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bp Sustainability Report 2024 ContentsIntroduction Introduction from our chief executive officer 1Introduction from our EVP strategy,sustainability&ventures 22024 at a glance 32024 sustainability progress 4Our approach 5 Safety 6Ethics and compliance 8Our people 9Policies and practices 11Sustainability in our processes 14Identifying and managing risk 15Getting to net zero 16Our net zero aims 17Our aim for net zero operations 18Our aim for net zero sales 21An update on our retired net zero aims 24Net zero aims 2024 update 25Improving peoples lives 26Our people aim 27Just transition 27Inclusive culture 28Social investment in local communities 30Caring for our planet 32Our planet aims 33Biodiversity 33Water 35An update on our retired planet aims 37Engaging stakeholders 38Engaging with our stakeholders in 2024 39Our reporting 43Materiality 44About our reporting 45Glossary 46Deloittes limited assurance report 48Cautionary statement 50Our sustainability frameOur purpose is to deliver energy to the world,today and tomorrow.Our sustainability frame underpinsdelivery of our strategy and our new sustainability aims are focused on the areas most relevant to the long-term success of our business.These aims are supported by strong beliefs and foundations that help us dothe right thing on safety,emissions,human rights,biodiversity and other fundamental matters.We are working hard to embed sustainability across our group and to engagestakeholders inachieving our aims.Get to net zeroCare for our planetImprove peoples livesAbout our 2024 reporting Since launching our sustainability frame we have continued to work to embed sustainability across bp and have made progress in several areas.Our work in 2024 is covered in this report.Deloitte has assured selected key performance indicators in this report.Deloittes report is on page 48.In addition to this report our 2024 reporting suite comprises severalother elements:bp Annual Report 2024 bp ESG Data sheet 20 24 to navigate this reportGo to another page of this reportGo to an online referenceDefinitions in the glossary,pages 46-47 Our approachGetting to net zeroImproving peoples livesCaring for our planetEngaging stakeholdersOur reportingIntroductionPrioritizing safetyWeve also made progress on safety,reducing the number of combined tier 1 and 2 process safety events for a second year in a row,with the most serious tier 1 events down significantly in 2024 but we have more to do.Our goal is to eliminate fatalities,life-changing injuries and the most serious process safety incidents.Tragically,an employee in our newly acquired bp bioenergy business in Brazil was fatally injured in October 2024.We must continue to embed and reinforce our Operating Management System(OMS),Life-Saving Rules and Safety Leadership Principles across bp.See page 6.Simplifying and focusingOne outcome of simplifying our activities and of progress made to date is a more focused set of sustainability aims.We are now concentrating them on the five areas we believe are most relevant to the long-term success of our businesses:net zero operations,net zero sales,people,biodiversity and water.Youll find more details on this in Giulias introduction and throughout this report.Theres also more on how we continue to embed sustainability processes into business-as-usual activity on pages 8-15.Energy for today and tomorrowbps portfolio is predominantly oil and gas and we continue to invest in this core business.But the past five years have also seen us build strong positions in lower carbon energies.Using our skills,track record and partnerships,we are positioning bp for success in the changing energy system.We own the largest renewable natural gas business in the US,Archaea Energy.We own a top-three sugar cane bioethanol producer in Brazil,bp bioenergy.Lightsource bp is a leading global solar developer.Weve also announced plans to form a new joint venture with our partner JERA.Subject to regulatory approvals,this is set to give us a top-five position in offshore wind,helping to grow the business in a capital-light way for bp.Its been a team effort in every way.The energy transition has to be a collaboration between business,government and wider society,so thank you for your support.And thank you to the bp teams particularly those on the front line for helping us deliver.Murray AuchinclossChief executive officer March 2025 Introduction from our chief executive officer See the glossary on pages 46-47Since early 2024 weve been in action,materially reshaping bps portfolio and laying the foundations for a fundamentally reset strategy.Were now squarely focused on actions to drive performance and grow cash flow and returns for shareholders.This process included reviewing oursustainability aims.Sustainability in 2024In 2024 our operational Scope 1 and 2 emissions were 38%lower compared with 2019 levels,including reductions from divestments and emissions reduction activities.See page 18.We continued to optimize our portfolio,giving the go-ahead to two green hydrogen projects linked to our refineries.We also worked to high-grade our portfolio of potential hydrogen projects.And with our partners,we reached financial close on two major projects in Teesside,UK:the Northern Endurance Partnership carbon capture and storage cluster,and the Net Zero Teesside Power project.There was also a big moment for our EV charging business,bp pulse.In 2024 we sold our first terawatt-hour(TWh)of EV energy.bp Sustainability Report 20241IntroductionOur approachGetting to net zeroImproving peoples livesCaring for our planetEngaging stakeholdersOur reporting Introduction from our EVP strategy,sustainability&venturesProgress in 2024In his introduction,Murray outlines how bp has diversified its portfolio while continuing to invest in our core oil and gas business.We have been laying the foundations for growth and sustainability remains part of the balanced criteria we use for investment decisions.In 2024 we continued to make progress on our aims:y Net zero operations we made a number of investments in 2024,which we expect to reduce Scope 1 and 2 emissions while balancing new projects coming online.In 2024 we made final investment decision to invest with our partners in the$7 billion Tangguh UCC project,which will include our first at-scale enhanced gas recovery through CCUS.See page 19.y Methane reduction 2024 was the first year we reported using our new methane measurement approach.Based on this approach,methane intensity was 0.07 in 2024.Our real-time methane emissions data,coupled with our increased technical understanding,has shown us that methane emissions are generally lower across our operations than previously reported using our old approach.It has also helped us identify where additional mitigation measures might be needed.See page 20.y Net zero sales we have new and growing businesses and partnerships across bioenergy,EV charging,renewables and power and hydrogen.These are attractive commercial opportunities which also contribute to reducing the carbon intensity of the energy products we sell.For instance,we expanded in supplying power to commercial and industrial customers,through our purchase of GETEC ENERGIE in Europe.See page 21.y People we continued our labour rights and modern slavery assessments of high-risk tier1 suppliers and advanced our just transition work with our partners on projects in the UK,USand Australia.y Planet we now have seven projects currently developing net positive impact(NPI)plans for biodiversity.And we reduced freshwater use in our refineries and operations in Europe and the US.Our bpx business in the US,invested in new wells at its Eagle Ford facilities,enabling it to usebrackish water instead of fresh water.These are great examples but there is much more to do,and we have a committed team to do it.It is five years since we introduced a strategy underpinned by our sustainability frame,and I am pleased with how far we have come.Our net zero,people and planet aims stretched an organization already in action and helped to change how we operate.They also added value to bp in other ways,such as driving down costs in some cases.Their structure,and their scope,gave us a framework to continue embedding activities andprocesses into the way we work.Net zero salesOur aim is to reduce to net zero the average lifecycle carbon intensity of the energy products we sell by 2050 or sooner,enabled by supportive government policies and the decarbonization of energy demand.Net zero operationsOur aim is to reach net zero by 2050 or sooner for Scope 1 and 2 emissions within bps operational controla including by maintaining near-zero methane intensity across our operated producing assets,enabled by supportive government policies.PeopleOur aim is to support our employees and local communities through the energy transition.BiodiversityOur aim is to support biodiversity where we operateb.WaterOur aim is to reduce our net freshwater use in stressed catchments where we operate.Looking ahead Focused aimsWe will continue our work on our sustainability frame,including the activities that now fall within our day-to-day work.We are now focusing our aims on those that are most relevant to the long-term success of our business.It is more apparent now than ever before that our progress towards our net zero ambition depends on how fast and how far society moves on policy,demand and lower carbon investment and our updated net zero aims reflect this.Thank youIt is only with the support and challenge of many of you reading this that we have achieved as much as we have.To our teams,partners,suppliers,our investors and the communities we work with,thank you.I believe that our focused aims and sustainability frame position us to deliver even more in the coming years.Giulia ChierchiaEVP strategy,sustainability&ventures March 2025a On a CO2e basis.b At our new in-scope bp operated projects and major operating sites.See the glossary on pages 46-47page 18page 21page 27page 33page 35bp Sustainability Report 20242IntroductionOur approachGetting to net zeroImproving peoples livesCaring for our planetEngaging stakeholdersOur reporting 2024 at a glancea This figure reflects new acquisitions and companies we have taken full ownership of including bp bioenergy and Lightsource bp.b Conversion to mboe based on gasoline gallon equivalent(1 MMBTu=8.04 gallons).See the glossary on pages 46-47We are an integrated energy company,one of only a few that can deliver energy at global scale through a decades-long energy transition.We are inaction to grow shareholder value,strengthen bp and build our resilience to deliver energy to the world,today and tomorrow.We have operations in Europe,North and South America,Australasia,Asia and Africa.Payments to partners and suppliers$146.6 bn(2023$151.7bn)Dividends$5.0 bn(2023$4.8bn)Total economic value generated by bp$197 bn(2023$215.2bn)Value creationUpstream production2.4 mmboe/d(2023 2.3mmboe/d)Biogas supply volumes23 mboe/db(2023 22mboe/d)Our 2024 performanceEmployees100,500a(2023 87,800)Countries of operation61(2023 61)Underlying replacement cost(RC)profit$8.9 bn(2023$13.8bn)About bpStrategic convenience sites2,950(2023 2,850)Electric vehicle charge points 39,000(2023 29,000)Developed renewables to FID(net)8.2 GW(2023 6.2GW)Installed renewables capacity(net)4.0 GW(2023 2.7GW)Taxes to governments$10.6 bn(2023$11.9bn)Benefits paid to employees$11.2 bn(2023$10.3bn)Social investment spend$76 msupporting additional initiatives to benefit communities(2023$117m)Tier 1 and 2 process safety events38(2023 39)bp Sustainability Report 20243IntroductionOur approachGetting to net zeroImproving peoples livesCaring for our planetEngaging stakeholdersOur reportinga In 2024 reported absolute methane emissions from upstream major oil and gas processing sites are based on our new measurement approach.Prior to 2024 these emissions were calculated using a different methodology and therefore the methane intensity reported in those years and calculated using that data does not directly correlate to progress towards delivering the 2025 target.Prior year data is provided for information purposes,and we do not seek to directly compare prior years.b On an updated methodology basis.See page 21.See the glossary on pages 46-472024 sustainability progressSome examples of our work across our three focus areas.Getting to net zeroImproving peoples livesCaring for our planetFostering an inclusivecultureIn India,we launched an attraction campaign called bp works for women aimed at increasing job applications from women who want to build a career in the energy industry.Just transitionWe continued our work in Teesside,UK,to help local people prepare for jobs in low carbon industries.At Redcar&Cleveland College,41students have now enrolled in the bp-supported Clean Energy Technician Scholarship programme.Biodiversity We have started to apply our net positive impact(NPI)methodology on new in scope projects,and by the end of 2024 seven projects were developing NPI plans.WaterAt our bpx energy Eagle Ford facilities in the US,we have invested in four new water wells that enable us to use brackish water instead of fresh water in our commissioning operations.Nearly 550,000m3 of brackish water from these wells was used in 2024.Unlocking growth in bioenergyWe took full ownership of bp Bunge Bioenergia in 2024.Now called bp bioenergy,the company is one of Brazils leading biofuels companies,with the capacity to produce around 50,000 barrels a day of ethanol equivalent from sugar cane,across five Brazilian states.Supporting livelihoods in OmanIn 2024 we celebrated 10 years of our social investment programme in Oman.In that time,we have invested$30 million to deliver more than 150 initiatives that support education,enterprise development and environmental sustainability.These areas align with our sustainability frame and Omans 2040 vision,which sets pillars and priorities for the countrys social and economic planning from 2021 to 2040.Enhancing biodiversity at Cherry Point refineryCherry Point refinery,US,is located close to hundreds of acres of wetland which are home to many different species of animal wildlife,grasses,trees and shrubs.We are trying to preserve and enhance this native biodiversity by creating more than 470 acres of new wetland just outside the refinery perimeter.We have developed a five-year biodiversity enhancement plan,underpinned by our use ofnew technologies to map and monitor biodiversity.0.07%methane intensity(2023 0.05%)aNet zero sales6%reduction in average lifecycle carbon intensity of energy products we sell,against the 2019 baseline.(2023 5%)b38%reduction in combined Scope 1 and 2 emissions,against the2019 baseline.(2023 41%)Net zero operationspage 18page 19page 21page 28page 29page 33page 35page 23page 30page 34bp Sustainability Report 20244IntroductionOur approachGetting to net zeroImproving peoples livesCaring for our planetEngaging stakeholdersOur reportingIn this section Safety 6Ethics and compliance 8Our people 9Policies and practices 11Sustainability in our processes 14Identifying and managing risk 15Our approachOur approach to sustainability is built on strong foundations,which guide the way we work andsupport our sustainability frame and net zero,people and planet aims.In 2024 we continued to take action on sustainability across bp.Block 61,Khazzan gas field,Omanbp Sustainability Report 20245Our approachGetting to net zeroImproving peoples livesCaring for our planetEngaging stakeholdersOur reportingIntroductionOur operating management system(OMS)a provides a single framework for our operations.It defines a consistent approach to managing our operational activities helping us to improve performance in delivering safe,reliable and compliant operations.It brings together bp requirements on health,safety,security,and environment(HSSE),social performance and operational reliability,and supports the implementation of key programmes.These programmes include our Safety Leadership Principles and the International Association of Oil&Gas Producers(IOGP)Life-Saving Rules and Process Safety Fundamentals.Our Safety Leadership PrinciplesOur five Safety Leadership Principles are designed to guide behaviour and ways of working across bp to drive a strong,consistent safety culture.They are informed by human performance and support a culture of care by helping us understand how people interact with their workingenvironment and may sometimes makemistakes related to safety.In 2024 we took further steps to help our people use and benefit from the Safety Leadership Principles,particularly to support their psychological safety.For example,we offered training to more employees in operations about how to incorporate the principles into daily conversations at work,stressing that psychological safety means sharing whatever is on their minds,including any challenges to executing their work Rules Industry standardization and consistent rules,including the IOGP Life-Saving Rules,help improve safety performance.Approximately 80%of personal safety incidents in the oil and gas industry that result in fatalities and life-changing injuries involve activities covered by these rules.In 2024 we started measuring the effectiveness of the rules in operating businesses that had implemented them in 2023.We also continued to embed them and reinforce conformance across our other businesses through safety inductions,team safety talks,and control of work systems.To help assess how the rules have been implemented and their effectiveness in driving improvements,the HSE&C operational safety team made several site visits.These covered production in Azerbaijan,refining in Spain,and terminals,pipelines and bpx energy in the US.These visits provided invaluable insights about how to integrate the Life-Saving Rules more effectively atother SafetyLife-changing injuriesWe record and report life-changing injuries against the IOGP industry-standard definition.This reporting metric is intended to help sharpen our focus on risks with the potential to cause fatalities or life-changing injuries.Using digital solutionsIn 2024 we stepped up the implementation of new digital systems and enhanced existing tools to helpus improve our safety performance.These aredesigned to provide access to data,help us standardize processes,and support collaboration and agile working.They include:y IRIS,our HSSE recording and reporting system,which we made more intuitive for users.y LENS,a user-friendly platform developed to streamline the way we learn about safety and share knowledge across bp.It has helped improve the way we share information about personal,process,and other safety incidents,including their potential causes,so we can do more to reduce the risk of similar events inthe future.y Nova,an integrated management tool,which we started rolling out to help our workforce manage risks,monitor controls,and uphold safety measures.At bp,safety comes first.We want to improve our safety performance and continue working towards our goal of eliminating fatalities,life-changing injuries and tier 1 process safety events.a For recently acquired businesses,there is typically a transition period while bps operating standards,as set out in our OMS,are integrated or aligned.b In October 2024 bp acquired the remaining 50%of bp Bunge Bioenergia.Shortly after the acquisition was completed,an incident occurred which resulted in a fatality.At the time of publication,bp bioenergy safety processes were still being integrated into bps reporting processes,during an initial transition period for acquired businesses,and as such,this fatality is not included in reported fatality data for 2024.c At the time of publication,during an initial transition period for these acquired businesses Archaea Energy,TravelCenters of America,Lightsource bp and bp bioenergy safety reporting processes were still being integrated into bps safety reporting processes and as such,their safety performance data are not included in reported data for 2024.See the glossary on pages 46-47We also increased the use of new technologies to improve operational safety.For example,for sites where we have drilling activities,we implemented an additional monitoring process.Technologies that monitor drilling activities for potential indicators of risk are now reviewed both on site and remotely by bp experts at our Houston,US,and Sunbury,UK,offices.Consequently,we can identify necessary improvements earlier.And in the US,bpx energy is using AI to help address driving safety.You can read more about this innovative approach in the case study on page 7.Personal safetyWe deeply regret the fatality and four life-changing injuries that occurred in 2024.In October an employee of our recently acquired bp bioenergy business in Brazilb was fatally injured during an operational activity.In May,a contractor in our Wells Trinidad business and an employee at our TravelCenters of America business in the USc suffered life-changing injuries during manual activities.In September at one of our Thorntons retail stores in the US,two employees suffered life-changing injuries during an incident involving amember of the public who was carrying a firearm.We have offered our support to the families and employees affected.We know we have more work to do on safety,so we are taking action to leverage lessons learned from these incidents to help us improve our safety performance.bp Sustainability Report 20246Our approachGetting to net zeroImproving peoples livesCaring for our planetEngaging stakeholdersOur reportingIntroductionWe made further progress in preventing and reducing spills.In 2024 there were 96 oil spillsd compared with 100 in 2023 and 108 in 2022.Our operating sites share examples of good practices and our central health,safety,and environment incident investigations team investigates serious or complex incidents so systemic gaps can be identified and addressed.The introduction of our new learning tool,LENS,in2024,has improved the way we share information about incidents.Tier 1Tier 280402060020202021202217532023164620249351733303Process safety eventsb,c(number of incidents)2024 personal safety performanceIn 2024 our recordable injury frequencya(RIF)increased by 8.5%.Our businesses have identified underlying patterns for these injuries and developed plans intended to help reduce them in the future.Driving safetyDriving continues to be one of the biggest personal safety risks we face at bp.In 2024 five severe vehicle accidents occurred,a decrease from seven in 2023.The number of kilometres driven fell by 11%during the same period.Advancing safety through AIIn 2024 bpx energy implemented new artificial intelligence(AI)technology across its operations in the Permian Basin in Texas,US.This technology assesses driving hazards and risks in real-time and provides in-vehicle alerts to help drivers take preventative action to avoid collisions or other incidents.It identifies and warns drivers about a range of risks,including dangerous driving behaviours and fatigue giving them critical extra time to respond.The use of this technology helped bpx energy reduce driver distraction events by 89%and tailgating events by 75tween December 2023 and December 2024.We are now considering implementing this technology in other bp businesses.Process safetyWe encounter our most significant process safety risks in our production&operations business,primarily in refining and production activities.In 2024 we made improvements to mitigate these safety risks by strengthening both our process safety risk barriers and the requirements in our OMS.In refining we started to implement a mechanical integrity framework that is designed to improve equipment integrity and consistency and the way we address related incidents.We carry out regular progress reviews of our process safety improvement plans for refining and production.Across bp-operated businesses in which more process safety risks exist,we are implementing the IOGPs Process Safety Fundamentals.These set out 10 principles designed to help improve awareness of process safety risks,for example,the need to respect hazards and sustainbarriers.Many of the Fundamentals reinforce processes within our OMS.2024 process safety performancebOur combined reported tier 1 and tier 2 process safety eventsc(PSEs)generally reduced during the last 12 years,apart from in 2019.We reported a total of 38 PSEs in 2024 compared with 39 in 2023.While we reported more tier 2 PSEs 35 compared with 30 in 2023 we reported our lowest number of tier 1 PSEs which are more consequential than tier 2 events,as3(2023:9).Emergency preparednessThe scale and geographical spread of our operations mean we must be ready to respond to a range of possible disruptions,including emergencies.We maintain disaster recovery,crisis,and business continuity management plans and work to build day-to-day response capabilities to support local management of incidents.We regularly test our plans and preparedness through exercises that simulate real-life situations.In 2024 we conducted 25large-scale exercises,including:y In July,an exercise in Indonesia with 350 participants including key bp stakeholders and visitors.The exercise featured an earthquake scenario.y In September,our US onshore businesses simulated a digital disruption event with 200 participants to assess our response capability toa major cyber-attack on bp systems.Industry collaborationWe contribute to the development and sharing of best practice safety standards and protocols through collaboration with global safety bodies,including the IOGP.In addition,to contribute to discussions,our senior leaders often take part in presentations at safety-related industry conferences.bp Sustainability Report 20247a The number of reported work-related incidents that resulted in a fatality or injury.b At the time of publication,during an initial transition period for these acquired businesses Archaea Energy,TravelCenters of America,Lightsource bp and bp bioenergy safety reporting processes were still being integrated into bps safety reporting processes and as such,their safety performance data are not included in reported data for 2024.c Tier 1 events are losses of primary containment from a process of greatest consequence,causing harm to a member of the workforce,damage to equipment from a fire or explosion,a community impact,or exceeding defined quantities(per API RP 754 tier 1 definitions).Tier 2 events are those of lesser consequence(per API RP 754 tier 2 definitions).d The number of accidental or unplanned losses of hydrocarbon from primary containment from a bp or contractor operation,irrespective of any secondary containment or recovery.Oil spills 1bbl are defined as any liquid hydrocarbon release of more than,or equal to,one barrel(159 litres,equivalent to 42 US gallons).Our approachGetting to net zeroImproving peoples livesCaring for our planetEngaging stakeholdersOur reportingIntroductionAt the date of this report(March 2025),references to how bp approaches various matters do not,or may not,apply to some acquired businesses.This is because integration plans are developed to transition acquired businesses into bps system of internal control(a holistic set of internal controls that includes policies,processes,management systems(including OMS),organizational structures,culture and standards of conduct employed to manage bps business and associated risk)over an appropriate timeframe.Ethics and complianceOur code of conductOur code sets standards and expectations for how we do the right thing and empowers us to speak up without fear of retaliation.It is the foundation of Who we are,our culture frame,and it puts safety first.Together with our Safety Leadership Principles and OMS,it helps us make safe and ethical decisions,act responsibly,comply with applicable laws,and implement our sustainability frame.Our code applies to all bp employees,officers and board membersa.Regular mandatory training and communications help our employees understand how to apply it and raise questions or concerns.All bp employees are required to confirm annually that they have read and understand our code and act in accordance with its principles.We expect and encourage all our contractors and their employees to act in ways that are consistent with our code.Read more about Who we are on page upOur code reinforces the importance of speaking up about anything that is unsafe,unlawful or inconsistent with its content,and makes it clear that everyone who works for bp has a responsibility to do so.It emphasizes line managers responsibility to listen and act when concerns are raised,and the importance of non-retaliation.It also provides an overview of our concerns management process.We do not tolerate retaliation of any kind and consider it to be misconduct.Any concerns or enquiries,including those related to human rights,can be raised through multiple speak up channels.These include line managers,senior leaders and contacts in our people&culture,ethics&compliance,safety&operational risk assurance,or legal teams.We also have a confidential global helpline,OpenTalk.It is always open and accessible by phone or internet in more than 75 languages to bp employees,the wider workforce,communities,business partners and other stakeholders.Anyone has the right to contact OpenTalk anonymously,except where this is prohibited by law.We promote OpenTalk in our operated businesses,for example during inductions and daily team meetings,and by displaying promotional posters on-site.These may include coaching ortraining,formal reprimands and employee separations.In 2024 around 250 employee separations resulted from non-conformance withour code,including unethical behaviour c.We monitor trends in our Pulse annual survey data to help us mitigate issues related to misconduct.Read more about our Pulse surveys on page 10.Anti-bribery and corruptionManaging bps key enduring risks,including our exposure to bribery and corruption,is essential.We operate in parts of the world where bribery and corruption present high risks,so it is important that we engage with our employees,contractors,suppliers and others to emphasize that our commitment to ethical and compliant operations is unwavering.Our code explicitly prohibits engaging in any form of bribery or corruption and includes an expectation that we work to make sure our business partners comply with our requirements.Our group-wide policies on anti-bribery and corruption,anti-money laundering and anti-tax evasion,and related procedures all include measures and guidance to assess and mitigate risks,understand relevant laws and report concerns.They apply to all bp-operated businesses.Where bp is not the operator,we have processes in place to manage our interests including guidance to help bp asset managers influence operators in line with our expectations.We provide appropriate training for employees in roles assessed to be at a higher risk of bribery and corruption.In 2024 around 5,900 employees completed anti-bribery and corruption training as part of our ethics&compliance risk-based learning.Our approacha For recently acquired businesses,there is typically a transition period while bps ethics and compliance standards,as required in our code,are integrated or aligned.b Excludes duplicate concerns.c This total excludes exits of contractors,suppliers,and vendors.See the glossary on pages 46-4720212022202320243,0002,0001,5005000Non-retailRetail2081,1303171,1346006291,6502,5001,0241,8171,000Total number of concernsb and enquiries raised More than 2,800 concerns and enquiries were reported in 2024(compared with around 2,250 in 2023).This increase can be attributed to a greater number of concerns from our retail sites and from bp bioenergy,since we took full ownership inOctober 2024.The concerns most frequently raised in 2024 related to bullying,harassment and discrimination,with these accounting for around 60%of all concerns.The second most common concern related to health,safety,security and environment(HSSE).Given the increase in bullying,harassment and discrimination concerns,we conducted a review of the concerns raised and identified appropriate actions to try to mitigate the issues raised.We take potential misconduct seriously and thoroughly review and respond to it,conducting investigations where appropriate.We follow a defined disciplinary process and issue sanctions as necessary.bp Sustainability Report 20248Our approachGetting to net zeroImproving peoples livesCaring for our planetEngaging stakeholdersOur reportingIntroductionWe assess our exposure to bribery and corruption risks when working with suppliers and business partners.If appropriate,we put in place a risk mitigation plan and will choose not to work with a counterparty,or to reject tenders,based on the results of our risk assessments.We also conduct anti-bribery compliance audits of selected suppliers when contracts are in place.We take corrective action with suppliers and business partners that fail to meet our expectations.This may include terminating contracts.Read more about our anti-bribery and corruption programme at Industries Transparency Initiative The Extractive Industries Transparency Initiative(EITI)aims to promote transparency and accountability in the ways that countries manage their natural resources to benefit their citizens.Through the EITI Standard,countries are encouraged to make disclosures relating to tax,revenues,contracts and licences linked to the extractive industries.This is intended to improve understanding of the economic contribution of the extractive industries and mitigate corruption risks.We are a founding member of the EITI and sit on its board,which sets priorities for the organization and evaluates countries progress in meeting the EITI Standard.We also actively participate in national multi-stakeholder groups in Trinidad and Tobago,Mauritania and Senegal.We support the EITIs initiative to encourage beneficial ownership transparency and we use beneficial ownership information in a risk-based manner when conducting due diligence on our counterpartiesa.We also back governments efforts to encourage and promote contract transparency when appropriate because we recognize its importance in improving understanding of our industry,encouraging accountability and building trust.We contribute to the public disclosure of contracts and licences consistent with government procedures in EITI-implementing countries wherewe have a presence.Political donationsWe prohibit the use of bp funds or resources to support any political candidate or party.We recognize the rights of our employees to participate in political processes and these rights are governed by the applicable laws in the countries where we operate.Our position on political activity is set out in our code.In the US we provide administrative support for the bp employee political action committee(PAC)a non-partisan,employee-led committee that encourages voluntary employee participation in the political process.The bp employee PAC is governed by a board of directors and administrative by-laws.All of the contributions it makes are weighed against its criteria for candidate support and reviewed for legal compliance before funds are sent to the recipients,and publicly reported in accordance with US election laws.Contributions made by the PAC are from employee contributions and not from bp funds.Tax transparency We take a responsible and transparent approach to tax and work to create open,constructive relationships with governments and tax authorities.Our responsible tax principles,which align with our code and beliefs,provide a framework for responsible tax behaviour.We comply with the tax legislation of the countries in which we operate,and do not tolerate the facilitation of tax evasion bypeople who act for or on behalf of bp.Taxes paid to governmentsb($million)202020212022202320248,0006,0004,00012,00010,0002,00014,00003,3375,37812,45311,93410,587In 2024 we continued to pay higher rates of tax due to windfall taxes on energy producers and suppliers.For example,in the UK the energy profits levy means that we pay 75%tax(78%from 1 November 2024)on our North Sea profits.As our taxes are largely based on profits,if they increase,we pay more Beneficial ownership refers to the individual who ultimately owns or has significant influence or control over the entity(UK EITI).b Comprises corporate income and production taxes.Our people Our people are crucial to delivering our purpose,strategy and aims.We enable them to succeed with bp through the culture we create,by investing in their professional development and by focusing on employee wellbeing and inclusion.Our cultureOur culture frame,Who we are,defines what we stand for and is integrated into our code of conduct.It sets out our three core beliefs Live our purpose,Play to win,Care for others and is underpinned by our commitment to safety.In 2024 we continued to embed Who we are across bp,through the work of our Changemakers,a growing bp community of more than 2,600 employee champions committed to role modelling Who we are and adopting new ways of working.We monitor and act on employee sentiment in various ways,including through our Pulse annual employee survey,which helps guide our action on culture.For example,on the basis of our 2023 survey,we identified psychological safety and inclusion as focus areas,so in 2024 we provided practical tools to employees and line managers to encourage inclusion and speaking up.More than 14,000 employees registered for our Growth Week in May 2024,which included sessions devoted to inclusion and psychological safety.bp Sustainability Report 20249Our approachGetting to net zeroImproving peoples livesCaring for our planetEngaging stakeholdersOur reportingIntroductiona Previously referred to as bps aim 7(incentivizing employees).See the glossary on pages 46-47Employee sentiment Our 2024 Pulse annual survey was sent to all eligible employees including for the first time all employees in our retail business.We also ran our Pulse live survey,which was sent weekly to a representative sample of around 8%of employees,and discussed specific topics in employee focus groups.In the 2024 Pulse annual survey our overall engagement score decreased by three points to70%,in line with 2022 levels,with a completion rate of 82%.In our retail business we achieved an engagement score of 68%andcompletion rate of 77%.Based on our overall Pulse survey results for 2024,we set three focus areas for improvement in 2025 psychological safety,competitiveness,and understanding of our strategy and performance.At board level,in late 2024 our Who we are culture oversight committee was absorbed into our people,culture&governance committee whose responsibilities include monitoring culture.Members of our board also participate in employee engagement sessions focused on culture.Read more in the bp Annual Report Sustainability NetworkOur Global Sustainability Network(GSN),created and led by employees,helps embed sustainability in our culture.It brings together people from across bp to connect,educate and act on sustainability.Since its launch in 2021,GSN membership has grown to more than 6,000 people who meet through 16 chapters across more than 50 countries.The GSNs activities in 2024 included sharing knowledge with sustainability-related employee networks in other companies and hosting events that reached approximately 2,000 people,to support delivery of the GSN strategy.Building capability and developing our peopleWe support training,education and employability initiatives to help our employees and members of the wider community acquire the skills needed now and in the future.We also build skills forecasts and implement capability plans for our businesses.We have several organizational transformation initiatives underway including building and scaling up our Business&Technology Centres in India,Malaysia and Hungary.We are investing in workforce development in these locations,including bespoke induction programmes to introduce new employees into our culture.And we are providing support to our leaders to help them understand relevant local regulations.Training and developmentIn 2024 bp employees collectively completed more than 1.2 million hours of formal learning(2023 1.3 million hours).This learning takes place within a development frame applicable to all employees.It covers safety,technical and operational skills,leadership,and future skills.Our development offer includes a mandatory curriculum focused on conformance with our internal standards and compliance with applicable laws and regulations.Evolving our culture requires our people at all levels to lead differently.Our Reinventing Leadership programme is designed to support and equip them to deliver bps strategy,while acting as role models and helping us build a culture of psychological safety.By the end of 2024 more than 10,000 bp employees had completed a Reinventing Leadership course.Recognizing that on-the-job development is one of the most important ways that people acquire and develop key skills,all our permanent employees have access to a performance development platform called Focusbp.It allows users to set developmental goals,complete regular check-ins,get real-time feedback and review their progress.Focusbp also forms the basis for discussions related to development and progression.Sustainability training and developmentIn 2024 we took steps to shape and increase the visibility of sustainability in our employee development offer.For example,we:y Collated sustainability learning across bp in a single repository that includes general sustainability for all learning and more in-depth options for those in specialist roles.y Developed and ran a new sustainability masterclass for first-level and senior leaders aspart of our Reinventing Leadership offer.y Piloted a Sustainability in Operations programme specifically focused on embedding a sustainability culture in our front-line activity.Community STEM and education initiativesMany of our long-running initiatives are focused on promoting science,technology,engineering,and mathematics(STEM)skills,particularly in disadvantaged communities where social mobilityfor many people is limited.Read more about enabling a just transition on page 27Fair wage and remunerationWith support from the Fair Wage Network,we have learned a lot from our annual wage reviews since 2020.We intend to embed our approach to fair wage into existing pay review processes alongside annual governance reviews.We plan for decisions on wages to be based on a range of sources,including fair wage data,market pay sources andlocal market conditions,as we do now.Linking remuneration to sustainabilityaOur annual bonus for all eligible employees,including the bp leadership team,has been linkedto a sustainability measure since 2019.The bonus scorecard for 2025 against which our eligible employees are measured,incentivizes them through three themes:safety and sustainability(30%of which sustainability makesup 15%),operational performance(15%),and financial performance(55%).For 2025 our sustainability measure is linked to our operated carbon emissions and covers all increases and reductions in those emissions over the year.This measure covers the same Scope 1 and 2 emissions reported as part of our net zero operations aim.See page 18.bp Sustainability Report 202410Our approachGetting to net zeroImproving peoples livesCaring for our planetEngaging stakeholdersOur reportingIntroductionOur 2022-24 long-term incentive plan scorecard was also linked to our operated carbon emissions performance.As with the bonus scorecard,for 2025-27 we are using an absolute percentage reduction in operational emissions against our 2019 baseline as the basis for measuring progress against our net zero operations aim in our long-term scorecard.Read more in the bp Annual Report 2024 pages 88-110Workforce health and wellbeingOur approach to workforce health and wellbeing is based on our employees needs.It comprises group-wide services and regional support focused on specific issues.We promote our services to encourage employees to make best use of them.We met our 2025 objective to offer all bp employees access to our wellbeing platforms with the launch of our global digital resources hub,Thrivebp,in 2023.The hub can help employees improve their wellbeing and access useful information.We widened the range of its services in 2024 with the addition of our change-and transformation-related content,information on understanding and managing menopause,and the launch of targeted virtual wellbeing check-ins.We took extra steps to support employees wellbeing following the announcement of a transformation programme across bp by providing them with wellbeing resources and support.By the end of 2024 more than 50%of our group leaders had completed our Healthy Minds training.The training is designed to help leaders provide support to their teams on mental health challenges.See page 39.The effectiveness of our health and wellbeing services is reflected by the high scores achieved in the employee wellbeing index in our Pulse annual and weekly Pulse live surveys.In the 2024 Pulse annual survey our employee wellbeing score increased by one point to 73%(2023 72%).For the second year running,the score for employees who feel supported to manage their work-life balance increased,reaching 78%(2023 74%).Launching new health hubs To meet our businesses needs,we have set up regional health hubs,including five new ones in 2024 in the Middle East and North Africa,Central and Southern Africa,Australia and New Zealand,Indonesia,and India-Malaysia.With two existing hubs in the UK and Azerbaijan-Georgia-Trkiye,wenow have seven hubs in total.The hubs provide our businesses,our employees and their families,with access to a wide range of relevant health resources.These resources include expert advice on occupational health and industrial hygiene,wellbeing programmes,on-site medical services and public health advice relevant to the needs oflocal communities.Policies and practices Our policies and practicesa set expectations and requirements for how we manage environmental and social performance before,during and after our activities.As part of our ongoing work to embed sustainability across bp,we review and periodically update these policies and practices to make sure they reflect our sustainability frameand aims.Our operating management system Our operating management system(OMS)provides a single framework for delivering safe,reliable and compliant operations.It includes environmental,carbon and social requirements related to our sustainability frame.These requirements apply to businesses over which we have operational control.All our major operating sites attest or certify to ISO14001,in line with our OMS requirementb.Social policies and practicesBoth our code of conduct and OMS contain requirements and guidance about the need to respect the rights of workers and community members.Our OMS requires all projects and operations where we are the operator to identify and engage with affected people in a manner that respects their rights.Our OMS also sets out that projects and operations need to ask for feedback on their proposed or actual activities,considering any sensitivities around livelihoods,land,environment and culture.Human rights Our human rights policy remains a foundation of our approach to sustainability.We respect the rights of our workforce and people living in communities where we operate,who are potentially affected by our activities.We focus on labour rights,security and human rights,the rights of individuals in potentially vulnerable groups(including indigenous peoples rights),potential impacts on livelihoods,and access to water,land and resources.Human rights policyOur human rights policy aligns with the UN Guiding Principles on Business and Human Rights.It is underpinned by the International Bill of Rights and the International Labour Organization(ILO)Declaration on Fundamental Principles and Rights at Work,including its Core Conventions.Labour rights and modern slavery principlesThese principles state our commitment to respect workers rights in line with the ILO Core Conventions on Rights at Work,and our expectation that contractors,suppliers and joint ventures do likewise.Our principles cover prevention of abusive or inhumane practices,such as child labour,forced labour,trafficking,slavery or servitude,and discrimination or harassment.Read our human rights policy,LRMS principles and our modern slavery and human trafficking statement: For recently acquired businesses,there is typically a transition period while bps policies and practices are integrated or aligned.b Our Mauritania and Senegal gas business became a major operating site in 2023 and is working towards ISO certification or attestation as per our OMS requirement.See the glossary on pages 46-47bp Sustainability Report 202411Our approachGetting to net zeroImproving peoples livesCaring for our planetEngaging stakeholdersOur reportingIntroductionIndigenous peoplesWe operate in several countries where indigenous people live.We seek to apply the principles of free,prior and informed consent where practical when consulting and engaging with them about new projects,recognizing their human rights and respecting their sensitivities concerning livelihoods,land,environment and culture.Our internal requirements for projects and operations reflect this.Improving working conditions We believe decent work defined as security in the workplace,equal treatment,fair income and the opportunity for work that is productive with prospects for personal development is fundamental to a just transition and should be underpinned by respect for human rights and labour rights.The prevention of modern slavery isintegral to this.In 2024 we continued developing more effective ways of working with suppliers to identify and address labour rights and modern slavery(LRMS)risks to the workforce.We expanded our evaluation of high-risk tier 1 suppliers,including raising priority findings with suppliers so remedy can be provided where it is needed.We included high-risk goods as well as high-risk services in more of our supplier pre-contract evaluations and provided in-person training for around 250 people from our central procurement teams to enable this.We also launched an e-learning programme to help our procurement teams improve their LRMS awareness and identify high-risk suppliers more effectively.We continued on-site assessments of prioritized contractors working at our sites to assess their performance against our LRMS requirements.These assessments are undertaken by trained bp employees and involve talking with the contractors management team,reviewing documents and interviewing a representative sample of workers.Our procurement teams made further improvements to their due diligence processes in 2024,particularly to the way they verify their effectiveness.We believe digital solutions can play an increasingly important role in LRMS risk management.In 2024 we conducted pre-contract supplier evaluations with nearly 420 suppliers and issued 85 corrective action plans.We completed 14 on-site assessments with high risk,tier 1 suppliers and we are working with them to address identified concerns.Human rights assessmentsWe commission independent third-party assessments of selected sites and business activities,to assess their conformance with our human rights policy.In 2024 we completed the work started in 2023 in some of our renewables businesses,and also commissioned detailed third-party assessments that included a focus on external perceptions of human rights risks in the offshore wind sector.Our AREH project in Australia reviewed human rights assessments of other renewable businesses to learn lessons about how best to prevent and manage potential human rights risks and impacts.We also updated our risk classification guidance in 2024,improving the way it captures and classifies social and human rights risks to help our businesses better understand,articulate andmanage social risks.Read more about risk management on page 15Community engagement We engage with local communities and other stakeholders by various means,including face-to-face meetings with our community liaison officers.When appropriate,we use these engagements to remind communities how they can raise concerns and grievances,including thoserelated to human rights.In 2024 we supported practitioners responsible for engaging with some of our local communities,by providing online courses,in-person workshops and senior-level coaching.This support helped them increase their understanding of best practice approaches to community engagement.Our engagement with communities helped us understand what they mean by good engagement so we can tailor our approach accordingly.We are developing a set of digital tools to help our social practitioners identify and manage potential impacts and risks to local communities more effectively and systematically.We expect to make these tools available to more bp colleagues in 2025.Community complaints in 2024The total number and nature of complaints in 2024 were consistent with those reported in 2023.Most of the concerns and complaints raised by communities related to day-to-day nuisance factors linked to projects and operations,for example,noise and dust.In 2024 there was a further increase in feedback related to job opportunities and community development.Establishing community engagement around the Australian Renewable Energy Hub In 2024 the Australian Renewable Energy Hub(AREH)in Pilbara,Western Australia stepped up engagement with local communities and industry.The goal was to keep communities informed and gather feedback from Traditional Owners,local governments,community organizations and businesses.Throughout the year,AREH representatives heard directly from these groups and a project website was set up to share up-to-date information and allow stakeholders to submit enquiries.Insights from these engagements on a range of issues,such as environmental impacts and access to water,have been considered in the AREH project design.This work has also helped the project seek free,prior and informed consent from the Traditional Owners of the land.Read more about our work on just transition and community engagement in Australia page 28 bp Sustainability Report 202412Our approachGetting to net zeroImproving peoples livesCaring for our planetEngaging stakeholdersOur reportingIntroductionResponsible securityIn 2024 we continued our implementation of the Voluntary Principles on Security and Human Rights(VPSHR)at bp-operated facilities,to help us address the underlying circumstances that may lead to local conflict as well as security and human rights risks.To help raise awareness among bp security practitioners,we launched a comprehensive information campaign to emphasise the importance of implementing VPSHR in our operations.We used our digital VPSHR impact and risk assessment tool to carry out 200 assessments across 42 countries.These assessments identified security and human rights related risks at 34 locations across 12 countries.We developed and introduced relevant measures intended to prevent or mitigate these risks.We continued our leadership role in the Voluntary Principles Initiative(VPI)and supported the creation of in-country working groups and other initiatives that promote industry and civil society collaboration on security and human rights best practice.Through the VPI,Ipieca and the International Code of Conduct Association,we help address issues relating to civic dialogue,transparency and capacity building.We provide ongoing training for security providers at an operational level and awareness building for bp employees.We also report on these activities annually to the VPI.In 2024 security and human rights-related training was completed by more than 700 private security personnel and nearly 200public security force representatives,incountries where we operate that have heightened human rights risks.Read our latest Annual Report on the Voluntary Principles on Security and Human Rights at policies and practicesbp environmental policyOur environmental policy is established through our code,in particular the sections on safety and sustainability and our responsibility and how we speak up.The policy is supported by relevant aspects of our commitment to health,safety,security and environmental performance,our sustainability frame,our biodiversity position and our internal group requirements and guidance,including those that form part of our OMS and protected areasOur biodiversity position builds on practices already in place to manage biodiversity across bp projects.We are committed to not operate any new oil or gas exploration or production activities inside natural or cultural UNESCO World Heritage sites,or in Strict Nature Reserves and Wilderness Areas as listed on 1 January 2020 and defined by the International Union for Conservation of Nature(IUCN).We review this commitment periodically and engage with UNESCO and the IUCN.In our online protected areas update,we report on the number and overlap of our major operating sites in or near to protected areas andkey biodiversity areas.Through our environmental practices,we require projects that are located in or could affect an international protected area,to identify and assess the risks involved and put in place any mitigation measures necessary to avoid and reduce project impacts.In 2024 no new projects or project activities triggered this process.Increasingly,we are using digital solutions to support delivery of our sustainability frame and our aims.For example,we use geospatial tools that enable us to visualize and monitor biodiversity information in relation to our assets and operations.Read more about biodiversity onpage understand our water-related challenges,we review water impacts,risks and opportunities at our operating sites.In 2024 our primary focus was on implementing efficiency and replenishment projects in water stresseda areas where we operate.Read more about water,on page 35.WasteWe adopt a lifecycle approach to waste management,to avoid and reduce waste from ouroperations and reuse materials.In line with our 2023 waste-related focus areas,wecontinued our efforts to divert as much waste as practical from disposal to recovery or recycling.We disposed of around 280kt of hazardous and non-hazardous waste from our operated businesses in 2024,a 17%increase from 2023(2023 240kt)and we recycled or recovered around 250kt of waste,a 15%increase from 2023.Our recycling and recovery rateb was 47%.20202021202220237797812031762282024891494003002001000105172 Hazardous Non-hazardousWaste disposed(kt)202020212022202320248815920025010005030015012876592035388195166 Hazardous Non-hazardousWaste recycled or recovered(kt)a The threshold bp is now using for stress is based on a water stress level of high or above,as defined by the WRI Aqueduct Water Atlas.bp determines areas of water stress using either the WRI Aqueduct Water Atlas or using site-specific local data sources.b Recycling and recovery rate calculated as:(quantity of waste(or exempted waste)sent for recycling or recovery)/(total quantity of waste managed).Excludes Drilling,Completion,Wells and Intervention(DCWI)chemicals,fluids and drill cuttings discarded from our DCWI operations as well as waste from remediation sites.Find more environmental and social data: Sustainability Report 202413Our approachGetting to net zeroImproving peoples livesCaring for our planetEngaging stakeholdersOur reportingIntroductionAir emissionsWe monitor our air emissions including sulphur oxides,nitrogen oxides and non-methane hydrocarbons and where possible,put measures in place to reduce the potential impact of our operational activities on local communities and theenvironment.In 2024 our total air emissions were 9%lower than in 2023.Read more about operational emissions reductions on page 18 2020202120222023394379195610421039202438391025020015010050028429 Nitrogen oxides group Sulphur oxides group Non-methane hydrocarbons groupAir emissionsby substance(kt)Supplier expectationsWe want to work with suppliers that value sustainability,respect human rights,and work consistently with our code.Sustainable Purchasing PositionSince publishing our Sustainable Purchasing Position in 2023,we have continued to deliver against the focus areas it sets out.We hosted our first bp Supplier Sustainability Summit in 2024.It was attended by more than 800 participants from our procurement teams and supplier community.In addition,we helped abp supplier achieve ISO 50001 certification forawarehousing facility in our North Sea region and an EV-charging equipment supplier in Australia to develop a sustainability strategy to reduce packing waste.We also worked with a supplier to refit six bp shipping vessels with advanced hull coatings that help to combat the growth of marine organisms.This reduces drag and can improve fuel non-operated joint ventures We have processes for managing our interests innon-operated joint ventures(NOJVs),including ways to encourage sustainable practices and to support them in pursuing their sustainability ambitions.Our NOJV solutions team provides a one-stop shop for integrated solutions and governance.We increased the size of the team in 2024 and developed new resources and processes for colleagues working to influence NOJVs on sustainability.Our 2024 engagement with selected NOJV partners included focus on net zero operations,biodiversity and water scarcity.Read more on our engagement with NOJVs on page 20 and page 41Workplace design and operationsIn 2024 we continued to embed sustainability in our many offices worldwide,primarily through our portfolio management strategy,which is led by our central workplace team.We prioritized action to make our buildings more energy efficient and promote safety and wellbeing at work.bp offices in the US,UK,Germany,Hungary,Australia,India,Indonesia,and Malaysia successfully acquired accreditation,in some instances for their energy efficiency and in others for their HSSE standards.We also secured our first green lease for office space in the US and our office in Pune,India achieved a five-star rating from the British Safety Council,which led to us winning its prestigious Sword of Honour award.Sustainability in our processes Our sustainability frame recognizes the need to embed sustainability in our ways of working at bp.We have continued to make progress and sustainability is now embedded in several key areas.For example,sustainability is one criterion in the balanced set of investment criteria against which all investment cases meeting our resource commitment meeting(RCM)threshold are tested;our net zero aims are included in group planning processes;and we have embedded sustainability considerations into our risk management process as a part of the ongoing group management of risk.Looking ahead,we will continue to integrate the consideration of sustainability-related risks and opportunities into other key business management processes.GovernanceThe board is responsible for setting our strategy and monitoring our management and operations as we work to deliver against our targets and aims.The board-level safety&sustainability committee oversees effective implementation of the sustainability frame and the management of significant non-financial risk,including health,safety,environmental,social and human rights risks.Management oversight of sustainability is embedded through our executive-level group sustainability committee,which is chaired by our executive vice president strategy,sustainability&ventures.The committee provides oversight,challenge and support for the implementation of our sustainability frame,and oversight of the management of potentially significant non-operational sustainability risks and opportunities,including those related to climate change.See the glossary on pages 46-47bp Sustainability Report 202414Our approachGetting to net zeroImproving peoples livesCaring for our planetEngaging stakeholdersOur reportingIntroductionAt senior vice president level,our sustainability forum comprises representatives from each bp business.It provides feedback to the group sustainability committee and endeavours to align and improve the visibility of key sustainability issues.Our main public policy positions are subject to endorsement by the sustainability forum and regional policy forums.A cross-functional sub-committee of the sustainability forum also advises businesses on sustainability-related marketing claims.Several other steering committees and working groups feed into the group sustainability committee and sustainability forum,helping to manage specific sustainability issues.Human rights governance At board level,our safety&sustainability committee has oversight of matters relating to human rights,including labour rights and modern slavery risk management.At executive management level,in addition to the group sustainability committee,our group operations riskcommittee regularly reviews our performance and progress in managing the operational and supply chain risks associated with labour rights and modern planning In 2024 we continued to set and performance manage delivery of our sustainability plans across our businesses and functions.This work was overseen by our group sustainability governance structure,which helped to align group and business-level plans.We continued to consider some of our net zero aims in certain key group planning processes.Investment governance and consistency withtheParis goals The board assesses capital allocation across our portfolio,including the level and mix of capital expenditures and divestments,strategic acquisitions,distribution choices and deleveraging,as well as reviewing certain investment cases for approval.For acquisitions and organic capital investments above defined financial thresholds,investment approval is conducted through the executive-level RCM,which is chaired by our chief executive officer.The RCM reviews the merits of each investment case against a balanced set of six investment criteria and considers any key issues raised in the assurance process.We disclose how we evaluate the consistency of new material capex investments greater than$250 million with the Paris goals and a range of other outcomes relevant to our strategya.Evaluations of the consistency of such investments with the Paris goals were undertaken by the RCM for eight new sanctioned material capex investments in 2024.The outcomes of these evaluations are included in the bpAnnual Report 2024.Read more in the bp Annual Report 2024 page 23Identifying and managing risk We manage,monitor and report on the principal risks and uncertainties we face.Throughout 2024 management teams,the leadership team,the board and relevant committees provided oversight of how principal risks to bp were identified,assessed and managed.They supported appropriate governance of risk management including having relevant policies inplace to help manage risks.bps system of internal control is a holistic set of internal controls that includes policies,processes,management systems,organizational structures,culture and standards of conduct employed to manage bps business and associated risks.In 2024 we updated the risk classification system underlying our risk management process,reflecting,amongst other factors,the changing range of sustainability risks faced by our businesses and to help identify and manage these.The group operational risk committee provides oversight of safety and operational risk management,including risks relating to sustainability.Our operating businesses identify and manage risk using our OMS.We also monitor how risk is managed in non-operated joint ventures.Read more about risk management in the bp Annual Report 2024 pages 61-64Managing climate-related risk Climate change and the transition to a low carbon economy continues to be identified as a principal risk,covering various aspects of how risks associated with the energy transition could manifest.Climate-related physical risks such as extreme weather are covered in our principal risks related tosafety and operations.Climate-related financial disclosuresIn 2024 we continued to work with the World Business Council for Sustainable Development(WBCSD)in relation to their ongoing Climate Scenario Analysis Reference Approach for Companies in the Energy System.We used the WBCSD Scenario Catalogue to inform our own scenario analysis.Testing the resilience of our strategyIn our climate-related financial disclosures in the bp Annual Report 2024(pages 42-55),we describe how we have conducted an analysis to test our view of the resilience of our strategy,based on the Capital Markets Update presented on 26 February 2025,to different climate-related scenarios.This includes some scenarios that are classified by the World Business Council for Sustainable Development(WBCSD)to be consistent with well-below 2C and 1.5C outcomesb.As we explain in our disclosure,while the results ofhis analysis must be treated with caution overall,this resilience test again reinforced our confidence in the continued resilience of our strategy to a wide range of ways that the energy system could evolve throughout this decade.These include scenarios consistent with limiting temperature rise to 1.5C and,in particular as our greatest transition exposure,oil price scenarios tested to 2030.Read more: As part of bps response to the 2019 CA100 resolution.b Our 2024 analysis used data from the WBCSD Climate Scenario Catalogue version 3.0,published on 16-05-2024 and downloaded on 13-11-2024.See the glossary on pages 46-47bp Sustainability Report 202415Our approachGetting to net zeroImproving peoples livesCaring for our planetEngaging stakeholdersOur reportingIntroductionGetting to net zeroIn this sectionOur net zero aims 17Our aim for net zero operations 18Our aim for net zero sales 21An update on our retired net zero aims 24Net zero aims 2024 update 25 See the glossary on pages 46-47Our ambition is to be a net zero company by 2050 or sooner,and to help the world get to net zero.bp bioenergy,Brazilbp Sustainability Report 202416Getting to net zeroOur approachImproving peoples livesCaring for our planetEngaging stakeholdersOur reportingIntroductionWe have two net zero aims:for our operations and for the energy products we sell.Our net zero aimsAs part of our strategy reset announced in February 2025 we have retired some of our previous aimsa and are focusing our net zero aims on the two areas that we believe are most relevant to our long-term success and to achieving our overall net zero ambition.These two areas are netzero operationsb and net zero sales.Both of our aims make explicit what is needed to enable their delivery and delivery of the associated interim targets and aims.It is important to recognize that our future business and investment decisions,which will affect the outcomes for these aims,willbe intended to facilitate delivery of our strategy and investor proposition,applying our balanced investment criteria,one of which relates to sustainability.With these points in mind,our updated aims are as follows:Net zero operations This aim now combines ourprevious operational emissions reduction aim and our methane reduction aim.Our interim target is a 20%reduction in Scope 1 and 2 emissions by the end of 2025,against the 2019 baseline.Our current outlook for the end of2030 is a reduction of around 45%against the2019 baseline.Informed by this outlook and the assumptions underpinning it,which may change over time,wehave adjusted our previous 50%reduction aimfor the end of 2030 to a range of 45-50%against the 2019 baseline.Our methane intensity target remains 0.20%by theend of 2025.a In 2020 we set five aims to get to net zero(aims 1-5)and five aims to help the world get to net zero(aims 6-10).b Net zero operations is a combination of our two previous aims:operational emissions reduction(aim 1)and reducing methane(aim 4).See the glossary on pages 46-47Net zero sales Our interim target is a 5%reduction by the end of 2025 for the average lifecycle carbon intensity of our sold energy products.Informed by our strategy reset,and a range of assumptions,our aim for the end of 2030 is now a reduction of 8-10%(previously 15-20%)against the2019 baseline.We have retired our previous aims on net zero production and on investment into transition.However we provide updates on both these areas on page 24.We provide guidance on a periodic basis about production volumes and ourcapital frame.We provide updates on the areas covered by the other retired aims as follows:advocacy page 40,incentivizing employees page 10,our participation in trade associations page 41,and transparency inour reporting page 45.We have retired our previous clean cities and corporates aim.However,we continue to work actively with our customers tohelp provide decarbonization solutions through the provision of integrated energy solutions.Energy outlookThe pace of the energy transition varies as a consequence of actions taken by governments and other stakeholders to address issues such as energy security,technology development,affordability and the pace of low carbon development.The bp Energy Outlook 2024 explores some of thepossible pathways that the energy transition could take out to 2050 and helps to inform our keybeliefs about of our net zero ambition and aims with the Paris goalsWe believe our net zero ambition and aims,taken together,are consistent with the goals of the Paris Agreement.By setting a path that enables us to make a positive contribution,working to build out and participate in many of the new energy value chains the world will need,and through our efforts to reduce our overall operational emissions,our ambition and aims support the worlds progress towards the goals ofthe Paris Agreement.Net zero operationsOur aim is to reach net zero by 2050 or sooner for Scope 1 and 2 emissions within bps operational control(on a CO2e basis),including by maintaining near-zero methane intensity across our operated producing assets,enabled bysupportive government policies.Net zero salesOur aim is to reduce to net zero the average lifecycle carbon intensity of the energy products we sell by 2050 or sooner,enabled by supportive government policies and the decarbonization of energy demand.We have also updated the methodology for ournetzero sales aim see page 21 and Sustainability Report 202417Getting to net zeroOur approachImproving peoples livesCaring for our planetEngaging stakeholdersOur reportingIntroductionOur aim for net zero operationsOur aim is to reach net zero by 2050 or sooner for Scope 1 and 2 emissions within bps operational control(on a CO2ebasis),including by maintaining near-zeroa methane intensity across our operated producing assets,enabled by supportive government policies.Progress and targets/aims 2021 performance2023 performance2030 aim2025 target2050 or sooner2022 performance2020 performance2024 performance35 %Net zero45-50AA8%Methane intensityb0.12%0.07%0.05%0.05%0.20%0.07%Reduction in emissions against the 2019 baseline(absolute basis)This aim relates to our Scope 1 greenhouse gas(GHG)emissions(from running the assets within our operational control)and Scope 2 GHG emissions(associated with producing the electricity,heating and cooling that is brought in to run those operations).These emissions were 54.5MtCO2e in 2019c.We are targeting a 20%reduction in our operational emissions by the end of 2025 and aiming for a 45-50%reduction by the end of 2030 against our2019 baseline.Our net zero operations aim combines our previous Scope 1 and 2 aim and methane aim.Our Scope 1 and Scope 2 emissions have already reduced by 38%in 2024 more than our 2025 target of a 20%reduction,against our 2019 baseline.New projects are coming online,adding to the challenge of reducing our operational emissions and continued investment and portfolio optimization will be needed to meet our 2030 aim.Our methane intensity for 2024b was 0.07%,compared with 0.05%in 2023.Our target by the end of 2025 is0.20%.Our progress and actions onScope 1 and 2 emissions in 2024Our combined Scope 1 and 2 emissions,covered by this aim were 33.6MtCO2e a decrease of 38%from our 2019 baseline.The total reduction includes 18MtCO2e attributable to divestments and 5.4MtCO2e in emissions reduction activities.Compared with 2023(32.1MtCO2e),Scope 1 and 2 emissions increased in 2024 due to growth in our portfolio,project start ups and operational issues at Tangguh,Indonesia.See page 20.In 2024 our Scope 1(direct)emissions were 32.8MtCO2e an overall increase from 31.1MtCO2e in 2023.Of these Scope 1 emissions,31.4MtCO2e were carbon dioxide and 1.5MtCO2e were from methaned.Scope 1(direct)and Scope 2(indirect)GHG emissions(operational control boundary)c,d,e(MtCO2e)Scope 1Scope 260402002019202020215.23.82.420221.420231.020240.832.849.241.733.230.431.1Overall emissions increased due to project ramp-ups(for example Tangguh LNG Train 3 in Indonesia and the Argos platform in the Gulf of America,US),operational growth in Archaea Energy and bp bioenergy,and some temporary operational changes such as turnaround activity and operational issues in Tangguh.These were partially offset by the delivery of emissions reduction projects.In 2024 our Scope 2(indirect)emissionsc,decreased by 0.2MtCO2e,to 0.8MtCO2e,compared with 2023.The continued use of lower carbon power agreements and a project at our Gelsenkirchen Refinery in Germany to replace imported steam from a coal-fired power plant with steam produced in our own gas-fired boilerscontributed to this decrease.Overall,key items affecting our Scope 1 and 2 emissions in 2024 included:y Permanent increases of 3.6MtCO2e include projects that ramped up or came online in 2024,for example Tangguh Train 3,Argos,bpx energy production increases,and Seagull North Sea start-up.y Taking full ownership(for a part-year in 2024)of bp Bunge Bioenergia(now bp bioenergy)increased Scope 1 and 2 emissions by69.9ktCO2e.y Total temporary production-related changes accounted for a decrease of 2.1MtCO2e from lower emissions in 2024 compared with 2023 due to less flaring in Azerbaijan,Georgia and Trkiye(AGT),fewer emissions from the Tangguh Train 3 project start-up phase,and refinery power outages at Whiting,US.y Delivery of emissions reduction activities reduced Scope 1 and 2 emissions by 0.42MtCO2e.y Divestments reduced Scope 1 and 2 emissions by 60ktCO2e.y Total upstream hydrocarbons flared decreasedfrom 861kt to 613kt primarily due tolower temporary operational flaring in AGT than in 2023.Operational efficiencyWe take a portfolio view of all our project improvement activities at individual sites.This allows us to prioritize the most effective projects supporting energy efficiency,reducedcarbon emissions,and lower costs.In 2024 we completed emissions and energy efficiency reviews in our AGT,Trinidad and Tobago,and Gulf of America production regions,and a Both the Oil and Gas Decarbonization Charter and the United Nations Environment Programme suggest 0.20%as the threshold for near zero methane intensity.By reference to either of these thresholds,our 2024 methane intensity can be considered to be near zero.b In 2024 reported absolute methane emissions from upstream major oil and gas processing sites are based on our new measurement approach.Prior to 2024 these emissions were calculated using a different methodology and therefore the methane intensity reported in those years and calculated using that data does not directly correlate to progress towards delivering the 2025 target.Prior year data is provided for information purposes,and we do not seek to directly compare prior years.c Including Scope 2 emissions on a market basis.d Due to rounding some totals may not equal the sum of their component parts.This does not affect the underlying values.e Operational control data comprises emissions from source activities operated by bp or otherwise within bps operational control boundary.S the glossary on pages 46-47bp Sustainability Report 202418Getting to net zeroOur approachImproving peoples livesCaring for our planetEngaging stakeholdersOur reportingIntroductionat two refineries,Whiting,US and Rotterdam,Netherlands.We expect to complete further reviews across our operating portfolio in 2025.Any opportunities identified are screened through existing business processes and plans that support our net zero ambition.Emission reduction projects implemented by our businesses in 2024 totalled 0.42MtCO2e,including:y Low carbon energy consumption projects,which delivered 102ktCO2e in emissions savings.These include electrification projects and installation of solar pumps in bpx energy,US.y The hydrocracker improvement project at Cherry Point,US,which saved 26ktCO2e of emissions.y Approximately 262ktCO2e in emission savings made through energy efficiency improvements in production processes and flaring process optimization projects,including:bpx energy,US central distribution projects,Karnes and Bingo,which enabled decommissioning of legacy natural gas-driven equipment,resulting in reduced flare volumes and the switch from natural gas to instrument air in pneumatic devices.Restoration of cooling water infrastructure at Cherry Point,to meet refinery needs and improve the efficiency of compressor operations.A reduction of 19ktCO2e at our Gelsenkirchen Refinery by replacing imported steam from a coal-fired power plant with steam produced inour own gas-fired boilers.Carbon capture and storage(CCS)and hydrogen We made final investment decisions on CCS andhydrogen projects during 2024:y In September,with our 50:50 joint venture partner Iberdrola,we took the final investment decision to develop a 25MW green hydrogen project that aims to reduce operational emissions at our refinery operations in Castelln,Spain.The project is expected to be operational in 2026 and,through displaced grey hydrogen consumption,could result in around 23ktCO2e fewer emissions annually.y In November,with our partners in Tangguh,Indonesia,we made the final investment decision for the$7 billion Tangguh UCC project,which will include the countrys first at scale enhanced gas recovery through carbon capture,utilization,and storage(CCUS).The carbon capture component of the project aims to sequester up to 15 million tonnes of CO2 in its initial phase and potentially more in future,given the large CO2 storage capacity of the area.Portfolio optimizationWe are continuing to high-grade our portfolio and focus on our most resilient assets.For example,in September 2024 we announced the sale of mature gas fields in Trinidad and Tobago to Perenco,as part of the refocusing of our gas business there.bp equity share emissionsWe report operational(Scope 1 and 2)GHG emissions in the bp ESG Datasheet 2024,with reference to two boundaries operational controla and bp equity share.bp equity share covers 100%of emissions from subsidiaries and the percentage of emissions equivalent to our share of joint arrangements and associatesb.Our aggregate bp equity share Scope 1 and 2 emissions increased by 0.1MtCO2e in progress and actions onmethaneemissionsIn 2024 we started reporting on the basis of our new methane measurement approach across our major operated oil and gas processing sites.Using this approach our methane intensity was 0.07%(2023 0.05%c)and the methane emissions from our upstream operations used to calculate this intensity were 46kt(2023 31kt).The higher emissions and intensity in 2024 are primarily from flaring due to operational issues in our Tangguh,Indonesia operations,and increases from a temporary operating mode quantified as a result of our new measurement approach in our Tangguh operations(see overleaf).In most other areas of our operations we saw reductions in methane emissions from using our methane measurement approach(and the increased understanding it provided)and from emissions reduction projects.Marketed gas volumes increased by 8.5%to 3,614bcf in 2024.We remain on track to reach zero routine flaring by 2030 in line with our aim under the World Banks Zero Routine Flaring Initiative.bpx energy has achieved zero routine flaring,ahead of its 2025 goal.Methane intensity c,d(%)0201920202021202220230.200.150.100.050.140.120.070.050.0520240.07Absolute methane emissionsc(Mt)0201920202021202220230.10.080.060.040.10.070.050.030.020.0320240.05a Operational control data comprises emissions from source activities operated by bp or otherwise within bps operational control boundary.See b bp equity share data comprises 100%of emissions from subsidiaries and the percentage of emissions equivalent to our share of joint arrangements and associates,other than bps share of Rosneft.On 27 February 2022 bpannounced that it intends to exit its 19.75%shareholding in Rosneft Il Company(Rosneft).bp ceased equity accounting for Rosneft from this date.c In 2024,reported absolute methane emissions from upstream major oil and gas processing sites are based on our new measurement approach.Prior to 2024 these emissions were calculated using a different methodology and therefore the methane intensity reported in those years and calculated using that data does not directly correlate to progress towards delivering the 2025 target.Prior year data is provided for information purposes,and we do not seek to directly compare prior years.d Methane intensity refers to the amount of methane emissions from bps operated upstream oil and gas assets as a percentage of the total gas that goes to market from those operations.Our methodology is aligned with theOiland Gas Climate Initiative.See the glossary on pages 46-47bp Sustainability Report 202419Getting to net zeroOur approachImproving peoples livesCaring for our planetEngaging stakeholdersOur reportingIntroductionIn bp shipping,we are currently deploying predictive emissions monitoring systems across our bp-operated liquefied natural gas(LNG)fleet to provide more accurate quantification of methane slip from combustion engines the main source of methane emissions on LNG carriers.To improve the quantification of shipping-related fugitive emissions,we have revised our leak detection and repair procedures and intend to use validated specific emission factors going forward.Methane measurement at bpx energyIn the US,bpx energy uses a varied approach to detection and measurement,appropriate to its operations and sources of methane.This approach includes direct measurement programmes to improve the accuracy of its emission inventory,supplemented by the use of fixed-wing aerial surveys,drones,hand-held cameras,and continuous monitoring systems.Our 2024 measured dataAside from an operational issue at our Tangguh facility in Indonesia,analysis of our 2024 measured data shows that overall methane emissions from upstream operational flaring were generally lower than previously reported when using conventional methodologies(including those mandated by regulations in some countries).Using our measurement approach,we found methane emissions for most of our gas turbines to be significantly lower than previously reported using emissions factors.In a few cases,the real-time data has helped us identify priority locations for additional performance improvement and methane abatement activities.We will continue to assess all of our methane sources for relevance and to identify the more significant sources,with the intention of adopting enhanced quantification methodologies where necessary.Learning from our methane measurement approachIn our Tangguh operations,Indonesia,various high CO2 gas streams are generated as part of the production process and,where appropriate,impurities are combusted in an acid gas incinerator(AGI).If the incinerator is unavailable the gas is routed to the flare for combustion.Our real-time methane emissions data,together with our increased technical understanding of methane in flares,allowed us to identify that in this abnormal situation,the flare destruction efficiency can be reduced.In 2024 methane emissions from Tangguh increased by 24kta mostly due to issues with the availability of the AGI.This constitutes mostof the increase seen in total methane emissions in 2024.Besides seeking to improve incinerator availability we are now in action to identify additional mitigation measures at our Tangguh,Indonesia facility.Collaborating with NOJVs andmethaneadvocacy We intend to continue our targeted engagement with the operators of non-operated joint ventures(NOJVs)to promote activity to reduce both their operational greenhouse gas(GHG)emissions and improve methane performance.This could include promoting the use of measurement technologies,emission reduction plans,aims or targets;and their participation in external initiatives such as the Oil&Gas Decarbonization Charter,the UN-led Oil&Gas Methane Partnership(OGMP)and the World Banks Zero Routine Flaring initiative.Several NOJVs and NOJV operators have now signed up to OGMP and set methane targets.Our collaborations with NOJVs in 2024 included joint shareholder seminars on methane monitoring technologies,awareness raising sessions on OGMP and a multi-shareholder HSE forum to share learnings on methane management.In 2024 for both our operated and non-operated activities,we retained gold status under the OGMP 2.0 reporting framework for the implementation of our source-level methane emissions measurement approach,and made further progress to reconcile this with our site-level measurement approach.This award recognized the work of many bp teams and collaborations with our partners,including NOJVs.In October 2024 as part of the memorandum of understanding signed in 2023,bp and the State Oil Company of the Azerbaijani Republic(SOCAR),brought together local oil&gas companies,equity partners,research institutes and government leaders and other stakeholders during Baku Climate Action Week,to support efforts towards developing a methane reduction pathway that meets the needs of Azerbaijans energy sector.The collaboration between bp and SOCAR is part of the Methane Guiding Principles Advancing Global Methane Reductions project,which aims to accelerate country-level methane emissions reductions.In 2024 we continued to advocate for sound methane policy,including the federal regulation of methane emissions in the US and the implementation of methane regulation in the EU.Read more about our advocacy activities on page reduction activityOur work to reduce operational methane emissions is ongoing.In 2024 this included upgrades in our current operations and advances in the design of our new facilities.Methane emissions reductions totalled around 39ktCO2e,and came from multiple projects.For example,bpx energy reduced methane emissions through investment in pipeline infrastructure,central delivery points,tankless upstream facilities,and electric-driven instrument air and electric gas compression.In AGT,we reduced methane emissions in Central Azeri as part of a turbine controls upgrade to reduce the number of trips offline.Methane measurement approachOur focus has been on identifying the most significant emission sources across our global upstream oil and gas portfolio and we have worked to introduce real-time monitoring solutions.These include new technology for quantifying flare efficiency,predictive emissions monitoring on gas turbines,and additional or updated meters and flare gas analysers.Real-time methane emissions data gives us better insights on actual performance and has supported improvements to our source-level inventory,allowing us to prioritize the most significant mitigation opportunities.We are also using drone and aircraft-mounted sensors to verify reported methane emissions and have completed top-down measurements at many of our major oil and gas processing sites,in some instances several times.For many of our assets,top-down measurement verified our methane emissions inventory,and in a few instances it enabled us to amend our inventory of source-level data.We use learnings from this approach to help us improve our top-down measurement programme,for example by optimizing the cadence of measurement.a In 2024 reported absolute methane emissions from upstream major oil and gas processing sites are based on our new measurement approach.Prior to 2024 these emissions were calculated using a different methodology and therefore the methane intensity reported in those years and calculated using that data does not directly correlate to progress towards delivering the 2025 target.Prior year data is provided for information purposes,and we do not seek to directly compare prior years.bp Sustainability Report 202420Getting to net zeroOur approachImproving peoples livesCaring for our planetEngaging stakeholdersOur reportingIntroductionOur aim for net zero salesOur aim is to reduce to net zero the average lifecycle carbon intensity of the energy products we sell by 2050 or sooner,enabled by supportive government policies and the decarbonization of energydemand.This aim applies to the average carbon intensity of the energy products we sella.It is estimated on a lifecycle(full value chain)basis from the use,production,and distribution of sold energy products per unit of energy(MJ)delivered.We are targeting a reduction in intensity of 5%by the end of 2025 and aiming for an 8-10%reduction by the end of 2030 compared to our 2019 baseline.Progress and targets/aimsbReduction in the average lifecycle carbon intensity of our sold energy products against the 2019 baseline.2021 performance2023 performance2030 aim2025 target2050 or sooner2022 performance4%5%Net zero c8-10%4 20 performance4%5 24 performance6%Methodology updateWe have updated our net zero sales methodology to follow a net volume accounting approach,guided by Ipiecas sectoral guidance(2016)for Scope 3 reporting(see table below).The approach focuses on identifying the point,for bp,where the largest amount of sold products is transferred within a given commoditys value chain.We believe this will better reflect and track our strategic progress over time.As part of this update in methodology,we have restated our 2019 baseline and progress through to2024(see page 22).All data in this section is based on this new methodology.Further details of our net zero sales methodology are described in the bp Basis ofReporting 2024.Our progress and actions on our netzero sales aim in 2024 In 2024 the average carbon intensity of our sold energy products was 79gCO2e/MJb.This represents a 6%d reduction from our 2019 baseline,driven by improvements in the well-to-tank emissions of sold products and changes in the sold product mix,which have included strategic investment activities such as the addition of significant retail power volumes as a result of the EDF Energy Services acquisition in 2022 in the US.The 2024 figures include part-year accounting ofsales from GETEC ENERGIE,the acquisition of which we completed in August 2024,and for bp Bunge Bioenergia(now called bp bioenergy)andLightsource bp,of which wetook full ownership inOctober 2024.Energy included under net zero sales for 2019(ourbaseline year)has been restated to 7.9EJ and the associated lifecycle emissions to 671MtCO2e.The 2019 carbon intensity baseline is now 84gCO2e/MJ.We have also updated all other reporting years.a When we say“we sell”we mean,sales by a bp group subsidiary,joint operation or bp equity accounted entity.See the bp Basis of Reporting 2024 forfurther information.b On the updated methodology basis.c At the point of net zero,our net zero carbon intensity aim also means we will be net zero on an absolute basis.d The percentage change is calculated from the source data instead ofthe rounded carbon intensity number.e Estimated based on available customer information.See the bp Basis ofReporting 2024 for more information on end users.See the glossary on pages 46-47CommodityPrimary energy(Production)Secondary energy(Processing/generation)Final energy (Sales to end userse)Oil/Refined productsCrude oil production0.9mmb/dRefining1.3mmb/dRefined product sales2.4mmb/dNatural gas&Natural gas liquids(NGL)Gas and NGL production1.2mmboe/dLNG liquefaction0.2mmboe/dGas and NGL sales1.0mmboe/dBiofuelsBiorefining22mb/dBiofuel sales0.1mmb/dBiogasBiogas processing5.7mboe/dBiogas sales3.6mboe/dPower&heatGeneration13TWhPower&heat sales71TWhNet volume accounting figures for 2024 reportingPoints to note:y Volumes shown are consistent with bps energy product definition.For example,this means crude which goes on to produce non energy products such as asphalt and bitumen is excluded from the metric.See the bp Basis of Reporting 2024 for further details.y Highlighted cells represent the point in each commoditys value chain where the largest volume of sold products is transferred.Consistent with net volume accounting principles,this volume has been included within the 2024 calculation of the lifecycle carbon intensity of our sold energy products.y Volumes in this table are collected for use solely for the purpose of the net zero sales metric and as such may not be directly reconcilable with disclosures of volumes made for different Sustainability Report 202421Getting to net zeroOur approachImproving peoples livesCaring for our planetEngaging stakeholdersOur reportingIntroductionShare of energy delivered per energy product typea,b(%)755025020192020202120222023100RefinedGasBioPower1212272222202482606036366433623460316030Average carbon intensity of sold energy productsa,c(gCO2e/MJ)85807570201920202021202281818184Performance2025 target 2030 aim(5%)(10%)(8%)202380202479a Previously reported figures for the period 2019-2023 have been restated to update the 2019 baseline and the years 2020-2023 in line with the updated methodology for the net zero sales metric.For more detail on how this metric is calculated see the bp Basis of Reporting 2024: The share of energy is based on the total energy associated with sales of energy products and with electricity represented as fossil equivalence of sold energy.Due to rounding the sum of the component parts may not exactly equal 100%.This does not affect the underlying values.c The aggregate lifecycle emissions and energy values used in the calculation of the average lifecycle carbon intensity of sold energy products is provided in the bp ESG Datasheet 2024.d Includes biofuels and biogas.e Covers all power,including renewable and non-renewable.See the glossary on pages 46-4776-78gCO2e/MJ84gCO2e/MJ2019baselineRenewables&powerEV chargingBioenergy8-10%reduction2030Examples of actions supporting delivery of our net zero sales aimGiven that specific lower carbon activities drive a reduction in carbon intensity of sold energy products,the chart below shows an outlook of potential relative scale of contribution of several specific low carbon activities towards the 2030 aim compared to each other.It is not intended to indicate actual impacts or contributions to delivery of the net zero sales aim.Other factors,such as the pace of decarbonization of energy products or change(in either direction)in the relative contribution of higher carbon intensity fuels to bps energy mix will also affect the average carbon intensity of our sold energy products.Achievement of the aim and all interim milestones need to be enabled by supportive government policy and by the decarbonization of energy demand.Full value chain emissions for energy productsNet zero sales is estimated on a lifecycle basis covering the full value chain of well-to-wheel or well-to-wire emissions associated w
