MAN GRI Report Corporate Responsibility at MAN 2016 Engineering the Future – since 1758. MAN SE
2 MAN GRI Report 2016 OvERvIEw Overview Foreword Portrait Strategy and Governance PAGE 01 FOREwORd PAGE 02 PORtRAIt OF thE MAN GROuP Integration Products People Production Annex PAGE 12 INtEGRAtION PAGE 05 CORPORAtE RESPONSIbIlIty StRAtEGy ANd GOvERNANCE PAGE 24 PROduCtS PAGE 36 PEOPlE PAGE 50 PROduCtION PAGE 64 ANNEx OvERvIEw OF kEy INdIcAtORs GRI cONtENt INdEx ANd UN GlObAl cOMpAct cOMMUNIcAtION ON pROGREss INdEpENdENt pRActItIONER’s lIMItEd AssURANcE REpORt AbOUt tHIs REpORt cREdIts & AddItIONAl INFORMAtION
01 MAN GRI Report 2016 Foreword Overview Foreword Portrait Strategy and Governance Integration Products People Production Annex dear Readers, How are climate change, urbanization, and digitization impacting MAN? And what role does MAN play in shaping these megatrends? Our CR Strategy 2020+ is our response to these questions. By defining concrete measures and targets in the areas of Integration, Products, Production, and People, we have brought transparency and accountability to our activities. As one of Europe's leading commercial vehicle and mechanical engineering companies, this is how we demonstrate responsibility along our entire value chain. Climate protection is one area where we see great potential for leveraging our corporate responsibility. More than 90% of the greenhouse gas emissions caused by MAN are generated through the use of our prod- ucts. So we are continuously working to boost their energy efficiency. We assign high priority to the development and use of alternative drives. We firmly believe that the drive systems of the future will be electric – at least in urban settings. At the end of 2019 we will be launching series produc- tion of an all-electric city bus, with an electric truck due to roll off the line in early 2021. As early as the end of 2017, we will make the first electric trucks available to our logistics partners for real-world trials. With new business models and innovative mobility solutions, we are also taking advantage of the opportunities offered by digitization. With RIO we launched an open, cloud-based platform in 2016, which bun- dles digital services for the entire transportation sector. RIO is now an independent digital brand of Volkswagen Truck & Bus, that we are developing together with our sister brands. RIO frees up cargo capacity, helps prevent empty runs, and reduces traffic volumes. Our customers benefit from more efficient use of capacity and higher pro- ductivity – which in turn lead to higher profits. At the same time, we reduce emissions within the transportation and logistics ecosystem. We have come a step closer to reaching our climate goal for our production operations – a 25% reduction in CO2 emissions by 2020 – by cutting our CO2 emissions by 19.8% in the year under review (baseline: 2008). One contributing factor was the construction of a combined heat and power plant in Munich, which enables us to generate up to 20% of our power needs on site. In 2016, MAN also continued with its refugee integration activities, helping 39 migrants gain a foothold in the working world by offering them initial vocational training, apprenticeships, and internships. Our initia- tives are grouped under the umbrella of MAN refugee aid, which coordi- nates numerous activities and offers assistance. Our CR Strategy 2020+ provides a roadmap for sustainable devel- opment, while this report shows the ground we have covered and the progress we have made. It is aimed at analysts, investors, customers, and business partners. Prepared in accordance with the standards of the Global Reporting Initiative and checked by an independent auditing firm, it presents performance indicators and data that are relevant to sustain- able business practices. And it outlines the ways in which we live up to our commitment to the ten principles of corporate responsibility defined by the UN Global Compact. We have also made an interactive abridged version of the report available online. We invite you to join us on the path we have embarked on and to keep in touch with us. You can reach us by e-mail at CorporateResponsibility@man.eu. Best regards Joachim Drees Chief Executive Officer of MAN SE
02 MAN GRI Report 2016 Portrait of the MAN Group wE PROvIdE EFFICIENt tRANSPORtAtION ANd ENERGy SOlutIONS Overview Foreword Portrait Strategy and Governance 2016 53,824 2016 30 Integration Products People Production Annex employees worldwide production sites in 14 countries €13.6 billion sales revenue 4 divisions: MAN truck & bus MAN latin America MAN diesel & turbo Renk €14.4 billion order intake €204 million operating profit For more information: www.corporate.man.eu
03 MAN GRI Report 2016 Portrait of the MAN Group Overview Foreword Portrait Strategy and Governance Integration Products People Production Annex The MAN Group The MAN Group is one of Europe's leading commercial vehicle, engine, and mechanical engineering companies. As a producer of trucks, buses, vans, diesel engines, turbomachinery, and special gear units, we hold lead- ing market positions in all our divisions. Long-term growth strategy Global demand for innovative solutions in the transportation and energy sectors will continue to rise overall. This means that going forward, the MAN Group will continue to pursue its profitable growth strategy with a MAN divisions focus on transportation and energy. Technology leadership remains a key factor in the success of MAN. We develop innovative products and solu- tions that meet the needs of customers and markets – while at the same time focusing on reducing fuel consumption and emissions and on gener- ating energy efficiently, reliably, and ecologically. In addition, MAN is mov- ing to leverage the opportunities of digitization and unlock new potential through new business models based on innovative mobility solutions. Commercial vehicles Power Engineering MAN truck & bus MAN latin America MAN diesel & turbo Renk (76%) Is the largest company in the MAN Group and a leading supplier of commercial vehicles and transportation solutions. the new tGE makes MAN a full-line provider of commercial vehicles from 3 t to 250 t. Is one of the largest truck manufacturers in brazil. three of the five best-selling truck models in brazil are made by MAN latin America. the company is a supplier of commercial vehicles and bus chassis for growth markets, marketed under both the volkswagen and MAN brands. Is one of the world's leading suppliers of large-bore diesel and gas-powered engines and also one of the leading sup- pliers of turbomachinery on the global market. Is a globally recognized manufacturer of high-quality special gear units, propulsion components, and testing systems. 2016 sales revenue €9,243 million €861 million €3,113 million €496 million
04 MAN GRI Report 2016 Portrait of the MAN Group Overview Foreword Portrait Strategy and Governance Integration Products People Production Annex In the Power Engineering business area, the situation in key seg- Economic environment As a whole, the global economy again recorded muted growth in 2016 and was impacted by economic and political crises. As expected, this made for a challenging business environment for MAN in the year under review – and this will not change in the foreseeable future. The Commercial Vehicles business area saw significant growth in the European commercial vehicles market. Demand for powerful commercial vehicles was particularly high in a number of countries such as Italy and Poland. In Brazil, however, the ongoing recession and the accompanying political uncertainty led to a considerable market decline, following what had already been a weak economic performance in the previous year. ments of the marine and turbomachinery markets deteriorated further. Given this difficult environment, the MAN Group performed well in 2016. We generated Group sales revenue of €13.6 billion in the year under review, down 1.0% on the previous year. Our operating profit was €204 million, which represents an improvement of some €100 million. Excluding special items attributable to restructuring expenses, we increased our operating profit to over €400 million in 2016. Restructuring expenses related to the MAN Diesel & Turbo program for future growth totaled €155 million, while restructuring expenses at MAN Latin America amounted to €58 million. We paid out guaranteed dividends to our share- holders of €3.07 per share in 2016. The MAN Group’s operating return on sales increased noticeably from 0.7% to 1.5%. MAN does not take extensive measures to optimize its taxes. Further information on our financial performance is available in our 2016 Annual Report. Volkswagen AG’s stake in MAN SE A domination and profit and loss transfer agreement (DPLTA) between Truck & Bus GmbH (now Volkswagen Truck & Bus GmbH), a wholly owned subsidiary of Volkswagen AG, and MAN SE was entered into the commer- cial register on July 16, 2013, and has been effective since that date. On December 31, 2016, Volkswagen Truck & Bus GmbH held 75.73% of MAN SE’s voting rights and 74.52% of its share capital. On December 31, 2016, 24.27% of MAN’s common shares were in free float. Capital expenditures In the 2016 fiscal year, the MAN Group incurred capital expenditures total- ing €860 million, after €708 million in the previous year. There was growth in both payments to acquire property, plant, and equipment, and in capital expenditures on intangible assets in fiscal 2016. In view of the difficult eco- nomic situation, we are reviewing planned capital expenditures particu- larly critically, and are systematically prioritizing them. We are deliberately retaining the necessary capital expenditures that will lead to long-term growth and are capable of improving our operational efficiency.
05 MAN GRI Report 2016 StRAtEGy ANd GOvERNANCE Overview Foreword Portrait Strategy and Governance cR strategy 2020+ Analysis of key challenges cR governance Integration Products People Production Annex MAN’s future performance depends on understanding global challenges and identifying the opportunities and risks with regard not only to sustainable development, but also to our commercial success. MAN's CR Strategy 2020+ is our response to the worldwide megatrends associated with these challenges. This is how we live our responsibility – along our entire value chain. CR Strategy 2020+ Since 2010 corporate responsibility (CR) has been an integral part of MAN’s Corporate Strategy. And our CR Strategy 2020+ is MAN’s response to the global challenges which have material significance for the Group. It allows us to identify the risks and opportunities arising from these challenges at an early stage and react accordingly. This safeguards the future success of our business and makes a contribution to sustainable development. With its four cornerstones of Integration, Products, People, and Produc- tion, MAN’s CR Strategy 2020+ outlines the ways in which we take respon- sibility along our value chain. Four fields of action have been assigned to each of these four CR cornerstones (, page 6).
06 MAN GRI Report 2016 CR Strategy 2020+ People Integration Production Products MAN’S CORPORAtE RESPONSIbIlIty StRAtEGy 2020+: thE FOuR CR CORNERStONES Overview Foreword Portrait Strategy and Governance cR strategy 2020+ Analysis of key challenges cR governance Integration Products People Production Annex MAN’S CORPORAtE RESPONSIbIlIty StRAtEGy 2020+: thE 16 FIEldS OF ACtION Occupational health & safety Employer attractiveness Promoting diversity vocational training & continuing professional development Compliance Corporate citizenship Climate & energy Strategy & integration Efficient and environmentally compatible products & services Environmental & resource conservation Stakeholder & customer satisfaction Product responsibility Responsible supplier relations Efficient transportation & logistics Product safety Intelligent mobility
07 MAN GRI Report 2016 CR Strategy 2020+ Overview Foreword Portrait Strategy and Governance cR strategy 2020+ Analysis of key challenges cR governance Integration Products People Production Annex MAN’s Climate Strategy We have assigned the five core initiatives defined in MAN’s Climate Strategy to the Integration, Production, and Products cornerstones of our CR Strategy 2020+. We will continue to develop MAN’s Climate Strategy in 2017 taking into account the United Nations Paris Agree- ment on climate change. 1. 2. 3. 4. 5. 25% reduction in CO2 emissions at MAN sites by 2020 (baseline: 2008) We will reduce CO2 emissions at MAN sites by improving energy efficiency, using renewable energy sources (solar, wind, geothermal), generating energy using combined heat and power (CHP) plants, and through integrated energy-management technology and organization. Consistently efficient product portfolio We position ourselves in the commercial vehicles and power engineering sectors with sus- tainable products and services. Customer involvement and dialog We involve our customers and talk to them about ways to reduce the global carbon foot- print. After all, many of our customers have already set themselves ambitious targets for cutting CO2 emissions. Potential for reducing CO2 emissions along the product life cycle To identify potential for reductions, we measure CO2 emissions along the entire product life cycle. Climate strategy management We manage the implementation of our Climate Strategy and have defined KPIs that are regularly measured and published.
