ESRS S2 – Workers in the value chain

Human rights due diligence for workers in the value chain is carried out within the scope of the ‘Supply chain’ action field in the sustainability strategy (see ‘Strategy targets and target achievement in 2025’).

Impacts and their interaction with strategy and business model in relation to workers in the value chain (S2 SBM-3)

The double materiality analysis identified potential impacts in relation to workers in the value chain within the ‘Other work-related rights’ sub-topic as material.

Forced labor in the metal supply chain (negative impact)

The extraction of raw materials from iron and non-ferrous metals, such as copper, zinc, cobalt, or lithium, and their subsequent processing through to the production of an end product, can – depending on the country, region, industry, and stage of production – have various negative impacts on workers in the upstream value chain. This applies in particular to the mining and processing of minerals.

These negative impacts can include child labor, forced labor, various forms of coercion and repression in the workplace (frequently part of modern slavery), disregard for workplace health and safety provisions, discrimination, non-payment of a living wage, or the use of force by security personnel. According to the International Labour Organization (ILO), forced labor in the mining and metal working sectors – especially in geopolitically sensitive regions – is classified as a substantial risk, making it a widespread and systemic negative impact.

The KION Group’s products comprise numerous components that contain or are made from a variety of metals. The KION Group is not directly involved in the extraction of raw materials as it purchases goods and components from manufacturers around the world instead. This means that its direct influence on practices in the upstream value chain – particularly with regard to material negative impacts such as forced labor in the metal industry – is limited.

Child labor in manufacturing industry supply chains (negative impact)

The global nature of the KION Group’s procurement activities poses the potential risk of child labor in manufacturing industry supply chains. The KION Group identified and deemed child labor a material topic in the double materiality analysis. According to the ILO, child labor – especially in global production supply chains and in geopolitically sensitive regions – is a substantial risk. Throughout the industry, international labor standards and human rights are breached time and again, particularly as a result of child labor, which is classified as a widespread and systemic negative impact.

Because the KION Group is not directly involved in the extraction or direct processing of raw materials, it has limited influence on working conditions in the upstream value chain and thus on the risk of child labor in the manufacturing industry supply chains.

Policies related to workers in the value chain (S2-1)

The following subchapters deal with the KION Group’s material policies related to workers in the value chain. The focus is on policies relating to value chain workers, whereas policies that relate exclusively to the Company’s own workforce are dealt with in the ‘Own workforce of the KION Group’ chapter.

To ensure that the actual and potential material impacts, risks, and opportunities for workers 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. As part of its direct business relationships, the KION Group assesses and evaluates tier 1 suppliers using the ESG supplier risk management process described in the ‘Business conduct’ chapter. Where necessary, an escalation process is initiated in line with the KION Group’s existing guidelines.

The KION Group requires direct suppliers to act in accordance with the following policies, which is also demanded with regard to the interests, views, and rights of workers in the upstream value chain.

Supplier Code of Conduct

The KION Group Supplier Code of Conduct contains specific requirements and rules of conduct for a responsible supply chain and formulates environmental, ethical, and social guidelines for the global supplier base. These include specific requirements on business ethics and compliance, human rights and labor rights (including with regard to forced labor, child labor, precarious employment, and fair wages), and the health and safety of the workforce. The code’s requirements in relation to the climate and the environment were tightened in 2025. The requirements were drafted in accordance with, and make reference to, the UN Guiding Principles on Business and Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work (in particular Convention Nos. 138 and 182), and the OECD Guidelines.

The KION Group Supplier Code of Conduct underscores the Group’s zero-tolerance approach to child labor, forced labor, and comparable human rights violations. The obligation for suppliers to avoid inhumane, discriminatory, and unsafe working conditions for their employees is a core principle. Suppliers are also advised to ensure that their own suppliers, in turn, comply with these principles and requirements.

The inclusion of the Supplier Code of Conduct as an integral part of the KION Group’s General Terms and Conditions of Purchase is very important to the Group. All suppliers entering into a business relationship with the KION Group must fulfill this requirement and agree to the Supplier Code of Conduct – either by acknowledging the General Terms and Conditions of Purchase or by concluding an individually negotiated agreement. In addition, both the General Terms and Conditions of Purchase of the KION Group and individual agreements contain further requirements and obligations for the supplier that are intended to ensure compliance with applicable law and responsible practices within the value chain.

