2019 Report on Sustainability - Alfaparf Group
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Ideas, research, knowledge processing of materials. The technique combined with human sensitivity. We work so that every professional recognize everything this in our products and put them at the service of its capabilities to produce beauty.
Indice 5 Letter to the stakeholders Product sustainability 37 6 Highlights Environmental sustainability 47 Methodological introduction 9 Social sustainability: people 55 10 Materiality Social sustainability: customers 67 ALFAPARF and the sustainable 12 Social sustainability: the community 71 development goals 13 GRI Content Index 75 Identity and governance Economic sustainability 27 Reconciliation table 79 ALFAPARF GROUP • Report on Sustainability 2019 3
Letter to the stakeholders With the publication of its second Report inspire the company’s strategic and opera- countries to guarantee health and safety in on Sustainability, ALFAPARF GROUP con- tional decisions with the principles of eco- these situations, which clearly emerged in tinues along the path started in 2019 to nomic-financial efficiency and social-envi- the Western world, summons companies communicate transparently to the stakehold- ronmental protection. to tasks which, to date, had been almost ers the policies which contribute to creating In a number of areas, the second edition extraneous to management, precisely be- lasting value: development and promotion of the Report allows a comparison with the cause historically they were delegated of human capital, protection of the environ- results of the previous year. It also updates to state institutions. In a similar scenario, ment, construction of positive relations with the commitments of the Group exercising showing the sustainability of one’s organi- the local community and the economic con- that function of reference for the stakehold- zation and one’s operating method will be text of reference. ers which is proper to all reporting. more difficult. The reporting, made possible by the defi- Publication takes place while, all over the ALFAPARF GROUP, like other companies, nition of formal processes introduced in world, the health, social and economic ef- has responded to the health emergency the organization and by the management’s fects of the Covid-19 pandemic are being by modifying in progress organization and strategy, aimed at reinforcing the path of dealt with. Although the Report refers to procedures to guarantee the health and sustainable development, allows spreading 2019, the event that has marked the first safety of its collaborators in all the coun- a culture in the company that is consistent part of 2020 imposes reflection, not so tries where it operates. On the other hand, with the values and sensitivities common much on the impact of the next Report but, we know we have entered a new historical today in society. rather, on the evolution of the management phase which, on the front of sustainability, The pivot of this structure is a work group of sustainability. will require the multiplication, at all levels, that monitors the actions in the various The awareness, widespread amongst the of commitment and attention. It is not the areas, recording their evolution, and that players of the economy, that the probabil- first time, in its forty years of history, that AL- assists management in their decisions, thus ity of events similar to that of 2020 is not FAPARF GROUP has been called to perform guaranteeing the application of the prin- that remote and that the exposure to risk is an extraordinary task. We are convinced ciples of sustainability. The organizational very concrete, will increase the importance that the quality of our people and of the or- commitment is significant and concretely of sustainability, particularly in companies ganization that we have built up will allow shows the determination of the directors to with global operations. The difficulty of us to successfully cope with it once again. ALFAPARF GROUP • Report on Sustainability 2019 5
Highlights 247,8 MLN € ECONOMIC VALUE GENERATED 11 BRANDS 225,6 MLN € ECONOMIC VALUE DISTRIBUTED 4 BUSINESS UNIT HAIR CARE, SKIN CARE, RETAIL, PRIVATE LABEL 73 MLN € SPENT ON LOCAL AND DOMESTIC SUPPLIERS 5MANUFACTURING SITES 24 BRANCHES 1.685 EMPLOYEES 5 MANUFACTURING SITES AND 2 COMMERCIAL BRANCHES 100 COUNTRIES REACHEDI THROUGH DIFFERENT DISTRIBUTION CHANNELS 837 OF WHOM WOMEN 6 ALFAPARF GROUP • Report on Sustainability 2019
0,22 KW CONSUMED APG IS ONE OF THE FIRST 100 ITALIAN COSMETIC COMPANIES AT WORLD LEVEL AND THE ONLY ONE OF THE FIVE ITALIAN COMPANIES, PER KILO OF TO OPERATE IN THE PROFESSIONAL PRODUCT CHANNEL 82.690 -15% COMPARED TO 2018 (ITALIAN BRANCH) 500ml TOTAL HOURS OF 3,8 TRAINING PROVIDED PIECES PRODUCED AVERAGE OF 49 HOURS PER CAPITA BY THE COOPERATIVA SOCIALE DALMINE ON 65 BEHALF OF ALFAPARF TON OF WATER PEOPLE CONSUMER PER EMPLOYED TON OF BULK 40 PRODUCT PEOPLE IN -5.5% COMPARED TO 2018 (ITALIAN BRANCH) TRAINING ALFAPARF GROUP • Report on Sustainability 2019 7
Methodological introduction The scenario in which the corporate vision BOUNDARY OF REPORTING the manufacturing sites in Italy, Brazil, Mex- and strategy are situated today cannot dis- ico and Argentina; for the data of an en- regard sustainability as an element of com- The ALFAPARF GROUP Report on Sustaina- vironmental nature, the boundary limitation petitive advantage which allows orienting bility describes the initiatives and the results concerns solely the Venezuelan manufactur- the market and the stakeholders towards in the economic, social and environmental ing site. The exclusion of the Venezuelan increasingly conscious choices. This led to sectors with reference to 2019 in compar- manufacturing plant and of the commercial the decision to publish, last year, the first ison, where possible, with the results of branches is linked to the fact that their inci- Report on Sustainability. the previous year; it has been drawn up dence is deemed without significance with With the decision to reinforce the structured following the guidelines of the GRI Sustain- respect to the total. In the case there were path taken, ALFAPARF GROUP is publish- ability Reporting Standards (GRI Standards) further boundary limitations, other than ing its second Report on Sustainability, - “Core” option – issued in 2016 by the those shown, they are duly shown in the showing its commitment to integrate topics Global Reporting Initiative. text. such as innovation and creativity, but also In order to gradually align the reporting Lastly, the data and the information present- social inclusion and respect for the environ- boundary of the Report on Sustainability ed derive from direct surveys; where it was ment into its business model, with a view with the consolidated financial statement, not possible to find the data or estimates to increasingly complete and transparent ALFAPARF GROUP has decided to in- were made, these are duly shown in the communication towards all the stakehold- clude in the 2019 report, as well as the document. ers, but also a strategic vision which puts five manufacturing sites in Italy, Argentina, sustainability at its center. Brazil, Mexico and Venezuela, the two This document aims to convey the ways commercial branches in Spain and Por- with which the human capital, the relation- tugal1. Therefore, in the document, when ship with customers, the impact on the local “ALFAPARF GROUP” appears, reference is communities and the solutions proposed for made to the reporting boundary that has environmental protection and for the sus- just been identified, net of any limitations. tainable development of the local area are The data relative to the suppliers, to the managed and developed. raw materials and to packaging, refer to The data relative to 2018 are relative to the 5 1 manufacturing sites ALFAPARF GROUP • Report on Sustainability 2019 9
