GRI report 2013 by Desso Group

The Floor is Yours

Corporate Responsibility Report

2013

Contents DESSO in Brief 2013

Foreword by the CEO

Being a good business

Our Vision

Creating a ripple effect

Highlights 2013

Dessoâ&#x20AC;&#x2122;s Corporate Responsibility Strategy

Corporate Governance

Stakeholder dialogue

CR reporting within Desso

CR Report Overview

Material Health and Management

Our health & wellbeing innovations 37

Material Reutilisation and Waste Reduction 38

Energy & Carbon Management

Water Stewardship

Customer Satisfaction

Employment, Health & Safety and Human Rights

Employment and Employee Development

Work environment and health & safety

Human Rights & Code of Conduct

Communications 57 Environmental expenditures and investment

Regulations and Compliance

Scope and reporting principles

Assurance report

GRI Application Level Statement

GRI index

References

DESSO in brief Desso is a global carpets, carpet tiles and sport pitches company, active in more than 100 countries. Desso products are supplied to corporate offices, education, healthcare, government, homes and also hotels, cruise liners and airlines. It also produces world leading sports surfaces such as the DESSO GrassMaster®, which has been installed at the home grounds of premier football sides and at the football ‘temple’ Wembley. Today, most people spend on average 90% of their time indoors which has led to the company’s vision: ‘How to make the floor work for our health and wellbeing’. Our mission is to ensure that we develop unique products that deliver a much improved indoor environment that maximises people’s health and wellbeing and ultimately their performance. This is driven by our innovation programme based on the three pillars of Creativity, Functionality and Cradle to Cradle® design.

65% 13%

Commercial Carpets Offices, banks, retail units, public buildings, schools, universities, care centres, airports.

Home Carpets High-end brands (Parade, Bonaparte, Desso) focused on Benelux, Germany, France and Switzerland.

HMA Custom made carpets for Hospitality, Marine and Aviation.

12% 10%

Sports Leading supplier of hybrid natural grass systems for sports and multi-purpose stadiums.

Key Facts

80+

years of experience

100+

countries where we are active

852

employees • Figures are Year To Date October 2013.

Group

€ 202m

($268m) net Group turnover 2013

Carpets*

€181m

($240m) net turnover 2013 carpets *Commercial, Home and HMA (excl. Sports)

Foreword by the CEO I am delighted to introduce our first Corporate Responsibility (CR) Report at Desso. Our company vision is to ‘make the floor work for our health and wellbeing’ based on the insight that we spend 90% of our time indoors. As more people move to cities across the world, this vision becomes ever more relevant. People want to be assured that the places where they spend so much of their time are healthy environments and also inspire them. We launched our Great Indoors campaign in 2012 to maintain this focus on the ultimate goal of helping to make the indoors a healthy and productive place. With this in mind, our designers think about the best creative carpet designs, textures and colours for a specific place as well as the best functionality. We have discovered how our carpets, when designed in a particular way, can lower some of the potentially damaging fine dust and dramaticaly reduce unwanted noise. From schools to hospitals to offices this can make a huge difference to health and wellbeing as well as help facilitate concentration, focus and the ability to collaborate and work well. These carpets can add to productivity in the workplace and reduce sickness absenteeism; and they can help to make teachers in schools more effective and potentially enable patients in the health sector to recover faster. Tied in with our health and wellbeing vision is the ongoing commitment to the environment through our Cradle

to Cradle® programme, which is helping us make the transition towards a circular economy. Our innovation platform of Creativity, Functionality and Cradle to Cradle® fuses these three crucial elements, ensuring that our Corporate Responsibility (CR) strategy connects directly to our business goals. We aim to add value by producing outstanding goods and services that meet tangible social and environmental needs, backed up by the best attention to detail for the individual customer and operational excellence. Over the past five years we at Desso have been moving towards the circular economy, away from the ‘take, make and waste’ linear model. Guided by Cradle to Cradle® principles we have been making products that are designed to have a positive impact in terms of human health and the environment. It is complex and hard to do. But we have always believed it is the best route to developing a successful model for economic growth for us all in the long run. If we can start out by delivering products that are composed of positively defined chemical ingredients then we can recycle the materials in a healthy way when they are taken back and how we be assured that our products have a positive impact on people and the environment while they are in use. In addition, Cradle to Cradle® principles embrace other key areas of our sustainability including water stewardship, renewable energy and social

fairness. We are also delighted to see how support for the circular economy is gaining momentum and that we are able to share our experience with other organisations. Ongoing commitments include our membership of the Ellen MacArthur Foundation’s (EMF) Circular Economy 100 and the new two year cross-industry project with the World Economic Forum and EMF. exploring the practical application of the circular economy.

and profits. Our market share in our commercial carpet tiles division increased from 15% to 27%1) in Europe from 2007 to 2013. Our innovative DESSO AirMaster® carpet designed to improve indoor air quality, invented in this period, is a bestseller across the world. We value transparent and open communications. Therefore, we wanted to communicate where we are in terms of sustainability, using the GRI standard on an annual basis.

The circular economy offers a positive future for a growing world economy, helping us deal with four major crises: through its focus on renewable energy it tackles both issues of energy security and climate change; through its emphasis on using healthy materials and defined recycling it addresses the problem of toxicity in materials that can damage health and wellbeing indoors and finally, the circular economy offers a way to produce more goods without continuing to waste vast quantities of the earth’s precious and finite resources.

We welcome feedback, so please don’t hesitate to get in touch with our Corporate Communications department (corporatecommunications@desso.com) and share your thoughts on the contents of this report with us.

Having these goals has proved commercially successful, ensuring that we do meet our obligations to people, planet

Alexander Collot d’Escury, CEO, DESSO®

DESSO and the UN Global Compact Desso has made the decision to support the UN Global Compact network, an initiative that promotes responsible corporate practices in the areas of the environment, labour, human rights and anti-corruption. We will apply for membership of UN Global Compact in Q3 of 2014 and will subsequently report on our progress via the annual ‘Communication on Progress (COP).

New GRI guidelines A new version of the Global Reporting Initiative guidelines for sustainability reporting was introduced in 2013. Desso will apply the new GRI G4 guidelines, to reports starting in 2016. One of the main features of the new guidelines involves a materiality analysis of sustainability aspects, which Desso will be working on developing further in the coming year.

External assurance Deloitte has conducted a limited assurance review on a selection of KPI’s and the GRI application level B+ of Desso’s Corporate Responsibility report 2013.

Being a good business

For us, there is no separation between providing a good return on investment for our shareholders and our commitment to having the most positive impact we can on people and the planet. More than that, we believe that we can only shape a successful business in the long-term by linking all of this up. Driving mutually beneficial connections that create innovations, better service for more engaged customers and a business model that is more sustainable in the long-term. How does all this work? Currently, we are implementing a broad-ranging plan entitled, the Desso Blueprint for the Future - developed in 2012 - which explains the inter-connected elements that drive our business, adding value to all of our stakeholders.

Our Vision Our vision is to be a world leader in manufacturing environmentally responsible carpets and sports pitches that deliver significant added value in terms of design and functionality and that contribute to people’s health and wellbeing. This is all underpinned by first class service at all times based on a deep understanding of our customers across the world. Today, most people spend 90% of their time indoors. This makes it imperative that we create healthy interiors. As a supplier of carpets to the commercial and consumer

sectors, we believe it is our responsibility to develop products that contribute to a healthier living and working space. At Desso, we say ‘The Floor is Yours’ to underline the fact that we maintain a relentless focus on our customers at all times. It underpins everything we do. We know that our success depends on it. Our Great Indoors campaign – raising awareness of the need to create a healthy and productive interior in cities and towns across the world helps us maintain a focus on this goal.

Creating a Ripple Effect When you throw a stone into the water you create a ripple effect. Similarly, we are well aware of the fact that our actions as a company have an effect on our customers, employees, shareholders, suppliers, the environment and society as a whole. Therefore, it is important that we ensure these actions create a positive effect. For us as a company, we want to have a positive impact across the commercial, environmental, social and human health areas, enabled by our commitment to Cradle to Cradle® principles and the transition to the circular economy. We want to create long-term business success by delivering environmental, social and economic value to our customers. By making our sustainability goals central to our business strategy we hope to create a powerful effect that contributes to commercial success that is truly sustainable and takes into account the major challenges of the 21st Century. In doing so, we believe we can build a business model that drives commercial success within the means of the planet and in a way that is positive to human health and the environment. The model we have developed will, we believe, help businesses like ours meet the following challenges: Energy Instead of being dependent on nuclear energy with the risk of accidents or harder to extract fossil fuels which is likely to continue to experience price volatility (posing continued risks to the world economy), we aim to increase our use of renewable energy. Climate change Linked to the above point, our increased usage of renewable energy will reduce our direct and indirect CO2 emissions. Resource scarity The earth’s resources are under continued pressure as the world economy creates millions of new consumers. We can become smarter through design, materials management and other areas such as tax policy in driving economic growth based on a better use of our existing materials and by ensuring these

How we incorporate Corporate Responsibility (CR)

Desso’s Ambition

Corporate Strategy:

• Organic growth 4-6% • Yearly EBIT improvement (>10%)

1. Operational excellence 2. Innovation • Creativity • Functionality • Cradle to Cradle® 3. Geographic/channel expansion 4. Comunications

Desso’s vision to create products which contribute to people’s health and wellbeing

CR and Compliance (ISO 9001, ISO 14001, C2C certification, ISO 26000, UN Global Compact's ten principles)

Desso’s core values, code of conduct and corporate governance

materials are positively defined, they can subsequently be recycled in a safe way. Material health In all of this, we believe it is vital to ensure that the materials we use are made out of the healthiest possible chemical ingredients. This links to our vision to make products that contribute to people’s health and wellbeing. Our Cradle to Cradle® commitment helps us ensure we achieve this material health goal. Our functionality and design processes help us add more value by creating products that act in such a way that they contribute to people’s health and wellbeing such as our DESSO AirMaster® that reduces the amount of fine dust indoors. All of this connects together to create three dimensions: 1. Engage - First, we aim to engage our customers with the most compelling products and services. Through our innovation platform we deliver functionality, Cradle to Cradle® qualities and creativity. As we move into the circular economy we believe that our products and services become ever more positive to human health and the environment. This in turn, we believe, will provide our customers with added value, which we always strive to deliver. 2. Innovate - Second, it is clear that innovation will enable us to maintain the engagement of our customers. Creativity is critical but not enough in itself. We need to keep inventing new functionality that puts the health and wellbeing

of people at the forefront, helping our customers create better indoor environments. And Cradle to Cradle® sets our compass on course for using positively defined materials which can be safely recycled, greater renewable energy use, good water management and social fairness. By making these broad CR goals part of our product development and manufacturing, it becomes deeply embedded in the business model. All of our products are the result of the synergy between these three elements, continually adding value for our customers, the wider community and the environment. 3. Transform - Finally, we cannot engage our customers or conduct the innovation we want without transforming the business. Going into the circular economy is not an easy option though we believe it is the best business strategy in the long run. It requires new thinking and behaviour at all stages from materials management and supplier relations to production and marketing and sales. With one eye on the short term pressures, especially intense in the recent long recession, we must also make decisions based on our long-term goals. Through these three elements – engage, innovate and transform – we hope to make the ripple effect count, delivering greater profitability while shaping a much more responsible and sustainable business model.

AirMaster速 Atmos 9032 10

Target indicators, results and progress in 2013 Our strategic decisions are guided by two key rules: 1) putting the customer at the centre of all decisions 2) ensuring all our actions add more value than cost. Annual financial targets for Desso Group: • Organic growth 4-6% • Yearly EBIT improvement (> 10%) Achievements during reporting period: Desso achieved a net turnover of €202 million in 2013 with normalised operating results (EBIT) of €14.3 million, 93 percent higher than in 2012. In a general market place still flat following the financial crash and ensuing recession, Desso successfully reinforced its market position across all its divisions. Performance of Carpets remained strong with a net turnover of €181 million and a normalised operating result (EBIT) of 7.5%. There was strong market growth of carpet tiles in the United Kingdom, Belgium, Germany, Scandinavia and the Mediterranean area. Net turnover in 2013 in its sports business was €21.4 million with normalised earnings (EBIT) of 3.2% compared to minus 17.9% in 2012; management had strengthened the division with a focus around its reinforced natural grass system called GrassMaster®.

