Sustainability strategy and management

Vossloh offers products and services that enable better and more widespread rail use. The aim is to increase the availability of existing tracks, facilitate efficient and trouble-free operation, and reduce infrastructure lifecycle costs.

In keeping with its guiding principle “enabling green mobility”, Vossloh is a driving force behind customer-focused, innovative and sustainable products and services for rail transport. This claim is also reflected in Vossloh’s sustainability strategy. In the 2021 fiscal year, Vossloh further developed its sustainability strategy to centrally align and focus sustainability activities within the Group, to further improve Vossloh’s positive impact on the environment and society, and to improve the transparency of Vossloh’s sustainability performance. The sustainability strategy and the guideline supporting it were adopted by the Executive Board of Vossloh AG on September 20, 2021.

At the same time, the Vossloh AG Executive Board has underlined and reaffirmed the Company’s claim and focus with its commitment to sustainability published on the Company’s website.

Sustainability commitment by the Executive Board of Vossloh AG

The new sustainability guideline provides the Group-wide organizational framework and set out the principles for all Vossloh’s sustainability measures and initiatives. The guideline defines in particular the scope of action, as well as organization, responsibility and processes. The direction and focus of sustainability measures are set by a materiality analysis in order to determine the sustainability issues relevant to Vossloh. Specific sustainability goals are then set in relation to these key issues. These goals are pursued through sustainability initiatives and the integration of environmental and social aspects into the Company’s business and decision-making processes. Another focus of the guidelines is on internal and external communication in order to make Vossloh’s sustainability performance transparent and also to further strengthen the commitment of its employees on the road to becoming a green company.

As part of its development, Vossloh has structured its sustainability management into eight areas of action, which enable a more targeted and efficient pursuit of the material issues identified in the materiality analysis. The overarching area, “Sustainability strategy and management“, provides the framework for the other seven areas as well as for the Group’s future approach.

The Group’s Executive Board bears the overall responsibility for all sustainability issues and ensures that Vossloh lives up to its ecological, economic and social responsibilities and makes a positive contribution to the environment and society. In operational management, sustainability is the responsibility of the Chief Operating Officer (COO). In addition, Vossloh AG has a Corporate Sustainability department. Created in 2020, the new role of Head of Corporate Sustainability, who reports directly to the Executive Board, is responsible for the development and implementation of the sustainability strategy as well as for the management of Group-wide sustainability initiatives. In addition, the Executive Board has established a Group Sustainability Committee to centrally manage all sustainability measures within the Group. The committee is run by the Head of Corporate Sustainability. Its members include the heads of key central offices at Vossloh AG as well as the managing directors and sustainability officers of the business units. In addition, each business unit has appointed a sustainability, health and safety officer.

For many years, rating agencies have assessed and recognized Vossloh’s sustainability performance on a regular basis. Among other things, the Company currently has a “prime status” according to ISS ESG, which places Vossloh in the top 10 percent of its sector. EcoVadis has also awarded Vossloh silver status, and the score obtained means the Company ranks among the top ten percent of all companies assessed. MSCI ESG Research has awarded Vossloh an A rating (on a scale from AAA to CCC) for its sustainability efforts. Such rankings play a special role for Vossloh: The Company was one of the first companies in Germany to place a sustainability-oriented hybrid note at the beginning of 2021. The redemption amount of the note is linked to the Company’s sustainability performance as measured by ISS ESG and MSCI ESG Research ratings.

Another criterion for the assessment of Vossloh’s sustainability performance is certification in accordance with internationally recognized norms and standards. The great majority of Vossloh units have certifications in at least one of the international quality, environmental, energy efficiency or occupational health and safety standards such as ISO 9001, ISO 14001, ISO 50001, ISO 45001 or its predecessor standard OHSAS 18001, or a comparable national standard, and have corresponding management systems in place. As in the previous year, 98 percent of the Vossloh workforce was employed at a unit bearing this certification as of December 31, 2021.

As part of the review of its Group-wide sustainability strategy in 2021, Vossloh conducted a materiality analysis to identify key sustainability topics. To this end, a total of 38 potentially relevant sustainability topics were divided into seven areas of action. As part of the materiality analysis, 198 representative stakeholders were surveyed, including 53 external participants. First, this survey asked stakeholders about what they expect from Vossloh regarding nonfinancial issues. They also assessed the relevance for Vossloh based on (i) the influence of Vossloh’s activities on these focus areas and (ii) the impact on the Company’s future business development. The ranking and prioritization of the sustainability topics were determined by linking stakeholders’ expectations to the relevance for Vossloh in each focus area. The result was subjected to a critical review by the Group Sustainability Committee and the Executive Board, including the management perspective, activities already underway, and Vossloh’s strategic alignment. Vossloh now reports on 23 material nonfinancial issues.

In addition it is reported on how the Group implements the ten principles of the UN Global Compact.

The nonfinancial statement covers Vossloh’s global activities; the companies considered correspond to the scope of consolidation of the consolidated financial statements (see “Consolidation” section, page 120 et seq). The management report contains supplementary and/or more detailed information regarding a number of the nonfinancial issues, and these are cross-referenced accordingly. The Company’s risk reporting covers all major risks associated with Vossloh’s business activities. It also includes the major nonfinancial risks to which Vossloh may be exposed (see “Nonfinancial risks and opportunities” section on page 71).

At the end of 2021 and based on the materiality analysis conducted and the 23 topics identified as significant, Vossloh pinpointed seven key focus areas for the further sustainability efforts. These key focus areas were each assigned concrete sustainability goals. At the same time, Vossloh launched a Group-wide sustainability initiative for each goal in order to achieve the fixed company objectives.

Vossloh’s seven sustainability goals are:

Key performance indicators are defined for all of the above goals, which can be used to measure the degree to which they have been achieved. The materiality analysis and the selection of key focus areas are reviewed annually and added to as necessary.

In addition to these focus areas and goals, which apply to the entire Group, there is a wide range of other sustainability initiatives being implemented in the various business units and at the Group’s sites. Company-wide, a total of 40 sustainability initiatives had been rolled out by the end of 2021 at Vossloh. In the future, a Group-wide register will ensure an overview of all initiatives and the corresponding performance measurement.