Corporate Responsibility Report KONE 2013 CONTENTS KONE in BRIEF KONE Is a Global Leader in the Elevator and Escalator Industry

MARINA BAY SANDS, SINGAPORE, 1:30 P.M. Innovative solutions for better cities

Corporate Responsibility Report KONE 2013 CONTENTS KONE IN BRIEF KONE is a global leader in the elevator and escalator industry. We have been committed to understanding the needs of our customers for the past 100 years, providing industry-leading elevators, escalators, automatic building doors and integrated solutions to enhance the People Flow Letter from the Chairman of the Board...... 4 in and between buildings. KONE’s services cover the entire lifetime of a building, from the design Letter from the CEO...... 5 phase to maintenance, repairs and modernization solutions. We serve more than 450,000 customers across the globe. The majority of these are maintenance Key figures 2013...... 6 customers. Key customer groups include builders, building owners, facility managers and developers. Our strategy...... 8 Architects, authorities and consultants are also key parties in the decision-making process regarding elevators and escalators. Megatrends and our solutions...... 9 In 2013, KONE had annual net sales of EUR 6.9 billion and at the end of the year over 43,000 Innovations...... 10 employees. KONE Corporation’s class B shares are listed on the NASDAQ OMX Helsinki Ltd in Finland. Managing sustainability...... 12

Materiality analysis...... 14 KONE worldwide Economic responsibility...... 16

Environment...... 20 Hyvinkää Delivery chain...... 32 Helsinki Essen Ùsti nad Labem Cadrezzate Safety...... 36 Coal Valley Pero Allen Kunshan Our people...... 40 Nanxun (GiantKONE) Torreón Reporting scope...... 46 Chennai KONE’s presence Independent assurance report...... 47 Head office Global Reporting Initiative index...... 48 Global R&D site

Production site

KONE collaborates with authorized distributors and agents in close to 100 countries.

Corporate responsibility at KONE At KONE corporate responsibility is embedded in our organizational culture. It is how we treat each other and our stakeholders, how we take the environment into account in all of our actions, and how we foster economic performance now and in the future. It is in the end user and customer focus of our vision to deliver the best People Flow® experience. We see sustainability as a source of innovation and a competitive advantage. KONE is committed to conducting our business in a responsible and sustainable way and we expect the same commitment from all our partners.

Read more about our approach to sustainability at www.kone.com/responsibility Letter from the chairman KONE 2013 | CORPORATE RESPONSIBILITY REPORT KONE 2013 | CORPORATE RESPONSIBILITY REPORT Letter from the CEO

Developing KONE for the long term Strong overall progress

“Our pioneering us to serve our customers better, provide third set of these programs at the end of “Both customer loyalty employment opportunities, and pursue an 2013. In 2011–2013, the satisfaction of our solutions have made us active role in the community. customers and employees grew, the quality and employee and competitiveness of our products advanced an industry forerunner Supporting local communities further, we made good progress in enhancing satisfaction improved Founded in 2010, the KONE Centennial our service business, and we clearly improved for several decades, Foundation is an important part of our initiative the quality of the whole delivery chain. and our good to support local and often disadvantaged and in 2013, we communities. The foundation is currently Engaged employees progress in the area of funding three projects on a contractual Employee satisfaction is an important measure brought another set basis and contributes to a number of smaller of our progress. In 2013, the improvement sustainability initiatives. It supports youth centers in Chennai, in our overall employee satisfaction was of innovations to the India and Johannesburg, South Africa, as well substantial. Also the participation rate in the continued.” as the Joy of Reading Mobile Library in China. survey improved further to a very high level. market.” The mobile library had another successful year This means that our people want to contribute in 2013, when it traveled from Beijing to Yuxi, to the development of KONE. I am very pleased visiting 14 schools and reaching out to more with this. These developments are outcomes of than 10,000 children. our focus in fostering a leadership culture that engages, empowers and inspires people. We Stronger every year have continuously increased our investments in KONE has become a stronger company year by developing our people. year, and 2013 was no exception. I would like Innovation is at the core of KONE’s culture to thank all our stakeholders for the trust and I am very pleased with our progress in 2013. We made good progress in safety. In addition and has been one of our success factors. support you have given us this year and look Once more, we achieved our objective of to the systematic work in the sharing of best Our pioneering solutions have made us an forward to the challenges and opportunities in making KONE a stronger company, and moved practices, we organized KONE’s Global Safety industry forerunner for several decades, and in store for us in the future. towards our vision “KONE delivers the best week around the theme “Little things matter in 2013, we brought another set of innovations People Flow experience”. Our global sales grew safety”. The global People Flow Day event also to the market. The competent and creative at a higher rate than the market. Our financial focused on safety. individuals at KONE have the experience and performance was strong. Both customer loyalty expertise to identify important problems and and employee satisfaction improved and our Leader in eco-efficiency find novel solutions for our customers and good progress in the area of sustainability In the area of sustainability our biggest for the people who use our solutions. Our Antti Herlin continued. opportunity is to contribute to the positive aim is to deliver the best customer and user Chairman of the Board development by minimizing the energy experience. KONE corporation KONE was ranked among the top 50 most consumption of our products. In this respect we innovative companies in the world by Forbes are a clear leader in our industry. In addition, we A long-term mindset Magazine for the third consecutive year. In succeeded to decrease the carbon footprint of Our business is driven by four megatrends: 2013, we launched two new innovations: our operations relative to net sales by 3.5%. urbanization, demographic change, the KONE UltraRope, which enables future elevator increasing importance of safety, and concern ride up to 1 km, and KONE People Flow for the environment. KONE contributes to Intelligence solutions, which make people flow sustainable urban development by creating in buildings increasingly smooth. energy-efficient solutions that move people Matti Alahuhta smoothly and safely in urban environments. We Good progress through development President & CEO believe KONE’s solutions play an important role programs KONE corporation in making urban areas better places to live. Our achievements are the result of the intense work we are doing in improving our To develop KONE in a profitable, responsible competitiveness through our development and transparent manner, we keep a long- programs. Our three-year development term mindset. Good economic performance programs have proven to be a very effective creates value for all our stakeholders. It allows way to develop KONE. We completed our

4 5 Key figures 2013 KONE 2013 | CORPORATE RESPONSIBILITY REPORT KONE 2013 | CORPORATE RESPONSIBILITY REPORT Key figures 2013

Key figures 2013

Sales by market, 2013 Key financial figures 2012 2013 change, % Relative operational carbon footprint Employees by market, 2013 Orders received MEUR 5,496.2 6,151.0 11.9% Order book MEUR 5,050.1 5,587.5 10.6% 16% Sales MEUR 6,276.8 6,932.6 10.4% 13% Operating income MEUR 828.71) 953.4 15.1% 46% Operating income % 13.21) 13.8 47% Cash flow from operations Vehicle fleet Electricity Business air travel Logistics Overall operations MEUR 1,070.8 1,213.1 (Scope 1) (Scope 2) (Scope 3) (Scope 3) 40% 38% (before financing items and taxes) Net income MEUR 611.0 713.1 2011 2012 2013 YoY 2011 2012 2013 YoY 2011 2012 2013 YoY 2011 2012 2013 YoY 2011 2012 2013 YoY

Basic earnings per share EUR 1.17 1.37 85.6 83.1* 77.4 -6.9% 898 1,055 1,027 -2.7% 226 182 226 +24.2% 1,408 1,088** 1,039 -4.5% 47.4 45.8* 44.2 -3.5% Interest-bearing net debt MEUR -574.0 -622.0 kgCO e / Unit in service kgCO e / Headcount kgCO e / Headcount kgCO e / Unit kgCO e / KEUR Sales EMEA 46% (49%) 2 2 2 2 2 EMEA 47% (48%) * Restated Asia-Pacific 38% (35%) Total equity/total assets % 47.1 43.7 Asia-Pacific 40% (38%) ** Restated to include GiantKONE and India Americas 16% (16%) Gearing % -31.3 -36.1 Data for vehicle fleet, electricity, business air travel and logistics assured externally. Americas 13% (14%)

(2012 figures in brackets) R&D expenditure MEUR 86.1 96.5 (2012 figures in brackets)

1) Excluding a MEUR 37.3 one-time cost related to the support function development and cost adjustment programs. Energy consumption Units 2011 2012 2013

Direct Heating fuels m3 2,500 1,300 800

Sales by business, 2013 Natural gas m3 3,337,000 5,631,000 5,927,000 Employees by job category, 2013 Indirect Electricity, including district heat* MWh 76,934 92,356 92,986 *2012 restated 14% KONE’s economic impacts in 2013 9% 10% Stakeholders Carbon footprint of KONE’s operations, tCO2e 2011 2012 2013 54% Direct (scope 1) Vehicle fleet* 88,500 88,400 86,200 Employees 1,473 (1,375) MEUR 56% 32% Customers Suppliers Added value Heating fuels 13,000 14,000 13,000 Creditors -6 (-8) MEUR 25% Gases for cooling systems 400 900 800 6,933 3,995 2,938 Public sector 758 (693) MEUR Indirect electricity Electricity consumption 32,000 42,000 45,000 (6,277) (3,610) (2,667) (scope 2) (including district heat) Shareholders 512 (781) MEUR* MEUR MEUR MEUR - Other relevant Logistics** 95,900 116,800 130,800 New equipment 54% (50%) = Economic value retained in the company 201 (-174) MEUR indirect (scope 3) Maintenance and Maintenance 32% (34%) modernization 56% (57%) (2012 figures in brackets) Business air travel 8,000 7,200 9,800 Modernization 14% (16%) New equipment sales and Employee commuting 12,000 18,000 19,000 istallation 25% (25%) (2012 figures in brackets) *Dividends paid for the financial year. The figure for the financial year 2012 includes a special dividend. Waste 500 500 600 Manufacturing 10% (9%)

Total* 250,300 287,800 305,200 Administration, IT, R&D 9% (9%)

*2012 restated (2012 figures in brackets) **2011 excluding GiantKONE in China Number of employees, end of year IIFR development* Scope 1, scope 2, and scope 3 logistics and business air travel data assured by Ecobio Oy 50 000 8 7 40 000 6 Waste, tonnes 2011 2012 2013 30 000 5 Recycled waste** 18,400 20,700 24,300 4 20 000 3 Incinerated waste 2,300 2,700 2,300 2 10 000 Landfill waste* 2,700 2,400 3,200 1 Hazardous waste 600 700 900 0 0 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013 Total** 24,000 26,500 30,700 *2012 restated * Industrial Injury Frequency Rate. KONE tracks the **2011 and 2012 restated number of lost time injuries of one day or more, per million hours worked, as a key performance indicator. The IIFR covers KONE’s own employees. Water consumption 2011 2012 2013 Total m3 270,000 390,000 440,000

6 7 Our strategy KONE 2013 | CORPORATE RESPONSIBILITY REPORT KONE 2013 | CORPORATE RESPONSIBILITY REPORT Megatrends and our solutions

Delivering the best People Flow Our industry is driven by four experience megatrends

DEMOGRAPHIC We operate through KONE’s vision is to create the best People Flow traveling within a building. This way we gain a URBANIZATION CHANGE SAFETY ENVIRONMENT The global elevator and escalator experience which means enabling people deep understanding of how our solutions can industry is driven by four megatrends: more than 1,000 offices to move smoothly, safely, comfortably, and deliver the best possible user experience. Urbanization is an The global demographic Urban infrastructure The demand for energy- urbanization, demographic change, without waiting in and between buildings. Our important megatrend structure is changing. systems in certain markets efficient solutions for the increasing importance of safety in some 50 countries strategy is to differentiate by delivering the best Development programs support our within the global elevator Economic growth translates are aging. National and moving people in and and the concern for the environment. user and customer experience with innovative vision and strategy and escalator industry. It is into higher standards of international safety codes between buildings is driven KONE contributes to sustainable around the world. People Flow solutions. We measure our progress toward our vision expected to drive demand living for a larger part of and standards play a key by voluntary sustainability urban development by developing with strategic targets. In 2013, these targets for years to come. For the the world’s population. The role in determining the ratings and national energy-efficient solutions that move We have seven global Elevators, escalators, and automatic doors were serving increasingly loyal customers, first time in history, an number of people classified safety level of elevators green building ratings. people smoothly and safely in urban should operate correctly and be integrated making KONE a great place to work, leading equal number of people as middle-income earners and escalators. Particularly These are becoming environments. production sites located seamlessly with a building’s other systems. the industry in profitable growth, and live in urban and rural is expected to grow by 2.7 in Europe, many countries more common and are of Different types of buildings have different providing the best user experience. areas. The concentration billion by 2030. Middle- have adopted strict increasing importance to in our main markets, as uses, traffic patterns and flows of people. of people in urban areas income earners expect standards for safety and our customers. Sustainable How, when and by whom a building is used KONE’s efforts to meet its strategic targets increases the importance more spacious and better- modernization in recent urban building refers to well as eight global R&D determine the optimal location, quantity and are supported by development programs of moving them efficiently equipped apartments, years. building practices that type of equipment required at the site. We that are designed to help us turn our strategy from one point to another. which drives higher improve energy efficiency, centers. In addition, have extensive knowledge of and expertise into reality. These programs are reviewed demand for elevators. Millions of people use use sustainable materials in understanding different environments and and redefined at regular intervals in response The growth of urban elevators and escalators and reduce a building’s KONE has authorized their functionality. to both achievements and changes in the areas is most evident in The world’s population every day, and our top negative impacts on business environment. We have also high- Asia, where long-term is also aging at an priority is to keep them human health and the distributors in close to Once the equipment is installed, we provide priority areas that are of utmost importance in population growth and unprecedented rate. safe. environment. maintenance solutions that ensure smooth our daily work. These are safety, quality and migration from rural The growing number of 100 countries. operation and, when appropriate, offer simplification. The development programs and communities is expected to older people raises the Read more on p. 36–39. Read more on p. 20–31. modernization solutions for aging equipment. strategic targets are founded on our core values continue. importance of accessibility We are committed to helping our customers of delighting the customer, energy for renewal, in buildings and urban achieve the best people flow experience at passion for performance, and winning together. Read more on p. 10–11. infrastructure. every stage of their building’s life cycle. Read more on p. 10–11. We conduct systematic studies of how people move and what they need when they are

KONE’s strategic targets were updated in 2014. One of them is Leader in sustainability. Read more at www.kone.com/strategy

8 9 Innovations KONE 2013 | CORPORATE RESPONSIBILITY REPORT KONE 2013 | CORPORATE RESPONSIBILITY REPORT Innovations