Compliance with the requirements is monitored as part of the ESG supplier risk management process (see ‘Policies related to management of relationships with suppliers’). Suppliers confirm compliance with the requirements by filling out the questionnaires developed for this purpose. Specific actions to verify compliance are undertaken at random or, in the event of reasonable suspicion of a dereliction of duty, as part of individual audits. Reports in the compliance system can also indicate that a supplier is not adhering to the Supplier Code of Conduct. If a suspicion is confirmed, appropriate remediation action is initiated together with the supplier.

The Head of Global Procurement is responsible for the Supplier Code of Conduct and the General Terms and Conditions of Purchase of the KION Group. Both policies were compiled with the Legal and Compliance department of the KION Group and apply to all direct suppliers of the KION Group.

The Supplier Code of Conduct is available to the public on the KION Group’s website at www.kiongroup.com/en/About-us/Suppliers.

Responsible Minerals Sourcing Standard

The Conflict Minerals Standard was replaced by the Responsible Minerals Sourcing Standard in 2025. The new standard is also based on the Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas of the Organisation for Economic Co-operation and Development (OECD) and other pertinent policies and regulations. By specifically referring to the EU Conflict Minerals Regulation (Regulation (EU) 2017/821) and the US Dodd-Frank Act (section 1502), the KION Group has clearly formulated its commitment in this area. Unlike the previous Conflict Minerals Standard, the new standard also relates to other relevant minerals.

The standard promotes responsible procurement and a zero-tolerance policy toward child labor, forced labor, human trafficking, and precarious employment. The extraction of minerals, in particular, poses an elevated risk of human rights violations around the world.

Every year, the KION Group carries out due diligence checks in its supply chain in order to ascertain whether the goods and components that it procures from its suppliers, and that are used in the KION Group’s end products, potentially contain conflict minerals.

Global Procurement is the central function with responsibility for managing and overseeing these checks.

The standard is available to the public on the KION Group’s website at www.kiongroup.com/en/About-us/Suppliers.

Processes for engaging with value chain workers about impacts (S2-2)

During the first stage of the ESG supplier risk management process described in the ‘Policies related to management of relationships with suppliers’ chapter, direct suppliers that do not have an EcoVadis rating are provided with a self-assessment questionnaire by the service provider IntegrityNext. In terms of material impacts, these cover various topics such as child labor, forced labor, discrimination, other labor-related rights, environmental topics, and internal procedural matters. Under the supervision of the Head of Global Procurement, the global Supplier Sustainability Team is responsible for the execution, compliance, quality, and effectiveness of the questionnaires. The ESG supplier risk management process itself is reviewed at the end of each year to check its effectiveness. All insights gathered during this phase are reviewed and the process is adapted where appropriate.

The Supplier Performance Management department within the procurement organization is responsible for monitoring and developing the existing supplier base as well as potential new suppliers on a global level. As part of this remit, the department also carries out in-depth, on-site supplier assessments and a range of audits of potential new suppliers, and of selected suppliers as required. Key sustainability criteria, such as child labor and forced labor, are also factored into the assessment. Where the assessment identifies potential risks, further investigations are initiated in accordance with the ESG supplier risk management process as described in the ‘Policies related to workers in the value chain’ chapter.

The KION Group also offers its suppliers training on LkSG and other sustainability topics such as environmental requirements for products and the reduction of carbon emissions, which, depending on the supplier’s structure, brings the Supplier Sustainability Team or other members of the procurement organization into contact with the supplier’s workforce.

To encourage wider participation in its own supplier network, the KION Group embraces inclusive procurement practices that make it possible for a wide range of companies to become suppliers. The KION Group’s approach helps it to identify and integrate innovative suppliers from diverse backgrounds in order to build up resilience and reinforce equal opportunities in the supply chain.

The KION Group has not entered into any global framework agreements or other agreements with global labor union federations related to respect for the human rights of workers in the value chain.

Processes to remediate negative impacts and channels for value chain workers to raise concerns (S2-3)

The KION Group provides a number of ways for internal and external whistleblowers to report potential breaches of the law or of other regulations. Actual or suspected breaches of the law or regulations can be reported to the Group’s Compliance department by email, telephone, or post. The KION Group can also be contacted through social media.

External whistleblowers can additionally make use of the KION Group whistleblowing system’s dedicated hotline to anonymously report actual or suspected compliance breaches. This system provides several channels for users to report concerns, such as an online form (www.kiongroup.com/whistleblowing), a hotline, and an email address (compliance@kiongroup.com).

