>

Sustainability Report 20191

Delivering growth − in Asia and beyond.

> Welcome from the CEO

Welcome from the CEO

Dear reader,
In 2019, DKSH has improved performance in all four Business Units and at the same time further raised sustainability standards. I am
therefore pleased to share with you our third sustainability report which highlights our key achievements.
Being mindful of our environmental impact, we have implemented efficiency measures in 2019 and achieved climate neutrality in our
founding markets of Japan, Singapore, the Philippines and Switzerland.
In the social area, we have been a proud partner of Right to Play in Thailand for 13 years. We extended this partnership by joining theirprograms with the Liverpool FC Foundation. In addition, we supported more than 40 social projects across Asia.
In governance, we introduced our sustainability policy and targets for the Executive Committee. This underlines our commitment andbetter links compensation to our sustainability efforts going forward.
DKSH has supported clients to expand in Asia for more than 150 years. Over this time, the company has developed from a traditional
trading house into the leading Market Expansion Services provider in Asia. As we have widely fulfilled our vision, we have launched our
new DKSH Identity, reflecting our ambition for growth and our purpose to enrich people’s lives. Our services give people in Asia accessto important products for their daily needs, create sustainable value for our partners and generate jobs. As part of our new Identity, we
also updated our values: integrity, empowerment, collaboration, entrepreneurship and sustainability.
For the first time, we have set sustainability targets at DKSH. These include becoming climate neutral by 2030, expanding training for
employees and increasing energy efficiency.
Especially in times of uncertainty, such as the outbreak of the COVID-19 virus, our ability to maintain business continuity in supply chainsis crucial. It demonstrates our reliability as a partner in fulfilling our responsibility to the local communities we serve. In terms ofsustainability, we have higher ambitions for the future and are continuing along this path while pursuing our vision of enrichingpeople’s lives.

Stefan P. Butz
CEO
2

Content2

Welcome from the CEO

4

About us7

Sustainability at DKSH

21 Environment
22 Environmental responsibility
25 Social
26 Recruitment, retention and development
28 Labor standards
30 Local communities
32 Governance
33 Economic performance
35 Market presence
36 Procurement practices
39 Anti-corruption
42 Occupational health and safety
45 Customer health and safety
47 Marketing and labeling
49 Information security
51 Appendix
57 GRI Standards and Disclosures

3

> About us

About us1

11.6
billionnet sales in 201944

innovation
centers

150
Operations in

distribution
centers

36 countries
850

business locations

33,350employees

1,900

clients

1,900
suppliers

525,000
customers

4Data for 20191

> About us

DKSH in summary

DKSH enriches people’s lives by providing
access to goods, services and insights.
United by our vision to be the trusted partner, we help companies grow theirbusiness in Asia and beyond.

Healthcare

Consumer
Goods

Performance
Materials

Technology

5

Delivering life-saving drugs to hospitals,
bringing high-quality products to remotevillages, installing technology that raises
living standards and providing new formulations for healthcare products that makelife easier.

These are just a few examples of how DKSH
touches and enriches people’s lives. We do
this by distributing, promoting and servicing
our clients' products and helping our customers grow by providing access tohigh-quality products, services and insights.

With a product range covering pharmaceuticals, over-thecounter (OTC), consumer health and medical devices and diagnostics, we offer services including product registration,marketing and sales, and value-added services such as
hospital and patient solutions.

Focusing on fast moving consumer goods, food services,
luxury goods, as well as fashion and lifestyle products, we help
companies grow in Asia through our services including productfeasibility studies, marketing and sales, and capillary
distribution.

Supported by our expertise in innovation and formulation,
supply chain, sourcing, regulatory and sales & marketing excellence, we distribute a wide range of innovative ingredientsand chemicals for the specialty chemicals, food and beverage,
pharmaceutical and personal care industries.

We cover a broad range of capital investment goods andanalytical instruments for which we offer marketing, sales,
distribution, application engineering and after-sales services.

> About us

Our services

Marketinsights

Sourcing

Marketingand sales

Distribution
andlogistics

After-sales
services
Customers

Clients

Omni-channel service portfolio
Backflow of information from customers to clients

Blanket market coverage across Asia Pacific

Business partners choose the services theyneed to grow their business from our comprehensive and ever-growing omni-channel
portfolio.

Sourcing
Business partners can access a global sourcing network with:• Deep industry expertise to provide clientswith any materials and products needed• A cost-effective, quality and dependable
supply• Full compliance with safety and environmental regulations

Market insights
Business partners can innovate for growthwith:• Access to our global net work ofinnovation centers in Business Unit
Performance Materials where we generate
new product ideas, develop and customize them, work on new ingredients

6and technology applications, provide
hands-on training and acceptance tests• Market entry and long-term businessstrategies based on our local expertiseand market intelligence• Omni-channel insights from data andanalytics

Marketing and sales
Business partners can open up new revenue
opportunities with:• A complete array of marketing and sales
services, including eCommerce marketing• Access to all relevant channels to markets,
customers and outlets across Asia Pacificboth offline and online

Distribution and logistics
Delivery of what our business partners
need, at the right time and place with:• An unmatched logistics infrastructure anddistribution centers to transport, store andmanage our business partners’ products
across Asia

• Many additional specialized services
including product registration, regulatory
support, customs handling, importation,
logistics, repackaging, invoicing, cash
collection, supply chain management ande-fulfillment• A global SAP platform, one of the largest
in Asia, which business partners can aligntheir IT systems with to receive valuable
direct data, such as outlet level transactions, for informed decision-making

After-sales services
Business partners receive services throughout the entire lifespan of their productswith:• A broad range of after-sales services andsupport ensuring top-quality standards,
fast problem resolution and the ability toestablish a positive product experience• Expertly trained teams providing customer service, repairs and maintenance,on-the-spot training and know-how
transfer

> Sustainability at DKSH

Sustainability at DKSH

7

> Sustainability at DKSH

Environment

50,000trees planted

5

percent lower CO2 emissions

4

markets climate neutral“We are mindful of the environmental and ecological impact of
our activities along our value
chain and are committed toreducing our footprint throughadequate measures.”8

We are committed to conducting our business in an environmentally sustainable manner. A significant part of our environmental
impact results from warehousing and transport logistics, and business-related travel.
We continuously strive to improve our processes in these areas. This includes for example a thorough planning process for newsites. Our environmental management systems in the newer distribution centers inHong Kong and Singapore are certified to
ISO 14001:2015. In addition, these distributions centers were awarded LEED certificates(Leaders in Energy Efficient Design) at goldand platinum level.

2019 marks our third consecutive year of
measuring our carbon footprint. However,
we are not simply content with measuring
and reporting, but continuously strive to
reduce emissions with various efficiency
measures. On top of this, we compensatedcarbon emissions in our four founding markets and set ourselves the target to achieve
climate neutrality in our own operations by2030. To achieve this, we will gradually increase our compensation in combination
with other initiatives to reduce our overall
footprint.
You can see an example of how we have
optimized packaging in Thailand in thisshort video:

> Sustainability at DKSH

Ensuring energy efficient distribution centers“Our clients expect DKSH to achieve operational excellence in all areas, including
environmental performance. As part of this, we look for strong environmental
credentials when selecting new sites to lease. Our newer distributions centers in Hong
Kong and Singapore have an environmental management system in place that is certified
to ISO 14001:2015. In addition, these distribution centers were also awarded LEED
(Leaders in Energy Efficient Design) certificates at gold and platinum levels. Whenever
we choose new sites, we carefully specify our needs and choose energy efficient air
conditioning, ventilation and lighting systems as well as window coverings that reduce
solar heat gain. We fit out the building with energy efficient equipment and areincreasingly switching to battery-powered material handling devices instead of fueloperated. Both our Hong Kong and Singapore distribution centers use LED lighting
controlled by sensors to ensure lights are only on when needed. We have also beenworking to upgrade lighting to LEDs in selected distribution centers over the past few
years.
To ensure these buildings reach their energy efficiency potential during day-to-day
operations, our qualified facilities and Health, Safety and Environment teams monitor
core mechanical and electrical systems and proactively seek further efficiency
improvements. By doing so, our distribution centres remain safe and pleasant places towork.”
Brian Lui, Senior Executive Manager, Center of Excellence, Supply Chain Management

Rolling out mobile printers to save paper in Thailand
At DKSH Thailand, various teams have been working to reduce the amount of paper
used for printing receipts and invoices. The Supply Chain Management team has enabled
tax invoicing to be more customizable, so each customer only receives the number ofprinted copies they really need. The Taxation team are developing an e-tax invoice which
can be emailed to customers, further eliminating the use of paper. Another initiative is
the “Mobile Printers for Collectors” project, which reduces the number of forms thatmust be printed in advance and carried around by the salesperson, instead replacingthese with a handheld device which can print a small receipt off a roll.
“In 2019, we launched the “Mobile Printers for Collectors” initiative to reduce paper
waste and time spent on administrative tasks in Business Unit Healthcare. As part oftheir sales and marketing activities, our specialists regularly visit customers such as
medical channels and pharmacies. Previously, upon delivery of ordered goods, they
provided invoices and receipts pre-printed on standard paper. All these papers had tobe printed, carried around and stored. This process was neither environmentallyfriendly nor efficient, therefore we looked into better options. Strengthening our commitment to sustainability, we added mobile printers to the tablets we use for runningthe mobile collector. This mCollector program records the transaction and the mobile
printers now produces a small collection note and summary receipt for customers. Overthe next three years, this initiative will reduce the amount of paper used for these
activities by 60 percent. We are pleased about this progress and are working on
several new initiatives for the years to come.”
Carl Johan Soderstjerna, Head Country Management and Country Finance Manager,
DKSH Thailand

9

> Sustainability at DKSH

Climateneutrality
by 2030

Target to achieve climate neutrality by 2030
DKSH has been reporting its carbon footprint since 2017, graduallyrefining the accuracy of the methodology as new data sources havebecome available. Once we had a clearer idea of where the main
impacts occur, DKSH initiated several energy saving projects to reduce emissions. In 2019, the Group took a leap forward by starting
to offset emissions associated with operations in the four founding
markets. Through our partnership with Plant-for-the-Planet, DKSH
achieved climate neutrality for its own operations and air travel in
the Philippines, Japan, Singapore and Switzerland. This involved
offsetting several thousand tons of greenhouse gas emissions by
retiring the equivalent amount of Gold Standard Voluntary Emissions
Reductions (VER) credits, generated through carbon offset projects.
Additionally, DKSH sponsored Plant-for-the-Planet to plant around50,000 trees on the Yucatán Peninsula in Mexico. Each of thesetrees absorbs at least 200 kg of CO2. This afforestation project is
supported by the Crowther Lab, ETH Zurich.

10

A final aspect of this commitment is supporting Plant-for-the-Planetin their work to educate young people to be Climate JusticeAmbassadors. The charity organizes sessions where young people
can practice giving presentations and convincing others of the importance of tackling climate change. This aims for a multiplier effect,as each young person passes the message on to their parents andfriends. The partnership with Plant-for-the-Planet complements
DKSH’s existing long-term collaboration with Right To Play, which
improves the well-being of children, young people and communitiesin Thailand through sport and play.
As we continually step up our efforts, we have set ourselves theambitious target to expand this partnership and achieve
climate neutrality in our own operations by 2030. We will also
develop further energy efficiency initiatives and targets in the coming years.

