Susainability notes

ABOUT SUSTAINABILITY REPORTING

Addtech’s sustainability efforts are a central and integrated part of our business, organisation and value chain. We have therefore also chosen to integrate the Sustainability Report into our Annual Report for the financial year from April 2019 to March 2020. This report covers Addtech AB company ID number 556302-9726 with associated subsidiaries.

In the reporting, Addtech has been inspired by the International Integrated Reporting Framework (IIRC). This is a framework that aims to report and create context around the factors that affect a company’s possibility to create value in the short, median and long term. The reporting also pertains to the statutory reporting of sustainability according to the Annual Accounts Act 06:10-14. The UN’s global goals were used as a framework for the materiality analysis, the stakeholder dialogue and our objectives. Key indicators are reported according to the Global Reporting Initiative (GRI) Standards, Greenhouse Gas Protocol and Addtech’s own key indicators for sustainable development. The sustainability notes are examined by an external party, see statement on page 121.

On the following pages, supplementary sustainability information is presented, such as: governance, materiality analysis and material areas, stakeholder dialogue, sustainability targets, key indicators and calculation methods.

GOVERNANCE
Ultimately, the Group’s Board of Directors is responsible, through Group Management, for Addtech’s overall, long-term sustainability targets. These targets are supplemented by targets and action plans developed by each business area for its companies. Our operational sustainability work is therefore conducted in line with our well established corporate culture through a decentralised responsibility in our companies. Addtech practices active ownership through Board work and follow-up, but does not govern the companies at a detailed level. Every year, the companies report their own sustainability work. If deficiencies are identified, the companies apply appropriate measures with the support of the Group.

Addtech’s Code of Conduct is a cornerstone of our sustainability work and an integrated part of the business. Our Code of Conduct, together with our core values, is the foundation of how we do business, behave and act in our daily work and in our relationships with the surrounding world. The Code includes human rights, working conditions, gender equality and diversity, anti-corruption and environmental responsibility and builds on the UN Global Compact, ILO’s core conventions and on the OECD Guidelines for Multinational Enterprises. It encompasses all companies and employees. The Code of Conduct is reviewed by the Board of Directors annually. It is available on our website www.addtech.com together with our Code of Conduct for Suppliers. Any improprieties or irregularities that are in conflict with our Code of Conduct shall be reported to our whistle-blower function.

MATERIALITY ANALYSIS
In order to be able to work strategically and in a manner integrated with sustainable development, we updated our materiality analysis and stakeholder dialogue during the year, and defined targets for our long-term work. The materiality analysis was established in Group Management in November 2019.

Material to stakeholders
In connection with the update of our materiality analysis, a stakeholder dialogue was held with prioritised stakeholder groups. The UN Global Sustainable Development Goals were used as a starting point for the dialogue. The dialogue consisted of in-depth interviews and surveys where the stakeholder groups responded to questions on what sustainability issues were important to them and what expectations they have of Addtech’s continued sustainability strategy. They also had the opportunity to prioritise the global goals that were the most important to those with whom Addtech works. The results are reported in the Y axis of the materiality matrix: Material to Stakeholders.

Prioritisation
The table below presents Addtech’s most material sustainability areas and their relation to the global goals. The questions are ranked according to the company’s and the stakeholders’ prioritisation. All of the global goals are of significance to Addtech, but to be able to focus and drive the work forward, a prioritisation is needed. Our material areas are followed up with GRI indicators and our own key indicators.

