2.1

Methodology

The commitment to double materiality is a statement of intent. What gives it credibility is the process behind it – how topics are surfaced, how severity and likelihood are scored, and how the boundary between material and non-material is drawn. Hager’s methodology has evolved over successive reporting cycles, each iteration sharpening the alignment between what the standards require and what the business reality demands.

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In 2024, Hager adjusted its double materiality assessment methodology to further enhance alignment with the requirements of the European Sustainability Reporting Standards (ESRS). The revised approach draws on the Materiality Assessment Implementation Guidance published by the European Financial Reporting Advisory Group (EFRAG) in December 2023. In 2025, the assessment was further refined by enhancing the granularity of the analysis, specifically by linking all IROs directly to the detailed ESRS sub-topics and sub-sub-topics.

The process to identify and assess material impacts has four phases: (1) understanding, (2) identification, (3) assessment, and (4) finalisation and validation.

2.1.1

Phase 1: Understanding

In the understanding phase, Hager built a clear and structured view of its company context and key stakeholders. The starting point was an analysis of the business landscape, including sectors of operation, value chain dynamics, and key drivers of value creation. This ensured a holistic perspective aligned with strategic priorities.

Hager draws on insights from its 2022 assessment as a robust baseline, while systematically updating this foundation with the latest developments. This included integrating new information to ensure that the assessment reflects the current scope and evolution of the business.

Hager also identified its stakeholders, as understanding their interests and relationships within the collaborative value chain is crucial to assessing sustainability impact. A detailed description of relevant stakeholders and how Hager engages with them is available in section 1.6.2 Stakeholder engagement.

The insights gathered through stakeholder engagement directly informed the double materiality assessment. They supported the identification and evaluation of material impacts, risks, and opportunities (IROs), ensuring that sustainability priorities reflect both external expectations and internal strategic considerations.

For employees and workers’ representatives, besides employee engagement, the views that could influence the materiality assessment are also captured through established processes, including health and safety management teams, as well as whistleblowing and grievance mechanisms. The outcomes of these engagements are consolidated by the relevant functions (including Human Resources, Sustainability, Compliance, and Risk Management) and escalated through defined governance channels.

The Board of Directors and the Supervisory Board are informed about the views and interests of key affected stakeholders through structured stakeholder engagement and formal reporting mechanisms embedded in the Group’s governance processes.

1. Stakeholder views and concerns related to material impacts, risks, and opportunities are communicated to senior management and the governing bodies through periodic reporting to the Sustainability Council
2. Management reviews and risk management updates
3. Ad-hoc escalations in the event of significant stakeholder concerns, incidents, or emerging risks

2.1.2

Phase 2: Identification

Once the groundwork had been established in the first phase, Hager started a scoping exercise to identify sustainability topics that are potentially material. This assessment was based on sectoral context, business model, geographic footprint, and the expectations of 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 potentially material matter is overlooked. Source material included internal sustainability and financial reports, external reporting frameworks (e.g. ESRS, GRI, SASB), sectoral research (such as the World Economic Forum Global Risks Report), third-party databases, and peer materiality assessments. In addition, insights gathered from stakeholder engagement were incorporated to enhance the completeness of the assessment.

Moreover, Hager’s due diligence processes were systematically integrated into the IRO identification process. These procedures include ongoing risk monitoring, supply chain assessments, grievance mechanisms, and ESG evaluations conducted across the value chain as part of the broader sustainability governance framework. Due diligence supported the verification of potential impacts and enabled 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 the dynamic risk environment and evolving sustainability context.

Initially, a comprehensive inventory of IROs was compiled. This exhaustive list, comprising more than 170 IROs, was then streamlined into 20 potential sustainability topics. To enhance the granularity of the assessment and align with ESRS topic standards, adjustments were made to the listed sustainability and material topics in 2024. For 2025, the list of sustainability topics shortlisted remained the same as the previous reporting year.

Value chain heatmap

In the identification phase, Hager also conducted a value chain heatmapping exercise to identify where the most significant sustainability impacts, risks, and opportunities (IROs) could potentially occur across operations. This analysis covered the entire value chain, including both upstream and downstream activities, and provided early insights into the areas where sustainability topics may be most concentrated. This step has been essential in guiding the IRO assessment in a focused and resource-efficient manner. By identifying potential hotspots early on, Hager is able to prioritise where to apply deeper due diligence and where to engage stakeholders more intensively. This approach helped the company understand where it is most likely to encounter regulatory exposure, reputational sensitivities, or business model implications related to environmental and social matters. The results can be found in the table below. It shows that climate change and energy are relevant throughout the entire value chain, while all other high-impact topics occur mainly in own operations.

2.1.3

Phase 3: Assessment

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 identified sustainability topic.

