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Sustainability inspiresSustainability Report 2011

www.siemens.com

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Contents

Foreword

Strategy One Siemens Cooperation

Materiality portolio

Outlook

Stakeholder dialogue with Tim Flannery

Sustainabilityalong thevalue chain

Supplier

Stakeholder dialogue with Jackie Bray

Own operations

Stakeholder dialogue

with Karl-Friedrich Rausch

Customer

Cross-unctional

topics

CO2 management along the value chain

Sustainability at healthcare

Siemens Integrity Initiative

Stakeholder dialogue with Robert Greenhill

Facts and fgures Reporting method Innovation

Customers and portolio

Compliance

Environmental protection

Product responsibility

Occupational health

and saety management

Employees

Suppliers

Corporate citizenship

Additionalinormation

Independent Assurance Report

UN Global Compact

UN CEO Water Mandate

Global Reporting Initiative

Notes and orward-looking statements

Inormation resources

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Foreword

Ladies and gentlemen,

Children are our uture. To pass on to them aworld worth living in is our obligation. And thisis where we, as a company, have a contributionto make with innovative products and solutionsand through a commitment to greater sustain-ability in our supply chain, at our own locationsand, not least, at our customers. Because sustain-able development or the beneft o the genera-tions to come concerns us all.

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Governments, societies and companies aced major challenges in 2011 challenges like Fukushima,

energy transormation, the Arab spring, the debt crisis and the highest carbon dioxide emissions in

history. I rigorously implemented, Germany s new energy policy will create opportunities or climate-

riendly, environmental technologies. And its here that Siemens can make a dierence worldwide.

The good news is that sustainability has made a great deal o progress and that it still harbors major

potential. The bad news is that not enough has been done to ensure that our children will have a world

worth living in over the long term. Developing sustainable solutions or a world population soon

approaching the seven-billion mark requires even closer cooperation with both internal and external

partners. Thats why weve made an express commitment to the goals and principles o the Global

Compact and the CEO Water Mandate o the United Nations and why were active participants in orga-

nizations like the World Business Council or Sustainable Development (WBSCD), the Global Reporting

Initiative (GRI), the World Economic Forum (WEF) and the World Resources Institute (WRI).

Our progress toward becoming a highly sustainable company has made us optimistic. In fscal 2011,we generated revenue o 29.9 billion or 41% o our total sales with our Environmental Portolio.

In the same period, our green technologies enabled customers to reduce their carbon dioxide ootprint

by 317 million tons an amount equal to nearly 1% o the worlds total energy-related annual CO2 emis-

sions. For this commitment and or our rigorous sustainability strategy, we were honored with the

German Sustainability Award. In the Dow Jones Sustainability Index, we were again No. 1 in the Diver-

sifed Industrials category, having urther improved our perormance. And with a score o 97 out o a

possible 100 points, we were among the top 500 companies worldwide in the Carbon Disclosure Lead-

ership Index (CDLI) or the ourth time in a row.

External assessments like these show that were still on the right track. Because sustainability didnt

become a guiding principle at Siemens only yesterday as the 40th anniversary o our Environmental

Ofce attests. We recognized the importance o environmental protection very early on, actively oster-ing ecoriendly behavior at our Company as ar back as 1971. When it comes to sustainability, we have

the greatest impact now as then on our own activities. However, we also eel increasingly respon-

sible or our entire supply chain. To show how were honoring this responsibility in practice, the frst

part o this report takes you on a journey along our value chain worldwide. An example rom China

illustrates how were helping a supplier cut his uture energy costs. A stopover in Charlotte (U.S.) pro-

vides an insight into the high sustainability standards weve set or our own activities. And a look at

our work on the ICx train demonstrates how seriously we take customer retention while jointly devel-

oping mobility solutions or the uture.

Sustainability is our guiding principle. Were on course, but we still have a long way to go. Constructive

dialogue with our stakeholders and the Siemens Sustainability Advisory Board a committee o lead-

ing international experts is helping us achieve our goals. To urther develop our sustainability-

related activities, we seek dialogue with all our stakeholders. Were looking orward to continuing this

exchange o ideas with you.

Peter Lscher Barbara Kux

President and CEO Member o the Managing Board o Siemens AG

der Siemens AG and Chie Sustainability Ofcer

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Our sustainable corporate strategy

Sustainability remains a core task or governments,society and business. What is needed are clear, bind-ing and orward-looking answers.

As a company that is active in around 190 countriesworldwide, we bear a great responsibility or ouremployees, or our shareholders and or the societiesin which we operate. Sustainable practices are irm-

ly anchored in our corporate culture, based on ourcompany values o being responsible, excellent andinnovative.

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Sustainability is the guiding principle in everything we do, at all hierarchical levels within the Com-

pany. We are aware o the associated high standards and the possibility o conficting goals. Never-

theless, the aim to create sustainable added value remains a key element o our corporate strategy.

We are convinced that sustainability, in this sense, is also a business opportunity, and one that is

worth seizing.

One Siemens an expression o our sustainable corporate strategy

We have paved the way with One Siemens, our ramework or sustain-

able value creation and capital-ecient growth. We already occupy

leading positions in many markets today, but were not content with

that. Our aim is to continuously improve our perormance relative tothe market and our competitors. We know our business activities depend on market dynamics and the

requirements o our customers. Thats why weve defned three strategic directions to guide us on our

way into the uture:

> We focus on innovation-driven growth markets with long-term growth potential, where we hope

to capture leading positions or extend our lead i weve captured them already. A central role here is

played by the products and solutions in our Environmental Portolio: They enable us to make a major

contribution to environmental and climate protection while also strengthening our standing in

these growth markets. In the year under review, we generated revenues o 29.9 billion with our

Environmental Portolio, which is 41% o our total revenue. Our target or the uture is to generate

40 billion by the end o fscal 2014 and we will continue to strive or this goal even though it will

be more challenging to achieve due to our planned initial public oering o OSRAM AG. Not onlybecause we think its achievable, but also because were pursuing an ecological goal with our Envi-

ronmental Portolio at the same time: to reduce our customers CO2 emissions.

We know that our Environmental Portolio can help improve our customers ecological impact. And

we can even prove it thanks to an external audit. Thanks to our innovative, efcient products and

solutions, our customers saved 317 million tons o carbon dioxide emissions during fscal 2011 (see

Environmental Portolio on page 56 or more details).

From a sustainability point o view, our ocus on innovation-driven growth markets also means

strengthening the innovative power o the Company as a whole. We managed to make progress in

2011 in this respect too, as the ratio o research and development expenses to revenue shows. In the

year under review, we had an R&D intensity o 5.3% the year beore it was 5.2% (see the Innova-

tion chapter on page 54).

Read more aboutOne Siemens at:

www.siemens.com/one-siemens

With products and solutions rom the Siemens

Environmental Portolio, our customers were able to save

317 million tons o carbon dioxide in fscal 2011 that is roughly equivalent to 1% o the worlds energy-induced

CO2 emissions or nearly 40% o the emissions in Germany.

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> In addition, and that is our second strategic direction, we aim to get closer to our customers all

over the world. The central argument in this respect is our global value chain: Today, we are not only

active in around 190 countries in the world, but also purchase rom local providers in many o those

countries, since a competitive, globally balanced and localized network o suppliers is vital to

Siemens long-term success. Being a strong partner also means selecting and qualiying our suppli-

ers in accordance with the same strict rules that apply to us (more details are provided in the Sup-

pliers chapter on page 74 and in our three reports on the ollowing pages). By strong partner, we

understand a close customer relationship based on trust something we work or every day at all

levels o the Company, rom the Managing Board to our service sta on site (see the Customers and

portolio chapter on page 56).

> Last but not least, we use the power of Siemens. Our employees are our greatest asset. With their

commitment, qualifcations and inventive spirit, they play a key role in our success and are the true

power o Siemens. To ensure it stays that way, we encourage lielong learning and continuousdevelopment throughout our workorce on all fve continents. We spent 251 million on this in the

year under review. With 402,000 employees, that equals 608 per person.

Our international orientation and worldwide presence give us a competitive advantage based on the

diversity o our employees. In our ten largest Regional Companies, or example, we have employees

rom 140 countries; men and women rom dierent generations with multiaceted qualications,

educational backgrounds and cultural perspectives. Tapping this wealth o experience and increas-

ing it by ostering dialogue between our employees is more than just one initiative among many;

it contributes to the sustainable development o the entire Company (learn more about this in the

Employees chapter on page 70).

