Sustainability report 2021/22

Creating value

Fields of action at KHS for sustainable and profitable added value

For the KHS Group, corporate responsibility means integrating social and ecological issues into the company processes and strategy. Our aim is to harmonize the impact of our business activities with the challenges faced by society.

We develop machinery and system solutions for our customers in the beverage, food and non-food industries that can be used to process products safely, reliably and with energy and resource efficiency for businesses and consumers alike. Our packaging systems are subject to constant further optimization and meet KHS’ high demands with respect to product design, economy and environmental friendliness.
KHS’ promise of performance is expressed in our motto of “your reliable partner”. We support our customers throughout the entire life cycle of their lines and machines with periodic new solutions and upgrades that generate added value.

KHS’ vision of corporate responsibility is openly practiced in its full social diversity by over 5,000 employees from almost 80 nations worldwide. Their commitment forms the basis for trusting and long-term cooperation with all of the KHS Group’s business partners.

Sustainability as a key pillar of our corporate strategy

Business practices and consumer behavior need to constantly change to halt the advance of global warming and prevent the loss of our ecological foundations of life. The sustainability targets negotiated in international climate and environment agreements are determinative here. We are faced with the challenge of applying our powers of innovation to bring our existing business models into line with the vision of a regenerative, resource-conserving circular economy in order to systematically, continuously and comprehensively reduce our impact on the climate and environment throughout the entire value chain.

In accordance with the new Salzgitter AG 2030 strategy issued by the Group parent company, the KHS Executive Management Board has defined the strategic positioning of the KHS Group for the next few years in its KHS2025 strategy program.

One core element of our strategy is continuous further development in a move towards sustainable business practice. In all key areas of the company KHS has thus specified measures designed to reliably and purposefully help cut greenhouse gas emissions by 2030 and 2045 respectively with the aim of becoming climate neutral. These measures are based on detailed calculations and analyses of the KHS Group’s carbon footprint. Parallel to this, we are optimizing our processes, products and services for a resource-conserving, CO2-reduced closed production chain. In doing so, we can offer our customers upgrades and new solutions that generate added value throughout the entire life cycle of their lines and machines.

As part of this strategy, Group parent Salzgitter AG has committed to net zero by 2045 and to binding, science-based greenhouse gas reduction targets. This commitment was cemented by its joining the Science-Based Targets Initiative (SBTi) at the beginning of 2022. Under the umbrella of the Group strategy, as a subsidiary and member of the Technology Business Unit KHS will also contribute to the planned reduction path in the striving for net zero. KHS has geared itself for this task and the implementation of suitable measures. The goal agreements reached by the Executive Management Board and executive managers are already based on sustainable defined targets for the environment, occupational health and safety and further personnel training.

As part of the Group-wide climate footprint, in 2022 KHS pinpointed the main sources of its own company greenhouse gas emissions throughout the value chain on the basis of the Greenhouse Gas Protocol. In the Scope 1 and Scope 2 categories KHS was able to evaluate its emissions (see key figures). Scope 3 throws up a number of specific challenges, in particular the collection of relevant data for exact calculation of emissions for purchased goods and services and the use of our machines during their life cycle. The data situation here is still imprecise, the specifications of the global Greenhouse Gas Protocol (GHG) standard still vague in some places, and therefore requires in-depth dialog with our suppliers and customers. Our strategy will focus on cutting these emissions in the coming years.

Our company’s direct and indirect, energy-related greenhouse gas emissions across all production sites are an integral part of this report. Our climate footprint forms the basis for the planned stipulation of our operative reduction targets and resulting business and investment plan that complies with the 1.5°C target.

Our strategic alignment is largely oriented towards the targets specified by the European Green Deal, the EU’s sustainability and growth strategy and the EU Taxonomy Regulation. KHS deduces the relevant key figures for consolidated, non-financial reporting by the Salzgitter Group with reference to the EU’s taxonomy targets. The data identified enables KHS to reflect on existing strategic fields of action and to derive new or recalibrated measures on the basis thereof.

