During the year, governance bodies are informed about sustainability matters in the following way:

• The CFO gives an update on non-financial matters to the Audit Committee and the Board every quarter.
• The Vice President and Head of Sustainability reports to the Audit Committee on performance on selected metrics relevant to key targets in the Sustainability strategy on a quarterly basis.
• Updates on implementation of due diligence take place via Enterprise Risk Management and the review of persistent risks.
• Reviews of the effectiveness of policies are currently taking place distributed throughout the year.
• Targets are evaluated annually in connection with the policy review cycle, depending on relevance.

Before being presented to the Board, all sustainability topics go through a review by the Executive Management team.

Vestas' governance bodies consider impacts, risks, and opportunities supported by the structure of the Enterprise Risk Management (ERM) programme. The structure of the ERM Annual Wheel supports them in overseeing strategy, risk management, and trade-offs related to impacts, risks, and opportunities.

The features of the annual risk management and internal control systems are aligned with the annual integrated reporting process. Relevant information from the double materiality assessment and other operational areas feeds into the risk reviews and thereby also the annual information flow managed by the ERM, involving the Risk Committee, Executive Management Team, Audit Committee, and Board of Directors.

The scope of risk assessments for all relevant areas in terms of strategic, financial, operational, and compliance risks, including material sustainability topics such as climate change mitigation and adaptation, anti-corruption and bribery, working conditions, and human rights. In terms of risk prioritisation, they are aiming at enhancing methodologies for identifying, assessing, and managing risks. Our risk prioritisation methodology is based on an assessment of risk severity (based on likelihood and impact) and mitigation efficiency (evaluating the effectiveness of current mitigation actions). The final discussion of prioritisation related to persistent risks takes place in the Risk Committee. The long-term emerging risks and opportunities are further aligned with the overall strategy process.

During 2024, the Board and Audit Committee were updated on sustainability topics by the Vice President and Head of Sustainability, providing information on the CSRD in general, the scope of reporting, implications, and the governance structures supporting the oversight of material impacts, risks, and opportunities.

With regards to policy reviews, the Board and Audit Committee reviewed the Tax Policy, the DEIB Policy, as well as the Human Rights Policy. There was one annual update on the scope of metrics in 2024, which will be revisited in February 2025. Furthermore, the targets on GHG emission reductions were evaluated, as these need to be revisited every five years in line with SBTi requirements.

The timeline to the right shows when these topics were addressed by the Board and the Audit Committee during the year.

During 2024, Vestas has also started developing new internal controls that will help ensure completeness checks for the Sustainability statement, referring to qualitative and quantitative data points in line with the ESRS. This internal controls process facilitates the identification of the information to be disclosed in relation to material IROs.

In terms of operational management of risks in a third-party perspective, we are certified in line with international standards, including ISO 9001 for Quality, ISO 14001 for Environment, and ISO 45001 for Health and Safety.

During 2024, we have also started developing new internal controls that will help us do completeness checks for the Sustainability statement, referring to qualitative and quantitative data points in line with the ESRS. This internal controls process facilitates the identification of the information to be disclosed in relation to material IROs.

The remuneration of the Executive Management team is linked to the results of Vestas’ financial and sustainability performance, through incentives. The annual process for selecting KPIs and setting targets for the incentives is based on Vestas’ strategic direction, and the KPIs are approved by the Board in the second quarter of the annual meeting cycle. The process includes input from each business area and leads to consolidated strategic prioritisation from the Executive Management and the Board when deciding KPIs and targets. For the Executive Management team, 10 percent of the short-term incentive scheme is linked to climate-related KPIs in the form of the KPI 'GHG emissions avoided.' During the year, no short-term incentives were paid to the Executive Management team linked to climate-related targets as the said targets were not met. The long-term incentives are not linked to sustainable targets, nor is the base remuneration. For the Board, 0 percent of the remuneration is linked to climate-related considerations.

The remuneration of the Executive Management team is linked to the results of Vestas’ financial and sustainability performance, through incentives. The annual process for selecting KPIs and setting targets for the incentives is based on Vestas’ strategic direction, and the KPIs are approved by the Board in the second quarter of the annual meeting cycle. The process includes input from each business area and leads to consolidated strategic prioritisation from the Executive Management and the Board when deciding KPIs and targets. For the Executive Management team, 10 percent of the short-term incentive scheme is linked to climate-related KPIs in the form of the KPI 'GHG emissions avoided.' During the year, no short-term incentives were paid to the Executive Management team linked to climate-related targets as the said targets were not met. The long-term incentives are not linked to sustainable targets, nor is the base remuneration. For the Board, 0 percent of the remuneration is linked to climate-related considerations.

For the Executive Management team, 10 percent of the short-term incentive scheme is linked to climate-related KPIs in the form of the KPI 'GHG emissions avoided.' During the year, no short-term incentives were paid to the Executive Management team linked to climate-related targets as the said targets were not met. The long-term incentives are not linked to sustainable targets, nor is the base remuneration. For the Board, 0 percent of the remuneration is linked to climate-related considerations.

For the Executive Management team, 10 percent of the short-term incentive scheme is linked to climate-related KPIs in the form of the KPI 'GHG emissions avoided.' During the year, no short-term incentives were paid to the Executive Management team linked to climate-related targets as the said targets were not met. The long-term incentives are not linked to sustainable targets, nor is the base remuneration. For the Board, 0 percent of the remuneration is linked to climate-related considerations.

The KPIs for the incentive schemes are approved by the Board in the second quarter of the annual meeting cycle.

During 2024, we finalised our first double materiality assessment (DMA). The outcome of the process confirmed our current path and added a few new topics to our scope of materiality. Going forward, Vestas will revisit the DMA process annually to ensure we continuously monitor material impacts, risks, and opportunities (IROs).

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.

We have, however, found that more work is needed to assess our ability to influence biodiversity downstream. In addition, it is necessary to continuously manage risks when moving into new geographies and involving new business relationships.

The main assessment of our impact on people is informed by our Corporate-Wide Human Rights Assessment (CW-HRA), a high-level due diligence process to identify and assess negative human rights risks and impacts across our entire value chain.

Our CW-HRA involves consultations with external experts representing relevant rightsholders such as indigenous peoples, workers, affected communities, Vestas’ senior management and internal subject matter experts, to ensure we understand how affected stakeholders are impacted and that we adhere to local as well as international expectations. For more information about our CW-HRA see page 120.

The main assessment of our impact on the environment is informed by a global environmental mapping, which outlines the primary environmental risks across our business areas, and the processes and mitigating measures in place to manage them. The environmental due diligence mapping covers areas such as pollution prevention, energy efficiency, GHG emissions, biodiversity conservation, cultural heritage, and cumulative impacts. See the section Additional Information for our Statement on Due Diligence, page 211.

The social and governance specific assessments have been supported by materials such as our CW-HRA and social due diligence process, Vestas’ Employee Engagement Survey, our incident management system, EthicsLine cases, supplier assessments, audits, assessments of lobbying activities, rating platforms (DJSI, CDP and EcoVadis) and consolidated ESG data.

Connections between impacts, risks, opportunities and dependencies Most of the topics assessed for financial materiality were derived from the material impacts identified. Additionally, some were added and assessed based on dialogues with subject matter experts across the organisation. Financial effects such as fines, lost working hours or delays were identified and assessed by Group Finance.

In doing so, it was possible to list material financial sub-sub-topics on par with the material impacts, and assessing the interlinked financial risk and opportunity in a double materiality perspective. Vestas’ dependency on social and natural resources was also assessed by looking into key inputs such as social resources and key raw materials versus the current and future market situation.