SUSTAINABILITY IS A STRATEGIC PILLAR AT DEUTZ

A company’s success and capacity for innovation depends to a large extent on its employees’ motivation and satisfaction (engagement) and empowerment (enablement), and not just on their ability to do their job. Consequently, we endeavor to provide our employees with a working environment that, at every stage of their working life, motivates and empowers them while, at the same time, ensuring the availability of skilled workers over the long term. The measures offered in this context include flexible working time models to enable employees to balance work with family life, a comprehensive training program, the agreement of individual targets, and a wide variety of healthcare and sports programs.

In 2019, DEUTZ carried out a groupwide employee survey for the first time in order to measure the levels of engagement and enablement in its workforce. The aim is to use the resulting insights to define specific measures, implementation of which can motivate and empower employees to put their skills to use for the benefit of the Company and to realize their potential as fully as possible. Once the results had been evaluated, workshops and other activities took place so that employees could play an active role in defining what measures needed to be taken.

The first employee survey, carried out in 2019, found that 78 percent of all DEUTZ employees were motivated and 69 percent felt empowered to do their work. As part of our sustainability strategy, we have set ourselves the target of maintaining these levels up to 2023.

Diversity in society, influenced by globalization and by demographic and societal shifts, is also reflected in the world of work. DEUTZ firmly believes that having a diverse set of employees with different skills and talents opens up opportunities for innovative and creative solutions while also providing access to a wider pool of talent. It attaches a high priority to increasing the proportion of women in the Company, for example. Recruitment decisions should therefore be made solely on the basis of the candidate’s professional suitability and there should be equal pay for women and men.

We have set ourselves the target of increasing the proportion of women in the workforce as a whole to more than 10 percent and the proportion of female managers to more than 20 percent, in both cases by the end of 2023. 

Further information is available in our non-financial report.

We firmly believe that new employees bring with them new perspectives that can help a company to develop and improve its ability to innovate. HR activities are therefore aimed at ensuring the groupwide rate of staff turnover in 2023 is within a range of 5 to 10 percent.

DEUTZ attaches great importance to training. Our success in this area is evidenced by the fact that the training center at the headquarters in Cologne, the Factory for Talents, was recognized by the Cologne Chamber of Industry and Commerce for its outstanding achievements in vocational training for the eleventh time in succession in 2021.

We target a ratio of trainees of 2,5 to 3 % until 2023.

Financial considerations must never be allowed to compromise the health and safety of staff, because every individual has the fundamental right to health and physical well-being. We recognize that providing a safe working environment that is conducive to health is part of our responsibility as an employer. Across the Group, we therefore comply with the statutory requirements on occupational health and safety that apply from country to country. This involves implementing measures that are designed to ensure that employees are exposed to as few dangers as possible at work and to minimize the risk of accidents.

As part of our ‘Sustainability Vision for 2023’, we have set ourselves the medium-term target of improving the RIR to seven by the end of 2023.

Further information is available in our non-financial report.

We understand good corporate governance and compliance to mean acting responsibly and in accordance with the laws of the countries in which we operate. We also understand it to mean showing integrity and adopting an ethical and moral approach in day-to-day business conduct toward not only customers and employees but also investors and other stakeholders of the Company. As this represents the foundations for a sustainable and successful system of corporate governance, the key tasks of the groupwide compliance organization include cementing the importance of integrity and compliance in the mind of every DEUTZ employee, effectively mitigating compliance risks, and taking rigorous action against breaches of the rules.

The DEUTZ code of conduct is the primary means of providing employees with guidance on how to conduct themselves with integrity and in accordance with the law. The code contains mandatory rules for behavior that cover areas such as respect for human rights, working conditions and social responsibility, anti-competitive practices, and data protection. It also sets out the Company’s zero-tolerance approach to corruption and bribery.

 

To support our employees in their efforts to avoid breaking the law or breaching regulations, they are required to complete annual compliance training in the form of e-learning courses or classroom-based training.

Our target for 2023 is to achieve an annual proportion of workforce to have completed compliance training of more than 95 percent.

DEUTZ maintains business relationships with nearly 550 suppliers in more than 40 countries. With nearly €900 million in direct materials purchased annually worldwide, DEUTZ AG's supply chain makes a significant contribution to its value creation process.

Our supplier management focuses primarily on the quality of the supplied components, lead times, and commercial conditions. But as part of the implementation of our groupwide sustainability strategy, there will also be a growing focus on sustainability criteria – especially those relating to respect for human rights, combating corruption and/or bribery, and maintaining certain environmental and social standards – in the supplier selection and assessment process.

