March 9, 2016

To our stakeholders:

As a member of the UN Global Compact the company is committed to global sustainable development. Sika does not compromise on integrity and apply high ethical standards to its work. Sika’s “Code of Conduct” defines the standards and rules of behavior for the company and all its employees.

In this annual Communication on Progress, we describe our actions to continually improve the integration of the Global Compact and its principles into our business ans sustainability strategy, in our culture and in daily operations. We also commit to share this information with our stakeholders using our primary channels of communication.

Kind regards,

Jan Jenisch
(CEO)

Human rights reviews and/or impact assessments

Human rights are part of the Code of Conduct and the Policies and Principles of the company. The General Managers are obligated to strictly adhere to legal practices and to supervise the subsidiary accordingly. Also, they are responsible for taking preventative action. Human rights reviews are included in annual compliance confirmation letters signed by the general managers, in the internal audit program and the legal audits which are performed regularly in subsidiaries.

Around 20 internal audits and 10 legal audits are performed annually, corresponding to around 20% of Sika’s subsidiaries.

In 2015, Sika continued the review into all its auditing activities for Quality and EHS to extend quantitative coverage of this indicator. In addition, Sika has gained confidence through the verification by the management teams and the compliance confirmation letters that all companies adhere to the human rights charter as set out in the Code of Conduct.

Screened suppliers

Sika implemented the new Group-wide process in the reporting year that maps out the main sustainability principles (economic, social, environmental) for vendor qualification and evaluation. The multi-stage vendor qualification process has three central elements: It requires all suppliers to sign the Supplier Code of Conduct and to complete a self-assessment questionnaire.

In unclear cases, the purchasing department will follow up with audits before concluding a supply contract. In the year under review, most of the procurement employees in the company have been trained using a systematic supplier audit method. These procedures are designed to ensure compliance with international labor standards and prescribed quality, environment, safety, and health criteria.

Sika has been implementing this new process globally in 2015, collecting evidence and documents on a newly created globally available platform. However, as Sika applies a risk-based approach, companies reporting according to GRI on human rights criteria, signatories of the UN Global Compact, and the OECD Guidelines for multinational companies will not necessarily be screened.

The audit scope regarding Human Rights includes following topics:

How does the organisation effectively:
Assure the protection of human rights?
Assure the elimination of forced and child labor?
Avoid the discrimination in respect of employment and occupation?
Assure a precautionary approach to environmental responsibility and development of sustainable solutions?
Assure the elimination of corruption in all its forms? Is a anti-corruption policy implemented and how is it controlled?

Sika companies and their employees comply with global and local labor and social standards. Furthermore, all employees are
bound by the Sika Code of Conduct, regardless of where they work and in which function. The Sika Code of Conduct is binding
even in cases where local laws are less stringent. In addition, as a signatory of the UN Global Compact, Sika prepares its reporting in accordance with the GRI G4 guidelines. To ensure that the interests of all stakeholders are represented and to reaffirm our commitment, Sika is also a member of the World Council for Sustainable Development.

The Sika Code of Conduct protects and ensures compliance with human rights. The company respects the right to freedom of association. However, it must be noted that Sika also operates in countries where the right to freedom of assembly and collective bargaining are restricted by national legislation.

Sika tolerates neither child labor nor any type of slavery and observes all laws and guidelines in respect of discrimination in
any form. Sika actively promotes a recruitment policy aimed at achieving a diversified workforce. Chapter 9 of Sika’s Code of
Conduct establishes a zero tolerance approach to harassment and discrimination in the workplace.
Every year around 20 internal audits and 10 external audits are conducted, corresponding to some 20% of all Sika national subsidiaries.

Among other things, these audits ensure compliance with the applicable labor and social standards.

The senior management teams at the individual subsidiaries are mandated to enforce compliance with the Code of Conduct and
with all relevant laws and standards.

If Sika employees have doubts or questions about matters relating to the content of the Sika Code of Conduct or the company
values and principles, they are required to contact their line manager, the Group Compliance Officer, Corporate Legal, or
Corporate HR. Sika has also set up a central help desk.

The introduction and compliance by the General Managers and their management teams was reviewed at the end of 2015 for all
Sika companies, and conformity verified in a reporting system. The Code of Conduct states, among other things, that Sika under
no circumstances tolerates any form of corruption or human rights infringements.

Absolutely no leeway is allowed in respect of any breaches of these values. Integrity, ethical, and principled conduct, and adherence to the law are the foundation on which Sika’s impeccable reputation is built. This is what customers and all other
stakeholders – most notably, the Sika staff and shareholders – have rightly come to expect. During 2015, the adoption in
all Sika’s companies of a localized Gift & Entertainment Policy was completed. This policy, which integrates and reinforces the
principles of the Code of Conduct, provides employees with a clear and detailed framework on how to give and accept gifts
and entertainment in their daily business and defines – for each company/country – different levels of authority depending on
the gift value.

