UNILIN Sustainability report by UnilinSustainability

UNILIN SUSTAINABILITY REPORT 2013

THE UNILIN WAY

Contents 1 Statement from the CEO 2 About this report 3 Our company

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3.1 Corporate profile

3.2 Business Units

3.2.1 Flooring 3.2.2 Panels

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3.2.3 Insulation

3.2.4 UNILIN worldwide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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3.3 Economic scale and impact

3.4 Stakeholder engagement

3.4.1 Industry affiliations

4. Approach

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4.1. Create a culture of labour safety excellence and care for the well-being of the employees

4.1.1. Our workforce 4.1.2. HR policy

4.1.4. Labour safety

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4.1.3. Talent management

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4.1.5. Well-being and health

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3.4.2 Governance and ethics

4.2. Managing the environmental impact of our processes and products

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4.2.1. Use of wood as raw material versus the use for energy production

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4.2.3. Waste

4.2.4. Water

4.2.2. Air emissions

4.2.5. Sustainable product development

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4.3. Energy saving and energy efficiency

4.4. Embedding sustainability in the overall management

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4.4.3. Human rights in the supply chain

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4.5. Community engagement of UNILIN and its employees

4.6. Profiling of UNILIN as sustainable solutions provider

4.6.1. Innovation

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5. A look back, and a look forward

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4.6.2. Customer satisfaction

6. GRI index

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4.4.1. Closing the material cycle 4.4.2. Product responsibility

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1 Statement from the CEO

The concern for sustainability has become an integral part of our day-to-day lives. For UNILIN as well, corporate sustainability has become a reflexive part of doing business: in all of its activities, UNILIN is constantly weighing the relative importance of economic, social and ecological considerations. UNILIN strives to deal with the expectations and wishes of society, customers, employees and our business partners in the most balanced possible way. Corporate sustainability is a very broad concept. After a thorough analysis of the internal and external context, we decided to focus particularly on the following priorities: 1. Continue to strive for a safe and healthy work environment for our employees and for third parties working on site. 2. Manage the environmental impact of our processes and products. 3. Achieve energy savings in our production sites, with the objective of reaching the world top in energy efficiency 4. Embed sustainability in the companyâ&#x20AC;&#x2122;s management 5. Work on the social engagement of UNILIN and its employees 6. Profile UNILIN as a company that offers sustainable solutions In order to meet these challenges, we are carrying out specific action plans in the various business units and departments, and we are making the necessary people and resources available to do so. We regularly evaluate the progress being made, and we adjust the priorities where necessary. Success depends largely on the engagement of every individual within UNILIN: we therefore wish - just like we did for safety and health - to develop a â&#x20AC;&#x153;sustainability awarenessâ&#x20AC;? that will constitute the basis for an effective sustainability policy, one supported by the entire organisation. Our very first sustainability report - the result of many months of work by several UNILIN employees - is a natural outgrowth of these resolutions. With this report we hope to communicate even more transparently about our intentions and our achievements concerning sustainability. I kindly invite you to share your opinion and suggestions with us - our aim is to acquire new knowledge in order to make further progress.

Bernard Thiers CEO UNILIN Bernard Thiers , CEO UNILIN

2 About this report

We are pleased to present UNILIN first Sustainability Report. We have prepared this report using the Global Reporting Initiative (GRI) 3.1 guidelines and are reporting at an application level C.

Content selection Our process for defining the content of this report is highly based on a thorough materiality assessment. Materiality involves determining which issues to focus our corporate responsibility strategy and initiatives on and include in our corporate responsibility reporting. We follow the definition of materiality as set forth by the Global Reporting Initiative. We strive to address topics that reflect our significant economic, environmental and social impact, or that could influence the assessments and decisions of our stakeholders. In the preparation phase of this first sustainability report, we started performing an external analysis, aiming to give an overview in arbitrary order of the sustainability issues that are important to our stakeholders. More on our stakeholder analysis here.

Core expectations of the key stakeholders towards UNILIN: • Strong financial result • Good governance and compliance

• Reduction of dust and formaldehyde emission

• Customer service

• Waste reduction and re-use

• Innovation (product and process)

• Reduction of energy consumption

• Product certification and quality

• Personnel training and education

• Product safety and health

• Quality of the work environment

• Sustainable product lifecycle

• and safe working conditions

• Sustainable use of resources

• Social engagement

We have confronted a broad range of employees in all three business units with these general issues. Based on these discussions, we have selected ‘very important’ and ‘important’ issues to be reported. They are all closely aligned with our sustainability vision and strategic approach that encompasses products, people and process. These issues were then linked with the GRI performance indicators (KPI’s). A limited amount of KPI’s have in the end not been selected because we sought to include data and metrics that were complete, measurable, accurate and verifiable, primarily through invoice records and systems data. From this year on, we seek to report minimum every two years. It is our aim to have the next sustainability report externally verified. We have been guided by the experts of the EY Cleantech and Sustainability team Belgium.

Scope of the report The reporting period for this year’s report is the 2013 calendar year, which is also our fiscal year. The content is limited to the products and operations of UNILIN, excluding United States and joint ventures (Brazil). During 2013, we have acquired Pergo (Flooring division) and Spano (Panels division) and we started up a new insulation factory in France (Insulation division). For reasons of availability of data, we have chosen not to include these recent acquisitions and start-ups in the metrics of this first report. In addition, our US factories are closely monitored by Mohawk and are excluded from this report. Beyond these acquisitions, there have been no other significant changes regarding the size, structure and ownership of our company during the reporting period. Data are reported for all three business units of UNILIN (Flooring, Panels, Insulation) and for UNILIN Technologies where relevant.

Contact: Contact person for questions about this report or its content: Frank Meire – Chief Sustainability Officer +32 56 67 52 11 info@UNILIN.com Ooigemstraat 3 – 8710 Wielsbeke – Belgium www.UNILIN.com

3 Our company

3.1 CORPORATE PROFILE The roots of UNILIN date to the 1960’s. Today we are a 1,4 billion euro enterprise, comprised of three main business segments and active around the world. UNILIN is part of the American company MOHAWK INDUSTRIES INC., which is listed on the New York Stock Exchange and is the world’s largest floor covering group with about 32 500 employees. Origin of UNILIN: flax farmers in West-Flanders (E. Claus - 1887) History of UNILIN

1960

The Quick-Step® brand was introduced.

Several families from south-west Flanders who were active in the flax industry began producing flax chipboards. They called the company ‘UNILIN‘ short for ‘Union de Lin’. In the 70s and 80s the company quickly expanded with the production of melamine boards, laminate floors & roofing elements.

1990

1997

The UNILIN Group was acquired by Mohawk Industries Inc.

Quick-Step® was the first manufacturer to market a glueless, integrated click system: Uniclic.

2005

2007

UNILIN, division flooring acquired Spectrim, a distributor in UK.

A new product line, engineered wood, was integrated in the division flooring.

2009

2011

UNILIN signs agreement for joint venture with ARAUCO for production of laminate floors in Brazil.

UNILIN, division flooring acquires the Australian distributor Premium and opens Russian laminate production site.

2012

2013

Acquisition Pergo (laminate), Marazzi Russia (ceramic tiles) & Spano (boards)

UNILIN has three business units and its head office is situated in Wielsbeke, Belgium: • UNILIN, division Flooring: laminate, parquet and luxury vinyl floors • UNILIN, division Panels: chipboards, MDF/HDF, decorative panels and finished products • UNILIN, division Insulation: roofing elements and insulation panels Next to the three product business units UNILIN has a separate division, UNILIN Technologies, for the commercialization of intellectual property rights for the UNILIN group and third parties. About 3700 people work for the UNILIN group (excluding US).

From mission to action UNILIN stands for (r)evolution. Thanks to continuous innovation, investing in design, research & development and the latest technologies, each of our business units have developed into top players. Our success is based on the UNILIN spirit underlying our mission.

“We create beautiful and convenient quality products for your home” Products that are smart in every possible way: panels that fit your needs, stylish floors that can be assembled in a fast, clever way and smart solutions for insulating your house. This ambition is clearly expressed in our corporate slogan: FOR SMART LIVING. All UNILIN business units share a single, unique way of doing things, ‘the UNILIN way’. More information on our vision.

Customers Our laminate, hardwood and luxury vinyl flooring serve both residential and commercial customers. The Panels and Insulation business unit focus on the construction, cabinet and furniture market as well as the ‘Do it Yourself’ businesses.

Did you know that… MOHAWK Industries Inc., from whom UNILIN group is fully part, publishes an annual sustainability report since 2009. For the latest version, see www.mohawksustainability.com.

3.2 BUSINESS UNITS Although UNILIN and Mohawk strongly work on integrating all business units of our industry, each business unit, even each factory has its own characteristics. A short introduction of each of the three business units of UNILIN.

3.2.1 Flooring UNILIN, division flooring produces laminate, hardwood and luxury vinyl floors, including the well-known brands Quick-Step® and Pergo®.

Website: http://www.quick-step.com/ Laminate

Laminate floors are produced at different production sites in 4 countries (in Belgium, in the United States, in Russia and in Brazil) and are sold around the world. It consists of a HDF core, covered with a back layer and on the upper side a decor and anti-wear layer. Our laminate floors guarantee carefree living pleasure. The floors are very scratch resistant and easy to maintain. Their unrivalled designs are also extremely trendy and stylish. In addition, it’s easy to install thanks to the patented, glueless clicking system: Uniclic®. The system allows to install in 2 different ways:

Laminate flooring

a) rotate and click (both long and short side)

b) horizontal insertion (both long and short side)

Uniclic® is protected by patents in 52 countries. 8

Uniclic technology

Hardwood Hardwood floors consist of a Hevea, spruce or HDF core, with a veneer back and a top layer of natural wood (such as oak). Our hardwood floors let you enjoy every day. These natural, authentic quality floors are finished with an oil or lacquer. When the hardwood floor is installed with the Uniclic速 Multifit click system, you can start enjoying your floor immediately, as they do not need any treatment after fitting. The production of engineered wood is based in a production plant in Malaysia and 3 in the United States. The primary market is Western-Europe. In 2014, the Czech manufacturer Magnum was taken over. Hardwood flooring

Luxury vinyl floors UNILIN recently introduced luxury vinyl floors. These damp-proof and amazingly silent floors are soft and warm to the feet, rock solid and perfectly suitable for renovations thanks to its thinness. Livyn速 floors consist of four layers: a protective PU top coating, a transparent wear layer, a design layer and a waterproof and sound reducing core. The Flooring division wants to remain the benchmark in the laminate market and expand to the luxury vinyl floors market. The focus will also be on the new markets in the upcoming economies, offering the complementary brands Quick-Step速 en Pergo速 via the different distribution channels Luxury vinyl flooring (Livyn)

3.2.2 Panels The Panels division produces chipboards, MDF/HDF, decorative panels and finished products. Chipboards are produced starting from fresh and recycled woodchips, glued and pressed together. For MDF/HDF, the wood is first reduced to fibers. Decorative panels are chipboards covered with a melamine and decor layer. The Panels division has production sites in Belgium (6), France (1), and in the United States (1). Sales are made throughout Europe, Africa, the Middle and Far East and in the United States. UNILIN Panels focuses on technical building solutions, furniture and interior products, sustainable building and industrial packaging. All UNILIN Panels products are almost entirely wood based.

