Suppliers

Against this backdrop, RadiciGroup has implemented all appropriate measures to best meet Customer demand on the basis of its strengths:

Solid upstream integration with optimised processes fully under control.

A widespread production, distribution and sales network, as a guarantee of proximity and continuity of supply for customers.

Constant awareness of the challenges of different sectors, from circularity to green chemistry, from sustainable fashion to electric mobility and med-tech (medical sector with a high technological content). Strengthening the sustainable solution offer with new recyclable and recycled products.

R&D activities, with a strengthening of projects in the area of circularity and process and product sustainability, also on the basis of eco-design, to develop high-performance solutions and materials, where possible based on sustainable intermediates, that can be translated into safe, durable, lightimpact and recyclable products, in line with the most pressing market demands.

Disclosures 102-9, 102-10

"We seek the best to provide the best. In our Group, we choose our Suppliers based on criteria of competitive advantage, equal opportunity, cost-effectiveness, quality, sustainability, as well as on the basis of objective assessments that protect the interest and reputation of our companies.

We select Suppliers after we have established their reliability, their ability to provide adequate goods and services, and their guarantee of compliance with applicable regulations with a particular focus on legislation on occupational health and safety and environmental protection. To do this, we use objective and verifiable criteria that do not preclude potential access to all those Suppliers who meet the necessary requirements.

We work with Suppliers according to principles of transparency, loyalty and fairness with a view to stable and enduring business relations. To ensure maximum transparency and efficiency of the procurement process, we have set up an adequate traceability system in each Group company, storing the relevant documentation, in compliance with current regulations.

We require Suppliers to comply with the agreed conditions and we also adhere to them."

- From the RadiciGroup Code of Ethics -

Learn more about the Supplier Code of Conduct.

Strategic Materials and Logistics function

The Group production processes are extremely diversified and complex, starting with raw materials: caprolactam, phenol, olone (cyclohexanol-cyclohexanone mix), ammonia, adiponitrile, and polypropylene, polyethylene and polyester polymers, which are absolutely essential materials for RadiciGroup processes. The Strategic Materials & Logistics function is responsible for centralised coordination of the various procurement process phases and management of raw materials purchasing. The tasks of the function thus include: negotiating contractual conditions, procurement logistics and distribution to RadiciGroup sites, safe storage and monitoring the risk of big suppliers. There are about 70 strategic raw materials Suppliers worldwide on framework agreements. They cover around 65% of the Group's procurement expenditure and are essential for all its activities. Packaging and Transportation is another department of

the Strategic Materials and Logistics function. After raw materials, transportation is the second most important item purchased by the Group. The aim of the function is not only to optimise logistics flows, contributing to improvement in product lead times, but also to find lower environmental impact solutions, such as intermodal transport.

Real Estate & Services function

The Real Estate and Services function is assigned tasks that are part of supply chain activities, including coordinating at the corporate level and supporting the individual business areas on matters concerning service procurement, such as telecommunications and information technology, domestic and international shipping, car fleet management, handling of trade fair events and travel arrangements. The suppliers related to this function are predominantly mid-sized domestic companies. For services used in the daily operations of Group companies, the suppliers may sometimes be local family-operated businesses. This choice has been made to retain value added within local areas by fostering development as much as possible. Among the main tasks of the function are the preservation and leveraging of the companies’ real estate and the monitoring of sites during decommissioning and renovation of brownfield sites. In all these cases, the function will usually seek the collaboration of mostly local companies and/or professionals, giving priority to professionalism and excellence in carrying out the assigned activities.

In 2021, a significant measure taken by Real Estate & Services involved the makeup of the corporate fleet, through the long-term leasing of increasingly greener cars. In fact, if in 2018 and 2019 only one employee out of four could travel in a low-environmental-impact car, in 2021, as the result of a new corporate policy directed at increasing the quota of electric and hybrid cars in its corporate fleet, the percentage of cars with electric motors ordered annually grew to 67%. In anticipation of further growth in Plug-in and Full Electric vehicles, in 2021 RadiciGroup installed electric vehicle (EV) charging stations on the infrastructure at its main Italian sites. These EV charging points are powered by 100% renewable energy from the Group supplier-partner Geogreen. The EV charging infrastructure will accelerate the transition to electric vehicles and strengthen the Group’s commitment to the environment, thanks to the special sensitivity of Group employees to such issues.

