Assessment of climate-related risks and opportunities

Climate scenarios

• The Net-Zero Scenario (1.5°C) represents a rapid decarbonisation pathway aligned with global net-zero commitments by 2050, requiring significant emissions reductions across all sectors.
• The Announced Pledges Scenario (1.7-2°C) assumes the implementation of current national climate commitments, with moderate emissions reductions, particularly in sectors such as energy and transportation.
• The Stated Policies Scenario (2-2.5°C) reflects the continuation of existing climate policies without major new commitments, leading to a slower decarbonisation trajectory and a temperature rise of up to 2.5°C.

These key climate scenarios are derived, using data from authoritative sources, including the International Energy Agency (IEA), the Intergovernmental Panel on Climate Change (IPCC), and the Network for Greening the Financial System (NGFS). We apply them across three time horizons (short-term: 2025, medium-term: 2030, long-term: 2050), with a primary focus on the next decade to assess near- and medium-term business implications.

Methodology to identify key risks and opportunities

We applied a structured process to identify the key climate-related drivers most relevant to our business model.

In a qualitative assessment, we reviewed our enterprise risks and business model to compile a comprehensive list of potential climate-related drivers. This included mapping our value chain to understand dependencies between suppliers, internal operations, and consumers. External climate and socioeconomic datasets were leveraged to provide science-based insights into the potential physical and transitional impacts of climate change.

The identified drivers were then assessed and refined through peer reviews and targeted research into relevant market and environmental factors. Each risk and opportunity was evaluated using a likelihood and impact scoring methodology, supporting prioritisation for further analysis and integration.

Findings were validated at multiple levels of governance, including review by the Sustainability SteerCo, approval by the ELT, and formal acknowledgement by the BoD. Key risks and opportunities were embedded into our ERM system for ongoing monitoring, mitigation, and reporting. Further details on how climate and sustainability risks are integrated into our broader risk management process can be found in the Integrating sustainability into the ERM framework section.

Summary of potential impacts of climate-related risks on the technology industry

• Rising operational costs: Volatile energy prices, driven by extreme weather events and shifting climate patterns, increase operational expenses.
• Economic disruptions: Environmental disasters, such as floods and heatwaves, weaken economic growth, reduce consumer purchasing power, and lower transaction volumes.
• Regulatory pressure: Stricter ESG and carbon emissions regulations demand investments in cleaner technologies and process modifications, leading to added costs and operational shifts.

Summary of potential opportunities of climate change on the technology industry

• Innovation in data analytics: Advanced analytics enable businesses to optimise operations, reduce emissions, and drive sustainable innovation.
• Sustainable product development: Rising demand for low-carbon technologies and circular economy solutions create new growth opportunities.
• Market growth in digital commerce: Increased focus on sustainability drives platform traffic and sales, aligning business success with environmental benefits.

These opportunities and risks manifest across short-, medium-, and long-term horizons, each influencing SMG’s strategy to different extents. As a result, SMG’s approach remains adaptable and is designed to evolve accordingly.

Adaptable and resilient: The enduring strength of our business model

SMG has assessed the resilience of its business strategy against the three climate scenarios outlined at the start of this section. Across all three scenarios, our diversified business model enables us to navigate climate risks, including rising energy costs, economic disruptions, and regulatory changes. By assessing climate impacts, we enhance operations, financial planning, and sustainability reporting while leveraging opportunities in the low-carbon and circular economy.

Our climate scenario analysis confirms the resilience of SMG’s strategy under moderate as well as accelerated decarbonisation pathways. Proactive investments in sustainability, operational efficiency, and digital infrastructure enable SMG to mitigate exposure, enhance long-term competitiveness, and support business continuity.

Managing energy price volatility

To manage energy price volatility, SMG is advancing a targeted energy transition strategy. This includes the optimisation of IT infrastructure through cloud-based solutions and active engagement with data centre providers to ensure hosting services are powered by renewable or low-carbon electricity. Our office network is also transitioning to renewable electricity, with all Swiss offices already powered by certified clean energy. In shared buildings, we are engaging stakeholders to obtain contractual proof of renewable sourcing. Internationally, we continue to pursue low-carbon electricity options in markets where clean supply remains limited.

Adapting to shifting consumer behaviour

We believe SMG is well-positioned to respond to changing consumer preferences, associated with accelerated decarbonisation pathways, particularly the growing demand for affordable, sustainable, and circular products. The transition to a more circular economy aligns with our business model, creating opportunities to increase platform listings for second-hand items.

Enhancing regulatory preparedness

SMG has established a central GHG emissions inventory and is implementing a compliance framework. We are expanding our Sustainability Team to ensure transparency and adaptability in response to evolving regulatory requirements.

Overall, SMG’s climate scenario analysis demonstrates that our business model is resilient across a range of climate futures. Our proactive investments in sustainability, operational efficiency, and digital innovation enable us not only to manage risks, but also to seize opportunities that strengthen our long-term competitiveness. This reinforces our commitment to building a more future-proof, responsible, and climate-resilient organisation.