Governance
In this section
GOV-1 – The role of the administrative, management and supervisory bodies
The management of thyssenkrupp is the responsibility of its parent company, thyssenkrupp AG, which is a joint stock company established under German law with a dual management and control structure consisting of the Executive Board and Supervisory Board as required by German law.
Executive Board
The Executive Board is responsible for managing the company on its own authority and in the interest of the company, i.e., with the aim of sustainable value creation and taking into account the concerns of the shareholders, employees and other stakeholders and the interests of thyssenkrupp. The Executive Board provides the Supervisory Board and the responsible committees with regular reports about matters relating to strategy, planning, business performance, risk management, compliance and sustainability that are of relevance to the company and the group. It aligns the strategic orientation of the company and the group with the Supervisory Board and regularly discusses the status of strategy implementation with this body.
In the reporting period, the Executive Board was composed of five executive members, four men and one woman. This equates to a proportion of 80% men and 20% women. The members of the Executive Board are appointed by the Supervisory Board. Regarding the composition of the Executive Board, the Supervisory Board considers the existing diversity policy for the Executive Board, including other diversity and factual criteria such as personality, expertise and experience, internationality, training and professional background as well as age and gender.
The Executive Board as a whole and its members have the relevant expertise to perform their tasks properly. The individual Executive Board members contribute different types of knowledge, skills and experience that include, for example, many years of experience in the areas of corporate governance, finance, mergers and acquisitions, change management/transformation and human resources in various industry sectors as well as substantial international experience. The Executive Board members are responsible for the sustainability matters in their respective directorates and, among other things, have the knowledge and experience gained as a result of their respective profiles and activities. In addition, the Executive Board can draw on the expertise and experience of the relevant specialist departments within the company and of external experts; this includes knowledge and experience of material sustainability matters.
Supervisory Board
The Supervisory Board advises and oversees the Executive Board in the performance of its duties and is involved in fundamental decisions taken by the company. Its activities also relate to sustainability matters. The Supervisory Board appoints the Executive Board and defines the members’ areas of responsibility (directorates).
The Supervisory Board of thyssenkrupp AG is composed of 20 non-executive members, ten shareholder representatives and ten employee representatives in accordance with statutory requirements. Under the Articles of Association, the Alfried Krupp von Bohlen und Halbach Foundation has a corresponding right of appointment. The other shareholder representatives are elected by the Annual General Meeting. In the reporting year, the Supervisory Board had eight female members. This equates to a proportion of 60% men and 40% women. In accordance with the recommendations of the German Corporate Governance Code, all the shareholder representatives are independent.
The Supervisory Board and its members have the necessary knowledge, skills and experience to carry out their supervisory and advisory activities properly. In accordance with the recommendations of the German Corporate Governance Code, the Supervisory Board has defined specific targets for its composition and a competency profile. Taken as a whole, the Supervisory Board should have industrial expertise/sector knowledge in the fields in which thyssenkrupp operates, expertise in corporate development, organization and structuring, corporate strategy, business conduct, human resources, digitalization and IT, sustainability, financing and capital markets, accounting and auditing, law, compliance and corporate governance, and international experience. The current composition of the Supervisory Board meets the targets and the competency profile. The Supervisory Board members receive organizational and financial support for training and development measures that enable them to perform their duties. To supplement this, the company offers information events and training sessions on specific topics, including sustainability matters.
The Supervisory Board’s targets for its composition are also based on the diversity model for the Supervisory Board and, in addition to a gender quota, concern the international operations of thyssenkrupp, potential conflicts of interest, the number of independent Supervisory Board members, an age cap for Supervisory Board members and a limit for the time served as a Supervisory Board member. The diversity model and the targets for the composition of the Supervisory Board are implemented by electing the members of the Supervisory Board.
