L'Erbolario Impact Report 2023

Impact Report 2023

General introduction

 About us

 Our values

 Our global presence and our performance

 The regenerative path

 L’Erbolario Group's strategy towards Sustainable Development Goals (SDGs)

 Introduction analysis and materiality matrix

Objective 1 – Natural beauty

 Safe and natural products according to green chemistry principles

 Reduce and optimise water consumption in processes and products

 Ethical initiatives and transparent communication to engage customers and stakeholders on sustainability issues

Objective 2 – Good for the planet

 Protect biodiversity, as well as flora and fauna

 Reduce the environmental impact of processes and products

 Environmentally friendly design of the product and packaging throughout the life cycle

Objective 3 – Good for people

 Health, wellbeing and people development in the company

 Valuing and positively integrating diversity

Gaol 4 – Good for the community

 Local area and community commitment

 Stakeholder involvement and engagement for joint impact improvement

Accountability and transparency

 Our BIA score

Annexes

 Methodological note

Letter from the Bergamaschi Family

2023 was a special year for L'Erbolario: indeed, we celebrated our 45th anniversary. This important milestone was not only an opportunity to celebrate with many initiatives for our Customers and Collaborators, but also a time for analysis, reflection and to plan new goals.

first impact report, published precisely in 2023, we traced the stops of our journey from 1978 to today. A journey whose development is based on a precise commitment: to draw the best ingredients from nature, whilst constantly preserving its delicate balance, with the aim of creating and promoting cosmetics recipes with people, animals and the environment in mind. However, we need to do more than take stock of the situation: the analysis of the results achieved so far should in turn serve as a starting point to plan the next steps.

Therefore, this Impact Report is a summary of our analysis and a commitment: year after year, we intend to keep on measuring our performance in order to constantly improve by focusing the four common good objectives in our articles of association as a Benefit Company: Natural beauty, Good for the planet, Good for people, Good for the community.

In presenting this document, we would like to thank all the people who every day work alongside all the companies of the L'Erbolario Group and without whom it would not have been possible to achieve these goals: the 490 Colleagues who every day work with us with professionalism, passion and dedication, our Agents, Consultants, Retailers, Suppliers, citizens of the Community, and all our very loyal Customers.

Daniela

Villa and

Franco Bergamaschi Founders of L'Erbolario

Giulia Bergamaschi and Luigi Bergamaschi

L'Erbolario's second generation

About us

We were founded over 45 years ago with a very specific commitment: to preserve nature and take care of it, to select its best products and turn them into recipes for beauty, whilst constantly striving to give back every gift received.

The embrace between people and nature is symbolic of our choice: it stands for the care for the planet that hosts us and provides us with a wealth of resources to draw on, and it represents a meeting of herbal tradition and cosmetic innovation.

This conception, which we like to call ‘CosmETHics’, is perfectly expressed by the claim ‘Those who embrace nature create beauty’, which we coined on the occasion of our 45th anniversary and which is featured in our communications campaign launched in 2023 and running through 2024 as well.

Our embrace combines herbal tradition and cosmetic innovation to offer quality, effectiveness and safety.

L'Erbolario began as a small artisan herbalist shop. Its founders, Daniela Villa and Franco Bergamaschi, are a young couple who love to spend their spare time searching for medicinal plants in the meadows and fields of area around Lodi and then turn them into lotions, decoctions and infusions by following old family recipes. Indeed, the name L'Erbolario comes from the archaic word erborare, meaning “to go foraging for herbs for study or therapeutic purposes”.

Within a few years, thanks to the word of mouth from our first enthusiastic Clients, what had started as an interest we cultivated in our private lives turned into a successful business, enabling Daniela and Franco to anticipate the boom in the plant-derived cosmetics market, and then to become key players in the years to come.

The small space of the artisan workshop was no longer enough to accommodate a steadily growing business. It became necessary to find a new location to create a wellstructured production workshop that could combine artisan knowledge with modern, advanced technology. The notions acquired over the years by attending herbal medicine courses held by the distinguished “noble fathers” of natural cosmetics – professors Paolo Rovesti,

coined the term “phytocosmetics”, Gianfranco Patri and Gianni Proserpio – became an important guide for the founders of L'Erbolario.

increasingly clear, that is to draw the best ingredients from the plant world to create products that are excellent, safe and effective. Most importantly, line with an ethical vision of cosmetics, based on the principle of making natural beauty available to all and on respect for people, animals and the environment. Indeed, with the formulation

Daniela and Franco rejected the option of animal testing and firmly supported (the Anti-Vivisection League) cosmetic ingredients that fully meet the requirements of the International Standard “Stop Animal Testing” –guaranteed by LAV – signed by L'Erbolario and not to sell their products in countries where animal testing of the finished cosmetic product

As the years went by, L'Erbolario Group kept growing and proved to be a top player on the Italian plant-derived cosmetics market, without ever forgoing its vocation as a 100% Italian-made company.

The only premises in Lodi, within the Adda Sud Park, has a very short supply chain, which ensures maximum control over every processing stage and excellent value for money. The pride and joy of this virtuous chain are the Extracts Lab, where the more than 400 extracts and aromatic distilled waters that make L'Erbolario cosmetics unique are created, and the R&D Lab, where more than

40 new recipes are designed and formulated every year. All proposals undergo rigorous testing to ensure effective, safe and pleasant finished products. The content of at least 7 heavy metals is also monitored to minimize allergy risks and to safeguard even very sensitive skin.

In 2005, its commitment to converting all its farmland to organic farming led L'Erbolario to obtain the certification awarded by the Institute for Ethical and Environmental Certification (ICEA).

The journey was still guided by sustainability-driven choices, such as the creation of a photovoltaic park,

expanded in 2023 to 1677 kWp, and the inauguration in 2012 of the new Logistics Hub. This had no gas-powered plant, which had been replaced by geothermal probes and heat pumps.

Premiata Erboristeria

Artigiana L'Erbolario was established in Lodi’s old town centre in Corso Archinti 11.

1978 1994 2003 2006 2018 1984 1999 2004 2012 2023

L’Erbolario settled in its current location on Viale Milano, within the Adda Sud Park.

We created Iris, our most successful women's range.

The new Extracts Research and Production Lab, the pride and joy of our production chain, was inaugurated.

We set up L’Erbolario’s online shop.

Let's celebrate our first 45 years together!

The production and administrative headquarters of L'Erbolario moved to the banks of the Adda River, in via Nazario Sauro.

Our products are sold and appreciated even in Taiwan, as much as 9,600 km from Lodi!

To L'Erbolario's phytocosmetics, we added phytotherapies from Erbamea, our sister company based in Umbria.

The New Logistics Hub, a rare example of an energy-class B industrial building and the starting point of our products to the world, became operational.

L’Erbolario and L’Erbolario Franchising evolved into a Benefit Company 2021

100% MADE IN ITALY

Our phytocosmetics are 100% made in Italy, in our production site in Lodi immersed in the greenery of the Adda Sud natural park. None of the production stages have been outsourced and our products are made Good Manufacturing Practice guidelines.

EFFICACY AND SAFETY

We offer cosmetics of the highest quality at affordable prices.

Efficacy and safety are guaranteed by strict clinical trials supervised by the University of Pavia.

SELF-PRODUCED PLANT EXTRACTS

In our Extracts Lab we make more than 450 extracts and aromatic distilled waters, starting directly from the best plants and namely their organic version if possible. We therefore autonomously produce the ingredients that go into our cosmetics, which makes them unique.

FRIENDS OF ANIMALS

Because right the very beginning we have fought alongside the Anti-Vivisection League to then obtain a ban on cosmetic testing on animals in 2004.

GOOD FOR THE PLANET

Right since 2002, we chose to have an Environmental Management System, committing ourselves to improving our environmental and energy-saving performance. Since 2005, all the agricultural activities in our botanical garden have been certified as organic by the Institute for Ethical Environmental Certification (ICEA).

ENVIRONMENTALLY SUSTAINABLE PACKAGING

We are always looking for environmentally sustainable packaging: we select recycled plastics or those obtained from renewable sources, such as sugar cane, and use only FSC paper material, supporting the responsible management of forest resources.

7 TESTED METALS

ENERGY FROM RENEWABLE SOURCES

We exclusively use electricity from renewable sources, largely self-generated by our 1677 kWp photovoltaic park.

EXTREMELY SHORT PRODUCTION CHAIN

We have a short, extremely short production chain! Each cosmetic product is formulated, made and packaged in Lodi and from there it is shipped directly to our Clients to optimise costs and transport. We monitor the content of at least 7 heavy metals (nickel, lead, arsenic, cadmium, mercury, antimony and chromium) to minimise allergy risks and safeguard sensitive skin.

BENEFIT COMPANY

Right since 1978 we have been advocates of ethical cosmetics designed around people, animals and the environment. In 2021, we became a Benefit Company, thereby confirming our commitment to directing our activities toward an increasingly sustainable, inclusive and transparent development model.

New milestones have marked the unceasing growth of the brand, which is increasingly known in Italy and around the world with a catalogue of more than 600 items, including scented and treatment lines, sunscreens, products for children and scented diffusers. In 2002 the company obtained the ISO 14001 certification, the most acclaimed international standard for environmental management systems.

