Strategy

SBM-1 – Strategy, business model and value chain

The thyssenkrupp companies in the five segments offer a broad spectrum of products and services.

• The Automotive Technology segment is a series supplier of chassis and drive components and an assembly and logistics partner to the global automotive industry. Other key products for this customer group are forged components, lightweight car body components, springs and stabilizers, and systems for car body construction and drive and battery assemblies. Automotive Technology also delivers system solutions for the resources, construction and mobility industries.

• The Decarbon Technologies segment provides comprehensive plant engineering solutions for large areas of the chemical and cement industries. As well as delivering turnkey facilities, the segment also provides planning, engineering and maintenance services. In particular, thyssenkrupp nucera delivers the technology for electrolysis plants, including those used for the industrial-scale production of green hydrogen. Other key products are slewing and other bearings and seamless rolled rings for the manufacturers of wind energy installations and for other industrial applications.

• The Materials Services segment supplies raw materials and almost all kinds of materials, customized supply chain solutions and materials-related services such as processing to various customer groups, including the automotive and aerospace industries. The portfolio increasingly includes data-driven digital services for sustainable supply chains.

• The Steel Europe segment produces a broad range of flat carbon steel products with properties tailored to many different applications. It supplies a large number of customer groups, the most important of which is the automotive industry.

• The main products of the Marine Systems segment are submarines and surface vessels, as well as maritime electronics and security technology systems. The primary customer group is the defense area of the public sector.

Detailed information on the segments can be found in the “Fundamental information about the group” section of the management report.

An overview of our employees by region can be found in the section headed “ESRS S1 Own workforce.”

Fossil fuels

thyssenkrupp is active to a small extent in the fossil fuel sector. The Materials Services segment earns revenue from trading in fossil fuels, mainly coal and coke, but this is not the main focus of the segment’s commercial activity. Sales from fossil fuels amounted to around €180 million, which is less than 1% of the group’s total sales.

This figure includes sales of less than €1 million achieved with oil-based products.

In the reporting year, no sales were achieved with taxonomy-aligned economic activities relating to fossil gas.

Sustainability-related targets

Even in a changing and challenging environment, a major goal is to make thyssenkrupp a high-performing and sustainable undertaking. Alongside an economically sustainable competitive position, environmental protection, climate change mitigation and social matters play a key role. Considering the interests of various stakeholder groups is accorded high priority by thyssenkrupp and their requirements in respect of key sustainability matters are determined continuously via various processes. On this basis, we derive targets and actions for improving our sustainability performance.

Our climate targets – The green transformation is a key element of our corporate strategy. It applies to both our own processes and the entire value chain; further information on the green transformation can be found in the “Targets and strategy” subsection in the section headed “Fundamental information about the group” in the management report. This is especially evident in respect of our climate targets: SBTi (Science Based Targets initiative) has assessed our system of medium-term climate objectives (2030) as conforming with the 1.5-degree Celsius target of the Paris Climate Agreement. Our target system includes emissions from our own processes (Scope 1 and 2) and from upstream and downstream activities (Scope 3). Our goal is that thyssenkrupp will reach net zero emissions worldwide by 2050 at the latest – in Germany already by 2045. Further information about the GHG reduction targets can be found in subsection “E1-4” in the section headed “ESRS E1 Climate change.”

In the areas of climate, energy and environment, technology and innovations, employees and purchasing, we have defined non-financial targets (NFT) in consultation with the segments, which are responsible for achieving the targets and work with the businesses to drive implementation.

Energy – Energy efficiency plays an important role at thyssenkrupp. For ten years, the global Groupwide Energy Efficiency Program (GEEP) has included measures such as process optimizations, better use of waste heat and the replacement of plant components and lighting systems. We seek to achieve annual energy efficiency gains as a crucial lever in achieving our climate targets.

CO₂ emissions – To reflect our climate targets, we are pressing ahead with reducing the group’s CO₂ emissions intensity, calculated as the total of our direct emissions (Scope 1) and emissions from purchased energy (Scope 2) relative to sales (excluding the Steel Europe segment). For the Steel Europe segment, the target value was formulated accordingly for the volume of net CO₂-reduced steel, which is calculated from the reduced carbon input at the Duisburg site and the resulting CO₂ savings, allocated to a production volume.

Technology and innovations – In the course of implementing our innovation strategy, we are driving forward with our research and development (R&D) activities. Our target here is to achieve an adjusted R&D intensity of 3.0% for the group. This figure refers to R&D costs as a proportion of sales, excluding the Materials Services segment.

