Francotyp Postalia : Non-financial group report 2022

Non-financial Group Report

of Francotyp-Postalia Holding AG for the 2023 fiscal year

Introduction

Background and purpose of this disclosure

This sustainability report, in the form of the non-financial group report for the 2023 fiscal year, explains in detail how the Francotyp-Postalia Group (hereinafter referred to as the "FP Group" and "FP") contributes to sustainable corporate development as a listed group of SMEs. This report also shows the goals that FP has set in this context, as well as the structures created and the measures already taken. In this manner, FP provides information on its current commitment to responsible entrepreneurship with the aim of shaping a sustainable future for the com- pany, its stakeholders, and its direct and indirect environ- ment.

Our environment is changing ever more quickly, requiring us to rethink how we want to live, work and produce- the latter not only directly in the factory buildings, but also indirectly in the associated administrative departments and offices. For more than 100 years, FP has been helping other companies and institutions to organise their communication and workflow processes more effectively and efficiently. FP is therefore an expert in solutions that not only make office life easier, but also more sustainable. For this reason, we are confident that our technologies, which increase efficiency, productivity and transparency in the office environment, can contribute to a more resilient and sustainable future for us all.

In addition to our product and service portfolio, sustainability is also playing an ever greater role in how we align our business activities. The focus here is not only on the impact of our business activities on our environment and our public, but also on how sustainability issues may potentially influence our FP business model.

We firmly believe that our customers, investors and the public have long since stopped focusing only on our financial reporting. They also expect us, in our role as a listed SME, to assume concrete responsibility by also understanding the indirect environmental and social effects of our business models and managing them as part of sustainable corporate development.

As in previous years, this report was prepared in accordance with the GRI Standards, the internationally recognised framework for sustainability reporting. It pertains to the 2023 fiscal year and was prepared with the involvement of all relevant specialist departments and reviewed by the FP Management Board. Unless otherwise stated, the report applies to the entire FP Group in accordance with the scope of consolidation for financial reporting (see Annual Report for 2023, p. 17). It was published on 30 April 2024.

New developments in non-financial reporting for European companies

As a European company with international business ac- tivities, we are not only required to set ambitious targets for our sustainable corporate development, but also to report on our targets, the measures taken, and the extent to which we have achieved them in a much more regulated manner in the future.

In addition to our current GRI reporting in accordance with the EU Taxonomy and its mandatory reporting templates with regard to the proportion of our taxonomy-eligible or aligned economic activities in sales, capital expenditure and operating expenses (referred to as "green revenue / CapEx / OpEx"), the reporting structure and content of FP's sustainability reporting will therefore be comprehensively updated for the coming 2024 fiscal year due to the significantly stricter requirements of the European Union's Corporate Sustainability Reporting Directive (CSRD).

However, the Taxonomy Regulation and the associated EU delegated acts use formulations and requirements that are still subject to various uncertainties with regard to their interpretation, particularly in the first few years of their application. This non-financial statement reflects their current interpretation and application by the management of Francotyp-Postalia Holding AG and of the responsible departments for the purposes of our sustainability reporting for the 2023 fiscal year.

In addition, the European Sustainability Reporting Standards (ESRS) are to be applied in the future in place of the previously used GRI standards of the Global Reporting Initiative. The FP Group has launched a project to further develop its sustainability reporting in order to fulfil all these requirements in good time as a listed SME.

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Company profile and business model

Business model of the FP Group

Francotyp-Postalia AG, the parent company of the FP Group, is a listed company headquartered in Berlin with a history going back more than 100 years in postal infra- structure. As a leader in the field of efficient office solu- tions, FP focuses primarily on the development, production and distribution of solutions for processing mail and consolidating business mail. Digital solutions for companies and public authorities are also making an increasingly significant contribution to revenue and earnings.

In the 2023 fiscal year, FP was divided into three business units: Mailing, Shipping & Office Solutions, Mail Services and Digital Business Solutions. These units reflect the wide variety of products and services that the company offers to fulfil the wide-ranging requirements and needs of our customers in the office environment.