08 MAN GRI Report 2016 Analysis of key challenges Overview Foreword Portrait Strategy and Governance cR strategy 2020+ Analysis of key challenges cR governance Integration Products People Production Annex Analysis of key challenges Global challenges: MAN ranking of opportunities and risks [G4-18] As part of a multi-step materiality analysis conducted in 2014, we identified global challenges that are relevant to MAN. This included not only what our stakeholders expect of the Company, but also MAN’s own objectives for sustainable commercial success. We are planning to update the materiality analysis in 2017. Evaluation by the MAN CR Steering Committee In 2014, the MAN CR Steering Committee (, page 11) discussed and ana- lyzed twelve global challenges, including climate change, population growth, resource scarcity, poverty, and health. Using a scale of zero (low) to ten (high), they evaluated the challenges with regard to business opportu- nities and risks for MAN (, see graphic). s e i t i n u t r o p p O Population growth Diversity & equal opportunity Climate change Urbanization Resource scarcity Health Environmental pollution Demographic change Access to water Poverty Human rights Biodiversity Risks
09 MAN GRI Report 2016 Analysis of key challenges Overview Foreword Portrait Strategy and Governance cR strategy 2020+ Analysis of key challenges cR governance Integration Products People Production Annex Assessment by stakeholders [G4-24, G4-25, G4-26, G4-27] To supplement the materiality analysis per- formed by the MAN CR Steering Committee, in 2014 we asked our stake- holders what expectations they have of MAN. For this process we elected to use an international, open, online questionnaire. In order to include as many stakeholder interests as possible, we did not pre-select target groups. Over a period of several months, over 1,700 people participated in the sur- vey on the MAN corporate website. We were able to analyze more than 150 of these data sets. Material global challenges facing MAN In addition to the assessments of the global challenges which were per- formed by the MAN CR Steering Committee and our stakeholders, we also conducted an analysis of our competitors and consulted expert opinion. This led to the definition of six material challenges as the basis of the MAN CR strategy and of our reporting to the G4 standard of the Global Reporting Initiative (GRI). These global challenges were then assigned to the corre- sponding GRI Aspects (, page 10) for which MAN reports at least one perfor- mance indicator (, GRI-Index, page 66 et seq). We performed the materiality analysis for the MAN Group as a whole. To take account of regional variations, MAN Latin America con- ducted an additional, separate analysis, which confirmed the MAN Group results to a very great extent. In this analysis, regionally relevant issues such as access to water, biodiversity, and population growth were ranked higher and are addressed accordingly by the CR activities of MAN Latin America. MAN Diesel & Turbo also conducted a materiality analysis specifi- cally for the subgroup. In February 2016, the findings of this analysis were reviewed by experts from the specialist functions and measured against MAN’s CR Strategy 2020+. Survey participants by stakeholder group in % Others 28 Policymakers 0 Non-governmental organizations 8 (NGOs) 8 Analysts/investors 2 8 Customers 42 Employees 12 Business partners Global challenges: Stakeholders’ expectations of MAN Percentage 77 66 53 31 Environmental pollution Climate change Resource scarcity Urbanization Health Diversity & equal opportunity Human rights Population growth Demographic change Biodiversity Poverty Access to water 17 14 12 11 7 5 5 4
10 MAN GRI Report 2016 Analysis of key challenges Overview Foreword Portrait [G4-19, G4-20, G4-21] Material global challenges facing MAN Global challenge description Relevance for MAN Material GRI Aspect Aspect boundary* Strategy and Governance Climate change Among other problems, the rise in global temperatures caused by greenhouse gas emissions leads to extreme weather events, rising sea levels, and natural disasters. In many regions, this in turn leads to further negative impacts on ecosystems as well as social and economic systems. In this context, the transportation and logistics sec- tor is called on to reduce its emissions of CO2 and other greenhouse gases and minimize climate impacts. We give top priority to the development and use of alternative drives and fuels. Energy Emissions Transportation Materials Energy Transportation Occupational health and safety Customer health and safety Corres- ponding CR cornerstone Production Products Production Products Production Products People Products Integration Production Products People cR strategy 2020+ Analysis of key challenges cR governance Integration Products People Production Annex Resource scarcity Resources include all raw materials and natural resources such as water, energy, and land which are necessary for life and economic activity. Overuse of these resources leads to water shortages, desertification and erosion, and rising prices for raw materials and building materials. urbanization The percentage of the total world population living in urban areas is growing steadily. According to United Nations esti- mates, 60% of all people will live in cities by 2030. health Severe physical stress, lack of exercise, and psychological issues such as mental stress are key challenges in the field of health. To increase road safety, accident prevention measures also play an important role. Resource scarcity impacts on MAN as a manufac- turing company and makes its supply of production materials less secure and economical. The quality of life and ecological sustainability of large cities depends on efficient transportation and energy solutions, as well as intelligent mobility. MAN can make a material contribution in these areas. As an international manufacturer of heavy industrial machinery and commercial vehicles, the issue of occupational health and safety has traditionally played an important role at MAN. Another key chal- lenge facing MAN is the occupational health of its employees in countries outside Germany. MAN has also engaged in accident research for many years to improve the safety of its vehicles. Environmental pollution The increasing amounts of waste produced around the world have far-reaching effects on plant, animal, and human life. Millions of tonnes of plastic waste end up in the oceans and contaminate the groundwater. In addition, waste incineration plants cause air pollution. MAN makes every possible effort to limit the envi- ronmental impacts of its production activities, focusing on the continuous reduction of volumes of waste and assessing the recyclability of materials in product life cycle assessments. Wastewater and waste Products and services Compliance (environmental regulations) diversity & equal opportunity Diversity means treating all people equally, regardless of characteristics such as gender, ethnic origin, age, disability, and sexual orientation. As a globally positioned, inclusive company, MAN believes it is essential to treat every employee equally and create an environment in which individ- uals can develop to their full potential. Training and education Diversity & equal opportunity * Inside the company , outside or both .
11 MAN GRI Report 2016 CR governance CR governance At MAN, corporate responsibility is a top managerial function. The Chief Human Resources Officer and Arbeitsdirektor (Executive Board member responsible for employee relations) is ultimately responsible for CR at MAN. Reporting to him is the MAN Group's Corporate Responsibility function, which is responsible for implementing MAN’s CR Strategy 2020+. The Corporate Responsibility function serves as the central point of con- tact for all CR issues in the Company. It also coordinates the CR Steering Committee, whose members include managers from the Production, Products, and Integration functions (e.g. from Procurement, the Group Works Council, and Human Resources) and all subgroups. In addition to the continuous development of the CR strategy, the CR Steering Commit- tee is responsible for integrating CR in our operating processes and for sys- tematic stakeholder dialog. In the year under review, the CR Steering Com- mittee met one time; it is being restructured. In addition, we steer our CR activities through our integrated management systems, as described in the People (, page 36) and Production (, page 50) chapters of this report. Activities within the Volkswagen Group As a strong brand within the Volkswagen Group, we participate in the Corporate CSR & Sustainability and Environment & Energy Steering Groups in order to play an active part in shaping the Volkswagen Group’s environmental and sustainability strategy. Since 2016, MAN has also been a member of the Group working committee on aid to refugees. Overview Foreword Portrait Strategy and Governance cR strategy 2020+ Analysis of key challenges cR governance Integration Products People Production Annex
12 MAN GRI Report 2016 INtEGRAtION Management approach Our business practices are shaped by corporate responsibility (CR). It is our aim to live our responsibility every day. We continue to boost our competitive edge by anchoring CR firmly in the strategies of our divisions, our operating processes, and our vocational training and continuing professional development. Responsible corporate governance is the foundation on which we build. Dialog with our stakeholders and customers helps us integrate CR in our core business activities. Through our corporate citizenship initiatives and MAN aid to refugees, we also make a lasting contribution to sustainable development. Overview Foreword Portrait Strategy and Governance Integration Management approach strategy & integration compliance Responsible corporate governance Compliance program stakeholder and customer satisfaction corporate citizenship Products People Production Annex Challenges and objectives Compliance with the law is the basic precondition for the success of our business. At MAN, management and supervision of the Company and the Group is focused on ensuring sustained value creation and an appropriate profit in line with the principles of the social market economy. Principles and guidelines Corporate governance at MAN complies with nationally and internation- ally recognized standards of good and responsible corporate governance. Important policies and guidelines include: Corporate law and regulations The German Corporate Governance Code The UN Global Compact Our Code of Conduct Our Articles of Association and internal policies Challenges and objectives MAN does not tolerate illegal or irregular conduct. Managers have a particular responsibility to lead by example, follow rules, and comply with the law. Organization The MAN Group Corporate, Governance & Compliance (GRC) function is currently staffed by 47 employees. This function is under the Head of GRC / Chief Compliance Officer (CCO), who reports regularly to MAN SE’s Executive Board and the heads of other functions on the current status of GRC activities. At different levels of the Group, regular status reports on GRC programs and initiatives are also presented in the responsible committees. Compliance and risk management responsibilities are also carried out by employees known as Compliance Champions and by the coordinators of the risk management and internal control system. They are not full-time GRC employees, but MAN employees and managers who have taken on special responsibility for topics related to compliance and risk management.
13 MAN GRI Report 2016 Management approach Overview Foreword Portrait Strategy and Governance Integration Management approach strategy & integration compliance stakeholder and customer satisfaction corporate citizenship Products People Production Annex Principles and guidelines Our Code of Conduct outlines standards of behavior that are binding for all our employees in their daily work. Our compliance guidelines also provide concrete instructions for handling ambiguous situations. Relations with our business associates are governed by our Code of Conduct for Suppliers and Business Partners, which requires them to comply with basic princi- ples of corporate responsibility, transparency, fairness, and data protection. Systems and instruments Rolled out in 2010, our compliance management system helps us detect non-compliance at an early stage and respond quickly, effectively, and consistently. It is designed to address issues related to white-collar crime (in particular, the prevention of corruption, money laundering, and ter- rorism financing) and antitrust law. The Disciplinary Sanction Committee is the body responsible for imposing internal sanctions in the event of compliance violations. It meets on an ad hoc basis and is made up of the Chief Executive Officer of the subgroup concerned, the Chief Human Resources Officer of MAN SE, the Chief Compliance Officer, and the Com- pliance Officer of the subgroup in question. The findings of misconduct investigations – as well as the results of regularly conducted compliance risk assessments – are used to continuously improve our compliance management system and introduce selective compliance measures. Memberships MAN is a member of Transparency International and the German Insti- tute for Compliance (DICO). We are active in several different DICO com- mittees and working groups. MAN also remains committed to the ten principles of the United Nations Global Compact. In addition, we support the Alliance for Integrity, an initiative of Germany's Federal Ministry for Economic Cooperation and Development, the Federation of German Industry, and numerous German companies, which promotes integrity in business practices. Risk management Challenges and objectives Entrepreneurial activity entails constant exposure to risk. With a view to exploiting market opportunities, we deliberately accept risk if, by doing so, we can expect to see an appropriate increase in shareholder value. As a basic principle, risk that could jeopardize the Group’s continued existence may not be entered into, while unavoidable risk must be minimized by taking suitable measures. Global challenges such as climate change, demo- graphic change, globalization, population growth, digital transformation, and urbanization represent opportunities and risks for MAN, as does the internationalization of our business activities. Organization and instruments Our Group-wide, centralized risk management system allows us to con- tain risk and leverage opportunities by providing us with the necessary information at an early stage. Comprising key elements such as risk and opportunity management, our internal control system, our continuous controls monitoring system, and the standard GRC process of Volkswa- gen AG, it is an integral part of our corporate management and business processes. To assess risks and opportunities, experts regularly conduct risk analyses. More information on this topic can be found in the MAN 2016 Annual Report, page 46 et seq.
14 MAN GRI Report 2016 Management approach Overview Foreword Portrait Strategy and Governance Integration Management approach strategy & integration compliance stakeholder and customer satisfaction corporate citizenship Products People Production Annex Climate-related risks and opportunities At MAN, the following climate-related risks and opportunities apply to one or more of our subgroups: Regulatory risks, particularly with regard to a CO₂ tax or emissions trad- ing in the logistics sector Extreme weather events, such as severe storms, flooding, hail, or heavy snowfall, which could interrupt production or affect suppliers Reputation risk – because the use of our products generates greenhouse gas emissions and MAN can only achieve long-term market success if the Company invests in energy-efficient and low-carbon technologies At the same time, the consistent continuation of the European climate- protection policy and the gradual implementation of similar policies in the BRIC countries will also yield new growth opportunities for MAN. These include: Increasing market share through early compliance with regulatory requirements Strengthening ties to customers and suppliers through joint efforts to cut CO₂ emissions Increasing competitiveness through greater immunity to energy price fluctuations, resulting from increased reliance on internal energy gen- eration and renewables Corporate citizenship Strategic approach At MAN we see ourselves as part of society. Our goal is to be a good corpo- rate citizen and promote sustainable development. We can make the most valuable contributions to issues that relate to our core business areas. We have enjoyed a successful strategic partnership with SOS Children’s Vil- lages since 2008. Our joint activities focus on long-term and sustainable education programs for children and young people. In cooperation with the non-profit organization, we implement projects around the world – often with the help of volunteer work by our employees. With our attrac- tive initiatives, we are aiming to make a contribution to society and increase our employees’ identification with the Company. Furthermore, in the year under review MAN Diesel & Turbo and the non-governmental organization Mercy Ships formalized their long- standing partnership by signing a sponsorship agreement. The collabora- tion with Mercy Ships, a health care charity that operates worldwide, extends back to 2010. Policies All donations and sponsorship activities must comply with our mandatory, Group-wide policy. Permissible fields of activity for donations include edu- cation, academia, the arts, community programs (social welfare organiza- tions and charitable and humanitarian projects), and disaster relief efforts. Instruments Most of our sponsorship activities and donations are long standing and closely related to our core business areas. We apply the internationally recognized standard of the London Benchmark Group (LBG) to measure the success of our community projects.
