# Artboard 1

Sustainability Management

Through our technical excellence, innovative products and the strong commitment of our employees we enable and accelerate sustainable and safe mobility solutions. Together with our customers we deploy them for rail and road. Sustainability management focuses on the necessary environment for implementation of our sustainability activities. It ensures that sustainability is an integral part of our processes and decisions.

Sustainability Strategy and Materiality

Knorr‑Bremse wants to live up to its environmental and social responsibilities. In line with this desire, we have committed to sustainable corporate governance and integrated sustainability into our organizational structures and business processes. We aim to strengthen this integration continuously because the company’s sustainable direction contributes to its business success. The resulting sustainability strategy is impetus for adding value in a way that conserves resources and a key influence on our conduct as a fair business partner and employer.

The specific design of our sustainability management is based on international standards and internal rules. They lay out our requirements for sustainable corporate governance and are a guide for our employees’ and business partners’ conduct. These internal guidelines include, for example, our Sustainability Guidelines, the Group-wide Code of Conduct and our Human Rights Policy. Furthermore, we are guided by international guidelines and conventions such as the UN Global Compact, the UN Guiding Principles on Business and Human Rights, the conventions of the International Labour Organization (ILO), and international standards such as ISO 14001 (environmental management), ISO 50001 (energy management), or ISO 45001 (health and safety management). The UN Sustainable Development Goals (SDGs) also guide us. Our sustainability ambitions are accomplished using the specific, established management systems and action programs.

Industry Guidelines

There are also industry guidelines that provide orientation for Knorr‑Bremse in the design of its sustainability management. For example, we are cosignatories to the following guidelines:

  • Sustainability Charter of the International Association of Public Transport (UITP)
  • Code of Conduct of the Verband der Bahnindustrie in Deutschland e. V. (VDB, railway industry association)
  • UNIFE Code of Conduct
  • Dublin Declaration of the European Rail Supply Industry
  • European Railway Safety Culture Declaration

The Knorr‑Bremse Sustainability Guidelines

Through our sustainability strategy, we have set the objective of constantly enhancing our sustainability performance in all areas of the value-adding process. We derive the specific focus topics from international guidelines, our materiality analysis, external ratings and customer assessments. We also gain important input through dialogue with our stakeholders, such as customers, employees and investors. We use the ESG approach to structure our overarching sustainability program, and the measures derived from it. This means we follow capital market requirements and future legislation.

Our sustainability activities during the reporting period focused on the ongoing strengthening of our ESG organizational structure, the continuing implementation of our climate action projects, and the constant incorporation of sustainability into decision-making processes. For instance, the carbon price that we have implemented internally is a decision-making criterion for capital expenditure over € 500 thousand. Furthermore, defined ESG criteria are integrated into property management. In terms of climate protection, Knorr-Bremse has committed to a long-term target of net zero emissions (Scopes 1 to 3) by 2050. Moreover, expanded climate targets validated by the Science Based Target initiative (SBTi) were set in 2023 and comprise emissions from our own production (Scope 1 and 2) as well as relevant emissions from the supply chain and product use (Scope 3) (Climate Protection). The systematic development of our sustainability management is one reason for our significant improvement in selected sustainability ratings during the reporting year.

The ESG Approach

ESG stands for environment, social and governance. It provides a structure for the areas of a company’s sustainability management. The ESG approach is intended to be a tool to achieve sustainable business and company development and make a positive contribution to sustainable development in society as a whole. The term is used mostly in the capital market for the guiding principle of sustainability.

We used our materiality analysis to determine the focus topics we need to prioritize in order to take responsibility for environmental and social challenges. These material sustainability topics also determine the content of this report. During the analysis, we first evaluated the positive and negative impacts of our business activity on the environment and society from an inside-out perspective. Secondly, we analyzed the impact of the topics on Knorr-Bremse’s business activities and future viability (outside-in perspective). This confirmed the following 13 focus topics from the previous materiality analysis:

Our focus topics

E Environment
Social
G Governance
Anti-corruption and Fair Competition
Climate Protection
Data Protection
Environmental Product Design
Sustainability in the Supply Chain
Waste
Water

Anti-corruption and Fair Competition

Responsible corporate governance is a prerequisite for gaining the trust of society, customers and employees. It is the basis for the company’s growth and minimizes reputational and legal risks. We hold ourselves to our own high standard of constant compliance with laws, internal regulations and voluntary commitments. Combating corruption and bribery is therefore one of the key topics in compliance management at Knorr-Bremse. The topic of anti-corruption and fair competition is integrated into the “Integrity and Compliance” chapter.

