Environmental and Corporate Responsibility

Transcription

1 Environmental and Corporate Responsibility 29 BSH BOSCH UND SIEMENS HAUSGERÄTE GMBH

2 ABOUT THIS REPORT About this report BSH Bosch und Siemens Hausgeräte GmbH has issued a report for stakeholders detailing the progress made on realizing its sustainable development strategy every year since The present report the 18th to be published covers every single BSH site around the world. It discusses recent achievements and developments at the Group and presents the environmental and staff-related indicators for fiscal 29. The final deadline for contributions to this report was March 31, 21. This report follows the latest Global Reporting Initiative guidelines (GRI G3). It also serves as BSH s progress report in relation to the UN Global Compact. A more detailed GRI balance sheet containing additional information not presented here may be found on the Internet, together with a concise breakdown of our progress in implementing the Global Compact principles, at > What we stand for > Responsibility > Global Compact BSH Bosch und Siemens Hausgeräte GmbH, 21 The Report is printed on Galaxi Keramik. This paper is certified by the Forest Stewardship Council (FSC). This report was printed climate-neutrally.

3 CONTENTS 3 Foreword The company Our strategy Looking back over the past year, we can be highly satisfied even if things have not been easy from the economic perspective. BSH ranks as one of the world s leading home appliance manufacturers and is firmly committed to being the best in the sector. focuses on the challenges of the future to ensure that we remain effective and successful. Special: Global stakeholder survey creates transparency BSH conducted its first international survey in order to gain a better insight into the needs and expectations of its stakeholders. Page 4 Page 6 Page 8 Page 11 Society regards corporate responsibility as a key factor for companies in building trust with customers and the public. Special: Fighting climate change through energy efficiency Using energy more efficiently in business, at home and in all areas of society is one of the most effective ways to combat climate change. Page 12 Page 15 Our employees deserve an open-minded and responsible employer and that is what we strive to be. Special: International employee survey Our people are the bedrock of our success. We surveyed employees in 17 countries in 29 to keep track of their views and concerns. Page 16 Page 19 The environment Indicators Program Our sites Contacts inspires our sustainability concept: careful use of resources and super-efficient appliances. Special: Environmental concerns drive innovation Revolutionary new developments are rare in the home appliances sector, which makes the BSH dishwasher with Zeolith Drying System all the more remarkable. tracking our financial, environmental and social performance show BSH s continuous sustainable development. BSH sets out the corporate objectives achieved during 29 and the targets it has set itself for the future. at a glance, and status of environmental management certification. at BSH Headquarters in Munich and in Spain, China and the USA. Page 2 Page 23 Page 24 Page 33 Page 34 Page 35

4 4 FOREWORD Dear Reader, Looking back over the past year, we can be highly satisfied even if things have not been easy from the economic perspective. Essentially, we succeeded in keeping headcount levels stable, and gained market share in many countries. The increase in sales achieved with our super-efficient appliances has been a particularly gratifying development. The responsibility we demonstrate as a company underpins the confidence of our customers and stakeholders, and is thus essential to our long-term corporate success. This applies today more than ever. In discharging our responsibility to the environment and to society and by living our values, we are also contributing to global sustainable development. And we are happy to be judged on this contribution. Dr. Kurt-Ludwig Gutberlet Environmental protection and resource efficiency have become key competitive factors. For many years now we have consistently paid due attention to both within all phases of the value-creation chain. This has given us a competitive edge that we want to extend with super-efficient appliances, innovative and resource-conserving techniques in production and a global environmental management system. Winfried Seitz We can also once again take justified pride in a number of prestigious prizes and awards: February 21 saw us honored with the Innovation Prize for Climate and Environment IKU. With this award, Germany s Federal Environment Ministry and Federation of German Industry (BDI) have for the first time singled out innovations that provide an answer to the central challenge of our age, that of embarking on new paths in the field of climate and environmental protection, revolutionary approaches that have also proved effective in practice. As early as November 29 our report achieved a creditable eighth place in the ranking of the sustainability reports issued by the 15 largest German companies, making it the best such publication in the sector evidence not just of openness and transparency, but also of a comprehensive sustainability management system backed up by key performance indicators. Our thanks here go in particular to our employees, without whom these successes would not have been possible. With our Energy Excellence Initiative, which was launched in 28, we have demonstrated how much potential and how many good ideas can be brought to fruition with such a clear objective in view. Our aim is to ensure that the topic of resource efficiency takes root throughout the company. A worldwide employee training program focusing on energy efficiency has just got under way, and is intended to extend our role as a pioneer and opinion leader in the international arena. This objective is also to be promoted by our Super Efficiency Portfolio, which aims to boost sales of our most frugal products and thus makes a demonstrable contribution to climate protection. Even if the global business climate is now somewhat brighter, competition remains fierce. All the more important, then, to continue with determination on the path we have chosen to take. In taking responsi- Milestones BSH founded Corporate Department for Environmental Protection set up (1991) First Environmental Report (1992) 1993 Use of CFCs and HFCs discontinued in Europe 1994 Approval of a binding environment policy throughout the Group Take-back of end-of-life appliances 1995 First EMASvalidation Environmental management handbook 1996 Product Environment Analysis (PEA) 1997 Environmental controlling at sites outside Europe commenced 1999 China s first CFC and HFC-free refrigerators manufactured 1998 PEA awarded environmental prize by Federation of German Industry (BDI) 2 Traineeships commence in Turkey Global occu pational health and safety guidelines

