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Extract from

HEXATRONIC GROUP ANNUAL REPORT 2016/2017

Sustainability HE X ATRONIC GROUP AND SUSTAINABILIT Y GLOBALLY

We have resolved to be active and drive development to­ wards sustainable enterprise. With smarter, reliable product and system solutions for passive fiber infrastructure, we are accelerating the digital transformation for the benefit of businesses, individuals, and society at large. Our economic, social and environmental responsibility is important to us, and as a company we must never believe that we are finished; the continual process that benefits coming generations should be a natural part of our business.

Contents Group Facts, Business Model Sustainability Strategy, Green All The Way Stakeholder Analysis, Materiality, GRI Global Goals: Agenda 2030 The Year in Summary Our Responsibility, Memberships

Read more at www.hexatronicgroup.com/sustainability

Group Facts Hexatronic Group AB (publ) is a corporate group with an international focus which deve­ lops, manufactures, markets and delivers pro­ ducts, components and system solutions with the primary focus on the fiber optic market. Hexatronic is based in Sweden but operates on a global market. NO. OF EMPLOYEES

384

NET SALES (calendar year 2017)

MSEK 1,300

NO. OF COMPANIES

14*

* The dots indicate countries with Group companies

Business Model KEY ACTIVITIES

• Developing • Manufacturing • Marketing • Delivering

• Products • Components • System sol. • Services

CUSTOMER SEGMENTS Global market for fiber optics

• Installation companies

• Network owners

• Partners

• Operators

• Resellers

CUSTOMER REL ATIONS

• Long-Term Thinking • Innovation • Close to the Customer • Entrepreneurial Spirit

SALES & DISTRIBUTION • Via wholesalers/Resellers/Partners • Direct sales • OEM

STRENGTHS • Innovative • Specialist expertise • High availability/fast response • Flexible in-house production • Field support and training • Sustainability Strategy (Green All The Way) • Positive culture

QUOTE & PRICE

• Quote • General agreement • Individual orders/projects

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Global Sustainability Strategy Hexatronic Group AB has decided that sustainability is a vital aspect for the entire Group. We are investing 2,030 hours to make lasting changes through our internal development project, Green All The Way.

We aim to formulate measurable focus areas and significant risks, the way we as a company manage risks and central results indicators affecting our operation, and to link sustai­ nability to business benefit. The results of the project will be summarized in future sustainability reports.

Internal sustainability project

Green All The Way 2,030 hours will be dedicated to sustainability during 2018 We are investing time in sustainability, formulating goals and following up on an annual basis. The project will assist us in setting goals, monitoring and creating profitability in our sus­ tainability efforts, and in involving and showing personnel, customers and suppliers that we take a long-term approach to responsibility worldwide. Green All The Way will be the ongoing theme in our opera­ tion throughout the year, with a particular focus two weeks a year, when the Group will include sustainability in its work; this applies to all departments at all levels in the Group.

The first stage of the project is to spread knowledge about sustainability, with a digital educational that we produce our­ selves and distribute to all our companies around the world. We thereby train our personnel in what sustainability is, and how they can do their part both as employees and as indivi­ duals. We can also send the video to suppliers and any new companies we acquire. A link to the video will be sent to all employees in the Group to help minimize environmental im­ pact. Our digital sustainability video will have a ripple effect for personnel and suppliers, as well as acquired companies.

Green All The Way Sustainability areas PERSONNEL

CHOICE OF MATERIALS

PURCHASING

PRODUCTION

RECYCLING

SUPPLIERS

TRANSPORT

SOCIAL INITIATIVES

BUSINESS DEVELOPMENT

Global priorities

SUSTAINABLE

2,030

CHAIN FROM

HOURS FOR

PRODUCTION

SUSTAINABILITY

TO DELIVERY

DIGITAL

LINK BUSINESS

SUSTAINABILITY

EDUCATION IN

BENEFIT TO

AMBASSADORS

SUSTAINABILITY

INTERNALLY AND

SUSTAINABILITY

EXTERNALLY

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Stakeholder Analysis –Materiality –GRI Hexatronic has performed a stakeholder analysis At Hexatronic, it is important to know what our stakeholders feel are the most significant sustainability issues for our Group. Their responses will form the basis of our priorities and ambitions moving forward, and we will link them to our four focus areas in Agenda 2030. The next step will be to rank the responses based on expectations, risks and opportunities, and the way we manage these aspects will be presented in future sustaina­ bility reports.

Stakeholders refers to: •

Owners

Suppliers

Board of Directors

Competitors

Management

Industry organizations

Personnel

Trade unions

Customers

The significant issues outlined below are some of the areas that emerged from our stakeholder analysis, and which we have linked to our focus areas in our work on Agenda 2030, see over.