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Environmental,Social and Governance Report 202401Content72 75 77 82 85Environmental Strategies and ProgressClimate Change and Carbon NeutralityNature and Biodiversity Conservation15 17 27 Creating an Age-Appropriate Digital Environment for MinorsEmpowering the Silver Generation in the Digital EraAssisting Individuals with Physical Impairments in Overcoming the Digital DivideDigital Technologies Supporting Rural Development64 68 69 70Privacy ProtectionCyber and Data SecurityAI Safety GovernanceInternet for Trust46515659Digital Technologies Promoting Sustainable InnovationDigital Upgrade of the Philanthropic SectorDigital Financial InclusionDigital Technologies Promoting Sustainable Urban DevelopmentDigital Technologies Improving Health and Well-beingAbout TencentMessage from ChairmanExecutive Summary020304Board Independence and DiversityRisk ManagementCommercial Value,Social Value,and Shareholder Value05 0607 ESG StrategyESG Governance StructureBoard StatementAnnual Review of ESG Working GroupIntegration of ESG Concepts into Corporate CultureESG Materiality Assessment08090910 12 13Adherence to Integrity PracticeAdherence to the Principle of Fair CompetitionAnti-Money Laundering ManagementIntellectual Property ProtectionSustainable Supply Chain8991 92 93 95Our ApproachAttracting,Retaining,and Motivating TalentEmployee Training and DevelopmentBuilding a Diverse,Inclusive,and Collaborative WorkplaceEmployee Health and WelfareEmployee Communication and Expression3233 36 39 41 44 OverviewCorporate GovernanceESG Governance1.Environmental Protection2.Caring for Our People3.Safeguarding Digital Rights4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendixOverviewCorporate GovernanceESG GovernanceChapter 1Environmental ProtectionChapter 2Caring for Our PeopleChapter 3Safeguarding Digital RightsChapter 4Digital InclusionChapter 5Digital Technologies Supporting Sustainable Development GoalsChapter 6Business EthicsAppendix9702About TencentTencent is a leading global internet technology company dedicated to creating innovative products and services to enrich the lives of people.Our communication and social platform serves over one billion users worldwide,enabling them to stay connected with friends and families while enjoying easy access to life services such as entertainment,transportation and payments.We develop and publish some of the worlds most popular online games and premium digital content,delivering engaging and interactive experiences for a broad and diverse audience.We provide enterprise services,including marketing,cloud services and computing,and FinTech services,to support the digital upgrade and business expansion of our partners.Tencent was founded in 1998 and has been listed on the Main Board of the Hong Kong Stock Exchange since 2004.Value for Users,Tech for GoodCreating value for our users and harnessing technology for good are at the core of Tencents vision and mission.This belief is deeply embedded in our product development,daily operations and corporate governance,driving the sustainable growth of our Company while guiding our engagement with broader society to create sustainable social value.OverviewCorporate GovernanceESG Governance1.Environmental Protection3.Safeguarding Digital Rights2.Caring for Our People4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix About Tencent Message from Chairman Executive Summary03Message from ChairmanLeveraging our strengths in internet technologies and artificial intelligence(AI),Tencent delivers inclusive and accessible products and services to users while supporting enterprises in their digital upgrade,contributing to broader economic and social progress.AI is deeply integrated into our products and operations,serving as part of our strong technological foundation that accelerates business growth and enhances risk management.We have deployed AI to more than 700 use cases,fostering innovation and increasing operational efficiencies for the Company,as well as for our customers and partners.In 2024,we introduced AI in corporate governance,including internal Ma Huateng Chairman of the BoardAs the 99 Giving Day event celebrated its 10th anniversary in 2024,it evolved into the Giving for Good Initiative(with 99 being homophonous with 久久 meaning forever),marking a shift from an event to a long-term initiative.This years festival brought together over 2,200 philanthropic organisations,5,500 charitable projects,more than 20,000 participating enterprises,and 280 million users who contributed via cash donations,step-donation fundraising,and the Little Red Flower interactive campaigns.Leveraging internet technologies,we continue to strengthen connections among donors,philanthropic organisations and beneficiaries.We promote philanthropy,expand public access to project information and progress tracking,and streamline project verification using AI-powered solutions,helping to enhance efficiency and transparency in the sector.As we look ahead to the next decade,we hope digital technologies,as vessels carrying compassion and trust,will continue to support philanthropic organisations in expanding their reach,integrating charitable activities into everyday life and the long-term development of the industry.In advancing the United Nations Sustainable Development Goals(SDGs),enterprises can be more proactive in creating positive impact.We continue to leverage digital technologies to enable social innovation across multiple domains.For example,our digital twin and game technologies supported Beijings Central Axis in its successful inscription as a UNESCO World Heritage Site.The Red Umbrella Programme,powered by Tencent Healths AI,provided free cervical and breast cancer screenings for over one million women in remote areas.This programme was recognised as a Best Practice in the Fifth Global Poverty Reduction Case Initiative,co-organised by the World Bank and the Food and Agriculture Organisation of the United Nations.In collaboration with the China Earthquake Networks Centre,we launched a Weixin Mini Program that delivers real-time earthquake alerts to users,helping to safeguard lives in times of crisis.We firmly believe that lasting change comes from the steady and profound creation of social value.Tencent will continue to harness digital innovations to address sustainability challenges,embedding Tech for Good values into our products and operations while working alongside industry and societal partners to fulfil our long-term commitment to sustainable development.controls and supply chain management,to enhance the acuity and precision of our risk identification tools.Guided by user value and broader societal needs,Tencent is committed to developing and deploying AI that is safe,ethical and responsibly governed.Key considerations around privacy,data security and governance were also discussed in the report.We actively contribute to industry development through open source collaboration and cross-industry partnership,while upholding responsible AI principles.Recently,we have signed the AI Safety Commitment initiated by Chinas AI Industry Development Alliance.OverviewCorporate GovernanceESG Governance1.Environmental Protection3.Safeguarding Digital Rights2.Caring for Our People4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix About Tencent Message from Chairman Executive Summary04Executive SummaryEnvironmentalSocialGovernance We are advancing towards our carbon neutrality goal,annually assessing progress and ensuring progress remains on track through energy efficiency improvements and transitioning to renewable energy.Leveraging our fourth-generation high-efficiency data centre technology,T-block,we implemented cooling efficiency upgrades and applied AI algorithms to optimise energy consumption.Meanwhile,we accelerated renewable energy adoption via increases in installed renewable energy facilities and procurement of renewable electricity,raising our renewable electricity use from 12.4%in 2023 to 22.0%of our total electricity use in 2024.We explored digital technologies for biodiversity conservation,applying AI in species protection and promoting public engagement through social platforms.These efforts were recognised as notable contributions to sustainable development in China under the United Nations Global Compacts 20 Case Examples in 20 Years Project.We strengthened our technical capabilities in privacy protection compliance,prioritising user value and focusing on core data security.We improved governance capabilities by refining management requirements,optimising platform tools,integrating compliance requirements into business processes,and conducting internal audits.Leveraging AI-enabled efficiency,we achieved significant improvements in the effectiveness of our cloud security,data security,and business continuity safeguards.Our AI safety governance framework builds upon data,algorithms,and operations to address emerging risks and respond to stakeholder concerns.During the reporting period,there were no recorded occurrences of cybersecurity or data breach incidents.We execute Tech for Good by investing in sustainable social value innovations aligned with the UN Sustainable Development Goals.The Xplorer Prize and the New Cornerstone Investigator Program have supported over 360 scientists with long-term and stable funding for pioneering research.In emergency response,Weixins instant communication capabilities can assist public safety efforts by reducing response time.Using digital solutions to preserve culture and inheritance,the Digital Beijing Central Axis project employs high-precision digital simulations to recreate heritage sites,engaging over 17,000 online volunteer inspectors.After three years of honing,we implemented our self-developed methodology,SQI,for evaluating the scale,quality and impact of our sustainable social innovation projects.We further promoted accessibility and inclusion across digital products and physical spaces.By leveraging AI to boost the efficiency of producing accessible content,we released more than 190 accessible films in Tencent Video platform in 2024.We have developed an accessible version of First Lesson in AI Programming,which was incorporated into the curriculum for special education schools in Guangzhou,Beijing and Nanjing,enabling visually impaired students to learn AI fundamentals.We introduced accessibility design in our new campus under construction in Shenzhen and received Chinas highest 3-star accessibility rating for the first batch of buildings completed in 2024.We maintained high standards of business ethics,and recently applied AI capabilities to identifying and assessing ethical risks.We also continued to enhance anti-fraud training for our employees and key suppliers.We collaborated with suppliers to embed ESG in business practices.The Tencent Supplier ESG Code of Conduct has been integrated into our supplier engagement process.We have promoted green energy transition in leased data centres to reduce Scope 3 emissions.During the year,several leased data centres broke ground in procuring green energy to support our operations.We maintained a high standard of corporate governance.We closely monitor emerging trends and will adopt appropriate measures to continuously enhance governance at the company and board level,as well as address stakeholder requirements.Tencent has been included in multiple major ESG indices,including the World Index and Emerging Markets Index under the Dow Jones Sustainability Index(DJSI),the MSCI Emerging Markets ESG Leaders Index,the MSCI China ESG Leaders Index,and more than 20 other MSCI ESG-related indices.In August 2024,Tencent was added to the Hang Seng ESG 50 Index and Hang Seng Corporate Sustainability Benchmark Index.MSCI upgraded our ESG rating from BB to BBB,while S&P Global ranked our ESG score among the top three in our industry sector globally during 2024.These recognitions reflected widespread acknowledgement of the effectiveness of our ESG management.Tencent executes our Environmental,Social,and Governance strategy through our corporate risk management process,which manages existing ESG issues and monitors emerging risks,while integrating sustainable social value creation into our daily operations and product development.In 2024,we made significant progress in the following areas:James Mitchell John Lo Co-Chairs ESG Working Group*Photographed at Tencent Binhai TowersOverviewCorporate GovernanceESG Governance1.Environmental Protection3.Safeguarding Digital Rights2.Caring for Our People4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix About Tencent Message from Chairman Executive Summary05Corporate GovernanceBoard Independence and DiversityTencent has established a unitary board.As of 31 December 2024,the Companys board of directors(the Board)consisted of eight directors,including an executive director,two non-executive directors(NEDs)and five independent non-executive directors(INEDs).The NEDs are from the senior management within the Naspers Group,a long-term shareholder investing in Tencent through its subsidiary Prosus.Naspers is a global consumer internet group and one of the largest technology investors in the world.The NEDs bring business,financial and management experience from a global perspective and in reflection of the long-term interests of shareholders,as they perform the supervisory duties of directors.The INEDs are professionals from a wide range of industry backgrounds,possessing diverse expertise and broad management experience in different fields.They provide checks and balances that safeguard the interests of the shareholders,the Company,and the stakeholders.The Nomination Committee under the Board has assessed the independence of the INEDs and determined them to be independent.The Company,in undertaking this assessment,has considered the independence guidelines set out under the Listing Rules of the Hong Kong Stock Exchange Limited,along with the tenure of service of each INED and the unique perspective,skill and experience each contributes to the Board.The Company has received the annual independence confirmation from each INED,and the Board has affirmed their independence.Among the five INEDs,two have served for more than nine years.The Nomination Committee and the Board,after careful assessment,are of the view that they have the independence to fulfil their roles as INEDs effectively and will continue to bring valuable experience,knowledge and professionalism to the Board.In 2024,INEDs accounted for 62.5%of the total Board members,and NEDs represented 25%.The Board plays a pivotal role in steering Tencents strategic direction,overseeing corporate governance,and ensuring the Companys long-term sustainable growth.It operates through a well-defined governance structure and delegates certain matters requiring dedicated time,attention,and expertise to its various committees.As such,the Board has established five committees:Audit CommitteeThe Audit Committee consists of three members,including one NED and two INEDs,ensuring strong independent oversight.Chaired by an INED,this committee plays a crucial role in financial oversight.Its primary responsibilities include reviewing financial information,overseeing the financial reporting system,and managing relationships with external auditors.Additionally,the committee reviews risk management and internal controls,overseeing the Companys risk tolerance levels.It also oversees the anti-money laundering and sanctions compliance system.Corporate Governance CommitteeWith five members,the Corporate Governance Committee is composed of one NED and four INEDs,ensuring a high level of independent governance.It is chaired by a NED.The committee is mainly responsible for reviewing and monitoring ESG-related matters,including progress on strategies,targets and metrics,disclosures in ESG reports,and making recommendations to the Board.It also evaluates corporate governance disclosures and compliance with regulatory requirements.Another key function is to review and advise on the Shareholders Communication Policy,making recommendations to the Board as appropriate.Investment CommitteeThe Investment Committee consists of three members,including a senior executive,executive and non-executive directors.The committee is chaired by the President of Tencent.It is primarily responsible for identifying and evaluating investment opportunities,including mergers,acquisitions,and disposals.Additionally,the committee ensures that all investment decisions comply with the Listing Rules and other relevant legal and regulatory requirements.Nomination CommitteeComprising five members,the Nomination Committee is chaired by an executive director and includes a majority of INEDs,along with one NED.Its key responsibilities include reviewing and monitoring the structure,size,and composition of the Board to ensure a balanced and diverse representation.The committee is also in charge of identifying suitable and qualified individuals for recommendations as new Board members,evaluating shareholder nominations for directorships,and assessing the independence of INEDs.Additionally,it reviews and monitors the Board Diversity Policy and Board Nomination Policy,ensuring their effective implementation.Remuneration CommitteeThe Remuneration Committee consists of three members,including one NED and two INEDs,ensuring strong independence in remuneration decisions.Chaired by an INED,this committee is mainly responsible for reviewing and approving proposals about the policy and structure of remuneration of directors and senior management team,ensuring that these proposals align with corporate goals and objectives.It also enforces strict governance policies,ensuring that directors or any of their associates are not involved in decisions regarding their own remuneration.Additionally,the committee reviews and approves share scheme-related matters.The Board values the diverse experience of its directors and recognises the advice and oversight provided by the NEDs and INEDs.The Board makes continuous efforts on maintaining a good mix of director tenure lengths to embrace various viewpoints and experience from both veteran and newly appointed directors,while ensuring the effectiveness and efficiency in fulfilling their fiduciary duties.The Board focuses on a diverse set of factors when selecting directors,including industry knowledge,professional background,experience,and gender,having due regard to the benefits of Board diversity.We have implemented the Board Diversity Policy and Board Nomination Policy to ensure alignment with both the Companys current policies and the Listing Rules requirements when assessing candidates eligibility for directorship.Since May 2023,female representation on the Board has increased to 25%,with a target already set in 2022 to raise this proportion to 30%by 2030.Board members have profound professional expertise covering a wide range of sectors,including computer and information technology,telecommunication,business administration,financial management,accounting,law,medicine,and social sciences.The Board has delegated its responsibility to steward the Companys ESG matters to the Corporate Governance Committee.For details of the Companys corporate governance efforts in 2024,please refer to the Corporate Governance Report section of Tencents 2024 Annual Report.OverviewCorporate GovernanceESG Governance1.Environmental Protection2.Caring for Our People3.Safeguarding Digital Rights4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix Board Independence and Diversity Risk Management Commercial Value,Social Value,and Shareholder Value06Risk ManagementIntegrating ESG into Risk ManagementWe have fully considered and integrated ESG-related factors,including challenges related to climate change,into the Companys risk assessment and internal control management processes.We also conduct regular risk identification and assessment,prioritise risks based on the results of the assessment,and formulate appropriate risk response measures.Risk CultureThe Company is committed to strengthening its internal control environment,increasing employees risk management awareness,and continuously enhancing its risk management capabilities.The Company provides regular risk management and internal control training to all employees through various channels including on-site and online courses,additional online and offline content.The training covers topics such as risk management system,key risk analysis and internal control activities.Risk management is included in the mandatory training courses for new hires.The Company has integrated risk management and internal control assessment results into the performance review process of each business group and functional department.Adequate and effective risk management and internal control systems are key to safeguarding the Companys strategic objectives.In respect of establishing the organisational structure for risk management,implementing risk management processes,and enhancing risk culture,the Company has been continuously improving its risk management and internal control system,as well as enhancing its risk management capabilities to ensure healthy and sustainable development of the Company.Risk Governance StructureThe Board acknowledges its responsibility to ensure that the Company has established and maintained adequate and effective risk management and internal control systems.The Board delegates its responsibility to the Audit Committee to review management practices with respect to risk management and internal control on a quarterly basis,including the development,implementation and monitoring of risk management and internal control systems.The Audit Committee also reviews the effectiveness of risk management and internal control systems on an annual basis.The members of the Audit Committee have extensive experience and knowledge of financial and risk management.They also receive updates on the latest risk management requirements and best practices from internal teams,and discuss further at the quarterly Audit Committee meetings as necessary.Under the supervision and guidance of the Board,the Company has adopted a risk management and internal control structure,referred to as the Three Lines Model,to ensure the effectiveness of its risk management and internal control systems.Risk Management ProcessAs an Internet technology company with a wide variety of rapidly changing businesses,the Company has adopted the following dynamic risk management process in response to the ever-changing risk landscape:Business and functional departments of each business group identify,assess and respond to risks in the course of operation in a bottom-up and systematic manner.Through collecting,consolidating,and analysing the Companys business information,the Internal Control Department builds a list of significant risks at both the corporate and business level,and ensures that appropriate risk response strategies and control measures have been taken for such risks.These significant risks,along with their corresponding risk responses and control measures,will be reviewed by management and subsequently by the Audit Committee before being reported to the Board.The Internal Control Department analyses and evaluates the responses to significant risks from time to time,and reports to the Audit Committee at least once a year.The Audit Committee,on behalf of the Board,assesses and determines the nature and level of the risks that the Company is willing to take in order to achieve its business objectives and formulates appropriate response strategies,which include designating responsible departments for handling each significant risk.The Audit Committee provides guidance to the Companys management to implement effective risk management system with support from the Internal Control Department.On behalf of the Board,the Audit Committee supervises the overall risk management of the Company and assesses the risk acceptable level,risk ratings and the risk response strategies.The Audit Committee considers that management has taken appropriate measures to address and manage the significant risks that they are responsible for at a level acceptable to the Board.For details of the significant risks and corresponding response and mitigation measures for 2024,please refer to the Corporate Governance Report section of Tencents 2024 Annual Report.OverviewCorporate GovernanceESG Governance1.Environmental Protection2.Caring for Our People3.Safeguarding Digital Rights4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix Board Independence and Diversity Risk Management Commercial Value,Social Value,and Shareholder Value07Commercial Value,Social Value,and Shareholder ValueSince our strategy upgrade to promoting sustainable innovations for social value,alongside nurturing the consumer Internet and embracing the industrial Internet,we have positioned the Company with a clear strategic vision for future development and strengthened our foundation in sustainability.We proactively manage the balance between commercial value,social value and shareholder value,ensuring the interests of shareholders and stakeholders are taken into account and the Company can steadfastly attain sustainable development in the long run.We fund our investments in social value innovations from the accumulated returns of our investment portfolio,separate from R&D funding for our products,technologies,and platforms.In designing commercial value,user value is our foundation.We invest heavily in technologies and products,strengthening the protection of user privacy and data security to deliver a superior product experience to our users.By supporting the digital upgrade of industries,we create social value together for the benefit of society.This,in turn,enables us to share commercial benefits brought by the convergence of the digital and real economies.In promoting digital industrialisation and industrial digitalisation,we position Tencent as a trusted digital assistant facilitating innovation and entrepreneurship and providing enabling technologies to support industries digital upgrades.Tencent continues to place user value at the core of our mission and culture,and at the forefront of commercial value design for our products and services.Regarding social value innovation,we focus on deploying our products and technologies to find innovative pathways to solve social pain points.We encourage our business teams to discover or enhance the social value of our products by,for example,making digital tools accessible for communities with activity limitations,protecting endangered wildlife,and more.Led by our Sustainable Social Value organisation,we provide funding support to scientists specialising in basic science research and,in several core areas,partner with recognised philanthropic organisations to incubate projects that can bring scalable benefits to society.On shareholder value,our continuous focus on creating user value and the organic integration of social and commercial values strengthens our foundation in sustainability,thus safeguarding the long-term value of the Company.We are committed to maintaining a high standard of corporate governance and have integrated environmental and social factors into our corporate strategies and risk management.OverviewCorporate GovernanceESG Governance1.Environmental Protection2.Caring for Our People3.Safeguarding Digital Rights4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix Board Independence and Diversity Risk Management Commercial Value,Social Value,and Shareholder Value08ESG GovernanceESG StrategyRooted in our vision and mission of Value for Users,Tech for Good,our ESG strategy is closely aligned with the Companys business strategy,which prioritises users,industries,and society.Guided by leadership and embraced by employees,our commitment to ESG has become a core element of our corporate culture and serves as a driving force for the Companys sustainable development.We implement ESG management through three approaches:(i)establishing an ESG governance structure that includes the Board,management,and employees;(ii)integrating ESG principles into corporate culture and ESG practices into daily business operations;and(iii)publishing an annual ESG report aligned with international reporting standards to enhance transparency and communicate the Companys actions and performance in ESG.With rapid advancements in AI technologies and the integration of digital and real economies within a globally interconnected landscape,the Internet industry is encountering a range of new market opportunities and risks.We are dedicated to creating products that deliver value for users and business partners,while proactively identifying and managing associated risks.At the same time,we put Tech for Good into practice,leveraging technologies to address environmental and social pain points,advancing the 17 United Nations Sustainable Development Goals (SDGs),and fulfilling our responsibility as a good corporate citizen.Our ESG strategy is implemented internally through robust corporate governance,ethical business practices aligned with internationally recognised standards,and advanced human capital management.Externally,we pursue sustainable business growth that prioritises the balanced interests of our users,business partners,industries,society,and the environment.We summarise our efforts as follows:Enhance corporate governance.Ensure the effectiveness,independence,and diversity of our governance system,and integrate ESG practices into our risk management and controls,to protect the rights of shareholders and related parties;Uphold business ethics.Operate in compliance with laws and establish and adhere to a code of ethical business conduct that encompasses anti-fraud,anti-unfair competition,and anti-money laundering practices;Provide our employees with a diverse,equitable,inclusive,and safe work environment,empower their professional growth,and nurture talent.Business Operations Protect the privacy of our users and the security of their data and digital properties.Implement a rigorous user privacy policy,data and cybersecurity strategies,and build a healthy digital content ecosystem to provide superior products and protect the rights of users;Listen to feedback from users and actively respond to their needs,enquiries,and complaints,and continuously enhance the quality of products and services accordingly;Support users,particularly minors,the silver generation and people with physical impairments,ensuring they have equal access to participate in the digital economy within a safe online environment.Users Assist industries,especially Micro-,Small and Medium-sized Enterprises(MSMEs)in managing their digital transformations;Ensure fair and equitable treatment when dealing with our business partners,and encourage them to provide feedback on our business practices;Eliminate and prohibit illegal or unwarranted behaviours that are harmful to long-term business partnerships by empowering our Internal Control Department and Anti-fraud Investigation Department.Business Partners Contribute to the advancement of the Internet industry via open source collaboration,open platform partnership,and Internet ecosystem interoperability;Increase community investment,leverage our products,platforms and technologies to implement Tech for Good,and alleviate social pain points through innovative applications;Support the digitalisation of philanthropy by leveraging digital capabilities to lower the barrier for public participation in philanthropic activities,improve the operational efficiency of philanthropic organisations,and increase the transparency of philanthropic projects.Industry and Society Reduce our carbon footprint and increase the use of renewable energy to achieve carbon neutrality in our operations and supply chains by 2030;assist industries in strengthening climate change management,contributing to the low-carbon transformation of society through technological solutions;Conserve nature by applying digital technologies to areas including species conservation and biodiversity mainstreaming;Raise environmental awareness among employees and users and encourage the adoption of eco-friendly practices to reduce carbon emissions and waste while minimising consumption of natural resources.EnvironmentOverviewCorporate GovernanceESG Governance1.Environmental Protection2.Caring for Our People3.Safeguarding Digital Rights4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix ESG Strategy ESG Governance Structure Board Statement Annual Review of ESG Working Group Integration of ESG Concepts into Corporate Culture ESG Materiality Assessment09ESG Governance StructureThe Companys ESG governance framework operates at three interconnected levels:the Board provides strategic oversight,senior management drives the development of ESG strategy and execution of ESG priorities,and ESG Champions implement initiatives across various business groups and provide regular reports on progress.Since the establishment of the ESG Working Group(see the table)in 2021,the Corporate Governance Committee has further strengthened its oversight through several approaches,including but not limited to inquiries,written reports,face-to-face meetings,and review of the annual ESG report prepared by the ESG Working Group.Strengthening the disclosure regarding user privacy and data security protection;evaluating the suitability and practicality of participating in relevant international initiatives or industry coalitions;and promoting the ongoing optimisation of internal policies and guidelines.Promoting biodiversity awareness within the Company,facilitating collaborative conservation projects,and exploring methods for quantitative impact measurement.Promoting a diverse and inclusive corporate culture and values in our business operations;tracking and reporting progress.Creating an ESG communication strategy,enhancing content,and broadening channels to promote culture among employees and gain recognition from external stakeholders.Enhancing ESG management within the supply chain by guiding internal departments and suppliers to adopt fundamental ESG principles,while monitoring the progress and outcomes of their implementation.The ESG Working Group has established five special committees to promote internal collaboration and strengthen ESG risk management and performance.Authorised by the Board to lead ESG governance.User Privacy and Data SecurityBiodiversity ConservationDiversity,Equity and InclusionCulture and CommunicationSupply Chain ManagementThe BoardESG Working GroupCorporate Governance CommitteeESG ChampionsESG Coordination OfficeESG Steering Team Leading the ESG Working Group to formulate the Companys ESG strategy and priorities.Co-chaired by the Chief Strategy Officer and the Chief Financial Officer,it is well-represented by senior executives from various business groups and functional teams,each focusing on specific ESG topics.Assisting the ESG Steering Team in identifying ESG objectives and coordinating various business groups and functional teams to develop action plans and monitor progress.Acting as the secretariat of the ESG Working Group and providing periodic reports on the Companys ESG-related matters to the Corporate Governance Committee.Leveraging their respective areas of expertise and professional resources to collaboratively drive the Companys ESG initiatives while providing regular updates to the ESG Coordination Office on the latest developments.Comprising employee representatives from various business groups and functional teams,focusing on specific ESG topics.Board StatementThe Board has overall responsibility for the Companys ESG strategy and reporting and delegates the oversight of ESG matters to the Corporate Governance Committee.Under the three-tiered ESG governance structure established by the Company,the ESG Working Group provides support to the Corporate Governance Committee to oversee the implementation,progress and performance management of the Companys ESG-related matters.During the reporting period,the Board participated in the materiality assessment and prioritisation of key ESG issues(please refer to the ESG Governance ESG Materiality Assessment section for more information).Through interviews,surveys,meetings,and other means,directors provided their views and suggestions regarding ESG topics that could potentially impact the Companys long-term sustainable development and evaluated the priorities of such topics.The senior executive management team and business leaders have also participated in the assessment of key ESG risks related to the business,and formulated risk response measures by considering the possibility,impact,and trends of key ESG risks.The Company has incorporated key ESG risks into its annual corporate risk assessment and comprehensive risk management system.The Board and the Corporate Governance Committee regularly supervise ESG-related matters,review the key risks,and make recommendations for mitigation measures.The Corporate Governance Committee tracks the progress and performance of ESG-related matters via regular progress updates,special reports,and responses to ad-hoc inquiries prepared by the ESG Working Group.The Corporate Governance Committee and the Board have closely followed material ESG topics with the potential to significantly impact the Companys businesses and have overseen the formulation and implementation of relevant response and mitigation strategies.The Companys annual ESG report,which has obtained limited assurance from a professional third-party organisation,was reviewed by the Corporate Governance Committee and Audit Committee,and approved by the Board.OverviewCorporate GovernanceESG Governance1.Environmental Protection2.Caring for Our People3.Safeguarding Digital Rights4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix ESG Strategy ESG Governance Structure Integration of ESG Concepts into Corporate Culture ESG Materiality Assessment Annual Review of ESG Working Group Board Statement10Annual Review of ESG Working GroupSince its formation,the Tencent ESG Working Group has fostered collaboration and co-creation across teams,integrating ESG principles into our technological innovation,product development,and service operations.We host the annual ESG Working Group conference in September.In 2024,we reported the progress of our key ESG programmes at the conference and invited experts to share and exchange insights into the latest ESG trends and industry developments.Additionally,the ESG Working Group collects and evaluates the annual best practices in ESG,inviting the awarded teams to present programmes and share experiences during the conference.In 2024,we refined existing and introduced ESG policies as well as launched projects in the following areas:Biodiversity ConservationUser Privacy and Data SecurityOur digital innovative solutions for biodiversity conservation were recognised as one of the United Nations Global Compact(UNGC)s 20 Case Examples of Private Sectors Sustainable Development in China for 20 Years.Eco-friendly Operation:We have formulated and implemented Tencent Solid Waste Management Policy,practising the Reduce,Reuse,and Recycle principle(3R principle).*Photographed at Tencent Binhai Towers Innovative Applications of Technologies:We have upgraded our AI tool to identify different species,expanded the range of identifiable categories,and improved the accuracy of identification.Additionally,we have assisted conservation agencies in enhancing the efficiency of ecological protection efforts.Raising Public Awareness:We aim to enhance the mainstreaming of biodiversity and utilise game technology and Tencent Hunyuan to create the Virtual Giant Panda.This approach helps bridge the gap between the public and wildlife.For more details,please refer to the Environmental Protection Nature and Biodiversity Conservation section in this report.We continuously develop and enhance our technical platform to ensure compliance with privacy protection standards,integrating privacy requirements into every aspect of business development and management process.Principle:We are committed to Privacy by Design,enhancing the protection of users digital rights and interests,and incorporating privacy protection into every facet of product and service development and operations.Technology:We broadened the use of privacy-enhancing technologies in 2024 to anonymise sensitive data that could potentially identify individuals,including methods such as encryption and data masking.Audit:We continuously improve the technical capabilities of our privacy protection and data security tools.We conduct regular compliance assessments and testing on our products to ensure they meet compliance standards across various regions worldwide.For more details,please refer to the Safeguarding Digital Rights Privacy Protection section in this report.OverviewCorporate GovernanceESG Governance1.Environmental Protection2.Caring for Our People3.Safeguarding Digital Rights4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix ESG Strategy ESG Governance Structure Integration of ESG Concepts into Corporate Culture ESG Materiality Assessment Annual Review of ESG Working Group Board Statement11We integrated ESG considerations into the onboarding process of suppliers,the procurement of network equipment and the sourcing of electricity.Onboarding Requirements:Our suppliers are required to sign the ESG Code of Conduct for Tencents Suppliers during the onboarding process.Green Procurement:We have enhanced the access criteria for suppliers of servers,network equipment,and leased data centres by introducing new environmental protection certification requirements and evaluating their environmental performance during the assessment process.Scope 3 Carbon Emissions Reduction:We promoted green energy transition in our leased data centres by sharing our experience and capabilities in green electricity procurement.The share of green electricity consumption in leased data centres reached 3.8%(0%in 2023).For more details,please refer to the Business Ethics Sustainable Supply Chain section in this report.Investors Institutional Investor magazine ranked Tencent as the No.1 in Asia(ex-Japan)as the Best ESG internet companies for four consecutive years,from 2021 to 2024.It is based on a survey of about 6,000 professional investment and financial services institutions globally.ESG Rating S&P Global has raised Tencents ESG score to 59,ranking it among the top three globally in the industry1;MSCI upgraded Tencents ESG rating to BBB2;Morningstar Sustainalytics maintained Tencents rating at the Low Risk level for two consecutive years,from 2023 to 20243;Wind awarded Tencent an AA ESG rating,ranking it first in the industry4.ESG Indices S&P Global includes Tencent in both its Dow Jones Sustainability World Index and Sustainability Emerging Markets Index;MSCI includes Tencent in its MSCI Emerging Markets ESG Leaders Index,MSCI China ESG Leaders Index,and others;The Hang Seng Index includes Tencent in the Hang Seng ESG 50 Index,and Hang Seng Corporate Sustainability Benchmark Index.We held multiple ESG engagement meetings with investors,business clients,and other stakeholders,actively communicating our ESG achievements and performance.By the end of 2024,these efforts received widespread recognition,particularly from the capital markets,as outlined below:1 According to the S&P Global ESG Score released on September 2,20242 According to the MSCI ESG Rating Report released on December 3,20243 According to the Morningstar Sustainalytics ESG Risk Rating Report released on December 20,20244 According to the Wind ESG Rating Report released on June 20,2024Tencent incorporates these values into our team development and workplace culture,and puts them into action.Within Tencent:We create a friendly,innovative,and collaborative workplace.Our senior executive management team has defined the direction for implementing diverse and inclusive corporate culture and values.During 2024,we introduced a training programme to promote these values.We enhanced our talent selection philosophy to Equity and Respect,Focus on the Core,which has been integrated into interviewer certification,training,and code of conduct.Regarding workplace infrastructure,we actively implement the highest standards of accessibility.For more details,please refer to the Caring for Our People Building a Diverse,Inclusive,and Collaborative Workplace section in this report.Diversity,Equity and InclusionSupply Chain ManagementCommunication and Recognition Products and Technology:Digitally inclusive products enable us to address the needs of diverse user groups,while creating an equitable access for people with impairments and senior citizens to participate in digital life.For more details,please refer to the Digital Inclusion section in this report.Philanthropy and Humanity:We collaborate with partners to promote these values by leveraging our platforms and technological advantages,collectively advancing Tech for Good.For example,the Red Umbrella Programme utilises digital technology for disease screening,establishes a digital management platform,and employs AI technology to help doctors increase two-cancer screening rates for women in regions with limited resources.Our collaboration with the China Children and Teenagers Fund on the Spring Bud InnoGrils and Spring Bud Choir projects is dedicated to promote the arts,sciences,and related disciplines to girls in underdeveloped areas.For more details,please refer to the Digital Inclusion and Digital Technologies Supporting Sustainable Development Goals sections in this report.*The Spring Bud InnoGirls project provides girls with the opportunity to learn about AI.OverviewCorporate GovernanceESG Governance1.Environmental Protection2.Caring for Our People3.Safeguarding Digital Rights4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix ESG Strategy ESG Governance Structure Integration of ESG Concepts into Corporate Culture ESG Materiality Assessment Annual Review of ESG Working Group Board Statement12Integration of ESG Concepts into Corporate CultureTencent integrates ESG concept with corporate culture and values,encouraging employees to implement ESG principles in daily work,and advancing our long-term sustainable development.We held our first ESG Culture Week in 2024,inviting professionals to share insights on ESG development trends with employees through in-person seminars and live-streaming,exploring ways to tap into business opportunities while addressing potential risks.Additionally,we introduced online training courses to enhance their ESG knowledge,and for the past two years,we have been organising monthly ESG quiz competitions to promote the integration of ESG concepts into daily work.In addition,we organised a series of ESG culture-building activities,including:Environmental Protection:We leverage World Earth Day,World Environment Day,and other significant occasions to provide employees with resources promoting environmental protection.Our Natural Positive initiative encourages energy conservation,carbon reduction,and waste minimisation while developing quantitative performance measures.Diverse and Inclusive Workplace:Through interviews with senior executives and employees,we developed a shared definition of diversity,equity,and inclusion that reflects our corporate values and culture.Based on this common understanding,we launched company-wide training that uses work scenarios and case studies to emphasise the importance of respecting individual differences and addressing unconscious bias.To celebrate International Womens Day,our offices hosted events and experience-sharing sessions.During the Global Cultural Festival,we further promoted the awareness and respect for diverse cultures through Q&A sessions,lectures,sharing booths,and other interactive activities.Privacy Protection and Data Security:Building on our general training,we strengthened professional skills and compliance requirements for specific positions.We incorporated privacy issues into promotional activities like Technology Culture Week,encouraging integration into daily work.AI Safety and Governance:We provide specialised assessments and training on AI safety for each business team,enhancing their security compliance awareness and capabilities to ensure that the AI models and technologies comply with applicable regulations and standards.Business Ethics:We provide specialised training on the Tencent Sunshine Code of Conduct(the Sunshine Code of Conduct)to all employees,facilitating their understanding of the management requirements concerning business ethics.Philanthropy:Through the Act for Good Mini Program,employees can utilise their personal skills,knowledge,and time to participate in or initiate philanthropic projects.A total of 27,000 volunteers had participated in over 1,330 projects by the end of 2024.*The trophy of ESG Best Practice Award is made of recycled circuit boards from our data centresOverviewCorporate GovernanceESG Governance1.Environmental Protection2.Caring for Our People3.Safeguarding Digital Rights4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix ESG Strategy ESG Governance Structure Integration of ESG Concepts into Corporate Culture ESG Materiality Assessment Annual Review of ESG Working Group Board Statement13Stakeholder CommunicationThe opinions and suggestions from stakeholders are particularly important for the Company to effectively identify ESG risks and enhance ESG management.We regularly communicate with our stakeholders to understand their expectations and feedback on the Companys ESG performance.Our stakeholders include users,governments and regulatory bodies,employees,investors,business partners,non-governmental organisations(NGOs),the media and the public.Our communication channels include but are not limited to the Companys website,Official Accounts on social platforms,online and in-person meetings,investor and press conferences,and employee satisfaction surveys.ESG Materiality AssessmentMateriality AssessmentTo identify and evaluate various ESG topics that are material,we engaged a third-party consultancy to conduct a materiality assessment applying the following methodology:Identify a list of potential material ESG topics by taking into consideration:1)common topics raised by internal and external stakeholders,2)topics covered in the ESG Reporting Code published by the Hong Kong Exchanges and Clearing Limited(HKEX)and major international ESG reporting standards and frameworks,including International Financial Reporting Standards(IFRS)S1&S2,the Task Force on Climate-Related Financial Disclosures(TCFD),the Taskforce on Nature-related Financial Disclosures(TNFD),the Global Reporting Initiative(GRI)Standards,and the Sustainability Accounting Standards Board(SASB)Standards,the SDGs,and 3)global sustainable development trends.Understand concerns and views on material ESG topics via in-depth interviews and online surveys across stakeholder groups.In order to solicit views from various stakeholder groups,we distributed online questionnaires and collected over 6,000 valid responses from users,business partners,employees,regulatory bodies,suppliers,academia,media,and NGOs.We conducted interviews with directors,management,and investors to gain an in-depth understanding of their prioritisation of ESG topics,as well as their perspectives and recommendations on our ESG strategy.Following the ESG report publication,we collected feedback on our ESG disclosures and materiality assessment through various communication channels,including meetings with stewardship teams.Determine the importance of each ESG topic through a materiality matrix.The 2024 materiality matrix presentation has been updated from last year to better reflect the importance of ESG topics.1Climate Change Response and Carbon Neutrality2Energy Management3Natural Resources and Biodiversity Protection4Waste Management and Circular Economy Solutions5Water Management6Digital Solutions for Environment Protection7Environmental Education and Awareness Building8Talent Attraction,Development and RetentionEnvironmentSocietyGovernance9Employee Compensation and Benefits10Diversity,Equity and Inclusion11Employee Rights and Labour Practices12Protection of Data Privacy13Data and Cyber Security14AI Safety and Governance15Responsible Content and Platform16Service Quality and Customer Feedback17Providing Accessible and Assistive Digital Product18Building a Safe and Healthy Digital World for Minors19Digital Technologies Driving Financial Inclusion20Supporting the Digitalisation of the Real Economy21Leveraging Digital Technologies for the SDGs and Executing Tech for Good22Corporate Governance(Efficiency,Independence,and Diversity)23Integrating ESG Factors into Strategies and Balanced Scorecard Review24Incorporating ESG Value into Corporate CultureBusiness ImpactHighLowHighSocial and Environmental ImpactStakeholders Communication ChannelsUser satisfaction surveys,online customer service,official website,and social media platformsUsersIndustry conferences,supplier conferences,supplier evaluation,site visits,and official websiteBusiness PartnersInformation disclosure,policy consultation and feedback,special meetings or reports,official visits,and official websiteGovernments and RegulatorsEmployee satisfaction surveys,annual staff meetings,internal bulletin boards,employee channels for appeals,official website,and social media platformsEmployeesInvestor meetings,company announcements,Annual General Meeting,official website,and social media platformsInvestorsPress conferences,official website,and social media platformsMedia and General PublicIndustry events,press conferences,official website,and social media platformsNGOs25Anti-monopoly26Anti-money Laundering27Anti-corruption28Protection of Intellectual Property Rights29Sustainable Supply Chain Management30Stakeholder Dialogue and Engagement121911101719162201815148222726232930251367534242128OverviewCorporate GovernanceESG Governance1.Environmental Protection2.Caring for Our People3.Safeguarding Digital Rights4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix ESG Strategy ESG Governance Structure Integration of ESG Concepts into Corporate Culture ESG Materiality Assessment Annual Review of ESG Working Group Board StatementAlignment with the Ten Principles of the UNGCPrinciple 7:Businesses should support a precautionary approach to environmental challenges;Principle 8:undertake initiatives to promote greater environmental responsibility;Principle 9:encourage the development and diffusion of environmentally friendly technologies.Environmental ProtectionThe World Economic Forums Global Risks Report 2025 lists the most serious global risks for the next decade,naming extreme weather events and biodiversity loss and ecosystem collapse as the top two concerns.Climate change and ecosystem issues are deeply interconnected.In 2024,the 29th Conference of the Parties to the United Nations Framework Convention on Climate Change(COP29)and the 16th meeting of the Conference of the Parties to the Convention on Biological Diversity(COP16)reinforced the importance of a coordinated approach to foster synergies between climate and nature initiatives,promoting the development of low-carbon technologies and nature-based solutions(NbS)to address biodiversity loss and climate change simultaneously.As a technology company,Tencent believes that digital technology should play a key role in promoting the synergies between climate and nature initiatives.Alignment with SDGs*Photographed at Tencent Binhai Towers1.1 Environmental Strategies and Progress1.2 Climate Change and Carbon Neutrality1.3 Nature and Biodiversity Conservation14Corporate GovernanceESG Governance1.Environmental Protection2.Caring for Our People3.Safeguarding Digital Rights4.Digital Inclusion6.Business EthicsAppendixOverview5.Digital Technologies Supporting Sustainable Development Goals Environmental Strategies and Progress Climate Change and Carbon Neutrality Nature and Biodiversity Conservation151.1In light of the global challenges posed by climate change and nature loss,Tencent recognises that addressing these two issues in a synergistic approach is becoming essential for sustainability efforts.We have set ambitious carbon neutrality targets and released the Tencent Biodiversity Statement to promote a more eco-friendly environment,aligning with the Paris Agreement and the Kunming-Montreal Global Biodiversity Framework.We have established clear responsibilities and reporting mechanisms for environmental protection,formulated and implemented policies,including the Tencent Environmental Protection Management Policy.Our ESG Working Group is responsible for coordinating and managing environmental matters and reports to the Corporate Governance Committee on our progress twice a year.The objective is to keep the Corporate Governance Committee informed about climate and nature-related trends and regulatory changes,supporting their governance on climate and nature strategies.We apply frameworks including the International Financial Reporting Standards S2 Climate-related Disclosures(IFRS S2)/TCFD and TNFD,to effectively track,assess,and disclose our targets and progress,ensuring alignment with international reporting frameworks.Our decarbonisation roadmap and greenhouse gas(GHG)emissions that we disclosed were selected by the HKEX as one of the two examples of reporting on GHG emissions published on its official website1.Environmental Strategies and Progress A 1.5C average rise may put 20-30%of species at risk of extinction2.Increasing renewable energy use from 15%to 85n reduce the risk of species extinction and biodiversity loss by 75%4.The worlds forests absorb a net 7.6 billion metric tons of carbon dioxide per year5.Forest loss is currently responsible for 20%of total global GHG emissions3.ReciprocalRelationship1 HKEX:ESG in Practice Climate Change Reporting on greenhouse gas emissions Example 2.2 IPCC,Special Report:Global Warming of 1.5C,2018.3 The World Economic Forum,How protecting forests can help us tackle climate change and meet net-zero targets,21 May,2022.4 WWF and BCG,Building a nature-positive energy transformation Why a low-carbon economy is better for people and nature,3 November,2023.5 Washington University in St.Louis,Our future hangs in the balance:climate change and biodiversity loss,2025.Climate ChangeNature and BiodiversityOverviewCorporate GovernanceESG Governance1.Environmental Protection2.Caring for Our People3.Safeguarding Digital Rights4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix Environmental Strategies and Progress Climate Change and Carbon Neutrality Nature and Biodiversity Conservation16We actively explore actions that synergistically address both climate change and nature conservation.For instance,we recycle electronic waste from data centres to reduce land use associated with landfills while reducing carbon emissions resulting from newly purchased electronic equipment.We also collect and compost coffee grounds from our office buildings as fertiliser for mangrove park conservation.Additionally,we support the ecological restoration of seagrass beds to enhance their carbon sequestration capacity and assist in developing marine carbon sinks.Consumed 1,416,661.8 MWh of renewable energy,an increase of 123.9%compared to 2023 and reduced 807,922.2 tonnes of CO2 emissions.Developed digital solutions for species conservation,for example,AI-powered species recognition.Net-Zero Target validated by the Science Based Targets initiative(SBTi).Tencent Digital Innovative Solutions for Biodiversity Conservation included in UNGCs 20 Case Examples of Private Sectors Sustainable Development in China for 20 Years report.Promoted green energy transition in leased data centres;increased the share of green electricity consumption in leased data centres to 3.8%(0%in 2023).Formulated and implemented the Tencent Solid Waste Management Policy.Reused 4,380.8 tonnes of electronic equipment and recycled 649.0 tonnes of hard disks and mobile terminals for resource utilisation.Added green and low-carbon certifications as criteria for selecting server and data centre vendors.Tencent Tianjin Binhai data centre received a TRUE1 zero-waste certification.Launched the CarbonX Program 2.0,investing hundreds of millions of RMB,to support the large-scale application of cutting-edge low-carbon technologies,such as carbon capture,utilisation and storage(CCUS)and long-duration energy storage.Piloted the use of reclaimed water in data centres for cooling systems to conserve freshwater.Supported research on emerging carbon sink technologies and the development of carbon reduction methodologies,including seagrass beds,water-saving and drought-resistant rice.Conducted a pilot implementation of waterless cooling systems to replace water cooling systems in regions with relatively high water stress,thereby reducing water usage.Carbon NeutralityBiodiversity ConservationGreen Supply ChainWaste ManagementInnovative Low-Carbon SolutionsWater ManagementSynergies between Climate and NatureOur Progress in 2024ClimateNature1 TRUE(Total Resource Use and Efficiency)Certification is verified by the Green Business Certification Inc.,which aims to rate how well facilities perform in minimising their non-hazardous,solid waste and maximising their efficiency in the use of resources.*Photographed at Tencent Binhai TowersOverviewCorporate GovernanceESG Governance1.Environmental Protection2.Caring for Our People3.Safeguarding Digital Rights4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix Environmental Strategies and Progress Climate Change and Carbon Neutrality Nature and Biodiversity Conservation17Tencent is committed to responding to the global climate action and Chinas carbon peaking and carbon neutrality goals.We proactively leverage digital technology and the influence of our products to assist users,industries,and society in their transition to a low-carbon economy.In 2024,Tencents total GHG emissions were 6,056,610.1 tCO2e,representing an increase of 3.1%compared to the base year(2021).The total GHG emissions per unit of revenue was 9.2 tCO2e/RMB million,representing a reduction of 12.4%compared to the base year.Climate Change and Carbon Neutrality1.2Continued to implement energy-saving and emission-reduction measures in our data centres and offices.Continued to procure green electricity.A total of 1,364,625.9 MWh of green electricity was purchased in 2024,representing a 125.8%increase compared to 2023 and reducing CO2 emissions by 778,246.2 tonnes.Expanded the installed renewable energy capacity in data centres.By the end of 2024,the total installed capacity had reached 63.8 MW,representing a 22.2%increase compared to 2023.Promoted green energy transition in leased data centres.The share of green electricity in our leased data centres reached 3.8%in 2024(0%in 2023).Decarbonisation RoadmaptCO2e/RMB millionMtCO2eAdvancing Carbon Neutrality Through Energy ManagementWe follow the principle of emissions reduction and green electricity first,followed by offset.We focused on enhancing energy efficiency in 2024,facilitating the transition to renewable energy,and increasing the use of green electricity throughout our supply chain.Carbon Neutrality Roadmap and ProgressIn 2021,Tencent unveiled the carbon neutrality plan.In 2022,Tencent released the 2030 carbon neutrality target and decarbonisation roadmap.Achieve carbon neutrality across own operations and supply chain by 2030;Use green electricity for 100%of all electricity consumption by 2030;The target and roadmap cover supply chains.In 2023,Tencent refined its absolute emissions reduction targets to include Scope 1,2 and 3 emissions,which have been validated by the SBTi and are in line with the 1.5C goal of the Paris Agreement.Scope 1 and Scope 2:Reduce by 70%by 2030(from the 2021 base year);Scope 3:Reduce by 30%by 2030(from the 2021 base year).In 2024,Tencents 2050 Net-Zero Target has been validated by the SBTi.47.28%2.01%Scope 1Scope 2459750.71%Scope 3 6238Scope 3 Emissions CategoriesCapital goods14.83%2Purchased goods and services0.495.60%Fuel-and energy-related activities(not included in scope 1 or scope 2)30.23%Upstream transportation and distribution40.01%Waste generated in operations5Downstream leased assets0.06.32%Employee commuting752.82%Upstream leased assets84.64%Business travel61Scope 1,2 and 3 GHG emissionsTotal GHG emissions per unit of revenue(RHS)Reduced emissions2021202220232024864210Scope 1 emissionsScope 3 emissionsScope 2 emissions151296310.510.49.59.2OverviewCorporate GovernanceESG Governance1.Environmental Protection2.Caring for Our People3.Safeguarding Digital Rights4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix Environmental Strategies and Progress Climate Change and Carbon Neutrality Nature and Biodiversity Conservation18Tencent incorporates low-carbon and eco-friendly principles into its operations,reducing the carbon footprint of its products and services.In compliance with the Environmental Protection Law of the Peoples Republic of China(PRC),the Energy Conservation Law of the PRC,and other applicable laws and regulations in regions where we operate,we focus on reducing carbon emissions emitted during our operations and construct green data centres and office buildings.Reducing Our Carbon FootprintGreen Data CentreThe acceleration of AI applications in 2024 has imposed higher demands on the computational load and power density of data centres and led to increased energy consumption.To address this challenge,we have further developed and implemented efficient power and cooling technologies on the basis of our fourth-generation data centre(T-Block),while employing our AI-powered energy-saving algorithm model to optimise energy usage.Meanwhile,we expanded the use of renewable energy and piloted synergistic solutions for renewable energy and power storage facilities,aiming to deliver greener cloud computing services to customers and society.By the end of 2024,Tencents data centres had received 29 green and low-carbon-related certifications.Site SelectionWe take full consideration of energy supply,physical climate risks,and natural impacts when determining the location of our data centres.Evaluating the local renewable energy supply;Selecting areas with favourable temperatures to reduce energy consumption from cooling demands,evaluating physical climate risks,including flooding and landslides;Conducting environmental and energy assessments to evaluate the potential impacts of data centres on soil,water,atmosphere,ecosystem,and energy consumption,developing and taking countermeasures.*One of Tencents Data Centres in China*T-BlockConstructionOur T-Block uses modular design to reduce construction time,costs,and carbon emissions.OverviewCorporate GovernanceESG Governance1.Environmental Protection2.Caring for Our People3.Safeguarding Digital Rights4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix Environmental Strategies and Progress Climate Change and Carbon Neutrality Nature and Biodiversity Conservation19Energy Efficiency Enhancement in OperationsWe conduct real-time monitoring of operating parameters and promote low-carbon and efficient operation of data centres through a series of intelligent management platforms.Additionally,we leverage AI technology to adjust equipment operating parameters,which helps further enhance the overall energy efficiency of data centres in operations and maintenance.Energy Efficiency Enhancement in EquipmentWe optimise the power usage effectiveness(PUE)of our data centres through various measures,investing in developing and applying higher-efficiency hardware and cooling systems to further unlock energy-saving potential.Intelligent OperationWe apply the Internet of Things(IoT)technology to monitor equipment operating parameters in real time.Our intelligent operation platform automates the collection and management of data on infrastructure devices,energy use,and carbon emissions.It can perform PUE energy efficiency management and energy consumption analysis based on intelligent algorithms and calculate carbon emissions.Operators can customise the management process on the platform to automatically dispatch tasks according to actual operational needs.Our partners can also access the platforms core functionality modules to build their platforms,jointly advancing the intelligent operation of data centres.In 2024,we piloted upgrades of temperature and humidity sensors as well as electricity meters in our data centres to improve their accuracy.We also increased the number of ports on the data acquisition gateway to improve the accuracy and efficiency of data acquisition of hardware devices.Power Supply Devices with Higher Energy EfficiencyOur high-efficiency integrated high voltage direct current(HVDC)system adopts a modular design concept and combines the functions of the control cabinet,HVDC cabinet and integrated distribution cabinet.This approach effectively improved power density,conserved energy while reducing loss.In 2024,we launched pilot applications of our high-efficiency HVDC systems.Cooling Systems with Higher Energy EfficiencyWe implemented next-generation indirect evaporative cooling technology in our data centre cooling systems,improving energy efficiency by 16%compared to the air handling units used prior to the replacement.In 2024,we expanded the deployment of indirect evaporative cooling units,saving approximately 10,825.0 MWh of electricity.To address the rapid advancement of AI,we also developed high-efficiency liquid cooling solutions and products tailored for the high power density of GPUs.In 2024,we completed the deployment and trial operation of our first pilot project.*Intelligent Management Platform for Renewable Energy Project*AI Optimisation Management Platform AI OptimisationWe developed an AI energy-saving algorithm model that optimises operating parameters such as supply air temperature and fan speed to save energy,and leveraging modelling and analysis based on operational data,indoor environmental data,and outdoor weather data.In 2024,we implemented this model in leased data centres to work with our suppliers in reducing carbon emissions.OverviewCorporate GovernanceESG Governance1.Environmental Protection2.Caring for Our People3.Safeguarding Digital Rights4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix Environmental Strategies and Progress Climate Change and Carbon Neutrality Nature and Biodiversity Conservation20Renewable Energy TransitionWe are accelerating our renewable energy adoption,scaling up green electricity procurement and expanding renewable energy facilities deployment.Our renewable electricity percentage increased from 12.4%in 2023 to 22.0%in 2024.Procurement of Green ElectricitySince 2021,we have adhered to the principles of additionality,traceability and proximity to promote green electricity procurement.Additionality means that the green electricity procured is not subsidised,ensuring our green electricity procurement efforts to better promote the generation of renewable power;Traceability means that the green electricity can be clearly traced back to the source of the energy,ensuring compliance,transparency and sustainability of the source;Proximity means that we prioritise renewable energy projects that are geographically close to data centres during the process of energy procurement.This can reduce energy transmission losses and improve the efficiency of energy utilisation.Integrated Wind-Solar-Storage Microgrid for Data CentresOur integrated wind-solar-storage microgrid for data centres was completed and connected to the grid in November 2024.This system utilised energy storage and peak-load shifting technologies to effectively manage peak demand,reducing power supply pressure during peak hours while increasing the proportion of green electricity consumed by data centres.We also leveraged digital technology to enable real-time monitoring and forecasting of renewable energy generation,thereby improving the efficiency of green electricity usage through the optimisation of the operational mode.PV modulesWind energy generation systemAdjustable loadEnergy storage system Renewable Energy FacilitiesWe have diversified the types of self-built new energy facilities in data centres,piloting building-integrated photovoltaics(BIPV)and wind-solar-storage microgrids while increasing the scale of grid-connected rooftop photovoltaic(PV)systems.Solar-powered EV charging stationsBy the end of 2024,the total installed capacity of Tencents data centres renewable energy facilities had reached 63.8 MW,representing an increase of 22.2%compared to 2023.In 2024,a total of 1,364,625.9 MWh of green electricity was purchased,representing an increase of 125.8%compared to 2023,and reduced CO2 emissions by 778,246.2 tonnes.Our BIPV pilot project was launched in 2024.Compared to traditional PV panels,our flexible PV modules significantly reduce dust accumulation and effectively improve the efficiency of system power generation by adopting a frameless design.The BIPV design also fits tightly to the building surface and achieves seamless integration,which provides better windproof and waterproof performance of the building.In addition,we are regularly evaluating the green and low-carbon potential at leased data centres,leveraging our experience and capabilities to assist them in sourcing green electricity.In 2024,our leased data centres purchased 234,474.5 MWh of green electricity.OverviewCorporate GovernanceESG Governance1.Environmental Protection2.Caring for Our People3.Safeguarding Digital Rights4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix Environmental Strategies and Progress Climate Change and Carbon Neutrality Nature and Biodiversity Conservation21Green OfficeTo make our workplace more sustainable,we continue to take energy and resource efficiency into consideration throughout the design,construction and operation of our office buildings.We implemented multiple energy-saving measures and enhanced green management,through which we saved a total of 5,754.3 MWh of electricity in 2024 and reduced CO2 emissions by 3,281.7 tonnes.Energy Conservation Through ManagementWe continuously refine the management strategy for reducing energy consumption and update the Guidelines for the Operation of Energy-consuming Equipment based on the actual operating conditions of different offices.We leverage digital solutions including the Facility Management Platform and Building Automation System to monitor and optimise the energy consumption patterns of our office buildings.We adjusted the control methods for lighting switches,optimised the operation strategies for air conditioning,and dynamically adjusted equipment operating hours based on actual usage.In addition,we established an energy-saving assessment policy to conduct monthly assessments on building operators and offer incentives or impose penalties.Green CertificationThe management of our office buildings complies with international management systems standards,including ISO 9001 Quality management systems,ISO 14001 Environmental management systems,ISO 45001 Occupational health and safety management systems and ISO 50001 Energy management systems published by the International Organisation for Standardisation(ISO).We design all our new buildings to meet international and local green building standards.After completion and operation,we adhere to international standards to regulate our routine operations and maintenance.The operators of our office buildings are all certified with ISO 9001,14001 and 45001 in 2024.At Dachan Bay in Shenzhen,our new headquarters under construction is designed with an energy management and carbon reduction roadmap,including deployment of PV facilities,adoption of air-source heat pump energy-saving technology,and load adjustment through peak shaving and valley filling by a centralised cooling station.In 2024,the 04 plot of this project has passed the joint audit by the Building Research Establishment(BRE)and TV Rheinland Greater China(TV Rheinland)in accordance with the Net-Zero Carbon Community Evaluation Scheme.The audit results indicate that its carbon emissions meet low-carbon requirements,and its carbon management system is outstanding.This plot has been awarded the Certificate of Outstanding for Low Carbon Community by TV Rheinland.The LEED certifications for Tencents self-owned office buildingsBuildingCertificationYear of CertificationTencent Binhai TowersLEED BD C:NC Gold Design Certification2017LEED O M:EB Gold Operation Certification2020Chengdu Tencent TowersLEED BD C:NC Gold Design Certification2017LEED O M:EB Platinum Operation Certification2018Beijing Tencent TowersLEED BD C:NC Gold Design Certification2021LEED O M:EB Platinum Operation Certification2023Energy Conservation Through TechnologyWe regularly assess the energy consumption levels in our office buildings and conduct specialised energy-saving retrofits,constantly exploring the carbon reduction potential of lighting and heating,ventilation,and air conditioning(HVAC)systems.For lighting systems,we have adjusted operating hours based on usage needs in areas including offices,corridors,elevator lobbies,cafeterias,basement and gyms.We have replaced fluorescent tubes with LED tubes and switched permanent lamps to motion sensor lamps.For HVAC systems,we control the cooling hours and air-conditioning temperatures,leveraging the residual cooling of the chilled water pipelines to reduce the running time of the air-conditioning units.Additionally,we precisely control temporary air-conditioning demand using intelligent remote switches to further reduce unnecessary energy consumption.*Rendering of Tencent New Headquarters Project under ConstructionOverviewCorporate GovernanceESG Governance1.Environmental Protection2.Caring for Our People3.Safeguarding Digital Rights4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix Environmental Strategies and Progress Climate Change and Carbon Neutrality Nature and Biodiversity Conservation22Tencent believes that digital technologies are conducive to the low-carbon transition of society.Our solutions include but are not limited to online office to reduce business travel,mobile payment to reduce paper consumption,games to promote environmental awareness,and digital tools to improve industrial efficiency.Facilitating Low-Carbon Transition of SocietyOnline OfficeOur cloud products provide efficient solutions for enterprises with hybrid and online office models,actively contributing to carbon reduction.Tencent Meeting offers functions including remote video collaboration,real-time screen sharing,instant messaging and AI-generated meeting minutes,which help improve meeting efficiency,save on travel expenses,and reduce paper waste.Its carbon credits centre can quantify users low-carbon behaviours and convert them into credits,encouraging carbon reduction.Tencent Docs supports cloud storage and allows multiple users to collaborate and edit the same online document,which can effectively reduce carbon emissions while improving productivity.Emission reductions resulting from using online documents mainly come from:lower carbon emissions compared to local storage,reduced carbon emissions during file transmissions,and the facilitation of mobile editing,which consumes less energy.Industrial ApplicationWe are exploring digital solutions to assist enterprises in facilitating intelligent decision-making in energy management.To promote refined energy consumption and carbon management in the steel industry,we partnered with a short-process steelmaker to digitally model the short-process steelmaking1 and equipment loads,and optimise the scheduling of production based on information including time-of-day tariffs,peak load shifting and demand-side response instructions from the grid.This initiative can help the steelmaker enhance its renewable energy integration capacity within the power system,ensuring production output while reducing carbon emissions.Online GamesWe use online games to raise public environmental awareness in an enjoyable and accessible way.In 2024,Tencent Games was awarded the coveted Sustainability Award at gamescom 2024 in Cologne,Germany.Carbon Island is a simulation game focused on environmental science education.Players can build a thriving island that seeks sustainable economic growth,therefore learning carbon neutrality knowledge and low-carbon lifestyle concepts.In 2024,Carbon Island received the UNEPs Choice award at the Green Game Jam2.PUBG Mobile encourages players to participate in and achieve a collective running distance goal by launching the in-game Run for Green event.When players achieve the goal,we will unlock support for offline ecological conservation projects spanning over 750,000 square meters in the form of carbon credits,delivering tangible contributions to environmental protection.In 2024,PUBG Mobile received the Medias Choice award at the Green Game Jam2.1 Short-process steelmaking uses scrap steel as its main raw material and offers significant potential for energy saving and carbon reduction by eliminating the need for pollution-intensive,energy-consuming processes such as coking,sintering,and blast furnace ironmaking.2 Green Game Jam is organised by the Playing for the Planet Alliance initiative,facilitated by the United Nations Environment Programme(UNEP).Mobile PaymentsWeixin Pay continues to expand its mobile payment offerings,promoting a shift towards low-carbon lifestyles through the following functions:Electronic receipts,invoices,insurance policies to replace paper consumption;Online utilities bill payments to reduce commuting emissions;QR codes scanning for public transportation options,including buses,subways,and shared bikes to promote green travel.OverviewCorporate GovernanceESG Governance1.Environmental Protection2.Caring for Our People3.Safeguarding Digital Rights4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix Environmental Strategies and Progress Climate Change and Carbon Neutrality Nature and Biodiversity Conservation23Exploring CCUS InnovationsTencent actively supports innovative low-carbon technologies,including basalt carbon capture and other CCUS technologies.In 2023,we launched the CarbonX Program,which is dedicated to supporting the research and application of emerging low-carbon technologies.The first phase of the programme covered CCUS technologies and selected 30 projects that received support.Two of the project examples are as follows.Advancing Low-Carbon InnovationsBased on the exploration of the first phase of the project,we initiated the second phase of this programme(CarbonX Program 2.0)in December 2024.We will invest hundreds of millions of RMB,focusing on three key areas in CCUS:carbon dioxide removal,CCUS for the steel industry,and CarbonXmade.We have also extended our scope to other energy-saving technologies,including long-duration energy storage.CarbonX Program 2.0 has broadened the projects scope to geographies outside of China to promote international collaboration for development of decarbonisation technologies.In 2024,we initiated a joint research project with Tsinghua University on the measurement,reporting and verification of CCUS to better quantify the emission reduction effects of this innovative technology,enhance the credibility and transparency of the quantification process,and improve the efficiency of climate action.The team led by Professor Wang Tao from Zhejiang University,developed a high-throughput,low-pressure-loss,and efficient air carbon capture reactor,leveraging cutting-edge ultra-low-energy moisture swing technology and mass-producible and stable hierarchical porous polymer materials,which significantly reduces operational energy consumption and facilitates the practical application of direct air capture to help mitigate climate change.The team led by Professor Su Wei from the University of Science and Technology Beijing,innovatively designed steel slag blocks by simulating the natural process of mineral rock formation and evolution,combining CO2 from steel production with steel slag.These blocks not only sequester CO2 but also enhance the resource utilisation of steel slag,transforming it into durable construction materials.Developing AI Knowledge Tools for Climate KnowledgeThe open community for global climate technology sharing and cooperation that we have established TanLIVE,aims to facilitate communication among various stakeholders in low-carbon technologies to promote technology incubation and application.In 2024,we introduced an AI knowledge base feature in TanLIVE,which allows environmental organisations to build their internal knowledge repositories,supported by AI-powered management and search capabilities.Additionally,this feature enables cross-institutional knowledge exchange and collaborative development,encouraging broader communication and cooperation.Supporting the Development of Emerging Carbon SinksWe are actively exploring digital innovations for carbon sinks,including the use of digital technology to assist in the accounting and verification of forest carbon sinks.Simultaneously,we are supporting the exploration of emerging carbon sinks.We have collaborated with Xiamen University to jointly develop a methodology for measuring and monitoring carbon sinks in seagrass bed restoration,supporting the protection of marine ecosystems and blue carbon development.We have also used digital technology to support the monitoring and measurement of GHG emission reductions in water-saving and drought-resistant rice,while completing the research and development of the methodology for water-saving and drought-resistant rice.OverviewCorporate GovernanceESG Governance1.Environmental Protection2.Caring for Our People3.Safeguarding Digital Rights4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix Environmental Strategies and Progress Climate Change and Carbon Neutrality Nature and Biodiversity Conservation24Climate-Related Risks and OpportunitiesGovernanceThe Board of Directors is supported by the Corporate Governance Committee to oversee the performance and implementation of our environmental management progress.The ESG Working Group is responsible for managing and coordinating our environmental efforts and reports to the Corporate Governance Committee.Management and CoordinationImplementationThe ESG Working Group is co-chaired by the Chief Strategy Officer(CSO)and the Chief Financial Officer(CFO).Please refer to ESG Governance ESG Governance Structure section in this report for detailed composition:Identifying,assessing and monitoring climate-related risks and opportunities;Reviewing Tencents ESG strategy,establishing climate risk response measures,and monitoring relevant business departments to implement actions;Seizing relevant ESG-related opportunities;Reviewing and updating the ESG targets based on the Companys strategy and international standards;Conducting annual audits of climate-metrics;Enhancing employee awareness and capacity building on climate matters.The Carbon Neutrality Joint Project Group is led by the Groups Senior Vice President and guided by advisors in climate and energy matters.The group consists of Strategy Development Department,Carbon Neutrality Lab,Data Centre Green Energy Team,ESG Coordination Office,Administration Department,and low carbon-related product teams:Developing an appropriate climate strategy,which includes a resilience plan,response measures for managing climate-related risks,and initiatives for seizing opportunities;Implementing climate response measures and exploring business opportunities;Developing climate-related targets and setting up metrics to regularly monitor the progress.StrategyWe continue to conduct climate assessments by incorporating considerations of factors including business model,value chain and financial capacity into our climate strategy.We conducted scenario analysis for our operational assets and business activities using both low-carbon and high-carbon climate scenarios to assess the related climate risks and opportunities.The analysis is using datasets from the Intergovernmental Panel on Climate Change(IPCC)and the International Energy Agency(IEA),please refer to Appendix Time Horizons and Climate Scenarios Selection in this report for more details.The assessment covered 7 physical climate risks and identified 11 transition risks/opportunities.Please refer to Appendix Climate-related Risks and Opportunities Scenario Analysis Results in this report for the assessment results.Based on our scenario analysis results,we have implemented appropriate measures to strengthen capacities in climate risk response,mitigation,and adaptation,thereby enhancing our climate resilience to manage identified material physical and transition risks.For example,we support the research and development of climate resilience technologies while strengthening our own climate resilience.We collaborated with Nanjing University to develop materials radiative cooling with a nano-thin material developed from ecofriendly cellulose acetate,thereby mitigating glacier melting.To disclose our enhancement in climate-related topics in a more comprehensive and balanced manner,Tencent applies the HKEXs Environmental,Social and Governance Reporting Code and IFRS S2/TCFD to conduct climate-related disclosures.OverviewCorporate GovernanceESG Governance1.Environmental Protection2.Caring for Our People3.Safeguarding Digital Rights4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix Environmental Strategies and Progress Climate Change and Carbon Neutrality Nature and Biodiversity Conservation25Summary of Climate-related Risks and Opportunities with Associated Impacts and ResponsesKey Climate Risk/OpportunityImpact1 DescriptionResponsesExtreme heat Higher cooling demand in facilities due to temperature increase may lead to increased operating costs;The operation of power-consuming facilities may be disrupted by a shortage of power supply under extreme heat conditions,which may lead to revenue loss.Factoring climate in the site selection of data centres and using natural conditions to cool down equipment;Improving energy efficiency and reducing cooling energy consumption through technologies including T-Block and high-efficiency air conditioning;Strengthening the heat resistance and resilience of electrical facilities,for example,adopting dual power supply cooling systems.FloodingTyphoon Infrastructure and equipment damaged by flooding and typhoon leading to data loss;Investment for upgrades and maintenance of facilities and buildings for climate resilience enhancement may lead to an increase in capital expenditures(CAPEX);Temporary suspension of operation during flooding and typhoon conditions may lead to revenue loss;Flooding and typhoon can pose health and safety risks to employees.Factoring flooding and water location in the site selection of data centres and office buildings;Building and maintaining facilities to cope with extreme weather,for example,flood gates,secondary drainage,sealed power and fibre ducts;Installing servers,air conditioners,and other critical equipment in locations that meet the requirements for flood protection and wind resistance grade.Water stress and drought The continuity of data centre operations may be disrupted due to a lack of cooling water during water stress conditions,which may lead to revenue loss;Alternative water procurement in the event of a shortage of common water may lead to increased operating costs.Factoring the impacts on surrounding water resources in the site selection of data centres and office buildings;Adopting waterless cooling system for air conditioning units;Adopting water conservation equipment and retrofitting existing equipment for water saving to enhance the efficiency of water use;Applying rainwater harvesting techniques;Considering the availability of alternative water resources in case of water shortage and installing backup water facilities,including backup water trucks.Implementation of carbon emission reduction policies Data centres may be included in the carbon trading market,and the procurement of carbon allowances for compliance may lead to an increase in operating costs;Increase of carbon sink price may lead to increased operating costs.Participating in the carbon trading market for compliance in accordance with the requirements where we operate;Strengthening internal carbon management,promoting the development of internal energy-saving and emission reduction technologies,and exploring internal carbon pricing;Promoting the development and innovative application of carbon sequestration technologies by investing in NbS and supporting the development of carbon sequestration methodologies.Increased requirements on climate change action and disclosure Increased investment in energy efficiency upgrades and emission reduction resulting from the tightening of carbon emission-related policies may lead to an increase in operating costs;Stricter climate disclosure requirements may lead to an increase in disclosure-related operating costs.Applying AI technologies in energy conservation to improve data centre energy efficiency and reduce PUE;Increasing the deployment of renewable energy facilities including flexible energy storage system and microgrid in data centres to reduce dependence on green electricity procurement;Disclosing climate-related information in alignment with the latest global disclosure standards.Market opportunities for low-carbon products Increased market share by offering low-carbon products aligned with customer preferences and carbon neutrality targets;Increased revenue arising from providing solutions to accommodate for a low-carbon digitalisation shift in the economy.Reducing the carbon footprint of our products and services and providing low-carbon options to customers;Providing customers with digital low-carbon transformation solutions,including digital upgrades in the energy industry to support the low-carbon digital transformation of different sectors.1 This includes the existing and forecasted impacts on our business model and value chain.OverviewCorporate GovernanceESG Governance1.Environmental Protection2.Caring for Our People3.Safeguarding Digital Rights4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix Environmental Strategies and Progress Climate Change and Carbon Neutrality Nature and Biodiversity Conservation26Risk ManagementWe have incorporated climate-related risks into our enterprise risk management system and assessment framework for identifying,assessing,managing and monitoring all risks that could impact our business.Climate-related Risks Management ProcessStep 1:Risk Inventory and Identification Analysing sectoral and peer best practices;Identifying climate risks and opportunities aligned with the TCFD categories;Generating a long list of climate-related risks and opportunities.Step 2:Risk Assessment and Scenario Analysis Selecting low and high carbon climate scenarios;Selecting appropriate time horizons(short-,medium-,and long-term)to assess climate impacts;Collecting the information of assets and the business development strategy;Conducting internal interviews to understand the operational status;Conducting scenario analysis on sector and asset level to identify material climate risks and opportunities on our business operation and value chain,where the materiality is determined based on the likelihood and impact of risks and opportunities.Step 3:Impact Assessment of Risks and Opportunities Conducting qualitative analysis of impacts of climate risks and opportunities on Tencents business strategy and financial planning;Conducting quantitative analysis of climate financial impact through developing financial quantification modelling.Step 4:Risk Management and Response Enhancing climate risk response measures for material climate-related risks and opportunities;Continuously monitoring and evaluating the progress of improvements in risk management practices based on the regular reports from each business unit.Metrics and TargetsOur Near-Term targets and Net-Zero Target have been validated by the SBTi,demonstrating that our carbon neutrality pathway aligns with the Paris Agreements 1.5C trajectory.To effectively track progress toward carbon neutrality and manage climate-related risks and opportunities,we have established a series of metrics and targets.These metrics and targets are developed in accordance with standards including the HKEXs Environmental,Social and Governance Reporting Code and IFRS S2/TCFD.For more details,please refer to Appendix-Environmental Performance and Appendix-Climate-Related and Nature-Related Targets in this report.*Building-Integrated PhotovoltaicsOverviewCorporate GovernanceESG Governance1.Environmental Protection2.Caring for Our People3.Safeguarding Digital Rights4.Digital Inclusion5.Digital Technologies Supporting Sustainable Development Goals6.Business EthicsAppendix Environmental Strategies and Progress Climate Change and Carbon Neutrality Nature and Biodiversity Conservation27Nature and Biodiversity ConservationEco-Friendly Operations1.3Tencent actively reduces its impact and dependence on nature,developing its business in an environmentally friendly manner.Eco-Friendly Working EnvironmentWe conducted ongoing investigations on bird collisions at Tencent Binhai Towers and implemented eco-friendly retrofitting in 2024.The upgraded facilities can provide essential food,water and habitats for insects and other wildlife species.Tencent recognises the essential role that nature and biodiversity conservation play in supporting the sustainable development of our planet.We actively respond to the SDGs,the Convention on Biological Diversitys(CBD)Kunming-Montreal Global Biodiversity Framework,and China National Biodiversity Conservation Strategy and Action Plan(2023-2030).We published the Tencent Biodiversity Statement in 2022,conducted nature assessments in line with the TNFD framework and joined the Science Based Targets Network(SBTN)Corporate Engagement Programme.*Photographed at Tencent Binhai TowersTencent Biodiversity Statement articulates our strategies and commitments to biodiversity conservation through three main areas:Developing our business in an eco-friendly way;Utilising t