Integrity and Compliance

Impacts on the Environment and Society:

Business Relevance:

Climate Protection

Climate change is a global challenge. As a manufacturing company, our business activity has direct and indirect impacts on the environment and the climate. Moreover, we must develop strategies that prepare us for the risks associated with climate change. With our Climate Strategy 2030, we want to make our contribution to the target of the 2015 UN Paris Agreement to limit global warming to a maximum of 1.5 degrees.

Climate Protection

Impacts on the Environment and Society:

Business Relevance:

Data Protection

Digitalization is important for our company’s future direction as it supports efficient processes and new business models. We are always responsible for our handling of the data from various stakeholders that is used and acquired. We have developed and implemented legally compliant safeguards for this.

Data Protection and Information Security

Impacts on the Environment and Society:

Business Relevance:

Diversity, Equal Opportunities and Inclusion

Positive and fair employment conditions inherently involve equal treatment for all employees. Individual employees can harness their potential better when they are in an environment characterized by diversity. A diverse workforce is therefore a driver of creativity, innovation and cultural competence in business partnerships – and consequently a cornerstone of our commercial strength. To reinforce gender equality at Knorr-Bremse, we work on increasing female representation within the workforce and within management.

Diversity, Equal Opportunities and Inclusion

Impacts on the Environment and Society:

Business Relevance:

Employment Conditions

As a responsible employer, we wish to offer good employment conditions. They are the foundation for satisfied employees as well as for gaining and obtaining the loyalty of the best skilled workers and managers. In addition to having an open and supportive corporate culture, there are many other factors that contribute to good employment conditions, from fair, competitive salaries to a reasonable work-life balance.

Employment Conditions

Impacts on the Environment and Society:

Business Relevance:

Environmental Product Design

We can make a significant contribution to climate and environmental protection with environment-oriented product development. It also enables us to utilize market opportunities and counteract product-based risks proactively. Using our EcoDesign approach, we systematically integrate sustainability criteria, such as longevity, resource conservation and emission prevention, into our processes. In addition, we make sure we design our products in such a way that they are capable of industrial remanufacturing and overhaul; this is now a significant line of business at both Knorr-Bremse divisions that contributes to a circular economy.

Environmental Product Design

Impacts on the Environment and Society:

Business Relevance:

Occupational Health and Safety

With high standards and targeted measures for occupational health and safety, we as a responsible employer meet our own requirements and the requirements of human rights more broadly. We promote a healthy and safe working environment that prevents accidents at work and where our employees can reach their full potential.

Occupational Health and Safety

Impacts on the Environment and Society:

Business Relevance:

Personnel Development

Knorr-Bremse can only manifest its leading market position with well-qualified and motivated employees. Our strategic personnel development focuses on the recruitment of qualified people and the individual, further development of employees and managers.

Personnel Development

Impacts on the Environment and Society:

Business Relevance:

Product and System Safety

Knorr‑Bremse’s products for commercial and rail vehicles are highly relevant to transportation safety. Our customers rely on us fulfilling our distinct, self-imposed standards for technological excellence and high quality and safety. Simultaneously, we are a driver of innovation and are successful in constantly enhancing the safety of our products and boosting our commercial success.

Product and System Safety

Impacts on the Environment and Society:

Business Relevance:

Social Commitment

Knorr‑Bremse is a part of society through its business activity and as an enabler of sustainable mobility concepts. For this reason, the company and its employees contribute to society, especially at its locations. As an employer, as a purchaser of materials and services and through its products, Knorr-Bremse influences local communities and economies in a variety of ways. Thanks to our engagement in society, our employees’ identification with Knorr-Bremse increases. Our employees feel motivated to play an active role in social projects themselves. In addition, having a greater reputation in society contributes to the company’s employer branding.