In 2004 Franco decided to combine L'Erbolario's decades of experience in the phytocosmetic field with the skills of Fausto Mearelli, an authoritative specialist in the phytotherapeutic sector: this partnership led to Erbamea, our sister company located in Umbria, in the green heart of Italy. The company specialises in medicinal plants and food supplements, as well as being L'Erbolario's supplier of excellence for plant-based raw materials. Erbamea immediately positioned itself as an innovative company in the phytotherapy world and was able to combine the value of tradition with the most established scientific methods. It currently has more than 650 items in its price list: food supplements, medicinal herbs, foods (herbal teas, candies) and cosmetics. A total of 94% of its products are suitable for vegans and 30% are certified as organic. The 351 food-grade references are 100% gluten-free and 99% lactose-free.

L'Erbolario Franchising was also established in 2004. This is the network of stores with a sign dedicated to the sale of L'Erbolario products and Erbamea phytotherapics. Designed with an exclusive concept, the chain's stores are an unmistakable reference for our Customers. Starting with the first store in Sassari, the network has expanded throughout Italy and abroad, with currently about 190 domestic and international stores.

The entry into the company of Daniela and Franco's children, Giulia and Luigi Bergamaschi, brought new life to the company's development and innovation projects, again firmly and entirely in line with the initial values and philosophy. In this perspective of continuity, in 2021 L'Erbolario and L'Erbolario Franchising evolved into Benefit Companies, confirming –also in their articles of association – their ethical commitment to people, animals and the environment shown in more than 45 years of business. In 2023 L'Erbolario celebrated its 45th anniversary.

We operate in 45 countries worldwide ( )

Retailers in Italy 4800

L’Erbolario stores 190

We decided to include in our legal status as a Benefit Corporation the three fundamental principles that have always guided our approach to business, namely respect for people, animals and the environment.

Italian law 208/2015 for Benefit Companies was introduced in Italy in 2016 and reflects a more integrated vision of sustainability, as the purpose of profit generation intersects with those of generating a positive impact on society and the environment, through a statutory commitment to create value not only for shareholders, but also for all stakeholders.

Our commitment as a Benefit Society also involves transparency obligations, including the appointment of an “Impact Officer” responsible for monitoring and tracking actions designed to pursue these objectives. The statutory commitments are continuously supported by impact measurement, which is carried out according to the international third-party B Impact Assessment (BIA) standard developed by the not-for-profit company B Lab. The standard is designed to provide a holistic measurement of the company's sustainability performance in the areas of governance, workers, community, environment and customers.

The regenerative path

L'Erbolario and L'Erbolario Franchising have been using this measurement tool since 2021, though in 2022 the score was updated based on the actual transition to its legal status of a Benefit Company. The firm its founding documents and adopted a legal entity that requires all stakeholders to be taken into account in the decision-making process. We illustrated our impact and measurement in our 2021-22 Impact Report.

This year we extended the measurement to the entire Group, again by using the BIA tool in order to monitor our progress toward our impact goals. Moreover, we have added strategic considerations for ''future development, thanks to the outcome of the materiality analysis process: the results are reported in the “Accountability and Transparency” chapter.

Our Impact Report became a key tool to communicate commitments, goals and results with our stakeholders through a regular report on our progress toward a regeneration and value creation path for society and the biosphere.

L’Erbolario Group's strategy towards Sustainable Development Goals

The Sustainable Development Goals are 17 goals defined by the Global Agenda for Sustainable Development (Agenda 2030), signed in 2015 by 193 United Nations countries, including Italy. Originally created as a guide for institutions, today the Sustainable Development Goals (SDGs) are also used by many companies to include the social and environmental impacts of their businesses in a shared framework. Through them, any kind of company can clearly indicate the specific global challenges it is focusing on as a positive and regenerative force.

To optimise its impact and better direct the actions of the L'Erbolario Group, we have identified the priority SDGs by looking at the areas where we have more influence in relation to our business strategy, our skills and the specific common benefit purposes we have adopted as a Benefit Company.

At a group level, L'Erbolario and L'Erbolario Franchising share the same values and vocation, but because their business models and business purposes differ, where necessary there are some slight differences for L'Erbolario Franchising.

OBJECTIVE 1

Natural beauty

Making beauty a quality commodity accessible to all

L’ERBOLARIO

Researching and making products that meet customers' needs with the aim of creating an affordable product offer by ensuring the highest quality in natural cosmetics and the highest standards in terms of safety and functionality. Transparent communication and ethical choices related to the effectiveness of natural formulas and care with the utmost attention to each customer's experience, which has always been the guiding principle underlying our company’s business.

L’ERBOLARIO Franchising

Distributing products that meet customers' needs with the aim of creating an affordable product offer by ensuring the highest quality in natural cosmetics and the highest standards in terms of safety and functionality. Transparent communication and ethical choices related to the effectiveness of natural formulas and care with the utmost attention to each customer's experience, which has always been the guiding principle underlying our company’s business.

GOAL 3

RELEVANT SDGs

In developing our formulas, we are inspired by the concept of global well-being, that is, involving people, animals and the planet. Our contribution to Goal 3 is made stronger by our commitment to create GMO- and microplastic-free products, monitoring through continuous testing the heavy metal content, which in our products is below legal limits.

GOAL 14

Our sunscreens with a protective factor do not contain Octinoxate and Oxybenzone filters, which are banned by the Hawaii Coral Treaty as they are considered to be the main culprits of coral bleaching.

OBJECTIVE 2

Good for the planet

Developing products by promoting the preservation and regeneration of fauna and flora

L’ERBOLARIO

Research and production of products derived from plant-based raw materials, with the aim of reducing the use of chemicals and promoting a culture involving a responsible use of resources, with a commitment to reduce the impact of our products throughout their life cycle and to study and promote virtuous solutions aimed at maximising the company's positive impact. Promote the protection and regeneration of biodiversity by caring for a cultivating native plant species, thereby promoting a natural lifestyle that captures and protects the beauty of our planet. Commitment to promote a gradual evolution of our business and operating model towards an economy with no climate-altering gases, in line with European climate neutrality targets and national green transition targets.

L’ERBOLARIO Franchising

Commitment to convey messages aimed at generating a more ethical and responsible culture wherever we operate. Namely, promoting a natural lifestyle that captures and protects the beauty of our planet. Distribution of products derived from plant-base raw materials through a network of stores that, in line with the messages conveyed, aims at minimising the environmental impact of its shops.

GOAL 7

We are committed to promoting the use and availability of renewable energy through self-generation of photovoltaic energy, power supply through geothermal energy and the installation of electric vehicle charging points, as well as through the various energy efficiency actions.

GOAL 9

We pursue this goal through the various projects we implemented over the years in the area of production system efficiency, both in terms of energy (photovoltaic and geothermal power supply) and water (osmosis and recirculation systems), as well as automation and improved ergonomics for packaging lines.

GOAL 12

As well as optimising energy and water production, we contribute directly to this goal by designing alternative packaging options (e.g. Green PE and Green PET derived from sugar cane), using recycled materials (R-PET), as well as experimenting with refills and waterless products.

GOAL 13

With its participation in CO2alizione for Italy, the initiative aimed at accelerating the transition of companies towards climate neutrality, L'Erbolario has joined 89 companies that have decided to act together to institutionalise their climate action in their articles of association with the aim of creating the necessary conditions to tackle the climate crisis and contribute to achieving European targets. In doing so, we have given a clear mandate to current and future management to pursue, in addition to profit, the evolution towards a zero-emission economy. In this sense, our activity contributes directly to Goal 13.

GOAL 15

By enhancing our ancestral bond with nature, we have settled in the Adda Sud Natural Park where we manage a 20-hectare park. We contribute to promoting biodiversity through the recovery and protection of local flora and various activities to protect the land, banks and irrigation ditches from erosion. In 2023 we reconfirmed our commitment by adhering to the Park’s Trademark and we will continue along this path with various initiatives in 2024 as well, thus continuing to contribute to Goal 15.

Good for people

Promoting well-being and a serene, pleasant and stimulating working environment with friendly and transparent relations

L’ERBOLARIO and L’ERBOLARIO Franchising

Promotion of an inclusive and safe working environment, suitable for professional and personal development, with a commitment to generate a growing awareness of social justice issues by valuing women's work and to maintain a cohesive internal community determined to drive us in a common and shared direction aimed at social and environmental regeneration, as well as economic well-being.

GOAL 8

We have always strived to create and maintain a working environment based on building positive and healthy relationships with an approach more typical of a family than a company. We pay attention to creating the conditions in which each employee can grow and achieve their full potential and personal satisfaction, as well as actively contribute to the achievement of the company's common benefit objectives. Namely, we contribute directly to supporting everyone's growth through training and the promotion of inclusive practices, a healthy and safe working environment for all workers, particularly women.

OBJECTIVE 4

Good for the community

Generate value and a positive impact for the local community

L’ERBOLARIO

Commitment to build a prosperous and responsible ecosystem through close and constant interaction with our stakeholders. Support of local, national and international bodies, associations and groups of volunteers. Commitment to foster the local economy by promoting the richness of the Lodi area, where L'Erbolario was founded, by enhancing its natural resources in order to allow everyone to experience the beauty of nature and the importance of preserving it.