Innovations for future cities

For the third consecutive year, KONE Cities currently cover 2 percent of the surface inspirations and ideas via KONE’s Innovation core of KONE UltraRope has an exceptionally For example in Europe, it is estimated that has been ranked among the top 100 of the planet, yet they already host more than Tool. The tool has approximately 1,500 users long lifetime – twice as long as those of more than four million residential buildings of most innovative companies in the half of the world’s population and account globally, with a goal of creating an innovation conventional steel ropes. The super-light KONE over three floors’ height are without elevators. world by the U.S.-based business for 75 percent of energy consumption and 80 community. UltraRope technology provides unrivalled This makes it very challenging for elderly magazine Forbes. In 2013, KONE’s percent of manmade carbon dioxide emissions. elevator eco-efficiency, reliability and durability, people to leave their homes. An environment ranking rose to 37 from 42. KONE has An increasingly urban world calls for sustainable Throughout the entire R&D process, eco- while also improving elevator performance. where it is easy and safe to move around also also received GOOD DESIGN awards innovations. KONE focuses on developing efficiency, safety and quality are of utmost makes it possible for elderly to live at their in 2008, 2009 and 2013, two red dot smoother People Flow® solutions that make importance. Many buildings will be kept moving with KONE homes longer, instead of moving to nursing design awards and two honorable buildings more intelligent and accessible. People Flow Intelligence solutions. This new suite homes. This improves the quality of life, and Turning to the public mentions in 2012, and the Council Award-winning innovations of smart solutions is designed to guide building might also mean substantial savings for society. of Tall Buildings and Urban Habitat KONE has a long history of innovation and Optimizing the urban environment requires new visitors and tenants effectively and smoothly from Great ideas and innovations often spur (CTBUH) Innovation Award in 2013 for the company’s success is founded on its approaches to modernization and maintenance front entrance to desired destination, while at Many ways to improve accessibility from seemingly small observations KONE UltraRope. position as industry forerunner. For the past as much as solutions for new buildings. the same time improving building security. The As our population matures, the buildings we in real-life situations. One way KONE century, we have made systematic, long-term Innovations such as the KONE EcoDisc® hoisting KONE People Flow Intelligence portfolio includes depend on also grow older. In Europe, more than gathers these important insights is investments into our research and development machine and the KONE MonoSpace® elevator four product areas: access control, destination half of the elevators in use are over 20 years old through the annually organized People (R&D) capabilities. We have seven global R&D have been helping building owners to cut their guidance, information communication, and and in need of modernization. Modernization Flow Day. The KONE researchers-for-a- competence centers which are located in energy consumption and carbon footprint for equipment monitoring. increases safety and accessibility. For example day observe people’s movements and Finland, China, Italy, India, the United States, more than a decade. by modernizing an elevator, the space inside the use of the equipment in different types Mexico and Germany, and over 800 dedicated Better cities for aging population car can increase by even up to 50%. This makes of buildings, and interview customers. technology professionals working for R&D. KONE revolutionized the industry in 1996 with People are living longer due to enhanced living it easier to access the elevator with a wheelchair The valuable data obtained during the world’s first machine-room-less elevator standards and improved medical care. During or a walker. Reduction of energy consumption is the event is passed on to KONE’s R&D Creating solutions from inspiration – the KONE MonoSpace – and the ground the next 40 years the share of over 60-year-olds another benefit. Over time, a new elevator will teams, who use it to develop new KONE’s R&D process is a continuous search breaking, energy efficient KONE EcoDisc hoisting will increase to over 30% in the OECD*. As save up to 70 percent. solutions. In 2013, the emphasis of for new ideas and opportunities. Our starting machine. In 2012, KONE launched a new range populations age, demand for accessible, safe research was on safety. point is a wide variety of sources, the most of elevators based on years of intensive research and convenient People Flow solutions increase. Design of an elevator affects the user experience, important ones being our customers and into customers’ needs and the possibilities of As an innovative company, KONE is constantly including accessibility. Mirrors make it easier the equipment users. We also make use of new technology. The result was an eco-efficient looking for better modernization solutions for to reverse to and out of an elevator with a opportunities presented by the market, for elevator range that serves the demands of the our customers and their tenants. Cities – namely wheelchair; handrails give support in moving example the demand of ever-higher buildings buildings and cities of the future. buildings and transportation hubs – need to be around, and braille signalization makes and their huge, growing populations, and designed and built in a way that enables elderly operating the elevator easy for people with ideas generated through our own innovation KONE UltraRope™, launched in 2013, is a persons to move around easily. failing eyesight. processes. We collaborate closely with our completely new high-rise elevator hoisting customers, partners, universities, and research technology that eliminates the disadvantages centers. We for example organize design and of conventional steel rope and enables future 5 easy ways to improve accessibility 5 innovation labs with academic world, and elevator travel heights of one kilometer – twice by modernizing an elevator encourage our own people to share their the distance currently feasible. The carbon fiber 1. The space inside the car can be increased by as 1 much as 50% 2

KONE’s R&D process supports innovations 2. Wide opening doors make it easier to enter with a wheelchair or a baby stroller Market environment and megatrends 3. Accessibility can be improved by installing 4 accessories such as handrails and a mirror 3 4. Braille signalizations and audible Creation of announcements are available for people with Concept Research new products hearing and vision impairments creation and services 5. An elevator can be installed in a building Read more previously without one, in the stairwell or about KONE’s R&D and eco-efficiency attached to an outside wall on p. 22. Eco-efficiency Safety Quality

*OECD (Organization for Economic Co-Operation and Development) Demographic and Labor Force database

10 11 Managing sustainability KONE 2013 | CORPORATE RESPONSIBILITY REPORT KONE 2013 | CORPORATE RESPONSIBILITY REPORT Managing sustainability

Managing corporate Fostering stakeholder relations responsibility at KONE

Memberships and At KONE corporate responsibility is embedded the President and CEO of KONE. Our Quality We work closely with our stakeholders customers, provide our employees with training positions of trust in our organizational culture and our daily and Environmental Board and Executive Board, to maintain an active dialogue. It is our and development opportunities, and build long- operations. It shows in how we treat each both chaired by the President and CEO, are responsibility to ensure that the business we term and mutually beneficial relationships with KONE is an active participant and a other and our stakeholders, how we take the responsible for the company’s environmental carry out is sustainable and makes a positive our suppliers. major contributor to the development environment into account in all of our actions, management. KONE’s economic responsibility contribution to fulfilling our stakeholders’ of codes, standards, and guidelines and how we foster economic performance now is managed by Chief Financial Officer who is objectives. With open dialogue, we can maintain efficient for improving safety, accessibility, and in the future. Responsible thinking is in the represented in the Executive Board and who collaboration with our stakeholders and ensure a energy efficiency, and other important end user and customer focus of our vision to reports to the President and CEO. In 2013, a We aim to create value for our shareholders, predictable business environment for all parties. aspects of elevator and escalator deliver the best People Flow® experience. We new position was established to the Executive deliver the best People Flow® solutions to our products around the world. See the see sustainability as a source of innovation and a Board with responsibility for safety, quality and list of organizations of which KONE competitive advantage. installation. is a member at www.kone.com/ Stakeholder group Channels of dialogue Assessments memberships. KONE is committed to conducting its business Our management and supervisors work to KONE deals with over 450,000 Customer meetings and events, constant Annual global customer loyalty in a responsible and sustainable way and we ensure that our employees are familiar with and customers worldwide. Our main dialogue through solution support, seminars survey, monitoring of sales- expect the same commitment from all our comply with the legislation, regulations and customers are builders, building and conferences, company reports, related activities owners, facility managers, and brochures and magazines, company website partners. We comply with the laws and rules of internal operating guidelines of their respective developers the societies in which we operate. Our everyday areas of responsibility and that our products and KONE pays wages and salaries to Performance discussions, continuous face- Pulse employee survey, annual work is guided by KONE’s Code of Conduct and services are in full compliance with all codes and over 43,000 employees in about to-face dialogue between employees and performance discussions, our other company policies and guidelines. standards applicable to them. 50 countries managers, European Annual Employee Innovation Tool Forum, company intranet, internal employee Sustainability and its management are the publications, training events, global learning solutions, innovation creation through responsibilities of KONE’s Executive Board and Innovation Tool

KONE conducts business with Continuous one-to-one dialogue, Annual Annual supplier survey, supplier 20,000 suppliers Supplier Day for Strategic Suppliers, trade performance assessment Management systems and Management bodies in KONE fairs, steering group meetings, supplier with the Supplier Excellence certificates workshops Certification Program KONE pays dividends to over Management meetings with investors and Direct investor feedback, Economic Finnish Corporate Governance Code, Annual General Meeting, Board of 45,000 shareholders, ranging analysts, dedicated Investor Relations team, feedback through surveys and responsibility internal control, internal auditing Directors, Internal Audit function, from institutional investors and annual general meetings and capital markets perception studies companies to individuals, public days. In addition, financial disclosure is Executive Board, President and CEO institutions, and non-profit provided through stock exchange and organizations press releases, as well as financial and other Social KONE Code of Conduct, KONE Board of Directors, Executive Board, company reports. responsibility Supplier Code of Conduct, OHSAS Internal Audit function, President and 18001 Occupational health and safety CEO KONE collaborates with author- Continuous dialogue through daily contacts, Customer survey, monitoring of management system ized distributors in close to 100 regular country visits, distributors’ meetings sales-related activities, and direct countries and various support tools feedback from distributors

Environmental ISO 14001 Environmental management Board of Directors, Quality and and product system, ISO 9001 Quality management Environmental Board, Executive Board, responsibility system, Lifts Directive Module H, President and CEO KONE communicates proactively Press releases, interviews, background Surveys, media analysis, KONE’s Supplier Excellence Certification and openly with representatives briefings, visits, press events, factory tours, reputation and perception of the media publications and magazines, company studies website

KONE collaborates with edu- KONE International Trainee Program, CEMS Most attractive workplace cational institutions locally and and JA-YE Europe in Global Enterprise surveys, online tracking globally Project, thesis opportunities, local internships, participation in recruitment fairs, common projects, guest lectures, participation in research programs

Read more Society - KONE pays direct tax- Media coverage, company website, reports, Sustainability surveys, reputation about our corporate governance from es, social security, and employer stakeholder relations studies Financial Statements publication, on p. 60–63. expenses in around 50 countries

12 13 Materiality analysis KONE 2013 | CORPORATE RESPONSIBILITY REPORT KONE 2013 | CORPORATE RESPONSIBILITY REPORT Materiality analysis

Corporate responsibility focus areas

In 2013, we carried out a materiality analysis from different corporate responsibility areas in A long-term perspective High quality delivery chain to continue our work in defining the most KONE and from the Executive Board. We strive to generate long-term returns for shareholders We strive for continuous improvement in the quality, important corporate responsibility topics. by conducting our business in a profitable, responsible and responsiveness and efficiency of our delivery chain. It An online questionnaire was sent to over 200 The results are presented in the matrix below, transparent manner. Good economic performance not refers to all of the actions and processes that lead up to respondents, including customers, investors and the most important aspects are covered only creates value for our owners, it also allows us to serve the delivery of equipment to the customer’s site. KONE and analysts, industry associations, end users, in this report. A summary of these topics is our customers better, provide employment opportunities, delivers 2.6 million packages from distribution centers to the suppliers, employees, media representatives illustrated on the next page. sustain suppliers, and pursue an active role in the installation sites annually. Read more on p. 32–35. and KONE’s Executive Board. community. Read more on p. 16–19.

The response rate was 44% resulting in 94 responses. The results were analyzed and grouped in a workshop including participants

Materiality matrix Energy efficiency of our products Safety is our top priority Buildings consume around 40% of the world’s energy, KONE moves millions of people with elevators and escalators End user safety and elevators and escalators account for 2–10% of that every day, so we pay close attention to our design, power. We help combat climate change and contribute to manufacturing, installation, and maintenance processes Research and development Employee satisfcation the development of next-generation green buildings by to enhance the safety of our products and services. We Quality delivering eco-efficient elevator, escalator, and automatic have over 43,000 employees, and we work together with Environmental impact of our building door solutions for sustainable and net zero energy thousands of subcontractors. We want them to return home products, services buildings. Read more on p. 20–25. injury free every day. It is our strong belief that all accidents Competent and operations and committed are preventable. Read more on p. 36–39. Environmentally efficient management and technologies Impacting staff megatrends

Occupational Innovations health and safety Ethical business Non-discrimination Accessibility practices Customer satisfaction Diversity and equal opportunity Economic performance

Inlfuence on stakeholder assessment and decisions Training and education Environmental impact of our Our people Material and water use operations and services In 2013, KONE had 43,000 employees globally. We want to Logistics is responsible for 43% of our greenhouse gas make KONE a great place to work and to inspire, engage, emissions – the single biggest contributor to our carbon and develop our employees to deliver great results. We Significance of economic, environmental and social impacts footprint. We optimize our delivery chain and use follow high ethical principles in all our activities. All KONE distribution models that take eco-efficiency into account. employees have the right to a safe, healthy working Our vehicle fleet is responsible for 28% of KONE’s environment where discrimination is not tolerated and

Read more operational carbon footprint. We continuously look personal well-being promoted. Read more on p. 40–43. about our reporting scope on p. 46. for new and innovative ways of reducing the carbon footprint of our vehicle fleet. Read more on p. 26–30.

14 15 Materiality analysis KONE 2013 | CORPORATE RESPONSIBILITY REPORT KONE 2013 | CORPORATE RESPONSIBILITY REPORT economic responsibility

ECONOMIC RESPONSIBILITY Generating long-term returns KONE’s objective is to achieve sustainable and profitable growth by meeting the needs and expectations of our customers. We provide our customers with solutions for the entire lifetime of their elevators, escalators and automatic building doors, from new equipment installation to maintenance and modernization. KONE’s foremost economic responsibility is to a relatively low level of investment, but with a We strive to generate its shareholders. With our solutions, we bring high return on invested capital. Our objective Our main geographic regions include the Europe, Middle East significant added value to our customers and is to maintain a good discipline in our payment long-term returns and Africa region (EMEA), North America and Asia-Pacific. end users. Sustainable economic performance terms in order to manage risk and provide also brings valuable and lasting benefits financing for our growth. KONE has been able for shareholders Sales by business 2013 to other stakeholders, such as employees, to maintain a strong cash flow and negative suppliers and communities as a whole. working capital. by conducting our

We strive to generate long-term returns for Following the financial crisis of 2008–2009, business in a profitable, shareholders by conducting our business new equipment markets in Europe and North in a profitable, responsible and transparent America declined significantly and still remain responsible and manner. At the end of 2013 KONE had over below peak volumes. In contrast, markets have New equipment Modernization Maintenance 45,000 shareholders, ranging from institutional been growing rapidly in Asia-Pacific, driven by transparent manner. investors and companies to individuals, public China in particular. The impact of the financial 54% 14% 32% institutions, and non-profit organizations. crisis has been seen also in modernization. KONE’s shareholder base expanded significantly The developed European and North American during the year, with approximately 14,000 markets, where the main short-term growth Sales by market 2013 new investors – of which close to 13,000 were potential in modernization lies, have seen Long-term financial targets households – holding KONE’s shares at the end clearly weaker market development compared of the year. to the pre-crisis period. Growth: Americas EMEA Asia-Pacific Faster than the market 16% 46% 38% A lifecycle business model for the Maintenance is the most stable element of the long term business model over economic cycles, because Profitability: KONE’s business model is based on a life-cycle even in times of recession, maintenance is 16% earnings before interest and taxes approach. We provide customers with solutions required to keep equipment running smoothly. for the entire lifetime of their elevators and In virtually all over the globe, equipment Cash flow: escalators, starting from new equipment maintenance is also legally required. Improved working capital rotation installation. Regular maintenance is required to keep equipment running smoothly, and once it Over the long term, our business has very solid ages, modernization is typically also needed. growth drivers. The growth of the elevator and escalator industry is driven by four Our business model is very capital-light. The global megatrends: urbanization, changing production of new equipment consists mainly demographics, an increased focus on the of assembling outsourced components, and environment and the growing importance of the service business requires very little fixed safety. investment. This model enables growth with

KONE’s economic impacts in 2013 Stakeholders

Employees 1,473 (1,375) MEUR Customers Suppliers Added value Creditors -6 (-8) MEUR

6,933 3,995 2,938 Public sector 758 (693) MEUR

(6,277) (3,610) (2,667) Shareholders 512 (781) MEUR* MEUR - MEUR = MEUR Economic value retained in the company 201 (-174) MEUR

(2012 figures in brackets) *Dividends paid for the financial year. The figure for the financial year 2012 includes a special dividend.

