SA8000 Management. Review. Management Review SA 8000 n : 5 date: 05/02/2016

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1 Pagina 1 di 14 Management SA 8000 n : 5 date: 05/02/ Introduction The aim of this Management is to perform a critical review of the CSR Indicators of the Norm SA 8000 and to check the opportunity or the need to define actions for the improvement. The present document is reviewed on a yearly basis, to show the trend of the KPIs along the times and eventually to compare them with values taken from the literature. The following Management review is the reference for year 2015 and it is updated at 31/12/2015.

2 Pagina 2 di 14 Company Introduction EagleBurgmann BT, is a legal entity born in June 2013, by the merge of the former Companies: BT TENUTE MECCANICHE ROTANTI S.p.A. Headquarters and workshop: Via Leonardo da Vinci, 9 - Arcugnano (VI) Workshop: Via Meucci, 56 - Arcugnano (VI) BT BURGMANN S.p.A. Headquarters and officies: Via A. Meucci, 58 - Arcugnano (VI) From the organizational point of view, the two companies were managed since years as one Company, therefore the fusion did not change the way of management of the organization. BT was founded in year 1966 with the name of Boribello & Testa, from the surnames of the two founders, with the purpose to produce mechanical seals for hydraulic pumps. In 1974 a new plant was built up in the industrial area of Arcugnano. The building, of about square meters is still one of the two plants of EagleBurgmann BT. In 1994 the second plant was built up. The second plant is about square meters, with three floors (ground, first and second). On the ground floor a workshop (stamping, CNC machines, welding etc) and the Finish Product Warehouse are located. On the first and the second floor there are the offices of the Company: Financial and Controlling, R&D, Sales, IT, QHSE, chemical-physical and mechanical test area. The EB BT products cover around 30% of the National needs of Mechanical Seals, the amount of the Export Sales is about 45% of the total turnover of BT. The fields of applications of the BT seals is quite wide, from the household applications to industrial and agricultural pumps and also for food and chemical industries. In 1998 BT was taken over by Burgmann Group, a German multinational company based in Wolfratshausen, near Munich. In the beginning of 2004 EagleBurgmann was acquired by Freudenberg Group, a German Group with more than employees, currently leader of Nonwovens production, anti-vibration systems and components for automotive industry. EagleBurgmann is now the Mechanical Seal Division of Freudenberg in joint-venture with the Eagle Group Japan. With 16 Sales Offices, 45 subsidiaries and about employees all over the World, EagleBurgmann is one of the leaders for seals systems.

3 Pagina 3 di 14 2 Identification of the Stakeholders and their expectations EagleBurgmann BT has identified the following Stakeholders, regarding the SA8000 topics. Internal Stakeholders Owners Employees worker s representatives For them the expectations connected with the SA800 Certification might be summarized as following: to create the right dialog into the organization and with the worker s representatives to improve the atmosphere inside the Company, to improve the HSE conditions and to involve the associates to achieve the HSE and CSR targets. External Stakeholders Suppliers Customers Local Trade Union Government Administration Local Agency (INPS, INAIL, ASL) ONG The expectations of the External Stakeholders, are very different depending on the role of the stakeholder but can be summarized as following: To receive evidence about the respect of the human rights, with a CSR management system; To maintain clear and honest relationships with the institutions and the inspection agencies of the Government (HSE agency, Labour Agency, etc) All the stakeholders are invited to give their opinion and contribution to the CSR Management System of BT, using the communication Form available in the last page of the present Document. With this form is possible to: - send suggestion or remarks about the CSR performances of the organization; - report any unclear information of the present document and ask for a clarification.