ECONOMIC

SOCIAL

ENVIRONMENTAL

Sustainable products Sustainable supply chain Suppliers terms Sustainability linked to business benefit Transparency

Involving employees Employee health and safety Equality Human rights Legal compliance – anti-corruption

Obeying laws and requirements ISO 9001, ISO 14001, OHSAS 18001 certification Environmental impact in the production chain Waste management Recycling

OUR METHODS OF GATHERING STAKEHOLDER OPINION:

• Dialogue and workshop with the management team and subsequent dialogue. • Dialogue with the Board and owners. Sustainability was discussed at Board meetings and in subsequent dialogue. • Employee survey. This will be supplemented with further questions on economic, social and environmental aspects of sustainability.

• Analysis of competitors and industry organizations via their sustainability reports, websites and online articles about the companies. • Our customers sent their review forms to us, and their questions about sustainability have now been listed as significant issues for our customers. • The trade unions answered sustainability questions.

GRI – Global Reporting Initiative Part of our Green All The Way project entails an ambition to strive for more detailed reporting in the future. 

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Globala mål – Agenda 2030 The world’s nations have committed to lead the world towards a fair, sustainable future – Agenda 2030. Hexatronic Group can and wants to take part in this development. The goals cover three aspects: economic, social and environmen­ tal sustainability. Below is a summary of the aspects that relate to our Group, based on our four focus areas. Read more at www.un.org/sustainabledevelopment

Hexatronic’s focus areas Of the 17 Sustainable Development Goals in the UN’s Agenda 2030, Hexatronic Group has decided to focus on four as a priority. The significant issues outlined on page 24 in the annual report have led to four focus areas of Agenda 2030 being chosen, and they are described below.

SUSTAINABLE INDUSTRY, INNOVATION AND INFRASTRUCTURE. TODAY

9.1

• Our products. Our vision and mission.

• Green All The Way. Sustainable development in production, transport, purchasing, choice of materials. • Sustainability training • Workshop

9.4

• Upgrading the infrastructure = our products • ISO 14001 • Adapting the industry, industrial processes: Our internal environmental efforts to reduce direct and indirect emissions (e.g. transport), also resource consumption.

• Green All The Way. Sustainable development in production, transport, purchasing, choice of materials.

9.c

• Our products incl. training

• Connecting fiber to schools/ education centers. Following up, being on site and communicating. Eco., Soc., Env.

EQUALITY TODAY

FOCUS

• I nternal code of conduct • Diversity and discrimination policy • Action plan to combat victimization

• • • •

5.5

• Internal code of conduct • Diversity and discrimination policy

• As above

5.6.b

• Our products

• Connecting fiber to schools/ education centers • Monitoring on site/ communicating

5.1

Green All The Way Local sponsorship Sustainability ambassadors Training/information, external and internal • Sustainability policy

RESPONSIBLE CONSUMPTION AND PRODUCTION TODAY

FOCUS

12.2

• See other points on resource consumption

• See other points on resource consumption

12.4

• O ur internal environmental efforts to reduce direct and indirect emissions (e.g. transport), also resource consumption

• Green All The Way. Sustainable development in production, transport, purchasing, choice of materials. • Digital sustainability video

12.5

• Continuous efforts to reduce the proportion of waste in production. Is a KPI target as regards economy, quality and environment. • KPI targets to reduce the proportion of returns. Returns often lead to scrapping of products.

• Green All The Way. Sustainable development in production, transport, purchasing, choice of materials. • Digital sustainability video • Competition for personnel • Workshop

12.6

• Sustainability report • The annual cycle currently includes reports required by law: environmental report to the local authority for activities requiring a permit, reporting to the Swedish Energy Agency, Environmental Protection Agency, Chemical Agency, Transport Agency

• Sustainability report • Communicating the points below • Green All The Way. Sustainable development in production, transport, purchasing, choice of materials. • Digital sustainability video • Competition for personnel • Workshop

DECENT WORK AND ECONOMIC GROWTH TODAY

FOCUS

FOCUS

8.2

• Product development/ innovation.

• Green All The Way • Goals and measuring hours • Sustainability competition

8.4

• Energy mapping

• Green All The Way • Sustainable development in production, transport, purchasing, choice of materials, Economic, Social, Environmental

8.8

Systematic working environme­ nt efforts and OHSAS 18001 certification, including: • Internal code of conduct • Diversity and discrimination policy • Action plan to combat victimization • External code of conduct for suppliers

• Green All The Way • Sustainable development in production, transport, purchasing, choice of materials, Economic, Social, Environmental • OHSAS 18001 to the new standard ISO 45001 during 2019 • Employee survey • Sustainability policy • Sustainability competition

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The Year in Summary Our entire Group is characterized by a genuine care for people and it’s important to us to maintain and develop this outlook, whether at our head office or our companies around the world. Our person­ nel are our most important asset, and we want to foster the entre­ preneurial spirit in the companies that are part of our Group.

Consequently, it is important to us that each company, at the local level, should be able to protect and work for the sustainability iss­ ues that they are passionate about. We believe in this choice, and we feel it is socially sustainable for the future, in all our companies, in every country where we operate.