16 17 economic responsibility KONE 2013 | CORPORATE RESPONSIBILITY REPORT KONE 2013 | CORPORATE RESPONSIBILITY REPORT economic responsibility

2013 Orders received: A global company escalator units amounted to approximately KONE’s financial position was very strong at the growth in the service business since 2005. Strong growth in Asia-Pacific and the KONE’s main geographic regions include the 137,000 units (2012: approximately 118,000). end of December 2013. Cash flow generated In maintenance, our maintenance base has Americas Europe, Middle East and Africa (EMEA) region, from operations (before financing items and expanded from 580,000 units at the end of North America, and Asia-Pacific. In 2013, KONE’s net sales grew by 10.4% as compared to taxes) was EUR 1,213 (1–12/2012: 1,071) million. 2005 to over 950,000 units at the end of 2013.

0 500 1,000 1,500 2,000 markets in Asia-Pacific, North America and the the prior year, and totaled EUR 6,933 (1–12/2012: At the end of December 2013, net working capital The most significant driver of this growth has Middle East developed positively. In Europe, 6,277) million. KONE delivered approximately was EUR -611.5 (December 31, 2012: -439.3) been conversions: obtaining maintenance 2011 1,045 Q1 2012 1,366 markets remained uncertain, but uncertainty in 120,000 new elevator and escalator units in million, including financing items and taxes. contracts for equipment installed by KONE. 2013 1,712 the market decreased towards the end of the 2013 (2012: approximately 103,000). In 2013, Interest-bearing net debt at the end of December In addition, the growth of the maintenance year. In the EMEA region as a whole, the new KONE’s largest individual countries in terms of 2013 was EUR -622.0 (December 31, 2012: base has been supported by acquisitions of 2011 1,226 equipment market declined slightly in 2013. Q2 2012 1,513 contribution to sales were China, accounting -574.0) million. KONE’s cash and cash equivalents small and mid-sized maintenance companies in 2013 1,638 In North America, the recovery of the market approximately 30% of total sales, and the United together with current deposits were EUR 890.6 Europe and North America. At the end of 2013, progressed throughout the year. The market States, exceeding 10% of total sales. KONE’s (873.2) million at the end of the reporting period. KONE ranked fourth globally measured by the 2011 1,095 in Asia-Pacific grew at a somewhat higher customer base is large and diverse, with no single size of our maintenance base. Q3 2012 1,269 2013 1,327 rate than in the previous year driven by rapid customer representing a substantial share of sales. KONE has a strong balance sheet with a positive growth in China. Globally, the major projects cash position. A strong balance sheet supports Although we have increased our global market 2011 1,099 segment grew somewhat, driven by strong KONE’s operating income (EBIT) grew and KONE’S growth ambitions. It also enables KONE share significantly over the past eight years, Q4 2012 1,321 2013 1,473 activity in Asia-Pacific, the Middle East and reached EUR 953.4 (1–12/2012: 828.7) million to react to attractive opportunities should they we continue to develop our business with a North America. The modernization market was or 13.8% (13.2%) of net sales (1–12/2012 occur within its scope of business. We have no challenger’s mindset. Our aim continues to relatively stable, with positive development in figures exclude a one-time cost of EUR target for the balance sheet structure and no be to grow faster than the market in all the 2013 Sales: North America and Asia-Pacific, but a decline in 37.3 million related to the support function dividend or share buy-back policy – the dividend different parts of our business. Strong sales growth in new equipment and good growth also in maintenance the EMEA region. Maintenance market growth development and cost adjustment programs). proposal by the Board of Directors is determined was the fastest in Asia-Pacific, driven by growth The growth in operating income was a result on the basis of the overall business outlook Long-term financial targets 0 500 1,000 1,500 2,000 2,500 in new equipment installations. In the more of continued strong new equipment sales and opportunities as well as the current and KONE has reached two of the three long- mature maintenance markets, the growth rate growth in Asia-Pacific, China in particular, and anticipated capital structure. For 2013, KONE term targets communicated in January 2011. 2011 1,054 Q1 2012 1,241 was lower, with many countries seeing a very positive development in the service business distributed in dividends in total EUR 512 million We have grown faster than the market and 2013 1,399 competitive market environment. globally. The relative operating income was to its shareholders. improved our working capital rotation. The burdened by the significant growth of the third target, which is yet to be reached, is that 2011 1,286 Q2 2012 1,544 Over the past years, KONE’s geographic share of new equipment sales of total sales, We retain a challenger’s mindset of achieving an EBIT margin of 16%. In the 2013 1,762 presence and sales split has shifted significantly. a high level of deliveries of projects that Between 2005 and 2013, new equipment short term, the increase of the share of new The share of the Asia-Pacific region out of were booked as orders received with lower has been the fastest growing part of KONE’s equipment out of KONE’s total sales has been 2011 1,296 Q3 2012 1,634 KONE’s total sales has increased from 12% margins in 2010 and 2011, particularly in business, and we have improved significantly burdening margin development. However, 2013 1,739 in 2005 to 38% in 2013. In the same period, North America, and intense price competition. our market share in this business. In 2013, with our negative working capital, and high the share of EMEA has declined from 66% to However, in the second half of the year, the KONE ranked second globally in new return on capital in all parts of our business, 2011 1,589 46% and that of North America from 22% to relative operating income developed positively equipment volumes. The share of new we do not seek to optimize the sales mix in the Q4 2012 1,858 2013 2,033 16%. This is a result of rapid market growth due to a strong operational performance on equipment out of total sales has grown in short term, but to grow absolute EBIT and to and KONE’s market share gains in Asia-Pacific, a broad basis as well as a favorable impact of this period from 40% to 54%, driven by fast improve profitability in all parts of our business at a time when European and North American pricing actions taken during the past two years. growth in Asia-Pacific. At the same time on in the long term. Growth in new equipment 2013 Operating income*: markets have been weak. At the same time KONE continued to increase fixed costs in the service side, the share of modernization sales contributes to the long-term growth of Strong new equipment sales growth in Asia-Pacific and positive development in however, good sales growth has been achieved areas that support the growth of the business, has decreased from 19% to 14% and that of the business, and is the best way to secure global service business key contributors also in more challenging markets in the EMEA in particular in Asia-Pacific as well as process maintenance from 41% to 32%. future growth in the maintenance business to EBIT growth region and North America. While the major development and IT. KONE’s income before through obtaining maintenance contracts for volumes of new equipment globally have taxes was EUR 960.5 (804.3) million. Although the fastest growth has been seen in installed equipment. 0 50 100 150 200 250 300 shifted today to the Asia-Pacific region, Europe new equipment, we have also achieved good 2011 119 and North America are important markets in Taxes totaled EUR 247.3 (193.3) million. This Q1 2012 135 maintenance and modernization. represents an effective tax rate of 25.8% Development of KONE’s share prices versus OMX Helsinki Cap and Euro Stoxx 600 2013 160 (24.0%) for the financial year. The effective 40 2011 185 Financial performance tax rate resulting from the operations for the 35 Q2 2012 210 In 2013, KONE’s orders received increased by financial year was 23.6% (23.5%). KONE 2013 243 30 11.9% and totaled EUR 6,151 (1–12/2012: maintains transparency in its relationship with 25 2011 189 5,496) million. Maintenance contracts are not all tax authorities. We are committed to paying 20 Q3 2012 226 included in orders received. The margin of all taxes that are legally due and to meeting all 15 2013 258 10 the order book was at a healthy level, and the disclosure requirements in the countries where 5 2011 233 orders received margins improved slightly from we operate. Every transaction must have a 0 Q4 2012 257 Jun 1, Jan 1, Jan 1, Jan 1, Jan 1, Jan 1, Jan 1, Jan 1, Jan 1, Dec 31, Read more the previous year’s good level. Cancellations solid business rationale without compromising 2005 2006 2007 2008 2009 2010 2011 2012 2013 2013 2013 293 about our economic performance of orders remained very low. KONE’s new tax compliance principles. Our objective is to www.kone.com/investors * excluding one-time items equipment orders received in elevator and ensure predictability in tax matters. KONE class B share OMX Helsinki Cap Index Euro Stoxx 600 Index

18 19 Environment KONE 2013 | CORPORATE RESPONSIBILITY REPORT KONE 2013 | CORPORATE RESPONSIBILITY REPORT Environment

ENVIRONMENT KONE helps combat climate change and contributes to the development of next-generation green buildings by delivering eco-efficient elevator, escalator, and automatic building door Developing eco-efficient solutions for solutions for sustainable and net zero energy buildings. future buildings The increasing interest in achieving green building certifications such as LEED, BREEAM, Green Star, 3 Star and Green Mark is one of the factors driving the growing demand for eco-efficient elevators and escalators. KONE’s environmental strategy is to provide Green transformation safe, environmentally efficient and responsible Leader in sustainability has been defined as high performance solutions and services. We one of KONE’s strategic targets. To support this strive for continuous improvement in all of target, we have updated our Environmental Levels of green building activity by firms around the our business activities by complying with or Excellence program’s key initiatives and targets world (2009–2015 Expected) exceeding applicable laws, rules and regulations. (read more on p. 31). The program supports Buildings account for Furthermore, we work with our suppliers the ongoing transformation of the built 2% and customers to prevent or reduce business environment into smart eco-cities, low-carbon 6% about 40% 13% 10% operations-related emissions and waste. communities, and net zero energy buildings. 28% 11% Transformation is not only applicable to newly of the world’s energy 33% 26% 17% 51% KONE’s long-term environmental objectives constructed buildings, but also relates to 13% 20% are to further improve the eco-efficiency of the renovation of old buildings and the built consumption*, and 30% 19% 21% our solutions, modernize existing elevators, environment as a whole. Green transformation escalators, and automatic building doors to occurs throughout the life cycle of buildings, elevators and escalators make them more energy efficient, and to from design and construction to maintenance 2009 2012 2015 further reduce the adverse environmental and modernization. can represent from 2 to impact of our operations, particularly with

More than 60% Green Projects 1% to 15% Green Projects regard to our operational carbon footprint as 10% of energy use in an well as energy, material, and water efficiency. 31% to 60% Green Projects Exploring (No Green Involvement) individual building. 16% to 30% Green Projects

Enabling eco-efficiency in every phase of a building’s life cycle *Source: UNEP

Source: McGraw-Hill Construction, 2013 We provide services that help our customers We pay careful attention to the way our achieve their eco-efficiency goals in every phase services are produced and delivered to ensure of the building’s life cycle – from designing and that they create as little environmental impact constructing the building to maintaining and as possible. Governments in different parts of modernizing it. the world are taking action in quest of green building. The European 1. Supporting green 2. Eco-efficient installation Energy Performance of Buildings building design Considering the environment Directive requires that by the end of Calculating our products’ when installing new equipment. energy use and enabling green Our well planned and efficient 2020 all new buildings constructed building construction. We publish installation processes minimize the are nearly zero energy buildings*. the environmental impact of adverse environmental impacts of The government in China recently KONE products and contribute installation work, and our systems to developing global energy ensure we reduce our chemical use published an ambitious target for 50% management standards. and handle waste efficiently on site. of new buildings to be constructed according to green building standards in 2020**.

Up to 70% energy savings 6.9% relative reduction of *A nearly zero energy building is by modernizing vehicle fleet emissions defined as “a building that has a very high energy performance”.

**Source: Mizuho Securities Asia 4. Eco-efficiency through 3. Efficient maintenance processes Limited modernization Using smart technologies and a green Applying a range of solutions to vehicle fleet to minimize emissions and make the most difference for the least maximize efficiency. Remote monitoring impact. Our modernization solutions solutions reduce unnecessary technician range from retrofitting LED lights to a callouts. By carrying spare part stocks in completely new elevator with energy- our vehicles we reduce warehouse visits, regeneration technology. further decreasing emissions.

