Material Impacts, Risks and Opportunities
Process for identification and assessment
We take the following measures to continuously monitor and assess the key elements of business conduct, particularly the implementation of our Code of Conduct and our Supplier Code of Conduct, human rights issues in the supply chain, and bribery and corruption.
WACKER has implemented standard processes and tools throughout the Group to regularly identify and assess the impacts, risks and opportunities of our business conduct and to establish the necessary actions. As part of our compliance strategy, we implement comprehensive actions to assess corruption risks, including risk analyses and reviews of our business units and processes. Our systematic analysis takes into account the geographical location, type of business activity and historical data.
Compliance risk analysis
When the Compliance department conducted its compliance risk analysis in 2023 and in 2024, it carried out an initial evaluation of the main compliance risks. They were assessed on the basis of a self-assessment and conceivable risk scenarios using the gross/net method and form the basis for planned global compliance risk reviews.
In the period under review, an external law firm conducted a specific compliance risk analysis at our US locations. We are currently planning a global compliance risk analysis.
We also conducted a comprehensive risk analysis regarding conflict minerals. This analysis includes identifying relevant minerals (tin, tantalum, tungsten and gold), a detailed supply chain analysis and an assessment of geographical and supplier-specific risks. We have implemented specific risk-minimization strategies including introduction of a supplier code and execution of regular audits and training courses to raise awareness. We report transparently and regularly to document and communicate compliance with the standards involved.
By participating in industry initiatives and cooperating with stakeholders, we actively advocate responsible procurement practices and help to prevent human rights violations in conflict regions.
The following is a description of WACKER’s material impacts in terms of corporate governance and business conduct as well as the resulting risks and opportunities in relation to our business model, our value chain, our policies and our decision-making.
Material impacts
Corporate culture
WACKER’s Code of Conduct, like its Supplier Code of Conduct, which applies groupwide to all employees, customers and business partners, constitutes the foundation of our corporate culture and our business conduct. Ethical principles and compliance with legal regulations are an integral part of our conduct to boost the company’s value in the long term and protect our reputation.
As a result, we positively impact suppliers, our own workforce and our customers by embodying and insisting on business conduct with integrity.
Destruction of the environment and human rights violations by suppliers
The mining of minerals entails a high risk of human rights violations such as forced labor or corruption. It may also involve negative environmental impacts due to the breakdown of ecosystems. WACKER’s use of minerals might therefore negatively impact our upstream value chain. Forests are often cut down and rivers polluted, which not only damages ecosystems but also jeopardizes the livelihoods of people living in these areas. Growing demand for critical minerals also means an increase in human rights violations and corruption since working conditions in mining regions are often exploitative. For this reason, WACKER sets great store by the origin of its raw materials, particularly the four conflict minerals: tantalum, tungsten, tin and gold (3TG). Use of palm oil can also cause environmental pollution such as deforestation. Even though WACKER procures only small amounts of palm (kernel) oil derivatives, we ensure that we obtain this renewable raw material from sustainable, certified sources. WACKER uses palm (kernel) oil in the form of various fatty acids/alcohols or their derivatives. We see the main impacts in our upstream value chain.
Furthermore, we see potential negative impacts from the use of specific raw materials in the countries and regions with low standards when it comes to respecting human rights. Please refer to the ESRS S2 – Workers in the Value Chain section for further information.
Material risks
Corruption and bribery in the supply chain
As a global company, we work with a variety of distributors and sales partners. There is a risk within these structures of corruption and bribery in the downstream value chain, which can also lead to reputational damage and monetary fines for WACKER. For more information on detailed impacts and actions and on our risk analysis relating to our strategy, please see the Risk Management Report.
Conflict minerals, palm oil and forced labor in our supply chain
In view of our impacts in relation to conflict-prone minerals, we have identified a potential risk in the upstream value chain. The potential consequences of this risk include reputational damage, claims for damages and losing customer relationships and orders. To minimize this risk, we are members of the TfS initiative (see “General disclosures on environmental standards”) and have implemented a Supplier Code of Conduct.
Material opportunities
Political commitment as an opportunity for positive competitive conditions
Increasing our energy efficiency is an important part of our sustainability strategy. The energy transition requires high capital expenditures. WACKER is calling on energy-policy decision makers to establish stable and predictable conditions so that long-term investment decisions can be made. Unpredictable changes to electricity prices or the regulatory framework negatively impact planning certainty. Our political commitment also allows us the opportunity to strike a balance between support of the energy transition and ensuring competitiveness.
Transparency and traceability as competitive advantages
Being able to track specific raw materials shows our customers that our products are manufactured in an environmentally-conscious and sustainable manner. This helps us to retain customers and strengthens our competitive position. It also enables us to guarantee compliance with regulatory requirements such as trade restrictions in certain regions and industries.
