Environmental StatementReport Environmental Protection and Safety Taicang 2016

CONTENTS

General Part

Foreword 3 Message from the shareholders 3 Introduction by the Chief Executive Officer 5

Company Portrait 7 The Schaeffler Group 7 Schaeffler worldwide 11

Environmental Protection Worldwide 13 Standards on Environmental Protection and Occupational Safety 14 Schaeffler Environmental, Health and Safety Policy 15

Environmental Communication 16 Award 17 Environmentally Friendly Products 18

Location Part

Location 19 Introducing the Location in Taicang and Anting 19

Environmental Impacts 22 Direct Environmental Impacts 22 Indirect Environmental Impacts 26

Health and Safety 27 Risk Management 27 Safety at work 28 Social aspects 29

Key Indicators according EMAS III 31

Environmental Indicators 35 Input 35 Output 37

Goals and Programs 39 Our Plan 40

Validation and responsibilities 41

CONTENTS | 2

Message from the shareholders

Maria-Elisabeth Schaeffler-Thumann | Georg F. W. Schaeffler

3 | FOREWORD

Yours,

Maria-Elisabeth Schaeffler-Thumann Georg F. W. Schaeffler

Schaeffler, which is based in Herzogenaurach (Germany), is a leading technology company and supplier to the automotive sector and around 60 further industrial sectors. The listed family-owned company has around 86,600 employees worldwide who, with their expertise, reliability, and commitment, lay the foundations for the company’s success.

The highest quality, outstanding technology, and strong innovative ability represent the basis for the Schaeffler Group’s lasting success. Sustainable management is a success factor for both the company and for our established corporate culture, which we as family shareholders represent.

For this reason, the consideration of ecological and social criteria has been an integral part of our corporate guidelines for many years.

In particular, the Schaeffler Group made a commitment to comply with a standardized, worldwide environ-mental management system that fulfills the highest requirements more than 20 years ago. This system has been continuously developed and now includes the topics of environmental protection, health protection, and occupational safety, which the company implements in a consistent manner.

All manufacturing locations have been validated according to the stringent EMAS regulations and certified according to ISO 14001 and OHSAS 18001 with regard to occupational safety. In the field of environmental protection, Schaeffler is playing a leading role on an international level and received an award from the European EMAS Commission in 2015.

We are delighted that the 2016 environmental statement documents the successful connection between cost-effectiveness, environmental protection, and social factors inside and outside the company.

FOREWORD | 4

Introduction by the Chief Executive Officer

Klaus Rosenfeld

5 | FOREWORD

The world is moving. And it is clearly getting faster by the day. Ongoing climate change, increasing urbanization, globalization, and digitalization will all permanently influence and change the ways in which we live and work.

These are changes that we want to play an active part in shaping. Our “Mobility for tomorrow” strategy was put in place in order to allow us to achieve this goal. Based on the four megatrends listed above, Schaeffler is focusing on four areas across divisions and regional borders: “Eco-Friendly Drives”, “Urban Mobility”, “Interurban Mobility”, and “Energy Chain”. As a globally active automotive and industrial supplier, we provide our customers with products, system solutions, and services that help to make our world cleaner, safer and smarter.

Within the Schaeffler Group too, however, sustainable management along the entire value-added chain and social responsibility are integral parts of the corporate culture that we practice. We place great emphasis on combining economic success with acting responsibly towards our customers, the environ-ment, and our employees. We provide a safe working environment for our employees in addition to active health protection measures and services. This has its key points firmly anchored in our corporate code of conduct.

Group-wide governance guarantees that our guidelines and high standards in the fields of environmental protection, health protection, and occupational safety apply at every Schaeffler location around the world. Every one of the Schaeffler Group’s manufacturing locations works with environmental management sys-tems according to EMAS or ISO 14001. We are always working to further develop these, and we prioritize Europe’s stringent EMAS standard as the basis wherever possible. We do not differentiate between our plants in Germany and those in other countries in Europe, the USA, or Asia; after all, we believe there is only one environment – one that is global and worth protecting. When it comes to fulfilling high environ-mental and social standards, we also actively involve our suppliers.

As a global family-owned company, we are joined by four central values – sustainable, innovative, excellent, and passionate – and these are the expression of our responsibility towards the environment and our customers and employees, as well as towards future generations. Our aim is to keep continuously developing Schaeffler by not losing sight of our vision, which makes a future worth living possible.

Klaus Rosenfeld Chief Executive Officer, Schaeffler AG

FOREWORD | 6

The Schaeffler Group

The Schaeffler Group is a global automotive and industrial supplier. Top quality, outstanding technology, and exceptionally innovative spirit form the basis for the continued success of the company. The Schaeffler Group identifies key trends early on, invests in researching and develo-ping new forward-looking products, and sets new standards in technology. Extensive systems know-how enables the Schaeffler Group to offer compre-hensive solutions that are tailored to customer and market requirements. By delivering high-precision components and systems in engine, transmission, and chassis applications, as well as rolling and plain bearing solutions for a large number of indus-trial applications, the Schaeffler Group is shaping “Mobility for tomorrow” to a significant degree. The company already offers innovative products for hybrid and electric vehicles today.

With its approximately 86,600 employees, the Schaeffler Group is one of the leading global tech-nology companies, and its network of manufactu-ring locations, research and development facilities,

and distribution companies consists of approxi-mately 170 locations in over 50 countries. The group’s 75 production facilities are the cornerstone of its operations. As a global development partner and supplier, Schaeffler maintains stable long-term relationships with its customers and suppliers. In addition to Schaeffler AG, a publicly listed stock corporation incorporated under German law with its registered office in Herzogenaurach that acts as the group’s lead company, the Schaeffler Group includes 152 domestic and foreign subsidiaries as at December 31, 2016.

Strategy “Mobility for tomorrow”

“As a leader in technology, we combine a passion for innovation with the highest standards of quality to shape the future of mobility – for a world that will be cleaner, safer, and smarter.” This is the vision of the Schaeffler Group. To live up to this claim, Schaeffler adopted its strategy “Mobility for tomorrow” in 2016.

Vision“As a leader in technology, we combine a passion for innovation with the highest standards of quality to shape the future of mobility – for a world that will be cleaner, safer, and smarter.”

Mission“Guided by the values of a global family business, we work closely together with our customers as true partners to deliver a compelling value proposition through our best-in-class expertise in manufacturing technology and systems know-how. In doing so, we contribute to the success of our customers, the advancement of our employees, and the prosperity of our society.”

7 | COMPANY PORTRAIT

Eco-friendly drives Urban mobility

Interurban mobility Energy chain

Under this strategy, the Schaeffler Group concentrates on 4 focus areas: Eco-friendly drives, urban mobility, interurban mobility, and energy chain. These 4 focus areas are based on four megatrends that will influence the business of the Schaeffler Group in the future: Climate change, urbanization, globalization, and digitalization.

On this basis, the Schaeffler Group’s Board of Managing Directors developed 8 strategic pillars in cooper-ation with the Supervisory Board and senior management worldwide. These pillars define the company’s scope for strategic action for the next few years and form the basis for the continuous further development of the Schaeffler Group. The “Agenda 4 plus One” excellence program ensures that the strategy is executed; it comprises 16 strategic initiatives that have significance worldwide and have been selected from a variety of initiatives.

We want to be the preferred technology partner for our customers.

We are an Auto motive and Industrial supplier.

We are a global company with a local presence throughout the world.

We produce components and systems.

We view E-Mobility, Industry 4.0 and Digita-lization as key opportunities for the future.

We strive for the highest possible quality, efficiency and delivery performance.

We want to be an attractive employer.

We live by the values of a global family business.

COMPANY PORTRAIT | 8

Efficient Future Mobility concept vehicles show technological solutions for regional requirements. The Efficient Future Mobility China concept vehicle is shown here.

Divisions

Automotive The Schaeffler Group has divided its business activities into the two divisions Automotive and Industrial. As a partner to the automotive sector, the Schaeffler Group leads the field when it comes to developing and manufacturing groundbreaking components and systems for engines, trans-missions, and chassis, for both vehicles with drive trains based on the internal combustion engine and hybrid and electric vehicles. The Automotive division business is organized into the business divisions (BD) Engine Systems, Transmission Systems, Chassis Systems, and Automotive Aftermarket.

The Automotive division’s main products include clutch systems, transmission components, torsion dampers, valve train systems, camshaft phasing units, electric drives, and bearing solutions in transmissions and chassis. The Schaeffler Group’s precision products and systems are key to helping make engines use less fuel and comply with incre-asingly strict emission requirements. At the same time, they also extend engine and transmission life

and increase driving comfort and dynamics. Its comprehensive technical expertise for the entire drive train is what sets apart Schaeffler Automotive, one of the leading automotive suppliers worldwide. As future consumption and emissions targets can only be fully met by electrifying the drive train, the Schaeffler Group offers solutions for the entire range of electrification types – from hybrid through to fully electric drive systems.

A comprehensive Aftermarket portfolio rounds out the business of the Automotive division. The product range covers applications in clutch and release systems, engine and transmission applications, and chassis applications. In addition, Schaeffler Automotive Aftermarket offers a com-prehensive variety of services such as practice-oriented training courses, advice provided by the Schaeffler repair hotline or the group’s online garage portal, as well as the development of specialized tools.

