Demant

The overall responsibility for risk management lies with the Executive Leadership Team, but risk management activities are carried out throughout the organisation on a day-to-day basis.

Risk management is an integral part of the management of the Demant Group. Risks to which business areas, markets and operations are exposed are identified, monitored and mitigated at all management levels. Through frequent and transparent reporting, these measures ensure that key risks are escalated to the business area leadership, to functional boards, to the Executive Leadership Team, and if relevant, to the audit committee and ultimately the Board of Directors.

We have established a number of functional boards to ensure focus on governance, development and risk management in key areas globally, i.e. IT, Finance, HR, Sustainability and Legal & Compliance. The functional boards are responsible for risk management in their respective areas and for ensuring that policies, guidelines and processes are established to monitor risks and new legislation.

The audit committee oversees the risk management processes related to financial risks, including sufficient and efficient internal controls.

Integration of sustainability-related performance in incentive schemes

Demant refers to its Remuneration Report 2024 (page 8) for the disclosure on integration of sustainability-related performance in incentive schemes.

Cross-reference location

As stated in the index table on page 111:

The full disclosure is provided in a separate Remuneration Report 2024 and is not included in the sustainability statement excerpts provided.

Risk management activities in the Demant Group include a variety of risk areas, many of which may impact the performance and reputation of the Group. The overall responsibility for risk management lies with the Executive Leadership Team, but risk management activities are carried out throughout the organisation on a day-to-day basis.

Risk management is an integral part of the management of the Demant Group. Risks to which business areas, markets and operations are exposed are identified, monitored and mitigated at all management levels. Through frequent and transparent reporting, these measures ensure that key risks are escalated to the business area leadership, to functional boards, to the Executive Leadership Team, and if relevant, to the audit committee and ultimately the Board of Directors.

We have established a number of functional boards to ensure focus on governance, development and risk management in key areas globally, i.e. IT, Finance, HR, Sustainability and Legal & Compliance. The functional boards are responsible for risk management in their respective areas and for ensuring that policies, guidelines and processes are established to monitor risks and new legislation.

The audit committee oversees the risk management processes related to financial risks, including sufficient and efficient internal controls.

Our Purpose and Strategy

Our PURPOSE is to create life-changing differences through hearing health

Our AMBITION is as the leading hearing healthcare company to improve as many lives as possible

Our PRIORITISATION is to support the entire journey to better hearing by focusing on personalised care and innovative solutions

Our Strategy

Leading hearing healthcare - In 2024, we communicated our Group strategy – leading hearing healthcare – reflecting our ambition as the leading hearing healthcare company to improve as many lives as possible. In doing so, we contribute to building a more sustainable world and enable more people the opportunity to enjoy life in full.

With our strategy, we are focused on creating value by growing our business at a rate exceeding the market growth rate, while improving our profitability through economies of scale and efficiency. Our strategy comprises three choices and three enablers:

Choices:

• Fuel innovation and core technology development: An important organic growth driver is to bring superior technological solutions to the market timely and in high quality. We are therefore firmly focused on investing in R&D in both Hearing Aids and Diagnostics, aiming to advance technology further in our R&D programme.

• Participate in consolidation of distribution and leverage commercial position: Another key growth driver is the acquisition and integration of hearing care clinics worldwide into our existing network as well as potential acquisitions within Diagnostics.

• Grow across geographies and channels and in adjacent business activities: To enable future growth, we focus strongly on growing sales in our existing markets and channels. We aim to gain market share among independents and drive profitable growth with strategic accounts and in export markets.

Enablers:

• Leverage scalability and increase business resilience: We need to leverage our size and ensure efficiency in everything we do to increase profitability across the Group.

• Continuously drive a culture of inclusion and engagement: Our employees are our most valuable resource, as they are critical to Demant's future success.

• Drive responsible and sustainable business practices: We are committed to adding value responsibly and sustainably.

Business Model and Operations

We operate a focused hearing healthcare company, consisting of three business areas: Hearing Aids, Hearing Care and Diagnostics.

Hearing Aids: The Hearing Aids business area engages in the development, manufacturing and wholesale of hearing aids, developing innovative and leading technological solutions that create life-changing hearing health.

• Serves customers in 130+ countries
• 900+ employees in Hearing Aids R&D
• External revenue in 2024: DKK 10,022 million

Hearing Care: The Hearing Care business area comprises the Audika Group, which is a global retail company that provides personalised hearing care to customers worldwide through several strong local brands.

• 4,000+ clinics worldwide
• Hearing care clinics in 25+ countries
• Revenue in 2024: DKK 9,932 million

Diagnostics: The Diagnostics business area consists of a group of international companies and is the global market leader in hearing and balance assessment solutions used by audiologists, ENT doctors and balance clinics worldwide.

• Facilitated screening of 200+ million people
• Holds a market leading position in relevant categories
• Revenue in 2024: DKK 2,465 million

Operating Model

Our operating model is designed to steer us in operating our three business areas – Hearing Aids, Hearing Care and Diagnostics – in a setup that is ensuring that we remain focused on excelling in each business area, while leveraging synergies across the Group through strong collaboration.

Research and development: Innovation is an integral part of Demant's strategy, and we constantly strive for technological advancements in our R&D activities. Our main R&D sites are located in Denmark, Poland and Malaysia and we have smaller R&D sites in other countries.

Manufacturing and service: Demant has a strong manufacturing set-up with two main locations in Poland where we manufacture hearing aids and diagnostic equipment for global markets. We also have a site in Mexico, primarily for custom devices and servicing.

Sales and distribution: Demant serves customers in more than 130 countries globally. In over 30 countries, we sell our products directly through our own local sales organisations and hearing care clinics. The remaining markets are serviced by distributors.

Value Creation

Input:

• Employing 22,000+ people
• More than DKK 1.4 billion invested annually in R&D
• Growing portfolio of 3,500+ patents and designs as well as a portfolio of 1,400+ registered trademarks
• Global distribution network, comprising over 4,000 hearing care clinics, distribution of hearing aids to more than 130 markets and a comprehensive distribution set-up of diagnostic products, spanning around 100 countries
• Core expertise within audiology
• Strong brand value across our multi-brand set-up
• Strong relationships with component suppliers

Output:

• Diagnostic equipment that increases the quality of patient care
• High-quality hearing aid solutions
• Personal and individualised treatment offering the highest level of expertise in audiology

Outcome:

We create life-changing differences through hearing health by helping people overcome hearing loss and improving their lives supported by innovative solutions and hearing care.

