environ- mental sustain- abilityenvironmental interactions associated with the process consist...

SUSTENVIRON-MENTAL AIN-ABILITY

ENVIRON-MENTAL AIN-ABILITY

3

65%

91%

97-99%

environmental product certifications

average consumption of solvents

under 65% with respect to the limits set forth by law per sq.m. of leather in 2015

of waste sent for recycling +2% with respect to 2014

purification efficiency of waste WATER for the main environmental parameters

39ENVIRONMENTAL SUSTAINABILITY

purification efficiency of waste WATER for the main environmental parameters

Important environmental aspects of the tanning cycle

Although the tanning industry continues to apply various typical artisanal processes, it has for many years assumed industrial characteristics. The transformation of raw hides is a process that requires the use of water, energy and chemicals and the environmental interactions associated with the process consist mainly of waste water, waste and atmospheric emissions.By subdividing Dani's tanning process into three main stages, the main environmental aspects may be identified:

From raw hides to tanned leather: the raw hides may reach the tannery fresh (and in this case they are processed immediately) or salted to preserve the same. Bad preservation treatments may cause free ammonia and odours to develop; although these are not dangerous to health or the environment they do affect the quality of the surrounding air; in the early stages of leather processing and tanning, large quantities of water are used and the waste water has an impact on the parameters of waste water discharges such as the COD, suspended solids, chlorides, sulphates, organic nitrogen and chromium III. The waters undergo purification treatments at a central water conditioning plant where pollutants are reduced to values that do not entail risks for the environment. This treatment produces sludge which is currently taken to the disposal site. Fleshings, hair, leather trimming scraps and shaving powders are on the other hand sent for reuse (for example by the industrial, agricultural or breeding sectors);From tanner to crust: even the waste water from dyeing is sent to the water conditioning plant; the mechanical drying of skins entails low consumption of electrical and thermal energy;

40

From crust to finished leather: finishing, and in particular the application of products on the surface of the leather with compressed air spray guns, has an impact on the quality of atmospheric emissions, above all powders and volatile organic substances (VOS). All emissions caused by skin grinding and the spraying booths on the finishing lines, are discharged through filters and dust collectors, in order to ensure compliance with the limits set forth by law.

REPORT ON SUSTAINABILITY 2015


Dani's environmental management and certifications

All companies may play a fundamental role in improving conditions in their environment and, in a small way, act as driver for changes in the battle against global warming. It is precisely in this perspective that Dani intends to become: a point of reference in the tanning industry for the efficient use of natural resources and energy, the use of low-impact chemicals, encouraging suppliers and customers to improve environmental operational practices, starting up research and development projects, transparent communications with local communities and the daily commitment of each and every employee. In order to strengthen this important objective and remind us every day of its importance, Dani has included the words “sustainable leather” in its logo, to demonstrate how it intends to do business and the approach of all its corporate activities. Dani is committed, therefore, to continuously controlling and monitoring its environmental performance in order to continuously improve the same.The environmental certifications obtained are a concrete example of this.

In 2011 the Company obtained the Environmental Product Declaration (EPD), an internationally important voluntary certification system, that makes it possible to communicate objective, comparable and credible information on the main environmental impacts of the leather by examining the complete chain.

In the same year Dani obtained the Carbon Footprint of the Product (CFP) in accordance with ISO 14067 which quantifies the overall impact of leathers on global warming, in kg of equivalent

CMYK

1

42

CO2. This impact quantifies the greenhouse gases produced throughout the supply chain, starting from agriculture through to delivery of the finished leather to our customers.

Der Blaue Engel is the prestigious German ecological label that certifies the high environmental performance of our leather and is awarded by the German Ministry for the Environment to products whose life cycle produces a low environmental impact. DER BLAUE ENGEL (RAL UZ 148)

Fissa una serie di parametri, inferiori a quelli previsti per legge, relativi alla presenza ed emissione di sostanze pericolose e nocive.



Raw materials, materials and products

The most important inputs of a tannery are raw hides, chemical substances and water.