Employees – Occupational safety and health have always been important issues at thyssenkrupp. In the interest of continuously improving occupational safety, thyssenkrupp monitors accident trends and seeks to steadily reduce the accident frequency rate.

We are also committed to ensuring equal opportunities for all employees and non-discrimination. This is why we have implemented a target for women in management positions. The target is used in accordance with local laws. Further information on this and the aforementioned target can be found in the section headed “ESRS S1 Own workforce.”

We use the employee Net Promoter Score (eNPS) as the indicator of employee satisfaction and strive to achieve a continuous improvement. The thyssenkrupp eNPS is part of the annual Employee Pulse Check survey; it indicates the willingness of employees to recommend thyssenkrupp as an employer.

Value chain – Using the HSR metric, we have set the target of achieving an annual reduction in the proportion of suppliers still classified as high risk – even after any risk-mitigating measures – relative to the total population of potentially high-risk suppliers. The risk categorization is based on the risk analysis required by the German Act on Corporate Due Diligence Obligations in Supply Chains (LkSG), which we are required to perform once yearly and on an ad hoc basis if necessary. In this way, we aim to achieve a general reduction in the risk of violating the legal provisions of this legislation in respect of environmental protection, human rights and occupational safety within our portfolio of suppliers. Moreover, if the risk analysis identifies risks, these must be mitigated as soon as possible by taking prompt action that is consistent with the provisions of the legislation. Further information on performing our risk analysis can be found in the section headed “ESRS S2 Workers in the value chain.”

All established targets are pursued in the interest of continuous improvement and are constantly being adjusted and extended in parallel with our ongoing strategic development. Since fiscal year 2020 / 2021, we have been integrating sustainability activities gradually into the Long-Term Incentive (LTI) of the Executive Board and top-level management through the NFTs. Further information on the LTI can be found in the subsection headed “ESRS 2 GOV-3 Integration of sustainability-related performance in incentive schemes” in this section.

When formulating and defining sustainability-related targets, the requirements of key markets, customer groups, the capital market and other stakeholder groups play an important role.

Assessment of these requirements influences the focus of our business activities and is conducted in the context of our regular dialog with the corresponding stakeholders. In addition to the Annual General Meeting as a platform for dialog, sustainability targets are a key aspect of discussions with customers, investors and rating agencies specialized in sustainability. We submit our sustainability targets in respect of climate change mitigation to the SBTi for assessment.

Our participation in sustainability ratings and the associated external assessment of our sustainability targets and performance represent an important feedback instrument for us and underscore the target-oriented implementation of our sustainability actions.

Sustainability elements of the strategy

The strategy of thyssenkrupp can be described in terms of three key elements: performance, portfolio and the green transformation. Further information on this can be found in the “Targets and strategy” subsection in the section headed “Fundamental information about the group.”

The green transformation is described primarily by the Climate Transition Plan (see subsection “E1-1” in the section headed “ESRS E1 Climate change”), which defines the transformation of both our own processes and those in our upstream and downstream value chain, with clearly specified targets and the actions needed to achieve these targets. We also develop and deliver many innovative solutions that offer our customers support in implementing their own climate- and resource-saving processes and introducing more sustainable products.

Value chain

With a broad portfolio of products and services, we aim to generate added value for our customers, enabling them in turn to create innovative and more sustainable products. To this end, we work with our suppliers, development partners and customers along the value chain.

The following graphic shows the features of the upstream and downstream value chain – the material supplies, the core elements of thyssenkrupp’s various business activities and the downstream activities of our customers.

In the upstream value chain, we procure raw materials, especially iron ore and coal products, for the manufacture of a broad range of high-quality flat steel products. In addition, we procure all kinds of raw materials and materials (steel, stainless steel, aluminum, plastics and others) for trading and as the basis for extensive supply chain services. For the manufacture of products such as automotive components and plants, we procure metallic and non-metallic materials, semi-finished products, components and equipment.

The individual business units record the purchased goods and services using various enterprise resource planning (ERP) systems. These data are consolidated centrally in thyssenkrupp’s Spend Data Warehouse for use in reporting and controlling.

As described in this subsection, we offer our customers a broad range of high-quality materials and technical products, solutions and services. In addition to delivering direct benefits for our customers, we generate sustainable value for our investors. We also seek to create modern and future-proof jobs in all regions and at all our sites. Further information on our stakeholders’ interests can be found in the following subsection.

