SUSTAINABILITY REPORT - NEXT GENERATION MOBILITY
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2019
ZF Sustainability Report
NEXT
GENERATION
MOBILITY
SUSTAINABILITY
REPORT2 ZF SUSTAINABILITY REPORT 2019 GENERAL DISCLOSURES MATERIAL TOPICS: ECONOMIC ENVIRONMENT SOCIAL ABOUT THE REPORT ABOUT THE REPORT This is the eighth edition of the ZF Sustainability Report published by ZF Friedrichshafen AG; it is based on the fiscal year 2019. The report is intended to offer transparency, with a particular focus on sustainability activities and objectives. It addresses customers, employees, suppliers, politicians, authorities and all other target groups that are interested in our company and wish to know about our values, principles and actions. At the same time, the ZF Sustainability Report represents our progress report to the United Nations Global Compact, which we joined in May 2012. The GRI Standards request companies to perform a material- ity analysis which sets priorities in reporting and focuses on central elements of the performance indicators in the fields of economy, environment and society. Our latest materiality analysis was conducted in summer 2018 and is still valid. The process is described on page 19. The strategic objectives of our sustainability program correspond to the identified mate- rial topics of ZF.
3 ZF SUSTAINABILITY REPORT 2019 GENERAL DISCLOSURES MATERIAL TOPICS: ECONOMIC ENVIRONMENT SOCIAL CONTENTS
CONTENTS
4 SUSTAINABILITY PROGRAM
9 GENERAL DISCLOSURES 21 MATERIAL TOPICS
10 Organizational Profile 22 ECONOMIC 29 ENVIRONMENT 39 SOCIAL
13 Strategy
22 Economic Performance 29 Materials 39 Employment
16 Governance
24 Indirect Economic Impacts 30 Energy 40 Labor/Management Relations
17 Stakeholder Engagement
25 Procurement Practices 33 Water 41 Occupational Health and Safety
19 Reporting Practice
26 Anti-corruption 34 Emissions 44 Training and Education
36 Effluents and Waste 46 Diversity and Equal Opportunity
38 Environmental Compliance 49 Non-discrimination
38 Supplier Environmental Assessment 49 Supplier Social Assessment These icons can be used
within the Sustainability
50 Customer Health and Safety Report by clicking with
the following functions:
52 IMPRINT Table of contents
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Internal references
External references4 ZF SUSTAINABILITY REPORT 2019 GENERAL DISCLOSURES MATERIAL TOPICS: ECONOMIC ENVIRONMENT SOCIAL ABOUT THE REPORT
SUSTAINABILITY PROGRAM
ZF Friedrichshafen AG has been reporting
about its sustainability activities since 2012,
the same year we have made our commit- PROD UC TS P R OD UC T I ON
ment to the ten principles of the United
Nations Global Compact. By stepping up
Sustainable product portfolio:
our efforts over the years, we have continu- Gradually increasing the share of
ously worked towards our contribution to revenue from sustainable products Emissions of plant operations: Reducing
SDG
sustainable development – encoded in the and services.
9
CO₂ emissions caused by plant operations.
17 United Nations Sustainable Development
Product safety: Zero accidents Water: Saving water resources and sup-
Goals (SDGs). and zero fatalities through smart SDG
12
porting clean water quality.
product solutions and highest SDG
With regard to our business activities,
we have identified seven SGDs where we
quality assurance.
Material efficiency of products:
11 Waste: Supporting recycling management
and reducing hazardousness of waste.
can contribute the most – either through
Reducing the use of raw materials
minimizing our negative impacts or by and realizing a circular economy.
developing solutions for positive change. SDG
17
SDG
In 2020, for example, we announced our
climate strategy with which we will halve
our production-related emissions by 2030
13
Safety at work and health protection:
compared to 2018 and produce climate- We strive to improve our safety perfor-
neutral no later than 2040. mance by conducting professional Upstream and downstream emissions:
incident management, Safety Leadership Slowing down climate change and working
SDG
4
and Behavior Based Safety actions as well towards healthier environments.
But we are nowhere near the end of our ef-
as improving our functional safety areas.
forts. Our entire industry still has a long way Standards in the supply chain: We aim for
to go to meet the many environmental and SDG
8
Training and education: We aim to an implemented supply chain sustainability
social challenges on the road to sustain- continuously contribute to improve the management.
able development. Due to the complexity organization, in order to achieve a global
learning culture of innovative learning
of these challenges, they cannot be solved
and development.
alone, but only in cooperation and part-
nership. We will therefore further analyze
our impact on SDGs, strengthen our own
sustainability efforts and, together with our EM PLOYEES SUP P LY C H A I N
partners, intensify the development of solu-
tions for a viable future.5 ZF SUSTAINABILITY REPORT 2019 GENERAL DISCLOSURES MATERIAL TOPICS: ECONOMIC ENVIRONMENT SOCIAL SUSTAINABILITY PROGRAM
The ZF Sustainability Program follows the updated materiality analysis of 2018. Strategic objectives correspond to the identified material topics. We will regularly report and comment on how
we are proceeding to achieve these targets, which projects and measures have already been implemented and what progress has been made.
Strategic Objective Targets Actions/Status
Products
Product safety: Targeting zero accidents By 2021, ZF will develop an integrated concept for “Functional Safety” and A SOTIF process was integrated into the ZF safety process framework.
and zero fatalities through smart product “Safety of the Intended Functionality” (SOTIF) to address emerging active Following ongoing ISO revisions, this new process will be updated,
solutions and quality standards. safety technologies and automated driving independently reviewed by an external organization like TÜV as necessary
and deployed.
By 2022, ZF will align safety concepts across all segments and domains. ZF has released standardized safety training integrating experience from all
divisions and is continuing to unify safety concepts from varied domains.
ZF is tracking the development of Euro NCAP. By 2022, ZF will enable New target
customers to meet the highest NCAP ratings in the 2025 roadmap.
Regarding Product Safety, ZF continues its strategy of developing new safety ZF deployed product cybersecurity and integrated it with functional safety.
systems and consistently improving product quality aimed at safety. ZF demonstrated a system to improve vehicle crash performance by
dynamically shaping crumple zones before a crash. The system detects
pre-crash conditions using external sensors. Significant reduction in occupant
injury is predicted.
