Management of the Impacts, Risks and Opportunities

Interests and views of stakeholders

The interests and views of our stakeholders play a crucial role in our strategy and business policy. Open communication with them encourages mutual understanding and enables our decisions to be accepted by society, while allowing WACKER to receive valuable input and feedback. In order to identify material sustainability topics, we continuously analyze the interests, expectations and demands of our stakeholders and take these into account in our materiality assessment. No explicit external questionnaire was conducted for this. The Executive and Supervisory Boards are regularly informed about sustainability topics and the views of our stakeholders are incorporated into our reporting.

The following table shows our main stakeholder groups and the respective forms of exchange.

Dialogue formats and interests and views for stakeholders
Stakeholders		Dialogue formats and interests and views for stakeholders

Customers		Dialogue formats: Continuous personal exchange with sales and marketing employees Market studies, customer surveys Attendance of international tradeshows
Customers		Interests and views: Product safety, current and future product compliance, products for future market requirements, future-oriented business relationships
Employees, labor unions		Dialogue formats: Employee events attended by the Executive Board and senior management circulars and presentations specific to particular occasions, company intranet, social media, internal campaigns, employee surveys
Employees, labor unions		Interests and views: Corporate values, training and upskilling, corporate benefits, employee satisfaction
Suppliers		Dialogue formats: “Together for Sustainability” initiative Sustainability-related events and workshops for suppliers Continuous exchange via the employees responsible for procurement assignments
Suppliers		Interests and views: Future-oriented business relationships, product buyers, employment conditions
Associations		Dialogue formats: Active membership of national and international associations, such as the German Chemical Industry Association (VCI), European Chemical Industry Council (Cefic), Plastics Europe, American Chemistry Council (ACC) and China Petroleum and Chemical Industry Federation (CPCIF)
Associations		Interests and views: Pre-competitive exchange of thoughts and ideas,, joint representation of interests, elaboration and compilation of common positions
Investors, lenders and analysts		Dialogue formats: Annual shareholders’ meeting Continuous exchange with major investors via the Supervisory Board Annual report, half-yearly financial report and quarterly reports Various events for investors and analysts that focus on specific topics (Capital Market Days) Range of online information Continuous personal exchange with banks via Treasury employees
Investors, lenders and analysts		Interests and views: Forward-looking investments, transparency with regard to sustainability performance and strategic direction
Official bodies		Dialogue formats: Regular exchange with authorities, ministries and policymakers
Official bodies		Interests and views: Compliance with minimum legal requirements, transparency with regard to business activities
The general public, neighbors, NGOs		Dialogue formats: Dialogue specific to particular occasions, e.g. investment projects/meetings in the local community, open house days, regular exchange via site management at the various production plants
The general public, neighbors, NGOs		Interests and views: Transparency on sustainability performance, environmental and social impacts, on surroundings
Media		Dialogue formats: Press releases, press conferences, behind-the-scene talks, one-on-one interviews Communication via social media, channels such as LinkedIn, X, Facebook and YouTube Annual report, half-yearly financial report and quarterly reports, as well as presentations and speeches given at conferences and symposiums
Media		Interests and views: Transparency with regard to business activities and sustainability performance

The individual topic and its relevance will determine how we identify and prioritize our stakeholders; we then choose the suitable forms of exchange and relevant frequency. We have various channels at our disposal for our exchanges.

Our Sales and Procurement teams closely communicate with our customers and suppliers through various digital and personal channels. Market studies and customer and supplier information are incorporated into product development. At our technical centers, we work together with our customers to provide more efficient solutions. We use this information in our long-term planning to future-proof WACKER.

Our employees are our most important asset and WACKER’s success is a team effort. An ongoing exchange with employees and the employee council is crucial. As the German chemical industry is strongly unionized, our HR department and employee council are in constant contact with labor union representatives. This enables employee interests to be taken into account in material decisions. Regular groupwide employee surveys – the most recent being in 2023 – help us to identify potential for improvement. Our Human Rights Committee, including the human rights officer appointed by the Executive Board, holds regular meetings to advise and raise awareness within sensitive departments. WACKER ensures that we do not cause or contribute to any human rights violations in our business operations, either in the upstream or downstream value chains.

