Climate change (E1)

Interim targets achieved ahead of time

In the reporting year, the SFS Group made further progress in its focus on decarbonization. Scope 1 and 2 emissions were reduced by –9.9% versus the previous year. Compared to the 2020 reference year, this equates to a reduction of –77.1% in relation to net sales. A slight decline was also recorded for Scope 3 emissions. The climate targets for 2050 are consistent with the 1.5 °C target set by the Science Based Targets initiative (SBTi) and were validated at the end of 2025. By drawing 81.5% of the electricity it consumed from renewable energy sources, SFS has already significantly exceeded the interim target for 2025 of at least 50%.

Climate change is one of the main challenges being faced around the world and is an important topic for SFS from both an ecological and an economic perspective. The impacts we have on our climate affect all levels of the value chain and directly influence our business strategy, supply chain and long-term competitiveness. As part of the double materiality analysis, SFS has identified the material impacts, risks and opportunities (IROs) detailed below. The analysis was carried out in accordance with the TCFD framework, which is integrated into our group-wide risk assessment system.

Material impacts

SFS’s business operations contribute to global warming via direct and indirect greenhouse gas emissions. Scope 3 emissions make up the largest share of total emissions, accounting for approximately 95% of SFS’s total carbon footprint. The main Scope 3 emissions drivers are the categories “Purchased goods and services” (approx. 80%), followed by “Employee commuting”, “Upstream transport and distribution” and “Downstream transport and distribution” (approx. 5% each). During the transition toward climate neutrality, it is crucial that targeted measures to mitigate emissions in these areas are implemented.

Scope 1 and Scope 2 emissions are generated from the energy-intensive production processes employed by SFS – particularly cold forming, machining and plastic injection molding – with an annual energy consumption of 347,664.8 MWh. Around two-thirds of the energy required is covered by electricity and one-third by fuel and combustibles, which are mainly used for heat treatments. The SFS Group is continuously working on increasing energy efficiency and reducing resource consumption. The aim is to draw at least 90% of electrical energy from renewable sources by 2030.

Opportunities and risks

Owing to the energy transition, energy-efficient building insulation is becoming increasingly important, unlocking growth potential in the Fastening Systems segment in particular. As a specialist in fastening systems for suspended rear-ventilated façades, the SFS Group holds a strong strategic position in this area.

Opportunities are also emerging in the automotive industry with a high share of powertrain-independent product solutions. Trends such as autonomous driving and energy recuperation are boosting demand for sensor and brake systems, for which SFS supplies assemblies and housing solutions.

SFS has identified these opportunities as key elements for future business development and positioning as part of the transition to a low-carbon economy.

One of the main transition risks is the availability of renewable energy and the stability of prices. Energy costs currently account for around 1.5% of sales. With the aim of increasing the security of the energy supply and reducing the Group’s dependence on external energy providers, SFS is investing in expanding its in-house power generation. The target is to produce at least 10% of the electricity required by the Group itself by 2030.

Strategy for mitigating climate change (E1-1, E1-2, E1-3, E1-11)

The SFS Group is currently developing a transition plan to bring its business strategy in line with the targets set out in the Paris Agreement and EU climate neutrality by 2050. The main aim is to reduce Scope 1 and 2 greenhouse gas emissions relative to net sales by ≥90% by 2030 in comparison with the 2020 reference year. In addition, SFS is committed to achieving short-term and long-term science-based targets in accordance with the requirements set out by the SBTi. As there is currently no reliable information available on “included or unavoidable emissions”, these will be disclosed and taken into account at a later point in time. This strategy will be implemented by continuously increasing energy efficiency, electrifying core processes and expanding the use of renewable energies at all locations, including in-house production. Additional measures include further developing the product and service portfolio for sustainable solutions as well as supply chain management.

The investments in decarbonization measures (CapEx, OpEx) necessary for this have been incorporated into the strategic financial and investment plans and are being monitored by the Board of Directors. The Board of Directors reviews the progress on a regular basis and approves additional measures, where necessary. The financial effects of climate-related risks and opportunities are factored into the decision-making process for investments. These include both potential additional costs as a result of rising CO₂ prices and regulatory changes as well as the expected benefits such as cost reductions due to efficiency gains and new potential sales volumes due to sustainable products.

Commissioned and reviewed at least once a quarter by the Group Executive Board, the Competence Center ESG (CC ESG ) is responsible for operational implementation and reporting. The achievement of objectives is regularly assessed and disclosed on the basis of emissions trends and specific climate metrics. The progress that has already been achieved indicate that progress is being made in transforming the business model.

