03

E3:
an Integrated Sustainability Strategy

Sustainability that does not consider the triple bottom approach is not one.

As a family owned and run company with clearly defined values, we act today to ensure our success for tomorrow and the day after. We do this by investing in our employees by way of their skills development and training, as well as minimising our ecological footprint. Thinking and acting for the long term helps us systematically manage risks and take advantage of entrepreneurial opportunities earlier and with greater intensity.

Sustainability Governance in Hager Group

We realise that as one of the leading innovators in the electrical installation sector, we have both an opportunity and a responsibility to develop our business towards being a low carbon operation. Hager Group is uniquely positioned to provide some of the solutions to the climate crisis, spanning services from energy distribution to energy and load management and from security systems to building automation. By recognising our positioning, we can shape the future of sustainability both through the infrastructure we deliver to customers and partners as well as internally in Hager Group.

Practical engagement with sustainability issues is therefore key to our long-term success. The long-term nature of many of these factors, that is to say our Sustainability Strategy called E3, is embedded in our Corporate Strategy named Project 2030. Many of the issues are reflected in the three E3 pillars:

The Ethics pillar is a critical component of our sustainability strategy and refers to the ethical principles and values that guide the company’s business practices. This pillar encompasses a range of issues related to ethical behaviour, responsible business practices, respect for human rights and the promotion of ethical behaviour throughout the supply chain.

The Employees pillar focuses on the well-being, development and engagement of its employees. It encompasses a range of issues related to human capital management, including employee Health & Safety, training & development, diversity, equity & inclusion and work-life balance.

Our work on the Environment pillar is a dedicated strategy named the Blue Planet Commitment. This is the blueprint through which the company reduces the environmental impact of the company’s products and operations.

Responsibility for the sustainability lies with the Executive Board of Hager Group represented by the company’s CHRO and Sustainability Ambassador, Franck Houdebert. Sustainability is firmly anchored at group management level, ensuring the resources and high-level input needed to engage with stakeholders and continuously improvee performance. Governance and strategic sustainability initiatives are consistently a topic for the Executive Board and Sustainability Council meetings.

From left to right, the five members of our Executive Board: Dr. Ralph Fürderer, Chief Technical Officer – Philippe Ferragu, Chief Resources Officer – Daniel Hager, Chief Executive Officer – Franck Houdebert, Chief Human Resources Officer – Mike Elbers, Chief Marketing Officer.

03.1

Our E3 objectives align with the UN Sustainable Development Goals

At Hager Group, we are convinced that the 17 Sustainable Development Goals cannot be tackled individually. There are many interlinkages between them and sometimes tradeoffs that are important to understand. The combination of different substantial efforts in a multidimensional approach is the only way of getting to the main poverty reduction goal.

Hager Group has launched a 10-year corporate strategy, Project 2030⁷, designed to achieve different corporate ambitions of which the E3 sustainability approach is a priority. E3 is built on a foundation of responsible business practices spanning business ethics & governance, human rights, communities, procurement and environmental impact. Each pillar has clear objectives that contribute to different SDGs.

