Sustainability Report 2023
The Festo delegation at the award ceremony in Düsseldorf on November 23, 2023 (from left to right): Christian Österle, Vice President Corporate Communication and Sustainability, Dr. Sebastian Beck, Member of the Management Board Finance and Human Resources, Julia Bikidis, Head of Corporate Sustainability, Neeta Wellhäußer, Human Rights Officer, Dr. Oliver Niese, Member of the Management Board of Festo Didactic SE. Table of Contents Cover image: Winner of the German Sustainability Award The German Sustainability Award (DNP) is the largest award for environmental and social commitment in Europe. It is based on the goals of the German government’s 2030 Agenda and thus on key areas of transformation such as climate, biodiversity, resources, the supply chain, and society. Prizes are awarded for pioneering contributions to the transformation for a sustainable future. In 2023, Festo was given the award in the hydraulics, pumps, and compressors category as an example of environmental and social progress; this demonstrates how sustainability can be successfully implemented. The German Sustainability Award confirms our holistic approach – with a focus on climate protection and people – because sustainability has always been the work of many hands at Festo. The award recognizes the commitment of our employees and shows that we are on the right track. We place particular emphasis on climate protection and reducing our carbon footprint. This is why we are continuously optimizing our energy efficiency and waste recycling. Our core values, such as our ethical principles and an inclusive work environment, are also part of our holistic approach. And in everything we do, we always have the drive to find the best and most efficient solution for our customers. 4 Foreword 6 Company Portrait 110 Blue World 14 Making Work Easier 16 Improve Health 18 Lifelong Learning 22 Industrial Transformation 26 Ecological Innovations 30 Resilience in Value Chains 234 Strategy and Management 36 Sustainability Strategy and Management 40 Networks and Committee Work 3 42 Climate Protection and Resource Efficiency 44 Corporate Carbon Footprint (CCF) 50 Sustainability at Our Locations 60 Material Use in Our Products and the Product Carbon Footprint (PCF) 66 Use of the Products Sold 470 Technical Education 72 Digital Learning 76 Learning through Professional Competitions 78 Training for Sustainable Professions 5 80 People at Festo 82 Employee Development 86 Diversity 90 Vocational Training 94 Further Training 98 Occupational Health and Safety 102 Comprehensive Health Promotion 6104 Ethics and Governance 106 Compliance 109 Taxes 110 Human Rights in the Supply Chain 118 Business Continuity Management (BCM) 7120 GRI Index 8130 Report Profile
Dear Readers, As the new Chairman of the Management Board, it gives me great pleasure to invite you to read the Sustainability Report 2023. In our latest report, we show you how Festo, as a family-owned company, understands and embraces sustainability across various dimensions. In addition to the social perspective, our focus in the context of sustainability is on climate protection. Our aim here is to demonstrate the technological expertise of the entire Festo team in the area of energy and resource efficiency along the value chain. Already in research and development, we deal with challenges relating to the selection of materials and the innovative functionalities of our products with the aim of significantly reducing the impact on our environment. Digitization and artificial intelligence will become increasingly important for us as an automation and learning company. We are convinced that, alongside the continuous development of our product hardware and the addition of digital features, we offer our customers priceless added value. At the same time, we are working on answers to the existential challenges of our time. However, dear readers, we can only meet these challenges together – through GRI 2-1, GRI 2-11, GRI 2-22, GRI 2-23 broad-based partnerships that are open to innovation. The next industrial transformation toward a climate- friendly circular economy requires courage, pioneering spirit, entrepreneurship, and innovative strength. It’s all in our DNA. In this report, we use our Blue World to show you how we are advancing into completely new solution areas in many industries with our automation ideas and are thus enablers of a sustainable future. Two outstanding awards in 2023 show us that, as a company, we are on the right track with our efforts. We are proud to be the winner of the UNIDO Innovation Award with our Didactic unit and to be awarded the German Sustainability Award in the same year. These awards confirm that we are on the right track with our holistic approach, where climate protection and people are at the heart of our efforts. I hope you enjoy reading our Sustainability Report 2023. Dipl.-Ing. (FH) Thomas Böck, Chairman of the Management Board of Festo SE & Co. KG Dipl.-Ing. (FH) Thomas Böck, Chairman of the Management Board of Festo SE & Co. KG 4 5 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
