1.1.4 Management of impacts, risks and opportunities
Information on the materiality assessment process
ESRS 2 IRO-1, ESRS 2 IRO-2
Basis and scope
The analysis of the materiality assessment is based on the Implementation Guide "materiality assessment" of the European Financial Reporting Advisory Group (EFRAG) and the Institute of Accounting and Auditing (ICAC). To do so, Viscofan engaged an external consultant expert in sustainability.
Until the current year, Viscofan has based the information to be reported in its Statement of Non-Financial Information on a materiality assessment, taking into account a double perspective reflected in Directive 2014/95/EU on the disclosure of non-financial information. However, for the purpose of this sustainability report based on the new reporting regulations, Viscofan has carried out a new materiality assessment that is detailed below.
Viscofan's incidents, risks and opportunities (IROs) in its own operations and in the value chain can be dynamic and vary over time, and this applies to both the material IROs identified in the current double materiality assessment and the non-material ones. This changing nature is due to multiple factors, such as market fluctuations, regulatory changes, technological advancements, etc. For this reason, Viscofan plans to carry out periodic reviews of the assessment and materiality through a proactive approach that ensures effective adaptation to changes in the operational context and the value chain, so as to maintain resilience and responsiveness to new challenges and opportunities. A reasonable and foreseeable timeframe for these reviews can be two years, which could allow for capturing and adjusting to a possible new reality in an ever-evolving environment.
We have identified our impacts on the environment and people based on the importance to stakeholders (impact materiality assessment). On the other hand, we have identified the sustainability-related risks and opportunities to which we are exposed according to their strategic importance represented by the impact of the outside world on our business (financial materiality assessment). Tools have been used for the risk assessment in the case of climate change. See the description of these in the sub-section "Material impacts, risks and opportunities, their interaction with the strategy and business model and current and anticipated financial effects" in 2.1.3 of the ESRS E1 Climate Change.
For our own operations, we identify and assess impacts on people and the environment, as well as potential risks to our business from sustainability issues. In addition, we assess the impacts and risks of the entire value chain, especially on our raw materials, the use and consumption of our products and their waste. Value chain assessments have been based on internal knowledge and primarily on our top-tier suppliers.
Methodology of double materiality assessment
1. Identification
a. Understanding of the internal and external context.
With this scope and with the aim of establishing a baseline, an understanding of the context in which Viscofan's activities and commercial relationships take place has been carried out and, at the same time, an understanding of the main stakeholders affected.
In this phase, use has been made of Viscofan's current strategic plan called Beyond25, the external information made available to the public of both a financial and non-financial nature, policies, the materiality assessments of different comparable companies and the sustainability frameworks, the sustainability requirements of the different stakeholders, regulators, analysts, ESG indices and sector studies.
With this analysis of the context, environmental, social and governance issues have been identified in the operations themselves and upstream and downstream in the value chain that are relevant in the context of Viscofan.
b. Identification of actual and potential impacts, risks and opportunities related to sustainability issues
With the analysis of the internal and external context, a review has been carried out of the list of topics and their alignment with the list of sustainability issues included in the thematic ESRS established in ESRS 1, paragraph AR. 16 and in parallel also the Global Reporting Initiative standard.
An identification of internal and external stakeholders has also been carried out through the understanding of the value chain and taking into consideration the knowledge of the internal managers of the different areas with influence and affected by the potentially material aspects identified.
In this phase, stakeholder views have been taken into account indirectly, by way of the knowledge of internal managers who have continuous dialogue with them and therefore good insight into their interests and points of view. In addition, our ongoing engagement activities in the communities and associations in which we are present are a solid basis for assessing the impacts and risks that are most important to us.
See details of the stakeholders and communication channels established in the sub-section Interests and views of stakeholders of point 1.1.3.
2. Materiality assessment. Analysis and determination of material IROs related to sustainability issues
a. Identification of impacts, risks and opportunities
Of the potentially material topics, positive and negative impacts (with an inside-out approach) and risks and opportunities (outside-in approach) were identified.
b. Assessment of impacts, risks and opportunities identified and Scoring
For this phase, the criteria of managers from different areas of Viscofan with extensive experience in sustainability issues, as well as members of the board of directors and, in parallel, the opinions of stakeholders have been considered for the preparation of the double materiality matrix.
Impact materiality
In the materiality of impacts, a scale of 0 (no impact) to 5 (critical) has been established generate the severity score. The following parameters have been taken into account:
- Magnitude: We evaluate the dimension of the impact on the environment, people or any human rights
- Scope: We assess the extent of the impact from a geographical point of view, whether be local or global, and which stakeholders it affects.
- Irreversibility: We assess how difficult it is to reverse the damage in terms of cost and time horizon.
In addition, with respect to the possible impacts, an additional parameter of probability and time horizon has been added.
On this basis, for the actual negative impacts, each of the three above dimensions of severity has been scored and weighted equally in terms of their severity. Then, for the potential negative impacts, severity and probability have been weighted at 60/40.
For actual positive impacts, scale and scope have been scored and weighted equally in terms of severity. Then, for the potential positive impacts, severity and probability have been weighted at 50/50.
Financial materiality
For risks, using the scale from 0 (no impact) to 5 (critical), in assessing the potential magnitude, the score is based on four equally weighted parameters: Whether the risk may cause interruptions or difficulties in operations, how it would affect the growth of the business and the financial statements (Balance Sheet, P&L and Cash Flows) and if it does so materially, how it would affect access to financing or the cost of capital and how it would affect the perception and reputation of Viscofan among stakeholders. Then, the probability of occurrence of risks combined with the time horizon accounts for the other half of the score.