How the different divisions performed

Carpets For 2013, the net turnover of the Carpets division amounted to €181 million (2012: €185 million), 2.0 percent lower than in 2012. This small decline was largely explained by the impact of foreign currency exchange rates in the reported year (especially pound sterling and US dollars), which reduced net turnover by €1.6 million. The normalised operating result for 2013 was €13.6 million, equivalent to 7.5 percent of net turnover (7.6 percent in 2012). The strongest business within carpets was the carpet tiles division (commercial sector) which maintained the same level of turnover as in 2012, a year in which turnover had increased by more than 18 percent. The products in this segment did particularly well in the UK, Belgium, Germany, Scandinavia and the Mediterranean area. Carpets in the Hospitality, Marine and Aviation segment (HMA) came up against several tough challenges including severe price competition and the volatile nature of the market (e.g. new build and refit of cruise ships). Process improvements and tight cost controls helped to keep this division’s results in line with expectations. A contracting market in the housing segment in the Netherlands and other European markets put downward pressure on the consumer carpets business; this was countered by several cost reduction programmes to minimise the impact on overall results. Sports For 2013, the Sports division posted a lower net turnover of €21.4 million compared to the previous year (2012: €37.1 million). However, structural

changes made in this period strengthened the division’s profitability. The operating result increased significantly because of this, exceeding expectations and reported earnings, (normalised operating result - EBIT) of €0.7 million (representing 3.2 percent of net turnover) versus minus 17.9 percent in 2012. In 2012 management concluded that further competitive advantages and improved margins could only be achieved by focusing on niche markets

in artificial grass and hybrid soccer grass. Therefore, in 2013 Desso continued with the development, marketing and sales of artificial- and hybrid soccer grass (DESSO GrassMaster®) and the extrusion of yarns applied in those products. Desso also decided to close down and outsource its tufting and finishing (coating) activities and streamline its sales and marketing activities to focus on the highest potential geographical markets and products segments.

Figure 1: EC1- Direct economic value generated and distributed.

key figures € x 1,000

2013

2012

Net turnover

202,357

221,785

Cost of sales

141,503

158,715

Operating expense

46,545

55,647

Normalised operating result (EBIT)

14,309

7,432

Exeptional items

4,340

11,369

(47)

Fair value adjustment on depreciation

3,416

3,742

Operating result (EBIT)

6,598

(7,641)

Depreciation and amortisation

4,579

4,488

Normalised EBITDA*

18,887

11,911

EBITDA

14,593

542

Dec 31st 2013

Dec 31st 2012

Assets

143,328

169,676

Net worth

40,558

39,510

Net debt

49,622

59,881

Amortisation of negative goodwill

* Normalised” refers to performance indicators (EBITDA or EBIT) before Exceptional items, Fair value adjustments and Amortisation of negative goodwill as they do not occur regularly as part of the normal activities of the Group. They are presented because they are important for the understanding of the underlying sustainable performance of the Group. Normalised indicators are additional indicators used by management, and should not replace the indicators determined in accordance with accounting guidelines as applied in the Financial statements as an indicator of the Group’s performance. Normalised indicators may not be comparable to that of other companies. Desso does not have any community investments.

Highlights 2013

75%

100%

46%

2020 goal recycled content

2020 goal renewable energy

reduced carbon emissions

We aim to reach the goal of using >75%

Our long-term aim is to make the shift

Desso reduced its carbon emissions

defined post-consumer recycled

gradually to drawing 100% of our ener-

(indirect and direct) by 46% between

content in our commercial carpet tiles

gy from renewable sources (purchased

2007 and 2013.

by 2020.

and self-generated) by 2020.

25,000 m2

80%

30%

solar panels

market share boost in recession

2020 goal for recycled water

In 2011, Desso also invested in the

Desso’s market share in commercial

30% recycled water use by 2020. In five

installation of 25,000 m solar panels

carpets – its largest business division

years, Desso has increased the recy-

for its factory in Dendermonde, Belgium

and where Cradle to Cradle® was ap-

cled water amount from 11% in 2008

and Waalwijk, the Netherlands. These

plied first – has grown from 15% to 27%

to 20% in 2013. In 2013, the special

solar cells generated 5% of Desso’s

between 2007 and 2013.

ozone treatment resulted in a 68 million

electricity use in 2013.

litre saving on fresh water.

100%

38%

green electricity

waste recycling

increase green investment

By 2012, Desso had switched over to

100% recycling of pure textile manu-

The amount Desso invested in

100% green electricity (hydro-power

facturing waste at Desso’s production

environmental prevention measures and

generated in the Alps). As a result, 25%

plants.

environmental management increased by 38% from 2009 to 2013.

of its energy usage is renewable. The remaining 75% comes from natural gas (see Figure 8, page 42).

50%

80%

Commercial carpets recycled content

SoundMaster® recycled content

Over half of Desso’s commercial carpets

DESSO SoundMaster

contain ECONYL yarn consisting of

80% recycled content (40% from recy-

in our products has gone up from 771

100% regenerated nylon

cled PET bottles and 40% from used

tons in 2010 to just under 2,115 tonnes

fibres).

in 2013.

1344 tonnes ®

backing has

more regenerated yarn used The amount of ECONYL® material used

Desso’s Cradle to Cradle® roadmap 2013-2020 Desso’s long-term targets include: • By 2020, reach a level where more than 80% of all materials used in its products are positively defined according to Cradle to Cradle® criteria. • By 2020, use 75% defined post-consumer material to produce carpet tiles. • Reach the target of 100% renewable energy for processing and manufacturing. • Ensure that factory effluent water is cleaner than the water it is discharged into. • Further development of Take Back® and recycling programmes. • Further implementation Cradle to Cradle® supply-chain management. • Support the UN Global Compact, an initiative that promotes responsible corporate practices in the areas of the environment, labour, human rights and anti-corruption. • All Desso products to be designed according to Cradle to Cradle®design principles by 2020. • Maintain awareness in public and private circles on the case for Cradle to Cradle® and the circular economy with an emphasis on what businesses can do to move things forward, as well as governments in terms of public policy measures. Includes Desso’s commitment to the corporate network, the Circular Economy 100, organised by the Ellen MacArthur Foundation; and also the membership of the new Project MainStream, a joint initiative between the Ellen MacArthur Foundation and the World Economic Forum with the support of McKinsey & Co. The 24 month project aims to achieve practical outputs leading to material savings, job creation and the generation of new revenue. Alexander Collot d’Escury, Desso CEO is a member of its steering committee, launched at the WEF Annual Summit in Davos in January 2014.

Desso’s Corporate Responsibility Strategy

At the heart of Desso’s corporate vision is to be the world leader in making environmentally responsible flooring products that deliver outstanding value in design and functionality and thus contribute to people’s health and wellbeing. CR is at the centre of this vision; as already explained (pages 7-9) the transition to the circular economy via Cradle to Cradle® is a key pillar of the company’s core strategy and embraces five areas of relevance to corporate responsibility: Material health (no toxicity); material reutilisation (developing healthy closed loop systems, positive to human health and the environment); renewable energy (clean energy and reducing carbon emissions); water stewardship (recycling and purifying water used); and social fairness (committed to the UN Global Compact’s ten principles relating to human rights and labour relations (see page 54). As detailed in this report each of these headings covers a great deal of internal and external issues. For example, human rights and good labour relations embraces such critical issues as health and safety, absenteeism at the sites in the Netherlands and Belgium; whilst at the same time the company is aware of the need to try to influence other stakeholders across the supply chain to maintain the same standards in regard to people.

90% of its carpet tiles certified, develop its C2C Silver Certified EcoBase™ backing (see page 37), increase the use of recycled nylon yarn in its commercial carpets to more than 50%, and develop TakeBackTM and Refinity® technology to received used carpets and prepare the different materials at the right purity for recycling or reuse (see page 38-39). Stakeholder Engagement In its drive to execute its Cradle to Cradle® strategy Desso has focused on certain key stakeholders such as suppliers prepared to sign an agreement about its materials in support of C2C’s material health criteria, for example, as well as help create a non-toxic closed loop such as Aquafil’s production of regenerated nylon ECONYL® (see page 36). As mentioned, Desso’s employees, have been involved in the C2C transition from the start of the strategy and many of them have taken training in the subject. Desso has also engaged with the global media to encourage discussion and debate on the topic of going circular. Desso also considers governments and international bodies (important in public policy areas related to waste, the environment, etc); NGOs (such as EMF, WEF, ECRA and GUT, DGBC etc) as

Desso believes that there is significant ROI in committing to the Circular Economy powered by Cradle to Cradle® key stakeholders; and of course, from the start of the CR strategy in 2008, the company’s shareholders (currently Bencis Capital private equity and the senior management). Through the tough times of recession (2008-2013) they have unwaveringly supported the Cradle to Cradle® strategy, knowing that some of the benefits will be long-term. We have many contacts with stakeholders which, however, have yet to be formalised. That is our challenge for 2014 among others. Based on our first reporting experience we expect to be able to check stakeholder expectations more easily.

Implementation In relation to the environment and human health, Desso has been advised since 2008 by the Environment Protection Encouragement Agency (EPEA), the consultancy run by C2C co-founder Dr Michael Braungart which has, in regard to material health, developed an internationally recognised process for identifying chemicals that pose some or significant risk to the environment and human health (see page 36). Using this methodology, Desso ensures that it phases out the more risky or toxic chemical elements in the process of creating positively defined materials: if nothing potentially harmful goes in, it cannot leak out at any point in the product life cycle. This along with the development of expertise and technology within the company has enabled Desso to have

The business case for C2C Desso’s commitment to Cradle to Cradle® and the broader circular economy is described elsewhere in this report. The motivations are linked to the triple bottom line aims of doing business in a way that impacts positively on people, planet and profits. The adherence to C2C’s tough standards on non-toxicity in materials is a core part of Desso’s wider commitment to health and wellbeing in the built environment, where it feels it has a particular responsibility as a manufacturer of flooring products. In building up towards the creation of a manufacturing system that operates in non-toxic closed loops, the company expects to benefit stakeholders in a number of ways including: • Uphold high standards of material health, contributing to health and wellbeing inside buildings, where people spend 90% of their time; • Contribute to smarter use of waste materials to construct a more sustainable business model; • Lessen the threats of climate change through the growth of renewable energy use; • Develop innovations that meet needs in improving the environment and human health; • Encourage other companies to follow the same path, leading to greater momentum. Speed of cycles in the closed loop Desso recognises that progress might sometimes seem slow, especially in relation to the take back of materials and processing them in a non-toxic closed loop. We are also not helped by legislative measures in many countries which has seen the price of sending worn out carpets to landfill drop significantly. This makes it even more challenging for us to build a sound business case for taking back carpets and ensuring these are recycled in a responsible way. A recent focus on the circular economy in the EU Commission for the Environment is welcome in exploring ways legislation can help to create smarter uses of resources and see waste as a value3). Most of Desso’s products have a long product life span of 10-15 years; whereas most circular economy products have shorter spans of three to five years. It is, therefore, more of a challenge for Desso to account for and control the future benefit of materials to be potentially processed through its Take BackTM and Refinity® system.

New selling models for the Circular Economy. Desso aims to develop KPIs on social fairness and biodiversity and has also begun to introduce a leasing system in partnership with De Lage Landen suited to the circular economy. The latter is an important basis for the circular economy in which customers and end users lease a product and gain a service, while the manufacturer remains responsible for the material flows at the end of the product’s life. Investing in the future Considerable investments have been made in environmental and sustainability policy at Desso since 2008 in particular – the start of its C2C strategy (see page 59). The shareholders, employees and other stakeholders recognise the need for these investments to make the radical changes across processes, systems, technology, supply chain management, materials procurement and design, product design, sales and marketing required to embed the Cradle to Cradle® philosophy into something real. Desso believes – backed up by its experience since 2008 - that there is a significant ROI on investing in Cradle to Cradle® Economy processes, product design and business has already seen the success of innovations created as a result of taking this journey (see, for example, information on the DESSO AirMaster® on page 37). But it cannot overstate that this is about helping to push towards a revolutionary shift in the world economy, which if achieved, even in part, could benefit countless stakeholders (as outlined earlier). If this can be done while creating formidable products that maintain competitive edge, then the model works to the benefit of the shareholders and employees as well. However, we as a business have to consider that a bold and innovative strategy also brings a certain amount of risk. In our pioneering role, we are in unknown territory where we cannot look to others for answers to our questions. Communicating change In January 2014, business leaders discussed how to scale up the circular economy at the World Economic Forum’s annual summit at Davos. There a third report on the transition to the circular economy was launched by the Ellen MacArthur Foundation and McKinsey & Co., which outlined the economic

opportunity represented by a switch to circularity from the linear system. The latest report (Towards the Circular Economy, Vol 3) concludes that the “materials savings potential alone [of circular economy business models] is estimated at over a trillion dollars a year4).” Connected to these discussions, the World Economic Forum, the Ellen MacArthur Foundation, McKinsey & Co., together with Desso and other leading companies supported the start of a new 24 month initiative, Project MainStream, to scale up the circular economy. A steering committee was formed at Davos including Desso CEO, Alexander Collot d’Escury. Project MainStream aims to leverage a pre-competitive, cross-sector collaborative effort that addresses the enablers of a circular economy, ranging from pure material flows and policy enablement to technology. The project will develop business cases, deliver proof of concept for such flows, and will be the cornerstone to influence the rest of the business community. Desso is also a member of the Circular Economy 100, a cross-industry network organised by the Ellen MacArthur Foundation which meets across Europe to discuss progress on the transition to the circular economy and the practical steps to take. Desso CEO Alexander Collot d’Escury is a board member of the Dutch Green Building Council (DGBC) and Desso is a member of other Green Building Councils including UKGBC. Furthermore, Desso is part of the board of the European Carpet & Rug Association as well as the VNTF (Dutch Industry Association) and the Cradle to Cradle® Certifications Standards Board.

