Ethics & integrity

Values and principles

Our shared core values – innovation, engagement, and responsibility – shape the corporate culture that defines and unites us as a company across all brands and regions.

Our reputation for ethical behavior and integrity is one of our most valuable assets. It is the result of our daily actions and an integral part of our endeavor to create sustainable value and success.

Sonova’s commitment to compliance promotes ethical conduct at all levels of the organization. Compliance means that we follow the laws of each country in which we operate while also abiding by our own Code of Conduct and internal regulations.

Code of Conduct and internal regulations

Sonova’s Code of Conduct defines general principles for ethical behavior; it applies to all employees of the Sonova Group, its subsidiaries, and any contractors or vendors performing work for the Sonova Group or any of its subsidiaries. The Code of Conduct is available in 15 languages.

The entire workforce was trained on the Sonova Code of Conduct when it came into force; all new employees are trained on its principles as part of their initial orientation. Sonova’s internal audit function performs independent performance assessments on ethical standards and reports these to the Audit Committee.

The principles of the Code of Conduct are further refined in various internal guidelines and policies, including – but not limited to – anti-bribery, interaction with healthcare professionals, competition law, trade compliance, and Swiss Stock Exchange reporting obligations. Non-compliance with the company’s Code of Conduct or Sonova’s internal policies and guidelines triggers disciplinary action, including – where appropriate – dismissal and prosecution.

Human rights and labor standards

Sonova supports and respect human rights as an integral part of our business. This commitment is reflected in our Code of Conduct and Group Supplier Principles (SGSP) and embedded throughout the company. We believe in treating everyone with respect and fairness at all times. We value the varied experience of diverse individuals from around the world. We are committed to conducting business in accordance with, and to aligning our codes and principles according to internationally recognized standards of the United Nations (UN), the International Labor Organization (ILO), and the Organization for Economic Cooperation and Development (OECD). As a sign of this commitment, Sonova became a signatory to the UN Global Compact in 2016, endorsing its ten principles in the areas of human rights, labor, the environment, and anti-corruption. All employees of the Sonova Group, as well as its business partners, are expected to comply with these principles.

Human rights as understood by the Sonova Group include the following principles:

Sonova operates within a highly integrated business model: all manufacturing centers are owned by Sonova Holding AG. Thanks to its ownership and financial control over its manufacturing sites, Sonova is able to enforce strong ethical business practices even in countries with higher risk of human rights concerns. Sonova’s local management teams and the corporate procurement team are permanently on the alert to prevent any breaches of such human rights principles as nondiscrimination, child and forced labor, or freedom of association and collective bargaining.

In the 2017/18 financial year, no concerns were raised relating to human rights violations. Sonova’s internal audits and supplier assessments found no operations or supplier businesses in which the right to exercise freedom of association and collective bargaining may have been violated or put at significant risk. No operations or suppliers were identified as posing a significant risk for incidents of child labor, forced labor, or illegal labor.

Anti-corruption

Sonova is committed to high standards of integrity in dealing with its business partners and to compliance with all applicable anti-bribery laws, including the Swiss Criminal Code, the UK Bribery Act, and the US Foreign Corrupt Practices Act. Sonova’s Anti-Bribery Policy refines the rules of the Code of Conduct and prohibits all forms of corruption. The Policy, like the Code of Conduct, is available in 15 languages.

As a global healthcare company, we also recognize that many countries have specific regulations governing interactions with healthcare professionals. These impose further obligations which the company has translated into country-specific guidelines detailing what is permissible and what is not.

As a general rule, Sonova does not make donations to political parties. Sonova, its employees, and representatives may make contributions to support charitable causes, subject to appropriate due diligence (including the amount contributed, and the nature and purpose of the charity’s activities). Contributions should be made for bona fide purposes and only where permitted by local law.

The Anti-Bribery Policy has been communicated to all governance body members and employees worldwide. The Sonova Group Supplier Principles cover ethical standards such as compliance with all laws and regulations on bribery, corruption, and prohibited business practices. These have been communicated to all our suppliers (see Continuous supplier management).

As a matter of principle, Sonova avoids dealing with third parties known or reasonably expected to be paying bribes. Potential bribery/ corruption risks are therefore an integral component of our business partner due diligence, which is performed not only before entering a business relationship but also regularly thereafter, following a pre-defined process.