With respect to opportunities, the evaluation of potential magnitude is scored based on three equally weighted scales: how it would affect the growth of the business and the financial statements (Balance Sheet, P&L and Cash Flows) and if it does so materially, how it would affect access to financing or the cost of capital and how it would affect the perception and reputation of Viscofan among stakeholders. Then, the probability of occurrence of opportunities combined with the time horizon accounts for the other half of the score.
c. Threshold
Lastly, IROs are defined as material if they exceed the score threshold of 3.5. That is, those whose duality of severity and probability reflect their critical and significant nature for the Viscofan Group for one of the two material matters, both of impact and financial.
Result of the double materiality assessment
Subsequently, the results of the impact and financial material matters, including their interaction, have been consolidated, grouping the IROs based on their classification in all ESRS topics and by extension in the relevant sub-topics. Hence, according to the thresholds established and detailed above, 35 impacts, risks and opportunities have been chosen that were evaluated as material and that are grouped in the ESRS reported in this sustainability statement.
This consolidation has been reviewed and approved by the Viscofan Group's Executive Sustainability Committee and has subsequently been presented to the Audit Committee of the Board of Directors.
In the environmental category, environmental impacts, risks and opportunities of relative importance are grouped into the topics E1-Climate Change, E2-Pollution and E5-Resource use and circular economy and are related to our vision of facilitating the feeding of millions of people thanks to our casings, which requires an energy-intensive production process that we are seeking to decarbonise, the use of raw materials and resources of natural origin, dependence on these, as well as the generation of waste in the production process.
In the social category, the material impacts, risks and opportunities are grouped into the topics S1-Own workforce and S4-Consumers and end-users. Our business model also mainly affects the people who work at Viscofan and the Consumers of the food products manufactured with our casings and other products in the new business division. We focus our efforts on achieving a safe, fair and inclusive working environment and on producing casings with excellence in food quality.
Lastly, according to the double materiality assessment, the ESRS G1-Business conduct is a material issue and is related to the essential basis that all the people of the Group act in accordance with the principles established in the Code of Conduct and in the policies of the Regulatory Compliance System.
All assessed IROs have been mapped to their relevant ESRS standard. The impact or risk with the highest score within a topic determines the location in the matrix. With this, six of the ten ESRS topics are material for Viscofan. Each material topic of ESRS is presented in the following table, where we specify the sub-topics to which they are related. In addition, we indicate in the table whether the IROs are in our own operations or in the value chain and whether our impacts are positive or negative.
Brief descriptions of IROs detailing more information on how we respond to the effects of our impacts and risks are included in the thematic sections "Environment", "Social" and "Governance".
See below the detailed table of the Viscofan Group's IROs:
| ESRS E1. Climate change | ||||
|---|---|---|---|---|
| ID | Type | Location in value chain | Time horizon | Description |
| Climate change mitigation | ||||
| 1 | Negative impact | Own operations | Short term | Impact on climate change. Greenhouse gas emissions |
| 2 | Risk | Own operations | Short term | Regulatory changes. Transition risk – Policy and Legislation |
| Climate change adaptation | ||||
| 3 | Risk | Upstream | Long term | Shortage of collagen skins. Physical risk – Temperature-related |
| 4 | Risk | Upstream | Long term | Water scarcity. Physical risk – Water-related |
| 5 | Opportunity | Downstream | Long term | Products with a lower carbon footprint |
| Energy | ||||
| 6 | Risk | Own operations | Long term | Cost of transition to low-emission technologies. Transition risk – Policy and Legislation |
| 7 | Opportunity | Own operations | Short term | Promotion of renewable and sustainable energies |
| 8 | Opportunity | Own operations | Medium term | Efficiency of production processes |
| ESRS E2. Pollution | ||||
|---|---|---|---|---|
| ID | Type | Location in value chain | Time horizon | Description |
| Pollution | ||||
| 9 | Negative impact | Own and downstream operations | Short term | Air and water pollution and the generation of microplastics in production processes. |
| 10 | Positive impact | Own operations | Short term | Investment in available technologies for the filtering and washing of emissions and the treatment and discharge of water that mitigate the risk of water pollution. |
| 11 | Risk | Own operations | Short term | Imposition of fines and penalties and implementation of corrective actions as a result of litigation arising from non-compliance in matters of pollution. |
| ESRS E5. Resource use and circular economy | ||||
|---|---|---|---|---|
| ID | Type | Location in value chain | Time horizon | Description |
| Resource inflows, including resource use | ||||
| 12 | Risk | Upstream | Long term | Unavailability of raw materials of natural origin |