FP has an international presence spanning several conti- nents. With subsidiaries in 15 countries, the company is globally active, allowing it to serve customers worldwide. Thanks to this broad geographical scope, FP can tailor its services to local market conditions and customer requirements while increasing its innovative strength and operating efficiency by way of international impetus.

FP's business model is based on the provision of pre- mium, customised solutions for its customers. More information on the specific business models of the individual units and the company's financial and operating performance data is provided in the combined Group management report. This provides a detailed overview of the company's business activities, its financial performance and its strategic goals for the future.

Business units

Mailing, Shipping & Office Solutions

In the Mailing, Shipping & Office Solutions business area, the FP Group develops franking systems. FP produces and sells or rents these and also offers its customers a comprehensive range of products, services and support. The products FP offers to customers in this business area are not limited to franking machines and related hardware - its range also extends to other office supplies and solutions from the digital product spectrum.

The business area is reflected in the segment reporting in the Mailing, Shipping & Office Solutions segment, which reports in accordance with local accounting stand- ards.

Revenues and earnings from digital solutions and products are allocated to the Digital Business Solutions business area.

Digital Business Solutions

The Digital Business Solutions business unit comprises all digital activities with which FP is expanding its business model in a growth-oriented manner. This includes input and output management in the Document Work- flow Management area. In Input Management, incoming physical and digital documents are collected, analysed according to the customer's specific criteria, evaluated and then fed into the customer's data or document system in an electronic form. In Output Management, FP takes care of printing, inserting, franking and handover to delivery services or delivery in digital form. The other area, Business Process Management & Automation, comprises products and solutions for efficient and automated process workflows for our customers. In addition to digital signatures, this includes solutions for electronic legal transactions. The Shipping & Logistics area includes the SaaS-based parcel shipping software for parcel shipments as well as software solutions for inbound parcel management, asset tracking and internal logistics.

The business area is described in segment reporting in the Digital Business Solutions segment, which reports in accordance with local accounting standards. Revenues and earnings from digital solutions such as Parcel Ship- ping, which are sold through the MSO sales channel, are reported in the Digital Business Solutions business area.

Mail Services

The Mail Services business unit comprises the franking service - collecting unfranked outbound post and providing the franking - and the consolidation service - collecting franked post, sorting it by postcode and delivering it in batches to a regional office of Deutsche Post AG or an alternative postal distributor. Collection, postage -optimised sorting and delivery to postal service providers takes the pressure off companies with medium and high volumes of letters and helps to reduce the costs that this entails.

The business area is reflected in segment reporting in the Mail Services segment, which reports in accordance with local accounting standards.

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Integration of sustainability aspects into the business model

For FP, sustainability and business success always go hand in hand. FP strives to establish sustainable value chains as an integral part of its business activities, which is aimed at providing an innovative portfolio of solutions for our customers and contributes to both positive developments in society and long-term, profitable growth for the company.

As an industrial company, we attach particular importance to using energy sources and water with a focus on resource conservation. The FP Group therefore produces exclusively in Germany and sources its raw materials and intermediate products predominantly from suppliers in Germany and Europe. This strong regional sourcing approach makes a significant contribution to minimising our carbon footprint.

When developing new products and processes, FP analyses their environmental compatibility and energy efficiency at a very early stage in the development process in order to optimise their subsequent production, distribution and service processes in their entirety (GRI 3-3).

We offer our employees various training courses to raise their awareness of responsible behaviour in their daily professional activities. The FP Group also maintains an open and transparent dialogue with employees, author- ities, customers, suppliers and the public. Regular surveys on employee, stakeholder and customer satisfaction also facilitate dialogue on aspects of environmental and energy management.

Goals and measures to promote sustainability

FP is committed to the global Sustainable Development Goals (SDGs), which were adopted by the United Nations in autumn 2015. Its 17 detailed goals set the course to 2030 and call upon companies, politicians and society to do their part. FP aims to contribute to this within the scope of its possibilities and therefore carefully reviews the SDGs and their specific implementation.