The Supervisory Board of thyssenkrupp AG has also established six committees: the Executive Committee, the Mediation Committee in accordance with § 27 (3) of Germany’s Codetermination Act (MitbestG), the Personnel Committee, the Audit Committee, the Strategy, Finance and Investment Committee and the Nomination Committee. The members of these committees prepare the resolutions for the full Supervisory Board and perform the tasks assigned to them on the basis of the rules of procedure for the Supervisory Board and for the respective committee. The chairs of the committees report regularly on the meetings and work of the committees at the Supervisory Board meetings.
Responsibilities and governance in respect of sustainability issues
The Executive Board and Supervisory Board are also responsible for managing and monitoring impacts, risks and opportunities on the basis of the dual management and control structure required by German law. The respective responsibilities are defined in the rules of procedure for the Executive Board and for the Supervisory Board and its committees, in the Schedule of Responsibilities for the Executive Board, in the company’s regulations and in the approval and consultation obligations specified for the entire company. As the senior management body, the Executive Board defines the company’s strategic alignment and business targets, also taking account of the relevant sustainability matters. In addition, the Executive Board has developed and implemented an organizational and governance framework aimed at ensuring appropriate and effective internal control and risk management. This also takes account of the sustainability-related targets that are of relevance for the company.
The Supervisory Board also exercises its supervisory and advisory function in respect of the sustainability-related aspects of its duties. It receives regular information from the Executive Board on this subject. Moreover, the respective sustainability matters are an integral aspect of the work of the respective Supervisory Board committees. This applies particularly to the Strategy, Finance and Investment Committee, which examines the sustainability matters associated with the corporate strategy and investments, and to the Audit Committee in respect of its role relating to the annual report and the audit topics.
The groupwide management framework is based on an integrated governance, risk and compliance (GRC) model. The organizational framework for the GRC model at thyssenkrupp is the three lines model. This shows which line is responsible for risk management in the broadest sense within the group. It helps to identify organizations, structures and processes that facilitate strong governance and strong risk management. Within this governance framework, the Corporate Function Internal Auditing serves as the independent third-line oversight function and supports executive management in the exercise of its responsibility. Internal Auditing reports directly and independently to the Executive Board of thyssenkrupp AG and, if necessary, to the Supervisory Board. The central Corporate Function Sustainability coordinates and supports the company’s strategic sustainability management and environmental management. Specific topic areas are handled by and are the responsibility of the relevant specialist units, for example, the Corporate Function Legal & Compliance and the Corporate Function Human Resources; these report on current developments to the Executive Board member responsible for the respective directorate.
Strategic sustainability management within the company is managed and enhanced in conjunction with the Sustainability Committee. Further explanations and information on the composition of the Sustainability Committee can be found in subsection “ESRS 2 GOV-2” below.
Further information on the Executive Board and Supervisory Board as well as on the key corporate governance principles and practices can be found in the “Corporate governance statement;” further information on the groupwide risk management and internal control systems can be found in the subsection headed “GOV-5 – Risk management and internal controls over sustainability reporting” in this section and in the “Opportunity and risk report” in the management report.
GOV-2 – Information provided to and sustainability matters addressed by the undertaking’s administrative, management and supervisory bodies
Our governance structure for sustainability
Responsibility for sustainability is clearly defined at thyssenkrupp. Strategic sustainability management is coordinated by the Corporate Function Sustainability. As well as preparing the sustainability strategy, the Corporate Function Sustainability drives cross-cutting sustainability projects and programs within the company. Together with other corporate functions, service lines and segments, the Corporate Function Sustainability continuously identifies stakeholder requirements, from which it derives targets and actions to improve our sustainability performance. The monitoring and management of the material impacts, risks and opportunities is the responsibility of the respective corporate functions, which report current developments to the Executive Board member responsible for the respective directorate. In the course of preparing the first sustainability report in accordance with the CSRD, Sustainability expanded its regular working and discussion formats with the specialist departments. The goal is to strengthen collaboration between the segments and units when it comes to the practical implementation of the sustainability policies developed within the group.