Grids 2915

Trace 9521 18

Corporate Governance

As a company we have set ambitious business and sustainability goals and expect the leaders within the company to instil a high-performance culture and enable us to reach these goals. At the top of this leadership structure is the Executive Board composed of the CEO Alexander Collot dâ&#x20AC;&#x2122;Escury and the Chief Financial Officer Tom Francken. Its responsibilities include the development and implementation of the business and sustainability strategy, meeting immediate business goals as agreed with the Supervisory Board while setting in place the policies and structures to meet long term aims and ambitions. Therefore, while the Executive Board would manage the business to meet short term financial targets and wider business goals it will also be aiming to put in place all the processes and training to set the company on its long-term path towards becoming a circular economy company and developing health and wellbeing product innovation. The Executive Board is also responsible for the management of all the companyâ&#x20AC;&#x2122;s brands and market positions as well as finance, acquisitions and divestments. The Management Team that sits directly beneath the Executive Board supports the development of policies and ensures the alignment , continuous implementation and flawless execution of key priorities and strategies across the organisation. The Executive Board and Management Team meet every four weeks, ensuring issues are dealt with in a timely fashion and everyone is clear about the current status and objectives to be met. Overseeing all of this is the Supervisory Board which meets six times a year, discussing progress in terms of meeting current strategic objectives and the longer term goals. It is chaired by Eric-Joost Ernst, a partner with Bencis Capital Partners, a majority investor in Desso. Bencis Capital is an independent private equity firm which targets medium sized companies in the Benelux countries.

In 2007, some of Desso’s top management and the private equity company, NPM Capital joined in a management buyout of Desso from its then owner – the Armstrong Group. Subsequently in 2011, Desso Group B.V. was acquired from NPM Capital and current management by Bencis Capital Partners - an independent private equity firm which targets medium sized companies in the Benelux countries.

Desso Holding B.V. (‘the Company’) was incorporated under Dutch law, domiciled in Waalwijk, the Netherlands and is statutorily based in Amsterdam, the Netherlands. The consolidated financial statements of Desso Holding B.V. comprise the company and its group companies (referred together as ‘the Group’). Desso Holding B.V. was incorporated at 20 January 2011 and is a private limited company, where

ordinary shares are held by STAP B B.V. and a preference share is held by Bencis Buyout Fund III B.C.V. As medium sized enterprise, Desso‘s management structure is relatively simple. At the top are the CEO and CFO with a Chairman from external shareholder Bencis Capital. Under top management is a layer of management which implements strategy across the Group. All are selected on the basis of expertise, capability, experience and commitment to Desso’s values and vision. Acquisitions and integration In February 2010, Desso acquired the high-end consumer carpets company, Enia Carpet NL Holding BV, bringing with it new markets in Europe. Enia had two production sites at Goire and Heerlen in the Netherlands which had to be integrated into Desso’s production systems. This included CSR requirements such as minimising waste, energy and water use. Initially, Enia’s performance in areas like waste and renewable energy had a negative impact on Desso’s overall CSR performance (mentioned in relevant sections below).

AirMaster® Blend 2013

Supervisory Board Chairman: Eric-Joost Ernst

Board Member: Mathieu Vrijsen

Executive Board CEO: Alexander Collot d’Escury CFO: Tom Francken

The Executive Board is responsible for Desso’s policies in all areas including brands and markets, finance, operations, acquisitions and divestments.

During 2012, Goirle’s dyeing department was integrated into Desso’s plant in Dendermonde, Belgium, whilst the coating of broadloom carpet was moved from Dendermonde to Goirle. The plant in Heerlen was closed altogether and ceased production in November 2012. As mentioned earlier, the Sports business was restructured to focus on niche markets in artificial grass and hybrid soccer grass. In 2013 Desso continued with the development, marketing and sales of artificial- and hybrid soccer grass (DESSO GrassMaster®) and the extrusion of yarns applied in those products. Tufting and finishing (coating) activities for Sports were outsourced.

Management Team CEO: Alexander Collot d’Escury, CFO: Tom Francken, Director Operations:

Willem Stas, Director Corporate Communications & CSR: Anette Timmer,

Director Human Resources: Cathy Ockers, Managing Director Sports: Marc Vercammen, Director Design & Technical Development: Ludwig Cammaert,

Managing Director: Rob Peters, Director Business & Process Improvement & IT: Ted vd Meulengraaf, Regional Managing Director: Andrew Sibley,

Regional Managing Director: Roland Jonkhoff, Regional Managing Director: Gilbert Pivoly

All footnote references can be found on page 76

Vision of Shards 6103 22

Stakeholder dialogue

Desso’s stakeholder communication can be characterised by transparent relations, regular dialogue, clarity and a high level of ethics. In 2007, following a management buy-out from the Armstrong Group, Desso started its sustainability reporting. At this time, a stakeholder review was carried out by a Dutch consultancy firm to establish which key performance indicators Desso should focus on. In parallel, we register every request for sustainability data from external stakeholders in our systems. By doing so, we can evaluate whether our reporting measures are in line with the requirements of our key stakeholders. This is evaluated on an annual basis. In 2013 this process brought to light the need to focus on the following key topic areas: • Corporate responsibility: Covered directly in the GRI report (see summary of the company vision and CSR approach pages 8-9) • Environmental responsibility: Covered directly in the GRI report (see sections on material management, energy and water on pages 35-47) • Labour practices: Covered directly in the GRI report (see pages 51-54) • Fair business practices: This is a key part of the company’s Code of Conduct, adhered to by all employees globally (see page 54). • Sustainable procurement: One key aspect of this is the company’s Cradle to Cradle® philosophy in terms of material health and reutilisation (see pages 3539). The company is also exploring ways in which it can apply this standard to other areas of corporate procurement. • Community development: Desso has traditionally paid great heed to water quality, reinforced further by Cradle to Cradle® requirements in this area. It aims to ensure its operations such as at the Dendermonde plant have a positive environmental impact on the local ecology and water sources. (See pages 4547). The company is also exploring further ways to support local communities impacted by its operations and business. We will use the information we gather in this process for a more extensive materiality analysis which is planned in the coming year. 23

Stakeholder dialogue Our most important stakeholder groups are: Customers, Suppliers, Partners, Shareholders, Investors, Employees and Society. Through ongoing dialogue with the representatives of these groups, we can evaluate which sustainability aspects are the most important. As already mentioned, we want to further formalise this process and Desso will therefore be carrying out a materiality analysis amongst key stakeholders to ensure we are focusing on the most critical CR areas in relation to our business and in regard to the needs of our stakeholders. Channels for stakeholder dialogue A key communication channel for all of Desso’s stakeholders is its corporate website (www.desso.com), as is the company’s participation in social media such as Twitter, Facebook, LinkedIn and YouTube. • Customers: Meetings between Desso’s representatives and customers. Often, this also includes in-depth seminars on the implementation of Cradle to Cradle® and the Circular Economy. • Suppliers and Partners: Supplier visits and supplier audits through surveys. • Investors: regular meetings and extensive reporting in the annual financial report. • Employees: Internal communications through our internal (digital and printed) news magazine, email updates, internal courses, regular updates from Desso’s Works Council, management presentations to all staff and company events. • Society: Local open house days, family and sponsorship activities,

•

collaboration with universities and colleges. Authorities: Dialogue with local regulatory authorities about specific issues. Desso also works through trade organisations at both national and European levels. Government: discussions in meetings organised by national government on issues around business and sustainability. NGO’s: Regular meetings with organisations where we are involved in the dialogue around key sustainability issues, such as Leaders for Nature, IUCN and REDD+. Board membership: European Carpet & Rug Association, VNTF (Dutch Industry Association), Dutch Green Building Council, Cradle to Cradle® Certifications Standards Board

Stakeholder meetings in 2012-2013 Desso has been providing case studies and leadership lessons to the UK-based Ellen MacArthur Foundation (EMF) which has been promoting a greater understanding of the need for and the transition to the circular economy since 2010. As part of this, Desso was a case study in the EMF’s influential report, Towards the Circular Economy (Volume 1) which showed that savings of up to $630 billion per year could potentially be released if a subset of EU manufacturing

Key communication channel is: www.desso.com

REDD+ Deforestation and forest degradation, through agricultural expansion, conversion to pastureland, infrastructure development, destructive logging, fires and more account for nearly 20% of global greenhouse gas emissions, according to the UN7). REDD+ (Reducing Emissions from Deforestation and Forest Degradation) is a project organised by businesses with the UN to incentivise locals to conserve the forests, linked to the carbon emissions that action would reduce. In February 2013 Desso, the Dutch sustainable energy companies Essent and Eneco, the Dutch Development Bank FMO and the Platform Biodiversity, Ecosystems & Economy (Platform BEE8)) came together to support REDD+. Desso and the partners were present at the United Nations Climate Change Conference in Warsaw, Poland in November 2013, where they continued their discussions on developing the REDD+.

went circular. This report, produced with the global management consultancy, McKinsey & Company was launched to an audience of global CEOs at the World Economic Forum’s Annual Summit in Davos in January 2012. Desso was present at this meeting. More recently in January 2013, the EMF followed up with another report, Towards the Circular Economy (Volume 2) which showed that the Circular Economy could be worth $700 billion per year when looking at the fast-moving consumer goods industry. Overall, the EMF stated that the Circular Economy could drive as much as $1 trillion of value for the global economy5). This report was also co-produced with McKinsey & Company and delivered at a special session on the Circular Economy at the World Economic Forum’s annual summit in Davos in 2013. Desso’s CEO Alexander Collot d’Escury led some of the discussions on the circular economy at the World Economic Forum’s ‘Summer Davos’ in China in September 2013. In January 2014, Collot d’Escury also joined other industry leaders at the WEF annual summit in Davos to discuss how to push forward on the circular economy. Combined with a third report from the Ellen MacArthur Foundation and McKinsey, this led to the launch of Project MainStream, a collaborative project which could help businesses shift towards a circular economy and as a result save up to $500 million in materials and prevent 100 million tonnes of waste. Taking full part in discussions at Davos, Collot d’Escury also joined the steering committee of Project MainStream6). Desso’s senior managers and executives participate in events relating to C2C, circular economy and sustainability across the world. For example, Regional Managing Directors Roland Jonkhoff and Andrew Sibley have attended a number of regional World Economic Forum summits. Manager CSR Rudi Daelmans and Director Communications & CSR Anette Timmer are engaged in a number of specialised circular economy initiatives including the Circular Economy 100 workshops, the annual summit, and Project MainStream. Next to that, there are many others representing Desso in regional initiatives, events and presentations.

Desso will continue to connect with these external stakeholder audiences through the sharing of its best practice and leadership lessons.

In 2012 Desso became one of the first corporate members of the EMF’s Circular Economy 100 network9), dedicated to accelerating the transition to the circular economy through collective problem solving, building best practice and articulating scalable mechanisms. Other CE100 members include major international brands such as Philips, Marks & Spencer, Unilever, Coca Cola, Nespresso, H&M and Morrisons. In June 2013, Desso attended the CE100’s first annual summit held in London, where some of the speakers included leaders from companies such as McKinsey & Company and Renault-Nissan as well as circular economy experts Walter Stahel of the Product Life Institute, Cradle to Cradle® co-founders William McDonough and Michael Braungart and Janine Benyus of the Biomimicry Institute. Desso will continue to connect with these external stakeholder audiences through the sharing of its best practice and leadership lessons. This includes the following:

London Business School London Business School (4th in the world in the FT’s Global MBA 2012 Ratings) has been teaching the Desso Case study since 2011 (Desso – Taking the Sustainability Challenge10)) to MBAs and global executives. Case study currently being updated.

IMD, Switzerland Desso leaders discussed Cradle to Cradle® innovation strategy at two events at the leading Swiss business school, IMD during 2012.

Desso also reached a wide audience of business readers through articles and coverage in the following: Huffington Post, World Economic Forum online, Harvard Business Review online, Financial Times, Guardian Sustainable Business, Sunday Times, BusinessGreen.com, Busines Strategy Magazine (London Business School), Modus Magazine (Royal Institute of Chartered Surveyors), Ethical Corporation Magazine, Sustainability Business Magazine, Edie.net and Wall Street Journal. In addition to the World Economic Forum’s Annual Summit, Desso also attended other world events focused on innovation, sustainability and the circular economy such as a: • KPMG Summit in New York; • World Business Council for Sustainable Development, Council Meeting, Berlin; • Cradle to Cradle® Product Innovation Institute Meeting, New York; • Accenture/Guardian Sustainability 24 Summit; • Chatham House (Royal Institute of International Affairs); • Department of Energy & Climate Change (DECC), London; • Blue Monday CEOs Meeting on Sustainability, London; • Ethical Corporation and BITC Responsible Business Conventions.

2012 Desso won the Guardian Sustainable Business Award for Waste and Recycling for its implementation of Cradle to Cradle® design in its business strategy.

The University of Exeter Business School In November 2012 the University of Exeter Business School published a new Case Study on how Desso has been rethinking its supply chain to drive its Cradle to Cradle® innovation platform. Led by Exeter Business School’s Professor Michael Howard, the study (Desso and the Cradle-to-Cradle® Challenge: Rethinking Carpet as a Closed-loop Supply System11)). Ranked 2nd for business studies by the Sunday Times, Exeter Business School also launched the innovative One Planet MBA programme with the WWF.

