Targets and legal conditions

Sustainability targets relevant to remuneration

Bestandteil des GNFK StartThrough its corporate strategy, the Schaeffler Group pursues a variety of sustainability targets. The company extended its climate targets to the supply chain in the year under review: The emissions resulting from intermediates and raw materials should be reduced by 25 percent by 2030. The company plans to be entirely climate-neutral by 2040.

The Schaeffler Group calls for and promotes sustainable thinking and action in all divisions, functions, and regions of the company, with the aim of making our mark on sustainability. This applies, in particular, to the areas of environmental and climate protection, in which we have set ourselves ambitious sustainability targets. These targets are inextricably linked to the variable remuneration of the Executive Board and our top management.

Klaus RosenfeldChief Executive Officer

To promote consistent implementation, these are also reflected in the remuneration system alongside the Roadmap 2025. The sustainability targets defined for 2021 – energy efficiency and occupational safety – are anchored in the short-term variable remuneration of the Schaeffler AG Executive Board and the management level below. The Schaeffler AG Supervisory Board has defined the following sub-targets for the year under review:

• Implementation of energy efficiency measures of cumulative 45 GWh/a for 2020 and 2021
• Reduction of the accident rate to 4.1 for 2021Bestandteil des GNFK Ende

Overview of the sustainability targets

Information on the remuneration system for the Schaeffler AG Executive Board and Supervisory Board at: Schaeffler AG remuneration system

EU taxonomy reporting

Bestandteil des GNFK StartTo meet existing climate and sustainability targets, the European Commission has defined concrete measures with the EU’s Action Plan on Financing Sustainable Growth, which are designed to ensure that capital flows are directed to sustainable activities, among other goals. The EU taxonomy is the first approach to a comprehensive classification system that aims to facilitate comparison of the sustainability activities of different companies. In accordance with Article 10 (3) of Regulation (EU) 2020/852, the EU taxonomy classifies the contribution according to six defined environmental objectives:

• Climate change mitigation
• Climate change adaptation
• Transition to a circular economy
• Pollution prevention and control
• Protection and restoration of biodiversity and ecosystems
• Sustainable use and protection of water and marine resources

For the reporting year 2021, the percentage of taxonomy-eligible¹⁾ economic activities in total turnover and in capital and operating expenditure needs to be reported for the first two environmental objectives. As of reporting year 2022, disclosures must be reported for all six environmental objectives and their taxonomy alignment.²⁾ All of the Schaeffler Group’s activities identified to be eligible for the reporting year 2021 exclusively support the environmental objective “climate change mitigation”.

In preparation for the requirements of the EU taxonomy, the Schaeffler Group formed a cross-divisional, multidisciplinary project team for the initial collection of data. This team evaluated the taxonomy eligibility of the Schaeffler Group’s activities based on market analyses and internal financial key figures.

As part of the EU taxonomy implementation process, materiality thresholds were defined to identify relevant economic activities for the data collection process. These were set in such a way that they have no material influence on the reporting. To prevent different economic activities from being counted twice, a stepwise process with integrated control mechanisms was developed.

On February 2, 2022, the European Commission published a second FAQ document which addressed the interpretation issues related to Article 8 of the EU Taxonomy Regulation. This document has implications for the Schaeffler Group as an automotive and industrial supplier that could not be fully implemented due to time constraints regarding the publication of the sustainability report. The assessment of the identified activities and measures is therefore based on the state of information of the Schaeffler Group as at January 31, 2022. In particular, no distinction has been made between “eligible”, “eligible-to-be-enabling” and “eligible-to-be-transitional” economic activities.

5 % of the Schaeffler Group’s turnover is taxonomy-eligible. This portion falls primarily within the wind sector cluster of the Industrial division and can be classified under the economic activity “Manufacture of renewable energy technologies”. The basis for this relative disclosure is the key figure “revenue”, which is derived from the Group’s consolidated statement of income for the reporting year 2021.

25 % of the Schaeffler Group’s capital expenditures are taxonomy-eligible and include capital expenditures for the expansion of business associated with wind power generation facilities as well as investments associated with the purchase of taxonomy-eligible services and products in the areas of real estate, fleet, and energy management. The basis for this relative disclosure is the sum of the key figures “additions to intangible assets”, “additions to right-of-use assets from leases”, and “additions to property, plant and equipment” as at December 31, 2021, applying the definition of the EU Taxonomy Regulation.

3 % of operating expenditures are taxonomy-eligible and reflect the capital expenditures associated with technologies for renewable energies and hydrogen, as well as the implementation of energy efficiency measures. The basis for this relative disclosure, applying the EU Taxonomy Regulation’s definition, results from the “research and development costs” from the Group’s consolidated statement of income for the reporting year 2021 plus the maintenance costs associated with the Schaeffler Group’s production plants, less the associated costs for depreciation, amortization and write-downs, insurances, and other taxes.

A large percentage of Schaeffler Group products are built into customers’ end products, which are classified under the economic activity “Manufacture of low-carbon technologies for transport”. These activities are not included in the EU taxonomy reporting.

According to the EU taxonomy, only the manufacturers of the end products themselves can report turnover under this economic activity. As far as the Schaeffler Group is aware, classification as the economic activity “Manufacture of other low-carbon technologies” was not possible based on the information available on January 31, 2022. According to the interpretation of the Schaeffler Group, the activity description was aimed at the end product in the economic sector in question, meaning no classification is possible for components used in transport technology. Nevertheless, the Schaeffler Group makes a material contribution to climate protection with these products, as the finished components are installed in taxonomy-eligible vehicles, trains, and two-wheelers.Bestandteil des GNFK Ende

Sustainability requires joint action. We communicate our contribution and our ambitions in comprehensive reports, which also make them transparent to our stakeholders.

Claus BauerChief Financial Officer

1) Taxonomy-eligible means that the economic activity falls within the scope of the environmental objectives of the EU taxonomy, including consideration of NACE codes.

2) Taxonomy-aligned means that the technical evaluation criteria – i.e. the specifications for material contribution to achieving one of the environmental objectives and preventing significant impairment of a different environmental objective as well as the criteria for minimal social protection – are fulfilled.