L’ERBOLARIO Franchising

Commitment to build a prosperous and responsible ecosystem through close and constant interaction with our stakeholders. Promotion of the local economy through the creation of job opportunities throughout Italy, fostering social justice and women's work. Commitment to be ambassadors for the protection of natural resources so as to influence the communities where the company operates to be more environmentally aware and allow everyone to experience the beauty of nature and the importance of preserving it.

GOAL 8

Our business has always contributed to the development of the area where we operate. Indeed, we refuse to relocate production activities in order to contribute to the prosperity of the local area. Our commitment aims to leave a positive mark on our local area and our community by creating relationships and partnerships with organisations and associations, donations of both money and products, and funding to organise cultural activities. As a result, our business contributes directly to the creation of decent jobs and conditions to try to separate economic growth from environmental degradation.

GOAL 17

Aware of the need to bring in everyone's contribution to solve the big challenges we face, we are committed to promoting and supporting the activities of stakeholders in our communities to amplify our positive impact. We have a strong bond with our local area and we invest to support the creation of shared value in the community in which we operate in a broader sense, particularly in the area around Lodi, in Italy and worldwide. This is why we consistently promote and support various social responsibility initiatives in partnership with associations, organisations of volunteers and local, national and international philanthropic activities.

The material themes identified by L'Erbolario Group are:

L’ERBOLARIO

GROUP TOPIC

Safe and natural products according to green chemistry principles

Ethical initiatives and transparent communication to engage customers and stakeholders on sustainability issues

Reduce and optimise water consumption in processes and products

Environmentally friendly design of the product and packaging throughout the life cycle

DESCRIPTION

Maximisation of product quality, safety and efficacy levels by checking raw materials and with rigorous product testing; selection of raw materials that are plant-derived and therefore by their very nature renewable; we only use solvents that are safe for the environment

Attention to relationships and constant and transparent communication with customers, employees, suppliers, involving them in campaigns and initiatives focused on respect for people, animals and the environment

Measure water consumption and ensure it is used efficiently in manufacturing stages; monitor through an Environmental Management System and strive for new ambitious targets

Products designed according to sustainability principles, e.g. by choosing natural and plant-derived raw materials, developing new cosmetic products (such as waterless ones), choosing single-material, renewable, recycled, refillable packaging

Reduce the environmental impact of processes and products

Protect biodiversity, as well as flora and fauna

Health, wellbeing and people development in the company

Measurement and reduction of the environmental impact of processes and products, striving to protect natural resources and reduce the emissions of production processes through efficiency and the use of renewable energy sources, monitoring through Environmental Management System and a commitment to continually strive for new ambitious goals

Use of plant-based raw materials and no GMOs or animal testing; selection of reef-friendly sunscreens; commitment to the protection of biodiversity in the company's neighbouring areas

Promotion of a safe, healthy, serene, pleasant and stimulating working environment with friendly relations between people through the professional and personal development of employees through training programmes

Valuing and positively integrating diversity

Stakeholder involvement and engagement for joint impact improvement

Local area and community commitment

Promotion of an inclusive working environment; commitment to generate increasing awareness of equality, equity, inclusion and social justice issues

Interaction, engagement and stakeholder support to build a prosperous and responsible ecosystem throughout the value chain

Support and collaboration with local, national and international organisations and associations to generate a positive impact on the community

Stakeholder demands were cross-referenced with those of the company: the results are shown in the materiality matrix here to the side. The resulting four priority themes are featured at the top right and relate to both the production of natural and safe products and the environmental impact of the entire manufacturing process. There is also a theme related to care for our people and our working environment, as well as a governance theme related to ethical and transparent communication vis-a-vis our stakeholders through open and constant interaction.

These priorities are in line with the commitments we undertook in relation to the objectives in our articles of association and will guide our sustainable development plan in coming years.

Relevance for Stakeholders

Relevance for L’Erbolario

OBJECTIVE 1

Natural beauty

_Safe and natural products according to green chemistry principles.

_Reduce and optimise water consumption in processes and products.

_Ethical initiatives and transparent communication to engage customers and stakeholders

Safe and natural products according to green chemistry principles

In our lab, we select only the best ingredients to formulate excellent, effective and safe cosmEthics for your skin.

We have always strived to draw on plants’ best virtues to create effective and efficient products.

Our products’ performance depends on a number of factors: from the selection of excellent raw materials to the unique plant-based active ingredients in our extracts, along with the utmost care and dedication at every development and manufacturing stage of our phytocosmetics. The raw materials characterising our products are derived from plants, flowers and fruits that are strictly 100% non-GMO.

In our botanical garden, we grow organic herbs that are compatible with our climate zone (mint, rosemary, sage, lavender, wormwood, but also fruit, vegetables and flower), which we can use to prepare extracts and freshly distilled waters.

This way, we retain a very short supply chain, “from field to pot”, with almost no distance between the extracts manufacturing department and the manufacturing and packaging departments. In selecting raw materials, we also give priority to the extensive list of medicinal herbs available from Erbamea, our supplier of choice.

This is why our company philosophy is strictly based on a “Made in Italy” policy, which is reflected in a very short supply chain, to guarantee cosmetics entirely formulated and made in the area around Lodi, without ever relocating any manufacturing or shipping stage to third countries.

Our Extracts Laboratory researches, develops and makes more than 450 extracts and aromatic distilled waters with processes in which it employs eudermic solvents such as water, plant-derived glycerine (preferably certified organic) and organic sunflower oil.

Plant-based extracts are the strength of our cosmEthics.

We make them in our lab, the pride and joy of our very short supply chain.

”

From formulation to finished product, check after check, we make sure your skin is safe.

Incoming raw materials are first analysed in our in-house quality control laboratories to ensure maximum product safety. All the necessary quality parameters are controlled in-house by using the most advanced analytical techniques: from when the raw material arrives to the finished product, without overlooking any stage of the manufacturing process. This allows us to accurately monitor and take action at any time if needed. To minimise allergy risks and preserve even the most sensitive skin, we monitor the content of 7 heavy metals (nickel, chromium, cadmium, lead, mercury, arsenic, antimony) of each production batch. In 2023, we extended the analysis to an additional element – cobalt – thanks to the purchase and installation of a new heavy metal analysis machine. All the plants we use are tested according to our rigorous analytical protocols to ensure they are free of pesticides (testing of over 300 types) and heavy metals above regulatory limits and to ensure microbiological compliance. The product stability, tolerability and efficacy are tested by our R&D Lab, which works with the Department of Internal Medicine and Medical Therapy at the University of Pavia. In order to verify tolerability and efficacy, each new product undergoes an extensive protocol of both in-vitro and in-vivo testing on a significant panel of healthy volunteers before being released onto the market. This enables us to gather information and considerations to rigorously validate the various performance claims associated with individual products and ensure correct and verified communication.

THE VIDEO

We constantly seek solutions that provide the best guarantees and work to constantly optimise our Research & Development and Extracts Research & Production processes to promote the development of new sustainable cosmetic formulas. In this sense, we are working to increasingly expand our range of waterless solutions, aiming for example at solid products with a very low water content to reduce their environmental impact in relation to the formulation, packaging and transport. Cosmetic products with reduced water consumption lend themselves to the use of packaging with more sustainable materials, such as simple cardboard instead of plastic. Lastly, by reducing the water content at the formulation stage we reduce the product and packaging volumes and weight, as well as limiting emissions associated with transport.

In 2023, we launched these new solid cosmetics: the three shampoos of the Eco-Routine Perfect Hair range, the Hyaluronic Acid Face and Beard Cleanser for Him and the Night in Tangiers solid perfume. In total, we have 98 waterless or low water content cosmetics in our catalogue to cover different cleansing and care needs for skin and hair, including oils and solid soaps that are waterless by nature.

98 waterless or low water content cosmetics to cater for different skin and hair cleansing and care needs

Ethical initiatives and transparent communication to engage customers and stakeholders on sustainability issues

L'Erbolario is not just a phytocosmetics brand. It is a set of values that are constantly conveyed on our product packaging and all our communication channels: Customers have always been at the centre of these values.

L'Erbolario products can be purchased in Italy in the 174 L'Erbolario shops, in one of the 4800 stores of

its physical retailers (herbalist shops, pharmacies and over-the-counter pharmacies) and, from 2018, also on our online shop www.erbolario.com, which has its own in-house logistics.

Our cosmetics can be purchased abroad in thousands of sales outlets in around 40 countries.

We have always relied on an exclusively in-house Customer Service team that works closely with all company departments.

To strengthen the quality relationship with our customers, we currently offer two loyalty programmes: the L'Erbolario loyalty programme, which has more than one million customers and only applies to L'Erbolario shops; the L'Erbolario Club loyalty programme, available on our website, which involves products that can be purchased through any channel and offers many benefits and services, including competitions, discount vouchers, a birthday gift and a unique catalogue of prizes.

As well as updating our site to improve its user experience, over the years we launched several advanced services to improve the relationship with our customers and the service offered, such as the option of reserving or purchasing a product online, which can then be picked up in a store or the option of paying in instalments with no interest fees with Scalapay.