20 21 Environment KONE 2013 | CORPORATE RESPONSIBILITY REPORT KONE 2013 | CORPORATE RESPONSIBILITY REPORT Environment

KONE MonoSpace® 500 Among KONE’s focus areas are green In developing new solutions, we focus energy efficiency rating for its volume elevator FIDE energy saving label BGreen Sustainable Supplier for Europe − kWh/year building research projects related to new on minimizing the environmental impact range while also fulfilling safety and accessibility In addition to the VDI 4707 certifications, of the Year Over 70% reduction 2008–2012* people flow technologies and pioneering low throughout the lifecycle of the equipment. codes. KONE is the first and only elevator company carbon maintenance concepts that employ This focus extends from the extraction of to achieve the FIDE energy saving label for its KONE Middle East was awarded 2,500 remote monitoring and an eco-efficient raw materials to end-of-life processes such as A number of KONE solutions in Europe and elevators. The KONE MonoSpace 500, KONE “Sustainable Supplier of the Year” 2,000 service vehicle fleet. In addition, we develop recycling, waste treatment, and the reuse of Asia ranging from low- and mid-rise to high- MiniSpace, and KONE EcoSpace® elevators at the BGreen Awards in 2013. The 1,500 efficient installation methods for elevators and recovered materials. rise elevators have received an A-class energy already gained labeling in 2011. In 2013 the Sustainable Supplier of the Year is awarded to the supplier with the most 1,000 buildings, decreasing the installation time and efficiency rating as defined by VDI 4707, range of labeled elevators was extended to resources needed. The KONE R&D process aims to: the guideline published by the Association include the KONE MonoSpace 700, KONE significant R&D efforts in the creation 500 of German Engineers (Verein Deutscher N MonoSpace, KONE N MiniSpace, KONE of eco-friendly products, who offers • reduce energy consumption 0 For example, over 50% (2.2 million in 2010) Ingenieure). VDI 4707 classifies elevators based S MonoSpace®, and KONE S MiniSpace™ a significant range of eco-friendly 2008 2010 2012 of the elevators and escalators currently • develop new smart technologies for green on their energy consumption. Commonly elevators. FIDE is an official Mexican products, and presents the buyer with in operation in Europe are more than 20 building used by the elevator industry, the classification organization that acknowledges companies a sustainable alternative. The award Lighting *Calculations are based on an elevator speed of years old. In 2020, it is estimated that this ranges from A to G, from the most to the least for their technical and economical efforts to recognizes KONE’s new elevator Electrification 1 m/s, a load of 630 kg, • reduce material use, including packaging and Hoisting 150,000 starts/year, a figure will increase to 60% (3.2 million)*. energy efficient systems. produce energy efficient equipment. The FIDE offering for its energy efficiency. BGreen travel height of 9 m and waste 4 floors According to the “E4 study Energy Efficiency evaluation is based on VDI 4707. is the Middle East’s only magazine of Elevators and Escalators” supported by • avoid the use of hazardous substances The A-class certifications have been achieved on dedicated to environmental issues and the European Commission, by modernizing customers’ sites with measurements conducted sustainability. • maximize material durability and recycled Green Label certification elevators installed in 1985 or earlier with the by third parties, in building types varying In 2013 KONE received Green Label content best available technology, energy savings from low-rise residential buildings to high-rise certification for the KONE N MiniSpace and KONE N MonoSpace® for Asia of as much as 63% can be achieved. On • maximize recyclability office buildings and hospitals. KONE has also N MonoSpace elevators from the Singapore - kWh/year the European level this would mean energy achieved an A-class VDI 4707 certificate for Green Building Council. KONE is the first Over 75% reduction 2008–2012* • ensure that our products meet green building savings of 11.6 TWh. certification requirements a double deck elevator, which is a special elevator company to achieve the distinction. application for buildings with very high traffic Through this certification, KONE’s elevators 4,000 Energy efficient solutions that lead to • minimize water consumption volumes. During 2013, KONE elevators’ VDI are recommended for Green Mark certified 3,200 greener buildings 4707 A-class energy efficiency rating coverage green buildings. Green Mark is a green building 2,400 KONE is a pioneer in developing eco-efficient Every product development project at for customer installations was expanded to certification scheme of the Singaporean

1,600 solutions in the elevator and escalator industry. KONE must follow detailed eco-efficiency include KONE N MiniSpace™ and KONE N Building and Construction Authority, which The biggest environmental impact of our criteria, verified using prototypes and pilots, MonoSpace® as well as an A-class certification promotes sustainability in the construction and 800 solutions relates to the amount of electricity with a special focus on minimizing energy for a modernized KONE MonoSpace® 500 real estate sectors. 0 used by the equipment over its lifetime. This consumption. In product management, every elevator. 2008 2010 2012 underlines the importance of continuing new change to a product is evaluated against

Lighting *Calculations are based to develop and improve energy efficient the existing solution to verify that the new on an elevator speed of innovations. solution delivers improved performance in Electrification 1 m/s, a load of 1,000 Hoisting kg, 150,000 starts/year, terms of minimized adverse impact on the VDI 4707 energy efficiency a travel height of 12 m Best-in-class energy efficiency KONE seeks to decrease the environmental environment. To identify and eliminate any classification and 5 floors Europe KONE KONE KONE KONE KONE impact of buildings by continuing to reduce product-related risks, including those relating EcoSpace® MonoSpace® MonoSpace® MiniSpace™ Double Deck the energy consumption of its elevators to environmental safety, a risk assessment is 500 700 A A and escalators. Our volume elevator models made in every project. Observation launched in 2012 consume 70% less energy in Building type Residential Residential Hospital Office tower B KONE N MiniSpace® for Europe, 60–75% less in Asia and 40% less in KONE’s expertise in eco-efficiency enables Asia - kWh/year Location Italy Finland Italy Germany Austria C the US compared to the typical KONE elevator us to perform in-depth analyses of traffic Over 60% reduction 2008–2012* Load (kg) 480 630 2,000 4,000 2 x 1,200 configuration from 2008. These improvements patterns, energy consumption, and the D Speed (m/s) 0.63 1.0 1.0 3.0 6.2 have been made possible by the completely potential carbon footprint reduction over the 6,000 E renewed KONE EcoDisc® hoisting machine, entire operational lifespan of the solutions we Energy 4,800 efficiency class A A A A A a highly efficient drive, enhanced standby offer our customers. The tools used to conduct F 3,600 solutions, and LED lighting. Our escalator these analyses are particularly valuable in G 2,400 offering is 30% more energy efficient than it helping customers design net zero energy Asia KONE KONE KONE KONE KONE N MiniSpace™ E MiniSpace™ N MiniSpace™ N MonoSpace® MiniSpace™ 1,200 was in 2010. buildings and comply with green building requirements. Building type Residential Residential Hotel Office Office 0 Eco-efficiency drives the R&D process Read more 2008 2010 2012 Location China China China China China Eco-efficiency is one of the key drivers of Top-class energy efficiency about KONE’s active participation Load (kg) 800 1,000 1,150 1,600 1,600 Lighting *Calculations are based our R&D process and is at the heart of the In 2013, KONE further increased the number of in different organizations on an elevator speed Speed (m/s) 2.0 2.0 1.75 2.5 6.0 and working groups related Electrification entire KONE offering, from low- and high-rise energy efficient elevator installations globally, of 1.6 m/s, a load of to sustainability issues at Hoisting 1,000kg, 200,000 starts/ elevators to escalator and automatic building especially in Europe and Asia. KONE is the Energy year, a travel height of efficiency class A A A A A www.kone.com/memberships 45 m and 15 floors door solutions. only elevator company to offer the best A-class

*Source: European Lift Association ELA

22 23 Environment KONE 2013 | CORPORATE RESPONSIBILITY REPORT KONE 2013 | CORPORATE RESPONSIBILITY REPORT Environment

Eco-efficient People Flow solutions

Carbon footprint of our products that our greatest environmental impact stems Elevator solutions • Eco-efficient operation can cut energy KONE TransitMaster 120 KONE’s environmental responsibility covers the from the energy consumed by our products • The KONE EcoDisc® hoisting machine delivers consumption by up to 50% by slowing down escalator awarded full life cycle of its products, from design and during their operational lifetime. By reducing the best VDI 4707 A-class energy efficiency on or stopping the escalator when it is not in use manufacturing to maintenance, modernization, energy consumption we consequently reduce the market. The innovative copper winding or increasing the efficiency of the motor when The KONE TransitMaster 120 escalator system reduces heat losses by up to 30%. The and end-of-life treatment. KONE’s life cycle the environmental impact of KONE solutions traffic volumes are low. targeted at the public transport braking system reduces the power consumption assessment, carried out in accordance with the during their operational lifetime. segment won a 2013 Architectural during steady run by 75% compared to the ISO 14040 standard (ReCiPe method), shows • Regenerative solutions reduce energy Products Product Innovation Award previous model. KONE EcoDisc is compact and lightweight, contributing to material and space consumption by up to 60% by recovering the (PIA). Its signature attributes include Setting new benchmarks for efficiency. energy that is released when the escalator is the regenerative solutions and a high-rise Carbon footprint of KONE’s products, tCO2e 2011 2012 2013 used. standby speed operation, which saves • KONE’s regenerative solutions can provide up to 16% of energy by reducing KONE’s new high-rise solution, KONE Production of materials for products (calculated) 1,313,000 1,761,000 1,991,000 energy savings of 20–35% by recovering the • LED lighting consumes up to 80% less the escalator’s speed when there TM UltraRope , will enable future elevator Lifetime energy consumption of products ordered energy that is released when the elevator is used. energy compared to conventional lighting are no passengers on the step band. travel heights up to 1,000 meters. The from KONE during the reporting year (calculated) 2,862,000 4,180,000 5,045,000 technologies. Additionally, the escalator offers solution cuts energy consumption by • LED lighting can reduce energy consumption a range of attractive LED lighting 2011 excluding GiantKONE by up to 80% compared to halogen lighting 15% for a 500-meter elevator ride. • KONE Direct Drive is an innovative and eco- options that save up to 80% of energy and lasts ten times longer. When elevators travel higher in the efficient drive system that consumes up to 20% compared to conventional lighting. future, energy savings of as much as less energy than a conventional worm gear Materials used, tonnes 2011 2012 2013 • Standby solutions power down the equipment, 45% will be possible for an 800-meter when the elevator is not in use, providing drive. elevator ride. Manufacturing (calculated) Metals (steel, substantial energy savings. aluminum, copper) 349,000 470,000 532,000 • The KONE EcoMod™ solution makes it possible TM KONE UltraRope has been developed Miscellaneous 9,400 7,800 5,500 • KONE’s destination control system optimizes for an escalator to be modernized without and tested rigorously both in real traffic, reducing the size and number of removing the truss, saving both construction Plastics 3,800 4,200 4,100 elevators and simulation laboratories elevators needed in a building. time and materials. at KONE’s research and development Glass 3,000 3,700 3,900 facilities in Finland. Since 2010, it has • KONE’s new high-rise solution, KONE Automatic building door solutions Packaging (calculated) Wood 39,600 42,000 39,500 UltraRope, cuts the energy consumption of a been tested in operation at the world’s • KONE’s sliding door solution regulates the 500-meter elevator ride by 15%. tallest elevator testing laboratory, Carton board 1,300 1,200 1,100 door’s opening width and opening time based KONE’s Tytyri facility built over 300 on the outside temperature, wind speed, and Plastics 800 1,000 1,100 meters underground adjacent to an Escalator solutions pedestrian volumes. This enables savings of up active limestone mine. Read more on Office consumables (actual data) Paper 400 400 600 • The lubrication-free step chain saves oil, to 4,000 kWh per year in heating and cooling p. 10–11. Total 407,300 530,300 587,800 reduces chain wear, and decreases fire risk. consumption.

Calculations are based on Life Cycle Assessment data and products ordered from KONE (2011: 85 k; 2012: 118 k; 2013: 137 k); 2011 excluding GiantKONE.

KONE EcoDisc ® hoisting machine Regenerative solution

KONE UltraRope™

LED lighting

Standby solutions

Lubrication-free step chain Destination control system Regenerative solution

Eco-efficient operation

KONE EcoMod™ modernization Energy-efficient sliding door

24 25 Environment KONE 2013 | CORPORATE RESPONSIBILITY REPORT KONE 2013 | CORPORATE RESPONSIBILITY REPORT Environment

The environmental impact of KONE’s operations in 2013

KONE’s operational environmental work In 2013 KONE’s operational carbon footprint Logistics thanks to new, bigger ships and lower sailing Relative carbon footprint of logistics

kgCO2e/Unit focuses on reducing our carbon footprint and relative to net sales decreased by 3.5% Logistics accounted for 131 ktCO2e, or 43% of speed. The volume increase in KONE’s improving energy and material efficiency, as compared to 2012. The operational carbon KONE’s operational carbon footprint, making it deliveries has helped us improve transportation 1,500 well as reducing water consumption, waste footprint of externally assured scope 1 and the biggest contributor in terms of greenhouse efficiency. We have also continued to improve and the use of hazardous substances. We work scope 2 greenhouse gas emissions decreased by gas emissions. In 2013 KONE extended the reporting accuracy. 1,200 1,408 with our suppliers and customers to minimize 9.1% relative to net sales. The absolute scope scope of its externally assured environmental 900 1,088 1,039 the emissions and other adverse environmental 1 and 2 carbon footprint decreased by 0.2%, data to include the logistics emissions. KONE’s KONE’s logistics operations are based on 600 -4.5% impacts of our business operations and to whereas KONE’s sales volumes increased by logistics carbon footprint relative to units accurate and timely information at all phases 300 prevent them altogether whenever possible. In 10%. delivered to customers decreased by 4.5%. The of the delivery chain, and on using distribution order to address the areas that have the most logistics data covers both the transportation models that take eco-efficiency into account. 0 2011 2012 2013 significant environmental impacts, KONE has With 131 (2012: 117) ktCO2e in 2013, the of products from KONE’s manufacturing units Special attention is paid to reducing the impact been assessing its carbon footprint since 2008. major source of greenhouse gas emissions was to customers and the transportation of those of transportation through route and shipment • 2011 Excluding GiantKONE and India KONE’s logistics operations. The other major modules that are delivered straight from optimization, as well as careful analysis of • 2012 restated to include In 2013 KONE’s absolute operational carbon components are our vehicle fleet with 86 (2012: our suppliers to our distribution centers and alternative transportation models. The impact GiantKONE and India

footprint amounted to 305 (2012: 288) ktCO2e 88) ktCO2e, electricity consumption with 45 onward to customers. In 2013, KONE delivered of packaging is managed, for example, by

(thousand tonnes of carbon dioxide equivalent). (2012: 42) ktCO2e, fuels for heating and cooling 2.6 million packages from distribution centers using environmentally conscious packaging

The increase is mainly a result of increased with 14 (2012: 15) ktCO2e, and mobility, to the installation sites. design. This applies to both our own packaging employee headcount, sales and production including business air travel and employee and that of our suppliers. Packaging plays a

volumes. commuting, with 29 (2012: 25) ktCO2e. KONE has been able to control the increase significant role in improving transportation of logistics emissions by further optimizing its efficiency and full-chain quality. Relative operational carbon footprint logistics network and by improving the logistics efficiency per delivered unit. For example, KONE has strict requirements concerning we have further optimized our transportation the eco-efficiency of its service providers’ network in Europe through optimal supplier operations. The environmental reporting locations and better utilization of the methods that KONE rolled out to its main distribution centers close to KONE locations. logistics service providers globally in 2012 have We have made transportation improvements been further improved from the perspectives of Vehicle fleet Electricity Business air travel Logistics Overall operations such as ocean freight emission reductions accuracy and coverage during 2013. (Scope 1) (Scope 2) (Scope 3) (Scope 3)

2011 2012 2013 YoY 2011 2012 2013 YoY 2011 2012 2013 YoY 2011 2012 2013 YoY 2011 2012 2013 YoY 85.6 83.1* 77.4 -6.9% 898 1,055 1,027 -2.7% 226 182 226 +24.2% 1,408 1,088** 1,039 -4.5% 47.4 45.8* 44.2 -3.5% How KONE reduces the environmental impacts of transportation kgCO e / Unit in service kgCO e / Headcount kgCO e / Headcount kgCO e / Unit kgCO e / KEUR Sales 2 2 2 2 2 Development action Impact on eco-efficiency * Restated ** Restated to include GiantKONE and India Optimized use of transportation networks Optimal routing of material through distribu- Data for vehicle fleet, electricity, business air travel and logistics assured externally. tion center network and selection of suppliers located close to distribution centers.