4 3 Quality, HSE, CSR Policy Pagina 4 di 14 The Freudenberg EagleBurgmann group, to which belongs EagleBurgmann BT Spa, is known all over the world as a leader about mechanical seals technologies. The success of the Group is based on: the continuous research and development, sales strategies, improvement of processes and productivity efficiency, internal and external Customer satisfaction. Furthermore, the group aims to achieve the best Environmental care, the continuous improvement of the working condition and the Corporate Social Responsibility. The Top Management of the Group adopts an holistic approach about these topics, based on the Freudenberg Guiding Principles: - Value for the Customers; - Innovation; - Leadership; - People; - Responsibility; - Long term orientation The Management of EagleBurgmann BT, through the total observance of the National and European Law and all the other requirements subscribed by the organization, the observance of the Freudenberg Safety Standards, the implementation of an Integrated Management system comply with the UNI EN ISO 9001:08, UNI EN ISO 14001:04, OHSAS 18001:07 and SA 8000:14 and certified by an Independent Certification Body, the will for the continuous improvement of the company performances INTENDS TO AGREE TOTALLY TO THE TARGETS OF THE GROUP For this purpose the following targets are defined: - To guarantee the quality of our products and the reliability of our processes using a quality control system and monitoring the Key Performance Indicators; - The optimization of the On-Time Delivery through the implementation of a Supply Management System with the involvement of all the associates; - The analysis of the claims from the customers to identify the root causes and to adopt corrective actions; - The Research and Development of our products to promptly reach the expectations of the market; the continuous research for technical solutions to improve the safety and environmental performance of facilities, machine, devices, collective and personnel protective equipment; - The continuous training of the associates about all the topics (Quality, HSE and CSR); - The analysis of Non Conformities, accidents, near misses and environmental accidents to identify the root causes and prevent them in the future; - To sensitize the employees to share their ideas for the improvement and the commitment of the management to analyse their suggestions; - The implementation of a HSE Management System compliance with the d.lgs. 231/01, checked by an independent Inspection Committee; - To replace, when possible, the dangerous chemicals with less dangerous ones; - The communication of our CSR performance to our Stakeholders (suppliers, customers, etc); - The reduction of wastes, when possible, and the sorting of the wastes to increase the recyclable rate; - Actions for energy saving and energy optimization; - The energy production from renewable sources through the installation of a photovoltaic system on the building roof in Via Meucci 56. The Eagleburgmann BT Management commits itself to put into practice this Policy and to advertise it, inside and outside the Company. For this purpose, the Policy will be spread out to the employees and will be available on the company website Arcugnano, 29 th January 2014 the Managing Director Antonio Maria Costa

5 Pagina 5 di 14 4 Social Accountability Requirements 4.1 Child Labour The youngest associate in the Company is about 20 years old, no underage person is employed in BT. In the following graphic, the average age of the manpower is reported divided by men, women, clerks and manufacturing. The average age of the manpower is 43 years old. The average Female age is 47,1; the average Male age is around 40. There is almost no difference between Clerks and Man works: in fact the average age of the Clerks is 43,4 while the average age of the Production is 43,7 years old. In the following graphic the manpower has been divided in age groups. The employees are distributed aroud the group years old.

6 Pagina 6 di 14 At 31/12/2015 the Company had two employees with an apprenticeship contract. Regarding the child labour, in the case that any child would be found in the Company (e.g. working for a tender), by suppliers/contractors, by any other Company that works in /for EBBT, EagleBurgmann BT will get in contact with the local Social Agency to define the right corrective action. During the year 2015 we haven t found any problem (neither internal or external) concerning this issue. 4.2 Forced and Compulsory Labour The Company do not support or engage the use of forced or compulsory labour. All the work for EB BT is done on a voluntary basis, nobody is victim of threats or other intimidation connected with forced or compulsory labour. The Company do not retain any part of the wages of the employees, excepted in case of legal requirements or in case of requests of the workers (e.g. fees to the trade union, pension funds, etc) Regarding the worker s documentation, the HR department asks only what is strictly connected with legal requirements as: fiscal code, residence permit, bank account, fiscal documentation, Privacy authorization, etc. When a new employee is hired, the Company gives him/her a copy of the National Work Collective Contract. The turnover of the manpower practically does not exist: during 2015 one resignation and two retirements have been recorded.