The role of the Executive Board and Supervisory Board in sustainability management
Sustainability activities at thyssenkrupp are managed groupwide by the Sustainability Committee. This body is composed of the Executive Board members, the segment CEOs, the heads of the corporate functions and the company’s sustainability experts. The Sustainability Committee takes decisions on evolving existing actions, implementing innovative actions and new strategies, and setting sustainability-related targets. It receives reports from the Corporate Function Sustainability on the current status every six months and on an ad hoc basis, enabling it to systematically monitor the group’s sustainability performance. In the course of this work, the Sustainability Committee is supported by the Corporate Function Sustainability, which provides reports on the relevant metrics, developments and initiatives concerning material sustainability topic areas.
Sustainability matters and the progress of their implementation are integral items on the agenda of the regular meetings of the thyssenkrupp Executive Board, which take place at least twice monthly in accordance with a defined annual schedule. Among other things, the Executive Board received information on the performance and outcome of our double materiality assessment, which identified the material impacts, risks and opportunities. In addition, the Executive Board discusses key environmental, social and governance topics on both a regular and ad hoc basis. Here, the focus in the past fiscal year was on actions for the consistent implementation of our climate strategy, the further development of our ambitions to achieve our climate targets, actions to foster environmental protection, and social matters such as occupational safety and health. Governance topics were also the subject of regular reports to the Executive Board, for example, as part of the quarterly compliance report. The Executive Board additionally receives ad hoc reports – but at least once yearly – on the effectiveness review and findings relating to our human rights and environmental due diligence obligations. Further information on the aforementioned topic can be found in the section headed “ESRS S2 Workers in the value chain.”
The material sustainability matters identified by the double materiality assessment are elements of our sustainability strategy that has been adopted by the Executive Board, which supports its implementation. In this way, we are seeking to ensure the systematic integration of sustainability matters into the group’s corporate strategy and their consideration in key business decisions and transactions. For example, the Executive Board discusses the strategic alignment of the group’s investment activities in detail. In the context of short- and medium-term corporate planning, it takes decisions about the investment volume and approves all transactions above a certain size. In this connection, in addition to core aspects such as economic considerations and the analysis of opportunities and risks, the Executive Board also examines sustainability matters and their impacts, risks and opportunities on an ad hoc basis. For example, when deciding on the investment for the construction of a hydrogen-capable direct reduction plant for the production of CO2-reduced steel, consideration was given to the potential impacts on society and the environment as well as to the financial relevance in connection with greenhouse gas emissions.
The Supervisory Board and its committees receive regular information from the Executive Board on the development and implementation of our sustainability actions. These include the relevant sustainability matters in the corporate strategy, corporate planning and the setting and achievement of targets relating to the sustainability activities that are integrated in the Long-Term Incentive Plan for the Executive Board. This reporting enables the Supervisory Board to exercise its oversight and advisory function in respect of sustainability matters. In the past fiscal year, the reporting covered matters including the results of the double materiality assessment. Moreover, reports were given to the quarterly meetings of the Audit Committee of the Supervisory Board on sustainability matters that specifically concerned the preparation of the first report in accordance with the CSRD. Further information can be found in the “Report by the Supervisory Board.”
Like the sustainability strategy, the groupwide risk management system is aligned with the corporate strategy. It helps to safeguard the continued existence of the company and the sustained increase in its value. In order to deal efficiently with risks and opportunities, these must be identified at an early stage, assessed systematically and managed proactively. This requires consideration of both sustainability matters and the impacts of our business activities on non-financial matters. Further information, including risk reporting to the Executive Board and Supervisory Board, can be found in the subsection headed “GOV-5 – Risk management and internal controls over sustainability reporting” in this section and in the “Forecast, opportunity and risk report” in the management report.
GOV-3 – Integration of sustainability-related performance in incentive schemes
Further information on Executive Board and Supervisory Board compensation, especially the compensation components that are not described in more detail here, can be found in the separate annual compensation report and the explanations of the compensation systems.
