Materiality
assessment

In order to ensure that Hager is fully compliant with socio-environmental best practice, and to ensure that all our stakeholders can be completely confident in our commitment to sustainability – including the organisational strategies and actions which flow from this – we undertake an annual materiality assessment.

Materiality assessments are used to evaluate the environmental, social and governance (ESG) issues that are most relevant and impactful (ie material) to the reporting organisation and its stakeholders.

Hager conducts a double materiality assessment; one which considers both financial materiality (impacts on Hager) and impact materiality (the impact of Hager on people and our planet).

This process is at the heart of sustainability reporting. It is a vital benchmark for Hager as it evaluates the effectiveness of our decision-making, and acts as a guide for future action. For our stakeholders it provides a clear indication of our ambitions and achievements – the progress we are making in shaping the sustainable electrical world of tomorrow.

This process involves active collaboration across our entire value chain, engaging suppliers, customers, and other key partners to identify, assess, and address material sustainability issues. By fostering open dialogue and shared responsibility we integrate diverse perspectives and expertise into our E3 framework (Ethics, Employees and Environment – see later in this report), aligning closely with stakeholder expectations. This enables us to prioritise issues significant from both impact and financial viewpoints, ultimately driving organisational resilience and inclusivity.

02.1

Methodology

GRI 2-29 General disclosure
GRI 3-1 and 3-2 Material topics
ESRS 2 SBM-2 §45 and
IRO-1 §53 General disclosure

In 2023 we updated our double materiality assessment methodology to ensure alignment with the requirements of the Corporate Sustainability Reporting Directive (CSRD). The revised approach draws on the Materiality Assessment Implementation Guidance published by the European Financial Reporting Advisory Group (EFRAG) in December 2023.

Given that the methodology is already aligned with CSRD requirements, no fundamental changes were necessary in 2024. However, this year the assessment was further refined by enhancing the granularity of the analysis – specifically by incorporating ESRS sub-topics and sub-sub-topics into the impact and financial materiality identification process.

The materiality assessment methodology is a four-phase process: understanding, identification, assessment, and finalisation.

02.1.1

Phase 1. Understanding

02.1.1.1

Understanding the company context

We have reviewed our business landscape, including sectors of operations, value chain dynamics and key drivers of value creation. This comprehensive assessment includes upstream, own operations, and downstream activities, ensuring an holistic perspective that aligns with strategic priorities.

For this reporting year our sustainability data is primarily based on our 2022 assessment. However, we have supplemented this with updated information to include details related to recent acquisitions.

02.1.1.2

Stakeholder mapping and engagement

Stakeholder mapping and engagement are an important next step. Having a clear picture of all our stakeholders, their interests and the dynamics of their interaction within our collaborative value chain, is essential for a full understanding of our sustainability impact.

Engagement analysis is undertaken by stakeholder group, ensuring comprehensive alignment across the entire value chain.

Our stakeholders are grouped as follows:

Members of the Hager family

Hager family members serve as key stakeholders and principal shareholders of the company, playing an active role in shaping the long-term vision and strategy for Hager. Their involvement ensures that the business remains anchored in responsible entrepreneurship, sustainable growth and generational continuity.

Engagement with the family occurs through regular board meetings – where two out of six Supervisory Board members are family representatives – as well as through shareholder meetings, sustainability-focused discussions, and other informal exchanges.

Customers

As a business which is fully committed to customer-centricity as an enabler of growth, our customer relationships are a core focus. Environmental sustainability is a topic for engagement with Hager customers across a range of channels, including customer fairs, customer service key account manager relationships, customer requests and sustainability partnerships.

Suppliers

This component of our value chain is critical for Hager in delivering successfully for our customers. Strong supplier partnerships sustain our operations, and having a partnership mindset ensures these relationships continue to be mutually beneficial. Embedding sustainability across this group is supported by training and special projects, on-site audits, and ongoing relationship management.

