Annual Report 2014

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Responsibility and commitment

GF has been recording and analyzing environmental indicators since 1997. The global reporting system was upgraded in 2005 to include social performance data and was expanded into the Sustainability Information System (SIS). Various documents, for instance the Code of Conduct, support mainstreaming and implementation in the 31 countries in which GF operates.

Objectives //

The currently applicable sustainability objectives were adopted by the Executive Committee and cover the five-year period from 2010 to 2015. Objectives for the next period until 2020 are developed by top management in 2015. At the operational level, the divisions and the Corporate Companies derive their environmental and social objectives from these quantified targets valid throughout the Corporation. Achievement of the targets is monitored by means of a corporation-wide reporting system. The environmental goals include, for instance, a reduction in CO2 emissions and an improvement in energy efficiency. The social responsibility targets encompass a reduction in the accident and absence rates and the fostering of employee development by means of modern training programs. The general sustainability objectives also call for sustainability aspects to be embedded in GF’s cooperation with suppliers (GF Supplier Code). GF published its full Sustainability Report with extensive data in June 2014. The report is made in accordance with the GRI guidelines (Global Reporting Initiative).
 

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Social objectives

Safety at work and health protection //

Occupational health and safety protection are part of the management system in all production companies and the system is certified to OHSAS 18001 (Occupational Health and Safety Assessment Series). One of the sustainability goals defined by the Executive Committee is to reduce the accident rate by 15% by 2015. On corporate level, a task force focuses on a comprehensive health and safety approach covering all GF sites worldwide. Even though GF’s occupational health and safety activities indicate a decrease in accidents, sadly, GF had to regret one fatal accident in 2014. The accident was analyzed in detail and actions will be taken to maximize safety around the entire Corporation. Every loss of life is a loss too much and cannot be accepted.

On corporate level, a task force focuses on a comprehensive health and safety approach covering all GF sites worldwide.

Vocational training //

Apprenticeships have a long-standing tradition at GF and ensure that the Corporation can draw on a skilled workforce. GF offers a broad range of training opportunities spanning a variety of technical and commercial professions. In 2014 GF offered a total of 506 positions, of which 209 were in Switzerland, for training apprentices in various technical or commercial professions.

Graduates //

GF offers career entry routes through thesis projects and internships. In addition, GF collaborates on numerous research and development projects with the key universities located in the main markets.

Employees

Management development //

In 2014, GF was able to fill around 50% of all senior management vacancies with internal candidates. This is the result of the Corporation’s management development process, which has been very well established for some years now. As well as technical and management training, the three divisions offer training programs geared to operations. The GF Academy makes a significant contribution to the efficient organization of training by preparing and conducting development programs. Furthermore, in the review year, some 200 managers from many different countries and all areas of the Corporation attended intensive training sessions at the Corporation’s Klostergut Paradies training center. These sessions included, for example, Industrial Business Training (IBT), Financial Management Training (FMT), People Management Training (PMT), and Corporate Management Training (CMT).

In addition, a Corporation-wide initiative on management issues and collaboration – based on programs developed by Franklin Covey – was implemented. These training courses are aimed at managers and employees from all divisions. The three divisions also conduct their own training programs that are geared specifically to the operations of their business areas. There is a particularly strong demand for skilled staff in the People’s Republic of China. As the country’s labor market is highly competitive, the GF Academy pays particular attention to developing managers. In fact, it has been offering appropriate management and leadership training courses in China since 2007.

Pay and social benefits //

In 2014, GF generated net value added of CHF 1.22 billion. About 81% of this amount was paid out as salaries to employees. GF operates a fair, modern, and transparent remuneration system for employees, without discrimination. Salary levels are based on those being offered in the relevant market and individual salaries are set according to job requirements, personal performance, and the company’s financial performance. Where appropriate, GF offers a performance-related variable component and allows employees to share in the Corporation’s success. Excellence on the part of individual employees and teams is recognized and rewarded. In addition, GF offers the usual social benefits customary in the respective country and industry.