Website: http://www.UNILINpanels.com/ The Panels division wants to offer â&#x20AC;&#x2DC;best in classâ&#x20AC;&#x2122; service and value added products to its customers via different distribution channels.

3.2.3 Insulation The Insulation division manufactures various types of structural & insulated roof elements (prefabricated solutions) and polyurethane insulation boards for walls, floors and roofs. The roof elements are standard or tailor made, consisting of structural wood elements, insulation and cladding material.

UNILIN roof elements

Polyurethane is produced starting from MDI and polyol using pentane as a blowing agent. The Insulation division has three production sites, in Belgium (1), the Netherlands (1) and France (1). The company is market leader for roof elements in Western Europe.

Website: http://www.UNILINinsulation.com/ The Insulation division wants to deliver value added products, offering the customers solution for the more and more stringent insulation requirements for new housing.

3.2.4 UNILIN worldwide UNILIN has a well-developed network of production and sales sites responsible for worldwide market coverage. All the units are managed from our headquarters in Wielsbeke, Belgium. About 65 % of UNILINâ&#x20AC;&#x2122;s turnover is generated from the European branch. UNILIN has 21 production sites, in Belgium (9), the Netherlands (1), France (2), Czech Republic (1), US (5), Russia (1), Malaysia (1) and Brazil (1).

Organization: production plants per country CEO

FLOORING

PANELS

INSULATION

1 1 1

Belgium Netherlands France Czech Republic US Malaysia Russia Brazil (*) : outside the scope of the report

1 1 4 1 1 1

FIN

(*)

3.3 ECONOMIC SCALE AND IMPACT UNILIN forms part of the US company Mohawk Industries which is stated on the New York Stock Exchange. For the financial part of our reporting we refer to the ‘economic impact’ chapter of the Mohawk sustainability report. Turnover (M Euro)

1600 1400 1200 1000 800 600 400 200 0

2001

2002 2003 2004 2005 2006 2007 2008 2009

2010

2011

2012

2013

Year

3.4 STAKEHOLDER ENGAGEMENT UNILIN wishes to base its growth and development on the respect and trust that it builds up and continuously earns from all stakeholders: • Mohawk as well as the shareholders expect not only that profit is made, but also that UNILIN has a long-term vision and perpetuates its growth within a framework of social responsibility. • The department heads and employees find their remuneration important, but also elements as working conditions, working circumstances and atmosphere. • Our customers want a beautiful and robust product that is easy to handle and install, as well as one that does not release harmful substances in the home during use. Customers are also interested in what can be done with the products at the end of life cycle. Increasingly, environmentally-aware customers expect wood that has come from sustainably-managed forests. • Strategic suppliers are of utmost importance to UNILIN, as they contribute in a significant way to the quality of the products and security of delivery. • Distributors are an important part of the chain between UNILIN and its customers. • Additionally, nearby residents, environmental authorities and environmental organisations expect that our production and products cause only a minimum amount of nuisance and harm to the environment.

Key stakeholders of UNILIN: Internal

External

• Mohawk /

• Strategic suppliers for

governing bodies

• Shareholders • Department heads and employees

energy, (recycled) wood and glue • Distributors • Customers

Stakeholder consultation forum

Each stakeholder has a certain set of expectations based on his or her particular values. We have mapped those clearly. The continuous challenge consists in keeping the right balance between these expectations. In order to know and understand these wishes even better, UNILIN attaches great importance to developing and maintaining a good relationship with the different stakeholders: we have discussed the sustainability policy at the European Forum of employee representatives, we have regular contacts with environmental associations and neighbours and an active cooperation with the federations, both national and European, of the wood working industry. We also cooperate with the authorities directly or via our federations to develop vision and policies for the wood working industry. As our sustainability strategy continues to evolve, we communicate, directly or indirectly, regularly with these groups to listen and further understand their needs and expectations. This feedback, in turn, helps us to develop our own strategies, policies and processes.

3.4.1 Industry affiliations UNILIN participates in and is member of the following organizations (non-exhaustive list): • • • •

EPF (European Panel Federation) EPLF (European Producers of Laminate Flooring) European Federation of the Parquet Industry. The regional/national organizations responsible for the collection of waste: Valipac, Valpac, EcoDDs, The Nordic Swan Ecolabel, … • PEFC and FSC (labels for sustainable forest management) • IBU – Institut für Bau und Umwelt ( Institute Construction and Environment) • National Wood Flooring Association (NWFA)

Country-specific memberships: Belgium: • Technisch Centrum van der Houtnijverheid (Technical Center of Wood Technology) • Fedustria (Federation of the Textile, Wood and Furniture Industries) • FEB (Federation of Enterprises in Belgium) • VOKA (Flanders’ Chamber of Commerce and IndustryKauri (Belgian meeting point for Sustainability) • NBN (Normalisation Organization) • MMFA (Multilayer Modular Flooring Association) • Fedustria: Federation of Woodworking and Textile Industries • Febem : Federation of Environmental Management Industries • Ondernemers voor Ondernemers (Network for Sustainable Cooperation with the South) France: • SNPU: National Union for Polyurethans • Promotoit (Sector organization for the Promotion of Qualitative Roofs) • Negobois (Charity organization for the Wood Sector) • UIPP (union for the Panels Industries) • ATMO: regional organisation for the the follow up of the air quality The Netherlands: • NVPU (Nederlandse Vereniging van Polyurethaan Hardschuim-fabrikanten) Malaysia: • MEF (Malaysian Employer Federation) • FMM (Federation of Malaysian Manufacturer)

3.4.2 Governance and ethics The UNILIN executive management is structured as following:

Bernard Thiers CEO

Matthew Kahny President UNILIN NA

Paul De Cock President divison flooring (non-NA)

Lode De Boe President division panels Europe

Lieven Malfait President division insulation

Mike Cuvelier CFO

Jan Dewitte CIO

Luc Lemarcq VP HR

The code of ethics is written down in Standards of Conduct And Ethics for Employees, Officers And Directors of Mohawk Industries, Inc, audited in a yearly employee survey. Mohawk industries complies with the Sarbanes-Oxly Act (SOX). The governance structure and corporate governance are closely managed within the Mohawk group, at the corporate website of Mohawk Inc.: • Board of Directors and Executive Officer listing • Board committee charters • Contact information for Board members • Corporate governance guidelines • Privacy Policy • Related person transaction policy

Direction Committee UNILIN (from left to right: Jan Dewitte (CIO), Bernard Thiers (CEO), Lode De Boe (President division panels Europe), Luc Lemarcq (VP HR), Mike Cuvelier (CFO), Lieven Malfait (President division insulation), Paul De Cock (President division flooring (non-NA))

4 Approach

Corporate sustainability has been in UNILIN´s blood from the very start. More than 50 years ago, UNILIN began as a company focused on the recycling of flax straw, a green activity that delivered a natural end product. The later use of wood and recycled wood as a raw material also demonstrates our inherent love for nature and the environment. Along with sustainable products, sustainable solutions were also added to the line, for example laminate that can be installed without adhesive or insulating material that significantly reduces energy consumption and thus emissions. UNILIN is continuously trying to find the best solutions for societal challenges through creating top-end products. Corporate sustainability plays an important role in the way UNILIN is managed. We have always used a no-nonsense, pragmatic approach where people and resources are deployed in a carefully thought-out way in order to guarantee long-term growth. In order to tackle these challenges, we have formulated ‘UNILIN’s Strategic Intent towards Sustainability’:

Make sustainability a driver to create value for and with the internal and external stakeholders by: • doing things sustainably • doing the sustainable things

This goal has been further developed to key priorities for UNILIN’s sustainability strategy for 2013-2017: 1. Create a culture of labour safety excellence and care for the well-being of the employees 2. Manage the environmental impact of our processes and products 3. Continue our energy saving program 4. Embed sustainability into the overall management 5. Profile UNILIN as a corporate social company and sustainable solutions provider

In this sustainability report, UNILIN’s approach is structured along these key priorities of the sustainability strategy for 2013-2017.

Management UNILIN is working at integrating sustainability principles explicitly and horizontally into its management. Not only economic but also ecological and social aspects, are taken into consideration in all business processes and decisions. We currently work on this by taking following steps: Make sustainability a driver to create value for and with the internal and external stakeholders by: • The key priorities are integrated in the strategic plan (STRAP) of the business units where relevant; • A balanced score card, which is a management control and reporting system, will be introduced based on the key performance indicators resulting from the materiality analysis; • Strategic alignment of the STRAP’s to the site- and department level is a continuous focus; • Different reporting actions: - Quarterly to the direction committee - Yearly for the management review - Yearly for the http://www.mohawksustainability.com/Mohawk Sustainabilty Report – and from this year on also the UNILIN sustainability report

UNILIN, site Wielsbeke Flooring/Decorative Panels also subscribed to the Corporate Sustainability Charter, a local government programme in which companies can voluntarily participate. To do so they must propose actions on 10 sustainability themes which are evaluated each year by a committee of external experts. UNILIN Flooring received the annual certificate of the Corporate Sustainability Charter in 2010, 2011, 2012 and 2013. Our intention is to apply the principles of the Charter to the other Belgian business units of UNILIN, starting with Panels, as well.

UNILIN’s sustainability policy is supported by Mohawk Industries Inc. See therefore the Mohawk Environmental Policy. Mohawk Ind. Corporate Environmental Policy

4.1. CREATE A CULTURE OF LABOUR SAFETY EXCELLENCE AND CARE FOR THE WELL-BEING OF THE EMPLOYEES Doing the right thing for our employees and our communities is one of the most important things we can do to ensure the continued economic sustainability of our business. This includes an extended health and safety management, as well as a stimulating talent management. We attract the right people, we connect them with our strong company culture, we grow and develop their talent and reward them in line with the market and their performance.

