sustainability_report_environment_teaser

Environment

GRI 103 (incl. 103-1, 103-2, 103-3) Management Approach 2016 (applicable to all environmental topics)

We are meeting our responsibility toward people and the environment by implementing a range of different environmental protection measures. This responsibility is anchored in ZF’s values and protects against entrepreneurial risks – in the areas of compliance, customer relations and reputation – while improving operating efficiency and benefiting the environment.

Conserving natural resources is the fundamental principle of our environmental strategy. A corresponding policy therefore includes essential areas of activity such as climate protection, the environmental impact of production, eco‑friendly product design and environmental performance improvement. It is binding for all locations.

In the course of integrating the Active & Passive Safety Technology Division, the work of the integration team for Environment, Health and Safety (EHS) led to an update of the environmental policy and targets. Our ZF Sustainability Program provides an overview of our environmental protection targets and actions, which is part of this report. Due to changes in the financial accounting system and organizational changes in the divisional set‑up, data for the year 2017 were recalculated to function as the basis for ZF’s new target period 2018 – 2020.

The EHS integration team also revised the EHS management system at large. It is currently being rolled out within the Group and will be implemented after a three‑year period. Therefore, a new Group directive was issued in June 2018 to act as a bridging document between policy and the new EHS Management System in order to strengthen EHS processes throughout the company.

The global ZF environmental organization covers all areas of the company, from each individual division to different regions, right down to the locations. The corporate environmental protection officer is responsible at the Group level and senior environmental protection officers are appointed at the divisional level. On plant level, the EHS officers work on a daily basis towards securing environmental protection. The regional managers provide support for ensuring compliance in their respective regions, the implementation of ZF standards and monitoring of the environmental management system.

Systematic environmental management according to ISO 14001 is the standard for all production and main development locations. In the year under review, the changeover to audits using the ISO 14001:2015 Environmental Management Standard was successfully completed. In the ZF Group, a total of 246 certificates were issued up to 2018. These external expert audits confirm that the participating locations conform to current environmental, occupational health and safety legislation as well as certification standards.

Management reviews are conducted twice a year, in which the Board of Management assesses the target achievement of the sites. The Board also assesses whether the environmental management system is qualified to fulfill current legal customer and management requirements.

Following the “design for environment” principle, our Group Directive for Global Development & Product Evolution Process (GD PEP) puts particular focus on environmentally friendly product design. Relevant aspects must be proven by means of a checklist at various steps in the development process, taking into account environmentally friendly manufacturing and manufacturability, wear, serviceability and repairability, recyclability and environmentally sound materials.

GRI 301

MATERIALS 2016

GRI 103 (incl. 103-1, 103-2, 103-3) Management Approach 2016

As raw materials become increasingly scarce and more expensive, their efficient use is crucial. Likewise, materials must conform to our high expectations regarding quality and safety as well as environmental and social standards. Regarding the Control of Prohibited & Regulated Substances our technical standard ZF 9003 applies in addition to worldwide laws and regulations. See GRI 204 for more details on procurement procedures and the general environmental management approach for details on the “design for environment” principle.

At ZF, product‑related environmental protection begins with material selection. From the very start, during the product development phase, we consider the total life cycle of a product, including factors such as product materials, utilization phase as well as disposability and recyclability, and design our products accordingly. By reducing material variety, ensuring materials are easily separated and using consistent materials, we continually increase the recyclability of our products. We systematically substitute materials containing hazardous substances. All these principles are embedded in guidelines during the development phase.

The ZF Materials Warehouse provides information on almost all existing materials, and, in the future, will also classify them into approved and preferred materials. It will then only be possible to use a non‑approved material after submitting a release application to the Materials Department, which will review the material and check its conformity with set requirements. This procedure optimizes costs, simplifies material selection and guarantees that only materials are used which comply with technical standards and country‑specific laws banning certain materials. Materials in the ZF Materials Warehouse will be regularly screened for hazardous substances. This means materials containing hazardous substances can be substituted at the earliest possible stage of the material selection process, reducing the environmental impact of ZF products even before they are manufactured.



