Climate and Energy Management

Climate Governance and Management Approach

SMG recognises its responsibility to contribute to climate change mitigation and the transition to a low-carbon economy. GHG emissions and energy consumption have been identified as material environmental impacts, and this forms the basis of SMG’s climate and energy management approach. This focus informs the Group’s overarching climate strategy, which prioritises reducing environmental impact while strengthening long-term resilience.

Climate governance is embedded within the broader sustainability and ERM framework. Oversight of climate-related matters lies with the Board of Directors, supported by the RAC. The Executive Leadership Team and the SteerCo are responsible for executive oversight and implementation, while the Sustainability Team and the different business units handle monitoring and reporting.

The Board of Directors exercises oversight of climate-related IROs through its approval of the DMA and climate-related disclosures, and validation of top enterprise risks.

SMG’s climate disclosures comply with the Swiss Ordinance on Climate Disclosures and are aligned with TCFD recommendations⁴ and the Greenhouse Gas Protocol (GHG Protocol) Corporate Standard. SMG has established net-zero targets for Scope 1 and 2, which form the core element of its GHG commitments in alignment with the aims of the Paris Agreement. These targets provide the foundation for managing and reducing SMG’s emissions and developing broader reduction measures over time.

Climate-Related Impacts, Risks, and Opportunities

SMG conducted a detailed climate risk assessment in 2024 to evaluate potential risks and opportunities that climate change could pose to its business model and operations; for further details see Assessment of Climate-Related Risks and Opportunities. This provided directional insights into transitional and physical climate-related developments,⁵ which were considered in the context of broader DMA and ERM processes in 2025.

The DMA did not identify any climate-related risks or opportunities that are material for SMG’s business model, strategy, or financial planning. SMG identified one opportunity linked to the circular economy, which is detailed in Circular Economy, and several climate- and energy-related impacts. These findings indicate where SMG needs to take action to manage this topic and progressively reduce associated environmental effects, rather than addressing climate-related risks or opportunities.

As a digital company, a significant proportion of SMG’s GHG footprint stems from value-chain activities, which account for more than 97% of total emissions. The DMA further highlighted material climate and energy effects linked to energy consumption from digital infrastructure and upstream services, which are expected to grow as demand for AI and data-driven technologies increases.

Addressing these impacts requires long-term planning and engagement with partners and suppliers to increase transparency and improve data quality along the value chain. Near-term efforts focus on emissions within SMG’s control (Scopes 1 and 2). Together, these insights inform SMG’s climate transition pathway. The Scope 1 and 2 reduction pathway, towards net zero by 2030, provides the basis for the phased development of future Scope 3 reduction goals towards overall net zero.

Driving Change with Net-Zero Targets

The targets for Scope 1 and 2 emissions are aligned with the aims of the Paris Agreement and reflect guidance from the Intergovernmental Panel on Climate Change to limit global warming to 1,5°C. These commitments require transparent, reliable emissions data and SMG prepares its GHG inventory in line with the GHG Protocol standards to ensure consistent and accountable progress tracking.

SMG has committed to reducing Scope 1 and 2 emissions by 90% by 2030, relative to its 2023 baseline. The remaining 10% is expected to be addressed through permanent carbon removal, in line with the Science Based Targets initiative (SBTi) Corporate Net-Zero Standard.

While permanent carbon removal may play a role in addressing residual emissions in the future, SMG does not currently finance carbon removal credits, nor does it apply an internal carbon pricing scheme. The Group will continue to assess these elements as it achieves further GHG reductions.

Emission Reduction Targets

Progress reflects cumulative emissions reductions compared to the 2023 baseline.

The 90% reduction target is informed by operational insights and the identification of key emission sources, in particular sources linked to energy use in Scope 1 and 2. Although these emissions represent a relatively small share of SMG’s total footprint, reducing them remains essential to its decarbonisation approach. Broader climate-management priorities include improving the efficiency of digital infrastructure, increasing renewable-electricity sourcing, and improving emissions data quality and accuracy to support reliable measurement and future reduction planning.

For Scope 3, SMG’s ambition is to reduce value chain emissions and define concrete reduction targets. The Group has not yet set specific commitments, which will require GHG accounting maturity and higher quality data. Current constraints include limited standardisation of available information, restricted influence over upstream activities, reliance on secondary or spend-based estimates, and inconsistent availability of supplier-specific data. Together, these constraints limit SMG's ability to measure year-on-year progress consistently.

The current focus is on improving data accuracy and transparency along the value chain with actions including deepening supplier engagement and expanding the number of partners that provide supplier-reported primary emissions data. This will reduce reliance on estimates, support greater methodological consistency over time, and improve overall visibility of value chain emissions. These steps will support the development of credible Scope 3 reduction targets and progress along SMG’s long-term decarbonisation pathway.