• Customers: We deliver a user experience that exceeds expectations by providing life-changing hearing health through innovative, state-of-the-art products. This benefits both individuals and society, improving the lives of 11 million people in 2024.
• Employees: We are a great place to work with engaged employees who feel included and empowered to develop, grow and do what they do best. In 2024, our engagement score increased to 4.13 from 4.11 the year before.
• Investors: We deliver attractive financial returns and growth based on a resilient business model and a strategy that focuses on value-creating growth.

Interests and views of stakeholders

Overview

Stakeholder engagement on sustainability topics is crucial to Demant's ability to increase its positive impact on hearing health and create value for our stakeholders.

We engage with our stakeholders on a continuous basis to meet their expectations, report on our product innovation process and ensure mitigation of potential negative impacts. The interests and views of key stakeholders are shared with the Executive Leadership Team through our functional boards as well as our functional and business area leadership teams. Please refer to our sustainability governance model on page 56.

Stakeholder groups and engagement

Material impacts, risks and opportunities and their interaction with strategy and business model

Full list of material IROs

Demant has identified and organised all material impacts, risks and opportunities (IROs) into 13 material topics for clarity. The material topics inform both our strategy and our reporting.

Material topics matrix

The material topics are categorised by impact materiality and financial materiality as follows:

Double material (financially and impact material):

• Climate change mitigation (E1)
• Product circularity (E5)
• Diversity, equity and inclusion (S1)
• Providing life-changing hearing health (S4)
• Hearing health awareness (S4)

Financially material:

• Climate change adaptation (E1)
• Talent attraction and retention (S1)
• Product quality and safety (S4)
• Corruption and bribery (G1)
• Advocacy for hearing health (G1)

Impact material:

• Working conditions (S1)
• Responsible supply chain (S2)
• Right to privacy (S4)

Not material:

• Various ESG topics, including pollution (E2), biodiversity (E3), water (E4) and affected communities (S3).

Description of material IROs by topic

Linkage between IROs and strategy / business model

The material topics are integrated into Demant's sustainability strategy as follows:

Sustainability ambition: Core impact - Improving lives through life-changing hearing health. Our roots are in hearing health, and our purpose is to create life-changing differences through hearing health, whereby we contribute to building a more sustainable world where people have the opportunity to enjoy life.

ESG ambition: We will drive responsible and sustainable business practices across three pillars:

1. Environment - Respect for the planet

   • Decouple emissions from growth
   • Work with environmental optimisation
   • Strive for ambitious emissions reductions
   • Material topics: Climate change mitigation, Climate change adaptation, Product circularity

2. Social - Caring for people

   • Help people overcome hearing loss through awareness
   • Improve their quality of life through innovative solutions and personal care
   • Have a positive impact on health
   • Ensure our people's well-being, safety, engagement and development
   • Promote an organisational culture characterised by care and respect with diversity, equity and inclusion as important drivers
   • Material topics: Providing life-changing hearing health, Hearing health awareness, Product quality and safety, Right to privacy, Working conditions, Diversity, equity and inclusion, Talent attraction and retention, Responsible supply chain

3. Governance - Performing with integrity

   • Strive for high ethical standards
   • Perform business with integrity and honesty
   • Set the minimum standards and ethical principles through our code of conduct
   • Material topics: Corruption and bribery, Advocacy for hearing health

How material IROs interact with the business

Demant's identified material IROs interact with the business through:

Strategic integration:

• The material topics determine the European Sustainability Reporting Standards (ESRS) on which we report
• Material topics inform both strategy and reporting
• The sustainability strategy was refined in 2024 based on the double materiality assessment, including sustainability ambition and ESG ambitions and targets

Governance:

• The Sustainability Board (comprising the Executive Leadership Team and selected senior leaders) meets every other month to review progress and risks, give strategic guidance on ESG priorities and ensure alignment and traction in the business areas
• The Board of Directors evaluates progress on sustainability ambition and ESG priorities twice a year
• Business areas implement the Group's ESG priorities, drive supply chain- and product-related projects and monitor product-related and country-specific legislation

Risk management:

• The Sustainability Board is accountable for the assessment and management of material sustainability impacts, risks and opportunities
• Sustainability-related risks are considered appropriately alongside other types of risks and integrated into the continuous risk management processes of the Group's business areas and functions

Value chain coverage:

• The material IROs span across upstream (suppliers), own operations, and downstream (customers, users) parts of the value chain
• Climate change mitigation affects all three parts of the value chain
• Social impacts primarily occur in own operations (working conditions, diversity) and downstream (life-changing hearing health)
• Supply chain impacts are addressed through responsible supply chain management

Resilience to identified IROs

Climate change adaptation: In 2024, Demant's business strategy and business model were assessed for resilience against the risk of climate-related natural disasters. Demant is considered resilient to the current risk level. The Group ensures the resilience of our business model by integrating considerations of climate-related natural disaster risks into our own operations and supply chain management to minimise business disruption, should such an event occur.

Climate scenario analysis: As part of the DMA process in 2023, Demant performed a climate-scenario analysis to understand the climate-related physical and transition risks and their materiality to the Group. For physical risks, Demant evaluated different climate scenarios from the Intergovernmental Panel on Climate Change (IPCC) namely RCP2.6; RCP4.5; RCP8.5 with a timeframe extending to 2065. For transition risks, Demant considered scenarios where global warming was limited to 1.5°C with no or only limited overshoot scenarios.

Results:

• Climate-related natural disasters are considered a material physical risk for Demant
• No transition risks are considered material
• Through the Group's already established continuous risk management, both current and future risks will be considered
• Specific actions to reduce potential business disruptions due to future climate scenarios have been analysed and will be taken if and when deemed necessary

Product circularity: Though there are regulatory limitations to the changes we can make in our products, we are committed to continuous progress in this area. We continuously work with suppliers that can deliver parts and services of the required quality, we monitor supplier performance, and we give appropriate supplier feedback.

Human rights: We endorse the principles of the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. Our commitments are implemented through our Code of Conduct and other internal policies and procedures. The sustainability team and other relevant functional teams implement Demant's human rights commitments. The Executive Leadership Team is ultimately accountable for ensuring that human rights are respected in our own operations and throughout our value chain.