EUR 3.65 billion total revenue in 2023 Company portrait Festo at a glance The focus is always on finding the most efficient and productive solution for movement tasks in industrial production. Sustainability and the climate-friendly transformation of manufacturing are becoming the most important tasks in the entire value chain. In the 2023 financial year, the Festo Group generated revenue of 3.65 billion euros and has around 20,600 employees at 250 locations around the world. The company invests more than seven percent of its sales annually in research and development. Vocational and advanced training measures account for 1.5 percent of turnover. GRI 2-1 The Festo Group is divided into the business divisions Automation and Didactic. Important industry segments include automotive, food and packaging, electronics and assembly, biotech, pharmaceuticals and cosmetics, chemicals, and water as well as the areas of medi- cal technology and laboratory automation (LifeTech), which are growing in importance. Festo also supports all automated process steps in the field of electromobility – from battery production to the production of electric vehicles. GRI 2-1 The Automation division Automation offers a wide range of solutions for factory and process automation. The business purpose encompasses the development, manufacture, and sale of pneumatic and electric components, technical systems, and services as well as the provision of knowledge for automation tasks such as the control, regu- lation, positioning, and handling of machines, apparatus and technical processes. When it comes to customer solutions, demands on energy and resource efficiency and the human- ization of work are increasingly becoming competitive factors in all industrial segments. GRI 2-6 The Didactic division The Group’s activities in the Didactic division stand for technical education and training and have encompassed the continuous development of professional, industry-related learning products and services relating to automation technology for over five decades. The edu- cational offer covers a wide range of techno- logies, including factory and process automation, fluid engineering, electrical engineering, industrial trade, and much more. Festo Didactic is a system partner of companies as well as private and public educational institutions in order to make or keep people fit for work through education and training and to allow them to participate in economic development. GRI 2-6 Festo stands for clear values, top quality, and customer-oriented inno- vations. In industrial automation technology and technical education, we contribute to the sustainable development of the environment, the economy, and society. As a family-owned company, we think and act responsibly and with a focus on the future. 60 Companies in around 60 countries GRI 2-2 employees worldwide GRI 2-7 Total sales by region 2021 2022 2023 Europe/Middle East 60% 57% 59% Asia 24% 25% 23% Americas 16% 18% 18% GRI 201-1 Production sites: 12 global production centers Delivery centers: 4 regional service centers Offices: over 250 worldwide Service worldwide: in 176 countries 20,545 in research and development services EUR 280 million 6 7 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
& UNIDO INNOVATION E S G I By 2030: –30% The reduction plan to achieve net zero in accordance with SBTi is under development. Scope 1 I Since 2024: CO2-neutral I Expanding PV output: By the end of 2023: 14 MW (total output) By the end of 2024: 20 MW (total output) I By 2030: 25% in-house power generation Scope 2 Scope 3 I Since 2024: CO2 offset I By 2030: –30% (base year 2021) I From 2040: Net zero We place particular emphasis on climate protection and continuously reducing our CO2 footprint. For example, since 2024, the entire Festo Group worldwide has been carbon offset in terms of Scope 1 and carbon-neutral in terms of Scope 2 – two years earlier than planned. We are continuing to work on energy-saving measures such as the further expansion our photovoltaic (PV) capacity and retrofitting our heating technology in order to continuously reduce the need for offsets and achieve net zero by 2040, including in Scope 1. For this reason, Festo is joining the Science Based Targets Initiative (SBTi) in 2024. In doing so, we commit to scientifically sound climate targets that are in line with the Paris Agreement and are continuously reviewed by the globally recognized network. Furthermore, the implementation of an energy management system in accordance with ISO 50001 is planned in Germany for 2024. Sustainability is firmly anchored in our corporate strategy. As a long-term operating family-owned company, we assume responsibility for the environment, social issues, and governance (ESG) when it comes to current and future generations. For us, sustainability means the holistic fulfillment of all three dimensions. At Festo, the focus is on people. After all, a healthy, motivated, and high-performing workforce is a key factor in our success. With our comprehensive range of training courses, we make an important contribution to the technical qualification of current and future generations. In order to achieve the goals of sus- tainable development, we attach great importance to acting ethically and in accordance with the law and regu- lations. Climate protection and the economical use of energy, materials, and resources are firmly anchored in our sustainability strategy. Ethics and governance Technical education People at Festo Climate protection and resource efficiency Certified sustainability GRI 3-3 Sustainability in action Our operational management systems contribute to the continuous improvement of sustainable processes and services in the company. This is confirmed by recognized standards such as the following: Festo actively promotes sustainability. We are therefore involved in various initiatives and are committed to acting in a socially supportive and resource-conserving manner. Environmental management system: certified in accordance with ISO 14001 GRI 303-1 Occupational health and safety management system in Budapest, São Paulo, and Shanghai: certified according to ISO 45001 GRI 403-1 Compliance Management System: certified in accordance with the IDW testing standard 980 GRI 206-1 2024: Joining the Science Based Targets Initiative (SBTi) to reduce greenhouse gas emissions in line with the Paris Climate Agreement. 2023: Establish a systematic approach to respecting human rights and the related environmental rights. 2022: Signature of the Diversity Charter to take into account and promote the diversity of our workforce. Award-winning sustainability Our commitment is already widely recognized in important awards, ratings, and rankings. This confirms our strategic orientation and motivates us to continue on this path. Our areas of activity In order to achieve our sustainability goals, our sus- tainability strategy defines four fields of action. GRI 2-6, GRI 2-22, GRI 2-23, GRI 3-2 8 9 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