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01Foreword02General Disclosures03Commitment to Initiatives 04Raw Materials05Outlook for 202506AnnexResponsible Raw Materials Report 2024Volkswagen Group Responsible Raw Materials Report 2024201Foreword02General Disclosures03Commitment to Initiatives 04Raw Materials05Outlook for 202506AnnexContents4 Foreword 6 General Disclosures 7 Responsible Supply Chain(ReSC)System 9 Raw Materials Due Diligence Management System(RMDDMS)11 Main Tools of the RMDDMS 14 Supply Chain Grievance Mechanism15 Human Rights and Environmental Risks in Scope 16 Priority Raw Materials17 Limitations 18 Commitment to Initiatives 19 Initiative for Responsible Mining Assurance(IRMA)19 Responsible Minerals Initiative(RMI)20 DRIVE Sustainability 21 2024 Highlights 22 Raw Materials 23 Battery Raw Materials 27 Lithium 30 Cobalt 32 Nickel 35 Natural Graphite 37 Conflict Minerals 38 Tin,Tantalum,Tungsten and Gold(3TG)41 Other Raw Materials 42 Aluminum 45 Copper47 Cotton 50 Leather52 Magnesium 54 Mica 57 Natural Rubber60 Platinum Group Metals(PGM)63 Rare Earth Elements(REE)66 Steel 68 Outlook for 2025 70 Annex 71 List of Abbreviations 73 List of Initiatives and Associations 74 List of 3TG Smelters 80 List of 3TG Countries and territories of origin81 Contact InformationContentsVolkswagen Group Responsible Raw Materials Report 2024301Foreword02General Disclosures03Commitment to Initiatives 04Raw Materials05Outlook for 202506AnnexDisclaimerThis report is prepared by the Volkswagen Group companies and the respective brands(“legal entities”)of the Working Group for the Responsible Raw Materials Due Diligence Management System(RMDDMS).These legal entities are Volkswagen AG,AUDI AG,Dr.Ing.h.c.F.Porsche AG,MAN Truck&Bus SE and Scania CV AB.Within this Management System we have assigned the 18 priority raw materials to the aforementioned legal entities.Through this systematic approach,the Volkswagen Group companies are able to cover a broad range of raw materials andcoordinate actions across the Volkswagen Group companies accordingly.Although this report has been prepared in collaboration with and by the aforementioned legal entities,each single legalentity is only responsible for the content and described activities of the raw material for which it is in the lead(please seeoverview of the 18 priority raw materials on page 16 of this report).Volkswagen Group Responsible Raw Materials Report 20244Kapitelname01 Foreword02General Disclosures03Commitment to Initiatives 04Raw Materials05Outlook for 202506AnnexForeword01 Volkswagen Group Responsible Raw Materials Report 2024501 Foreword02General Disclosures03Commitment to Initiatives 04Raw Materials05Outlook for 202506AnnexForewordMobility is changing rapidly worldwide.Our ambition as the Volkswagen Group is clear:we dont just want to accompany this era,we want to play a key role in shaping it as“The Global Automotive Tech Driver”.“The Group Strategy Mobility for Generations”combines long-term goals with short-term agility.Ensuring sustainable business practices along the entire supply chain including keyraw materials remains an important focus.We identify,assess and mitigate sustainability risks through our Raw Materials Due Diligence Management System together with our Sustainability Procurement network of more than 110 experts across our brands and regions.In 2024,we prioritized 18 raw materials and their respective supply chains for in-depth analysis,with a focus on human rights due diligence and environmental protection.During the reporting period,we increased our engagement with our key suppliers and their suppliers in upstream supply chains to enhance transparency and traceability.We also continued to work with business partners and stake-holders via initiatives on common standards and tools.We believe that it is only by working together that we can find solutions and build stable,resilient and sustainable supply relationships.This report describes our approach and methodology,reports on our activities in 2024,and highlights our global efforts through on-the-ground projects.Now in its fifth edition,this report reflects our longstanding commitment established well before such reporting became a standard expectation.It outlines the progress we have made in terms of transparency and risk mitigation but also shows challenges we continue to face in our global,complex and fragmented supply chains.In 2025 and beyond,we will continue to enhance our processes and systems and prepare for compliance with new sustain-ability legislation.Our focus will remain on driving common approaches such as standards and audits together with our partners and improving the effectiveness of our risk manage-ment.We will continue to learn as we go.We hope you find this report informative and invite you toshare your feedback with us at .Further information on environmental,social and governance(ESG)topics is available on the Groups corporate website and in the 2024 Annual Report.Dirk Groe-Loheide Member of the Extended Executive Committee responsible for Group ProcurementMember of the Board of Management of the Volkswagen Brand responsible for procurement Dear readers,Volkswagen Group Responsible Raw Materials Report 20246Kapitelname Rohstoffbezeichnung01Foreword02 General Disclosures04Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Responsible Supply Chain(ReSC)System Raw Materials Due Diligence Management System Human Rights and Environmental Risks in Scope Priority Raw Materials Main Tools of the RMDDMS Limitations Supply Chain Grievance Mechanism General Disclosures02 Volkswagen Group Responsible Raw Materials Report 2024701Foreword Responsible Supply Chain(ReSC)System Raw Materials Due Diligence Management System Human Rights and Environmental Risks in Scope Priority Raw Materials Main Tools of the RMDDMS Limitations02 General Disclosures04Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Supply Chain Grievance MechanismGeneral Disclosures Responsible Supply Chain(ReSC)System As one of the worlds largest automotive manufacturers,the Volkswagen Groups global supply chains include more than 66,000 supplier locations in 95 countries around the worlda vast and complex network of relationships and logistics.We recognize the impact we have on people and the planet and our responsibility to be a leader in respect of human rights and the environment.Sustainability is an important element of our procurement strategy,and we are committed to responsible and transparent business conduct.Our policy on sustainable materials is based on global norma-tive guidelines,including in particular the UN Universal Declaration of Human Rights the Core Labour Standards of the International Labour Organization(ILO)the UN Guiding Principles on Business and Human Rights the Organisation for Economic Co-operation and Develop-ment(OECD)Guidelines for Multinational Enterprises the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas the principles of the UN Global Compact.The Volkswagen Group continuously monitors and adapts its risk management approach in procurement to meet the re-quirements of new laws and prepare for upcoming regulations at both the national and international level,such as the EU Battery Regulation(EUBR)and the EU Deforestation Regulation(EUDR).We identify,assess and address the risks in our supply chains through our Responsible Supply Chain System and have re-cently prioritized 18 high-risk raw materials for more in-depth risk management through our Raw Materials Due Diligence Management System(RMDDMS).Responsible Supply Chain (ReSC)SystemThe Volkswagen Groups overarching approach to sustain-ability management in our supply chains is the Responsible Supply Chain(ReSC)system.This system includes regular risk analyses and proactive and reactive standard measures for our suppliers,such as the Code of Conduct for Business Partners,the Supply Chain Grievance Mechanism,media screenings,sensitization,the sustainability rating(S-Rating),and training for suppliers and employees.While this is an important approach to preventing and min-imizing human rights,social and environmental risks in the Volkswagen Groups supply chains,we recognize that many of the most severe human rights and environmental risks occur further upstream in the supply chain,particularly in the raw materials sector,where additional measures are necessary to mitigate risk.To address these risks,the RMDDMS is em-bedded in the ReSC system as one of the in-depth measures that extend to the more remote tiers of the raw material supplychain.The various procedures and measures included in the ReSC system are described in detail in our 2024 Annual Report (pages395398).The Responsible Raw Materials Report 2024 focuses on progress made,the RMDDMS and our 18 priority raw materials.Kapitelname Rohstoffbezeichnung01Foreword02 General Disclosures04Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Responsible Supply Chain(ReSC)System Raw Materials Due Diligence Management System Human Rights and Environmental Risks in Scope Priority Raw Materials Main Tools of the RMDDMS Limitations Supply Chain Grievance MechanismGeneral Disclosures Responsible Supply Chain(ReSC)System Responsible Supply Chain(ReSC)SystemHuman Rights Focus SystemIndustry-based sustainability risk assessmentSupplier-based allocation to sustainability riskStandard measures preventive and reactiveDeep dive measuresMeasureslowmediumhighAll suppliersMedium/high-sustain-ability-risk suppliersHigh-sutain-ability-risk suppliersAnalysisAnalysisImplemen-taion of measuresEvaluationDeep DiveMeasuresProbability and severity of human rights and environmental risksRaw Materials Due Diligence SystemCountry Risk FilterSeverityProbabilityAcross all tiers n tierlowlowhighhigh Code of Conduct for Business Partners Supply Chain Grievance Mechanism Sustainability Rating Supplier TrainingRisk Analysis Media ScreeningVolkswagen Group Responsible Raw Materials Report 20248 8Volkswagen Group Responsible Raw Materials Report 2024901Foreword Responsible Supply Chain(ReSC)System Raw Materials Due Diligence Management System Human Rights and Environmental Risks in Scope Priority Raw Materials Main Tools of the RMDDMS Limitations02 General Disclosures04Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Supply Chain Grievance MechanismGeneral Disclosures Raw Materials Due Diligence Management System(RMDDMS)Raw Materials Due Diligence Management System(RMDDMS)The Volkswagen Groups supply chain is extremely complex,globally distributed and subject to constant change.One products supply chain can have as many as nine tiers,and one single vehicle component can have several hundred suppliers and sub-suppliers.It is therefore essential that we take a risk-based approach and prioritize areas of focus in our due diligence efforts.Within the Raw Material Due Diligence Management System(RMDDMS),activities focus on our direct suppliers as well as our upstream supply chain(n-tier level)for the 18 raw mate-rials identified as high-risk priority raw materials.The management system outlines the steps we take to identi-fy,assess,prevent and mitigate actual and potential adverse effects in the supply chain.It also ensures that our sourcing activities do not contribute to conflict by indirectly supporting non-state armed groups in the extraction,transport,trade,handling or export of raw materials.The RMDDMS strives to be in alignment with the require-ments of the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas(OECD Minerals Guidance),the OECD-FAO(Food and Agricul-ture Organization)Guidance for Responsible Agricultural Supply Chains,and the OECD Due Diligence Guidance for Responsible Business Conduct.As a basis for the annual risk-based due diligence cycle,the Volkswagen Group has identified priority high-risk raw materials and their main applications.Raw-material-specific risk analyses are conducted annually for each of these priority materials.These are used to design and implement appropri-ate risk management measures(including analysis as well as preventive and reactive measures).The measures selected may relate to general risks in a specific raw material supply chain and its actors or may be supplier-specific.The progress and impact of mitigation measures are monitored,evaluated and reported internally and externally.The RMDDMS was developed in 2020 to align with the five-step framework of the OECD Minerals Guidance.Its imple-mentation provides a basis for the implementation of due diligence requirements such as the EUBR and the German Supply Chain Due Diligence Act(LkSG).As the basis for our management approach,we have set out our goals and commitments with regard to our raw material supply chains in the Volkswagen Groups Responsible Raw Materials Policy,which was reviewed and updated in 2024.Thepolicy was extended to cover new legislation(e.g.EUBR)and now includes an additional commitment regarding the entire scope of raw materials and risks in the RMDDMS.2.Mitigation Measures3.Evaluation&Reporting1.Risk AnalysisRaw material due diligence cycle Assessment of raw material key-risks Identification of focus parts and main suppliersIdentification of high-risk raw materials Approach B:Cross-industry engagementImpact assessment of implemented measures Public ReportingApproach A:Direct engagement with suppliersand/or Annually check Every 34 yearsVolkswagen Group Responsible Raw Materials Report 20241001Foreword Responsible Supply Chain(ReSC)System Raw Materials Due Diligence Management System Human Rights and Environmental Risks in Scope Priority Raw Materials Main Tools of the RMDDMS Limitations02 General Disclosures04Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Supply Chain Grievance MechanismGeneral Disclosures Raw Materials Due Diligence Management System(RMDDMS)Brand leads assigned to each raw materialMeets bi-weekly to coordinate RMDDMS activities across the materialsRMDDMS GovernanceThe processes and responsibilities of the RMDDMS are described in internal Volkswagen Group guidelines and handbooks,which are regularly updated,including in 2024.In line with the OECD Minerals Guidance,the RMDDMS is overseen by a senior-level steering committee consisting of senior procurement sustainability managers from all relevant brands and regions of the Volkswagen Group,including the head of global supplier risk and sustainability management of Volkswagen Group Procurement.The steering committee meets quarterly to approve,manage and track RMDDMS activities and measures.The Sustainable Supply Chain team,a working group con-sisting of sustainability managers from the procurement departments of Volkswagen Group brands,coordinates the due diligence activities.Each of the 18 identified priority materials is assigned to a“brand lead”to ensure in-depth knowledge and ongoing engagement with relevant suppliers and stakeholders for each of the raw materials.This brand lead is responsible for coordinating and implementing RMDDMS activities for the Volkswagen Group.During the reporting period,the working group met biweekly online and twice in person.Driven by increasing regulatory expectations,we significantly enhanced our internal reporting and documentation over the reporting period.Our internal sustainability database collects sustainability information on our 18 priority materials and their supply chains,including risk analyses,sustainability ratings,grievance cases,mitigation measures and more.This information is automatically cross-checked with global media reports and sanction lists to identify areas for action.Results are reported to the steering committee on a regular and ad hoc basis.1.Risk AnalysisRMDDMS 2.Mitigation Measures3.Evaluation&ReportingWorking GroupSustainable Supply Chain TeamSenior-Level Steering CommitteeSenior Management of Sustainabile Procurement representing all relevant brands and regions of the Volkswagen GroupMeets quarterly to approve,manage and track group-wide RMDDMS activities and measures.Discussion on suggestions and recommendationsFeeds intoOver-seeVolkswagen Group Responsible Raw Materials Report 20241101Foreword Responsible Supply Chain(ReSC)System Raw Materials Due Diligence Management System Human Rights and Environmental Risks in Scope Priority Raw Materials Main Tools of the RMDDMS Limitations02 General Disclosures04Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Supply Chain Grievance MechanismGeneral Disclosures Main Tools of the RMDDMS Main Tools of the RMDDMSWhile the challenges and approaches to solutions can vary greatly depending on the high-risk raw material in focus,there are a number of tools that are considered particularly useful in the context of the RMDDMS.These are presentedbelow.Sustainability Requirements for Suppliers As a general and mandatory component of Volkswagen Groups contracts with direct suppliers,we use a Code of Conduct for Business Partners(CoC BP),which sets out ourexpectations of business partners with regard to sustainability.The re-quirements cover key human rights,environmental,social and compliance standards;transparent and fair business relations;and due diligence for supply chains of minerals from conflict-affected regions.They are based on international standards as well as objectives,rules and policies of the Volkswagen Group.Our tier-1 suppliers are alsorequested to meet their due diligence obligations alongtheir supply chains.In 2019,we introduced a sustainability rating(S-Rating)for allrelevant business partners and suppliers with a high sustainability risk.We use it to audit the sustainability per-formance of relevant suppliers and identify opportunities for continuous improvement.More information can be found in the 2024Annual Report(pages 403404).For selected high-risk raw materials,we use contractually binding sustainability specification sheets as a key com-ponent of our raw material due diligence.The specification sheets stipulate the way in which certain products must be manufactured,thus defining our raw-material-specific expec-tations of our suppliers with regard to human rights and the environment.For example,specification sheets can include requirements for supply chain transparency and the imple-mentation of certain industry-specific sustainability standards(such as the Initiative for Responsible Mining Assurance,IRMA,standard)at important pinch points in the supply chain.Direct business partners who supply focus products contain-ing any of the raw materials in scope are requested to comply with the specification sheets for all new contracts.How ever,we also strongly encourage our suppliers with existing con-tracts to comply with the specified requirements when we roll out individual specification sheets across the Volkswagen Group.We also expect our direct suppliers to pass on these requirements,in addition to the CoC BP,to their respective suppliers and up the supply chain.To date,we have developed specification sheets for the following priority raw materials:battery raw materialslithium,cobalt,nickel and natural graphite(rolled out across the Volkswagen Group in 2020,updated in 2023)aluminum(rolled out across the Volkswagen Group in 2023)mica(rolled out across the Volkswagen Group in 2023)leather(rolled out across the Volkswagen Group in 2023).Audits Audits are one of the key tools used to assess risks in our upstream supply chains and to identify mitigation mea-sures.They are utilized alongside other tools used for our raw material due diligence and help promote transparency,compliance,and a culture of continuous improvement and dialogue throughout the supply chain.Due to the complexity and the large number of suppliers,the Volkswagen Group has established a tiered assessment system with different types of audits to systematically evalu-ate the sustainability performance of our suppliers.Second-party audits on behalf of the Volkswagen Group are used at regular intervals or on a case-by-case basis to verify that our suppliers comply with our requirements.They are carried out by qualified auditors(internal or contracted consultants).We conduct some of these audits as part of the S-Rating,while others are performed ad hoc,for example in response to a grievance case,and focus on human rights risks and social standards.On-site audits can identify gaps in supplier performance as well as risks at indirect suppliers sites that need to be mitigated through the direct supplier.A Corrective Action Plan(CAP)is prepared following all audits of direct suppliers.Follow-up audits can be conducted to verify the effectiveness of the measures implemented.Initially,the focus of the Volkswagen Groups battery audit program was on cobalt,due to the severity of the human rights risk associated with this mineral.From there,it was expanded to other raw materials used in batteries,and we worked our way up the supply chain,moving from our battery suppliers to precursors,refiners,processing plants and mines.Because human-rights-related risks are often greatest at the beginning of the supply chain and can be most effectively addressed there,third-party auditing and certification form another part of our strategy.Several global initiatives offer voluntary audit-based certification for suppliers according to a standard set of requirements,including IRMA,the Alumin-ium Stewardship Initiative(ASI)and the Leather Working Group(LWG).The Volkswagen Group also uses databases with audits conducted by global initiativesfor example the Responsible Mineral Initiatives(RMI)list of RMI-conformant smelters.We also work directly with mine operators to certify mines through international associations.Through a combination of these approaches,the Volkswagen Group can more effectively monitor its supply chains to en-sure that they meet rigorous environmental and human rights standards.This table provides an overview of how we use audits across various raw materials in our supply chains.Volkswagen Group Responsible Raw Materials Report 20241201Foreword Responsible Supply Chain(ReSC)System Raw Materials Due Diligence Management System Human Rights and Environmental Risks in Scope Priority Raw Materials Main Tools of the RMDDMS Limitations02 General Disclosures04Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Supply Chain Grievance MechanismGeneral Disclosures Main Tools of the RMDDMS 1 Find more information on audits related to the Sustainability Rating in the 2024 Annual Report(pages 403404).AuditsTin|Tantalum|Tungsten|GoldCobaltLeatherAluminumMicaBattery Raw Material,PGMsAudit standardResponsible Minerals Assurance Process(RMAP)developed by the Responsible Minerals Initiative(RMI)Customized standard developed by the Volkswagen Group with an external audit company.Draws on the OECD Minerals GuidanceStandard developed by the Leather Working Group(LWG)ASI Performance and ASI Chain of Custody(CoC)Standard developed by the Aluminium Stewardship Initiative(ASI)Global Workplace Standard for Mica ProcessorsInitiative for Responsible Mining Assurance(IRMA)Standard for Responsible MiningScope of risks assessed in the auditAnnex II risks as defined by the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk AreasAnnex II risks(see column to the left),as well as occupational health and safety,and child laborBusiness and operations management,environmental and social impact,occupational health and safety,complianceASI Performance Standard:62 environmental,social and governance principles such as business integrity and transparency,water and bio-diversity and human and labor rights ASI CoC standard:requirements for a CoC material,including supply chain due diligence and material accountingEnvironmental management system,occupational health and safety,fair labor practicesEnvironmental impact;Social Impact;Health and safety;Business integrityTier(s)that have been auditedSmelters and refinersFrom battery cell supplier to treatment unit levelTanneriesAll stages of the aluminum supply chainMica processorsMine sitesVolkswagen Group Responsible Raw Materials Report 20241301Foreword Responsible Supply Chain(ReSC)System Raw Materials Due Diligence Management System Human Rights and Environmental Risks in Scope Priority Raw Materials Main Tools of the RMDDMS Limitations02 General Disclosures04Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Supply Chain Grievance MechanismGeneral Disclosures Main Tools of the RMDDMS Supplier DialoguesWe view collaboration as key to implementing due diligence along the supply chain.We can only effectively assess and manage human rights and environmental risks in our supply chains if we work together with our key suppliers and share a common understanding.To this end,the Volkswagen Group engages directly and on an ongoing basis with key suppliers of focus parts containing one or more of the 18 prioritized raw materials.We also offer them a wide range of support,including training and initiatives to participate in.Over the reporting period,collaboration with our key suppliers has intensified,with some meetings taking place on a monthly or biweekly basis to align on strategic issues such as evolving regulatory requirements,due diligence measures and efforts,and emerging risks.Collaboration with External Partners and International Initiatives The Volkswagen Group also aims to address human rights risks in the upstream supply chain beyond its contractual relationships.To this end,we engage with various stakehold-ers as an exercise to increase our leverage while at the same time benefit from the learning and knowledge exchange.We take part in conferences and workshops and meet with NGOs,associations,local partners and media representatives.We see value in engaging with NGOs and community representa-tives at both the national and international level.In addition,the Volkswagen Group and its brands are active members of a number of global initiatives,both cross-industry and raw-material-specific.Together with our partners,we aim to share knowledge;develop standardized risk assessment tools;and introduce standards for responsible raw material supply chains in terms of human rights,the environment and compliance.We believe that these activities help us make progress toward transparent and sustainable supply chains and promote more responsible business practices around theworld.For a description of selected initiatives of which the Volkswagen Group is a member,see the section on participation in interna-tional initiatives on pages 1821.Sustainability Training and WorkshopsAnother important tool is the systematic training of our suppli-ers and our own employees.Sustainability is an integral part of the skill profile of our entire Procurement staff.Sustainabil-ity trainingdelivered in web-based,online or face-to-face formatscovers topics such as corporate responsibility,legal frameworks and requirements,processes,and management systems.Part of this training is dedicated to the topic of sus-tainability in raw materials.To support the continuous development of our suppliers,sustainability managers of Volkswagen Group Procurement also offered sustainability training courses and workshops for our suppliers at selected locations and online.Since 2020,we have also been offering voluntary human rights training for suppliers.We have also created an e-learning module on sustainability that is available to current suppliers in eight languages.Volkswagen Group Responsible Raw Materials Report 202414Kapitelname Rohstoffbezeichnung01Foreword02 General Disclosures04Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Responsible Supply Chain(ReSC)System Raw Materials Due Diligence Management System Human Rights and Environmental Risks in Scope Priority Raw Materials Main Tools of the RMDDMS Limitations Supply Chain Grievance MechanismVolkswagen Group Responsible Raw Materials Report 202414General Disclosures Supply Chain Grievance Mechanism 1 Excerpt from available optionsSupply Chain Grievance Mechanism The Supply Chain Grievance Mechanism is an important component of responsible supply chain management.We use it to investigate breaches or suspected violations of the Code of Conduct for Business Partners by our direct or indirect suppliers.It is accessible via the hotline and channels of the Volkswagen Groups Whistleblower System and is open to all potentially affected stakeholders,whether employees of suppliers or representatives of local communities or civil society organizations.Reports can also be filed confidentially and anonymously.Through the grievance mechanism,we process concerns others have raised regarding negative human rights and environmental impacts in our supply chain and introduce appropriate measures,e.g.audits.In the event of serious breaches,suppliers can be blocked from awarding new contracts.More information and KPIs for 2024 can be found in our 2024 Annual Report(page 403).Who can report1What is the outcomeHow can reports be made1In personVia the Compliance contact personOmbudspersons (external lawyers)www.ombudsmen-of-Respective suppliers might be temporarily blocked from being awarded new contractsCan lead to termination of supplier relationship with the Volkswagen GroupRepresentatives of communities in the immediate vicinity of our production locationsCivil society organizationsAll suppliers staff membersBreaches identified and categorized by their severitySerious breachesOnline Reporting Channelwww.goto.speakup.report/en-GB/volkswagen/homeEmailiovolkswagen.de Mail Central Investigation Office,Mail Box 1717,38436 Wolfsburg/Germany24/7 hotline 800 1818 952(have the corresponding organi-zational code 122203 ready)Volkswagen Group Responsible Raw Materials Report 20241501Foreword02 General Disclosures04Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Responsible Supply Chain(ReSC)System Raw Materials Due Diligence Management System Human Rights and Environmental Risks in Scope Priority Raw Materials Main Tools of the RMDDMS Limitations Supply Chain Grievance MechanismGeneral Disclosures Social,Human Rights and Environmental Risks in Scope Human Rights and Environmental Risks in Scope Environment Handling,storage and disposal of wasteand residues Hazardous substances,especially production and use of pollutants and hazardous chemicals Air,including air pollution and greenhouse gas emissions Noise and vibrationsPollutionWasteCommunity Life Forced evictions and/or expropriations of land,forests,bodies of water Protection of the rights of indigenous and local people Causing harmful soil change,water and air pollution,noise emissions,excessive water consumption,which affect natural resources and healthCommunities rightsHuman Rights Child labor Torture Forced labor and compulsory labor,including slavery and serfdom Direct or indirect support of non-state armed groups and/or public or private security forces Any form of discrimination Health and safety at work Trade union freedoms and freedom of association Payment of appropriate and fair wages/salaries Plant safetyHuman rightsWorking conditionsThe risk categories are listed in abbreviated form in Section 04 of this report for every raw material.We annually review our risk categories covered by the RMDDMS to reflect upcoming regulatory requirements such as the EU Battery Regulation and industry best practices.Following an update at the beginning of 2024,further small adjustments were made during the reporting period,which are reflected in the graphic below.The risks in scope are grouped into seven sub-categories in line with the European Sustainability Reporting Standards(ESRS):Environmental risks are grouped into the sub-clusters pollution,waste,water and biodiversity.Social risks are covered by the sub-clusters human rights and working conditions.The impact of supply chain activities on local communities is included in the sub-cluster communities rights.Soil pollution,soil erosion,land use and land degradation Loss of biodiversity,including damage to natural habitats,wildlife,plants and ecosystems/ecosystem servicesBiodiversity Water pollution,including seabed and marine environment,water consumption,impacting the amount of water(flood or drought)and access to water and sanitationWater01Foreword02 General Disclosures04Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Responsible Supply Chain(ReSC)System Raw Materials Due Diligence Management System Human Rights and Environmental Risks in Scope Priority Raw Materials Main Tools of the RMDDMS Limitations Supply Chain Grievance MechanismGeneral Disclosures Priority Raw Materials 16Volkswagen Group Responsible Raw Materials Report 2024Raw Material Lead Brands in RMDDMS are Volkswagen|Audi|Porsche|MAN|Scania1 PGMPlatinum Group Metals 2 REERare Earth Elements Battery Raw MaterialsOther Raw MaterialsConflict Minerals(3TG)AluminumNickelSteel Tungsten CobaltCopperTantalum Gold 20Raw material experts across our groupPriority Raw MaterialsFor the 2024 reporting period,as in the previous year,the RMDDMS included a total of 18 priority raw materials.Following the OECD-compliant risk-based approach,we developed a methodology for selecting priority raw materials based on the severity of potential human rights and environmental impacts.We base our risk assessment on databases such as Maplecrofts global risk data and raw-material-specific risk analyses as well as other reports that outline ESG risks in supply chains.In addition,we reviewed cases from our grievance mechanism and gathered relevant data through outreach to stakeholders such as NGOs and n-tier suppliers.We also considered our leverage in raw material supply chains and at times prioritized raw materials where we considered the risk less severe but where we had leverage and saw the opportunity to make an impact.Tin LithiumNatural GraphitePGM1REE2 Natural Rubber Leather Mica MagnesiumCottonVolkswagen Group Responsible Raw Materials Report 20241701Foreword Responsible Supply Chain(ReSC)System Raw Materials Due Diligence Management System Human Rights and Environmental Risks in Scope Priority Raw Materials Main Tools of the RMDDMS Limitations02 General Disclosures04Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Supply Chain Grievance MechanismGeneral Disclosures LimitationsLimitations2024 is the fifth year since the RMDDMS was introduced in the Volkswagen Group.During the reporting period,we have made improvements for each of the individual raw materials and taken steps to further strengthen and enhance our human rights and environmental risk management.While we are pleased with the progress we have made,we continue to face limitations and obstacles along the way.Navigating new regulartory requirementsIn recent years,the European Union has introduced legislation on sustainable supply chains to encourage environmental preservation,social improvement and better governance.This includes the EU Battery Regulation(EUBR)and the EU Deforestation Regulation(EUDR).Both are important pieces of legislation that have the potential to accelerate due diligence efforts in our high-risk raw material supply chains,namely cobalt,lithium,nickel,natural graphite and natural rubber.However,the implementation of the new requirements also presents significant challenges,as it requires extensive documentation and supply chain mapping for raw materials back to the point of origin(farm/mine site).In addition,we are seeing some late or incomplete guidance and unresolved regulatory issues that further complicate planning and execution within an overall ambitious timeline.To learn more about the detailed position of the automotive industry on the EUDR,please refer to the position paper of VDA.Lack of a level international playing fieldWhile due diligence expectations have increased at the EU and European national levels,legal requirements for businesses in many other regions are not evolving at the same pace.This places an increased burden on European companies and in some cases may even put EU buyers at a competitive disadvantage,as non-EU suppliers perceive the increased due diligence and documentation procedures as onerous.This is particularly concerning in cases where EU companies are highly dependent on a limited number of suppliers or supply regions or in scarce raw material markets.Challenges of multi-tiered global supply chainsIn the reporting year,we intensified our efforts to achieve greater transparency within our supply chains and worked even more closely with our suppliers and sub-suppliers.The flow of sustainability and compliance information as well as risk assessment and mitigation activities still remains a challenge in fragmented and complex supply chains.It is particularly diffi-cult to identify and manage the risks of upstream actors in more distant stages of the supply chains where the Volkswagen Group does not have a direct contractual relationship with the supplier.For example,we found that in some cases suppliers were unwilling to disclose the identity of their suppliers due to perceived antitrust and competition concerns.Limits of corporate influence and the role of governmentsSome of the issues we face are beyond our control.As stated in the UN Guiding Principles on Business and Human Rights,governments are obliged to protect human rights,while businesses are obliged to respect them.Governments have a key role to play in creating an enabling environment for responsible business conduct.This includes ensuring good governance(e.g.,combating bribery and corruption),enacting and enforcing relevant legal frameworks,and ensuring that the use of state security forces does not violate human rights.However,we are aware of the complex challenges govern-ments face in trying to ensure and protect human rights and the environment.The protection and respect of human rights in regions with artisanal and small-scale mining(ASM)is an example of such complexities relevant to the downstream sector.While ASM is associated with poor health and safety standards and child labor and may operate outside the formal economy with little or no regulation,it is an important source of income for a large number of people in the countries concerned.Eliminating poor labor and environmental conditions from global supply chains while not preventing the most vulnerable populations from improving their livelihoods is therefore a balancing act.Given the limitations described and the scope of our raw material supply chains,we still have a lot of work to do.Nevertheless,we see that the concept of due diligence in raw material supply chains is becoming more widely accepted and that more actors in the supply chain are considering human rights and environmental risks.We remain committed to working with our direct suppliers and the industry as a whole to continue to make progress.Volkswagen Group Responsible Raw Materials Report 202418Schaubild01Foreword02General Disclosures03 Commitment to Initiatives Responsible Minerals Initiative Initiative for Responsible Mining Assurance DRIVE Sustainability 2024 Highlights04Raw Materials05Outlook for 202506Annex Commitment to Initiatives 03 Volkswagen Group Responsible Raw Materials Report 20241901Foreword02General Disclosures03 Commitment to Initiatives Responsible Minerals Initiative Initiative for Responsible Mining Assurance DRIVE Sustainability 2024 Highlights04Raw Materials05Outlook for 202506AnnexCommitment to Initiatives Initiative for Responsible Mining Assurance(IRMA)|Responsible Minerals Initiative(RMI)The Volkswagen Group considers cooperation with other industry actors and participation in initiatives an important part of its approach to raw material due diligence.By engaging in initiatives,we can join forces to address human rights and environmental risks along the supply chains.Standards and audits have become increasingly important in identifying and mitigating risks.Several initiatives have developed effective due diligence standards for their raw materials and fields of activity and are working to encourage and help actors deeper inthe supply chains to apply them to their operations.The Volkswagen Group is involved in and takes a leading role in several initiatives focusing on sustainability along the supply chain.Some of them are cross-industry initiatives that concern a range of raw materials,while others are raw-material-specific.In 2024,among other,more raw-material-specific initiatives,we continued our involvement in the following initiatives and took on an active role in several of their activities.Initiative for Responsible Mining Assurance(IRMA)The Volkswagen Group is a committed member of the Initiative for Responsible Mining Assurance(IRMA).We also play an active role in the IRMA Buyers Group and the Mining Engagement Team.IRMA is a multi-stakeholder alliance that advocates for more socially and environmentally responsible mining.It offers an independent assessment of mines according to comprehensive standards.The IRMA standards encompass the protection of human rights,including the rights of local communities,corruption prevention,health protection mea-sures,occupational safety and environmental protection.The Volkswagen Group has committed to progressively apply-ing the IRMA Standard for Responsible Mining in its battery supply chains,ensuring that,in high-risk regions,the sourcing of battery raw materials is restricted to material originating from mines that are audited according to the IRMA Standard.We have chosen the IRMA standard as our preferred mining assurance standard due to its strong emphasis on social con-sultation and its recognition of the concept of Free,Prior,and Informed Consent(FPIC).The continued scaling of IRMA across the mining industry and raw material supply chains remains critical to ensuring the ability of the Volkswagen Group and other downstream brands to achieve their responsible sourcing goals.The number of mines interested in and committed to IRMA is increasing,but not all mines are on board yet.We remain committed to combined efforts to increase leverage.In 2024,members of the Volkswagen Groups Sustainable Supply Chain team participated in two IRMA National Level Forums,one focused on lithium mining in Chile and one on Indonesia and the growing nickel industry.We also held a partner session with IRMA during the 17th OECD Forum on Responsible Mineral Supply Chains and attended other events such as training sessions.During the reporting year,IRMA and RMI decided to join forces and engaged in discussions on a partnership.The Volkswagen Group strongly welcomes this collaboration to create synergies and streamline approaches and work packages.Responsible Minerals Initiative(RMI)The Responsible Minerals Initiative(RMI)aims to promote the responsible sourcing of minerals to ensure that supply chains make a positive contribution to social and economic devel-opment worldwide.To this end,the RMI provides a range of tools,standards and resources.One example is the RMIs Responsible Minerals Assurance Process(RMAP),which enables companies and their suppliers to determine which smelters and refiners have systems in place to responsibly source minerals in accordance with current global standards.The assessment is carried out by an independent third party.Through the RMI,the Volkswagen Group joins forces with other partners,either along the supply chain or from other industries,to promote dialogue and build a common under-standing of sustainability expectations and harmonized upstream and downstream due diligence tools.We help drive cross-industry solutions and collaborative efforts to collec-tively leverage and standardize tools.In the reporting period,the Volkswagen Group used Material Insights as a risk radar tool to support the risk identification and due diligence process and continued to encourage sup-pliers to be assessed against RMI standards.We participated in the RMIs Emerging Minerals Working Group,which brings together companies to map global value chains for sustainable transition,encourage suppliers to be assessed against a standard and use collective leverage where necessary to drive responsible business practices upstream.The Volkswagen group was also an active member Volkswagen Group Responsible Raw Materials Report 20242001Foreword02General Disclosures03 Commitment to Initiatives Responsible Minerals Initiative Initiative for Responsible Mining Assurance DRIVE Sustainability 2024 Highlights04Raw Materials05Outlook for 202506AnnexCommitment to Initiatives DRIVE Sustainability of RMIs Gold Team which mirrors the activities of Emerging Minerals Working Group focusing on the gold value chain.In addition,the Volkswagen Group has been actively involved in the process of updating the RMIs ESG assessment stan-dard.The aim of this activity is to ensure that RMIs valuable tools remain state-of-the-art and fully comply with the most recent regulatory requirements,such as the due diligence obligations of the EU Battery Regulation.DRIVE SustainabilityThe Volkswagen Group is a founding member of the industry-led initiative DRIVE Sustainability,under the umbrella of CSR Europe.DRIVE Sustainability is a partnership of 16 leading automotive companies that are driving the transformation to a circular and sustainable automotive value chain by taking a unified stance in their engagement with suppliers,stake-holders and related sectors.Within the Raw Materials Working Group,we are continuing the development of the Raw Material Outlook.This platform is a key initiative within DRIVE Sustainability and provides automotive companies with a tool to analyze 20 critical raw material value chains by mapping stages and actors and iden-tifying key ESG risks along the supply chain.In 2024,two new risk profiles were added:cobalt and natural rubber.Another tool developed by the working group is the Sustain-ability Assessment Questionnaire(SAQ),which is also used by the Volkswagen Group as a basis for our sustainability rating(S-Rating)assessment.This common questionnaire standard for evaluating sustainability aspects of suppliers is currently used by 16 of the member companies and is intend-ed to improve efficiency through a standardized approach.In the reporting year,we supported the development of a specific Battery SAQ(BSAQ),which includes additional questions on ESG data according to the provisions of the new EUBR.The BSAQ has been adapted to encompass actors on all levels of the battery supply chain from tier 1 to tier n.An industry-wide rollout is planned for 2025.Drive is the sustainable supply chain platform for tier-1 automotive suppliers and supplier associations.Members can engage in a systematic dialogue with Drive Sustainability partners about common sustainability challenges to find joint solutions.In the reporting year,we also participated in several external events together with DRIVE Sustainability and engaged with more than 50 stakeholders,including NGOs,trade unions,industry associations and suppliers.Drive Sustainability and CSR Europe also work locally with a focus on setting up sustainability networks to strengthen re-sponsible sourcing and due diligence practices in the battery value chain.An on the ground project with IndustriALL Global Union on human rights due diligence in the Indonesian battery supply chain took place in April 2024.DRIVE Sustainability is an associate member of several ini-tiatives for more sustainable,material-specific supply chains,among them the Global Platform for Sustainable Natural Rubber(GPSNR)and ResponsibleSteel.For more details on our participation in raw-material-specific initiatives,please see the respective raw material snapshots in Section 04 of this report.A full list of our membership and participation in industry groups and initiatives can be found in Annex II at the end ofthis report.Volkswagen Group Responsible Raw Materials Report 20242101Foreword02General Disclosures03 Commitment to Initiatives Responsible Minerals Initiative Initiative for Responsible Mining Assurance DRIVE Sustainability 2024 Highlights04Raw Materials05Outlook for 202506AnnexCommitment to Initiatives 2024 Highlights Natural RubberAs a founding partner of CASCADE,Porsche has committed to continue the project for another three years,helping even more smallholders in Sumatra,Indonesia to improve their livelihoods See also Raw Material Snapshot on natural rubber,page 57Lithium20 local stakeholders sign joint action plan of the Responsible Lithium Partnership“in Chiles Salar de Atacama Basin to manage and protect water resources.See also Raw Material Snapshot on lithium,page 27PGMScania continued to support the Marikana Coalition in South Africa,providing children with education for a future beyond mining.See also Raw Material Snapshot on PGM,page 60IRMAAs active participants in the IRMA Buyers Group,we participated in 2 IRMA National Level Forums,one focused on lithium mining in Chile and one on Indonesia and the growing nickel industry.DRIVE SustainabilityA dedicated working group has developed a Battery SAQ with questions on ESG topics,including the risk categories outlined in the EU Battery Regulation.new risk profiles added to the Raw Material Outlook platform.MicaTogether with the Responsible Mica Initiatives Community Empowerment Program,we helped nearly 180 villages in Jharkhand,India,aiming to eradicate child labor in mica mines through better access to education and income diversification programs.See also Raw Material Snapshot on mica,page 5422024 Highlights Battery Raw Materials Conflict Minerals05Outlook for 202506Annex Other Raw Materials01Foreword02General Disclosure03Commitment to Initiatives 04 Raw Materials 04 Raw Materials 01Foreword02General Disclosure04 Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Battery Raw Materials Lithium Cobalt Nickel Natural Graphite Conflict Minerals Other Raw MaterialsVolkswagen Group Responsible Raw Materials Report 2024Raw Materials Battery Raw MaterialsLithiumCobaltNatural GraphitePage 27Page 30Page 35NickelPage 32 EV batteryBattery Raw MaterialsLithium,nickel,cobalt and graphite are the key raw materials for lithium-ion batteries commonly used in electric vehicles.ElectrolyteCathodeSeparatorAnodeGraphite,copperLithium,nickel,cobalt,manganese23Volkswagen Group Responsible Raw Materials Report 20242401Foreword02General Disclosure04 Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Battery Raw Materials Lithium Cobalt Nickel Natural Graphite Conflict Minerals Other Raw MaterialsRaw Materials Battery Raw Materials The Volkswagen Group is striving to become the number one provider of sustainable mobility worldwide.The electri-fication of our vehicle portfolio is an integral part of The Group Strategy and a key lever for decarbonization.As part of this strategic focus,there is a corresponding requirement to ensure sustainable business practices throughout the entire supply chain,including the key raw materials used to make lithium-ion electric vehicle(EV)battery cells:lithium,nickel,cobalt and natural graphite.Therefore,we are taking a comprehensive joint due dili-gence approach for these battery raw materials,building on the foundations of our overall RMDDMS.The approach is designed to minimize the risk of any of our batteries raw materials in our supply chain being linked to human rights abuses or other social or environmental risks and incorporates the due diligence requirements of the LkSG and the new EU Battery Regulation(EUBR).Battery Raw Materials in our Supply ChainGiven their strategic importance for the energy transition and their high supply risk,lithium,nickel,cobalt and natural graphite are listed by the EU as critical raw materials.In the reporting year,the Volkswagen Group did not directly source any battery raw materials.We bought battery cells from suppliers,which are themselves up to several steps away in the supply chain from the raw material origin.From 2025 onward,the Volkswagen Group will also source battery raw materials directly to supply its battery cell producer PowerCo(see page 26).For all battery raw materials,the Volkswagen Group manages sustainability topics via single points of contact for their key battery suppliers.The Sustainable Supply Chain team closely cooperates to prepare and coordinate due diligence processes for all such raw materials in accordance with the upcoming EU Battery Regulation.as well as a large part of our internal processes are already in line with the EUBR due diligence requirements.In the reporting year,we set up a working group for battery due diligence and held regular meetings with our key battery suppliers to create a shared understanding of the scope of due diligence.Anoth-er priority area in 2024 was working with cross-industry initiatives to assess and improve the joint risk assessment and risk mitigation approach and to develop tools to facilitate compliance with the EUBR throughout the upstream supply chain,e.g.,with RMI and Drive Sustainability.In 2025,we plan to continue our preparation,considering further guidelines to be provided by the EU.We will also continue our engagement with stakeholders at the mining level and in the countries of origin.The EU Regulation concerning batteries and waste batteries(EU Battery Regulation)was adopted on July 12,2023,and will replace the existing Bat-teries Directive dating from 2006.The EUBR aims to improve current regulations by making batter-ies used in the EU more environmentally friendly and increasing the lifespan of electronic devices used by consumers.The due diligence chapter of the regulation(chapter VII)will apply from August18,2025.In view of the expected growth in battery demand,the EU is imposing battery due diligence obligations on economic operators that make batteries available in the EU or that use them in their products.These obligations go beyond the voluntary efforts from actors in the battery supply chain that are already in place.Annex X of the EUBR provides a list of raw materials and risk categories to focus on when designing and implementing battery due diligence policies.The list of social and environmental risk categories is far more extensive than existing due diligence legislation.To prepare for the new regulation,the Volkswagen Group has thoroughly reviewed the RMDDMS to ensure integration of battery due diligence and adapted internal processes and tools to comply with the EUBR,with a particular focus on chapter VII.However,sustainability was already a signif-icant focus area in our battery supply chains,and our responsible sourcing practices before that Preparing for the EU Battery Regulation(EUBR)making batteries used in the EU more sustainableVolkswagen Group Responsible Raw Materials Report 20242501Foreword02General Disclosure04 Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Battery Raw Materials Lithium Cobalt Nickel Natural Graphite Conflict Minerals Other Raw MaterialsRaw Materials Battery Raw Materials Stakeholder Engagement Increased cooperation with our battery suppliers,support for the cascading of sustainability requirements down the supply chain Initial dialogue with tier-1 suppliers of PowerCo,including thorough,on-the-ground due diligence Ongoing engagement in initiatives to leverage joint standards and tools Engagement with experts and authorities on current developments and technologies Continuous exchange with NGOsBattery Specification SheetTo ensure sustainable sourcing,we work closely with our key battery suppliers,for whom we use a mandatory EV battery raw material specification sheet as a key due diligence tool.It requests suppliers to provide supply chain transparency,which allows us to conduct a comprehensive social and environmental risk analysis,conduct mapping audits,and define and implement risk mitigation measures where nec-essary.We also ask our suppliers to adhere to internationally recognized responsible sourcing practices such as the OECDDue Diligence Guidance.There is a corresponding requirement for suppliers to com-municate these commitments to sub-suppliers and ensure sustainable business practices throughout their supply chains.All sub-suppliers up to the crude refiner level must undergo an independent audit by an industry body,such as the Responsible Minerals Initiative(RMI),or through an independent audit company that has been pre-approved by the Volkswagen Group.While we have noticed significant progress regarding the acceptance of such independent verification processes,especially for cobalt,some supply chain actors are not yet familiar with these processes,and additional capacity building is needed.Risk AssessmentEV batteries face raw material supply challenges,as lithium,nickel,cobalt and natural graphite reserves are in high demand globally but are also associated with social and environmental concerns.The battery supply chain includes several stages,from mining the metals to refining,processing to create cathodes and anodes,provide the inputs for battery cell production,and recycling(end of life).Around the world,mining of some battery metals has been linked to human rights abuses,including the use of child and forced labor.Many mines,particularly artisanal and small-scale mines(ASM),fail to provide basic worker safety measures,and min-ing often comes at an environmental cost.The refining and processing of raw materials is currently highly concentrated in China.See the raw material dashboards on the following pages for more details on the countries of origin and the iden-tified risks for the individual raw materials.For risk assessment,we are continuing to collect supply chain data and progress with our supply chain mapping and auditing program.Furthermore,the Volkswagen Group has undertaken a broad sectoral analysis of the supply chains for battery raw materials and is leveraging media and supply chain monitoring solutions to actively monitor media attention to issues occurring along the battery supply chain.Collaboration with our battery suppliers has intensified over the reporting period.We meet with some of our key suppliers on a bi-weekly or monthly basis to align on long-term stra-tegic issues such as preparation for the legal requirements of the EUBR,to coordinate sub-supplier audits or to discuss emerging topics on an ad hoc basis.However,supply chain transparency remains a challenge,particularly in the more remote tiers.Risk MitigationThe upstream supply chains for battery raw materials are com-plex and fragmented,with multiple social and environmental risks.Transparency and data availability therefore remain a challenge,as do frequent changes in supplier relationships.Therefore,common standards are an important approach to mitigating risks and driving continuous improvement.The Volkswagen Group is a member of the Initiative for Responsible Mining Assurance(IRMA)and has chosen IRMA as its preferred mining assurance standard due to its strong emphasis on social consultation and its recognition of the concept of Free,Prior,and Informed Consent(FPIC).In addition,the Volkswagen Group is engaged in several other industry initiatives such as the RMI and Drive Sustainability,as we believe these initiatives help to drive harmonization of the approaches to risk mitigation and to increase leverage and efficiency through joint measures.In 2024,we actively participated in working groups on battery raw materials and the adaptation of existing standards to the requirements oftheEUBR.We also conduct supply chain audits across all levels of our lithium,cobalt,nickel and natural graphite supply chains.For these,the Volkswagen Group has been working with external consultants since 2021 to help us verify upstream transpar-ency information and better understand our suppliers overall preparedness to comply with requirements or upcoming regulations.The audits are performed following a risk-based approach and cover compliance with the five-step frame-work of the OECD Due Diligence Guidance,including aspects such as forced and child labor,health and safety measures,and due diligence procedures.Where necessary,Corrective Action Plans(CAPs)are agreed on and closely monitored.Volkswagen Group Responsible Raw Materials Report 20242601Foreword02General Disclosure04 Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Battery Raw Materials Lithium Cobalt Nickel Natural Graphite Conflict Minerals Other Raw MaterialsRaw Materials Battery Raw Materials In 2024,we conducted several audits at direct supplier lo-cations,at cathode and anode manufacturers,refineries,and mine sites.Our Sustainable Supply Chain team was closely involved and observed some of the audits,which improved our understanding of the processes and due diligence man-agement of our tier-1 suppliers.It was also a good opportunity to intensify the dialogue with our main battery suppliers.All of these activities are aimed at the continuous improvement of sourcing practices.The findings from the audits and consulta-tions are incorporated into the audit questionnaire to improve future assessments.In the reporting year,the Sustainable Supply Chain team of theVolkswagen Group participated in various training ses-sions and workshops on battery raw material supply chains,covering topics such as compliance requirements for the EUBR and supplier relations.Battery RecyclingTo reduce our consumption of resources,the Volkswagen Group is working on a recycling concept for batteries,oper-ating a pilot facility for recycling high-voltage vehicle bat-teries at the site in Salzgitter.In addition,we are exploring strategic partnerships in the battery value chain to compre-hensively close the loop for high-voltage batteries.More information is available in the 2024 Annual Report(page 334).PowerCoThe Volkswagen Group is one of the few automotive manu-facturers around the world that is taking the battery as a core e-mobility technology into its own handsfrom the pro-curement of raw materials to recycling.PowerCo,founded in 2022,vertically integrates the development and production of battery cells within the Volkswagen Group.Three sites for bat-tery cell production are currently under construction:the main plant in Salzgitter,Germany(scheduled to start production in 2025),Valencia,Spain(2026),and St.Thomas,Canada(2027).All sites are consistently operated with electricity from renew-able sources.More information is available in the 2024 Annual Report(pages 281-282).For the supply of raw materials,PowerCo relies on three mech-anisms:long-term supply contracts,investments with partners in its own mines and procurement on the commodity markets.Because the Volkswagen Group is expected to cover more than half of its raw material requirements through PowerCo or purchase them directly in the future,the objective is to have a more direct lever for improving environmental and social condi-tions in the supply chain.The Group aims to maximize material use within production through close-to-production recycling of production surpluses(scrap and end-of-line).We want to drive the development of a strong,sustainable battery industry with strong roots in Europe and North America.In addition,the Volk-swagen Group and PowerCo are also focusing on systematic end-of-life recycling and the use of recycled materials.Since its start,PowerCo has already introduced the concept of the unified cell,founded a joint venture,IONWAY BV,with Belgian material technology group Umicore to produce cath-odes,and introduced activities to secure the supply of raw materials.In the reporting period,PowerCo entered purchas-ing agreements with suppliers of battery raw materials that will begin supplying PowerCo inthe coming years.In preparation for the start of battery cell production,the Sustainable Supply Chain team of the Volkswagen Group is supporting PowerCo in assessing the social and environmen-tal risks of potential direct suppliers of battery raw materials.During the reporting period,we performed desktop due diligence ESG pre-checks with a focus on mine sites for all battery raw materials as a standard process during the initial dialogue with potential suppliers.In high-risk contexts,during contract negotiations,we also performed comprehensive on-site due diligence facilitated by industry expert consultants.These assessments cover extensive human rights and envi-ronmental aspects in accordance with applicable legislation and international due diligence standards.In high-risk countries,we strive to ensure that our raw material Outlook 2025We plan to continue our robust engagement and close dialogue with our direct battery suppliers collect further information about the upstream supply chain and review the data with a raw material specific lens finalize the development and start to roll-out new tools for initial risk analysis and risk mitigation while prioritizing 3rd party solutions to re-duce the burden at the supplier base improve our due diligence and mapping audit program to facilitate in-depth risk analysis work with cross-industry initiatives on standards and tools to facilitate com-pliance which align with the EUBRsuppliers only use lithium,cobalt,nickel and natural graphite from IRMA assessed mines.Following a suppliers commit-ment to obtaining IRMA assessment,we continuously monitor their progress and remain closely involved.One priority topic is the safe management of hazardous substances,including mining tailings.We also seek a contractual commitment to continuous improvement in order to increase the IRMA perfor-mance level over time.Volkswagen Group Responsible Raw Materials Report 20242701Foreword02General Disclosure04 Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Battery Raw Materials Lithium Cobalt Nickel Natural Graphite Conflict Minerals Other Raw Materials Battery Raw Materials Lithium LithiumLithium is a soft and light,silvery-white alkali metal found in mineral and brine deposits.The metal is best known for its high energy storage density and its use in rechargeable batteries.Further industrial applications are metallurgy,glass and ceramics,lubricants,and drugs.EnvironmentHuman Rights Community Life Forced or compulsory labor Protection of the rights of indigenous and local people Causing harmful environmental change Water pollution and consumptionKey material-specific risks Top 3 mining countries Source:USGS,2024 estimates.Countries of origin (Share of global mining/processing)207%AustraliaChinaChile17%Volkswagen Group Responsible Raw Materials Report 20242801Foreword02General Disclosure04 Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Battery Raw Materials Lithium Cobalt Nickel Natural Graphite Conflict Minerals Other Raw MaterialsBattery Raw Materials LithiumKEY APPLICATION EV batteries Lithium in our Supply ChainLithium hydroxide and lithium carbonate are the most im-portant lithium products,which also goes for the Volkswagen Group.They serve as a key raw material for battery cathodes.Demand for lithium is therefore expected to rise in the coming years due to the expansion of electromobility.In 2024,the Volkswagen Group did not directly source any raw materials for batteries,including lithium.Starting 2025,the Volkswa-gen Groups battery manufacturer PowerCo will be directly supplied with lithium(see more on page 26).Other than that,the Volkswagen Group purchases battery cells and modules containing lithium from major battery manufacturers.Risk Assessment In order to assess the systemic and salient risks associated with lithium,we continuously work with cross-industry initia-tives and other external stakeholders to understand the ESG risks associated with the lithium supply chain.Additionally,we collect supply chain data through our battery suppliers and review the data,considering the results of our general raw material risk assessment.Australia,Chile,Brazil,Canada,China,Argentina,US are among the main countries of origin.The systemic and salient risks linked to lithium produc-tion are primarily water-related and include various adverse environmental impacts on soil and biodiversity.Environmen-tal risks are particularly high for water stress areas such as Chile.Additional risks are related to operations affecting in-digenous peoples rights.We also identified forced labor as a potential risk in particular geographies,following a grievance case in 2023(for more information see RRMR 2023(page 25).were agreed on.Several are already completed or underway,with others prioritized for the future.A cadaster of water rights holders for the riverbasin Geological and hydrological mapping Awareness campaigns on the challenges of water scarcity Inauguration of a gray water recycling system at a local high school(capacity of 5,000 liters per week)Providing access to data from more than 300resources,with additional resources made available through a website and social mediaThe participants have extended the project until Feb-ruary2025 and aim to institutionalize the roundtable to ensure their work continues beyond that time.The Volkswagen Group is one of the founding members of the Responsible Lithium Partnership in Chile.The initiative is coordinated by the German Agency for International Cooperation(GIZ)and promotes the responsible use of resources in lithium production in the arid Salar de Atacama region.The ecosystem in the region is fragile,and mining risks could affect ecosystems and local livelihoods,intensifying conflicts over the scarce water resources between the local communities and the lithium-mining companies.The unique format of the “Mesa Multiactor”project,a multi-stakeholder roundtable,brings together representatives from local tourism and agriculture associations,lithium-mining companies,indigenous communities,and local authorities to reach collab-orative agreements on priority issues related to the sustainability of the region.The project has proven very successful over the past years,facilitating dialogue and reducing conflict potential regarding water and community rights.During an on-site visit in March 2024 together with a delegation of funding partners,we were able to see the solutions and activities already implemented in the region.The visit also allowed us to directly communicate with representatives of local and indigenous communities and other stakeholders such as representatives from tourism associations.With a joint action plan signed by around 20 local stakeholders,a range of initiatives and measures HIGHLIGHT“Mesa Multiactor”a Roundtable for Dialogue in ChileVolkswagen Group Responsible Raw Materials Report 20242901Foreword02General Disclosure04 Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Battery Raw Materials Lithium Cobalt Nickel Natural Graphite Conflict Minerals Other Raw MaterialsBattery Raw Materials Lithium Direct Lithium Extraction(DLE)has emerged as a set of dif-ferent technologies to selectively extract lithium ions directly from lithium-rich solutions,allowing for reduced brine con-sumption but increasing energy and freshwater consumption,depending on the specific technology used.However,to date,the available data on environmental impacts of DLE is limited to a few pilot projects,and the associated ESG risks have yet to be fully assessed.The Volkswagen Groups Sustainability Supply Chain team will closely monitor the pilot projects and collaborate with relevant stakeholders to evaluate their specific social and environmental impacts.Risk MitigationOur strategy for risk mitigation in the lithium supply chain is multi-faceted,with a focus on working closely with our key battery suppliers to engage along the supply chain.Our approach contains sustainability requirements for all suppli-ers and is closely coordinated for all battery raw materials.Formore information see page 25.We also engage in multi-stakeholder initiatives and believe that joint approaches can help to achieve positive impacts in mining-affected regions by working locally with affected stakeholders and indigenous communities.During the report-ing period,we continued to engage with IRMA to promote common standards and increase the share of IRMA-certified material.During a trip to Chile,we met with two lithium-producing companies who shared insights into their IRMA assessments conducted in 2023.In 2024,a major multi-metal facility of Talison Lithium located in Australia committed to undergoing the IRMA assessment.This audit will further increase transparency surrounding ESG aspects of lithium production at Australian hard rock sites.The Lithium Working Group of the German Automotive Sector Dialogue,in which Porsche participates,continued to work with the set of recommendations for sustainable lithium production developed in 2023.The common set of expectations Stakeholder Engagement Regular meetings with battery suppliers Direct conversations with local stakeholders,NGOs and companies during an on-site visit to the project Mesa Multiactor in Chile Participation in lithium working groups of the German Automotive Sector Dialogue and the RMI Outlook 2025We plan to continue supporting local stake-holders in Chile through the Responsible Lithium Partnership intensify the dialogue with external stakeholders on environmental and social risks related to new extraction technologies such as DLE and new geographies where lithium is extracted(apart from Chile and Australia)further adapt our processes and prepare for the EUBR For more information on the EU Battery Regulation see page 24 of thisreport.is mainly directed at mining companies,while intermediate actors such as processing facilities and cathode materi-al manufacturers have not yet been addressed.Through dialogue with companies in the supply chain about their experience in applying and cascading the recommendations,we were able to deepen our insight into selected aspects of supply chain risks and further promote the recommendations.The Volkswagen Group also participates in the RMI Working Group on Lithium to promote due diligence activities and responsible sourcing throughout the supply chain.During the reporting period,the main focus of the working group was on sharing best practices for risk mitigation along the lithium supply chain.In this context,we shared insights from our visit to Chile,highlighting the effectiveness of joint engagement to improve the situation of affected local stakeholders.In addition,as a result of joint supply chain mapping and indus-try engagement efforts,two more smelting facilities were successfully assessed according to the Responsible Minerals Assurance Process(RMAP)standard.As part of our broader stakeholder engagement,we col-laborate with NGOs,academics and government bodies on specific topics.In 2024,we continued to work with NGOs in order to deepen our understanding of the situation of local stakeholders and communities in resource-rich regions.For example,we met with NGO representatives from Zimbabwe to discuss the social and environmental risks associated with artisanal and small-scale lithium mining that arose in connec-tion with high lithium prices but ceased recently due to the decline in lithium prices.In the reporting period,the Volkswagen Group discussed a research proposal with academic partners in Australia and Chile.The proposal was to focus on social risks originating in the lithium triangle in South America(Argentina,Bolivia,Chile).The fruitful discussions helped us to better understand the research interests of international academics and to de-fine our own focus areas for continued engagement in 2025.Volkswagen Group Responsible Raw Materials Report 20243001Foreword02General Disclosure04 Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Battery Raw Materials Lithium Cobalt Nickel Natural Graphite Conflict Minerals Other Raw MaterialsBattery Raw Materials Cobalt CobaltCobalt is a hard,lustrous,silvery metal found in rocks only in a chemically combined form.The vast majority of cobalt is extracted as a by-product of existing nickel and copper mining.Cobalt is primarily used in lithium-ion batteries and in the manufacture of high-strength magnetic alloys.EnvironmentHuman Rights Community Life Child labor Forced or compulsory labor Discrimination Health and safety Trade union freedoms Payment of adequate wages Protection of the rights of local communities Causing harmful environmental change Hazardous substances Water pollution including marine environment Handling and disposal of waste Soil pollution and land degradation Loss of biodiversityKey material-specific risks Top 3 mining countries Source:USGS,Cobalt Institute,2024 estimates.Countries of origin (Share of global mining/processing)76%DR CongoRussia3%IndonesiaVolkswagen Group Responsible Raw Materials Report 20243101Foreword02General Disclosure04 Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Battery Raw Materials Lithium Cobalt Nickel Natural Graphite Conflict Minerals Other Raw MaterialsBattery Raw Materials CobaltKEY APPLICATION EV batteries Cobalt in our Supply ChainCobalt hydroxide,cobalt sulfate and cobalt metal are the main inputs for electric vehicle(EV)battery cell production.Cobalt plays an essential role in batteries,improving vehicle range and safety by providing thermal stability in cathode chemistry.In 2024,the Volkswagen Group did not directly source any raw materials for batteries,including cobalt.Starting 2025,the Volkswagen Groups battery manufacturer PowerCo will be directly supplied with cobalt(see more on page 26).Risk Assessment The Volkswagen Groups main sourcing countries for cobalt are DR Congo,Turkey,Indonesia and Australia.Human rights and adverse environmental impacts are the most systemic and salient risks identified for cobalt.This is mainly due to the great majority of cobalt being mined in the southern area of the DR Congo,often in artisanal and small-scale mining(ASM)with low wages,poor working conditions and little to no safety.The lack of law enforcement is also related to adverse environmental impacts on the neighboring communities.Supply chain traceability is low and challenging due to the many actors involved.Risk MitigationIn order to mitigate the risks associated with the complex cobalt supply chain,we are focusing on working closely with our battery suppliers and engaging with cross-industry initiatives and NGOs.Our approach includes sustainability requirements for all suppliers and is closely coordinated for all battery raw materials.See page 25 for more information.The Volkswagen Group strictly excludes artisanal mining operations from its sourcing of cobalt.However,in line with the OECD Minerals Guidance,we do not generally prohibit sourcing from conflict-affected and high-risk areas but instead aim to promote responsible sources within these regions.We are sensitive to evidence that may help identify suppliers from conflict-affected and high-risk areas that areprone to human rights abuses.We seek contractual commitment to international standards such as those developed by IRMA or RMI(RMAP).Tailing management in particular is a main risk at cobalt mining sites and must be properly addressed to comply with international best practices.However,compared to lithium,the cobalt supply chain entails additional challenges regarding stan-dards.Cobalt is often mined as a by-product of large-scale copper(mainly in DR Congo)or nickel mines(e.g.,Indonesia).The respective copper-cobalt mining companies are often new to the IRMA standard and sometimes favor alternative standards.The Volkswagen Group also participates in the RMI working groups on cobalt and emerging minerals.We also continued to engage in discussions with NGOs,media and other stake-holders to improve our understanding of local affected com-munities and emerging risks.In 2024,we continued phase 2 of Cobalt for Development(C4D),a cross-industry pilot project implemented by GIZ.The project works to support communities dependent on ASM cobalt mining in the DR Congos Lualaba Province.In C4D,we work together with partners to improve working and living conditions of small-scale cobalt miners and their communities.Stakeholder Engagement Regular meetings with battery suppliers Ongoing exchange with NGOs,media and other stakeholders regarding local affected communities Participation in RMI working groups on cobalt and emerging minerals Outlook 2025We plan to continue to promote the IRMA standard for responsible cobalt mining further adapt our processes and prepare for the EUBR For more information on the EU Battery Regulation see page 24 of thisreport.Volkswagen Group Responsible Raw Materials Report 20243201Foreword02General Disclosure04 Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Battery Raw Materials Lithium Cobalt Nickel Natural Graphite Conflict Minerals Other Raw Materials Battery Raw Materials Nickel NickelNickel is a metallic element with a silvery appearance which occurs naturally in soil and water.Primary nickel is produced and used as ferronickel,nickel oxides and other chemicals.Lithium-Ion Batteries and stainless steel are the most important usages of nickel.It is also used in other alloys and plating.EnvironmentHuman Rights Community Life Child labor Support of armed groups Health and safety Trade union freedoms Payment of appropriate wages Plant safety Forced evictions or expropriations Protection of the rights of indigenous people Causing harmful environmental change Hazardous substances Air pollution Water including marine environment Handling and disposal of waste Soil pollution and land degradation Loss of biodiversityKey material-specific risks Top 3 mining countries Source:USGS,2024 estimates.Countries of origin (Share of global mining/processing)Indonesia59%Russia6%9%PhilippinesVolkswagen Group Responsible Raw Materials Report 20243301Foreword02General Disclosure04 Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Battery Raw Materials Lithium Cobalt Nickel Natural Graphite Conflict Minerals Other Raw MaterialsBattery Raw Materials NickelKEY APPLICATION EV batteries Exhaust systems Nickel in our Supply ChainNickel is a strategically important raw material in the electri-fication of vehicles,in addition to its other uses in stainless steel,alloys and plating.Nickel sulfate provides a source of nickel ions for the cathode material of lithium-ion batteries,such as Nickel-Manganese-Cobalt(NMC)batteries,contribut-ing to overall performance,energy density and stability of the batteries.In EV batteries,nickel-rich cathodes improve energy density and stability while reducing costs.For the Volkswagen Group,EV batteries are prioritized as focus parts and we did not directly source any nickel for this use in 2024.Starting 2025,the Volkswagen Groups battery manufacturer PowerCo will be directly supplied with battery nickel(see more on page 26).Risk Assessment Our main countries of origin for nickel are Australia,China,Democratic Republic of the Congo,Finland,Indonesia,PapuaNew Guinea,Turkey.The systemic and salient risk areas associated with nickel are the environmental impacts of open-pit mining such as the destruction of forests and soils,water pollution,and waste handling,particularly toxic tailings from processing facilities.Additionally,nickel pro-duction is a greenhouse-gas-and energy-intensive process.Adverse environmental effects also have a direct impact on local communities.Another salient risk area is human rights,including working conditions,health and safety.In order to assess the systemic and salient risks associated with nickel,we are continuously collecting supply chain data through our battery suppliers and working with cross-industry initiatives and non-governmental organizations.A particular challenge in the sourcing of nickel from Indonesia is the complex combination of large nickel mines and smelting and refining facilities in industrial parks.Assigning risks and responsibilities for worker protection and environmental management is difficult,due to cumulative impacts and inter-twined operations.Risk MitigationTo mitigate the risks associated with the complex nickel supply chain,we are focusing on working closely with our battery suppliers and engaging with cross-industry initiatives and NGOs.Our approach includes sustainability requirements for all suppliers and is closely coordinated for all raw materials used in batteries.See page 25 for more information.As with other metals,we seek to contractually commit our nickel suppliers to international standards such as the IRMA standard.However,compared to lithium,the nickel supply chain entails additional challenges as nickel mining compa-nies are often new to the IRMA standard and sometimes favor alternative standards.The Volkswagen Group also participates in the RMI Working Group on Nickel.During the reporting period,the working group met to discuss human rights risks and environmental concerns and partnered with the Inter-national Labour Organization(ILO)to address systemic labor risks within the nickel supply chain.Stakeholder Engagement Founding member of Nickel on-the-ground partnership project in Indonesia Engagement in industry initiatives and working groups Ongoing dialogue with industry peers and direct and indirect suppliers Collaboration with NGOs and stakeholders Outlook 2025We plan to continue promoting IRMA within the nickel supply chain implement an on-the-ground partnership project in Indonesia further adapt our processes and prepare for the EUBR For more information on the EU Battery Regulation see page 24 of thisreport.Volkswagen Group Responsible Raw Materials Report 20243401Foreword02General Disclosure04 Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Battery Raw Materials Lithium Cobalt Nickel Natural Graphite Conflict Minerals Other Raw MaterialsBattery Raw Materials Nickel In 2024,we conducted a field trip to Indonesia to assess environmental,social and governance(ESG)risks related to nickel mining.The trip facilitated engagement with local stakeholders,including government bodies,workers unions and community representatives,to identify challenges and implement risk mitigation strategies.During another trip to Canada,we engaged with the Mining Association of Canada and local authorities to understand the structural challenges of IRMA assessment and review current risks associated with water management and reclamation.In the reporting year,the Volkswagen Group took a leadership role as a founding member of an on-the-ground partner-ship project in Indonesia.This initiative focuses on driving on-the-ground improvements addressing key ESG risks such as biodiversity loss,labor conditions,human rights impacts,water contamination and tailing management.The partnership promotes collaboration with local stakeholders,including mining companies,NGOs and community representatives,to implement tangible solutions and improve industry practices.Potential on-the-ground projects in the Indonesian regions of Sulawesi and Halmahera were evaluated.Following these scoping activities,implementation of the projects is planned to start in 2025.We also aligned with the chinese and indonesian companies on in-country work in Indonesia to promote sustainable sourcing and enhance traceability.During the reporting year,the Volkswagen Group also con-tinued to engage in discussions with NGOs,media and other stakeholders to target key issues such as biodiversity degra-tion and human rights risks and explored satellite monitoring programs of the European Space Programme partnership to monitor deforestation activities.Volkswagen Group Responsible Raw Materials Report 20243501Foreword02General Disclosure04 Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Battery Raw Materials Lithium Cobalt Nickel Natural Graphite Conflict Minerals Other Raw MaterialsBattery Raw Materials Natural Graphite Natural GraphiteGraphite is a soft,crystalline form of carbon with a metallic luster and a dark gray color.With its thermal and electrical conductivity,it is suitable for many industrial applications.Graphite has two forms:natural graphite,which is mined,and synthetic graphite,which is produced from petroleum coke or coal tar.Both are used on a large scale in pencils,lubricants and electrodes.EnvironmentHuman Rights Community Life Health and safety Harmful environmental change Production and use of pollutants Air pollutionKey material-specific risks Top 3 mining countries Source:USGS,2024 estimates.Countries of origin (Share of global mining/processing)6%5%MadagascarMozambiqueChina79%Volkswagen Group Responsible Raw Materials Report 20243601Foreword02General Disclosure04 Raw Materials03Commitment to Initiatives 05Outlook for 202506Annex Battery Raw Materials Lithium Cobalt Nickel Natural Graphite Conflict Minerals Other Raw MaterialsBattery Raw Materials Natural GraphiteKEY APPLICATION EV batteries Natural Graphite in our Supply ChainGraphite(in both natural and synthetic form)is contained in a vast number of vehicle parts,most importantly in the anodes of EV batteries,but also in brake discs and precision parts,graphite powders,etc.For the Volkswagen Group,EV batteries are by far the largest field where natural graphite is required,and we did not directly source any natural graphite for this use in 2024.Starting 2025,the Volkswagen Groups battery manufacturer PowerCo will be directly supplied with natural graphite(see more onpage 24).Risk Assessment The Volkswagen Group has determined natural graphite as one of its priority materials,so our risk assessment is primarily focused on further analyzing the natural graphite supply chain and the associated human rights,community and environ-mental risks.Natural graphite is mainly mined in open-pit and underground mines.The graphite ore is then processed,using methods that depend on the type of deposit,the flake size distribution and the required specifications of the final concentrate.Human rights and adverse environmental impacts were identified as the most systemic and salient risk areas,partic-ularly occupational health and safety,air pollution,and the production and use of pollutants and hazardous chemicals.China is by far the worlds leading supplier of natural graphite,followed by Madagascar and Mozambique.Achieving trans-parency remains a challenge,given the fragmented nature of the mining sector and the strong reliance on China.In addi-tion,law enforcement in the mining regions tends to be weak,increasing human rights and environmental risks.In 2024,the Volkswagen Group conducted an in-depth risk analysis of the Chinese natural graphite sector,which included desktop research and a series of interviews with stakeholders in the supply chain.We also initiated a project with external experts to complement our existing insights in terms of actual salient risks in natural graphite in China that we need to address.We expect the results of the project to validate our risk analysis,to enable direct contact with tier-2 and tier-3 suppliers as a follow-up,and to derive opportu-nities for risk mitigation and supplier engagement in 2025.The project was carried out for the raw materials graphite,magnesium and REE.Risk MitigationTo mitigate the risks associated with the complex natural graphite supply chain,we are focusing on working closely with our battery suppliers and engaging with cross-industry initiatives and NGOs.Our approach includes sustainability requirements for all suppliers and is closely coordinated for all battery raw materials.See page 25 for more information.As for other metals,we actively engage with IRMA and seek to contractually commit our graphite suppliers to the IRMA standard.To date,there is a lack of sustainability standards for graphite on both the mining and the refining level,and the development of a common approach is additionally complicated by differing production processes for synthetic and natural graphite.Besides IRMA,the Volkswagen Group is also a member of the RMI Working Groups on Graphite andEmerging Minerals.Outlook 2025We plan to continue expanding our graphite supply chain mapping and audit program with our battery suppliers initiate dialogue with Chinese stakeholders to increase supply chain transparency raise awareness among sub-suppliers and promote joint standards through dialogue further adapt our processes and prepare for the EUBR For more information on the EU Battery Regulation see page 24 of thisreport.Stakeholder Engagement Stakeholder interviews to increase understanding of the complex and fragmented natural graphite supply chains Member of the RMI Working Group on Graphite and Emerging Minerals Regular meetings with battery suppliers Volkswagen Group Responsible Raw Materials Report 20243705Outlook for 202506Annex Battery Raw Materials 3TG Other Raw Materials Conflict Minerals04 Raw Materials01Foreword02General Disclosure03Commitment to Initiatives Raw Materials Conflict MaterialsConflict MineralsTin,tantalum,tungsten and gold(3TG)are called“conflict minerals”due to their role in violent conflicts in the Democratic Republic of the Congo(DRC)and other Conflict Affected and High Risk Areas(CAHRAs),where their extraction and trade are used to fund armed groups while fueling human rights abuses and corruption.TinTantalumTungstenGoldPage 38Page 38Page 38Page 38 05Outlook for 202506Annex Battery Raw Materials 3TG Other Raw Materials Conflict Minerals04 Raw Materials01Foreword02General Disclosure03Commitment to Initiatives Conflict Minerals 3TG38 3TG“Conflict minerals”include the metals tantalum,tin,tungsten and goldalso referred to as 3TG,which are the extracts of the minerals cassiterite,columbite-tantalite and wolframite,respectively.3TG metals are used in small quantities in a wide range of electronic products and are considered critical for the electronic and other industries.Child labor Forced or compulsory labor Support of armed groups Any form of discrimination Health and safety Payment of appropriate wages Plant safety Forced evictions or expropriations Protection of the rights of indigenous people Causing harmful environmental change Hazardous substances Air pollution Noise and vibrations Water pollution and consumption Handling and disposal of waste Soil pollution and land degradation Loss of biodiversityHuman Rights Community LifeEnvironmentKey material-specific risksBecause 3TG metals are four different raw materials with a large total number of countries of origin,we decided against visualizing them on a world map.Instead,the 3TG smelters and the countries and ter-ritories of origin we identified are listed in Annexes III and IV of this report.TIN,TANTALUM,TUNGSTEN AND GOLDVolkswagen Group Responsible Raw Materials Report 20243901Foreword02General Disclosure03Commitment to Initiatives 05Outlook for 202506Annex Battery Raw Materials 3TG Other Raw Materials Conflict Minerals04 Raw MaterialsConflict Minerals 3TGKEY APPLICATIONS Various automotive parts Electronics 3TG in our Supply Chain3TG metals(tin,tantalum,tungsten and gold)are used in minute quantities in a wide variety of automotive parts and components.This lack of focal parts to concentrate on creates a key challenge for 3TG due diligence within automotive supply chains.Tracing the upstream supply chains becomes even more challenging considering that we do not source 3TG metals directly.They typically enter our supply chains several levels upstream,where we do not have direct contractual relationships.Risk Assessment 3TG metals are mined in both large-scale and artisanal and small-scale mining(ASM),and as with most other minerals,the highest risks occur at the mining level.Mining provides a livelihood for many people in the mining regions but frequently takes place under precarious working conditions in disregard of labor law,human rights,or health and safety precautions,especially in ASM.Almost all risk categories defined in the Volkswagen Groups RMDDMS apply to the group of 3TG conflict minerals.In our annual risk assessment,we identified human rights risks including child labor and support for non-state armed groups and/or public or private security forces as the main systemic social risks.Salient environmental risks are pollutants and hazardous chemicals in mining discharge.The basis for our 3TG due diligence activities is the“choke point approach”,in line with the OECD Minerals Guidance.The Guidance recommends that,as a best practice,due diligence should focus on the smelters and refiners as the critical points in the complex and multi-step processing of 3TG metals.First,smelters and refiners are identified,and then we aim to ensure that they source responsibly.To collect information along the supply chain,we use Assents supply chain management solution,including a third-party database,and we ask our suppliers to complete the Conflict Minerals Reporting Template(CMRT)of the Responsible Minerals Initiative(RMI).In addition to identifying smelters and refiners,the CMRT also requires the countries of origin of the mined material to be listed.This approach enables us to efficiently obtain more accurate and relevant information from our suppliers despite the large number of suppliers involved.In 2024,we identified and engaged with approximately 1,500suppliers who supply nearly 200,000 different parts.We have determined country of origin data for the majority of the smelters in our supply chain.Please see the lists of smelters and the 3TG countries of origin in Annexes III and IV of this report.Stakeholder Engagement Member of the RMIs Smelter Engagement and Gold teams Dialogue with tier-1 suppliers,promoting the need for RMAP-conformant smelters in the upstream supply chain Encourage the use of RMAP for smelters and refiners Ongoing dialogues with NGOs Outlook 2025We plan to further increase the response rate when collecting CMRTs from suppliers to increase transparency engage with key direct suppliers to emphasize the importance of sustainable 3TG supply chains further increase the percentage of RMAP-conformant 3TG smelters in our supply chainVolkswagen Group Responsible Raw Materials Report 20244001Foreword02General Disclosure03Commitment to Initiatives 05Outlook for 202506Annex Battery Raw Materials 3TG Other Raw Materials Conflict Minerals04 Raw MaterialsConflict Minerals 3TG Risk Mitigation As a downstream buyer of complex,already processed auto-motive components,we adopt a multi-pronged approach to risk mitigation.In the reporting period,we continued to make progress in collecting supply chain information and identify-ing critical smelters.However,transparency in the fragmented 3TG supply chains for a high number of affected automotive parts remains a challenge.Cross-industry collaboration is another part of our approach to addressing human rights and environmental risks in our complex 3TG supply chains.The Volkswagen Group is a member of the RMI and continued to participate in the Smelt-er Engagement Team and the Gold Team in 2024.Together with other RMI members,we have worked with a number of smelters and refiners,encouraging them to undergo the RMIs Responsible Minerals Assurance Process(RMAP)and to pursue risk mitigation and continuous improvement.Since we do not directly purchase any 3TG metals,we have established sustainable 3TG sourcing requirements for our direct suppliers of parts and components.Our contractually binding Code of Conduct for Business Partners(CoC BP)requests them to comply with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas and to ensure that they only use responsibly sourced 3TG metals.To comply,the 3TG