> Sustainability at DKSH

Social41

social projects

12

hours of training per employee

5

new company values“We operate in a socially responsible manner with due consideration to the requirements of our
stakeholders.”

11

As a services company, our 33,350 people
are the heart of our business, and of our
success. Since 2015, we have been operating our in-house Fantree Academy to further develop our talents. Employees pursuing courses at Fantree Academy received anaverage of 12 hours of training in 2019 andwe have set a target to increase this to 15
hours by 2025. Going forward, we will continue increasing the focus on our people
and their learning and development opportunities as per our DKSH Identity and values.
Please read more about this on ensuing
pages.

One of our core initiatives in our major
market of Thailand is the 13-year partnership with the international organization
Right to Play. This global organization uses
the transformative power of play to educate
and empower children facing adversity.
DKSH extended this partnership at the beginning of 2020. Together with theLiverpool FC Foundation and Right to Play,DKSH now reaches 2,000 children and
1,500 communities in Thailand by establishing sport and play-based sessions, rehabilitating sport fields and organizing tournaments.

Besides empowering our own employees, astrong commitment to the local communities we operate in has always been an integral part of our business. We supported 41
projects across many of our markets.

For more examples of our local community
initiatives, please see:> Sustainability at DKSH

Never lose the love and passion for what you do“I proactively identify business opportunities in my line of work. Having delivered a record-breaking sales result of an all-time high in Business Unit Consumer Goods in Singapore in 2019, I wasawarded as the first “employee of the month” and kick-started this initiative to recognize successful individuals. My mantra in life is to enjoy the journey and seize the opportunity to change
things for the better.”
Florence Ng, Manager, Client Management, Business Unit Consumer Goods, DKSH Singapore

At DKSH employees have a positive impact that enriches people’s lives“I joined DKSH in 2016 as a Service Sales Specialist handling service contracts. DKSH provides agreat platform to further grow and develop my skills. The company allows me to approach customers and propose ideas that not only generate more business value for them but also
benefit the company, rather than just merely selling something without making an impact.”
Chow Meng Kai, Senior Specialist, Service Solution, Business Unit Technology, DKSH Malaysia

I enjoy winning big as a team
“I joined DKSH as a management trainee in 2008 and have progressed to a Senior Manager today.
Being in Business Unit Healthcare, DKSH presents a dynamic and exciting working environment
with multiple learning opportunities. It is amazing to see how we work as a team to masterchallenges and I truly appreciate the moments of triumph when we overcome obstacles as one
team.”
Grace Yeo, Senior Manager, Client Management, Business Unit Healthcare, DKSH Malaysia

I am proud to be a part of the DKSH family“Working at DKSH has been an enriching experience and a great learning opportunity. The work
culture encourages high performance, promotes talent and grooms future leaders. DKSH adequately empowers its employees to take on business challenges, overcome obstacles and explore
new opportunities. Keeping the best interests of the organization in mind, we work with a senseof ownership and accountability.”
Vishal Jawale, General Manager, Business Unit Performance Materials, DKSH India

I am as engaged as ever and really happy to work with DKSH
“I celebrated my 20 years anniversary with DKSH Laos. I started as a Sales Representative, taking
on many different roles and responsibilities thereafter. Working with DKSH provides me with theopportunity to have a positive impact that enriches people’s lives. Being able to enjoy continuous
learning and development in both my personal and career life has been my motivation to staywith DKSH for such a long time.”
Thipthaphone Chanthavong, Assistant General Manager, Business Unit Healthcare, DKSH Laos12

> Sustainability at DKSH

DKSH Identity

Our purpose

Enriching people’s lives.

Our vision

Being the trusted partner.

Our strategy

Growing our four Business Units, strengthening
our service offering and increasing operational
efficiency.

Our values

Integrity

Empowerment

Entrepreneurship

Collaboration

Sustainability

Our promise

Delivering growth – in Asia and beyond.

13

> Sustainability at DKSH

Why did DKSH need a new Identity?
Over the past 150 years, DKSH has developed from a traditional trading house to theleading Market Expansion Services provider
with a focus on Asia. As our “old” vision
was largely implemented, it was therefore
time to redefine our DKSH Identity and values for the company we are today.

What is the new Identity about?
As a company, our services give people in
Asia access to important daily products,
create sustainable value for our partners andgenerate jobs across the region. Therefore,
we define our corporate purpose as“Enriching people’s lives”. Our promise of“Delivering growth – in Asia and beyond”
reflects our ambition for future growth.

How is it important for employees?
The DKSH Identity and values provides acommon guide, bringing employees
together as one strong DKSH team working
towards a shared goal. This will also enable
DKSH to keep employees and theirdevelopment at the heart of our culture.

Integrity
We never compromise on our ethical,
business and compliance standards.

Entrepreneurship
We innovate, identify business opportunities
and focus on operational excellence to drive
growth for our partners and us.

Empowerment
We own our decisions, take accountability
for our actions and trust and respect eachother – so each one of us can make a

Sustainability
We take responsibility for our environmental, social and economic impact to accountfor present and future needs.Wfor present

difference and grow.

Collaboration
We work as one DKSH team, supporting
each other and our partners, to achieve joint
success.We

14

For more information on our Identity see:> Sustainability at DKSH

Governance

100%of Executive Committee withsustainability targets

1

new membership at the Roundtable on Sustainable Palm Oil“We strive to maintain the highest standards and ethical values
in all our business activities with
our employees, stakeholders andthird parties.”15

Our success is rooted in collaborative, ethicaland sustainable leadership. DKSH’s Boardof Directors and Executive Committee areresponsible for defining the business strategy and ensuring its execution, including onsustainability. They are committed to upholding strong governance standards representing the interests of DKSH and its
stakeholders. With our newly developed
sustainability policy, we further define ourorganizational set-up, responsibilities andcommitments. In line with this, DKSH has
set targets related to the UN Sustainable
Development Goals. Additionally, all members of the company’s top management
have a sustainability-related target included
as part of their yearly appraisal.

DKSH is committed to meeting the highest
quality requirements along the entire value
chain. This also applies to areas that constitute a minor part of our business, such as
the sourcing of palm oil in our Business Unit
Performance Materials. Our entity in Spain,
as well as the newly acquired company
A xieo, have been a member of the“Roundtable on Sustainable Palm Oil”
(RSPO) for several years. As a next milestone, DKSH as a group became a member
in 2019 and we will further consolidate ourapproach to palm oil products in 2020.

> Sustainability at DKSH

Promoting sustainable products“Working with the specialty chemicals sector, we are constantly looking to develop new
innovations that benefit society. Examples include additives which when applied tocoatings on buildings can absorb pollution from the atmosphere. One of our clientsdeveloped a product based on “photocatalytic TiO2” and we formulated it into different
coatings and concrete solutions with some of our customers. These formulations can beapplied to exterior materials, such as concrete paving stones in city streets, or interior
surfaces, such as paints and coatings for schools and hospitals. We have been selling
this product in Europe for several years. We actively monitor the development of sustainable products and select promising innovations. More recently in Asia, we havebegun distributing and promoting a new substance that can be added to building materials to absorb CO2 and other pollutants from the atmosphere. We are excited to growthis market further and play our part in improving the environment.”
Ramon J. Viñas, Vice President, Global Specialty Chemicals Industry andHead Country Management Spain and Portugal

Refining our approach to sustainability“DKSH has considerably strengthened its commitment to sustainability over the past
years. Therefore, in 2019, we have developed a sustainability policy that covers all DKSH
entities. For the first time, we define the governance structure for sustainability at DKSH,
including setting roles and responsibilities. The definition of sustainability is broad, encompassing environmental, social and ethical issues relating to the company’s day-to-day
operations. The policy assigns responsibilities to the Board of Directors, Executive
Committee, local operating company management teams and the Sustainability
Committee. The Sustainability Committee, led by our functions Group Governance, Risk
& Compliance and Group Investor & Media Relations, is responsible for the implementation of the policy. In this Committee, we are supported by representatives from otherdepartments as well as Business Units and report directly to the Executive Committee.”
Andreas Wuest, Vice President, Group Governance, Risk & Compliance“Since the beginning of 2020, each member of the Executive Committee has a sustainability target with an initial weight of five percent. Sustainability is now better
linked to our Executive Committee’s compensation.”
Till Leisner, Head, Group Investor & Media Relations

16

> Sustainability at DKSH

What really matters: our materiality matrix

DKSH conducts materiality assessments to
identify the most relevant topics for our
stakeholders. Our initial materiality assessment was conducted in 2017. In 2018 and2019, we performed a high-level review of
the assessment. The review included theintegration of updated information frombusiness partners, analysts, media, investors
and sustainability rating agencies. Whendefining report content, we have considered
all significant aspects of our business along
the value chain. Due care was taken for the
preparation of this report through application of the reporting principles of stakeholder inclusiveness, sustainability context, materiality and completeness to the best of ourability.

For establishing our materiality matrix, a listof potential topics was assembled fromseveral sources, including various industry
frameworks, sustainability reports by peers,clients and customers, as well as importantfactors identified by DKSH’s risk profile.
Subsequent steps included an eliminationof topics with limited relevance for our business, followed by an impact assessment
conducted by survey, involving personnel
located in various parts of the business andgeographies.

Separately, expectations expressed by otherimportant stakeholder groups, such as
employees (via employee surveys), clientsand customers, were taken up via direct
feedback. In fact, many of our top clientsand customers have adopted sustainability
principles and reporting standards, and they
expect DKSH to play its part in their upstream or downstream supply chains.
These expectations also relate to stakeholder groups that DKSH does not directly engage with – such as consumers of healthcare products and fast-moving consumer
goods.
GRI 102-40, GRI 102-42 to 44,
GRI 102-46 and 47

Anti-corruption

Influence on assessment by stakeholders

Customer healthand safety

Recruitment, retention
and development

Environmental
responsibility

Occupational healthand safety
Labor practices

Procurement
practices

Marketing andlabeling

Economic value

Local
communities

Information
security

Marketpresence

Environment
SocialGovernanceSignificance of impacts

17

> Sustainability at DKSH

Our engagement for local communities

Mumbai, India
DKSH provides medical aid to community children, by carrying out pediatric, orthopedic surgeries.
Bangkok, Thailand
DKSH supports an initiative toencourage the employment of blindmasseuses in Thailand.

34

supported projects in
2018

41

supportedin 2019
projectsprojects
in

15 in 16differentdifferent
countriesmarkets

Hong Kong
DKSH partners with Food Angel toprovide people in need withhealthy and nutritious meals.

Phnom Penh, Cambodia
DKSH conducts its second blood
donation campaign under the
motto: "Give blood, give love,save lives."

See more on page 30-31

See more
X (GRI 413-1)(GRIpage413-1)

Dongala Palu, Indonesia
DKSH partners with the Indonesian
Red Cross to provide local schools
and surrounding communitites witha cleaner environment.