Table 12 | The Group's Suppliers in relation to turnover and geographical location

Breakdown of RadiciGroup supplier types by turnover in 2021

Strategic raw materials

Packaging + transport

Maintenance + utilities

Other goods or services from EUR 800 to EUR 830 million

about EUR 68 million

about EUR 148 million

about EUR 133 million

Geographical breakdown of RadiciGroup Suppliers by turnover in 2021

Europe

Asia

North and South America about 85% of sales*

about 10% of sales

about 5% of sales

A challenging two years for the Supply Chain

Disclosure 102-15

2020 and 2021 were challenging years for company supply chains globally, including the Group’s.

In 2021,in particular, the continued Covid crisis brought further logistic issues with the transport of goods and repeated and substantial restrictions on people’s mobility.

This was compounded by the Suez Canal being blocked and a number of unexpected and adverse events in the United States which led to a significant shortage in raw materials and marked disruption to global supply chains. The situation continued throughout the year, in parallel with the impact of the recovery which pushed demand up further and, consequently, exacerbated the shortage of raw materials and pushing their prices yet higher.

2021 concluded with significant disruption in the supply of natural gas and electricity too, both of which were impacted by significant post-lockdown demand and sharp price rises. The situation had a significant impact on all production segments.

RadiciGroup acted proactively, leveraging its organisation and negotiating power in the supply chain, where it enjoys deep-rooted relationships. The Group increasingly considers its Suppliers to be strategic partners, with whom it works not only for the continuity of its activities and service to Customers, but also for the planning of future solutions. It therefore builds long-lasting relations based on trust and transparency, selecting well-structured suppliers able to flexibly manage critical situations through a fundamentally solid organisation. RadiciGroup regularly monitors the market and Suppliers’ organisational structure and assesses risks in order to protect against shortages and sudden variations in price.

Disclosures 102-15, 102-40

The careful selection of Suppliers, an excellent existing relationship with them and a particular focus on risk management have been behind the Group’s success in limiting, as far as possible, the negative effects of the shortage of raw materials and maintaining production and Customer service levels above those of other players across relevant sectors. Supplementing this is constant market oversight by the Strategic Materials & Logistics function, in collaboration with partner Geogreen, to monitor trends in energy prices and maintain a resilient system in place which is capable of exploiting opportunities and optimising efforts by directing them towards the Group’s more strategic and higher valueadded products.

In addition to the supply chain-related challenges noted above, 2022 also began with an extremely complex international situation which heightened market volatility and made the risk of structural shortages in raw materials more acute.

RadiciGroup and Versalis, commitment to sustainable logistics In a 2021 that saw the need to leverage every part of the supply chain to optimise it and react to the challenges posed by the global backdrop, RadiciGroup finalised a major investment project by opening the railway connection at the Versalis plant in Mantua for the transport of OLONE to Radici Chimica SpA in Novara. OLONE (KA Oil) is one of the main chemical intermediates used in the production of adipic acid and in the polyamide 66 chain, Radici Chimica's core business. Versalis, Eni's chemical company, produces it at the Mantua plant from which RadiciGroup takes several tens of thousands of tons a year. Before construction of the junction, this intermediate left the Versalis site in Mantua by truck to the nearby railway yard and continued by rail to Radici Chimica where an internal hub has been in place for some time. As a result of this investment, the OLONE now travels exclusively by rail-tanker with increased safety in material handling and transport as well as undoubted environmental benefits. Since it became fully operational, by kilometres travelled, RadiciGroup and Versalis have achieved an 80% reduction in CO2 emissions and a primary energy saving of 75% when compared to road haulage. This is yet another sustainable logistics initiative implemented by Radici Chimica – this time supported by Versalis – as part of its strong commitment to rail transport which today accounts for more than 90% of incoming raw materials, in line with RadiciGroup's policy for a production system with low direct and indirect emissions.