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Sustainability Report2024Table of contentsIntroduction39Sustainability strategy14Innovate for good17 Delivering solutions for global challenges25 Enabling a circular economy31 Innovating safe and sustainable by design37Protect people and the planet39 Acting on climate47 Leading water stewardship54 Delivering world-class environmental,health,and safety performance6285A1Empower people to thrive63 Accelerating diversity,equity,and inclusion71 Cultivating well-being and fulfillment 77 Building thriving communitiesGovernanceAppendicesA3 GRI content indexA38 SASB content indexA41 TCFD disclosure indexA52 Forward-looking statementsIntroductionSustainability strategyIntroductionEmpower people to thriveAppendices3DuPont 2024 Sustainability ReportInnovate for goodProtect people and the planetGovernanceLetter from our Executive Chairman and CEOEd Breen Executive Chairman and Chief Executive OfficerTo our stakeholders,Im proud to share our 2024 Sustainability Report that details progress we have made toward achieving our 2030 Sustainability Goals and highlights the hard work by our DuPont team to meet our commitments across all aspects of Environmental,Social,and Governance(ESG).At DuPont,sustainability is integral to our strategy,embedded in every aspect of our businessfrom our innovation pipeline,to our manufacturing and supply chains,to how we engage with our people and communities.As a global innovation leader and multi-industrial company,were developing new products and solutions in exciting growth areas.Importantly,were focused on meeting customers needs for both innovation and sustainability,including products for cleaner water,energy-efficient buildings,electric vehicles,and advanced computing.Today,more than 80%of our innovation portfolio is expected to advance sustainability with solutions that address important global challenges.Reflecting these efforts,DuPont was named Best ESG Partner by Samsung Electronics.DuPont delivered another year of strong performance on our bold climate goals,which are aligned with the ambition of the Paris Agreement to limit global warning to 1.5 C and have been validated by the Science Based Target initiative(SBTi).We achieved a 58%reduction of Scopes 1 and 2 emissions from the 2019 baselineexceeding our 2030 goal of 50%ahead of schedule,and we exceeded our 2030 Scope 3 emissions reduction goal of 25%from the 2020 baseline.In addition,we met our 2030 goal of sourcing 60%of electricity from renewable energy,through the purchase of additional Renewable Energy Credits(RECs).Our 2023 results underscore our commitment to partnering across our value chains to meet the climate challenge.This past year,we made strong progress in the continued deployment of our enterprise-wide Operational Excellence framework designed to drive continuous improvement and unlock growth and productivity.In 2023,our manufacturing sites advanced deployment plans focused on creating value through standardized tools,best-in-class technologies,and robust practices that stabilize workflows,reduce errors,and minimize waste.This relentless focus on continuous improvement resulted in our safest year on record for employees and contractors.Our strong governance practices underpin our sustainability strategy.DuPont remains committed to transparently reporting on our sustainability policies and performance through oversight from our Board of Directors.A key focus in 2023 was strengthening the DuPont Supplier Code of Conduct with our new responsible supplier program called“Together for the Planet”.The commitment of our global team to our core values,customers,and communities is essential to our sustainability journey.Through multiple workplace initiatives,we are delivering opportunity,experience,and purpose for our employees across the globe.This is reflected in both internal survey performance and external recognition.Our IMPACT Survey indicates our employees are highly engaged with purposeful work in an inclusive environment.In 2023,DuPont achieved Great Place to Work certification and was named to Forbes list of Best Employers for Diversity and Bloombergs Gender-Equality Index,among others.While our sustainability journey doesnt have an end,were pleased to share our progress and celebrate our milestones.Thank you for taking the time to learn more about our achievements and for your continued interest in DuPont.Sincerely,Sustainability strategyIntroductionEmpower people to thriveAppendices4DuPont 2024 Sustainability ReportInnovate for goodProtect people and the planetGovernanceOur company and purposeDuPont de Nemours,Inc.(DuPont)is a publicly traded,premier multi-industrial company based in Wilmington,Delaware,United States of America.We are a global innovation leader in technology-based materials and solutions that help transform industries and everyday life.Our passion for,and proven expertise in,science and innovation enable us to partner with our customers to create sustainable solutions for the complex challenges facing our world.Our core values With four core values anchoring our commitment to sustainable innovation,weve designed and maintained a foundation for long-term growth,connection with local communities,and an environment that attracts the best and brightest talent to help us deliver solutions to our customers.Our core values are timeless and foundational to everything we do and every decision we make every day.Our employees around the world come to work each day with a shared purpose:to empower the world with the essential innovations to thriveMore information about our organization,corporate governance,Board of Directors,operational structure,markets served,and geographical footprint as of December 31,2023,is available in our 2023 Annual Report on Form 10-K(the“Annual Report”)and in our 2024 Proxy Statement(the“Proxy Statement”),which are both filed with the U.S.Securities and Exchange Commission and available at .Safety and health Were committed to protecting the safety and health of our employees,our contractors,our customers,and the people in the communities where we operate.Respect for people We treat our employees and all our partners with professionalism,dignity,and respect,fostering an environment where people can contribute,innovate,and excel.Highest ethical behavior We conduct ourselves in accordance with the highest ethical standards,and in compliance with all applicable laws,always striving to be a respected corporate citizen worldwide.Protecting the planet We find science-enabled,sustainable solutions for our customers,always managing our businesses to protect the environment and preserve the earths natural resources for today and for future generations.Sustainability strategyIntroductionEmpower people to thriveAppendices5DuPont 2024 Sustainability ReportInnovate for goodProtect people and the planetGovernanceDuPont at a glance35%U.S.and Canada47%U.S.and Canada43%Asia Pacific33%Asia Pacific18%Europe,Middle East,and Africa17%Europe,Middle East,and Africa4%Latin America3%Latin AmericaDuPont sales worldwide1DuPont employees worldwide2DuPont segment sales$12.1B net sales24,000 employees worldwide$5.6Bnet sales$5.3Bnet sales1 Sales on a continuing operations basis as reported in the 2023 Annual Report on Form 10-K.2 Approximately,as of December 31,2023.Not all of these employees are reflected in the employee demographic data presented in this report,as the effects of acquisitions and divestitures are incorporated into data systems at various points post-transaction.Refer to the Reporting Scope table on page 95 for details.$12.1B2023 net sales50 countries where we operate 100manufacturing sites25Global Technical Centers24,000employeesWater and Protection45%Safety Solutions29%Shelter Solutions26%Water SolutionsElectronics and Industrial35%Semiconductor Technologies39%Industrial Solutions26%Interconnect SolutionsSustainability strategyIntroductionEmpower people to thriveAppendices6DuPont 2024 Sustainability ReportInnovate for goodProtect people and the planetGovernanceDuPont business today Today,our business portfolio has been transformed as we have become a premier multi-industrial company.Following the completion of recent divestitures,our portfolio is largely set,and we are now squarely focused on driving growth.Our current business portfolio strategically aligns with our innovation strengths and industry-leading products.Our customers rely on us as a partner for delivering technology and applications development expertise and sophisticated,integrated solutions.Our product portfolios,capabilities,and customer relationships are aligned to five strategic growth areas.12%of net salesWe provide technologies that help purify more than 50 million gallons of water every minute around the world and enable water reuse and recycling,desalination,and the safe access to both ground and surface water.Our solutions address a variety of water and sustainability challenges through a broad portfolio of water purification and separation technologies.WaterOur innovative products,technologies,and performance materials are used to supply the leading manufacturers in the semiconductor,circuit board,display,digital and flexographic printing,healthcare,aerospace,industrial,and transportation industries.Electronics29%of net salesFrom first responders to industrial workers,we provide a wide range of personal protection solutions,including some of the most trusted and innovative brands in the industry,such as Kevlar,Nomex,Tyvek,and Tychem.We also develop solutions for managing the air,water,and thermal performance of buildings and residences,helping our customers build energy-efficient,resilient,and durable shelters in a rapidly changing world.Protection21%of net salesOur automotive products deliver a broad range of technology-based products and solutions for current and advanced mobility.Solutions supporting battery assembly,thermal management,and technology for e-motor and power electronics are part of a customizable portfolio that can enhance vehicle performance,reduce weight,improve efficiency,and enable development of next generation vehicles.Next generation automotive 10%of net salesOur innovative products include specialty medical devices and components,silicones for healthcare and industrial applications,precision parts for aerospace,industrial and automotive applications,and specialty industrial materials for printing plates.We partner with customers to provide advanced materials and solutions that are designed to help meet their performance and quality requirements in some of the most demanding industrial environments.Industrial technologies28%of net salesNote:Percentages above reflect estimated end-market exposure based on 2023 net sales on a continuing operations basis.Sustainability strategyIntroductionEmpower people to thriveAppendices7DuPont 2024 Sustainability ReportInnovate for goodProtect people and the planetGovernanceAwardsInnovate for goodProtect people and the planetEmpower people to thriveReceived four 2023 R&D 100 Awards for advancements in science and innovation.The awards,sponsored by R&D World magazine,recognize the 100 most innovative technologies of the previous year.Named to the Clarivate Top 100 Global Innovators list for the 11th consecutive year.This recognition demonstrates the strength of our innovation-led growth in the markets we serve.Received two Silver and one Bronze Edison Awards.The awards recognize excellence in new product and service development,marketing,design,and innovation.Received A-score on our CDP climate assessment and named for the first time to CDPs Supplier Engagement Leaderboard.Received perfect score on the Human Rights Campaign Foundations 20232024 Corporate Equality Index,earning designation as recipient of the Equality 100 Award:Leader in LGBTQ Workplace Inclusion.Received Top Employer Award in China for second consecutive year.Certified as a Great Place To Work based on the results of the Trust Index survey which assesses employee satisfaction.Earned a perfect score on Disability:IN and AAPDs Disability Equality Index and named Best Place to Work for Disability Inclusion for the 8th year in a row.Named to the 2023 Forbes lists for Worlds Top Companies for Women,Worlds Best Employers,and Americas Best Employers for Diversity.DuPont Experimental Station,Wilmington,DE awarded the Wildlife Habitat Council(WHC)Gold Certification and special recognition for Landscaped Project in 2023.Named to The Wall Street Journals Management Top 250,which ranks companies on customer satisfaction,employee engagement and development,innovation,social responsibility,and financial strength.Named to the 2023 Bloomberg Gender-Equality Index(GEI)for the sixth consecutive year,recognizing our commitment to support gender equality through policy development,representation,and transparency.Named a Top Corporation for Womens Business Enterprises from Business Enterprise National Council.Named the Global Water Intelligence(GWI)“Water Technology Company of the Year.”The award recognizes the innovative solutions in our water technology portfolio to address global water challenges.Named to the Clean200 2023 list of major corporations that are leading the way by putting sustainability at the center of products,service,business models,and investments.Sustainability strategyIntroductionEmpower people to thriveAppendices8DuPont 2024 Sustainability ReportInnovate for goodProtect people and the planetGovernanceSustainability strategyIntroduction9DuPont 2024 Sustainability ReportSustainability strategyInnovate for goodProtect people and the planetEmpower people to thriveGovernanceAppendicesQ&A with Alexa Dembek,Chief Technology&Sustainability Officer Q:How critical is the intersection between innovation and sustainability for achieving our 2030 Sustainability Goals?A:Driving innovation and delivering sustainable solutions do not operate on parallel paths;its at their intersection where we strengthen and grow our impact on society and solve for some of the biggest societal challenges.As CTSO,I have a unique role in guiding our innovation and stewarding sustainability that plays out in how we advance circularity,decarbonize,and solve for our customers and partners.The exciting part of the intersection is the results and impact we create in the markets we servewere developing new technologies and products to make water cleaner,enable advanced computing,make buildings and homes more energy efficient,frontline workers safer,and healthcare solutions more advanced.Its also in the remarkable progress weve achieved in meeting our climate action goals well ahead of schedule.In many ways,the intersection serves as the gateway to endless possibilities,presenting opportunities for growth,innovation,meaningful exchanges with stakeholders,and bringing about positive change for society.Q:What does it mean to achieve shared value with your customers?A:Our approach to delivering solutions for global challenges is grounded in a disciplined customer engagement process that enhances collaboration with strategic customers and global end users.Through this process we align and strengthen our targeted innovation investment choices.We become their partner of choice by enabling them to achieve their own sustainability targets and goals.In 2023,we improved the discipline of our strategic customer engagement and insight generation by expanding our structured engagement program to 120 strategic customers across our global businesses.We also implemented a process to manage requests from customers for sustainability information that improves our responsiveness and enables us to incorporate the requests as input to understanding of customer sustainability priorities.By embedding customer insight in our research and development process,we believe we can increase the commercialization success of innovation programs and foster stronger growth and relationships with our customers.Q:What are you most proud of from the sustainability work achieved this past year?A:Im so proud of the progress on our goals,but this report is really about the dedicated teams across DuPont that put their energy,passion,and pursuit on display every day to support our customers and support each other.Im fortunate to lead some of these teams and see firsthand how they are fostering an inclusive culture and are living our core values and embedding them in every decision we make,every action we take.Its in their stories that this report comes to life.“I view sustainability as an opportunity for value creation;not a risk to be managed.More than ever,were putting sustainability at the core of our overall strategy,and the powerful combination of innovation,sustainability,and digital means more value for our customers,employees,shareholders,and communities.”Q:How has DuPonts transformation supported its sustainability strategy?A:Over the past several years,weve reshaped and transformed our business portfolio,positioning the company as a premier multi-industrial.As weve completed the transformation,were focused on addressing and capturing high-value opportunities in five strategic growth areas:Electronics,Water,Protection,Industrial technologies,and Next generation automotive.These growth areas are driven by technology,require innovation,and have sustainability as a foundation.Q:How is DuPont aligning its business strategy with its sustainability strategy?A:The number one way that we can lead sustainably is through innovation that addresses global challenges.It goes back to our purposecreating the innovations that help people thrive.Throughout my career,I have increasingly viewed sustainability as an opportunity for value creation;not a risk to be managed.More than ever,we are putting sustainability at the core of our overall strategy,and the powerful combination of innovation,sustainability,and digital means more value for our customers,employees,shareholders,and communities.Q:What do you see as the next steps in DuPonts sustainability journey?A:We have done the hard work of reshaping and sharpening our portfolio in alignment with our five strategic growth areas.The next step in our journey is aligning our investment choices on technologies where sustainable innovation is needed to meet important societal and sustainable development challengesand where we can best leverage synergies across our global businesses.Whats the next challenge?Were witnessing an astounding rate of change in the world;we need to capture and harness opportunities with greater speed and urgency.That means better understanding the market,anticipating customer needs,and delivering timely solutions,all of which are critical to keeping DuPont in front of the innovation curve.Introduction10DuPont 2024 Sustainability ReportSustainability strategyInnovate for goodProtect people and the planetEmpower people to thriveGovernanceAppendices Empower people to thrive Protect people and the planet Innovate for goodThree-pillar sustainability frameworkTo manage the complex and quickly evolving sustainability landscape,weve built our strategy on three pillars:Innovate,Protect,and Empower.Our nine 2030 Sustainability Goals reside within these three pillars and shape our innovation portfolio,our operations strategy,and our commitment to our people and communities.As a premier multi-industrial company,DuPont recognizes that to achieve sustainable value creation we must address societal challenges across our entire value chain.We develop innovations with our diverse customers,incorporate sustainability in our own operations,and advance sustainability in our supply chains.Established in 2019,our sustainability strategy harnesses our deep understanding of science and technology and our close collaboration with stakeholders to create impactful and enduring outcomes.Innovate for good Innovate for good is our commitment to use our talent,resources,and innovation expertise to work on meaningful and valuable solutions to societal challenges.We address the worlds most pressing sustainability challenges by delivering innovative solutions in four key impact areas:climate action,enabling a more circular economy,creating products that are safe and sustainable by design,and advancing water stewardship.Our customer engagement initiatives help us understand our customers needs from each of our global businesses and shape our innovation priorities and investments to meet them.Protect people and the planet Protect people and the planet is our commitment to take action to ensure the safety of our employees,contractors,customers,and communities while improving our impact on the environment.Ultimately,the most valuable and enduring business outcomes are the ones that enable people and the planet to thrive.Our goals in this pillar focus on the challenges of climate change,water stewardship,and achieving world-class environmental,health,and safety performance.Empower people to thrive The Empower pillar of our sustainability strategy addresses how we enable our employees and communities to experience well-being,purpose,opportunity,equity,and connection.At DuPont,our employees are at the heart of our sustainability efforts and drive our results and impact.We cultivate an inclusive work environment that allows our employees to make a difference,grow professionally,and thrive.To further our impact,we encourage active participation in the communities where we work through key partnerships,collaboration with nonprofit organizations,skills-based volunteering,and board service.Introduction11DuPont 2024 Sustainability ReportSustainability strategyInnovate for goodProtect people and the planetEmpower people to thriveGovernanceAppendicesOur 2030 Sustainability Goals Protect people and the planetInnovatefor goodEmpowerpeople to thriveDelivering solutions for globalchallengesInnovate products to meaningfully address the worlds sustainability challenges,with positive impacts for customers and societyEnabling a circulareconomyIntegrate circular economy principles into our business models considering life cycle impacts in the markets we serveInnovating safe and sustainable bydesignAdvance sustainable chemistry in the design of our products and processes,addressing substances of concern and communicating with stakeholders on our performanceActing on climateReduce our Scopes 1 and 2 greenhouse gas emissions by 50%by 2030 from the 2019 base year and deliver carbon neutral in operations by 2050Reduce our Scope 3 emissions from purchased goods and services and end of life of sold products by 25%by 2030 from 2020 base yearSource 60%of power to our operations from renewable sources by 2030 as part of our RE100 commitmentLeading water stewardshipImplement holistic water strategies at sites in high-risk watersheds and at high consumption sitesEnable millions of people access to clean water through leadership in advancing water technology and enacting strategic partnershipsDelivering world-class environmental,health,and safety performanceFurther our commitment to zero injuries,occupational illnesses,incidents,waste,and emissionsAccelerating diversity,equity,andinclusionBecome one of the worlds most inclusive companies,with diversity well ahead of industry benchmarksCultivating well-being and fulfillmentCreate a workplace where employees report high levels of well-being and fulfillmentBuilding thriving communities Improve over 25MM lives through targeted social impact programs Introduction12DuPont 2024 Sustainability ReportSustainability strategyInnovate for goodProtect people and the planetEmpower people to thriveGovernanceAppendicesDuPonts employee-led sustainability network engages and activates employees across the globeIn 2023,DuPont established a sustainability network,Good Earth Stewards(GES),led by our employees.GESs mission is to enrich DuPonts sustainability culture and drive meaningful changes to create a positive impact.GES empowers employees through engagement,education,and activation.Within GES,sustainability is championed by dedicated employees who have driven the adoption of sustainable practices throughout the organizations businesses,regions,and manufacturing sites.GES supports a more connected workplace for employees to collaborate,build competency,and network.The High-Performance Building(HPB)Team,part of DuPonts Facilities Services and Real Estate function,is at the forefront of driving significant change in building standards across the corporation.The HPB Team is leading the way in developing and implementing innovative standards that improve energy,water,emissions,waste efficiency,and well-being in both new and existing buildings.In collaboration with the By the Bay community,our Singapore Sustainability Task Team(STT)participated in a beach clean-up volunteer event with the goal of increasing awareness about marine pollution.Singapore STT successfully collected and responsibly disposed 197.3 kg of plastic and general waste.The Edina Sustainability Team has played an instrumental role in the establishment of a reliable energy management system by partnering with Xcel&CenterPoint Energy.The team is excited to start a University of Minnesota Technical Assistance Program to host summer interns,who will engage in site sustainability projects.In 2023,the Experimental Station received the Wildlife Habitat Councils(WHC)Landscaped Project Award and achieved WHCs Certified Gold Conservation Certification,which is the highest level of conservation certification offered by WHC.The Aramids Sustainability Committee is a global cross-functional team that partners to increase education on technical sustainability topics.The Committee offers valuable insights to employees on customer engagement,ESG ratings,and GHG emissions.330 employees united as Good Earth Stewards23 GES chapters located across the world driving a connected workplaceIntroduction13DuPont 2024 Sustainability ReportSustainability strategyInnovate for goodProtect people and the planetEmpower people to thriveGovernanceAppendicesInnovating safe and sustainable by design Enabling a circular economy Delivering solutions for global challenges Innovate for goodAt DuPont,we believe the greatest positive impact we have on the world is through our innovations.We believe scientific advancement is critical in addressing the worlds most pressing challenges and delivering on the promise of the United Nations Sustainable Development Goals.Our innovation strategy and 2030 Sustainability Goals focus on the powerful intersectionsand synergiesbetween advances in technology and sustainability,application development and human development,value for our customers and stakeholders,and value to society.Innovate for good14DuPont 2024 Sustainability ReportSustainability strategyIntroductionProtect people and the planetEmpower people to thriveGovernanceAppendicesDuPont 2024 Sustainability Report14Our approach to innovating for good As a premier multi-industrial company with a strong portfolio of market-leading businesses,we understand that growth is dependent on the intersection of sustainability,digital solutions and enablement,and innovation.In 2023,we continued to strengthen our portfolio by investing in each of these to deliver business growth,value creation for our customers,and benefits to society.Our approach to innovation starts with learning and insight generation:understanding the current and emerging technological and sustainability challenges in our markets,from raw materials to consumer use.We collaborate with our customers and partners across our value chains to deliver solutions that improve product performance and life cycle sustainability.As we innovate for growth,customer and value chain insights enable our businesses to identify and deliver new innovations and position our products in high-growth markets.Across our global businesses,we invest in innovation based on each of our businesses unique strategies,growth drivers,and opportunities.Our investment in innovation is approximately 4%of net sales and primarily targets high-growth opportunities in our eight innovation platforms,which are described in the Delivering solutions for global challenges section of this report.Furthermore,we apply a disciplined learning approach to assess opportunities in emerging markets.For example,in 2023,we assessed the emerging hydrogen value chain to determine if it fits within our strategy and capabilities.We focus on investments to enable future capabilities that will improve our speed to market,competitiveness,and impact.One of the key capabilities were investing in is digital tools and enablement,which complements our leading scientific and application development expertise.Where innovation,sustainability,digital,and an inclusive culture come together,a future-focused business growth mindset thrives.Powerful intersections deliver value creationInnovate for good15DuPont 2024 Sustainability ReportSustainability strategyIntroductionProtect people and the planetEmpower people to thriveGovernanceAppendicesMore than 1,400 employees participated in six virtual live sessions offered as part of our Technology Learning Academy in 20232023 Lavoisier&Pedersen AwardeesEach year we honor DuPont innovators whose work and commitment have had significant results for our businesses,our customers,and the world.We apply digital solutions,such as lab connectivity,integrated lab data management,knowledge management and materials discovery using generative artificial intelligence,digital process mining,predictive analytics,and optimization to help our world-class scientists accelerate learning and value creation for our customers.We combine digital enablement with cutting-edge science to solve complex challenges in thermal management,miniaturization,electromagnetic interference(EMI)shielding,advanced separation and filtration,advanced construction technologies,user interfaces,and more.In 2023,we took several actions to foster a global,inclusive culture of innovation.We held several internal technical conferences with virtual participation across regions,focused on sharing innovation success stories,digital strategies,and sustainability topics.The technical conferences offer our innovators the chance to share ideas and best practices and provide an opportunity to recognize excellent work.The sessions covered emerging topics such as financial acumen,competitive landscape assessment,climate action,innovating with customers,and project leadership.Through the Technology Learning Academy,we aim for learning to be a source of competitive advantage.We also held our annual Dead Projects Day to shrink the stigma of project failure and feature innovation projects that we made the right but tough choices to end.Additionally,we announced the 2023 winners of our Lavoisier&Pedersen Awards,recognizing scientists and engineers who have demonstrated the highest level of innovation achievement at DuPont.Paul Bernatis,Ph.D.Paul led the formulation development for semiconductor advanced cleaning technologies,which have become the industry standard for advanced device nodes of 14 nm.Reiyao Zhu,Ph.D.As the lead developer for Nomex thermal apparel,Reiyaos prolific work in fiber blends has increased DuPonts engagement in industrial protection via atransformation shift to multi-hazard protection.Deyan Wang,Ph.D.Senior Research Laureate,DuPont Electronics&IndustrialAcross a 30-year industrial career,Deyan has been a lifetime achiever in creating pathfinding technology for semiconductor and circuit board manufacturing.His pioneering technology in 193 nanometer(nm)immersion lithography for semiconductor fabrication has become mainstream industrial technology for its high throughput and low material cost.Advancements in embedded barrier layer and novel leveler materials for plated copper interconnects are just some of the other areas Deyans innovations have impacted semiconductor manufacturing.Jon Johnson,Ph.D.Jon led the design of spiral-wound reverse osmosis(RO)and nanofiltration elements and components that comprise them.His leadership in linking fundamental engineering principles to element limitations and capabilities has materialized in value-adding products for our customers.Lavoisier Medal for Lifetime Technical Achievement recognizes scientists and engineers who have demonstrated a career of creative technical contributions with significant business impact.Named in honor of the 18th century French chemist,Antoine Laurent Lavoisier,this award is the pinnacle recognition for DuPont innovators.Pedersen Medal celebrates technical knowledge,skill,and commitment in areas that have resulted in important new innovation for DuPont customers.The award is named in honor of Charles J.Pedersen,who received the 1987 Nobel Prize for his discovery of a novel class of chemical compounds called macrocyclic polyethers.Awards ceremony,November 2023Innovate for good16DuPont 2024 Sustainability ReportSustainability strategyIntroductionProtect people and the planetEmpower people to thriveGovernanceAppendicesAccomplishments in 2023Delivering solutions for global challengesReceived the 2023 AIChE Energy and Sustainability Award for FilmTec Prime RO,a family of energy-efficient reverse osmosis(RO)membranes that contributes to the decarbonization of water purification.Recognized as Best ESG Partner by Samsung Electronics and received eight additional supplier of the year awards from semiconductor customers for achievements in innovation and sustainability.Launched a new enterprise-wide initiative,along with introducing new products aimed at high-value challenges in the emerging hydrogen value chain.Expanded strategic customer sustainability engagements focusing on climate and safe and sustainable by design(SSbD)needs,which are critical imperatives for customers.Innovate products to meaningfully address the worlds sustainability challenges,with positive impacts for customers and society.Our 2030 goalMore than 80%of our innovation portfolio value is expected to deliver sustainability value for our customers or advance solutions to global challenges based on analysis using an updated portfolio sustainability assessment(PSA)methodology.New product offerings delivered positive sustainability and performance impact in each of our innovation platforms,enabling customer outcomes in areas such as advanced computing,vehicle electrification,and water purification.7R&D 100 and Edison Awards received for products delivering positive performance and sustainability benefits for customers and society.Read on for our approach tosolutions for global challengesInnovate for good17DuPont 2024 Sustainability ReportSustainability strategyIntroductionProtect people and the planetEmpower people to thriveGovernanceAppendicesDuPont 2024 Sustainability Report17CollaborateWith our customers and across our global value chains to accelerate learning and innovation to address sustainability challenges in the markets we serve AlignWith our customers and across our business growth strategies and differential investment choices in our core businesses and eight innovation platforms with customer insight and global sustainability challenges DeliverSustainable product and application innovations that create quantifiable positive impact for customers and society Our approach to solutions for global challengesDuPont Kevlar EXO for body armor Our approach We believe the most meaningful way DuPont can advance sustainability is by providing the world with essential innovations to thrive.Our innovation investments align with our purpose and are a key driver of growth for our global businesses.We work across value chains and industries and leverage resources and partnerships with private,public,and nongovernmental organizations to deliver solutions for customer and societal challenges.Our approach to delivering solutions for global challenges is grounded in a disciplined customer engagement process that enhances collaboration with strategic customers and global end users.Through this process we align and strengthen our targeted innovation investment choices in our core businesses and eight innovation platforms.We choose to invest in innovations that deliver solutions to valuable scientific,technical,and sustainability challenges in the industries and markets we serve.We recognize the need for agility and the urgency of addressing climate change,access to clean water and healthcare,resource efficiency,and sustainable production,as well as enabling connectivity and high-performance computing globally.Strategic insight fromour customersIn 2023,we improved the discipline of our strategic customer engagement in three key areas.First,we continued our structured engagement program with strategic customers across our global businesses,sharing the results through an interactive internal dashboard to facilitate analysis and insight generation.Second,we integrated our customer engagement program with DuPonts portfolio sustainability assessment(PSA)methodology,enabling our innovation teams to identify and address important and valuable customer sustainability challenges.Third,we implemented a process to manage requests from customers for sustainability information that improves our responsiveness and enables us to incorporate the requests as input to understanding of customer sustainability priorities.The results of our customer sustainability engagements in 2023 confirm prior findings that climate change remains the top sustainability priority for most of our customers.What this prioritization of climate action means in practice,however,varies significantly across our global businesses and markets and leads to different innovation investment choices.Over 60%of our strategic customers have set climate targets validated by the Science Based Targets initiative(SBTi)or other non-SBTi Net Zero commitments.Innovate for good18DuPont 2024 Sustainability ReportSustainability strategyIntroductionProtect people and the planetEmpower people to thriveGovernanceAppendicesIn 2023,we saw an increase in customer requests for product carbon footprint data and carbon reduction strategies,which are directly connected to our customers upstream Scope 3 commitments.These requests are aligned with our SBTi-validated commitment to reduce the carbon footprint of the raw materials we purchase to make our products.The other opportunity we identified is to address climate change through innovation.This means collaborating with customers to reduce their manufacturing footprint and develop applications and product designs to enable use-phase GHG emissions reduction.Examples of both are highlighted throughout this report.While the high-level results of customer engagement help our teams understand global sustainability trends,the real power of our structured approach is the ability to analyze the data in detail and gain insights specific to individual business units,customers,and growth markets.By embedding customer insight in our research and development(R&D)process,we believe we can increase the commercialization success of innovation programs and foster stronger growth and stronger relationships with our strategic customers.DuPont recognized as best ESG partner by Samsung ElectronicsSamsung Electronics named DuPont as the Best Partner in Environmental,Social,and Governance(ESG)category during Samsungs Materials-day event.DuPont is recognized for significant contributions in establishing a sustainable supply chain by collaborating to develop more sustainable semiconductor materials.For example:yIn our interconnect solutions business,research teams continue to focus on the development of recycled copper-based flexible laminates that reduce the raw material carbon footprint and life cycle energy consumption.yAcross personal protection markets and value chains,circular economy solutions continue to grow in importance,driving innovation in materials and design opportunities.Business sustainable innovationgrowth strategiesDue to the diversity of our global businesses,sustainable innovation strategies and the differential investment choices needed to drive growth will always vary considerably across our businesses.What is common across our businesses and strategic growth areas is the importance of listening to our customers,developing value chain insights,and building partnerships to scale innovative solutions for global challenges.In 2023,we leveraged strategic customer insight to refine our market and business-level sustainable innovation growth strategies.Each business focuses on key sustainability drivers that align with the four 2030 Sustainability Goals embedded in DuPonts portfolio sustainability assessment(PSA)methodology:Acting on climate,Enabling a circular economy,Innovating safe and sustainable by design,and Leading water stewardship.By improving our strategic customer engagement and insight generation and working with our global business teams,we were able to build differentiated strategies that address the highest priority sustainability challenges faced by our customers.In the semiconductor value chain,for example,our customers are looking for sustainable solutions across the entire product life cycle:ySource low-carbon raw materials from our suppliers;yReduce or eliminate substances of concern(SoC);yProvide industrial wastewater treatment solutions for semiconductor fabrication plants;and yEnable energy efficiency in product design and use.Insights into the complex sustainability challenges faced by our customers and society lead to expanded collaboration between our global businesses in terms of both technical expertise and product synergies.Solutions for global challenges:DuPont innovation platformsAt DuPont,were taking intentional and targeted action on global challenges to address the current and emerging needs of customers and stakeholders to deliver solutions with impact.As a premier multi-industrial company,were focused on growth through innovation across five key strategic growth areas:Electronics,Water,Protection,Industrial technologies,and Next generation automotive.Within,and sometimes across,these key strategic growth areas,our eight innovation platforms focus and align our investment choices on technologies and growth markets where innovation is needed to meet important societal and sustainable development challengesand where we can best leverage synergies across our global businesses.In 2023,investment in our innovation platforms was more than 65%of our total R&D budget.Innovate for good19DuPont 2024 Sustainability ReportSustainability strategyIntroductionProtect people and the planetEmpower people to thriveGovernanceAppendicesBy 2030,it is estimated that there will be close to 30 billion connected devices,and this connected ecosystem,enabled by 5G,will continue to revolutionize the world and transform the way weand our devicescommunicate.Our innovations provide total solutions for advanced circuit fabrication and enable fast reliable transmission of data for high signal integrity,high bandwidth(data),EMI shielding,and other critical technologies.Sustainability drivers:y Improve energy efficiency and durability in devices;and y Improve material and process circularity.High frequency connectivityInnovation platformRecycled copper-based flexible laminate enables digital crown for smartwatch Pyralux Flexible Copper Clad Laminate with recycled copper reduces energy consumption and carbon footprint by replacing some of the mined new copper with recycled copper.This sustainable solution offers comparable processibility and performance to traditional copper-based laminates.An early application of this total solution is being used in a flexible circuit to enable functionality of a digital crown in a smartwatch.A digital crown is a small circular button on the side of the smartwatch that allows the user to activate several features and settings.By using copper-based flexible laminate that includes recycled content,energy efficiency is improved,and the carbon footprint of the device is reduced.Helping customers optimize semiconductor polishing During the semiconductor fabrication process,excess material from each layer of the wafer is removed to create a smooth surface through chemical mechanical planarization(CMP).DuPonts biased pulse groove(BPG)is a new design for CMP pads to optimize the flow of slurry during polishing.Pads featuring the BPG design can improve CMP performance and productivity by reducing flow rate or the amount of slurry used in the process while maintaining process quality.This innovation is helping customers reduce waste and can be used with many of DuPonts leading CMP pad families,including the Visionpad and Ikonic CMP pad families.Enabling advanced node processing solutions Our EPIC Photoresist Series is an essential component of our commitment to revolutionize the world of high-performance computing through innovative lithography technologies.Specifically designed to meet the demands of more advanced but complicated 193 nm lithography processes,our unique immersion lithography process and innovative material design ensure precise high-resolution patterning performance for high-end memory and logic devices,resulting in greater manufacturing efficiency,accuracy,and quality.Improving efficiency and plating performance with Solderon BP TS 7000 series Smaller and more powerful semiconductor chips continue to drive innovation for printed circuit boards.The Solderon BP TS 7000 series is a newly redesigned,lead-free1 formulation for tin-silver plating chemistry.This formulation delivers industry-leading plating rates,enhanced plating performance,bath stability,and greater process flexibility in next generation micro-bumping technology for advanced packaging applications.R&D 100 Green Tech recognitionFor ultrapure water filtration in microelectronics Ultrapure water free from impurities remains a vital component for advanced semiconductor manufacturing.AmberTec UP4000PD OH Ion Exchange Resin uses a strong a base anion exchange with highly active palladium nanoparticles to remove impurities,such as hydrogen peroxide.This recently launched technology received an R&D 100 Award and a Special Recognition Silver Medal in the Green Tech category.This recognition exemplifies the interconnectedness across DuPonts Innovation Platforms,wherein Clean Water innovations directly enable other industries to progress their sustainability initiatives.The intersection between high-performance computing and sustainable development centers on access to the computational advances needed to build resilient and sustainable industries and infrastructures.Our innovations enable advanced node processing solutions for smaller devices,printed circuit board designs,and advanced packaging architectures.Sustainability drivers:y Reduce or eliminate substances of concern;y Improve energy efficiency and reduce value chain greenhouse gas emissions;and y Improve material and process circularity.High-performance computing Innovation platform1 Formulated without such component.Innovate for good20DuPont 2024 Sustainability ReportSustainability strategyIntroductionProtect people and the planetEmpower people to thriveGovernanceAppendicesInnovation platformAs a global leader in purification and specialty separation technologies,we provide solutions that help make drinking water safer and cleaner for homes and communities;help industries and markets operate more effectively and efficiently;and make water scarcity challenges more manageable,wherever they arise.Our innovations lead in water purification,conservation,and reuse technologies.DuPont is collaborating for a water-optimized world and innovating to change the way the world thinks about water.Sustainability drivers:y Reduce energy consumption needed for water and wastewater treatment;and y Improve process circularity through wastewater reduction,recycling,and reuse,as well as recovery of valuable raw materials from wastewater or seawater.Clean waterInnovation platformFilmTec Fortilife CR200 element receives 2023 Edison Silver Award To help address the challenges of wastewater reuse and increase access to clean water,DuPont developed a high-productivity membrane to maximize operational efficiency and combat biological and organic fouling.Fouling is the accumulation of unwanted materials that create the need for chemical cleaning to maintain operational efficiency.FilmTec Fortilife CR200 elements work in some of the worlds most challenging waters through combinations of membrane and module technologies.Compared to standard reverse osmosis elements,the CR200 can help purify wastewater with up to 20%reduction in energy consumption and 50%reduction in number of cleanings.DuPont Personal Protection brings together some of the most trusted names in personal protective equipment(PPE)and solutionsTyvek,Nomex,and Kevlarto provide unparalleled solutions that protect workers against chemical,thermal,electric arc,mechanical,and other workplace hazards.Our innovations focus on advanced multi-threat protection with optimal comfort and durability for industrial workers,front-line responders,and military personnel.Sustainability drivers:y Improve material carbon footprint,process,and product circularity;and y Reduce or eliminate substances of concern.Personal protectionInnovation platformProtection is expected;mobility and comfort are demanded Introducing Kevlar EXOPerformance and comfort are often at odds in PPE.The weight and bulkiness required in PPE for ballistics,fire protection,arc,and other hazards limits physical motion,the length of time PPE can be worn,and the wearers comfort.Kevlar EXO is a new aramids technology platform to help our customers solve problems that require demanding performance beyond our legacy fibers.This high strength fiber enables an optimal combination of protection,comfort,mobility,and flexibility in a lightweight solution.Kevlar EXO has the highest ballistics performance among all aramid fibers.Innovation across healthcare applications is evolving rapidly,requiring high-performance materials and applications expertise to enable smarter healthcare and positive patient outcomes.Our advanced materials solutions drive innovation for healthcare applications like drug delivery,biopharmaceutical processing,advanced fluid handling,medical devices,and medical packaging.Sustainability drivers:y Improve material and process circularity;and y Reduce or eliminate substances of concern.Applied healthcare solutionsInnovation platformLiveo MG 7-9960 adhesives for advanced wound care and adhering medical device applications Wound care and transdermal drug delivery systems require bandages and patches that adhere to skin reliably and comfortably for days,even weeks.New Liveo MG 7-9960 Soft Skin Adhesive(SSA)has the highest peel adhesion in the Liveo SSA family.It offers better conformability,easy removal,high repositionability,and improved wear performance and design flexibility.In addition,low-cyclics Liveo MG 7-9960 SSA is non-sensitizing,non-irritating,and non-cytotoxic,making it ideally suited to protect the highly sensitive and fragile skin of populations including children,the elderly,and patients with skin conditions or open wounds.Innovate for good21DuPont 2024 Sustainability ReportSustainability strategyIntroductionProtect people and the planetEmpower people to thriveGovernanceAppendicesKapton MT based and Nomex 710 Slot Liner Solution improves efficiency in high-voltage E-Motors Slot liners protect the copper wires in an E-Motor from the outer steel wall,dissipating heat to the outside and enabling the motor to operate efficiently at a cooler temperature.This solution utilizes a three-ply laminate,which sandwiches Kapton MT polyimide film between two layers of Nomex paper,delivering superior electrical insulation,optimal heat dissipation,and high thermal conductivity.Kapton MT thermal conductive and electrically insulating film Within the battery pack,Kapton MT films are utilized in busbars,cooling plates,and between modules.These films help maintain optimal temperature during battery operations which results in increased power output and efficiency for peak performance.Their use ultimately leads to a longer lifespan and more reliable operation for battery systems.MOLYKOTE Specialty Lubricants for high-voltage connections As the automotive industry undergoes its biggest change in decades,manufacturers are facing new lubrication challenges.Electrified vehicles have an increasing number of high-voltage connectors to protect from electrical erosion,oxidation and aluminium corrosion,along with friction and wear.Maximizing charging performance in electric vehicles with Silveron GT-210 EV charging connectors require a durable and conductive finish to maintain a stable and low electrical-resistance connection throughout the life cycle and in harsh environments.Silveron GT-210 high durability silver is made using an electroplating process that creates a silver-rich deposit with a low and stable coefficient of friction and the excellent electrical and thermal properties of pure silver.Laird Performance Materials optimize energy transfer for reliable performance in battery control units Battery Management Control systems modulate the energy in the battery to protect against deep discharge and maintain operating conditions.These complex electronic circuit boards need high-performance thermal management and EMI shielding materials to operate vehicles.From brine to batteryDirect lithium extraction leads to new resources for lithium FilmTec LiNE-XD nanofiltration elements offer high lithium recovery from new sources,such as geothermal brines,salt lakes,and surface and sub-surface clay.Lithium mass recovery is optimized,with enhanced purity,as metal ions not needed are filtered out.Importantly,lower energy consumption and up to 30%in energy savings can be realized with use of the FilmTec LiNE-XD nanofiltration elements compared to other filtration solutions.Vehicle electrification is projected to continue its double-digit growth.1 Requirements for improved vehicle range,battery performance,charging time,and charging infrastructure continue to drive the need for sustainable solutions that dont compromise on safety,durability,or performance.Our solutions are targeted at enabling electric and smart vehicles by solving critical challenges in thermal management,battery assembly,and reliable connectivity.Sustainability drivers:y Reduce transportation carbon emissions;y Improve systems and charging efficiency;and y Improve durability,reliability,and material circularity.Advanced mobility Innovation platformBETAMATE broad-bake structural adhesives enable sustainable manufacturing of next generation electric vehicles Battery weight in electric vehicles(EVs)calls for more robust body structures,including the sill,or rocker panel.On EVs,the sill has to support a higher load than with internal combustion vehicles due to functional requirements and design complexities for supporting the weight of the battery pack.BETAMATE broad-bake structural adhesives allow a reduction of the e-coat oven temperature by 25 C,enabling significant energy savings while durably bonding the high mass underbody of EV body structures in the body shop.1 Cossins-Smith,A.(2023,August 15).Analysis:global electric vehicle market set to grow 16%by 2035.Power Technology.Innovate for good22DuPont 2024 Sustainability ReportSustainability strategyIntroductionProtect people and the planetEmpower people to thriveGovernanceAppendicesContributing solutions to high-value challenges in emerging hydrogen value chain Emerging innovationHydrogen is an emerging energy source that is expected to play a major role in decarbonizing hard-to-abate emissions from industrial processes,such as heat and steam generation and commercial transportation.DuPonts close partnerships across many industrial value chains and our innovation capabilities provide opportunities to advance hydrogen,as well as other new and emerging clean energy solutions.AmberLite P2X110 ion exchange resin designed for water electrolyzers Electrolysis is the process of electrically splitting the water molecules into hydrogen and oxygen gas.While there are various types of electrolyzers,they all rely on high-purity water as the feedstock to produce hydrogen.Our newly introduced AmberLite P2X110 ion exchange resins are designed to endure the thermal and chemical challenges present in an electrolyzer.This solution can offer durable and reliable water quality that helps prevent contaminant build-up in the electrolyzer loop.Vespel polyimide parts and shapes are well suited for hydrogen sealing and storage Hydrogen as an alternative energy source brings about a set of challenges not easily addressed with fossil fuel infrastructure.Hydrogen is highly reactive and is often compressed or cooled to liquid form for transportation and use.Hydrogen leakage prevention and thermal insulation or active cooling must be maintained over long periods of time.Vespel has a unique blend of thermal,mechanical,and tribological properties that are well suited for these challenges.Innovation platformAdvancing sustainability in the built environment requires innovative construction solutions that help drive whole life carbon of buildings to net zero,increase circularity of materials,and utilize safer chemistries,to realize our shared vision of sustainability within the built environment.Our innovations enable integrated building and envelop solutions that drive energy efficiency,weatherization,durability,fire resilience,build cycle reduction,and quality of installation.Sustainability drivers:y Reduce material carbon footprint and life cycle greenhouse gas emissions;and y Improve material circularity and eliminate substances of concern.Sustainable and productive construction Innovation platformGame changing performance for customers and the environmentStyrofoam Brand Plazamate XR foam insulation With 30%higher R-value per inch than traditional extruded polystyrene roofing insulation,Styrofoam Brand Plazamate XR foam insulation is the winner of a 2023 R&D 100 Award.This insulation has a low global warming potential and offers Leadership in Energy and Environmental Design(LEED)Embodied Carbon/Life Cycle Assessment(LCA)Optimization credit.Weve partnered with American Hydrotech to offer a combination product:American Hydrotechs Monolithic Membrane 6125 combined with Plazamate to provide architects and commercial building owners an exceptional R-value,design flexibility,and peace of mind,all covered by a single source warranty.Skyton conductive adhesive for smartphone displaysManufacturers of the newest smartphone displays require technologies to solve challenges with complicated manufacturing processes,including production losses due to static electricity.Skyton conductive adhesive provides a grounding pathway to resolve this issue,contains less solvent,and requires less solvent in device manufacturing.The new formulation reduces cost,enhances performance,and reduces waste for our customers.Displays in smartphones,computers,televisions,and increasingly in cars,are the human interfaces to technology and need to be functional,durable,and energy efficient.Our innovations enable transformational improvements in user interfaces,optical display materials,and augmented reality,including organic light-emitting diode(OLED),emerging MicroLED technology,and organic passivation materials.Sustainability drivers:y Improve energy efficiency in devices and displays;and y Improve material and process circularity.User interfaceInnovation platformInnovate for good23DuPont 2024 Sustainability ReportSustainability strategyIntroductionProtect people and the planetEmpower people to thriveGovernanceAppendices y Eliminate or reduce substances of concern(SoCs).y Ensure(and improve)manufacturing safety.y Enable customers to reduce SoCs or improve manufacturing safety.y Enable safer by design products for consumers.Advancing our ability to quantify the impacts of sustainable innovation Our DuPont portfolio sustainability assessment(PSA)methodology1 provides a sustainability lens for our innovation portfolio and supports embedded sustainable innovation growth strategies at the business level.For our eight innovation platforms,our PSA drives a deeper understanding of market and customer sustainability challenges,fostering growth and stronger relationships across our global value chains.DuPonts PSA methodology provides a framework to assess innovation opportunities and quantify impacts across the product life cycle in four sustainable impact categories:climate action,enabling a more circular economy,creating products that are safe and sustainable by design,and advancing water stewardship.In 2023,we continued to refine and implement DuPonts PSA methodology.First,we refined the assessment process and scoring criteria for each of the four sustainability impact categories,focusing on meaningful opportunities and risks.Second,we integrated our customer engagement program with the PSA methodology,enabling our innovation teams to identify and address important and valuable customer sustainability challenges.Using the refined methodology,we assessed all innovation projects past the ideation stage,developing a representative view of sustainable projects,market signals,and customer and value chain challenges across our global businesses.1 Aligned with the World Business Council for Sustainable Development Chemical Industry Methodology for Portfolio Sustainability Assessment.The assessment results in 2023 were broadly consistent with our 2022 pilot and customer insights,confirming alignment with customer and market sustainability priorities.More than 50%of the identified sustainable innovations focused on climate action while roughly 25%focused on providing solutions that are safe and sustainable by design.Deeper analysis at the business and market level revealed differences consistent with our differentiated sustainable innovation growth strategies,such as finding that 40%of identified sustainable innovations for the EV market are circular economy solutions.The portfolio-level scoring results demonstrate that our innovation portfolio is both strongly aligned with the sustainability priorities of our strategic customers and sustainably advantaged versus competitive market solutions.Approximately 70%of DuPonts innovation portfolio is advantaged(score of 1)in at least one sustainability impact category,and approximately 10%of the portfolio is highly differentiated(score of 2)in terms of sustainable value creation.Less than 5%of total innovation projects by value were scored as disadvantaged(score of-1)or at risk(score of-2),and most of these scores were related to the presence of substances of concern.While this number is far less than the 25%of projects by value that provide solutions that are safe and sustainable by design,it is indicative of the chemical stewardship and regulatory challenges faced by our customers and in our industry verticals.As detailed in the Innovating safe and sustainable by design section of this report,weve strengthened our management approach and are focused on building strong,supportive,and transparent relationships with our suppliers and customers that integrate external“safe and sustainable by design”principles to deliver value,support transparency,and drive competitiveness.In 2024,we will continue to advance our PSA methodology with a short-term focus on improving quantification of footprint and handprint.In the future,we will assess the broader alignment of our commercial product portfolio with customer and market priorities.y Reduce product carbon footprint.y Manufacture using renewable energy.y Enable carbon reduction for customers.y Enable use phase efficiency or other climate solutions.y Reduce product water footprint.y Improve operations water use efficiency.y Enable water efficiency improvements for customers.y Enable improved water outcomes for the world,including expansion of access to clean water.Climate actionWater stewardshipPSA impact categoriesSafe and sustainable by design y Manufacture using recycled or bio-based materials.y Reduce or repurpose operational waste.y Enable waste reduction or efficiency for customers.y Design for circularity.Circular economyInnovate for good24DuPont 2024 Sustainability ReportSustainability strategyIntroductionProtect people and the planetEmpower people to thriveGovernanceAppendicesRead on for our approach to circular economyAccomplishments in 2023Enabling a circular economy15%of our innovation portfolio is expected to address circular economy drivers in diverse markets based on a 2023 portfolio sustainability assessment(PSA).Launched COASTALUME in partnership with U.S.Steel,offering increased durability and reliability roofing and wall systems for coastal buildings exposed to hurricane force winds and saltwater spray.Collaborated with multiple customers to develop new Tyvek-enabled medical device packaging designs that improved customers manufacturing operations using less material and improved recyclability.Advanced partnerships with strategic suppliers by organizing a Packaging Summit that yielded new innovative ways to advance circularity,increase recycled content,and address extended producer responsibility for DuPont packaging.Achieved International Sustainability and Carbon Certification(ISCC)PLUS certification at the Tyvek manufacturing facility in Luxembourg for developing sustainable supply chains through the incorporation of bio and/or circular materials.Our Manufacturing&Technology Center in Taiwan was recognized as a“Resource Recycling Excellent Enterprise”by the Taiwanese Ministry of Environment for conversion to reusable waste storage containers that reduced waste volume.Over 1,100employees engaged in virtual circular economy learning seminars led by DuPont subject matter experts,focused on the four elements of our circularity approach.Integrate circular economy principles into our business models considering life cycle impacts in the markets we serve.Our 2030 goalInnovate for good25DuPont 2024 Sustainability ReportSustainability strategyIntroductionProtect people and the planetEmpower people to thriveGovernanceAppendicesDuPont 2024 Sustainability Report25Source circular raw materials y Develop partnerships with strategic customers and suppliers to scale circular opportunities for critical raw materials y Advance sourcing and use of low-carbon,recycled,and bio-based raw materials y Implement robust traceability and certification practicesOptimize our manufacturingprocesses y Design efficient processes y Maximize yield and minimize losses in our manufacturing operations y Advance 4R waste reduction opportunities(reduce,reuse,repurpose,and recycle)Design circular products y Collaborate with our customers on circular process and design opportunities y Advance circular LCA and product marketing claims competencyRecover and reprocess materials at end-of-use(to enable circular value chains)y Collaborate with strategic customers,suppliers,and third parties to establish fully circular value chains y Advance product takeback,reverse logistics,and material reprocessing capabilities Our approachto circular economyDuPont Tyvek T500 for garments Our approach Our circular economy approach guides how we address waste,material use efficiency,and design challenges across our innovation platforms and global businesses.Our approach defines how to incorporate circular economy principles at four different points in product life cycles.Each stage in the product life cycle requires different types and levels of investment and presents both unique and complementary challenges.Circular economy strategies will differ for each of our global businesses and innovation platforms depending on their targeted innovation and sustainability challenges.Establishing a cultureof learningIn 2023,we advanced a circular economy learning culture to support our businesses and customers.Based on insights from stakeholder engagements,we affirmed the elements of our approach to circular economy and identified internal subject matter experts to develop learning modules for key themes.We convened a series of virtual interactive circular economy learning seminars with DuPont practitioners on topics including circular product case studies,life cycle assessment(LCA)for circular product marketing claims,mass balance accounting and certification,and recycling partnerships.The internal seminars directly engaged over 1,100 employees in 2023 and were recorded for employees who were not able to attend,as well as for future learning opportunities.Strategic insights on circular economy from our customersThe results of our customer engagements in 2023 confirmed the importance of circular economy drivers in our global value chains,with 60%of our strategic customers citing the issue as a high priority.Specific issues in order of importance include waste and environmental pollution,circular product design,and recycled and bio-based raw materials.The results of our first comprehensive portfolio sustainability assessment(PSA)show alignment between our innovations and market drivers,with more than 15%of our innovation projects providing circular economy benefits for our customers and value chains.Across automotive value chains,circular economy is an even higher priority,driving innovation in design for recycling solutions and transparency as the industry prepares for Digital Product Passport(DPP)and related European Union regulations.Throughout this section,we highlight circular economy actions and innovations from across our global businesses that demonstrate the differential drivers and investment decisions needed for a multi-industrial company serving many markets and value chains.Innovate for good26DuPont 2024 Sustainability ReportSustainability strategyIntroductionProtect people and the planetEmpower people to thriveGovernanceAppendices Design circular productsOne of the most impactful ways DuPont can enable a more circular economy is through designing innovative circular products and processes with customers and value chain partners.Through our scientific and application development expertise,we work with customers to improve how products are designed,processed,and used by consumers.When designing circular products and processes,we:yCollaborate with our customers on circular process and design opportunities;and yAdvance circular LCA and product marketing claims competency.The following are examples of circular product and process design delivered in 2023.Partnering for extended lifetime in roofing applicationsBuildings account for a significant amount of global energy consumption,and coupled with changes in climate and weather patterns,improvements in roofing performance,energy efficiency,and lifetime can have a dramatic impact on sustainability and consumer wallets.Two examples of DuPont partnerships with roofing suppliers illustrate our collaborations to drive improvements in circularity:The Duro-Life 600 Roofing System is a sustainable,50-year commercial low-slope roofing solution that significantly reduces replacement costs and minimizes the amount of building materials that enter the waste stream.Powered by Styrofoam Brand XPS insulation,this roofing system offers 50 years of consecutive thermal performance compared to conventional polyisocyanurate insulation,which offers only 15 years.The roofing system was developed through a collaboration between Duro-Last and DuPont,two trusted leaders in commercial roofing and sustainable construction.Nearly 40%of Americans who live in coastal communities are facing an increasing chance of damage caused by hurricane force winds and saltwater spray.U.S.Steel and DuPont launched COASTALUME,which combines the strength of U.S.Steels GALVALUME material with the resilience and flexibility of DuPonts Tedlar PVF film.Tedlar withstands saltwater corrosion,UV damage,cracking,impact and more.COASTALUME carries the longest available coastal warranty for metal panels,ensuring buildings look new and last for many decades,even in the harshest environments.Driven to continuously improve operational excellence,the Global Packaging Group at Teleflex Incorporated(Teleflex),undertook a package redesign project to improve manufacturability and sustainability of its Central Venous Catheter(CVC)Arrow ErgoPack Complete System product package.Like many other medical device manufacturers of large kits,Teleflex relied on a preformed tray,but the legacy packing process design was laborious and dependent on manual operations.Teleflex identified this as an ideal opportunity to improve life cycle efficiencies and reduce packaging waste.The Teleflex team looked to a form-fill-seal(FFS)packaging process;however,the number of configurations and overall weight and size of these kits presented unique challenges.The transition in both the package format,design,materials,and manufacturing process demonstrates the adaptability and functionality that Tyvek Healthcare Packaging brings.Tyvek was an integral part of this packaging solution due to its superior strength and durability.Tyvek resists tearing and puncture damage while providing an outstanding microbial barrier to help ensure patient safety.The new flexible FFS package design reduced the packaging weight by an average of 67%leading to an avoidance of nearly 120 tons of plastic packaging on an annual basis.Improving manufacturability and sustainability with new packaging designInnovate for good27DuPont 2024 Sustainability ReportSustainability strategyIntroductionProtect people and the planetEmpower people to thriveGovernanceAppendicesStarting in early 2024,the packaging for some Tyvek,Tychem,and ProShield garments will transition to being made with a minimum of 50%PCR content.Some European Union countries have already implemented new packaging regulations with the aim of reducing the use of virgin grade polymers and enforcing the use of PCR raw materials.While the regulations are currently country specific,DuPont Personal Protection is proactively working to collaborate with customers and prepare its operations for increasing packaging and packaging waste regulations.DuPont Personal Protection will continue to roll out this new packaging throughout the year.The new coverall product packaging,pictured here,uses 50%less virgin grade low density polyethylene(LDPE).We are also eliminating the transparent outer bags used in Tychem garment packaging,which will further reduce the use of LDPE.These changes enable DuPont and our customers to meet regulatory requirements and advance circular raw material utilization goals.Increasing post-consumer recycled(PCR)content for Tyvek,Tychem,and ProShield garment packaging1Our Tyvek manufacturing facility in Luxembourg received the International Sustainability and Carbon Certification(ISCC)PLUS certification in 2023.ISCC PLUS is a globally recognized certification system for developing sustainable supply chains through the incorporation of bio and/or circular materials.This certification verifies and validates the adoption of clear,transparent,and traceable practices for organizations using the mass balance approach for maintaining chain of custody.“ISCC PLUS enables the use of sustainable raw materials derived from renewable and recycled sources through the mass balance approach.This helps enable the gradual replacement of fossil fuel-based raw materials and a lower carbon footprint for Tyvek products,which can be transferred to our value chain partners who continue to eagerly seek more sustainable products.”David E.Domnisch,Vice President and General Manager,DuPont Tyvek and TyparTyvek Luxembourg facility achieves ISCC PLUS certification for use of circular raw materials1 Minimum 50%PCR in packaging.Source circular raw materials Circular inputs to production have decreased over the past five years from 9.1%to just 7.2%,while resource consumption continues to increase1.For society to move from wasteful linear value chains to a more circular economy,its imperative that we begin scaling the production of economically viable,circular raw materials.This will require new partnerships and increased value chain collaboration,innovations in post-consumer waste processing,and the separation and purification of valuable components.In addition to waste reduction,there is a strong connection between circularity and efforts to develop and scale low-carbon raw materials.In sourcing circular raw materials,we:yDevelop partnerships with strategic customers and suppliers to scale circular opportunities for critical raw materials;yAdvance sourcing and use of low-carbon,recycled,and bio-based raw materials;and yImplement robust traceability and certification practices.We have several projects in our innovation pipeline that advance the sourcing and utilization of circular raw materials.The following are examples of results we delivered in 2023.In addition to the featured initiatives,were working with our strategic suppliers to understand and identify opportunities to reduce the carbon footprint of raw materials.1 The Circularity Gap Report 2024 by Circle Economy Foundation,which is available at https:/www.circularity-gap.world/2024#download under a Creative Commons Attribution-ShareAlike 4.0 International License.Full terms of the Public License are available at https:/creativecommons.org/licenses/.Innovate for good28DuPont 2024 Sustainability ReportSustainability strategyIntroductionProtect people and the planetEmpower people to thriveGovernanceAppendicesOptimize our manufacturingprocesses As we work to advance circularity across our global value chains,we recognize the importance of optimizing our own manufacturing processes and sites.To optimize our manufacturing processes,we:yDesign efficient processes;yMaximize yield and minimize losses in our operations;and yAdvance 4R(reduce,reuse,recycle,repurpose)waste reduction opportunities.By 2030,we aim to have 4R(reduce,reuse,repurpose,recycle)waste management and reduction programs implemented at all our sites.To do this,our teams work across businesses and with customers to identify opportunities to develop and deliver technical solutions that simultaneously reduce waste to landfill and realize financial or societal benefits.To learn more about our environmental and waste management programs,see the Delivering world-class environmental,health,and safety performance section of the report.Our Asia CMP(Chemical Mechanical Planarization)Manufacturing&Technology Center was selected as a“Resource Recycling Excellent Enterprise”by the Ministry of Environment in Taiwan.This site was recognized because it designed reusable chemical containers to replace disposable ones and significantly reduce hazardous waste generation.Some of the waste generated during manufacturing required special handling and was stored in paper drum containers,necessitating incineration of the containers along with the waste.The site replaced disposable containers with stainless steel reusable containers and streamlined waste disposal by eliminating transfer to a secondary shipping carrier.An automatic loading system equipped with a valve and a monitoring system to accurately measure the amount of waste loaded also improved efficiency and enhanced work process safety.The upgrades eliminate 4.4 tons of waste volume annually.Asia CMP Manufacturing&Technology Center recognized as outstanding resource recycling enterprise Waste solvent is generated in many industrial manufacturing processes,including in the production of advanced display materials at DuPonts plant in Cheonan,Korea.Most of the sites waste solvent has historically been sent to a third-party for incineration,which produces GHG emissions.The DuPont team adopted a cross-functional approach to create impact through our 4R program:yProcurement helped the site identify a new third-party vendor who can take the waste solvent and secondly,a refinery facility that can recycle the solvent to a suitable quality for reuse in other applications;yProduct Stewardship helped the site team understand local auditing regulations and used the DuPont EH&S Standards for qualifying the third-party vendor,transportation,and refinery facility;and ySite Operations helped to collect samples and worked with the third-party vendors to assess options for recycling and reuse.The pilot program successfully recycled 20%of the sites waste solvent,which was converted into raw materials for other chemical products.The team plans to double the volume in 2024.Recycling waste solvent from advanced display materials manufacturing in Korea77%of our sites had 4R programs in place in 2023Innovate for good29DuPont 2024 Sustainability ReportSustainability strategyIntroductionProtect people and the planetEmpower people to thriveGovernanceAppendicesRecapture valuable materials at end of use As recycling rates have declined over the past five years,solid waste generation continues to grow.According to the World Bank,the world generates slightly more than 2 billion tons of municipal solid waste annually,with at least 33%not managed in an environmentally safe manner1.In response to this growing challenge,leading companies have developed product takeback programs to recover valuable materials and have worked with public and private sector organizations to address waste collection and recycling infrastructure.Globally,government agencies have responded by enacting or proposing waste recycling and extended producer responsibility(EPR)regulations.The societal and environmental challenge is that waste generation from single use products and products with limited lifetimes is built into our systems of production and consumption and will not be addressed without significant effort to create more circular value chains.At DuPont,were advancing initiatives and collaborating with strategic customers to recapture valuable materials at end of use.To recover valuable materials and enable circular value chains,we:yCollaborate with strategic customers,suppliers,and third parties to establish fully circular value chains;and yAdvance product takeback,reverse logistics,and material reprocessing capabilities.The following case studies highlight results we delivered in 2023.1 World Bank,“Trends in Solid Waste Management.”https:/datatopics.worldbank.org/what-a-waste/trends_in_solid_waste_management.html”DuPont launched an industry-first program for take back of solid surface samples.Customers use small sample tiles of Corian Solid Surface products to assess the aesthetic of colors and patterns they are interested in.Our take back program allows customers to return these samples free of charge for repurposing into new samples or recycling into new Corian Solid Surface products.This approach reduces the use of new material and the costs to dispose of or remove scraps.We are currently seeking TRUE certification,which will validate our commitment to turning waste into savings and environmental responsibility.In 2024,we plan to increase the reach of this program by involving more value chain partners to help us divert even more material from landfills.Launch of Corian design sample take back program Disposable personal protective equipment(PPE),from face masks to coveralls,is essential to protect workers across many industrial sectors.However,this vital equipment is generally more complex to recycle than other textiles.While chemically or biologically contaminated PPE must be appropriately disposed,uncontaminated items are potentially recyclable.Most disposable garments are manufactured using blends of plastics,which can make the recycling process complex.Even when garments are recyclable,the outcome is often low-quality plastics with limited applications.Tyvek PPE is made using a single materialhigh-density polyethylene(HDPE)through a patented flash-spinning technology.Therefore,Tyvek is easier to recycle than other multi-material fabrics and enables the production of higher quality HDPE end products.The new recycling program enables German companies to work directly with plastic recyclers and ship used clothing directly to them in large batches.Participating Tyvek customers reduce plastic waste while limiting transport emissions and reducing landfill and incineration costs.DuPont launches recycling initiative to reduce PPE waste in EuropeInnovate for good30DuPont 2024 Sustainability ReportSustainability strategyIntroductionProtect people and the planetEmpower people to thriveGovernanceAppendicesRead on for our approach tosafe and sustainable by designInnovating safe and sustainable by designAdvance sustainable chemistry in the design of our products and processes,addressing substances of concern and communicating with stakeholders on our performance.DuPont BETASEAL 1585 automotive glass adhesiveOur 2030 goalAccomplishments in 202325commercialized products that avoided or eliminated the use of substances of concern(SoC).y Completed PFAS and Bisphenol-A phase-out plans for E.U.BETAMATE Structural Adhesives portfolio that will expand globally with new product commercialization.y Completed effort to replace 2-pyrrolidone solvent in DuPont Artistri digital printing inks with safer non-regulated alternatives in over 70 products for key customers ahead of expected regulatory restrictions.y Reformulated Thermax Non-Halogen(NH)Series of insulation products,achieving Living Building Challenge(LBC)Red List Approved certification,meaning that 99%of ingredients contain no Red List chemicals.Strengthened our list of SoC with current or future potential restrictions on uses relevant to DuPont to include endocrine disruptors,heavy metals,heavy metal salts,and substances that are persistent and bioaccumulative.Products that contain substances on this list are subjected to additional governance and mitigation plans.Advocated for the establishment of external science-based frameworks and regulations for SoC that support innovation,economic growth,and human health and safety.30R&D projects funded to phase out SoC in targeted products and applications.Note:At DuPont,we define a SoC as a substance that is known to have an inherent capacity to cause significant adverse effect on humans or animals,and with known routes of human and/or environmental exposure and are subject to current or future regulatory action.Innovate for good31DuPont 2024 Sustainability ReportSustainability strategyIntroductionProtect people and the planetEmpower people to thriveGovernanceAppendicesDuPont 2024 Sustainability Report31Semiconductor chips being sliced for use in printed circuit boards Drive efforts to avoid,eliminate,or minimize substances of concern(SoC)across our portfolioUse green chemistry principles when designing new products and processesDesign next generation products cognizant of evolving regulatory trends and consumer preferencesOur approach to safe and sustainable by designOur approach At DuPont,it is our responsibility to ensure our products are safe and sustainable by design.As a principle,we seek to avoid,eliminate,or minimize substances of concern(SoC)where safer or more sustainable alternatives exist.We have developed a culture focused on building transparent relationships with our suppliers and customers and integrating safe and sustainable by design principles to deliver value,support transparency,and drive competitiveness.Our culture drives us to critically evaluate our operations,value chains,and raw materials to ensure continued improvement in the safety,sustainability,and societal benefits of our products.Advancing a culture of safe and sustainable by designTo advance a culture of safe and sustainable by design,we:yApply science-based approaches:Our scientists and product stewards use science-based approaches to assess and appropriately mitigate risk early in the design phase and trigger additional assessments for existing products as new science-based data becomes available;yUse green chemistry principles:Our scientists utilize our Kingston Technology Centre expertise in Green Chemistry to identify opportunities to eliminate or reduce the use of SoC,minimize the burden on resources,and eliminate or reduce the generation of hazardous waste;yAssess risk:We continue to advance the skills needed to evaluate risk versus societal benefit throughout the entire life cycle of our products from raw material selection,product design,formulation,manufacture,sales,product use,and disposal;yManage SoC:We utilize a SoC list,conduct risk assessments,and implement risk mitigation plans to avoid or phase out of SoC in raw materials,processes,and products where possible;DuPont Automotive TeamStuttgart,GermanyInnovate for good32DuPont 2024 Sustainability ReportSustainability strategyIntroductionProtect people and the planetEmpower people to thriveGovernanceAppendices yEngage customers:Our customer engagement survey showed more than 80%of our customers identified safe and sustainable chemistry as a priority sustainability topic.We use customer engagement protocols to align our products with the safety and sustainability expectations of our customers;yEngage suppliers:We partner with our suppliers to drive transparency regarding the presence of SoC in the materials we procure and evaluate opportunities to reduce or eliminate SoC in our inputs;yDesign for circularity:We assess the impacts SoC may pose on circularity and ensure we collaborate with our suppliers and customers to consider SoC in the design for circularity where practical;yDrive continuous improvement:Using a portfolio sustainability assessment(PSA),we drive a culture of continuous improvement not only informing the design of new products but also to inform opportunities for mitigation and phase out plans for SoC in our existing portfolio;and yUtilize multigenerational product plans:We are using multigenerational product plans to replace or minimize the use and presence of SoC,including per-and polyfluoroalkyl substances(PFAS).Dyeing and printing is an important part of textile production;however,20%of industrial water pollution globally is attributable to the dyeing and treatment of textiles.With environmental concerns in mind,many manufacturers in the printing industry are moving toward digital printing methods using pigment inks because of the water savings and waste reduction they can achieve with this technology.A solvent,2-pyrrolidone,is commonly used in the inks formulation with an important role in polymer binders and dispersant.However,it is a precursor to N-methyl-2-pyrrolidone and is part of a global harmonization of SoC for consumer applications.Artistri scientists have completed a three-year effort to replace 2-pyrrolidone solvent in inks with safer,non-regulated alternatives while maintaining equivalent performance and shelf life.Through new synthetic strategies to produce polymer binders,dispersants,and inks,and with a cross-functional team,Artistri renewed and brought its offerings to the market ahead of regulatory restrictions.In all,the impact of this program results in the elimination of 2-pyrrolidone in over 70 binders,dispersions,and inks used in digital printing for key customers.This work supports the overarching trends of printers moving to digital printing for consumer products and demonstrates DuPonts commitment to being ahead of the curve with regard to SoC across our portfolio.Innovating safer and more sustainable alternatives into water-based digital printing inks Case studyBETAMATE Structural and BETASEAL Elastic Adhesives multigenerational product plans drive SoC elimination across entire portfolio y Completed PFAS and Bisphenol-A phase-out plans for E.U.BETAMATE Structural Adhesives portfolio that will expand globally with new product commercialization.y Completed N-methyl-2-pyrrolidone phase-out plans in all new BETASEAL Glass Bonding adhesives technologies.Pictured above:DuPont Artistri Digital Textile InksInnovate for good33DuPont 2024 Sustainability ReportSustainability strategyIntroductionProtect people and the planetEmpower people to thriveGovernanceAppendicesProduct stewardship commitment Our product stewardship commitment drives us to ensure that the products we bring to the market are safe for use across their life cycle and contribute to a sustainable environment.Our rigorous and comprehensive Product Stewardship and Regulatory(PS&R)Management System is at the core of our commitment to product safety and risk management.Built on the framework of the American Chemistry Council Responsible Care Product Safety Code and International Council of Chemical Associations principles,this system plays a critical role in our product and application development processes.Every DuPont business uses the PS&R Management System to assess and manage potential risks and identify improvement opportunities.The adequacy and effectiveness of the PS&R Management System is reviewed annually to ensure continuous performance improvement throughout the organization.Product Stewardship ReviewsCentral to the PS&R Management System are Product Stewardship(PS)Reviews.As part of our PS Reviews,a cross-functional team of business,science/technology,and regulatory subject matter experts use the protocols established in our PS&R Management System to assess and address the impact of any new,or modified,product or process.All new and existing products,applications,and services undergo Product Stewardship Reviews,which include detailed health,safety,and environmental impact assessments.Detailed PS Reviews are then conducted on a set cadence for products that have not undergone any modifications.Reviews are tailored to encompass product use and potential application areas.PS Reviews evaluate risks during transportation and during customer use based on a detailed assessment of the chemical,physical,and biological impacts of substances.Risk assessment includes evaluation of toxicology data,environmental fate,and worker and customer exposure,as well as non-human and environmental impacts.Broadly inclusive,PS Reviews focus on the full product life cycle from product design and manufacture to customer use,safe handling,and disposal.As a result,we decide whether to continue developing or modifying a product,application,service,or process.If the findings from a PS Review identify a negative impact,the affected product or process is either redesigned or discontinued.Product transparency andlabeling Safe handling and use of products is foundational to product safety.DuPonts PS&R Management System ensures compliance with global and local safety data sheet(SDS)and labeling information requirements.As a result,every DuPont product includes SDSs and labels providing essential information.We continue to increase product transparency through enhanced documentation,including sustainability and transparency declarations,certifications,and analyses for products in our portfolio.25 products that avoided or eliminated the use of SoC were commercialized in 202330 R&D projects funded during 2023 to phase out SoC in targeted products and applications1,100 Product Stewardship Reviews were held across DuPont businesses globally in 2023DuPont Cyrel Flexographic PlateInnovate for good34DuPont 2024 Sustainability ReportSustainability strategyIntroductionProtect people and the planetEmpower people to thriveGovernanceAppendicesReducing the environmental impact of boron nitride in thermal interface materialsBoron nitride(BN)is one type of high-performing,thermal conductive filler widely used in thermal interface materials for heat dissipation.Laird Performance Materials has transitioned to a new manufacturing process that replaces the original boron nitride.Currently,five of 12 product lines using original boron nitride have been replaced,reducing 17 MT of landfill,3.8MM liters of wastewater,and 65,000 liters of acids/bases from the processing.In addition to plans for converting the rest of the product lines,there is also a cost savings benefit realized with this raw material replacementdemonstrating that sustainability progress can be good for business competitiveness.Responding to industry recommendations for reductionof methanol DuPont has been proactive in addressing the needs of its semiconductor chip end-users who are members of the Responsible Business Alliance(RBA).RBA has listed methanol on its Industry Focus Process Chemical List and has recommended reducing its use and keeping it to less than 0.1%in final product.DuPonts Interconnect Solutions business identified the metallization products that use methanol,and several teams,including engineering,manufacturing,and technology,worked together to remove methanol completely.Our teams identified an acceptable solution that surpassed customer and industry requirements while maintaining the quality and performance of the product.Reduction of sulfuric acid peroxide mixture(SPM)usage in Ceria post-CMP cleaning Chemical mechanical planarization(CMP)is a critical process in the production of semiconductor devices.However,the steps following Ceria slurry CMP polishing are highly demanding and require an additional sulfuric acid peroxide mixture(SPM)process.In order to address concerns over hazardous waste,toxic chemicals,and tightened environmental regulations,customers want reduced SPM volumes.DuPonts solution involves streamlining the Ceria post-CMP cleaning process to a single step,simplifying the entire procedure.This approach not only reduces SPM usage,but it also frees up valuable footprint space for other semiconductor production tools.Annually,environmental benefits include 400,000 gallons less of deionized water usage,200,000 gallons less of SPM,and 100 MTCO2e less of GHG emissions.A year of impactful contributionsInnovating safe and sustainable by design for semiconductor manufacturingEngineered for both concealed and exposed wall insulation applications,Thermax Sheathing is an easy-to-use nonstructural rigid insulation board with a fiberglass-infused foam core that helps improve fire performance and dimensional stability.Reformulated Thermax Non-Halogen(NH)Series makes DuPont the first Class-A polyisocyanurate sheathing manufacturer to phase out halogenated flame retardants from our formulations,setting a new standard for the industry.Our commitment to green chemistry innovations has driven us to remove priority substances from our portfolio,and the Thermax NH Series is a remarkable example.We are proud to say that this product line has achieved Living Building Challenge Red List Approved certification under the Declare label,meaning that 99%of the ingredients present and disclosed at above 100 ppm in the product contain no Red List chemicals.Setting a new standard:Thermax Non-Halogen Series insulationInnovate for good35DuPont 2024 Sustainability ReportSustainability strategyIntroductionProtect people and the planetEmpower people to thriveGovernanceAppendicesInnovate for goodAdvancing equity and inclusion of women law enforcement officers with science Traditionally,large numbers of law enforcement officers were male and protective body armor was designed for their sizes and shapes.Female officers often use ill-fitting garments that put their own safety at risk.Gear designed for male torsos leaves exposed areas under the shoulders,back,and upper chest that arent adequately protected.Additionally,torso differences could inhibit waist and hip movement when fast action is needed.Scientists at ETC have developed Kevlar and Kevlar EXO products with a thermoforming process to allow for the design of customized vest molds and other ballistics solutions,like helmets and shin guards.These thermoformed Kevlar products provide better fit for individuals across varying body shapes and sizes,an
