Risk management

GRI

201-2

The Geberit Group has a risk management system that is approved by the Board of Directors. This system comprises a structured process for recording and managing various risks, including ESG-related risks.

The risk management process involves the following steps:

Risk identification and classification: Correct identification and assessment of the significant risks. These are discussed in depth every other year by the Board of Directors and the Group Executive Board.
Risk analysis: Assessment of specific business risks and analysis of the changes since the last survey. The former is assessed with the Probability of Occurrence, on a scale of improbable (1) to frequent (5). To scale the effects of a risk that has been identified, the scale of the Impact of Risk Event is used. The scale ranges from insignificant (1) to very critical (5). The risks are classified on the basis of the combined scores.
Risk control: Instruments, measures and responsibilities are defined for each risk. These are checked at regular intervals.
Risk reporting: The regular reporting to the Group Executive Board and the Board of Directors is part of the risk assessment that takes place every two years.

The Group Executive Board has operational control of risk management, while those responsible for individual risks implement and check specific actions. The Internal Audit Department coordinates the process and issues a risk report for the Board of Directors every other year. Furthermore, significant risks are discussed regularly in the meetings of the Group Executive Board and Board of Directors.

For further information on risk management by Geberit, see Business Report > Business and financial review > Strategy and goals > Risk management and Business Report > Corporate Governance > Board of Directors > Information and control instruments vis-à-vis the Group Executive Board . For an overview of the Group compliance topics, see Business Report > Business and financial review > Financial Year 2024 > Compliance.

Dealing with climate-related risks and opportunities

Risks associated with climate change are an integral part of the overall risk management system.

In accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) Art. 964a ff. CO Content Index, a distinction is made between physical risks and transitional risks and opportunities. Geberit regularly reviews and assesses these risks and their financial significance as part of the risk management system.

Physical risks comprise both short-term, extreme weather events and long-term, local changes such as increasing average temperatures, rising sea levels and more frequent periods of drought. These short- and long-term effects may cause damage to property and infrastructure, adversely affect logistics operations or lead to disruptions in the supply chain. Rising temperatures and an increase in the number of hot days lead to increased energy demand for the cooling of machines, processes and workplaces during the summer months, while there is the possibility that energy demand for heating buildings in the winter may drop. Rising sea levels may also mean that production sites located near the coast have to be protected against flooding.

All in all, the physical risks affecting procurement, production and logistics in particular are classified as being of low to moderate risk in terms of their financial impact.

Transitional risks and opportunities arise from new legal, technological, societal and economic trends and framework conditions triggered by climate change.

Changes in environmental protection laws and tighter regulations may lead to stricter requirements concerning energy efficiency and the use of renewable energy sources, as well as an increase in CO₂ taxes on fuels and combustibles, leading to increased energy costs. In terms of water, lower availability and poorer quality may also result in stricter requirements. This would lead to increased demand for water-saving sanitary systems – particularly toilets – enabling Geberit to generate additional sales.
The trend towards resource efficiency and a circular economy is leading to increasing demands in terms of the quality, durability, repairability and recycling of products and building materials. These developments could have an impact on the product portfolio and production plants. Furthermore, customers, investors and employees also have increasing expectations in terms of sustainable, CO₂-reduced products and services. With its high-quality, durable products, Geberit is well positioned and could generate additional sales.
The biggest opportunity for the Swiss sanitary technology group can be found in the limited local availability of water in many places as the result of climate change. In the risk analyses conducted periodically by the World Economic Forum (WEF) and published in its Global Risk Report 2025, water scarcity (a central topic in the context of scarcity of natural resources) was classified as one of the ten highest global risks in terms of impact over the next ten years. This trend has an influence on the development of sanitary technology. Water-saving, resource-efficient products will become increasingly important. Geberit is taking advantage of the opportunity to meet the growing worldwide demand for water-saving products and to contribute towards the diligent handling of water, thus strengthening its own market position.

All in all, the emerging trends and changes are more likely to create opportunities for the company to generate additional sales with innovative, efficient and water-saving sanitary products.

Assessment of climate-related risks and opportunities

The following table shows the most important climate-related risks and opportunities that have been identified and assessed by the company. This not only focuses on short-term development but also takes medium- and long-term development into consideration.

