E3: an integrated sustainability strategy

03

E3:
an integrated sustainability strategy

The dynamics of our economic system

and their impact on society and the environment are in constant flux, with new variables continually entering the equation.

The pace of change is accelerating rapidly, compelling us to anticipate and adapt to emerging developments, regulations, and partner preferences.

In order to cope with this rapid rate of change, we have reassessed our approach to leadership and management of corporate sustainability in 2023. The traditional notion of “business as usual” is no longer viable; established practices that have served well for centuries are now outdated and offer little promise for future success.

Addressing these challenges have made us focus our E3 strategy on three key factors: a fitting governance model, regulatory compliance to steer and control, and our existing strengths as a solid basis. Effectively integrating sustainability into a company’s leadership framework requires the commitment of all corporate functions.

Effectively integrating sustainability into our company’s leadership framework requires the commitment of all corporate functions to our E3 Strategy.

Franck Houdebert,
Chief Human Resources Officer and Group Sustainability Sponsor

03.1

Sustainability governance

The G in ESG stands for governance – and sustainable corporate governance enables us to monitor, anchor and manage sustainability across all relevant functions in the group. Our governance model reflects a holistic and integrated system of corporate leadership, management, and supervision that keeps our group productive and impactful for the long term.

The figure below is a comprehensive overview of the management of sustainability-related decision-making and actions at a group level. It illustrates the delegation of sustainability management actions from the highest governance body to employees and, outlining the scope of their responsibilities in ensuring sustainable development.

GRI 2-13 General disclosure

Hager Group Sustainability Governance
03.2

Our E3 strategy

Recognising our position as a leading innovator in the electrical installation sector, we acknowledge both the opportunity and responsibility to steer our business towards operating with lower carbon emissions. By leveraging our position, we can influence the sustainability landscape, both through the infrastructure we provide to customers and partners, as well as internally within Hager Group. Active involvement in sustainability issues is therefore vital for our sustained success. Our E3 Sustainability Strategy is an integral part of our Corporate Strategy, Project 2030, aligning with long-term objectives. E3 comprises three pillars:

Ethics underscores our commitment to ethical principles and values, guiding our business practices. Our commitment to ethical behaviour is reinforced through various channels such as awareness training available via Hi! University, a robust grievance mechanism, and the dedication of our Ethics Ambassadors. The ethics pillar encompasses promotion of ethical behaviour, responsible business conduct, human rights, and promoting ethical behaviour throughout our supply chain.

Employees prioritises the well-being, development, and engagement of our workforce. It addresses human capital management, including aspects such as employee health and safety, training and development, diversity, equity, and inclusion, as well as work-life balance. Having identified the need for a robust health and safety structure at group level, Hager Group is actively working to standardise health and safety practices throughout our operational sites.

Environment objectives are encapsulated in our Blue Planet Commitment. Aligned with our environment value proposition and SBTi commitment, this strategy outlines our approach to minimising the carbon footprint of our products and operations, serving as a blueprint for environmental protection efforts within the company. Our initiatives, such as the integration of eco-design principles into our product development, promoting reuse of ocean-bound plastic waste in our product manufacturing and focusing on our product environmental profile (PEP) development exemplify our commitment to transitioning towards a low-carbon economy. Our ambitious company project – Project 2030 – is aimed at ensuring Hager Group’s readiness to operate sustainably. We have now entered in the second phase of this project with the clear ambition to make Hager Group future ready by reaching industry standards. This will be achieved through three objectives highlighted below:

CSR strategy priorities in 2024

Tactical

Partner with credible sustainability rating systems to ensure transparency and credibility

  • Maintain EcoVadis gold rating by executing 75 % of dedicated cross-functional action plans

Strengthen the core

Strengthen the basics and nurture our assets

  • Strengthen safety culture with our Mission Zero safety programme to reach zero accidents
  • Refine the sustainability employee strategy (health and well-being at work, leadership, etc.) – Improved integrity alert system
  • Roll out our Blue Planet Commitment Programme

Ability to steer and control

Generate CSR data to allow self-diagnosis and benchmark

  • 50 % of CSRD data points ready
  • Deliver sustainability data architecture
  • Deliver sustainability report aligned with GRI standards
03.3

SDGs and E3

The figure here lists the SDGs relevant to the operations of Hager Group. It also highlights its alignment with our E3 Strategy i.e., Environment, Employees and Ethics. The alignment is further accentuated and justified by using the “Linking the SDGs and the GRI5 Standards”, a guide developed by the GRI in 2020.