Blue World How to treat our blue planet presents humanity with unprecedented challenges. The ability to securely supply and support the world’s population in the face of demographic change seems to be in insoluble conflict with the protection of our natural resources. Festo deals with these conflicting priorities with its expertise in automation technology and technical education and anchors them in the “Blue World.” Automation and technical education with Festo: enabler for sustainable solutions to tackle humanity’s greatest challenges. 10 11 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
What Factory automation, process automation How Automation and technical education Pneumatic automation Electric automation Digitization Artificial intelligence Biological transformation Industrial transformation Driving structural change Ecological innovations Save resources, protect nature Resilience in value chains Deglobalization, safeguard supply chains Assist people at work Human–machine collaboration Improve health Technologies for life sciences Lifelong learning Technical education Focus on people Focus planet Why Challenge: Climate change and limited resources Why Challenge: Growing population and demographic change Festo has anchored its solution expertise in its Blue World. With the technology fields of pneumatics, electric automation, process automation, digitization, and artificial intelligence, Festo is enabling the transformation of industrial production into an efficient and climate-friendly method of production and, in the future, also into biological transformation. With our people-centric approaches, we make life easier for people at work. The technologies developed in our LifeTech division support health care, and our learning systems empower people to learn and use new technologies efficiently. With our resource-centric approaches, we use automation technology to support structural change in industries such as the automotive industry and demonstrate how automation technology can better protect our most important resources. Increased localization also means shortened transport routes and value chains, which minimize emissions. Our blue planet presents us with major challenges. How can we use automation technology and technical education to help solve these challenges? 12 13 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
Making Work Easier GripperAI software In company logistics centers, thousands of different parts and objects are packed into boxes by employees and prepared for shipment. The larger the product portfolio, the more parts of varying weights there are – an enormous strain on employees. The AI software GripperAI from Festo can enable all kinds of robots and handling systems to grip objects of varying weight. There is no upper limit on the number of kilograms. The software also follows a completely autonomous learning process and makes it possible to really reach On the one hand, the focus is on intelligent and collaborative robots that can work hand in hand with humans and provide relief, particularly in a working environment with difficult and tiring tasks. On the other hand, digitization offers great potential for enhancing human capabilities and increasing productivity. AI software tools and methods can take on complex analyses of large volumes of data and generate information that helps people make decisions or carry out burdensome tasks. What systems and solutions does Festo offer that make the workplace more ergonomic or relieve people of heavy and stressful tasks, both physically and mentally? “blindly” into the box – it recognizes and grabs unknown and unlearned objects. This allows heavy parts of dif- ferent shapes to be handled efficiently, which reduces the workload for employees and increases operational efficiency. Pretrained AI capabilities, such as those for parallel gripping and vacuum gripping, are available and can be adapted or further developed according to customer requirements. Furthermore, the software can even take over the packaging of objects in boxes. These skills are offered as a set, individually, or modu- larly within the GripperAI Suite. 14 15 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
Festo LifeTech Festo supplies components for the automation of analytical applications for laboratory facilities. The offer includes electric and pneumatic drives as well as controllers, dosing systems, and grippers, equipped with sensors for measuring and checking. Automated handling speeds up the work with samples and fluids and also offers safe handling of the test material. This reduces the causes of errors, for example by preventing mix-ups. In addition, it guarantees sterile and consistent analysis conditions even with higher test volumes and delivers fast and accurate results. Festo also offers products and solutions for the construction of medical systems and devices, such as the high-precision control of medical gases or components for minimally invasive surgery. Festo products also ensure maximum quality in the production of medical consumables. Fast and precise diagnostics are required. Under the term “LifeTech” Festo offers systems and components for medical technology and laboratory automation. Thanks to decades of experience and innovative strength in the automation of industrial manufacturing processes, a high level of efficiency and productivity as well as maximum reliability are achieved in these areas. From standard market products to customized subsystems: Festo LifeTech offers everything from a single source for medical technology and laboratory diagnostics. Improve Health Population growth, demographic change, and pandemics are placing ever greater demands on healthcare and preventive health measures. How can technological innovations in automation technology speed up medical technology and laboratory diagnostics while ensuring high quality and safety standards? 16 17 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