SBM-2 – Interests and views of stakeholders

The continuous dialog with stakeholders supports our responsible and forward-looking corporate governance and is a key element of thyssenkrupp’s sustainability strategy. We foster an open dialog with our stakeholders as a way of taking account of their expectations, concerns and suggestions – especially in respect of environmental and social matters – in our strategic and business decision-making.

In order to gain a better understanding of our stakeholders’ expectations and perspectives and foster a purposeful dialog, we record their opinions regularly at various levels using a range of communication channels – here are a few examples:

Employees – As thyssenkrupp’s most important internal stakeholder group, the company’s employees are provided with transparent information on relevant topics, for example, at regular information events, via our “WeNet” company intranet and through targeted training. We foster a continuous and active dialog and request specific feedback via employee review meetings, pulse checks and dialog formats such as “klar:text.” In addition, our whistleblower system gives them the opportunity to report potential grievances in confidence, thus contributing to the integrity of our activities.

Customers – Our customers have clear expectations regarding the quality, level of innovation and sustainability of our products. They are the focus of our activities. We maintain a close dialog with them, especially through in-person discussions with our sales and marketing team.

Suppliers and business partners – As contributors in the value chain, our suppliers and business partners are responsible for complying with social and environmental standards. We maintain a close dialog with our suppliers and business partners by way of regular discussions with the internal teams responsible for our purchasing processes and through supplier audits. Any suspicions concerning human rights violations by our suppliers and business partners can be reported via our whistleblower system, which is open to use by all thyssenkrupp employees, as well as by external stakeholders and other third parties.

Capital and financial market participants, analysts and rating agencies – The growing interest of our investors and analysts in ESG criteria and sustainable value creation is reflected in our continuous and transparent dialog with these stakeholders. Forums for this include capital market events such as investor conferences, roadshows and capital markets days, our Annual General Meeting and our annual and quarterly reports. We also provide information in the investor relations section of our website (www.thyssenkrupp.com/en/investors). Through our active participation in ESG ratings, which are also relevant for investors and analysts, we underscore our commitment to transparency and provide guidance for our stakeholders.

Policy makers, legislation and authorities – We maintain a regular dialog with policy makers, ministries and authorities so that we can give early consideration to relevant developments and provide transparency about actions planned by thyssenkrupp.

Trade unions – We consider trade unions to be important partners in the social dialog. We foster trustful and constructive cooperation with the employee representatives, involving them at an early stage in relevant decision-making processes. Regular discussions at site and group level help us to ensure fair working conditions and jointly develop solutions to current challenges.

Non-governmental organizations, industry associations, academia, research and development, media – We maintain a topical dialog with this stakeholder group, which functions as an observer of and driving force for sustainable development and as a source of innovation and research. We cultivate collaborations with scientific institutions and educational stakeholders, participate in specialist events and contribute to industry associations and initiatives with the goal of jointly advancing social and technological developments. The media have the role of ensuring the transparency of undertakings’ sustainability strategies and asking critical questions, thus creating publicity and fostering debate.

Civil society and local communities, vulnerable groups – Targeted and ad hoc dialog facilitates an open exchange of views. In the case of planned investments, for example, we address stakeholders at an early stage, clarify respective interests and foster transparency. Moreover, we provide information via press releases, thereby building trust and facilitating participation within the meaning of our ESG responsibility and our governance principles. Some of our stakeholder groups may be particularly vulnerable. This may be the case if, for example, they have a limited ability to express their interests and needs. Our accessible whistleblower system enables these stakeholders to contact us as well.

Nature – We consider nature to be a silent but crucial stakeholder whose interests are represented by non-governmental organizations, local communities, legislators, and nature and environmental protection organizations. The dialog with these stakeholders enables us to identify environmental impacts and act responsibly in the interests of nature.

We systematically involve the relevant internal representatives of stakeholder groups in the central process steps of our double materiality assessment, such as the identification and assessment of impacts, risks and opportunities. Further details of the materiality assessment process can be found in the subsection headed “IRO-1 Description of the processes to identify and assess material impacts, risks and opportunities” in this section.

We consider those groups that might be affected by the impacts of our operations or business relationships to be the relevant stakeholders in respect of the materiality assessment. In their day-to-day work, the internal representatives of these groups are in regular dialog with internal and external stakeholders and contribute their perspectives to our assessment processes. Outside the double materiality assessment process, a structured dialog with our stakeholders takes place via the respective specialist departments and expert groups. For this purpose, we use a number of established communication channels (see list above). The open and regular dialog with our local, national and global stakeholders enables us to better comprehend different expectations and viewpoints. It can serve as the basis for mutual understanding and social acceptance of our business decisions, at the same time delivering valuable impetus for the continuous further development of our sustainability strategy. In order to identify material sustainability matters, we analyze the expectations, interests and requirements of our stakeholders on a continuous basis. The insights obtained in this way are used in our double materiality assessment, our sustainability agenda, the management system for human rights due diligence and our groupwide opportunities and risk management system.