Forming the core of Sika’s corporate culture, these values and principles relate to the following aspects: Customer First, Courage for Innovation, Sustainability & Integrity, Empowerment & Respect, and Manage for Results.
These internal standards summarize the key principles of the Sika management style, which is based on mutual trust, personal
responsibility, and full transparency at all levels. Group Management had created the post of Corporate Compliance Officer in 2014.

OCCUPATIONAL HEALTH AND SAFETY

In 2015 Sika had a lost time rate of 9.7 accidents / 1,000 employees (previous year: 10.8).
In the reporting year the company reported 176 accidents (> 1 day of absence from work) compared to 193 in the previous year. Of these, the EMEA region accounted for 114, North America for 12, Latin America for 37, and APAC for 13.

The rate includes temporary labor (1,147) not on Sika’s payroll. Sika excludes construction and project work from the accident reporting.

Sika experienced 17 contractor accidents on its premises (previous year: 21).

As accident data from the subsidiary is processed anonymously, it is not possible to give a breakdown by gender at Group level.
27 legal entities, including their headquarters, are certified according to OHSAS 18001.
In addition 13 operational units (plants, warehouses and technology centers) are certified individually according to OHSAS Certification 18001. The status of the legal entities can be found in Sika’s Annual Report.

TRAINING AND EDUCATION
With more than 17,000 employees globally, Sika regards training and education as an important instrument in retaining and grooming its workforce. The company is proud of a large share of long-time associates and recognizes the need to keep these valued associates up to date regarding their relevant knowledge and abilities.

Sika therefore maintains a broad range of internal and external training programs and its own training academies, e.g. for operations, sales and marketing, and technical faculties. Sika collaborates with universities to gain access to up-to-date knowledge. In 2015 we continued our cooperation with IMD business school where we trained our talents with potential to take over Senior Management positions.

Sika has no explicit Group target with regard to training and education but strives to offer every Sika employee > 10 hours of training per year, and a fully-fledged training seminar for managers.

The total number of training hours reported by the local companies amounted to around 11.9 hours per employee on average (2014: 11.4 hours). As training data from the subsidiaries are processed anonymously, Sika does not provide a breakdown by gender at Group level yet.

DIVERSITY AND EQUAL OPPORTUNITY
The composition of the Board of Directors: Out of 9 members 1 is female (11%). Regarding the age group all members are over 50 years old.

During the year under review, compliance processes were streamlined and Sika strengthened its Compliance
organization by appointing four part-time Regional Compliance Officers (RCO ) who have a functional reporting line to the Group Compliance Officer in compliance-related matters. To preserve Sika’s strong compliance culture and ensure that the Code of Conduct’s principles are understood and adhered to by all employees, Sika has developed an animated e-learning program on the Code of Conduct that is used in addition to regular class training events. This training program and a new web-based reporting platform, the Sika TrustLine, will be available in more than 20 languages throughout the organization as part of an awareness-raising campaign on Compliance. The Sika TrustLine is an externally hosted reporting channel where Sika’s employees may raise legitimate complaints regarding serious misconduct and/or breaches of Sika’s Code of Conduct in a safe and confidential environment, if reporting to other more immediate existing resources, like line management or other specialists,
is not feasible or adequate. As part of the roll-out of the Sika TrustLine, an ad hoc policy (“Sika Trust Policy”) will be made
available to Sika’s employees in order to provide clear rules and appropriate training on rights and obligations with regard to internal misconduct reporting. A defined reporting procedure and an effective organization-wide communication campaign on the
use of the Sika TrustLine will help to preserve and foster Sika’s strong culture of trust, integrity, and transparency.
Sika also assumes responsibilities for the supply chain. In 2015, the Group made the Supplier Code of Conduct that it introduced
in 2013 binding on all new suppliers. It is also phasing it in for existing suppliers. Sika thereby ensures that suppliers are informed of Sika’s ethical, environmental, and social expectations and guidelines and that they carry out their processes in compliance with the Sika sustainability criteria.

Sika had defined a new group-wide process the previous year that maps out the main sustainability principles (economic,
social, and ecological) for supplier qualification and evaluation. The multi-stage supplier evaluation process has three central
elements: It requires all suppliers to sign the Supplier Code of Conduct and to complete a self-report questionnaire. In unclear
cases, the Purchasing department will follow up with sustainability audits before concluding a supply contract. Sika implemented
this new process globally in 2015, initially focusing on high-risk geographic regions and industries.
A platform was created during the year under review for transparently recording and storing documentation generated during
supplier qualification. The system enables buyers to inspect suppliers’ qualifications and improve them in their countries as
necessary.