Lifelong Learning How do we enable people to master new technologies? After all, productivity and competitiveness cannot be maintained and increased by modern, high-quality automation solutions alone. Rapid technological change means that companies need to continuously train their employees and develop their skills in order to maintain their productivity over the long term. Employees themselves ensure their employability by continuously acquiring the most sought-after skills through on- and off-the-job training. Driven by innovations and changing societal needs, completely new job profiles are constantly being created and existing jobs are being transformed. As the world’s leading provider in the field of technical education, Festo is a global partner for educational institutions, governments, public institutions, and companies. 18 19 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
Festo Learning Experience (Festo LX) The Festo LX digital learning portal offers a holistic approach to basic and further technical training. We pursue a blended learning approach that combines theoretical knowledge with practical exercises. Festo LX provides the right learning content for the learning systems from Festo Didactic. Knowledge can be learned independently and tested on the physical equipment so that it can be used in a targeted manner in later daily work. Thanks to the large number of learning formats, learning is motivating and varied. Festo LX enables digital learning that is as individual as people themselves. Digitization not only changes the required skills taught in basic and further technical training but also how these are learned. 20 21 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
Festo also consis- tently relies on industrial intelligence and AI at its own plants. The findings from these applications are incorporated into customer projects in a targeted manner. Entire branches of industry and sectors are undergoing profound change. With Industry 4.0, production is increasingly interlinked with state-of-the-art information and communication technology. How will we manage to bring about this change in our machine and plant control systems? Industrial Transformation 22 23 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
This structural change is particularly evident in the automotive industry. Combustion drives are transforming into regenerative drive systems with massive effects on production environments, processes, and supply chains. Intelligent machines independently coordinate increasingly complex manufacturing processes and generate data that is converted into information using artificial intelligence in order to identify specific areas where there is potential for optimization. This improves quality and reduces the use of resources. For battery cell production in the field of e-mobility, Festo supplies the technology needed to produce high-quality batteries reliably and cost-efficiently. This includes the automation of processes, starting with the processing of raw materials, the fully automated production of battery cells, and the transport and assembly systems for the precise assembly of battery parts through to disassembly and recycling as a closed loop. Festo Automation Experience (Festo AX) With Festo AX Solutions, Festo uses artificial intelligence to offer algorithms that make it possible to record status data of components in order to predict their potential failure – including during recycling. A wide variety of components are moved here. Adaptive gripping with corresponding algorithms and robot solutions enables the efficient and fast recycling of individual materials. 24 25 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
Ecological Innovations It’s about opening up new solution areas for automation and the transformative steps toward a circular economy. Economists have been predicting the end of linear growth for some time now. Moving toward a closed circular economy is the next major goal with new growth potential. Here, too, our great role model is nature, as it knows no waste or garbage. Particularly promising for Festo is the inclusion of biology as a field of activity for automation because automation technology can be used to accelerate and scale biological processes and thus make them economically viable. Following the bioreactor projects PhotoBionicCell (2022) and BionicCellFactory (2023), which focused on the cultivation of algae, Festo’s current BionicHydrogenBattery project focuses on one of the energy sources of tomorrow: hydrogen. Among other things, it will play an important role in the generation of clean electricity. Protecting climate and resources is becoming our most urgent task. How do we save energy and reduce CO2 emissions? How can we use less material, recycle more, and find alternative materials? Picture, bottom left: The PhotoBionicCell automates the cultivation of algae and keeps growth in check. Picture, bottom right: The BionicCellFactory demonstrates a holistic bioprocess – from the automated cultivation of algae to its further processing and refinement. 26 27 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
