2.3 Progress on our sustainable impact

Sustainability is in our DNA and an integral part of our mission to create Technology for Life. Since its foundation in 1929, Nedap has taken a long-term approach to creating value for people and society, through technological innovation and products built to last. With our focus on creating solutions that make our customers’ business models more sustainable, our innovations are increasing the efficiency of sectors, such as the dairy industry, healthcare, inventory management for retailers and security. We strongly believe our quest for commercial success is reinforced by our intrinsic motivation to create technological solutions that make people’s work and lives easier.

Our explicit sustainability journey began in 2020, when we set up a dedicated sustainability excellence team. In 2021 we designed a framework in which we identified four focus areas where we want to create sustainable impact: our employees, our operations, our products, and our customers. In 2022, an analysis of the life cycle of our products showed that energy consumption during the use phase of our products has the biggest impact. This insight has already led to new product and software adjustments to cut energy consumption. In 2023, we made further progress in our ambitions for the four focus areas, we kicked off an internal campaign themed ‘Do the right thing’, and we conducted a double materiality analysis to further align with our stakeholders.

EcoVadis silver rating

EcoVadis is a globally recognised provider of business sustainability ratings. Our dedication to sustainability has earned us a silver rating, placing us in the top 15% of companies globally. This score reflects our commitment to environmental, social and ethical standards and our dedication to sustainable responsibility.

Double materiality

In anticipation of the introduction of the EU Corporate Sustainability Reporting Directive (CSRD) in the 2024 financial year, we conducted a double materiality assessment in 2023 with the help of a reputable external consulting agency. The objective was to identify Nedap’s broader impact, both positive and negative, on people and the environment, and throughout our value chain, in accordance with the directive. This assessment also considered the 'outside-in' perspective, examining how external ESG factors could potentially impact Nedap's operations and long-term viability, thereby ensuring a holistic understanding of our sustainability position. The outcomes were discussed with the Board of Directors and Supervisory Board. We are currently fine-tuning our policies and finalising our data collection requirements for the 2024 financial year. Based on the outcomes, a few minor adaptations were made in our sustainability framework, in which we have categorised the four focus areas where Nedap has the greatest impact.

Sustainability framework

Our impact: employees

Target: 40 hours of development per employee per year.
SDG 8, Decent work and economic growth.

Employees are the cornerstone of our organisation. This mindset comes with the responsibility to provide an environment in which everyone feels comfortable, valued and can flourish. We want our people to continue developing their talents by gaining skills and experience that are relevant throughout their careers, regardless of whether they continue their careers at Nedap or elsewhere. To flesh out this ambition, we have set a target for all employees to spend at least 40 working hours a year on their personal development. In 2023, this target was achieved by 52% of 571 respondents (47% of 386 respondents in 2022).

Diversity, Equity and Inclusion

SDG 5, Gender equality.

When it comes to the composition of our workforce, we aim for a Nedap-relevant composition that reflects the society around us. We also want to ensure that everyone feels safe and heard. One of our initiatives in this respect is an open, employee-founded platform to discuss matters related to Diversity, Equity and Inclusion. Nedap supports this platform with all the necessary resources. In 2023, we defined our DEI policy based on extensive interviews and discussions with a diverse group of employees.

This policy was adopted at the end of 2023.

Gender diversity

To enhance gender diversity, Nedap has set targets for the male/female ratio on the Board of Directors and the Supervisory Board. Our Supervisory Board composition of two female and three male members adheres to the statutory diversity quota, ensuring a representation of at least one-third female and one-third male. Our Board of Directors, comprising one female and two male members, meets the gender balance target with at least 30% representation from each gender.

We are working towards a target of female representation in our senior management by 2025 in line with the current gender ratio for Nedap as a whole (2023: male 73% and female 27%). Senior management includes, but is not limited to, members of the Nedap Alignment team and other senior managers as determined from time to time by the Board of Directors. The ratio of senior management in 2023 is: male 82% and female 18%.

Nedap supports the advancement of more female staff with leadership qualities and ambitions to management roles. To that end, in 2023, we held in-depth interviews to assess how Nedap can facilitate and support the development of female leadership. By the end of 2024 we will have gathered extensive insights on how best to achieve this.

Please, also refer to the paragraph on 'Diversity, Equity and Inclusion' in the sections 2.2 'Progress on people, culture and leadership' and 3.3 'Corporate Governance'.

Health and safety

At Nedap, the health and safety of our people is a top priority. To ensure their safety, we have set up preventive safety and emergency response teams made up of voluntary professionals at our company. Courses were held in 2023 (104 attendees in total) and the team of volunteers was expanded. Nedap also has three confidential counsellors and offers employees the opportunity to talk to an occupational psychologist.

Also refer to section 2.2 for more information.

Our impact: operations

Target: Scope 1 and 2 carbon emissions to net zero by 2030.
SDG 13, Climate change.

