Respect for human rights

Ensuring ethical governance

Management approach

Respect for human rights is reflected in our Code of Conduct, our Supplier Code of Conduct, our Human Rights Directive published in 2024 and our Whistleblowing Guideline.

Embracing an HRDD approach, Zehnder Group started recently developing a management system to conscientiously assess our human rights risks and impacts in a proactive manner. During this process, existing attributes will be reviewed based on a risk-based approach which includes a review of our compliance practices and a HRDD as well as a supplier sustainability risk assessment. We adhere to the principles of the ILO Conventions Nos 138 and 182, the ILO-IOE (International Labour Organization and International Organisation of Employers) Child Labour Guidance Tool for Business of 15 December 2015 with respect to fundamental labour rights and the UN Guiding Principles (UNGPs) on Business and Human Rights.

We put processes and policies in place for each of the six HRDD core elements: “Policy commitment”, “Risk & impact assessment”, “Risk-based measures”, “Embedding”, “Track & communicate” and “Grievance & remedy” and defined measures to improve in all six areas. The measures are regularly evaluated for their effectiveness. The human rights topics analysed are child labour, environmental issues impacting human rights, freedom of association and collective bargaining, living wage/income, modern slavery and forced labour, OHS, working conditions as well as workplace discrimination and harassment.

An external human rights consultancy supported us in building internal capacity and conducting a gap analysis. Based on interviews with 24 stakeholders, we analysed how internal policies and processes need to be adapted to comply with international standards on the core HRDD elements. The analysis showed that Zehnder already has individual HRDD elements in various directives, processes and systems. However, we did not yet have a holistic and systematic approach to implementing HRDD and certain elements needed to be further developed to comply with the UNGP and need to reach beyond tier 1 suppliers.

For each of the six HRDD core elements, Zehnder’s status was analysed and goals and respective measures were defined:

Policy commitment: As a basis for integrating human rights in a company, a publicly available policy commitment raises awareness among stakeholders. It contains key principles, processes and measures. While Zehnder’s commitment to human rights had already been integrated in the Code of Conduct, the Supplier Code of Conduct and the Modern Slavery Statement, the commitment needed to be developed further. Therefore, Zehnder drafted a standalone Human Rights Directive in 2023, including a description of the HRDD management system, which has been publicly available since 2024. This directive represents Zehnder’s commitment to support and respect human rights and guides the implementation of the Human Rights framework for Zehnder. It is approved by the Group Executive Committee.
Risk & impact assessment: Systematically analysing human rights risks and impacts is the basis to take appropriate measures. In the initial phase of developing a human rights risk management framework, we conducted an assessment and prioritisation of salient human rights topics across our value chain. This prioritisation was based on the severity and likelihood of each topic. Most of the salient risks identified are concentrated along our value chain, encompassing the supply chain, end-of-life treatment and logistics. These risks include topics such as modern slavery, forced labour, child labour, environmental impacts on human rights, living wage or income and freedom of association and collective bargaining. However, all these topics are of medium salience in our own operations. The most prominent risk within our operations is associated with OHS. Wherever possible and meaningful, in-depth assessments are conducted to gather more information and engage with potentially affected stakeholders on salient human rights topics.
Risk-based measures: Following the risk assessment, effective measures need to be defined and implemented to prevent potential risks or actual negative impacts on affected stakeholders. Zehnder has defined the following measures as focus topics for 2024 and 2025:

Workplace discrimination and harassment in own operations: Ensure Group-wide implementation of Diversity, Equity and Inclusion Directive and Anti-Harassment Directive (trainings, grievances, monitoring, etc.).

Living wage in own operations: Identify context/root cause of the identified income gaps and create a roadmap (targets, timelines and responsibilities) to address these gaps.

Modern slavery and forced labour risks in own operations: Conduct a Group-wide risk assessment to identify and address human rights risks for workers (including those that are sub-contracted) in Zehnder’s own operations and to commit to the employer pays principle to ensure that no recruitment fees are charged to migrant workers.

Occupational health & safety in own operations: Develop a directive containing the Zehnder OHS management system which is obligatory for all entities (including OHS requirements such as ISO 45001, trainings, monitoring of OHS cases, etc.)