BionicHydrogenBattery At present, hydrogen can only be stored and transported safely and in a space-saving manner using processes that require extremely high or low temperatures and high pressures. This requires a great deal of energy. With the fully automated biological system BionicHydrogenBattery, we are demonstrating a completely new solution: the volatile substance is converted into formic acid in a low-risk and energy-efficient manner with the help of bacteria – at a comparatively low temperature of around 65°C and low pressure of 1.5 bar. The acid can be easily stored and transported. At the destination, the same bacteria reverse the process and decompose the acid back into CO2 and hydrogen. While hydrogen can be used to generate electricity, the high-purity CO2 could go on to be used in the beverage industry, for example. In the exhibit, it is recycled as part of a circular economy and used again for the production of formic acid. Electrolysis: production of hydrogen from water. Cultivation reactor: optimal bacterial growth thanks to automation technology. Production reactor: conversion of hydrogen and CO2 into formic acid. Symbolized: the low-risk transport of formic acid in liquid form. Fuel cell: conversion of hydrogen into electrical energy by bacteria. Automation technology in the base: control and regulation of complex processes 28 29 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
Resilience in Value Chains Long supply chains and a dependence on single sources of raw materials bring risks in times of pandemics, warfare or high energy prices. How can we better safeguard globalized supply chains and find a more environmentally friendly way to deal with our environment? In addition to the manufacture of the products, logistics are an important competitive factor, as goods need to reach our customers quickly and safely while causing as little environmental impact as possible. Festo relies on a local-for-local strategy. Thanks to a decentralized production network, local markets – with their local market needs – can be supplied more quickly and reliably thanks to short transport routes. At Festo, a CO2-reduced supply chain begins with the development of new products and the question: What risks can already be taken into account during the design phase of the products in order to support product development and market entry? The level of material stocks, risks of individual suppliers defaulting, and selected delivery routes follow this consideration. Our selected means of transport are as CO2-reduced as possible, while the digitization of the supply chain ensures early detection of disruptions and their elimination. Festo supply chain 30 31 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
Safe supply for the population, demographic change CO2-neutral production, minimized use of resources Goal Transformation to a climate-neutral circular economy Our goal: the transformation into a circular economy Today’s challenges call for innovation-friendly and broad-based partnerships. We see the next development boost for industrial production in the shift toward a circular economy. Together with our customers and partners, we want to drive this transformation forward. Innovations are the key to greater sustainability. 32 33 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
Corporate Responsibility Christian Österle is Vice President Corporate Communication and Sustainability and is therefore globally responsible for communication, design, branding, history, and sustainability at Festo. He is responsible for continuously developing and monitoring the implementation of Festo’s sustainability strategy. Sustainable decisions require holistic consideration of ecological, economic, and social aspects. Sustainability is therefore an integral part of Festo’s corporate strategy. Christian Österle, Vice President Corporate Communication and Sustainability at Festo 34 35 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
Sustainability Strategy and Management The United Nations (UN) has formulated 17 Sustainable Development Goals (SDGs) at the economic, social, and environmental levels. A strategy in line with these sustainability goals, systematic sustainability management, and transparency are essential elements for Festo on the path to achieving this goal. GRI 3-3 Sustainability is firmly anchored in our corporate strategy. The Management Board of Festo SE & Co. KG is committed to this. From left to right: Dr. Ansgar Kriwet; Gerhard Borho, Dipl.-Ing.; Dr. Jaroslav Patka; Dr. Sebastian Beck; Thomas Böck, Dipl.-Ing. (FH); Frank Notz, Dipl.-Ing. (FH) Reference framework of our sustainability strategy and our sustainability management There were no significant changes to Festo’s value chain or business model in the reporting period. GRI 2-6 As part of our “local for local” approach, we will expand our international production capacities in Hungary and Turkey. We will include these locations in our sustain- ability management. GRI 203-1 Basic information about Festo for 2023 can be found in the company profile on pages 6 and 7. More detailed information on our business units is available on our website www.festo.com. Sustainability strategy as part of the corporate strategy Thinking in terms of generations and responsible, longterm business practices is deeply rooted in Festo – a family-run company. Key aspects of our sustainability strategy are therefore firmly anchored in our corporate strategy. It is based on the following five strategic directions: – Competitiveness – Growth – Innovation – Culture – Sustainability GRI 2-1, GRI 2-6, GRI 2-9 The following three sustainability topics from the corporate strategy are managed and promoted at the Management Board level: – Reduction of the CO2 footprint – Digital education – Capability Shift GRI 2-6, GRI 2-9 These measures are subject to a quarterly evaluation by the Management Board, are supported by senior executives, and follow a company-wide project organization. The other topics of the sustainability strategy are continuously assessed and developed further together with the responsible departments. This is the responsibility of the Corporate Sustainability department, which is also responsible for sustainability reporting. GRI 2-1, GRI 2-6, GRI 2-9 Identification of key issues The interests of both internal and external stakeholders were taken into account when identifying topics. Specifically, we focus on the following peer groups: – Shareholders – Management Board – Customers and their clients – Employees – Suppliers – Local population – Science – The general public – Nongovernmental organizations (NGOs) – Government – Supervisory institutions GRI 2-26, GRI 2-27, GRI 2-29, GRI 413-1 36 37 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