Materiality For the definition of the areas and of the Lastly, these topics have been evaluated The result of the analysis shows that, in addi- topics to be shown in its Report on Sustain- individually by the heads of the main cor- tion to the financial performance, the topics ability, ALFAPARF GROUP has analyzed the porate functions through a questionnaire in deemed most important both from the point material nature aimed at identifying and which they were asked to give a score from of view of ALFAPARF GROUP and from the giving priority to the topics considered im- 1 (negligible aspect) to 5 (very important point of view of its stakeholders are linked portant and significant for its business and aspect). to the area of the product – from the quality for its stakeholders. These topics are defined This year, in order to improve the process and safety of the products as well as inno- “material” in that they reflect the economic, of definition of the material topics, a pre- vation and research and development – but social and environmental impacts of the or- liminary activity of stakeholder engagement without forgetting the social sphere, with ganization and can influence the decisions was carried out. In particular, all the employ- particular reference to human rights and to of the internal and external stakeholders. ees and the Top Management of the Italian the development and safety of employees. In order to identify the most important and manufacturing site and of the two commer- significant topics for ALFAPARF GROUP, a cial branches (Spain and Portugal) were survey was carried out according to a struc- asked to fill in an online survey, created ad tured process, based on the following steps: hoc, to understand the importance of the in- • Interviews with the corporate people of dividual topics, from the point of view of the reference who hold key functions in the ar- internal stakeholder. eas identified as priority in relation to the Once all the evaluations from the individual topics of sustainability; surveys had been collected, they were ana- • Analysis of the characteristics of the sector lyzed and consolidated. The result obtained they belong to and analysis of benchmarks is a matrix of materiality which allows mak- in order to identify the main topics on which ing a synthetic representation of the topics competitors also focus; analyzed. Only the topics which passed the • Analysis of the existing internal documen- so-called threshold of materiality were pre- tation (including the Code of Ethics and sented, i.e. those which obtained, on both Model 231). axes, an average score of more than 3.5. 10 ALFAPARF GROUP • Report on Sustainability 2019
MATRIX OF MATERIALITY Governance 5,00 Social responsibility Environmental responsibility Economic responsibility Health, safety Product responsibility and customer satisfaction Community Solidity and profitability of the Group IMPORTANCE FOR THE STAKEHOLDERS 4,50 Transparency and integrity Waste production and management Product quality, packaging and R &D in the business Human rights Marketing, communication and brand reputation Prevention of corruption Energy and water consumption Markets served Health, safety, development Equal opportunities of human capital 4,00 Responsible procurement and inclusion Protection of biodiversity Engagement and development and animal welfare of local communities 3,50 4,00 4,50 5,00 IMPORTANCE FOR ALFAPARF ALFAPARF GROUP • Report on Sustainability 2019 11
ALFAPARF and the sustainable development goals (SDGs) On 25th September 2015, at the 70th tribution to the fight to eliminate poverty. The results of the analysis have led to the General Assembly of the United Nations, As a first step towards the integration of the selection of the following SDGs, as sustain- the world leaders adopted a new global Agenda 2030 into the strategy of sustain- able development goals of priority interest framework for sustainable development. ability, ALFAPARF GROUP has carried out for ALFAPARF GROUP, i.e. the attainment of This framework is represented by the now an exercise aimed at identifying the SDGs which the organization can most contribute well-known Agenda 2030, made up of of priority interest for the organization, tak- to through its business activities: 17 goals (Sustainable Development Goals ing into account the topics resulting mate- - SDGs) and 169 sub-goals, valid for the rial from the analysis of materiality carried period 2015-2030. out and the characteristics of the sector in The adoption of the Agenda 2030 repre- which it operates. sented a historical event, clearly deeming that the model of development is unsustain- able, not only on an environmental level but also on the economic and social level. All countries are also asked to contribute to and define a strategy, which allows reach- ing the goals by the deadline. Lastly, the Agenda 2030 explicitly recalls the responsibility of all the players in socie- ty, from the governments (central and local) to corporations, and from civil society to in- dividual citizens. In particular, the manufac- turing sectors and companies are asked to implement sustainable development goals, aiming to reduce the negative impact of their respective businesses on the ecosys- tem, the use of resources and fostering both the creation of new employment and the redistribution of wealth produced as a con- 12 ALFAPARF GROUP • Report on Sustainability 2019
Identity and governance VISION MISSION VALUES “To create and offer solutions to exalt in- “To guarantee and maximize the quality The values guiding ALFAPARF GROUP in dividual beauty, so each person’s journey of the products and services offered to our pursuing its goals are represented by four becomes a pleasant experience.” customers, combining Italian taste and cre- key words: 1 ativity with the latest international trends, in the awareness that the market requires PEOPLE/RELATIONS increasing professionalism, attention and We are a large family that promotes close relations personalized services.” with our customers and collaborators through listening, Orientation to innovation is one of the qual- support and a sense of belonging. ities of the ALFAPARF GROUP identity: the 2 habit of working alongside professionals all over the world has allowed developing EXCELLENCE the ability to pick up in time the trends of the We put together the latest technologies with the typically demand and channel them into activities of Italian approach of wanting to do things always aiming research and development, building up for excellence. and increasing a unique expertise, today recognized by the whole sector. 3 The products and services emblematically embody the results of research and innova- COURAGE tion and of the collaborations established We are not afraid of risks and using our independence to act and find our own way. over the years with the sector’s profession- als. In addition, the great technological ex- 4 pertise and the in-depth knowledge of the customers and their needs are a fundamen- PASSION tal element for the success and achieve- We are committed to meeting the continuously evolving ment of the Group’s mission. needs of hairdressers, beauticians and their customers. We love beauty. ALFAPARF GROUP • Report on Sustainability 2019 13