Melaka, Malaysia
DKSH collaborates with SUKA society to provide children with preschool education.
11

16

2017

18

41

34
15

16

2018

2019

No. of markets
No. of projects

> Sustainability at DKSH

Supporting the United Nations’Sustainable Development Goals
DKSH strives to create sustainable value for all stakeholders. Founded in Asia in the 19th century by Swiss pioneers, we are deeply rooted in the communities we serve and are committed to creating opportunities for advancement with a focus on less developed countries.
Our business directly and indirectly contributes to the United Nations (UN) Sustainable Development Goals (SDGs). These Goals, adopted
by the UN in 2015 for delivery by 2030, seek to address the world’s largest challenges for the benefit of all, including ending poverty,
improving health and education, and tackling climate change. We seek to contribute to the SDGs and have identified five Goals where
we can create a positive impact through our business activities. We have identified specific targets to be reached by 2025 and 2030.

Our contribution
Ensuring access to healthcare is at the core of our business and is aligned with DKSH’s mission of enrichingpeople’s lives in Asia and beyond. Not only do we distribute prescription and non-prescription drugs and medical devices, but we also contribute to the education of doctors and patients in the correct use of these products.
Furthermore, we participate in health-related community engagement activities, such as blood donation campaigns.
The health, safety and wellbeing of our workforce – of which around 20 percent works in distribution and logistics – is a top priority. Our capillary distribution system requires significant travel activities for our sales force
and delivery personnel. Safety procedures in our distribution centers and road safety are key topics for us. We
strive to minimize accidents through measures such as monitoring of working hours, correct use of equipment
and regular training sessions (read more on pages 42-44).

Our target“Promote safe driving and work towards zero deaths and high-consequence injuries on our roadways by 2025.“(2019: two fatalities)

Our contribution
As a services company, people are our greatest asset, and their dedication, attitude and passion drive the longterm success of our business. DKSH encourages employees to own their professional development throughproactive engagement. The DKSH Fantree Academy, our in-house learning and development center, offers
around 40 programs aimed at developing capabilities across all levels of the organization. DKSH monitors its
yearly training activities and will further expand these. This is in line with the Group’s strategy to continue
placing increased focus on talent development while promoting lifelong learning.
Our target“Increase annual training to 15 hours per employee at Fantree Academy by 2025.“(2019: twelve hours)

19

> Sustainability at DKSH

Our contribution
DKSH contributes to economic growth in many countries in Asia through our commitment to providing attractive jobs and enabling employment. We are committed to acting responsibly and to providing attractive work
opportunities in a safe and secure work environment. We treat our workers with dignity and respect and play
our part in avoiding all forms of indecent labor, including child and forced or compulsory labor. Throughout all
our facilities we have processes and procedures in place to ensure that our workplaces are safe and secure.

Our contribution
Driving innovation is an important part of Business Unit Performance Materials. For example, we develop new
formulations that enhance the environmental performance of our clients’ products. To improve public andprivate infrastructure in Asia, our Business Unit Technology offers complete solutions for infrastructure andspecialized industrial applications, mostly to small and medium-sized enterprises. An important part of DKSH’s
service offering is our market coverage via an established capillary distribution network as well as our 150 distribution and 44 innovation centers across Asia. DKSH is committed to continually reviewing and upgrading its
infrastructure, and using the latest, most sustainable technology in order to optimize resource-use efficiency.
By implementing such initiatives every year, we contribute to the UN goal of better infrastructure.
Our target“Improve energy efficiency incrementally across our own sites by 2025.”(2019: improvements in Thailand, New Zealand and other markets)

Our contribution
We seek to reduce the carbon impact of our own activities with a particular focus on our large, mainly outsourced,
fleet and temperature-controlled facilities for consumer goods and healthcare products. This aligns with ourcommitment to upgrade existing infrastructure as outlined in our contribution to Goal 8. We have standardized
our global management approach for greenhouse gas emissions since 2018 and are looking at lower carbon
paths in the markets in which we operate, for our own operations as well as supporting our clients’ climatechange objectives. In 2019, we began compensating emissions in our founding markets and strive to expand
this commitment over the next years.
Our target“Achieve climate neutrality in our own operations by 2030.”(2019: 20 percent)20

Environment

21

> Environment

Environmental responsibility

At DKSH, our environmental commitment
includes limiting our own impacts, helping
our suppliers and clients to manage theirs,
and raising our employees’ awareness of‘green’ issues.
As a major employer, we have a role ineducating our employees about how they
can reduce their environmental impact athome as well as at work. For example, forthe second year in a row DKSH in China has
run a campaign on the correct separationof waste as well as providing eco tips, suchas ways to save paper.
Since the adoption of our Health, Safety andEnvironment (HSE) policy in 2017, we have
gradually strengthened and standardized

22

the environmental management approachacross our own operations. In line with thispolicy, local HSE managers are responsible
for maintaining a register of applicable national environmental laws and regulations
and for ensuring that all our operations arecompliant through an appropriate management program.
Since 2017, DKSH has had no recorded
incidents of non-compliance with environmental laws and regulations.
GRI 307-1

DKSH takes responsibility for its environmental impacts. We have been reportingthe carbon emissions related to our opera-

tions for three years and have launchedseveral initiatives to reduce our environmental footprint. In addition to reducing carbon
emissions, DKSH is following a program tooffset progressively more of its carbon footprint each year, with the aim of becoming
climate neutral by 2030. In 2020, we willcontinue to look for opportunities to increase energy efficiency and reduce ourclimate impact further. Read more about
these initiatives on pages 9-10.
TargetAchieve climate
neutrality in ourown operations by2030. (2019: 20
percent)

> Environment

Our main environmental impacts relate toour distribution centers, fleet and businesstravel.
Greenhouse gas emissions
in tons CO2-5%69,492

78,98582,77730,283

28,66356,202

57,41655,906

10,175

8,218

7,589

2017

2018

2019

Value
chain

18,776Own
business

Air travel
Electricity
Fuel and refrigerants

GRI 305-1 to 305-3
Energy use, by activity
in MWhFacilities
100,842
95,917

Transport

10,4302017

GRI 302-1

23

17,467

12,72620182019

Distribution centers account for a significant
part of our carbon footprint. Energy is consumed for lighting, cooling and operating
forklifts and other handling equipment.
Most of our handling equipment is battery-operated. Temperature-sensitive
products may require storage and transport
in air-conditioned vehicles or in specialtransportation boxes. Therefore, the use ofrefrigerants and the resulting fugitive emissions are another significant part of ourcarbon footprint.
To achieve continuous improvements, theenvironmental management systems of ourdistribution centers in Singapore and Hong
Kong have been certified to ISO 14001:2015.
Currently, we are building a next generation
distribution center in Taiwan for Business
Unit Healthcare, which will also have an environmental management system certified
to this internationally-recognized standard.
Read more on page 9.

Downstream transportation

99,861

Distribution centers
To distribute our clients’ products and ourown, DKSH operates 150 distribution centers (DCs) across Asia. Our DCs and warehouses are typically leased, with a few ofthem built-to-suit.

Preparing goods for delivery requires use of
packaging (mostly cardboard cartons andplastic for pallet wrapping), and packaging
waste is generated from incoming shipments. Healthcare cold chain goods needparticularly extensive packaging to protect
sensitive items. We have intensified our efforts to recycle cold chain packing in thepast few years. To optimize packing material usage in air-conditioned and ambient
packing, we use automated packing equipment. The machine speeds up the process
for packaging and shipping while creating
minimal waste and maximizing protection
for packed items.

At our Healthcare DC in Thailand, we operate a so-called D-Pack system, which is twotimes faster than manual packing. The innovative machine scans and identifies the
maximum height for the products to fit into
the box and proceeds to use that information to automatically close and seal the storage box. This ensures that there is no void
space and eliminates the need for air pouches. By optimizing space in the boxes, up to
15% of packaging materials are saved andthe carbon footprint for logistics and transport services is reduced. Scan the below QR
code to watch a video about this system:

Transport
Our capillary distribution network serves
several thousand customers daily. Most of
our outbound delivery service is managed
through our professional service providers,
but we also have a small fleet of our own
for specialized services. One of our mostsignificant impacts relate to fuel consumption within these vehicles.
More than 95% of our outsourced transport
is diesel-powered although some vehicles
are natural gas- or gasoline-powered. In ourhigh volume, high frequency businesses(e.g. FMCG, Healthcare) with many delivery
drop point s to be ser viced, route
optimization is key for operating efficiently.
Fuel savings lead to cost savings, representing a win-win situation. To increase efficiency and tackle emissions for our small company- owned fleet and our haulage
suppliers, we have, since 2018, started rolling out a specialized software targetingtransport network optimization.

> Environment

This enables us to plan the most efficient
usage of trucks and the best routes to take.
The system will result in efficiency gains andsavings of up to 10 percent as it reduces thenumber of vehicles needed and time spent
making.
The roll-out of this software in Thailand,
Singapore, Hong Kong and Malaysia wascompleted in 2019, and savings have alreadybeen realized in some markets, such asSingapore. The tool was further deployedto Vietnam and Taiwan during 2019, where
savings are expected to be seen from 2020.
To ensure effective use of the new system,
training on route planning has been provided alongside the software.
In addition to optimizing transport routes,
DKSH is also exploring options to use battery-operated vehicles for both own andoutsourced transport. A pilot was started in
Thailand in 2019, where the first electricvans have been introduced for Business Unit
Consumer Goods and electric motorcycles
for Business Unit Healthcare. This will substantially lower carbon emissions and, once
established in Thailand, this solution could
be further rolled-out to other markets.
Business travel
Despite our widespread use of communication technologies, traveling remains an important factor in our service delivery andour other business operations. Most ofthese journeys are made by vehicles notcontrolled by the company, such as businessflights, travel by sales and service teams intheir own cars, and travel by public transport. Internal approval systems are in place
to prevent unnecessary travel. In recent
years, we have upgraded IT communication
capabilities and promoted conference andvideo calls to reduce the need for travel.

24

Office and IT infrastructure
Most of our offices are leased, often withcentral control of air conditioning and otherservices by the building management teams.
This results in us having limited visibility ofour direct energy usage and little scope tochange the building fabric and fittings.
Options to reduce energy consumption inleased buildings are limited to certain actions, such as upgrading lightbulbs to LEDs
and controlling lighting through sensors andtimer switches to ensure the buildings remain unlit when not occupied. During 2018,
DKSH New Zealand installed LED lights
throughout all its sites. With this measure,electricity consumption in 2019 was reduced
by one-third, thereby also substantially lowering the local carbon footprint.
The reduction of paper and printing was afocus in 2019 for several markets. In the
DKSH headquarters in Switzerland, we
switched to 100% recycled printing paper.
In Malaysia, a 25% reduction in paper printing was achieved in 2019 through introducing various online process workflows. In
Thailand, our “Mobile Printers forCollectors” initiative was launched in
Business Unit Healthcare and will save 60%of paper over three years. Read more about
this initiative on page 9.
Reporting approach
Data on refrigerants, fuels and downstream
transportation is captured for markets withthe highest usage of refrigerated storageand largest distribution networks. These
include Cambodia, Hong Kong, Malaysia,
Myanmar, New Zealand, Singapore,
Thailand, Taiwan and Vietnam. For fuel, thisincludes usage of CNG, LPG, diesel and gasoline for our internal fleet of delivery vehicles and back-up electricity generators.