In November 2021, we launched a series of live events on our website to present new products or discuss specific topics, with the aim of promoting our cosmetics in the best possible way and actively engage our Customers. During these live events, our beauty consultant describes the products and their ingredients, sustainability features, gives tips on how to use them, explains their benefits and results, and answers customers' questions live. Those who are unable to follow the live event can do so at any time by going to the dedicated section on our website. Given the great success, we decided to hold them on a monthly basis and put together 11 live shows in 2022 for a total of 3,907 viewing hours and 29,800 visitors. In 2023 we launched 13 live shows

for a total of 5,350 viewing hours and 73,100 visitors. The goal for 2024 is to continue with this activity while maintaining the one live show per month.

in 2023 we launched 13 lives for a total of 5,350 viewing hours and 73,100 visitors

Grazie di cuore!

Keeping the quality of the in-store shopping experience high has always been one of

That is why we devote the utmost attention and care to what we believe are fundamental customers in our shops

Inquadra il QR code e scopri di più

In over 45 years of business, through our stores and, from 2018, also with the online store, we have built a close relationship based on trust with our users – so much so that for the eighth year running, by the German Institute of Quality & Finance and La Repubblica A&F with the Seal of Quality, which proclaimed us for 2024.

This prestigious award is the result of the study carried out by the German Institute for Quality & Finance on the service received, which also includes the relationship with customers and their purchasing experience, through more than 358,000 assessments of

Best 2024 Brand in the fourth edition of the survey promoted by the magazine Largo Consumo, supported by the retail community and by trade associations and assessing the quality of the experience

As well as being awarded as Overall Winner, we also won the title of 2024 Best Retailer in the Herbalist Shops category and Best non-food customer relationship. The study was conducted by Ipsos, which selected 124 among the most relevant national brands and carried out 6,000 interviews to offer an in-depth analysis on customer experience aspects with a representative sample of the Italian population by geographic area, gender and age. To carry out the survey, more than 90 parameters of interest were assessed and collected in five macro-categories: Product offer, Store, Service, Sales personnel and Customer experience.

Plus, we received three awards as part of the 16th edition of Retailer of the Year, a research project supported by hundreds of retail brands that features the most extensive consumer satisfaction survey in relation to favourite shops. We were awarded as Overall Winner as part of Retailer of the Year for the fourth time; Winner of Retailer of the Year in the Herbalist Shop & Wellness category for the seventh time; Winner of Online Retailer of the Year in the Herbalist Shop & Wellness category for the fourth time.

VINCITORE ASSOLUTO

We constantly monitor the Customer focus and purchasing experience in our stores. We carry out a four-monthly measurement of the quality provided in each individual shop with the help of an external international body, which carries out independent and anonymous in-store audits.

In total, we provided for 3 audits per year and 500 audits in total, focusing on any situations involving non-compliance with the service standard we want to provide to our customers. In relation to the results of this questionnaire, L'Erbolario Franchising achieves a level of excellence between 90-95%, a result we constantly strive to maintain.

A further means of monitoring our stores is provided by our network co-ordination staff, who are responsible for on-site verification of the activities of all shops in the chain, recording quantitative elements on personnel and site compliance, which are then reported on an online platform.

2023 goals update and achievement

Area: RAW MATERIALS AND PRODUCTS

No GMOs Maintain 100% no GMOs % of non-GMO raw materials 100% achieved

LAV (Anti-Vivisection League)

Maintain 100% of LAV-certified products % of LAV products 100% achieved

Reef-friendly sunscreens

Maintain 100% of reef-friendly sunscreens % of reef-friendly sunscreens

Waterless

Launch of at least 3 new waterless products and related marketing # waterless products

Extracts and distilled waters

Increase in the number of extracts and distilled waters produced in-house correlated with an increase in product ranges # extracts and distilled waters 100% achieved

Products for sensitive skin

Increased product safety for sensitive skin: extended analysis for an additional element, cobalt, thanks to the inclusion of a new heavy metal analysis machine

Inclusion of an analysis on an additional metal On/Off

Area: RELATIONSHIP WITH CUSTOMERS

SCOPE 2023 GOALS KPI

Feedback monitoring

Quality of service provided

Launch of a study on the option of: 1) implementing a feedback system on the assistance provided, 2) activating an instant chat, 3 integrating the Customer Service system with the main social media platforms. By 2023, we plan to complete the analysis and launch point 1)

Launch of feedback monitoring on the assistance provided by our Customer Service On/ Off Completion of analysis and evaluation of new potential implementations On/Off

STATUS SDGs

Area: AWARDS

Loyalty programmes

1 - 100% achieved

The other targets are included in the 2024 Targets table

Maintain the current Customer Service performance level:customer service response time of about 8-10 hours - maintain the transmission of 2 newsletters per week (8/10 per month) to users - maintain the publication of all product reviews Customer service response time # users reached via newsletter # reviews received 100% achieved

Combination of loyalty programmes in an omnichannel perspective and further consolidation of the quality relationship we have with our Customers. As a result, there will also be a paper dematerialisation of privacy policy consents, which will enable us to save on printed paper.

Single loyalty programme On/Off

Amount of paper saved

SCOPE 2023 GOALS

Overall Winner in the Retailer of the Year and Online Retailer of the Year categories and winner of the Physical and Online Retailer of the Year in the Herbalist Shop & Wellness category and winner of the German Institute of Quality and Finance award

Partially achieved* 100% achieved

Option of paying with Scalapay

Monitoring and checks

Expand the option of paying with Scalapay to customers who buy in our branded shops. This is a payment method that enables customers to defer instalments without paying any interest

New service offer On/Off 100% achieved

Four-monthly measurement of the quality provided within each individual shop by an external body with results that place L'Erbolario Franchising at 95-100%, i.e. within a level of excellence

% of the level of service quality excellence Partially achieved**

* The project to merge loyalty programmes with an omnichannel perspective is currently underway. The implementation is currently suspended due to delays related to the analysis of requirements and the timeframe to solve them. At the moment, the project is estimated to be completed by 2025.

** The level of excellence in 2023 was between 90-95% due to certain contingencies that led to a slight drop in the level of service in the second measurement wave, which lowered the annual average.

Area: RELATIONSHIP WITH CUSTOMERS

Area: AWARDS

SCOPE 2023 GOALS

Quality of service provided

Feedback monitoring

KPI SDGs

Promotion of 2 weekly newsletters inside which newsletters on sustainability and the company's brand values will also be added, and implementation of monitoring indicators for the newsletters # newsletters promoted/year # users reached through the newsletters

Launch a study on the option of activating an instant chat and integrating our Customer Service system with the main social media platforms. Study launch On/Off

Website optimisation and maintenance Analysis and study to optimise the website Study launch On/Off

Website evolution Collection of requirements for new website developments Study launch On/Off

ErboLIVE project

One live per month and assessment of monitoring indicators # lives/year

Monitoring and checks

Four-monthly measurement of the quality provided within each individual shop by an external body with results that place L'Erbolario Franchising at 90-95%, i.e. within a level of excellence

% of the level of service quality excellence SCOPE

Maintain the same number of awards of the previous year, both in relation to service and to the different categories of the various awards (Retailer of the Year, Best Retailer, Italy's Best company in the Natural Cosmetics Service sector)

Awards On/Off

OBJECTIVE 2

Good for the planet

}_Environmentally friendly design of the product and packaging throughout the life cycle

°Reduce the environmental impact of processes and products

_Protect biodiversity, as well as flora and fauna

_Reduce and optimise water consumption in processes and products

“

” WATCH THE VIDEO Nature is our home: we grow flowers, trees and shrubs in our large park and take care of the animals that live in it.

The concept of sustainable development is a key ethical principle on which the second objective of our work is based: the responsibility to preserve a healthy and balanced environment for future generations.

With this in mind, the constant search for new ways to reduce the impact of our manufacturing processes and products is a priority for us.

We are also committed to protecting the natural areas in which we operate and we intend to contribute to the achievement of the climate neutrality goals set by the European Union for 2050 to meet the current climate emergency challenge.

Protect biodiversity, as well as flora and fauna

Located within the Adda Sud Natural Park, L'Erbolario's production site now occupies a green area of about 200,000 square metres and is home to about 30,000 trees, shrubs and herbaceous plants. The area resembles a nature reserve and the entire perimeter has been surrounded by hedges that act, together with all the existing greenery, as true ecological corridors useful for the area's typical fauna (squirrels, foxes, birds of prey, roe deer, badgers, etc.).

This choice has enabled the company to maintain a direct contact with the local area and its biodiversity, and has also been once again confirmed by its adhesion to the Adda Sud Park Trademark, designed to promote the area around Lodi, so that the entire Park area becomes an added value for companies that want to be part of it.

Since 2005, all agricultural activities in our botanical garden have been certified organic by the Environmental Ethics Certification Institute (ICEA), except for a small ornamental part of the garden, which is managed with integrated farming techniques.

To take care of the lawn, we also follow the ECOprato turf maintenance method, certified by the CSI CERT external body, which aims at reducing environmental impact and increasing biodiversity. We also apply various water preservation practices to optimise water consumption: sprinkler irrigation for ornamental lawns, drip irrigation for permanent lawns and drip irrigation for orchards, ornamental beds and tall trees.

Over the course of 2023, we planted 150 new specimens of trees, shrubs and perennials within the L'Erbolario Park, which are necessary to maintain the balance and health of the native species and to keep protecting, increasing biodiversity and enhancing the beauty of the local area. We have also started assessing activities that can be undertaken within the L'Erbolario Park to protect and increase biodiversity:

- The project of cutting certain portions of the lawn only once a year, in early spring, was successfully implemented to encourage the development of herbaceous species with flowering attractive to pollinating insects and the attainment of maturity for seed-producing species valued by granivorous birds.

