1 2 4 3 Risk analysis Reporting Complaint mechanism Measures and effectiveness monitoring 1 Declaration of principles A policy statement has been updated on the basis of the risk analysis carried out in the 2023 reporting period. Festo undertakes to protect human rights and related environmental rights, as well as to prevent violations of rights, both in its own business areas and vis-à-vis its business partners (direct and indirect suppliers). GRI 2-23, GRI 403-3, GRI 407-1, GRI 408-1 GRI 409-1 2 Risk analysis The annual risk analysis serves as the basis for appropriate and effective risk management. In the 2023 reporting period, an annual risk analysis was carried out for our own business unit and for direct suppliers in order to identify, weight, and prioritize human rights and environmental risks. We analyze internal and external data sources to identify potential risks to our business unit and our direct suppliers. In doing so, we take into account both general risks, such as country and product group risks in purchasing, as well as specific risks that correspond to our business purpose. To assess country risk, we use sources such as the ITUC Global Rights Index and the Countries’ Risk Classification from the Business Social Compliance Initiative (BSCI). We also use internal information from on-site audits and other control measures to assess risks inothers.con- junction with human rights. The risks are prioritized according to their nature and the degree of personal responsibility. As part of the risk-based approach, human rights workshops on human rights impact assessments were held within the Festo Group. The human rights focus areas are as follows: discrimination, safety and health in the workplace, working conditions (contracts and working hours), wages and remuneration, and freedom of association and assembly. GRI 403-4, GRI 412-1, GRI 413-2 It turned out that the criteria for identifying suppliers with potentially high and medium risk based on country and industry risks were appropriate and covered the correct scope. As a result, 36 suppliers in countries with high environmental and medium risk are being assessed for potential human rights violations. The potential human rights risk areas in the supply chain are occupational health and safety, discrimination, wages and salaries, and freedom of association and assembly. GRI 407-1, GRI 408-1, GRI 409-1, GRI 412-1, GRI 414-1, GRI 414-2 In addition, we carry out system-based checks as part of our export controls (embargo, sanction list, and goods list checks, as well as a critical end-use check). 3 Complaint mechanism Festo offers three different options for submitting a complaint or an indication of possible human rights violations: – Anonymous report via our whistleblower portal – Direct report to Corporate Sustainability – Direct report to our Compliance Office Eleven reports were reported via the whistleblower portal in 2023. However, according to the assessment, these are not violations of the Supply Chain Act. As a result, they were closed. GRI 2-25, GRI 413-1 4 Reporting During the reporting period, the results of the risk analysis and the derived preventative measures were reported annually to the Management Board and relevant authorities. The key elements of the Supply Chain Act are reported annually as part of the Sustainability Report. GRI 2-25 The report sent to the German Federal Office for Economic Affairs and Export Control (BAFA) is available for download here: www.festo.com/ethik-und-governance Measures and effectiveness monitoring In addition to the policy statement and the complaints procedure, the following additional preventive measures were implemented: – Establishment of an operational risk management system for the global safeguarding and guarantee of human rights and environmental obligations along the value creation chain – Raising awareness of company-wide complaint procedures – The Supply Chain Act as a component of the ISO 14001 environmental management system – Global purchasing awareness training: WE Program – Sustainability keynote for the global purchasing organization – Escalation process – Update of construction contracts for international construction sites – Training of site managers for new construction projects – Update of invitations to tender for non-production material – Pilot of on-site checks in China – Sustainability rating of Festo SE & Co. KG by EcoVadis, NQC Supplier Assurance, and Integrity Next GRI 403-5, GRI 410-1, GRI 412-2, GRI 412-3, GRI 414-2 The chart shows the systematic approach to respecting human rights and related environmental rights. Approach to respecting human rights and related environmental rights Declaration of principles 114 115 1. Blue World 2. Strategy and Management 3. Climate Protection and Resource Efficiency 4. Technical Education 5. People at Festo 6. Ethics and Governance 7. GRI Index 8. Report Profile Festo SE & Co. KG Sustainability Report 2023 Festo SE & Co. KG Sustainability Report 2023
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