HUBER+SUHNER Annual Report 2023\n\n### Sustainability governance\n\n###### HUBER+SUHNER has embedded sustainability within its organization. A well-defined\n governance structure, with clearly assigned responsibilities, enable effective\n monitoring of the progress in implementing the Group's sustainability strategy.\n\n The Board of Directors\n\nThe Board of Directors (BoD) convenes at least five times annually. During at least two of these meetings, the Executive\nGroup Management (EGM) reports on relevant sustainability-related matters. The BoD oversees the implementation of\nthe company's sustainability strategy and targets. The BoD is also responsible for approving the company's\nsustainability reporting.\n\n###### Management\n\nThe CEO is responsible for approving and overseeing the implementation of the company's sustainability strategy. The\nHead of Global Sustainability reports to the members of the extended EGM and the CEO on the progress in\nimplementing the company's strategic targets. Sustainability-related objectives constitute a component of the\nextended EGM's variable compensation package.\n\n###### Global sustainability\n\nThe Head of Global Sustainability is responsible for proposing and implementing the company's sustainability strategy.\nIn this role, the Head of Global Sustainability directs a global network of local environmental and corporate\nresponsibility managers who are responsible for coordinating and implementing the sustainability strategy at the\ncompany's various sites. Together with this network, the Head of Global Sustainability also monitors relevant\nsustainability compliance obligations and assesses sustainability related risks.\n\n###### Product compliance\n\nThe purpose of the product compliance team is to ensure that HUBER+SUHNER operates in compliance with all relevant\nlegislation and regulations related to materials used in our products. Its responsibilities include coordinating and\noverseeing all material-compliance activities at HUBER+SUNER, including:\n\n- Establishment of a company product compliance guideline\n\n- Creation of an up to date material compliance database and reporting system\n\n- Provision of training, information, and support to ensure involvement and consultation of all employees and\n\nbusiness partners\n\nThis involves regular assessments of our upstream supply chain, the implementation of processes to monitor and track\ncompliance, as well as to corporate responsibility managers, who are responsible for coordinating and implementing\nthe sustainability strategy at the company's different sites.\n\n###### Sustainable sourcing\n\nThe global sourcing team is responsible for engaging with suppliers on sustainability issues. In 2023, HUBER+SUHNER\nformulated a due diligence policy, which is compliant with due diligence requirements under the Swiss Ordinance on\nDue Diligence and Transparency in relation to Minerals and Metals from Conflict-Affected Areas and Child Labour\n(DDTrO).\n\nSustainability governance 125\n\n--NEW-PAGE--\n\nHUBER+SUHNER Annual Report 2023\n\n### Compliance and business ethics\n\n###### Compliance is a fundamental prerequisite for value-driven and ethical business\n conduct. This applies to both the workplace and when doing business. As a global\n player exposed to numerous potential risks, HUBER+SUHNER seeks to promote a visible\n culture of integrity, ethics, and compliance which is built on the HUBER+SUHNER group\n wide Code of responsible business conduct. Our compliance program safeguards us\n against potential reputational, financial and legal damage resulting from non\n compliance or unethical business conduct.\n\n##### Approach\n\nCompliance at HUBER+SUHNER is about living the company's values and speaking up if we witness or suspect unethical\n[behavior or any non-compliance with the Code of responsible business conduct. We follow various approaches in](https://xp-frontend-prod-dkfaangrapdfhhg3.z01.azurefd.net/api/asset/eyJjbGllbnRJZCI6ImNsaWVudC1lYzRya2E0Z2l5a2hyYWQ2IiwiaWQiOjQ5MDA1LCJ0aW1lc3RhbXAiOjE2ODQxNDAxNjEsInZlcnNpb24iOjE2NzE4MDMzOTV9:huber-suhnerag:tohpshejxTOpDlpN3pUegiHmqQKsfpcn-QG1u-PeVLk/download?quality=80&format=jpg)\nensuring ethical business conduct.\n\n###### Our Code of responsible business conduct\n\nPublished in six languages, our Code of responsible business conduct lays out important principles on how we conduct\nour business in a responsible manner and is the guiding document for every employee of the HUBER+SUHNER Group as\nwell as for all stakeholders which enter into relationships with our organisation. In 2022, HUBER+SUHNER launched a\n[Supplier code of conduct in line with the Code of responsible business conduct, which addresses more in depth](https://xp-frontend-prod-dkfaangrapdfhhg3.z01.azurefd.net/api/asset/eyJjbGllbnRJZCI6ImNsaWVudC1lYzRya2E0Z2l5a2hyYWQ2IiwiaWQiOjQ5MTkxLCJ0aW1lc3RhbXAiOjE2ODg0NTY2MTksInZlcnNpb24iOjE2ODYwNDUwOTl9:huber-suhnerag:gzNYBjMfsW3IXiVFofyjO6DP8IEiiWpkji9LKZQlnC0/download?quality=80&format=jpg)\nrequired sustainability standards. The Supplier code of conduct is also published in six languages. For certain matters,\nspecific guidelines with more detailed information and instructions have been issued. Aligned with the code's principles\nand obligations, HUBER+SUHNER has established a group-wide compliance program, which specifies our policies and\nguidelines, procedures, and actions within a defined process to help prevent risks and detect potential violations.