Corporate Responsibility at Sonova

CR program

As a leading hearing care company, Sonova has both a duty to conduct business in a responsible manner, along its whole supply chain, and an ability to make a positive impact on society. Our integrated Corporate Responsibility (CR) program closely aligns with our long-term business strategy and objectives and is endorsed at every level of the company.

Vision, values, and culture

Sonova’s vision is straightforward and motivates all our activities: We envision a world where everyone enjoys the delight of hearing and therefore lives a life without limitations.

Our shared core values drive our daily actions and reflect the corporate culture that defines and unites us as a company across all brands and regions. In 2019/20, we completed a broad-based internal effort, including focus groups and the HearMe employee survey, synthesizing the five core values that guide all we do. We see these values as combining clear statements of the principles by which we have always worked in the past with the aspirations we all share for a transformative future.

We care: We care for our employees, customers and consumers, as well as our shareholders and society.
We drive innovation: We courageously pioneer new ideas and approaches to come up with impactful innovations, to delight customers and consumers.
We strive for excellence: We act with agility. We aim to excel. We are continuously working on improving products, services, processes and skills, to realize growth.
We take accountability: We deliver on our commitments. We take accountability to provide outcomes in agreed quality and time, always acting with integrity.
We build the best team: We team up. We grow talent. We collaborate with people of diverse backgrounds to win with the best team in the marketplace.

Our commitment to act responsibly and create long-term value for all our stakeholders is embodied in the Sonova Group Code of Conduct and deeply rooted in our corporate vision, values, and culture. These are a fundamental and integrated element of our CR program, which is our guiding framework for CR management and reporting at Sonova.

Material topics

Materiality assessment

Sonova regularly assesses expectations of its key stakeholders, as well as the environmental, social, and governance (ESG) topics that present the greatest risks and opportunities. This materiality assessment plays an important role in strengthening the integration of CR with our core business. In the 2019/20 financial year, we conducted an updated materiality assessment to identify and prioritize the most material ESG topics and further improve our global CR program.

Sonova drew on a number of sources to compile a broad initial list of ESG topics that could be considered relevant to the organization’s impact, or could be influential in its stakeholders’ views and decisions. Our sources included global frameworks and standards, such as the Global Reporting Initiative (GRI) Standards, the Sustainability Accounting Standard Board (SASB) industry standards or the UN Sustainable Development Goals (SDGs), peer reviews, public media, investor and ESG analyst feedback, customer and employee surveys, industry reports, stakeholder interviews, as well as existing and upcoming international, governmental, and industry regulations, standards, and agreements. We reviewed the results and consolidated the most important topics into a list of 21.

These 21 topics were ranked by key internal and external stakeholders on the basis of personal interviews and online surveys in three dimensions: relevance of the topic to the stakeholder, significance of Sonova’s impact on the topic, and strategic relevance to Sonova. To determine the stakeholder relevance and influence of each topic on stakeholder expectations and decisions, we identified internal and external representatives of our key stakeholder groups who then assessed the relevance of each topic. When selecting the representatives, we took into account a balanced representation of the different geographical regions and Sonova businesses. The significance of Sonova’s impact for each topic was assessed by external experts with relevant experience in the respective fields. The strategic relevance of each topic was assessed in individual internal interviews including the Group CEO, the Vice President Corporate Strategy, and the Head of Internal Audit & Risk.

The result of the 2019/20 materiality assessment is shown in the materiality matrix below. Our analysis identified eight focus topics, which we prioritize when evaluating our activities and identifying measures to further improve our performance. We will use the insights of the materiality assessment to prompt further discussions identifying risks and opportunities with key internal and external stakeholders, and to align our activities ever more closely with our business strategy and expectations of key stakeholders.

COVID-19
The materiality assessment update for 2019/20 was finalized before the global spread of the COVID-19 pandemic. We decided not to adjust the analysis and matrix retrospectively for the 2019/20 reporting year, also because the Sonova strategy overall remains valid. In 2020/21, however, we will fully assess the impact of COVID-19 on our materiality matrix, along with the ESG topics that have become progressively more important during the crisis, such as occupational health and safety, access to hearing care, and the responsible supply chain.