15 MAN GRI Report 2016 StRAtEGy & INtEGRAtION Integration in corporate divisions The integration of CR in the strategies of the divisions, operating pro- cesses, and vocational training and continuing professional development activities is the most important factor in our success. Systematic stake- holder dialog and open communication facilitate the integration of CR in MAN’s core business activities. In 2016, we again worked with a number of relevant partners to drive corporate responsibility initiatives at MAN Truck & Bus and MAN Diesel & Turbo. „We at MAN“ onboarding program In 2016, the MAN Academy continued to offer training within the frame- work of the MAN onboarding program. At MAN Truck & Bus a total of 116 new employees from our German sites had the chance to participate in the first course in the MAN onboarding program, “We at MAN,” which was offered five times. Participants learn about the structure and responsibili- ties of all functional areas within the Company. They also have a chance to dialog with experts in three marketplaces themed around corporate responsibility & environment, health management, and compliance. Presentations from each division and a guided tour of the truck assembly plant in Munich offer the participants detailed insights into the world of MAN. Another highlight of the program is a visit to the test track, where the newcomers can gain firsthand experience of our products by driving trucks and buses. At MAN Diesel & Turbo too, the topic of corporate responsibility has been firmly anchored in training programs for managers and new vocational trainees, as well as onboarding activities for new employees. Overview Foreword Portrait Strategy and Governance Integration Management approach strategy & integration compliance stakeholder and customer satisfaction corporate citizenship Products People Production Annex
16 MAN GRI Report 2016 COMPlIANCE Overview Foreword Portrait Strategy and Governance Integration Management approach strategy & integration compliance stakeholder and customer satisfaction corporate citizenship Products People Production Annex German Corporate Governance Code In its management and reporting activities, MAN SE largely complies with the recommendations of the German Corporate Governance Code (DCGK) as amended on May 5, 2015. The most recent Declaration of Conformity was issued in December 2016. MAN SE departed from the DCGK recommenda- tions with regard to three points ( 2016 Annual Report, page 14 et seq). Business Partner Approval Tool Our policy on engaging business partners regulates collaboration with business partners who support our sales activities. The Business Partner Approval Tool is used to check and approve their integrity. A list of all com- panies that we are not permitted to work with is updated on a monthly basis and communicated within the Group. In total, 1,995 checks were conducted using this tool in the report- ing period. Because approvals are issued for a limited period, some of the checks were related to renewals of the approvals granted to individual business partners. Compliance Helpdesk All MAN employees can contact the central Compliance Helpdesk by phone or e-mail to obtain answers to compliance-related questions. In the reporting period, 355 questions were answered by the central office, while 1,850 questions were handled locally by compliance managers in various business units and sales regions. Compliance training Compliance awareness training courses were held for 1,767 employees around the world in the year under review. These on-site training courses focus on providing basic knowledge on the topics of combating corruption, antitrust law, and money-laundering prevention. We also conduct special courses on antitrust law and combating corruption for employees who are particularly exposed to risks in these areas. In the reporting period, these courses provided in-depth training to 1,902 employees. Since 2015, we have also been offering our managers special on-site compliance training courses. The focus here is on specific compliance risks and challenges as well as the special responsibilities that come with a leadership role. In the reporting period, 666 managers attended these courses. Special on-site training courses were also held for 103 procurement employees and 26 business partners in 2016. Furthermore, in the year under review 1,736 employees successfully completed the first compliance e-learning module on the Code of Conduct, which addresses the topics of combating corruption, antitrust law, and data protection. In the second module on the Code of Conduct, 2,035 employees were trained in correct conduct during searches, dealing with conflicts of interest, and preventing money laundering. In October of the year under review, a third Code of Conduct e-learning module was rolled Participation in on-site compliance training courses in 2016 MAN Group 4,464 1,767 Compliance awareness course Compliance training for managers 666 Training for business partners 26 103 Training for procurement employees Antitrust workshop 926 976 Anti-corruption workshop
17 MAN GRI Report 2016 Compliance Overview Foreword Portrait Strategy and Governance Integration Management approach strategy & integration compliance stakeholder and customer satisfaction corporate citizenship Products People Production Annex out to supplement the first two courses, offering more in-depth treatment of the issues of integrity, transparency, and personal responsibility. In the reporting period, 10,979 employees completed this new module. Since 2013, employees who are exposed to an increased corruption risk (e.g. in sales and purchasing) have also participated in an in-depth web-based training module on combating corruption. In 2016, 225 employ- ees completed this module. Also in the reporting period, 802 employees took advantage of a training module called “Antitrust Law: Preventing Antitrust Infringements.” Integrity campaign An integrity campaign held in the reporting period included a variety of activities designed to generate and raise awareness of issues related to eth- ical behavior. One example was the creation of an in-house film focusing on the topic of integrity and using case studies to illustrate the meaning of lawful behavior. In addition, the Governance, Risk & Compliance (GRC) organization has initiated “Compliance Alerts,” a new newsletter format that makes it possible to provide employees with timely information on current compliance risks and hints on correct conduct. In-house events were also organized worldwide to call attention to the issue of combating corruption and the importance of ethical behavior. Preventing money laundering Both the Geldwäschegesetz (GwG – German Money Laundering Act), and many laws in other jurisdictions require companies to introduce measures to prevent money laundering and terrorism financing. Among other things, our Group-wide money-laundering policy establishes minimum standards for handling suspicious business partners and requires investigation of ambiguous circumstances before a business transaction is concluded. We educate our employees on this topic as part of the training module on our Code of Conduct ( , Compliance training). Compliance training 4,464 MAN employees across the Group received information and training on a variety of compliance issues in 2016 Reporting compliance violations The “Speak up!” whistleblower portal helped to uncover and prevent seri- ous risks for MAN in the year under review. “Speak up!” is used to accept and analyze information relating to serious compliance violations, espe- cially in the areas of white-collar crime (e.g. corruption offenses and money laundering), antitrust law, and data protection. MAN employees and third parties can use "Speak up!" to report compliance violations — confidentially and regardless of time and location. MAN does not toler- ate compliance violations under any circumstances. Reports of possible violations are investigated in detail and violations are dealt with and sanctioned in line with the penalties permitted under labor law. In addi- tion, findings from the investigation of compliance violations are used to continuously improve the compliance management system. Selected compliance measures Business Partner Approval Tool 1,995 business partners checked 2016 Helpdesk On-site training courses Integrity campaign 355 questions answered by central office; 1,850 handled locally 381 sessions with 4,464 participants Compliance film focusing on integrity; Compliance Alerts; Integrity e-learning module; worldwide in-house events on combating corruption
18 MAN GRI Report 2016 Compliance Data protection MAN stands for effective data protection in compliance with legal regula- tions, applied worldwide based on the rigorous European standards. To meet these stringent requirements, the MAN Group maintains a global network of data protection officers and coordinators. In Germany, four data protection officers in seven companies work to ensure that the per- sonal data privacy rights of employees, customers, suppliers, and business partners are respected. Outside of Germany the network comprises 73 coordinators in 42 nations who work on data protection in 81 companies. MAN SE, Group Data Protection, coordinates the network. In the reporting period, Group Internal Audit was the body responsible for data protection. Due diligence CR and compliance risks can ensue from the acquisition or disposal of equity investments. To avert such risks, the GRC function is involved in acquisition projects from the outset. Target companies must complete a due-diligence questionnaire that addresses CR and compliance issues, and includes questions on human rights and environmental impacts. Overview Foreword Portrait Strategy and Governance Integration Management approach strategy & integration compliance stakeholder and customer satisfaction corporate citizenship Products People Production Annex
19 MAN GRI Report 2016 StAkEhOldER ANd CuStOMER SAtISFACtION Overview Foreword Portrait Strategy and Governance Integration Management approach strategy & integration compliance stakeholder and customer satisfaction corporate citizenship Products People Production Annex Ratings and rankings The respected environmental rating agency oekom research once again awarded MAN a good “B-” rating in 2016. For its ratings, oekom research uses a twelve-step scale extending from A+ (best) to D-. In the context of changes within the Volkswagen Group, other rankings and ratings have been shifted to a group-wide level. This means that the MAN Group will no longer receive separate rankings and ratings. Memberships With the aim of supporting dialog and communication between industry, policymakers, and society, we are a member of numerous associations and organizations. Our most important memberships are: German Association for Materials Management, Purchasing, and Logistics Association of German Freight Forwarders and Logistics Operators German Transport Forum European Automobile Manufacturers Association (ACEA) International Chamber of Commerce Germany Transparency International Germany German Association of the Automotive Industry German Engineering Federation Bavarian Business Association MAN is an active member of these associations and organizations, partici- pating in working groups as well as management committees. This espe- cially applies to committees that focus on the following issues: Sustainable mobility Fuel efficiency Emissions of CO₂, airborne pollutants, and noise Size and weight of commercial vehicles Safety Connected automated driving, aimed at safer and more efficient trans- portation of goods and people At EU level, MAN is deeply involved in European Technology Platforms (ETPs), which are working to develop strategic innovation and research programs that will drive sustainable and competitive mobility of people and goods. These include: Alliance for Logistics Innovation through Collaboration in Europe European Council for Automotive R&D European Green Vehicles Initiative European Road Transport Research Advisory Council International Road Transport Union International Union for Road-Rail Combined Transport
20 MAN GRI Report 2016 Stakeholder and customer satisfaction Overview Foreword Portrait Strategy and Governance Integration Management approach strategy & integration compliance stakeholder and customer satisfaction corporate citizenship Products People Production Annex Dialog with policymakers [G4-26] We are actively working to develop solutions for global challenges. To this end, we also contribute our knowledge and expertise to the ongo- ing political debate. Our focus here is on topics relevant to our core busi- ness, such as reducing worldwide CO₂ emissions caused by the transporta- tion of goods and people. To this end we maintain an ongoing dialog with the responsible ministries at the national, EU, and international levels, as well as with elected representatives and opinion leaders from the govern- ment and the opposition. The MAN guidelines for lobbying are defined in a Code of Conduct which applies Group-wide. This Code explicitly outlines our commitment to nonpartisanship and to making our positions transparent. In 2016, MAN spent around €80,000 on direct lobbying activities. Dialog with local policymakers and businesses As part of the Munich Business Climate Pact, initiated by the City of Munich, MAN and 14 other major Munich-based companies have commit- ted to a shared goal of reducing greenhouse gas emissions. The pact was signed at City Hall by representatives of all participating companies in 2016, followed by an initial workshop and the launch of a joint activity. In this context, in January 2017 vocational trainees from the participating companies attended an energy-scout course offered by the Chamber of Industry and Commerce. MAN is making an important contribution to the Climate Pact through the construction of a combined heat and power plant at its Munich site and other climate protection measures in build- ings at the site. In addition, MAN Truck & Bus has been part of the Bavarian Environmental Pact since 1996, working for sustainable business practices and environ- mental protection. This agreement between the Bavaria state government and Bavarian businesses is based on a commitment to voluntary action, showing initiative in environmental protection, and cooperative activity. Customer involvement and dialog Dialog with our customers – one of the core initiatives of MAN’s Climate Strategy – represents a valuable opportunity to discuss the reduction of global CO₂ emissions. After all, many of them have already rolled out their own CO₂ reduction targets. It is essential for MAN to understand future customer needs; by flowing customer requirements into the development of our products and services, we create more customer value. At meetings of the customer advisory panel, first set up in 2009, MAN Truck & Bus customers exchange ideas with MAN experts and the Executive Board member responsible for sales. Selected customers partic- ipate in this discussion and feedback platform. We also conduct targeted customer dialog at trade fairs for our sec- tor. For instance, MAN Diesel & Turbo showcased its modular power plant concept at the 2016 Power-Gen Europe fair, and presented its entire mari- time portfolio at the 2016 SMM, the leading trade fair for shipbuilding and marine technology.
21 MAN GRI Report 2016 Stakeholder and customer satisfaction Overview Foreword Portrait Strategy and Governance Integration Management approach strategy & integration compliance stakeholder and customer satisfaction corporate citizenship Products People Production Annex Customer satisfaction Along with our employees, customers are our most important stake- holders because they drive our business success. In order to maintain long-term relationships with our customers and better understand their needs, we conduct regular surveys in all our business areas to find out how satisfied customers are with our products and services. By way of example, MAN Truck & Bus continuously tracks customer satisfaction using the CustomerFirst Study (CFS). As part of the CFS, in 2016 we con- ducted telephone surveys of over 40,000 customers – significantly more than in the previous year. More than 90% gave MAN Truck & Bus a “good” rating or better, while almost 70% responded with “very good” or better. This indicates that customer satisfaction has shown a further rise compared to 2015 levels. Customer survey In 2016, more than 90% of 40,000 customers surveyed gave MAN truck & bus a rating of at least “good” or “very good” We use the results of these customer surveys to check the effectiveness of our customer satisfaction improvement measures and initiate fol- low-up activities. Customer information We provide our customers with comprehensive information and instruc- tions for all our products. By optimizing the operation of our products, our customers help not only to improve product safety, but also to con- serve resources. We therefore inform them specifically about factors, such as rolling resistance and aerodynamic drag, which influence vehicle emis- sions and fuel consumption. We present information on the CO₂ emis- sions generated by our vehicles with reference to the total lifetime mile- age. The calculations can be simulated using the TCO (Total Cost of Ownership) calculator on the MAN Truck & Bus website. We are working to raise awareness among MAN Truck & Bus sales employees and provide them with regular training in the correct use of our products and services. In 2016, a total of around 13,000 employees participated in over 200,000 hours of training. Of these, 700 partici- pants completed training courses on climate protection and the envi- ronment. Every two years, MAN Diesel & Turbo conducts an online survey which also serves to monitor customer satisfaction. In 2015, some 4,000 custom- ers were asked to provide feedback on the company’s products and ser- vices. 35% of the participants rated the performance of MAN Diesel & Turbo as “good,” 42% as “very good,” and 9% as “excellent.”
