Business conduct

The ‘Business conduct’ chapter meets the entity-specific disclosure requirements of ESRS G1 and is based on the results of the double materiality analysis. For the KION Group, sustainable management is a fundamental part of the decision-making process and the wider implementation of decisions, particularly where its relationships with business partners are concerned (see ‘The role of the administrative, management, and supervisory bodies’). Material topics for the KION Group are managed in the context of the ‘Supply chain’ action field.

Furthermore, ‘Anti-corruption and anti-bribery’ was integrated into this ‘Business conduct’ chapter as a mandatory disclosure under CSR-RUG.

Material impacts, risks, and opportunities and their interaction with strategy and business model in relation to business conduct

The double materiality analysis outlined in the ‘Description of the process to identify and assess material impacts, risks, and opportunities’ chapter identified the following entity-specific sub-topic in relation to the ‘Business conduct’ topic based on a positive impact that was assessed as material.

Responsible selection and assessment of suppliers (positive impact)

The responsible selection and assessment of suppliers on the basis of sustainability criteria helps to make the supply chain more sustainable and can encourage suppliers to actively collaborate on sustainability activities. By considering sustainability matters in the selection and contract awarding process, the KION Group creates an incentive for suppliers to offer goods with relatively low negative – or positive – environmental and social impacts. It motivates suppliers to continually improve or at least maintain their ESG risk assessment level. This process is supported by the KION Group’s ESG supplier risk management process, as described in the ‘Policies related to workers in the value chain’ chapter.

As a global company, the sustainability performance of the KION Group’s products and services depends not only on the properties of its directly sourced raw materials, goods, and services, but also on its business relationships. The strategic approach in the upstream supply chain and the associated positive impact are therefore closely linked with the business model and business strategy of the KION Group.

Policies related to management of relationships with suppliers, except for payment practices (entity-specific)

The binding rules of the KION Group ESG Risk Management Standard for Suppliers, as described in the ‘Policies related to workers in the value chain’ chapter, address the systematic implementation of sustainable and ethical standards in the upstream value chain. Several years ago, the KION Group implemented and expanded the ESG risk management process to identify and investigate any shortcomings in supply chain relationships.

In order to ensure that actual or suspected instances of non-compliance can be reported anonymously, the KION Group has a standardized whistleblowing procedure. This is described in greater detail in the ‘Processes to remediate negative impacts and channels for own workforce to raise concerns’ chapter. 

Management of relationships with suppliers, except for payment practices (entity-specific)

Sustainability is a key topic of and firmly embedded in the corporate strategy. As integral elements of this sustainability strategy, the supply chains and the relationships with suppliers play a vital role in responsible business conduct. The responsible selection and assessment of suppliers is therefore not just a key component of the KION Group’s business model for legal reasons, it also promotes sustainable practices along the entire supply chain. 

The KION Group sources raw materials, goods, and services from suppliers in different parts of the world. The responsible selection and assessment of suppliers guided by sustainability in line with the KION Group’s ESG supplier risk management process can help to make the supply chain more sustainable and encourages suppliers to actively work on sustainability-related activities. By considering sustainability matters in the selection and contract awarding process, the KION Group creates an incentive for suppliers to offer goods with relatively low negative – or positive – environmental and social impacts. ESG supplier risk is reviewed and updated annually. The outcome of this ESG supplier risk assessment is incorporated into the supplier performance risk and influences the individual supplier performance score. This motivates suppliers to continually improve or maintain their ESG risk assessment level. A good ESG supplier risk score not only has a positive influence on the overall assessment of supplier performance, it also has a positive effect on the business relationship and awarding of contracts going forward. 

More information on the ESG supplier risk management process is provided in the ‘Workers in the value chain’ chapter.

Actions related to management of relationships with suppliers, excluding payment practices (entity-specific)

The KION Group took material steps in 2024 to embed ESG criteria – particularly in the upstream value chain – into its procurement practices, integrating them into the Global Supplier Awarding Committee (GSAC) process and the supplier performance scorecard. In both cases, the ESG supplier risk score is used as determined in the ESG supplier risk management process. Assessments of existing tier 1 suppliers are generally conducted every year, but they are also performed on an ad hoc basis, for example for prospective new suppliers.