5 FOREWORD 5 bility for the environment and for the society, we are directing our innovation management towards exploiting future potential. This potential lies in particular not just in enhancing energy efficiency, but also in finding answers to demographic change. In both areas we are looking to apply our innovations to offer better solutions than those of our competitors. International surveys conducted among our employees and stakeholders reveal that BSH is seen as a dependable, responsible and forward-looking partner and employer. This reputation rests on fairness and transparency even when dealing with critical issues. Since the fall of 29, the Munich pudic prosecutor s office has been investigating BSH for possible unfair sales promotion activities in its German sales office during the past. BSH has expressly supported these investigative activities from the outset, and is eager to see a swift and exhaustive clarification of all the circumstances of this case. Legal appraisal has yet to be delivered, but our aim is to see the case brought to a rapid conclusion. We will be announcing the result in the public arena. Our profitability is critically dependent on the skills and innovativeness of our employees. In a competitive environment that grows tougher all the time, their motivation and the way they identify with the company are highly significant. Wide-ranging continuing education programs, opportunities for personal development and regular workforce surveys are thus an important basis for our lasting success. Johannes Närger The present report sets out how we discharge our management responsibility and our approach to meeting the challenges of the future. The report follows the guidelines set out in the Global Reporting Initiative (GRI), and also represents our progress report in relation to the Global Compact. We hope you will find this report interesting and informative and would welcome any suggestions you might have after reading it, via corporate.communications@bshg.com. Dr. Kurt-Ludwig Gutberlet, Chairman of the Board of BSH Jean Dufour, Sales, Brand Management, Logistics Johannes Närger, Finance and Corporate Development, Labor Relations Director Winfried Seitz, Product Development, Corporate Technology, Factories and Environmental Protection Our brands enjoy a worldwide reputation for innovation, quality and resource efficiency. Consumers trust them, and appreciate their attributes, and we believe this obliges us always to give of our best, whether in product development, sales or customer service. And increasingly this also includes advising customers about energy efficiency matters. Because frugal appliances cut energy costs and help protect the climate at the same time. Jean Dufour 22 Dr. Robert Kugler named Eco Manager of the Year Best Practice presentation at UN Summit in Johannesburg 23 Company named Best Innovator 24 Company wins Federation of German Industries prize for transfer of environmental protection technology Company signs up to UN Global Compact Corporate Principles updated 25 Signing of the Code of Conduct by the European Committee of Domestic Equipment Manufacturers (CECED) 26 International B.A.U.M. special award to Dr. Kurt-Ludwig Gutberlet Supports Europewide Sustainable Energy Europe campaign 28 BSH wins German Sustainability Award Introduces compliance management 29 BSH Plant Nauen "Factory of the Year" Occupational health and safety management system according to OHSAS 181 BSH named as one of Germany's top employers 21 BSH wins German Innovation Prize for Climate and Environment (IKU)

6 6 THE COMPANY BSH ranks as one of the world s leading home appliance manufacturers and is firmly committed to being the best in the sector. BSH Bosch und Siemens Hausgeräte GmbH was founded in 1967 as a joint venture between Robert Bosch GmbH, Stuttgart, and Siemens AG, Berlin/Munich. Today BSH ranks as the third-largest home appliance manufacturer in the world and number one in Europe. The Group s portfolio spans the entire spectrum of modern home appliances from cookers, dishwashers, washing machines, refrigerators and freezers to home laundry, floor care and small home appliances. As at December 31, 29, BSH operated 41 factories in Europe, Asia and North and Latin America plus a worldwide network of sales and customer service companies in more than 4 countries. BSH sold its business in Brazil, which included a production site and a logistics center plus sales and customer service operations on July 1, 29. Total headcount consequently fell by 1,5 to approximately 39, people, more than 7 percent of whom work in Europe. A platform for lasting success The global economic downturn that followed the onset of the financial crisis in the fall of 28 persisted into 29. BSH too felt the effects, with sales revenue down four percent year on year at 8.4 billion euros and earnings before taxes of 517 million euros. Thanks to our broad brand portfolio and steadily increasingly sales of super-efficient appliances, however, we believe that we remain well placed even in times of economic uncertainty. We have the capacity to tailor our offerings to the needs of an enormous range of different target groups. The Bosch brand, for example, speaks of superior quality and absolute reliability, while the Siemens brand attracts customers who share its passion for innovation and trend-setting technical advances. The Neff and Gaggenau special brands and our regional brands in different countries also For more information about BSH and its brands, see BSH s 29 Group Annual Report or visit its website at: > The Company > Brands & Products Main Brands Special Brands Regional Brands

7 THE COMPANY 7 all have their own distinctive brand profile. BSH s innovative, energysaving appliances received prestigious German and international awards once again in 29 and did particularly well at the Foire de Paris, one of Europe s largest trade fairs and a showcase for innovation, where our tumble dryers incorporating heat pump technology won an environment prize and BSH Slovenia picked up two innovation awards: gold for its hot beverage vending machines and silver for a hand blender. Leading the way Our quality awareness and innovations earned us special recognition in numerous product tests in 29. BSH appliances emerged as best in test or best buy in no fewer than 44 of the 79 different German and European tests in which they featured. We also won Euronics International s prestigious Supplier of the Year Award for the fourth time in a row in the summer of 29, providing further evidence of our strong competitive edge in product quality, delivery reliability and customer service. All of these successes share the same essential foundation: our consistent policy of innovation. We submitted a total of around 1, initial patent applications around the world in 29, some 7 of which are effective in Germany. This makes BSH one of the most innovative companies in the home appliances sector and raises it from 13th to 7th position on the list of the most prolific filers of patent applications with the German Patent and Trade Mark Office. The connection between innovation and sustainability, responsibility and customer-focus is especially strong in our sector. Here too BSH continues to lead the way: In 28 we received the German Sustainability Award in recognition of our responsible and conscientious management approach across all areas of the value chain and in 29 we followed this up by placing eighth in a ranking of German sustainability reports, capturing the title of Factory of the Year for our Nauen home appliance plant and winning the German Innovation Prize for Climate and Environment for the Zeolith Drying System featured in our dishwashers. Nor has our performance in sustainability matters passed unnoticed elsewhere in the world. In Russia, for example, Bosch was voted the most environmentally friendly brand in 29 in the annual independent Trusted Brand survey conducted by Reader s Digest magazine. Sales revenue by region, 29 Employees by region, % Asia 11.8% Latin America 15.2% North America 19.9% Eastern Europe 21.9% Germany 19.5% Asia 35.1% Germany 1.6% Others 14.4% Americas 1.4% Eastern Europe 48.2% Western Europe excl. Germany, incl. Turkey As at December 31, % Western Europe excl. Germany, incl. Turkey As at December 31, 29