Raw hides

Transport

Use of packaging

Chemical products Emissions into the air

Treatment of waste and co-products

Wastewater treatment

Water consumption

Electrical and thermal energy

Dani processes leather from the slaughter of cattle for the production of meat for human consumption. Processing leathers from raw hides makes allows us to control all the processing stages and chemical products used, as a further guarantee of quality and health for our customers and the environment.

44

To transform leather from raw hides into finished leather the structure of the leather is modified, making it rot-proof and giving to the leather the mechanical properties and appearance required. In tanning many different chemical products are added to the drums with water and the leathers, or even sprayed on the surface.As regards the specific question of water, please see page 55.

The chemical products purchased1 by Dani amounted to (kg):

Approximately 48% of the chemical products purchased in 2015 is classified as Not Dangerous according to the new CLP classification. (No comparison may be made with previous years when the old classification was still in force). The most dangerous chemicals are above all those in the class of irritants: the procedures used by Dani to manage hazardous chemicals are designed to avoid risks to people and the environment. Operators are trained on how to handle these risks and PPE are made available to the same to ensure their safety. The company is always prepared to improve the working conditions of its personnel.

15,439,0002013

18,072,000 17,904,0002014 2015

1 Source: information system Q-Lick (Prochi2) that provides data for chemical products purchased. Given that the difference with respect to the chemical product data used is <3% and that this system makes it possible to subdivide the data into different stages, we decided to use the purchase data

* 1,800 t. subcontracted** source: information system Q-Link (Prochi2)

2015 consumption by Dani

chemical products17,900 t.**

Raw hides36,800 t.*



For each kilogram of leather processed the following quantities of chemical products were used:

The following table shows the number of kilograms of chemical products used per functional unit2 (sq.m.) of average leather processed by Dani in the three year period3:

U.M. 2013 2014 2015

Kg/kg of leather 0.46 0.49 0.49

U.M. 2013 2014 2015

kg of chemical products/sq.m. 3.04 3.42 3.40

2 The functional unit is a measure of the functional performance of the product system. The main scope of the functional unit is to provide a reference to which to link the flows, so that it must therefore be defined and measurable. The functional unit is represented by 1 sq.m. of an average piece of finished leather.

3 The calculation was carried out as follows:A calculation of the total consumption of chemical products for each macro-phase (from raw

hide to tanned leather, from tanned leather to crust leather, from crust leather to finished leather)

B calculation of the total weight of the leather processed in each macro-phaseC calculation of the quantity of chemicals used per kg of leather processed in each macro-phaseD allocation of the correct amount of chemical product for the quantity of product defined by

the different allocation coefficients of each macro-phase starting from the assumption that: 1 sq.m. of finished leather weights 1 kg. This assumption may be used to calculate the different allocation coefficients of Dani leather in the other macro-phases as shown by the following table:

Macro-phase Average weight of 1 hide (kg) Functional unit (kg/sq.m.)

From raw to tanned 37 7.4From tanner to crust 7 1.4

From crust to finished leather 5 1

46

Energy

Dani mainly uses electrical energy, natural gas and diesel. Electricity is used to run machinery and equipment, while natural gas is used to reach the required processing temperatures in some stages of processing (for example liming drums, tanning, dyeing and dying) and in the workplace. Diesel is used for forklifts and mechanical claws. The tanning industry is not on the whole a high energy consumption industry.

Energy consumption by year and type is as follows:

Energy consumption (GJ)3 2013 2014 2015

GJ GJ GJ

Diesel used 3,969(91,559 kg)

4,051(93,491 kg)

3,956(91,375 kg)

Electricity

used 45,194(12,553,888 kwh)

46,683(12,967,500 kwh)

47,852(13,292,246 kwh)

natural gas 135,342(3,469.418 cu.m.)

123,615(3,168.802 cu.m.)

144,451(3,702.930 cu.m.)

Total energy consumption 184,505 174,349 196,259

U.M. 2013 2014 2015

Kwh/kg 0.37 0.35 0.36

The total electrical energy consumption, per kilogram of leather processed was:


47

U.M. 2013 2014 2015

Total Kwh/sq.m. 2.28 2.36 2.47

U.M. 2013 2014 2015

total cu.m./kg 0.103 0.088 0.101

U.M. 2013 2014 2015

total cu.m./sq. m 0.65 0.59 0.68

Electricity consumption by functional unit in three years is as follows:

The increase in the last stage of the production cycle is due to the slight drop in production, on a par with electrical energy consumption.

