Sustainability Report

Environmental Protection Policy and Safety

Environmental protection and safety are self-evident in all Swatch Group’s areas and they outline a priority tenet, which is respected, promoted, and implemented daily by every employee of the company. Our motto is “actions, not words” – or exhaustive reports. In this way, we must all share in taking care of our environment as well as paying utmost attention to safety in general. These guiding principles are a part of the ESG (Environment, Social, Governance) values on which we all place the greatest importance, as stated in a number of places in the latest Annual Report.

We are all very conscious of our responsibility to protect life, to promote the quality of life, to guarantee safety and to preserve health, as well as to respect our environment, and we do our very best to meet our responsibilities with regard to our immediate surroundings, within the scope of our direct or indirect influence.

In principle, resources are used efficiently and sparingly, to ensure that products are manufactured and sold in a sustainable and environmentally friendly manner. Starting with the planning and development phase of every new product, recyclable materials and auxiliary products as well as environmentally friendly production methods are taken into account.

Moreover, measures to reduce energy and resource consumption are implemented, whether through manufacturing facilities with intelligent energy control systems or through energy-efficient and heat-insulated infrastructures. To achieve the best possible ecological and energy balance, ultra-modern technologies and building materials are used for new industrial facilities and renovations; this practice also led to a further positive contribution in the year under review. Every year, all values relevant to operational ecology are consolidated into a comprehensive data collection. This data is evaluated and serves as a measurement of results achieved and also as a basis for further goal setting.

Swatch buildings - solar panels

Environment, safety and health – relevant measures

The safety and health of our employees as well as our customers worldwide receive our fullest attention. Our guidelines for sourcing, production, distribution and also for use of our products comply not only with the strictest international laws and directives but also with our own very high standards, which we also constantly upgrade and improve. In this respect, we have also never stopped learning, and this leads the company to engage in continuous innovation and new investments. Environmental, ethical and social criteria are also an integral part of our sourcing policy. Responsible purchasing of industry-specific raw materials such as precious metals, diamonds, and exotic leather is of the utmost importance. Furthermore, Swatch Group decided to voluntarily eliminate the use of endangered tree species, and to use only wood originating from sustainable cultivation. This allows Swatch Group companies to make an additional important contribution to the improvement of the ecological balance. Gold sourcing is exclusively confined to “traceable gold” from conflict-free, non-critical regions such as the United States, Canada and Australia. By the same token, we ensure that diamonds used in our products originate solely from suppliers who fully respect and apply the Kimberley Process certification system.

In relation to clearly sustainable production methods and products, Swatch Group complies with the existing directives, particularly the EU directives such as the restriction of hazardous substances (RoHS), the registration, evaluation, authorization, and restriction of hazardous chemicals (REACH), and the disposal of old electrical and electronic equipment (WEEE). Additional information in the area of energy and ecology is available from the Belenos Clean Power report on page 116, and in the area of environmental protection and safety, from the Swatch Group Quality Management statement on pages 112 and 113 of the Annual Report 2018.

Risk management

The Corporate Risk Management System is an integral part of the environmental protection and safety policy. In this system, crucial risks are regularly identified, analyzed and recorded, in order for us to recognize risks to environmental protection, safety, and health at an early stage, and to plan and implement adequate measures to prevent any incidents. A significant component is Business Continuity Management. Experts determine which operating entities and their networks are important for the Group, identify the main risks (for example, fire, water, chemical substances, interruption of operations), and define measures to ensure the greatest possible Business Continuity. Prevention and emergency procedures are the focal point. A significant element of Swatch Group risk management is its policy of independence. Consequently, the company is reducing any dependence on single suppliers, distribution partners, and financial service providers. Also taken into account are sufficient inventory, expansion and modernization of production capacities, considering second sources, strategically important acquisitions, and a high level of equity.

Sustainability Report

Environmentally relevant key figures

Swatch Group has various industrial and production facilities, which are all highly specialized and therefore all have their own specific profiles in terms of safety, health and environmental protection. The development of every single company is carefully guided, so that additional optimizing measures can be defined and implemented. The most important benchmarks are those in the area of environmental relevance with impact on energy consumption, in particular, power and heat consumption and their associated CO2 emissions, and the key performance indicators for water consumption, waste management, battery recycling and VOC (Volatile Organic Components) emissions. These benchmarks are implemented for all Swatch Group entities and serve as the basis for the following development.

