Strategy

Strategy, business model and value chain

About WACKER

WACKER is a global company with state-of-the-art specialty chemical products. The business model, legal structure, key products, services, business processes and our raw-material base are described in the combined management report’s sections on “Group business fundamentals¹” and “Governance².” The main sales markets and competitive positions are depicted, too. The “Segment data by region⁴” shows the distribution of sales, investments and employees in our most important sales regions. Our divisions correspond to the main product categories and reflect the position in the value chain, including the differences in chemical products and the various market and customer groups (downstream value chain)^{1, 2}. Our suppliers of silicon, ethylene, acetic acid, methanol and energy form the other side of the value chain (upstream value chain)^{1, 3, 5}. The “Business report³” section describes the most important customer industries and their current trends as well as developments in our key raw materials and energy. Risks are explained in the risk management report⁵.

Principles and strategic corporate goals

Sustainability has been firmly anchored in our business processes for years. At WACKER, we aim to balance economic, ecological and social factors in everything we do. The importance of sustainability is shown by the fact that the topic lies at the heart of two of our five strategic targets.

In line with its purpose as an innovative chemical company – Our solutions make a better world for generations – WACKER makes an important contribution to improving the quality of life of people all around the world. In the future, we want to continue developing and supplying solutions that meet our rigorous demands – creating added value for our customers, shareholders, employees and society, and growing sustainably.

Voluntary commitments

Our actions are guided by voluntary initiatives, which form the basis for sustainable corporate management at WACKER.

Responsible Care^®

WACKER has been an active member of the Responsible Care^® initiative since 1991. As a program participant, we must act to continually improve health, safety and environmental performance on a voluntary basis – even in the absence of statutory requirements. This explains our strong focus on environmental protection, the safe operation of plants (for both employees and neighbors), a high level of in-plant occupational safety, and product safety (for customers and end users).

https://www.vci.de/themen/nachhaltigkeit/responsible-care/rc-initiative/uebersicht.jsp

The UN Global Compact

As a member of the UN Global Compact, we support the goals of this initiative for responsible corporate management. The Global Compact addresses the protection of human rights, adherence to social and environmental standards, and the fight against corruption. We have undertaken to implement the Global Compact’s Ten Principles. which are derived from the Universal Declaration of Human Rights, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, and the Rio Declaration on Environment and Development. Our progress report is available on the UN Global Compact website. As part of the UN Global Compact’s Forward Faster initiative, WACKER is committed to doing its part in the fight against climate change, as well as to ensuring gender equality and paying living wages by 2030. WACKER is thus making a significant contribution to achieving the UN’s Sustainable Development Goals.

We also publish our latest progress report on the WACKER website:

https://www.unglobalcompact.org/what-is-gc/participants/10060-Wacker-Chemie-AG

https://www.wacker.com/cms/en-de/sustainability/global-compact/detail.html

UN “Race To Zero”

When it comes to climate change mitigation, WACKER has set itself ambitious, science-based targets. This means they contribute to the goal of limiting the global rise in temperature to a maximum of 1.5 degrees Celsius and therefore comply with the Paris Agreement. Our targets were validated by the independent Science Based Targets initiative (SBTi). WACKER is also part of the UN’s Race to Zero initiative. This means that we voluntarily commit to complying with the 1.5-degree Celsius goal and to documenting our course toward net zero with transparent progress reports.

https://sciencebasedtargets.org

https://racetozero.unfccc.int

Sustainability strategy: SustainaBalance^®

SustainaBalance^® is WACKER’s holistic sustainability strategy to achieve its medium- and long-term sustainability targets. This strategy is based on three pillars designed to promote the balance between ecological, social and economic factors: Value Up, Footprint Down and Collaboration Beyond.

SustainaBalance^® is directly related to the 17 goals of the UN’s 2030 Agenda for Sustainable Development.

WACKER’s SustainaBalance^® is a commitment to responsible stewardship and contributes to the implementation, in particular, of seven UN Sustainable Development Goals (SDGs).

The three pillars of SustainaBalance^®

Major challenges for the future and planned key solutions

The main challenges lie in the implementation of numerous legal requirements and intelligent, automated data management in order to meet future transparency requirements. In the year under review, WACKER began to create suitable organizational conditions and to launch projects to meet these requirements.

WACKER’s sustainability targets

Global warming is a socially and economically relevant environmental factor due to the rise in greenhouse gas emissions. We want to lead the way as a company, use our products to help in the fight against climate change, and reduce both our own emissions as a company and those of our products. The sustainability targets we have therefore set are ambitious. For example, WACKER intends to cut its absolute greenhouse gas emissions (Scopes 1 and 2) by 50 percent by 2030 relative to 2020 and to achieve net zero by 2045.

WACKER is striving to ensure that its entire product portfolio meets defined sustainability criteria by 2030. We also expect all our key suppliers to meet defined sustainability standards by 2030. During the same period, we aim to reduce by 25 percent the emissions from our upstream products (Scope 3, categories 1 and 3) that we use. In addition, we have set targets for specific water withdrawal and specific energy consumption: in each case, WACKER aims to achieve a 15-percent reduction by 2030 compared to the 2020 base year.

The targets to cut greenhouse gases are science-based targets, which means that they contribute to the 1.5 °C target set out in the Paris Agreement. Not only the targets for 2030 but also our aim of achieving net zero by 2045 have been validated by the independent Science Based Targets initiative (SBTi).