Desk research was conducted to score IROs and their justification related to the 20 sustainability topics identified as being relevant to the Hager value chain and operations. This research was based on internal reports, industry publications, academic studies, and third-party sustainability databases.

Next, a total of 20 expert interviews were conducted, 14 internal and 6 external, to review the IRO list and research-based assessment and obtain input on the severity/magnitude and likelihood of each. Experts were selected based on their sustainability topic(s) competency and were invited to challenge the identified IROs and add to the list where necessary.

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

Impact materiality assessment

The core of the assessment is the classification and evaluation of impacts as either actual or potential, based on evidence gathered through desktop research and expert interviews.

For actual negative impacts, Hager focused on severity using the following three sub-criteria:

• 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.

For positive impacts, only scale and scope are considered, as irremediability is not applicable in this case.

For potential impacts, Hager considered both severity and likelihood, reflecting the possible extent of the impact and the probability of occurrence. Likelihood is assessed based on the probability of an impact occurring within the context of Hager’s activities, considering both internal operations and value chain dependencies.

Each of the criteria was 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 assessing impacts, Hager also considered the effect of existing prevention, mitigation, and remediation actions. These include operational controls and grievance mechanisms designed to prevent or reduce negative impacts and to provide remedy where impacts occur. The evaluation therefore reflects the residual severity and likelihood of impacts after taking into account these management measures.

For impacts with potential adverse implications on human rights, Hager applied a severity-led assessment approach in line with ESRS requirements. Severity takes precedence over likelihood in determining materiality. As a result, impacts assessed as highly severe may be considered material even where their likelihood is low, recognising that certain human rights impacts require prioritised attention due to their potential gravity and irreversibility.

Financial materiality assessment

To assess financial materiality, each identified risk and opportunity was scrutinised as to its potential financial effect and the likelihood of occurrence. Risks and opportunities are assessed from an outside-in perspective, considering how external sustainability developments may affect Hager’s financial performance across the value chain. These impacts are analysed across upstream, own operations, and downstream activities.

Upstream and downstream risks and opportunities primarily arise from external factors such as supply chain conditions, stakeholder expectations, and regulatory developments affecting areas including workers in the value chain and affected communities. These external drivers influence Hager through dependencies on suppliers, partners, and customer markets.

Within own operations, the financial implications of these external developments are further analysed and categorised into operational, regulatory, and reputational dimensions. This includes, for example, changes in impacts on internal processes and workforce (operational), evolving legal requirements (regulatory), and stakeholder perception (reputational).

For the assessment, Hager applied two criteria: 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 factored in.

2.1.4

Phase 4: Finalisation and approval of material topics

After completing the detailed IRO assessment described above, Hager stepped back to reflect on the overall picture emerging from the analysis. Based on this consolidated view, a threshold was defined to determine materiality: IROs exceeding this threshold are considered material, while those below are not. For impact materiality, the threshold is 2,6 and for financial materiality the threshold is 2,2. The list of material IROs is available in Annexure III.

Building on this foundation, Hager conducted mapping exercises to translate the assessment results into actionable insights. Each IRO was linked back to its respective topic. A topic is considered material if it is associated with at least one material IRO. Otherwise, it is classified as not material. This assessment resulted in nine of the twenty topics being rated as material for Hager and establishes the basis for determining the disclosure requirements included in the ESRS index.

All topics and their respective IROs identified as material were reviewed by the Sustainability Council. This review ensured their strategic and business relevance, taking into account links to own operations, value chain, as well as impacts on and dependencies from the environment and society.

2.2

Management of IROs

Identifying material topics is a necessary first step, but it is not, on its own, a sustainability strategy. The value of the assessment lies in what happens after the threshold is set: how priorities translate into resource allocation, governance attention, and operational change.

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Sustainability is a core enabler of Project 2030, not a parallel workstream. Hager manages its material impacts, risks, and opportunities (IROs) according to the E3 framework: Ethics, Environment, and Employees, which structures how sustainability priorities translate into decisions across the organisation. The framework operates through two streams: environmental sustainability (Chapter 4: Climate change and energy) and Human Sustainability (Chapter 8: Our people and culture).

The double materiality assessment and resilience analysis work as a continuous loop. Resilience analysis surfaces emerging market, regulatory, and environmental developments; the materiality assessment determines which of these are significant enough to act on. Together they ensure strategic priorities reflect the sustainability topics that matter most, and that Hager is not caught off-guard by those emerging on the horizon.

This shapes how resources are allocated. Most capital and operational expenditure is business as usual: the normal investment required to run and grow the company. Where material IROs demand more targeted action, dedicated sustainability budget is injected directly into the relevant functions. On the capital side, this covers investments in greenhouse gas reduction, energy efficiency, and circular product design. On the operational side, it funds people development through the Care model and programmes that strengthen ethical conduct and compliance.