- we started the project of converting the ornamental lawn of about 5000 square metres at our Logistics Centre into a flower meadow by planting species attractive to pollinators, also to be mowed once a year. The aim is to complete the project in 2024, with the installation of some nests for honey bees (Apis mellifera) alongside this activity.

- we have launched a study to assess the possibility of placing some nesting boxes for small birds, in particular titmice; we plan to place them in 2024.

- we began an analysis of the fountains in place on an area of approximately 16 hectares within the Group's property and adjacent to the plant, detecting the presence of the Knipowitschia punctatissima or Orsinogobius punctatissimus fountain fish species, at the risk of extinction and endemic to Northern Italy.

In 2024, we intend to start a project to revitalise the area and restore the fountains to protect this fish species and to attract amphibians and migratory birds.

“ ” WATCH THE VIDEO

We will take you on a journey of discovery through our wonderful garden, a green biodiversity oasis immersed in the Adda Sud Park.

Reduce the environmental impact of processes and products

Efficiency of manufacturing processes

Right since our inception, we have used a pro-active approach to reduce the effect our manufacturing facilities have on the environment. This approach involves optimising processes to maximise production yields, ensure a reduction in energy and resource consumption and increase the use of renewable energy sources to operate the facilities. Our commitment to minimise the environmental impact of our activities is also tangibly proven by our ISO 14001 certification, which we obtained in 2002.

The production site and the logistics centre are 100% powered by energy from renewable sources, partly self-produced and partly purchased with a guarantee of origin. Furthermore, the energy purchased is completely clean: in 2023, we offset the residual, albeit minimal, impacts associated with the production and distribution of renewable electricity, totalling 566 tonnes of CO2 by contributing to the following projects: Engenheiro Ernesto Jorge Dreher and Engenheiro Henrique Kotzian SHPs VCS Project (JUN1120) in Brazil, reducing CO2 emissions into the atmosphere (energy efficiency). The 2 projects involve the construction of new reservoirs needed to generate electricity through the use of small hydroelectric power plants (SHP) that harness hydropower, a renewable energy source. These projects are an environmentally friendly alternative to traditional heat generation from fossil fuels.

In 2023, we expanded our photovoltaic park, increasing its capacity from 977 to 1677 kWp*. This will enable us, under average weather conditions, to avoid the emission of over 800,000 kg of CO2 every year, the equivalent of a forest of 6000 trees**.

Moreover, thanks to the presence of native trees, shrubs and grasses, we absorb 142,160 tonnes of CO2 per year in our park (Pennati, 2009).

The Logistics Centre was designed in 2010 by applying the best energy efficiency innovations available at the time: rather than methane gas, we employ a “hot and cold” manufacturing system via a power station with open-circuit geothermal heat pumps, which allow for higher energy efficiency than traditional systems. The free cooling system for the areas served by the radiant panels exploits the low temperature of the groundwater coming from the three sampling wells during the summer season, further limiting consumption.

We also employ various technological efficiency solutions at our Lodi site to optimise drinking water consumption: in the Logistics Centre we reuse the water recovered from the heating/cooling plant for dual water and irrigation, and we collect part of the rainwater for irrigation purposes. In the production site, we recover waste water from the osmosis plant for vacuum production by means of liquid ring pumps.

All the solutions we adopt at the manufacturing and distribution stages aim at minimising our carbon footprint

in order to contribute to the progressive evolution of our business model towards a carbon-neutral economy, in line with European climate neutrality targets and national green transition targets. That is why, at the beginning of 2022 we joined CO2alizione Italia, a movement of more than 89 Italian companies from different business sectors that have chosen to integrate the goal of climate neutrality into their articles of association to create the necessary conditions to reach the climate neutrality target set by the European Union for 2050.

In 2023, CO2alizione launched an innovative collaboration platform for participating companies to promote the exchange of experiences and the creation of joint solutions to reduce carbon emissions. With a cycle of 10 meetings focused on 6 main areas – climate reporting, offsetting, green logistics and packaging – companies had the opportunity to share best practices, successes and challenges. The programme included webinars, hands-on workshops and the participation of external experts, thereby creating a rich source of knowledge now accessible on CO2alizione’s online platform. This virtual space acts as an essential hub for member companies, offering the chance to consult shared materials and actively contribute to the creation of new tools and processes for a more sustainable future.

*Source: Provisions on the regulation for the energy efficiency of buildings and the related energy performance certificate (Ordinary Series No. 12 of 20 March 2017).

**Source: CNR of Bologna (2017 data).

We carry out various projects with our franchise shops to minimise the environmental impact of the stores and promote a culture of sustainability.

In 2023, we confirmed our adherence to the “We are open for energy saving” campaign promoted by Confimprese, under the aegis of the Italian Ministry of Green Transition: keeping shop doors closed in order to save on energy consumption.

Over the years, we have adopted various energy-efficient solutions for individual outlets, such as LED revamping and the optimisation of air conditioning systems.

From top to bottom, our company is designed to be sustainable and powered by renewable energy.

Plant-derived raw materials and formulation choices

In our formulas, we have always chose to use of plant-derived raw materials, which are therefore renewable by their very nature. We currently use 95.7% (by weight out of the total volume of ingredients used in 2023) of naturally derived/vegetal ingredients, while the remaining percentage of ingredients ensures a stable and pleasant product. For our formulas, we have decided to stick to a very stringent set of guidelines that strictly consider the safety and environmental impact of ingredients. This means we decide to select only GMO-free ingredients and not to use a long list of ingredients, including silicones, parabens, sulphated surfactants, chlorinated compounds and nanoparticles.

We also choose not to use Octinoxate and Oxybenzone filters, which are banned by the Hawaii Corals Treaty, as they are considered to be among the main culprits of coral bleaching due to human activities.

) 95.7% of naturally derived/vegetable ingredients

We adhere to the “Stop Animal Testing” international standard, drawn up and endorsed by the most important animal welfare associations in Europe and the United States. According to the standard, adhering companies must undertake not to use raw materials that have been tested, even for non-cosmetic purposes.

Environmentally friendly design of the product and packaging throughout the life cycle

When we conceive a new product, our research cannot merely stop at its formulation, but also needs to consider the shape and container in which it will be presented. Over the years, we have carefully selected environmentally friendly packaging suitable to protect our products and we are constantly looking for innovative solutions to minimise our impact.

This is why in 2023 we launched 71 new cosmetic products on the market and we decided to reduce the packaging of seven of them. Indeed, we did away with

the paper cases for the Hyaluronic Acid Shaving Foam for Him and the three conditioners of the Eco-Routine Perfect Hair range, which are in RPET bottles.

We also completely eliminated plastic packaging and only used paper cases for the three Solid Shampoos of the Eco-Routine for Perfect Hair range. Launched in early summer 2023, this collection is designed for those who want a simple, practical and environmentally friendly cleansing and treatment routine, and consists of three pairs of Solid Shampoos and Spray Conditioners: for dry hair,

for oily hair or for frequent use. These cosmetics contain up to 98% ingredients of natural origin and are formulated with plant extracts made in our own extraction laboratory. In addition to minimal packaging, they are designed with a view of reducing water consumption: Indeed, our Solid Shampoos contain 70% less water than a liquid shampoo, while our Spray Conditioners are rinse-free.

To further reduce the environmental impact of our products, we have chosen to only use paper certified according to Forest Stewardship Council® standards for all our paper products (packaging, calendars, agendas, brochures, leaflets, catalogues, etc.).

For the packaging of our cosmetic ranges, we prefer materials that have a lower impact than conventional ones: for example, for the majority of the cream tubes we use green PE deriving from bioethanol from sugar cane and for the foam bottles we use green PET, 30% of which is obtained from the same renewable source, or R-PET, derived from the regeneration of post-consumer plastic bottles. Moreover, some of the recycled polyethylene used in some ranges is OWP® (Ocean Waste Plastic) certified: this is a project to recover plastic from oceans, seas and beaches.

We use airless plastic bottles and glass bottles fitted with the TAG-System (Techno Airless Glass System), which has won the Packaging Oscar, and guarantees total product protection, while also facilitating dispensing, with a reduction in the percentage of residue and a return rate of more than 95%. This enables us to increase the stability of active ingredients, minimise the use of preservatives and extend the useful life of products.

To prepare online store orders, as of July 2023 we replaced the “sizzlepack” protective filler material with “papillon” paper. This allowed us to reduce the amount of filler paper used by 30% and curb input and storage volumes by 90%, resulting in a reduction in transport to replenish this material.

Packaging in FSC® certified paper the responsible forest management label

“

” Our products are good inside and out: we choose innovative, sustainable packaging to protect cosmetics and safeguard the environment.