| Resource outflow related to products and services | ||||
| 13 | Risk | Own operations | Short term | Plastic products. Taxation |
| 14 | Risk | Downstream | Long term | Plastic products. Decrease in demand |
| 15 | Opportunity | Downstream | Long term | Customer and consumer preference for casings of natural or biodegradable origin |
| 16 | Opportunity | Downstream | Long term | Development with the customer of products that allow a better use of resources |
| 17 | Negative impact | Downstream | Medium term | Impact on the environment due to the increase in waste disposed of |
| Waste | ||||
| 18 | Opportunity | Downstream | Medium term | Recovery of cellulose casing waste at the customer. |
| 19 | Opportunity | Own operations | Long term | Waste recovery. Reduction of the cost in management and use as a source of energy mainly |
| 20 | Risk | Own operations | Long term | Waste disposal. Increased restrictions from the administrations and the cost of managing them |
| ESRS S1. Own workforce | ||||
|---|---|---|---|---|
| ID | Type | Location in value chain | Time horizon | Description |
| Working conditions | ||||
| 21 | Negative impact | Own operations | Short term | Illnesses and accidents in the workplace |
| 22 | Opportunity | Own operations | Short term | Increased knowledge, continuous improvement and productivity |
| 23 | Opportunity | Own operations | Short term | Long-term loyalty and commitment |
| 24 | Risk | Own operations | Short term | Failure to comply with working conditions |
| 25 | Risk | Own operations | Short term | Deterioration of the work environment, labour conflicts |
| Equal treatment and opportunities for all | ||||
| 26 | Positive impact | Own operations | Short term | Capacity building, diversity and professional talent |
| 27 | Negative impact | Own operations | Short term | Inadequate working conditions and remuneration structures |
| Other labour rights | ||||
| 28 | Opportunity | Own operations | Short term | Protección social, estabilidad económica y equilibrio personal |
| ESRS S4. Consumers and end-users | ||||
|---|---|---|---|---|
| ID | Type | Location in value chain | Time horizon | Description |
| Personal safety of consumers. Health and safety | ||||
| 29 | Negative impact | Downstream | Short term | Food security crisis |
| 30 | Risk | Own operations | Short term | Failure to meet quality standards or a food safety crisis can lead to lawsuits and reputational damage. |
| 31 | Risk | Downstream | Medium term | Losing market position due to regulatory requirements in terms of food safety. |
| 32 | Opportunity | Downstream | Medium term | To make it easier to feed an affordable protein to millions of households around the world. |
| 33 | Opportunity | Own operations | Medium term | Product safety and quality as a competitive advantage to lead the casing market. |
| ESRS G1 Business Conduct | ||||
|---|---|---|---|---|
| ID | Type | Location in value chain | Time horizon | Description |
| Corporate culture | ||||
| 34 | Opportunity | Own operations | Short term | Compliance through a culture of shared values |
| 35 | Opportunity | Own operations | Short term | Maintaining a good corporate reputation |
| 36 | Risk | Downstream | Short term | Loss of customers and business partners |
| 37 | Risk | Own operations | Medium term | Decrease in the Viscofan share price |
| Corruption and bribery | ||||
| 38 | Risk | Own operations | Short term | No cumplimiento de las normativas, reglamentos y leyes. Sanciones de carácter económico |
List of disclosure requirements under ESRS
| Standard | Cross-cutting/Topic | RDs | Description of RDs | DP | Section |
|---|---|---|---|---|---|
| ESRS 2 | General Disclosures | BP-1 | General basis for preparation of sustainability statements | 3; 4; 5 (a); 5 (b) i.; 5 (b) ii.; 5 (c); 5 (d); 5 (e) | 1.1.1.Bases of presentation |
| ESRS 2 | General Disclosures | BP-2 | General basis for preparation of sustainability statements | 6; 7; 8; 9 (a); 9 (b); 10 (a); 10 (b); 10 (c); 10 (d); 11 (a); 11 (b) i.; 11 (b) ii.; 12; 13 (a); 13 (b); 13 (c); 14 (a); 14 (b); 14 (c); 15; 16; 17 (a); 17 (b); 17 (c); 17 (d); 17 (e) | 1.1.1.Bases of presentation |
| General basis for preparation of the sustainability statements | |||||
| Disclosures in relation to specific circumstances | |||||
| Disclosures in relation to specific circumstances – Time horizons | |||||
| Disclosures in relation to specific circumstances | |||||
| - Value chain estimation | |||||
| Disclosures in relation to specific circumstances | |||||
| - Sources of estimation and uncertainty of the result | |||||
| Disclosures in relation to specific circumstances | |||||
| - Changes in preparation or presentation of sustainability information | |||||
| Disclosures in relation to specific circumstances | |||||
| - Reporting errors in prior periods | |||||
| Disclosures in relation to specific circumstances | |||||
| - Disclosures stemming from other legislation or generally accepted sustainability reporting pronouncements | |||||
| - Disclosures in relation to specific circumstances – Incorporation by reference | |||||
| - Disclosures in relation to specific circumstances – Use of phase-in provisions under Appendix C of ESRS 1. | |||||
| ESRS 2 | General Disclosures | GOV-1 | The role of administrative, management and supervisory bodies | 19; 20 (a); 20 (b); 20 (c); 21 (a); 21 (b); 21 (c); 21 (d); 21 (e); 22 (a); 22 (b); 22 (c) i.; 22 (c) ii.; 22 (c) iii.; 22 (d); 23 (a); 23 (b) | 1.1.2.Governance |
| The role of administrative, management and supervisory bodies | |||||