Targets related to material IROs

Environment (E):

• 2025: 50% renewable electricity
• 2030: 100% renewable electricity
• 2030: 46% reduction in scope 1 and 2 GHG emissions
• 2030: 46% reduction in scope 3 GHG emissions
• 2050: Net-zero emissions

Impact targets:

• 2030: More than 16 million lives improved
• 2030: Increase awareness by hearing-testing more than 2 million people

Social (S):

• 2030: Increase gender balance in top-level management to 35/65% (women/men)
• 2030: Take employees' experience of inclusion to the top-third level of Gallup index
• 2030: Take employee engagement to the top-third level of Gallup index

Governance (G):

• 2030: Increase excellence in business conduct through code of conduct training to reach 100% highly exposed employees

Description of the process to identify and assess material impacts, risks and opportunities

Step-by-step methodology

Demant conducted a comprehensive double materiality assessment (DMA) process in 2023, which was further qualified in 2024. The process consisted of the following steps:

1. Point of departure and benchmarks: Consideration of company strategy and corporate governance model; desktop review of ESG rating methodologies and sustainability reporting standards; review of peers' reporting performance and sustainability strategies; definition of scope to include all entities where Demant has operational control as well as key locations in the value chain; review and detailed mapping of value chain.

2. Assessment methodology: Development of DMA tool for description and scoring of IROs, including setting thresholds for impact and financial materiality.

3. Identification and engagement of stakeholders: Desktop analysis and interviews with approximately 40 internal stakeholders selected based on their ability to represent affected internal and external stakeholders and their insight into the business.

4. Identification of impacts, risks and opportunities: More than 50 IROs were identified. The documentation and descriptions of the IROs include specifications of their nature (impact, risk or opportunity) and where in the value chain an IRO occurs. It also indicates the time horizons and the affected stakeholders and if the IRO is the result of our own operations or our business relationships.

5. Assessment of impact and financial materiality: Further analysis of IROs, including consideration of geographies with elevated potential impacts or risks, and assessment of impact and financial materiality of all IROs through scoring workshops with relevant stakeholders. To specifically understand impacts related to pollution, water and biodiversity, an environmental analysis considering main locations was conducted. No material IROs were identified deeming the standards E2, E3 and E4 immaterial.

6. Shortlist of material impacts, risks and opportunities: A shortlist of material IROs was further qualified with relevant internal stakeholders.

7. Consultation of stakeholders: Process and material IROs were presented to industry peers (experience exchange sessions), Executive Leadership Team (approval of material IROs), Audit committee and Board of Directors (approval of material IROs).

8. Integration of results into reporting plan: Grouping of material IROs into larger material topics for external reporting based on the ESRS. Assessment of material standards and existing gaps to meet reporting requirements. Development of plan for ESRS compliance and 2024 reporting.

Inputs to the assessment

Internal sources:

• Interviews with approximately 40 internal stakeholders selected based on their ability to represent affected internal and external stakeholders and their insight into the business
• Internal experts' knowledge
• Scoring workshops with relevant stakeholders
• Internal documentation of Process
• Information from Demant's due diligence practices

External sources:

• ESG rating methodologies and sustainability reporting standards
• Peers' reporting performance and sustainability strategies
• Secondary information for environmental analysis
• Industry peers through experience exchange sessions

Benchmarks:

• European Sustainability Reporting Standards (ESRS)
• ESRS guidance from European Financial Reporting Advisory Group (EFRAG)
• Sector best practices

Scoring criteria for impact materiality

The scoring methodology included the following parameters scored on a scale from 0 (lowest) to 5 (highest):

Impact materiality:

• Scale
• Scope
• Irremediability of negative impacts
• Likelihood of impacts

For actual positive and negative impacts, materiality is based on the impact severity, whereas for potential positive and negative impacts, materiality is based on the severity and likelihood of the impact. For scoring of potential negative human rights impacts, severity took precedence over likelihood.

Scoring criteria for financial materiality

The scoring methodology included the following parameters scored on a scale from 0 (lowest) to 5 (highest):

Financial materiality:

• Size of financial effect
• Likelihood
• Impact on reputation

The materiality of IROs was ranked using predominantly qualitative scales. However, the basis for the ranking included quantitative input, such as quantitative scales on financial effect and information obtained from internal sources assessed to be sufficiently reliable.

Threshold for materiality

All impacts, risks and opportunities ranked over the materiality threshold of 1.8 on either impact, financial impact or both have been grouped into the 13 material topics included in this report.

Frequency / when last reviewed

Assessing materiality of sustainability topics on an annual basis helps us take the right strategic decisions and guides our external disclosures.

In 2024, the double materiality assessment was reviewed and further qualified through:

• Deeper impact and risk analyses, such as a human rights impact assessment and a detailed transition risk analysis
• Based on new materiality guidance from EFRAG and feedback from external auditors, the list, descriptions, scoring and grouping of IROs were reviewed
• This review did not result in any change in the list of material sustainability IROs

In 2025, we will update the DMA process, considering new learnings and experiences. The update will include further maturing of underlying impact analyses and information from Demant's due diligence practices.

Use of value chain mapping in the process

The process included:

• Review and detailed mapping of value chain as part of point of departure
• The documentation and descriptions of the IROs include specifications of where in the value chain an IRO occurs and if the IRO is the result of our own operations or our business relationships
• Definition of scope to include all entities where Demant has operational control as well as key locations in the value chain

Governance and accountability

Demant's project group for implementation of the Corporate Sustainability Reporting Directive (CSRD) consists of members of the sustainability and ESG reporting teams. The project group is responsible for the double materiality process and conducted the assessment, including the development of all documentation.

The Sustainability Board is accountable for the assessment and management of material sustainability impacts, risks and opportunities. This ensures that sustainability-related risks are considered appropriately alongside other types of risks and are integrated into the continuous risk management processes of the Group's business areas and functions.

All information related to the ESRS disclosure requirements is provided with the corresponding ESRS reference throughout the report. You can find an overview of all the disclosure requirements included and their location in the report on pages 110-115.

Our sustainability reporting choices are guided by our double materiality assessment, detailed on page 57, where we outline the topics that have been identified as material. Information related to the impacts, risks and opportunities, policies, actions and progress towards our targets are included thereafter.

Transition plan for climate change mitigation

Scope and alignment

Demant's Transition Plan consolidates the existing climate change mitigation plans and initiatives and details the different mitigation actions set by the Group to reduce the GHG emissions and reach our climate targets aligned with the Paris Agreement. The Transition Plan, which is a dynamic document updated yearly, was approved by the Sustainability Board in H2 2024. The Plan currently focuses on Demant's near-term climate target for 2030.