4.1.1. Our workforce UNILIN (non US) counted 3.669 employees as of December 31, 2013, compared to 3100 the year-end 2012. The majority of the employees work in Europe. Men comprise 73 percent of our worldwide workforce, women 27 percent. We define our workforce by two types of employment categories: there are 2.549 employees who are classified as direct workers, that is 69 percent. 1.120 employees are classified as indirect workers that is 31 percent. Workforce

2011

2012

2013

Grand total

3076

3100

3669

Total Europe

2233

2243

2649

Total Asia Pacific

843

857

1020

(excluding joint ventures and UNILIN US)

The largest share of the personnel increase is due to the acquisitions performed in 2013. The personnel increase in Malaysia is mainly due to increased production at this plant. Total workforce by gender

Gender

2011

2012

2013

Male

77%

73%

Female

23%

27%

Total workforce by employment type: Employment type

2011

2012

2013

Direct workers

2134

2168

2549

Indirect workers

942

932

1120

Total

3076

3100

3669

2011

2012

2013

91%

90%

Percentage of employees covered by collective bargaining agreements: Total

Over 90 % of the employees are covered by a collective bargaining agreement. For the others, site and country specific agreements apply. Our total turnover for 2013 was 21 percent, compared to 7 percent in 2012. The figure is especially influenced by the high turnover rate amongst the UNILIN employees in Malaysia. Turnover for UNILIN excl. UK and Australia (2013): Terminations in 2013

New hires in 2013

Gender

Male

366

Male

493

Female

195

Female

282

Total

561

Total

775

Age group

18-30

307

18-30

435

31-46

169

31-46

276

47-65

66 and above

66 and above Total

1 561

Region

Total

775

Region

Europe (excl. UK)

185

Europe (excl. UK)

239

AsiaPacific (excl. Australia)

376

AsiaPacific (excl. Australia)

536

4.1.2. HR policy Integrated and automated HR The HR organization, led by the VP HR, is integrating Talent Management, Training & Development, Internal Communication, Compensation & Benefits, Payroll and HR Information Systems for the 3 business units of UNILIN worldwide. Each business unit has its own HR Director reporting directly to the business unit president and functionally to the VP HR. All employees in the plants and departments are served by dedicated HR professionals. Since 2012, the hire-to-retire process is automated in Workday®, a cloud-based human capital management system rolled out in all Mohawk companies. Through Workday®, employee data are managed centrally, employees get visibility on the entire organization, employees and managers get access to paperless approval processes. The following processes are integrated in Workday®: • Staffing management (request for hire, create position) • Organisation management (organisational structure, organisational charts) • Employee lifecycle management (Hire/retire, transfer, promote employee) • Talent Management (goal setting, performance reviews, development plans) • HR master data and performance management

Recruitment policy When attracting people, their fitting with our values – Passion, Entrepreneurship, Excellence and Respect – are of utmost importance. UNILIN fully realizes that the people are the most important asset. We therefore pay great attention to a strong communication with everybody. The communication tools are: intranet, e-mail, UNILINK magazine/Flash, info meetings, info boards, TV screens, instant messaging and meet & greets.

Anti-discrimination policy UNILIN is an equal opportunity employer that does not discriminate on the basis of race, religion, gender, national origin, age, marital status, sexual orientation or disability. Non-discriminatory policies and practices are in place to ensure that our equal opportunity approach is enforced. We consider any individual for any position for which he or she is qualified and can perform the essential job functions.

Attendance policy With its attendance policy, UNILIN strives to achieve a higher attendance figure and a healthy working environment via increased well-being of the employees. We focus on a number of environmental factors such as nutrition, health, shift work, well-being, movement and vitality. Under the name ´Feel Good project´, the Belgian sites have already started with an active movement policy, and the other sites are soon to follow. Top actions of the Feel Good project in 2013 were: • 23 April – 27 June: Start To Run / Keep On Running with 78 participants • 27 June: UNILIN-RUN had 35 participants • 8-15-22-29 May: cycling days with 223 participants • 25-26 May: the UNILIN Cycling Challenge welcomed 55 participants • Weeks 27-29-34-36-39: distribution of fruit baskets • 10 & 12 September: Info sessions on how to have a healthy diet attracted a total of 180 participants The HR services received a lot of positive feedback to the actions from various parties. It is still too early to see the full impact on sick leave figures Sick leave (short term) percentages available: Sick leave 7,00 percentage absenteeism

6,00 5,00 4,00 3,00 2,00 1,00

Belgium

2011

2012

2013

3,59

3,44

3,23

Netherlands

4,97

3,21

1,52

France

2,90

6,30

4,20

Australia

2,60

1,50

1,90

Russia

2,10

1,70

1,90

Malaysia

0,77

0,83

0,93

We observe clear regional differences, which are partly related to the difference in social security systems in the different countries. Besides this, we see a downward trend in the absenteeism.

4.1.3. Talent management The development of talent to drive innovation is a strategic imperative for UNILIN. It is based on the following principles.

Training for everyone We are convinced that passionate, competent employees are the engine that drives UNILIN’s success. In a continuously evolving environment we offer our employees the opportunity to learn and grow. Training and development are an integrated part of the UNILIN culture.

The right person on the right place Our training policy is based on the following pillars: • Integration in the company, becoming and remaining familiar with UNILIN’s culture, organisation and products • Personal development and developing interpersonal skills • Developing functional competencies, acquiring expertise

Training and development programs At UNILIN there are numerous career possibilities, both horizontal and vertical, local and international, within one´s own business unit or in a different business unit. It is important to match both the abilities and the personal ambition of employees. There are different angles to make a career: Deepening: expert role Managing: people or project management role Broadening: cross department or cross functional move Sustaining: grow in current role Professional development is an inherent part of our informal and relationship-driven culture. Our employees are open to learning from their peers, comfortable exchanging institutional knowledge and willing to change when new and better practices are introduced. This informal education is an invaluable driver for innovation. Across our company we also offer training linked to specific business objectives. There are corporate programs followed throughout the UNILIN branches. In addition, the branches can offer specific training programs meeting local requests. For example, in Bazeilles (France) English language trainings were given and in Russia there was a focus on several trainings for sales representatives (business game, negotiations, etc).

Corporate programs are: • Leadership trainings • Finance for non-Finance trainings • Technical and IT trainings • ‘Soft skills’ trainings (eg. Interpersonal relations, time- and stress management, Out-of-the-Box thinking) • Sales trainings and Customer Service trainings • Individual coaching sessions • Plant visits

UNILIN UNIVERSITY UNILIN ACADEMY

Average hours of training per year: 2 Europe (incl. Russia)

2011

2012

2013

Indirect workers

20,7

20,4

18,1

Direct workers

18,0

27,7

23,7

AsiaPacific (excl. Australia)

2011

2012

2013

All employees

25,6

4,5

2,8

2013 - Average hours of training per year per employee 25

23,7

20 15

18,1

10 5 0

2,8 Indirect workers - EU

Direct workers - EU

Scope: UNILIN Australia and UK are not included in the figures

All Employees - Asia/Pacific

Employee evaluation Evaluation and review is an important component of continuous improvement and professional development. All UNILIN employees receive regular performance and career development reviews. UNILIN wants to continue to work on the internal mobility of its employees. In doing this and keeping in mind the global integration of our company, we want to stimulate job rotations between functions and business units. We also want to use internal promotions as a way of succession planning.

4.1.4. Labour safety Policy Through safety-leadership programs, employee engagement and well-defined processes and procedures, we are working to improve safety at all of our facilities every day. Our commitment to continuous safety improvement is founded on our culture of prevention, where everyone takes responsibility for safety and works toward our goal of zero injuries or illnesses. Our safety initiatives are led by the Corporate Direction Committee supported by the HSE Steering Committee. It has established safety leadership accountability, has developed a common corporate structure and metrics, shares ideas and information across business units, and acts globally while allowing flexibility for each local operation to implement rapid, cost-effective safety solutions. Safety topics are discussed on a regular, structured basis in the formal Safety Committee or some other consultative body Percentage of workforce represented in formal health and safety committees: Total

2011

2012

2013

84%

82%

82% of the total workforce is represented by the formal joint management-worker committees on health and safety. In smaller sites, a more direct and informal approach is possible, due to the shorter distance between employees and managers. â&#x20AC;˘ In Russia regular consultations are held between managers and employees via toolbox meetings and tours. â&#x20AC;˘ In the UK, health & safety issues are dealt with at management meetings and ISO quality meetings. In Australia, the employees are spread over 5 locations that are only reachable by plane. There is a two-yearly physical meeting at 1 location where HSE topics are discussed.

We list a few specific points of particular interest per site

t gh

in the spot For the Belgian and Dutch sites: y t li • ´Safety in the spotlight´ action fe - Improve the quality of Regular Observation Tours (so called ‘ROT´s’ or ‘ROBs’) - Monitor quality of the housekeeping tours - Increase the visible involvement of management (via training and presence on the work floor) - Input of committee members in the Annual Safety Action Plan • Preparation of a dust explosion safety document • Introduction of a HSE registration system and cooperation between the HSE departments • Completion of Report for Commissioning and reactivation of prevention policy • Preparation for the compliance with the future legislation on formaldehyde • Fulfilment of statutory obligation within the framework of psychosocial stress • HSE screening of the luxury vinyl floors project (for Flooring) • HSE screening of the Panels project ´FPW´ (Finished Products Warehouse) and moving of a press (LUX 10) (Panels) • Insulation: work accidents reduction working group For France: • Psychosocial risk analysis: a survey of the personnel was organised which led to an action list that was completed in accordance of priority • Reduction in the sources of exposure to wood dust • Safety observation tours with attention for behaviour • SafeStart® training courses (objective: increase safety awareness) • ATEX-related training courses (objective: prevent dust explosions) • Improve system of safety registrations • Conduct task risk analyses • Develop a ´lean´ HSE management system in the new factory in Sury (F) For Malaysia: • 5S and safety audit • Safety awareness campaigns • Fire exercise • Noise monitoring • HIRRAC (Hazard Identification and Risk Assessment) • CHRA (Chemical Hazard Risk Analysis) For Russia: • There is no safety committee, but there is regular consultation with the employees • Regular observation tours for reporting and follow-up • Regular toolbox meetings

In Australia (where there are 4 warehouses located at great distance from one another) there is a two-yearly meeting at which safety is one of the permanent agenda items. In the UK, HSE matters are discussed in the management committees and ISO quality meetings. We have taken as our goal to form a separate safety committee, composed of 1 senior manager from each site (Manchester/Newry/Quick-Step® ® Academy) and 1 representative of the employees.

Status Safety figures

2012

2013

Frequency rate

9,59

13,6

Severity rate

0,11

0,22

Number of recordable accidents

Frequency rate (Fg) Unilin Group FG 40 35 30 25 20 15 10 5

2005

2006

2007

2008

2009

2010

2011

2012

2013

The frequency rate is the number of lost day accidents per million worked hours. The severity rate is the number of lost days due to occupational accidents per thousand worked hours. In 2013 both the frequency and severity rate increased compared to 2012. The high pace of growth (take overs, acquisitions, innovative projects, new plants starting up) could be part of the explanation. Still, the 2013 safety result is the 2nd best ever.

Year

“Safe Maintenance Award Benelux 2013” An expert jury selected UNILIN Panels, Chipboards Business unit as the winner of the “Safe Maintenance Award Benelux3 2013” in the category “in-house maintenance service”. All entries were assessed according to objective evaluation criteria with regard to shop floor safety. UNILIN won several sets of new work clothes with this award. UNILIN donated the work clothes to a local technical school, with which UNILIN already is cooperating for a long time.