| ESRS 2 | General Disclosures | GOV-2 | Information provided to and sustainability matters addressed by the undertaking’s administrative, management and supervisory bodies | 24; 25; 26 (a); 26 (b); 26 (c) | 1.1.4.Management of impacts, risks and opportunities |
| ESRS 2 | General Disclosures | GOV-3 | Integration of sustainability-related performance in incentive schemes | 27; 28; 29 (a); 29 (b); 29 (c); 29 (d); 29 (e) | remuneration. Integration of sustainability-related performance in incentive schemes. |
| ESRS 2 | General Disclosures | GOV-4 | Due diligence statement | 30; 31; 32; 33 | Good governance, due diligence statement and business conduct policies. |
| ESRS 2 | General Disclosures | GOV-5 | Risk management and internal controls over sustainability reporting | 34; 35; 36 (a); 36 (b); 36 (c); 36 (d); 36 (e) | Risk management and internal controls over sustainability reporting. |
| ESRS 2 | General Disclosures | SBM-1 | Strategy, business model and value chain | 38; 39; 40 (a) i.; 40 (a) ii.; 40 (a) iii.; 40 (a) iv.; 40 (b); 40 (c); 40 (d) i.; 40 (d) ii.; 40 (d) iii.; 40 (d) iv.; 40 (e); 40 (f); 40 (g); 41; 42 (a) ; 42 (b); 42 (c) | Strategy, business model and value chain. |
| ESRS 2 | General Disclosures | SBM-2 | Interests and views of stakeholders | 43; 44; 45 (a) i.; 45 (a) ii.; 45 (a) iii.; 45 (a) iv.; 45 (a) v.; 45 (b); 45 (c) i.; 45 (c) ii.; 45 (c) iii.; 45 (d) | Interests and views of stakeholders. |
| ESRS 2 | General Disclosures | SBM-3 | Material impacts, risks and opportunities and their interaction with strategy and business model | 46; 47; 48 (a); 48 (b); 48 (c) i.; 48 (c) ii.; 48 (c) iii.; 48 (c) iv.; 48 (d); 48 (e) i.; 48 (e) ii.; 48 (f); 48 (g); 48 (h); 49 | Materially important incidents, risks and opportunities, their interaction with the strategy and business model and current and expected financial effects. |
| ESRS 2 | General Disclosures | IRO-1 | Description of the processes to identify and assess material impacts, risks and opportunities | 51; 52; 53 (a); 53 (b) i.; 53 (b) ii.; 53 (b) iii.; 53 (b) iv.; 53 (c) i.; 53 (c) ii.; 53 (c) iii.; 53 (d); 53 (e); 53 (f); 53 (g); 53 (h) | Information on the materiality assessment process. |
| ESRS 2 | General Disclosures | IRO-2 | Disclosure requirements set out in the ESRS covered by the company's sustainability statement | 54; 55; 56; 57; 58; 59 | Result of the double materiality assessment. |
| ESRS 2 | General Disclosures | MDR-P | Policies adopted to manage materially important sustainability issues | 63; 64; 65 (a); 65 (b); 65 (c); 65 (d); 65 (e); 65 (f) | Policies related to each of the material issues. |
| Climate change | |||||
| Pollution. | |||||
| Resource use and circular economy. | |||||
| Own workforce. | |||||
| ESRS 2 | General Disclosures | MDR-A | Actions and resources in relation to material sustainability matters | 66; 67; 68 (a); 68 (b); 68 (c); 68 (d); 68 (e); 69 (a); 69 (b); 69 (c) | Actions and resources in relation to each of the material matters. Climate change |
| Pollution | |||||
| Resource use and circular economy | |||||
| Own workforce | |||||
| Consumers and end-users. | |||||
| ESRS 2 | General Disclosures | MDR-M | Metrics for material sustainability matters | 73; 74; 75; 76; 77 (a); 77 (b); 77 (c); 77 (d) | Metrics for each of the material matters. |
| Climate change | |||||
| Pollution | |||||
| Resource use and circular economy | |||||
| Own workforce | |||||
| ESRS 2 | General Disclosures | MDR-T | Monitoring the effectiveness of policies and actions through targets | 78; 79 (a); 79 (b); 79 (c); 79 (d); 79 (e); 80 (a); 80 (b); 80 (c); 80 (d); 80 (e); 80 (f); 80 (g); 80 (h); 80 (i); 80 (j); 81 (a) ; 81 (b) i.; 81 (b) ii. | Consumers and end-users. |
| ESRS E1 | Climate change | GOV-3 | Integration of sustainability-related performance in incentive schemes | 13 | 2.1.2. Governance |
| ESRS E1 | Climate change | E1-1 | Transition plan for climate change mitigation | 14; 15; 16 (a); 16 (b); 16 (c); 16 (d); 16 (e); 16 (f); 16 (g); 16 (h); 16 (i); 16 (j); 17 | 2.1.3. Strategy |
| Transition plan for climate change mitigation. | |||||
| ESRS E1 | Climate change | SBM-3 | Material impacts, risks and opportunities and their interaction with strategy and business model | 18; 19 (a); 19 (b); 19 (c) | 2.2.1. Management of impacts, risks and opportunities |
| ESRS E1 | Climate change | IRO-1 | Description of the processes to identify and assess material climate-related impacts, risks and opportunities | 20 (a); 20 (b) i.; 20 (b) ii.; 20 (c) i.; 20 (c) ii.; 21 | 2.1.4. Management of impacts, risks and opportunities |
| ESRS E1 | Climate change | E1-2 | Policies related to climate change mitigation and adaptation | 22; 23; 24; 25 (a); 25 (b); 25 (c); 25 (d); 25 (e) | 2.1.4. Management of impacts, risks and opportunities |
| ESRS E1 | Climate change | E1-3 | Actions and resources in relation to climate change policies | 26; 27; 28; 29 (a); 29 (b); 29 (c) i.; 29 (c) ii.; 29 (c) iii. | 2.1.4. Management of impacts, risks and opportunities |
| ESRS E1 | Climate change | E1-4 | Targets related to climate change mitigation and adaptation | 30; 31; 32; 33; 34 (a); 34 (b); 34 (c); 34 (d); 34 (e); 34 (f) | 2.1.5. Metrics and targets |
| ESRS E1 | Climate change | E1-5 | Energy consumption and mix | 35; 36; 37 (a); 37 (b); 37 (c) i.; 37 (c) ii.; 37 (c) iii.; 38 (a); 38 (b); 38 (c); 38 (d); 38 (e); 39; 40; 41; 42; 43 | 2.1.5. Metrics and targets |
| Energy consumption and mix - Energy intensity based on net revenue | |||||