ZF actively contributes to UNECE safety regulations for steering and braking
systems.
Upstream and downstream emissions: Vision Zero: Zero Emissions Projects: CeTrax (city buses; commercial vehicles); AxTrax (city buses);
Slowing down climate change and work- ZF will continue to improve product efficiency and as a result reduce CO₂ EV plus (plug-in hybrid); ZF Marine “hybrid ready” transmission.
ing towards healthier environments emissions.
CO₂ reduction in tons in the course of the development of new products, using In the context of the ZF Climate Neutrality Strategy a comprehensive PCF
carbon footprinting and life cycle assessments. strategy was developed, including specific responsibilities (CO₂ champions in
divisional R&D).
By 2020, the existing monitoring system will be extended to upstream and First screening of Scope 3 emissions completed; material categories were
downstream emissions. identified for further improvement.
Material efficiency of products: Reducing By the end of 2020, a strategy and targets will be developed to increase over- As part of the Product Carbon Footprint (PCF) strategy under development,
the use of raw materials and realizing a all material efficiency of products. aspects of material efficiency were reviewed for improvement.
circular economy
Sustainable product portfolio: Gradu- By 2020, a concept will be developed to align environmental compatibility of Development of the concept was on hold to be aligned with the ZF Climate
ally increasing the share of revenue from our products with the new ZF Product Strategy Process. Neutrality Strategy. Development and rollout are planned for 2020.
sustainable products and services6 ZF SUSTAINABILITY REPORT 2019 GENERAL DISCLOSURES MATERIAL TOPICS: ECONOMIC ENVIRONMENT SOCIAL SUSTAINABILITY PROGRAM
Strategic Objective Targets Actions/Status
Supply chain
Standards in the supply chain: We aim By 2020, a new initiative will be introduced worldwide to reduce the highest The concept to manage supply chain emissions with a focus on the highest sup-
for an implemented supply chain sustain- CO₂-emitting supplies and suppliers within the product life cycle. plies and suppliers is in preparation under consideration of carbon footprint and
ability management by 2025. customer requirements; pilots for testing and improvements have been initiated.
Increase coverage on sustainability-related certificates (e.g. ISO 14001) within ISO 14001 is required for new sourcing decisions for environmentally critical
the ZF supplier base. parts.
Increase CSR self-assessment for new suppliers. 100% implementation of CSR Assessments for new suppliers. No new supplier
approval without a CSR Assessment.
Implementation of a Sustainability Supplier Assessment for the existing supplier Start of the assessment in Q3 2019 with a pilot phase covering about 800
base and for new suppliers. strategic suppliers.
Introduction of a Social Media Monitoring. Social Media Monitoring was initiated in cooperation with a third party.
Employees
Globally attractive employer: We aim to By 2025, we aim to be among the Top 15 engineering employers in our strate- Fostering and increasing university cooperations; Trendence/Universum
be among the most attractive engineer gic markets. rankings in combination with International ZF Benchmark Study in strategic
employers worldwide and well positioned markets. Overall target achievement by 2019 was 50%, with positive ranking
in growing markets. especially for professionals and diversity (7 ZF SUSTAINABILITY REPORT 2019 GENERAL DISCLOSURES MATERIAL TOPICS: ECONOMIC ENVIRONMENT SOCIAL SUSTAINABILITY PROGRAM
Strategic Objective Targets Actions/Status
Safety at work and health protection: We Reduction of the Group accident rate (LTAR: accidents with more than one Programs and activities such as near-miss reporting, safety alerts, root cause
strive to improve our safety performance by day absence from work per million working hours) by 10% per year. (Goal for analysis and the Safety Leadership program led to an improvement of 15%
conducting professional incident manage- 2020: 3.5%). (4.5 > 3.8%) in 2019.
ment, Safety Leadership and Behavior
Based Safety actions as well as improving Safety Leadership & Behavior Based Safety (BBS): Conduct 200 Safety Leader- 307 workshops were conducted by internal Safety Leadership Coaches. Globally
our functional safety areas ship workshops worldwide per year. Add 15 sites in 2019 and 20 sites in 2020 23 sites in total were added to the BBS program. The BBS pilot in Germany was
to the ZF global Behavior Based Safety program. successful; additional sites in Germany and the rest of the world will be added
in 2020 to reach the 2020 target of an additional 20 sites implementing BBS.
Internal Transportation: Improve the safety of internal transport by reducing the ~90% of the locations reached the target.
potential risk to pedestrians and the number of incidents compared with the
previous year by 20%.
Occupational health management: We Global implementation of the Health Management System is implemented Implementation at site level started and is supported by regional EHS teams.
aim to ensure the protection of the health, worldwide by end of 2021 with fulfillment of 90%.
and to promote the well‐being, of our
employees worldwide Reporting of occupational diseases worldwide based on national definitions. Ongoing process, first report by end of 2021.
Conducting the “Fit im Betrieb” campaign at all German locations. The campaign started in 2019 and will be concluded during 2020.
Compliance within the Group: We aim By 2020, all compliance-relevant policies will be harmonized within the Harmonization of all compliance-relevant policies within the entire Group is
to continually improve our Compliance entire Group. progressing, and drafts are currently being fine-tuned. Entry into force and
Management System to uphold the good implementation are expected to take place in early 2020.
reputation we have earned and to ensure
the Group’s long-term business success Addition of “Human Rights” as a category of the ZF Trustline, our electronic New target, completion early 2020.
compliance notification system.8 ZF SUSTAINABILITY REPORT 2019 GENERAL DISCLOSURES MATERIAL TOPICS: ECONOMIC ENVIRONMENT SOCIAL SUSTAINABILITY PROGRAM
Strategic Objective Targets Actions/Status
Production
As climate protection has become one of the most urgent issues of our time, ZF makes its contribution by bundling and strengthening current measures in a climate strategy: Our goal is to become climate-
neutral — from Scope 1 to Scope 3 – not later than 2040 and already halve our emissions from production by 2030 compared to 2018. In doing so, the company is supporting the goals of the Paris Climate
Agreement, which aims to limit global warming to 1.5 degree. See GRI 305 for detailed information.
