Environmental, Social and Governance (ESG) Policy

Environmental,

Social and Governance

(ESG) Policy

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) POLICY

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Contents

4.

6.

7.

8.

12.

15.

Introduction

Philosophy and Values Our ESG Values Environmetal Policy Social Ploicy Governance

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ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) POLICY

Founded in 1997, and following the completion of the 2015 acquisition of intergenia Holding GmbH, HEG is now Europe’s largest privately owned hosting provider, biggest domain registrar in the UK and Germany’s third largest registrar.

We are Germany’s leading provider of Managed Hosting and number two in Europe. We currently own and/or solely manage seven data centre facilities in Europe and the USA, supported by over 1,200 employees. HEG has more than 1.5 million customers with over 7 million domain names under management. We focus on small and medium sized businesses (SMEs) along with enterprise businesses: who want to make the most of the web, we refer to them as ‘Next Generation Businesses’.

Linked to our business strategy of becoming the number one choice for Next Generation Businesses, we take seriously our responsibility as a corporate citizen. As such, HEG aims to take actions in the most responsible fashion, at all times. Such principles guide us in our decision making, and our commitment in this area means that HEG aims to carry out all business practices to the highest of ethical standards. We work to the International Labour Standards on forced

labour, child labour, discrimination, general working conditions and other human rights.

We act responsibly in our decision making in order to make a positive contribution to the communities we work in. HEG is committed to sustainable business practices and environmental protection, seeking to ensure that our activities do not have a detrimental effect on the environment and society. We aim to align our environmental and social responsibilities with our business strategies, operations and in the everyday world of the individual employee.

The HEG Environmental, Social and Governance policy is endorsed by Patrick Pulvermüller, Group CEO and the HEG Executive Board.

Introduction

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) POLICY

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ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) POLICY

HEG is committed to operate and grow its business in a responsible way with a vision to be environmentally friendly. Our aim is to improve the quality of life for all of our communities through integrated and sustainable development.

Understanding our impact on the communities in which we operate is important. We appreciate that our business in fully dependent on our data centre infrastructure and therefore we have an impact on the environment. We have put measures in place to limit this wherever possible. We also recognise our responsibility to monitor and remove illegal content on the internet which is hosted on our services.

As a Next Generation business ourselves, we are embracing new forms of working together, new ways of working with our customers and with society.

This policy is divided into three main topics, Environmental, Social and Governance with each policy initiative aligned to the HEG business risk register. Each topic identifies HEG’s current vision, position and our group aims. We aim to improve in each of these areas and define ways that this can be achieved.

The HEG, ESG values set out below have been established in line with our HEG company values.

Helpful:

If we can, we do improve in all aspects of ESG.

Open:

Be open and honest in all areas while respecting commercial and personal confidentiality.

We talk:

We strive to ensure Group wide awareness of the ESG policy and employee compliance through global training sessions.

We can:

We embrace new ideas which encourage efficient use of natural resources and promote the protection of the environment and our employees.

Excellence:

We work towards full compliance of ESG guidelines and best practices.

Philosophy and Values Our ESG Values

At HEG we believe these values are a central commercial priority. In order to fulfil them, we:

• Make careful use of finite resources;

• Encourage a work environment which values and respects all employees;

• Engage in activities such as recycling within the work place;

• Work on improving our carbon and energy efficiency;

• Regularly assess initiatives,

• Improve digital inclusion in communities

• Continue to provide a diverse working environment

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) POLICY

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ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) POLICY 2. Process and Key Performance Indicators

(KPIs)

This policy sets out the focal areas in which HEG will measure and report the effectiveness of its ESG policy using appropriate KPIs. The process involves setting yearly targets in November for the following calendar year, with key stake holders including department heads and senior executives.

Details surrounding the agreed KPIs and related performance reporting can be found in the annual and half year review.

HEG believes that environmental sustainability is a crucial component as we are a business that is fully dependent upon our data centres. Data centres consume a lot of energy and are the biggest contributor to our carbon footprint. We are fully committed to reducing our carbon footprint.

We also aim to minimise our consumption of natural resources and manage our waste through responsible re-use and recycling.

3.1.Key Performance Indicators

Power Usage Effectiveness

At HEG, Power Usage Effectiveness (PUE) is the metric used to measure the efficiency of our data centres. PUE is an important measure because if a data centre is inefficient and has a high PUE, the running costs will be considerably higher.