Demant is in a position – and actively works – to reduce the carbon footprint in line with the goals of the Paris Agreement and contribute to global efforts to mitigate climate change. Therefore, the Group is not excluded from the 'Paris-aligned benchmarks' established by the European Commission. The benchmarks provide a roadmap to ensure that company activities are consistent with the Paris Agreement's objectives, particularly the goal of limiting the global temperature rise to 1.5°C above pre-industrial levels.

Climate targets

Demant commits to delivering on our climate targets approved by the Science Based Targets initiative (SBTi) in 2023. These targets set not only the final goal of reaching net-zero emissions across the value chain by 2050 but also include mid-term targets.

Near-term targets

Demant commits to reducing absolute scope 1 and 2 GHG emissions by 46% by 2030 from a 2019 baseline year. Demant also commits to reducing absolute scope 3 GHG emissions by 46% within the same timeframe.

Long-term targets

Demant commits to reducing absolute scope 1 and 2 GHG emissions by 90% by 2050 from a 2019 baseline year. Demant also commits to reducing absolute scope 3 GHG emissions by 90% within the same timeframe.

Overall net-zero targets

As an additional step in the efforts towards climate change mitigation, Demant commits to reaching net-zero GHG emissions across the value chain by 2050 from a 2019 baseline year.

Target setting methodology

The targets follow the operational control approach for setting Demant's organisational boundary. As it is allowed in the target-setting methodology under the SBTi net-zero criteria V5.0, our target-setting uses a cross-sector pathway and market-based accounting approach.

Demant submitted its climate targets for validation to the SBTi in 2021, using 2019 as the baseline year, since it provided the latest available data before coronavirus disrupted business operations. Demant does not consider GHG emissions removals, carbon credits and avoided GHG emissions as means of achieving the required GHG emissions levels in the near or long term.

Aligned with the Greenhouse Gas Protocol, the GHGs considered in the targets are:

• Carbon dioxide – CO2
• Methane – CH4
• Nitrous oxide – N2O
• Hydrofluorocarbons – HFCs
• Perfluorocarbons – PFCs
• Sulphur hexafluoride – SF6
• Nitrogen trifluoride – NF3

Decarbonisation levers

Demant's Transition Plan currently focuses on five decarbonisation levers, each including one or more mitigation actions:

Lever 1: Energy consumption reduction and efficiency in own operations

This lever focuses on avoiding or reducing the consumption of all energy sources in our operations and on increasing energy efficiency. The actions to do so continued in 2024.

Energy consumption reduction and efficiency actions are managed locally, allowing us to tailor our approach to the specific characteristics of each location. This ensures that we can effectively address specific needs and opportunities for improvement.

This lever is mostly applied at Demant's production sites and in other entities with high energy consumption. Each location is free to implement its own actions regarding energy efficiency based on local needs and context. Examples of actions that may be made in this lever are adjustments of the ventilation and heating systems in our facilities and the assessment of appropriate light levels.

As a Group with both organic and acquisitive growth, we do not track the energy consumption performance of individual locations and companies at Group level, but we consider their absolute energy consumption. As a result, there are no Group targets associated with this lever.

Lever 2: Renewable electricity for own operations

In 2024, GHG emissions from electricity represented 88% of scope 2 GHG emissions and 44% of scope 1 and 2 GHG emissions combined. Demant consumed 1,245 MWh on-site renewable electricity and therefore avoided the generation of 611 tonnes market-based CO2e emissions in Mexico, Denmark, Poland, South Africa, Australia and Italy. Demant consumed 17,116 MWh off-site renewable electricity of which 60% was directly acquired through electricity vendors in France, Italy and Poland and the remaining 40% was covered by Energy Attribute Certificates in Poland, Germany and Denmark. The use of offsite renewable electricity enabled Demant to avoid 10,145 tonnes market-based carbon dioxide equivalent (CO2e) emissions.

The transition to renewable electricity is expected to remove all scope 2 GHG emissions associated with electricity consumption by 2030. Demant aims to have 100% renewable electricity in our own operations by 2030 and will continue using current renewable electricity sources while exploring the incorporation of new sources.

Lever 3: Vehicle fleet electrification

In H2 2024, the Sustainability Board approved a new plan to speed up electrification of Demant's vehicle fleet, replacing internal combustion engine vehicles with electrical vehicles. Through this plan, Demant promotes the use of electric vehicles across the Group's fleet. Phase one of the plan focuses on six specific countries where the legal entities must reach a defined electric vehicle share in their fleet by 2030. Considering fleet size and behaviour, phase one is expected to avoid the emission of 2,675 tonnes of CO2e in 2030.

Lever 4: Supplier engagement programme

In 2024, the Hearing Aids business area launched a new supplier engagement programme, called Sustain, to collect primary data from the category of purchased goods and services (phase one) and to set a supplier target for improvement of the environmental performance of this category (phase two). While phase one started in 2024, phase two is expected to start in 2025, and once decarbonisation targets have been agreed with our suppliers, the expected avoided GHG emissions will be quantified.

Lever 5: Use of less climate-intensive transport modes

The use of less climate-intensive transport modes requires continuous work to identify the business needs, type of freight, routes and locations compatible with the transition from air travel to alternative transport modes. Last year, our Diagnostics business area started this lever and set a target for 5% GHG emissions reduction in 2024 compared to 2023. We exceeded the target by 11% and reduced our transportation emissions intensity from 0.14 kg CO2e/DKK spent in 2023 to 0.11 kg CO2e/DKK spent in 2024. The medium- and long-term targets associated with this lever are yet to be determined.

Link between targets and levers

Regarding the link between the climate targets and the decarbonisation levers, for the near-term target in scope 1 and 2, the energy consumption reduction and efficiency in own operations (lever 1), along with the phase-in of renewable electricity for own operations (lever 2), will enable the required reduction by 2030.

It is important to highlight that fleet electrification (lever 3) is a complementary effort to ensure that the GHG emissions reduction takes place as soon as possible and that the fossil fuel emissions from the fleet are controlled and do not jeopardise the near-term target. For the near-term target in scope 3, the relevance of each lever still needs to be assessed.