Bottles in airless plastic and glass with a

TAG-System

(Techno Airless Glass System)

Single-material packaging or that can be easily separated into its recyclable components

WATCH THE VIDEO

2023 goals update and achievement

Area: BIODIVERSITY AND LOCAL AREA

Biodiversity

ICEA certification

Assessment of activities to be undertaken in L'Erbolario Park to protect and increase biodiversity (e.g. nest boxes for birdlife, land shelters for small fauna)

Maintain the ICEA certification (by the Italian Association for Organic Agriculture) for the Park

Area: EFFICIENCY OF MANUFACTURING PROCESSES

Renewable energy

Increase in self-produced and self-consumed energy from renewable sources – 700 kWp photovoltaic park extension

Energy efficiency feasibility study through the replacement of indoor lighting fixtures from traditional to LED, photovoltaic extension.

Energy efficiency

Feasibility study for the installation of the white roof on the Logistics hub*

*The feasibility study had a negative outcome with regard to the desirability of installing the white roof on the logistics hub due to the limited impact it would have.

Area: ENERGY

SCOPE 2023 GOALS KPI

Solar thermal plant

Energy savings

Feasibility study for the installation of a solar thermal plant to produce domestic hot water for showers and washing equipment in the extract department Installation On/Off Not attained*

Participation in the 2023 “M'Illumino di meno” campaign by promoting energy-saving practices On/Off 100% achieved

Area: SUSTAINABLE PROCUREMENT POLICIES

Energy savings

Participation in the “Siamo aperti al risparmio energetico” campaign to close shop doors On/Off 100% achieved

savings Replacement of LED lights where renovations are planned On/Off

* the study has been launched and is still underway

Area: ENVIRONMENTAL MANAGEMENT

Purchase of goods

Launch the selection and definition of purchasable goods with MEC (Minimum Environmental Criteria) criteria

Area: PACKAGING WITH LOW ENVIRONMENTAL IMPACT

FSC® paper

2023 GOALS

100% of the paper and cardboard of the product packaging delivered to customers, as well as for communication materials and shopping bags in stores are FSC® certified

Area: CLIMATE NEUTRALITY

Environmental Management Maintain the ISO 14001 certification On/Off

Offsetting of emissions

CO2alizione Italia

Offsetting all residual emissions for renewable electricity purchases (Scope 2) Tons of CO2

Participation in a collaborative plan for training and evolution of the business model towards zero emissions, through Exploration Labs as part of the CO2 alizione Italia initiative On/Off

2024 goals

Area: BIODIVERSITY AND LOCAL AREA

GOALS

Installation of 33 nesting houses in the park On/Off

Biodiversity

Installation of hives for wild bees On/Off

Restoration of fountains in the Cascina Folla meadow On/Off

Area: EFFICIENCY OF MANUFACTURING PROCESSES

Renewable energy

Achievement of 100% green electricity supply in branded stores and launch of franchisee agreement proposal

Installation On/Off

Energy efficiency

Feasibility study on energy efficiency measures for the Logistics Hub

Study launch On/Off

Area: ENERGY

SCOPE 2024 GOALS KPI SDGS

Energy savings

Participation in the 2024 “M'Illumino di meno” campaign by promoting energy-saving practices throughout the franchising and affiliate network On/Off

Participation in the “Siamo aperti al risparmio energetico” campaign to close shop doors in direct and affiliated shops, should the initiative be repeated On/Off

New openings (15 shops) with 100% LED lighting On/Off

Replacement of LED lights where renovations are planned On/Off

Area: ENVIRONMENTALLY FRIENDLY DESIGN OF THE PRODUCT AND PACKAGING THROUGHOUT THE LIFE CYCLE

SCOPE 2024 GOALS KPI SDGS

Packaging with low environmental impact

Launch of 71 new products with more sustainable packaging, including 27 items without secondary packaging/case

# items without case/secondary packaging

Test launch to switch from traditional sellotape to paper sellotape Test launch On/Off

Lower use of paint for manufacturing packaging and use of 100% FSC® paper (white boxes will be unpainted sand-coloured and will be FSC®)

Launch of a five-product range with 100% recycled aluminium packaging

% of FSC® certified paper packaging launch of all new lines with Havana-coloured boxes and gradual replacement of existing ones

# 2024 items with recycled aluminium

SCOPE 2024 GOALS KPI SDGS

Packaging with low environmental impact

Launch of 3 products with 100% recycled plastic packaging

# 2024 items in 100% recycled plastic

Launch of at least 2 products with sustainable packaging (XPaper)

# 2024 items with XPaper packaging

Area: CLIMATE NEUTRALITY

SCOPE 2024 GOALS KPI SDGS

Offsetting of emissions

CO2alizione Italia

Offsetting all residual emissions for renewable electricity purchases (Scope 2) Tons of CO2

Participation in a collaborative plan for training and evolution of the business model towards zero emissions, through Exploration Labs as part of the CO2alizione Italia initiative On/Off

Feasibility study for the installation of electric car charging stations (8 parking spaces) Installation On/Off

Start of the calculation of the Group's carbon footprint (Scope 1 and 2) for 2022 and 2023, with the year 2022 as a baseline Tons of CO2

Lower CO2 emissions

Increase by at least 10% of the car fleet converted to hybrid/electric (plug-in hybrid, mild hybrid and plug-in cars)

% of the car fleet converted to hybrid/electric

Launch of reduced emissions calculation study in 2023 vs 2022 Tons of CO2

OBJECTIVE 3

Good for People

}

_Health, wellbeing and people development in the company

_Valuing and positively integrating diversity

“

” People are the beating heart of our company. We are one big family sharing commitment, dedication and values.

We have always been firm believers in the principle of shared responsibility: we think it is essential to implement, cultivate and foster transparent relationships and open and constructive communication with all the people who work with us.

The safety and physical and mental health of workers, as well as the promotion of a friendly, serene, positive and purposeful working environment that enables them to fully express themselves and allows for the full integration of everyone’s personal and professional life are at the heart of what we do.

Diversity and inclusiveness are two basic principles of the L'Erbolario Group. Currently 490 colleagues work within all the L'Erbolario companies. Furthermore, gender equality has always been at the top of our agenda. This is why we believe it is essential to promote and enhance the role of women at the workplace, so much so that more than 85% of our staff are women.

WATCH THE VIDEO

Viale Milano

In 2023 we celebrated our 45th anniversary with a big party: a Family Day, an event dedicated to all our employees and their families at our headquarters. All our colleagues had a chance to show their families the offices, departments and laboratories where they work every day and then had lunch together, which culminated with the cutting of the cake in the L'Erbolario park. Children activities and musical entertainment were also available. Participants were also able to explore the “Nature is our refuge” exhibition set up in our garden in partnership with the Ethical Photography Festival and featuring shots taken around the world by photographer Ami Vitale. The day was a success and involved 674 participants, including 223 staff and 451 guests, with 81 children among them.

As far as the health and physical and mental well-being of our employees is concerned, in 2023 we focused on the theme of prevention, involving our colleagues in the Lodi office in a free oncological early diagnosis campaign, organised in partnership with the LILT of Milan Monza Brianza.

Between December 2023 and January 2024, we hosted a LILT mobile outpatient clinic for three days, which offered the following preventive tests for employees in the Lodi office: breast exam and breast ultrasound for women under 39 years of age; breast exam and mammography with tomosynthesis for women over 40 years of age; skin cancer prevention exam with dermatoscope for men of all ages. A total of 50 women (a total of 50 breast exams, 32 breast ultrasounds and 18 mammograms) and 17 men took part in the project.

To ensure optimal health and safety conditions for our employees, we have worked to make our machinery more efficient and improve ergonomic conditions through automation projects.

Health, wellbeing and people development in the company

With a view of attaining greater environmental sustainability, in 2023 we have also set up water dispensers directly connected to the water mains in our offices in Lodi, and we have given each colleague a personalised L'Erbolario water bottle to use for their daily water supply. At the same time, we replaced the water bottles inside the dispensers with recycled plastic equivalents, available for visitors and guests who do not have a water bottle with them.

This initiative was an opportunity to change habits, both in terms of personal health and greater environmental sustainability, encouraging colleagues to drink more water throughout the day and significantly reducing the amount of plastic bottles purchased. Indeed, we have estimated that thanks to this choice we will be able to avoid the consumption of half-litre bottles of water, which amount to more than 13,500 per year.

Corporate discounts

We firmly believe that the attention dedicated to the well-being, health and quality of life of our collaborators is fundamental to promoting a serene and positive working environment.

This is why a series of corporate benefits and discounts with (around Lodi) and beyond (outside the area around Lodi or online), are available to all our employees. These discounts are with various shops and companies operating in a variety of sectors to offer the opportunity to make the most of special discounts and customised preferential rates.

Over the course of 2023, with a view of further expanding the range of offers and benefits for our employees and to offer a more and organised benefits system, we have entered into a partnership with Corporate Benefits, the market leader in corporate which provides companies with an exclusive sales channel to the general public, giving users access to particularly advantageous discounts. Throughout 2024, we will carry out an evaluation to extend the use of the portal to all Erbamea employees and area agents.

Benefits we reserve to our collaborators also include opportunities to our partnerships with organisations and associations. For example, every year the Italian Environmental Fund (FAI), of which L'Erbolario has been Corporate Golden Donor since 2007, provides our employees with tickets to visit listed properties throughout Italy.

Valuing and positively integrating diversity

of those affected by the floods. For each hour of pay each employee chose to donate, the company decided to donate an equivalent amount. A total of 123 colleagues took part in the initiative, donating as many hours.

