Sustainability strategy

New ‘KION 2027’ corporate strategy developed

During 2017 the KION Group developed its ‘KION 2027’ strategy further and already launched its implementation at the turn of 2017/18. ‘KION 2027’ builds on the success of Strategy 2020, which was produced before the acquisition of Dematic. ‘KION 2027’ is designed to leverage the full potential of the entire Group and focus more closely on a shared, customer-centric innovation, sales and brand strategy. Within this, our emphasis will be on the overarching development and marketing of integrated, automated supply chain and mobile automation solutions. Overall the KION Group strives to continually expand its share of the global material handling market and to continue to report the highest profitability in its industry. Securing crisis resilience as well as an attractive return on equity round off the Group’s objectives.

KION Group Annual Report 2017 – Management Report: Strategy

Sustainability – a guideline for the strategy process

Sustainable and responsible business practices are a core principle of the KION Group’s activities. The Group’s focus on sustainability is reflected in its environmentally friendly and safe products that help customers save energy, reduce emissions, and meet high occupational health and safety standards. The same applies to the Group’s environmentally friendly production processes and its safe, non-discriminatory working environment.

The KION Group and its operating units have always strived to balance environmental, economic and social considerations in their activities. In particular, the Company sees itself as responsible for the health and safety of its employees, suppliers, customers and neighbours as well as for the protection of the environment. This attitude was incorporated into the strategy process as a strategic guideline during the development of the ‘KION 2027’ strategy. The values of the KION Group, which were redefined in the reporting year 2017, also have a clear relationship to sustainability. For example, the value of ‘Integrity’ calls upon everyone in the Company to ‘align their actions with ethical as well as sustainability and compliance standards’. See the section Employees

Key milestones achieved

In 2017, the KION Group achieved further key milestones on its way to achieving greater sustainability. In autumn 2017, the first Group-wide sustainability report was published covering the previous fiscal year 2016. This marked the first time the Company had reported on its sustainability performance at Group level. It is a path the KION Group continues to follow with this report – transparently, comprehensively and based on concrete facts. For this purpose, in the current reporting year the Group defined sustainability KPIs and established the required data management system. On the basis of this, a Group sustainability management system was established that encompasses all operating units. At the same time, the structure and business frameworks of Dematic have already been taken into account.

The first meeting of all the operating units’ sustainability coordinators was held in November 2017 and the newly established Sustainability steering committee also met for its inaugural meeting. This saw the preparation and adoption of the Group’s sustainability programme, marking the achievement of another key milestone for the KION Group. This has led already to the creation of the first specific programmes at operating unit level, some of which are already being rolled out.

Sustainability strategy as core foundation for all activities

The KION sustainability strategy forms the basis for all these activities (> Figure 1). It sets out the Company’s clear aspiration to take responsibility and thus promote its sustainable development. With ambitious objectives, efficient structures and processes, and an effective reporting system the Company intends to attain a leading position in its industry in terms of corporate responsibility. Sustainability is to be an integral element in the way each and every employee goes about their work, combined with the aspiration to continuously improve. This is why in 2018 activities will focus on the internal communication of sustainability and raising employees’ awareness of this range of topics. They are to be enabled and encouraged more strongly than ever before to act sustainably. Further, the KION Group intends to promote sustainability along its entire value chain, in close collaboration with its suppliers and customers. The Company will therefore take an even more active approach to integrating environmental and social considerations into its business processes − and contribute lasting value to the Group and its shareholders, customers and society in the process.

The sustainability strategy is guided by the principle of ‘We are moved by sustainability’, brings together the core strategies, and sets out its approach in each of its four focus areas: Performance, Products, Processes, and People. The strategy was formulated based on interviews with Group Executive Committee (GEC) members, the heads of the Group functions in question, and the operating units’ sustainability coordinators.

Figure 1 KION Group sustainability strategy

Four guiding principles drive implementation

To implement its sustainability strategy, the KION Group has established four guiding principles that set out the guidelines for its sustainable approach:

1. We embody sustainability – it is an integral part of our activities, and we strive to make further improvements every day.
2. We champion cost-effective sustainability along the entire value chain – together with business partners and suppliers, we offer customers efficient solutions which also assist them in their sustainability activities.
3. We pursue clear sustainability objectives – and achieve them through effective structures, efficient processes and transparent reporting.
4. We enable our employees to drive innovation, which increases our Company’s sustainability performance.

In the reporting year these guiding principles were communicated throughout the Company as part of the redesign of the intranet section on sustainability, with sustainability added as a separate topic on the KION intranet. In terms of internal communication, which means informing employees and involving them in the Company’s sustainability activities, KION intends to embed its sustainability activities on a broad basis within the Group.

In the coming years too, the focus will remain on internal and external communication. The objective is to inform internal and external target groups about the KION Group’s sustainability performance as part of the Company’s long-term communication strategy, and in doing so reach a wider audience beyond the mere communication of facts and figures.

The basis of this is the Company’s regular sustainability report, which meets the requirements of current statutory regulations. The objective is also to position the KION Group appropriately in the relevant sustainability ratings and rankings. The Annual Report 2017 also carries the motto ‘RESPONSE & Responsibility’, focusing on key aspects of the KION Group’s commitment to sustainability. This is intended to highlight and make tangible how the KION Group derives responses from its corporate responsibility towards stakeholders and society as a whole.

KION Group Annual Report 2017

Key challenges for the KION Group

Materiality as the basis for strategy development

The materiality assessment performed by Linde Material Handling EMEA at the start of 2015 formed the basis for developing the KION sustainability strategy (> Figure 2). The management team’s assumptions at the time, together with the stakeholders’ expectations, were reviewed with regard to the KION Group and very largely adopted. This also gave rise to a systematic approach at Group level, which addresses and prioritises the material challenges facing the Group. The units with the highest overall relevance are also the focus of the KION Group’s sustainability management activities. > Table 2> Table 2

Figure 2 Materiality analysis findings

For further information, hover the mouse pointer over the points.

The Company plans to update and expand on its materiality assessment in 2018 to include its operating units. In doing so, it plans to take into account both its acquisition of Dematic as well as the stronger regional focus of its sustainability programme within its operating units. Furthermore, the analysis is to place greater focus on stakeholder dialogue by means of a targeted survey.

> Table 1 shows which aspects of the Global Reporting Initiative Guidelines (GRI G4) the KION Group is addressing as part of its material challenges. The aspects can be material both internally (i) and externally (e) to the organisation. The analysis of aspect boundaries is important to determine the control mechanisms for the particular aspects within the KION Group.

Group-wide sustainability programme with 14 action fields

Based on the findings of the materiality assessment, 14 action fields form the structure of the KION Group’s sustainability programme (> Figure 3). To manage sustainability within the Company, in the reporting year KPIs were set for each individual action field. Underpinning each action field is a specific programme with aims and measures to develop the Group’s sustainability activities on an ongoing basis (> Table 2). Aside from the ‘Collaborative development of suppliers’ action field, which only comes into focus after successful implementation of social and environmental standards, all action fields are pursued with the same priority.

Responsibility for implementing these measures lies with the assigned executives, who are also accountable for integrating sustainability aspects into the processes. The sustainability objectives set out a minimum standard which is binding on the entire KION Group. Individual units may achieve higher standards in their sustainability activities or supplement them as required.

Figure 3 KION sustainability strategy action fields

Table 2Action field scope and objectives