Corporate Responsibility at Sonova

IntACT – Sonova's ESG Strategy

At Sonova, it has always been our mission to have a positive effect on our consumers’ lives. We aspire just as much to have a positive effect on society as a whole. The pandemic has simply confirmed the importance of making environmental, social, and governance (ESG) principles integral to the way we do business.

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.

  • 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 ESG strategy, which is our guiding framework for ESG management and reporting at Sonova.

IntACT – Sonova's ESG Strategy

Sonova has long been committed to continuous improvement in its environmental, social, and governance responsibilities. We are further embedding our ESG commitments across all dimensions of the business and aim to track and optimize our ESG performance with the same intensity as we do our key financial indicators. As part of this effort, we have launched IntACT, an upgrade to our ESG strategy that builds on four key areas: serving society, advancing our people, acting with integrity, and protecting the planet.

  • Serving society: We constantly innovate in hearing health care, improve access for people in under-served areas, and engage actively with our communities.
  • Advancing our people: We foster our employees’ development, well-being and engagement in an inclusive work environment that embraces diversity.
  • Acting with integrity: We behave ethically and apply the highest quality and safety standards to everything we do.
  • Protecting the planet: We drive the transition to a resource-efficient and low-carbon future of our operations throughout the lifecycle of our products and services.

In 2020/21, we have also introduced an additional range of measurable ESG targets with firm dates for achievement. These targets are shown in the table below, together with existing commitments in key ESG topics that we made in previous years, such as increasing employee engagement, improving product reliability rate, and increasing units of hearing aids sold in low- and middle-income countries.

Sonova IntACT elevated ESG commitments

 

 

 

 

 

 

 

ESG topics

 

ESG commitments

 

New/existing

 

Related SDGs

Serving society

 

 

 

 

 

 

Access to hearing care

 

We increase unit sales of hearing instruments in low- and middle-income countries by 50% vs. 2018/19 by 2023/24.1

 

adjusted

 

3, 4

Access to hearing care

 

We train and certify 250 hearing care professionals (HCPs) in low- and middle-income countries through the Swiss International Hearing Academy (SIHA) 12-month HCP program by 2022.

 

new

 

3, 4

Access to hearing care

 

We increase lives impacted by the Hear the World Foundation (HTWF) by 10% year-over-year – focusing on children with hearing loss in low- and middle-income countries.

 

new

 

3, 4

Advancing our people

 

 

 

 

 

 

Talent & employee engagement

 

We achieve the employee engagement rate level of high performing companies by 2022.

 

existing

 

5, 8

Talent & employee engagement

 

We aim for >95% of employees to have a development plan by 2022.2

 

new

 

8

Diversity & inclusion

 

We strive for 40% women in key positions by 2025.

 

new

 

5

Diversity & inclusion

 

We train >95% of employees on D&I by mid 2021.

 

new

 

5

Acting with integrity

 

 

 

 

 

 

Product quality, safety and reliability

 

We improve the product reliability rate >20% year-over-year for hearing instruments (HI) and cochlear implants (CI).3

 

existing

 

3, 9

Human rights & labor practices

 

We implement human rights due diligence (HRDD) aligned with international frameworks and train all relevant employees by 2022.

 

new

 

8, 16

Business ethics & legal compliance

 

We achieve annual on-time mandatory employee Global Compliance training completion rate of >98%.4

 

adjusted

 

8, 16

Data privacy & digital ethics

 

We establish a digital ethics committee by 2021.

 

new

 

8, 9, 16

Protecting the planet

 

 

 

 

 

 

Energy & climate

 

We reduce greenhouse gas emissions relative to revenue by 50% compared to 2017 by 2022.5

 

existing

 

7, 9, 12, 13

Energy & climate

 

We achieve carbon-neutral operations by 2021.

 

new

 

7, 9, 12, 13

Energy & climate

 

We assess the potential effects of climate change on Sonova and define actions to improve our climate resilience by 2021.

 

new

 

13

Eco-friendly products

 

We reduce packaging waste by 20% vs. 2020 by 2023.

 

new

 

12, 13

1In 2020/21, the target date for achieving the 50% increase was adjusted by one year from 2022/23 to 2023/24 due to COVID-19 impact on the hearing care market.

2Excluding job roles in production/assembly.

3The 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.

4The target was adjusted in 2020/21 from >95% to >98%.

5Scope 1&2 + air-travel related Scope 3 emissions.

