Surteco : Sustainability report 2023 (5.89 MB)

Sustainable products. Sustainable business.

Sustainability report 2023

CONTENTS

|1| Foreword

|2| SURTECO at a Glance

General principles • Sectors of activity • Global presence • Value Chain • Strategy and business model •

Our understanding of sustainability • UN Global Compact and SDGs • Sustainability goals and measures • The succes of SURTECO • Stakeholder approach • Opportunities outweigh risks • Sustainability management • Certified production sites • Organizational structure

|3| Environment

Water usage • Wastewater • Biodiversity • Energy consumption • Emissions into the air • Waste

|4| Social

Promotion • Qualified employees • Equal opportunities for women and men • Performance review and improvement • Occupational accidents

|5| Economy

Distribution of value added • Customer orientation • Values, principles, standards and norms of behaviour • Measures against corruption and breaches of the law

|6| Share of the environmentally sustainable sales revenues, capital expenditure and operating expenses (disclosure in accordance with Article 8 (2) of Directive (EU) 2020/852)

|1| FOREWORD

Dear Readers,

"We make rooms worth living in" - this is our vision for SURTECO. The entire earth is our living space. Our promise is to protect our living space by giving our company a sustainable structure. This concept permeates our entire organization. Our ambition requires the determination to roll up our sleeves and get things done. And above all, strength is needed to put visions into practice. This report tells you all about the milestones we achieved during the past year.

Our long-term objective is to be a climate-neutral company by the year 2045. While we have set ourselves challenging goals for the future, we have also achieved multiple successes.

• The installation of more than 2,500 kWp of solar-powered electricity reduces our dependence on non- renewable resources and also contributes to combatting climate change.
• Since 2021, all our locations in Germany have used electricity generated from renewable sources of energy. This is making a contribution to reducing our carbon footprint.
• We are promoting inclusiveness and diversity by growing the proportion of women in management positions. This also plays a role in enriching our corporate culture and encouraging innovation.
• Since 2019, we have succeeded in reducing our CO₂ emissions by some 60,000 metric tonnes.
• Our conversion to printing inks free of volatile organic compounds (VOCs) produced in-house for our printing facilities in Buttenwiesen and Agawam contributes to improving air quality and to reducing pollution of the environment.
• We are increasing our application of recycled raw materials in our products so as to minimize waste and maximize efficient utilization of resources.
• The introduction of products made from bio-based PVC in Gislaved demonstrates our commitment to sustainable innovations. These products reduce our environmental footprint and make a contribution to a more environmentally friendly product portfolio.
• And finally, the transformation of our fleet to electric vehicles highlights our dedication to the reduction of CO₂ emissions.

As far as the social aspects are concerned, we are striving to counteract the shortage of specialist workers by being an attractive employer and strategically promoting talented young people. Our aim is to foster a loyal workforce of skilled professionals and managers in our company. We seek to achieve this by creating a modern working atmosphere where every employee perceives themselves to be part of a diverse, committed team. This provides scope for the development of individual strengths and personal goals within a healthy and secure working environment.

SURTECO SUSTAINABILITY REPORT 2023

Our economic success empowers us to continue driving forward positive changes and build a more sustainable future. Innovative products and attractive services enabled us to maintain economic stability over the past year, not-withstanding the context of a global economy stricken by crises and uncertainty.

In addition, we acquired important divisions of OMNOVA Solutions Inc., USA, during the course of 2023. This move has expanded our portfolio of products and technologies. As a result, we will continue to be ideally positioned in future to make rooms worth living in.

Finally, we should like to express our sincere thanks to our employees, partners and stakeholders for their ongoing support and commitment as we implement our roadmap for sustainability. Together, we will continue to drive forward positive changes and build a more sustainable future for the coming generations.

We would like to take this opportunity to wish you an inspiring read.