Financial resources and locked-in emissions

In H2 2024, we further improved our scope 3 accounting methodology and restated our baseline and historical GHG emissions. Based on this improvement, we are working to set additional decarbonisation levers and to quantify the financing of the Transition Plan.

The financial resources required for the implementation of the decarbonisation levers and their relation to the financial statements are yet to be determined, as this depends on further defining the decarbonisation levers and their mitigation actions.

Looking ahead

Demant's Transition Plan is under constant development, and new levers will be added over time, especially with a view to reducing our scope 3 GHG emissions, as new information becomes available.

Scenario analysis timeframe

In the resilience assessment the timeframe for the scenario analysis is 2065 and it does not align with the timeframe of Demant's climate targets, which have been set to 2030 and 2050. The latter aligns with science-defined key years for climate change mitigation and the former aligns with the secondary information used by Demant in the assessment. Nevertheless, as these two elements refer to climate change mitigation and climate change adaptation respectively, the timeframe misalignment neither influences the risk assessment nor the climate target alignment with the limited 1.5°C scenario increase at the end of the century.

Policies related to climate change mitigation and adaptation

Demant has disclosed one named policy related to climate change mitigation and adaptation.

Sustainability Policy

Policy name: Sustainability Policy

Scope: All Demant entities

Approval and oversight:

• The Sustainability Board approved the Policy in early H2 2024
• The Sustainability Board is accountable for its implementation

Key content and principles:

The Sustainability Policy sets the direction within climate change mitigation and adaptation and describes roles, responsibilities and actions to tackle GHG emissions in own operations and value chain:

• Avoiding the use of unnecessary energy and increasing energy efficiency in operations
• Substituting internal combustion vehicles by electric vehicles
• Using renewable electricity in own operations
• Focusing on the scope 3 categories where the impact is biggest

The Policy also lays down the Group's expectations for relevant business-critical locations regarding the adaptation to climate change-related natural disasters.

Public availability: The Policy is publicly available on Demant's website (demant.com)

Monitoring implementation:

• Progress on the Policy will be presented and discussed in meetings with the Sustainability Board
• Progress will be discussed with the Environmental Sustainability Community and relevant in-house experts

Actions and resources in relation to climate change policies

Demant's Transition Plan currently focuses on five decarbonisation levers, each including one or more mitigation actions:

Lever 1: Energy consumption reduction and efficiency in own operations

Scope: Scope 1 and 2
Geographical scope: Global
Time horizon: From short to long term

Mitigation actions:

• Decrease in energy consumption
• Increase in energy efficiency

Description: This lever focuses on avoiding or reducing the consumption of all energy sources in operations and on increasing energy efficiency. The actions continued in 2024. The lever is mostly applied at Demant's production sites and in other entities with high energy consumption. Each location is free to implement its own actions regarding energy efficiency based on local needs and context. Examples of actions include adjustments of the ventilation and heating systems in facilities and the assessment of appropriate light levels.

Resources and outcomes:

• In 2024, Demant consumed 1,245 MWh on-site renewable electricity and avoided the generation of 611 tonnes market-based CO2e emissions in Mexico, Denmark, Poland, South Africa, Australia and Italy
• Demant consumed 17,116 MWh off-site renewable electricity of which 60% was directly acquired through electricity vendors in France, Italy and Poland and the remaining 40% was covered by Energy Attribute Certificates in Poland, Germany and Denmark
• The use of offsite renewable electricity enabled Demant to avoid 10,145 tonnes market-based CO2e emissions

Note: As a Group with both organic and acquisitive growth, Demant does not track the energy consumption performance of individual locations and companies at Group level. There are no Group targets associated with this lever.

Lever 2: Renewable electricity for own operations

Scope: Scope 2
Geographical scope: Global
Time horizon: From short to medium term

Mitigation actions:

• Use of on-site renewable electricity
• Use of off-site renewable electricity

Description: In 2024, GHG emissions from electricity represented 88% of scope 2 GHG emissions and 44% of scope 1 and 2 GHG emissions combined. The transition to renewable electricity is expected to remove all scope 2 GHG emissions associated with electricity consumption by 2030.

Target: Demant aims to have 100% renewable electricity in own operations by 2030 and will continue using current renewable electricity sources while exploring the incorporation of new sources.

Lever 3: Vehicle fleet electrification

Scope: Scope 1 and 2
Geographical scope: Global
Time horizon: From short to long term

Mitigation actions:

• Transition to electric vehicles for already existing fleet in six prioritised European countries
• Transition to electric vehicles for fleet in remaining countries

Description: In H2 2024, the Sustainability Board approved a new plan to speed up electrification of Demant's vehicle fleet, replacing internal combustion engine vehicles with electrical vehicles. Through this plan, Demant promotes the use of electric vehicles across the Group's fleet.

Resources and outcomes:

• Phase one of the plan focuses on six specific countries where the legal entities must reach a defined electric vehicle share in their fleet by 2030
• Considering fleet size and behaviour, phase one is expected to avoid the emission of 2,675 tonnes of CO2e in 2030

Lever 4: Supplier engagement programme

Scope: Scope 3
Geographical scope: Global (determined by the location of the suppliers onboarded to the programme)
Time horizon: From short to medium term

Mitigation actions:

• Setting a supplier target for improvement of the environmental performance of purchased goods and services

Description: In 2024, the Hearing Aids business area launched a new supplier engagement programme, called Sustain, to collect primary data from the category of purchased goods and services (phase one) and to set a supplier target for improvement of the environmental performance of this category (phase two).

Implementation timeline:

• Phase one started in 2024
• Phase two is expected to start in 2025
• Once decarbonisation targets have been agreed with suppliers, the expected avoided GHG emissions will be quantified

Lever 5: Use of less climate-intensive transport modes

Scope: Scope 3
Geographical scope: To be determined
Time horizon: From short to long term

Mitigation actions:

• Shift from air freight transport to less climate intensive transport modes

Description: The use of less climate-intensive transport modes requires continuous work to identify the business needs, type of freight, routes and locations compatible with the transition from air travel to alternative transport modes.

Resources and outcomes:

• Last year, the Diagnostics business area started this lever and set a target for 5% GHG emissions reduction in 2024 compared to 2023
• The target was exceeded by 11%
• Transportation emissions intensity was reduced from 0.14 kg CO2e/DKK spent in 2023 to 0.11 kg CO2e/DKK spent in 2024
• The medium- and long-term targets associated with this lever are yet to be determined

Financial resources

The financial resources required for the implementation of the decarbonisation levers and their relation to the financial statements are yet to be determined, as this depends on further defining the decarbonisation levers and their mitigation actions.

