October 2021, the Judge dismissed from the proceedings, the portion of the litigation consisting
of the cross indemnity claims between Pirelli, on the one hand, and Prysmian CS and Prysmian
S.p.A., on the other, ordering that it be joined with the litigation pending between the two parties
before the Court of Milan (refer to the section above - Litigations against the Companies of the
Prysmian Group before the Milan Court of Appeal).
Lastly, also in April 2019, the Electricity & Water Authority of Bahrain, GCC Interconnection Authority,
Kuwait Ministry of Electricity and Water and Oman Electricity Transmission Company, served a writ
of summons against Pirelli, some of the Prysmian Group companies and other defendants in the
aforementioned decision of the European Commission, suing them jointly and severally to obtain
compensation for the damages allegedly suffered as a result of the alleged anti-competitive conduct
for the total amount of euro 472 million, which was quantified during the course of the proceedings.
These proceedings were brought before the Court of Amsterdam, which with its ruling dated
November 25, 2020, upheld the objection raised by Pirelli and excluded its own jurisdiction over
Pirelli. In February 2021, the plaintiffs appealed against this ruling before the Amsterdam Court of
Appeal, proceedings that have to date been suspended, following an incidental question raised by
the Amsterdam Court of Appeal itself before the Court of Justice of the European Union.
Based on careful analyses supported by authoritative external legal opinions, the assessment of the
risk related to the disputes described above is such as to not require the allocation of any specific
provision in the Consolidated Financial Statements at December 31, 2024.
US Class Actions
On January 30, 2024, the European Commission announced the opening of an investigation against
certain tyre manufacturers active in the European Economic Area, for alleged violations of the
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
623
European Union competition laws, through the possible collusion of prices for new replacement tyres
for cars and trucks, to be sold in the European Economic Area. At the same time, the Commission
has conducted inspections at the offices of the aforementioned tyre manufacturers, including those
of Pirelli. The latter confirmed the probity of its operations and to have always acted in compliance
with the applicable antitrust laws and regulations.
Following the European Commission’s announcement of the aforementioned actions, in February
2024, a number of class action suits - later merged into a single proceeding - were commenced
before the US Courts, relating to alleged similar issues that allegedly occurred in the United States.
The claims for damages have not been quantified. In February, 2025, the Federal Court of Ohio,
before which these class actions had been joined, rejected the plaintiffs’ appeal in its entirety,
granting the latter a deadline for the possible filing of a new complaint based on different arguments,
which was filed in April 2025.
Based on the assessment carried out, supported by authoritative external legal opinions, Pirelli, also
in light of the limited information available to date, did not consider it necessary to recognise any
specific provision in the Consolidated Financial Statements at December 31, 2024.
Tax Disputes
The subsidiaries Pirelli Pneus Ltda., Pirelli Comercial de Pneus Brasil Ltda. and Pirelli Neumaticos
SAIC, with headquarters in Brazil and in Argentina, are involved invarious tax disputes and
proceedings. The most significant are described below:
Brazil - Litigation concerning the IPI Tax Rate applicable to specific Types of Tyres
Pirelli Pneus Ltda. is party to a tax dispute with the Brazilian tax authorities concerning the IPI tax
rate (Imposto sobre Produtos Industrializados or tax on industrialised products) specifically
concerning the tax rate applicable to the production and importation of tyres for the Sports Utility
Vehicle (“SUV”), vans and other light industrial transportation vehicles (such as, for example, trucks).
According to statements by the Brazilian tax authorities in the tax assessment notices issued during
the course of 2015, 2017 and 2021 the aforementioned tyres should have been subjected to the IPI
tax rate for the production and importation of tyres for cars – with an applicable rate of 15% - instead
of the 2% rate applied by Pirelli Pneus Ltda., as is required for the production and importation of
tyres destined for heavy industrial use vehicles. To date, the dispute is pending before the competent
tax commissions and the Group believes it has a good chance of winning in court. This position is
also supported by (i) an appraisal prepared by a Brazilian government institution (the INT - National
Institute of Technology) specifically commissioned for this purpose by Pirelli Pneus Ltda, who
concluded their analysis by equating, in light of their similar characteristics, the tyres in question with
those intended for heavy industrial vehicles, (ii) judicial decisions favourable to taxpayers.
The risk is estimated at approximately euro 42 million, inclusive of tax, interests and penalties.
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
624
The risk of losing the case has not been assessed as probable and, therefore, no provision has been
recognised in the Financial Statements for this dispute.
Brazil - Litigation concerning Transfer Pricing applied to some Intra-group Transactions
Pirelli Pneus Ltda. is involved in a dispute with the Brazilian tax authorities for income tax purposes
(IRPJ - Imposto sobre a renda das pessoas jurídicas) and social security contributions (CSLL -
Contribuição Social sobre o Lucro Líquido) due from the company for the 2008, 2011 and 2012 tax
periods, deriving from the application of the so-called transfer pricing regulations to import
transactions with related parties. Based on the notices of assessment served on the company during
the course of 2013, 2015 and 2016, the Brazilian tax authorities are mainly contesting the incorrect
application by the company, of the methodology provided for by the administrative practice in force
at the time (IN - Instrução Normativa 243), for the assessment of transfer prices applied to the
importation of goods from related parties.
To date, part of this litigation is pending before the competent administrative-judicial jurisdictions,
and part of it was settled during the first half-year of 2023. The Group maintains that it has a good
chance of winning and, in this regard, Pirelli Pneus Ltda has already obtained some favourable
rulings from the administrative court, which has recognised the company’s arguments by reducing
the amount originally contested by the Brazilian tax authorities.
In light of the above, the risk is estimated at approximately euro 20 million inclusive of taxes,
sanctions and interest.
The risk of losing the case has not been assessed as probable and, therefore, no provision has been
recognised in the Financial Statements for this dispute.
Brazil - Disputes concerning the IPI Tax Rate for the Sale of Tyres to the Automotive Sector
Pirelli Pneus Ltda. is also party to a dispute concerning the IPI tax rate, (Imposto sobre Produtos
Industrializados or tax on industrialised products), concerning the sale of components to companies
operating in the automotive sector. According to what was claimed by the Brazilian tax authorities in
a notice of assessment issued in 2013, Pirelli Pneus Ltda. was not entitled to benefit, with reference
to its secondary headquarters located in the city of Ibiritè in the Federal State of Minas Gerais, from
the IPI exemption provided for by law in the case of sales of particular components, to companies
operating in the automotive sector. All administrative proceedings have been concluded, resulting in
a reduction of the originally contested amount. The remaining amount is currently being disputed in
the judicial system. The Group believes it has well-founded grounds to contest the tax
administration’s claim and, therefore, has a good chance of winning.
The risk is estimated at approximately euro 19 million, inclusive of tax, interest and penalties.
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
625
The risk of losing the case has not been assessed as probable and, therefore, no provision has been
recognised in the Financial Statements for this dispute.
Brazil - Litigation concerning the Tax Impact deriving from the so called “Plano Verão”
Pirelli Pneus is involved in a tax dispute with the Brazilian tax authoritiesfor the period from 1989 to
1994 as a result of the so-called “Plano Verão”. The Plano Verão was an economic measure
introduced by the then Brazilian government to control the phenomenon of hyperinflation that was
affecting the country, through a price freeze. However, the difference between the real inflation and
indexed inflation had the effect of creating significant distortions in the financial statements of
companies and ultimately, the amount of taxes paid by them. Pirelli Pneus Ltda. used the real
inflation rate for its financial statement assessments, and, at the same time, initiated legal
proceedings to assert its arguments regarding the correct amount of taxes owed. During the course
of the aforementioned proceedings, Pirelli Pneus Ltda. first adhered to a tax amnesty to settle the
dispute in question and, only later, on the basis of a ruling by the Brazilian Supreme Court with
binding erga omnes effects, did it request the annulment of the effects of the amnesty it had
previously adhered to.
The proceedings are pending before the competent judicial courts and the risk is estimated to be up
to a maximum euro 33 million, inclusive of taxes, interest and sanctions.
The risk of losing the case has not been assessed as probable and, therefore, no provision has been
recognised in the Financial Statements for this dispute.
Brazil - Litigation concerning “ICMS Substituicão Tributária” (Tax Substitution case)
Pirelli Comercial de Pneus Brasil Ltda. has become involved in a new dispute concerning ICMS
(Imposto sobre Circulaçao de Mercadorias e Serviços - Substituicão Tributária) tax credits.
According to the claims made in a notice of assessment issued during 2022 by the Brazilian tax
authorities for the 2018 and 2019 tax periods, Pirelli Comercial de Pneus Brasil Ltda. allegedly
transferred ICMS-ST credits to Pirelli Pneus without the prior formal authorisation of the Brazilian tax
authorities.
In 2023, Pirelli Pneus also received a contestation from the State of São Paulo on the same matter,
for allegedly failing to comply with formal obligations in relation to the use of the ICMS-ST credits
transferred by Pirelli Comercial.
Proceedings are pending before the competent administrative bodies and the risk is estimated at
approximately euro 56 million, including taxes, interest and penalties.
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
626
The risk of losing the case has not been assessed as probable and, therefore, no provision has been
recognised in the Financial Statements for this dispute.
Brazil - Litigation concerning ICMS Tax Credits for the Purchase of Assets Used in the Industrial
Process and for the Purchase of Fixed Assets
Pirelli Pneus Ltda. is involved in a new tax dispute concerning ICMS (Imposto sobre Circulaçao de
Mercadorias e Serviços) tax credits. n August 2024, the Company was assessed by the State of São
Paulo for a series of alleged irregularities related to the recording of ICMS credits against the
purchase of tangible assets used in the Company’s industrial process.
As also demonstrated during the tax audit, the Group believes it has well-founded reasons to contest
the tax authorities’ claim and, therefore, a good chance of winning.
Proceedings are pending before the competent administrative bodies and the risk is estimated at
approximately euro 17 million, including taxes, interest and penalties.
The risk of losing the case has not been assessed as probable and, therefore, no provision has been
recognised in the Financial Statements for this dispute.
Argentina - Customs dispute concerning Import Values
The subsidiary Pirelli Neumaticos SAIC, based in Argentina, is involved in a number of disputes and
tax proceedings, in which the Argentine customs authorities claim that the value of certain imports -
from other Group companies - of finished products and raw materials should have included royalties
paid to the Pirelli Tyre S.p.A. Group company, for the licence to use patents and for technical
assistance.
On the same subject, the Company is a party to various litigations in progress with the Argentine
customs authorities that concern the years from 2009 to 2019. In particular, in one of the disputed
cases, the customs authority ruled in Pirelli’s favour to annul the dispute with reference to the
importation of finished products and limiting it exclusively to the importation of raw materials.
The risk is estimated at approximately euro 10 million, inclusive of tax, interests and penalties.
The risk of losing the case has not been assessed as probable and, therefore, no provision has been
recognised in the Financial Statements for this dispute.
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
627
30.
REVENUES FROM SALES AND SERVICES
Revenues from sales and services were as follows:
These revenues are mainly generated by the sales of tyres and related services to customers
represented by both distributors and end customers.
For information on the breakdown of sales according to geographical region, please refer to Note 9,
“Operating Segments”.
For further information on the performance of revenues from sales and services, refer to the section
“Group Performance and Results” in the Directors’ Report on Operations, which is an integral part
of this document.
31.
OTHER INCOME
The item is composed as follows:
The item sales of industrial products mainly refers to revenues generated by the sale of tyres for
trucks and agricultural vehicles, purchased mainly from the Prometeon Group, and which are sold
by the distribution network controlled by the Pirelli Group, mainly in Brazil.
The item other income from the Prometeon Group mainly includes:
euro 16,000 thousand for the license agreement for the use of the Pirelli trademark;
euro 14,800 thousand for the license agreement for know-how;
euro 1,218 thousand for services rendered;
(in thousands of euro)
2024
2023
Revenues from the sales of goods
6,567,533
6,471,590
Revenues from services
205,791
178,473
Total
6,773,324
6,650,063
(in thousands of euro)
2024
2023
Sales of Industrial products
111,071
127,529
Other income from the Prometeon Group
39,854
34,105
Recoveries and reimbursements
39,449
26,664
Government grants
25,431
33,961
Gains on disposal of property, plant and equipment
2,027
1,142
Rent income
2,776
2,912
Income from subleases of right of use assets
949
911
Other income
124,898
101,770
Total
346,455
328,994
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
628
euro 765 thousand for the sales of raw materials, semi-finished and finished products.
The item recoveries and reimbursements includes, in particular:
tax refunds and customs duty refunds totalling euro 13,672 thousand, received mainly by the
Brazilian subsidiary;
tax refunds totalling euro 3,895 thousand due to rebates obtained in Germany for excise
duties on electricity to the amount of euro 2,243 thousand, and on gas to the amount of euro
1,652 thousand;
income from the sale of tyres for testing, and the recovery of transport expenses in Germany
to the amount of euro 1,717 thousand.
The item other mainly includes income related to the sale of goods and services, in connection with
sports events linked to sponsorship agreements to the amount of euro 42,198 thousand, royalties
from third parties to the amount of euro 29,252 thousand, of which euro 11,721 thousand was from
the joint venture the Middle East and North Africa Tyre Company for the supply of know-how in the
construction of the tyre factory in Saudi Arabia (Note 12), and income from the sale of tyres and
scrap materials carried out in the United Kingdom totalling euro 1,309 thousand.
32.
PERSONNEL EXPENSES
The item is composed as follows:
(in thousands of euro)
2024
2023
Wages and salaries
997,875
947,717
Social security and welfare contributions
187,899
182,179
Costs for employee leaving indemnities and similar
24,330
18,732
Costs for defined contribution pension funds
27,872
25,807
Costs for defined benefit pension funds
4,394
703
Costs for jubilee awards
13,076
13,603
Costs for defined contribution healthcare plans
33,403
25,954
Other costs
12,448
10,616
Total
1,301,297
1,225,311
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
629
33.
DEPRECIATION, AMORTISATION AND IMPAIRMENTS
The item is composed as follows:
For the composition of the depreciation of the right of use, reference should be made to Note 10.2,
“Right of Use”.
34.
OTHER COSTS
The item is subdivided as follows:
The item fluids and energy includes the cost of purchasing greenhouse gas emission allowances
and renewable energy certificates. The decrease in this item compared to the previous year is
consistent with the decrease in gas and electricity prices during 2024.
(in thousands of euro)
2024
2023
Amortisation
137,994
139,091
Depreciation of owned tangible assets
323,025
317,599
Depreciation of right of use
111,701
101,287
Impairment net of reversals
2,098
30,086
Impairment of right of use
132
400
Total
574,950
588,463
(in thousands of euro)
2024
2023
Selling costs
374,074
408,643
Purchases of goods for resale
449,028
416,141
Advertising
260,653
252,921
Fluids and energy
240,066
305,521
Warehouse operating costs
111,535
91,175
IT expenses
68,785
67,347
Consultants
72,573
50,873
Maintenance
83,898
69,944
Insurance
35,749
34,717
Leases and rentals
46,326
42,224
Outsourcing
51,721
45,784
Stamp duties, levies and local taxes
42,486
33,158
Other provisions accruals for liabilities and charges
22,823
28,172
Travel expenses
40,568
38,323
Remuneration for Key Managers
25,722
23,855
Cleaning expenses
23,486
19,031
Canteen
30,726
26,578
Security expenses
16,725
14,644
Waste disposal
14,048
12,530
Telephone expenses
5,170
5,254
Other
211,237
189,108
Total
2,227,399
2,175,943
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
630
The item leases and rentals is composed as follows:
euro 23,220 thousand for lease contracts with a duration of less than twelve months (euro
21,023 thousand for 2023);
euro 13,029 thousand for lease contracts with variable instalments not linked to indices or
rates, (for example, inflation or the EURIBOR), but linked for example, to usage (euro 11,866
thousand at December 31, 2023);
euro 10,078 thousand for lease contracts for assets with a low unit value (euro 9,335
thousand at December 31, 2023).
The item other also includes, labour provided by third parties to the amount of euro 15,131 thousand,
(euro 23,661 thousand in 2023), expenses for the testing of technology to the amount of euro 17,310
thousand (euro 18,154 thousand in 2023), membership fees to the amount of euro 10,405 thousand
(euro 10,074 thousand in 2023) and transport costs for materials to the amount of euro 19,488
thousand (euro 18,758 thousand in 2023).
35.
NET IMPAIRMENT OF FINANCIAL ASSETS
This item, which was negative to the amount of euro 10,303 thousand compared to euro 5,263
thousand for 2023, mainly included the net impairment of trade receivables to the amount of euro
10,320 thousand (net impairment of euro 5,597 thousand for 2023).
36.
NET INCOME/(LOSS) FROM EQUITY INVESTMENTS
36.1 Share of Net Income/(Loss) from Equity Investments in Associates and Joint Ventures
The share of the net income/(loss) from equity investments in associates and joint ventures, which
is accounted for using the equity method, was positive to the amount of euro 27,456 thousand and
mainly refers to the investment in the joint venture Xushen Tyre (Shanghai) Co., Ltd. which was
positive to the amount of euro 25,137 thousand (positive to the amount of euro 9,505 thousand for
2023), and in the joint venture PT Evoluzione Tyres in Indonesia, which was positive to the amount
of euro 1,001 thousand (positive to the amount of euro 840 thousand for 2023).
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
631
36.2 Dividends
In 2024, these amounted to euro 3,932 thousand and mainly included dividends received from Fin.
Priv. S.r.l. (euro 2,110 thousand) and the RCS Mediagroup S.p.A. (euro 1,729 thousand). In 2023
they had amounted to euro 4,269 thousand.
37.
FINANCIAL INCOME
The item is composed as follows:
Interest income which totalled euro 42,350 thousand, mainly included:
euro 32,881 thousand in interest receivables from financial institutions, associates and joint
ventures;
euro 4,149 thousand in interest on fixed-income securities;
euro 3,412 thousand in interest accrued on security deposits provided by the Brazilian
subsidiaries as a guarantee for legal and tax disputes.
euro 1,248 thousand in interest on other types of securities;
The item other financial income amounted to euro 21,287 thousand and includes interest accrued
on tax and social security receivables from the Brazilian subsidiaries.
The fair value measurement of other financial assets was positive to the amount of euro 56,859
thousand and refers to the fair value measurement of dollar-linked bond instruments in which the
Argentine subsidiary has invested in order to mitigate the effects of depreciation on the local
currency. The exchange rate component of the fair value measurement of dollar-linked bond
instruments amounted to euro 35,249 thousand, and partially offsets the combined effect of the total
of euro 136,330 thousand comprised on the one hand, of the Argentine net monetary loss of euro
92,520 thousand and on the other hand, of the effect of the Argentine subsidiary’s net losses on
exchange rates which amounted to euro 43,810 thousand. Reference should be made to Note 38,
“Financial Expenses” for further details.
(in thousands of euro)
2024
2023
Interest income
42,350
46,424
Other financial income
21,287
5,080
Net interest on provisions for employee benefit obligations
985
612
Fair value measurement of other financial assets
56,859
170,838
Fair value measurement of foreign exchange derivatives
14,370
-
Fair value measurement of other derivatives
475
2,707
Total
136,326
225,661
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
632
The item fair value measurement of foreign exchange derivatives refers to forward foreign
exchange buy/sell transactions to hedge commercial and financial transactions, in accordance with
the Group’s exchange rate risk management policy. For transactions still open at period-end, the fair
value is determined by applying the forward exchange rate at the reporting date. Fair value
measurement consists of two elements: the interest component, which is linked to the interest rate
differential between the currencies covered by the individual hedges, equal to a net cost of euro
27,418 thousand, and the exchange rate component, equal to a net income of euro 41,788 thousand.
38.
FINANCIAL EXPENSES
The item is composed as follows:
Interest which totalled euro 168,671 thousand, and mainly included:
euro 95,314 thousand incurred from bank financing facilities held by Pirelli & C. S.p.A;
euro 49,660 thousand in financial expenses related to bond loans, of which euro 26,721 thousand
was related to the “Bond SLB EUR 600m 4.25% due 01/28”, euro 12,342 thousand was related
to the “Bond SLB EUR 600m 3.875% due 07/29”, euro 9,934 thousand was related to the
monetary and non-monetary interest from the “Convertible Bond Loan”, and euro 664 thousand
was related to the “Schuldschein” financing, which in all cases were issued by Pirelli & C. S.p.A.;
euro 17,400 thousand in net interest receivables which included interest on Interest Rate Swaps,
for which hedge accounting was adopted to rectify the flow of financial expenses for the bank
credit facilities and bond loans mentioned above.in the preceding point. For further details,
reference should be made to Note 28, “Derivative Financial Instruments”;
euro 31,536 thousand in financial expenses related to bank loans held by foreign subsidiaries.
The item commissions, to the amount of euro 28,513 thousand includes, in particular, euro 10,287
thousand in costs for the assignment of receivables with non-recourse clauses, mainly in South
America, Italy and Germany, and euro 18,226 thousand related to expenses for sureties and other
banking commissions.
(in thousands of euro)
2024
2023
Interest expenses
168,671
181,600
Commissions
28,513
26,223
Net monetary loss
82,067
41,298
Other financial expenses
15,180
3,481
Interest expenses on lease liabilities
23,283
23,189
Net losses on exchange rates
105,197
84,957
Fair value measurement of foreign exchange derivatives
-
59,016
Total
422,911
419,764
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
633
The item net monetary loss refers to the effect on monetary items deriving from the application of
IAS 29 - Financial Reporting in Hyperinflationary Economies, by the Argentine subsidiary Pirelli
Neumaticos SAIC, which was negative to the amount of euro 92,520 thousand and by the Turkish
subsidiaries Pirelli Otomobil Lastikleri A.S. and Pirelli Lastikleri Dis Ticaret A.S., which was positive
to the amount of euro 10,453 thousand (reference should be made to Note 42 “Hyperinflation” for
further details).
The item net losses on exchange rates which amounted to euro 105,197 thousand (gains
amounted to euro 446,179 thousand and losses amounted to euro 551,376 thousand) refers to, the
adjustment of period-end exchange rates for items expressed in currencies other than the functional
currency and still outstanding at the closing date of the Consolidated Financial Statements, and to
the net gains realised on items closed during the course of the period.
When comparing the net losses on exchange rates of euro 105,197 thousand, recognised on the
receivables and payables in currencies other than the functional currency of the various subsidiaries,
with the fair value measurement of the exchange rate component of the foreign exchange derivatives
used for hedging, which amounted to a net income of euro 41,788 thousand, the result is a negative
imbalance of euro 63,409 thousand. This imbalance includes a net loss on exchange rates for the
Argentine subsidiary Pirelli Neumaticos SAIC of euro 43,810 thousand, which was partially offset by
the positive fair value measurement of other financial assets, as described in Note 37, “Financial
Income”. Net of the aforementioned Argentine effect, however, the imbalance would have been a
negative euro 19,599 thousand, mainly due to the impossibility of efficient financial hedging, mainly
in Egypt.
Interest includes euro 8.3 million paid to suppliers with whom, as part of the normal management
and optimisation of working capital, the Group has commercial agreements in place - mainly in Brazil
- for the deferral of payment terms. The total for the related trade payables at December 31, 2024
amounted to euro 140.3 million.
39.
TAXES
Taxes were composed as follows:
Taxes in 2024 amounted to euro 146,689 thousand against a net income before taxes of euro
647,793 thousand, compared to the amount of euro 134,198 thousand in 2023 against a net income
before taxes of euro 630,103 thousand. The tax rate for 2024 stood at 22.6% compared to 21.3%
for 2023. Taxes in 2024 reflected the positive effect of approximately euro 30 million relative to the
positive development of some tax disputes concerning previous years. Taxes for 2023 included the
Patent Box tax benefits for the 2020-2022 three-year period of approximately euro 40 million.
(in thousands of euro)
2024
2023
Current taxes
151,883
205,140
Deferred taxes
(5,194)
(70,942)
Total
146,689
134,198
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
634
The reconciliation between theoretical and effective taxes is as follows:
The negative impact on the tax rate from non-deductible costs and other items, was more than
compensated in 2024 by the tax incentives from which the Group mainly benefits in Italy, including
the Patent Box and ACE (Allowance for Corporate Equity) relative to previous financial years.
The item “Other” was mainly impacted by the adjustment of deferred taxes for the Brazilian
subsidiaries and the effect of hyperinflation in Argentina and Turkey, net of changes in the Provision
for tax risks, also due to the positive developments in some tax disputes concerning previous years.
(in thousands of euro)
2024
2023
A) Net income/(loss) before taxes
647,793
630,103
B) Theoretical taxes
164,588
174,129
Main causes for variations between theoretical and effective taxes:
Taxes incentives
(53,394)
(87,815)
Non-deductible costs
11,707
16,647
Taxes on undistributed income of subsidiaries and other non-recoverable withholding
taxes
11,927
14,566
Other
11,861
16,672
C) Effective taxes
146,689
134,198
Theoretical tax rate (B/A)
25.4%
27.6%
Effective tax rate (C/A)
22.6%
21.3%
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
635
The Group’s theoretical tax burden is calculated by taking into account the nominal tax rates of the
countries where the Group’s main companies operate, as shown below:
The following table shows the incidence of taxes paid during the financial year, which amounted to
euro 158,488 thousand (euro 138,998 thousand in 2023), by geographic region:
-
27% Europe (33% in 2023);
-
32% APAC (36% in 2023);
-
11% Russia and MEAI (3% in 2023);
-
12% South America (8% in 2023);
-
18% North America (20% in 2023).
Taxes paid refers to the total amount of income taxes effectively paid during the fiscal period by the
companies of the Group in their respective tax residence jurisdictions, to income tax prepayments
paid in 2024, to income taxes paid during 2024 but relative to previous financial years (for example;
income tax balances relative to 2023), or payments relative to tax assessments for previous financial
years. Taxes paid also include withholding taxes incurred on cross-border payments such as
dividends, interest and royalties and reported in the tax residence jurisdiction of the percipient.
2024
2023
Europe and Turkey
Italy
29.57%
29.57%
Germany
30.00%
30.00%
Romania
16.00%
16.00%
Great Britain
25.00%
23.50%
Turkey
25.00%
25.00%
Russia, Nordics and MEAI
Russia
20.00%
20.00%
North America
USA
25.50%
25.50%
Mexico
30.00%
30.00%
South America
Argentina
35.00%
35.00%
Brazil
34.00%
34.00%
APAC
China
25.00%
25.00%
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
636
40.
EARNINGS/(LOSSES) PER SHARE
Basic earnings/(losses) per share are determined by the ratio between the earnings/(losses)
attributable to the Parent Company and the weighted average number of ordinary shares outstanding
during the period, with the exclusion of treasury shares.
It should be noted that basic and diluted earnings/(losses) per share are the same. It should also be
noted that the option to convert the shares of the bond loan, did not have a dilutive effect as the
average market price of the shares, was lower than the exercise price of the option itself during the
course of 2024.
41.
DIVIDENDS PER SHARE
During the course of 2024, Pirelli & C. S.p.A. distributed to its shareholders a unit dividend of euro
0.198 per ordinary share from its 2023 results, equal to a total dividend pay-out of euro 198 million
gross of withholding taxes.
42.
HYPERINFLATION
Based on the provisions of the Group’s accounting standards, hyperinflation accounting was adopted
by the Argentine subsidiaries, Pirelli Neumaticos SAIC and Latam Servicios Industriales S.A. as of
July 1, 2018 and December 15, 2022 respectively, and by the Turkish subsidiaries Pirelli Otomobil
Lastikleri A.S. and Pirelli Lastikleri Dis Ticaret A.S., as of June 30, 2022.
For the Argentine company, the price index used for the application of hyperinflation accounting was
the National Consumer Price Index (CPI) published by the National Institute of Statistics and Census
(INDEC), equal to an official annual value of 117.33%.
For the Turkish companies, the price index used was the National Consumer Price Index (TUFE)
published by the Turkish Statistical Institute (TUIK), equal to an official annual value of 44.38%.
Net losses on the net monetary position were recorded in the Income Statement as “Financial
Expenses” (Note 38), to the amount of euro 82,067 thousand.
(in thousands of euro)
2024
2023
Net income/(loss) attributable to the Parent Company
467,981
479,080
Weighted average number of ordinary shares outstanding (in thousands)
1,000,000
1,000,000
Earnings /(losses) per ordinary share (in euro per share)
0.468
0.479
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
637
43.
RELATED PARTY TRANSACTIONS
Related Party Transactions, including intra-group transactions, do not qualify as either atypical or
unusual, but are part of the ordinary course of business for companies of the Group. Such
transactions, when not settled under standard conditions, or dictated by specific regulatory
conditions, are in any case regulated by conditions consistent with those of the market and carried
out in compliance with the provisions contained in the Procedure for Related Party Transactions
which the Company has adopted.
The following table summarises the items from the Statement of Financial Position, the Income
Statement and the Statement of Cash Flows that include Related Party Transactions and their
relative impact.
STATEMENT OF FINANCIAL POSITION
(in millions of euro)
12/31/2024
of which related
parties
% incidence
12/31/2023
of which related
parties
% incidence
Non current assets
Other receivables
309.5
7.8
2.5%
408.6
7.2
1.8%
Current assets
Trade receivables
622.9
11.0
1.8%
649.4
9.4
1.4%
Other receivables
444.0
91.0
20.5%
419.2
98.7
23.5%
Non-current liabilities
Borrowings from banks and other financial institutions
3,068.6
15.8
0.5%
3,174.7
8.3
0.3%
Other payables
79.9
-
n.a.
77.9
0.2
0.3%
Provisions for liabilities and charges
101.1
19.4
19.2%
109.5
22.1
20.2%
Provisions for employee benefit obligations
184.0
7.8
4.2%
180.2
3.2
1.8%
Current liabilities
Borrowings from banks and other financial institutions
760.9
3.7
0.5%
789.5
2.2
0.3%
Trade payables
2,081.6
129.0
6.2%
1,999.4
126.1
6.3%
Other payables
392.7
22.9
5.8%
412.2
21.4
5.2%
INCOME STATEMENT
(in millions of euro)
2024
of which related
parties
% incidence
2023
of which related
parties
% incidence
Revenue from sales and services
6,773.3
61.5
0.9%
6,650.1
31.0
0.5%
Other income
346.5
80.5
23.2%
329.0
60.1
18.3%
Raw materials and consumables used (net of changes in inventories)
(2,177.4)
(18.1)
0.8%
(2,216.1)
(11.0)
0.5%
Personnel expenses
(1,301.3)
(16.7)
1.3%
(1,225.3)
(17.4)
1.4%
Other costs
(2,227.4)
(326.9)
14.7%
(2,175.9)
(325.0)
14.9%
Financial income
136.3
3.5
2.6%
225.7
3.1
1.4%
Financial expenses
(422.9)
(3.3)
0.8%
(419.8)
(0.8)
0.2%
Net income / (loss) from equity investments
31.4
27.5
n.a.
