Annual Report 2021

Annual Report 2021


10.3 Economic Performance

Economic performance (GRI 201)

Management approach economic performance

As a key objective of the company, the economic performance of the Geberit Group is under the strategic control of the Board of Directors and the operational management of the Group Executive Board.

How Geberit implements integrated sustainability and thus creates value is shown in a separate graphic. The vision of achieving sustained improvement in the quality of people’s lives with innovative sanitary products represents the starting point. To bring this vision to fruition, Geberit continuously refines its products, systems and services and sets new standards as a market leader in the area of sanitary products. Values such as integrity, team spirit, enthusiasm, modesty and an ability to embrace change are core factors. The long-term core strategy is based on four pillars: Focus on sanitary products, Commitment to design and innovation, Selective geographic expansion and Continuous optimisation of business processes. This strategy is implemented on the basis of six growth and earnings drivers. The sustainability strategy supplements the core strategy and the growth and earnings drivers with twelve concrete modules. These modules strengthen the business model and the added value for various stakeholders in the areas People, Planet and Profit in a targeted manner. The results of Geberit’s activities show the diverse added value in the three dimensions of sustainability. At the same time, the results contribute to the UN Sustainable Development Goals (SDGs) set out in the 2030 Agenda for Sustainable Development (see SDG Reporting). Goal number 6 – “Clean Water and Sanitation” – and goal number 11 – “Sustainable Cities and Communities” – are a key focus for Geberit. However, significant contributions are also made when it comes to “Decent Work and Economic Growth” (goal number 8) and “Industry, Innovation and Infrastructure” (goal number 9).

For detailed explanations of the four strategic pillars and the medium-term goals, see Business Report > Business and financial review > Strategy and goals. For a description of the economic position of the Geberit Group, see Business Report > Business and financial review > Financial Year 2021 > Market environment.

Value added and its distribution (GRI 201-1)

Significant indicators for the creation and distribution of value in accordance with the GRI requirements can be found in the financial report.

Direct Economic Value Added:

Economic Values Passed On:

Retained Economic Values:

Opportunities and risks due to climate change (GRI 201-2)

One of the visible effects of climate change is the limited local availability of water resources in many places. In the risk analyses conducted periodically by the World Economic Forum (WEF) and published in its Global Risk Report 2022, water scarcity (a central topic in the context of scarcity of natural resources) was classified as one of the ten highest risks in terms of impact over the next ten years. This trend has an influence on the development of sanitary technology. Water-saving, resource-efficient products will become increasingly important. Geberit is taking advantage of the opportunity to meet the growing worldwide demand for water-saving products and to contribute towards the diligent handling of water, thus making a name for itself as a leader in sustainability. Products classified as special water-saving products already make a substantial contribution to Group sales.

According to TCFD guidelines, a distinction is made between physical risks and transition risks.

Physical risks include extreme weather events as well as the longer-term, local effects of climate change that can include rising average temperatures, a rise in sea levels, drought, flooding, and landslides. This may result in damage to property and infrastructure or adversely affect logistics operations, or cause disruptions in the supply chain. Rising average temperatures and an increase in the number of hot days lead to increased energy demand for the cooling of machines, processes and workplaces during the summer months, as well as to a reduction in energy demand for heating buildings in the winter. Rising sea levels could lead to a need for protective measures at production sites with direct access to the sea (e.g. Gaeta (IT) and Ekenäs (FI)). Prolonged periods of drought can have a negative impact on the availability and quality of water needed for ceramics production, resulting in added expenditure for water treatment and thus additional costs. Overall, the financial impact of physical risks at Geberit are rated as moderate.

Transition risks arise from new legal, economic and technological trends and framework conditions triggered by climate change. Changes in environmental protection laws and tighter regulations may lead to an increase in CO2 taxes on fuels and combustibles, as well as to stricter requirements concerning energy efficiency and the use of renewable energy sources. This would have a significant impact on energy costs, particularly at the ten ceramics plants in Europe. The trend towards a circular economy is also leading to increasing demands on the reuse and recycling of products and building materials. This could have a significant impact not only on production facilities, but also on the product portfolio. Societal impacts, notably the changing expectations of customers, investors and employees towards sustainable, low-carbon products and services, also give rise to risks. Geberit rates the financial impact of transition risks also as moderate. However, the trends addressed above also harbour opportunities for Geberit to achieve a competitive advantage as a market leader in sustainable sanitary products. Geberit regularly reviews and assesses material physical risks and transition risks and their financial significance for the company.

