GRI Report 2017

Table of content

1 GRI 102: General disclosures 2016 ....................................................................................................... 3
1.1 Organizational profile ................................................................................................................... 3
1.2 Strategy ...................................................................................................................................... 11
1.3 Ethics and integrity..................................................................................................................... 12
1.4 Governance ............................................................................................................................... 12
1.5 Stakeholder engagement ........................................................................................................... 12
1.6 Reporting practice ...................................................................................................................... 15
2 Material topics ...................................................................................................................................... 18
2.1 Economic performance .............................................................................................................. 18
2.2 Market presence ........................................................................................................................ 20
2.3 Procurement practices ............................................................................................................... 22
2.4 Anti-Corruption ........................................................................................................................... 25
2.5 Environmental responsibility ...................................................................................................... 29
2.6 Recruitment, retention and development ................................................................................... 37
2.7 Occupational health and safety ................................................................................................. 40
2.8 Labor standards ......................................................................................................................... 43
2.9 Local communities ..................................................................................................................... 47
2.10 Customer health and safety ..................................................................................................... 49
2.11 Marketing and labeling ............................................................................................................. 52
2.12 Information security ................................................................................................................. 54

Page 2

1 GRI 102: General disclosures 2016
1.1 Organizational profile
GRI 102-1: Name of the company
DKSH Holding Ltd.

GRI 102-2: Activities, brands, products and services
DKSH is the leading provider of Market Expansion Services with a focus on Asia. We help companies
grow their business in new or existing markets.
DKSH Annual Report 2017, inside cover “DKSH at a glance”.
DKSH Corporate Brochure 2018, page 13-16.
GRI 102-3: Location of headquarters
Zurich, Switzerland
DKSH Annual Report 2017, page 7
GRI 102-4: Location of operations
We maintain business activities in 37 markets, of which we consider the following operations to besignificant* (in alphabetical order).
• Cambodia• Singapore• Hong Kong SAR• Taiwan• Malaysia• Thailand• Myanmar• Vietnam• People’s Republic of China*Significant operations are defined as local country organizations with more than 500 employees.

Page 3Our operations in Indonesia surpassed this threshold via an acquisition in the latter part of 2017 and will
be classed as “significant” in our GRI Report 2018.
DKSH Corporate Brochure 2018, page 36-37.
GRI 102-5: Ownership and legal form
DKSH Annual Report 2017, page 7-8.
GRI 102-6: Markets served
Our Market Expansion Services business operates in 37 markets, serving customers from 800 businesslocations in Asia Pacific and 25 business locations in Europe and the Americas.
In our own brands business (watches, healthcare products), apart from distribution through our own
infrastructure, we indirectly serve many markets globally via specialized resellers.
We address the following business segments and industry sectors:
Business segment

Sectors served

Consumer Goods(Fast Moving Consumer Goods,
Luxury and Lifestyle)Distributive trade (wholesale, retail trade resale), healthcare
providers (hospitals, clinics), hospitality, consumer markets
http://dksh.com/global-en/home/industries/consumer-goods

Healthcare

Healthcare providers (hospitals, clinics, practitioners), distributive
trade (wholesale, retail)
http://dksh.com/global-en/home/industries/healthcare

Performance Materials

Manufacturing industries (chemical, pharmaceutical, food &beverage, personal care)
http://dksh.com/global-en/home/industries/performance-materials

Technology

Manufacturing industries, education (universities), research,
distributive trade
http://dksh.com/global-en/home/industries/technology

As a services provider, we differentiate between two major categories of counterparties, i.e. our clientsto whom we provide Market Expansion Services, and our customers who buy our products and services.
We operate in a B2B environment, with a comparatively small, yet fast-growing B2C online business, aspart of our omni-channel strategy.
Our clients typically are manufacturers of fast-moving consumer goods, luxury and lifestyle products,
pharmaceuticals, consumer health/OTC products and medical devices, producers of specialty chemicals
and food ingredients, and advanced machinery or technical equipment. Our downstream customer basecan be classified into the following main categories:• Manufacturers• Distributive trade (wholesale, retail)• Professional users (healthcare professionals, hospitality, other services)• Consumers (via retail outlets operated by us or via online platforms)
Whilst we predominantly serve the private sector, a sizeable part of our business can be attributed to the
public sector.

Page 4

GRI 102-7: Scale of the organization
The scale of DKSH’s operation is comprehensively described in the DKSH Annual Report 2017 and theCompany Brochure 2018. For example:• Total number of employees: DKSH Annual Report 2017, page 61• Total number of operations: DKSH Annual Report 2017, page 6, 92-93, Company Brochure 2018
page 36-37• Net sales: DKSH Annual Report 2017, page 63• Market capitalization: DKSH Annual Report 2017, page 4, 60• Number of clients and customers we serve: Company Brochure 2018, “Key figures 2017”

Page 5GRI 102-8: Information on employees and other workers

All disclosures in this Statement relating to employee numbers are based on headcount, rather than fulltime equivalents. This contrasts with the data reported in our Annual Reports, but we believe it is more
appropriate for Sustainability reporting purposes.
a. Total number of employees by employment contract (permanent and temporary), by gender
Gender

Permanent

Temporary

Total

Female15,916722

16,638Male

15,604216

15,820Total

31,520938

32,458Page 6

b. Total number of employees by employment contract (permanent and temporary), by region
RegionPermanent

Temporary

Total

Thailand

10,534664

11,198Greater China*

3,350

159

3,509

Malaysia and Singapore

5,024

7

5,031

Rest of Asia Pacific

12,13793

12,230Rest of the World

475

15

490

31,520938

32,458Total* China, Hong Kong, Macau and Taiwanc. Total number of employees by employment type (full-time and part-time), by gender
GenderFull TimePart-time

Total

Female16,220418

16,638Male

15,72892

15,820Total

31,948510

32,458The above sets of data were extracted from DKSH’s IT system (SAP HRIS), as of December 31, 2017.
The majority of DKSH’s activities are performed by our own employees. For some of our services,
however, we rely on external, third-party service providers. This is particularly relevant in the case ofoutbound transport logistics, product customization (adapting products to local market requirements),
merchandizing and in-store promotions at customer outlets. The number of workers performing these
services can vary considerably during a year.

Page 7

GRI 102-9: Supply chain

In Market Expansion Services, our activities strongly focus on marketing, sales and order fulfilment, asshown in the table below. We distribute goods procured locally or internationally from supply sources ofour clients and delivered to our warehouses. For certain product categories that require special storage
conditions, storage and handling is outsourced to specialized service providers. In some instances(mostly relating to machinery and equipment that are manufactured to customer specification), goods
may be delivered directly from manufacturing sites to customers.
Sales are largely generated from our own sales force. Sales orders are prepared for delivery by our
specialized logistics personnel and delivered to customers by our own transport fleet or by specialized
third-party logistics contractors. Some of our product categories, predominantly in the Business Unit
Technology, require installation and maintenance or after-sales services. Our supply chain also includes
reverse logistics, i.e. the handling of damaged or expired goods or the execution of product recalls.
For most of our business, our products are passed through specialized warehouses and distribution
centers, where goods are stored and handled in accordance with product specifications. Where required,products are adapted to meet local regulatory or promotional requirements, involving activities such as
repacking, co-packing (a form of promotional packaging) and labeling.
On the supply side, we buy from clients in larger quantities to meet market demand on an ongoing basis.
On the sales side, we deliver according to customer needs, which generally is an assortment of products

Page 8

by various clients in smaller quantities. Our ability to reach out to many delivery points is what we refer toas our capillary distribution system.
In our own brand watch business, we are sourcing materials and components to manufacture Maurice
Lacroix watches in Switzerland. These watches are exported from our factory to our own distribution
network in Asia Pacific and to many other markets worldwide via third-party distributors. Other own brandactivities rely on contract manufacturing, with products largely distributed via our own distribution network
in Asia Pacific.
Function

Employees

Sales and Marketing

20,228Operations (Sales Administration, Call Centers, Logistics, After-Sales Service)

8,658

Business Support (Finance, HR, IT)

2,296Management and Administration

1,276

Total

32,458Further information on DKSH’s supply chain is available from DKSH’s Corporate Brochure 2018 (page12, 14-16).
GRI 102-10: Significant changes to the organization and its supply chain
Significant changes that occurred during the reporting period are summarized in DKSH’s Annual Report
2017, in the “Management’s discussion & analysis” section, pages 38-40.
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 our clients, we run a product stewardship program
covering activities such as storage, labeling, packaging and arranging transportation, and our tracking
systems ensure that any issues can be quickly traced back to the source. Regular auditing is in place toensure product safety and that operations are being run in accordance with our environmental policies.
GRI 102-12: External initiatives
DKSH currently does not openly subscribe to or endorse any external initiatives, but through our clients’
expectations, we are indirectly exposed to such initiatives and strive to meet their requirements. An
example for this is the Pharmaceutical Supply Chain Initiative (PSCI), which is endorsed by many of ourmultinational clients in our healthcare business and passed down to us as a partner in their supply chain.
Going forward, we will be evaluating the most suitable initiatives to endorse, given the vast diversity of
our enterprise.

Page 9

GRI 102-13: Membership of associations
DKSH companies are members of several associations in the countries we operate in, with a strong focus
on industry associations for the chemical, pharmaceutical and food industries, as well as membership ofchambers of commerce. Membership is generally considered from a strategic perspective, and in someinstances, DKSH managers hold positions in governance bodies, participate in projects or committees.
DKSH does not provide funding to associations beyond routine membership dues, apart from ourmembership of the Swiss Chamber of Commerce and Industry in Japan, for historic reasons (this is where
DKSH was originally founded in the 19th century; we are the Swiss company with the longest
uninterrupted presence in Japan).