The Management Board of Francotyp-Postalia Holding AG bears ultimate responsibility for the sustainability of our company. The Management Board reviews and approves the sustainability report and ensures that all material topics are addressed.

Strategic and operational implementation is the responsibility of the head of ESG Management, who reports regularly to the Management Board and is part of the FP management team. Together with their sustainability team, they are responsible for FP's central and cross-divisional sustainability programme. Together with their team and the internal FP process owners - or example, from the specialist areas of environmental and energy management, supply chain management and compliance - they work closely together to firmly integrate key sustainability topics throughout the Group.

The sustainability team has set the goal of anchoring sustainability strategically throughout the entire organisation and also making it measurable in operational terms. To this end, they work closely with the various FP units

and heads of divisional departments in order to account for the diversity of the FP product and solutions portfolio and to identify the levers that make a significant contribution to sustainable corporate management at FP.

A key sustainability goal for FP is to make its own contribution to reducing greenhouse gas emissions. Emissions of these greenhouse gases in the EU are to be reduced by 55% by 2033 versus 1990 in order to achieve climate neutrality by 2050 in the long term.

As FP sustainability targets, FP's contribution to reducing carbon emissions plus its successful regular ISO recertifi- cation have been key, quantifiable components of the target agreements for FP Management Board members since the 2021 fiscal year.

In this context, the FP Group plans to reduce its carbon emissions in Germany by 26% by 2026 versus 2021. This target will be achieved through the use of green energy and more resource-efficient working. Since the 2019 fiscal year, power, heat and business travel have been tracked on a monthly basis to ensure that the ESG sustainability criteria are met. Besides the cut in CO2 emis- sions, the agreed ESG criteria also include the reduction of water consumption, the reduction of waste and the switch to green electricity, which are weighted equally in the assessment.

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Environment

The resource-conserving use of energy sources and water and the reduction of CO2 emissions are an integral part of the FP Group's measures to help engineer a sustainable transformation of the environment and to drive this forward as part of its own business activities.

In the following section, the environmental indicators relate to the German subgroup only. A key indicator system for the international part of the Group is currently still being developed.

Efficient use of natural resources: overall picture, structures and processes

Various raw materials, semi-finished products and preliminary products as well as energy and water are used in the manufacture of the FP Group's products. This also results in various emissions, waste water and other substances that can no longer be used in the FP production process.

Therefore, generally speaking, FP's business activities also require the use of limited natural resources and ultimately also contribute to their scarcity or can potentially be associated with negative environmental impacts that can arise from the extraction, processing and disposal of materials. From an economic perspective, one consequence is potential inflation in the prices of energy, raw materials, materials and waste disposal. These are cost components that may in turn directly affect our own com- petitiveness.

FP therefore optimises its business processes from both an economic and environmental perspective and designs them in a manner to use as few resources as possi- ble. From product development to the final application set-up at our customers' sites, FP takes various environmental aspects into account in order to minimise downstream disposal activities along its value chain.

Materials and production processes

When selecting and using raw materials, semi-finished products, technologies and production processes, FP always analyses their environmental compatibility.

On the one hand, this affects product and solution development at a very early stage. On the other hand, those responsible for production at FP are constantly looking for more environmentally friendly alternatives and pro- cesses, and assessing their feasibility in the FP context. As a company in the electrical and electronics industry, FP primarily uses materials and manufacturing processes that have a relatively low impact on the environment and that are easy to control in terms of handling. Materials with potential hazards are replaced by less problematic substances wherever technology and processes allow.

Water and waste water

Water is a valuable resource that is becoming increasingly scarce in many regions of the world due to climate change. The responsible use of water is therefore taking ever greater priority.

At the German sites, FP primarily uses fresh water from the public drinking water supply (GRI 303-1). This is used mainly as sanitary water and is also of very minor importance in FP's production processes.

In this respect, there is no negative impact on the water sources used (GRI 303-2). Recycling with production circuits or separate systems is also not required (GRI 303- 3).