The existence of these channels is clearly communicated on the website and in the KION Group Code of Compliance. They are accessible to the public at www.kiongroup.com/en/About-us/Compliance and in the information for suppliers of the KION Group. The obligation to protect whistleblowers is also set out in the Code of Compliance. The Code sets out that reprisals, threats, or attempted reprisals against a whistleblower are forbidden in internal investigations in the KION Group. 

It is standard policy in the KION Group to investigate and follow up on every compliance report, with each one being documented in the Compliance Case Management System and reviewed by the KION Group Compliance Case Manager. Depending on the nature of the report, either a Compliance Officer or a representative of another competent KION Group function is appointed to manage the investigation, follow-up on the report, and close the investigation. The Compliance Case Manager monitors progress and prepares management reports. 

The KION Group continuously improves the whistleblowing system on the basis of feedback from whistleblowers and other users of the system. Anyone can make suggestions for improvements. In 2025, these were discussed by the Compliance department, the Compliance Committee, and any other internal stakeholders as appropriate. Questions on the whistleblowing system were included in the annual compliance risk assessment questionnaires that were filled out by the local KION Group sites in 2025. To date, no formal assessment of value chain workers’ trust in the channels has been carried out. Corporate Compliance is responsible for the procedure for dealing with compliance incidents, which is set out in the KION Group’s policy on internal investigations. 

In addition to its whistleblowing system, the KION Group screens news to identify cases that come to light through reports in the media and involve a potential breach of compliance. These incidents are also documented in the Compliance Case Management System by the Supplier Sustainability Team.

In accordance with the ESG supplier risk management process described in the ‘Policies related to management of relationships with suppliers’ chapter, the KION Group has defined a process for any infringements of protected rights in the supply chain. This process serves, in particular, to follow up any infringements categorized as a ‘Human rights or environmental breach in the supply chain’ and to take suitable remedial action. 

Once a report has been made via one of the aforementioned channels, the incident is assigned to be followed up by the global Supplier Sustainability Team, which is part of the procurement organization. The investigation is performed as described in the ESG supplier risk management process and is subject to the same requirements as for compliance case management. The aim is to analyze all incidents thoroughly, uniformly, and with the same level of detail.

There is no defined process for managing compensation for workers in the value chain. Workers have to make their case themselves and decisions are made following an individual review. 

Regular checks by the Compliance Committee of the KION Group and the quarterly Human Rights Committee are designed to monitor the effectiveness and efficiency of the process. 

Taking action on material impacts on value chain workers and effectiveness of those actions (S2-4)

The KION Group’s sustainability strategies, procedures, and requirements described in the ‘Policies related to workers in the value chain’ chapter are used as binding criteria for the selection of suppliers and give rise to specific actions to avoid human rights violations. Given the tried-and-tested processes that are in place, no substantial capital expenditure or operating expenditure is currently anticipated for any potential actions. The sustainable approach to procurement follows a continuous improvement process across the phases of strategy development, risk assessment, risk mitigation, incident management, and corrective actions.

One potential incident was reported in 2025, which was documented and processed via the Compliance Case Management System (see ‘Processes to remediate negative impacts and channels for value chain workers to raise concerns’). The incident concerned a supplier with complicated sub-supplier structures that could not disclose whether its subcontractors at the end of the supply chain were ensuring a fair wage and employment conditions. Due to the supplier’s lack of willingness to cooperate, the Group ceased collaboration on a project with this supplier.

ESG supplier risk management including forced and child labor

In 2025, the three-stage ESG supplier risk management process described in the ‘Policies related to management of relationships with suppliers’ chapter was used by the global Supplier Sustainability Team – part of the procurement organization – to determine actual or potential material negative impacts on workers or on the environment in the upstream value chain. The KION Group’s mandatory ESG supplier risk management process includes explicit questions on child labor and forced labor as well as on the supplier’s onward supply chain. The actions to be taken to prevent, mitigate, or remediate actual or potential negative impacts are defined in this process. The KION Group also recommends that compliance with the requirements is replicated along the entire value chain and requires its suppliers, where necessary, to uphold the Principles of Supplier Conduct described in the ‘Policies related to workers in the value chain’ chapter in their supply chains.

The KION Group arranges visits to suppliers’ sites so that it can perform sample-based checks on its suppliers. The results of these supplier audits are compared with the suppliers’ own self-assessments and serve to review the effectiveness of supplier risk management processes. In 2025, the KION Group did not find reason to revise its system of supplier risk management.

