ESRS 2 Governance

GOV-1 The role of the administrative, management and supervisory bodies

The Board is responsible for setting the business focus, business portfolio, and overall short and long-term operational objectives, and for adopting key policies to ensure the long-term sustainability of the business. The Board identifies how sustainability issues impact risks and business opportunities, and approves the company’s strategic plans for long-term sustainability goals, based on an assessment of actual and potential impacts, risks, and opportunities. Guidelines for risk management, which include actual and potential sustainability risks, are reviewed and adopted regularly.

The Board ensures that Sandvik has routines to safeguard that principles for financial and sustainability reporting, and related internal controls, are applied. It also oversees that sustainability reports are produced in accordance with legislation, accounting and reporting standards, and other requirements for listed companies.

The Audit Committee, appointed by the Board, prepares matters for the Board concerning sustainability reporting, compliance and risk management, internal controls, internal and external audits, and Sandvik financial and sustainability information. The Committee also reviews and discusses any Group policies that are to be adopted by the Board. It assists the Board in these matters, reporting observations and, if and when necessary, making recommendations and proposals for actions and resolutions.

The Audit Committee examines accounting principles to ensure alignment with accepted sustainability reporting practices. It also oversees the company’s compliance with applicable laws and regulations governing sustainability reporting and makes recommendations to ensure the reliability of the reporting.

Group Executive Management is responsible for the Sandvik overall strategy, including sustainability. Implementation and follow-up is managed by the Group functions, business areas and divisions. Each business area assesses and manages sustainability risks within its operations, while Group Sustainability coordinates the sustainability agenda together with the business areas and Group functions.

Strategic objectives are adopted by the President & CEO and the Group Executive Management, to ensure delivery of the strategy, and selected objectives are approved by the Board. Key results are consolidated and reported to track objectives at both Group and business area levels. Performance is assessed quarterly, and targets and actions are set for the upcoming year.

Although Sandvik’s operational structure is decentralized, all parts of the Sandvik Group adhere to a set of mandatory joint requirements in our governance framework, The Sandvik Way, to ensure performance management, legal responsibilities, and compliance with relevant rules and regulations throughout the organization. Sustainability governance at Sandvik is grounded in the company’s business strategy, business model, and international frameworks. Relevant goals are set to address material areas and effectively manage associated impacts, risks, and opportunities.

Policies and management systems have been implemented to ensure financial, environmental, and social compliance. The Group Executive Management has the overall accountability for the implementation of our policies. Each policy owner is responsible for reviewing and updating the policies, taking into account expectations from relevant external stakeholders such as regulators, customers, investors, and Non-Governmental Organizations (NGOs).

Further details on Sandvik governance structure related to business conduct can be found under Incorporated by reference index. Data related to the composition of the Board is found under S1-9.

GOV-2 Information provided to and sustainability matters addressed by the undertaking’s administrative, management and supervisory bodies

The Board oversees the company’s control mechanisms for assessment of the impact that Sandvik has on the economy, environment, and people, as outlined in the Board’s Procedural Guidelines and relevant policies in The Sandvik Way. The Board also ensures that the company has effective management of all sustainability impacts, risks, and opportunities.

The Audit Committee monitors CSRD reporting, including the Group’s double materiality assessment which is adopted annually by the Board. The Committee receives regular updates from the sustainability function.

Relevant key results are tracked and reported to the Board and Group Executive Management quarterly, through interim reports and objectives and key results tracking.

Stakeholder engagement is managed through the operational structure, see SBM-2 for further details.

GOV-3 Integration of sustainability-related performance in incentive schemes

Sustainability is integrated in the business strategy. The financial targets are linked, among other things, to delivering on sustainability performance. Therefore, Sandvik does not apply separate sustainability-related performance in the incentive schemes.

GOV-4 Statement on due diligence

Due diligence at Sandvik consists of several different processes to manage the impact Sandvik has on the economy, environment and people. Our due diligence is managed through policies and procedures in The Sandvik Way. Components of due diligence are under regular development and improvement, and is reviewed yearly. The table below maps where to find information about our due diligence process in our sustainability statement.

GOV-5 Risk management and internal controls over sustainability reporting

Sandvik has an internal control procedure as a part of our sustainability reporting framework, in The Sandvik Way. The purpose of the procedure is to establish a systematic and integrated approach to internal controls for sustainability reporting. It is structured to identify, evaluate, and manage potential risks to ensure that the sustainability statement complies with the qualitative characteristics in ESRS 1. The internal control system aligns with the conceptual framework of Committee of Sponsoring Organizations of the Treadway Commission (COSO), which is based on five key components that provide an effective framework for describing and designing the internal control system implemented in the organization.

Sandvik has adopted a risk-based approach when setting the scope of internal controls for sustainability reporting. We conducted an analysis to identify material risks related to reported metrics and prioritized based on the level of importance for Sandvik. In the risk assessment, we identified risks related to completeness and accuracy of environmental, social and governance (ESG) data that could impact the sustainability statement. These risks are taken into consideration to ensure that adequate controls exist to mitigate these risks. In 2026, we will conduct risk assessments specifically targeting the ESG metrics and related processes to identify any risks and reassess existing ones. Our aim is to enhance our approach to risk evaluation and the related prioritization methodology in subsequent reports, thereby fostering ongoing improvements within our sustainability reporting framework. More information about our risk management and internal controls are available in the incorporated reference index within BP-2.