Priority Global goal Implication for Addtech Area KPI
Prioriterade områden
1 7: Affordable and clean energy
7.2 Increase the share of renewable energy
7.3 Double the global rate of improvement in energy efficiency
That we increase the share of business that contributes to the transformation to renewable energy consumption and improve the efficiency of our own energy use. Also included in goals 9 and 13. Energy consumption GRI 302-1 Energy consumption
GRI 302-3 Energy intensity
GRI 302-4 Reduction of energy consumption
2 13: Climate action
13.3 Improve knowledge and capacity on climate change mitigation
That we map, set targets and reduce our emissions from transports, purchases and energy consumption. Emissions of greenhouse gases GRI 305-1 Scope 1
GRI 305-2 Scope 2
GRI 305-3 Scope 3
GRI 305-4 GHG emissions intensity
GRI 305-5 Reduction of GHG emissions
3 9: Industries, innovation and infrastructure
9.4 Upgrade infrastructure and retrofit industries to make them sustainable
That we increase the share of business that offers technical solutions for the transformation to sustainable innovation, industries and infrastructure. Economic value GRI 201-1 Direct economic value generated and distributed
Addtech KPI: The share of sales that contributes to sustainable development in total by business area and by global goal.
4 8: Decent work and economic growth
8.8 Protect labour rights and promote safe and secure work environments
That we ensure a long-term perspective in our growth without risking working conditions for our own employees and at our suppliers. Employees Employment Training and development Social supplier evaluation GRI 102-8 Number of employees and proportion of full-time and part-time employments.
GRI 401-1 New employee hires and employee turnover
GRI 404-1 Average hours of training per year per employee
GRI 404-3 Percentage of employees receiving regular performance and career development reviews
Addtech KPI: Percentage of purchasing volume evaluated based on the Code of Conduct
5 5: Gender equality
5.5 Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decisionmaking.
That we have a gender equal and inclusive working environment that promotes female leadership. Diversity and equal opportunity GRI 405-1 Diversity of governance bodies and employees
GRI 404-1 Average hours of training per year per employee, by gender
Addtech KPI: Proportion of women, sales
Addtech KPI: Number of reported whistle-blower cases
6 12: Responsible consumption and production
12.2 Sustainable management and efficient use of natural resources
That we have a product life cycle with efficient use of natural resources. Environmental supplier evaluation Addtech KPI: Percentage of purchasing volume evaluated based on the Code of Conduct
7 3: Good health and well-being
3.4 Reduce mortality from noncommunicable diseases and promote mental health
That we work systematically to promote health and safety at our workplaces Health and safety GRI 403-1 Accidents and sick leave
Less prioriterade areas
8 11: Sustainable cities and communities Included in goal 9.
9 11: Sustainable cities and communities Included in goal 9.
10 10: Reduced inequalities Included in goal 5.
11 6: Clean water and sanitation Included in goal 9.
12 1: No poverty
13 16: Peace, justice and strong institutions
14 4: Quality education
15 17: Partnerships for the goals
16 15: Life on land
17 2: Zero hunger

VISIONS AND KEY PERFORMANCE INDICATORS
The materiality matrix has then be converted into a sustainability model consisting of five of the highest priority areas for both Addtech and stakeholders, with a breakdown into three strategic focus areas: the business, the organisation and the value chain. For each strategic focus area, there is a long-term vision that is measurable and limited in time to the year 2030 in accordance with the global goals. With a distinct direction, we want to clarify where we want to go and what value we want to create and using key performance indicators, we want to ensure that we develop in the right direction. Focus in the next year will be to establish priorities and visions throughout the Group to develop together a strategic plan of action and necessary activities for achieving our objectives.

BUSINESS

2030 the vision is that 100% of sales will contribute to sustainable development

ORGANISATION

2030 the vision is to have 40% women in senior positions and reduce our carbon dioxide intensity by 50%

VALUE CHAIN

2030 the vision is to have evaluated 80% of the purchase volume based on our Code of Conduct