Overall, Geberit sees far more opportunities in climate change than it does risks. Stricter environmental rules and regulations and greater environmental awareness among customers are creating additional demand for products that conserve water, energy and resources. Stricter regulations and requirements governing water consumption and water quality – which could result from water scarcity due to climate change – may increase demand for Geberit products, as the company offers globally leading system solutions in this area.

As far as corporate risks are concerned, the Audit Committee of the Board of Directors introduced a comprehensive system for the monitoring and management of the risks associated with the company’s business activities, including environmental and climate risks, see Financials > Consolidated financial statements Geberit Group > Notes > Note 4.

Benefit plan obligations (GRI 201-3)

The Geberit Group sponsors defined benefit plans for its employees in Switzerland and the USA, amongst others. For further details on pension and benefit plans, see Financials > Consolidated financial statements Geberit Group > Notes > Note 3 and Financials > Consolidated financial statements Geberit Group > Notes > Note 17.

Financial assistance received from government (GRI 201-4)

Assistance received from the public sector includes:

  • Income taxes, see Financials > Consolidated financial statements Geberit Group > Notes > Note 25.
  • Investment subsidies to promote the respective business location and secure jobs: CHF 0.1 million (previous year CHF 0.3 million)
  • Contributions received to support training and part-time employment prior to retirement: CHF 0.5 million (previous year CHF 0.5 million)
  • Various other subsidies: CHF 0.1 million (previous year CHF 0.1 million)

The public sector is not represented on the Board of Directors of the Geberit Group.

Socioeconomic compliance (GRI 419)

Management approach socioeconomic compliance

The Geberit Code of Conduct describes the basic principles that have to be met in order for Geberit to be an exemplary, reliable and fair business partner and employer. The Geberit Compass, a key compliance element, describes the cornerstones of the corporate culture, namely the joint mission, the shared values, the operational principles and the success factors to be considered by all employees. The Geberit Compass was presented and explained in the Group-wide employee magazine, which is published in six languages.

In order to guarantee compliance with the requirements of the Code of Conduct, Geberit has established an effective compliance system that focuses on the following key topics: antitrust legislation, corruption, data privacy, product liability, fundamental employee rights, and environment, health and safety. In practice, the system comprises various elements such as guidelines, continuous training, job orientation for new employees, eLearning campaigns, info circulars, compliance-related audits, annual reporting on the Code of Conduct and the Geberit Integrity Line – a whistleblower hotline for employees. A separate Integrity Line has been available for suppliers since 2017. In addition, training concepts and tools were developed further and professionalised in the reporting year, a focal point being antitrust legislation and data privacy.

As only very few companies work with agents, there is no significant risk exposure in this area. Nevertheless, a Code of Conduct for business partners was drawn up in 2016 based on the Geberit Code of Conduct and communicated to the agents by the managing directors of the local sales companies.

Corporate Legal Services is responsible for implementing the compliance topics of antitrust legislation, corruption, product liability and data protection, while Corporate Human Resources is responsible for employee rights, and environmental protection falls under the remit of Sustainability and Process Management.

As part of the annual reporting on the Code of Conduct for Employees, compliance with the requirements set out there is subject to controls. All companies receive over 60 questions on the above-mentioned key topics. In addition, on-site audits are performed by the Internal Audit Department and corrective measures taken in the event of misconduct. The audits also comprise special interviews with the managing directors of the individual companies on the topics mentioned in the Code of Conduct. The respective information is verified. The findings from the survey and audits form the basis for the annual Compliance Report submitted to the Board of Directors and the Group Executive Board, and are published in the annual report.

KPMG also carried out a comprehensive external audit of the compliance organisation, focusing on antitrust legislation, corruption, sustainability, employee rights and product liability, with good results achieved overall.

With respect to measures and objectives in the Code of Conduct, see also Sustainability strategy.

Sanctions due to non-compliance (GRI 419-1)

In the reporting year, non-material fines were imposed on one company for a minor infringement of tax regulations.