Leveraging the power o Siemens also means strictly adhering to clear principles o integrity something we also expect o our partners and suppliers. These principles ocus on such themes as

anti-corruption, environmental protection, and occupational health and saety management (see

the chapters Compliance, Environmental protection and Occupational health and saety manage-

ment on pages 58, 60 and 68).

As these examples clearly show, sustainability is not just embellishment at Siemens, its the

central theme of a corporate strategy that points the way to the future.

Sustainability requires close cooperation

The importance we attach to the topic o sustainability is also evident rom its central positioning

within the Company s organization. In contrast to many o our competitors, we have anchored the

theme at the highest level and made it a matter or the Managing Board.

A cross-departmental and cross-unctional committee, the Siemens Sustainability Board, defnes the

guidelines or our sustainability activities. It is the central steering and decision-making body or sus-

tainability at Siemens and in line with its importance is headed by Managing Board member

Barbara Kux. The Sustainability Board, staed by top representatives o the Sectors and all relevant

specialist unctions, convenes regularly to set the strategic ocus o our sustainability activities and

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Further inormationen on the orga-nization o our sustainability activitiesis available at:

www.siemens.com/sr/organization

approve appropriate measures and initiatives. It is advised by a com-

mittee o leading international experts, the Siemens Sustainability

Advisory Board. A corresponding unit, the Corporate Sustainability

Ofce, supports the above-mentioned boards in their work and coor-

dinates company-wide programs and measures.

As the composition o the Sustainability Board shows, we see sustainability as a company-wide task

that requires clear structures and close cooperation between various units within the Company. The

classical silo mentality wouldnt get us anywhere. Only collaboration between all relevant target

groups in the Company and solution-oriented dialogue with our external stakeholders can generate

concepts and solutions that help us achieve our corporate goals.

That we take this issue seriously at Siemens is evidenced by the act that cooperation across organi-

zational boundaries or the beneft o the Company pays o or our employees. Senior managers, or

example, receive additional compensation i they participate in this kind o cooperation. But we dont

stop there: We want to get all our employees interested in sustainability and strengthen their commit-

ment to it. For this purpose, we introduced our Sustainability at unctions initiative in scal 2011,

Global value chain

> U.S., page 24

> Germany, page 34

> China, page 14

Siemens is not only active in around 190 countries, butalso purchases locally in many o those countries, sincea competitive, globally balanced and localized networko suppliers is vital to our company s long-term success.

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with the aim o clearly showing all our employees what role sustainability plays in sales and customer

relationships, or example, and how each and every one o us can act more sustainably.

And last but not least, theres our Siemens Integrity Initiative, with which we supported our frst con-

crete projects in scal 2011 (see page 48). This initiative shows how we help spread our own high

sustainability standards beyond Company boundaries.

Our involvement with major national and international sustainability organizations is yet another

testament to the importance o sustainability at Siemens. In 2003, or example, we joined the United

Nations Global Compact, and last year we became a member o the newly ounded LEAD Initiative,

an alliance o companies that show particular commitment. In addition,

we work together with organizations like the World Business Council

or Sustainable Development (WBCSD), the United Nations Environ-

ment Programme (UNEP), the Global Reporting Initiative (GRI), theWorld Economic Forum (WEF) and the World Resources Institute

(WRI). We also play an active role in various sustainability initiatives. As part o a WBCSD initiative, or

instance, we promote sustainable urban development throughout the world one example o many

that show how our business and sustainability activities coincide and in many cases even complement

each other. Another initiative we support is the Carbon Disclosure Project (CDP), which promotes

greater transparency in carbon emissions reporting. Our aim here is to use our knowledge and experi-

ence to help other companies reduce their greenhouse gas emissions.

And as part o Future Dialogue, which we organized with the Max Planck Society and the Economist

Conerences, we share and discuss ideas on our planets uture with international experts.

Materiality the result o intensive dialogue

This selection o examples shows how we promote sustainability at all levels: locally, regionally and

globally because wherever were active as a company, we bear responsibility (see the three reports

below). From our daily work we know that specic requirements can change quickly, and some-

times even dramatically. This makes it all the more important to look at our own principles and prac-

tices on a regular basis in order to critically examine their eectiveness and, i necessary, adapt them

to changed circumstances. For this purpose, we regularly analyze and prioritize the topics that are

important to us and our stakeholders, and derive appropriate standards to be applied using the prin-

ciple o materiality as an orientation.

Our materiality portolio highlights key sustainability topics and their

importance or our stakeholders and Siemens. We prepare the porto-

lio annually and consulted more than 30 external stakeholders and

experts rom science, industry, politics, non-governmental organiza-

tions and consultancies in fscal 2011. We then combined the outcome

o this dialogue with the assessments o our specialist departments. The result is now available:

our materiality portolio 2012. By dealing with the topics it contains, we are able to identiy opportuni-

ties, minimize risks and provide answers to the questions o tomorrow.

A detailed overview o our member-ships and partnerships is availablevia our sustainability platorm on theInternet at:

www.siemens.com/sr/memberships

Our materiality portolio 2012, includinga detailed explanation o the key topicswe have determined, is available on theInternet at:

www.siemens.com/materiality

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Outlook sustainability remains a core topic

The awards we received during the year under review show that were on the right track. In the Dow

Jones Sustainability Index (DJSI), a sustainability ranking by Dow Jones and SAM, Siemens was once

again ranked rst in the Diversied Industrials category, which also includes companies like 3M,

General Electric and Toshiba. We even managed to improve our score compared to the previous year:

with 90 out o a possible 100 points, we achieved our best result to date.

We were also successul in the Carbon Disclosure Project (CDP), which included Siemens in its

Global-500 Carbon Disclosure Leadership Index (CDLI) or the ourth year in a row. Scoring 97 out o

100 possible points, we once again showed an excellent result and were thus able to maintain our

place among the top 500 companies worldwide. Last but not least, our commitment to sustainabil-

ity was also honored in Germany, where we received the German Sustainability Award 2011 or our

consistent and rigorous sustainability strategy.

All this shows that weve put things on the right track and have taken a big step forward again

in fscal 2011. But its also true that urther steps must ollow. Weve thereore set ourselves

corresponding goals.

www.siemens.com/sr/sustainability-strategy

Materiality portfolio 2012

> Sustainablecompanystrategy

> Stakeholderengagement

> Risk

management

> Reporting/KPIs

Increasing importance for stakeholders

Increasing importance for Siemens(or sustainable business success)

> Demographicchange

> Urbanization

> Climate change

> GlobalizationMegatrends

Processes

> Resourceproductivity

> Sustainability inthe supply chain

> Innovation

> EnvironmentalPortolio

> Integrity

> Diversity

> Human rights

> Internal resourceeiciency

> Employeesatisaction

> Employeerecruiting &retention

> Corporatecitizenship

> Health & saety

> Aordable &personalizedhealthcare

> Resource security

> Localization othe value chain

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15

> Supplier in Nantong

Xiaojun Dai (let)Xiaojun Dai, the Head o Purchasing atSiemens in Shenzhen, coordinates allprocurement processes. This includesselecting suitable suppliers, handlingquality assurance and ensuring deliveryreliability and dependable, efcientlogistics.

Xian Z ha ng (r ight)Xian Zhang, Deputy Managing Directorand Head o Production at CIMC, isresponsible or the Siemens project.His goal is to keep expanding the rela-tionship o trust with Siemens.

From supplier to partner:Cooperation with a utureNantong, production site o CIMC Tank Equipment

Xiaojun Dai rom Siemens and Xian Zhang rom the supplier CIMCTank Equipment, which produces vessel kits or Siemens, got to

know and respect each other during their collaboration. What

started out or Siemens as a broad-scale search or a supplier that

could meet demanding technical requirements, has evolved over

the past three-and-a-hal years rom a joint development project

into an extremely successul working relationship benefting both

companies. Xiaojun Dai and Xian Zhang talk about their experience

and uture projects.

Xiaoju n Da i When we sent you our irst inquiry regarding theproduction o vessel kits in November 2008, we didnt knowi CIMC could meet all our requirements especially sincewe needed a supplier that not only had the technologicalexpertise, but would also comply with our stringent sustain-ability requirements covering aspects such as occu pationalhealth and saety and environmental protection.

Supplier Own operations Customer

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16

Xian Zha ng We were delighted to receive your inquiry.I still recall very clearly that when we spoke the irst time,we soon realized that we shared the same views in manypoints both regarding the necessary technological exper-tise and the required sustainability standards.