Emissions of plant operations: By end of 2020, CO₂ emissions will be reduced by 10% relative to sales based The slight increase of 0.1% results from decreased sales caused by economic
Reducing CO₂ emissions caused by plant on the ZF Group performance of 2017 (including direct emissions caused by situation - the increase of this specific KPI does not reflect achievements
operations ZF operations). regarding absolute reduction. Considering our new ZF Climate Neutrality
Strategy to reduce absolute CO₂ emissions we achieved an absolute reduction
by -2.6% or 42,000 tons compared to previous year.
By 2020, a well-established and comprehensive CO₂ reduction program will Energy program completed and rolled out. Systematical planning for renewable
be in place covering energy efficiency and renewable energy. projects in preparation (e.g. new solar plants).
By 2020, the emissions profile of purchased energies will be part of the evalu- The development of a concept on renewable energy strategy was anchored in
ation during the procurement process. the ZF Climate Neutrality Strategy.
By end of 2020, energy consumption will be reduced by a further 10% relative Programs to support locations in energy efficiency projects are in place. The
to sales based on the ZF Group performance of 2017. reduction of -0.6% result from decreased sales caused by economic situation
– the decrease of this specific KPI does not reflect achievements regarding
absolute reduction. Considering our new ZF Climate Neutrality Strategy to
reduce absolute CO₂ emissions we achieved an absolute reduction by 118 GWh
compared to previous year. Thereof 78 GWh were reduced by energy efficiency
measures in 2019.
By 2020, energy productivity will be included in regular operations reviews. Energy efficiency as part of Operational Review process. In 2019, the concept
was adapted to the new ZF Climate Neutrality Strategy. In this course the
Science-based target setting process was also evaluated and considered.
Water: Saving water resources and sup- Water consumption relative to sales will be lower than the previous year. Target on reduction of water consumption relative to sales was achieved.
porting clean water quality
By 2020, in water-scarce areas project‐related targets will be defined and The ZF Group is not affected by Water Scarced Areas, which is why the focus
monitored. is being expanded to include Water Stressed Areas.
Waste: Supporting recycling management The amount of waste for disposal relative to sales will be lower than the previ- Target on reduction of waste for disposal relative to sales was achieved.
and reducing of waste ous year.
A special focus will be placed on minimizing landfilling of waste. Multiple locations reduced landfilling due to waste projects. This contributed
to the increase of waste for recycling.9 ZF SUSTAINABILITY REPORT 2019 GENERAL DISCLOSURES MATERIAL TOPICS: ECONOMIC ENVIRONMENT SOCIAL
GRI CONTENT INDEX
GRI 101: FOUNDATION 2016
GRI 102: GENERAL DISCLOSURES 2016
The following GRI disclosures are based on the Standards
(2016) of the Global Reporting Initiative (GRI). For the
Materiality Disclosures Service, GRI Services reviewed that
the GRI content index is clearly presented and the references
for Disclosures 102-40 to 102-49 align with appropriate
sections in the body of the report.10 ZF SUSTAINABILITY REPORT 2019 GENERAL DISCLOSURES MATERIAL TOPICS: ECONOMIC ENVIRONMENT SOCIAL ORGANIZATIONAL PROFILE
ORGANIZATIONAL PROFILE
GRI 102-1 We also digitalize our products to enable Intelligent Mechani- • TRW: braking systems, steering and suspension parts and
Name of the organization cal Systems, which are being used for vehicles to see, think shock absorbers for passenger cars and commercial ve-
and act. Autonomous driving becomes a reality through hicles. Brakes, clutches, handlebars, pretensioners, radar,
ZF Friedrichshafen AG networking environmental sensors, such as camera and radar switches, accessories and footrest systems for motorcycles
(see), electronic control units (think) and intelligent mecha-
GRI 102-2 tronics in driveline, chassis and steering (act). • BOGE: shock absorbers for passenger cars and commer-
Activities, brands, products, and services cial vehicles
Our Group has an international service network of around
The ZF Group is a leading worldwide supplier of automotive 120 of its own service locations and 650 service partners. GRI 102-3
components and systems. With our vision of zero accidents Through these partners, ZF customers worldwide have ac- Location of headquarters
and zero emissions, we shape our future in four technology cess to a comprehensive range of services. This includes
areas: Vehicle Motion Control, Integrated Safety, Electric individual service offers for fleets and exchange transmissions Friedrichshafen, Germany
Mobility and Automated Driving across three segments: pas- for minimum downtimes as well as intelligent connectivity
senger cars, commercial vehicles and industrial applications. solutions, plus maintenance and repair services, and conver- GRI 102-4
ZF is currently the only supplier to deliver autonomous driving sions and retrofits for more efficiency, comfort and safety. Location of operations
systems, electric drivelines and predictive maintenance tech-
nologies to both automotive and industry applications. Through ZF Aftermarket we use a workshop concept that not As of 2019, ZF has 18 main development locations and oper-
only makes technical innovations available in the aftermarket ates at 241 locations in 41 countries. The Group has an in-
As our technology can be found in many applications, mobility in good time, but also provides the relevant technical know- ternational service network of around 130 of its own service
solutions range from motorcycles and construction equipment how for professional diagnostic findings, maintenance and re- locations and 650 service partners.
to trucks and yachts. In the world of electromobility, ZF stands pair of our components. The most important ZF Aftermarket
not only for efficient power consumption in electric vehicles, product brands include: GRI 102-5
but also for intelligent power generation through renewable Ownership and legal form
energy sources such as wind parks. At the same time, the • SACHS: clutches, dual‑mass flywheels, torque convert-
Group transfers its expertise to all other areas of application, ers and shock absorbers for passenger cars, motorcycles, ZF Friedrichshafen AG is a non-listed corporation in ac-
including connectivity and cloud‑based solutions, and is work- commercial vehicles and agricultural machinery cordance with German law. The shareholders of ZF are the
ing on digital solutions for mobility providers and new automo- Zeppelin Foundation, which is administered by the City of
tive customers. • LEMFÖRDER: steering and suspension parts, rubber‑to‑ Friedrichshafen and holds 93.8 percent of the company’s
metal components for passenger cars and commercial shares, and the Dr. Jürgen and Irmgard Ulderup Foundation,
vehicles Lemförde (Germany), which holds 6.2 percent of the com-
pany’s shares. Employee stocks are not issued.11 ZF SUSTAINABILITY REPORT 2019 GENERAL DISCLOSURES MATERIAL TOPICS: ECONOMIC ENVIRONMENT SOCIAL ORGANIZATIONAL PROFILE
GRI 102-6 GRI 102-8 T. 03 HR
Markets served Information on employees and other workers
Number of people¹ 2019 2018 2017
The main sales markets of the Group are Europe (46%), On December 31, 2019, ZF employees worldwide numbered
North America (29%) and Asia‑Pacific (21%). 147,797. This represents an decrease of 0.79 percent over ZF Group (total) 147,797 148,969 146,148
the previous year.
