KSB : ESG report(PDF 3 MB)

20 Management and Issues 2020	E	KSB Group / Annual Report 2020

Separate Combined Non-financial Report

For 150 years, KSB has been committed to sustainable and responsible business practices. This approach has allowed the company to secure lasting success while respecting the rights of individuals and protecting the environment. Sustainability is an integral part of KSB's corporate strategy. This includes the responsible use of resources and the environment, as well as our responsibility to employees and corporate social commitment. These topics are covered in this separate combined non-nan- cial report pursuant to Sections 289b(3) and 315b(3) HGB [Handelsgesetzbuch - German Commercial Code]. The report fulls the requirements of the CSR Directive Implementation Act [CSR-Richtlinie-Umsetzungsgesetz] and combines the statement at company level with the Group statement outside of the management report.

In accordance with its business model, KSB aims to supply customers worldwide with high-quality pumps and valves, as well as related service. The company develops the vast majority of its products itself and manufactures them in factories on four continents. The products are sold via its own sales organisation, supported by dealer networks comprising selected partners. KSB's business model is presented in the group management report (see page 38).

By joining the UN Global Compact in 2010, KSB committed to aligning its business activities with ten universal principles. The Global Compact principles apply equally to managers and employees throughout the company, as well as to all suppliers and business partners.

Sustainability at KSB

KSB has formulated its own corporate sustainability principles via a Group-wide sustainability policy. These are binding for all locations and all companies within the KSB Group. A committee chaired by the CEO regularly reviews progress on sustainability issues and the implementation of Group-wide sustainability goals. Management also receives a compliance report twice a year as well as an annual review of management issues relating to quality, the environment and occupational health and safety.

The Sustainability Committee includes the CEO and management staff from Human Resources, Legal & Compliance, Production, Product Management, Purchasing, Communications and Integrated Management.

KSB operates a global integrated management system in order to full consistently high standards worldwide with regard to quality, risk, environment, occupational health and safety, and sustainability. It is process-oriented and complies with the requirements of the international ISO 9001, ISO 14001, ISO 26000 and ISO 45001 standards as well as the UN Global Compact. The management system governs organisational processes and workows, responsibilities, procedures and processes at Group level and at our individual locations.

Sustainability reporting

The management concepts relating to key issues outlined here apply to both the Group and to KSB SE & Co.KGaA; any instances where this is not the case are duly indicated. All information in the non-nancial report relates to KSB SE & Co. KGaA and the Group in 2020. References to information not included in the group management report in this section represent supplementary information and are not part of the separate non-nancial report. PricewaterhouseCoopers GmbH performed a limited assurance engagement on the information in this report in accordance with ISAE 3000 (Revised) and issued an independent assurance report, see pages 33-35.

In the areas of human rights, labour standards, the environment, anti-corruption and sustainability in the supply chain, the concepts and activities set out in this report follow the principles of the UN Global Compact.

The non-nancial report covers 29 material Group companies, unless otherwise stated. These were selected on the basis of their impact on aspects such as energy consumption and the number of employees. The 29 Group companies include all consolidated subsidiaries with production plants and two service companies with energy-intensive workshops.

KSB Group / Annual Report 2020	E	Management and Issues 2020 21

Key sustainability topics for KSB
Very high	Environment	Compliance	Human rights	Employees	Society

Relevance for stakeholders

	Resource efficiency
Respecting human rights	Energy-efficient
	products
Equal opportunities	Emissions
	Compliance
	Education and
	training
Sustainability in	Product reliability
the supply chain	Occupational
Social responsibility	health and safety

High		Relevance for KSB		Very high

As part of its corporate responsibility strategy, KSB is also committed to supporting social initiatives. The company chooses to report on these activities on an entirely voluntary basis, as these do not have any signicant or material impact on its business success.