CO2 emissions from energy consumption

As early as 2001, Swatch Group began to set clear climate and efficiency goals and to contribute to climate protection. Hence, each individual entity was assimilated into the program, and measures to reduce energy  consumption were defined. In order to contribute even more to climate protection and further reduce energy consumption, it was decided in early 2013 to include all Swiss production entities in a CO2 exemption program. In the process, the voluntary economic and ecological measures toward reduction of energy consumption and its associated CO2 emissions are set by the Swiss Federal Office for the Environment (BAFU) and fixed goals are contractually documented. 

The goal of this agreement is to further reduce energy consumption within the timeframe of 2013 to 2020, particularly by further reducing CO2 by 27% and at the same time increasing energy efficiency 8% by 2020. In association with the Swiss Business Energy Agency (EnAW), energy audits have been carried out by specialists in all locations since 2013 and additional opportunities to reduce CO2 emissions were compiled. A corresponding optimized action plan to achieve the goal was developed. Since then, the defined measures have been consistently implemented and have resulted in significant CO2 reduction and tax exemptions for production sites. The action plan is regularly reviewed and updated, so that a significant contribution to climate protection can also continue to be made. Annual target achievement is guided and audited by the Swiss Federal Office for the Environment (BAFU) and the Swiss Federal Office for Energy (BFE). Detailed audits at the individual sites as well as data compilation by the specialists are very time-consuming, reason why the figures from the audits for the year under review are only available by the middle of the following year. As soon as the audits are completed, EnAW annually issues a specific certificate reflecting the extent to which the objectives have been met.

As early as 1990, Swatch Group supported reduction of CO2 emissions and lowering of energy consumption through its sponsorship of the solar mobile Spirit of Biel. At that time, the solar mobile won the World Solar Challenge in Australia. The first solar-powered Swatch (1995), which has lost none of its appeal and can still be purchased today, stems from this period. With this, our early commitment to climate protection remains ever-present and motivates us to continue our contribution to climate protection.

The following diagrams show CO2 emissions from the start of the new program in 2013, as well as the targets to reduce them 27% by 2020. Since the start of this new program, CO2 emissions were reduced by a total of 1743 tons, as shown in the following diagram 1.

 

Energy efficiency should be increased by a total of 8% up to and including 2020, which leads to a linear target line as shown in the diagram 2. In the first five years after implementation of the new program, the diagram demonstrates that the increase in energy efficiency has exceeded the set target. The consumption of electricity increased by 10.7% in 2018 due to higher production volumes. CO2 emissions increased temporarily as new company buildings have not been taken into regular operation. Therefore, the substitution of fossil fuels will take place only when in regular operation. This means the target values were exceeded (diagram 1).

Of course, foreign distribution subsidiaries, particularly due to the many retail stores, also have the goal of improving their energy balances, even though energy consumption is benchmarked much lower to the production entities located in Switzerland.

diagrams show CO2 emissions

Heat consumption by effective area (kWh / m2 per year)

Energy consumption from fossil energy such as heating oil, natural gas and district heating in kWh per m2 effective area and year, decreased by 0.1% in the year under review, despite a stronger winter climate than in the previous year. A higher energy consumption was avoided, notably by means of ongoing investments in both new and existing buildings and production facilities. This target was reached thanks to new constructions equipped with ultra-modern heat pump technology, new building insulation and renovation programs, optimization or replacement of various air-conditioning and water-cooling systems, renovation of heating systems and implementation of new heat recovery systems. Due to continuous investment aimed at minimizing heat consumption by effective area, this consumption has been more than halved since the beginning of the program in 2001. The extension work of the Omega site in Biel / Bienne (BE) is a good example of the numerous endeavors undertaken, since it has resulted in a 48% decrease in heat consumption per m2 surface and an impressive 55% drop in CO2 emissions.

 

Power consumption by effective area (kWh / m2 per year)

Measured in kWh per m2 and year, power consumption increased by 9.3% over the previous year. This higher consumption was due to the commissioning and startup of new factories and higher production. The implementation of new, more energy-efficient machinery and equipment in the various production entities, as well as significant investment with regard to lighting, in the form of renovation of existing systems, nonetheless resulted in proportionally lower power consumption. The use of new LED lights has made it possible to achieve optimum light and to decrease the heat load, thereby reducing power consumption and the costs of air conditioning. The investments made at the Omega site had positive effects, improving energy efficiency by replacing fossil energy sources with heat pumps.