8 8 OUR STRATEGY Our strategy focuses on the challenges of the future to ensure that we remain effective and successful. BSH intends to play a material role in finding solutions to the enormous challenges facing humanity over the coming years. We consider the issues of climate change and resource efficiency to be particularly urgent, but as a manufacturer of home appliances we also need to come up with innovative and advanced solutions to the problems raised by demographic change and the worsening global shortage of fresh water. Our recognition in December 28 as Germany s most sustainable company underlines the effectiveness of our strategy, which we continue to develop and refine in dialog with our stakeholders. Our strategy centers on three key fields in which we aim to be a leader; the better we perform in these three key fields, the more value we create not only for our company, but also for society. Tackling the challenges Our effort to tackle pressing ecological and social challenges strategically and harness them as business opportunities concentrates on three key fields: 1. Energy efficiency: Set the standard in the sector with innovative product and manufacturing solutions that reduce resource consumption and help to combat climate change. 2. Responsibility for our products: Improve environmental and health protection continuously in dialog with politicians, retailers, consumers, suppliers and waste disposal specialists throughout the product lifecycle. BSH s Corporate principles, environmental policy, occupational health and safety guidelines and Business Conduct Guidelines can be found at > The Company 3. Know-how transfer: Offer people throughout the world the best possible living and working conditions by passing on standards and experience in development, product design, training and continuing education obtained within the world of BSH. Ensure and enhance the success of our business The market for greener appliances is growing fast in the face of rising energy prices and the threat of climate change and our highly energyefficient models are ideally poised to take advantage. We endeavor to anticipate changing priorities and concerns in order to gain a vital edge over the competition and ensure that our operations never fall foul of public opinion. This gives us the scope we need to pursue our adopted policies. The responsible approach we demonstrate throughout the value chain, for example, not only ensures that our product quality remains high, but also safeguards our global reputation as a brand manufacturer. The same applies to know-how transfer: We have been aware since we began opening our first production facilities outside Germany in the 198s that taking our innovative products onto the international stage would entail consistently transferring our proven standards to each new site. We have always appreciated the

9 OUR STRATEGY 9 importance of taking the lead and setting an example in other areas too, as illustrated by our prominent role in the phasing out of CFCs, in environmentally friendly product design, in voluntary product labeling and in the design of pan-european take-back systems. Setting clear guidelines Acting responsibly means setting clear guidelines that apply to every employee and every stage of the value chain. The culture of responsibility at BSH, which incorporated environmental protection into its corporate principles all the way back in 1989, begins at the very top with the Board of Management and its clear conviction that sustainability and good corporate citizenship belong at the very center of the company s management philosophy. This conviction persists undimmed even in difficult economic times and together with the corporate principles, environmental policy, occupational health and safety guidelines and corporate HR principles forms part of a framework of priorities and commitments that shapes the way we conduct our business. We signed up to the principles of the UN Global Compact in 24, moreover, played a leading role in drawing up a code of conduct based on the Global Compact for the European Committee of Domestic Equipment Manufacturers (CECED) in 25 and then drafted our own Business Conduct Guidelines on this basis and implemented them throughout the Group in 26. UN Global Compact > CECED (European Committee of Domestic Equipment Manufacturers) > Embedding corporate responsibility in our organization Ultimate responsibility for BSH s performance in respect of the environment, its employees and society as a whole rests with the Board of Management, which is assisted by a Coordinating Committee for Corporate Responsibility established in 25. This committee, which meets regularly to share information and coordinate activities, also evaluates new requirements in the sphere of corporate responsibility and sustainability and compiles the materials and resources the Board of Management requires to make relevant decisions. Monitoring sustainability performance Genuinely demanding targets cannot be achieved without clear structures and defined workflows. This applies across all areas, from quality, research and development and environmental protection to Coordination of Corporate Responsibility (CR) BSH Board of Management CR Coordinating Committee Corporate Functions/Areas Communication Law Environmental Protection/ Health and Safety Human Resources Logistics Customer Service Purchasing Sales and Marketing Production Strategy Controlling IT Information Security/ Data Protection Technology Research & Development Brands Others

10 1 OUR STRATEGY health and safety at work and human resource management. Our product environmental analysis (PEA) introduced in 1996 makes resource conservation and energy efficiency targets a mandatory element of every development project. We operate 28 production sites, 25 of which have completed certification under both ISO 91 (quality) and ISO 141 (environmental management) and have been consistently recording their environmental performance in the form of indicators for many years (see page 34). Our occupational health and safety management regulations have been in strict compliance with the OHSAS 181 international standard since the beginning of 29. BSH calculated the contribution of its portfolio of super-efficient home appliances to the effort to limit climate change for the first time in fiscal 29 and submitted its findings for validation by an external auditor (see page 2 and page 25 in the Indicators section). Open dialog with our stakeholders generates useful suggestions. Discussions during trade fairs, as well as the sharing of views within the framework of the Global Compact, which was set up by former UN Secretary General Kofi Annan, form part of this open dialog. ISO (International Organization for Standardization) > OHSAS (Occupational Health and Safety Assessment Series) > German Ranking of Sustainability Reports > Keeping communication channels open Political interventions and the increasingly stringent multilateral measures adopted in response to the threat of climate change certainly guide our actions to an extent, but we are also very mindful of the evergreater expectations of our stakeholders. We cultivate and maintain close contacts with consumer and environmental protection organizations, the academic world and customers, public agencies and our neighbors on the ground through direct talks, open days at our sites, trade fairs and our membership of sector associations and the German Global Compact Network in order to identify emerging trends and matters of concern at an early stage and adapt our approach accordingly. We also sought stakeholder views directly at the end of 29 with our first ever international stakeholder survey (see page 11). We maintain particularly close contact with consumer groups and organizations, from which we receive regular requests and inquiries. Concerns about good corporate citizenship have moved higher and higher up the agenda over recent years and it is important that we are able to demonstrate that the exacting environmental and quality requirements we apply to our products are respected in practice throughout the value chain. Comprehensive and transparent reporting Our employees, business partners and the public at large want to know what we are doing to live up to our responsibilities around the world, how we plan to realize further improvements in energy efficiency and how we ensure that we always act in an even-handed manner and in accordance with the law and, quite rightly, they expect us to provide this information openly and in full whenever they ask for it. Our primary means of communicating developments in these areas remains the annual sustainability report, which explains our strategy and our activities in all business areas and presents indicators that convey our performance in an objective and readily comparable form. Our 28 report was ranked first in the home appliances sector and eighth overall in the German Ranking of Sustainability Reports of the 15 largest German companies carried out by future e.v. and the German Institute for Ecological Economy Research (IÖW) with backing from the German Council for Sustainable Development (RNE) and the German Federal Ministry of Labor and Social Affairs (BMAS).