Cradle to cradle

Over the years, we have gained valuable insights into closing the loop. Like nature, the cradle‑to‑cradle concept knows no waste, no renunciation and no restrictions. Biological and technical nutrient cycles provide the right materials at the right time and in the right place.

Ultimately, the result is always better quality. The “from the cradle to the cradle” (C2C) production method directly contrasts with the “from the cradle to the grave” model, in which material flows often ignore resource conservation. From this point of view, the Cradle to Cradle Products Innovation Institute assesses products and processes in the following categories: material health, material reutilization, renewable energy and carbon management, water stewardship, and social fairness.

After certification of the MFZ 430 clutch cover and 8HP torque converter for automatic transmissions the ZF plant in Bielefeld (Germany) achieved gold‑level certification for remanufacturing clutch disks in 2018. This is the second highest certification level and indicates in terms of a recycling economy that 95 percent of the materials are reused. The Bielefeld plant team is now stepping up its ambition with preparations for certification of the clutch control system ConAct. This ZF product is an entirely new challenge because, for the first time, electronic components are included that contain many different materials subject to the test procedure. For its constant commitment to environmental protection, ZF’s team was honored with the Environment and Climate Protection Award from the city of Bielefeld in 2018.

GRI 301-1

Materials used by weight or volume

The commodities steel and aluminum have the largest consumption share in the purchasing portfolio. The ZF Group purchases approximately 285,000 tons of aluminum and 1,960,000 tons of steel (including iron cast) annually.

ZF purchases not only raw materials but also a large number of assembled parts and products that already consist of a mixture of different materials. Therefore, figures on specific materials are not readily available. A standard ZF product, the 8HP70 8‑speed automatic transmission, comprises approximately 58 percent steel and 25 percent aluminum. The rest contains lubricating oil (7%), silicon (3%), rubber and plastics (2.2%) and copper (1.5%) as well as other metals, alloys and solvents in extremely small quantities.

GRI 301-2

Recycled input materials used

ZF frequently uses recycled materials in its production processes. Steel and aluminum constitute the highest weight share of ZF products. This includes steel from scrap steel and aluminum from scrap aluminum. For standard steel, the minimum global recycling rate is 70 percent.

Recycled oils, for example hydraulic oil, are also used in production. Furthermore, ZF channels a high percentage of waste back into the material cycle via external recycling procedures, especially scrap metal and metal chips, waste oil, paper and cardboard, wood and demolition waste. As a result of their material composition, ZF products make a disproportionately high contribution to meeting the recycling quotas as stipulated in the EU End‑of‑Life Vehicle Directive.

GRI 301-3

Reclaimed products and their packaging materials

To comply with respective legislation, ZF is required to take back packaging. In Germany, ZF fulfills this requirement by, for example, participating in external collection systems that involve taking back and recycling packaging through a dual system, or through sector solutions (for automobile repair workshops or for information technology, communications technology and consumer electronics). Through this approach, we have more than exceeded statutory recycling quotas. Detailed data of the total amount of packaging material used within the ZF Group were not available for this report, since respective reporting follows a different cycle.

Concerning products, ZF has been committed for decades to remanufacturing procedures and has therefore established a global reclaiming system. Various parts like torque converters, ConAct and dual‑mass flywheels are being remanufactured for industrial use. More than 90 percent of production energy is saved in the remanufacturing of transmissions and other parts. Also, ZF was able to save over 10,000 tons of materials by remanufacturing more than 25,000 gearboxes for trucks, buses, passenger cars and off‑road vehicles, and our site in Bielefeld (Germany) remanufactured over 340,000 clutch pressure plates and discs and saves an additional 10,000 tons of material each year. Moreover, the locations in Frydlant and Wrexham remanufactured almost 745,000 brake calipers from passenger cars.

GRI 302

ENERGY 2016

GRI 103 (incl. 103-1, 103-2, 103-3) Management Approach 2016

Managing energy is a top priority for an industrial company such as ZF and a core element within the ZF EHS management system. By this means, all locations regularly evaluate their energy profiles and energetic topics. This involves conducting audits, identifying potential for improvement and defining actions and measures for improving energy efficiency and consumption reduction. In addition to ZF EHS management, all German and European locations are audited externally on a regular basis.