The sustainability strategy of Festo SE & Co. KG is firmly anchored in the corporate strategy and was approved in March 2020. It covers a period of approximately five years and is continuously developed. The chart above shows the current areas of activity. The sustainability strategy will also be realigned in 2024 together with the next period of the corporate strategy. In doing so, we are guided both by our own efforts and by the requirements of the Corporate Sustainability Reporting Directive (CSRD). In particular, the materiality analysis of the CSRD and the assessment of the disclosure requirements to be reported will provide information on the potential need to adapt the sustainability strategy. GRI 2-23, GRI 3-1, GRI 3-2 Climate Protection and Resource Efficiency Chapter 3 Since 2023, we have been pooling our activities and measures to reduce our carbon footprint and use energy, materials, and resources sparingly in the action area of climate protection and resource efficiency. This area of activity is the focus of our sustainability efforts. It includes the updated corporate carbon footprint (CCF) for 2022 and 2023, calculated in accordance with the GHG Protocol (Greenhouse Gas Protocol), and the progress we are making toward reducing our carbon footprint. The reduction plan for Scope 3 with a focus on Scope 3.11 plays a key role here. By joining the Science Based Targets initiative (SBTi), we commit to scientifically sound climate targets in line with the Paris Agreement. For Scope 3.11, which accounts for around 95 percent of Festo’s CCF, an SBTi-compliant reduction plan was drawn up and will be submitted for review by the end of 2024. On the one hand, the reduction plan includes the aspiration to always find the most efficient solution for the respective customer application. On the other hand, it also takes into account the effects of expanding our portfolio to include more efficient products (see section 3.4). We were also able to make progress with regard to Scopes 1, 2, and 3.8 in 2023: since 2024, – two years earlier than planned – the entire Festo Group has been offset in Scope 1 CO2. In addition, we plan to reduce Scope 1 emissions by around 30 percent by 2030 and achieve net zero by 2040. In Scopes 2 and 3.8, the Festo Group has been CO2-neutral since 2024. We are also continuing to invest in energy efficiency measures and the further expansion of photovoltaics (PV). In 2023, photovoltaic systems were installed at a further 20 locations. The total PV capacity installed at Festo has thus been increased by more than 60 percent and now amounts to 13.8 megawatt peak. By the end of 2023, all PV installations worldwide generated 15,651 megawatt-hours of electricity. This avoids 10,600 metric tons of CO2 per year at the plants of the respective electricity suppliers. By 2030, we want to generate around 25 percent of our own power requirements with PV ourselves. In Scopes 3.1 and 3.4, we continued to focus on improving the data quality of our CO2 emissions with regard to the materials we use and, in selected projects, to investigate the use of materials with lower CO2 emissions and the possibility of a circular economy. The same applies to distribution logistics. Here, we continued the systematic conversion of individual products from air freight to sea freight. We were also able to make progress with the product carbon footprint (PCF) in 2023. After testing our approach with pilot customers, it is now available to all customers upon request. A further development is planned for 2024 (for details see chapter 3.3). In addition to our focus on reducing CO2 emissions, which goes hand in hand with the efficient use of resources, we are also continuing our environmental management. At our own locations, we will work on the efficient use of materials and supplies as well as waste reduction and the economical use of water as part of our ISO 14001-certified international environmental management system. Technical Education Chapter 4 The technical education and training of our customers at Festo Didactic is another important pillar of our sustainability efforts. Examples of our activities: – Provide accessible, high-quality technical training with the digital learning portal Festo Learning Experience (Festo LX) – Supporting learning through competitions with numerous activities and inspiring young people to pursue careers in technology – Training in sustainable professions to promote environmentally conscious thinking and enable them to develop eco-friendly innovations. People at Festo Chapter 5 Within this sphere of activity, we will continue to work on the qualification and further development of our employees, the expansion of occupational health and safety promotion, and equality and diversity in the company over the long term. Ethics and Governance Chapter 6 The focus area of ethics and governance focuses on our global compliance management system and the fulfillment of corporate due diligence obligations for human rights. In 2023, we operationally implemented the requirements of the German Supply Chain Due Diligence Act (LkSG) at our suppliers and in our own business units. Our activities in the areas of activity in the 2023 reporting period are also explained in the following chapters using corresponding GRI indicators. The four action areas of our sustainability strategy GRI 2-6, GRI 2-22, GRI 2-23, GRI 3-2 Sustainability Strategy Governance Environment Socialissues Our contribution to the Technical Education People at Festo Ethics and Governance Climate Protection and Resource Efficiency 38 39 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
