Acting for all People

Numerous programs and centers of excellence have been implemented to further improve occupational health and safety. For example, the EHS management system includes mandatory requirements as well as guidelines that address environmental, occupational health and safety management issues for all ZF locations worldwide. Progress is evaluated through self-assessments and as part of the EHS Corporate Audit Program.

Safety Excellence covers three key areas: Leadership in Occupational Safety (Safety Leadership), Employee Involvement (Behavior Based Safety), and Continuous Improvement of the EHS Management System, which also encompasses other programs, such as Ergonomics and Machine Safety.

The Safety Leadership Program is a global program aimed at improving managers' awareness of occupational safety. In this way, we promote a sustainable safety culture by identifying opportunities in the program for managers to influence improvements in occupational safety and teaching them how to fulfill their role model function.

Behavior Based Safety (BBS) aims to get employees more involved in safety by coaching each other and making them aware that everyone's behavior at work plays a big role in overall safety.

The software-based ergonomics program includes e-learning, ergonomic risk assessment and best practice solutions, and a video analysis tool. The aim is for the Group to have no more workplaces with a high ergonomic risk by 2025 and to reduce medium-risk workplaces to a proportion of less than 10 percent.

Our safety standards on machines are high, and accidents mostly occur due to incorrect operation. A global team of experts not only checks compliance with safety standards, but also works to improve the operation of machines beyond legal requirements.

The EHS management system provides for employees and their representatives to be actively involved in EHS initiatives and decision-making processes and to be involved in the continuous improvement of occupational health and safety. Employees are encouraged to report near misses and unsafe situations and to participate in activities such as risk assessments, kaizen workshops and suggestion schemes. They also have access to the general ZF Trustline to report health and safety complaints. These reports are treated in strict confidence.

Many countries, including the United States of America, Canada, Mexico and Germany, have enacted additional laws to step up their existing human rights laws and prevent the import of goods manufactured under forced labor. These laws have an impact on supply chains. This is why they require appropriate attention and transparency from every partner in the supply chain.

Within the scope of its human rights due diligence, ZF works with its own risk management process. It identifies the risks of negative impacts on human rights and prioritizes them based on various suitability criteria.

• Identification of risks according to country-specific human rights risks and risks associated with various raw materials.
• Risk assessment and prioritization according to suitability criteria (e.g., on the basis of the probability of occurrence, severity and our potential contribution to the cause).

ZF has joined the Responsible Supply Chain Initiative e.V. (RSCI), an initiative for sustainable supply chains in the automotive industry. RSCI has defined a standard and developed a central platform for a standardized sustainability assessment of production sites. The initiative also carries out on-site inspections. As the results of audits already conducted by other companies are recognized, the RSCI standard helps to avoid multiple inspections.

ZF is also a founding member of the “Mecanismo de Reclamación de Derechos Humanos” (MRDH). This is a pilot project for a cross-company complaint mechanism in Mexico. MRDH was developed jointly by government institutions, trade unions, civil society, businesses and human rights institutions – both from Germany and Mexico. The MRDH provides a common and standardized complaint platform for the entire supply chain of its member companies. This will improve access to remedies and the identification of systemic risks.

Other critical issues in the supply chain, such as child labor, human rights violations or environmental protection violations must be reported via the ZF Trustline. We inform our suppliers about this whistleblower system, among other things, in our Business Partner Code of Conduct (PDF: 7 MB).

To ensure that ZF's key requirements for value-oriented cooperation are met, all suppliers must accept the ZF Business Partner Code of Conduct. It includes topics such as human rights, labor standards, occupational safety and health, environmental protection, business ethics and compliance. These principles are in line with national and international laws, conventions and guidelines such as the UN Global Compact, the OECD Guidelines for Multinational Enterprises, the Universal Declaration of Human Rights, the UN Guiding Principles on Business and Human Rights, and the conventions of the International Labour Organization (ILO).