9 | COMPANY PORTRAIT

The bearings and related products manufactured by the Industrial division are used, for example, in wind turbines.

Industrial The Industrial division is primarily managed based on regions due to its wide customer and business structure. On this basis, the Europe, Americas, Greater China, and Asia/Pacific regions operate as profit centers responsible for the Industrial business in their respective markets. Within the regions, the Industrial business is grouped into eight sectors: (1) wind, (2) raw materials, (3) aerospace, (4) rail, (5) offroad, (6) two wheelers, (7) power transmission, and (8) industrial auto-mation. Sales to distributors (Industrial Distribu-tion) round out the Industrial division’s regional business.

The Industrial division’s product spectrum includes rolling and plain bearings, linear technology, main-tenance products, monitoring systems, and direct drive technology. The Industrial division offers a broad portfolio of bearing solutions, ranging from high-speed and high-precision bearings with small diameters to large-size bearings over three meters in diameter. Components are increasingly being integrated in system solutions, some of which are designed as mechatronic systems with data- generating sensors.

With its rolling bearing, linear technology, and direct drive solutions, the Schaeffler Group offers comprehensive technological and application en-gineering expertise for complete systems from one source that are precisely matched to one another. The focus is increasingly on smart products and on connecting components. One example is the “Machine Tool 4.0”, whose sensor-equipped com-ponents measure and report vibrations, forces and temperatures at all relevant bearing positions.

The majority of rolling bearings is supplied by the “Bearing & Components Technologies” (BCT) unit as an internal supplier. The bearings and related products are used in applications in drive techno-logy, production machinery, and wind turbines, as well as in heavy industries. In the aerospace sec-tor, the Schaeffler Group is a leading manufacturer of high-precision bearings for jet and helicopter engines as well as for space travel applications.

COMPANY PORTRAIT | 10 COMPANY PORTRAIT | 10

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11 | COMPANY PORTRAIT

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COMPANY PORTRAIT | 12

Environmental Protection Worldwide

At all manufacturing locations Since the mid-1990s, Schaeffler has been deve-loping an environmental management system of which it has every reason to be proud today: Virtually all of the company’s manufacturing locations are certified according to ISO 14001 and the even more stringent EMAS regulations. New locations generally follow suit within three years.

Leading role in the application of EMAS The total number of EMAS-registered manu-facturing locations, particularly outside the European Union, means that Schaeffler is playing a significant leading role. Schaeffler was the first organization to apply EMAS outside the EU, thus laying the foundation for the registration of locations in third countries that subsequently became possible with EMAS III (also referred to as “EMAS Global”).

Numerous awards Schaeffler’s commitment here has already garnered special awards on numerous occasions, including the Bavarian Environmental Medal, the “Ökoglobe”, and the Ford Motor Company’s “Recognition of Achievement, Environmental Leadership”, which it has also won three times in a row. Schaeffler won the EMAS Award for Germany and Europe in 2005 and, in 2015, also received an honorary award during the European EMAS Awards ceremony.

Sharing experiences Schaeffler shares its experience and expertise in this field with interested groups in numerous different ways – for example, it is a member of the Environmental Verification Committee, leads the EMAS Review working group, creates various EMAS reference documents, carries out research studies, receives visits from universities and expert groups, holds regional meetings with EMAS clubs, and takes part in numerous conferences and workshops relating to EMAS and environmental management.

Manufacturing location at Schaeffler Bühl

13 | GLOBAL ENVIRONMENTAL PROTECTION

Standards on Environmental Protection and Occupational SafetyISO 14001 ISO 14001 is an international, private standard for environmental management systems. It was published in 1996. Similar to the quality standard ISO 9001, also ISO 14001 is built on the Plan-Do-Check-Act cycle for the continuous improvement of systems. That cycle was developed by William Deming in the 1930s years. Like all ISO standards the current ISO 14001 chapters follow the so called high level structure. Important contents are amongst others the preparation of an environ-mental policy, the assessment of environmental impacts, the definition of responsibilities and the preparation of an environmental program, docu-ment control and conducting audits. Many bigger companies, especially from the automotive sector, require that their suppliers are certified according to this standard by an accredited certifier. Because of this it is wide spread.

EMAS EMAS stands for environmental management and audit scheme. The basis of the system is a Euro-pean regulation, which was published in 1993. However the participation is voluntary. EMAS requires a system according to ISO 14001 and additionally compliance with environmental law and the preparation of a comprehensive environ-mental statement. Both has to be checked and confirmed by a licensed or accredited environ-mental verifier. EMAS is the superior and more ambitious of both systems. It is focusing on perfor-mance, transparency and credibility and is mainly implemented within the European Union.

OHSAS 18001 OHSAS 18001 is based on a British standard for occupational health and safety management systems. It exists since 1999 and has much in common with ISO 14001 or ISO 9001. One main element is the preparation of risk assessments. Since 2016 a draft of an ISO 45001 is available, that will replace OHSAS 18001 within the next years.

ISO 50001 ISO 50001 is a relatively young standard for energy management systems. The structure and contents is similar to those of ISO 9001, ISO 14001 and ISO 45001. Especially because of tax incentives the number of ISO 50001 certifications has increased significantly in many countries during the last years.

GLOBAL ENVIRONMENTAL PROTECTION | 14

Schaeffler Environmental, Health and Safety Policy

Environmental protection, occupational health, and occupational safety (EHS) are part of our management principles. We help ensure the continuity and success of our company by creating and sustaining a work environment that is safe, healthy, and conducive to performance and by actively protecting the environment. The following principles apply to all areas of our company. We are committed to taking responsibility for our employees, society, and future generations.

Efficient Occupational Health and Safety and Environmental Protection Management We actively use a global occupational health and safety and environmental management system that is undergoing continuous improvement and provide our employees with a fulfilling and fruitful life until retirement age. We elaborate forward-looking holistic concepts, structures, and processes that we implement in collaboration with our contractual partners. We carry out regular checks across all areas to determine the extent to which these measures have been implemented and to monitor the success of our management system.

Safe, Employee-Friendly Workplaces We are convinced that all occupational accidents and illnesses can be avoided. Motivated em-ployees and managers help us achieve our goal of a zero-accident workplace. When it comes to protection, our employees and contractors have equal priority. When designing work centers and procedures, we take into account the latest trends and developments and place special emphasis on ergonomic design.

Reliable Actions We are committed to observing all legislation and specifications regarding work safety and environ-mental protection. We act in a responsible manner in accordance with our own regulations, which, in many cases, go beyond existing legal requi-rements. We configure, purchase, operate, and maintain machines and facilities in such a way as to minimize potential hazards, risks, and operati-onal disturbances. Our technology is based on the latest state of the art.

Minimum Environmental Impact and Environmentally-Friendly Products Regardless of the activities we are carrying out, we endeavor to minimize environmental impact by taking suitable measures in advance. We consume raw materials and energy sparingly and make every effort to minimize waste, waste water, noise, and other emissions. We manufacture environmentally-friendly products taking into account the entire product lifecycle.

Responsible Employees We hold regular information and training sessions to ensure that our employees and business part-ners have the expertise and knowledge to carry out their work safely in a health-promoting manner and with the minimum of environmental impact in all areas of the company.

Preventive Measures We preserve and promote the physical and psycho-logical health of our employees. We take compre-hensive preventive measures to protect our em-ployees and prevent damage to the environment. Comprehensive and effective emergency measures are in place at all locations to ensure that our employees and visitors are treated properly in the event of injury.

Open Communication We conduct an intensive and trusted dialog with interested parties. We provide information about our work safety and environmental protection measures as well as the impact each of our locations has on the environment.

Chief Executive Officer, Schaeffler AG Klaus Rosenfeld

15 | GLOBAL ENVIRONMENTAL PROTECTION

The company’s intranet provides comprehensive information: contact persons, databases, a waste guide and much more. This information is made available to all employees worldwide.

Company newsletters and notices are also used to inform employees.

Regular Conferences Environmental protection conferences held every year allow participants to exchange information and coordinate goals and actions. These confe-rences last several days and are attended by the environmental protection coordinators from all locations.

Since environmental protection conferences were first introduced, cooperation and coordination (e. g. for planning environmentally relevant facilities) between all locations have improved tremendously.

Global Regulations: Plant Standards and Procedures All actions relevant for the environment, such as the approval of indirect materials or the specification of substances prohibited for use in products and packaging, are regulated globally by special plant standards. In this way, Schaeffler ensures that hazardous materials are used only if there are no other alternatives.

Environmental Communication

The relevant departments are informed in a timely manner about the use of such materials, and the required action is taken. This means that our customers can be sure that products supplied by Schaeffler contain only approved materials.

Safety rules and regulations also apply to con-tractors working in Schaeffler plants. A document detailing all safety-related requirements has been prepared for contractors working on the plant premises. Contractors may not enter the premises to perform their work unless they have agreed in writing to comply with these requirements.