As an integral part of the energy management system, locations define specific targets locally on an annual basis to increase energy efficiency and take appropriate action. Our revised target regarding energy is to reduce energy consumption by 10 percent relative to sales by 2020 based on the ZF Group performance of 2017. Achievement of our targets is monitored and controlled through key performance indicators within the environmental and energy management system in conformity with ISO 14001 and ISO 50001.

The ISO 50001 Corporate Energy Management scheme covered 61 locations in 2018 (2017: 47); eight locations gained single‑site certification according to ISO 50001. Further european locations have conducted external audits to fulfill the European Energy Efficiency Directive (EED) following country specific options like EN 16247, ESOS (UK) or similar.

Detailed energy programs help the locations to achieve their targets. The core elements are behavioral changes, energy supply management, energy data management, and organizational and technical energy efficiency programs.

Actions to increase efficiency and reduce energy consumption are planned and implemented at all locations depending on the local consumption footprint and target achievement. These measures, in conjunction with the energy management system, considerably improve energy efficiency worldwide.

GRI 302-1

Energy consumption within the organization

Energy is mainly used for production processes, especially heat treatment, surface treatment and compressed air. Another significant field of energy use is associated with building and infrastructure management, for example heating, lighting, air conditioning and ventilation. Due to the huge variety of production processes used within the ZF Group, the share of energy use differs greatly between locations.

Approximately 65 percent of the energy consumed at ZF comes from purchased electricity. Energy procurement and consumption is therefore a major topic, especially at the ZF production locations. While the major share of energy consumption comes from electricity, natural gas accounts for 29 percent. It is mainly used for heating and production processes and partially in on‑site combined heat and power (CHP) plants. The remaining 6 percent comprise energy from oil, district heating, liquid gas, acetylene and biogas. While the share of renewable energy supply is still low it increased to 8.3 percent of purchased energy in 2018. Approximately 12 percent of the electricity consumption involves CO₂‑reduced emission factors due to special purchasing contracts or on‑site production.

Energy consumption 2016 - 2018 in percent

ENERGY CONSUMPTION 2016 – 2018

in percent of absolute energy consumption 2018 2017 2016
Renewables 8.3 2 -

GRI 302-2

Energy consumption outside of the organization

The vast majority of energy consumption outside the organization comes from the use of our products. See GRI 302-5 for more information.

GRI 302-3

Energy intensity

As in previous years, ZF reduced its energy intensity. ZF brought down energy consumption per € million in sales by 3.7 percent in 2018. This improvement in energy performance was reached by increasing production volume and implementing a vast variety of energy efficiency measures.

GRI 302-4

Reduction of energy consumption

Special programs and actions at site level have brought about a constant improvement in energy efficiency. In 2018, ZF implemented more than 165 projects to reduce energy consumption and increase energy efficiency . These were mainly in the areas of plant engineering, process optimization and building technology.

Within the huge variety of measures taken, 165 projects were reported to save approximately 42 GWh in 2018. This is enough energy to supply more than 10,500 households with 4,000 kWh/a on average.

ZF also fosters behavior that reduces energy consumption by empowering employees to identify and label equipment and lights that can be safely turned off when not needed.

In the reporting year, our Częstochowa location achieved all objectives of its project “The Way to Achieve Green Plants”, taking part in the ZF Excellence Award 2017: Greenhouse gases were reduced by 20 percent through measures in heating and heat recovery; energy efficiency increased by 20 percent due to the use of LED lighting, air conditioning optimization and the use of a central cooling system; and the share of renewable energy increased by 20 percent because of the use of photovoltaic modules.

GRI 302-5

Reductions in energy requirements of products and services

As a technology and cost leader, ZF aims to meet the demands of the mobility megatrends of tomorrow, such as efficiency, integrated safety and automated driving. Following our Vision Zero, ZF products are intended to make a strong contribution to reducing emissions and accidents to zero. Accordingly, the Group has set a clear technology focus with its guiding principle “See – Think – Act”. The company’s product and technology planning follows market and product roadmaps, which are constantly updated.