11 SPECIAL OUR STRATEGY 11 Global stakeholder survey creates transparency BSH conducted its first international survey in order to gain a better insight into the needs and expectations of its stakeholders. We sent our questionnaire in German, English, Polish, French and Spanish to more than 2 stakeholders all over the world in November 29 and received over 7 responses. The good response rate reveals strong interest in what we do and how we act, explains Eva Delabre, Head of Corporate Communications at BSH. High response rate, positive assessment Response rates in all regions were highest among employees, suppliers, business partners and trade associations, but we also received replies from non-governmental organizations, scientific institutions and public authorities. Germany accounted for the largest share of participants in the survey (22 percent). Next came Poland, Spain and China (15 percent each) then France (eight percent) and Turkey (seven percent). Italy, Belgium and the USA together made up the remaining ten percent. Some 72 percent of respondents rated BSH s commitment to the environment as better than average, 44 percent felt that our contribution to wider society was better than average and 33 percent said we were better than average in the area of commitment to our employees. Overall, 61 percent of those surveyed stated that our commitment to sustainability was better than average and 33 percent that it was adequate. Future concerns and key issues The most important concern for the future among those surveyed turned out to be the ease of use of home appliances for older people (25 percent). Next came social and ecological standards in the supply chain (13 percent) and good consumer information (11 percent). Then asked where they thought BSH was strongest in terms of corporate responsibility, most respondents indicated product- and production-related environmental protection, occupational health and safety and consumer information. Here too our stakeholders rated our performance as very good, although results were slightly less favorable in the occupational health and safety category. Fewer than half of those replying felt that BSH has any particular obligation in the area of donations and sponsoring. The other areas in which the company ought to concentrate its efforts instead, according to the survey, are securing jobs, compliance, training and professional development and human rights. These findings will be very useful to us as we map out the evolution of our sustainability strategy.»what topics will be important for BSH in the future?«answers from the stakeholder survey:»»» Pay much more attention to the implications of demographic change and develop appliances especially for older target groups.«maintain the balance between profits and social and environmental responsibility in the face of ever tougher competition.«exert a positive influence on the competition and compel them to adopt proper standards that can then become sector standards.«

12 12 SOCIETY LORUM IPSUM Society regards corporate responsibility as a key factor for companies in building trust with customers and the public. The global financial crisis has led to a loss of confidence among the public at large that is affecting most big companies. The very nature of our economic system has been called into question. Values like integrity, moderation and responsibility central tenets of sustainable development as the concept was first described by the Brundtland Commission in 1987 have been thrust back into the spotlight. Focusing on social challenges: With our value-driven actions and pioneering products we are looking to make a contribution to sustainable development. Respect for the law Integrity and respect for the law have always been core strands of the corporate culture at BSH. Clear regulations like the Business Conduct Guidelines, which came into force in 26, and employee training are just as central to compliance management as the exhaustive investigation of any purported illegal activity. The Board of Management and Corporate Compliance Committee received information about possible unfair sales promotion activities in Germany in the summer of 29. BSH is investigating the matter as a top priority and is cooperating fully with the public prosecutor s office. Working in conjunction with external attorneys, we are ascertaining the facts of the case and preparing corresponding legal assessments. Investigations were still ongoing when the present report went to press. We have raised the number of staff in the Compliance Committee office from two to six to enhance its training capacity and its ability to provide advice on legal compliance matters. Making principles binding We formalized the values and principles that govern our interactions with each other and with our business partners in a code of conduct back in 26. This code of conduct applies with binding effect to all employees worldwide. The existence of a common, binding framework is particularly important for a company like BSH that operates across many different countries, cultures and legal systems. We introduced an international compliance management organization with almost 5 Compliance Officers at the beginning of 28 to help facilitate the consistent implementation of our Business Conduct Guidelines across the company. Employees who wish to report a breach also have the option of contacting an independent ombudsman. BSH s corporate compliance organization investigated 17 cases in fiscal 29. In six cases it was found that there had been no material breach of the guidelines. The other cases are either ongoing or have been concluded following the implementation of appropriate measures. The ombudsman received three reports of possible compliance breaches in 29. We launched a wide-ranging internet-based training program in a number of languages in 28 in order to help ensure all employees understand and remember the importance of values and compliance. Availa-