Wolfgang Moyses	Andreas Pötz
CEO	CFO

|2| SURTECO AT A GLANCE

General principles

SURTECO GROUP SE (Societas Europaea) is a company listed on the stock exchange under European law and is based in Buttenwiesen, Germany. The company is the ultimate parent company of the Group and is registered in the Company Register of the Local Augsburg Court (Amtsgericht Augsburg) under HRB 23000. The purpose of the companies consolidated in the SURTECO Group is the development, production and sale of coated surface materials based on paper and plastic. This sustainability report is a consolidated report about the SURTECO Group. The report has not been audited and it has not been subject to an audit review by an auditor. No single framework was used for purposes of drawing up the report. The group of consolidated companies for the sustainability report corresponds to the companies consolidated in the consolidated financial statements of the company. It should be noted that on March 1, 2023, the business areas "Laminates and performance films and coated fabrics" were acquired from Omnova Solutions inc., USA. These business areas are not taken into account in the previous year's figures. The reporting period is the fiscal and calendar year 2023 after acquisition, not being accounted the entire year but the 10 months from March to December. The baseline year for achieving the goals related to sustainability is the business year 2019. The financial information has been given in the reporting currency euros (€). The Supervisory Board and the Management Board approved this report for publication on 16 April 2024.

The preparation of the sustainability report to a certain degree requires decisions of judgement, estimates and assumptions of the management. The significant facts which are affected by such decisions of judgement and estimates related to the definition of the risks and opportunities associated with sustainability. The quantitative information is the result of consolidated, regular surveys of the individual units within the Group. These data were prepared with due care and attention and following a process of thorough checking. When carrying out the surveys of the individual subsidiary companies, unintentional misrepresentations may be made in response to questions. One past example is of information being reported in the wrong unit of measurement. Whenever an error was discovered, the corresponding figure for the previous year was corrected in the report and identified accordingly.

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SURTECO SUSTAINABILITY REPORT 2023

Sectors of activity

SURTECO produces a wide range of products for domestic use, for the trade sector and for the public arena. SURTECO products are used in virtually all areas of daily life. For example, they are applied on furniture, floors and doors in homes, in caravans and on cruise ships. The products manufactured by the group of companies are primarily processed by the international flooring, wood-based and furniture industries. They are also refined by cabinetmakers and artisan craft workshops. This involves coatings being provided for wood-based materials such as chipboard and fibreboard. These boards receive their final surface with appropriate visual, haptic and functional attributes. The skirtings offer a perfect transition between flooring and wall. The most important sales markets of the Group include Germany, the rest of Europe, and North and South America.

Edgebandings based on plastic and paper are the product with the highest sales at SURTECO. Plastic edgebandings are manufactured from the plastics ABS, PMMA, PP or PVC in a wide range of different dimensions and strengths to meet specific needs. Melamine edgebandings are created on the basis of printed lightfast specialist papers.

Finish foils made of plastic or paper are ideal for all areas of application. The paper-based foils provide innovative design and a natural haptic feel to create appealing furniture applications with outstanding technical properties. SURTECO has plastic foils in its product range for particularly attractive furniture surfaces, for further refinement into long-life carpets and for many industrial applications.

Decor papers are used to provide materials with decor elements in order to refine wood-based materials, for the furniture and flooring industry, and in interior design. The development of creative wood, stone and fantasy decors is carried out in cooperation with the Group's own design studios.

Skirtings complete the product range in the area of flooring. SURTECO is a reliable partner for specialist flooring wholesalers and for professional floor-layers. The spectrum of products comprises skirtings, stair edges, transition rails and all the accessories required for laying floors.

Decorative impregnated products from SURTECO are found everywhere, for example on furniture or laminated flooring. They have tough, abrasion-resistant surfaces that are extremely resistant to mechanical, thermal and chemical influences. Overlays with a laminate structure from SURTECO give an additional coating for areas subject to heavy wear and tear, and provide special optical effects. Complementary to this, release papers from SURTECO are widely used in the wood-based material industry. The product lends the surface its final visual look and provides a haptic feel. Release papers from SURTECO are also used to give texture to other materials such as leatherette.

Technical extrusions made of all common plastics manufactured for the construction sector and many other industrial sectors complete the product portfolio.

Laminates have a multi-layer structure and offer durable and cost-effective surfaces for residential and commercial spaces. Performance films offer a variety of end applications as rigid, semi-rigid and flexible films. Coated fabrics are vinyl-coated materials and are used in upholstery for seats and trim, for example in the automotive industry or used in shipping.

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Decor papers	Edgebands

Release papers

Impregnated products

The perfect design match

Skirtings

Finish foils

Laminates

Performance films

Roller-shutter systems	Technical extrusions

Coated Fabrics

SURTECO SUSTAINABILITY REPORT 2023

All products from the SURTECO Group can be subsumed under the sector "Building Products & Furnishings".