Page 10

1.2 Strategy
GRI 102-14: Statement from senior decision-maker“As a Swiss company deeply rooted in Asia for more than 150 years,
being a responsible corporate citizen has always been part of the
DKSH mindset. Our business as a Market Expansion Services
provider is built on integrity, trust and reliability. These virtues are
deeply engrained into our culture and are part of our unique selling
proposition.
Our vision for Sustainability is to leverage our extensive network to
support economic and social progress in the communities we
operate in. This includes fulfilling our fundamental purpose ofbringing key products, such as healthcare, to new markets whilst
operating with:• Integrity‒ Treating our suppliers fairly‒ Protecting our environment‒ Offering opportunities to local communities• Trust‒ Preventing bribery and corruption‒ Maintaining high information security‒ Disseminating better business practices to our supply chain• Reliability‒ Supporting strong product stewardship‒ Employing the best people‒ Maintaining our financial security
There is an increasing focus amongst leading companies on the sustainability of their wider supply chains,particularly with respect to fair practices and human rights. As a preferred outsourcing partner for
renowned international clients, we need to maintain transparency and engage with our business partners
to meet growing expectations.
We conducted a major materiality exercise in 2017, identified key areas of focus, and we report on theseissues to meet demands for transparency. As a first-time reporter in 2018, we realize that sustainability
reporting is a process, with some areas of data collection more challenging than others, and we will beworking to enhance our reporting over the next few years. We are also inspired by the United Nation’s
Sustainable Development Goals and will be seeking a deeper understanding of how we can support thesetargets.
As a company with a long-term focus, we are committed to continue this path. I would like to thank all
employees for their efforts to support the sustainability of our business.”
Stefan P. Butz, CEO

Page 11

1.3 Ethics and integrity
GRI 102-16: Values, principles, standards and norms of behavior
a. Description of the organization’s values, principles, standards, and norms of behavior
DKSH’s Code of Conduct enshrines the standards of behavior we expect from all employees and thirdparty service providers. The Code was developed by DKSH’s governance and compliance function, in
collaboration with the legal and human resources functions. It was approved by the Executive Board andthe Board of Directors in February 2015 and thereafter released to all DKSH entities and joint venture
parties worldwide.
The Code of Conduct was developed in the English language but has been translated into local languages
in countries where English is not widely understood by local DKSH employees. The launch of the 2015
edition of the Code of Conduct was accompanied by a training to all employees including certification,
and a periodic refresher training is conducted. All new employees upon joining need to undergo a training
and acknowledge as part of their employment contract that they are aware of the Code and will always
follow it during their employment.
Intermediaries appointed by DKSH are required to sign contracts that include compliance clauses,
including observance of our Code of Conduct, which serves as a contractual document. Some older
contracts may not have the full set of clauses in place; these will be addressed during contract review.
1.4 Governance
GRI 102-18: Governance structurea. Governance structure of the organization, including committees of the highest governancebody
Information on DKSH’s governance structure, including committees of the highest governance body, isaccessible via our DKSH Annual Report 2017, “Corporate governance” section, page 7-27.
b. Committees responsible for decision-making on economic, environmental, and social topics
The main body responsible for decision-making on economic, environmental and social topics is the
Senior Executive Team, comprised of the Executive Board and the operational Group Management.
Certain decision authority is delegated to operating countries, where a Country Management Team acts
as the local governance body. The Head of the Country Management Team is appointed by the Group’s
Chief Executive Officer, while the Head of Corporate Affairs as a member of the Executive Board
supervises the composition of the Country Management Team.
1.5 Stakeholder engagement
GRI 102-40: List of stakeholder groups
Identified stakeholders of the DKSH Group are:
• Clients• Suppliers, Vendors• Customers• Consumers• Employees

•
•
•
•

Local communities
Governments, local authorities
Shareholders, Investors
Competitors

GRI 102-41: Collective bargaining agreements
At the end of 2017, 45 percent of DKSH’s employees were covered by collective bargaining agreements.

Page 12GRI 102-42: Identifying and selecting stakeholders
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.
From the stakeholder groups disclosed under GRI 102-40, DKSH actively engages with the following
stakeholders:• Clients• Suppliers, Vendors• Customers• Employees• Local communities• Authorities• Shareholders, Investors

Page 13GRI 102-43: Approach to stakeholder engagement
DKSH periodically engages with the following stakeholder groups:
Stakeholder Group Engagement
Clients

Annual client satisfaction surveys and regular business reviews; discussions on
expectations as part of due diligence, business negotiations and sustainability
auditsSuppliers

DKSH engages with suppliers of goods and services for our own products on an
ongoing basis

Vendors

DKSH engages with vendors on an ongoing basis. Contractual agreements
ultimately will express DKSH’s expectations on business conduct to vendors

Customers

Direct interaction with customers on expectations or areas of concern

Employees

Employee survey conducted in 2016

Local communities

Via community engagement undertaken by local management in the countries
we operate in

Authorities

We engage directly with authorities as part of the licensing process and otherregulated activities, to ensure legal requirements are met

Shareholders,
Investors

Direct engagement via investor meetings; indirectly through interaction withsustainability rating agencies engaged by investors

For the preparation of this report, the interactions as per the table above were considered, specificallywith certain employee groups as part of our initial materiality assessment in 2017.

Page 14

GRI 102-44: Key topics and concerns raised
Through interaction with stakeholders, the following concerns were identified:
Pages

Stakeholders
Topics18
20

Clients

ShareLocal
Custom- Employholders/
commuers
ees
Invesnities
tors

X

Procurement
practicesX

25

Anti-corruption

X

29

Environmental
responsibility

X

37

Recruitment,
retention &development

X

40

Occupational
health & safety

X

43

Labor standards

X

47

Local communities

49

Customer health &safety,Marketing &Labeling

54

Vendors

Economic
performance,
Market presence

22

52

Suppliers

Information
security

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X
X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

How DKSH responds to key topics and concerns is disclosed under GRI 103.
1.6 Reporting practiceGRI 102-45: Entities included in the consolidated financial statements
The list of companies included in DKSH’s consolidated accounts can be found from page 102 onwards
of DKSH’s Annual Report 2017.
In some sections of this report, due to data availability, the reporting scope may be limited to fewer
entities, and this will be clearly stated in each case.
GRI 102-46: Defining report content and topic Boundaries
When defining 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
to the best of our ability.

Page 15

Materiality
For establishing our initial materiality matrix, a long list of topics was assembled from several sources,
including various industry frameworks, sustainability reports by peers, clients and customers, as well as
important factors identified by DKSH’s risk profile. Subsequent steps included an elimination of topics
with limited relevance for our business, followed by an impact assessment conducted by survey, involving
personnel located in various parts of the business and geographies. Separately, expectations expressedby other important stakeholder groups, such as employees (via employee surveys), clients andcustomers, were taken up via direct feedback. In fact, many of our top clients and customers haveadopted 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 – largely consumers of healthcare products and fast-moving, branded
consumer goods.
GRI 102-47: List of material topics
The following topics were identified in the process of defining content for this report:

GRI 102-48: Restatements of information
Not applicable (This is the first published report).
GRI 102-49: Changes in reporting
Not applicable (This is the first published report).
GRI 102-50: Reporting period
Calendar year 2017
GRI 102-51: Date of most recent report
Not applicable (This is the first published report).
GRI 102-52: Reporting cycle
We intend to update the report on a yearly basis.

Page 16

GRI 102-53: Contact point for questions regarding the reportsustainability@dksh.com
GRI 102-54: Claims of reporting in accordance with the GRI Standards
This report has been prepared in accordance with the GRI Standards: Core option.
GRI 102-55: GRI content index
This is DKSH’s first GRI Report and it is presented as a Content Index. It will be updated and publishedannually, following publication of our Annual Report. For each disclosure, we provide information andreferences to our Annual Report and other published documents, where appropriate.
GRI 102-56: External assurance
DKSH’s GRI Report for calendar year 2017 has not been externally assured.

Page 17

2 Material topics
2.1 Economic performance

GRI 103: Management approach 2016
GRI 103-1 Explanation of the material topic and its boundaries
DKSH drives a clear strategy for sustainable, profitable growth that continuously increases our market
share and helps our clients expand their business. The economic value that we generate benefits all our
stakeholders, such as providing returns and dividends for our shareholders, salaries for our employees
and tax payments to local governments.
Our stakeholders are keenly interested that DKSH continues to generate steady returns and offers
financial stability. This positions us as a long-term investment opportunity, an attractive employer, areliable business partner, a responsible taxpayer and a good corporate citizen. Therefore, the generationand distribution of economic value is key for us to meet our stakeholders’ needs.
GRI 103-2 The management approach and its components
DKSH’s strategy for economic value generation is based on our three strategic pillars:• We focus on our existing Business Units and markets to leverage our leadership position• We continuously strengthen and extend our service offerings to ensure long-term success for ourcustomers and clients• We progressively drive improvement in the efficiency and effectiveness of our processes

Page 18

Responsibility for our financial performance lies with the CEO, CFO and Board of Directors. DKSH isorganized into four Business Units. Each has a head who is a member of the Senior Executive Team andbears overall responsibility for the Business Unit. The local management teams have full accountability
both a) operationally to their respective Business Unit heads and b) collectively for providing an efficientand effective support platform for the business to operate successfully, in compliance with applicablelaws and regulations.
GRI 103-3 Evaluation of the management approach
DKSH monitors its financial performance through a process steered by the CEO, the CFO and Board of
Directors. The Group publishes its results twice a year. In line with our financial guidance for the year,
net sales and profit grew in 2017. For 2018, we expect further growth in net sales and an operating result
around last year’s level.
GRI 201: Economic performance 2016
201-1 Direct economic value generated and distributed
DKSH 2016
DKSH 2017
Annual Report Annual Report
Direct economic value
generated

Revenues

10,541

11,058Economic value distributed

Operating costs(9,641)(10,113)

Employee wages and benefits

(594)

(639)

Payments to providers of capital

(98)

(311)

Payments to governments(taxation)

(80)

(77)

127**

(82)

Economic value retained *(Direct economic value generated economic value distributed)* Positive value = value added/retained to company;
Negative value = economic value distributed higher than value generated due to special dividend paidin 2017** Figures do not add up because of rounding
DKSH contributes to various community projects at the local level. By supporting a diverse range ofsmaller charities, we respond directly to the local need.

Page 19

2.2 Market presence

GRI 103: Management approach 2016
GRI 103-1 Explanation of the material topic and its boundaries
DKSH promotes and distributes our clients’ products in local markets, particularly in Asia. Our intimate
knowledge of the markets we do business in is a key part of the value we bring to our clients, who often
do not have a local presence. An important part of our service offering is our market coverage via acapillary distribution network, which means that we can serve our customers wherever they are located.
Our market presence is also integral to our corporate culture. As a Swiss company deeply rooted in Asia,
DKSH successfully combines Swiss reliability and Asian “can-do” attitude. This is a key part of ourcompany’s success. We also believe sharing business practices from other cultures contributes to local
skills and economic development.
GRI 103-2 The management approach and its components
We pursue growth strategies and continue to invest in strengthening our position in local markets. For
example, in July 2017 our acquisition of PT Wicaksana enabled our Business Units Consumer Goods
and Healthcare to enter the large Indonesian market, joining the Business Units Performance Materials
and Technology which were already present.