Cranfield Management School Cranfield Management School, one of the top five research-intensive universities in the UK, alongside Oxford, Cambridge and London’s Imperial College, started researching for a Case Study on Desso’s Cradle to Cradle® strategy in 2012 with completion planned in 2014.

RSA DESSO-RSA Debate – Reinventing Business: The Transition to the Circular Economy In October 2011, Desso partnered with the progressive think tank, the RSA in the UK to hold a debate, chaired by RSA’s CEO Matthew Taylor: “Reimagining business – the transition to the circular economy”. 200 guests and over 7000 viewings on YouTube.

Desso received a ‘red dot product design’ award for its ‘Visions of’ carpet line. The ‘red dot’ is a quality seal for aesthetic forms and lasting trends, handed out each year during one of the most renowned design contests in the world.

2013 Desso picked up a Big Tick Award for excellence in sustainability from the prestigious Business in the Community (BITC) organisation in the UK.

CR reporting within Desso

This report is the first Corporate Responsibility report to be produced by Desso and it follows GRI G3.1 guidelines. Having developed and followed an ambitious sustainability strategy based on Cradle to CradleÂŽ principles since 2008 as a basis for moving towards the circular economy, it was considered important to find a rigorous reporting method that would encompass all aspects of the companyâ&#x20AC;&#x2122;s sustainability goals and progress. It is intended to make this a regular reporting process complying with the Global Reporting Initiative (GRI) guidelines. CR reporting at Desso is led by Group Corporate Communications with the support of the CSR department, the Legal Department, HR, Purchasing staff functions, and Production. Each production plant has an environmental coordinator and a health and safety officer. The central CSR Group function is responsible for the governance and coordination of environmental issues. CR reporting on www.desso.com

CR Reporting within Desso Reporting Period: 1st January to 31st December 2013 The company’s reporting system is based on monthly reports, year-end forecasts produced twice, and annual budget planning. Each month, the Board is informed of financial results versus budget and its effects on future plans. Environmental and social reporting: Most KPIs are continuously measured and reviewed by the departments responsible. Cradle to Cradle® KPIs are measured quarterly. Currently, the consolidation of reporting in these areas is done annually. Desso aims to change this to quarterly reporting with one integrated internal report. For every KPI there is a KPI owner (management) and a KPI reporter who determines the definition and scope of each KPI. The latter checks for consistency and plausibility during the reporting process. Corporate Communications and Finance lead on the profile disclosure and the drafting of the report. Internal review is made by the CSR department and all KPI reporters and owners. Desso is using where possible GRI measures but in some cases the Cradle to Cradle® approach – which is a new set of measures and processes developed by Braungart/McDonough and independently assessed by the US Products Innovation Institute – is so unique that Desso must use the measures it has developed to understand its own progress. For every KPI, the used definitions, scoping, reporters, procedures for data collection, primary information sources and their owners are documented. Conversion factors are used in individual cases and documented as such.

Location of Standard Disclosures • All information pertaining to strategy & analysis, organisational profile and governance commitments and engagement can be accessed online at: www.desso.com • For disclosure of management approach, core performance indicators and additional GRI indicators, please refer to the details of the Cradle to Cradle® Roadmap on page 14. External assurance Desso has commissioned Deloitte to provide an independent assurance of its Corporate Responsibility report. Deloitte is Desso’s assurance provider and audits the annual statements since 2012.

Code of Conduct: the basis for CR Desso’s Code of Conduct in the areas of the environment, health and safety and ethics applies to all employees, without exception. The Code of Conduct is based the the Global Sullivan Principles and will be linked to the Ten Principles of the UN Global Compact, as we make this step in Q3 2014. The Code of Conduct provides a basis for the internal CR process, and training in the Code of Conduct is mandatory for all employees.

Figure 2: CSR Reporting at Desso Externally

Internally

Code of Conduct Workplace and environment issues Marketplace issues Society & community issues Policies

Self evaluation Internal control

External audits

GRI guidelines Economic performance Environmental performance Social performance

Global Sullivan principles UN Global Compact

Governance and reporting

CR report Company website Annual report

International guidelines

CR Report Overview

In the pages to follow, we provide information and commentary on the key areas of our CR programme: • Material health and management; • Energy and carbon management; • Water stewardship; • Customer satisfaction; • Employment, health and safety and human rights; • Communications; • Environmental investments and costs; • Regulations and compliance

CR Report Overview GRI indicators listed below in bold have been assured by Deloitte. Material Health & Management This is a vital part of our sustainability journey. It involves ensuring that the materials we use are made of positively defined chemical ingredients which makes it safe for human health and the environment when the materials are in use and when they are being recycled. It underpins our goal to move towards the circular economy and always have a positive impact on human health and wellbeing as well as the planet. We report here on • EN 1: Materials everywhere used by weight or volume (tonne) • EN 2: Percentage of materials used that are recycled of rapidly renewable • EN 27: Carpet reclaimed per country excluding packaging materials (tonne) • EN 22: Total weight of waste by type and disposal method (tonne) This section can be found on pages: 35-39

Energy & Carbon Management This is also a crucial aspect of becoming a circular economy organisation as the transition to using more renewable energy sources for our business means that increasingly we will be able to be eco-effective: producing goods using green energy. That also means less carbon emissions. It is, we believe, the most sensible way to develop industry for the long-term so that we can produce more without adding to problems such as climate change and not being exposed to oil price hikes. We report here on • EN 3 & 4: Direct & indirect indirect energy (GJ) • EN 16: Total direct and indirect green-house gas emissions (tonne CO2) This section can be found on pages: 41-43

Water Stewardship Many people don’t realise that water stewardship is one of the key components of Cradle to Cradle® certification, which most observers link solely to recycling. However, the Cradle to Cradle® philosophy is about fulfilling wider social responsibility and environmental goals to ensure that a business has a deeply positive impact on the world around it. Water is a precious resource and therefore improving the ability to recycle this resource is a critical goal; secondly, we want to ensure that the water we send back nature is at least as clean if not cleaner than the water it goes into. This is about our commitment to the local community and the environment. We report here on • EN 8: Total water use by site (m3) and measured against sales (m3/sales €m) • EN 9: Water sources significantly affected by withdrawal of water • EN 10: Percentage and total volume water recycled (m3) • EN 21: Total water discharge by quality (BOD, COD and TSS) and destination (m3) This section can be found on pages: 45-47

Customer Satisfaction Desso regards customer satisfaction as one of the most critical KPIs. All its goals - driven by operational excellence and the innovation combination of creativity, functionality and Cradle to Cradle® - are dedicated to the need to add value for its customers with exciting and valuable products, contributing to health and wellbeing. Customer satisfaction is the marker that demonstrates whether the company is on target or not. We report here on • PR 5: Customer Satisfaction This section can be found on page: 49 32

Employment, Health & Safety & Human Rights Social responsibility is also a key part of the Cradle to Cradle® philosophy. We have always been committed to engaging our workforce and maintaining responsible goals towards employees and communities directly linked to the business and through the supply chain. This data shows where we are today. We report here on • LA 1: Total workforce by employment type, employment contract, and region. • LA 2: New employees hired and employee turnover. • LA 4: Percentage of employees covered by collective bargaining agreements. • LA 7: Rates of injury, lost days, and absenteeism, and total number of work-related fatalities. • LA 12: Percentage of employees receiving regular career development reviews. As part of Desso’s commitment to social fairness, we currently adhere to the Global Sullivan Principles and have made the decision to support the UN Global Compact network, starting in Q3 2014. We report here on: • HR 6: Operations and significant suppliers identified as having significant risk for incidents of child labour, and measures taken to contribute to the effective abolition of child labour. • HR 7: Operations and significant suppliers identified as having significant risk for incidents of forced or compulsory labour, and measures taken to contribute to the elimination of all forms of forced or compulsory labour. This section can be found on pages: 51-54

Communications Clear and transparent internal and external communications are key to Desso’s business and corporate responsibility strategies. Internally, communicating change to engage employees in the tough challenges ahead; external, to explain the reasons for the long term strategy embracing Cradle to Cradle®, connecting with suppliers, customers, the sustainability community, the media, governments, and investors. We report here on • PR 6: Communications This section can be found on page: 57

Environmental Investment and Costs These KPIs reflect our commitment to putting Cradle to Cradle® theory into practice and making the necessary investment in people, technology and processes. It includes the work we have done on getting 90% of our carpet tile products in the commercial sector Cradle to Cradle® certified. We report here on • EN 30: Total environmental expenditures and investments by type. This section can be found on page: 59

Regulations and Compliance This section sets out our performance in regard to meeting environmental regulations. We report here on • EN 28: Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environmental laws and regulations. • SO 8: Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations. • PR 9: Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services. This section can be found on page: 61 33

Material Health and Management

Today, most people spend 90% of their time indoors. This makes it imperative that we create healthy interiors. As a supplier of carpets to the commercial and consumer sectors, we believe it is our responsibility to develop products that contribute to a healthier living and working space. This vision is brought into action by the company’s focus on its three pillared innovation strategy (creativity, functionality and Cradle to Cradle®) and operational excellence, all underpinned by a relentless focus on our customers. Desso’s vision is to make products that contribute to people’s health and wellbeing. As part of our circular economy and Cradle to Cradle® commitment, material health plays a crucial role. If you want to have healthy products – you need to know what goes into your products. Therefore we have set ourselves the target to have all our products designed according to the Cradle to Cradle® design principles by 2020 and to achieve this it starts with being transparent about what we use in our materials.

Material Health and Management

This relates to the product design stage, creating products that are made of positively defined12) ingredients. From the start of Desso’s Cradle to Cradle® strategy in 2008, the Environmental Protection Encouragement Agency (EPEA), led by Cradle to Cradle® cofounder Dr. Michael Braungart, has helped us to assess the ingredients of our materials in accordance with this tough criteria. They are judged against a set of environmental and human health criteria and any ingredients that are classified as red (high risk) should be phased out and replaced. Chemical Profiling Methodology uses 24 human health, environmental health, and chemical class endpoints13) whose ratings are used in conjunction with the specific use scenario and related routes of exposure to generate an A, B, C, X rating for each material. Even though material health is not a standard GRI indicator, we plan to report on it in our 2014 report. There are many material components used in our products across our entire business (see figure 3). In 2013, 4.0% of the total material used by all of Desso’s business divisions combined contained recycled content - the same level as in 2011 and 2012. We are aiming to include more and more defined recycled content into our products as guided by our Cradle to Cradle® goals. According to this Figure 3: EN 1 Raw materials per type (tonne) Tonne

70.000 60.000 50.000 40.000 30.000 20.000 10.000 0 2009

2010

2011

2012

Heavy coating Latex compound Fibres and yarns Other materials Finished and semi-products

2013

concept, materials must consist of the optimal chemical ingredients (positively defined) in order to be safe for recycling. The process of analysing materials in this way and finding replacements for some of the ingredients is a long one. But we are determined to stick to our goals of recycling in a positive way for human health and the environment. In so doing, we have to accept it will take longer relative to some other organisations to build in large quantities of recycled content into our products. The proportion of recycled content is much higher in regard to specific product areas and Cradle to Cradle® material elements. For example, as discussed in more detail below, over half of our commercial carpets contain ECONYL® yarn which is now made of 100% regenerated nylon and our new DESSO SoundMaster® carpet has 80% recycled content (40% from recycled PET bottles and 40% from used fibres). For each of these materials Desso must continue to develop ways to increase the overall material purity. We work closely with our supplier Aquafil using its ECONYL® 100% regenerated nylon for the yarn. In recent years, they developed proprietary technology at their new regeneration plant in Slovenia to turn recovered post-consumer polyamide 6 carpet fibres into new polyamide 6 again and again. As their processes improved they went from from using 70% recycled content in in this product to 100%. The amount of ECONYL® material used in our

products has gone up from 771 tonnes in 2010 to just under 2,115 tonnes in 2013. Another key development was the launch of our DESSO EcoBase® backing in 2010, which contains a polyolefin based layer that is 100% safely recyclable in Desso’s production process. Carpet tiles with DESSO EcoBase® achieved a Cradle to Cradle® Silver Certificate for having reached a level where up to 97% of the materials are positively defined (Green or Yellow).

The process of analyzing materials in this way and finding replacements for some of the ingredients is a long one.

Our health & wellbeing innovations DESSO AirMaster® Specially designed carpet tiles that are eight times more effective at capturing and retaining fine dust in the indoor air than hard flooring and four times more effective than standard carpets14). They contain up to 100% regenerated ECONYL® nylon yarn and can come with Cradle to Cradle® Silver Certified DESSO EcoBase® backing. The health benefits of this product resulted in it becoming one of Desso’s top sellers with big markets in Europe and Latin America. DESSO SoundMaster® A carpet designed to reduce the damaging impact of unwanted noise inside buildings. Using this product can potentially lead to improvements in employee productivity in the workplace and improvements in the learning atmosphere in schools. It can also potentially contribute to faster recovery times for hospital patients. It offers better sound insulation up to +15 dB above the standard value15) and better sound absorption performance up to +0.15 (αw)16), equivalent to up to +100% improvement in comparison to standard carpet designs (αw value between 0.15 and 0.20). It also has a special backing designed to offer optimal sound absorption and insulation, made from 100% polyester (80% recycled: 40% from PET bottles and 40% from used fibres).

