Strategy

ESRS 2 SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model

As an international industrial and technology group, thyssenkrupp is active in various sectors and depends on a large number of global value chains. Due to our diversified business model and global activities, communities – including indigenous population groups – in regions where raw materials are extracted and processes in the upstream value chain and along the downstream value chain may potentially be impacted by our business activities.

In detail, we deem affected communities to be those communities and population groups that are or may be affected directly or indirectly by the company’s activities, projects and business performance. They include neighbors, local communities and indigenous peoples whose quality of life, environment and social structure are or may be affected by thyssenkrupp’s economic activities and decisions.

In the context of our double materiality assessment, groupwide risk analysis and the risk analysis in accordance with the LkSG (see also subsection “S3-1” and the section headed “ESRS S2 Workers in the value chain”), we review whether and to what extent our operations may impact these communities. We systematically consider relevant affected groups. Any findings are used in designing our groupwide actions to comply with our human rights and environmental due diligence obligations.

Our double materiality assessment identified material potential negative and positive impacts on affected communities almost solely in the upstream value chain. Risks and opportunities were not identified. This is due to the nature of our business activities: thyssenkrupp generally does not maintain direct relationships with the affected communities in the supply chains and is not operationally dependent on their involvement. Nevertheless, we are conscious of the fact that our business activities may have an indirect impact, especially on neighbors, local communities, indigenous population groups and other stakeholders in our suppliers’ regions.

Material negative impacts

The potential negative impacts on affected communities identified by our double materiality assessment in our upstream value chain include pollution of the soil, air or water and the extraction of natural resources, which may impair health, reduce the supply of food, restrict habitat or provoke land-use conflicts for affected communities. Non-compliance with occupational safety standards may have impacts outside the immediate operational context, for example, if occupational accidents negatively affect the life, health and property of neighboring communities or those in close proximity.

Those material potential negative impacts identified may negatively affect the quality of life in affected communities. Due to the possible reach of these impacts, they are classified as systematically widespread. This classification takes account of the risks customary in resource-intensive sectors, external studies and guidelines, and the geographical distribution and complexity of our global supply chains. It is also included in the double materiality assessment, which is reviewed and updated when new information becomes available from audits, complaints and dialog with stakeholders.

Material positive impacts

As part of our commitment to a responsible and sustainable supply chain, we require our suppliers to contribute to strengthening local structures by providing basic infrastructure, for example. This action may have potential positive impacts on local living conditions.

Basis of our insights relating to potentially affected communities

Our understanding of the characteristics of potentially affected communities and of their specific contexts is primarily based on our dialog with relevant stakeholders, our participation in industry initiatives, the assessment of relevant guidelines and findings from our risk analysis in accordance with the LkSG and from our groupwide complaints mechanism.

At the present time, we have only limited ability to formally describe characteristics and contexts that are indicative of particularly vulnerable groups such as indigenous peoples. Based on international guidelines, groups are considered particularly vulnerable if they are structurally disadvantaged or may be affected disproportionately by human rights or environmental risks. However, we are working to systematically expand our knowledge so that we can identify potential negative impacts on affected communities at an early stage. Further details can be found in subsection “S3-4.”