Social Commitment

Impacts on the Environment and Society:

Business Relevance:

Sustainability in the Supply Chain

Having a sustainable supply chain structure is a core element of our value-adding process and makes a decisive contribution to our company’s success. We create the foundation for sustainable products with our selection of suppliers and raw materials. On top of that, our selection of suppliers has significant impacts on the environment and society in the countries the goods are produced in. That is why we demand adherence to our high sustainability standards. After all, violations of them can result in reputational or business risks.

Sustainability in the Supply Chain

Impacts on the Environment and Society:

Business Relevance:

Waste

Waste management is an important aspect of a circular economy, as the valuable raw materials contained in waste can be returned to production. The disposal of waste can also create burdens on the environment. For this reason, we attach great importance to preventing waste or recycling it wherever possible.

Resource Conservation

Impacts on the Environment and Society:

Business Relevance:

Water

Our water management is intended to promote sustainable and responsible use of this resource. The current and predicted water shortages in a number of regions around the world also result in increased entrepreneurial risk for us. We want to use water efficiently and reuse it multiple times through recirculation wherever possible so that water is consumed sustainably and conservatively.

Resource Conservation

Impacts on the Environment and Society:

Business Relevance:

Organizational Structure for Sustainability

With a clear organizational structure, we ensure the integration of the topic of sustainability in the Group’s highest decision-making bodies. The entire Executive Board is responsible for the business strategy’s focus on sustainability. The Sustainability division coordinates the sustainability strategy and reports directly to the Chief Financial Officer (CFO). To address the topic of sustainability in an organizationally appropriate way and support the implementation of the defined measures, the company relies on the ESG Board as the central coordination body. The ESG Board, which meets several times a year, comprises two members of the Executive Board, a representative of the senior management from each of the two divisions, a representative of each of the management teams of the Knorr-Bremse North America/ South America and Asia-Pacific regions, the Chair of Knorr-Bremse Global Care e. V. and the Head of the Sustainability department. The ESG Board advises on the development of the sustainability program. It defines goals and measures for implementing the strategic topics and evaluates their progress on an ongoing basis. The ESG Board and the Sustainability department are centrally responsible for the development, management, and monitoring of sustainability projects. The operational implementation of projects takes place in different areas of activity and divisions.

ESG Board: A Glance Behind the Scenes in 2023

The ESG Board as the coordination body for sustainability measures met five times in 2023. The members were informed of material topics and developments but also received strategic or project-related draft proposals for decision and granted approvals. Topics from the reporting year:

  • Sustainability Management: Decision on the integration of ESG aspects into various processes (e.g., CO2e price, risk management, real estate management); status update on central KPIs
  • Environment: Adoption of climate targets and updates on the SBTi validation process
  • Social: Concept to raise employee awareness of sustainability topics
  • Governance: Information exchange on global regulatory changes and the extent to which Knorr-Bremse complies with them at present

The ESG Alignment Circle is a body that precedes the ESG Board. It has the task of coordinating the implementation of the individual sustainability activities across departments and divisions and ensuring systematic process integration. It comprises leading representatives of nearly all functional units of the Knorr‑Bremse Group. In addition, issue-specific committees and departments supplement the implementation and development of the sustainability program. Established bodies – e.g., for the topic of human rights or sustainable purchasing – communicate on individual specialist topics and monitor operational implementation. The Executive Board and the Supervisory Board are informed regularly about sustainability topics and make important decisions.

The Organizational Structure for Sustainability at Knorr‑Bremse

Stakeholder Management

Trusting collaboration and open exchange with stakeholders is the basis for sustainable business success. We seek to understand the perspectives and demands of our stakeholder groups. This is essential in order to identify future trends, global developments and market requirements at an early stage and thus meet our stakeholders’ expectations. Particularly important stakeholder groups for us include employees, young professionals, customers and suppliers, shareholders and investors, business partners, authorities, unions, associations, the media, politics, non-government organizations (NGOs), local residents near our sites and representatives of local initiatives. We maintain a dialog with them all, often within fixed communication and event formats. They include direct conversations with customers, global trade fairs, active work in associations, investor meetings, the Annual General Meeting and communication with employees.