14 ALFAPARF GROUP • Report on Sustainability 2019
History THE ORIGINS THE EVOLUTION GLOBALIZATION ALFAPARF GROUP was founded in 1980, In 2000 the Italian manufacturing activity In recent years, the Group has been very on an idea of Roberto Franchina who, as- was moved to Osio Sotto (Bergamo) and, determined in following the path of glo- sisted by about ten collaborators, started two years later, ALFAPARF GROUP came balization, extending its business beyond to conceive products for the hairdressing into being: with a turnover of about euro the usual markets of reference. Export has channel. 60 million, more than 90% of which was increased towards Eastern Europe (Russia, In 1989 the Semi di Lino line was launched, generated abroad. the Baltic countries and the Balkans, the which was to be the first great commercial Its international vocation was strengthened former Soviet Republics), India, the Middle success. The permanent coloring of Evolu- in 2003 with the start of the activity in Chi- East and Africa. tion of the Color came the following year. na. In 2008 work started on expanding ALFAPARF GROUP, which has always con- The adventure in export started in the the sites in Italy, Mexico and Brazil. The centrated on the professional channel, has 1990s, first with exports to Spain and Latin Private Label project also started: this aims made its debut in the retail channel in Bra- America, then the establishment of the com- to develop production on behalf of third zil with the ALTA MODA E’… brand (Hair mercial branches in Brazil, Mexico, Argen- parties thanks to the Group’s expertise, in Care), distributed in stores specialized in tina and Venezuela. Production also started particular in products for coloring. products for hair, health stores and perfum- with the first factories in Brazil and Mexico. 2009 was a historical year: the GTS eries. The manufacturing capacity has in- Group, founded at the end of the 1970s, creased thanks to new plants in Argentina which produced and distributed profes- and Venezuela. sional cosmetics and equipment for beauty The organizational structure of the Group salons, was taken over. In the global in- has been remodeled through the creation dustry of professional cosmetics, ALFAPARF of two regional bodies: Americas and Eur- GROUP is, by dimensions, the first compa- asia/Africa/Oceania. The objective: to ny with 100% Italian capital. accelerate global growth. ALFAPARF GROUP • Report on Sustainability 2019 15
Organizational Structure ALFAPARF GROUP is an Italian multinational corporation in the cosmetics industry, made up of multiple companies that share the same objectives of quality, excellence and perfor- mance, guided by common values and by solid expertise. 100% Junior S.r.l. 60,96% Roberto Franchina (Italia) 19,04% Alfa Parf Group S.P.A. (Italia) 4,76% 100% AB S.r.l. 15,24% Attilio Brambilla (Italia) 16 ALFAPARF GROUP • Report on Sustainability 2019
Delly Alfhair Ltd Dobos S.A. de C.V. Kosmetic Ltda (Messico) (Australia) (Brasile) Prod./Comm. Comm. Prod. 99,999% 100% 99,94% Hel Cosm Alfa Parf Middle East Porta Nuova S.R.L. Beauty & Business S.P.A. S.P.L.C. DMCC (S.Domingo) (Italia) (Grecia) (Dubai -EAU) Comm. Prod./Comm Comm. Comm. 100% 100% 99,9% 100% Prodicos Industrias Veprocosm Sabama Ltda Alfa Parf UK Ltd Cosmetic Services S.r.l. S.A.U. C.A. (Colombia) (Londra) (Italia) (Argentina) (Venezuela) Comm. Comm. Serv. Prod./Comm. Prod. 99,85% 100% 100% 100% 99,55% Costa Rica Prodob de Mexico S.A. Cosmetica Chi.Cosm B.I.P. Inc. Industrial Chemical Percosm S.A.C. Maresana Lda Percosm S.A.C. Cosméticos Cosdist SRL de C.V. Ltd (U.S.A.) Cosmetics Holding Ltd (Perù) (Portogallo) (Perù) (Costarica) (Messico) (Cile) Comm. (Malta) Comm. Comm. Comm. Comm. Prod./Comm. Comm. 100% 100% 100% 99,9996% 99,80% 0,0007% 0,01 0,0004% Alfa Parf American Alfa Parf Delly Distribuidora de Guatemala Prodob de Mexico S.A. Clio Cosmetics S.A. de Cosméticos e Prestacao de Alfa Parf Russia DIS.MAR Cosmetics C.A. Porta Nuova S.R.L. Division Distribution S.A. Shangai Trading Co. Ltd Cosmeticos S.A. de C.V. de C.V. C.V. Servicos Ltda (Russia) (Venezuela) (S. Domingo) (Uruguay) (Cina) (Guatemala) (Messico) (El Salvador) (Brasile) Comm. Comm. Comm. Comm. Comm. Comm. Prod./Comm. Comm. Comm. 99,99% 100% 80% 100% 0,01% 0,20% 0,1% 1% 98,93% Maresana Alfa Parf SP distribuidora Clio Cosmeticos S.A. de Delly Distribuidora de Delly Guatemala Cosmeticos Alfa Parf Panama S.A. de cosmeticos e prestacao DIS.MAR Cosmetics C.A. Cosméticos e Prestacao Sabama Ltda Lda C.V. Kosmetic Ltda S.A. de C.V. (Panama) de servicos LTDA (Venezuela) de Servicos Ltda (Colombia) (Portogallo) (El Salvador) (Brasile) (Guatemala) Comm. (Brasil) Comm. (Brasile) Comm. Comm. Comm. Prod. Comm. Comm. Comm. 100% 99,9993% 99% 99,99% 0,06% 0,15% 20% 90% 1,07% Alfa Parf Panama Pol.Cosm Alfa Parf Group Espana Dobos Alfaparf American Dea Project S.r.l. Cosmetica Chi.Cosm Ltd Pacifico S.A. Sp. Z.O.O. E.Cos S.A. .S.L.U. S.A. de C.V. E.Cos S.A. Division Distribution S.A. (Italial) (Cile) (Panama) (Polonia) (ECcoumadmo.r) (Spagna) (Messico) (ECcoumadmo.r) (Uruguay) Prod. Comm. Comm. Comm. Comm. Prod./Comm. Comm. 80% 90% 99,99% 1% 100% 100% 100% 0,001% 0,01% ALFAPARF GROUP • Report on Sustainability 2019 17
The Italian parent company has adopted BOARD BOARD O AUDITING a traditional model of Corporate Govern- OF DIRECTORS F AUDITORS FIRM ance, with a clear-cut separation between the management and the control functions. ROBERTO FRANCHINA ANDREA CASAROTTI ERNST&YOUNG S.p.A. In particular, the company is managed by Chairman Chairman a Board of Directors, while the function of vigilance is assigned to the Board of Audi- ATTILIO BRAMBILLA ALESSANDRO RICCI tors. Both the managing bodies are elected Deputy Chairman Auditor by the Shareholders’ Meeting. GIUSEPPE CALDESI VALERI Auditor FABIO GALLIO Alternate Auditor SIMONE FURIAN Alternate Auditor 18 ALFAPARF GROUP • Report on Sustainability 2019