Regular Internal and External Audits The level and progress of the company’s environ-mental protection are also monitored by regular internal audits at all manufacturing sites as well as external audits by an independent environmental verifier. These audits are planned and coordinated at company headquarters and carried out by the Schaeffler auditor pool. The Schaeffler Group’s internal environmental auditors participate in multi-day training courses for auditors on a regular basis.

All locations receive an audit report that includes details of the current status and recommendations for improvement.

Due dates and responsibilities are defined for all relevant measures.

ENVIRONMENTAL COMMUNICATION | 16

European EMAS Award 2015

Schaeffler receives an honorary award for environmental protection

In May 2015, Schaeffler received an honorary award from the European Commission for its leading role in the application of EMAS during the European EMAS Awards ceremony. Schaeffler had registered its first location in China in accordance with EMAS, and has more manufacturing locations on the register than any other company, particular ly outside of the EU.

The award was presented by Kestutis Saduaskas, director of the European Commission’s Green Economy section, during the ceremony in Barcelona, and received on behalf of Schaeffler by Lennart Schleicher, Director of the Environmental Protection and Safety Management System.

Prior to this, Schaeffler had won the national preliminary selection in the “major companies” category.

The European EMAS Award was first announced in 2005 and even at the start was presented to Schaeffler at both the national and European level.

EMAS, which stands for European Eco-Manage-ment and Audit Scheme, is a management system designed to help organizations improve their environmental performance and communicate their results. EMAS is chiefly characterized by its performance, credibility, and transparency, and is considered to be the premier environmental management system.

17 | AWARD

Environmentally Friendly Products

Environmental pollution and the depletion of resources can largely be attributed to the increased consumption of products. We must change our way of thinking and insist on environmentally friendly products that use fewer resources and minimize the strain on the environment. Our “Integrated Product Policy (IPP)” addresses this idea and aims to promote environmentally friendly products.

Schaeffler – Always One Step Ahead This isn’t a new idea for Schaeffler; we have embraced this idea for many years. We accepted the challenge to design environmentally friend-ly products a long time ago. What is new is the methods and tools used to achieve this goal. How can we utilize previously untapped potential to improve the ecobalance of a product over its entire lifecycle?

New Inroads One way to make environmentally friendly pro-ducts is to increase the efficiency of the material and energy used, thus reducing environmental impacts. We continuously evaluate and design all material and energy flows, from the time they enter the company to the time they leave as products or residual materials.

Comprehensive Data Management The company’s own environmental data coordi-nator handles inputs and outputs of material and energy flows for all processes and products at the respective plant. Material flow analyses help further integrate environmental management into the company’s corporate units, such as Logistics, Manufacturing and Financial Controlling. Existing processes and technologies are questioned tho-roughly, and additional opportunities for improving processes are recognized and put into practice.

Information Networks Environmental impacts occur even when resources are extracted. To make products even more environmentally friendly, Schaeffler stays in close contact with its suppliers and customers. A shared network is used to record and analyze environmen-tal information along the entire product chain. The insights gained allow new solutions to be recognized for environmentally friendly products and sustainable development.

Recycling We try to ensure that manufactured components are recycled at the end of a vehicle’s service life. This is why LuK and INA are founding members of the Partslife recycling system.

ENVIRONMENTALLY FRIENDLY PRODUCTS | 18 ENVIRONMENTALLY FRIENDLY PRODUCTS | 18

Introducing the Location in Taicang and Anting

Since its investment in manufacturing facilities in China in 1995, Schaeffler Greater China has established a comprehensive customer service system and built up competitive advantages in manufacturing, sales, R&D and technical support. Currently, Schaeffler Greater China has 10,863 em-ployees at end of 2015, one R&D center in Anting. 7 productions bases in Taicang, Suzhou, Nanjing and Ningxia. 20 sales offices nationwide including in Beijing, Shanghai, Hongkong and Taiwan. With a view to its future long-term development, Schaeffler will continue to invest in China and build up new factories in Nanjing or other locations. Schaeffler Greater China has laid solid foundation for providing long-term, high-quality and conveni-ent services to Chinese customers.

To accomplish the goals of best quality and to give the well organized response to our customers, we have achieved QS 9000 since 1998. For the better and higher level of the satisfaction to the custo-mers, we have achieved ISO/TS16949 since 2003.

We focus on product quality as well as our environ-mental conservation and occupational health. We have achieved ISO 14001 since 2000 and OHSAS 18001 were certificated in 2009.

Taicang Location There are 4 plants on 2 sites in Taicang. Plant 1 is located in Chaoyang Road and Plant 2, 3 and 4 are located in Schaeffler Road. Plant 1 is only 5 km away from Plant 2 & 3. There round about 6877employees are working for Taicang plants. Among them, around 1293 employees from Central function are supporting plant production.

Plant 1 Plant 1 was established in 1998 with plot size of 41,020 m², toal gross floor space is 27,230 m². Among them, production area is 17,430 m². Currently, around 1416 employees are working at this location.

The main parts are engine components for automo-tive industry includes hydraulic tappet, mechanical tappets, finger follower with pivot element; variable camshaft timing ( VCT), oil control valve and belt Chain

The main production process are forming, turning, heat treatment, coating, grinding, assembly.

Plant 2, 3 and 4 Plant 2, 3 and 4 were built up at the same premise and located in the industrial area. Total plot size of plant 2, 3, and 4 are 199,000 m².

19 | LOCATION

Plant 2 Plant 2 was established in 2006 with plot size around 55,000 m² and toal gross floor space is around 31,608 m². Among them, production area is 20,592 m². Currently around 1171 employees are working at plant 2.

The main products are for industrial field and range includes: Wheel Bearing(WB), EPB, TR, ECO-S, Textile Bearing (TB), overruning alternator pulley (OAP), Ball Screw Support Bearing (BSSB) and water pump Bearing(WPB).

The main production processes are turning, heat treatment, grinding, honing, assembly, galvanic and machining.

The wheel bearing was located in plant 3 and were relocated to plant 2 in 2014. Furthermore, the new investment will be continued to plant 2 after production was relocated to Nanjing plant.

Plant 3 Plant 3 includes building 3 and Hall 5. Building 3 was established in 2006 with plot size around 55,000 m² and total gross floor space is around 34,461 m². In building 3, the production area is 22, 676 m². Hall 5 was established in 2014 with plot size around 18,000 m². Hall 5 is divided phase 1 and phase 2, phase 1 has already started production, phase 2 is still under construction. Currently around 1516 employees are working at plant 3.

The main parts are clutch and transmission com-ponents for automotive industry includes wheel bearings, clutch pressure plate, clutch disc, dual mass fly wheel, clutch release systems, Clutch engagement system (ERS) and Double Clutches dry/ wet.

The main production processes are stamping, heat treatment, machining, grinding, assembly.

Plant 4 Plant 4 was established in 2012 with a plot size 88,667 m² and total gross floor space is 38,966 m². Among them, production area is 29,273 m². Currently around 1481 employees are working at plant 4.

The main parts are for automotive industry inclu-des needles, finger follower pins, thrust needle bearing, shell type needle bearing, radial needle cages, synchronizer rings, clutch release bearing, detent pins, shift modules, strut-bearing/ steering bearing, plastic components, spherical roller bearing (SRB) cages.

The main production processes are stamping, heat treatment, grinding, honing, assembly.

LOCATION | 20

Training Center On the demand of adequate and qualified workers for the ever developing production, a training cen-ter has been established in 2005. In 2012 training center was relocated from other location in plant 4. The training center occupied 1,124 m² among production area of plant 4.

Currently there are about 240 apprentices study-ing at training center. These young apprentices frequently received environmental protection and occupational safety training from EHS function. Vocational training, refresher training courses or cooperative education programs are conducted in the training shop.

Anting Anting is one of the centers of the Chinese auto-mobile industry, located in the Jiading District of Shanghai. Schaeffler R&D Center was established there in 2007, cover an area of 21,000 m² and comprise state-of-the-art testing facilities, labo-ratories, as well as a center of competence and a modern product showroom. Currently more than 1699 employees are working at this location.

The construction for new office building in Anting starts in Apr. 2013 and were completed in Feb. 2015. The new building was located in the west of the existing building. The plot size of the new building is 6,767 m² . The total gross floor space is around 18,584 m². Among them, net office apace is 5, 835m². The new building is mainly for exten-ded R&D center and sales office.

2 new gas tanks 2 new underground gas tanks using for fire engine test rig which started construction in Oct. 2013 and were completed in Mar. 2014. The 2 double-wall underground tanks with volume 5 m3 each which one is petrol gas tank and the other is diesel gas tank. All the necessary legal requirements are met before start construction tanks. The previous diesel tank was scrapped and digged out.

Anting

21 | LOCATION

One of the primary goals of environmental protection is to prevent environmental impacts at their source or to at least minimize unavoidable impacts. A large number of measures have been implemented to achieve this goal.

Legal requirements and permitted limits According to China law, every new manufactu-ring operation must comply with Environmental Protection Three Simultaneousness project in their process of construction. Three Simultaneousness requires that environmental protection facilities should be designed, established and ready to use with the main body of the project.