Unilin Panels won the Benelux Safe Maintenance Award and donated the workclothes it won to the Technical School (VTI) of Tielt (B)

4.1.5. Well-being and health Health complaints The health complaints of the employees are divided into 2 categories. The overview for 2013 is as follows: • Physical complaints due to overloading: 3 cases (Insulation, Panels, Flooring) • (Allergic) reaction to chemical products: 4 cases (Insulation, Flooring, transport provider) These figures are quite low relative to the number of personnel and considering the industrial nature of the activities. UNILIN is making structured efforts to reduce the health risks for its own people and nearby residents. UNILIN works on this closely together with occupational physicians and of the external prevention and protection services.

Benelux=Belgium, Netherlands, Luxemburg

Ergonomics UNILIN believes in the principle of a healthy mind in a healthy body. In consultation with the occupational physicians and the safety committee, regular initiatives are developed on ergonomics in order to reconcile the working organisation and workplace layout as well as possible to the operator and a smooth job performance. Moreover, UNILIN also takes account of the fact that employees will have to continue working longer in the future until retirement than they do presently, which further increases the importance of an ergonomic workplace layout. Training courses are also organised to make the employees aware of back-friendly methods for lifting loads and the risks of repetitive work.

Vacuum lifting tools for boards

Noise measurements All machines and installations must meet the applicable noise standards in order to limit the nuisance to both our own employees and nearby residents. We seek to prevent noise at the source and to enclose sources of noise. When there is no other alternative, personal hearing protection is provided, which in most cases are custom-made for the employees. Exposed employees are also given regular hearing tests in order to detect any eventual hearing loss at an early stage.

Movement and healthy diet In the Belgian sites in 2013 an attendance policy was developed that focused on movement and a healthy diet. These initiatives are being continued, with attention to work-related psychosocial stress being added as of 2014.

Condition check during Unilin Safety Days (november 2012)

Formaldehyde in the workplace Wood naturally contains significant quantities of formaldehyde. At the beginning of 2015, formaldehyde will be reclassified from category 2 to 1B under CLP (presumed to have carcinogenic potential on humans) (CLP: classification, labelling and packaging). The demand for reclassification came about as a result of pressure from public opinion in a number of European countries, and is not exclusively based on scientific studies. Formaldehyde molecule

Anyhow, we must follow a firm precautionary principle. The new exposure limits in the workplace that one expects will be legally introduced are already in effect in Belgium. For France this will signify a tightening of standards. UNILIN is testing the formaldehyde levels in the workplace systematically and is working on interventions to lower the levels even further by adapting process parameters and improving the extraction system. However, these measures cannot entirely exclude the possibility that, in certain places or exceptional situations, respiratory protection must be worn. Naturally we will try to keep this to a minimum. UNILIN uses the same European assessment criteria for evaluating exposure to formaldehyde in the Malaysian site as well.

Wood dust in the workplace As for formaldehyde, UNILIN follows a similar monitoring and control strategy for the exposure to wood dust on the workplace.

4.2. MANAGING THE ENVIRONMENTAL IMPACT OF OUR PROCESSES AND PRODUCTS The environmental policy is coordinated by the local environmental manager. It is integrated into the entire company policy and, as such, responsibility for its fulfilment is borne by the whole organisation. UNILIN is aware of the environmental impact of its products. Our sustainability report describes the various measures being taken in order to reduce the environmental impact associated with the production. The process component largely involves minimizing the environmental impact of our manufacturing and distribution operations through reducing the emissions in production, waste reduction and water management and a continuous strive for sustainable product development.

4.2.1. Use of wood as raw material versus the use for energy production We live and breathe wood. A noble, long-lasting and naturally-healthy material. Building and living in and with wood means living close to nature, in absolute comfort and perfect harmony with ourselves and our surroundings. The overview of the materials used in production show the considerable quantities of wood used. Materials used by weight or volume, per business unit of UNILIN: Flooring Russia HDF (ton)(째) Impregnated paper (m2)

2011

2012

2013

19.864

18.686

3.099.784

3.482.276

(째): HDF in 2012: sourcing from Panels Bazeilles / in 2013: partially external sourcing (14 014 ton)

Flooring/Decor Panels Wielsbeke (B)

2011

2012

2013

HDF (ton) (°°)

155.543

137.179

119.354

Chipboard (ton)(°°°)

198.240

168.491

194.811

Base paper (ton)

6.226

5.662

6.846

Resin (ton)

2.140

2.686

2.868

Formaldehyde (ton)

6.263

4.594

4.851

Melamine (ton)

6.931

6.821

7.428

2011

2012

2013

51.070

61.346

59.840

4.255.833

5.112.167

4.986.667

Flooring Malaysia

2011

2012

2013

Wood (ton)

21.611

29.273

35.964

Panels Bree/RdG (B)

2011

2012

2013

Virgin Wood (ton)

657.041

566.552

682.002

Recycled wood (ton)

523.323

566.151

512.896

Formaldehyde glue (ton)

66.032

70.021

63.861

2011

2012

2013

Virgin Wood (ton)

829.043

680.129

889.561

Recycled wood (ton)

200.016

251.342

207.154

Formaldehyde glue (ton)

100.860

78.959

98.482

2011

2012

2013

Wood (ton) - estimation

28.560

18.541

32.032

Insulation materials for roof elements (m³)

48.153

40.739

25.037

Raw materials PU (ton)

19.869

22.376

24.796

(°°): HDF produced in Panels Bazeilles (°°°): intercompany supply Decorative Panels Izegem (B) Chipboard (ton) (°°°) Melaminated paper (m²) (°°°) - estimation

Panels Bazeilles (Fr)

Insulation

Only the Panels division is substantially using recycled materials. The wood waste of the other business units are nevertheless used for more or less half of their amount for the production of UNILIN panels. 32

Percentage of recycled wood used in the Panels division: 2011

2012

2013

51%

50%

47%

This percentage depends highly on market conditions. It is the intention of the Panels division to increase the recycled content. Belgian producers of â&#x20AC;&#x153;wood board materialâ&#x20AC;? are under pressure due to the continued policy of the subsidised burning of wood, going against the cascade use of wood: this means first use wood as raw materials, try to recycle as long as possible and eventually burn the end of life wood for green energy production. This subsidy policy ensures that the board companies must constantly compete with energy producers for their raw material. Moreover, this is an unfair competition between, on the one hand, a subsidised sector (energy producers) and, on the other, an unsubsidised sector (board companies). For the board companies, no or insufficient raw materials means no production, which in the long run is equivalent to the unavoidable disappearance of employment and an entire sector. Together with the sector federation Fedustria, in February 2014 the alarm bell was sounded about the subsidised burning of wood.

Action against the use of fresh and recyclable wood as fuel

4.2.2. Air emissions Formaldehyde Formaldehyde is a natural substance that does not bio-accumulate and which is necessary for making life on earth possible (building block of DNA). Wood naturally contains significant amounts of formaldehyde. Formaldehyde is also a raw material of the adhesive that is used to bond the wood chips and fibres and to impregnate the paper layers of laminate. As with all substances, the risk depends on the dose to which users or employees are exposed.

Atmospheric emissions It is in this light that one should mention the new BREF (reference document for best available techniques) for wood based panels: a guideline with a list of the best available technologies, drafted by the JRC (Joint Research Center) in collaboration with the EPF (European Panel Federation). The focus of attention is the emission of VOC´s and formaldehyde. Formaldehyde emissions into the atmosphere come primarily from the dryers in the board factories and the HDF and chipboard presses, as well as from the resin preparation and impregnation in the flooring factories. A comparative study will have to demonstrate which process, material and technical parameters are decisive for formaldehyde emissions. UNILIN opts to limit formaldehyde emissions at the source as far as possible, because it is already clear that end-of-pipe solutions entail enormous investment and operating costs, without even guaranteeing that the emission limits of formaldehyde will be met. Measurements around the UNILIN plant in Bazeilles (France) have demonstrated that immissions of formaldehyde are virtually undetectable: during both production and shutdown periods one measures the same environmental concentration for formaldehyde

Health Formaldehyde receives a great deal of media attention because of the suspected impact on the quality of the indoor atmosphere, which is becoming ever more critical due to the fact that buildings are being constructed so as to be increasingly airtight. In terms of ´indoor air quality´ the Formaldehyde emissions of the UNILIN products satisfy the strictest applicable standards (test method EN 717-1 and WHO indoor atmosphere standard): through innovation over the past 40 years, the industry has succeeded in systematically reducing the content of formaldehyde in the indoor atmosphere. The current levels of formaldehyde are scarcely detectable. As a member of the EPF (European Panel Federation), UNILIN works together with Formacare, which represents key European producers of Formaldehyde. Within this framework and at the request of the ECHA (European Chemicals Agency), more extensive research is being performed on the contribution of board products and wood floor covering to the formaldehyde contents in the indoor atmosphere. A recent study by Salthammer et al shows that an estimated 10 to 50 % of the formaldehyde that is found indoors comes from organic sources such as candles, incense, gas heating, cigarette smoke and wood itself. The rest comes from material that is produced on the basis of formaldehyde, such as resins or adhesives. 34

Dust Dust is an inherent aspect of the handling and processing of wood. Dust is generated in all sites, primarily in the Panels production sites. The production installations (sawing, sanding and cutting machines) have dust extractors with downstream cyclones and filters to guarantee that the emission standards are met. This is assured by certification of the suppliers and by differential pressure measurement and periodic monitoring where possible. In order to prevent dust production when handling wood in production and on the site premises, a large number of measures are in effect for the Panels division, in addition to continuous monitoring: A point of special attention in Western Europe, and particularly in Flanders, is the high contents of fine dust in the atmosphere. Fine dust can be partially linked to the processing of wood, but the fine dust issue is related to a greater degree with road transport emissions. UNILIN understands this issue and is cooperating with experts to better understand and (where possible) further limit the contribution of its activities to the fine dust issue. It is well-known that fine dust has a negative impact on health. 2 February 2014, an alarming report was published in the Flemish press (the newspaper De Morgen) about the fine dust issue in Flanders. The area around Wielsbeke (Belgium), and more specifically around the UNILIN Panels site, was indicated as a “black spot”. UNILIN took these allegations very seriously and organised a discussion with experts of the University of Louvain (KUL) on this subject. The following interesting information came from this discussion: • One finds comparable levels for PM10 dust both in the countryside and in the city (PM10: particulate matter smaller than 10 µm) • Ultrafine dust (referred to as UFP, Ultrafine Particles, nanoparticles smaller than 300 nm) comes largely from traffic and combustion processes. • The demo of Atmosys which was online at the time of the article suffered from modelling and calculation errors. Until 2013 a specific installation was used on the site in question (Panels division, R. De Ghellinck) that had issues with dust emission. These dust emissions were mistakenly extrapolated to fine dust emissions. More recent, annual measurements of the VMM (Flemish Environmental Agency) show that there are no problems with regard to the average daily concentration (40 µg/m³) and the number of times the daily average of 50 µg/m³ was exceeded.