The GSAC, made up of a cross-functional team, decides in an internal process which suppliers are shortlisted for the awarding of contracts. The supplier score card facilitates the assessment of supplier performance and strengthens the supplier relationship. Six areas of supplier performance are assessed, including sustainability. The ESG supplier risk score is determined as part of the sustainability assessment and makes up 15 percent of the supplier performance score. This has a direct impact on the specific supplier relationship. 

More information on the ESG supplier risk management process is provided in the ‘Workers in the value chain’ chapter.

Targets related to management of relationships with suppliers, excluding payment practices (entity-specific)

As mentioned above, the KION Group set a new target in the ‘Supply chain’ action field of the sustainability strategy in 2024. The KION Group aims to continually increase the proportion of annual global spending on deliveries from direct suppliers that are essential for production (A suppliers) with a low ESG risk, and set itself the target of raising the proportion to 31.5 percent in 2024. In 2024, the KION Group managed to increase the proportion of tier 1 suppliers in category A with a low ESG risk to 60.5 percent (see ‘Strategy targets and target achievement in 2024’ and ‘Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities’).

Contextual information for this metric can be found in the ‘Metrics related to workers in the value chain’ chapter.

Anti-corruption and anti-bribery matters

In line with its compliance management system, the KION Group aims for systematic compliance with laws, guidelines, and voluntary codes across the Company. The Executive Board is collectively responsible for the groupwide compliance management system of the KION Group. In organizational terms, the compliance function reports directly to the Chief Executive Officer of KION GROUP AG.

[[The KION Group Code of Compliance underpins the compliance management system and is complemented by other groupwide regulations on a wide range of matters that cover the KION Group’s full spectrum of activities.]] The KGCC is binding for all KION Group employees and provides guidance on the correct and appropriate way to interact with colleagues, customers, business partners, and the public. All new KION Group employees must complete an e-learning course covering all aspects of the KGCC.

The KION Group expressly supports the fight against any form of corruption and bribery. With this in mind, it takes a prevent-detect-respond approach, which aims to permanently prevent misconduct, uncover misconduct that has occurred, and initiate appropriate remedial action in a timely manner. In addition to the rules on conduct and anti-corruption in the KGCC, further detailed requirements can be found in topic-specific guidelines. These include the KION Group anti-bribery and anti-corruption policy, the KION Group policy on conflicts of interest, and the KION Group donations and sponsorship policy. Among other things, it stipulates that every donation and every sponsorship activity must be checked and approved in advance by the Compliance department.

Employees and external stakeholders of the KION Group can report actual and suspected compliance violations via the whistleblowing system in person or by telephone, post, or email. In addition, a 24/7 whistleblower hotline and an online form are available for the anonymous reporting of potential compliance violations. Further information can be found in the ‘Processes to remediate negative impacts and channels for own workforce to raise concerns’ and ‘Processes to remediate negative impacts and channels for value chain workers to raise concerns’ chapters.

The effectiveness of the KION Group’s compliance management system is continuously monitored and optimized. It is modeled on audit standard 980 of the Institute of Public Auditors in Germany (IDW PS 980), which focuses on the avoidance of compliance violations. Through regular and ad hoc audits, Group Internal Audit ensures that the compliance requirements are met by KION GROUP AG and all of its subsidiaries.

The risks relating to corruption and bribery are documented and assessed on an annual basis as part of a systematic compliance risk analysis throughout the Group, including for KION GROUP AG. Money laundering risks, risks of non-compliance with antitrust laws, tax regulations, and cybersecurity rules, and violations of human rights are also assessed. Non-financial risks that arise on an ongoing basis are identified, assessed, and managed. Adequate measures are subsequently determined to eliminate weaknesses, both in processes and control mechanisms.

The characteristics of the corruption perception index for the respective country, the size and structure of the local procurement or sales organization, and contacts with public officials play an important role in the assessment of risk. The risk analysis conducted in 2024, which focused on corruption and bribery, did not identify any incidents or risks that could be deemed material according to the internally defined thresholds.