Nedap aims to minimise and, where possible, eliminate the negative environmental impact of its operations. We want to reduce the carbon emissions of our business operations (scope 1 and scope 2) and reach net zero by 2030. To that end, we have a roadmap with several key targets, including maximum use of renewable energy, sustainable building management and a fleet of sustainable vehicles.

For the 2023 financial year, the scope 1 and 2 emissions include all Nedap operations worldwide.

Renewable energy

By 2025, we want to have halved our gas consumption compared to 2019 levels. By 2030, we intend to have stopped using gas altogether. Having procured only green power since 2014, we now want to take this to the next level by being completely self-sufficient where possible in our electricity needs by 2030. We intend to achieve this by using technologies such as heat pumps combined with solar panels.

In 2023, we also carried out a study into the possibility of installing technological solutions that could help reduce the use of natural gas to zero by 2030. The inability of regional and national grid operators to upgrade our power connection to the level needed to achieve this, creates additional challenges in realising our scope 1 emission reduction target.

Sustainable building management

When redeveloping and renovating our buildings, we strive to make these more sustainable by minimising their environmental impact. During the design phase, we look at material choices and assess which existing parts can be retained. When parts cannot be retained, we try to recycle as much of the waste as possible. To save energy, we take measures such as improving the insulation of our buildings, installing heat pumps, air treatment units with thermal wheels, solar panels and LED lighting.

Sustainable outdoor spaces are just as important to us as our offices, so we aim to create environments that contribute as much to biodiversity and water management as to creating a pleasant work environment. In 2023, we transformed the entrance to our head office in Groenlo into a greener and more biodiverse environment, using recycled materials wherever possible. The garden is intended for our employees to relax in, but is also open to the public.

We also focus on waste reduction and separation in our building management and monitor the results of our initiatives in this area. In 2022, the total weight of paper and cardboard waste stood out. This has now been reduced by using recycled cardboard as a filler in our product packaging.

Sustainable fleet

Target: Nedap aims to have phased out fossil fuel-powered company vehicles by 2030.

To achieve this goal, we will stop buying or leasing cars with a fossil fuel combustion engine from 2025, and we are already actively encouraging people to go electric when choosing a new car.

As of the end of 2023, 53% of our fleet is electric or hybrid (2022: 37%). In anticipation of the transition to a completely fossil-free fleet in 2030, we will stop purchasing fossil-fuelled cars from 2025. In concrete terms, this means that 2024 will be the last year in which fossil-fuelled cars can be purchased.

Business travel and commuting

In addition to all of the above initiatives targeting scope 1 and 2 emissions, we are also committed to further reducing carbon emissions from business travel and commuting, i.e. scope 3 emissions.

Environmental awareness of the impact of business travel has increased, and the contribution of employees’ commute has been reduced. Working from home is the largest contributor to this reduction.

Despite the potential for carpooling, electric vehicle use and public transportation to reduce our negative environmental impact, a survey among all employees has shown that these options are not always available, to or embraced by, everyone.

This leads us to focus more on other initiatives to reduce commuting such as facilitating working from home and expanding our network of hubs in the Netherlands.

Carbon offsetting

In 2023, Nedap partnered with Justdiggit to offset unavoidable emissions.

Our impact: products

Ambition: Nedap aims to lower negative carbon impact of its products and solutions.

Through various life cycle analyses (LCAs), we've identified the distribution of impact across production, transportation, disposal, and notably, the use phase of our products. A key finding is that reducing the power consumption of our products will have a major impact, not just on newly sold products, but also on our existing installed base. Given the long lifetime of our products, reducing their power consumption is an important driver for lowering the carbon impact.

As these are not all activities that we can directly control, achieving our sustainability goals will require cooperation with business partners, suppliers and customers. We must work together to reduce the carbon emissions of our own products and throughout the value chain. The next steps are to analyse the impact of our entire hardware product portfolio in detail, create a plan and set specific carbon reduction targets. These are now being worked on within the key markets and in 2024, a concrete target will be set for the company as a whole.

We present three graphs, each illustrating the environmental impact of a selected product. The graphs offer a visual representation of how each product contributes to global warming potential across different lifecycle stages, from production to end-of-life. By showcasing the environmental impact at each stage, these graphs provide clear insights into where the most significant emissions occur.

Based on the findings of the LCA (CO₂) dashboard, product emissions per life cycle phase have been made transparent. This highlights priorities and directions for reassessing the design of existing products and guides us as we develop new sustainable product designs.

Reducing negative environmental impact will become an important part of portfolio management.

LCA methodology

Nedap adopted a pragmatic approach to conduct a portfolio life cycle assessment (LCA), embodying the company's commitment to sustainability. The method employed is a streamlined LCA process that considers all stages in a product's life cycle: raw material extraction, production, distribution, use and end-of-life. Given the extensive nature of our portfolio and the detailed requirements of a traditional LCA, two strategic simplifications were introduced:

1. Portfolio Consolidation: recognising the inherent similarities among many products in our portfolio, we opted for a consolidated approach. By collaborating closely with our business units, we identified representative products that encapsulate the characteristics of broader product groups, thus acting as a reference.