The DEUTZ code of conduct for suppliers (Supplier Code), which was introduced in 2019, is a key instrument in the Company’s efforts to communicate sustainability aspects to its supply chain. The code sets out mandatory groupwide requirements, for example with regard to ensuring compliance with occupational health and safety standards and certain environmental protection standards as well as respecting human rights. Amongst other objectives, the code thus helps to ensure that DEUTZ does not make itself complicit in human rights abuses as defined in the second principle of the UN Global Compact. It also expresses the Company’s expectation that suppliers should impose the same requirements on their supply chain that DEUTZ imposes on them.

In order to ensure and track the effectiveness of the Supplier Code to the greatest possible extent, we conduct audits of both existing and new suppliers to assess their compliance with the requirements set out in the code.

Under the Sustainability Vision for 2023, we have set ourselves the target of auditing 30 existing suppliers a year from 2020 regarding their compliance with the Supplier Code and of auditing 90 percent of all new suppliers brought on board from that time.

We expect not only our employees to act in compliance with the law but also our business partners – whether they are customers, suppliers, or service providers.

In 2019, we began to implement a new IT-based business partner compliance tool that will enable us to respond appropriately and at an early stage to matters such as suspected money laundering, anti-competitive practices, corruption, and bribery on the part of our business partners. We use this to provide business partners with a web-based self-declaration form and then checks both the company itself and the members of its governance and supervisory bodies as well as the beneficial owners against up-to-date sanctions lists. On the basis of the information obtained, the business partners are classified using an internal DEUTZ risk model and, if required, action is taken to minimize risks.

The target for 2023 is to use the newly established tool to conduct compliance risk assessments for 90 percent of all existing suppliers with whom DEUTZ’s purchasing volume for the prior year exceeded €0.5 million.

Our objective is to obtain a transparent overview of material sustainability risks in the supply chain that enables us to address these risks appropriately. With this in mind, we established the global supply chain platform EcoVadis in 2020, which can be used to assess the sustainability performance of suppliers and identify potential for continuous improvement. The assessment criteria cover environmental and ethical topics, labor rights, human rights, and sustainable sourcing and take account of country-specific and industry-specific aspects as well as the size of the supplier.

We have set ourselve the target of auditing and rating 50 percent of the top 150 suppliers as measured by DEUTZ’s purchasing volume in the prior year via the EcoVadis online assessment.

Sustainability is anchored at senior management level in the DEUTZ Group, and overall responsibility lies with the Chairman of the Board of Management. The SDC, which comprises the heads of the relevant departments and the individuals responsible for the key sustainability topics, provides the information that is used as the basis for making decisions related to corporate sustainability in the DEUTZ Group. Guided by the Group’s Investor Relations function and the Quality Management team, the SDC sets non-financial targets, creates action plans for achieving them, and discusses the continuous improvement of sustainability efforts across the Group at regular intervals.

Responsibility for implementing and monitoring strategic initiatives lies either with the relevant departmental heads or the individuals nominated by them. In view of the fact that the DEUTZ Group is highly decentralized, they are supported in their work by local representatives at the subsidiaries.

As part of the preventive risk management approach, internal monitoring and reporting to the Board of Management on the implementation status of the sustainability strategy take place each quarter. The objective is to identify risks that might jeopardize the achievement of the targets at an early stage and to modify the action plan if necessary.

Because it operates within global value chains, DEUTZ has an influence on economic, environmental, and social developments. The Company is aware of the responsibility that comes with this, and as a consequence signed up to the United Nations Global Compact at the end of March 2021. DEUTZ has thus joined an international movement from the realms of business, politics, and civil society that has the common goal of making globalization more sustainable by making it work better for society and the environment.

As a member of the UNGC, DEUTZ has voluntarily undertaken – on the basis of ten universally accepted principles – to promote human rights, fair working conditions, environmental protection, and the fight against corruption.

In addition to the ten principles outlined above, signatories to the UNGC are also called upon to support the achievement of the United Nations’ general objectives and, in particular, its 17 sustainable development goals (SDGs). The goals describe the key challenges and objectives in the context of a global sustainability policy and thus provide guidelines for the sustainable development of society, culture, and the economy. DEUTZ prioritizes eight SDGs, that will be incorporated into the strategic planning for all groupwide sustainability activities.

The progress we make in supporting the UNGC principles and the extent to which we are making a positive contribution to achieving the SDGs is revealed annually in our non-financial report.

We continually monitor our sustainability performance, which is rated and ranked by a wide range of independent organizations around the world.

We continually strive to improve our performance.