ESRS G1 – Business conduct

The four KION Group values of integrity, collaboration, courage, and excellence are an integral element of the business strategy. Their purpose is to shape daily interactions and help to foster a culture of respect and social responsibility and to promote a solutions-driven, collaborative working relationship with all relevant stakeholders. Technological excellence and innovation are the foundations for sustainable growth, a high level of customer satisfaction, and a strong community. These foundations include integrity, ethical conduct, and strict adherence to statutory and company rules.

For the KION Group, sustainable management is a fundamental part of the decision-making process and the wider implementation of decisions, particularly where its relationships with business partners are concerned (see ‘The role of the administrative, management, and supervisory bodies’).

‘Anti-corruption and anti-bribery matters’ are also dealt with in this chapter on business conduct.

Material impacts and their interaction with strategy and business model in relation to business conduct (G1 SBM-3)

The sub-topic of management of relationships with suppliers, except for payment practices, was identified as a potentially material positive impact in the double materiality analysis. It is managed via the ‘Supply chain’ strategic action field (see ‘Strategy targets and target achievement in 2025’).

Responsible selection and assessment of suppliers (positive impact)

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

The careful and responsible selection and assessment of suppliers guided by sustainability criteria play an important part in making the supply chain more resilient and future-proof. This approach creates incentives for suppliers to embed sustainability standards in their processes and to continually improve, or at least maintain, their ESG risk assessment. By considering sustainability matters in the selection and contract awarding process, the KION Group creates an incentive for suppliers to offer goods with relatively low negative – or positive – environmental and social impacts.

This endeavor is supported by the KION Group’s ESG supplier risk management process, as described in the ‘Policies related to management of relationships with suppliers’ chapter.

Policies related to management of relationships with suppliers (G1-1)

Several years ago, the KION Group implemented and expanded the ESG risk management process to identify and investigate any shortcomings in supply chain relationships.

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

ESG Risk Management Standard for Suppliers*

To ensure that the actual and potential material impacts, risks, and opportunities in the upstream value chain are assessed and that actual or potential negative impacts are prevented, minimized, or eliminated, the KION Group has established a three-stage process for assessing supplier risk in relation to environmental, social, and corporate governance (ESG) matters. This process is described in the ESG Risk Management Standard of the KION Group.

Every supplier in a direct business relationship with a KION Group company (tier 1 supplier) must be analyzed and assessed using the ESG supplier risk management process. This process assesses the risks and efforts of suppliers to comply with and achieve certain labor-law, social, ethical, and environmental standards. Specific focuses of the ESG Risk Management Standard include workplace health and safety, anti-corruption and anti-bribery practices, product-related environmental protection, upstream supply chain monitoring, and, in particular, compliance with fundamental human rights, labor rights, and employment standards, which include questions about child labor and forced labor. The ESG supplier risk management process is an ongoing one, with new suppliers being continually added.

The first stage of the three-stage ESG supplier risk management process is the ESG supplier risk assessment. This encompasses global risk mapping based on the supplier’s country, sector, and goods risk. In addition, an individual risk assessment is carried out by service providers IntegrityNext and EcoVadis if a supplier is classified as high risk during global risk mapping or if the KION Group specifically selects the supplier for an individual assessment. This allows the KION Group to recognize an individual ESG risk for each supplier. In this way, suppliers can be systematically assigned to one of the following three categories: ‘low ESG risk’, ‘some degree of potential ESG risk’, or ‘high ESG risk’. Buyers can see this result in the ESG dashboard.

The second stage of the process encompasses the ESG supplier risk analysis. In this phase, the KION Group gives each supplier risk identified in the first stage a weighting and priority. The severity and probability of occurrence of the potential negative impacts of the identified risks, the significance of the supplier for the KION Group’s operations, and potential alternative sources for procuring the relevant products are considered in this analysis. The assigning of priorities allows the KION Group to initiate corrective actions where the materialization of risk would have a particularly severe impact.

The results of this ESG supplier risk analysis determine whether and what kind of improvement actions will be taken, and in what order, in the third stage of the process. These actions are defined in the Guideline on Corrective Actions, and include corrective action plans, further document-based analysis, face-to-face meetings with the suppliers, supplier training, and audits. The choice of actions is made in consultation with the suppliers and depends on their individual knowledge and the risk assessment.

Should a supplier fail to comply with the ESG supplier risk management process – for example by refusing to provide information, preventing audit initiatives, or unilaterally failing to instigate remedial action plans – the escalation process is triggered in line with the current KION Group rules. Non-compliance can have a wide range of consequences for the supplier. In accordance with the Supplier Code of Conduct, and in the event of non-compliance with the code, the KION Group ultimately reserves the right to end the business relationship.