Knorr‑Bremse as a Driver of the “Europe’s Rail” Technology Initiative

Knorr‑Bremse is one of the 25 founding members of the technology initiative Europe’s Rail. By working together the companies are developing a whole series of forward-looking, sustainable solutions in digitalization, automation and connectivity across all levels of rail transport. Knorr-Bremse is active in five of its six “Flagship Areas”. Knorr-Bremse will be the driving force for three topics in the “Sustainable and Green Rail Systems” cluster: the use of halogen-free and low-GWP refrigerants, technology for improved air quality in trains and the testing of the electromechanical brake.
Europe’s Rail

Stakeholder Inclusion

Sustainable Development Goals (SDGs)

The United Nations’ 17 Sustainable Development Goals, which came into effect in 2015, provide guidance for companies to align their business activities with sustainable development across the entire value chain. Based on these Sustainable Development Goals (SDGs), the industry can use its economic power and strong innovation in a more targeted way to face the economic, social and environmental challenges. In this context, Knorr-Bremse wants to address the challenges through its business model and activities, and contribute to the achievement of the SDGs. Our sustainability strategy focuses on the five SDGs that we can have the greatest influence over through our business. Furthermore, Knorr-Bremse contributes to SDG 4 (Quality Education) and SDG 6 (Clean Water and Sanitation) through the activities of Knorr-Bremse Global Care e. V. (Social Commitment).

We focus on the following SDGs:

SDG 5: Gender Equality

Knorr‑Bremse believes that a diverse workforce is a critical factor in business success. We are committed to gender equality and to supporting women in the entire workforce, in management and in STEM professions. We support our employees with various offerings that help to achieve a work-life balance.

Examples of activities in 2023:

  • Adoption of a Group-wide DEI (Diversity, Equity and Inclusion) strategy
  • Development of a global diversity network
  • Establishment of women’s networks at further locations
Diversity, Equal Opportunities and Inclusion

SDG 8: Decent Work and Economic Growth

Knorr‑Bremse strives to add value sustainably and wants to offer good working conditions and fair social standards to its current and future employees around the world. We continuously work on making our global supply chain more sustainable. We seek to respect and uphold human rights with our processes for human rights due diligence for our employees and suppliers.

Examples of activities in 2023:

  • Implementation of 10 sustainability audits on-site at suppliers
  • Establishment of processes for human rights due diligence in accordance with the German Supply Chain Due Diligence Act
  • Key occupational health and safety figures at persistently low levels
Employment Conditions
Due Diligence Processes for Human Rights
Sustainability in the Supply Chain

SDG 9: Industry, Innovation and Infrastructure

Knorr‑Bremse finds solutions for the mobility of tomorrow and invests in a sustainable future through its research and development activities. Working in cooperation with our customers we can actively drive the transition to sustainable mobility with our innovative solutions. Thanks to our EcoDesign approach, we are already integrating aspects of sustainability into the development and innovation process.

Examples of activities in 2023:

  • Continuation of eCUBATOR, an ideas factory for electric mobility
  • Implementation of a recycling analysis for 28 projects in the RVS division
  • Consistent incorporation of EcoDesign criteria into product development
Environmental Product Design

SDG 12: Responsible Consumption and Production

Knorr‑Bremse is committed to integrated and preventive environmental protection in its production processes, which it practices by preventing waste and using natural resources efficiently. In our product development, too, we take care to use materials in a way that conserves resources and to recycle with the help of our EcoDesign approach. We extend the product service life through our remanufacturing (CVS) and overhaul (RVS) activities and improve our customers’ environmental and commercial sustainability.

Examples of activities in 2023:

  • Increase of revenues from remanufactured/overhauled products to around 11 %
  • Performance of life cycle analyses (LCAs) of selected products
  • Publication of key figures on Knorr-Bremse’s global waste volume
Environmental Management
Resource Conservation
Environmental Product Design
Climate Protection
Eco-friendly Logistics

SDG 13: Climate Action

Knorr‑Bremse aligns its climate protection objectives with the 1.5 degree target of the UN Paris Agreement. We want to minimize the carbon emissions from our business activity through production processes with reduced energy and emissions levels and through innovative products and solutions.