22 MAN GRI Report 2016 CORPORAtE CItIzENShIP Overview Foreword Portrait Strategy and Governance Integration Management approach strategy & integration compliance stakeholder and customer satisfaction corporate citizenship Products People Production Annex Long-term partnership with SOS Children’s Villages As part of our long-term partnership with SOS Children’s Villages, we have pledged annual funding of €150,000. This provides support for SOS Chil- dren’s Villages facilities in Germany, Ethiopia, and Haiti. In the year under review, a key focus of our support was on a variety of refugee aid projects. In Germany we assisted SOS Children’s Villages initiatives near six of our sites. This included a new refugee aid project run by SOS Children’s Vil- lages in Zwickau. A large part of the pledged funds and a donation in the amount of €26,500 were used for SOS Children’s Villages refugee aid proj- ects. In addition to offering financial assistance, we strongly encourage employee volunteering. Diesel & Turbo and the Augsburg SOS Children’s Village was continued. In 2016, the long-standing and successful partnership between MAN Corporate volunteering In the year under review, 67 MAN employees volunteered some 500 hours in SOS Children’s villages facilities Vocational training in Ethiopia One international program that we support is the SOS Vocational Train- ing College in Kality, Ethiopia. Since 2008, MAN has contributed a total of €600,000, which has gone toward the construction of a new training building, facility maintenance, the salaries of five teachers, and MAN scholarships for young people. In 2016, MAN again assisted with the financing of the engine servicing and maintenance, drive systems, and automotive mechanics programs. With a donation of €30,000, MAN covers a large share of the running costs for this vocational program. School education in Haiti In Haiti we support the SOS Herman Gmeiner School, a primary and sec- ondary school which is located in Santo on the outskirts of the capital Port-au-Prince and is currently attended by more than 1,000 children. The children can attend these SOS schools free of charge. In 2016, MAN pro- vided €20,000 to pay for approximately three-and-a-half teaching posi- tions at the Santo school. Partnership with Mercy Ships In 2016, MAN Diesel & Turbo and the non-governmental organization Mercy Ships formalized their long-standing partnership by signing a sponsorship agreement at the SMM maritime trade fair in Hamburg. Mercy Ships is a health care charity that operates worldwide. Its hospital ships offer free state-of-the-art medical services to people with no regular access to health care. Surgeons, dentists, nurses, health care trainers, teachers, cooks, mariners, engineers, farmers, and other specialists all volunteer their time and expertise in aid of this worthy cause. The agreement between MAN Diesel & Turbo and Mercy Ships pledges the annual provision of spare parts for the four engines of the M/V Africa Mercy hospital ship to the value of up to €250,000. MAN Diesel & Turbo’s collaboration with Mercy Ships extends back to 2010.
23 MAN GRI Report 2016 Corporate citizenship Overview Foreword Portrait Strategy and Governance Integration Management approach strategy & integration compliance stakeholder and customer satisfaction corporate citizenship Products People Production Annex Refugee integration We see immigration as an opportunity. The shortage of skilled profes- sionals in Germany will only increase as the country’s demographics continue to shift. The decisive thing now is to give motivated refugees a chance to build a better future. To this end, MAN not only makes dona- tions to integration projects, but also fosters the integration of refugees in the Company. In the 2016 fiscal year, 39 refugees were integrated into the MAN Group through a variety of channels. This included 18 young refugees who completed initial training (eight) or a vocational training program (ten). 20 refugees were offered internships, and three other ref- ugees were employed. Donations In 2016, our cash and non-cash donations totaled €1,147,454 (2015: €837,937). MAN extended this support to numerous charitable projects and institutions – with a focus on scientific, educational, and social wel- fare initiatives. Scholarships Since 2011, MAN has supported approximately 300 recipients of the Ger- many Scholarship, which opens up educational opportunities to high-per- forming students regardless of their social background and the location of their university. Half of the funding for the scholarships, which are awarded in recognition of outstanding achievements, comes from the German federal government, with the other half contributed by compa- nies, foundations, and private individuals. MAN provides Germany Schol- arship funding at the Technical University of Munich, Munich University of Applied Sciences, RTWH Aachen University, Deggendorf Institute of Technology, and the Technical University of Berlin. In all, we collaborate with almost 100 technical universities around the world. Several years ago MAN PrimeServ China launched its own scholarship program, which allows MAN Diesel & Turbo to support students of marine engineering at Shanghai Maritime University and Dalian Maritime University in China. Each year, four students at these universities are granted scholarships based on their outstanding academic achievements. donations In 2016, MAN donated €1.1 million to charitable projects (2015: €837,937)
24 MAN GRI Report 2016 PROduCtS Management approach Overview Foreword Portrait Strategy and Governance Integration Products Management approach product responsibility Efficient and environmentally friendly products & services Intelligent mobility product safety People Production Annex MAN stands for efficient transportation and energy solutions. Our approach to product responsibility is broad and comprehensive: not only must our products offer maximum economic benefits for our customers and the lowest possible environmental and carbon impact, they must also offer top-class safety and add value for society as a whole. Challenges and goals To meet the global challenges in the areas of health, resource scarcity, urbanization, and climate change, MAN takes a broad and comprehensive approach to product responsibility. This focuses on everything from the development of efficient and safe products and the implementation of environmentally friendly, resource-efficient production processes to envi- ronmentally responsible after-sales activities and customer support. Conse- quently, product responsibility at MAN is based on four cornerstones – environment, safety, health, and social responsibility – and takes into account the entire product life cycle, from raw materials extraction to end- of-life disposal. This broad-based approach allows us to meet the increasing expectations of our stakeholders. Principles and goals We are committed to continuously improving the efficiency of our prod- ucts. After all, in most cases our customers base their decision to buy a product on total cost of ownership. In the freight transportation sector, fuel costs account for approximately one third of this sum, which is why the quest for greater efficiency and low emissions is a key technology Material GRI aspects covered in this chapter: Products and Services [measures to reduce negative impacts] – Customer Health and Safety driver. In pursuit of technology leadership, MAN focuses its research and development activities not only on developing new products and enhanc- ing existing ones but also on Reducing fuel consumption and emissions Alternative drive concepts Alternative fuels Systems and instruments Future trends and scenarios are an important benchmark for MAN’s stra- tegic product development process. MAN Truck & Bus uses a “Trend Radar” to assist in the early identification, evaluation, and analysis of rel- evant trends. The findings are then integrated into our Product Engineer- ing Process. MAN Truck & Bus calculates the life cycle environmental impact of its products in two stages. Stage one is a Product Carbon Foot- print (PCF) analysis. For example, we performed a PCF for a typical long- haul truck, which was then externally verified. Stage two is a Life Cycle Assessment (LCA). To meet the high safety standards expected of our products, MAN Diesel & Turbo has set up a Product Safety Committee. At the corporate organizational level, product safety is also underpinned by the “Product safety monitoring and the handling of substandard products” subgroup policy. The Executive Board has also signed off on internationally binding product safety guidelines. As in previous years, the product safety audits carried out in 2016 documented the awareness of product safety that exists throughout the organization.
25 MAN GRI Report 2016 PROduCt RESPONSIbIlIty Reducing the life cycle CO2 emissions of our products To identify the potential for reducing the life cycle CO2 emissions of our products, we calculate PCFs for virtually all product groups of the MAN Truck & Bus subgroup and for selected product groups of MAN Diesel & Turbo. The benchmark products for which calculations have been per- formed include not only a dual-fuel engine, but also a performance- enhancing system (turbocharger) and a Selective Catalytic Reduction (SCR) system. The calculation methodology is based on the requirements of the Greenhouse Gas Protocol. The product life cycle stages used by MAN Truck & Bus in this cal- culation model are defined in accordance with standard automotive industry practice. They comprise: 1. Production 2. Use phase 3. End of life (recycling and waste processing) As early as late 2014, our PCF study for a typical long-haul truck was veri- fied in accordance with TÜV NORD standard TN-CC 020 based on the international standard ISO 14064-3. The study was carried out in line with the requirements of the GHG Protocol Product Accounting and Reporting Standard. We also perform LCAs which take into account additional envi- ronmental impact categories, such as photochemical ozone creation potential and ozone depletion. In 2016, MAN Diesel & Turbo went on to calculate a PCF for a transmission compressor. The findings were clear: for a transmission compressor as well, the use phase accounts for by far the largest share of CO2 emissions. On average, more than 90% of the total life-cycle greenhouse-gas emissions of the products of both our Commercial Vehicles and our Power Engineering business areas are generated during the use phase. Bearing in mind that most of our products have a very long service life, during which they are used intensively, we implement a future-oriented product devel- opment process aimed at reducing environmental impacts. Overview Foreword Portrait Strategy and Governance Integration Products Management approach product responsibility Efficient and environmentally friendly products & services Intelligent mobility product safety People Production Annex
26 MAN GRI Report 2016 EFFICIENt ANd ENvIRONMENtAlly FRIENdly pRoduCtS & SeRviCeS Overview Foreword Portrait Strategy and Governance Integration Products Management approach product responsibility Efficient and environmentally friendly products & services Intelligent mobility product safety People Production Annex Protecting the climate through innovation MAN seeks to reduce the total cost of ownership (TCO) and fuel consumption of its products by developing innovative transportation and energy solutions. In particular we focus on improving the efficiency of existing products and developing alternative drive systems. As part of MAN’s Climate Strategy we are committed to offering our customers a consistently efficient product portfolio. We have positioned ourselves as a supplier of sustainable products and services in both our Commercial Vehicles and our Power Engineering business areas ( , Climate Strategy, page 7). Efficient diesel engines Ever since Rudolf diesel developed the diesel engine in the late 19th century together with engineers at Maschinenfabrik Augsburg (a forerunner of the MAN Group), we have worked continuously to improve the efficiency and performance of this internal combustion engine. today, economical and efficient transpor- tation and energy solutions from MAN are in operation all over the world. Trucks The highly efficient TGX EfficientLine, now into its third generation, incor- porates a range of fuel-saving technologies aimed at further reducing total cost of ownership and CO2 emissions. The fuel consumption of the MAN TGX EfficientLine 3 has been reduced by 6.35% compared with the previous model. This calculation was verified by the TÜV technical inspection authority in 2016. By way of example, a GPS-based Efficient- Cruise cruise control system on this model anticipates upcoming uphill and downhill stretches and calculates the most fuel-efficient speed in advance, allowing the vehicle’s momentum to be used to save fuel. Fuel-saving technologies on the TGX EfficientLine 3 include: EfficientCruise predictive cruise control EfficientRoll coasting function D26 engine series developing enhanced torque and power TipMatic manual transmission with efficiency functions High-performance TeleMatics system Since market launch in 2010, more than 65,000 customers have already opted for the extra-fuel-efficient EfficientLine models and packages. Coaches With its aerodynamically optimized design, the NEOPLAN Skyliner double-decker coach than 30 l/100 km – a saving of approximately 5% in highway driving at a constant speed of 100 km/h. This has benefits for the environment as well, with CO2 emissions of just 12 g/passenger kilometer when oper- ating at full passenger capacity. fuel consumption of returns less Awards The MAN TGX EfficientLine 3 delivered an impressive performance in a road test trade magazine “transporte mundial,” recording the lowest average consumption of any vehicle tested by the magazine to date. German trade magazines “Verkehrsrundschau” and “Trucker” honored the new model’s predecessor, the TGX EfficientLine 2, with their “Green Truck Innovation” award, based on its 2016 environmental rankings. The NEOPLAN Skyliner was presented with the “International busplaner Sustainability Award 2017” by German trade magazine “busplaner.”