Page 20

We believe in mixed management teams that represent various cultures and backgrounds. This aligns
well with requirements of the business and with DKSH serving as a bridge between international clientsand local markets and customers. We strive for a balance between local and foreign talent in thecomposition of our local management teams.
As an equal opportunity employer, we do not have a policy of positive discrimination towards nationals,
although an ability to demonstrate an understanding of the local culture or to speak the local language
may be relevant for some roles. Legal requirements relating to minimum wages are always respected,
but alongside these, we also consider what is competitive in the local market when setting salaries.
GRI 103-3 Evaluation of the management approach
Human Resources carefully monitors the composition of nationalities in our senior management teams.
Nationality composition data is shared with the Country Management Team and Senior Executive Teamduring market updates and a “live” update is also available on the Global People Dashboard (an IT
management system for HR). On a local level, the nationality mix is reported as a statutory requirement
for some countries in Asia.
A significant portion of local management teams are local nationals. At the end of 2017, our roughly
32,000 DKSH employees covered 70 nationalities, meaning that we speak the language and understandthe culture of our business partners in the 37 markets we operate in.
GRI 202: Market presence 2016
202-2 Proportion of senior management hired from the local community
At the end of the reporting period (December 31, 2017), 57.4 percent of senior management personnel
was hired from the local community, whereby “senior” refers to managers in corporate, regional or local
management roles. Local management roles include first and second line managers.
Data relates to significant operations, which are defined as local organizations with more than 500
employees (GRI 102-4 disclosure).

Page 21

2.3 Procurement practices

GRI 103: Management approach 2016
GRI 103-1 Explanation of the material topic and its boundaries
The bulk of our procurement activities refers to goods we source and distribute under marketing anddistribution services agreements with our clients. For the operation of our business, we procure goods
and services (non-trade procurement, NTP), such as delivery drivers and contractor labor, utilities for oursites and office supplies. Much of our non-trade procurement is at the local level, such as local labor. For
crucial services, such as delivery providers, we operate from a few main providers in each market.
A comparatively small part of our business relates to sourcing of materials and components for the own
brand items we manufacture or distribute (OEM), such as watches or healthcare products, as well as ourfood manufacturing business.
GRI 103-2 The management approach and its components
Our non-trade procurement activities are governed by our corporate NTP policy. All DKSH markets are
required to centralize NTP wherever and whenever meaningful and economically viable, to support
professional conduct, optimization and independence of decision-making. The head of the NTP function
reports to the Country Finance Manager (CFM), to ensure proper independence and control, withaccountability to the respective Country Management Team (CMT), as led by the Head of Country
Management (HCM). The CFMs and the heads of NTP for their respective market must ensure that all
employees involved in procurement are trained in the NTP policy.

Page 22

Transportation services (logistics), redressing (repacking, labeling) and promotional services are ourhighest expenditure items in NTP and our technical requirements typically will limit the number ofqualifying suppliers. In the Business Unit Healthcare, for example, redressing suppliers need to be able
to operate under the requirements 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 NTP policy requires suppliers to be dealt with fairly and transparently, and for the
results of tender or bidding processes to be communicated openly. DKSH is also bound to investigate
any complaints raised by suppliers of unfair or unethical practices conducted by any of our employees orby their competitors.
Although we do not have a specific policy of procuring locally, most of our procurement is from local
companies as it is mainly service delivery. Part of our unique selling proposition (USP) is how quickly andflexibly we can respond to clients, and this is reflected in the lead time we can offer our suppliers. Ourdelivery 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 clients value our reliability, we seek long-term stable relationships with critical suppliers.
In our comparatively small own brands healthcare business, supplier selection is primarily driven byquality and capability considerations. In a significant part of this business, we are the licensee, and the
supply source is either the licensor or determined/approved by the licensor. All supply sources must meet
GMP and WHO standards and be compliant with the Pharmaceutical Inspection Co-operation Scheme(PICS). Suppliers are audited accordingly, by health authorities as well as by our own audit procedures.
In our watch business, to avoid the sourcing of materials from conflict zones, we choose local suppliers
who respect standards of responsible procurement (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).
GRI 103-3 Evaluation of the management approach
Our NTP policy operates under the supervision of the Country Management Team as the local governing
body. As an operational policy, it also falls under the purview of our Internal Audit Function.
Furthermore, corporate Supply Chain Management (SCM) sets the standards for logistics suppliers andoversees that these standards are being followed in local operations.
In outsourced redressing activities, it is the respective Business Unit’s Quality Assurance (QA) team thatwill monitor service delivery and the need to retain or replace service providers. This activity is often also
under scrutiny by our clients’ own Quality Assurance (QA) management.

Page 23

GRI 204: Procurement practices 2016
204-1 Proportion of spending on local suppliersa. Percentage of the procurement budget used for significant locations of operation that isspent on suppliers local to that operation (such as percentage of products and services
purchased locally)b. The organization’s geographical definition of ‘local’c. The definition used for ‘significant locations of operation’
We do not currently have this information aggregated at the Group level, but we plan to work towards
reporting local market-level information for our significant markets (i.e. local organizations with more than
500 employees, including: Cambodia, Hong Kong, Malaysia, Myanmar, China, Singapore, Taiwan,
Thailand and Vietnam).

Page 24

2.4 Anti-Corruption

GRI 103: Management approach 2016
GRI 103-1 Explanation of the material topic and its boundaries
Trust and integrity are of paramount importance in our business. We advocate compliant and ethicalbehavior in all our business activities and we do not tolerate corruption. Most of our business is conductedin Asia where we operate in several markets and industries with perceived higher integrity risks. It istherefore imperative that our employees understand our values and expected standards of businessconduct and live up to and respect them in all their activities. We place great emphasis on hiring andretaining people who share our values and who, through their integrity, protect our business and that ofour clients and customers.
As a Market Expansion Services provider, we operate as an intermediary between our clients andcustomers. For parts of our service delivery, we also rely on third parties, such as agents, consultants
and sub-distributors, who assist us in the execution of our business. DKSH does not maintainrelationships with third parties that do not share our values and meet our standards of doing business.
GRI 103-2 The management approach and its components
We model our anti-corruption program on the requirements of the U.S. Foreign Corrupt Practices Act(FCPA) and the UK Bribery Act (2010) and we adhere to the same high standards irrespective of where
we are operating.
DKSH expects lawful and ethical behavior from all employees and business partners as laid down in our
Code of Conduct, which also prohibits any form of bribery and corruption, including facilitation payments.

Page 25

Non-compliance risks are addressed in a comprehensive compliance program that includes policies, risk
assessment, processes and procedures, training and education, monitoring and auditing, as well as
confidential reporting and investigations. Accountable to the General Counsel, the Group’s GovernanceRisk Compliance (GRC) Function is responsible for operating an effective compliance program based on
our compliance policy framework.
For the execution of the compliance program, GRC works directly with DKSH’s operating markets. The
management team for each market overseas compliance at a national level, led by a Head of Country
Management who is appointed by the Chief Executive Officer (CEO). In markets with perceived higher
compliance risks, the Head of Country Management is supported by dedicated local compliancemanagers who operate under the guidance and control of GRC. For compliance initiatives relating to
specific Business Units or Functions, GRC engages directly with the global Business Unit or Function
Heads.
As stated in the Code of Conduct, employees and intermediaries are required to immediately report any
incidents of non-compliance – including demands for bribes or facilitation payments – to their supervisors
or to GRC (an email address is provided in the published Code of Conduct, for use by internal and external
stakeholders in confidence). Substantiated cases are investigated, ensuring confidentiality and protectionof the reporters. The internal reporting and investigation process was enhanced in 2017 through the
adoption of a new Compliance Incident Reporting and Investigations policy.
Policies
Building on our Code of Conduct, we maintain the following anti-corruption policies as part of ourcompliance program. All policies apply group-wide to all entities and all DKSH employees. This also
includes joint ventures and other entities controlled or managed by DKSH.
• Anti-Bribery and Anti-Corruption (ABAC)
The ABAC policy was developed to meet expected standards under the U.S. Foreign Corrupt
Practices Act (FCPA) as well as the UK Bribery Act (2010). The policy prohibits any form of bribery or
corruption, and addresses specific principles and rules to be followed, applicable to employees andappointed third parties alike.
• Gifts, Hospitality and Entertainment (GHE)
The GHE policy builds on the same standards as the ABAC policy and provides more detailed
guidance to employees on permissible and non-permissible practices when offering or accepting gifts,
hospitality or entertainment. It sets acceptable limits for each market of operation and determines
approval and reporting routines for exceptional circumstances.
• Non-Trade Procurement (NTP)
The current version of the NTP policy builds on the dual objective of cost benefits through centralized,
professional procurement processes on the one hand, and proper checks and balances (e.g. conflictof interest, fraud and bribery prevention) on the other. The policy determines standards andprocedures for vendor selection and appointment and equally addresses requirements for concluding
service agreements.
GRI 103-3 Evaluation of the management approach
The assessment of the effectiveness of DKSH’s compliance program is primarily performed by the GroupInternal Audit (GIA) Function, through audit assignments derived from GIA’s risk assessment. Audit plans
are approved by the Audit Committee of the Board of Directors of DKSH Holding Ltd. Audit results andrecommendations are shared by GIA with GRC. GIA is consulted at the policy-making stage to ensure
maximum alignment and practicality of approach in support of the Group’s compliance objectives.

Page 26

Internally, GRC additionally drives periodic compliance reviews to ensure the effectiveness of existing
controls. Externally, DKSH’s compliance program is frequently assessed by prospective or active clients
and/or external audit firms appointed by them. The assessment includes thorough due diligenceprocedures and pre- or post-contract compliance audits and reviews. Any relevant findings andrecommendations will be taken up by GRC.
GRI 205: Anti-Corruption 2016205-2 Communication and training about anti-corruption policies and procedures
a. Total number and percentage of governance body members that the organization’s anticorruption policies and procedures have been communicated to, broken down by region.
In June 2016, enhanced anti-corruption policies were adopted and communicated to all governancebody members. These policies are also communicated to all new governance body members as partof their onboarding. Thus, 100 percent of governance body members at the end of 2017 were awareof our anti-corruption policies.
For the purposes of this disclosure, governance body members include:• Boards of Directors in the main public listed entity (DKSH Holding Ltd.) and in subsidiary listed
entities (DKSH Malaysia Berhad, PT. Wicaksana Overseas International Tbk.)• Executive management at Group level as disclosed in DKSH’s 2017 Annual Report (page 22-24)• All local-level top management teams in charge of governing DKSH’s local organizations
As of December 31, 2017, the regional split of governance body members was as follows:
RegionGovernance body members

Thailand

14

Greater China*

24

Malaysia & Singapore

22Rest of Asia Pacific74

Rest of the world

37

Total

171

* China, Hong Kong, Macau and Taiwan

b. Total number and percentage of employees that the organization’s anti-corruption policies
and procedures have been communicated to, broken down by employee category and region.
Anti-corruption policies are communicated to all employees through various means, which include
information via email link, reference in employment contracts or as a contract attachment, during
onboarding, or through periodic training.
c. Total number and percentage of business partners that the organization’s anti-corruption
policies and procedures have been communicated to, broken down by type of business
partner and region. Describe if the organization’s anti-corruption policies and procedures
have been communicated to any other persons or organizations.
In communicating our anti-corruption policies, we focus on business partners assisting us with theexecution of our business directly. These business partners include sales intermediaries, such as