Examples of activities in 2023:

  • Knorr-Bremse’s updated climate targets (Scope 1-3) validated by the Science Based Targets initiative (SBTi)
  • Setting of an internal CO2e price for investment measures
  • Installation of photovoltaic systems at further locations
Climate Protection

Sustainability Ratings and Rankings

Knorr‑Bremse’s commitment to sustainability is evaluated regularly and recognized as part of external ratings and rankings. They are important to us as they confirm our direction and alert us to potential improvements. Using sustainability ratings and rankings, we analyze and evaluate the external perception of our sustainability performance. The comparison with our peers and early detection of trends gives us findings that we use to develop our sustainability management further. Knorr-Bremse has already received many above-average ratings for its sustainability measures and was able to improve further on a number of relevant ratings during the reporting period.

ESG Ratings and Rankings

DAX®50 ESG

Knorr‑Bremse has been listed in the index since it started. It represents the top 50 companies in Germany based on their ESG performance, market capitalization and revenue.

DAX®50 ESG

S&P Global Corporate Sustainability Assessment

Knorr‑Bremse scored 51 out of 100 points (2022: 50; 2021: 52), putting it in the top 21% of the comparison group.

The S&P Global Corporate Sustainability Assessment takes into account economic criteria as well as environmental and social criteria based on the best-in-class principle. The most sustainable companies in an industry are added to the index.

S&P Global Corporate Sustainability Assessment

MSCI

Knorr‑Bremse’s rating of “AA” was confirmed for the reporting year 2023 (2022: AA, 2021: A), the second-best of seven categories. MSCI ESG ratings score companies on a scale from “AAA” to “CCC” with regard to their industry-specific ESG risks and their risk management.

MSCI

© 2024 MSCI Inc. All rights reserved. For more information, visit MSCI

ISS ESG

Knorr‑Bremse improved to the prime status of “B-” (2022: C+, 2021: C+), thus putting Knorr-Bremse among the best 12% in an industry comparison. ISS ESG assesses a company’s sustainability performance on a scale from “A+” to “D-.”

ISS ESG

Morningstar Sustainalytics

Knorr‑Bremse scored 13.8 out of a total of 100 risk points (2022: 19.5; 2021: 18.9) and was therefore classified as low risk (top 1% of the comparison group).

Sustainalytics categorizes ESG risks across five risk levels (negligible, low, medium, high and severe).

Sustainalytics

©2024 Morningstar Sustainalytics. All rights reserved. For more information, visit Sustainalytics

CDP

Knorr‑Bremse received an improved rating of “A-” for transparency and performance on climate protection (2022: C, 2021: B). This meant that Knorr-Bremse achieved the leadership level of CDP, putting it above the European average (B) and the global sector average (C). Within the comparison group Knorr-Bremse is among the top 21%.

CDP rates companies on climate protection according to a scale from “A” to “D–”, with “A” being the highest.

CDP

EcoVadis

Knorr‑Bremse is currently scored with Gold (2023: Silver status; 2022: Silver status) and is therefore among the top 3% of companies in the comparison group.

EcoVadis rates corporations from 180 countries in the categories of Environment, Labor & Human Rights, Ethics and Sustainable Procurement, awarding a status of Platinum, Gold, Silver or Bronze.

EcoVadis

SAQ – Sustainability Self-Assessment Questionnaire by Drive Sustainability

20 Knorr‑Bremse sites are rated within a range from 84% to 92% (2022: 18 sites within a range from 81% to 93%, 2021: 17 sites within a range from 80% to 93%).

The Self-Assessment Questionnaire (SAQ) is a supplier questionnaire of the automotive (supplier) industry. It rates the sustainability management of a company’s individual locations on a scale from 0% to 100%.

Drive Sustainability

Transparency in Sustainability Reporting

Our goal of transparent reporting also includes the transparent presentation expected by investors of our corporate climate risks and opportunities. We publish these in this Sustainability Report in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) (TCFD Reference Table).

In addition, we constantly work on meeting the statutory reporting obligations, such as the EU Taxonomy (Management Report) and on preparing for further developments in legislation on non-financial reporting (Corporate Sustainability Reporting Directive, CSRD).

International Sustainability Strategy, Local Implementation: Insights from America

How the central sustainability strategy is being successfully implemented in North America. A discussion.

Smart minds worldwide: Together for sustainable mobility

Our experts work worldwide to ensure sustainable mobility. Get to know some of them.

Climate Protection

More about our updated Climate Strategy 2030, our contribution to the UN Paris Agreement targets.

Environment