15.9
11.6
n.a.
STATEMENT OF CASH FLOWS
(in millions of euro)
12/31/2024
of which related
parties
% incidence
12/31/2023
of which related
parties
% incidence
Net cash flow provided by / (used in) operating activities
1,292.6
(226.5)
n.a.
1,359.9
(290.1)
n.a.
Net cash flow provided by / (used in) investing activities
(421.3)
1.0
n.a.
(392.9)
(0.3)
n.a.
Net cash flow provided by / (used in) financing activities
(610.7)
(4.1)
n.a.
(979.6)
(4.0)
n.a.
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
638
Related Party Transactions are detailed below, subdivided according to the counterparty:
TRANSACTIONS WITH ASSOCIATES AND JOINT VENTURES
Transactions - Statement of Financial Position
The item other non-current receivables refers to a loan granted by Pirelli Tyre S.p.A. to the
Indonesian joint venture PT Evoluzione Tyres.
The item trade receivables includes receivables for the purchase of raw material and for services
rendered, mainly to the Chinese joint venture Jining Shenzhou Tyre Co., Ltd., to the amount of euro
9.1 million.
The item other current receivables mainly refers to receivables from the Jining Shenzhou Tyre
Co., Ltd., for royalties to the amount of euro 3 million, and for various services to the amount of euro
4.5 million.
STATEMENT OF FINANCIAL POSITION
Other non-current receivables
7.8
-
-
7.8
7.2
-
-
7.2
of which financial
7.8
-
-
7.8
7.2
-
-
7.2
Trade receivables
9.4
1.6
-
11.0
7.8
1.5
-
9.4
Other current receivables
87.1
3.9
-
91.0
88.0
10.7
-
98.7
of which financial
78.6
-
-
78.6
75.0
-
-
75.0
Borrowings from banks and other financial institutions non-current
6.3
9.5
-
15.8
7.9
0.4
-
8.3
Other non-current payables
-
-
-
-
-
-
0.2
0.2
Provisions for liabilities and charges non-current
-
-
19.4
19.4
-
-
22.1
22.1
Provisions for employee benefit obligations non-current
-
-
7.8
7.8
-
-
3.2
3.2
Borrowings from banks and other financial institutions current
2.4
1.3
-
3.7
2.1
0.2
-
2.2
Trade payables
69.5
59.5
-
129.0
45.7
80.4
-
126.1
Other current payables
-
0.4
22.5
22.9
0.1
0.8
20.5
21.4
INCOME STATEMENT
Revenues from sales and services
58.9
2.6
-
61.5
29.2
1.8
-
31.0
Other income
40.5
39.9
-
80.5
18.9
41.2
-
60.1
Raw materials and consumables used
(net of change in inventories)
(9.3)
(8.7)
-
(18.1)
(2.1)
(8.9)
-
(11.0)
Personnel expenses
-
-
(16.7)
(16.7)
-
-
(17.4)
(17.4)
Other costs
(230.4)
(70.8)
(25.7)
(326.9)
(209.3)
(91.8)
(23.9)
(325.0)
Financial income
2.9
0.6
-
3.5
2.8
0.2
-
3.1
Financial expenses
(0.4)
(2.9)
-
(3.3)
(0.5)
(0.3)
-
(0.8)
Net income/ (loss) from equity investments
27.5
-
-
27.5
11.6
-
-
11.6
STATEMENT OF CASH FLOWS
Net income / (loss) before taxes
(110.3)
(39.4)
(42.4)
(192.1)
(149.3)
(57.8)
(41.2)
(248.3)
Reversal of Financial (income) / expenses
(2.5)
2.3
-
(0.2)
(2.3)
0.1
-
(2.2)
Reversal of share of net result from associates and joint ventures
(27.5)
-
-
(27.5)
(11.6)
-
-
(11.6)
Reversal of accruals to provisions and other accruals
-
-
14.2
14.2
-
-
12.3
12.3
Change in Trade receivables
(1.3)
(0.1)
-
(1.5)
1.2
0.1
-
1.3
Change in Trade payables
(21.9)
8.9
-
(13.0)
12.3
(40.5)
-
(28.1)
Change in Other receivables
3.1
6.9
-
10.0
(3.8)
13.6
-
9.8
Change in Other payables
(0.0)
0.4
(8.1)
(7.7)
0.1
(0.0)
(20.6)
(20.5)
Use of Provisions for liabilities and charges
-
-
(8.8)
(8.8)
-
-
(2.6)
(2.6)
Net cash flow provided by / (used in) operating activities
(160.4)
(21.1)
(45.1)
(226.5)
(153.5)
(84.5)
(52.1)
(290.1)
Disposals of equity investments in associates and JV
-
-
-
-
-
-
-
-
Change in Financial receivables from associates and JV
(0.5)
-
-
(0.5)
(0.3)
-
-
(0.3)
Dividends received
1.5
-
-
1.5
-
-
-
-
Net cash flow provided by / (used in) investing activities
1.0
-
-
1.0
(0.3)
-
-
(0.3)
Repayment of principal and payment of interest for lease liabilities
(2.5)
(1.6)
-
(4.1)
(3.0)
(0.9)
-
(4.0)
Net cash flow provided by / (used in) financing activities
(2.5)
(1.6)
-
(4.1)
(3.0)
(0.9)
-
(4.0)
Associates and
joint ventures
Other related
parties
Remuneration for
Directors and Key
Managers
Total related
parties
(in millions of euro)
Associates and
joint ventures
Other related
parties
Remuneration for
Directors and Key
Managers
Total related
parties
Associates and
joint ventures
Other related
parties
Remuneration for
Directors and Key
Managers
Total related
parties
2024
2023
(in millions of euro)
Associates and
joint ventures
Other related
parties
Remuneration for
Directors and Key
Managers
Total related
parties
(in millions of euro)
Associates and
joint ventures
Other related
parties
Remuneration for
Directors and Key
Managers
Total related
parties
2024
2023
Associates and
joint ventures
12/31/2024
12/31/2023
Other related
parties
Remuneration for
Directors and Key
Managers
Total related
parties
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
639
The financial portion refers to the financing granted by the Pirelli Tyre Co., Ltd. to the Jining
Shenzhou Tyre Co., Ltd.
The item borrowings from banks and other financial institutions non-current refers to the
payables of the company Pirelli Deutschland GmbH to the company Industriekraftwerk Breuberg
GmbH, for the hire of machinery.
The item borrowings from banks and other financial institutions current refers to a portion of
the aforementioned short-term debt.
The item trade payables mainly refers to trade payables to the Jining Shenzhou Tyre Co., Ltd.
Transactions - Income statement
The item revenues from sales and services mainly refers to the sales of raw materials and
semi-
finished products to the Jining Shenzhou Tyre Co., Ltd.
The item other income refers to royalties to the amount of euro 13.3 million, mainly from the joint
venture the Middle East and North Africa Tyre Company, and to the recharging of expenses to the
amount of euro 4 million.
The item other costs mainly refers to costs for:
the purchase of tyres from Jining Shenzhou Tyre Co., Ltd. to the amount of euro 139.6 million;
the purchase of Motorcycle products from PT Evoluzione Tyres to the amount of euro 46.2
million;
purchase of energy and fees for the operational management by Industriekraftwerk Breuberg
Gmbh totalling euro 30.5 million.
The item financial income refers mainly to interest on loans disbursed to the two joint ventures.
OTHER RELATED-PARTY TRANSACTIONS
The transactions detailed below refer mainly to transactions with the Aeolus Tyre Co., Ltd. and to
transactions with the Prometeon Group, companies belonging to the Sinochem Group. It should be
noted, that in the second quarter of 2024, the existing agreements between the Pirelli Group, the
Aeolus Tyre Co., Ltd. and the Prometeon Tyre Group S.r.l., regarding technology and trademark
licenses were subjected to a review aimed, among other things, at renegotiating its duration and the
amounts of royalties due. As part of the review, a new lease agreement was also signed for the
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
640
production site in Izmit (Turkey), replacing the previous one. The Related Party Transaction figures
included in this document, therefore, reflect the impacts of the transaction described above.
Transactions - Statement of Financial Position
The items trade receivables and other current receivables refer mainly to receivables from
companies of the Prometeon Group.
The item borrowings from banks and other financial institutions current refers to the payables
of Pirelli Otomobil Lastikleri A.S. to Prometeon Turkey Endüstriyel ve Ticari Lastikler A.S. for
machine hire.
The item trade payables mainly refers to payables to companies of the Prometeon Group to the
amount of euro 57.5 million.
Transactions - Income statement
The item other income comprises, amounts from the companies of the Prometeon Group, mainly:
-
the licence agreement for know-how charged by Pirelli Tyre S.p.A. to the amount of euro 14.8
million;
-
royalties recorded by Pirelli Tyre S.p.A. in respect of the license agreement for the use of the
Pirelli trademark to the amount of euro 16 million;
-
logistics services rendered by the Spanish company Pirelli Neumaticos S.A. - Sociedad
Unipersonal to the amount of euro 1.2 million.
The item raw materials and consumables used refers mainly to costs payable to companies of
the Sinochem Group for the purchase of direct materials, consumables and compounds, of which
euro 8.4 million were costs to payables the Chinese company, Pirelli Tyre Co., Ltd.
The item other costs mainly includes:
-
the purchase of truck products for a total amount of euro 62.2 million of which euro 61 million
was made by the Brazilian company Comercial e Importadora de Pneus Ltda. and
subsequently resold to retail customers, and euro 1.3 million made by the German company
Driver Reifen und KFZ-Technik GmbH;
-
costs incurred by the Pirelli Tyre (Jiaozuo) Co., Ltd. for electricity expenses payable to the
Aeolus Tyre Co., Ltd. to the amount of euro 4.2 million.
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
641
REMUNERATION FOR DIRECTORS AND KEY MANAGERS
Remuneration for Directors and Key Managers can be summarised as follows:
-
the Statement of Financial Position items provisions for liabilities and charges
non-current and provisions for employee benefit obligations non-current, include the
provisions for the monetary three-year 2023-2025 and 2024-2026 Long Term Incentive Plans
(LTI) to the amount of euro 8.6 million, (euro 5.9 million at December 31, 2023), the provisions
for the Short Term Incentive Plan (STI) to the amount of euro 6.4 million (euro 7.2 million at
December 31, 2023), as well as severance indemnities to the amount of euro 12.2 million
(euro 16.8 million at December 31, 2023);
-
the Statement of Financial Position item other current payables includes the short-term
portion related to the STI and LTI Plans;
-
the items personnel expenses and other costs include euro 3.1 million related to
employees’ leaving indemnities (TFR) and severance indemnities (euro 4 million for 2023),
as well as provisions for short-term benefits to the amount of euro 14.1 million (euro 13.8
million for 2023) and for long-term benefits, to the amount of euro 13.4 million (euro 10.5
million for 2023).
44.
SIGNIFICANT EVENTS SUBSEQUENT TO THE END OF THE YEAR
In February 2025, Pirelli & C. S.p.A. and some of its Italian subsidiaries, committed to purchasing
an amount of tax credits (so-called “Superbonus Credits”) on a monthly basis for the 2025-2027
period from a bank with a high credit standing, for a total amount of euro 420 million, for the almost
immediate use of offsetting various types of tax liabilities.
In April 2025, the US administration announced the introduction of tariffs for the Auto & Parts sector
starting from May 3, 2025, and reciprocal tariffs on various countries, the latter being temporarily
suspended. Additionally, tariffs on products compliant with the USMCA agreements from Mexico and
Canada are also temporarily suspended. Pirelli, in light of the high uncertainties regarding US tariffs,
confirms the targets communicated to the market on February 26. The group has nonetheless
defined a plan to mitigate the impact of US tariffs – should the currently announced measures come
into effect – with the aim of ensuring the Adjusted Ebit and cash targets at the lower end of the
guidance range, as stated in the paragraph “Outlook for 2025” of the Directors’ Report on Operations,
thereby achieving the deleverage objective.
On April 23, 2025, Pirelli and CTS, an independent operator specializing in retail and services in the
tire industry active in Northern Europe, signed a preliminary agreement for a long-term strategic
partnership. This partnership will enable Pirelli to strengthen its commercial presence and High Value
strategy in the region, while CTS will further enhance its ability to serve customers throughout
Sweden. The operation involves CTS acquiring Däckia AB from Pirelli, which currently consists of a
network of 60 directly owned stores and 42 affiliates operating in Sweden. The preliminary value of
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
642
the acquisition is approximately 260 million SEK (around 24 million euros). The transaction, subject
to customary closing conditions and regulatory approvals, is expected to be finalized by July 2025.
Simultaneously, an agreement between Pirelli and Däckia for the supply of tires until 2030 will come
into effect. This agreement will ensure the distribution of Pirelli products and its role as the main
supplier. The alliance will allow Pirelli to rely on a more structured distribution system, with an
expected greater market coverage, and on the retail specialization that distinguishes CTS in the
region.
45.
OTHER INFORMATION
Information on Climate Change
The Group presented the update of its sustainability targets in the 2024 - 2025 Industrial Plan Update
presented to the financial community on March 6, 2024. The Group’s performance at December 31,
2024 is described in the section “Consolidated Sustainability Reporting” to which reference should
be made.
The Group’s updated forecasts which, based on internal estimates, represent the net benefits from
future cash flows, take the risks related to climate change into account, by setting the related
objectives and performance targets, and in particular:
-
in the production processes, in terms of reducing absolute Scope 1 and 2 CO2 emissions,
increasing the share of electrical energy from renewable sources and improving the efficiency
in the use of energy and natural resources;
-
at product and raw materials level, through the evolution of product ranges with a lower
environmental impact throughout their respective life cycles, while at the same time ensuring
greater driving safety, and in terms of increasing the share of bio-based and recycled
materials used in the new product lines;
-
as part of the supply chain, through targets for the reduction of absolute Scope 3 CO2
emissions, particularly associated with raw materials suppliers.
The achievement of these objectives requires further specific actions, some of which have already
been initiated and are reflected, where applicable, in the forecasts of the economic and financial
flows for 2025. These actions include:
-
the purchase of Energy Attribute Certificates (EAC) for electrical energy at almost all of the
Group’s production sites. These are instruments that certify the renewable origin of the
energy sources used, and for 2024 were recorded under other costs;
-
the procurement of electrical energy through Power Purchase Agreements for the dedicated
supply from renewable sources at the Merlo (Argentina), Campinas (Brazil) and Feira de
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
643
Santana (Brazil) production sites. The cost of these contracts were classified under other
costs;
-
investment projects for greater energy efficiency, which were already initiated in 2021, with
investments commencing in 2023, for the electrification of the vulcanisers. Investments in
2024 amounted to euro 9.1 million for energy efficiency improvement projects and euro 27.1
million for the electrification of the vulcanising presses, and are included in the increases in
property, plant and equipment.
With reference to investments for new products, it should be noted that the assets used to
date for tyre production do not need to be replaced, but will be subject to possible
improvements. Instead, with reference to projects to achieve greater energy efficiency,
mainly improvements and the purchases of additional components for existing assets are
planned. Lastly, the projects to electrify the vulcanising presses used in the production
process, involve the replacement of the non-material components of existing assets.
Therefore, the types of investments mentioned above do not impact the valuation of the
useful lives of the assets currently in use or the recoverability of their carrying amount at
December 31, 2024;
-
research and development costs for the development of new products and operating costs
for improving energy efficiency.
With regard to the impact on the financial structure, it should be noted that at December 31, 2024,
financing geared to sustainability indexes accounted for almost 70.1% of the Group’s total gross
debt. Specifically, the Group had outstanding “sustainable” bank facilities to the amount of euro 3.0
billion, of which euro 1.5 billion resulted as used at December 31, 2024, and euro 1.5 billion was
available in the form of a revolving committed credit facility, as well as euro 1.2 billion in sustainability-
linked bonds (the so-called SLBs).
For further information, reference should be made to Note 24, “Borrowings from Banks and Other
Financial Institutions” and Note 4, “Financial Risk Management Policies”.
With regard to risks linked to climate change, Pirelli monitors these elements of uncertainty (both
physical - acute and chronic - and transitional) along its value chain through sensitivity analyses and
risk assessments, to assess and quantify the financial impacts (risks and opportunities) linked to
climate change and water stress, and to put in place appropriate prevention and mitigation measures
to protect its business. One instrument to support these analyses is the Group’s Climate Change
and the related Water Stress Risk Assessment, which is updated periodically to integrate these
analyses with forecasts for the medium to long-term time period, with respect to the IPPC
(Intergovernmental Panel on Climate Change) climate scenarios, which represent a projection of
global temperature increases at the end of the century of between <1.5°C (RCP 1.9) and >4°C (RCP
8.5), and the IEA (International Energy Agency) projections for energy transition which take into
consideration the different levels of ambition and speed in the implementation of climate policies
(Stated Policies Scenario (STEPS), Announced Pledges Scenario (APS) and Net Zero by 2050
(NZE)).
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
644
As regards the physical risks, the potential impacts are projected over a time frame up to 2050,
against the various IPCC climate scenarios, by assessing the potential damage to assets and the
business interruption days for the Group’s manufacturing plants and for strategic suppliers, arising
from the main risks (including flooding, drought, wildfire and storms). In terms of potentially critical
issues, assessed according to the Group’s rating scales, no significant impacts are identified in the
short-medium term (2024-2030), while elements of uncertainty persist on the horizon leading up to
2050.
Instead, with regard to transition risks, the Group went on to evaluate, among other factors, the
introduction and/or tightening of the current CO2 emission pricing schemes in the countries in which
it operates. The potential impacts, linked to an increase in the costs of production, have been
estimated based on different evolutions in the cost of acquiring CO2 emission allowances, deriving
both from the forecasts published by the IEA for the STEPS, APS, NZE scenarios, as well as from
the three possible carbon intensity pathways for the Group. No material impact emerged for the short
(2024) and medium term, while there were elements of uncertainty regarding the long-term (2050),
particularly in the event of the NZE and APS scenarios occurring.
At December 31, 2024, no risks of probable cash outflows had emerged that would require the
accrual of specific provisions in the Financial Statements.
The impacts of the actions taken to achieve the Plan’s objectives and the related risks described
above, were taken into account in the performance of the impairment test on goodwill and on the
Pirelli Brand at December 31, 2024. In particular, with reference to the period of the Plan, the new
cash flows forecast by management for 2025 were taken into account and, with reference to the
medium-long term, the impacts were assessed through stress tests to evaluate the sustainability of
the recoverable amount for goodwill and for the Pirelli Brand.
For more information, reference should be made to Note 10, “Intangible Assets”.
For more information on climate change and in particular on the related risks and the objectives and
actions implemented by the Group, reference should be made to “E1 - Climate Change” within the
section “Consolidated Sustainability Reporting”.
Research and Development Expenses
Research & Development expenses for 2024 amounted to euro 289.5 million and represented 4.3%
of sales, and refer to expenses for product and process innovation, as well as for the development
of new materials. The portion allocated to research and development for High Value activities
amounted to euro 272.8 million and equalled 5.3% of High Value revenues. For further details,
reference should be made to the section “Research and Development Activities” in the Directors’
Report on Operations, which is an integral part of this document.
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
645
Remuneration for Directors and Statutory Auditors
The remuneration paid to the Directors and Statutory Auditors was as follows:
Average Employee Headcounts
The average headcount for employees, sub-divided by category, for the companies included in the
Scope of Consolidation were as follows:
Remuneration for Independent Auditing Firms
Pursuant to the applicable regulations, total fees for the 2024 financial year for auditing and non-
audit services rendered by the company PricewaterhouseCoopers S.p.A. and by entities belonging
to its network, are shown below:
(in thousands of euro)
2024
2023
Directors
25,722
23,855
Statutory Auditors
495
393
Total
26,217
24,248
2024
2023
Executives and white collar staff
6,235
6,171
Blue collar staff
23,633
23,367
Temporary workers
1,483
1,688
Total
31,351
31,226
(in thousands of euro)
Company that provided the
service
Company that received the
service
Total fees
Independent auditing services
PricewaterhouseCoopers S.p.A.
Pirelli & C. S.p.A.
92
PricewaterhouseCoopers S.p.A.
Subsidiaries
1,471
Network PricewaterhouseCoopers
Subsidiaries
1,678
3,241
79%
Independent certification services (1)
PricewaterhouseCoopers S.p.A.
Pirelli & C. S.p.A.
513
PricewaterhouseCoopers S.p.A.
Subsidiaries
118
Network PricewaterhouseCoopers
Subsidiaries
33
664
16%
Non-audit services
PricewaterhouseCoopers S.p.A.
Subsidiaries
74
Network PricewaterhouseCoopers
Pirelli & C. S.p.A.
125
Network PricewaterhouseCoopers
Subsidiaries
13
212
5%
4,117
100%
(1) the item "Independent certification services" indicates the amounts paid for other services that require the issuance of an auditor’s report, as w ell as the amounts paid for the so-called certification services, as they are
concomitant w ith the statutory auditing services.
Partial fees
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
646
Information required by Law No. 124/2017 Art. 1 paragraphs 125-129
With reference to the company Pirelli Tyre S.p.A., the main contributions received from the
Government in 2024, are reported below:
• with reference to the agreement signed with MiSE (the Ministry of Economic Development,
now the Ministry of Enterprises and Made in Italy), during the 2019 financial year, for the
funding of three Research and Development projects, up to a maximum of euro 6.3 million in
total. During the current financial year, the company has received instalments amounting to
euro
1.2
million,
(CUP
-
Unique
Project
Code
-
B46G21000050005,
CUP
B42C21000730005, and CUP B42C21000740005);
• with reference to the agreement signed with MiSE (the Ministry of Economic Development,
now the Ministry of Enterprises and Made in Italy) during the 2022 financial year, for the
funding of a Research and Development project in the field of Digital Solutions, up to a
maximum of euro 2.6 million. During the current financial year, the company had received
instalments amounting to euro 2.4 million, (CUP B49J22003730005);
• under the Fondo Crescita Sostenibile (Sustainable Growth Fund), the company received a
grant decree from the MIMIT (the Ministry of Economic Development and Made in Italy) for
the funding of Research and Development activities, up to a maximum of euro 5.9 million,
(CUP B49J24002180005);
• under the PNRR (National Recovery and Resilience Plan), the Company obtained approval
from MOST (the National Centre for Sustainable Mobility), funded by the MUR (the Ministry
of Universities and Research), for the funding of two Research and Development projects
under the “Flagship Line B” funding schemes, totalling euro 2.7 million, (CUP
B43D21010580004). It should also be noted, that under the same funding scheme, Pirelli
Digital Solutions received approval for euro 0.1 million;
• under the European Life 2023 programme, Pirelli Tyre obtained approval from the European
Commission for the funding of a Research and Development project, up to a maximum of
euro 0.2 million, of which euro 0.1 million has already been received;
For the sake of completeness, it should also be noted that under the Industrial Transition Fund, Pirelli
Industrie Pneumatici received a grant decree from MIMIT, for the funding of investments in energy
saving, up to a maximum of euro 4.7 million, (CUP C39C23000640005).
Additionally, it should be noted that the following funding programmes are still active, although no
instalments have been received in the current financial year:
• under the PNRR (National Recovery and Resilience Plan), during the 2022 financial year,
Pirelli Tyre obtained a grant decree from the MUR (the Ministry of Universities and Research),
for the funding of Research and Development activities under “MOST” - “Centro Nazionale
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
647
di Mobilità Sostenibile” (the National Centre for Sustainable Mobility), up to a maximum of
euro 1.2 million, (CUP B43D21010580004);
• under the PNRR (National Recovery and Resilience Plan), during the 2023 financial year,
the same company obtained approval from MOST (the National Centre for Sustainable
Mobility), financed by MUR (the Ministry of Universities and Research), for the funding of
Research and Development activities under the “POC – Proof of Concept” and “Scalability
Grant” funding schemes, totalling euro 0.2 million, (CUP B43D21010580004);
• during the 2023 financial year, the company Pirelli Digital Solutions S.r.l. signed a Regional
Programme Agreement with the Puglia Region, who will provide the funding of investments
and R&D activities at the new Digital Solutions Centre in Bari, up to a maximum of euro 4.9
million in non-repayable grants, of which euro 2.4 million has already been received.
Lastly, also under the PNRR, Pirelli & C. obtained a grant decree from MUR (the Ministry of
Universities and Research) for the funding of Research and Development activities within the
Ecosystem for Innovation framework of “MUSA – Multilayered Urban Sustainability Action”, up to a
maximum of euro 0.4 million.
Atypical and/or Unusual Transactions
Pursuant to CONSOB Notice No. 6064293 of July 28, 2006, it should be noted that during the course
of the 2024 financial year, that no atypical and/or unusual transactions as defined in the aforesaid
Notice, were carried out by the Company.
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
648
Exchange Rates
The main exchange rates used for consolidation were as follows:
(local currency vs euro)
12/31/2024
12/31/2023
2024
2023
Thai Bhat
35.6760
37.9730
(6.05%)
38.1865
37.6275
1.49%
Swedish Krona
11.4865
11.0960
3.52%
11.4322
11.4755
(0.38%)
Australian Dollar
1.6772
1.6263
3.13%
1.6397
1.6286
0.69%
Canadian Dollar
1.4948
1.4642
2.09%
1.4821
1.4594
1.55%
Singaporean Dollar
1.4164
1.4591
(2.93%)
1.4458
1.4522
(0.44%)
US Dollar
1.0389
1.1050
(5.98%)
1.0824
1.0812
0.11%
Swiss Franc
0.9412
0.9260
1.64%
0.9526
0.9719
(1.98%)
Egyptian Pound
52.8872
34.2093
54.60%
49.1521
33.2384
47.88%
Turkish Lira (°)
36.7429
32.5739
12.80%
36.7429
32.5739
12.80%
Romanian Leu
4.9741
4.9746
(0.01%)
4.9746
4.9465
0.57%
Argentinian Peso (°)
1,072.1448
893.3373
20.02%
1,072.1448
893.3373
20.02%
Mexican Peso
21.0567
18.6988
12.61%
19.7818
19.2060
3.00%
South African Rand
19.6188
20.3477
(3.58%)
19.8297
19.9520
(0.61%)
Brazilian Real
6.4363
5.3516
20.27%
5.8325
5.4022
7.97%
Chinese Renminbi
7.4680
7.8264
(4.58%)
7.7084
7.6184
1.18%
Saudi Arabian Riyal
3.9029
4.1639
(6.27%)
4.0615
4.0566
0.12%
Russian Rouble
106.1028
99.1919
6.97%
100.2028
92.1863
8.70%
British Pound Sterling
0.8292
0.8691
(4.59%)
0.8466
0.8699
(2.67%)
Japanese Yen
163.0600
156.3300
4.30%
163.8519
151.9632
7.82%
Period-end Exchanges Rates
Change
in %
Average Exchange Rates
Change in
%
(°) average exchange rates equal period-end exchange rates from the application of IAS 29 - Financial reporting in Hyperinflationary
economies
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
649
Net Financial Position
(Alternative Performance Indicators not provided for by the accounting standards).
Net financial debt is summarised below, based on the format provided by the ESMA guidelines:
(in thousands of euro)
Note
of which related
parties (note 43)
of which
related parties
(note 43)
Current borrowings from banks and other financial institutions
24
760,856
3,707
789,527
2,242
Current derivative financial instruments (liabilities)
28
3,503
18,183
Non-current borrowings from banks and other financial institutions
24
3,068,599
15,825
3,174,678
8,326
Non-current derivative financial instruments (liabilities)
28
-
-
Total gross debt
3,832,958
3,982,388
Cash and cash equivalents
20
(1,502,741)
(1,252,769)
Other financial assets at fair value through Income Statement
19
(165,965)
(228,759)
Current financial receivables **
16
(113,297)
(78,552)
(106,065)
(74,992)
Current derivative financial instruments (assets)
28
(16,577)
(7,360)
Net financial debt *
2,034,378
2,387,435
Non-current derivative financial instruments (assets)
28
(4,326)
(12,886)
Non-current financial receivables **
16
(104,288)
(7,791)
(112,829)
(7,240)
Total net financial (liquidity) / debt position
1,925,764
2,261,720
12/31/2024
12/31/2023
* Pursuant to CONSOB Notice of July 28, 2006 and in compliance with the ESMA guidelines regarding disclosure requirements pursuant to the Prospectus
Regulation applicable from May 5, 2021.
** The item "financial receivables" is reported net of the relative provisions for impairment which amounted to euro 8,369 thousand at December 31, 2024 (euro
10,968 thousand at December 31, 2023).
(in thousands of euro)
12/31/2024
12/31/2023
Cash and cash equivalents
(1,502,741)
(1,252,769)
Other current financial assets
(295,839)
(342,184)
of which Current financial receivables
(113,297)
(106,065)
of which Current derivative financial instruments (assets)
(16,577)
(7,360)
of which Other financial assets at fair value through Income Statement
(165,965)
(228,759)
Liquidity
(1,798,580)
(1,594,953)
Current borrowings from banks and other financial institutions
760,856
789,527
Current derivative financial instruments (liabilities)
3,503
18,183
Current financial debt
764,359
807,710
Current net financial debt
(1,034,221)
(787,243)
Non-current borrowings from banks and other financial institutions
3,068,599
3,174,678
Non-current derivative financial instruments (liabilities)
-
-
Non-current financial debt
3,068,599
3,174,678
Total net financial debt *
2,034,378
2,387,435
* Pursuant to CONSOB Notice dated July 28, 2006 and in compliance with the ESMA guidelines regarding disclosure
requirements pursuant to the Prospectus Regulation applicable from May 5, 2021.
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
650
SCOPE OF CONSOLIDATION
List of companies included in consolidation using line-by-line method
Company
Business
Headquarters
Currency Share Capital
% holding
Held by
Europe
Austria
Pirelli GmbH
Agent
Vienna
Euro 726,728
100.00%
Pirelli Tyre (Suisse) S.A.