The waste water produced in this context is discharged into the respective municipal waste water systems as part of regular waste water disposal and treated or reprocessed by the responsible waste water companies. The standards required for this are regulated by local legal and official requirements at all locations.

FP is currently analysing the extent to which further water -saving measures can be implemented at its loca- tions.

Durability, remanufacturing and waste

In the context of responsible use of limited resources, concepts from the circular economy can provide significant impetus for resource-conserving business models. In addition to actual production, the focus is on the complete life cycle of FP products.

As a first step, products that are as durable as possible are an important approach in circumventing avoidable waste in downstream phases of the product life cycle by prematurely disposing of potentially technically obsolete product generations.

As a result, FP has been relying primarily on service and repair programmes for its durable product portfolio for several years now in order to ensure a long service life for its office machines on-site at its customers' premises and to extend these where technically possible and economically viable.

FP is currently analysing the extent to which a supplementary refurbishment programme for its already very durable products will make technical and commercial sense in the future.

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FP operates a waste management system for the waste generated at the respective company locations with the goal of avoiding, minimising or, if necessary, sensibly recycling the waste. This concept has already been taken into account in production and process planning and includes the return of selected waste to a circular econ- omy.

If it is not possible to avoid or reuse waste, it should be utilised for energy recovery via the respective waste disposal companies wherever possible. To this end, waste that can neither be avoided nor recycled is disposed of properly in cooperation with the respective waste disposal companies. In doing so, FP chooses the most environmentally friendly route that is justifiable from an economic point of view.

Furthermore, FP supports its waste management companies in terms of processes by pre-sorting and separately storing the remaining residual waste, for which these providers pay FP a nominal amount in recognition. FP prepares an annual volume balance comparison from the waste balances in order to better understand the proportion of waste types and their utilisation or recycling.

Efficient use of natural resources: corporate goals and results

Materials and production processes

At the German sites, 83 hazardous substances were used in the past fiscal year (previous year: 98), 22 of these are classified as dangerous (previous year: 33). Six hazardous substances are used at two or more locations.

Of the 43 substances used at the Berlin-Pankow location, most are either stored in small amounts or used exclusively in development. The production sites in Berlin-Ad- lershof and Wittenberge use 22 and 26 substances, re- spectively. All substances for which a safety data sheet is required have been listed. For example, these include old used inks that are assigned to water hazard class 1 but do not require any hazard statements (GHS-H) or pre- cautionary statements (GHS-P).

Contact sprays, Caramba and Raster Clean are substances that are provided with hazard and precautionary statements even in small amounts. FP evaluates and assesses all impacts on the health, safety and environment of employees and customers before it uses potentially dangerous materials or they are put to further use (GRI 306-3).

Water and waste water

Water consumption at the Langenfeld (663 m3) site in Germany and the other four German sites, Wittenberge (712 m³), Berlin-Adlershof (210 m³), Hennigsdorf (57 m³) and at the main site in Berlin-Pankow (809 m³) totals 2,451 m³ (previous year: 2,419 m³). Measured in terms of hours of use, the water consumption level of 2,451 litres equates to 4.2 litres per hour of use (previous year: 4.5 litres per hour of use). This improvement was achieved by raising awareness among employees and installing

taps with sensors. The aim is to keep water consumption per hour of use at this low level. In the hazardous substances list, all substances used are classified according to their water hazard class. According to the current Federal Water Act (section 62 sentence 1 WHG), substances that are potentially hazardous to water are divided into three classes. Substances that are not hazardous to water are assigned to class 0.

FP works with very few water pollutants of hazard classes 2 and 3, including very small volumes of adhesives and cleansing agents. The old franking machine inks are cat- egorised in water hazard class 3.

With regard to substances hazardous to water, FP pays particular attention to appropriate labelling. These substances are always stored in special containers. Special precautions at filling points prevent them from entering the wastewater system. All supply lines, pipes and containers are sealed and drip-proof, suitable binding agents are always available, and disposal always complies with the respective disposal standards and statutory requirements.

