Sustainability progress report 2022 / 2023

We cultivate an open and friendly corporate culture, in which we treat each other fairly and offer mutual respect and support. Our employees see themselves as part of a large, international family and feel at home in the Vaillant Group. Many of them have been with the company for a long time and pass on their knowledge and experience to younger colleagues. This culture of partnership is supported by one of the Vaillant Group’s five strategic priorities, “We Make It Happen” (WMIH). It is an important prerequisite for the success of the other four strategic goals and a key driver in uniting our employees worldwide into a strong community that ensures that the Vaillant Group successfully implements its vision and goals. Core elements of WMIH are cross-functional collaboration and open communication so that we act as ONE team, and anchoring a customer-focused, innovative and results-oriented approach within the company.

Continuous learning is key in this day and age. New knowledge and skills are required to keep up with the ever-accelerating pace of change. That’s why we at the Vaillant Group use state-of-the-art methods to provide high-quality training worldwide. We support our employees in their targeted development: starting with vocational training, which 27 cooperative degree students and 35 trainees are currently taking part in across five apprenticeships and six cooperative study courses in Germany – in line with our motto: “The best skilled workers? Let’s do it ourselves!”. The company brings together job-specific qualifications and comprehensive measures to strengthen and develop interdisciplinary and social skills as well as professional skills under the umbrella of the Vaillant Group Academy. As a whole, we give our utmost to support the continuous learning of our employees and cross-departmental networking as best as possible. Our international transformation and the associated change in working environments is also supported by various functional academies. In this way, the respective employees gain the required knowledge in good time. This is not only proven by official accreditations such as the “Investors in People” Gold Award in the UK, but also by our employees themselves when they give the company good ratings on websites like Kununu or Glassdoor and in the regular employee survey “SENSOR”. The Vaillant Group was named a Kununu Top Company in 2023.

The development and retention of our talented employees are also close to our hearts. In addition to the global development opportunities for experts and managers, we have established a Group Talent Pool to support career planning and the targeted development of our top talents. The Group Talent Pool also helps them expand their network beyond their own function and country and increase their visibility within the Vaillant Group. In this way, we further train both our prospective and experienced managers and systematically prepare them for more complex tasks. Through targeted succession planning, this means we are often able to fill management positions from within our own ranks.

In 2021, we developed a comprehensive Diversity & Inclusion (D&I) strategy, which we have been implementing since 2022. It includes, among other things, methods to promote international exchange and cooperation, awareness-raising measures and targeted D&I activities with top management. Processes are also being reviewed and adapted accordingly: the recruitment training that all managers complete, for example, addresses the topic of unconscious bias.

The Vaillant Group attaches great importance to the safety and health of its employees. To this end, it maintains an effective occupational health and safety management system in which the active involvement and participation of employees plays an important role. Hazards are identified and assessed preventively in order to derive and implement the necessary protective measures. If an incident does occur, an accident analysis with appropriate measures to safeguard against the identified risk in the future is carried out as soon as possible. Learnings from accidents, as well as best practices from the various Vaillant Group sites, are systematically shared internationally. This is an example of effective knowledge management and makes an important contribution to our continuous improvement. At the production sites and our headquarters in Remscheid, the occupational health and safety management system is certified in accordance with ISO 45001.

Number of employees

The number of employees has risen steadily in recent years and stood at 17,132 as of 31 December 2022. We are an internationally oriented company that has sales companies in more than 20 countries and is active in over 60. This is also reflected in the cultural diversity of our employees. In 2022, we employed people from a total of 76 nations.

Accident rate

^{Total occupational accidents TIR}

The indicator for accidents at work is known as the total injury rate (TIR, accidents per 200,000 hours worked). The number of accidents at the company has been on the decline for years. In 2022, the value was 0.96. Our long-term aim is to reduce the number of work-related accidents to zero.

Recommendation rate and Employee Engagement Index

The “SENSOR” employee survey in 2021 showed that 84 per cent of employees would recommend the Vaillant Group as an employer. In the last survey in 2018, the value was 80 per cent. The target of the planned survey in 2024 is to increase the recommendation rate to at least 85 per cent.