Key issues

KSB communicates regularly with various stakeholders in order to identify their interests and expectations regarding the com- pany. The core sustainability issues dened on this basis - see materiality matrix above - have been reviewed and conrmed by specialist departments and the Sustainability Committee, with oversight from Management. The aspects and factors

necessary for understanding the development and performance of the business and the position of the company as well as the impact of our activities on the following issues remain the same:

Environment (resource efciency, manufacturing of energy- efcient products, emissions and product safety) Combating corruption and bribery (compliance) Respecting human rights (sustainability in the supply chain) Employee concerns (training and development, equal oppor- tunities, occupational health and safety)

These issues are related at a fundamental level to manufacturing, products, business partners and employees. KSB's products also

22 Management and Issues 2020	E	KSB Group / Annual Report 2020

Non-financial objectives up to 2025 and performance indicators

Topics		Objectives up to 2025		Performance indicators
		More than half of newly developed products are subject to ecological
Resource efficiency		assessment.		Number of development projects
Energy-efficient products				CO2 savings for KSB water pumps with variable
	KSB's water pumps save an annual 850,000 tonnes of CO2.		speed drives
Emissions		KSB production plants reduce their CO2 emissions by 30 %.
	(Reference year: 2018)		CO2 emissions at production sites
Education and training		Each employee invests at least 30 hours per year in training and development.		Number of training hours per employee per year
Equal opportunities		At least 20 % of managers are women.		Proportion of women in management positions
Engagement		The employee satisfaction index is 80 %.		Engagement score according to employee survey
Occupational health and		The number of working days lost due to occupational accidents is reduced		Number of days lost due to accidents
safety		to fewer than 0.3 days per employee per year.		(lost time accident rate)
Social commitment		KSB is involved in at least 25 social projects worldwide.		Number of CSR projects
Sustainability in the supply		The sustainability performance of 90 % of key regional and global suppliers
chain		is assessed.		Proportion of suppliers assessed

• The 17 Sustainable Development Goals of the United Nations take into account the three dimensions of sustainability: social, environmental and economic aspects. KSB's key sustainability topics relate to the goals addressing poverty (1), hunger (2), health and well-being (3), quality education (4), gender equality (5), clean water and sanitation (6), decent work conditions and economic growth (8), sustainable consumption and production (12) and climate action (13).

make a direct contribution to protecting the environment, for exam- ple, by saving energy or via their use in waste water treatment.

Risks related to non-financial factors

KSB does not see any material risks, as assessed based on the net risk method, associated with its own business and the business relations of the company or its products and services which have or could have a serious negative impact on non- nancial aspects such as the environment, anti-corruption, human rights, employee concerns and social issues. The consequences of the COVID-19 pandemic led to challenges in

2020, but did not entail material risks. All other risks affecting our business activities are described in the group management report from page 57.

Goals for 2025

KSB supports the 17 Sustainable Development Goals set out by the United Nations. In 2019, the company developed nine specic sustainability objectives which are aligned with these Sustainable Development Goals and the key issues they address. The company aims to achieve them by 2025 at the latest.

KSB Group / Annual Report 2020	E	Management and Issues 2020 23

Status as at 31 Dec. 2020		Objective by 2025	SDGs*

7 %

428,902 t CO2**

15.1 % reduction in CO2 emissions

1. hours / year
   13 %
   No survey in 2020; result from 2019: 57 %

1. days per employee / year

• 50 %
  850,000 t CO2

30 %

30 hours / year

1. %

1. %
   < 0.3

25	25
> 50 %	90 %

** The basis for this calculation can be found on page 25 of this report.

The nine objectives adopted by Management cover environmental, employee, social and supply chain sustainability topics. They focus on climate protection, the promotion of decent working conditions and sustainable economic growth, and health and well-being. In addition, KSB is committed to doing even more to promote gender equality. The company also intends to gather more comprehensive information on how our suppliers deal with sustainability topics. KSB is dedicated to combating poverty and hunger as well as ensuring the availability of clean water and education through social projects. Developing the knowledge of employees is another binding goal. More information on the individual objectives

and progress towards their completion at the end of the year under review can be found in the overview above, and in the respective sections of this non-nancial report.