Durability, remanufacturing and waste

The amount of waste at FP increased to 291.2 tonnes (previous year: 258 tonnes), but 110.6 tonnes were recycled compared with the previous year (99.7 tonnes). The amount of waste at the Wittenberge site increased significantly last year. This is attributable to returns of machines that were either handed back at the end of their service life, were subject to complaints due to defects or were returned under leases. At the sites in Germany, the waste amounted to 291.2 t (of which 0.3 hazardous) (GRI 301-1). The proportion of hazardous waste decreased compared to the previous year. In accordance with the Basel Convention, FP did not export any waste (GRI 306-4).

The central waste collection points are clearly documented for the locations in site maps.

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Climate protection and emissions: overall picture, structures and processes

One of the most urgent and not only environmental tasks at present is to mitigate the immediate consequences of climate change and largely avoid any potential negative consequences. In this context, FP recognises the global goal formulated in the Paris Climate Agreement to keep global warming well below two degrees Celsius and has derived specific targets and measures for this as part of its own corporate pol- icy.

Scope 1 / 2 / 3 emissions

Among other things, FP has set the goal of reducing its CO2 emissions in Germany by 26% by 2026 compared to 2021. In the medium term, we are also aiming to reduce CO2 emissions in the upstream supply chains, for which further analyses and measures are required.

FP follows the triad of avoidance, reduction and-if not otherwise possible or economically feasible-offsetting emissions. The FP Group's "Scope 1" and "Scope 2" emissions are the initial focus of emissions-related activi- ties.

The best way to reduce emissions is to prevent them from being generated in the first place. Accordingly, all opportunities to save energy are given high priority at FP in order to improve energy-related key performance indicators (if possible) or to keep them stable even with increasing production volumes. The focus here is on all FP operating processes, machines, systems, equipment, buildings and their infrastructure.

Reliable and standardised energy and emissions data form the basis for a valid survey and relevant control of the respective energy consumption. In order to further improve both data quality and the data collection pro- cess, FP is currently working on a Group-wide platform for the centralised and standardised collection and processing of energy and emissions-related data.

Energy management and committee for occupational safety and environmental protection

Responsibility for energy management and consumption lies with the FP departments and the FP subsidiaries.

The FP Group's energy management goals include improving efficiency and productivity, protecting the environment and reducing the use of fossil fuels. To this end, the company implements energy efficiency measures at its sites and improves energy management continuously.

FP met the ISO 50003 audit requirements for the energy management system at an early stage and recertified the system in accordance with ISO 50001:2018 in 2019. Approaches from ISO 31000 (risk management) are also used and implemented in order to support risk-based thinking. In 2009, the legally required Occupational Safety Committee (ASA) was converted into an

Occupational Safety and Environmental Protection Committee (AUSA). This committee assesses topics such as compliance, waste, hazardous materials, energy, resources and occupational health and safety and defines measures for improvement. These include:

• Energy management, energy savings and en- ergy supply at the respective location
• Production, saving, selection and transport of raw materials, water management and water saving
• Avoidance, recycling, reuse, transport and final disposal of waste
• Assessment, monitoring and reduction of noise pollution inside and outside the location
• Environmentally relevant changes to existing production processes as well as to packaging, transport, use and final disposal
• Operational environmental protection: prac- tices among contractors and suppliers
• Current legal situation, new legal or internal re- quirements and any feedback from interested parties, improvements, corrections

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Climate protection and emissions: corporate goals and results

FP's direct greenhouse gas emissions (Scope 1) originate from sources that are under FP's control or ownership due to the FP Group's own activities. They mainly consist of emissions from heating systems, the operation of vehicles in the vehicle fleet and emissions from FP production processes.

In the 2023 fiscal year, FP generated Scope 1 emissions primarily from the use of heating oil, natural gas and district heating totalling 1,940 MWh (previous year: 1,872 MWh). This use of heat resulted in CO2 emissions of 420 tonnes, compared to 419 tonnes of CO2 in the previous year. The emissions were generated from both stationary and mobile energy sources.