ESG Governance

Sonova has established an ESG Council to oversee and further develop the Group’s ESG strategy, including its commitments and targets. The Council also monitors progress on key performance indicators and initiatives. It meets at least quarterly and consists of the Group CEO, selected members of the Management Board, the Group General Counsel & Compliance Officer, and the Corporate Responsibility team. Progress on ESG targets is also regularly reviewed by the full Management Board and are an element of each member’s variable compensation. The Board of Directors approves the ESG strategy, initiatives, and targets and receives progress updates on at least a yearly basis.

Good governance is supported by a regular dialogue on ESG topics with proxy advisors, investors, and rating agencies, and by Sonova’s continuous and active risk management and compliance functions.

Sonova’s Corporate Responsibility team provides expertise and advice to the Management Board on relevant ESG topics and drives the implementation of the ESG strategy and group-wide initiatives in close collaboration with internal experts. These are functional experts linked to Group-wide business functions as well as country or regional experts, representing Sonova Group companies within a given territory and driving ESG initiatives locally.

Material ESG 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. The last materiality assessment and update of the Sonova materiality matrix was conducted in 2019/20. For this, 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 Standards 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 materiality assessment is visualized in the materiality matrix. 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.

We acknowledge that the COVID-19 pandemic put more emphasis on selected ESG topics, such as occupational health and safety, access to hearing care, human rights and labor practices, and responsible supply chain management. Since the overall prioritization of the ESG topics in Sonova’s materiality matrix remains valid, we decided not to modify it in 2020/21. The next adjustments are planned as part of the next regular major review of our materiality assessment.

Consolidation

We further consolidated the ESG topics identified in the materiality assessment into four strategic areas of Sonova IntACT, our enhanced ESG strategy. This Corporate Responsibility Report is therefore organized according to these four strategic areas. The connections between the detailed topics from the materiality matrix and the consolidated strategic areas are outlined below:

  • Serving society: Access to hearing care.
  • Advancing our people: Talent development, diversity and inclusion, occupational health and safety, employee wellbeing, responsible reorganizations.
  • Acting with integrity: Product quality, safety and reliability, responsible supply chain, human rights and labor practices, business ethics and legal compliance, data privacy and digital ethics, corporate governance, ethical marketing and sales practices, taxes, public policy, animal welfare.
  • Protecting the planet: Energy and climate, eco-friendly products, waste, water, biodiversity.

Topic boundaries

The Sonova ESG Strategy is defined by its relevance to the whole Sonova Group. All defined topics are therefore 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 ESG strategy 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 ESG strategy’s completeness and effectiveness, based both on annual reporting and on ad-hoc updates about specific initiatives.

Management approach and performance

Below is an overview of selected key 2022/23 ESG targets defined in previous years and the progress we have made towards achieving our targets.

 

 

 

 

 

 

 

 

 

 

 

Priority goals/KPIs

 

Related SDGs

 

Strategic areas

 

Targets (target year)

 

2020/21 performance

 

2019/20 performance

Increase unit sales of hearing instruments in low- and middle-income countries by 50% vs. 2018/19 by 2023/24.1

 

3, 4

 

Serving society

 

50% vs. base year 2018/19 (target year 2023/24)

 

0.4% vs. base year 2018/19

 

1.1% vs. base year 2018/19

Achieve the employee engagement rate level of high performing companies by 2022/23.

 

5, 8

 

Advancing our people

 

level of high performing companies (target year 2022/23)

 

4% gap to high performing companies (Sonova 83% engagement)

 

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).2

 

3, 9

 

Acting with integrity

 

HI: >20% (each year) CI: >20% (each year)

 

HI: 21% CI: 32% vs. previous year 2019/20

 

HI: 4% CI: 27% vs. previous year 2018/19

Achieve annual on-time mandatory employee Global Compliance training completion rate of >98%.3

 

8, 16

 

Acting with integrity

 

>98% (each year)

 

95.9%

 

95.3%

Reduce greenhouse gas emissions relative to revenue by 50% compared to 2017 by 2022.4

 

7, 9, 12, 13

 

Protecting our planet

 

-50% vs. base year 2017 (target year 2022)

 

-39% vs. base year 2017

 

-21% vs. base year 2017

1In 2020/21, the target date for achieving the 50% increase was adjusted by one year from 2022/23 to 2023/24 due to COVID-19 impact on the hearing care market.

2The 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.

3The target was adjusted in 2020/21 from >95% to >98%.

4Scope 1&2 + air-travel related Scope 3 emissions.

More information on all Sonova’s material ESG topics is available in the corresponding sections of this CR Report:

Each describes the relevant management approach and its components (e.g. processes, policies, resources, commitments, goals and targets, specific actions, programs or initiatives), along with the evaluation of the effectiveness of the management approach (e.g. internal/external audits, key performance indicators, progress in implementation of specific actions), as well as its contributions to the contributions to the SDGs.