13 SOCIETY 13 ble to all, the program is mandatory for senior and middle management, authorized agents and customer- and supplier-facing employees. The program includes online training packages covering BSH Business Conduct Guidelines, antitrust law, corruption and since early 21 employment law have also been introduced. In 29 more than 11, employees have completed web-based trainings worldwide. Compliance is addressed in face-to-face training events and workshops worldwide too and has been a permanent component of the management training program provided through our BSH Academy since 29. Including the supply chain Our high expectations regarding integrity and respect for the law extend far into the supply chain. BSH spends in excess of four billion euros on commodities and materials every year. We source more than 4 percent of these resources from low cost countries and the substantial influence this business affords us in the regions concerned gives us considerable scope to promote and encourage socially and ecologically responsible behavior. We have defined guidelines laying down the principles of collaboration on the purchasing side and communicated them to our chief suppliers. We base our code of conduct for BSH suppliers on the UN Global Compact and the conventions of the International Labour Organization (ILO). Included in supply contracts since 27, the code requires all suppliers to act in accordance with BSH s own principles. ILO (International Labour Organization) > We had obtained an undertaking to uphold the code of conduct from our direct material suppliers in both A and B categories by the end of 29. These two groups together account for more than 95 percent of our purchasing volume. We only accept new suppliers if they are prepared to recognize the code of conduct and we carry out a basic audit that looks at social and environmental aspects in every case. Environmental protection has been an important factor in our supply relationships for many years and we expect all of our A and B suppliers to have an environmental management system in place. We invest in our suppliers relations during the worldwide economic crisis, too. BSH collaborates actively with its suppliers, looks hard at the risks in the supply chain and supports strategically important partners. The steadily increasing significance of sustainability factors in supply chain management is evident not least in the results of our stakeholder survey. Living up to our regional responsibility Skills training and fair cooperation with our suppliers based on clearly defined guidelines are the hallmarks of the regional responsibility that BSH assumes at all its operating locations worldwide.

14 14 SOCIETY In most of the regions in which it operates, BSH provides a substantial proportion of the available jobs and training opportunities and is an important customer for local businesses. We accordingly have considerable responsibility for the development of the broader regional setting. We seek to live up to this responsibility not merely by paying the applicable taxes and duties in accordance with the value actually added at each site, but also by improving local infrastructure. We expect each of our 29 purchasing sites around the world to favor locally-based suppliers as a matter of principle, a policy that avoids currency risks and customs duties and keeps transport distances to a minimum. In new markets and emerging countries in particular, we encourage suppliers to establish a base on our sites and assist them with undertakings such as the introduction of environmental management systems. ZVEI (Zentralverband Elektrotechnik- und Elektronikindustrie e.v.) > To make the benefits of modern technology accessible and usable for as many people as possible worldwide is an objective BSH targets with barrier-free appliances and the Protos plant oil stove. Helping to shape the framework BSH seeks to make its voice heard in the political sphere both on its own and through its membership of the German Electrical and Electronic Manufacturers Association (ZVEI). Most of its efforts in this context focus on advocating initiatives to speed up the replacement of obsolete and inefficient appliances: replacing the approximately 188 million old appliances in homes across Europe with the latest super-efficient models would cut annual CO 2 emissions by around 22 million metric tons. BSH CEO Dr. Kurt-Ludwig Gutberlet continues to call for consumers to be given better and more transparent information. One of the proposals mooted is for the EU energy label system to be open-ended at the upper end of the scale to reflect technical progress more accurately and give consumers a reliable way to identify the most efficient model. Uniting advanced technology and ease of use Demand for user-friendly appliances designed or adapted for seniors and people with disabilities continues to grow. Ultimately, making appliances more straightforward to operate benefits everyone and enables all to live independently and enjoy the advantages of new technical features. This realization lies at the heart of BSH s Design for All concept, which has already earned the Group numerous design awards for its user-friendly appliances. Examples from the current product range include visually and haptically optimized rotary controls for cooktops and the refrigerator with fully-retractable drawers. BSH is presently involved in developing international usability standards together with other home appliance manufacturers, consumer groups and scientists. Promoting sustainable development worldwide BSH turned the plant oil stove idea into a mature and marketable product in order to help prevent exposure to harmful combustion gases and reduce deforestation in developing countries. The Protos plant oil stove provides users in areas where wood has previously been the main fuel used in food preparation with a healthier and more environmentally friendly alternative. Adoption of the Protos also entails a local production and marketing concept that will create jobs in the extraction and processing of oil from indigenous plants, in the manufacturing of the stove and in sales. Large-scale production of the second generation of the stove begins in Indonesia, the first key market for the Protos, in 21.

15 SPECIAL SOCIETY 15 Fighting climate change through energy efficiency Using energy more efficiently in business, at home and in all areas of society is one of the most effective ways to combat climate change. The potential still waiting to be realized in this area is enormous: We could slash annual electricity consumption by around 7 billion kilowatt-hours just by moving to electrical drives, lighting solutions and refrigerators and freezers that are designed to make intelligent use of energy. That equates to 42 million metric tons of CO 2, or more than a quarter of the cut that has to be achieved by 22 under the German federal government s 3 percent reduction commitment, explains Dr. Klaus Mittelbach, Executive Director of the German Electrical and Electronic Manufacturers Association (ZVEI). A core competency of BSH Making efficient use of energy and resources has become second nature at BSH. Our latest appliances have reduced consumption to a level nobody would have believed possible ten years ago. Recently BSH engineers took another huge leap forward with the unveiling of our new heat pump technology for tumble dryers, which cuts the appliances energy consumption to as little as half that of a class A model under the existing energy efficiency classification scheme. Conventional condensed air tumble dryers fall into efficiency classes B or C at best. The new BSH dryer is more convenient as well as more efficient: Thanks to its selfcleaning condenser, a highlight no other appliance on the market can match, its consumption figures remain low for good. The many invaluable features of BSH s heat pump tumble dryer have also turned heads at the German Institute for Applied Ecology (Öko-Institut) in Freiburg, whose environmental scientists found in a comparative study of different drying options that our dryer is better from an ecological standpoint than drying laundry on lines in heated rooms. For the good of society BSH is involved in the sector trade association ZVEI s Energy Efficiency Initiative, which aims to raise energy efficiency to the top of the corporate and social agenda, and has launched its own Group-wide Energy Excellence Initiative to make consumers and employees even more aware of energy efficiency. By consciously exploiting our expertise and the long reach of our brands to encourage energy saving in all domains, from private homes to industry and from schoolchildren to executives, we are also helping to change the way society as a whole thinks about the associated issues. Dr. Klaus Mittelbach, Executive Director of the German Electrical and Electronic Manufacturers Association (ZVEI)» Electricity is simultaneously one of the central pillars of our economy and a necessary condition for our high standard of living. We can fight climate change much better and more sustainably by boosting efficiency than by imploring people to go without, which makes the intelligent use of technology a matter of vital importance. Unfortunately most people, politicians included, have yet to appreciate this fully.«