WACKER’s success and future direction are of material interest to investors, lenders and analysts. The Executive Board and employees in our Investor Relations and Treasury departments communicate closely with these stakeholders. We aim to secure our financing requirements in the long term at good conditions. Keeping in regular contact with our long-term shareholders plays a key role in the stable, long-term direction of our business model.

Site-specific functions attend to local matters at our sites, including contacts with authorities, neighbors, ministries and political representatives. Suspected human rights violations in the supply chain can be reported using our whistleblowing tool and we use information from the media. Our involvement in trade associations enables us to introduce our expertise into the political dialogue and to represent our interests.

As part of the materiality assessment, we have aligned the interests of our key stakeholders with our strategy and our business model. Our long-term goals and strategies are geared toward stakeholder requirements. Our material impacts, risks and opportunities are in line with our Group strategy. Our strategic goals covering the period up to 2030 and published in March 2022 serve to guide our success. No change is currently planned. Further information can be found in the “Goals and strategies” section in the general part of the Group Management Report.

Group business fundamentals – Goals and strategies

Materiality assessment

Process and assessment of materiality

To identify the main areas of focus in our sustainability strategy, it is crucial that we are aware of the material topics for our stakeholder groups. We regularly check the materiality of sustainability topics to align our strategy, our implementation actions and our reporting. Specific goals, actions and management approaches for material sustainability topics can be found in the respective sections of the Sustainability Report.

In 2024, we initiated a comprehensive process to assess double materiality in line with the EU’s Corporate Sustainability Reporting Directive (CSRD) and the accompanying European Sustainability Reporting Standards (ESRS). This enabled us to deepen our understanding of the material aspects for our stakeholders.

The double materiality assessment under the CSRD is the basis for future reporting and will be reviewed in the third and fourth quarter every year. The assessment confirms the relevance of topics reported in the previous year and served as the basis for introducing additional topics in our 2024 sustainability reporting, particularly due to wider consideration of the impacts in the value chain. In terms of sustainability-related risks, the review does not identify any additional material risks that are highly likely to have severe adverse impacts on WACKER.

The double materiality assessment is conducted along WACKER’s value chain and covers our own operations as well as the upstream and downstream value chains. The upstream value chain covers relationships with suppliers of material core feedstock and energy sources. This does not result in any material direct opportunities and risks from steps further up the value chain. The downstream value chain is primarily made up of WACKER’s direct customers. Due to the wide range of applications of our products, the impacts in the value chain further downstream are classified as not material. Our customers incorporate our products as specialty chemicals – in some cases only in small quantities – into a large number of their processes and products. The double materiality assessment takes account of important megatrends.

The double materiality assessment is conducted at Group level, since all of WACKER’s business divisions are subject to similar materiality topics. As a result of our business model, we focused on issues that are important for the chemical industry. Geographically speaking, we look at all our sites using the same process and place high demands on our suppliers of upstream chemical products.

The double materiality assessment identifies material impacts, risks and opportunities that could occur in the short, medium and long term. It covers both the sustainability aspects of the topical ESRS as well as WACKER-specific sustainability aspects. We were guided by the list of topics under ESRS 1 and have not identified any material WACKER-specific topics.

Our materiality assessment takes into account both positive and adverse actual and potential impacts that are caused by WACKER, to which the Group contributes or with which it is connected. They are assessed according to scale, scope, unchangeability and likelihood. In the case of financial materiality, we examine the likelihood and the scale of the potential financial impacts, including our dependency on natural or social resources. Risks may, moreover, arise from actions relating to the identified impacts. Identifying impacts, risks and opportunities is part of our strategy.

Our double materiality assessment involved a multi-step decision-making process and was checked internally several times. The steps of the double materiality assessment are: identify, assess, validate and implement.

