Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental awareness
• Social support
• Governance

Environmental Achievements

• Cochlear’s global headquarters awarded a 4 Star Green Star rating by the Green Building Council of Australia.
• CBAS headquarters in Mölnlycke, Sweden, awarded a Green Building Silver Certificate by the Sweden Green Building Council.
• Initiatives to reduce electricity use and waste at Cochlear Technology Centre in Mechelen, Belgium and Cochlear Americas headquarters in Denver, US.
• New agreement with an energy provider to use power from renewable energy sources at Cochlear Europe, Middle East and Africa (EMEA) headquarters in Basel, Switzerland.

Social Achievements

• Supporting the tertiary education sector through engagement with Macquarie University and research agreements with over 100 external research partners.
• Supporting the community through the Cochlear Foundation, employee volunteering, and financial help for community activities in several countries.
• Supporting employees through workplace health and safety activities, healthy living initiatives, and access to a range of health services.
• Global social media campaign for International Cochlear Implant Day (#CelebrateCochlear).

Governance Achievements

• Published online shareholder reports (Corporate Governance Statement, Tax Contribution Report, and Investor Handbook) to improve transparency.
• External consultant review of the Board with positive results.
• Changes introduced to short-term incentives to strengthen alignment around global integration priorities under the banner of One Cochlear.

Climate Goals & Targets

Environmental Challenges

• Global uncertainty characterized by events including the UK’s decision to withdraw from the European Union.
• Increased competition in the implantable hearing solutions market.
• Infringement litigation.
• Misappropriation of know-how and intellectual property.
• Stringent regulations in the medical device industry.
• Pressure on healthcare budgets globally.
• Product liability risks.
• Interruption to product supply due to reliance on third-party suppliers.
• Political, economic, or social instability in various markets.
• Foreign exchange rate fluctuations.

Mitigation Strategies

• Appropriate strategy to grow over the coming years, remaining alert to potential uncertainty.
• Investment in R&D (12% of sales revenue), collaboration with external research partners, and intellectual property protection.
• Comprehensive patent portfolio, Legal department, and internal/external legal resources.
• System monitoring and safeguards, confidentiality agreements.
• Worldwide quality assurance system, regular audits by regulatory bodies.
• Working with reimbursement and government agencies to emphasize benefits and cost-effectiveness.
• Product liability insurance and worldwide quality assurance system.
• Global manufacturing across six sites, supplier monitoring, second-source supply identification, inventory management, and disaster recovery plans.
• Careful assessment of countries and sales, global scanning software for partners and suppliers, and cautious tender participation.
• Currency hedging to provide certainty around near-term cash flow.

Supply Chain Management

Responsible Procurement

• Consideration of economic, social, and environmental impact when acquiring goods and services from suppliers.

Climate-Related Risks & Opportunities

Awards & Recognition

• 4 Star Green Star rating (global HQ)
• Green Building Silver Certificate (CBAS HQ)

Environmental Metrics

ESG Focus Areas

• Communities
• Governance
• Environment
• People & Culture

Social Achievements

• Formalized targets to achieve 40% female representation amongst senior managers within three years and 30% female representation at Board level over the next two years.
• Continued implementation of flexible working program and Diversity & Inclusion learning module for People Leaders.
• Good progress on global gender pay equity project, with over 95% of roles globally reviewed to remove any gender pay gap.

Governance Achievements

• Increased governance of the Board and management due to COVID-19 and capital raise.
• Regular external and independent evaluation of Board performance (most recent in May 2020).

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic impacting operations, events, and travel.

Mitigation Strategies

• Implemented principles to manage business during pandemic: ensuring employee health and safety, supporting recipients and partners, and maintaining financial health.
• Held additional 13 Board meetings to address COVID-19 impacts and capital raise.
• Adapted leadership development and upskilling programs to virtual delivery.

Supply Chain Management

Responsible Procurement

• Supplier Code of Conduct encouraging standards on labour practices, safety and wellbeing, environment and sustainability, and ethical trading.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (3rd edition)

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• 33% renewable energy source across manufacturing facilities and key sites
• 46% reduction in total emissions from FY19 (pre-COVID)
• Implemented recyclable PaperFoam® and biodegradable packaging

Social Achievements

• Grew Cochlear Family membership to over 200,000
• Conducted 500+ professional training events with over 47,000 participants
• Opened Chengdu China Clinical Skills Institute
• Awarded first ever Aboriginal and Torres Strait Islander Hearing Health Cochlear Scholarship

Governance Achievements

• Implemented supplier onboarding process
• Conducted ESG risk assessment of key direct suppliers
• TCFD review completed on 13/15 facilities
• Published Global Modern Slavery Statement
• 30% Board Gender Target achieved

Climate Goals & Targets

Environmental Challenges

• COVID-19 impact on business activities and operations
• Uneven and unpredictable effects of COVID-19 across different regions
• Need to balance business travel with carbon emission reduction goals