Europe 88,304 86,388 85,294
Cars and light commercial vehicles make up the major share
(80%) of the sales distribution by sectors, whereas com- In sum the total number of employees remained stable. of which Germany 50,864 50,794 50,618
mercial vehicles over six tons (12%) and construction and The support of ZF’s Next Generation Mobility has lead to
North America 34,785 36,762 35,885
agricultural machinery, marine craft, aircraft, special and rail an increase in the Technology Center in India. In view of the
vehicles, and wind power (8%) account for the minor shares. increasing importance of India, since 2018 the country has not South America 5,322 5,509 5,470
been listed as part of Asia‑Pacific but as a separate region.
Asia-Pacific² 16,132 17,396 18,367
GRI 102-7 The headcount in Germany is slightly unchanged. There are
Scale of the organization increases in Europe and India, and decreases of headcount India 2
2,627 1,980 -
in Asia-Pacific, North America, South America and Africa.
Africa 627 934 1,133
At the end of 2019, ZF had a workforce of 147,797 employ-
ees at approximately 241 locations and 18 main development Almost two‑thirds of the Group’s employees work in Europe, Employee Category³
locations. ZF has a portfolio of several thousand products most of them in Germany. 96 percent of all employees have
Direct 74,442 78,281 77,797
and generated sales of €35.5 billion in 2019. For detailed regular contracts with the ZF Group. The percentage of wom-
liabilities and equity, please see the Consolidated statement en employed by the ZF Group is 27, with the North America Indirect 73,355 70,688 68,352
of financial position, p. 27 in the 2019 Annual Report. region showing the highest proportion with 40 percent. In
Work contracts
2019, ZF had a total of 12,429 External Agency Workers.
Regular 142,068 143,198 141,954
Limited 5,729 5,771 4,194
Full-time 144,246 146,383 143,513
Part-time 3,551 2,586 2,635
Apprentices and
temporary workers
Apprentices 2,540 2,756 2,856⁴
External Agency Workers 12,429 12,421 15,195
1 Number of employees by contracts in accordance with IFRS regulations
at the end of the year.
2 As of 2018, India is not listed as part of Asia‑Pacific but as a separate region.
3 Direct and indirect participation in value creation processes.12 ZF SUSTAINABILITY REPORT 2019 GENERAL DISCLOSURES MATERIAL TOPICS: ECONOMIC ENVIRONMENT SOCIAL ORGANIZATIONAL PROFILE
GRI 102-9 mental due diligence is also conducted as part of acquisition • Automotive Industry Action Group (AIAG)
Supply Chain processes to minimize liability and financial risks. Addition-
ally, internal and external audits are conducted. • Carbon Composites e.V.
Solely for the procurement of production materials, ZF
maintains a global network consisting of approximately 6,600 In preparation for emergencies, every location has an emer- • Chamber of Industry and Commerce Hochrhein Bodensee
suppliers, ranging from small family businesses through to gency organization in place. Emergency response teams are
large groups. Among these, there are about 1,200 strategic provided with adequate equipment and procedures. Mock • Chamber of Industry and Commerce Oberschwaben,
suppliers. Furthermore, ZF has about 46,380 non-production emergency drills are carried out on a regular basis. Techni- Weingarten
material suppliers worldwide. cal installations (e.g. flood or fire protection, collection trays,
redundant installations) are company standard, as are behav- • Compliance Network e.V.
The purchasing volume for production materials totaled €20.6 ior‑based measures for increasing awareness for prevention
billion in 2019 and includes directed buy volumes. The value of environmental damage. • Employers’ Association Südwestmetall
of non‑production materials amounted to some €6.0 billion.
GRI 102-12 • European Association of Automotive Suppliers (CLEPA)
Since ZF manufactures products at about 160 locations External initiatives
worldwide, a major part of value creation in production lies in • Foundation of German Business – Remembrance,
the supply of components. The costs for materials purchased The ZF Group observes the core labor standards of the Responsibility, and Future (as a donor)
from suppliers account for some 73 percent of sales. ZF sup- International Labour Organization (ILO), the content of the
pliers are normally contractors who procure the raw materials German Corporate Governance Code and the OECD Guide- • German Aerospace Industries Association (BDLI)
or basic components for the products ordered, manufacture the lines for Multinational Enterprises. ZF also respects and sup- (ZF Luftfahrttechnik GmbH, Kassel-Calden is a member)
products and, in some cases, also design products. ports the Universal Declaration of Human Rights and the
UN Guiding Principles on Business and Human Rights. • German Association of Materials Management,
GRI 102-10 Purchasing, and Logistics e.V. (BME)
Significant changes to the organization and its supply Therefore, ZF signed the United Nations Global Compact
chain on May 1, 2012, thus committing the Group to observe and • German Digital Association e.V. (Bitkom)
promote its ten principles. Since joining, ZF has also become
There were no significant changes relevant to this report. a member of the German Global Compact Network and par- • German Global Compact Network
ticipates in exchanges between the member companies.
GRI 102-11 • German Association of the Automotive Industry e.V. (VDA)
Precautionary Principle or approach GRI 102-13
Memberships of associations • German Engineering Federation e.V. (VDMA)
All locations follow the principle “prevention before reaction”
and the precautionary principle. Therefore, a core element The ZF Group and its companies are committed to a wide • German Federation for Motor Trades and Repairs (ZDK)
of ZF’s Environment, Health and Safety (EHS) management range of associations and interest groups. The following list
system is the evaluation and minimization of potential risks. provides a representative selection: • German Diversity Charter (Charta der Vielfalt e.V.)