Scenario analysis identifies climate-related risks

The SFS Group systematically identifies and assesses climate-related risks within the framework of the group-wide risk management system and in accordance with TCFD recommendations. Both physical and transition risks are factored into this methodology.

Examples of physical risks include acute incidents such as extreme weather as well as chronic trends such as temperature rises, water shortages and changing precipitation patterns. These particularly affect the supply of raw materials, the operational safety of locations and the stability of global supply chains.

Transition risks comprise regulatory requirements, rising CO₂ prices, technological upheaval and changing customer requirements. They can cause additional costs, but also unlock opportunities for efficiency gains and sustainable products.

Scenarios

• BAU (business as usual): continuation of the current trend without any additional measures
• WB2C (well below 2°C): the scenario in which efforts are made to limit global warming to below 2 °C
• NZE (net-zero emissions): framework in line with the 1.5 °C target

Methodology of the scenario analysis

• Time horizon: short term (by 2030), medium term (by 2040) and long term (by 2050)
• Scope of the analysis: the Group’s own locations as well as macro-economic trends in the main sales regions, based on variables such as CO₂ price, political costs and indicators of the demand for climate-friendly technologies
• Methods and tools: a qualitative and quantitative risk assessment based on internal emissions data and energy consumption as well as on external regional climate data sourced from publicly accessible information (e.g. WBCSD) for the evaluation of transition risks and on data from the Group’s insurance provider for physical risks
• Region: Consideration at the level of production sites and key supplier regions
• Evaluation criteria: likelihood, duration and scale of the potential incidents or regulatory developments; potential cost effects, particularly due to rising CO₂ prices

Findings from the scenario analysis

In the BAU scenario, the incentives for decarbonization and the demand for sustainable solutions remain low. In the long term, this would result in an increase in physical damage and substantial consequential costs.

However, the WB2C and NZE scenarios depict a significant rise in CO₂ prices, stricter regulatory requirements and higher energy prices as the main cost risks.

Thanks to the considerable progress already made in lowering CO₂ emissions since the analysis was carried out in 2024, SFS has significantly reduced the cost risks from rising CO₂ prices in particular. Other financial effects – such as due to the necessary investments in adaptation measures, higher operating and insurance costs, and the expansion of resilient supply chains – continue to prevail and remain part of the continuous risk assessment.

At the same time, the analysis illustrates the opportunities arising from proactive investment in energy efficiency, renewable energies (including in-house power generation) and resilient supply chains. Such measures improve our long-term competitiveness and unlock additional potential sales volumes through climate-friendly products and solutions, as both customers and regulatory framework conditions are increasingly calling for sustainable offerings.

The NZE scenario also reveals that ambitious climate targets may bring about an increase in regulatory costs in the short term, but offer the greatest potential in the medium term to minimize climate-related damage and save on costs.

Sensitivity analysis of climate risk

Resilience related to climate change

SFS regularly reviews the resilience of its business strategy and business model to climate-related risks. This is based on the scenario analyses (BAU, WB2C, NZE) as well as the evaluations of physical and transition risks.

The analyses show that the SFS Group’s strategy remains viable even under stricter regulatory framework conditions thanks to the ongoing decarbonization, the expansion of renewable energies and the electrification of core processes. Investments in efficiency gains, the local-for-local approach and the diversification of the supply chains are bolstering the Group’s ability to mitigate acute and long-term physical risks. The strategy’s resilience is also demonstrated by the fact that the financial effects of climate-related risks and opportunities are systematically assessed and incorporated into financial planning. These include potential losses in value (“stranded assets”) in energy-intensive processes as well as any opportunities that arise as a result of falling energy costs, efficiency gains and additional potential sales volumes.

The adaptability of the strategy is underpinned by three factors:

• Financial flexibility: Climate-related investments are incorporated into strategic financial planning
• Technological adaptability: Existing facilities are modified, decarbonized or replaced
• Future-oriented investments: Projects are funded in a targeted manner to mitigate and adapt to climate change

The results confirm that our business strategy is generally resilient to climate-related risks and at the same time unlocks opportunities to improve our competitiveness.

Impact, risk and opportunity management (E1-4, E1-5)

The SFS Group undertakes to actively contribute to environmental and climate protection beyond merely complying with legal requirements. Our group-wide Sustainability guidelines and our Code of Conduct provide a basis for this.

The main points set out in these documents are reducing our energy consumption, increasing the use of renewable energies and avoiding non-renewable resources. Products and services focus on their environmental, financial and social benefits.

The behavior of each and every employee helps us to protect the environment and climate. Our Board of Directors and Group Executive Board ensure that climate policy is regularly reviewed and further developed.