 

Energy from self-generated renewable solar energy and hydropower production

For decades, Swatch Group has not only invested in the area of electronic systems in low-energy and energy-efficient components and integrated circuits, but also runs its own energy production plants using renewable energy such as solar energy and hydropower production. Self-generated production of sustainable energy increased in recent years due to new facilities. Although the amount of self-generated sustainable power production is fairly modest, it nonetheless contributes to climatic and environmental protection. A Belenos Clean Power photovoltaic system with a state-of-the-art micro-inverter was put into operation when the new production building on the Omega site was inaugurated. The said plant generated 170 MWh during the year under review. The total energy production is not constant, since the power stations La Suze and Le Bez in Corgémont (BE), which were completely renovated and automated in 2010, are dependent on average precipitation, and solar energy is dependent on the average incoming light on the photovoltaic installations at Omega and Distico in Biel / Bienne and at ETA in Boncourt (JU). The hydropower plants and photovoltaic installations have an annual production capacity of approximately 1600 MWh. Among other things, this energy is used to operate part of ETA’s electric vehicle fleet.

 

Waste management

Due to cleaning processes within production as well as further internalization of production, the amount of special waste (excluding watch batteries) increased by 13.3% in the year under review. In the same period, the portion of recovered and / or recycled hazardous waste increased by 4.6%. In addition, other industrial waste such as paper, cardboard, synthetic material, and electronic components showed a pleasing 1.3% drop.

 

Battery recycling

Excluding internal elimination of expired batteries and liquidation of surplus stock at Renata, over 7.6 tons of batteries were delivered for reprocessing to authorized recycling firms in the year under review. Renata is currently the only battery manufacturer to operate its own button cell battery recycling facility started in 2018 (dedicated to recovering silver). With an annual capacity of 250 million button cell batteries yielding 25 tons of silver oxide, this plant demonstrates an important contribution, yet unequalled in the world, in environment protection from the perspective of sustainable development.

 

Water management

Due to increased production, startup of new production plants, integration of additional production facilities, and additional air conditioning installations, fresh water consumption increased by 10.1% compared to the previous year, while non-potable water consumption rose by 29.7%. Special mention should be made regarding the reduction of waste water achieved by installing closed water circulation systems, by increasing the efficiency of water treatment plants, and by using rainwater recovery systems to obtain water for cooling and sanitary installations.

 

VOC (Volatile Organic Components) emission

Due to increased production, integration of new production plants and further internalization of production in the year under review, VOC consumption increased compared to the previous year, mainly due to the use of acetone, alcohol and gasoline as cleaning agents for produced components. Accordingly, corresponding VOC emissions increased by 8.1%. However, in the year under review, 7.7% more VOCs were recovered and / or recycled thanks to the recovery systems for gasoline and other volatile solvents. A more substantial increase in VOC emissions was prevented by increased substitution of volatile substances by processes using aqueous solutions that do not contain solvents or contain less volatile substances.

CO2 emissions

General raw material sourcing

Environmental, ethical and social criteria are an integral part of our sourcing policy, reason why, only suppliers and sub-suppliers who fully comply with our clearly defined and contractually documented criteria regarding safety, environmental and sociopolitical aspects can be considered. This includes not only compliance with national and international laws, but also compliance with the OECD guidelines for sourcing of raw materials and components (OECD Due Diligence Guidance for Responsible Supply Chains from Conflict-Affected and High-Risk Aeras and its Supplement on Gold) as well as Standard SA8000 (Social Accountability International) pertaining to responsible sourcing under the premises of fair and ethical working conditions, health protection and occupational safety, observance of human rights and handling of business partners, as well as inclusion of the supply chain, local development and additional social and environmentally relevant factors.