DESSO Light Reflection Master® Carpet designed to reflect back more light than the average flooring, thereby reducing energy usage for lighting – both an environmental and cost advantage. In fact, The use of DESSO Light Reflection Master® can increase the brightness of a room by up to 14% and can reduce lighting costs by up to 10%17). DESSO GrassMaster® A sports surface of 100% natural grass reinforced with Desso synthetic fibres (20 million of the artificial grass fibres are injected into the pitch). The DESSO GrassMaster® sports surface is used at major stadiums including the ‘football temple’ at Wembley and the home grounds of premier football teams such as Arsenal, Manchester United, Manchester City and Liverpool. ECONYL® regenerated yarn One of Desso’s yarn suppliers, invested in a depolymerisation plant to create its ECONYL® yarn made from 100% regenerated nylon. Currently, 50% of Desso’s carpet tiles contain up to 100% ECONYL® yarn18). Desso EcoBase® Carpets tiles with DESSO EcoBase® backing have achieved Cradle to Cradle® Silver Certification reaching a level where up to 97% of the materials are positively defined (this means that all the ingredients have been assessed

as either Green [optimal] or Yellow [tolerable] according to the Cradle to Cradle® assessment criteria). Light Transmissive Carpets In November 2013, Philips and Desso - global leaders in lighting and carpets respectively – launched a partnership agreement to offer solutions that combined LED lighting with light transmissive carpet. This innovation unlocked the potential of LED integration into surfaces and adds an exciting dimension to interior design and space planning. The solution will transform the way people interact with information and their environment in offices, hotels, conference centres and other public buildings. These LED light emitting carpets will provide many benefits in the areas of information, direction, inspiration and safety such as guiding people around buildings; and, enhancing the ambiance and atmosphere of the interior of buildings combining lighting with design and colour.

All footnote references can be found on page 76

DESSO EcoBase® carpet tile

Defined dyestuff PA 6 - PA 6.6 yarn Primary backing Precoat + stabiliser Polyolefin based layer with stabiliser Glass scrim Fleece

= DESSO EcoBase® secondary backing. (The polyolefin based layer with stabiliser accounts for minimum 96% (in weight) of the total secondary backing and this layer is 100% fully recyclable).

Material Reutilisation and Waste Reduction

Material Reutilisation As part of the Cradle to Cradle® certification process you must be able to identify the material streams that can be reutilised when the product is taken back after it has been used by the consumer or customer. These are fed back as nutrients either into the manufacturing process (technical sphere) or into the earth (biosphere). At the heart of the Cradle to Cradle® philosophy is the idea that ‘waste equals food’. Early in 2008, Desso started to take steps to ensure that carpets could be safely recycled. We launched our Take Back™ programme, where besides our own products, we also worked on scaling up the collection of all types of used carpet internationally, except for those products containing PVC - a material considered potentially harmful by C2C criteria.

2008 Desso launched its Take Back™ programme and one year later, developed an innovative separation technique called DESSO Refinity® through which Desso takes back old carpets (provided they don’t contain PVC) and separates the yarn and other fibres from the backing. Carpets are recycled using our innovative separation technique called Refinity®,

In the period from 2009 to 2013 we increased the annual amount of material taken back seven fold.(see figure 4) which separates the yarn and other fibres from the backing. After an additional purification stage, the yarn (with the required purity) is returned to the yarn manufacturer for the production of new yarn. In the entire process, some virgin material is needed to compensate for losses and process inefficiency. Today’s bitumen carpet backing is recycled as a valuable raw material for the road industry. All non-recyclable fractions will be used as secondary fuel in the cement industry. As already mentioned we believe it is critical that we develop positively defined materials for use and recycling, so that the impact on human health and the environment is always positive. This might mean it takes longer for us to develop the right procedures and materials to achieve this goal. For example, we must work closely with our suppliers to ensure we get positively defined materials from

the start. And this has to be looked at constantly in close co-operation with our R&D and at the purchasing departments to ensure we persuade our suppliers to help us achieve these goals. We aim to reach the goal of using 40% defined post-consumer recycled content in our commercial carpet tiles input in 2014 with a target to increase this to 75% by 2020. The idea of being eco-effective is a very important element of the Cradle to Cradle® philosophy. It shows that you can start with a better design in the first place instead of trying to minimise the impact of traditionally designed goods on the environment and on human health. In that light, we put a lot of stress on the early phases of product design to ensure the materials are set up to be healthy for use and recycling. To achieve this we must work closely with our suppliers, requiring them to sign an agreement that they will provide information on their ingredients. Starting the process is relatively ‘easy’ but the further you get the more difficult it becomes. The complexity of the supply chain, the need to optimise the technology for Take Back™ and recycling, the pressures of day to day business in one of the toughest business environments in decades reinforces the need of the leadership at Desso to maintain a relentless focus on our long term Corporate Responsibility goals.

product

Discarded fish nets

2013 We reported 4,968 tonnes of waste, 99.5% of which was non-hazardous.

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Carpet Tile Technical Cycle

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In Figure 5, a breakdown of the disposal of the waste can be found. This information is based on data provided to Desso by our waste disposal contractor. Our goal of driving down waste will continue throughout the business.

ay ing l er ck

In 2013, we reported 4,968 tonnes of waste, of which 99.5% was nonhazardous.

Waste Reduction Next to our overall Cradle to Cradle® strategy we also have a strict focus on reducing the amount of waste we currently generate. In line with the aims of Cradle to Cradle® the key goal is to turn waste into ‘food’ – as nutrients for either the technical or the biological sphere. We live on a planet of finite resources and need to develop ways to use the resources we extract in a more continuous flow, rather than having them dumped into landfill or burned in incinerators. This relates to waste in the material flow. We also need to be mindful of recycling waste generated in our plants and offices.

m ateria

Refinity® In 2009, Desso developed an innovative separation technique, Refinity® (see previous page). Those who send back carpets and participate in our programme receive a Take Back™ certificate as a guarantee that the material is recycled according to Cradle to Cradle® principles or at the best possible level.

Us ag e

n tio uc od r P

lier Supp

As Figure 4 shows, the percentage of reclaimed carpets in comparison with the products sold reduced slightly from 2.9% to 2.7% which can be attributed to a somewhat lower amount of material taken back.

All non-recyclable fractions will be used as secondary fuel in the cement industry.

Healthy Seas In 2014, Desso committed its support to a new environmental project related to protecting the oceans: ‘Healthy Seas, a Journey from Waste to Wear’19). The initiative aims to remove waste, in particular fishing nets for the purpose of creating healthier seas and recycling marine litter into regenerated yarn, some of which is being used to produce new Desso carpets. According to a report from the Food and Agriculture Organization of the UN (FAO) and the United Nations Environment Programme (UNEP), there are approximately 640,000 tonnes of abandoned fishing nets in the oceans, accounting for onetenth of all marine litter19). These discarded nets can remain in the sea for centuries continuing to catch or injure marine life such as fish, dolphins, turtles and marine birds (known as ghost fishing). Healthy Seas aims to provide a solution by bringing together businesses, NGOs, divers, fishermen and other stakeholders to recover the fishing nets and recycle them into Desso carpets, amongst others.

Figure 4: EN 27 Carpet reclaimed per country (excl. packaging) both from Desso and competitors

Figure 5: EN 22 Waste Tonne

6.000

Tonne

% of total sales (t)

1400

3,5%

1200

3,0%

1000

2,5%

800

2,0%

3.000

600

1,5%

2.000

400

1,0%

200

0,5%

0,0% 2009 CZ FR

2010

2011

2012

SC UK DE BE Reclaimed as % of sales (t)

2013 NL

5.000 4.000

1.000 0 2009 Recycling Incineration

2010

2011

2012

2013

Co-generation cement Other

Energy & Carbon Management

The Cradle to Cradle® goal regarding energy is described thus: “The Renewable Energy and Carbon Management category is a combination of these core principles of Cradle to Cradle® design: produce and use renewable energy and eliminate the concept of waste. Renewable energy displaces energy produced from fossil fuels, which emit carbon. Changing the quantity and quality of energy used affects the balance of carbon in the atmosphere and ultimately the climate. Ideally, emissions are simply eliminated, and renewable energy is produced in excess to be supplied to local communities. When emissions do occur, they are managed as biological nutrients and balanced with an equivalent uptake by natural systems20).”

Energy & Carbon Management

In line with the aims of Cradle to Cradle® and the circular economy, Desso’s leaders decided in 2008 to start increasing the amount of renewable energy the company used to power its production sites and warehouses in the Netherlands and Belgium. At that time the amount of renewable energy it used was close to zero. In 2013, Desso consumed 283,918 Gj energy in total for its production and warehousing locations in the Netherlands and Belgium (see Figure 6).

Waalwijk, the Netherlands. These solar cells generated 5% of Desso’s electricity use in 2013. As expected the move away from fossil fuels to renewable gradually brought down the amount of CO2 emissions22) In 2013, Desso reduced its CO2 emissions in absolute terms compared to 2012. In the period between 2007 and 2013,

Desso reduced its carbon emissions (indirect and direct) by 46%. The company experienced a carbon emissions increase in 2010 due to the acquisition of Enia, but has since then steadily reduced its total (direct and indirect) CO2 emissions*). Desso reports according to Scope 1 and 2 of the Green House Gas (GHG) Protocol and uses National (Dutch and Flemish) conversion factors23).

Our long-term aim is to make the shift gradually to drawing 100% of our energy from renewable sources (purchased and self-generated) by 2020. This way the company would ensure that it contributes to reducing carbon emissions and the associated climate change threat. This route, also known as eco-effectiveness, gives businesses the opportunity to increase production while respecting the planet. No need for cutting back on fossil fuels to reduce greenhouse gas emissions. By 2012, Desso had completely switched its sourcing of electricity over to green electricity by means of buying green certificates of hydropower electricity generated in the Alps21) (see Figure 7). This meant that 25% of its energy usage (that related to electricity) was renewable. The remaining 75% came from natural gas. In 2011, Desso also invested in the installation of 25,000 m2 solar panels for its factory in Dendermonde, Belgium and

Figure 6: EN 3 & 4 Direct & Indirect Energy Consumption by location

Figure 7: EN 3 & 4 Direct and indirect Energy Consumption

400.000

350.000

300.000

250.000

200.000

150.000

100.000

50.000

25%

75%

0 2009

2010

Dendermonde Waalwĳk

Figure 8: Renewable energy Renewable energy / total consumption (%) 2013

2011

Goirle Waasmunster

2012

2013 Heerlen

2009

2010

2011

2012

2013

Electricity (purchased) Gas Electricity (generated-sold) Heating oil

Non-renewable Renewable (purchased + generated)

Desso reduced its carbon emissions (indirect and direct) by 46% between 2007 and 2013

All footnote references can be found on page 76

Figure 9: EN 16 Climate impact (total tonne CO2)

CO2

CH4

N2O

HFCs

PFCs

SF6

18.000 16.000

SCOPE 2 INDIRECT

14.000

SCOPE 1

Purchased electricity, steam, heating & cooling for own use

12.000

DIRECT

SCOPE 3

10.000

INDIRECT Purchased electricity, goods & services

8.000 6.000

Leases assets

Capital goods

4.000

Employee commuting

Fuel & energy related activities

2.000

Transportation & distribution

0 2009

2010

Tonne CO2

2011

2012

2013

Company facilities

INDIRECT

Investments Company vehicles

Business travel

Franchises

Processing of sold products

Leased assets Use of sold products

Waste generated in operations

UPSTREAM ACTIVITIES

SCOPE 3 Transportation & distribution

REPORTING COMPANY

End-of-life treatment of sold products

DOWNSTREAM ACTIVITIES

Water Stewardship

Desso’s has long been committed to excellence in its water stewardship but more recently has also been guided as well by the Cradle to Cradle® philosophy which includes this element in its certification process. In line with these principles, the company’s long-term goal is to ensure that by 2020 all the water discharged from Desso’s plants is as clean as or cleaner than the source it is discharged upon.

Water Stewardship

Desso treats water as a valuable resource by applying effective management and use strategies. In carpet and sports pitches manufacturing, large quantities of water are used for dyeing, drying, cleaning and other processes; 98% of the water intake occurs at Desso’s Dendermonde plant in Belgium (see figure 10). In 2013, 93% of the water intake was drawn from groundwater and 7% from municipal water. Desso has decreased its water intake from 1,512 to 1,336 per m3 to € Sales 2013 in the period 2009 to 2013 (see figure 10). Desso’s leaders believe they have a duty to ensure that the company preserves as much as possible of this precious natural resource. To meet this challenge Desso has installed water treatment equipment at Dendermonde to recycle its water. Desso is on track to reach its target of 30% recycled water use by 2020. In five years, it has increased the amount of water it recycles from 11% in 2009 to 20% in 2013. In 2013, the special ozone treatment resulted in a 68 million litre saving on fresh water. There are tough quality controls in the Netherlands and Belgium in terms of water discharged back into local sources and Desso in Dendermonde has more than 30 years’ experience of developing best practices to meet these requirements.