Page 27sub-distributors, tender agents and resellers, or vendors, such as commission agents, consultants,
forwarders, importers, customs brokers, fulfilment agents and event organizers.
Business partners are always engaged based on contracts that contain anti-corruption complianceclauses, with reference to our Code of Conduct and Anti-Bribery and Anti-Corruption (ABAC) policy,
both serving as contractual documents. We currently do not maintain a database that would allow us
to provide information by business partner type and region, hence data is currently unavailable for thisindicator.
In 2018 and beyond we will work on further enhancing our procedures for managing third-party
compliance risks, with a strong focus on anti-bribery. We will report on the progress of this initiative
next year.
d. Total number and percentage of governance body members that have received training on
anti-corruption, broken down by region.
DKSH currently practices a two-year cycle for its training activities except for new employees who aretrained within a maximum of three months after joining. At the end of December 2017, all governancebody members who are employees had received an anti-corruption training within the preceding 24months.
e. Total number and percentage of employees that have received training on anti-corruption,broken down by employee category and region.
We are unable to report on this indicator for 2017 since our information systems presently do not allow
us to capture this information.
DKSH currently practices a two-year cycle for its anti-corruption training. In the fourth quarter of 2016,
the corporate GRC Function began an anti-corruption online training and certification initiative for
5,684 employees with higher exposure to corruption risks based on the nature of their role, or for thosein risk control functions, across all market operations. Selection criteria included exposure to market
risk, industry risk and functional risk (e.g. sales, marketing, supplier management). The initiative wascompleted in the first quarter of 2017.
In 2017, more than 8,000 employees (or roughly 25 percent of our entire workforce) received an anticorruption training.

Page 28

2.5 Environmental responsibility

GRI 103: Management approach 2016
The subsequent management approach reporting addresses the topics of GRI 302 (Emissions), GRI 305(Energy) and GRI 307 (Environmental compliance) in a combined manner.
GRI 103-1 Explanation of the material topic and its boundaries
DKSH is committed to conducting our business in an environmentally sustainable manner. As aninternational Market Expansion Services provider with a strong focus on sales, marketing and distributionof products, a significant part of our environmental impact results from:• Warehousing• Transportation logistics• Personnel travel• Office and IT infrastructure
Regarding warehousing logistics, the main environmental impacts are energy consumption for theoperation of our distribution centers, such as for lighting, cooling and powering delivery handlingequipment (e.g. forklifts), and the use of refrigerants in cooling equipment. Furthermore, packaging
material is used when preparing goods for delivery to customers (mostly cardboard cartons and plastic
for pallet wrapping) and some packaging waste is generated from incoming shipments.
For transportation logistics, we operate a capillary distribution network that serves several hundred
thousand customers daily. We have a small fleet of our own, but delivery is mostly outsourced to
specialized service providers, whereas we retain overall responsibility for delivery performance.

Page 29

Environmental impacts relate to fuel consumption within these vehicles. Additionally, temperaturesensitive products may require transportation in air-conditioned vehicles or in special transportation
boxes, increasing energy consumption and fugitive emissions of refrigerant gases.
A further consideration, in relation to both warehousing and transportation, is the risk of environmental
spills resulting from the mishandling of dangerous goods including hazardous materials. All suchmaterials are handled in compliance with applicable Safety Data Sheets (SDS).
Despite the availability of communication technologies, traveling remains an important factor in ourservice delivery (sourcing, marketing, sales, after-sales services) and for managing the company. Again,such travel is mainly in vehicles not controlled by the company, such as business flights, travel by sales
and service teams in their own vehicles and public transport.
We also engage in a small amount of manufacturing, which entails a different set of environmental
impacts, albeit very minor in scale compared to the rest of our business. Examples include:• A mixing and blending plant for food products in the Philippines• Regional franchise in South East Asia for apparel products (Levi Strauss), which includes
manufacturing (sewing and washing)• Manufacturing of watches (Maurice Lacroix)• Licensing activities for own brands, mostly in Business Unit Healthcare, with products being sourced
from OEM markets (negligible in-house manufacturing)
GRI 103-2 The management approach and its components
Effective January 1, 2017, we adopted a Health, Safety and Environment (HSE) policy at Group level, tomove away from a market-based to a more standardized global management approach. Compliance tonational environmental laws and regulations is still mainly managed at the local level. HSE managers in
the markets are responsible and accountable to ensure that all our operations are compliant. For thispurpose, they maintain a legal register of applicable laws and regulations.
In warehousing logistics, all our handling equipment (e.g. forklifts) is battery-operated. Temperaturecontrolled facilities are adequately insulated to preserve energy required for cooling. Energy-efficient
lighting is used to reduce energy consumption; this also includes the installation of smart LED systems.
Our distribution centers and warehouses are typically leased, with a few of them built-to-suit. For any
investment into new facilities, environmental criteria will be considered in the planning phase.
Transportation emissions from our distribution network are likely to be material. Most of our service
providers are still using diesel-powered vehicles, although some are natural gas-powered. In our highvolume, high-frequency business (e.g. FMCG, Healthcare) with many delivery drop points to be serviced,
delivery route optimization is key for operating efficiently. Fuel savings lead to cost savings, representing
a win-win situation. To tackle emissions for our small company-owned fleet and our haulage suppliers,
we will begin implementing specialized software targeting transport network optimization in 2018. This
enables us to plan the most efficient usage of trucks and the best route to take. The driver is then given
the route to follow, and we track the actual progress of the trip. We can analyze the data to see if weshould change the truck type, loading or the number of vehicles, to increase efficiency. We are rolling thistechnology out to Singapore, Malaysia, Thailand and Hong Kong over the next years, with other markets
to be added.
Environmental risks relating to dangerous goods and hazardous materials are addressed either via
clear standard operating procedures for in-house handling or via outsourcing to specialized service
providers. All handling is always compliant with applicable SD. The HSE function in operating markets isPage 30

responsible for maintaining a register of all environmental laws and regulations applicable to our businessand for reporting on non-compliance risks to the Group’s GRC Function.
In personnel travel, internal approval systems are in place to prevent unnecessary travel. In recent
years, we have upgraded IT communication capabilities and promoted conference calls to reduce theneed for business travel.
Regarding office and IT infrastructure, we largely operate from leased facilities where usage of airconditioning is often centrally controlled by the building management. The installation of energy efficient
lighting and equipment is an area we need to focus on going forward. We will also be working tounderstand our management of office wastes, such as IT equipment.
Environmental management approaches relating to our manufacturing, franchising and OEM activities
include:1. Mixing and blending plant in the Philippines
In 2017, output from this factory was 33,000 metric tons of food products (premixes and finishedconsumer products), produced according to DKSH customized formulations. Sales and deliveries of
products are mostly to domestic customers, with roughly two percent of production being exported.
Direct environmental impacts occur in production, through consumption of energy and water, and in
the form of solid waste materials (production waste, packaging materials). Other impacts are external
to the company through deliveries by third-party service providers (transportation of raw materials andintermediates to the factory, deliveries to customers). About 60 percent of purchased materials are
sourced from local suppliers, with the rest procured internationally from China, USA, ASEAN, Korea
and Europe.
The bulk of the operation is dry blending, which has a lower energy and water intensity, with a water
footprint of 2.77 L/kg, even though our customized manufacturing requires more frequent wet cleaningof production lines. Waste water is directly treated on-site by our own waste water treatment facility,with monitoring of water quality as required by law.
The factory has an environmental management system in place that ensures proper governancethrough risk and impact assessment, awareness and training, controls and reporting. A continuous
improvement cycle strives to reduce energy consumption, reduce waste and increase the rate of waste
recycling. Between 2014 and 2016, the entire facility converted to energy efficient LED lighting.
2. Apparel franchising (Levi Strauss)
Our core activity is the operation of apparel retail stores in Thailand and neighboring markets and inpart includes some subcontracting for cutting and sewing, as well as washing. Materials procurement
and all manufacturing steps, including subcontracting, follow the stringent sustainability requirementsof the franchisor (http://www.levistrauss.com/sustainability/#introduction).
Our activities are aligned with the franchisor’s 2020 global targets of 100 percent better cotton in all
manufacturing (organic and recycled), 25 percent reduction in CO 2 and 80 percent waterless products
in all manufacturing.
The franchisor conducts annual sustainability audits, which include subcontractors, to ensurecompliance with expected standards.

Page 31

3. Watch manufacturing (Maurice Lacroix)
Details on the Maurice Lacroix brand can be found on the company’s website athttps://www.mauricelacroix.com/About/Brand.sls.
The main activity of Maurice Lacroix is the manufacturing, marketing and distribution of watches under
the Maurice Lacroix brand. Watches are assembled at the manufacturing site, with materials andcomponents procured from external suppliers and from an affiliated company. The latter’s
manufacturing process involves machining operations of metal parts for watch cases. Environmental
impacts result from metal waste in the production process and the use of cooling fluids for the metalworking machines. All metal waste is recycled and waste water is treated in line with applicable local
regulations.
Other environmental impacts occur from packaging material, mainly boxes made of medium-density
fiberboard (MDF) and associated watch manuals and warranty cards, as well as cardboard boxes forshipment. For the promotion and sale of the watches, printed materials are used for consumer andtrade catalogues. Over the last two years, we have undertaken initiatives to reduce materials usage.
For example, warranty certificates and manuals have been consolidated into one document, which is
now printed in one language only (compared to eight languages previously), with a reference to a
website link where other languages can be accessed.
Other external impacts occur through delivery processes (for procured materials and shipment offinished products) undertaken by third parties, which consume vehicle fuel.
4. OEM brands
DKSH does not manufacture our own brand healthcare products but procures these from OEM
sources for distribution in the healthcare markets we serve. Environmental impacts are identical tothose incurred in the services we provide to client brands (mostly logistics and business travel).
GRI 103-3 Evaluation of the management approach
DKSH carefully monitors its energy usage costs in each market. Additionally, all efforts relating to energy
savings are tracked and encouraged. 2017 is the first year we have brought all available data on ourenergy and carbon impacts together on a Group level; this will serve as a benchmark and a basis forevaluating our environmental management going forward. We intend to broaden our assessment ofenvironmental impacts to consider issues such as water management at specific sites and waste
production.
GRI 302: Emissions 2016
302-1 Energy consumption within the organizationa. Total fuel consumption within the organization from non-renewable sources, in joules ormultiples, and including fuel types used
DKSH consumed 9,572 MWh of fuel in 2017. This included CNG, LPG, diesel and gasoline for ourinternal fleet of delivery vehicles. We are aware that some of the diesel consumption may in fact relate
to stationary generators used to provide power in the event of a power cut; we will be working overthe next year to clarify this. DKSH collected this data from our major markets in Thailand, Malaysia,
Hong Kong, Taiwan, Singapore and Vietnam.
b. Total fuel consumption within the organization from renewable sources, in joules ormultiples, and including fuel types used.
Zero