16 16 OUR EMPLOYEES Our Employees deserve an open-minded and responsible employer and that is what we strive to be. BSH built its strong reputation as an employer by providing good working conditions everywhere in the world coupled with plentiful opportunities for career development and a values-led corporate culture. Even in difficult economic times, we remain committed to maintaining these distinctive features, retaining our people and offering them attractive prospects. Just how seriously we take this commitment can be seen from the fact that we have not cut any jobs in Germany or even introduced short-time working despite the economic crisis. The introduction of additional employee-funded retirement pension plan sends another clear signal to our people in Germany that we still have their best interests at heart. Thereby, BSH is assisting recipients of low and middle income with a financial subsidy. A good company to work for Our good reputation helps us to master the challenges posed by demographic change and to continue attracting well-qualified new recruits. BSH took part in the CRF Institute s Top Employer project again this year as part of efforts to consolidate its position as an attractive employer in the labor market. We qualified for the final stage again too and consequently rank as a Top Employer for 21. Our attractiveness as an employer is also reflected in our low staff turnover rate, which fell from 3.3 percent in 28 to 2.7 percent last year at BSH Germany. Training for life Our attractive tailored training programs for people just embarking on a career represent another of the ways in which we act as a positive force in society. Proper training and respected qualifications open up a lifetime of opportunity for young people and give them the best preparation for a successful working life. The innovative BSH JuniorFirma, a company within the company set up at our Headquarters in Munich a few years ago, has become an established part of the Group s business administration training program and continues to enjoy steadily increasing orders. The JuniorFirma enables trainees and students engaged in combined practical and academic study programs at one of Germany s Duale Hochschule universities to gain invaluable direct experience of running a business on their own initiative. Nurturing junior recruits and offering lifetime learning are part of the BSH corporate culture. Worldwide human resource development We nurture the most promising of our junior staff around the world through our Junior Executive Pool (JEP) and International Executive Pool (IEP). There were 525 junior staff in the JEP in 29, half of whom came from BSH companies outside Germany and 27 percent of whom were women. Junior staff earmarked for future international management functions are assigned to the IEP, where the proportion of female recruits reached 18 percent in 29. The Senior Executive Program (SEP) launched in 27 continued to serve selected members of the

17 OUR EMPLOYEES 17 senior management group successfully during the year under review. This three-year program carefully prepares participants, ten percent of whom were women in 29, to assume key functions within the BSH Group. The Project Leader career path presents another attractive professional development option for staff at BSH. Employees choosing to follow this program have the opportunity to build up their project management knowledge and experience systematically to gain Project Manager, Senior Project Manager or Project Director qualifications. BSH prioritizes human resource development on the factory floor too and won Turkish HR development organization PERYÖN s Blue Collar Award in the Talent Management category in 29. Successful professional development at the BSH Academy The BSH Academy provides a wide range of development opportunities for all employees through its learning platform, which is available worldwide. The options offered are designed to be transparent, to meet the specific needs of relevant target groups and to reflect actual demand within the BSH Group. We developed a new continuing professional qualification program based on the BSH Competence Model and the management principles for our management-level staff in 29. Naturally the program relates very closely to actual practice within BSH. We believe it is very important that our multimedia learning offerings reach as many of our employees as possible in their mother tongue. Our special compliance training courses, for example, are now available in eleven languages. The value of diversity BSH knows about the advantages of cultural diversity in development projects and regularly assembles mixed teams of different backgrounds and perspectives. Cultural diversity and mutual respect stand at the heart of our corporate HR principles and BSH executive management promotes the sharing of expertise within the world of BSH. Currently the Group has 194 German employees working abroad (expats) and 96 other employees of various nationalities working in BSH companies outside their home country (inbounds and cross-countries). Our Business Conduct Guidelines also emphasize the importance of mutual respect for effective collaboration. BSH will not tolerate discrimination on grounds of gender, age, religion or ethnic origin. Equal opportunities for women BSH considers it self-evident that men and women should be offered the same opportunities and we ensure that female employees in every

18 18 OUR EMPLOYEES country receive the same pay as their male counterparts. We offer attractive career paths for female employees too and regularly take part in Germany s nationwide Girls Day event to convince young women of the appeal of a technical training with BSH. Women account for 61 percent of our business administration trainees too, although the proportion on the industrial side is significantly lower. We already make it easier to combine family and career at our sites with mechanisms such as flexible working time and part-time and teleworking models. The ability to strike a good work-life balance, of course, is increasingly important to male as well as female applicants. Respect for employee rights The Business Conduct Guidelines, which apply worldwide, provide the foundation for cooperation between all BSH employees. BSH s European Committee, which brings the employee representatives from the Group s European sites together once a year to share views on structural decisions and employee-related issues across countries and discuss them with the BSH Board of Management, was established in BSH engages contract workers only from companies which employ their workers according to the applicable collective bargaining pay scale. The requirements of employees are a top priority at BSH: During the course of the Ergo-Check we constantly assess the design of manufacturing workstations. Occupational health and safety We make sure that our employees around the world can carry out their assigned tasks in safety and without risks to their health even against a background of rapidly evolving job descriptions and changes in the workplace age structure. Occupational health and safety issues often go hand in hand with environmental protection concerns in manufacturing, so BSH assigns responsibility for both areas to one organization: the Department for Environmental Protection and Occupational Health and Safety. All BSH sites have nominated occupational health and safety officers who report to the headquarters. We have recorded dramatic improvements worldwide in recent years thanks to a combination of a systematic management regime and extensive training measures. Today occupational health and safety levels at BSH are comparable across all areas from Europe to China to the USA. BSH in Germany revised and extended the existing health promotion provisions in 29 to create a new BSH health management program. This framework provides the foundation for all health promotion activities at our sites including schemes to help those on long-term sick leave return to work. Meeting the needs of older employees The average age of our workforce continues to rise. Mindful of the need to prepare for the consequences of impending demographic change, we acted three years ago to launch an initiative in which representatives of the Human Resource Departments of our factory sites, the corporate departments, customer service, corporate technology and the Works Council collaborate in three working groups to generate possible solutions to the associated issues. We communicate the activities underway and their outcomes to all employees under the headline Shaping the future BSH prepares for demographic change. All activities under the initiative focus on health promotion and enabling employees to carry on working. Concrete examples include our Ergo-Check scheme, under which we assess the design of manufacturing workstations against ergonomic criteria and undertake any necessary improvements.