Dendermonde (DDM) As explained above, since 1974, this site has managed an on-site biological water purification process and since 2006 it has added an ozone treatment process which enables Desso to discharge water of a higher quality than required by local regulations. The water is discharged into a local surface water stream which flows into the Schelde or Dender rivers. Goirle Before discharging its water into the local sewers, the site chemically pre-treats the waste water. Then once discharged it is further biologically treated by the local municipality. This water ends up in the Dommel Basin. Waalwijk (WW) This site discharges most of its waste water directly into the sewer system because it is sanitary waste water. The rest of it comes from the pre-coating process and contains some latex compounds which are sent back to the latex supplier (Synthomer) for chemical and biological treatment. Heerlen This sites uses water mainly for sanitary purposes and it is discharged directly into the sewer system to be treated by the local municipality. As mentioned on page 21, this site was subsequently closed down in 2012 as part of the post-acquisition reorganisation and integration of ENIA’s operations into Desso’s main facilities.

Figure 10: EN 8 Total water use per site (m3)

Desso has increased the amount of water it recycles from 11% in 2009 to 20% in 2013.

In 2013, the factory in Dendermonde biologically treated 257,879 m3 waste water. The quality of the water exceeded and improved on local standards in the following areas (see figure 11): • The Chemical Oxygen Demand (COD) in Desso’s water has been no more than 52 mg/l, while the local standard sets 160 mg/l as the ceiling. (COD indirectly measures the amount of organic compounds in water). • The Biological Oxygen Demand (BOD) has been no more than 6,3 mg/l, while the local standard is 25 mg/l. (BOD is the amount of dissolved oxygen needed by aerobic biological organisms in a body of water to break down organic material present in a given water sample at certain temperature over a specific time period.) • And the Total Suspended Solids (TSS) has been no more than 2 mg/l; while the local standards ask for 60 mg/l. (TSS is a water quality measure of the weight of particles obtained by separating them from a water sample using a filter).

Figure 11: EN 21 Total water discharged by destination

400.000

2.000

350.000

1.800 1.600

300.000

1.400

350,000 300,000 250,000

250.000

1.200

200.000

1.000

150.000

800

150,000

600

100,000

100.000

400

50.000

200 0

0 2009 2010 2011 2012 2013 Dendermonde Waalwĳk Heerlen Waasmunster

Goirle 3 m / M€

200,000

50,000 0 2009

2010

2011

2012

2013

Sanitay water discharged on sewer (WW and Goirle) Untreated process water discharged in the sewer (Goirle) Process water purfied externally (WW) Physico-chemically treated process water discharged on sewer (Goirle) Purified process water discharged on surface water (DDM)

Furthermore, in 2011 Desso comissioned a study on the groundwater extraction by its Belgian facility, Desso Dendermonde NV. The study carried out by ‘Vision on Technology (VITO) found that Desso’s water extraction in Dendermonde:’ • Did not influence the permanent groundwater storage of the surrounding area. • That the nature conservation area was not influenced by the facility’s direct intentional operations. • That there was no risk from the facility’s direct operations to the immediate surroundings. In addition, it found that the risk that the surrounding ecosystem might be harmed was minimal.

In 2013, the special ozone treatment resulted in a 68 million litre saving on fresh water.

Customer Satisfaction

At Desso, we say â&#x20AC;&#x2DC;The Floor is Yoursâ&#x20AC;&#x2122; to underline the fact that we maintain a relentless focus on our customers at all times. It underpins everything we do. We know that our success depends on it. With strong expansion and growth plans, we know we need to ensure we can deliver on all levels: innovation, operational excellence, and customer service. In todayâ&#x20AC;&#x2122;s fast moving market, customers expect the best in creativity, functionality and environmental responsibility as well as competitive prices. Uppermost in their minds will be getting a first class service. In this light, we aim to meet order requests in a fast and efficient manner and bring our people and operational resources behind that goal. In all our businesses, we always managed to deliver over 85% of our orders to the promised times. In many periods of the year we raised the bar to over 92%. But we will continue to work on improving these performances looking for higher levels on a consistent basis.

Employment, Health & Safety and Human Rights

As an employer we consider it one of our top priorities to act responsibly towards our staff, providing the best environment for them to develop and excel in their work and to promote their health and wellbeing. This is one of our commitments as a responsible business. We have built a high-performance culture in a global environment throug our shared values and target-oriented leadership. We rely on all our employees to enable us to achieve our ambitious targets. It also ensures that we make use of the strength of the organisation, drive developments in the right direction, maintaining the momentum and correctly allocate our resources. With strong expansion and growth plans, we know we need to ensure we can deliver on all levels: innovation, operational excellence, customer service and so on. We have a common sense approach to working and encourage people to be selfstarting.

Employment and Employee Development

Talent Management To drive the best results we believe in encouraging a high-performance culture and reward people accordingly. Since 2008, we have used the Hay Group Talent Management system to ensure we have a structured strategy for the entire business. Performance reviews take the form of coaching to encourage personal development, motivation and goal fulfilment. These take place twice per year. All reviews are logged in an online database which was also introduced in 2008. In 2013, the number of employees receiving a performance review was 55% of the total workforce. From that 40% female and 60% male. In 2014, we want to extend that to the entire workforce. All new employees take part in an extensive and tailor-made introduction programme. Next to that, individual training needs are identified on an ongoing basis during the performance reviews and training in the company’s Code of Conduct will continue for all new employees Of Desso’s 852 employees in 2013, some 93% were on permanent contracts and 84% employed full time. The split between male and female employees was 71% and 29% respectively (see Figure 12).

Figure 12: Workforce Desso 20 31 89

852

345

Netherlands Belgium Total DE, FR & UK Total other Europe Other regions

367

For people leaving and joning Desso, the 2013 split was as follows:

Key objectives of Be1:

Leavers: 74% male, 26% female Newcomers: 73% male, 27% female Most employees are also covered by collective bargaining arrangements (83% in 2013). Where this is not the case, it is due to the local regulatory environment or the fact that Desso does not employ sufficient numbers in that region to qualify for collective bargaining status. Salary and reward A reward system that recognises our employees’ performance and stimulates their development is key to our future success. We aim to provide competitive salaries and rewards to attract the best talent and maintain their motivation and focus. BE1 programme We believe in encouraging continuous improvement in all areas of our work from the factory floor to the sales and marketing offices. Only by examining our employee’s performance all the time and looking for ways to improve it can they take the next step. We provide a structure for this through our BE1 programme. BE1 is an organisation wide programme to ensure the implementation of the ‘Blueprint for the Future’

Customer focus in everything we do Quality, quality, quality! be your own quality owner Speak up think along with us Communication if only Desso knows what Desso knows

Work environment and health & safety Relentless in our desire to satisfy our customers, we make it a priority to continuously improve our operational performance. We must maintain the best capabilities to deliver what our customers need whenever they want it, however they need it and wherever they are. It’s about having the mindset to deliver fast, flexible and focused customer solutions that are flawlessly executed and uphold the superior quality standard, which Desso has become known for. The business environment is changing fast all the time and we must be able to adapt to the ever changing needs of our clients. Our internal operations philosophy is centered around three key areas: Safety, Quality and Quantity. These criteria (in order of importance) form the backbone of how we manage our day-to-day operations. Six core values underpin our culture. All employees are encouraged to work according to them: Customer focus We are 100% committed to doing what is right for our customers. We want them to keep coming back and to recommend us to others. To make the point as upfront as possible, we made our brand tagline, ‘The Floor is Yours’, emphasising the fact that we put our customer’s wishes at the centre of our operations and thinkingevery second of the day. Common sense We prefer to take the simplest and fastest route to achieve our objectives and encourage all our employees to use their common sense drawn from their own opinions to deliver successful results. It is about finding the best solutions and ideas that will take us forward in the quickest possible time. We rely on the wealth of experience and knowledge of our employees. Imagine: ‘If only Desso knows what Desso knows’ Integrity We believe that trust is a fundamental requisite of good business. That is why we regard integrity as a critical core value. It’s about being open, honest and respectful at all times with our colleagues, with our customers and with all our stakeholders. Entreprenurial spirit and ambition We never rest on our laurels. Business can be tough and you must adapt constantly in a fast changing world,

always meeting your customer’s needs and spotting opportunities for new markets. Entrepreneurs are adaptive, risktaking and hungry for success. They are brilliant at spotting new opportunities and developing talent. At Desso, we believe everyone can develop their own entrepreneurial spirit. That is why we have made it a core value. We combine this with the value of ambition because we expect our people to follow through on their best ideas and make them happen. Ownership and empowerment The best way to engage our employees is to trust them to make the right decisions. We call this Ownership & Empowerment and it means that every single employee at Desso is responsible for achieving the best results, for drawing on and strengthening their skills, for collaborating successfully with their colleagues, for developing new ideas and solutions and for contributing to the drive, energy and creativity of the overall organisation. CSR and Cradle to Cradle® This includes our commitment to developing outstanding products that are environmentally responsible and contribute to health and wellbeing. It embraces the five core areas of Cradle to Cradle®: material health, material reutilisation, renewable energy, water stewardship and social fairness. Desso is dedicated to contributing to people’s health and wellbeing through our creativity and product innovation. This vision is just as important internally. In our plants, offices and wherever our staff work, we aim to make absolutely sure we are adhering to the most stringent and up to date methods for providing the most effective and positive work environment and promoting health and safety. Health and Safety We are committed to eliminating hazards from the workplace, providing employees with a safe and healthy work environment and complying with all such applicable occupational safety and health laws and standards. Employees are required to comply with all such laws and related Desso policies. Employees are also required to appropriately report any adverse health or unsafe conditions, hazards, broken equipment or machinery, and accidents.

For Desso, health and safety has always been a top priority and an area where we aim to continuously improve. The most important actions around this topic are: • Equipment and work station risk analysis to prevent injury or accident. • Provision of safe access to and from all places of work. • The safe storage of materials as directed by company policy. • Sufficient signaling/routes/lighting to help show people where to go in case of evacuation. • A health and safety committee of 40 volunteers kept up to date on methods and evacuation techniques. • The right of every employee to report any unsafe working area, situation, environmental incidents or ergonomic problems. This reporting is analysed daily by operations and by the health & safety committee and if necessary corrected. • Environmental and safety training course for all new employees and onsite contractors. In 2013, Desso’s injury rate in Belgium and the Netherlands was 1.524) below the industry benchmark of 4.44 (2012 Belgium) and rate of lost days25) – defined as days lost due to a worker’s inability to perform the work – was at 56.4 in 2013 against a benchmark26) of 96 (Belgium, 2012). People absent due to illness can be a great drain on productivity. However, at Desso the absentee rate27) has been consistently better than the industry benchmark28) in both the Netherlands and Belgium. In the Netherlands the rate was 3.8 to an industry benchmark of 4.9 and 3.0 in Belgium against a benchmark of 4.77 in 2012.

We want employees to make their own decisions and take control of their area of the business. All footnote references can be found on page 76

Human Rights & Code of Conduct

We adhere to the Global Sullivan Principles, with its commitment to human rights and fair labour practices. Social Fairness is one of the five elements of the Cradle to Cradle® philosophy we have been following since 2008. It covers all areas from ensuring high health and safety standards in our offices and plants to trying to ensure that no one in our supply chain around the world has any connection with the use of child labour or enforced labour. Desso has made the decision to support the UN Global Compact network, an initiative that promotes responsible corporate practices in the areas of the environment, labour, human rights and anti-corruption. We will apply for membership of UN Global Compact in Q3 of 2014 and will subsequently report on our progress via the annual ‘Communication on Progress (COP). Desso requires suppliers to sign a Supplier Declaration which covers the Global Sullivan principles (including child- and forced labour) as well as filling in a self-assessment form on social, environmental and quality aspects. .

Compact and in line with Cradle to Cradle® requirements). Therefore, risks and impacts in the supply chain need to be further identified and where necessary addressed.

other countries where Desso has sales offices child labor is very unlikely to occur and would be recognised by central HR in the Netherlands. All of these areas are addressed in Desso’s Code of Conduct.

Desso has appointed an external company to provide us with the tools to manage this process, according to the following key steps:

Code of Conduct We employ hundreds of people globally and need to ensure that every single employee and all those who work for us as contractors adhere to our code of conduct rules. Operating honestly, openly and with integrity is of key importance to us. Showing respect to other culture, following the rules and regulations in all locations, being a good business these are non-negotiable behaviours.

1. Supply chain mapping 2. Supplier engagement 3. Risk assessments 4. Auditing 5. Driving improvements 6. Monitoring and reporting We will cover this topic in more detail in our 2014 GRI report, as the system will have been implemented by then. Desso’s manufacturing locations are in the Netherlands and Belgium with sales agencies around the world. HRmanagement is centralised and located in the Netherlands and Belgium. In the Netherlands and Belgium child labour and forced labour is prohibited by law. In

The actions of Desso and its directors, managers, officers, employees, agents, consultants and other representatives must be in compliance with applicable laws, Desso’s values and Code of Conduct and its policies. When there is any doubt as to the lawfullness of any proposed activity, we advise our employees to seek advice from the Human Resources department.