All locations conduct environmental aspect assessments and
risk assessments for their respective facilities and processes • Association of German Engineers e.V. (VDI) – Lake • Wissenswerkstatt Friedrichshafen e.V. (as a supporting
in a local context and on a regular basis, for example prior Constance regional association (as a supporting member) organization)
to the introduction of procedures and substances. Environ-13 ZF SUSTAINABILITY REPORT 2019 GENERAL DISCLOSURES MATERIAL TOPICS: ECONOMIC ENVIRONMENT SOCIAL STRATEGY
STRATEGY
GRI 102-14 Our overarching aim is to balance the mobility needs of our protection and fighting corruption. ZF is actively supporting
Statement from senior decision-maker society with the prerequisites of a healthy ecosystem. We these principles not only with regard to our own operations
must ensure that all of our activities respect the latter’s limits but along the entire value chain.
Dear readers, and at the same time develop sustainable and future-fit
solutions. As we have a clear vision to be part of the solution In addition to our commitment to climate protection, it is a
2019 was a year many will remember because of challenging to the current environmental and societal challenges, ZF is central concern of ZF to ensure that human rights are re-
weather events across the globe. Some of them had an un- prepared to step up its efforts. spected worldwide and within all of our business activities. In
precedented scale like the bushfires in Australia. Combined, the reporting period, we have reviewed our Business Partner
these events are proof that we all have to work even harder For this reason, we have worked intensively on our ZF Cli- Principles, published a Statement of Principles on Human
to achieve our goals for sustainable development. For two mate Neutrality Strategy over the past year. Our long-term Rights and have initiated a series of measures to further
reasons in particular, I am confident that we can overcome goal is to become climate neutral, from Scope 1 to Scope strengthen our due diligence processes in the supply chain.
the enormous challenges that we are facing today. 3, no later than 2040 and already halve our emissions from
production by 2030 compared to 2018. At the same time, we With this report we wish to inform you of our progress within
Firstly, ZF is well prepared to offer technological solutions will work on reducing emissions across our supply chain as all of our sustainability related action fields. We welcome
that benefit people – and the planet. We are investing more well as minimizing the environmental impact from our prod- your feedback and engagement.
than ever in research and development following our ZF ucts. In doing so, ZF can actively support the goals of the
Strategy with good results. Recent product innovations like Paris Climate Agreement which aims to limit global warming Yours sincerely,
our EVplus plug-in hybrid and our e-drive technology give to 1.5 degrees.
proof to this. It is now in volume production with an OEM for
passenger cars and a European market leader in city buses. To emphasize this commitment, ZF decided to join the World
We have made solid progress over the last 18 months with Economic Forum’s Alliance of CEO Climate Leaders. The aim Wolf-Henning Scheider
milestone business awards which show that our strategy is of this initiative is to demonstrate the engagement of the Chief Executive Officer
on the right track. Where solutions are not yet at hand, we business community for climate action and at the same time
will continue pushing forward. to advocate a uniform regulatory framework. ZF will fulfill its
own promise by working relentlessly and with clear focus.
Secondly, I have spoken with many smart and motivated
people inside and outside of ZF who are working together Furthermore, since 2012 ZF has been a signatory of the
to achieve our common sustainability goals and one com- United Nations Global Compact. Under this initiative, over
mon theme is clear: ZF has a history of managing change 13,000 organizations are working towards a more sustain-
successfully. Now, as part of our "Next Generation Mobility" able future – sharing strategies and joining actions. We are
strategy, we are pursuing an agile and integrated approach to keeping our commitment to promoting its ten principles in
shape the fundamentally changing mobility requirements of the areas of human rights, labor standards, environmental
tomorrow.14 ZF SUSTAINABILITY REPORT 2019 GENERAL DISCLOSURES MATERIAL TOPICS: ECONOMIC ENVIRONMENT SOCIAL STRATEGY
GRI 102-15 and analyzed. They are then actioned if substantiated. More ing demand for finite resources, which is leading to increased
Key impacts, risks, and opportunities detailed information about our general approach regarding conflict. Several trends require a technology shift toward effi-
risk management can be found in the 2019 Annual Report, ciency and resource conservation, which ZF is pushing for by
ZF’s opportunities and risks culture is focused on sustaining p. 30. continually reducing CO₂ and noise emissions, for example.
the Group’s continued existence and increasing its value. Our Megatrends also play a central role when setting targets
risk management system aims to identify and take opportuni- Over the past two years, the Group has gradually developed for innovation. ZF identifies a need for action, principally in
ties as early as possible while preempting risks that could its ZF Enterprise Risk Management. This includes the defini- the areas of efficiency, advanced driver assistance systems,
adversely affect the value of our activities by identifying them tion and regulation of clear roles and responsibilities as well autonomous driving and integrated safety.
early, assessing them appropriately and initiating suitable as a Group-wide standardized risk management process.
management measures. Another major innovation of the revised Enterprise Risk Man- Innovative solutions in these areas are directed towards our
agement (ERM) is an integrated Governance, Risk & Compli- “Vision Zero”: Zero accidents. Zero emissions. ZF therefore
The Board of Management is responsible for the risk manage- ance (GRC) approach, which is characterized by improved offers solutions for almost all vehicle segments which are
ment system and reports to the Supervisory Board and the interfaces between the internal control system, compliance, showcased for example by the Vision Zero Vehicle, the ZF
Audit Committee about the identified opportunities and risks corporate audit, and corporate risk management. Structured Tractor, the ZF Innovation Truck or the ZF Advanced Urban
on a regular basis but also on an ad hoc basis as situations documentation and monitoring of risks and measures to deal Vehicle. In order to take full advantage of these opportuni-
arise. The Supervisory Board is responsible for monitoring the with them, the consideration of strategic and operational ties, ZF has invested in companies, creating a close network
Board of Management and therefore oversees the effective- risks and the future aggregation of the overall risk landscape of strategic cooperation. We call this the ZF Vision Zero Eco
ness of the risk management system. The implementation of all contribute to improved transparency of the risk situation. System.
the ZF risk management system is regularly audited in terms
of compliance by Corporate Audit. In addition, the external As part of the environmental management system in accor- With strong partners and wide‑ranging expertise, ZF can
auditors check ZF’s early risk detection system as part of the dance with ISO 14001, respective risks and opportunities are make this vision real one day: Driver assistance systems and
annual Group audit. assessed at site and Group level and reported as part of the the continuous development of automated and autonomous
management review. This procedure will be adapted to the driving can drastically reduce the number of accidents. At the
The framework conditions, as well as the responsibilities and new enterprise risk management standard in 2020. same time highly efficient hybrid drives and locally completely
processes of the risk management system, are laid down in a emission‑free electric drives are contributing to emission
Group-wide directive approved by the Board of Management. The context for our sustainability considerations is to a large reduction.