19 SPECIAL OUR EMPLOYEES 19 International employee survey Our people are the bedrock of our success. We surveyed employees in 17 countries in 29 to keep track of their views and concerns. The survey achieved a response rate of 82 percent, which is impressively high and represents an increase of 11 percent in Germany, where we conducted a similar survey in 27. I am sure one of the reasons so many of our people chose to respond is that they have seen for themselves how sharing their opinions in our organization can really make a difference, says Johannes Närger, member of the BSH Board of Management and Labor Relations Director. Continuity in difficult economic times Plans to conduct a survey soon in all of the countries in which BSH operates began to take shape shortly after the 27 employee survey in Germany. Nobody realized at that time that a profound financial and economic crisis was about to break, but when it did, BSH showed no hesitation in standing by the Board of Management s decision to extend the employee survey internationally. After all in difficult times, employees need more communication, not less, and the more open this communication is, the better the results. Adhering to a planned course of action demonstrates stability and continuity, moreover, which of course sends an important signal to all employees. Top ranking for environmental awareness The 29 employee survey revealed improvements in every single area as compared with the 27 survey in Germany. This is undoubtedly the result of the numerous measures devised and implemented in the intervening two years. The extent to which BSH employees identify themselves with the company, their sense of belonging and the strength of their loyalty, for example, all increased substantially from 27. The survey also attempted to tease out how much of an influence different factors have on employee identification and satisfaction. The analysis revealed that personal satisfaction with work depends to a very large degree on corporate culture, management and the nature of the job. The assessment placed environmental awareness first, with targets and the nature of the job next in order of significance. A monitoring tool has been developed to allow consistent tracking of the measures introduced following the 29 employee survey. We intend to continue asking our employees around the world every two years for their views on what has improved and what still needs to be improved. Johannes Närger, member of the BSH Board of Management and Labor Relations Director» It is vital today to understand how employees feel about their company and where they would like to see things improved. Building and maintaining an effective edge over the competition means exploiting every last ounce of potential. When we reach this level of detail, employees really can be the best of advisors.«

20 2 THE ENVIRONMENT LORUM IPSUM The environment inspires our sustainability concept: careful use of resources and super-efficient appliances. We strive to minimize our consumption of natural resources at every stage of the value chain, from development and manufacture to use and recycling. We have already realized almost all of the potential savings achievable in many areas, but with a systematic approach and innovative technologies there are always further improvements to be made. Focus on the product use phase We have been paying particular attention recently to the environmental performance of our appliances in the use phase. The energy, water and cleaning agents consumed in the home while the appliance is in use account for more than 9 percent of the total environmental impact over the product lifecycle. That our appliances rank among the most efficient in the world is clear not just from our indicators (see page 25), but also from numerous product tests and a whole host of awards. Our engineers spend every day in pursuit of new technical ideas to enhance the ease of operation and performance of our appliances and simultaneously bring about further reductions in their electricity and water consumption. One of the tools they use in this process is the systematic product environmental analysis (PEA) method developed by us at BSH. Every new development and every product revision has to undergo a PEA. 4 9% *) 9 percent of the environmental impact arising over the lifetime of a home appliance occurs during the usage phase. Accordingly, the development of products that conserve resources is the most sustainable contribution BSH can make towards environmental and climate protection. Production (consumption of raw materials, energy and water) Raw materials (non-ferrous metals, steel, synthetics, glass, others) <.5% 9 95% **) <.5% Distribution (energy consumption for transportation of goods) Disposal (energy consumption for recycling) Usage (consumption of water, energy and chemicals) *) according to product **) according to product and usage

21 LORUM IPSUM LORUM IPSUM THE ENVIRONMENT 21 Our portfolio of super-efficient appliances Our electricity- and water-saving appliances often outperform the minimum threshold defined by law for inclusion in energy efficiency class A, the top class, by quite some margin. We have now brought these outstanding appliances together to create a portfolio of superefficient home appliances. In 29, for example, we succeeded in trebling sales of these super-efficient appliances, year-on-year. Our most efficient home appliances accounted for 15 percent of total sales by volume and an even more impressive 18 percent of total sales revenue in the year under review. Our super-efficient home appliances make a significant and measurable contribution to the fight against climate change as well as helping our customers to cut their electricity costs substantially. The superefficient appliances we sold in Europe in 29 are responsible for around 1.1 billion kilowatt-hours in savings, calculated over the appliances average duration of use. This is equivalent to the average annual electricity consumption of more than 3, private households in Germany. Standards defining how these savings are to be recorded and calculated in our sector have yet to be drawn up, so we have submitted both our procedure and the underlying data to an external auditor for verification. Potential savings in manufacturing In production too we take great care to eliminate any unnecessary consumption of natural resources. Our targets are ambitious: We aim to slash energy consumption per ton of product by 15 percent by 213. An energy audit to identify potential savings is the first step in reaching these targets. The Bretten and Traunreut sites have already implemented a large number of measures to optimize their resource consumption and other factories will follow suit in 21 and subsequent years. Quality and environmental management systems at all BSH sites worldwide ensure that we continue to pursue and implement our environmental objectives consistently. Our factory at Nauen in Germany gave an impressive demonstration of just what we mean when we talk about resource-efficient production at BSH in the Global Excellence in Operations competition organized by consultants A.T. Kearney. Entered in the outstanding resource efficiency category, it was named the category s Factory of the Year in 29. The jury explicitly praised, the entire system, from conceptual targets and the systematic approach to implementation in practice. The central building management computer, which controls heating, ventilation, cooling water circuits and hall illumination as a function of shift plans and plant utilization, deserves much of the credit. The heat generated by the compressors supplying the production process is captured and used for water heating to minimize energy wastage. The BSH home appliance plant at Nauen earned the title Factory of the Year in recognition of its systematic controlling of resource efficiency during production. Saving energy in administration Efficient building systems and IT solutions have recently become an important issue for company sites. Here too BSH revels in the chance to showcase its passion for innovation, most notably with the first administration building in the Netherlands to be realized using the Cradle-to- Cradle principle. Located in Hoofddorp near Amsterdam and scheduled