Page 32

c. In joules, watt-hours or multiples, the total:
i. electricity consumption 82,420 MWh
ii. heating consumption 0
iii. cooling consumption 0
iv. steam consumption0d. In joules, watt-hours or multiples, the total:
i. electricity soldii. heating soldiii. cooling soldiv. steam soldNot applicable - DKSH does not generate any energy.
e. Total energy consumption within the organization, in joules or multiples.
Total energy consumption for DKSH amounts to 91,992 MWh in 2017.
f. Standards, methodologies, assumptions, and/or calculation tools used.
We collect data on electricity consumption from bills received from utility suppliers for 15 of ourmarkets. Where only cost data is available, we convert to kilowatt hours based on standard
commercial energy prices in the region. We are aware this may not give the full picture of consumption;for example, in leased offices, there are shared areas and shared services where consumption isreflected in the landlord fee. However, we believe bill data gives us the most reliable and replicableindicator of consumption. Fleet data is obtained from bill data in kilograms or liters of fuel consumed.
In 2018, we will strive to collect this data for more of our markets. For consistency, fuel property factors
applied to calculate kilowatt hours from kilograms or liters of fuel consumed data were sourced fromUK Government GHG Conversion Factors for Company Reporting (2018 edition); the gross calorificvalue was applied in all cases.
g. Source of the conversion factors used
For consistency, fuel property factors applied to calculate kilowatt hours from kilograms or liters of fuelconsumed data were sourced from UK Government GHG Conversion Factors for Company Reporting(2018 edition); the gross calorific value was applied in all cases.
GRI 305: Emissions 2016305-1 Direct (Scope 1) GHG emissions
a. Gross direct (Scope 1) GHG emissions in metric tons of CO2 equivalent
Scope 1 emissions amount to 10,161 metric tons CO2e. This is the first year we have collected dataon our F-gas usage and fleet data, and we have concentrated on markets with the highest usage ofrefrigerated storage, including Thailand, Malaysia, Hong Kong, Taiwan, Singapore and Vietnam.
b. Gases included in the calculation; whether CO2, CH4, N2O, HFCs, PFCs, SF6, NF3, or all
CO2, CH4, N2O, HFCs (R134a, R404a, R22, R410a, R507, R32).
c. Biogenic CO2 emissions in metric tons of CO2 equivalent
Although DKSH is likely to have biogenic emissions associated with the use of forecourt diesel andpetrol in our small fleet of vehicles, the degree is likely to vary considerably among countries, and wehave not calculated this in our first year of reporting.

Page 33

d. Base year for the calculation, if applicable, including:i. the rationale for choosing it
ii. emissions in the base yeariii. the context for any significant changes in emissions that triggered recalculations of baseyear emissions
Not applicable - this is DKSH’s first year of reporting this type of data.
e. Source of the emission factors and the global warming potential (GWP) rates used, or areference to the GWP source
For consistency, all emissions factors applied to fuels were sourced from UK Government GHG
Conversion Factors for Company Reporting (2018 edition).
For GWP, we select the rates from the Intergovernmental Panel on Climate Change (IPCC) Fourth
Assessment Report (AR4) over a 100-year period.
f. Consolidation approach for emissions; whether equity share, financial control, or operational
control
Operational control.
g. Standards, methodologies, assumptions, and/or calculation tools used
We align our methodology to the Greenhouse Gas Protocol’s “A Corporate Accounting and ReportingStandard- revised edition”.
All Scope 1 data covers our operations in Thailand, Malaysia, Hong Kong, Taiwan, Singapore andVietnam. These markets were chosen due to the high degree of refrigerated storage and distribution
by road vehicle. We intend to broaden the range of markets included in future reporting.
Fleet data relates to use of CNG, LPG, diesel and petrol by our own distribution fleet. Diesel data may
include some diesel for stationary back-up generators; we will be working to refine this in futurereporting and may restate previous data if material.
We use F-gases in refrigeration, air conditioning and fire suppressant equipment. Our data is basedon maintenance logs for stationary equipment.
305-2 Energy indirect (Scope 2) emissions
a. Gross location-based energy indirect (Scope 2) GHG emissions in metric tons of CO2
equivalent
47,683 metric tons CO2eb. If applicable, gross market-based energy indirect (Scope 2) GHG emissions in metric tons of
CO2 equivalent
47,894 metric tons CO2ec. If available, the gases included in the calculation; whether CO2, CH4, N2O, HFCs, PFCs, SF6,
NF3, or all
CO2, CH4, N2O,

Page 34

d. Base year for the calculation, if applicable, including:i. the rationale for choosing it
ii. emissions in the base yeariii. the context for any significant changes in emissions that triggered recalculations of baseyear emissions
Not applicable - this is DKSH’s first year of reporting this type of data.
e. Source of the emission factors and the global warming potential (GWP) rates used, or areference to the GWP source
We have applied Location-Based 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) mostrecent credible residual factor source (e.g. RE-DISS for European countries) and (iii) same as Location
Based Factor.
UK ratios of CO2:CH4:N2O, sourced from UK Government GHG Conversion Factors for Company
Reporting (2018 edition), have been used to calculate CO2e if only CO2 is given, or to calculate thebreakdown by gases if only CO2e given.
For GWP, we select the rates from the Intergovernmental Panel on Climate Change (IPCC) Fourth
Assessment Report (AR4) over a 100-year period.
f. Consolidation approach for emissions; whether equity share, financial control, or operational
control
Operational control
g. Standards, methodologies, assumptions, and/or calculation tools used
We align our methodology to the Greenhouse Gas Protocol’s “A Corporate Accounting and ReportingStandard- revised edition”.
We collect data on electricity consumption from bills received from utility suppliers for 15 of our markets(Australia, Cambodia, France, Guam, Hong Kong, Indonesia, Japan, Malaysia, New Zealand,
Philippines, Portugal, Singapore, Spain, Switzerland and Vietnam). For the other markets where only
cost data is available, we convert to kilowatt hours based on standard commercial energy prices in
the region. We are aware this may not give the full picture of consumption; for example, in leased
offices, there are shared areas and shared services where consumption is reflected in the landlord
fee. However, we believe bill data gives us the most reliable and replicable indicator of consumption.
We expect to refine our methodology in future reporting to reduce extrapolation and may restateprevious years if material.
305-3 Other indirect (Scope 3) emissions
a. Gross other indirect (Scope 3) GHG emissions in metric tons of CO2 equivalent
60,213 metric tons of CO2eb. If available, the gases included in the calculation; whether CO2, CH4, N2O, HFCs, PFCs, SF6,
NF3, or all
CO2, CH4, N2O

Page 35

c. Biogenic CO2 emissions in metric tons of CO2 equivalent
Although DKSH is likely to have Scope 3 biogenic emissions associated with the use of forecourt
diesel in our outsourced fleet, the degree is likely to vary considerably among countries, and wehave not calculated this in our first year of reporting.
d. Other indirect (Scope 3) GHG emissions categories and activities included in the calculation
Business flights: 29,408 metric tons CO2e
Downstream transportation and distribution: 30,805 metric tons CO 2e. This relates to diesel usage by
distribution trucks.
e. Base year for the calculation, if applicable, including:i. the rationale for choosing it;ii. emissions in the base year;iii. the context for any significant changes in emissions that triggered recalculations of baseyear emissions.
Not applicable - this is DKSH’s first year of reporting this type of data.
f. Source of the emission factors and the global warming potential (GWP) rates used, or areference to the GWP source
UK Government GHG Conversion Factors for Company Reporting (2018 edition) were applied toconvert kilometers flown to CO2e (including Radiative Forcing). For domestic flights, we applied thedomestic factor, irrespective of country, to err on the side of overestimation. For all international flights,
we used the international not to/from UK factor, with "average" seat class.
For consistency, all emissions factors applied to diesel usage by the outsourced fleet were sourced
from UK Government GHG Conversion Factors for Company Reporting (2018 edition).
GWP rates are sourced from the Intergovernmental Panel on Climate Change (IPCC) Fourth
Assessment Report (AR4) over a 100-year period.
g. Standards, methodologies, assumptions, and/or calculation tools used
Kilometers flown data was supplied by our travel providers for markets with major travel including
Hong Kong, Switzerland and Thailand. This data was extrapolated for the remaining countries basedon the available flight spend data. We expect to refine our methodology in future reports to reduce
extrapolation and may restate previous years if material.
Diesel consumption by our suppliers’ fleet was sourced from markets with major distribution networks,
including Thailand, Malaysia, Taiwan, Singapore and Vietnam. Major suppliers provided diesel
consumption data in liters from bill data.
GRI 307: Environmental compliance307-1 Non-compliance with environmental laws and regulations
a. Significant fines and non-monetary sanctions for non-compliance with environmental laws
and/or regulations in terms of (i) total monetary value of significant fines; (ii) total number of
non-monetary sanctions; (iii) cases brought through dispute resolution mechanisms
Noneb. Identification of non-compliance with environmental laws and/or regulations
We have not identified any case of non-compliance with environmental laws and/or regulations in2017.

Page 36

2.6 Recruitment, retention and development

GRI 103: Management approach 2016
The subsequent management approach reporting addresses the topics of GRI 401 (Recruitment andretention) and GRI 404 (Training & education) in a combined manner.
GRI 103-1 Explanation of the material topic and its boundaries
As a services provider, our success largely depends on the availability of skilled employees who share
our values. As our reputation is built on trust and reliability, we seek to retain talent to maintain stable
relationships with our business partners.
Our company is widely diversified and complex, yet highly specialized in the industries we serve. Manyof our client and customer-facing specialists need to possess a science degree and demonstrateprofessional know-how and experience, commercial acumen and interpersonal skills. Employees inbusiness support functions must manage the complexities and challenges that come with such a large
and diverse company. Often in less developed markets, the availability of qualified candidates is limited,and special efforts are required for recruitment and training.
GRI 103-2 The management approach and its components
In addition to offering competitive remuneration and a wide variety of other benefits, we provide acompelling Employer Value Proposition (EVP). The EVP is our promise to employees – what we offer
them in exchange for their skills, capabilities and experiences.