To achieve current and future climate goals and to eliminate particulates, CO₂ and noise in cities, public transport systems have to be rethought. ZF’s AxTrax AVE electric portal axle makes it easier for bus manufacturers and public transport authorities to switch over to quiet, zero local emission drives. This driven axle can be operated all electric not only by battery or overhead lines, but also in hybrid or fuel cell configurations. The AxTrax AVE electric portal axle was honored with the 2019 EBUS Award in the category “Drives for Battery Buses”, as it stands out due to its powerful, compact design and its flexible energy source configuration options. The award is sponsored by the Forum für Verkehr und Logistik e.V., an association that promotes electromobility of buses in public transport.

ZF’s new eAMT (electrified Automated Manual Transmission) technology is an innovative concept for the hybridization of front‑transverse vehicles that integrates the company’s electric axle drive system (eVD) and an automated manual transmission (AMT) into one system. In addition to the hybrid functions of electric drive and recuperation and boost, eAMT also features electric all‑wheel drive. ZF software regulates the networking and coordination of the internal combustion engine, electric motor and automated transmission.

As a worldwide leader in marine propulsion systems, supplying systems and components for all types of ships, ZF Marine offers a range of “hybrid‑ready” transmissions to address the market needs. Our systems can be integrated into all types of fast craft, from coast guard vessels to fast offshore supply vessels. The resulting environ‑ mental protection extends to fuel savings, lower CO₂ emissions and noise reduction.

GRI 303

WATER 2016

GRI 103 (incl. 103-1, 103-2, 103-3) Management Approach 2016

Water is used at ZF locations for production, e.g. for surface treatment processes, washing, rinsing and cleaning, as a coolant, or for non‑production purposes such as sanitary water, drinking water, in the canteen or during construction projects.

At locations in water‑scarce areas, water consumption in production is a major issue as the use of freshwater could become increasingly restricted in the future. However, the ZF water management objective goes beyond reducing consumption in risk areas: We want to constantly reduce specific water consumption throughout the Group. The target is therefore part of our revised environmental objectives for 2018 – 2020. All sources of water will be considered. Location‑specific projects focus on the reuse of water as well as on conserving water in water‑scarce areas. Progress is monitored and managed in line with our environmental management system at the individual locations and at Group level.

GRI 303-1

Water withdrawal by source

The water supply at ZF locations is adapted to local circumstances and mainly comes from the municipal water supply. At some locations water from rivers or groundwater is used for cooling processes without any chemical change. Over the last year, the absolute consumption increased by 5 percent.

Besides various projects for reducing overall consumption, ZF makes use of available water treatment and reuse technologies to reduce freshwater consumption – as for example the sewage treatment plant in Guadalajara (Mexico), which provides final disinfecting with ozone to ensure that the reprocessed water complies with local quality standards. In future, it will also serve to wash and rinse the chromated parts.

Specific water consumption 2016 – 2018 in cubic meters per € million in sales

GRI 303-2

Water sources significantly affected by withdrawal of water

Currently no figures are available for affected water sources. Some of our production locations, e.g. in Brazil and Mexico, are in so‑called “water‑stressed areas”. Permits for water withdrawal for production are occasionally restricted in these areas. If water scarcity persists, the situation could worsen or spread to other regions. Resource scarcity results in the need for increased investment or expenses to cover the technical modernization of production equipment.

GRI 303-3

Water recycled and reused

ZF makes full use of all technical methods for saving water in production processes, for example cascade rinsing systems for cleaning processes or process water recycling. The significantly increased amount of water recycled or reused (absolute and specific) bears out the positive impact of our efforts. We will initiate further projects in 2019.

Our location at Chennai, India, took part in the ZF Excellence Award 2018 with its “Preservation of Underground Water” project. The aim was to conserve groundwater reserves by reusing water while reducing costs at the same time. Through reverse osmosis the daily water consumption dropped from 37 cubic meters to 20 cubic meters and energy savings of 30 percent were achieved.