\n\n###### Our compliance programme\n\nOverall responsibility for implementation of the corporate compliance program has been assigned by the Board of\nDirectors to the chief financial officer (CFO), who in this function vests the position of group compliance officer. The\ngroup compliance officer, with the support of the general counsel, is tasked with continuously improving the\ncompliance program through a set of measurements such as:\n\n- Overseeing the global compliance reporting\n\n- Compliance risk identification and mitigation\n\n- Issuing group-wide compliance rules and guidelines\n\n- Executing annual compliance risk assessment and adaptation of compliance map\n\n- Compliance reporting to the Board of Directors\n\n- Defining the annual Group compliance focus and subsequent actions including trainings\n\n- Mandating or conducting internal and/or external audits regarding actual or suspected violations\n\nThe group compliance officer has the power to veto business transactions that jeopardise the Group's reputation as a\nresult of threatened or existing infringements of the Code of responsible business conduct. However, the final decision\nabout execution lies with the CEO.\n\nTwice annually, the group compliance officer meets with the area compliance officers who are responsible to ensure\ncompliance within the Group. The area compliance officers make sure that a top-down implementation of control\nmeasures is guaranteed by country managing directors and line managers, and is reflected in the management\nsystem of HUBER+SUHNER. The country managing director and line managers are required to inform area compliance\nofficers about any suspected or actual non-compliance or emerging topics for assessment and subsequent actions.\n\nCompliance and business ethics 179\n\n--NEW-PAGE--\n\nHUBER+SUHNER Annual Report 2023\n\n### Responsible supply chains\n\n###### At HUBER+SUHNER, over 50 % of turnover is used for procurement. Based on the\n resulting material environmental and social impact, we aim to ensure that production\n materials are sourced only from qualified suppliers, guaranteeing high environmental\n and social standards. We promote the "regional for regional" approach to strengthen\n local supplier relationships and ensure short supply chain routes whenever feasible.\n Actively managing social and environmental risks in our supply chain enables us to\n meet growing regulatory and market expectations – including from the Swiss\n Ordinance on Due Diligence and Transparency in Relation to Minerals and Metal from\n Conflict-Affected Areas and Child Labour (DDTrO) – to conduct supplier due diligence.\n\n##### Approach\n\nIn 2023, HUBER+SUHNER introduced a multi-step supplier sustainability due diligence process for both new and existing\nsuppliers in direct material categories. Going beyond the requirements defined by the DDTrO, suppliers with at least a\nmedium sustainability risk need to show that they uphold relevant sustainability standards in the following areas:\nhuman rights and labour practices (including child labour), occupational health and safety, responsible sourcing,\n[environmental protection and climate change mitigation, and fair operating practices. The Supplier code of conduct](https://xp-frontend-prod-dkfaangrapdfhhg3.z01.azurefd.net/api/asset/eyJjbGllbnRJZCI6ImNsaWVudC1lYzRya2E0Z2l5a2hyYWQ2IiwiaWQiOjQ5MTkxLCJ0aW1lc3RhbXAiOjE2ODg0NTY2MTksInZlcnNpb24iOjE2ODYwNDUwOTl9:huber-suhnerag:gzNYBjMfsW3IXiVFofyjO6DP8IEiiWpkji9LKZQlnC0/download?quality=80&format=jpg)\nlaunched at the end of 2022 lays out the principles and standards we expect our supply chain to follow. Our Global\nSourcing team leads the supplier engagement process and has updated our procurement policies accordingly.\n\nNew suppliers are required to complete nine different self-assessment questionnaires provided by an established\nplatform as part of the qualification process. They are also required to confirm compliance with the HUBER+SUHNER\nSupplier Code of Conduct. For our existing suppliers, we conduct risk screenings, where both high-and medium-risk\nsuppliers are asked to complete a self-assessment. Where the self-assessments show non-compliance for eight core\nsustainability risks, suppliers are required to collaborate to improve their sustainability performance.\n\nAny form of misconduct, including in our supply chain, may be reported through our independent and secure\nwhistleblowing platform, which is available free of cost in several languages.\n\nIn our production, HUBER+SUHNER processes the conflict minerals tin and gold. In this regard, the company is mapping\n\n[its supply chain using the Conflict Minerals Reporting Template (CMRT) of the Responsible Minerals Initiative. The most](https://xp-frontend-prod-dkfaangrapdfhhg3.z01.azurefd.net/api/asset/eyJjbGllbnRJZCI6ImNsaWVudC1lYzRya2E0Z2l5a2hyYWQ2IiwiaWQiOjQ5MTg5LCJ0aW1lc3RhbXAiOjE2ODA1MDU5NDksInZlcnNpb24iOjE2NzE4MDM2ODB9:huber-suhnerag:cf5wtpfL2A7pBKWZ7dQ5YmCBXr-PLgSOkfQ04XL_uYY/download?quality=80&format=jpg)\nrecent version of the CMRT is publicly available on the HUBER+SUHNER website.\n\n##### Objectives\n\nThe objective was to assess 75 % of our production material spend through our due-diligence platform by the end of\n2023. We also aim to procure according to the "regional for regional" model to strengthen local supplier relationships\nand ensure short supply chain routes whenever possible.\n\nResponsible supply chains 182