In order to identify material impacts, risks, and opportunities (IROs) of NORMA Group, the initially conducted materiality assessment from financial year 2024 was updated in accordance with the European Sustainability Reporting Standards as part of the Consolidated Non-financial Statement for financial year 2025. The procedure is explained below. The consolidated results of the materiality assessment can be found in the section MATERIAL IMPACTS, RISKS, AND OPPORTUNITIES AND THEIR INTERACTION WITH STRATEGY AND BUSINESS MODEL (SBM-3). The results of the climate risk and vulnerability analyses from financial year 2024 and the risks from the existing financial risk management system were also taken into account.
Performance of the materiality assessment
The identification and assessment of NORMA Group’s material impacts, risks, and opportunities (IROs) was carried out in accordance with the methodology for double materiality assessment described in ESRS 1. Two perspectives were taken into account when determining the relevant sustainability topics: first, the impact of NORMA Group’s operations on people and the environment (inside-out) and second, the financial risks and opportunities for NORMA Group arising from sustainability aspects (outside-in). To identify material impacts, risks, and opportunities, NORMA Group has updated the materiality assessment carried out in financial year 2024 in accordance with the ESRS for financial year 2025. The consolidated results can be found in the section MATERIAL IMPACTS, RISKS, AND OPPORTUNITIES AND THEIR INTERACTION WITH STRATEGY AND BUSINESS MODEL (SBM-3).
The analysis was based on the principle of double materiality and covered the entire scope of consolidation of NORMA Group. In particular, NORMA Group also considered the entire scope of consolidation when identifying material impacts, risks, and opportunities in connection with corporate governance.
As part of the process to identify and assess IROs, all divisions and activities of NORMA Group were considered. The material topics were assigned to the relevant stages of the value chain. Due to the homogeneous business model and comparable risk profile, there was no disaggregation by business unit or geographical region, for example. NORMA Group used internal and external stakeholders to identify and evaluate IROs. This was to ensure that the defined value creation stages and relevant sources were considered. As part of the materiality assessment, NORMA Group did not systematically analyze its sites and business activities with regard to local issues of environmental pollution, water resources, resource use and circular economy, nor did it carry out an assessment of assets and activities. Instead, these analyses were carried out at Group level.
For impacts, the extent and scope (and in the case of negative impacts, irremediable character) were used to determine the degree of severity. In the case of potential impacts, the probability was also assessed, with the severity of the impact taking precedence over the probability in the case of potential human rights violations. The probability and extent of the financial impact were assessed for financial materiality. Dependencies and interrelationships between impacts, risks, and opportunities were not explicitly considered in the materiality assessment. An impact, risk, or opportunity is considered material if the threshold defined by NORMA Group is reached.
The initial materiality was based on a list of ESRS sub-topics, supplemented by company-specific aspects. A total of 46 sub-topics were defined, assigned to the environmental, social, and governance fields of action, and allocated to the relevant stages of the value chain. Internal and external stakeholders were involved in the identification and evaluation of the IROs. To this end, 14 stakeholder groups were identified, including internal experts from Corporate Responsibility, QEHS, and Integrity, as well as external groups such as customers, suppliers, and NGOs. The integration took place in two phases: qualitative interviews with internal stakeholders and a written survey for quantitative evaluation by internal and selected external stakeholders.
The results were reviewed by the Steering Committee and approved by top management. The Steering Committee and the working groups of the sustainability management program were involved in the validation process. The audit and confirmation are part of NORMA Group’s internal control procedure.
Updating the materiality assessment in financial year 2025
The results of the double materiality assessment and the assessment of the key IROs are revalidated annually and the double materiality assessment process is repeated if necessary, for example in the event of changes to the business model. In the future, interfaces to other relevant processes such as the risk management process or other due diligence processes of the various departments will be integrated into the process. The material IROs are reviewed during the current reporting year, with internal experts and the respective departments evaluating whether they remain up to date. If necessary, the results and affected IROs are adjusted accordingly and approved by the Steering Committee and therefore also the CFO.
In financial year 2025, NORMA Group decided to update the initial materiality assessment due to the Group-wide transformation process and restructuring in order to identify possible influences and to further improve the quality and informative value of the results.
The analysis was updated based on the findings from the first implementation and by incorporating best practices from the first published CSRD reports. The results of the previous analysis were systematically reviewed and used as a starting point. In addition, the stakeholders involved at the time were identified and checked for their continued relevance.