Business and brands Hair Care ALFAPARF GROUP operates in hair and Production and marketing body care and bases its growth on solid of products for hair coloring skills, multiple research activities and on the and care collaboration with hair-stylists of internation- al level who, over the years, have taken the brands all over the world. Production takes place in the five manufac- turing plants in Italy, Mexico, Brazil, Argen- tina and Venezuela and the offer proposed allows meeting professional demands of various kinds and referred to different mar- Retail ket sectors, distributing its products in over Skin Care Manufacture of products 100 different countries through its subsidiar- Production and marketing under the ALFAPARF brand, ies. The ALFAPARF GROUP business can be of products for body care distributed through a close- divided into four main Business Units: Hair and of equipment for aes- knit network of distributors Care, Skin Care, Private Label e Retail. thetic applications. (professional channel and Mass Market) . The efforts made over the years in the quest for innovative and high quality products have allowed many brands to assert them- selves both on the Italian market and on Private Label foreign markets: today the Group has 11 Production of products brands, four in the Hair Care Business Unit on behalf of third party and seven in the Skin Care Business Unit. customers who sell their own products all over the world, taking advantage of the Group’s expertise. ALFAPARF GROUP • Report on Sustainability 2019 19
HAIR CARE Your Partner in Beauty. Created in Brazil to meet the needs of the Beauty has to be a source of pleasure: this local population, today Yellow is a profes- is how it can also help face up to other chal- sional brand distributed all over the world lenges in life. that has made a name for itself thanks to ALFAPARF MILANO expresses a unique, hu- formulas which optimally combine ad- man and independent point of view, created vanced technologies and ingredients of thanks to its local presence. For 40 years, natural origin. It is a line of products that ALFAPARF MILANO has been supporting are easy to use and with an excellent qual- hairdressers with efficient services and prod- ity-price ratio. ucts to help them in their business and offer people the chance to express themselves as they wish. The ALFAPARF MILANO product range is rich in diversified solutions for every require- ment: color, shape, treatment, styling and a men’s line. All the products are made with care, according to the principles of the AL- This is a brand characterized by profession- FAPARF GROUP philosophy: Italian dyna- al distribution (through hairdressing salons) mism, innovation and openness to diversity. and retail distribution (through selected chains of beauty stores) with an excellent quality-price ratio. Launched in Brazil and today distributed in Central and South America, it is ALFAPARF GROUP’s first brand for Retail. On the strength of its professional technology, it offers products for hair care and coloring. 20 ALFAPARF GROUP • Report on Sustainability 2019
SKIN CARE The sun protection that offers a safe, even The beauty secrets of TEN SCIENCE are the The beauty solution for over forty years: tech- With almost forty years of experience in and long-lasting tan. SOLARIUM is the sun result of the fusion between technology and nological innovation, scientific research and the professional beauty channel, ALFAPARF care specialist in beauty salons: a wide nature, raised to the level of science. A com- experience come together to guarantee max- GROUP develops and sells latest generation range of protective products for all require- plete and high-performing range of products, imum efficiency through a made-to-measure technologies and equipment for all the needs ments, after-sun and tan intensifiers. The made with the most precious natural ingredi- method and program. DIBI MILANO is the of a modern beauty salon. Design, develop- brand stands out for high quality, the breadth ents, combined through advanced technolog- point of reference in professional beauty in ment, production and assembly: completely of the range and the originality of the style. ical procedures. It is a brand that has made terms of quality and innovation. Italian-made to ensure the best guarantees of green minimalism its distinguishing feature, certification and quality for partners. In 2019 also thanks to the selection of ingredients and the innovative and productive capacity of AL- its packaging with a low environmental im- FAPARF GROUP in medical equipment and pact. The TEN Institutes are the brand’s pro- equipment for beauty salons was enriched by fessional venues. For over thirty years, face and body prod- skills and reinforced with the acquisition of a ucts of high quality in beauty salons. A scien- very dynamic and innovative local company tific approach, technology and results thanks specialized in laser technologies. to a team of expert beauticians. BECOS stands out in the panorama of cosmetics as DECODERM exceeds the limits of color a brand that looks to fashion trends, con- thanks to a line of make-up which knows stantly projected towards innovation. The the skin and designs the beauty of every BECOS line was relaunched in 2018, in woman, protecting her. The result of the particular with a new image of the testimoni- The professional and cosmetic, holistic and perfect combination between Skin Care al Francesca Sofia Novello and a proposal sensory answer: in OLOS nature takes first and make-up, it embodies the desire for more in line with the brand’s professional place, the mother of the most precious and beauty, color and protection, thanks to the specialization. The BECOS Clubs are plac- effective active ingredients for the beauty of combination between formulations with a es where professionalism and personalized the face and body as well as the source of treatment action, textures, new generation solutions can be found to start out on a path inspiration of the product lines. It is a brand applicators and a harmonious range of towards beauty. which looks to the future, where beauty is har- shades. mony, balance and lifestyle. ALFAPARF GROUP • Bilancio di sostenibilità 2019 21
Responsible governance MODEL 231 The Organization and Management Model From the methodological point of view, in “Process ownership”, according to which applies both to internal relations and to re- 2019, the Body of Vigilance also carried each corporate process must report to a spe- lations with those outside the company, with out the activity of verification on the Special cific person of reference, while the powers the aim of avoiding the offences punishable Part of the Model, especially through inter- and responsibilities must be clearly defined by Law 231 being committed. views with the subjects responsible for the and acknowledged. The decision of the ALFAPARF GROUP Board important activities, with a dual purpose: The training activity has been carried out of Directors to have, on a voluntary basis, - To make and obtain an overview of the mainly following the adoption of the Model an Organization and Management Mod- concrete application of the operating princi- 231 and has differed in the content and in el is part of the broader policy of raising ples of the Model; the methods depending on the qualification awareness on the transparent and correct - To verify the presence and/or the appli- of the addressees and the level of risk