Identify

The double materiality assessment is based on desktop research and internal expert opinions, with internal and external data along the value chain being taken into account. We analyzed where in the value chain impacts, risks and opportunities occur, how they are linked to WACKER’s business operations, business model and products, and which stakeholder groups could be affected. These results are collected in a long list. Climate risks at our sites were assessed using, for example, data collected by our insurers. When assessing impacts on water and biodiversity, we include expert opinions on environmental impacts at our sites.

Assess

The long-list topics identified are assessed by suitable experts. The final results are aligned with the Group’s sustainability targets and presented to the head of Corporate Sustainability for review. After approval, the bodies described in the following also provide further validation.

When assessing the materiality of the impacts, we use absolute, quantitative thresholds. WACKER defines the gross impacts based on the intended operation of its plants and on the use of its products. We assess the impacts of improper operation as potential impacts with corresponding likelihood. Potential adverse impacts are weighted more strongly than positive ones since unchangeability is included as a criterion in the assessment. Impact is material if at least half of the scoring values are achieved.

In 2024, a profound risk assessment was conducted along with our well-established top risk assessment process; this assessment covered the CSRD topics along the value chain. Until this assessment is concluded, we essentially consider those CSRD topics identified as material using internal appraisals and the risk thresholds in the risk management report as material due to potential risks. When assessing the materiality of risks and opportunities, we likewise use absolute, quantitative thresholds. Potential risks are assessed conservatively in the current materiality review, which means that we report on a broad range of topics that are classified as low risk in our risk management system. Risks and opportunities are material if at least half of the scoring values are achieved.

Validate

The process, the methodology and the outcome of the double materiality assessment were reviewed and confirmed by our Sustainability Council, our Executive Board, and the Audit Committee of Wacker Chemie AG’s Supervisory Board. In addition, the outcome of the double materiality assessment is discussed with the Employee Council in its capacity as a material stakeholder representative, and its feedback is taken on board.

Implement

The material sustainability topics are processed and managed by the topic owners from the respective corporate functions in line with the need for action and the possible impacts on people and the environment. This also includes the financial and non-financial opportunities and risks concerned as well as any measures required that are mapped in the groupwide risk management system.

Disclosure requirements covered

Details that relate to the disclosure requirements identified in the double materiality assessment and on which WACKER has material impacts and/or from which material risks and opportunities arise for WACKER can be found in the individual topic sections of this Sustainability Report. In line with the process of determining materiality, we may decide on a case-by-case basis that an individual datapoint is not relevant. In general, all disclosure requirements for which WACKER has set corporate targets or that involve human rights concerns are material. A list of the disclosure requirements can be found in the annex to this report.

Standards ESRS E4 Biodiversity and ecosystems, ESRS S3 Affected communities and ESRS S4 Consumers and end-users were assessed as not material.

The biodiversity risk analysis we performed in the year under review identified and assessed the material impacts, risks and opportunities in WACKER’s own operations at site level. Using the WWF biodiversity risk filter as a basis, we analyzed physical risks and reputational risks using geolocations and assessed them based on local conditions at the sites, taking account of the requirements of communities and regulatory authorities. Even if some of our sites are in the immediate vicinity of areas with biodiversity in need of protection, we did not identify any material negative impacts or risks. As a result, we do not consider specific measures to be necessary. Impacts, risks and opportunities relating to biodiversity and ecosystems in connection with climate, pollution, water and circular economy are covered by the respective reporting standards. Possible impacts and/or risks in terms of our upstream value chain involve those renewable raw materials used at WACKER which are currently classified as immaterial due to the low volume. We do not currently see any transition or systemic risks.

This evaluation may change in the future, especially as a result of adapting the business model to future developments and technologies.

The WACKER Group’s material sustainability topics

The following overview shows WACKER’s material impacts on people and the environment as well as the resulting risks and opportunities for WACKER. Further information on the interaction of the impacts, risks and opportunities with our strategy and business model is provided in the relevant topic-specific section of this report.

