General disclosures

The Porsche AG Group first carried out a context analysis to specify the scope of application and the relevant stakeholder groups in terms of the ESRS requirements.

The materiality assessment considered the Porsche AG Group—corresponding to the non-financial consolidated group—and its activities along the value chain. The period under review for the materiality assessment corresponded to the reporting year, so matters occurring throughout the entire year have been taken into account.

The Porsche AG Group indirectly incorporated the concerns and views of its relevant stakeholder groups into the materiality assessment, e.g. by using analyses, ESG ratings and consulting with individual stakeholders from the departments.

Internal experts were asked to contribute their experience and expertise to the process. This allowed the internal knowledge of the departments to be used to identify links between the sustainability topics. In addition, when selecting the experts, care was taken to ensure the most comprehensive and diverse view possible of both the company’s own business activities and the value chain. Aspects that are more likely to have a negative impact have also been taken into account in this selection. The internal team of experts with a wide range of expertise was able to adequately cover the stakeholder views, resulting in an efficient yet comprehensive identification of relevant topics. The views of specific stakeholder groups were included in the materiality assessment, including the company’s own workforce and workers in the value chain, customers, the works council and local residents. An effort has also been made to include the requirements from the perspective of nature/natural ecosystems. Insurance companies, financial institutions, shareholders, investors and financing partners, analysts, the media and NGOs were identified as users of sustainability information or as those affected by the financial effects of sustainability matters.

Stakeholders were also involved in validating the results of the materiality assessment, which is described in step 6. The inclusion of stakeholder interests beyond the materiality assessment process is described in → Stakeholder engagement.

The list of topics for the materiality assessment is based on ten topics, which in turn are made up of the 37 sub-topics of the European Sustainability Reporting Standards (ESRS 1 AR 16). An additional entity-specific sub-topic was defined as “Corporate citizenship” under S3 “Affected communities.”

The resulting 38 sub-topics were used as the basis for collecting possible material negative impacts, risks and opportunities. The results of the materiality assessment from the previous reporting year were also incorporated. The potential impacts, risks and opportunities were identified in workshops with subject matter experts from the departments concerned. These were categorized as short-term (less than one year), medium-term (one to five years) and long-term (more than five years) depending on their impact periods. The granular impacts, risks and opportunities collected in this way were aggregated into clusters.

In order to harmonize the materiality assessment methodology within the Volkswagen Group, the methodology was adjusted in the reporting year, including changes to the rating scales and the inclusion of the reputation effect in the assessment of risks and opportunities. The procedure was last adjusted for the reporting year 2023. Since then, the principle of double materiality as defined by the ESRS has been applied.

The materiality assessment of the impacts, risks and opportunities of a sub-topic was carried out by the respective subject matter experts at the level of the identified clusters, taking into account the updated assessment methodology.

Whether impacts are classified as material depends on their severity, which is determined pursuant to the ESRS as a calculation of the factors extent, scope and irreversibility (in the case of negative effects).

The impacts have been assessed separately according to “actual impacts” and “potential impacts.” Potential impacts are also evaluated in terms of the likelihood of occurrence.

The overall assessment of the impact is therefore based on their severity (for actual impacts) or the multiplication of the severity by the probability of occurrence (for potential impacts).

Negative impacts on human rights that have the potential to be significant are automatically assessed as material and are therefore subject to an in-depth review in accordance with regulatory requirements.

Sustainability-related risks and opportunities are assessed using the Porsche AG Group’s general risk management processes, which are described in the → Report on risks and opportunities. Risks and opportunities that may arise in connection with the material impacts were taken into account when defining the IRO clusters and in the assessment workshops.

Based on the requirements of the ESRS, a value was calculated for each sustainability-related risk and opportunity by multiplying the anticipated financial effects by the probability of occurrence. This value makes the risks and opportunities comparable. The potential financial impact is calculated from the weighted criteria “financial potential” and “reputation effect,” which was initially assessed by the Sustainability department and the Politics and Society department.

In accordance with the requirements of the ESRS, a materiality threshold is defined for both impacts and financial materiality after the assessment phase.

On a five-point scale from “informative” to “critical,” a topic is material for the Porsche AG Group if it exceeds the threshold of the second-highest category “significant.” A sub-topic is material if either an impact, a risk or an opportunity exceeds the materiality threshold.

The risk assessment in the materiality assessment was carried out according to the methodology described at IRO cluster level, i.e. by aggregating several individual risks or opportunities. According to the defined methodology of the risk management system, there are already individual material risks with a net financial potential of ≥ €100 million in the worst-case scenario. → General principles of risk and opportunity management

To achieve transparency and consistency, individual risks and opportunities that exceed the net potential in the worst-case scenario of €100 million were listed in the corresponding chapters of the non-financial statement, even if they fall below the materiality threshold for aggregated IRO clusters according to the ESRS methodology. These individual risks and opportunities do not give rise to materiality in the sense of the CSRD.

Topics with a quantitative assessment close to the threshold value were analyzed in more detail, as were other topics of strategic or regulatory relevance and investor interest.

Subsequently, the assessment results from the workshops were validated in an internal workshop with representatives from all relevant departments. The works council and Porsche Sustainability Council were also consulted on the results as stakeholders with a cross-cutting interest in the topics.

Another central part of the validation was harmonizing the results with the Volkswagen Group. The assessment results were checked for consistency in this step, and the appropriateness of possible deviations was discussed.

