Sustainability approach

Sustainability strategy

Our approach is to create (added) value from raw materials in a responsible manner. In line with a sustainable transformation, we are investing in both the product portfolio and the production processes. We also support the Paris Agreement from the Paris Climate Conference as well as the European Green Deal. On this basis, we are pursuing the strategic goal of actively contributing to minimising global warming. The crucial factor in this regard is the CO2 reduction targets for our emissions from Scope 1 and Scope 2 in line with the Science Based Targets initiative. In the reporting year, we made significant progress with regard to the recording of emissions from Scope 3 in particular and also developed approaches for reducing these emissions (see “Emissions and energy”). Further information about our climate strategy
can be found in the “Strategy” section of the TCFD report.

The Group-wide sustainability strategy applies to the entire corporate group and is supported by the Board of Directors. This is demonstrated by our ongoing commitment to the objectives of the United Nations (UN) Global Compact, which we joined in the last reporting year.

The sustainability goals are centrally defined and coordinated; the Climate and Doors Divisions are responsible for the decentralised implementation. For this purpose, they are developing specific plans with individual measures and expanding their product portfolios so that they contribute to the Group-wide goals.

Sustainability governance

Arbonia is organised in a decentralised way and has a holding structure. Group Management – consisting of the Group CFO and the two CEOs of the divisions – determines together with the Executive Chairman of the Board of Directors the targets and measures with which the strategy specified by the Board of Directors will be implemented. The responsibility for the operational business lies with the divisions.

Sustainability is an essential part of the Group strategy. The Group CFO is responsible for managing the topic within the Group. This person develops the sustainability strategy together with the sustainability committee and representatives from the Corporate Communications & Investor Relations department, which is responsible for the Group-wide coordination. The sustainability committee consists of a representative of the Climate Division and one representative each from the Wood Solutions Business Unit and the Glass Solutions Business Unit of the Doors Division. The divisions or their companies coordinate individual measures with the Group functions and implement them. Group Management evaluates important initiatives and projects on a monthly basis.

The Board of Directors and Group Management are pursuing a long-term strategy, while always keeping in mind the interests of the company, its employees, shareholders and other important stakeholders. Once a year, they review the strategy and its reporting with regard to the material topics for Arbonia. The Board of Directors of Arbonia is continuously informed about new legal requirements for sustainable corporate governance. It takes on the decision-making and control function for all measures and evaluates the performance on the basis of defined targets.

This concerns Internal Audit and thus risk assessment, for example. In the reporting year, Internal Audit sent the Board of Directors 15 audit reports on risks and the implementation of planned measures. These reports are also available to external auditors. The Board of Directors is also continually involved in examining possible acquisitions in the form of due diligence processes. The Board of Directors can order investigations or call in external consultants via the Audit Committee in all areas of competence. As of the 2023 financial year, quantitative climate targets aimed at reducing the intensity of greenhouse gases have also been integrated into the variable compensation for Group Management.

Materiality analysis

For our fourth sustainability report we conducted a new materiality analysis in 2023. This involved defining 13 topics which, on the one hand, are relevant to long-term business success and, on the other hand, are relevant with respect to important effects on the environment and society. The analysis was based on frameworks such as the GRI Standards, the Swiss Code of Obligations (see also “Matching material topics with the interests of the Code of Obligations”) and an initial comparison with the European Sustainability Reporting Standards (ESRS). Additional references included a benchmark analysis with sustainability reports from competitors as well as ESG rating analyses.

A core team consolidated the selection of topics, and an evaluation was then carried out by 23 internal stakeholders including the CFO of the Arbonia Group, the sustainability officers, as well as representatives of the divisions from various areas of responsibility and various corporate functions. The individual topics were rated according to the two dimensions “Effects on the environment and society” and “Business relevance”. A threshold value was used to distinguish material topics from non-material topics. A workshop was then held where the stakeholders validated the results together with an external team of experts.

On this basis, nine of the 13 topics were rated as “material”; these topics are shown in the materiality matrix.

However, the following four topics were rated as non-material: “Equal treatment and opportunities for all”, “Social engagement”, “Water and waste water”, “Biodiversity and ecosystems”. While Arbonia is aware that these topics are also highly relevant when considering the topic of sustainability as a whole, their current significance with regard to both business success and effects on the environment and society was rated as significantly lower than that of the other topics in this reporting cycle. Nevertheless, Arbonia is also undertaking measures and initiatives in these non-material areas.

Article 964a ff. Code of Obligations: Matching material topics with the interests of the Code of Obligations

The Swiss Code of Obligations sets out requirements regarding sustainable corporate governance in order to protect people and the environment. These requirements came into force in 2022. They oblige large Swiss companies to produce an annual report on the non-financial risks for the environmental matters, social issues, employee-related issues, human rights and measures aimed at combating corruption. There are also further stipulations regarding transparency in the sensitive areas of child labour and conflict minerals. In this report, the Arbonia Group applies the new regulatory requirements for the first time. The table below matches up the material topics with the areas from the Code of Obligations. Within the report, the detailed requirements of the Code of Obligations are disclosed in a separate paragraph before the respective material topic.

