8.1 Economic Performance (EC)
Management Approach - Economic Performance
As a key objective of the company, the economic performance of the Geberit Group is under the strategic control of the Board of Directors and the operational management of the Group Executive Board (aspects economic performance, market presence, indirect economic effects).
A clear strategy and its consistent implementation are crucial for long-term success. The tried-and-tested strategy rests on four pillars:
- Focus on sanitary technology
- Commitment to innovation
- Selective geographic expansion
- Continuous optimization of business processes
For detailed explanations of the four strategic pillars, see www.geberit.com > Company > Vision and Strategy.
For a discussion of the economic position of the Geberit Group, see Business Report > Business and financial review.
G4-EC1 Economic performance
Significant indicators for the generation and distribution of value in accordance with the GRI requirements can be found in the financial report:
Direct Economic Value Added
- Sales and operating profit, see Financial Report > Consolidated financial statements Geberit Group > Income statements.
Economic Values Passed On
- Operating expenses excl. personnel expenses, see Financial Report > Consolidated financial statements Geberit Group > Income statements.
- Personnel expenses, see Key figures Sustainability > Employees and society.
- Payments to providers of capital, see Financial Report > Consolidated financial statements Geberit Group > Statements of cashflows.
- Social commitment, see G4-EC7.
Retained Economic Values
- Investments in and divestments of property, plants and equipment, see Financial Report > Consolidated financial statements Geberit Group > Income statements.
- Share buyback, see Financial Report > Consolidated financial statements Geberit Group > Notes > Note 22.
G4-EC2 Financial implications of climate change
The Intergovernmental Panel on Climate Change (IPCC) presented its most recent report at the end of March 2014. The message contained in the IPCC report is unequivocal: Global warming is a reality, and climate change is impacting on the availability of water resources worldwide. In 2010, the World Bank forecast that the adjustment to an increase in temperature of the global climate of two degrees Celsius between 2020 and 2050 would cost between USD 70 and 100 billion per year. 20 percent of this is attributable to water supply and flood protection measures. Around a third of the global population is already living in regions in which water resources are scarce. Europe is increasingly affected, especially the southern and eastern Mediterranean region where, according to the European Commission’s Green Book, available water resources will halve within the next 50 to 100 years. For people in economically weak regions in particular, this trend is often associated with a lack of drinking water, hygiene problems caused by waste water and slower economic growth. Sustainable water use is essential for ensuring viable social and economic development around the world. Water is of central importance for nutrition, health, the environment, the economy and energy production. Sensible water management therefore calls for cross-sector solutions.
These trends will determine the sanitary technologies of the future. Water-saving, resource-efficient products will become increasingly important. Geberit is taking advantage of the opportunity to meet the growing worldwide demand for water-saving products and to contribute towards the diligent handling of water, thus making a name for itself as a leader in sustainability. Products classified as special water-saving products already make a substantial contribution to Group sales.
Compared to these relatively high chances of success, Geberit is exposed to an average risk of natural disasters triggered by climate change which can fundamentally affect production areas or transport areas. None of the production sites is particularly at risk in this respect, however. As Geberit does not operate in the classically energy-intensive industries, there are currently no special CO2 regulations such as statutory emission limitations. On the other hand, Geberit is indirectly affected by higher energy or raw materials prices and by generally increasing requirements in terms of energy management. With its internal energy master plan, the targeted introduction of the ISO 50001 energy management system, and the measures related to its CO2 strategy (see aspect Emissions), Geberit is reacting proactively and is working continuously on saving energy, improving its energy efficiency and reducing its CO2 emissions. Thanks to these efforts, electricity consumption in 2014 was lower than that in 2006, even though currency-adjusted sales grew by 39% during the same period. In the same period, it was also possible to reduce absolute CO2 emissions by around 19%. In this way, the company is saving on energy costs and reducing the risks associated with CO2 emissions.
As far as corporate risks are concerned, the Audit Committee of the Board of Directors introduced a comprehensive system for the monitoring and management of the risks associated with the company’s business activities, including the risk category CO2 emissions, see Financial Report > Consolidated financial statements Geberit Group > Notes > Note 4.
G4-EC3 Scope of the organization’s defined benefit plan obligations
The Geberit Group sponsors defined benefit plans for its employees in Switzerland, Germany, Austria and the USA. For further information, see Financial Report > Consolidated financial statements Geberit Group > Notes > Note 3 > Retirement benefit plans and Financial Report > Consolidated financial statements Geberit Group > Notes > Note 17.
G4-EC4 Significant financial assistance received from government
Significant assistance received from the public sector includes:
- For information on income taxes, see Financial Report > Consolidated financial statements Geberit Group > Notes > Note 26.
- Investment subsidies for new investments to promote the respective business location and secure jobs: CHF 1.8 million (Slovenia: CHF 1 million, Switzerland: CHF 0.5 million, Germany: CHF 0.3 million).
- Contributions received to support training and part-time employment prior to retirement: CHF 0.2 million.
The public sector is not represented on the Board of Directors of the Geberit Group.
8.2 Market Presence (EC)
Management Approach - Market Presence
Geberit has grown from a family-run firm into a listed global company that has proven its ability to adapt to a rapidly changing environment. Geberit’s characteristic values, skills and a shared understanding of products provide the business framework for the company’s representatives in 41 countries. Within its core strategy (see Management approach economic performance), Geberit’s aim is to ensure that production plants and sales companies alike function well as units which enjoy a high degree of autonomy. A high level of acceptance among the local workforce is a fundamental part of this, thanks in part to an attractive pay structure and the involvement of local know-how at the management level.
