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This report covers our disclosures aligned with the Swiss Climate Ordinance under art. 964b. It follows the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) from 2017 and the annex “Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures” (October 2021). It considers cross-sectoral and sector-specific recommendations as well as the “Guidance on Metrics, Targets and Transition Plans” (October 2021). The report also covers our climate transition plan, which is comparable with the Swiss climate goals.

Governance

The Board of Directors (BoD), acting collectively, has the ultimate responsibility for the conduct of business of SIG Group AG (the Company or SIG) and for delivering sustainable value for shareholders and other stakeholders. The BoD sets the Company’s strategic aims, ensures that the necessary financial and human resources are in place to meet the Company’s objectives, and supervises the management of the Company. The BoD responsibilities cover climate-related targets and measures and other sustainability topics. The BoD also approves the Group’s ESG-related key policies. For further details, see “Our key policies”.

Our sustainability approach consists of four key action areas that together deliver our net positive ambition: Climate+, Food+, Resource+ and Forest+. Other action areas such as sustainable culture and innovation also contribute to our net positive ambition. The projects and activities covered by the four key action areas aim, among other things, to address potential impacts of SIG’s value chain on climate change and to assess risks and opportunities of climate change on our business. Activities in the Climate+ area specifically cover climate change mitigation and adaptation measures. Activities in the other action areas aim to mitigate climate change both in our value chain and by proactively delivering positive impact beyond our value chain.

Climate-related matters are incorporated in our governance processes over sustainability matters. For the organizational chart of the SIG sustainability governance structure and a description of our processes, see “Our sustainability governance” and “Integrating external insight”. Climate-related risks and opportunities are among the sustainability matters discussed by the different governance bodies. For more information on corporate governance-related topics, see our Corporate Governance Report.

Strategy

Our regular assessment of potential climate-related impacts on our business and strategy helps us to better understand how the Group may be affected by climate-related events, both in terms of risks and opportunities. The assessment enables us to better position ourselves to navigate risks and challenges and to explore opportunities arising due to climate change.

Following the TCFD’s categorization, our assessment of climate-related risks and opportunities is based on scenario analysis covering acute and chronic physical risks (i.e. short-term and extreme weather events and longer-term shifts in climate patterns) as well as transition risks arising from policy, legal, technology and market changes required to address mitigation and adaptation requirements in the transition to a lower-carbon economy. The assessment covers potential risks and opportunities occurring over the short term (2025), medium term (2030) and long term (2050). To date, we have conducted two levels of assessment: a detailed assessment in 2023 of direct physical risks to our owned and leased production sites, and a higher-level assessment in 2024 of direct and indirect physical and transition risks and opportunities across our value chain. The higher-level assessment expands on our risk and opportunity assessment performed in 2023.

The rationale for the choice of time horizons and climate scenarios used in our 2024 assessment is outlined below.

Climate-related risks

Our assessment of climate-related physical and transition risks, summarized below, indicates that some of the identified risks may have a potential financial impact on the Group’s business along the whole value chain. The overview tables on the following pages provide additional details about the impacts of climate-related risks on the Group.

Within the three parts of the value chain, physical and transition risks intensify over time, while no risks in the value chain had a high risk rating in the short term. However, eight risks were identified as high risks in the long term.

In our upstream value chain, flooding was considered medium risk across all time horizons and scenarios, potentially leading to increased operational expenditure due to disruptions in the distribution of raw materials. In the medium to long term, the occurrence and intensity of wildfires, coastal floods and storms/cyclones is expected to increase, particularly under the 2–3°C and ≥3°C scenarios. Transition risks related to new or increased regulations were rated as medium risk in the short-term given that new or increased regulations are already introduced in the key countries assessed. Risks related to regulation increase over time, particularly under the 1.5°C and 2–3°C scenarios.