It is accessible to all employees and is subject to regular extent shaped by global megatrends. Climate change, demo-
review by Group Risk Management, which also ensures com- graphic change and increasing urbanization are leading to
pliance with the directive. Major opportunities are also listed changes in consumer behavior – with a fundamentally grow-15 ZF SUSTAINABILITY REPORT 2019 GENERAL DISCLOSURES MATERIAL TOPICS: ECONOMIC ENVIRONMENT SOCIAL STRATEGY
GRI 102-16 Code of Conduct
Values, principles, standards, and norms of behavior Correct, responsible and sustainable business management
and accepting corporate social responsibility are fundamental
A company can only achieve business success in an intact components of our corporate policy. We reject all forms of
economic environment. But a company’s focus on success human trafficking and support the abolition of slavery, forced
must also match the development of the surrounding and de- labor and child labor. Our Code of Conduct explicitly states
pendent companies so that sustainable corporate governance that we do not tolerate any discrimination, especially on the
is possible for all. This principle plays a major role in the rela- grounds of race, gender, religion, age, nationality, social or
tionships with our business partners, but also in investments ethnic origin, pregnancy, disability, belief, sexual orientation,
in production materials and capacities. or political and trade union engagement. These principles
apply to all new and existing employees and the collegial
This is why the Group has firmly anchored sustainable cor- relationships between employees, our dealings with business
porate management factors in its Guiding Principles. They partners and, lastly, how employees are promoted within the
are seen not as individual actions, but as a central aspect of organization. See GRI 205 for more information and our
entrepreneurial activity in the day‑to‑day decision‑making Code of Conduct.
processes.
Business Partner Principles
ZF Charter The ZF Business Partner Principles (BPP) require all suppli-
As an integral part of the ZF Management System, the ZF ers and service providers to make a commitment to respect
Charter defines aspects regarded as most important across national and international laws and regulations at their loca-
all our divisions, functions and regions. The Guiding Prin- tions worldwide. They must ensure that human rights are
ciples of the ZF Charter are: Innovation Approach, Customer respected and human dignity is protected in all business
Focus, Result Orientation and Commitment to People. The processes. The BPP are currently being revised, and a new
Guiding Principle “Commitment to People” helps us create version is expected to enter into force in 2020. See GRI 204
a corporate culture that supports trusting collaboration and for more information on our management approach regarding
motivates top performance. business partners.
The ZF Management System with its focus on Speed, Sim-
plicity and Target Focus and its four principles are at the core
of all our activities and actions and represent everything that
makes ZF special. By concentrating on them, we become
stronger, and grow faster and more sustainably.16 ZF SUSTAINABILITY REPORT 2019 GENERAL DISCLOSURES MATERIAL TOPICS: ECONOMIC ENVIRONMENT SOCIAL GOVERNANCE
GOVERNANCE
GRI 102-18 With due consideration for German legislation governing The risk management framework including the correspond-
Governance structure equal representation of women and men in managerial posi- ing responsibilities and processes is governed through a
tions in the private and public sectors, ZF Friedrichshafen Group-wide binding policy, applicable to all of its direct and
The shareholders, the Zeppelin Foundation and the Dr. AG has discussed and set targets for the relevant managerial indirect controlled subsidiaries. This policy is accessible to all
Jürgen and Irmgard Ulderup Foundation exercise their voting levels to be achieved by June 30, 2022. employees and is subject to regular reviews. Implementation
rights at the annual shareholders’ meeting. and compliance are ensured by Corporate Risk Management.
• At the first managerial level (executive vice president/
ZF Friedrichshafen AG and the ZF Group are led by the Board senior vice president) and the second managerial level Corporate Risk Management coordinates the risk manage-
of Management, which manages the company, and by the (vice president) below the Board of Management, the ment process at group level and provides structure, suitable
Supervisory Board, which monitors the Board of Manage- percentage of women is planned to increase to 15.0 methods and technologies. The risk management system is
ment. For the most part, the activities of the Board of Man- percent each. integrated into the strategy, planning, controlling and reporting
agement are strategic in nature and comprise responsibility processes of all Corporate Functions and operational units.
for the corporate functions, the divisions and the regions. In • For vacancies regarding the Board of Management, a
this context, particular importance is placed on close net- quota of 10.0 percent female Board of Management The Risk Committee, which is led by the member of the
working and cooperation within the Group. Operational top- members is envisaged. The appointment of Sabine Board of Management responsible for Finance, IT and M&A,
ics are mainly addressed in the divisions and business units. Jaskula as member of the Board of Management for the is responsible for evaluating the holistic risk situation for ZF
HR and Legal Corporate Function means that this target and for initiating further development of Corporate Gover-
In the 2019 fiscal year, the Board of Management initially has been met. nance aspects. The accountability for risk management lies
comprised seven members, and later, eight: Chief Executive with the Board of Management. The Board of Management
Officer Wolf-Henning Scheider, Dr. Konstantin Sauer, Michael • For vacancies regarding the Supervisory Board, a quota of reports the both centrally and decentrally identified relevant
Hankel, Sabine Jaskula, Dr. Holger Klein, Dr. Franz Kleiner 30.0 percent was set. The quota is currently 10 percent. opportunities and risks at least quarterly to the Supervisory
and Wilhelm Rehm. Dr. Martin Fischer was appointed to the Board as well as the Audit Committee. The Supervisory
Board of Management on November 1, 2019. As of 2020, GRI 102-30 Board monitors the Board of Management and focuses on
he took charge of the responsibilities previously managed by Effectiveness of risk management processes the effectiveness of the risk management system. Corporate
Dr. Franz Kleiner, who stepped down on December 31, 2019. Audit checks the implementation and effectiveness of the risk
The objective of ZF’s Enterprise Risk Management is to management system on a regular basis. Every year, the suit-
The supervision of the Board of Management by the Super recognize and realize opportunities as well as to identify ability of the early warning system is subject to the Financial
visory Board, whose members are appointed with equal threats of value losses from entrepreneurial activities at an Statement audit by the assigned external auditor.
