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Sustainability governance

The sustainability governance of the Sandvik Group is grounded in its business strategy, business model, and international frameworks. Relevant goals are established to address material areas and effectively manage associated impacts, risks, and opportunities. Policies and management systems have been set to ensure financial, environmental and social compliance.

Governance structure

The Sandvik Board of Directors holds primary responsibility for sustainability oversight within Sandvik and the Audit Committee monitors the sustainability reporting. Implementation is delegated to the President and CEO of Sandvik.

The Group Executive Management bears the overarching responsibility for the Sandvik sustainability strategy and agenda. Implementation and follow-up, however, are the responsibilities of the Group functions, business areas and divisions. Additionally, the business areas are tasked with assessing and managing sustainability risks in their operations. The coordination within the Group is managed by the Group Communications and Sustainability function. Key performance indicators (KPIs) are consolidated and reported to track goals at both Group and business area levels. Annually, we assess our performance, establish targets, and outline focus actions for the upcoming year.

The Sustainability Council serves as a collaborative forum for cooperation and best practice sharing across Sandvik, with representation from both business areas and Group functions. Group Sustainability coordinates the sustainability agenda together with the business areas and Group functions.

Board’s sustainability competence

The Board consists of members with experience from different geographic areas and different industry sectors. All Board members have long experience from managing different positions in global, industrial companies in different functions, which includes the topics generally covered by the sustainability concept. Many of the Board members are former CEOs or senior managers of other global, industrial companies and as such, have extensive experience from managing environmental, social, and governance-related impacts of the business in all parts of its value chain.

Board’s role in overseeing management of sustainability impacts

The Board oversees the due diligence and other processes to manage the impact Sandvik has on the economy, environment and people through many different processes, managed through the Board's Procedural Guidelines and the policies and procedures in The Sandvik Way. The normal Board processes include regular reports to the Board and its Committees on risk management, human resource management, sustainable supplier management, compliance and environment, and health and safety reporting. Key KPIs within the areas are tracked and reported to the Board on a quarterly basis, both through the interim reports and the Key Objectives tracking. The Audit Committee supports the Board in reviewing performance in these areas.

Stakeholder engagement is managed through the operational structure. This includes Investor Relation meetings with key shareholders, dialogues with the Board union representatives as well as considering external analyst and shareholder reports.

The Board uses this information in the strategic planning for the Group and updates the guidance to management as appropriate, considering the overall balance of the different interests. For example, after input from stakeholders, the Remuneration Committee has requested management to investigate potential Environmental, Social, Governance (ESG) targets for one or several of the existing incentive programs during 2024.

Evaluation and reporting

The effectiveness of the processes described above is evaluated using, for example, the internal controls framework, internal and external audits in different parts of the value chain (including supplier audits), as well as the feedback from the Speak Up system and investigations conducted as part of that process.

Sustainability is an integrated part of the reports submitted to the Audit Committee and sustainability reports are also made available to the Board on at least a quarterly basis. These reports include stakeholder engagement and results of the evaluation of the effectiveness of processes.

In 2023, the Board of Directors also received updates on the new sustainability strategy and the Corporate Sustainability Reporting Directive (CSRD) project. The Communication and Sustainability function informed the Audit Committee of relevant sustainability matters and communicated progress throughout the year. Both the Audit Committee and the Board of Directors proactively sought information and engaged in discussions on related topics, including CSRD.