GF Piping Systems creates innovations that reduce water losses as it travels from its source to household taps. GF Casting Solutions develops new lightweight components to make mobility more CO2 efficient. GF Machining Solutions and its smart technologies offer customers a more efficient use of resources by reducing the consumption of materials and energy.

In addition, GF has invested in partnerships with other companies and academic institutions to promote sustainability.

In this sustainability chapter, GF provides an overview of environmental, social, and governance (ESG) topics. GF’s comprehensive Sustainability Report 2021 will be published in the first half of April 2022.

GF maintains a continuous dialogue with its internal and external stakeholders to proactively recognize and resolve key issues. It promotes this ongoing exchange through a range of activities, events, and initiatives.

Much of GF’s business success relies on understanding the needs of its stakeholders. The following chapter lists these main stakeholder groups, their significance to GF, and the formats through which it maintains this dialogue.

In an increasingly complex and uncertain world, it is becoming even more critical for companies to focus on broad stakeholder value to achieve business success. GF ensures that its business contributes positively to society’s progress toward the UN Sustainable Development Goals.

In 2021, the COVID-19 pandemic posed challenges for businesses and society. GF responded with numerous measures to ensure that employees remain safe and healthy. These initiatives included extending the existing home office policy, applying team splits, providing personal protective equipment, testing infrastructure to enforce physical distancing, and frequent communication throughout the pandemic. GF employees worldwide followed the company’s safety regulations; thanks to their teamwork and cooperation, 2021 was a successful year.

GF is a sustainability and innovation leader providing superior customer value. GF’s sustainability strategy, the Sustainability Framework 2025, came into effect in 2021 and will guide GF’s sustainability efforts during the next five-year strategy cycle. The Sustainability Framework 2025 is intertwined with GF’s strategy 2025, underlining the clear link between sustainability and business.

Further information regarding the strategic goals and targets of the Sustainability Framework 2025, including how the framework was developed, is provided in the Sustainability Report 2020 in the section Sustainability Framework 2025.

In 2021, the Board of Directors made sustainability a strategic focus. In this context, GF’s management developed an implementation roadmap for the strategy period 2025. In addition to strengthening the organizational structure at the corporate and divisional levels, this roadmap entails the launch of several strategic sustainability initiatives.

GF believes that sustainability and business are very closely linked. Therefore, in line with the growing importance of sustainability in its business activities, GF declared 2021 “the year of sustainability”. The strategic priority of sustainability in the company is reflected in GF’s governance structure and overall approach to sustainability management.

The ultimate responsibility for sustainability at GF lies with the Board of Directors. In 2020, GF formed a Sustainability Committee to support the Board of Directors in strengthening its focus on environmental, social, and governance (ESG) topics. The Sustainability Committee is embedded in the Nomination Committee. The Charter of the Nomination and Sustainability Committee defines that regular meetings must be held at least twice a year. In 2021, the committee met on three occasions. The committee’s agenda mainly focuses on GF’s sustainability initiatives (such as the implementation of the EU Taxonomy, the SBTi, or the TCFD disclosures) and GF’s eight sustainability goals for 2025. GF’s overall progress is measured against a predetermined timeline and the strategy cycle of 2025.

The Sustainability Committee also has the essential role of ensuring that executive remuneration is linked to ESG targets and aligns with the eight goals of GF’s Sustainability Framework 2025. As a result, each Executive Committee member has GF’s company-wide CO2e target as a remuneration incentive. In addition, they also have individual targets such as the zero-accidents campaign, circular economy benchmarks, or the target to implement the TCFD’s recommendations and publish GF’s first TCFD report in March 2022 as part of its Annual Report.

The Executive Committee has a direct overview of GF’s progress on reaching the strategic goals and targets. In addition, the Executive Committee conducts performance reviews between two and four times per year and within each division’s management meetings. These reviews enable the Executive Committee to take the required strategic and operational actions to ensure GF’s target achievement remains on track.