Xiaoju n Da i Yes, thats right. We then addressed both issuesat the same time. But irst you had to complete our supplierqualiication process.

Xian Zha ng Yes. Right at the start we had to prove that, apartrom business-speciic minimum requirements, we werealso able to meet Siemens quality and environmentalprotection requirements and complied with the Code oConduct or Siemens Suppliers in all points.

Xiaoju n Da i And so what posed the bigger challenge or you:technical implementation o the component or our sus-tainability requirements?

Xian Zha ng Deinitely the technical implementation. Despiteour extensive know-how, we needed just over two-and-a-hal years to make a prototype that was ready or seriesproduction. Siemens helped us a lot in this regard, advis-ing us on production and productivity, challenging ourprocesses and giving us valuable tips on how to optimizethem. We beneited enormously rom that. Now we makethe vessel kits in top quality. Thats harder than it looks,because the tolerance is just one millimeter, while thediameter is around two meters

Xiaoju n Da i I think we both learned a lot. The irst prototypeswere ready in September 2009 and things proceeded veryquickly rom then on. Ater extensive testing, we awardedyou the order in October; the vessel k it was examined andcertiied by TV NORD. Series production then began.

Vessel k its

Large current-carrying coils generate thepowerul magnetic feld o an MRI system.

The coils are cooled by liquid helium in amulti-walled vessel. To prevent the helium

rom escaping it must be produced accu-rately and be completely leak-proo.

Chuneng Liu, Managing Director o CIMC Tank Equipment Weve beneited greatlyrom the cooperation with Siemens. Siemens is an

important strategic partner or us.

CIMC abides by the very higheststandards o quality. Every single pro-duction step is accompanied by strictcontrols. In a fnal stage, the vesselkits are subjected to detailed testing.

Our controller ensures that the machinetools work correctly and accurately.

> Supplier in Nantong

> Supplier in Nantong

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3,120employees

That is how many people workat CIMC in Nantong. Our supplieris the worlds largest manuac-turer o stainless steel shippingcontainers; it also produces andsells high-pressure vessels or

production plants and tank trucks.

> Supplier in Nantong

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~ 50percent

The value o purchased productsand services amounts to abouthal o our revenue so suppliersare critically important. Thatswhy Siemens oers them thepossibility o urther improving

their energy eiciency and haslaunched its own program toenable that: the Energy EiciencyProgram or Suppliers.

> Siemens actory in Shenzhen

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19

Xi aoju n Da i But that wasnt all. Parallel to technical develop-ment, we pushed orward with sustainability as well.

Xi an Z ha ng It was clear to us rom the outset that i you want

to be a supplier o Siemens, you cant just be good you haveto be very good. Thats why we were pleased to undergoan external Sustainability Audit, especially since this eval-uation by external experts also proved worthwhile or us.

Xi aoju n Da i The audit conirmed our assessment rom thequali ication phase: CIMC is very well positioned in termso sustainability. You soon put our subsequent sugges-tions urther improvements in occupational saety, orexample into practice

Xi an Z ha ng because they were very useul stimuli thatbeneited our company as a whole. In particular, the close

cooperation with Siemens once more spelled out the greatimportance and economic signiicance o sustainability.

Xi aoju n Da i What are the concrete beneits or CIMC?

Xi an Z ha ng Siemens supported us, or instance, in rolling outspeciic guidelines and processes and more eicient workmethods that help us meet sustainability standards andincrease productivity; moreover, the successul audit ur-ther strengthened our sustainabil ity proile. And inally,the product certiication by TV NORD provided interna-tional conirmation o the quality o our work all aspectsthat are useul in other projects and beneit the entire com-pany. And these things ultimately beneit Siemens as well.

Supplier o SiemensThe Code o Conduct or Siemens Suppliers

defnes the requirements that the Com-panys suppliers around the world have to

ulfll. Among other things, it prohibitscorruption, bribery and child labor andincludes environmental protection and

occupational saety measures.www.siemens.com/sr/code-of-conduct

Sustainability

Ensuring that our high sustainability require-ments are also implemented in the supply

chain is a core part o our supplier manage-ment processes. Learn more at:www.siemens.com/sr/supplier

www.siemens.com/sr/supplier-training

Every step in the assembly o thehighly sensitive MRI devices pro-duced in Shenzhen is controlled anddocumented with great precision.

> Siemens actory in Shenzhen

> Siemens actory in Shenzhen

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30

Mark Pringle In the U.S., which is the worlds largest electr icity

market, coal is sti ll our most important source o energy.

However, the average age o our coal-ired power plants is

already 40 years. That means they can only respond slowly

to luctuations in demand, they dont use coal very e i-

ciently and they re big environmental polluters.

Jennier Roberts But thats surely not just true o the U.S.

Mark Pringle No, it isnt and thats why we want to exportpower plant technology worth US$400 mil lion a year rom

Charlotte.

Jennier Roberts Hearing that makes me proud, especially since

Charlotte and the surrounding region beneit a lot rom it.

The Charlotte area suers rom high unemployment, which

made us all the more happy to support Siemens in inding

and training 700 additional employees or the new produc-

tion acility.

Mark Pringle It was especially important or us to amiliarize

the new employees quickly with the speciic demands o a

cutting-edge production plant. We get a lot o support or

this goal rom Central Piedmont Community College (CPCC) and

the University o North Carolina Charlotte (UNCC).

Jennier Roberts Were delighted about that, especially since

both institutions have also beneited rom working with

Siemens. Siemens makes high demands, but it also shares

its knowledge: For example, some members o the colleges

sta completed their mechatronics instructor training at

Siemens in Germany. They were very enthusiastic about

that experience. You also recently began an apprenticeship

program that gives young people a chance to gain college

credit and practical instruction on the job the way its

done in Germany.

Mark Pringle Weve introduced that model here, and well be

expanding it even urther. Ater completing their training,

these young people are excellently qualiied or a success-

ul career with us.

Jennier Roberts This is a model or the uture, and we look

orward to continuing to work with Siemens.

ExportSiemens Energy not only supplies the U.S.

and other countries with a 60-Hertzpower grid rom Charlotte, it exports all

over the world.

Central Piedmont Community College

Siemens training partner CPCC has sevenlocations and some 70,000 students, making

it the largest community college system inNorth and South Carolina.

Mechatronics instructor training

The Siemens Mechatronics SystemCertication Program (SMSCP) supports

colleges and universities worldwide inintegrating established modules rom the

German training system into their existingeducational programs.

> Central Piedmont Community College

At the Central Piedmont CommunityCollege, well-trained teaching sta mem-bers look ater our new employees. Tomake sure they are ully acquainted withthe specic Siemens requirements, someo the teachers have gone through ex-tensive training themselves in Germany.

For Siemens, lielong learning is an inte-gral part o the corporate strategy. For thisreason, our employees also continue totake part in urther training activities evenater completing their initial training.

> Siemens plant in Charlotte

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32

Stakeholder dialoguewith Karl-Friedrich Rausch

Karl-Friedrich Rausch has been responsible or

sustainability on the Management Board o

Deutsche Bahn (DB) since 2011. The group has

set itsel a clear goal. In order to continue dealing

successully with the opportunities and chal-lenges in its market, DB has decided to anchor

sustainability more rigorously in its corporate

strategy and organization. Rausch is a member

o the Board o Governors o econsense, Forum

or Sustainable Development o German Business.

What role does sustaina bil ity play

regarding mobility and transport?

Karl-Friedrich Rausch The concept of sus-

tainability is intrinsic to the uture via-bility o our business. The key question

for us is: What do we have to do to be

successful over the long term? In view

o the increase in passenger and reight

transport, one o our core challenges is

to keep emissions rom increasing with

the growth o the market. Mobility and

logistics service providers have a vital

responsibility to propose solutions here.

The transport sector accounts for a quar-

ter o global CO2 emissions, making the

mobility and transport market the sec-

ond-largest CO2 emitter after the energyindustry. Its clear that transport compa-

nies must deliver solutions to reduce the

CO2 they generate. We at DB Schenker

did that last year with our Eco Solutions.

Since then, weve offered a CO2-free or

lower CO2 alternative for all transport

and logistics products. If a reduction is

no longer possible, customers can com-

pensate for their CO2 emissions by in-

vesting in climate projects.

What are the greatest challenges acing

Deutsche Bahn regarding sustainable

mobility and logistics?