Physical risks

Physical risks
Risk	Characterisation	Description	Measures
Influence of flooding, landslides, storms and other extreme weather events on corporate sites; delays in the supply chain	Acute physical risks Short- to medium-term time horizon In-house production, upstream and downstream value chain Low to moderate financial impacts	Extreme weather events can affect Geberit’s in-house production, logistics or supply chain. Due to (i) the continuous investments in building infrastructures and (ii) the procurement strategy focusing on regional/local suppliers close to the plants, the risks to the supply chain in particular are minimised.	Regular assessment of acute physical risks as part of business continuity management (BCM) Continuous investments in building infrastructures and the procurement strategy focusing on regional/local suppliers close to the plants Supply chains are kept short, with alternative suppliers established wherever possible Continuation of adopted production and logistics strategies Implementation of emergency concepts for protecting the affected production plants
Rising sea levels as a result of climate change	Chronic physical risks Long-term time horizon Upstream value chain and in-house production Low to moderate financial impacts	Rising sea levels could have a long-term effect on two production plants close to the coast in Gaeta (IT) and Ekenäs (FI). The remaining 24 plants that make up 98% of Group sales are not affected.	Regular assessment of chronic physical risks as part of the risk management system Relocation of products from the two at-risk ceramics plants to the other unaffected plants
Increasing periods of drought as the result of climate change	Chronic physical risks Medium- to long-term time horizon Upstream value chain and in-house production Low to moderate financial impacts	Increasing periods of drought can have a negative impact on the availability and quality of drinking water or process water, leading to increased costs in ceramic production in particular.	Regular assessment of chronic physical risks as part of the risk management system Ongoing investment in resource-efficient, energy-saving and water-saving production
Rising average temperatures as the result of climate change	Chronic physical risks Medium- to long-term time horizon Upstream value chain and in-house production Low to moderate financial impacts	Rising average temperatures lead to increased energy demand for the cooling of machines, processes and workplaces during the summer months, thus leading to increased costs.	Regular assessment of chronic physical risks as part of the risk management system Ongoing investment in resource-efficient, energy-saving and water-saving production

Overall, these risks and opportunities are classified as being of low to moderate risk in the short to medium term.

Transitional risks

Transitional risks
Risk	Characterisation	Description	Measures
Increased demands for energy efficiency and the use of renewable energy sources, plus increased CO₂ taxes on fossil combustibles and fuels	Transitional risk Short- to medium-term time horizon Upstream value chain and in-house production Low to moderate financial impacts	Increased CO₂ taxes on fossil combustibles and fuels lead to increased operating costs, primarily in the European ceramics plants. However, if necessary, these can be passed on thanks to the existing price-setting power, or can also be absorbed due to healthy profitability. These possibly higher operating costs thus do not represent any significant risk for Geberit.	Further implementation of the comprehensive CO₂ strategy: (i) Implementation of measures for saving energy, heat recovery and increasing efficiency in the plants and logistics, (ii) Increasing the share of green electricity and replacing heating systems using fossil fuels and energy-intensive technologies Use of an internal CO₂ price for efficient decision making
New technologies such as energy-efficient machines and CO₂-reduced or carbon-neutral production processes	Transitional risk Short- to medium-term time horizon Upstream value chain and in-house production Low to moderate financial impacts	Increased costs for procuring new machines, the use of alternative fuels (e.g. biogas or green hydrogen) and the changeover of production processes for achieving carbon neutrality. The higher costs do not lead to any significant risks for Geberit, however, due to the company’s healthy profitability.	Regular assessment of technology risks as part of the risk management system Implementation of the CO₂ strategy, particularly structural reduction and the internal CO₂ price for efficient decision making on more cost-effective, innovative solutions Ongoing renewal of machine fleet and infrastructure, plus continued investments in the latest technology

