Sika : Sustainability Report - Annual Report 2021

SIKA

BUSINESS YEAR

2021

WWW.SIKA.COM/ANNUALREPORT

SIKA ANNUAL

SUSTAINABILITY REPORT

SIKA SUSTAINABILITY REPORT 2021

 52

TABLE OF CONTENTS

STRATEGIC FOUNDATION	54
Sika Sustainability Strategy 2019-2023	54
Identification of Strategic Targets	59
Sika and the UN Sustainable Development Goals (UN SDGs)	61
Stakeholder Engagement	63
Materiality Assessment and Report Content	64
OUR PEOPLE	68
Corporate Culture and Business Integrity	68
Employee Management	75
Diversity	80
Employee Education and Training	83
Health and Safety	86
Human Rights and Labor Standards	94
SUPPLIERS	96
The Supply Chain	96
Supplier Social and Environmental Compliance	97
CUSTOMERS	102
Customer Relationship and Satisfaction	102
COMMUNITIES	104
Local Community Engagement	104
PLANET	107
Environmental Sustainability	107
Water Management	108
Waste Management	113
Circular Economy	115
Materials	116
Energy Management	118
Emissions	121
Environmental Compliance	125
PRODUCTS	127
Products, Innovation and Sustainability	127
Sustainable Solutions	129
Product Quality and Reliability	139
ECONOMICS	141
Economic Performance	141
Tax Approach	143
METHODOLOGICAL NOTE	145
Reporting Standards	145
Scope of Reporting and Consolidation	145
Data Collection and Reporting Methodologies	146
KEY PARTNERSHIPS	147

SIKA SUSTAINABILITY REPORT 2021

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STRATEGIC FOUNDATION

The world is changing. Economic challenges resulting from the pandemic persist, societies are growing dependent on digital systems, and greenhouse gas (GHG) emissions are rising. The performance of a company is no longer solely measured based on financial metrics, but ESG (Environmental, Social, and Governance) metrics are becoming equally important. This is a major opportunity for Sika, as it has the ability to drive the change towards a more sustainable society.

Sustainability is at the center of everything Sika does. As a technology leader with a global presence, Sika focuses on creating value for all stakeholders across the entire value chain - always considering economic, environmental, and social aspects in all its activities.

Sika can make the largest positive impact by developing and offering innovative technologies which allow the construction and transportation industry to be more sustainable - helping customers to construct healthier and safer buildings and vehicles with a lower carbon footprint. With its products and solutions and clearly defined strategic targets, Sika actively contributes to the United Nations Sustainable Development Goals (UN SDGs).

The outstanding engagement of its employees and their strong identification with the company are a key contributor to Sika's success. Its strong corporate culture promotes an inclusive work environment where everyone is treated fairly and has access to equal opportunities. Since the foundation of the company more than 100 years ago, social responsibility has been an integral part of the culture, with a long-standing commitment to community engagement in all the countries where Sika is active.

The progress made on strategic targets is closely monitored and measured. To make sure immediate action is taken and to increase engagement in the organization, there is a clear structure of accountability in place, whereby economic and ESG performance are transparently integrated into incentive programs for senior management.

The Sika Sustainability Report provides a comprehensive overview of the company's sustainability performance in 2021 across its six target areas. Simultaneously, it highlights the performance of the identified material topics, reflecting the sustainability impacts of Sika's operations, products and solutions, on employ- ees, suppliers, customers, communities, and on the planet.

SIKA SUSTAINABILITY STRATEGY 2019-2023

The strong performance of Sika is founded on the company's entrepreneurial philosophy and the Sika Spirit, which is a synonym for the set of five values and principles that make up the DNA and culture of the com- pany: Customer First, Courage for Innovation, Sustainability & Integrity, Empowerment & Respect, and Manage for Results.

The Sika Growth and Sustainability Strategies were aligned in 2019 and are closely linked to each other:

• The Sika Growth Strategy 2023 ensures long-term success and profitable growth. The company's innova- tive drive combined with sustainability is a key component. Sustainability is the overarching principle with the overall goal to reduce the CO2eq emissions (scope 1 and 2) per ton sold by 12% until 2023.
• The Sustainability Strategy "More Value - Less Impact" 2023 integrates the results of the materiality analysis conducted in 2018 and the development of the Sika Growth Strategy. It refers to Sika's ambition to maximize the value of its solutions and contributions for all stakeholder groups, while simultaneously minimizing the risks and resource consumption associated with value generation. With the "More Value - Less Impact" Strategy, Sika pursues six strategic target areas, focusing on Climate Performance, Energy, Waste/Water, Community Engagement, Occupational Safety, and Sustainable Solutions.

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Strategic Foundation

At the Sika Capital Markets Day 2021 (available at https://www.sika.com/en/investors/events/2021-capital-markets-day.html),CEO Thomas Hasler presented the Sika Sustainability Roadmap which includes the milestones below that will be performed between 2021 and the second half of 2022:

• Scope 3 assessment: Sika initiated a company-wide initiative in 2020/2021 to assess and calculate the CO2eq emissions from its material scope 3 GHG categories in accordance with the requirements of the Greenhouse Gas Protocol (GHGP). A second phase of this project started in 2021, and is currently ongoing, to consolidate the methodological approach and assess the scope 3 emissions for 2021. Based on this analysis, Sika will define its carbon reduction pathway which will contribute to reaching net zero by 2050.
• Sustainability, Scope 3, ESG workshops: three internal workshops have been organized for the Group man- agement by internal and external experts to trigger a discussion on sustainability-related topics for the upcoming strategy review process.
• Materiality analysis: to align the sustainability strategy with stakeholder expectations, Sika regularly pro- cesses a materiality analysis. This analysis allows the company to identify the most important ESG/sus- tainability topics, opportunities, and risks for the business from two perspectives: their importance to Sika stakeholders and their impact on Sika's business. In 2021, the company has started to work on the Sika Materiality Analysis 2022 as an important basis for the imminent strategy review. The new materiality matrix will be reviewed by the Group Management in February 2022 and approved by the Board of Direc- tors in the second half of 2022.
• TCFD: Sika is an official supporter of the TCFD recommendations. Since 2020, the company has started assessing climate-related risks and opportunities and their impacts on Sika's strategic resilience. In 2021, Sika has further advanced its analysis which has been included in the "Risk Management and TCFD Rec- ommendations" chapter of the Strategic Report (p.23)
• Net zero roadmap: to address the global environmental challenge, Sika is tackling climate change compre- hensively in its strategic development. Several activities were performed in the last years to foster the basis of Sika forthcoming net zero roadmap and commitment to the latest Net Zero Science-Based-­Target initiative (SBTi) criteria.
• "Sika as Enabler": with clear commitment to sustainability, Sika is not only focusing on reducing its own CO2eq emissions, but also emissions along its value chain. Sika has a strong focus on helping customers to reduce their CO2eq footprint by providing innovative solutions and products. In many respects, Sika's tech- nologies make the company an "enabler" that strongly contributes to the climate neutrality journey of the construction and automotive industries.
• External assurance: in 2021, Sika selected an external auditor that will perform a limited assurance of 2022 non-financial data and information.
• Strategy 2028: in February 2022, Sika will hold the first workshops to prepare the review process of the Corporate Strategy, further integrating sustainability with business growth.

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Strategic Foundation