The online surveys conducted as part of the initial materiality assessment yielded only low response rates and few usable results. Accordingly, the involvement of internal stakeholders via qualitative workshops proved to be significantly more effective and was recognized as a more suitable approach. A core team of employees from various NORMA Group departments first carried out an initial assessment of the material impacts, risks, and opportunities (IROs). To enable a comprehensive view, NORMA Group organized workshops and open discussion rounds with internal experts who are in regular contact with external stakeholders such as customers or investors. This allowed external perspectives to be indirectly incorporated into the process.
In the workshops, the core team discussed different points of view, reviewed assessments from previous years, and added new topics with first-time assessments. The impacts, risks, and opportunities were analyzed and finally determined in an iterative process. An initial assessment by the Management Board served as a strategic compass and helped ensure the analysis was carried out in line with the Company’s overall direction. In addition, the impacts, risks, and opportunities to be assessed were analyzed in accordance with the requirements of the ESRS in terms of where they occur within the value chain and in what time horizon they are relevant. This is to ensure that not only the impacts resulting directly from NORMA Group’s own operations are taken into account, but also those of the upstream and downstream value chain. The entire evaluation process was finally validated by the core team.
The software-supported individual assessment of the impacts, risks, and opportunities was carried out by the Corporate Responsibility team in order to ensure a comprehensible and structured assessment. Existing risks from company-wide risk management were taken into account to ensure a consistent and integrated assessment. Finally, the results were validated by the CFO and COO and then approved by the Steering Committee.
In the course of the update, the measurement model, including the materiality threshold, was reviewed again to ensure its relevance for decision-making. A threshold was set in the middle of the rating scale in order to be able to differentiate between the topics. This classification indicates relevance for decision-making in the overall comparison and, from NORMA Group’s point of view, corresponds to both the significance of the topics considered and the intended informative value of the materiality assessment.
Changes compared to the previous year
The originally indicatively assessed impacts, risks, and opportunities in the areas of “Affected Communities” (ESRS S3) and “Pollution” (ESRS E2) were re-examined as part of an in-depth analysis involving specialist expertise and the Management Board. Based on this reassessment, they are not considered material for NORMA Group.
Implementation of the climate risk and vulnerability analysis (IRO-1)
In accordance with the requirements of the conformity criteria within the EU taxonomy, a climate risk and vulnerability analysis was carried out in financial year 2024 in relation to the economic activities CCM 3.18 and CCM 5.1. The assessment of physical climate risks was carried out on the assumption that most of the economic activities of NORMA Group have an expected lifespan of more than ten years.
To enable an efficient approach, the Corporate Responsibility department analyzed the largest percentage shares of taxonomy-eligible revenue for financial year 2023 and selected three Water Management companies and two companies with the highest revenue shares from eMobility products.
The coordinates of the selected sites were used to identify potential climate risks specific to each location. Potential climate risks were evaluated using a climate excellence tool. The evaluation was carried out in accordance with the precautionary principle. For example, the IPCC high emissions scenario SSP5-8.5 was used to determine the climate-related risks that pose a threat to the economic activities of NORMA. The climate model projections used in the latest IPPC assessment report (AR6) for the (SSP5-8.5) scenario were used to determine which hazards will have a material impact on NORMA’s individual sites and operations. The analysis was based on data from climate scenarios up to the year 2050 and does not include any other time horizons.
The potential climate risks were then validated in interviews with site managers and other experts, and existing adaptation measures – such as drainage systems for flood risks – were identified and documented.
Due to the existing remedial actions classified as suitable at the selected sites in the USA, China, India, Poland, and Malaysia, no new actions were defined and no adaptation plan was developed, as no need for this was identified.
Beyond the climate risk and vulnerability analysis described above, no further analyses were carried out in connection with climate risks in financial year 2025. The climate scenarios used are not taken into account in the financial statements. The existing processes are to be expanded over the next few years.
Implementation of the business model resilience analysis
The material impacts, risks, and opportunities identified for NORMA Group were also examined in financial year 2025 with regard to the resilience of its strategy and business model in accordance with ESRS. The probabilities of occurrence were examined, including in relation to climate risks, human rights risks, and possible bans on relevant substances. Based on this resilience analysis, the Company concludes that the strategy proves to be resilient in terms of its impacts, risks, and opportunities from non-financial matters and in relation to the business model. The actions already initiated, as well as future mitigation and adaptation measures, are taken into account in the strategy and are in line with the Company’s business model
The material topics identified were assigned to the areas of environmental protection, protection of employees, corporate integrity, and product quality, and are described in the following sections.
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These contents are part of the Non-financial Group Report and were subject to a separate limited assurance examination.