The process to identify IROs started with our CSRD workforce reviewing all the sustainability matters in ESRS 1, Appendix A. Impacts were described and assessed in a tool including the entire gross list where materiality of each matter is determined by its positive or negative nature, actual or potential impact (most topics were actual) and the severity and likelihood of impact. The topics were listed to be assessed on a sub-sub-topic level.

Negative impacts are prioritised based on severity (considering scale, scope and irremediability) and likelihood. Positive impacts are prioritised based on scale, scope, and likelihood. Our impact threshold honours the principles: Inclusion of all impacts with "critical" severity and severity taking precedence over likelihood – all within timeframes consistent with the ESRS. This is the process to assess and prioritise impacts supported by a quantitative scoring methodology.

Examples of core activities in our upstream value chain are related to extraction of raw materials, refineries, smelters, components assembly and transport. Activities in our operations relate to project development, construction, manufacturing and service. Our downstream value chain mostly comprises activities in our customers’ scope, decommissioning and end-of-life solutions.

As demand for renewable energy is increasing, it also means that our value chain will scale significantly. It is therefore important that we address the risks that come with scaling and the heightened adverse effects across the value chain that come with growth. After assessing specific activities, business relationships, geographies, and other factors, the topics of climate change, circularity, biodiversity, human rights and health and safety have been found to represent overarching adverse impacts across our value chain and these are addressed in our current sustainability strategy and mitigation measures.

The scenarios used are the International Energy Agency’s Net Zero Emissions by 2050, representing a climate scenario in line with limiting global warming to 1.5°C, and the Stated Policy Scenario, representing a more conservative benchmark for the future, not taking for granted that governments will reach all stated goals and energy-related objectives.

These scenarios are all relevant to Vestas as they cover both a very optimistic and a more realistic future scenario. Opposite to physical risks, transition risks and opportunities are more extreme in scenarios that assume successful mitigation of the worst effects of climate change, as drastic political and regulatory measures are necessary to change the current path. Therefore, these scenarios prepare companies well to adapt to changes in status quo.

The scenarios used are the International Energy Agency’s Net Zero Emissions by 2050, representing a climate scenario in line with limiting global warming to 1.5°C, and the Stated Policy Scenario, representing a more conservative benchmark for the future, not taking for granted that governments will reach all stated goals and energy-related objectives.

These scenarios are all relevant to Vestas as they cover both a very optimistic and a more realistic future scenario. Opposite to physical risks, transition risks and opportunities are more extreme in scenarios that assume successful mitigation of the worst effects of climate change, as drastic political and regulatory measures are necessary to change the current path. Therefore, these scenarios prepare companies well to adapt to changes in status quo.