Integrity in ethical business conduct

05.1

Our ethical commitment

GRI 2-24 and 2-25 General disclosures

Our prosperity and sustainable development depend on the trust we inspire in our customers, partners, suppliers and stakeholders. Central to this trust is our unwavering commitment to fostering an ethical work environment within our company and across our entire value chain. Our Ethics Charter and Human Rights Charter set out the guiding principles and rules to uphold our commitment to ethical behaviour, deal with complex ethical situations with integrity and safeguard us against any form of corruption and unethical behaviour. Both charters underscore our dedication to upholding human rights and ensuring human safety within our organisation and beyond.

With our Ethics Charter, we affirm our steadfast commitment to conducting business with integrity and ethical rigour. This entails strict adherence to both national and international standards and regulations, safeguarding Hager Group’s intellectual property (IP) and assets, promoting fair competition and upholding the highest standards of product quality, safety and environmental protection. Our commitment extends to transparent communication, robust data protection and unwavering respect for data privacy across all stakeholder interactions. Furthermore, our Ethics Charter emphasises our dedication to fair treatment and providing development opportunities for all employees and actively avoiding conflicts of interest. We uphold a strict zero-tolerance policy against any form of corrupt practices, including remaining politically and religiously neutral, avoiding funding any political party.

With our Human Rights Charter, we affirm our unwavering commitment to upholding internationally recognised human rights regulations and standards. We endeavour to ensure that respect for human rights remains at the core of all our actions. Within our company operations, we strictly prohibit the use of child labour and any form of forced or compulsory labour. Moreover, we extend this zero-tolerance policy to our value chain. At Hager Group, we prioritise equal opportunities for all employees and applicants, our workplace culture champions diversity and inclusivity.

GRI 3-3 Material topics

05.2

Driving ethical behaviour

GRI 2-24 and 2-25 General disclosures

In alignment with our commitment to ethical behaviour and the pursuit of being viewed as a trusted company, we have implemented measures to identify and address ethical risks within our company, across our supply chain and among our customers. These comprehensive measures, guided by the principles outlined in our Ethics Charter and compliance with relevant laws, reinforce our reputation as a trusted organisation. As evidence of our dedication, we are proud to report that during the reporting period 2022 and 2023, we incurred no monetary fines nor non-monetary sanctions, our commitment to ethical conduct and compliance is strong.

GRI 2-27 – General disclosures

GRI 3-3 Material topics

05.2.1

Ethical risk assessment

An ethical risk assessment is crucial for identifying and evaluating potential unethical behaviour within an organisation or project. Its importance lies in the fact that by identifying these risks, organisations can ensure the integrity and sustainability of their businesses in today’s complex landscape¹⁴. As such, we conducted a comprehensive ethical risk assessment across the group in 2021, its ambition was to promote ethical conduct and strengthen our stakeholder relationships.

GRI 205-1 – Anti corruption

We followed a four-step assessment process to identify and effectively manage our potential ethical risks:

Ethical risk assessment results

In addition to the ethical risk assessment, Hager Group conducts operational risk assessments at group level and complies with local regulations. Therefore, the impact of critical ethical risks such as corruption and bribery is stringently assessed through operational, economic, reputational and regulatory perspectives for 100% of our operations.

In compliance with legal requirements of the French SAPIN II law, all Hager Group France-based operations are periodically assessed for risks related to corruption and bribery. In the last 2021 assessment, we identified fraud as a corruption-related risk and increased vigilance. Additionally, in 2019 and 2021, our Legal and Risk function performed group risk mapping in collaboration with all the relevant stakeholders. The mapping also included the group’s exposure to corruption and bribery risks in all our operations. In 2024, we are conducting the risk mapping at group level again, data security will also be included as it is a top management priority.

GRI 205-1 – Anti corruption

05.2.2

Digital trust and security

Digitalisation is a top priority as part of our commitment to sustainable development. Integrating digital technologies into our operations is essential for advancing optimisation and efficiency initiatives. By focusing on developing and providing software solutions to our customers, we actively explore new economic opportunities.

While digital transformation offers significant benefits to businesses and operations, the trend necessitates a focus on cybersecurity as the threat landscape is constantly evolving. It is of critical importance that we prioritise cybersecurity, product security and data protection due to the complex and far reaching nature of our business; we are present in over 30 countries, with intricate regulatory frameworks and an extensive network of suppliers.