Measures being implemented

The climate strategy is implemented through a set of specific measures:

• Decarbonizing processes by increasing energy efficiency, electrifying production steps and gradually reducing the consumption of fossil fuels
• Increasing the share of renewable energies, by both acquiring renewable electricity and investing in our own facilities to generate power
• Optimizing supply chains within the scope of the local-for-local strategy to reduce transport emissions and increase resilience to climate-related risks
• Adapting the infrastructure by means of structural measures and insurance solutions in order to mitigate physical risks

SFS allocates the financial resources to implement these measures in a targeted manner. The investments in decarbonization measures intended for this purpose are an integral part of strategic financial planning. Progress and the use of resources are continuously monitored and recorded as part of group-wide ESG controlling.

Clearly on track to achieve the 1.5 °C target (E1-6)

The SFS Group is following a clear path toward achieving the 1.5 °C target until 2050 and has set itself ambitious goals for reducing greenhouse gas emissions.

• Scope 1 and 2: By 2030, Scope 1 and 2 emissions relative to net sales are set to be reduced by ≥90% in comparison with the 2020 reference year. In accordance with the requirements set by the ESRS, the reduction in emissions will be measured relative to net sales rather than per value-added franc as was previously used.
• Scope 3: Short-term and long-term SBTi targets have been rolled out in place of the previous intensity-based targets.

The targets for Scope 1 and 2 emissions cover 100% of the emissions inventory and are in line with the scope of the financial reporting. The text will clearly indicate instances where this is not applicable (see SBTi targets). In addition to CO₂ emissions, further gas emissions will also be measured as part of the collection of data for Scope 1 emissions: nitrogen oxides (NOₓ), sulfur oxides (SOₓ), particulate matter (PM₂.₅, PM₁₀) as well as non-methane volatile organic compounds (NMVOC) (see ESRS E2).

SBTi – short-term targets

• Reduction of the absolute Scope 1 and 2 greenhouse gas emissions by 60% by 2030 in comparison with the 2023 reference year
• Reduction of the absolute Scope 3 emissions in the categories “Purchased goods and services”, “Investments”, “Fuel and energy-related activities”, “Upstream transport and distribution”, “Waste generated in operations”, “Business travel”, “Employee commuting” and “Downstream transport and distribution” by 25% by 2030 in comparison with the 2023 reference year

SBTi – long-term targets

• Reduction of the absolute Scope 1 and 2 greenhouse gas emissions by 90% by 2050 in comparison with the 2023 reference year
• Reduction of the absolute Scope 3 emissions from the aforementioned categories by 90% by 2050 in comparison with the 2023 reference year

The long-term climate target for 2050 has been aligned with the SBTi 1.5 °C target and was validated at the end of 2025 (see also SBTi target dashboard). They cover approximately 90% of the emissions inventory for Scope 3 emissions. The categories “Capital goods”, “Use of sold products” and “End-of-life treatment of sold products” are not included.

The targets are reviewed regularly. Adjustments are made in response to significant changes to business operations, the organizational structure and the regulatory environment.

SBTi targets

Progress made in the energy mix (E1-7)

The energy consumption of the SFS Group is recorded at all relevant locations in line with the requirements set out in the Greenhouse Gas Protocol (GHG Protocol). It encompasses electricity, heat, process energy and fossil fuels. In order to comply with the consolidation scope of the financial reporting, the North American locations of the Triangle Fastener Corporation and Pro Fastening Systems Inc. brands as well as the locations of Hoffmann UK Quality Tools Ltd. and Hoffmann Quality Tools India Private Limited have now also been included in the reporting.

Interim targets achieved ahead of time

In the reporting year 2025, the share of self-generated, predominantly renewable electricity rose to 11.2%. This means that SFS has achieved its target of producing at least 10% of the electricity required by the Group itself by 2030 ahead of schedule in 2025. The share of consumed electricity from renewable sources increased to 81.5% (PY: 73.9%). This means that the interim target of drawing at least 50% of the energy consumed from renewable sources by 2025 has likewise been achieved ahead of time. SFS aims to increase this share to at least 90% by 2030.

The positive development compared to the previous year is attributable both to the 13.0% increase in the purchase of renewable electricity as well as on expanding its own electricity production by 69.9% . In 2025, the SFS Group expanded existing systems at the locations in China, Malaysia, Hungary and the USA and put additional systems into operation. Following the expansion of renewable energy sources, the share of electricity generated from fossil fuels and nuclear power was considerably reduced by –24.1% in comparison with the previous year.

Advancing the energy transition

SFS aims to continuously reduce energy consumption in relation to net sales and to further increase the share of renewable energies. The goal is to achieve this by expanding the Group’s own power generating systems and drawing more electricity from renewable sources.