Currently, 74% of product related invoice amount comes from suppliers that have signed a product declaration. In 2014, Desso plans to improve further its social supply chain management system, covering these issues. Desso’s objective is to develop a transparent and responsible supply chain (in the context of UN Global

The Ten Principles29) The UN Global Compact’s ten principles in the areas of human rights, labour, the environment and anti-corruption are as follows: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Businesses should support and respect the protection of internationally proclaimed human rights. They should make sure that they are not complicit in human rights abuses. Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining. They should uphold the elimination of all forms of forced and compulsory labour. They should uphold the effective abolition of child labour. They should uphold the elimination of discrimination in respect of employment and occupation. Businesses should support a precautionary approach to environmental challenges. They should undertake initiatives to promote greater environmental responsibility. They should encourage the development and diffusion of environmentally friendly technologies. Businesses should work against corruption in all its forms, including extortion and bribery.

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Communications

At Desso, we are committed to clear, open and honest communications that enable us to achieve our strategic objectives. Reinventing a business means having to win the hearts and minds of a multitude of stakeholders, both internally and externally. For these reasons, Desso believes that robust and open communications is one of the fundamental drivers of its long-term success. It is equally important that we make sure our communications is in line with our broad CSR objectives, linked to Cradle to Cradle速 and the circular economy. That is why we want our communications to adhere to the GRI guidelines in accordance with PR 6 as a key performance indicator.

Environmental expenditures and investment

Since 2008, Desso began to incorporate Cradle to Cradle® objectives into its long-term sustainability plans with the support of the Cradle to Cradle® consultancy EPEA based in Hamburg. To pursue this pioneering approach the company had to spend considerable money and time developing new processes and starting to change the company accordingly. In the process its prevention and environmental management costs increased by 38% from 2009 to 2013. It had hired more personnel for this part of its sustainability project as well as ways to improve operations by investing more capital on R&D. As Figure 13 also shows, from 2009 to 2013 waste disposal costs decreased by 32%. However, approximately 18% of this decrease can be attributed to the release of a previously recognised provision. In 2013, 23% of the expenditures were related to waste disposal and remediation costs and 77% were related to environmental prevention costs and investments.

Figure 13: EN 30 Protection expenditures and investments by type (€) €

3.500.000 3.000.000 2.500.000

Total environmental protection expenditures

2.000.000

Waste disposals, emissions treatment and remediation costs

1.500.000

Prevention and environmental management costs

1.000.000 500.000 0 2009

2010

2011

2012

2013

Regulations and Compliance

Results 2009-2013 Over the last four years (2009-2013) Desso has not received any fines or nonmonetary sanctions for non-compliance with any general laws and regulations, environmental laws or regulations, or laws and regulations concerning the provision and use of products and services.

Scope and reporting principles Desso operates its own vertically integrated production process in its factories in the Netherlands and Belgium. All stages of Desso’s carpet production are managed over these three sites: • Waalwijk, The Netherlands (carpet tiles) • Goirle, The Netherlands (finishing, tufting) • Dendermonde, Belgium (carpets and artificial grass) This set-up is crucial in enabling us to monitor quality as well as maintain flexibility in the support of our customer needs. Scope for reporting: 2007: Waalwijk, Dendermonde and Waasmunster 2008: Waalwijk, Dendermonde and Waasmunster 2009: Waalwijk, Dendermonde - Waasmunster closed 2010: Acquisition Enia: Waalwijk, Dendermonde, Goirle, Heerlen and Soest 2011: Waalwijk, Dendermonde, Goirle, Heerlen and Soest 2012: Waalwijk, Dendermonde, Goirle 2013: Waalwijk, Dendermonde, Goirle

Dealers Sales Offices / Sales Representatives / Showrooms Warehouses Both

Reporting Principles: DESSO’s Corporate Responsibility Report for 2013 complies with the Global Reporting Initiative guidelines (Version G3.1). 63

Assurance report Independent limited assurance report on the Key Performance Indicators included in the ‘Corporate Responsibility 2013’ report of Desso Holding B.V. To the stakeholders of Desso Holding B.V. Engagement and responsibilities We have performed a limited assurance engagement on the 13 Key Performance Indicators (kpi’s) as listed in the GRI content index of the ‘Corporate Responsibility 2013’ report (hereafter ‘the report’) of Desso Holding B.V., Waalwijk on page 70-74 where ‘yes’ is stated in the column Assurance 2013. In addition we have reviewed whether the report 2013 has been prepared in accordance with the G3.1 application level B Guidelines of the Global Reporting Initiative (GRI) with the objective to issue an assurance report that provides limited assurance. Conclusion On the basis of the procedures we have performed nothing has come to our attention that causes us to believe that the assurance kpi’s as included in the report 2013 have not been prepared in all material respects in accordance with the accounting policies applied by Desso Holding B.V. The Sustainability Reporting Guidelines (G3.1) of the Global Reporting Initiative application level B. Comparative figures We did not perform any assurance procedures on the key performance indicators other than for the year 2013. Our work as a basis for our conclusion Our work was carried out by a multidisciplinary team of experts in assurance and Corporate Responsibility. It is our responsibility to issue an assurance report on the report. We have conducted our examination in accordance with international law, including Standard NV COS 3410N “Assurance Engagements relating to Sustainability Reports”. This requires that we meet the applicable ethical requirements. The nature and scope of our work was more limited than an engagement to obtain reasonable assurance and can only result in a conclusion that provides limited assurance that the report is not materially misstated. This provides less assurance than an audit. Our work performed mainly consisted of the following procedures: • Reviewing the processes for data collection and processing of the other information, including the aggregation of data to information as included in the report; • Performing analytical procedures (analytical reviews);

• •

Reviewing the report on the basis of internal and external documents, also by establishing in detail that the report corresponds with the information in the relevant underlying documents; Assessing the company’s stated application level B according to GRI’s guidelines.

The report includes forward-looking information in the form of objectives, expectations and ambitions. It is inherent in such information that its realization is uncertain. For that reason we do not provide assurance on any forward-looking information. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Standards applied by Desso Holding B.V. The management of Desso Holding B.V. is responsible for the preparation of the report and the information included in it in accordance with the Sustainability Reporting Guidelines (G3.1 ‘application level B’) of the Global Reporting Initiative. This responsibility includes the design, implementation and maintenance of a system of internal controls relevant for preparing the report free from material misstatements due to fraud or error, the selection and application of acceptable reporting criteria for corporate sustainability reports, and the preparation of estimates that are reasonable given the circumstances. Rotterdam, 24 June 2014 Deloitte Accountants B.V. Signed on the original: P.J. Segers

GRI Application Level Statement

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GRI index DESSO’s Corporate Responsibility Report for 2013 complies with the Global Reporting Initiative guidelines (Version G3.1). The following index shows where information can be found, with links to the CR report. Deloitte has conducted a limited assurance review on a selection of KPI’s and the GRI application level B+ of Desso’s Corporate Responsibility report 2013. Report References: CR = Corporate Responsibility Report AR = Annual Report 2013

Report Status: Reported Partially reported Not reported

Indicators

Report References

Report Status

Assurance 2013*

STRATEGY AND ANALYSIS

1.1

Foreword: CEO Alexander Collot d’Escury

CR: 4-17

1.2

Sustainability-related impacts, risks and opportunities

CR: 15-16

CR: 21

yes

ORGANIZATIONAL PROFILE

2.1

Name of the organization

2.2

Primary brands, products and/or services

CR: Cover, 37

2.3

Operational structure

CR: 3, 19-21

2.4

Location of headquarters

CR: 78

yes

2.5

Countries where the Group operates

2.6

Nature of ownership

2.7

Markets served

2.8

Scale of the reporting organization

2.9

Significant changes during the reporting period

2.10

Awards received during the reporting period

REPORT PARAMETERS

3.1

Reporting period

3.2

Date of most recent report

CR: 3, 62, 78-79

CR: 19-21

yes

CR: 62, 78-79

CR: 3, 12

yes

CR: 21

yes

CR: 23-25

CR: 28

yes

N/A

yes

3.3

Reporting cycle

CR: 27-28

yes

3.4

Contact persons

CR: Back Cover

yes

Scope and boundary of report 3.5

Process for defining report content

CR: 27-28

3.6

Boundary of the report

CR: 63

yes

3.7

Specific limitations on the scope or boundary of the report

CR: n/a

yes

3.8

Reporting of entities that can affect comparability from period to period and/or between

AR: 69

yes

CR: 28

n/a

yes

organizations 3.9

Data-measurement techniques and the bases of calculation

3.10

Explanation of the reasons for and effect of any restatements of information

* The assurance procedures on the (key) performance indicators are limited to the year 2013, for more information we refer to the independent assurance-report on page 64

Indicators 3.11

Significant changes in the scope, boundary or measurement methods

Report References

Report Status

Assurance 2013*

n/a

yes

Contents according to GRI 3.12

GRI Index

CR: 31-33, 70-74

yes

3.13

Policy and current practice regarding external verification

CR: 27-28, 70-74

yes

GOVERNANCE, COMMITMENTS AND STAKEHOLDER RELATIONSHIPS

4.1

Governance structure of the organization

CR: 19-21

yes

4.2

Chairman’s position

CR: 19-21

yes

4.3

Number of independent, non-executive Board members

CR: 21

4.4

Mechanisms for shareholders and employees to provide recommendations or directions to

CR: 27-28

CR: 51-54

the Board or management 4.5

Linkage between compensation to Board members, senior executives and managers and the organization’s performance in terms of financial and non-financial targets

4.6

Processes in place for the Board to ensure that conflicts of interest are avoided

CR: 51-54

4.7

Processes for determining the qualifications and expertise of Board members

CR: 19-21

4.8

Statement of mission, values, code of conduct and principles relevant to sustainability

CR: 51-54

CR: 19-21

CR: 11-13

performance, and their status 4.9

The Board’s procedures for overseeing how the Board addresses and handles financial, environmental and social issues, and how well these are implemented

4.10

Processes for evaluating the Board’s performance, particularly with regard to financial, environmental and social issues

Commitments to external initiatives 4.11

Explanation of how the Group addresses the precautionary approach

4.12

Externally developed economic, environmental and social charters, principles or other initia-

CR: 20

CR: 9, 27-28

CR: 15-16, 23-25

tives to which the Group subscribes or endorses 4.13

Memberships in associations (such as industry organizations) and/or international advocacy organizations

Stakeholder engagement 4.14

List of stakeholder groups engaged by the Group

CR: 23-25, 27-28

4.15

Basis for identification and selection of stakeholders

CR: 23-25, 27-28

4.16

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

CR: 23-25, 27-28

CR: 11-12

CR: 12 / AR: 63-93

yes

stakeholder group. 4.17

Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to these

MANAGEMENT APPROACH AND PERFORMANCE INDICATORS

ECONOMIC PERFORMANCE INDICATORS Disclosure on Management Approach Economic Performance EC1

Direct economic value generated and distributed

EC2

Financial implications and other risks and opportunities due to climate change

EC3

Coverage of the organization’s defined-benefit plan obligations

EC4

Significant financial assistance received from government

EC5

Range of ratios of standard entry level wage compared to local minimum wage at significant

no AR: 74, 85

locations of operation Market presence 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 locations of significant operation

Indicators

GRI Report

Report Status

Assurance 2013*

Indirect Economic Impacts EC8

Development and impact of infrastructure investments and services provided primarily for

public benefit EC9

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

impacts

ENVIRONMENTAL PERFORMANCE INDICATORS Disclosure on Management Approach

CR: 8-9,14-15,35-47,61

Material EN1

Materials used by weight or volume

CR: 36

yes

EN2

Percentage of materials used that are recycled input materials

CR: 36

yes

EN3

Direct energy consumption by primary energy source

CR: 42

yes

EN4

Indirect energy consumption by primary energy source

CR: 42

yes

EN5

Energy saved due to conservation and efficiency improvements

EN6

Initiatives to provide energy-efficient or renewable energy-based products and services, and

Energy

reductions in energy requirements as a result of these initiatives during the reporting period EN7

Initiatives to reduce indirect energy consumption and reductions achieved

Water EN8

Total water withdrawal by source

CR: 46

yes

EN9

Water sources significantly affected by withdrawal of water

CR: 46

EN10

Percentage and total volume of water recycled and reused

CR: 46

yes

Biodiversity EN11

Location and size of land owned, leased, managed in, or adjacent to, protected areas and

areas of high biodiversity 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, andu 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

CR: 43

yes

EN17

Other relevant indirect greenhouse-gas emissions by weight

EN18

Initiatives to reduce greenhouse gas emissions and reductions achieved

EN19

Emissions of ozone-depleting substances by weight

EN20

NO, SO, and other significant air emissions by type and weight

EN21

Total water discharge by quality and destination

CR: 46

yes

EN22

Total weight of waste by type and disposal method

CR: 39

yes

EN23

Total number and volume of significant spills

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 Products and Services EN26

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

mitigation EN27

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

CR: 39

yes

Indicators

GRI Report

Report Status

Assurance 2013*

Compliance with laws and regulations EN28

Monetary value of significant fines and total number of non-monetary sanctions for noncom-