| ESRS E1 | Climate change | E1-6 | Gross Scope 1, 2 and 3 GHG emissions and total GHG emissions | 44 (a); 44 (b); 44 (c); 44 (d); 45 (a); 45 (b); 45 (c); 45 (d); 46; 47; 48 (a); 48 (b); 49 (a); 49 (b); 50 (a); 50 (b); 51; 52 (a); 52 (b); 53; 54; 55 | 2.1.5. Metrics and targets |
| GHG intensity based on net revenue | |||||
| ESRS E1 | Climate change | E1-7 | GHG removals and GHG mitigation projects financed through carbon credits | 56 (a); 56 (b); 57 (a); 57 (b); 58 (a); 58 (b); 59 (a); 59 (b); 60; 61 (a); 61 (b); 61 (c) | 2.1.5. Metrics and targets |
| ESRS E1 | Climate change | E1-8 | Internal carbon pricing | 62; 63 (a); 63 (b); 63 (c); 63 (d) | 2.1.5. Metrics and targets |
| ESRS E1 | Climate change | E1-9 | Anticipated financial effects from material physical and transition risks and potential climate-related opportunities | 64 (a); 64 (b); 64 (c); 65 (a); 65 (b); 66 (a); 66 (b); 66 (c); 66 (d); 67 (a); 67 (b); 67 (c); 67 (d); 67 (e); 68 (a); 68 (b); 69 (a); 69 (b); 70 | 2.2.2. Metrics and targets |
| ESRS E2 | Pollution | IRO-1 | Description of the processes to identify and assess material pollution-related impacts, risks and opportunities | 11 (a); 11 (b) | 2.2.1. Management of impacts, risks and opportunities |
| ESRS E2 | Pollution | E2-1 | Pollution-related policies | 12; 13; 14; 15 (a); 15 (b); 15 (c) | 2.2.1. Management of impacts, risks and opportunities |
| ESRS E2 | Pollution | E2-2 | Pollution-related actions and resources | 16; 17; 18; 19 (a); 19 (b); 19 (c) | 2.2.1. Management of impacts, risks and opportunities |
| ESRS E2 | Pollution | E2-3 | Targets related to pollution | 20; 21; 22; 23 (a); 23 (b); 23 (c); 23 (d); 24 (a); 24 (b); 24 (c); 25 | 2.2.2. Metrics and targets |
| ESRS E2 | Pollution | E2-4 | Pollution of air, water and soil | 26; 27; 28 (a); 28 (b); 29; 30 (a); 30 (b); 30 (c); 31 | 2.2.2. Metrics and targets |
| ESRS E2 | Pollution | E2-5 | Substances of concern and substances of very high concern | 32; 33; 34; 35 | 2.2.2. Metrics and targets |
| ESRS E2 | Pollution | E2-6 | Anticipated financial effects from material pollution-related risks and opportunities | 36; 37; 38 (a); 38 (b); 39 (a); 39 (b); 39 (c); 40 (a); 40 (b); 40 (c); 41 | 2.2.2. Metrics and targets |
| ESRS E5 | Circular economy | IRO-1 | Description of the processes to identify and assess material resource use and circular economy-related impacts, risks and opportunities | 11 (a); 11 (b) | 2.3.1.Management of impacts, risks and opportunities |
| ESRS E5 | Circular economy | E5-1 | Policies related to resource use and circular economy | 12; 13; 14; 15 (a); 15 (b); 16 | 2.3.1.Management of impacts, risks and opportunities |
| ESRS E5 | Circular economy | E5-2 | Actions and resources related to resource use and circular economy | 17; 18; 19; 20 (a); 20 (b); 20 (c); 20 (d); 20 (e); 20 (f) | 2.3.1.Management of impacts, risks and opportunities |
| ESRS E5 | Circular economy | E5-3 | Targets related to resource use and the circular economy | 21; 22; 23; 24 (a); 24 (b); 24 (c); 24 (d); 24 (e); 24 (f); 25; 26 (a); 26 (b); 26 (c); 27 | 2.3.2. Metrics and targets |
| ESRS E5 | Circular economy | E5-4 | Entradas de recursos | 28; 29; 30; 31 (a); 31 (b); 31 (c); 32 | 2.3.2. Metrics and targets |
| ESRS E5 | Circular economy | E5-5 | Resource outflows | 33; 34 (a); 34 (b); 35; 36 (a); 36 (b); 36 (c); 37 (a); 37 (b) i; 37 (b) ii; 37 (b) iii; 37 (c) i; 37 (c) ii; 37 (c) iii; 37 (d); 38 (a); 38 (b); 39; 40 | 2.3.2. Metrics and targets |
| Resource outflows - Products & Materials | |||||
| Resource outflows - Waste | |||||
| ESRS E5 | Circular economy | E5-6 | Anticipated financial effects from resource use and circular economy-related impacts, risks and opportunities | 41; 42 (a); 42 (b); 43 (a); 43 (b); 43 (c) | 2.3.1.Management of impacts, risks and opportunities |
| ESRS S1 | Own workforce | SBM-2 | Interests and views of stakeholders | 12 | 3.1.2. Management of impacts, risks and opportunities |
| ESRS S1 | Own workforce | SBM-3 | Material impacts, risks and opportunities and their interaction with strategy and business model | 13 (a); 13 (b); 14 (a); 14 (b); 14 (c); 14 (d); 14 (e); 14 (f) i.; 14 (f) ii.; 14 (g) i.; 14 (g) ii.; 15; 16 | 3.1.1. Strategy |
| ESRS S1 | Own workforce | S1-1 | Policies related to own workforce | 17; 18; 19; 20 (a); 20 (b); 20 (c); 21; 22; 23; 24 (a); 24 (b); 24 (c); 24 (d) | 3.1.2. Management of impacts, risks and opportunities |
| ESRS S1 | Own workforce | S1-2 | Processes for engaging with own workforce and workers’ representatives about impacts | 25; 26; 27 (a); 27 (b); 27 (c); 27 (d); 27 (e); 28; 29 | 3.1.2. Management of impacts, risks and opportunities |
| ESRS S1 | Own workforce | S1-3 | Processes to remediate negative impacts and channels for own workers to raise concerns | 30; 31; 32 (a); 32 (b); 32 (c); 32 (d); 32 (e); 33; 34 | 3.1.2. Management of impacts, risks and opportunities |
| ESRS S1 | Own workforce | S1-4 | Taking action on material impacts on own workforce, and approaches to mitigating material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions | 35; 36 (a); 36 (b); 37; 38 (a); 38 (b); 38 (c); 38 (d); 39; 40 (a); 40 (b); 41; 42; 43 | 3.1.2. Management of impacts, risks and opportunities |
| ESRS S1 | Own workforce | S1-5 | Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities | 44 (a); 44 (b); 44 (c); 45; 46; 47 (a); 47 (b); 47 (c) | 3.1.3. Metrics and targets |
| ESRS S1 | Own workforce | S1-6 | Characteristics of the undertaking’s employees | 48; 49; 50 (a); 50 (b) i.; 50 (b) ii.; 50 (b) iii.; 50 (c); 50 (d) i.; 50 (d) ii.; 50 (e); 50 (f); 51; 52 (a); 52 (b) | 3.1.3. Metrics and targets |