To preserve Sika’s strong compliance culture and ensure that the Code of Conduct’s principles are understood and adhered
to by all employees, Sika has developed an e-training program on the Code of Conduct that is used in addition to regular class
training events. Both this program and a new web-based reporting platform, the Sika TrustLine, will be available in more
than 20 languages. Sika TrustLine is an externally hosted channel where employees can raise legitimate complaints regarding
serious misconduct or breaches of Sika’s Code of Conduct in a confidential environment if reporting to other more immediate
existing resources, like line management or other specialists, is not feasible or adequate. Together, these initiatives represent
an important improvement of the compliance system as they foster a culture of trust, support transparency, and enhance a
speak-up culture within the Group.

Through its products, systems, and solutions, Sika seeks to generate benefits for stakeholders that far outweigh the negative
consequences of the production process and resource consumption.

The sustainability strategy developed by Sika in 2013, and further implemented and communicated in 2015, has proved its
worth. Group-wide, Sika companies planned and implemented projects in pursuit of the six predefined strategic targets, focusing
on economic performance, sustainable solutions, local communities/ society, energy, waste/water, and safety. To this end,
each of Sika’s subsidiaries has developed a roadmap to define the key aspects of the projects and control their implementation.
These projects and the attained targets are documented in the sustainability report. Sika reports its key sustainability
performance results in line with the G4 Guidelines of the Global Reporting Initiative (GRI G4). In dialog with internal and
external stakeholders, Sika defined the target indicators with the largest potential effect and enshrined these in its global
reporting procedures. These results and findings are presented in the sustainability report (see page 48 ff of the download version of the Annual Report) and in detail on Sika’s website at www.sika.com/gri.

Energy consumption within the organization
Sika used 1’833 terrajoule (TJ) of energy (pervious year: 1’671 TJ), 46.7% directly from non-renewable primary energy conversion and 53.3% from purchased electricity. The fuel types used for direct energy (856 TJ) are light liquid fuels (48%), coal (7%) in China, and natural gas (45%).

Total Energy Consumption. 1 833 TJ
Non-renewable: 856 TJ Light liquid fuels, coal (in China), natural gas
Electricity: 977 TJ From renewable and non-renewable sources, depending on local power generation
Renewable electricity: 1.5% Green electricity (water, wind, solar, etc.)

Energy is a necessary input for conversion processes, e.g. stirring and mixing, melting and cooling, ventilation and pumping, as well as heating and air conditioning of buildings. As mentioned above Sika uses around 47 % of total energy consumption from its own energy conversion, mainly for heating buildings and production equipment, steam generation, drying processes, etc.
Sika’s production itself is less energy-intensive than the supplier industries, specifically the chemical industry. However, Sika believes that energy efficiency and mitigation of emissions is a major driver of its overall efficiency effort. Energy is further a relevant cost factor for Sika.
Therefore, the company has set a target at Group level for energy consumption to achieve efficiency gains of 3% each year in relation to production volumes. Some of our subsidiaries have started energy efficiency programs according to ISO 50001,

Additional information on leased vehicles and travel
In addition, the leased car fleet consumed 302 TJ (295 TJ in 2014) of energy and business travel amounted to 202 TJ (205 TJ in2014). The leased car fleet figure is derived from a sample of 65% of the leasing contracts and the figure for business travel is derived from a sample of 40% of the travel contracts.
Sika uses conversion factors from the UK Department for Environment Food and Rural Affairs: http://www.ukconversionfactorscarbonsmart.co.uk/.

WATER

Total water withdrawal by source
Water is used as cooling water, cleaning water, in products, and for general purposes like sanitary facilities. Sika uses around 2.36 million m3 (previous year: 2.79 million m3) both from public supply (58 %) and groundwater wells (42 %). Cooling water is mainly derived in line with local permits from ground water wells in water-rich areas, like Switzerland, the UK, and Eastern USA. Cooling and process water makes up 52 % of Sika’s water use. The company strives to increase water efficiency and has set a target of 3% for the reduction of water consumption per ton of product sold.
Water sources:
• Surface water: 21 T m3 (previous year: 37 t m3)
• Ground water: 968 T m3 (previous year: 1328 t m3)
• Public supply: 1373 T m3 (previous year: 1427 t m3)
• Rain water: A few factories have started to use rain water. There are no detailed data available.
• Waste water: No waste water is used

Sika uses water for the following purposes:
• Process and Cooling water: 1.24 million m3 (previous year: 1.75 million m3)
• Sanitary water: 0.42 million m3 (previous year: 0.34 million m3)
• Water in products: 0.71 million m3 (previous year: 0.69 million m3)
 

EMISSIONS

Direct greenhouse gas (GHG) emissions (Scope 1)
Direct energy conversion results in local greenhouse gas emissions (CO2). Sika uses various fuels for its own energy conversion, incl. coal in China. Around 47% of the energy is converted in Sika sites amounting to CO2 emissions of around 53’000 tons (previous year: 47,000 tons).