The total natural gas consumption , per kilogram of leather processed was:

Natural gas consumption by functional unit in three years is as follows:

The increase in consumption is caused by the loss of efficiency after the outage of the cogeneration plant.

Dani owns a thermal power plant with two industrial boilers for the production of heat at HSF division, the Automotive Division and Quinta Strada. During combustion the boilers emit Nitrogen Oxides (NOx) and Sulphur Oxides (SOx), as well as carbon dioxide (CO2). The Automotive Division is also equipped with:A co-generator; A system for the recovery of heat from the compressorsThese systems reduce the use of the boilers and, consequently, reduce the emissions into the atmosphere.

ENVIRONMENTAL SUSTAINABILITY

48

Activities for energy savingIn the years taken into account by this report Dani started to introduce energy saving solutions:

Situ

atio

nin

201

2

Activ

ity

Area

ATTAINEDAS TO 31.12.2015

ATTAINEDAS TO 31.12.2014

PLANNEDAS TO 31.12.2017

ESTIMATED ENERGY SAVED

9

55

100%STANDARD

LAMPS

40

18BOOTHS

-

-

Compressors with inverterInverts on the main compressorRecovery of heat from the compressors

Inverter on the vatsHigh-efficiency motors

Leds in the departments and offices

Replacement of diesel fork-lifts with electric forklifts or in any case forklifts with low-environmental impact

Installation of low-pressure guns

Planning the installation of the cogeneration plant at the automotive factoryPlanning the installation of the cogeneration plant at the Quinta strada factory

Implementation of an energy management system (iso 5001)

21

Installation on 4

20-

5% of the total

3

4

-

-

-

---

--

15% of the total

10

-

-

-

-

--

Feasibility analysis at Quinta Strada

245

30-40 % of the total

20

6

Installation

Installation

Completion

30-40 %10%2%*

3%3-5 %

50-70%

40%

5-10%

40%**

40%**

20%

COMPRESSORS

DRUMS

LIGHTING

FORKLIFTS

FINISHING

HEAT

MANAGEMENT

* for the total gas consumption in a year by Dani** for electricity consumption


49

Emissions

The main parameters that affect air quality and are typical of tanning processes are Volatile Organic Solvents (VOS), powders and hydrogen sulphide. Emissions into the atmosphere, which are conveyed outside the tannery by suction systems equipped with dust collectors, are produced in different stages of the process, both in the drums and during the finishing treatments.Dani periodically monitors emissions as set forth by law, with checks carried out by an external accredited laboratory.The tests carried out on the chimneys and the solvent declarations are sent to Vicenza Province every year.

48 tests were carried out on the chimneys in 2015, as set forth by law. The tests were subdivided as follows:

dust analysis

hydrogen sulphide test nitrogen oxide test

30

14 4

ENVIRONMENTAL SUSTAINABILITY

50

The solvent declaration indicates the number of grams of solvent used per square metre of leather:

It should be noted that the emission factor decreased from 2012 to 2014 (-14.3%), while it increased in 2015 due to a significant difference in the type of leathers produced.

It should be noted that the absolute value of the solvent emitted varies according to the performance of production and the type of leathers processed

For the factory at Quinta Strada 20, no solvents Declaration is submitted since this factory does not have a finishing department.

This report gives a comparison of the years 2013-2014-2015; taking into account the years 2010-2011-2012 however, the decrease in the use of solvents is even greater decrease from year to year in the Home Style and Fashion Division. This is due to an important

2012 2013 2014 2015

HSF Division g/sq.m. Absolute value (kg) g/sq.m. Absolute

value (kg) g/sq.m. Absolute value (kg) g/sq.m. Absolute

value (kg)

(limit set forth by law: 75 g/sq.m.)

32.10 66,850 29. 5 76,255 27.5 62,288 30.2 72,476

2012 2013 2014 2015

Automotive Division g/sq.m. Absolute value (kg) g/sq.m. Absolute

value (kg) g/sq.m. Absolute value (kg) g/sq.m. Absolute

value (kg)

(limit set forth by law: 75 g/sq.m.)