7 Pagina 7 di 14 Concerning the absenteeism rate 1, in the following table the trend of the last 5 years is reported: Theoretical working hours Year , , , , , Hours of absence 7.301, , , , , % absenteeism 7,22% 4,97% 4,65% 4,49% 4,05% 3,05% 3,23% 8,00% 7,00% 6,00% 7,22% Absenteeism rate trend 5,00% 4,00% 3,00% 4,97% 4,65% 4,49% 4,05% 3,05% 3,23% absenteism 2,00% 1,00% 0,00% The trend of the absenteeism rate is positive if we take under consideration the period 2009/2015, even though in year 2015 there has been a slight worsening. 4.3 Health and Safety Health and Safety is one of the core topics and main targets for EagleBurgmann BT; this strong commitment of the Company is proofed by the respect of the Occupational Safety Legislation (eg main Italian Law d.lgs. 81/08), the Certification of the HS Management System (according to OHSAS 18001), the adoption of a Organizational System compliance with the Law d.lgs. 231/01. In the followings the Occupational Safety Statistic of the Company is reported 2 1The indicator is calculated considering: sickness, injuries, strikes, delay or not paid absences. 2 The indicators are calculated following the Norm UNI 7249

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9 Pagina 9 di 14 First of all, the last accident occurred more than 6 years ago (August 2009), nevertheless a few near misses and a couple of medical treatments have been recorded and therefore the attention about the Health and Safety conditions is continuously high. Considering the Frequency (IF) and Gravity (IG) Indexes, period , the average values are: Total number of accidents: 7 (average 0,8 a/y) IF average: 6,9 IG average: 0,1 Those data may be compared with those calculated by INAIL (National Authority for Safety on Work) for the whole Sector of Activity (Sector D) Frequency Index Sector D: 25,79 Gravity Index Sector D: 2,25 Both, the Gravity and the Frequency Indexes for the Sector are widely higher than those of EB BT, condition that demonstrates the good performance of the Company. The training about HSE topics is done, as soon as a new employee is hired and periodically to keep high the awareness of the associates. Totally in year 2015, 38 training sessions have been conducted for a total of 741 training hours. 98,5 % of the manpower have attended at least one HSE training, while the average amount of training hours for employees has been 11. The medical checks are performed by the Factory Doctor on a regular basis, following a specific plan. The results of the controls (in an anonymous and collective way) are always under investigation and, up to now, haven t shown any work-related disease/problem.

10 Pagina 10 di 14 The General Manager have appointed an HSE Officer, Mr. Federico Zugno, with the duty to ensure to abide by the HSE Legal requirements as well as the requirements of SA8000:14 and OHSAS 18001:07 standards. The HSE Officer reports directly to the General Manager, Mr. Antonio Costa. From year 2015, EagleBurgmann BT has implemented a so called Safety Committee, composed of the two members of the HSE Office and the 3 HSE and SA8000 worker representatives. The committee meets every 2 months, discussing about all the topics related with HSE and CSR. After each meeting the members write down the Minutes of meeting, which are sent to the GM for information. The Safety Committee follows an action plan with specific tasks for each member, the action plan is checked and reviewed during each meeting. 4.4 Freedom of association and right to collective bargaining The Company respects the freedom of association of the associates, the right to be part of a trade union and the right to collective bargaining. The number of employees who are members of a trade union is 1 people, about 10% of the total. There are two different Trade Unions in the Company: CGIL FIOM e FIM. The employees are also represented by two Internal Workers. The local trade union representatives meet periodically and in total freedom the workers. Specific boards in the Company are dedicated to the communications between the Trade Union and the manpower. All the employees can attend the meetings organized by Trade Union in total freedom. During year 2015, 5 of these Meetings took place. The Worker s representatives attend to the local meetings of the Trade Union, during the working hours. In 2015, in fact they have cumulated 47 hours of trade union permits. During the past year there hasn t been any strike. 4.5 Discrimination EB BT abhors all the kind of discrimination, guarantees the same opportunities to all the workers and do not make and/or allowed any interference with the private life based on the race, nationality or social origin, caste, birth, religion, disability, gender, sexual orientation, family responsibilities, marital status, union membership, political opinions, age or any other condition that could give rise to discrimination. Threats or offensive behaviors are not allowed among the workers and between workers and Company. Female manpower: in the company 35 women are employed (on a total of 69 associates) and 4 of them have a position of coordination. Foreign workers: currently they are 3.