Executive Board compensation
The Executive Board compensation system is an important management element that aims to support successful and sustainable corporate governance; for this reason, the compensation of the Executive Board members is linked to the group’s short- and long-term performance. The compensation of the Executive Board members comprises performance-independent and performance-related elements. The total target compensation of the Executive Board consists of fixed compensation, a pension allowance or company pension, fringe benefits, the Short-Term Incentive (STI) target amount and the Long-Term Incentive (LTI) target amount. The latter two elements are primarily performance-related compensation elements; the aim here is to strengthen the performance focus of the compensation system.
In accordance with § 87 (1) of the German Stock Corporation Act (AktG), the Supervisory Board is responsible for Executive Board compensation. Following preparation by the Personnel Committee, it resolves on the compensation system and on the performance criteria and related target values and thresholds in respect of the performance-related and variable compensation components for the Executive Board members where these are not already defined directly by the applicable compensation system. In addition, in accordance with § 120a (1) AktG, the compensation system is submitted for the approval of the Annual General Meeting whenever a significant change is made but at least every four years.
The STI is the short-term variable compensation element; it has a performance period of one year. 70% of the STI amount for the Executive Board members depends on the development of financial performance indicators and 30% on individual performance targets. In principle, the latter may include sustainability matters. However, for fiscal year 2024 / 2025, no targets were defined on the basis of sustainability-related considerations.
The second performance-related compensation element is the Long-Term Incentive (LTI), a share-based element with a performance period of four years. The LTI is issued in annual installments. Before each new installment is issued, the Supervisory Board defines target values and thresholds for the related performance criteria. In addition to financial performance criteria, sustainability targets systematically account for 30% of the LTI. To this end, before each new installment is issued, the Supervisory Board selects one to two specific sustainability targets from a catalog of criteria. These serve as performance criteria that apply for the four-year performance period of the respective installment. They are applied equally to all Executive Board members. When selecting the targets, the Supervisory Board takes account particularly of relevance and the availability of data across the underlying sustainability strategy, which is being refined continuously against the backdrop of thyssenkrupp’s transformation.
The current LTI installments include the following sustainability targets for fiscal year 2024 / 2025:
LTI 2021 / 2022 – 2024 / 2025
Reduce the emissions intensity, calculated on the basis of Scope 1 and Scope 2 emissions at group level (excluding Steel Europe), to 34.5 tons CO2 equivalent per €1 million sales in fiscal year 2024 / 2025; weighting of 15% within the LTI performance criteria as a whole
Achieve a production volume of 500,000 tons of net CO2-reduced steel by the Steel Europe segment in fiscal year 2024 / 2025, verified by an independent external testing organization; weighting of 15% within the LTI performance criteria as a whole
LTI 2022 / 2023 – 2025 / 2026
Achieve a proportion of 16% women in leadership positions at the end of fiscal year 2024 / 2025; weighting of 15% within the LTI performance criteria as a whole
Increase the employee Net Promoter Score as an indicator of employee satisfaction to a value of (2) for fiscal year 2024 / 2025; weighting of 15% within the LTI performance criteria as a whole
LTI 2023 / 2024 – 2026 / 2027
Reduce sustainability risks in our supplier portfolio, measured using thyssenkrupp’s own metric of the High Risk Supplier Reduction (HSR), to a value of 53.9% for fiscal year 2024 / 2025; weighting of 30% within the LTI performance criteria as a whole
LTI 2024 / 2025 – 2027 / 2028
Reduce the accident frequency rate for group employees to a value of 2.1 per one million hours worked in fiscal year 2024 / 2025; weighting of 30% within the LTI performance criteria as a whole
For fiscal year 2024 / 2025, the proportion of compensation based on sustainability-related targets amounted to 18% of the target amount for the variable, performance-related Executive Board compensation.
In principle, climate-related aspects may be considered in both the individual STI performance targets and the LTI sustainability targets if the Supervisory Board defines corresponding climate-related targets for the respective fiscal year. Specifically, this is the case for the aforementioned targets of reducing the emissions intensity and achieving a verified production volume of net CO2-reduced steel in connection with the LTI installment for 2021 / 2022 to 2024 / 2025 that is due for payment at the end of fiscal year 2024 / 2025; these targets incentivize the reduction in Scope 1 and 2 greenhouse gas emissions. As a result, the proportion of the expense for Executive Board compensation for fiscal year 2024 / 2025 that is associated with climate-related targets amounted to 2%.
