Through a double materiality assessment, we identify material impacts and material financial risks and opportunities with regard to environment, social affairs and governance matters. We therefore report both overarchingly and on an issue-related basis on the processes and procedures for identifying impacts, risks and opportunities.
Description of the processes to identify and assess material impacts, risks and opportunities [IRO-1]
In 2025, we conducted a double materiality assessment in accordance with the ESRS. This assessment was based on extensive experiences and methods from earlier evaluations, such as our double materiality assessment in the previous year, our human rights risk assessment and the climate scenario analysis. In our analysis, we made the assumption that the planetary limits and the needs of our stakeholders are especially crucial for identifying issues. We also assumed that regulatory changes, economic conditions, technological progress, environmental changes and sustainability in the value chains will continue to significantly impact the materiality of certain aspects in the future.
There are several elements to our process for identifying, evaluating, prioritizing and monitoring the impacts on people and the environment. First, we identify potential material impacts by conducting comprehensive research, followed by a detailed assessment by our internal subject matter experts. Our experts also have the relevant knowledge regarding the opinions and perspectives of our external stakeholders. We then apply specific thresholds to prioritize the materiality of the identified impacts. Our process takes into account all significant activities and business relations in the Crop Science, Pharmaceuticals and Consumer Health divisions, as well as in our enabling functions. Here we particularly focus on our production activities and the resources used during these processes that can lead to an elevated risk of adverse effects. The process thus also involves analyzing the impacts that can result both from our own activities, such as research, development and production, and from our business relationships in the upstream and downstream value chain.
When conducting the double materiality assessment, we consult both external and internal experts to take into consideration the perspectives of affected stakeholders. Here we collaborate closely with our Sustainability Council, which comprises external sustainability experts. Before the evaluation of materiality begins, the Sustainability Council receives the list of potential key impacts, reviews it and suggests corresponding additional entries. This is intended to ensure that the opinions and concerns of relevant internal and external stakeholder groups are adequately taken into account. To prioritize and determine impact materiality, we use an average view with a threshold of 2.5 on a scale of 1 to 5. In our process, we prioritize impacts related to human rights by giving precedence to severity over likelihood.
The process for identifying, evaluating and prioritizing the financial risks and opportunities was implemented in close coordination with the Group-wide opportunity and risk management system. Under the ERM risk management process, risks are identified by risk managers in the divisions and enabling functions, taking into account a continuously updated risk universe that also includes ESG-related risks. ESG-related opportunities are also identified through the analysis of internal and external factors that influence our business.
The identified risks and opportunities are evaluated with regard to their potential scale and probability of occurrence using the risk assessment matrix. The evaluation of the scale is quantitative and/or qualitative and reflects a possible influence on cash flow. For the presentation in our Sustainability Statement, we define all ESG-related risks as material once they exceed the fundamental thresholds, which we have defined in the risk assessment matrix (more than €500 million potential damages). We define ESG-related opportunities as material once they have exceeded the thresholds of the risk assessment matrix for reporting in the Opportunity and Risk Report (more than €1,500 million potential damages and below 10% likelihood of occurrence or more than €750 million potential damages and above 10% likelihood of occurrence). For more information on our Group-wide opportunity and risk management system, please see Chapter A 3.2 Opportunity and Risk Report.
We take into account the material impacts as the input for identifying ESG-related financial risks and opportunities. This approach enables us to understand the potential links between the identified impacts and the associated financial risks and opportunities.
Within the scope of our risk management, sustainability risks are treated with equal importance to the other risk categories. The results of the materiality assessment are approved by the Board of Management to ensure that the material impacts, risks and opportunities are accounted for in strategic decisions. The management team of our Public Affairs, Sustainability and Safety Enabling Function contributes to the process for identifying, evaluating and managing impacts and risks, thereby enabling integration into the general management of our company. This also applies to the process for identifying, evaluating and managing opportunities.
The specific parameters and data sources used in the implementation of our double materiality assessment encompass internal data from our departments and the external perspectives of relevant stakeholders such as regulatory authorities, environmental organizations, suppliers, capital market participants, industry associations, customers, academic institutions and health services providers. We have already reinforced our entire process through various validation activities and are thereby further developing our internal control system. In 2025, we improved our methodology for identifying material impacts by increasing the number of internally involved subject matter experts, for example. We also improved our process for identifying material risks and opportunities by synchronizing it with our Group-wide opportunity and risk management system.
