5. Responsibility

Accountability within the company’s management with regard to sustainability is disclosed.

A separate Corporate Responsibility Department has been dealing with the issue of sustainability since 2015. The strategic core issues are worked on, further developed, analyzed and monitored by this department. The department consists of three specialists, each of whom is responsible for a core topic, and a director, who has the overall thematic responsibility. She reports directly to the Executive Management Board of cosnova.

6. Rules and Processes

The company discloses how the sustainability strategy is implemented in the operational business by way of rules and processes.

The four main topics of cosnova's sustainability strategy are dealt with by the respective specialists of the Corporate Responsibility Department in interdisciplinary cooperation with the specialist departments. This ensures implementation in the specialist departments and is followed up and driven forward by the relevant CR specialist. In addition, there is a continuous internal flow of information on the relevant sustainability topics, for example, via the Intranet or through so-called Info Meetings in which all cosnova employees come together. This aims to strengthen the general understanding of the sustainability issues and underline their importance for cosnova and its business activities. Furthermore, a status presentation is made to the Executive Management once a year, during which the objectives for the following year are also reviewed.

7. Control

The company states how and what performance indicators related to sustainability are used in its regular internal planning and control processes. It discloses how suitable processes ensure reliability, comparability and consistency of the data used for internal management and external communication.

In the 2018 fiscal year, cosnova performance indicators were defined for the first time for three of the four core topics of the Sustainability Strategy. Our performance indicators create transparency with regard to our sustainability goals and help to identify opportunities for improvement. In future, they will be regularly reviewed and their progress will be reported on. They form an important pillar of our long-term corporate success. The performance indicators for the individual focal topics were defined as follows:

Harmlessness: step by step, we want to develop our products safely in the three areas of health, social affairs and the environment. Health goals are measured by the number of substances used with a red evaluation according to the internal INCI analysis. Social aspects should contribute to compliance with human rights and the elimination of child labor through transparent supply chains. They are measured by the transparency of our supply chain of natural mica originating in India. Transparency is measured as a percentage of the levels of the supply chain disclosed by the mica supplier. The goal here is to achieve a 100% transparent mica supply chain by 2023. Environmental targets are designed to promote the sustainable cultivation of natural resources, such as certified palm oil, and are measured by the amount of RSPO credits purchased. The goal is to cover 100 percent of the total consumption of palm oil/palm kernel oil and its derivatives with RSPO credits from 2018 onwards.

Working conditions: We want to ensure that at least the ILO Core Labor Standards and local legal requirements are adhered to by our business partners. Our expectations on this subject are set out transparently for all business partners in a cosnova Code of Conduct. The targets are measured by the number of signed Codes of Conduct and the number of business partners evaluated by EcoVadis in relation to the total number. The goal is to have 100 percent of our suppliers rated at least once by EcoVadis by 2021. The goal is to obtain a signed Code of Conduct from each supplier by 2020.

Waste: The topic is divided into three areas: secondary and tertiary packaging, display and marketing materials and obsolete products. We strive for a general reduction in waste for all of them. The focus is on the use of more environmentally-friendly, sustainable and recyclable materials and finally, the disposal of the residual material through recycling or upcycling. The objectives are measured on the basis of the realization and the degree of implementation of a so-called negative list at our business partners. It specifies the type of materials that may be used. 
The goal is a 100 percent implementation of the "must haves" of the negative list at our business partners by 2020, as well as a 100 percent implementation of all "should haves" of the negative list by 2021.

Social affairs: Our corporate mission provides the basis for our social commitment. With its help, we strive to have a positive impact on the lives of others: both in our company, in our neighborhood and along our value chain. No measurable performance indicators have yet been determined for this focus area.

Key Performance Indicators to criteria 5 to 7

Key Performance Indicator GRI SRS-102-16: Values
The reporting organization shall report the following information:

a. A description of the organization’s values, principles, standards, and norms of behavior.

Global mission: “Our heart beats for everyone in the world. We offer them the products and brand experience that helps them to feel more beautiful at all times.”

Global values: passion, courage, trust, reliability, openness and responsibility. In addition, loyalty – to our employees, to our business partners and to the people at our locations.

