Annual Report 2024

Enterprise risk management

The Group’s enterprise risk management (ERM) process is designed to identify, assess, and mitigate actual and potential as well as emerging risks to our business in order to protect the Group from negative financial and/or reputational impact.

Furthermore, the ERM process facilitates the disclosure of risks to key stakeholders. It also raises internal awareness and provides a basis for informed decision-making. Our ERM process is an integral part of our strategy process and the results of our risk assessment are taken into account when defining our strategic initiatives. The ERM process, which is periodically reviewed by the Audit and Risk Committee and approved by the Board of Directors, is led by the Group General Counsel & Chief Compliance Officer.

Our ERM process is carried out in accordance with the Swiss Code of Best Practice for Corporate Governance. Our risk assessment takes into account the material topics we have identified based on the Global Reporting Initiative (GRI) Standards and our preliminary double materiality assessment under the Corporate Sustainability Reporting Directive (CSRD), for further information see Our material topics. Climate change is one of our material topics, and climate-related risks and opportunities are identified following the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), see our TCFD report. Our approach to addressing climate-related risks and opportunities is integrated in our ERM process and includes transition risks in fast-moving consumer goods markets and physical climate risks to our assets and supply chain, as well as opportunities related to our low carbon footprint innovations. For more information on identified climate-related risks and opportunities, see Climate+ and our TCFD report.

Management is responsible for identifying and reporting risks and for implementing and tracking mitigation measures. Each top risk, including the respective mitigation actions, is owned by a member of the Group Executive Board. Each mitigation action has an owner at Group level who works closely with the respective regional functions to ensure local implementation.

At least annually, we review our top risks and mitigation actions in workshops with our regional and functional leadership teams. The results of these workshops are then discussed with the Group Executive Board. The top risks and mitigation actions are subsequently reviewed by the Audit and Risk Committee and ultimately by the Board of Directors, which also sets the risk profile and the risk capacities of the Group.

Mitigation actions and their implementation status are also tracked and reviewed throughout the year as part of our strategic initiatives and management processes.

The Audit and Risk Committee reviews the implementation of the risk management system and the integrity and accountability of the risk management function on an annual basis. As part of the ERM process, the Audit and Risk Committee also regularly discusses risks that could materially impact our business and financial position, as well as the development of internal controls to mitigate such risks. In addition, the Audit and Risk Committee periodically reviews the internal policies and procedures designed to secure compliance with laws, regulations, and internal rules regarding insider information, confidentiality, bribery and corruption, sanctions, and adherence to ethical standards, and assesses the effectiveness thereof.

The Audit and Risk Committee also discusses with the Group CFO and the Group General Counsel & Chief Compliance Officer any legal matters that may have a material impact on the Group’s business or financial position and any material reports or inquiries by regulatory or governmental agencies that could materially impact the Group’s business or financial position. The Audit and Risk Committee reports material matters to the Board of Directors on a regular basis.

The risks that we may be exposed to lie particularly in the areas of strategy, operations, sustainability, regulatory, legal and compliance, as well as finance.

Strategic risks

Description

We are exposed to several strategic risks, such as:

  • The risk that our business model no longer adequately addresses the needs of customers and consumers.
  • The risk of changing customer or consumer preferences.
  • The risk of existing competitors or new market players.
  • The risk that we do not keep up with new technology trends.
  • The risk of geopolitical instability.

How we mitigate risk

  • We regularly review our strategy.
  • We constantly seek feedback from our customers, suppliers and other stakeholders.
  • We monitor and assess the competitive landscape.
  • We monitor technology trends and invest in development of new technology.
  • We closely monitor the geopolitical developments.
  • Our business is diversified regarding both geographies and products.

How we turn risk into opportunity

  • We adapt our strategy where appropriate to be a pioneer in our industry.
  • We explore new markets and business opportunities to expand our business.
  • We implement new technology to meet and exceed customer and consumer expectations.

Operational risks

Description

We are exposed to several operational risks, such as:

  • The risk that our supply chains are disrupted (e.g. due to geopolitical tensions and conflicts caused by regional instability).
  • The risk of loss of production, including due to damage to key manufacturing facilities (e.g. caused by natural disasters, including flooding), IT failures, severe power blackout or energy shortages.
  • The risk that we do not meet our high product quality standards or that our products do not comply with product food safety regulations.
  • The risk that we do not meet our high standards to ensure the health and safety of our employees.
  • The risk that our employees cannot perform their duties due to events such as a pandemic.
  • The risk that we are not able to attract and retain employees (e.g., due to appearing to not sufficiently drive diversity and inclusion), resulting in limitations to maintaining, developing and growing the business.

How we mitigate risk

  • We expand our supply base where appropriate, including new suppliers and materials to further increase supply chain resilience.
  • We have implemented processes to ensure business continuity planning, including a pandemic contingency plan.
  • We embrace renewable energy and technology advancements to decouple from traditional energy sources.
  • We implement adaptation solutions for both existing and newly built manufacturing facilities to reduce identified climate-related physical risks.
  • We constantly monitor cybersecurity risks and have implemented an information security management system to prevent, detect and swiftly remediate security incidents (including cyber-attacks and phishing attempts).
  • We have a quality management system and invest to continuously improve the quality of our products.
  • We take measures and foster a culture that prevents people incidents and work-related illness.
  • We regularly review and adapt as appropriate our compensation structure and working conditions to remain an employer of choice, and we implemented a diversity and inclusion program.