In the year under review, management staff with specialist responsibility for Production, Product Management, Human Resources, Purchasing, Communications and Integrated Management developed plans for achieving the objectives by 2025. The respective departments have already reported the rst measures to the Sustainability Committee. The Committee will continue to monitor the measures and review progress towards the completion of each objective twice a year.

24 Management and Issues 2020	E	KSB Group / Annual Report 2020

Energy consumption

Total

KSB SE &

Europe**

Asia / Pacific

Americas

Middle East /

Co. KGaA

Africa

Total energy consumption*

267,157

MWh

98,697 MWh

140,667

MWh

32,213

Mwh

81,742 MWh

12,535

MWh

Total electricity ***

147,155

MWh

36,372 MWh

55,881

MWh

27,590

Mwh

53,686 MWh

9,998

MWh

Electricity from renewables

54,042

MWh

18,597 MWh

23,985

MWh

8,599

Mwh

18,893 MWh

2,565

MWh

CO2 emissions

86,342 t

22,181 t

30,066 t

21,414 t

27,517 t

7,345 t

• Electricity, gas, fuel oil, district heating, wood, etc. ** Including KSB SE & Co. KGaA

*** Total differs due to rounding

Environment

ENERGY CONSUMPTION, CO2 EMISSIONS AND RESOURCE EFFICIENCY

Objectives:

As a manufacturing company, KSB attaches great importance to the responsible use of natural resources. For this reason, the company aims to reduce its consumption of energy and raw materials as far as possible. This helps lessen the impact on the environment while simultaneously increasing the protability of the company. Furthermore, KSB avoids economic and legal risks which could potentially result from environmental damage and failure to comply with laws and regulations.

By 2025, KSB intends to assess the environmental impact of more than 50 % of its development projects in accordance with the international ISO 14040 standard. This concerns new product developments and signicant design modications to existing type series. Detailed information on the life cycle assessments of new products can thus be determined.

A further goal to be achieved by 2025 is a 30 % reduction in the global CO2 emissions of the manufacturing plants (based on gures from 2018).

Organisation, processes and measures:

KSB follows the internationally recognised ISO 14001 environmental management system to continuously improve its environmental performance. To date, the company has implemented the environmental management system at 37 production and assembly locations (KSB SE & Co. KGaA: 3 locations); this represents 90 percent coverage.

KSB carries out regular energy audits - most recently in 2019

• at its major European locations to reduce energy consumption
  and CO2 emissions. The resulting measures include the energy-efcient refurbishment of our buildings and foundries.

KSB regularly records and evaluates data on energy consumption and CO2 emissions. In the year under review, energy consumption was 267,157 megawatt hours (KSB SE & Co. KGaA: 98,697 megawatt hours). This represents a year-on-year decrease of 27,569 megawatt hours (KSB SE & Co. KGaA: - 466 megawatt hours). 36.7 % of the energy consumed came from renewable sources (KSB SE & Co. KGaA: 51.1 %). Group- wide, this percentage rose by 2.3 compared with the previous year, making it the highest that the company has ever achieved. KSB calculates CO2 emissions for Scope 1 and Scope 2 in accordance with the Greenhouse Gas Protocol. The Group's emissions in the year under review amounted to 86,342 tonnes of CO2 (previous year: 99,047 tonnes of CO2); for KSB SE & Co. KGaA, the gure was 21,181 tonnes of CO2, (previous year: 21,142 tonnes of CO2). Emissions of the climate-critical greenhouse gas were thus reduced by 12,705 tonnes across KSB compared with 2019.

Waste is a by-product of manufacturing. KSB therefore continuously modernises its factories to reduce the amount of hazardous substances used in the manufacturing processes. If environmental pollution is identied at a location, the company sets aside provisions to meet obligations for necessary remediation. Provisions totalling € 980 thousand have been recognised for KSB SE & Co. KGaA in the nancial statements.