Karl-Friedrich Rausch Fortunately, we can

look forward to global growth. Yet that

also means we need to be especially

careful about the ecological impact we

make. We not only offer transport ser-

vices on rail, but also by road, water and

air. The rai l network we run is a complex

infrastructure, and we are Germany s

largest energy consumer. To adapt our

networks to future challenges, we arespending a lot of money on moderniz-

ing our fleet, for example. Like most

companies, we also have to tackle tasks

relating to demographic change and our

attractiveness as an employer. DB is one

of Germany s largest employers and

providers o training.

What role does rai l transpor t play in

this?

Karl-Friedrich Rausch Rail is a strong pil-

lar or us in developing climate-riendly

solutions in passenger and freight

transport. No other means o transport

can match it or environmental compat-

ibility. Our clear goal is to transer moretraffic to rail. The European Union has

set unambiguous targets in this regard:

By 2050, half of all passenger and

freight transport above a distance of

300 km is to be shited to rail and sh ip.

In reaching that goal, it will be impor-

tant to link the means o transport in a

reasonable way. For Siemens, or exam-

ple, weve developed a transport con-

cept for delivering commuter trains to

Russia by three means of transport: on

land, water and rail.

What is DB doing to make rail transport

even more attractive and sustainable?

Karl-Friedrich Rausch The order weve

awarded Siemens for the ICx is an impor-

tant example of how we wish to make

passenger rail travel more appealing

and sustainable. Were jointly develop-

ing a high-speed train that offers cus-

tomers greater comfort, can be made

up flexibly in line with demand and

saves energy thanks to better aerody-

namics and lower weight. There are

similar investments in our rail cargofleet, for example our purchase of diesel

locomotives with particulate filters.

As I already mentioned, we at DB Schen-

ker have also introduced Eco Solutions.

One product from this series is Eco

Plus, with which we offer customers

completely CO2-ree rail transport.

Dr. Karl-Friedrich RauschKarl-Friedrich Rausch is the Member o the Man-agement Board o DB Mobility Logistics AG in chargeo the Transportation and Logistics Division andis responsible or the activities o DB Schenker.He is responsible or the issue o sustainability onthe Management Board o Deutsche Bahn.

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Value chain: Customer

Ecient feet

or Deutsche BahnSiemens proximity to markets all over theworld makes it a strong local partner for itscustomers the ICx train project is a part-nership with new dimensions.

> Kreeld

> Berlin

> Erlangen

Siemens develops the ICx trains orDeutsche Bahn (headquarters in Berlin)at the Erlangen and Kreeld plants.Assembly o the rst cars will begin inKreeld in mid-2013.

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> In the ICE train to Kreeld, Germany

Ulrich Hbel (right)Ulrich Hbel is in charge o the ICxproject at Deutsche Bahn. Among otherunctions in the past, the vehicle engi-neer was responsible or redesigningthe ICE 1 and managed Deutsche Bahnsproject or the second ICE 3 series.He already knew Martin Oer romthat project.

Martin Offer (left)Martin Oer is in charge o the ICxproject at Siemens. Previously, the elec-trical engineer looked ater the ICE 3project at Siemens and was involved indevelopment projects or high-speedtrains and streetcars.

A partnership with visionSiemens plant in Kreeld

Ulrich Hbel and Martin Oer know each other well. As managers

o the ICx project at Deutsche Bahn and Siemens respectively,

they and their teams have dealt with each other extensively and

successully. With a potential volume o up to 300 ICx trains by

2030, the contract signed in May 2011 is not only the biggest single

investment in Deutsche Bahns history but also the biggest order

in Siemens history.

The rst ICx is due to leave the Kreeld plant or trials in mid-2015.

However, many o the details are already being planned in depth

on the computers at the actory.

Ulrich Hbel Mr. Offer, what can you already show me of

the new ICx here today at the plant?

Martin Offer You wont see an ICx in production yet but you

can see the Siemens Velaro D, which is an enhanced ICE 3

for Deutsche Bahn. Our design engineers are making good

progress and the virtual ICx is nearly finished.

Supplier Own operations CustomerIllustration: ICx at Berlin Central Station

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Martin Offer The ICx consumes up to 30% less energy per seat

than its predecessor. To achieve this, we have come up

with many new ideas. For example, the train is compara-

tively light. By using longer cars, the Powercar concept and

trail ing bogies with inside bearings, we have reduced theweight of a 200-meter train by about 20 metric tons

Ulrich Hbel while increasing the seating capacity at the

same time.

Martin Offer The ICx has seven long cars instead of eight

conventional ones. So although the train stays the same

length, it has fewer gangways and therefore provides space

for up to 499 passengers. In addition, its lower weight and

improved aerodynamics will reduce running resistance

and, in turn, costs. On top of that, our Powercar concept

allows Deutsche Bahn to configure the ICx to meet varying

requirements.

Ulrich Hbel That will give us greater freedom when operat-

ing the trains. All train configurations are conceivable

consisting of 5 or up to 14 cars. Having more Powercars

on routes with many starts and stops means that we will

be able to accelerate faster and reach higher speeds.

Martin Offer But Mr. Hbel a perfect passenger train must

do more than just use little energy

Ulrich Hbel Naturally the trains must please or, even better,

fascinate the passengers. People want to get on and off

easily, sit comfortably in an environment with good acous-tics and air conditioning and, of course, travel quickly,

reliably and safely. And that is what they will get. From 2016

on, they will be able to travel on the most modern train in

the world the ICx.

Martin Offer At Siemens, we are very proud to have won

the order for this ambitious ICx project. What led Deutsche

Bahn to sign a contract extending until 2030?

Powercar

Powercars are driven intermediate carsthat have all parts o an electric drive unitunderneath transormer, power con-

verter, cooling system and tr action motor.The 5- to 14-car ICx trainsets will be

available in 24 congurations consisting oPowercars and unpowered cars.

Construction o the body shellrequires sound mechanical skills,precision and experience.

Between the individual produc-tion stages, employees use a lasermeasurement system to inspectthe body shells o end and inter-mediate cars, which can be up to28 meters long.

> Siemens plant Kreeld

> Siemens plant Kreeld

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Additional topics

> Energy-saving production

And its not just the trains rom Kreeld that save energyand are environmentally riendly. This is true o the Siemensplant itsel: Between scal 2007 and scal 2011, the sitereduced its yearly CO2 emissions by 23% (4,700 tons) to just16,000 tons. Other measures are currently being imple-mented. Each year, we expect them to reduce CO2 emis-sions by an additional 2,500 tons and energy costs by800,000. To begin with, we examined our oces and pro-duction halls on the basis o the Siemens Energy EciencyProgram and quickly came to the conclusion that it wouldbe worthwhile to install our own heating and power plant.Since the all o 2011, it has been generating electricity anddelivering waste heat both or heating the production hallsand drying the paint on the trains. This meant convertingpumps and valves o the halls air heaters to the latest energy-saving design, installing circulating heat exchangers, andinsulating acades and roos. A new central building manage-ment system generates urther savings.

> Ecoriendly logisticsAssembly o the rst ICx is scheduled to begin in Kreeld inmid-2013. Siemens is already collaborating with its supplierson an ecoriendly logistics concept. To this end, externalstorage acilities are being combined in a new central ware -house at the Kreeld plant. The goal is to use rail or transpor-tation as much as possible. Body shells are no longer goingto be delivered rom a partners plant in Grlitz by heavy-dutytrucks. When combined in whole trains, they can be trans-ported just as quickly by rail but with much lower energy con-sumption.

> Siemens plant Kreeld

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3 Cross-unctional topics Additional inormation Facts and fgures

CO2 management along the value chain Sustainability at healthcare Siemens Integrity Initiative Stakeholder dialogue with Robert Greenhill

44

According to calculations by the Intergovernmental Panel on

Climate Change (IPCC), the target o limiting the rise in global

temperature to a maximum o 2 C can be achieved i global

emission o carbon dioxide is reduced 80% by the year 2050.

Considering that energy-related 30.6 billion tons o carbon diox-

ide were emitted into the atmosphere worldwide in 2010, that

is a huge challenge.

At Siemens we strive to reduce greenhouse gases at all stages

o our value chain, and we regularly inorm the public about

the progress we have made. For this purpose we have been

calculating greenhouse gas emissions rom our own activi-

ties, our vehicle eet and our power consumption in line

with the international Greenhouse Gas Protocol Standard or

a long time.