Number of days: fine dust concentration higher than 50 µg/m3 (Wielsbeke & neighbouring cities; maximum 35 days/year) stacode

gemeente

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

44M705

Roeselare (Haven)

130

40OB01

Oostrozebeke

126

129

44N052

Zwevegem

40RL01

Roeselare (Brugsesteenweg)

40OB02

Wielsbeke

40MN01

Menen

Average yearly fine dust concentration in µg/m3 (Wielsbeke & neighbouring cities; maxium 40 µg/m3) stacode

gemeente

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

44M705

Roeselare (Haven)

40OB01

Oostrozebeke

44N052

Zwevegem

40MN01

Menen

40RL01

Roeselare (Brugsesteenweg)

40OB02

Wielsbeke

Nevertheless, UNILIN attaches great importance to the monitoring and prevention of (fine) dust. UNILIN is studying how the UFP (Ultrafine Particles) can be reliably measured around the factories in Wielsbeke and Oostrozebeke (Belgium).

Status significant air emissions Air pollutants can have adverse effects on habitats and human and animal health (workers and communities around the facilities). UNILIN is therefore constantly monitoring the significant air emissions on-site, as well as taking the necessary and possible measurements to reduce them. Most of the emissions come from the combustion processes, the drying and processing of wood and the production of polyurethane insulating material. A breakdown of the significant air emissions in the UNILIN production process: • CO2: is released in the combustion processes and when drying wood; CO2 is the best-known greenhouse gas; we are seeking to limit CO2 emissions through our efforts for effective energy use. • Formaldehyde: is released from wood during the drying process or from the added formaldehyde adhesives and resins.

• Dust: comes both from the combustion processes and the processing of wood and polyurethane; • NOx: is a combustion product and the concentration in the flue gases, such as CO, is related to the proper operating conditions of the burners. NOx contributes to the acidification of rain and is decisive for the energy consumption. UNILIN seeks to keep these values as low as possible. • TOC: is released, just like formaldehyde, during the drying of wood. Organic components contribute to the formation of summer smog and acidification of the environment. The release of TOC is inherent to the production of wood products. UNILIN follows the best available technologies to limit the emission as much as possible. • Pentane: is used as a blowing agent for polyurethane insulation. The largest share remains captured in the pores of the Polyurethane. A small part (around 3 %) is released during the blowing and cutting of the insulating material. With the quantities that UNILIN emits, the effect on global warming is insignificant. Significant air emissions by type and weight (in ton/year): 2011

2012

2013

NOx

652

617

632

Formaldehyde

135

154

112

Stof

TOC

428

452

694

Today we still have no global overview of the leaks from the condensation units (HFCs). HFCs also contribute to the greenhouse gas effect. An overview of these will be prepared in 2015. It should be noted that all condensation units within UNILIN are subject to periodic leak tests and it is expected that the emission will be limited.

4.2.3. Waste At UNILIN we look at waste as both a challenge and an opportunity. We are challenged to find ever more sustainable ways to reduce waste, while at the same time recognizing the opportunity to transform waste into something of value. Our capabilities for such are well-developed, but more many opportunities remain

Production scrap A large share of the wooden production cuttings are re-used in UNILIN´s own production. UNILIN is striving to make it possible to close the material cycle. In the Panels division a research project (OPT-I-SORT) is running in order to condition even more wood from municipal container parks for recycling. In addition, UNILIN Insulation is studying the feasibility of returning PU at the end of its service life to its original raw materials and re-using them.

Use of wood

Sorting & separation

Collection #01 #07

Use in woodworking, building and furniture industry

#02

Chemical cleaning

OPT-I-SORT closed cycle

#06

Use as biofuel

#03

#05

#04

Recycling in chipboard

OPT-I-SORT: research project to increase recycling of wood

total weight of waste by type and disposal method (ton): 2011

2012

2013

1.880

2.128

1.906

200

1.386

1.942

Incineration

40.167

21.382

21.276

Landfill

6.728

10.114

11.045

Recycled (external)

70.330

112.665

114.615

Recycled (internal)

127.352

106.836

113.428

Grand Total

246.662

254.566

264.231

Hazardous Waste Incineration Landfill Recycled (external) Non-hazardous Waste

Spills UNILIN takes every possible prevention measure in order to prevent spills such as: • Periodic controls and leak tests of the tanks • Containment system for the tanks • Equipped with overfill prevention devices • Equipped with embanking and absorbent agents • Emergency planning for fighting leaks An exhaustive list for the reporting period 2011 through 2013: • In the Insulation division (Oisterwijk, the Netherlands), 8000 litres of polyol in a pentane tank leaked due to an erroneous discharge. In 2011, 100 litres of MDI ended up on the roof via a vent pipe, as well as 400 litres of polyol in hall 5a due to leakage. There was no harm to the environment. • In the Panels division (Breestraat, Belgium) there was a fuel oil leak due to water infiltration by road works in 2012. Everything was cleaned up and repaired.

4.2.4. Water The production processes within UNILIN are essentially dry processes. There is little or no water consumption, except for the resin preparation in Flooring and for the emission treatment in the electric filters in Panels. In both cases one strives to use lightly polluted water a second time and finally to remove it with a tank truck. Where possible, consideration is also being given to using rainwater for production or sanitary purposes. The highest water need is in the production facility of the Panels division in Bazeilles (France) and secondly in the production facility of the Flooring division in Wielsbeke (Belgium), in both sites because of specific production steps typical for the site (steam production, washing of chips, production of resin, ..). Substantially less water is consumed in the other factories. Total water withdrawal by source: 2011

2012

2013

12.005

11.565

11.676

Tap water (m3)

348.798

444.390

466.909

Total (m3)

360.803

455.955

478.858

2011

2012

2013

Industrial waste water (m³)

77.926

55.298

59.833

Sanitary waste water (m³, estimation)

78.960

81.930

111.510

Total (m3)

156.886

137.228

171.343

Ground water (m3)

Total water discharge by quality and destination:

Most of the UNILIN sites do not discharge industrial waste water, only foul water and rain water (roofs and paving on site) In some of the sites, the rain water is buffered and decanted. Certain water streams (WESP water) are treated (press, flocculants), reused and eventually disposed of via a truck.

4.2.5. Sustainable product development In the first place, we aim at manufacturing qualitative and long lasting products. This clearly has a positive environmental impact. UNILIN turns sustainable raw materials into sustainable products. Through research and product innovation, UNILIN wants to further increase the sustainable character of its products in the production and use phase. That is why it is important to know the environmental impact of the products as completely as possible.

EPD (Environmental Product Declaration) of roof

LCA and EPD

element Unilin SW Plus PUR

The transition of the Construction Product Directive into the Construction Product Regulation brought an additional 7th essential requirement as part of de CE-declaration: the requirement concerns the sustainable use of natural resources. An Environmental Product Declaration, EPD, is a verified document that reports environmental data of products based on life cycle assessment (LCA) and other relevant information and in accordance with the international standard ISO 14025. A LCA is a tool for the systematic evaluation of the environmental aspects of a product through all stages of its life cycle. UNILIN has chosen to develop the expertise to conduct LCA in house. Ultimately we want to draft EPD’s for all UNILIN end products. In 2013 the model and draft EPD, including the background document, was made for the roof elements. The EPD was published on 07/05/2014. For all other products concerned, the model was made in de GABI®-sofware (LCA software of PE-international) and most of the data were collected. The project will be completed by end 2014 and new EPD’s will be drafted as new products are introduced. A LCA is also a tool for eco-design of new products and the evaluation of alternative raw materials. Naturally other actions also determine the continuously improved environmental efficiency of the product development: for example the re-use of materials, transport via water and train, an energy policy agreement, reduced water use, etc. 40

Installation Installation is an important phase for the majority of our flooring products and one in which we seek to minimize the use of materials. UNILIN’s patented Uniclic® technology is a good example. It offers an easy installation method that uses no glue or other chemicals, helping to improve indoor air quality. For cabinet makers and kitchen builders looking to combine top quality with cost efficiency and considerable time savings, UNILIN has developed a full and unique range of kitchen frames, named ClicBox. It is the first kitchen frame that ‘clicks’ into place without the use of glue, a screwdriver or even a single screw, while still being extremely robust. On top of this, the ClicBox kitchen frames take 82 % less transportvolume than ordinary kitchen frames. A considerable CO2 saving is realized using the ClicBox® technology. End of life, the kitchen frames can easily be recycled: there are no foreign materials (no screws, plastics)

Plan for the future Start-up of new plant for production of luxury vinyl floors UNILIN developed a completely innovative production process with which Luxury vinyl floors is produced in a sustainable and energy-efficient manner. As of 2015 this newly-developed technology will be applied for the first time in Wielsbeke (Belgium) so to be able to produce a unique offer of Luxury vinyl floors. The production process is significantly more energy-efficient and environmentally-friendly than the current production techniques. This creates a completely closed material cycle, where the production cuttings can be re-used 100%.

Construction of new factory for luxury vinyl floors in Wielsbeke (B)

4.3. ENERGY SAVING AND ENERGY EFFICIENCY Being conscious about and aware of energy usage in production is of such strategic importance to UNILIN that it forms a separate key priority in its sustainability strategy. UNILIN’s business, especially its boards production, is energy-intensive. Fluctuations in energy prices have a direct impact on production costs. The adhesive used (urea formaldehyde) is also petroleum-based and is therefore subject to the same price variation. Effective energy and raw materials use therefore forms the object of constant attention.

Energy use As far as economically feasible, UNILIN´s production sites apply the best available technologies in order to cause minimum harm to the environment. Thanks to the lean, 5S methods, production losses are avoided at the source as much as possible. This is supported by training, follow-up and awareness-raising campaigns. On the other hand, as a wood processing company UNILIN has long had the tradition of using wood residues from production that can´t be utilised otherwise for energy generation. An energy generation method that is favourable in terms of both cost price and CO2. Total energy, plus CO2 emissions, by source:

unit

2011

2012

2013

Electricity (primary)

2.854.936

2.921.375

2.888.771

Gas

412.739

432.333

452.329

CO2 emission gas

ton

20.806

21.793

22.801

Light fuel

162.877

139.883

127.633

CO2 emission light fuel

ton

10.276

8.825

7.650

Heavy fuel

16.256

14.294

6.087

CO2 emission heavy fuel

ton

1.186

1.043

444

Biomass

1.621.680

1.504.676

1.606.467

Indirect CO2 emission

ton

132.173

135.249

133.739

Direct CO2 emission

ton

32.330

31.716

23.269

Total CO2 emission (energy use)

ton

164.503

166.965

157.008

Unilin Primary Energy consumption 2013 (GJ)

32% 57% 0,9%

Electricity (primary) Gas Light fuel Heavy fuel Biomass

The use of heavy fuel is gradually being phased out, due to upcoming more stringent emission limits. Besides this, we observe a shift from light fuel to natural gas, mainly driven by cost. It is also the intention of UNILIN to use as much as possible biomass based on end of life wood for energy production. This is also reflected in the figures.