Indirect greenhouse gas (GHG) emissions (Scope 2)
Indirect energy conversion results in greenhouse gas emissions (CO2) depending on the primary energy used in the country’s electric power generation mix. Therefore, a shift from the company's own power generation to purchasing electrical power may positively or negatively impact Sika’s total carbon footprint.
To obtain an informed estimate we use the Greenhouse Gas Protocol calculator to quantify the scope 2 emissions. However, in some cases, e.g. Germany, we have contractual agreements with power suppliers to procure “green” power, e.g. from hydro-electrical conversion, which has a much lower carbon footprint than the average footprint in the country. In these cases Sika deducts the renewable amount from the total consumption in the country, before converting into CO2. For the year under review, calculated CO2 emissions from third party power supply amounted to around 107,000 tons for the Group (previous year: 102,000 tons).

The company also evaluates the carbon emissions from travel and leased vehicles. Extrapolations of available data show a footprint of 21,000 tons for the leasing fleet and 13,800 tons for business travel for the entire Group in 2015 (previous year: 20,500 and 14,000 tons). Both figures are derived from a sample of 65% of the Sika leasing and 40% of the Sika travel contracts.
The company uses conversion factors as published by the IEA, International Energy Association

EFFLUENTS AND WASTE
Total water discharge by quality and destination
Sika discharges around 1.6 million m3 of water (previous year: 1.7 million m3), in conformity with local legislation and permits. In most Sika factories, process water is collected in tanks, or cleaned in treatment facilities and tested before discharge as per local permits; it is then discharged into either the sewage system or directly into a surface water body.
The local companies hold permits for water discharge parameters, like quantity and chemical limit values, which the companies are bound to. However, due to the very diverse nature of requirements, the Sika Group does not report on discharge water quality.
Discharge destination
• Water to sewer, sewage plant: 0.54 million m3 (previous year: 0.48 million m3)
• Water to surface water bodies: 1.0million m3 (previous year: 1.22 million m3)

Total weight of waste by type and disposal method
Waste consists of the unavoidable losses of input material, occurring in cleaning, trials, color changes, repair and maintenance, and other non-continuous operations. Other waste sources are packaging materials, cleaning materials, maintenance goods like oils and other utilities.
In total, Sika generated around 70,000 tons of waste (previous year: 62,000 tons), which accounts for around 1.7% of total ton sold (revised value previous year: 1.6%).
Three quarters of the waste is non-hazardous. The category of reuse describes waste which finds a secondary use at lower value. Sika manages the disposal of waste through management systems according to ISO 14001, which regulate the flow of materials and local documentation locally and are in place at all production sites.

Total weight:
• Non-hazardous: 50,000 tons (previous year: 47,000 tons)
• Hazardous: 20,000 tons (previous year: 15,000 tons)

Disposal method:
• Landfill: 21,000 tons (previous year: 18,000 tons)
• Incineration: 22,000 tons (previous year: 20,000 tons)
• Reuse: 27,000 tons (previous year: 24,000 tons)

The company strives to increase material efficiency and has set a target of 3% reduction of waste per ton of product sold.

Sika is committed to taking back products for recycling and strives to increase the durability of products. For example, the company has established a recycling regime for used roofing membranes in the USA, and the recycled material is used in the manufacture of new membranes. Within their ISO 14001 management systems the local companies are bound to find a compliant, cost-effective and efficient method of disposal and to keep the necessary documentation for the transfer of waste to the disposal endpoint.

ENERGY AND EMISSIONS

WHY ARE ENERGY AND EMISSIONS MATERIAL ASPECTS FOR SIKA?
Sika’s energy consumption is to a large extent based on non-renewable sources of energy, exposing Sika to price volatilities, supply and production uncertainties and increasing regulatory interventions related to climate change.
Although Sika’s production itself is less energy-intensive than the supplier industry, specifically the chemical industry, Sika sees it as its responsibility to minimize its impact with regard to climate change by reducing its energy consumption. Sika believes that energy efficiency and mitigation of emissions is a major driver of its overall efficiency effort and additionally contributes to cost reductions.
Apart from its own operations Sika also contributes to the reduction of energy consumption through its products and systems, by providing sustainable solutions for the construction and transportation industries, i.e. to improve the energy efficiency of buildings and to build lighter cars. Energy is a relevant factor throughout the value chains of both industries. Especially in the cement industry energy consumption and secondary fuels play a large role in production processes.
Sika products can contribute considerably to savings in cement production. Energy for conversion processes is also a very important input parameter as a supplier of raw materials in the chemical industry. Sika’s sustainable solutions contribute to the reduction of energy use in these sectors. (see part “Specific Actions”)

HOW DOES SIKA MANAGE ENERGY AND EMISSIONS?
On the one hand, Sika’s management approach is aiming at reducing energy consumption and resulting CO2 emissions from Sika’s own operations. On the other hand, Sika is constantly improving its products and systems to reduce energy consumption and resulting CO2 emissions in the application and use phase and production processes of its customers.