For the roll-out of the Sustainability Framework 2025, GF established a Corporate Sustainability Council (CSC) at the Executive Committee level. The CSC coordinates and steers all sustainability-related activities. It is headed by the CSC Chairwoman, who advises the Executive Committee. The CSC consists of the CEO, CFO, Divisional Presidents, corporate and divisional sustainability teams, and high-level members of management. The CSC’s key responsibilities include the reporting and tracking of progress and measures regarding the Sustainability Framework 2025; supporting the Executive Committee on deciding on cross-divisional strategic sustainability projects and initiatives; coordinating and supervising projects and initiatives, and reporting their progress to the Executive Committee. The CSC meets at least twice every year. The council’s first meeting took place on 4 October 2021, where it exchanged ideas regarding:

In addition, GF’s divisions also presented insights into their innovations, progress, and strategies in the area of sustainability. From 2022 onwards, the CSC is expected to meet twice a year with the possibility of additional meetings as required.

Each department and division is responsible for continuously integrating aspects of sustainability into GF’s daily operations towards achieving the Sustainability Targets 2025. The topic is coordinated at the corporate level by the Corporate Sustainability Team (CST). The CST is positioned within the Corporate Finance organization and led by the Head of Investor Relations & Sustainability. The Head of Sustainability Transformation leads key strategic, cross-functional sustainability-related projects and initiatives. The Head of Corporate Sustainability participates in the Sustainability Committee meetings and is a member of the Corporate Risk Council. He is responsible for sustainability reporting, including engagement with ESG rating agencies. Both the Head of Sustainability Transformation and the Head of Corporate Sustainability report directly to the Head of Investor Relations and Sustainability.

The CST works in close contact with the three divisions’ dedicated sustainability teams to track the progress of individual locations, business units, and divisions towards achieving set targets. The CST is also responsible for raising organizational awareness about sustainability and climate-related risks.

The divisional sustainability units evaluate their sustainability performance each quarter and present their respective management teams with the results. The sustainability units review the following aspects: the achievement of sustainability targets and the implementation status of agreed-upon actions, the monitoring of GF’s business partners’ sustainability performance and the development and marketing of products and solutions that provide GF’s customers with sustainability benefits.

Every year, the divisions determine a set of actions needed to implement the Corporation’s sustainability targets. Each divisional sustainability manager ensures their locations define and submit initiatives to meet the set goals, aggregates an overview for their division to track progress, and coordinates with the CST on status, cross-divisional experience-sharing, and, where needed, dispute escalation. For example, in 2021, GF Machining Solutions established a divisional sustainability working group that meets every quarter and brings together key functions and the divisional management team to define the next steps towards target achievement.

GF incentivizes corporate target achievement at various levels. For example, individual goals are defined for the Executive Committee members as well as for the corporate and divisional sustainability teams.

To help embed sustainability aspects into GF’s daily business, the CST and the divisional sustainability teams communicate with GF employees through various channels. The next global GF sustainability conference will be held in 2022. To reflect GF’s increased focus on sustainability, the scope of the conference will be extended to include a more diverse audience that represents GF’s global operations. In 2022, the conference will focus on developing a concept that unites all relevant functions and departments in contributing to the strategic goals of the Sustainability Framework 2025.

Additionally, the CST worked closely with the divisional teams to organize employee workshops on the Science Based Targets initiative (SBTi) and diversity and inclusion.

GF continuously monitors international sustainability developments to ensure it integrates relevant issues into its business decisions and processes. In 2021, GF made significant progress regarding science-based targets, the circular economy, climate-related financial disclosures, and the EU Taxonomy.