Page 37

The DKSH Employer Value Proposition
1. Enjoy a world of learning and development. Thanks to DKSH’s great diversity of services, industries,
clients, products, regions and employees, you’ll enjoy a world of on-the-job learning and developmentthat will drive your personal and professional growth
2. Own your career and take business responsibility. DKSH offers you a dynamic growth environment
and unique culture where you can “write your own career ticket” by taking business responsibility andcareer ownership early on, seizing development opportunities whenever they arise
3. Have a positive impact that touches people’s lives. By helping DKSH and other companies grow andbring their products, solutions and progress to markets, you’ll experience your own personal growth
and the satisfaction of seeing the positive impact you have on the lives of others
At DKSH, we encourage employees to own their professional development through proactive
engagement. An important feature is the six-monthly performance review where they can discuss andagree on their personal development plan with their line manager. This is carried out through the DKSH
Talent Portal, an online performance and talent management solution. Regular dialogues between
managers and employees on development objectives, including constructive and focused feedback, arealso a part of the development journey at DKSH.
In learning and development, we subscribe to the 70-20-10 learning approach. This approach recognizes
that the greatest impact of learning comes from job-related, hands-on experience and occupational
training (70 percent). The remaining impact comes from learning through others (20 percent) and throughformal courses (10 percent). The DKSH Fantree Academy, our in-house learning and development
center, offers more than 39 programs to develop capabilities across all levels of the organization.
The diversity of our business provides our employees with opportunities to gain new experiences bypromoting internal mobility across markets and organizational units. We regularly advertise job openings
internally to foster career progression and only recruit externally if no suitable applications are received
from within the organization. Our Mobility Guidelines, part of our Group Compensation and Benefits,provide guidance on supporting employees as they move through the company, such as subsidizing costs
and providing cultural training to expatriate workers and their families when entering a new market.
Recognition is a key part of our approach to retaining talent. Each year, we celebrate the employees who
have most embodied our corporate values through the DKSH Fantree Awards.
GRI 103-3 Evaluation of the management approach
As part of our continuous efforts to engage our specialists and create a dynamic and high-performancework environment, we regularly conduct employee surveys. These surveys focus on the work
environment, leadership, organizational transformation, company culture and other matters affecting
workplace effectiveness. Resulting action plans are drawn up, implemented and monitored. Targeted
focus groups are used to address any key areas within the respective countries. Exit interviews areanother important source for identifying and addressing any critical retention issues. Given our manydifferent markets, our employee hiring and turnover data is complex, and we will be working to refine this.
Internal reports on attendance and ratings of Fantree Academy learning programs are collated on aquarterly basis. Results are presented to the Senior Executive Team and to the global Business Unit
Heads with management approaches adapted accordingly.

Page 38GRI 401: Employment 2016
401-2 Benefits provided to full-time employees that are not provided to temporary or part-time
employees
a. Benefits which are standard for full-time employees of the organization but are not provided
to temporary or part-time employees, by significant location of operations
DKSH provides a variety of benefits to its employees, including life insurance, healthcare, disability
and invalidity coverage, statutory retirement provision and parental leave. These benefits, however,are not standardized but may vary by market depending on regulatory requirements and generalmarket practice. The same variations may apply by employment type, with part-time and/or temporary
employees in some markets not being entitled to the same number of benefits as full-time employees.
Benefits related to stock ownership are limited to eligible key managers of the company (Annual
Report 2017, page 31, paragraph titled “Long-term incentive”).
We are aware that benefits are an important element in employee satisfaction and retention and weperiodically review and adjust benefits to business requirements.
DKSH’s philosophy and principles on compensation and benefits are further described in theCompensation Report of the Annual Report 2017, pages 29 and 32 (“Other employee benefits’).
b. The definition used for “significant locations of operation”
Ref. GRI 102-4
GRI 404: Training & education 2016404-1 Average hours of training per year per employee
Currently, we track training provided through the Fantree Academy, DKSH’s in-house training anddevelopment center. We currently offer 39 training programs across three pillars: essential skills,
leadership programs and functional skills. Training is provided through various channels, includingclassroom, instructor-led, on-the-job training and training through the company’s intranet. External
training is not scheduled or reported through the company’s training requisition system, however, theseinclude courses or degree programs in the company’s tuition reimbursement programs, external
conferences and other external learning opportunities. Due to the breadth and diversity of our training
opportunities, we do not presently aggregate and report on the total number of hours of training that
employees receive across the company but will be working to gather this in the following years.
In 2017, 8,754 employees attended at least one Fantree Academy training course; there were 14,255
registrations to a training course in total, an increase of 25 percent against 2016.
a. Average hours of training that the organization’s employees have undertaken during thereporting period, by (i) gender; (ii) employee category
This data is currently not available (see above).
404-3 Percentage of employees receiving regular performance and career development reviews
a. Percentage of total employees by gender and by employee category who received a regularperformance and career development review during the reporting period.
As per our General Employment Policy, all employees are subject to a yearly appraisal of theirperformance with their superior.
For eleven percent of our employees, a more extensive review was applied in 2017, by making use ofa specialized software tool. 98 percent of the participating employees completed the review (with nonoticeable difference in completion rate by gender). The majority of these more detailed reviews
applied to management level employees.

Page 392.7 Occupational health and safety

GRI 103: Management approach 2016
GRI 103-1 Explanation of the material topic and its boundaries
DKSH operates a diversified portfolio of activities, distributing a wide range of products to many different
industries. Activities include sales, marketing, distribution, warehousing, installation and after-sales
services, involving the operation of machinery and handling equipment, such as forklifts. Our
manufacturing operations are comparatively small.
Some of the more serious health and safety risks associated with our business relate to workplaces
and/or people we do not manage directly. In smaller parts of our business, we deal with dangerous goods(storage, handling, transportation) where there is potential for our employees in Supply Chain
Management and other functions to be exposed to health and safety risks. Our capillary distribution
network means a significant amount of travel for sales teams and delivery drivers (mostly contractors),
making safe driving a priority.
GRI 103-2 The management approach and its components
Our Code of Conduct, which employees are trained on regularly, stipulates our approach to health andsafety, the role we all must play in keeping our workplaces safe, and the importance of reporting hazards
promptly to the line manager or Health, Safety and Environment (HSE) officer.
Our induction training for all new recruits includes a comprehensive HSE module, in addition to any jobspecific training they receive. This includes rules about usage of forklifts and other handling equipment,
and the wearing of personal protective equipment (PPE). All new recruits must complete the training
before commencing duties (with signed attendance records). Periodic refreshers are also held, andattendance is monitored.

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Building on the “5S” model of workplace organization, we have a “7S” program to create healthy and safe
workplaces: Sort, Set-in-order, Shine, Standardization, Sustain, Safety and Security. We have also
provided training on implementing behavior-based safety models to encourage a safety culture. Senior
management at Group and local level provides strong and visible commitment, leadership and personal
involvement on occupational health and safety.
HSE policy and management system
Since 2017, we have been defining a new HSE policy and management system, which applies to all
entities and employees of the DKSH Group and to all joint ventures with ownership by DKSH of at least
50 percent and/or controlled by DKSH. The new system provides centralized support and global
standards to local HSE managers who implement this approach at the market level in line with local
legislation. The policy stipulates that HSE-related policies and guidelines at market level should include,
as a minimum: vehicle and traffic safety management, fatigue management, alcohol and drugs
prohibition, dangerous goods handling and storage, waste and environmental management, and specificguidelines for manufacturing operations and those operating, servicing or installing machinery. In cases
where DKSH internal standards exceed local regulatory requirements, the DKSH standard should be met.
Roles, responsibilities and accountabilities are defined, documented and communicated to enable allindividuals to fulfill their role in improving health and safety performance. Steering Committees (SC) at
Group and market level are responsible for steering the health and safety agenda with policies andstrategies to drive performance. HSE Managers drive implementation of the program at the market level.
Local Business Units, Functions, their respective line managers and specific site managers act as riskowners, who are responsible and accountable for preventing and responding to incidents in their areas.
Contractors
The new HSE policy includes roles and responsibilities for Supply Chain Management (SCM), and wehave issued training to our relevant employees on how to communicate our requirements to the suppliers
they interact with. This includes ensuring all contractors working on our sites are aware of emergency
procedures, proper lifting techniques and other safety procedures. HSE managers are asked to ensure
contractors have a clear reporting line for any concerns they may have.
Specific HSE requirements relating to suppliers are also covered in SCM policies, the Standard Operating
Procedure on Workplace Safety (which includes safe driving), and Working Instructions on Visitor Safety,
Contractor Safety and Permit to Work (which also covers safe driving) and Contractor Guidelines. For thehandling of hazardous goods, we have a Standard Operating Procedure on Hazard Identification andRisk Assessment, HIRARC Training and Guidelines, and a HIRARC Inspection Form. Following safety
audits, corrective action plans are used to address any issues.
The new vehicle tracking solution we will begin implementing in 2018 will be able to identify any speeding
among our own fleet and contracted delivery drivers. This will be a useful tool in keeping our drivers safe.
GRI 103-3 Evaluation of the management approach
We evaluate our health and safety management approach through monitoring our performance, which
we do at site level, market level and Group level. A health and safety scorecard is generated and reported
to the Group Steering Committee (three members of the Senior Executive Team) on a quarterly basis.
Management approaches are adapted accordingly. At Function level, a global leadership team underGroup Supply Chain Management conducts regular monitoring and review activities under an internal
assessment program that includes safety.

Page 41GRI 403: Occupational health & safety 2016
Disclosure 403-2: types of injury and rates of injury, occupational diseases,
lost days, and absenteeism, and number of work-related fatalities
Implementation of our new HSE approach began in 2017. From 2018, we will be able to report
occupational health and safety data for at least our nine largest markets. Data was collected for 2017
under previous reporting systems but these were not standardized and non-comparability between
countries means we are only reporting data for Cambodia, Hong Kong, Indonesia, Japan, Malaysia,
Myanmar, China, Philippines, Singapore, Taiwan, Thailand and Vietnam.
a. Types of injury, injury rate (IR), occupational disease rate (ODR), lost day rate (LDR),
absentee rate (AR), and work-related fatalities, for all employees, with a breakdown by (i)region; (ii) gender.
Types of injury

2017

No. of First aid injuries

43

No. of Medical treatment injury

15

No. of Lost time injury

40

No. of Fatality

0

Total

98

No. of occupational disease reported: 0
No. of Lost Days: 826
Note:• Data reported in above table is limited to all our Asian markets, excluding Korea and Laos
• The above statistics cover all workers; separation of data by employees and contractors will beavailable from 2018 onwards• Conversion of Incident Counts to Incident Rates (including IR, ODR, LDR and AR) is notavailable for 2017 but will be available from 2018 onwards• Tracking of absentee days and absentee rate is not available• Break-down of work-related injuries/illnesses by gender is not available• Maximum Lost Time per incident is capped at 180 calendar days based on Occupational Safety
and Health Administration (OSHA) Standard
b. Types of injury, injury rate (IR), and work-related fatalities, for all workers (excluding
employees) whose work, or workplace, is controlled by the organization, with a breakdownby (i) region; (ii) gender.
This data is not available for 2017 but will be available from 2018 onwards.
c. The system of rules applied in recording and reporting accident statistics.
Incidents are identified, tracked and reported through an incident report system installed at market
level, with the HSE manager being at the receiving end. The HSE manager will consolidate incident
information for reporting to Group and local management.