Absolute operational carbon footprint per category, ktCO2e Maximized use of railway and waterway transporta- Less CO2 emissions per tonne-kilometer. tion, minimized use of air freight

Scope 1: Direct emissions Scope 2: Indirect emissions Scope 3: Other relevant indirect emissions 140 Improved space utilization ratio in loading Better load planning of outbound trucks and 120 131 containers resulting in improved container space utilization, optimization of transportation 100 117 units used and more products delivered per 80 96 89 89 86 shipment. 60 Centralized volumes to main suppliers, convenient Fewer transportation routes and improved 40 42 45 location of suppliers close to distribution centers transportation efficiency ratio. 20 32 8 7 10 Use of more eco-efficient transportation equipment Truck equipment selected on the basis of 0 13 15 14 eco-efficiency. Requirement for Euro 4 (Euro- Vehicle fleet Heating and cooling Electricity Business air travel Logistics pean emission standard for light duty vehicles) trucks for European logistics service providers. Read more 2011 2012 2013 about KONE’s delivery chain on p. 32–35. • 2011 excluding GiantKONE • Logistics 2011 excluding GiantKONE and India • 2013 data for all categories assured externally

26 27 Environment KONE 2013 | CORPORATE RESPONSIBILITY REPORT KONE 2013 | CORPORATE RESPONSIBILITY REPORT Environment

Relative carbon footprint How KONE reduces packaging-related emissions and waste Electricity been calculated based on life cycle impact KONE’s Czech manufacturing of vehicle fleet Electricity consumption accounts for 45 (2012: assessment data. Increased product volumes unit certified for excellent kgCO2e/Units in service Development action Impact on eco-efficiency 42) ktCO2e or 15% of KONE’s operational are reflected in higher material consumption energy management 100 Optimized packaging to better fit into logistics chain More products delivered per transportation carbon footprint. The electricity is used in figures. KONE focuses strongly on material unit. KONE’s offices, warehouses, and manufacturing management and the optimization of our In 2013 KONE’s Czech manufacturing 80 83.1 facilities. own operations. Our primary goal is material unit became the first KONE unit 85.6 Optimized use of packaging materials Less packaging material used, better waste 60 -2.9% 77.4 management, increased recyclability of mate- efficiency throughout our manufacturing chain, to receive the ISO 50001 Energy -6.9% 40 rials. KONE has committed to specific energy beginning with the product development management systems certification. The

20 Management and development of Less packaging material used, better waste consumption and electricity saving programs. stage. KONE also aims to reduce waste in its unit management saw the certification suppliers’ packaging management, improved logistics efficiency. For example KONE’s Finnish country manufacturing facilities and offices through as a powerful tool that fits with KONE’s 0 organization is aiming to reduce the electricity reduction at the source, reuse and recycling, commitment to energy efficiency. 2011 2012 2013 consumption at its facilities by 9% by 2016, with and by sending waste to incineration. Landfill Thanks to actions agreed during the 2008 as the base year. KONE’s Global Facility waste is kept to a minimum. certification process such as installing Vehicle fleet benefit cars. In 2013 KONE’s vehicle fleet Policy also includes energy saving targets. proximity sensors to lighting, installing

Altogether, 28% of KONE’s operational emitted 86 (2012: 88) ktCO2e in total. Waste is always handled according to a new compressor for the site, and greenhouse gases are emitted by our global The absolute vehicle fleet carbon footprint In total, 4% (2012: 4%) of the electricity applicable laws and regulations in local KONE improving the energy efficiency of vehicle fleet, making it the second biggest decreased by 2.4%, whereas the relative carbon used in our operations is green electricity organizations. KONE aims to be as material- machinery use practices, significant contributor in terms of greenhouse gas footprint (per unit in service) was reduced produced using renewable sources. KONE’s efficient as possible, and we aim to exceed energy and monetary savings have emissions. In 2013 the total size of our fleet by 6.9%. KONE continuously looks for new German, Swedish, Danish, and Dutch country legal requirements. been achieved. remained at 14,000. Two-thirds of the fleet and innovative ways of reducing the carbon organizations, our Italian manufacturing are service vehicles, the rest being employee footprint of its vehicle fleet. unit as well as the new KONE People Flow Only 4% (2012: 6%) of the waste generated by Center in Finland use green electricity. KONE’s KONE’s global delivery chain (environmental Italian manufacturing unit in Slimpa has a data has been collected from 11 engineering photovoltaic system to produce some of the and manufacturing sites), is sent to landfill. Key actions taken to reduce the carbon footprint of KONE’s vehicle fleet electricity consumed and the eco-efficient The remaining 96% is recycled or incinerated. KONE US Operations Center in Moline, Illinois All of the waste generated by our escalator Compliance with KONE vehicle KONE continued to manage its vehicle fleet fleet policy in compliance with the global vehicle fleet combines active and passive energy strategies, manufacturing unit and the GiantKONE including over 1,300 solar panels. manufacturing unit in China and by our policy, which defines maximum CO2 emission limits. manufacturing unit in Pero, Italy is recycled Sourcing focus on fuel efficiency During 2013 KONE signed global contracts with Renault, Ford and Fiat. One of the key criteria in the selection was competitive fuel effi- Fuels for heating and cooling or incinerated – none is sent to landfill. Only ciency in their fleet offering. In 2013, both passenger and commercial Fuels for heating and cooling account for 5% of 0.3% of the waste generated by our elevator vehicles taken out of use were replaced by new, significantly more our operational carbon footprint. In 2013 fuels manufacturing unit in China is sent to landfill. fuel-efficient models. Another example of using eco-efficient technolo- for heating and cooling generated 14 (2012: gy is the selection of vans with start-stop systems. 15) ktCO2e of greenhouse gas emissions. This Although the water consumption in KONE’s Introduction of electric vehicles Piloting the fully electric vehicle models continued in France, represents a decrease of 7% compared to 2012. production and maintenance processes is Germany, Spain, and in the Netherlands. minimal, we continue to optimize and further Vehicle rightsizing The vehicle rightsizing program continued in 2013. KONE has contin- Business air travel minimize our usage of water. KONE uses uously paid attention to selecting correctly sized commercial vans Business air travel accounts for 3% of KONE’s municipal water, and waste water is released when replacing existing models, which often had larger cargo capac- operational carbon footprint. In 2013 air travel into municipal treatment systems that abide ity than required. The proportion of compact and medium-sized vans related greenhouse gas emissions increased by local regulations. The total amount of in the global fleet continues to grow. by 34.8% to 10 (2012: 7) ktCO2e. The relative water used in our manufacturing and office Monitoring driver performance The driver performance monitoring program continued in 2013. increase was 24.2%. In order to reduce facilities was 440,000 (2012: 390,000) m³. KONE monitored the driving performance of its service drivers in the need for travel and to facilitate global The increase is, again, caused by the increased France, the UK, the Netherlands, Czech Republic, Slovakia, and Po- land. Drivers were scored each month in terms of fuel efficiency and collaboration, KONE invests in virtual meeting headcount and production volumes. In 2013 driving behavior. tools such as video conferencing equipment. In KONE’s manufacturing units (excluding 2013 virtual meeting time increased by 1.5%. GiantKONE) released 24.8 tonnes (2012: 26.4) Vehicle sharing program The vehicle sharing program in France continued. This has been achieved by encouraging KONE of wastewater effluents into the municipal Telematics systems Telematics systems were piloted in several countries to dispatch ser- personnel to use the virtual meeting tools as wastewater systems. vice technicians more effectively. the first option instead of traveling. Improving the eco-efficiency of KONE Material management and waste facilities optimization KONE has over 1,000 facilities globally, In 2013 KONE used 588 (2012: 530) k tonnes including office spaces and installation and Read more about the facility policy in improving the of materials for producing and packaging service operation hubs. At the end of 2013, eco-efficiency of KONE facilities on p. 30. its elevators and escalators. The figures have the KONE Executive Board approved a Global

28 29 Environment KONE 2013 | CORPORATE RESPONSIBILITY REPORT KONE 2013 | CORPORATE RESPONSIBILITY REPORT Environment

Environmental Excellence program

Facilities Policy in order to create a harmonized KONE is the industry leader in CDP Key initiatives Target 2013 Achievements in 2013 KONE employees voiced their approach to the selection and management of opinion on environmental reporting We continue to Further reduction • KONE UltraRope™ high-rise technology announced. It offers significantly KONE’s facilities. Each KONE unit will have a KONE’s score in CDP’s (formerly known as reduce the energy in the energy increased eco-efficiency, durability, and reliability and cuts energy consumption excellence local sponsor from the management team who Carbon Disclosure Project) climate change consumption consumption of by 15% for a 500-meter elevator ride. and increase the volume elevators • KONE’s current volume elevator offering is over 70% more energy-efficient than will be responsible for the implementation of program further improved to 98/100 in 2013 To give KONE employees a voice in eco-efficiency of and escalators the 2008 offering in Europe, and 60-75% and 40% more energy-efficient than the policy. Each unit will also appoint a local (2012: 90/100). The program is designed to our solutions. the 2008 offering in Asia Pacific and in the United States, respectively. environmental excellence, a follow-up For the third year running, KONE achieved owner who will monitor and approve all facilities enable the management of greenhouse gas • KONE’s escalators are 30% more energy-efficient compared to the 2010 offering. to an employee survey conducted in a top position in CDP’s Nordic Climate related projects. The key objectives of the facility emissions and the risks and opportunities • The VDI 4707* A-class coverage for customer installations expanded to include 2009 was arranged in 2013. Almost KONE N MiniSpace™ and KONE N MonoSpace®. An A-class certification also Disclosure Leadership Index. policy include providing fit-for-purpose facilities associated with climate change. For the third 400 KONE employees responded and given to a modernized KONE MonoSpace® elevator. and eco-efficient operations as well as providing year running, KONE achieved a top position in • The range of FIDE** energy saving labeled KONE elevators extended to include the survey was complemented by a safe and secure work environment for all KONE CDP’s Nordic Climate Disclosure Leadership Index the KONE MonoSpace® 700, KONE N MonoSpace®, KONE N MiniSpace™, interviews of KONE people worldwide. employees. The goal is to reduce the facilities (CDLI) featuring the best 10% of organizations KONE S MonoSpace®, and KONE S MiniSpace™ elevators. Useful insights were received to assist • KONE was the first elevator company to achieve the Green Label certification in planning KONE’s environmental related carbon footprint by 15% by the end of included in the CDP Nordic report. The CDLI by the Singapore Green Building Council, which it received for the KONE N Showing the way to 2016. This will be implemented by: companies have displayed the most professional MiniSpace™ and N MonoSpace® elevators. excellence targets for 2014-2016. The eco-efficiency approach to climate change information • KONE Middle East awarded “Sustainable Supplier of the Year” at the BGreen survey results are encouraging and Awards. The award recognized KONE’s new elevator offering for its energy • Improving space efficiency at KONE facilities disclosure. The minimum score in the CDLI has show that in general, KONE employees efficiency. KONE’s facilities in Hyvinkää, Finland • Optimizing energy usage in heating, constantly risen. In addition to carbon disclosure, • KONE solutions delivered to LEED, BREEAM and other green buildings. are very proud to work for a company entered a new era at the start of ventilating, air conditioning, and in lighting CDP evaluates companies on their performance • The KONE TransitMaster™ 120 escalator won an Architectural Products Product that is committed to environmental 2013 when the newly constructed, systems by using proximity sensors and LED in mitigating climate change on a scale of A Innovation Award. KONE TransitMaster 120 stood out for its innovation in eco- excellence. Two main focus areas for efficiency, safety, and design. eco-efficient People Flow Center lights to E, with scores from A to B considered high further development were identified: welcomed its first customers. The • Deploying energy-saving practices for performance. KONE’s score of A- in 2013, show We continue to Reduce carbon • KONE’s carbon footprint decreased by 3.5%. The carbon footprint of externally practical guidance on environmental People Flow Center is a new building computers and office equipment improved carbon performance from its B score minimize the footprint relative assured scope 1 and scope 2 greenhouse gas emissions relative to net sales issues in daily work and requiring carbon footprint to net sales by 3% decreased by 9.1%. next to KONE’s factory. It includes • Increasing the share of green electricity in 2012. CDP is a leading global environmental of our operations. from 2010 level high environmental standards from meeting rooms, a canteen, and a two- • Improving material efficiency in reporting system, representing over 700 investors suppliers. Our processes ful- All corporate units, • All corporate units, manufacturing units, and R&D units are ISO 14001 and ISO floor showroom. Over 2,700 visitors, manufacturing/warehousing/office activities and gathering information from thousands of the fill ISO 14001 and manufacturing 9001 certified. consisting of customers and partners • Reducing waste and further improving world’s largest companies. green building units, and • 18 major country organizations are ISO 14001 and ISO 9001 certified (2012: requirements. targeted country and KONE employees experienced its recycling 17). KONE’s manufacturing unit in Czech Republic achieved the ISO 50001 organizations are Energy Management System certification. amenities in 2013. The facility is a fine • Selecting eco-efficient service suppliers ISO 14001 and ISO 9001 certified • KONE’s People Flow Center in Hyvinkää, Finland achieved a LEED Gold example of KONE’s commitment to certification. sustainability. In addition, new KONE buildings should be We develop All KONE strategic • Currently, 90% of strategic suppliers are ISO 14001 certified. designed according to LEED or other green environmental suppliers meet Green building principles and building standards and green buildings favored excellence jointly ISO 14001 with our suppliers. requirements accessibility directed the People Flow in the relocation of KONE facilities to existing Center’s design and construction. It buildings. We communi- KONE Corporate • KONE 2012 Corporate Responsibility Report maintained GRI3 B level. was awarded a LEED Gold certification cate and gain Responsibility • KONE’s score in the Carbon Disclosure Project improved to 98/100 points (2012: recognition as the Report maintains 90) with carbon performance score A- (2012: B). KONE included in the Nordic under the US Green Building most eco-efficient GRI3 B level Carbon Disclosure Leadership Index for the third year running. Council’s New Construction & Major company in our industry. • In addition to scope 1 and 2 greenhouse gas emissions comprising direct Renovations rating system and energy use and electricity consumption, KONE’s logistics and business air travel received a maximum score for water emissions from scope 3 were externally assured in 2013. efficiency. Other key eco-efficiency * VDI 4707 is a guideline published by the Association of German Engineers (Verein Deutscher Ingenieure), which classifies elevators based on their energy consumption. features of the building are energy ** FIDE is an official Mexican organization thatevaluates the energy efficiency of equipment. The FIDE evaluation is based on efficiency and indoor environmental VDI 4707. quality. The facility’s LEED Gold certification includes Innovation in Design credits thanks to the two Environmental Excellence Program 2014–2016 energy-efficient KONE MonoSpace® Key Solutions Green building Environmental OneISO and Reporting and 700 elevators used in the building. initiatives impact of suppliers communication operations

Targets Further Develop Reduce KONE’s Continue to Work to meet for 2016 reduce energy solutions to fulfill carbon footprint maintain OneISO GRI4 requirements consumption green building relative to net sales (ISO 9001/14001) and continue to of elevators requirements by 3% annually and require ISO maintain high CDP and escalators and implement 9001/14001 scores compared to LEED/BREEAM at from our strategic 2013, and further selected KONE suppliers Read more about KONE’s environmental key KONE’s new faciilty in Finland, the People Flow Center, was awarded a LEED Gold certification under the US Green Building improve resource facilities efficiency figures on p. 6–7. Council’s New Construction & Major Renovations rating system.