To enable us to comply with new framework conditions and relevant sustainability requirements, we adjust our processes to involve stakeholders as and when necessary. In fiscal year 2024 / 2025, no fundamental changes were made to our strategy or business model as the result of feedback from our stakeholders.

As part of the presentation of our double materiality assessment, the Supervisory Board and Executive Board were informed about the viewpoints and interests of the affected stakeholders, among other things. The Executive Board member responsible for the respective directorate is also notified about the stakeholders affected by sustainability-related matters.

SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model

As an international corporation, thyssenkrupp develops technologies and solutions for future market and customer needs. In fiscal year 2024 / 2025, we performed a double materiality assessment to identify and assess the actual and potential negative and positive impacts of our business activities on society and the environment and the economic relevance of sustainability matters for thyssenkrupp.

Double materiality assessment – method and results

Our value chain covers the global procurement of raw materials, goods and services, the manufacture of and trade in products, and the marketing of our products, solutions and services. This results in material impacts, risks and opportunities from our own business activities and along the upstream and downstream value chain. The material impacts identified are mainly caused by or closely related to thyssenkrupp’s business strategy and business model. In the double materiality assessment, we systematically assessed the impacts, risks and opportunities identified. These assessments, including a tabular overview of the material impacts, risks and opportunities, can be found in the respective topical sections.

We continuously analyze our business activities in respect of their material impacts, risks and opportunities. In so doing, we seek to minimize negative impacts, amplify positive impacts, reduce risks and leverage opportunities. We take care to include material impacts, risks and opportunities – together with their current and potential future relevance – into our strategic considerations. Potential connections with our business model and value chain are also included in our decision-making processes. The material impacts, risks and opportunities in connection with our own operations and with the operations in our value chain and their impacts on our business model, value chain, strategy and decision-making are explained in the respective topical sections.

In the 2024 / 2025 reporting year, no sustainability matters other than those envisaged by the ESRS were identified. Due to our extensive portfolio of innovative technologies, products and services, there are no significant concentrations of potential negative or positive impacts, risks and opportunities in either our business model or in the value chain. Moreover, in the current reporting year, there are currently no significant financial effects of the material risks and opportunities on our financial position and profit or loss, nor have the impacts, risks and opportunities identified and the actions initiated or planned resulted in any change to the corporate strategy or business model.

Further information on the double materiality assessment can be found in subsection “IRO-1” in this section.

Resilience of the strategy and business model

In the future, to support the qualitative and quantitative analysis of the resilience of the strategy and business model in respect of the material impacts, risks and opportunities, thyssenkrupp will identify long-term risks in an annual double materiality assessment, assess these in qualitative and quantitative terms and have them reviewed by selected experts.

Social and environmental risks are also included in this assessment. They undergo holistic analysis and their assessment takes account of the environment in which thyssenkrupp operates. thyssenkrupp defines risks as future events or developments that may result in negative deviations from our forecasts or other targets. Dealing responsibly with risks is part of corporate governance at thyssenkrupp, because the continuous and systematic management of business risks – but also opportunities – is fundamental to targeted governance. Further information about the key features of our risk management and control system can be found in the “Opportunity and risk report” in the management report.

We continuously monitor the resilience of the strategy and business model as well the company’s ability to deal with current and future material impacts and risks and leverage the opportunities identified. The assessment includes the climate and biodiversity analyses described in subsections “SBM-3 E1” and “E4-1.” We also monitor any changes in the market environment or caused by new risks and take suitable action to address them if necessary.

The analysis of the resilience of the strategy and business model takes account of the fact that sustainability has been an integral element of our corporate strategy for many years and that thyssenkrupp reports regularly on its sustainability activities. The assessment of our medium- and long-term targets by independent ESG rating agencies not only delivers an objective estimation but also serves as an external benchmark for our sustainability performance. We continuously monitor any changes and new developments in the sustainability context, responding strategically and flexibly to any changes and taking account of our stakeholders’ expectations. In the context of our strategic alignment, we examine our resilience to external influences, also in light of sustainable development aspects. The assessment and integration of social, environmental and strategic risks and opportunities show that thyssenkrupp has a robust and adaptable business model that is focused in the long term on sustainable development and resilience to external influences.