27 MAN GRI Report 2016 Efficient and environmentally friendly products & services Overview Foreword Portrait low-pollutant natural gas engines As a clean fuel, natural gas plays a key role in our product portfolio. As well as Strategy and Governance providing low-emission propulsion for buses, trucks, and ships, natural gas is also ideally suited for use in the power generation industry. Integration Products Management approach product responsibility Efficient and environmentally friendly products & services Intelligent mobility product safety People Production Annex City buses When operated on biogas or e-gas, the MAN Lion’s City GL CNG nat- ural gas-powered city bus is virtually carbon-neutral. Gas-powered buses accounted for one in five of all MAN city buses sold during the year under review. MAN Truck & Bus is the leading European supplier of gas buses, with a current average market share of 39%. In 2016, the first vehicles were delivered under a contract to supply 143 Lion’s City CNG buses to the Tbilisi Transport Company in Tbilisi, Georgia. Ever since MAN presented its first gas-powered bus back in 1943, the Company has been continuously developing and improving both the engine and the emissions technology for these vehicles. Trucks To explore the potential for natural gas in Brazil and other emerging markets, MAN Latin America has developed a 23-tonne 100% natural gas-powered truck for urban operation. A tank capacity of 150 m3 gives this vehicle a driving range of 200 km. Chassis dynamometer tests have shown major reductions in emissions, with a 95% reduction in fine particle emissions, a 70% reduction in nitrogen oxides and a 20% reduction in CO2. Dual-fuel engines With its dual-fuel engines, which are capable of operating on both gas- eous and liquid fuels, MAN Diesel & Turbo offers a low-carbon propul- sion solution for ships that combines energy efficiency with flexibility. As well as liquefied natural gas (LNG), MAN Diesel & Turbo also offers engines capable of running on methanol, ethanol, or liquefied petro- leum gas (LPG). The first primarily LNG-powered container ships will have engines sup- plied by MAN Diesel & Turbo. The U.S. shipping company TOTE Inc. has signed a contract with the NASSCO shipyard in San Diego for the construction of two new container ships, both powered by an 8L70ME- GI dual-fuel two-stroke engine capable of operating on both liquid and gaseous fuels. Gas storage In addition to dual-fuel engines, under the MAN Cryo brand MAN Die- sel & Turbo also supplies systems for the storage and processing of natural gas in maritime applications. This means the Company is able to supply its customers with complete engine/gas supply solutions for gas-powered ships. Gas-fired power plants MAN Diesel & Turbo gas turbines and gas-only engines offer an ideal solution for decentralized energy generation. Following the launch of the 35/44G gas engine (electrical output: 10,335 kW) for power gen-
28 MAN GRI Report 2016 Efficient and environmentally friendly products & services eration, MAN Diesel & Turbo has now extended its gas engine portfolio with the 51/60G, which has an electrical output of 18,465 kW. This unit also features very high efficiency. In one example from this segment, energy company EnBW Energie Baden-Württemberg AG has commissioned MAN Diesel & Turbo to build a 30 MW gas-fired combined heat and power (CHP) plant at its Stuttgart-Gaisburg site. In addition to producing electricity this plant, which will be powered by three MAN 20V35/44G gas engines, will also provide up to 30 MW of district heating. With up to 90% overall effi- ciency, the plant will achieve a very high fuel utilization factor. MAN Truck & Bus offers low-pollutant gas engines for CHP plants in an output range from 37 kW to 580 kW in the case of natural gas, and from 68 kW to 580 kW for operation on alternative gases such as bio- gas, landfill gas, or sewage gas. Specially developed for operation on natural gas and alternative gases, these MAN engines are noted for their high standards of reliability and energy efficiency. With their opti- mal combustion/CHP processes, they achieve overall efficiencies of over 90%. With lambda=1 control and 3-way catalytic converter, the extensive range of low-maintenance, naturally-aspirated gas engines allows operators to comply with very strict emissions standards. Aftertreatment systems MAN Diesel & Turbo offers its customers highly efficient aftertreatment systems capable of ensuring compliance with both present and future emissions requirements. These technologies are not only fitted on new engines, but are also available for retrofitting on engines already in oper- ation. MAN was the first manufacturer to offer IMO Tier III compliance for its four-stroke engines by combining them with an SCR (selective cata- lytic reduction) system. Now we have successfully applied this technol- ogy to two-stroke engines as well. Overview Foreword Portrait Strategy and Governance Integration Products Management approach product responsibility Efficient and environmentally friendly products & services Intelligent mobility product safety People Production Annex
29 MAN GRI Report 2016 Efficient and environmentally friendly products & services Overview Foreword Portrait Electricity – the climate-friendly drive technology with zero pollutant emissions and low noise, plus a low carbon footprint Strategy and Governance when the power is renewably generated, electricity is set to be the drive Integration Products Management approach product responsibility Efficient and environmentally friendly products & services Intelligent mobility product safety People Production Annex technology of the future – at least around town and on shorter journeys. by 2020, as a step to expanding electric mobility in the commercial vehicle sector, we plan to begin volume production of an all-electric city bus and an electric truck (etruck). Our economically robust eMobility solutions are being developed in close collaboration with cities and logistics partners. Hybrid buses Our MAN Lion’s City bus is already available in a hybrid version. The MAN Lion’s City Hybrid bus is powered by a frugal internal combus- tion engine and an efficient electric motor. Fuel consumption is cut by up to 30%, equivalent to a reduction of 26 tonnes in annual CO2 emis- sions. More than 450 MAN hybrid buses have been supplied to cus- tomers since the market launch in 2010. Electric buses Thanks to its long experience developing electrified powertrains and components for the MAN Lion’s City Hybrid, MAN Truck & Bus is well placed to offer practical and efficient solutions for all-electric buses, too. Here MAN has opted for a modular concept. Charging technolo- gies can be freely selected and combined, and the number of battery modules can be varied – in line with individual requirements in terms of driving range and transportation capacity. In 2018 MAN will present a pre-production version of a battery-electric bus (bEv) In 2019 MAN will begin volume production of an all-electric city bus In 2016, MAN Truck & Bus entered into “innovation partnerships” with a number of cities to work towards the goal of emissions-free public transportation. Together, we are looking to expand the development of alternative-powered line-service buses. MAN’s partners include: Hamburger Hochbahn and Verkehrsbetriebe Hamburg-Holstein public transportation companies in Hamburg Münchner Stadtwerke municipal utilities and Münchner Verkehrs- gesellschaft public transportation company in Munich Stadtwerke Wolfsburg municipal utilities and Wolfsburger Verkehrs- GmbH public transportation company in Wolfsburg
30 MAN GRI Report 2016 Efficient and environmentally friendly products & services Overview Foreword Portrait Strategy and Governance Integration Products Management approach product responsibility Efficient and environmentally friendly products & services Intelligent mobility product safety People Production Annex The aim of this collaboration is to develop a TCO-optimized, zero- emission concept for electric mobility. At the same time, the innova- tion partnerships will also provide an opportunity for reviewing and exploring the potential of fuel cell and hydrogen technology. Electric trucks Since 2009, MAN Truck & Bus has been working on new concepts for goods delivery and waste collection in urban areas. Cities today increas- ingly face the challenge of finding new ways to balance the require- ments of a healthy climate and good quality of life for citizens with the need for urban goods transportation and delivery. Back in 2012, MAN 2017 MAN etrucks field trials begin 2021 etrucks scheduled to join the MAN product portfolio Truck & Bus presented a solution in the form of the MAN Metropolis concept vehicle. In all-electric mode, this electrically powered 26-tonne refuse collection vehicle operates with zero CO2 emissions. At the same time, its very low noise emissions mean that it can also operate at night even in downtown areas. A range extender fitted in the chassis increases the daily driving range to as much as 150 km. At the 2016 Commercial Vehicles Trade Fair in Hanover (IAA), MAN Truck & Bus took the Metropolis approach one stage further, this time presenting an electrically powered semitrailer tractor for night-time urban delivery work – a distribution model already well-established in the food sector, among others. This concept vehicle meets the main requirements for urban delivery vehicles of the future, combining generous cargo space with a low unladen weight, zero emissions, and very quiet operation. Field testing of this vehicle by nine partners from the Austrian Council for Sustainable Logistics (CNL) will begin in 2017. From 2020, CNL is planning to switch increasingly to eTrucks for urban and urban-fringe distribution work. MAN Truck & Bus and CNL signed a memorandum of understanding regarding this project in early 2017. The signing was attended by Austrian Chancellor Christian Kern and Austrian Minister for Transport, Innovation and Technology Jörg Leichtfried.
31 MAN GRI Report 2016 Efficient and environmentally friendly products & services Overview Foreword Portrait Strategy and Governance Integration Products Management approach product responsibility Efficient and environmentally friendly products & services Intelligent mobility product safety People Production Annex key challenge: charging technology standardization MAN sees charging interface standardization as a key challenge which still needs to be resolved. Standardization is an essential requirement for ensuring flexibility, interoperability, and a stable planning framework for city bus operators, and for the successful introduction of emission-free propulsion technologies in urban transportation. With this in mind, MAN is taking part in the public-funded project “eBusCS” (Electric Bus Charging System), whose sponsors include the German Federal Ministry for Economics and Energy. For the manufacturers, the main standardization issues to be tackled include vehicle-to-grid communication as described in ISO 15118, the positioning of automated charging systems, and the positioning of the charging inlet on the vehicle. Remanufacturing and service The climate footprint of a vehicle depends to a large extent on the length of its service life. Extending the service life of vehicle components cuts costs and, compared with manufacturing new parts, also reduces CO₂ emissions and resource consumption. With this in mind, MAN Truck & Bus professionally remanufactures used parts such as coolant pumps or crankshafts under the MAN Genuine Parts ecoline brand. These parts then go back into everyday use. More than 3,000 parts are now offered under this program. A comprehensive remanufacturing process at our plant in Nuremberg, Germany, restores used original components to tip-top con- dition. The first step is a thorough cleaning. The components are disman- tled, cleaned in a wash bay, sandblasted, and recoated. Some parts are also rejected at this stage, since the cleaning process reveals which parts are still usable and which should be sent for recycling. Parts which are still functional now enter the remanufacturing process, while worn compo- nents are replaced. Finally, the remanufactured components are reassem- bled and function-tested. The quality standards are high: despite an up to 50% lower price tag, MAN Genuine Parts ecoline products come with the same warranty as new parts. For customers in most parts of Europe an extensive range of MAN replacement units and parts is also available. With more than 115 locations worldwide, MAN PrimeServ, the service brand of MAN Diesel & Turbo, maintains a strong local market presence. The PrimeServ portfolio spans everything from certified original parts and high-quality servicing to customer training and retrofits. Retrofits, for example for diesel engines or marine propulsion systems, help boost effi- ciency and cut emissions.
32 MAN GRI Report 2016 INtEllIGENt MObIlIty Overview Foreword Portrait Strategy and Governance Integration Products Management approach product responsibility Efficient and environmentally friendly products & services Intelligent mobility product safety People Production Annex Leveraging the potential of digitization Digital transformation is opening up whole new business opportunities and fields of activity for MAN. Taking commercial vehicle connectivity as our starting point, we are already offering smart services that reduce fuel consumption, increase fleet utilization levels, and reduce the frequency of workshop visits. Saving potential 2.3 l/100 km: that’s how much fuel experienced drivers can save by adopting a more efficient driving style with the help of Connected Codriver Sustainable transportation systems from RIO The transportation industry continues to be dogged by a range of effi- ciency issues. Often the problems are further compounded by high costs and time-consuming processes. Digitization has the power to transform this situation, providing alternatives to the patchwork of stand-alone solutions that exist at present. Volkswagen Truck & Bus’s digital brand RIO is pursuing this goal with an open, cloud-based, manufacturer-inde- pendent platform which aims to integrate the entire transportation and logistics ecosystem. The RIO platform consolidates information from across the trans- portation and logistics chain, creating a pool of data that can be used to provide practical advice to all parties in the logistics chain. By improving information flow, RIO helps to improve the profitability and competi- tiveness of its customers. With its digital freight-matching service, for example, RIO is able to ensure better utilization of truck capacity, reducing the number of empty journeys. This reduces traffic volumes and brings significant resource savings. It also improves efficiency and cuts emissions. Because every empty run comes at a high environmental cost. Connected CoDriver – the virtual co-driver MAN is also using digitization to support a low-carbon driving style. After all, even if driver assistance systems already play an important sup- porting role, the driver still has a major influence on fuel economy. With Connected CoDriver, MAN Truck & Bus offers its customers a system which, for the duration of the training period, pairs drivers with an instructor who acts as a virtual co-driver. Driving data – about the vehi- cle, the style of driving, and the route topography – is supplied to the instructor by the TeleMatics system. The instructor uses this data to pro- vide regular coaching and tips for a more efficient driving style via the hands-free phone system. Platooning At the present time, the mandatory minimum following distance between trucks driving on Europe’s highways is 50 meters. In the future, truck pla- tooning could change all this – with benefits both for the environment and for traffic flows. MAN defines platooning as a vehicle-based system, still at the development stage, in which two or more truck-trailer combi-
33 MAN GRI Report 2016 Intelligent mobility Overview Foreword Portrait Strategy and Governance Integration Products Management approach product responsibility Efficient and environmentally friendly products & services Intelligent mobility product safety People Production Annex nations follow each other in close proximity with the aid of driver assis- tance systems, controller technology, and vehicle-to-vehicle communica- tion. The vehicles are effectively connected by an “electronic tow bar,” with the lead vehicle controlling the following vehicles in the platoon. The dis- tance between each semitrailer combination is less than 15 meters, or roughly half a second of driving time. The resulting “slipstreaming effect” achieves an overall fuel saving for the platoon as a whole of up to 10%, depending on vehicle model and convoy length, which also leads to reduced CO2 emissions. MAN is working with its customer DB Schenker to continue devel- oping and improving platooning technology. This is the first time that a logistics company and a vehicle manufacturer have cooperated on the development of connected truck platoons and their testing under real- world conditions. A memorandum of understanding regarding this cooperation was signed by DB Schenker and MAN in 2016. The first step will be to define the framework for the project and the accompanying field tests. Then in 2018, the plan is for a truck platoon to operate on the “digital highway test track” – a section of the A9 highway between DB Schenker’s Munich and Nuremberg depots. In the second phase of the project, self-driving trucks would then be operated at the DB Schenker site in Nuremberg. Long trucks On certain routes, extra-long trucks (up to 25.25 m) have the potential to absorb the forecast future growth in road freight traffic while at the same time helping to curb greenhouse gas emissions. An MAN truck was among the vehicles taking part in the German long-truck field trial which con- cluded at the end of 2016. The trial vehicle shuttled daily between the Dachau parts depot and the Salzgitter plant. Findings derived from the sci- entific monitoring of the field trial show that on average, one trip by a long truck can replace 1.56 trips by a conventional standard truck, reducing fuel consumption and CO2 emissions by up to 25%. In Germany, long trucks are already in regular operation on certain sections of the highway network. Since December 2016, a further long truck has been operating between our Munich plant and a freight com- pany in Braunschweig. MAN’s findings corroborate the savings claimed by the Federal Highway Research Institute. Since mid-2014, MAN has been playing a pilot role in the “Study on High Capacity Vehicles” task force of the European Automobile Manufac- turers’ Association (ACEA). The aim is to analyze the opportunities and risks offered by new vehicle concepts for long-haul transport. This will be underpinned by the development of a Smart Infrastructure Access Policy (SIAP) aimed at improving the efficiency of multimodal freight transport. Saving potential An MAN long truck can reduce fuel consumption by up to 25% compared with a standard truck
34 MAN GRI Report 2016 PROduCt SAFEty Overview Foreword Portrait Strategy and Governance Integration Products Management approach product responsibility Efficient and environmentally friendly products & services Intelligent mobility product safety People Production Annex Product quality As already reported in the 2015 GRI Report, MAN Truck & Bus performed strongly in the 2015 TÜV Report for Commercial Vehicles, where it was the truck manufacturer with the highest share of vehicles to pass the main TÜV inspections free of faults. 85.9% of the trucks proved free of faults (2014: 83%). A TÜV Report for Commercial Vehicles was not pub- lished in 2016. Driver assistance systems Highly and fully automated driving is an increasingly important develop- ment focus. As well as improving safety, such systems also help make our vehicles even more efficient. Based on many years of accident research, MAN Truck & Bus is working to continuously improve the safety of its vehicles. The following are some of the driver assistance systems which are playing a key role: Adaptive Cruise Control (ACC): The ACC radar sensor, which has a range of approx. 150 meters, detects the distance and relative speed of preceding vehicles in the same lane as the subject vehicle. Armed with this information, the system actively controls vehicle speed, accelera- tion, and deceleration in order to maintain the required distance from the vehicle ahead. Emergency Brake Assist (EBA): The new-generation EBA (Emergency Brake Assist) system makes MAN vehicles safer on the road and reduces the risk of accidents. Sensor fusion – data from the radar sensor at the front of the vehicle is combined with information from the camera in the front windscreen – allows the new system to detect hazardous situ- ations even faster and more reliably, and to initiate emergency braking sooner in a critical situation. Lane Guard System (LGS): On long and monotonous journeys, or when driving at night, drivers may be prone to attention lapses or microsleep. By monitoring lane-keeping behavior, LGS improves both safety and driving comfort. The system provides an audible alert if the vehicle starts to stray from its lane, provided the driver has not signaled a lane change with the direction indicator. The European research project euroFOT, in which companies and institu- tions from ten different countries took part, established that MAN driver assistance systems improve road safety and reduce fuel consumption. Trucks using ACC achieved average fuel savings of almost 2% over the period of the trial, despite also recording a higher average speed. At the same time critical events such as hard braking or sudden evasive maneu- vers were reduced by more than one third, while the number of times the following distance from the vehicle ahead fell to critical levels was halved. LGS, which warns the driver of a lane departure, resulted in better lane- keeping and smoother steering. In the concluding driver survey, 94% of drivers said that ACC significantly improved safety – and rated it as one of the most important driver assistance systems for trucks.