Statement on our material impacts, risks and opportunities
Material impacts		Explanations

Climate change	Sustainable products and solutions (positive)	The transition to net zero requires new technologies and materials to which WACKER makes positive contributions in the form of its many products in areas such as renewable energy, smart construction, digitalization and e-mobility.
Climate change	Sustainable products and solutions (positive)	(upstream and downstream value chains, own operations, short-term)
	Release of fossil greenhouse gas emissions through chemical products (negative)	Due to its energy intensity and the use of fossil raw materials, the manufacturing of chemical products involves the release of greenhouse gases. WACKER’s production processes, too, release greenhouse gases that impact climate change.
		(upstream and downstream value chains, own operations, short-term)
Pollution	Emissions to air and water (negative)	Chemical-product manufacturing involves the release of substances into the environment that negatively impact people and the environment. WACKER’s emissions also influence the quality of air and water.
Pollution	Emissions to air and water (negative)	(own operations, short-term)
	Use of critical substances (substances of concern/substances of very high concern) (negative)	Manufacturing specialty chemical products often requires the use of critical substances that negatively impact people and the environment. WACKER too uses critical substances to manufacture its specialty chemical products and, as a result, also exerts a potential influence.
		(own operations, short-term)
Water resources	Water consumption, water withdrawal and water backflow (negative)	Water plays a material role in our chemical production processes. Water withdrawal, water consumption and water backflow can impact the availability and quality of water as a resource. WACKER uses water as a resource, which means it also influences water as a resource.
Water resources		(own operations, short-term)
Resource use and circular economy	Use of petrochemical raw materials (negative)	Circular economy is a topic of strategic importance to us due to the consumption of petrochemical raw materials and other raw materials but also due to waste incurred in our production but that cannot be returned to our material loops. The procurement of alternative raw materials and the recyclability of our products are highly relevant to achieving a circular economy.
Resource use and circular economy	Use of petrochemical raw materials (negative)	(upstream value chain and own operations, short-term)
	Waste generation (negative)	The chemical production methods used to manufacture actual products result in hazardous waste as well, improper handling of which can adversely impact people’s health and damage ecosystems. Along with its large number of specialty products, WACKER too produces waste , improper handling of which can adversely impact people’s health and damage ecosystems.
	Waste generation (negative)	(own operations, short-term)
Our own workforce	Working conditions and social benefits (positive)	Fair wages, flexibility and innovative working-time models and active support of social partnership and freedom of assembly have a positive impact on our employees and provide them with an adequate standard of living.
Our own workforce	Working conditions and social benefits (positive)	(own operations, short-term)
	Equal treatment and opportunity for all (positive)	Granting all employees equal opportunity is one of WACKER’s material objectives. We consider fair wages to be part of our duty just as much as training and upskilling/reskilling. Our corporate culture does not tolerate violence or harassment in the workplace.
	Equal treatment and opportunity for all (positive)	(own operations, short-term)
	Health promotion (positive)	WACKER encourages a healthy lifestyle with various health-related programs for its employees and additional health benefits.
	Health promotion (positive)	(own operations, short-term)
	Equality (negative)	WACKER is an advocate of equal opportunity for men and women. However, women are not represented on all management levels to the same extent due to the historical patterns of gender distribution. As a result, we seek to increase the proportion of women in management positions.
	Equality (negative)	(own operations, short-term)
	Occupational health and safety (negative)	Chemical production means having to deal with hazardous substances and putting suitable practices into place. This involves an increased risk of workplace accidents and damage to health.
	Occupational health and safety (negative)	(own operations, short-term)
Workers in the value chain	Working conditions and health and safety at our supplier sites (positive)	We have designed our procurement practices to help promote fair and adequate working conditions for our suppliers’ employees in the long run.
Workers in the value chain		(upstream value chain, short-term)
	Human rights violations (negative)	In some sectors and regions, however, particularly in risk areas, supply chain employees might encounter challenges such as a lack of equal opportunity, unfair wages, unstable jobs, a lack of work-life balance, and insufficient safeguards to ensure occupational health and safety. We tackle severe human rights violations such as child labor or forced labor at our supplier sites with appropriate measures.
	Human rights violations (negative)	(upstream value chain, short-, mid- and long-term)
Governance	Our corporate culture (positive)	Through our Code of Conduct, WACKER and all employees throughout the Group are committed to living WACKER’s corporate values. As a result, WACKER has a positive impact on people and the environment. The Code of Conduct also includes our value chain.
Governance	Our corporate culture (positive)	(upstream value chain, short-term)
	Environmental damage and human rights violations by suppliers (negative)	WACKER is dependent on certain minerals that are considered conflict minerals. We also need raw materials for our products whose cultivation has a negative impact on the environment. WACKER could therefore indirectly violate human rights or damage the environment through our suppliers. Suppliers may also supply or provide raw materials and services using forced labor, discrimination and from war zones.
		(upstream value chain and own operations, short-, mid- and long-term)

