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he title of this publication, "ClimateChange: The New Economy" is a call toaction. We are called upon to create awhole new economy, a new economicsystem that focuses on reversing our tendency topollute. It is by now clear to everyone everywhere in theworld that we must make this transition; the question ishow we go about it. We must reverse climate change by reversing habitsdeveloped over time, adopting new habits and newtechnology that can reduce or avoid the impact on theenvironment we live in. This is not an area where wecan expect individual citizens of the world to act out oftheir own sense of responsibility; it is a challenge thatrequires great leadership from governments andindustry. It requires innovative thinking and a strongdose of pragmatism. Solutions not solidly based in thelaws of economics will go nowhere.At Pirelli, we have a great sense of our responsibility bothas an industrial leader, generally, and, more specifically,as a company in the mobility business. Mobility pollutes,and we want to do our part to find innovative solutions -and they must be economically viable. We also want to use our influence throughout the industry andthroughout the world, to raise quality standards forconsumers everywhere and to raise environmentalstandards everyone in the industry must adhere to. In allforums we participate in, at European or other regionallevel or at international or UN level, we activelycontribute to set the same standards for everyone. The key service Pirelli provides, mobility, is a servicewhich is indispensable and at the same time bearsgrave responsibilities. We are responsible for people'slives and our research and development has alwaysfocused on safety as well as reducing environmentalimpact. But today our responsibility lies as well inmaking mobility sustainable, in being an innovativeleader in an area as fundamental for human well-beingas the quality of the air we breathe. And the companyhas found that this approach is a valid growth strategy.In our commitment to sustainable mobility we: . focus on "green performance" products that areenvironmentally friendly while maintaining safetyand other performance features, as our growthstrategy. Our commitment translates into numbers:green performance products made up 20 per cent ofour revenues in 2008, rising to 25 per cent in 2009(target fully reached). By the end of 2013 theirproportion will rise to 47 per cent of sales; . produce tyres that reduce fuel consumption invehicles, anticipating new EU standards. The tyresachieve this by limiting rolling resistance - theattrition that makes an engine have to push harder toturn the wheels -by as much as 20 per cent. Ourengineers are at the forefront of the industry infiguring out ways to do that at the same time asincreasing, not risking, driver safety; . produce tyres that last longer, which means they getas much as 30 per cent more mileage and have alonger initial operating life;. produce technology to monitor air pressure in tyres,with benefits in terms of both safety and fuelconsumption. Tyres that are 20 per cent below theirregular air pressure level can make the vehicleconsume up to 3 per cent more fuel, withconsequent greater pollution from emissions. Pirelli's Cyber Tyre Lean uses a sensor to monitor air pressure;.invest in research to develop the "Cyber Tyre", whichpromises to feed key information from the tyre - roadcontact area to the vehicle's electronics, improvingsafety and fuel efficiency;PIRELLI: FULLY COMMITTEDTO SUSTAINABLE MOBILITY100GREEN TRANSPORTTFILIPPO BETTINI, HEAD OF GROUP SUSTAINABILITY AND RISK GOVERNANCE, PIRELLI GROUP

reduction of dangerous emissions like carbon dioxide.Special attention has been given to the re-utilisation ofproduction remnants and used tyres, and the wastehandling protocol calls for the recycling of used F1tyres for either the generation of new primary materialsor for energy production;.produce particulate filters for diesel engine vehicles,both for new cars and trucks and for retro-fitting on existing commercial and industrial vehicles,dramatically cleaning their exhaust emissions. ThePirelli Eco Technology Feelpure filter eliminates morethan 90 per cent of PM10 present in vehicle emissionsand an average of 50 per cent of NO2, with no increasein NOx. Vehicles are, more and more, being required toclean up their emissions due to greater governmentregulation on air quality worldwide, particularly withlow-emission zones in city centres;. will soon open a new "green factory" with state-of-the-art technology and eco-compatible architecture,designed to increase productivity and limitenvironmental impact and destined to become thepioneer example in the tyre sector to be followedwithin the group worldwide;. are renewing all our manufacturing capacityworldwide, so that in 2015 around 60 per cent of ourplants and machinery will be less than 10 years old;. are moving production closer to demand, so thatlocal-for-local production will rise to 89 per cent in2015 for car tyres and to 85 per cent for truck tyres.Pirelli has adopted a sustainability governance systemwhich enables us to best manage the economic, socialand environmental impact linked to our processes,products and services, always with a view toinnovation, as well as across-the-board risk prevention.Our sustainability model takes its inspiration from theUN Global Compact, of which we have been an activemember since 2004.We adopt a multi-stakeholder approach, spanning all areas of corporate responsibility for all stakeholdersby pursuing sustainable and steady growth, as much as possible based on a fair balance between thedifferent expectations of all those who interact with the Company: the environment, investors,employees, clients, suppliers, institutions, outsidecommunities, competitors. Our strict ethical code aswell as our Policy on the environment, health, safetyand workers' rights inspired by SA8000 principles, areapplied to all our suppliers. Recently Pirelli conductedtough audits on 72 suppliers in 10 nations where thecompany has offices or purchases natural rubber, fromenvironmental/social/human rights/corruption riskspoints of view.Pirelli's sustainable performance is also witnessed byits recent confirmation in the Dow Jones SustainabilitySTOXX and Dow Jones Sustainability World indices,where the Company has been declared WorldSustainability Leader in the "Autoparts and Tyres"sector for the fourth consecutive year. nGREEN TRANSPORT101. produce tyres that reduce noise pollution, complyingin advance with a European standard to beapplicable in 2012;. use cleaner processes and materials free of highlyaromatic oils that are a potential health hazard, since2008. We are applying European standards inadvance, and all over the world, even where suchstandards are not mandatory;. actively develop and use a series of new, increasinglyecological materials for compounds. In 2009 Pirelliconducted research on raw materials from renewablesources that will enable it to produce ecological silica;. reduce consumption of water in production plants (by35 per cent in 2015 compared to 2009 levels),energy (by 15 per cent in 2015 compared to 2009levels) and CO2emissions (by 15 per cent in 2015compared to 2009 levels);. produce tyres that are highly retreadable;. introduce innovative manufacturingprocesses,increasing productivitywhile dramatically reducingenergy consumption;. take responsibility,together with ourcompetitors, for improvingrecycling of end of life tyres,materials and energy; . are committed tobringing environmentalsustainability criteria to ourexclusive Formula One tyresupply contract, whichcovers the 2011-2013 racingseasons. As in all Pirellicompetition tyres, the compounds forthe PZero tyre are free of highlyaromatic oils. Further, the processes usedat our motorsport tyre factory in Turkey arebased on energy and waterefficiency and the