.
Belgium
Pirelli Tyres Belux S.A.
Agent
Brussels
Euro
700,000
99.996%
Pirelli Tyre (Suisse) S.A.
0.004%
Pneus Pirelli S.A.S.
France
Pneus Pirelli S.A.S.
Distributor
Villepinte
Euro 1,515,858
100.00%
Pirelli Tyre S.p.A.
Germany
Deutsche Pirelli Reifen Holding GmbH
Holding
Breuberg /
Odenwald
Euro 7,694,943
100.00%
Pirelli Tyre S.p.A.
Driver Handelssysteme GmbH
Service provider
Breuberg /
Odenwald
Euro 26,000
100.00%
Deutsche Pirelli Reifen Holding
GmbH
Pirelli Deutschland GmbH
Manufacturer and
distributor
Breuberg /
Odenwald
Euro 23,959,100
100.00%
Deutsche Pirelli Reifen Holding
GmbH
Pirelli Personal Service GmbH
Service provider
Breuberg /
Odenwald
Euro 25,000
100.00%
Deutsche Pirelli Reifen Holding
GmbH
PK Grundstuecksverwaltungs GmbH
Dormant
Breuberg /
Odenwald
Euro 26,000
100.00%
Deutsche Pirelli Reifen Holding
GmbH
Driver Reifen und KFZ-Technik GmbH
Distribution chain
Breuberg /
Odenwald
Euro 259,225
100.00%
Deutsche Pirelli Reifen Holding
GmbH
Greece
Elastika Pirelli C.S.A.
Distributor
Elliniko-
Argyroupoli
Euro
11,630,000
99.90%
Pirelli Tyre S.p.A.
0.10%
Pirelli Tyre (Suisse) S.A.
Pirelli Hellas S.A. (in liquidation)
Under liquidation
Athens
US $ 22,050,000
79.86%
Pirelli Tyre S.p.A.
The Experts in Wheels - Driver Hellas
S.A.
Service provider
Elliniko-
Argyroupoli
Euro 100,000
74.80%
Elastika Pirelli C.S.A.
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
651
Company
Business
Headquarters
Currency Share Capital
% holding
Held by
Italy
Driver Italia S.p.A.
Service provider
Milan
Euro 350,000
71.21%
Pirelli Tyre S.p.A.
Driver Servizi Retail S.p.A.
Service provider
Milan
Euro 120,000
100.00%
Pirelli Tyre S.p.A.
HB Servizi S.r.l.
Service provider
Milan
Euro 10,000
100.00%
Pirelli & C. S.p.A.
Maristel S.r.l.
Service provider
Milan
Euro 50,000
100.00%
Pirelli & C. S.p.A.
NewCo Micromobility S.r.l.
Service provider
Milan
Euro 10,000
100.00%
Pirelli Tyre S.p.A.
Pirelli Digital Solutions S.r.l.
Service provider
Milan
Euro 500,000
100.00%
Pirelli Tyre S.p.A.
Pirelli Industrie Pneumatici S.r.l.
Manufacturer Settimo Torinese
(To)
Euro
40,000,000
100.00%
Pirelli Tyre S.p.A.
Pirelli International Treasury S.p.A.
Financial
Milan
Euro
125,000,000
70.00%
Pirelli Tyre S.p.A.
30.00%
Pirelli & C. S.p.A.
Pirelli Servizi Amministrazione e Tesoreria
S.p.A.
Service provider
Milan
Euro 2,047,000
100.00%
Pirelli & C. S.p.A.
Pirelli Sistemi Informativi S.r.l.
Service provider
Milan
Euro 1,010,000
100.00%
Pirelli & C. S.p.A.
Pirelli Tyre S.p.A.
Principal
Milan
Euro 558,154,000
100.00%
Pirelli & C. S.p.A.
Poliambulatorio Bicocca S.r.l.
Service provider
Milan
Euro 10,000
100.00%
Pirelli Tyre S.p.A.
The Netherlands
Pirelli China Tyre N.V.
Holding and Agent
Rotterdam
Euro 38,045,000
100.00%
Pirelli Tyre S.p.A.
Poland
Driver Polska Sp. z o.o.
Service provider
Warsaw
Pol. Zloty 100,000
69.00%
Pirelli Polska Sp. z o.o.
Pirelli Polska Sp. z o.o.
Distributor
Warsaw
Pol. Zloty 625,771
100.00%
Pirelli Tyre S.p.A.
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
652
Company
Business
Headquarters
Currency Share Capital
% holding
Held by
United Kingdom
CTC 2008 Ltd.
Dormant
Burton-on-Trent
British Pound
Sterling 1
100.00%
Pirelli UK Tyres Ltd.
Pirelli Cif Trustees Ltd.
Trustees
Burton-on-Trent
British Pound
Sterling
4
50.00% Pirelli General & Overseas Pension
Trustees Ltd.
50.00% Pirelli Tyres Pension Trustees Ltd.
Pirelli International Limited (ex Pirelli
International plc)
Dormant
Burton-on-Trent
Euro 5,000,000
100.00%
Pirelli Tyre S.p.A.
Pirelli Motorsport Services Ltd.
Service provider
Burton-on-Trent
British Pound
Sterling 1
100.00%
Pirelli UK Ltd.
Pirelli General & Overseas Pension
Trustees Ltd.
Trustees
Burton-on-Trent
British Pound
Sterling 1
100.00%
Pirelli UK Ltd.
Pirelli Tyres Ltd.
Dormant
Burton-on-Trent
British Pound
Sterling 16,000,000
100.00%
Pirelli UK Tyres Ltd.
Pirelli Tyres Pension Trustees Ltd.
Trustees
Burton-on-Trent
British Pound
Sterling 1
100.00%
Pirelli Tyres Ltd.
Pirelli UK Ltd.
Holding
Burton-on-Trent
British Pound
Sterling 163,991,278
100.00%
Pirelli & C. S.p.A.
Pirelli UK Tyres Ltd.
Manufacturer and
distributor
Burton-on-Trent
British Pound
Sterling 85,000,000
100.00%
Pirelli Tyre S.p.A.
Slovakia
Pirelli Slovakia S.R.O.
Distributor
Bratislava
Euro 6,639
100.00%
Pirelli Tyre S.p.A.
Romania
Pirelli Tyres Romania S.r.l.
Manufacturer and
distributor
Slatina
Rom. Leu 2,189,797,300
100.00%
Pirelli Tyre S.p.A.
Russia
Closed Joint Stock Company "Voronezh
Tyre Plant"
Manufacturer
Voronezh Russian Rouble 1,520,000,000
100.00%
Limited Liability Company Pirelli
Tyre Russia
Limited Liability Company Pirelli Tyre
Services
Service provider
Moscow Russian Rouble
54,685,259
95.00%
Pirelli Tyre (Suisse) S.A.
5.00%
Pirelli Tyre S.p.A.
Limited Liability Company "Industrial
Complex Kirov Tyre"
Manufacturer
Kirov Russian Rouble 348,423,221
100.00%
Limited Liability Company Pirelli
Tyre Russia
Limited Liability Company "Pirelli Tyre
Russia"
Manufacturer and
distributor
Moscow Russian Rouble 6,153,846
65.00%
Pirelli Tyre (Pty) Ltd.
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
653
Company
Business
Headquarters
Currency Share Capital
% holding
Held by
Spain
Euro Driver Car S.L.
Service provider
Valencia
Euro 960,000
58.44%
Pirelli Neumaticos S.A. - Sociedad
Unipersonal
Neumaticos Arco Iris S.A.
Service provider
Valencia
Euro 302,303
66.20%
Pirelli Neumaticos S.A. - Sociedad
Unipersonal
Pirelli Neumaticos S.A. - Sociedad
Unipersonal
Distributor
Valencia
Euro 25,075,907
100.00%
Pirelli Tyre S.p.A.
Sweden
Dackia Aktiebolag
Distribution chain
Stockholm
Swed. Krona 31,000,000
100.00%
Pirelli Tyre S.p.A.
Pirelli Tyre Nordic Aktiebolag
Distributor
Stockholm
Swed. Krona 950,000
100.00%
Pirelli Tyre S.p.A.
Switzerland
Driver (Suisse) S.A.
Service provider
Bioggio
Swiss Franc 100,000
100.00%
Pirelli Tyre (Suisse) S.A.
Pirelli Group Reinsurance Company S.A.
Insurance
Basel
Swiss Franc 3,000,000
100.00%
Pirelli & C. S.p.A.
Pirelli Tyre (Suisse) S.A.
Distributor /
Distribution chain
Basel
Swiss Franc 1,000,000
100.00%
Pirelli Tyre S.p.A.
Turkey
Pirelli Lastikleri Dis Ticaret A.S.
Service provider
Istanbul
Turkish Lira 50,000
100.00%
Pirelli Otomobil Lastikleri A.S.
Pirelli Otomobil Lastikleri A.S.
Manufacturer and
distributor
Istanbul
Turkish Lira 190,000,000
100.00%
Pirelli Tyre S.p.A.
Hungary
Pirelli Hungary Tyre Trading and Services
Ltd.
Distributor
Budapest
Hun. Forint 3,000,000
100.00%
Pirelli Tyre S.p.A.
North America
Canada
Pirelli Tire Inc.
Agent
St-Laurent
(Quebec)
Can. $ 6,000,000
100.00%
Pirelli Tyre (Suisse) S.A.
U.S.A.
Pirelli North America Inc.
Holding
New York (New
York)
US $ 10
100.00%
Pirelli Tyre S.p.A.
Pirelli Tire LLC
Manufacturer and
distributor
Rome (Georgia)
US $ 1
100.00%
Pirelli North America Inc.
Prestige Stores LLC
Dormant
Los Angeles
(California)
US $ 10
100.00%
Pirelli Tire LLC
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
654
Company
Business
Headquarters
Currency Share Capital
% holding
Held by
Central/South America
Argentina
Pirelli Neumaticos S.A.I.C.
Manufacturer and
distributor
Buenos Aires
Arg. Peso
2,948,055,176
99.83%
Pirelli Tyre S.p.A.
0.17%
Pirelli Pneus Ltda.
Latam Servicios Industriales S.A.
Service provider
Buenos Aires
Arg. Peso
100,000
95.00%
Pirelli Neumaticos S.A.I.C.
5.00%
Pirelli Pneus Ltda.
Brazil
Comercial e Importadora de Pneus Ltda.
Distribution chain
Sao Paulo
Bra. Real 381,473,982
100.00%
Pirelli Comercial de Pneus Brasil
Ltda.
Pirelli Comercial de Pneus Brasil Ltda.
Distributor
Sao Paulo
Bra. Real
710,994,861
85.00%
Pirelli Tyre S.p.A.
15.00%
Pirelli Latam Participaçoes Ltda.
Pirelli Latam Participaçoes Ltda.
Holding
Sao Paulo
Bra. Real 701,959,921
100.00%
Pirelli Tyre S.p.A.
Pirelli Ltda.
Service provider
Sao Paulo
Bra. Real 14,000,000
100.00%
Pirelli & C. S.p.A.
Pirelli Pneus Ltda.
Manufacturer and
distributor
Campinas (Sao
Paulo)
Bra. Real
3,527,941,893
85.03%
Pirelli Tyre S.p.A.
14.97%
Pirelli Latam Participaçoes Ltda.
Comércio e Importação Multimarcas de
Pneus Ltda.
Dormant
Sao Paulo
Bra. Real
128,191,500
97.12%
Pirelli Pneus Ltda.
2.45%
Pirelli Tyre S.p.A.
0.43%
Pirelli Latam Participaçoes Ltda.
C.P.Complexo Automotivo de Testes,
Eventos e Entretenimento Ltda.
Service provider
Elias Fausto
(Sao Paulo)
Bra. Real
89,812,000
60.00%
Pirelli Pneus Ltda.
40.00%
Pirelli Comercial de Pneus Brasil
Ltda.
TLM - Total Logistic Management
Serviços de Logistica Ltda.
Service provider
Sao Paulo
Bra. Real
3,074,417
99.99%
Pirelli Pneus Ltda.
0.01%
Pirelli Ltda.
Hevea-Tec Industria E Comercio Ltda.
Manufacturer
Sao Paulo
Bra. Real
23,300,000
100.00%
Comércio e Importação
Multimarcas de Pneus Ltda.
Chile
Pirelli Neumaticos Chile Ltda.
Distributor
Santiago
US $
3,520,000
85.25%
Pirelli Comercial de Pneus Brasil
Ltda.
14.73%
Pirelli Latam Participaçoes Ltda.
0.02%
Pirelli Ltda.
Colombia
Pirelli Tyre Colombia S.A.S.
Distributor
Santa Fe De
Bogota
Col. Peso/000
1,863,222,000
85.00%
Pirelli Comercial de Pneus Brasil
Ltda.
15.00%
Pirelli Latam Participaçoes Ltda.
Mexico
Pirelli Neumaticos S.A. de C.V.
Manufacturer and
distributor
Silao
Mex. Peso
11,595,773,848
99.83%
Pirelli Tyre S.p.A.
0.17%
Pirelli Latam Participaçoes Ltda.
Consolidated Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
655
Company
Business
Headquarters
Currency Share Capital
% holding
Held by
Africa
Egypt
Pirelli Egypt Tyre Trading S.A.E.
Holding
Giza
Egy. Pound 84,250,000
100.00%
Pirelli Tyre S.p.A.
Pirelli Egypt Consumer Tyre Distribution
S.A.E.
Distributor
Giza
Egy. Pound
89,000,000
99.89%
Pirelli Egypt Tyre Trading S.A.E.
0.06%
Pirelli Tyre S.p.A.
0.06%
Pirelli Tyre (Suisse) S.A.
South Africa
Pirelli Tyre (Pty) Ltd.
Distributor
Gauteng 2090
S.A. Rand 11
100.00%
Pirelli Tyre S.p.A.
E-VOLUTION Tyre South Africa (Pty) Ltd.
Holding
Gauteng 2090
S.A. Rand 100
100.00%
Pirelli Tyre (Pty) Ltd.
Oceania
Australia
Pirelli Tyres Australia Pty Ltd.
Distributor Pyrmont (NSW)
Aus. $ 150,000
100.00%
Pirelli Tyre (Suisse) S.A.
Asia
Saudi Arabia
Pirelli Middle East Limited
Service provider
Riyadh
Riyal Saudita 500,000
100.00%
Pirelli Tyre S.p.A.
China
Pirelli Logistics (Yanzhou) Co., Ltd.
Service provider
Jining
Chinese
Yuan 5,000,000
100.00%
Pirelli Tyre Co., Ltd.
Pirelli Tyre (Jiaozuo) Co., Ltd.
Manufacturer
Jiaozuo
Chinese
Yuan 350,000,000
80.00%
Pirelli Tyre S.p.A.
Pirelli Tyre Co., Ltd.
Manufacturer and
distributor
Yanzhou
Chinese
Yuan 2,471,150,000
90.00%
Pirelli China Tyre N.V.
Pirelli Tyre Trading (Shanghai) Co., Ltd.
Service provider
Shanghai
US $ 700,000
100.00%
Pirelli China Tyre N.V.
Korea
Pirelli Korea Ltd.
Distributor
Seoul
Korean Won 100,000,000
100.00%
Pirelli Asia Pte Ltd.
United Arab Emirates
Pirelli Tyre MEAI DMCC
Distributor
Dubai
AED 50,000
100.00%
Pirelli Asia Pte Ltd.
Japan
Pirelli Japan Kabushiki Kaisha
Distributor
Tokyo
Jap. Yen 2,200,000,000
100.00%
Pirelli Tyre S.p.A.
Singapore
Pirelli Asia Pte Ltd.
Distributor
Singapore
Sing. $ 2
100.00%
Pirelli Tyre (Suisse) S.A.
Thailand
Pirelli Tyre (Thailand) Ltd.
Distributor
Bangkok
Baht
Thailandese 102,000,000
99.00%
Pirelli Tyre S.p.A.
1.00%
Pirelli Asia Pte Ltd.
Pirelli & C. S.p.A. – Annual Report 2024
Consolidated Financial Statements
656
List of investments accounted for using the equity method
Company
Business
Headquarters
Currency Share Capital
% holding
Held by
Europe
Germany
Industriekraftwerk Breuberg GmbH
Electricity
generation
Hoechst /
Odenwald
Euro 1,533,876
26.00%
Pirelli Deutschland GmbH
Greece
Eco Elastika S.A.
Tyres
Athens
Euro 60,000
20.00%
Elastika Pirelli C.S.A.
Italy
Consorzio per la Ricerca di Materiali
Avanzati (CORIMAV)
Financial
Milan
Euro
103,500
100.00%
Pirelli & C. S.p.A.
Eurostazioni S.p.A.
Financial
Rome
Euro
100,000
32.71%
Pirelli & C. S.p.A.
Poland
Centrum Utylizacji Opon Organizacja
Odzysku S.A.
Tyres
Warsaw
Pol. Zloty 1,008,000.00
20.00%
Pirelli Polska Sp. z o.o.
Slovakia
ELT Management Company Slovakia
S.R.O.
Tyres
Bratislava
Euro 132,000.00
20.00%
Pirelli Slovakia S.R.O.
Romania
Eco Anvelope S.A.
Tyres
Bucarest
Rom. Leu
160,000
20.00%
Pirelli Tyres Romania S.r.l.
Spain
Signus Ecovalor S.L.
Tyres
Madrid
Euro
200,000
20.00%
Pirelli Neumaticos S.A. - Sociedad
Unipersonal
Asia
China
Xushen Tyre (Shanghai) Co, Ltd
Tyres
Shanghai
Renminbi
1,050,000,000
49.00%
Pirelli Tyre S.p.A.
Jining Shenzhou Tyre Co, Ltd
Tyres
Jining City
Renminbi
1,050,000,000
100.00%
Xushen Tyre (Shanghai) Co, Ltd
Saudi Arabia
“Middle East and North Africa Tyre
Company (Joint Stock Company)”
Tyres
King Abdullah
Economic City
Saudi Riyal
386,250,000
25.00%
Pirelli Tyre S.p.A.
Indonesia
PT Evoluzione Tyres
Tyres
Subang
Rupee
1,313,238,780,000
63.04%
Pirelli Tyre S.p.A.
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
657
ANNUAL FINANCIAL STATEMENTS
AT DECEMBER 31, 2024
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
658
STATEMENT OF FINANCIAL POSITION (in euro)
Note
of which related
parties (Note 39)
of which related
parties (Note 39)
Property, plant and equipment
8
56,974,549
62,770,446
Intangible assets
9
2,279,489,673
2,278,775,885
Investments in subsidiaries
10
4,621,948,778
4,624,448,778
Investments in associates
11
142,750
6,374,500
Other financial assets at fair value through other comprehensive income
12
60,547,868
50,748,726
Other receivables
13
386,547
-
1,700,615,890
1,700,000,000
Derivative financial instruments
17
4,264,020
4,264,020
12,751,956
12,751,956
Non-current assets
7,023,754,185
8,736,486,181
Trade receivables
14
61,647,402
60,718,230
55,664,952
54,682,932
Other receivables
13
1,997,593,674
1,983,088,116
193,859,523
180,323,214
Cash and cash equivalents
15
51,426
34,444
Tax receivables
16
76,071,161
75,106,559
34,811,976
34,559,526
Derivative financial instruments
17
32,633
32,633
6,884
6,884
Current assets
2,135,396,296
284,377,779
Total assets
9,159,150,481
9,020,863,960
Shareholders' equity:
- Share capital
1,904,374,936
1,904,374,936
- Other reserves
2,207,708,767
2,208,899,752
- Retained earnings reserve
639,392,383
594,508,404
- Net income of the year
302,024,244
242,882,239
Total shareholders' equity
18
5,053,500,330
4,950,665,331
19
2,713,507,974
2,823,717,789
Other payables
23
94,990
-
405,644
211,511
Provisions for liabilities and charges
20
39,061,625
19,436,998
43,837,587
22,144,151
Provision for deferred tax liabilities
24
604,848,558
577,994,950
Employee benefit obligations
21
17,664,521
3,812,746
15,490,804
3,180,768
Non-current liabilities
3,375,177,668
3,461,446,774
19
548,294,500
1,191,027
443,660,509
762,197
Trade payables
22
30,533,740
3,756,857
28,344,467
3,422,612
Other payables
23
77,042,938
32,247,713
84,008,389
33,240,532
Provisions for liabilities and charges
20
50,700,000
31,200,000
Employee benefit obligations
21
820,000
820,000
Tax payables
25
23,073,662
22,779,424
20,714,671
20,714,671
Derivative financial instruments
17
7,643
7,643
3,819
3,819
Current liabilities
730,472,483
608,751,855
Total Liabilities and Equity
9,159,150,481
9,020,863,960
Borrowings from banks and other financial institutions
Borrowings from banks and other financial institutions
12/31/2024
12/31/2023
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
659
INCOME STATEMENT (in euro)
Note
of which related
parties (Note 39)
of which related
parties (Note 39)
Revenues from sales and services
27
86,322,108
86,303,243
72,998,400
72,988,718
Other income
28
142,757,052
132,932,073
120,864,873
116,905,955
Raw materials and consumables used
29
(281,839)
(302,204)
Personnel expenses
30
(75,930,545)
(11,060,985)
(75,579,525)
(10,123,237)
Amortisation, depreciation and impairment
31
(10,762,435)
(10,288,263)
Other costs
32
(137,014,078)
(40,633,757)
(118,949,871)
(38,131,203)
Net impairment loss on financial assets
33
(56,320)
-
Operating income (loss)
5,033,943
(11,256,590)
Net income (loss) from equity investments
34
319,892,369
277,269,278
- gains on equity investments
-
-
288,065
288,065
- losses on equity investments
(23,031,178)
(23,031,178)
(6,600,000)
(6,600,000)
- dividends
342,923,547
339,084,585
283,581,213
280,117,016
Financial income
35
88,512,713
87,981,604
91,420,273
91,390,202
Financial expenses
36
(132,356,398)
11,902,213
(137,146,716)
9,088,261
Net income (loss) before taxes
281,082,627
220,286,245
Taxes
37
20,941,617
22,595,994
Total net income of the year
302,024,244
242,882,239
2024
2023
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
660
STATEMENT OF COMPREHENSIVE INCOME (in euro)
Note
2024
2023
A
Net income of the year
302,024,244
242,882,239
- Remeasurement of employee benefits
21
(72,218)
(40,979)
- Tax effect
17,332
9,835
- Fair value adjustment of other financial assets at fair value through other
comprehensive income
12
9,821,838
4,598,465
B
Total items that may not be reclassified to income statement
9,766,952
4,567,321
Fair value adjustment of derivatives designated as cash flow hedge:
- Gains / (losses) for the year
17
3,355,864
(4,576,185)
- (Gains) / losses reclassified to income statement
17
(17,771,913)
(17,542,816)
- Tax effect
3,459,852
5,308,560
C
Total items reclassified / that may be reclassified to income statement
(10,956,197)
(16,810,441)
D
Total other components of comprehensive income (B+C)
(1,189,245)
(12,243,120)
A+D
Total comprehensive income / (loss) for the financial year
300,834,999
230,639,119
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
661
Total at 12/31/2022
1,904,374,936
380,874,988
630,380,599
12,466,897
133,734,599
40,947,360
1,022,927,715
559,833,511
252,485,607
4,938,026,212
Dividend distribution as per resolution of June 29, 2023
-
-
-
-
-
-
-
-
(218,000,000)
(218,000,000)
Result carried forward
-
-
-
-
-
-
-
34,485,607
(34,485,607)
-
Other components of comprehensive income
-
-
-
-
-
(12,243,120)
-
-
-
(12,243,120)
Result for the year
-
-
-
-
-
-
-
-
242,882,239
242,882,239
Total comprehensive income/(loss) for the year
-
-
-
-
-
(12,243,120)
-
-
242,882,239
230,639,119
Other changes
-
-
-
-
-
(189,286)
-
189,286
-
-
Total at 12/31/2023
1,904,374,936
380,874,988
630,380,599
12,466,897
133,734,599
28,514,954
1,022,927,715
594,508,404
242,882,239
4,950,665,331
Dividend distribution as per resolution of May 28, 2024
-
-
-
-
-
-
-
-
(198,000,000)
(198,000,000)
Result carried forward
-
-
-
-
-
-
-
44,882,238
(44,882,238)
-
Other components of comprehensive income
-
-
-
-
-
(1,189,245)
-
-
-
(1,189,245)
Result for the year
-
-
-
-
-
-
-
-
302,024,244
302,024,244
Total comprehensive income/(loss) for the year
-
-
-
-
-
(1,189,245)
-
-
302,024,244
300,834,999
Other changes
-
-
-
-
-
(1,741)
-
1,741
-
-
Total at 12/31/2024
1,904,374,936
380,874,988
630,380,599
12,466,897
133,734,599
27,323,968
1,022,927,715
639,392,383
302,024,244
5,053,500,330
STATEMENT OF CHANGES IN EQUITY (in euro) (note 18)
Other O.C.I.
Reserves (*)
Share
Capital
Legal
Reserve
Share Premium
Reserve
Concentration
Reserve
Other
Reserves
Merger
Reserve
Reserve from
results carried
forward
Net result
of the year
Total
(in euro)
Reserve for fair value
adjustment of financial
assets at fair value
through other
comprehensive income
Cash flow hedge
reserve
Reserve
Remeasurement
for employee
benefit
Tax effect
Total other
O.C.I.
Reserves
Balance at 12/31/2022
(207,901)
51,430,207
2,145,272
(12,420,218)
40,947,360
Other components of comprehensive income
4,598,465
(22,119,001)
(40,979)
5,318,395
(12,243,120)
Other changes
(189,286)
-
-
-
(189,286)
Balance at 12/31/2023
4,201,278
29,311,206
2,104,293
(7,101,823)
28,514,954
Other components of comprehensive income
9,821,838
(14,416,049)
(72,218)
3,477,184
(1,189,245)
Other changes
(1,741)
-
-
-
(1,741)
Balance at 12/31/2024
14,021,375
14,895,157
2,032,075
(3,624,639)
27,323,968
BREAKDOWN OF OTHER O.C.I. RESERVES *
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
662
CASH FLOW STATEMENT (in euro)
Note
2024
2023
Net income (loss) before taxes
281,082,627
220,286,245
Reversals of amortisation, depreciation, impairment losses
31
10,762,435
10,288,263
Reversal of accruals/releases
32
20,599,242
19,776,987
Reversal of (Financial income)/financial expenses
36
43,843,685
45,726,443
Reversal of Dividends
34
(342,923,547)
(283,581,213)
Reversal of (gain)/losses on investments
34
23,031,178
6,311,935
Change in Trade receivables
14
(6,038,770)
(11,666,278)
Change in Trade payables
22
1,066,805
4,590,969
Change in Other receivables
13
1,864,200
1,670,935
Change in Other payables
23
(20,850,196)
898,846
Change in Tax receivables/Tax payables
16
12,372,215
76,891,193
Use of Provisions for employee benefit obligations
21
(24,157)
-
Use of Other provisions
20
(9,730,378)
(2,871,356)
A
Net cash flows provided by/(used in) operating activities
15,055,339
88,322,969
- of which related parties
39
123,027,737
188,312,576
Investments in property, plant and equipment
8
(1,018,288)
(1,228,672)
Investments in intangible assets
9
(1,552,315)
(3,491,737)
Disposal/(Acquisition) of investments in subsidiaries
10
- 387,824
Disposals /(Acquisition) of other non current financial assets at fair value through other
comprehensive income
12
22,696 189,287
Repayment of share capital and reserves from associates
11
5,200,572
-
Dividends received
34
342,923,547
282,105,338
B
Net cash provided/(used) by investment activities
345,576,212
277,962,040
- of which related parties
39
344,285,157
279,028,965
Change in Financial receivables
13
(105,369,600)
344,008,736
Financial income
35
88,512,713
68,524,537
Change in Borrowings from banks and other financial institutions due to draw down
19
1,200,000,000
898,224,000
Change in Borrowings from banks and other financial institutions due to repayments
19
(1,220,000,000)
(1,348,000,000)
Dividends paid
18
(198,000,000)
(218,066,030)
Financial expenses
36
(117,504,817)
(102,926,024)
Repayment of principal and payment of interest for lease liabilities
19
(8,252,864)
(8,051,899)
C
Net cash provided/(used) by financing activities
(360,614,568)
(366,286,680)
- of which related parties
39
2,998,058
418,628,634
D
Total net cash generated/(used) in the year (A+B+C)
16,982
(1,671)
E
Opening balance of Cash and cash equivalents
34,444
36,115
F
Closing balance of Cash and cash equivalents (D+E)
51,426
34,444
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
663
EXPLANATORY NOTES
1.
GENERAL INFORMATION
Pirelli & C. S.p.A. (hereinafter also the “Company” or the “Parent Company”) is a corporation
organized under the laws of the Republic of Italy.
Founded in 1872, it is a holding company that manages, coordinates and funds the activities of
subsidiaries (hereinafter Pirelli Group).
The registered office of the Company is in Viale Piero e Alberto Pirelli 25 – Milan.
The audit of the financial statements is entrusted to PricewaterhouseCoopers S.p.A. pursuant to
Legislative Decree January 27, 2010 no. 39 and in execution of the resolution of the shareholders’
meeting of August 1, 2017, which assigned the mandate to this company for each of the nine financial
years ending from December 31, 2017 to December 31, 2025.
On 16 June 2023, the Prime Minister’s Office adopted a measure containing some prescriptions
pertaining to Pirelli’s corporate governance (the “Golden Power Prime Ministerial Decree”). These
prescriptions addressed both to the shareholder National Chemical Corporation Limited (“CNRC”)
and to Pirelli itself, entail, inter alia, the obligation to adopt both “structural safeguards independent
of the temporary nature of the shareholders’ agreement” and “a network of measures operating
together to protect the autonomy of Pirelli & C. S.p.A. and its management, and to protect the
information of strategic importance held by the Company”.