CR focus areas

We further consolidated the ESG topics identified in the materiality assessment into five focus areas: access to hearing care; responsible products and services; ethics, risk and compliance; investment in people; and safeguarding the environment. This Corporate Responsibility Report is therefore organized according to these five areas. The connections between the detailed topics from the materiality matrix and the five consolidated focus areas are outlined below:

Access to hearing care: Access to hearing care
Investment in people: Talent development, diversity and inclusion, occupational health and safety, employee wellbeing, responsible reorganizations
Responsible products and services: Product quality, safety and reliability, data privacy and digital ethics, ethical marketing and sales practices, animal welfare
Ethics, risk and compliance: Business ethics and legal compliance, responsible supply chain, human rights and labor practices, corporate governance, taxes, public policy
Safeguarding the environment: Eco-friendly products, energy and climate, waste, water, biodiversity

Topic boundaries

The CR program is defined by its relevance to the whole Sonova Group and therefore all defined topics are assumed to be material to all or nearly all of the entities covered by this report. Sonova assigns the impacts of each material ESG topic to its appropriate stage or stages of the value-creation process, from raw material supply to after-sales refurbishing or recycling. Impacts which occur partly or primarily outside the organization relate either to upstream activities (topics: responsible supply chain, human rights and labor practices, energy and climate) or to downstream activities, such as the utilization of our products and services (e.g. access to hearing care, product quality, safety and reliability, data privacy and digital ethics, ethical marketing and sales practices, eco-friendly products).

Validation

The CR program aligns closely with our long-term business strategy as well as the United Nations Sustainable Development Goals (SDGs) and is reviewed regularly both at the highest management level and at meetings of the Board of Directors. Both the Management Board and the Board of Directors assess the CR program’s completeness and effectiveness, based on the annual reporting and ad-hoc updates on specific initiatives.

Management approach and performance

Sonova has defined key CR targets for each CR focus area and related material topics. The table below outlines the progress we have made towards achieving our 2022/23 targets.


Priority goals/KPIs	Related SDGs	CR focus areas	Targets (target year)	2019/20 performance
Increase unit sales of hearing instruments (HI) and cochlear implants (CI) in low- and middle-income countries by 50% by 2022/23.	3, 4	Access to hearing care	HI: 50% CI: 50% vs. base year 2018/19 (target year 2022/23)	HI: 1% CI: 2% vs. base year 2018/19
Achieve the employee engagement rate level of high performing companies by 2022/23.	5, 8	Investment in people	level of high performing companies (target year 2022/23)	4% gap to high performing companies (Sonova 83% engagement)
Improve product reliability rate >20% year-over-year for hearing instruments (HI) and cochlear implants (CI). 1	3, 9	Responsible products and services	HI: >20% (each year) CI: >20% (each year)	HI: 4% CI: 27% vs. previous year 2018/19
Achieve annual on-time mandatory employee Global Compliance training completion rate of >95%.	8, 16	Ethics, risk and compliance	>95% (each year)	95.3%
Reduce greenhouse gas emissions relative to revenue by 50% compared to 2017 by 2022.	6, 7, 9, 12, 13	Safeguarding the environment	-50% vs. base year 2017 (target year 2022)	-21% vs. base year 2017

1 The HI product reliability rate includes Receiver-In-Canal (RIC), Custom In-The-Ear (ITE) and Behind-The-Ear (BTE) hearing instruments. The CI product reliability includes Naìda pediatric sound processors.

Access to hearing care

Sonova is committed to increase access to hearing care by expanding its presence in underserved markets: offering a broad product portfolio with a wide range of performance and pricing levels, creating customized solutions, leveraging digital technologies, expanding our global distribution network, enhancing remote access, investing in partnerships, promoting training and education of hearing care professionals, and supporting the charitable Hear the World Foundation with funding, expertise, and hearing solutions. Our efforts to increase access to hearing care and improve the quality of life for millions of people with hearing loss closely aligns with SDG 3 (good health and well-being) and SDG 4 (quality education).

We have set the priority target of a 50% increase in unit sales of both hearing aids and cochlear implants in low- and middle-income countries by 2022/23. In the 2019/20 financial year, unit sales for hearing aids in low- and middle-income countries increased by 1% and cochlear implants by 2%. One of the main reasons for the low growth rates is the impact of COVID-19 starting in February 2020 in key markets such as China. The global health and economic crisis resulting from the COVID-19 pandemic severely affected the hearing care market and with it our business activities. We expect to see a significant impact on unit sales during the crisis but remain confident that demand will rebound thereafter. You can read more about our management approach and performance in this CR focus area in 2019/20 in the corresponding sections of this CR Report: Access to hearing care.

