Climate Change Data

Environmental Metrics

ESG Focus Areas

• Governance
• People
• Planet

Environmental Achievements

• Decreased Scope 1 CO2 emissions in Schramberg, Germany, and Padova, Italy by more than 17% from 19,807.78 t in 2019 to 16,330.35 t in 2021.
• Reduced Scope 2 CO2 emissions in Schramberg by 47.81% from 2019 to 2021.
• Reduced Scope 3 CO2 emissions by 1.61% from 2019 to 2021.
• Increased share of renewable energy in Schramberg electricity consumption from 37.94% in 2019 to 52.97% in 2021.
• Reduced waste in relation to sales from 46.86 t/EUR million in 2019 to 44.20 t/EUR million in 2021.
• Increased waste recycling or reuse to 83.67%.

Social Achievements

• Launched several initiatives to make factory work more accessible to women (e.g., purchasing machines to assist with lifting heavy objects).
• Increased the share of women hired from 13.3% in 2019 to 30.6% in 2021.
• Increased average training hours per employee to 22.4 in 2021 from 15.3 in 2020.
• Implemented a risk mitigation plan for COVID-19, including testing, temperature checks, and a COVID-19 committee involving unions.

Governance Achievements

• No monetary losses recorded from legal proceedings associated with anti-competitive behavior regulations in 2019, 2020, and 2021.
• Implementation of a whistleblower mechanism planned for 2022.
• Zero-tolerance approach to bribery and corruption.
• Publication of Code of Ethics and various policies on the company website.

Climate Goals & Targets

Environmental Challenges

• Data restrictions in China prevented calculation of exact CO2 emissions at the Suzhou plant.
• Lack of data for renewable energy share across all plants except Schramberg.
• Climate change related risks: changing market conditions, supply chain disruptions due to extreme weather, increased costs of energy and supplies, and impact of temperature changes on manufacturing facilities.

Mitigation Strategies

• Plans to extend CO2 emission data collection to the entire Group in the future.
• Plans to generate own electricity through renewable sources (e.g., solar panels in Suzhou in 2022).
• Diversifying suppliers, expanding material stockpiling, and developing alternative materials to reduce dependency on critical materials from developing countries.
• Risk management system designed to identify risks early and implement countermeasures.

Supply Chain Management

Responsible Procurement

• Modern Slavery and Human Trafficking Statement; regular supplier reviews for reliability and compliance; confirmation from suppliers that they do not employ anyone under 16.

Climate-Related Risks & Opportunities

Physical Risks

• Supply chain disruptions due to extreme weather events

Transition Risks

• Changing market conditions, increased costs of energy and supplies

Opportunities

• Growth in e-mobility market

Reporting Standards

Frameworks Used: GRI, WEF, SDGs, SASB

Certifications: ISO 50001, ISO 14001, ISO 45001 (Padova, Schramberg & Suzhou by 2024), IATF 16949

Sustainable Products & Innovation

• Components for e-bikes and EHVs

Environmental Metrics

ESG Focus Areas

• Environment
• Employee-related matters
• Social matters
• Respect for human rights
• Combating corruption and bribery

Environmental Achievements

• Reduced energy consumption by nine percent in 2022 despite an increase in production output.
• 100% renewable electricity at the Schramberg site since January 2023.
• Commissioned a photovoltaic system at the Suzhou site in September 2022, generating up to 25% of its annual energy needs.
• Reduced the amount of waste and residual materials despite increasing production volumes.
• Recycling rate of residual materials at 84%.

Social Achievements

• Continued investments in production facilities and highly qualified technical staff.
• Organized a “Girls Day” to promote interest in technical and commercial professions.
• Supported the junior athletics team of the SG Schramberg sports club.
• Very positive employee feedback regarding motivation, willingness to stay, and recommending hGears as an employer.

Governance Achievements

• Established a high-level ESG Committee in November 2022.
• Implemented an efficient governance, risk management, and compliance organization (GRC) system.
• No compliance violations reported in 2022.

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic causing production and supply chain constraints.
• Russia’s invasion of Ukraine causing steep material and energy price increases and inflation.
• Recession concerns leading to cautious order placement and cancellations.
• Increased input costs that could not be fully passed on to customers.
• Customers not accepting price increases to offset cost increases.

Mitigation Strategies

• Pass-through clauses in contracts to compensate for raw material price increases.
• Diversified and localized supply chains to secure raw materials.
• Continued investments in production facilities for ramp-up of new projects.
• Close communication with customers to increase awareness of their demands.
• Evaluating alternative production options and local financing to mitigate geopolitical risks.
• Optimizing IT landscape and implementing cybersecurity measures.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Compliance with environmental and social standards, labor law, and human rights; satisfactory information and binding declarations required from suppliers.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events, disruptions in supply chains

Transition Risks

• Regulatory changes, market shifts

Opportunities

• Market leadership in e-mobility

Reporting Standards

Frameworks Used: GRI

Certifications: ISO 9001, ISO 14001 (Suzhou), IATF 16949 (all sites)

Third-party Assurance: PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Steel components replacing plastic parts; optimized component design for ease of replacement and recyclability.

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Environment
• Employee-related matters
• Social matters
• Respect for human rights
• Combating corruption and bribery

Environmental Achievements

• Reduced energy consumption by an average of around 12.6% in 2022 and 2023
• 100% renewable electricity at the Schramberg site since January 2023
• Photovoltaic system commissioned at the Suzhou site in September 2022, generating up to 25% of its annual energy needs
• Recycling rate for residual materials at 79% in 2023
• Generated additional revenue of around EUR 800,000 from the sale of metal chips in 2023

Social Achievements

• 795 employees participated in further education programs for a total of 13,076 hours in 2023 (average 16.4 hours per employee)
• Padua site certified according to ISO 45001 (occupational health and safety management systems); Schramberg and Suzhou sites to receive certification by 2025
• Supported FV Kickers 09 Lauterbach football club

Governance Achievements

• Established a high-level ESG Committee in November 2023
• Established the additional function of Group Risk & Compliance Manager in 2023
• No compliance violations reported in 2023

Climate Goals & Targets

Environmental Challenges

• Energy crisis in 2022 impacting electricity sourcing
• Climate change posing risks to market conditions, supply chains, and production

Mitigation Strategies

• Switched to 100% renewable electricity sourcing in 2023 (Schramberg)
• Implemented risk management system to address climate change risks
• Investing in renewable energy sources (photovoltaic system in Suzhou)

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Requires satisfactory information and binding declarations on compliance with labor law and human rights from suppliers

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events
• Disruptions in supply chains
• Rising energy and supply costs
• Disruptions in production conditions due to weather changes

Transition Risks

• Abrupt changes in market conditions

Opportunities

• Market leadership in e-mobility components

Reporting Standards

Frameworks Used: GRI

Certifications: ISO 9001, ISO 14001 (Suzhou), ISO 45001 (Padua, Schramberg and Suzhou by 2025), IATF 16949

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Replacing plastic parts with steel parts in customer applications

Awards & Recognition

• Not disclosed