In line with the 2015 Paris Agreement, governments and businesses are working to find practical and effective solutions to significantly limit global warming. Recently, the IPCC’s Sixth Assessment Report reinforced the urgent need to reduce global warming to 1.5°C (as opposed to well below 2°C) above preindustrial levels. To reach this goal, the United Nations Environment Programme (UNEP) has calculated that the world must halve annual greenhouse gas emissions by 2030.¹

GF firmly believes it has a responsibility to contribute to meeting these goals. It therefore uses the official protocols of the Science Based Targets initiative (SBTi) and is committed to setting a science-based target aligned with the 1.5°C ambition level across all three scopes. In 2021, GF made significant progress: firstly, it comprehensively recorded all emissions for scopes 1, 2, and 3. Across the 15 categories of Scope 3 emissions, GF identified four specific categories as material: purchased goods and services, upstream energy, upstream transport, and the use of sold products. The emissions from these four categories represent approximately 90% of GF’s total Scope 3 emissions.

GF believes it is vital to ensure responsible resource and waste management. It is therefore working to redesign its production processes, find new materials, and create new business cases to close material loops. In addition, reducing waste during the manufacture of GF’s products has always been in focus. GF recognizes the concept of a circular economy is an important driver towards achieving a carbon-free economy.

In 2021, GF initiated a circular economy project featuring a series of workshops where a cross-divisional and cross-functional team, including GF’s CFO, developed a common understanding of the approach and concepts to promote its adoption. The team also defined new pilot projects. These projects include new business models, modularity improvements, and product simplification to enable reuse within the material cycle. GF will implement these projects throughout 2022 and beyond.

The European Commission has set climate and energy targets for 2030 underpinned by an action plan – the European Green Deal – to make the EU economy climate-neutral by 2050. The Commission considers direct investments in sustainable projects and activities as essential for reaching these targets. Therefore, in June 2020, the EU issued the EU Taxonomy Regulation, a framework that defines the specific types of economic activities that qualify as environmentally sustainable.

In 2021, GF assessed its business activities against the developed EU Taxonomy criteria. The review of eligible activities has been completed for the environmental objectives regarding climate mitigation and climate adaptation. In 2022, we will extend the assessment to the remaining four environmental objectives.

It has become evident that climate change will have both immediate and long-term impacts on businesses around the world. GF firmly believes that companies that fail to recognize climate-related risks and opportunities and adjust their operations accordingly will ultimately become less competitive. In addition, as more investors become sensitive to the financial impact of climate change on businesses, these companies will also find it harder to access capital.

The Task Force on Climate-related Financial Disclosures (TCFD) issued a set of recommendations in 2017 to increase the transparency of how companies are addressing climate change. The TCFD’s purpose is to help companies provide meaningful climate-related disclosures so that investors can make more informed investment decisions.

In 2021, a key component of GF’s TCFD-aligned risk management strategy was a scenario analysis assessing GF’s possible climate-related impacts between now and 2050. As a result, GF defined material physical and transition risks and opportunities as a foundation for future risk management, as well as various adaptation and mitigation activities.

With its first index published in 2022, GF is reflecting on the TCFD’s growing importance among investors and businesses. GF’s TCFD report emphasizes three critical topics: the climate-related opportunities that can help GF remain competitive, the specific physical risks GF is exposed to, and the transition risks facing GF’s operations. Full information on GF’s climate-related disclosures can be found in GF’s first TCFD report.

GF engages in sustainability efforts throughout the value chain and is committed to extending its sustainability standards to its suppliers. As one of its 2025 sustainability targets, GF aims to assess 80% of its procurement spend, which covers around 1’000 suppliers. GF partnered with the rating agency EcoVadis to conduct these assessments, focusing on the four themes of environment, labor and human rights, ethics, and sustainable procurement. Each assessment is adapted based on company size, industry, and country.

In 2021, GF’s responsible procurement team conducted an initial pilot phase to familiarize itself with the process. In September, it started the internal risk assessment and selected key suppliers and those with high risks to be included in the first assessment phase. In the follow-up, approximately 400 suppliers were invited to take part in the assessment. A kick-off webinar accompanied the broader roll-out to provide further details about the program and general sustainability issues in the supply chain.