Net value added

Information //

Sustainability issues are regularly dealt with in Globe, GF’s employee magazine, which is published in six languages. This ensures that information on sustainability trends in society and associated activities at GF is communicated to staff members in full. Moreover, larger sites also produce their own publications, which are regularly distributed to all staff. In order to communicate with the online audience, GF is present on social media channels since 2013. Regular posts provide insights into the world of GF and sustainability activities within the corporation.

Best-practice exchange to strengthen sustainability management //

Last year, around 150 managing directors addressed fundamental strategic and operational issues at specialist conferences. Senior management meets annually at the two-day Corporate Conference and at regional managing director meetings. These conferences deal with strategic and financial management issues as well as with specific human resource management topics. The two-day sustainability conference, which takes place annually in Europe, and biennially in China and the USA, focuses on a cross-divisional dialog. In 2014, this conference was held in Schaffhausen, Switzerland, and Easton, USA. High on the agenda were current sustainability issues facing the Corporation and its divisions, in particular occupational safety and health and as regards the environment, energy efficiency. HR managers, occupational safety and health protection specialists, energy experts, and environmental officers from regional Corporate Companies attended the conference.

Environmental objectives

Energy //

The challenges of the future include climate change, the inite nature of fossil fuels, and a steep increase in the demand for energy. In 2013, GF generated about 713 000 tons of CO2 emissions of which fossil fuels accounted for 250 000 tons and electricity for 455 000 tons. Compared with the emissions from energy consumption in production, emissions caused by employee business travels are around 8 000 tons. The figures for 2014 will be published in the Sustainability Report 2014.

Energy effiency //

Fossil energy will be among the most important and ever-diminishing resources in the coming decades. Consumption is steadily increasing particularly in the emerging markets. GF has set itself the goal of increasing energy efficiency in production in each division by 10%. All the divisions of GF are developing innovative solutions such as low-efficient piping components, light-weight components for vehicles, and energy-efficient tool-making machines. In addition, all the divisions contribute, through their products and solutions, to increasing energy efficiency and to lowering energy consumption. For instance, low-optimized piping components can reduce the pump input power needed in a plant. Further power consumption reduction is achieved through an intelligent machine software optimizing power consumption during operating and stand-by modes.

Resource-efficient innovation //

Important resources are also becoming scarcer and more expensive. As a result, the development departments have introduced processes for resource-efficient innovation (eco-design, life cycle assessment). These processes help ensure that product-related sustainability and resource efficiency issues are taken into account as early as the development stage of new products. Developers have to take the product’s entire life cycle, and not just the development phase, into consideration. The impact of new products on the environment is analyzed by assessing the raw materials and suppliers selected, production, the customer’s use of the products along with their reuse once their life cycle has expired.

Engagements

Clean Water //

In 2002, on the occasion of its 200-year anniversary, the GF Corporation established the Clean Water foundation, endowing it with CHF 3.5 million. Since then, GF provides the foundation with a considerable amount each year. To date, Clean Water has supported 124 projects worldwide with over CHF 8.5 million and has improved the lives of more than 140 000 people with a sustainably improved access to clean drinking water.

To mark the foundation’s tenth anniversary in 2012, GF and Caritas Switzerland signed a partnership for the supply of drinking water. Clean Water contributed CHF 1 million for this purpose, which will enable Caritas to provide at least 35 000 people worldwide with a sustainably improved access to clean drinking water by 2015. Within the scope of the partnership, GF Piping Systems supports Caritas with know-how and expertise in the field of water treatment and distribution. The objective is to noticeably improve the access to drinking water with help of innovative methods.

