Materiality assessment

Sandvik has performed a double materiality assessment to determine material topics. The double materiality assessment was performed supported by the topics included in the CSRD and GRI as well as the dependence on natural, social, and human resources. The outcome of the assessment results in material impacts, risks, and opportunities, and forms the basis of this year’s GRI reporting. The impact assessment includes positive, negative, actual, and potential impacts. The mapping and understanding of impacts were primarily centered on the value chains where impacts were deemed most likely to occur. Upstream, this included transportation of products and sourcing of minerals and metals from high-risk countries, as well as sourcing of conflict minerals and cobalt. Downstream, focus was on transportation of products and people, the mining sites in high-risk areas, and the end-of-life of our business areas’ products.

Impacts were evaluated using scale, scope and irremediability determining the severity of an impact as well as likelihood for potential impacts. The evaluation of positive and negative impacts relied on internal expertise within different areas such as supplier management, environment, human resources, health and safety, community involvement and law. The participants came from different business areas, functions, and geographies within Sandvik, which brought different perspectives and experience on Environmental, Social and Governance (ESG) topics in the value chain. The assessment also considered external reports, legislation, and frameworks. These sources included the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, the OECD Due Diligence Guidance for Responsible Mineral Supply Chains, as well as supplier risk screening through EcoVadis and supplier audits. The process involved workshops and interviews.

In the financial materiality assessment, risks and opportunities were assessed by the magnitude of the financial consequence as well as likelihood. The financial materiality assessment was based on a short-term perspective which highlighted the most urgent topics. In the coming year, the medium perspective will be further investigated and included in the analysis. Based on the input collected, a threshold value for the topics was defined, above which the topics were deemed material and as such a basis for our reporting.

Sandvik has a multitude of interactions across the value chain: suppliers, customers, and our own operations and interactions related to the end-of-life process. Our supply chain and geographical footprint are examples of factors that affect the value chain and our impacts, risks, and opportunities.