KPI 2019/2020 2018/2019 2017/2018
The business
Sustainable development
Percentage of sales from business that contributes to sustainable development (%)* 40 -
-
Distribution by business area (%) Energy: 32.00 -
-
Industrial Process: 29.00 -
-
Power Solutions: 19.00 -
-
Automation: 12.00 -
-
Components: 8.00 -
-
Distribution by global goal (SDG) (%) SDG 3: Good health and well-being: 4.00 -
-
SDG 6: Clean water and sanitation: 1.00 -
-
SDG 7: Affordable and clean energy: 28.00 -
-
SDG 9: Industry, innovation and infrastructure: 38.00 -
-
SDG 11: Sustainable cities and communities: 9.00 -
-
SDG 12: Responsible consumption and production: 2.00 -
-
SDG 14: Life below water: 18.00 -
-
Economic value
Financial value generated (SEK million) 11,735 10,148 8022
Financial value distributed (SEK million) 11,510 9,787 7765
Of which, manufacturing costs (SEK million) 8,725 7,398 5825
Of which, salaries and remunerations (salaries, pensions, payroll taxes, social security contributions) (SEK million) 2,114 1,840 1496
Of which, disbursements to creditors (SEK million) 62 50 40
Of which, disbursements to shareholders (SEK million) 336 269 235
Of which, disbursements to goverments (SEK million) 273 230 169
Remaining in the company (SEK million) 225 361 257
KPI 2019/2020 2018/2019 2017/2018
Organisation (Social)
Diversity & equal opportunity
Proportion of women, management (%)* 14 11 12
Proportion of women, administration, finance & purchasing (%) 65 66 66
Proportion of women, sales (%) 14 14 14
Proportion of women, technical service, support, production, warehousing (%) 19 21 22
Proportion of women, total (%) 26 26 26
Proportion of employees who ever felt discriminated (%)* (Survey is done every two years) - 1.8 -
Number of reported whistle-blower cases* 0 0 0
Employment
Total number of employees 2,913 2,590 2,283
Percentage of permanent employees (%) 97 98 96
Percentage of full-time employees (%) 94 94 93
Personnel turnover (%) 10 12 12
Personnel turnover, women (%) 10 13 13
Personnel turnover, men (%) 10 11 12
Health & safety
Absence due to illness (%)* 3 3 3
Number of accidents 32 32 29
Training & development
Total number of invested training hours 24,137 22,585 22,556
Number of invested training hours/employee 8.29 8.72 9.88
Percentage of invested training hours per female employee, weighted gender distribution (%) 54 52 57
Percentage of invested training hours per male employee, weighted gender distribution (%) 46 48 43
Percentage of documented performance and development interviews (%) 63 63 62
Organisation (enviroment)
Emissions of greenhouse gases*
Carbon dioxide intensity (total emissions tonnes CO2e/net sales, SEK thousands) 2.2 2.2 2.2
Total emissions (tonnes CO2e) 25,312 22,265 17,600
SCOPE 1 (tonnes CO2e) 2,071 1,869 1,643
Emissions from own vehicle fleet (tonnes CO2e) 2,071 1,869 1,643
SCOPE 2 (tonnes CO2e) 2,494 2,318 2,134
Emissions, energy consumption (tonnes of CO2e) 2,494 2,318 2,134
SCOPE 3 (tonnes CO2e) 20,747 18,078 13,823
Upstream freight emissions (tonnes of CO2e) 10,581 9,892 8,134
Downstream freight emissions (tonnes of CO2e) 7,781 6,038 4,464
Business travel emissions, air travel (tonnes of CO2e) 2,385 2,148 1,225
Energy consumption
Total energy consumption (MWh) 24,935 23,184 21,343
Of which electricity (MWh) 16,317 15,595 14,744
Of which heating (MWh) 8,618 7,589 6,599
Share of electricity from renewable sources (%) 59 59 54
Energy consumption in relation to net sales (%) 2.1 2.3 2.7
KPI 2019/2020 2018/2019 2017/2018
Value chain
Social & environmental supplier evaluation
Percentage of purchasing volume evaluated based on the Code of Conduct (%)* 51 -
-
* See below for calculation methods and comments.

Calculation methods and comments on outcomes

PERCENTAGE OF SALES FROM BUSINESS THAT CONTRIBUTES TO SUSTAINABLE DEVELOPMENT
Addtech wants to be part of the transformation to a sustainable development and sees considerable opportunities in business that contributes positively to society and the environment. A self-assessment has been done based on each business area’s existing product and service offering that addresses any of the sustainability challenges mentioned in the UN Global Sustainable Development Goals and their 169 targets. The revenue from these assignments are then estimated to be able to do a calculation of their share of total sales at a Group level, rounded to the nearest ten. The purpose of this key performance indicator is to identify a present situation to over time increase the share of our sales that contributes to a sustainable future and new business opportunities.

PROPORTION OF WOMEN, MANAGEMENT
The technology trading industry has historically been, and is still, male-dominated. Addtech wants to gradually increase the share of women and promotes female leadership. We therefore have an explicit vision to have gender equal management groups in the Group by 2030. The calculation of the share of women in management positions is done of the number of women who work in management groups at the Group and company level, in relation to the total number of employees that work in management groups. The purpose of the key performance indicator is to identify a present situation to be able to promote equal opportunities and increase participation of women in management and decision-making. During the year, we achieved an increase from 11 percent to 14 percent women in management positions. Read more about how we work with this on pages 28-29.