22 22 THE ENVIRONMENT SPECIAL to open in 21, the new building, which will be home to our Dutch BSH subsidiary, has been designed such that all of its components can be reused or returned to nature at the end of its life. BSH struck a decidedly green note in the IT field in April 29 too when an overhaul of our data center that improved performance by 18 percent simultaneously reduced our energy consumption by around 1.3 million kilowatthours a year. This achievement won us the 29 GreenCIO Award. Environmentally aware transport operations Logistics account for around ten percent of total CO 2 emissions from BSH s operations. We accordingly aim to improve our goods shipments continuously (see page 27). Our logistics center in Giengen, Germany, recently developed an environmentally friendly logistics concept in conjunction with DHL Global Forwarding under which the weekly freight run 12 truck-loads to the ports of Bremerhaven and Hamburg is moved to rail transport, cutting CO 2 emissions by 6 percent. Transport operations at BSH are organized around the combined transport concept, with all feasible modes of transport considered and the best in each scenario selected on the basis of availability, price and efficiency. Inland waterways have turned out to be the most efficient option for our Nauen site in Germany, for example: Once a week, 54 overseas containers are delivered by ship from the nearby inland harbor of Wustermark to the port of Hamburg for transfer, an arrangement that eliminates 1,4 truck journeys annually. To implement those logistic concepts, an own container terminal was established at the logistic centers Giengen and Nauen. To cut CO 2 emissions, BSH continuously focuses on new concepts for logistics and transport. A pioneer in waste disposal and recycling BSH phased gases that deplete the ozone layer out of its refrigerator manufacturing operations at the beginning of the 199s in Europe and a few years later in China. Home appliances have such a long product life span, however, that still there is a large quantity of CFC-containing refrigerators and freezers, coming back from customers. That is why our contractors have to meet high quality standards for recycling. BSH introduced a quality assurance system for recycling in Germany in 28 to verify compliance with these important standards. An independent inspection organization conducts regular checks to ensure that the quality requirements are being met. Each year around 1 quality assurance audits are carried out at the waste disposal companies. This means that BSH goes well beyond the minimum requirements imposed by law. Other manufacturers have begun joining up to this proven audit system since the middle of 29. In cooperation with NGOs, the ZVEI, associations of waste disposal contractors and public authorities, BSH plans a field test for measuring the amount of recaptured CFC. We want to see high quality standards for recycling throughout Europe and have worked with the relevant trade associations, in our capacity as a member of more than 2 national take-back systems, to draft and encourage the adoption in practice of voluntary industry standards for the collection, transport, storage, handling and processing of refrigerators and freezers. The fact that almost two thirds of end-of-life appliances in the European Union are collected outside the national take-back systems and disposed of without proper scrutiny is something we as manufacturers unfortunately can do little about.

23 SPECIAL THE ENVIRONMENT 23 Environmental concerns drive innovation Revolutionary new developments are rare in the home appliances sector, which makes the BSH dishwasher with Zeolith Drying System all the more remarkable. The zeolite dishwasher won the inaugural German Innovation Prize for Climate and Environment (IKU) awarded by the German Federal Ministry for the Environment (BMU) and the Federation of German Industries (BDI) in February 21. This innovation promises to change the market altogether. Award-winning zeolite technology Our novel drying technology uses zeolite minerals to reduce dishwasher electricity consumption by 2 percent as compared with what were previously the most efficient appliances in the top efficiency class. All in all, our engineers have managed to halve the electricity consumption of our dishwashers over the last 2 years. Zeolite, a substance formerly used only in industry, adsorbs moisture and releases heat in the process, making it ideal for use inside our dishwashers. The hot air produced dries the load after the rinse cycle without any additional energy input. We take great pride in having won the Innovation Prize, not just because it marks the crowning moment of a development project lasting almost six years, but also because of the way this combination of innovative strength and concern for the climate and environment so perfectly encapsulates our number one priority: to make environmental and climate change issues the inspiration and driving force for our innovation management. Mindful of the value and impact of the award, the BSH Board of Management launched a new internal annual innovation prize at the beginning of 21 to recognize especially innovative technologies and products. A genuine breakthrough innovation The Innovation Prize for Climate and Environment is intended to promote German innovations that contribute to the fight against climate change and provide answers to the great challenge of the moment. The jury headed by Dr. Klaus Töpfer described the zeolite dishwasher, which triumphed in the heavily contested category for products and services of relevance to combating climate change, as a genuine breakthrough innovation, an accolade reserved for inventions with the potential to change the way we live and make a significant economic impact. Jury member and Chairman of the Bremen chapter of Friends of the Earth Germany (BUND) Prof. Dr. Helmut Horn observed that The application of zeolite technology in the home appliances sector is a revolutionary innovation. Prof. Dr. Helmut Horn, Chairman of the Bremen chapter of Friends of the Earth Germany (BUND) and Head of the Department of Mechanical Engineering and Manufacturing at Hamburg University of Applied Sciences» The zeolite dishwasher demonstrates that with sufficient ingenuity even long-understood phenomena can be put to work to improve mass-market products for the good of the environment. This technology is likely to become standard in all such appliances over time, so it is entirely appropriate to describe the zeolite dishwasher as a breakthrough innovation.«