Page 422.8 Labor standards

GRI 103: Management approach 2016
The subsequent management approach reporting addresses the topics of GRI 406 (Non-discrimination),
GRI 407 (Freedom of association and collective bargaining), GRI 408 (Child labor), GRI 409 (Forced orcompulsory labor) and GRI 412 (Human rights assessment) in a combined manner.
GRI 103-1 Explanation of the material topic and its boundaries
Much of our workforce is employed in countries which rank high on human rights risk indices. Additionally,
we procure a huge range of services and products across Asia, such as outsourced drivers for our
distribution network, warehouse workers, product promoters, consultants, stationery suppliers, officeequipment suppliers, components for our own-brand manufacturing and cleaners. Some of theseindustries are considered at higher risk of human rights violations and we focus our attention on thecontractors who directly help us deliver our client offering, including delivery drivers and warehouse
workers.
GRI 103-2 The management approach and its components
We are committed to fair employment practices, free of harassment and discrimination, as laid out in our
Code of Conduct. We respect our workers’ rights for freedom of association and collective bargaining.
We do not employ people below the legally permitted age and do not engage in, or tolerate, forced orcompulsory labor. Our commitment also extends to service providers we appoint for the fulfillment of ourservice delivery.

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The Human Resources and Supply Chain Management teams in each of our key operating markets have
responsibility for all hiring and ensuring employees and contractors have the correct documentation. We
operate management programs in line with applicable local laws and labor regulations to prevent thehiring of under-age persons or illegal workers, to ensure decent and safe workplaces, fair and timely pay,
and adequate rest periods. We expect all our business partners to follow the same basic principles ofhuman rights. Violation of these principles can lead to contract termination.
DKSH does not discriminate based on age, religion, gender or any other category, and this policy isenshrined in our Code of Conduct. As part of the Code of Conduct and related trainings, we explain our
stance on human rights and non-discrimination to employees and ask any staff member who feels that
they, or one of their colleagues, is subject to discrimination or harassment to report it to the Human
Resources department. Organizationally, we practice a business partnering approach, whereby
representatives of the Human Resources department are stationed within operations for ease of access.
GRI 103-3 Evaluation of the management approach
Our management approach on non-discrimination and human rights practices has focused thus far on
legal compliance; governance processes and the evaluation of their effectiveness has mainly been at the
local level. Although we are not aware of significant issues arising because of our current approach, weare mindful that a compliance-led approach could lead to varying standards among countries. We are
now considering centralized oversight of this issue, with clear reporting lines to Group management. We
are also planning a human rights impact assessment to better understand where our risks lie and how to
mitigate them. This will focus on major operations and key contractor types, identified using a risk-based
approach. We will comment further on our progress in future reports.
GRI 406: Non-discrimination 2016406-1 Incidents of discrimination and corrective actions takena. Total number of incidents of discrimination during the reporting period.
b. Status of the incidents and actions taken with reference to the following: (i) Incident reviewed
by the organization; (ii) Remediation plans being implemented; (iii) Remediation plans thathave been implemented, with results reviewed through routine internal management review
processes; (iv) Incident no longer subject to action.
Our Group Functions do not currently collate information on incidents of discrimination for all
operations; we will be working to address this and hope to report the data in future.
HSE induction training for new employees and contractors on-site includes the importance of treating
all people with respect. It specifically states that any form of discrimination based on gender, race or
any other protected characteristic, sexual harassment and bullying are not acceptable. The training
encourages people to report to the site manager, HR function or HSE responsible person in case of
misconduct and emphasizes that reports will be kept confidential.
GRI 407: Freedom of association and collective bargaining 2016407-1 Operations and suppliers in which the right to freedom of association and collective
bargaining may be at risk
a. Operations and suppliers in which workers’ rights to exercise freedom of association orcollective bargaining may be violated or at significant risk either in terms of: (i) type ofoperation (such as manufacturing plant) and supplier; (ii) countries or geographic areas with
operations and suppliers considered at risk.
b. Measures taken by the organization in the reporting period intended to support rights toexercise freedom of association and collective bargaining.

Page 44Although our Code of Conduct respects our workers’ rights to freedom of association and collective
bargaining, and we would never penalize anyone engaging in such activity in good faith, we are awarethat full and genuine exercise of these principles is restricted by law in some of our major markets.
We will be looking at this in more detail through our human rights impact assessment and hope toreport more fully in future years. We will be looking at what mechanisms are in place at our facilities
to enable employees and contractors to express their views about their workplace. Should we identify
cases where collective bargaining is restricted by law or by custom, we would look at other options,such as open meetings for group discussion between employees and local management, or meetings
with elected workers’ representatives.
GRI 408: Child labor 2016408-1 Operations and suppliers at significant risk for incidents of child labora. Operations and suppliers considered to have significant risk for incidents of (i) child labor;(ii) young workers exposed to hazardous work.
b. Operations and suppliers considered to have significant risk for incidents of child labor
either in terms of: (i) type of operation (such as manufacturing plant) and supplier; (ii)countries or geographic areas with operations and suppliers considered at risk.
c. Measures taken by the organization in the reporting period intended to contribute to theeffective abolition of child labor
We do not consider that any of our own operations are at significant risk of child labor. We prohibit
any child labor at our sites and our training for all workers includes encouraging any workers
suspecting a violation of their colleague’s human rights to speak out, in confidence. The Human
Resources teams check that applicants are legally able to work. However, we are aware thatcomplying with local requirements on minimum age could lead different standards being applied indifferent markets. As part of our human rights assessment, we will be considering how to mitigate any
risk of child labor in our operations and among our contractors.
GRI 409: Forced or compulsory labor 2016409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labora. Operations and suppliers considered to have significant risk for incidents of forced orcompulsory labor either in terms of: (i) type of operation (such as manufacturing plant) andsupplier; (ii) countries or geographic areas with operations and suppliers considered at risk.
b. Measures taken by the organization in the reporting period intended to contribute to theelimination of all forms of forced or compulsory labor.
We do not consider that any of our own operations are at significant risk of forced or compulsory labor.
We prohibit any such labor at our sites, and do not participate in any initiatives with local governments
to use the labor of individuals who are currently incarcerated. Our training for all workers includes
encouraging any workers suspecting a violation of their colleague’s human rights to speak out, in
confidence. The nature of our work also makes it unlikely that workers have been forced. As part ofour human rights assessment, we will be considering how to mitigate any risk of forced or compulsory
labor in our operations and among our contractors. We hope to report more fully on this disclosure in
future reports.

Page 45GRI 412: Human rights assessment 2016412-2 Employee training on human rights policies or procedures
a. Total number of hours in the reporting period devoted to training on human rights policies orprocedures concerning aspects of human rights that are relevant to operations.
Our Code of Conduct training includes human rights issues. We ran a large-scale Code of Conduct
training campaign in 2016, followed by a refresher training for employees in 2017 that could beaccessed electronically. New recruits also receive induction training. We aim to have a training thatreaches all employees, annually. We are currently unable to quantify the number of hours spent on
Code of Conduct training in 2017 and how much of this time can be attributed to human rights.
b. Percentage of employees trained during the reporting period in human rights policies orprocedures concerning aspects of human rights that are relevant to operations.
74 percent of our employees received a training on our Code of Conduct in 2017, including humanrights issues.

Page 46

2.9 Local communities

GRI 103: Management approach 2016
GRI 103-1 Explanation of the material topic and its boundaries
A strong commitment to the local communities we operate in has always been a key part of our business.
Our business was founded by Swiss pioneers who went to explore opportunities in Asia in the 19th
century. Over time, our operations became deeply rooted in the countries we operate in and today this isa key ingredient for our sustainable success.
We create positive impacts on society, particularly in less developed regions, by providing stable jobs
with fair employment terms and opportunities for personal development, and by raising standards in how
business is conducted. Furthermore, through our capillary distribution network, we enable market accessfor healthcare products and other necessary items across Asia, contributing to the quality of life in thecommunities we serve.
We strive to create a positive impact on top of our business activities by engaging in projects and selectedsponsorship programs to develop and support local communities.
GRI 103-2 The management approach and its components
DKSH’s projects in the communities we work in are designed and implemented through our local teams.
This enables us to specifically serve local needs and priorities. Types of support include sponsorships,
donations and other social initiatives.

Page 47

DKSH has a sponsoring policy in place, which ensures that all activities fit into our overall strategy andframework. Sponsorship is encouraged for projects that relate to investments into local communities, act
as an enabler for others to expand their skills or leverage interdisciplinary thinking.
We are also open to opportunities to offer roles to local people who have struggled to enter the workplace.
For example, in Malaysia DKSH employs around ten deaf people from the local community at the Famous
Amos cookie outlets.
We understand that local development takes time and continued support. One of our core initiatives has
been supporting Right to Play for more than ten years. This international charity uses play to educate
and empower young people in disadvantaged communities. In 2017, DKSH Thailand partnered with Right
to Play to organize a series of “Play Days” in local schools, as well as a Charity Day in Bangkok. Over 50
DKSH specialists participated in various locations and, through playing games, helped more than 300
disadvantaged children learn about the importance of collaboration, managing emotions, setting goals
and other life skills.
GRI 103-3 Evaluation of the management approach
Every activity is evaluated by local management teams, who assess the impact achieved for both internaland external stakeholders and consequently define key learnings for future activities. Additionally,
information on projects and activities is reported to Group Communications twice a year, who
subsequently document and showcase some of the projects in employee newsletters and on our website.
GRI 413: Local communities
413-1 Operations with local community engagement, impact assessments, and development
programs
a. Percentage of operations with implemented local community engagement, impact
assessments, and/or development programs.
In 2017, 70 percent of our markets with significant operations conducted social projects and activities
for local communities. In total, DKSH supported 16 projects.