Link to targets

Regarding the link between the climate targets and the decarbonisation levers, for the near-term target in scope 1 and 2, the energy consumption reduction and efficiency in own operations (lever 1), along with the phase-in of renewable electricity (lever 2) are the primary actions.

Targets related to climate change mitigation and adaptation

Near-term targets

Scope 1 and 2 GHG emissions:

• Target: Reduce absolute scope 1 and 2 GHG emissions by 46% by 2030
• Baseline year: 2019
• Target year: 2030
• Scope: Own operations (scopes 1 and 2)
• Type: Absolute reduction
• Validation: SBTi-validated (July 2023)
• Progress to date: 8% reduction in 2024 against baseline year 2019

Scope 3 GHG emissions:

• Target: Reduce absolute scope 3 GHG emissions by 46% by 2030
• Baseline year: 2019
• Target year: 2030
• Scope: Value chain (scope 3)
• Type: Absolute reduction
• Validation: SBTi-validated (July 2023)
• Progress to date: 31% increase in 2024 against baseline year 2019

Renewable electricity:

• Interim target: 50% renewable electricity by 2025
• Target: 100% renewable electricity by 2030
• Scope: Own operations
• Progress to date: 35% of electricity consumption from renewable sources in 2024 (21% in 2023)

Long-term targets

Scope 1 and 2 GHG emissions:

• Target: Reduce absolute scope 1 and 2 GHG emissions by 90% by 2050
• Baseline year: 2019
• Target year: 2050
• Scope: Own operations
• Type: Absolute reduction
• Validation: SBTi-validated (July 2023)

Scope 3 GHG emissions:

• Target: Reduce absolute scope 3 GHG emissions by 90% by 2050
• Baseline year: 2019
• Target year: 2050
• Scope: Value chain
• Type: Absolute reduction
• Validation: SBTi-validated (July 2023)

Overall net-zero target

• Target: Net-zero GHG emissions across the value chain by 2050
• Baseline year: 2019
• Target year: 2050
• Scope: Scopes 1, 2, and 3
• Validation: SBTi-validated (July 2023)

Target setting methodology

The targets follow the operational control approach and use a cross-sector pathway and market-based accounting approach as allowed under SBTi net-zero criteria V5.0. Demant does not consider GHG emissions removals, carbon credits and avoided GHG emissions as means of achieving the required GHG emissions levels in the near or long term.

Energy consumption and mix

Total energy consumption

Demant's total energy consumption increased by 7% from 113,404 MWh in 2023 to 121,209 MWh in 2024. The main part of the increase is attributable to higher usage of fuel by the vehicle fleet (2,141 MWh), and to acquisitions resulting in increased usage of heating sources (4,226 MWh) and electricity (2,099 MWh).

Demant's total use of energy from fossil fuels was 102,721 MWh in 2024 compared to 102,425 MWh in 2023.

Energy consumption by source

Renewable energy

Renewable energy share increased from 10% in 2023 to 15% in 2024 (as percentage of total energy consumption).

Renewable electricity increased from 21% of total electricity consumption in 2023 to 35% in 2024.

Demant consumed 1,245 MWh on-site renewable electricity in 2024, avoiding 611 tonnes market-based CO2e emissions in Mexico, Denmark, Poland, South Africa, Australia and Italy.

Demant consumed 17,116 MWh off-site renewable electricity in 2024, of which 60% was directly acquired through electricity vendors in France, Italy and Poland, and the remaining 40% was covered by Energy Attribute Certificates in Poland, Germany and Denmark. This avoided 10,145 tonnes market-based CO2e emissions.

Energy intensity

Accounting policy

Energy consumption includes both primary and estimated usage of electricity, district heating, natural gas, diesel, petrol, coal and liquefied petroleum gas. Energy consumption is recorded using different units (e.g. liters, kWh, kg) and is later converted to megawatt hours (MWh) for consolidation purposes.

Energy data is recorded and compiled in the energy management system, with each legal entity providing its monthly consumption figures on a biannual basis.

Refrigerants are not included in the energy consumption, as they account for less than 0.1% of the total energy consumption.

According to ESRS definitions, all of Demant's business is classified as belonging to a high-climate impact sector.

Gross Scopes 1, 2, 3 and Total GHG emissions

Scope 1 and 2 GHG emissions

Demant reports both location-based and market-based Scope 2 emissions. In 2024, market-based Scope 1 and 2 GHG emissions decreased by 11% compared to 2023 and by 8% compared to the 2019 baseline year.

Scope 1 sources: Direct GHG emissions arise from actual and estimated consumption of natural gas, liquefied petroleum gas, coal, petrol, diesel and refrigerants.

Scope 2 sources: Indirect GHG emissions arise from actual and estimated consumption of electricity and district heating. Market-based methodology considers specific type of electricity consumed (including renewable electricity); location-based methodology considers average emission intensity of the power grid.

Scope 3 GHG emissions by category

Scope 3 GHG emissions decreased by 6% in 2024 compared to 2023, but increased by 31% compared to the 2019 baseline. Ten of fifteen GHG Protocol categories are included in Demant's inventory.

Excluded categories: 8 (upstream leased assets – under operational control, reported in Scope 1 and 2), 10 (processing of sold products – Demant provides final products), 13 (downstream leased assets – not applicable), 14 (franchises – not applicable), 15 (investments – less than 0.1% of total Scope 3).

Methodology: Categories 1 and 2 use spend-based method with relevant emission factors; for certain goods, materials are classified and weighed. Category 3 uses actual fuel and energy data. Categories 4 and 9 use primary data from logistics suppliers. Category 5 uses actual waste data. Category 6 uses primary air travel data. Category 7 uses EU passenger mobility statistics and employee numbers. Category 11 multiplies emission factors by number of sold products and internal product usage data. Category 12 uses sales numbers by product type, material composition and geography.

Total GHG emissions and intensity

Exclusions and adjustments

Communications business area: The Communications business area is reported as discontinued operations. Estimated Scope 3 emissions for Communications account for 12% of the Group's total Scope 3 emissions in 2024 based on the 2019 baseline. Scope 3 metrics in this disclosure do not include Communications.

Accounting methodology changes: In 2024, Demant changed its Scope 3 accounting policy by applying a new, more accurate method. Comparative and baseline figures have been restated. The 2024 effect is estimated to be approximately 250,000 tonnes lower CO₂e compared to the previous method.