Measuring the Carbon Footprint

SMG measures GHG emissions from its operations and value chain in line with the GHG Protocol to ensure a consistent and reliable basis for its inventory. To consolidate activity data and emission factors across organisational units and business activities, SMG uses a carbon-accounting management tool, which tracks, analyses, and improves access to emissions data in all scopes.

SMG established its first GHG inventory in 2023 and subsequently developed an Inventory Management Plan (IMP) to formalise organisational and operational boundaries, data sources, calculation methodologies, and quality assurance procedures. The IMP is updated annually to reflect evolving regulatory requirements and developments in emissions estimation methodologies and associated frameworks.

In 2025, SMG made significant updates to the IMP, including refinements to data collection, validation processes, methodologies, and assumptions. Updates included improved extrapolations where data was unavailable, revised emission factors, and refinements to existing assumptions to enhance accuracy and year-on-year consistency.

The IMP is complemented by an annual GHG emissions scoping exercise, which assesses changes to organisational or operational boundaries, such as office relocations or mergers and acquisition activities, and ensures material activities are captured in the GHG inventory. It also informs annual updates to methodologies, assumptions, and data sources, improving the attribution of impacts across internal operations along the value chain.

Together, the IMP and the annual scoping exercise form the basis for SMG’s emissions measurement approach and inform future decarbonisation measures. For further details, see GHG Methodology and Boundaries.

Key Developments in Emissions and Energy

The following sections present a detailed breakdown of SMG’s 2025 emissions and energy profile, including the drivers of year-on-year changes in Scopes 1, 2, and 3 and energy consumption. The latter section, Climate and Energy Initiatives, outlines the measures that contributed to these developments between 2024 and 2025.

Emissions Key Takeaways

In 2025, SMG achieved notable reductions in its direct emissions, with Scope 1 emissions decreasing by 22.2% and Scope 2 emissions by 6.6%, reflecting progress against the Group’s net-zero targets for Scope 1 and 2.

Total emissions amounted to 3,601.1 tCO₂e (previous year: 3,638.5 tCO₂e), representing a 1.0% decrease compared to the prior year. This limited change reflects the fact that a significant amount of SMG’s emissions arise in Scope 3. Consequently, reductions in Scopes 1 and 2 have a limited effect on the overall footprint, while year-on-year movements are primarily driven by changes within the value chain and the maturity of emissions data along the supply chain.

Emissions from Scopes 1 and 2 represented approximately 3% of total emissions, consistent with the low operational footprint of a digital business.

For information on the standards, methodologies, and assumptions applied in calculating SMG’s GHG emissions, see GHG Methodology and Boundaries.

Development of GHG Emissions

in tCO₂e, change in %

Scope 1: Direct emissions decreased by 22.2% in 2025

Scope 1 includes emissions from fossil-fuel combustion in leased vehicles and stationary equipment. Emissions are mainly driven by fuel use in leased company vehicles, while stationary sources remain immaterial due to the predominance of electrically powered heating systems.

The reduction reflects lower fossil-fuel consumption due to the ongoing electrification of the vehicle fleet, which represents a structural decarbonisation lever. Emissions from stationary combustion increased slightly due to location-specific factors but remain immaterial and are not indicative of a structural variation.

Scope 2: Indirect emissions from purchased energy decreased by 6.6% in 2025

Scope 2 emissions arise from the generation of purchased heating and cooling, and purchased electricity including electricity consumed by leased electric vehicles (EVs). Emissions are driven by both energy consumption levels and the carbon intensity of the local energy supply mix.

Market-based Scope 2 emissions decreased year-on-year, reflecting progress in renewable electricity sourcing and lower electricity consumption at selected locations. Reductions were supported by lower consumption attributed to the Vietnam office and the transition of the Goa office in Q4 2025 to renewable-sourced purchased electricity, the full impact of which is expected to become more visible in future reporting periods.

Location-based Scope 2 emissions increased due to changes in the geographic distribution of office space, notably a higher share of operations in Serbia, which has a more carbon-intensive electricity grid. This increase reflects greater exposure to local grid emission factors rather than changes in energy procurement practices.

Scope 3: Indirect value-chain emissions decreased by 0.6% in 2025

Scope 3 emissions represent approximately 97% of SMG’s GHG footprint. Material categories include purchased goods and services, capital goods, business travel, and employee commuting. Year-on-year movements are mainly due to changes in spend profiles, developments in value-chain data availability, and updates to estimation approaches, particularly in categories where supplier-specific primary data is not yet consistently available.

