Marco Tronchetti Provera Accepts the Corporate Social Responsibility Award

Thanks to all of you. It's a great honor for me to be here and receive this prestigious award. I accept it on behalf of the thousands of Pirelli employees who have integrated social and environmental responsibility into their daily working lives and value systems. They have achieved results for Pirelli and set an example for others.

Although many political leaders around the world have a long-term vision and focus on policies for a sustainable planet, it is becoming clear that corporations, as much as governments, play a key role in sustainable development. We can set standards, cut emissions, save water, and educate children. We can set examples and teach responsible behavior in our internal and external communities.

In constructive relations with all our stakeholders, when we purchase materials from a supplier, we can demand ethical behavior from that supplier and from the whole supply chain, creating a ripple effect. When we prove to our investors that sustainability is profitable, we encourage them to demand sustainable practices from other companies they invest in.

Corporate responsibility is a governance model that has evolved over time. Companies have long had a role in creating value for local communities, and a hundred years ago in Europe, a family-owned company like Pirelli was already very focused on taking care of its workers and their families. By the way, Pirelli is 141 years old this year, even older than a prestigious Foreign Policy Association.

When Pirelli opened a factory abroad, it was quite natural to contribute to the surrounding community, improving local health care, supporting youth, and so on. Today, corporate responsibility is a requirement. People expect a multinational corporation to have a social program, but it goes farther: the program's impact must be scientifically measurable, as it must create value.

Now corporations have departments to oversee sustainability management, measure impacts, and work closely with communities. Today we are faced with a new sense of urgency about our planet, our people, and our resources. We have to think long-term. We are helped by a push from investors interested in sustainability. We are helped by financial sustainability indexes like the Dow Jones Sustainability Index or the FTSE4Good Index, which monitors specific criteria ranging from corporate governance to treatment of workers to environmental impact.

We are helped by information technology, which allows companies to measure in real time such aspects as the carbon footprint of a single product. We can set targets and monitor whether we are meeting them. Pirelli is targeting a 70% reduction in water withdrawal, a 15% reduction in CO2 emissions, and a 15% reduction in energy consumption in our factories between 2009 and 2015.

We are helped by the speed and activism of internet-based media, which encourages good practices and can punish bad ones. We are helped by a new consumer activism that favors responsible brands. In a survey by the Reputation Institute on Pirelli's 2012 Global Reputation Pulse, 42 percent of the result was based on CSR drivers. Overall, 61 percent of consumers buy products of an organization with a good reputation—a reputation largely based on CSR.

We are helped by new frontiers in research, which allow, in our case, silica made from rice husk—a lower rolling resistance in a tire for significant fuel savings and less CO2 emissions. What is really exciting for us is that we have enough measuring and monitoring systems in place that we can prove to ourselves, investors, and the world that sustainability is profitable.

As investors understand this, our investor profile has shifted, with 74 percent of our free float now in the hands of long-term international institutional investors, including socially responsible investors, compared with 33 percent in 2009.

I have given you a lot of detail because I believe it helps for all of us to share what we do and think together about how we can continuously improve in sustainability. I'm honored to receive this award, and I want to thank Archie Cox Jr., Neal Ide, and the Foreign Policy Association, as well as all of you for your attention. Thank you.