| ESRS S1 | Own workforce | S1-7 | Characteristics of non-employee workers in the undertaking’s own workforce | 53; 54; 55 (a); 55 (b) i.; 55 (b) ii.; 55 (c); 56; 57 | 3.1.3. Metrics and targets |
| ESRS S1 | Own workforce | S1-8 | Collective bargaining coverage and social dialogue | 58; 59; 60 (a); 60 (b); 60 (c); 61; 62; 63 (a); 63 (b) | 3.1.3. Metrics and targets |
| ESRS S1 | Own workforce | S1-9 | Diversity metrics | 64; 65; 66 (a); 66 (b) | 3.1.3. Metrics and targets |
| ESRS S1 | Own workforce | S1-10 | Adequate wages | 67; 68; 69; 70; 71 | 3.1.3. Metrics and targets |
| ESRS S1 | Own workforce | S1-11 | Social protection | 72; 73; 74 (a); 74 (b); 74 (c); 74 (d); 74 (e); 75; 76 | 3.1.3. Metrics and targets |
| ESRS S1 | Own workforce | S1-12 | Persons with disabilities | 77; 78; 79; 80 | 3.1.3. Metrics and targets |
| ESRS S1 | Own workforce | S1-13 | Training and skills development metrics | 81; 82; 83 (a); 83 (b); 84; 85 | 3.1.3. Metrics and targets |
| ESRS S1 | Own workforce | S1-14 | Health and safety metrics | 86; 87; 88 (a); 88 (b); 88 (c); 88 (d); 88 (e); 89; 90 | 3.1.3. Metrics and targets |
| ESRS S1 | Own workforce | S1-15 | Work-life balance metrics | 91; 92; 93 (a); 93 (b); 94 | 3.1.3. Metrics and targets |
| ESRS S1 | Own workforce | S1-16 | Compensation metrics (pay gap and total compensation) | 95; 96; 97 (a); 97 (b); 97 (c); 98; 99 | 3.1.3. Metrics and targets |
| ESRS S1 | Own workforce | S1-17 | Incidents, complaints and severe human rights impacts | 100; 101; 102; 103 (a); 103 (b); 103 (c); 103 (d); 104 (a); 104 (b) | 3.1.3. Metrics and targets |
| ESRS S4 | Consumers and end-users | SBM-2 | Interests and views of stakeholders | 8 | 3.2.1. Strategy |
| ESRS S4 | Consumers and end-users | SBM-3 | Material impacts, risks and opportunities and their interaction with strategy and business model | 9 (a); 9 (b); 10 (a) i.; 10 (a) ii.; 10 (a) iii.; 10 (a) iv.; 10 (b); 10 (c); 10 (d); 11; 12 | 3.2.1. Strategy |
| ESRS S4 | Consumers and end-users | S4-1 | Policies related to consumers and end-users | 13; 14; 15; 16 (a); 16 (b); 16 (c); 17 | 3.2.2. Management of impacts, risks and opportunities |
| ESRS S4 | Consumers and end-users | S4-2 | Processes for engaging with consumers and end-users about impacts | 18; 19; 20 (a); 20 (b); 20 (c); 20 (d); 21; 22 | 3.2.2. Management of impacts, risks and opportunities |
| ESRS S4 | Consumers and end-users | S4-3 | Processes to remediate negative impacts and channels for consumers and end-users to raise concerns | 23; 24; 25 (a); 25 (b); 25 (c); 25 (d); 26; 27 | 3.2.2. Management of impacts, risks and opportunities |
| ESRS S4 | Consumers and end-users | S4-4 | Taking action on material impacts on consumers and end-users, and approaches to managing material risks and pursuing material opportunities related to consumers and end-users, and effectiveness of those actions | 28; 29 (a); 29 (b); 30; 31 (a); 31 (b); 31 (c); 31 (d); 32 (a); 32 (b); 32 (c); 33 (a); 33 (b); 34; 35; 36; 37 | 3.2.2. Management of impacts, risks and opportunities |
| ESRS S4 | Consumers and end-users | S4-5 | Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities | 38 (a); 38 (b); 38 (c); 39; 40; 41 (a); 41 (b); 41 (c) | 3.2.3. Metrics and targets |
| ESRS G1 | Business conduct | GOV-1 | The role of administrative, management and supervisory bodies | 5 (a); 5 (b) | 1.1.2. Governance |
| ESRS G1 | Business conduct | IRO-1 | Description of the processes to identify and assess material impacts, risks and opportunities | 6 | 4.1.2. Management of impacts, risks and opportunities |
| ESRS G1 | Business conduct | G1-1 | Corporate culture and business conduct policies | 7; 8; 9; 10 (a); 10 (b); 10 (c) i.; 10 (c) ii.; 10 (d); 10 (e); 10 (f); 10 (g); 10 (h); 11 | 4.1.2. Management of impacts, risks and opportunities |
| ESRS G1 | Business conduct | G1-2 | Management of relationships with suppliers | 12; 13; 14; 15 (a); 15 (b) | 4.1.2. Management of impacts, risks and opportunities |
| ESRS G1 | Business conduct | G1-3 | Prevention and detection of corruption and bribery | 16; 17; 18 (a); 18 (b); 18 (c); 19; 20; 21 (a); 21 (b); 21 (c) | 4.1.2. Management of impacts, risks and opportunities |
| ESRS G1 | Business conduct | G1-4 | Confirmed incidents of corruption or bribery | 22; 23; 24 (a); 24 (b); 25 (a); 25 (b); 25 (c); 25 (d); 26 | 4.1.2. Management of impacts, risks and opportunities |
| ESRS G1 | Business conduct | G1-5 | Political influence and lobbying activities | 27; 28; 29 (a); 29 (b) i.; 29 (b) ii.; 29 (c); 29 (d); 30 | 4.1.2. Management of impacts, risks and opportunities |
| ESRS G1 | Business conduct | G1-6 | Payment practices | 31; 32; 33 (a); 33 (b); 33 (c); 33 (d) | 4.1.2. Management of impacts, risks and opportunities |
List of data points included in cross-cutting standards and thematic standards derived from other EU legislation
The Sustainability Statement has not taken into account aspects derived from other EU legislation not related to the Group's sector of activity, such as Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector (OJ L 317, 9.12.2019, p. 1), Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (Capital Requirements Regulation, "CRR") (OJ L 176, 27.6.2013, p. 1), Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as references in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (OJ L 171, 29.6.2016, p. 1) and (6) Commission Implementing Regulation (EU) 2022/2453 of 30 November 2022 amending the implementing technical standards laid down in Implementing Regulation (EU) 2021/637 with regard to disclosure of information on environmental, social and governance risks (OJ L 324, 19.12.2022, p. 1).