In the all o 2011, the Corporate Value Chain (Scope 3) Stan-

dard o the World Resource Institute (WRI) and the World

Business Council or Sustainable Development (WBCSD) was

published, which acts as an accounting basis or the Compa-

nys greenhouse gas emissions throughout the value chain.Together with other companies, Siemens played an active

part in the development and initial test phase o the new stan-

dard. As ar as measures or reducing greenhouse gases are

concerned, our Company sees three major spheres o inu-

ence: our own activities, our inuence on suppliers and our

possibilities or reducing customers emissions with Siemens

products and solutions.

OUR OWN ACTIVITIES

We want to keep improving the energy efciency o our plants

and ofce locations. This is where we have the greatest direct

inuence and where efcient use o energy will directly reduceenergy costs. Besides using electrical energy more efciently,

we can also inuence greenhouse gas emissions through the

emission actor o the power we buy. From 2007 to 2011, we

pushed ahead with an environmental program that ocused,

among other things, on two main targets: to reduce the inten-

sity o our carbon dioxide emissions by 20% and to improve

our energy efciency by 20%. Our internal Energy Efciency

Program (EEP), which was launched in 2007, ensured that

these targets were met (details are provided in the Environ-

mental protection chapter on page 60). Our report gives ex-

amples rom our plants in Kreeld (page 34) and Charlotte

(page 24).

Company vehicles are another worthwhile approach when it

comes to avoiding the production o carbon dioxide emissions.As early as 2009, Siemens was one o the frst companies to is-

sue a mobility guideline that sets incentives or using company

vehicles with low uel consumption. With this approach we

intend to reduce the emission o carbon dioxide by our Com-

pany eets new vehicles in Europe to an average o 120 g/km

by the year 2015 a goal that includes not just cars, but also

transport vehicles. As a comparison: In 2011 the average emis-

sion value or all newly registered Siemens cars in Germany

was 136 g/km, which is already 10 g/km lower than the German

average o 146 g/km.

All in all, we can be proud o the results o our eorts, as the

current report shows: At 3.6 million tons1

, our emission ogreenhouse gases in fscal 2011 remained almost on the same

level as in the previous year even though Company revenue

grew considerably.

Suppiers

At Siemens, activities or climate protection address the entire

supply chain. Using models that consider the energy efciency

o purchased materials and supplier products, calculations

were made in the test phase o the Scope 3 standard along the

Siemens supply chain (i.e. rom the raw material sources to our

plants). These calculations showed that our to six times more

greenhouse gases were emitted than in our own manuactur-

ing operations. These fgures show the signifcance o suppli-ers or climate and environmental protection. Obviously we

have less inuence on their emission o greenhouse gases

than on our own activities, but we do support them in their

eorts to restrict energy consumption and reduce emissions.

To this end, we are gradually extending our internal Energy

CO2 managementalong the value chain

Measured on the basis o the GHG Protocol according to Scope 1, Scope 2 and Scope 3 (travel).

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Efciency Program to our suppliers. The Energy Efciency Pro-

gram or Suppliers (EEP4S) identifes and assesses the potential

or energy savings in production processes. Pilot projects have

shown that consumption can be cut by up to 17%, which is also

fnancially attractive or suppliers. More details are provided in

the Suppliers chapter on page 74 and in our supplier report

rom China on page 14.

CUSTOMERS

With the help o energy efciency programs and environmen-

tal management systems, we work constantly on using energy

as economically as possible in our value chain. However, our

products and solutions are our biggest lever when it comes to

environmental protection. They enable our customers to lower

their energy costs while improving their carbon dioxide oot-

prints. All products, systems, solutions and services that

reduce negative environmental impacts and climate change-

inducing emissions o carbon dioxide have been bundled in

the Siemens Environmental Portolio.

CO2 abatementat our customers

FY Mt

FY Mt

FY Mt

Siemens GHG emissionsrom production

FY . Mt

CO2 abatement rom newly installed products and solutions.

CO2 abatement rom previous installations.

Our target or 2011 was or the Siemens Environmental Porto-lio to help our customers save about 300 million tons o carbon

dioxide emissions a year. With all the products and solutions

rom our Environmental Portolio that have been installed or

customers since fscal 2002 and are still in use, we managed to

surpass this target: We helped our customers reduce their

carbon dioxide emissions by 317 million tons in fscal 2011 a

quantity nearly 90 times the sum o our own emissions, and

roughly equivalent to the total annual carbon dioxide emis-

sions o Berlin, Delhi, Hong Kong, Istanbul, London, New York

City, Singapore and Tokyo.

In addition to its environmental benefts,

our Environmental Portolio enables us to

compete successully in attractive mar-

kets and generate proftable growth. Weset ourselves an ambitious growth target

in fscal 2010: We want to increase reve-

nue rom our Environmental Portolio to

at least 40 billion by the end o fscal

2014. In the frst stage fscal 2011 we have already earned

revenue o 29.9 billion. More and more research and develop-

ment projects at Siemens involve products and solutions that

enhance our Environmental Portolio. See the Innovations

chapter, which begins on page 54, or inormation about our

investments in research and development

OPPORTUNITIESTargeted carbon dioxide management throughout the value

chain opens up outstanding opportunities or Siemens. By

cutting carbon dioxide emissions in our own manuacturing

operations as well as at our suppliers and, in particular, at our

customers, we can make a major contribution to climate pro-

tection. The management consulting frm McKinsey assessed

the technical opportunities to reduce greenhouse gas emis-

sions signifcantly in 2030 compared to levels expected under

a business-as-usual development. The result: Our current

technology portolio already covers 37% o these opportunities.

In addition, our products and solutions enable us to reduce

both our own and our customers energy costs and tap new

and sustainable felds o business.

You can ind moreinormation on theSiemens EnvironmentalPortolio at:

www.siemens.com/environmental-portfolio

www.siemens.com/environmental-portfolio-report

An average o percent thats how much Siemens increased the global carbon dioxide

efciency o its production plants between 2006 and 2011.

http://www.siemens.com/environmental-portfoliohttp://www.siemens.com/environmental-portfoliohttp://www.siemens.com/environmental-portfolio-reporthttp://www.siemens.com/environmental-portfolio-reporthttp://www.siemens.com/environmental-portfolio-reporthttp://www.siemens.com/environmental-portfolio-reporthttp://www.siemens.com/environmental-portfolio-reporthttp://www.siemens.com/environmental-portfolio-reporthttp://www.siemens.com/environmental-portfoliohttp://www.siemens.com/environmental-portfolio

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47

even constituted 17.4% in 2009 (OECD Health Report 2011).

People in developed countries are expected to live longer in

the uture and the demand or high-quality health services will

continue to grow. However, a broad availability o services can

only be ensured i costs remain aordable. One way to achieve

this is to enhance healthcare efciency. The potential is well

known: as the WHOs World Health Report 2010 states, 20% to

40% o all global healthcare expenses are currently wasted dueto inefcient systems.

Siemens oers pioneering solutions in this feld as well. For

example, syngo.share 3 is a product that allows clinical imag-

ing data in various fle ormats to be distributed and managed

quickly and efciently. That means clinics and medical prac-

tices can share imaging data, and physicians know immedi-

ately which images are available or their patients. This rapid

access helps to improve the quality o treatment and saves

precious time.

PROVIdINg ACCESS TO hEAlThCAREMore than 830 million people had access to Siemens imaging

systems in 2011 4. However, our goals are much more ambi-

tious: We want to give more than one billion people access to

our imaging systems by 2014. In addition to greater use o ex-

isting X-ray devices, CT scanners, and MRI systems, we want to

improve basic healthcare in less developed countries through

inexpensive medical technology.

An example o how we are accomplishing this comes rom

China. Since 2005, Siemens has been successul there with the

SOMATOM Spirit CT scanner. We adapted leading CT technol-

ogy to the demands o basic care or less developed health

systems.

The SOMATOM Spirit is easy to operate, very reliable, and

exceptionally cost eective. This concept not only convinced

our customers in China, where more than 700 SOMATOM Spirit

scanners are in use, but we also export much o the production

in Shanghai to developing regions around the world.

Oten, these regions are already looking or technology that

takes them beyond basic care. In addition, global demand or

cost-optimized, frst-class solutions is growing. We met this

need by launching the SOMATOM Perspective at the end o

2011 5.

All this shows how we are working to help clinicians and

healthcare acilities throughout the world advance healthcare.As our mission states: We innovate to advance human health

because good health provides all o us with the potential to

lead happier lives and ulfll our dreams.