CR: 61

pliance with environmental laws and regulations Transport EN29

Significant environmental impacts of transporting products and other goods and materials

used for the organizationâ&#x20AC;&#x2122;s operations, and transporting members of the workforce Overall EN30

Total environmental protection expenditures and investments by type

CR: 59

yes

CR: 51-54

CR: 52

PERFORMANCE INDICATORS FOR LABOR PRACTICES AND DECENT WORK Disclosure on Management Approach LA1

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

LA2

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

LA3

Benefits provided to full-time employees that are not provided to temporary or part-time

employees, by major operations Labor/management relations LA4

Percentage of employees covered by collective bargaining agreements

LA5

Minimum notice period(s) regarding significant operational changes

CR: 52

no no

Occupational health and safety LA6

Percentage of workforce represented in formal work-environment committees

LA7

Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-

no CR: 53

yes

related fatalities by region and by gender LA8

Action program relating to serious diseases

LA9

Health and safety topics covered in formal agreements with trade unions

LA10

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

LA11

Programs for skills management and lifelong learning

LA12

Percentage of employees receiving regular career development reviews

LA13

Composition of governance bodies and breakdown of employees per employee category

CR: 52

no no

according to gender, age group, minority group membership, and other indicators of diversity LA14

Ratio of basic salary of men to women by employee category

PERFORMANCE INDICATORS FOR HUMAN RIGHTS Disclosure on Management Approach

CR: 51-54

Investment and procurement practices HR1

Percentage and total number of significant investment agreements that have undergone

human-rights screening HR2

Percentage of significant suppliers that have undergone human-rights screening, and

actions taken 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. HR4

Total number of incidents of discrimination and corrective actions taken

Freedom of association and collective bargaining HR5

Operations identified in which the right to exercise freedom of association and collective

bargaining may be at significant risk and actions taken HR6

Operations identified as having significant risk for incidents of child labor and actions taken

CR: 51-54

HR7

Operations identified as having significant risk for incidents of forced labor and actions taken

CR: 51-54

HR8

Percentage of security personnel trained in the Companyâ&#x20AC;&#x2122;s policies or procedures con-

cerning apects of human rights relevant to operations

Indicators HR9

GRI Report

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

Report Status

Assurance 2013* no

taken

PERFORMANCE INDICATORS FOR SOCIETY Disclosure on Management Approach S01

CR: 51-54, 61

Programs and practices that assess and manage the impacts of operations on society/

no no

communities S02

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

S03

Percentage of employees trained in anti-corruption policies and procedures

S04

Actions taken in response to incidents of corruption

S05

Public policy positions and participation in lobbying

S06

Total value of financial and in-kind contributions to political parties, politicians and related

2013: value is â&#x201A;Ź0

2013: none

CR: 61

CR: 49, 57, 61

institutions by country Anti-competitive behavior S07

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

S08

Monetary value of fines and number of sanctions for noncompliance with laws and regulations

PERFORMANCE INDICATORS FOR PRODUCTS Disclosure on Management Approach PR1

Life-cycle stages in which health and safety impacts of products and services are assessed

and the percentage of products and services 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

Product and service labeling PR3

Type of product and service information required by procedures, and percentage of pro-

ducts and services subject to such information requirements PR4

Total number of incidents of non-compliance with regulations and voluntary codes con-

cerning product and service information and labeling, by type of outcomes PR5

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

CR: 49

CR: 57

satisfaction PR6

Programs for adherence to standards and voluntary codes concerning market communications

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

PR8

Total number of substantiated complaints regarding breaches of customer privacy ad losses

2013: none

CR: 61

of customer data PR9

Monetary value of fines for noncompliance with laws and regulations concerning products and services

Tweed 7841 75

References

External sources used for calculation of market share date include: BMW, Palmer, Fedustria, UFTM, real estate agencies, architectural billings and supplier information (yarn and other components). Internal data is based on local management estimates. 2) 50% relates to the sales volume of products available with ECONYL® yarn in the commercial carpet tile collection. The total % of recycled content varies per product and per colour. Whether a colour contains ECONYL® yarn and the exact % thereof can be found on our website: www.desso.com. 3) Janez Potočnik, Virtuous Circles, Opening session of Green Week 2014, 3 June 2014, European Commission (SPEECH/14/426) 4) Towards the circular economy: Accelerating the scale-up across global supply chains, Ellen MacArthur Foundation/Mckinsey, page 10. 5) http://www.ellenmacarthurfoundation.org/business/reports/ 6) http://www.ellenmacarthurfoundation.org/news/project-mainstream 7) http://www.un-redd.org/aboutredd/tabid/102614/default.aspx 8) http://www.iucn.nl/en/themes/greening_companies/platform_bee/ 9) http://www.ellenmacarthurfoundation.org/business/ce100 10) Ioannis, I., & Ody-Brasier, A., Desso – Taking the Sustainability Challenge, London Business School, November 2011. Available online at: http:// www.ecch.com/educators/ 1)

Howard, M., Jeanrenaud, S., & Correia, F.,Desso and the Cradle-to-Cradle® Challenge: Rethinking Carpet as a Closed-loop Supply System, Exeter Business School, September 2012. Available online at: http://www.ecch.com/educators/ 12) Positively defined = all ingredients have been assessed as either Green (optimal) or Yellow (tolerable) according to the Cradle to Cradle® assessment criteria. As described in Cradle to Cradle® CertifiedCM Product Standard Version 3.0. 13) C2C Products Innovation Institute. Online at: http://www.c2ccertified.org/product_certification/criteria/material_health/v3_0 14) Based on tests performed by the independent German test institute, GUI, with DESSO AirMaster® carpet versus standard PVC hardfloor and versus standard structured loop pile carpet 15) Tests performed at SWA (Schall- und Wämemessstelle Aachen GmbH) – Institut fuer schalltechnische und wärmetechnische PrüfungenBeratung-Planung. 16) Tests performed at SWA (Schall- und Wämemessstelle Aachen GmbH) – Institut fuer schalltechnische und wärmetechnische PrüfungenBeratung-Planung. 17) Data based on calculations made with DIALux software, based on closed cell office without furniture and without windows. The results depend on the size of the room, the height of the ceiling, the amount of light coming in from outside and the general nature of the surroundings. 18) 50% relates to the sales volume of products available with ECONYL® yarn in the commercial carpet tile collection. The total % of recycled content varies per product and per colour. Whether a colour contains ECONYL® yarn and the exact % thereof can be found on our website: www.desso.com. 19) http://healthyseas.org/ 20) http://www.c2ccertified.org/product_certification/criteria/energy/v3_0 21) Hydroelectric power is generated by water flowing through a dam’s interior causing turbines to spin. As long as rainfall keeps the river full enabling it to replenish the water in the lake behind the dam, electricity will be generated without using a non-renewable fuel such as coal. Recently, some environmentalists have claimed that dams can alter nature’s river systems, with a possible impact on plant and animal habitats leading to an imbalance in the ecosystem. Desso is aware of this debate and is in conversation with its energy supplier to ensure the hydropower energy it uses is generated in a sustainable way. http://www.sustainablehydropower.org; http://wwf.panda.org/what_we_do/ footprint/water/dams_initiative/dams/energy/ 22) Refers to the extra energy required such as in the extraction of raw materials (e.g. oil, gas) to create the energy, efficiency of electricity production and transmission. 23) CO2 Conversion factors used: Agency NL(electricity NL) Dutch Emission Authority (gas NL) Flemish environmental agency (Electra&gas B) (Vlaamse Milieumaatschappij – VMM) 24) Desso calculates the injury rate as follows: Total number of injuries divided by total hours worked multiplied by 200.000. 25) Calculated as total number of lost days divided by total hours worked multiplied by 200.000. 26) Belgium official statistics – 63) http://www.faofat.fgov.be/) 27) Calculated as Absent days divided by total worked days 28) CBS Netherlands 29) http://www.unglobalcompact.org/abouttheGc/TheTenprinciples/index.html 11)

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Contact information Headquarters Headquarters Desso Taxandriaweg 15 5142 PA Waalwijk The Netherlands Hospitality, Marine, Aviation Taxandriaweg 15 5142 PA Waalwijk P.O. Box 169 5140 AD Waalwijk The Netherlands Address (Production) R. Ramlotstraat 89 9200 Dendermonde Belgium

T: +31 (0)416 684 100 F: +31 (0)416 335 955 www.desso.com

T: +31 (0)416 684 100 F: +31 (0)416 335 955

Home Carpets Taxandriaweg 15 5142 PA Waalwijk P.O. Box 169 5140 AD Waalwijk The Netherlands

T: +31 (0)416 68 42 45 F: +31 (0)416 68 42 67

Desso Sports R. Ramlotstraat 89 9200 Dendermonde Belgium

T: +32 (0)52 262 411 F: +32 (0)52 221 767

Russia Pokrovka Street 33/22 Office 418 Moscow 105062 Russia

T: +7 495 225 9408 F: +7 495 225 9409 service-ru@desso.com

T: +32 (0)52 262 411 F: +32 (0)52 221 767

Showrooms Belgium Robert Ramlotstraat 89 9200 Dendermonde Belgium

T: +32 522 62 480 F: +32 522 62 489 service-be@desso.com

France Parc du pont de Flandre 11 Rue de Cambrai F-75 019 Paris France

T: +33 155 26 39 39 F: +33 155 26 39 40 service-fr@desso.com

Middle East T: +971 439 859 00 Bayswater Tower, Business Bay F: +971 439 859 08 Level 9, Office 08 service-mea@desso.com Dubai, United Arab Emirates Netherlands Taxandriaweg 15 5142 PA Waalwijk The Netherlands

T: +31 (0)416 684 100 F: +31 (0)416 335 955 info@desso.com

Poland Plac Piłsudskiego 2 00-073 Warszawa Poland

T: +48 22 331 32 22 F: +48 22 331 32 23 service-pl@desso.com

Spain Torre de Valencia T: +34 914361805 C/ O’donnell, 4 - 1ra. Planta - Of. 19 -20 F: +34 914314678 28009 Madrid service-es@desso.com Spain Switzerland Türliackerstrasse 4 8957 Spreitenbach Switzerland

T: +41 55 645 21 11 F: +41 55 645 23 43 service-ch@desso.com

United Kingdom 23-25 Great Sutton Street London EC1V 0DN United Kingdom

T: +44 20 7324 5500 F: +44 20 7324 5510 service-uk@desso.com

Sales offices and dealers

(for complete addresses of our global sales offices, please visit www.desso.com) Albania, Croatia & Balkans T: +385 1615 55 50 service-hr@desso.com

Colombia T: + 57 318 735 1770 service-co@desso.com

Peru T:+31 416 684 128 service-latam@desso.com

United Kingdom T: +44 1235 554 848 service-uk@desso.com

Argentina T: +54 11 4342 3345 service-latam@desso.com

Czech Republic T: +42 0774 993 723 service-cz@desso.com

Poland T: +48 22 331 32 22 service-pl@desso.com

Uruguay T:+54 11 4342 3345 service-latam@desso.com

Asia T: +31 416 685 402 service-asia@desso.com

Denmark T: +45 32 71 36 56 service-dk@desso.com

Portugal T: +351 22 099 4261 service-pt@desso.com

USA T: +1 888 337 7687 service-us@desso.com

Australia T: +61 427 337 883 service-aus@desso.com

Finland T: +358 (0)10 6665 170 service-fi@desso.com

Puerto Rico T:+31 416 684 128 service-latam@desso.com

Venezuela T:+57 318 7351770 service-ven@desso.com

Austria T: +43 1 716 44-0 office@ambiente-textil.at

France T: +33 155 26 39 39 service-fr@desso.com

Romania T :+44 7584007698 service-ro@desso.com

Belgium & Luxembourg T: +32 522 62 480 service-be@desso.com

Germany T: +49 6122 58 73 410 service-de@desso.com

Russia / Baltics +7 985 766 3163 service-ru@desso.com

Bolivia T:+31 416 684 128 service-latam@desso.com

Hungary +420 773 526 444 service-hu@desso.com

Slovakia T: +42 0774 993 723 service-sk@desso.com

Brazil T: +55 11 99600 3864 service-br@desso.com

Italy T: +80 007 650 765 service-it@desso.com

South Africa T:+971 439 859 00 info@desso.co.za

Bulgaria T:+44 7584007698 service-bg@desso.com

Japan T:+31 416 685 402 service-japan@desso.com

Spain T: +34 91436 1805 service-es@desso.com

Central America/Andean/ Carribean T: +57 1 618 0537 service-latam@desso.com

Mexico T: +52 155 41406688 service-me@desso.com

Sweden T: +46 (0) 8 531 880 50 service-se@desso.com

Middle East / India T: +971 439 859 00 service-mea@desso.com

Switzerland T: +41 55 645 21 11 service-ch@desso.com

Norway T: +47 23 12 05 22 service-no@desso.com

The Netherlands T: +31 416 684 130 service-nl@desso.com

Panamรก T:+31 416 684 128 service-latam@desso.com

Turkey T:+44 7584007698 service-tr@desso.com

Chile T: +55 11 99600 3864 service-chile@desso.com China (Northern) T: +86 13 501 064 621 service-china@desso.com China (Southern) T: +86 13 801 884 918 service-china@desso.com

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