Specific water recycled/reused 2016 – 2018 in cubic meters per € million in sales

GRI 305

EMISSIONS 2016

GRI 103 (incl. 103-1, 103-2, 103-3) Management Approach 2016

Our environmental and energy management system manages the reduction of emissions resulting from energy consumption at production facilities. Regarding production, the target is to reduce C0₂ emissions by 10 percent relative to sales by 2020, based on 2017 including direct and indirect emissions caused by ZF operations. Emission profiles of purchased energies are part of the evaluation in the procurement process.

Nevertheless, the majority of emissions in our value chain are generated during the utilization phase of our products. This is why, as part of our emission reduction efforts, we are focusing on developing products that contribute to cutting vehicle emissions. Therefore, the revised environmental objectives from 2018 to 2020 support our Vision Zero: aiming for C0₂ reduction in the development of new products through carbon footprint and lifecycle assessments. For more information see GRI 302‑5.

In 2016 and 2017, the emissions calculation was based on the VDA emission factors from 2015; for the 2018 calculation we used the revised VDA emission factors from 2017. In 2016, ZF joined the CDP reporting scheme in 2016.

Regarding procurement‑related emissions, ZF’s strategy is to buy where the supplied materials or components are needed. It therefore follows the “local for local” principle, which helps to avoid the impacts of transportation. As a consequence, ZF decided to be responsible for all transport carried out from suppliers to ZF plants.

For us, this is the best way to ensure that transportation is organized efficiently and that environmental factors are systematically taken into account. As part of our freight management, we are making a concerted effort to pool transport and increase the full truck load (FTL) quota to avoid unnecessary transport.

A new tender is currently being issued for local freight transport at the Friedrichshafen site. The shift to alternative means of transport aims at the use of low‑emission transport and alternative drive technologies as well as the selection of suitable vehicles for the respective applications (e.g. GAS trucks, and later also hybrid vehicles and e‑vehicles).

In addition, the use of sustainable logistics service providers is to be reinforced. To this end, a concept takes into account the emission evaluation in the award process to external companies as well as the evaluation of sustainability aspects of service providers used.

GRI 305-1

Direct (Scope 1) GHG emissions

Direct emissions include emissions from energy consumed at the sites, including natural gas, and fuels such as diesel, gasoline, biogas, acetylene, liquid gas and others.

Absolute CO₂ emissions fell by about 2.6 percent, although energy consumption rose slightly due to increased production (+1.19%). Direct emissions (Scope 1) remained almost constant (2017 adjusted: 264,461 MWh; 2018: 264,761 MWh). The reduction was mainly achieved by purchasing more electricity from renewable sources, especially in Spain and Brazil but also at locations in Germany or Austria.

Absolute CO₂ emissions¹ 2016 – 2018

in thousand tons 2018 2017² 2017 2016
Scope 1 265 264 253 -
Scope 2 - market‑based 1,290 1,332 1,393 -
Total 1,555 1,596 1,646 1,570
1 Scope 1 + 2 emissions have only been reported since 2017 due to changing calculation methods in recent years.
2 Data for the year 2017 were recalculated for reasons mentioned in the management approach, page 30

GRI 305-2

Energy indirect (Scope 2) GHG emissions

Indirect emissions include emissions from purchased electricity and all kinds of district heat. The Scope 2 value “market based” was calculated using VDA emission factors for sites that use “standard electricity” and specific emission factors for sites that have a “green electricity” contract.

The increase in absolute energy consumption due to expanded production led not to a rise in absolute Scope 2 fossil CO₂ emissions in 2018.

GRI 305-3

Other indirect (Scope 3) GHG emissions

Our approach for Scope 3 emissions focuses on the supplies and suppliers with highest CO₂ emission levels in the life‑cycle perspective. Scope 3 emissions are not yet part of this report, as only partially available data would not adequately represent ZF. See GRI 302‑5 for more information on emissions from products and services.

GRI 305-4

GHG emissions intensity

The GHG emissions intensity results directly from the energy intensity and the footprint of each country where energy is purchased and used. In addition, the production footprint is strongly influenced by customer needs as well as national production and purchasing requirements.

