Compliance and fair business practices

Impacts, risks, and opportunities

Impacts

Corruption undermines the integrity of governance systems and undermines their ability to protect human rights. By disregarding accountability, individuals and companies can evade laws and tax regulations that can fund public services such as education, healthcare, and infrastructure. Zehnder Group is committed to promoting strong ethics both within the company and across its supplier base in order to ensure high standards in its operations. This also enhances transparency throughout the supply chain and contributes positively to external stakeholders.

Risks and opportunities

While corruption poses a risk in many industries, it is perceived to be particularly prevalent in the construction sector, which Zehnder Group serves. Zehnder Group operates in countries with varying degrees of public-sector corruption. While Switzerland and the Netherlands, for example, are among the top ten countries in the Corruption Perceptions Index, China (76/180) and Türkiye (107/180)  pose a higher risk of corruption.

The consequences of bribery and corruption can be severe and far reaching. Legal disputes arising from such practices may lead to significant reputational damage. Corruption can also result in inefficient resource allocation, hinder innovation, and disrupt market dynamics, which has a long-term impact on social welfare. Combating corruption therefore offers an important social opportunity, strengthens competition, protects vulnerable communities, and promotes fair business practices.

Our Code of Conduct establishes that we win and retain customers through our commitment to trust and the quality of our products, not through unethical practices. We apply these principles consistently across our operations and expect the same from our suppliers. Therefore, we place strong emphasis on transparency and preventive measures as core elements of our compliance strategy. Our Code of Conduct, training programmes, and due diligence procedures are designed to identify and mitigate corruption risks throughout our operations and supply chain.

Management approach

At Zehnder Group, we are committed to upholding the highest standards of ethical conduct, transparency, and compliance. Our compliance system follows a three-lines-of-defence approach: business units implement internal regulations as the first line of defence, legal and compliance experts provide oversight as the second line of defence, and the third line of defence is led by the Head of Group Internal Audit and the Audit Committee to ensure independent assurance and advice. The Board of Directors and the Group Executive Committee oversee the entire process to ensure transparency and accountability throughout the company. Group Legal and Group Compliance have been brought together under the Group General Counsel, making governance even stronger.

Our compliance management system is reviewed and updated regularly. Key risks are addressed through directives and guidelines, in-person and online training, onboarding programmes, newsletters, risk assessments, and internal audits. Each site appoints a legal and compliance contact, with quarterly reporting consolidated at Group level.

Our Code of Conduct

The Zehnder Group Code of Conduct serves as a framework for ethical, legal, and socially responsible behaviour. The Code of Conduct informs our daily interactions and helps us navigate complex business environments while upholding the highest ethical standards. Available in ten languages, it provides a solid foundation for our compliance efforts.

The Code of Conduct covers the following key topics:

• Integrity, ethics, and compliance
• Conflicts of interest and insider trading
• Safeguarding corporate assets
• Communication
• Environment, health, and safety
• Fairness, respect, and anti-discrimination
• Diversity, equity, and inclusion
• Confidentiality and data privacy
• Competition and global trade
• Corruption and gifts
• Quality

Updated in 2023, the Code of Conduct incorporates international best practices, such as the UNGPs, the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises, and the OECD Due Diligence Guidance for Responsible Business Conduct.

Supportive directives

In addition to the Code of Conduct, Zehnder Group’s Legal and Compliance Directive defines clear roles and responsibilities, ensuring effective monitoring and governance across the Group. Introduced in 2023, the Anti-Bribery and Anti-Corruption Directive sets out stringent rules on ethical business conduct, including the handling of gifts and benefits, and is aligned with international legislation such as the Swiss Criminal Code, the US Foreign Corrupt Practices Act, and the UK Bribery Act . The directive reinforces our zero-tolerance approach to bribery, prohibits facilitation payments, prevents the misuse of third parties for improper purposes, and ensures that our business records remain accurate and transparent. These measures have strengthened awareness and improved escalation practices across the organisation. Regular anti-corruption training further supports compliance, and no incidents of corruption were recorded in 2025 . While this suggests our prevention measures are working effectively, we recognise that robust detection mechanisms and continued vigilance therefore remain priorities. We therefore maintain ongoing training, regular risk assessments, and continuous enhancement of our compliance framework.

To further highlight our stance, the CEO endorsed the UN Global Compact Call-to-Action, which promotes collaboration between businesses and governments to strengthen governance and anti-corruption efforts as vital components of a sustainable and inclusive global economy, aligned with the 2030 Agenda for Sustainable Development.

The Zehnder Group Integrity Line

Our Integrity Line provides employees and business partners a confidential and secure way to report any suspected misconduct or breaches of the Code of Conduct. Available in all operating countries, it supports local languages and allows anonymous reporting. All submissions are taken seriously, investigated thoroughly and independently by Group Legal and Compliance, and the findings are reported to the Group Executive Committee and Audit Committee. The Integrity Line serves as an alternative reporting channel for individuals who are uncomfortable with the internal reporting procedures, ensuring that concerns can be raised without fear of retaliation.