The Golden Power Prime Ministerial Decree prohibits CNRC from exercising management and
coordination activities over Pirelli pursuant to Articles 2497 et seq. of the Italian Civil Code and
requires it, inter alia, by way of example only:
(i)
to ensure Pirelli complete autonomy in the management of relations with customers and
suppliers;
(ii)
to ensure that Pirelli independently prepares the strategic, industrial and financial plans and/or
budgets of the Company and the Group;
(iii)
to guarantee that Pirelli shall not be subject to instructions by the Sinochem Group;
(iv)
not to adopt any deeds, resolutions or communications that may suggest that Pirelli’s decisions
are the consequence of desires and instructions imposed upon it by CNRC;
(v)
not to centralise treasury services or other financial assistance or coordination functions (e.g.
cash pooling) or other technical coordination functions (e.g. integration of Pirelli’s IT systems
into those of Sinochem Holdings Corporation Ltd., including those of Pirelli’s Chinese
subsidiaries);
(vi)
not to issue any orders or instructions and in any case not to coordinate the initiatives regarding
financial and credit-related decisions and research and development in Pirelli;
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
664
(vii) not to issue directives regarding any special transactions carried out by Pirelli including, for
example, the listing of financial instruments, acquisitions, disposals, concentrations,
contributions, mergers, spin-offs;
(viii) not to make any crucial decisions regarding the operating strategies of Pirelli or formulate
group strategic guidelines;
(ix)
to guarantee the absence of any organisational-functional connections between Pirelli, on the
one hand, and CNRC, on the other.
The Golden Power Prime Ministerial Decree also requires the CNRC to undertake to ensure that:
(i)
the Chief Executive Officer of Pirelli, drawn from the majority slate submitted by CNRC, is
indicated by Camfin;
(ii)
out of 12 Directors drawn from the majority slate, 4 are appointed by Camfin;
(iii)
the position of General Manager is introduced, to whom the power to implement Pirelli’s
business plan, budget and ordinary management is delegated;
(iv)
all of Pirelli’s Delegated Bodies are to be appointed exclusively from among the Directors
designated by Camfin;
(v)
the power to appoint and dismiss Managers and Deputy Managers of Pirelli is deferred to the
Executive Vice Chairman or to the Chief Executive Officer;
(vi)
Pirelli’s Bylaws are amended so that, in relation to Board resolutions pertaining to the assets
of strategic importance (as identified in the Golden Power Prime Ministerial Decree) in addition
to the appointment and dismissal from the office of Key Managers, the proposal is reserved
for the Chief Executive Officer and any decision contrary thereto may only be adopted with the
vote against of at least 4/5 of the Board of Directors (thereby attributing veto power over such
resolutions to the Directors elected by Camfin).
Considering the above, the majority of the Pirelli Board of Directors is now composed of independent
directors, and the majority of the Directors drawn from the list submitted by the CNRC (8 out of 12)
are also independent directors or directly designated by Camfin; limiting to 4 (four) the (non-
executive) “non-independent” directors designated by CNRC who, in turn, will have to comply with
the requirements dictated by the Golden Power Prime Ministerial Decree, including the one aimed
at “ensuring the absence of organisational-functional links between Pirelli on the one hand and
CNRC on the other”.
Adoption of the Golden Power Prime Ministerial Decree made it necessary to carry out a number of
in-depth investigations to ascertain the continued existence of MPI Italy control over Pirelli pursuant
to the international accounting standard IFRS 10 “Consolidated Financial Statements”. On this point,
a question was submitted to Consob by the Board of Statutory Auditors and management on 15
February 2024 (“Question”). On 31 July 2024, Consob, following proceedings initiated as a result of
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
665
the Question: (a) communicated the relative results to Pirelli, envisaging the obligation for the
Company Board of Directors to assess the existence or otherwise of a controlling entity in
accordance with IFRS 10; (b) recalled the commitment required by the Golden Power Prime
Ministerial Decree on the part of CNRC not to exercise direction and coordination, and therefore the
commitment not to provide directors with indications; (c) emphasised the mandatory nature of certain
provisions of said Prime Ministerial Decree concerning the role of Camfin S.p.A. (e.g. regarding the
appointment of the Chief Executive Officer who proposes the strategic plan, and the Executive Vice
Chairman who outlines the strategies) that strengthen the autonomy of the Company’s Board of
Directors and that “prevent the shareholder [Marco Polo International Italy S.r.l (“MPI Italy”)] from
being able – even if not exercised – to influence the significant decisions of the Issuer”.
The Company conducted in-depth studies assisted by opinions from leading auditing firms with
reference to the correct application of the accounting standard IFRS 10, as well as additional
opinions received from external legal advisors, and took into account the additional documentation
submitted in the proceedings initiated by Consob following the Question, and the documentation
(including briefs and opinions) provided by the other intervening parties, MPI Italy and Camfin S.p.A.
(“Camfin S.p.A.”).
While conducting these investigations, in order to assess the existence of control by an entity
pursuant to IFRS 10, the Company focused on the three requirements of that standard, namely
whether an entity has simultaneously (i) power over the investee entity; (ii) exposure or rights to
variable returns arising from the relationship with the investee entity; and (iii) the ability to exercise
its power over the investee entity in order to affect the amount of its returns. More specifically,
focusing on the first requirement, the decisions that generally represent exercise of the power of an
investor over another entity were analysed, with an indication for each one of whether MPI Italy can
unilaterally take the aforesaid decisions through the rights resulting from the 2023 Shareholders’
Agreement Renewal, as amended to incorporate the provisions of the Golden Power Prime
Ministerial Decree. Please find below the outcome of these analyses for each decision:
•
Appointment and dismissal of executive directors (Executive Vice Chairman and Chief Executive
Officer): the two executive directors were assigned the first one by the parties upon appointment
by Camfin and the second one by express provision of the Golden Power Prime Ministerial
Decree, upon indication by Camfin. The dismissal or replacement of the CEO can only take
place upon the proposal of the Executive Vice Chairman (a Camfin person), also delegated to
propose a replacement who must be a director representing Camfin;
•
Preparation of the budget and the business plan and any significant amendments to be
submitted for approval by the Board of Directors: the proposal to the Board of Directors of the
budget and business plan and any possible changes must be formulated by the CEO, appointed
by Camfin. The Board of Directors has the sole right to approve the CEO proposal or to vote
against it, giving adequate reasons and taking the best interests of Pirelli into account. Although
MPI Italy has the right to appoint the majority of directors (four of whom “independent”), the MPI
Italy right to provide guidelines to the directors it appoints is severely limited by the provisions
of the Golden Power Prime Ministerial Decree; so the MPI rights do not appear to be substantive
rights, in accordance with IFRS 10 provisions;
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
666
•
Appointment and dismissal of key managers: the appointment or dismissal of key managers
must be put forward by the CEO and any resolution against that proposal requires the favourable
vote of at least 4/5 of the members of the Board of Directors – a qualified quorum higher than
the number of directors appointed by MPI Italy;
•
Matters reserved for the Board of Directors: although the 2023 Shareholders’ Agreement
envisages that certain decisions are taken by the Board of Directors with a simple majority, and
thus potentially by MPI Italy through its directors, this right is severely limited by the provisions
of the Golden Power Prime Ministerial Decree. So MPI rights do not appear to be substantive
ones, in accordance with the provisions in IFRS 10;
•
Decisions pertaining to the Pirelli strategic assets as identified by the Golden Power Prime
Ministerial Decree: in accordance with provisions in the Golden Power Prime Ministerial Decree,
the Bylaws envisage that in relation to board resolutions pertaining to assets of strategic
importance as identified by the Prime Ministerial Decree, the proposal is reserved for the CEO
and any resolution against that proposal requires the favourable vote of at least 4/5 of the
members of the Board of Directors – a qualified quorum higher than the number of directors
appointed by MPI Italy.
Furthermore, the Company considered that in the aforementioned provision, Consob asked the
Board of Directors to assess, for the purposes of resulting decisions on the permanence of control,
whether MPI Italy has the concrete capacity to dismiss the management body in the event of a
disagreement with the Board of Directors on the strategic directions taken and, ultimately, on the
returns that the investee generates. To this end, the Company has assessed that in the Ordinary
Shareholders’ Meetings held from 2018 to 2023 there was a shareholding of over 80% and in the
2024 Shareholders’ Meeting it was 88%, which does not allow MPI Italy to independently decide the
outcome of the Shareholders’ Meeting and dismiss the administrative body in its entirety; nor can
MPI Italy influence the appointment and dismissal of the Company managing bodies, devolved to
Camfin, pursuant to the Golden Power Prime Ministerial Decree and the Shareholders’ Agreement
between Camfin and CNRC.
The result of all these considerations is that the issuance of the Golden Power Prime Ministerial
Decree resulted in the loss of the unilateral control of MPI Italy (and, as a result, that of Sinochem)
over Pirelli pursuant to IFRS 10 and, at the same time, Pirelli is not subject to the unilateral control
of any entity under the aforementioned accounting standard.
The Board of Directors approved these Separate Financial Statements on April 28, 2025 and
authorized their publication.
Significant Events 2024
On January 30, 2024, the European Commission announced the launch of an investigation into
certain tyre manufacturers operating in the European Economic Area, for alleged infringements of
EU competition law, with reference to the possible coordination of prices of new replacement tyres
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
667
for cars and trucks intended for sale in the European Economic Area. At the same time, it conducted
inspections at the offices of the aforementioned tyre manufacturers, including those of Pirelli. The
latter, in confirming the correctness of its actions and of having always acted in compliance with the
applicable legislation, has assured full collaboration to the Authority in the scope of the investigations
carried out.
On March 22, 2024, Pirelli signed an agreement with a selected pool of international banks for a
term loan credit line for an amount of euro 600 million, with maturity in October 2028. The line,
stipulated as part of the usual management and optimization of the financial structure, allowed the
early repayment of a portion of the debt maturing in 2025, the strengthening of the liquidity margin
and the extension of debt maturities. The credit line is calibrated in line with the sustainability
objectives that Pirelli has set itself in the Business Plan Update 2024-’25.
On May 28, 2024, the Shareholders’ Meeting approved, with over 99.8% of the capital represented,
the financial statements for the 2023 financial year, closed with a net profit of the parent company of
euro 242.9 million and a consolidated net profit of euro 495.9 million, resolving the distribution of a
dividend of euro 0.198 per ordinary share, equal to a total dividend of euro 198 million. The dividend
was paid on June 26, 2024 (ex-dividend date June 24 and record date June 25).
On June 24, 2024, Pirelli announced that - with reference to the interest-free senior unsecured
guaranteed equity-linked bond loan called “EUR 500 million Senior Unsecured Guaranteed Equity-
linked Bonds due 2025” - the conversion price of the bonds was changed from euro 6.0173 to euro
5.9522 in accordance with the bond loan regulations, effective from June 24, 2024 following the
resolution of the Shareholders’ Meeting of May 28, 2024 to distribute a dividend of euro 0.198 per
ordinary share.
On June 25, 2024, Pirelli placed with international institutional investors a sustainability-linked bond,
for a total nominal amount of euro 600 million, benchmarked to Pirelli sustainability objectives
validated by the Science Based Targets initiative (SBTi) on September 19, 2024, consistent with the
Pirelli “Sustainability-linked financing Framework”. The issue was oversubscribed by over 4.6 times,
amounting to approximately euro 2.8 billion. The transaction, which took place within the framework
of the current EMTN (Euro Medium Term Note Program), allowed the debt structure to be optimized,
by extending its maturities and diversifying its sources. The transaction, which allowed to improve
the liquidity margin, had a settlement date of July 2, 2024. The issue has a five-year maturity and an
effective yield to maturity of 3.950%, corresponding to a yield of 115 basis points above the reference
rate (mid swap). The securities are listed on the Luxembourg Stock Exchange.
On November 6, 2024, Pirelli announced that Marco Polo International Italy Srl (“MPI”), also on
behalf of China National Tire and Rubber Corp. (“CNRC”), sent Pirelli a copy of the provision of
October 31, 2024 notified to CNRC by the Presidency of the Council of Ministers, which deemed it
appropriate to initiate administrative proceedings for the possible violation by CNRC of the provisions
contained in the Decree of the Presidency of the Council of Ministers of June 16, 2023, with which
the special powers were exercised through the imposition of specific provisions, pursuant to article
2 of Legislative Decree no. 21 of March 15, 2012 (“DPCM Golden Power”). In particular, the
proceedings concern the potential violation of the requirement to ensure the absence of
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
668
organizational-functional connections between Pirelli on the one hand and CNRC on the other. The
provision set the deadline for the conclusion of the proceedings at 120 days from the date of
notification of the provision. CNRC has communicated to Pirelli that it believes it has always complied
with the provisions of the Golden Power DPCM and is confident that it will clarify its position during
the proceedings.
2.
BASIS FOR PREPARATION
These Financial Statements have been prepared on a going concern assumption since the Directors
have verified the absence of financial, operational or other types of indicators that could indicate
critical issues regarding the ability of the Company to meet its obligations in the foreseeable future
and in particular in the next 12 months. The description of the ways in which the Company manages
financial risks is contained in Chapter 4 Financial risk management policy and Chapter 6 Capital
management policy of these Explanatory Notes.
In application of Legislative Decree of February 28, 2005, no. 38, “Exercise of the options provided
for by article 5 of regulation (EC) no. 1606/2002 on international accounting standards”, issuers are
required to prepare not only the consolidated financial statements but also the financial statements
of the Company in compliance with the international accounting standards (IFRS) issued by the
International Accounting Standards Board (IASB) and published in the Official Journal of the
European Community (GUCE).
IFRS include all International Financial Reporting Standards, International Accounting Standards
(IAS), all interpretations of the International Financial Reporting Interpretations Committee (IFRIC),
formerly the Standing Interpretations Committee (SIC).
The financial statements have been prepared on the basis of the historical cost criterion. The
following items have instead been measured at fair value:
-
derivative financial instruments;
-
other financial assets at fair value recorded in the other components of the comprehensive
income statement;
-
other financial assets at fair value through the income statement.
Financial Statements
The separate Financial Statements at December 31, 2024 consist of the Statement of Financial
Position, the Income Statement, the Statement of Comprehensive Income, the Statement of
Changes in Equity, the Statement of Cash Flows and the Explanatory Notes, and are accompanied
by the Directors’ Report on Operations.
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
669
The format adopted for the Statement of Financial Position classifies assets and liabilities as current
and non-current.
The Company has opted to present the components of profit/loss for the year in a separate Income
Statement, rather than include these components directly in the Comprehensive Income Statement.
The income statement format adopted classifies costs by nature.
The Company opted for the presentation of the tax effects and reclassifications to the income
statement of profits/losses recognized among the other components of the Comprehensive Income
Statement in previous years directly in the Comprehensive Income Statement and not in the
explanatory notes.
The Statement of Changes in Equity includes, in addition to the total gains/losses of the period, the
amounts from transactions with equity holders and the changes in reserves during the year.
In the Cash Flow Statement, the cash flows deriving from operating activities are presented using
the indirect method, according to which the profit or loss for the period is adjusted by the effects of
non-monetary items, by any deferment or accrual of past or future operating receipts or payments,
and by any revenue or cost items connected with the cash flows arising from investing activities or
financing activities.
It shall also be noted that the Group has applied the provisions of Consob Resolution no. 15519 of
July 27, 2006 in regard to the formats of financial statements and Consob Notice no. 6064293 of
July 28, 2006 in regard to corporate disclosure.
In order to provide greater clarity and comparability of the financial statement items, the amount of
the corresponding items of the previous year were adjusted where necessary.
All amounts included in the Notes, unless otherwise specified, are in euro thousands.
3.
ACCOUNTING STANDARDS
The accounting standards used in the preparation of separate financial statements are the same as
those used for the purposes of preparing the consolidated financial statements where applicable,
except as indicated below.
Investments in subsidiaries and associates
Investments in subsidiaries and associates are recorded at cost, net of any impairment losses.
In the presence of specific impairment indicators, the value of investments in subsidiaries and
associates, determined based on the historical cost basis, is tested for impairment.
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
670
The main indicators are the following:
the carrying amount of the investment in the separate financial statements exceeds the
carrying amount of the investee’s net assets (inclusive of any associates goodwill) expressed
in the consolidated financial statements;
the dividend distributed by the investee exceeds the total comprehensive income of the
investee company in the year to which the dividend refers;
the operating result achieved by the investee company is significantly lower than the amount
envisaged in the management plan;
there are expectations of significantly decreasing operating results for future years;
existence of changes in the technological, market, economic or regulatory environment in
which the investee operates that may generate significant negative economic effects on the
company’s results.
The impairment test consists of comparing the carrying amount and the recoverable value of the
investment.
If the recoverable amount of an investment is lower than the carrying amount, the latter is reduced
to the recoverable amount. This reduction constitutes an impairment loss recognised in the Income
Statement. In the event that the loss pertaining to the Company exceeds the carrying amount of the
investment and the subsidiary is obliged to fulfil legal or implicit obligations of the subsidiary or
however to cover its losses, any excess with respect to the carrying amount is recognized in a
specific provision of liabilities under the provisions for risks and charges.
The recoverable amount of an investment is identified as the greater of fair value, less costs to sell,
and value in use.
For the purposes of impairment testing, the fair value of an investment in a subsidiary or associate
with shares listed on an active market is always equivalent to its market value, irrespective of the
percentage of ownership. In the case of investments in unlisted companies, the fair value is
determined using estimates based on the best information available.
For the purposes of determining the value in use of a subsidiary and associated company, an
estimate is made of the future net operating cash flows discounted, net of the net financial position
of the company considered at the reference date of the estimate (Discounted Cash Flow criterion –
Asset side). The value in use reflects the effects of factors that may be entity specific, factors that
may not be applicable to any entity.
If the reason for impairment ceases to exist, the carrying amount of the investment is recorded in the
Income Statement, up to the original cost.
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
671
Impairment of financial receivables from subsidiaries and associates
The calculation of the impairment of financial receivables from subsidiaries and associates is made
with reference to the expected losses in the following twelve months. This calculation is based on a
matrix that includes the ratings of companies provided by independent market operators. In the event
of a significant increase in the credit risk subsequent to the origin date of the receivable, the expected
loss is calculated with reference to the entire life of the receivable. The Company assumes that the
credit risk related to a financial instrument has not increased significantly after initial recognition, if it
is determined that the financial instrument has a low credit risk at the reporting date.
The Company assesses whether there has been a significant increase in credit risk when the
counterparty rating, attributed by independent market operators, undergoes a change that shows an
increase in the probability of default. The Company considers a financial asset in default when
internal or external information indicates that it is unlikely that the Company will receive the entire
contracted amount overdue.
Dividends
Dividend income is recorded in the Income Statement when the right to receive payment is
established, which normally corresponds to the resolution approved by the Shareholders’ Meeting
for the distribution of dividends.
It is also noted that starting from 2024, the rules of the Pillar Two model have come into effect as
detailed below:
International Tax reform - Pillar Two model
The Organisation for Economic Co-operation and Development (OECD) published the new tax rules
(known as “GloBe rules”) of European origin for the Pillar Two model in December 2021 to implement
the Global Minimum Tax. These rules aim to ensure that large multinational companies are subject
to a minimum tax rate of 15%. The Pillar Two rules have been adopted by several jurisdictions where
the Group operates and are applicable from January 1, 2024.
With reference to the Pillar Two regulations, please note that calculation of the related taxes for the
financial statements as of December 31, 2024, was made considering that Pirelli & C. S.p.A. is the
Ultimate Parent Entity (UPE) following the loss of control of MPI Italy (and, as a result, that of
Sinochem) over Pirelli pursuant to IFRS No. 10 following the issuance of the Golden Power Decree
on June 16, 2023 - as reported in Note 1 - General Information.
Given the novelty and complexity underlying the determination of the effective tax level, the Pillar
Two legislation provides, for the first three effective periods (the so-called transitional regime valid
for periods starting before December 31, 2026, and ending no later than June 30, 2028), the
possibility of applying a simplified regime (the so-called transitional safe harbour tests, also known
as “Transitional Safe Harbours” - “TSHs”), mainly based on available accounting information for each
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
672
relevant jurisdiction. If at least one of the three tests is passed, it results in the reduction of
compliance burdens and the elimination of Pillar Two taxes.
The Group has decided to opt for these TSHs and, based on the 2024 data sent by the individual
subsidiaries for consolidation purposes, at least one of the related tests (i.e., de minimis test,
simplified ETR test, and routine profit test) has been passed; therefore, for the 2024 financial year,
no material exposure to this additional tax is due by the Group and consequently by the Company.
Regarding the accounting of deferred taxes arising from the aforementioned new tax rules, the
Company as of December 31, 2024 makes use of the temporary exception provided by IAS 12.
3.1
Accounting standards and interpretations endorsed and in force from January 1, 2024
In accordance with IAS 8 “Accounting standards, changes in accounting estimates and errors”, the
IFRS effective from January 1, 2024 are indicated below:
Amendments to IAS 1 - Presentation of Financial Statements - Classification of liabilities as
current or non-current
The amendments clarify the criteria that must be applied for the classification of liabilities as
current or non-current and specify that the classification of a liability is not influenced by the
probability that the settlement of the liabilities be deferred by twelve months following the
reference year. The Company’s intention to liquidate the liability in the short term has no impact
on the classification. There are no impacts on the classification of financial liabilities following
these amendments.
Amendments to IAS 1 - Presentation of financial statements - non-current liabilities with
covenants
These amendments specify that the covenants to be respected after the reporting date do not
affect the classification of the debt as current or non-current at the reporting date. The
amendments instead require the company to provide information on these covenants in the notes
to the financial statements.
There are no impacts on the classification of financial liabilities and in terms of disclosure
following these amendments.
Amendments to IFRS 16 Leasing: Lease liabilities in a sale and leaseback transaction
These amendments specify the requirements for accounting for a sale and a leaseback after the
date of the transaction.
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
673
In particular, in the subsequent measurement of the liability deriving from the leasing contract,
the seller-lessee determines the “lease payments” and the “revised lease payments” in such a
way as not to record gains or losses that refer to the right of use maintained. Since no sale &
leaseback transactions occurred during 2024, these amendments have no impact on the
Company’s financial statements at December 31, 2024.
Amendments to IAS 7 – Cash Flow Statement and IFRS 7 – Financial instruments: Additional
information – Supplier Finance arrangements
Said amendments introduce new disclosure requirements to improve the transparency of the
information provided in relation to supplier financing agreements, in particular regarding the
effects of such agreements on the entity’s liabilities, cash flows and exposure to liquidity risk.
Amendments to IAS 12 - Income taxes International Tax Reform – Pillar Two model rules
These amendments provide a temporary exemption from the accounting for deferred taxes
arising from the application of the new tax rules (“GloBE rules”), of European origin, for the
implementation of the Global Minimum Tax, introduced by the Organization for Economic Co-
operation and Development (OECD). The OECD published Pillar Two model rules in December
2021 to ensure that large multinational companies are subject to a minimum tax rate of 15%.
The Separate Financial Statements at December 31, 2024 make use of the temporary exception
mentioned above.
3.2
International accounting standards and/or interpretations issued but not yet in force in
2024
Pursuant to IAS 8 “Accounting standards, changes in accounting estimates and errors”, the following
are the new Standards or Interpretations that have been issued but have not yet come into force or
have not yet been endorsed by the European Union at December 31, 2024, and which are therefore
not applicable, and the foreseeable impacts on the Separate Financial Statements.
None of these Standards and Interpretations have been adopted by the Group, and thus by the
Company in advance.
Amendments to IAS 21 – The effects of changes in exchange rates: lack of exchangeability
Said amendments clarify when a currency is exchangeable for another currency and,
consequently, when it is not. When a currency is not exchangeable with another, said
amendments define how the exchange rate to be applied is determined. The amendments also
specify the disclosure to be provided when a currency is not exchangeable.
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
674
Said amendments have been endorsed by the European Union and will be applicable from
January 1, 2025. No impact on the Company’s financial statements is expected as a result of
these amendments.
Amendments to IFRS 9 and IFRS 7 – Amendments to the classification and measurement of
financial instruments.
Said amendments:
clarify the date of recognition and derecognition of certain financial assets and liabilities,
providing for a new exception for certain financial liabilities settled through electronic
money transfer systems. By applying this exception, a financial liability can be
derecognized at an earlier date if the money transfer occurs through an electronic payment
system and if specific conditions are met. In particular, the entity making the payment must
not have the practical ability to withdraw, stop or cancel the payment instruction;
o the practical possibility of accessing cash;
o a significant settlement risk.
This exception does not apply to payment methods, such as checks, and must be chosen
for each payment system used;
clarify and provide further guidance for assessing whether a financial asset satisfies the
“principal and interest payments only” criterion (SPPI test). The amendments concern
financial assets that have the following characteristics and for which a careful assessment
must be carried out:
o contractual terms that may change cash flows based on contingent events (for
example, interest rates tied to ESG objectives);
o non-recourse characteristics, i.e. financial assets where the creditor has a right of
recovery limited only to the assets given as collateral, with no further rights on the
debtor’s other resources;
o contractually-linked instruments (CLI)
introduce new disclosure requirements for financial instruments the cash flows of which
may vary due to events not directly related to changes in credit risk (for example, some
instruments with characteristics linked to the achievement of ESG objectives);
introduce new disclosure requirements for equity instruments designated at FVOCI.
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
675
These amendments, which will come into force on January 1, 2026, have not yet been approved
by the European Union. The impacts of these changes on the Company’s financial statements
and disclosures are being analyzed.
IFRS 18 - Presentation and Disclosure of Financial Statements
The key points of the new standard are as follows:
structure of the Income statement: all income and expense items must be classified into
five categories and grouped into three subtotals. The standard provides precise
indications on the classification of the various items within each category;
definition of Management Performance Measures (MPM), i.e. performance indicators
defined by management and used in public communications. These indicators must be
explained in detail in the Notes and a reconciliation with the comparable subtotals
specified by IFRS must be provided;
guidance on how to aggregate and disaggregate information: items with similar
characteristics should be aggregated, while items with dissimilar characteristics should
be disaggregated.
This amendment, which will come into force on January 1, 2027, has not yet been approved by
the European Union. The impact of these amendments on the Separate Financial Statements is
currently under analysis.
IFRS 19 – Disclosures by Subsidiaries Without Public Responsibility
The new standard reduces and simplifies the disclosure requirements for the separate IFRS
financial statements of those companies that have a parent that prepares consolidated financial
statements under IFRS, with operational relief and lower costs. Entities that can apply IFRS 19
are those whose equity or debt instruments are not traded in a public market.
This amendment, which will come into force on January 1, 2027, has not yet been approved by
the European Union. This amendment has no impact on the Company’s financial statements at
December 31, 2024.
Annual improvements Volume 11 (issued July 2024)
Said amendments merely clarify the wording of an IFRS accounting standard or correct
unintended consequences or relatively minor oversights in accounting standards. Additionally,
they resolve minor conflicts between the requirements of different accounting standards.
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
676
The standards amended are the following:
IFRS 1 First-time adoption of International Financial Reporting Standards;
IFRS 7 Financial instruments: Additional information and related Guide to the application
of IFRS 7;
IFRS 9 Financial instruments;
IFRS 10 Consolidated Financial Statements;
IAB 7 Cash Flow Statement.
These amendments, which will come into force on January 1, 2026, have not yet been approved
by the European Union. There were no impacts on the Separate Financial Statements as a result
of these amendments.
Amendments to IFRS 9 and IFRS 7 - Contracts for Electricity from Natural Sources
Said amendments:
introduce guidelines for determining whether electricity purchase contracts from natural
sources fall within the definition of “own use” contracts. In particular, the amendments
clarify that such contracts fall within the definition of “own use” contracts if the entity is
and expects to continue to be a “net purchaser” of electricity for a maximum period of 12
months, i.e. if it purchases sufficient electricity to offset sales of unused electricity on the
same reference market;
introduce an exception to the IFRS 9 requirement that a future transaction must be highly
probable to be designated as a hedged item in a hedging relationship;
require additional disclosures for physical “Power Purchase Agreements” contracts
accounted for as “own use” contracts.
These amendments, which will come into force on January 1, 2026, have not yet been approved by
the European Union. The impact on the Financial Statements of said amendments is being analyzed.
4.
FINANCIAL RISK MANAGEMENT POLICY
The measurement and management of the financial risks of Pirelli & C. S.p.A. are consistent with as
defined by the Group policies.
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
677
The Pirelli Group is exposed to financial risks. These are principally associated with foreign
exchange rates, fluctuations in interest rates, the price of financial assets held as investments, the
ability of customers to meet their obligations to the Group (credit risk), and raising funds on the
market (liquidity risk).
Financial risk management is an integral part of Group business management and is handled directly
by the headquarters in accordance with guidelines issued by the Finance Department on the basis
of general risk management strategies defined by the Managerial Risk Committee.
The main financial risk categories to which the Company is exposed are shown below:
Exchange rate risk
This risk is generated by the commercial and financial transactions that are executed in currencies
other than euro. Exchange rate fluctuations between the time when the commercial or financial
relationship is established and when the transaction is completed (collection or payment) may
generate foreign exchange gains or losses.
The Group aims to minimize the impact of transaction exchange rate risk related to volatility. To
achieve this objective, Group procedures make the Operating Units responsible for collecting
complete information about the assets and liabilities that are subject to transaction exchange rate
risk. This risk is hedged with forward contracts made with the Group Treasury.
The items subject to exchange rate risk are mainly represented by receivables and payables
denominated in foreign currency.
The Group Treasury is responsible for hedging the net position for each currency and, in accordance
with established guidelines and restrictions, it closes all risk positions by trading derivative contracts
on the market, which typically take the form of forward contracts.
The Group has decided not to opt for hedge accounting pursuant to IFRS 9, insofar as the
representation of the economic and financial effects of the hedging strategy on foreign exchange
rate risk is still substantially guaranteed even without adopting such option.
Furthermore, it shall be noted that as part of the annual and three-year planning process, exchange
rate forecasts are made using the best information available on the market. The fluctuation in
exchange rates between the time when the forecast is made and the time when the commercial or
financial transaction occurs represents the exchange rate risk on future transactions.
From time to time, the Group assesses the need to engage in hedging transactions on future
transactions for which it typically uses both forward and optional purchase or sale transactions such
as risk reversal (e.g. zero cost collar). Hedge accounting in accordance with IFRS 9 is referred to
when the conditions are met.
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
678
With reference to some foreign currency loans, the Company enters into derivative contracts, cross
currency interest rate swaps, to hedge for which hedge accounting is activated in compliance with
the requirements of IFRS 9.