of management of the company, in respect of cation of formalized application procedures the area in which they operate. In particu- the current legislation and the fundamental for the management of the processes, in lar, two types of 231 training given can be principles of business ethics in pursuing the general, and for the application of the oper- distinguished: corporate purpose. ating principles of the Model, in particular. • For the personnel operating in production; To draw it up, the parent company mapped Since the Model 231 has been adopted, • For the personnel operating in the adminis- the processes, highlighting the sensitive 100% of the contracts and agreements of trative offices, with a particular focus on the activities, the functions and roles directly investment made by the Italian subsidiary first corporate levels who have contributed involved, and associating with the already include a note which requires the signature to raising awareness on the topics with re- existing checks further new instruments – of the company’s Code of Ethics and Model gard to the whole structure. such as new operating procedures – in 231. The pre-existing suppliers have been The training, given compliance with the requirements and the informed that the Organizational Model only to the personnel of the Italian branch, new ISO standards for risk analysis and 231 has been adopted and they have been is carried out periodically while the Code of risk prevention.This Model, inclusive of the asked to become familiar with it. Ethics has been translated and distributed to Code of Ethics, forms an integral part of all In relation to the topic of anti-corruption, a all the employees, including of the foreign the rules, procedures and systems of control system of control is in place which assumes branches. developed by ALFAPARF GROUP, contrib- the avoidance of cases of corruption or of uting to defining an overall, structured and any other significant offence. This system is complete organizational framework aimed based on some fundamental principles of at preventing illegal behavior. control such as, for example, the so-called 22 ALFAPARF GROUP • Report on Sustainability 2019
INTERNAL AUDITING AND INTERNAL CONTROL SYSTEM The Internal Auditing in ALFAPARF GROUP New checks were introduced in 2019, in started in July 2016, through a start-up particular: of the function. In particular, the activity is • Receivables Management with the aim of carried out by the Italian subsidiary for all harmonizing the processes and the opera- the foreign manufacturing and commercial tive times and improving the overdue trade branches and concerns the main corporate debts, the DSO and the activity of control of processes, including: the credit controllers of the subsidiary. On • Procurement the basis of the checks made in 15 branch- • Human resources es, it was deemed necessary to develop a • Administration, finance and control Group Receivables Procedure, with the ob- • Logistics jective of harmonizing the process and the • Quality control controls on receivables. • Health, safety and environment • Returns Management following the activity • Commercial carried out and seeing the differences found Once the activities of verification have taken in the controls on the customer returns, es- place, the internal audit function produces, pecially in the case of product returns of a every six months, a report summarizing the significant value, returns for breakage and/ results and the assessments assigned – both or non-conformities of product or expired at the level of the individual process and at products, it has been deemed necessary to the level of Italy/Group – relative to the ver- implement a Management of Returns Proce- ifications made. dure to improve the management and imple- In addition, in order to assess the Internal ment new controls. System of Control during the activity of con- • Trade Commissions new controls have trol and mapping, verifications are made on been implemented in order to verify wheth- the 231 points of control in the processes er the commissions paid to the agents are also managed by the foreign subsidiaries. linked to effectively reaching the pre-set com- mercial targets (sales and receivables). ALFAPARF GROUP • Report on Sustainability 2019 23
CERTIFICATIONS The mission of ALFAPARF GROUP is to raise The certifications obtained and renewed by With the start of the Private Label Business Amongst the 2019 goals, the Italian branch the quality of the service offered by the pro- the Italian branch, for the management of Unit, the Italian subsidiary has been the ob- has considered, in its Policy on quality, the fessional operators (hairdressers and beauty the various sectors of activity of the organ- ject, over the years, of audits with respect to application of the following aspects: salons) through the application of an Inte- ization, are: some social, ethical and safety certification • Identification of the risks and opportuni- grated Management System, in order to programs on the request of some large cus- ties and subsequent actions for the manage- create synergies, integrate processes and tomers, through verification and evaluation ment; distinguish their specializations. in the field by international auditors with • Approach of the Management System in • UNI EN ISO 9001:2015 respect to the following Standards: SME- relation to the context of the organization; Quality Management System (QMS) TA (Sedex Members Ethical Trade Audit), • Internal and external factors, needs and SEDEX (Supplier Ethical Data Exchange) and expectations of the parties concerned; SA 8000 (Corporate Social Responsibility). • Engagement of the personnel; When the standard ISO 9001:2015 came • Perspective of the life cycle of the prod- • ISO 22716:2007 Cosmetics into force, the company adopted an ap- uct/service provided; Good Manufacturing Practices (GMP) proach according to the risk/opportunity • Management of the suppliers and of out- logic, through “Risk-Based Thinking”, which sourcing. implies management based on the capacity For the future, the Italian parent company of each member of the organization to take has set itself the goal of keeping and re- • UNI EN ISO 13485:2016 decisions or undertake actions, including newing the existing certifications and once Medical Devices- Quality Management thanks to an attentive assessment of the pos- against sets itself the aim of obtaining the System sible – positive and/or negative – effects in following certifications, to complete its Inte- the context considered. grated Quality Management System: • ISO 14001:2015 – Environmental Man- agement System; • AEO (Authorized Economic Operator) • ISO 45001:2018 – Management Sys- certification tem for health and safety in the workplace. Authorization for customs simplifications . AEO and of safety (AEOF) 24 ALFAPARF GROUP • Report on Sustainability 2019