representation, is supported by an Executive Committee and early stage, to assess resulting risks and to initiate adequate
an Audit Committee which are both composed of members mitigating measures.
of the Supervisory Board. In the fiscal year, the Supervisory
Board comprised 20 members under the leadership of
Dr. Ing. Franz-Josef Paefgen.17 ZF SUSTAINABILITY REPORT 2019 GENERAL DISCLOSURES MATERIAL TOPICS: ECONOMIC ENVIRONMENT SOCIAL STAKEHOLDER ENGAGEMENT
STAKEHOLDER ENGAGEMENT
GRI 102-40 GRI 102-42 In this environment the role of a Tier 1 automotive supplier
List of stakeholder groups Identifying and selecting stakeholders such as ZF is rapidly changing. From selling components and
systems we are now offering complex vehicle functions to a
There are many significant stakeholders at ZF, including As our approach to stakeholder communication and en- greater extent, such as autonomous driving or vehicle motion
employees, customers, suppliers, the company owners, gagement has been applied and refined for several years, control. This requires not only new skills but also a different
investors, authorities, trade unions, associations, the media all relevant stakeholders are well identified. Each group is market approach, offering the entire competence and product
and politicians as well as business partners and residents at important, since it contributes unique insights and feedback. portfolio of ZF from the one source. Furthermore, our cus-
company locations. An increasingly important group includes Our day‑to‑day interaction influences the way we reconsider tomers expect an empowered counterpart that can represent
the next generation of employees, which is why schools, vo- and reevaluate topics, processes and priorities. the entire Group.
cational schools, universities of applied sciences, universities
and scientific institutes can be found at the top of the list of GRI 102-43 Therefore, we have rebuilt our sales organisation in 2019
stakeholder groups to be involved. As a B2B company, ZF has Approach to stakeholder engagement with the participation of our top customers. In this global key
rarely been in direct contact with national, non‑governmental account management organization, the Key Account Execu-
organizations (NGOs) that represent ecological and social ZF is in regular contact with its stakeholders through the tives (KAE's) are the decision makers and most important
issues. However, as is the case with local environmental following channels: the German Global Compact Network, customer contact for the entire ZF Group. The KAE manage
initiatives that are often in direct communication with the personal contact with residents at company locations, the the customer account in an entrepreneurial manner, they are
location managements, these NGOs likewise number among media, direct discussions with customers, suppliers, inves- responsible for customer-specific results and act as sparring
the stakeholder groups that we consider important. tors, analysts and other capital market participants, as well as partners for the divisions. The introduction of the new key ac-
surveys on topics such as sustainability, and with employees count management organization is supported by ZF's internal
GRI 102-41 via the Works Council as well as through internal events and Sales Academy with targeted training.
Collective bargaining agreements Group media.
Employees
The Group values open communication among its employees Customer satisfaction Since employees collaborate on an everyday basis, feedback
and respects their right – as is consistent with applicable law Delivery reliability, the ability to innovate and cost competi- and recognition are ever‑present. Several new initiatives to
– to join or assist a labor union or works council, or to refrain tiveness are basic qualifiers in today’s automotive industry. foster ZF’s feedback culture have been implemented (e.g.
from doing so. No employee or employee representative shall Due to regulatory changes, rising consumer awareness and regular Skip-Level-Meetings). Employee feedback surveys are
be disadvantaged as a consequence of exercising his or her new supply chains for megatrends such as electrification, the implemented on location level. The objective is to sustainably
rights in this regard. As the implementation of HR software sustainability expectations towards the automotive industry contribute to company goals through increased transparency
tools has not yet been completed, valid data regarding collective are constantly growing. and by involving employees on all levels.
bargaining agreements within our workforce were not available.18 ZF SUSTAINABILITY REPORT 2019 GENERAL DISCLOSURES MATERIAL TOPICS: ECONOMIC ENVIRONMENT SOCIAL STAKEHOLDER ENGAGEMENT
ZF Excellence Award benchmark again highlighted the respective critical toring is to check the extent to which companies meet their
The fifth ZF Excellence Award set a new record: Over 4,000 points, we had already started to revise our supply chain due responsibilities. In this context ZF maintains close dialogue
employees in 935 teams took part in the competition, with diligence processes in 2018. Among other things, we have with all monitoring partners. With other suppliers and OEM
776 applications from more than 100 locations in 29 coun- now finished the review of our Business Partner Principles in the German Association of the Automotive Industry (VDA),
tries. Participation across regions, divisions and departments and published a Statement of Principles on Human Rights ZF also works together on an assessment standard that
was very well balanced. Of the 46 teams that reached the (see GRI 204 for more information). In the light of Germany’s examines different criteria of Corporate Social Responsibility
final, the Executive Board and top management selected five National Action Plan (NAP) on Business and Human Rights, including human rights issues.
winners in each of the categories. ZF is part of the NAP Monitoring. The objective of this moni-
In addition to the categories “Products and Manufacturing
Processes”, “Health, Safety, Environment and Social Affairs”, T. 01 Types of stakeholder communication
“Small Projects”, “Learning from Each Other” and “Business
Processes and Methods”, a special “Best Performing Plant”
Groups Media
prize was again awarded in 2019.