Employee involvement

By further intensifying the dialog with our employees, the entire KHS workforce is more involved in our sustainable development process. An increased exchange of information and more intensive cooperation between the different companies in the Salzgitter Group are also designed to further expand the process of sustainable development. This serves to activate our full knowledge and ideas potential in order to push decarbonization and help save resources. For example, KHS took part in the internal Group-wide Salzgitter AG competition initiated in 2022 to generate measures for efficient decarbonization by submitting various suggestions. The most promising approaches expressed in these ideas have been identified and are now to be widely applied – where possible, throughout the entire Group.

Strategic positions and fields of action

The KHS Group focuses its corporate responsibility on the entire value chain. With respect to its decarbonization target, the upstream stages in the mining of raw materials and their industrial processing and the use of systems and machines by customers throughout their entire service life have been identified as the key issues here.

KHS offsets these challenges by exercising its creative powers in the development of its products and services. By engineering innovative products and intelligent system solutions with respect to packaging design, for instance, KHS is constantly working to reduce the carbon footprint of its new and existing machines.

Our key approaches are illustrated by the various example products outlined in this sustainability report that help to boost overall equipment efficiency and create circular beverage packaging:

  • With our compact line designs we cut down on the use of materials while aiming for an increase in output.
  • Modularization helps us to modernize and expand the systems installed at our customers’ sites. At the same time, our range of services ensures reliable operation. Besides boosting functionality and efficiency, we extend the service life of our equipment and protect resources. If required, retrofits adapt the technology on existing production lines to cater for current market and customer demands.
  • For operation at customer plants we optimize processes on our single machines and lines in order to limit the use of auxiliary media and consumables to a necessary minimum.
  • Our goals for beverage packaging are reuse and full recyclability. Our packaging design development team thus directs its focus to the use of regenerative and recycled materials and on cutting down on packaging materials.

Our development targets for our packaging systems are to save on material and use fewer primary resources, replacing these with more recyclate, for example. [r]PET and biodegradable alternatives are KHS solutions with which we can meet future requirements with regard to the handling and processing of PET. We also offer a broad spectrum of innovative and sustainable concepts when it comes to secondary packaging. These range from secondary packaging made of paper to packs held together by nothing more than a few small dots of adhesive. We set up partnerships with scientific institutions and our suppliers to identify new packaging materials and test their potential according to our criteria. In doing so, we strengthen our consultancy expertise in primary and secondary packaging and considerably help our customers to produce using our machinery and products in the long term while saving on resources.

Continuous further development for more sustainability

KHS is responsible for aligning its activities with demands for sustainable development with a view to its customers and the future. This gives rise to a number of central strategic fields of action that demonstrate how we aim to meet this demand.

  1. Customer satisfaction through reliable partnership

    Our global demand for quality forms the basis of our corporate activities: KHS stands for the highest standards that are always geared towards customer requirements. The high quality of our filling and packaging systems is the prerequisite for a long service life, smooth and efficient production processes, product protection and safety in the operation of our plant technology. KHS engages in systematic quality management, defining and monitoring suitable requirements to this end for its suppliers.
  2. Development of flexible and sustainable machines and system solutions for long-term value creation

    We aim to always find a system solution for our customers that gives them perfect results as regards output, cost and resource efficiency. Our portfolio is intended to help them leave as small an ecological footprint as possible. KHS supports its customers from the initial plans to on-site installation with tailor-made concepts, long-term empirical values and customized solutions. This also holds true when customer requirements change over time – for example as a result of market developments, new regulations, innovations, changing patterns of consumption and demands for sustainability. One of our most important concerns is to design our systems so that they can be flexibly adapted and expanded as and when required. Providing options for modernization and system modularization are important principles in product development at KHS.
  3. Global footprint: customer proximity and great service expertise through worldwide presence