COMMITMENT
Sika manages limited resources and reduces energy consumption. The company is committed to increasing the energy efficiency of its own operations and contributing to the reduction of energy use in its customers' production processes as well as to energy savings during the installation and use phase of its products and systems.

GOALS AND TARGETS
Sika’s 5-year target plan for 2014-2018 includes the following target for energy consumption:
- Minus 3% rate, per ton

RESPONSIBILITIES
Energy efficiency of Sika’s operations is the responsibility of the regional management reporting to the CEO. At local level operations are responsible for helping to reach Sika’s targets with regard to energy efficiency and for setting and achieving local targets accordingly.

SPECIFIC ACTIONS
- Life Cycle Assessment (LCA): Sika sets out to undertake objective, transparent and comparative assessments of the sustainability of its products – not only in manufacturing, but throughout their life cycle in accordance with internationally recognized standards. These analyses may pinpoint necessary improvements for existing products. They may also deliver important insights into resource management (raw materials, energy, water and waste), production processes or application efficiency and thereby promote innovation and optimize the development of new products and systems.
- Energy management system according to ISO 50001: As a start, some Sika entities are in the process of building energy management systems according to ISO 50001, which allow for continuous improvements in energy efficiency. Sika Germany, which accounts for around 6 % of personnel headcount is certified to ISO 50001.
- Sustainable solutions: Sika seeks to enhance the outstanding and widely appreciated usefulness of its products by optimizing their sustainability profile, and thus to create added value for its customers.

Sika solutions for energy efficiency and climate protection include
Extensive project case studies from around the globe detailing how Sika succeeded in energy efficiency and climate protection can be found at www.sika.com/sustainability

EVALUATION OF MANAGEMENT APPROACH
Sika evaluates its management approach through:
- Monitoring: Sika measures its energy use on a regular basis. Energy use is reported quarterly to the internal Environment, Health & Safety department where results are followed up and management approaches adapted accordingly.
- Evaluation of results from LCA: Sika carries out life-cycle assessments (LCA) during the product development process. These serve to quantify energy demand, resource efficiency, greenhouse gas emissions or water demand during each phase of a product’s life cycle and measure the associated possible impacts on the environment.
- Evaluation of Results from energy management system ISO 50001: The entities participate in the energy management systems according to ISO 50001, allowing for continuous improvement in efficiency by evaluating and acting upon the outcome from the certifications. Sika reviews all audit results to improve the management approach and integrates improvements.
- Benchmarking: Sika started to compare the energy consumption per product unit internally through factory reporting and to benchmark with other similar companies.
- Internal reports: The company developed a report for the production facilities on energy efficiency and consumption in 2014 and continued this in 2015.

Furthermore, Sika evaluates its management approach by target setting, achieving or missing the targets and measuring the effectiveness of the approach. The management approach has been reviewed and has been proven to be effective.

RESULTS OF EVALUATION
- EN3 - Energy consumption within the organization:
- EN15 - Direct greenhouse gas (GHG) emissions (Scope 1)
- EN16 - Energy indirect greenhouse gas (GHG) emissions (Scope 2)

By reducing relative energy consumption per production unit (ton) over the past three years, Sika has also slightly reduced the carbon footprint of Sika’s operations. However, the footprint strongly depends on the energy mix the local company is forced to choose, given the local supply options. Electricity usually increases the overall footprint due to conversion and grid losses.
Sika uses the official conversion factors according to the Carbon Disclosure Project, which are national mean values. In some cases, e.g. in Germany, Sika sources electricity based on hydropower contracts, and this results in a much lower carbon footprint compared to national mean values. The renewable portions are deducted before calculating the scope of the CO2 footprint from purchased electricity.

WATER

WHY IS WATER A MATERIAL ASPECT FOR SIKA?
Water is a crucial input factor for Sika’s production, and water quality and scarcity are important issues for Sika in water-stressed regions and geographies. This is in particular the case for production facilities in certain areas of the Middle East, Latin America, South East Asia and Australia.
Increasing water scarcity in many regions of this world is a potential threat to business growth and expansion. Especially in regions where freshwater is scarce, businesses may be exposed to water shortages, decline in water quality, water price volatility and reputational issues.
The impact of Sika’s operations on water is mainly due to the use of water in its production processes and buildings. Water is used for cooling, process water, sanitary water, and product water.
A key attribute of many products of Sika’s is water proofing. Through the application of its products, therefore, Sika has an impact on reducing water loss and increasing water quality, for example in drinking water reservoirs. Additionally, Sika offers its customers solutions which reduce the water input in cement production by up to 15%, applying standard production procedures.