Investments in energy efficiency in production UNILIN continuously assesses the manufacturing processes to find ways to use less energy and reduce emissions. In 2013, the investments specifically aimed at energy savings amounted to almost 1.200.000 euros, and that’s only for the ´hard´ investments in installation and technical interventions. Other investments in personnel, consultancy, certification, R&D and waste disposal aren’t included in this figure. Overview of investments in energy efficiency: 2011

2012

2013

203.000 €

750.000 €

1.194.687 €

The most important investments in energy efficiency since 2009 brought about a yearly saving 177.897 GJ, equivalent of 8850 ton CO2. 4

Note: only the investments in the most energy intensive plants are included. They account for over 90 % of UNILIN total energy consumption.

The main energy savings were done by the Panels division for a total per year of 116.034 GJ and 6008 tones CO2 emissions: 1. Boiler house thermal oil modifications: firstly, energy is saved by insulating the thermal oil pipes, resulting in lower heat losses. Secondly, there are savings on pump energy through the application of variable speed of the thermal oil pumps, controlled by the heat demand (Bazeilles site). 2. Biomass storage building. Thanks to the covered storage of the wood residues, the latter donâ&#x20AC;&#x2122;t get wet when it rains and they generate more heat when burned (Bazeilles site). 3. Preheating of combustion air of the dryer with heat from WESP (wet electrostatic precipitator): water: for the pre-heating of the combustion air, the recovered heat from the water of the electrostatic dust separator (R.de Ghellinck site) is used 4. Optimization of WESP energy is saved through adjustment of the field strength, taking into account the emission limits for dust (Breestraat site). Energy saved due to efficiency improvements in production: GJ primary/year

tonnes CO2/year

TOP 4 (see above)

116.034

6008

TOTAAL

177.897

8850

Employee engagement Employee engagement is a critical part of our efforts to reduce energy use and emissions. To help our people become more engaged, our UNILIN operations in Belgium organized a series of â&#x20AC;&#x153;Energy Daysâ&#x20AC;? in 2013 to promote energy savings among its employees. Over a period of three days, UNILIN held energy training and awareness sessions, as well as a fair that focused on energy saving opportunities such as compressed air, lighting, heat pumps, insulation and electric vehicles. The intention is to continue implementing best energy saving practices at all UNILIN sites in the future. They will focus on the development of a simple and user friendly measuring/ monitoring system, optimisation of the compressed air production and distribution, insulation of the thermal oil pipes, variable flow for the thermal oil, variable extraction rates, optimisation of lighting, heating, cooling making maximum use of free cooling ... Training session during Unilin Energy Days

Moreover, the Belgian subsidiaries of UNILIN are aiming to conclude an Energy Policy Agreement with the Flemish government. These Energy Policy Agreements are the most important policy instruments used by the Flemish government in order to improve the energy-efficiency of energy-intensive industries, while also safeguarding the growth opportunities of the companies concerned. In order to coordinate all of this, the organisation is being strengthened by the addition of an energy engineer. Besides this, other initiatives are being developed outside the production environment.

Returnable pallets Currently a project is running to prepare the switchover from one way pallets to euro pallets. The transition is scheduled for mid-November 2014. For 300,000 pallets used on an annual basis we can save 3,100 tonnes of CO2. That’s the equivalent of the emissions from 1,500 cars per year.

Intensification of multimodal transport

Wood supplied by barge

For the supply of the raw materials, we consider transport by barge (Panels Belgium) or train (Bazeilles) For our outbound transport, we have studied whether it is possible to develop more environmentally-efficient alternatives for truck traffic. Generally this is not feasible because of the required flexibility vis-à-vis the customers. However, there are possibilities for the transport of finished products to Sweden and Italy. Grouped transports are now taking place more frequently. • 218 trucks for transport to Sweden have been switched to multimodal transport • 35 trucks of intermodal combination truck & train to the Milan region

We are going further in offering alternative transport. Beyond this, in the meantime we go to Rotterdam instead of to the Ruhr area by truck, which means 100km less per truck (one trip). Except for UNILIN Insulation Netherlands (Cevotrans), UNILIN does not have its own truck fleet. We work with third parties for transport. Major drivers for transport organisation are cost, flexibility and on-time delivery. This doesnâ&#x20AC;&#x2122;t necessarily run contrary to sustainability: better-organised transport means less handling and fewer kilometres driven, which is good for both the cost and the environment UNILIN currently does not have a comprehensive overview of the environmental impact of the transport of its products, but calculating the impact of the transport will form part of the LCAs (life cycle analyses) that are currently being conducted.

4.4. EMBED SUSTAINABILITY INTO THE OVERALL MANAGEMENT Our product strategy works to ensure that we are offering products across every flooring category that utilize either recycled or renewable inputs. We seek to hold our suppliers accountable for ensuring that products are manufactured in a responsible manner â&#x20AC;&#x201D; one that respects both the labor behind them and the environment behind them.

4.4.1. Closing the material cycle Raw materials, including wood, are becoming increasingly scarce, and so it is of vital importance that great emphasis is placed on closing the material cycle even more completely.

Recycling of wood The share of recycled wood in chipboard production is rising: incoming quality control and cleaning up of recycled wood is becoming increasingly important. This wood is carefully sorted - both by the wood supplier and by UNILIN - and freed of any ferrous or non-ferrous metals. The residual fraction is further recycled as much as possible by waste processors. Research is being done on sorting this residual fraction even further on the basis of chemical contamination and then cleaning it up. For the moment, recycling MDF/HDF is not self-evident. For laminate there is the additional problem of the anti-wear agent that causes problems for the sawing and sanding when re-used in board material.

Use of wood

Sorting & separation

Collection #01 #07

Use in woodworking, building and furniture industry

#02

Chemical cleaning

OPT-I-SORT closed cycle

#06

Use as biofuel

#03

#05

#04

Recycling in chipboard

Re-use of PU foam at Insulation For years now, polyurethane foam has been widely used as a high-performance insulating material in construction. Currently the quantity of polyurethane foam from demolition sites is still relatively small, but the volume will increase greatly in the coming years. The insulation usually ends up in sorting centres via mixed waste containers. In most cases, after sorting it is incinerated with energy recovery, so there is great potential in the processing and recycling of PU foam for higher-value purposes. As time goes on, more and more attention is being paid to closing the cycle. This challenge has clear social importance and transcends individual business interests, which is why two manufacturers of polyurethane foam insulation and a partner in waste management have joined forces. The consortium wishes to stop the incineration of PU insulation and instead see it recycled as much as possible. This requires setting up a new chain of collection, transport, possible pre-treatment and processing. With this, UNILIN is already satisfying the European and Flemish regulations on waste and materials management, which are shifting the priorities from pure waste processing to genuine materials management.

4.4.2. Product responsibility Fire safety is a major point of interest for the Flooring division and Panels division. For insulation boards made from polyurethane, acoustical properties are also important. For all products, safety information sheets are available with instructions for safe installation, use and removal. This also applies for products that are purchased from third parties and are sold under the name of UNILIN. UNILIN´s highly-developed safety and health policy is supported by the various product certificates that we can present related to fire safety, emissions and acoustics, since each certificate entails successfully passing an in-depth quality inspection. Overview of the product certificates: (non exhaustive list): • UNILIN Flooring http://professionals.Quick-Step® .com/europe/be/nl/lam/projectDocs.aspx • UNILIN Panels http://www.unilinpanels.com/nl-BE/Downloadcenter • UNILIN Insulation http://www.UNILINinsulation.com/be-nl/downloads

4.4.3. Human rights in the supply chain 90% of the supplied materials come from European countries: one can assume that compliance with human rights is not an issue. The luxury vinyl floor slabs are for the moment delivered from China (accounting for 3.87% of the supplied materials), but this will only remain the case until our own luxury vinyl floors production starts up in Belgium at the end of 2014. Explicit attention is paid to human rights in the contract with the Chinese manufacturer. The finished product EWF (engineered wood flooring) is brought to Belgium from the UNILIN factory in Malaysia (accounting for 5.91% of the supplied materials). We also focus on human rights compliance in our own factory in Malaysia. UNILIN provides a “Supplier Code of Conduct”, inspired by the UN Global Compact, as an annex with large orders. There is no formal programme for auditing the suppliers, but there are regular informal contacts with and visits to them. With regard to wood provisioning, since the entry into force of the EU Timber Regulation (2010) it is impossible to market wood from illegal logging in Europe. Besides this, all wood that is used as raw material comes from sustainable forestry (PEFC, FSC) Finally, UNILIN has undertaken a risk management exercise with regard to the US regulation on conflict minerals. The conclusion was that no materials subject to the regulation are used in our production processes. UNILIN wishes to ensure that materials incorporated into UNILIN products comply with all laws and requirements, including our own principles of social responsibility. In our strive for continuous improvement we therefore set as objective to evaluate the current ‘Supplier Code of Conduct’ and to check more closely upon the accomplishment. UNILIN is also looking to join a collaborative platform for sharing ethical supply chain data.

4.5.COMMUNITY ENGAGEMENT OF UNILIN AND ITS EMPLOYEES We believe that strong communities help to sustain a strong workforce, which has a direct effect on our financial and operating performance. We collaborate with government and community leaders to identify ways in which our business and the surrounding community can work together to enhance the local quality of life as well as the business climate. We have a long history of commitment to the communities in which we operate. UNILIN regularly receives requests for contributions/sponsorship from employees and external parties. All requests are reviewed carefully by the VP HR and the CSO based on the Community Engagement policy.

Project examples Installing UNILIN floors at non-profit organizations There are multiple examples of non-profit organizations receiving UNILIN products as in-kind contribution. Just one example, from our plant in Malaysia: the Tai Tong Chinese school needed funds for the new school hall. UNILIN has contributed in kind through delivering an engineered floor in June 2013. More recently, we are doing a little extra by combining ‘product’ contributions with ‘people’ contributions. For example, the marketing team of Quick-Step® engaged in an activity, supporting the local community as part of a team-activity. UNILIN (Malaysia) donated floor to the Tai Tong They installed Quick-Step® laminate and luxury vinyl floors Chinese School in a local primary school. For some of the marketing people it was the first time they installed laminate and luxury vinyl floors themselves. A welcome product experience, also appreciated by the local school community, that has nice and tidy classrooms now. Nature conservation works The UNILIN HSE team spent half a day doing nature conservation works as part of their team activity. In cooperation with the nature organization ‘Natuurpunt’, the team members removed an invasive plant species spread over 1 ha manually, in order not to make all other plant species disappear.

UNILIN HSE team involved in nature conservation works as part of team activity

Togo Jungle Challenge Togo Jungle Challenge is a Belgian organized, mountain bike marathon in the heart of West-Africa (Togo & Benin). 3 of the UNILIN staff of the Panels Business unit took up this challenge to support a charity project. They were sponsored by UNILIN for this challenge. In the total, no less than €33 302 was collected by the participants and organizers. This sponsorship contribution for SOS children’s villages is used to set up a medical post in Dapaong (Northern Togo). Jan Sabbe, Johny Amelynck and Frederic Van De Wiele (Panels Division), took the Togo Jungle Challenge

Solidarity race In 2012 the Laurette Fugain association and Pierre Pijoulat organised the ‘sans raison race’ aiming at fundraising and encouraging people to become donors (blood, platelets, bone marrox, organs …). Two of our French colleagues represented our company in this solidarity running race. Association Laurette Fugain

Children visit at the plant in Russia Our plant in Dzerzhinsk (Russia) often invites clients, children of the employees, school children and students of Nizhny Novgorod and Dzerzhinsk to visit us. But the plant visit which took place in September 2013 was special because it was organized for special group of children. Kindergarten № 67 is a unique preschool educational institution of Dzerzhinsk. Here children with abnormalities of the locomotive system can go to school. They visited our showroom and made a tour on the plant where they got an explanation on laminate: what it consists of, it’s features and how to make it. Production made bright impression not only on our little guests, but also on their teachers. After the excursion a tea break with sweeties was awaiting the children.