Over million patientssuering rom a heart attack, stroke, breast cancer,lung cancer, HIV/AIDS or tuberculosis were examined

and treated with Siemens medical products in 2011.

We based the calculation on the active installed base o Siemens equipment used or the

diagnosis and in the treatment process o stroke, heart attack, lung cancer, breast cancer,TBC and HIV / AIDS. Only equipment used in line with strongest recommendations in acceptedmedical guidelines is included.

We based the calculation on the active installed base o Siemens imaging equipment andthe associated utilization rates. Additionally, the worldwide in vitro diagnostic test volumewas considered, adjusted by the average number o tests per patient.

3 syngo.share is a medical device o ITH icoserve technology or healthcare GmbH, Innsbruck,Austria. syngo.share currently is not available in all countries.

We based the calculation on the number o installed Siemens CT systems in 113 developingcountries (UN HDI < 0.785). Population covered per CT was derived rom CT density inselected countries.

Under FDA review. Not available or sale in the U.S.

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MAKATI BUSINESS ClUB (MBC) PhIlIPPINES:

MORE INTEgRITy FOR SUSTAINABlE dEVElOPMENT

The Shine Project o our integrity partner MBC aims to oster

joint commitment by domestic and oreign companies in

the Philippines to combat corruption and promote sustainable

development: All companies are to be able to work in the

Philippine market under air conditions.

Siemens will be supporting this initiative with US$1.04 million

over our years. The MBCs project partner is the European

Chamber o Commerce o the Philippines. The highlight o the

projects activities in the frst year was the signing o an Integ-

rity Pledge at a public event in September 2011. More than

800 companies and 25 government agencies and ten industry

associations have signed the pledge thus ar. In addition, the

MBC began ormulating an extensive code o conduct or Phil-

ippine businesses. In a urther ocus area, our integrity partner

devoted its energies to encouraging government institutions

to collaborate in two uture activities. First, the code o con-

duct or the Philippine business world is to be closely inter-

meshed with legal requirements. And second, the MBC intendsto work with its project partner to support the Philippine gov-

ernment in developing its own anti-corruption program.

NEW CENTURy ACAdEMy ON TRANSNATIONAl

CORPORATIONS (NATC) ChINA: INTENSIFyINgdIAlOgUE ANd PRACTICE ShARINg

An intensive dialogue between government and business, rec-

ommendations or compliance legislation, and practice-driven

compliance training or domestic companies these are the

objectives o the project launched by our integrity partner

NATC in China.

The Siemens Integrity Initiative is supporting the project o the

organization ounded in 2005 or a period o three years

with US$0.89 million. The project kicked o with a campaign

intended to win local partners. Analyses o Chinese and oreign

legislation as well as o the management practices o Chinese

and multinational companies supplied valuable inormation on

proven compliance solutions and the latest trends or use in

subsequent project activities. Our integrity partner examined

the challenges or the management o Chinese companies

operating in selected high-risk countries; the NATC handed

over the report with its key results to the Chinese government

authorities. To intensiy the dialogue regarding integrity

between government agencies and companies as well as mul-

tinational companies in China, and to discuss international

trends in this feld, our integrity partner has initiated a discus-sion platorm or these players (Compliance Executive Club).

INITIAl POSITIVE dEVElOPMENTS ANd

VAlUABlE EXPERIENCE

The diverse initial successes and perormance o the projects

to date show us that, together with our integrity partners and

thanks to the support o the Siemens Regional Companies, we

have made solid progress with the complex and demanding

Siemens Integrity Initiative. Work on this project requires all

parties involved to learn rom each other and fnd joint solu-

tions. Managing such a global initiative comprising 31 projects

in many countries, and working with a large number o exter-nal and internal parties, also marks new ground or Siemens

as a key element o our compliance management as well as in

its dimension as part o our global engagement or sustainable

development. The experience our Company gains rom work-

ing with the integrity partners is just as diverse and valuable.

We would like to take this opportunity to thank all o them or

their work so ar.

With our commitment to Collective Action and Siemens Integ-

rity Initiative, we are pursuing a clear goal: We intend to make

a long-term contribution to fghting corruption and promoting

clean markets beyond the boundaries o our Company to-

gether with other stakeholders. This goal will guide us in theuture as well.

US$ million: this is the amount

o support agreed with our integrity partnersin the frst round o the Integrity Initiative.

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The Partnering Against Corruption Initiative

(PACI) o the World Economic Forum is a global

anti-corruption initiative oering a platorm or

companies to assist them in developing internal

anti-corruption measures and to acilitate Collec-tive Action with other companies, governments

and civil society.

Mr. Greenhill, experts estimate that the

cost o corruption equals more than 5%

o global GDP (US$2.6 trillion), with over

US$1 trillion paid in bribes each year.

Who pays the bill and how are compa-

nies aected?

Robert Greenhill In addition to the direct

costs, we should also consider the con-sequences o corruption: It distorts mar-

kets, stiles growth, debases democracy

and undermines the rule o law. It erodes

the conidence o a society in its govern-

ment and business leaders. The Arab

Spring was in part a reaction against cor-

ruption between business and govern-

ment. It is almost impossible to express

these impacts in inancial igures. But

Im sure the total would be ar beyond

the numbers you mentioned.

Klaus Schwab, the ounder and Execu-tive Chairman o the World Economic

Forum, has repeatedly emphasized the

role businesses could or rather should

play in helping strengthen good public

governance. Besides this concept o

Corporate Global Citizenship, is there a

speciic business case or companies to

engage in Collective Action against cor-

ruption?

Robert Greenhill Corporate Global Citi-

zenship encourages companies to en-

gage with other stakeholders in ad-

dressing critical global issues. These

issues are too complicated and inter-re-lated to be addressed in isolation. Cor-

ruption is a clear example. Collective

Action with other businesses is neces-

sary to ensure that industry sectors

work together to eliminate corruption.

Collection Action with civil society and

government is necessary to ensure the

right laws are in place and are being

implemented. The business case or

global companies is clear some o the

astest growing economies in the world

today are among the most corruptive.

Companies cannot ignore these mar-kets, nor can they accept the historical

level o corruption. Collective Action to

ight corruption is a robust strategy that

enables companies to engage in impor-

tant emerging opportunities while main-

taining the highest business principles.

In November 2011, political leaders met

at the G20 Summit in Cannes. Their i-

nal communiqu underlined the need

or strong anti-corruption legislation as

a mandatory ramework or helping

clean up the markets. How eective are

voluntar y standards l ike the PACI Prin-

ciples or Countering Bribery, and howdo they complement national legisla-

tion or international conventions?

Robert Greenhill The PACI Principles are

a best-practice ramework or develop-

ing and implementing a corporate anti-

corruption program. They are the back-

bone o the PACI value proposition

calling or an action and implementa-

tion-ocused approach to tackling cor-

ruption. I would say the PACI Principles

are an important complement to nation-

al and international conventions or at

least three key reasons:1. Through the peer exchange resulting

rom implementation o the Principles,

companies are continually exposed to

the latest best practices in anti-corrup-

tion and corporate ethics and these

are usually more stringent than nation-

al and international standards.

2. When companies sign and implement

the PACI Principles, they level the busi-

ness playing ield in their locality, in-

dustry or region. The Principles also

play a key role in actualizing interna-

tional conventions such as the UN Con-vention Against Corruption as well as

national legislation.

3. Signing and implementing the Prin-

ciples is an explicit signal rom manage-

ment that a company is committed to

anti-corruption and ethics. In turn, the

Robert GreenhillRobert Greenhill is Managing Director andChie Business Ofcer at the World EconomicForum. His work areas include the role obusiness in society, sustainability issues, andthe fght against corruption.

Stakeholder dialoguewith Robert Greenhill

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Global companies have a vital role to play in combating corruption.

Their global perspective means they can apply best practices rom other regions,

and are less vulnerable to local pressures. They can increase their impact

through joining orces within the business sector and through collaboration

with the public sector and civil society. Siemens Collective Actionactivities provide encouraging evidence o this.

company is recognized or having the

correct tone at the top, an important

consideration in legislation like the For-

eign Corrupt Practices Act in the U.S.

and the Bribery Act in the U.K.

Changing the rules o the game is a

challenge, even when companies joinorces and begin tackling the issue o

anti-corruption collectively and across

sectors. What actions should companies

like Siemens take, and what outcomes

can companies expect within which

time rame?