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911 Turbo 50 Years(WLTP):Fuel consumption combined 12.5 12.3 l/100 km,CO emissions combined 283 278 g/km;CO class GIDENTITYAnnual and Sustainability ReportPorsche AG2024Our inseparable,clearly identifiable identity remains intact even wheneverything around us is changing.Dr.Wolfgang Porsche6 MAGAZINE6 IN CONVERSATION:Oliver Blume on identity,strategies,and passion.34 WE INVEST IN THE FUTURE39 TO OUR SHAREHOLDERS40 LETTER FROM THE EXECUTIVE BOARD41 MEMBERS OF THE EXECUTIVE BOARD60 PORSCHE IN THE CAPITAL MARKET63 REPORT OF THE SUPERVISORY BOARD71 MEMBERS OF THE SUPERVISORY BOARD73 CORPORATE GOVERNANCE74 CORPORATE GOVERNANCE DECLARATION 85 MEMBERS OF THE EXECUTIVE BOARD87 MEMBERS OF THE SUPERVISORY BOARD91 REMUNERATION REPORT 2024119 COMBINED MANAGEMENT REPORT120 FUNDAMENTAL INFORMATION ABOUT THE GROUP120 Business model122 Strategic direction of the Porsche AG Group125 Management and key performance indicators127 Corporate Governance Declaration128 BUSINESS DEVELOPMENT128 Macroeconomic and sector-specific environment130 Deliveries132 Production133 Research and development133 Personnel134 Overall statement on business development and theeconomic situation136 RESULTS OF OPERATIONS,FINANCIAL POSITION ANDNETASSETS136 Results of operations140 Financial position145 Net assets147 PORSCHE AG HGB FINANCIAL STATEMENTS(CONDENSEDVERSION)152 REPORT ON RISKS AND OPPORTUNITIES152 General principles of risk and opportunity management158 Risks and opportunities as of December 31,2024165 REPORT ON EXPECTED DEVELOPMENTS165 Development of the global economy and passenger car markets166 Forecast assumptions167 Forecast of the most important key performance indicators 167 Overall statement on anticipated development169 NON-FINANCIAL STATEMENT (part of the Combined Management Report)170 GENERAL DISCLOSURES195 ENVIRONMENT196 Climate change219 Pollution229 Water234 Biodiversity and ecosystems242 Resource use and circular economy255 EU Taxonomy269 SOCIAL270 Own workforce297 Workers in the value chain306 Affected communities312 Consumers and end-users317 GOVERNANCE318 Business conduct336 ANNEX347 CONSOLIDATED FINANCIAL STATEMENTS348 CONSOLIDATED INCOME STATEMENT349 CONSOLIDATED STATEMENT OF COMPREHENSIVEINCOME350 CONSOLIDATED STATEMENT OF FINANCIAL POSITION352 CONSOLIDATED STATEMENT OF CHANGES INEQUITY354 CONSOLIDATED STATEMENT OF CASH FLOWS355 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS355 Basis of presentation356 Significant events356 Impact of climate change356 Basis of consolidation362 Effects of new or amended IFRS363 New and amended IFRS not applied363 Currency translation364 Accounting policies376 Segment reporting379 Notes to the income statement387 Notes to the consolidated statement of financialposition411 Other notes475 FURTHER INFORMATION476 RESPONSIBILITY STATEMENT477 INDEPENDENT AUDITORS REPORT485 INDEPENDENT AUDITORS REPORT487 INDEPENDENT AUDITORS REPORT490 ABOUT THIS REPORT492 GRI CONTENT INDEX498 TCFD INDEX499 SASB INDEX502 KEY FINANCIAL FIGURES503 GLOSSARY509 FINANCIAL CALENDAR 2025512 LEGAL NOTICECONTENTSIdentity Contents5 54 428Emotionally PorscheLike distinctive design,performance is deeply rooted in Porsches identity.As a catalyst for technology development,motorsport has always shaped the brand.And Porsche channels these themes into experiences that are unique the world over.EMOTIONALLYTaycan Turbo GT with Weissach package(WLTP):Electrical consumption combined:21.3 20.6 kWh/100 km;CO emissions combined:0 g/km;CO class:A28ICONICALLYINNOVATIVELYDynamically PorscheThe biggest year of product launches in Porsche history was 2024.Chairman of the Executive Board Oliver Blume discusses the power of identity,strategies,and passion.In conversation with Oliver BlumeTaycan Turbo(WLTP):Electrical consumption combined:20.5 18.0 kWh/100 km;CO emissions combined:0 g/km;CO class:AIdentity DynamicallyDYNAMICALLY76628Emotionally PorscheLike distinctive design,performance is deeply rooted in Porsches identity.As a catalyst for technology development,motorsport has always shaped the brand.And Porsche channels these themes into experiences that are unique the world over.EMOTIONALLYTaycan Turbo GT with Weissach package(WLTP):Electrical consumption combined:21.3 20.6 kWh/100 km;CO emissions combined:0 g/km;CO class:A28ICONICALLYINNOVATIVELYMr.Blume,what makes a Porsche aPorsche?Porsche is a way of life,and each and every one of our products embodies this.We represent performance and passion,sustainability and extraordinary experiences,inspiring fans all over the world.Its this combination that defines Porsche.How exactly do you do that?With clear criteria:Criteria for distinctive design,for performance,and the driving experience.Our vehicles are technical masterpiecesright down to the smallest detail.And to make them takes expertise.Not to mention a determina-tion to keep innovating,and to keep inspiring people,time and time again.And with instinct,ensuring that Porsche always remains Porsche.Take,for instance,our iconthe 911.Were currently in the eighth generation.And weve continued to develop it,making it better and better.At its core,the 911 has remained true to itselffor more than 60years.Its original identity has stood the testof time.Drivinga Porsche should always be an unforgettable experience.If theres a smile on my face after a test drive,it means weve done every-thing rightas a team.And thats something our fans all over the world can feel.Thats typicalPorsche.Combining tradition and innovationwhat exactly does that look like?The values Ive just described define our brand.Theyve transformed our products into driving icons.Every new development needs to fulfill this objective and carry it into the future.Take,the new 911 Carrera GTS.For the first time,it comes with a hybrid drivean ultra-lightweight performance hybrid system,inspired by motorsport.The technology is groundbreaking,and perfectly complements the overall concept,giving the 911 even more power and further enhancing the driving dynamics.Or the 911 GT3,which has delivered a totally unadulterated driving experience for the past 25years.It combines racing genes with everyday usability.And thats exactly what were now emphasizing even more.The new GT3 is even more emotive.And we go even further in tailoring it to the individual wishes ofour customers.Porsche has overhauled its model range in a very short period of time.Thats quite a feat.It certainly is.We revamped four of the six model lines in 2024:The Panamera,the Taycan,the 911,and the Macan.That was no easy task.Modernizing our line-up so comprehensively required a great deal of effort and money.But it was well worth it.Our portfolio now is the youngest and strongest in Porsche history.With every new car,weve developed trailblaz-ing innovations and set benchmarks.Macan:A technical masterpiece down to the smallest detailPorsche is a way of life,and each and every one of our products embodies this.Oliver BlumeIdentity Dynamically911 GT3(WLTP):Fuel consumption combined:13.8 13.7 l/100 km;CO emissions combined:312 310 g/km;CO class:G911 Carrera GTS(WLTP):Fuel consumption combined:11.0 10.5 l/100 km;CO emissions combined:251 239 g/km;CO class:G98628Emotionally PorscheLike distinctive design,performance is deeply rooted in Porsches identity.As a catalyst for technology development,motorsport has always shaped the brand.And Porsche channels these themes into experiences that are unique the world over.EMOTIONALLYTaycan Turbo GT with Weissach package(WLTP):Electrical consumption combined:21.3 20.6 kWh/100 km;CO emissions combined:0 g/km;CO class:A28ICONICALLYINNOVATIVELYWhat makes this model overhaul soambitious?Its a challenge in more ways than one.To start with,the new products need to be developed on scheduleand to fulfill the extraordinary quality standards for which Porsche is known.Then our plants need to be able to accommo-date the demanding ramp-up in production.And finally,theres the distribution:While the predecessor is gradually phased out worldwide,the new model is launched step by step.This transition needs to be managed perfectly.And it all needs financing at the same time.Thats challenging enough with one new model,but we had four in 2024,in quick succession.Ithink its safe to say that Porsche delivered.All of the new launches are reflected in the sales figures.After so many record-breaking years,you had to accept a setback in terms of the financial results.It was an extremely challenging year for the European automotive industry as a whole in 2024.We were expecting that,but thesitu-ation worsened throughout the year.We are experiencing a massive drop in demand in the luxury segment in China.Plus,costs have increased in many areas,especially in the supply chain.Still,we followed through with our year of product launches as planned,and we made great strides in the development of innovative products and services.Considering the situation we find ourselves in,what we accomplished is nothing short of spectacular.And all credit goes to our team for this extra-ordinary achievement.A look at the world map reveals a dramatic shift in sales distribution.Whats the strategy behind this development?Over the years,we at Porsche have made a real effort to balance sales across regions aroundthe world.For example,weve strategically invested in the regions of South Korea,the ASEAN states,the Middle East,Brazil,and Mexico.911 GT3 with Touring package:Identity preservedfor more than 60 years911 GT3 with Touring package(WLTP):Fuel consumption combined:13.8 13.7 l/100 km;CO emissions combined:312 310 g/km;CO class:G1011628Emotionally PorscheLike distinctive design,performance is deeply rooted in Porsches identity.As a catalyst for technology development,motorsport has always shaped the brand.And Porsche channels these themes into experiences that are unique the world over.EMOTIONALLYTaycan Turbo GT with Weissach package(WLTP):Electrical consumption combined:21.3 20.6 kWh/100 km;CO emissions combined:0 g/km;CO class:A28ICONICALLYINNOVATIVELYAnditsnowpaying off because we were able to compensate for much of the decline in China with other regions.We remain true to our objective,“Value over Volume.”Value-oriented,sustainable growth is more important to us than quantity.When it comes to electric mobility,different regions around the world are developing at very different rates.How do you deal with that?Electric mobility is the technology of the future.At the same time,Porsche is flexibly positioned.This is important when it comes to meeting the needs of the different regions,which are developing at different rates.For individual model lines,our customers will therefore be able to choose between efficient internal combustion engines,high-perfor-mance plug-in hybrids,and all-electric models well into the 2030s.Can you be more specific?In terms of sports cars,we offer the 911 with a six-cylinder boxer engine and as a sports hybrid.There will be the all-electric 718 Boxster and Cayman.In the SUV seg-ment,we have the all-electric Macan as well as the Cayenne,which is available with an internal combustion engine or as a plug-in hybrid,and in the future will also be offered inall-electric form.And as far as sports sedans are concerned,the Taycan represents electric performance,while the Panamera is availablewith aninternal combustion engine or as ahybrid.And the“double E”strategyelectric and eFuelscontinues?Absolutely.In our view,synthetic fuels do not directly compete with electromobility,but they are a practical addition for the transition phase.This transition will take quite some time.eFuels could be used in the existing fleet without any technical limitations.Currently,too little of these synthetic fuels are produced around the world.Porsche offers its customers more than just a wide selection of drives to choose from.Youve also significantly expanded the options available for vehicle customization.Thats right.And there,too,we draw from Porsches history.The Sonderwunsch program,for example,goes all the way back to the late 1970s.Since then,weve built on and updated the program,and of course expanded and modernized the range of options.It means that our customers can incorporate some of their own personality into their dream car.The possibilities are virtually endlessright down to a totally individual one-off car.And we plan to continuously expand our product range with Porsche Exclusive Manufaktur.LEFT Taycan Turbo:Ground-breaking innovations developed and new standards setRIGHT Oliver Blume:Chairman of the Executive Board since 2015Identity DynamicallyTaycan Turbo(WLTP):Electrical consumption combined:20.5 18.0 kWh/100 km;CO emissions combined:0 g/km;CO class:A1312628Emotionally PorscheLike distinctive design,performance is deeply rooted in Porsches identity.As a catalyst for technology development,motorsport has always shaped the brand.And Porsche channels these themes into experiences that are unique the world over.EMOTIONALLYTaycan Turbo GT with Weissach package(WLTP):Electrical consumption combined:21.3 20.6 kWh/100 km;CO emissions combined:0 g/km;CO class:A28ICONICALLYThe automotive industry is undergoing an epochal shift.Digitalization inside the vehicle goes even further than electric mobilityand requires a whole new way of thinking.Executive Board members Michael Steiner(Research and Development)and Sajjad Khan(Car-IT)explain more.Innovatively PorscheINNOVATIVELY14628Emotionally PorscheLike distinctive design,performance is deeply rooted in Porsches identity.As a catalyst for technology development,motorsport has always shaped the brand.And Porsche channels these themes into experiences that are unique the world over.EMOTIONALLYTaycan Turbo GT with Weissach package(WLTP):Electrical consumption combined:21.3 20.6 kWh/100 km;CO emissions combined:0 g/km;CO class:A28ICONICALLYMr.Blume,what does the digital transformation mean for Porsche generally speaking?OLIVER BLUME We have a fundamentally different way of thinking today.The motto used to be“Hardware first.”Software was only introduced during the development process.These days,software defines the central requirements of a new vehicle from the very start.This new way of thinking is primarily an issue of mindsetthroughout the industry,notjust at Porsche.Mr.Steiner,Mr.Khan,the two of you are promoting this change in development at Porsche together.How will a“software-defined Porsche”be different in the future?MICHAEL STEINER It will be a vehicle thatsdevel-oped and produced in accordance with the very highest quality standards and delivers extraordinary performance and a one-of-a-kind driving experience.So exactly what Porsche has represented for more than 75 years.That will always be our objective.And what our customers expect of us.Were creating exciting experienceswith first-class hardware,soft-ware,and digital services.Fluid material:the software is the starting point for a new PorscheSAJJAD KHAN I couldnt agree more.Of course,the software itself has to be excellent.But how its integrated ultimately makes all the difference.Good software has to offer real added value,harmonize perfectly with vehicle components,and in the end represent a desir-able overall package.MICHAEL STEINER In other words,not much has changed in terms of our vision.But the path there is different.In software development,weve moved away from the long-term cycles of the past.Its an ongoing process.And that requires a high degree of flexibility and agility throughout the organization.That sounds like a cultural change.SAJJAD KHAN Thats exactly what it is.We have clear visions for the software of our future sports cars.When it comes to implementation,our teams work in a model of“liquid organiza-tion”:no silos,reduced hierarchy,and lots of content.This type of organization allows us to respond more dynamically and quickly to mar-ket changes and technological developments.Youre working with partners more and more these days,especially in the digital sphere.What are you hoping to achieve?MICHAEL STEINER Partnerships are an oppor-tunity to increase speed,improve competi-tiveness,and develop expertise internally.To advance at a faster pace,it sometimes makes sense to work with external partners.Espe-cially in the digital sphere,theres no need to redevelop everything ourselves from the ground up.Whenever the opportunity presents itself to benefit and learn from the expertise of others,thats what we do.But we also go out looking for competition in the areas were especially strong in ourselves.Were creating exciting experienceswith first-class hardware,software,anddigitalservices.Michael Steiner and Sajjad Khan Identity Innovatively17628Emotionally PorscheLike distinctive design,performance is deeply rooted in Porsches identity.As a catalyst for technology development,motorsport has always shaped the brand.And Porsche channels these themes into experiences that are unique the world over.EMOTIONALLYTaycan Turbo GT with Weissach package(WLTP):Electrical consumption combined:21.3 20.6 kWh/100 km;CO emissions combined:0 g/km;CO class:A28ICONICALLYHow do you preserve Porsches unique identity in a construct like that?SAJJAD KHAN I prefer to explain that using an example from the food and beverage industry.Good ingredients are key.But it takes anextra-ordinary chef to turn them into something special that inspires the guests.Something that no one else can do.Applied to our software,it all comes down to how well its integrated into our customers vehicles and how it makes the driving experience even better.Who devel-oped which components plays a much less important role.Speaking of the Porsche driving experience,what makes it so unique?MICHAEL STEINER We organize everything else around the driving experience.Thanks to intelligent software,we already perform very well in areas like driving dynamics and energy management,both of which will distinguish Porsches in the future.SAJJAD KHAN The Porsche Driver Experience engages all five senses.The role of voice control will continue to grow in the future,but the visual,acoustic,and tactile design of the system is also important.Artificial intelli-gence will play an increasingly important role insimplifying interaction with the vehicle and improving operation,making it as easy and intuitive as possible.But will a Porsche still be a car you primarily want to drive yourself?OLIVER BLUME Absolutely.We use all the options that new digital systems offer us.Our technol-ogy should optimally support the driver at all timesnot replace them.Its not a competitor.Its a good partner.Digital assistants are invisi-ble codrivers and bodyguards.“Software-defined Porsche”:intelligent software transforms the icon into an incomparable driving experienceDigital assistants are invisible codrivers and bodyguards.Oliver Blume1828Emotionally PorscheLike distinctive design,performance is deeply rooted in Porsches identity.As a catalyst for technology development,motorsport has always shaped the brand.And Porsche channels these themes into experiences that are unique the world over.EMOTIONALLYTaycan Turbo GT with Weissach package(WLTP):Electrical consumption combined:21.3 20.6 kWh/100 km;CO emissions combined:0 g/km;CO class:A286IconicallyPorscheHe and Oliver Blume meet at one of the Weissach Development Centers most secretive locations:the halls of Style Porsche.Head of Design Michael Mauer has spent more than 20 years developing visionary designs and preserving iconic lines.ICONICALLY212028Emotionally PorscheLike distinctive design,performance is deeply rooted in Porsches identity.As a catalyst for technology development,motorsport has always shaped the brand.And Porsche channels these themes into experiences that are unique the world over.EMOTIONALLYTaycan Turbo GT with Weissach package(WLTP):Electrical consumption combined:21.3 20.6 kWh/100 km;CO emissions combined:0 g/km;CO class:A28New drive mode shifter:technology as an aesthetic work of artMr.Blume,you come here often.Whyis that?OLIVER BLUME Its important to me to maintain close contact with Michael and his team.Even for issues beyond mere coordination of new products.Weve come to realize that design can do so much more than just styling our sports cars.How do you mean?OLIVER BLUME Our design strategy serves as a guideline that we want to apply at the company far beyond the confines of design.It represents a clear added valued for the long-term position of our brand.Simply put,design experts develop brand strategies that we aim to use as a type of brand compass throughout the companyregardless of the actual product design.The aim is to ensure a consistent brand feeling thats perceived the same way across alltouchpoints with the Porsche world.Thats quite an undertaking,isnt it,Mr.Mauer?MICHAEL MAUER It certainly is.Continuity and consistency are part of our brand identity.Defining them carefully and carrying them into the future is a fundamental,strategic task.Rather than redefining everything anew,Porsche simply continues to develop what already works well.A long-term strategy is very important.It ensures a consistent and innova-tive way of thinking that aligns with the brand,and allows all of us at the company to move in the same direction.Im delighted that were working with many other areas of the company to expand the strategy expertise derived from the design.Lets talk about concrete processes.How does the strategic aspect fit in to vehicle design?MICHAEL MAUER Weve defined three terms for the design that describe our brand values,regardless of the models and derivatives:focus,purpose,and tension.They form the core of our strategic thought process.On that basis,we develop concrete designs on a product level.For example,these attributes come into play when we discuss the design of the display Oliver Blume(left)and Head of Design Michael Mauer:so much more than just vehicle stylingbehind the steering wheel.In this context,focus means that we focus clearly on the driver and tailor the display to their specific needs.The result is our so-called curved display.Lets leave the result aside for just a moment and go back to the beginning.How does Porsche begin the design process for a certain model?MICHAEL MAUER Sketching with pencil and paperor a tablet and stylus penis actu-ally still the most important starting point when it comes to finding or visualizing ideas.It depends on whether theres a predecessor model or were creating a brand-new product.Above all else,I need to be able to recognize immediately that its a Porsche.Identity Iconically232228Emotionally PorscheLike distinctive design,performance is deeply rooted in Porsches identity.As a catalyst for technology development,motorsport has always shaped the brand.And Porsche channels these themes into experiences that are unique the world over.EMOTIONALLYTaycan Turbo GT with Weissach package(WLTP):Electrical consumption combined:21.3 20.6 kWh/100 km;CO emissions combined:0 g/km;CO class:A28The Porsche identity,this design tradition that everythings con-nected totheres nothing else like it.Oliver BlumePorsche 911:timeless icon with unmistakable designWhat are the most important topics?MICHAEL MAUER The early phase is largely about achieving optimal vehicle proportions.Just as the location is decisive for a piece of real estate,proportions are key when it comes to vehicle design.Proportions,proportions,and again proportions.What makes sports cars in general and Porsches in particular so special is their dramatic width-to-height ratioregard-less of the segment.This width-to-height ratio ensures that all of our products are recogniz-able as Porsches at first glance.Perfect pro-portions are the foundation of a consistent and authentic brand identity.And then there are additional details such as the abruptly sloping roofline that also characterize our vehicles.In addition to brand affiliation,weve also defined elements on the model level that,for example,clearly distinguish a 911 from a Panamera and provide every vehicle with its own characterits own product identity.Here,too,were largely guided by our design philosophy and can thus ensure that these features are established as part of our design identity over the long term.Being creative,developing innovations,and preserving the identity that has evolved over theyearshow do you reconcile allof that?MICHAEL MAUER Its an exhilarating task like no other.Designing a Porsche that breaks entirely with history would be a terrible idea.In fact,we go in the opposite direction.Its our job to visually present the brand in a way that is full of life,innovative,and forward-looking.To find the right balance between innovation and tradition.Here,in particular,I think the composition of the team plays a decisive role.For example,if were working on the successor of the current 911,we intentionally bring together experi-enced designers and young newbies.This form of exchange is extremely exciting and creates approaches that make this balance,in particu-lar,a reality.252428Emotionally PorscheLike distinctive design,performance is deeply rooted in Porsches identity.As a catalyst for technology development,motorsport has always shaped the brand.And Porsche channels these themes into experiences that are unique the world over.EMOTIONALLYTaycan Turbo GT with Weissach package(WLTP):Electrical consumption combined:21.3 20.6 kWh/100 km;CO emissions combined:0 g/km;CO class:A28You have helped shape the design culture at Porsche over the past two decades.What has changed,and what has remained the same?MICHAEL MAUER The designers work has changed dramatically over the past two decades.Topics like digital applications have become a whole lot more important.They represent both a challenge and an opportunity.On the one hand,weve come to realize that the user experienceor driver experience,as we call itis becoming more and more important for the brand.On the other,digital applications in design provide us with the opportunity to visualize our ideas very quickly.Nevertheless,I still firmly believe that allegedly outdated phys-ical clay models play a key role in the quality of our designs.But technological advancements have certainly had the biggest influence.Elec-tric mobility is a very good example.Elimination of the massive engine block allows us to design a much more striking hood on our sports cars.At the same time,there needs to be enough space to house the large battery,which hasnt gotten any smaller.The same goes for the manufacturing process.Today were able to produce shapes that were once impossible in the series production process.And what would you say about the future of design?MICHAEL MAUER The importance of design will only grow in the futureand not just on a product level.With our design philosophy,weve created the perfect foundation.A com-pass that provides the entire company with clear guidelines on the path to a consistent,emotionally charged customer experience.OLIVER BLUME That allows us to sustainably strengthen the future viability of our brand over the long term.And theres one thing that will never change:anytime you see a Porsche somewhere in the world,you will instinctively turn around.This Porsche moment is a huge acknowledgment.Especially because weve managed to maintain this enormous level of consistency over the decades.The Porsche identity,this design tradition that everythings connected totheres nothing else like it.Its an important incentive for many of our custom-ers to buy.Perfect proportions are the foundation of a con-sistent and authentic brand identity.Michael Mauer Masterful interplay of forms with continuity:the Porsche 9112628Emotionally PorscheLike distinctive design,performance is deeply rooted in Porsches identity.As a catalyst for technology development,motorsport has always shaped the brand.And Porsche channels these themes into experiences that are unique the world over.EMOTIONALLYTaycan Turbo GT with Weissach package(WLTP):Electrical consumption combined:21.3 20.6 kWh/100 km;CO emissions combined:0 g/km;CO class:A28Mr.Blume,2024 was an exciting year for Porsche in motorsportwith major victories as well as narrow defeats.What was the season like foryou?I felt like a co-driver.I got lost in the excite-ment.The season was a rollercoaster of emotions and I spent much of it on the edge of my seat.Our teams achieved some impres-sive successes.Were proud of our world champion drivers in Formula E and the FIA World Endurance Championship.We secured the manufacturers,teams,and drivers titles in convincing fashion in the IMSA SportsCar Championship in the US.Le Mans,on the other hand,was a good example of how close it can be in top-flight motorsport.Our works Porsche 963 was ultimately just 1.2 seconds short of a place on the overall podiumand thats after 24 hours of racing.It doesnt get any more exciting than that.But what was most important to me was that we learned from every lap and continued to develop.Is that the primary purpose of motorsport at Porsche?It certainly is.Motorsport drives innovation and is our most demanding test environ-ment.Many technical developments like the turbocharger,the hybrid drive system,and the Porsche dual clutch transmission(PDK)ori-ginated from the racetrack.We even designed and developed the 800-volt system originally for motorsport.Today,it delivers Porsche performance in the Macan and Taycanwith remarkably high charging capacities.And as well as the technical aspects,the emotion of racing is also very important to us.We love competition,and its also part of our identity.We love competition,and its also part of our identity.Oliver Blume99X Electric:Learning and developing with every lapIdentity Emotionally31303130Porsche brand store and all-electric Macan:Porsche creates experiences that leave a lasting impressionIt also excites millions of fans worldwide.Where does this passion for Porsche come from?Porsche represents values,dreams and apassion that brings people together across generations and continents.Whether its on theracetrack or at one of the many Porsche events around the globe,this real love for the brand is the force that unites the Porsche community.The solidarity and cohesion create a unique atmosphere.This feeling of being part of a global community makes Porsche some-thing truly extraordinary.How does Porsche actively promotethat?Its about the shared experience,especially when it comes to younger target groups.Its these special Porsche moments that leave a lasting impression and that people enjoy sharing,which is why we create experiences at every touchpoint with our brand.Whether its the first contact at one of our new Porsche Studios or during intensive driver training.Porsche Experience Centers(PECs)play a key role.The concept goes quite a long way back,doesnt it?Yes,the first driver training courses were offered in the 1950s.The Porsche motor-sport school was founded in 1974 and was linked to the first 911 Turbo.You had to learn how to master itturbo lag being a key topic there.Of course,things have changed a lot since then,and turbo lag is no longer a factor,thanks to the electric turbocharger of the new 911 Carrera GTS with its performance hybrid system.But the idea behind the PECs remains the same.To understand what a Porsche is really capable of,you have to push it to itslimits.What does the future of PECs looklike?In 2025,the 10th such experience center will open its doors in Toronto.The 11th is being built in Singapore.Every PEC is unique.Some are located at legendary racetracks,while others feature reproductions of famous corners or off-road tracks.What they all have in com-mon is that the experience extends far beyond just driving.Everyones welcome here,young or old.And you dont need to own a Porsche either.This openness is an integral part of the global Porsche communitys identity and it shapes our brand.This feeling of being part of a global community makes Porsche something truly extraordinary.Oliver Blume911 Carrera GTS(WLTP):Fuel consumption combined:11.0 10.5 l/100 km;CO emissions combined:251 239 g/km;CO class GMacan 4(WLTP):Electrical consumption combined:21.1 17.9 kWh/100 km;CO emissions combined:0 g/km;CO class:AMacan Turbo(WLTP):Electrical consumption combined:20.7 18.9 kWh/100 km;CO emissions combined:0 g/km;CO class:A320102Taycan Turbo S Celestial Jade:custom-made,all-electric sports car with special pigmented paint01 GROWTHThe identity of Porsche includes a commitment to value-driven and brand-appropriate growth.Sales figures alone are not a benchmark for us.Thats especially true at times like these when global challenges are onthe rise,making linear growth very difficult.At the same time,success increasingly requires a strong brand,which is why we will remain true to our tried-and-tested approach even in the future:to always produce one vehicle fewer than the market needs.Growth at any cost is not how we do things.Were much more interested in following the principle of“Value over Volume,”which means we focus on the value our vehicles contribute.If its high,all of the stakeholders benefit:theemployees,customers,and shareholders.02 LUXURYAt Porsche,the vehicle itself has always taken precedence.With its unmistakable design andextraordinary performance,it represents the epitome of luxury.That must and will always be our ideal.We will never lose sight of the iconic brand or the cultural legacy.Porsche also offers its customers unique experiences and an extraordinary community.Purchasing a Porsche automatically makes you a member of the Porsche family.“Its not what you buy,but what you buy into”thats how we define luxury.Customer engagement and support are impor-tant.Our aim is to fulfillor even exceedPorsche customers highest expectationseverywhere and at all times.That also applies to the brands attention to detail and the quality of the craftsmanship and materials.If this is your top priority,youll ultimately create a product with maximum appeal and quality.We invest in the futureGrowthLuxuryTaycan Turbo S(WLTP):Electrical consumption combined:20.5 17.9 kWh/100 km;CO emissions combined:0 g/km;CO class:A35030504Sonderwunsch program:Porsche enables personalizedone-offs05 PROFITABILITYIts part of Porsches DNA that were constantly tinkering and trying to squeeze out even more horse power.For us,being highly profitable is not an end in itself,but rather a fundamental component of our business model.Our aim is to inspire and surprise our customers again andagainwith innovations,groundbreaking new technologies,and exclusive experiences.The financial leeway necessary to do all that requires a high return,which is why its so important that Porsche maintains a financially robust position and does everything in its power to ensure it stays that way.03 RESPONSIBILITYPorsche is an exclusive brand,but doesnt exclude anyone.We view ourselves as a partner to society and allow others to share in our success.That,too,is a fundamental part of our selfimage as a luxury brand.Were involved in the community in a variety of ways.For example,we sponsor sports events and cultural activities and even support Brger-stiftung(Community Foundation)Stuttgarts“Supp_optimal”project.Employees and the members of the Executive Board help distrib-ute food to people in unstable living situations.It goes without saying that a responsible company needs to be involved in climate and environmental protection,which is why we promote the eFuel and direct air capture(DAC)technologies.eFuels are synthetic fuels that can potentially be manufactured entirely with renewable components and do not rely on fossil resources.DAC is a promising technology for capturing CO as a raw material for use in eFuels and plastics.Or even for removing CO from the atmosphere and binding it perma-nently.In other words,we should be able to operate petrol engines with virtually no carbon emissions in the future.04 INVESTMENTSPorsche uses its financial power on behalf of customers.We invest in other exclusive offers such as expanding our popular,high margin Sonderwunsch program.We also plan to expand additional luxury enablers like our Porsche Studios and our Porsche Experience Centers,which allow fans around the world to actively get to know our products firsthand.They offer demanding courses that allow you to try out your dream carand driver training with experienced instructors.Porsche Studios are retail locations where we engage with our customers in the center of larger cities.There,too,we offer immediate and highly emotional contact with the brand and our vehicles in an exclusive ambience.Even in challenging times,we are determinedto invest in our future,all the while adapting to changing conditions with a high degree of flexi-bility and courage.This allows us to strengthen our product portfolio,our innovative power,and ourproducts and services.Our investments today will be our profits tomorrow.Taycan Turbo S(WLTP):Electrical consumption combined:20.5 17.9 kWh/100 km;CO emissions combined:0 g/km;CO class:AResponsibilityInvestmentsProfitability37393938Taycan Turbo GT with Weissach package(WLTP):Electrical consumption combined:21.3 20.6 kWh/100 km,CO emissions combined:0 g/km,CO class:ATO OUR SHAREHOLDERS40 LETTER FROM THE EXECUTIVE BOARD41 MEMBERS OF THE EXECUTIVE BOARD60 PORSCHE IN THE CAPITAL MARKET63 REPORT OF THE SUPERVISORY BOARD71 MEMBERS OF THE SUPERVISORY BOARDAnnual and Sustainability ReportPorsche AGMAGAZINETO OUR SHAREHOLDERS Letter from the Executive Board Members of the Executive Board Porsche in the capital market Report of the Supervisory Board Members of the Supervisory BoardCORPORATE GOVERNANCE COMBINED MANAGEMENT REPORT NON-FINANCIAL STATEMENT(part of the Combined Management Report)CONSOLIDATED FINANCIAL STATEMENTSFURTHER INFORMATION40LETTER FROM THE EXECUTIVE BOARDDear Sir or Madam,Dear Friends of the Company,A strong brand stands by its values,especially in challenging times.For more than 75 years,we at Porsche have been building innovative sports cars to the highest standards of performance,design,and qualityto the exhilaration of millions of people around the world.This is what drives us.Every day,we work with devotion and a passion for detail,not to mention an outstanding team.These are the hallmarks of Porsche.We have held this courseeven when the sea has been rough and the waves have been talland we have remained true to ourselves during challenging times.The world was again beset by wars and conflict in 2024.Demand in China is changing on a structural level,and the transition of our industry to electric mobility is progressing more slowly than originally predicted a few years ago.We at Porsche have not been immune to the pressure that all this has brought.However,our business model has proved to be resilient and flexible.Despite the difficult conditions,Porsche is in a robust financial position and is highly profitable.We have successfully completed our year of product launchesthe greatest in our historyand accelerated the development of innovative products and services.The second,significantly more advanced generation of the all-electric Taycan is now on the market.Likewise,the Macan,our biggest seller for many years,has powered forth into the new era as a newly developed electric car.The new Panamera comes with hybrid drive systems that are significantly more powerful,in addition to many other highlights.And the new 911 continues to break new ground:for the first time ever,it isavailable with an exceptionally efficient performance hybrid drive system inspired by motorsport.These model changes and new launches were a Herculean effort and had a significant impact on Porsches year.We expected this from the outset.However,we are certain that our efforts have paid off.By comprehensively modernizing and rejuvenating our product portfolio,we have paved the way for success in the coming years.We are in a strong position to keep on exciting and inspir-ing our customers.Of the new vehicles delivered to customers in 2024,27per-cent were either all-electric or plug-in hybrids.Our product portfolio aims to significantly increase this proportion.The ramp-up of electrification depends largely on customer demand,the development of electromobility in the different regions of the world,and regulatory incentive schemes.For thetransition phase,we are positioning ourselves as flexi-blyaspossible with a mix of combustion-engined,plug-in hybrid andall-electric vehicles.The year 2025 will be challenging,too.The macroeconomic landscape remains strained,as does the geopolitical situation.The development of the US and Chinese markets continues to be plagued by uncertainty.This is compounded by supply shortages and continuously rising costs,especially on the supply side.We must ready ourselves to face these external factors and seize the opportunities that present themselves in spite of thechallenging conditions.Therefore,we are carefully exam-ining how to position our portfolio,taking the wishes of our customers into account at all times.We are also carrying out continuous in-depth analysis of our budgets and costs.In doing so,we will gain the scope to continue making significant investmentin innovation,digitalization and sustainability,thedevelopment of future products and services,and in brand and customer satisfaction.Our newly formed Executive Board team is pulling out all the stops and putting the pedal to the metal with this work.An excellent team,strong products,and a clever strategy:this has been the successful recipe that helped us claim numer-ous titles on the racetrack and thrill our fans around the globe in 2024.The year will go down in history as one of the most successful for Porsche Motorsport.The transformation of our industry is a special kind of endurance race,but we will qualify for the next stages using that same recipe again.And we will remain true to ourselves and our values while doing so.We are glad to have you at our side.With warmest regards,The Executive Board of Dr.Ing.h.c.F.Porsche AGBarbara Frenkel ProcurementLutz Meschke Deputy Chairman of the Executive Board,Finance and IT(until February 25,2025)Detlev von Platen Sales and Marketing(until February 25,2025)Jochen Breckner Finance and IT(not pictured)Matthias Becker Sales and Marketing (not pictured)Albrecht Reimold Production and LogisticsAndreas Haffner Human Resources and SocialAffairsMichael Steiner Research and DevelopmentSajjad Khan Car-ITOliver Blume Chairman of the Executive BoardMEMBERS OF THE EXECUTIVE BOARD911 Turbo 50 Years(WLTP):Fuel consumption combined:12.5 12.3 l/100 km,CO emissions combined:283 278 g/km;CO class GPictured individuals(from left to right):Albrecht Reimold,Andreas Haffner,Michael Steiner,Sajjad Khan,Oliver Blume,Barbara Frenkel,Lutz Meschke,Detlev von PlatenAnnual and Sustainability ReportPorsche AGMAGAZINETO OUR SHAREHOLDERS Letter from the Executive Board Members of the Executive Board Porsche in the capital market Report of the Supervisory Board Members of the Supervisory BoardCORPORATE GOVERNANCE COMBINED MANAGEMENT REPORT NON-FINANCIAL STATEMENT(part of the Combined Management Report)CONSOLIDATED FINANCIAL STATEMENTSFURTHER INFORMATION4342To our shareholders Members of the Executive Board4342To our shareholders Members of the Executive BoardHow would you characterize yourself?I am a team player,a sportsman,and a family manand some-one who always thinks in terms of opportunities.Who has inspired you the most?I count myself lucky to be able to meet so many great people in my life;people from lots of different fields,both professional and personal,with a wide range of backgrounds and points of view.Over the decades,I have been able to experience many different cultures and values and Ive personally learned a lot from them.This has shaped me and,still to this day,it never fails to inspireme.What characteristics must your department preserve intothefuture?I see the management team,including myself,in the role of a player-coach.We are responsible for overarching functions such as strategy,communication,quality,auditing,legal,and com-pliance,but also for our model lines.This requires the greatest flexibility.We are experts and generalists rolled into one,keep-ing one eye on the details and the other on the big picture.And where is there a need to go back to the drawing board?We constantly ask ourselves how and where we can improve.It is an integral part of our culture at Porscheas well as our work in management.The world is becoming more and more com-plex.Geopolitical tensions are rising.Frameworks,markets,and customer requirements are evolving rapidly.We must be able to react optimally in this environment.And better still:operate proactively.This is the reason why we made further updates to our Porsche strategy in 2024 and sharpened our focus on the four core subject areas:customer,products,sustainability,and transformation.It will chart a clear course for the future.Oliver BlumeChairman of the Executive BoardSelf-reflection and continuous improvement are a key element of our Porsche identity.Annual and Sustainability ReportPorsche AGMAGAZINETO OUR SHAREHOLDERS Letter from the Executive Board Members of the Executive Board Porsche in the capital market Report of the Supervisory Board Members of the Supervisory BoardCORPORATE GOVERNANCE COMBINED MANAGEMENT REPORT NON-FINANCIAL STATEMENT(part of the Combined Management Report)CONSOLIDATED FINANCIAL STATEMENTSFURTHER INFORMATION4544To our shareholders Members of the Executive Board4544To our shareholders Members of the Executive BoardHow would you characterize yourself?Someone with clear boundaries.Challenging and supportive.Iam always candid and I speak transparentlyto colleagues on all levels.Who has inspired you the most?My childhood idol:the soccer player Gnter Netzer.His tech-nique and understanding of the flow of the game were unrivaled.He was unorthodox.He was also able to just let some things pass.Nevertheless,he proved himself beyond a doubt and everyone followed his lead,both on and off the pitch.I met him in person a few years ago.I am pleased to say that he lived up to his reputation.What characteristics must your department preserve intothefuture?In the past,for the most part,Finance was only responsible for bookkeeping and strict cost management.Today,it is the com-panys strategic copilot.It is important to me that the depart-ment is not merely seen as an administrative database.It should be seen as an internal adviser and a confident driving force that helps to form strategic decisions.To other departments,it is an equal partner that helps implement projects,business models,and strategic initiatives.And where is there a need to go back to the drawing board?The world has become more complex and volatileand in turn less predictable.Disruptive events like pandemics,breaks in global supply chains,or geopolitical changes are happening more and more frequently.Thats why we have structured our processes to be significantly more flexible than in the past,especially with regard to planning and forecasting,as these play a key role in corporate governance.We even use new technol-ogy,such as AI,to do this.It provides unparalleled opportunities that we absolutely must seize.Lutz MeschkeDeputy Chairman of the Executive Board and Member of the Executive Board responsible for Finance and IT(until February 25,2025)We are an inter-nal adviser and a confident driving force that helps form strategic decisions.Annual and Sustainability ReportPorsche AGMAGAZINETO OUR SHAREHOLDERS Letter from the Executive Board Members of the Executive Board Porsche in the capital market Report of the Supervisory Board Members of the Supervisory BoardCORPORATE GOVERNANCE COMBINED MANAGEMENT REPORT NON-FINANCIAL STATEMENT(part of the Combined Management Report)CONSOLIDATED FINANCIAL STATEMENTSFURTHER INFORMATION4746To our shareholders Members of the Executive Board4746To our shareholders Members of the Executive BoardHow would you characterize yourself?I am a positive and optimistic person who never loses sight of opportunities,even in challenging situations.I am curious and very much enjoy working with new technology.Reliability and passion are incredibly important to me because I believe that Iam successful whenever I do something that is really close to my heart.Who has inspired you the most?I am inspired by people who excel and make their dreams come true despite adversity.It could be a handicapped athlete who wins an Olympic medal.Or Sally Ride,the first American female astronaut.She had to overcome a lot of obstacles to make her greatest dream come true.I like to be inspired by thrilling sto-riesat certain stages in life or in certain situations.What characteristics must your department preserve intothefuture?Resilience,especially personal resilience,is crucial.After all,we are constantly forced to deal with change and challenges to the point of crisis management.We also support suppliers in finan-cially strained situations.This requires not only professionalism,but also a strong sense of responsibility,in order to obtain the best outcome possible for the companies involved.And where is there a need to go back to the drawing board?The transformation of our industry requires us to modify our supply chains and,in some cases,restructure them to be even more resilient.It is important to recognize and utilize opportu-nities:attract new,innovative,and suitable suppliers,cultivate partnerships,formulate efficient contracts,and accelerate development processes.Barbara FrenkelMember of the Executive Board responsible for ProcurementIt is crucial to never lose sight of opportunities,even in challenging situations.Annual and Sustainability ReportPorsche AGMAGAZINETO OUR SHAREHOLDERS Letter from the Executive Board Members of the Executive Board Porsche in the capital market Report of the Supervisory Board Members of the Supervisory BoardCORPORATE GOVERNANCE COMBINED MANAGEMENT REPORT NON-FINANCIAL STATEMENT(part of the Combined Management Report)CONSOLIDATED FINANCIAL STATEMENTSFURTHER INFORMATION4948To our shareholders Members of the Executive Board4948To our shareholders Members of the Executive BoardHow would you characterize yourself?Inquisitive and empathetic.I love to immerse myself in new subject areas through podcasts,books,or even conversations with colleagues from a wide range of fields.It creates an unbe-lievably enriching variety of perspectives.Who has inspired you the most?I am most impressed by people who show some backbone.People who stand up for what they believe in.People like Albert Schweitzer,winner of the Nobel Peace Prize.Through his ethical commitment and humanitarian work as a doctor in Africa,he made an impact that can still be felt today.People who make the world a better place.I find the work of Alfred Herrhausen,the former Chairman of Deutsche Bank,similarly inspiring.His visionary advocacy for social responsibility to be more deeply anchored in business is more relevant than ever.Economic success and social commitment are inextricably linked.What characteristics must your department preserve intothefuture?I see strong cohesion in the day-to-day work of our department.We truly embrace the value of“Family”from our Porsche Code.We must preserve this team spirit.And where is there a need to go back to the drawing board?We should move away from old habits and,in particular,continue to systematically reduce the red tape.We must make greater use of new technology,such as artificial intelligence,inour projects and processes.This gives us more time to do ful-filling and productive things.We can make time for people.Andreas HaffnerMember of the Executive Board responsible for Human Resources and Social AffairsWe need empathy,especially in the age of artificial intelli-gence and digita-lization.To be able to think and act as a team.That makes us unbeatable.Annual and Sustainability ReportPorsche AGMAGAZINETO OUR SHAREHOLDERS Letter from the Executive Board Members of the Executive Board Porsche in the capital market Report of the Supervisory Board Members of the Supervisory BoardCORPORATE GOVERNANCE COMBINED MANAGEMENT REPORT NON-FINANCIAL STATEMENT(part of the Combined Management Report)CONSOLIDATED FINANCIAL STATEMENTSFURTHER INFORMATION5150To our shareholders Members of the Executive Board5150To our shareholders Members of the Executive BoardHow would you characterize yourself?I see technology as a transformative force and turn innovations into real solutions for our customers.My approach is vision based,yet also strongly aligned with the Porsche experi-ence.Close collaboration with fellow experts is of particular importance to me.This is the only way to overcome complex challenges.My goal is to shape the digital future of Porsche and,in so doing,preserve the unique identity of the brand.Who has inspired you the most?Konrad Adenauers ability to set clear goals in a time of upheaval and then work to accomplish them with equal amounts of vision and pragmatism was inspiring.In particular,I was struck by his confidence in Germanys capacity to flourish again and become an economically strong country,even after such difficult times.Adenauer had the courage to move in new directions without straying from his countrys values.This quality is just as relevant today,especially in an industry that is currently reinventing itself.What characteristics must your department preserve intothefuture?Software development at Porsche should remain focused on maximum creativity,functionality,and customer centricity in the future.Not unlike a well-balanced meal,it is all down to the optimal integration of digital technology.To date,no one has created a car quite like the Porsche 911.Our task is to take this icon into the future with innovative software.The crucial part remains finding the perfect harmony between the software and all the other components of the car.And where is there a need to go back to the drawing board?You need the right mindset to develop a software-defined vehicle:software must be part of the development process from the outset.Thats why we are transitioning to a software-first approach,supported by flexible working models like the“liquid organization.”This enables teams to collaborate in an agile man-ner across departments and respond to changes in the market with greater speed.In this context,it is important to actively involve employees in order to drive this cultural change.Sajjad KhanMember of the Executive Board responsible for Car-ITWe all must work together to shape the digital future of Porsche.Together and on a par with experts from all fields.Annual and Sustainability ReportPorsche AGMAGAZINETO OUR SHAREHOLDERS Letter from the Executive Board Members of the Executive Board Porsche in the capital market Report of the Supervisory Board Members of the Supervisory BoardCORPORATE GOVERNANCE COMBINED MANAGEMENT REPORT NON-FINANCIAL STATEMENT(part of the Combined Management Report)CONSOLIDATED FINANCIAL STATEMENTSFURTHER INFORMATION5352To our shareholders Members of the Executive Board5352To our shareholders Members of the Executive BoardHow would you characterize yourself?As open-minded and cosmopolitanif only because of my international background.I value different perspectives,listen,and am able to put myself in the shoes of the person I am talking to.I am a pragmatic team player and am always focused.I like to think Im always two or three steps ahead.I love a chal-lenge and new things,and I never want to remain static.There isonly one of me,by which I mean that I am authentic.And I never lose my sense of humor.Who has inspired you the most?I am not thinking about one person in particular.Instead,I think that motorsport is a great example for me of the right mindset.I can feel that irrepressible joy of always wanting to compete against the best:with lots of pioneering spirit,even more passion,and yet stilldespite any successalways a degree ofhumility.What characteristics must your department preserve intothefuture?To be open,to listen,and to learn from others.To stride forwards with courage,remain positive,and never give up.We must learn the right lessons from defeats and share success stories with others.Even in challenging times,our dreams inspire us to continue on our pathas a promise of an extraordinary brand and product experience.And where is there a need to go back to the drawing board?Whenever there is change,it is clear that the customer will always remain the top priority,even in the future.Otherwise,there are no barriers to our thinking.Barriers dont suit my personality.Change is happening at an increasing pace and AI-based tools are becoming ever more important to us,as they are in all areas of the company.Customers should be able to come into contact with the Porsche brand anytime and anywhere.Online offerings and the physical world of Porsche transition seamlessly into one another,but I see a lot of scope for innovation here.Detlev von PlatenMember of the Executive Board responsible for Sales and Marketing(until February 25,2025)The need to excite customers is what drives us mostwithan extraordinary product and brand experience that gets their pulses racing.Annual and Sustainability ReportPorsche AGMAGAZINETO OUR SHAREHOLDERS Letter from the Executive Board Members of the Executive Board Porsche in the capital market Report of the Supervisory Board Members of the Supervisory BoardCORPORATE GOVERNANCE COMBINED MANAGEMENT REPORT NON-FINANCIAL STATEMENT(part of the Combined Management Report)CONSOLIDATED FINANCIAL STATEMENTSFURTHER INFORMATION5554To our shareholders Members of the Executive Board5554To our shareholders Members of the Executive BoardHow would you characterize yourself?I would describe myself as setting clear targets,leading the team by example with my own attitude,and showing apprecia-tion.As I always say,“You have to be in love with success.”This positive attitude brings success both individually and to the entire team,professionally as well as personally.Who has inspired you the most?I have been inspired by the American athlete Dick Fosbury.He revolutionized high jumping with the“Fosbury flop,”a technique consisting of a backwards flop.His style was initially met with ridicule,but is now standard practice in the high jump event.I have retained this principle of taking new approaches and uti-lizing innovations throughout my professional career.Even after decades in automobile manufacturing,the phrase“Weve always done it that way”has never entered my vocabulary.I enjoy trying new things with my team.What characteristics must your department preserve intothefuture?Constant self-scrutiny has always been a hallmark of Porsche production.A good example of when we demonstrated this was when we started manufacturing the Taycan,when we built a factory within a factory in Zuffenhausen.Despite the limited space,we managed to build a cutting-edge facility in no time.We must preserve this attribute as we head into the future,in order to realize the dreams of our customers through innova-tions.The important thing is that this can only be done through close collaboration with other departments such as Technical Development,Sales,and Procurement.And where is there a need to go back to the drawing board?Our industry is currently undergoing the greatest transforma-tion in its historyin terms of electric mobility,software and connectivity,but also production.We must forge ahead with the fully networked smart factory,both through the use of cloud solutions and AI as well as with regard to production processes.In the future,it will offer tremendous potential to head in new directions.To me,personally,it is extremely important that sustainability plays a key role in all innovations.Long-term entrepreneurial success can only be achieved through sustain-able productionliterally.Albrecht ReimoldMember of the Executive Board responsible for Production and LogisticsSetting clear targets,leading the team by example with my own approach,and showing appreciation.Annual and Sustainability ReportPorsche AGMAGAZINETO OUR SHAREHOLDERS Letter from the Executive Board Members of the Executive Board Porsche in the capital market Report of the Supervisory Board Members of the Supervisory BoardCORPORATE GOVERNANCE COMBINED MANAGEMENT REPORT NON-FINANCIAL STATEMENT(part of the Combined Management Report)CONSOLIDATED FINANCIAL STATEMENTSFURTHER INFORMATION5756To our shareholders Members of the Executive Board5756To our shareholders Members of the Executive BoardHow would you characterize yourself?I work with passion and a clear focus on the future and devel-opment of Porsche.I think it is important to push forwards with technical innovations without losing sight of the essence and tradition of the brand.I value precision and attention to detail,especially when it comes to realizing complex concepts in exclusive sports cars.I am driven by the challenge of combin-ing the tried and tested with the new,and leading Porsche into amore sustainable future.Who has inspired you the most?Wilhelm Conrad Rntgen inspired me with his curiosity and application of theoretical models from nature.His X-rays made the invisible visible through experimental evidence.His approach really motivates me to understand complex tech-nology and topics on a daily basis.This understanding is the foundation of the creativity that we need in order to develop innovations.What characteristics must your department preserve intothefuture?At Porsche,Technical Development must preserve its pioneering spirit and culture of innovation.One of our greatest strengths atthe Weissach Development Center is the outstanding effi-ciency of our vehicle development and the skill of our engineers.Our goal is still to build the sportiest car in every segment.A Porsche is a marriage of driving pleasure,performance,and effi-ciency and gets better with every generation.This means that in the future,we will meet the changing requirements over the course of our transformation and remain true to our DNA.And where is there a need to go back to the drawing board?The pace of innovation in the software sector is increasing all the time.We therefore have to adapt our development pro-cesses and shorten development times.Cost efficiencies and the utilization of synergies remains crucial.Strategic partner-ships help us focus on the essentials while increasing internal value creation in central areas.At the same time,data-driven development is indispensable for making the increasing com-plexity manageable.Michael SteinerMember of the Executive Board responsible for Research and DevelopmentAn understanding of complex tech-nology paves the way for creativity and innovation.Annual and Sustainability ReportPorsche AGMAGAZINETO OUR SHAREHOLDERS Letter from the Executive Board Members of the Executive Board Porsche in the capital market Report of the Supervisory Board Members of the Supervisory BoardCORPORATE GOVERNANCE COMBINED MANAGEMENT REPORT NON-FINANCIAL STATEMENT(part of the Combined Management Report)CONSOLIDATED FINANCIAL STATEMENTSFURTHER INFORMATION5958To our shareholders Members of the Executive Board5958To our shareholders Members of the Executive BoardHow would you characterize yourself?I am athletic,genuine,and open-minded with a lot of heart and passion.Structured but also creative.My family and friends matter a lot to me,and I value loyalty highly.Teamwork is a key aspect,as I strongly believe that we can accomplish more when we work together.Who has inspired you the most?As a teenager and as a student,I was very much into athletics.At the time,Carl Lewis was the dominant sprinter and long jumper of his era with nine Olympic gold medals and he was named world athlete of the century in 1999.Lewis was later dethroned as the fastest sprinter in the world by Usain Bolt.I like the way in which both men succeeded they had a sporty,relaxed attitude combined with a clear focus on their goals.The great personal motivation and passion of both men,driven by the will to push boundaries,have shown that you can achieve a lot whenyou believe in your dreams and do your utmost to realize them.“Follow Your Dreams”How would you characterize yourself?I am level-headed and deliberate,down to earth and economical,but not miserly quintessentially Swabian,both at work and at home with my family.Apolitical and always interested in the matter at hand and the best solution.Putting my heart and soul into representing the business conscience of the company has always been important to me in a variety of roles and it still is.Who has inspired you the most?I have always been fascinated by jazz musicians,how theyplay together,improvise,and dare to try something new on the spur of the moment,all while being able to rely on each other.And by how something that might seem chaotic at first ultimately becomes something great.That is art in its truest sense.Apply-ing this notion to a professional environment,I am fascinated when people improvise,react appropriately,remain flexible,and keep on finding new solutions,even if the situation seems challenging at first glance.Jazz musicians can teach you to establish structures quickly even in supposedly chaotic and dynamic situations.Resume1970 Born in Braunschweig1990 Studied mechanical engineering at the Technical University of Braunschweig 1993 Internship,Volkswagen de Mxico,Puebla 1996 International trainee program,AUDI AG,Ingolstadt1997 Product Marketing,Audi UK,Milton Keynes1998 Sales Manager(Scandinavia,France,UK),Audi Sales Europe2006 Head of Sales in a joint venture with FAW-VW,Audi China,Changchun2009 Head of Marketing,Volkswagen Germany,Wolfsburg2013 Head of Sales Asia and Overseas,incl.China,koda Auto,Mlada Boleslav2015 Head of Sales,Overseas and Emerging Markets Porsche AG,Stuttgart2025 Member of the Executive Board responsible for Sales and Marketing at Porsche AGResume 1977 Born in Stuttgart1997 Studied business administration at the University of Stuttgart2000 Joined Porsche as an intern in Controlling2004 Controller of subsidiaries2008 Assistant to the Chairman of the Executive Board2010 Head of Subsidiary Controlling 2012 Head of Product Controlling2017 Head of Controlling2018 Head of General Secretary and Corporate Development2025 Member of the Executive Board responsible for Finance and IT at Porsche AGJochen BrecknerMember of the Executive Board responsible for Finance and IT (since February 26,2025)Changes to the Executive Board at Porsche:Jochen Breckner has assumed responsibility for Finance and IT,and Matthias Becker is now in charge of Sales and Marketing.They succeed Lutz Meschke and Detlev von Platen,who left the company by mutual agreement.Matthias BeckerMember of the Executive Board responsible for Sales and Marketing (since February 26,2025)Annual and Sustainability ReportPorsche AGMAGAZINETO OUR SHAREHOLDERS Letter from the Executive Board Members of the Executive Board Porsche in the capital market Report of the Supervisory Board Members of the Supervisory BoardCORPORATE GOVERNANCE COMBINED MANAGEMENT REPORT NON-FINANCIAL STATEMENT(part of the Combined Management Report)CONSOLIDATED FINANCIAL STATEMENTSFURTHER INFORMATION6160To our shareholders Porsche in the capital marketPORSCHE IN THE CAPITAL MARKETSTOCK PRICE AND OVERALL MARKETThe most important stock indices,such as the German stock index DAX,the European EURO STOXX 50,and the global MSCI World Index,continued their trend upwards in the reporting period,building on strong performances in the previous year.Inflation fell significantly over the course of the year,which prompted leading central banks to announce their first interest rate cuts in 2024.The European Central Bank(ECB)brought an end to its restrictive monetary policies with an initial interest rate cut in June,followed by three more in September,October,and December.The American Federal Reserve followed suit and lowered its interest rate in September,November,and Decem-ber.This created a palpable tailwind for global stock markets,which,with regard to the STOXX Europe 600,benefited companies in the banking,insurance,telecommunications,and media sectors in particular.Negative factors,such as the con-frontations in the Middle East and the ongoing Russia-Ukraine conflict,had at best a short-term negative impact on the performance of the stock markets and investors,for the most part,tuned out.The DAX grew by a significant 18.8%in 2024,rising above 20,000 points for the first time during trading hours on Decem-ber 3.The MSCI World Index also performed well with growth of 17.0%.On the other hand,the STOXX Europe 600 Automobiles&Parts(SXAP)and S&P Global Luxury indicesboth of which are of relevance to Porschefell by 12.2%and 2.5%respec-tively.Following a strong start to 2024,Porsches preferred shares were unable to maintain their upward momentum.The sluggish rollout of electric mobility in Europe,high regulatory hurdles,and slowing demand for luxury goods,especially in China,created considerable headwinds over the course of the year.At the same time,the comprehensive modernization of four out of six series in the model range,which involved corresponding investments and costs,led to a decrease in the return on sales.The peak price of Porsches preferred shares was 95.24 on April 11,2024,compared to the lowest price of 57.22 on November 21,2024.The year-end price of 58.42 corresponds to market capitalization of around 53.2 billion.In 2024,the average daily trading volume of Porsche preferred shares was around 99 million.Stock price development in 2024Index 100January01,2024 June15,2024 December 21,2024Porsche AGSXAPDAXS&P Global Luxury13012011010090807060DIVIDENDSThe Executive Board and Supervisory Board of Porsche AG are going to propose a dividend of 2.30 per ordinary share and 2.31 per preferred share to the Annual General Meeting,which is set to take place on May 21,2025.In this case,a total of 2.1 billion will be distributed to shareholders,subject to the approval of the shareholders.For notes on Porsches sustainable dividend strategy,please refer to the condensed version of the Porsche AG HGB financial statements.Porsche AG HGB financial statements(condensed version)20242023Stock pricesYear-end price158.4279.90Year high195.24120.35Year low157.2279.90Key stock indicatorsEarnings per ordinary share3.945.66Earnings per preferred share3.955.67Total number of sharesShares911,000,000911,000,000Market capitalization(Dec.31)billion53.272.8Average daily trading volume million99.069.0DividendDividend per ordinary share2.3022.30Dividend per preferred share2.3122.31Amount paid out billion2.122.1Payout ratioX.4240.71 Each share price is the closing price on Xetra at the Frankfurt Stock Exchange.2 Proposal for the Annual General Meeting by the Executive Board and Supervisory Board.SHARE CAPITAL AND SHAREHOLDER COMPOSITIONThe subscribed capital of Porsche AG,in the form of no-par bearer shares,consists of a total of 911 million shares,of which 455.5 million are unlisted ordinary shares and 455.5 million are listed nonvoting preferred shares.Each share has a theoretical interest in the share capital of 1.Consequently,this amounts to 911 million.The interest of Volkswagen AG,which indirectly holds 75.0%minus one of the ordinary shares through Porsche Holding Stuttgart GmbH,remained unchanged in the reporting year,as did the interest of Porsche Automobil Holding SE,which indirectly holds 25.0%plus one of the ordinary shares.Of the nonvoting preferred shares,around 75.8%is indirectly held by Volkswagen AG via Porsche Holding Stuttgart GmbH,and around 24.2%is in free float(as of December 31,2024).Shareholder composition as of December 31,2024(as a percentage of share capital)12.1%Institutional and private investors12.5%Porsche AutomobilHolding SE75.4%Volkswagen AG120241 Volkswagen AG indirectly holds its shares via Porsche Holding Stuttgart GmbH.Annual and Sustainability ReportPorsche AGMAGAZINETO OUR SHAREHOLDERS Letter from the Executive Board Members of the Executive Board Porsche in the capital market Report of the Supervisory Board Members of the Supervisory BoardCORPORATE GOVERNANCE COMBINED MANAGEMENT REPORT NON-FINANCIAL STATEMENT(part of the Combined Management Report)CONSOLIDATED FINANCIAL STATEMENTSFURTHER INFORMATION6362To our shareholders Report of the Supervisory BoardANNUAL GENERAL MEETINGThe Annual General Meeting 2024 was held on June 7,2024.Held virtually for the first time,it was attended by around 2,000shareholders,shareholder representatives,and media representatives.One hundred percent of the voting capital was represented.The shareholders approved all proposed resolutions unanimously.In particular,the items on the agenda included the distribution of a dividend of 2.30 per qualifying ordinary share and 2.31 per qualifying preferred share as well as the official approval of the actions of the members of the Executive Board and Supervisory Board.Furthermore,the share-holders approved the system of remuneration for the members of the Executive Board and the remuneration report.They also accepted the proposals of the Supervisory Board concerning the necessary Supervisory Board elections and the appointment of the auditor of the annual and consolidated financial statements.DIALOG WITH THE CAPITAL MARKETThe Executive Board of Porsche AG and members of the Investor Relations department maintained a constant,trusting dialog with investors and analysts in the reporting period.They joined national and international market players in a number of discus-sions and explained the business model of the company as well as its current development and outlook.The dialog took place by phone,on videoconferencing platforms,and in person either in Zuffenhausen or on the premises of the institutional investors themselves.After the publication of each set of current figures,the Executive Board of Porsche AG was involved in direct dialog with the most important investors at road shows in New York,London,Atlanta,Shanghai,and Frankfurt.Additionally,numer-ous other road shows and a series of interviews with analysts and investors were held at the headquarters of Porsche AG in Stuttgart-Zuffenhausen,at Porsche Experience Centers,and at the home of Porsche Exclusive Manufaktur.Likewise,inter-national events were an opportunity to hold workshops with analysts and investors,including the dealer launch of the Macan in Singapore,the“Icons of Porsche”event in Dubai,and a special“Product Day”,held by Porsche at Silverstone,in the UK.These focused on both new products and new technology,as well as Porsches business in overseas and growth markets and its individualization strategy.NOTIFICATION OF DIRECTORS DEALINGS IN ACCORDANCE WITH ARTICLE 19 OF THE MARKETABUSEREGULATION(MAR)NameFunctionType of transactionAggregatedvolume in Price in DateDr.Wolfgang PorscheSupervisory BoardPurchase27,920.00 69.80 Jun.13,2024Dr.Wolfgang PorscheSupervisory BoardPurchase30,104.80 68.42 Aug.2,2024Dr.Wolfgang PorscheSupervisory BoardPurchase13,456.00 67.28 Aug.5,2024Dr.Wolfgang PorscheSupervisory BoardPurchase19,494.00 64.98 Sep.10,2024REPORT OF THE SUPERVISORY BOARDOF DR.ING.H.C.F.PORSCHE AKTIENGESELLSCHAFT(PURSUANT TO SECTION 171,PARAGRAPH 2,OFGERMANYS STOCK CORPORATION ACT(AKTG)Dear Sir or Madam,Dear Friends of the Company,The 2024 financial year was shaped by major geopolitical tension,increasing macroeconomic uncertainty,andfor uspoor market developments in our key Chinese market.Simultaneously,there was a continuation of the deep changes within the global automotive industry that have been caused by ongoing advances toward sustainable mobility.Recently,though,there has been a noticeable slowdown in this process in Europe and Germany in particular.Innovative power,boldness,and passion are crucial driving forces for our day-to-day actions,especially in times of massive challenges that demand a lot of us all.That is something we must not forget,and we would be well advised to reflect on our strengths.Such contemplation is essential in order for us to offer PorscheAGs customers unique driving experiences and build them sports cars that inspire.We remain on our trajectory and are delivering on our core promise of always making our customers wishes our focus,even in times of transformation.Dear shareholders,renewal was a key theme in the PorscheAG product portfolio in 2024.Four out of six model ranges were overhauled extensively as part of the largest model offensive in our companys history.As a result,we are offering our custom-ers the youngest product portfolio seen in years.We have put exciting vehicles on the market in the form of the newly devel-oped,all-electric Porsche Macan and the second-generation all-electric Porsche Taycan.The Porsche911 sets new standards with an efficient performance hybrid drive system inspired by motorsport.On top of that,PorscheAG released an exclusive anniversary model of its iconic Porsche911 Turbo sports car to celebrate its 50th year.The 911 Turbo 50Years keeps with the original mythology of the 911,featuring a fascinating symbiosis of outstanding performance and exclusive design elements.The uncompromising Porsche911 GT3 sports car also celebrated its anniversary last year.For 25 years,it has stunned people as a motorsport icon both on the track and on the road.Mean-while,the third-generation Porsche Panamera has redefined the luxury sedan segment,combining smooth driving comfort with the attributes of a Porsche sports car.With our offensive,we are meeting our customers expectations of an incomparable drivingexperience while also keeping an eye on that special extra at alltimes.Motorsport continues to have a significant role in the companys identity,and PorscheAG had the privilege of celebrating impres-sive successes on the racetrack in 2024.Among the standouts were the two world drivers championships,claimed by Pascal Wehrlein,who was victorious in the ABB FIA Formula E World Championship with the Porsche99X Electric Gen 3,and the trio of Kvin Estre,Andr Lotterer,and Laurens Vanthoor,who won the World Endurance Championship with the Porsche963 hybrid prototype.In the US,Porsche Penske Motorsport had another strong season.The works team claimed seven out of eight possible titles in the IMSA WeatherTech SportsCar Championship and FIA World Endurance Championship with the Porsche963.A 20th overall victory in 24Hours of Le Mans was,however,not entirely on the cards after ultimately falling 37seconds short of an anniversary victory.The 2025 financial year ahead of us will be a challenging one and demand a great deal of us.The developments in the global sales markets are dynamic,and the general conditionsespe-cially as they pertain to the automotive industryare changing rapidly and structurally.To us,this is an incentive to be better.However,we will need to make difficult decisions,too,and carry out the necessary changes with consistency.Our enhanced 2030 Plus corporate strategy charts the course for this and will guide us through these challenging times.Porsche has a unique identity.We are an unmistakable brand which connects tradition with innovation,quality,and outstanding driving experiences.That is a promise to not only our customers,but also to you,our shareholders.911 Turbo 50 Years(WLTP):Fuel consumption combined:12.5 12.3 l/100 km;CO emissions combined:283 278 g/km;CO class:G911 GT3(WLTP):Fuel consumption combined:13.8 13.7 l/100 km;CO emissions combined:312310 g/km;CO class:GAnnual and Sustainability ReportPorsche AGMAGAZINETO OUR SHAREHOLDERS Letter from the Executive Board Members of the Executive Board Porsche in the capital market Report of the Supervisory Board Members of the Supervisory BoardCORPORATE GOVERNANCE COMBINED MANAGEMENT REPORT NON-FINANCIAL STATEMENT(part of the Combined Management Report)CONSOLIDATED FINANCIAL STATEMENTSFURTHER INFORMATION6564To our shareholders Report of the Supervisory BoardMETHODS OF THE SUPERVISORY BOARD AND MEETING ARRANGEMENTS OverviewIn the 2024 financial year,the Supervisory Board performed the tasks and duties incumbent on it under the law,the Articles of Association,and the Rules of Procedure,and focused closely on the position and prospects of Dr.Ing.h.c.F.Porsche AG(“Porsche AG”).While doing so,the Supervisory Board moni-tored the Executive Board as it conducted business and advised it regularly on all key matters,and also with regard to the recommendations and requirements of the German Corporate Governance Code.The Chairman of the Supervisory Board was in close,trusting,and regular contact with the Executive Board,especially the Chairman of the Executive Board,where they discussed matters of strategy,planning,and business development.Without delay,the Chairman of the Executive Board notified the Chairman of the Supervisory Board of significant events of relevance to the assessment of the companys position and development,as well as to the running of the company,and the Chairman of the Supervisory Board,like the board as a whole,was heavily involved in the strategic considerations and decision-making processes of the Executive Board.The report by the Chairman of the Executive Board was supported by regular reports from the members of the Executive Board responsible for Finance and Sales,as well as ad hoc reports from other portfolio holders.The Supervisory Board dedicated considerable time to the reports of the Executive Board.Due to the regular reporting by the Executive Board,the Super-visory Board was informed in full,promptly,and transparently at all times,both verbally and in writing.The necessary documents were made available in full to the members of the Supervisory Board and the relevant committees in good time.Key topics discussed,including at the plenary meetings,included the development of business,strategic matters,business planning,including financial,investment,and human resource planning;and matters relating to profitabil-ityon a Group level and for key subsidiaries.In particular,the subsidiaries that were reported on intensively included Porsche Financial Services GmbH,Porsche Consulting GmbH,Porsche Engineering Group GmbH,Porsche Lifestyle GmbH&Co.KG,MHP Management und IT-Beratung GmbH(MHP),and Porsche Werkzeugbau GmbH.This enabled the Supervisory Board to paint a complete picture.Aside from the regular reports,the Executive Board submitted regular,timely,and comprehensive reports to the Supervisory Board on all material aspects of relevance to the company and transactions requiring approval.This made it possible to address individual topics specifically,such as the progress of individual vehicle projects.Reports were regularly received from the Supervisory Boards committees at the plenary meetings.Thanks to the intensive and diligent preparation for individual issues within the relevant committees,decisions were able to be made efficiently and on a considered basis at the plenary meetings.Additionally,the representatives of shareholders and employees normally met for separate advance discussions in the run-up to Supervisory Board meetings.Although the members of the Executive Board participated in meetings of the Supervisory Board and its committees,the Supervisory Board and committees frequently met without the Executive Board too.Disclosure of Plenary Meeting Attendance by Individual and Overview of Meeting FormatThe Supervisory Board met in full six times in the financial year.Circular resolutions outside regular meetings were not passed.Overall,the attendance rate at Supervisory Board(plenary)meetings in 2024 was 94%.Compared with the previous year,the attendance rate at the plenary meetings fell slightly.1 The attendance of each Supervisory Board member at the plenary board meetings in the 2024 financial year can be viewed in the table below.1 One reason for this is that Supervisory Board members who had a potential con-flict of interest on certain issues opted out of attendance at relevant meetings as a precaution.Notes on the response to conflicts of interest generally and background information about specific instances can be found in the“Conflicts of Interest and How They Are Handled”section.Meeting AttendanceAttendance in%Full Supervisory BoardDr.Wolfgang Porsche(Chairman)6/6100%Jordana Vogiatzi(Deputy Chairman)6/6100%Dr.Arno Antlitz5/683%Dr.Christian Dahlheim5/683%Micaela le Divelec Lemmi6/6100%Melissa Di Donato Roos5/683%Dr.Hans Michel Pich5/683%Hans Dieter Ptsch3/650%Dr.Ferdinand Oliver Porsche5/683%Dr.Hans Peter Schtzinger6/6100%Hauke Stars6/6100%Ibrahim Aslan1 2/2100%Harald Buck6/6100%Wolfgang von Dhren12/2100%Martina Holzbauer2 4/4100%Akan Isik6/6100%Nora Leser12/2100%Knut Lofski5/683%Steffen Reiig24/4100%Meeting AttendanceAttendance in%Vera Schalwig6/6100%Stefan Schaumburg12/2100%Conny Schnhardt24/4100rsten Schumacher6/6100%Heidi Zink-Larson24/4100%1 Departed with effect from June 7,2024.2 Member of the Supervisory Board since June 7,2024.All meetings of the full Supervisory Board were held in person in the 2024 financial year.Within the committees,occasional resolutions on urgent topics were passed at hybrid meetings or by videoconference.The flexibility of such(hybrid)meeting for-mats has proved itself in exceptional,well-founded situations.Consequently,these formats will continue to be an option in the next financial year for making the business of the Supervisory Board as efficient as possible and avoiding travel time in situa-tions with issues of particularly short notice.Details about the format of the plenary meetings and of the boards committees can be viewed in the table below:BoardNumber of meetingsOf which in person1Of which by videoconfer-ence/tele-conferenceFull Supervisory Board660Presidential Committee642Audit Committee440Nomination Committee101Mediation Committee000Related Party Committee0001 For meetings held in person,all members of the Supervisory Board are generally invited to attend them on-site.However,it is also possible to attend an in-per-son meeting via videoconference.If,due to exceptional circumstances,a member of the Super-visory Board or a committee was unable to attend a meeting for reasons other than a potential conflict of interest,they were able to familiarize themselves with the items on the meetings agenda with the preparatory documents.In this case,they cast their vote in writing to participate in resolutions.As in previous years,digital documents ensured that meeting preparations and procedures were efficient.The members who cast their vote in writing to participate in resolutions in exceptional,well-founded situations during the reporting period were Dr.Christian Dahlheim,Dr.Ferdinand Oliver Porsche,Hans Dieter Ptsch,andKnut Lofski,who were unable to attend certain meetings.Training and Professional Development As a rule,the members of the Supervisory Board completed the necessary training and development courses for their duties on their own responsibility,with reasonable support from the com-pany.In particular,the company assists with the organization of seminars.Moreover,the company offers specific training and pro-fessional development formats for the entire Supervisory Board.The first Supervisory Board training session in the 2024 financial year took place in mid-May,the day before the Supervisory Board meeting at the production location in Leipzig.This session was the first of a series of training sessions on the subject of sustainability and involved the Porsche Sustainability Council and Executive Board.It had brief,summary presentations where the Sustainability Council addressed issues that are material to PorscheAG,such as ESG management,decarbonization,and sustainability in the supply chain.On the day before the companys Annual General Meeting on June 7,2024,which was held as a virtual meeting for the first time,comprehensive training was provided on the rights and duties of the Annual General Meeting,as well as the current legal framework for a virtual Annual General Meeting.In late October 2024,the first training session of its kind was held across companies on the topic of corruption prevention and bribery.To leverage synergy,six companies joined together for it and developed and real-ized a purely virtual and audience-specific training format for almost 100members of various supervisory boards in multiple languages.On December 5,2024,the concept of a Super-visory Board training day was used again to hold the second part of the ESG training series.Information was provided about the Supervisory Boards ESG obligations,especially in view of CSRD sustainability reporting,in an interactive training session lasting multiple hours.Moreover,the Supervisory Board also addressed the topic of efficiency in its working methods on this day.A biennial feedback option based on a digital questionnaire was introduced to complement the comprehensive self-as-sessment,and it was able to be used to evaluate,for example,new report and training formats as well as the onboarding of new Supervisory Board members.More information about the performance of the“efficiency check”and the evaluation of the results is available in the Corporate Governance Declaration at https:/ training was provided with the assistance of internal and external experts.Beyond purely legal matters,training also focused on subject areas relating to products and technology.Part of the Super-visory Board meeting in Leipzig included,for example,test-drives of the all-electric Macan,which gave the committee the opportunity to familiarize itself with the technical and driving characteristics.Furthermore,an extensive report on the topic of product and technological expertise was compiled in the 2024 financial year,and it is planned to be a regular format in the future,too.As part of the design presentation,future vehicle models were also shown to the members of the Supervisory Board in detail.Annual and Sustainability ReportPorsche AGMAGAZINETO OUR SHAREHOLDERS Letter from the Executive Board Members of the Executive Board Porsche in the capital market Report of the Supervisory Board Members of the Supervisory BoardCORPORATE GOVERNANCE COMBINED MANAGEMENT REPORT NON-FINANCIAL STATEMENT(part of the Combined Management Report)CONSOLIDATED FINANCIAL STATEMENTSFURTHER INFORMATION6766To our shareholders Report of the Supervisory BoardTo provide the individual members of the Supervisory Board and board as a whole with a comprehensive offering of education and training,the Supervisory Board consults internal and external experts throughout the year to identify suitable topics for the Supervisory Board training day as well as other training courses and presentations.Additionally,the Supervisory Board pursues continuous learning independently,at and outside meetings,to obtain information and knowledge about current issues.Onboarding of New Supervisory Board Members Aside from the aforementioned training formats,a comprehen-sive onboarding program is available to new members of the Supervisory Board,for example,to give them the opportunity to meet the members of the Executive Board and managers to discuss general and current topics,and in doing so develop an understanding of matters relevant to the company and its governance structure.Extensive information material will also be provided to new members of the Supervisory Board to assist them with their Supervisory Board activities.During the 2024 financial year,the Supervisory Board of PorscheAG welcomed four new additions to its members(more about this in the“Personnel Changes on the Supervisory Board and Executive Board”section).To prepare for their roles as Supervisory Board members,detailed onboarding talks were held with each individual member.The Supervisory Boards office provided extensive support for all administrative matters.MAIN FOCAL POINTS OF THE PLENARY MEETINGSAt all of its meetings in the reporting period,the Supervisory Board delved deeply into the core matters of the company and the economic situation of Porsche AG and of its key subsidiaries.The meetings of the Supervisory Board were characterized by frank and constructive exchange at all times.The first Supervisory Board meeting during the reporting period was held on February28,2024,and focused in particular on issues surrounding the annual financial statements for 2023.The audit and formal approval of the consolidated and annual financial statements for the 2023 financial year,the combined management report,including the nonfinancial report,and the dependent company report pursuant to section 312 of the AktG,for example,were discussed as part of this.Alongside that,the Supervisory Board passed a resolution to prepare the remuneration report for the 2023 financial year jointly with the Executive Board and adopt the proposed resolutions for the agenda items at the Annual General Meeting,which took place on June 7,2024.Moreover,the Supervisory Board dealt with the strategic development of MHP internationally.The second Supervisory Board meeting of the year was held on May15 and 16,2024.In light of the launch of the all-electric Macan,the Supervisory Board opted to have the meeting at the Leipzig production location.Besides the standard situa-tion reports from the Executive Board on business,sales,and finances,as well as standard reports from the committees,the Executive Board members responsible for Development and Car-IT reported extensively on technical topics.In addition to the report on the sales situation,the Chinese sales market was dis-cussed as a topic in detail.Finally,the Supervisory Board looked at multiple financial and corporate matters involving,among other things,investments in strategically important companies.The Supervisory Board held its inaugural meeting on June7,2024,directly after the Annual General Meeting where fresh elections were held for all shareholder representatives.Dr.Wolfgang Porsche was elected as Chairman of the Super-visory Board at this meeting and Jordana Vogiatzi as Deputy Chairwoman,affirming their positions.The Supervisory Board furthermore elected the members of the committees set up byit.The Supervisory Board met at the Weissach Development Center on September24,2024.The focal points at the meeting were the reports by the chairpersons of the Audit and Pres-idential Committees as well as the reports by the Executive Board members on the business situation.A closer look was given in this context to the supplier situation at that time by the Executive Board member responsible for Procurement.The PorscheGroup PR73 planning session was also talked over.In this context,the Supervisory Board intensively discussed ques-tions concerning the companys medium-and long-term plans,including the product range and vehicle projects.Moreover,the board dealt with financial and corporate issues,including for example approvals of strategic investments and a new partner-ship with Penske Automotive Australia.At an extraordinary meeting on November11,2024,the Supervisory Board made a decision on approving a framework agreement to be concluded with VolkswagenAG for develop-ment services and vehicle software licenses.This agreement is connected to the joint venture agreed between VolkswagenAG and Rivian Automotive,Inc.The final Supervisory Board meeting for 2024 was held in Zuffenhausen on December6,2024.The focal points at the meeting were the reports from the Audit and Presidential Com-mittees as well as the reports by the Executive Board members on the business situation.The discussions on the PR73 planning session were additionally continued intensively.On top of three financial and corporate issues concerning the realignment of certain majority-owned investments,a resolution was also passed for the routine financial strategy for 2025.The Super-visory Board also adopted the annual Declaration of Conformity with the German Corporate Governance Code after a thorough discussion.Lastly,the Supervisory Board dealt with its meeting dates for 2025.On the basis of reporting by the Executive Board,the Supervi-sory Board was continuously engaged with the key official and judicial processes of the company,such as the proceedings in connection with emissions.PERSONNEL CHANGES ON THE SUPERVISORY BOARD AND EXECUTIVE BOARDThe tenure of all Supervisory Board members ended routinely at the time the Annual General Meeting ended on June7,2024,which made fresh elections necessary.Among the employee representatives,Ibrahim Aslan,Wolfgang von Dhren,Nora Leser,and Stefan Schaumburg departed the Supervisory Board.The entire Supervisory Board expressed their gratitude to the four departed Supervisory Board members for the many years of trusting cooperation and for their commitment to the board.Martina Holzbauer,Steffen Reiig,Conny Schnhardt,and Heidi Zink-Larson were elected as new members to the Supervisory Board to represent the employees in accordance with Ger-manys Codetermination Act(MitbestG).The other employee representatives were reelected as members of the Supervisory Board.Furthermore,the shareholder representatives were reelected to the Supervisory Board in the same composition at the Annual General Meeting,in keeping with the Supervisory Boards proposal.The tenure of all Supervisory Board members commenced at the end of the Annual General Meeting on June7,2024,and will go on until the end of the Annual General Meeting in the 2029 financial year.At its inaugural meeting directly after the Annual General Meeting,the Supervisory Board reelected Dr.Wolfgang Porsche as its Chairman and Jordana Vogiatzi as its Deputy Chairwoman.Due to the departure of certain Supervisory Board members,there arose corresponding changes to the personnel on the boards committees.Jordana Vogiatzi was elected by the Supervisory Board to succeed Nora Leser on the Audit Com-mittee.In addition,Knut Lofski was elected to the Related Party Committee after the departure of long-serving member Wolfgang von Dhren.There were no changes to the personnel on the Executive Board during the reporting period.There were new appointments to the Executive Board positions responsible for Finance and IT as well as Sales and Marketing in February2025.COMMITTEES OF THE COMPANYS SUPERVISORY BOARD AND MEETING FREQUENCY In order to perform the duties incumbent on it,the Supervisory Board has formed committees to assist it with its tasks.The following details the duties of the committees as well as their meeting frequency and the individual attendance of meetings by committee members.Presidential CommitteeThe Presidential Committee coordinates the work within the Supervisory Board and prepares its meetings.It prepares per-sonnel-related decisions for the Supervisory Board.Alongside the Executive Board,the Presidential Committee also ensures that a long-term succession plan is in place.The Presidential Committee met six times in the 2024 financial year.Audit CommitteeThe Audit Committee monitors the accounting process,the effectiveness of the internal control system,the risk manage-ment system,the internal audit system,as well as the audit of the financial statements,especially the selection and indepen-dence of the auditor,the quality of the audit,and the additional services performed by the auditor.The Audit Committee met four times in the 2024 financial year.Nomination CommitteeThe Nomination Committee is staffed exclusively by repre-sentatives of the shareholders and has the task of proposing suitable candidates to the Supervisory Board for its proposals to the Annual General Meeting for the election of Supervisory Board members to represent the shareholders.The Nomination Committee met once at the start of the reporting period.Mediation CommitteeWhen the criteria of section 31,paragraph 3,sentence 1,and paragraph 5,of the MitbestG are met,the Mediation Committee is responsible for proposing candidates for appointment to the Executive Board and for proposing the dismissal of Executive Board members.The Mediation