During the 2017/18 financial year, Sonova continued to strengthen the Group compliance program, with a particular focus on the integration of our acquired businesses into our compliance culture, training sessions and process enhancements in ethics and anti-bribery compliance. Our continuing compliance efforts help us live our values of ethical behavior and unquestionable integrity. No fines or non-monetary sanctions for non-compliance with laws and regulations were levied against the company in the 2017/18 financial year.

Anti-competitive behavior

Sonova’s Competition Law Policy provides the basic principles of fair competition in doing business. The existing Policy was updated in 2016/17 and rolled out globally to further strengthen employee awareness of competition law matters.

In the 2017/18 financial year, Sonova neither initiated nor defended against legal actions regarding, anti-competitive behavior or violations of anti-trust and monopoly legislation.

Responsible marketing

We adhere to strict ethical sales and marketing practices in all our businesses and have established world-wide guidelines containing principles regarding responsible marketing for our group companies to ensure that all our interaction with customers and marketing materials provide truthful, accurate, balanced and non-misleading information and to prevent inappropriate practices or false claims. These guidelines are further supported by the worldwide Sonova Group Code of Conduct and the Anti-Bribery Policy, which also includes detailed information on interactions with health care professionals (HCPs). Furthermore, we have implemented refined country-specific marketing and sales practices codes in group companies in markets with relevance for Sonova.

Compliance program

Compliance is a shared responsibility at Sonova. Ultimate responsibility and oversight lie with the Board of Directors. The Management Board is expected to lead by example. Local Compliance Champions ensure implementation of the group compliance program within each group company.

During the 2017/18 financial year, Sonova continued to strengthen the Group compliance program, with a particular focus on the integration of our acquired businesses into our compliance culture, training sessions and process enhancements in ethics and anti-bribery compliance. Our continuing compliance efforts help us live our values of ethical behavior and unquestionable integrity. No fines or non-monetary sanctions for non-compliance with laws and regulations were levied against the company in the 2017/18 financial year.

Internal grievance procedures

Sonova maintains an internal compliance helpdesk for general questions and advice regarding Sonova Group policies. We also maintain a compliance hotline. This is operated by an independent, qualified service partner and allows employees to raise concerns anonymously and is available to internal and external stakeholders. All reports to the compliance hotline are forwarded to designated functions in the Sonova Group and followed up in a timely manner for further investigation and clarification. The Audit Committee is updated quarterly on any concerns received through the hotline and the measures taken.

Requirements for conflict resolutions and e.g. the use of independent arbitration is defined on a case by case basis.

Data privacy

Sonova protects confidentiality and integrity of data, including the data of employees and customers, by technical and organizational means. We adhere to applicable data protection regulations. We closely monitor developments in data protection law and incorporate its principles into our business processes and product design. We continue working on our data protection program to meet the changing demands of the digital environment.

Continuous supplier management

Our suppliers are an integral part of our international value chain: a risk to them is also a risk to our company and our customers. Sonova requires that all our suppliers be as committed to sustainable development as we are. Sonova’s Group Supplier Principles (SGSP) are based on a range of international standards, customer requirements, and industry characteristics. These principles are non-negotiable; they are the first basis of contact with possible suppliers. Once a supplier has been approved as a Sonova partner, the SGSP is incorporated into all development and supply agreements. The SGSP requires suppliers to put in place and maintain systems that ensure:

In 2015 the Group Supplier Principles were revised and the updated version was published on the Sonova website. All existing suppliers were contacted to secure their agreement with the updated version of the principles and general conditions of purchase.

The procurement department actively participates in the process of design and definition of Sonova products, solutions, and services and makes sure from the early development stages that for all selected parts or components a risk assessment is done according to the “Risk and Risk Mitigation Matrix” defined by the procurement department. The main criteria for qualification of a critical supplier are derived from dependency (critical components, technology, sustainability, quality, regulatory) but other criteria, such as high volumes, are also considered.

