The materiality analysis is the process by which the relevant ESG issues ("material") underlying sustainability reporting are identified. With the entry into force of the Corporate Sustainability Reporting Directive (CSRD) and the related Standards for Reporting (ESRS Standards prepared by EFRAG), this process has evolved, requiring companies to assess sustainability issues according to the so-called "dual relevance": on the one hand, companies must identify the positive and negative impacts, current and potential, that they can generate towards the environment and society, including possible repercussions on human rights (so-called "impact materiality"); on the other hand, they must identify the risks and opportunities for their organisation deriving from sustainability issues, considering the financial effects that can be determined (so-called "financial materiality").

The Granlatte-Granarolo Group, anticipating the timing of the new obligations deriving from the CSRD (applicable to the Group from FY2025), carried out in the first months of 2024 a first exercise of "dual relevance" as a start to the progressive fulfilment of regulatory requirements.

The activities developed for the determination of dual relevance are described separately below. The process was carried out at every stage under the supervision of Granarolo's Communication, External Relations and Sustainability Office, which was responsible for verifying the consistency of the analyses and the results that emerged.

Impact materiality

The impact materiality analysis conducted by the Group consisted of several work phases:

• identification of possible impacts, positive and negative,
• listening to company Functions and stakeholders in order to assess the identified impacts (12 Granarolo managers, 17 Granlatte farmer shareholders, 14 Granarolo employees, 5 suppliers, 2 customers),
• determination of sustainability issues from the point of view of the materiality of the impact.

Financial materiality

The Group also conducted the evaluation of "financial materiality" to identify ESG risks and opportunities. To this end, the activities carried out have actively involved Granarolo's Governance, Risk Management and Compliance Office.

Also in this case, we proceeded in successive steps; in particular:

• identification of ERM risks in line with ESRs sustainability issues,
• listening to the financial community (3 leading credit institutions),
• identification and evaluation of opportunities for the Group,
• determination of sustainability issues from the point of view of financial materiality.

The outcome of "dual relevance" was finally discussed and validated in a moment of discussion with the President, the General Manager and the Director of Human Resources, Organization and IT of Granarolo.