30 31 delivery and supply chain KONE 2013 | CORPORATE RESPONSIBILITY REPORT KONE 2013 | CORPORATE RESPONSIBILITY REPORT delivery and supply chain

DELIVERY CHAIN We at KONE strive for continuous improvement in the quality, responsiveness and efficiency of our delivery chain. It refers to all of the actions and processes that lead up to the delivery of Delivery chain tailored to equipment to the customer’s site. The chain ends when the customer accepts the installation. Leading up to this point, customer needs KONE works to ensure that in all phases of manufacturing, distribution, installation, and in the processes of our suppliers, the right items are delivered to the right place at the right Customer experience is at the heart of KONE’s In 2013, KONE continued to implement Control time, and with the right quality. delivery chain process, and our global presence Tower, a system developed within the company Our aim is to develop the best delivery chain in the industry. makes it crucial for the company to be close to in which different units integrate their processes its customers. In 2013, KONE’s delivery chain to improve delivery accuracy. In practice, the comprised eight production sites, eight global system relies on open communication and distribution centers for elevators, and four common project management processes. distribution centers for spare parts. KONE’s ninth Its purpose is to provide a consistent supply global distribution center is under construction. forecast to factories and external suppliers and Located in Chengdu, China, it will be opened to give the functions that deal directly with during the spring 2014. Over 4,100 people keep customers updated information on material and KONE’s supply operations running, covering capacity availability. By synchronizing all delivery new equipment, modernization, and spares process phases on a daily and weekly level, we supply. In addition, we work closely with a are able to provide customers with precise and KONE’s largest significant number of material suppliers and reliable delivery and installation schedules. manufacturing unit logistics service providers. A streamlined network through In April 2013, we celebrated the Delivery chain is an important part of KONE’s continuous learning opening of KONE Park manufacturing strategy, and Delivery Chain Excellence We are continuously developing our delivery and R&D site in Kunshan. This new was one of the five global development chain by implementing Lean and Six Sigma site meets the needs of our customers programs KONE had in place in 2011–2013 methods and tools to eliminate waste and in China, Asia and other parts of the for strategy implementation. Drivers behind reduce process variation. KONE’s target is world. It is located close to the Suzhou- KONE delivers 2.6 million packages from the development program were the needs to apply Lean and Six Sigma philosophies Shanghai Expressway, enabling good distribution centers to the installation sites, and of customers in different segments, global throughout the entire delivery chain as well as connections to suppliers and customers. close to 0.5 million packages of spare parts from harmonization and the smart integration of in product and process transitions. It was planned according to the Lean our facilities to the customer sites annually. processes and systems. During the three-year manufacturing principle to maximize period for this development program, we In 2013, over 3,000 people completed efficiency and eliminate waste, and managed to increase the effectiveness of delivery the Lean Passport E-learning Program. constructed according to modern green chain through Lean methods, and to improve Participants included more than 100 supplier building standards, aiming to earn a the demand - supply planning. representatives. The learning module is LEED Gold green building certification. available in six languages: Finnish, English, China is by far the single biggest market Meeting the needs of customers Chinese, Italian, Spanish and Czech. Advanced for new elevators and escalators. KONE’s delivery chain is able to adapt to training for Lean practitioners was conducted different customer requirements. For example during the year with about 20 participants. our customers with modernization projects Furthermore, KONE established a Lean Office Sharing ideas value timely delivery of certain components, to serve as a dedicated resource to implement and in special high-rise projects the role of Lean, provide training and serve as a To build a culture of continuous well-planned and specified delivery is crucial in knowledge center. About 250 people at KONE learning, employees are encouraged meeting customers’ demanding conditions. have been trained in Six Sigma. Majority of to participate and share their them have received certification. improvement ideas. Idea Management We collect systematically customer feedback System is in use in all of KONE’s on our quality performance, which we The 5S* method, which has been employed at factories globally, and by the end analyze using Six Sigma tools before taking all KONE offices and distribution centers, was of 2013, approximately 18,500 corrective action. We set targets and monitor implemented at all KONE distribution centers initiatives have been approved for key performance indicators (KPI’s) such as the during the year. Implementation at installation implementation, out of which over early failure rate of our products. Employees sites is ongoing. 16,000 have already been put into are actively encouraged to take part in the action. improvement of processes, through an Idea Management System and the Kaizen *The name of the 5S methodology comes from the words Read more continuous improvement practices. sort, stabilize, shine, standardise, and sustain. about our logistics on p. 27.

32 33 delivery and supply chain KONE 2013 | CORPORATE RESPONSIBILITY REPORT KONE 2013 | CORPORATE RESPONSIBILITY REPORT delivery and supply chain

Actively developing supplier excellence

Strategic suppliers with Our suppliers and their sub-tier suppliers are an Supplier Code of Conduct follow-up process. We also run a supplier Supplier Excellence Certification Supplier Development Program integral part of KONE’s delivery chain. They play All KONE suppliers must comply with our scorecard system. It evaluates key suppliers KONE’s Supplier Excellence Certification progresses ISO 9001 certification: a key role in the task of delivering high-quality Supplier Code of Conduct, which sets out of direct materials to our distribution Program assesses key suppliers’ sites. It considers 100% solutions to our customers. Just as internal KONE’s global values. Suppliers are expected centers and factories as well as main environmental and quality management KONE launched its Supplier efficiency is essential, so is working effectively to adhere to this Code in their dealings with installation subcontractors within our country systems, performance scorecards, and supplier Development Strategy in 2012 to with the 20,000 suppliers who provide us with KONE, their own employees and suppliers, as organizations. The scorecards combine audit results, among other aspects. ISO 14001 extend the drive for delivery chain raw materials, manufacture components and well as third parties. KONE may terminate all quantitative and qualitative performance and ISO 9001 compliance are also assessed. We excellence to our supplier network. Strategic suppliers with modules, transportation services, and install our contracts with suppliers who breach this code. criteria including quality and safety, aim to maintain a supply base that complies Its objective is to improve quality, ISO 14001 certification: products. KONE prohibits any kind of unethical business cost competitiveness, logistics, technical with international quality and environmental reliability and manufacturing efficiency practices. competence and service level. We discuss standards as well as those of KONE. In 2013, at suppliers, and ultimately improve 90% KONE purchases 80% of its raw materials, performance evaluations with suppliers 100% of KONE’s strategic supplier factories were KONE’s market position. A total of 181 components, and systems supply for new KONE’s Supplier Code of Conduct focuses on regularly and initiate corrective actions or ISO 9001 certified and 90% of KONE’s strategic supplier development projects were equipment production from approximately issues including: development projects, and conduct follow-up supplier factories were ISO 14001 certified. We completed in 2013. Strategic suppliers 100 suppliers located in the vicinity of our when performance does not meet KONE’s expect all our key suppliers’ factories to attain audited in 2013: production centers. The close location of many Ethics – complying with local laws; intellectual expectations. Supplier Excellence Certification. of our suppliers has a positive impact on both property rights; improper payments; conflict of 100% our flexibility and environmental footprint. interest

We ensure supplier excellence by auditing Environment – complying with environmental our suppliers, assessing and mitigating laws and regulations and obtaining supplier related risk, employing standardized environmental permits; continuously reducing contractual agreements that include the KONE harmful environmental impacts by minimizing Supplier Code of Conduct, assessing supplier the amount of waste, waste water, air performance, and certifying key suppliers. emissions, greenhouse gas emissions, chemicals and hazardous substances. Supplier Audits We audit all of the main suppliers that deliver Labor – non-discrimination, and fair and equal direct materials to KONE distribution centers treatment of all employees; prohibition of child or factories on a regular basis. All of KONE’s or forced labor; maintaining a safe and healthy strategic suppliers were audited in 2013. working environment; complying with wage- related laws and regulations We review our audit plan every year to prioritize and schedule audits according to our Health and Safety – managing exposure business needs. Audits can be scheduled to to potential safety hazards and physically check on changes in products or production demanding tasks; implementing emergency processes, to validate follow-through on plans and response procedures; managing improvement initiatives, to assess quality and occupational injuries and illnesses environmental management systems especially when suppliers are not ISO certified, or to pre- Management systems – identifying, monitoring audit the suitability of potential suppliers. and understanding applicable laws, regulations and customer requirements; identifying Assessing supplier risks and controlling supplier risks related to KONE’s sourcing risk monitoring system is environment, health and safety and labor based on a thorough assessment of suppliers, practices. including analyses of their financial and business viability, and their dependence on Assessing supplier performance business from KONE. We also work closely with The performance of KONE’s main suppliers our strategic suppliers to secure competitive for direct production materials is monitored Read more about our Supplier Code of Conduct raw material price levels. through a monthly KPI measurement and We purchase close to 80% of the components, raw materials, and system supply for new equipment production from at www.kone.com/suppliers approximately 100 suppliers located close to our production centers.

34 35 delivery and supply chain KONE 2013 | CORPORATE RESPONSIBILITY REPORT KONE 2013 | CORPORATE RESPONSIBILITY REPORT Safety

SAFETY Millions of people use elevators, escalators and automatic building doors every day, and our top priority is to keep them safe. Our 15,000 service technicians around the world ensure that Safety is our top priority the equipment maintained by KONE functions properly 24/7.

KONE has over 43,000 employees, and we work together with thousands of subcontractors. We want them to return home injury free every day. It is our strong belief that all accidents are preventable. Safety is an integral part of KONE’s strategy employees has the necessary competence to Boosting safety culture and a cornerstone of our business. We strongly perform their work professionally and safely. In 2013, KONE’s industrial injury frequency rate (IIFR) for believe that all accidents are preventable, and KONE employees receive training on health In 2013, KONE organized its second employees was 3.0; a reduction of 11.4% from the previous thus our ultimate goal is for zero accidents - for and safety, as well as training that is relevant for annual Global Safety Week. The year. KONE tracks the number of lost time injuries of one day or all of our employees, users of our equipment, their respective work roles and tasks. purpose of this global event is to more, per million hours worked, as a key performance indicator. and partners. We work towards achieving this further boost KONE’s culture for safety. goal by continuously developing our people KONE’s Supplier Code of Conduct requires Activities included for example training and processes, by working together with our all of our suppliers to protect the health and modules, virtual sessions, toolbox IIFR development partners, and by actively communicating about safety of their employees. Both our employees talks, locally organized activities, and

8 the safe use of equipment to users. and subcontractors are required to follow our also family events for employees and 7 globally defined rules and methods to ensure subcontractors. 6 We enhance the safety of KONE products their own safety and that of anyone else who 5 4 and services through rigorous attention to may be affected by their activities. 3 our design, manufacturing, installation, and 2 maintenance processes. KONE has global Monitoring workplace safety 1 policies, processes, and guidelines to ensure that performance 0 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013 our business activities, including subcontractor Every manager is responsible for ensuring that Safety targets and operations, are organized and conducted in a all necessary arrangements are in place to allow achievements structured and globally harmonized way. their teams to work safely. We conduct audits to measure compliance with KONE’s policies, • The ultimate goal of zero accidents Safety is a joint effort rules, and defined working methods, and take • In 2013 our industrial injury Elevator, escalator and automatic door safety is corrective actions if deviations are identified. frequency rate (IIFR) was 3.0 – an a joint effort that involves technology providers, Safety is checked in all process audits, and if 11.4% reduction compared to 2012 building owners, maintenance service providers obstacles to safe working are found, the work • In our annual employee survey, and equipment users. As a technology provider, in question stops until a safe way to continue Pulse, the question about KONE’s KONE manufactures equipment that meets has been approved. Members of the senior commitment to employee safety applicable codes and standards. Our equipment management teams participate in workplace again received a very high score in also often include additional safety features that audits regularly. 2013 exceed the minimum requirements. To support continuous improvement in KONE’s Building owners and maintenance service safety performance, a procedure is in place providers are responsible for making sure that to report and investigate accidents, near equipment is professionally maintained and miss incidents, unsafe conditions and unsafe kept in good condition. Customers should for behavior. The underlying root causes are example inform service providers if they identify identified and corrective and preventive actions any recognizable hazards, such as broken glass or are implemented to ensure that the accident or sharp edges due to vandalism. We emphasize that near-miss incident is not repeated. At the start of elevator, escalator and automatic door users need 2013, KONE began monitoring employee near- to be conscious of their own behavior when using miss incidents on a global level, setting targets equipment, and we communicate actively about and gathering feedback. Lost days per accident safety to both external and internal stakeholders. and the number of near misses are part of each unit’s monthly reporting to global functions. KONE contributes to the development of codes and standards that aim to further improve KONE organizes quarterly global safety equipment safety. We also promote safety through network meetings to share lessons learned from our involvement in industry trade associations. accidents and near-miss incidents, and also gathers safety managers together on a monthly Safe working for employees and basis to accelerate the sharing of best practices subcontractors and to discuss concerns. Toolbox talks are Safety is integrated into all of KONE’s processes, used to communicate safety messages to field and we focus on making sure each of our employees.

36 37 Safety KONE 2013 | CORPORATE RESPONSIBILITY REPORT KONE 2013 | CORPORATE RESPONSIBILITY REPORT Safety

Safety every step of the way

Safety highlighted at People We enhance the safety of our products and services through rigorous attention to our design, Showing the safe way Flow Day manufacturing, installation, and maintenance processes. Safe practices are promoted for our employees and subcontractors, as well as for customers and people who use our equipment. KONE provides educational material to Safety was the chosen theme of equipment users and organizes global KONE’s fourth annual People Flow events on safety. In 2013 we continued Day, which took place on October SUPPLIERS R&D OFFICE PRODUCTION SITE INSTALLATION USE MODERNIZATION MAINTENANCE our work in educating children and 30, 2013. KONE employees from for example produced an animation around the world met customers and KONE’s Supplier Code of Safety is embedded in KONE promotes the KONE enhances the KONE’s installation KONE supports customers KONE develops KONE maintains the safety featuring our safety mascots Bob and equipment users to gather their views Conduct requires all of our the product development safety awareness of its quality and safety of all methods and processes are and building owners in modernization solutions of elevators, escalators, Max. Read more at www.kone.com/ on safety. Findings from the day are suppliers to protect the process. Potential safety employees through health components used in designed to protect installer promoting the safe use of for upgrading or replacing and automatic doors using safety. published in the global People Flow health and safety of their hazards affecting the and safety training as well production by carefully safety whilst enabling elevators, escalators and existing equipment with preventive maintenance Day report, read more at employees. products’ full life cycle are as safety-related internal controlling raw materials product quality and automatic building doors. new solutions that meet methods. www.kone.com/ systematically identified communication. and production processes. reliability. KONE follows or exceed the latest safety people-flow-day-report-2013. KONE has defined clear and eliminated before All of KONE’s major the 5s methodology in all KONE communicates standards, improving We train our maintenance quality requirements which products are introduced to Building managers production sites are of its installation processes. actively about safety issues, equipment reliability and professionals regularly so are continuously measured the market. promote and maintain certified to ISO 9001, and organizes events for user safety. that they have the required and followed. In addition, safe and healthy working 14001 and OHSAS 18008 KONE uses continuous end users and customers competence to perform our quality professionals Existing products are environments in KONE standards. training, installation safety & to promote the safe use of Products are installed by their work safety. regularly audit key suppliers continuously developed to premises. method passport, site audits, equipment we maintain. professional technicians to monitor the safety improve their safety and We make sure that all and risk-assessed methods following strict and quality of delivered functionality further. our production sites are to control site safety. modernization processes components and products. safe places to work, for that include safety example by using the requirements. 5S methodology and by conducting regular safety training.

