Integrating sustainability into the ERM framework

As part of the Enterprise Risk Management (ERM) process, risks are systematically identified, assessed, and suitable mitigation measures are recorded. The process is based on an annual, comprehensive update of the risk landscape and a subsequent mid-year update of the risks identified as pivotal in the annual update. Risks identified as pivotal are reported bi-annually to the RAC and annually to the BoD.

The identification and assessment of risks and the recording of mitigation measures are carried out in an iterative process between Risk Sponsors (ELT members) and Risk Champions (subject matter experts familiar with the ERM process). The process and risk reporting are coordinated by Group Finance (Central Services).

Following the TCFD’s recommendations to support the assessment and management of climate risks and opportunities, we integrated processes in 2024 for the BoD to oversee climate-related risks, which are integrated into the existing ERM framework, as well as climate-related opportunities. Other sustainability-related topics, such as social issues, employee-related matters, human rights, and corruption, have long been embedded into our risk assessment processes. Following our established ERM process, these risks were analysed based on their likelihood and impact for SMG.

These risks and respective mitigation measures are addressed throughout this report and specifically, climate risks are considered in our sustainability strategy, reinforcing our commitment to responsible risk management and long-term resilience.

It’s important to note that available data and risk management models, both in general and for our industry, are still evolving and currently have limited predictive capability. We are actively working to improve our own data quality and refine our methodologies to gain deeper insights into potential sustainability and climate-related risks. This includes improving our understanding of Greenhouse Gas (GHG) emissions data within our operations and supply chain, and advancing our financial impact assessment to better evaluate material exposure.