Description of the processes to identify and assess material climate-related impacts, risks and opportunities [E1.IRO-1]
In conducting our double materiality assessment, we analyzed impacts, risks and opportunities related to climate change. Here we particularly took into account the following sustainability matters:
Climate change adaptation
Climate change mitigation
Energy
We have reported for many years on our Scope 1, 2 and 3 greenhouse gas emissions according to the requirements of the Greenhouse Gas Protocol (GHG Protocol), and on the steps we have taken over the years to reduce our emissions. We therefore accounted for our experiences and findings in the double materiality assessment.
In addition, we have conducted a scenario analysis in the past several years, with which we evaluate our business activities to estimate the acute and chronic physical and transition risks. This analysis particularly includes the upstream and downstream value chains, based on the climate scenarios Green Road SSP1-1.9 and Rocky Road SSP3-7.0 and cover short-, medium- and long-term time horizons. In the future we want to further develop our scenario analysis with the focus on analyzing our sites.
The findings of the scenario analysis flow into our double materiality assessment and into the financial assessment of the physical and transition risks as part of our enterprise risk management (please see Chapter A 3.2 Opportunity and Risk Report). The results are also used to assess the impacts of climate-related matters (please see the section “Impact of climate-related matters” in Note [3] Reporting policies, methods and critical accounting estimates in Chapter B Consolidated Financial Statements). For more details of our scenario analysis and the identified risks and methodology of our analysis, please see the section “Description of the processes to identify and assess material impacts, risks and opportunities [IRO-1].” In the identification of climate-related issues, we also took into account scientific findings, particularly on climate change and the expected impacts on agriculture (including extreme weather events), as well as on human health. These findings were confirmed in the further identification of the topics and interaction with the stakeholders involved. The scenario analysis contributes to the analysis of the resilience of our business model and enables us to observe from various perspectives how risks and opportunities stemming from climate change influence our business. We do not currently see any restrictions with regard to the rededication, modernization or closure of existing assets, the adjustment of our product and service portfolio or the retraining of workers. To our knowledge, our scenario analysis did not identify any business activities that would be incompatible with the transition to a climate-neutral economy.
Description of the processes to identify and assess material pollution-related impacts, risks and opportunities [E2.IRO-1]
The topic of pollution was comprehensively accounted for in our double materiality assessment. In the identification, evaluation and prioritization of impacts, risks and opportunities in this area, we analyzed the following sustainability matters in particular:
Pollution of air, water and soil
Pollution of living organisms and food resources
Substances of concern and of very high concern according to ESRS
Microplastics
In the identification of impacts, risks and opportunities related to pollution, we analyzed in particular activities at our production sites that could increase the risk of adverse environmental impacts. Relevant stakeholder perspectives and sound specialist expertise were taken into account here. Additional consultations with affected communities have not been conducted specifically for the purpose of our double materiality assessment.
Description of the processes to identify and assess material water and marine resources-related impacts, risks and opportunities [E3.IRO-1]
The double materiality assessment process also analyzes the area of water and marine resources. To identify, assess and prioritize impacts, risks and opportunities in this area, we looked particularly at the following sustainability matters:
Water
Marine resources
We systematically examined our activities to identify actual and potential impacts, risks and opportunities related to water and marine resources. We conducted extensive research and evaluations here, focusing particularly on our production sites that could present an elevated risk of negative impacts on water resources. Relevant stakeholder perspectives and sound specialist expertise were accounted for in this process.
Description of processes to identify and assess material biodiversity and ecosystem-related impacts, risks and opportunities [E4.IRO-1]
Within the scope of our double materiality assessment, we identified, assessed and prioritized the impacts, risks and opportunities related to biodiversity and ecosystems.
The following sustainability matters were taken into account both when creating the list of all potential material impacts, risks and opportunities related to biodiversity, as well as when interacting with the stakeholders involved within the context of the double materiality assessment:
Direct impact drivers of biodiversity loss
Impacts on the state of species
Impacts on the extent and condition of ecosystems
Impacts and dependencies on ecosystem services
The findings in the reports by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) were also taken into account, especially with regard to the direct drivers of terrestrial biodiversity loss. When implementing our materiality assessment, we did not consult any potentially impacted communities to assess the sustainability of jointly used biological resources and ecosystems throughout our value chain. This is because we mitigate the potential impact of our sites on conservation areas in normal operations and implement a comprehensive package of policies, actions and targets to alleviate soil degradation and the decline in biodiversity on farmland.