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A Journey Towards a Sustainable FutureSamsung Electronics Sustainability Report 2024A Journey Towards a Sustainable FutureSamsung Electronics Sustainability Report 2024Message from Our CEOAbout UsStakeholder EngagementOur Company040506Compliance&EthicsPrinciple53Materiality AssessmentMateriality Assessment08Our PeopleSustainability in Supply ChainEmpowering CommunitiesPrivacy Protection&SecurityCustomer Safety&QualityPeople3139454850Economic PerformanceSocial PerformanceEnvironmental PerformanceAvailable Water Resources by RegionPerformance by Division Facts&Figures56576265 66Independent Assurance Report Verification Statement on Scope 1,2Greenhouse Gas EmissionVerification Statement on Scope 3 Greenhouse Gas EmissionGRI Index TCFD IndexSASB IndexCollaboration Efforts on Climate Action About This ReportAppendixDX Division Governance and Major ProgressClimate ChangeCircular EconomyWater&PollutionDS Division Governance and Major ProgressClimate ChangeWaterWastePollutionPlanet 12131517 1920232628Samsung Electronics Sustainability Report 202402Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeople70 71 727477798182Our Company04 Message from Our CEO05 About Us06 Stakeholder EngagementSamsung Electronics Sustainability Report 202403Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleSamsung Electronics Sustainability Report 202404Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleMessage from Our CEODear Shareholders,Customers,Partners,and Employees,Samsung Electronics faced a very challenging year in 2023 due to macroeconomic uncertainties with high interest rates,inflation,and geopolitical issues as well as a sluggish memory industry and increased competition for various product lines.It is thanks to the interest and encouragement of our stakeholders that we have been able to invest KRW 28.3 trillion in R&D,the highest level ever,and KRW 53.1 trillion in strategic facility investments to strengthen our technology leadership,responding to mid-and long-term needs in advance,laying the foundation for sustainable growth even in such challenging internal and external environments.Once again,I would like to express my deepest gratitude.Reflecting this rapidly changing economic situation,the field of corporate sustainability is also facing many changes.In particular,information disclosure regarding corporate sustainability activities is entering a new era in line with the spread of global non-financial information disclosures.The International Financial Reporting Standards Foundation(IFRS Foundation)issuing its sustainability disclosure standards in June 2023,the EUs Corporate Sustainability Reporting Directive(CSRD)and the United States Securities and Exchange Commissions(U.S.SEC)subsequently confirming their climate disclosure rules all demonstrate the beginning of an era of mandatory ESG information disclosure.In addition,the EU is consistently strengthening its environmental regulation through means like the Carbon Border Adjustment Mechanism(CBAM)and Battery Regulation.Interest in human rights continue to grow as well as,seen by Germanys Supply Chain Due Diligence Act,mandating supply chain human rights and work environment management,coming into effect in 2023,and the EU Corporate Sustainability Due Diligence Directive(CSDDD)being approved in May 2024 by member states.Samsung Electronics continued our efforts for a sustainable future in line with this trend.Samsung Electronics announced our New Environmental Strategy in September of 2022,which includes our goals to join in overcoming the global climate crisis through achieving net zero Scope 1,2 emissions by 2050,maximizing resource circularity to contribute to a circular economy,and tackling environmental challenges through technological innovation.Our two divisions are pursuing a number of environmental efforts.The DX Division,aiming to be net zero Scope 1,2 emissions by 2030,recorded a Renewable Energy(RE)transition of 93.4%by the end of 2023.This includes a 100%RE transition for our major manufacturing facilities world-wide including the United States,EU,China,Republic of Korea,Vietnam,India,and Brazil.The DX Division is also working in line with our Resource Circularity Roadmap and applied recycled resin in 25%of procured plastic parts.The DS Division installed 16 new process gas treatment facilities(Regenerative Catalytic Systems,RCS)on 4 production line buildings to achieve net zero Scope 1,2 emissions by 2050,and strived to reduce greenhouse gas(GHG)emissions by expanding our liquid natural gas(LNG)waste heat recovery system.We proved our water management systems excellence by obtaining the highest level of certification(Platinum)from the Alliance for Water Stewardship(AWS)for our Giheung,Hwaseong,Pyeongtaek(Korea)and Xian(China)facilities with the goal of reducing our water withdrawal to 2021 levels in 2030.We also aim to reduce our waste generation and are expanding the number of resource circularity certifications obtained from the Republic of Koreas Ministry of Environment.The list current stands at 49 items including 9 new certifications for items like wafer boxes in March of 2024.In the social sector,Samsung Electronics aligned with our Global Human Rights Principles(announced in February 2023)to establish a Global Grievance Resolution Policy in March 2024,setting up standards for our grievance submission channels resolution process and submitted grievance resolution principles.We are also expanding our supply chain work environment management scope to include non-and second-tier manufacturing suppliers,depending on risk analysis results.Samsung Electronics also seeks to fulfill our corporate social responsibility.For example,the DS Division established a standard workplace for people with disabilities,named Stellar Forest,as a subsidiary in March 2023.Stellar Forest is dedicated to providing a stable workplace for individuals with development disabilities,starting with operating a confectionary manufacturer that supplies baked goods to Samsung Electronics employees.This years Sustainability Report is organized in line with global disclosure regulation frameworks to identify our companys key sustainability management issues and to faithfully communicate these key issues governance structure,strategy,implementation activities and current status.We also designed the Sustainability Report to closely connect to Samsung Electronics newly launched Sustainability Website.As Samsung Electronics experiences an era where environmental,social,and economic risks and geopolitical uncertainties have become part of everyday life,sustainability is an unwavering indicator of the direction we must take and a driving force for business competitiveness and technological innovations.As the saying goes,“Difficulty is the Nurse of Greatness”,and Samsung Electronics will continue to do our best to seek new heights through sustainability and meet the expectations of our stakeholders with even greater progress.Thank you.CEO and Vice Chairman of Samsung Electronics Co.Jong-hee Han Our CompanyDS Division Head and Vice Chairman of Samsung Electronics Co.Young-hyun JunSamsung Electronics Sustainability Report 202405Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleAbout UsSamsung Electronics Co.,Ltd.(Samsung Electronics)aims to be a global first-class company that contributes to society by creating the best products and services based on a talented workforce and advanced technology.To this end,Samsung Electronics has established five Key Values that reflect the companys management philosophy and refined the core values into principles and behavioral guidelines,or the Global Code of Conduct.Samsung Electronics will continue to grow by internalizing these five core values in our corporate culture,using the Global Code of Conduct as the standard for all corporate activities.About Our OrganizationSamsung Electronics is divided into two Divisions,Device eXperience(DX)and Device Solutions(DS),operated independently according to product characteristics.The DX Division produces and sells finished products such as TVs,refrigerators,washing machines,air conditioners,smartphones,network systems,and computers,while the DS Division consists of the Memory Semiconductor Business,Foundry Business,and System LSI Business which produce and sell semiconductor components such as DRAM,NAND Flash,and mobile APs.Our CompanySalesKRW 169.9923 trillionOperating ProfitKRW 14.3847 trillionNetworksMobile eXperienceVisual DisplayDigital AppliancesHealth&Medical EquipmentSalesKRW 66.5945 trillionOperating ProfitKRW(-)14.8795 trillionFoundrySystem LSIMajor Business UnitsDevice eXperienceDXDSDevice SolutionsMemory The sales and operating profits above are based on 2023 figures,including intersegment transactions and excluding the performances of Harman and Samsung Display Company(SDC).Regional Headquarters1)Sales Offices2)Manufacturing SitesProcurement Centers151093261)Regional classification is based on Samsung Electronics internal management criteria.2)Sales subsidiaries,branches,etc.3)Distribution subsidiaries,IP Offices,etc.4)Suppliers of parts used in the manufacturing of Samsung Electronics products.R&D expenditure KRW28.3 trillionOperations in 76 countriesSuppliers4)2,515Employees 267,860R&D CentersDesign CentersOthers3)Total40723232Samsung Electronics Sustainability Report 202406Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleStakeholder EngagementActive communication with our stakeholders is an important part of fulfilling our responsibility as a global corporate citizen.Samsung Electronics transparently and timely discloses relevant information on our Sustainability Website .In addition,we seek to strengthen our relations and align ourselves with our stakeholders on issues regarding sustainability through active communication via multiple channels,including stakeholder forums,surveys,and on-site visits.StakeholdersKey InterestsCommunication ChannelsMajor ActivitiesCustomers(B2C&B2B)Quality of products and services Safety in product use Environmental impact of products throughout their life cycle Accurate product information Transparent communication Customer satisfaction surveys Contact centers,service centers Samsung Electronics Newsroom S Samsung Semiconductor Newsroom Sustainability Website Sales Channels Product Environmental Report Reinforce quality and safety management systems Offer product information via country-specific websites Resolve issues identified through Voice of the Customer(VOC)Staff sustainability specialists at the subsidiary and business levelsShareholders and Investors Economic performance Risk management Information disclosure ESG agenda,including environmental,social,and governance Annual General Meeting Non-Deal Roadshows,Investor Meetings Earnings Releases Investors Forum Investor ESG Roadshow IR Website Forecast business performance and environment Update shareholder return policy Publish disclosures Release corporate governance information Share environmental and social performances Pool shareholder,investor viewsEmployees Safe and healthy work environment Diversity,equity,and inclusion Training and career development Employment and benefits Labor relations Organizational culture Labor unions,work councils Counseling centers Satisfaction surveys(work concentration,organizational health,employee experience)Sustainability Website Communications with the executive management Online comm.platforms,including Samsung NOW Compliance and ethics whistleblowing channels Industrial Safety and Health Committee Offer tailored career development programs Host town halls by individual business units Perform collective bargaining Operate labor-management relations advisory group Operate health promotion programs (diet programs,etc)Mentor executive management by younger generation employees Manage our business sites work environment Foster a culture of trust and communication Carry out Employer Branding ActivitiesSuppliers Partner Collaboration Workplace EHS(Environment,Health&Safety)improvement Fair Trade Worker human rights protection GHG emissions reduction Global Supplier Relationship Management System(G-SRM)Hotline,online whistleblowing channels Partner Collaboration Academy Partner Collaboration Day,supplier dialogues Sustainability Website Support employee training and innovation Manage GHG emissions reduction Provide funding and technology support Manage and take responsibility for suppliers work environment Collect and resolve grievancesLocal Communities Local employment&economic development Indirect economic effects,incl.investment/employment Conservation of local environment Philanthropic activities Local volunteer centers Sustainability Website CSR Website Support SMEs,including Smart Factory construction Conserve river ecosystems near our business sites Run community outreach programs on education and employment(Samsung Stepping Stone of Hope,Samsung SW Academy for Youth,etc.)Intl.Organizations,NGOs,Associations,Specialized Organizations Social responsibilities for local communities,human rights,and the environment Cross-regional&business sector collaboration UN SDGs contributions(climate action,etc)Transparent and timely information disclosure Corporate dialogues NGO meetings Stakeholder forums Sustainability Website Meetings between civil society groups and executive management.Labor-human rights stakeholders workshops Industrial Associations Collect global NGO opinions Engage with RBA1),RMI2),BSR3)1)Responsible Business Alliance2)Responsible Minerals Initiative3)Business for Social Responsibility Engage with UNGC1)Engage with ACEC2),SCC3)1)United Nations Global Compact2)Asia Clean Energy Coalition3)Semiconductor Climate ConsortiumGovernment Indirect economic effects,incl.investment/employment Occupational health and safety Fair trade Compliance Business Ethics Policy conferences National Assembly Policymaking public hearings Policy advisory boards Sustainability Website Support SMEs in collaboration with the government Operate joint venture investment windows in collaboration with the governmentMedia Strategy,performances for major products,business units Future growth strategies such as investment,R&D,and M&A ESG progress(Net Zero,etc)HR,labor relations,health&safety,patents,product&service quality,etc.Press releases Sustainability Website Media dialogues Samsung Electronics Newsroom Samsung Semiconductor Newsroom Support media coverage of global IT exhibitions and unpack events Implement planned promotional activities Participate in interviews&press conferences Participate in media days Our Company Materiality Assessment07Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleSamsung Electronics Sustainability Report 202408Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleSamsung Electronics Sustainability Report 2024Samsung Electronics conducts materiality assessments identifying and prioritizing key sustainability issues material to our business,transparently disclosing the processes and results.In 2024,We conducted a Double Materiality Assessment(DMA)adapted from the European Financial Reporting Advisory Groups(EFRAG)materiality assessment implementation guidance.DMA DefinitionSamsung Electronics 2024 DMA evaluates topics of potential materiality to Samsung Electronics sustainability,considering both relevant company activities impacts to the external environment and relevant external factors financial impacts to the company in order to ascertain material topics for Samsung Electronics sustainable management.DMA ProcessSamsung Electronics DMA process consists of four steps:understanding the business,identifying impacts,risks,and opportunities(IROs),evaluating IROs,and selecting material topics.Step 1.Understanding the BusinessUnderstanding the business involved analyzing our business internal/external environments and value chain,then identifying primary topics.In the internal/external environment analysis,we reviewed disclosed company data such as our Annual Business Report and internal company data such as stakeholder inquiries to secure base materials for future evaluation processes.We also conducted a value chain analysis to derive ESG topics that comprehensively consider relevant stakeholder characteristics within the value chain.We first organized the value chain into upstream(raw materials,parts,and other suppliers)own operations(manufacturing,sales)downstream(transportation,sales,repairs/services)phases and identified each phases key stakeholders industrial sectors and business activities.We then analyzed ESG topics for each industrial sector referencing the Sustainability Accounting Standards Board(SASB)standards,after which we derived material ESG topics for each Division and Business Units individual value chain phases.We also identified key stakeholder groups interested in our sustainability activities in order to widely gather stakeholder opinions during the assessment process.We also established various opinion gathering plans to accommodate our diverse stakeholders characteristics.Reflecting DX/DS Divisional Characteristics Samsung Electronics strived to reflect our Divisional characteristics during the DMA process.In the value chain analysis step we identified individual value chains by DX,DS Divisions and their respective Business Units to comprehensively consider sector-specific ESG topics in issue pool composition and assessment.We also identified and performed surveys/interviews with Division specific employees,customers,and suppliers while evaluating stakeholder groups.Derive Primary TopicsSamsung Electronics formed an issue pool of 115 issues,constructed from 92 sub-topics as suggested by the European Sustainability Reporting Standards(ESRS)and 23 additional,sector specific issues.Each issue was evaluated against four criteria(alignment with company strategy,alignment with global initiatives,key issues in the industry,and results of value chain analysis)to derive 52 issues,and 13 primary topics were selected to encompass these 52 issues based on the topic taxonomy of the ESRS.Materiality AssessmentClimate Change and EnergyPollutionWaterResource Circularity and WasteWorking Conditions-EmployeesEqual Treatment and Opportunities-EmployeesForced Labor-EmployeesSupply ChainInformation Security and ProtectionProduct Quality and SafetyAccessibilityBusiness ConductGovernancePrimary TopicsDouble Materiality Assessment ProcessGather internal/external key stakeholder opinionsCombine IRO evaluation results and stakeholder inputsReport DMA results tocompany boardSelecting Material TopicsAnalyze internal/external environmentsUnderstand and analyze the value chain(Upstream/Own operations /Downstream)Derive primary topicsUnderstanding the BusinessIdentify financial impactsClassify risks/opportunitiesIdentify environmental and social impactsClassify positive/negative and actual/potential impactsIdentifying IROsSet evaluation criteria and scales for material topic selectionAssess financial risks/opportunitiesAssess environmental/social impactsEvaluating IROsSelection of ESG Topics Material to Samsung ElectronicsEnvironmental&Social Impacts1Financial Risks&Opportunities2 Materiality AssessmentCorporationExternalEnviron-ment09Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleSamsung Electronics Sustainability Report 2024Step 2.Identifying IROsSamsung Electronics identified environmental/social impacts and financial risks/opportunities for the 13 primary ESG topics.We first prepared identification bases for primary topics including related regulations,media,Sustainability Website and Report contents as well as requests from key stakeholders like our customers,investors,and rating agencies,then analyzed topic relevant Samsung Electronics business activities.Next we identified environmental/social impacts of relevant value chain business activities and classified each impact into positive/negative and actual/potential traits.Using the identification bases,we also identified and analyzed how topical external environments can financially impact us and classified each impact into risks and opportunities,analyzing the respective account subjects.Stakeholder Engagement-Based AssessmentStakeholder SurveysIn March 2024,we conducted an online survey for relevant internal/external stakeholders including Samsung Electronics employees,customers,partners,investors,NGOs,and international organizations.We distributed assessment guides and video materials to aid stakeholders in understanding the survey.We also held separate briefing sessions for our employees to inform them in detail of survey purpose,participation method,evaluation scale,and result usage.Executive Management InterviewsIn March 2024,we conducted in-person and written interviews with DX/DS Division sustainability-related executives to obtain their views on ESG topics material to the company.EU Stakeholder ForumIn March 2024,we held a sustainability forum in Brussels,Belgium,titled Innovate&Empower:Samsungs Sustainability Journey for EU stakeholders.Key stakeholders including European government agencies such as EFRAG and DG GROW,international organizations such as the ILO,OECD,UNDP,UNEP,UNGC,and UN PRI,associations such as the RBA and WBCSD,and professional organizations discussed major challenges and opportunities for non-financial disclosure standards and regulations,climate action,resource circularity,and labor rights in Europe.Samsung Electronics also identified areas for improvement through meetings with stakeholders,and plans to continue to strengthen communication with stakeholders in the future.Legal/Regulative IssuesExternally disclosed information(media,Sustainability Website,Sustainability Report,etc.)Stakeholder requests (customers,investors,suppliers,rating agencies,etc.)Company activitys environmental and social impacts related to ESG topics Classified as positive/negative,actual/potentialID BasesEnviron-mental/Social Impacts External environmental impacts on company finances related to ESG topics Classified as risks/opportunitiesFinancial Risks/Opportu-nitiesIdentifying IROsClassificationAssessment StandardScaleSize of impactsScopeGeographic/physical reach of impactsRemediability Time required to remediate negative impactsLikelihoodTime estimated for potential impacts to occurQuantitative sizeQuantitative size of risks/opportunities considering company sales,net worth,net income before tax,etc.Qualitative reachQualitative reach of risks/opportunities considering expected or realized time of executive managements strategy formation and decision makingLikelihoodTime expected for financial risks/opportunities to occurStep 3.Evaluating IROsSamsung Electronics designed evaluative scales for identified primary topics IROs referencing EU ESRS requirements and performed evaluations based on robust stakeholder participation.Env./Social ImpactsFinancial Risks/OpportunitiesClimate Change and EnergyWaterResource Circularity and WasteWorking Conditions-EmployeesSupply ChainInformation Security and ProtectionProduct Quality and SafetyBusiness ConductFinal Material TopicsEnvironmentalSocialGovernanceQuantitative Results Combined qualitative and quantitative analyses results to select final material topics1)8 material topics selected(3 environmental,4 social,1 governance)Identifying IROsQualitative ResultsFinancial Risks/OpportunitiesEnv./Social Impacts1)Information security and protection,product quality and safety,business conducted selected as new material topics compared to previous assessmentExecutive Management Interview ResultsStep4.Select Material TopicsSamsung Electronics selected eight material topics based on a combination of quantitative and qualitative analyses of the survey results,including:climate change and energy,water,resource circularity and waste,working conditions-employees,supply chain,information security and protection,product quality and safety,and business conduct.Due to sectoral differences between each Division,we further selected environmentally material issues by Division.The DX Divisions material environmental issues included climate change and energy,water,resource circularity and waste,while the DS Divisions material environmental issues included climate change and energy,water,resource circularity and waste,and pollutants.After management review,selected material issues were reported to the Sustainability Committee under the Board of Directors.10Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleSamsung Electronics Sustainability Report 2024Material Topic ManagementSamsung Electronics identifies the impacts of selected material topics on the company,and reports on company activities to manage these topics.2024 Material TopicsUN SDGsGovernanceStrategyRisk Management(Policy)Activities(Major Progress)Climate Change and Energy Sustainability Committee under the Board of Directors oversees sustainability management(including environmental management)strategy and progress Sustainability Council(chaired by CEO)and Environmental Management Task Force(consisting of relevant departments)and decide on current issues Invest over KRW 7 trillion in environmental management activities by 2030(including process gas reduction and water resource preservation)DX Division:net zero Scope 1,2 emission by 2030 DS Division:net zero Scope 1,2 emission by 2050 Board of directors approved New Environmental Strategy Operate Environmental Management Task Force Reduce direct emissions,expand renewable energy,reduce external GHG emissionsWater DX Division:replenish 100%of water used globally by 2030 DS Division:achieve zero increase in water intake relative to 2021 levels by 2030 Board of directors approved New Environmental Strategy Operate Environmental Management Task Force and Net Zero Committee Assess water resources risk assessment and establish response strategy by region Expand scope of AWS1)certification for Korean manufacturing sites1)Alliance for Water StewardshipResource Circularity and Waste DX Division:apply recycled resin to all plastic parts by 2050 DS Division:achieve 99.9%waste recycling rate across all Korean manufacturing sites Board of directors approved New Environmental Strategy Operate Environmental Management Task Force and Net Zero Committee Set up product waste retrieval system,attain Zero Waste-to-Landfill certifications at business sitesWorking Conditions-Employees Sustainability Committee under the Board of Directors,Sustainability Council chaired by the CEO and Labor and Human Rights Council oversees and manages employee and supply chain labor and human rights at various levels Respect human rights based on management philosophy of“People First”,continue to pursue safe work environment,and create positive workplace culture Establish various policies and standards including fundamental principles of human rights,grievance policy,environmental health and safety policy Operate employee communication and grievance channels and perform human rights due diligence Observe freedom of association and right to collective bargaining Analyze and improve living wage gap Operate manufacturing site safety management programs and employee health promotion programs Provide fringe benefits and work policies for work-life balanceSupply Chain Secure sustainable supply chain by assisting supplier labor and human rights,occupational health and safety,and talent development as well as business competitiveness Establish various policies and standards including supplier Code of Conduct,global purchasing Code of Conduct Provide supplier employee comm.channels,grievance channels,and operate integrated workplace environment management process Perform force labor,child labor special audits Perform regular ESG audits,consulting and training for suppliers Operate Partner Collaboration AcademyInformation Security and Protection CPO(Chief Privacy Officer)and Information Protection Center head,acting as CISO(Chief Information Security Officer),perform control tower role and operate Privacy Protection Committee and Security Council Provide strategic direction through the Three Privacy Principles and Four Pillars of Cybersecurity Establish global privacy protection policy,operate Samsung privacy website Operate Privacy Legal Management System(PLMS)and educate employees Operate security platform Samsung Knox and Samsung Knox Vault Semiconductor technology securityProduct Quality and Safety Global CS Center(Customer Satisfaction Center)and business unit organizations in charge of quality perform operations Announce Code of Conduct based on vision of top class pursuit of quality Operate quality assurance system and incident response process Secure product safety and improve product qualityBusiness Conduct Board of directors and affiliated committees provide oversight on compliance,Compliance Committee performs operations Establish and specify employee and business guidelines CPMS1)based risk management1)Compliance Program Management System Operate education and reporting programs,evaluate corruption riskSamsung Electronics Sustainability Report 202411Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleWe dream of a better world,a better planet.PlanetDX Division12 Governance and Major Progress13 Climate Change15 Circular Economy17 Water&PollutionDS Division19 Governance and Major Progress20 Climate Change23 Water26 Waste28 Pollution12Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleSamsung Electronics Sustainability Report 2024GovernanceSamsung Electronics Sustainability Committee under the Board of Directors,as its highest governance body,recognizes the environmental field(encompassing issues like climate change and resource circularity)as a core management area that directly connects to company business and financial progress.The Sustainability Committee under the Board approves the companys Environmental Strategy and targets,overseeing relevant major activities.In 2022,the Board resolved Samsung Electronics New Environmental Strategy,which encompasses mid-to long-term climate change response and resource circularity goals.In 2023,Major Achievements of the 1st Anniversary of the New Environmental Strategy was reported to the Board.In the DX Division,the CEO has responsibility and authority over key issues such as establishing environmental strategies,identifying implementation tasks,and implementing investments.The CEO presides over the companys Sustainability Council with Business Unit heads and operative department heads.In addition,the Environmental Management Task Force,a company-wide council composed of executives from environment-relevant departments,establishes environmental management plans and checks on implementation status.The Corporate Sustainability Center,Global EHS office,regional environmental organizations,and Business Unit sustainability offices are in charge of implementing action items/projects to respond to climate change.The DX Division started GHG emission reduction performance DX Division Governance BodiesReports to Board of Directors composed of independent directors,oversees sustainability strategy and progress at least once per quarterSustainability CommitteeDiscuss sustainability issues at least once per quarter with executives of all relevant units and chaired by CEOSustainability CouncilReviews and updates corporate Environmental Strategy action items,discusses and makes decisions on current issuesEnvironmental Management Task ForceCarbon Disclosure CouncilEstablishes carbon emission calculation standards and systemEco-Council Reviews progress on environmentally responsible productsEnvironmental Safety MeetingsOversees,manages GHG emission and reduction action itemsClimate Change Circular EconomyWater&PollutionGovernance and Major ProgressDX DivisionEnvironmental Management System Environmental Risk Management Environmental Targets and Major Progress in 2023Environmental TargetsProgress in 2023 100%RE transition for DX business sites Replace all corporate vehicles in Korea with 100%zero-emission vehicles(EV,hydrogen)DX Division RE transition at 93.4%Applied ultra-power-saving technologies to major models in seven product categories1),improved energy efficiency by 25%compared to 2019 Achieve net zero Scope 1,2 emissions for DX Division Improve power consumption of major models in seven product categories1)by 30%2)Net Zero Resource Circularity Water 20272030 Expand water replenishment program(3 Korean sites,8 global sites at 4 countries)Obtain highest level certification(Platinum)from Alliance for Water Stewardship(AWS)for 3 Korean4)and 3 Vietnamese manufacturing sites Performed water replenishment pilot projects at 3 Korean locations Replenish 100%of water used globally for DX Division20242030 Applied recycled resin to 25%of plastic product parts Operating e-waste recovery programs in approximately 70 countries globally Obtained Platinum Zero Waste-to-Landfill certification in 2 Korean,12 global manufacturing sites world-wide5)Obtain Underwriter Laboratories(UL)highest level certification(Platinum)for Zero Waste-to-Landfill at all our manufacturing sites Apply recycled resin to 50%of plastic parts used in our products3)Expand e-waste recovery to all global sales regions Cumulatively collect the industrys largest amount of e-waste at 10 million tonnes Apply recycled resin to all plastic parts3)Cumulatively collect 25 million tonnes of e-waste2025205020301)Based on comparable specifications for 7 electronic products:smartphones,TV,refrigerators,washing machines,air conditioners,PCs,monitors 2)Compared to 2019 3)Pure recycled resin ratios differ by part 4)Certified in January 2024 5)As of March 2024evaluations in its organizational reviews in 2021,and added items such as RE transition,energy-efficient product development,and waste recycling performance to organizational and executives performance reviews in 2023,expanding the list in 2024 to include water resource management.We will continue to enhance incorporation of sustainability issues in our organizational and executives performance reviews.13Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleSamsung Electronics Sustainability Report 2024Climate Change Planet/DX DivisionStrategyThe DX Division plans to achieve net zero Scope 1,2 emissions by 2030 in line with the New Environmental Strategy announced in 2022.To this end,we are minimizing direct emissions through process energy efficiency improvement and expanding our use of renewable energy(RE).We are also pursuing various GHG emission mitigation activities in our business sites and across our entire value chain,including product logistics,sales,and use.Climate Change Strategy Risk ManagementThe DX Division identifies tangible financial or strategic impacts of climate change related risks,develops response strategies based on each issues importance and impact on our business and incorporates said strategies into our decision making process.Risks include global climate frameworks,increased regional regulations,market change,stakeholder requests,and changes in the physical environment.For example,Korean manufacturing facilities in particular are performing our legal obligations for GHG emission management under the K-ETS(Korean Emission Trading Scheme).We anticipate that GHG emission reduction targets assigned to companies subject to K-ETS according to the Republic of Koreas Nationally Determined Contribution(NDC)will continue to be strengthened.In the short term,we expect increases in investment due to increasing carbon prices,adopting energy efficient technology,and responding to extreme weather caused damages to be potential risks.We also expect easing of carbon pricing sensitivity due to securing external carbon credits and energy cost reduction due to deploying highly energy efficient technology to be potential opportunities.We also anticipate change in consumer spending patterns and preference for environmentally responsible products to be potential mid-term opportunities,while expecting physical impacts like temperature rise and water resource depletion to be potential long term risks.Climate Change RisksOpportunities ActivitiesDirect GHG Emission ReductionThe DX Division prioritizes minimizing its own emissions through improving the energy efficiency of business sites,reducing energy use,and transitioning energy sources,while identifying and executing GHG reduction projects to offset emissions that cannot be reduced through our own reduction activities.We also continue to reduce energy use at our global manufacturing subsidiaries while setting energy use reduction targets relative to the previous year1).In 2023,we secured a total of 250,000 tonnes of carbon credits through agroforestry and mangrove projects in India and Indonesia.We are especially focusing on reduction projects that not only reduce GHG emissions but also improve the quality of life and income levels of the local community such as cookstoves and agroforestry.We also plan to transition to 100%zero-emission vehicles(electric and hydrogen cars)in Korea by 2027.We plan to continue to implement GHG reduction projects to achieve our direct emission reduction and net zero targets.1)2024 target:energy use reduction Direct GHG Emission Reduction Roadmap Reduce GHG emissions through means such as retrofitting facilities with high-efficiency equipment,and automation including application of Internet of Things to our systems Reduce energy use through facility heating and cooling operation optimization Cooperate with global institutes specializing in emission reduction Secure external carbon credits through forestation projects and mangrove projects Reduce business site energy use through means such as LNG use efficiency improvement Achieve net zero Scope 1,2 emissions2023 2024 2030Direct Emission Reduction Activities Direct GHG Emission Reduction Energy reduction activities including energy efficiency equipment installment and manufacturing process optimization GHG reduction project implementation for remaining emission reduction Achieve zero net direct emission by 2030 Renewable Energy Expansion Joined RE100,a global initiative purusing RE transition,in 2022 Utilize diverse RE procurement options to economically and sustainably secure RE Transition to 100%RE by 2027 Value Chain Carbon Reduction Apply power-saving technology to major models for smartphones,TVs,refrigerators,washing machines,air conditioners,PCs,and monitors Support supplier GHG emission calculation and reduction target setting(guidance development,training)Reduce value chain carbon emission from entire life cycle of a product,including in material procurement,manufacturing,transportation,usage,disposal,and recycling14Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleSamsung Electronics Sustainability Report 2024Expansion of Renewable Energy UseThe DX Division has set a target of transitioning to 100%RE at all of our business sites by 2027 and is continuously expanding our RE usage by utilizing procurement means available to the global market.We are also increasing the number of our Power Purchase Agreements(PPAs)in order to secure stable sources of RE and seeking to qualitatively and quantitatively improve our RE supply through such measures as installing solar power generation facilities on spare grounds in our business sites.Renewable Energy Transition Status by RegionU.S.Our U.S.subsidiaries have increased their renewable energy use by means like installing solar power generating facilities in company buildings and purchasing Renewable Energy Certificates(RECs).As a result,our U.S.subsidiaries achieved 100%renewable energy transition in 2020.Europe Our European manufacturing sites have transitioned 100%of their electricity use to renewable energies by adopting the Green Pricing System and purchasing RECs.India Our Indian manufacturing sites completed the transition to 100%renewable energy in 2022 by signing PPAs with local solar,wind,and biomass power stations,purchasing RECs,and installing solar power generating facilities.Vietnam and China Our Vietnamese manufacturing sites transitioned to 100%renewable energy in 2022 by purchasing RECs,while our Chinese manufacturing sites also transitioned to 100%renewable energy by adopting PPAs and purchasing RECs.We plan to expand the number of renewable energy PPAs for both countries.Central and South America Our Brazilian manufacturing sites completed the transition to 100%renewable energy in 2022.Our Mexican manufacturing site expanded its share of renewable energy to 70%in 2023 from 4%in 2020 through power contracts including REC purchases.We are pursuing additional renewable energy PPAs and plan to achieve our transition target by 2025.Republic of Korea The DX Division completed the transition to 100%renewable energy in 2022.Our Suwon manufacturing site has installed solar power generation facilities on site while our Gumi and Gwangju manufacturing sites has implemented in-situ renewable energy PPAs to supply themselves with solar powered electricity.Renewable Energy Transition Roadmap Declared plan to expand RE use(100%transition by 2020 in U.S.,European and Chinese business sites)Completed 100%transition in U.S.,European and Chinese business sites Completed transition to 100%RE at all DX Division business sites in Korea and manufacturing sites in Vietnam,India,and Brazil 100%transition in Central and South America 100%transition for DX Division2018 2020 2022 20252027RE Transition Status by Key Regions Solving the climate crisis facing the world is a task that requires everyones participation,and we want to create a journey together with our suppliers.Samsung Electronics joined the CDP1)supply chain program in 2019.We established an operational system to promote GHG reduction in 2022 and are implementing substantive reduction activities.We developed a guide to help our suppliers calculate their GHG emissions and set reduction targets,as well as operating a step-by-step support program for reduction activities.1)CDP:Environmental Disclosure Platform (formerly Carbon Disclosure Project)Responding to Climate Change with Our Suppliers DX Division RE Transition Rate(Usage,GWh)(as of 2023)93.4 221)93.1%(2,856)20231)93.4%(2,720)202014.4%(470)202117.7%(556)Energy Efficient Products Roadmap Energy efficiency of leading models of 7 major product categories1)improved by 25%compared to 2019 using high energy efficiency technologies Improve energy efficiency of leading models of seven major product categories1)by 30%compared to 20192023 2030 1)7 major models(2023):Refrigerators(RF85C9241AP),air conditioners(AR10DYEAAWK/ST),washing machines(WF25CB8795BK),TVs(KQ75QNC900FXKR),monitors(LS49AG950NKXKR),PCs(NP960XFG),smartphones(SM-S918)Value Chain Carbon ReductionThe DX Division is striving to reduce value chain carbon emissions from a product life cycle perspective including material procurement,production,transportation,usage,disposal,and recycling as well as pursuing net zero Scope 1,2 emissions by 2030.In particular,we plan to decrease 2030 power use in major models for smartphones,TVs,refrigerators,washing machines,air conditioners,PCs,and monitors by 30%on average compared to 2019 models with equivalent performance and specifications.In 2023,we decreased the power use in our major models by 25%relative to comparable 2019 models.Carbon emissions reduction in the product use stage 1)2022 electricity usage:3,067 GWh,2023 electricity usage:2,914 GWh15Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleSamsung Electronics Sustainability Report 2024Circular Economy Planet/DX DivisionStrategyThe DX Division aims to enhance the resource circularity of our entire product life cycle ranging from raw material procurement to production,disposal,and recycling.We aim to develop the resource circularity process through producing electronics with recycled materials,collecting end-of-life and discarded products,recovering resources,and applying the recovered resources to new products.We work to extend our products lifecycles and minimize our environmental impact.Risk ManagementThe DX Division manages resource circularity risks in 4 stages:risk recognition,assessment,treatment,and progress management.We recognize resource circularity related risks in waste treatment cost increase,treatment facility and technology limits,and lack of consumer awareness,and resource circularity opportunities in waste reduction via recycling,including plastics,and new market opportunities from recycling technology development.Expand Use of Recycled and Recyclable Materials Developing innovative technology for recycling discarded fishing nets to address plastic debris Expand recycled and recyclable materials use Apply recycled resin to 50%/100%of DX Division purchased product plastic parts by 2030/2050Operate E-waste Collection System Operate e-Waste collection and recycling systems in approximately 70 countries to ensure that waste products are recycled into materials for new products Expand e-Waste collection system to approximately 180 countries by 2030 Cumulatively collect 10 million tonnes of e-Waste by 2030 and 25 million tonnes by 2050Achieve business site Zero Waste to Landfill Certification Set Zero Waste to Landfill policy to promote recycling Achieve Zero Waste to Landfill1)certification from global environment and safety certifier UL for all manufacturing sites Achieve highest level certification(Platinum)for all DX Division manufacturing sites by 20251)UL(Underwriters Laboratories)Zero Waste to Landfill Certification:evaluates a companys resource circularity efforts and assigns four levels of certification based on the percentage of waste generated by a business that is diverted from landfills.Platinum 100%,Gold 95-99%,Silver 90-94%,Certified 80%or higher(decimals are rounded up,99.5%is rounded up to 100%)ActivitiesExpand Recycled and Recyclable Materials UseThe DX Division is striving to apply recycled and recyclable materials.We took note of plastic waste,considered the largest threat to marine environments,and developed innovative technologies to recycle discarded fishing nets.We are also continually expanding our use of recycled and recyclable materials such as recycled aluminum and glass.Continual Expansion of Recycled Materials Samsung Electronics reduces environmental impacts by replacing plastics and vinyl used in several products packaging with recycled materials while reducing GHG emissions in our product transportation through miniaturizing and lightweighting our packaging.The Galaxy S24 series launched in 2024 used 100%recycled paper in package boxes as well as for protection papers attached to product front and rear.Recycled and Recyclable Packaging Material Use Case by Product CategoryVisual Displays/Digital Appliances Mobile AppliancesRecycled and Recyclable Materials Roadmap Ocean-bound plastic recycled and applied to DX Division manufactured products Circular Economy Lab established Applied recycled resin to 25%of plastic parts in products1)Apply recycled resin to 50%of plastic parts in products purchased by DX Division1)Establish recycling system for minerals extracted from all waste batteries collected by us Apply recycled resin to 100%of plastic parts in products purchased by DX Division1)2022 20232030 2050 1)Weight based.Recycled resin rates differ by partResource Circularity Risk Management Process1Identify potential risks from a life cycle perspective from product design to disposal3Develop,implement,and monitor responses to each risk2Prioritize identified risks4Manage progress on each risk,evaluate management efficiency and continually improve risk management effectWe enhance the durability,repairability,and upgradability of select products,support regular software upgrades,and operate the Samsung Care program to minimize customers burdens with maintenance and repair,helping them use our products longer.16Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleSamsung Electronics Sustainability Report 2024E-waste Collection SystemThe DX Division is operating various recycling programs for waste products regardless of brand in over 70 countries including the Republic of Korea.We consider national traits in operating our e-waste recovery and recycling programs,either directly operating recycling centers or collaborating with recycling associations and companies.We have recovered a total of 6.297 million tonnes of e-waste from 2009 to 2023.We will expand our waste product recovery system to all countries with product sales,or approximately 180 countries,and plan to recover a total of 10 million tonnes of e-Waste by 2030 and 25 million tonnes by 2050 from 2009.Extend Product LifecyclesWe research and apply ways to extend our product life cycles considering their impacts on the environment,given shorter product life cycles increase resource usage and carbon emissions.In addition to enhancing our products durability and repairability and upgrading their software,we replace all used parts with 100%authentic Samsung parts through our Certified Re-Newed(CRN)program in the United States,England,and France(as of March 2024).All CRN approved smartphones have new batteries installed.We extend our product lifecycles by collecting used smartphones and selling CRN approved smartphones via such trade-in programs.Research Recycling TechnologiesWe established the Circular Economy Lab in July 2022,which specializes in research on material recycling process and technology,and the application of recycled materials to products to maximize resource circularity.Through the Lab,we have collaborated with various research institutions and corporations to research material recycling and waste-to-resource technologies with the aim of ultimately manufacturing all of our products with recyclable materials.Obtain Business Site Zero Waste-to-Landfill CertificationDX is targeting Zero Waste-to-Landfill certifications for all of our manufacturing sites to recycle resources and reduce environmental impacts.Our manufacturing sites are recycling manufacturing process waste,previously sent to the landfill or incinerated,into cement raw materials and recycled fuel.We have maximized our recyclable waste sorting capabilities by establishing new waste sorting processes,and are recovering energies via heat and steam where materials that are not recyclable are incinerated.We raised our recycling rate through these means and plan to acquire the highest level of Platinum Zero Waste-to-Landfill certification at all manufacturing sites by 2025.Zero Waste-to-Landfill Status Reduce Company WasteIn order to minimize the use of disposables,the DX Division distributed reusable bags to all employees in Korea to minimize the use of single-use plastic bags and are using reusable cups and cutlery in Korean business site cafeterias and cafes.We also have installed approximately 480 food processors at our Suwon and Gwangju business sites to sort food waste from general waste,converting them into fertilizer.We plan to strengthen these types of business site waste reduction activities and expand them to other sites.Company Waste Reduction E-waste Take-Back OperationRecycling Programs by CountryWaste Product Recovery System by RegionRequirements for Recycling Service Partners(Base year:2009,Units:10,000 tonnes)Amount of Collected e-waste Annual amount Cumulative amount55.92021509.959.92022569.859.92023629.7E-waste Collection and Recycling Roadmap Operate e-waste collection programs in approximately 70 countries Operate e-waste collection programs in approximately 180 countries and cumulatively1)collect 10 million tonnes of e-waste Cumulatively1)collect 25 million tonnes of e-waste 2023 2030 2050Business Site Zero Waste-to-Landfill Roadmap DX Division obtained first Platinum Zero-Waste-to-Landfill in our Slovakia site1)1)from global safety certifier UL(Underwriters Laboratories)DX Division received Platinum certification at 14 manufacturing sites Receive Platinum certification at all manufacturing sites2021 2023 2025 Activities to Extend Product LifecyclesIncrease DurabilityUpgradabilityConsider ReparabilityProduct Repair ServicesKorea:Suwon,GwangjuGlobal2):(Chennai,Noida),Brazil(Campinas,Manaus),Poland,Egypt,Vietnam(Hanoi(2),Mexico(Tijuana),TurkiyeKorea:GumiGlobal2):Hungary,Vietnam(Ho Chi Minh),Thailand,Mexico(Queretaro),Indonesia,United States,MalaysiaPlatinum Certification1)Gold Certification1)1)As of March 20242)Global refers to all non-Korean regionsWaste ItemPreviousImprovedGlass panel with deposition for refrigeratorsLandfillReused into glass raw materialOpen cell panel for TVsLandfillReused into cement raw materialWaste batteryLandfillExtracted into valuable metalsCafeteria waste,landscaping byproductIncinerateManufactured into fertilizer and feedExpanded Business Site Recycled Waste List1)base year of 200917Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleSamsung Electronics Sustainability Report 2024Water&Pollution Planet/DX DivisionStrategyThe DX Division categorizes used water into sewage,wastewater,process water,and ultra-pure water to increase the reutilization rate of water used for manufacturing across approximately 20 global manufacturing sites.We calculate monthly reutilization rates by category to reduce the amount of water withdrawn.Furthermore,water that is ultimately consumed and not returned to the local environment is restored through external water replenishment projects in an effort to preserve water resources.We also perform Responsible Business Alliance(RBA)assessments of our suppliers,reviews Water,Sanitation and Hygiene(WASH)services,and provides consulting on water resource treatment facilities.Each manufacturing site also formed cooperative systems with local governments,NGOs,and local residents to protect and improve water resources in watersheds near our sites.Water Resource Management Mission and Vision We strive to minimize the impact of substances of concern that may enter our products,as well as chemicals used in the frontlines of manufacturing,on the health of our customers and employees.Our internal regulations are stringently managed according to global standards,including the Restriction of Hazardous Substances(RoHS)Risk ManagementWe perform annual analysis on whether a business site is located in a water stress or water risk region,detailing potential water resource risks.We apply internationally recognized water resource management tools like the World Resource Institutes(WRI)Aqueduct Water Risk Atlas1)to identify water stress or risk regions,then establish and execute response strategies per water resource risk based on the Carbon Disclosure Project(CDP)Water Guidance.1)Aqueduct Water Risk Atlas standard:Regions evaluated as High(3)based on metrics including water resource quantitative and qualitative data,regulation and reputation riskKey water resource risk response strategies include preparing for droughts by installing and operating water storage tanks and reuse facilities to operate manufacturing facilities,preparing for floods through annually renewing disaster insurances,and preparing emergency response systems and performing regular response drills.We also are managing our effluent standards to legal levels as well as rigorous internal levels and performing various activities raise employee awareness of the importance of water,such as partaking in Water Day events.Water Risk Assessment Water Resources Risk Analysis and Countermeasure Strategies Water UnitSitesWithdrawalReleaseTotal1,000 Tonnes2517,270 13,042Water Risk Regions1,000 Tonnes91)2,4501,493DX Division Business Site Water Risk Status(as of 2023)1)Number of water risk sites by country:India(2),Mexico(2),Poland(1),Egypt(1),China(1),Thailand(1),United States(1)Systemic Water Resource Management Reduce and recycle water used in manufacturing process through detailed water resource management at global manufacturing sites Obtain Alliance for Water Stewardship water management certificationsRestore Water Resources Preserve water resources through water replenishment projects for all manufacturing sites Restore 100%of globally used water for DX Division by 2030Product and Manufacturing Process Substances of Concern(SoC)Management Comply with regulations and strengthen management of SoCs in products and business site chemical substance regulation complianceDirect and the Registration,Evaluation,Authorization,and Restriction of Chemicals(REACH)Regulation of the EU and the Toxic Substances Control Act(TSCA)of the U.S.EU REACH Declaration The DX Division,based on the Standards for Control of Substances Used in Products,performs risk assessments for all business site work processes and facilities handling substances of concern whenever new facilities are installed,personnel or process deployed,or work order and conditions changed.We analyze risks upon confirmation based on its occurrence possibility,causal factors,and control measures and predict its potential impacts based on possible accident scenariosActivitiesSystemic Water Resource ManagementThe DX Division seeks to decrease water withdrawal and increase water reuse at all business sites by means like installing water saving facilities,treating wastewater,and expanding graywater reuse.We are also pursuing various water use reduction activities including using groundwater and rainwater for landscaping and everyday purposes.Water reduction1,553 thousand tonnesWithdrawal reduced by 8%relative to 2022 levelsWater reuse3,470 thousand tonnesReuse rate increased by 3%relative to 2022 levelsWater Resource Management Process 18Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleSamsung Electronics Sustainability Report 2024Product and Manufacturing Process Hazardous Substance ManagementThe DX Division encourages our suppliers to actively engage in environmental management activities through Eco-Partner Certifications managing hazardous substances in the supply chain.Suppliers submit product environmental assurance reports that guarantee data and hazardous substance information from their raw material providers.Samsung Electronics evaluates and certifies companies compliance to Standards for the Control of Substances Used in Products and only works with certified suppliers.Control of Substances Used in Products As chemical substance regulations are strengthened world-wide and national regulatory subjects and standards become diversified,more professional chemical substance management is necessary.Samsung Electronics regularly updates chemical substance regulation database for 16 countries with manufacturing sites including China,Vietnam,and India,while minimizing risk by applying our own standards and through integrative management.We are also enhancing our chemical substances management history process and system to readily identify whether internally regulated substances are contained in any chemical products that our employees intend to use,and testing for such chemicals.To secure chemical substance use safety,we manage all chemicals-related activities from procurement to disposal via our system.Chemical Substance Management Process Manufacturing Process Used Regulated Substance Pollutant Discharge Minimization and Incident PreparednessIn order to minimize air and water pollutant discharge that occurs during the product manufacturing process,we are applying both legal and rigorous internal standards for discharge and each manufacturing site analyzes atmospheric discharge outlets and effluent analysis more often than is legally required.We secure an additional capacity of more than 10%in our air and water pollutant prevention facilities at all times so as to prepare in advance for sudden pollutant inflow increases,and doubly install key preventive facilities so that even in emergency incidents such as facility breakdown preventive facility operations are not hindered.We are also prepared to immediately lock down pollutant discharge through the installment of blocking facilities such as automated floodgates and valves and surveillance facilities such as meters and CCTVs at rainwater final discharge locations in accordance to the specific traits of treated substances and external watersheds.Voluntary Local Community AgreementsThe DX Divisions business sites entered voluntary agreements with local environmental agencies in Korea so as to ensure air quality control and prevent negative air quality impacts on the local populations health,including those of our employees.The Suwon site entered into a voluntary agreement to reduce seasonal particulate matter with the Korean Ministry of Environments Metropolitan Air Quality Management Office and is voluntarily reducing key particulate matter substance use by over 10%of legal requirements during high concentration particulate matter seasons(December March).The Gwangju site signed a voluntary agreement to reduce air pollutants with the Youngsan River Watershed Office of the Environment to reduce annually emitted pollutants to less than 95%of legally allowed limits until 2024.The DX Divisions Suwon,Gumi,and Gwangju business sites obtained the highest level of Platinum certification from the Alliance for Water Stewardship(AWS)in February 20241).We consider this a testament to the superiority of our water resources management system and plan to expand certifications to global locations like Vietnams in 2024.1)AWS is a global membership collaboration for water management jointly founded by the UNGC(UN Global Compact),CDP(Carbon Disclosure Project),and other international organizations.AWS certifies a companys water resource management system into three levels of Platinum,Gold,and Core based on a total of 100 evaluative items like the companys water management stability water contaminant management water quality and hygiene impact on aquatic ecosystem in nearby watersheds,and governance structure.Water Replenishment ProjectsWater usage is a necessary part of a products manufacturing process and while used water is treated and returned to the natural environment,some water is inevitably consumed in the process.The DX Division established a goal to return as much water as is consumed in its 100%water restoration by 2030 target.We minimize our environmental impact by returning utilizable water resources to stakeholders and local communities through such water replenishment projects.For example,we signed a Memorandum of Understanding(MOU)with the Korean Rural Community Corporation to support agricultural water reuse in island communities facing water shortages.In 2024,we will identify and develop replenishment projects not only in Korea but around the world where we have manufacturing sites to contribute to preserving water resources.Status of Water Restoration in DX Division AWS Certifications Water Resources Replenishment Roadmap Sign MOU with the Korean Rural Community Corporation,run 3 pilot projects for water resources replenishment in Korea Expand replenishment projects to 3 Korean sites and across 8 business sites in 4 countries globally*Develop additional replenishment projects globally*(11 countries,12 business sites)Restore 100%of globally used water for DX Division2023 2024 2030DX Division Water Resource Flow Chart(2023)(unit:1,000 tonnes)ProductionProcessDischarged into riverReuse3,470Discharged into sewage treatment plantDX DivisionSource of SupplyOff-site treatment facilities10,600On-site treatment facilities2,442Surface Water16,485Groundwater78619Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleSamsung Electronics Sustainability Report 2024Climate ChangeWater WastePollutionDS DivisionGovernanceThe Sustainability Committee under the Board of Directors,as our overarching decision-making body,oversees environmental issues at large including climate change and water resources,which are key areas of management directly connected to our companys business and financial success.The Sustainability Committee approves corporate environmental management strategies/targets,oversees key relevant activities,and makes key decisions.In the DS Division,the ESG Management Council(CEO-presiding)reviews strategies,targets,and progress for our environmental management.DS Division Sustainability Management Meetings chaired by the Corporate Management Office head makes decisions on detailed strategies,and the Net Zero Committee chaired by the FAB Engineering&Operations Head sustainably pursues its environmental strategy.Working committees in the carbon,pollutants,waste,and water reuse fields develop action items and review progress based on this decision-making process.The DS Division has assigned items such as GHG emission reduction,renewable energy transition,and electricity use reduction as core categories in evaluating the performance of executives and organizations,depending on the responsibilities(including for the Chief Safety Officer as the officer overseeing our manufacturing).We will continue connecting environmental progress results with rewards to reinforce our environmental management system.Governance and Major ProgressEnvironmental Targets and Major Progress in 2023 Environmental TargetsProgress in 2023 Develop innovative technology to improve process gas treatment efficiency Improve energy efficiency of FAB facilities through cooperation with facility companies Expanded installment of process gas treatment facilities(RCS)Reduced fuel usage of boilers through expansion in waste heat recovery Expand renewable energy such as signing new solar power PPAs Achieve Net Zero(Scope 1,2)for DS DivisionNet ZeroWater ResourcesWastePollutants20302050 Obtain highest grade in Zero-Waste-to-Landfill(Platinum)certification for all manufacturing sites Zero detection rate in sections where workers are directly exposed to chemicals Maintained high level Zero-Waste-to-Landfill certifications1)1)7 Platinum,1 Gold Achieved Korean manufacturing site waste recycling rate of 98.4veloped high efficiency air,water pollutant treatment facilities and processes that dont use pollutants Managed chemical substances exposure at levels 10%lower than legally required Achieve 99.9%waste recycling rate for DS Division Korean manufacturing sites Treat DS Division manufacturing site air,water pollutants to natural levels Develop new technology to treat pollutants to natural levels20252030 Developed ecological status maps for areas influenced by DS Division sites(Giheung,Hwaseong)Obtained first AWS Platinum certification in Korea in March(Hwaseong)Expand ecological status map development for areas influenced by DS Division business sites Expanded sites with AWS1)Platinum certification(Giheung,Hwaseong,Pyeongtaek,Xian)1)Alliance for Water Stewardship Reduce DS Division water withdrawal at Korean business sites to 2021 levels through means such as reuse of effluent water from public wastewater treatment plants2024203020302040DS Division Environmental Management Governance BodiesReuse Expansion CommitteeEnvironmental Preservation CommitteeCarbon Reduction CommitteeReports to Board of Directors composed of independent directors,oversees sustainability strategy/progress at least once per quarterSustainability CommitteeDiscuss sustainability issues at least once per quarter with executives of all relevant units and chaired by head of DivisionESG Management CouncilEngineering&Operations Head presiding,discusses carbon relevant issues every other monthNet Zero CommitteeCorporate Management Office head presiding,discusses ESG issues at least once per quarterDS Sustainability Management MeetingsWaterPollutants,WasteClimate Change20Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleSamsung Electronics Sustainability Report 2024StrategyThe DS Division announced net zero Scope 1,2 emissions by 2050 in the New Environmental Strategy in 2022.We are strengthening our carbon reduction activities through various projects including GHG treatment and energy efficiency improvement technology implementation and cooperation with government and industrial bodies.Risk ManagementThe DS division identifies regulation risks and opportunities by country related to climate change and integrates them into our company risk management system.Risks and opportunities include global regulations and market trend change by region that can impact our business and reputation.Identified risks and opportunities are reported to management through relevant environmental governing bodies.Climate-Related Financial Risks and Opportunities AssessmentWe conducted a pilot assessment of future financial impacts using 2021 as a base year to respond to shifts in the industry paradigm due to climate change.Because understanding climate related risks and opportunities is important for creating new businesses and entering future markets,we identified physical and transition risk factors from climate change and analyzed their financial impacts.The DS Division identified heat waves,storms,and coastal erosion as key physical risks.We installed rain screens at our manufacturing sites,and accounted for the highest level of wind speed recorded-capable of significantly impacting semiconductor production facilities-when establishing wind resistance standards during facility construction.The DS Division will consider such key issues when selecting new business sites and expanding production lines.We identified cost increases due to GHG emission increases to be a key transition risk,thus we are continuously investing in reducing emissions including installing additional RCS1),or process gas treatment facilities.1)Regenerative Catalytic SystemClimate Change Planet/DS DivisionClimate Change Risk Management Process Integrate climate change related regulation risk by country into company risk management system Risks include global regulations and market trend change that can impact company business and reputationClimate Change Risk AssessmentPhysical Risk:assessed impacts on corporate value due to 3 of 10 identified major climate related disasters(heat wave,storm,coastal erosion)based on RCP1 8.5(greater than 4 increase)Transition Risk:estimated impacts on corporate value of GHG emissions(Scope 1,2,3)at large focusing on low carbon transition under NGFS2)scenarios of the REMIND3)model based on SSP4)1)Representative Concentration Pathway 2)Network for Greening the Financial System 3)Regional Model of Investment Shared Socioeconomic Pathways 4)Shared Socioeconomic PathwaysClimate Change Risk Cost increase due to GHG emission increase(Scope 1,2,3)Transition Risk Heat wave,extreme cold,storms,coastal erosions,etc.Damage-related costs from 10 extreme climate and natural disastersPhysical RiskClimate Change Risk and Opportunities ActivitiesEnvironmental risks and opportunities affect not only products and services but also manufacturing processes,supply chains,R&D,and other business activities.The DS Division monitors risks from global operations according to risk management processes and manuals in environmental safety,climate change and energy,and compliance.We have established and disclosed our environmental safety policies.Direct GHG Emission ReductionThe DS Divisions direct carbon emissions(Scope 1)are mainly due to the use of process gas during the semiconductor manufacturing process and use of fuels such as LNG.By 2030,the DS Division plans to develop innovative technologies that will significantly improve the efficiency of process gas treatment and expand carbon emission reduction facilities on production lines.In addition,to reduce the use of LNG boilers,we will expand the utilization of waste heat and consider introducing electric heat sources.We also plan to convert 100%of Korean business vehicles to zero-emission vehicles(electric and hydrogen vehicles)by 2027.GHG Emission Reduction Roadmap Operate bimonthly Net Zero Committee and Carbon Reduction Committee to establish and execute DS Division GHG reduction action items Expand process gas treatment facility(RCS)installation Reduce LNG boiler usage through expansion of waste heat recovery Develop/apply high efficiency RCS catalyst Expand the utilization of waste heat recovery system Develop innovative technologies for improving process gas treatment efficiency Improve energy efficiency of FAB facilities through cooperation with facility companies Achieve net zero Scope 1,2 emissions for DS Division2023 2024 2030 205021Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleSamsung Electronics Sustainability Report 2024Process Gas Emissions ReductionThe DS division is reducing direct GHG emissions by increasing process gas treatment efficiency,reducing gas usage,developing alternative gases,and continuously expanding investment in RCS facilities.Fuel Use ReductionThe DS Division recovers and recycles waste heat generated during business operations to reduce the amount of fuel(LNG)used within business sites.We maximized recovery of waste heat generated from facility cooling water/wastewater effluents at our Giheung,Hwaseong,and Pyeongtaek plants to use as a heat source for process water and air conditioning systems.This has the effect of reducing GHG emissions by reducing the amount of LNG used as a conventional heat source.The DS Division plans to develop technologies to improve waste heat recovery rates and introduce/expand facilities that can replace LNG-based heat sources to minimize direct GHG emissions at its sites.Expand Renewable Energy UseWhile the DS Division has a large electricity demand due to its industrial nature,Korean renewable energy supply conditions are relatively unfavorable compared to major countries overseas.We nevertheless plan to transition our global power use to renewable energy by 2050.Additionally in the United States and China,where we already achieved our renewable energy targets,we will expand our power purchase agreements(PPAs)focusing on regions with existing renewable energy supplies.1 Process Gas Treatment Expand installations of large-scale process gas treatment systems(RCS)Develop and apply new catalysts,increase process gas treatment efficiency(up to 97%)2 Reduce Process Gas Usage Optimize process time,steps,and Clean Recipe to minimize the usage of process gas3 Develop alternative gases Develop alternative process gases with low global warming potential and replace PFCs in some product processes(Developed G1 gas,an alternative to C4F8)Renewable Energy Status by Key RegionU.S.In November 2019,we signed a PPA for 75MW of wind power with Apple,eBay,and Sprint to source renewable energy for U.S.Austin sites.Based on such efforts,the U.S.subsidiary achieved the transition to 100%renewable energy in 2020.The U.S.subsidiary also received the Green Power Leadership Awards for Excellence in Green Power Use from the U.S.EPA(Environmental Protection Agency)in September 2019.China Our China operations have converted 100%of their electricity to renewable energy in 2020.We will gradually diversify our portfolio in accordance to local renewable energy-related schemes and market conditions.Korea The DS Division signed a PPA with SK E&S in Nov.2023 and with Samsung C&T in Mar.2024 to supply approximately 76.2 GWh of renewable energy annually from a 60 MW solar power plant for 20 years for a total of 1,466 GWh1)of renewable energy,starting in 2025.So far,we have installed a total of 2.8 MW of solar power generation facilities and generated 2.8GWh of energy in 2023 for on-site use.We also installed 1,372 RT2)worth of geothermal heating and cooling facilities at our Korean business sites,including 1.5 MW at the Giheung site and 0.7 MW at the Pyeongtaek site.We will continue to expand both PPAs and facilities utilizing renewable energy.1)accounting for reduction in guaranteed supply due to solar panel degradation2)Ton of RefrigerationFuel Use Reduction ActivitiesLNG Use Reduction Maximized waste heat recovery using cooling water/wastewater effluents Evaluated facilities that can replace LNG-based heat sourcesThe RCS Treatment Process13245Pre-treatment scrubber:treats high concentration acidic gasRCS facility:uses catalysts to decompose PCFs(perfluorocarbons)at low temperaturesPost-treatment scrubber:HF(hydrogen fluoride)treatmentPrimary acid scrubber:primary treatment of acidic gas using cleaning facilitiesSecondary acid scrubber:secondary treatment of acidic gas to minimize atmospheric pollutantsDS Division GHG Emission Reduction Project Progress in 2023 Process Gas Treatment Facility Operation Renewable Energy Use Process Efficiency Improvement&Alternative Gas Use 566%8%(Unit:tCO2e)10,059 1,000tCO2eLarge Scale Integrated Process Gas Treatment Facility(RCS)The DS Division developed and is using the semiconductor industrys first and only large-scale integrated process gas treatment facility,known as RCS.RCS collectively treats process gas at site rooftops using catalysts by leveraging the feature that all facility outlets are connected to rooftops.Compared to existing individual treatment facilities,the DS Divisions RCS can treat gas at a lower temperature,reducing fuel use and generating fewer air pollutants such as nitrogen oxides.We continue to reduce our direct emissions by installing new RCS facilities on lines that can be installed,16 process gas treatment facilities(RCS)were built in 4 production line buildings in 2023.1)Regenerative Catalytics System1)22Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleSamsung Electronics Sustainability Report 2024Value Chain Carbon ReductionSince 2009,the DS Division showcased low-power memory solutions every year.We are also strengthening our technical capabilities to increase product energy efficiency,reducing carbon emissions in product use phase through the development of innovative ultra-low power technologies.We are obtaining various environmental certifications through key product carbon footprint and carbon reduction factor calculations.In particular,we plan to secure ultra-low-power technologies that will enable us to significantly reduce the power consumption of memory used in data centers and mobile devices in 2025.Scaling down of semiconductors and advances in low-power design technology will not only contribute to reducing GHG emissions by reducing the power used by various IT products and data centers but will also allow us to develop products with the same performance using fewer raw materials.Semiconductor Product Life Cycle Assessment(LCA)ProcessThe DS Division has established a Life Cycle Assessment(LCA)process to identify environmental impacts and calculate the carbon footprint of semiconductor products throughout their entire life cycle.We also completed third-party verification of the LCA process in accordance with ISO 14040,14044,and 14067 international standards to ensure the reliability of the data generated through the process.Based on this experience,the DS division has built its own automated carbon footprint calculation system,which calculates the emissions of final products based on the emissions of each unit of the semiconductor production process to reflect product characteristics such as miniaturization.In the long term,we will strive to minimize our environmental footprint by establishing a comprehensive management system to evaluate not only carbon emissions but also the overall environmental impact,including on water and other resources.LCA Third Party Verification Statement Strengthen Other Indirect Emissions(Scope 3)Management and Identify Reduction Action ItemsThe DS Division has been operating a company internal committee since 2022 to strengthen our Scope 3 management and reduction.In 2022,we enhanced our Scope 3 calculation methodology by category and completed third party verifications.We will continue to enhance our calculation methodology for more accurate emission calculations.Calculated Scope 3 emissions are disclosed through channels like the Sustainability Report and Carbon Disclosure Project(CDP)reports.Also,we continue to identify various reduction action items in our supply chain,resource circularity,logistics,and other subjects to establish mid-to long-term reduction targets and have implemented pilot projects for hydrogen vehicles in our Pyeongtaek sites employee transit buses.System SemiconductorsReduce power use and develop high-performance semiconductors Mobile processor Exynos 2400:Installed deca-core CPU1)and hexa-core GPU2)to reduce power usage on mobile devices,improved CPU performance by 70%compared to previous generation products Image Sensor:Develop leading micropixel technology to maximize resolution and minimize required energy for HDR3)movement through design optimization1)Central Processing Unit 2)Graphics Processing Unit 3)High Dynamic RangeMemory SemiconductorsReduce global data center power use Develop data center specific high-performance SSDs1)and improve energy efficiency over previous generation products-PM9D3a:approximately 60%more energy efficient than PM9A3Develop next generation low-power DRAM Minimize power consumption and improved performance over the previous generation with such new technologies as EUV2),HKMG3),TSV4),and DVFS5)-LPDDR5X:Achieved 20%reduction in power consumption compared to the LPDDR4X-LPCAMM2:Achieved 60%less power consumption compared to the SODIMM1)Solid State Drives 2)Extreme Ultra Violet 3)High-K Metal Gate 4)Through Silicon Via 5)Dynamic Voltage and Frequency ScalingReduce Electricity UseThe DS Division is optimizing our improvements to the semiconductor manufacturing process to minimize the increase in GHG emissions by reducing power use through shortening facility test times,improving operating temperature conditions for auxiliary facilities,and applying high-efficiency equipment.We also aim to increase power efficiency by replacing and supplementing facilities and optimizing operations.Electricity Use Reduction Activities Shorten facility test times Improve auxiliary facility operating temperature conditions Develop energy saving technologies for facility power Apply Sleep Mode to production equipment Use energy saving technologies such as energy efficient chillersReduce electricity use in semiconductor manufacturing process23Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleSamsung Electronics Sustainability Report 2024StrategyAs Samsung Electronics expands semiconductor lines in Korea,the amount of industrial water required for DS Division manufacturing sites in 2030 is expected to continue to grow from 2021 levels.In response,we have set a 2030 water intake reduction target aimed at reducing water consumption to 2021 levels and are striving to achieve this goal through various efforts,such as building wastewater reuse systems and signing agreements to reuse our treated sewage effluents.The DS Division will continue to work on minimizing our water resources impacts of Korean and global manufacturing sites.Risk ManagementThe DS Division has established an ESG risk management system to identify ESG risks including for water resources.Key management risks based on monitoring and risk assessment are reported to executive management and ultimately applied to DS Division sustainability strategies.Water Planet/DS DivisionSiteWater Stress LevelKorea(Giheung/Hwaseong/Pyeongtaek/Cheonan/Onyang)Medium-HighChina(Xian/Suzhou)Extremely highChina(Tienjin)Medium-HighUnited States(Austin/Taylor)Medium-HighReduce Water Use Optimize manufacturing process to reduce manufacturing use water Stop water supplies to non-active facilities Manage facility water use time Improve processes for facility operationsEcological Preservation Secure stream flows by release cleanly treated water Contribute to improving water quality and enhancing biodiversityExpand Water ReuseEstablish Water Reuse System Maximize industrial water reuse rate through wastewater effluent reuse system and invest in new technology development Apply technology for wastewater by concentration levels Reuse concentrated wastewater generated during ultra-pure water production Develop membrane-based water reuse technologiesUtilize External Wastewater Expand water supply through agreements to expand wastewater reuseWater Risks and Opportunities and Response StrategiesThe DS Division applied the WRI Aqueduct Water Risk Atlas,an internationally recognized water resources management framework and tool,to identify water resource risks1).We identified 4 risks factors and 1 opportunity factor and establish response strategies by region accordingly.1)Aqueduct Water Risk Atlas standard:Regions evaluated as High(3)based on metrics including water resource quantitative and qualitative data,regulation and reputation riskWater Risks and Response StrategiesDroughts,Water Outage Diversify water sources:establishment of emergency supply system capable of providing water from water suppliers;alignment with criteria set by water suppliers when evaluating water risks Calculate expected drought damage costsIncreases in South Korean Water Stress Index Annually review business site water stress/risk levels,detail risks and prepare response strategies accordinglyWater Resource Depletion,Pollution Participate in activities commemorating World Water Day to raise awareness of the importance of water Engage with local communities including joint activities for water risk prevention and river and marine ecosystem conservation with public,civic,and academic organizations in proximity to our business sitesWater Regulations Observe local environmental policies and regulations Maintain management standards at legal levels as well as rigorous internal levelsWater Opportunities and Response StrategiesSecure comparative competitiveness through value chain water resources management support Annually monitor water use savings,share water use savings knowhow,and seek partner company cooperation through value chain water footprint management24Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleSamsung Electronics Sustainability Report 2024Water Resource Regulation Risk and Opportunity ManagementThe DS Division is actively responding to regional regulation changes including such laws like the Water Environment Conservation Act,the Promotion of and Support for Water Reuse Act1),the Water Supply and Waterworks Installation Act,and the Sewage Act in Korea.According to health and safety protocols we continue to modify our health and safety incident management policies and manage water resource outflow at both legal and rigorous internal standards.We deliver our opinions on policies to regulation agencies via communication channels such as relevant associations and indirectly participate in water related policy and regulation improvement.Our Giheung,Hwaseong,Pyeongtake,Onyang sites have earned the Green Company status under Article 16-2 of the Environmental Technology and Environmental Industry Support Act,as assigned by the Ministry of Environment to applicable companies in accordance with the Acts Enforcement Decree.Green Company designation is dependent on meeting all qualifications including environmental assessments,pollutant management status,environmental improvement planning,and demonstration of compliance with environmental laws.In addition,the DS Division has also performed environmental management activities in setting management standards at legal and rigorous internal levels and was designated Green Company status in recognition of such activities.1)Promotion of and Support for Water Reuse ActActivitiesExpand Water ReuseThe DS Division is reducing our newly withdrawn water by maximizing our process water reuse.DS Division required water withdrawals are forecast to continue growing by 2030 relative to 2021 levels,but we will maximize our water reuse to reduce withdrawal to 2021 levels.Water Use ReductionThe DS Divisions manufacturing sites reduced our water use through operation optimization,changing wastewater treatment methods and process control values.We will maximize water reuse through systemic enhancements including for the production process or reuse systems and for our low concentration wastewater reuse.We also plan to reuse public wastewater treatment plants effluents.Water Reuse(units:thousand tonnes)202120222023113,108119,421Water Resources Management Roadmap Develop ecological status map for areas within DS Division site influence(Giheung,Hwaseong)March obtain AWS Platinum certification,a Korean first(Hwaseong)Expand ecological status map for DS Division(Pyeongtaek,Cheonan,Onyang)Expand AWS Platinum certified sites(Giheung Hwaseong,Pyeongtaek,Xian)Net zero water withdrawal increase for DS Division Korean sites compared to 2021 levels by means such as wastewater treatment plant effluent reuse2023 2024 2030 Water Resource Management ProcessThe DS Division,to increase our manufacturing process water reuse rate,classify our water resources into sewage,wastewater,process water,and ultra-pure water and manage them by entering reuse rates per category per site in our environment management system on a monthly basis.We prevent contamination with site-installed groundwater contamination prevention facilities and safely treat effluents via on-and off-site treatment facilities.We apply legal and rigorous internal management standards when directly releasing effluents to stream via on-site treatment facilities.Acquiring Alliance for Water Stewardship(AWS)CertificationThe DS Divisions Hwaseong site obtained the highest level of Platinum certification from the Alliance for Water Stewardship in March of 2023.We have since expanded our Platinum certification status to our GiheungHwaseong and Pyeongtaek sites in January of 2024 and to our Xian,China site in February of 2024.Samsung Electronics plans to expand AWS certifications to our key global sites.AWS Certification Progress DS Division Water Resource Flow Chart1)(2023)(unit:thousand tonnes)Discharged into river 58,153Surface Water160,090Reuse119,421Discharged into sewage treatment plantGroundwater0DS DivisionSource of SupplyOff-site treatment facilities71,8001)Based on global manufacturing site annual cumulative usageDS Division Annual Reduction of Water UseTotal Water ReuseDaily reduction activities Optimize site operations Replace aged facilities Improve operation standardsSystemic improvements Enhance manufacturing process Process optimization:reduce ultra-pure water usage Establish reuse system1)approximate 2)Amount relative to water use under business as usual conditions such as not performing water saving projects119,4211)thousand tonnes12,7101)thousand tonnes2)1)approximateOn-site treatment facilities63,942Manufacturing Process89,97725Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleSamsung Electronics Sustainability Report 2024Woncheon-ri Stream-Hwangguji Stream,Hwaseong 8 families and 21 species of fish(dominated by freshwater minnows,crucian carp,common carp,and goby minnows)37 families and 57 species of benthos(high proportion of aquatic insects)1,369 counts of 34 bird species(Class II endangered wildlife bean goose spotted)9 species of mammals(class I endangered wildlife Eurasian otter and class II endangered wildlife leopard cat spotted in Huangguji Stream)Water flea acute toxicity test shows no ecotoxicity impact to streams from effluentsOsan Stream,Giheung 12 families and 26 species of fish(dominated by crucian carp,common carp,bass,and freshwater minnows)37 families and 55 species of benthos(high proportion of aquatic insects)8,861 counts of 90 bird species(8 class II endangered wildlife including the common spoonbill,eagle,hawk,bean goose,and long-billed plover spotted)5 species of mammals(class I endangered wildlife Eurasian otter,class II endangered wildlife leopard cat spotted)Otter gene survey1)confirmed existence of at least 4 Eurasian otters(3 male,1 female)Water flea acute toxicity test shows no ecotoxicity impact to streams from effluents1)Survey process:Collection of otter feces Amplify mitochondrial DNA Sequence analysis using genetic markersSeojeong-ri Stream Jinwi Stream,Pyeongtaek 5 families and 15 species of fish(dominated by freshwater minnows,crucian carp)23 families and 32 species of benthos(high percentage of aquatic insects)Water flea acute toxicity test shows no ecotoxicity impact to streams from effluentsGokgyo Stream,Onyang-Cheonan 8 families and 23 species of fish(dominated by freshwater minnows,goby minnows,and stone moroko)34 families and 45 species of benthos(high percentage of aquatic insects)684 counts of 34 bird species(Class II endangered wildlife long-billed plover,kestrels spotted)9 species of mammals(class I endangered wildlife Eurasian otter,class II endangered wildlife leopard cat spotted)Jiaohe Stream,China 8 families and 21 species of fish(common carp,crucian carp,etc.)53 families and 92 species of benthos(high percentage of arthropods)Ecotoxic luminescent bacteria composite toxicity test SOS/UMU genotoxicity testing shows no stream impacts from effluentsBiodiversity Recovery and Conservation effortsOsan stream near the Giheung site is fed with a daily average of 45,000 tonnes of purified effluents from our site,and the stream ecosystem has been restored to the point where otters(Class I endangered wildlife,Korean Natural Monument)now inhibit the area.In 2023,we conducted the first analysis using genes in otter feces and confirmed that at least four otters(three males and one female)live along Osan stream and discovered traces of various mammals such as leopard cats,raccoon dogs,and water deer.We also conducted removal of wildlife that disturbed the ecosystem,and our employees in cooperation with local residents planted native riverside plants and cleaned up the stream.The Hwaseong site has featured a natural area of approximately 290,000 m2 including the Donghak Mountain conservation forest(46,000 m2 of natural forest)within the site.In accordance with the Korean Environmental Impact Assessment Act,the site preserved a percentage of the natural area in consultation with the project approval agency and created ecological ponds,landscape ponds,and recreational forests.In addition,our Onyang and Cheonan site has been working with public-private partnerships since 2006 to install sand collectors,remove ecosystem disturbances,and collect ocean waste at least biannually to preserve the ecology and landscape of the Sohwang Sand Dune1)in Boryeong,Chungcheongnam-do,South Korea.The entirety of the Dune is well preserved and designated as an ecological and landscape conservation area and a coastal landscape reserve(Ministry of Environment,Ministry of Oceans and Fisheries),and is home to endangered wildlife such as the Mongolia racerunner(Eremias argus)and Swinhoes egret(Egretta eulophotes).1)Sohwang-ri Coastal Sand Dune,the only unspoiled coastal dune in Korea(2 km of coastline and an area of about 120,000 m2),home to 391 species of flora and fauna,including many endangered wildlife.Ecological conservationIn order to secure the ecological health of discharging rivers and preserve their biodiversity,Samsung Electronics DS Division has been conducting river monitoring and conservation activities since 2007 at Osan Stream,which activity has now been expanded to all worksites.Furthermore,we are in the process of establishing an ecological status map of areas under DS influence,which analyzes and evaluates the current status and impacts on the natural and ecological systems around the business sites in various ways,starting with the Giheung and Hwaseong sites in 2023.Stream Ecosystem ManagementKorean sites regularly measure water quality indicators such as biological oxygen demand(BOD),total phosphorus(T-P),pH in discharge rivers,and biological indicators such as fishes,benthos,birds,and mammals in order to manage and monitor their impact on the ecosystem.Based on these monitoring results,we carry out activities to improve and preserve the natural environment and biodiversity.Freshwater Ecosystem Monitoring and ImprovementIn order to protect the ecosystem and biodiversity of rivers near our sites,we regularly monitor the status of aquatic ecosystems(fishes,benthos,vegetation,etc.),terrestrial ecosystems(mammals,birds,etc.),water quality,vegetation,and biological habitats to identify impacts on the ecosystem in accordance with the Guidelines of the National Institute of Environmental Research.1)National Institute of Environmental Research Notification 2024-1,enacted on Jan.1,2024Wildlife near Osan Stream Wastewater OutletEurasian Otter Leopard cat Water deer 26Our CompanyAppendixMateriality AssessmentFacts&Figures PrinciplePlanetPeopleSamsung Electronics Sustainability Report 2024StrategyThe DS Division is actively working towards achieving a recycling rate of 99.9%by 2030 through various activities such as recycling waste,developing recycling technologies,and minimizing the use of disposable products.Collectively,our goal is to attain the Platinum Zero Waste to Landfill Certifications1)at all manufacturing sites by 2025.1)Zero Waste to Landfill Certification:Assesses a companys resource diversion initiatives and assigns a four-tier rating according to the percentage of waste produced by the business that is diverted away from landfills.Waste Planet/DS DivisionDevelop Waste Recycling Technologies Create technologies to recycle different types of waste,including wastewater sludge Utilize cleanroom supplies like dust-free suits and wipes constructed from recycled clear PET bottles Convert waste wafers into raw materials such as recycled aluminum alloy Rematerialize organic waste liquids through purificationAchieve Zero Waste to Landfill Certification Obtained Platinum Zero Waste to Landfill Certifications at 7 DS manufacturing sites and Gold Certification at 1 DS manufacturing siteRisk ManagementThe DS Division has implemented an ESG risk management process to identify significant waste-related risks stemming from our materiality assessment.Adhering to ISO 14001,ISO 50001,and other environmental management system standards,the EHS Center,DS Sustainability Management Office,and other pertinent departments evaluate risks on an ongoing basis.Key environmental concerns are then reported to management and incorporated into the DS Divisions sustainability management strategy,inclusive of risk management and identification of opportunities within relevant councils.ActivitiesDeveloping waste recycling technologiesWastewater Sludge RecyclingThe DS Division routinely analyzes the composition of wastewater sludge,which makes up over 50%of the waste generated at DS manufacturing sites,aiming to utilize sludge as a resource.By leveraging our analysis of wastewater sludge that can be monitored through our in-house system,we have identified and broadened the scope of reclaimed wastewater.We extract copper from wastewater sludge and recycle it.Additionally,we employ various methods to decrease the amount of sludge produced,such as reducing the water content of sludge and modifying the chemicals utilized in wastewater treatment plants.Risk Management Process3 Integrate into enterprise risk management processes Designating significant environmental issues as topics for periodic internal reporting;implementing investment,procurement,and operational plans while reporting on critical milestones.2 Manage risks and opportunities Monitoring risks and opportunities pertaining to GHG emissions,waste,renewable energy usage,water resources,pollutants,and more Discussing matters at