	Key Action Area and Governance	Qualitative Goals	Quantitative Goals	Monitoring	SDGs⁸
Coordination: Chief Human Resources Officer - Franck Houdebert	Environment Environmental Sustainability Director (Matthieu Alexandropoulos) under the CTO	Reduce the environmental impacts of our products and services	Reduce scope 1 & 2 emissions by 50% by 2030	The Science based targets initiative (SBTi) has validated our objectives.	SDG13 – Climate Action Aligning to limiting the temperature raise to 1.5% by reducing own emissions contributes directly to this SDG. SDG17 – Partnerships for the Goals Hager Group partners with technical experts, CDP, the United Nations Global Compact, World Resources Institute (WRI) and the World Wild Fund for Nature (WWF) in the context of the SBTi to fulfil this target.
							Reduce scope 3 emissions by 25% by 2030⁹	Starting 2023, we plan to yearly disclosure through CDP¹⁰ – Climate Change questionnaire to verify and track our environmental performance.
						Reduce by 100% non-sustainable packaging until the end of 2025	A dedicated project team lead by environmental project managers	SDG12 – Responsible Consumption and Production Reducing the use of non-sustainable packaging contributes to avoiding impacts related to the consumption of Hager Group Products & Solutions and makes sure production is cleaner and abides to eco-design¹¹ guidelines.
		Employees Cécile Zuber / François Belot Talent Development and Culture Senior Director under the CHRO Michael Blieberger Senior Health and Safety Manager under Manufacturing SVP	Attract and retain talent Hi! University	Skills Development Programme specific objectives	Time spent on My learning Hub platform.	SDG4: Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all.
				Empower our employees and make our working environment safe and secure with a preventive and continuous improvement approach.	Reduce the number and rate of recordable work-related injuries	the number and rate of recordable work-related injuries per site	Occupational Health & Safety is linked to the sustainable development goals through Goal 8: Decent Work and Economic Growth, as well as SDG3: Good Health and well-being. Providing safe and healthy working conditions is a key aspect of decent work, and it contributes to the overall health and well-being of workers, which is essential for sustainable development. Additionally, reducing work-related accidents and illnesses can lead to increased productivity and economic growth.
		Ethics Group Ethics Officer	Ensure ethical business practices along the value chain of our products	Train 100% of Group Managers on how to analyse and interpret difficult ethical situations through the “Serious Game” (Let’s Practice) programme by 2024	Number of managers trained: 50% by the end of 2022	These are programmes that reinforce capacities and resilience of managers to unethical behaviour in every single aspect of daily business operations in clear accordance with our Hager Group values in particular: courage, authenticity and integrity. Ethics play a crucial role in sustainable development goals as they provide a moral framework for making decisions and taking actions that promote sustainable development. Ethics provide guidance on what is considered fair, just, and responsible, which is important when addressing issues such corruption, harassment, and ethical business practices. This is of particular importance to SDG 16 Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels.
		Ethics Group Ethics Officer			Expand the Ethics Ambassadors network to 20 ambassadors worldwide by the end of 2022. The ambassadors are part of a train-the-trainer system that ensures different ethical business workshops are organised regularly and equally among employees in all different sites worldwide.		Number of ambassadors in the network

Hager Group reports on its contribution to several SDGs along its value chain

03.2

Rules, Processes, and Controlling: Embedding Sustainability in daily operations

Hager Group has a proactive approach to sustainability management and has developed a sustainability policy to make sure sustainability is anchored in decision making. Our main Corporate Sustainable Development policy describes clauses related to:

Accountability
Disclosure
Scope and boundaries
Grievance though our Integrity Alert System (Let’s talk!)

Attached to it, specific themes policies treating material topics, as defined by our materiality assessment, are implemented using internal processes:

Ethics Charter
Environmental Policy
Internal Mobility Charter
Hager Anti-Corruption Code of Conduct
Supplier Code of Purchasing

Hager Group uses an X-Matrix model to monitor, track Executive Board priority targets to be translated into all functions in the company. For every managerial function where sustainability issues are relevant, KPIs used to monitor yearly targets are controlled periodically using reporting dashboards transmitted to the Executive Board.

Controlling Sustainability Targets in Hager Group

Quantitative Goals	Monitoring	Control
Reduce direct emissions by 50% by 2030 Reduce indirect emissions by 25% by 2030¹²	The Science based targets initiative (SBTi) has validated our objectives. Starting 2023, we plan to yearly disclosure through CDP¹³ – Climate Change questionnaire to verify and track our environmental performance.	Activity data used in calculating the carbon footprint is monitored, namely Energy Consumption on a monthly basis.
Reduce by 100% non-sustainable packaging until the end of 2024	A dedicated project team following definitions of the Ellen MacArthur foundation definition of sustainable packaging	SAP operating systems track quantities of sustainable & non-sustainable packaging purchased against objectives
Talent Attraction and Preservation	Turnover and recruitment figures	SuccessFactors HR system
Talent Development People and Organisation Review (P&O R) yearly: define training needs	Hi! University Performance Development Interviews - Development interviews	Digital platform (hours spent training): MyLearning hub
Empower our employees and make our working environment the best it can possibly be	The number and rate of recordable work-related injuries	Monthly reports on work related injuries and fatalities are presented by the manufacturing department to the Executive Board
Train 100% of group managers on how to analyse and interpret difficult ethical situations through the “Serious Game” programme by 2024	Number of managers trained: 50% by the end of 2022	Attendance to training workshops is documented and communicated upon.
Expand the Ethics Ambassadors network to 20 ambassadors worldwide by the end of 2022. The ambassadors are part of a train-the-trainer system that ensures different ethical business workshop are organised regularly and equally among employees in all different sites worldwide.	Number of ambassadors in the network	Recruitment campaigns for ambassadors are internally launched. Their selection is validated by their managers as they have to agree to having an additional role (next to their main function) and allocate a part of their working time on the ethics training programmes.
Treat 100% of eligible ethics alerts received.	Rate of closed cases against number of reported ethics calls.	CSR & ethics officer KPI reports to Sustainability Council