Code of Conduct: the content is based on the ILO Core Labor Standards and, of course, compliance with the stipulated and local laws.

Global Sustainability Mission: “Our heart beats for everyone in the world. And with every heartbeat, we try harder to have a positive impact on other people’s lives: in our company, in our neighborhood and with our partners along our value chain. To constantly challenge ourselves to perform even better and to lead our way to long-term and sustainable success.”                                                                                   

8. Incentive Systems

The company discloses how target agreements and remuneration schemes for executives and employees are also geared towards the achievement of sustainability goals and how they are aligned with long-term value creation. It discloses the extent to which the achievement of these goals forms part of the evaluation of the top managerial level (board/managing directors) conducted by the monitoring body (supervisory board/advisory board).

In addition to the monthly salary, our remuneration system also provides for a performance-related compensation in the form of a bonus system. At present, there is no specific consideration of sustainability aspects in our remuneration or bonus system, nor is this currently planned. Nevertheless, sustainability impulses are set with the aid of incentive systems through the integration of a so-called bonus-malus system in our company car guideline. This system favors vehicles with particularly low emissions and thus encourages company car drivers to switch to more environmentally-friendly vehicles.

Key Performance Indicators to criteria 8

Key Performance Indicator GRI SRS-102-35: Renumeration policies
The reporting organization shall report the following information:

a. Remuneration policies for the highest governance body and senior executives for the following types of remuneration:
i. Fixed pay and variable pay, including performance-based pay, equity-based pay, bonuses, and deferred or vested shares;
ii. Sign-on bonuses or recruitment incentive payments;
iii. Termination payments;
iv. Clawbacks;
v. Retirement benefits, including the difference between benefit schemes and contribution rates for the highest governance body, senior executives, and all other employees.

b. How performance criteria in the remuneration policies relate to the highest governance body’s and senior executives’ objectives for economic, environmental, and social topics.

cosnova GmbH is a family-run, non-capital-market-oriented company. Therefore, we do not consider the assessment of this performance indicator to be relevant for assessing the sustainability of the company. 

Key Performance Indicator GRI SRS-102-38: Annual total compensation ratio
The reporting organization shall report the following information:

a. Ratio of the annual total compensation for the organization’s highest-paid individual in each country of significant operations to the median annual total compensation for all employees (excluding the highest-paid individual) in the same country.

cosnova GmbH is a family-run, non-capital-market-oriented company. Therefore, we do not consider the assessment of this performance indicator to be relevant for assessing the sustainability of the company. 

9. Stakeholder Engagement

The company discloses how the socially and economically relevant stakeholders are identified and integrated into the sustainability process. It states whether and how an ongoing dialogue takes place with them and how the results are integrated into the sustainability process.

In order to be able to identify and interview the most important stakeholder groups within the framework of the development of cosnova's Sustainability Strategy, the following approach was implemented: For a comprehensive perspective of our stakeholders, the so-called stakeholder mapping criteria were applied. This means that appropriate representatives from all areas could be taken into account:

This resulted in the following possible stakeholder categories for qualitative interviews: o Distribution partners o Direct suppliers o Important NGOs, campaign organizations (with a thematic focus, for example, on health, human rights, water, packaging) o Science o Bloggers o Cosmetics industry   In the next step of stakeholder selection, the criteria for selecting concrete interview partners were first defined (qualitatively). These criteria should be used to select contact persons, but they do not all have to be available and can also be combined with each other.   In general, a combination of existing and new contacts is desirable for such interviews. Existing contacts have a deeper understanding of the specific situation of cosnova, new contacts can reveal "blind spots" through their external view. The following qualitative approach was determined for the stakeholder interviews: A topic list was sent to the interviewee prior to the interview and was filled in and returned by the interviewee. Block A: Prioritization of topics and discussion of the list of topics. Discussion of the prioritization with a focus on the most important and challenging topics (problem-centered approach)   Block B: Discussion of the recommendations/expectations for sustainability at cosnova. Targeted discussion regarding what the "next step" should be to further develop cosnova's sustainability performance. A prioritized list of topics/ protocol on indications for the further development of cosnova's sustainability commitment The following possible stakeholder categories were defined for the quantitative survey:   An important part of the continuous dialogue and interaction with our stakeholders is the active participation in various industry initiatives that support sustainable management, such as the environmental and packaging initiative "Recycling Forum". There, 26 industrial partners (retailers, consumer goods manufacturers, brand owners, design agencies, waste disposal companies, government, communications agencies) are working on jointly defined goals relating to packaging recycling and the use of recyclates. A great deal of pioneering work still needs to be done, especially with regard to the use of recycled materials in cosmetic packaging, as approval and REACH conformity are still unclear. This is why we are committed to finding solutions for our market segment in order to sustainably improve the ecological balance of our products. The use of recyclates can save up to 80 percent energy in the extraction of raw materials and up to 60 percent CO2 emissions.