HOW DOES SIKA MANAGE WATER?
Sika’s management approach is aiming at reducing water consumption in its own operations and at constantly improving its products to increase their contribution to save water.
The management approach for water within Sika includes the following components:

COMMITMENTS
Sika is committed to reducing the amount of water used by its own operations and to contributing through its products to the reduction of water use and the increase of water quality.

GOALS AND TARGETS
Sika’s 5-year target plan for 2014-2018 includes the following target for water:
- Minus 3% rate, per ton and year

RESPONSIBILITIES
Water efficiency in Sika’s operations is the responsibility of the regional management reporting to the CEO. At the local level, the operations manager is responsible helping reach Sika’s targets with regard to the reduction of water use and for setting and achieving local targets accordingly.

SPECIFIC ACTIONS
Life Cycle Assessment (LCA): Sika sets out to undertake objective, transparent and comparative assessments of the sustainability of its products – not only in manufacturing, but throughout their life cycle in accordance with internationally recognized standards. These analyses may pinpoint necessary improvements for existing products. They may also deliver important insights into resource management (raw materials, energy, water and waste), production processes or application efficiency and thereby promote innovation and optimize the development of new products and systems.

Environmental management system ISO 14001: Sika production facilities are certified to ISO 14001, which allows for continuous improvement in efficiency.

Sustainable solutions: Sika seeks to enhance the outstanding and widely appreciated usefulness of its products by optimizing their sustainability profile, and thus to create added value for its customers.

Sika solutions for water efficiency and adequate clean water supply: Extensive project case studies from around the globe detailing how Sika succeeded in water efficiency can be found at www.sika.com/sustainability

EVALUATION OF MANAGEMENT APPROACH
Sika evaluates its management approach through
- Monitoring: Sika measures its water use on a regular basis. Water use is reported quarterly to the internal Environment, Health & Safety department where results are followed up and management approaches adapted accordingly.
- Evaluation of results from LCA: Sika carries out life-cycle assessments (LCA) during the product development process. These serve to quantify energy demand, resource efficiency, greenhouse gas emissions or water demand during each phase of a product’s life cycle and measure the associated possible impacts on the environment.
- Evaluation of results from environmental management system ISO 14001: Sika production facilities are certified to ISO 14001 and perform impact assessments, target setting and management reviews of the effectiveness of the management system with regard to water use.
- Benchmarking: Sika started to compare the water consumption per product unit internally through factory reporting and to benchmark with other similar companies.
- Internal reports: The company developed a report for the production facilities on water efficiency and consumption in 2014 and continued this in 2015.

Furthermore, Sika evaluates its management approach by target setting, achieving or missing the targets and measuring the effectiveness of the approach. The management approach has been reviewed and has been proven to be effective.

EFFLUENTS AND WASTE

WHY ARE EFFLUENTS AND WASTE MATERIAL ASPECTS FOR SIKA?
Since Sika is a chemical company, stakeholders and in particular communities bordering Sika’s production sites have a great interest in how Sika manages waste and water discharge resulting from its production as they may be directly impacted through water pollution and the improper disposal of waste.
The waste resulting from Sika’s production amounted to 62,000 tons in 2014, which represents around 2% of tons sold. The efficient use of input materials for production and the recycling of materials, resulting in a reduction of waste, is one of the key priorities for Sika. Water discharge is strongly regulated by local authorities at the Sika locations, and Sika adheres to the standards set.
As a supplier of products to the construction and transportation industry, Sika also has an impact on the waste production of its customers, through packaging material and in the after-use phase of its products. Sika sees it as its responsibility to contribute to reducing the waste of its customers through better product durability and optimization of packaging material.

HOW DOES SIKA MANAGE EFFLUENTS AND WASTE?
Through its management approach, Sika seeks to reduce waste resulting from its production as well as its products and packaging. With regard to water discharge, Sika complies with national requirements. Sika manages the disposal of waste through management systems according to ISO 14001, which are in place at all production sites.

COMMITMENTS
Sika strives to increase input materials efficiency in its production processes. High efficiency production in this context means reducing and reusing production scrap, reducing and reusing packaging material and improving the packaging design, resulting in less material use and focusing on sustainable input materials.
Sika strives to reduce effluents by controlling and reducing water inputs. Locally, effluents are managed according to their constituents and parameters as permitted by the local authorities. For waste Sika is committed to taking back products for recycling where possible and to increasing the durability of its products.