Mitigation Strategies

• Accelerated rollout of connected care solutions
• Increased use of online and remote services and support
• Commitment to 50% absolute reduction in business flight related carbon emissions by FY25 and 20% reduction in business flights per full-time employee by FY25

Supply Chain Management

Supplier Audits: 38 key suppliers reviewed in the previous year

Responsible Procurement

• Supplier Code of Conduct
• Social procurement initiatives (Australia)
• Supplier onboarding process

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: GRI

Certifications: ISO 13485:2016

Third-party Assurance: Self-assurance only

UN Sustainable Development Goals

• SDG 3
• SDG 4
• SDG 5
• SDG 8
• SDG 9

Cochlear's activities contribute to these goals through improving access to hearing solutions, supporting education and employment, promoting gender equality, and fostering innovation.

Sustainable Products & Innovation

• Rechargeable batteries with 40% longer battery life
• PaperFoam® packaging

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Product quality, safety and reliability
• Access and affordability
• Health outcomes and socioeconomic enablement
• Data privacy and cyber security
• Awareness and education
• Empowered customers
• Customer-centric approach
• Research and innovation
• Energy, emissions and climate resilience
• Employee value proposition
• Ethical and sustainable supply chain
• Diversity, equity and inclusion

Environmental Achievements

• Transitioned manufacturing to 100% renewable energy at five of our six sites.
• Approved the installation of a 750 kW roof top solar system at our Lane Cove facility.

Social Achievements

• Helped over 40,000 people hear with one – or two – of our cochlear or acoustic implants, providing an estimated net societal benefit of more than $6 billion.
• Cochlear Foundation established a global partnership with Malala Fund to remove hearing loss as a barrier to education in emerging markets.
• Supported the ‘Living Guidelines’ initiative to deliver clinical guidelines to enable early identification and referral for cochlear implant candidates.
• Cochlear™ Remote Assist achieved FDA approval, enabling live video appointments for both cochlear implant and Baha ® Implant recipients.
• Cochlear Family membership exceeded 260,000.
• Implemented new digital learning platform for European-based surgeons.
• Introduced the Cochlear Americas Vocational Scholarship for recipients.
• Formalised our commitment to reconciliation with Aboriginal and Torres Strait Islander peoples through our first Reconciliation Action Plan (RAP).

Governance Achievements

• Delivered training to all employees on the Global Code of Conduct.
• Reviewed and formalised the Environmental, Social and Governance Risk Assessment Procedure for suppliers.

Climate Goals & Targets

Environmental Challenges

• Lack of clear guidelines amongst medical professionals resulting in low cochlear implant penetration rates for adults and seniors.
• Limited access and funding for hearing implants in emerging markets.
• Climate change impacts on operations and supply chain.
• Managing climate-related sustainability risks (riverine and urban flood, extreme heat, cyclones and wildfires).

Mitigation Strategies

• Development of a standard treatment pathway for adults with cochlear implants.
• Investment in global, regional and local market access capability to improve access and funding.
• Setting net-zero GHG emissions targets for operations (2030) and value chain (2050).
• Transitioning to 100% renewable energy at manufacturing sites.
• Reducing business flight emissions.
• Conducting supplier due diligence assessments for sustainable and ethical procurement.
• Implementing a comprehensive enterprise risk management approach to assess physical climate-related risks.

Supply Chain Management

Responsible Procurement

• Supplier Code of Conduct
• Supplier onboarding process screening for governance, human rights and environmental issues
• WISE framework for supplier categorization based on gender, indigenous groups, modern slavery and environmental commitment

Climate-Related Risks & Opportunities

Physical Risks

• riverine and urban flood, extreme heat, cyclones and wildfires

Transition Risks

• Regulatory changes, market shifts

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: GRI Standards

UN Sustainable Development Goals

• 3 (good health and wellbeing)
• 4 (quality education)
• 8 (decent work and economic growth)
• 9 (industry, innovation and infrastructure)
• 10 (reduced inequalities)
• 13 (climate action)

Cochlear's contributions to SDGs are detailed throughout the report.

Sustainable Products & Innovation

• Nucleus ® Kanso® 2 Sound Processor (smaller, integrated rechargeable battery)

Awards & Recognition

• Professor Jim Patrick named 2021 NSW Scientist of the Year

Environmental Metrics

ESG Focus Areas

• Anti-Bribery and Corruption
• Competition
• Conflicts of Interest
• Human Rights
• Environmental Sustainability
• Privacy
• Quality and Regulatory Compliance
• Health and Safety
• Equal Employment Opportunity and Discrimination
• Animal Ethics

Environmental Achievements

• Not disclosed

Social Achievements

• Not disclosed

Governance Achievements

• Established a Global Code of Conduct to guide ethical and responsible business practices.
• Implemented a Whistleblower Protection Policy.

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Supplier Code of Conduct

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: UN Global Compact

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed