CORPORATE SOCIAL RESPONSIBILITY REPORT OF THE KONCAR - ELECTRICAL ENGINEERING INSTITUTE KONCAR Electrical Engineering INSTITUTE

Contents I GENERAL STANDARD DISCLOSURE STRATEGY AND ANALYSIS ORGANIZATIONAL PROFILE IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES STAKEHOLDER ENGAGEMENT REPORT PROFILE ETHICS AND INTEGRITY RESEARCH AND DEVELOPMENT PROPRIETARY SOLUTIONS LABORATORIES OF THE INSTITUTE NOTIFIED BODY AND PRODUCT CERTIFICATION BODY II SPECIFIC STANDARD DISCLOSURES CATEGORY: ECONOMIC CATEGORY: ENVIRONMENTAL CATEGORY: SOCIAL: Labour practices and decent work CATEGORY: SOCIAL: Human rights CATEGORY: SOCIAL: Society EXTERNAL ASSURANCE GLOBAL REPORTING INITIATIVE G4 CONTENT INDEX – CORE OPTION

I General standard disclosure KONČAR – Electrical Engineering Institute Inc. • Founded in 1961, reorganised in 1991 • Headquarters in Zagreb, Fallerovo šetalište 22 10 MODERN EQUIPPED LABORATORIES mil € INCOME FROM SALES IN 2016 • independent stock company within An KONČAR Group 82% EMPLOYEES WITH HIGH OR HIGHER EDUCATION Mission Through application of knowledge and state-of-the-art technologies we develop solutions for efficient energy conversion and power transmission, on the principles of Corporate Social Responsibility. Vision To become a globally recognizable partner in the fields of power...

Strategy and analysis LETTER FROM THE MANAGEMENT G4-1 Continuous adaptation to new trends, increasingly complex customer requirements, and slowing down economic growth of power industry and transport in the surrounding countries are for KONČAR – Electrical Engineering Institute challenges that are increasing each year. Creation of innovative and competitive technical solutions and services, continuous investment in the development, professional improvement of employees, minimization of environmental impact, and care about the community are the pillars of our sustainable operations. In 2016 we...

KONCAR - Electrical Engineering Institute is a stock company engaged in research, development and testing in natural, technical and technological sciences. As one of KONCAR Group companies the Institute is oriented towards applied research, testing and support to development projects of the Group. Besides supporting the Group in power industry and transport, the Institute offers its proprietary solutions and services in the global market. The Institute has the status of an autonomous company wholly-owned by KONCAR - Electrical Industry Inc., which leaves the Institute its entire profit for further...

The organization of the Institute enables an efficient adaptation to the market rules and investment of its own funds in new technologies and applied research for development of new solutions. Such approach results in employees’ and customers’ confidence and competitive solutions whose characteristics and qualities meet all the customer criteria. Departments of the Institute as centres of key competences for individual groups of products are profit centres, and the only measure of their business efficiency is value added, which is also the basis for determination of workers’ income in departments....

RESEARCH AND DEVELOPMENT The Institute follows trends and invests in research in order to be the leader in application of advanced technologies to the production programme of companies of the KONČAR Group and to im­ rove its p proprietary solutions for the global market. PROPRIETARY SOLUTIONS State-of the-art technical solutions of the Institute are results of decades of experience and knowledge gained in the field of electric power equipment. Monitoring systems enable enhanced capital asset management and risk control. Monitoring systems for transformers, rotating machines and switchgears Control...

KONČAR Group Croatia Export Transport Energy Trade Industry • 167 employees • 82% with faculty degrees and post-secondary school • 11 with PhD and 4 with MSc degrees • female executives (Managing Board and heads of 54% departments) • 50% employees with 10 or less years of service • Average age 40 years • Average years of service 15 years under 30 years 30 - 39 years 40 - 49 years over 50 years Rights defined in the Col­ective Agreement are guaranteed to all the employees. In 2016 92% of them have l had permanent employment contracts. Code of Business Ethics is the basis on which the Institute...

• Croatian Academy of Engineering (HATZ) • Croatian Laboratories (CROLAB) • Electrotechnical Society Zagreb (EDZ) • European Committee for Electrotechnical Standardization (CENELEC) • Croatian Chamber of Economy (HGK) • Croatian Automotive Industry Competitiveness Cluster • Croatian ICT Industry Competitiveness Cluster • Croatian Electrical and Mechanical Machinery Industry and Technology Competitiveness Cluster • Croatian Maritime Industry Competitiveness Cluster • Croatian Defence Industry Competitiveness Cluster • Croatian Chamber of Electrical Engineers (HKIE) • Croatian Chamber of...

G4-24 - G427 Inclusion of stakeholders and taking into account their needs are indispensable preconditions for strategy setting, identification of material aspects, and elaboration and content of each CSR report. To improve additionally the communication with stakeholders, a new website was developed in 2016 to promote monitoring and diagnostics of rotating machines, and also interactive communication through social networks was established. The existing website of the Institute contains information and contacts for all departments, so that our stakeholders can give us their suggestions or complaints....

The content of this CSR report follows GRI G4 guidelines, and this year it is in accordance with GRI G4 – Core option. This is the 10th CSR report of the Institute made in accordance with internationally recognized methodology of Global Report­ng Initiative (GRI). It is published annually, and each report contains the results from the previous calendar year, i and provides a balanced and reasonable presentation of the effects of Institute’s sustainability. Last report was published in May 2016, and it is planned to publish the next one in April 2018. Besides topics relevant for sustainable development,...