Note: Under Article 26 of the Environmental Pro-tection Law, installations for the prevention and control of pollution at a construction project must be designed, built and commissioned simultane-ously with the design, construction and operation phases of the project.

Environmental Impacts

“Schaeffler China has already built pollution pre-vention facilities. All plants have passed environ-ment protection acceptance”. Quoting from Official Document of Taicang Environmental Protection Bureau. The environmental final acceptance was released by Taicang Environmental Protection Bureau.

The permitted limits were defined in the final acceptance of environmental impact assessment. Please refer to the table below. If written “N/A” in the table that means the limit is not required to be tested or no limit could refer to it.

Plant / Location

Waste Water (limit) Waste Water (current)Chemical

oxygen demand (CSB / COD)

[mg / l]

Zinc / Zn [mg / l]

Nickel (Ni) [mg / l]

Chemical oxygen demand

(CSB / COD) [mg / l]

Zinc / Zn [mg / l]

Nickel (Ni) [mg / l]

Anting (Shanghai) China 500 5 1 486 N / A N / A

Taicang I China 500 5 1 194 N / A N / ATaicang II-IV China 500 1 1 80.8 0.32 N / AGermany 500~1000 2 0.5

Table 1 most important limit

Plant / Location

Emissions (limit)

Particle matter (PM) [mg / m3]

Nitrogen Oxide (NOx)

[mg / m3]

Sulfur Dioxide (SO2)

[mg / m3]

Volatile organic carbons (VOC)

[mg / m3]

Noise outside day + night

dB (A)Anting (Shanghai) China 120 200 50 N / A 60 + 50

Taicang I China 120 240 550 N / A 60 + 50Taicang II-IV China 120 240 550 N / A 65 + 55

Germany 20 0.1 - 0.35 0.35 75

70 + 70 (industrial)

65 + 50 (commercial)

ENVIRONMENTAL IMPACTS | 22

Emissions Manufacturing emissions such as oil mist have been reduced considerably by using electrostatic air filters. New types of filter system will be tested to help reduced these emissions even further. Air pollutant emissions associated with boilers can occur. However, natural gas boilers are used and these boilers are considered clean relative to coal-or oil-fired boilers. To keep air fresh and clean at the shop floor clean, dust/particle originated from work station are sucked through filtering system and collected in the bag. Waste air from heattreat-ment process are burned by using natural gas before emitting to the outside.

Saving Water Water is supplied by city municipality. A save water campaign is spreading in whole China now due to water shortage. At our locations, water is being reused and recycled maximally from production line, for example: recycling cooling water and boi-ler water and reusing polishing wastewater.

We try to minimize the consumption of water ex-pense. Installing centrifuges to clean process water has almost eliminated waste water in process that usually generate large volumes, such as vibratory finishing. Centrally located emulsion facilities allow a very long service life for cooling lubricants, thus preventing unnecessary water consumption. All of these efforts have resulted in a significant reduction in fresh water consumption in manufac-turing.

Water Protection Our sites adopted a separate discharge of sewage and rainwater as a drainage system. Wastewater

Plant / Location

Emissions (current)

Particle matter (PM) [mg / m3]

Nitrogen Oxide (NOx)

[mg / m3]

Sulfur Dioxide (SO2)

[mg / m3]

Volatile organic carbons (VOC)

[mg / m3]

Noise outside day + night

dB (A)Anting (Shanghai) China N / A 162 45 N / A 54.3 + 47.6

Taicang I China N / A 32.2 10.8 N / A 59.8 + 49.8Taicang II-IV China N / A 1.6 5.13 N / A 64.8 + 54.7Germany

originates mainly from industrial and domestic sources. Industrial wastewater is preprocessed by our own wastewater treatment facility before di-scharging to municipal wastewater treatment plant. Rainwater directly goes down to the rainwater pipe system. We adopt state of the art technology to make sure there is no water pollution to the local rivers.

A waste treatment facility is in operation at our site. Our chemical laboratory monitors the was-tewater values for internal purpose. An external environmental monitor station conducts additional monitoring by randomly selected.

For improving discharge quality,an evaporator system and biological system were built in 2015.The previous ultrafiltration system is replaced by evaporator system. The evaporator is more effec-tive to reduce COD than ultrafiltration system.

23 | ENVIRONMENTAL IMPACTS

The evaporator system is for the complete oily wastewater we use in our company. Oily wastewa-ter includes emulsion, washing water and cleaning water. Wastewater originated from floor and parts cleaning will be collected and treated via this system. Finally it goes to the chemical/physical wastewater treatment and biological system . The reduction of the wastewater is more than 90%. So the disposal cost will be less paid to the external certified company. Meanwhile fresh water will be protected further more and our environmental standards will be raised to another high level.

Hazardous substances are monitored by a con-trol system. Leaks are reported via sensor and electronic system to relevant department. To reduce environmental risks and save resources, central facilities have been installed for large-scale consumption of substance such as grinding oil. A positive side effect has been the quantities of potential water pollutants requiring transporta-tion have decreased considerably. A procedure P170070 (Release of chemical production and product materials) is used in all sites of Schaeff-ler group. BAFF form ( Material, Fluids and Other chemicals-Request/Approval form) must be filled in and approved by headquarters for every new chemical production material.

Waste management Waste generated at our sites is collected separate-ly. Wastes including waste scraps, waste packing material, waste liquid and waste sludge. Waste scraps are generating from production process. Waste scraps and waste packing material can be recycled and to be sold to a recycled company.

Waste segregation has revealed a great deal of po-tential prevention. Waste liquid and waste sludge are classified as hazardous waste according to “National Catalog of Hazardous Waste”. Therefore, those wastes are disposed by a local certified company on a regular basis. Meanwhile this cer-tified company is regularly double checked by our Environment, Health and Safety (EHS) function and central facility department to make sure there is no indirect impact to the environment.

Meetings are held with the waste disposal depart-ment on a regular basis to discuss current issues and determine required actions.

Engergy Saving Energy saving is one of our top priorities. Our com-pany always dedicates to save energy and reduce emission for protecting our earth. For better energy saving, we educated our employees to improve awareness on how to save water, electricity and heat. But the other side, we asked our employees to control on-site energy consumption. At our locations, all high voltage transformers and motor starters have been installed capacitance com-pensation counters and transducers respectively. Meanwhile, energy –saving bulbs were replaced at the office. Automatic switch-off lighting system was installed at office corridors, toilets and coffee rooms.

Facility department has established intelligent building and facility control system since 2007. Water and electricity are being monitored automa-tically and water and electricity consumption are being controlled via this system for further energy saving.

ENVIRONMENTAL IMPACTS | 24

A new central gas supply for welding process was built in 2009. A positive side effect is to eliminate the risk from transportation and save the man-power when the single gas cylinder needs to be changed.

At our locations, our company is committed to using waste heat to help reduce primary energy consumption and resulting emission. Examples in-clude: recovery of waste heat from compressed air generation for hot water which is used for shower.

Soil Tanks/pipes containing oil or chemicals under the ground were all installed double wall. Once oil or chemical leakage, an alarm monitoring device will ring immediately. Oil prevention equipments or anti-leakage chemicals equipments were installed at most of machines, such as oil/water separation equipment, well isolation, collection waste equip-ment etc. Soil has been more secured and better protected due to above preventive measures. So far there is no soil/ ground water contamination accident occured.

Work Accident Like we pursue our product quality “zero defect”, “zero-accident” is also one of our goals to be achieved. Every accident will be recorded into the database and analyzed by EHS department. First aiders are nominated from each different depart-ment and well trained by government. The contact method of the first aider could be easily found at shop floor or information board.

Risk of potential environmental accidents and impacts out of incidents, accidents and potential emergency situation The environmental aspects have been revised on a regular basis. The aspects have been identified mainly through experiences together with on-site inspection and “Risk Aspect Analysis Checklist”. The following information will be considered when identifying the environmental aspects: Introducing / improvement / replacement of manufacturing processes or utilities; Introducing / improvement / replacement of chemicals or environmental protec-tion equipments; Serious environmental accidents; other environmental aspects or need to specific en-vironmental aspect assessment. The standards of identifying significant environmental aspects inclu-ding “waste water, air pollutant and noise”, “solid waste” “use of energy” “products” and “others” have been made as assessment standards accor-ding to different environmental aspects. These five standards present life cycle assessment theory in order to assess significant aspects precisely and appropriately.

In our plant, hazardous waste such as waste liquid from different production process, waste sludge, waste oil, waste barrel and galvanic treatment have been assessed as significant environmental aspects. Company takes the 1st priority to reduce these environmental impact as much as possible.

25 | ENVIRONMENTAL IMPACTS

Indirect Environmental Impacts

Products The main material (steel) contains virtually no hazardous substances. At the end of their service life, parts can easily be recycled and remelted into raw material, thus closing the raw material cycle. We produce environmentally friendly products or indirectly helped our environmental conservation, for example our products are also used at wind power station.