Alignment of SDGs and our E3 strategy

03.4

Rules, processes and controlling: embedding sustainability in daily operations

Our sustainability policy underscores its commitment to challenging itself and transitioning towards sustainable practices. Complementing our E3 strategy commitment, we aspire to adhere to world-class standards through ISO certifications. The policy ensures that sustainability considerations are deeply integrated into decision-making processes with a focus on:

  • Accountability
  • Disclosure
  • Scope and boundaries
  • Grievance through our Integrity Alert system (Let’s talk!)

Beyond the sustainability policy, Hager Group has established additional policies and processes to further articulate our ambitions and ensure adherence to our sustainability commitments. These are meticulously documented at both operational and functional levels, falling under the umbrella of:

  • Ethics Charter
  • Environment and energy policy
  • Internal Mobility Charter
  • Human Rights Charter
  • Supplier code of purchasing

As highlighted in the table, Hager Group has set quantitative and qualitative targets to ensure the effectiveness of its sustainable development policies and process. These objectives are monitored and controlled by the highest governance body.

GRI 2-23 General disclosure

Hager Group sustainability impact
03.5

Incentive systems

To ensure group level objectives are achieved, Hager Group introduced a new bonus scheme in 2019. Central to this scheme is the idea of ensuring economic growth while upholding our E3 strategy objectives. KPIs are set annually at group level, which are used as a basis for evaluating our performance as a team. The group performance bonuses are triggered upon achievement of a group net cash flow target to finance its future development. The distribution of bonuses within Hager Group is determined by a balance between individual performance and collective performance, which may vary based on employee’s position and level of responsibility within the organisation. For the year 2023, four group targets and six key performance indicators (KPIs) were defined to cover all areas of the company, they are weighted evenly in order to recognise their equal importance for group performance.

Our top priorities are minimising work-related injuries through our mission zero strategy, adding value for our customers through improved data quality and encouraging employees to participate in our blue planet strategy, besides continuously robust economic performance.

Group KPIs

Our bonus scheme policy has recently been adjusted to better align individual and collective performance expectations and now brings under one umbrella group priorities and leadership principles. Senior managers and executives now have one leadership objective and a maximum of four objectives linked to group priorities. Sustainable development must be integrated with a minimum of 20 % into all individual objectives as it is a group priority. In 2024, Bonus also covers our yearly corporate priority objectives namely: safety, data, and sales & operation planning (S&OP).

Updated bonus scheme

Weight of objectives for all Senior Managers and Executives (max five Objectives)

The How

10 %
Leadership principles
  • Lead with purpose
  • Empower people and teams
  • Be agile

The What

20 %
Sustainability

L0 Safety, L0 Data, L0 S & OP

Application and % to be defined according to functions and jobs

At Hager Group, we work closely together in partnerships with our suppliers

to achieve measurable improvements in sustainability across our entire supply chain.

Torsten Schulz
Group Sourcing and Supply Chain Senior Vice president

03.6

Responsible sourcing

GRI 3-3 Material topics

03.6.1

Our sourcing vision

We are dedicated to upholding ethical, social, and ecological responsibilities both within our company and in our interactions with business partners. Therefore, responsible sourcing is a crucial aspect of the sustainability strategy at Hager Group and we are dedicated to collaborating with suppliers who share our values and prioritise environmental and social responsibility. To ensure mutually beneficial collaboration, we actively engage with our suppliers through rigorous standards and regular assessments.

This includes:

  • Reducing carbon emissions
  • Using eco-friendly materials
  • Promoting fair labor practices

By aligning our expectations and working together, we aim to create an inclusive, carbon-neutral world. Our dedication to these principles reflects our strong commitment to sustainability at every level of our supply chain.