How we turn risk into opportunity

  • Our responsible sourcing program offers opportunities to develop sustainable suppliers that are more resilient towards climate change impacts.
  • Our employer branding and employee wellbeing programs help us to remain an employer of choice for our existing and new talent.

Sustainability risks

Description

We are exposed to several sustainability risks, such as:

  • The risk that acute or chronic impacts resulting from climate change affect forests, jeopardizing the availability of and costs for paperboard, one of our key raw materials.
  • The risk of stricter climate-related regulations (e.g. on recyclability of packaging materials or on waste) or requirements for low-carbon products.
  • The risk of potential negative impacts caused by our operations or our supply chain on the environment or communities, including human rights.

How we mitigate risk

  • We have set near- and long-term emission reduction targets approved by the Science Based Targets initiative, aiming to achieve net-zero emissions by 2050.
  • We drive innovation that promotes substantial reductions in the negative environmental impact (such as the carbon footprint) of our packaging solutions.
  • Through our partnerships (e.g. with WWF Switzerland), we help to mitigate negative environmental impacts and enhance positive ones, such as initiatives to create additional sustainably managed forest land and foster the collection and recycling of used beverage cartons.
  • We source 100% of our carton paperboard from FSC™-certified suppliers.
  • We source 100% of the aluminum for our aseptic carton packs from ASI-certified suppliers.
  • We are a signatory to the United Nations Global Compact and committed to adhering to the standards encompassed within the International Bill of Human Rights, the International Labor Organization’s core labor standards and the Ethical Trading Initiative Base Code.
  • We have systems in place to minimize negative environmental impacts for both, our operations and within our supply chain, and we conduct human rights due diligence.

How we turn risk into opportunity

  • We invest in research and development to better meet the needs of customers and consumers, including enhancing the environmental performance of our packaging solutions.
  • An increasing demand for sustainable products offers great business opportunities.
  • We are committed to further reducing the carbon footprint of all our packaging and pioneer carbon-negative packaging concepts.
  • Our focus on corporate social responsibility is recognized with high scores in various ESG ratings.

Regulatory, legal and compliance risks

Description

We are exposed to several regulatory, legal and compliance risks, such as:

  • The risk of increasing regulatory requirements regarding, e.g. the environmental performance of our products throughout their life-cycle.
  • The risk of stricter trade restrictions, including export controls, new or rising tariffs, and economic sanctions, prohibiting or restricting us from doing business in certain countries or with certain designated persons.
  • The risk that our employees fail to act with integrity, in compliance with applicable laws and regulations and in accordance with our internal policies and processes (e.g. regarding anti-bribery and anti-corruption), which could result in negative reputational and financial impact for the Group.
  • The risk that our financial reporting is inadequate.
  • The risk of legal disputes.

How we mitigate risk

  • We maintain a compliance management system, including regular compliance risk assessments and process-oriented controls.
  • We provide guidance to our employees on acting with integrity through our compliance policies and training. For employees in high-risk roles, we regularly provide dedicated additional training on special compliance topics, such as anti-bribery and anti-corruption.
  • We have implemented control systems to ensure compliance with applicable trade restrictions.
  • We have implemented an internal control system for financial reporting.
  • We operate a grievance mechanism for reporting any compliance issues or concerns including an Integrity & Compliance Hotline which is available to all our employees, as well as to external stakeholders.
  • We monitor legislative developments and take action to comply with upcoming applicable laws and regulations.

How we turn risk into opportunity

  • Acting with integrity, also beyond compliance with applicable laws and regulations, and conducting business based on values, enhances our Group’s reputation.
  • We invest in research and development of sustainable and environmentally friendly products to meet and exceed regulatory requirements and customer expectations.

Financial risks

Description

We are exposed to several financial risks, such as:

  • The risk of increasing costs (including commodity, freight, energy and other input costs) due to, e.g. inflation.
  • The risk of fluctuations in exchange rates.
  • The risk of increasing interest rates.
  • The risk that we do not have sufficient financial resources and liquidity.

How we mitigate risk

  • We have processes in place to monitor and manage our costs.
  • We have implemented hedging policies to manage the risk of fluctuations in exchange rates and commodity prices.
  • We have established treasury policies that identify risks faced by the Group and set out policies and procedures to mitigate those risks.
  • We maintain a broad network of financing sources, including bank financing and debt capital markets, in different geographies, and we maintain adequate cash and liquidity reserves.

How we turn risk into opportunity

  • Our reporting of risks and opportunities adds transparency, permitting investors to make informed decisions.

Emerging risks

Description

In 2024, we continued to assess emerging risks that might become relevant for our business, including:

  • The risk of increasing regulations related to plastics packaging.
  • The risk of potential contributions to the loss of biodiversity along our value chain, including raw material supply, operations and product end of life.
  • The risk of artificial intelligence and new technologies, such as blockchain, quantum computing and AI being used to attack our IT infrastructure, potentially resulting in business interruption and impacting our ability to supply our customers.

How we address such emerging risks

  • We closely monitor the regulatory environment and engage in product innovation and product circularity.
  • We pursue a strategy of responsible sourcing, which supports the building of resilient forests and the protection of biodiversity along our value chain including our operations.
  • We assess, and where necessary improve, our IT security layers to prepare for and defend against cyber attacks with new technologies (such as blockchain, quantum computing and AI).

How we turn risk into opportunity

  • An increasing demand for sustainable and more circular products offers great business opportunities.
  • Providing information about the results of the performance assessment of our products along the life-cycle supports customers and consumers in making informed choices.
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