Energy efficiency is deeply-rooted in the DNA of Schaeffler. Ultimately, optimizing frictional resis-tance is the primary purpose of a rolling bearing. In addition, reducing fuel consumption and emissi-ons is the primary motivation of valve train compo-nents, which Schaeffler has been manufacturing for decades. The company’s product range has long incorporated a wide variety of components, modules and systems that can achieve significant improvements in energy efficiency. This includes double-clutch solutions, dual mass flywheels and belt drives with optimized friction characteristics and other solutions for engines, transmissions and chassis.

Other example is the state of the-art coating pro-cess is used which has enabled a friction reduction of up to 50 percent between the camshaft and tappets to be achieved. The power loss of the en-gine and CO2 emissions were significantly reduced in this way. We are closing work with Anting with E-mobility. Schaeffler have strongly focused on electric mobility in China and have close coopera-tion with some local vehicle manufactures, such as GEELY and CHANG AN. Schaeffler have many innovations in high energy efficiency field, like electric motor, power electronics, brake, cooling system which are installed inside the wheel rim and so on.Schaeffler also produced some concept cars with vehicle manufacture partners.

Package The customer generally decides what type of packaging is to be used. Whenever possible, reu-sable packaging is used to reduce environmental impacts. The cardboard packaging and wooden pallets used that can easily be recycled.

Goods Transportation We exclusively use contractors for external trans-port. We choose shipping instead of airfreight for international goods transportation and use trucks for domestic goods transportation. Our plans emphasize the need for agreements and measures that serve to protect the environment in negotia-tions with its transport and logistics contractors in the future.

Employee transportation Our employees can use several company –subsi-dized bus lines to commute to work everyday.

More than 20 shuttle buses go to different direc-tions including Shanghai, Anting, Suzhou and Kunshan for employees are not based in Taicang. Company also provides regular buses during day time between plant 1, Plant 2,3,4 and Anting. This service not only brings comfort and convenience to the employees, strengthens people’s sense of belonging and security, but also save the energy and reduce the emission.

For people based in Taicang, we encourage our employees to use bicycle or electronic bicycle. We have installed more new bicycle parking areas to satisfy our employees needs.

Environmental performance of contractors, subcontractors and suppliers Our supplier ratings always take environmental certifications into consideration. We spread our environmental information and issues to them and require them to follow our work safety and environmental policy meanwhile to take relevant environmental action.

We provide special support to small and regional suppliers who wish to implement an environmen-tal management system. EHS function audit the environmental related company on-site periodi-cally. For example, waste management company is regularly double checked by EHS function to make sure the company is in accordance with the law when they are dealing with waste.

ENVIRONMENTAL IMPACTS | 26

Fire protection and emergency preparedness Each employee will have a fire protection training before he joins Schaeffler. Every year fire drilling is held at Taicang plant 1, 2, 3 ,4 and Anting R &D center. A response team was organized and trained for fire protection and emergency evacuation.

A local Taicang fire brigade is only 3 minutes away from plant 1 and 5 minutes away from plant 2 ,3 and 4. Fire brigade holds 6 fire engines. Anting fire brigade is 5 minutes away from Anting R&D center. We have varieties of fire extinguishers, such as CO2 fire extinguishers, foam extinguishers, dry powder extinguishers and fire hydrant. Apart from that, smoke detection and automatic sprinkler were installed in Anting. Those extinguishers in sites are checked and recorded regularly.

Risk Management

Plant security Currently around 45 security guards are working in Taicang campus and round about 17 security guards are working in Anting.

Their roles and responsibilities include: >> Enhance Security Policies>> Protect company’s personnel and assets>> Conduct investigation for security breach or inci-

dents>> Prevent and fight against internal and external

fraud>> Protect company’s image and information>> Prevent and respond to lost, damage, risk and

danger

Apart from young and dynamic guards, we have CCTV monitoring system, patrol tour system and patrol tour vehicle to secure our products and properties.

a. Access control (employees, business partners and visitors, etc.)

b. Contractors managementc. Checkup (transports for dangerous goods, etc.)

27 | HEALTH AND SAFETY

Health and Safety

Just like another big plant of Schaeffler Group worldwide an internal medical centre is founded in Taicang plant to provide health services for all staff. We know well that the employee satisfaction can only be achieved if employees are in good heath and enjoy good work conditions. Therefore manifold protection and promotion measures are taken for the employee’s health by the company.

Our medical centre was approved by Taicang Health Bureau and founded in January 2007. The well equipped medical centre can meet general diagnosis and treatment needs and the competent medical and nursing staff offer professional servi-ces to Chinese and foreign employees. With res-pect to occupational health preventive measures are provided to our employees with high standard, ergonomics concepts are applied for workplace construction in the production and office thorough-ly. Numerous employees received first-aid training systematically in order to handle the accident quickly and effectively and ensure the internal emergency systems running well . To enhance the employee’s health awareness and to promote a good health medical check that health lectures are provided to all employees regularly.

Its services cover:>> Occupational medicine: defining and eliminating

health hazardous aspects in workplace and orga-nizing employee’s occupational health examina-tion to prevent occupational disease

>> Emergency medicine: implementing effective emergency measures within corporate and cooperating with local hospital and emergency centre,

>> General Medicine: providing diagnosis, treat-ment and medical consultation,

>> Travel medicine: medical preparedness for busi-ness trip

HEALTH AND SAFETY | 28

Social benefits Our company not only pursues the economic benefit but also considers social responsibilities. “Schaeffler Group Hope School” was built in Guan-gyuan city, Sichuan province in October 2009 after the earthquake. The volunteers are selected among from Schaeffler employees to teach/help those kids at the certain period.

We believed the concept of environmental conservation should be cultivated from kids. We signed the “Green cooperation” agreement with local school to fulfill our social responsibilities. School teacher and kids were invited to visit our plant, such as production line and environmental protection equipment. We used simple language to describe current environmental situation and exp-lained our wastewater treatment. We asked those kids to think about energy saving ideas in their daily life and encouraged them to be an “Earth protector” in future.

We are convinced that people is the core for society and the most valuable assets for the company. Therefore we provided not only finance but also knowledge to the universities. We decided to cooperate with Tongji University by supporting their technical education in accordance to our industries specific requirements and strengthen local research activities 3 years ago. Recently Dr. Peter Gutzmer, who is Executive Vice president of

Social aspects

Technical Product Development of the Schaeffler Group has been awarded “ Advisory Professor” of Tongji University in Shanghai. This proves the further strengthening of our partnership.

The signing ceremony of “ Schaeffler Enginee-ring Scholarship” between Schaeffler Group and Southwest Jiaotong University (SWJTU) was held in Schaeffler R&D center in Anting. Schaeffler Group has maintained cooperative relationship with SWJTU for nearly one decade. This will provide more practical knowledge and prospect of career development for the graduated of SWJTU.

Particular measures for integration of handicap-ped or older persons We are supporting junior and caring handicapped and older persons. Money has been donated to local charity and welfare found. Meanwhile we sponsored to hold FESPIC (Far East and South Paci-fic) games for disabled people.

Company sporting groups We established lots of clubs for our employees according to their interests, such as photo club, basketball club, music club and football club etc. We actively organized games for our club mem-bers. Meanwhile we encouraged our employees to join outside games or activities.

29 | HEALTH AND SAFETY

Key Indicators according EMAS III Taicang Plant 2, 3, 4 & 5

Absolute Relative*Database 2013 2014 2015 2013 2014 2015Reference dataAdded value in Mio. Euro [Mio] 156 187 185General DataTotal headcount [EMP] 3,138 3,507 4,168Size of property [m2] 199,437 199,437 199,437Total sealed surface [m2] 106,981 114,354 129,054 685 613 699 [m2 / Mio €]Biodiversity [%] 54 57 65

InputWater [m3] 296,195 362,003 420,161 1,896 1,939 2,276 [m3 / Mio €] Electricity from external supply [kWh] 78,028,750 97,308,360 105,276,920 499,480 521,202 570,267 [kWh / Mio €]>> Percentage of renewable energies

(only from external supply) [%] 23.0 23.9 25.0>> Amount of electricity from

renewable energy (only external supply) [kWh] 17,946,613 23,227,506 26,319,230 114,880 124,411 142,567 [kWh / Mio €]

>> Amount of electricity generated inhouse (conventional) [kWh] 0 0 0 0 0 0 [kWh / Mio €]

>> Amount of electricity generated inhouse from renewable energy [kWh] 0 0 0 0 0 0 [kWh / Mio €]

Electricity ∑ [kWh] 78,028,750 97,308,360 105,276,920 499,480 521,202 570,267 [kWh / Mio €]>> Percentage of renewable

energy with regard to overall consumption [%] 23 24 25

Natural gas [kWh] 19,860,404 27,521,603 24,047,224 127,131 147,411 130,260 [kWh / Mio €]>> Amount from renewable energies [kWh] 0 0 0 0 0 0 [kWh / Mio €]>> Percentage of renewable energies [%] 0 0 0Light fuel oil [l] 0 0 0 0 0 0 [l / Mio €]>> Amount from renewable energies [l] 0 0 0 0 0 0 [l / Mio €]>> Percentage of renewable energies [%] 0 0 0Fuels for internal logistics Diesel [l] 72,661 79,861 78,276 465 428 424 [l / Mio €]