In the 2023 fiscal year, the FP Group's transport vehicles carried more than 136 million letters (previous year: 122 million). The FP Group maintains a separate CO2 register for its vehicle fleet (broken down into cars and vans). In 2023, an average of 40 kg of CO2 was generated per month. Depending on the vehicle type, 99 passenger cars (previous year: 105 passenger cars) produced 423,527 kg of CO2 and 13 vans (previous year: 16 vans) produced 53,271 kg of CO2.

This results in a total consumption of 986 tonnes of CO2 (previous year: 1,129 tonnes of CO2), of which 420 tonnes are attributable to the use of heat, 477 tonnes to the CO2 fleet register, 60 tonnes to the use of electricity and 29 tonnes to the use of airline flights.

Indirect Scope 2 emissions arise in particular when external energy sources are utilised by the FP Group. This primarily includes the emissions that result from the generation of electricity, steam or heat that FP consumes but does not produce itself. FP's consumption in the 2023 fiscal year was 972 MWh of electricity (previous year: 1,012 MWh) and generated a total of 60 tonnes of CO2 (previ- ous year: 172 tonnes of CO2)as Scope 2 emissions. These emissions come exclusively from electricity generation.

In addition to our own Scope 1 and Scope 2 emissions, Scope 3 emissions are also the subject of further analyses at FP. These Scope 3 emissions arise, for example, in the supply chains through the extraction of raw mate- rials, the production of preliminary products or their subsequent transport to the FP sites. This also includes emissions from waste disposal, employee commuting and business trips. In order to gain a better understanding of these Scope 3 emissions and to manage their reduction strategically in the future, further analyses of the upstream and downstream value chain are required. Based on these analyses, a reduction plan with targets for Scope 3 emissions can be developed in the next step.

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Environmental compliance: overall picture, structures and processes

Strict compliance with all relevant laws worldwide as well as international and national standards and guidelines is one of the many pillars of the FP Group's economically successful and sustainable business activities. As a pre- requisite, it also results in ensuring that quality promises for FP products are adhered to and is also considered a fundamental obligation towards all stakeholders of the FP Group.

Compliance with environmental regulations

A key challenge in the area of environmental protection

• particularly with regard to waste, chemicals, water and wastewater - is compliance with environmentally rele- vant laws, official authorisation requirements and other environmentally relevant requirements. At FP, environ- mental managers at site level ensure that the relevant regulations and requirements are incorporated into the management system and that all processes are legally compliant. If there is a need for action, the environmental managers must take appropriate precautions. This can be done, for example, by issuing site-specific process and work instructions. Regular internal and external au- dits and compliance checks are carried out to verify com- pliance with legal and internal environmental require- ments.

Chemicals management

Through its chemicals management system, FP ensures the safe handling of hazardous substances and hazardous goods throughout the entire process chain, thereby protecting both FP employees and the environment.

Responsibility for the safe handling of chemicals lies with the employees in charge of operating the facilities, who are supported by occupational safety specialists and the environmental protection officers at the sites. The company -wide information system on the hazardous substances used is based on a substance database and the hazardous substance directories. This ensures that FP uses only chemicals that are registered and may be used in the EU in accordance with REACH (Registration, Evaluation and Authorisation of Chemicals). In addition, strict care is taken to ensure that, as far as possible, no substances are used that are labelled as Very High Concern.

Substance restrictions

FP fulfils the requirements of the EU Directive on the Restriction of Hazardous Substances in Electrical and Electronic Equipment (RoHS) by using software to monitor the relevant chemicals. Suppliers must confirm in writing that the materials, substances and mixtures provided comply with the directives, laws and regulations.