Sonova assesses all new suppliers on their management systems, including their compliance and management procedures, as well as on environmental, human rights, and labor practices. Our personnel audit and/ or visit potential supplier sites and inspect their management capabilities – through employee interviews, document reviews, on-site inspections, and third-party information searches – to assess potential risks and identify opportunities for improvement. If deficiencies are found, we require the suppliers to take corrective and preventive actions before we begin any active business relationship. A candidate that fails to meet the requirements will not be accepted as a supplier.

Even after careful supplier selection, we maintain a continuous supplier management process. We annually assess supplier CSR risks and identify the risk level for each supplier. We manage our suppliers based on their risk level, regularly risk-auditing supplier sites. If a problem occurs, we require the suppliers to take preventive and corrective measures, and follow up on their progress until the issue is resolved.

Sonova strives for long-term collaborations and long-term contracts with their suppliers. In the 2017/18 financial year, 77% of the total purchase volume came from suppliers with more than 10 years of business relationship with Sonova and 94% of the total purchase volume came from suppliers with more than 5 years of partnership. Sonova also offers its suppliers financial support to buy necessary equipment and technology.

In the 2017/18 financial year, we had 10 critical suppliers; all of them have been certified or recertified by a notified body and therefore no need to audit them. They have all been visited within the last two years in a less formal manner than an audit, but the Group Supplier Principles were always an important topic during the visits. No significant actual or potential negative impacts related to environmental issues, labor practices, or human rights matters occurred in Sonova’s supply chain.

Taxes

Sonova is a Swiss-based multinational enterprise, with operations headquartered to the vast majority in the canton of Zurich where the Group develops, manufactures, and distributes products marketed under multiple brands. Sonova operates in more than 100 countries and owns local wholesale and retail distribution subsidiaries in over 30 countries. With this business structure, Sonova’s tax contribution encompasses various direct and indirect, corporate, and employee taxes, as well as customs duties, that make a significant contribution to societies around the world. Sonova’s tax approach is fully compliant with local law and regulations as well as in complete alignment with relevant international standards.

Sonova’s approach to taxes is based on the following principles:

a) Taxes follow the business: Sonova does not use off-shores structures, nor does the Group allocate functions or risks to international structures purely for tax reasons. Sonova avoids the acquisition of non-business related offshore structures. An important step during the integration process for newly acquired companies is to unwind acquired tax schemes and bring the tax structure of the new business fully in line with Sonova’s tax policy and BEPS principles.

b) Full compliance: All taxes fully comply with local laws, regulations and are aligned with internationally recognized standards such as the OECD guidelines. Sonova’s complex cross-border operations and supply chains are subject to yearly reviews using Sonova’s Transfer Pricing Documentation and multiple benchmarking analysis. Inter-company transactions are regularly monitored to ensure complete alignment with international standards and Sonova’s internal Transfer Pricing Policy.

c) Cooperation with tax authorities: Sonova highly values open and proactive cooperation with tax administrations worldwide for any kind of tax matter, irrespectively of the fact that Sonova has not entered Advanced Pricing Agreements (APAs). As part of our tax compliance policy, we continuously engage in constructive and transparent dialogue with tax authorities.

The responsibility for tax compliance lies with the Corporate Tax team, located in Switzerland, the US, and Germany. The team reports directly to the Group CFO. This function coordinates, educates, and supports local controllers in all Group companies to ensure that they achieve tax compliance in line with Sonova’s standards and policies. A Master Transfer Pricing file is prepared, along with local files that are coordinated with the local organizations according to the OECD guidelines and Sonova’s Transfer Pricing Policy. Sonova has been fully prepared since 2016 to implement external country-by-country reporting when this becomes mandatory for Swiss multinational enterprises.

Sonova’s commitment to tax transparency and responsibility is expressed in various policies in the field of direct and indirect taxes as well as transfer pricing, most of them for internal tax use only. A tax policy in line with the above-mentioned principles is in the process of being made publicly available on the Sonova website.

Bioethics

As a manufacturer of medical devices, Sonova is required by regulatory authorities to demonstrate the biological safety of any product with body contact by complying with the international standard ISO 10993-1:2009.

According to this standard, animal tests need to be considered in biological safety evaluations; in some cases, they cannot be completely avoided. However, we are committed to the “Three Rs” principle – replacement, reduction, and refinement – to limit such testing as far as possible:

Replacement

Reduction

Refinement