In GF’s core business, sustainability efforts are directly linked to the Corporation’s understanding of its purpose – to add value to and improve the quality of lives through all of GF’s business endeavors. Thus, GF ensures that the components or complete-system solutions that it designs and produces address the megatrends faced by today’s society, contribute to the UN Sustainable Development Goals, and provide best value-added from a quality, safety, and sustainability perspective for the customers.

For GF Casting Solutions, sustainability in its product portfolio means developing solutions for the future of mobility. For the division’s customers in the automotive segment, the development of alternative drive systems plays a critical role in reducing CO2 emissions. Using fewer and lighter components lowers a vehicle’s weight and is one of the most effective ways to reduce its fuel or energy consumption and emissions during its lifespan. GF Casting Solutions is partnering with Microsoft Switzerland in an innovation project using artificial intelligence to optimize the ramp-up phase of casting production and ultimately maximize the quality of components while minimizing their associated energy consumption. In 2021, the project was successfully tested at one of GF’s locations in Europe. In the next step, the project will extend to other plants.

For GF Machining Solutions, sustainability translates into more innovative, integrated, and connected high-precision machines and solutions. It is the division’s goal to ensure resource efficiency throughout the machine’s life cycle and to significantly reduce the energy consumption of its machines. The division also offers new technologies, such as laser texturing, to replace the harmful etching process. Offering re-use possibilities is equally important when it comes to sustainable manufacturing. In 2021, GF Machining Solutions took a step forward in reducing the environmental footprint of its products. In collaboration with a partner, the division designed a new “Ecospool” that can be produced with significantly less plastic. In addition, this spool is made of fully recyclable white Polystyrene plastic, allowing new spools to be created from used ones. By choosing a mono-material design and simplifying the recycling process, GF Machining Solutions is making circular economy principles a reality.

GF supports and promotes cultural and social programs at its various locations as well as activities that contribute to the common good. In 2021, it spent around CHF 2 million at the Corporation level on social engagement activities in addition to the donations (around CHF 900’000) made by the individual locations. The largest contributions in 2021 went to the GF-owned foundations Clean Water, Klostergut Paradies, and Iron Library. In addition, several GF companies supported local activities by making substantial contributions.

GF is a member of various Swiss and international business associations with annual membership fees amounting to less than CHF 0.1 million. In the year under review, GF made no contributions to any political parties or individual politicians.

GF’s Clean Water Foundation has supported a total of 160 drinking water projects worldwide since 2002. To date, GF has invested more than CHF 12 million and improved the lives of more than 330’000 people by providing better access to safe drinking water. In 2021, the Clean Water Foundation granted about CHF 500’000 to projects in Somaliland, Zambia, Cambodia, Nicaragua, and Uganda. Most of the projects focus on improving infrastructure for water filtration and distribution in rural communities and hospitals. In 2022, GF will celebrate the 20th anniversary of the Clean Water Foundation by supporting one project each in the areas of health/hospital infrastructure and education/school buildings. The partners of these projects, working in close cooperation with GF, will clarify in more detail how GF can make a greater contribution in the future via technical expertise and know-how in addition to financial support.

Each year, GF supports the Foundation with a substantial lump sum contribution. The Board of Trustees includes the CEO, who also chairs the Foundation, and two members of the Executive Committee.

The Klostergut Paradies in Schlatt (Switzerland) has been owned by GF since 1918. Today, this historic building serves as the Corporation’s main seminar and training center. In addition, the Iron Library Foundation has been located at the Klostergut Paradies since its foundation in 1948. Today, GF proudly owns one of the world’s largest private collections of books on the subjects of material science and the history of technology.

The Iron Library and GF Corporate Archives, managed by one team, jointly preserve GF’s historical and cultural heritage, which dates back to the 18th century. In 2021, the digital offerings included over 1’200 digitized volumes totaling more than 100’000 pages.