Social responsibility and cybersecurity are closely linked, as cybersecurity is vital in the digital age. With our lives increasingly connected to technology and the internet, safeguarding digital identities and personal information is essential. Cybersecurity breaches can lead to financial loss, reputational damage, and physical harm.

Companies and organisations must protect their data and prevent cyber-attacks by implementing robust measures like encryption, firewalls, and intrusion detection systems. They should also update systems regularly and educate employees on cybersecurity best practices.

Individuals also have a duty to protect their personal information, using strong passwords, being cautious with unsolicited emails, and keeping software up to date.

In summary, protecting digital identities and information is a key aspect of social responsibility in the digital age to build Digital Trust for all stakeholders. To address the growing need for connectivity and the rise in operational, financial, and reputational risks, Hager Group aims to establish and maintain Digital Trust across our digital landscape for employees, partners, and customers. This includes a diverse range of digital technologies such as:

• IT (all digital office tools for our employees and possibly some partners)
• OT (Industry 4.0 landscape in production and logistics centers serving our business)
• IoT (smart products and services for our customers)

With our global IT security policy, we are dedicated to safeguarding the data of our employees, customers and stakeholders and ensuring compliance with data protection laws and regulations. We strive to enhance resilience, foster trust and mitigate risks across our digital and operational realms. Through close collaboration across all ecosystems – suppliers, authorities and customers, particularly those in critical infrastructures – we are raising industry defence standards and bolstering digital trust.

Raising employee awareness about cybersecurity is crucial for safeguarding both our workforce and the company as a whole from potential cyber threats. Accordingly, we have implemented a cybersecurity training module in our corporate university Hi! This cybersecurity training is mandatory for all employees. By equipping our workforce with the knowledge and skills necessary to identify and respond to cybersecurity threats, we fortify our defences and promote a culture of cyber resilience within Hager Group.

05.2.3

Ethics in our supply chain

Throughout 2022 and 2023, we embarked upon a comprehensive array of initiatives designed to effectively communicate our sustainable development expectations to our suppliers. Our Code of Purchasing Conduct, articulates our stringent standards regarding ethical conduct and the protection of human rights.

With the enactment of the German supply chain due diligence act, known as LkSG, we have elevated our efforts beyond contractual obligations. Leveraging our reporting and compliance management tool, SPHERA, we now actively monitor instances of non-compliance within our nearly 1600 tier-1 direct sourcing suppliers. This enables us to swiftly address any identified issues, reinforcing our proactive stance in recognising the potential impacts on our operations and stakeholders.

GRI 414-2 – Supplier social assessment

Currently, we are diligently progressing with an update of tier 2 and 3 suppliers, as well as suppliers from the Group Real Estate, Investments & Business Services (GRiBS) and logistics function, within the SPHERA tool. This ongoing enhancement is pivotal for our overarching monitoring and control efforts, ensuring comprehensive coverage and efficiency in our sustainability initiatives.

05.2.4

Product safety

As a trusted company, the health and safety of our customers remain paramount in our operations. We understand the profound impact that supplying faulty products can have, on both the well-being of customers and our company’s reputation. Additionally, the prospect of recalling such products from the market poses significant financial and reputational risks for the company.

GRI 3-3 – Material topics

With these considerations in mind, we have implemented rigorous quality standards to ensure the integrity of our offer. Each new development and existing product undergo meticulous assessments for customer health and safety. This process includes various risk assessments, qualification plans, quality gates and certification programmes. As a result of these stringent measures, we are pleased to report that no incidents leading to penalties or violations of regulations have been reported during the reporting cycle.

GRI 416-1 and 416-2 – Customer H&S

To further strengthen our commitment to customer safety, we are currently in the process of developing a tool to enable the direct recording and timely resolution of customer issues. With these proactive steps, we uphold our reputation as a trusted supplier while safeguarding the well-being of our valued customers.

05.3

Reporting integrity alerts

GRI 2-24 and 2-25 General disclosures

At Hager Group, we have taken multiple measures to identify, report and address potential ethical and human rights issues in our company and across the value chain. These measures also include data security and privacy issues.