Waste disposal

Modern technologies and products in the electrical industry consist of a wide variety of materials and compo- nents. If not disposed of properly, hazardous components may be overlooked due to their composition, causing potential environmental and health problems. In accordance with the requirements of the EU WEEE (Waste

of Electrical and Electronic Equipment) Directive, which regulates the return, recovery and recycling of electrical and electronic waste, FP has concluded an EU-wide contract with a disposal company. In this respect, the legally compliant disposal of FP products as electrical and electronic waste at the end of their product life cycle is en- sured. The company is also registered as a distributor of electrical and electronic equipment in all countries of the European Union.

Environmental compliance: corporate goals and results

In the 2023 reporting year, no fines or penalties were imposed on FP for non-compliance with environmental laws and regulations (GRI 2-27). There were also no complaints regarding environmental aspects that had to be submitted, processed or resolved in a complaints procedure (GRI 3-3).

The regular ISO recertification audit took place in Octo- ber and November 2022, which FP passed for the following five standards:

• ISO 9001:2015 (quality)
• ISO 14001:2015 (environment)
• ISO 45001:2018 (occupational safety)
• ISO 50001:2018 (energy)
• IEC/ISO 27001:2013 (information security - only FP Digital Business Solutions GmbH at the Berlin-Adlershof site)

The auditors issued 40 recommendations (opportunities for improvement) and 24 notes (minor non-conformi- ties). All these items have been included in our potential list. FP is continuously working to rectify and improve these audit results. The next recertification audit is planned for the 2024 fiscal year.

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Sustainable procurement and supplier management: overall picture, structures and processes

Due to the high value-added contribution of the supply chain, procurement is, first of all, a key economic process for the long-term success of the FP Group. In this context, the company is continuously working on optimising its supply chain and has been optimising a set of targets for several years in order to not only improve price, delivery quality and on-time delivery, but also to largely avoid the environmental impact of international transport.

With this aim in mind and in order to strengthen and simplify its procurement processes, FP already switched to very local sourcing in the 2014 fiscal year. FP Produk- tionsgesellschaft mbH, based in Wittenberge, Branden- burg, is the only production site for franking machines and therefore a supply chain target. As part of this local sourcing, both individual parts and prefabricated assemblies are procured and used in the contract manufacturing of machines, plastic parts, electronic components and assemblies as well as drive technology. In 2023, FP worked with 226 predominantly local suppliers (previous year: 232).

For more than ten years now, FP has been optimising procurement from suppliers based in Europe from an economic and environmental point of view. Direct cooperation with suppliers located in Asia has been almost entirely terminated.

As a result, there are now only six non-European suppli- ers. The direct procurement rate in Europe is currently 97%. The share of the procurement volume awarded in Germany is 91%.

Sustainable procurement and supplier management: corporate goals and results

Due to this very local supply chain in combination with the high environmental, labour and social standards in Germany and its neighbouring countries, typical potential risks from international supply chains, such as environmental pollution or human rights violations due to inadequate occupational safety standards, child or forced labour, play only a very minor role in the shared understanding of FP and its predominantly local suppliers.

Irrespective of this, non-compliance with environmental and human rights standards can generally have a negative impact on people and the environment along the supply chain and subsequently harm the company itself. With its very local supply chain, FP therefore also generally endeavours to positively influence environmental and human rights standards along this supply chain through fair and long-term business relationships and thus, for example, to secure jobs in the Berlin-Branden- burg region or, if possible, to create them together with the suppliers involved.

In addition, as part of the "Best Material Purchase" pro- ject, which FP successfully completed back in 2019, local suppliers were certified in order to increase the number of its local suppliers and thus strengthen the Berlin-Bran- denburg region both economically and sustainably.

Overall, FP's aim is to build and maintain long-term relationships with its suppliers on the basis of partnership. This is the only way to ensure a sustainable supply of the necessary materials for production. Of the A and B suppliers (58 companies in this fiscal year), 35 have worked with FP for over 15 years, 12 have worked with FP for over ten years, and ten have worked with FP for over five years.

Processes for supplier validation

To the best of our current knowledge, the FP Group has no relationships with suppliers that are suspected of having a negative impact on the environment, human rights, labour practices or society (GRI 308-2).

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