Employees and social partners

Our employees and the wider families and social networks of which they are part, across age, role, location and all diverse identities, are the most important asset that Hager has. The health and safety, well-being and professional development of our people are essential elements of our organisational resilience.

We engage in many ways, including annual development interviews and surveys, learning, personal and career development, collective bargaining, dialogue with works councils and other representative bodies, and the Hager Awards, which recognise and reward innovation that drives sustainable growth across our value chain.

Government and civil society

We interact with governments and civil society groups globally around a wide range of policy and regulatory issues. We provide policymakers with insights into how our products and technologies support the transition to a low-carbon society, and advocate for increased investment in electrical distribution grids, transportation, industrial processes and urban infrastructure, as an effective policy position for decarbonisation.

Community

The communities we are proud to be a part of are the bedrock of our operations. Ensuring the well-being of our communities is driven by engagement, consultation, dialogue with community organisations, contributing to community initiatives, charitable giving, and more structured activities carried out under the auspices of the Peter und Luise Hager Foundation (see the Ethics section of this report for more information).

Nature

We recognise nature as a silent stakeholder, whose health is essential to the resilience of our operations and society. By engaging with nature, albeit indirectly, we seek to reduce our environmental footprint, protect biodiversity, and support the transition to a sustainable economy, fully aligned with our long-term value creation ambitions. Our engagement is realised through various proxies, including collaboration with sustainability experts and scientific institutions, our decarbonisation commitments under the Science Based Targets initiative (SBTi), conducting biodiversity impact assessments, and ongoing pollution monitoring.

Building on our regular stakeholder engagement throughout the reporting cycle, we have also actively engaged with stakeholder groups during this double materiality assessment cycle, categorising stakeholders as users, affected stakeholders, or both (per ESRS), and as external or internal stakeholders.

Engagement with stakeholders has been conducted through a combination of direct interactions and representative proxies, tailored to each stakeholder group.

Using this data we are able to map value chain stakeholder expectations, and derive insight into our level of achievement against expectation, as perceived by stakeholders. Our organisational goal is for Hager to achieve scores which qualify as Leadership level, as defined by ESRS criteria.

* As a family-owned business Hager has no external investors. Investments are internally financed through revenue.

02.1.2

Phase 2. Identification

02.1.2.1

Identification of sustainability topics

The first step in the identification phase is to conduct an initial scoping exercise, to identify which sustainability topics are potentially material for Hager. This assessment is based on our sectoral context, business model, geographic footprint, and the expectations of our stakeholders. The aim is to achieve a comprehensive overview of all relevant sustainability topics, including but not limited to those explicitly covered under the ESRS, to ensure no material matter is overlooked.

Source material includes internal sustainability and financial reports, external regulatory frameworks (eg ESRS, GRI), sectoral research, third-party databases, and peer materiality assessments. In addition, insights gathered from stakeholder engagement are incorporated, to enhance the completeness of the assessment.

The sources used are grouped into three categories:

Initially a comprehensive inventory of topics spanning these categories is compiled. During the exercise, this exhaustive list comprised over 400 entries, subsequently streamlined into 21 potential sustainability topics – a level of granularity consistent with ESRS requirements.

To enhance the granularity of our assessment and align with ESRS topic standards we have made adjustments to our listed sustainability and material topics.

The list of sustainability topics shortlisted remains the same as the previous reporting year, with the exception of product sustainability³, which has been omitted, leaving 20 in total. To ensure a more granular data materiality, previous general topics have been broken down to more specific themes (general pollution becomes three distinct sustainability topics: pollution to air, pollution to soil, pollution to water).

The 20 sustainability topics which are identified as being relevant to Hager operations are as follows:

02.1.2.2

Value chain heat map

In the identification phase we also conduct a value chain heatmapping exercise to identify where the most significant sustainability impacts, risks, and opportunities (IROs) could potentially occur across our operations.