Networks and Committee Work Partnerships and networks mean significant added value for mutual exchange and working across corporate boundaries. Our Automation and Didactic business divisions work both nationally and internationally as part of various committees and associations directly on the issue of sustainability. GRI 2-28 5 G Alliance for Connected Industries and Automation (5 G-ACIA) I Working group for Business and Human Rights of the German Engineering Federation (VDMA) I Stuttgart CSR network I Digital Industries I Various employer associations I European industry umbrella organization ORGALIM (indirectly via VDMA and ZVEI) I EuropElectro (representing the interests of European industry in China) I Fraunhofer Institute for Production Systems and Design Technology I ISO and IEC standardization committees for automation technology I Industry 4.0 platform I SustaiNet – business network I VDMA Blue Competence sustainability initiative I German Electrical and Electronic Manufacturers’ Association (ZVEI) ADEA – Association for the Development of Education in Africa I German-African Business Association I Didacta Association I Digital Industries I Don Bosco Tech Africa I EU Global Gateway I European Institute of Innovation & Technology (EIT) I EuroSkills I iMove I German Asia-Pacific Business Association I Eastern Europe Business Association of Germany I Industry 4.0 platform I UN organizations such as UNESCO, UNIDO, UNICEF, UNHCR I VDMA I WEF – Advanced Manufacturing and Production I Worlddidac I WorldSkills Africa I WorldSkills International I ZVEI Automation Didactic 40 41 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
Climate protection and the economical use of energy, resources, and materials are therefore important tasks of our time and are firmly anchored in both our corporate and sustainability strategies. Our focus is on reducing CO2 emissions – for our customers and for ourselves. Since 2024, the entire Festo Group has been CO2 offset in terms of Scope 1 and CO2-neutral in terms of Scopes 2 and 3.8 – two years earlier than planned. In addition, we plan to reduce Scope 1 emissions by around 30 percent by 2030 and achieve net zero by 2040. The Scope 3 reduction plan with a focus on Scope 3.11 – the use phase of our products sold – is already being implemented. GRI 3-3 Climate Protection and Resource Efficiency
Festo SE & Co. KG Nachhaltigkeitsbericht 2022 52 Greenhouse gas emissions 2023 (Scope 1, Scope 2, and Scope 3) in line with the GHG Protocol (in t CO2e). * Category 3.9 is included in category 3.4. 3.1 Corporate Carbon Footprint (CCF) Since 2022, Festo has been calculating the corporate carbon footprint (CCF) for all three scopes in accordance with the Greenhouse Gas Protocol (GHG Protocol). The four categories 3.10, 3.13, 3.14, and 3.15 were identified as irrelevant for Festo’s CO2 footprint. These categories have therefore not been calculated and are grayed out accordingly in the graphic. The calculation is based on the various possible approaches and meets the requirements of the GHG Protocol. The greenhouse gas emissions from 2023 are shown below. The figures from the two previous years can be found in the table on the next page. 3.7 Employee commuting Purchased electricity, steam, heating, and cooling Vehicle fleet 3.14 Franchises 3.13 Leased property, plant and equipment 3.1 Purchased goods and services 3.2 Capital goods 3.3 Fuel- and energy-related emissions 3.4 Transport and distribution 3.5 Waste 3.6 Business travel 3.8 Rented or leased property, plant, and equipment Company facilities 3.15 Investments 3.12 Handling of products sold at the end of the product lifecycle 3.11 Use of the products sold 3.10 Processing of the products sold 3.9 Transport and distribution Downstream activities Upstream activities Festo Scope 3 Scope 3 Scope 2 Scope 1 12,972,026 13,097 * 394 5,454 121,968 23,343 14,378 351,103 18,982 25,820 8,087 19,683 44 45 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
Compared to the previous year’s report, the figures in the following categories have changed: – 3.4: Adjustment to standard emission calculations without radiative forcing index (RFI) – 3.5: Focus on existing waste data from the production and logistics network and refraining from extrapolating across the Festo Group – 3.7: Correction of a calculation error – 3.11: In this category, the most significant correction was made, as the assumptions regarding the number of cycles of large diameter cylinders were made more precise and the service life of our products was standardized to ten years. On the other hand, the calculation logic has been refined, automated, and thus accelerated in some cases. This allows us to publish the results of the CCF for the past three years and thus also for the year 2023. In total, the Festo Group’s CCF for 2023 amounts to approximately 13.57 million metric tons, which is around 500,000 metric tons lower than in the economically stronger year 2022 and around the same level as in 2021. Compared to 2022, the 2023 CCF shows significant changes in category 3.1 caused by the use of a unified database with more accurate secondary data for electronic components. 