For downstream transportation, major suppliers provided diesel consumption data inliters from bill data. For consistency, all fuelproperty factors were sourced from UK
Government GHG Conversion Factors for
Company Reporting (2019 edition). The
Global Warming Potentials applied are fromthe Intergovernmental Panel on Climate
Change (IPCC) Fourth Assessment Report(AR4) over a 100-year period.
We collect data on electricity consumption
from bills received from utility suppliers forall our markets except for two small ones,
where we have extrapolated energy datafrom cost data. We have applied LocationBased Factors according to the following
hierarchy: (i) government source (as recent
as possible, by state if available), (ii) IEA
2012, (iii) nearest neighboring country. For
Market-Based Factors, we applied the following hierarchy: (i) electricity supplier factor, (ii) most recent credible residual factor
source (e.g. RE-DISS for European countries)and (iii) same as Location-Based Factor.
Kilometers flown data was supplied by ourbusiness travel providers for major markets
including Hong Kong, Malaysia, Singapore
and Thailand, and UK Government (2019)carbon factors were applied. Data was extrapolated for the remaining countries
based on the available flight spend data.
We also disclose to CDP; please see our latest carbon disclosure for further information. CDP is an international non-profit organization that aims to establish businessnorms for environmental reporting and risk
management. Given its relevance to bothbusiness partners and investors, DKSH has
published CDP disclosures since 2016.

> SocialSocial25

> Social

Recruitment, retention and development

As a services provider with 33,350 employees, our success largely depends on theavailability of skilled professionals who share
our values. As our reputation is built on
trust, integrity and reliability, we seek toretain talent to maintain stable relationships
with our business partners.
DKSH provides a variety of benefits to its
employees, based on applicable policies in
the countries of operation. Standard benefits, with some variation by market, include
life insurance, healthcare, disability and invalidity coverage, statutory retirement provision and parental leave. Benefits related
to stock ownership are limited to eligible key
managers of the company (Annual Report
2019, page 33).

26

Our practices with respect to providing
benefits to employees comply fully withapplicable legislation and in many cases exceed it. In four of our nine significant operating markets, the benefits
provided to part-time and temporary
employees are identical to those of permanent full-time employees, and in
two other markets there are only minor
variations.
GRI 401-2

DKSH Identity
Over the past 150 years, our company has
developed from a traditional trading houseto the leading Market Expansion Services
provider with a focus on Asia. As our “old”
vision was largely implemented, it wastherefore time during 2019 to redefine our
DKSH Identity and values to reflect the company we are today.
The new Identity reflects our ambition for
future growth as well as our corporate purpose to enrich people's lives. As a company,
our services give people in Asia access toimportant daily products, create sustainablevalue for our partners and generate jobs
across the region.

> Social

As part of our new Identity, we updated our
corporate values: integrity, empowerment,
collaboration, entrepreneurship and sustainability. With these core values, we ensurethat DKSH will keep our employees, andtheir development, at the heart of our culture.

Learning and development
In learning and development, we subscribe
to a 70-20-10 learning approach. This approach recognizes that the greatest impactof learning comes from job-related, handson experience and occupational training (70percent). The remaining impact comes fromlearning through others (20 percent) andthrough formal courses (10 percent) largely
provided internally via DKSH’s Fantree
Academy, our in-house learning and development center. DKSH encourages employees to own their professional development
through proactive engagement.
The DKSH Fantree Academy offers around40 programs to develop capabilities acrossall levels of the organization. The programs
span three pillars: essential skills, leadershipprograms and functional skills. Training isprovided through various channels, including classroom, instructor-led, on-the-job
training and learning through the company’s learning management system, Maya.
Since 2015, DKSH has expanded thenumber of courses, places available, and thenumber of employees trained. In 2019,around 7,000 employees participated in a
training at Fantree Academy (13,000 course
places registered).

27

Around 7,000 DKSH employees participated in Fantree Academy in 2019,each receiving an average of 12 hoursof training during the year (2018: 14
hours).
GRI 404-1
Employee recognition
Recognition is a key part of our approach toretaining talent. This includes our focus onpromoting internal mobility across markets
and organizational units, which enables our
employees to gain new experiences. We
regularly advertise job openings internallyto foster career progression and only recruit
externally if no suitable internal applications
are received. Especially for management-level employees, DKSH tracks the proportionof internally filled vacant positions and reports this figure to senior management.
Our Mobility Guidelines, part of our Group
Compensation and Benefits, provide guidance on supporting employees as they movethrough the company, such as subsidizing
costs and providing cultural training to expatriate workers and their families whenentering a new market.
Performance reviews
At DKSH, we encourage employees to own
their professional development through proactive engagement. An important featureis the yearly performance review where employees can discuss and agree on their personal development plan with their manager.
It is a requirement of our Employment Policythat all employees participate in a formal
annual appraisal of their performance with
their manager. This is carried out throughthe DKSH Talent Portal, an online performance and talent management solution.
Regular dialogues between managers andemployees on development objectives, including constructive and focused feedback,are also a part of the development journey
at DKSH.

All our employees have a yearly appraisal. 19 percent of employees received acomprehensive performance review in2019 (2018: 16 percent). This review
includes a reflection on our values,
leadership principles, individual targets
and development plans. All decision-making with respect to appraisals,
development opportunities and promotions uphold our equal opportunities
commitment.
GRI 404-3

TargetIncrease annual training to 15 hours per
employee by 2025.
(2019: twelve hours)

> Social

Labor standards

At DKSH, our workforce is as diverse as
our business. Many of our employees are
office based, with others working in distribution centers, laboratories, innovationand service centers or out in the field serving customers. What all our employees
have in common is a desire for fair employment and pleasant, safe workplaces
free of discrimination and harassment.
Much of our workforce is employed incountries and industries which typicallyrank high on human rights risk indices.
Additionally, for some of our supply
chain-related services we rely on contractors. We expect all our appointed business
partners to respect human rights, as mandated by our Supplier Code of Conduct.
Violation of these principles can lead tocontract termination.

28

Respecting human rights is a key elementin our employment offering, as laid out in
our Code of Conduct. DKSH does not discriminate based on age, religion, genderor any other category. We respect ourworkers’ rights to freedom of associationand collective bargaining. We would neverpenalize anyone engaging in good faith inworkers’ groups.
GRI 407-1
At the end of 2019, 24 percent of
DKSH’s employees were covered bycollective bargaining agreements (2018:27 percent).
GRI 102-41

Our stance on human rights and non-discrimination is made clear to employees
through our Code of Conduct and related
induction training. This includes the importance of treating all people with respect.
The training materials specifically state thatthe company values diversity in the workforce, such as differences in backgrounds
and cultures, and that any form of discrimination, harassment or bullying is not acceptable.
The training also gives examples of unacceptable behaviors; these include employees
being prevented from activities such aspracticing their religion, giving feedback orsuggestions, or joining groups which discuss
workplace benefits.

> Social

At DKSH, we recognize that everybody inthe workplace must be treated with respectand dignity.
The training encourages people to reportany cases of misconduct to the site manager or to HR and emphasizes that reports will
be kept confidential. Organizationally, we
practice a business partnering approach
whereby representatives of the HR department are stationed within operations, allowing employees to easily access theirsupport. In 2019, no incidents of misconduct were reported to HR.
Subsequent to the launch of a new Learning
Management System (LMS), we will conduct
a company-wide training on the Code of
Conduct including human rights during2020 and disclose associated training data
in future reports.
GRI 412-2
DKSH recorded no incidents of discrimination or harassment in 2019.
GRI 406-1

29

To ensure labor rights are fully upheld, theHR and Supply Chain Management teams
in each of our key operating markets have
responsibility for all hiring and for ensuringthat employees and contractors have thecorrect documentation. We operate management programs in line with applicable
local laws and labor regulations to preventchild or forced labor, or illegal workers, andto ensure decent and safe workplaces, fair
and timely pay, and adequate rest periods.
GRI 408-1 and GRI 409-1
Our management approach on non-discrimination and human rights practices has focused thus far on legal compliance andgovernance processes; evaluation of theeffectiveness of this approach has mainly
been at the local level. Although we are notaware of significant issues arising from thiscompliance-led approach, we intend to further standardize our management of theseissues across our markets.

> Social

Local communities

A strong commitment to the local communities in which we operate has always beena key part of our business. We create positive impacts on society, particularly in lessdeveloped regions, by providing stable jobs
with fair employment terms and opportunities for personal development, and by setting a clear standard for how businessshould be conducted. Furthermore, throughour capillary distribution network, we enable market access for healthcare products
and other necessary items across Asia, contributing to the quality of life in the communities we serve. In addition, we provide ingredients and equipment to build local
industries and infrastructures with ourBusiness Units Performance Materials andTechnology.

30

Directly linked to our business activities, ourcolleagues in Business Unit Healthcare in2019 organized blood donation campaignsin Cambodia, Myanmar, Singapore and thePhilippines. In Vietnam, DKSH volunteers
and medical specialists from the University
in Ho Chi Minh supported the medical
check-up of 500 people unable to afford
medical aid. Furthermore, several teams
from Business Unit Consumer Goods regularly participated in food donation programs
and organized baskets of everyday essentials
for less-advantaged families.
Alongside our business activities, we strive
to create a positive impact by engaging in
projects and selected sponsorship programs
to develop and support local communities.
As stated in our Code of Conduct, DKSH

does not engage in political processes andrefrains from any form of donation to political parties, elected officials or candidates
for public office, or in support of any political campaigns.
In terms of charities, one of our core initiatives in our major Thai market has been to
support Right to Play for more than 13
years. This global organization uses thetransformative power of play to educate andempower children facing adversity. During
2019, DKSH explored options to expand thispartnership and successfully did so in early2020. Together with Right to Play and theLiverpool FC Foundation, DKSH will establish sport and play-based sessions, rehabilitating sports fields and organizing tournaments as well as voluntary initiatives.

> SocialThrough these activities, children will gain
the critical life skills they need to take ownership of their future, build resilience, andengage more meaningfully with their communities and society. The program targets
2,000 children and young people as well as
1,500 community members in Thailand.

Since 2018, all markets with significant
operations have supported charitable
activities benefitting local communities.
In total, DKSH supported 41 (2018: 34)
projects in 2019.
GRI 413-1

We are also open to opportunities to offer
roles to local people who have struggled toenter the workplace. For example, in
Malaysia, DKSH employs around ten deaf
people from the local community at theFamous Amos cookie outlets.

DKSH, Right To Play and Liverpool FC Foundation joint forces to promote life skills, social cohesion and learning environments of children, young people
and communities in Thailand.

31

> Governance

Governance32

> Governance

Economic performance

Economic performance refers to our ability
to operate a profitable business model. At
the same time and as defined by our corporate value “Sustainability”, we take responsibility for our environmental, social andeconomic impact to account for present andfuture needs. DKSH has a clear strategy forsustainable, profitable growth that continuously increases our market share and helps
our clients expand their businesses. By doing this, DKSH actively contributes to the
UN Sustainable Development Goals (SDGs).
Both our business and charitable activities
support the 2030 Global Goals. Read more
about our contribution and targets for the
SDGs on page 19-20.

DKSH contributes to various charitableprojects based in our local communities. By
supporting a diverse range of smaller
charities, we respond directly to the local
need.

The economic value that we generate benefits our stakeholders, such as providing
returns and dividends for our shareholders,salaries for our employees and tax payments
to local governments.