Within our own operations, with one exception, physical risk was assessed as low in the short term for all scenarios. Extreme heating was considered medium risk across all time horizons and scenarios due to the current occurrence of extreme heating in the countries assessed. Extreme heating and other physical risks may intensify over time, leading to direct and indirect impact on SIG. SIG may directly be impacted by potential losses in value of SIG’s production sites caused by structural damages. SIG may indirectly be impacted by reduced revenue due to disruptions in production caused by the inability of workers to access their workplace, or by workers impacted by health and safety issues. Direct physical risk impacts increase to high risk in the long term, mainly caused by flooding in United States, Brazil and China. Most indirect physical risks remain as medium risk in the long term apart from flooding, which increases to high risk in the medium- to long-term under the ≥3°C scenario. Transition risks related to new or increased regulations were assessed as medium for all time horizons and scenarios. Risk related to adoption of new technologies was assessed as medium for most time horizons and scenarios except under the 1.5°C and 2–3°C scenarios, where this risk increases to high risk over time due to intensification of decarbonization actions worldwide. Reputational risk associated with increased stakeholder concern and sentiment related to environmental or sustainability matters increases to high in the medium term under the 1.5°C scenario and in the long term under the 2–3°C scenario.

In our downstream value chain, physical risks were assessed as low to medium risk, with flooding and coastal floods as the main physical risk drivers in the medium term under the 2–3°C and ≥3°C scenarios. Transition risks related to new or increased regulations and increased customer preferences for eco-friendly alternatives were considered medium in the short and medium term for all scenarios. These risks can result in a reduction of revenue if products do not meet regulatory requirements, or if the demand for SIG products decreases due to the products not being considered as the most eco-friendly alternative. Both transition risks increase to high in the long term under the 1.5°C and 2–3°C scenarios.

Climate-related opportunities

Our assessment of climate-related opportunities, summarized below, indicates that some of the identified opportunities may have a potential financial impact on the Group’s business. The overview tables on the following pages provide additional details about the impacts of climate-related opportunities on the Group.

Opportunities in our upstream value chain predominately arise in the long-term in the form of avoided costs from increased reliability of our supply chain due to a diversification of suppliers and integrated transportation planning that reduce disruptions in critical supply chains. In our downstream value chain, opportunities also emerge from a growing demand for products and services related to long-life consumables in markets highly exposed to physical climate risks, access to new and emerging markets driven by a shift in consumer preferences toward low-carbon products and an enhanced market positioning for these products. No significant opportunities were noted within our own operations.

SIG’s business strategy and resilience

The results of our assessment and the measures identified to manage physical and transition risks are linked to our business strategy and financial planning. To assess the materiality and prioritize climate-related risks and opportunities in the value chain, we give each risk and opportunity a rating based on likelihood and financial impact. The consideration of three different scenarios allows us to better understand plausible futures and to ensure long-term business resilience.

We have already introduced a broad set of actions to mitigate climate-related risks and ensure resilience. The Climate+ action area includes our Climate+ Program that is designed to reduce the emissions in our operations and throughout the value chain. Our low-carbon packaging solutions enable us to help our customers and consumers lower their own carbon emissions. This ability to offer low-carbon alternatives to other types of packaging is a key differentiator and value driver that not only mitigates climate-related risks but also enables SIG to capitalize on climate-related opportunities. Our products offer a variety of features that are associated with climate benefits for consumers, such as renewable content or recyclability – in addition to the advantages of ambient packaging with excellent shelf-life performance, which contributes to reducing food waste.

For more information on our climate strategy, see Climate+, “Our approach”.

Climate-related risks¹

Climate-related opportunities

Risk management

We conducted the 2024 climate-related risk and opportunities assessment through scenario analysis. As mentioned under the Strategy section above, the assessment has been done in two phases. Phase 1 was focused on a detailed assessment of direct physical risks to our owned and leased production sites. Phase 2 was focused on a higher-level assessment of direct and indirect physical and transition risks as well as opportunities across our value chain. Depending on the type of impact, the assessments under Phase 2 were done at key locations or at global level. Physical risks include acute and chronic physical risks. Transition risks include technology, market, reputational and legal risks. Opportunities relate to resource efficiencies and cost savings, development of new products and services, access to new markets and creating resilience.