Material risks and opportunities		Explanations

Climate change	Sustainable products and solutions (opportunity)	A number of products that WACKER manufactures contribute to the transition to climate-preserving technologies and products. This increases the competitiveness of our products and allows us to set ourselves apart from the competition.
Climate change	Sustainable products and solutions (opportunity)	(long-term)
	Ever more regulations (transition risk)	As climate change progresses, we expect increasing regulatory measures in the medium term, particularly in Europe, that have the potential to considerably influence the competitiveness and product portfolio of WACKER and those of its customers. This can lead to risks for WACKER as a chemical producer.
	Ever more regulations (transition risk)	(mid-term)
	Availability of energy at competitive costs (transition risk)	Climate change is driving the energy transition toward renewable energy. Subject to the initial energy system, speed of implementation and the political framework, this transition may incur considerable additional cost, which can have an adverse impact on an energy-intensive company like WACKER and so constitutes a risk.
		(mid- to long-term)
	Loss of business due to customer demands (transition risk)	In the long term, greater customer requirements could lead to a loss of business if WACKER were unable to fulfill them, which can have a negative impact on WACKER and so constitutes a risk.
	Loss of business due to customer demands (transition risk)	(long-term)
Pollution	Increase in regulatory requirements for our production processes and products (risk)	The rise in regulations related to emissions may lead to significant restrictions and higher costs as regards our production lines, which can have an adverse impact on WACKER and so constitutes a risk. What is more, new legal requirements in the production and use of chemical substances constitute a further risk in terms of restrictions or prohibitions of groups of substances and stricter critical limits.
Pollution		(mid-term)
Resource use and circular economy	Availability, cost and acceptance of petrochemical raw materials (risk)	An increase in regulatory requirements relating to the procurement of raw materials can lead to significant cost increases in our production. We especially consider the availability of fossil raw materials at reasonable costs to be a risk.
Resource use and circular economy		(mid-term)
Our own workforce	Secure employment (risk)	Structural changes and the chemical industry’s general move away from Germany could potentially result in less demand for labor in this region. At the same time, skilled workers are highly sought after worldwide, which may lead to bottlenecks.
Our own workforce	Secure employment (risk)	(mid- to long-term)
	Pension commitments (risk)	As a result of rising life expectancy of those entitled to a pension, of pay and pension adjustments, and of falling discount rates, we see a potential reduction in the plan assets in our company pension fund due to our pension commitments to employees as a financial risk in the medium term.
	Pension commitments (risk)	(mid-term)
	Occupational and plant safety (risk)	As a chemical producer, we also have a higher risk of workplace accidents with additional consequences for employee health. This also involves a financial risk of high health expenses due to the potential loss of labor or production.
	Occupational and plant safety (risk)	(mid-term)
Workers in the value chain	Human rights (risk)	Potential human rights violations such as child labor or forced labor in the supply chain involve financial risk from reputational damage, potential fines or the cost of lawsuits.
Workers in the value chain	Human rights (risk)	(mid-term)
	Working conditions and secure employment (opportunity)	Our customers want to work with suppliers that are reliable and show integrity. A sustainable supply chain allows us to be a preferred partner for our customers and other business partners.
	Working conditions and secure employment (opportunity)	(mid-term)
Governance	Political engagement (opportunity)	WACKER is actively involved in shaping energy, climate and industrial policy to provide a framework that offers investment and planning certainty for the transition of energy-intensive companies toward net zero by 2045.
Governance	Political engagement (opportunity)	(mid-term)
	Conflict minerals and critical raw materials (risk)	WACKER depends on certain minerals that are considered conflict minerals. Our products, moreover, require raw materials, extraction of which negatively impacts the environment.
	Conflict minerals and critical raw materials (risk)	(mid-term)
	Guarantees of origin and customer ratings (opportunity)	Guarantees of origin and ratings allow us to set ourselves apart from other manufacturers.
	Guarantees of origin and customer ratings (opportunity)	(mid-term)
	Bribery and corruption (risk)	In particular, bribery and corruption incidents might occur in our supply chain as well.
	Bribery and corruption (risk)	(mid-term)