Investment in people

Sonova strives to be a responsible employer: We value diversity as an important key to our success, support the development of our employees, and offer a flexible and inclusive work environment. Our approach includes developing our employees to higher levels of success with a systematic talent management process, including a strategic approach to training, succession, and career planning, along with fostering employee engagement through a holistic Diversity and Inclusion strategy and other initiatives, such as the group-wide Body & Mind initiative. Through these efforts we contribute to SDGs 5 (gender equality) and 8 (decent work and economic growth).

We have set the priority target to achieve an employee engagement rate equivalent to that of high performing companies by 2022/23. The results of our 2019/20 HearMe employee engagement survey – now in its second year – showed that 83% of respondents feel engaged through their work here at Sonova. This means that we are currently four percentage points below the benchmark level of high performing companies (87%), which we plan to achieve by 2022/23. Initiatives inspired by HearMe results are being implemented, aiming to release untapped potential, identify key drivers of employee engagement, encourage effective leadership at all levels, and thus stimulate professional growth and business success. You can read more about our management approach and performance in this CR focus area in 2019/20 in the corresponding sections of this CR Report: Investment in people.

Responsible products and services

We offer our customers and consumers innovative technology, high quality products, and expert audiological care, and strictly adhere to health and safety standards. Our approach includes strict enforcement of standards relating to product quality, safety, and reliability; ensuring data privacy and IT security; adhering to strictly ethical marketing practices; and limiting animal testing required by regulatory authorities as far as possible. These efforts are in line with SDG 3 (good health and well-being) and SDG 9 (industry, innovation and infrastructure).

Sonova has set the priority target to improve is product reliability rate by more than 20% year-over-year for both hearing instruments (HI) and cochlear implants (CI). In 2019/20, we improved the HI reliability rate by 4% and the CI reliability rate by 27%. We are working towards achieving the target next year for both HI and CI. Measures have already been initiated, such as the redesign of product components, continuous quality improvements, training and awareness raising activities, and specific root cause analysis related to product returns. You can read more about our management approach and performance in this CR focus area in 2019/20 in the corresponding sections of this CR Report: Responsible products and services.

Ethics, risk and compliance

At Sonova, we lead with ethical behavior and integrity, take accountability for our daily actions and conduct our business activities in line with the high standards we have set for our company. Our approach includes conducting business and 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); strengthening the Group Compliance program; respecting and supporting human rights; fostering responsible supply chain management; striving for good corporate governance; and ensuring tax compliance. We thereby positively influence SDGs 8 (decent work and economic growth) and 16 (peace, justice and strong institutions).

We introduced a new Group target of >95% on-time completion for employee annual mandatory Global Compliance training. The annual mandatory Global Compliance training is rolled out to all Sonova employees worldwide, including part-time employees. The training focuses on the content of the Code of Conduct and how to identify and report potential violations, such as conflict of interest, harassment, fraud, discrimination, corruption or breach of secrecy. In 2019/20, we achieved a training completion rate of 95.3%. You can read more about our management approach and performance in this CR focus area in 2019/20 in the corresponding sections of this CR Report: Ethics, risk and compliance.

Safeguarding the environment

Sonova strives to make efficient use of natural resources and minimize the environmental impact of our activities, products, and services over their life cycle. Our approach to achieve this includes improving operational energy efficiency (e.g. fully utilizing capacity, renewing equipment, remodeling existing buildings, moving to new buildings); increasing the use of renewable energy; continuously improving environmental management systems at our own operations; and urging our suppliers to follow the same standard. This contributes to several SDGs related to the environment (6, 7, 9, 12, 13).

To reduce our environmental impact, Sonova aims to achieve by 2022 a 50% reduction of greenhouse gas (GHG) emissions in relation to revenues compared to the base year of 2017. In 2019, we further reduced GHG emissions intensity by around 11% from 16.4 to 14.7 metric tons of CO₂ equivalents (t CO₂eq) per million CHF revenues, compared to 2018. This results in a total reduction of GHG emissions intensity by around 21% compared to 2017 levels, keeping us well on track to achieve our 2022 target. You can read more about our management approach and performance in this CR focus area during 2019/20 in the corresponding sections of this CR Report: Safeguarding the environment.