The effects on the shareholders’ equity and on the income statement of the Company deriving from
changes in exchange rates calculated on the hedging instruments in place at December 31, 2024
are described in note 17 “Derivative financial instruments”.
Interest rate risk
Interest rate risk is represented by the exposure to variability of the fair value or future cash flows of
financial assets or liabilities due to changes in market interest rates.
The Group assesses based on market circumstances whether to enter into derivative contracts,
typically interest rate swaps, to hedge for which hedge accounting is activated when the conditions
set out in IFRS 9 are fulfilled.
The following is an outline of the effects on the Company’s net result arising from an increase or
decrease of 0.50% in the level of interest rates, with all other conditions being equal:
The effects on the Company shareholders’ equity resulting from changes in the EURIBOR rate
calculated on the interest rate hedging instruments outstanding at December 31, 2024 are described
in note 17 “Derivative financial instruments”. The Company has not implemented derivatives or other
optional structures that impact the linearity of the rate sensitivities on the debt.
Risk of failure to achieve the sustainability objectives set in bank financing and bond loans
As reported in note 19 “Payables to banks and other lenders”, to which reference is made for further
details, the Company has “sustainable” bank lines in place for euro 2.1 billion, of which euro 1.5
billion used at December 31, 2024 and euro 0.6 billion available in the form of committed revolving
credit facilities as well as bonds linked to sustainability objectives (Sustainability Linked Bonds, SLB)
for euro 1.2 billion.
Failure to achieve these objectives would result in an increase in the contractually agreed interest
rate and consequently an increase in financial expenses and future cash flows compared to what
(in thousands of euro)
12/31/2024
12/31/2023
12/31/2024
12/31/2023
Impact on Net income (loss)
2,838
(5,518)
(2,838)
5,518
+0.5%
-0.5%
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
679
would be expected with the achievement of the sustainability objectives, which is not material for the
Company.
Price risk associated with financial assets
The Company is exposed to price risk, which is limited to the volatility of financial assets such as
listed and unlisted stocks and bonds; these assets are classified as financial assets at fair value
recorded as other components of the statement of comprehensive income.
Derivatives hedges are not set up to limit the volatility of these assets.
Financial assets at fair value recorded as other components of the statement of comprehensive
income consist of listed securities amounted to euro 21,929 thousand (euro 18,299 thousand at
December 31, 2023) and those represented by securities indirectly associated with listed shares
(Fin. Priv. S.r.l.) amounted to euro 29,297 thousand (euro 23,416 thousand at December 31, 2023);
these financial assets represent 85% of total financial assets subject to price risk; a +5% price
change in the above listed securities, other things being equal, would result in a positive change of
euro 1,096 thousand of the Company’s shareholders’ equity (positive for euro 915 thousand at
December 31, 2023), while a -5% negative change of these listed securities, other things being
equal, would result in a negative change of euro 1,096 thousand of the Company’s shareholders’
equity (negative for euro 915 thousand at December 31, 2023).
Credit risk
Credit risk represents the Company’s exposure to contingent losses resulting from default by
commercial and financial counterparties.
The Company’s exposure to commercial and financial obligations is mainly towards Group
companies.
To limit the risk for commercial obligations towards third parties, the Company has implemented
procedures to evaluate its customers’ potential and financial solidity, for the monitoring of expected
cash flows and taking credit recovery action if necessary. The Company operates only with highly
rated financial counterparties for the management of its temporary cash surpluses and constantly
monitors its exposure to individual counterparties.
The Company does not hold public debt instruments from any European country, and constantly
monitors its net credit exposure to the banking system.
Liquidity is deposited according to risk diversification principles and in compliance with minimum
rating levels.
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
680
Liquidity risk
Liquidity risk represents the risk that the financial resources available are insufficient to meet the
financial and commercial obligations pursuant to the contractual terms and conditions.
The principal instruments used by the Group to manage liquidity risk are comprised by its annual
and three-year financial and cash-pooling plans. These allow complete and fair detection and
measurement of incoming and outgoing cash flows. The differences between plans and actual data
are constantly analyzed.
The Group has implemented a centralized cash pooling system for the management of collection
and payment flows in compliance with various local currency and tax laws. Banking relationships are
negotiated and managed centrally, in order to ensure coverage of short and medium-term financial
needs at the lowest possible cost. The procurement of medium and long-term resources on the
capital market is also streamlined through centralized management.
Prudent management of the risk described above requires maintaining an adequate level of cash or
cash equivalents and/or highly liquid short-term financial instruments, and the availability of funds
through an adequate amount of committed credit facilities and/or recourse to the capital market,
while diversifying the products and their maturities to seize the best available opportunities.
Furthermore, the Group adopts an extremely prudent approach with respect to the maturities of its
financial debt, with refinancing well in advance in order to minimize the risks associated with liquidity
crises or market shut-downs.
At December 31, 2024, the Company has, in addition to liquidity equal to euro 51 thousand (euro 34
thousand at December 31, 2023), an interest-bearing current account with Pirelli International
Treasury S.p.A. equal to euro 249,719 thousand (euro 143,675 thousand at December 31, 2023),
classified as current financial receivables, of unused credit lines equal to euro 600,000 thousand
(euro 600,000 thousand at December 31, 2023).
The maturities of financial liabilities at December 31, 2024 may be broken down as follows:
(in thousands of euro)
up to 1 year
from 1 to 2 years
from 2 to 5 years
over 5 years
Total
Payables to banks and other lenders
610,270
396,138
2,585,199
-
3,591,607
of which lease liabilities:
8,322
8,226
20,593
-
37,141
Trade payables
30,534
-
-
-
30,534
Other payables
77,043
95
-
-
77,138
Derivative financial instruments
8
-
-
-
8
Total
717,855
396,233
2,585,199
-
3,699,287
12/31/2024
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
681
The maturities of financial liabilities at December 31, 2023 may be broken down as follows:
5.
INFORMATION ON FAIR VALUE
5.1
Fair value measurement
In relation to financial instruments measured at fair value, the following table shows the classification
of these instruments on the basis of the hierarchy of levels pursuant to IFRS 13, reflecting the
significance of the inputs used in determining the fair value. The levels are as follows:
level 1 – unadjusted quotations recorded on an active market for assets or liabilities subject to
valuation;
level 2 – inputs different from the quoted prices referred to in the preceding point, which are
observable on the market either directly (as in the case of prices) or indirectly (because they are
derived from prices);
level 3 – inputs that are not based on observable market data.
The fair value of financial instruments traded on active markets is based on the price quotations
published at the reporting date of the Financial Statements. These instruments, included in level 1,
primarily comprise equity investments classified as financial assets at fair value through other
comprehensive income.
The fair value of financial instruments not traded on active markets (e.g. derivatives) is determined
by the use of evaluation techniques widely used in the financial sector, which maximize the utilization
of observable and available market data:
market prices for similar instruments;
the fair value of interest rate swaps is calculated by discounting estimated future cash flows based
on observable yield curves;
the fair value of foreign exchange derivatives (forward contracts) is determined by using the
forward exchange rate at the reporting date.
The fair value of unlisted equity securities classified in level 3 of the Fair Value hierarchy is
determined primarily on the basis of data from the latest available financial statements.
(in thousands of euro)
up to 1 year
from 1 to 2 years
from 2 to 5 years
over 5 years
Total
Payables to banks and other lenders
530,197
1,391,587
1,625,993
4,953
3,552,730
of which lease liabilities:
8,004
7,905
22,645
4,953
43,507
Trade payables
28,344
-
-
-
28,344
Other payables
84,008
406
-
-
84,414
Derivative financial instruments
4
-
-
-
4
Total
642,553
1,391,993
1,625,993
4,953
3,665,492
12/31/2023
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
682
The following table shows assets measured at fair value as at December 31, 2024, divided into
the three levels defined above:
The breakdown at December 31, 2023 was as follows:
The following table shows the changes of financial assets that occurred in level 3:
These financial assets mainly consist of the equity investment in Istituto Europeo di Oncologia
(European Institute of Oncology) (euro 8,357 thousand).
In the year ended December 31, 2024, there were no transfers from level 1 to level 2 and vice versa,
nor from level 3 to other levels and vice versa.
(in thousands of euro)
Note
12/31/2024
Level 1
Level 2
Level 3
FINANCIAL ASSETS
Other financial assets at fair value through income statement
Current derivative financial instruments
17
33
-
33
-
Other financial assets at fair value through other comprehensive income
Equities and shares
12
60,548
21,929
29,297
9,322
Investment funds
12
-
-
-
-
Derivative hedging instruments
Non-current derivative financial instruments
17
4,264
-
4,264
-
Current derivative financial instruments
17
-
-
-
-
TOTAL ASSETS
64,845
21,929
33,594
9,322
FINANCIAL LIABILITIES
Financial liabilities at fair value through profit or loss
Current derivative financial instruments
17
(8)
-
(8)
-
Derivative hedging instruments
Non-current derivative financial instruments
17
-
-
-
-
Current derivative financial instruments
17
-
-
-
-
TOTAL LIABILITIES
(8)
-
(8)
-
Note
12/31/2023
Level 1
Level 2
Level 3
FINANCIAL ASSETS
Other financial assets at fair value through income statement
Current derivative financial instruments
17
7
-
7
-
Other financial assets at fair value through other comprehensive income
Equities and shares
12
50,725
18,299
23,416
9,010
Investment funds
12
24
-
24
-
Derivative hedging instruments
Non-current derivative financial instruments
17
12,752
-
12,752
-
Current derivative financial instruments
17
-
-
-
-
TOTAL ASSETS
63,508
18,299
36,199
9,010
FINANCIAL LIABILITIES
Financial liabilities at fair value through profit or loss
Current derivative financial instruments
17
(4)
-
(4)
-
Derivative hedging instruments
Non-current derivative financial instruments
17
-
-
-
-
Current derivative financial instruments
17
-
-
-
-
TOTAL LIABILITIES
(4)
-
(4)
-
(in thousands of euro)
12/31/2024
12/31/2023
Opening balance
9,010
9,130
Fair value adjustments through other comprehensive income
312
(120)
Closing balance
9,322
9,010
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
683
5.2
Categories of financial assets and liabilities
The following are the carrying amounts for each class of financial asset and liability identified by
IFRS 9:
6.
CAPITAL MANAGEMENT POLICY
The Company’s objective is to maximize the return on net invested capital while maintaining the
ability to operate over time, ensuring adequate returns for its shareholders and benefits for the other
stakeholders, with progressive deleverage of the financial structure in the short/medium term, as
also outlined in the section relating to the “Outlook for 2025” in the Directors’ Report on Operations.
7.
ESTIMATES AND ASSUMPTIONS
The preparation of the Separate Financial Statements entails Management making estimates and
assumptions which, under certain circumstances, are based on difficult and subjective assessments
(in thousands of euro)
Note
12/31/2024
12/31/2023
FINANCIAL ASSETS
Financial assets at fair value through Income Statement
Current derivative financial instruments
17
33
7
Financial assets at amortized cost
Other non-current receivables
13
387
1,700,616
Current trade receivabels
14
61,647
55,665
Other current receivables
13
1,997,594
193,860
Cash and cash equivalents
15
51
34
2,059,679
1,950,175
Financial assets at fair value through Other Comprehensive Income
Financial assets at fair value through Other Comprehensive Income
12
60,548
50,749
Derivative hedging instruments
Current derivative financial instruments
17
-
-
Non-current derivative financial instruments
17
4,264
12,752
4,264
12,752
TOTAL FINANCIAL ASSETS
2,124,524
2,013,683
FINANCIAL LIABILITIES
Financial liabilities at fair value through Income Statement
Current derivative financial instruments
17
8
4
Financial liabilities at amortized cost
Non-current borrowings from banks and other financial institutions (excl. Lease payables)
19
2,686,300
2,791,152
Current borrowings from banks and other financial institutions (excl. Lease payables)
19
541,207
437,166
Current trade payables
22
30,534
28,344
Other non-current payables
23
95
406
Other current payables
23
77,043
84,008
3,335,179
3,341,076
Lease payables
Non-current lease payables
19
27,208
32,566
Current lease payables
19
7,087
6,495
34,295
39,061
TOTAL FINANCIAL LIABILITIES
3,369,482
3,380,141
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
684
and estimates that are based on historical experience, and assumptions that are periodically
considered reasonable and realistic in light of the circumstances. Therefore, the actual results
achieved may differ from said estimates. Estimates and assumptions are reviewed periodically and
the effects of any changes made to them are reflected in the Income Statement in the period in which
the estimate is revised. If such estimates and assumptions, based on the best evaluation currently
available, should differ from actual circumstances, they will be modified accordingly in the period of
the change of the circumstances. The estimates and assumptions mainly refer to the valuation of
the recoverability of other intangible assets with indefinite useful life and of the investments in
subsidiaries, to the determination of payables for leasing and rights of use, to the determination of
taxes (current and deferred), and to the recognition/valuation of provisions for risks and charges.
Pirelli Brand (intangible assets with indefinite useful life)
The Pirelli Brand is an intangible asset with indefinite useful life not subject to amortization, but,
pursuant to IAS 36, to impairment annually or more frequently, if specific events or circumstances
occur which may lead to the presumption of impairment.
The recoverable value configuration for the purposes of the impairment test at December 31, 2024
is the Fair Value, calculated on the basis of the income approach (Level 3 of the hierarchy of IFRS
13 – Fair Value measurement).
The key assumptions used by management are the estimate of future increases in sales and
operating cash flows and related growth rates beyond the explicit forecast period, in order to estimate
the terminal value and the discount rate, which is based on the weighted average cost of capital plus
a premium determined according to the riskiness of the specific asset.
Rights of use and lease payables
With regard to the estimates and assumptions used to determine lease payables and rights of use,
the application of IFRS 16 introduced some elements of professional judgment and the use of
assumptions and estimates in relation to the lease term, to the definition of the incremental borrowing
rate. The main ones are summarized as follows:
the contract renewal clauses are considered for the purposes of determining the duration of the
contract when the Company has the option of exercising them without the need to obtain the
consent of the counterparty and when their exercise is deemed reasonably certain. In the case
of clauses which provide for multiple renewals that can be exercised unilaterally by the Company,
only the first extension period has been considered;
the automatic renewal clauses of contracts in which both parties have the right to terminate the
contract have not been considered for the purposes of determining the duration of the contract,
as the ability to extend the duration of the same is not under the unilateral control of the Company
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
685
and the penalties to which the lessor could be exposed to is not significant. However, in the event
that the lessor is exposed to a significant penalty, the Company considers including a renewal
option in determining the duration of the contract. This assessment is also carried out considering
the degree of customization of the asset subject to leasing: if the customization were high, the
lessor may incur a significant penalty if opposing the renewal;
early termination clauses in contracts: these clauses are not considered in determining the
duration of the contract if they can only be exercised by the lessor or by both parties. If they are
unilaterally exercised by the Company, specific assessments are contractually conducted (for
example, the Company is already negotiating a new contract or has already given notice to the
lessor);
the incremental borrowing rate consists of the risk-free rate of the country in which the contract
is negotiated and is based on the duration of the contract. It is then adjusted on the basis of the
Group’s credit spread and local credit spread.
Investments in subsidiaries
Investments are assessed to establish whether there was a decrease in value, to be recorded with
impairment, if there are indications that it will be difficult to recover their net accounting value. To
establish the presence of said indications, Directors must make subjective assessments on the basis
of information available within the Company and the market, as well as historical experience.
Moreover, if it is determined that a potential impairment loss may be generated, the Company
calculates this loss using appropriate measurement techniques. The proper identification of
elements indicating the existence of a potential impairment loss, and the estimates for calculating
the amount of such losses, depend on factors that may vary over time, affecting the assessments
and estimates made by Directors. In particular, the key assumptions used by management are
estimates of future increases in sales, operating cash flows, growth rate of operating cash flows
beyond the explicit forecast period for the purpose of estimating the terminal value, and the weighted
average cost of capital (discount rate).
Provisions for risks and charges
Provisions are set aside against legal and fiscal risks related to indirect taxes, representing the risk
of losing lawsuits. The amount of provisions recorded in relation to these liabilities represents the
best estimate at the reporting date made by management for lawsuits and tax claims regarding a
vast range of issues which are subject to the jurisdiction of various countries. Such an estimate
entails making assumptions that depend on factors that may change over time and which could
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
686
therefore have a material impact with respect to the current estimates made by management for the
preparation of the Separate Financial Statements.
Income taxes (current and deferred)
Income taxes (current and deferred) are determined according to an interpretation of the tax
regulations in force. This process sometimes involves complex estimates in determining taxable
income and temporary deductible and taxable differences between accounting and tax values. In
particular, deferred tax assets are recorded to the extent that it is probable that future taxable income
will be available against which they can be recovered. The assessment of the recoverability of
deferred tax assets, recorded in relation both to tax losses that may be used in subsequent years
and to temporary deductible differences, takes into account the estimate of future taxable income
and is based on tax planning. With regard to situations in which the tax legislation in force lends itself
to interpretation, if the Company considers it probable (greater than 50%) that the tax authority will
accept the tax treatment adopted, the pre-tax result is determined in accordance with the tax
treatment applied in the tax return. Otherwise, the effect of uncertainty is reflected in the
determination of the pre-tax result. The probability refers to the fact that the tax authority does not
accept the tax treatment adopted, and not to the probability of the assessment.
8.
PROPERTY, PLANT AND EQUIPMENT
The breakdown was as follows:
8.1
Property, plant and equipment
The breakdown and changes are as follows:
(in thousands of euro)
12/31/2024
12/31/2023
- Owned tangible assets
28,825
30,360
- Rights of use
28,150
32,410
Net Value
56,975
62,770
(in thousands of euro)
Gross Value
Accumulated
Depreciation
Net Value
Gross Value
Accumulated
Depreciation
Net Value
Land
5,245
-
5,245
5,245
-
5,245
Buildings
44,791
(26,957)
17,834
44,349
(25,707)
18,642
Plant and machinery
3,599
(2,362)
1,237
3,271
(2,177)
1,094
Industrial and trade equipment
1,927
(1,901)
26
1,927
(1,730)
197
Other assets
15,239
(10,767)
4,472
15,065
(10,433)
4,632
Assets under construction
11
-
11
550
-
550
Total
70,812
(41,987)
28,825
70,407
(40,047)
30,360
12/31/2024
12/31/2023
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
687
There were no significant increases and divestments in 2024.
Financial expenses were not capitalized on property, plant and equipment.
8.2
Rights of use
The net value of the assets for which the Company has stipulated a lease contract is as follows:
Rights of use on buildings mainly refer to contracts relating to offices.
Rights of use on other assets mainly refer to contracts relating to motor vehicles. These contracts
also include the service component (non-lease component).
Lease contracts are negotiated on an individual basis and include a wide variety of terms and
conditions.
The increases in rights of use in 2024, also including remeasurement, amounted to euro 2,024
thousand (euro 3,564 thousand in 2023) and refer to vehicle and property lease contracts.
There were no reassessments or changes to significant contracts in 2024.
NET VALUE
(in thousands of euro)
12/31/2023 Increases
Decreases
Reclassif.
Depreciation
12/31/2024
Land
5,245
-
-
-
-
5,245
Buildings
18,642
266
-
176
(1,250)
17,832
Plant and machinery
1,094
100
-
229
(184)
1,238
Industrial and trade equipment
197
-
-
-
(172)
26
Other assets
4,632
28
-
145
(333)
4,472
Assets under construction
550
11
-
(550)
-
11
Total
30,360
404
-
-
(1,939)
28,824
NET VALUE
(in thousands of euro)
12/31/2022 Increases
Decreases
Reclassif.
Depreciation
12/31/2023
Land
5,245
-
-
-
-
5,245
Buildings
19,829
36
-
-
(1,223)
18,642
Plant and machinery
1,187
64
-
-
(157)
1,094
Industrial and trade equipment
404
34
-
-
(241)
197
Other assets
4,618
266
-
-
(252)
4,632
Assets under construction
-
550
-
-
-
550
Total
31,283
950
-
-
(1,873)
30,360
(in thousands of euro)
12/31/2024
12/31/2023
Rights of use Buildings
25,550
30,673
Rights of use Other assets
2,600
1,737
Net value
28,150
32,410
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
688
Amortization of rights of use recorded in the income statement and included in the item
“amortization, depreciation and impairment” (note 31) are as follows:
For interest expense recorded in connection with lease contracts, refer to the information in note 36
“Financial expenses”.
For information on costs for lease contracts with a duration of less than twelve months, lease
contracts for low unit value goods and lease contracts with variable fees, refer to note 32 “Other
costs”.
For information on lease payables, refer to note 19 “Borrowings from banks and other lenders”.
9.
INTANGIBLE ASSETS
The items in question and the related changes are detailed as follows:
The Pirelli Brand (asset with indefinite useful life) for euro 2,270,000 thousand, originated following
the allocation of the merger deficit, generated following the incorporation of the parent company
Marco Polo Industrial Holding S.p.A. in 2016. The allocation of the deficit was made consistently with
the consolidated financial statements as a result of the completion of the Purchase Price Allocation.
The valuation of the useful life of the brands is based on a series of factors including the competitive
environment, market share, history of the brand, life cycles of the underlying product, operational
plans and macroeconomic environment of the countries in which the related products are sold. In
particular, the useful life of the Pirelli Brand was assessed indefinitely on the basis of its history of
one hundred fifty years of success (established in 1872) and the intention and ability of the Group to
continue investing in order to support and maintain the brand.
(in thousands of euro)
2024
2023
Buildings
5,516
5,380
Other assets
768
728
Total depreciation of right of use
6,284
6,108
(in thousands of euro)
Decrease
Pirelli Brand - indefinite life
2,270,000
-
-
-
-
2,270,000
Software licenses
911
126
-
256
(348)
944
Other intangible assets
6,847
933
-
662
(2,191)
6,251
Assets under construction
1,018
2,195
-
(918)
-
2,294
Total
2,278,776
3,253
-
-
(2,539)
2,279,490
12/31/2023
Increase
Transfers
Amortisation
12/31/2024
(in thousands of euro)
Decrease
Pirelli Brand - indefinite life
2,270,000
-
-
-
-
2,270,000
Software licenses
855
248
-
88
(280)
911
Other intangible assets
4,820
1,141
(27)
2,939
(2,026)
6,847
Assets under construction
3,430
615
-
(3,027)
-
1,018
Total
2,279,105
2,004
(27)
-
(2,306)
2,278,776
12/31/2022
Increase
Transfers
Amortisation
12/31/2023
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
689
The increases in the year mainly refer to the enhancement of the information systems aimed at
creating a new integrated operating model.
No impairment was carried out in 2024.
Impairment test of the Pirelli Brand (asset with indefinite useful life)
The Pirelli Brand, amounting to euro 2,270,000 thousand, is an intangible asset with indefinite useful
life and therefore not subject to amortization, but, pursuant to IAS 36, to impairment annually or more
frequently, if specific events or circumstances occur which may lead to the presumption of
impairment.
The impairment test at December 31, 2024 was performed using the assistance of an independent
third-party professional.
The recoverable value configuration for the purposes of the impairment test at December 31, 2024
is the Fair Value, calculated on the basis of the income approach (Level 3 of the hierarchy of IFRS
13 – Fair Value measurement).
The forecasts move from the adjusted EBITDA flows of the 2025 management plan approved by the
Company’s Board of Directors on February 26, 2025 - and subsequently confirmed as of the date of
this document - drafted based on the new market context. The prospective flows of 2025, which
reflect the Group’s positioning on the market thanks to the strategy of focusing on High Value, have
been adjusted, without sterilizing the effects of expansion investments, downward to take into
account the analysts’ consensus estimates updated after the presentation of the plan, as evidence
from outside and with reference to 2026 the analysts’ consensus estimates were used.
The flows used for the purpose of determining recoverable value express a cumulative average
annual growth rate (CAGR) of revenues in the two-year period 2025-2026 of 2.7 percent over 2024
and an average adjusted EBITDA margin for the period of 22.9 percent.
Furthermore, the estimate of fair value is based on:
-
evaluation criterion for the sum of parts that also considers the contribution in terms of royalties
from the Prometeon Tyre Group for the use of the Pirelli brand in the Industrial segment as per
management forecasts;
-
excess earnings pertaining to the Pirelli brand obtained by deducting from prospective operating
income the notional fee or royalty rate of the Group’s operating activities other than the Brand,
expressed at fair value;
-
discount rate equal to 10.06%, which includes, with respect to the WACC calculated for the
purposes of the impairment test of goodwill in the consolidated financial statements and equal to
8.14%, a premium determined on the basis of the riskiness of the specific asset and a growth
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
690
rate “g” in the terminal value equal to 0.44%. The pre-tax rate that equates the fair value,
estimated using after-tax cash flows discounted at the after-tax discount rate, to the fair value
estimated using pre-tax cash flows discounted at the pre-tax discount rate is 15.06%;
-
TAB (Tax Amortization Benefit), which is the tax benefit that would benefit the market participant
that acquired the asset separately due to the possibility of fiscally amortizing it.
For the purposes of the impairment test, the recoverable value of the Pirelli Brand cum TAB is
compared with the respective carrying amount (cum TAB) and no impairment has emerged.
The recoverable value is higher than the carrying amount of the Brand of 27.4%. In order for the Fair
Value to be equal to the carrying amount, a worsening variation of the key parameters is necessary
and in particular:
a percentage decrease in revenues of 629 basis points in the explicit forecast period and in the
terminal value;
a decrease in adjusted EBITDA margin of 111basis points in the explicit forecast period and in
the terminal value;
an increase in the discount rate of 235 basis points in the explicit forecast period and in the
terminal value;
a decrease in the growth rate “g” of 340 basis points beyond the explicit forecast period.
With regard to climate change issues, considering that the Group expects in the medium term, based
on internal estimates of the impacts of climate change, net benefits on operating cash flows, these
were not included in the flows used for the impairment exercise. In addition, a stress test was
conducted to assess the sustainability of the recoverable value by using, in the terminal value
calculation, the cash flows of the most conservative analysts’ forecast as a negative scenario that is
assumed to incorporate also the effects of climate change. The calculation used is based on the
assumption that the scenario, once it occurs, will persist over time.
The above exercise shows a recoverable value exceeding the carrying amount of the brand by 14.3
percent.
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
691
10.
INVESTMENTS IN SUBSIDIARIES
At December 31, 2024, this item amounted to euro 4,621,949 thousand compared to euro 4,624,449
thousand at December 31, 2023, and the breakdown is as follows:
Below are the changes during the year:
The change in the financial year refers to the impairment of the investment in the company Pirelli
Ltda.
The company checks the recorded values of its investments and the existence of impairment
indicators on the basis of as set out in paragraph 3 - Accounting standards Investments in
subsidiaries and associates.
Following the verification of the indicators, the subsidiary on which it was necessary to carry out the
test is Pirelli Ltda. The impairment test resulted in the recognition of a loss in value of euro 2,500
thousand.
Further details are set out in the Annexes to the Explanatory Notes.
11.
INVESTMENTS IN ASSOCIATED COMPANIES
At December 31, 2024, this item amounted to euro 143 thousand compared to euro 6,375 thousand
at December 31, 2023, and the breakdown is as follows:
(in thousands of euro)
12/31/2024
12/31/2023
Pirelli Tyre S.p.A.
4,528,245
4,528,245
Pirelli International Treasury S.p.A.
75,000
75,000
Pirelli Group Reinsurance Company S.A.
6,346
6,346
Pirelli Ltda
5,920
8,420
Pirelli Servizi Amministrazione e Tesoreria S.p.A.
3,238
3,238
Pirelli Sistemi Informativi S.r.l.
1,655
1,655
Maristel S.p.A.
1,315
1,315
HB Servizi S.r.l.
230
230
Pirelli UK Ltd.
-
-
Total investments in subsidiaries
4,621,949
4,624,449
(in thousands of euro)
12/31/2024
12/31/2023
Opening balance
4,624,449
4,624,549
Liquidation of Subsidiaries
-
(100)
Impairment
(2,500)
-
Closing balance
4,621,949
4,624,449
(in thousands of euro)
12/31/2024
12/31/2023
Consorzio per le Ricerche sui Materiali Avanzati (CORIMAV)
104
104
Eurostazioni S.p.A.
39
6,271
Total investment in associates
143
6,375
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
692
Below are the changes during the year:
The decrease refers to the reimbursement of a significant portion of the share capital of Eurostazioni
SpA.
The company checks the recorded values of its investments and the existence of impairment
indicators on the basis of as set out in paragraph 3 - Accounting standards Investments in
subsidiaries and associates.
Following the verification of the indicators, the associate on which it was necessary to carry out the
test is Eurostazioni S.p.A.. The impairment test resulted in the recognition of a loss in value of euro
1,031 thousand.
Further details are set out in the Annexes to the Explanatory Notes.
12.
OTHER FINANCIAL ASSETS AT FAIR VALUE RECORDED IN THE OTHER COMPONENTS
OF THE STATEMENT OF COMPREHENSIVE INCOME (FVOCI)
Other financial assets at fair value recorded in the other components of the statement of
comprehensive income amounted to euro 60,548 thousand at December 31, 2024 (euro 50,749
thousand at December 31, 2023). The breakdown of the item for each security is as follows:
The changes in the year are shown below.
(in thousands of euro)
12/31/2024
12/31/2023
Opening balance
6,375
6,375
Decreases
(5,201)
-
Impairment
(1,031)
-
Closing balance
143
6,375
(in thousands of euro)
12/31/2024
12/31/2023
Listed securities
RCS Mediagroup S.p.A.
21,929
18,299
Unlisted securities
Fin. Priv S.r.l
29,297
23,416
Fondo Comune di Investimento Immobiliare Anastasia
-
24
Istituto Europeo di Oncologia S.r.l.
8,580
8,357
Other companies
742
653
Total financial assets at fair value through other comprehensive income
60,548
50,749
(in thousands of euro)
Opening balance
50,749
Decreases
(23)
Adjustment to fair value recognized in other comprehensive income
9,822
Closing balance
60,548
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
693
The decreases refer to the final distribution of the liquidation of the shares held in the Anastasia
Mutual Investment Fund.
The fair value adjustments in the other components of the statement of comprehensive
income mainly refer to the investments in RCS MediaGroup S.p.A. (positive for euro 3,630
thousand), in Fin. Priv. S.r.l. (positive for euro 5,881 thousand), in Genextra S.p.A. (positive for euro
25 thousand), in Istituto Europeo di Oncologia (positive for euro 2243 thousand), in Fondo Comune
di investimento Anastasia (negative for euro 2 thousand) and in Nomisma - Società di Studi
Economici S.p.A. (positive for euro 64 thousand).