In addition, suppliers must naturally fully adhere to the Swatch Group Quality Management internal guidelines, any ecological and legal regulations, and also the legal compliance related to products, particularly REACH (Regulation on Registration, Evaluation, Authorisation and Restriction of Chemicals), RoHS (Restriction of Hazardous Substances) and WEEE (Waste Electrical and Electronic Equipment). To ensure this, every supplier receives direct and secure access to the Swatch Group Quality Management conformity specifications for raw materials and substances. The specifications in the comprehensive database are updated on a regular basis. Swatch Group FEPS (Far East Procurement Service) and Swatch Group Quality Management constantly check to ensure that suppliers really fulfill the conditions. If the guidelines are not met, the supplier is requested to take corrective measures. Any supplier who does not or can no longer meet the qualification guidelines will not be considered anymore.

Organic raw material sourcing

In relation to organic raw material such as cotton, leather, wood, etc., not only are the many national and international laws respected (EU 995 / 2010 and EC 338 / 97, Lacey Act, CITES Convention on International Trade in Endangered Species of Wild Fauna and Flora, UICN Union Internationale pour la Conservation de la Nature, FSC Forest Stewardship Council, PEFC Programme for the Endorsement of Forest Certification, Timber Regulation, etc.), but also legal and not endangered materials which are determined by our specialists to be ethically critical are voluntarily eliminated. In this manner, wood from endangered and potentially endangered tree species is voluntarily eliminated, and only wood originating from sustainable cultivation and whose provenance, forestry, and CITES are declared and certified is used. In addition, Swatch Group takes particular care to ensure that its supply of exotic leather originates from very few, clearly identified, controlled, and sustainable farming operations. The result is that only a small number of farms in the United States, which can guarantee the very strict US Fish and Wildlife as well as the above-mentioned CITES guidelines, can be used.

 

Precious metal sourcing

Swatch Group has a clear sourcing policy in regard to precious metals. They are only purchased from individual established long-term suppliers who can demonstrate that as well as complying legally and according to all the provisions financial market authority, they are at least certified members of the Responsible Jewellery Council (RJC) or the London Bullion Market Association (LBMA), and can guarantee that the precious metals delivered originate from impeccable sources and conflict-free regions. The RJC norm is specifically aimed at the Haute Joaillerie and jewelry industry and includes the OECD guidelines for precious metal sourcing (OECD Due Diligence Guidance for Responsible Supply Chains from Conflict-Affected and High-Risk Aeras and its Supplement on Gold) as well as Standard SA8000 (Social Accountability International) on responsible and ethical sourcing of material.

The processes for metal sourcing have been continuously improved over the years, and may be improved further, notably by ensuring complete traceability of the supply chain. In this regard, cooperation has been established with the relevant authorities and institutions, such as within the framework of the Better Gold Initiative with the SECO (State Secretariat for Economic Affairs). Since the origin of gold is important, the group exclusively procures “traceable gold” from North America and Australia, where mines are operated according to extremely stringent conditions imposed by the authorities. Moreover, the gold supply chain is kept very short and direct.

Moreover, the investments made in recent years in the Group’s foundries and precious metal treatment plants have also enabled complete internalization of processes and precious metal refining, so as to ensure that the transformation of precious metal stocks, production of alloys and their recycling are all done in-house. After processing the alloys, bar profiles and raw ingots are produced and then transformed by further internal production processes into semi-finished goods. The Swatch Group thus controls the entire gold processing chain, while subjecting its entire treatment cycle to a clearly defined process. The Nivarox-FAR-foundry plays a key role in this respect, since it processes the Group’s entire gold stocks in a closed and strictly controlled circuit. The Nivarox-FAR-foundry has the necessary federal authorizations both as a founder and as a commercial assayer (sworn-in assayer). It also holds the Responsible Jewellery Council Code of Practice certification.

 

Diamond and gemstone sourcing

Diamonds are only purchased from the few suppliers who completely respect and implement the Kimberley Process certification system. Certification guarantees that diamonds can be proven to originate from conflict-free regions and from legal trade. Countries, companies, and merchants who do not use this certification system in its entirety are excluded from trade. In addition, only long-term partners who comply with the CIBJO (Confédération Internationale de la Bijouterie, Joaillerie, Orfèvrerie des diamants, perles, et pierres; The World Jewellery Confederation) guidelines as well as the Kimberley Process are used, in order to eliminate any quality and sourcing risks.

Social Policy

At the end of 2017 and the beginning of 2018, the economic environment and prospects for the watchmaking industry were improved and Swatch Group was able to meet the high demands of the different markets. This was made possible by employees who not only remained active during the difficult months but also used the time available to acquire new skills and thus meet the challenges facing Swatch Group. It was important to maintain a good and open relationship with the staff, who acknowledged the efforts made by their employers to maintain the positions as well as the general conditions required for each person’s personal fulfillment.