Sales by product group

2022

2023

in € 000s

Total	747,698	835,089
Edgebands	282,002	262,352
Finish foils	136,657	133,649
Decor papers	99,267	93,475
Impregnated products / Release papers	55,384	45,224
Skirtings and related products	82,141	77,124
Technical extrusions	56,188	50,483
Laminates	0	69,516
Performance Films	0	31,122
Coated Fabrics	0	41,016
Other	36,059	31,128

Global presence

Closeness to customers is important to SURTECO. This guarantees short delivery channels that conserve resources, while also enabling individual responses to different regional preferences and trends. SURTECO operates in almost all countries and maintains 26 production locations in Germany, the United Kingdom, Sweden, Portugal, Canada, USA, Brazil, Indonesia, Thailand and Australia. At the same time, the global presence and the comprehensive product range make the company less susceptible to sales fluctuations in individual countries and sectors.

Geographical breakdown of SURTECO Group
	Sales in € 000s			Employees
	2022	2023	2022	w/o Omnova	2023
Total	747,698	835,089	3,052	2,920	3,685
Germany	182,407	166,239	1,627	1,495	1,495
Europe (without Germany)	337,852	324,243	657	617	617
America	158,042	260,440	553	601	1,013
Asia / Australia	63,837	77,350	215	207	560
Other	5,560	6,817	-	-	-

Value chain

Truly sustainable companies have to ensure responsible business practices within their own organization and throughout the entire value chain - in upstream and downstream areas.

SURTECO procures raw materials, packaging materials, production goods, services and other input factors such as energy throughout the world. Generally speaking, SURTECO purchases directly from the corresponding manufacturers and the company is not particularly dependent on any single supplier. The cost of materials ratio at 52 % in 2023 indicates that the procurement of raw materials constitutes the biggest expense item for SURTECO. Around 75 % of the total cost of materials is attributable to the three most important raw materials paper, plastics and chemical additives. Insofar, plastics manufacturers, paper producers and the chemicals industry are the most important supplier groups.

In order to maintain its social and environmental responsibility as part of a holistic approach, SURTECO defines its values through a Code of Conduct for suppliers - Sustainable Procurement ("Code of Conduct") with 17 principles based on ethical business conduct, social and environmental standards. (The code is based on international conventions such as the United Nations Human Rights Declaration, the guidelines on children's rights and business conduct, economy and human rights, labour standards and the United Nations Global Compact).

End customers are dominated by the wood-based materials industry, wholesalers, home-improvement stores and the furniture industry. End customers only purchase skirtings through the home-improvement sector as a finished product from SURTECO. Surface materials are incorporated into the production process at customers of SURTECO in order to make other products like furniture, doors and laminate flooring. Most end products can be disposed of through household waste collection or recycling centres. Some furniture parts can be recycled and returned to the wood-based materials industry.

The requirement for living and office space is increasing with the rising world population and the consequent expansion of purchasing power. This is therefore leading to a rising demand for furniture, flooring and interior fittings. That holds true above all for the demographic and economic development in the emerging economies. Furthermore, a global trend towards urbanization and individualization is generating an accelerated demand for attractive interior design and fittings.

The company and its products need to become more sustainable throughout the entire value chain in order to meet this demand in a sustainable way and without jeopardizing the company's principles.

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SURTECO SUSTAINABILITY REPORT 2023

Value chain

Raw material suppliers

Decor papers

Pigments

Plastic granules

Resigns

MDF

Printing inks &

varnishes

Printing &

embossing cylinders

SURTECO production

Printing

Digital printing

Impregnation &

lacquering

EBC coating

Extrusion

Calendering

Embossing

Design

CAD technology

Color matching and

inspection

SURTECO products

Decor papers, Release

liners, Finish foils, Thermoplastic foils & Edgebandings

Laminates & Films

Technical profiles & Shutter systems

Skirtings

Lighthing

Coated Fabrics

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SURTECO SUSTAINABILITY REPORT 2023

Strategy and business model

Our business model is based on the claim that we manufacture outstanding surfaces, edgings and extrusions. However, excellent products are not adequate on their own to ensure sustainable success. This needs to be

The strategy of the group of companies with its seven mainstays of product leadership, operational excellence,	augmented by tailormade solutions to meet the needs of our customers and by comprehensive service. Our
commercial excellence, digitalization, focused internationalization, sustainability and a corporate culture	strategy rises to this challenge by encompassing all stages of the value chain with a particular focus on best-
based on the motto "Company I like to work for" is aligned entirely on the overarching goal:	in-class service for our customers.
"We make rooms worth living in".