E levator dos Using elevators properly ensures a safe and comfortable s ride for ever r do yone. Follow these simple guidelines to alato prevent injuries and enhance safety Esc .

Using escalators properly ensures a safe and comfortable ride for . everyone. Follow these simple guidelines to prevent injuries and enhance your safety ! !

If the car is full, be patient At the end of theand ride, wait for the next ride. When you enter the step off properly from the elevator Children must always be escalator and make room , walk to the back Keep feet ﬁrmly on of the car accompanied by an adult, for the next passengers , face forward the step and aways sides. from and keep away from the and their hands should be to step off. ward and hold the escalator’ doors. held for the duration of Face for the ride. Pets should be the handrail. kept close on the leash.

Watch your step when entering or exiting the If you notice something elevator, as it may not be unusual about the elevator The emergency stop level with the ground. please inform the facility , button should be used management immediately in case of an incident or Children should always be call the elevator maintenance, or escalator malfunction. accompanied by an adult company to inspect it. and their hands should be held during the ride.

Safety is one of the megatrends affecting KONE’s business. Read more on p. 9.

38 39 Our people KONE 2013 | CORPORATE RESPONSIBILITY REPORT KONE 2013 | CORPORATE RESPONSIBILITY REPORT Our people

OUR PEOPLE KONE follows high ethical principles in all its activities. All KONE employees have the right to a safe, healthy working KONE’s efforts to meet environment where discrimination is prohibited and personal An inspiring and collaborative working well-being promoted. Diversity is important to us. culture fosters innovation its strategic targets We have clear rules and guidance for ethical business practices and they are easily available to all our employees. are supported by

KONE believes that innovations are born when Employee Engagement development development programs KONE employed over 43,000 individuals in a working culture is open and engaging, and program progressed more than 50 countries at the end of 2013. when the contribution of each individual KONE’s personnel strategy aims to ensure that are designed to is valued. This idea is embedded into our the availability, engagement, motivation and

43,298 aim of making KONE a great place to work, continuous development of our employees. help us turn our strategy 39,851 37,542 with motivated employees that aspire to This is a fundamental part of KONE’s business 33,988 33,755 deliver great results. It is also embraced in strategy and is highlighted in our Employee into reality. Read more our approach to leadership. KONE leaders are Engagement development program, which expected to inspire and empower their people was carried out in 2011–2013. The program on p. 8. to find innovative solutions and perform at focused on three key initiatives: providing their best. growth and development opportunities for employees, developing leadership capabilities, Among the four core values that guide our and ensuring well-being and safety at work. 2009 2010 2011 2012 2013 personnel is that of winning together. This Gender distribution 2013 means that in addition to encouraging In 2013, we started rolling out our global participation, we promote the sharing of learning management system, which allows us information and ideas. We seek to develop a to manage certifications, training requirements culture of working together, where co-workers and personnel development more easily. It trust and respect each other and good will also support our online and field trainings, Male Female 87% 13% performance is recognized. and aims to better collaboration and material sharing. The first region to start using the Pursuing an equal opportunity system was North America and the roll-out approach continues with China in 2014. As an employer, KONE is committed to an equal opportunity approach that places people KONE continued to carry out its global learning in the positions that best suit their abilities. This programs for leaders, such as the Supervisor increases productivity and fosters creativity and Development Program for first-level managers. Management Male Female teams (top 492*) 83% 17% innovation that are the integral elements of our We also launched a program on Managing culture. KONE Business and used mentoring more than ever before. KONE follows high ethical principles in all of its activities. We treat each employee KONE’s goal is to have the best possible fairly and provide them with a safe working professionals with the right competencies Executive Male Female Board 85% 15% environment. We value diversity and prohibit in each position. This is emphasized by all kind of discrimination. During the reporting organizing performance discussions between year, KONE had employees of more than 100 an employee and his or her supervisor at least different nationalities working in the company, twice a year. In addition to target setting and with people from 33 countries working in our job contents review, KONE managers are units in Finland alone. advised to discuss employee well-being in these Board of Male Female Directors 60% 40% discussions. Career development and growth In gender distribution, a slight improvement was opportunities are also important topics. During achieved in the proportion of women to men in the reporting period, the quality of performance *Excluding United States. management positions. In 2013, females made discussions was further improved and we up 17% of the members of management teams. heavily encouraged more people to have their KONE’s target is 20%. We do not differentiate individual development plans in place. By work applicants based on gender, race or other the end of 2013, a majority of the personnel aspects of their personal backgrounds, however, using KONE’s performance management tool we have also set goals for cultural diversity in our had a documented plan. The total number of Read about global teams. documented plans was twice as high as the workplace safety on p. 37. number in 2012.

40 41 Our people KONE 2013 | CORPORATE RESPONSIBILITY REPORT KONE 2013 | CORPORATE RESPONSIBILITY REPORT Our people

Personnel by country Job rotation continued to be emphasized as a Measuring workplace satisfaction Rewarding our people In 2013 we rolled out a KONE Collaboration Age distribution, Dec. 31, 2013 Dec. 31, 2013 means of professional development during the Each year, we conduct our Pulse survey Our reward framework is intended to inspire, Workplace project to improve teamwork via (All KONE employees) (10 largest countries) year. In 2013, the number of open positions to measure employees’ level of workplace motivate and engage employees through the intranet. The upgraded intranet improves –25 13% on the KONE intranet was more than double satisfaction. It offers our employees the easy-to-understand policies, guidelines and document sharing and supports interactivity. China 10,829 26-30 20% United States 3,919 that of 2010, and on average more than 450 opportunity to give their feedback and provides practices that align with our business strategy 31-35 17% India 3,559 open positions were advertised at any given insight into their engagement with KONE’s and development programs. While reward Since 1993 we have organized an annual 36-40 13% France 3,281 time. In addition to posting all open positions core values. In 2013, more than 35,500 policies are consistent across KONE, the European Employee Forum that brings together 41-45 12% Finland 1,984 46-50 11% Italy 1,837 on the intranet, many units advertise vacancies employees provided feedback, and the global practices are flexible enough to meet local top management and employee representatives 51-55 8% United Kingdom 1,819 on office notice boards, in pay slips or even as response rate was 92%, exceeding the all-time needs. to discuss issues ranging from safety to business 56– 7% Germany 1,628 text messages to reach as many employees as high achieved in 2012. development. In 2013 the theme was learning Australia 1,169 possible. Compensation and other benefits of the and development, and 21 employees from Netherlands 1,022 The survey covers areas such as employee Board of Directors, President and CEO, and 15 European countries participated. A smaller To get fresh insights and to renew the way we engagement, performance enablement, the Executive Board are disclosed in KONE’s working group meets two to four times a Average length of service approach our business, we also seek external corporate responsibility, strategy and values, Financial Statements 2013 (p. 62–63). year to ensure continuous consultation and Dec. 31, 2013 candidates for open positions. In addition, we leadership, communication and involvement, communication on important developments (10 largest countries) offer students and graduates opportunities customer relationships, and growth and Open and timely communication affecting KONE employees. to work on interesting projects in different development opportunities. Additionally, how Employee engagement has a lot do to with China 3.32 United States 8.78 KONE units around the world through KONE’s respondents view their job, managers and open and timely communication about KONE’s KONE’s latest news and events are published India 4.90 International Trainee Program. In 2013, we performance review is covered. goals and the ways of doing business. We in our intranet, employee magazine and France 9.72 received close to 2,000 applications, and use multiple channels to reach and motivate newsletters, which are available both on a Finland 11.91 Italy 13.43 had trainees from five different countries, In 2013, KONE’s employee engagement our employees, and encourage them to global and local level. In 2013, KONE published United Kingdom 9.09 representing 12 nationalities. KONE also score maintained its three-year upward trend collaborate by for example offering everyone three editions of its global employee magazine Germany 13.00 offers various summer traineeships and thesis and also surpassed external benchmarks. the opportunity for language testing and online Move, in nine languages. Australia 8.54 opportunities in several countries. The scores of each of the 47 questions in the English training. Netherlands 12.44 survey exceeded those of the previous year. Well-being and safety programs continued, The questions with the most improved scores and good progress was made in implementing relate to confidence in KONE strategy, career Elevate Your Health programs globally. The opportunities, and survey follow-up. The results 70% of competence well-being programs deal with topics ranging also show that there has been considerable from taking care of joints and muscles to improvement in employees’ belief that they development happens weight loss initiatives, walking campaigns and can participate and share their ideas and views building stress resilience. freely. on the job, 20% by learning from others and 10% from training Employees by job category, 2013 Employees by market, 2013 and self study. During

9% 13% the previous reporting 10% year, we created the 56% 47% 70-20-10 learning 25% 40% guide, a practical learning solution with Maintenance and EMEA 47% (48%) modernization 56% (57%) Asia-Pacific 40% (38%) New equipment sales and examples on building installation 25% (25%) Americas 13% (14%) Manufacturing 10% (9%) (2012 figures in brackets) more effective individual Administration, IT, R&D 9% (9%) (2012 figures in brackets) development plans.

42 43 Our people KONE 2013 | CORPORATE RESPONSIBILITY REPORT KONE 2013 | CORPORATE RESPONSIBILITY REPORT our people

Committed to ethical business Competition Compliance Policy well as other employees who have access to Training and information KONE’s Competition Compliance Policy confidential information. Individual business practices expands on the principles of fair competition units can nominate additional participants, • Online training programs delivered presented in the Code of Conduct. The policy where they feel it is necessary. in 24 languages complement details our unambiguous position against classroom training provided to anti-competitive practices. It sets out the rules Enforcing the codes and policies employees in their respective Our global presence KONE has more than 1,000 offices in over 50 KONE’s Code of Conduct and principles that all KONE employees must Dedicated compliance officers help employees business units countries, and we collaborate with authorized KONE’s Code of Conduct sets out the follow to ensure that we comply fully with comply with KONE’s Code of Conduct. makes it crucial to distributors in almost 100 countries around the standard of behavior that is expected of KONE competition laws. Employees have several ways they can contact • Policy documents available in 29 world. As a global corporate citizen, we are employees and KONE companies, and gives KONE’s Compliance Officers, and have the languages to all employees ensure that clear rules committed to the laws and rules of societies in clear guidance about the kind of behavior Online training programs right to make contact in their native language. which we operate. Thus, our global presence that is not tolerated. Topics covered include All KONE employees with personal KONE and guidance for ethical makes it crucial to ensure that clear rules and complying with the laws and rules of society, e-mail accounts must regularly complete the Supplier Code of Conduct guidance for ethical business practices are in the work environment, product and service Code of Conduct online training program. KONE’s Supplier Code of Conduct sets out the business practices are place and easily accessible to all our employees. marketing, fair competition, the environment Participants for the Competition Compliance ethical business practice requirements that we and sustainability. All our employees are Policy program are determined globally and expect of our suppliers. The Supplier Code of in place and easily KONE’s global Code of Conduct sets out expected to read and understand the code, selected on the basis of their role and position. Conduct is explained in more detail on page 34 our position on ethical business practices. It and to report any violations to KONE’s These participants include the members of of this report. accessible to all our is supplemented by a detailed Competition Compliance Officers or to the global, or KONE’s Executive Board, local management Compliance Policy that focuses on relevant local, legal function. personnel, sales and sales support teams, as employees. competition law.

Topics included in the KONE Code of Conduct

Compliance with laws and rules of society • KONE is committed to complying with all laws and regulations that apply to KONE

• KONE respects prevailing cultural norms and practices, but where there are conflicts KONE’s employees are required to follow the KONE Code of Conduct

Work environment and human rights • KONE prohibits all forms of discrimination

• KONE is committed to ensuring a safe and healthy working environment for all employees

• KONE prohibits offensive behavior, including sexual harassment

• KONE prohibits child and forced labor, and does not enter into business with suppliers who use these practices

Competition law • KONE is committed to fair competition, and prohibits any violations

Environment and sustainability • KONE is committed to minimizing the environmental impact of its solutions, products, services, and operations

Risks and conflicts • KONE employees are required to avoid conflicts of interest

• KONE prohibits direct and indirect bribes and unethical payments, as well as excessive gifts and hospitality

44 45 Reporting scope KONE 2013 | CORPORATE RESPONSIBILITY REPORT KONE 2013 | CORPORATE RESPONSIBILITY REPORT Independent Assurance Report