 

Employment

In terms of employment, 2018 achieved a new record, with the creation of more than 1500 positions compared to December 31, 2017, representing a total of more than 18 000 Swatch Group contracts in Switzerland and more than 19 000 internationally. These figures are greater than those in 2015, the year which had previously had the highest staff complement for Swatch Group.
These results increase the responsibility of the management in all companies towards their employees, who place their trust in Swatch Group and who make their skills available to meet future challenges.

Staff Development

Faced with the sharp increase in the number of employees, a large number of intense and essential internal training sessions took place, enabling each individual to rapidly acquire the skills and processes required to fulfill their missions. This support for new employees was also a good learning curve in developing and reinforcing the versatility of older employees with the motivation to transmit their knowledge to the newcomers. 

 

Initial Professional Training

Thanks to the Swatch Group Executive Management Board’s vision and longterm strategy, it was again possible to offer a permanent contract to all technical apprentices at the end of their training in order to round off and develop their skills with a view to an interesting future within the company. Similarly, there were more apprentices hired in August 2018 than the number that completed their training in June of the same year. With close to 500  apprentices, the overall number still increased slightly as a result. 

Swatch Group apprentices

For the fifth time, two apprentice watchmakers spent eleven weeks in Hong Kong to discover the activities of a repair center and benefit from multicultural experiences on the other side of the planet. The Hong Kong staff as well as the young pair were equally enthusiastic and underscored the rationale for maintaining this approach.

Other linguistic exchanges allowed three French Swiss apprentices to spend six weeks in Berlin and three young Swiss Germans to spend six weeks in Paris. Lodged with host families, they worked in Swatch boutiques while attending language schools.

In Switzerland, Swatch Group apprenticeships involve 32 different trades, which range from a single apprentice to 91 in the most represented professions. Accordingly, Swatch Group is the watchmaking industry’s biggest trainer, both in terms of the number of young people in training and the number hired by the companies after their training.

 

Nicolas G. Hayek Watchmaking Schools

The six Nicolas G. Hayek Watchmaking Schools continued to meet the key need to have individuals who are competent and trained in the watchmaking industry in the different countries, to ensure consistent advice and repairs across our sales network and Customer Service platform. This curriculum is recognized beyond Swatch Group, which needs to motivate and provide development opportunities to these young people, so that they remain with the company after their initial training. 

Watchmakers at work

Professional Development

The positive trend in demand in 2018, which resulted in the creation of numerous positions, also had an effect on the skills-monitoring workshops and development centers, as well as on internal on-the-job training. Employees were entrusted with new tasks at their workstations, according to their skills and interests. This way of doing things allowed them to be rapidly integrated into their new missions and to develop and accept more complex, attractive and high-added-value responsibilities.

 

Social Partnership and Working Conditions

Two years after its implementation, the watch industry’s new Swiss Collective Labor Agreement, valid for five years, was perfectly integrated by staff, staff committees, the management and the trade union partners with whom the company seeks to maintain a dialogue and constructive collaboration throughout the year and in all regions.

Following the 1.2% increase in the consumer price index at the end of August 2018 compared to August 2017, in line with the Swiss Collective Labor Agreement, Swatch Group proceeded to implement salary increases for 2019 of between 52 Swiss francs at the least and 78 at the most. This will have an impact of several million francs on the payroll. Given that nearly 95% of turnover is achieved outside of Switzerland in monetary areas where the strong Swiss franc has a negative impact on business, vigilance is essential. Each company must remain efficient and retain its entrepreneurial spirit in order to absorb this increase in labor costs and continue to invest for the future.

At the same time, there has been a particular focus on all the constituent elements of working conditions, such as ergonomics in the workplace, monitoring of movements and posture, analysis of buildings and the optimization of production equipment. All the companies are extremely active in this regard with the aim of offering a pleasant working environment adapted to the missions of all concerned employees, and driven by a positive outlook.

 

Statement on the Modern Slavery Act

Here you can download the Swatch Group's statement on its efforts against slavery and human trafficking, made in compliance with section 54 of the UK Modern Slavery Act 2015.

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