Training programmes

Our company philosophy is based on thorough knowledge of the product combined with the creation of a unique sales style, oriented towards building a customised, trustworthy and lasting relationship with Customers. A relationship that is able to convey L'Erbolario’s principles and add value to stores and the company’s brand through the reliability transmitted by its staff.

Launched in 2020, the L'Erbolario Academy has enabled us to set up extensive training for purchasing consultants, retailers, in-house staff and agents. It is therefore an across-the-board project for L'Erbolario and L'Erbolario Franchising staff and all the retailers of the brand: herbalist shops, pharmacies, over-the-counter pharmacies and NES (new successful herbalist shops).

Thanks to the Academy's digital and interactive courses, developed via the Docebo platform, we can reach out to our entire network of retailers and stores by offering content on a wide range of topics, which can be used in full autonomy and freedom, thanks to the option of connecting yourself from any device and at any time. We favour content devoted to further exploring and learning more about products (L'Erbolario phytocosmetics and Erbamea phytotherapics), along with customer relationship care and optimal shop management courses. Fact sheets, sales simulations, quizzes and videos are the tools we provide for learning new concepts, with the aim of experimenting with increasingly innovative and participative ways of engagement, also thanks to the gamification of the learning experience and knowledge of the company. The platform was launched at the beginning of 2022, together with a customer loyalty programme linked to user activity on the online academy. At the end of each course, points and badges are awarded for that specific activity and gadgets/prizes are awarded upon reaching each of the 2 levels.

By the end of 2023, 33% of retailer customers were enrolled in the Academy, covering 41% of the retailer customer turnover, 100% of NES (new successful herbalist shops) and 100% of the chain's shops, with a total of almost 2,200 enrolled users. In 2023, a total of 136 hours of training were provided, including 46 hours of digital training and 90 hours of introductory webinars. These included courses on Phytocosmetics and Phytotherapy for purchasing consultants, training on sales techniques, new products introduced and in relation to the various product categories (fragrances, facial care, body care, etc.).

2023 goals update and achievement

Area: FLEXIBILITY OPTIONS

Remote working Option of working remotely one day per week if feasible with the task # days of remote working per week

Area: BENEFITS

Discounts

Launch of discounts with local companies (around Lodi) and beyond (outside the area around Lodi)

Air quality optimisation

Ergonomic optimisation

Plant engineering innovation with the construction of a new dust extraction and filtration system. New air conditioning system

Packaging pick-and-place robot installation

Purchase of a new packaging line and revamping of 2 existing lines

Area: HEALTH AND SAFETY CONDITIONS IMPROVEMENT SCOPE 2023 GOALS

Area: L’ERBOLARIO DIGITAL ACADEMY SCOPE

Courses Provision of courses on new topics (fragrances, Erbamea products) # courses provided 100% achieved

Courses

Courses

Delivery of 46 hours between self-study courses and webinars and 90 hours of introductory webinars. Digital training will be complemented by face-to-face training. # hours of course

Increase Academy user base: 2600 people enrolled with the Academy # people involved 100% achieved

Area: AREA: FLEXIBILITY OPTIONS

SCOPE 2024 GOALS KPI SDGS

Remote working

Option of working remotely one day per week if feasible with the task

# days of remote working per week

Area: AREA: BENEFITS

2024 goals

SCOPE 2024 GOALS KPI SDGS

Discounts

Throughout 2024, we will carry out an evaluation to extend the use of the portal to all Erbamea employees and area agents.

Portal launch On/Off

Training and medical tests on company premises and where possible across Italy for cardiovas- On/Off

Area: L'ERBOLARIO ACADEMY AND L'ERBOLARIO DIGITAL ACADEMY

Provision of 30 hours between self-study courses and webinars and 60 hours of introductory webinars. Digital training will be complemented by face-to-face training.

# hours of course provided

Digital Academy courses

Introduction of 3 new areas within the Academy: Conversations for wellness, Beauty notes and Cosmetology lessons

Creation of a monthly training plan with a specific monthly focus. Every training plan comprises information on existing courses and new gamification content with 3 new levels

Provision of 2 days of training on leadership and dealing with feedback for management (L'Erbolario Franchising)

# hours of course provided

L'Erbolario Academy courses

Launch of a training course to qualify as shop manager (first semester on 20 (branded stores) / 30 people (with affiliated shops (pilot project)) –L'Erbolario Franchising

Introduction of a performance appraisal programme for all employees and one-to-one feedback for all employees with employees reporting directly to them, on an annual basis (L'Erbolario)

Training launch On/Off

# hours of course provided # people involved

OBJECTIVE 4

Good for the Community

}_Local area and community commitment

_Stakeholder involvement and engagement for joint impact improvement

We express the bond we have with the community and the local area where we operate through our investment in social responsibility: every year we hold a number of local initiatives, alongside national and international ones, all aimed at protecting people, animals and the environment.

We have a strong bond with our local area and we believe that generating value, even at an economic level, is our duty towards a community that has enables us to grow over the years, always operating with respect for people, animals and the environment.

Our desire to have a positive impact on the community comes to life through the numerous social responsibility initiatives we implement to consistently support local, national and international associations, not-for-profit organisations and philanthropic activities.

Local area and community commitment

On the occasion of International Women's Day, on the 8th of March, we renewed our commitment alongside the national association D.i.Re Donne in Rete contro la violenza, whose 82 member organisations run more than 100 women shelters and dozens of shelters across Italy. In 2022 we allocated our contribution to the “Autonomy Fund”, which promotes the autonomy of women during their path out of mistreatment, while in 2023 we chose to support this important association with a donation for the “Refuge Fund” set up by D.i.Re to support women living in shelter houses in their personal path of building a future.

The Fund, which can be accessed by all the member organisations of the D.i.Re Network by presenting their own project, covers the running costs of the shelter homes and the costs of goods or services for the women

In May 2023, we decided to support PizzAut Onlus, an association established in 2017 to set up the first pizzeria in Italy run by children with autism spectrum disorders in Cassina de' Pecchi, in 2021. Our support took the form of our adhesion to the #100Mattoni per Monza initiative, a fundraising event to cover the costs of training young people employed as pizza makers and waiters in the new PizzAut restaurant in Monza and to support the creation of the Home Autonomy Gym a place where young people can increase their level of autonomy in daily activities.

In 2023, we became a supporting partner of the Casa della Comunità Foundation, supporting the “Don Olivo Dragoni” charity shop in Lodi through the donation of L'Erbolario personal care products. This is an actual supermarket where people in need can choose the products they require and stock up using a customer loyalty card available to them. There are currently 500 families using it.

Following the floods that hit the Emilia Romagna region in May 2023, we decided to support local people and communities in that region affected by them by joining the “Un aiuto per l'Emilia-Romagna” fundraising campaign launched by the regional authority and Civil Protection department.

On the occasion of our 45th anniversary, on Saturday 20 May, Sunday 28 May and Saturday 17 June we welcomed more than 5600 visitors to our Lodi headquarters to show them where L'Erbolario cosmetics are made. During these days we had a stall where we put on sale some special anniversary-related products and gadgets, such as hats, mugs, notebooks, aprons. We donated the entire proceeds of the sales to raise funds for the Emilia Romagna region.

We then involved the L'Erbolario Franchising stores throughout Italy, with a project consisting in the donation of €1 for every product purchased on Saturday 24 and Sunday 25 June, which was very popular with your Customers.

Lastly, L'Erbolario and L'Erbolario Franchising employees joined the solidarity initiative proposed by Confindustria in agreement with Italian trade unions CGIL, CISL and UIL, which allowed them to “donate an hour of work” in favour of those affected by the floods.

For each hour of pay each employee chose to donate, L’Erbolario decided to donate an equivalent amount. A total of 123 colleagues took part in the initiative, donating as many hours.

For all these initiatives we received a letter of thanks from the head of the Emilia Romagna regional authority.

On the whole, in 2023 we allocated 302,000 euros to donations and sponsorships.

Stakeholder involvement and engagement for joint impact improvement

As long-standing supporters of LAV, the anti-vivisection league, in 2023 we chose to celebrate our 45th anniversary by renewing our commitment to animals with a special project dedicated to the protection of dogs and cats. The whole proceeds from online sales on www.erbolario.com on Wednesday 3 May 2023 went to support “Insieme contro ogni forma di abbandono”, a national campaign for free microchipping and neutering of dogs and cats designed to promote the issue of living with pets responsibly.

The enthusiastic participation of our customers enables us to schedule more stops in addition to the 10 ones initially planned: between June and November 2023, two LAV-L'Erbolario ambulances were engaged in a national tour of 13 stops from northern to southern Italy, carrying out 635 microchipping operations and over 200 neutering procedures.

CONTRO OGNI FORMA DI ABBANDONO & L’ERBOLARIO

As a Corporate Golden Donor, since 2007 we have contributed to financing the activities of the Italian Environmental Fund (FAI), a not-for-profit foundation that protects and enhances our historical, artistic and landscape heritage. Namely, in 2018 this partnership to the creation of the “Fior di Salina” range.

Moreover, on 5 June 2023, on the occasion of the World Environment Day, we chose to extend our support to FAI by becoming Supporters of an Asset of Significant Natural and Scenic Value with a one-year contribution to the preservation and routine

maintenance of the Woods of St. Francis in Assisi, near Perugia. This way we have helped the Foundation ensure that the Woods of St. Francis are constantly protected, so that they continued to be a symbol of respect and coexistence between man and nature, as well as a place of exemplary beauty, knowledge and sharing, capable of generating individual and collective well-being.