>> Amount from renewable energies [l] 0 0 0 0 0 0 [l / Mio €]>> Percentage of renewable energies [%] 0 0 0 Gasoline [l] 0 0 0 0 0 0 [l / Mio €]

>> Amount from renewable energies [l] 0 0 0 0 0 0 [l / Mio €]>> Percentage of renewable energies [%] 0 0 0District heating [kWh] 0 0 0 0 0 0 [kWh / Mio €]>> Amount from renewable energies [kWh] 0 0 0 0 0 0 [kWh / Mio €]>> Percentage of renewable energies [%] 0 0 0Propane / LPG [kg] 123,000 145,865 151,201 787 781 819 [kg / Mio €]Metanol [kg] 756,050 862,620 720,414 4,840 4,620 3,902 [kg / Mio €]Energy input ∑ [kWh] 104,280,297 132,163,160 135,940,919 667,522 707,891 736,368 [kWh / Mio €]>> Amount of renewable energy with

regard to total energy input [kWh] 17,946,613 23,227,506 26,319,230 114,880 124,411 142,567 [kWh / Mio €]>> Percentage of renewable energy

with regard to total energy input [%] 17 18 19

31 | KEY INDICATORS

Absolute Relative*Database 2013 2014 2015 2013 2014 2015Emulsion concentrates [kg] 150,000 77,784 74,100 960 417 401 [kg / Mio €]Processing oils [kg] 188,700 325,920 317,200 1,208 1,746 1,718 [kg / Mio €]Solvent - VOC [kg] 19,188 19,812 2,340 123 106 13 [kg / Mio €]Solvent - non VOC [kg] 79,680 183,029 88,501 510 980 478 [kg / Mio €]Metal raw materials [t] 35,700 53,500 65,501 229 287 355 [t / Mio €]Metal semi finished products(external supply) [t] 38,800 38,500 0 248 206 0 [t / Mio €]Other raw materials [kg] 0 0 1,200 0 0 7 [kg / Mio €]

OutputWaste ∑ [t] 37,647 46,768 48,078 241 251 260 [t / Mio €]non hazardous waste ∑ [t] 2,827 4,058 3,894 18.10 21.73 21.09 [t / Mio €]

>> paper, cardboard [t] 562 1,072 1,195 3.60 5.74 6.47 [t / Mio €]>> waste wood [t] 809 1,061 759 5.18 5.69 4.11 [t / Mio €]>> domestic waste [t] 1,429 1,890 1,854 9.15 10.12 10.04 [t / Mio €]>> others [t] 27 34 86 0.17 0.18 0.47 [t / Mio €]

hazardous waste ∑ [t] 3,750 3,630 3,432 24 19 18.59 [t / Mio €]>> grinding swarf/ sludge [t] 2,957 2,977 2,895 18.93 15.95 15.68 [t / Mio €]>> waste emulsion [t] 723 556 448 4.63 2.98 2.43 [t / Mio €]>> waste oil [t] 33 88 77 0.21 0.47 0.42 [t / Mio €]>> others [t] 37 9 12 0.23 0.05 0.07 [t / Mio €]

Scrap (ferrous + non-ferrous) ∑ [t] 31,070 39,081 40,752 199 209 220.75 [t / Mio €]

>> waste for recycling (without scrap)

[t] 1,398 2,168 2,787 9 12 15.10 [t / Mio €][%] 21 28 38

>> waste for disposal / removal

[t] 3,750 3,630 3,432 24 19 18.59 [t / Mio €][%] 57 47 47

CO2-equivalents ∑ [t] 83,732 104,815 111,903 536 561 606 [t / Mio €]>> CO2-emissions from combustion

processes at this site [t] 5,660 7,449 6,568 36 40 36 [t / Mio €]>> CO2-emissions from electricity

obtained from external sources [t] 78,029 97,308 105,277 499 521 570 [t / Mio €]>> CO2-emission factor per kWh

electricity obtained from external sources

[g / kWh] 1,000 1,000 1,000

>> CO2-emissions from district heating obtained from external sources [t] 0 0 0 0 0 0 [t / Mio €]

>> CO2-equivalent from the refrigerant agent amounts refilled due to leakages [kg] 42,900 57,200 58,542 275 306 317 [kg / Mio €]

SO2 - emissions from combustionprocesses at the site [kg] 206 237 227 1.3 1.3 1.2 [kg / Mio €]NOx - emissions from combustionprocesses at the site [kg] 3,018 3,876 3,435 19 21 19 [kg / Mio €]Particulate matter emissons ∑ [kg] 2,421 2,423 2,422 15.50 12.98 13.12 [kg / Mio €]>> from combustion processes

at the site [kg] 7 9 8 0.05 0.05 0.04 [kg / Mio €]>> from production an other

processes [kg] 2,414 2,414 2,414 15.45 12.93 13.08 [kg / Mio €]VOC-emissions [kg] 19,188 19,812 2,340 122.83 106.12 12.68 [kg / Mio €]* In relation to added valueSources for evaluation of emission factors are the ProBas data bank (http://www.probas.umweltbundesamt.de - status: September 22nd, 2011) as well as the GEMIS 4.8 data bank (http://www.oeko.de/service/gemis/).

KEY INDICATORS | 32

Key Indicators according EMAS III Anting R&D Center China

Absolute Relative*Database 2013 2014 2015 2013 2014 2015Reference dataAdded value in Mio. Euro [Mio]General DataTotal headcount [EMP] 1,320 1,598 1,699Size of property [m2] 18,400 18,400 18,400Total sealed surface [m2] 15,150 15,150 15,150 11.48 9.48 8.92 [m2 / Mio €]Biodiversity [%] 82 82 82

InputWater [m3] 25,007 30,812 24,160 18.94 19.28 14.22 [m3 / Mio €] Electricity from external supply [kWh] 4,235,800 4,288,120 6,686,000 3,209 2,683 3,935 [kWh / Mio €]>> Percentage of renewable energies

(only from external supply) [%] 23.0 23.9 25.0>> Amount of electricity from

renewable energy (only external supply) [kWh] 974,234 1,023,574 1,671,500 738 641 984 [kWh / Mio €]

>> Amount of electricity generated inhouse (conventional) [kWh] 0 0 0 0 0 0 [kWh / Mio €]

>> Amount of electricity generated inhouse from renewable energy [kWh] 0 0 0 0 0 0 [kWh / Mio €]

Electricity ∑ [kWh] 4,235,800 4,288,120 6,686,000 3,209 2,683 3,935 [kWh / Mio €]>> Percentage of renewable

energy with regard to overall consumption [%] 23 24 25

Natural gas [kWh] 1,155,798 1,475,034 1,764,564 876 923 1,039 [kWh / Mio €]>> Amount from renewable energies [kWh] 0 0 0 0 0 0 [kWh / Mio €]>> Percentage of renewable energies [%] 0 0 0Light fuel oil [l] 0 0 0 0 0 0 [l / Mio €]>> Amount from renewable energies [l] 0 0 0 0 0 0 [l / Mio €]>> Percentage of renewable energies [%] 0 0 0Fuels for internal logistics Diesel [l] 0 0 0 0 0 0 [l / Mio €]

>> Amount from renewable energies [l] 0 0 0 0 0 0 [l / Mio €]>> Percentage of renewable energies [%] 0 0 0 Gasoline [l] 0 600 0 0 0 0 [l / Mio €]

>> Amount from renewable energies [l] 0 0 0 0 0 0 [l / Mio €]>> Percentage of renewable energies [%] 0 0 0District heating [kWh] 0 0 0 0 0 0 [kWh / Mio €]>> Amount from renewable energies [kWh] 0 0 0 0 0 0 [kWh / Mio €]>> Percentage of renewable energies [%] 0 0 0Propane / LPG [kg] 0 0 0 0 0 0 [kg / Mio €]Metanol [kg] 0 0 0 0 0 0 [kg / Mio €]Energy input ∑ [kWh] 5,391,598 5,768,414 8,450,564 4,085 3,610 4,974 [kWh / Mio €]>> Amount of renewable energy with

regard to total energy input [kWh] 974,234 1,023,574 1,671,500 738 641 984 [kWh / Mio €]>> Percentage of renewable energy

with regard to total energy input [%] 18 18 20

33 | KEY INDICATORS

Absolute Relative*Database 2013 2014 2015 2013 2014 2015Emulsion concentrates [kg] 0 0 0 0 0 0 [kg / Mio €]Processing oils [kg] 0 0 0 0 0 0 [kg / Mio €]Solvent - VOC [kg] 0 0 0 0 0 0 [kg / Mio €]Solvent - non VOC [kg] 0 0 0 0 0 0 [kg / Mio €]Metal raw materials [t] 0 0 0 0 0 0 [t / Mio €]Metal semi finished products(external supply) [t] 0 0 0 0 0 0 [t / Mio €]Other raw materials [kg] 0 0 0 0 0 0 [kg / Mio €]

OutputWaste ∑ [t] 4 3 1 0 0 0 [t / Mio €]non hazardous waste ∑ [t] 0 0 0 0 0 0 [t / Mio €]