Children visiting UNILIN Flooring (Russia)

Stimulating prisoners for wood craftsmanship The production plant of UNILIN in Malaysia has contributed to the enhancement of prisoners to their integration in society after serving prison term. Our colleagues have done this through contributing wood waste to the prison. Most of the end product made by the prisoners are furniture and some decorative home items.

UNILIN (Malaysia) contributed to the enhancement of prisoners to their integration in society after serving prison term

4.6. PROFILE UNILIN AS SUSTAINABLE SOLUTIONS PROVIDER “We will continue to make our products using ever more responsible methods and materials in order to protect the health and safety of our customers, ensure the quality they expect and reduce the impact on our environment.”

4.6.1. Innovation Innovative products created with passion Continuous innovation forms one of the pillars of UNILIN’s success. Passion for innovation is present in all business units. We do not just innovate in the optimization of our own production processes, but also in our proactive approach to the market, which means that we often come up with surprising new applications for our products and can offer intelligent solutions in response to our customers’ day-to-day needs. To the outside world this is most visible in the technical innovations of the research and development departments of the respective business units. UNILIN can count on a large team of full-time researchers, state-of-the-art equipment and testing facilities in their incessant quest for better and nicer products. Engineers, designers, prototypers, trend watchers, stylists and process specialists work in close collaboration to develop the products and the technologies of the future, always with the ambition of playing a leading role on the markets in which UNILIN is active, whether it involves insulation panels, furniture, floorboards or other products. Technical innovation within UNILIN lies at different levels: • the product level or the quest for new products; • the level of the technical product characteristics or the quest for additional or improved product properties; and • the technological level or the quest for new or improved processes for manufacturing UNILIN products. UNILIN developments start off from trends and is driven by achieving maximum client satisfaction.

Sustainability driver for innovation Over the years, we have come to an understanding that sustainability can also be a true driver for innovation and new business creation. In 2013, UNILIN started a specific program aimed at detecting specific, tested and calculated business cases in line with the sustainability propositions of UNILIN. We therefore focus on answering a market need and dealing with societal challenges, staying in line with the UNILIN strategy. 51

Flooring division Investment in manufacturing luxury vinyl floors production: UNILIN developed an innovative production process with which Luxury vinyl floors is produced in a sustainable and energy-efficient way. We expect that this newly-developed technology will secure a growing market share in the coming years. It will be applied for the first time in the local production plant in Wielsbeke (Belgium). The plan is to have the production ready by end of 2014. Installing the full Luxury vinyl floors production line will make a closed material cycle possible. The scrap material from the Luxury vinyl floors production unit as well as externally purchased PVC raw materials can gradually be re-used in the production process after installing strict control measures to avoid phthalates and heavy metals. Installing a closed production cycle will yield important savings in terms of the (raw) materials used. UNILIN will make the transition to a continuous process. This will bring important advantages regarding the use of materials and energy consumption: the start-up procedure is the most energy-intensive phase of the production process. The product quality is also inferior during the start-up (waste material) which, in turn, increases the consumption of raw and other materials. Locating the entire production process for luxury vinyl floors at one plant in Belgium will also eliminate the transport of semi-finished products from China. In addition, the new products will mainly target the European market. The significant reduction in the number of transports for the production and sales of the new luxury vinyl floors product range will reduce CO² emissions.

Panels division ClicBox®, the first kitchen frames without tools, glue or screws For cabinet makers and kitchen builders looking to combine top quality with cost efficiency and considerable time savings, UNILIN – inventor of the revolutionary Uniclic® system – has developed a full and unique range of kitchen frames. ClicBox clicks into place without the use of glue, a screwdriver or even a single screw while still being extremely robust. On top of this, the ClicBox kitchen frames take 82 % less transport volume than ordinary kitchen frames. A considerable CO2 saving is realized using the ClicBox technology.

Insulation division Easy Airtight concept guarantees roof airtightness The UNILIN insulation business unit is putting an end to fiddling around with foil, tape and silicone sealants to ensure an airtight roof finish. With the Easy Airtight concept, roofing sections can be made airtight in one fell swoop. Fast and easy installation, which is an asset for building contractors. Architects will opt for the Easy Airtight system in order to secure a sustainable roof with perfect airtightness. Unilin Easy Airtight concept

It certainly offers major benefits in terms of energy efficiency and therefore meets new European regulations on energy-efficiency. Moreover, France has adopted a stringent airtightness regulation (RT2012). UNILIN has ensured that the high performance of the Easy Airtight system is reliably based on test results provided by the University of Ghent. And finally, the building owner is guaranteed a high-quality roofing, long-lasting system.

4.6.2. Customer satisfaction UNILIN draws up a ´DoP´ (Declaration of Performance) listing the technical product requirements, and seeks to implement it via the internal quality management system. Moreover, the sites of the Panels division (chipboards) and the production site in Malaysia are ISO 9000/9001 certified. Not only the quality, but also the timeliness and correctness of the deliveries are important. This is measured on the basis of a service level or an ´OTC´ (On Time and Complete) score. The business units establish strict targets for this in a spirit of continuous improvement. UNILIN has procedures for registering and dealing with complaints. At the Panels division, the evolution of the complaints is monitored in terms of their frequency and seriousness. There is periodic reporting to the direction committee. In all business units there is intense, frequent contact with the customers; we regularly inquire about their satisfaction and try to identify improvement possibilities Our business depends on us meeting the needs of our customers with safe, high-quality products for their homes or businesses. As such, we intentionally design our products to meet or exceed all safety, health and quality standards and regulations. This is more than just a good business decision. It also is good for our customers and just the right thing to do.

Quick-Step® celebrates eighth House Beautiful award Quick-Step® has in 2013 won a best in category award for the 8th consecutive year running at the prestigious annual House Beautiful awards (UK). “With extra long and extra wide planks to showcase the beauty of the weathered oak, the notable style of the Quick-Step® hardwood Imperio range, impressed the House Beautiful judges who awarded the collection Silver in Best Flooring category. Suitable for use with underfloor heating, peace of mind is assured with a lifetime warranty on the beautiful appearance of Imperio flooring, which develops and heightens with the passage of time.”

Added value for our clients: Academy for Excellence in Flooring powered by Quick·Step® and Pergo®. UNILIN, division flooring has two unique expertise centres: Academy for Excellence in Flooring, powered by Quick-Step and Pergo. These academies, one in UK and one in Belgium, support the installers and the retailers with specific courses and installation trainings and give them an competitive advantage.

5 A look back, and a look forward

We have embarked on the sustainability reporting process having external as well as internal ambitions in mind. We wanted to demonstrate our external stakeholders what the sustainability journey of UNILIN looks like. We also wanted to have a tool to structure and support the sustainability management of UNILIN and the awareness building of our people. https://www.globalreporting.org/resourcelibrary/StartingPoints-2-G3.1.pdf It has proven to be a challenging, though highly interesting, journey. We have worked hard on providing clear, reliable, accurate and balanced information. We have encountered that the data collection is not always done in a uniform way in the different plants. This of course causes difficulties when seeking to standardize data. Collecting the necessary data for this first report, has given us valuable insights on our performances, even in some cases leading to corrected historical data. For these reasons, we want to keep working on the accountability of our data by improving the data collection process. As stated in the scope of the report, we have chosen not to include the data of the recent acquisitions of UNILIN (Pergo, Spano and the Insulation factory in Sury, France) in our first sustainability report. Naturally, we will include them as from the next sustainability report on. In the years to come, UNILIN will continue working on the priorities as mentioned in the beginning of this report with certain specific focus points • Continue to strive for a safe and healthy working environment for our employees and for third parties working on site: we look forward to implementing many of our best practices and processes in the recently acquired businesses as well as learning from them to implement their best practices in our businesses. We keep on working to bring safety to a same level of commitment in the whole UNILIN group. Psycho-social aspect of the job will also become an explicit point of attention. • Manage the environmental impact of our processes and products: based on the findings of the EPD’s, the next step will be to make our existing product portfolio and innovations even more sustainable. Several projects to close the material cycle are already started. • Achieve energy savings in our production sites, with the objective of reaching the world top in energy efficiency : special attention will go to energy reporting and sharing and implementing of best energy saving practices. • Embed sustainability in the company’s management: an important next step is to streamline the data collection for the sustainability reporting and periodically report the KPI’s to the businesses. Besides this, we will continue embedding specific sustainability items in the STRAP’s of the different divisions. We have also come to an insight that active stakeholder engagement focused on sustainability is not yet done structurally, nor pro-actively. We therefore want to select specific needs for UNILIN and for (specific) stakeholders and seek targeted debate and collaboration. 55

• Work on the social engagement of UNILIN and our employees • Profile UNILIN as a company that offers sustainable solutions: priority that goes hand in hand with priority nr 2 (Manage the environmental impact of our processes and products). The outputs of the project ‘Sustainability driver for innovation’ will materialize this intent. We hope that with this report it is becoming transparent for you, as a stakeholder, what the sustainability challenges and opportunities are for UNILIN and how we manage them. Finally, we strongly encourage our readers to have a look at the fifth sustainability report of our mother company Mohawk Industries Inc. Readers will notice a strong strategic alignment between UNILIN and the Mohawk group.

6 GRI index

G3.1 Content Index - GRI Application Level C STANDARD DISCLOSURES: Profile Disclosures 1. Strategy and Analysis Profile Disclosure

Description

Reported Cross-Reference

1.1

Statement from the most senior decision-maker of the organization.

Fully

1.2

Description of key impacts, risks, and opportunities.

Partial

4, 5

2. Organizational Profile Profile Disclosure

Description

Reported Cross-Reference

2.1

Name of the organization.

Fully

2.2

Primary brands, products, and/or services.

Fully

3.2

2.3

Operational structure of the organization, including main divisions, operating companies, subsidiaries, and joint ventures.

Fully

2.4

Location of organization's headquarters.

Fully

3.1

2.5

Number of countries where the organization operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report.

Fully

2.6

Nature of ownership and legal form.

Fully

3.1

2.7

Markets served

Fully

2.8

Scale of the reporting organization.

Fully

2.9

Significant changes during the reporting period regarding size, structure, or ownership.

Fully

2.10

Awards received in the reporting period.

Fully

4.1.5, 4.6.2

3. Report Parameters Profile Disclosure

Description

Reported Cross-Reference

3.1

Reporting period (e.g., fiscal/calendar year) for information provided.

