Corporate Responsibility Report 2006 Facts, figures and other information on the 2006 fiscal year www.siemens.com/corporate_responsibility Corporate Responsibility Report 2006 Content Siemens in Profile We provide facts and figures on Siemens in fiscal 2006, including key performance figures and information on our business areas, our corporate structure, Siemens worldwide, markets and competition, and our portfolio. 4 Corporate Responsibility Strategy Corporate responsibility is one of the enablers in our new company program Fit4 2010 and has a high priority in our corporate strategy. 5 Our goals We have set ourselves clear goals in a number of key areas and will report regularly on our progress on achieving them. 6 Company We report here on corporate governance, compliance, suppliers, and risk management in fiscal 2006. 8 Environment This section presents facts and figures on product stewardship and industrial environmental protection and information on our reporting methodology and management system. Climate protection is among the key topics. 10 Society Besides key citizenship programs like Siemens Generation21 and Caring Hands, this section spotlights occupational health and safety at Siemens and provides facts and figures on our global workforce. 32 Evaluation and Reporting Approach In fiscal 2006, Siemens was again listed on major indices and received numerous awards. In this chapter we also publish the details of our reporting approach. 63 2 Preface Facts, figures and other information As a global business operating in over 190 countries, Siemens is influenced by a variety of cultures, religions, values and mentalities. In many countries, the company has been an integral part of the economy and society for decades. As a global player, we have a highly diversified workforce, and this diversity is inspiring for Siemens. It makes for a richer societal, cultural and political experience, and opens up new opportunities for us. Our understanding of corporate responsibility is no less global – something reflected by our participation in the UN Global Compact. Underlined terms link to web sites or PDFs, the figures in the tables of content link to the respective pages. 3 Siemens in Profile Siemens, headquartered in Berlin and Munich, is one of the world's largest electrical engineering and electronics companies and holds leading market positions in all its business areas. The company has around 475,000 employees working to develop and manufacture products, design and install complex systems and projects and tailor a wide range of services to individual requirements. Siemens, founded more than 160 years ago, provides customers with innovative technologies and comprehensive know-how to solve their commercial and technical challenges. Key Figures and Corporate Structure All financial information on the 2006 fiscal year as well as the Siemens corporate structure can be found in the Siemens Annual Report 2006. The most important key figures in the Siemens archive since the company was founded. Business Areas Siemens is active in the business areas Automation and Control, Power, Transportation, Medical, Information and Communications and Lighting. Portraits of our business areas and most recent innovations.on our international web site. Important innovations of previous years in the Siemens archive. Global Presence With 474,900 employees in almost 190 countries, Siemens does business all around the world. We operate some 290 manufacturing facilities worldwide. Our global presence is illustrated in the Siemens Annual Report. Siemens’ worldwide activities are described on the international web site. In the Siemens archive you can read about Siemens becoming a global player. Markets and Competition Details about our market, its regional split and the current landscape of competition can be found on the Investor Relations pages. Our Portfolio On our Investor Relations pages you will find information about the most recent portfolio changes with details of each individual transaction. Portfolio development over previous years in the Siemens archive. 4 Strategy Corporate responsibility as an enabler for business success At Siemens, corporate responsibility is a strategic managerial process aimed at integrating business, environmental and social performance to create greater value and enduring benefits within a framework of ethical practices. This is why corporate responsibility is a cornerstone of Fit4 2010, our new intermediate- term program to drive company growth. Further information on Siemens’ corporate strategy including our internal guidelines and the international guidelines on which we place great emphasis can be found in the chapter Principles and Management on our Corporate Responsibility web site. 5 Our Corporate Responsibility Goals Overview Supply Chain Management Definition of company-wide implementation goals for revised Code of Conduct for Siemens Suppliers until the end of fiscal 2007. Selection of indicators for reporting on corporate responsibility in the Siemens supply chain regarding the new Code of Conduct and monitoring of suppliers’ compliance until the end of fiscal 2007. First reporting based on new indicators until the end of fiscal 2008. Further information on these topics in the chapter “Supplier Management“ on page 7. Environmental Protection Further improvement of environmental reporting: Medium-term (Fit4 2010). Implementation of environmental management systems (EMSs) at newly acquired sites and increasing the maturity of EMSs at existing sites: Medium-term (Fit4 2010). Improvement of environmental performance according to quantifiable environ- mental targets (energy/CO2, water, and waste) until the end of fiscal 2011. Further information on these topics in the chapter “Environmental Targets under Fit4 2010“ on page 31. Occupational Health & Safety Further reduction of work accidents and occupational diseases (EU campaign “Community Strategy 2007-2012 on Health and Safety at Work”) until 2012. Integration of decentralized IT applications for purposes of safety, health and environment management under a uniform platform (SAP EH&S). Development of an integrated OH&S protection tool (ISO 14001 / OHSAS 18001) for conducting self-assessments. Further information on these topics in the chapter “Our Occupational Health and Safety Goals“ on page 44. 6 Corporate Citizenship Intensification of citizenship governance for our Groups and Regional Companies until the end of fiscal 2007. Full listing, analysis and categorization of corporate citizenship expenditures company-wide until the end of fiscal 2007. Further contentual and financial consolidation of results through improvement of financial reporting and evaluation of projects until the end of fiscal 2007. Introduction of a company-wide Corporate Responsibility Award with a focus on corporate citizenship until the end of fiscal 2007. Development of a catastrophe prevention program within Siemens Disaster Relief until the end of fiscal 2007. Further information on these topics in the chapter “Goals for 2007“ on page 62. Corporate Responsibility Reporting Detailed intermediate-term framework with binding goals for: our performance and/or the development of performance goals development and/or implementation of further guidelines and/or processes as necessary our reporting in our Corporate Responsibility Report 2007. Further information on these topics in the chapter “Reporting Approach“ on page 65. 7 Company The Conditions for Sustained Success Siemens has always believed in taking a long-term approach to business based on solid financial foundations. Our focus is on sustaining our business success and profitability to create value for our customers, investors, employees and other stakeholders. Corporate Governance Sound corporate governance principles inform all our decision-making and monitoring processes at Siemens. We report in detail on corporate governance in our Annual Report 2006. Read on our Investor Relations pages how Siemens addresses German corporate governance requirements, European CG initiatives, and U.S. capital market regulations. Compliance Compliance is discussed in a number of sections in our Annual Report 2006. You can find detailed compliance information on p. 131-132 of "Management's discussion and analysis." Supplier Management Sustainability in the Supply Chain Corporate responsibility plays an important role in Siemens’ supply chain, and our sustainability principles, a cornerstone of our procurement strategy, help to safeguard our success as a company in the long term. We hope that these principles will also succeed in promoting a wider sense of social responsibility and an awareness of the importance of environmental stewardship among our suppliers. This is why we ask them to abide by these principles in their own businesses and why our system of supplier management sets out to assert our sustainability standards. Fundamental Supplier Requirements From 2002, our business dealings with suppliers were governed by a set of fundamental supplier requirements centered on environmental protection and corporate social responsibility which suppliers were expected to endorse and embrace. The aim of these requirements was to avoid environmental impacts, to encourage the fair treatment of workers, and to protect fundamental human rights. Audits were conducted to verify suppliers’ compliance with these requirements. Read in our Fundamental Supplier Requirements which basic requirements suppliers must agree to. 8 Revised Supplier