>> paper, cardboard [t] 0 0 0 0 0 0 [t / Mio €]>> waste wood [t] 0 0 0 0 0 0 [t / Mio €]>> domestic waste [t] 0 0 0 0 0 0 [t / Mio €]>> others [t] 0 0 0 0 0 0 [t / Mio €]

hazardous waste ∑ [t] 4 3 1 0 0 0 [t / Mio €]>> grinding swarf/ sludge [t] 0 0 0 0 0 0 [t / Mio €]>> waste emulsion [t] 2 2 1 0 0 0 [t / Mio €]>> waste oil [t] 2 1 0 0 0 0 [t / Mio €]>> others [t] 0 0 0 0 0 0 [t / Mio €]

Scrap (ferrous + non-ferrous) ∑ [t] 0 0 0 0 0 0 [t / Mio €]

>> waste for recycling (without scrap)

[t] 0 0 0 0 0 0 [t / Mio €][%] 0 0 0

>> waste for disposal / removal

[t] 4 3 2 0 0 0 [t / Mio €][%] 100 100 100

CO2-equivalents ∑ [t] 4,469 4,587 7,042 3 3 4 [t / Mio €]>> CO2-emissions from combustion

processes at this site [t] 233 299 356 0 0 0 [t / Mio €]>> CO2-emissions from electricity

obtained from external sources [t] 4,236 4,288 6,686 3 3 4 [t / Mio €]>> CO2-emission factor per kWh

electricity obtained from external sources

[g / kWh] 1,000 1,000 1,000

>> CO2-emissions from district heating obtained from external sources [t] 0 0 0 0 0 0 [t / Mio €]

>> CO2-equivalent from the refrigerant agent amounts refilled due to leakages [kg] 0 0 0 0 0 0 [kg / Mio €]

SO2 - emissions from combustionprocesses at the site [kg] 2 3 3 0 0 0 [kg / Mio €]NOx - emissions from combustionprocesses at the site [kg] 100 127 152 0 0 0 [kg / Mio €]Particulate matter emissons ∑ [kg] 0 0 0 0 0 0 [kg / Mio €]>> from combustion processes

at the site [kg] 0 0 0 0 0 0 [kg / Mio €]>> from production an other

processes [kg] 0 0 0 0 0 0 [kg / Mio €]VOC-emissions [kg] 0 0 0 0 0 0 [kg / Mio €]* In relation to added valueSources for evaluation of emission factors are the ProBas data bank (http://www.probas.umweltbundesamt.de - status: September 22nd, 2011) as well as the GEMIS 4.8 data bank (http://www.oeko.de/service/gemis/).

KEY INDICATORS | 34

Input

Environmental Indicators The representation of the most important environmental indicators for plant sites is prepared in relation to the value added accordingly. In this way, the figures for each year can be compared.

Water Consumption Generally, water mainly was used by production line.

Comparing with 2014, water consumption decre-ased by around 14.4% in 2015 in Plant 1. Mean-while, the average water consumption is decreased by 17.4% refer to the added value in plant 1. The root causes are as below:

a Plant 1 has installed some water recycling ma-chines.

b Plant 1 has installed many water meters to strengthen the management work. It makes the water consumption visualize and measurable.

[m3] Water Consumption Plant 1 [m3/ Mio €]

250,000

200,000

150,000

100,000

50,000

02013 2014 2015

Water Consumption [m3] | Average [m3/Mio €]

0

1,000500

1,5002,0002,5003,0003,500

In 2015, water consumption in Plant 2,3 and 4 in-creased by 16.1% comparing with 2014. However the average water consumption in 2015 increased by around 17.4% comparing with 2014 refer to the added value. To a large extent, the amount of water used depends on manufacturing. The capacity of needle line has expanded too much, it consumed more water, but the products are not profitable.

[m3] Water Consumption Plant 2,3 & 4 [m3/ Mio €]

450,000

400,000

350,000

300,000

250,000

200,000

150,000

100,000

50,000

02013 2014 2015

Water Consumption [m3] | Average [m3/Mio €]

0

1,000

500

1,500

2,000

2,500

The total water consumption in Anting decreased by approximately 21.6% in 2015 comparing with 2014. The average water consumption decreased by 26.2%

Too much construction and commissioning of new building water system spent much water in 2014 , and it went to be normal in 2015.

[m3] Water Consumption Anting [m3/ Heatcount]

35,000

30,000

25,000

20,000

15,000

10,000

5,000

02013 2014 2015

Water Consumption [m3] | Average [m3/Headcount]

0

10

5

15

20

25

35 | ENVIRONMENTAL INDICATORS

Energy Management Electricity consumption Plant 1 electricity consumption in 2015 has in-creased by approximately 9.7%, and the average electricity consumption has slightly increased by 5.8% comparing with 2014.

Because new machines were installed and many machines were relocated. There are 3 sets FD furnace machines, 2 sets Minster press machines, 1 set coating machine, 3 sets washing machines, 10 grinding machines, 5 sets turning machine were installed in 2015.

[MWh] Electricity Consumption Plant 1 [MWh/Mio €]

60,000

50,000

40,000

30,000

20,000

10,000

02013 2014 2015

Electricity Consumption [MWh] | Average [MWh/Mio €]

520

550

540

530

560

570

580

590

Plant 2, 3 and 4 electricity consumption increased by 8.2% in 2015. However the average electricity consumption in Plant 2, 3 and 4 has increased 9.4% in 2015.

Electricity consumption increased, because new machines were installed, and the production ex-panded, also hall 5 had more production, new faci-lities were installed: 2 compressors were installed in 2015, one chiller and air condition system, installed for heat treatment area in the 2nd half year of 2014, run fully in 2015 in plant 4.

Added value decreased because GPC reduced, this influenced the production credit to reduce a lot, and plant 2‘s products structure changed, and some production lines capacity can not match the producing requirement, and during June~September.

Anting electricity consumption increased by about 55.9% in 2015 comparing with 2014. That’s because the new building goes into normal ope-ration and consumed too much power by those new added equipments. the test rigs need more electricity.

[MWh] Electricity Consumption Plant 2, 3 & 4

[MWh/ Mio €]

120,000

100,000

80,000

60,000

40,000

20,000

02013 2014 2015

Electricity Consumption [MWh] | Average [MWh/Mio €]

460

520

500

480

540

560

580

[MWh] Electricity Consumption Anting [MWh/ Mio €]

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

02013 2014 2015

Electricity Consumption [MWh] | Average [MWh/Mio €]

1,5

1,0

0,5

0

3,0

2,5

2,0

3,5

4,0

4,5

ENVIRONMENTAL INDICATORS | 36

Output

Waste Management The avoiding – reducing – recycling and disposal concept has been long here in the waste treatment. Every employee has been surely informed of the separation of different waste from the first day he comes. And though a clear clarification of waste, we get full use of waste materials and reduce cost of waste disposal.

All waste were transferred to external waste management companies. Metal waste was sent to steel factory directly and will not show in the chart.

Most of wastes generated at this location are recycled as per legal specifications. The remainder wastes generated here is also disposed properly.

Total waste at Taicang location consists of the following types:

Waste for Recycling:>> Cardboard>> Wood>> Plastic

2015 Non-hazardous Waste

2015 Non-hazardous Waste

Paper, Cardboard 54% | Waste wood 41% | others 5%

Grinding swarf/sludge 79% | Waste emulsion 18% | Waste oil 3%

Other waste:>> Liquid waste>> Solid waste

The pie chart above shows all waste from Taicang plant 1, 2, 3, 4 and Anting. Around 20 kinds of waste are generated at sites. Oily water, waste sludge and waste oil occupied 18%,79% and 3% respectively among hazardous waste. Wood, plastic and cardbord occupied 41%, 5% and 54% respectively among non-hazardous waste in 2015. Many environment protection equipments have been installed, such as biological systems, evapo-rator systems, briquetting machines.

Comparison of waste The below charts demonstrate average waste generated from 2013 to 2015.

[t/Mio €] Waste Management Plant 1

45

40

35

30

25

20

15

10

5

02013 2014 2015

Waste for Recycling [t/Mio €] | Other Waste [t/Mio €]

37 | ENVIRONMENTAL INDICATORS

[t/Mio €] Waste Management Plant 2, 3 & 4

25

20

15

10

5

02013 2014 2015

Waste for Recycling [t/Mio €] | Other Waste [t/Mio €]

Average recycling waste in Plant 1 are stable, but the other waste decreased dramatically. That‘s be-cause some environmental systems were installed, such as new biological, evaporator system and briquetting machine.

Average recycling waste in Plant 2, 3 & 4 are increased by 25%, that’s because there were too many new machines and production lines in plant 2, 3 & 4. The package and transportation produced recycling waste. The other waste decreased a little, but the quality of discharged water has been stable and improved too much. The COD and Zink have re-duced a lot , the test result is much lower than the limitation now. There are new biological system, new evaporator system and briquetting machines.

Waste in Anting is also separated as hazardous and non-hazardous. Non-hazardous waste is divided into several categories such as paper, cardboard, glass, can, bottle etc. Those waste are collected and disposed by local authorities. However, there is only few hazardous waste in Anting because Anting is non-production site. i.e. waste oil was generated 1.0 ton and oily water was generated 1.0 ton in 2015 in Anting. Even a small amount of waste, they were still disposed by the qualified supplier according to the law.