Transportation & logistics supplier risk assessment: Conduct a high-level human rights risk assessment for the transport/logistics value chain stage which includes all risks (including child labour).
Embedding: HRDD needs to be integrated in the company for credibility and continuous improvement. At Zehnder, responsibility is assigned to the Steering Committee, the CEO and the Chair of the Board of Directors. The next steps include developing a human rights training concept as well as responsible purchasing principles. Furthermore, human rights aspects need to be embedded deeper into Zehnder’s strategies, policies and processes across all departments, including, but not limited to, Group risk assessment, internal audit and contracts with suppliers, customers and business partners.
Track & communicate: Zehnder routinely tracks and evaluates the performance of the HRDD approach including the grievance mechanism. With this report, Zehnder is communicating its human rights targets for the first time. From 2024 onwards, we will regularly assess our HRDD approach and report results in the Sustainability Reports that are publicly accessible on our website.
Grievance & remedy: At Zehnder Group we maintain the highest ethical standards and believe in transparency and trust. Zehnder already has a publicly available Integrity Line for employees and stakeholders to report violations of regulations, laws and company guidelines (see Combating corruption). For 2024 and 2025, Zehnder will increase access to and support for its grievance mechanisms.

Next to the HRDD, Zehnder has several guidelines in place that already integrate human rights topics, such as the Anti-Harassment Directive and the Diversity and Equity and Inclusion Directive. Local OHS policies together with our management approach ensure a safe and healthy working environment for our employees. Regarding our value chain, the key guidelines are our Zehnder Group Code of Conduct, the Supplier Code of Conduct and our Modern Slavery Statement¹. Another point worth mentioning is that the employees in most of our main sites are covered by collective bargaining agreements. However, we are not yet able to provide a company-wide figure on how many of our employees globally are covered by collective bargaining agreements, but we are confident that we will be able to report this figure next year.

In compliance with Swiss regulations regarding due diligence obligations and transparency concerning minerals and metals from conflict areas, as well as child labour, Zehnder addresses the topics of child labour and minerals from conflict areas within the broader context of its HRDD.

With respect to child labour, as explained above we are therefore following international standards and therefore comply with the equivalent provided by Swiss law².

When sourced from a conflict-affected or high-risk context, all minerals and metals have the potential to cause or contribute to conflict financing and severe human rights abuses. Regarding minerals and metals from conflict areas, Zehnder Group has conducted an assessment of the minerals in scope in accordance with the Ordinance on Due Diligence Obligations and Transparency Regarding Minerals and Metals from Conflict Areas³. Assessing the import volumes from relevant business units in Europe⁴ showed that our total imports are below the threshold values in accordance with the Ordinance on Due Diligence Obligations and Transparency Regarding Minerals and Metals from Conflict Areas and Child Labour. Nevertheless, we aim to continue to reduce the use of conflict minerals in our products and, wherever possible, ensure that we do not use materials sourced from areas potentially affected by conflict.

Group Sustainability leads the HRDD at Zehnder and coordinates with the Group Executive Committee as well as relevant departments such as Legal, HR, Procurement, Logistics and the Competence Centres. Due diligence is applied through the six elements which form part of the HRDD approach set out above.

¹Limited to Zehnder Group UK
² As defined in CO Art. 964j Para 4 and Ordinance on Due Diligence Obligations and Transparency Regarding Minerals and Metals from Conflict Areas and Child Labour Art. 9 Para 1
³Tantalum, tin, tungsten, gold (3TG), as defined by regulation (EU) 2017/821
⁴Lahr (DE), Bolesławiec (PL), Gränichen (CH), Vaux-Andigny (FR) and Manisa (TR)

Implementation and outlook

To implement the above management approach and policies, we defined an ambition that is underpinned by several targets and monitored via specific KPIs.

Ambition: Apply a Human Rights Due Diligence approach and respect the UN Guiding Principles on Human Rights

Set up Human Rights Due Diligence risk management process and implement a roadmap based on the UN Guiding Principles on Business and Human Rights
Status:
In 2023, we initiated the implementation of an HRDD process in accordance with international standards. Zehnder has developed a Human Rights Roadmap – a key tool when it comes to encapsulating all aspects of HRDD mentioned earlier. It will include quantitative as well as qualitative targets with clearly defined KPIs, measures, responsibilities, budget and resources, timelines and monitoring.
Outlook:
We continue to develop and implement the HRDD process and further develop the risk-based measures to tackle the salient human rights topics identified. This includes the development of relevant KPIs and setup of a systematic human rights risk management framework including a routine risk assessment.

Ambition: Minimise the use of rare earth and conflict minerals consumption in our products and production processes

Assess our main direct high risk material supply chains by country of origin
Status:
Many materials have been well researched and documented for the human rights risks that are related to their production. In addition to tantalum, tin, tungsten and gold, we acknowledge the potential adverse effects of other materials procured by our Group for goods production. These include iron for steel, bauxite for aluminium, copper and the mica group of minerals.
Outlook:
Primarily, our initial focus is on the steel industry. Our aim is to identify the sources of iron used in the manufacturing of our steel products. We have set ourselves the goal of discontinuing the sourcing of steel from conflict-affected and high-risk areas by 2025 in cases where such sourcing exists at present.