In 2025, 16 compliance cases  were recorded (compared to nine in 2024). Five cases were substantiated following investigation (previous year: five) and one case was determined to be partially substantiated (previous year: zero). One case was handled locally and 15 at Group level. The cases included four IT security and (potential) data breaches (of which two were substantiated, two were not substantiated) and one potential product safety issues (not substantiated), and internally three cases relating to harassment (one substantiated, one not substantiated, and one case that is ongoing), one case concerning potential offences against property (not substantiated), three cases concerning other breaches of the Code of Conduct (e.g. conflict of interests, two not substantiated, one partially substantiated) and one case concerning internal trade compliance (substantiated). Four cases occurred in North America, eleven in Europe and the Middle East, and one in China. Remedial actions included warnings, a dismissal, and further mitigation and compliance measures. Three cases were closed as out of scope.

Our Whistleblowing Guidelines protect all reporters from retaliation, harassment, or discrimination, reinforcing a culture of transparency, trust, and accountability.

Implementation and outlook

Implementation of the above management approach and policies is structured around one focus area with three defined targets and KPIs.

Targets

Ambition: Maintain a good compliance framework, upskill, and achieve zero corruption or antitrust incidents, with compliance reviews forming an essential part of internal audits

Target: Upskill in compliance through compliance training

• Status: Compliance training activities were further expanded across the organisation in 2025. In-person legal and compliance sessions covered topics such as corporate governance, contracts, antitrust, anti-bribery and anti-corruption, regulatory aspects, and ESG, reaching employees across all functions, including sales, procurement, management, and the Board of Directors.
  
  The mandatory Code of Conduct training was rolled out to all employees, with e-learning for white-collar staff and classroom sessions for blue-collar employees. Reminders were sent to ensure completion among remaining participants. Additional e-learning campaigns focused on conflicts of interest and anti-bribery and corruption refreshers were also conducted.
  
  Relevant compliance e-learnings are now integrated into the onboarding process for new employees.
  
  In 2025, 1033 employees  were enrolled in compliance e-learnings, 326 employees  took part in in-person legal or compliance sessions (mainly for blue collar workers), and 2023 employees  attended various additional Group compliance trainings.
• Outlook: With foundational compliance training complete, the focus will shift to ensuring these foundational trainings are periodically refreshed or deepened as appropriate. This ongoing approach aims to maintain high awareness levels and reinforce alignment with the organisation’s ethical standards. These upskilling efforts are supplemented by additional compliance measures.

Target: Establish a more granular risk management framework related to operations with a potentially higher risk score for bribery or corruption

• Status: We further strengthened our risk management approach for operations with an elevated bribery and corruption risk. A targeted anti-bribery e-learning refresher was launched for selected employees. In supplier onboarding, Group Procurement integrated additional anti-bribery and anti-corruption questions into supplier onboarding, improving transparency on supplier practices and conditions at their sites. In parallel, potential suppliers are now asked to sign the Supplier Code of Conduct at onboarding, which reinforces awareness of anti-bribery and anti-corruption expectations. Supplier sign-off continues to follow a risk-based approach, with a supplier’s risk profile determined by a combination of country and category risk, including business ethics and anti-corruption criteria.
• Outlook: The updated supplier audit template will be fully launched and implemented by Group Procurement in 2026, strengthening anti-bribery and anti-corruption coverage in on-site supplier assessments. Further measures and next steps under this target will be defined and led by Group Legal and Compliance, in coordination with Group Procurement, as part of the broader corruption-risk management framework.

Target: Focus on raising awareness for antitrust

• Status: Awareness-raising on antitrust compliance continued in 2025 through a series of virtual and in-person training sessions, and roll-out of new antitrust directives, following a similar approach as in 2024. The sessions targeted employees in sales, procurement, management, and other functions exposed to potential competition law risks. The training underscored the importance of understanding fair competition principles, prohibited practices, and compliance in daily business activities.
• Outlook: Antitrust awareness initiatives will remain a key element of the Group’s compliance programme. Future efforts will focus on maintaining regular refresher trainings and integrating antitrust guidance into onboarding and role-specific compliance sessions.

Metrics

GRI 2: General Disclosures 2021
Disclosure 2-27 Compliance with laws and regulations

GRI 205: Anti-corruption 2016
Disclosure 205-2 Communication and training about anti-corruption policies and procedures

GRI 205: Anti-corruption 2016
Disclosure 205-3 Confirmed incidents of corruption and actions taken

GRI 206: Anti-competitive Behaviour 2016
Disclosure 206-1 Legal actions for anti-competitive behaviour, anti-trust, and monopoly practices