Fully

3.2

Date of most recent previous report (if any).

3.3

Reporting cycle (annual, biennial, etc.)

Fully

3.4

Contact point for questions regarding the report or its contents.

Fully

3.5

Process for defining report content.

Fully

3.6

Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers). See Fully GRI Boundary Protocol for further guidance.

3.7

State any specific limitations on the scope or boundary of the report

Fully

3.8

Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organizations.

Fully

3.9

Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the report. Explain any decisions not to apply, or to substantially diverge from, the GRI Indicator Protocols.

3.10

Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement (e.g.,mergers/acquisitions, change of base years/periods, nature of business, measurement methods).

3.11

Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report.

3.12

Table identifying the location of the Standard Disclosures in the report.

Fully

GRI index

3.13

Policy and current practice with regard to seeking external assurance for the report.

Fully

4. Governance, Commitments, and Engagement Profile Disclosure

Description

Reported Cross-Reference

4.1

Governance structure of the organization, including committees under the highest governance body respon- Fully sible for specific tasks, such as setting strategy or organizational oversight.

3.5

4.2

Indicate whether the Chair of the highest governance body is also an executive officer.

Fully

Mohawk corporate website

4.3

For organizations that have a unitary board structure, state the number and gender of members of the highest governance body that are independent and/or non-executive members.

Fully

Mohawk corporate website

4.4

Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body.

Fully

Mohawk corporate website

4.5

Linkage between compensation for members of the highest governance body, senior managers, and executives (including departure arrangements), and the organization's performance (including social and environmental performance).

Fully

Mohawk corporate website

4.6

Processes in place for the highest governance body to ensure conflicts of interest are avoided.

Fully

Mohawk corporate website

4.7

Process for determining the composition, qualifications, and expertise of the members of the highest governance body and its committees, including any consideration of gender and other indicators of diversity.

4.8

Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation.

Fully

4.9

Procedures of the highest governance body for overseeing the organization's identification and management of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct, and principles.

Fully

Mohawk corporate website

4.10

Processes for evaluating the highest governance body's own performance, particularly with respect to economic, environmental, and social performance.

Fully

Mohawk corporate website

4.11

Explanation of whether and how the precautionary approach or principle is addressed by the organization.

Fully

Mohawk corporate website

4.12

Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses.

Fully

Flooring, site Wielsbeke: Corporate Sustainability Charter

Fully

Panels + Flooring, site Malaysia: ISO 9001

Fully

3.4

4.13

Memberships in associations (such as industry associations) and/or national/international advocacy organizations in which the organization: * Has positions in governance bodies; * Participates in projects or committees; * Provides substantive funding beyond routine membership dues; or * Views membership as strategic.

4.14

List of stakeholder groups engaged by the organization.

Fully

3.4

4.15

Basis for identification and selection of stakeholders with whom to engage.

Partial

3.4

4.16

Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group.

Partial

3.4

4.17

Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting.

Partial

3.4

STANDARD DISCLOSURES: Performance Indicators Economic Performance Indicator

Description

Reported Cross-Reference

Economic performance EC1

Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.

Partial

EC2

Financial implications and other risks and opportunities for the organization's activities due to climate change.

EC3

Coverage of the organization's defined benefit plan obligations.

EC4

Significant financial assistance received from government.

Market presence Range of ratios of standard entry level wage by gender compared to local minimum wage at significant locations of operation.

EC6

Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation.

EC7

Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation.

EC5

Mohawk sustainability report

Indirect economic impacts EC8

Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement.

Partial

EC9

Understanding and describing significant indirect economic impacts, including the extent of impacts.

4.5

Environmental Performance Indicator

Description

Reported Cross-Reference

Materials EN1

Materials used by weight or volume.

Fully

4.2.1

EN2

Percentage of materials used that are recycled input materials.

Fully

4.2.1

Energy EN3

Direct energy consumption by primary energy source.

Fully

4.3

EN4

Indirect energy consumption by primary source.

Fully

4.3

EN5

Energy saved due to conservation and efficiency improvements.

Partial

4.3

EN6

Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives.

Partial

4.3

EN7

Initiatives to reduce indirect energy consumption and reductions achieved.

Water EN8

Total water withdrawal by source.

Fully

EN9

Water sources significantly affected by withdrawal of water.

EN10

Percentage and total volume of water recycled and reused.

4.2.4

Biodiversity EN11

Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiNR versity value outside protected areas.

EN12

Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas.

EN13

Habitats protected or restored.

EN14

Strategies, current actions, and future plans for managing impacts on biodiversity.

EN15

Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk.

Emissions, effluents and waste EN16

Total direct and indirect greenhouse gas emissions by weight.

Fully

EN17

Other relevant indirect greenhouse gas emissions by weight.

EN18

Initiatives to reduce greenhouse gas emissions and reductions achieved.

Fully

EN19

Emissions of ozone-depleting substances by weight.

4.3 4.3

EN20

NOx, SOx, and other significant air emissions by type and weight.

Fully

4.2.2

EN21

Total water discharge by quality and destination.

Fully

4.2.4

EN22

Total weight of waste by type and disposal method.

Fully

4.2.3

EN23

Total number and volume of significant spills.

Fully

4.2.3

EN24

Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally.

EN25

Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organization's discharges of water and runoff.

Products and services EN26

Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation.

Partial

EN27

Percentage of products sold and their packaging materials that are reclaimed by category.

4.2.5

Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations.

Significant environmental impacts of transporting products and other goods and materials used for the organization's operations, and transporting members of the workforce.

Partial

4.3

Total environmental protection expenditures and investments by type.

Partial

4.3

Compliance EN28 Transport EN29 Overall EN30

Social: Labor Practices and Decent Work Performance Indicator

Description

Reported Cross-Reference

Employment LA1

Total workforce by employment type, employment contract, and region, broken down by gender.

Partial

4.1.1

LA2

Total number and rate of new employee hires and employee turnover by age group, gender, and region.

Partial

4.1.1

LA3

Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations.

LA15

Return to work and retention rates after parental leave, by gender.

Labor/management relations LA4

Percentage of employees covered by collective bargaining agreements.

Fully

LA5

Minimum notice period(s) regarding significant operational changes, including whether it is specified in collective agreements.

4.1.1

Occupational health and safety LA6

Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs.

Fully

4.1.4

LA7

Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region and by gender.

Partial

4.1.2

LA8

Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, Fully their families, or community members regarding serious diseases.

4.1.5

LA9

Health and safety topics covered in formal agreements with trade unions.

Fully

4.1.4

Training and education LA10

Average hours of training per year per employee by gender, and by employee category.

Partial

4.1.3

LA11

Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings.

Partial

4.1.4

LA12

Percentage of employees receiving regular performance and career development reviews, by gender.

Partial

4.1.3

Partial

Mohawk corporate website (board)

Diversity and equal opportunity LA13

Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity.

4.1.1 (employees) Equal remuneration for women and men LA14

Ratio of basic salary and remuneration of women to men by employee category, by significant locations of operation.

Social: Human Rights Performance Indicator

Description

Reported Cross-Reference

Investment and procurement practices HR1

Percentage and total number of significant investment agreements and contracts that include clauses incorporating human rights concerns, or that have undergone human rights screening.

HR2

Percentage of significant suppliers, contractors and other business partners that have undergone human rights screening, and actions taken.

Partial

HR3

Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained.

Non-discrimination HR4

Total number of incidents of discrimination and actions taken.

Freedom of association and collective bargaining HR5

Operations and significant suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk, and actions taken to support these rights.

Operations and significant suppliers identified as having significant risk for incidents of child labor, and measures taken to contribute to the effective abolition of child labor.

Child labor HR6

Forced and compulsory labor HR7

Operations and significant suppliers identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of all forms of forced or compulsory labor.

Security practices HR8

Percentage of security personnel trained in the organization's policies or procedures concerning aspects of human rights that are relevant to operations.

4.4.3

Indigenous rights HR9

Total number of incidents of violations involving rights of indigenous people and actions taken.

Percentage and total number of operations that have been subject to human rights reviews and/or impact assessments.

"Number of grievances related to human rights filed, addressed and resolved through formal grievance mechanisms.â&#x20AC;?

Assessment HR10 Remediation HR11

Social: Society Performance Indicator

Description

Reported Cross-Reference

Local communities SO1

Percentage of operations with implemented local community engagement, impact assessments, and development programs.

SO9

Operations with significant potential or actual negative impacts on local communities.

SO10

Prevention and mitigation measures implemented in operations with significant potential or actual negative impacts on local communities.

Partial

4.2.2

Corruption SO2

Percentage and total number of business units analyzed for risks related to corruption.

SO3

Percentage of employees trained in organization's anti-corruption policies and procedures.

SO4

Actions taken in response to incidents of corruption.

Public policy SO5

Public policy positions and participation in public policy development and lobbying.

SO6

Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country.

Anti-competitive behavior SO7

Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes.

Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations.

Compliance SO8

Social: Product Responsibility Performance Indicator

Description

Reported Cross-Reference

Customer health and safety PR1

Life cycle stages in which health and safety impacts of products and services are assessed for improvement, Partial and percentage of significant products and services categories subject to such procedures.

PR2

Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes.

4.1.1 / 4.2.5 / 4.4.2

Product and service labelling PR3

Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements.

PR4

Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes.

PR5

Practices related to customer satisfaction, including results of surveys measuring customer satisfaction.

Partial

Marketing communications PR6

Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship.

PR7

Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes.

Customer privacy PR8

Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data.

Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services.

Compliance PR9

4.6.2

Glossary

5S sort, straighten or streamline, shine, standardize, sustain ATEX ATmosphĂ¨res EXplosibles Benelux Belgium, Netherlands, Luxemburg BREF Best Available Technology Reference Documents CEO Chief Executive Officer CFO Chief Financial Officer CIO Chief Information Officer CLP CLP is the Regulation on classification, labelling and packaging of substances and mixtures CO2 Carbon dioxide CSO Chief Sustainability Officer DIY Do It Yourself DoP Declaration of Performance EPD Environmental Product Declaration FPW Finished Products Warehouse GRI Global Reporting Initiative Hazardous Waste Waste listed with * in EURAL (European Waste list) HDF High Density Fiberboard HFC Hydrofluorocarbon HR Human Resources HSE Health, Safety & Environment Inc. Incorporated ISO International Standardization Organisation LCA Life Cycle Analysis MDF Medium Density Fiberboard MDI Methylene diphenyl diisocyanate MWI Malaysia Wood Industries NOX generic term for mono-nitrogen oxides NO and NO2 OTC On Time and Complete OVAM Openbare Vlaamse Afvalstoffenmaatschappij PM10 particulate matter smaller than 10 Âľm PU polyurethane RdG site Ridder de Ghellinck - Wielsbeke (Belgium) ROB Regelmatige Observatierondgangen ROT Regular Observation Tour STRAP Strategic Plan TOC total organic carbon UFP ultra fine particles (smaller than 300 nm) US United States of America VMM Vlaamse Milieumaatschappij VOC volatile organic compounds VP HR Vice President Human Resources