The cross-cutting standards for the material aspects taken into account are the following:
| Disclosure requirement and related data point | Reference to the Regulation on benchmarks (3) | Reference to European Climate Legislation (4) | Reference |
|---|---|---|---|
| ESRS 2 GOV-1 Gender diversity of the board of directors section 21, letter d) | Commission Delegated Regulation (EU) 2020/1816 (5), Annex II | GOV-1: The role of the administrative, management and supervisory bodies | |
| ESRS 2 GOV-1 Percentage of board members who are independent, paragraph 21 e) | Delegated Regulation (EU) 2020/1816, Annex II | GOV-1: The role of the administrative, management and supervisory bodies | |
| ESRS 2 SBM-1 Participation in activities related to fossil fuels section 40, letter d), subparagraph i) | Delegated Regulation (EU) 2020/1816, Annex II | SBM-1: Strategy, business model and value chain | |
| ESRS 2 SBM-1 Participation in activities related to the production of chemical substances section 40, letter d), subparagraph ii) | Delegated Regulation (EU) 2020/1816, Annex II | SBM-1: Strategy, business model and value chain | |
| ESRS 2 SBM-1 Participation in activities related to controversial weapons section 40(d)(iii) | Delegated Regulation (EU) 2020/1818 (7), Article 12, paragraph 1 Delegated Regulation (EU) 2020/1816, Annex II | SBM-1: Strategy, business model and value chain | |
| ESRS 2 SBM-1 Participation in activities related to the cultivation and production of tobacco section 40, letter d), subparagraph iv) | Delegated Regulation (EU) 2020/1818, Article 12, paragraph 1 Delegated Regulation (EU) 2020/1816, Annex II | SBM-1: Strategy, business model and value chain | |
| ESRS E1-1 Transition plan to achieve climate neutrality by 2050 section 14 | Regulation (EU)- 2021/1119, Article 2, paragraph 1 | E1-1: Transition plan for climate change mitigation | |
| ESRS E1-1 Companies excluded from the benchmarks harmonized with the Paris Agreement section 16, letter g) | Delegated Regulation (EU) 2020/1818, Article 12(1)(d) to (g) and Article 12(2) | E1-1: Transition plan for climate change mitigation | |
| ESRS E1-4 GHG Emission Reduction Targets Section 34 | Delegated Regulation (EU) 2020/1818, Article 6 | E1-4: Targets related to climate change mitigation and adaptation | |
| ESRS E1-6 Gross GHG emissions of scope 1, 2 and 3 and total GHG emissions section 44 | Delegated Regulation (EU) 2020/1818, Article 5(1) and Articles 6 and 8(1) | E1-6: Gross GHG emissions of scope 1, 2 and 3 and total GHG emissions | |
| ESRS E1-6 Gross GHG emissions intensity sections 53 to 55 | Delegated Regulation (EU) 2020/1818, Article 8, paragraph 1 | E1-6: Gross GHG emissions of scope 1, 2 and 3 and total GHG emissions | |
| ESRS E1-7 GHG Removals and Carbon Credits Section 56 | Regulation (EU)- 2021/1119, Article 2, paragraph 1 | E1-7: GHG removals and GHG mitigation projects financed through carbon credits | |
| ESRS S1-1 Due diligence policies regarding matters referred to in fundamental conventions 1 to 8 of the International Labour Organization, paragraph 21 | Delegated Regulation (EU) 2020/1816, Annex II | S1-1: Policies related to own personnel | |
| ESRS S1-14 Number of fatalities and number and rate of occupational accidents section 88, letters b) and c) | Delegated Regulation (EU) 2020/1816, Annex II | S1-14: Health and safety parameters | |
| ESRS S1-16 Gender pay gap, unadjusted, section 97, letter a) | Delegated Regulation (EU) 2020/1816, Annex II | S1-16: Compensation parameters (wage gap and total compensation) | |
| ESRS S1-17. Non-compliance with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines, paragraph 104(a). | Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Article 12, paragraph 1 | S1-17: Incidents, complaints and serious incidents related to human rights | |
| ESRS S1-1. Non-compliance with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines, paragraph 19 | Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Article 12, paragraph 1 | S1-1: Policies related to own personnel and MDR-P Good governance, declaration of due diligence and policies business conduct in 1.1.2. Governance | |
| ESRS S4-1 Non-compliance with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines, paragraph 17 | Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Article 12, paragraph 1 | S4-1: Policies related to consumers and end users | |
| ESRS G1-4 Fines for violating anti-corruption and bribery laws, section 24(a) | Delegated Regulation (EU) 2020/1816, Annex II | G1-4: Goals, Zero cases of corruption or bribery |
General process for the management of impacts and risks of the Viscofan Group
ESRS 2 IRO-1 and ESRS 2 GOV-2
Impact and risk management ensures that the desire to create value for our stakeholders is balanced with the risks and impacts associated with business, commercial, operational, labour, financial and social initiatives, as established in the sustainability policy both in the operations themselves and as a result of business operations.