Another indicator is the Employee Engagement Index, which measures the long-term loyalty of employees to their job / the Vaillant Group as an employer based on five criteria. These evaluate the motivation, pride and enthusiasm of employees at work. This figure was also 84 per cent in 2021.

Internal filling of management vacancies

Our aim is to fill about two-thirds of management positions from within our own ranks. In 2022, it was possible to fill around 64 per cent of these positions internally on average.

The Vaillant Group develops energy-efficient and resource-saving products for heating, cooling and hot-water supply. In this way, we make an important contribution to the energy transition in the buildings sector. To this end, the Vaillant Group develops and produces future-oriented solutions, including heat pumps, solar thermal or photovoltaic systems, ventilation units for low-energy buildings, split air-conditioning units and hybrid systems. This portfolio is complemented by digital service offerings that enable contactless remote monitoring and diagnostics as well as energy management of the devices.

In the field of heating technology, the Vaillant Group is increasingly putting its faith in heat pump systems, which cover around 75 per cent of its energy requirements with environmental heat. Heat pumps can be connected with photovoltaic modules and battery storage systems to form intelligent systems that can increase the share of renewable energies. The portfolio comprises heat pumps for all types of buildings, which can be used for both renovation and new constructions.

We are reducing the environmental footprint of our existing products on an ongoing basis. As of 2025, Vaillant plans to only launch heat pumps with the natural, environmentally friendly coolant R290 on the market. Back in 2019, Vaillant was one of the first manufacturers to introduce a heat pump based on this natural coolant. The greenhouse gas potential of R290 is significantly lower than that of conventional coolants. Nevertheless, R290 still allows high flow temperatures. As a result, these heat pumps can not only provide heating energy and hot water in new buildings, but also in older existing buildings with poorer insulation, and can thus support the decarbonisation of the buildings sector.

The Vaillant Group is driving forward its transformation into a leading manufacturer of heat pumps. This development has a positive impact on our carbon footprint, as the use phase of our products accounts for the largest share of the Vaillant Group’s Scope 3 CO₂ emissions. The establishment of a science-based climate target for Scope 3 greenhouse gas emissions underlines our ambitions to successfully help shape the heating transition in Europe. In terms of value creation, our aim is to reduce our Scope 3 emissions by 55 per cent by 2030.* The starting point is the base year 2019. This ambitious target has been validated by the SBTi and will thus support the international goal to limit global warming to a maximum of 1.5 degrees Celsius.

In order to allow sustainability criteria to be systematically observed from the very start of product development, we compiled the “6 Green Rules” in 2017, which are firmly anchored in our product development processes. These are criteria that set standards for the following product aspects: energy efficiency, durability, responsibility, service, handling and end of life. The consideration of these sustainability criteria must be documented in the development process.

We are driving forward the development of sustainable packaging concepts on the basis of our packaging strategy. Our goal is to save packaging material and avoid single-use plastics.

In order to promote the market ramp-up of heat pumps and drive the transformation in the heating sector, the Vaillant Group offers its installers a wide range of training courses. These include the customer journey, training, planning and installation as well as system support for heat pumps.

_{* The Vaillant Group has committed itself to reducing its Scope 3 emissions by 55 per cent from 2019 to 2030, based on one million euros of value creation.}

Efficient use of raw materials

It is important to the Vaillant Group to use materials efficiently. The proportion of offcuts and scrap metal in our production is demonstrably very low. At 95 per cent, the efficiency rate of the raw material used was at a very high level again in 2022.

As an internationally oriented family-owned company, social responsibility is a matter of course for us. Social sustainability aspects, such as acting responsibly within our sphere of influence and partnering with non-profit organisations, form a part of this.

Observing and strengthening human rights is a fundamental part of our corporate ethos. Our aim is to ensure respect for human rights within our company, work towards compliance across our global supply and value chains within our scope of influence, achieve transparency in respect of potential risks and take action wherever human rights have been breached. As a way of expressing our corporate responsibility, we drafted a declaration of principles to respect human rights, which was published in early 2020. The senior management team is responsible for the implementation of, and compliance with, the Vaillant Group human rights policy statement. All employees are obligated to incorporate the human rights policy statement within their day-to-day work and to observe it in their behaviour. In addition to standards for environmental protection, we have also enshrined respect for human rights in our Code of Conduct.