PRIZES AND ACKNOWLEDGEMENTS In 2019, ALFAPARF GROUP became one of the 10 quotable companies in the beauty sector – and one of the 80 quotable companies at national level in the various sectors - iden- tified by Pambianco. This acknowledgement is given to companies which prove they meet key requisites in terms of administration, reputation and growth of its business. For the fourth year running, ALFAPARF GROUP is also one of the first 100 largest cosmetics manufacturers in the world (94th place) according to the ranking drawn up every year by the online magazine Women’s Wear Daily, one of the most authoritative sources of information in the sector. In the 2019 ranking, ALFAPARF GROUP is one of the five companies present with Italian capital and the only one amongst those for the professional segment. ALFAPARF GROUP • Bilancio di sostenibilità 2019 25
DIALOGUE WITH THE STAKEHOLDERS The stakeholders are all those who, in vari- CUSTOMERS AND CONSUMERS LOCAL, NATIONAL AND HUMAN RESOURCES ous ways, can influence or be influenced by • Customer Service INTERNATIONAL INSTITUTIONS • Training programs and performance man- the activities of ALFAPARF GROUP. They rep- • Social networks AND NON-GOVERNMENTAL agement resent the complexity of the organizational • Sales channel as a channel for listening, ORGANIZATIONS • Focus groups and group coaching reality, highlighting all the relations in which intermediation and communication • Participation in local and national trade • Sharing the Code of Employee Conduct the Group is continuously involved. • Questionnaires organizations and the Code of Ethics The Report on Sustainability aims to meet • Creation of work groups with teams of • Participation in events such as conferenc- the stakeholders’ needs for information on hairdressers/beauticians es and similar, to share with third parties the TRADE UNIONS/ the performances of the Group in the field corporate experience and the corporate sit- TRADE ASSOCIATIONS of sustainability and at the same time of pro- LOCAL COMMUNITIES uation • Meetings for periodical information on the moting dialogue and the improvement of the • Continuous relationship with the local au- Group’s situation management and of the organization itself. thorities and the communities to manage the FINANCIAL INSTITUTIONS • Meetings for negotiations on corporate The main categories identified, with which environmental impact of the manufacturing • Sharing the global scenarios of financial and site topics the Group interacts, and the relative ways plants on the local systems markets through which regular constructive dialogue • Support activity in some initiatives of the • Occasions of sharing the company’s per- takes place, are: local authorities in the social field formances and development plans • Sharing and collaboration on topics SHAREHOLDERS linked to the local area PRESS AND SOCIAL MEDIA • Interviews and daily exchanges on corpo- • Relations with the local and international rate management SUPPLIERS press • Monthly Management Meetings • Periodic meetings with the suppliers and • Participation in round tables • Meetings, including on aspects linked to visits in loco • Social Networks sustainability • Sharing of the Suppliers’ Code of Con- duct and of the Code of Ethics • Periodic contacts for the definitions of standards of quality 26 ALFAPARF GROUP • Report on Sustainability 2019
Economic sustainability THE APPROACH DIRECTORS’ REPORT2 ALFAPARF GROUP pays particular attention contributes to economic maintenance and The Group closed 2019 with a turnover of €243.1 million, a growth of 2.6% compared to the capacity of generating income and development. to 2018, and with an added value of €108.1 million (44.5% of the ordinary revenue). work in the local systems where the Group Therefore, combining as best as possible the INCOME STATEMENT 31.12.2019 31.12.2018 operates, trying to produce and keep the development of the human capital with the Ordinary revenue 243,100,677 236,778,646 maximum of added value, effectively com- development of relations with suppliers/cus- Ebitda 44,996,809 53,564,368 bining all the resources it uses, and devel- tomers and the investments made generates Ebitda % 18.5% 22.6% oping the specificity of local products and a path of constant innovation which supports Ebit 33.039,306 26,429,701 services. thew economic growth of the organization, Ebit % 13.6% 11.2% In particular, the Group believes that its making it solid and sustainable. Financial charges -5,085,209 -4,551,301 fundamental base for its economic devel- Income before non-recurring items 27,954,097 21,878,400 opment is the capacity to create innovation Valuation adjustment to financial assets -6,216 -2,709.390 through an increasingly consolidated rela- Extraordinary income/charges - - tionship with its collaborators who, through Ebt 27,947,881 19,169,010 periods of training and “on the job” exper- Ebt % 11.5% 8.1% imentation, make a significant contribution Taxes of the year 14,985,652 7,216,591 to the generation of new products and the Profit (loss) of the year 12,954,913 11,952,415 improvement of the company’s manufactur- Profit(loss) of third parties 7.316 4 ing capacity. The relationship with the sup- NET INCOME 12,962,229 11,952,419 pliers with whom ALFAPARF GROUP tries NET INCOME % 5.3% 5.0% to establish synergies, which derive from the development of their investments with the ideas and requirements of the Group, thus obtaining new added value from the products and services purchased, is not negligible. Last but not least, attention to investments in technology, both of the tangible type (machinery) and intangible (software), al- lows obtaining a third dimension which 2 The data shown refer to the consolidated perimeter of the Group ALFAPARF GROUP • Report on Sustainability 2019 27
6,64% Remuneration of the Public Administration DISTRIBUTION OF THE ADDED VALUE 2,25% 0,03% 2019 Remuneration of backers Donations The distribution of the added value is the point of contact between the economic profile 27,98% 63,10% and the social profile of the business of ALFAPARF GROUP and allows analyzing how the Remuneration of the personnel Operating costs wealth created is distributed to the whole socio-economic system with which the organiza- tion interacts. RECLASSIFICATION OF THE INCOME STATEMENT 31.12.2019 31.12.2018 Revenue 243,100,677 236,778,646 Other revenue 3,908,062 4,145,802 € 225.581.410 Financial revenue 753,596 1,116,431 ECONOMIC VALUE Total economic value generated DISTRIBUTED by the Group 247,762,335 242,040,879 Operating costs 142,332,900 140,304,309 Remuneration of the personnel 63,118,549 56,344,010 Remuneration of the backers 5,085,209 4,551,301 Remuneration of the Public Administration 14,985,652 7,216,591 External donations 59,100 117,755 Total economic value distributed by the Group 225,581,410 208,533,966 In 2019, the Economic Value Generated, equal to €247.8 million, was mostly distributed Economic value retained by the Group 22,180,925 33,506,913 to the different stakeholders with whom ALFAPARF GROUP comes into contact in carrying out its business, in the respect of the cost-effectiveness of the business and the expectations of its stakeholders. The Economic Value Distributed, equal to € 226 million, represents about 91% of the Eco- nomic Value Generated which, as well as covering the operating costs borne during the year, is used to remunerate the socio-economic system with which the Group interacts, including the employees, the backers and the community, understood as donations made. Lastly, the Economic Value Retained, about 9% of the Economic Value Generated, represents all the financial resources dedicated to the economic growth and to the stability of the equity of the corporate system. 28 ALFAPARF GROUP • Report on Sustainability 2019