05.3.1

Let’s talk

In line with our Ethics Charter, we have a well-established integrity alert system called “Let’s talk!”. It is accessible to all our employees and relevant external stakeholders (temporary employees, NGOs, customers, suppliers and other business partners) at all times and in native languages. The integrity alert system ensures the anonymity of the person reporting as the process is confidential. The alerts are received and handled internally by our ethics teams or by an impartial third-party agency thus guaranteeing confidentiality if specifically requested by the person reporting any kind of alert.

GRI 2-26 – General disclosures

In 2023, our integrity alert system witnessed a significant surge in alerts compared to the previous year. While the number of reported incidents stood at 17 in 2022, this figure raised to 58 in 2023, marking a threefold increase.

GRI 2-16 – General disclosures

Incident reporting

Notably, nearly 90 % of these cases pertained to Human Resources (HR) issues and instances of dishonest behaviour. The most frequently reported issues include harassment of a sexual or other nature, unfair treatment, poor management practices, discrimination and racism. In terms of dishonest behaviour, issues related to conflicts of interest, theft and fraud were more frequent.

Human Resource allegations

Although the spike in reported cases could raise concerns, it also reflects a heightened level of trust and awareness of our integrity alert system among both employees and stakeholders. Furthermore, it’s essential to recognise that not all reported cases were of a serious nature. Of the reported cases, approximately 90 % warranted further investigation, 21 out of the 53 investigated reports were at least partially substantiated. However, it is noteworthy that six of the alerts investigated by the Ethics Committee resulted in employee dismissals.

Note that none of the confirmed cases were linked to corruption. Moving forward, we remain committed to fostering a culture of transparency, accountability and ethical conduct to uphold the trust placed in us by our stakeholders.

GRI 205-3 – Anti corruption

In recent years, our efforts have been directed towards enhancing awareness and fostering trust in our integrity alert system, “Let’s talk!” Recognising the importance of effective stakeholder engagement and trust-building, we initiated a feedback mechanism in 2023. Our ethics team has developed a comprehensive questionnaire for feedback from users of the integrity alert system, facilitating the identification of areas for improvement.

This questionnaire is distributed to all individuals involved in internal investigations, including informants, respondents and witnesses. Additionally, feedback is gathered through our Ethics Ambassadors, who serve as the voice of Hager Group’s stakeholders on ethical matters. Through these concerted efforts, we aim to continuously refine and enhance our integrity alert system, reinforcing our commitment to transparency and ethical conduct.

GRI 2-25 – General disclosure

To strengthen “Let’s talk!” and build stakeholder trust, as part of phase 2 of our company project named Project 2030, we aim to focus on the following deliverables:

05.3.2

Data security

Our cybersecurity teams have implemented a robust cybersecurity monitoring and control system, resulting in a steady decrease in reported incidents each year. From 2020 to 2023 there has been an over 50 % decrease in reported incidents. However, the persistent occurrence of high-risk and extremely high-risk incidents remain a cause for concern and warrant attention. In 2023, we observed the highest number of high-risk incidents to date.

Additionally, while the number of data breach incidents has declined from twelve in 2020 to just one in 2023, we remain vigilant regarding this significant threat. By prioritising proactive measures and continuously refining our cybersecurity protocols, we strive to ensure the ongoing protection of our organisation and stakeholders from cyber threats.

05.3.3

Supply chain

In 2023, our supply chain witnessed 170 incidents of socio-environmental violations, encompassing suppliers across our direct sourcing, logistics operations and Group Real Estate, Investments & Business Services (GRiBS). Of these reported incidents, only six, accounting for 3.5 % of the total, were determined to have medium to serious relevance and pose a medium to high impact.

Of the identified incidents, 4 were attributed to faulty labour practices, specifically lapses in ensuring occupational health and safety in the workplace, while two were related to instances of forced labour. Prompt intervention followed the discovery of these incidents; actions were taken with the respective business partners and remedial measures implemented to address the violations.

GRI 414-2 – Supplier social assessment

05.4

Ethics training programme

GRI 2-24 and 2-25 General disclosures

Our ethics team has diligently created a tailor-made and adaptable training programme to equip employees with the necessary knowledge and skills to understand and effectively navigate complex ethical situations. Specific training modules focusing on business ethics and ethical decision-making are currently available, others are still in development and scheduled for implementation in the coming years.