GF not only promotes sustainability within its own company, but also enters into partnerships with other companies to develop or implement sustainable projects together.

GF Piping Systems collaborates with the Helsinki Region Environmental Services Authority (HSY). The authority is responsible for wastewater treatment in the Helsinki region and manages around 3’000 km of water supply piping and 4’900 km of sewers. The city of Helsinki has the ambition to become the world’s most sustainable urban region. As part of this goal, HSY has begun replacing its metal pipelines with polyethylene pipes over the last ten years.

GF Piping Systems is supporting HSY to reach this ambitious goal. It supplies HSY with fittings for plastic piping networks from the ELGEF Plus system that are used in the water supply. For the collaboration with HSY, it was decisive that GFPS was the only supplier that could provide a comprehensive breakdown of CO2 emissions during the entire manufacturing and supply process.

In addition, the lightweight and corrosion-free ELGEF Plus components provide high flexibility in construction and low maintenance in operations. GFPS’s large-diameter piping joints are also leak-proof, ensuring water supply security and minimizing repair costs. GF is therefore HSY’s preferred partner to support the utility’s ongoing sustainability efforts.

GF Piping Systems, the leading flow solutions provider for the safe and sustainable transport of fluids, has become a Sustainable Digital Infrastructure Alliance (SDIA) partner. The company joined the SDIA to partner with its association of companies, individuals, and governments to highlight the importance of digital infrastructure facilities contributing to reducing the global carbon footprint.

Data centers consumed about 205 terawatt-hours (TWh) of electricity in 2018, up 6% from 2010 (Masanet et al., in Science). That is slightly more electricity than what Denmark used in 2018 (Our World in Data), Energy Innovation, an energy and climate change policy think tank, estimated that 43% of that is used for cooling. Therefore, any small improvement in efficiency can have significant environmental benefits. The SDIA is researching the development of advanced cooling systems using liquid- and air-cooling technologies to improve the overall efficiency of data centers. The cooling systems will be connected to district heating and cooling grids, using GF Piping Systems’ technology, to ensure energy recovery from the heat generated by IT equipment. As a global leader in flow solutions, GF Piping Systems’ high-quality and value-adding piping technologies will contribute to the project’s success.

In 2021, TBD Media Group included GF as a sustainability leader in its “50 Sustainability & Climate Leaders” campaign. The campaign showcases companies that are advancing themselves and their industries towards a better future. It consists of a video series that aims to support the UN’s Sustainable Development Goals action campaign.

The video on GF explains how GF develops products in all three divisions that are particularly sustainable in their manufacture or production. With its goal to generate 70% of sales from products, systems, or solutions that have social or environmental benefits, GF is a role model for other companies on how to contribute to the achievement of the SDGs.

In December 2021, the London-based CDP rating agency awarded GF an A– rating (leadership level) for its efforts with regard to climate change and water security. The management of environmental and climate impacts is anchored in GF’s Sustainability Framework 2025.

In the 2021 CDP reporting cycle², GF implemented approximately 24 measures worldwide to reduce greenhouse gas emissions. However, due to COVID-19 restrictions, only smaller projects could be completed. Nevertheless, combined with the purchase of renewable electricity, GF’s projects prevented 21’000 metric tons of CO2e emissions in 2021

S&P Global’s Corporate Sustainability Assessment (CSA) is an annual evaluation of companies’ sustainability practices. It covers over 5’300 companies from around the world. The CSA focuses on sustainability criteria that are both industry-specific and financially material. In 2021, GF obtained an overall score of 60% and falls in the 88th percentile as of 20 November 2021. The global average score is 28%.

GF Piping Systems and GF Casting Solutions were reassessed by EcoVadis for their performance on criteria relating to the environment, labor and human rights, ethics demand sustainable procurement in 2021. Both divisions achieved a silver medal, which places them among the top 25% of companies assessed by EcoVadis.