For listed securities, the fair value corresponds to the Stock Exchange listing at December 31, 2024.
For unlisted securities and real estate funds, the fair value was estimated according to available
information.
13.
OTHER RECEIVABLES
The breakdown of other receivables is as follows:
Financial receivables from subsidiaries include a loan of euro 1,700 million to Pirelli International
Treasury S.p.A. accessed on January 31, 2023 with maturity January 31, 2025, the receivable for
interest accrued not yet paid on the same line for euro 32,807 thousand and the relation with Pirelli
International Treasury S.p.A. relating to the interest-bearing current account, regulated at interest
rates market for euro 249,720 thousand.
For the purposes of applying the IFRS 9 accounting standard in relation to loans to Group
companies, management has made an estimate of the expected credit losses in the 12 months
following the closing of the financial statements. The analysis takes into consideration qualitative,
quantitative, historical, and prospective information to determine whether the intra-group loan has a
credit risk at December 31, 2024. Referring to a probability of default of a loan from the Pirelli & C.
Group and considering the financial position of subsidiaries, Pirelli & C. management concluded that
any impairment required by the standard would be of an immaterial amount.
Receivables from the tax authorities for taxes not related to income for euro 8,216 thousand
mainly refer to receivables for VAT.
Deferred financial assets relate mainly to the commissions on the revolving and term loan credit
line.
(in thousands of euro)
12/31/2024
Total
Non-current
Current
Total
Non-current
Current
Other receivables from subsidiaries and associates
562
-
562
3,512
-
3,512
Financial receivables from subsidiaries
1,982,527
-
1,982,527
1,876,483
1,700,000
176,483
Guarantee deposits
333
333
-
341
341
-
Other receivables from third parties
3,909
54
3,855
2,863
275
2,588
Receivables from tax authorities for taxes not related to income
8,216
-
8,216
8,177
-
8,177
Financial accrued interest income
-
-
-
263
-
263
Financial prepaid expenses
2,434
-
2,434
2,837
-
2,837
Total other receivables
1,997,981
387
1,997,594
1,894,476
1,700,616
193,860
12/31/2023
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
694
The carrying amount of financial receivables and other receivables approximates their fair value.
14.
TRADE RECEIVABLES
Trade receivables amounted to euro 61,647 thousand compared to euro 55,665 thousand of the
previous year and the breakdown is as follows:
Below is the breakdown of trade receivables, gross of the provision for bad debts based on the
currency in which they are expressed:
Receivables from subsidiaries at December 31, 2024 mainly include the amounts that Pirelli & C.
S.p.A. charges for services rendered through Corporate functions and charge-backs of costs. The
aforementioned receivables are due within the financial year and do not show past due balances of
significant amount.
Receivables from other companies of euro 1,103 thousand (euro 1,219 thousand at December
31, 2023), shown gross of the provision for bad debts of euro 163 thousand, are past due for euro
693 thousand.
Past due receivables and receivables due have been valued in accordance with the Group policies
described in the paragraph relating to credit risk management in the “Financial risk management
policy”.
Impaired receivables include both significant positions impaired separately, and positions with similar
characteristics in terms of credit risk, grouped and impaired on a collective basis.
(in thousands of euro)
12/31/2024
12/31/2023
Receivables from subsidiaries
60,704
54,646
Receivables from associates
3
3
Receivables from other companies
1,103
1,219
Total receivables - gross amount
61,810
55,868
Provision for bad debt
(163)
(203)
Total receivables
61,647
55,665
(in thousands of euro)
% of total trade
% of total trade
receivables
receivables
12/31/2024
12/31/2023
EUR
57,558
93%
52,114
93%
USD (Dollar USA)
554
1%
511
1%
RUB (Ruble Russia)
1,225
2%
888
2%
CHF
2,473
4%
2,355
4%
Total
61,810
100%
55,868
100%
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
695
The change in the provision for bad debts is shown below:
For trade receivables, the carrying amount is considered to approximate the applicable fair value.
15.
CASH AND CASH EQUIVALENTS
At December 31, 2024, they amounted to euro 51 thousand, against euro 34 thousand at December
31, 2023 and refer to balances of bank accounts in euro repayable on demand.
The credit risk associated with cash and cash equivalents is to be considered limited because the
counterparties are represented by leading national and international banking institutions.
The value of cash and cash equivalents is considered to be aligned with the respective fair value.
16.
TAX RECEIVABLES
At December 31, 2024, they amount to euro 76,071 thousand (euro 34,812 thousand at December
31, 2023). The amount mainly includes receivables from Group companies participating in the tax
consolidation for euro 75,106 thousand (euro 28,176 thousand at December 31, 2023). The increase
compared to the previous year substantially depends on the greater contribution of the taxable result
by the subsidiary Pirelli Tyre S.p.A..
17.
DERIVATIVE FINANCIAL INSTRUMENTS
The item includes the fair value measurement of derivative instruments. The breakdown is as follows:
The above derivatives are intercompany derivatives stipulated with the Group’s treasury company,
Pirelli International Treasury S.p.A.
(in thousands of euro)
12/31/2024
12/31/2023
Opening balance
203
207
Accruals
56
-
Utilizations/reversals
(96)
(4)
Closing balance
163
203
(in thousands of euro)
Non Current
Current
Non Current
Current
Non Current
Current
Non Current
Current
Assets
Assets
Liabilities
Liabilities
Assets
Assets
Liabilities
Liabilities
Without adoption of hedge accounting
Forex instruments - trade positions
-
33
-
(8)
-
7
-
(4)
In hedge accounting
- cash flow hedge:
Derivatives for interest rate - included in net financial position
4,264
-
-
-
12,752
-
-
-
Total derivative instruments
4,264
33
-
(8)
12,752
7
-
(4)
12/31/2024
12/31/2023
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
696
Derivative financial instruments not in hedge accounting
The value of exchange rate derivatives included in assets and liabilities corresponds to the fair
value of forward currency purchases/sales outstanding at the closing date of the period. These are
transactions that mirror Company commercial transactions for which the hedge accounting option
was not adopted. The fair value is determined by using the forward exchange rate at the reporting
date.
Derivative financial instruments in hedge accounting
The value of interest rate derivatives recorded under non-current assets for euro 4,264 thousand
refers to the fair value measurement of 5 interest rate swaps with the following characteristics:
For these derivatives, cash flow hedge accounting was adopted. The subject of the hedge is future
interest flows on floating rate EUR liabilities.
The change in fair value for the period is positive for euro 3,356 thousand. This change was entirely
recorded among other components of the Comprehensive Income Statement.
In the income statement, euro 17,772 thousand were transferred under the item “Financial expenses”
(note 36) to correct the financial expenses recognized on the liabilities hedged. This amount consists
of:
1) euro 11,825 thousands of interest income on IRS in hedge accounting
2) euro 5,462 thousand, corresponding to the portion of the positive cash flow hedge reserve
accrued on IRS forward start pre hedge receive floating EURIBOR / pay fix EURIBOR closed
early in 2022. This amount corrects the financial expenses of the related hedge item, a
sustainability-linked bond issued in January 2023 for a total nominal amount of euro 600
million;
3) euro 485 thousand, corresponding to the fair value of 2 IRS closed early in July 2024 following
the early repayment of the hedged item, represented by the “Schuldschein” bond loan.
A change of +0.5% in the EURIBOR curve, other conditions being equal, would lead to a positive
change net of the tax effect of euro 1,784 thousand in the Company’s equity, while a change of -
0.5% in the same curve would lead to a negative change net of the tax effect of euro 1,855 thousand
in the Company’s equity.
Derivative
Hedged element
Notional amount
Start date
Maturity
(Euro million)
IRS
Club Deal EUR 1.6 bn ESG 2022 5y
500.0
February 2023
February 2026 receive floating / pay fixed
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
697
Hedging relationships relating to IRS are considered effective prospectively as the following
conditions are met:
-
there is an economic relationship between the hedging instrument and the hedged item, as the
characteristics of the hedging instrument (nominal interest rate, reset of the interest rate and
frequency of the payment of interest) are substantially in line with those of the hedged item. As
a consequence, changes in the fair value of the hedging instrument regularly offset those of the
hedged item;
-
the effect of credit risk is not predominant within the hedging relationship: based on the Group’s
operating rules, derivatives are traded only with high standing banking counterparties and the
credit quality of the existing derivatives portfolio is constantly monitored;
-
the designated hedge ratio is in line with the one used for financial risk management and is 100%
(1:1).
The ineffectiveness of the hedging relationship is calculated at each reporting date with the Dollar
Offset method, which provides for the comparison of changes in the fair value risk adjusted of the
hedging instrument with changes in the fair value risk free of the hedged item, through the
identification of a hypothetical derivative with the same characteristics of the underlying financial
liability.
Possible causes of ineffectiveness are as follows:
-
application of adjustment for credit risk only to the hedging instrument but not to the hedged item;
-
the hedged item incorporates a floor that is not reflected in the hedging instrument;
-
misalignment between the actual contractual conditions of the future transaction and those of the
hedging instrument.
18.
SHAREHOLDERS’ EQUITY
Equity amounted to euro 5,053,500 thousand (euro 4,950,665 thousand at December 31, 2023).
The statement of changes in equity is shown in the main financial statements.
The change is essentially due to the net result for the year (positive for euro 302,024 thousand), the
adjustment to the fair value of derivatives designated as cash flow hedges net of the tax effect
(negative for euro 10,939 thousand), the adjustment to the fair value of financial assets at fair value
recorded as other components of the statement of comprehensive income (positive for euro 9,820
thousand) and the distribution of dividends for euro 198,000 thousand.
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
698
Share capital
The share capital at December 31, 2024, fully subscribed and paid-in, amounts to euro
1,904,374,935.66 divided into 1,000,000,000 ordinary shares without nominal value and unchanged
compared to December 31, 2023.
Legal reserve
The legal reserve at December 31, 2024 amounted to euro 380,875 thousand, unchanged compared
to December 31, 2023, having already reached the limit set by art. 2430 Civil Code.
Share premium reserve
At December 31, 2024, the share premium reserve amounted to euro 630,381 thousand and
unchanged compared to December 31, 2023.
Concentration reserve
At December 31, 2024, concentration reserves amounted to euro 12,467 thousand and unchanged
compared to December 31, 2023.
Other reserves
At December 31, 2024, other reserves amounted to euro 133,735 thousand and unchanged
compared to December 31, 2023. Other reserves include the reserve of euro 41,200 thousand
created in 2020 to include in equity the component relating to the fair value of the option sold to the
subscribers of the convertible bond loan.
Other O.C.I. reserves
At December 31, 2024, Other O.C.I. reserves were positive for euro 27,324 thousand and refer to
the cash flow hedge reserve, net of the tax effect (positive for euro 11,271 thousand), to the
employee benefit remeasurement reserve (positive for euro 2,032 thousand) and to the reserve for
the fair value adjustment of financial assets at fair value through comprehensive income (positive for
euro 14,021 thousand).
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
699
Merger reserve
At December 31, 2024, the merger reserve amounted to euro 1,022,928 thousand, unchanged
compared to December 31, 2023. The reserve was generated following the merger by incorporation
of Marco Polo Industrial Holding S.p.A. in Pirelli & C. S.p.A. in 2016.
Reserve from results carried forward
The reserve from results carried forward amounted to euro 639,392 thousand compared to a 594,508
at December 31, 2023. The increase is attributable in part to the residual result carried forward from
the previous year, as per meeting resolution of May 28, 2024.
In accordance with the provisions of article 2427, no. 7-bis of the Italian Civil Code, in the following
table each item of equity is indicated analytically, with indication of its origin, possibility of use and
distributability, as well as of its use in previous years.
(in thousands of euro)
Amount Possible use
Available
portion
Summary of
reserves uses in
the last three
previous years
Share capital
1,904,375
Share premium reserve
630,381
A, B, C
630,381
-
Legal reserve
380,875
B
380,875
-
Other reserves
- Concentration reserve
12,467
A, B, C
12,467
-
- Convertible bond loan reserve
41,200
A
41,200
-
- Other reserves
92,535
A, B
92,535
-
- Other O.C.I. reserves
27,324
-
-
-
- Merger reserve
1,022,928
A, B, C
1,022,928
-
Retained earnings
639,392
A, B, C
639,392
-
Total
4,751,477
2,819,778
-
Non distributable
514,610
Residual quota available
2,305,168
A
to increase the share capital
B
to cover losses
C
to distribute to the shareholders
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
700
19.
BORROWINGS FROM BANKS AND OTHER LENDERS
The item borrowings from banks and other lenders, is broken down as follows:
The item bonds refers to:
-
a non-interest-bearing senior unsecured guaranteed equity-linked bond (“convertible bond”),
[ISIN: XS2276552598] for a nominal value of euro 500 million maturing on December 22,
2025. The bond, reserved for institutional investors, issued by Pirelli & C. S.p.A. on December
22, 2020, guaranteed by Pirelli Tyre S.p.A. and admitted to trading on the Vienna MTF,
multilateral trading facility managed by the Vienna Stock Exchange. The bond is convertible,
at the discretion of the bondholders, into new ordinary shares of the Company at a price of
euro 5.9522 per share (originally euro 6.235 per share), subject to additional anti-dilutive
adjustments envisaged by the loan regulations. At December 31, 2024, the transaction is
fully recorded among current financial payables for euro 490.1 million. The difference with
the nominal value refers to the fair value of the option held by the subscribers of the loan to
convert the bond into new ordinary shares of the Company at a pre-set price. This value was
accounted for at inception under equity reserves for euro 41.2 million (net of transaction
costs);
-
rated sustainability-linked bond “Bond loan SLB EUR 600 mln 4.25% due 01/28” [ISIN:
XS2577396430] for a nominal value of euro 600 million, placed on January 11, 2023 with
international institutional investors with fixed coupon of 4.25% and maturity January 2028.
The transaction, classified entirely as non-current financial payables, was issued as part of
the EMTN (Euro Medium Term Note) Program approved by the Board of Directors on
February 23, 2022. The securities are listed on the Luxembourg Stock Exchange. The
regulation of the securities provides for each of the two sustainability parameters indicated
contractually (linked to the Group’s sustainability objeectives), the increase in the coupon of
0.25% in the event of failure to achieve each of the related objectives by 2025. At December
31, 2024, the rating assigned by the rating agency Fitch on this instrument is BBB, revised
upwards in July 2024, while the rating assigned by the rating agency Standard & Poor’s is
BBB-.
-
rated sustainability-linked bond “Bond loan SLB EUR 600 mln 3.875% due 07/29” [ISIN:
XS2847641961] with a nominal value of euro 600 million, placed on July 2, 2024 with
international institutional investors with a fixed coupon of 3.875% and maturing in July 2029.
The transaction, classified entirely among non-current financial payables, was issued under
(in thousands of euro)
Total
Non-current
Current
Total
Non-current
Current
Bonds
1,679,980
1,189,839
490,141
1,095,029
1,095,029
-
Borrowings from banks
1,496,460
1,496,460
-
2,095,728
1,696,123
399,605
Lease liabilities
34,296
27,209
7,087
39,061
32,566
6,495
Other financial payables
761
-
761
1,547
-
1,547
Accrued liabilities
50,306
-
50,306
36,014
-
36,014
Total borrowings from banks & other
financial institutions
3,261,803
2,713,508
548,295
3,267,379
2,823,718
443,661
12/31/2024
12/31/2023
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
701
the EMTN Program (Euro Medium Term Note). The securities are listed on the Luxembourg
Stock Exchange. The regulations of the securities provide for each of the two sustainability
parameters indicated in the contract (linked to the new sustainability objectives of the Group
that were validated by SBTi in September 2024), an increase in the coupon of 0.25% in the
event of failure to achieve each of the related objectives by 2027. As of December 31, 2024,
the rating assigned by the Fitch rating agency on this instrument is BBB, revised upwards
during the month of July 2024, while the rating assigned by the Standard & Poor’s rating
agency is BBB-.
It should also be noted that at December 31, 2023, the item bonds included the “Schuldschein” loan
for a total nominal value of euro 20.0 million. This loan was fully repaid in July 2024.
The carrying amount of the item bonds was determined as follows:
Below are the changes of the item bonds.
The change in the item bonds relating to the previous year is shown below:
(in thousands of euro)
12/31/2024
12/31/2023
Nominal value
1,700,000
1,120,000
Equity convertible bond component
(41,791)
(41,791)
Transaction costs
(16,048)
(11,244)
Bond discount
(3,780)
(1,776)
Amortisation of effective interest rate
8,294
5,085
Non-monetary interest convertible bond loan
33,305
24,755
Total
1,679,980
1,095,029
(in thousands of euro)
Bonds as at 12/31/2023
1,095,029
Transaction costs
(6,915)
Bond repayment "Schuldschein"
(20,000)
Bond issuance "Bond SLB EUR 600 mln
600,000
Cash changes
573,085
Non-cash interest convertible bond
8,550
Amortised cost of the year
3,316
Non-cash changes
11,866
Bonds as at 12/31/2024
1,679,980
(in thousands of euro)
Bonds as at 12/31/2022
713,097
Transaction costs
(6,163)
Bond repayment "Schuldschein"
(223,000)
Bond issuance "Bond SLB EUR 600 mln
600,000
Cash changes
370,837
Non-cash interest convertible bond
8,354
Amortised cost of the year
2,741
Non-cash changes
11,095
Bonds as at 12/31/2023
1,095,029
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
702
The breakdown of the item payables to banks, which amounted to euro 1,496,460 thousand, is as
follows:
and refer to:
use of the “Club Deal EUR 1.6 bln ESG 2022 5y” for euro 598,778 thousand and classified
under non-current financial payables. The variable rate loan line (Euribor + spread),
guaranteed by Pirelli tyre S.p.A., was signed on February 21, 2022, with a pool of leading
Italian and international banks and with 5-year maturity. The line, linked to the Group’s ESG
objectives, is made up of three tranches for a total of euro 1.6 billion, distributed as follows:
o Pirelli & C. S.p.A. term loan with nominal value of euro 600,000 thousand fully used
and revolving cash credit facility of euro 100,000 thousand, unused at December 31,
2024;
o Pirelli International Treasury S.p.A. revolving cash credit facility of euro 900,000
thousand, unused at December 31, 2024.
It should be noted that following the most recent reporting of sustainable KPIs and having
achieved the objectives for the year, the Group is benefiting from the related incentives to
reduce the cost of the credit line.
“Club Deal EUR 600 mln. ESG 2024 5y” for euro 597,967 thousand relating to the credit line
of euro 600 million at floating rate (Euribor + spread), guaranteed by Pirelli Tyre S.p.A. and
stipulated on March 22, 2024 with a pool of leading Italian and international banks and with
a 4.5-year maturity. The financing - classified among non-current financial payables - is
calibrated to some of the Group’s sustainability targets with annual reporting starting from
the publication of the 2024 consolidated financial statements;
“Linea bilaterale ESG 300 mln. 2023 2.5y” for euro 299,715 thousand relating to the bilateral
loan for a nominal amount of euro 300 million disbursed in July 2023 in favor of Pirelli & C.
S.p.A. by a leading bank, with maturity February 2026, guaranteed by Pirelli Tyre S.p.A. The
loan, at variable rate (Euribor + spread), is benchmarked to certain Group sustainability
targets and is classified as non-current financial payables. It should be noted that following
the most recent reporting of sustainable KPIs and having achieved the objectives for the
year, in June 2024, the Group started benefiting from the related incentives to reduce the
cost of the credit line.
It should also be noted that in December 2023, entered into with a selected pool of international
banks was the revolving committed credit line “Club Deal EUR 500 mln. ESG 2023 4y RCF” for an
(in thousands of euro)
Due Date
Interest rate
Nominal value
Balance
Non - current
Current
Club Deal EUR 1,6 bln. ESG 2022 5y
02/22/2027 EURIBOR + spread
600,000
598,778
598,778
-
Club Deal EUR 600 mln ESG 2024 4,5y
10/20/2028 EURIBOR + spread
600,000
597,967
597,967
-
Bilateral ESG EUR 300 m 2023 2,5y facility
02/27/2026 EURIBOR + spread
300,000
299,715
299,715
-
Total borrowings from banks
1,496,460
1,496,460
-
12/31/2024
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
703
amount of euro 500 million with 4-year maturity (December 2027), guaranteed by Pirelli Tyre SpA
and benchmarked to the Group’s new sustainability objectives (reporting as of 2024 data). At
December 31, 2024, the line is unused.
It should also be noted that since July 2024, the Group has been benefiting from a reduction in the
margins of the bank debt lines held by Pirelli&C SpA and Pirelli International Treasury SpA, thanks
to the improvement of the Group’s credit rating to BBB by the rating agency Fitch.
At December 31, 2023, the item payables to banks included Club Deal EUR 800 mln. ESG 2020 5y
for a value of euro 798.4 million and Linea bilaterale ESG 400 mln. 2021 3y for a value of euro 399.6
million. These lines were fully repaid in 2024.
At December 31, 2024, the Company has a liquidity margin of euro 849,770 thousand made up of
euro 600,000 thousand of unused committed credit lines, euro 249,719 thousand relating to the
interest-bearing current account with Pirelli International Treasury S.p.A. recognized as current
financial receivables and euro 51 thousand relating to cash and cash equivalents.
Below are the changes in payables to banks:
The change in total payables to banks for the previous year is shown below:
Lease payables represent financial liabilities relating to the application of IFRS 16 starting from
January 1, 2019.
(in thousands of euro)
Borrowings from banks at 12/31/2023
2,095,728
Issuance of "Club Deal EUR 600 mln ESG 2024 4,5Y" financing
600,000
Repayment of bilateral borrowings " Club deal EUR 400 mln. ESG 2021 3Y"
(400,000)
Repayment " Club deal EUR 800 mln. ESG 2020 5Y" financing
(800,000)
Transaction costs
(2,438)
Cash changes
(602,438)
Amortised cost of the year
3,170
Non-cash changes
3,170
Borrowings from banks at 12/31/2024
1,496,460
(in thousands of euro)
Borrowings from banks at 12/31/2022
2,917,566
Repayment "ISP 125m" financing
(125,000)
Repayment "ISP 600m" financing
(600,000)
Repayment “Club Deal EUR 400m ESG 2022 19m” financing
(400,000)
Transaction costs
(703)
Issuance of “ ISP ESG 300m" financing
300,000
Cash changes
(825,703)
Amortised cost of the year
3,865
Non-cash changes
3,865
Borrowings from banks at 12/31/2023
2,095,728
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
704
Below are the changes in total lease payables:
The change in total lease payables for the previous year is shown below:
Non-discounted future payments for lease contracts for which the exercise of extension options is
not considered reasonably certain amounted to euro 58,768 thousand at December 31, 2024 and
are not included in this item (euro 58,163 thousand at December 31, 2023).
The item other financial payables refer to the payable to shareholders for euro 761 thousand
following the squeeze out operation.
Accrued financial expenses (euro 50,306 thousand) mainly refers to the accrual of interest on
loans from banks for euro 13,096 thousand (euro 10,405 thousand at December 31, 2023), to the
accrued interest matured on bonds for euro 35,972 thousand (euro 24,780 thousand at December
31, 2023) and to the accrued interest matured on derivatives for euro 1,191 thousand.
At December 31, 2024, there are no financial payables secured by collateral (pledges and
mortgages).
For current financial payables, it is maintained that the book value is approximately the fair value.
The table below compares the fair value of non-current financial payables with their carrying amount:
The fair values of the two rated sustainability-linked bonds issued by Pirelli & C. SpA under the
EMTN program are quoted and therefore measured with reference to year-end prices. The fair
values are classified in level 1 of the hierarchy, as provided for by IFRS 13 – Fair Value
Measurement.
(in thousands of euro)
Lease liabilities as at 12/31/2023
39,060
Increase of lease obligations
1,815
Remeasurement and early termination
173
Cash outflow for lease obligations - principal amount
(6,752)
Lease liabilities as at 12/31/2024
34,296
(in thousands of euro)
Lease liabilities as at 12/31/2022
41,911
Increase of lease obligations
1,738
Remeasurement and early termination
1,808
Cash outflow for lease obligations - principal amount
(6,397)
Lease liabilities as at 12/31/2023
39,060
(in thousands of euro)
Carrying amount
Fair value Carrying amount
Fair value
Bonds
1,189,839
1,237,350
1,095,029
1,114,812
Borrowings from banks
1,496,460
1,522,611
1,696,123
1,724,865
Total borrowings from banks and other financial institutions - non
current
2,686,299
2,759,961
2,791,152
2,839,677
12/31/2024
12/31/2023
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
705
The fair value of payables to banks was calculated by discounting each debtor cash flow expected
at the market swap rate for the currency and at the reference maturity date, increased by the Group
credit rating for similar debt instruments by nature and technical characteristics and is therefore
classified as level 2 in the hierarchy required by IFRS 13 – Fair Value Measurement.
With reference to the currency of origin of the payable, it is noted that payables to banks and other
lenders at December 31, 2024 and December 31, 2023 are all denominated in euro.
At December 31, 2024, there are interest rate hedging derivatives in place.
Considering the effects of the hedging derivatives, the Company’s exposure to fluctuations in interest
rates on financial payables, both in terms of the type of interest rate and their resetting, is as follows:
floating-rate payables for euro 996,460 thousand, the interest rate of which is subject to
redetermination in 2025;
fixed-rate payables for euro 2,179,981 thousand, the interest rate of which is not subject to
redetermination until the natural maturity of the reference debt (euro 490,141 thousand
maturity in the next twelve months and euro 1,689,840 thousand maturity beyond twelve
months).
With reference to financial payables, at December 31, 2024, the Company is not subject to
covenants.
“Club Deal EUR 1.6 bln. ESG 2022 5y”, “Linea bilaterale EUR 300 mln. ESG 2023 2.5y”, “Club Deal
EUR 500 mln. ESG 2023 4y RCF”, “Club Deal EUR 600 mln. ESG 2024 4.5y”, “Convertible bond
loan”, “Bond loan SLB EUR 600 mln. 4.25% due 01/28” and “Bond loan SLB EUR 600 mln. 3.875%
due 07/29” providing for Negative Pledge clauses and other usual provisions, the terms of which are
in line with market standards for each of the aforementioned types of financial instrument.
NET FINANCIAL POSITION (alternative performance indicator not required by IFRS
accounting standards)
The table below shows the breakdown of the net financial position and net financial debt at December
31, 2024 and December 31, 2023, determined in accordance with the provisions of Consob
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
706
communication DEM/6064293 of July 28, 2006 and in compliance with the ESMA guidelines on
disclosure obligations pursuant to the prospectus regulation applicable from May 5, 2021:
The net financial debt is summarized below based on the format provided by the ESMA guidelines:
(in thousands of euro)
Note
12/31/2024
of which
related parties
(note 39)
12/31/2023
of which
related parties
(note 39)
Current borrowings from banks and other financial institutions
19
548,295
-
443,661
-
Non-current borrowings from banks and other financial institutions
19
2,713,508
-
2,823,718
-
Total gross debt
3,261,803
3,267,379
Cash and cash equivalents
15
(51)
-
(34)
-
Current financial receivables and other assets
13
(1,984,961)
(1,982,527)
(179,583)
(176,746)
Derivative financial instruments - assets
17
-
-
-
-
Net financial debt *
1,276,791
3,087,762
Non-current financial receivables and other assets
13
(333)
-
(1,700,341)
(1,700,000)
Derivative financial instruments
17
(4,264)
(4,264)
(12,752)
(12,752)
Total net financial (liquidity)/debt position
1,272,194
1,374,669
* Pursuant to CONSOB Notice of July 28, 2006 and in compliance with the ESMA guidelines regarding disclosure requirements pursuant to the
Prospectus Regulation applicable from May 5, 2021.
(in thousands of euro)
Cash and cash equivalents
(51)
(34)
Other current financial asset
(1,984,961)
(179,583)
of which current financial receivables
(1,984,961)
(179,583)
of which Current derivative financial instruments (assets)
-
-
Liquidity
(1,985,012)
(179,617)
Current borrowings from banks and other financial institutions
548,295
443,661
Current derivative financial instruments (liabilities)
-
-
Current financial debt
548,295
443,661
Current net financial debt
(1,436,717)
264,044
Non-current borrowings from banks and other financial institutions
2,713,508
2,823,718
Non current financial debt
2,713,508
2,823,718
Net financial debt *
1,276,791
3,087,762
12/31/2024
12/31/2023
* Pursuant to CONSOB Notice of July 28, 2006 and in compliance with the ESMA guidelines regarding disclosure
requirements pursuant to the Prospectus Regulation applicable from May 5, 2021.
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
707
20.
PROVISIONS FOR RISKS AND CHARGES
The following is a detail of changes of the item in question:
The increases in provisions for risks and charges mainly refer to:
provisions for the STI (Short term Incentive) and LTI (Long term Incentive 2023-2025 and
2024-2026) incentive plans of the Directors for a total of euro 9,484 thousand;
provision to cover losses of investee companies for euro 19,500 thousand, which refers to
the subsidiary Pirelli UK Ltd.
The uses are mainly attributable to labor disputes and the directors’ end-of-term provision.
The reclassifications concern the reclassification from non-current provisions to payables to
directors of the portion of the 2022-2024 LTI plan set aside in previous years, which will be paid in
the first half of 2025.
21.
PERSONNEL PROVISIONS
Personnel provisions amounted to euro 18,485 thousand (euro 16,311 thousand at December 31,
2023), and the breakdown is as follows:
(in thousands of euro)
12/31/2023
Increases
Uses
Reversals
Reclass
12/31/2024
Provision for employees disputes
1,100
65
(439)
(314)
-
412
Provision for tax risks
1,141
-
(292) (849) -
-
Provision for environmental risks
19,407
-
(232)
- -
19,174
Provision for other risks and charges
22,190
9,484
(8,768)
(8)
(3,424)
19,475
Provision for liabilities and charges - non current portion
43,838 9,549 (9,730) (1,171) (3,424) 39,062
Provision for losses of subsidiaries
31,200 19,500 - - - 50,700
Provision for liabilities and charges - current portion
31,200 19,500 - - - 50,700
Total Provisions for risks and charges
75,038
29,049
(9,730)
(1,171)
(3,424)
89,762
(in thousands of euro)
Total
Non current
Current
Total
Non current
Current
Employee leaving indemnities (TFR)
2,090
2,090
-
1,957
1,957
-
Other benefits
16,395
15,575
820
14,354
13,534
820
Total employees' benefit obligation
18,485
17,665
820
16,311
15,491
820
12/31/2024
12/31/2023
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
708
Employee severance indemnity (TFR)
The changes during the year 2024 for the provision for severance pay are as follows:
Net actuarial losses accrued in 2024 recorded directly in other components of the Comprehensive
Income Statement amounted to euro 72 thousand and are related to the change in the reference
economic parameters (discount and inflation rates).
