Metrics and targets

E1-4 – Targets related to climate change mitigation and adaptation

thyssenkrupp’s GHG reduction targets are part of the groupwide decarbonization strategy and taken together are assessed by SBTi as being in accordance with the 1.5-degree Celsius target of the Paris Climate Agreement. The target system is aligned with the SBTi methodology and follows a cross-sector and sectoral decarbonization approach (SDA). The methodology is based on the IPCC’s science-based climate scenarios (Intergovernmental Panel on Climate Change = IPCC) and on international and European reference frameworks such as the Paris Climate Agreement and the EU Green Deal. Stakeholder interests – especially legislative and capital market requirements – were also considered in formulating the targets.

Target types and scope of application

On account of its diverse business activities, thyssenkrupp deploys a combined target system of both absolute and relative GHG reduction targets with 2018 as the base year.

Absolute medium-term GHG reduction targets – groupwide outside the iron and steel SDA:

• Scope 1 and 2 in t CO₂e: reduction by 50.4% by 2030

• Scope 3 in t CO₂e: reduction by 30% by 2030

Relative medium-term GHG reduction target – within the boundary of the iron and steel SDA:

• Scope 1 to 3 in t CO₂e per t of hot strip mill steel: reduction by 30.1% by 2030

Absolute long-term GHG reduction targets – groupwide:

• Scope 1 and 2 in t CO₂e: reduction by 90% by 2050

• Scope 3 in t CO₂e: reduction by 90% by 2050

The overarching target is to achieve net zero emissions groupwide by 2050 in accordance with the SBTi Net Zero Standard. The GHG reduction targets were assessed by SBTi in the 2024 / 2025 reporting year. The intermediate and long-term targets for Scope 1 and 2 (2030 and 2050) were assessed to be in accordance with the 1.5-degree Celsius pathway. This also applies to the GHG emissions within the boundary of the iron and steel SDA. It does not apply to the separately assessed Scope 3 targets. The relative GHG reduction target within the boundary of the iron and steel SDA is assessed in accordance with the method specified by SBTi and includes defined steps of the steel production process. In the base year, around 90% of total Scope 1 and 2 emissions and around 1% of Scope 3 emissions were within the boundaries of the iron and steel SDA. The emissions covered are an aspect of the overarching emissions reporting and are included in the table in subsection “E1-6” and in the presentation of the base, actual and target values for the entire company in subsection “E1-1.”

Target assumptions

The development of the GHG reduction targets is based on various assumptions. These include expected changes in volumes and market conditions, technological progress such as the ramp-up of hydrogen-based direct reduction, regulatory trends – such as those in the context of the EU emissions trading system and the Carbon Border Adjustment Mechanism (CBAM) – and changing customer requirements in respect of low-carbon products and processes. These factors affect the development of GHG emissions and the ability to implement the reduction pathways. Further information on these assumptions can be found in subsection “ESRS 2 SBM-3” in this section.

Moreover, a virtually constant steel scrap ratio is assumed in the GHG reduction target within the boundary of the iron and steel SDA. This requires that the ratio of scrap to primary material used must be included when calculating reduction pathways for steel producers. The scrap ratio determines the degree to which an undertaking’s emissions intensity is aligned with the pathway for primary and secondary steel production. These factors affect the development of GHG emissions and the ability to implement the reduction pathways.

Actions to achieve the targets

thyssenkrupp applies several strategic decarbonization levers to achieve its GHG reduction targets. They include, in particular, the change in steel production technology, the adaptation of the product portfolio, the growing use of renewable energy – either purchased or generated by the company itself – and efficiency improvements in energy and production processes. Neutralization technologies to capture and store or use any unavoidable GHG emissions may be a complementary action in the long term. Further information on this can be found in subsection “E1-3.”

Measuring and managing progress

The GHG reduction targets are monitored by way of the annual greenhouse gas balance sheet. The relevant data are recorded using a central ESG reporting system that is subject to regular internal auditing. Results and progress are published in the sustainability report.

E1-5 – Energy consumption and mix

For thyssenkrupp, energy consumption is a key area of action for the transition to a decarbonized economic system. The company’s total energy consumption and the composition of the energy mix are disclosed below. The disclosures distinguish between non-renewable, renewable and nuclear sources and consider forms of energy generated by the company itself and purchased forms of energy.

Energy intensity on the basis of sales

The calculation of energy intensity on the basis of sales reflects the consolidated energy consumption as a ratio of the group’s consolidated net sales (MWh/€). The metric considers all thyssenkrupp’s business activities because these were allocated to the relevant NACE sections in this connection and are considered as relevant in this context. In the reporting year, the energy intensity on the basis of sales amounted to 0.001954748 MWh / €.

It was calculated using the sales reported in the statement of income in the published consolidated financial statements.