Since 2018, our absorption chiller at Plant 2 in Friedrichshafen has been in full operation. The resulting CO₂ savings amount to approximately 500 t/a through the replacement in the electricity procurement by natural gas and avoidance of electricity procurement for conventional refrigeration.

Although energy consumption rose slightly due to increased production (+1.19%), direct emissions (scope 1) remained almost constant (2017 adjusted: 264,461 MWh; 2018: 264,761 MWh).

Overall, and for the first time, CO₂ emissions were reduced by 2.6 percent despite increasing energy consumption, mainly in the area of indirect emissions (Scope 2). These fell by around 3.1 percent (2017 adjusted: 1,331 thousand tons; 2018: 1,290 thousand tons). The reduction was mainly achieved by purchasing more electricity from renewable sources.

Specific CO₂ emissions¹ 2016 – 2018

in tons per € million in sales 2018 2017² 2017 2016
Scope 1 5.3 5.5 6 -
Scope 2 - market‑based 25.8 27.9 33.7 -
Total 31.0 33.5 39.8 40
1 Scope 1 + 2 emissions have only been reported since 2017 due to changing calculation methods in recent years.
2 Data for the year 2017 were recalculated for reasons mentioned in the management approach, page 30.

GRI 305-5

Reduction of GHG emissions

ZF’s strategy focuses on continuously reducing GHG emissions. The improvements result from numerous initiatives and projects to increase efficiency and raise awareness at a local level. All projects for reducing energy consumption or increasing energy efficiency also led to a reduction in emissions.

Over 165 energy efficiency projects were implemented at ZF locations around the world. These were mainly in the areas of plant engineering, process optimization and building technology. The installation of a photovoltaic field in Bouthéon with 10,300 photovoltaic panels will finally lead to an overall production of 3,000 MWh.

The location Bielefeld (Germany) has been purchasing 100 percent of its electricity from renewables since 2018. A total of 19 locations (in Spain, Austria, Brazil, Belgium and Germany) purchased electricity from renewables or with reduced CO₂ emissions, leading to a total reduction of approximately 90,000 tons of CO₂.

Because these measures and growing purchase of renewable energy, ZF was able to avoid an increase in absolute emissions in 2018. For details on projects see GRI 302‑4.

GRI 305-6

Emissions of ozone-depleting substances (ODS)

ZF locations worldwide manage their ODS emissions at local level in line with our environmental management system and according to local legal requirements. At ZF locations, ODSs are relevant to air conditioning processes and equipment. Therefore, locations engage qualified contractors for the maintenance and service of coolant equipment to ensure appropriate handling.

The most relevant ODSs in operation processes are volatile organic compounds (VOC), mainly used in surface treatment processes. For detailed absolute and specific emissions of solvents (VOCs) see GRI 305‑7.

GRI 305-7

Nitrogen oxides (NOᵪ), sulphur oxides (SOᵪ), and other significant air emissions

A major percentage of ZF’s VOC emissions originate from large painting and degreasing facilities. Wherever possible, we are continuing the transition to water‑based paints and aqueous degreasing procedures so as to reduce VOC emissions from these processes. Wherever water‑based paints cannot be used for reasons of product quality, the captured exhaust flows from these facilities are technically treated to minimize VOC emissions.

Another approach to improving environmental performance is to change air filters from active carbon adsorption to thermal oxidation. This way, solvents can be oxidized effectively and solid particles extracted. Further potential ways to reduce VOCs in paint processes are being evaluated in certain products from the off‑highway segment, bearing in mind the specific high corrosion resistance and resistance to mechanical stress requirements.

Absolute VOC, NOᵪ and SOᵪ emissions 2016 – 2018

in tons 2018¹ 2017² 2017 2016
VOC 1,123 1,014³ 1,014 886
SOᵪ 2,984 4,068¹ 4,350 4,226
NOᵪ 2,224 2,675¹ 2,821 2,755
1 Data for VOC solvents of the Active & Passive Safety Technology Division were not yet available on Group level
2 Figure was updated compared to ZF’s Sustainability Report 2016
3 Without the Active & Passive Safety Technology Division.