SUPPLIERS ALFAPARF GROUP controls the whole value The three-year KISS project (2016-2019) chain directly: from research and innovation has also been implemented, which has led to the production, sale and distribution of its to a great change in the structure and in the products all over the world, and it has an internal processes of the function, identifying operational system which allows identifying the targets, the milestones and the funda- the percentage of expenditure concentrated mental key points which must characterize on local suppliers, as well as the weight and the Group’s Procurement function. volume of the materials purchased. The whole project is based on four main gui- 2016 was a turning point for the procure- delines: three actions and one opportunity. ment division. The Senior Management of ALFAPARF GROUP, having considered the continuous growth of the company and to better face future challenges, decided to create the Global Purchasing Department, which, thanks to a totally dedicated team, ensures a centralized strategic management of procurement, guaranteeing a transparent control, efficiency and constant coordination with the local purchasing offices at the forei- gn branches. ALFAPARF GROUP • Report on Sustainability 2019 29
Actions BUY RIGHT BUY CHEAPER BUY LESS • COMPETITIVE, TRANSPARENT • FRAMEWORK CONTRACTS • LESS CONSUMPTION AND TRACEABLE OFFER WITH SELECTED SUPPLIERS THANKS TO THE BETTER YIELD IN THE PRODUCTION PHASE • ANALYSIS OF THE TCO AND • GROUP PROCUREMENT OF NOT ONLY OF THE PRICE THE RAW MATERIALS WITH BETTER • “MAKE OR BUY” (IN YIELD AND LOWER PRODUCTION SOURCING) • STANDARDIZATION OF THE COSTS PRODUCT • LESS OBSOLESCENCE OF • OPTIMIZATION OF THE RAW MATERIALS QUANTITIES ORDERED Opportunity BEST PRACTICES • IDENTIFICATION OF THE PRACTICES AMONGST THE DIFFERENT SUBSIDIARIES • SHARING AND IMPLEMENTING THE SAME ALL OVER THE WORLD • CONSIDER THE PECULIARITIES OF THE INDIVIDUAL SITUATIONS 30 ALFAPARF GROUP • Bilancio di sostenibilità 2019
Ambito Temi materiali Gli standard Perimetro degli impatti di riferimento Interno Esterno Responsabilità Salute, sicurezza 416-1 Gruppo Clienti di prodotto The e soddisfazione driving force of this initiative was also re- • Suppliers of the Group oriented Fornitori to impro- del cliente Enti e Istituzioni aching the correct Total Cost of Ownership ving and standardizing the processes and Prodotto, packaging (TCO) which has allowed e R&D monitoring, in an 301-1 301-2 Gruppo an increase in qualified Clienti suppliers. Fornitori increasingly effective and efficient way, the With the objective of greater transparency purchase management process, always ke- 417-1 Marketing and traceability Gruppo of the wholeInvestitori purchasing e comunicazione Clienti eping the highest standard of responsabile quality of the process, the Group has modified the purcha- Fornitori products and the precision in deliveries. sing procedure at World level and, Enti e thanks to Istituzioni The main advantages Responsabilità obtained, Consumi energetici thanks to the 302-1 long portal3 , itGruppo has been possible Clienti to auto- the centralization and ambientale the actions underta- 302-4 e idrici mate the management of the orders, Fornitorievalua- 303-1 Collettività ken in recent years, have been: te the performance of the supply chain and, Rifiuti 306-1 Gruppo Clienti • Greater added value obtained by the 306-2 at the same time, have the lifeFornitori cycle of the adoption of the Group’s best practices orders constantly monitored. Collettività (Group benchmark); Biodiversità Thanks to the portal, 304-2 Gruppoit is possible Clientito make e animal testing • Consolidation of expenditure and aggre- comparisons on several levelsFornitori and simula- Collettività gation of volumes, with consequent Emissioni* econo- tions, 305-1 in order to identify Gruppo and select Clienti the best mies of scale (in terms of greater discounts 305-2 suppliers; in addition, for each Fornitori type of order, Collettività linked to greater volumes ordered); the actions and feedback requested from •* Centralized professional skills (extension of each commercial partner il Gruppo ha deciso di rendicontare anche gli aspetti legati alle emissioni nonostante can be defined, know-how) il tema non and sia “contamination” risultato materiale of dall’analisi the skills svolta. such as confirmation of the quantities and to the different branches (Group power); the date of delivery. • Opportunities for synergies between the branches; 3 Portal of communication between the Italian branch and its suppliers. ALFAPARF GROUP • Report on Sustainability 2019 ALFAPARF GROUP • Bilancio di sostenibilità 2018 3111
EXPENDITURE ON LOCAL SUPPLIERS AND BY CATEGORY OF GOODS Although the purchasing function is centralized under the Global Purchasing Department of In 2019, ALFAPARF GROUP had relations with over 2,000 suppliers for a total of over €92 the Italian branch, Group procurement is carried out by favoring, at equal quality, perfor- million of turnover, of which €86 million (93% of the total) with local and national suppliers, mance and price, local and national commercial partners. €4 million (4% of the total) with continental suppliers and €2 million (3% of the total) with international suppliers. ITALIA ARGENTINA BRAZIL MEXICO % of tot. % sul tot. % of tot. % sul tot. % of tot. % sul tot. % of tot. % sul tot. Localization 2019 2018 Localization 2019 2018 Localization 2019 2018 Localization 2019 2018 Local - Lombardy 62,3% 53,7% Local - Argentina 59,2% 97,0% Local - Brasile 94,4% 99,5% Local - Messico 90% 82,1% Italy 31,8% 32,2% Continental 37,1% 3,0% Continental 2,7% 0,3% Continental 1,6% - Continental 5,6% 12,3% Rest of the World 3,7% - Rest of the World 2,9% 0,2% Rest of the World 8,4% 17,9% Rest of the World 0,3% 1,8% 15,7% 0,3% 0,6% 64,5% 20,7% 32,7% 35,6% 24% 44,2% 2,3% 47,8% 10,2% 19,3% 34,5% 24,7% 23% Components, Equipment, Promotional products Promotional products Promotional products Promotional products Packaging Packaging Packaging Packaging Raw materials Raw materials Raw materials Raw materials Other uncoded materials and services Uncoded services and materials Uncoded services and materials Uncoded services and materials 32 ALFAPARF GROUP • Report on Sustainability 2019
