Governance\n\nA strong governance structure ensures that sustainability remains at the heart of our activities. Top management is actively involved in overseeing the delivery of our global sustainability strategy. \n\nThe Board of Directors is the highest governing body within the Group and is the ultimate decision-making authority except for those decisions reserved by law to the Annual General Meeting. The SA30, which include ambitious climate targets for 2030 and 2050, was approved by the Board.\n\nA dedicated Sustainability Committee of the Board was established in 2022 in response to the growing relevance of sustainability to the Company and its stakeholders. The Committee plays an important role in assisting the Board to develop its sustainability plans and act accordingly. It oversees sustainability related issues that may affect the Group and its customers, including climate-related risks and the implementation of the decarbonization strategy.\n\nIn accordance with the Company's internal regulations, the Board of Directors delegated the operational management of the Group to the Executive Committee. As a result, the Executive Committee defines the Group's strategy, targets and policies, including those related to climate action, throughout all the operations. The ultimate responsibility for implementing this Net-Zero Transition Plan lies with the Executive Committee. This is reflected in its monthly meetings, which the corporate sustainability team regularly attend to deal with sustainability and climate action items on the agenda.\n\nOur regions and affiliates are responsible for implementing various initiatives that support the Group's sustainability targets. The network of regional and local sustainability ambassadors is responsible for implementing the programs in the affiliates, cascading the corporate initiatives down to every single SGS site.\n\nESG metrics are included in the long-term incentive scheme for all executive members and local management teams across the organization, accounting for 20% of the incentive opportunity, based on the key priorities of decarbonization, health and safety and diversity.\n\n[More information in our annual integrated report.](https://www.sgs.com/en-es/sustainability/corporate-sustainability/reporting-hub)\n\nStakeholder engagement\n\nMaintaining a continuous dialogue with all our stakeholders is critical to our long-term success. The valuable insights from our customers, consumers, employees, suppliers, communities, governments and industries as well as investors inform our materiality assessment and enable us to align our sustainability initiatives to stakeholder requirements and ensure that we deliver value to society.\n\nInternally, we consistently implement innovative initiatives, including campaigns on energy, water and waste awareness, to foster employee engagement in our commitments. This effort aims to cultivate an enduring culture of sustainability throughout the Company.\n\nAdditionally, we encourage close collaboration between the sustainability professionals in our network to facilitate the sharing of knowledge, good practices and success stories and ultimately, to provide a better service to customers.\n\nDifferent levels of collaboration translate into varying degrees of control over our sources of GHG emissions. Some, such as energy consumption in our buildings or the purchase of renewable electricity, fall under our direct control. Others, such as emissions from our supply chain, are within our relative control but require close collaboration with our suppliers. Finally, certain factors extend beyond our direct influence. This is the case for instance of the pace of technological development, which impacts the availability of charging stations for electric vehicles. Navigating these diverse channels of communication and engagement with stakeholders requires a nuanced approach. By understanding the levels of control and influence we possess across different aspects of our operations, we can strategically prioritize our efforts and leverage partnerships to accelerate our journey towards net-zero emissions while fostering sustainable practices throughout our value chain.\n\n[More information in our annual integrated report.](https://www.sgs.com/en-es/sustainability/corporate-sustainability/reporting-hub)\n\nClimate-related risks and opportunities\n\nAt SGS, climate-related risk management is a Group‑wide endeavor. We treat our non‑financial risks in the same way as financial risks and incorporate our risk analysis into our materiality assessments.\n\nOur Board of Directors reviews risks ensuring that the Company has a robust strategic approach to mitigating them. However, the ultimate responsibility for identifying risks and integrating their management into key business planning processes rests with our Executive Committee. The Group Risk Steering Committee, chaired by the CEO, oversees our risk management framework. Accountability for managing risk rests with 'Global Risk Owners' who are charged with assessing risk in the jurisdictions for which they are responsible.\n\nTo support our risk management framework, the Group conducts risk assessments, using a bottom-up approach, with identification of potential risks, coupled with design and implementation of mitigation actions and action plans at a local level, where appropriate. Additionally, at Group level, SGS applies a top-down approach to evaluate and conclude on the country level results as well as to identify and assess risks\n\nWe ensure that our climate-related risks and opportunities are transparently communicated by endorsing and supporting the voluntary recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). This is a guidance framework that assists companies with disclosing climate-related risks to investors, lenders and insurers. As the International Financial Reporting Standards (IFRS) Foundation took over the monitoring of the progress of companies' climate-related disclosures, we will start adapting our reporting to the International Sustainability Standards Board (ISSB) recently published inaugural standards, IFRS S1 and IFRS S2, which fully incorporate the TCFD recommendations.