The validated results and thus the final list of material sustainability topics were approved by the Executive Board of the Porsche AG Group.

For the reporting year, nine of the ten topics with a total of 26 sub-topics were identified as material in the double materiality assessment. The sustainability reporting on the associated impacts, risks and opportunities is carried out in this non-financial statement in line with the ESRS.

In accordance with Article 8 of the Articles of Association, Porsche AG’s Executive Board is composed of at least two people. The Executive Board, which had eight members as of December 31, 2024. has sole responsibility for managing the company in the company’s best interests. In addition to Management, the other Board portfolios are: Procurement, Car-IT, Research and Development, Finance and IT, Human Resources and Social Affairs, Production and Logistics as well as Sales and Marketing.

The Supervisory Board considers various aspects, including diversity, in the composition of the Executive Board. The Executive Board should also have a sufficient mix of ages. Efforts are made to achieve a higher proportion of women than the statutory minimum. The law requires that the Executive Board have at least one woman and one man as members. The current share of women on the Executive Board is 12.5%.

Additionally, the Supervisory Board places particular emphasis on the professional profiles and professional and general experience of the Executive Board members, including international experience. More information about the skills of the members of the Executive Board can be found in → G1 Business conduct.

The aforementioned requirements for the composition of the Executive Board aim to ensure that it has sufficient experience that is relevant to the segments, products and geographical locations of the Porsche AG Group.

The Executive Board of the Porsche AG Group deepens its sustainability-related expertise in regular meetings with the external members of the → Porsche Sustainability Council. The Sustainability Council also discusses external stakeholder requirements, e.g. potential legislation and new regulations, with the entire Executive Board and reflects on corresponding implementation options for Porsche AG.

The members of the Executive Board are sufficiently aware about matters relating to anti-corruption and bribery due to their role and the Porsche-specific “Code of Conduct for the Management Board,” which contains specific guidelines on how to deal with invitations and gifts. In addition, the members of the Executive Board must regularly complete e-learning modules, e.g. on topics relating to corruption, bribery, fraud prevention and human rights. The Executive Board also has access to a learning program offered by Porsche AG on various ESG topics (e.g. sustainability matters in the supply chain, diversity, environmental compliance). At its meeting, the Executive Board is comprehensively informed about any changes to internal compliance guidelines.

The Supervisory Board of Porsche AG consists of 20 members, ten of whom are shareholder representatives elected by the Annual General Meeting. The other half are employee representatives elected by the employees in accordance with the German Co-Determination Act. Seven of these employee representatives are employees of Porsche AG, the other three are trade union representatives. As of December 31, 2024, the Supervisory Board had eight women members, which corresponds to 40%.

The Supervisory Board is not an executive body. The shareholder representatives on the Supervisory Board are of the opinion that four shareholder representatives are currently independent within the meaning of recommendation C.6 of the German Corporate Governance Code (DCGK). These are Ms. Micaela Le Divelec Lemmi, Ms. Melissa Di Donato Roos, Dr. Christian Dahlheim, and Dr. Hans Peter Schützinger. This corresponds to a 40% share of independent members.

Members of the Supervisory Board Dr. Hans Michel Piëch, Dr. Ferdinand Oliver Porsche, Dr. Wolfgang Porsche, and Hans Dieter Pötsch have all belonged to the Supervisory Board for more than twelve years and thus fulfill one of the indicators set out in recommendation C.7 of the DCGK for lack of independence from the company and the Executive Board. However, taking all the circumstances of the specific case into account, the shareholder side still considers these members of the Supervisory Board to be independent of the company and the Executive Board. The work of the Supervisory Board and its committees shows that Dr. Hans Michel Piëch, Dr. Ferdinand Oliver Porsche, Dr. Wolfgang Porsche, and Mr. Hans Dieter Pötsch continue to unreservedly possess the required critical distance from the company and its Executive Board to allow them to appropriately monitor and assist the Executive Board in managing the company. To properly perform its supervisory and advisory duties, the Supervisory Board as a whole must collectively have the required expertise, i.e. knowledge, skills and professional experience. This requires the members of the Supervisory Board to be collectively familiar with the sector in which the company operates—i.e. the automotive industry—and to be able to assess the business conducted by the company. In addition, the Supervisory Board members as a whole must collectively have expertise relating to sustainability issues relevant to the company. If necessary, the Supervisory Board can also seek advice from external experts on ESG matters. Attention should be paid to diversity, a broad range of experience and appropriate representation of both genders when seeking qualified individuals to best strengthen the specialist and managerial expertise of the Supervisory Board as a whole in line with these targets.

The qualification matrix for the Supervisory Board shows that certain Supervisory Board members have expertise in the area of sustainability. → G1 Business conduct

In the reporting year, the Supervisory Board received training on selected sustainability topics, such as ESG management, decarbonization, sustainability in the supply chain and its obligations in the context of sustainability reporting in accordance with the CSRD. The training courses were conducted by the Porsche Sustainability Council and external consultants.

The members of the Supervisory Board have sufficient awareness about anti-corruption and bribery due to their various roles and the training formats they have already completed. The Supervisory Board undergoes additional training on preventing and combating corruption and bribery due to its special position as the company’s supervisory body.

In the reporting year, the entire Supervisory Board received detailed and target group-specific training on anti-corruption and bribery from an external consultant, partly due to the four new Supervisory Board members.