E1-6 – Gross Scopes 1, 2, 3 and Total GHG emissions

The reported GHG emissions are calculated on the basis of the definitions and methodologies of the GHG Protocol Corporate Accounting and Reporting Standard and the other standards referenced therein for calculating GHG emissions from the company’s own processes and from the upstream and downstream value chain. The following reporting of these GHG emissions is in line with the requirements of the CSRD and ESRS E1.

The scope of consolidation is the same as that used in financial reporting and considers the fully consolidated group companies. The Scope 1 and 2 emissions for HKM are calculated in line with the shareholding of 50%. By contrast, any supply volumes that exceed this shareholding are allocated as purchased goods to Scope 3.

To calculate the Scope 1 and 2 emissions, the energy consumption by energy source is determined at all relevant sites and suitable emission factors are applied. Some of the factors are obtained from the commercial Sphera database; other emission facts are calculated individually for the input volumes of coal and coke on the basis of the material stream analyses. The emissions of the greenhouse gases methane (CH₄), nitrous oxide (N₂O), partially halogenated hydrofluorocarbons (HFCs), sulfur hexafluoride (SF₆) and nitrogen trifluoride (NF₃) were determined by analysis; they are deemed to be not material to reporting and are therefore not disclosed. It should also be noted that the methodology for calculating some of the Scope 1 emissions relating to the volumes of coal and coke used changed between the base year and the reporting year. This results in an insignificant deviation in the data.

The reporting of Scope 2 emissions is both site-based and market-based. The site-based calculation applies the current average, country-specific IEA emission factors; the market-based calculation applies the emission factors contained in the various contractual instruments used. If no market-based emission factor is available for an energy component, the site-based emission factor is applied for this component in line with the GHG Protocol Scope 2 Guidance.

Scope 3 emissions for the various categories in the upstream and downstream value chain are calculated using activity- and expenditure-based data in line with the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard. As a matter of principle, suitable emission factors from relevant and publicly available sources are used, for example, from international associations and from commercial databases. If available, supplier- and customer-specific data are also used in the calculation. Expenditure-based emission factors are adjusted for inflation. See subsection “BP-2” for information on the uncertainties associated with calculating the Scope 3 emissions. The material Scope 3 categories that therefore must be reported are determined on the basis of the criteria contained in the GHG Protocol. The underlying assumptions and calculation methods for the relevant categories are described below. At present, only small amounts of Scope 3 greenhouse gas emissions are calculated on the basis of inputs from certain activities in the upstream and downstream value chain. The proportion of primary data is less than 1% overall.

Scope 3, Category 1 “Purchased goods and services”

Indirect GHG emissions from purchased goods and services that are allocated to Category 1 in accordance with the GHG Protocol also include the upstream emissions reflected in the emission factors from Sphera and from industry associations such as the World Steel Association that are used. As a rule, the emissions of goods – especially materials – are calculated on the basis of weight. If no weight data are available, an averaging process is applied. In the case of goods for which it makes no sense to apply a weight-based approach or for purchased services, the calculation is based on expenditure with the application of suitable emission factors. If suppliers provide product-specific data, these are given preference in calculating emissions. In those cases where there is no information about the type of purchased goods or services, an extrapolation is performed using the averaging method on the basis of the purchase values to ensure the fullest possible recognition of emissions.

Scope 3, Category 3 “Fuel and energy-related activities”

The GHG emissions for the company’s entire energy and fuel supplies that occur in the upstream value chain as the result of extraction, generation and transport – which are also the basis for the calculated Scope 1 and 2 emissions – are determined and disclosed with the aid of suitable emission factors from Sphera.

Scope 3, Category 4 “Upstream transportation and distribution”

Financial expenditure for transportation services is broken down by transportation type and the resulting GHG emissions are calculated on the basis of expenditure-based emission factors using the Scope 3 Evaluator tool from GHG Protocol, which is adjusted annually for inflation. If no data are available, a small proportion is extrapolated using the averaging method.

Scope 3, Category 5 “Waste generated in operations”

The indirect GHG emissions of waste are calculated from the waste volumes determined in the environmental data recording process, broken down by hazardous and non-hazardous waste that is either disposed of or recycled. This calculation uses emission factors from Sphera, which are based on various waste treatment methods, e.g., landfilling and disposal by incineration.

Scope 3, Category 6 “Business traveling”

Most of the indirect GHG emissions from business traveling relate to air travel. They are calculated mainly using primary data from the airlines that are delivered by a service provider. In addition, emissions from the use of other modes of transport and from hotel accommodation are determined using an averaging method and included in the total emissions for this category.

Scope 3, Category 10 “Processing of sold products”

In the case of sold products resulting from thyssenkrupp’s various business activities, the typical processing steps until the use of the end product are examined and assessed in respect of the GHG emissions that occur. In the case of materials, components and semi-finished products, the breakdown is in line with the further stages of the trading chain and additional processing. If this usually involves assembly only, the emissions that occur are considered to be not material and are not reported. In line with section 6.4 of the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard, this also applies in those cases in which sufficient information is not available due to the large number of potential processing steps and end uses, and reliable assumptions are therefore not possible. However, if energy-intensive machine processing of intermediate products is involved, the GHG emissions are determined using typical energy consumption data, taking account of the product volumes delivered and local IEA emission factors for the energy supply. In the case of immaterial products, such as construction services in plant engineering, order-specific calculations are performed on the basis of the material volumes used in the construction of the respective plant.