Page 48

2.10 Customer health and safety

GRI 103: Management approach 2016
GRI 103-1 Explanation of the material topic and its boundaries
Product safety is critical for our business model and DKSH’s brand reputation. We have two major
categories of business partners: clients, to whom we provide Market Expansion Services, andcustomers, who buy the products and services. These two categories differ regarding the legal positionon liability, the reputational risk of an unsatisfactory product or service, and the nature of the activities weneed to undertake to uphold customer health and safety.
Strong product stewardship mitigates against compliance risks and legal damages. As a services provider
with very limited manufacturing activities, our main role is to safeguard the quality and safety of the
products in our care and custody, and to ensure the safe delivery of any services we provide ancillary to
our products. Traceability is also a key factor, so that, if any issue arises, we can pinpoint it in the supply
chain and address it.
Health and safety risks differ across our four Business Units, given their widely varying products. The
Business Units Performance Materials and Technology predominantly serve the manufacturing industry,
with the Business Unit Performance Materials providing specialty chemicals and food ingredients, andthe Business Unit Technology offering customized solutions spanning a wide array of industries. The
Business Units Consumer Goods and Healthcare operate closer to consumer markets, distributing food,non-food and healthcare products.

Page 49

The variety of items, the number of markets and cross-border transfers, and the changing regulatory
landscapes together demand the highest levels of product stewardship for the goods in our custody. Ourability to navigate such complexity is part of the reason clients choose to work with us.
GRI 103-2 The management approach and its components
All employees and contractors working in our distribution centers receive a training on the proper handlingof goods and operation of related equipment (if applicable) before they are allowed to start working.
Ensuring safety of the final product is also a key focus in the pre-qualification of new suppliers to DKSH;
corrective action plans, additional auditing or contract termination may be required in the case ofsignificant non-compliance with quality requirements. Beyond these controls, our management approachvaries significantly by Business Unit due to the distinctively different products and legal requirements.
Business Unit Consumer Goods
Our focus is on the proper handling and storing of goods in line with good warehousing and distribution
practices. Storage and handling of products is executed as per agreed specifications with our clients toensure the integrity and safety of our products throughout their life cycle. This can include adaptation of
products to local regulatory requirements.
DKSH complies with applicable regulations set by the food and drug administrations in the countries
where we operate. Freshness is key for food and beverage products. Some products must be stored
under temperature-controlled conditions to preserve their quality. Our IT systems support good storagepractices that enable methods such as FIFO (first in, first out) or FEFO (first expired, first out), to minimize
product waste.
Business Unit Healthcare
Quality requirements and expectations are compliant with international guidelines (e.g. those from theWorld Health Organization, the International Council for Harmonization of Technical Requirements for
Pharmaceuticals for Human Use and the Pharmaceutical Inspection Co-operation Scheme). We maintainrigorous and up-to-date quality standards when handling, storing and distributing healthcare products. All
our distribution facilities relating to pharmaceutical products and medical devices are approved by therespective local health authorities with the appropriate internationally recognized Quality Management
System certification (i.e. ISO 9001 and ISO 13485).
Pharmacovigilance (PV): regulations on drug safety are continuously evolving and differ from market tomarket and across regions. This poses a challenge for all our healthcare clients. We have customerfacing compliance and regulatory services teams providing specialist support to get our clients’ products
to market and to diligently manage drug safety expectations.
Counterfeit products: counterfeit products are a significant concern in the healthcare industry. We haveestablished internal best practices related to the management of suspected counterfeit products and our
SAP systems are validated for batch traceability across the entire supply chain.
Product Recalls: if safety concerns trigger a product recall, our SAP systems allow for the full traceabilityof products and enable a fast and efficient recall. We have established internal best practice proceduresin the event of a recall, which include setting up a product recall committee to steer escalation, tracking
and monitoring of the entire process in collaboration with our clients.
Business Unit Performance Materials
This Business Unit has a dedicated and independent Regulatory Affairs (RA) team with specialists for
Safety, Health and Environment (SHE), Quality Assurance (QA) and Registrations (REG) on local,

Page 50

regional and global levels. Critical safety, health and environment processes and controls are harmonizedand documented to fully comply with the Globally Harmonized System (GHS), requirements related toClassification, Labelling and Packaging (CLP), and other health and safety standards.
Performance Materials has implemented a stringent and standardized qualification and certification
program for supplier and service providers based on relevant and applicable standards such as GxP (forpharmaceuticals), IFS, BRC and ISO 22000 (for food), ISO 9000, CLP (for chemicals), internal Standard
Operating Procedures (SOPs) and the DKSH HSE Policy. The evaluation, qualification and certificationof service providers (logistics, warehouses, labs) and suppliers involves safety document assessments,
safety audits and corrective action plans along the entire supply chain. Our food production activity in thePhilippines is FSSC 22000 (Food Safety System Certification) certified.
To ensure safe handling and usage of the products, we guarantee fully compliant product documentationand classification in all cases. For chemicals, Safety Data Sheets (SDS) and CLP are provided with all
relevant products. For food and pharmaceuticals, health certificates and quality documents are provided,
if applicable. Documentation and classification is subject to safety audits. Full product and batch
traceability is guaranteed along the entire supply chain.
A global deviation reporting and management process ensures any health and safety related issues are
documented, followed by corrective actions and reviews.
Business Unit Technology
The Business Unit Technology distributes various types of machinery or equipment, sourced from
reputable manufacturers. Depending on the type of product, units are tested before delivery and ourservice offering also includes installation, commissioning and training to ensure proper and safe
operation. Our service engineers are trained by the manufacturers.
GRI 103-3 Evaluation of the management approach
The Quality Assurance, Regulatory Affairs and Supply Chain Management teams in each Business Unit
regularly perform quality audits and reviews, to ensure ongoing compliance with applicable standards.
Business Unit Performance Materials implemented a standard Internal Process Review (IPR) to assess
health and safety risks and define mitigations.
Additionally, our operations are frequently audited by our clients or their appointed auditors. Due to thesensitivity of the products, most of these audits occur in the Business Unit Healthcare. In 2017, 111 suchaudits took place, which means that on average the Business Unit is subject to roughly one audit permonth per market of operation.
GRI 416: Customer health and safety 2016416-2 Incidents of non-compliance concerning the health and safety impacts of products andservicesa. Total number of incidents of non-compliance with regulations and/or voluntary codes
concerning the health and safety impacts of products and services within the reporting
period, by (i) incidents of non-compliance with regulations resulting in a fine or penalty; (ii)incidents of non-compliance with regulations resulting in a warning; (iii) incidents of noncompliance with voluntary codes.
Noneb. Any non-compliance with regulations and/or voluntary codes
In 2017, DKSH recorded no incidents of non-compliance concerning the health and safety impacts ofproducts and services.

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2.11 Marketing and labeling

GRI 103: Management approach 2016
GRI 103-1 Explanation of the material topic and its boundaries
DKSH’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 and customers is the advertising and promotion of our products in themarkets we serve.
The marketing of our products can involve various risks, if not managed properly and supported with therelevant and necessary product information. Rising public awareness and new policy initiatives ontransparency have increased demand for correct and complete product information, making this topic
highly relevant for DKSH’s business model and brand reputation.
GRI 103-2 The management approach and its components
Product adaptation and customization to meet regulatory requirements, including product labeling, is an
important DKSH service offering. Our regulatory affairs teams embedded in the various Business Units
are responsible for establishing relevant Standard Operating Procedures and monitoring compliance,
assisted by 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, labeling and packaging.

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For the marketing of our own brand products, our regulatory affairs teams ensure compliance withapplicable laws. For all the 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 put in place, supported by training activities, to ensure that the marketing ofour products meets our standards and expectations.
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, such as
doctors or pharmacists, or require professional expertise for their application. Various segments in thehealthcare industry, specifically for prescription drugs and medical devices, have adopted codes of ethics,
advocating responsible marketing of their products. DKSH adheres to these standards throughmembership in the respective industry associations and by operating management programs to ensurecompliance by employees and service providers.
GRI 103-3 Evaluation of the management approach
DKSH carefully monitors and validates relevant product data from clients on an ongoing basis and takes
corrective actions, if appropriate. Any complaints about marketing and labeling are addressed by therelevant Business Unit.
GRI 417: Marketing and labeling 2016417-2 Incidents of non-compliance concerning product and service information and labelinga. Total number of incidents of non-compliance with regulations and/or voluntary codes
concerning product and service information and labeling, by (i) incidents of non-compliancewith regulations resulting in a fine or penalty; (ii) incidents of non-compliance withregulations resulting in a warning; (iii) incidents of non-compliance with voluntary codes.
Noneb. If the organization has not identified any non-compliance with regulations and/or voluntary
codes, a brief statement of this fact is sufficient.
In 2017, DKSH recorded no incidents of non-compliance concerning marketing communications,
including advertising, promotion and sponsorship.

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2.12 Information security

GRI 103: Management approach 2016
GRI 103-1 Explanation of the material topic and its boundaries
The operation of our business results in a significant accumulation of data relating to our products andservices as well as to our customers and business partners. 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 be collected relating to employees, contractors and others. In today’s digital andinterconnected world, risks of data theft or leakage have risen. Information security has become a key
topic for any business.
GRI 103-2 The management approach and its components
In line with our Code of Conduct, we are fully committed to processing and protecting personal data withdue care, and to comply with applicable data protection laws as well as DKSH’s principles of protecting
confidentiality. We have an IT Security Policy in place and a dedicated Information Security team.
We train our staff on various topics relating to information security. DKSH’s main IT hub is in Malaysia,
however, each market has its own local IT team responsible for regular IT security trainings.
Furthermore, quarterly Group-wide IT newsletters as well as ad-hoc IT newsflashes ensure thatawareness of sensitive topics is raised across all markets. In 2017, we embarked on the implementationof ISO 27001:2013 standard on information security management and achieved certification in 2018. Our
quality assurance team ensures that the required standards are maintained on an ongoing basis.

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To further demonstrate our commitment to protecting our clients’ and customers’ data, we harmonized
our operations with the EU General Data Protection Regulation (GDPR). We identified and implemented
the necessary changes in the organization. To align our operations with the GDPR we implemented in
May 2018 a new Group Data Privacy Policy, a new Website Policy and a Global Privacy Governance
Structure. Under this new structure, our Global Privacy Lead oversees the work of the Privacy
Coordinators in each of the main Global Functions and Business Units. There are also Privacy
Coordinators in the key operating markets. Thus, every Business Unit and Function has a go-to-personfor data security.
GRI 103-3 Evaluation of the management approach
Group Internal Audit conducts independent audits on access management. Furthermore, the Group IT
Security team performs audits on all country IT installations on regular basis.
GRI 418: Customer privacy 2016418-1 Substantiated complaints concerning breaches of customer privacy and losses ofcustomer data
In 2017, DKSH received no complaints regarding data breaches of customer privacy and loss of customer
data from outside parties or regulatory bodies. Similarly, DKSH is not aware of any identified leaks, thefts,
or losses of customer data.

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DKSH Holding Ltd.
Wiesenstrasse 8, P.O. Box 888, 8034 Zurich, Switzerland
Phone +41 44 386 7272, Fax +41 44 386 7214

www.dksh.com