IMPACT ECONOMIC SOCIAL ENVIRONMENT Governance and sustainable management The company’s governance and management dictate the trajectory of the business. Thus, our economic performance and the sustainable growth of our business depends on the planning and implementation of corporate governance and sustainable management across all PENNY business lines. The governance and sustainable management of our company can add value to the communities in which we operate by facilitating investment and allocating resources to the implementation of social responsibility projects, as well as initiatives that improve the quality of life of our employees and create new jobs. The impact of any PENNY environmental action is based on how our business is governed and managed. In this sense, a system that relies on sustainability and corporate governance will support the allocation of resources to mitigate negative environmental impacts. Thus, if funds are not made available at management level, environmental conservation projects cannot be carried out. For example, if photovoltaic panels for our own green energy production cannot be purchased and refrigeration equipment cannot be upgraded, that would lead to increased emissions into the atmosphere. Sustainable business model Integrating sustainability and a business-wide approach to environmental and social concerns positions us as a responsible discounter. We invest in sustainability projects because we are aware of the long-term economic value generated. With the emergence of consumer awareness in regards to climate change, responsible natural resource use, environmental and social protection, our business is exposed to risks of not meeting their needs and expectations. Our business strategy meets the needs of our consumers and we strive to increase their quality of life and to contribute to local communities. All the activities of a discounter have a potential environmental impact. We aim to identify environmental aspects that could have a negative impact and we develop processes to avoid them. Our management systems support the creation of structures and processes that help this negative impact prevention and mitigation mechanism. On the other hand, we continue to identify opportunities and create value. Risk management and compliance Mis-managed risks and non-compliance with legal obligations can negatively impact our company through financial penalties as well as damage to our brand and reputation which can result in reduced revenues or business interruption. On the other hand, thorough risk management can result in business opportunities, which can lead to the growth of our business. Incorrect risk management and failure to identify risks can have a negative impact on the social factor through possible redundancies or degradation of employee welfare. This, in turn, can impact the communities in which we operate by affecting employees' families and reducing the quality of life in the local communities due to job losses. Ineffective risk management and lack of legal compliance can lead to negative environmental impacts if certain operational risks are not correctly identified, if there is no risk management plan in place or if the firm does not comply with applicable legislative requirements. These situations can lead to exceeding the environmental limits, which can have a negative impact on the environment. Cybersecurity Poor cybersecurity management can result in the loss or theft of personal or business data. This can negatively impact our company through financial losses due to penalties from authorities and damage the company's image. On the other hand, proper cybersecurity management can benefit the company through automating and digitizing internal processes that save resources and increasing customer confidence. The main negative social impact resulting from poor cybersecurity management is to jeopardize the safety of our employees and customers. Through the theft of personal data, the members of our community can be the victims of cyber-attacks or financial losses. At the same time, in the event of a breach, the safety of our customers can be affected by the alteration of our product quality monitoring systems. Digital responsibility involves automating processes and developing new skills for our employees. Because IT systems are interconnected, a cybersecurity breach can alter multiple internal systems. Thus, malware can affect our internal environmental monitoring or consumption systems, resulting in uncontrolled resource consumption or accidental pollution. Responsible cybersecurity management also involves supporting digitization and developing solutions that aid in designing more efficient processes and reduce waste. Our significant material topics – CORPORATE GOVERNANCE AND BUSINESS pillar SUSTAINABILITY REPORT PENNY ROMANIA 2022 50/250 SUSTAINABILITY STRATEGY ABOUT US AND OUR VALUE CHAIN THE FUTURE IS MADE TODAY SUSTAINABILITY HIGHLIGHTS MESSAGE FROM THE GENERAL DIRECTORS CONTENTS SUSTAINABILITY STEP BY STEP
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