This analysis covers the entire value chain, including both upstream and downstream activities, and provides early insights into the areas where sustainability topics may be most concentrated. From our perspective this step has been essential in guiding the IRO assessment in a focused and resource-efficient manner.

By identifying potential hotspots early on we are able to prioritise where to apply deeper due diligence and where to engage stakeholders more intensively. This approach helps us understand where we are most likely to encounter regulatory exposure, reputational sensitivities, or business model implications related to environmental and social matters.

02.1.3

Phase 3. Assessment

02.1.3.1

Impacts, risks and opportunities (IROs)

The next step is to carry out a structured assessment of actual and potential impacts – both positive and negative – as well as any related risks and opportunities for each sustainability topic which has been identified. We conducted our in-depth analysis in line with the ESRS sub-topics and sub-sub-topics.

Each topic was examined individually to determine whether the associated impacts, risks and opportunities are:

• Actual, potential, or both (in cases where evidence of current impact and reasonable likelihood of future occurrence co-exist).
• Negative or positive.
• Operational, regulatory, or reputational.
• Likely to involve adverse impacts on human rights.
• Going to have short-, medium-, or long-term environmental effects.

This IRO identification assessment is carried out using a three-step approach:

• Desk research is conducted to identify the potential IROs linked to the 20 sustainability topics identified as being material to the Hager value chain and our operations. This draws on internal reports, industry publications, academic studies and third-party sustainability databases, and leads to the identification of numerous potential IROs which, although relating to Hager activities, remain relatively high level. While these IROs are general in nature at this stage, they provide a valuable foundation for further validation and refinement through expert interviews.

• Expert interviews are then conducted to fine-tune the IRO list and obtain input on the severity/magnitude and likelihood of each. The IROs identified through desk research are used as a basis for conversations with the experts, who were invited to challenge them and add to the list where necessary.

  A total of 20 interviews were conducted, 14 internal and six external, in which the experts shared their knowledge on selected topics. Experts were selected based on their sustainability matter(s) competency. In some cases, experts were only asked to discuss one sustainability matter, and in other cases, they shared their knowledge on more than one.

  This dual approach – combining desk research with stakeholder feedback – ensures that our identification of IROs is both comprehensive and evidence-based. It also allows for the validation of causal relationships between identified impacts and associated financial risks or opportunities.

• Hager due diligence processes are systematically integrated into the IRO identification process. These procedures include ongoing risk monitoring, supply chain assessments, grievance mechanisms, and ESG evaluations conducted across our value chain as part of our broader sustainability governance framework.

  Insights from due diligence were used to identify actual adverse impacts that may not have been identified through expert interviews and stakeholder engagement alone, particularly in relation to complex value chain risks (eg labour conditions, environmental harms).

  Due diligence supports the verification of potential impacts and enables the assessment of severity, scope, and irremediability, especially in cases involving human rights. Due diligence also informs the ongoing monitoring and review of IROs, ensuring that the materiality assessment reflects our dynamic risk environment and evolving sustainability context.

02.1.3.2

Impact materiality assessment

To assess the impact materiality of the identified sustainability matters we next conducted a structured evaluation process.

The core of the assessment is the evaluation of each impact based on two dimensions: severity and likelihood. Severity is assessed using the following three sub-criteria, consistent with ESRS materiality guidance:

• Scale: the gravity or seriousness of the impact.
• Scope: the extent or number of people, ecosystems, or geographies affected.
• Irremediable character: the degree to which the impact can be mitigated, reversed, or remedied.

Likelihood was assessed based on the probability of an impact occurring within the context of Hager activities, considering both internal operations and value chain dependencies.

Each of the criteria is rated on a scale from one to four, where four represents the highest level of severity or likelihood. This scoring ensures comparability across topics and provides a consistent, transparent basis for the impact materiality analysis.

In line with ESRS 1 §54, for any impact with potential adverse implications on human rights the highest severity score of four is automatically assigned. This approach reflects the ESRS requirement to prioritise severity over likelihood in such cases, recognising that even low-probability human rights impacts may require urgent attention due to their potential gravity and irreversibility.

