Life Unlimited Sustainability Report 2019 Introduction and sustainability strategy Putting people first Products with a reduced footprint How we manage sustainability Contents Our purpose Introduction and sustainability strategy 2 Life Unlimited captures the essence of our Our purpose 2 A message from our 3 purpose to improve the health issues that hinder Chief Executive Officer At a glance 4 people from living their lives to the fullest. Our business model 5 A message from our Chair 6 Why sustainability 7 is important Access to healthcare 8 Our sustainability strategy 9 Putting people first 14 Empowering our employees 15 Injury-free workplace 20 Our purpose Our culture pillars Our strategic imperatives Achieve the full potential Responsible global citizen 23 Life Unlimited. Our culture pillars guide Five strategic imperatives 1 of our portfolio Smith+Nephew our behaviours and build form our value creation plan Launching new products 27 Transform the business through exists to restore a winning spirit. for the medium term. in 2019 enabling technologies people’s bodies 2 Safe use of our products 29 Care – A culture of and their self-belief. Expand in high-growth empathy and understanding Products with 3 segments a reduced footprint 30 for each other, our customers Strengthen talent Product development 31 and patients. and capabilities Minimising waste 32 Collaboration – A culture of 4 A focus on water 34 teamwork based on mutual Become the Reducing emissions 35 trust and respect. 5 best owner How we manage Courage – A culture of sustainability 38 continuous learning, innovation Corporate governance 39 and accountability. Our approach to 40 risk management Acting with integrity 42 Working with responsible 44 third parties Data and references 45 Smith+Nephew Sustainability Report 2019 2 Introduction and sustainability strategy Putting people first Products with a reduced footprint How we manage sustainability A message from our Chief Executive Officer A spotlight on sustainability Since joining Smith+Nephew as CEO in November 2019, I have been impressed by the Company’s increasing spotlight on sustainability. Our sustainability strategy is integrated We have created a Sustainability Council with our Group business strategy, our comprising members of our Executive purpose of Life Unlimited, our culture pillars, Committee to provide further visibility and our strategic imperatives, to ensure to the Board through regular updates to that sustainability guides what we do. our Compliance & Culture Committee. Our Sustainability Council was established to We are very proud that this is our 19th annual set and ensure delivery of our sustainability sustainability report. The report outlines our strategy, so that sustainability truly becomes new sustainability strategy and provides an part of the fabric of Smith+Nephew. update on our 2020 targets, against which we have made good progress. It also introduces We continue to apply our culture pillars of our new strategy focused on delivering our Care, Collaboration and Courage and strive purpose of Life Unlimited. Our commitment to deliver sustained competitive advantage goes beyond just environmental concerns and through focusing holistically on people, patient safety, to also include meaningfully planet and products. “Our commitment goes addressing the health issues that hinder people from living their lives to the fullest. We are beyond just environmental accelerating our sustainability programme concerns and patient safety, and setting more ambitious goals with hard to also include meaningfully metrics to measure our success and ensuring addressing the health issues accountability across the whole business. Roland Diggelmann that hinder people from living Chief Executive Officer their lives to the fullest.” Roland Diggelmann Chief Executive Officer Smith+Nephew Sustainability Report 2019 3 Introduction and sustainability strategy Putting people first Products with a reduced footprint How we manage sustainability At a glance We are a leading portfolio medical technology company We serve our customers through the global franchises Group revenue Orthopaedics Sports Medicine & ENT Advanced Wound Orthopaedics includes an Our Sports Medicine & ENT Management innovative range of Hip and (Ear, Nose and Throat) businesses Our Advanced Wound 17, 5 0 0 + $5,138m Knee Implants used to replace offer advanced products and Management portfolio provides diseased, damaged or worn instruments used to repair or a comprehensive set of products employees supporting joints, robotics-assisted enabling remove soft tissue. They operate to meet broad and complex customers in over technologies that empower in growing markets where clinical needs, to help healthcare surgeons, and Trauma products unmet clinical needs provide Revenue by franchise Revenue by geography professionals get CLOSER TO used to stabilise severe fractures opportunities for procedural ZERO human and economic We operate through three We serve customers in established and correct bone deformities. and technological innovation. consequences of wounds. 100 global franchises. and emerging markets. countries, supporting healthcare professionals for more than Advanced Wound Orthopaedics Emerging United States Management $2,222m markets $2,551m 160 $1,380m $957m years Innovation Manufacturing & quality Smith+Nephew delivers Smith+Nephew takes great pride innovation that aims to improve in its manufacturing expertise 19% Sports Medicine Other established quality of life. New products and maintains focus on delivering more invested & ENT $1,536m markets $1,630m and business models empower products that are safe and in R&D in 2019 healthcare professionals with effective for patients. options to improve patient outcomes. We develop technology through our global R&D programme, and additionally acquire exciting products where we can add value through technical or commercial acumen. Smith+Nephew Sustainability Report 2019 4 Introduction and sustainability strategy Putting people first Products with a reduced footprint How we manage sustainability Our business model Value creation is driven by our purpose, culture pillars and strategic imperatives Our resources >> Creating value through >> Value delivered in 2019 Our people & culture Operating Trading Efficiency Attracting, developing and retaining Revenue profit profit1 savings the best employees is important. We strive to build a purpose- $5,138m $815m $1,169m $80m driven culture based on strong Purpose-driven culture Strong product portfolio and authentic values. Having a clear purpose gives employees We have market-leading technology Practitioner training Philanthropic a sense of belief and determination. across our broad range of products. Ethics & compliance Dividend Jobs instances donations This supports a strong culture which We deploy our capital to drive continued Committed to doing business the $318m 17,637 110,000+ $13m right way, compliance is embedded improves performance across the innovation from our R&D programmes in the way we work. business both in terms of financial and invest in product and technology and non-financial value. acquisitions which improve outcomes Sales & marketing and widen access to life-changing care. Shareholders Customers Supporting customers through highly In 2019 we were pleased We continue to bring new, specialised sales teams with in-depth to deliver a 4% increase innovative products to technical product knowledge that in dividend, in line with customers, and support these surgeons and nurses value greatly. our progressive policy. with clinical evidence, as well Shareholders also benefited as delivering professional Manufacturing & quality from a 28.3% increase in development training to Operating global manufacturing Life share price over the year. healthcare professionals efficiently and to high standards around the world. to ensure quality and competitiveness. Patients Our products are used in Employees Medical education more than 100 countries In 2019 we improved our Supporting the safe and effective use of Unlimited to improve the quality of employee engagement our products through medical education. life of patients. We strive and promoted diversity to widen access to such and inclusion. Research & development technology, with 19%of Innovation is part of our culture and revenue now coming from Communities we are increasing the amount we invest the Emerging Markets. We aim to work in a sustainable, in new products. ethical and responsible manner, supporting local Sustainability Strategic imperatives Customer centricity charities, and reducing our We focus on three aspects environmental footprint. of sustainability; economic Our five strategic imperatives are Serving our customers is at the heart prosperity, social responsibility fundamental to how we focus the resources of our business model. We have a global and environmental stewardship. of the business to maximise commercial franchise model led by management For more information, impact in our markets. They form the basis of who are specialists in their areas. This keeps click here for our our value creation plan for the medium term. us close to our customers, ensuring we can 2019 Annual Report anticipate and meet their needs. 1 This non-IFRS financial measure is explained and reconciled to the most directly comparable financial measure prepared in accordance with IFRS on pages 200-204 of our 2019 Annual Report. Smith+Nephew Sustainability Report 2019 5 Introduction and sustainability strategy Putting