Scope 3, Category 11 “Use of sold products“

In the case of sold products resulting from various business activities, the typical customer use types are examined and assessed in respect of the GHG emissions that occur. To start with, a distinction is made between whether the use of the product results in direct or indirect emissions. Direct emissions from product use – such as operation of the plant supplied or of a motor component – are measured and reported. In the case of plant engineering products supplied, the different periods of use that are expected for each plant type result particularly in high Scope 3 emissions. The time at which a plant is transferred to the customer determines the year to which the Scope 3 emissions are allocated. This may result in significant fluctuations between reporting years. The GHG emission of plants are calculated using order-specific assumptions for the service life, energy consumption and possible process emissions. These are then assessed using relevant emission factors such as those from the IEA or, if available, using project- and customer-specific emission factors. An assessment of the emissions for this category – deviating in one respect from the other plant engineering products supplied and from the base value presented – is conducted for the electrolysis plants sold. To facilitate a more realistic assessment of the emissions resulting from the use of electric power during the service life of these plants, we assume the ongoing decarbonization of the electricity mix in the countries where the plants are located on the basis of the IEA’s Stated Policies Scenario (STEPS). Although this is a recognized scenario, it may be subject to inherent limitations if there is any change in the framework conditions. This adjustment to the method results in a reduction of around 50 million t CO₂e in the emissions presented for the electrolysis plants sold in the reporting year over their service life.

Other direct emissions reported in this category result from the energetic use by customers of the products traded and supplied by thyssenkrupp, such as coal, coking coal and steel mill gases. Due to contractual terms governing the protection of sensitive information in connection with defense projects, no emissions from the use of Marine Systems products are determined. Indirect emissions from the use of traded and supplied products – for example, materials and components – are not reported in this category.

Exclusion of non-material Scope 3 categories

Some Scope 3 categories are excluded from reporting because either no or only low GHG emissions were calculated. They include the following Scope 3 categories:

• Category 2 (Capital goods)

• Category 7 (Employee commuting)

• Category 8 (Upstream leased assets)

• Category 9 (Downstream transportation and distribution)

• Category 12 (End-of-life treatment of sold products)

• Category 13 (Downstream leased assets)

• Category 14 (Franchises)

• Category 15 (Investments)

Together, these Scope 3 categories account for only around 0.2% of overall GHG emissions.

Contractual instruments for the market-based calculation of Scope 2 GHG emissions

Of the contractual instruments that were used in the market-based calculation of Scope 2 emissions in this reporting year, 2% related to long-term power purchase agreements (PPA) and 11.6% to green electricity tariffs. A further 4% was accounted for by guarantees of origin (GO) and renewable energy certificates (REC). In addition, 72% related to other electricity, steam and heat supplies with known emission factors. The percentages relate to the amount of energy hedged by the respective instrument relative to the total amount of electricity, steam and heat purchased and used by the company itself.

GHG intensity on the basis of sales

The GHG intensity defines the ratio of total GHG emissions to sales (t CO₂e / €). It is reported in respect of both sites and markets. In the reporting year, the site-based GHG intensity amounted to 0.006299083 t CO₂e / €, whereas the market-based GHG intensity was 0.006303086 t CO₂e / €.

These figures were calculated using the sales reported in the statement of income in the published consolidated financial statements.

E1-8 – Internal carbon pricing

For those businesses that are subject to the European Emission Trading Scheme (EU-ETS), thyssenkrupp applies an internal carbon price for the economic assessment of planned investments. This shadow carbon price ensures the systematic consideration of future carbon cost risks in long-term capital allocation decisions, especially for infrastructure and plant replacement projects.

The assumed carbon price is in a corridor between the current market price and around €150/t CO₂ through 2035 and around €250/t CO₂ through 2045. thyssenkrupp is thus guided by the customary market assumptions contained in leading scenario models and regulatory developments at the EU level – such as Fit for 55, CBAM and ETS II – especially in respect of the anticipated development of carbon prices, emission reduction pathways, sectoral decarbonization targets and adaptations in the cross-border trade with carbon-intensive products.

One key example of an application is the investment in a hydrogen-capable DR plant with smelter by Steel Europe at the Duisburg site. In the future, this will replace the coke-fired blast furnace. The use of natural gas or hydrogen will reduce carbon emissions by as much as 3.5 million tons each year. The internal carbon price was included as a key parameter in calculating the economic efficiency of this investment.

In the reporting period, the shadow carbon price potentially covered approximately 16 million t CO₂e of gross Scope 1 GHG emissions, equivalent to 82% of total gross Scope 1 GHG emissions.