Electricity production and consumption (limited assurance 2025)

Energy consumption (limited assurance 2025)

Energy production (limited assurance 2025)

Recalculation of energy intensity

In line with the requirements set out by the ESRS, energy intensity will now be calculated based on net sales, which means that it will no longer be calculated per value-added franc. See the table below for the relevant reconciliation.

Energy intensity (limited assurance 2025)

On track with the climate strategy (E1-8)

The SFS Group records and reports its greenhouse gas emissions in accordance with the requirements set out in the Greenhouse Gas Protocol (GHG Protocol). The direct emissions produced by burning fossil fuels and process-related sources (Scope 1), the indirect emissions from purchased electricity, heating and cooling (Scope 2, both market and location-based) as well as the main categories of upstream and downstream value chains (Scope 3) are factored into this. The emissions data is updated and consolidated on an annual basis. The potential effects of climate certificates and the extraction of greenhouse gases are not factored in. The emissions are recorded in accordance with the financial control principle, thus providing a transparent representation of our emissions. There are no other significant assets managed by the company outside of the consolidation scope.

Emissions reduced further on the whole

The 2.1% increase in Scope 1 emissions compared to the previous year is mainly related to slight volume growth in the manufacturing sector and the postponement of reduction projects. Scope 2 emissions, however, were reduced by –21.2%. This is primarily driven by the increased share of electricity from being drawn from renewable sources, particularly at the locations in China, Malaysia, Hungary and the USA. A total reduction of –9.9% was recorded for Scope 1 and 2 emissions in comparison with the previous year.

SFS reduced the intensity of greenhouse gas emissions by –10.3%. Compared to the 2020 reference year, this equates to a total reduction of –77.1%. SFS is thus on the right track to achieve the target of reducing Scope 1 and Scope 2 emissions by ≥90% by 2030 in relation to net sales, as set out in its climate strategy.

Compared with the adjusted prior-year figures, Scope 3 emissions in the reporting year declined slightly by –1.7%. In the “Purchased goods and services” and “Upstream transport and distribution” categories, this decline was mainly the result of reduced procurement volumes. Within the “Business travel” category, the reduction in travel as part of rigorous cost management led to a lowering of emissions, whereas a change in the product mix in the “Use of sold products” category generated additional emissions.

Greenhouse gas emissions, broken down by Scope 1–3 (limited assurance 2025)

Recalculation of the intensity of greenhouse gas emissions

In line with the requirements set out by the ESRS, the intensity of greenhouse gas emissions will now be calculated based on net sales, which means that it will no longer be calculated per value-added franc. See the table below for the relevant reconciliation.

Greenhouse gas intensity based on net sales vs. value-added franc (limited assurance 2025)

Greenhouse gas intensity (limited assurance 2025)

Removal of greenhouse gases and the use of emissions certificates (E1-9)

The SFS Group is primarily pursuing a reduction strategy focusing on energy efficiency, electrification and the expansion of renewable energies. There are currently no projects within the Group that focus on the active removal of greenhouse gases from the atmosphere.

Internal CO₂ pricing (E1-10)

To date, there is still no group-wide CO₂ pricing system in place that is a mandatory part of financial and investment decision-making.

However, an internal CO₂ price is already being used as an analytical instrument in risk management to evaluate the financial effects of climate-related risks in various scenarios. The internal price is reviewed regularly and applied differently depending on the region. The amount is based on the latest scientific findings, regulatory developments and the progress made in achieving group-wide emissions reduction targets (SBTi).

As part of its TCFD scenario analyses, SFS has already taken into account different CO₂ price levels across multiple scenarios, regions and time horizons to realistically assess the potential cost impacts on its business operations. The aim is to further develop the existing approach into a consistent and standardized instrument that is integrated into investment and financial planning in the medium term and supports the strategic management of climate-related risks and opportunities.

Outlook

Reducing greenhouse gas emissions and increasing energy efficiency remain the core elements of SFS’s corporate responsibility and long-term value creation. Targeted measures to reduce direct and indirect emissions as well as the integration of sustainable product and process solutions will help the SFS Group to make an active contribution to climate protection. At the same time, the company is strengthening its competitiveness and future viability in a changing market environment.

The climate scenario analysis is completely aligned with the TCFD recommendations and is fundamental to the strategic management of climate-related risks and opportunities. In the 2025 reporting year, based on the comply-or-explain approach pursuant to Art. 964b para. 5 CO, climate-related financial risks and opportunities will not be quantified, as the necessary methodological foundations and data processes are still being developed.

In future reporting cycles, the quantitative assessment of these risks and opportunities will be further expanded in order to continuously improve the basis for financial decision-making, the comparability of results, and the transparency of climate reporting.