PUE is determined by dividing the amount of power entering a data centre by the power used to run the computer infrastructure. PUE is therefore expressed as a ratio, with overall efficiency improving as the quotient decreases toward 1.

We will report on all Group data centres which are owned and/or solely managed by HEG. In Germany, some infrastructure is hosted in co- location centres (centres which are not solely managed by HEG) and therefore, not included.

Overview of data centre locations

HEG owns and/or fully manages 7 data centre facilities in Europe and USA. This consists of two data centre facilities in Cologne, Germany, three in Leeds, UK, one in Strasbourg, France and a further site in St. Louis, USA.

Additionally, HEG uses co-location services in Germany and Spain. In Germany, these sites are located in Falkenstein, Gütersloh, Neubiberg and Wendlingen. In Spain, the site is located in Madrid.

HEG data centre breakdown - ‘owned and fully managed’

HEG data centre breakdown – ‘co-location’

Power usage effectiveness

PUE = Total facility power + IT equipment power CRACs = Computer Room Air Conditioning Name

CGN DC1 CGN DC3 LD DC3 LD DC4 LD DC5 SXB STL

Name GUT MUC Madrid STR1

Utility Company

Location Cologne, DE Cologne, DE Leeds, UK Leeds, UK Leeds, UK Strasbourg, FR St. Louis, USA

Location Gütersloh Neubiberg Madrid Wendlingen

Total Facility Power

Power Switchgear

• UPS

• Battery Backup

• Cooling

• Chillers

• CRACs Operated by Host Europe GmbH Host Europe GmbH Webfusion Ltd.

Webfusion Ltd.

Webfusion Ltd.

PlusServer AG Hosting Solutions International (HIS)

Operated by Arvato Infineon AG Global Switch Niederlassung Stuttgart

IT Equipment Power

• Servers

• Storage

• Telco equipment

Power in Power in

Environmental Policy

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ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) POLICY

According to the Uptime Institute, an independent auditing body, the typical data centre has an average PUE of 2.5. This means that for every 2.5 watts in at the utility meter, only one watt is delivered out to the IT load.

The Uptime Institute estimates most facilities could achieve 1.6 PUE using the most efficient equipment and best practices. We are close to this level already.

We have a stringent structure whereby our Head of Data Centres is responsible for the PUE reporting process. Each data centre produces a monthly and annual report. The CTO/COO for Mass and Managed Hosting is now responsible for bringing new data centres in line with HEG reporting standards and guidelines.

KPI: Record PUE ratings across the Group.

Our yearly target is to improve the Group PUE rating based on the previous year. We believe this can be achieved through continuously exploring ways to advance the efficiency of our data centre systems, equipment and processes.

Carbon Reduction

HEG recognises that the concept of environmental governance is a means of increasing citizens’

participation in environmental policy and technological choice, in order to make policy processes more deliberating and socially inclusive.

HEG takes seriously its responsibility to reduce carbon emissions across our global data centre operations.

KPI: Put in place a consistent process of monitoring our carbon footprint /

emissions across all group locations in 2015 including France and America, with an aim to set a baseline in place for 2016 and an improvement target in 2017.

1. The Uptime Institute, formed in 1993, is a well-respected consortium of companies that engage in education, certification and publications for data centre professionals.

2. Key issues Current Carbon reporting process: Data Centre managers in UK, Germany, France and the USA are responsible for the reporting process. Each data centre produces a monthly and annual report. CTO for Mass and Managed Hosting (depending on business division) will be responsible for bringing new data centres in line with HEG reporting standards and guidelines.

As part of our commitment to environment protection, HEG engages in effective methods of waste management. We minimise our consumption of natural resources and manage waste through responsible disposal, reuse and recycling.

HEG works with a third party in the UK to recycle old servers, hard drives and printer cartridges which are no longer of use. We ensure that servers are wiped before they are recycled to speed up the process and for data protection purposes.

HEG took care in selecting the appropriate recycling company to work with. The decision was driven by the company’s environmental commitment to conserve natural resources, its WEEE disposal services and its work with charities, schools and hospices to generate funds through printer cartridge recycling.

In our offices, we ensure our employees further engage in recycling wherever possible. We consider the environment when making decisions regarding the business and their day-to-day tasks.