• We focus on our existing Business Unitsand markets to leverage our leadership
position• We continuously strengthen and extend
our service offerings to ensure long-term
success for our customers and clients

33

Our stakeholders have a keen interest in
DKSH as a long-term investment opportunity, attractive employer, reliable business
partner, responsible taxpayer and good
corporate citizen. Therefore, the generationand distribution of economic value is key for
us to meet our stakeholders’ needs.
DKSH’s strategy for economic value generation is based on our three strategic pillars:• We drive improvement in the efficiency
and effectiveness of our processes
DKSH has a Group Tax Policy in place, whichis reviewed annually by the CFO and Headof Tax. The policy is approved by the Boardof Directors and any proposed amendments
are subject to their approval. DKSH iscommitted to paying its taxes in a timely
manner and in the markets where the revenue was generated. Intra-group transactions are carried out under market
conditions and are supported by transfer
pricing documentation.
DKSH monitors its financial performancethrough a process steered by the CEO, the
CFO and the Board of Directors. The Grouppublishes its results twice a year. Refer to
our Annual Report for more information.

> Governance

11.6

billion Swiss francs Direct economic value generated

11.5

billion Swiss Francs Direct economic value distributed

53

million Swiss francs Economic value retained

2018
in CHF milions

2019
in CHF millions

Direct economic
value generated

Revenues

11,455

11,613

Economic value
distributed

Operating costs(10,444)(10,658)

Employee wages and benefits

(669)

(688)

Payments to providers of capital

(119)

(155)

Payments to governments (taxation)

(71)

(60)

Direct economic value generated −economic value distributed

151

53

Economic value
retained
GRI 201-1

34

> GovernanceMarket presence

DKSH promotes and distributes clients’products in local markets, particularly in
Asia. Our in-depth knowledge of the markets we do business in is a key part of thevalue we bring to our clients, who often do
not have a local presence. An importantpart of our service offering is our market
coverage via a capillary distribution network, which means that we can serve ourcustomers wherever they are located.
Especially for Business Unit Performance
Materials, our strong geographical coveragein both Europe and Asia is part of ourunique selling proposition. In line with ourstrategy to expand our service offering andgeographical reach, DKSH made several acquisitions in 2019 and added theNetherlands as an additional market for the
Performance Materials business.

35

Operating in many diverse local communities we do business with is part of ourcorporate culture. We also believe sharing
business practices across cultures contributes to local skills and economic development. Therefore, our mixed management
teams represent various cultures and backgrounds. This aligns well with the requirements of the business and with DKSH serving as a bridge between international clientsand local markets and customers. Our
33,500 DKSH employees cover 70 nationalities, meaning that we speak the language
and understand the culture of our business
partners in the 36 markets we operate in.
In 2019, 60 percent of senior managers in
our markets with significant operations
were hired from the host country, with “senior” referring to managers in corporate,
regional or local management roles. Local
management roles include first- and second-line managers (2018: 53 percent).

DKSH defines significant operations as
all markets with more than 500 employees. This includes the nine markets
of Cambodia, Hong Kong, Indonesia,
Malaysia, Myanmar, Singapore, Taiwan,
Thailand and Vietnam.
GRI 102-4

60 percent of local senior management
is hired from local communities.
GRI 202-2

> Governance

Procurement practices

Given our business model, our procurement
activities are sizeable. In 2019, we achieved
sales of CHF 11.6 billion and delivered goods
that originated from a supply base of 3,800
clients and suppliers, for a procurement
value equal to almost CHF 10 billion. These
trade-related procurement activities werecomplemented by procurement of goods
and services for our own operation accounting for roughly half a billion Swiss Francs.
Each of our three procurement categories
follows dif ferent standards andexpectations:• Goods for distribution under marketingand distribution services agreements

36• Goods and materials for resale undersourcing arrangements or for manufacturing• Goods and services for our own operation and our service delivery

Our primary procurement focus in this partof our activities is ensuring compliance with
our global Trade & Customs Compliance
Policy, regulatory requirements as well as
the safety, security and integrity of the
products we handle.

Marketing and distribution services
Our marketing and distribution services
business accounts for the bulk of our procurement activities. We serve a global clientbase with a split of around one third eachheadquartered in the Americas, Europe andAsia. We usually take over products at port
and distribute them locally from our 150
distribution centers. Increasingly our services
are also sought by local manufacturers
wanting to benefit from our market accesssolutions.

Moreover, our business operates within
well-defined product categories, following
ethical standards and stringent contract
management procedures. Except a few longer-term arrangements, we do not engage
in companies involved in manufacturing,sale or distribution of tobacco or alcoholic
beverages and we do not have any businesswith companies involved in arms or weapons of mass destruction. We respect all applicable international and local laws andregulations pertaining to trade restrictions.

> GovernanceSourcing and manufacturing
The principles governing our sourcing andmanufacturing activities are as follows:• In Performance Materials, unlike in
distribution services (push), sourcing
relates to identifying the right product andsupply source for a specific requirementof a customer (pull). Sourcing aims to findnew or alternative sources for dedicatedspecialty chemicals or ingredients on a
project basis to serve the spectrum ofcustomers from small to multinational
enterprises. Suppliers and products
require qualification based on stringent,
pre-defined and agreed criteria prior
to starting any business, based on astandardard qualification process
For example, our food processing activity
in the Philippines focuses on flexible solutions (both premixes and finished products) for customers in food services or
consumer-facing businesses. About 60
percent of procured materials for production (mixing and blending) are sourced
from local suppliers, with the rest procured internationally from China, USA,ASEAN, Korea and Europe.
• In our watch business, to avoid the sourcing of materials from conflict zones, wechoose local suppliers who respect standards of responsible procurement (e.g.
OECD Due Diligence Guidance for
Responsible Supply Chains of Minerals
from Conflict-Affected and High-Risk
Areas, Kimberley Process Certification
Scheme and Responsible Jewellery
Council)37• In 2019, DKSH acquired the food distribution business of Auric Pacific which included house brands partly produced externally and partly self-manufactured, withthe majority being dairy products. Thirdparty manufactured products are sourced
from high-quality responsible suppliers inAustralia, New Zealand and Belgium.
Ingredients for our production site in
Malaysia are exclusively sourced locally,
except a few ingredients not available in
the local market, with a primary focus on
quality and food safety
Our Thailand and Malaysia based franchising operations (Levi’s, Famous Amos) follow
strict procurement guidelines by the respective franchisors (The Levi Strauss Co., Ferrero
SpA), with the franchisors either supplying
materials to us for manufacturing, appointing supply sources, or auditing and approving suppliers selected by DKSH prior to us
procuring materials on their behalf.
Whenever possible, we give preference togoods from local suppliers over imported
goods.
In our own brands healthcare business, supplier selection is primarily driven by quality
and capability considerations. In a significant part of this business, DKSH is thelicensee, and the supply source is either the
licensor or is determined/approved by thelicensor.
All supply sources must meet GMP and
WHO standards and be compliant with thePharmaceutical Inspection Co-operation
Scheme (PICS). Suppliers are audited accordingly by health authorities as well as by ourown audit procedures.

Procurement for our own operationand service delivery

24%
37%
4%
9%
26%

Logistics and distribution costs
Selling costs
Travel and entertainment
Information technology
Other operating expenses

Procurement activities for our own operations are dominated by logistics and distribution costs. This mainly refers to the costof goods handling and movement in or
between our locations and deliveries to customers, including ancillary costs such as
packaging materials. Transportation is largely outsourced to specialized local logistics
companies. For the operation of our distribution centers we partially rely on the services of foreign workers engaged via specialized labor service providers where there
is a shortage of local labor. This includes
workers for the adaptation or customizationof products to local market conformity (e.g.
repacking or labeling).

> GovernanceOur second largest expenditure item, selling
costs, refers mainly to advertising and promotional expenses. These may include specialized media agencies, but often relate toin-store trade marketing expenses. Some
expenses are incurred in the engagementof promoters (for example for product sampling) on a casual basis, providing a sourceof income for people with low educational
background or for those preferring flexible
work arrangements. The procurement ofother supplies mainly refers to general expenditure items, such as rent, utilities, stationery and office supplies, consultancy, andIT license and service fees and, except someconsultancy and IT license and service fees,
are incurred locally.
For the local execution of our business(primarily service delivery), almost 100
percent of our procurement by spend
in 2019 in significant locations of operation was from local companies.
GRI 204-1

Overall, this part of our activity is guided by
our Non-Trade Procurement (NTP) Policy and
our Supplier Code of Conduct. The NTP policy sets various requirements for supplierselection and management, in part relating
to commercial criteria and in part pertaining
business conduct governing the relationship.
It mandates written form for any supply arrangements including a reference to the
Supplier Code of Conduct forming an integral part of any supply contract. Our
Supplier Code of Conduct addresses topics
such anti-corruption, health and safety, decent work, respecting human rights and theenvironment.

38

More specifically on supplier selection, ourtechnical requirements tend to limit the
number of qualifying suppliers. In Business
Unit Healthcare, for example, redressing
suppliers (for repacking or labeling of products) need to be able to operate under therequirements of Good Manufacturing
Practices (GMP). Supplier assessment isbased mainly on factors such as the company’s financial robustness, capabilities, capacities and standing in the market. The respective Business Unit’s Quality Assurance (QA)
team will monitor service delivery and theneed to retain or replace service providers.
This activity is also typically scrutinized byour clients’ own Quality Assurance (QA)
management.
Part of our unique selling proposition (USP)
is how quickly and flexibly we can respondto client and customer requirements, andthis is reflected in the lead time we can offer our suppliers. Our delivery services providers are expected to meet certain key
performance indicators, such as delivery
accuracy and timeliness, which are monitored over time and may lead to performance improvement discussions (applicable
mostly in our Fast-Moving Consumer Goods
and Healthcare businesses). Since our clientsand customers value our reliability, we seek
long-term stable relationships with criticalsuppliers. For our crucial delivery services,
we operate from a few main providers ineach market. Corporate Supply Chain
Management (SCM) sets the standards fortransport logistics suppliers and oversees
implementation of the standards in local
operations.

Importantly, our standards require suppliers
to be dealt with fairly and transparently, andfor the results of tender or bidding processes to be communicated openly. DKSH isalso bound to investigate any complaints
raised by suppliers of unfair or unethicalpractices conducted by any of our employees or by their competitors. At the sametime, we also expect our suppliers to act inline with our principles and standards, as
expressed via our Supplier Code of Conduct
and to report any non-compliance as perreporting channels identified by the Code.

> GovernanceAnti-corruption

At DKSH, we are committed to taking responsibility and playing our part in fighting
corruption by conducting our business in an
ethical manner. Our business is built on trustand integrity. We do not tolerate any formof corruption, as set forth in our DKSH Codeof Conduct and as embedded throughout
our organization. In 2019, we have again
reaffirmed our commitment to integrity byhighlighting it as one of our key corporate
values (see page 14).
Most of our business is conducted in Asia
where we operate in several markets andindustries. It is imperative that our employees understand our values and expected
standards of business conduct and live up
to and respect them in all their activities.
We place great emphasis on hiring and retaining people who share our values andwho protect our business and that of ourclients and customers.
39

100% of our employees are madeaware of our anti-corruption policies
upon joining, including periodic reminders during their employment withus.
GRI 205-2
Integrity in our own businessIn 2019, DKSH has promoted Integrity as
one of its six corporate values. DKSH expects lawful and ethical behavior from all
employees and business partners as laid
down in our Code of Conduct, which prohibits any form of bribery and corruption.
Non-compliance risks are addressed in acomprehensive compliance program, which
includes our Anti- Briber y and AntiCorruption (ABAC) and other policies, risk
assessment, processes and procedures,training and education, monitoring as wellas confidential reporting and investigations.