2. Efficient Data Collection: for each representative product, data was collected across the five life stages.

This approach provides a holistic view of our product portfolio's environmental footprint while ensuring the process remains both efficient and data-driven.

The results of our streamlined LCA methodology were used to create a pioneering CO₂ dashboard, an internal application where business units can view their product-related insights.

Examples of our contribution

• Retail’s Connected Devices addressed the need to help retailers become more sustainable by developing a sleep mode for iSense. iSense sleep mode temporarily disables the transmitters on our devices, resulting in lower energy consumption. We aim to enable sleep mode on all these systems, estimating that an annual electricity saving of approximately 600MWh could be achieved. This equates to about 30% savings during sleep mode. Realising this potential will require a coordinated effort with business partners and customers.

• The new locker management solution, introduced by Security Management in 2022, was enhanced. At night, or when not in use, these locks can be put into power-saving mode and consume 75% less energy while maintaining the required level of security.

• Our proven UV lamp driver technology has brought significant sustainable benefits. In 2023 we expanded the data inputs used to measure the carbon footprint in our product life cycles and we focused on new solutions.

Next steps in 2024

• At present, efforts are being made to develop a second iteration of the dashboard, integrating key improvements and features that align with our long-term sustainability goals. Key focus areas for this development include a refined simplification method as well as an enhanced product data architecture. Furthermore, we are working to create more efficient and streamlined data handling and analysis processes.

• Alignment with CSRD reporting and reduction plans: these enhancements are strategically designed to align the company's operations with the Corporate Sustainability Reporting Directive (CSRD) requirements. By proactively incorporating these features, we are laying the groundwork for more concrete and actionable impact reduction plans.

Sustainable procurement

Responsible procurement is another important pillar of our efforts to reduce the carbon footprint of our products. It is anchored in our code of conduct. We perform audits to check key suppliers’ sustainability standards.

Software impact

Target: Nedap's policy is to use data centres with sustainable standards.

Nedap develops and supplies cloud-based software solutions. For these solutions, Nedap uses data centres for data processing and hosting. We aim to use data centres that run on green power, comply with the European code of conduct for Energy Efficiency in Data Centres, and do not seriously harm other EU Taxonomy objectives, such as circularity.

A substantial part of Nedap’s software revenue already flows through data centres that meet these standards.

Our impact: customers

Ambition: to embed sustainability in our propositions so that they help to make our customers’ business models more sustainable.

We aim to integrate sustainability into the strategic ambitions of our propositions and to enhance the sustainability of our customers’ business models through them. When developing new propositions, their contribution to sustainability is therefore an important consideration.

Examples of our contribution

• Our market leadership in healthcare gives us the knowledge, experience and authority to act as a thought leader and architect. Our mission is to use our knowledge to make the sector more efficient. We developed Caren to assist in staying informed about the well-being of loved ones in a care facility and to offer clients the opportunity to stay in touch with formal and informal carers. And we created Nuts, a high-security trust layer for the industry-wide exchange of medical data between healthcare providers, as a non-profit solution.

• Retail’s iD Cloud proposition helps prevent waste in the fashion industry.

• Livestock Management’s proposition helps reduce carbon emissions per litre of milk produced.

• One of our original equipment manufacturers (OEM) customers developed sustainable technology to extend the shelf life of liquids such as milk and fruit juice through treatment with UV light sources using Nedap’s driver technology. Depending on the transparency of the liquid, the new application saves 60%-90% of the energy and 60%-80% of the water used during a pasteurisation process.

Other sustainable initiatives 2023

In 2023, we intensified our sustainability approach and the involvement and knowledge of our organisation in this area grew considerably. Our preparations for the Corporate Sustainability Reporting Directive (CSRD) were instrumental in advancing our objectives and plans and making them concrete.

One of the most notable developments was the growing engagement of Nedap employees when it comes to sustainability. Multiple events were organised to inform, inspire and motivate our colleagues. One example was the Step Up! Day in March, a strategy event that challenged employees to translate sustainability into their own disciplines and markets.

Furthermore, Retail’s Connected Devices hardware development team has been actively involved in the Dutch Research Council’s (NWO) Circular Circuits project. As part of the project, we are starting a collaboration with Delft University of Technology (TU) called 'Design for Recycling.' The knowledge gained from this project will benefit all other Nedap business units that develop hardware devices.

The Do the right thing theme of our internal campaign emphasises making thoughtful and wise decisions, especially in terms of sustainability. In 2023, an internal website was launched to engage and inform employees around our four focus areas. Other activities were the launch of an internal podcast series and the first edition of the Do the right thing Festival took place.