17.7 37,192 17.6 53,042 18.3 54,615 22.7 61,115



project which was started in 2011 and ended in 2012 with the Der Blaue Engel certification for furnishing leathers:

0

10.5

21

31.5

42

2010 2012 2014

Total solvent (g/sq.m.)

Solvent (g/sq.m.)

Der Blaue Engel is the prestigious German ecological label that certifies the high environmental performance of our leather and is awarded by the German Ministry for the Environment to products whose life cycle produces a low environmental impact. The parameters evaluated refer to the contents of harmful substances, the emission of pollutants, the use of raw materials and water in accordance with pre-established quantitative limits. “Der Blaue Engel” is issued only for products that fall within specific limits well below those set forth by law. Most of our pigmented items for the furnishing industry (produced by the HSF division) comply with these requirements and are therefore authentic models of low-environmental impact products.

DER BLAUE ENGEL (RAL UZ 148)Fissa una serie di parametri, inferiori a quelli previsti per legge, relativi alla presenza ed emissione di sostanze pericolose e nocive.

52

As regards the quantification of environmental impacts produced by Dani, two certifications were obtained recently:

Carbon Footprint4 Project - HSF DivisionOurs was the first tannery in the world to obtain this certification; the CFP is a quantification of the overall impact of a product on global warming, expressed in grams of equivalent CO2 per unit of product considered.The calculation is carried out as set forth by ISO TS 14067 standards, and represents the sum of greenhouse gases (GHG) emitted during the entire life cycle of a particular product or service.

ResultsTo produce 1 sq.m. of finished bovine leather, 45.52 kg of CO2eq are emitted, subdivided as follows:

CMYK

1

4 2014 data

Finished bovine leather (1 sq.m.) Upstream Core

Agriculture Breeding Slaughter Transport Production Total

GREENHOUSE EFFECT-GWP100

(kg CO2 eq.)40.92 4.60 45.52

% 89.9% 10.1% 100%

The activities with the greatest impact with respect to the different stages of the life cycle of the product are the following:UPSTREAM: cattle breeding, in particular emissions of the animals and the use of manure and nitrogen fertilizers.CORE: natural gas consumption during production, transportation of raw hides, packaging and some chemicals.



5 2014 data

Environmental Product Declaration5 Project - HSF Division The EPD is a process, structured in accordance with ISO 14025, which quantities the environmental impacts of a product through categories of parameters calculated in an LCA study. The impact categories analysed are the greenhouse effect, acidification, photochemical smog formation, eutrophication and destruction of the ozone layer.The EPD for the “finished leather” product is carried out in accordance with the provisions of the PCR (Product Category Requirement) “Finished bovine Leather”; the PCR are substantially guidelines specifically created to ensure that LCA studies are compatible with the EPD.Our Environmental Product Declaration may be downloaded from the website: www.environdec.com

ResultsThe following table shows the environmental impacts relevant to the production of 1 sq.m. of finished leather by Dani, subdivided by upstream (agriculture and bovine breeding), core (tanning cycle), downstream (transport to customers):

Finished bovine leather (1 sq.m.) Upstream Core Downstream

Impact categories Total Production of raw materials

Leather

production/Transports

Distribution of finished

leather

GREENHOUSE EFFECT-GWP100 (kg CO2 eq.) 45.27 38.50 4.56 2.21

ACIDIFICATION(g SO2 eq.) 772.09 746.64 15.66 9.79

REDUCTION OF THE OZONE LAYER (mg CFC-11 eq.) 1.41 0.36 0.66 0.40

PHOTOCHEMICAL SMOG(g C2H4 eq.) 7.63 6.53 0.73 0.36

EUTROPHICATION(g PO4

3- eq.) 322.25 317.07 3.57 1.61

54

Taking into account the energy sources used and consumption for the year, the “carbon footprint” of DANI may be calculated in terms of equivalent CO2:

Calculation of emissions of equivalent CO2 (tons CO2 eq.) 2013 2014 2015

Direct emissions*

Emissions from diesel consumption 0.3 0.3 0.3

Emissions from natural gas consumption 6,790 6,201 7,246

Indirect emissions**

Emissions from electricity consumption 4,837 4,996 5,121

Total 11,627 11,198 12,368

* Direct emissions (scope 1) are produced by the plants and machinery of the company, such as the heating systems (natural gas consumption), and forklifts (diesel).