Key Performance Indicators to criteria 9

Key Performance Indicator GRI SRS-102-44: Key topics and concerns
The reporting organization shall report the following information:

a. Key topics and concerns that have been raised through stakeholder engagement, including:
i. how the organization has responded to those key topics and concerns, including through its reporting;
ii. the stakeholder groups that raised each of the key topics and concerns.

As part of the process described above, we received the views of 901 people from the stakeholder groups mentioned above. These were then transferred to a materiality matrix and processed further. In June 2018, a second stakeholder survey was conducted among consumers in order to obtain an up-to-date assessment of our previously prioritized topics and also to uncover any new expectations. 1,464 people took part in this survey, which was conducted exclusively via social media. This resulted in the current top 5 topics from the consumer's point of view:
  1. Animal welfare
  2. Plastic/micro plastic
  3. Sustainable product ingredients
  4. Waste
  5. Consumer health and safety
In comparison, the top 5 topics in 2015 were:
  1. Animal welfare
  2. Plastic
  3. Climate & energy
  4. Consumer health and safety
  5. Waste
A slight shift in consumer priorities can be observed in the new survey, which was limited to the consumer perspective. Sustainable product ingredients, for example, have recently moved much more into the focus of attention than before. Climate & energy, on the other hand, appear to have less relevance. The results of this survey were shared within the company in order to be able to react specifically to the changed priorities of the stakeholders.

10. Innovation and Product Management

The company discloses how innovations in products and services are enhanced through suitable processes which improve sustainability with respect to the company’s utilisation of resources and with regard to users. Likewise, a further statement is made with regard to if and how the current and future impact of the key products and services in the value chain and in the product life cycle are assessed.

With our goal of sustainable corporate management, we not only take the general corporate responsibility into account, but also the changing requirements of our consumers. Their awareness of serious problems such as environmental pollution, waste and unethical behavior is increasing. Consumers therefore expect people and brands to behave responsibly and make informed choices. They are looking for products that they can use without hesitation and want transparency, simplicity and safety. These findings are used by cosnova as a guideline to integrate sustainability aspects into all relevant processes related to product development. This is done through presentations by the Innovation Team both internally for all brand houses and externally for contract manufacturers as well as for partners and suppliers, for example, trade marketing suppliers. In the 2018 reporting year, concrete pilot projects were initiated for the first time in the brand houses in order to establish long-term sustainability aspects in the product development and finished products.

In accordance with our mission, we develop and market products that help everyone feel more beautiful at all times. In doing so, we do not define a particular ideal of beauty, but want to support each individual and the diversity of our consumers. Low pricing is also an important social aspect because it makes our products available to all social groups. The positive social impact of cosmetic products can be confirmed by consumer surveys and is measured by us using market research. The ecological effects of our products in the sense of an LCA (Life Cycle Assessment) have not yet been surveyed. However, both internal workshops and the creation of the first Corporate Carbon Footprint have taken steps to better outline the environmental impacts of our products and to define the key hotspots for our business operations.

Key Performance Indicators to criteria 10

Key Performance Indicator G4-FS11
(report also in accordance with GRI SRS): Percentage of assets subject to positive and negative environmental or social screening.(Note: the indicator should also be reported when reporting to GRI SRS)

None of the financial assets undergo a selection process based on environmental or social factors.