Sonova ESG Report 2022/23

Message from the CEO

Dear readers,

Sonovaʼs long-standing commitment to good environmental, social, and governance (ESG) practice is based on straightforward logic: we are convinced that verifiable improvement in sustainability performance is the right thing to do based on our values, and that it is also an essential contributor to long-term market success. An uncertain global environment – one that includes climate change, talent scarcity, public health risks, macroeconomic instability, and geopolitical conflict – makes it even more important to accelerate our actions in this regard. Sustainable practice sustains our business as well as customer and employee engagement.

Through our businesses, we make a positive impact on the quality of life of millions of people every day, enabling them to enjoy the delight of hearing using our innovative solutions. We aspire just as much to have a positive effect on our employees, society in general, and the environment. Our IntACT ESG strategy, launched two years ago, puts this aspiration into specific targets and concrete actions. Throughout the 2022/23 financial year, we have made good progress in further implementing this strategy.

Progress on Sonovaʼs IntACT ESG strategy

On the environmental side we have further reduced our global carbon footprint. Including our Consumer Hearing business and Alpaca for all years, we have been cutting our greenhouse gas emissions by 22% across our value chain since 2019. We are also carbon neutral in our own production facilities and 100% of our electricity consumption now comes from renewable sources. In 2022/23, we established ambitious climate targets that commit us to reducing greenhouse gas emissions across our value chain in line with the standards set by the Science Based Targets initiative (SBTi). These targets, currently in validation by SBTi, commit us to significantly reduce our scope 1-3 emissions, while continuing to grow our business substantially.

In the midst of difficult global circumstances, we were proud to be able to maintain consistently high levels of employee engagement, including a stable 82% employee engagement rate in the last financial year. We are also happy to report that 97% of non-production or assembly employees now have a personal development plan – overachieving our 2022/23 target. Employee health and wellbeing remains a key priority for us: we launched a global wellbeing framework and program that puts particular focus on mental health, including the training of around 200 leaders in the first year on how to recognize and address early signs of mental challenges.

We have long been determined to improve local hearing care access by helping to train hearing care professionals (HCPs) to the highest international standards. Our Swiss International Hearing Academy (SIHA) offers a pioneering blended-learning program in audiology for aspiring HCPs worldwide, making training viable in countries where vocational education facilities are limited or non-existent. We overachieved our target to train and certify 250 HCPs in low- and middle-income countries through the SIHA program by 2022/23: 270 HCPs were certified over the past two years, and over 250 additional people were actively enrolled in the program at the end of this financial year.

Message from the CEO

We continued implementing our human rights due diligence framework, created in alignment with international standards such as the United Nations Guiding Principles on Business and Human Rights. We launched a Human Rights Policy, conducted our second human rights risk assessment, and kicked off further on-site assessments to evaluate our actual human rights impacts. We also launched a tool to assess sustainability risks for our suppliers and engage with them to improve their own practices.

Ambitious ESG targets

Our ESG targets are ambitious, and we have not achieved all of them. Although we initiated a program to reduce the environmental footprint of our packaging, our overall absolute weight of packaging increased in 2022/23, mostly due to strong business growth; we are therefore unlikely to reach our target of a 20% reduction in packaging by the end of the 2023/24 financial year. On the social side, we increased the share of women in key positions over the past two years to 34.5%, getting us closer to our ambitious target of 40%. However, a challenging talent hiring market has slowed progress. We will also continue to intensify our strong focus on advancing product reliability in our hearing instruments to achieve our target of a 20% year-on-year improvement. We set ambitious targets as a spur to immediate and sustained action; not achieving some of them is, for us, a further incentive to strengthen our execution and continue to strive for significant progress.

External recognition and transparent ESG reporting

Major sustainability indices and rating agencies confirm Sonovaʼs strong ESG performance: the 2022 Dow Jones Sustainability Index ranked Sonova second out of 268 companies in the healthcare equipment and supplies industry. The disclosure ratings agency CDP gave us a grade of A- and put us in the top 12% in the medical equipment and supplies industry – ranking us among the leaders for climate action and for transparency in reporting. Sonova strives to apply the same rigor and intensity to the improvement, measurement, analysis, and reporting of our ESG performance indicators as we apply to our financial ones. ESG objectives remain part of the variable cash compensation of each member of the Management Board.

As part of our commitment to transparent stakeholder dialogue, we have been publishing this dedicated ESG Report for over ten years. Its form and content are guided by international reporting frameworks, including GRI, SASB, and TCFD. Sonova has been a signatory of the UN Global Compact since 2016, and we fully endorse its ten principles governing human rights, labor, environment, and anti-corruption.

There is still a lot of work to be done. Together with more than 17,000 colleagues all over the world, we will continue to strive for improvement, driving impactful actions for our society and our planet.

Arnd Kaldowski
Chief Executive Officer