KPI: Put in place a consistent process of monitoring our recycling rates across all group locations in 2016 (focusing in particular on data centre recycling), with an aim to set a baseline in place for 2016 and an improvement target in 2017. Record the number of servers recycled versus the number of servers disposed.

As the largest, privately owned hosting provider in Europe, HEG has offices throughout the continent, including Germany, UK, Spain and Romania. As a result of HEG’s extensive international network, many meetings and conferences require the presence of personnel from different offices.

HEG ensures that where possible, the relevant conferences and meetings are held through video conferencing or by conference calls. This assists our aim to reduce carbon emissions through avoiding travel by plane, car or public transport unless absolutely necessary.

KPI: To reduce the amount of non-essential travel to locations by increasing our

investments in video conferencing software.

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ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) POLICY

HEG recognises its obligations to act responsibly and with integrity in its dealings with its staff, customers and community as a whole.

4.1. Key Performance Indicators

Online Fraud and Abuse

HEG conducts its business in a legal and ethical manner. Therefore, when faced with risks from wrong doing it aims to create a vigorous anti- fraud and anti-abuse culture that promotes honesty, integrity, openness and vigilance. HEG understands its responsibility to respond to all reports of online abuse and fraud and respond to all reports in a timely manner.

The Fraud and Abuse policy sets out guidelines for how we can reduce occurrence and minimise the impact of fraud and abuse related threats such as; malicious users regularly seeking to abuse the services we provide to our customers, customers using our services in an abusive way and customers attempting to fraudulently purchase services from us.

KPI: Put in place a process of monitoring reports of online abuse and fraud in the same format across all group brands in 2016 including response times, with an aim to set a baseline in place for 2016 and an improvement target for response rate times in 2017.

Social Policy

Digital Inclusion

HEG believes that everyone should have access to the skills and resources to enable them to be part of the digital revolution. We do this by enabling all our employees to pass on their digital skills to digital disenfranchised members of society through our volunteering programmes, charitable donations and community projects.

Our aim is to introduce a HEG scheme focused on digital inclusion.

KPI: Monitor the following areas:

1. Number of initiatives implemented;

2. Number of employees engaged; and 3. Corporate funds invested.

For all office locations to annually report upon the amount spent on community and social investment. All office locations will also report on the numbers of employees participating in community and social programmes each year with an aim to improve employee engagement each year.

Diversity

Diversity is a key aspect of all our employee processes, and we understand that by building diverse teams we will have the broadest and most able talent pool. At HEG, we work to ensure that our employee workforce reflects the markets in which we operate and that we support numerous initiatives that allow us to connect with our local community.

We have ensured that we have the appropriate mix of skills and abilities throughout our business and we ensure that the following principles are adhered to in all of employment practices matched by:

• Employment and promotion are

always fair and unbiased and we work with local education providers to increase our representation in underrepresented areas;

• Encourage innovation through the inclusion of multiple cultures;

• Foster a meritocracy where every employee is treated with respect and fairness;

• Provide a work environment that utilises and encourages contributions of team members with diverse backgrounds, education, experiences and perspective; and

• Increase awareness in all team members of their rights and responsibilities with regards to fairness, equity and respect for all aspects of diversity.

KPI: We will measure (wherever possible) the male and female ratio across the group and explore ways in which we can expand this reporting to include other minority groups . We will measure the percentage of females in management roles.

Being a Good Employer

HEG ensures that it is an employee of choice and understands the business benefits of a motivated workforce. We ensure that the welfare and development of our employees is paramount in everything that we do and employee engagement is our key people metric.

We want our employees to feel supported and proud of the organisation they work for and we give the greatest support to allow them to develop as individuals. We want to be an employer that people really want to work for and this will be driven by our culture, leadership and employee experience.

We ensure that employees are not only able to do the basic tasks but are able to grow. We offer an ergonomic working environment and ensure that we offer the best facilities and working environment for our staff.

3. At HEG, the most common target minority group is women but this also extends to targeting other disadvantaged or minority groups such as people of different ethnic background, sexual orientation, age, religion or socially excluded people

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ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) POLICY

Employees will know exactly where they are and there is clear and open communication both from the top down and bottom up. Employees are encouraged to express their ideas regardless of their role and are given clear performance feedback.