NUMBER OF REPORTED CASES OF DISCRIMINATION
Addtech endeavours to have no discrimination in the workplace. Every two years, an employee survey is done for all employees in the Group that includes questions about equal opportunity, diversity and discrimination. For the calculation of the share of employees who every felt discriminated, the number of responses of the nature “Do not agree” to the statement “I have never been discriminated against at work” is put in relation to the total number of employees. The work to promote an inclusive working environment without discrimination takes place decentralised through the companies’ own systematic work environment efforts with the support of Group-wide guidelines.

NUMBER OF REPORTED WHISTLE-BLOWER CASES
The cause of the whistle blowing may relate to any kind of impropriety or irregularity that is in conflict with our Code of Conduct, which covers bribery and corruption, the working environment, discrimination and environmental responsibility. In 2019, the implementation was initiated of a new whistle-blower system in order for the handling and categorisation of the whistle-blower cases to be done by an external party.

HEALTH & SAFETY
We apply a zero vision regarding work-related accidents, illness and incidents and promote health and well-being among our employees. We therefore continuously follow up key performance indicators for health and safety. For the calculation of the number of accidents, each company in the Group has reported the number of injuries that occurred due to or during the work, but not injuries caused during travel to and from work. The year was characterised by a continued low sickness absence.

EMISSIONS OF GREENHOUSE GASES
We want to conduct our business with the least possible impact on the climate. We therefore work to improve efficiency and reduce our resource consumption and emissions. Our carbon dioxide emissions are calculated according to the international standard Greenhouse Gas Protocol and are reported in three different scopes. The precautionary approach has been applied for all calculations.

- Scope 1 pertains to direct emissions from operations owned and controlled by us, including emissions from production and fuel consumption for vehicles where the operational control method has been used in the calculation and based on reported mileage and average emissions of 134 g Co2e/km from the Group’s vehicle fleet. With a new car policy that was implemented during the year, we want to encourage the selection of more environmentally friendly cars with the aim of reducing our emissions in Scope 1.

- Scope 2 pertains to indirect emissions from purchased and consumed electricity, heating and cooling. The emissions in Scope 2 were reported in accordance with the GHG Protocol’s guidelines for location-based emissions. The emissions factor for consumed electricity and heating is based on a high calculated average for Nordic electricity production and Swedish district heating production where 1 KWh is estimated to generate 0.1 kg CO2e. In the future, we intend to prepare location-specific emissions factors for electricity and heating consumption.

- Scope 3 pertains to indirect emissions from sources that are not owned or controlled by Addtech, and include among other things purchasing, logistics and business travel. The calculations are based on reports from transport providers and travel agencies. For upstream transports, all freight transports from suppliers to warehouse are calculated and with downstream transports, all freight transports from customer to warehouse are calculated. The transports that go directly from supplier to customer are counted as downstream. Our largest identified emissions in Scope 3 are within category 4: upstreams transport and distribution, category 9: downstream transport and distribution and 6: business travel (only air travel). The emissions from purchasing and use of our products have not been estimated in this phase.

During the year, the decision was made that we want to reduce our carbon dioxide intensity by 50 percent by 2030. With that vision, we want to grow in an even more climate-efficient manner. This work will continue in 2020/2021 with encouraging all companies in the group to set their own goals in line with the overall vision.

PERCENTAGE OF PURCHASING VOLUME EVALUATED BASED ON THE CODE OF CONDUCT
We have a large number of suppliers around the world and a majority of purchasing takes place from non-Nordic suppliers in Europe, the USA and Asia. The circumstance that production largely does not take place within our operations entails certain sustainability risks. At the same time, our supplier relations are often long and characterised by close cooperation on how the supplier’s products can be used in different customer applications. This benefits quality, price, lead times and customer satisfaction at the same time that it gives us the opportunity to have a constructive dialogue on the supplier’s sustainability risks and development. We are also constantly looking for new suppliers that can supplement or strengthen our business development. It is therefore important that both new and existing suppliers are evaluated in accordance with our Code of Conduct, an effort that is done decentralised at our companies. Our vision is to regularly review, evaluate and conduct a constructive dialogue with suppliers equivalent to 80 percent of our purchasing volume that is prioritised according to strategic importance and higher risk. With this, we seek to achieve positive economic, social and environmental changes in our supply chain.