2021 2022 2023 Scope 1 24,847 30,762 25,820 Scope 2 38,875 38,589 8,087 3.1 Purchased goods and services 359,717 452,869 351,103 3.2 Capital goods 19,421 18,082 14,378 3.3 Fuel- and energy-related emissions 20,499 32,027 23,343 3.4 Transport and distribution 121,178 129,586 121,968 3.5 Waste 364 394 394 3.6 Business travel 7,000 18,620 19,683 3.7 Employee commuting 18,288 18,330 18,982 3.8 Rented or leased property, plant, and equipment 4,434 8,422 5,454 3.9 Transport and distribution See 3.4 See 3.4 See 3.4 3.11 Use of products sold 12,683,345 13,363,775 12,972,026 3.12 Handling of products sold at the end of the product lifecycle 14,382 14,549 13,097 Total 13,312,350 14,126,005 13,574,335 Greenhouse gas emissions (Scope 1, Scope 2, and Scope 3) in accordance with the GHG Protocol (in t CO2e). With the exception of category 3.5, which only includes our headquarters as well as the production and logistics sites worldwide, but only accounts for a negligible share of 0.003 percent of the CCF, the table shows the emissions of the entire Festo Group, including all international sales companies. On the one hand, 2023 was shaped by the realization that 95% of the emissions in category 3.11 are caused by the use phase of our products. As a result, our efforts to reduce emissions – in addition to Scopes 1 and 2 – are primarily focused on these scopes (see chapter 3.4 for details). Scope 2 electricity-related emissions have also fallen significantly, as guarantees of origin have made the entire production and logistics network mathematically carbon-neutral from 2023. The differences in Scope 1 and categories 3.3 and 3.8 result in lower consumption of fossil fuels. The other categories show only minor fluctuations. GRI 302-1, GRI 302-2, GRI 302-4, GRI 302-5, GRI 305-1, GRI 305-2, GRI 305-3, GRI 305-5 The greatest lever for CO2 savings: our products being used customers. 46 47 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
Julia Bikidis has headed the Corporate Sustainability department at Festo since July 2023. Prior to that, she was responsible for projects to reduce CO2 emissions in our product portfolio. Her current activities focus on reducing Festo’s corporate carbon footprint without losing sight of the holistic sustainability approach according to ESG. Joining the Science Based Target Initiative (SBTi) is an important step on our path to carbon neutrality. In doing so, we are pursuing our strategic goal of enabling sustainable production for both our customers and ourselves. Julia Bikidis, Head of Corporate Sustainability at Festo 48 49 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
GRI 305-1: Direct greenhouse gas emissions (Scope 1, t CO2e) GRI 302-1c: Final energy (electricity, district heating, MWh) Energy consumption in relation to sales (MWh/million €) GRI 305-2: Indirect energy-related greenhouse gas emissions (Scope 2, t CO2e) GRI 305-4: Greenhouse gas emissions (Scope 1 and Scope 2), in relation to sales (t CO2e/€ million) 120 90 60 30 0 126,202 60 40 20 0 53.7 15 5 0 3.8 10 GRI 302-1a: Primary energy (heating oil, diesel, gas, MWh) 80 60 40 20 0 69,852 13,471 2021 2022 2023 30 20 10 0 0 2021 2022 2023 15 10 5 0 86,690 79,683 18,507 16,563 141,851 140,623 33,400 31,744 68.0 57.8 15.4 12.7 2021 2022 2023 2021 2022 2023 2021 2021 2022 2023 2022 2023 3.2 Sustainability at Our Locations Primary energy consumption and Scope 1 greenhouse gas emissions Under primary energy consumption, we document the consumption of heating oil and natural gas caused by the operation of our buildings and, to a much lesser extent, by some of our production processes. It also includes the fuel consumption of the largely leased vehicle fleet. In addition, self-generated renewable energies are listed under primary energies. We report on the CO2 emissions caused by fossil fuels accordingly in Scope 1. GRI 302-1a Our production processes do not cause any direct emissions of other greenhouse gases (e.g. process emissions). Refrigerant emissions from cooling and refrigeration systems are negligible compared to CO2 emissions. They are therefore not reported on. In 2023, primary energy demand amounted to 69,852 megawatt-hours, a decrease of 12 percent compared to the previous year. This is due to several effects. At the German locations, for example, savings measures in connection with the gas shortage led to significantly lower consumption. A milder winter resulted in lower consumption at all European locations. In addition, the economic situation also affected primary consumption – for example, due to closing days Scope 1 emissions are mainly derived from fossil fuels in primary energy consumption. Simply shifting between the different energy sources such as heating oil, natural gas, diesel, and petrol can lead to slight deviations. The influencing factors are correspondingly identical to those of primary energy consumption. GRI 305-1 Scope 1 emissions are shown in the second diagram on the right and amounted to 13,471 metric tons of CO2 equivalent emissions in 2023. We have been offsetting these emissions for the production and logistics network since 2023. Final energy consumption and derived Scope 2 emissions Festo obtains its final energy almost exclusively in the form of electricity. Two locations are heated by district heating. The associated emissions are reported in Scope 2. GRI 302-1c The final energy demand in 2023 amounted to 126,202 megawatt hours, which is 10 percent lower than in the previous year. In addition to economic factors, this was achieved primarily by internal energy-saving measures. Scope 2 emissions caused by final energy demand have fallen to zero due to the purchase of green electricity. The purchase of district heating causes 270 metric tons of CO2e emissions. As these are compensated, they are set to zero. GRI 302-1, 305-2 Total energy demand in relation to sales (primary and final energy) fell by seven percent year-on-year to a record low of 53.7 megawatt hours per million euros. Scope 1 and 2 sales-related emissions fell sharply yearon-year at 70 percent to the lowest figure ever of 3.8 metric tons CO2e million euros in sales. As a result, there is now a decoupling of both energy requirements and greenhouse gas emissions from sales. The much faster development of emissions is due to the purchase of green electricity. In addition, in-house power generation with photovoltaic systems was further expanded. GRI 302-4, GRI 305-4, GRI 305-5 50 51 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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