02.1.3.3

Financial materiality assessment

To assess financial materiality, each sustainability topic is scrutinised as to its potential financial impact and the likelihood thereof. Unlike impact materiality, financial materiality does not differentiate between stages of the value chain as the financial effects are anticipated to directly affect Hager.

Risks and opportunities are then categorised as either operational, regulatory, or reputational. Next, the time horizon for each is assessed (short, medium, or long term) with respect to potential impact upon our financial position, cash flows, access to finance, and cost of capital.

Two criteria are now applied: likelihood and magnitude. Likelihood measures the probability of the occurrence of financial risk, while magnitude delineates its scale. As with impact assessment, further desk research and the ESG scoring from the stakeholder engagement phase are also now factored in.

02.1.3.4

Sustainability topic scoring

The scoring methodology used in both the impact and financial materiality assessments results in up to six distinct scores for each sustainability topic. For impact materiality these scores reflect combinations of actual and potential impacts across the three stages of the value chain: upstream, own operations, and downstream. For financial materiality these scores reflect combinations of risks and opportunities across three categories: operations, regulation and reputation.

To ensure a precautionary and risk-sensitive approach, the highest of the six scores is used to determine the overall impact materiality of each sustainability topic.

This reflects the principle that even a single high-impact occurrence – regardless of its location in the value chain – may justify prioritisation under ESRS due diligence and disclosure requirements. The same principle applies to human rights-related matters, where severity takes precedence.

This approach enables a structured and transparent consolidation of scoring results, ensuring that material topics are not underestimated due to segmentation across different parts of the value chain or IRO type.

02.1.3.5

02.1.4

Phase 4. Finalisation and validation of material topics

To define materiality we set a threshold for the scoring of the different sustainability topics beyond which a topic is considered material, when scored against four criteria: positive or negative impact materiality, risk, or opportunity financial materiality. In this step we define the threshold and the rationale therein.

For impact materiality the threshold is 2,6 (overall score) and for financial materiality the threshold is 2,2 (overall score). The threshold for identifying the most material topics has been determined based on strategic and business relevance. The threshold has been set at a level where the topics above it represent those that pose substantial risk, create significant opportunity, or are critical to achieving our sustainability and corporate objectives.

This ensures that reporting efforts focus on issues that require active management and disclosure, maintaining alignment with our strategic sustainability commitments and regulatory compliance.

This assessment resulted in nine of the 20 topics being rated as material for Hager operations, our value chain and downstream activities, in regard to their impact on the economy, environment and people, including human rights.

02.2

Key learnings

The Hager approach to sustainability and responsible business practice is structured around the continuous identification and management of material topics, impacts, risks, and opportunities (IROs). These efforts are embedded in our E3 framework – Ethics, Environment and Employees – which informs our governance, innovation and stakeholder engagement.

Hager emphasises collaborative value chain creation through transparent partnerships with suppliers and stakeholders, aiming to co-develop solutions that support decarbonisation and uphold environmental and social standards.

Under our Blue Planet Commitment (see later in report), Hager integrates principles of resource efficiency, circularity and low-carbon innovation into product development. Tools such as lifecycle assessments and eco-design are employed to reduce environmental impact and enhance sustainability across the value chain.

Product safety is treated as a fundamental ethical and customer obligation. Hager maintains rigorous internal controls and works closely with suppliers to identify and mitigate risks early, including efforts to phase out substances of concern and ensure regulatory compliance.

Our new Human Sustainability programme, which is fully aligned with our Project 2030 goals, promotes employee well-being, inclusion and skills development. Occupational health and safety is prioritised through a centralised governance model and proactive safety culture initiatives, including Behaviour-Based Safety (BBS) and risk management.

Together these initiatives reflect the Hager commitment to embedding sustainability into our long-term transformation, creating shared value for stakeholders while advancing our social and environmental goals.