Supervisory Board compensation
Under § 14 of the Articles of Association, Supervisory Board members are entitled to an annual basic compensation component and a meeting attendance fee. The amount of compensation awarded to members of the Supervisory Board is based on the member’s duties on the Supervisory Board or its committees. In accordance with the provisions of the German Corporate Governance Code, compensation does not include any variable components. Therefore, sustainability- and climate-related aspects are not considered in Supervisory Board compensation.
GOV-4 – Statement on due diligence
The following overview shows how and in which sections of the sustainability report the main aspects and steps of the due diligence process are disclosed.
GOV-5 – Risk management and internal controls over sustainability reporting
Like all other risks, we consider the risks in connection with sustainability reporting in the established processes of our risk management and internal control systems.
The material sustainability matters in accordance with the ESRS classification are mapped fully in the thyssenkrupp risk catalog and integrated in the groupwide processes of the risk management and internal control systems. The specific content for these two groupwide governance systems will be refined successively.
Risk inventory
In the context of the risk inventory, it has been possible since spring 2025 to assess all sustainability-related risk factors so that all group entities included in the risk inventory are able to record risks in the risk management tool. The process for describing, assessing and prioritizing the risks is the same as the one used for other risks. The risk assessment is based on the net method, which considers all risk management measures that have already been implemented and are effective. We assess all identified risks on the basis of their probability of occurrence and impact – measured by the performance indicators of adjusted EBIT and free cash flow before M&A in the planning period – which enables us to prioritize the reported risks. The risk inventory findings are used in the double materiality assessment, the results of which are examined for their relevance to the risk inventory and discussed with the risk managers.
Control system
Back in 2024, we began systematically integrating the key processes relating to sustainability reporting into our groupwide internal control system. In the reporting year, we developed sample controls for high-risk process steps on the basis of target processes. The specific local controls in the respective group entities can then be documented and tested. Once the sample controls have reached a high level of maturity and cover the respective process almost entirely, it is planned to transfer them to the corresponding groupwide IT application.
Detailed further information on our relevant systems can be found in the “Opportunity and risk report.”
Material risks
In our view, material risks in connection with sustainability reporting are incomplete data or data which do not satisfy quality, plausibility or approval requirements. Process weaknesses may result in the incorrect or late reporting of data or errors in electronic data transfer. Regarding the data recording process for sustainability reporting, we expanded our internal control system to include the corresponding process controls and clear responsibilities for individual process steps in the reporting year. Examples include application of the dual control principle or ensuring the appropriate segregation of duties in the provision of data. If IT systems are involved in the reporting process, we ensure that data transfer is automated where possible.
Responsibilities
For each relevant sustainability reporting subprocess, clear responsibilities (department, person) have been defined in accordance with the GRC model in consultation with the respective specialist departments and the Corporate Function Sustainability. The first line consists of the persons with operational responsibility at all organizational levels for mitigating specific risks and implementing defined controls in the respective subprocess. The corporate functions with specialist responsibility (second line) support the first line if risks are identified or if control deficits are found when implementing risk management actions.
Risk reporting
As we have integrated the sustainability reporting risks into the standard processes of our risk management and internal control systems, the same approach is applied to these risks when it comes to reporting to our committees. At thyssenkrupp, the material corporate risks as defined in the groupwide risk management system are presented each quarter to the interdisciplinary Risk and Internal Control Committee (RICC) headed by the CFO, where they are subjected to plausibility checks. At the same time, the RICC meetings serve to prepare the subsequent risk reporting to the Executive Board and Audit Committee. The RICC meetings are attended by all key officers responsible for governance, risk and compliance in the group. In addition, there is a regular dialog between the Corporate Function Sustainability and the Risk Management department aimed at continuously enhancing collaboration between the disciplines.
Further information on reporting can be found in the “Opportunity and risk report” in the management report.