35 MAN GRI Report 2016 Product safety Overview Foreword Portrait Strategy and Governance Integration Products Management approach product responsibility Efficient and environmentally friendly products & services Intelligent mobility product safety People Production Annex Training ProfiDrive, a professional training system from MAN Truck & Bus, is firmly focused on the needs of the driver while at the same time taking the interests of the operator into account. The ProfiDrive portfolio com- prises both periodic theoretical training, as prescribed in Germany by the statutory requirements on professional competence certification for drivers, as well as professional, practice-oriented training to further improve safety and economy in everyday driving. Profidrive trainings 2016 participants Economy training (buses) 202 500 Safety training (trucks) 178 Safety training (buses) 830 Economy training (trucks) MAN Diesel & Turbo’s 13 PrimeServ Academies offer technical training and customized product training for both customers and employees, which can be delivered directly on-site, even on board the customer’s ship or at the customer’s power station. Technical know-how transfer mainly takes the form of hands-on product-based training. In 2016, we provided training for 9,000 participants, approximately 7,000 of them customers. All PrimeServ Academies worldwide operate to the same high quality standards. The PrimeServ Academies also serve as a net- work for promoting the exchange of knowledge between customers, suppliers, and our research and development departments. We also offer web-based training that combines practical elements with e-learning. Fifteen thousand participants have already benefitted from our digital training portfolio. When it comes to product safety, we depend on the support of each and every one of our employees. This calls for a high level of safety awareness along with high standards of competence on the part of our employees when it comes to areas as critical as explosion safety or machine safety. This was the focus of the Rollout of Standardized Safety Training (ROST) project, which was completed in 2016. Its goal of realign- ing existing continuing professional development programs around the topic of product safety and achieving a uniform standard across the Company was achieved. At MAN Diesel & Turbo, more than 4,500 par- ticipants received product safety training in 2016.
36 MAN GRI Report 2016 PEOPlE Management approach Overview Foreword Portrait Strategy and Governance Integration Products People Management approach vocational training and continuing professional development Employer attractiveness promoting diversity Occupational health and safety Production Annex MAN is one of Europe’s leading players in the commercial vehicle and mechanical engineering sectors. To maintain this position going forward, we need highly skilled and motivated people on our team. It is our aim to offer our employees a safe and attractive working environment that lets them develop to their full potential. This is made possible by our values-based culture of diversity, openness, and transparency. human resources strategy Being a top employer is an integral part of MAN’s Corporate Strategy. Now and in the future, this means attracting talented and skilled employees, offering them professional development opportunities and an innovative working environment, and actively promoting diversity within the Com- pany. As digital transformation sweeps through the Company, it is perma- nently transforming the workplace and posing new challenges – but at the same time, it presents MAN with numerous opportunities. Digitization is not the only change facing the Company. A new gen- eration of employees is transforming our understanding of working methods, models, and environments, as well as the associated forms of collaboration, communication, and leadership. key GRI aspects covered by this chapter: Training and Education – Diversity and Equal Opportunity – Equal Treatment – Freedom of Association and Right to Conduct Collective Bargaining – Occupational Health and Safety New job profiles are also emerging. In addition to the classic professions of mechanical, electrical, and computer engineers, in the future MAN will above all also need IT specialists in many different sectors. To attract and retain dedicated, responsible, and competent employees in these key fields for our future, we need responsible leadership as well as individual- ized professional development and training opportunities. Organization Human resources management within the Group is placed under the corpo- rate HR function, headed up by the Chief Human Resources Officer and Arbe- itsdirektor (Executive Board member responsible for employee relations) of MAN SE and MAN Truck & Bus AG. In the central functions, we develop uni- form methods and instruments and bundle competencies with the aim of leveraging synergies and setting consistently high quality standards. Principles and guidelines MAN and its employees are active in more than 180 countries. We stand for respect and tolerance, have made a clear commitment to diversity, and do not discriminate based on age, gender, religion, ethnic origin, or sexual orientation. Wherever MAN has production sites, we support local eco- nomic development by recruiting employees from the region. The follow- ing policies provide a binding framework for our human resources work around the globe:
37 MAN GRI Report 2016 Management approach Overview Foreword Portrait Strategy and Governance Integration Products People Management approach vocational training and continuing professional development Employer attractiveness promoting diversity Occupational health and safety Production Annex UN Global Compact OECD Guidelines for Multinational Enterprises Code of Conduct Charter on Labor Relations Charter on Temporary Work Policies based on the conventions of the International Labour Organization (ILO) Strategic priorities and their implementation The key priorities for the implementation of MAN’s human resources strategy are: Attracting the right employees As an attractive, modern employer, it is our aim to get potential employ- ees excited about MAN and win them over at an early stage. Our employer marketing activities are aligned with the demands of digitization and new generations of employees. We offer a variety of opportunities for getting started at MAN – from internships for secondary-school students to a wide range of vocational training programs, our Global Champion Trainee Program, and traditional direct hiring. Retaining the right employees We offer our employees opportunities to structure their working hours more flexibly and freely, through models such as Flex Work, telecommut- ing, and trust-based hours. When designing offices and workstations, we pay attention to layout, furnishings, and equipment. Through our new, open-plan concepts for different working environments, we are aiming to boost our employees’ efficiency, innovativeness, and satisfaction – and helping to keep them with MAN for the long term. As a top employer, we recognize the importance of continuing profes- sional education and development for our employees. Whether their goal is to build and expand skill sets for their current position or for the next step in their career, we support every employee by offering them targeted training opportunities. We honor performance by ensuring that all employees share in the Company’s success – because good performance should be rewarded. Diversity Diversity is an important issue for MAN, and goes far beyond creating opportunities for women. A diverse workforce boosts our competitive- ness, making it a cornerstone of our corporate success going forward. For this reason, we recognize and actively foster the distinctive qualities of our employees. At MAN, we define diversity as encompassing gender, nationality, disabilities, age, competencies, and both professional and life experience. By adopting a clear stance in favor of diversity, we create value for the Company. Occupational health and safety management Challenges and objectives Shifting demographics and the ever-increasing pace of change in the working environment present significant challenges for occupational health and safety at MAN. These factors affect our employees’ productivity and require holis- tic approaches to maintain and restore their health. Given that healthy and productive employees are essential to the long-term success of the Company, within the framework of our comprehensive occupational safety and health management program at MAN we place high priority on ergonomics and preventive health and safety in the workplace.
38 MAN GRI Report 2016 Management approach Overview Foreword Portrait Strategy and Governance Integration Products People Management approach vocational training and continuing professional development Employer attractiveness promoting diversity Occupational health and safety Production Annex Organization The central health services function at MAN is responsible for guiding us as an employer in the formulation and implementation of our Com- pany-wide health management strategy. The goal is to define a coordi- nated strategic approach to health services worldwide by developing prin- ciples which are applicable in every location. In addition, the health services at our plants act independently to address specific concerns with appropriate measures. Systems and instruments At MAN, occupational health measures aim to strengthen the health awareness of our employees and managers and encourage them to take the initiative in matters concerning their own health. To this end, we offer health counseling, training courses, therapeutic measures, and re-integra- tion assistance. Occupational safety includes all measures related to preventing workplace accidents, work-related illnesses, and occupational diseases. Our occupational safety management is part of our integrated manage- ment system (, page 48). The OHSAS 18001 certified management systems at our sites help to continuously improve the safety and health of our workforce. Across the Group, we systematically evaluate workstation ergo- nomics and potential workplace hazards. This reflects the high priority that we assign to improving ergonomics in our production sites with the aim of keeping our employees healthy and physically fit. In addition, we conduct regular internal and external occupational health and safety audits and inspections. Employee structure The MAN headcount is defined as active employees (permanent staff), employees in the passive phase of partial retirement, and vocational train- ees. It does not include subcontracted employees. On December 31, 2016, the MAN Group employed 53,824 people. This represents a decrease of 1,206 employees compared with the end of 2015. The ratio of employees in Germany to those in other countries changed only slightly. Our non-German companies employed a total of 22,380 peo- ple, a year-on-year downturn of 930. Compared with the previous year, the number of employees working in Germany fell by 276 to 31,444. The number of employees on fixed-term contracts rose by 28% to 1,881 (2015: 1,467). The number of subcontracted employees increased by 760 to 1,562. In 2016, 109 subcontracted employees were taken on as per- manent staff. In the year under review, 941 women and 309 men at MAN held part-time contracts not related to parental leave. Employees by business area Commercial Vehicles Power Engineering Other MAN Group 2014 38,449 17,143 311 55,903 2015 37,599 17,133 298 55,030 2016 36,777 16,808 239 53,824
39 MAN GRI Report 2016 Management approach Overview Foreword Portrait Strategy and Governance Integration Products People Management approach vocational training and continuing professional development Employer attractiveness promoting diversity Occupational health and safety Production Annex Employee structure Age of employees1 Permanent staff of which: women of which: men of which: part-time employees of which: employees on fixed-term contracts Vocational trainees of which: women of which: men of which: Germany Employees, passive partial retirement headcount Subcontracted employees Employees by location Germany Other countries total % in other countries 2014 51,995 7,228 44,767 1,073 1,193 3,312 552 2,760 2,341 596 55,903 879 2014 32,309 23,594 55,903 42 2015 51,234 7,102 44,132 1,183 1,467 3,177 571 2,606 2,268 619 55,030 802 2015 31,720 23,310 55,030 42 2016 49,982 6,758 43,224 1,250 1,881 3,145 547 2,598 2,245 697 53,824 1,562 2016 31,444 22,380 53,824 42 < 30 31 – 40 41 – 50 51 – 60 > 61 total 1 permanent staff only 2016 8,256 14,978 14,264 10,950 1,534 49,982 Employee turnover The employee turnover rate indicates what percentage of employees left the company during a one-year period. Employees on fixed-term con- tracts and employees starting retirement or partial retirement are not included in the calculation of this indicator. The relevant 2,488 departures in 2016 result in an employee turnover rate of 5.0%. In the year under review we hired a total of 3,392 people, while 4,631 left our Company. Com- pared to the previous year, the employee turnover rate increased by 1.0%. This is due to structural measures undertaken in the course of our PACE2017 program for the future ( more information on PACE2017 can be found in MAN’s 2016 Annual Report).
40 MAN GRI Report 2016 vOCAtIONAl tRAINING ANd CONtINuING PROFESSIONAl dEvElOPMENt Overview Foreword Portrait Strategy and Governance Integration Products People Management approach vocational training and continuing professional development Employer attractiveness promoting diversity Occupational health and safety Production Annex Vocational training and the dual model Our dual model of vocational training ensures the professional develop- ment of the next generation of outstanding technical and commercial employees. The program, which is anchored in the MAN Academy, saw some 800 young people start their careers at MAN in late 2016 – in loca- tions including Germany, Austria, Turkey, and Poland. At MAN, our vocational trainees were able to complete their train- ing in a total of 26 vocational training programs, 22 for technical and four for commercial professions. In the year under review, 17.0% of our 3,145 vocational trainees were women. Dual education programs in cooperation with various universities are increasingly popular among young people. At present, more than 180 students on dual education and integrated vocational training and degree programs are completing the practical part of their studies at our sites in Germany. 25.4% of the participants in these programs are women, an almost 5.0% increase against the previous year. Worldwide, vocational trainees and students on dual programs make up 6.3% of the MAN Group’s active workforce. The digitization of the workplace (Industry 4.0) plays a key role in our vocational training pro- grams, which can focus on areas such as virtual welding, 3D printing, and robot cells. vocational training 6.3% of our workforce in 2016 made up vocational trainees Continuing professional development and training Approximately 175,400 participants around the globe took part in some 14,500 continuing professional development (CPD) and training initia- tives in 2016. Each MAN Truck & Bus employee received an average of 20.3 CPD hours in the year under review. At MAN, learning and teaching takes place in close cooperation with internal experts. They pass their knowledge on to their colleagues within the “Berufsfamilien” (vocational groups), which include all employ- ees who have a common skill that they develop further. This training and knowledge transfer takes place within the Berufsfamilien Academies. In 2016 the principle of the Berufsfamilien Academies (BFA) was further expanded and broadened by the MAN Academy to guarantee uniform standards of quality and competencies around the globe. The focus of expansion was on the Sales/AfterSales, Engineering, and Finance sectors. In early 2016, the number of users with access to all of the content of our centralized learning platform was also expanded to include the employees at our Steyr and Ankara sites. Furthermore, we added to our digital learn- ing programs aimed at employees and managers. Segment heads and group leaders (“Meister”) working at VW Truck & Bus GmbH brand sites in Germany also had the opportunity to take part in the joint “New Dimensions for Production Supervisors” leadership pro- gram, which gave them a chance to network and learn from each other. The participants came from the Production, Engineering, and Vocational Training functions. As part of our international CPD initiatives, this pro- gram was also rolled out in Turkish at our Ankara site.