Strategic aspirations

SURTECO Vision & Positioning 2023

We make rooms worth living in.

	BU Surfaces	BU Edgebands	BU Profiles	BU North America	BU APAC
	Be the leading provider of			Extend North American	Provide the "best-in-class"
	aesthetic, innovative, and			service in decorative Surfa-
Growth	Be the global reference for	Be the expert for extrusion-	market leadership with the
sustainable surfacing solu-	ces and extrusion solutions
pillars	edgebanding solutions driven	based profiles supplying our	broadest and most
tions, fuelled by customer	for the Asian-Pacific market
by a culture of product and	customers globally	attractive product
	focus, environmental re-	by combining our German
	operating excellence		offering
	sponsibility, and a culture of		expertise with our global net-
	excellence				work

Operational Excellence: : Create Customer value through continuous improvement and agile, efficient processes in SURTECO's value streams

Sustainability: Drive a sustainable business and be a role model for ESG practices

EnablersIT & Digitalization: Plan, build and operate professional quality IT services, that create significant business value for the whole SURTECO group Procurement: Be the global purchasing organization with a commitment to enhance overall SURTECO competitiveness

Corporate Development: Make SURTECO strategic ambition become real, by and for our key stakeholders

Foundation

People, Organization & Culture: Make SURTECO a "Company I Like to Work For"

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SURTECO SUSTAINABILITY REPORT 2023

Our understanding of sustainability

Sustainability is an integral component of the corporate strategy. SURTECO perceives an obligation to act not only in the economic interests of the shareholders but simultaneously to conserve the resources of our planet. Acting sustainably entails the need to ensure durably viable development in governance, environmental and social terms. This approach takes account of the needs of current generations today without robbing future generations of the opportunity to fulfil their own aspirations.

SDGs

By adopting the Sustainable Development Goals (SDGs) of the UN, the community of nations has made a commitment to work together and contribute jointly to improving economic, environmental and social development by 2030. The SDG Agenda is intended to decisively drive forward global activities with a set of 17 Global Goals and 169 targets. The individual goals are closely linked together and exert an influence on each other in a variety of different ways.

Materiality matrix based on the 17 UN sustainability goals (SDG)*:

				1
			5
				4
stakeholder		14	3	2
	8	15
			7
for	11			6
Relevant	12
10	9
				13

SURTECO firmly believes that attainment of these goals is the mission of all the societal players involved and is therefore also a mission for commercial enterprises. They provide the framework for what companies have to achieve in order to be able to do business successfully in the future. Without neglecting the perspective of a holistic approach to the goals, SURTECO analyses the priorities for developing its sustainability strategy in a continuous process. The company evaluated the entire value chain in the course of this procedure. On this basis, five SDGs (3, 5, 8, 12, 13) were identified that SURTECO can exert a major influence on. Partnerships for achieving the goals (SGD 17) complement the strategy.

By supporting the ten principles underpinning the Global Compact, SURTECO demonstrates its commitment to respecting human rights and labour standards in its business activities, promoting environmental protection and combating corruption. Our dedication and our contribution to implementing the principles of the United

1 Climate protection

4 Sustainable material alternatives

7 Customer satisfaction

10 Employee development

13 Digitalization

Relevant for SURTECO

2 Recyclability of products

5 Resource protection

8 Environmental / social standards in suply chaint

11 Certifications

14 Equal oportunities

3 Low-emission / pollutant products

6 Governance and Compliance

9 Job attractiveness / conditions

12 Environmental / social commitment

15 Sustainable and long-term growth

Nations Global Compact are highlighted in a progress report published every year.

SURTECO is very much aware of the role it plays in minimizing climate risk and taking positive action to achieve the goals of the Paris Agreement. The aim is to drive the transition to a low-carbon economy and define science- based emissions reduction targets and achieve global net-zero emissions by 2050 as a minimum in order to limit global warming to 1.5ºC. SURTECO joined the initiative in May 2022 and has already declared its goal of net-zero carbon emissions by 2045 at this stage of defining short-term goals.