According to IPBES, the biggest direct drivers of terrestrial biodiversity decline are land-use change, including the fragmentation and degradation of habitats, and intensified land use. Agriculture is one of the main causes of land-use change. The drivers of biodiversity loss due to land-use change include the expansion of agricultural and grazing land into natural habitats, the homogenization of landscapes (larger fields, fewer structural elements, tighter crop rotations) and intensified land use (e.g. through increased mowing frequency and increased nitrogen input in grassland management). These ecosystem impacts can vary widely from one region to the next.
In general, agriculture is more dependent than any other industry on natural cycles (such as water and nutrients), climate and cultivated crops, and different ecosystem services such as pollination and natural pest control. Transition risks (e.g. related to politics or our reputation), for example, related to biodiversity and agriculture in general therefore occur in value chains like ours, although these risks can vary broadly by region and in terms of our value chain. This also applies to systemic agricultural risks. In addition to the double materiality assessment process, we had already analyzed and assessed our sites with regard to potential impacts on biodiversity-sensitive areas and endangered species in 2024. We updated the number of relevant sites in 2025.
We focused on sites where our operations could potentially be relevant for nature. These include sites for the production and formulation of active ingredients for pharmaceutical and crop protection products, herbal medicines, nutritional supplements and seeds, as well as those with activities on agricultural fields and plant breeding sites and those for the mining of phosphate rock.
Using the World Database of Key Biodiversity Areas (KBA), the World Database on Protected Areas (PA) and the IUCN Red List of Threatened Species, we analyzed the geographic proximity of relevant conservation areas and endangered species to our 485 production sites, agricultural field and breeding stations, and mining operations. With an impact radius 10 times greater than the size of the respective site, we identified 38 sites near conservation areas (PA or KBA), including 18 production sites, 5 seed production facilities, 14 field and breeding stations and 1 phosphate mine. Six of these 38 sites are located near areas in which more than 10 different species are endangered (EN) or critically endangered (CR) according to the IUCN Red List.
We have currently not identified any sites that we consider material with regard to direct impacts on nearby conservation areas. Nonetheless, we strive to minimize our potential impacts on the environment. On the basis of compliance with legal and regulatory requirements as well as targeted, site-specific measures, we came to the conclusion that no additional remedial measures will have to be undertaken with regard to potential impacts on biodiversity.
Description of the processes to identify and assess material impacts, risks and opportunities related to circular economy [E5.IRO-1]
The topic of circular economy is an integral element of our double materiality assessment. In the identification, assessment and prioritization of impacts, risks and opportunities in this context, we employed methods such as extensive research and expert assessments. We also made assumptions about the recyclability of our products – whereby we took into account that not all products, such as pharmaceuticals, are suitable for repeated use – and utilized tools for prioritizing materiality to systematically record the impacts on humans and the environment. Here we particularly analyzed the following sustainability matters:
Resource inflows, including resource use
Resource outflows related to products and services
Waste
The analysis involved extensive research and evaluations, focusing particularly on production sites of ours that could present an increased risk of inefficient resource use or waste generation. The perspectives of relevant stakeholders and sound specialist expertise were accounted for in this process. No direct consultations were conducted with stakeholders as part of the double materiality assessment; instead, our findings were based on existing data and experiences obtained in continuous dialogue with our stakeholders.
Description of the processes to identify and assess material impacts, risks and opportunities related to business conduct [G1.IRO-1]
The topic of business conduct is also an element of our double materiality assessment. In the identification, assessment and prioritization of material impacts, risks and opportunities, we employed comprehensive research, expert assessments and materiality prioritization tools. Here we particularly analyzed the following sustainability matters:
Corporate culture
Protection of whistle-blowers
Animal welfare
Political engagement and lobbying activities
Management of relationships with suppliers including payment practices
Corruption and bribery
During this analysis, we took into particular consideration all relevant criteria, such as our company culture, our German and international sites, the size and market position of our company, the relevant sectors in which we are active and the specific requirements and challenges resulting from these factors.
Disclosure requirements in ESRS covered by the undertaking’s sustainability statement [IRO-2]
For an overview of the disclosure requirements according to ESRS covered in this report, please see Chapter A 4.5 ESRS Index. For an overview of the data points resulting from other EU legal regulations that were taken into account in the preparation of our Sustainability Statement, please see Chapter A 4.6 Data Points From Other EU Legal Regulations. Information is assessed as material or nonmaterial within the scope of our double materiality assessment according to the specifications described in ESRS 1, section 3.2. Data points are therefore considered material if they pertain to our material impacts, risks and opportunities and support users of our Sustainability Statement in their decision-making processes. For more details about our double materiality assessment, please see the section “Description of the processes to identify and assess material impacts, risks and opportunities [IRO-1].”