41 MAN GRI Report 2016 vocational training and continuing professional development Leadership and management training As the working environment continues to change, digitization progresses, and the disconnect between workplace and working hours grows, manag- ers in particular are facing new challenges. To help them keep pace with the shifting demands of their positions, in 2016 MAN Truck & Bus launched initiatives such as the “Leadership Forum” as a new training for- mat at its Munich site. It gives managers a chance to reflect on and discuss the transformation of the workplace and the leadership challenges it poses, and to take advantage of their colleagues’ advice. The selection and training of high potentials for management functions and leadership roles continues to be a key aspect of HR develop- ment at MAN. In addition, more new training initiatives are being rolled out for the commercial vehicle brands. One important objective of these programs is cross-brand networking between managers. Overview Foreword Portrait Strategy and Governance Integration Products People Management approach vocational training and continuing professional development Employer attractiveness promoting diversity Occupational health and safety Production Annex
42 MAN GRI Report 2016 EMPlOyER AttRACtIvENESS Overview Foreword Portrait Strategy and Governance Integration Products People Management approach vocational training and continuing professional development Employer attractiveness promoting diversity Occupational health and safety Production Annex Top employer To secure a lasting position as a top employer, MAN has committed itself to the following objectives: offering comprehensive onboarding programs to integrate new employees into the world of MAN as quickly as possible providing topic-specific and interdisciplinary training and CPD facilitating the creation of professional and international networks fostering cooperation across divisions positioning MAN as a top IT employer reaching out to a new target group through innovative recruiting meth- ods and events such as the hackathon held at the Technical University of Munich in 2016 We believe that our employees make the most convincing ambassadors for the Company’s attractiveness as an employer. “Best Employer of 2016,” a Germany-wide study conducted by the Statista, Xing and Kununu online portals in cooperation with FOCUS magazine, ranked over 2,000 compa- nies. Rated by industry, MAN placed 19th in the mechanical engineering sector. We were also ranked 33rd in the 2016 Trendence survey of college graduates in Germany, and finished 26th in the Universum ranking. Fostering young talent It is our aim to attract and retain talent at an early stage. We offer intern- ships, scholarships, and career development programs to young people who are attending or have recently graduated from universities and voca- tional-technical schools. In 2016, the MAN Group supported 20 PhD stu- dents and gave some 3,000 students from universities and schools around the world a chance to gain first-hand work experience with the Company. Our young talent programs target students at more than 100 tech- nical colleges and universities. In 2016, the MAN Group was represented at some 15 specialist and university career fairs. In addition, our experts staged numerous activities at colleges and universities around the world. By way of example, for five years now MAN has supported teams from Munich Technical University, Munich University of Applied Sciences, Karls- ruhe Institute of Technology, and RWTH Aachen in the Formula Student Germany race series. These activities focus on providing opportunities for meetings and discussions with MAN employees. Employee opinion survey [G4-26] In mid-2016, we conducted our employee opinion survey for the fourth time. The opinion survey (also known by its German name “Stim- mungsbarometer” or mood barometer) is a standardized, anonymous, voluntary survey of the employees of all brands and companies in the Volkswagen Group. By participating, employees can play an active role in shaping events at MAN. The survey measures employee satisfaction and identification with the Company and is also used to gauge the success of MAN’s “Top Employer” HR strategy. In recent years, the “Stimmungsba- rometer” has been not only the catalyst for the generation and imple- mentation of numerous improvements in a variety of areas, but also the source of ideas for fine-tuning the survey itself. This prompted us to revamp the employee opinion survey for 2016 and roll it out in its new and improved form. 37,215 employees of the MAN Group participated in the 2016 sur- vey, representing a participation rate of 86% – almost the same as in the previous year (87%). At 74.7 points, the measured level of employee satis- faction is more positive than in 2015 (73.9). Employees expressed their opinions in sections under the headings of “In our organizational unit,” “Working together,” and “My work and I at MAN.” Their responses revealed both strengths and scope for improvement in fields such as working con- ditions, information, quality, productivity, leadership, and teamwork. The survey results will be used as the basis for subsequent improvement pro- cesses and follow-up activities. By the deadline of March 1, 2017, 4,662
43 MAN GRI Report 2016 Employer attractiveness Overview Foreword Portrait Strategy and Governance Integration Products People Management approach vocational training and continuing professional development Employer attractiveness promoting diversity Occupational health and safety Production Annex measures had been defined. These will be implemented in the depart- ments and teams in 2017. Not only does this tool help foster an intrapre- neurial attitude among our employees, it also boosts our image as an employer and makes a positive contribution to the transformation of our corporate culture. Retirement benefits When their active working life comes to an end, employees in Germany receive benefits from a modern and attractive occupational pension sys- tem that constitute a key element of MAN’s remuneration policy. These benefits represent a reliable source of additional income on retirement and also provide cover for the risk of permanent disability or death during active employment. Employees benefit from employer contributions that are tied to their remuneration and can make additional provision through deferred compensation — which is employer-subsidized for staff who are covered by collective bargaining agreements. For employees at sites outside Germany, depending on the usual practice in each country we make market-based contributions to third- party pension plans or retirement investment funds. These also include defined benefit pension plans, the majority of which are designed to pro- vide life-long annuities. Job security As part of a realignment of the MAN Truck & Bus production network, we have streamlined our European manufacturing group, clearly defin- ing the operational focal points of each plant. We achieve higher produc- tivity by bundling similar types of production at fewer sites, while effi- cient vertical integration keeps our headcount at an almost consistently high level. Against this backdrop, MAN Truck & Bus plans to make a three-digit million euro investment by 2019. These plans are being rolled out in consultation with the responsible labor unions in Germany, Poland, Austria, and Turkey. In late 2016, MAN Diesel & Turbo launched its Base Camp 3000+ program dedicated to ensuring the future viability and profitability of the company. Base Camp 3000+ will tackle the further development of the company’s strategy in light of the business sector’s increasing focus on digitization and carbon neutrality, with the long-term aim of boosting earnings by €450 million. The greatest share of this improvement will be achieved through efficiency measures and optimizations affecting devel- opment, sales, quality, product costs and Group functions. Furthermore, at the end of March 2017 the Executive Board and General Works Council of MAN Diesel & Turbo SE agreed on a series of measures aimed at the structural optimization of its Augsburg, Berlin, Hamburg, and Oberhau- sen sites. A total of 900 jobs will be cut as a result of these measures, 600 of them in Germany. Further savings will be targeted through the stream- lining of procurement and order processing. Under the plan, each site in the turbomachinery network will be assigned clearly defined compe- tences and products. The company’s two Hamburg plants will be merged. The negotiated agreement does not call for any site closures or lay-offs; the downsizing will be conducted in accordance with the company’s com- mitments to social responsibility. The agreed measures are due to be implemented by the end of 2018 at the latest.
44 MAN GRI Report 2016 Employer attractiveness Employee rights The MAN Code of Conduct guides our daily behavior and activities. We respect human rights, do not tolerate discrimination, and are commit- ted to transparency. In the reporting period, no cases of discrimination were ascertained. MAN recognizes the rights of workers to form and participate in unions and to conduct collective bargaining. Almost all permanent staff in Germany are covered by collective bargaining agreements; around the globe, the share of our workforce which falls under collective agreements stands at 83%. The Volkswagen Charter on Temporary Work has been rolled out at MAN Truck & Bus and MAN Diesel & Turbo. As the next step in the rollout of the Charter on Labor Relations, in 2016 a framework participation agree- ment was agreed for the MAN Truck & Bus Group companies in Poland. In the various countries where MAN is active, employee relations are struc- tured in accordance with national laws and regulations. Overview Foreword Portrait Strategy and Governance Integration Products People Management approach vocational training and continuing professional development Employer attractiveness promoting diversity Occupational health and safety Production Annex
45 MAN GRI Report 2016 PROMOtING dIvERSIty Overview Foreword Portrait Strategy and Governance Integration Products People Management approach vocational training and continuing professional development Employer attractiveness promoting diversity Occupational health and safety Production Annex Equal opportunity MAN is committed to diversity and equal opportunity – respecting employees regardless of age, gender, religion, ethnicity, and sexual orien- tation. This is why, around the world, we actively promote the diversity of our workforce, recognize the value of each individual, and foster a team- oriented culture of performance based on our corporate values. One area we focus on is equal opportunities for men and women, which we advance by holding events such as our “Girls for Engineering” Camp. In Austria, our “Women on the fast track” recruiting campaign aimed at encouraging women to undertake technical vocational training won a gold HR Award and raised the percentage of women among the new vocational trainees to 30% in 2016. MAN offers special HR development measures, such as its mentor- ing program, to support women who are starting out as specialists and managers. We offer special programs and training courses for our employ- ees on parental leave. Our guidelines for management hiring specify that diversity and the placement of qualified women in particular are to be given due con- sideration. Our new managers receive training to raise their awareness of the issue of equal opportunity. In 2016, the proportion of female man- agers rose slightly to 9.0% (including Executive Board; not including Executive Board members: 9.2%), up from 8.6% in 2015. We promoted 14 women within management levels one to three in the year under review. This represents 14.3% of our management promotions (2015: 11%). These management levels are part of the management structure of the MAN Group, which is derived from our assessment of the functions and reflects their value to the Company. Generally speaking, level one is equivalent to employees at the first reporting level. There are currently no women on the Executive Board of the MAN Group. However, one additional woman joined the Supervisory Board in the year under review, bringing the number of women who sit on that Board to four – repre- senting 25% of its membership. women in management positions Level 1 Level 2 Level 3 total Percentage 2014 2015 2016 2 29 96 127 8.7 2 33 87 122 8.5 4 32 92 128 9.2 Balancing work and family MAN continues to work to help its employees achieve a better work-life balance, offering measures which include flexible working hours, the opportunity to split a full-time position into two part-time positions, and company daycare centers at MAN’s Munich and Augsburg sites that care for 137 infants, toddlers and young children. We also offer part-time hours for management staff. Information sessions for expecting parents, a semi- nar on re-entry into the workforce after parental leave, a vacation program for employees’ children, and opportunities to work from home round off the opportunities available at the Munich site. In summer 2016, an agreement was concluded at MAN Diesel & Turbo with the aim of providing more long-term support for employees balancing work and families. The agreement empowers employees to work remotely on a regular or a flexible, as-needed basis, and has been taken up by both female and male employees alike. On the school holiday
46 MAN GRI Report 2016 Promoting diversity Examples of active measures to promote inclusion at our Munich site include redesign of workstations, creation of new jobs for severely dis- abled persons, accessible communication for deaf employees, and mobil- ity aids. At the MAN Truck & Bus plant in Salzgitter, inclusion is an inte- gral part of the vocational training program. As part of the “Changing Sides” project, vocational trainees from the Braunschweig chapter of Leb- enshilfe, an association for the support of people with disabilities, spend two weeks at the MAN Academy. In return, five vocational trainees from MAN spend two weeks helping out at the Lebenshilfe workshop. The proj- ect was awarded the Chamber of Commerce and Industry’s Social Trans- fer Prize in 2015. It continued in 2016 with joint projects to design a recep- tion area for the Salzgitter plant and to convert a bicycle into an info-mobile for Lebenshilfe Braunschweig. for the Day of Repentance and Prayer, for the first time Sales Region Ger- many and MAN Truck & Bus each organized an activity day at MAN for elementary school children. A total of 36 children attended. In addition, since October 2016 our employees in Bavaria have been able to take advantage of a caregiver placement service to help find appropriate care for children and family members. Parental leave (2016)1 Employees working during parental leave Employees starting parental leave Length of parental leave (average months per employee) 1 Data include German sites only women 111 305 14 Men 57 827 1.9 Inclusion The Company management, the General Works Council, and the Group Council for Employees with Disabilities are committed to providing equal opportunities for and preventing discrimination against people with severe disabilities or an equivalent status. In the year under review, MAN employed 1,689 severely disabled people in Germany (2015: 1,609). Overview Foreword Portrait Strategy and Governance Integration Products People Management approach vocational training and continuing professional development Employer attractiveness promoting diversity Occupational health and safety Production Annex
47 MAN GRI Report 2016 OCCuPAtIONAl hEAlth ANd SAFEty Overview Foreword Portrait Strategy and Governance Integration Products People Management approach vocational training and continuing professional development Employer attractiveness promoting diversity Occupational health and safety Production Annex Preventive occupational safety Across the Group, we have continued with all existing initiatives to cut accident rates and prevent work-related illness. As part of our “Workplace Optimization” initiative, we systematically assessed the ergonomics of all workstations in MAN Truck & Bus production sites. The cross-site Health and Safety Competence Forum aims to facilitate the exchange of informa- tion and the strategic development of occupational health and safety in the coming years. In 2016, MAN Diesel & Turbo continued and expanded its focus on health and safety on business trips. In addition, the “Increased assessment of dangers to mental health in the workplace” project was brought to a successful conclusion and integrated into regular processes at all German and Swiss sites. In one occupational health program at our Augsburg site, we took an in-depth look at allergies, our focal topic for the year, in a series of coordinated events. At MAN Truck & Bus in Munich, the “Assessing dangers to mental health in the workplace” pilot project was also successfully rolled out in several segments in 2016. It will be expanded to include all production areas in the Munich plant in 2017. In addition, in 2016 we developed and finalized our "Healthy Leadership” seminar. Every manager will be able to participate in this program going forward. In 2016, MAN Latin America carried out a total of 150 measures aimed at improving occupational safety. Occupational health and safety activities focused on issues related to ergonomics, work-related health risks, and safe operation of production machinery. When it comes to documenting workplace accidents, MAN is aware of regional and cultural differences that impact on reporting. With this in mind, we are aiming to address these differences by incorporating suit- able measures in our management approach. Number of lost-time injuries1 Number of lost-time injuries2 Accident frequency index3 Accident severity index4 2015 830 13.0 17.2 2016 835 13.5 16.6 1 Only reported lost-time injuries affecting permanent staff in production or production-related sites. 2 In accordance with the German Social Code (SGB), lost-time injuries are defined as injuries incurred by the insured while carrying out their insured employment. We count lost-time injuries starting at one day of missed work. 3 The accident frequency index is an indicator of the frequency of lost-time injuries relative to the sum of all hours worked. The formula for calculating the index is the number of workplace accidents multiplied by 1 million divided by hours worked. 4 The accident severity index indicates the severity of accidents by showing the sum of workdays missed due to injury in relation to the num- ber of hours worked. The formula for calculating the index is the number of workdays missed multiplied by 1 million divided by hours worked multiplied by 10. In 2016, there was a fatal accident during a field service assignment of an employee from the MAN Diesel & Turbo Copenhagen site, which we deeply regret. The Executive Board was informed of the incident. The acci- dent was analyzed with the authorities and the existing hazard assess- ment process was reviewed. As a result, we have introduced measures to prevent a recurrence of this type of accident. In addition, the results of the analysis were passed on to all relevant sites and reported to occupational safety bodies throughout the Group.