Governance, management and oversight bodies play a critical role in considering impacts, risks and opportunities by overseeing the Beyond25 strategy and Sustainability Action Plan, decisions on major deals and the risk management process. This is carried out on the basis of the specific powers assigned to them, which are detailed at the level of the Board Committees, at the management level and on specific topics in different committees. Its comprehensive approach ensures that the company's strategy is aligned with its objectives and that impacts, risks and opportunities are managed effectively.
The impact and risk management system is the responsibility of the Board of Directors, which delegates its supervision and proper functioning to the Audit Committee. Likewise, the Viscofan Group has different bodies charged with the supervision and control of different risks that could arise in the course of Viscofan's activities with different level of occurrence and materiality:
- Internal audit: Its function is to promote the application of risk management in all activities and to supervise that the relevant risks are adequately identified, assessed, managed and controlled. It has a broad presence on specific committees.
- Ethics and Regulatory Compliance Committee: This is the body responsible for supervising the risks specific to the Group with regard to criminal liability or any other non-compliance, and for assessing, implementing and monitoring the Regulatory Compliance System.
- Global Risk Committee: this is a body whose purpose is to identify and assess the main risks threatening the Viscofan Group, making a deeper analysis of their organisation and recommendations for the actions required to manage the risks within the established margins.
- Credit Risk Committee: It is established as a supervisory and control body for those risks related to customer payment management. The objective of this Committee is to delve into the prevention, monitoring and solution of the risks mentioned, via the creation and implementation of the instruments considered most appropriate at the time.
- Investments Committee: Its main objective is to control and oversee compliance with the Investment Plan approved by the Board of Directors. To achieve this, it meets on a quarterly basis for the purposes of performing periodic follow-up checks on the correct application of approved investments and controlling the efficient use of Group resources and investments.
- Cyber Security Committee: Responsible for defining the Group's strategic cybersecurity objectives, promoting secure information management and guaranteeing the state of protection, as well as regularly monitoring regulatory compliance, projects and risk situations and incidents.
- Executive Sustainability Committee: This is the body responsible for coordinating and supervising the Sustainability Action Plan, the initiatives, work plans and long-term objectives for the same.
- Senior management: Responsible for identifying and assessing the risks and impacts faced by the Group in the course of its activity and taking appropriate measures to prevent their materialisation or, in the event of an occurrence, to reduce or eliminate their impact. Therefore, it plays a fundamental role in designing and implementing control mechanisms and ensuring their fulfilment across the organisation.
In management, Viscofan uses a comprehensive control and management system that is applicable in all companies and is developed in accordance with the basic principles of integration in management, adaptation to changes, transparency and adoption of continuous improvement.
Impacts and potential risks are considered when monitoring and adjusting the company's strategy as a basis for making decisions that strengthen Viscofan's resilience and allow for proactive adaptation to market changes. To this end, Viscofan has an identification, assessment and mitigation system that covers all operational areas based on international reference frameworks and best practices to ensure structured and efficient risk and impact management.
Moreover, the Viscofan Group monitors the values of the risk indicators and the defined thresholds according to their severity and probability, so that when these thresholds were exceeded the required management measures are taken to redirect the risks to the defined tolerance level. Viscofan seeks to reinforce the control system, promoting a solid business model and enabling incidents and risks to be confronted in a controlled manner.
The aim of the risk and impact management policy is to identify and assess events as soon as possible, based on the Code of Conduct, the internal regulations and the strategic plan, to maintain constant contact with stakeholders, and to take adequate measures to reduce them and, in some cases, they can present opportunities.
Management and supervisory bodies also promote a culture of risk management throughout the organisation. Through training and clear policies, they seek to ensure that all people understand the importance of timely risk and impact identification and reporting. In addition, regular audits and compliance reviews are conducted to ensure that risk control measures are effective and kept up to date. This proactive approach allows Viscofan not only to react to impacts and risks, but also to anticipate possible threats, thus maintaining a position of competitive advantage and ensuring long-term sustainability.
Viscofan has approved a risk management control policy, whose purpose is to set the basic principles and the general action framework to identify, measure, prevent and mitigate risks of all types that may affect the attainment of the strategic objectives. This system includes people and environment.
The system includes the following activities:
- Identify the main financial and non-financial/sustainability risks taking into account their impact on the creation of sustainable and shared value for the Viscofan Group's stakeholders within the Strategic Plan in force at any given time and evaluate their probability of occurrence and impact in order to prioritise them accordingly. Based on this, the system also takes account of the connections of impacts and dependencies with risks and opportunities.
- Determine risk appetite by establishing tolerances and suitably monitor their development with key risk indicators, used as input parameters depending on the risk.
- Implement a control system integrated into the internal rules and regulations of the Viscofan Group, including the identification and evaluation of the controls and contingency plans necessary to mitigate the impact of the materialisation of risks.
- Assess the efficiency of the control system and its application, as well as its compliance by all the Viscofan Group employees.
- Establishing action plans in the event that the occurrence of one of the main risks negatively affects the creation of long-term sustainable value, taking residual risk to an acceptable risk level. As a direct consequence of this reduction in the level of risk, it will be necessary and appropriate to reassess and prioritise these risks, forming a continuous process of risk management.
- Auditing of the system by the Internal Audit Division.
Viscofan's risk map is defined in accordance with the code of conduct, internal regulations and the current Strategic Plan, which includes different types of risks (market, business, operational, credit, social, environmental, climate change, technological, legal and regulatory), and is presented adopting the COSO methodology, grouping the existing risks in four categories in accordance with the type of objective they affect: strategic, operational, information and compliance.
The information in reference to impact and risk management has been set forth in greater detail in section E) of the Annual Corporate Governance Report. In this section, the Viscofan Group describes the main financial and non-financial risks, the bodies responsible for drawing up and enforcing the financial and non-financial risk management system, the level of tolerance, the risks occurred in the year and the plans to respond to and supervise the main risks.