The KION Group monitors the progress of its three-stage ESG supplier risk management process by means of quarterly reporting that includes all Group entities and Operating Units. The proportion of suppliers covered by the ESG process was increased further in the reporting year. Supplier master data was also harmonized in the system, which enhanced data quality. This also means that standardized assessments can be conducted within a group of companies, regardless of the SAP systems in place. The number of low-risk suppliers was also increased further thanks to targeted communication with suppliers and corrective action. Regions of particular focus in 2025 were the Americas and APAC. Existing supplier training was subtitled for Chinese suppliers and distributed via the regional sourcing platform. Audits were carried out in all three regions in the reporting year, with a particular focus on countries in the Americas and Europe (EMEA region) due to the volume of business. Corrective actions and supplier interviews also brought about improvements.

Transparency regarding conflict minerals

With respect to conflict mineral smelters or refiners (SOR), the KION Group has been participating in an annual smelter outreach initiative since 2022. This initiative, which is actively managed by the service provider Assent, aims to approach directly those SORs that have not yet been, or have refused to be, assessed by local auditors regarding their conflict-free minerals sourcing. The initiative does not specifically target the KION Group’s suppliers but is a general due diligence initiative as part of an industry-recognized assessment program, with the objective of improving transparency globally. The KION Group initiated an additional campaign in 2025 to increase the scope of the supplier information that it holds.

Targets related to managing material negative impacts (S2-5)

The following subchapter deals with a material target of the KION Group related to workers in the value chain.

The KION Group introduced the global ESG supplier risk management process in 2023. The process is presented in the ‘Policies related to management of relationships with suppliers’ chapter. As part of this process, metrics were defined in respect of targets that are to be achieved by 2030.

Increase in spend on tier 1 suppliers with a low ESG risk

In order to strategically counter negative impacts on workers in the value chain, the KION Group defined a target in the ‘Supply chain’ action field of its sustainability strategy. This target is driving the continual expansion of a very low-risk upstream value chain and preventing, mitigating, or remediating actual or potential negative impacts on the environment or human rights, such as exploitative child labor and forced labor. The KION Group is pursuing the strategic target of increasing the proportion of annual spending on tier 1 suppliers in category A with a low ESG risk. The definition of this metric is presented in the section below (see ‘Strategy targets and target achievement in 2025’).

For 2025, the KION Group’s target was to raise the proportion to 47 percent, representing a year-on-year increase of 15.5 percentage points (2024: 31.5 percent). A base year of 2023 and base value of 24 percent were set for this target. The proportion reached in 2025 was 60.9 percent, which exceeded the target, so a new target of 80 percent to be achieved by 2030 has been set. The Procurement department, the Legal and Compliance department, the Sustainability department, and the HR department were all involved in formulating this groupwide target. No changes were made to the methodology for calculating the target. The Supplier Sustainability Team monitors target achievement on a monthly basis. This is complemented by quarterly reporting to management level in procurement.

Metrics related to workers in the value chain

The following deals with a material metric of the KION Group related to workers in the value chain.

In 2025, the KION Group managed to increase the proportion of annual spending on tier 1 suppliers in category A with a low ESG risk to 60.9 percent. The metric measures the proportion of spending on tier 1 suppliers in category A that were identified as low ESG risk by the ESG supplier risk assessment. This is calculated as a percentage of the total spend on direct tier 1 suppliers in category A. Tier 1 suppliers provide products or services directly to the KION Group, excluding sub-suppliers or downstream suppliers. Direct suppliers deliver materials that are directly incorporated into the end products. Category A suppliers are strategic suppliers that, according to an ABC categorization based on the proportion of spend they account for, receive a total of around 80 percent of overall expenditure on tier 1 suppliers and are therefore materially important to the KION Group.

Only external spending is taken into account. Intracompany transactions and expenditure for companies in which the KION Group holds a minority interest are excluded. The main source of the operating expenditure data is an internal database that predominantly contains primary data such as invoices and directly interfaces with the KION Group’s accounting systems. Since not all of the Group entities are linked to this database, it does not capture 100 percent of the Group’s operating expenditure. Entities that are not linked to this internal database are asked to identify their suppliers so that these can be included in the assessment.

Further information on supplier risk categorization can be found in the ‘Policies related to management of relationships with suppliers’ chapter.