Specific VOC, NOᵪ and SOᵪ emissions 2016 – 2018

in kilograms per € million in sales 2018¹ 2017² 2017 2016
VOC 22 21³ 25 34
SOᵪ 60 85¹ 105 107
NOᵪ 44 56¹ 68 70
1 Data for VOC solvents of the Active & Passive Safety Technology Division were not yet available on Group level
2 Figure was updated compared to ZF’s Sustainability Report 2016
3 Without the Active & Passive Safety Technology Division.

GRI 306

EFFLUENTS AND WASTE 2016

GRI 103 (incl. 103-1, 103-2, 103-3) Management Approach 2016

Wastewater at ZF is usually discharged into the public sewer system and treated at local wastewater treatment plants connected to the system. However, our environmental management system aims at continually reducing the volume of wastewater and waste. Direct drainage into surface water only occurs at a few locations lacking public infrastructure. In these cases, water is drained only if approved by the authorities and is treated in conformity with state‑of‑the‑art technology. Threshold values are strictly monitored here. ZF is committed to installing water‑saving equipment that exceeds these statutory requirements. The amount of waste for disposal relative to sales of the current year is to be lower than for the previous year.

ZF is constantly working toward decreasing the volume of waste sent for disposal and hazardous waste by altering processes, optimizing procedures and substituting hazardous substances in operations. In addition, our revised environmental objectives are aiming at minimizing hazardous substances in products by substitution. Another focus lies on minimizing landfilling of hazardous waste.

The relevant processes at ZF with a potential risk for the release of hazardous substances are essentially surface treatment, carbide treatment, magnesium machining and hardening. Preventive technical measures in place at the locations ensure that hazardous substances cannot spill into the ground and endanger the groundwater, even in the event of a potential release resulting from a breakdown. A Group‑wide reporting obligation has been introduced to cover the eventuality of a release.

GRI 306-1

Water discharge by quality and destination

The total and specific volumes of wastewater at ZF locations increased based on the use of raw water. The use of water from municipal supply decreased. The increase of raw water use was due to the hot summer in 2018 (e.g. the higher temperature of water from the Main river, which led to higher water requirements for cooling processes).

Using water treatment technologies, ZF reduces not only fresh‑ water consumption, but also effluents. The production process then uses the recycled water for washing, rinsing and cleaning operations and for the application of cooling lubricants.

Absolute wastewater 2016 – 2018

in million cubic meters 2018 2017¹ 2017² 2016²
Sanitary wastewater 2.266³ 1.483 1.472 1.551
Treated process wastewater 1.252 1.411 0.831 0.870
Untreated process wastewater 6.722 6.104 6.085 5.638
Total 10.241 8.999 8.389 8.059
1 Data for the year 2017 were recalculated for reasons mentioned in the management approach, page 30.
2 Without the Active & Passive Safety Technology Division
3 Due to new environmental reporting requirements for the Active & Passive Safety Technology Division, the combined KPIs for raw water at some locations of ZF in 2017 were not yet consistant

Specific wastewater 2016 – 2018

in cubic meters per € million in sales 2018 2017¹ 2017² 2016²
Sanitary wastewater 45 31 55 60
Treated process wastewater 25 30 31 34
Untreated process wastewater 134 128 229 219
Total 204 189 316 314
1 Data for the year 2017 were recalculated for reasons mentioned in the management approach, page 30.
2 Without the Active & Passive Safety Technology Division

GRI 306-2

Waste by type and disposal method

While the total amount of waste rose by 0.8 percent due to an increase in production, the specific amount of waste decreased by 4 percent in 2018 compared to the previous year.

We initiated several projects worldwide to avoid waste or recycle waste better in the future. For example, our location in Sorocaba, Brazil, increased its recycling volumes to reduce the amount of waste that would otherwise have landed on landfills by 310 tons a year. Necessary transportation by disposal truck was also reduced from 170 to 45 entrances and exits per month by compressing the collected recyclables and thereby reducing their volume.