In 2014, the Board of Trustees approved eight new projects in Ecuador, Kenya, Nicaragua, Tanzania (two projects), Tajikistan, Somaliland, and Bosnia-Herzegovina in the amount of more than CHF 500 000. The region Balacici in Bosnia-Herzegovina was hit by heavy loods in 2014. Employees of GF Automotive in Mettmann (Germany) supported reconstruction efforts with EUR 5 000 as part of the German aid campaign “Deutschland Hilft”. Clean Water also donated CHF 50 000 to rebuild a water reservoir that provides 140 families with drinking water. The necessary geological studies have been completed and construction will begin in spring 2015. Follow the reconstruction online: www.caritasprojectbosnia.wordpress.com

Clean Water has supported 124 projects worldwide with over CHF 8.5 million and has improved the lives of more than 140 000 people.

Clean Water

Contributing to the common good //

Through its fundamental values and corporate principles, GF is committed to promoting cultural, social, and environmental involvement. To this end, the Corporation and Corporate Companies are locally involved at their respective locations. In 2014, around CHF 2 million were spent at Corporation level on social involvement activities. In addition to this, some 30 GF subsidiaries support local activities, making substantial contributions in some cases.

Stakeholder dialog //

Management responsibility and active, open, and timely communication – with internal and external stakeholders and at various levels – are inseparably linked. GF fulfills this duty to inform and communicate primarily through its Communications and Investor Relations staff units. The Annual Report, Mid-Year Report and Sustainability Report are the main printed publications for shareholders, investors, and the general public. Whenever possible and permissible, employees are being notified first. As a company listed on SIX Swiss Exchange, GF is subject to the requirements on ad hoc publicity. Making sustainability and resource efficiency the subject of an ongoing dialogue is entirely in the interests of GF customers, too. After all, to be considered as a supplier, evidence of sustainability in production is a key factor alongside technology, quality, and price. In addition, sustainability aspects in working relationships with suppliers are defined in a Supplier Code. In November 2014, GF was again invited to the “Daimler Sustainability Dialogue”, in Stuttgart (Germany), where stakeholders from business, politics, and society discussed sustainability issues.

Awards //

GF regularly receives awards for its unwavering commitment to sustainable practices. For the third time, GF was awarded with 95 out of 100 points, and was the sector leader in the Carbon Disclosure Project (CDP) in 2014.

Tools and systems

Management systems //

At GF all production sites have to be certfiied according to ISO 9001 (quality management), ISO 14001 (environmental management), OHSAS 18001 (Occupational Health and Safety Assessment Series) and where applicable to ISO 50001 (Energy Management System). As at 31 December 2014, 46 of 51 earmarked sites had been certified, equating to 90%. Newly established or acquired manufacturing companies must have obtained certification after three years at the latest.

Reporting systems //

The systematic recording of sustainability figures, which was initiated in 1997, is carried out by all production companies and by all sales companies with more than ten employees. In the year under review, 98 operations, or close to 100% of all employees, were covered. The Sustainability Information System (SIS), which has been steadily upgraded over the years, ensures that the data are compiled and that they are comparable Corporation-wide. Trained employees in the local companies collect and report the data, which are then consolidated and analyzed in the central database. The findings form the basis for monitoring success and for sustainability reporting and also serve to formulate future objectives. The social reporting (e.g. accident rate) covers approximately 99% of the workforce and an estimated 95% of its environmental footprint.

Corporate compliance //

Compliance with laws, internal guidelines, and the GF Code of Conduct is a key part of GF’s corporate culture. Organizational measures, training plus information and advice ensure that the Corporate Companies are able to comply with local legislation and the principles of business ethics applicable in the Corporation The Corporate Compliance Officer reports annually to the Executive Committee and Board of Directors on his activities.

Internal Auditing verifies compliance with the applicable laws, guidelines, and ethical business requirements. If they wish, employees can also report breaches of laws or guidelines to their line managers, Internal Auditing or the Compliance Officer anonymously. This whistle-blowin option has not been used over the last two years.

For more information on the certified production sites of GF please see page 41 of the Business Report 2014.

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