The risks and opportunities identified in the materiality assessment currently have no significant financial impacts on the financial position, financial performance and cash flows in the next reporting period. There is no need to adjust the carrying amounts of assets and liabilities reported in the consolidated financial statements.

WACKER has not identified any additional company-specific impacts, risks and opportunities. First-time adoption of ESRS means that there are no changes to report in 2024 compared with the previous year. In addition, there were no changes to our targets and strategies compared with prior reporting either.

For a detailed description of the processes to identify material impacts, risks and opportunities regarding climate change, pollution, water and marine resources, and resource use and circular economy, please refer to the specific topic section. The same applies to information on our own workforce, workers in the value chain and business conduct.

Qualitative resilience

WACKER is prepared for future environmental, social and corporate policy challenges.

The environmental challenges include emissions, the use of critical substances, water use, use of raw materials, and waste handling. We regularly analyze the long-term competitiveness of our products and sites, which includes assessment of customer demands, market conditions, regulatory requirements and technological developments. We aim to develop sustainable solutions to further reduce any adverse impacts on the environment both in our own operations environment and also in the case of our customers. We take preventative action regarding risks so that we can assess them at an early stage and initiate corresponding actions. What is more, we believe that our international positioning and diversification of our upstream and downstream value chains leave us well placed to be able to respond flexibly to future legal developments.

In terms of our own workforce, we can use our working conditions and social benefits, equal treatment and opportunity, and health promotion measures to create an attractive working environment for our employees and new talents. We are taking systematic action to improve gender equality for women and occupational safety for our employees. We conduct regular external and internal analyses to determine how competitive our working conditions are so we can pinpoint any risks early on, take appropriate action and, in doing so, ensure our company’s success in the long run.

Workers in the upstream value chain may be negatively affected by human rights violations. WACKER addresses this impact and the associated risks by imposing specific requirements on its suppliers via the Supplier Code of Conduct and conducting regular supplier reviews, particularly when suppliers are based in high-risk areas. It also maintains a diversified procurement portfolio to avoid becoming reliant on individual suppliers. Taking the measures described above, moreover, presents us with an opportunity to have a positive impact on working conditions for workers in the upstream value chain.

As far as our corporate policy is concerned, we have identified potential impacts and risks associated with critical raw materials and conflict materials, as well as with bribery and corruption in the supply chain. We address these potential impacts and risks by imposing clear requirements on our suppliers and conducting regular reviews. We also use a range of communication channels in an attempt to pick up on any possible incidents early on and take appropriate countermeasures.

We see this as an opportunity to use our own actions to make a positive impact. We also have our own performance in this area evaluated at regular intervals. At the same time, our lobbying activities are our way of helping to make the transformation process commercially viable.

Annual Report 2024