Sustainability goals and measures

SURTECO has set itself the goal of keeping our planet "worth living on". To this end, we are protecting our environment, using natural resources sparingly and avoiding or reducing the burden on people and nature. We have raised our goal of reducing CO2 from 30 % to 50 % by 2030. Starting from the business year 2021, we sourced green electricity at all locations in Germany and zero-emission electricity at some locations abroad. Increasing self-generated electricity from photovoltaic systems in our own plants is a mitigation measure that is also in the agenda. At the moment, one of our subsidiary companies, in Portugal, has been corporate climate neutral since 2022. Our goal, in relation to the previous structure (without Omnova plants), has being above 50% since 2022. Recalculating the base year of 2019 with the figures for the new plants, a reduction of 43% was achieved in 2023. We also aim to achieve the objective of net zero CO2 in 2045. All production locations should be environmental certifiable according to ISO 14001 by the year 2028 and the internal plastic recycling rate should be increased to 80 %. SURTECO also strive for zero occupational accidents and ensure compliance with high-standards of human rights along its value chain.

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SURTECO SUSTAINABILITY REPORT 2023

Reduce CO2 emissions	All production sites	Ensure compliance to	Strive for zero occupa-
by 50% until 2030 and	certifable according to	high-standards of hu-	tional accidents
achieve net zero emis-	ISO 14001	man rights along value
sion by 2045	until 2028	chain

Furthermore, SURTECO is continually working towards reducing the relative consumption of energy and water use, and on the reduction of waste and emission of pollutants. The maximum level of safety for the production plants is a top priority. Products are being permanently improved.

When suppliers and partner companies are selected, SURTECO takes account of high quality and the reliability of deliveries, as well as safe and environmentally compatible production. When materials are procured and service providers are selected, the preference of choice is for SURTECO to cooperate with companies which operate environmental management in conformity with the international regulations of ISO 14001 or operate under comparable conditions. Suppliers and service providers are required to comply with the same strict requirements as SURTECO in accordance with its Code of Conduct.

The success of SURTECO

Installation of > 2.500 kWp of solar power in the SURTECO group.

All German sites have been using electricity from renewable sources since 2021.

Gender Diversity: Women make up 25% of senior management.

Reduction of CO2 emissions from 2019 to 2022 approx. 60,000 tons (based on the base year 2019).

Our self-produced printing inks for the printing plants in Buttenwiesen and Agawam are VOC-free.

Increased use of recycled raw materials in profiles and plastic edgebands.

New products based on biobased PVC at Gislaved.

Transition of car fleet from combustion to electric in full implementation.

Stakeholder approach

SURTECO communicates continuously and promptly with key stakeholders in a form that is relevant to the individual target group. In particular, SURTECO's stakeholders include investors, employees, suppliers, customers, residents near its locations, government agencies, and associations as key stakeholders.

Stakeholder	Communication	Expectations	Implementation in
			SURTECO Strategy -
			Pursuit of the UN target:
Investors	Exchange within the	Sustainable corporate	SDG 8 Decent work and
	framework of the Annual	value	economic growth
	General Meeting, the capi-
	tal market conferences or
	in individual discussions
Employees	Communication via mee-	Secure and safe	SDG 3 Good health and
	tings, intranet and staff	employment	well-being
	discussions	Equal opportunities
		Pay equity	SDG 8 Decent work and
		Opportunities for	economic growth
		advancement
		Work / Life - Balance
Supplier	Ongoing contact via pur-	Equal access for all	SDG 9 Industry, Innova-
	chasing departments and		tion and Infrastucture
	sustainability team
Customer	Ongoing contact via sales	Sustainable products and	SDG 12 Responsible con-
	department, customer	production	sumption and production
	events and customer
	satisfaction surveys		SDG13 Climate action
Residents	Informal contact via loca-	Sustainable production	SDG6 Clean water and
	tion lines	sites in harmony with	sanitation
		living quality
			SDG13 Climate action
Authorities and	Process-dependent	Good Corporate	SDG 17 Partnerships for
associations	communication by the	Governance	the goals
	respective specialist
	department

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