    Throughout the world KHS has ten production sites in six countries and over 40 service centers located in 35 different nations. Our global presence means that we are close to our customers and can offer them quick and reliable support on site with our range of expert services. Designated contacts expertly ensure that our customers’ systems operate efficiently. KHS’ responsibility does not end with the delivery of our machines: this is where it really begins. We provide many options for our customers: from direct support from our 24/7 Service HelpDesk through our worldwide spare parts service or IT-assisted remote diagnosis in the event of system disruptions to personal assistance from one of our many service centers located around the world.
  4. Responsibility for the people and environment at our factories

    For KHS, the sparing use of energy and resources in the manufacture of our system solutions is a prime concern. Water, electricity, natural gas and fuel are needed for production and intralogistics, our offices and vehicle fleet and for structural extensions of and modernizations to our production sites. We have installed systems of environmental and energy management at our production sites to continuously reduce the necessary consumption of the above. We are constantly improving our production processes with an eye to energy and resource efficiency and to exploiting and encouraging the exchange of ideas among our employees. The conservation of resources and energy efficiency are also key topics at our production sites outside Germany where we produce for the local markets. This decentral arrangement allows us to react locally to customer demand and at the same time assume our cultural and ethical responsibilities as a global company.
  5. KHS as a future-oriented and attractive employer

    KHS is only as innovative, successful and fit for the future as our own employees are. Encouraging them and their development is thus our core concern. We attach the greatest importance to providing fair, attractive working conditions and an open environment defined by mutual respect and appreciation. Besides assuring skilled labor and personnel development, plus continuously expanding our occupational health and safety management system, the most important fields of action for our HR Management Department are therefore digitalization and process efficiency and transformation of the modern working environment.

    The strategic fields of action within KHS form the basis of our cooperation – and of our success. Through our strategy we have permanently anchored the underlying values thereof in our everyday work. Our system of compliance and code of conduct provide the fundamental foundations here. Moreover, we find it extremely important that our partners and suppliers also comply with the standards we have defined.

Anchoring and controlling corporate responsibility

The KHS Executive Management Board holds general primary responsibility for sustainable and ethical business practice; it establishes principles that apply to the entire Group and reaches decisions on policies and investments. The decisions made by the Board are prepared by the responsible executive managers who also monitor the implementation thereof. In order to be able to consistently implement our mission statement and the claims derived from this, KHS has assigned clear roles and responsibilities within the company. We use a comprehensive system of governance that encompasses various controlling entities both at company and Group level and includes external audits and certification. Systems of management have been set up at all of our divisions and production sites that define processes and operative responsibilities. These include certified management systems governing compliance, our suppliers, quality, innovation, energy and environmental protection, human resources and occupational health and safety. Furthermore, the KHS Group has taken part in the EcoVadis rating system every year since 2015; at the time of writing, it has a successful silver rating valid until July 2023. KHS has also participated in SEDEX audits since 2013.

In order to underline the strategic relevance of the sustainable further development of the KHS Group, during the reporting period our system of sustainability management was integrated into our Strategic Projects Department. Here, together with the Executive Management Board, executive managers and responsible user departments, the company’s strategic positions and measures are developed, approaches and achievements made recorded and described and responsibility assumed for the systematic expansion of KHS’ CSR reporting system. This is executed in close alignment with the ESG functions of our parent company Salzgitter AG.

Communication with our stakeholders takes on a central role when recording and communicating KHS’ corporate responsibility and its contribution to sustainable development. We identify the demands made of the KHS Group by various parties through a number of different channels. Here, the perspectives held by our employees and their representative bodies, our executive managers, Salzgitter AG, our customers, competitors, the media as stakeholders for the general public and various other interest groups in particular are taken into account. KHS actively uses the demands made by these stakeholder groups to regularly check and adjust its strategy in order that it can continue to be a reliable partner to its customers.