Robert Greenhill It has become increas-

ingly clear that the ight against corrup-

tion is not a preserve o any one stake-

holder. Companies, governments and

other stakeholders such as civil society

have to work in concert. Challenges

abound, such as the classic prisonersdilemma when companies may hesitate

to be the irst to engage in anti-corrup-

tion activities or ear o losing busi-

ness. In this context, corporate leader-

ship is extremely important. Siemens

has demonstrated leadership in various

ways. For example, in recent years it

has demonstrated that a company

can maintain state-o-the-art anti-cor-

ruption practices while competing suc-

cessully around the world. Moreover,

Siemens is sharing best practices. Eval-

uating third-party business intermedi-aries has become a critical compliance

concern or global businesses, particu-

larly since the UK Bribery Act took eect

last July 1. At a recent PACI meeting,

Siemens presented its innovative Busi-

ness Partner Compliance Process and

Tool which introduces a structured,

risk-based methodology or evaluating

and approving suppliers, contractors and

other third parties. PACI signatories had

an opportunity to learn rom Siemens

considerable experience in this area.

Finally, Siemens has been substantially

supporting Collective Action. SiemensUS$100-million Integrity Initiative is

helping back key initiatives on a global

basis. The company is also contributing

senior executive time to support Collec-

tive Action. Peter Solmssen, or exam-

ple, is playing an important global role,

including serving as vice-chair o the

World Economic Forum Global Agenda

Council on Anti-Corruption, which de-

velops and advocates international anti-

corruption policy. The best way or com-

panies to engage and commit is or their

CEO and Board to declare that anti-corruption is a strategic issue that must

be addressed proactively, rather than a

control issue to be managed reactively.

It is not an issue that will be resolved

overnight. However, changes have been

signiicant and accelerating over the

last ew years.

Robert Greenhill Convincingly addressing the

scourge o corruption is one o thebest ways or companies to build trust

with communities around the world.

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REPORTINg APPROACh

Our Sustainability Report 2011 describes the strategy, organi-

zation, initiatives and goals or ensuring sustainability at

Siemens. It not only continues and supplements last years

Sustainability Report, but also serves as our annual progress

report on implementing the United Nations CEO Water Man-

date and the Global Compacts ten principles at the Company.

In addition, our Report is oriented to the recommendations o

the Global Compact and Transparency International regarding

anticorruption reporting.

REVIEW PERIOd ANd REPORT BOUNdARIES

This Report is based on activities during Siemens fscal 2011

(October 1, 2010 September 30, 2011). Any exceptions are

indicated as such. In general, all o our ully consolidated com-panies are covered by the Report. Here, too, possible excep-

tions regarding the data are indicated and explained. Minority

equity investments are not included in our sustainability

reporting. To provide an up-to-date picture o the Company,

we also include inormation about important developments in

fscal 2012 up to the editorial deadline on March 1, 2012.

During fscal 2011, we announced our plan to publicly list

our subsidiary OSRAM AG. Following this move, we classifed

the business as a discontinued operation. The change was

included in all disclosures on continuing operations in the

present Report. In general, however, the reported inormation

relates both to discontinued and continuing operations; devia-tions rom this are indicated.

dATA COllECTION

Given Siemens size and global spread, gathering data poses a

major logistical challenge. Moreover, our companies through-

out the world are required to comply with local regulations

concerning the compilation and defnition o perormance

fgures, which means that the generated data is not always

comparable. Where applicable, we point out any signifcant

limitations in the inormation presented in the Report. As a

rule, no company-wide standards exist or the inormation

published in the Sustainability Report. This applies in particu-lar to specifc fnancial fgures, including, or example, the

revenue attributable to the Siemens Environmental Portolio.

As a result, these fgures may not be comparable with the data

published under the same or similar designations by other

companies. The data published in our Sustainability Report is

collected through various internal reporting systems which,

or the most part, are dierent rom those applicable to the

fnancial inormation presented in our Consolidated Financial

Statements. In particular, the standards and controls applied

and the computer systems used during the preparation o the

data can be less comprehensive in comparison. We reserve

the right to change our internal guidelines regarding the in-

clusion o data in the Sustainability Report without prior

announcement.

EXTERNAl REVIEW

Not only have we prepared our Sustainability Report to high

quality standards, but we have also gone beyond typical in-

dustry practices by voluntarily commissioning a ull and

independent audit o the Report by PricewaterhouseCoopers

AG Wirtschatsprungsgesellschat (PwC). The auditors Inde-pendent Assurance Report can be ound on page 80. For such

limited assurance reviews, which provide a limited degree o

certainty, the review procedures are not as extensive as or a

review o our fnancial reporting. The auditors merely confrm

that nothing has come to their attention during the audit that

would cause them to believe that the inormation contained in

the Report departs materially rom the relevant sustainability

reporting requirements.

EdITORIAl NOTICE

All reerences to tons in the Sustainability Report reer to

metric tons.

Reporting method

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Facts and figures

Repori eo

Ioio

Csoers poroio

Copice

Eiroe proecio

Proc resposiii

Occpio e

se ee

Epoees

Sppiers

Corpore ciiesip

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Cross-unctional topics Facts and fgures

Reporting method Innovation

Customers and portolio

Compliance

Environmental protection

Product responsibility Occupational health and saety management

Employees

Suppliers

Corporate citizenship

56

Business success is a key element o sustainability. And deci-

sive or business success are long-term customer partnerships

and a strong local presence in the markets where our custom-

ers operate. One Siemens, our ramework or sustainable value

creation, concentrates on serving innovation-driven growth

markets and, at the same time, steadily expanding our custom-

er-oriented Environmental Portolio.

thE EnvIROnmEntal PORtfOlIO

IS a kEy dRIvER Of SuStaInablE gROwth

Thanks to the close relationships cultivated with our custom-

ers, we develop a considerable share o our portolio directly

with them, and oten even in their own companies. This ap-

plies in particular to our Environmental Portolio, in which we

bundle all those products, systems, solutions and services thatmake particular contributions to environmental and climate

protection. They can be divided into three main categories:

> First, products and solutions with especially high energy

eciency, such as combined cycle power plants or intelli-

gent building systems;

> Second, equipment and components or renewable ener-

gies, such as wind turbines and solar power plants; and

> Third, environmental technologies or the provision o clean

water and air.

The qualication o products and solutions or our Environ-

mental Portolio is based on dened processes and strict crite-ria. Once a year, the Siemens Sustainability Board approves

changes in the composition o the Portolio. In scal 2011, or

example, we added maintenance and repair or highly ecient

gas turbines.

In scal 2011, we generated revenue o 29.9 billion with Port-

olio oerings an increase o approximately 9% over the pre-

vious years revenue o 27.4 billion.

Within the ramework o One Siemens,

we have set ourselves a highly ambitious

growth target: By the end o scal 2014,

we intend to exceed 40 billion in reve-nue with our Environmental Portolio

and we will continue to strive or this goal even though it will

be more challenging to achieve due to our planned initial pub-

lic oering o OSRAM AG.

For more inormationon the Siemens Environ-mental Portolio, visit:

www.siemens.com/

environmental-portfolio

Yet this Portolio is also intended to help our customers reduce

their carbon dioxide ootprints, cut their energy costs and im-

prove their protability through an increase in productivity. Our

target or 2011 was to help our customers reduce their annual

carbon dioxide emissions by 300 million tons. With all the En-

vironmental Portolio elements that have been installed at cus-

tomer locations since the beginning o scal 2002 and are still

in use, we have exceeded our goal: By the end o scal 2011 we

reduced customer carbon dioxide emissions by 317 million tons.

Csoers poroio

FY 2011 FY 2010 1 FY 2009 1

Revenue generated by theEnvironmental Portolio (continuingoperations; in billions o ) . . .

Accumulated annual customerreduction in carbon dioxideemissions generated by elementsrom the Environmental Portolio(continuing and discontinuedoperations; in millions o tons)

Number o Market DevelopmentBoards (MDBs) established inconjunction with industry-specifcmanagement o key accounts

Revenue and CO2 reductions adjusted or comparability due to changes in theportolio.

We closed our Market Development Board or public authorities in 2011 due tochanges in the portolio.