Reporting scope Independent Assurance Report – KONE’s GHG Emissions 2013

KONE has chosen to report using the figures presented in this report are based delivered directly from suppliers to KONE To the Management of KONE Oyj Concerning limited assurance engagement Ecobio has no financial dependencies Global Reporting Initiative (GRI) guidelines on KONE Corporation’s consolidated and distribution centers). Insinööritoimisto Ecobio Oy (hereafter the evidence-gathering procedures on KONE beyond the scope of this in order to facilitate easier comparison of audited financial statements for 2012 and Ecobio) has been commissioned by are more limited than for a reasonable engagement. Ecobio has conducted this our performance with other companies 2013. KONE has used an environmental KONE Oyj (hereafter KONE) to perform a assurance engagement, and therefore assurance independently, and there has and to streamline our own corporate performance software system since limited third party assurance engagement less assurance is obtained. This assurance been no conflict of interest. responsibility reporting efforts. KONE The personnel data is provided by our HR 2011. The environmental data has been regarding greenhouse gas emission engagement was conducted from January has published a Corporate Responsibility organization and – with the exception of collected from branch offices using a (hereafter GHG emission), including Scope to April 2014. Helsinki, 3rd of April 2014 Report annually since 2008. The previous the data relating to gender distribution customized data collection spreadsheet 1, 2 and 3 emissions disclosed in KONE’s Insinööritoimisto Ecobio report was published in June 2013. in management – covers the entire KONE consolidated on the country level. The Sustainability Report for 2013 for the period The assurance process included: The reports follow GRI (G3) reporting Group. country-level data has been entered into of January 1st to December 31st 2013. • Interviewing personnel responsible for Sanna Vaalgamaa (Ph.D.) guidelines as far as they are applicable. the environmental performance system. data collection and reporting. Managing Director The environmental data has been collected The data has further been consolidated KONE’s Responsibility • Evaluating procedures for gathering, The report for 2013 covers economic, from KONE’s 11 manufacturing units globally in a combined effort with KONE’s KONE was responsible for the collection, analyzing, and aggregating quantitative Thomas Andersson (M.Sc.) social, and environmental responsibility. worldwide and from 31 major country global carbon footprint assessment. preparation and presentation of GHG data on GHG emissions. Senior Consultant A table detailing how this report complies organizations with sales, installation, The environmental performance has emission disclosures in the Sustainability • Performing cross-checks on a sample with the GRI guidelines is shown on pages and service operations in Asia-Pacific, been reported in accordance with the Report according to the Greenhouse Gas basis concerning the reported GHG 48–49. We have self-declared our reporting EMEA, and North America. The collected Greenhouse Gas Protocol and ISO 14064 Protocol (GHG Protocol). Ecobio, as an emissions. to be Application Level B of the GRI G3 environmental data covers 84% (2012: guidelines. KONE’s greenhouse gas independent assuror, was not involved • Performing cross-checks on a sample Guidelines. PricewaterhouseCoopers 85%) of all KONE’s employees and emissions for scopes 1 and 2 (direct and in the preparation of any GHG emission basis on fuel, electricity and cooling gas Oy has checked our reporting and has 100% of the employees working at our indirect energy consumption) and scope 3 disclosures, apart from the independent consumption data and data concerning confirmed it to be Application Level B. manufacturing units. The facilities related (logistics and business air travel) have been assurance engagement. The Management air travel and logistics. The reporting period corresponds with the data collected from the reporting country assured by Ecobio Oy. of KONE has approved the information • Evaluating internal guidelines for data calendar year and with KONE’s financial organizations has been extrapolated for on GHG emissions provided in the collection. year of January 1–December 31, 2013. the entire KONE organization. The goal We welcome any feedback on this report Sustainability Report. • Evaluating the sufficiency of is to gradually extend our environmental or our overall corporate responsibility documentation of the data gathering When developing the report content and reporting to cover all of KONE. performance. If you have any comments Practitioner’s Responsibility process. choosing indicators, the driver has been or suggestions, please contact corporate Ecobio’s responsibility was to present • Checking the consistency of the the materiality to KONE’s operations. The Data on business air travel has been communications at [email protected]. an independent conclusion on the GHG reported GHG emissions compared to materiality analysis questionnaire was collected from 27 countries, covering emission disclosures subject to the limited the guidelines. conducted for external stakeholders and approximately 75% of all business travel assurance engagement. Ecobio disclaims different organizational units within KONE. by KONE employees, and data on KONE’s any liability or responsibility for any third Conclusions The purpose of the analysis was to identify vehicle fleet fuel consumption has been party decision based upon this assurance Based on the work described in this and prioritize the key aspects of KONE’s collected from 20 countries, covering report. report, nothing has come to our attention corporate responsibility. The results are over 97% of the total fleet. Data related that would cause us to believe that the described on p. 14 - 15. KONE’s approach to product and spare parts logistics has Methodology GHG emission disclosures in KONE’s to corporate responsibility has also been been collected centrally by the corporate Ecobio based the assurance process on the Sustainability Report 2013 are not fairly described in the CEO’s and Chairman of organization. The logistics data covers the following guidelines and standards: stated, in all material respects, or that the Board’s reviews on pages 4 - 5, and transportation of products from KONE’s • Greenhouse Gas Protocol - A Corporate it would not comply with the reporting in the strategy description on page 8. All manufacturing units to customers and Accounting and Reporting Standard guidelines stated before. major local and regional organizations and the transportation of modules that are • Global Reporting Initiative (GRI) G3 all production units are included in the delivered straight from our suppliers to our Sustainability Reporting Guidelines 3.0 Practitioner’s Independence and reporting scope. delivery centers and onward to customers. • ISO 14064-3 standard (Greenhouse Qualifications Inbound logistics of materials to KONE’s gases – Part 3: Specification with Ecobio is an independent environmental All financial data and a significant manufacturing sites is excluded from guidance for the validation and consulting company with over 20 years of proportion of the employee-related data the reporting scope because of its minor verification of greenhouse gas history. Ecobio’s assurors are skilled and has been collected through KONE’s impact (KONE prefers material suppliers assertions) experienced in environmental assurance enterprise resource management and located close to our manufacturing units, • International Standard on Assurance and have good knowledge of industry financial reporting systems. All financial and a large part of the modules are Engagements 3000 (ISAE3000) related sustainability issues.

46 47 Global Reporting Initiative index KONE 2013 | CORPORATE RESPONSIBILITY REPORT KONE 2013 | CORPORATE RESPONSIBILITY REPORT Global Reporting Initiative index

Global Reporting Initiative index

Comparison with Global reporting initiative guidelines Comparison with Global reporting initiative guidelines GRI Content Included Page Remarks GRI Content Included Page Remarks 1. Strategy and Analysis Energy 1.1 CEO's statement Yes 4–5 EN3* Direct energy consumption Yes 7 Heating fuel and natural gas reported in m³. 1.2 Key impacts, risks and opportunities Yes 8–11; 16–19 EN4* Indirect energy consumption Partly 7; 29 2. Organizational Profile EN5 Energy saved due to conservation and efficiency improvements Partly 29–30 2.1 Name of the organization Yes Back cover EN6 Initiatives to provide energy-efficient or renewable energy based products and Yes 20–23 2.2 Primary brands, products and services Yes 3, 10–11 http://www.kone.com/en/company/in-brief/ services 2.3 Operational structure Yes http://www.kone.com/en/company/organization/ EN7 Initiatives to reduce indirect energy consumption and reductions achieved Partly 27–30 2.4 Location of organization's headquarters Yes Back cover Water 2.5 Number of countries and location of operations Yes 8 http://www.kone.com/en/company/in-brief/ EN8* Total water withdrawal by source Yes 7; 29 2.6 Nature of ownership and legal form Yes http://www.kone.com/en/company/in-brief/ Emissions, Effluents and Waste 2.7 Markets served Yes 8, 10 http://www.kone.com/en/company/in-brief/ EN16* Total direct and indirect greenhouse gas emissions Yes 26 2.8 Scale of the reporting organization Yes 6 EN17* Other relevant indirect greenhouse gas emissions Yes 26 2.9 Significant changes regarding size, structure or ownership Yes 46 EN18 Initiatives to reduce greenhouse gas emissions Yes 26–31 2.10 Awards received in the reporting period Yes 10 EN22* Total amount of waste by type and disposal method Yes 7 3. Reporting Principles Products and Services Report profile EN26* Mitigating environmental impacts of products and services Yes 20–25 3.1 Reporting period Yes 46 Compliance 3.2 Date of most recent report Yes 46 EN28 Significant fines and sanctions for non-compliance with environmental Yes No significant fines or sanctions regarding non-compliance with 3.3 Reporting cycle Yes 46 regulations environmental regulations. 3.4 Contact point for questions regarding the report Yes 46 Transport Report scope and boundary EN29 Environmental impacts of transportation Yes 26–28 3.5 Process for defining report content (materiality, prioritizing topics and Yes 14–15; 46 Overall stakeholders using the report) SOCIAL PERFORMANCE INDICATORS 3.6 Boundary of the report Yes 46 Management approach to social responsibility 3.7 Limitations on the report's scope or boundary Yes 46 Labor Practices and Decent Work 3.8 Basis for reporting subsidiaries, joint ventures, leased facilities, outsourced opera- Yes 46 Management approach to labor practices and decent work Yes 12; 36–37; 40–43 tions and other entities affecting comparability Employment 3.9 Data measurement techniques and bases of calculations Yes 46 LA1* Total workforce by employment type, employment contract and region Partly 6; 40–42 Not reported by employment type or employment contract. 3.10 Explanation of re-statements Yes Reported in connection with the indicators in question. Labor/Management Relations 3.11 Significant changes from previous reporting periods in the scope, boundary or Yes No significant changes during the reporting period. LA5* Minimum notice period regarding operational changes Yes According to local legislation. measurement methods Occupational Health and Safety GRI content index LA7* Rates of injury, occupational diseases, lost days, fatalities and absenteeism Partly 36 Injury rate reported. 3.12 GRI content index Yes 48–49 LA8* Education and prevention programmes regarding serious diseases Partly 37; 41 Assurance Training and Education 3.13 Assurance policy and practice Yes 47 LA11 Programmes for skills management and lifelong learning Yes 41–42 4. Governance, Commitments and Engagement LA12 Employees receiving regular performance and career development reviews Partly 41 Governance Diversity and Equal Opportunity 4.1 Governance structure of the organisation Yes FS 60 LA13* Composition of governance bodies and breakdown of employees Partly 41 Breakdown by gender reported. 4.2 Position of the Chairman of the Board Yes FS 60 Human Rights 4.3 Independence of the Board members Yes FS 62 Management approach to human rights Yes 12; 34–35; 44–45 4.4 Mechanism for shareholder and employee consultation Yes FS 60 Investment and procurement practices 4.5 Impact of organisation's performance on executive compensation Yes FS 62–63 Linkage to CR performance not reported. HR2* Suppliers and contractors that have undergone human rights screening and Partly 34–35 (inc. social and environmental performance) actions taken 4.6 Processes for avoiding conflicts of interest Yes FS 60 HR3 Employee training on policies and procedures concerning human rights relevant Partly 44–45 4.7 Processes for determining Board members' expertise in strategic management Yes FS 60; FS 64 to operations and sustainability Non-discrimination 4.8 Implementation of mission and values statements, code of conduct and other Yes 8; 34–35 Freedom of association and collective bargaining principles Child labor 4.9 Procedures of the Board for overseeing management of sustainability perfor- Yes 12; FS 61 HR6* Operations identified as having significant risk for child labor and measures taken Yes No risks related to the use of child labour have been identified in mance, including risk management to contribute to the elimination of child labor KONE’s own operations. 4.10 Processes for evaluating the Board's performance Yes FS 60 Forced and compulsory labor Commitments to External Initiatives HR7* Operations identified as having significant risk for forced or compulsory labor and Yes No risks related to the use of forced or compulsory labour have been 4.11 Addressing precautionary approach Yes 21–23; FS 61 measures taken to contribute to the elimination of forced or compulsory labor identified in KONE’s own operations. 4.12 Voluntary charters and other initiatives Yes No commitments to initiatives as defined by GRI. Security practices 4.13 Memberships in associations Yes http://www.kone.com/en/responsibility/our-approach/stakeholder-re- Indigenous rights lations/memberships-and-positions-of-trust/ HR9 Incidents involving rights of indigenous people and actions taken Yes KONE prohibits all kinds of discrimination, and diversity is valued. Stakeholder Engagement Society 4.14 List of stakeholder groups Yes 13 Management approach to society Yes 12; 8–11; 44–45 4.15 Identification and selection of stakeholders Yes 13 Community 4.16 Approaches to stakeholder engagement Yes 13 Corruption 4.17 Key topics raised through stakeholder engagement Yes 13 Public Policy ECONOMIC PERFORMANCE INDICATORS SO7 Legal actions for anti-competitive behaviour, anti-trust, and monopoly Yes FS 6 Management approach to economic responsibility Yes 12; 17–19 Compliance Economic Performance SO8* Significant fines and sanctions for non-compliance with laws and regulations Yes No significant fines or sanctions during the reporting period. EC1* Direct economic value generated and distributed Yes 17 Product Responsibility EC2* Financial implications, risks and opportunities due to climate change Partly 21– 23 Management approach to product responsibility Yes 12; 36–39; EC3* Coverage of defined benefit plan obligations Partly FS 37–39 44–45 Market presence Customer Health and Safety EC6* Policy, practices and spending on local suppliers Partly 34–35 PR1* Assessment of health and safety impacts of products Yes 37–39 ENVIRONMENTAL PERFORMANCE INDICATORS Product and Service Labeling Management approach to environmental responsibility Yes 12; 20–31 PR5 Practices related to customer satisfaction and results of customer satisfaction surveys Partly 13 Materials Marketing Communications EN1* Materials used by weight or volume Yes 24 Customer Privacy Compliance * GRI Core indicator

48 49 KONE Corporation Corporate Offices Keilasatama 3 P.O. Box 7 Espoo, 02150 Finland

Tel.: +358 (0)204 75 1 Fax.: +358 (0)204 75 4496

Business Identity Code: 1927400-1

KONE Corporation www.kone.com [email protected]

Publication Environmental performance Liisa Kivelä Hanna Uusitalo Director Environmental Director External Communications Personnel and social performance Economic performance Kerttu Tuomas Karla Lindahl Executive Vice President Director, Investor Relations Human Resources

Read more about KONE’s operations in these publications

SINGAPORE, 1:30 P.M. Innovative solutions for better cities

Siva and his colleagues are on site at the bustling Marina Bay Sands. The integrated resort is the first in the world to adopt the KONE UltraRope™ elevator hoisting technology. The super-light and durable innovation can reduce elevator energy consumption significantly in high-rise buildings like the resort’s soaring hotel tower. KONE is also the maintenance partner of Marina Bay Sands, helping to ensure smooth and safe people flow at the luxury property, which operates 24/7. PARIS, 11:30 AM Hugo and his family enjoy their newly modernized KONE elevator. ROTTERDAM, THE NETHERLANDS Smart and exible Innovation all around solutions for the A bigger car with wide-opening automatic doors, smooth leveling, and quieter motor Intelligent design requires innovative solutions. buildings of today was installed in the building in just two De Rotterdam is the largest mixed-use building weeks. Replacing an old and unreliable – and one of the greenest – in the Netherlands, and tomorrow. unit, the modern elevator improves and cutting-edge technologies were utilized quality of life for the Dubois family and from the start. Aesthetics combine with industry- Quick and comfortable movement all of the building's users. All over the leading people ﬂ ow solutions to enhance combined with reliable security and world, KONE delivers innovative solutions the vertical transportation in this sustainable access control. These needs are met that enable people to move smoothly, vertical city. with KONE People Flow Intelligence safely, comfortably and without waiting in buildings in an increasingly urbanizing – solutions for access and destination environment. control, real-time information and equipment monitoring. Corporate Financial Statements Responsibility Report KONE in brief KONE References KONE 2013 KONE 2013 2013 2013

This publication is for general informational purposes only and we reserve the right at any time to alter the product design and specifications. No statement this publication contains shall be construed as a warranty or condition, express or implied, as to any product, its fitness for any particular purpose, merchantability, quality or representation of the terms of any purchase agreement. Minor differences between printed and actual colors may exist. KONE MonoSpace®, KONE EcoDisc®, KONE Care® and People Flow® are registered trademarks of KONE Corporation. Copyright © 2014 KONE Corporation.

Production and graphic design: Miltton Oy Print: Kirjapaino Uusimaa, Finland

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