Page 96 - Vaculug Sustainable Report 2022

EXTERNAL RISKS
Risk related to macroeconomic outlook
After the strong rebound of the global economy following the recession caused by the pandemic, the market is characterized by significant volatile market conditions, high energy prices and the continuation of a higher and more persistent inflationary scenario than expected, especially for the countries in which the Company operates.
In addition to the global scenario, there are also specific elements of individual economies have to
be considered, such as hyperinflation happened in Turkey, election in Brazil, importation constraints in Egypt. Further elements of uncertainty and instability also persist with reference to geopolitical tensions, with particular focus on continency situation of Russian¬ Ukrainian crisis.
Country risk
The Company is willing to adopt, where is appropriate, local-for-local strategy in order to respond to demand at local level with competitive industrial and logistical costs.
The aim is to increase the competitiveness and
to allow the Company to overcome potential protectionist measures, such as customs barriers or any other measures such as technical prerequisites, product certification and administrative costs
& antidumping related to importation, etc. In this context, the Company constantly monitors the evolution of general politico-economic situation, tax regimes and related risks from political, economic/ financial and security point of view, regarding the countries in which it operates, aiming to adopt continuously and timely (if possible) measures to mitigate the potential impacts of any changes arising at local level. Furthermore, in order to follow local- for-local approach, production capacity increase investment is foreseen.
Risks relative to the Russia-Ukraine contingency situation
The outcomes and implications of the Russia- Ukraine contingency situation remain uncertain. The restriction of international sanctions is also having repercussions on the Russian economy in terms of growth expectations, the currency market and the sustainability of the domestic economic and financial system. Under this context, with those complications the situation is also bringing about rising prices
for energy, metal and agricultural commodities,
with repercussions on price pressure and growth prospects for the Eurozone. These elements of uncertainty could impact significantly normal market dynamics and, more generally, of business operating conditions.
The situation and its developments of the Russia- Ukraine crisis is monitored constantly by Risk Committee and the Company has defined mitigation measures and a contingency plan.
Risks associated with
the evolution of long-term demand
Mobility is undergoing an unprecedented evolution due to technological changes (smart mobility, electrification of propulsion, driving automation and digital connectivity) and regulatory changes, with the aim of improving the society from sustainability points of view.
The Company constantly monitors these trends, both by analyzing studies and data available at global and local level and by participating in national and international webinars/conferences, as well as members of various category association, in order to anticipate potential impacts on the market and sector.
Risks linked to climate change
Today Climate Change is an undeniable fact and it brings significant changes in ecosystems of our Blue Planet, for example, the expansion of drier climate zones, posing serious risks to wellbeing of all species living on Earth, as well as regulatory points of view (possible effects on business and cost). For instance, the risks are very likely to cause negative impact on living conditions of human life in all its aspects i.e. economic, social and cultural life.
As the risk may have financial and business
impacts (risks and opportunities) to the Company, Vaculug monitors elements of uncertainty related
in order to put in place appropriate prevention and mitigation measures to protect its business, adopting therefore pro-active approach for this end. Lastly, the Company is committed to develop the most sustainable product with lower environmental impact as much as possible throughout their life cycle.
Moreover, specific focus has to be put on water management as water is the most vital resource for life and living on the Earth, the Company has set strategy and target aiming to have an efficient and responsible use of water in Production processes and workplace, therefore Vaculug is committed
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