Opportunities

Opportunities
Opportunity	Characterisation	Description	Measures
Rising average temperatures as the result of climate change	Medium- to long-term time horizon Upstream value chain and in-house production Low to moderate financial impacts	Rising average temperatures lead to a reduction in energy demand for heating buildings in the winter, which reduces heating costs.	Regular assessment of chronic physical risks as part of the risk management system Ongoing investment in resource-efficient, energy-saving and water-saving production
Increased CO₂ taxes on fossil combustibles and fuels	Short- to medium-term time horizon Upstream value chain and in-house production Low to moderate financial impacts	Due to Geberit’s healthy profitability, competitors would be affected more by higher costs, which the company can use to strengthen its own market position.	Further implementation of the comprehensive CO₂ strategy: (i) Implementation of measures for saving energy, heat recovery and increasing efficiency in the plants and logistics, (ii) Increasing the share of green electricity and replacing heating systems using fossil fuels and energy-intensive technologies (iii) Use of an internal CO₂ price for efficient decision making
Increasing requirements for saving water	Short- to medium-term time horizon Entire value chain Moderate to high financial impacts	Increasing requirements for saving water lead to an increased demand for water-saving solutions in sanitary applications. Geberit has a broad product portfolio of water-saving sanitary systems and helps to systematically and holistically optimise the handling of water in buildings while ensuring the highest levels of hygiene, including in drinking water applications.	Further expansion of the portfolio of water-saving sanitary products, particularly WC systems Increased marketing measures for promoting water-saving solutions, particularly toilet flushes
Tighter regulations in terms of the circular economy, particularly through the European Green Deal	Short- to medium-term time horizon Entire value chain Low to moderate financial impacts	High product quality and durability mean that Geberit can strengthen its market position in the event of tighter regulations and/or increased awareness relating to the circular economy. The European Green Deal leads to increased activity in renovations and new buildings in the European construction sector, meaning the sanitary technology group benefits as the leading provider of sanitary products.	Consistent development of products according to the eco-design principle Identification of ways in which to close internal material cycles and make production waste useful as secondary materials Increasing the share of recycled materials (e.g. ABS regranulate) in production and searching for further high-quality plastic regranulates
New technologies such as energy-efficient machines and CO₂-reduced or carbon-neutral production processes	Short- to medium-term time horizon Upstream value chain and in-house production Low to moderate financial impacts	Due to its high investment capability and willingness to invest as well as its sound financial strength, Geberit benefits from technology risks compared to the competition.	Regular assessment of technology risks as part of the risk management system Implementation of the CO₂ strategy, particularly structural reduction and the internal CO₂ price for efficient decision making on more cost-effective, innovative solutions Ongoing renewal of machine fleet and infrastructure, plus continued investments in the latest technology
Changes to customer needs and expectations	Short- to medium-term time horizon Downstream value chain High financial impacts	Geberit already has a wide range of resource-saving and energy-efficient products and can use its innovative strength to further expand the product portfolio. Strengthening the market position and generating additional sales due to exploitation and increase of product share for low-emission products. Geberit supports the transformation in the construction industry towards more sustainable solutions (green building) with a particular focus on saving water.	Continuously high level of innovation maintained for sanitary products and system solutions Consistently high investments in water-saving, energy-efficient and resource-saving technologies and products, as well as in product quality; annual investments of around CHF 74 million in research and development Industry-leading know-how in the fields of hydraulics, water conservation, drinking water quality and sound insulation, for example Development of skills in the field of green building Consistent development of products according to the eco-design principle Transparent communication of environmental impacts of the products as part of environmental product declarations (EPDs) Increasing number of products with an environmental product declaration (EPD) in the product portfolio Identification of ways in which to close internal material cycles and make production waste useful as secondary materials Increasing the share of recycled materials (e.g. ABS regranulate) in production and searching for further high-quality plastic regranulates Regular review of the sustainability strategy and communication with external stakeholders Increased external communication of the sustainability performance

Resilience of the business model in a range of scenarios

The risks and opportunities mentioned can be rated differently depending on the scenario. Two scenarios were used for the sensitivity analysis:

Sustainable scenario: This scenario corresponds to the goals of the Paris Agreement and global warming of under 2 °C. In this scenario, the physical impacts of climate change are lower for the company. In comparison to the business-as-usual scenario, the adaptation to stricter regulatory requirements goes hand in hand with greater efforts and costs.
Business-as-usual scenario: This scenario forecasts global warming of between 2 °C and 3 °C. A temperature increase of this magnitude could lead to greater physical risks as well as to regional water scarcity. At the same time, this scenario is accompanied by less stringent regulatory intervention.

Overall, Geberit estimates the risks described to be low to moderate in both scenarios. Climate change is more likely to create opportunities for the company. Stricter environmental regulations – particularly in terms of energy, water consumption and water quality – and growing environmental awareness among customers are increasing demand for durable products that conserve water, energy and resources. The sanitary engineering group is well prepared thanks to the wide and continuously developed range. This strengthens the resilience of the business model to climate-related influences.

In the financial year 2024, the risks and opportunities of climate change were assessed, including as part of the materiality analysis, according to the principle of double materiality in compliance with the ESRS (European Sustainability Reporting Standards). Significant impacts, risks and opportunities were analysed comprehensively and reviewed in surveys with stakeholders as well as in extended management. These confirmed that climate-change-related risks are not among the material corporate risks for Geberit.