The Telecom Italia Group has performed a leading role in introducing the Sustainability Report in Italy as a means of integrated performance reporting and transparent communication of corporate strategies. The path we have followed, from our first 1997 Sustainability report onwards, has been coherent and compliant with a growing commitment to promote Sustainability as a business value.

In 2002 the Group''s governance structure was further enhanced through adopting practices and principles of conduct, formally expressed in codes and procedures. The Corporate Governance system was implemented with the Code of Ethics, which is ideally placed upstream of the whole system and which constitutes, in terms of general policy, the set of principles which guides the Group''s activities in relation with our stakeholders for an ethical business conduct.

In the 2002 Sustainability Report, Telecom Italia was assessed in accordance with the following international standards, using specific indicators to measure its performance in respect of:
- Customers: the criteria established in the Consumption Guidelines of the Council of Economic Prorities (CEP)
- Suppliers: the SA8000 included in the CEP indicators
- Environment: the indicators of the Sustainability Reporting Guidelines (GRI)
- The Community: the guidelines of the London Benchmarking Group (LBG)
- Employees: the Human Development Enterprise (HDE) model
- Shareholders: DJSI, Ftse4Good, SIRI

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Actions and objectives accomplished in 2002:

- Signing up to the GC principles
- Drawing up the Sustainability Report, jointly reported with the Annual Report and presented at the Shareholders'' Meeting
- Creation of a Sustainability Database containing 380 KPIs
- Admission to the FTSE4Good Index for Telecom Italia and TIM. Eligibility for admission to the DJSI for Telecom Italia and TIM
- Approval of the Group Code of Ethics and Group Code of Conduct for Insider Dealing
- Development of the Control & Self-Assessment project supplementing the existing internal control system
- Creation of the Group Sustainability Team

With respect to Environmental issues, the Group has identified four major elements by which it measures the effectiveness of its environmental management system and establishes programs to improve performance in the following areas:
- Waste management
- Consumption of natural resources and energy
- Air quality and climate changes
- Electromagnetic emissions

Each of these items is closely monitored and significant improvement occurres year over year.