The Group’s Governance Risk Compliance(GRC) Function operates an anti-corruption
compliance program in line with our compliance policy framework, which is based onrecognized international standards (U.K.
Bribery Act, U.S. Foreign Corrupt Practices
Act).
For the execution of the compliance program, GRC works directly with DKSH’soperating markets and in collaboration with
DKSH’s Business Units and Functions. The
management team for each market
oversees compliance at national level, under
the leadership of a Head of Country
Management appointed by the Group CEO.
In markets with perceived higher compliancerisks, the Head of Country Management is
supported by dedicated local compliancemanagers who operate under the guidanceof GRC.

> GovernanceFor compliance initiatives relating to specific Business Units or Functions, GRC engages directly with the global Business Unit orFunction Heads.
As stated in the Code of Conduct and the
ABAC policy, employees are required topromptly report any incidents of non-compliance – including demands for bribes or
facilitation payments – to their supervisors
or to GRC. In addition, an email address isprovided in the Code of Conduct and invarious internal policies for confidential use
by internal and external stakeholders.
Substantiated cases are investigated anderrant parties adequately sanctioned, with
DKSH having zero tolerance for retaliation
against anyone who reports incidents ingood faith. An annual review of compliancewith our standards is made to the executive
management, to identify trends and focus
areas for further compliance efforts.

Training and communication are important
cornerstones of our compliance culture.
New employees undergo thorough onboarding procedures upon joining our organization. These include reading and accepting our polic y framework andcompleting certified compliance training.
Periodically, all employees are required torefresh their knowledge of DKSH’s anti-corruption policies, including the expectations
for proper business behavior.

DKSH’s governance bodies for sustainability
include the Board of Directors of our public
listed entities in Switzerland, Malaysia andIndonesia, executive management at Grouplevel as disclosed in DKSH’s 2019 Annual
Report (page 22-25), and all local-level top
management members forming Country
Management Teams. The regional split in2019 was as follows:

In 2019, in addition to new recruits
completing onboarding procedures,
9,210 employees renewed their anti-corruption training. These employees
were selected because they work inhigher risk roles (sales, marketing, procurement functions) and/or markets(based on Transparency International’s
Corruption Perception Index) or control
Functions.
GRI 205-2

In 2019, 100 percent of governancebody members were aware of DKSH’s
anti-corruption policies. 75 percent ofgovernance body members (excluding
non-executive board members) completed anti-corruption training.
GRI 205-2

RegionTotal governance body members

Thailand

13

Greater China*

18

Malaysia and Singapore

23

Rest of Asia Pacific88

Rest of the World

46

Total

188

* Includes mainland China, Hong Kong, Macau and Taiwan

40

> GovernanceIntegrity of the supply chain
As an outsourcing partner to our clients, weare committed to upholding integrity in the
supply chain. This includes our downstream
business partners whom we rely on forparts of our service delivery. DKSH does not
maintain relationships with business partners that do not share our values or meet
our standards for doing business.
In communicating our anti-corruption policies, we focus on business partners who
assist us with the execution of our businessdirectly. These include sales intermediaries,
such as sub-distributors, tender agents andresellers, and vendors, such as commission
agents, consultants, forwarders, importers,
customs brokers, fulfilment agents andevent organizers.
All these business partners are engaged
based on written service contracts that include anti-corruption compliance clauses,with our Supplier Code of Conduct and the
ABAC policy serving as contractual documents.
Anti-corruption policies are communicated to all our downstream business
partners.
GRI 205-2

41

Effectiveness of the complianceprogramManagement is responsible and accountablefor ensuring proper application of compliance standards in the business. The Group’s
compliance function, GRC, supports management by providing advice, methodologies and tools. GRC also performs reviews
to assess the level of awareness, understanding and application of standards andcompliance controls through a structured
review and tailored enforcement program
based on risk assessments. Furthermore, theGroup’s Internal Audit (GIA) Function performs compliance audits through audit assignments derived from GIA’s own risk assessment.
Externally, DKSH’s compliance program isassessed by prospective or active clients
and/or external audit firms appointed bythem. We give our full assistance to theseassessments, which include thorough due
diligence procedures and pre- or post-contract compliance audits and reviews, andmake use of the results of such assessments,
if any, to further strengthen our complianceprogram.

> GovernanceOccupational health and safety

Employees are our most important assets
and health and safety in the workplace remains a top priority at DKSH. Our occupational health and safety (OHS) management
program focuses on two key topics: (i)workplace safety in our distribution center
operations and (ii) safe driving, given our
extensive marketing, sales, service and delivery activities across all Business Units. In
addition to these focus areas, the program
also covers safety risks related to the operation of machinery in production and to theinstallation, repair or servicing of machineryand equipment at customer sites, as well as
the risks to people and the environment
from the transportation, storage and handling of dangerous goods and hazardous
materials.

42

The management of OHS risks is enshrinedin our corporate Health, Safety andEnvironment (HSE) policy which mandates
proper HSE governance and execution in all
our countries of operation. Local Country
Management Teams (CMTs) are responsible
for ensuring maintenance and execution of
local policies adapted to their operations
and risk profiles. CMTs are assisted by local
HSE management units tasked with operating a comprehensive HSE management system, including OHS, and with maintaining
close cooperation and coordination with riskowners in the business. HSE performanceagainst the corporate policy is monitored
and reported to a global supervisory committee at least twice a year.

Training and education are important elements in ensuring all employees are awareof health and safety requirements and takeresponsibility for their own wellbeing andthe safety of others. New employees receive
comprehensive HSE induction training on
top of any job-specific training they require.
All new recruits must complete induction
training (with signed attendance records)
before commencing duties. Periodic refreshers are held, and attendance is monitored.
In line with our commitment to continuous improvement of OHS, it is essentialthat any incidents are reported and investigated, and that remedial action is taken
to prevent reoccurence.

> Governance

We are committed to taking all thenecessary precautions to prevent harm toanyone operating at any of our facilities,
through adequate safety procedures,
including the provision of signage, safety
equipment and personal protective gear.
This also extends to contractors operatingon our sites, addressed via Working
Instructions on Visitor Safety, Contractor
Safety and Permit to Work (which also
covers safe driving), and Contractor
Guidelines. For the handling of hazardous
goods, we operate a Standard Operating
Procedure on Hazard Identification and Risk
Assessment and Risk Control (HIRARC). We
also provide H I R ARC Training and
Guidelines, and a HIRARC Inspection Form.
Following safety audits, corrective actionplans are used to address any issues.
2019 performance
Workplace audits by key clients, customers,
standards boards and regulatory bodies aswell as internal stakeholders (Corporate
Supply Chain Management, HSE managers)
all target hazard identification across theorganization. Key hazards we identified andaddressed during 2019 mainly consisted of
improper behaviors relating to operating
forklifts and powered equipment; stackingof loads and storage of materials; and manual lifting and/or handling; and the risk of
exposure to potentially dangerous goods
and hazardous substances. Actions taken to
manage risks include engineering and administrative controls, training as well as theprovision of personal protective equipment.

43

Despite all the leading measures we have
put in place, sadly two people lost their lives
in road accidents during 2019 while working
for DKSH in Thailand and Malaysia.
• In Thailand, a DKSH employee driving adelivery van under adverse weather conditions (poor visibility and a slippery road)lost control of his vehicle trying to avoid
an unknown object. The van overturnedand fell into a roadside canal, where thedriver, having lost consciousness, tragically drowned in rising floodwater. DKSH
supported the family of the deceased byhelping with funeral costs and providing
a compensation fund
• In Malaysia, a third-party dispatch rider
operating between our distribution
centers and office locations, whilst driving
correctly, became the victim of a hitand-run incident while completing adelivery for DKSH. An internal collection
was established to support the family ofthe deceased
No blame is attached to either driver, but
management decided to extend messaging
on the importance of safe driving. Extra
activities were launched, including roadsafety refresher training, recurring communications and sharing sessions, enhanced
consequence management for road safety
violations, management reviews of roadsafety performance, and increased vehicle
inspections. No other incidents of highconsequence work-related injury were recorded for 2019.

> GovernanceWork-related injuries
Number
Employees

Rate1

2018

2019

2018

2019

Fatalities from work-related injuries

0

1

0

0.02

High-consequence work-related injuries

1

0

0

0

Recordable work-related injuries

52

46

0.9

0.8

57.5

54.5

-

-

Number of hours worked (in million)

NumberWorkers (all, no exclusions)

Rate1

2018

2019

2018

2019

Fatalities from work-related injuries

0

1

0

0.1

High-consequence work-related injuries

0

0

0

0

Recordable work-related injuries

12

16

1.4

1.6

Number of hours worked (in million)

8.8

10.3

-

-

1

per 1,000,000 hours worked

Main types of work-related injuries
Employees
Types of injury

Other workers

2018

2019

2018

2019

No. of First Aid injuries

23

23

10

14

No. of Medical treatment beyond first aid

9

6

2

5

No. of Job restrictions or transfers

1

4

1

1

No. of Lost time injuries

42

35

9

9

No. of Fatalities

0

1

0

1

Data was compiled via an internal reporting system guided by Occupational Safety and Health Administration (OSHA) reporting
requirements. HSE managers in countries are responsible for recording incidents into incident registers and to report these forconsolidation at Group level.
GRI 403-9

44

> Governance

Customer health and safety

DKSH’s business is built on trust and integrity. Our clients entrust us with the marketing and distribution of their products andexpect us to preserve the quality and safetyof their goods whilst under our care andcustody. Irrespective of the product categories we are handling – e.g. pharmaceuticals,
food, specialty chemicals, machinery – weare committed to operating quality management systems that deliver on our promiseof the high standards needed to safeguard
the health and safety of customers, consumers and patients.
Our management approach adapts to thedifferent business lines and product categories we handle and the corresponding reg-

45

ulations governing them. Products in thehealthcare sector focus primarily on patient
safety and must meet stringent quality standards specified by clients and regulators andcomply with international guidelines (e.g.
from the World Health Organization, theInternational Council for Harmonization ofTechnical Requirements for Pharmaceuticals
for Human Use, Pharmaceutical Inspection
Co-operation Scheme). All our Healthcare
distribution facilities are approved by therespective local health authorities with theappropriate internationally recognized
Quality Management System certification(e.g. ISO 9001 and ISO 13485).

Food safety is another significant concernthat we address through quality management procedures, whether for finishedgoods distributed by our Consumer Goods
business or food ingredients marketed by
our Performance Materials business. Our
quality assurance and regulatory affairs
teams ensure that our products and operations comply with applicable regulations set
by the respective food and drug administrations in the countries where we operate.
The handling of chemicals poses a different
set of challenges that we manage throughstringent safety procedures based on applicable standards including ISO 9000, theClassification, Labeling and Packaging (CLP)

> Governanceregulation, and our own Standard Operating
Procedures (SOPs), as well as DKSH’s Health,
Safety and Environment (HSE) policy andassociated management system, applicablethroughout our organization.
In our Technology business, our focus is on
safety procedures for the operation of machinery and equipment by our customers.
Where applicable, our products are tested
before delivery and our service offering also
includes installation, commissioning andtraining to ensure proper and safe operation. All our service engineers are trained by
the original equipment manufacturers.