48 MAN GRI Report 2016 Occupational health and safety Overview Foreword Portrait Strategy and Governance Integration Products People Management approach vocational training and continuing professional development Employer attractiveness promoting diversity Occupational health and safety Production Annex Behavior-based safety We promote the health of our employees by taking measures to reduce accidents, prevent occupational illnesses, and maintain good health. As part of our “Workplace Optimization” initiative, we assessed the ergonomics in MAN Truck & Bus production sites, leading to a significant reduction in physical strain at all workstations. One aspect of our “Always Safe. Always Good.” initiative, which has been rolled out at almost all of our European sites, is the improvement of behavior-based safety. The campaign is aiming to improve the safety culture in which managers and employees are trained. In 2016, some 35 workshops were held to train more managers and employees at the German sites of Munich, Nurem- berg, and Salzgitter in behavior-based safety. At both sites in Poland, in 2016 the campaign was carried out by a specially qualified trainer. We are planning to launch the initiative at our Plauen and Ankara sites in 2017. In addition, the Occupational Safety Competence Forum, a regular meeting for the heads of occupational safety from the MAN Truck & Bus plants, contributes to the continuous improvement of occupational safety throughout the Group. MAN Diesel & Turbo places particular emphasis on preventing occupational accidents. Thanks to the MAN Diesel & Turbo “Zero Acci- dent” initiative, 2016 marks the eighth year in a row in which there has been a decrease in the severity of workplace accidents within the sub- group. Established in 2014, behavior-based safety programs were fine- tuned in the UK, the United States, and our Augsburg site in 2016. The pro- grams aim to increase awareness of hazardous situations, systematically eliminate risks, and foster safe workplace habits. In addition, the “Safety First” campaign has made a valuable contribution to improving safety awareness and occupational health and safety. The majority of MAN Die- sel & Turbo’s service engineers have also been trained and certified in line with the Safety Certificate Contractors standards, which aim to sharpen safety awareness on customer construction sites and in projects. In the year under review, the international MAN Diesel & Turbo HSE Conference was held again to focus on strategy and targets in the area of occupational health and safety. In 2016, an all-day event called “Safety Stand-down Day” was also held for the third time for all employees at MAN Diesel & Turbo sites in the USA. OHSAS 18001 certification In the reporting period, our sites in Dachau and Rheine received OHSAS 18001 certification for the first time. This means that 27 of our sites are now certified under the occupational health and safety management system. Occupational health and safety management 27 MAN sites are certified under the OhSAS 18001 occupational health and safety management system Occupational health With our occupational health management program, we are aiming to successively systematize all health-related measures within the Company. Our health activities not only target working conditions, but also the behaviors of the individual employees.
At MAN Diesel & Turbo, the employee assistance program (EAP) is another important pillar of occupational health management. An integral part of our HR policy for many years, EAP services include counseling during cri- sis situations and the development of concrete solutions. 49 MAN GRI Report 2016 Occupational health and safety Through our targeted occupational health measures, we encourage our employees to take the initiative in matters concerning their own health. This not only includes offerings from our annual health program, but also initiatives such as stop smoking classes, intraocular pressure examina- tions, flu shots, massages, and a healthy eating program in cooperation with Weight Watchers. In cooperation with MAN Academy, we offer numerous training programs which reinforce employees’ personal responsibility, underpin healthy behavior and teamwork, and foster a leadership culture which promotes good health. In addition, MAN sees programs and assistance for employees re- integrating into the workplace following a protracted illness or accident not only as a legal obligation, but as an integral part of maintaining our employees’ ability to work and employability. The “MAN Checkup” is a pre- ventive health initiative which is also aimed at helping employees remain healthy as well as identifying any potential risks at an early stage. Overview Foreword Portrait Strategy and Governance Integration Products People Management approach vocational training and continuing professional development Employer attractiveness promoting diversity Occupational health and safety Production Annex
50 MAN GRI Report 2016 PROduCtION Management approach Overview Foreword Portrait Strategy and Governance Integration Products People Production Management approach climate & energy Efficient transportation & logistics Environmental & resource conservation Responsible supplier relations Annex Efficiency, resource conservation, and environmental protection shape our corporate responsibility activities in the production sector, which also includes the areas of transportation, logistics, and purchasing. We use the levers at our disposal to reduce CO2 emissions and help mitigate climate change. Environmental Management Challenges and goals In the production sector, climate change, pollution, and resource scarcity are global challenges to which the MAN Group is responding. With this in mind, accepting responsibility for the climate and the environment has traditionally been a key element of our corporate culture. We use our inte- grated management systems and advanced technology to mitigate the adverse environmental impacts of our activities. We take our responsibil- ity seriously; in 2011 we drew up MAN’s Climate Strategy, which included the binding goal of reducing CO2 emissions from our production plants by 25% by 2020, compared to the 2008 baseline (, Climate Strategy, 7). Material GRI aspects covered by this chapter: Materials – Energy – Emissions – Effluents and Waste – Compliance with Environmental Legislation and Regulations – Transportation Organization Our environmental management systems are organized at MAN sub- group level and implemented in line with the requirements of ISO 14001. The overarching objectives, such as MAN’s Climate Strategy, are addition- ally reported to the CR function of the MAN SE Group. All goals are pur- sued in collaboration with the subgroups, and put into practice by the responsible individuals at each site. The central Environmental Protection and Occupational Safety func- tions of the subgroups analyze requirements, implement and steer the management systems, and drive them forward in close collaboration with the environmental management officers at the production sites. The plant managers and heads of production are responsible for opera- tional tasks related to environmental protection. At each site, they are sup- ported by specialist officers and/or environmental protection experts. Regular meetings on environmental protection, climate action, and energy management are held at subgroup level to ensure an ongoing exchange of information across all central functions and sites.
51 MAN GRI Report 2016 Management approach Overview Foreword Portrait Strategy and Governance Integration Products People Production Management approach climate & energy Efficient transportation & logistics Environmental & resource conservation Responsible supplier relations Annex Systems and instruments The MAN Group operates systems for managing environmental protec- tion, occupational safety, and quality. At the production sites, these sys- tems are regularly verified by external experts or auditors, as well as by internal audits. We also operate a range of activities relating to energy management. Other key systems and instruments for implementing MAN’s Climate Strategy and environmental protection include: Internal policies and guidelines Regulations on environmental protection, energy, and occupational safety Alongside occupational safety, environmental protection is firmly anchored in the vocational training and continuing professional develop- ment activities of our employees. transportation and logistics Management Principles and guidelines Reducing the environmental impacts of our transportation and logistics activities is another key element of our integrated environmental man- agement system. MAN Truck & Bus has set a number of targets in this respect, including the optimization of transportation structures and pro- cedures. A dedicated tool for computing the CO2 emissions from transpor- tation activities has been put in place. To reduce CO2 emissions within our own logistics chain, we supply our regional freight forwarders via freight hubs, which consolidate ship- ments, optimize vehicle capacity utilization, and prevent vehicles from having to make empty runs. As a commercial vehicle manufacturer, we expect our service providers to use state-of-the-art trucks that comply with the latest emissions standards. Our regulations on air travel, car rental, and rail travel, which apply across the MAN Group, stipulate that journeys should only be undertaken when unavoidable. Alternatives such as video and telephone conferencing should always be considered in the first instance, and priority should always be given to the most environmentally friendly mode of transporta- tion, provided it is financially feasible. Supplier Management Challenges and goals The MAN Group’s procurement policy aims to reduce environmental and social risks in the supply chain while simultaneously optimizing material costs. As well as maximizing cost-effectiveness and efficiency, we are also committed to improving sustainability aspects. To this end, MAN has adopted the core system of the Volkswagen Group’s “Sustainability in Supplier Relations” concept. Together with tra- ditional priorities such as quality, price, and delivery times, the concept has been thoroughly integrated into our procurement processes. Before submitting a quote, suppliers are required to accept the Volkswagen Group’s sustainability requirements, which are written into all supplier contracts ( The requirements apply to all purchased goods and services world- wide. We also expect our tier 1 suppliers to pass these requirements on to their own suppliers. This helps ensure a consistently high quality of pro- cured goods and services, while avoiding potential supply shortages and damage to our reputation. Both MAN and its suppliers profit from the long-term supplier relationships which result. Code of Conduct for Business Partners).
52 MAN GRI Report 2016 Management approach Overview Foreword Portrait Strategy and Governance Integration Products People Production Management approach climate & energy Efficient transportation & logistics Environmental & resource conservation Responsible supplier relations Annex Concept and organization The “Sustainability in Supplier Relations” concept is based on three main pillars: requirements, monitoring, and development. The idea is to mini- mize and prevent negative social, environmental, and financial impacts along our supply chain. The Volkswagen Group’s requirements regarding sustainability in sup- plier relations span a range of issues, including environmental protec- tion, employee rights, fair market conduct, and transparent business relations, and have been a mandatory element of all contracts since 2015. They set out expectations in terms of business partners’ conduct with regard to central environmental and social standards. Among other things, they are based on the principles of the UN Global Com- pact, the International Chamber of Commerce's Business Charter for Sustainable Development, and the relevant conventions of the Interna- tional Labour Organization. The observance of human rights is another key element, including the rejection of child, forced, and compulsory labor, and compliance with all other regulations on worker protection. These principles are supplemented by MAN’s Environmental Policy and all related environmental targets and regulations, the Group’s Quality Policy, and the Volkswagen Declaration on Social Rights ( We use the Self-Assessment Questionnaire (SAQ) to help us identify risks early on. This sustainability questionnaire was jointly developed by ten OEMs within the European Automotive Working Group on Sup- ply Chain Sustainability, and is continuously updated. We also appoint independent auditors to conduct sustainability audits, which scruti- nize our suppliers for compliance with environmental, social, and human rights standards. This monitoring enables us to identify areas for improvement and guide our suppliers toward development opportunities, including an e-learning course offered by the VW Group. 2016 Volkswagen Sustainability Report). Systems and instruments To ensure that the concept of sustainability is firmly anchored in our sup- ply chain, the MAN Group provides all suppliers with access to an e-learn- ing module on sustainability, which is available in all the languages of our defined risk markets. After completing this module, the supplier must take a final examination. The Volkswagen Group uses an internal system for sustainable sup- ply chain management, providing supplier-specific sustainability infor- mation to facilitate comprehensive analysis. If one of our suppliers or their suppliers is suspected of violating our sustainability requirements, we will request a written statement using a standardized report (known as the 6D report). Based on the six points in the report, the supplier can respond to the alleged violations, describe what remedial action is being taken, and submit the required documentation. If the answers prove unsatisfactory, we take further appropriate steps, such as the examination of documents, on-site visits to the supplier’s premises, or further tailored supplier training activities. Throughout all process steps and measures, the focus is on fair dia- log between partners and on supplier development, in the interests of continuous, long-term collaboration.