With its products from the Fior di Salina range, L'Erbolario supports

Photo by Mirco Baccaille © FAI

In 2023, we once again partnered with the Lodi Ethical Photography Festival, held from 30 September to 29 October in the city's outdoor spaces and prestigious locations. Now at its 14th edition, the international photojournalism festival featured 20 exhibitions with over 700 images by 200 photographers from all over the world to tell stories and worlds that are often unknown, to reflect and to wonder.

Namely, L'Erbolario supported the “La natura è il nostro rifugio” exhibition at the Spazio Approfondimento, which featured photographs by not-for-profit organisation Vital Impacts, committed to protecting the planet and preserving species and led by renowned National Geographic photographer Ami Vitale.

© Ami Vitale

From 16 to 18 March 2023, we once again attended Cosmoprof Worldwide Bologna, the world's leading trade fair for the professional beauty and cosmetics industry. We welcomed dealers and customers to our stand to present our new spring launches.

From 7 to 10 September 2023, we once again attended San, the International Organic and Natural show dedicated to food, natural and organic cosmetics, and green lifestyles, now at its 35th edition. It was once again an opportunity to meet with our retailers and customers to preview our new autumn-winter collections.

We were once again a partner of Horti Aperti, Pavia’s Green Festival held from 15 to 17 September 2023 and devoted to climate change and forestation, urban and otherwise, topics with a focus on water as an asset to be used responsibly. We took part in the event with our green kiosk, offering visitors free samples of our latest products.

From 28 September to 1 October 2023, we renewed our partnership with Orticolario, the autumn event where nature becomes a lifestyle inspiration in the beautiful venue of Villa Erba in Cernobbio.

We were among those taking part in the second edition of Milano Beauty Week, the event hosted from 26 September to 2 October 2023 in Lombardy’s capital and dedicated to the culture of beauty and wellness, promoted by Cosmetica Italia in partnership with Cosmoprof and

Esxence. During the days of the event, participating L'Erbolario Franchising stores welcomed Customers and Clients with a scented gift and an invitation to immerse themselves in the L'Erbolario “Scented Garden” at Palazzo Giureconsulti, in the heart of Milan’s Beauty Week. Moreover, we once again took part in Beauty Gives Back, the fundraising initiative in favour of “La forza e il sorriso Onlus”, which organises free beauty workshops throughout Italy for women dealing with cancer. The event took place as part of Milan’s Beauty Week, at Palazzo Castiglioni in Milan on Saturday 30 September and Sunday 1 October 2023. Against a suggested donation, all visitors were able to choose cosmetics offered by L'Erbolario and participating companies.

The proceeds were used to make free beauty workshops more widely available throughout Italy. They were designed for women undergoing cancer treatment to provide an opportunity to focus on self-esteem, light-heartedness and sharing together.

2023 goals update and achievement

Area: PARTNERSHIPS AND COMMUNITY SUPPORT

Donations

Support and create projects that reflect the core values of respect for people, animals and the environment. Some of the partnerships will be with: Di.Re Donne In Rete, OffiCine Istituto Europeo di Design, La forza e il sorriso, FAI, LAV, the Ethical Photography Festival, gifts to foundations and shelter homes.

Maintain at least the same amount of donations and sponsorships of 2022 (216,910 euros)

Area: PARTICIPATION IN PARTNERSHIP INITIATIVES

Maintain participation in partnership initiatives (es. Cosmoprof, Horti Aperti, Orticolario, Beauty Week)

Area: PARTNERSHIPS AND COMMUNITY SUPPORT

Donations

Support and create projects that reflect the core values of respect for people, animals and the environment. Some of the partnerships will be with: Doctors Without Borders, La forza e il sorriso, FAI, the Ethical Photography Festival, PizzAut, ASST Lodi, Lodi Municipality, Codogno Municipality, Lodi Hospital Cardiology Department, gifts to foundations and refuges.

Fundraising for International Women's Day Euros donated

2024 goals

Area: PARTNERSHIPS AND COMMUNITY SUPPORT

Partnerships

Maintain participation in partnership initiatives (es. Cosmoprof, Horti Aperti, Orticolario, Beauty Week) On/Off

Launch of a playing card sponsorship partnership to raise children's awareness of biodiversity issues On/Off

Accountability and transparency

As a Benefit Company, L'Erbolario adopts the third-party international standard B Impact Assessment (BIA) developed by B Lab, a not-for-profit organisation that develops measurement standards for governance, workers, community, environment and customers in order to report on the generated impact.

L'Erbolario has been using this tool since 2021, measuring the sustainability performance of L'Erbolario and L'Erbolario Franchising, separately.

In 2023, as a first step towards Group reporting in accordance with CSRD, we valued our achievements in a single profile, which resulted in an overall score of 62 points for the L'Erbolario Group.

Below is the result of the detailed assessment of the different impact areas:

By adopting this assessment tool, L'Erbolario Group has been able to analyse all the impacts it generates at an economic, environmental and social level. This assessment has enabled the company to clearly outline its current sustainability profile and will allow it to define the goals to be achieved in future through the implementation of an Improvement Master Plan, which will map out an operational path aimed at achieving specific sustainable development goals in its various business areas.

Annexes

METHODOLOGICAL NOTE

The Materiality Analysis

The materiality analysis is a key element of our sustainability strategy: not only is it a very useful reporting tool, but it also allows us to identify strategic priorities for us and our most representative stakeholders, and is also a tool to communicate with them. The materiality analysis enables us to actively shape our plans for a sustainable evolution, in connection with the needs of our stakeholders and an ever-changing environment.

Aware of the crucial nature of this instrument, the European Commission set a new course on 21 April 2021 by proposing the Corporate Sustainability Reporting Directive (CSRD), which became operational on 5 January 2023. The CSRD redefines the concept of sustainable reporting, promoting an ever closer convergence between finance and sustainability, precisely through the materiality analysis tool. The ultimate goal of the legislation is to contribute to an inclusive and sustainable economy, in harmony with the European Green Deal and sustainable development goals, through common tools and standards.

In charting our course we relied on authoritative sources, such as the Global Reporting Initiative and the Sustainability Accounting Standards Board. We have embraced a comprehensive range of relevant topics, from climate change to biodiversity, knowing that our vision of sustainability covers the full spectrum of challenges and opportunities the world offers us.

The Process

Our materiality analysis process was structured according to the following steps:

Identification of material topics: we meticulously selected material themes by exploring a wide range of sources, such as SASB, the Global Risk Report, the IPCC, the MSCI Industry Materiality material to have a comprehensive view of relevant issues that can influence corporate reporting.

Benchmarking: we created a bridge between our commitment to sustainability and trends in the cosmetics industry, drawing on a wealth of authoritative sources, including international standards as well as materiality assessments conducted by other companies in the cosmetics industry, such as Natura, Davines and L'Occitane.

Frequency Analysis: After an in-depth analysis of collected data, we identified patterns and selected the most relevant material themes, guided by the frequency with which the themes occur within the company and within the sector.

Integration of material topics: we then compared the identified material topics with our collective aspirations and sustainability goals, ensuring that each action reflects our mission and meets transparency and accountability requirements. This is why we linked the selected material topics with the company's specific common benefit aims, as well as with the GRI (Global Reporting Initiative) and ESRS (European Sustainability Reporting Standard) topics, in accordance with the CSRD regulation that will apply to us from 2025. GRI and ESRS are guidelines that have become globally recognised standards for reporting on the environmental, social and governance (ESG) performance of companies. They also help companies communicate transparently, address stakeholder expectations, manage risks and opportunities, improve performance and increase their competitiveness in the market.

Stakeholder Identification/Questionnaire design: we selected our most relevant stakeholders and set up a tailor-made questionnaire to give each one of them the opportunity to share their opinions and assess the relevance of the selected material topics. The questionnaire was designed with the idea of obtaining both quantitative and qualitative answers, using a rating scale of 1 to 5: 1 indicates a theme that is neither strategic nor relevant for L'Erbolario Group, while 5 indicates a priority theme for the evolution of the company. Selected stakeholders: Customers (L'Erbolario Franchising SB S.r.l., online store customers, customers of the 2 shops in Lodi), Retail (herbalist shops, pharmacies and over-the-counter pharmacies), employees (L'Erbolario SB S.r.l., L'Erbolario Franchising SB S.r.l., Erbamea S.r.l.), suppliers (of raw materials, packaging, promotional materials for stores), institutions (Parco Adda Sud), financial institutions (Banor) and the business community (Cosmetica Italia).

Questionnaire data analysis: we analysed the data further by carefully exploring the assessment of material issues by the different stakeholder categories, providing a comprehensive overview of their perspectives and needs.

Meeting to discuss the Materiality Matrix: a meeting was held to present the results of the materiality analysis and gather valuable feedback from the Group’s Board of Directors, which in turn assessed the materiality of individual material issue using the rating scale. This enabled us to represent our materiality matrix in a graphic form, revealing the results of this process, with the aim of illuminating our path towards even more robust and authentic sustainability and inspiring tangible action and meaningful change.