CO2 Emissions Data was displayed for plant 1 between 2003 and 2015. Plant 2, 3 & 4, training center were counted since 2006 and Anting started to be counted in 2007.

Due to different sources, we divided CO2 emission into direct and indirect. Direct CO2 emission is emission from sources that are owned or controlled by the reporting entity. Indirect CO2 emission is emissions that are a consequence of the activities of the reporting entity, but occur at sources owned or controlled by another entity (definitions from http://www.ghgprotocol.org/calculation-tools/faq). CO2 emission from each site are summarized in the following tables.

Indirect CO2 emission Most of CO2 emissions are caused by electricity supplied from outside sources. Taicang and Anting are located in East China that most electricity is ge-nerated by burning the coal. An emission factor of 1.00 kg of CO2 emitted for every 1 kWh of electricity used. CO2 emission factors do changed depending upon the source of electricity. That is if a “cleaner” fuel is used to generate electricity compared to a “dirtier fuel”, like coal then CO2 emissions from electricity usage would be less.

Direct CO2 emission We converted usage of diesel oil, natural gas and propane to CO2 emissions. Diesel oil is used for heating and hot water in Plant 1. Nature gas is used for heat treatment and hot water only in plant 2, 3 and 4.

Conversion factors of CO2 emission shows below:>> 1 KWh natural gas used emits 0.202 kg CO2

>> 1 liter diesel oil used emits 2.605 kg CO2

>> 1 kg propane emits used 3.47 kg CO2

>> 1 kg Methanol used emits 1.37 kg CO2

ENVIRONMENTAL INDICATORS | 38

Environmental goals Environmental program Completed? ActionsReduce environmental impact

>> Reduce hazardous waste amount 10% internally comparing with previ-ous year (EHS & Plant 2 Facility)

>> Installing sound proofing wall around chiller (Anting)

>> 1,133 MWh electricity is planned to be saved per annual (plant 1)

>> have installed evaporator sys-tem and briquetting machine

>> have already installed the noise isolation wall

>> plant 1 have already finished installation, the other plants are in process.

Energy Saving >> To replace the normal fluorescent light with LED light, 1.87 MWh electricity is planned to be saved. (plant 1/2/3/4)

>> Investing a used heat reusable sys-tem from furnace chimneys in plant 4.This energy is used to heat the process water.

>> The water of pure water tank can heat by recovery heat device, then add to washing machine. (plant 1)

>> installed a heat reuse system from heattreatment

>> have already installed the heat reuse system

>> have already finish the project

Enhancing increasing management and employees‘ EHS awareness

>> Enhance management and employee‘s EHS awareness to reduce accidents/ incidents/loss

>> created a EHS contact team in every plant and trained them

Increasing employees’ health satisfaction against severe air pollution

>> Creating 1 internal measurement against severe air pollution (Medical center and EHS)

>> Organize a series of training course to prevent smog, offer a forecast.

Decreasing security incident rates

>> The security incident < = 4 issues every year (Security dept.)

>> The security department fully achieved this target

Goal has been achieved. Part of goal has been achieved. Additional actions planned. Goal not achieved.

Goals and Programs

Numerous environmental protection actions have been implemented at this location since the last complete environmental statement. Many small steps have helped achieve your environmental goals, not all of which can be documented here. The list below includes only those actions that were published in the last environmental statement.

39 | GOALS AND PROGRAMS

Our Plan

Environmental goals Environmental programs Responsible CompletionReduce environmental impact

>> Reduce HW17 hazardous sludge amount 10% internally comparing with 2015

>> The second evaporation for concentrated water. To reduce HW09 hazardous waste.

EHS & Facility departmentPlant 1 Facility

Dec. 2017

Oct. 2016

Energy Saving >> Reconstruct refrigerate mode of cooling water in winter

>> Compressed air heat recycling>> Investing solar panel for company street

lighting. about 10,950 KWh electricity is planned to be saved.

>> Install energy automatic switch of office air-conditions.

Plant 1 Facility

Plant 4 FacilityAnting

Plant 1 Facility

Dec. 2016

Dec. 2016Dec.2017

Dec. 2016

Enhancing increasing management and employees‘ EHS awareness

>> Develop more EHS people to be a good trainer

>> Developing ERT team. Annual Fire Preven-tion Training (Chi+ En), Participation rate 96.5 %. Evacuation drill will be organized in each plant

EHS

EHS

Dec. 2017

Dec. 2016

Decreasing security incident rates

>> The security incident < = 4 issues every year

Secuirty dept. Dec. 2016

Employee health services >> Set up new Medical Center in TC Campus, more medical services for employees

>> Integrate basic mental health service in routine services

>> Integrate TCM (traditional Chinese medicine) service in routine service

Central Occupational HealthCentral Occupational HealthCentral Occupational Health

April 2016

2017

2017

Setting specific and realistic goals is the only way to protect the environment in the long run. Environmental programs must include actions that can be implemented. We have selected the most important actions for the next three years. Responsibilities for implementing these actions have been clearly defined. The successful completion of environmental programs further relieves the environment within the specified time.

GOALS AND PROGRAMS | 40

Validation and Responsibilities

VERIFIER‘S DECLARATION:

Dr.-Ing. R. Beer, with EMAS environmental verifier registration number DE-V-0007, accredited or licensed for the scope 24.33, 25, 28, 29 (NACE Code), declares to have verified the site

Plant 1 Location | 18 Chaoyang Road, Taicang Jiangsu Province, P.R. China | Tel: +86 512 5395 7707

Plant 2, 3 & 4 Location | No. 1-3 Schaeffler Rd, Taicang, Jiangsu Province, P.R. China | Tel: +86 512 5395 8000

Anting Location | No. 1 Antuo Rd, Anting, Jiading District Shanghai, P.R. China | Tel: +86 21 3957 6000

as indicated in the environmental statement: release 2 from 07 July 2016 of the a. m. organization and confirms that the site meets all requirements of Regulation (EC) No 1221/2009 of the European Parliament and of the Council of 25. November 2009 on the voluntary participation by organizations in a community eco-management and audit scheme (EMAS).

By signing this declaration, I declare that

>> the verification and validation has been carried out in full compliance with the requirements of Regulation (EC) No 1221/2009.

>> the outcome of the verification and validation confirms that there is no evidence of non-compliance with applicable legal requirements relating to the environment.

>> the data and information of the environmental statement of the site reflect a reliable, credible and correct image of all the sites activities, within the scope mentioned in the environmental statement.

This document is not equivalent to EMAS registration. EMAS registration can only be granted by a Compe-tent Body under Regulation (EC) Nr. 1221/2009. This document shall not be used as a stand-alone piece of public communication.

41 | VALIDATION

The next environmental statement will be published in April 2019 at the latest.

In the years between, an annual update of the Environmental Statement will be compiled for validation by the environmental verifier.

Schaeffler Group with on following pages specified sites Registration-No.: DE-158-00016 Date of first registration 17th July 1997 This certificate is valid until 31st March 2018 This organisation has established an environmental management system according to Regulation (EC) No 1221/2009 and EN ISO 14001:2004 section 4 to promote the continual improvement of environmental performance. It regularly publishes an environmental statement and has let the environmental management system be verified as well as the environmental statement be validated by an independent and accredited verifier. This organisation is registered under EMAS (www.emas-register.de) and therefore entitled to use the EMAS-Logo. Nuremberg, 20th December 2017 Markus M. Lötzsch General Manager

Done at Schaeffler China, on

Dr.-Ing. R. Beer Environmental Verifier

Responsible for environmental protection at Taicang:

Mr. Guenther Werner Chief Operating Officer Greater China

Responsible for environmental protection at Anting:

Dr. Liu Yong Chief Technology Officer Greater China

Responsible for environmental statement at the Taicang and Anting location

Ms. Li You Environmental protection coordinator

VALIDATION | 42

Prin

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Questions about environmental Protection at the location Schaeffler China Corporation:

Li You No. 1-3 Schaeffler Road, Taicang, Jiangsu Province, 215400, P.R.China

www.schaeffler.com li.youl@schaeffler.com

China: From other countries: 0512 5395 8771 +86 512 5395 8771 0512 5312 2737 +86 512 5312 2737

Questions about environmental protection by Schaeffler:

Norbert Hörauf Industriestraße 1-3 91074 Herzogenaurach

www.schaeffler.com Norbert.Hoerauf@Schaeffler.com

Germany: From other countries: 09132 822058 +49 9132 822058 09132 82452058 +49 9132 82452058

The structure and contents of this report correspond to the requirements stated in Annex IV of Regulation (EC) No. 1221 / 2009 of the E uropean Parliament and the Council dated November 25, 2009 regarding the voluntary participation of organizations in the eco-management and audit scheme (EMAS).

Moreover, the report contains information about issues pertaining to occupational safety, plant security and fire protection as well as general information on social benefits pr ovided by the company and this location.

© Schaeffler Technologies AG & Co. KG · 2016 This publication or parts thereof may not be reproduced without our permission.