E X A M PL E S O F S U S TA I N A B L E I N I T I AT I V E S

THE SWEDISH CANCER SOCIET Y

Hexatronic produced a pink Viper cable that was auctioned off to the highest bidder. Congratulations and a big thank you to Kringdata AB who won the cable with a bid of SEK 175,000. The money will go in full to the Swedish Cancer Society Pink Ribbon and be of real benefit to many people fighting against cancer. See the film here: www.youtube.com/watch?v=tJ2jp2V93uw PL AN INTERNATIONAL – CHILDREN’S RIGHT TO EDUCATION

During the year we have supported several organizations with donations, including Plan International – Children’s Right to Education. We have chosen to help more children around the world have the opportunity to grow up in safety, with access to education and healthcare, and to develop into inde­ pendent individuals with power over their lives. #METOO

For a modern corporate group like Hexatronic, this is something we take very seriously. The Group management is keen to ensure that all our workplaces globally should be free of all forms of harassment, and also be equal, safe and secure, and free from alcohol, drugs and sexual harassment. The latest Christmas gift to the Group management was therefore a natural choice: the #metoo book. BLOWN FIBER IN RECYCL ABLE PACK AGING

Our Stingray blown fiber is now packed in a recyclable cardboard box, replacing the previous plastic packaging. The cardboard is easy to fold and recycle after use, which makes life easier for the installation engineer, saves space and benefits the environment. See the film here: www.youtube.com/watch?v=1VPd-8anxZc COMPACT MICRO CABLES BRING ENVIRONMENTAL GAINS SMALLER DUCTS MAKE A BIG DIFFERENCE

We have successfully developed the Viper range of micro cables, which are now a household name in the industry. The cables are slimmer and have im­ proved performance, and can therefore be blown into narrower ducts, again benefiting the environment. Less material is used when making both the cable and duct, and freight costs can be reduced by 35% thanks to the smaller pack size. See the film here: www.youtube.com/watch?v=VWARkF51k2c RECYCLING DUCT WASTE

Leftover material, scrap and waste from the duct lines is ground down into granules, which are then used to make new duct. This considerably reduces the consumption of raw materials.. MORE SUSTAINABLE TR ANSPORTATION

Parts of Hexatronic Group are increasingly using sea freight to make delive­ ries around the world, since this is a more sustainable option than air freight, for instance. The aim for one of our companies is that sea freight should be used for at least 50% of all its imported weight. w w w . h e x at r o n i cg r o u p. co m / s us ta i n a b i l i t y


Our responsibility SUSTAINABILIT Y POLICY

We take a holistic approach to sustainable development. This means respecting and protecting the environment, human rights, employee rights and good business ethics. We strive to continuously improve our operation, and comply with rules and relevant requirements in all areas. Our intention is to work with contractors and suppliers who share our values when it comes to sustainability and business ethics. This Sustainability Policy applies to all companies in the Hexatronic Group and all employees, as well as to hired labor. Our conduct shall be characterized by a high standard of business ethics, and is outlined in Hexatronic’s Code of Conduct. OUR ECONOMIC RESPONSIBILIT Y

We strive to be a positive force with local and global presence, whereby the Group works and makes investments for the future. Economic responsibility – for all compa­ nies in our Group – means taking responsibility for stable, profitable, yet ethically j ustifiable, development over time. OUR ENVIRONMENTAL RESPONSIBILIT Y

We shall protect the environment for present and future generations by preventing emissions and minimizing the use of resources in our product handling. Environmental work shall be an integral part of our day-to-day work, and we strive to reduce our own environmental impact locally and globally. OUR SOCIAL RESPONSIBILIT Y

We see differences as an asset – working with diversity strengthens our expertise and thereby our competitiveness. We aim to offer an inspiring working environment that contributes to job satisfaction, enjoyment and profitability while also preventing ill health, injury and exclusion from working life. Our workplaces shall be equal, safe and secure, and free from alcohol, drugs and sexual harassment. We shall act and contri­ bute locally and globally by supporting initiatives and operations that strive for a socially sustainable future. DIVERSIT Y POLICY – BOARD OF DIRECTORS

The diversity policy which applies when appointing Board members, including how it has been applied during the year and the results that have been achieved, is outlined in our Corporate Governance Report on page 38. CODE OF CONDUCT – SUPPLIERS

At Hexatronic, we stand by and run our business in line with the 10 principles for responsible enterprise as defined in the UN Global Compact. The principles are based on the UN Universal Declaration of Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work, the Rio Declaration, and the UN Conven­ tion against Corruption. CODE OF CONDUCT – INTERNAL

Everyone who works at Hexatronic must read the code, support and work in line with the company’s commitments and our internal regulations as summarized in the code, as well as all applicable laws. LIKE – from the Swedish for Long-Term Thinking, Innovation, Close to the Customer and Entrepreneurial Spirit – characterizes our business activities. Read more at www.hexatronicgroup.com/sustainability

Memberships We are proud members of the following three industry organizations, which in turn work with sustainability for a better world.

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Hexatronic Sustainabilty  

HEXATRONIC GROUP AND SUSTAINABILITY GLOBALLY We have resolved to be active and drive development towards sustainable enterprise. With smarte...

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HEXATRONIC GROUP AND SUSTAINABILITY GLOBALLY We have resolved to be active and drive development towards sustainable enterprise. With smarte...