Responsible sourcing process

Signature of our Code of Purchasing Conduct

Monitor risks in the supply chain

Sustainability assessment of selected high-risk suppliers

Audits (administrative) of selected suppliers

Supplier dialogue and corrective actions

03.6.2

Code of Purchasing Conduct

Our Code of Purchasing Conduct serves as the foundation of our business relationships with suppliers and is thus an integral part of our contracts for the supplies and services we procure. The code articulates the core principles that vendors, suppliers, sub-contractors, and other parties engaged with Hager Group must adhere to. We expect our business partners to uphold the principles outlined in this Code of Purchasing Conduct, disseminate them to their own vendors, subcontractors, and business associates, and implement reasonable measures to ensure compliance with these principles among these stakeholders.

GRI 205 Anti-corruption

03.6.3

Enhance compliance and sustainability risk management

Since 2022, we have taken various actions to strengthen our sustainable sourcing practices. This involved establishing clear policies, conducting risk assessments, CSR audits but also prioritising our selection of suppliers who are aligned and commit to our sustainability goals.

To enable a systematic and continuous risk assessment in our supply chain as well as foster social and environmental compliance we support this approach with the implementation of digital platforms and tools:

SPHERA was adopted as reference for our ethical compliance management in regards of the German Supply Chain Due Diligence Act. Hager Group has indeed chosen to comply with German law and report to the BAFA7 which also allows the group to anticipate the Corporate Sustainability Due Diligence Directive (CSDDD) law at European level.

SPHERA evaluates public reported incidents which enables us to assess the risk in our supply chain and take mitigation actions. Compliance is ensured through a four step process: violation identification, its categorization, following action plan, and reporting.

GRI 414 Supplier social assessment;

GRI 308 Supplier environmental assessment

GRI 3-3 Material topics

Assent is a digital tool specialised in sustainability which enables us to collect data to ensure the compliance of our products. The platform allows our suppliers to share all the requested certificates: REACH, RoHS, PFAS, Halogen and conflict minerals templates at the same place. Assent also permits us to continuously monitor and anticipate new regulations.

Hager Group also sends a sustainability assessment to its most strategic suppliers. This comprehensive questionnaire covers topics such as environment, ethics, governance, and health and safety. Based on the results, suppliers have been prioritised on their score in order to improve their sustainability performance. In 2024, these suppliers will be invited to a sustainability review at which Hager Group’s values and CSR objectives will be reiterated. An exchange will also take place in order to encourage the suppliers to enhance their maturity through actionable points.

In addition to the supplier sustainability assessment, we, in collaboration with EcoVadis, are currently implementing the process of supplier risk mapping and enabling our high-risk suppliers to improve their socio-environmental performance. EcoVadis provides country and industry-specific risk methodologies and in-depth analysis for 21 criteria on environmental, ethical, labour and human rights aspects as well as sustainable procurement.

03.6.4

Supporting local suppliers

In addition to a transparent sourcing process, an integral part of responsible procurement practices at Hager Group is to promote economic development and resilience in local communities by fostering strong business relationships with local suppliers, the suppliers in the locations of operations. Our operations in Germany, France, Great Britain, Italy, Switzerland, Poland, China, India, and Spain define these regions as significant locations of our operations. 76 % of our entire procurement budget was spent on “local suppliers” in 2023.

GRI 204 Procurement Practices

SPHERA 2023 in numbers

Based on this assessment, the figures below highlight our supplier socio-environmental due diligence in 2023.

170

alerts recorded

1600

suppliers onboarded

6

(3,5 % of recorded alerts)
violations investigated and acted upon

We use the different tools at our disposal as a GRI community member to better understand, communicate, and manage our contribution to the SDGs

Lost Time Accident Rate: number of accidents * 1,000,000 / number of real working hours

The Federal Office for Economic Affairs and Export Control

Cover – Message from the Chairman of the Supervisory Board – Letter from the Chief Executive Officer – Highlights 2023 – Facts & Figures – Connecting urban spaces, sustaining the future – Interview: Driving sustainability for long-term success – What the customer thinks – Interview: Sustainability through digital excellence – A sustainable business for a successful future – Hager Group Sustainability Report 2023 – CEO statement – Introduction – Materiality assessment – E3: an integrated sustainability strategy – Protecting the climate and the environment – Integrity in ethical business conduct – Our company culture breeds a thriving workplace – GRI Content Index – Imprint –