GOALS AND TARGETS
Sika’s 5-year target plan for 2014-2018 includes the following target for waste:
- Minus 3% rate, per ton and year

RESPONSIBILITIES
Effluents / waste efficiency of Sika’s operations are the responsibility of the regional management reporting to the CEO. At local level, the operations manager is responsible for helping reach Sika’s targets with regard to waste reduction, for setting and achieving local targets accordingly and for the compliance with local requirements for effluents.

SPECIFIC ACTIONS
- Life Cycle Assessment (LCA): Sika sets out to undertake objective, transparent and comparative assessments of the sustainability of its products and systems – not only in manufacture, but throughout their life cycle in accordance with internationally recognized standards. These analyses may pinpoint necessary improvements for existing products. They may also deliver important insights into resource management (raw materials, energy, water and waste) production processes or application efficiency and thereby promote innovation and optimize the development of new products and systems.
- Environmental management system ISO 14001: Sika production facilities are certified to ISO 14001, which allows for continuous improvement in efficiency.
- Sustainable solutions: Sika seeks to enhance the outstanding and widely appreciated usefulness of its products by optimizing their sustainability profile, and thus to create added value for its customers.

Sika solutions for resource efficiency include
Extensive project case studies from around the globe detailing how Sika succeeded in resource efficiency can be found at www.sika.com/sustainability

EVALUATION OF MANAGEMENT APPROACH
Sika evaluates its management approach through:
- Monitoring: Sika measures its effluents and waste on a regular basis. Water use is reported quarterly to the internal Environment, Health & Safety department where results are followed up and management approaches adapted accordingly.
- Evaluation of results from LCA: Sika carries out life-cycle assessments (LCA) during the product development process. These serve to quantify energy demand, resource efficiency, greenhouse gas emissions or water demand during each phase of a product’s life cycle and measure the associated possible impacts on the environment.
- Evaluation of results from environmental management system ISO 14001: Sika production facilities are certified to ISO 14001 and perform impact assessments, target setting and management reviews of the effectiveness of the management system with regard to effluents and waste.
- Benchmarking: Sika started to compare the waste generation per product unit internally through factory reporting and to benchmark with other similar companies.
- Internal reports: The company developed a report for the production facilities on material efficiency and consumption in 2014 and continued this in 2015.

The conclusion of the evaluation showed that even if it was a key priority Sika did not achieve the intended reduction in waste and material efficiency. Programs to reduce waste typically involve process changes which cannot be implemented in a short period. Sika will enhance the efforts in the coming year to achieve the 5 year strategic target.

Why is anti corruption a material aspect for Sika?

Corruption is a phenomenon with worldwide presence causing economic damage and contributing to an unfavorable business environment by distorting market mechanisms and increasing the cost of doing business. The World Bank estimated that 0.5% of GDP is lost through corruption each year, impeding in particular the economic development of developing countries.

The broad presence of corruption has led to an increase in regulation such as the introduction of the UK Bribery Act in 2013.

As Sika operates in many countries with high levels of corruption and is active in the construction industry, known for its exposure to corruption, the subject is of considerable importance to Sika.

For the same reasons corruption is also an important issue in Sika’s supplier relationships.

How does Sika manage corruption?

Sika’s management approach for anti-corruption is intended to avoid negative impacts.

In order to avoid corruption, Sika’s Code of Conduct states:

No Bribery, no Corruption
Avoid any form of either active or passive bribery or corruption.
Do not offer or accept any favor of any kind (cash, trip, gifts, etc.) for any improper advantage (offer, permit, order, project award, etc.).

Bribery and corruption can take many forms. It may be cash, but also any other favor (trips, excessive gifts of any kind). It is always intended to influence the receiving person’s decision to obtain an improper advantage for the person or entity offering the favor. It does not matter whether you offer or receive such a favor.

It does not matter who the counter party is (government, company or private person). Except for ordinary gifts and entertainment which do not aim at an improper advantage (see section 3) it does not matter how big or small the favor or the advantage is. It still is bribery or corruption which is strictly forbidden.

Gifts, Entertainment and Donations
Only give or accept gifts and entertainment which are lawful, reasonable and in compliance with the local Sika company’s written rules.

Sponsoring and charitable contributions are permitted in compliance with the local Sika company’s written rules.
Sika does not contribute to any political party or for a political cause unless approved by Group Management.

In almost all countries and markets reasonable gifts and entertainment (meals, sporting or cultural events, etc.) are an inherent part of business. They become bribery and corruption when they are intended to influence the receiving person’s decision. Trips or multiple day events as well as gifts and entertainment for public officials are especially critical.

All companies must implement written rules based on the corporate model rules to further specify which gifts and entertainment as well as which sponsoring and charitable contributions are permissible in the framework of this Code of Conduct. The rules must also provide for authority levels depending on the amount involved. Contributions to political parties or a political cause are subject to the approval of Group Management.