Phase 1 assessed the exposure (i.e. the level to which an asset is potentially affected by a hazard) and the vulnerability (i.e. the loss of net asset value, resulting from the exposure analysis combined with the potential amount of damage of a hazard) of our production sites. Phase 2 was performed selectively for the business areas and locations within the value chain that are most likely to present significant risks. Key considerations for the risk assessment included the supply of raw materials, the location of our production sites, their share of emissions, exposure to emerging regulations and sales from large customers. To assess climate-related risks and opportunities along the value chain, we assigned a rating to the likelihood (i.e. probability of occurrence for each chosen location, scenario and time horizon) and impact (i.e. financial consequences for the business) of risks and opportunities. The final risk rating allocation process is based on both the likelihood and the financial impact rating, aligned with our annual enterprise risk management (ERM) and the double materiality assessment processes. By analyzing the convergence of likelihood and impact, we determined a final risk category for each type of risk. The three possible risk categories (low, medium, high) were then used to prioritize each climate issue and assess their materiality. Opportunities were rated only based on impact.

The process for managing climate-related risks and opportunities is linked to our annual ERM process, with additional consideration of longer-term climate-specific time horizons. Management is responsible for identifying and reporting risks and for implementing and tracking mitigation measures. The material climate-related risks resulting from our scenario analysis are implemented in the ERM risk catalog and financial implications are also embedded within potential impact for that risk. At least annually, top ERM risks and mitigation actions are reviewed in workshops with regional and functional leadership teams. During these workshops, we review the top risks from the previous cycle, discuss potential emerging risks and review the status of our mitigating measures. The result of these workshops are then discussed with the Group Executive Board (GEB). Each ERM risk, including the respective mitigation actions, is owned by a member of the GEB. The top risks and mitigation actions are subsequently reviewed by the Audit and Risk Committee (ARC) and ultimately by the Board of Directors, who is also setting the risk profile and the risk capacities of the Group.

Each mitigation action has an owner at Group level who works closely with the respective regional functions to ensure local implementation. Moreover, each focus area of the Group’s sustainability approach (Climate+, Forest+, Resource+ and Food+), including their related commitments, is owned by a member of the Responsibility Steering Group, who is accountable for setting goals and delivering progress through targeted workstreams. Leaders from relevant business functions and regions are responsible for implementing the Group’s sustainability commitments with support from their teams and subject matter experts. The Group follows a range of different measures to manage and reduce identified climate-related risks as well as to capitalize on climate-related opportunities.

Examples of physical risk mitigating measures from 2024 for the Group’s own and leased production sites include:

Examples of measures in 2024 taken to manage transition risk include:

For more information on our ERM, see Enterprise risk management.

For additional details on our climate-related mitigation and adaptation measures, refer to Climate+, Forest+, Resource+, Food+ and Our supply chain.

Metrics and targets

The management of climate-related risks and opportunities is supported by key metrics and targets which allow us to monitor our performance to address and mitigate the effects of climate change. We are striving to minimize our footprint at every stage of the value chain – from sourcing to production, filling, use and recycling of our packs (see Climate+). And we are going further to bring positive impact beyond our value chain, helping our customers and consumers to further lower their own carbon footprint with our low-carbon packaging solutions. We are already among the group of leading companies that have developed a transition plan and set GHG reduction targets approved by the Science Based Targets initiative (SBTi) in line with the latest climate science to keep global warming below 1.5°C, which are comparable to Switzerland’s climate goals.

For our climate-related targets and KPIs, see Climate+, section “Our targets and performance,” sub-sections “Targets, progress and performance” and “KPIs” and Resource+, section “Our targets and performance”, sub-sections “Targets, progress and performance” and “KPIs”.

For more details on our greenhouse gas reporting, see “Greenhouse gas emissions basis for reporting”.

1 The results provided are based on the highest risk value identified among the geographies analyzed. This is chosen as a cautionary approach, but these results may not reflect the risks in all geographies where SIG operates. Direct physical risks are mostly caused by fluvial flooding in United States, Brazil, and China.