Internal Control and Risk Management

The Internal Control and Risk Management System (ICRMS) of Cementir Group is defined as the set of tools, organizational structures, procedures and corporate rules aimed at ensuring, through an adequate process of identification, evaluation, management and monitoring of the main risks, a correct business management, consistent with the set objectives in terms of:

• compliance with laws and regulations;
• safeguards of company assets;
• effectiveness and efficiency of operating activities;
• accuracy and completeness of reporting.

In particular, the Board of Directors has an oversight role by addressing and evaluating the Internal Control and Risk Management System, also by availing of the Audit Committee, which performs a preliminary analysis with reference to the related evaluations and decisions.

The Ethic Committee has the responsibility to ensure that the activities are conducted according to the ethical principles provided by the Code of Ethics. Moreover, it monitors the received reports related to Code of Ethics violations, regarding which it receives periodical information from the Internal Audit Department, and it can request further analysis or specific checks, if necessary.

The Group Management is the first responsible for the internal control and risk management activities and the second level control functions support the Management in the definition of adequate risk management systems and related controls according their competencies (i.e. EHS, Anticorruption, Antitrust, Privacy, etc.).

The Internal Audit Department has the responsibility for carrying out independent assurance activities on the Internal Control and Risk Management System, verifying the related adequacy in relation to the Group size and operating activities and ensuring the definition and implementation of adequate mitigation actions from the Management.

It helps the organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.

The Internal Audit Department of Cementir Group, on the basis of the mission assigned on the approved internal Audit Charter, supports the Top Management and the Board of Directors in the continuous improvement of the Internal Control and Risk Management System for all companies of the Group. The Internal Audit Department shall verify all companies on three years basis. 

The yearly "Audit Plan" is drawn up on the basis of a "risk based" and “integrated” approach that guarantees the coverage of the relevant processes and the principal laws and regulations applicable to the Group. 

In this way, the Audit Plan includes operational audits; compliance audits (ex Law 262/05, Human Rights, GDPR, 231 activities, Business Ethics Compliance, Diversity, Equity & Inclusion audits), Environmental, Health & Safety (EHS) audits; investigations to verify all complaints (Whistleblowing) received via dedicated channels and guarantee the respect of law, regulations and internal procedure (included the Code of Ethics of Cementir Group).

MAIN RISKS TO WHICH THE GROUP IS EXPOSED

The main types of risks and opportunities to which the Group is exposed are described below.

CLIMATE CHANGE

The cement industry's ability to reduce its CO2 emissions and respond to climate change has become a focal point for investors. In 2021, the Cementir Group has launched a project to implement the recommendations of the TCFD (Task Force on Climate-Related Financial Disclosure) committing to be transparent on risks and opportunities related to climate change. The identification, assessment and effective management of risks and opportunities related to climate change are fully integrated into the Group's risk management process.

As suggested by the TCFD, the Group monitors the risks and opportunities arising from the evolution of transition scenarios and the evolution of physical variables.

Physical variables are divided into two categories of risk:

• Acute: related to the occurrence of extreme weather conditions such as cyclones, hurricanes or floods. Acute physical phenomena, in the various cases, are characterised by considerable intensity and a frequency of occurrence that is not high in the short term, but which, considering long-term scenarios, sees a clear upward trend;
• Chronic: refers to gradual and long-term changes in climate patterns (e.g., sustained high temperatures) that can cause sea-level rises or chronic heat waves.

With regard to the energy transition process, towards a progressive reduction of carbon emissions, there are risks and opportunities linked to changes in the regulatory, technological, market and reputational context.

The Group has decided to align itself to the TCFD framework to clearly represent the types of risks and opportunities by indicating how each of them should be managed. The effects were assessed over three time horizons: the short term (1-3 years), linked to the implementation of the Industrial Plan; the medium term until 2030, in which it will be possible to see the effects of the energy transition; the long term until 2050, by which the Group is committed to achieving net-zero emissions throughout its value chain.