** Indirect emissions (scope 2) are produced by the energy consumption of all the factories.

Dani intends to further perfect the calculation of emissions, taking into account other emission factors.



Management of water resources

Consumption and water purification are the most important environmental aspects of a tannery. Leather is indeed processed through a number of different stages carried out in water (liming, tanning and dyeing drums). The Dani tannery is connected with the water conditioning plant Acque del Chiampo S.p.A., which supplies and treats water and provides through its website www.acquedelchiampospa.it details of consumption and concentration of pollutants in real-time.

For each kilogram of leather processed the following quantities of water were used:

in 2013

in 2015

in 2014

22.1 cu.m./t.

21.9 cu.m./t.

21.5 cu.m./t.

56


Water consumption by functional unit in three years is as follows:

All waste water undergoes an initial screening treatment on the company's premises before reaching the water conditioning plant. Approximately 9.9% of the water treated at the water conditioning plant in 2015 come from Dani (773,725 cubic meters of the 7,796,982 cu.m. treated).

The concentrations of pollutants at the sewer of the water conditioning plan and the limits that the water conditioning plant must comply with are as follows:

U.M. 2013 2014 2015

total cu.m./sq. m 0.15 0.15 0.15

Average concentration of pollutantsof Acque del Chiampo 2014 parameter (mg/l) Limits set forth by law

(mg/l)

Suspended solids 13 35

COD (Chemical oxygen demand) 105 150

Chlorides 1,362 1,830

Sulphates 1,196 1,530

Chromium III 0.37 0.70



The water conditioning plant treats waste water and handles the disposal of sludge from the water conditioning process. In 2014, the water conditioning plant guaranteed the following abatement percentages:

U.M. 2013 2014 2015

total cu.m./sq. m 0.15 0.15 0.15

Average concentration of pollutantsof Acque del Chiampo 2014 parameter (mg/l) Limits set forth by law

(mg/l)

Suspended solids 13 35

COD (Chemical oxygen demand) 105 150

Chlorides 1,362 1,830

Sulphates 1,196 1,530

Chromium III 0.37 0.70

Suspended solids

Total nitrogen

Filtered COD

Chromium III

99%

97.3%

96.6%

99%

58

Management of waste and by-products

The main waste products of a leather tannery are leather residues that cannot be used for the finished product scrapped during processing. According to the production cycle, various kinds of waste used for different purposes will be produced. Leather also produces large quantities of by-products that are recovered by other industries (food, fertilizers etc.) such as fleshings and shavings.

The tables below show the quantities of waste produced in 2013-2014-2015, their final uses and the percentage of hazardous waste.

Kg 2013 % 2014 % 2015 %

Disposed of waste 842,780 11% 860,660 11% 718,536 9%

Recycled waste 7,023,613 89% 7,118,268 89% 7,216,616 91%

Total waste 7,866,393 100% 7,978,928 100% 7,935,152 100%

hazardous 17,248 0.21% 14,149 0.17% 9,701 0.12%

As can be seen the % of recycled waste continues to be high and stable while there is a decrease in the production of hazardous waste.

The waste produced is shown by square metre of finished leather produced during the three years:

U.M. 2013 2014 2015

Kg of waste/sq.m. 1.30 1.55 1.54



of the waste consists of tanned leather (scraps, residue, cuttings, shaving dust), 13% of salt, 8% of sludge

Solvents are the main hazardous waste

61%

The table shows the quantity of by-products obtained in 2013-2014-2015 and the same figure compared to the number of tons of raw hides processed:

During waste management there were no spills or contamination of the environment.In 2015 Dani incurred costs of approximately 3,571,760 € for the treatment and disposal of waste.

Kg 2013 2014 2015

By-products 14,718,868 16,834,300 16,062,471

Kg/t. soaked hides 437 457 437

U.M. 2013 2014 2015

Kg of waste/sq.m. 1.30 1.55 1.54

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