46

Our operations are frequently audited byour clients or their appointed auditors toensure that storage and handling of products meets their expected standards. Dueto the sensitivity of the products, most ofthese audits occur in the Healthcare business. In 2019, 117 such audits took place,which means that on average the Business
Unit is subject to around one audit permonth per market of operation (2018: 143
audits).
Any deviations from applicable standards
detected through reviews, audits or complaints are promptly reported and addressed.

DKSH recorded 1 incident of non-compliance concerning health and safety
impacts of products and services in
2019.
GRI 416-2

> GovernanceMarketing and labeling

Our company’s main activity is to market
and distribute products sourced from manufacturers. Many of our products are imported and require local customization before being fit for sale. Additionally, a core
activity in our service delivery to clients andcustomers is the advertising and promotionof our products in the markets we serve.
The marketing of our products can involve
various risks if not managed properly andsupported with the relevant and necessary
product information. Rising public awareness and new policy initiatives on transparency have increased demand for correct andcomplete product information, making this
topic highly relevant for DKSH’s businessmodel and brand reputation.

47

Product adaptation and customization tomeet regulatory requirements, including
product labeling, is an important DKSH service offering. Our regulatory affairs teamsin the various Business Units are responsible
for establishing relevant Standard Operating
Procedures and for monitoring compliance,with assistance from our quality assurance
teams. In our Business Unit Healthcare,
where regulations are particularly stringent,
we perform customization work in accordance with Good Manufacturing Practices(GMP). In Business Unit Performance
Materials, we implement and audit against
GHS (Globally Harmonized System), with its
strict requirements for classification, labelingand packaging.

For the marketing of our own-brand products, our regulatory affairs teams ensurecompliance with applicable laws. For all
products distributed by the Business Units
Consumer Goods and Healthcare, we observe guidelines on responsible marketing
published by the relevant industry bodies.
Policies, procedures and controls are inplace and are supported by training activities to ensure that the marketing of our
products meets our standards and expectations. All our regulatory affairs specialists
have the required professional training andqualification to perform their work in accordance with applicable regulations and internal standards.

> Governance

DKSH carefully monitors and validates relevant product data from clients on an ongoing basis and takes corrective actions whereappropriate. Any complaints about marketing and labeling are addressed by the relevant Business Unit.
DKSH recorded three incidents regarding marketing and labeling practices(wrong labeling of a footwear productand two warning letters regarding advertisements).
GRI 417-3

48

Industry-specific risks in the healthcare
business
Advertising and promotion of healthcare
products in many jurisdictions are highly
regulated, often limited or even disallowed.
Many products are prescribed or dispensed
by healthcare professionals, or they require
professional expertise for their application.
Various segments in the healthcare industry(specifically for prescription drugs and medical devices) and in the food sector (e.g.
infant nutrition) have adopted codes of ethics advocating responsible marketing of
their products. DKSH adheres to these standards through membership in the respective
industry associations (local IFPMA associations; APACMed) and by operating management programs to ensure compliance by
employees and service providers.

> Governance

Information security

The operation of our business results in asignificant accumulation of data relating toour products and services as well as to ourcus tom er s and busine s s par tner s .
Unavoidably in our business, we also serve
clients who are competitors in the marketplace. Ensuring confidentiality is therefore
crucial. At times, personal data needs to becollected relating to employees, contractors
and others. In today’s digital and interconnected world, the risk of data theft or leakage has risen, and information security has
become a key topic for any business.
In line with our Code of Conduct, we are
fully committed to processing and protecting personal data with due care, and to49

comply with applicable data protection laws
as well as DKSH’s principles of protecting
confidentiality. Our information security
program and cyber security strategy is endorsed and supported by the Executive
Committee and the Board of Directors. The
overall program functions directly under theGroup Chief Information Officer. Our strategy focuses on cyber threat preventive
counter measures, stepping up organization
information security maturity and groupwide cyber security awareness programs.
In line with our strategy, we have an IT
Security Policy in place and a dedicatedglobal Information Security team, which isavailable via a 24/7 hotline for urgent security matters.

We train our staff on various topics relating
to information security. Since 2018, DKSH
holds yearly internal “IT security roadshows”. In 2019, these were held as full-day
events for the first time, demonstrating toemployees the importance the company
places on IT security. In total, 15 markets,
including all significant operations, heldsuch roadshows. Consistent with the previous year, the training was provided to morethan 500 employees. In addition, more than
7,000 employees who use IT in their work
completed an online IT security awarenesstraining and passed the accompanying test.

> Governance

DKSH’s main IT hub is in Malaysia, however,each market has its own local IT team responsible for regular additional IT security
training. Quarterly Group-wide IT newsletters as well as ad-hoc IT news flashes ensurethat awareness of sensitive topics is raised
across all markets.
In 2018, DKSH achieved ISO 27001:2013
certification of the Corporate Shared
Services Center SAP Infrastructure on information security management. As part of thecontinuous improvement of the company’s
IT landscape, IT applications will also be certified. The gap analysis and necessary measures were initiated during 2019 with atarget to achieve certification in 2020.

50

Our quality assurance team ensures that therequired standards are maintained on an
ongoing basis.
After having implemented a new Group
Data Privacy Policy, a new Website Policy
and a Global Privacy Governance Structure
in line with the EU General Data Protection
Regulation (GDPR) in 2018, we further implemented and rolled-out necessary measures and trainings in 2019.
Group Internal Audit conducts independent
audits on access management. Furthermore,
the Group IT Security team performs audits
on all country IT installations on a regularbasis. Our business continuity and contingency plans as well as incident response
procedures are tested twice yearly.

For the third year in a row, DKSH received no complaints related to data
breaches of customer privacy and lossof customer data from outside partiesor regulatory bodies in 2019. Similarly,
DKSH is not aware of any identified
leaks, thefts, or losses of customer
data.
GRI 418-1

Appendix

> Appendix

Stakeholder engagement
Identification of relevant stakeholder
groups resulted from an assessment
carried out by senior management.

Groups were selected based on their ability to influence or impact (directly or indirectly) DKSH’s approach to business, or the
potential for DKSH to have an impact on
them.

Stakeholder GroupEngagement and key topics

Clients

As a partner in the downstream supply chain, our engagement with clients is the mostintense of all stakeholder groups. Discussions on expectations are part of due diligence,business negotiations and sustainability audits. Other examples of engagement are annual client satisfaction surveys and regular business reviews. Topics focus on employment
practices, responsibility in the supply chain, product stewardship, health and safety, anti-corruption, information security and, lastly, our emissions.

Suppliers, Vendors

Our engagement with suppliers and vendors is mainly via business negotiations and business reviews during the financial year. Vendor concerns are primarily ethical businesspractices, including fair competition and anti-corruption. DKSH’s expectations are enshrined in our Supplier Code of Conduct.

Employees

As a service provider, employees are our most important asset. Therefore, employee engagement and satisfaction are of highest importance. We conduct periodic structured
employee engagement surveys and promote an open feedback culture. Employee concerns mainly are good corporate citizenship, fair employment practices, development
opportunities and associated training, safe and healthy workplaces, our safeguarding of
the environment, the integrity of our products and services, as well as our engagementwith local communities.

Customers

Our direct interaction with customers through our operations focuses mostly on their
expectations or areas of concern. Engagement with customers in the manufacturing industries in our Business Unit Performance Materials is most intense and key topics include
procurement practices.

Shareholders, Investors

DKSH directly engages with investors via roadshows and meetings as well as indirectly
through interaction with sustainability rating agencies. Investor’s main interests are economic performance, corporate governance, environmental topics, customer health andsafety and anti-corruption.

Local communities

Our local management directly engages with the communities in the markets we operate
in to address topics such as labor practices and environmental responsibility.

Authorities

DKSH is in continued exchange with authorities as part of the licensing process and otherregulated activities, to ensure legal requirements are met.

GRI 102-40, 102-42 to 102-44

52

DKSH engages with the identified stakeholder groups as follows:

> Appendix

Further details about our employees
All disclosures in this Statement relating toemployee numbers are based on headcount, rather than full-time equivalents.

This contrasts with the data reported in our
Annual Reports, but we believe it is more
appropriate for Sustainability reporting purposes. All data was extracted from DKSH's
SAP HRIS system.
GRI 102-8

Total number of employees by employment contract (permanent and temporary), by gender
Gender

Permanent% of total

Temporary% of total

Total

Female16,470

96.0%

766

4.0%

17,236Male

16,333

99.0%

199

1.0%

16,532

Total

32,803965

33,768

Total number of employees by employment contract (permanent and temporary), by region
RegionPermanent% of total

Temporary% of total

Total

Thailand

11,543

96.0%

530

4.0%

12,073

Greater China*

2,866

98.0%

59

2.0%

2,925

Malaysia andSingapore

5,836

100.0%

2

0.0%

5,838

Rest of Asia Pacific

12,105

97.0%

369

3.0%

12,474

Rest of the World

453

99.0%

5

1.0%

458

Total

32,803965

33,768* Includes mainland China, Hong Kong, Macau and Taiwan
Total number of employees by employment type (full-time and part-time), by gender
GenderFull-time% of total

Part-time% of total

Total

Female16,683

97.0%

553

3.0%

17,236Male

15,881

96.0%

651

4.0%

16,532

Total

32,56453

1,204

33,768

> Appendix

Membership of associations
DKSH companies are members of several
associations in the markets we operate in,with a focus on industry associations for thechemical, pharmaceutical and food industries, as well as membership of chambers ofcommerce. Membership is generally considered from a strategic perspective, and insome instances, DKSH managers hold positions in governance bodies, participate inprojects or committees.

DKSH does not provide funding to associations beyond routine membership dues,apart from our membership of the Swiss
Chamber of Commerce and Industry inJapan, for historic reasons (this is where
DKSH was originally founded in the 19th
century; we are the Swiss company with thelongest uninterrupted presence in Japan).