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Sonys Purpose&ValuesPurposeFill the world with emotion,through the power of creativity and technology.ValuesDreams&CuriosityPioneer the future with dreams and curiosity.DiversityPursue the creation of the very best by harnessing diversity and varying viewpoints.Integrity&SincerityEarn the trust for the Sony brand through ethical and responsible conduct.SustainabilityFulfill our stakeholder responsibilities through disciplined business practices.The Sony Group Code of ConductThe Sony Group Code of Conduct(the“Code”)sets forth the basic standards of ethical and responsible business conduct that must be followed by all Sony officers and employees(“Sony Group personnel”)in their daily work.The Code provides a set of principles to guide us,as we engage in our day-to-day roles to pursue our Purpose,in alignment with our Values.The Code requires that we ask if our business conduct contributes to a better future,not only for Sony,but also for society as a whole.The Code provides a set of guiding principles to conduct our business fairly.Following the Code in our day-to-day work helps nurture trust from our stakeholders which contributes to Sonys sustainable growth.The Sony Group Code of ConductVision of Founder and Basic Policy for Sustainability InitiativesSonys Basic Policy for Sustainability InitiativesSony manages diverse businesses with people at the core,and aims for sustainable value creation based on such diversity and mid-to long-term growth in the Sony Groups corporate value under its Purpose to“fill the world with emotion,through the power of creativity and technology,”and its Corporate Direction of“getting closer to people.”In order to have people connected to each other through emotion,it is necessary to create a society in which everyone can live with peace of mind in a healthy global environment.Sony acts with due consideration of the impact of its business activities on stakeholders,including shareholders,customers,employees,suppliers,business partners,local communities and other organizations as well as the global environment,and focuses on building trust with stakeholders through dialogue.Through innovation and sound business practice,Sony endeavors to enhance its corporate value and contribute to the development of a sustainable society.Sony Group Corporation has established the following basic policy on sustainability with the approval of the Board of Directors.Sustainability InformationCorporate GovernanceEthics and ComplianceTechnologyEnvironmentCommunity EngagementResponsible Supply ChainQuality and Customer ServiceAccessibilityResponsible AIRespect for Human RightsOccupational Health&SafetyEmployeesMaterialitySonys SustainabilityEditorial Policy/Business OverviewAt a Glance 2023Sonys Sustainability VisionSonys Basic Policy for Sustainability InitiativesThe Sony Group Code of ConductSonys Purpose&ValuesSustainability Report 2024002Sony manages diverse businesses and works for sustainable value creation and long-term growth in corporate value under its Purpose to“fill the world with emotion,through the power of creativity and technology.”The entire Sony Group endeavors to address sustainability issues,with each business leveraging its unique characteristics in taking action for sustainability.To address a variety of sustainability issues,Sony recently established a new Sustainability Vision to more clearly articulate the direction in which the Sony Group aims to proceed,with the goal to“inspire a world filled with emotion for this generation and beyond.”This vision expresses Sonys resolve to take action to create,and fill the world with,Kando through sustainability initiatives,defining the direction of its activities from the standpoints of People,Society and the Earth.Sony strives to celebrate individual differences and enrich hearts and minds so that people can share Kando with one another.It pledges to work to foster a society in which everyone can lead healthy,fair and equitable lives with peace of mind so that Kando is amplified,while ensuring that Kando is sustained by protecting and preserving the Earth,the foundation of all life.Since its founding,Sony has worked to be a corporation that is valuable to society.The principles of its founders are deeply rooted in its corporate culture and carried forward in Sonys Sustainability Vision.Inspire a World Filled with Emotionfor This Generation and BeyondPEOPLESOCIETYEARTHCelebrate individual differences and enrich hearts and mindsFoster a society in which everyone can live with peace of mindProtect and preserve the Earth,which is the foundation of lifePEOPLESOCIETYEARTHCelebrate individual differences and enrich hearts and mindsFoster a society in which everyone can live with peace of mindProtect and preserve the Earth,which is the foundation of lifeSustainability InformationCorporate GovernanceEthics and ComplianceTechnologyEnvironmentCommunity EngagementResponsible Supply ChainQuality and Customer ServiceAccessibilityResponsible AIRespect for Human RightsOccupational Health&SafetyEmployeesMaterialitySonys SustainabilityEditorial Policy/Business OverviewAt a Glance 2023Sonys Sustainability VisionSonys Basic Policy for Sustainability InitiativesThe Sony Group Code of ConductSonys Purpose&ValuesSustainability Report 2024003CONTENTS Employees 026026 Overview027 Diversity,Equity and Inclusion032 Attracting and Acquiring Diverse Talent034 Employee Challenge and Growth040 Creating an Environment where Individuality is Maximized046 Maintaining and Promoting Health Respect for Human Rights 056056 Overview057 Human Rights Due Diligence Responsible AI 060060 Overview061 Promoting Responsible AI Accessibility 062062 Overview063 Ensuring Enjoyment for More Customers Environment 092092 Overview093 Environmental Policies and Targets111 Contributions to Solving Environmental Issues112 Products and Services120 Supply Chain122 Manufacturing Sites134 Logistics136 Product Recycling140 Environmental Communication Technology 142142 Overview144 Technology for Sustainability Ethics and Compliance 150150 Overview151 Global Ethics&Compliance Network152 The Sony Group Code of Conduct153 Sonys Ethics and Compliance Program158 Privacy and Personal Information Management159 Customer-first Business Operations Corporate Governance 160160 Overview161 Corporate Strategy,Business Strategy and Other Policies161 Governance Framework175 Internal Control and Governance Framework181 Relationship with Shareholders and Other Stakeholders Community Engagement 085085 Overview086 Focus Areas and Results087 Support for Education088 Disaster Relief and Humanitarian Aid089 Initiatives for Global Issues090 Support for Communities091 Employee Engagement Quality and Customer Service 066066 Overview067 Product Quality and Quality Management069 Product Quality,Safety and Long-Term Reliability071 Customer Service072 Improving the User Experience Responsible Supply Chain 074074 Overview075 Supply Chain Management082 Responsible Sourcing of Minerals Occupational Health&Safety 049049 Overview050 Occupational Health&SafetyMateriality 023Sonys Sustainability 008008 Organizational Structure010 Message from the Officer in Charge of Sustainability011 Summary of Actions017 Stakeholder Engagement020 SDGs and Sonys Contributions021 External Evaluation and RecognitionAt a Glance 2023 005Sonys Sustainability Vision 003Sonys Purpose&Values 001Sustainability Information 184184 Datasheet191 Environmental Data Collection Methods and Rationale195 Independent Assurance Statement196 GRI Standards Content IndexThe Sony Group Code of Conduct 002Sonys Basic Policy for Sustainability Initiatives 002Editorial Policy/Business Overview 006Navigation ButtonsBack to the contents pageBack to the previously viewed pagePrevious pageNext pageGo to the relevant page in this reportGo to the relevant external siteSustainability Report 2024004Redefined DE&I StatementEstablished internal guidelines governing use of generative AI tools(Sony Group Corporation)*As of June 2024ISO 4500154 of 60 sites*received certification*April 2024Revised*the Sony Group Code of Conduct35hieved renewable electricity rate target*two years ahead of schedule*Target:more than 35%by fiscal year 2025Sony Global Relief Fund for COVID-19Global Social Justice FundPartnerships with international organizations totaling 15 million USD throughContinued medium-to long-term support throughExhibited accessible products at CEATEC and CSUNEstablished the rules of product commercialization processes for implementing inclusive designEstablished Sonys Sustainability VisionEstablished Sony Group Human Rights Policy*Including assessments using questionnaire and remote/on-site assessmentsMore than 240 supplier assessments*conducted*Each Executive Officer as defined in the policy will be in scope.Adopted the Clawback Policy*(Sony Group Corporation)At a Glance 2023Note:Except as noted individually,the figures are based on the results for fiscal year 2023(April 1,2023 to March 31,2024).*As of June 2024ISO 4500154 of 60 sites*received certification35hieved renewable electricity rate target*two years ahead of schedule*Target:more than 35%by fiscal year 2025*Including assessments using questionnaire and remote/on-site assessmentsMore than 240 supplier assessments*conductedSustainability InformationCorporate GovernanceEthics and ComplianceTechnologyEnvironmentCommunity EngagementResponsible Supply ChainQuality and Customer ServiceAccessibilityResponsible AIRespect for Human RightsOccupational Health&SafetyEmployeesMaterialitySonys SustainabilityEditorial Policy/Business OverviewAt a Glance 2023Sonys Sustainability VisionSonys Basic Policy for Sustainability InitiativesThe Sony Group Code of ConductSonys Purpose&ValuesSustainability Report 2024005Editorial PolicyEditorial PolicySony started to issue its Environmental Report in 1994.The report was then issued as Sonys CSR Report from 2003 to 2017,and has been issued as the Sustainability Report since 2018.The Sustainability Report 2024 has been issued to provide a comprehensive and detailed report on non-financial information for a wide range of stakeholders.This report focuses on major sustainability efforts in fiscal year 2023.It is issued with the approval of the Senior Executive in charge of sustainability.Scope:Sony Group Corporation,consolidated subsidiaries and other companies within the scope of consolidation.In this report,“Sony”refers to the“Sony Group,”as distinct from Sony Group Corporation and Sony Corporation.“Headquarters”refers to Sony Group Corporation.The“Sony Group”refers to Sony Group Corporation(the parent company operating in Japan)and all consolidated subsidiaries in which Sony Group Corporation holds a capital stake of more than 50%.For a list of consolidated subsidiaries please see“Affiliated Companies”on Sony Group Portal.Affiliated CompaniesPeriod CoveredFiscal year 2023(April 1,2023-March 31,2024)Some information on activities in April 2024 and after is also included.Date of IssueAugust 2024(Previous report issued:August 2023;issued annually)Referenced GuidelinesThe information in this report is presented with reference to the Global Reporting Initiative(GRI)Standards.This report also refers to the Environmental Reporting Guidelines(fiscal year 2018 version)published by Japans Ministry of the Environment.GRI Standards Content IndexReporting Principles of MaterialitySony has defined materiality as“material topics related to sustainability that impact Sonys value creation and are based on mid-to long-term social changes and the needs of diverse stakeholders,”and conducted a materiality assessment from the perspectives of both the company and the stakeholders.MaterialityThird-Party VerificationFor a third-party report on the assurance of environmental data,please use the link below.Independent Assurance StatementDisclosure and Communication of Financial and Non-Financial InformationSony understands the importance of appropriate disclosure to and communication with stakeholders.Since 2019,Sony has been issuing its Corporate Report to comprehensively communicate financial information and non-financial information,including policies for mid-to long-term value creation and business strategies.Sony also posts financial data,non-financial information and business summaries designed primarily for investors and shareholders on the Investor Relations section of its website.In addition,Sony issues its Sustainability Report to provide a wide range of stakeholders with non-financial information on topics such as activities related to sustainability and CSR.Disclosure of Financial and Non-Financial InformationCorporate Report Investor Relations WebsiteIntegrated report covering financial and non-financial information,such as business strategy and management policies for mid-to long-term value creation Messages from the CEO and the COO/CFO Value Creation at Sony Value Creation in Each Business Corporate GovernanceA business overview,with financial and non-financial information,particularly relevant to investors and shareholdersBriefings for Investors Corporate Strategy Meeting Earnings Announcement Business Segment Meeting Sustainability Meeting Technology MeetingFinancial Reports Securities Report(Japanese only)SEC FilingsCorporate Governance and Internal Controls Corporate Governance ReportSustainability ReportCovers non-financial information,such as activities related to sustainability and CSR,relevant to a wide range of stakeholders Sonys Sustainability Employees Occupational Health&Safety Respect for Human Rights Responsible AI Accessibility Quality and Customer Service Responsible Supply Chain Community Engagement Environment Technology Ethics and Compliance Corporate GovernanceOther Media for DisclosureReportsCorporate ReportCorporate Governance Report(in Japanese)SEC FilingsWebsite LinksInvestor RelationsSustainabilitySustainability InformationCorporate GovernanceEthics and ComplianceTechnologyEnvironmentCommunity EngagementResponsible Supply ChainQuality and Customer ServiceAccessibilityResponsible AIRespect for Human RightsOccupational Health&SafetyEmployeesMaterialitySonys SustainabilityEditorial Policy/Business OverviewAt a Glance 2023Sonys Sustainability VisionSonys Basic Policy for Sustainability InitiativesThe Sony Group Code of ConductSonys Purpose&ValuesSustainability Report 2024006Business OverviewCorporate Data(as of March 31,2024)Company nameSony Group CorporationFoundedMay 7,1946Headquarters1-7-1 Konan,Minato-ku,Tokyo,108-0075 JapanCommon stock881.4 billion yenSubsidiariesSubsidiaries:1,667Affiliated companies:163Out of which 1,634 are consolidated subsidiaries(including structured entities),and 150 are equity-method affiliates(including jointly-controlled entities)Headcount(consolidated)113,000Listed stock exchangesTokyo Stock Exchange(Japan)New York Stock Exchange(outside Japan)Shares per unit100Fiscal year-endMarchOrdinary general meeting of shareholdersJuneNumber of shares issued1,261,231,889Number of shareholders373,144Securities Report(in Japanese)Form 20-FOther Areas*24,200Asia-Pacific*116,600Mainland China and Hong Kong Region6,000Europe13,000United States16,000Japan57,200113,000(as of March 31,2024)Number of employees*3Other Areas*2948.4 billion yenAsia-Pacific*11,659.8 billion yenChina1,000.9 billion yenEurope2,633.0 billion yenUnited States3,751.2 billion yenJapan3,027.5 billion yen13,020.8 billion yen(FY2023 Results)Sales and financial services revenueFinancial Services1,770.0 billion yenEntertainment,Technology&Services(ET&S)2,453.7 billion yenImaging&Sensing Solutions(I&SS)1,602.7 billion yenMusic1,619.0 billion yenPictures1,493.1 billion yenGame&Network Services(G&NS)4,267.7 billion yen13,020.8 billion yen(FY2023 Results*4)Sales and financial services revenueAll Other 1,900Corporate employees 5,600Financial Services13,600Imaging&Sensing Solutions(I&SS)19,700Music11,300Pictures9,500Game&Network Services(G&NS)12,700Entertainment,Technology&Services(ET&S)38,700113,000(as of March 31,2024)Number of employees*3Data by Geographic SegmentData by SegmentForeign institutions and individuals 58.5%Japanese financial institutions 26.3%Japanese individuals and others 9.8%Other Japanese corporations 0.8%Japanese securities firms 1.4%Treasury stock 3.2%Distribution by shareholder type*1 Asia-Pacific:Southeast Asia,India,Oceania,Taiwan Region and South Korea*2 Other Areas:Middle East,Latin America,Africa and Canada*3 Numbers rounded to the nearest hundred employees*4 Including All Other,Corporate and eliminationSustainability InformationCorporate GovernanceEthics and ComplianceTechnologyEnvironmentCommunity EngagementResponsible Supply ChainQuality and Customer ServiceAccessibilityResponsible AIRespect for Human RightsOccupational Health&SafetyEmployeesMaterialitySonys SustainabilityEditorial Policy/Business OverviewAt a Glance 2023Sonys Sustainability VisionSonys Basic Policy for Sustainability InitiativesThe Sony Group Code of ConductSonys Purpose&ValuesSustainability Report 2024007Sonys SustainabilityOrganizational StructureSony Group Corporation has established the Sustainability Department under the supervision of the Senior Executive in charge of Sustainability.The Sustainability Department promotes various sustainability-related initiatives throughout the Sony Group in cooperation with each business unit and operating company(Business Unit(s)and other corporate divisions,including Compliance,Human Resources,Corporate Planning&Control,Finance and Legal(Relevant Divisions).Sonys Sustainability EffortsThe Sustainability Department,operating under the above structure and the aforementioned“Sonys Approach to Sustainability,”strives to spread this policy across Sonys business operations.Through dialogue with stakeholders and materiality analysis,the Sustainability Department identifies sustainability issues that need to be addressed by the Sony Group as a whole.Additionally,the Sustainability Department promotes the group-wide sustainability initiatives by formulating relevant Group policies on identified sustainability issues,including a global environmental plan,“Road to Zero,”and communicating across the Sony Group by collaborating with the Senior Executives in charge of Sonys headquarters functions and the Relevant Divisions.The Senior Executive in charge of Sustainability regularly reviews and assesses risks and engages in detection,communication,evaluation and response for the risk of loss related to sustainability.Board of DirectorsSenior Executive in charge of SustainabilitySustainability Departmentat Sony Group CorporationRelevant DivisionsBusiness UnitOperating CompanyCollaborate with each otherCollaborate with each otherCollaboratewith each otherSustainability InformationCorporate GovernanceEthics and ComplianceTechnologyEnvironmentCommunity EngagementResponsible Supply ChainQuality and Customer ServiceAccessibilityResponsible AIRespect for Human RightsOccupational Health&SafetyEmployeesMaterialityOrganizational StructureMessage from the Officer in Charge of SustainabilitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityEditorial Policy/Business OverviewAt a Glance 2023Sonys Sustainability VisionSonys Basic Policy for Sustainability InitiativesThe Sony Group Code of ConductSonys Purpose&ValuesSustainability Report 2024008Pursuing Sustainability Activities in Management and Business UnitsThe Business Units consider sustainability issues and opportunities for their respective businesses,and,with unique perspectives,implement sustainability-related initiatives that align with their respective business characteristics.In addition,the Business Units,consulting with the Sustainability Department,have introduced key performance indicators(Sustainability KPIs),which measure the Business Units sustainability efforts.The Sustainability KPIs are incorporated into the Business Units performance evaluations,and the Sustainability Department evaluates the status of achievement of such Sustainability KPIs.Additionally,achievement of the Group Sustainability Evaluation is incorporated into one of the indicators for Senior Executives remuneration linked to business results.The Group Sustainability Evaluation is an evaluation of efforts by Senior Executives to enhance the mid-to long-term corporate value and sustainable growth of the Sony Group as a whole,not limited to their respective businesses and organizations,including management succession and investment in human capital,sustainability initiatives related to social value creation and ESG(Environment,Social,Governance),value creation through collaborations among the businesses of the Sony Group,and engagement indicators based on employee surveys.In the fiscal year ended March 31,2024,Sony newly established“Sonys Sustainability Vision,”with the goal to“Inspire a world filled with emotion(Kando)for this generation and beyond,”to more clearly define the direction in which the overall Sony Group aims to promote sustainability-related initiatives.In addition,a global sustainability conference was held,where the Senior Executive in charge of Sustainability,the Senior Executive in charge of Human Resources,and personnel in charge of sustainability from the Business Units came together to confirm and share sustainability initiatives for the Business Units and their progress on the Sustainability KPIs.For the fiscal year ended March 31,2024,the Sustainability KPIs included reducing the power consumption of Sonys products,reducing GHG emissions in Sonys manufacturing processes,increasing the ratio of women in management positions,implementing environmental awareness-raising activities using Sonys content IP,conducting diversity,equity,and inclusion(“DE&I”)programs and training,and improving product and service accessibility.Dialogue with StakeholdersThrough the issuance of various reports such as its Corporate Report and Sustainability Report,and through its Sustainability Briefing and websites,Sony communicates its approach to sustainability and information about initiatives regarding sustainability.Corporate ReportSustainability MeetingSustainabilityRaising Employee AwarenessASony recognizes the importance of boosting employee awareness of sustainability and engages in a variety of initiatives to do so.Sustainability Awards Sustainability forums Dissemination of information via intranet websites E-learning training programsReports to the Board of Directors for ReviewThe Sustainability Section submits quarterly reports on its activities to the Board of Directors.Once a year,in principle,it reports to the Board of Directors on the status of Sonys entire set of sustainability initiatives(initiatives of climate change and other environment matters,and initiatives of human rights,diversity and other social matters,such as prevention of forced labor in the supply chain)and the Board reviews them.In addition,as part of reporting on each Business Units mid-range plan,the Board of Directors receives reports from each Business Unit on the sustainability challenges and opportunities relevant to their respective business operations and their efforts in those areas.Sustainability InformationCorporate GovernanceEthics and ComplianceTechnologyEnvironmentCommunity EngagementResponsible Supply ChainQuality and Customer ServiceAccessibilityResponsible AIRespect for Human RightsOccupational Health&SafetyEmployeesMaterialityOrganizational StructureMessage from the Officer in Charge of SustainabilitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityEditorial Policy/Business OverviewAt a Glance 2023Sonys Sustainability VisionSonys Basic Policy for Sustainability InitiativesThe Sony Group Code of ConductSonys Purpose&ValuesSustainability Report 2024009ourselves to the further evolution of diversity based on our belief that innovation is born from interaction between diverse talent in every field.At the same time,we are actively engaged in activities that contribute to the development of the next generation of talent and the promotion of diverse talent.Initiatives Addressing Global Social IssuesThe environment around us is constantly changing.Recent years have seen even greater changes in the global environment in which we live,both societally and environmentally.These include an increase in the frequency of severe natural disasters due to climate change,greater risks to human rights,COVID-19,and societal division.In response to these issues,in 2020,we established the Sony Global Relief Fund for COVID-19 and the Global Social Justice Fund,each for the amount of 100 million U.S.dollars,through which we have provided various support.Furthermore,in September 2023,Sony signed a partnership with each of three international organizations,UNICEF,UNHCR and Save the Children,to support their respective education,vocational training and mental health programs helping young people and children around the globe,while supporting health and hygiene to forcibly displaced persons.These also include the cash assistance for children in Japan and the promotion of better protection and resilience for children and youth overseas.Contribution to an Inclusive SocietyNearly 1 in 6 people,thats over 1.3 billion worldwide,have some kind of disability,and at Sony,we promote accessibility initiatives through our mission of“delivering innovation for an accessible future.”We believe that in pursuing accessibility,it is necessary to understand and consider the needs of such diverse users.By working together with these individuals,we aim to implement inclusive design that incorporates their perspectives into our product commercialization processes by fiscal 2025.Among others,initiatives include those for consoles,game titles and peripherals in the Game&Network Services(G&NS)segment.Our Access controller for PlayStation5,launched in 2023,was developed through input from organizations and experts on accessibility.The controller features customizable functionality to suit a wide range of needs,enabling gamers with disabilities to play games more comfortably and for longer periods of time.Accessibility efforts not only benefit these groups,but also make things easier to use for many people,which contributes to the realization of an inclusive society.Initiatives Addressing Environmental IssuesSony promotes environmental initiatives based on the dual axes of“responsibility”and“contribution,”with the former represented in our long-term environmental plan,Road to Zero,which we first published in 2010.In this plan,Sony strives to achieve a zero environmental footprint by 2050 from the four perspectives of“climate change,”“resources,”“chemical substances”and“biodiversity.”We are working to reduce environmental impact by setting medium-term targets in five-year increments backcasted from the final year of the plan.Among the four aforementioned perspectives,we view responding to climate change as an especially urgent issue,so we are working to achieve net-zero greenhouse gas emissions by 2040.GHG emissions in the supply chain fall under Scope 3,and fully capturing and reducing such emissions is a major challenge faced by many global businesses.At Sony,we take the long-term perspective in addressing this challenge,as we believe reducing supplier emissions is essential to achieving our 2040 target.First,we aim to reduce emissions from the use of purchased electricity at our major suppliers sites to net-zero by 2030.A major focus in recent years has been integrating sustainability into our business strategy,particularly in terms of making such initiatives a part of our business operations.Each business unit considers sustainability issues and opportunities for its respective businesses,and implements sustainability-related initiatives that align with its business characteristics.Moving forward,we will continue to emphasize information disclosure and dialogue with our diverse stakeholders to strengthen sustainability efforts.Inspire a World Filled with Emotion for This Generation and BeyondSony manages diverse businesses and pursues sustainable value creation and long-term growth in corporate value under its Purpose to“fill the world with emotion,through the power of creativity and technology,”and the Corporate Direction of“getting closer to people.”Each of our businesses is taking action for sustainability while leveraging their own unique characteristics.We newly established“Sonys Sustainability Vision”to more clearly articulate the direction in which the Sony Group aims to proceed,with the goal to“inspire a world filled with emotion for this generation and beyond.”It is important for us to take action so that people can share Kando,and that Kando is amplified and sustained.Diversity InitiativesDiversity in business and people,along with creativity and technology,are drivers of value creation.This is accomplished by our approximately 110,000 employees,who represent myriad nationalities,ethnicities and identities,as well as expertise across countless fields around the world.In fiscal year 2023,we redefined our Diversity,Equity and Inclusion(DE&I)Statement for the first time in a decade,rededicating Message from the Officer in Charge of SustainabilityShiro KambeSony Group CorporationSenior Executive Vice President Corporate Executive OfficerOfficer in charge of SustainabilitySustainability InformationCorporate GovernanceEthics and ComplianceTechnologyEnvironmentCommunity EngagementResponsible Supply ChainQuality and Customer ServiceAccessibilityResponsible AIRespect for Human RightsOccupational Health&SafetyEmployeesMaterialityOrganizational StructureMessage from the Officer in Charge of SustainabilitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityEditorial Policy/Business OverviewAt a Glance 2023Sonys Sustainability VisionSonys Basic Policy for Sustainability InitiativesThe Sony Group Code of ConductSonys Purpose&ValuesSustainability Report 2024010Summary of ActionsArea of FocusKey FocusFiscal Year 2023 ResultsLooking to the FutureCoverageEmployees Respect and support each employees ambitions to grow and take on new challenges,and provide a range of experiences and opportunities for each diverse employee to make the most of their individual strengths,skills,abilities and creativityDiversity,Equity and Inclusion(DE&I)Redefined the Sony Group DE&I Statement to rededicate ourselves to the further evolution of diversity Percentage of management positions held by women:30.7%(Sony Group,as of March 31,2024)Percentage of employees with disabilities:2.76%(Sony Group Corporation,as of March 31,2024)As one of the Iconic Partners of The Valuable 500,provided support for the Media Hub projectTalent Development and Employee Engagement Provided more accessible learning opportunities,including personalized content and online courses on a wide range of topics Promoted an environment where employees consciously build their own career and aim for self-growth Sony University,which supports the professional growth of key personnel,accepted entrants from all businesses and expanded its program to include various forms of participation by top management The Sony Cross-Mentoring Program,which aims to pass on the wealth of experience accumulated by management to the next generation of leaders,foster new synergies within the Group and contribute to talent development,was carried out with the participation of 22 pairs transcending business and regional boundaries 2023 employee survey response rate of 93%,2023 employee engagement index of 90%(Percentage of employees who did not give an unfavorable response to four questions regarding employee engagement)Aim to increase the respective percentages of women and non-Japanese nationals among Sony Group Corporations executives*to more than 30%by 2030 as part of Sonys commitment to further advance DE&I*Directors,Senior Executives including Corporate Executive Officers,and other officers Focus on DE&I;attracting and acquiring diverse talent;employee challenge and growth;and creating an environment where individuality is maximized Help employees work comfortably and provide opportunities for them to improve and make the most of their individual strengths,skills,abilities,and creativityEmployeesCorporate ReportSony Group Portal Website Diversity,Equity and InclusionOccupational Health&Safety Committed to reaching ZERO injury and ZERO illness,and to securing safe and engaging environment of workplace for all the workers in any business activity.Fiscal years 2024 to 2026:Established the global Occupational Health&Safety(OHS)Medium-Term Plan targets Implemented OHS initiatives targeting zero injury and zero illness 54 sites from amongst our 60 sites worldwide have obtained comprehensive ISO 45001 certification Develop a safe and healthy work environment for all employees in order to achieve Vision Zero based on our global OHS Medium-Term Plan targets for fiscal years 2024 to 2026 Implement more proactive and sustainable OHS initiatives Acquire ISO 45001 certification for 60 group sitesOccupational Health&SafetySustainability InformationCorporate GovernanceEthics and ComplianceTechnologyEnvironmentCommunity EngagementResponsible Supply ChainQuality and Customer ServiceAccessibilityResponsible AIRespect for Human RightsOccupational Health&SafetyEmployeesMaterialityOrganizational StructureMessage from the Officer in Charge of SustainabilitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityEditorial Policy/Business OverviewAt a Glance 2023Sonys Sustainability VisionSonys Basic Policy for Sustainability InitiativesThe Sony Group Code of ConductSonys Purpose&ValuesSustainability Report 2024011Area of FocusKey FocusFiscal Year 2023 ResultsLooking to the FutureCoverageRespect for Human Rights Continued reasonable efforts to avoid causing or contributing to adverse human rights impacts that may arise from our operations,products,services and/or business relationships Established the Sony Group Human Rights Policy A working group consisting of the Sustainability Department and the department in charge of legal and compliance met once a month and the working group reviewed the progress of initiatives in priority areas:”responsible supply chain,”“respect for diversity,equity and inclusion,”and“responsible development and use of technologies”and reviewed and updated action plans considering the trends in laws and regulations.Supported social justice and human rights initiatives through the Global Social Justice Fund Raise awareness of the Sony Group Human Rights Policy Under the above policy,conduct human rights due diligence on an ongoing basis and continue efforts to prevent or mitigate potential adverse impacts on human rights in areas of focus,working closely with each business segment Continue to analyze and monitor human rights risks throughout Sony Groups business activities and value chainsHuman RightsResponsible AI Strengthened systems and initiatives that tackle AI ethics Sony Group Corporation established internal guidelines for the use of generative AI tools Continued to implement an AI ethics assessment of the development life cycle of electronics products and services Continued to conduct employee education and awareness activities regarding AI ethics Improve AI ethics assessment processes and streamline their operation Improve and continue employee education and awareness activities regarding AI ethics Update guidelines as neededResponsible AISony Groups Initiatives for Responsible AIAccessibility Driving initiatives to improve accessibility so that people with diverse needs can enjoy our products,services,and experiences.By working together with individuals with diverse needs,we continued to implement inclusive design features that incorporate their perspectives into our product development processes.In order to further promote these initiatives for inclusive design across the Sony Group,internal workshops were regularly held where employees had the opportunity to have dialog with people with disabilities,and to learn about their needs to gain new insight.Continued to exhibit at accessibility events(CEATEC2023,CSUN Assistive Technology Conference 2024,etc.)both in Japan and the rest of the world to ensure we obtained customer feedback needed to improve products and services Continue to pursue accessibility and inclusive design to develop accessible products and services.Continue to hold internal workshops to raise employee understanding and awareness of accessibilityAccessibilitySony Group Initiatives for AccessibilityExhibiting at CEATEC2023Exhibiting at CSUN Assistive Technology Conference 2024Sustainability InformationCorporate GovernanceEthics and ComplianceTechnologyEnvironmentCommunity EngagementResponsible Supply ChainQuality and Customer ServiceAccessibilityResponsible AIRespect for Human RightsOccupational Health&SafetyEmployeesMaterialityOrganizational StructureMessage from the Officer in Charge of SustainabilitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityEditorial Policy/Business OverviewAt a Glance 2023Sonys Sustainability VisionSonys Basic Policy for Sustainability InitiativesThe Sony Group Code of ConductSonys Purpose&ValuesSustainability Report 2024012Area of FocusKey FocusFiscal Year 2023 ResultsLooking to the FutureCoverageQuality and Customer Service Exceed customer expectations of product quality and customer service,pursue product safety and product security,and improve customer experience,thereby remaining a highly trusted partner to all customers Maintained the quality management system and continued to improve the quality of products Continued with initiatives to ensure the safety,long-term reliability,and security of products Continued with efforts to improve customer satisfaction by improving customer information centers and other customer services As part of Sonys initiatives to enhance the user experience,continued to take action from the customers perspective by employing Human-Centered Design(HCD)processes,and continued our certification system for HCD experts Strengthen preventive measures,product compliance systems,and compliance with the product security regulations,thereby improving quality from the perspective of customers and achieving quality that exceeds customer expectations Continue leveraging its worldwide network to collect and analyze information which can then be reflected in the next releases of products and customer services Strengthen the processes for Human-Centered Design(HCD)and develop new talent with HCD skillsQuality and Customer ServiceSony Group Portal Website Human-Centered DesignResponsible Supply Chain Address risks to human rights,labor conditions,health and safety,and the environment throughout the electronics product supply chain Conducted assessment using questionnaire at 12 Sony manufacturing sites and at the plants of 235 new and existing suppliers Managers in departments involved in procurement of raw materials and parts received training on supply chain human rights issues and education on climate change initiatives.All raw materials and parts procurement personnel also received training on Sonys sustainable procurement policy and related initiatives,basic information on efforts to curb climate change and Sonys targets for the reduction of greenhouse gas emissions in the supply chain Donated to RMIs RMAP Audit Fund and Better Mining Project Enforce strict compliance with the Sony Supply Chain Code of Conduct in Sony and its suppliers operations In addition to training for employees,enhance awareness-raising activities through communication with suppliers.Continue to collaborate with various stakeholders to enhance measures regarding the sourcing of high-risk mineralsResponsible Supply ChainCommunity Engagement Under the slogan“For the Next Generation,”contribute to the resolution of a wide range of global social issues in places where Sony does business around the world by fully utilizing its products,content,and technologies Community engagement expenditures:approx.4.7 billion JPY Educational programs for children (approx.330 thousand participants)WWF Japan,WWF Indonesia,Sony Group Corporation and SynecO launched a collaborative pilot project to utilize Synecoculture for reforestation of Sumatra Implemented the Social Issue Experience Program as an initiative to utilize Sonys technology and aim for the resolution of social issues Through the Sony Global Relief Fund for COVID-19,Sony partnered with the United Nations Childrens Fund(UNICEF),the United Nations High Commissioner for Refugees(UNHCR),and Save the Children to pledge approximately 15 million USD to address social issues becoming more serious or more apparent and are still ongoing since the outbreak of COVID-19.Supported initiatives to promote social justice and human rights through the Global Social Justice Fund(total expenditure of approx.9.8 billion JPY(78.t million USD)as of fiscal year 2023)Continue striving to make the most of Sonys products,content,technologies,strengths of employees,and stakeholder partnerships to help address global issues and to meet various needs in local communities Through the Global Social Justice Fund,continue to support activities that leverage the Sony Groups assets and expertise Implement awareness-raising initiatives for people in and outside the Sony Group to address global issues,and strengthen employee engagement Apply technologies to solve social issuesCommunity EngagementSony Group Portal Website Social Contribution InitiativeSustainability InformationCorporate GovernanceEthics and ComplianceTechnologyEnvironmentCommunity EngagementResponsible Supply ChainQuality and Customer ServiceAccessibilityResponsible AIRespect for Human RightsOccupational Health&SafetyEmployeesMaterialityOrganizational StructureMessage from the Officer in Charge of SustainabilitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityEditorial Policy/Business OverviewAt a Glance 2023Sonys Sustainability VisionSonys Basic Policy for Sustainability InitiativesThe Sony Group Code of ConductSonys Purpose&ValuesSustainability Report 2024013Area of FocusKey FocusFiscal Year 2023 ResultsLooking to the FutureCoverageEnvironment Strive to achieve a zero environmental footprint throughout the life cycle of Sonys products and business activities in order to realize a sustainable societyClimate Change Annual energy consumption rate per product:Down 0.7%(compared to fiscal year 2018)Greenhouse gas emissions from sites:Down 12.6%(compared to fiscal year 2020)Use of electricity derived from renewable energy(renewable energy ratio):35.3%GHG emissions related to logistics between nations and within regions:Down 25.4%(compared to fiscal year 2018)Resource Conservation Use of virgin oil-based plastics per product unit:Down 16.1%(compared to fiscal year 2018)Use of plastic packaging per product unit:Down 25.1%(compared to fiscal year 2018)Amount of waste generated at sites:Worsened by 51.2%(compared to fiscal year 2020)Promoted the One Blue Ocean Project worldwide,and encouraged reduction of single use plastic use at Sony sitesChemical Substances Facilitated the use of alternative substances for PVC and BFR based on Sony standards for the management of chemical substancesBiodiversity Worked to conserve biodiversity while providing education and raising awareness in response to local needs at sites around the world Promoted the One Blue Ocean Project at sites worldwide,and held community clean ups for plastic waste Expanded the Food for the Future project to Sony Group sites worldwide,distributed a guidebook detailing environmentally conscious foods to employees,and provided meals that use environmentally conscious foods in Sony employee cafeterias.Designated October as Food for the Future Month,holding events related to utilizing environmentally conscious foods Accelerate initiatives to achieve net-zero targets across the value chain from scopes 1 to 3 by 2040 and a zero environmental footprint by 2050 Develop and leverage technologies that contribute to global environmental conservation Enhance supply chain engagement Strengthen environmental awareness-raising activities in the entertainment and other businesses Expand the adoption of renewable electricity by installing photovoltaic panels at Sony sites to achieve the target of sourcing 100%renewable electricity for worldwide operations by fiscal year 2030 Achieve net-zero targets for direct and indirect emissions(scopes 1 and 2)in Sonys own operations by 2030 Further strengthen initiatives to achieve climate change targets by fiscal year 2035,which were approved as 1.5C science-based targets(SBTs)Research and contribute to carbon removal/fixation Reduce plastic packaging materials used for products and the use of virgin oil-based plasticsEnvironmentTechnologySony Group Portal Website EnvironmentSustainability InformationCorporate GovernanceEthics and ComplianceTechnologyEnvironmentCommunity EngagementResponsible Supply ChainQuality and Customer ServiceAccessibilityResponsible AIRespect for Human RightsOccupational Health&SafetyEmployeesMaterialityOrganizational StructureMessage from the Officer in Charge of SustainabilitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityEditorial Policy/Business OverviewAt a Glance 2023Sonys Sustainability VisionSonys Basic Policy for Sustainability InitiativesThe Sony Group Code of ConductSonys Purpose&ValuesSustainability Report 2024014Area of FocusKey FocusFiscal Year 2023 ResultsLooking to the FutureCoverageTechnology Connect the entire Group through technology and support growth in individual businesses Promote collaboration,connection and growth of engineers across businesses Incorporate changes in the external environment and promote external collaboration Implemented joint research and demonstration testing for Sonys Earth MIMAMORI platform utilizing IoT technology at sites worldwide Promoted practical use of Triporous in healthcare Began provision of Camera Authenticity Solution to select news media agencies to enhance transparency and trustworthiness in news workflows Emphasize R&D to maximize creator output in a variety of fields,maximize the value of IP created and deliver the results to diverse users worldwide,with growth and collaboration for sensing,AI and virtual spaces as the core pillars of these efforts Begin development of large-scale AI models to transform Sony into an AI and data-driven companyTechnologyEthics and Compliance Foster an ethical culture based on Sonys Purpose&Values and the Sony Group Code of Conduct Continuously assess compliance risks in relation to business activities and review the compliance program based on the results of the assessment Strengthen and continue to run programs that address changes in the privacy environment and technological development Revised the Sony Group Code of Conduct Provided training and messaging on ethics and compliance via the Global Ethics&Compliance Network Operate the Sony Ethics&Compliance Hotline for internal reporting(Number of reports:492 in fiscal year 2023)Implemented third party risk-management based on the Sony Group Third Party Engagement Policy Implemented anti-corruption programs based on the Sony Group Anti-Bribery Policy Enhanced the global privacy management system and ran programs in order to respond to key changes in the privacy environment Improved the efficiency of privacy assessment processes through the use of privacy management software and provided privacy training to all employees Continue to improve training and to set the tone from the top in order to create a corporate culture that values integrity and to ensure that every employee acts in a way that is ethically responsible Continue to assess risks and programs related to Sonys business activities and review the compliance programs based on the results of the assessment Effectively operate the Global Ethics&Compliance Network which was reorganized in fiscal year 2024 to better align with Sony Groups business reporting structure Improve technology and processes to further streamline privacy-related operations Monitor compliance with privacy-related policies,ensure that training is given,and strengthen action to boost awarenessEthics and ComplianceSustainability InformationCorporate GovernanceEthics and ComplianceTechnologyEnvironmentCommunity EngagementResponsible Supply ChainQuality and Customer ServiceAccessibilityResponsible AIRespect for Human RightsOccupational Health&SafetyEmployeesMaterialityOrganizational StructureMessage from the Officer in Charge of SustainabilitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityEditorial Policy/Business OverviewAt a Glance 2023Sonys Sustainability VisionSonys Basic Policy for Sustainability InitiativesThe Sony Group Code of ConductSonys Purpose&ValuesSustainability Report 2024015Area of FocusKey FocusFiscal Year 2023 ResultsLooking to the FutureCoverageCorporate Governance Establish and enhance the corporate governance system that best suits the Sony Group Manage risks that may cause losses to the Sony Group Enhance information security management system and activities Comply with all applicable tax laws and regulations of each country and region where Sony conducts business as well as the common rules and guidance regarding international taxationEnhanced corporate governance system Reviewed the progress and result of the fourth mid-range plan and established the fifth mid-range plan Continuously monitored the business portfolio and capital allocation Continuously supervised risks including geopolitics and cybersecurity Continued and deepened discussions about Sonys strategies regarding new technologies and social changes(including generative AI and sustainability)Risk Management Manage impact on global operations due to trade restrictions and economic sanctions imposed by certain countries and regions Continued initiatives to maintain and strengthen the functions of the crisis management framework and reduce business disruption risksCybersecurity Revised information security policies for all group companies to strengthen information security management Improved the information security management structure and strengthened information security governance Monitored and responded to security threats on a 24/7 basis via the global security operations centerTax Strategy Continue to manage our tax affairs in line with business objectives and operations,as well as regular reporting and communication regarding tax with CFO,who is a Board member,and the Audit Committee Built open and transparent relationships with governments regarding our tax affairs Provided support to governments and the OECD regarding tax reform efforts and tax policy to ensure any future rules are fair and administrableEnhanced Corporate Governance System Monitoring the progress of the Fifth Mid-Range Plan and long-term growth strategy Deepened discussions about and supervision over focusing areas(growth through IP value maximization and technology platform supporting IP value maximization)Risk management(including,cybersecurity and economic security/geopolitical risks)Selection of Director candidates to ensure diversity/continuity of the Board of Directors Further consideration of the use of stock-based compensation and strengthening remuneration governance measures Audit Committee to ensure effective cooperation with management side and appropriate relationships with the accounting auditor and internal audit departmentRisk Management Continuously manage impact on global operations due to trade restrictions and economic sanctions imposed by certain countries and regions,and other geopolitical risks Strengthen cooperation with group companies and headquarters,conduct and continuously improve practical drills,thereby enhancing the effectiveness of crisis management and BCP Continue to reduce risks of buildings by optimizing facility renewal or facility renovation Continue to reduce fire risk at manufacturing sites,in accordance with Sony Group guidelinesCybersecurity Strengthen security management based on the revised information security policies for all group companies Examine increasingly sophisticated cyber-attacks on a daily basis,improve countermeasures,and identify new threats,thereby continuing to swiftly and appropriately respond to information security issues Continuously secure and develop high-level security professionalsTax Strategy Continue to manage our tax affairs in line with business objectives and operations,as well as regular reporting and communication regarding tax with CFO,who is a Board member,and the Audit Committee Maintain and improve open and transparent relationships with governments regarding our tax affairs Continue to provide support to governments and the OECD regarding tax reform efforts and tax policy to ensure any future rules are fair and administrableCorporate GovernanceCorporate ReportSony Group Portal Website Internal ControlSecurities ReportSustainability InformationCorporate GovernanceEthics and ComplianceTechnologyEnvironmentCommunity EngagementResponsible Supply ChainQuality and Customer ServiceAccessibilityResponsible AIRespect for Human RightsOccupational Health&SafetyEmployeesMaterialityOrganizational StructureMessage from the Officer in Charge of SustainabilitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityEditorial Policy/Business OverviewAt a Glance 2023Sonys Sustainability VisionSonys Basic Policy for Sustainability InitiativesThe Sony Group Code of ConductSonys Purpose&ValuesSustainability Report 2024016Stakeholder EngagementCommunication with StakeholdersSony recognizes that,by addressing issues that are of concern to its many stakeholders,it is strengthening its operating foundation,which is in turn vital to its business activities and the achievement of sustainable growth.Sony strives to earn the trust of all stakeholders by conducting its business responsibly and engaging in stakeholder dialogue.StakeholdersPrincipal GoalsMain Communication MethodsCustomers Provide products and services that deliver satisfaction,safety and peace of mind from the customers perspective Provide customer service that further enhances customer satisfaction Enhance usability and accessibility Inquiries from customers,important notices regarding products and services,contact point for reporting vulnerabilities in products and network services,surveys of purchasers,trade shows,seminars,the Sony Group Portal Website“Accessibility”and“Human-Centered Design,”social media sites,etc.Shareholders and investors Ensure swift and appropriate disclosure Achieve continued growth in corporate value Shareholders Meeting,Earnings Announcement,Corporate Strategy Meeting,Business Segment Meeting and meetings for individual investors,Sustainability Meeting,Technology Meeting,the Sony Group Portal“Investor Relations”,Corporate Report(integrated report),small meetings,one-on-one sessions and ESG dialogue with institutional investors,etc.Business partners Ensure appropriate,transparent and fair procurement practices,in line with the Sony Group Code of Conduct and Sony Supply Chain Code of Conduct Ensure that procurement practices are in harmony with the environment and society(including labor issues,human rights and conflict minerals)Explanatory meetings for suppliers,audits and surveys related to CSR procurement and the environment,conflict mineral surveys,dedicated website for suppliers and a department established for handling their inquiries,regular consultations with suppliers,Grievance System for Sony Group Electronics Supply Chain,etc.Employees Support the growth of each unique employee and provide opportunities to take on new challenges Acquire diverse talent Support employees with diverse backgrounds Nurture global business leaders and engineers who will drive growth in the future Support employee-driven career-building efforts Provide a safe and secure working environment where employees can make the most of their individual strengths Promote dialogue through employee surveys and town hall meetings Quarterly global meetings,town halls,management blog Internal newsletter,website and email notifications Career interviews and counseling Employee engagement surveys Sony Ethics&Compliance Hotline,labor management negotiations,safety and health committees,Social Issue Experience Program,etc.Local communities Promote initiatives that contribute to communities in fields where Sony is best able to do so Emergency humanitarian assistance Collaborate with NGOs and NPOs to help address social challenges Support and system development for employee volunteer participation Local volunteer initiatives,participation in events held by local organizations and governments,social contribution initiatives,etc.Global environment Reduce the environmental footprint of Sonys business activities and products throughout their life cycle to zero Activities for contributing to the community and reducing the environmental burden at each site,measures that take the environment into consideration over the lifecycle of products and services,environmental information provided through communication with various stakeholders,information provided on the Sony Group Portal“Environment”NGOs,NPOs and other organizations Collaborate with NGOs,NPOs and other organizations to help address social challenges Participate in global frameworks Participate in CSR-related organizations and projects Activities held in collaboration with NGOs and NPOs,etc.Sustainability InformationCorporate GovernanceEthics and ComplianceTechnologyEnvironmentCommunity EngagementResponsible Supply ChainQuality and Customer ServiceAccessibilityResponsible AIRespect for Human RightsOccupational Health&SafetyEmployeesMaterialityOrganizational StructureMessage from the Officer in Charge of SustainabilitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityEditorial Policy/Business OverviewAt a Glance 2023Sonys Sustainability VisionSonys Basic Policy for Sustainability InitiativesThe Sony Group Code of ConductSonys Purpose&ValuesSustainability Report 2024017Partnership and Participation in Multi-Stakeholder FrameworksFor Sony,engaging and working together with various stakeholders is vital for pursuing sustainability initiatives.In addition to promoting stakeholder engagement,Sony participates in multi-stakeholder efforts to forge a global framework for sustainability.Responsible Supply ChainRespect for Human RightsCommunity EngagementEmployeesOrganization/InitiativeOverview Sony ActionsSave the ChildrenAn international NGO that works in approximately 120 countries in a wide range of fields such as education and humanitarian response,aiming to make childrens rights to survival,development,protection,and participation a reality worldwide Jointly implemented projects and established a humanitarian fund in order to continuously support the children who lead the next generation Provides cash assistance for children in Japan who are from households with economic and living difficulties,as well as support activities such as protecting and improving resilience of children and youth in Bangladesh and MozambiqueUnited Nations High Commissioner for Refugees(UNHCR)(UN Refugee Agency)Protects people forced to flee due to conflict and persecution in over 130 countries,protecting millions of people by responding with life-saving support,safeguarding fundamental human rights and helping to build brighter futures Support forcibly displaced persons and their host communities in Bangladesh and southern Africa recover from the impacts of COVID-19,including through the delivery of access to health,and water,sanitation and hygiene(WASH)servicesUnited Nations Childrens Fund(UNICEF)Works in some of the worlds toughest places,to reach the worlds most disadvantaged children.Across more than 190 countries and territories,UNICEF works for every child,everywhere,to build a better world for everyone Support work to create environments with equal access to digital education and activities to improve mental health for children and young people world-wideThe Valuable 500An international initiative to promote participation by people with disabilities so that they can demonstrate their latent potential to bring value to business,society,and the economy Joined in 2019 Selected from among the 500 signatories as one of the Iconic Partners that are a driving force in their respective countries,regions,and industriesG20 EMPOWERAn alliance to increase the number of women who play a key role in the economy and business,and to empower women Participated as an advocate in 2020 to support action in JapanOrganization/InitiativeOverviewSony ActionsResponsible Business Alliance(RBA)An alliance dedicated to supply chain responsibility encompassing human rights,labor conditions,health and safety,and the environment Founding member(of the former EICC)Formulated the Sony Supply Chain Code of Conduct,which incorporates the provisions of the RBA Code of Conduct Member of the RBA Board of Directors since 2020Council for Better Corporate Citizenship(CBCC)Established under an initiative of Nippon Keidanren(Japan Business Federation)Helps Japan-affiliated companies engaged in business overseas to form good relations with various stakeholders Sony co-founder Akio Morita served as its first chairman Continues to be actively involved in its initiativesBSRA global non-profit organization with experts in CSR Member of the Human Rights Working Group and Sustainability Strategy Working Group organized by BSRSustainability InformationCorporate GovernanceEthics and ComplianceTechnologyEnvironmentCommunity EngagementResponsible Supply ChainQuality and Customer ServiceAccessibilityResponsible AIRespect for Human RightsOccupational Health&SafetyEmployeesMaterialityOrganizational StructureMessage from the Officer in Charge of SustainabilitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityEditorial Policy/Business OverviewAt a Glance 2023Sonys Sustainability VisionSonys Basic Policy for Sustainability InitiativesThe Sony Group Code of ConductSonys Purpose&ValuesSustainability Report 2024018EnvironmentOrganization/InitiativeOverview Sony ActionsBusiness Ambition for 1.5CA call to set targets that keep the global temperature rise to 1.5C or less,led by the United Nations Global Compact,We Mean Business and SBTi Joined in 2020Race To Zero CampaignAn international campaign by the United Nations Framework Convention on Climate Change(UNFCCC)calling for actions to achieve zero greenhouse gas emissions by 2050 Joined in 2021Music Climate PactA global platform initiated by the British Phonographic Industry(BPI)and Association of Independent Music to promote decarbonization throughout the music industry Sony Music Group signed up in 2021 through Sony Music Entertainment(UK)The Climate PledgeAn initiative aiming to achieve net zero carbon emissions by 2040 Joined in 2023Music Industry Climate Collective(MICC)An alliance for addressing global environmental challenges and changes within the music industry Sony Music Group joined as a founding member in 2023Organization/InitiativeOverview Sony ActionsThe World Wide Fund for Nature(WWF)Climate Savers ProgrammeA program where WWF partners with companies to formulate and implement plans to reduce emissions of greenhouse gases Participated since 2006 Signed a three-year comprehensive corporate partnership agreement with WWF Japan in 2021 to collaborate in the field of promoting biodiversity through forest conservation as well as the field of climate change.Renewed in 2024Japan Climate Initiative(JCI)A network committed to strengthening communication and information sharing among companies,local governments,NGOs and all other actors that are implementing climate actions in Japan Participated since 2018 Endorsed recommendations to the Japanese governmentRE100A global initiative led by The Climate Group in partnership with CDPParticipating companies set a goal of procuring 100%renewable electricity for power used in their global business operations Joined in 2018 Committed to procuring 100%renewable electricity for power used in its global business operations by 2030 Selected as a corporate member of the RE100 Advisory Committee in 2022TCFD ConsortiumLaunched as a forum for discussion between organizations that support the Recommendations of the Task Force on Climate-Related Financial Disclosures(TCFD Recommendations)established by the Financial Stability Board Announced its endorsement of the TCFD Recommendations in 2019 Joined the TCFD ConsortiumPlaying for the Planet AllianceAn international alliance to curb climate change established when the United Nations Environment Programme(UNEP)reached out to the gaming industry Sony Interactive Entertainment joined in 2019Sustainability InformationCorporate GovernanceEthics and ComplianceTechnologyEnvironmentCommunity EngagementResponsible Supply ChainQuality and Customer ServiceAccessibilityResponsible AIRespect for Human RightsOccupational Health&SafetyEmployeesMaterialityOrganizational StructureMessage from the Officer in Charge of SustainabilitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityEditorial Policy/Business OverviewAt a Glance 2023Sonys Sustainability VisionSonys Basic Policy for Sustainability InitiativesThe Sony Group Code of ConductSonys Purpose&ValuesSustainability Report 2024019SDGs and Sonys ContributionsSony manages diverse businesses with people at the core under its Purpose to“fill the world with emotion,through the power of creativity and technology,”and its Corporate Direction of“getting closer to people.”In order to have people connected to each other through emotion,it is necessary to create a society in which everyone can live with peace of mind in a healthy global environment.Through innovation and sound business practice,Sony endeavors to contribute to the development of a sustainable society.Sony believes that its diverse business portfolio is very relevant to the 17 SDGs,and aims to contribute to the achievement of the SDGs through its technologies,products,services and content,as well as various partnerships.3.Sony has also joined the RE100 initiative by making a commitment to sourcing 100%renewable electricity for the worldwide operations of the Sony Group by 2030.This concrete commitment is in line with securing renewable energy as sought by Goal 7(affordable and clean energy).To minimize inputs of virgin resources into its business activities,Sony identifies key resources and strives to achieve zero usage of those virgin materials.Furthermore,Sony endeavors to ensure the appropriate use of water,minimize waste from its business sites,and collect and recycle products from the market to contribute to Goal 12(responsible consumption and production).Materiality(Climate Change)EnvironmentDiversity,Equity and Inclusion(DE&I)Sony leverages its diverse businesses and workforce as strengths in its business strategy.In order to further promote diversity as a key management strategy,in addition to promoting diversity in business and geography and hiring diverse talent,Sony provides opportunities to think more deeply about diversity,whether it be in terms of race,nationality,disabilities,gender,sexual orientation,values,or work styles.These opportunities are also extended to other companies and external organizations.By promoting the message of diversity to society,Sony is promoting inclusive and sustainable economic growth,employment,and decent work for all,as outlined in Goal 8(decent work and economic growth).Sony is working to achieve gender equality and empower women as outlined in Goal 5(gender equality)by establishing action plans to increase career opportunities for women and implementing ongoing initiatives at group companies.Materiality(Diversity,Equity and Inclusion(DE&I)Diversity,Equity and InclusionHuman Rights and DiversityAll stakeholders who are connected to the business activities of the Sony Group,including employees and creators,are important and help support Sony in its drive to contribute to social change that will help achieve the SDGs.Sony ensures that all employees are aware of the Sony Group Code of Conduct,in which its fundamental human rights policy is set out.In March 2024,Sony newly established the Sony Group Human Rights Policy.Sony also implements initiatives to advance social justice,protect human rights and promote DE&I through the Global Social Justice Fund it established in 2020.Via such initiatives,Sony is working to eliminate discrimination as addressed by Goal 10(reduced inequalities),as well as to secure equal opportunities by encouraging appropriate behavior and correcting inequalities in outcomes.Materiality(Respect for Human Rights)Respect for Human RightsInitiatives throughout Supply ChainsSony works with its suppliers to secure compliance with the Sony Supply Chain Code of Conduct and Sony Group Policy for Responsible Supply Chain of Materials,applying the policies to its sites,suppliers and contract manufacturers.In this way,Sony and its suppliers are addressing issues in the supply chain including human rights,labor conditions,occupational health and safety,and the environment.Through this initiative,Sony is endeavoring to provide safe,decent,and humane work as called for by Goal 8(decent work and economic growth),and contribute to suitable and equitable skills development and economic activity as sought by Goal 10(reduced inequalities).By implementing such initiatives throughout the supply chain,Sony is aiming to realize peaceful and inclusive societies as described by Goal 16(peace,justice and strong institutions).Responsible Supply ChainCommunity EngagementUnder the slogan“For the Next Generation,”Sony engages in various social contribution activities across countries and regions worldwide.Leveraging Sonys products,content,technology,and the power of its employees,Sony Group collaborates with partners to address three key areas:support for education to nurture the next generation,disaster relief and humanitarian assistance,and tackling global challenges.These activities contribute to Goal 4(quality education)and create a positive social impact while partnering with external groups as prescribed by Goal 17(partnerships for the goals).Community EngagementSustainability Initiatives and SDGsResponsibilities toward the Global Environment and Positive ContributionsSony endeavors to reduce environmental impact and prevent pollution in its business activities and throughout the life cycle of its products.To address Goal 13(climate action),Sony is reducing energy consumption from business activities and the life cycle of products and services,aiming to achieve zero emissions of greenhouse gases by 2040,including Scope Sustainability InformationCorporate GovernanceEthics and ComplianceTechnologyEnvironmentCommunity EngagementResponsible Supply ChainQuality and Customer ServiceAccessibilityResponsible AIRespect for Human RightsOccupational Health&SafetyEmployeesMaterialityOrganizational StructureMessage from the Officer in Charge of SustainabilitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityEditorial Policy/Business OverviewAt a Glance 2023Sonys Sustainability VisionSonys Basic Policy for Sustainability InitiativesThe Sony Group Code of ConductSonys Purpose&ValuesSustainability Report 2024020ESG External Evaluations and Inclusion in IndexesSony is consistently ranked highly for its ongoing efforts to promote sustainability by the worlds leading ESG evaluation institutions,and it has been chosen for inclusion in various ESG indexes.External Evaluation and RecognitionTHE USE BY SONY GROUP CORPORATION OF ANY MSCI ESG RESEARCH LLC OR ITS AFFILIATES(“MSCI”)DATA,AND THE USE OF MSCI LOGOS,TRADEMARKS,SERVICE MARKS OR INDEX NAMES HEREIN,DO NOT CONSTITUTE A SPONSORSHIP,ENDORSEMENT,RECOMMENDATION,OR PROMOTION OF SONY GROUP CORPORATION BY MSCI.MSCI SERVICES AND DATA ARE THE PROPERTY OF MSCI OR ITS INFORMATION PROVIDERS,AND ARE PROVIDED“AS-IS”AND WITHOUT WARRANTY.MSCI NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI.FTSE Russell(the trading name of FTSE International Limited and Frank Russell Company)confirms that Sony Group Corporation has been independently assessed according to the criteria of the FTSE4Good and FTSE Blossom Index Series and has satisfied the requirements to become a constituent of those index series.Created by the global index provider FTSE Russell,those index series are designed to measure the performance of companies demonstrating strong Environmental,Social and Governance(ESG)practices and used by a wide variety of market participants to create and assess responsible investment funds and other products.THE INCLUSION OF SONY GROUP CORPORATION IN ANY MSCI INDEX,AND THE USE OF MSCI LOGOS,TRADEMARKS,SERVICE MARKS OR INDEX NAMES HEREIN,DO NOT CONSTITUTE A SPONSORSHIP,ENDORSEMENT OR PROMOTION OF SONY GROUP CORPORATION BY MSCI OR ANY OF ITS AFFILIATES.THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI.MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.Sustainability-related External Evaluation and ESG Index Sony Group Corporation has been named one of the Worlds Most Ethical Companies for the sixth consecutive year by Ethisphere Institute,a US-based organization dedicated to the study and advancement of ethical business practices(March 2024)*“Worlds Most Ethical Companies”and“Ethisphere”names and marks are registered trademarks of Ethisphere LLC.Sony Group Corporation received the highest AAA ranking in the MSCI ESG Ratings assessment for the fifth consecutive year(December 2023)In CDP surveys,Sony Group Corporation received the highest A List rating for climate change(February 2024)Sony Corporation was selected as a Supplier Engagement Leader in CDPs 2023 Supplier Engagement Assessment in recognition of its climate change initiatives in cooperation with the supply chain(March 2024)ESG External EvaluationsInclusion in ESG IndexesSustainability InformationCorporate GovernanceEthics and ComplianceTechnologyEnvironmentCommunity EngagementResponsible Supply ChainQuality and Customer ServiceAccessibilityResponsible AIRespect for Human RightsOccupational Health&SafetyEmployeesMaterialityOrganizational StructureMessage from the Officer in Charge of SustainabilitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityEditorial Policy/Business OverviewAt a Glance 2023Sonys Sustainability VisionSonys Basic Policy for Sustainability InitiativesThe Sony Group Code of ConductSonys Purpose&ValuesSustainability Report 2024021Major External Awards Received for Sustainability InitiativesOrganization names appear as they were at the time of award receipt.Organizations with no country name given in“Awarded by”are in Japan.Fiscal Year 2023(in order received)Major External Awards Received for Sustainability Initiatives*Trials of the rehabilitation and wellbeing gamification initiative were conducted at facilities operated by Lifecare Design Inc.,a member of the Sony Lifecare Group.Name of AwardAward-winning company/organizationAward contentAwarded byMonth receivedMinister for Internal Affairs and Communications Award at the 6th Space Development and Utilization AwardsSony Group CorporationThis is awarded to those who have made significant contributions to the promotion of space development and utilization,such as by taking leading initiatives.A forest fire detection system which allows low power data transmission by applying Sonys proprietary low power wide area(LPWA)communication standard ELTRES to space has been recognized for its contribution to addressing issues in Southeast Asia and its potential utilization in developing countries.Initiative/product awarded:Sonys Earth MIMAMORI platformCabinet OfficeMarch 20242024 Worlds Most Ethical CompaniesSony Group CorporationThis honors companies demonstrating exceptional leadership and a commitment to business integrity through best-in-class ethics,compliance,and governance practices.Sony has been recognized for its efforts related to ethics and compliance.Ethisphere Institute(United States)March 2024HCD-Net AWARD 2023 Special Jury AwardSony Group CorporationAn award recognizing expertise and knowhow that offer high shared value in the field of human-centered design.Evaluation is based on five perspectives:novelty,uniqueness and originality,extent of value in use and shared value,results in actual use cases and presentation.Initiative/product awarded:Human Resource Development and Awareness-raising Activities on HCDHuman Centered Design Organization(NPO)March 2024Award for Companies Promoting Experience-based Learning Activities for Youth 2023“Special Needs Award”Sony Life Insurance Co.,Ltd.An award established to encourage and promote educational CSR activities by companies utilizing their unique strengths.Its purpose is to promote opportunities for youth to engage in hands-on activities,such as helping children,who will lead the next generation,acquire the skills to survive in society.Initiative/product awarded:Life Planning LessonsMinistry of Education,Culture,Sports,Science and TechnologyFebruary 2024IAUD International Design Award 2023Sony Group Corporation/Sony Interactive Entertainment Inc./Sony Interactive Entertainment LLCThis award is given to organizations and individuals who implement activities or make proposals that are particularly important for the realization of a Universal Design society in which as many people as possible can live comfortably and easily,without experiencing difficulties in their lives due to differences such as ethnicity,culture,customs,nationality,gender,age,and ability.Initiatives/products awarded:XR Catch,rehabilitation/wellbeing gamification*,Access controllerInternational Association for Universal Design(IAUD)February 2024Platinum EruboshiSony Group CorporationCertification given to companies that have made particularly outstanding efforts to promote greater opportunities for women.Sony has received certification having met all standards set by Japans Ministry of Health,Labor and Welfare,including the percentage of women in management positions.Ministry of Health,Labour and WelfareJanuary 2024Gold certification in the PRIDE Index 2023Sony Group Corporation and 18 Sony Group companies in JapanAn evaluation index for initiatives for LGBTQ employees.Sony has received certification in recognition of its efforts in areas relating to LGBTQ employees,including system enhancement,training,sponsoring of external events,and internal network building.General Incorporated Association Work with PrideNovember 2023“Nationally Certified Sustainably Managed Natural Site”certification(first half of 2023)Kohda Site,Sony Global Manufacturing&Operations CorporationA certification system established by Japans Ministry of the Environment in 2023 as an initiative working towards the new global Kunming-Montreal Global Biodiversity Frameworks“30by30”target,which aims to ensure effective protection or conservation of at least 30%of land and sea areas by 2030 in order to protect healthy ecosystems.Sony Forest has been certified as a“Nationally Certified Sustainably Managed Natural Site”for being an area where biodiversity is conserved through the efforts of the private sector and other parties.Ministry of the EnvironmentOctober 2023Sustainability InformationCorporate GovernanceEthics and ComplianceTechnologyEnvironmentCommunity EngagementResponsible Supply ChainQuality and Customer ServiceAccessibilityResponsible AIRespect for Human RightsOccupational Health&SafetyEmployeesMaterialityOrganizational StructureMessage from the Officer in Charge of SustainabilitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityEditorial Policy/Business OverviewAt a Glance 2023Sonys Sustainability VisionSonys Basic Policy for Sustainability InitiativesThe Sony Group Code of ConductSonys Purpose&ValuesSustainability Report 2024022MaterialityOverview and Purpose of Materiality AnalysisThe Sony Group develops diverse businesses globally.Sony recognizes that stakeholders expect it to maintain a well-defined stance and take action to address the issues facing society and the global environment,in addition to delivering emotional experiences through its business.In response to such expectations,and to various social and environmental changes,Sony reviewed material topics in sustainability from the standpoints of all its businesses in fiscal 2022.In that process,Sony designated creativity and technology,two components of its Purpose,as drivers for value creation along with diversity of employees and businesses,and defined materiality as“material topics that are related to sustainability,impact Sonys value creation,and are determined with longer-term social change and diverse stakeholder needs in mind.”Importance from Stakeholder PerspectiveImportance from Groups PerspectiveRespect forHuman RightsClimate ChangeDiversity,Equity andInclusionTechnologyforSustainabilityHighHighMost ImportantImportantSony Group Material TopicsStep 1Identify and classify material topicsStep 2Assess topics from the perspective ofSony and its stakeholdersStep 3Identify the most important topicsMateriality Assessment StepsAnalysis Results and Sony Group Material TopicsAs a result of the aforementioned assessment process,climate change;diversity,equity and inclusion(DE&I);respect for human rights;and technology for sustainability as the most important.The identified materiality remains the same in the fiscal year ended March 31,2024.The Sustainability Report 2024 classifies Sonys materiality topics,including the above,into major sustainability efforts areas:employees,occupational health&safety,respect for human rights,responsible AI,accessibility,quality and customer service,responsible supply chain,community engagement,environment,technology,ethics and compliance,and corporate governance.The Materiality Assessment ProcessStep 1:Identify and classify material topicsBased on internal and external information and documents,Sony selected material topics with high relevance.References included the Global Reporting Initiative(GRI)Standards and the Sustainability Accounting Standards Board(SASB)standards,which are global guidelines for sustainability reporting,the ISO 26000 international standard for corporate social responsibility,and the SDGs,which are globally agreed goals for building a sustainable world.Step 2:Assess the topics from the perspective of Sony and its stakeholdersThe topics identified and classified in the Step 1 were assessed from the perspectives of Sony and its stakeholders.The senior executives in charge of Sony headquarters functions assessed each topic from the angle of its mid-to long-term positive or negative impact on value creation at Sony to determine its importance from the companys perspective.The assessment of the importance of each topic from the perspective of stakeholders was based on information published by NGOs,investors,ESG rating agencies,the mass media and other sources.Step 3:Identify the most important topicsThe most important topics were specified after being reviewed by top management and the Board of Directors on the basis of the assessment conducted in Step 2.Sustainability InformationCorporate GovernanceEthics and ComplianceTechnologyEnvironmentCommunity EngagementResponsible Supply ChainQuality and Customer ServiceAccessibilityResponsible AIRespect for Human RightsOccupational Health&SafetyEmployeesMaterialitySonys SustainabilityEditorial Policy/Business OverviewAt a Glance 2023Sonys Sustainability VisionSonys Basic Policy for Sustainability InitiativesThe Sony Group Code of ConductSonys Purpose&ValuesSustainability Report 2024023Background for selecting the Most Important TopicsClimate ChangeSony acknowledges that climate change impacts are becoming more apparent and that the transition towards a decarbonized society is a crucial issue for all companies and that Sonys stakeholders have elevated expectations of Sonys environmental initiatives along two axes:the first being its“responsibility,”for instance,to reduce its environmental impact,and the second being the“contribution”it can make by leveraging its diverse businesses and technologies.Sonys corporate activities are only possible if the earth,which sustains all life,is healthy.Sony believes that it is important to respond to the environment,including by taking measures against climate change.DE&ISony recognizes that diverse organizations are more innovative in corporate activities than non-diverse organizations.Sony believes that it is important to respect our employees diverse values,remember the importance of equity,and foster an inclusive organizational culture.Expectations are also rising for corporate initiatives to address social issues such as social justice and inequality,and Sony believes that it is important for the Sony Group to further promote initiatives aimed at resolving issues both inside and outside the Sony Group.Respect for Human RightsSony is aware of the potential human rights impacts of its global business activities.Sony recognizes that respecting human rights throughout Sonys value chain and addressing any potential human rights risks,whether the relationship with Sonys business operation is direct or indirect,are responsibilities that a diverse range of stakeholders expect of Sony.Considering recent changes in the external environment related to respect for human rights,Sony believes that it is important to further strengthen its efforts in this area.Technology for SustainabilitySony recognizes that our stakeholders have expectations regarding our ability to both grow our business and solve social and environmental issues through technology.Sony believes that it is an important mission of Sony to lead and contribute to the resolution of sustainability issues not only by increasing business revenue through the technologies and,products and services Sony develops,but also by having a positive impact on society and the environment.Strategy and targets for the Most Important Topics,and major initiativesClimate ChangeUnder the“Road to Zero,”a long-term environmental plan established in 2010 that aims to achieve a zero environmental footprint for the entire Sony Group by the year 2050,Sony is promoting environmental impact reduction activities in each of the following four perspectives:climate change,resources,chemical substances,and biodiversity.In May 2022,Sony announced that it had determined to accelerate its environmental impact reduction activities in the climate change area and to push its goal of achieving a net-zero footprint throughout the entire value chain,moving the target year from 2050 to 2040.Sonys net-zero*1 target for 2040 was approved as the net-zero target for the Science Based Targets initiative(“SBTi”)*2 in August 2022.*1 Sonys net-zero target follows the SBTi Corporate Net-zero Standard below:(a)reducing Scope 1,2 and 3 emissions to zero or a residual level consistent with reaching net-zero emissions at the global or sector level in eligible 1.5C scenarios or sector pathways;and(b)neutralizing any residual emissions at the net-zero target date and any GHG emissions released into the atmosphere thereafter.*2 Science Based Targets initiative(SBTi)is a global initiative that encourages companies to set science-based targets to reduce their GHG emissions towards the goal of limiting the increase in global average temperature due to climate change to 1.5C above pre-industrial levels.Specific targets for achieving the above net-zero target by 2040 are as follows.1.By 2030,Sony aims to make direct and indirect GHG emissions(Scopes 1 and 2)of its own business operations net-zero.For other emissions originating from stages such as products,supply chains,and logistics(Scope 3),Sony aims to reduce GHG emissions during product use by 45%compared to the fiscal year ended March 31,2019 by 2035.By 2040,Sony aims to achieve net-zero emissions in all Scopes.2.By 2030,Sony aims to achieve 100%renewable electricity used at its own business sites.The percentage of electricity use derived from renewable energy targeted to be achieved as of 2025 has been set at 35%.To achieve the targets in 1 and 2 above,Sony intends to implement the following measures.Continuous reduction of environmental impact at Sony Groups own business sites:Acceleration of energy saving,installation of solar power generation equipment,and introduction of renewable energy throughout the Sony Group.Virtual PPA(Power Purchase Agreement)using the FIP(Feed-in-Premium)system in Japan.Promotion of energy-efficient products:Acceleration of initiatives to reduce annual power consumption of Sony products.Strengthening efforts with partners:Encouragement of business partners engaged in parts,materials and finished product manufacturing to manage their GHG emissions,save energy,and convert to renewable energy.Contribution to carbon removal/fixation*3:Exploration of investments in start-ups engaged in carbon removal,and development of an index integrating biodiversity and carbon fixation associated with augmented ecosystem businesses,such as Synecoculture*4 being rolled out by SynecO,Inc.*3 Process by which carbon from the atmosphere is converted into organic compounds.*4 Synecoculture is a trademark of Sony Group Corporation.EnvironmentSustainability InformationCorporate GovernanceEthics and ComplianceTechnologyEnvironmentCommunity EngagementResponsible Supply ChainQuality and Customer ServiceAccessibilityResponsible AIRespect for Human RightsOccupational Health&SafetyEmployeesMaterialitySonys SustainabilityEditorial Policy/Business OverviewAt a Glance 2023Sonys Sustainability VisionSonys Basic Policy for Sustainability InitiativesThe Sony Group Code of ConductSonys Purpose&ValuesSustainability Report 2024024DE&ISony brings value to society through its Purpose&Values and implements DE&I initiatives based on its People Philosophy.“Special You,Diverse Sony”,and Sony Group Diversity,Equity&Inclusion Statement redefined in February 2024.Sony maintains operations in countries and regions around the world,hiring employees with high potential who best meet local needs.Approximately half of all Sony Group employees are engaged in business activities outside Japan,and more than 90%of these employees are locally hired.Sony aims to globally promote greater opportunities for women as part of our efforts to ensure an inclusive work environment in which diverse employees can play an active role.As of March 31,2024,the percentage of women to men in the workforce was 34.0%and the percentage of women to men in management positions was 30.7%at the whole Sony Group.Additionally,Sony focuses on increasing gender diversity in Japan,where few women major in science or engineering,by cooperating with educational institutions and providing scholarships.Sony also hires and provides workplace support for people with disabilities.Beyond complying with the laws,rules,and regulations of each nation and region in which it operates,Sony is devoted to creating inclusive workplaces where all employees,regardless of disability,can build careers.The Sony Group as a whole endeavors to increase the accessibility of its products and services,and undertakes initiatives related to diversity and social justice.In 2020,the Group established the 100 million USD“Global Social Justice Fund”to provide support to organizations advocating for social justice and human rights,and promote DE&I initiatives worldwide.Sony is committed to DE&I group-wide,aiming for women and non-Japanese nationals to comprise 30%or more of our executives*5 by 2030.By further evolving Sonys DE&I initiatives,Sony promotes diversity,the source of innovation,creating new value that leads to both the growth of the Sony Group and the development of society.*5 Directors,Senior Executives including Corporate Executive Officers,and other officersEmployees(3)Human Capital Strategies,Metrics and Targets,Sustainability Disclosure,B.Business Overview,Item 4.Information on the Company,Form 20-F(Annual Report)for Fiscal year ended on March 31,2024 Respect for Human RightsSonys policy requiring respect for human rights is set forth in the Sony Group Code of Conduct.Sony expects all Sony Group companies to practice responsible business conduct by respecting all human rights in compliance with the code as well as all relevant laws and regulations.Under this policy,Sony established and implemented Group policies for specific areas regarding human rights,such as the“Sony Supply Chain Code of Conduct”which sets forth the code of conduct for Sonys own manufacturing sites and suppliers,and aims to work towards a responsible supply chain,and the“Sony Group AI Ethics Guidelines,”which guide all Sony officers and employees to utilize artificial intelligence(“AI”)and/or conduct AI-related R&D in a manner that conforms with our values and emerging social norms.Sony conducts human rights risk impact assessments in line with the frameworks regarding human rights due diligence set out in the United Nations Guiding Principles on Business and Human Rights(UNGP)issued by the United Nations Human Rights Council and the OECD Guidelines for Multinational Enterprises.After identifying potential human rights risks by considering the characteristics of each business operation and the value chains important to each business,the assessments further identified three areas as priority areas for enhancing initiatives throughout the Sony Group:responsible supply chains,respect for diversity and responsible development and use of technologies.For issues where significant adverse human rights impacts are identified or are of concern in these priority areas,Sony promotes initiatives to prevent or mitigate those impacts for each of these areas.In the fiscal year ended March 31,2024,Sony again conducted a human rights risk impact assessment,confirmed that the three areas of potential human rights risk which were previously identified as most relevant to Sonys business activities remained the same,and promoted individual initiatives in each business.Sony has also established the“Sony Group Human Rights Policy,”with the aim of expressing its commitment to respecting human rights both internally and externally and promoting more systematic human rights due diligence across the Sony Group.Respect for Human RightsTechnology for SustainabilitySony supports technological development that helps businesses grow and innovation that betters society and industry for the future.For example,Sony is carrying out R&D regarding sensing technology that measures the water content in soil,ultra-wide area sensing network technology,and sophisticated predictive data analytics technology.Additionally,in order to address issues such as the proliferation of fake images and false information due to the rapid development of generative AI models,Sony Corporation has begun to provide certain media agencies with Camera Authenticity Solutions that verify the authenticity of images in compliance with the Coalition for Content Provenance and Authenticitys(C2PA)*6 standard and through the use of Sonys proprietary in-camera digital signature.Sony is also working to reduce the environmental impact of its products through the development of environmentally-conscious materials and technologies to reduce power consumption.Furthermore,SSS supplies its image sensors equipped with global shutter pixel technology Pregius to a company engaged in resource collection and recycling projects.The companys reverse vending machines equipped with the image sensor can accurately identify the shape of a used beverage container in approximately one second,contributing to effective sorting and the optimization of resource recovery systems.*6 A standards-setting organization that develops open standards and technical specifications for the provenance and authenticity of digital content.TechnologySustainability InformationCorporate GovernanceEthics and ComplianceTechnologyEnvironmentCommunity EngagementResponsible Supply ChainQuality and Customer ServiceAccessibilityResponsible AIRespect for Human RightsOccupational Health&SafetyEmployeesMaterialitySonys SustainabilityEditorial Policy/Business OverviewAt a Glance 2023Sonys Sustainability VisionSonys Basic Policy for Sustainability InitiativesThe Sony Group Code of ConductSonys Purpose&ValuesSustainability Report 2024025Milestones1966:Internal job posting program started1973:Sony Technology Exchange Fair started1978:Sony/Taiyo Corporation founded1988:Flex-time System introduced1990:Parenting leave and flex holiday programs introduced2000:Sony University program started2008:Flexible work policy introduced2015:Flexible career leave and free agent programs introduced2018:PORT,a place for employees to learn and interact,established2021:Sonys People Philosophy and People Strategy redefinedSony selected as one of the Iconic Partner of The Valuable 5002023:Senior Executive and Senior Vice President in charge of Lead of Group DE&I appointed2024:Diversity,Equity and Inclusion Statement redefinedStructureMaterial issues related to employees are discussed and deliberated at group-level meetings and by HR committees for each business segment.The Sony Group Corporation officer in charge of human resources and a diverse group of HR leaders from the main six business segments also hold regular meetings.As part of the new management system for fiscal year 2023,Sony has further enhanced its organizational structure through the appointment of a Senior Executive and a Senior Vice President in charge of Lead of Group DE&I.Looking to the FutureWe prioritize diversity,working on initiatives focused on Sonys People Philosophy to drive sustainable growth for the Sony Group and create social value.Sony also supports employees continued growth by providing opportunities for them to improve and make the most of their individual strengths,skills,abilities,and creativity.SpecialYouDiverseSonyShape your own career with the spirit of freedom and open-mindedness.Feel the emotion of opening up your future.Sony has a culture that values diversity.It is a placewhere people inspire each other to create new value.Sonys People PhilosophyEmployeesBasic ApproachStarting from the electronics business,Sony has continued to evolve,expanding the breadth of its businesses to include semiconductors,music,financial services,pictures and games.Half of our six main business segments are headquartered in the U.S.,and our diverse businesses operating across different regions are sustained by our diverse employees,one of Sonys most important management resources,who form the foundation for creative innovation.Our approximately 110,000 employees around the world represent a wide array of nationalities,ethnicities and occupations,and they are the driving force