Estimates and judgements: Scope 3 calculations involve judgement and estimates, including use of generic emissions factors. The majority of Scope 3 emissions are calculated using spend-based method. Suppliers are mapped according to primary goods or services purchased.

Biogenic emissions and regulated emissions

Not separately disclosed in this report.

Emission factors

GHG emission factors are from UK Department for Environment, Food & Rural Affairs (DEFRA), US Environmental Protection Agency, International Energy Agency, Danish Environmental Protection Agency database, and Ecoinvent database. GHGs included: CO₂, CH₄, N₂O, HFCs, PFCs, SF₆, NF₃.

Anticipated financial effects from material physical and transition risks and potential climate-related opportunities

Materiality Assessment

The following ESRS E1-9 datapoints have been assessed as not material by Demant:

• ESRS E1-9 (66): Exposure of the benchmark portfolio to climate-related physical risks
• ESRS E1-9 (66 (a)): Disaggregation of monetary amounts by acute and chronic physical risk
• ESRS E1-9 (66 (c)): Location of significant assets at material physical risk
• ESRS E1-9 (67 (c)): Breakdown of the carrying value of real estate assets by energy-efficiency classes
• ESRS E1-9 (69): Degree of exposure of the portfolio to climate-related opportunities

No quantified financial effects, time horizons, methodologies, or specific asset-level information for anticipated financial effects from climate-related physical risks, transition risks, or opportunities have been disclosed.

Policies related to own workforce

Demant discloses several policies and governance frameworks related to its own workforce, demonstrating a comprehensive approach to employment practices and working conditions.

Code of Conduct

Scope: All employees, regardless of their location and the nature of their work

Key content/principles:

• Sets minimum standards and ethical principles applicable to all employees
• Provides a common understanding of how to conduct business
• Explicitly addresses zero tolerance of slavery, human trafficking, compulsory labour, employment of children, discrimination and harassment (including sexual harassment)
• Outlines commitment to a good working environment

Public availability: Available through the company's intranet; global personnel handbooks in all countries

Link to international standards:

• Universal Declaration of Human Rights
• International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work
• UN Guiding Principles on Business and Human Rights
• OECD Guidelines for Multinational Enterprises

Governance: The Executive Leadership Team is ultimately accountable for ensuring human rights are respected; Sustainability Board accountable for implementation

Global Policy on Human Resources

Scope: All employees, including full-time, part-time, and temporary staff across all departments and locations

Key content/principles:

• Establishes clear framework for governance of employment practices and workplace conditions
• Aligns with Demant's strategy and values
• Defines minimum requirements for personal and professional development and growth
• Sets company expectations of employees

Governance: Leader of Group HR is responsible for implementation; launched in 2024

Monitoring: Group HR is accountable for implementing, monitoring and reviewing all policies; Cross-Group HR initiatives are coordinated via dedicated global forums, including the Global HR Board

Sustainability Policy

Scope: Group-wide

Key content/principles:

• Founded on commitment to respect all universally recognised human rights
• Covers human rights of any persons who may be adversely impacted by Demant's activities and business relationships
• Addresses actions to tackle impacts and risks regarding resource use, circular economy, and environmental matters

Link to international standards:

• Universal Declaration of Human Rights
• ILO Declaration on Fundamental Principles and Rights at Work
• UN Guiding Principles on Business and Human Rights
• OECD Guidelines for Multinational Enterprises

Governance: Sustainability Board is accountable for implementation

Policy on Diversity, Equity and Inclusion

Scope: All employees

Key content/principles:

• Fosters respect for diversity
• Strives to treat all employees fairly
• Focused on diversity, equity and inclusion as priority

Governance: HR function with dedicated roles to develop and implement specific actions and initiatives; global HR leaders and partners trained and equipped to drive the agenda

Anti-Harassment and Discrimination Guideline

Scope: All employees

Key content/principles:

• Provides specific information on how to raise grievances regarding harassment and discrimination
• Details complaints and remedy procedure

Monitoring: Cases handled internally according to Whistleblower Policy and Investigation Guideline

Stress Policy

Scope: All sites in Denmark (with local variations globally)

Key content/principles:

• Explains how to prevent and manage stress
• Acknowledges potentially negative impact on mental health related to work
• Aims at preventing stressful working context

Governance: Overall responsibility lies with local HR Management in close collaboration with local business leadership; stress management handled locally by HR departments

Occupational Health and Safety Management Systems

Scope: Operational sites across the Group

Key content/principles:

• Site-specific prevention policies and management systems
• Include risk assessment processes, health and safety instructions, safety walks and talks, training, accident investigation management, continuous review of processes

Governance: Site management is responsible for occupational health and safety

Position on Workplace Flexibility

Scope: Entire Group

Key content/principles:

• Guides implementation of concrete measures to ensure flexibility of employees and workplace
• Strives to provide good work-life balance culture
• Aims to be flexible workplace where tasks and local conditions allow

Whistleblower Policy

Scope: All employees and external stakeholders

Key content/principles:

• Enables confidential and anonymous reporting of concerns about serious and sensitive matters
• Includes anti-retaliation provisions
• Covers failures to comply with Code of Conduct, applicable laws/regulations, and health/safety risks

Link to international standards: Complies with Directive (EU) 2019/1937

Governance: Group Legal & Compliance manages all reports; Investigation Guideline ensures investigator independence

Public availability: Available globally; promoted through global campaigns and e-learning in 11 languages

Global Policy on Remuneration and Rewards

Status: In development for 2025 implementation

Key content/principles:

• Will establish salary philosophy
• Ensure guidance for the organisation

Governance: To be developed and implemented by Group HR

Taking action on material impacts on own workforce

Employee Engagement and Well-being

Pulse Survey

• Description: Track employee engagement development through annual Pulse survey conducted by Gallup
• Purpose: (1) Assess effectiveness of current initiatives on well-being, flexibility, inclusion and engagement; (2) Serve as starting point for developing specific actions in areas needing attention
• Scope: Own operations (corporate-wide)
• Participation and Results:
  • 2024: 84% participation rate, 4.13 engagement score, 52nd percentile
  • 2023: 87% participation rate, 4.11 engagement score, 52nd percentile
  • 2022: 86% participation rate, 4.08 engagement score, 50th percentile
• Methodology: Scale from 1-5; percentile rank benchmarks against Gallup's extensive database
• Time horizon: Data collection in February annually (ongoing)