SuCCESS On thE baSIS Of lOng-tERm CuStOmERRElatIOnShIPS In a SPIRIt Of PaRtnERShIP

Sustainable customer relationships are the basis or all our

business, and have been or over 160 years. We employ a struc-

tured key account management approach throughout the Com-

pany to look ater our major customers. This means that we

tailor our products and solutions to the size and regional site

structures o our customers, but we also ensure that our key

account managers continually develop Siemens relationships

to its customers and secure them over the long term. Key ac-

count managers are evaluated on the basis o the growth o

these customer accounts. The Market Development Boards

(MDBs) steer the key account managers. In concrete terms, em-

ployees rom a variety o Business Units come together here,concentrating on customer segments such as the automotive

industry, data centers or power utilities. With this approach,

we can oer a comprehensive spectrum o products and ser-

vices rom all our portolio elements and rom a single source.

Customers and portolio

http://www.siemens.com/environmental-portfoliohttp://www.siemens.com/environmental-portfoliohttp://www.siemens.com/environmental-portfoliohttp://www.siemens.com/environmental-portfolio

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Additional inormation

57

Our Business Units bear worldwide responsibility or their busi-

ness, that is, or their revenue and prots. This benets cus-

tomers o every size. Small and medium-sized enterprises and

organizations and they represent the majority o Siemens

customers receive local support. Our large international sales

orce, whose work is steered by our regional Clusters and Re-

gional Companies, ensures that our business-specic sales

strategies are implemented. Customers with major contracts or

large-scale projects, in contrast, are served directly rom the

headquarters o the respective Business Unit.

In addition, we regularly assess the strategic importance o the

market opportunities available to our Company. The Siemens

Sales Board determines whether the key account managers

have met their targets and makes sure that within Siemens,

synergies in customer management are maximized.

This approach is supplemented by our Executive Relationship

Program, in which all members o the Company s Managing

Board stay in direct contact with selected customers and main-

tain an ongoing dialogue with them to make certain they are

always amiliar with customers needs.

Thanks to these activities in particular, new orders in our key

account business have enjoyed growth that greatly exceeds

the average.

ImPROvIng CuStOmER SatISfaCtIOnOur business success is critically dependent on the satisaction

o our customers. For this reason, we measure customer satis-

action in every unit o the Company. During the year under

review, we used the Net Promoter Score (NPS) once again as a

uniorm standard or this purpose. This internationally recog-

nized and commonly applied managerial perormance indica-

tor, which we determine annually on a worldwide basis by

means o customer surveys, measures the reerral rate o our

customers. Our internal NPS target system, which is based on

business-specic, regional and industry benchmarks, is used

to set the target values or the Sectors and Clusters. The NPS

or 2011 was based on the results o more than 25,000 inter-

views. As planned, this represents a strong increase over theapproximately 18,500 interviews conducted the previous year.

We use the results to strengthen our customer orientation and

develop concrete measures or improvement together with

our customers, using their eedback as a basis. For example,

we have succeeded in shortening response times to customer

inquiries and speeding up deliveries. When implementing

measures such as these, we place a high value on our long-

term response to the inormation needs and comments o our

customers in line with a customer support approach aimed at

continuity.

Our customer management system has also been recognized

by outside institutions. In 2011, or example, Siemens was once

again ranked rst in Customer Relationship Management in

the Diversied Industrials category o the SAM Dow Jones

Sustainability Index. In addition, the Strategic Account Man-

agement Association (SAMA) designated our key account man-

agement program the Key Account Management o the Year

or 2011.

aSSuRIng thE lOng-tERm QualIty

Of CuStOmER SuPPORt

To assure the high quality and ongoing improvement o cus-

tomer support at Siemens, we have introduced company-wide

uniorm training programs or both key account managers and

the sales orce. Moreover, the sta in both areas is trained on

the topic o compliance to encourage conduct conormant

with guidelines, which itsel ensures our business success:

Absolute compliance with all laws and the Company s internal

guidelines and regulations is an elementary aspect o all our

worldwide marketing and sales activities.

In scal 2011, we were able to develop our relationships with

our customers around the world even more strongly and im-

prove the corresponding business gures. We are aiming at

generating signicant growth in scal 2012 as well a goal

that we intend to achieve in particular in our target industries

and across industry boundaries with our Environmental Port-

olio.

www.siemens.com/sr/customers

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79 Additional information

61

Greenhouse Gas emissions

Siemens stands by its global responsibility or climate protec-

tion. For this reason, we report our greenhouse gas emis-

sions Scope 1, Scope 2, and Scope 3 (travel) on the basis o

the guidelines in the Greenhouse Gas Protocol published by

the World Resource Institute (WRI) and the World Business

Council or Sustainable Development (WBCSD).

G g (in equivalent tons of CO2)1

(calculated using the model of the GHG Protocol)2

FY 2011 FY 2010 FY 2009 FY 2008

Scope 1 3 ,6, ,5, ,5, ,46,

Scope 2 3 ,4, ,6, ,55, ,9,

Scope 3 4 4, 4, 4, 454,

Ttl5 3,58, 3,6, 3,78, 3,95,

Data includes OSRAM. This timeline is based on continuing operations and is adjusted annually. All figures

are extrapolated to 100% coverage; previous years adjusted for comparability. Direct greenhouse gas emissions (Scope 1) are from sources in the Company s

possession or under its control. Indirect greenhouse gas emissions (Scope 2) referto consumption of purchased electrical energy and district heating.

Emissions from travel (flights, rail, rental cars). Discrepancies in totals are the result of rounding.

Dtbt f g g (in %)1, 2

FY 2011 FY 2010 FY 2009 FY 2008

Electricity anddistrict heating 5 5 5 5

Natural gas,fuel oil, other fuels 9 6

SF6 6 Other Kyoto gases 3

Travel

Data includes OSRAM. This timeline is based on continuing operations and is adjusted annually. All figures

are extrapolated to 100% coverage; previous years adjusted for comparability. This includes greenhouse gases such as technical CO2, HFC, PFC, CH4 and N2O.

In absolute terms, our greenhouse gas emissions have allen

by about 8% since 2008. Our Scope 1 emissions played an im-

portant part in this decline: Among other things, the reduction

o CO2 emissions rom our business vehicles has been notice-

able. One actor in this result is that our eet management has

defned emissions per kilometer as a criterion or vehicle selec-tion, which avors economical models.

Emissions, based on electricity and district heating, raised

slightly due to increased consumption. Emissions resulting

rom business trips also went up due to the greater number

o ights.

Our emission o SF6 ell urther in fscal 2011. Our goal is to

concentrate the use o SF6 at locations that are experienced

and efcient in handling this substance, and this strategy has

already had a avorable eect on our emissions.

Our reporting covers about 95% o our indirect and direct

greenhouse gas emissions. The remaining 5% comprises

greenhouse gas emissions caused by employee activities that

are not reported directly. Emissions are calculated on the basis

o extrapolation.

Compared with base year 2006, we have improved our CO2

efciency by 22% and thus exceeded our target o 20% by the

end o 2011.

ipvt vtl pfc Co2 , pw (in %, base year 2006)

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Environmental performance: portfolio-adjusted, based on aggregated plant revenue.

Status CO2 emissions, power (cumulative) Target (cumulative)

5% 9% 17% 18% 22%

Target FY 2011: 20%

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Cross-unctional topics Facts and fgures

Reporting method Innovation

Customers and portolio

Compliance

Environmental protection

Product responsibility Occupational health and saety management

Employees

Suppliers

Corporate citizenship

62

EnERgy COnSumPtIOn

All in all, our direct energy consumption in scal 2011 declined

by about 3% over the previous year.

direc eer cospio (in gigajoules) 1

FY 2011 FY 2010 FY 2009 FY 2008

Naturalgas/liquidpetroleumgas ,, ,, ,, ,,

Heating oil , , , ,

Hard coal/brown coal , , , ,

Gasoline/diesel uel 2 , , , ,

to3 ,47, ,344, 9,69, ,48,

Figures as collected in SESIS (including OSRA M), not extrapolated to 100% coverage. Energy consumption reported in SESIS or vehicles and machines at environmentally

relevant locations. Discrepancies in totals are the result o rounding.

Iirec eer cospio (in gigajoules)1

FY 2011 FY 2010 FY 2009 FY 2008

Electricity ,, ,, ,, ,,

Districtheating ,, ,, ,, ,,

to2 4,674, 4,98, 4,, ,,

Figures as collected in SESIS (including OSRA M), not extrapolated to 100% coverage. Discrepancies in totals are the result o rounding.

Our indirect energy consumption increased in comparison

with the previous year, or example by 2% or electricity. This is

due to higher capacity utilization at our production locations.

Nonetheless, our Energy Eciency Program (EEP) is beginning

to take eect. By the end o scal 2011 we had conducted en-

ergy analyses at over 100 locations. In addition, Siemens