SELECTION OF THE SUPPLIERS Ensuring the respect of human rights is a All the commercial partners must have, as 2019 which comprises, on every first con- In addition, preference is given to the pos- very complex and highly topical challen- the priority value of their activity, the respect tact (request of offer) with a new supplier, session of certifications such as ISO 14000 ge; the Italian branch adheres completely of the individual and are obliged to provide two main steps: or similar and being clearly committed in fa- to the Organizational Model 231/2001, a written contract of employment and pay- 1. Sending a pre-qualification questionnai- vor of sustainability, i.e. suppliers who show, adopted on a voluntary basis in 2016, and ment of social security for all employees, to re, containing a series of ethical-social que- as well as technical and operational skills, in particular puts respecting and promoting protect the psycho-physical integrity of their stions, to assess, from as early as the first their sensibility to social and environmental human rights at the center of its activity. collaborators, guarantee decent working contact, the approach to these topics. issues, without generating additional char- This is why the Group fosters and encoura- conditions and safe and healthy workpla- 2. Once the answers to the prequalification ges for the customer. ges commercial relations with partners that ces, in the full respect of the legislation cur- questionnaire have been assessed, there is share the same values of ethical commitment rently in force on providing health services, the evaluation of the economic offer and, and total respect for the local legislation in prevention of injury and accidents in the before proceeding with the first purchase terms of working standards. workplace and protection of the workers. order, a file of qualification must be comple- ALFAPARF GROUP requires the commercial ted with a series of questions of a technical conduct of its suppliers to be compliant with nature which aim at looking closely at the all the laws and contractual conditions appli- financial position of the individual supplier, cable at international, national and local le- the company organization, the certifica- vel, as well as with the standards based on tions they possess, the policies and activities ILO conventions and on the ISO standards existing on sustainable development and on the child labor, safety and anti-corruption. safety. No supplier is taken into consideration un- Only after having positively evaluated the less they comply with the above; in addi- answers is it possible to start a commercial tion, in the contractual phase, all the new relationship with the new supplier. The aim is suppliers must sign the Organizational Mo- to increasingly raise the level of knowledge del according to Legislative Decree 231 of the commercial partners, including from adopted by the Group, comprehensive of the ethical-environmental point of view, plan- the Code of Ethics. ning a contextual increase of projects linked To make the selection of suppliers even more to sustainability in partnership with them. effective, the new procedure of qualifying suppliers came into force towards the end of ALFAPARF GROUP • Report on Sustainability 2019 33
34 ALFAPARF GROUP • Bilancio di sostenibilità 2018 29 ALFAPARF GROUP • Report on Sustainability 2019
INITIATIVES AND PROJECTS 2019 Below are listed the main initiatives pursued This project aims to offer a great opportu- UNDER CONSIGNMENT STOCK tion with suppliers, universities, start-ups and in 2019 by the Global Purchasing Depart- nity of sharing and training for the profes- research centers. Development and choice ment, in collaboration with the different cor- sional and personal improvement of each From 2019, for the raw materials deemed of product through an economic and envi- porate functions and the foreign branches. colleague. strategic, under consignment stock was ac- ronmental evaluation of the Life Cycle Cost. tivated, which allowed obtained a series Concrete solutions of circular economy. YES, WE SHARE GREEN PROJECTS - PACKAGING of advantages both from the commercial - An inter-functional strategy to reformulate point of view but also at environmental lev- the corporate dynamics in green: sustain- From September 2019, every two weeks Following on the “Green yes or not?” pro- el, thanks to the optimization of the logistics ability as corporate responsibility, shared internal meetings are held (using a CISCO ject, in collaboration with the marketing related to the purchasing processes. and fueled by all the functions. Strategies video conference system) between the pur- department, the Purchasing Department has to involve internal customers in reaching the chasing offices of the Italian, Brazilian and completed some activities aimed at pursu- GREEN TRAINING sustainable development goals. Mexican branches, during which important ing the corporate objective of reducing the subjects and best practices are shared. environmental impact of some brands: the In June 2019 a representation of the Pur- CISCO POINT TO POINT A person of reference (Champion) is ap- explanatory leaflets were eliminated, with chasing Office took part in the “Sustainable pointed for each meeting. They may be the consequent reduction of the amount of Procurement Summit ’19”, during which the In 2019, 20 branches all over the world internal or external to the purchase division paper used; the use of recycled aluminum topic of Corporate Social Responsibility was were equipped with a Cisco videoconfer- and they are asked to prepare a presenta- tubes (one supplier already approved and discussed, through the experiences of some ence system. The advantages of the video- tion on a specific subject, considered useful others under approval) and the use of recy- companies. The main topics discussed are conference include better collaboration be- for the other colleagues as well. The subjects cled cardboard boxes were introduced. For shown below: tween teams and a direct sharing of ideas, dealt with can concern initiatives directly the secondary packaging, the weight of the - For a sustainable, transparent and safe exactly as in face-to-face exchanges. related to the purchase function or which, plastic and cardboard was reduced, intro- Supply Chain: purchasing and responsibly By its very nature, the videoconference al- in some way, can have an impact on the ducing the use of recycled paper. managing the supply chain, criteria of eval- lows the teams to take part wherever they procurement activity. From this point of view, In addition, in July 2019, at the Osio Sotto uation for the choice of suppliers and strat- are and this entails a considerable reduction wide space was given to GREEN projects, site, the purchasing department, in collabo- egies to involve them and commit them to of flights and travel and greater closeness with further study on the sector of recycling, ration with two of the Group’s main suppli- green dynamics. and contact with the branches, creating logistics and sustainability. The forthcoming ers, organized a workshop on “Sustainable - The Couple of the future: use of new tech- greater involvement of the participants. appointments, already scheduled, will main- Procurement Packaging” on post-industrial nologies to meet increasingly strict standards ly concern sustainable purchasing projects consumption recycled plastic. of sustainability. A vision that can be imple- and Green messages. mented through a relationship of collabora- ALFAPARF GROUP • Report on Sustainability 2019 35
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