MarketName of association or advocacy organization

Switzerland

scienceindustries

The below list provides an overview ofmembership of associations by market.
GRI 102-13

Business Association Chemistry Pharma Life Sciences
vips - Association of Pharmaceutical Companies in Switzerland
China

Swiss Chamber of Commerce

Germany

VCH Verband Chemiehandel e.V.
OAV German Asia-Pacific Business Association

Denmark

Kemi and Lifescience
Danish Chamber of Commerce

Spain

Spanish Chemicals Distributors Association AECQ
AFCA (Associación de Fabricantes y Comercializadores de Additivos yComplementos Alimentarios

FranceCentre Européen de Dermocométologie (CED)
Union Française du Commerce Chimique (UFCC)
France Chimie Auvergne-Rhône-Alpes

Hong Kong

Hong Kong Association of Pharmaceutical Industry
Swiss Chamber of Commerce54

> Appendix

MarketName of association or advocacy organization

India

Indian Drug Manufacturers Association
Indo-German Chamber of Commerce
Indian Specialty Chemical Manufacturers Association

Japan

European Business Council in Japan
European (EU) Chamber of Commerce in Japan
Austrian Business Council in Japan
Swiss Chamber of Commerce and Industry in Japan
German Chamber of Commerce and Industry in JapanThe Tokyo Chamber of Commerce and Industry

Cambodia

European Chamber of Commerce

MyanmarBritish Chamber of Commerce Myanmar
Myanmar Cosmetic Association
European Chamber of Commerce
American Chamber of Commerce
Myanmar Chamber of Commerce for Pharmaceutical and Medical Device
Union of Myanmar Federation of Chamber of Commerce & Industries

Malaysia

Malaysia Retailers Association
Malaysia Retail Chain Association
Pharmaceutical Association of Malaysia
Malaysian Animal Health and Nutrition Industries Association
Malaysia International Chamber of Commerce and Industry
Swiss Malaysian Business Association
Malaysian Employers Federation
Federation of Malaysian Manufacturers

New Zealand

Food and Grocery Council

Philippines

Philippine Swiss Business Council

Singapore

Singapore International Chamber of Commerce
Singapore Business Federation
Singapore Association of Pharmaceutical Industries (SAPI)

55

> Appendix

MarketName of association or advocacy organization

ThailandPharmaceutical Reseach & Manufactures Association (PReMA)
Thai Medical Device Technology Industry Association (THAIMED)The Federation of Thai Industries (FTI)
Foods & Beverages, Food Industry ClubThe Federation of Thai Industries (FTI)
Food Supplements Club
Thai Cosmetic Manufacturers Association (TCMA)
Thai Retailers Association (TRA)
Health Food Supplement Association (HSFA)
Cosmetics Industry Association
Thai Self-Medication Industry Association
Regulatory Affairs Pharmacy Association (TH) - RAPATThe Federation of Thai Industries, Responsible Care Management Committee of Thailand (RCMCT), Chemical Industry Club
Hazardous Substances Logistics Association (HASLA)

TaiwanTaiwan Association of Logistics Management
International Research-Base Pharmaceutical Manufacturers Association (IRPMA)
Taipei Medical Instruments Commercial Association
Taipei Pharmaceutical Agents and Distributors Association
Taipei Pharmaceutical Business Association
The American Chamber of Commerce in Taipei
Taipei Instruments Commercial Association
Taipei Kitchen Commerce Association
Taipei Machinery Traders’ Association
Taiwan Commercial Kitchen Equipment Development Association
Taiwan Pharmaceutical Marketing & Management Association
Taiwan Advanced Medical Technology Association
European Chamber of Commerce Taiwan
Taoyuan Pharmacists Association

Vietnam

European Chamber of Commerce in Vietnam
American Chamber of Commerce56

> GRI Standards and Disclosures

GRI Standards and Disclosures57

> GRI Standards and Disclosures

GRI Content Index

About this report
DKSH’s third report, released in June 2020, prepared in accordance with the Global Reporting Initiative (GRI) Standards "Core
option" offers a review of the Group’s sustainability efforts. It outlines our progress over the past year and shows important areas ofaction for the future.
If you have any feedback or need further information on our sustainability approach, please contact sustainability@dksh.com.

Abbreviations:
AR = Annual Report
CB = Corporate Brochure
CoC = Code of Conduct
All documents are available at: www.dksh.com/global-en/home/about-us/sustainability/sustainability-reports

GRI standards and diclosures
GRI 101

Foundation (2016)

GRI 102

General Disclosures (2016),
Core option

References

GRI 102-1

Name of the organization

AR 2019, p. 7

GRI 102-2

Activities, brands, products and services

CB 2020, p. 12-16

GRI 102-3

Location of headquarters

AR 2019 p. 7

GRI 102-4

Location of operations

p. 35

GRI 102-5

Ownership and legal form

AR 2019, p. 7-8

GRI 102-6

Markets served

CB 2020, p. 12-16, 36

GRI 102-7

Scale of operations

AR 2019, p. 4-5, 98-99
CB 2020, p. 36

GRI 102-8

Information on employees and otherworkersp. 53

GRI 102-9

Supply chain

CB 2020, p. 12-16

GRI 102-10

Significant changes to the organizationand its supply chain

AR 2019, p. 39-41

GRI 102-11

Precautionary principle or approach

DKSH takes a risk-based approach to managing its
operations and supply chain. Although most of the
products we distribute have been developed by ourclients, we run a product stewardship program covering activities such as storage, labeling, packaging andarranging transportation, and our tracking systems
ensure that any issues can be quickly traced back tothe source. Regular auditing is in place to ensure
product safety and that operations are being run inaccordance with our environmental policies.

58

Omissions

> GRI Standards and Disclosures

GRI standards and disclosures

References

GRI 102-12

p. 15, 19-20

External initiatives

GRI 102-13

Membership of associations

p. 54-56

GRI 102-14

Statement from senior decision-makerp. 2

GRI 102-16

Values, principles, standards and norms of
behavior

p. 13-15
CoC, p. 1-6

GRI 102-18

Governance structure

p.15-16
AR 2019, p. 7-28

GRI 102-40

List of stakeholder groups

p. 17, 52

GRI 102-41

Collective bargaining agreements

p. 28

GRI 102-42

Identifying and selecting stakeholder

p. 17, 52

GRI 102-43

Approach to stakeholder engagement

p. 17, 52

GRI 102-44

Key topics and concerns raised

p. 17, 52

GRI 102-45

Entities included in the consolidated
financial accounts

AR 2019, p. 98-99

GRI 102-46

Defining report content and topic
boundaries

p. 17

GRI 102-47

List of material topics

p. 17

GRI 102-48

Restatement of informationn.a

GRI 102-49

Changes in reporting

There have been no major changes in the material issues we report on between 2018 and 2019.

GRI 102-50

Reporting period

Calendar year 2019

GRI 102-51

Date of most recent report

Published 2020, relating to calendar year 2019

GRI 102-52

Reporting cycle

We intend to update the report on a yearly basis.

GRI 102-53

Contact point for questions regarding thereportsustainability@dksh.com

GRI 102-54

Claims of reporting in accordance wit the
GRI Standards

This report has been prepared in accordance with
the GRI Standards: Core option.

GRI 102-55

GRI content index

p. 58-62

GRI 102-56

External assurance

GRI Report 2019 has not been externally assured.

59

Omissions

> GRI Standards and Disclosures

GRI standards and disclosures

References

Economic
GRI 201

Economic performance (2016)

GRI 103

Management approach (2016)

p. 33

GRI 201-1

Direct economic value generated anddistributed

p. 34

GRI 202

Market presence (2016)

GRI 103

Management approach (2016)

p. 35

GRI 202-2

Proportion of senior management hiredfrom the local community

p. 35

GRI 204

Procurement practices (2016)

GRI 103

Management approach (2016)p. 36-38

GRI 204-1

Proportion of spending on local suppliersp. 38

GRI 205

Anti-Corruption (2016)

GRI 103

Management approach (2016)

p. 39-41

GRI 205-2

Communication and training aboutanti-corruption policies and procedures

p. 41

GRI 103

Management approach (2016)p. 22-24

GRI 302

Emissions (2016)

GRI 302-1

Energy consumption within theorganization

GRI 305

Energy (2016)

Environment

p. 23

GRI 305-1

Direct (scope 1) GHG emissions

p. 23

GRI 305-2

Indirect (scope 2) emissions

p. 23
p. 23

GRI 305-3

Other indirect (scope 3) emissions

GRI 307

Environmental compliance (2016)

GRI 307-1

Non-compliance with environmental laws
and regulations

60

p. 23

Omissions

> GRI Standards and Disclosures

GRI standards and disclosures

References

OmissionsSocialGRI 401

Recruitment and retention (2016)

GRI 103

Management approach (2016)p. 26-27

GRI 401-2

Benefits provided to full-time employeesthat are not provided to temporary or
part-time employees

p. 26

GRI 403

Occupational health and safety (2018)

GRI 103

Management approach (2016)p. 42-43

GRI 403-9

Types of injury and rates of injury, occupational diseases, lost days, absenteeism andnumber of work-related fatalities

p. 44

GRI 404

Training and education (2016)

GRI 103

Management approach (2016)p. 26-27

GRI 404-1

Average hours of training per year per
employeep. 27

We do not report this data separatelyby gender or employee category;
however, our equal opportunity policies apply to the availability of training and development opportunities.

GRI 404-3

Percentage of employees receiving regularperformance and career development
reviews

p. 27

Information is currently unavailable
according to employee categories.

GRI 406

Non-discrimination (2016)

GRI 103

Management approach (2016)p. 28-29

GRI 406-1

Incidents of discrimination and corrective
actions taken

p. 29

GRI 407

Freedom of association and collective
bargaining (2016)

GRI 103

Management approach (2016)p. 28-29

GRI 407-1

Operations and suppliers in which theright to freedom of association andcollective bargaining may be at risk

p. 28

GRI 408

Child labor (2016)

GRI 103

Management approach (2016)p. 28-29

GRI 408-1

Operations and suppliers at significant risk
for incidents of child labor

p. 29

61

Although we operate in countries
which are frequently ranked as having a higher risk of human rights issues on international ratings, wehave not identified any specific risks
affecting our operations or supply
chain in 2019. In 2020 we intend toroll out a company-wide training on
the Code of Conduct, which includes
human rights and issues such as
forced labor and child labor, and wewill remind all staff to remain vigilant
and report any concerns through thechannels outlined in our Code of
Conduct.

> GRI Standards and Disclosures

GRI standards and disclosures

References

GRI 409

Forced or compulsory labor (2016)

GRI 103

Management approach (2016)p. 28-29

GRI 409-1

Operations and suppliers at significant risk
for incidents of forced or compulsory
labor

p. 29

GRI 412

Human rights assessment (2016)

GRI 103

Management approach (2016)p. 28-29

GRI 412-2

Employee training on human rights
policies and procedures

p. 29

GRI 413

Local communities (2016)

GRI 103

Management approach (2016)p. 30-31

GRI 413-1

Operations with local community engagement, impact assessment anddevelopment programs

p. 31

GRI 416

Customer health and safety (2016)

GRI 103

Management approach (2016)p. 45-46

GRI 416-2

Incidents of non-compliance concerning
the health and safety impacts of products
and services

p. 46

GRI 417

Marketing and labeling (2016)

GRI 103

Management approach (2016)

p. 47-48

GRI 417-3

Incidents of non-compliance concerningmarketing communications

p. 48

GRI 418

Customer privacy (2016)

GRI 103

Management approach (2016)p. 49-50

GRI 418-1

Substantiated complaints concerning
breaches of customer privacy and lossesof customer data

p. 50

62

Omissions

Although we operate in countries
which are frequently ranked as having a higher risk of human rights issues on international ratings, wehave not identified any specific risks
affecting our operations or supply
chain in 2019. In 2020 we intend toroll out a company-wide training on
the Code of Conduct, which includes
human rights and issues such as
forced labor and child labor, and wewill remind all staff to remain vigilant
and report any concerns through thechannels outlined in our Code of
Conduct.

Sustainability at DKSH 2019
Publisher
DKSH Holding Ltd.
P.O. Box 888
Wiesenstrasse 88034 Zurich
Switzerland
Phone +41 44 386 7272
Fax +41 44 274 2034

Group Investor & Media Relations
Group Governance, Risk & Compliancesustainability@dksh.com

Edition: June 2020