Annual Report 2005/06 THE WORLD OF SOUND - Sonova

Corporate GovernancePhonak’s Board of Directors is totally independent. TheBoard of Directors consists of well respected, very seniorexecutives with a broad collective experience in many functionsand in-depth knowledge of several industries. Their level ofprofessionalism, integrity, and reputation guarantee that thetasks and responsibilities of the Board of Directors are executedin the interest of the shareholders.As described in the “Corporate Governance” section of theAnnual Report, the Board of Directors once again significantlyimproved the transparency of the compensation paid tothe Board of Directors and the Management Board in 2005/06.It continuously monitors Corporate Governance principlesand their observance, and will make further improvements ifnecessary.Environmental impact is remarkably lowThe quantity of raw materials going into Phonak’s annualproduction of hearing instruments is equivalent to three midclasspassenger cars (see adjacent table). Due to the wide rangeof different product lines, this analysis is based on the newPALIO BTE platform which is currently used for Savia, Eleva, eXtra,microPower, Verve, and Indigo and in the future will be usedas a basis for other product lines.Hearing instruments are subject to standards imposed bythe Medical Device Directive of the European Community, MDD93/42/EEC, and by ISO standards 9001:2000 and 13485:2003.In order to comply with these rules, Phonak must not use hazardousraw materials or operating supplies in its productionprocess. Unfortunately, these regulations also limit the use ofrecycled material or used components. Due to the premiumquality of the input materials used, waste materials are still veryvaluable and are redirected into the recycling loop, which includesthe recovery of plastic remnants from molding processes,cut-offs from printed circuit boards, and metals.Waste water from cleaning processes is filtered, filters are disposedof and the processed water redirected into the normal watercycle. The energy consumption of the production processes is verymodest. Climate control accounts for most of the energy consumed.In 2005/06, the Phonak Group extended its recycling measuresacross the entire life cycle of the products and implementedthe EU Directive WEEE (Waste Electrical and ElectronicEquipment) worldwide. This directive requires that consumers nolonger simply dispose of old electrical devices in their householdrubbish, but in an environmentally responsible way throughindividual collection and recycling systems. This directive alsoaffects owners of hearing instruments. Phonak has affiliated itselfto country-specific disposal systems. If these do not exist,Phonak takes back used devices and disposes of them correctlyat its headquarters in Stäfa, Switzerland.In 2005/06, the ongoing miniaturization of hearing systems– especially the micro devices for open fitting such as microSaviaand microEleva – led to lower consumption of raw materialsand operating supplies per unit, while the acoustic performanceof the hearing systems was substantially improved.As more product lines are built on the PALIO platform,today’s very low level of raw materials and operating suppliesusage per unit will decrease further in 2006/07. Additionalimprovements in production processes will boost yields and supportthis trend.Analysis based on the PALIO BTE platformPlasticsRubberMetalsNon-ferrous metalPrinted Circuit Boards (PCB)ChipsetLacquerTotal2,142 kg111 kg787 kg25 kg268 kg37 kg36 kg3,406 kg40 Sustainability