In accordance with national legislation, the amount due to each employee accrues based on the
service provided and is paid when the employee leaves the company. The treatment due to the
termination of the employment relationship is calculated based on its duration and the taxable
remuneration of each employee. The liability, annually revalued on the basis of the official cost of
living and statutory interest rate, is not associated with any accrual condition or period, nor with any
financial funding obligation; therefore, there is no activity at the service of the provision.
The discipline was supplemented by Legislative Decree no. 252/2005 and by Law no. 296/2006
(Finanziaria 2007) which, for companies with at least 50 employees, has established that the portions
accrued since 2007 be allocated, on the employees’ option, either to the INPS Treasury Fund or to
supplementary pension schemes, assuming the nature of “Defined contribution plan”. In any case,
for all companies, the revaluations of the amounts outstanding at the option dates are still accounted
for under staff severance indemnities as well as, for companies with less than 50 employees, also
the portions accrued and not allocated to supplementary pensions.
The main actuarial assumptions used at December 31, 2024 are as follows:
The main actuarial assumptions used at December 31, 2023 were as follows:
Hired employees at December 31, 2024 amounted to 436 units (425 units at December 31, 2023).
(in thousands of euro)
12/31/2024
12/31/2023
Opening balance
1,957
1,562
Movements through income statement:
- interest expense
68
68
Remeasurements recognised in equity:
- actuarial (gains) or losses arising from changes in financial assumption
72
41
Indemnities, advance payments, relocations, payment to funds
(7)
286
Total employees' leaving indemnities (TFR)
2,090
1,957
2024
Discount rate
3.3%
Inflation rate
2.0%
2023
Discount rate
3.4%
Inflation rate
2.0%
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
709
In other conditions being equal, a hypothetical change of 0.25% in the discount rate would result in
a decrease in liabilities equal to 1.27%, in the case of an increase (1.57% at December 31, 2023),
and an increase in liabilities of 1.30 %, in the case of a decrease (1.60% at December 31, 2023).
Other employee benefits
The breakdown of other benefits is as follows:
The item “Long-term incentive plans” relates to the amount set aside for the three-year monetary
incentive plans Long Term Incentive 2023-2025 and 2024-2026 intended for Group management.
The portion of the 2022-2024 LTI plan set aside in previous years, which will be paid in the first half
of 2025, has been reclassified under other current payables.
The item “Other benefits – non-current portion” refers to the short-term incentive plan for
employees.
22.
TRADE PAYABLES
The breakdown of trade payables is as follows:
The carrying amount of trade payables is considered to approximate their fair value.
(in thousands of euro)
Total
Non current
Current
Total
Non current
Current
Long-term incentive plans
7,630 7,630 - 5,075 5,075
-
Jubilee awards
1,688 1,688 -
1,556
1,556
-
Other benefits
7,077 6,257 820
7,723
6,903
820
Total
16,395 15,575 820 14,354 13,534 820
12/31/2024
12/31/2023
(in thousands of euro)
12/31/2024
12/31/2023
Payables to subsidiaries
3,628
3,423
Payables to associates
129
-
Payables to other companies
26,777
24,921
Total trade payables
30,534
28,344
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
710
23.
OTHER PAYABLES
The breakdown of other payables is as follows:
Payables to subsidiaries mainly refer to receivables related to VAT consolidation.
Payables to pension and social security institutions mainly consist of contributions to be paid to
the INPS (National Social Welfare Institute).
Payables to employees refer to the amounts to be paid to employees and include the portion of the
LTI 2022 – 2024 plan and the deferred portion of the STI (Short term incentive) incentive plan relating
to 2023, which will be paid in the first half of 2025.
Other payables mainly include payables for compensation to be paid to directors and auditors, for
withholding taxes on income from self-employed and employed work. The item includes the portion
of the LTI 2022 – 2024 plan and the deferred portion of the STI (Short term incentive) incentive plan,
which will be paid in the first half of 2025.
For other current payables, it is considered that the carrying amount approximates their fair value.
24.
DEFERRED TAX LIABILITIES
Deferred tax liabilities amounted to euro 604,849 thousand at December 31, 2024 (euro 577,995
thousand at December 31, 2023).
The breakdown of deferred tax liabilities gross of offsetting is as follows:
(in thousands of euro)
12/31/2024
12/31/2023
Total
Non-current
Current
Total
Non-current
Current
Payables to subsidiaries
11,964
-
11,964
12,773
-
12,773
Payables to social security and welfare institutions
5,702
-
5,702
4,915
-
4,915
Payables to employees
25,962
-
25,962
29,539
-
29,539
Other payables
33,510
95
33,415
37,170
406
36,764
Deferred income
-
-
-
17
-
17
Total other payable
77,138
95
77,043
84,414
406
84,008
(in thousands of euro)
12/31/2024
12/31/2023
Deferred tax assets
32,106
62,437
- of which within 12 months
24,424
53,421
- of which over 12 months
7,682
9,016
Provision for deferred tax liabilities
(636,955)
(640,432)
- of which within 12 months
(1,788)
(1,325)
- of which over 12 months
(635,167)
(639,107)
Total
(604,849)
(577,995)
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
711
The breakdown of deferred taxes, relating to temporary differences and tax losses carried forward
is shown in the following table:
At December 31, 2024, the value of unrecognized deferred tax assets relating to temporary
differences amounted to euro 25,856 thousand (unchanged compared to December 31, 2023).
The tax effect of gains and losses recorded in OCI was positive for euro 3,477 thousand (positive for
euro 5,318 thousand in 2023) and is disclosed in the Comprehensive income statement; these
changes were mainly due to the tax effects associated with actuarial gains/losses on employee
benefits obligations and to the adjustment of derivatives in cash flow hedges to their fair value.
25.
TAX PAYABLES
These amounted to euro 23,074 thousand at December 31, 2024 (euro 20,715 thousand at
December 31, 2023) and mainly include payables to subsidiaries that adhere to the tax consolidation,
which arose following the transfer of withholding taxes incurred abroad (WHT).
26.
COMMITMENTS AND RISKS
Lease contract commitments
At December 31, 2024, there were no commitments for lease contracts. At December 31, 2023, the
total of future non-discounted payments for lease contracts not yet in force and for which no financial
payable had been recorded amounted to euro 408 thousand.
(in thousands of euro)
12/31/2024
12/31/2023
Deferred tax assets
Provision for risk and charges
5,459
5,702
Employees provision
4,000
3,506
Provision for bad debt
26
38
Tax losses carried forward
-
5,057
ACE Benefit
11,872
37,938
Interests
5,523
5,108
Other
5,226
5,088
Total deferred tax assets
32,106
62,437
Provision for deferred tax liabilities
Brand Pirelli
(633,330)
(633,330)
Exchange differences not realised
(3,575)
(7,035)
Employees provision
(50)
(67)
Total provision for deferred tax liabilities
(636,955)
(640,432)
Total
(604,849)
(577,995)
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
712
Litigation against the companies of the Prysmian Group before the Court of Appeal of Milan
In June 2024, Pirelli appealed before the Court of Appeal of Milan the ruling of the Court of Milan
published in May 2024 regarding the dispute between Pirelli and certain companies of the Prysmian
group. The Court has established that Pirelli and Prysmian Cavi e Sistemi Srl (“Prysmian CS”) must
bear equal responsibility for the European Commission’s fine (which they have already paid) and for
any compensation for damages that they may be ordered to pay jointly in the follow-on proceedings
initiated by Terna (see below - Other litigation consequent to the European Commission Decision),
rejecting the reciprocal requests for full indemnity put forward by the parties.
The litigation is following the decision issued on April 2, 2014 by the European Commission (then
confirmed in the final instance by the Court of Justice of the European Union on October 28, 2020)
at the conclusion of the antitrust investigation in relation to restrictive practices of competition in the
European market for high voltage electric cables. The Commission’s decision had imposed a
sanction on (Prysmian CS) as directly involved in the cartel, of which a part (euro 67 million), Pirelli,
despite having been found to not have been involved directly in the activities of said cartel, was held
as being jointly liable with Prysmian CS, based solely on the application of the EU principle of
parental liability, in that during part of the period of the infringement, the capital of current Prysmian
CS was directly or indirectly held by Pirelli.
On December 31, 2020, Pirelli paid its portion of the aforementioned sanction in favor of the
European Commission (corresponding to 50% of this sanction, plus interest), in relation to which it
had previously made the appropriate provisions.
Pending the settlement of the aforementioned community proceeding, in 2014 and 2019, Pirelli took
two actions before the Court of Milan against Prysmian CS (the first) and against Prysmian CS and
Prysmian S.p.A. (the second) in order to obtain, in addition to the reimbursement of the sanction
imposed by the European Commission, the order to hold it harmless and indemnified from any
burden, expense, cost and/or damage resulting from claims of public and/or private third parties
relating, connected and/or consequential to the facts covered by the European Commission’s
decision.
Pirelli also requested to ascertain the liability of Prysmian CS and Prysmian S.p.A. in relation to
certain illegal conduct connected to the aforementioned anti-competitive agreement, carried out by
the same and, as a result, the conviction to compensation for all damages suffered and being
suffered by Pirelli.
Prysmian CS and Prysmian S.p.A. appeared in the aforementioned judgments, requesting the
rejection of Pirelli’s claims and, as counter-claim, to be held harmless and indemnified by Pirelli in
relation to any consequences deriving from claims of private and/or public third parties relating,
connected and/or consequential to the facts covered by the decision of the European Commission.
In April 2021, the two judgments (the one of 2014 and the one of 2019) were merged and
subsequently merged with them, in 2022, were also two segments of the judgment introduced by
Terna S.p.A. – Rete Elettrica Nazionale (“Terna”) against, among others, Pirelli, Prysmian CS and
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
713
Prysmian S.p.A.; in the context of said segments, Pirelli, on the one hand, and Prysmian CS and
Prysmian S.p.A., on the other hand, made mutual requests for indemnity with respect to what they
had to pay to Terna (see below – section Other litigation consequent to the European Commission
Decision).
On the basis of thorough analysis supported by authoritative external legal opinions, the evaluation
of the risk relative to the litigation described above is such as to not require the allocation of any
specific provision in the Separate Financial Statements at December 31, 2024.
Other litigation consequent to the European Commission Decision
In November 2015, some companies of the Prysmian Group notified Pirelli of proceedings for the
recovery of damages before the High Court of Justice of London against them and other recipients
of the European Commission Decision of April 2, 2014 by National Grid and Scottish Power,
companies that claim to have been injured by the cartel. Specifically, the companies of the Prysmian
Group requested that Pirelli, based on its role of parent company for a part of the period of the cartel,
hold them harmless in respect of any obligations to pay any damages claims (to date unquantified)
by National Grid and Scottish Power. As the aforementioned legal action is pending before the Court
of Milan, filed in November 2014, Pirelli challenged the lack of jurisdiction of the High Court of Justice
of London arguing that any decision on the merits should be assigned to the Court previously referred
to. In April 2016, the High Court of Justice, at the request of Pirelli and the companies of the Prysmian
Group, suspended the proceedings against Pirelli until the final passing of judgment that will define
the Italian judgment already pending.
In April 2019, Terna summoned Pirelli, three Prysmian Group companies and another company
recipient of the aforementioned European Commission decision, before the Court of Milan, to obtain
compensation for the damage allegedly suffered as a result of the anti-competitive conduct, currently
quantified by the claimant as a total of euro 199.9 million. Pirelli appeared in court contesting the
claims made by Terna and filing, like the other defendants and against them, a counter-claim in
recourse for the denied case in which it was held jointly liable for the anti-competitive agreement.
In October 2021, the Judge removed from the proceedings the fragment of the dispute consisting of
the “cross” indemnity requests mutually made between Pirelli, on the one hand, and Prysmian CS
and Prysmian S.p.A., arranging for a meeting with the pending judgment between them before the
Court of Milan (see above – Litigation against the companies of the Prysmian Group before the Court
of Appeal of Milan).
Lastly, also in April 2019, the Electricity and Water Authority of Bahrain, the GCC Interconnection
Authority, the Kuwait Ministry of Electricity and Water and the Oman Electricity Transmission
Company, served a summons against Pirelli, some Prysmian Group companies and others
recipients of the aforementioned European Commission decision, jointly agreeing with each other to
obtain compensation for the damage allegedly suffered as a result of the alleged anti-competitive
conduct, overall quantified during the case at euro 472 million. These proceedings were brought
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
714
before the Court of Amsterdam, which, with its ruling of November 25, 2020, upheld the objection
raised by Pirelli and excluded its jurisdiction over Pirelli itself. In February 2021, the plaintiffs lodged
an appeal against this ruling before the Court of Appeal of Amsterdam, proceedings currently
suspended following an incidental question raised by the Court of Appeal of Amsterdam before the
Court of Justice of the European Union.
On the basis of thorough analysis supported by authoritative external legal opinions, the evaluation
of the risk relative to the disputes described above is such as to not require the allocation of any
specific provision in the Separate Financial Statements at December 31, 2024.
US Class actions
On January 30, 2024, the European Commission announced the launch of an investigation into
certain tyre manufacturers operating in the European Economic Area, for alleged infringements of
EU competition law, with reference to a hypothetical coordination of prices of new replacement tyres
for cars and trucks intended for sale in the European Economic Area. At the same time, the
Commission conducted inspections at the offices of the aforementioned tyre manufacturers,
including those of Pirelli. The latter confirmed the correctness of its actions and that it has always
acted in compliance with applicable antitrust regulations.
Following the announcement of the aforementioned activity by the European Commission, in
February 2024, several class actions were launched – later consolidated into a single proceeding –
before the US Courts, relating to alleged similar issues that occurred in the United States; the
compensation claims were not quantified.
In February 2025, the Federal Court of Ohio, before which said class actions had been joined,
dismissed the plaintiffs’ appeal in its entirety, granting the plaintiffs a deadline for the possible filing
of a new complaint based on different arguments, which was filed in April 2025.
On the basis of the assessment carried out, supported by authoritative opinions of external lawyers,
Pirelli, also in light of the few elements available to date, did not deem it necessary to record any
specific provision in the Separate Financial Statements at December 31, 2024.
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
715
INCOME STATEMENT
27.
REVENUES FROM SALES AND SERVICES
Revenues from sales and services amounted to euro 86,322 thousand for 2024 compared to euro
72,998 thousand in 2023 and the breakdown is as follows:
Revenues from subsidiaries refer to services provided by the central functions.
28.
OTHER INCOME
Other income amounted to euro 142,757 thousand in 2024 (euro 120,865 thousand in 2023), and
the breakdown is as follows:
Other income from subsidiaries mainly includes royalties accrued from Group companies for the use
of the brand (euro 97,869 thousand in 2024 compared to euro 94,017 thousand in 2023) and the
charge-back of costs to subsidiaries (euro 34,930 thousand in 2024 compared to euro 22,831
thousand in 2023).
Other income from other companies mainly includes royalties paid by other companies for the use
of the Pirelli brand (euro 3,014 thousand in 2024 compared to euro 2,774 thousand in 2023) and tax
refunds for euro 4,158 thousand in 2024 (nil in 2023).
29.
RAW MATERIALS AND CONSUMABLES USED
They amounted to euro 282 thousand in 2024 (euro 302 thousand in 2023) and include purchases
of advertising material, fuels and various materials.
(in thousands of euro)
2024
2023
Sales of services to subsidiaries
86,267
72,531
Sales of services to other companies
55
467
Total revenues from sales and services
86,322
72,998
(in thousands of euro)
2024
2023
Other income from subsidiaries
132,799
116,848
Other revenues from third parties
9,958
4,017
Other income from other companies
142,757
120,865
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
716
30.
PERSONNEL COSTS
Personnel costs amounted to euro 75,931 thousand (euro 75,580 thousand in 2023), and the
breakdown is as follows:
Average Employees
The average number of employees, divided by category, is as follows:
31.
AMORTIZATION, DEPRECIATION AND IMPAIRMENT
The breakdown of the item is as follows:
For the breakdown of the amortization of the rights of use, see note 8.2 - Rights of use.
(in thousands of euro)
2024
2023
Wages and salaries
61,273
62,948
Social security and welfare contributions
10,624
8,804
Employee leaving indemnities
2,393
2,242
Retirement and similar obbligations
718
676
Other costs
923
910
Total
75,931
75,580
2024
2023
Executives
93
90
White collar staff
332
315
Blue collar staff
3
3
Total
428
408
(in thousands of euro)
2024
2023
Amortisation - intangible assets
2,539
2,306
Depreciation - property, plant and equipment (excl. Depreciation of Right of Use)
1,939
1,874
Depreciation of right of use
6,284
6,108
Total depreciation, amortisation and impairments
10,762
10,288
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
717
32.
OTHER COSTS
The breakdown of other costs is the following:
The item advertising and sponsorship increased compared to 2023, due to sponsorship contracts
for sporting events that took place in 2024.
The item Leases and rentals includes costs relating to the application of the accounting standard
IFRS 16, in particular:
euro 213 thousand for lease contracts with a duration of less than twelve months (euro 198
thousand in 2023);
euro 201 thousand for lease contracts for low unit value assets (euro 227 thousand in 2022).
33.
NET IMPAIRMENT OF FINANCIAL ASSETS
The value of the net impairment of financial assets is equal to euro 56 thousand for 2024, compared
to a nil value in the previous year.
34.
RESULT FROM INVESTMENTS
34.1 Gains on equity investments
This item was nil in 2024. In 2023, it included the gain deriving from the liquidation of the company
Servizi Aziendali Pirelli S.c.p.A., in which Pirelli & C. S.p.A. held a 90.35% investment.
(in thousands of euro)
2024
2023
Advertising and sponsorship
51,751
37,499
Remuneration of Directors and supervisory bodies
26,655
24,401
Consultancy and collaboration services
17,465
15,940
IT expenses
8,433
9,125
Travel expenses
5,249
2,871
Legal and notarial expenses
4,501
871
Insurance premiums
3,779
3,378
Membership fees and contributions
3,269
3,014
Security service
2,538
3,060
Property maintenance
2,526
2,843
Energy, gas and water expenses
1,474
2,247
Patents and trademarks expenses
879
749
Rental and lease instalments
558
1,475
Cleaning and property ordinary maintenance expenses
130
579
Accruals to provisions
65
4,919
Other
7,742
5,979
Total other costs
137,014
118,950
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
718
34.2 Losses on equity investments
In 2024, a provision for euro 19,500 thousand was made to cover losses of the subsidiary Pirelli UK
Ltd; in addition, the investments in Pirelli Ltda. and Eurostazioni S.p.A. were written down by euro
2,500 thousand and euro 1,031 thousand, respectively.
In 2023, a provision was made to cover losses for euro 6,600 thousand for the subsidiary Pirelli UK
Ltd.
34.3 Dividends
They amounted to euro 342,924 thousand in 2024 compared to euro 283,581 thousand in 2023, and
the breakdown is as follows:
35.
FINANCIAL INCOME
The breakdown of the item is as follows:
The item interest and other financial income includes euro 77,970 thousand of interest accrued
on loans disbursed in 2024 in favor of subsidiaries and euro 9,538 thousand of interest accrued on
the interest-bearing current account with Pirelli International Treasury S.p.A.
The item valuation at fair value of currency derivatives mainly refers to the purchase/sale of the
forward exchange rate hedge contracts to cover commercial and financial transactions in accordance
(in thousands of euro)
2024
2023
From subsidiaries:
- Pirelli Tyre S.p.A.
325,000
275,000
- Pirelli Group Reinsurance Company SA
5,120
3,011
- Pirelli Sistemi Informativi S.r.l.
900
450
- Pirelli International Treasury S.p.A.
4,877
-
- Pirelli Servizi e Amministrazione Tesoreria S.p.A.
380
180
From associates
- Eurostazioni S.p.A.
2,808
1,476
From other financial assets:
- RCS S.p.A.
1,729
1,482
- Fin. Priv. S.r.l.
2,110
1,668
- Genextra S.p.A.
-
314
Total
342,924
283,581
(in thousands of euro)
2024
2023
Interest and other financial income
87,955
88,730
Valuation at fair value of derivatives
473
2,690
Net gains on exchange rates
6
-
Valuation at fair value of derivatives
79
-
Total financial income
88,513
91,420
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
719
with the exchange rate risk management policy of the Group. For transactions still open at the end
of the financial year, the fair value was determined using the forward exchange rate at the closing
date of the Company’s financial statements.
36.
FINANCIAL EXPENSES
The breakdown of the item is as follows:
Interest and other financial expenses totalling euro 127,864 thousand (euro 134,165 thousand in
2023) mainly include:
euro 95,314 thousand for the bank loan lines held;
euro 49,660 thousand of financial expenses relating to bond loans, of which euro 26,721
thousand relating to the “Bond loan SLB EUR 600 mln, 4.25% due 01/28”, euro 12,342 thousand
relating to the “Bond loan SLB EUR 600 mln 3.875% due 07/29”, euro 9,934 thousand relating
to monetary and non-monetary interest on the “Convertible Bond Loan” and euro 664 thousand
relating to the “Schuldschein” loans;
euro 17,286 thousand for net interest income, including interest on Interest Rate Swaps, for
which hedge accounting was adopted, to adjust the flow of financial expenses of the bank lines
and bonds referred to in the previous points. For further details, refer to as reported in note 17
“Derivative financial instruments”.
37.
TAXES
The breakdown of taxes is as follows:
Current taxes for the year 2024 were positive for euro 51,273 thousand compared to euro 13,360
thousand in the previous year and mainly include income from tax consolidation. The increase
compared to the previous year is essentially attributable to the higher taxable income of the
subsidiary Pirelli Tyre. In 2023, Pirelli Tyre had transferred a lower taxable income, reflecting the
(in thousands of euro)
2024
2023
Interest and other financial expenses
127,864
134,165
Commissions
2,877
1,118
Interest expenses on lease liability
1,504
1,651
Net interest on employee benefit obligations
111
117
Net exchange rate losses
-
4
Valuation at fair value of derivatives
-
92
Total financial expenses
132,356
137,147
(in thousands of euro)
2024
2023
Current taxes
(51,273)
(13,360)
Deferred taxes
30,331
(9,236)
Total income taxes
(20,942)
(22,596)
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
720
benefit deriving from the application of the Patent Box tax relief regime, following the preventive
agreement signed on August 3, 2023 with the Italian Revenue Agency, for a total of euro 62,307
thousand.
Deferred tax assets/liabilities are negative for euro 30,331 thousand (positive for euro 9,236
thousand in the previous year) and mainly refer to the use of deferred tax assets relating to previous
tax items.
The table below shows the reconciliation of the effective tax rate with the theoretical rate of the
Parent Company:
Tax consolidation
It shall be noted that starting from 2004, the Company exercised the option for consolidated taxation
as consolidator, pursuant to article 117 and following of the TUIR, with regulation of relations arising
from adhesion to consolidation through a special Regulation, which involves a common procedure
for the application of laws and regulations.
Said regulation was updated in subsequent years as a result of amendments made within the
companies participating in the agreement and the related shareholding structure, as well as in light
of the corrective and supplementary interventions of the relevant legislation.
The above amendments particularly concerned the remuneration of the tax losses used by the
companies adhering to the consolidation. The adoption of the consolidation makes it possible to
compensate, with regard to the parent company Pirelli & C. S.p.A., the taxable income or loss of the
same parent company with those of its resident subsidiaries which have exercised the option, given
that the tax losses accrued during periods prior to the introduction of Group taxation can be used
only by companies that are eligible.
(in thousands of euro)
2024
2023
A) Profit/(loss) before taxes
281,083
220,286
B) Theoretical taxes
67,460
52,869
Main causes that give rise to changes between theoretical and effective taxes:
Dividends and gains from investments not subject to taxation
(78,186)
(64,740)
Tax incentives
(16)
(83)
Loss on investments
5,527
1,584
Non-deductible costs and other items
2,236
(305)
Deferred tax assets on previous tax losses and other temporary differences
(17,963)
(11,921)
C) Effective taxes
(20,942)
(22,596)
Theoretical tax rate (B/A)
24%
24%
Effective tax rate (C/A)
-7.5%
-10.3%
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
721
38.
NON-RECURRING EXPENSES AND INCOME
Pursuant to Consob Communication no. DEM/6064293 of July 28, 2006, no non-recurring events
were recorded in 2024.
39.
TRANSACTIONS WITH RELATED PARTIES
Transactions with related parties mainly include transactions with subsidiaries relating to:
services (technical, organizational, general) provided by head office;
charge-back of royalties for the use of the brand;
financial transactions.
All the transactions listed above are part of the ordinary management of relations between the Parent
Company and the subsidiaries.
Transactions with related parties also include the fees paid to Directors and Key Managers.
The statement below shows a summary of the Balance Sheet, Income Statement and Cash Flow
Statement that include transactions with related parties and their impact:
(in thousands of euro)
of which
% share
of which
% share
12/31/2024
related
12/31/2023
related
parties
parties
BALANCE SHEET
Non current assets
Other receivables
387
-
0.0%
1,700,616
1,700,000
100.0%
Derivative financial instruments
4,264
4,264
100.0%
12,752
12,752
100.0%
Current assets
Trade receivables
61,647
60,718
98.5%
55,665
54,683
98.2%
Other receivables
1,997,594
1,983,088
99.3%
193,860
180,323
93.0%
Tax receivables
76,071
75,107
98.7%
34,812
34,560
99.3%
Derivative financial instruments
33
33
100.0%
7
7
100.0%
Non-current liabilities
Other payables
95
-
0.0%
406
212
52.1%
Provision for liabilities and charges
39,062
19,437
49.8%
43,838
22,144
50.5%
Employee benefit obligations
17,665
3,813
21.6%
15,491
3,181
20.5%
Current liabilities
Payables to banks and other financial lenders
548,295
1,191
0.2%
443,661
762
0.2%
Trade payables
30,534
3,757
12.3%
28,344
3,423
12.1%
Other payables
77,043
32,248
41.9%
84,008
33,241
39.6%
Tax payables
23,074
22,779
98.7%
20,715
20,715
100.0%
Derivative financial instruments
8
8
100.0%
4
4
100.0%
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
722
The equity and economic effects and financial flows of transactions with related parties for the year
ended December 31, 2024 are detailed below.
(in thousands of euro)
of which
% share
of which
% share
2024
related
2023
related
parties
parties
INCOME STATEMENT
Revenues from sales and services
86,322
86,303
100.0%
72,998
72,989
100.0%
Other income
142,757
132,932
93.1%
120,865
116,906
96.7%
Personnel expenses
(75,931)
(11,061)
14.6%
(75,580)
(10,123)
13.4%
Other costs
(137,014)
(40,634)
29.7%
(118,950)
(38,131)
32.1%
Income on equity investments
-
-
0.0%
288
288
100.0%
Losses on equity investments
(23,031)
(23,031)
100.0%
(6,600)
(6,600)
100.0%
Dividends
342,924
339,085
98.9%
283,581
280,117
98.8%
Financial income
88,513
87,982
99.4%
91,420
91,390
100.0%
Financial expenses
(132,356)
11,902
n.a.
(137,147)
9,088
n.a.
(in thousands of euro)
2024
of which
% share
2023
of which
% share
related
related
parties
parties
CASH FLOW STATEMENT
Net cash flows provided by/(used in) operating activities
15,055
123,028
n.a.
88,323
188,313
n.a.
Net cash provided/(used) by investment activities
345,576
344,285
n.a.
277,962
279,029
n.a.
Net cash provided/(used) by financing activities
(360,615)
2,998
n.a.
(366,287)
418,629
n.a.