KPI: We will measure the percentage of employees that have attended training courses across all locations in HEG. We will also measure the percentage of employees that recommend HEG as a great place to work. This can be done by the external survey in November of each year; measured by the HEG quarterly pulse surveys. Additionally, we will measure annual employee turnover across locations and departments.

Health and Safety:

At HEG we consider our most valuable asset to be our people and we consider the safety and well- being of our team to be extremely important. When it comes to health and safety concerns, we are committed to complying with all the relevant laws, regulations and guidelines as well as our internal procedures.

A Group wide Health and Safety report is produced every month, recording percentage of employees that have received adequate Health and Safety Training, policy updates and Group wide certified First Aiders on site.

KPI: To provide a safe and healthy working environment for our people through regularly reviewing areas for improvement, investing in and ensuring all employees receive health and safety training. However, we believe the best way to accurately measure our efforts is to focus particularly on the number of lost days due to accidents that occur in the workplace across all group locations and take appropriate actions.

HEG believes that good governance shapes good companies. That is why HEG is committed to providing transparent reporting processes upon matters relating to local and international governance which affect our core jurisdictions.

HEG’s governance and risk management is an on-going process which enables identification, assessment and mitigation of risks and ensures governance within HEG. The information and procedures within HEG are organised in an easily- accessible and efficient manner.

6. Risk Register

The HEG Risk Register acts as a central repository for the organization’s risk information. It is used throughout HEG to record strategic, operational, regulatory and reputational risks. The Register records both actual risks and potential risks as well as engaging in a three stage process of risk identification, assessment and mitigation. The Risk Register is accessible to all Heads of Departments who will record the relevant information.

7. Compliance Committee

At HEG, we take compliance with laws, regulations and internal procedures and processes extremely seriously. For this reason, we have a Compliance Committee consisting of Group and local Heads of Departments, Chief and Director level staff members. It is responsible for educating and training employees on the HEG Code of Conduct and related policies, setting ESG aims, developing ESG related initiatives, evaluate risks and develop mitigation strategies.

8. Responsibility and Review

All members of HEG have a role to play in complying with our Environmental, Social Governance Policy and its implementation. All employees are encouraged to make suggestions in relation to initiatives we could undertake. Any suggestions can be made to the Compliance Committee representative.

In line with our core values, HEG is committed to exhibiting openness, honesty, integrity, fairness and respect in all its business dealings. In line with this commitment, we encourage all employees who have serious concerns relating to any actual or potential violation of this policy to communicate this to their local Compliance Committee

representative.

In order to ensure that our Policy is up-to-date and effective, we will review this Policy, as and when necessary in accordance with any changes in the relevant laws and regulations.

9. Key Performance Indicators:

Anti-Corruption and Bribery:

HEG conducts its business in a legal and ethical manner. Therefore, when faced with risks from wrong doing it aims to create a vigorous anti-fraud and anti-abuse culture that promoted honestly, integrity, openness and vigilance.

HEG measures its commitment to conducting business fairly, honesty and in compliance with the highest ethical and professional standards by recording the number of corruption and bribery cases reported.

KPI: HEG to introduce a group wide reporting framework on all anti-corruption and bribery cases by Q1, 2016.

Governance

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ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) POLICY Data Protection:

HEG is committed to ensuring that any personal data supplied by its customers or is otherwise generated by its business activities is collected and processed fairly and lawfully.

In support of this commitment all new starters receive appropriate data protection training which highlights responsibilities, processes and consequences of breaches. All employees will have access to refresher sessions when required.

As a further measure, we are aiming to develop a tailored training programme for senior management which we believe will help them to support their respective business units in compliance with data protection laws and company policy and procedures.

KPI: Our adherence to data protection laws and our responsibilities is recorded on an annual basis, through the number of data protection breaches that have been reported to the relevant regulatory board in correlation with the size of HEG’s entire customer base.

Litigation Liabilities:

HEG understands that litigation is a growing challenge and like many others poses risk to HEG’s reputation, finances and general business activity, thus requiring all departments to have a role in minimizing the risk in litigation.

Tracking of litigation and non-litigation matters allows the legal department to do a better job of staffing and budgeting and thus realise savings and create value based on a more efficient process.

KPI: Currently, we are focusing on the number of court judgments filed against HEG above

£10,000 with a view to expand on this each year, should complexity of cases provide a need for further in-depth reporting.