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C OR POR AT ER E PO R T 2024Contents3Message from Top Management 1Financial/Business 39 40 Financial Highlights 43 Business Profiles 46 Game&Network Services 49 Music 52 Pictures 55 Entertainment,Technology&Services 58 Imaging&Sensing Solutions 61 Financial Services 65 Messages from Outside Directors 67 Board of Directors 71 Strengthening Corporate Governance 75 Group InformationFeature 17Corporate Governance 64Value Creation 23 24 Value Creation Model 25 Value Creation 28 R&D/Message from the CTO 30 Employees/Message from the Officer in Charge of Human Resources 33 SustainabilityBusiness Segment AbbreviationsG&NS:Game&Network ServicesET&S:Entertainment,Technology&ServicesI&SS:Imaging&Sensing Solutions2023 Sony Group Corporation 2024 Sony Pictures Entertainment.All Rights Reserved.MARVEL and all related character names:&TM 2024 MARVEL.Sony Music Entertainment(Japan)Inc.Sony Music Solutions Inc.All rights reserved.1 Sonys Purpose&Values 4 Sonys Identity 6 Message from the CEO 11 Message from the COO/CFOThe Evolution of Sony as a Creative Entertainment Company 18 Progress with Creation Shift 19 Example 1:Anime 20 Example 2:Music 21 Example 3:Creation Technology 22 Message from the CSO4Sonys IdentityCreative Entertainment VisionSonys IdentityA Creative Entertainment Companywith a Solid Foundation of TechnologyCreative Entertainment VisionExperience a visual portrayal of the Sony Groups long-term vision,centered on its Purpose,projecting social change and technological evolution over the coming decade.https:/ the BeyondExplore a program portal site for creators that introduces Sonys initiatives to inspire them and support creation.https:/ Creative Entertainment Companywith a Solid Foundation of TechnologyCES 2024Take in an overview of Sonys press conference and display booth at the CES technology event,where Sony presented an exhibition on the theme of“Powering Creativity with Technology.”https:/ the next-generation facility,Torchlight,which is able to provide various simulations of filming in a virtual space at the concept stage of motion picture creation.https:/ IdentityKiyosumi-Shirakawa BaseContributing to Kando CreationKenichiro Yoshida Representative Corporate Executive Officer,Chairman and CEOMessage from the CEO6Message from the CEOMessage from Top ManagementEvolution Focused on Kando,the Key Element of Our PurposeUnder our shared Purpose,to“fill the world with emotion,through the power of creativity and technology,”the Sony Groups approximately 110,000 employees are working in a concerted effort to create Kando and deliver it to the world together with our partners.Since the launch of our first mid-range plan in FY2012,with Kando as the keyword,we have been working to enhance our entertainment businesses games,music,and pictures that move peoples hearts.These three businesses now account for around 60%of our consolidated sales.We reorganized the Group architecture,including the establishment of Sony Group Corporation in 2021 to evolve our businesses based on our Purpose,centering our diverse portfolio as our core strength.We believe that establishing a system in which each business is equally connected has led to the acceleration of Group synergies.Further,we plan to partially spin off Sony Financial Group(SFG)in 2025 so that it can pursue its own capital procurement and growth strategies.We will continue to support the evolution of the Financial Services business as an important part of the Group through measures such as leveraging the Sony brand and reinforcing collaboration among our businesses.Shift toward CreationBeyond these initiatives,Sony has been shifting its management focus to the creation side.Looking back over our history,in the 20th century Sony was a company that delivered Kando through its products,such as the Trinitron TV and the Walkman.In the 21st century,we want to be a company that contributes to creating Kando.We have been making this creation shift in our three main business layers.In the content layer,which is directly connected to Kando,we have invested approximately 1.5 trillion yen over the past six years to strengthen our content creation,starting with the acquisition of EMI Music Publishing in 2018.Our acquisition of Crunchyroll in 2021 was an investment in a distribution service that delivers Kando,and we aim to contribute to the anime creator community by spreading Japanese anime around the world.In the products and services layer,which creates Kando,we are also working hard to create entertainment together with creators.Currently,profits from creation-related business account for more than 80%of operating income in the ET&S segment.CREATION SHIFTContentProductsDISTRIBUTIONSemiconductors7Message from the CEOMessage from Top ManagementMessage from the CEO In the semiconductor layer,CMOS image sensors support the creative process for many people,from movie creators to smartphone users worldwide.We have implemented capital expenditures amounting to about 1.5 trillion yen in CMOS image sensors over the past six years,and intend to continue to evolve them as key devices for creating Kando.These CMOS image sensors also contribute to safety in mobility,which we are positioning as a new entertainment space(See“Feature:The Evolution of Sony as a Creative Entertainment Company”on p.17 for details).Focus on Creation Technology As a creative entertainment company with a solid foundation of technology,we aim to leverage the technologies we have cultivated until now,and further refine our technologies for Kando creation.Creativity resides in people,and people live in the present.Therefore,under the key concept“real-time,”we are focusing on the following two creation technologies.One is technology that captures moments using CMOS image sensors.Our Alpha 9 III mirrorless interchangeable-lens camera equipped with a full-frame global shutter image sensor,is one example.By reading out all pixels simultaneously,even fast-moving subjects can be captured.Since its release in 2024 it has already been used in many shooting opportunities at sporting events including the World Athletics Indoor Championships.When used with a 5G portable data transmitter it supports real-time data transport from shooting locations,contributing to prompt broadcasting and video production.Furthermore,the use of our VENICE digital cinema camera series is extending beyond film production to purposes such as capturing halftime shows during major sporting events.It is of ever-greater significance for creators behind the lens to capture the real world“as it is.”CMOS image sensors are also used in verifying the authenticity of an image to ensure that it consists of a real subject shot by a real person using a camera.Our second area of focus is game engines,which are at the core of real-time computer graphics and have evolved in recent years into technology for producing video content.At Sony we are using the Unreal Engine by Epic Games,a company in which we have also invested,in a range of creative processes.For example,at the conception stage,our Torchlight facility makes it possible to simulate filming on set using the Unreal Engine.Other examples of its use include virtual production at the shooting stage,and our immersive spatial content creation system that enables virtual overlaying of 3D content into the physical space to support creative and editing work in the production stage,raising the value of creators time and helping them to unleash their creativity(See“Feature Example 3:Creation Technology”on p.21 for details).CMOS Image Sensors Game EngineAlpha 9 III mirrorless interchangeable-lens cameraOn-set filming simulation facilityVirtual productionSpatial content creation systemVENICE 2 digital cinema cameraCMOS image sensor used for technology to capture“the moment”and verification of authenticity8Message from the CEOMessage from Top ManagementOur Purpose and Long-term Management PerspectiveMy foremost priority is to create value from a long-term perspective based on our Purpose,with a focus on Kando and people.For sustainability,where a long-term perspective is essential,each business of the Sony Group conducts initiatives that leverage its respective strengths,driven by the belief that to“fill the world with emotion”it is necessary to create a society in which everyone can live with peace of mind in a healthy global environment.In our sustainability initiatives we focus on climate change,DE&I,human rights,and technologies for sustainability,and are implementing initiatives such as reducing greenhouse gas(GHG)emissions,promoting career opportunities for women,embracing ethical AI practices,and broadening accessibility.In April 2024 we announced Sonys Sustainability Vision to more clearly articulate the intended direction in which the Sony Group aims to proceed with the goal to“inspire a world filled with emotion,for this generation and beyond”(See“Sustainability”on p.33 for details).It has been five years since we established our Purpose in Sonys corporate culture as the foundation on which our businesses and employees can take autonomous action.Even amidst a rapidly changing business environment,by formulating and following through on strategies rooted in our Purpose,each of our businesses is able to engage in flexible and agile management.Moreover,by sharing the same direction,various Group collaborations focused on Kando are born.Creativity develops communities.In each business we are working to create spaces where creator communities can gather and interact,and to nurture the next generation of creators.We aim to continue building value from a long-term perspective,contributing to the creation of Kando by leveraging the strengths of our diverse people and businesses.Sony Music Entertainment(SME)Africa,where many women employees play active rolesAn actor with a disability was cast to voice Sun-Spider,the first wheelchair-using Spider-Person,in Spider-Man:Across the Spider-VerseAn educational event for children using the satellite EYEThe Global Social Justice Fund supports the next generation of creatorsKando Trip,a community-building space for creators,mainly for imagingRetina Projection Camera KitThe Girls Make Games summer camp,held at the Sony Interactive Entertainment(SIE)headquarters9Message from the CEOMessage from Top ManagementSupporting the launch of a loop group*for actors with disabilities*Group of voiceover actors who record audio in post-production10Message from the CEOMessage from Top ManagementCreate Infinite RealitiesHiroki TotokiRepresentative Corporate Executive Officer,President,COO and CFOMessage from the COO/CFO11Message from the COO/CFOMessage from Top ManagementIn FY2023,which was the final year of our fourth mid-range plan,we faced an uncertain business environment and focused on the management of immediate risks to ensure we achieved our KPI goals.We also drew up our fifth mid-range plan for the next three years starting from FY2024 and discussed the Sony Group Vision for the long term thereafter,in order to realize the new growth stage for Sony that we announced when I assumed the positions of president,COO and CFO in April 2023.Review of the Fourth Mid-Range PlanIn the fourth mid-range plan whose theme was“Sonys Evolution,”we have been working to evolve our corporate architecture and business portfolio to drive growth for the entire Group.Since the founding of Sony Group Corporation in 2021,we have established a system in which each business is equally involved in contributing to Group growth,and have begun preparing for the planned partial spin-off of the Financial Services business in October 2025.By concentrating capital allocation on our three entertainment businesses and I&SS,our high-growth areas,we increased the ratio of their combined sales to those of the entire Group by 10%over the past four years,to 68%in FY2023,developing a more growth-oriented business portfolio.As a result,we made 5.1 trillion yen in cumulative consolidated adjusted EBITDA over the past three years,our KPI during the fourth mid-range plan set as a growth indicator,which was 19ove our initial target.Excluding the Financial Services segment,our average annual growth rate of consolidated operating income from FY2020 to FY2023 was 9.0%,demonstrating that our profitmaking ability is steadily improving.Direction of the Fifth Mid-Range PlanThe theme of the fifth mid-range plan,beginning in FY2024,is“Beyond the Boundaries:Maximize Synergies across the Group.”To continue working to build corporate value through sustainable growth,we plan to further evolve our initiatives to actualize intra-Group synergies and focus on mid-to long-term growth for our three entertainment business segments and I&SS.To reinforce our resilience amid the uncertainty and significant change we foresee in our business environment,we plan to further prioritize strengthening our earnings base through continuous evolution of our business portfolio and improving investment efficiency and business profitability.Consequently,for the current mid-range plan we are placing greater emphasis on profit-based growth,and have set as Group-wide KPIs the average annual growth rate in consolidated operating income(excluding the Financial Services segment)and operating income margin.We aim to achieve profit growth driven primarily by the G&NS and I&SS segments,an average annual growth rate of 10%or more in operating income,and a three-year cumulative consolidated operating-income margin of 10%or more.In addition,we have positioned sales growth for the Music,Pictures,and I&SS image sensor businesses,as well as the G&NS game-software and network-Fourth Mid-Range PlanFifth Mid-Range PlanThree-Year Cumulative Consolidated Adjusted EBITDAConsolidated Operating Income(Excluding Financial Services)3.65.14.3 190.31,035.3Actual(U.S.GAAP)ActualFourth Mid-Range Plan(FY2021-FY2023)Third Mid-Range Plan(FY2018-FY2020)TargetFY2020(IFRS)FY2023(IFRS)(IFRS)9.0GR(trillion yen)(billion yen)Notes:1.Adjusted EBITDA is not a measure in accordance with IFRS and U.S.GAAP.However,Sony believes that this disclosure may be useful information to investors.2.Consolidated Operating Income(excluding Financial Services)is not a measure in accordance with IFRS.However,Sony believes that this disclosure may be useful information to investors.CAGR of Consolidated Operating Income(Excluding Financial Services Segment)(FY2023FY2026)10%or more10%or moreThree-Year Cumulative Operating Income Margin(Excluding Financial Services Segment)12Message from the COO/CFOMessage from Top ManagementBeyond the BoundariesMaximize Synergies across the GroupMessage from the COO/CFOservices businesses,as important indicators.The mid-range plan mandates the focus for each business segment.The G&NS segment works to steadily maintain and expand the number of active users and user engagement and promote first-party software titles produced by our in-house studios as well as PC programs under the newly-established Platform Business Group and Studio Business Group.The Music segment continues working to grow faster than the market by strengthening initiatives in emerging markets,increasing earning opportunities for our music catalogs,and incorporating adjacent businesses such as merchandising,while accelerating global marketing of Japanese animation and artists.The Pictures segment,which serves as the core for collaboration among our three entertainment businesses,endeavors to maximize the value of the IP(intellectual property)assets held by the Sony Group.We further aim to achieve profitable growth with Crunchyroll,a direct-to-consumer(DTC)service that deeply engages with anime fans and anime creators.The ET&S segment,meanwhile,focuses on the steady growth of the highly profitable and technologically differentiated imaging and sound businesses,accelerating expansion into Growth Axis businesses.The I&SS segment targets higher sales and profitability primarily in mobile sensors and works to improve investment efficiency and reinforce development and manufacturing to boost yield.Finally,the Financial Services segment works to further increase corporate value through the organic growth of each operation,expanding its customer base across the financial group,and tightening alliances with the rest of the Sony Group.Capital AllocationWe expect a significant increase in the three-year cumulative consolidated operating cash flow,excluding the Financial Services segment,during our fifth mid-range plan due to profit growth we anticipate during the plan as well as due to the recovery of working capital that increased over the past three years.Using this as the main source of funds,we forecast 4.5 trillion yen for the total amount of capital allocation,up 0.6 trillion yen from that of the previous plan.With regard to the breakdown of this capital allocation,we expect to spend 1.7 trillion yen for capital expenditures,down 0.2 trillion yen from the previous plan,taking into account that investment for image sensors is expected to decrease.For strategic investments,we plan to allocate 1.8 Capital Allocation(Excluding Financial Services Segment)Total Payout Ratio61.This represents an increase in operating cash flow from the forecast at the end of Q3 FY2020 in the 3rd mid-range plan,and a delay in cash outflows related to strategic investments that have already been decided upon.2.Dividends paid in the 3rd mid-range plan were approximately 170 billion yen,and in the 4th mid-range plan approximately 280 billion yen.3.Strategic investments include investments in major music catalogs included in operating cash flow.4.Financial indicators in the 4th and 5th mid-range plans are based on IFRS.Operating cash flow includes the impact of differences in accounting standards for payments of principal on operating lease obligations and purchases and sales of content assets.However,this does not include the impact of investments in major music catalogs,which are included in strategic investments.Capital expenditures also include increases in right-of-use assets related to operating lease agreements.5.As of May 14,20246.Total payout ratio does not include the dividends in kind of Sony Financial Group Inc.shares expected to be effective in FY2025 as a result of the planned partial spin-off of the Financial Services business.1.21.91.71.84.52.50.41.00.22.61.30.40.31.10.30.22.82.83.93.94.54.5Breakdown of Capital AllocationSources of Allocated Capital3rd Mid-Range PlanResults(FY2018-FY2020)3rd Mid-Range PlanResults(FY2018-FY2020)4th Mid-Range PlanResults(FY2021-FY2023)4th Mid-Range PlanResults(FY2021-FY2023)5th Mid-Range PlanPlan5(FY2024-FY2026)5th Mid-Range PlanPlan5(FY2024-FY2026)(trillion yen)(trillion yen)Shareholder ReturnsAsset Sales/Debt FinancingConsolidated Operating CF4(Excluding Financial Services)ShareholderReturnsStrategic Investment3(Including Flexible Share Buyback)Carry-over from 3rd Mid-Range Plan and Earlier1Capital Expenditure4Capital Expenditure4Strategic Investment3Share BuybackDividends288.398.2202.5FY2021ActualFY2022ActualFY2023ActualAmount of Share Buybacks(billion yen)FY2026Target192%Approx.40Message from the COO/CFOMessage from Top Managementtrillion yen to business growth investments and flexible share repurchases.We will continue to work toward mid-to long-term growth of our business through such means as acquisitions of IP and M&A,but we intend to emphasize investment efficiency and be more selective in the strategic arena.The biggest change from the capital allocation strategy under the previous plan is that we intend to focus on shareholder returns.Regarding said returns,we aim to emphasize the total payout ratio,which we expect to gradually raise through the period of the current plan,aiming for approximately 40%for the final fiscal year ending March 31,2027.To this end,we set aside 250 billion yen for share buybacks for FY2024,greater than what we acquired in the previous fiscal year.As for dividends,our policy is to continue to increase them steadily while accelerating the pace of dividend increases.Long-Term Vision:Our Creative Entertainment VisionWe have just formulated our Creative Entertainment Vision,a long-term look beyond our fifth mid-range plan to illustrate where the Sony Group hopes to be a decade from now.By presenting our worldview as a creative entertainment company with a solid foundation in technology,as well as a clear timeline for pursuing that Vision and our shared Purpose,to“fill the world with emotion,through the power of creativity and technology,”we hope it will inspire employees,partners,and creators to help us create a bright future together.With likely changes in society and technological evolution also in mind,we have discussed this Vision over two years with diverse colleagues across our Group companies,particularly among the generation who will lead our company into the future to prepare this Vision.The key message of the Vision “Create infinite realities”expresses Sonys ambition to seamlessly connect the multi-Creativity UnleashedTranscend dimensions to unleash the creativity of creators around the worldCreative Entertainment VisionSeamlessly Connecting a Multilayered World Where Physical and Virtual Realities Overlap to Deliver Infinite Kando through Creativity and Technology Working with CreatorsBoundaries TranscendedTranscend boundaries to connect diverse people and values and foster communitiesNarratives EverywhereExpand exciting experiences rich in narrative beyond imagination and across the world14Message from the COO/CFOMessage from Top Managementlayered worlds we foresee on the horizon,where the physical and virtual overlap,developing limitless Kando through the power of creativity and technology,together with creators.The Vision summarizes our efforts to“create,”“cultivate,”“expand and deepen”IP to maximize its value in three key phrases:“Creativity Unleashed,”“Boundaries Transcended”and“Narratives Everywhere.”By this we mean to harness technology to unleash the creativity of creators around the world,transcending physical,virtual,and time dimensions;connect diverse people across boundaries to foster vibrant communities;work with creators to craft exciting experiences rich in narrative that go beyond imagination;and spread those experiences as new touchpoints for Kando around the world.Initiatives to Maximize IP Value under the Long-Term VisionWe have already begun initiatives to maximize IP value,moving toward the direction outlined in our Creative Entertainment Vision.In the anime field we plan to employ AnimeCanvas production software,currently under development,to improve the production environment,work efficiency,and quality of each title,as part of our efforts to contribute to IP creation.Together with the industry we are working on the establishment of an academy to cultivate anime creators for global markets.In the Pictures segment we are nurturing and supporting film creators who can make the most of cutting-edge shooting technologies like virtual production.As an effort to cultivate IP through community-building with fans,creators,and partners,we are undertaking film adaptations of game IPs like God of War and cultivating“fandom artists,”such as Nogizaka 46,whose passionate fans create new cultures.AnimeIP CreationIP CultivationIP 360ExtensionPicturesGamingMusicSportsDX/AcademyFan Voting CeremoniesLive Stage AdaptationAdvanced VisualizationFranchise DevelopmentCinema ConcertsTalent DiscoveryLive Action AdaptationLBEUnit Turning Novels Into MusicFandom ArtistsBiographical WorksReal-Time Animation OverlayVirtual Fan EngagementPredictive Sports Games Further,through our IP 360 Extension initiative to extend and deepen IP across categories including location-based entertainment(LBE),merchandising,and the mobility space.For LBE we are working to deliver the ultimate Kando through immersive experiences made possible by combining our IP with our gaming,sensing,video,and audio technology,and then grow it as a new business.We are also accelerating merchandising through our Group-wide collaboration,because it not only increases the emotional attachment of fans to a given IP,but can also help us acquire new fans.In the mobility space we are continuing our collaboration with other companies across the industry including Sony Honda Mobility,as well as increasing the experiential value of transportation and expanding opportunities to provide entertainment by turning a vehicle into a personalized entertainment space,made possible using sensing data and vehicle data to understand the passengers and surrounding environments.We are also expanding initiatives to maximize the value of IP globally by assisting creators with diverse cultural backgrounds and strong regional appeal.A case in point is the Sony Innovation Fund:Africa,a corporate venture-capital fund we established in collaboration with the International Finance Corporation to support startup companies that are helping develop entertainment businesses in Africa.15Message from the COO/CFOMessage from Top ManagementReinforcing Our Technology Base to Help Maximize IP ValueWe are bolstering technologies that can help creators engage in maximizing the value of their IP in efficient,high-quality ways,including sensing and capturing as well as real-time 3D processing,AI,and machine learning.Building on these initiatives,we are moving toward solutions for delivering our IP rapidly and at low cost to a broader range of fans.In sensing and capturing,we are putting particular effort into our Volumetric Capture Studio,which generates 3D data from people and locations to render high-quality images.Going forward,we plan to apply high-quality 3D assets,including motion data from our Studio,accumulated by each of our companies cross-functionally across the Group,and explore potential external sales.In real-time 3D processing we are pursuing exploratory activities with Epic Games,focused on the Unreal Engine,developed as a physics engine for game CG generation.For instance,we reused 3DCG components from a music video shot using virtual production to produce a game set in the same world,and released a proof-of-concept CG-based short film using the Unreal Engine.We used machine learning in the production of Marvels Spider-Man 2,a game released last year that proved a major hit.By applying voice-recognition software in certain languages,we were able to automatically synchronize subtitles with each characters lines,thereby significantly shortening the subtitling process.In India,a multilingual society,we are conducting research using AI technology and machine learning to shorten dubbing and translation processes.To maximize the value of our IP,we believe it is also important to develop a shared Group network to support these efforts.The PlayStation Network is a network service that provides both high-quality operations and cost optimization,flexibly auto-scaling to user traffic and supporting various payment methods and currencies.By extending its core functions,such as accounts,payments,data infrastructure,and security,to the Crunchyroll service,we plan to develop the network into an engagement platform for the Sony Group.Going forward,we plan to standardize user IDs for all the services the Group provides and utilize this engagement platform to support the development of new network services across the Group in areas such as mobility and LBE.In the future,we plan to build a common platform specialized for fan engagement beyond the boundaries of the Sony Group.Growth through Diverse ConnectionsI believe that the continuous evolution of diverse businesses and employees is important in order for Sony to be ever more resilient and keep growing amidst todays uncertain business environment and rapid technological evolution.Diverse talent has always been a Sony strength.In particular,in recent years M&A initiatives have allowed us to bring in new ways of thinking and knowledge,with increasing numbers of colleagues 1st MRP2nd MRP3rd MRP4th MRP5th MRPFY2012FY2014FY2015FY2017FY2018FY2020FY2021FY2023FY2024FY2026FY2027TransformingSonyProfit Generation&Investing for GrowthSustaining ProfitEvolving SonyBeyond the BoundariesKANDOTo be a company that inspiresand fulfills your curiosityPURPOSETo fill the world with emotion,through the power ofcreativity and technologyGROWTHTo growthrough diversityhaving specialized expertise,particularly in the entertainment businesses.This is an example of diverse experience coming to the fore.Year by year we are increasing our ratio of foreign nationals in executive positions and women in management positions.Sony brings together people with diverse nationalities,ethnicities,genders,and values and encourages them to share their knowledge and experience and to expand their scope for greater growth opportunities.Through constant growth as a company and the personal growth of employees,Sony maintains a positive spiral winning the preference of our customers,attracting more talented people,building corporate value,and giving back to society.I believe businesses and management represent positions of trust and a legacy for future generations,and I place at the core of my own values the need to contribute to Sony by increasing its value and passing it on to the next generation in an even better form.Toward the future forecast in our Creative Entertainment Vision,I will endeavor,together with our employees,creators,fans,business partners,shareholders,and investors,to realize growth by steadily maximizing the value of our IP beyond existing boundaries.16Message from the COO/CFOMessage from Top Management17The Evolution of Sony as a Creative Entertainment CompanyFeature Progress with Creation Shift Example 1:Anime Example 2:Music Example 3:Creation Technology Message from the CSO18Progress with Creation ShiftFeatureRecent ChangesIn recent years Sony has accelerated the growth of its entertainment businesses.Since FY2018,when Kenichiro Yoshida took on his role as CEO,Sony has been accelerating efforts to reinforce its entertainment businesses,which,driven by the Kando in its Purpose,move peoples hearts through games,music,and pictures.The proportion of Sonys total sales comprised by the entertainment businesses,consisting of G&NS,Music and Pictures,increased from 26%in FY2012 to 55%in FY2023(Chart 1).In addition to the evolution of this business portfolio,this change can be attributed in large part to investment accompanying Sonys shift of direction toward creation,which places more emphasis on creators under the management direction of“getting closer to people.”Of Sonys 2.4 trillion yen in total strategic investment over the past six years,content IP accounts for 57%,and DTC,which delivers content IP to users,for 8%.Strategic investment related to content IP has gone mainly into acquiring corporations with important IP assets as well as IP development and production studios.Including the acquisition of music catalogs and other expenses,the total investment in content IP over the past six years stands at roughly 1.5 trillion yen.Sonys creation shift is shown in its balance sheet.Intangible assets and goodwill as of the end of FY2023 were 4 trillion yen,approximately 2.9 times that of 10 years ago.Content IP like music catalogs and character rights comprises highly liquid,quality assets that can generate profit and cash over longer terms more efficiently than tangible fixed assets.Sonys ratio of intangible assets to tangible fixed assets has also grown,from a factor of 1.8 to 2.6 over ten years,illustrating the shift in asset components.Value Creation on the Creative SideLooking at the external environment,the entertainment market is clearly growing with the spread of streaming services and the like,and particularly the global music market has been growing(Chart 3).Within that trend the value of content IP is rising.While Sony previously focused on the distribution side of business,delivering Kando through sales of hardware and packaged media,today it has shifted its focus to the creative side of Kando.This shift is present in Sonys profit structure as well.The value of the content IP Sony acquires or creates is contributing more than ever,through licensing revenue.In the Music and Pictures segments the value of both new and older titles is increasing.For example,in 2023,the share of songs in the US music production market that were released more than 18 months ago accounted for 73%(Chart 4).In this way,continuous releases of hit content lead not only to single-year profits,but to the expansion of the profit base for the future as well,contributing to the sustainable growth of corporate value.This is why Sony continues putting effort into the creation and cultivation of content IP.Progress with Creation ShiftGame10%Music6vices12%HE&S14%All Other8%Financial Services14%G&NS32%Music12%Pictures11%All Other1%ET&S18%I&SS12%Financial Services13%FY2012FY2023IP&S10%MP&C17%Pictures10%Sales Growth in Entertainment Businesses(Component ratio of total sales per segment1)(Chart 1)Global Music Production Market Sales(Chart 3)Composition of Sales in U.S.Music Production Market (Chart 4)Breakdown of Strategic Investment over Last Six Years(Chart 2)Content IP57%Others35%DTC8 162017201820192020202120222023 Digital Physical Other220162023 New Songs3 Catalog473%Source:IFPI2.Including performance rights and synchronizationSource:Luminate3.Titles released up to 18 months ago4.Titles released more than 18 months agoIP&S:Imaging Products&Solutions MP&C:Mobile Products&Communications HE&S:Home Entertainment&Sound1.Due to rounding,individual sums arent 100%.Japanese animation,one of Sonys focus areas,features original characters and distinctive worlds,attracting fans to build a very strong community.The market for made-in-Japan anime has grown by a factor of roughly 2.2*over the past decade overall,and by a factor of approximately six*outside of Japan,with still further growth projected.In this strong growth market,inter-business cooperation among the entertainment businesses is facilitating Sonys steady implementation of initiatives to maximize IP value through generating,cultivating and extending IP beyond boundaries(IP 360 Extension),centered on Aniplex,a subsidiary of Sony Music Entertainment(Japan)(SMEJ),and Crunchyroll,a joint venture between Sony Pictures Entertainment(SPE)and Aniplex,which operates a DTC service specializing in anime.To generate IP,Aniplex produces many high-quality titles every year that are beloved by anime fans around the world,like Demon Slayer:Kimetsu no Yaiba,which has become a social phenomenon.Aniplex and Crunchyroll jointly produce anime such as Solo Leveling and are looking to establish an academy to nurture overseas animation creators across the industry.Demand for new titles is growing substantially,and the A-1 Pictures and CloverWorks production studios attached to Aniplex are leading the effort to develop the new anime production software AnimeCanvas through collaboration with engineers at SMEJ and across the Sony Group.Since 2017,the Crunchyroll Anime Awards have played a significant role in nurturing this kind of IP.Hosted by Crunchyroll,which boasts over 15 million paid subscribers across more than 200 countries and regions,the Awards celebrate and recognize excellence in anime creators,series,films,music,and more.Winners in over 30 categories are chosen by fans worldwide.The event features the creators of the nominated titles and celebrities representing anime enthusiasts as presenters,promoting both IP and anime culture alongside the fans.Adaptation of IP for LBE,such as at THE TOKYO MATRIX in Shinjuku,Tokyo,and the creation of merchandise are part of the IP 360 Extension initiative to further expand the IP.Aniplex is also working to adapt popular titles for theatrical performance.Demon Slayer:Kimetsu no Yaiba,Bocchi the Rock!,and Lycoris Recoil have already been produced for the stage,thrilling existing fans and creating new ones.*Source:Anime Industry Report 2023Message from the Representative Director of AniplexIn the era of streaming,the artistic expression,fascinating characters,and creative worlds of anime that have been fostered in Japan for many years are expanding on a surprising scale into the world.In such an era,it is wonderful that the Sony Group is approaching anime from so many different angles.Aniplex aims to continue to deliver outstanding titles that meet the expectations of fans,and,in cooperation with other Group companies,contribute to the further development of anime culture.Example 1Atsuhiro IwakamiRepresentative DirectorAniplex Inc.Solo Leveling Animation Partners Hajime Komoto/SHUEISHA,MASHLE CommitteeIP CreationAniplex Production of high-quality titles loved by anime fans worldwide Development underway of new animation production software,centered on A-1 Pictures and CloverWorks,subsidiaries of Aniplex,in collaboration with engineers across the Sony Group Consideration of establishing an academy to nurture overseas animation creators,in collaboration with Crunchyroll and across the industryIP CultivationCrunchyroll Anime Awards An event held since 2017 to immerse fans into anime IP and culture In 2024 the 8th Awards attracted over 34 million fan votes,a new recordIP 360 ExtensionLBE Adaptation of Sword Art Online into THE TOKYO MATRIX,an interactive attractionMerchandising Markets character merchandise derived from hit anime and moviesTheatrical Adaptation Produced stage versions of Demon Slayer:Kimetsu no Yaiba,Bocchi the Rock!and other popular titles19Progress with Creation ShiftFeatureAnime:Maximize IP Value through Inter-Business Cooperation among Entertainment BusinessesSonys music business has broken its own revenue record for eight consecutive years with revenue,increasing by 3.6 billion USD compared to FY2019,outpacing the growth of the market.In the US,the market share of new songs has increased for five consecutive years,reaching a record high of 27%.By acquiring The Orchard,which provides support for independent music distribution and independent labels,and AWAL,which offers support services for independent artists,as well as bringing record labels Som Livre and Altafonte into the company,SME is expanding its services to independent artists in many emerging markets around the world.At the same time,Sony Music Publishing(SMP),which boasts the worlds top share in the music-publishing industry,continues to acquire music catalogs and businesses.Since it made EMI Music Publishing a wholly-owned subsidiary in 2018,Sony has begun accelerating the enhancement of its music catalogs,resulting in 6.24 million copyrighted songs under its management as of March 31,2024,a 1.7-fold increase over the past decade.These vast catalogs represent a striking example of Sonys enhanced investment in content IP,and are a core strength,helping the company achieve high levels of growth against the backdrop of market expansion due to the adoption of streaming services.SMPs streaming revenue has increased to an average annual growth rate of 38%over the four years since FY2020 due to the expansion of the streaming market,a stable share of high-ranking songs by contracted artists on streaming services and widening opportunities to apply its catalogs of older songs.In fact,the number of new tracks released by SME to digital streaming services increased by 24%compared to FY2019,and songs involving SMP-affiliated songwriters have ranked number one on the Spotify Weekly Global Chart for 37 out of 52 weeks.From gaming to social media platforms to Web3,and beyond,there is commercial potential in many new technology areas.More importantly,Sony Music Group(SMG)commits resources to the research and development of cutting-edge formats to provide its artists and songwriters with more creative outlets and ways to reach new fans.In these circumstances,the layering of IP in this way helps to maximize IP value across categories,such as games and merchandising,and also leads to new opportunities for SME artists and songwriters.Furthermore,Sony expects it to continue to serve as the cornerstone of the strategy supporting Sonys music business even if there are future changes in the industrys technological trends.Going forward,Sony plans to continue to expand its catalog while making carefully selected investments in line with this strategy,and,while protecting the rights of artists,will also look to new technological fields with business potential,all the while continuing to evolve its ecosystem.Message from President of Commercial Music Group,SMESME is home to one of the worlds largest and most culture-defining catalogs of iconic songs,representing much of the foundational history of recorded music.We have a deep understanding of the catalogs we work with and consider ourselves stewards of our artists vision.Our expertise uniquely positions us to help our artists at every stage of their career maximize global opportunities with their music.Todays frontline hits are tomorrows catalog favorites.Music:High Level of Growth through the Strengthening and Utilization of Music IPRichard StoryPresident,Commercial Music Group,SMEShare increase for new songs in the USFive consecutive years(2018-2023)Share of music-publishing marketNo.1 for eleven consecutive years(2012-2023)New tracks released to digital streaming platforms 24%(FY2023 vs.FY2019)Songs managed6.24 million titles(as of March 31,2024)Spotify Weekly Global Top 100Average of 31 songs ranked(during FY2023)Weekly Spotify Worldwide Chart in 2023SMP songwriters contributed to No.1 songs in 37 of 52 weeksExample 220Progress with Creation ShiftFeatureMusic ProductionExpanding Services to New Artists and Emerging MarketsMusic PublishingEnhancing Music CatalogMessage from the CEO of PixomondoPixomondo excels in virtual production and our ability to bring creators visions to life through our advanced visualization and VFX capabilities.Supported by Sony,we integrate engineering,deploy cutting-edge LED stages,innovate,and educate to propel the global virtual production industry forward.As trailblazers in utilizing Unreal Engine for film production,we lead the industry in comprehensive virtual production and collaborate closely with our clients as creative partners,striving together to achieve ground-breaking outcomes in filmmaking and beyond.One of the creation technologies that Sony is focusing on is game engines,such as Epic Games Unreal Engine,which help maximize IP value.Making the most of its high-quality real-time 3D-processing(rendering)capability,the Unreal Engine can help raise work flow efficiency and production freedom significantly in the process of creating digital assets for films and other content.Based on its strategic investment in Epic Games,Sony has therefore undertaken a range of initiatives involving the Unreal Engine,and is exploring more applications.Using the Unreal Engine and other cutting-edge technologies,SPE has established Torchlight,an advanced visualization facility that allows creators to explore,manifest and develop their vision in real time at the pre-production stage.Using Torchlight in pre-production allows creators to comprehensively prepare for the actual filming,and also allows them to make use of the digital assets they have created right up until the final editing stage.It has been utilized for several third-party projects and SPE films including Venom:The Last Dance,Kraven the Hunter,and The Karate Kid.Specifically,by using the Virtual Production Tool Set,which allows creators to simulate the look of Sonys flagship VENICE digital cinema camera,they can freely test various shooting possibilities in a virtual space that uses the Unreal Engine to recreate a film set.Furthermore,by using tools such as the mocopi mobile motion capture system,it is possible to reproduce action by the actors in a virtual space.On the other hand,virtual production using large LED screens,provided by Pixomondo and Sony PCL,displays images in real time from the creators minds during the actual shooting of film content.Virtual production creates an environment where physical subjects and digital backgrounds projected on LEDs interact with each other while being shot simultaneously and synthesized in real time,freeing creators from the inevitable constraints of physical shooting on location.Natural complications such as time of day,location-based hazards,and weather conditions are avoided.It also significantly reduces the time required for the post-production processes,especially VFX,since the resulting real-time video composite will be captured directly on camera and can be seen and shared by the director and performers on the spot during the shooting.The Unreal Engine is used to create 3DCG backgrounds to be shown on the LED screens and perform in sync with the camera.The scalable nature of this technology has allowed creators to use it for motion pictures,TV programs,music videos,and commercials,ranging from TV series like Game of Thrones,House of the Dragon and Avatar:The Last Airbender,as well as a short film by the city of Kobe released in April 2024.21Progress with Creation ShiftFeatureCreation Technology:Using Game Engines for Video ContentJonny SlowCEO,PixomondoSportsAnimeGamesMotion PicturesMusicCreation TechnologyCMOS image sensors that capture the momentGame engines giving form to ideas in real timeImaging Alpha series Cinema Line including VENICE Technology to verify authenticity Use in creative processes Torchlight Virtual production Immersive spatial content creation system Turning sports data into 3D animationExample 3Sony aims to achieve further growth through maximizing IP value and with a management focus on creation.My mission as CSO is to formulate medium-to long-term strategies to achieve this goal effectively and efficiently across the Sony Group,promote internal and external collaboration,and enhance our corporate value.As part of this effort,as a Group headquarters initiative we take on business incubation projects that complement those carried out by Group companies and are best achieved through intra-Group collaboration.We identify areas that may be beyond the scope of one Group company to build into a business,but show great business potential through a mid-to long-term Group-wide effort,and work with financial discipline to develop them.After receiving development support at Group headquarters,projects deemed feasible as part of a business are transferred to appropriate Group companies,and the cycle continues.A case in point is our virtual production solutions business,which we started incubating in 2017 and is now operated by SPE and Sony Corporation.Sonys strength is the breadth of its technologies and expertise,from producing content to delivering experiences.Sony is unique in having it all sensing technologies to capture data needed for content,entertainment expertise to create content from data,and the devices and services to deliver that content to users.Sony is also uniquely positioned to engage in direct dialogue with a broad range of creators,from games to music,pictures and anime enabling us to listen to their needs to realize higher-quality and creative,new entertainment,and support them to unleash their creativity.Anime,for instance,is an attractive field where we can develop IPs into multifaceted businesses,with growing market demand for new titles.Technological barriers,however,have slowed the progress of digital transformation(DX),and consequently the industry faces many challenges such as heavy workloads.Leveraging technology to realize an environment that enables creators to focus on creative work,engineers at SMEJ and Sony Group are developing an anime production software,AnimeCanvas,based on dialogue with creators at Aniplexs production studios A-1 Pictures and CloverWorks.By supporting the anime industry from the production stage,Sony aims to further evolve and grow its anime business through the production of more new,high-quality titles.To maximize the value of IPs,Sony is making the most of its breadth of content.We are expanding the field of entertainment,by for example applying our expertise in music to games and sports,and focusing on expanding content of specific IPs such as film adaptations of game IP.One of the creation technologies that accelerates such multifold expansion of content is the game engine.Through our strategic investment in Epic Games,we are collaborating on developing workflows that utilize their Unreal Engine outside of gaming,such as in film and/or TV program productions.We are also working on diverse application of IPs through their game Fortnite,such as by merging an artists music video world with the game,to craft user experiences that transcend the borders of entertainment genres.By standardizing production tools,we can reduce production time and costs,and foster the creation of new entertainment,which is expected to contribute to the growth of the entire content industry.In emerging regions where we can expect significant growth in entertainment over the medium to long term,Sony works to cultivate both the next generation of creators and the local content business through initiatives such as the corporate venture capital fund,Sony Innovation Fund:Africa.We offer opportunities to rising talents early on in their careers,and work to deepen our understanding of local cultures and practices as we nurture and support these individuals.Our goal is developing business opportunities for Sony in tandem with creating and developing local content industries.In these ways,Sony is pursuing business development by embracing inclusion,whereby diverse people collaborate in an environment of deepening mutual respect and understanding,to keep on delivering Kando through new content and experiences.Message from the CSOToshimoto MitomoCorporate Executive Officer,Executive Deputy President and CSOOfficer in charge of Intellectual Property,Business&Technology Strategy,Business Development,Business Incubation Platform,and Mobility BusinessAnimeCanvas software for anime production22Message from the CSOFeature23Value Creation Value Creation Model Value Creation R&D/Message from the CTO Employees/Message from the Officer in Charge of Human Resources SustainabilityValue Creation Model24Value Creation ModelValue CreationSonys Purpose,to“fill the world with emotion,through the power of creativity and technology,”defines why Sony exists,and guides Sony Group employees along the same vector to create value from a long-term perspective.Further,Sonys Identity is a“creative entertainment company with a solid foundation in technology.”Finally,Sonys Corporate Direction is“getting closer to people.”As it aims for sustainable value creation,Sony designates creativity,technology,and diversity as drivers for value creation,which are essential to evolve and grow diverse businesses,promote collaboration,and create new value.Sonys PurposePurpose explains the reason for our existence,for Sony Group employees to work together along the same vector and create value from a long-term perspective;in other words,why we existIdentityIdentity expresses how we want to be perceived from the outside;in other words,who we areCorporate DirectionKey DriversCorporate Direction sets out where we are headedKey Drivers are the essential elements to realize value creationGetting closer to people Creativity Technology DiversityValue CreationValue creation through diverse businessesFill the world with emotion,through the power of creativity and technology.A creative entertainment companywith a solid foundation of technology1 Enriching peoples hearts through the delivery of emotional experiences2 Helping creators realize their dreams3 Contributing to society through the delivery of safety,health,and reliabilityValue CreationSony manages diverse businesses with the aim of sustainably creating value with people at the core,thereby serving its Purpose to“fill the world with emotion,through the power of creativity and technology,”under the Corporate Direction of“getting closer to people.”In pursuing this Purpose,Sonys value creation through its businesses can be roughly divided into categories based on three perspectives:users,creators,and the society in which people live.In addition to generating content that moves peoples hearts,Sonys content businesses,including Games,Music,and Pictures,and its DTC businesses,build communities where users can gather together and share creative experiences.The ET&S business leverages its strength in creation technologies to create brand-new entertainment together with creators.Finally,the I&SS business provides image sensors for smartphones used by people around the world to share emotion,as well as display devices for AR/VR,which are expected to emerge as technologies augmenting Kando spaces.Enriching peoples hearts through the delivery of emotional experiencesExamples from FY2023G&NS Provision of beloved IP such as Marvels Spider-Man 2(which broke PlayStation Studios 24-hour sales record)on PlayStation5(PS5)and the new live service game HELLDIVERS 2 on multiple platforms including PCMusic Continuous production of music creating emotion(on average,SME had a 31%share of Spotifys weekly Global Top 100 songs)Pictures Provision of worldwide hit productions such as Spider-Man:Across the Spider-Verse,Anyone But You,The Equalizer 3,The Crown,Sex Education,and wide-ranging anime content on CrunchyrollET&S Delivery of alternative broadcast:Hawk-Eyes tracking data converted into 3D animation in real time,with Beyond Sports visualization technologyI&SS Commercialization of a large-size,high-definition 1.3-type 4K OLED microdisplay that reproduces realistic spaces25Value CreationValue Creation1 Helping creators realize their dreams2Sony crafts environments where creators can fully express their creativity and fulfill their potential by providing platforms,technologies,and expertise,in addition to discovering,nurturing,and producing creators,and supporting Sony artists from all directions.Sony delivers the resulting content to move peoples hearts around the world across a variety of domains,including Games,Music,and Pictures.Sony plans to continue to contribute to co-creation of content and maximizing the value of creators time through products,technologies,and services that enable creators to express their vision;Sony also plans to continue to realize real-time creation and live events.Examples from FY2023G&NS Launch of the India Hero Project,a discovery and support program for aspiring game developers in IndiaMusic Expansion and enhancement of support for artists and songwriters through activities such as the Artists and Songwriters Forward initiatives,including technology advancements as well as support for enhanced compensation and healthcarePictures Completion by SPEs award-winning creation,innovation and technology company,Pixomondo,of virtual production on several new series,including Dope Girls,Doctor Who,The Boys and House of the Dragon Season 2 for Max1ET&S Launch of the Alpha 9 III mirrorless interchangeable-lens camera with the worlds first2 full-frame global shutter image sensorI&SS Provision of a full-frame image sensor for the worlds first2 mirrorless interchangeable-lens camera with a global shutter systemGroup Holding of the Sony Creators Conference,a technology conference for the creative community1.Previously HBO Max2.A world first for digital interchangeable-lens cameras (as of announcement on November 7,2023,source:Sony)26Value CreationValue CreationContributing to society through the delivery of safety,health,and reliability3Sony helps to create a society in which people can enjoy daily lives filled with emotion through its businesses that support people with safety,health,and reliability.Sony aims to contribute to automobile safety and a better future for mobility,along with improved industrial automation and security,with its CMOS image sensor technologies,while Sonys life science business aims to contribute to public health through applications in the fields of imaging,display,and cloud technologies that it has cultivated over many years.In the Financial Services business,Sony focuses on providing customers with a sense of safety and assurance through pertinent advice,products,and services that leverage a variety of information sources,while improving access to its services and promoting innovation for greater convenience in daily life.Examples from FY2023ET&S Entry into collaborative research agreement with Astellas Pharma Inc.to discover a novel ADC platform in the oncology fieldI&SS Commercialization of a CMOS image sensor for automotive cameras with industry-leading*17.42-effective megapixelsFinancial Services Expanded functionality to enable users to view and update life plans via Sony Life smartphone app(Sony Life)Expanded eligibility for housing loans and collateral offerings for couples to cover all types of partners,including de facto marriage partners(Sony Bank)*Among CMOS image sensors for automotive cameras(as of announcement on September 12,2023,source:Sony)27Value CreationValue CreationR&DAt Sony,under our Purpose to“fill the world with emotion,through the power of creativity and technology,”our research and development(R&D)aims to develop technologies that support creators and unleash their creativity.Our R&D direction is“We are here for creators.”We define“creators”broadly,to include artists,engineers,scientists,and everyone who endeavors to build a positive future with Kando.In line with this direction,to make Sony“future-ready”by building a technological foundation that not only supports our existing businesses but also enables development of new businesses,Sony pursues R&D pertaining to creation technologies.This translates into focusing on three technological areas sensing,AI,and digital virtual worlds and developing technologies that maximize creativity,IP value,and fan engagement.To develop these creation technologies,it is important to respect diversity in three areas:content,culture(which includes language),and the viewpoints of people across different demographics.Our R&D teams must also be diverse,bringing varied expertise and experiences to bear.Sony works to support diverse,outstanding research talent who address critical social issues through technological innovation.As part of this effort,together with the leading science journal Nature,in March 2024 Sony launched the Sony Women in Technology Award with Nature to annually recognize three next-generation women researchers whose work is driving positive impact on the planet and society.Through technology,Sony will continue to empower diverse creators to unleash their creativity.Hiroaki KitanoCorporate Executive Officer,Executive Deputy President,and CTO Officer in charge of R&D and AI CollaborationPresident and CEO,Sony Computer Science Laboratories,Inc.Representative Director and President,Sony Research Inc.Message from the CTOBuilding a Technological Foundation to Support Human CreativityAs Sony pursues its Purpose to create and fill the world with Kando together with creators,along with fundamental creation technologies our core research and development areas are sensing,AI,and digital virtual worlds,and their integration is key.We express this integration as a double-flywheel architecture,in which AI connects the real physical world with virtual digital worlds.In the first loop(left in the graphic),AI learns from sensing data drawn from the physical world to advance image and voice recognition capabilities.The second loop(right in the graphic)depicts how creators can use AI trained on large volumes of data to produce reams of virtual-world data,enabling them to generate virtual worlds and their contents or create extremely precise simulations.By driving these two loops continuously,we work to realize technological innovation that helps creators unleash their creativity and maximize the value of Sonys businesses in both the physical and virtual worlds.28R&DValue CreationLarge-scalereal-world dataVirtual space andcontent generationLarge-scalevirtual-world dataAttractive contentand high-precisionsimulationMore sensingdevicesImproved capabilityof intelligent systemsPhysicalReal WorldLarge-scaleAI ModelsDigitalVirtual WorldDouble FlywheelInitiatives for Inclusive and Responsible AIAmong diverse creation technologies,Sony sees AI as a tool for supporting human creativity.We are actively involved in AI ethics research in order to create fair,highly-transparent AI technology and applications.For example,in a seminal paper published in 2023,we investigated a way to reduce racial bias in facial recognition technology by making skin tone evaluation more accurate.Sony,as a supporter of creators,strongly believes that human creativity should not be threatened or harmed by the abuse of AI,such as through infringement of copyright,and is actively working on AI governance.The Sony Group AI Ethics Committee works to protect creator rights,build a framework for responsible AI use,and conduct test assessments of AI risks incorporating the perspectives of each Group company.Furthermore,to realize AI as public property,such as through a truly inclusive and fair large-language model that encompasses linguistic and cultural diversity,we think unbounded global alliances among industry,academia,and government are very important.29R&DValue Creation“We Are Here for Creators”Examples of Technologies and Initiatives that Enhance Creators CreativitySony Creators Conference and SETSTo delineate its R&D direction,“We are here for creators,”Sony held its first Sony Creators Conference in Los Angeles in August 2023.There Sony showed how its creators in diverse fields,from games to animation and motion pictures,are realizing their visions by making the most of technology.The conference led into the three-day Sony Entertainment Technology Showcase(SETS).Roughly 1,300 people from diverse fields,including engineers and creators involved in Sony businesses,participated to exhibit a wealth of different technologies,holding seminars and exchange events to cultivate the creator community through technology.GT7“Jericho”music videoSony Creators ConferenceImmersive Music ExperiencesSME works with its talent roster to align with growing opportunities in immersive entertainment.One example is how SME used virtual production technology to shoot the music video for“Jericho”by Iniko,an artist from Columbia Records.The 3D assets created through this process were then ported and optimized for Epic Games Fortnite,where they became part of“Journey Through Jericho,”a companion game from Iniko and SME that was created with Unreal Editor for Fortnite and which lets players race through the videos world.SME is continuing to expand the development of cohesive cross-platform strategies and solutions that enable artists to produce more content and reach wider audiences quickly and efficiently.Full Global Release of Gran Turismo SophyTMBorn from research and development of an AI racing agent that outraces the worlds best drivers,Gran Turismo SophyTM(GT Sophy)has proven the capability of AI to provide new kinds of game experiences.Following a limited-time release in early 2023,we gathered player feedback and leveraged it to evaluate the performance of its neural network and game design.In November 2023,the AI driver became a permanent in-game feature in the Gran Turismo 7(GT7)PlayStation racing simulation game as GT Sophy 2.0,offering many players an opportunity for fun racing experiences(PS5only).Sony plans to continue collaborating with PlayStation Studios to develop technology that can create more interactive game experiences while helping game developers make the most of their imagination and creativity.30EmployeesValue CreationEmployeesSonys People Philosophy:Special You,Diverse SonySonys development and business growth are based on the values that have been passed down since Sonys founding:an insatiable appetite for new challenges and a respect for diversity.Sony has always respected the independence and aspirational spirit of individuals,cherishing a corporate culture based on the partnership of choice between Sony and each individual employee,where each party is accountable for being responsive to the needs of others.Sonys People Philosophy,“Special You,Diverse Sony,”expresses Sonys approach to employees,which is deeply rooted in its culture and has been passed down to today.It conveys the wish that each unique individual who shares Sonys Purpose,and Sony,which embraces diverse individuals,will continue to grow together.People Strategy:Attract,Develop,and Engage Talented IndividualsThe Group-wide People Strategy is based on Sonys People Philosophy and the themes of“Attract talented individuals,”“Develop talented individuals,”and“Engage talented individuals.”Attract Talented IndividualsSony conducts strategic recruitment campaigns across the Group globally to acquire diverse talent with advanced skills,valuable expertise,and growth ambition.Examples of Sonys flagship HR initiatives include its career development programs(including an internal job-posting program,the Free Agent program and the Career Plus program),which support employees in building careers beyond business boundaries.In 2024,Sony launched a personnel exchange pilot program with third parties with the aim of developing employees careers through cross-company experience.Yasuhiro ItoSenior Vice Presidentin charge of Human Resources and General AffairsMessage from the Officer in Charge of Human ResourcesSonys strength lies in its diversity of businesses and people,with roughly 110,000 unique employees working globally under our shared Purpose&Values.Looking back on Sonys history,we see how new products and services have resulted from interactions among employees from diverse backgrounds,and that this diversity of employees forms the foundation of Sonys multifaceted business operations today.The challenger spirit of embracing the new is a legacy carried on from our founders.To remain innovative,it is important for us to continue to be an organization that embraces diverse perspectives including diverse values and ways of thinking.Evolving employee diversity helps create an organization that respects and leverages diverse perspectives.Sony understands that there are two kinds of diversity,the“diversity of attributes,”including nationality,race,and gender;and the“diversity of experiences,”fostered by career experiences working for Sony or other companies in various fields and job positions.We value both kinds of diversity and incorporate them in our HR policies.Personnel training that draws on diversity,career support across business boundaries,and employee engagement are areas of close focus for the entire Group going forward.With our globally diverse HR leadership team,Sony is accelerating initiatives to support and encourage each employees challenger spirit,so that the entire Group will grow along with its employees and build corporate value.Shape your own career with the spirit of freedom and open-mindedness.Feel the emotion of opening up your future.Sony has a culture that values diversity.It is a place where people inspire each other to create new value.into senior executive evaluations,while also quantitatively capturing the correlation between opportunities for growth and learning available to employees and employee engagement.1.In FY2023,90%of employees did not give an unfavorable response to four questions regarding employee engagement.Diversity,Equity and InclusionSony aims to be an organization where diverse personalities,opinions,views and values coexist.To help further the advance of diversity in the Sony Group,Sony has set new numeric targets and is working to raise the percentage of women and non-Japanese nationals as a proportion of Sony Group Corporation executives2 to more than 30%,respectively,by 2030.Develop Talented IndividualsSony looks deeply at the individual potential of its people and offers independent-minded employees motivation and opportunities to grow.Sony University,designed to foster top-management candidates,is attended by Sony Group employees worldwide as a program for exchange and interaction among diverse people and grows more active every year.The Sony Cross-Mentoring Program strategically links management teams from various businesses with next-generation leadership candidates across organizations.This initiative aims to build Group synergy and help employees expand their scope and perspective.As of 2024,there are eleven Technology Strategy Committees specific to technological fields.These committees offer members a place to share cutting-edge technical information beyond business boundaries to enhance the Groups technological strength.Engage Talented IndividualsIt is also important to create work environments and systems that allow employees with diverse characteristics and styles of life and work to passionately embrace a broad range of challenges.Sony maintains flexible work systems and environments,taking the customs and laws of each country or region into consideration.Sony believes the effects of its HR initiatives are eventually reflected in employee engagement.Employee engagement survey results1,which have remained high in recent years,factor It recently revised the Diversity,Equity and Inclusion(DE&I)Statement for the first time in ten years to showcase its attitude to diversity.Sony works to globally promote greater opportunities for women as part of its efforts to ensure inclusive work environments.As of March 31,2024,the percentage of women in Sonys workforce was 34.0%,and that of management positions held by women was 30.7ross the Sony Group.Sony plans to continue to advance joint initiatives with academic and other organizations to pursue gender diversity as an area of focus for Japan,where the ratio of management positions held by women is generally low and the number of women majoring in sciences and engineering is limited.2.“Executives”refers to Directors,Senior Executives including Corporate Executive Officers,and other officers.173%FY2022258%FY2023135%FY2021100%FY2020Sustainability Report 2024 EmployeesNote:Comparison of FY2021-FY2023 numbers,with those from FY2020 indexed as 100.Trends in Employees in Career Plus ProgramThe Career Plus program allows employees to spend up to two days a week on a job or project aside from their regular post.The number of employees in the program,which encourages an internal“side-job”has been increasing recently as more employees work to build careers in their own ways.Executive Commitment to Group-wide ProgramsHours Sony Group executives spent as a commitment to fostering next-generation leaders through Sony University,Sony Cross-Mentoring Program and round-table dialogues with top management(FY2023)540 hoursDE&I Statement Redefined in 2024Initiatives for Coming GenerationsThrough industry-academia collaboration,Sony has been helping foster next-generation talent from science and engineering backgrounds.Sony works to expand interest in technology among women,through such initiatives as the SONY STEAM GIRLS EXPERIENCE,which started in FY2024,scholarships for women studying science and engineering in universities in Japan,and the STEAM GIRLS Baton program,which is designed to spark interest in science and engineering among girls of junior high-and high-school years.31EmployeesValue Creation32EmployeesValue CreationProof-of-concept short film produced with the Pictures segment assets to test real-time image-production technology using a game engineManaging a Group-wide technology-exchange event to help nurture creative community within the GroupSony Cross-Mentoring ProgramThis is a Group-wide leadership mentorship program for the next generation of top-management candidates(mentees).In this program,management-team members(mentors)from diverse businesses and regions share their wealth of knowledge and connections,while working closely with mentees to help them hone their leadership skills and work toward individual goals.Since its launch in FY2022,44 mentor-mentee pairs have completed the program.Jun YokonoSGMAI Technology DivisionAdvanced Technology,Digital&Technology PlatformSony Group CorporationLiliana LaporteVP EMEA Channel SalesSony Interactive EntertainmentJason IleyChairman and CEOSony Music Entertainment UK&IrelandKeith Le GoyChairmanWorldwide Distribution and NetworksSony Pictures EntertainmentMentee VoicesI learned a lot about organizational management and leadership.I had a chance to shadow my mentor,Jason,in person at work,and gained firsthand knowledge of the kind of values that drive the music industry,as well as how jobs are done.I developed a passion for becoming a specialist capable of skillfully bridging AI and the music industry.Based on my mentors experience,I gained valuable insights into team management and leadership amidst market fluctuations.This deepened my commitment to Sony Groups vision and future contributions.Sony UniversityTechnology Strategy CommitteeEstablished in 2000,Sony University provides educational programs to train top-management candidates and has seen a cumulative total of 1,500 participants to date.It focuses on improving the value it offers by involving executives in giving employees growth assistance and partnering with leading outside managerial training organizations.The Technology Strategy Committee represents a Group-wide initiative to encourage the sharing of cutting-edge technical information beyond business boundaries,to enhance the Groups technological strength and train young employees.Every year over 1,700 people take part,and the UX/HCD Strategy Committee was added from FY2024.Through lectures and group discussions,I was able to experience the process of creating synergies across businesses with diverse members.I will leverage the network expanded through this program and continue exploring business opportunities and collaborating across different groups.Monica VeigaSVPUS DistributionSony Pictures EntertainmentContent Technology Strategy CommitteeThe committee focuses on technologies with the potential to resolve issues and promote advancement in the entertainment segments.People from the entertainment segments and technology providers come together,form working groups to refine practical technologies,and discuss new kinds of experience value to offer customers.I was able to learn more deeply and broadly about leadership,vision,and strategic planning through dialogue with Senior Executives.This program gives you the chance to learn,challenge yourself and grow as a person and leader.David StoppaHead of Sony Europe Technology Development CentreSony Europe B.V.Alumni VoicesCase StudyParticipant Attributes of Sony UniversityET&S I&SS Music G&NSPictures Financial Services Headquarters32%8%6%MentorMentorSonys Basic Policy on Sustainability InitiativesSony manages diverse businesses with people at the core,and aims for sustainable value creation based on such diversity and medium-to long-term growth in the Sony Groups corporate value under its Purpose to“fill the world with emotion,through the power of creativity and technology,”and its Corporate Direction of“getting closer to people.”In order to have people connected to each other through emotion,it is necessary to create a society in which everyone can live with peace of mind in a healthy global environment.Sony acts with due consideration of the impact of its business activities on stakeholders,including shareholders,customers,employees,suppliers,business partners,local communities,and other organizations as well as the global environment,and focuses on building trust with stakeholders through dialogue.Through innovation and sound business practice,Sony endeavors to enhance its corporate value and contribute to the development of a sustainable society.Organizational Structure for Sustainability InitiativesBased on the basic policy outlined above,Sony designates sustainability as a management priority and has established the Sustainability Department,under the supervision of the Senior Executive in charge of Sustainability,to promote a range of initiatives for the entire Group,in coordination with business units and all related divisions within the head office.The Senior Executive in charge of Sustainability regularly reviews and assesses risks and engages in detection,communication,evaluation,and response pertaining to the risk of loss related to sustainability.The Sustainability Department reports to the Board of Directors at least once every quarter on sustainability-related initiatives and their progress.In addition,as part of reporting on each business units mid-range plan,the Board of Directors receives reports from the relevant unit on the sustainability challenges and opportunities relevant to its respective business operations and efforts.The Sustainability Department strives to spread the basic policy on sustainability across Sonys business operations and,through dialogue with stakeholders and materiality analysis,identifies sustainability issues to be addressed by the entire Group,sets guidelines,and promotes initiatives.Through materials such as the Sustainability Report,Sony discloses information related to its sustainability efforts.Each business unit considers sustainability issues and opportunities for its respective businesses,and implements sustainability-related initiatives that align with its business characteristics.Material Topics in SustainabilityTo ensure that the Groups sustainability work is compatible with changes in the social environment and the expectations of stakeholders,Sony regularly identifies and analyzes material topics related to sustainability with a medium-to long-term perspective.In its FY2022 materiality analysis,Sony defined materiality as“material topics that are related to sustainability,impact Sonys value creation,and are determined with longer-term social change and diverse stakeholder needs in mind.”From the perspectives of both the company and stakeholders,it then assessed the importance of various sustainability issues relevant to Sony.As a result of this analysis,climate change,DE&I(diversity,equity,and inclusion),respect for human rights,and technology for sustainability were identified as the most important material topics.SustainabilityNote:For information on major initiatives related to sustainability,see the Sony Sustainability Report 2024.33SustainabilityValue CreationSustainability Report 2024https:/ of DirectorsRelevant DivisionsCollaborate witheach otherCollaborate witheach otherCollaborate witheach otherSenior Executive in charge of SustainabilitySustainability Department at Sony Group CorporationBusiness UnitOperating CompanySony Group Material TopicsImportance from Stakeholder PerspectiveImportance from Groups PerspectiveMost importantImportantRespect forhuman rightsClimate changeDiversity,equity andinclusionTechnologyforsustainabilityGreater importanceGreaterimportanceMessage from the Senior General Manager of the Sustainability DepartmentSony manages diverse businesses and works for sustainable value creation and long-term growth in corporate value under its Purpose to“fill the world with emotion,through the power of creativity and technology.”The entire Sony Group endeavors to address sustainability issues,with each business leveraging its unique characteristics in taking action for sustainability.To address a variety of sustainability issues,Sony recently established a new Sustainability Vision to more clearly articulate the direction in which the Sony Group aims to proceed,with the goal to“inspire a world filled with emotion for this generation and beyond.”This vision expresses Sonys resolve to take action to create,and fill the world with,Kando through sustainability initiatives,defining the direction of its activities from the standpoints of People,Society and the Earth.Sony strives to celebrate individual differences and enrich hearts and minds so that people can share Kando with one another.It pledges to work to foster a society in which everyone can lead healthy,fair and equitable lives with peace of mind so that Kando is amplified,while ensuring that Kando is sustained by protecting and preserving the Earth,the foundation of all life.Since its founding,Sony has worked to be a corporation that is valuable to society.The principles of its founders are deeply rooted in its corporate culture and carried forward in Sonys Sustainability Vision.34SustainabilityValue CreationSonys Sustainability Vision:Official Videohttps:/ individual diferences and enrich hearts and mindsFoster a society in which everyone can live with peace of mindProtect and preserve the Earth,which is the foundation of lifeInspire a World Filled with Emotion for This Generation and BeyondOur Purpose demands that Sony put high priority on long-term value creation focused on Kando and people.In recent years one of those initiatives has been to integrate sustainability with management strategy,which means making sustainability integral to each business operation.To that end,each business unit considers sustainability issues and opportunities for its respective businesses,and,with its own unique perspective,works to implement sustainability-related initiatives that align with its business characteristics.More than ever corporations are expected to help address sustainability issues and disclose related information.We think it is important to deepen our understanding about the sustainability issues that Sony should address through continuing dialogue with our stakeholders and reflect this insight in our initiatives and systems to carry them forward.Under the newly-established“Sonys Sustainability Vision,”we are working to advance,and deepen,our sustainability initiatives.Sustainability VisionMitsu ShippeeSenior General Manager,Sustainability Department35SustainabilityValue CreationAreas of Focus for Sustainability in Each BusinessDE&I/Accessibility/Environment/Responsible Supply Chain Cultivating a corporate culture that emphasizes DE&I Ensuring broad accessibility functions of hardware,controllers,and game titles,with development of dedicated peripherals Improving energy efficiency across hardware and network services;continuing to reduce plastic use in packaging Addressing environmental and human rights risks in the context of global supply chainsEnvironment/Accessibility/DE&I/Responsible Supply Chain Promoting,among other environmental considerations,the powering of operations at all manufacturing sites and offices with renewable energy for electricity and in product manufacturing,reducing energy consumption,using recycled materials,and minimizing plastic packaging Pursuing,from an accessibility perspective,incorporation of inclusive design into the product development process that reflects the needs of users who require accessibility features Diversifying human resources and creating comfortable work environments,including initiatives to eliminate the gender gap mainly in Japan Addressing environmental and human rights risks in the context of global supply chainsDE&I/Well-being/Environment/Social Contribution Fostering a culture of respecting DE&I Emphasizing the well-being of employees and creators Promotion of environmental awareness-raising and social contribution activities using content IPEnvironment/Accessibility/Employees/Responsible Supply Chain Reducing environmental footprint through such means as reducing GHG emissions and recycling natural resources in semiconductor manufacturing processes Undertaking initiatives for the environment and accessibility using imaging and sensing technologies Creating an environment that encourages an aspirational spirit for people with diverse backgrounds and perspectives The semiconductor industry-wide efforts to develop talent through collaboration with industry,governments and academia,and acquisition of talent Addressing environmental and human rights risks in the context of global supply chainsDE&I/Environment Expanding the pipeline for diverse stories and talent from a variety of backgrounds Undertaking initiatives to combat climate change and preserve natural resources Promoting environmental awareness programs using existing content IPClimate Change/DE&I/Ethics and Compliance Responding to climate change problems,mainly focusing on reduction of GHG emissions Improving investment and asset management structure according to SFGs ESG investment policy Producing highly specialized personnel by attracting and cultivating talented human resources,and promoting DE&I,such as through increasing the percentage of management positions held by women and improving accessibility Acting ethically and with integrity,complying with laws and regulations,and ensuring healthy and appropriate management with an awareness of the public nature of financial servicesSony GroupG&NSET&SMusicI&SSPicturesFinancial ServicesClimate Change/DE&I/Respect for Human Rights/Technology for SustainabilitySony is dedicated to supporting artists and creators,who are the source of generating Kando,and continuously strives to create environments in which they can immerse themselves in their work in a healthy manner,both mentally and physically,to make the most of their talents.In the Music segment,the SMG introduced its industry-leading Artists and Songwriters Forward programs in 2021 to provide our talent with support for their well-being,including global access to free confidential counseling with licensed therapists,and in the US,free advocacy services that assist our music creators with finding healthcare coverage and navigating issues related to their care needs.SMG also provides its artists and songwriters with a suite of tools providing earnings data and commercial insights in real time,as well as best-in-class payment solutions.Additionally,SMG is creating more financial opportunities for its long-standing talent through its Legacy Unrecouped Balance program,which pays through earnings going forward to qualifying artists and songwriters.In Japan,SMEJ launched its B-side project in 2021 to support the mental and physical health of its artists,creators and staff.Its primary activity is to provide free counseling by certified professionals.SMEJ also provides 24/7 online healthcare consultation services,as well as a mental health checkup as part of its annual health assessments.Additionally,workshops are held regularly to raise awareness of mental health and self-care among employees.The Sony Group is driving initiatives to enhance accessibility in its products,services,and entertainment,regardless of individual characteristics such as age,disability,capability,or circumstances.To pursue greater accessibility it works with individuals with diverse needs and implements inclusive design features that incorporate their perspectives into its product-development processes.The G&NS segment endeavors to reflect the perspectives of accessibility organizations and experts in its initiatives to create a future in which all people can enjoy games.SIE conducted weeks-long playtests with dozens of gamers within SIE and its game studios,as well as with players from the accessibility community during the development process of the AccessTM controller for PS5TM,and created a highly customizable accessibility controller kit that enables gamers with disabilities to play more comfortably and for longer periods.Sony endeavors to celebrate individual differences and enrich hearts and minds,enabling people to better share Kando with one another.Sustainability Report 2024 Accessibility36SustainabilityValue CreationPEOPLECelebrate individual diferences andenrich hearts and mindsInitiative Case Study:Supporting Artists and Creators,and Enhancing AccessibilityThrough the utilization of AI(artificial intelligence),Sony aims to contribute to the development of a peaceful and sustainable society while delivering Kando to the world.At the same time,Sony understands that the influence of AI on society is multifaceted and could have unintended consequences.Sony established the Sony Group AI Ethics Guidelines in September 2018 to guide all Sony officers and employees in utilizing AI and conducting AI-related R&D in a manner that conforms with the companys values and emerging social norms.In December 2019,Sony established the Sony Group AI Ethics Committee,and since that time has been working to strengthen its initiatives and framework for AI ethics.In 2021,the AI Ethics Office was established to provide subject matter expertise on AI ethics to all Sony business units.Furthermore,Sony has established a liaison system to share information on AI ethics risks with regard to AI utilization in products,services and internal operations in each of the Sony Groups business units.In March 2021,in accordance with the Sony Group AI Ethics Guidelines,Sony established an internal document stipulating requirements to be complied with in the commercialization process of electronic products and services.In July that same year,Sony started conducting AI ethics assessments in the product development life cycle and has since assessed over 100 instances.Sony uses e-learning tools to promote an understanding of AI ethics among its employees and invites speakers from outside the company to discuss related issues at lectures and symposia.Responding to the current trend in generative AI,Sony Group Corporation instituted internal guidelines for its use of generative AI in FY2023.Addressing the issue of fabricated images and AI-generated fake images spreading worldwide is a grave challenge,especially on the journalistic frontline in terms of transparency and credibility.To address such issues,the ET&S segment complies with C2PA*specifications and provides its Camera Authenticity Solution to verify image authenticity for media professionals,made possible using Sonys in-camera digital signature technology.This technology is expected to be introduced to a few select news agencies first,then incrementally expanded to be offered to all of them.To amplify Kando,Sony is working to foster a society where healthy,equitable and fair life is possible,in which everyone can live with peace of mind.*The Coalition for Content Provenance and Authenticity(C2PA)develops open standards and technical specifications for certifying the sources and credibility of digital content.Responsible AI as competitive advantageProducts that work well for everyoneEvaluate and mitigate AI risksGlobal leader in AI ethics37SustainabilityValue CreationSustainability Report 2024 Responsible AIInitiative Case Study:Responsible AISOCIETYFoster a society in which everyone canlive with peace of mindGoals for AI Ethics at SonyEditShootValidateC2PA-compliant workflowSonys Camera Authenticity SolutionCamera signature creationDigital birth certificate3D depths informationCheck authenticity inimage validation siteSignature ofediting historySony has been undertaking environmental initiatives since the 1970s.It instituted the Road to Zero environmental plan in 2010,which has the aim of reducing its environmental footprint to zero by 2050,and has been working to achieve the related targets from four perspectives:curbing climate change,conserving resources,controlling chemical substances,and promoting biodiversity.Recognizing the growing threat of climate change worldwide as an urgent issue,in 2022 Sony announced that it would bring forward its net-zero targets for GHG emissions(Scopes 1-3)throughout its value chain by ten years,moving the target year from 2050 to 2040.Approximately 5%of the total GHG emissions from Sony Group operations falls under Scopes 1 and 2 emissions,while approximately 95%is in the remaining Scope 3 emissions.More than half the Scope 3 emissions are from the electricity consumed in using Sony products.Sony works continuously to reduce the energy demand of its products.For example,a BRAVIA 4K LCD TV sold in FY2023 consumes approximately 59%less electricity per year than did a TV sold in FY2013.The 2023 model is equipped with an Eco Dashboard,which allows for a variety of energy-conservation settings in one place.This is designed to assist users in visually understanding how they are helping reduce environmental impact.For the Crystal LED VERONA,which boasts a high-quality LED display used for virtual production and other professional applications,high luminosity-efficient LEDs and Sonys proprietary power supply design were combined to improve energy efficiency by approximately 32%2 over conventional LED models.Sony also endeavors to reduce GHG emissions from its supply chain,the largest Scope 3 energy consumer after its products in use.Sony requires that its major suppliers of materials and parts as well as its manufacturing partners reduce GHG emissions(Scope 2)from their use of purchased energy to net-zero by 2030,and helps them in achieving that goal.Specifically,Sony provides them with energy-conservation expertise that the company has been building since FY2022 at Sony Group sites worldwide,as well as suggestions to help introduce or increase the use of renewable energy.Through its environmental initiatives Sony works to help protect and preserve the Earth,the foundation of all life,to sustain Kando.2.Power efficiency improvement per unit of brightness calculated at max brightness.Power efficiency per unit of brightness indicates the amount of power required to produce the required level of brightness.VERONA ZRD-VP15EB(with calibration function on)was compared to the ZRD-B15A B series as the conventional LED model.38SustainabilityValue CreationSustainability Report 2024 EnvironmentInitiative Case Study:Addressing Climate Change Across the Value ChainEARTHProtect and preserve the Earth,which is the foundation of lifeFY2023 GHG Emissions1Approx.21.11 million metric tons Scopes 1&25%Scope 3 Purchased goods and services Use of sold products Others23X 252030203520402050Zeroenvironmentalfootprint 2050Scopes 1&2:Achieve net-zero statusScope 3:Major suppliers achieve Scope 2 net-zero statusScopes 1-3:Achievenet-zero status1.All values are rounded.39Financial/Business Financial Highlights Business Profiles Game&Network Services Music Pictures Entertainment,Technology&Services Imaging&Sensing Solutions Financial Services40Financial HighlightsFinancial/BusinessFinancial HighlightsReview of FY2023Consolidated sales and financial services revenue for FY2023 totaled 13,020.8 billion yen,up 19%compared to the previous fiscal year(“year-on-year”)and is a new record.Operating income was down 7%year-on-year,and stood at 1,208.8 billion yen,marking the third consecutive year for which it was over 1 trillion yen.This increase in sales can be attributed mainly to the effects of market fluctuations in the Financial Services segment,an increase in sales of non-first-party titles(G&NS),higher revenues from streaming services(Music),and an increase in sales of image sensors for mobile products(I&SS).Despite the positive impact of increase in sales,operating income was down year-on-year due to the effect of market fluctuations for variable life insurance and other products(Financial Services),as well as higher depreciation and amortization expenses along with costs associated with the launch of mass production of a new image sensor(I&SS).Excluding the Financial Services segment,consolidated operating cash flow totaled 1,177.8 billion yen.Net income was 970.6 billion yen,a decrease of 34.7 billion yen compared to the previous fiscal year.FY2023 Consolidated Financial Results(Billion yen)FY20221FY20231Year-on-year Change( /-)ConsolidatedSales and Financial Services revenue10,974.413,020.8 2,046.4( 19%)Operating income1,302.41,208.8 93.6(7%)Net income attributable to Sony Group Corporations stockholders1,005.3970.6 34.7(3%)Sony excluding Financial Services2Sales10,102.011,265.0 1,163.1( 12%)Operating income983.31,035.3 52.0( 5%)Operating cash flow415.51,177.8 762.4 Investing cash flow(1,032.0)(794.2) 237.8 1.Average exchange rates were 1 USD=135.4 JPY and 1 EUR=140.9 JPY for FY2022,and 1 USD=144.4 JPY and 1 EUR=156.6 JPY for FY2023.2.Figures for Sony excluding Financial Services are not measures in accordance with IFRS.However,Sony believes that these disclosures may be useful information for investors.(Billion yen)Sales/Financial Services RevenueOperating IncomeMain Factors Impacting Operating Income ChangeFY2022FY2023FY2022FY2023G&NS3,644.64,267.7250.0290.2( )Impact of increase in sales of non-first-party titles including add-on content( )Positive impact of foreign exchange rates()Increase in losses from hardware mainly due to promotions()Impact of decrease in sales of first-party titlesMusic1,380.61,619.0263.1301.7( )Impact of higher sales for Recorded Music and Music Publishing from streaming services( )Positive impact of foreign exchange rates()Increase in selling,general,and administrative expensesPictures1,369.41,493.1119.3117.7()Impact of higher marketing costs in support of greater number of theatrical releases( )Larger number of theatrical releases and higher revenues from Crunchyroll due to growth in paid subscriptionsET&S2,476.02,453.7179.5187.4( )Positive impact of foreign exchange rates( )Reductions in operating expenses()Impact of lower unit sales of televisionsI&SS1,402.21,602.7212.2193.5()Increase in depreciation and amortization expenses()Increase in costs associated with launch of mass production of new image sensors for mobile products( )Impact of increase in sales of image sensors for mobile products( )Positive impact of foreign exchange ratesFinancial Services889.11,770.0318.1173.6()Decrease in net gains in Sony Life related to market fluctuations for variable life insurance and other products,as well as gains on real-estate sales recorded in previous fiscal year()Recovery of an unauthorized withdrawal of funds at a subsidiary of Sony Life in previous fiscal year( )Recording of realized and remeasurement gains resulting from transfer of a portion of shares of Sony Payment ServicesNotes:1.Sony has adopted IFRS 17“Insurance Contracts”(IFRS 17)from Q1 FY2023,in lieu of the previously applied IFRS 4“Insurance Contracts”(IFRS 4).Figures for FY2022 are restated in accordance with IFRS 17(unless otherwise specified,applies to all following pages).2.Sales in each business segment represents sales and revenue recorded before intersegment transactions are eliminated.Operating income in each business segment represents operating income reported before intersegment transactions are eliminated and excludes unallocated corporate expenses.These conditions apply to all following pages,unless otherwise specified.FY2023 Sales/Financial Services Revenue and Operating Income by Segment41Financial HighlightsFinancial/Business05001,0001,5002023202220212020201920182017201620152014(Billion yen)(Billion yen)2014201520162017201820192020202120222023(FY)Sales 8,215.98,105.77,603.38,544.08,665.78,259.98,998.79,921.51,200(Billion yen)(Yen)6000(1,200)(600)Cash Flow from Operating Activities,Cash Flow from Investing Activities(Excluding Financial Services)8004006002000Adjusted EPS2(Net Income Attributable to Companys Stockholders per Share(Diluted)260.1444.0770.6753.4762.9305.4(332.4)(300.5)(520.4)(363.1)(FY)1,150.31,177.8813.3(542.2)(711.1)415.5(1,032.0)(794.2)20142015201620172018201920202021 Cash flow from operating activities Cash flow from investing activitiesNote:Information related to consolidated cash flow(excluding Financial Services)disclosed here is not in accordance with U.S.GAAP or IFRS,but Sony believes it may be useful information for investors.3544474366226407647211518813,020.810,974.42022(FY)2023(FY)(%)Operating income(left scale)Operating income margin(right scale)68.5294.2288.7734.9894.2845.5955.3
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