Purchased goods and services remain the largest Scope 3 category and include software, hosting infrastructure, cloud computing, advisory services, and office-related goods and services. In 2025, emissions from this category increased by 15.6% year-on-year, primarily due to by higher emissions associated with advisory and other professional services. This increase reflects elevated advisory activity related to the Group’s IPO in 2025, a one-off situation which is not indicative of a structural increase in SMG’s value-chain emissions profile. Emissions associated with digital core operations and IT services represent less than 5% of SMG’s Scope 3 emissions. These emissions primarily relate to hosting infrastructure and key operational software tools, which are predominantly operated in low-carbon or renewable-powered environments, where feasible.

Emissions from capital goods include office and IT equipment and furniture. The year-on-year decrease primarily reflects the reduced building adaptations and furnishings compared to the prior year.

Business travel is the second-largest contributor to Scope 3 emissions. Emissions decreased in 2025, due to a reduction in regular intercontinental travel. This decline came despite a global company event, which in fact predominantly entailed short-haul and domestic travel. While this change indicates a shift in the travel mix toward lower-emission journeys, development over time will remain subject to future travel patterns and business needs.

Employee commuting includes emissions from travel between home and office. The decrease reflects a reduction in mileage in fossil-fuel-based vehicles and a shift towards public transport and active mobility options. This development is consistent with 2025 green commuting initiatives across multiple locations.

Emissions Breakdown and Intensity

Energy Key Takeaways

SMG’s total energy consumption in 2025 amounted to 1,018.9 megawatt-hours (MWh), reflecting a 20.1% decrease compared to 2024. This reduction was largely driven by the consolidation of office space into smaller and more energy-efficient locations, as well as the closure of an office that previously used biogas. Energy management focused on optimising energy use, reducing reliance on fossil fuels where feasible, and expanding renewable electricity coverage.

Total fossil energy consumption decreased by 22.9% compared to the prior year, primarily due to lower consumption of diesel and other petroleum products. This reflects the continued electrification of the vehicle fleet and a shift toward lower-emission mobility.

Total electricity consumption decreased by 19.7%, despite a 61.6% increase in electricity consumption from electric vehicles due to the continued expansion of the EV fleet. Purchased electricity declined by 26.3%, mainly reflecting the effects of the 2024 relocation from the Flamatt office to a smaller site in Fribourg.

The share of renewable electricity remained high in the reporting period, at around 85% (previous year: 89%).⁶ The slight decrease reflects changes in the office location portfolio, including the consolidation and closure of locations with high renewable electricity availability, which resulted in a reweighting of the Group’s energy mix rather than a change in the renewable electricity sourcing strategy. This effect was partially offset by the transition of the Goa office to renewably-sourced purchased electricity in Q4 2025.

Renewable electricity procurement is supported by contractual documentation from local suppliers and property managers, which facilitates traceability and verification. The Group monitors annual consumption of fossil-fuel-based energy sources, district heating, and electricity, as well as the share of renewable energy, to track progress against its energy objectives and inform future initiatives.

Energy Consumption and Intensity

Climate and Energy Initiatives

SMG presents the following ongoing initiatives in 2025 to support its journey towards lower emissions in Scope 1, 2, and 3. Building on the initiatives and foundations established in prior years, 2025 marks a shift from implementation towards measurable outcomes across climate and energy management.

Electrifying the Vehicle Fleet

SMG continued transitioning its vehicle fleet to electric models as leasing contracts expired. The share of electric vehicles increased year-on-year, which helped reduce Scope 1 emissions and fossil-fuel-based energy consumption. Fleet electrification remains the primary structural lever for reducing SMG’s direct emissions. As of 31 December 2025, more than 70% of the fleet consisted of fully electric or plug-in hybrid vehicles.

Expanding Renewable Electricity in Offices

The electricity in all Swiss offices comes from renewable sources. For both electricity directly managed by SMG and electricity managed by landlords, SMG has obtained contractual proof and/or corresponding certificates to verify the renewable electricity supply.

Internationally, SMG continues to assess renewable electricity options in markets with more carbon-intensive grid mixes. In this context, the Goa office transitioned to renewable electricity in Q4 2025, following the shift to renewable electricity sources in the Belgrade office. This transition helps reduce market-based Scope 2 emissions, with the full impact expected to become more visible in future reporting periods.

Boosting Supplier Engagement to Reduce Value-Chain Emissions

In 2025, SMG expanded the availability of supplier-specific primary reported emissions data, with coverage doubling year-on-year. The increased availability of primary Scope 3 data improved visibility into emissions from purchased goods and services and helped identify targeted reduction opportunities.

Balancing Business Travel and Reduction Initiatives

SMG has a dedicated policy that mandates central booking for business travel and prior authorisation for flights. Travel decisions balance environmental, financial, and operational considerations. Employee mobility, including business travel and commuting, remains a key focus area for emissions management.