Employees “we>move” employee magazine, social intranet “Zoom” including CEO Blog and various
GRI 102-44 news channels, townhall meetings, webinars, innovation challenges and pitch event,
Key topics and concerns raised Excellence Award and family days, zf.com, social media, ZF hilft, ZF BarCamp New Work,
ZF Digital Convention
Over the past year, the topics climate change and human Potential employees Cooperations with universities, Annual Report, Sustainability Report, advertisements,
rights have dominated the general discussion in society. ZF website, involvement in trade fairs, “vision” print/online magazine, social media
Accordingly, our stakeholders have more and more addressed
these issues with us. Former employees ZF website, ZF pensioner association, ZF Family Day, Senior Professionals Program,
“vision” online magazine, social media
With regards to combating climate change, civil society in Customers Annual Report, Sustainability Report, “vision” company magazine, ZF website, brochures,
particular raised its voice and increased the pressure for advertisements, customer days, involvement in trade fairs, key account management
action by companies and governments alike. By the end
End customers Annual Report, Sustainability Report, involvement in trade fairs such as the Frankfurt
of 2019, Germany adopted the Climate Action Programme Motor Show, North American International Auto Show, CES, non‑automotive trade fairs,
2030, including a price on CO₂ emissions in the transport advertisements, ZF website, “vision” online magazine, social media
and heating sectors as of 2021. In addition to regulatory
efforts, ZF has been increasingly addressed by its customers Suppliers and partners Annual Report, Sustainability Report, ZF website, involvement in trade shows, advertise-
but also employees to learn more about our next steps in the ments, supplier days, key purchasing strategy, ZF Global Supplier Summit, “vision” online
magazine, social media
field of combating climate change. During 2019 we have pre
pared a Climate Neutrality Strategy, which we announced in Politics, associations, interest groups Annual Report, Sustainability Report, ZF website, personal discussions,
early 2020 (see GRI 305 for more information). In the course External Affairs department
of 2020 we will continue to further elaborate specific actions
Educational institutions Sustainability Report, cooperations with universities and schools, ZF website, involvement
including increasing partnerships and respective dialogue.
in trade fairs, advertisements, “vision” online magazine, social media
At the end of 2019 the Corporate Human Rights Bench- Press and the media Annual Report, Sustainability Report, ZF website, press releases, press conferences,
mark published its assessment of Germany’s twenty largest “vision” online magazine, social media, Online Press Center
companies in which ZF finished in the rear ranks. While the Communities Press, ZF website, advertisements, sponsoring, regional events, “vision” online magazine,
social media19 ZF SUSTAINABILITY REPORT 2019 GENERAL DISCLOSURES MATERIAL TOPICS: ECONOMIC ENVIRONMENT SOCIAL REPORTING PRACTICE
REPORTING PRACTICE
GRI 102-45 GRI 102-46 GRI 102-47
Entities included in the financial statement Defining report content and topic boundaries List of material topics
In addition to ZF Friedrichshafen AG, 34 German and 236 The topic boundaries of this report follow the materiality • 201 Economic performance
international subsidiaries controlled by ZF Friedrichshafen AG analysis which we conducted in summer 2018. • 203 Indirect economic impacts
are included in the consolidated financial statements. • 204 Procurement practices
As for the methodology: In a first step, a list of all sustain- • 205 Anti-corruption
On March 28, 2019, ZF Friedrichshafen AG signed a binding ability topics potentially relevant to ZF was compiled. An • 301 Materials
agreement regarding the purchase of all outstanding shares industry analysis and general sustainability standards served • 302 Energy
of WABCO Holdings Inc. WABCO) listed on the New York as the basis. In the next step, this list was evaluated by an • 303 Water
Stock Exchange for a cash purchase price of $136.50 per external expert panel via qualitative telephone interviews • 305 Emissions
share. This corresponds to a purchase price of approximately and a supplementary online survey. Additionally, opportuni- • 306 Effluents and waste
$7 billion. The Board of Management and the Supervisory ties and risks were concretized; and ZF’s opportunities to • 307 Environmental compliance
Board of ZF as well as the Board of Directors of WABCO exert influence were discussed. As part of a workshop of the • 308 Supplier environmental assessment
agreed to the planned acquisition. On June 27, 2019, Sustainability Steering Committee, the topics were then pri- • 401 Employment
68.44% of the WABCO shareholders agreed to the trans- oritized with regard to business relevance, relevance from the • 402 Labor management relations
action. The transaction is subject to a number of general stakeholders’ point of view, and the impacts of ZF’s business • 403 Occupational health and safety
closing conditions, e.g. approval by the responsible authori- activities. Topics for reporting and topics that should be the • 404 Training and education
ties. ZF expects to be able to complete the transaction in the focus of strategic further development were identified in this • 405 Diversity and equal opportunity
spring of 2020. process. The results of the materiality analysis were finally • 406 Non-discrimination
confirmed by the Board of Management. • 414 Supplier social assessment
WABCO is a leading global supplier of brake control systems, • 416 Customer health and safety
technologies and services for the improvement of the safety,
efficiency and connectivity of trucks, buses and trailers.
WABCO offers integrated brake control and stability con-
trol systems, air suspension, transmission automation and
aerodynamics, telematics and fleet management systems.
In 2019, WABCO achieved sales of €3 billion. The company
employs approximately 14,000 people in 40 countries around
the globe.
More detailed information about entities belonging to the
Group can be found in ZF’s 2019 Annual Report, page 47f.20 ZF SUSTAINABILITY REPORT 2019 GENERAL DISCLOSURES MATERIAL TOPICS: ECONOMIC ENVIRONMENT SOCIAL REPORTING PRACTICE
GRI 102-51
ZF M AT E R IAL IT Y M AT R I X Date of most recent report
Employer attractiveness Emissions from upstream Product safety
and downstream acticvities March 2019
Corporate citizenship Diversity and Training and Occupational GRI 102-52
inclusion education health and safety Reporting cycle
Annual
Relevance from stakeholder perspective
GRI 102-53
Water Compliance Sustainable product portfolio Contact point for questions regarding the report
Social standards in Environmental standards
the supply chain in the supply chain ZF Friedrichshafen AG
Corporate Governance Sustainability
Löwentaler Straße 20
Material efficiency
of products 88046 Friedrichshafen
Compliance in
Waste Company health management supply chain Emissions from plant operations Email: sustainability@zf.com
Biodiversity Contribution to the economy GRI 102-54
Claims of reporting in accordance with the GRI Standards
Extent of business relevance This report has been prepared in accordance with the
GRI Standards: Core option.
Significance of economic, environmental and social impacts
GRI 102-55
GRI content index
GRI 102-48 GRI 102-50 This GRI table is the GRI content index.
Restatements of information Reporting period
GRI 102-56
A few figures were updated with explanatory footnotes This is the eighth edition of the Sustainability Report External assurance
under respective disclosures. published by ZF Friedrichshafen AG, which follows the
ZF Sustainability Report 2018. This report was not submitted for an external assurance.
GRI 102-49 It is based on the fiscal year 2019.
Changes in reporting
In accordance with the updated materiality.You can also read