“Let’s practice!” is a Hager Group tailor-made and interactive serious game about business ethics where participants are selected by Human Resources Business Partners. The objective of this training module is to:

• Discuss and learn how to analyse and interpret difficult ethical situations,
• Determine what actions to take and/or where to look for help,
• Defend choices and courses of action.

The content is developed based on real-life Hager Group situations, among other sources. Since its launch in 2021, almost 25 % of our target employees, mainly managers, have benefitted from this training. Whilst the initial plan was to train managers and specialists working in positions identified as incorporating high ethical risks, top management has now also decided to include all employees with an email address, as everybody is likely to face at least some ethical dilemmes related to their work, especially regarding discrimination, harassment, unfair treaments, racism, and conflicts of interest. Accordingly, we have adjusted to be able to train almost one-third of our target employees in 2024.

In 2023, the ethics team launched three e-learning training modules, each focusing on different ethical issues:

• Anti-bribery & Corruption
• Fraud & Conflict of Interests
• Discrimination & Harassment

By end 2023, 53 % of all permanent employees with an email address had completed these modules. The target is to achieve 75 % by end 2024.

GRI 205-2 – Anti corruption

Recognising the pivotal role of managers in upholding ethical standards, a comprehensive training programme “Ethics, Risk & Management” is planned for launch in 2025. Indeed, managers frequently encounter ethical dilemmas and their colleagues request guidance in such situations. This standardised training programme will equip managers with the necessary skills and knowledge to effectively navigate ethical challenges and provide guidance to their teams, fostering a culture of integrity and ethical conduct throughout the organisation.

05.5

Ethics Ambassadors

GRI 2-24 and 2-25 General disclosures

At Hager Group, we established an Ethics Ambassador network in 2020. The network has since evolved and become an integral part of Hager Group’s ethics function, with 23 members in over ten countries by end 2023. Ethics Ambassadors are employees from different functions and countries who have volunteered to promote ethical behaviour and values within the organisation. They act as advocates for ethical conduct and serve as a resource for employees who have questions or concerns about ethical issues.

Their responsibilities may include:

• Promoting the group’s Ethics Charter and values to all employees
• Providing guidance and advice to employees on ethical issues and dilemmas
• Identifying potential ethical issues and bringing them to the attention of management
• Contributing to Let’s talk! investigations
• Implementing training programmes, in particular the serious game “Let’s practice!”
• Encouraging open communication and transparency within the organisation
• Serving as a liaison between employees and management on ethical matters
• Participating in the development and implementation of ethical policies and procedures

Although voluntary, being an Ethics Ambassador is a pivotal role that requires the utmost consideration. Therefore, ambassadors are selected based on their knowledge and understanding of the organisation’s ethical policies, their ability to communicate effectively, and their commitment to promoting ethical behaviour. They also receive special training that helps them fulfil expectations of their role.

GRI 2-26 General disclosures

05.6

Corporate citizenship

Peter und Luise Hager Foundation

The Peter und Luise Hager Foundation was founded with the aim of centralising our charitable endeavours and exemplifying the corporate citizenship values of our company. It is dedicated to the conception, support and execution of its own projects, all of which are driven by a commitment to fostering skills and education across various domains.

The foundation operates with professionalism and ensures responsible stewardship of its funds to ensure that assistance reaches those in need precisely when required. In alignment with the group’s philosophy, the foundation prioritises the following:

Art and culture (AC)

Education and learning (EL)

Environmental protection (EP)

Social activities (S)

Science and research (SR)

Throughout 2022 and 2023, the Peter und Luise Hager Foundation allocated over €1 million to advancing the previously listed priority areas, with a commitment to fostering a sustainable society.

The foundation also actively encourages Hager Group employees to get involved by proposing and leading social or environmental projects in their region. Employees are invited to submit project proposals aligned with the foundation’s objectives, such as supporting food banks, campaigns to organise waste collection or facilitate tree planting initiatives. These projects are tailored to address local needs and challenges, emphasising regional impact and relevance. Teams are empowered to plan and execute these initiatives independently, with each team or department eligible to undertake one funded project per year. Prior approval from the line manager ensures alignment with organisational resources, fostering a culture of corporate social responsibility and community involvement at Hager Group.