The aim of our Social Compliance Management System is to firmly establish human rights and environmental due diligence obligations within the Vaillant Group. This is derived from the legal obligations of the German Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz – LkSG) and recognised frameworks such as the UN Guiding Principles on Business and Human Rights. The associated Group policy contains guidelines on elements of due diligence such as our social compliance governance, risk-related responsibilities, risk management and a complaints mechanism. In addition, a Human Rights Officer has been appointed to coordinate, support and monitor the due diligence processes.

Since 2020, we have been systematically analysing the impact of our actions on human rights and the environment in order to identify potential violations and those affected. On the basis of evaluation criteria, we analyse the probability of occurrence of violations, the severity of possible legal infringements, the reparability of potential damage and the possibility of counteracting or preventive action from the Vaillant Group. To this end, we use, among other things, risk-specific country indices and the CSR Risk Check. In Purchasing, we have also implemented a tool that supports risk analysis through an automated risk assessment and a questionnaire for suppliers considered to carry risk. The risk analysis is repeated at least annually and its methodology is developed on an ongoing basis

With regard to the supply chain, in 2020 the Vaillant Group developed a Supplier Code of Conduct that defines our guidelines on human rights, working conditions, health and safety, the environment, responsible and ethical business conduct and critical raw materials. The roll-out of the Supplier Code of Conduct began in late 2020 and is being continuously expanded to other strategic suppliers. We place special focus on suppliers from high-risk countries. In addition, we oblige our suppliers to comply with the Global Compact criteria through our General Purchasing Terms.

We randomly check compliance with our sustainability requirements for suppliers in “social checks” as part of supplier audits. The standardised questionnaire used here is derived from the contents of the Supplier Code of Conduct in the areas of human rights and labour standards, occupational safety, environmental protection, anti-corruption and grievance mechanisms. New auditors are being introduced to the methodology of social checks on an ongoing basis. Our aim is to carry out a social check as part of 100 per cent of regular supplier audits.

As part of the Social Compliance Management System, the Vaillant Group has an electronic whistleblowing system for employees, customers and business partners to enable them to report violations of laws and internal guidelines. This explicitly includes human rights and environmental aspects. Rules of procedure have been published in the whistleblowing system for this purpose. Complaints can be made anonymously if required and are reviewed by an independent company-internal authority without mandate. We effectively protect complainants from any potential unreasonable disadvantages and investigate any possible violations of human rights and environmental standards.

Works councils are recognised and supported. There are works councils at different levels, from the local works council to the general works council and Group works council to the European Works Council. The latter was founded in April 2001, which makes it clear that we have been committed to employee participation also at international level for over 20 years. Our constructive cooperation with the works councils in Germany goes back even further than that.

The Vaillant Group enters into targeted partnerships with non-profit organisations in order to make a contribution to society that goes beyond its own business activities. In this context, we have been a strategic partner of “SOS Children’s Villages worldwide” since 2013. We support the international children’s charity with environmentally friendly and energy-efficient heating technology. This partnership has long been a key part of our company’s social engagement. The aim behind our cooperation with WWF is to work together for the benefit of the heating transition and to add weight to the topic of climate-friendly heating in the energy and climate debate by drawing attention to the relevance of heat pumps as a particularly environmentally friendly and energy-saving heating technology. In addition, the Vaillant Group supports WWF nature conservation projects to preserve biodiversity and protect endangered species.

Support for SOS Children’s Villages

As part of the international partnership with the charitable organisation SOS Children’s Villages, a total of 15 heating technology projects were carried out in 2022. The Vaillant Group also supported SOS Children’s Villages with 13 social projects, including charity runs in France and the Spare Cents fundraising campaign in Germany.

Supplier acceptance of our Supplier Code of Conduct

By the end of 2022, around 620 suppliers, covering around 70 per cent of our purchase volume, had accepted our guidelines. In relation to the purchasing volume with suppliers operating in countries classified as risk countries by the Vaillant Group, the share is 80 per cent.

Implementation of supplier checks

A total of 110 supplier audits were carried out in 2022. In 67 percent of these audits, a social check was also carried out. In total, 74 social checks were carried out in 2022.