In 2015, the adoption in all Sika’s companies of a localized Gift & Entertainment Policy has been completed. This policy, which integrates and reinforces the Code of Conduct principles, provides employees with a clear and detailed framework on how to give and accept gifts and entertainment in their daily business and defines - for each company/country - different levels of authority depending on the gift value.

The management approach for anti-corruption within Sika includes the following components:

Commitment: Sika has a zero-tolerance approach concerning bribery and corruption within its own operations and with its suppliers.

Policies: Code of Conduct (PDF), Supplier Code of Conduct, localized Gift & Entertaiinement Policies

Goals and targets: Sika does not tolerate any incidents of corruption.

Responsibilities: The General Manager of the country organization is responsible for compliance with Sika’s Code of Conduct, the local Gift & Entertainment Policy, the Supplier Code of Conduct and setting of local rules and training.

Specific actions

Audits: The compliance with Sika’s Code of Conduct is monitored through regular Group audits and legal supervision of the local companies and General Managers.

Supplier Management: Sika’s Supplier Code of Conduct requests its suppliers to respect Sika’s zero-tolerance policy concerning bribery and corruption and avoid any active or passive corruption. They demonstrate integrity in all their business activities. Suppliers are required to have systems in place to ensure the proper instruction, training and auditing of its personnel and sub-contractors to ensure compliance with these principles. To the extent Sika is directly concerned, suppliers are obliged to immediately inform Sika of any violations of this code of conduct detected.

Training: Anti-corruption is part of the Code of Conduct training for all employees and General Manager briefings. Employees are regularly reminded, at least once a year, about these rules. General Managers of all Sika companies confirm for each fiscal year compliance of his/her company with these rules and have the duty to report about corruption cases to the Group Compliance Officer. Corporate functions regularly conduct training sessions and audits.

To preserve Sika’s strong compliance culture and ensure that the Code of Conduct’s principles are understood and adhered to by all employees, besides regular class training events, Sika has developed an animated e-learning program on the Code of Conduct. This training program will be available in more than 20 languages throughout the organization as part of an Awareness Raising Campaign on Compliance.

New Internal Reporting Tool: To preserve and foster Sika’s strong culture of trust, integrity and transparency, Sika has enacted a new web-based reporting platform, the SikaTrust Line (available in more than 20 languages). It is rolled-out throughout the organization as part of an Awareness Raising Campaign on Compliance. The SikaTrust Line is an externally hosted reporting channel where Sika’s employees may raise legitimate complaints regarding serious misconduct, such as corruption incidents, and/or breaches of Sika’s Code of Conduct, in a safe and confidential environment, whenever reporting to other most immediate existing resources, like line management or other specialists, is not feasible or adequate. As part of the roll-out of the SikaTrust Line, an ad hoc policy (“Sika Trust Policy”) will be made available to Sika’s employees in order provide clear rules and appropriate training on rights and obligations with regard to internal misconduct reporting. A defined procedure on reporting and an aligned communication campaign throughout the organization about the use of the SikaTrust Line supports a speak-up culture and deter misconduct.

Support of Transparency International: In order to support the international fight against corruption, Sika financially supports Transparency International

Sika evaluates its management approach through:

Monitoring: Sika investigates reported cases of corruption and any planned corrective actions to be taken on a regular basis. Confirmed incidents of corruption and actions taken are followed up by the Compliance function and reported annually to the Audit Committee of the Board of Directors. Cases are followed up, and management approaches adapted accordingly.

Evaluation of results from audits: Audit results are implemented within the management system.
Investigations: Through the audits carried out by Internal Audit on a regular basis, or if suspicion of corruption or fraud prevails, the relevant financial transactions are audited. All reports of potential corruption cases within SIKA are investigated and properly followed up according to applicable laws. A standard incident reporting and response process has been developed to provide guidance to Sika’s management on the procedures that must be followed when a criminal act or a material misconduct is suspected or detected. All high sensitive non-compliance incidents and criminal acts, such as corruption cases, have to be reported and escalated to the Group Compliance Officer irrespective of the source. All corruption reports generated via Sika Trust Line will be received automatically by the Group Compliance Officer who shall conduct and/or supervise the investigation process.

Overview of compliance cases: Sika’s Group Compliance Officer prepares reports to the Audit Committee of the Board about any cases detected and the consequences.

General Managers’ briefings: On a regular basis annually, the General Managers are instructed and briefed about anti-corruption requirements in the companies. The last briefing was conducted during the Senior Management Meeting in 2014 in the term of a workshop discussion.

Sika evaluates its management approach by target setting, achieving or missing the targets and monitoring the effectiveness of the approach. The management approach has been reviewed and has been adapted accordingly.