We have also set ourselves diversity targets: By 2030, we would like about one in three management positions to be held by a woman and around one in two management positions to be located outside of Germany.

Safety is of the utmost priority for WACKER. We aim every year, for example, to fully avoid chemical accidents with missed workdays and severe plant-safety incidents.

Suitable dialogue formats were used to engage both internal and external stakeholders in the target-setting process.

Sustainability targets in relation to key products and customer industries

WACKER’s portfolio comprises more than 3,000 products. Customers come from virtually every major sector worldwide. In line with our corporate purpose, we develop intelligent solutions and trailblazing technologies with the aim of improving people’s quality of life around the world. Our target to achieve net zero by 2045 plays an important role here. Responsible stewardship is one of the ways we contribute to the United Nations’ Sustainable Development Goals (SDGs) and we use our products to support, in particular, SDG 7 “Affordable and Clean Energy,” SDG 9 “Industry, Innovation and Infrastructure,” SDG 12 “Responsible Consumption and Production” and SDG 13 “Climate Action.”

Sustainable products

WACKER has a variety of products that contribute to conserving natural resources and cutting greenhouse gases. We develop not only modern products for the world of tomorrow, but also forward-looking solutions to ensure that these products make a positive contribution to sustainability throughout their entire life cycle. In doing so, we are supporting the global issues of the future such as renewable energy sources, smart construction, digitalization, e-mobility, nutrition and health, as well as quality of life. Our products can be found in solar modules, cars and building materials, not to mention a great many everyday objects and consumer goods. Through our contribution, we enable our customers to offer even more sustainable solutions on the market, allowing us to join forces to advance the transformation to a more sustainable economy and society.

The transformation of the value-creation chain into a circular economy will play an increasing role. We have used the mass balance approach to begin the transformation toward a climate-neutral circular economy. This method enables us to save fossil resources while preserving the quality of our products. Collaboration with customers and partners is vital for the development of recyclable products.

A selection of our sustainable products can be found along with additional information in our online app WACKER City.

https://www.wacker.com/cms/en-de/sustainability/sustainable-products/wacker-city.html

We have described our vision and strategic goals in detail in the Group management report.

Product assessment based on sustainability criteria

When assessing the sustainability of our products, we take account of economic, environmental and social aspects throughout the entire product life cycle. Our product portfolio evaluation tool takes the form of the WACKER Sustainable Solutions program. We also make use of the WACKER ECOWHEEL^® and perform life cycle assessments. These enable us to track the progress of a product from its manufacture through to when it leaves the factory gate.

• We use the WACKER ECOWHEEL^® to identify key sustainability topics at a qualitative level and, together with our stakeholders, set priorities for research projects. Our evaluations factor in a product’s material, water and energy consumption, as well as its ecotoxicity, over the entire life cycle.
• The WACKER Sustainable Solutions program allows us to assess the sustainability assessments of our product portfolio. in line with the standards set by the World Business Council for Sustainable Development (WBCSD). We study the life cycles of products and their usage under specific regional requirements. As a basis for these assessments, we compile products in what are called PARCs (Product/Product group in one Application in one Region in Combination). We examine toxicological classification, regulatory and social criteria, controversial industries and raw materials, as well as sustainability-related aspects across the entire product life cycle. Every assessed PARC unit is assigned to one of five sustainability categories.

WACKER aims to have 100 percent of its products meet defined sustainability criteria by 2030. In the reporting period, sustainable products accounted for 94 percent of WACKER’s total sales. For the majority of the remaining products, we have defined measures to either improve sustainability performance or replace the product.

https://www.wbcsd.org/Programs/Circular-Economy/Resources/Chemical-Industry-Methodology-for-Portfolio-Sustainability-Assessments

• Our life cycle assessments (LCAs) quantify the environmental impact of our products from their manufacture through to the moment they leave the factory gate. Cradle-to-gate analyses such as these allow us to evaluate the sustainability of our products and production processes, and to improve them accordingly. When preparing an LCA, we take account of all relevant, potentially harmful effects on soil, air and water, as well as all material flows associated with the system in question. That includes raw-material consumption and emissions from supply and disposal processes, from power generation and from transport.
  
  To this end, we concluded a groupwide project in 2024 to enable WACKER to automatically calculate the carbon footprint of all of its products and to update this information annually. The calculation complies with the rules of the Product Carbon Footprint Standard set by the Together for Sustainability (TfS) initiative.

https://www.tfs-initiative.com/app/uploads/2022/11/TfS_PCF_guidelines_2022-interactif-pages.pdf

1 Group business fundamentals; Silicon is WACKER’s most important raw material (ESRS 2.42a, b, c); Four business divisions (ESRS 2.40i,ii; ESRS 2.42b, c); Strategy at each business division (ESRS 2.42. a, b, c).

2 Governance: Key products, services and business processes (ESRS 2.40a i; ESRS 2.42a, b, c).

3 Business report: Sector-specific conditions (ESRS 2.40a ii, ESRS 2.42 c); Raw-material prices remain largely unchanged year over year (ESRS 2.42a, c; Energy prices still at a high level (ESRS 2.42 a, c).

4 Segment information by region; Employees (ESRS 2.40c).

5 Risk management report: Sales-market risks (ESRS 2.42b, c); Procurement-market risks (ESRS 2.42a, c); Production and environmental risks (ESRS 2.42 a).