The global Supplier Sustainability Team – part of the procurement organization – is responsible for the execution, compliance, quality, and effectiveness of the ESG risk management process. The team launches the relevant processes at the start of each year and formally initiates the corrective action process in the third quarter. Corrective action is carried out during the year at the request of suppliers and procurement employees. The corrective action may change a supplier’s ESG risk; this change is communicated to the buyers through the ESG dashboard. Buyers take the ESG risk into account in day-to-day processes such as decisions on the awarding of contracts, supplier assessments, and strategies for material groups. The consideration of ESG risk in procurement practices is described in greater detail in the ‘Actions related to management of relationships with suppliers’ section.

In addition to the annual review and updating of ESG supplier risk, the risk assessment is carried out on an ad hoc basis as required, e.g. for potential new suppliers. Where necessary or in the event of a potential rights violation coming to light, tier N suppliers can be included in the risk assessment too.

The ESG Risk Management Standard for Suppliers is available internally on the KION Group intranet. To facilitate understanding and compliance, the process has also been communicated via dedicated emails and training sessions for members of the Procurement team.

* The assessments by EcoVadis and IntegrityNext were not part of the audit carried out by KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin

Management of relationships with suppliers (G1-2)

As integral elements of the sustainability strategy, the supply chains and the relationships with suppliers play a vital role in business conduct.

The KION Group sources raw materials, goods, and services from suppliers in different parts of the world. The responsible selection and assessment of suppliers is not just a key component of the KION Group’s business model for legal reasons, it also promotes sustainable practices along the entire supply chain. Because it takes account of sustainability matters based on the ESG supplier risk management process described above, this approach can help to make the supply chain more sustainable and encourages suppliers to actively work on sustainability-related activities. The outcome of the ESG supplier assessment is incorporated into the supplier performance risk and influences the individual supplier performance score. This motivates suppliers to continually improve or maintain their ESG risk assessment level. A good ESG supplier risk score not only has a positive influence on the overall assessment of supplier performance, it also has a positive effect on the business relationship and awarding of contracts going forward. 

Actions related to management of relationships with suppliers (G1-2)

Once again in the reporting year, the KION Group took further action to integrate ESG criteria more thoroughly into procurement practices, especially in relation to the upstream value chain. Steps had already been taken in 2024 to embed the ESG criteria in the Global Supplier Awarding Committee (GSAC) process and in the supplier performance scorecard. In both cases, the ESG supplier risk score is used as determined in the ESG supplier risk management process described above.

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

Targets related to management of relationships with suppliers

As mentioned above, the KION Group set a new target in the ‘Supply chain’ action field of the sustainability strategy in 2024. The KION Group aims to continually increase the proportion of annual global spending on deliveries from direct suppliers that are essential for production (category A suppliers) with a low ESG risk. Further details can be found in the chapters ‘Strategy targets and target achievement in 2025’ and ‘Targets related to managing material negative impacts’.

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

Anti-corruption and anti-bribery matters

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

The KION Group Code of Compliance (KGCC) underpins the compliance management system and is complemented by other groupwide regulations on a wide range of matters that cover the KION Group’s full spectrum of activities. The KGCC is binding for all KION Group employees and provides guidance on the correct and appropriate way to interact with colleagues, customers, business partners, and the public. All new KION Group employees must complete an e-learning course covering all aspects of the KGCC. In addition to this e-learning course, other mandatory online courses are available on specific compliance topics such as anti-corruption, money laundering, conflicts of interest, and antitrust law. Some of these courses only need to be taken once, others at regular intervals (once or twice a year). Individuals who are in regular contact with customers or business partners are at a higher risk of corruption. These risk groups must attend additional mandatory face-to-face training at least every two years.

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

Actual and suspected compliance violations can be reported around the clock via the whistleblowing system in person or by telephone, post, or email. Reports can also be made anonymously via the hotline or an online form. Further information can be found in the ‘Processes to remediate negative impacts and channels for own workforce to raise concerns’ and ‘Processes to remediate negative impacts and channels for value chain workers to raise concerns’ chapters.

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

The risks relating to bribery and corruption are documented and assessed on an annual basis as part of a systematic compliance risk analysis throughout the Group, including for KION GROUP AG. Money laundering risks, risks of non-compliance with tax regulations and cybersecurity rules, and violations of human rights are also assessed. Non-financial risks that arise on an ongoing basis are identified, assessed, and managed. Appropriate actions are subsequently determined to eliminate weaknesses in processes and control mechanisms. Corruption and bribery have not played a significant role for the KION Group to date. Nevertheless, special attention is paid to preventing potential violations, especially in the procurement and sales functions.

The characteristics of the corruption perception index for the respective country, the size and structure of the local procurement or sales organization, and contacts with public officials play an important role in the assessment of risk. The risk analysis conducted in 2025, which focused on corruption and bribery, did not identify any incidents or risks that could be deemed material according to the internally defined thresholds.