All suppliers are obliged to acknowledge the ZF Business Partner Code of Conduct. In particular, we expect our business partners to reject any form of slavery, forced labor and child labor. Likewise, ZF expects them to respect the freedom of association and the right to form interest groups, to remunerate work fairly and appropriately, to adhere to working hours in accordance with applicable law, and to promote the qualification of their employees. In accordance with the ZF Code of Conduct, suppliers must comply with all applicable laws and ensure that this is also the case in their supply chains.

In order to remain a ZF supplier or become a new supplier, business partners must adhere to the ZF Code of Conduct. ZF reserves the right to scrutinize business relations and take appropriate action if deviations or violations are identified.

The Supplier Quality Directive (QD83) and the Global Logistics Directive (GLD) outline the environmental responsibility in the value chain and address product-related environmental protection aspects. They also cover directives such as the EU Chemicals Regulation (REACH) as well as logistics and packaging specifications. These directives also apply to sub-contractors.

Working with our supply chain partners is key to our success. We work closely with our suppliers and support them in restructuring and creating a new sustainability culture. To achieve the best possible performance in sustainability, we enhance collaboration, for example with pilot projects, promote and reward best practices, develop supplier guidelines and offer support through training.

The sustainability performance of its suppliers is of crucial importance to ZF. We promote climate neutrality goals and social topics, such as the respect for human rights. Here, ZF pursues ambitious targets for its own company as well as for its suppliers and has already implemented numerous sustainability measures.

To evaluate the sustainability performance of suppliers, ZF introduced the ZF Sustainability Score. This fully digital solution requires compliance with the minimum sustainability requirements. For this purpose, the ZF Sustainability Score measures sustainability performance based on various key input factors.

The Sustainability Score provides us with transparency in the areas of decarbonization and social responsibility and sets new sustainability standards for suppliers.

To ensure that our suppliers meet our sustainability expectations, we have introduced Sustainability Bid Conditions. This includes specific requirements for climate and environmental protection as well as requirements for social responsibility and responsible sourcing. Suppliers of production material are required to accept the tender conditions.

Critical Raw Materials (CRM) are raw materials of high strategic importance that are associated with high supply risks. This also includes environmental and social concerns. Within the value chain, the phases of raw material extraction and production pose the highest risk for human rights violations, environmental pollution or poor working conditions. In order to avoid or at least mitigate such risks, ZF is working with its business partners to ensure the responsible sourcing of critical raw materials. This is achieved through greater transparency in the supply chain, traceability of raw materials and circularity; all in line with ZF's sustainability goals and applicable international legislation.

As one of the most effective measures for risk mitigation, ZF is working on considering ESG risks already during product development. The objective is to reduce or eliminate the proportion of critical raw materials in ZF products.

In order to ensure the highest standards for responsible procurement, ZF also participates in multi-stakeholder initiatives such as SUSMAGPRO or in the Automotive Industry Sector Dialogue. The SUSMAGPRO project focuses on the recycling of magnets containing rare earths. The activities of the Automotive Industry Sector Dialogue include the development of guidelines for the integration of voluntary sustainability standards in CRM supply chains.

In addition, ZF has established a special due diligence procedure for conflict minerals, cobalt, and mica. This is because the mining and trading of these minerals may contribute to financing armed conflicts and serious human rights violations. As ZF is aware of these risks, the company strives to comply with environmental and human rights standards along the entire value chain. All relevant suppliers must disclose the origin of conflict minerals, cobalt and mica annually using the Conflict Minerals Reporting Template (CMRT) and Extended Minerals Reporting Template (EMRT) of the Responsible Minerals Initiative (RMI). The due diligence process follows the OECD Due Diligence Guidance for Minerals. This aims to identify, assess and eliminate high-risk sources of raw materials – that is, smelting plants and refineries that are not compliant with RMI's Responsible Minerals Assurance Process (RMAP). For more details on conflict minerals due diligence process, please refer to the Conflict Minerals Due Diligence Report 2024.