Absolute waste 2016 – 2018

in tons 2018 2017¹ 2017 2016
Recycled non-hazardous 515,176 508,053 534,807 507,062
Recycled hazardous 38,208 34,856 43,254 41,180
Total recycled 553,384 543,190 578,061 548,243
Disposal non-hazardous 28,710 35,436 33,654 34,075
Disposal hazardous 37,250 35,772 40,373 36,895
Total disposal 65,960 71,208 74,027 70,970
Total 619,344 614,398 652,088 619,213
1 Data for the year 2017 were recalculated for reasons mentioned in the management approach, page 30.

Specific waste 2016 – 2018

in tons per € million in sales 2018 2017¹ 2017 2016
Recycled non-hazardous 10.28 10.65 12.93 12.83
Recycled hazardous 0.76 0.73 1.05 1.04
Total recycled 11.05 11.39 13.97 13.88
Disposal non-hazardous 0.57 0.74 0.81 0.86
Disposal hazardous 0.74 0.75 0.98 0.93
Total disposal 1.32 1.49 1.79 1.80
Total 12.36 12.88 15.76 15.68
1 Data for the year 2017 were recalculated for reasons mentioned in the management approach, page 30.

GRI 306-3

Significant spills

In 2018, no significant spills with impact on the environment were reported.

GRI 306-4

Transport of hazardous waste

ZF does not export hazardous waste from one country to another. Our waste management is organized locally.

306-5

Water bodies affected by water discharges and/or runoff

No bodies of water were significantly affected by wastewater drainage.

GRI 307

ENVIRONMENTAL COMPLIANCE 2016

GRI 103 (incl. 103-1, 103-2, 103-3) Management Approach 2016

We continue to operate responsibly as a business and a manufacturer of ZF products by constantly striving to comply globally with legal requirements and internal standards.

In the context of environmental management, compliance is a core issue. Due to various local requirements, legal developments are pursued and evaluated and – if necessary – measures implemented at all locations and levels of the ZF Group. Processes and events that are relevant to compliance must be reported.

GRI 307-1

Non-compliance with environmental laws and regulations

ZF was involved in over 55 remediation projects, whose causes date back at least a decade. The processing of these projects is carried out jointly with the relevant local authorities. The costs for these projects amounted to €8 million in 2018.

Furthermore, no major violations were reported in 2018.

GRI 308

SUPPLIER ENVIRONMENTAL ASSESSMENT 2016

GRI 103 (incl. 103-1, 103-2, 103-3) Management Approach 2016

When selecting suppliers, ZF carefully reviews their environmental management. Furthermore, product‑related environmental protection elements are addressed in the Supplier Quality Directive (QD 83). The directive also aims at sub‑suppliers and includes aspects as REACH, logistics and packaging specification. See GRI 204 for more details on the management approach for procurement, supplier standards and assessment.

Capacity building

We set up the ZF Supplier Academy to create a strategic cooperation and qualification platform in order to promote and support cooperation with our production material suppliers. ZF suppliers have the opportunity to take part in seminars held in their regions. Participation provides suppliers with an in‑depth insight into ZF requirements, standards, guidelines and procedures so that they can subsequently apply them effectively at their companies. Since the end of 2017, suppliers of the Active & Passive Safety Technology Division have been able to participate in seminars as a result of the integration process.

GRI 308-1

New suppliers that were screened using environmental criteria

During the course of the reporting year, 100 percent of new ZF suppliers underwent self‑assessment according to sustainability criteria defined by ZF. No indications of infringements of our principles of environmental protection, human rights, labor practices, forced labor, child labor or freedom of association were identified. We will continue to apply this procedure consistently in the future.

GRI 308-2

Negative environmental impacts in the supply chain and actions taken

In China, the government took more strict measures in 2018 towards violation of environmental laws and regulations. ZF informed its supply base to comply with EHS regulations and organized appropriate training and self‑assessment for selected suppliers. For suppliers with potential environmental risks, the Purchasing and Supplier Management team is taking preventive action. EHS requirements were implemented in the approval process for new suppliers in China.