Material topic of Arbonia	Allocation of material topics in accordance with Code of Obligations, Article 964ter, B. 1
Emissions and energy	Environmental matters
Use of resources and circular economy	Environmental matters
Product responsibility	Environmental matters; Social issues
Working conditions	Social issues
Education and training	Employee-related issues
Occupational health and safety	Employee-related issues
Compliance and anti-corruption	Combating corruption
Procurement and supply chain	Respect for human rights; Environmental matters; Social issues; Due Diligence and Transparency in relation to Minerals and Metals from Conflict-Affected Areas and Child Labour (Seventh section Article 964^quinquies)
Data protection and cybersecurity	Social issues

Risk management

Given that our risk management process has been institutionalised for some time now, the risk catalogue was updated once again in the reporting year by means of a structured process. The catalogue comprises strategic, operational and external risks that can be translated into a total of 26 risk scenarios.

Key people from the Group and the respective divisions are involved in evaluating the risk scenarios on the basis of both probability of occurrence and extent of loss. The two divisions and the Group representatives evaluate the entire risk catalogue, with the divisions rating the risks more highly overall. As part of the evaluation, the risk exposures are represented on a matrix. The results are compared with the previous year to check their plausibility and consolidated for the Group and the Doors and Climate Divisions. The entire risk profile is presented to the Audit Committee as well as to the Board of Directors.

In the reporting year, the risks differ with regard to individual points or their order. The three highest non-financial risks from the perspective of the Group are in the areas of energy supply (strategic), product portfolio (strategic) and compliance (operational). When aggregated across both divisions, the greatest non-financial risks are in energy supply, materials / raw materials (external) and compliance.

Mitigation measures have been defined for each risk. A status report indicates whether the respective measure is planned, proposed, implemented, or completed, or whether it is an ongoing process. This status report is integrated in a risk management tool which carries out continuous internal monitoring of the risk exposure and the status of the measures.

In the future, more detailed risks that are linked to sustainability aspects will be added to the risk catalogue. Therefore, as an initial step, potential risks were defined and aggregated by the internal stakeholders as part of the new materiality analysis. These ESG risks will be incorporated into the annual evaluation in future by means of comparison with current risk management activities.

Stakeholder engagement

At Arbonia, we maintain a constant dialogue with all stakeholders who have a significant influence on the economic, environmental and social goals of the company. This group of internal and external stakeholders includes customers, employees, shareholders and investors, analysts, public authorities, neighbours and communities at the company sites – but also partners such as transport companies, suppliers, research institutes and associations, as well as the general public. The exchange of ideas with these groups takes place in the context of personal discussions, meetings, conferences and trade fairs, as well as surveys. The table “Inclusion of stakeholders and their concerns” provides an overview of our interactions with the various stakeholders.

Memberships in the most important chambers and associations – including Swissmem (association of the Swiss mechanical, electrical and metalworking industries), SwissHoldings, or the German-Swiss Chamber of Commerce – allow us to have a continuous dialogue with sector-related companies and relevant interest groups. We have also been a signatory of the UN Global Compact since the end of 2021 and meet all of the obligations arising from our membership.

In addition to our global engagement, we as Arbonia support communities at our production sites. This is demonstrated by numerous donor programmes and support for non-profit organisations. Many companies sponsor sports activities for young people and adults. In addition, the Group sponsors a non-profit association which organises educational projects to prepare children and young people for the challenges of the digital age. We also help to finance scholarships to universities of applied science.

Inclusion of stakeholders and their concerns

Stakeholder	Form of inclusion	Concerns
Customers	Internal and external customer surveys Personal discussions	Product quality, product life cycle, customer satisfaction
Employees	Employee interviews, employee representatives, trade unions, newsletter	Occupational safety, strategy, sustainability engagement, pay negotiations
Shareholders and investors	General Meeting, representation by Board of Directors, roadshows, 1:1 discussions	Economic performance, future prospects, strategy, sustainability performance
Analysts	Roadshows, conferences, press releases	Economic performance, future prospects, strategy, sustainability performance
Public authorities	Regular exchange, approval processes for particular installations and processes	Compliance with legal and regulatory requirements
Neighbours and communities	Regular exchange, sponsoring	Securing jobs, promoting cultural life, noise and emission protection
Partners such as transport companies, suppliers, research institutes and associations	Supplier surveys, regular exchange	Transport damage minimisation, exchange of information, partnership and fair cooperation
General public	Press releases, website	Current information on the company

Arbonia’s contribution to the SDGs

Arbonia is aware of its economic, environmental and social responsibility. We are committed to operating more sustainably over the long term.

We make a substantial contribution to climate protection with our products, which reduce energy consumption in buildings. For this purpose, we continually drive innovations in our two core areas of indoor climate and interior doors. In addition, Arbonia strives for a dynamic, open corporate culture and places a great deal of importance on a pleasant, appreciative and supportive working environment with attractive working conditions. As regional employers, the companies of Arbonia are an important economic factor in the respective regions.

Arbonia is committed to the United Nations’ goals for sustainable development. In particular, Arbonia is dedicated to supporting the eight Sustainable Development Goals (SDGs) highlighted in colour below.

We are not yet able to fully measure our contribution to achieving the SDGs. However, in the following chapters we will show activities that support the goals of the United Nations for sustainable development. This is identified by SDG icons in the corresponding subchapters.