03.3

Incentive Systems

Eve-Madeleine Groeblbauer,
Group Compensation and Benefits Senior Director

Aligned with Group Corporate strategy, a holistic approach for developing Compensation & Benefits programmes and policies is in place since 2019. The company has created an incentive scheme to consistently pursue and not lose sight of its most important corporate goals. The bonus scheme allocation at Hager Group between individual performance and collective performance depends on the position and responsibility in the organisation of each employee. The group performance is triggered when a group net cash flow is reached. There are 4 domains and 6 Group KPIs to measure collective group performance. The KPIs involve and engage every business function setting equally weighted objectives recognising their equal importance to deliver superior performance. As seen above, the defined KPIs cover the three different dimensions of sustainability (economy, social, environment). Minimising work related injuries and reducing our carbon footprint (energy intensity) while keeping a strong economic performance of our operations are top priorities.

Weightings of Different KPIs in defining the collective performance linked to Bonus Compensation

Group objectives	KPIs to measure 2022 performance	Definition	Weightings
Business	Turnover growth in %	External sales: income from ordinary operating activities less value added tax	17%	34%
Business		EBIT	External sales: income from ordinary operating activities less value added tax	34%	17%
Customers	OTRC / On-Time Received by the Customer	number of order lines received on time or before time by our customers / number of order line requested to be delivered by the customer during the period.	17%	34%
Customers		Customer Quality Issues managed within 30 days	All declared customer issues from all Market Areas	34%	17%
Employees	Work-related injuries	# injuries / 1.000 employees	16%	16%
Carbon Footprint	Energy Intensity	Reduction of the energy consumption of the production sites per Mio€ Turnover	16%	16%

Responsible sourcing is a highly material component of our sustainability strategy. We believe that managing ESG risk in sourcing materials, products, and services is not only important for the environment and society, but critical for the long-term success of our business. We are committed to working with suppliers who share our values and principles, and who prioritise environmental and social responsibility in their operations.

Thomas Stein,
Senior Director Sourcing Hager Group

03.4

Responsible Sourcing

When it comes to our sourcing operations, we are progressing towards developing and implementing a more complete strategy to put sustainability at the very heart of our mission. To streamline global action, we are assessing our operations in a multi-stakeholder consultation process. This strategy is focused on a vision of collaboration with our global supplier network to build an inclusive and carbon neutral world, where ecosystems and resources are preserved, and people get access to economic opportunities and decent working conditions. In 2022, we carried out several actions to strengthen our sustainable sourcing practices. Our approach lays on a clear process: policy commitment, risk assessment, audits, and supplier engagement.

Responsible sourcing process

Signature of our Supplier Code of Conduct

Monitoring of high-risk suppliers

Sustainability assessment of selected high-risk suppliers

Audits (administrative) of selected suppliers

Supplier dialogue and corrective actions

Policy and Business procedures

Our Supplier Code of Purchasing is a clear policy statement that commits us and our suppliers to fundamental sustainability requirements. This provides a clear direction for procurement activities and highlights priorities when it comes screening and assessing our suppliers. All our suppliers are obliged to sign this code to qualify as an eligible business partner with Hager Group.

Risk Assessment and Audits

Conducting risk assessment to identify potential environmental, social, and economic risks associated with the supply chain is critical to our business. In line with the German Supply Chain Due Diligence act, we have incorporated different tools to be able to:

continually perform risk assessment analysis using the Riskmethods artificial intelligence powered software establishing a single source of truth for handling risk across the entire organization.
lay down preventive measures in an enterprise’s own area of business, vis-à-vis direct suppliers and – if there are indications that suggest a possible violation of human rights – vis-à-vis indirect suppliers
Identify high risk suppliers for potential audits
Conduct administrative audits to ensure that risks are addressed properly and our Supplier Code of Purchasing is properly reinforced across our value chain.

Supplier Engagement

Engaging with suppliers and incorporating sustainability criteria into procurement processes helps to identify and select suppliers that share the organization’s commitment to sustainability. This also creates opportunities for collaboration and innovation with suppliers. The objective is also to implement an action planner that helps collaborate across the organization and with the suppliers to orchestrate the tasks needed to both proactively and reactively mitigate sustainability linked risks.

Project 2030 is designed for growth in times of rapid technological innovation and intensifying competition. It is geared to keep us customer centric, independent, strong, and sustainable.

UN Sustainable Development Goals

Our GHG emissions reduction targets are in absolute values.

CDP.net

Hager has developed an Eco-design handbook that supports in implementing circular economy practices in our production sites

Note that we exclude our end of life of sold products emissions from our scope 3 reduction targets.

CDP.net