11 Pagina 11 di 14 Taking under consideration, for both the working contracts present in the Company, the distribution of the people based on gender, origin, level, experience and salary,no situation of discrimination can be noticed. According with the Law 12/03/1999 n. 63, there are 4 disabled workers. 4.6 Disciplinary Practices During the year 2015, there hasn t been any written disciplinary remark sent to the employees. No fine, suspension of firing have been inflicted to the associates by the Company. The organization abhor any corporal punishment, mental or physical coercion or verbal abuse of personnel 4.7 Working hours The working week is defined, as requested by the working Contracts, in 40 hours with the following working time: from to and from to for the workshop in Meucci Street; from 8.00 to and from to for the workshop in Da Vinci Street; from 08.00/8.30 to 12.00/12.30 and from to for the offices. The Company allowed a flexible working time in case of motivated needs of the people, 9 workers take advantage by a part time job. Furthermore, during the Summer period, the Production Dept. starts working earlier in the morning to stop in the afternoon at 15.30/ Overtime work is voluntary. In the following table we resume the amount of overtime work, in the period :

12 Pagina 12 di 14 Anno Standard time , , , , , , ,00 Overtime hours 1.716, , , , , ,00 total , , , , , ,00 % overtime 1,80% 3,65% 2,38% 3,44% 1,39% 1,91% 1,63% ,00 Overtime on total working hours , , , ,00 Overtime Standard Time ,00 0, During 2015,the manpower has cumulated hours of overtime, made by 53 workers with an average of about 33 hours/each. The maximum amount of over time has been 219hours. No worker has exceeded the maximum overtime allowed by the law. Regarding the vacation time, the residual days at the end of the year were 38,30, with an average of 0,55 days/person and the maximum amount for single person was 6,50 days. The amount of leave hours was in total, with an average of 33 hours/person and a maximum of 105. The Company is normally closed two weeks in August and one week during Christmas time. 4.8 Remuneration Wages abide by the rules of the National Working Contracts, both for former BT Tenute Meccaniche and BT Burgmann employees. Anyway, the salaries are higher than the minimum defined by the law for both the categories. The wages are directly paid on the bank account of the associates, within 10 days of the following month.

13 Pagina 13 di Management System Internal Indexes The workers have elected/appointed three SA8000 representatives, those are also safety worker s representatives (in accordance with the requirements of d.lgs. 81/08 Main Italian Law about Occupational Safety) During year 2015, the company hasn t received any SA8000 suggestions from the employees. 14 HSE suggestions have been submitted by the associates, all of them have been implemented as preventive actions. The Company has implemented a Social Performance Team, according with SA8000:14, which is identified in the "Safety Committee", whose composition and functioning has been shown in Section 4.3 of this document. Suppliers management The Company has created a simple tool to assess the suppliers in terms of Corporate Social Responsibility and figure out any critical situation in the Supply Chain. This tool is written down in a procedure. In accordance with this procedure, the Suppliers can be classified in one of the following clusters: Category A: Maximum CSR Risk Category B: Medium Risk Category C: Low Risk Category D: no CSR Risk To ensure the respect of the CSR requirements by the suppliers, different actions for the control are defined in connection with the category of risk (more strictly from A to D) During the year, a HSE and CSR audit has been performed to a strategic supplier and the outcome of this audit was good. Stakeholders Indicators During the year the organization haven t received any remark and/or observation from the SAW on any other external Stakeholder In 2015, the Company was asked to present the activity in the CSR field, in one High School in Vicenza, taking part on a project promoted by the Region Veneto and by one of our customers, who was at the beginning of a CSR project To share the CSR activities of the Company during the year we involved about 150 stakeholders sending them our CSR Management review. Other: The Company did 3 donations during the year: - Red Cross; - Caritas; - Freudenberg project for refugees

14 Pagina 14 di 14 5 Remarks and comments We invite the readers to send us comments, remarks, suggestions about: our CSR performance; the communication of the present document (clear, complete, fluent, etc). To do so the following form is available. A proper arrangement of this CSR Management review, may be done giving the right attention to all the people, institutions, partners, organizations that might be interested in our activities. Your opinion is fundamental to improve our Management review and to write down a document more efficient and clear. Comments about the CSR Performance of the Company Comments about the information reported in the Management review (eg. Clear, complete, interest for other info not included in the current issue, etc) The form can be sent to the following addresses (in descending order of priority) Addressee FAX / WEB SITE SA8000 Manager c/o BT 0444/ federico.zugno@eagleburgmannbt.com Federico Zugno CISE Certification Body info@ciseonweb.it SAAS Accreditation Body saas@saasaccreditation.org Thank you for your time.