(in thousands of euro)
Other
Directors and
Total
related parties
Key Managers
12/31/2024
Derivative financial instruments (non current assets)
4,264
-
-
- 4,264
Trade receivables
60,635 73 11
- 60,718
Other current receivables
1,983,088
-
-
- 1,983,088
Tax receivables
75,107
-
-
- 75,107
Derivative financial instruments (current assets)
33
-
-
- 33
Provision for liabilities and charges (Non-current liabilities)
- - - 19,437 19,437
Employee benefit obligations (Non-current liabilities)
- - - 3,813 3,813
Payables to banks and other lenders (current liabilities)
1,191
- - - 1,191
Trade payables
3,628 129
-
- 3,757
Other payables (current liabilities)
11,964
- - 20,284 32,248
Tax payables
22,779
-
-
- 22,779
Derivative financial instruments (current liabilities)
8
-
-
- 8
Subsidiaries
Associates
(in thousands of euro)
Other
Directors and
Total
related parties
Key Managers
2024
Revenues from sales and services
86,267
- 36
-
86,303
Other income
132,799
69 63
-
132,932
Personnel expenses
- - - (11,061)
(11,061)
Other costs
(14,550)
(362)
- (25,722)
(40,634)
Losses from investments
(22,000)
(1,031)
- -
(23,031)
Dividends
336,276
2,808
- -
339,085
Financial income
87,982
- - -
87,982
Financial expenses
11,902
- - -
11,902
Subsidiaries
Associates
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
723
Below is a breakdown of the equity and economic effects and financial flows of transactions with
related parties for the previous year:
(in thousands of euro)
Other
Directors and
Total
related parties
Key Managers
2024
Net income (loss) before taxes
618,677
1,485
99
(36,783)
583,478
Reversal of accruals/releases
- - -
12,400
12,400
Reversal of (Financial income)/financial expenses
(99,884)
- - -
(99,884)
Reversal of Dividends
(336,276)
(2,808)
- -
(339,085)
Reversal of (gain)/losses on investments
22,000 1,031
- - 23,031
Change in Trade receivables
(5,989)
(69)
23
-
(6,035)
Change in Trade payables
205
129
-
-
334
Change in Other receivables
2,950
- - -
2,950
Change in Other payables
(1,276)
- -
(5,636)
(6,912)
Change in Tax receivables/Tax payables
(38,482)
- - - (38,482)
Use of Other provisions
- - -
(8,768) (8,768)
Net cash flows provided by/(used in) operating activities
161,926
(233)
122
(38,787)
123,028
Reimbursement of share capital and reserves from
-
5,201
- - 5,201
Dividends received
336,276
2,808
- - 339,085
Net cash provided/(used) by investment activities
341,477
8,009
- -
349,486
Change in Financial receivables
(105,781)
- - -
(105,781)
Financial income
87,982
- - -
87,982
Financial expenses
20,797
- - -
20,797
Net cash provided/(used) by financing activities
2,998
- - -
2,998
Subsidiaries
Associates
(in thousands of euro)
Other
Directors and
Total
related parties
Key Managers
12/31/2023
Derivative financial instruments (non current assets)
1,700,000
-
-
-
1,700,000
Trade receivables
12,752
-
-
-
12,752
Other current receivables
54,646
3
34
-
54,683
Tax receivables
178,847
1,476
-
-
180,323
Derivative financial instruments (current assets)
34,560
-
-
-
34,560
Other payables (Non-current liabilities)
7
-
-
-
7
Provision for liabilities and charges (Non-current liabilities)
-
-
-
212
212
Employee benefit obligations (Non-current liabilities)
- - -
22,144
22,144
Derivative financial instruments (non-current liabilities)
- - -
3,181
3,181
Payables to banks and other lenders (current liabilities)
762
- - -
762
Trade payables
3,423
- -
-
3,423
Other payables (current liabilities)
12,773
- - 20,468
33,241
Tax payables
20,715
-
-
-
20,715
Derivative financial instruments (current liabilities)
4
-
-
-
4
Subsidiaries
Associates
(in thousands of euro)
Other
Directors and
Total
related parties
Key Managers
2023
Revenues from sales and services
72,531
-
458
-
72,989
Other income
116,848
-
58
-
116,906
Personnel expenses
-
-
-
(10,123) (10,123)
Other costs
(13,946)
(330)
-
(23,855)
(38,131)
Gains from investments
288
-
-
-
288
Losses from investments
(6,600)
-
-
-
(6,600)
Dividends
278,641
1,476
-
-
280,117
Financial income
91,390
-
-
-
91,390
Financial expenses
9,088
-
-
-
9,088
Subsidiaries
Associates
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
724
TRANSACTIONS WITH SUBSIDIARIES
Transactions – Balance Sheet
Other non-current receivables were nil at December 31, 2024 (euro 1,700,000 thousand at
December 31, 2023). The amount at December 31, 2023 referred to a loan granted to Pirelli
International Treasury S.p.A. taken out on January 31, 2023 with maturity January 31, 2025.
Derivative financial instruments (non-current assets) for euro 4,264 thousand (euro 12,752
thousand at December 31, 2023) refer to hedging transactions with Pirelli International Treasury
S.p.A.
Trade receivables from subsidiaries amounted to euro 60,635 thousand (euro 54,646 thousand
at December 31, 2023) and mainly refer to receivables for services/provisions provided to Group
companies (euro 54,067 thousand from Pirelli Tyre S.p.A., euro 2,498 thousand from Pirelli Group
Reinsurance Company SA, euro 1,225 thousand from Limited Liability Company Pirelli Tyre Russia,
euro 405 thousand from Pirelli Industrie Pneumatici S.r.l., euro 169 thousand from Pirelli Digital
Solutions S.r.l.).
Other current receivables amounted to euro 1,983,088 thousand (euro 178,847 thousand at
December 31, 2023) and refer for euro 1,700,000 thousand to a loan granted to Pirelli International
Treasury SpA, for euro 249,719 thousand to the intragroup current account in place with Pirelli
International Treasury SpA, for euro 32,807 thousand to the interest accrued but not yet paid relating
to the loan to Pirelli International Treasury SpA, for euro 562 thousand to VAT credits transferred by
subsidiaries (of which euro 390 thousand to Pirelli Sistemi Informativi Srl, euro 171 thousand to Pirelli
Servizi Amministrazione e Tesoreria SpA and euro 1 thousand to Pirelli International Treasury SpA).
Tax receivables amounted to euro 75,107 thousand (euro 34,560 thousand at December 31, 2023)
and refer to receivables from Group companies that adhere to tax consolidation (mainly euro 65,330
thousand from Pirelli Tyre S.p.A., euro 7,678 thousand from Pirelli International Treasury S.p.A.,
(in thousands of euro)
Other
Directors and
Total
related parties
Key Managers
2023
Net income (loss) before taxes
548,240
1,145
516
(33,978)
515,923
Reversal of accruals/releases
- - -
10,067
10,067
Reversal of (Financial income)/financial expenses
(100,478)
- - -
(100,478)
Reversal of Dividends
(278,641) (1,476)
- -
(280,117)
Reversal of (gain)/losses on investments
6,312
- - - 6,312
Change in Trade receivables
(11,864)
- 82
-
(11,782)
Change in Trade payables
(1,012) (105) (18)
-
(1,135)
Change in Other receivables
(1,059)
- - -
(1,059)
Change in Other payables
6,391
- - (16,705)
(10,314)
Change in Tax receivables/Tax payables
63,477
- - -
63,477
Use of Other provisions
- - - (2,582) (2,582)
Net cash flows provided by/(used in) operating activities
231,366
(435)
580
(43,198)
188,313
Disposal/(Acquisition) of investments in subsidiaries
388
- - -
388
Dividends received
278,641
- - - 278,641
Net cash provided/(used) by investment activities
279,029
- - -
279,029
Change in Financial receivables
345,822
- - -
345,822
Financial income
68,495
- - -
68,495
Financial expenses
4,312
- - -
4,312
Net cash provided/(used) by financing activities
418,629
- - -
418,629
Subsidiaries
Associates
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
725
euro 802 thousand from Pirelli Industrie Pneumatici S.r.l., euro 539 thousand from Pirelli Digital
Solutions S.r.l., euro 507 thousand from Pirelli Sistemi Informativi S.r.l.).
Derivative financial instruments (current assets) for euro 33 thousand (euro 7 thousand at
December 31, 2023) refer to hedging transactions with Pirelli International Treasury S.p.A.
Payables to banks and other lenders to subsidiaries amounted to euro 1,191 thousand (euro 762
thousand at December 31, 2023) and refer to payables to the company Pirelli International Treasury
SpA.
Trade payables amounted to euro 3,628 thousand (euro 3,423 thousand at December 31, 2023)
and mainly refer to payables for the provision of services. These payables mainly refer for euro 1,793
thousand to Pirelli Tyre S.p.A. and for euro 1,384 thousand to HB Servizi S.r.l.
Other payables (current liabilities) to subsidiaries amounted to euro 11,964 thousand (euro 12,773
thousand at December 31, 2023) and mainly refer to payables with Group companies that adhere to
the VAT consolidation. The main ones are: euro 9,580 thousand to Pirelli Tyre S.p.A., euro 1,589
thousand to Pirelli Industrie Pneumatici S.r.l. euro 589 thousand to Pirelli Digital Solutions S.r.l., euro
145 thousand to Driver Servizi Retail S.p.A.
Tax payables amounted to euro 22,779 thousand (euro 20,715 thousand at December 31, 2023)
and refer to payables to subsidiaries that adhere to tax consolidation (euro 16,070 thousand to Pirelli
Tyre S.p.A., euro 6,709 thousand to Pirelli International Treasury S.p.A.).
The amount of euro 8 thousand (euro 4 thousand at December 31, 2023) of derivative financial
instruments – current liabilities refers to hedging transactions with Pirelli International Treasury
S.p.A.
Transactions – Income statement
Revenues from sales and services to subsidiaries amounted to euro 86,267 thousand in 2024
(euro 72,531 thousand in 2023) and mainly refer to service contracts. The main transactions with
subsidiaries are: euro 82,682 thousand with Pirelli Tyre S.p.A., euro 710 thousand with Pirelli Sistemi
Informativi S.r.l., euro 691 thousand with Pirelli Servizi Amministrazione e Tesoreria S.p.A., euro 644
thousand with Pirelli Digital Solutions S.r.l. euro 631 thousand with Pirelli Industrie Pneumatici Srl,
euro 415 thousand with Pirelli International Treasury SpA, euro 244 thousand with HB Servizi Srl.
Other income from subsidiaries amounting to euro 132,799 thousand in 2024 (euro 116,848
thousand in 2023) mainly refers to: royalties (euro 88,178 thousand from Pirelli Tyre SpA, euro 3,997
thousand from Pirelli Group Reinsurance Company SA, euro 5,007 thousand from Limited Liability
Company Pirelli Tyre Russia, euro 10 thousand from Pirelli International Treasury SpA); revenues
for expenses relating to personnel seconded to other group companies (euro 717 thousand from
Pirelli Tire LLC., euro 608 thousand from Pirelli Tyre (Suisse) SA and 418 euro thousand from Pirelli
Tyre Co. Ltd); cost recoveries (euro 29,772 thousand with Pirelli Tyre S.p.A.).
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
726
Other costs to subsidiaries for euro 14,550 thousand in 2024 (euro 13,946 thousand in 2023) mainly
refer to charges for services and miscellaneous costs (euro 5,509 thousand HB Servizi S.r.l., euro
4,197 thousand Pirelli Tyre S.p.A., euro 2,974 thousand Pirelli Sistemi Informativi S.r.l., euro 1,159
thousand Pirelli Servizi Amministrazione e Tesoreria S.p.A.).
The item losses from investments includes the allocation to the provision to cover losses of
investee companies for euro 19,500 thousand relating to the subsidiary Pirelli UK Ltd and the
impairment of the investment in Pirelli Ltda for euro 2,500 thousand.
Dividends for euro 336,276 thousand in 2024 (euro 278,641 thousand in 2023) refer to dividends
approved and collected during the year (euro 325,000 thousand from Pirelli Tyre S.p.A., euro 5,120
thousand from Pirelli Group Reinsurance Company SA, euro 4,876 thousand from Pirelli
International Treasury S.p.A., euro 900 thousand from Sistemi Informativi S.r.l. and euro 380
thousand from Pirelli Servizi Amministrazione e Tesoreria S.p.A.).
Financial income for euro 87,982 thousand in 2024 (euro 91,390 thousand in 2023) mainly refers
to interest income on receivables from Pirelli International Treasury S.p.A..
Financial expenses positive for euro 11,902 thousand in 2024 (negative for euro 9,088 thousand
in 2023) mainly refer to interest income on hedging instruments stipulated with Pirelli International
Treasury S.p.A.
TRANSACTIONS WITH ASSOCIATED COMPANIES
Transactions – Balance Sheet
Trade receivables from associated companies amounted to euro 73 thousand in 2024 (euro 3
thousand in 2023) and refer to receivables for services/provisions provided to the associate Jining
Shenzhou Tyres Co. for euro 47 thousand and to the associate PT Evoluzione Tyres for euro 26
thousand.
Other current receivables were nil in 2024 (euro 1,476 thousand in 2023). The amount for 2023
referred to receivables for dividends from the associate Eurostazioni SpA not yet collected.
Trade payables to associates amounted to euro 129 thousand (nil in 2023) and refer to payables to
the Consortium for Advanced Materials Research (CORIMAV).
Transactions – Income statement
Other income from associated companies amounted to euro 69 thousand (nil in 2023) and refers to
royalties paid to the associate Jining Shenzhou Tyres Co. for euro 47 thousand and to the associate
PT Evoluzione Tyres for euro 22 thousand.
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
727
Other costs to associated companies amounted to euro 362 thousand in 2024 (euro 330 thousand
in 2023) and refer to relations with the Consortium for Research on Advanced Materials (CORIMAV).
Losses from investments in associates amounted to euro 1,031 thousand (nil in 2023) and refer
to the impairment of the Eurostazioni SpA investment, following the reduction of the share capital
and legal reserve, as per the shareholders’ resolution of December 18, 2024.
Dividends of euro 2,808 thousand in 2024 (euro 1,476 thousand in 2023) refer to dividends
approved and collected from the associate Eurostazioni SpA.
TRANSACTIONS WITH OTHER RELATED PARTIES
Transactions – Balance Sheet
Trade receivables from other related parties for euro 11 thousand at December 31, 2024 (euro 34
thousand in 2023) include commercial relations with the Prometeon Group, companies belonging to
the Sinochem group and Fondazione Hangar Bicocca - Spazio per l’Arte Contemporanea.
Transactions – Income statement
Revenues from sales and services from other related parties for euro 36 thousand in 2024 (euro
458 thousand in 2023) refer to services/provisions with Prometeon Tyre Group S.r.l. and Camfin
S.p.A.
Other income from other related parties for euro 63 thousand in 2024 (euro 58 thousand in 2023)
refers to service contracts in place with Marco Tronchetti Provera & C. S.p.A. and Camfin S.p.A.
TRANSACTIONS WITH DIRECTORS AND KEY MANAGERS
Equity and economic transactions regarding Directors and Key Managers can be detailed as follows.
The balance sheet items provisions for risks and liabilities and employee benefit obligations
(non-current liabilities) include the long-term benefits relating to the three-year monetary incentive
plans Long Term Incentive 2023-2025 and 2024-2026 for euro 7,161 thousand, the short-term
benefits terms relating to the Short Term Incentive plan for euro 3,894 thousand, as well as end-of-
term indemnity for euro 12,195 thousand.
The balance sheet item other current payables includes the short-term portion relating to the Long
Term Incentive and Short term Incentive plans.
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
728
The income statement items personnel costs and other costs include euro 3,080 thousand relating
to employees’ severance indemnities and end-of-term indemnity (euro 3,895 thousand in 2023), as
well as short-term benefits for euro 12,675 thousand (euro 11,400 thousand in 2023) and long-term
benefits for euro 11,217 thousand (euro 8,303 thousand in 2023).
40.
OTHER INFORMATION
Directors and auditors’ fees
The fees due to Directors of Pirelli & C. S.p.A. amounted to euro 25,722 thousand in 2024 (euro
23,855 thousand in 2023). The fees due to the Statutory Auditors for the function performed at Pirelli
& C. S.p.A. amounted to euro 495 thousand in 2024 (euro 393 thousand in 2023).
Independent auditors’ fees
For the fees for the 2024 financial year for the auditing activities and other services rendered by the
independent auditors PricewaterhouseCoopers S.p.A., references is made to the information
contained in the explanatory notes to the Consolidated Financial Statements.
Disclosure requested by Law no. 124/2017 article 1 paragraphs 125-129
Pirelli & C. S.p.A. obtained within the PNRR a concession decree from the MUR (Ministry of
University and Research) for the facilitation of Research and Development activities within the
Innovation Ecosystem “MUSA – Multilayered Urban Sustainability Action” up to a maximum of euro
0.4 million.
Any information referring to the subsidiaries of Pirelli & C. S.p.A. are included in the consolidated
financial statements.
41.
ATYPICAL AND/OR UNUSUAL TRANSACTIONS
Pursuant to CONSOB Notice No. 6064293 of July 28, 2006, it is hereby specified that during the
course of the 2024 financial year that no exceptional and/or unusual transactions as defined in the
aforementioned Notice were carried out by the Company.
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
729
42.
SIGNIFICANT EVENTS SUBSEQUENT TO YEAR-END
On January 31, 2025, Pirelli International Treasury S.p.A. was granted a new loan worth euro 1.4
billion maturing on February 16, 2027.
In February 2025, the company committed, together with other companies of the Group and limited
to its own tax burden, to purchase monthly an amount of tax credits (so-called “Superbonus Credits”)
for the three-year period 2025-2027 from a bank of primary credit standing for a total amount of euro
420 million, with almost immediate use in compensation with tax debts of various kinds.
In April 2025, the US administration announced the introduction of tariffs for the Auto & Parts sector
starting from May 3, 2025, and reciprocal tariffs on various countries, the latter being temporarily
suspended. Additionally, tariffs on products compliant with the USMCA agreements from Mexico and
Canada are also temporarily suspended. Pirelli, in light of the high uncertainties regarding US tariffs,
confirms the targets communicated to the market on February 26. The group has nonetheless
defined a plan to mitigate the impact of US tariffs – should the currently announced measures come
into effect – with the aim of ensuring the Adjusted Ebit and cash targets at the lower end of the
guidance range, as stated in the paragraph “Outlook for 2025” of the Directors' Report on Operations,
thereby achieving the deleverage objective.
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
730
— ANNEXES TO THE NOTES
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
731
MOVEMENTS OF INVESTMENTS IN SUBSIDIARIES FROM 12/31/2023 TO 12/31/2024
Carrying
Carrying
Number
amount
% of total
of which
Number
Number
amount
% of total
of which
of shares
(€/thousand)
investments
direct
of shares
(€/thousand)
of shares
(€/thousand)
investments
direct
INVESTMENTS IN SUBSIDIARIES
ITALY
Unlisted:
Pirelli Servizi Amministrazioni e Tesoreria S.p.A. - Milan
2,047,000
3,238
100.0
100.0
-
-
2,047,000
3,238
100.0
100.0
Maristel S.r.l. - Milan
1 share
1,315
100.0
100.0
-
-
1 share
1,315
100.0
100.0
Pirelli International Treasury SpA - Milan
37,500,000
75,000
100.0
30.0
-
-
37,500,000
75,000
100.0
30.0
Pirelli Sistemi Informativi S.r.l. - Milan
1 share
1,655
100.0
100.0
-
-
1 share
1,655
100.0
100.0
Pirelli Tyre S.p.A. - Milan
558,154,000
4,528,245
100.0
100.0
-
-
558,154,000
4,528,245
100.0
100.0
HB Servizi Srl - Milan
1 share
230
100.0
100.0
-
-
1 share
230
100.0
100.0
Total investments in Italian subsidiaries
4,609,683
-
4,609,683
Carrying
Carrying
Number
amount
% of total
of which
Number
Number
amount
% of total
of which
of shares
(€/thousand)
investments
direct
of shares
(€/thousand)
of shares
(€/thousand)
investments
direct
FOREIGN COMPANIES
Brazil
Pirelli Ltda - Sao Paulo
13,999,991
8,420
100.0
100.0
-
(2,500)
13,999,991
5,920
100.0
100.0
Pirelli Latam Participações Ltda.
1
-
-
-
-
-
1
-
-
-
UK
Pirelli UK ltd. - London - ordinary
163,991,278
-
100.0
100.0
-
-
163,991,278
-
100.0
100.0
Switzerland
Pirelli Group Reinsurance Company S.A.
300,000
6,346
100.0
100.0
-
-
300,000
6,346
100.0
100.0
Total investments in foreign subsidiaries
14,766
(2,500)
12,266
Total investments in subsidiaries
4,624,449
(2,500)
4,621,949
MOVEMENTS OF INVESTMENTS IN ASSOCIATES FROM 12/31/2023 TO 12/31/2024
Carrying
Carrying
Number
amount
% of total
of which
Number
Number
amount
% of total
of which
of shares
(€/thousand)
investments
direct
of shares
(€/thousand)
of shares
(€/thousand)
investments
direct
INVESTMENTS IN ASSOCIATES
ITALY
Unlisted:
Consorzio per le Ricerche sui Materiali Avanzati (CORIMAV) -Milan
1 share
104
100.0
100.0
-
-
1 share
104
100.0
100.0
Eurostazioni S.p.A. - Rome
52,333,333
6,271
32.7
32.7
-
(6,232)
52,333,333
39
32.7
32.7
Total unlisted companies
6,375
(6,232)
143
Total investments in associates - Italy
6,375
(6,232)
143
Total investments in associates
6,375
(6,232)
143
12/31/2023
CHANGES
12/31/2024
12/31/2023
CHANGES
12/31/2024
12/31/2023
CHANGES
12/31/2024
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
732
MOVEMENTS OF OTHER FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPRENSIVE INCOME FROM 12/31/2023 TO 12/31/2024 (Continue)
Carrying
Carrying
Number
amount
% of total
of which
Number
Number
amount
% of total
of which
of shares
(€/thousand)
investments
direct
of shares
(€/thousand)
of shares
(€/thousand)
investments
direct
INVESTMENTS IN OTHER COMPANIES
ITALIAN LISTED COMPANIES
RCS Mediagroup S.p.A. - Milan
24,694,918
18,299
4.7
4.7
-
3,630
24,694,918
21,929
4.7
4.7
Total other Italian listed companies
18,299
3,630
21,929
Total other listed companies
18,299
3,630
21,929
Carrying
Carrying
Number
amount
% of total
of which
Number
Number
amount
% of total
of which
of shares
(€/thousand)
investments
direct
of shares
(€/thousand)
of shares
(€/thousand)
investments
direct
ITALIAN UNLISTED COMPANIES
Aree Urbane S.r.l. (in liquidazione) - Milan
1 share
-
0.3
0.3
-
-
1 share
-
0.3
0.3
C.I.R.A. - Centro Italiano di Ricerche Aerospaziali S.c.p.A. - Capua (CE)
30
-
0.1
0.1
-
-
30
-
0.1
0.1
Alitalia Compagnia Aerea Italiana S.p.A. - Rome
1,162,098,622
-
1.4
1.4
-
-
1,162,098,622
-
1.4
1.4
CEFRIEL - Società Consortile a Responsabilità limitata
1 share
-
4.9
4.9
-
-
1 share
-
4.9
4.9
Consorzio DIXIT (in liquidazione) - Milan
1 share
-
14.3
14.3
-
-
1 share
-
14.3
14.3
MIP Politecnico di Milano - Graduate School of Business
Società consortile per azioni
12,000
-
2.9
2.9
-
-
12,000
-
2.9
2.9
Consorzio Milano Ricerche - Milan
1 share
-
9.0
9.0
-
-
1 share
-
9.0
9.0
Societa' Generale per la Progettazione
Consulenze e Partecipazioni ( ex Italconsult ) S.p.A. - Rome
1,100
-
3.7
3.7
-
-
1,100
-
3.7
3.7
F.C. Internazionale Milano S.p.A. - Milan
55,805,625
-
0.4
0.4
-
-
55,805,625
-
0.4
0.4
Fin. Priv. S.r.l. - Milan
1 share
23,416
14.3
14.3
-
5,881
1 share
29,297
14.3
14.3
Istituto Europeo di Oncologia S.r.l. - Milan
1 share
8,357
6.1
6.1
-
223
1 share
8,580
6.1
6.1
Nomisma - Società di Studi Economici S.p.A. - Bologna
959,429
394
3.3
3.3
-
64
959,429
458
3.3
3.3
Tiglio I S.r.l. - Milan
1 share
1
0.6
0.6
-
(0)
1 share
1
0.6
0.6
Genextra S.p.A.
592,450
258
0.6
0.6
-
25
592,450
283
0.6
0.6
Total other Italian unlisted companies
32,426
6,193
38,619
12/31/2023
Changes
12/31/2024
12/31/2023
Changes
12/31/2024
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
733
MOVEMENTS OF OTHER FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPRENSIVE INCOME FROM 12/31/2023 TO 12/31/2024
Carrying
Carrying
Number
amount
% of total
of which
Number
Number
amount
% of total
of which
of shares
(€/thousand)
investments
direct
of shares
(€/thousand)
of shares
(€/thousand)
investments
direct
FOREIGN COMPANIES
Libia
Libyan-Italian Joint Company - ordinary shares B
300
-
1.0
1.0
-
-
300
-
1.0
1.0
Total other foreign companies
-
-
-
OTHER PORTFOLIO SECURITIES
Fondo Comune di Investimento Immobiliare - Anastasia
53 shares
24
-
-
-
(24)
53 shares
-
-
-
TOTAL AVAILABLE-FOR-SALE FINANCIAL ASSETS
24
(24)
-
50,749
9,799
60,548
TOTAL FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER
COMPRENSIVE INCOME
12/31/2023
Changes
12/31/2024
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
734
LIST OF INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES (PURSUANT TO ART. 2427 OF THE CIVIL CODE)
(in thousand of euro)
Legal address
Carrying
amount
Share % Share capital
Attributable
equity
Attributable
net income
(loss)
INVESTMENTS IN SUBSIDIARIES - ITALY
Pirelli Servizi Amministrazioni e Tesoreria S.p.A.
Milan
3,238
100%
2,047
3,347
340
Maristel S.p.A.
Milan
1,315
100%
50
3,331
35
Pirelli Sistemi Informativi S.r.l.
Milan
1,655
100%
1,010
3,788
1,404
Pirelli Tyre S.p.A.
Milan
4,528,245
100%
558,154
1,784,800
262,621
HB Servizi S.r.l
Milan
230
100%
10
584
5
Pirelli International Treasury S.p.A.
Milan
75,000
30%
125,000
83,376
7,608
Total investments in subsidiaries - Italy
4,609,683
INVESTMENTS IN FOREIGN SUBSIDIARIES
Switzerland
Pirelli Group Reinsurance Company S.A.
Lugano
6,346
100%
3,187
14,556
2,762
Brasil
Pirelli Ltda
Sao Paulo
5,920
100%
2,175
(6,571)
(373)
UK
Pirelli UK Ltd.
London
-
100%
197,775
(49,414)
1,923
Total investments in foreign subsidiaries
12,266
Total investments in subsidiaries
4,621,949
INVESTMENTS IN ASSOCIATES - ITALY
Consortium for the Research into Advanced Materials (CORIMAV) Milan
104
100%
104
104
-
Eurostazioni S.p.A. *
Rome
39
33%
16,000
8,048
1,657
Total investments in associates - Italy
143
Total investments in associates
143
*balance sheet at November 30, 2024
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
735
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
736
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
737
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
738
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
739
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
740
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
741
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
742
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
743
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
744
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
745
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
746
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
747
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
748
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
749
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
750
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
751
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
752
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
753
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
754
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
755
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
756
Separate Financial Statements
Pirelli & C. S.p.A. - Annual Report 2024
757
Pirelli & C. S.p.A. – Annual Report 2024
Separate Financial Statements
758
Resolutions
Pirelli & C. S.p.A. - Annual Report 2024
759
RESOLUTIONS
Pirelli & C. S.p.A. – Annual Report 2024
Resolutions
760
Resolutions
Pirelli & C. S.p.A. - Annual Report 2024
761
Pirelli & C. S.p.A. – Annual Report 2024
Certifications
762
Certifications
Pirelli & C. S.p.A. - Annual Report 2024
763
Pirelli & C. S.p.A. – Annual Report 2024
Certifications
764
Certifications
Pirelli & C. S.p.A. - Annual Report 2024
765
Pirelli & C. S.p.A. – Annual Report 2024
Certifications
766
Certifications
Pirelli & C. S.p.A. - Annual Report 2024
767
Pirelli & C. S.p.A. – Annual Report 2024
Certifications
768
Certifications
Pirelli & C. S.p.A. - Annual Report 2024
769
Pirelli & C. S.p.A. – Annual Report 2024
Certifications
770
Certifications
Pirelli & C. S.p.A. - Annual Report 2024
771
Pirelli & C. S.p.A. – Annual Report 2024
Certifications
772
Certifications
Pirelli & C. S.p.A. - Annual Report 2024
773
Pirelli & C. S.p.A. – Annual Report 2024
Certifications
774
Certifications
Pirelli & C. S.p.A. - Annual Report 2024
775
Pirelli & C. S.p.A. – Annual Report 2024
Certifications
776
Certifications
Pirelli & C. S.p.A. - Annual Report 2024
777
Pirelli & C. S.p.A. – Annual Report 2024
Certifications
778
Certifications
Pirelli & C. S.p.A. - Annual Report 2024
779
SASB CONTENT INDEX
SUSTAINABILITY ACCOUNTING BOARD (SASB) – AUTO PARTS
Topic
Accounting Metric
Page Number
SASB Code
Energy
Management
1) Total energy consumed, (2) percentage
grid electricity, (3) percentage renewable
Par. Energy management – Metrics –
Energy consumption and mix p. 157-158 TR-AP-130a.1
Waste
Management
(1) Total amount of waste from
manufacturing,
(2) percentage hazardous, (3) percentage
recycled
Not material
TR-AP-150a.1
Product Safety
Number of recalls issued, total units
recalled
Par. Product safety, performance and
sustainability – Policies p. 336-338
TR-AP-250a.1.
Design for Fuel
Efficiency
Revenue from products designed to
increase fuel efficiency and/or reduce
emissions
Par. Disclosure pursuant to article 8 of
regulation (UE) 2020/852 (Taxonomy) –
Performance indicators, p. 212-220
TR-AP-410a.1.
Materials
Sourcing
Description of the management of risks
associated with the use of critical
materials
Par. Resource use and Circular
economy – Actions – Management of
end-of-life tyres, p. 196-198
TR-AP-440a.1.
Materials
Efficiency
Percentage of products sold that are
recyclable
Par. Resource use and Circular
economy – Actions – Management of
end-of-life tyres, p. 196-198
TR-AP-440b.1.
Percentage of input materials from
recycled or remanufactured content
Par. Resource use and Circular
economy – Actions – Management of
end-of-life tyres, p. 196-198
TR-AP-440b.2.
Competitive
Behavior
Total amount of monetary losses as a
result of legal proceedings associated with
anti-competitive behavior regulations
Par. Disclosure pursuant to article 8 of
regulation (UE) 2020/852 (Taxonomy) –
Social minimum safeguards, p. 210-212
TR-AP-520a.1.
Activity Metrics
Page Number
SASB Code
Number of parts produced
NA
TR-AP-000.A
Weight of parts produced
Par. Resource use and Circular economy – Metrics – Resource outflows,
pag. 200-201
TR-AP-000.B
Area of manufacturing plants Par. Strategy, business model and value chain - Strategy, pag. 72-77
TR-AP-000.C
Pirelli & C. S.p.A. – Annual Report 2024
Certifications
780
Certifications
Pirelli & C. S.p.A. - Annual Report 2024
781
Pirelli & C. S.p.A. – Annual Report 2024
Certifications
782
Certifications
Pirelli & C. S.p.A. - Annual Report 2024
783
Pirelli & C. S.p.A. – Annual Report 2024
Certifications
784
PIRELLI & C. Società per Azioni (Joint Stock Company)
Milan Office, Viale Piero e Alberto Pirelli n. 25
Share Capital Euro 1,904,347,935.66 fully paid in
Register of Companies of Milan No. 00860340157
REA (Economic Administrative Index) No. 1055