G4-EC5 Ratio of standard entry-level wage compared to local minimum wage
Geberit pays market-rate wages, taking into account local circumstances and laws. When selecting employees and determining their assignment in the company, Geberit attaches great importance to qualifications appropriate to the task description. In accordance with their qualifications, the majority of Geberit employees at the 17 production sites and at the sales companies are paid well above the minimum wage range. Stability and a high level of motivation among employees are important to Geberit. This is being encouraged at the new site in India, for example, by means of a comparatively attractive pay structure. The applicable requirements on minimum wages are well met.
G4-EC6 Procedures for local hiring
Geberit has no personnel policy or employment practices providing for the preferential treatment of persons from local vicinities in connection with the hiring of members of management boards for the respective country organizations. However, Geberit would like to establish organizations at its production and sales sites that function on a local basis, which is why it always integrates locally appointed managers. For example, the sales companies in India and China are both headed by a managing director who has been recruited locally.
8.3 Indirect Economic Impacts (EC)
Management Approach - Indirect Economic Impacts
Indirect economic impacts arise primarily due to positive side-effects from direct economic action. Geberit aims to achieve sustained improvement in the quality of people’s lives through innovative solutions in sanitary technology. The economy benefits from this in several respects: through the contribution to a durable, resource-efficient sanitary infrastructure, through know-how transfer in the sanitary industry, via impetus for the economy in regional economic areas, and through suppliers. There is no management approach to indirect economic impacts in the narrower sense. Instead, the company works with the stakeholders concerned to identify the best solutions in each case.
Geberit pursues a clear strategy as part of its social engagement, and therefore supports social projects each year that exhibit a relationship to the topic of water and sanitary facilities, as well as to Geberit’s core competencies and corporate culture. Social projects also play an important role in training. Working on these projects provides Geberit apprentices with the opportunity to develop abilities and social skills that aid their personal and professional development. At the same time, social engagement also contributes to the implementation of the Millennium Development Goal of the United Nations, which has the aim of providing people worldwide with access to clean drinking water and basic sanitation.
G4-EC7 Investments in infrastructure and services primarily for public benefit
Donations and financial contributions, including product donations, totaling CHF 3.3 million (previous year CHF 3.1 million) were made during the reporting year. In addition, Geberit employees contributed 2,770 hours of charitable work (previous year 1,340 hours). Geberit also supports facilities for disabled persons and long-term unemployed, where simple assembly and packaging work in the amount of around CHF 5.5 million was carried out in 2014 (previous year CHF 4.4 million). See also Key figures Sustainability > Employees and society.
The focus was on the following projects and partnerships in 2014:
- Conducting a social project in Varanasi in northern India: Renovation of sanitary facilities at the Kiran Village, a training institution with boarding school for around 360 disabled children and young people.
- Continuation of the partnership with Helvetas on the topic of clean drinking water and sanitary facilities. This included holding a joint donations campaign with Geberit employees to raise CHF 40,000 for four new wells in Mozambique, thus giving 3,000 people access to clean drinking water.
- Cooperation with the charitable organization “Swiss Water Partnership” to promote international dialog on the topic of water.
- Installing sanitary facilities at the new occupational therapy center for the mentally disabled at the Boscana Foundation in Barcelona (ES).
- Financial commitments to diverse social projects, including a substantial donation to LIV, a South African organization which provides care and shelter for orphans in purpose-built villages.
- Initiation of a corporate volunteering project for 16 employees at the Rapperswil-Jona (CH) site, enabling them to take part in the WARM (Water Resources Management) project in Nepal for two weeks.
G4-EC8 Indirect economic impacts
Geberit forms part of the value chain in the construction industry. It has significant indirect economic impacts “downstream” on the customer side at planners, plumbers and end users, as well as “upstream” at suppliers and transport companies. Continuous investment in 17 production plants in Europe, China, India and the USA, as well as the logistics center in Germany, will strengthen these individual economic areas.
Geberit know-how and products significantly reduce the burden on water and waste water systems. According to one model calculation, all dual-flush and flush-stop cisterns installed since 1998 have so far saved around 17,900 million cubic meters of water in comparison with traditional flushing systems. In 2014 alone, the water saved amounted to 2,128 million cubic meters. This is more than half of the annual consumption of all German households.
Geberit is committed to sustainable sanitary systems which, as elements in construction, help to shape infrastructure as a whole. For example, Geberit actively worked on adapting the applicable standard for the dimensioning of waste water piping to smaller diameters. This is important so that the full functionality of the piping system is ensured even with lower quantities of waste water. Geberit also supported WELL (Water Efficiency Label), a product classification system for water-saving and resource-efficient sanitary products that was introduced in 2011. Similar to its work in the field of waste water hydraulics, Geberit also played a major part in ensuring that topics such as noise insulation and fire prevention, as well as hygiene in drinking water and sanitary areas, have been developed to the benefit of the end user and laid down in standards and recommendations.
Geberit lends impetus to the sanitary industry with innovation and new products that are sold and implemented worldwide by wholesalers, plumbers and planners. During 2014 alone, around 30,000 customers were provided with education and further training on Geberit products and software tools in the 25 information centers in Europe and overseas, see Business Report > Business and financial review > Customers. Education and training for 232 apprentices and students continues to be supported, as does research on sanitary technology and green building, by cooperation with institutions such as the Swiss Federal Institute of Technology (ETH) in Zurich (CH) and Tongji University (CN).
The indirect economic impacts on suppliers and transport companies are also significant. The Group’s cost of materials in 2014 was CHF 646.0 million (previous year CHF 606.4 million). Geberit has relations with a total of more than 1,200 suppliers. The company does not have its own transport fleet and contracts external transport companies for logistics services.