Human Rights Assessment

Corporate-wide Human Rights Assessment

• Description: Assessment covering full value chain of activities
• Time horizon: Second half of 2024 (completed)
• Scope: Own operations with consideration of geographies where Demant operates and industries worked in; also mapped actual and potential impacts in value chain

Remuneration Policy Development

Global Policy on Remuneration and Rewards

• Description: Policy to establish salary philosophy and provide organizational guidance
• Time horizon: To be developed and implemented in 2025
• Rollout plan: Initiated in select locations (Poland, USA, Denmark, France, Canada, Germany, Australia, UK) with rest of world to follow consecutively

Diversity, Equity and Inclusion (DE&I) Actions

Global Recruitment Platform Enhancement

• Description: Embedded materials designed to prompt inclusive recruitment behaviour
• Scope: Global recruitment processes
• Non-financial resources: Training programs including:
  • Unconscious bias training (expanded)
  • Inclusive leadership training
  • Psychological safety training
  • HR leader capability development for driving DE&I topics locally

Employee Resource Groups (ERGs)

• Description: Employee-led groups focused on DE&I topics including (in)visible (dis)abilities, women in Demant, LGBTQIA+, generational intelligence, international colleagues, Asian American employee network, mental health advocacy
• Governance: Sponsored by senior management (Vice President or Senior Vice President); supported by Global HR and local HR in Denmark and US
• Current presence: Denmark and US locations (will continue to strengthen structure, format and collaboration globally)
• Purpose: Provide sense of community, safe space to raise DE&I concerns, input on actual and potential impacts on employees
• Engagement: Consulted regularly and invited to provide input for developing strategies to mitigate potential impacts on inclusion and equal opportunities

Performance Dialogue Process

• Description: DE&I-specific themes integrated into global employee performance dialogue process
• Time horizon: Since beginning of 2023 (ongoing)
• Purpose: Assess effectiveness of DE&I actions; evaluated through Pulse survey with specific questions regarding inclusion and fair treatment
• Organizational responsibility: DE&I actions anchored in HR function with dedicated roles to develop and implement initiatives

Talent Development and Retention

Employee Development Platforms

• Description: Global and local learning platforms focusing on leadership, project management, people development
• Non-financial resources:
  • Leadership competencies development
  • Global leadership learning journeys (to be launched in 2025 with focus on employee development and facilitation)

Global Graduate Programme

• Description: Two-year development journey across global organization for young professionals
• Scope: Personal and professional skills development across entire global organization
• 2024 participation: 23 graduates

Career Development Framework

• Policy: Global Policy on Human Resources defines minimum requirements for personal and professional development and growth
• Scope: All employees (full-time and part-time, across all functions, business areas and locations)
• Tools: Career paths and growth opportunities clarified through career frameworks; focus on internal recruitment; improved recruitment and onboarding practices
• Process: Regular meetings between managers and employees to review development

Talent Retention Initiatives

• Focus: Business areas with highest turnover rates
• Strategic initiatives: Developed for specific challenges at production and clinic locations
• Results tracking: Employee turnover rate:
  • 2024: 20% (4,080 headcount)
  • 2023: 25% (4,795 headcount)
  • 2022: 26% (4,698 headcount)

Workforce Demographics (Context)

• Total employees: 22,639 (as of 31 December 2024)
• Gender ratio: 64% female / 36% male
• Coverage: 88% registered in global HR management system; remaining estimated based on geographical location

Targets related to own workforce

Target 1: Employee Engagement

Target metric: Employee engagement score (Gallup engagement index)

Target value: Top-third level (67th percentile or above in the Gallup engagement index)

Target year: 2030

Baseline year: 2024

Baseline value: 4.13 engagement score (52nd percentile)

Scope: Own workforce (global)

Type: Absolute target (percentile ranking)

Validation: External experts from Gallup consulted in defining the target level

Progress to date (2024):

• Engagement score: 4.13 (increase of 0.02 from 2023)
• Percentile: 52nd
• Participation rate: 84% (more than 17,000 employees)

Target 2: Gender Diversity in Top-Level Management

Target metric: Gender balance (women/men) in global top-level management (Vice President level and above)

Target value: 35/65% (women/men)

Target year: 2030

Baseline year: 2024 (new baseline year)

Baseline value: Not explicitly stated in excerpts (but previous 2025 goal was achieved one year ahead)

Scope: Global top-level management (Vice President level and above)

Type: Absolute target (percentage)

Validation: Internal target

Progress to date: Previous target achieved one year ahead of 2025 goal year

Target 3: Experience of Inclusion

Target metric: Inclusivity score (Gallup inclusion index)

Target value: Top-third level (67th percentile or above in the Gallup inclusion index)

Target year: 2030

Baseline year: 2024

Baseline value: 4.27 inclusivity score (56th percentile)

Scope: All Demant employees (global)

Type: Absolute target (percentile ranking)

Validation: External experts from Gallup consulted in defining the target level; approved by Executive Leadership Team and endorsed by Board of Directors

Progress to date (2024):

• Inclusivity score: 4.27 (+0.01 from previous year)
• Percentile: 56th

Key figures and financial ratios – year

Characteristics of non-employees in the undertaking's own workforce

Demant's Anti-Harassment and Discrimination Guideline applies to all employees and contractors working for Demant globally. However, quantitative data regarding the number of non-employee workers, breakdown by type (contractor, agency, self-employed), or methodology for counting is not disclosed in the available excerpts.

Gender diversity in leadership

2030 target: Increase gender balance in top-level management to 35/65% (women/men).

Generally, when I look at the diversity traits of our Group and our efforts to create a work environment built on care and respect for others, I believe we are in a good place. In 2024, we reached our 2025 target for increased gender balance in our global top management ahead of time, and our new target for this group is now 35% women and 65% men.

Half-year breakdown for 2024:

• H1 2024: 30/70% (women/men) top level management
• H2 2024: 31/69% (women/men) top level management
• H1 2024: 49/51% (women/men) all managers
• H2 2024: 50/50% (women/men) all managers

Health and safety metrics

Demant has not disclosed quantitative health and safety metrics in the 2024 Annual Report.

The company's datapoint index explicitly states that ESRS S1-14 datapoints 88(b) and (c) (number of fatalities and number and rate of work-related accidents) and datapoint 88(e) (number of days lost to injuries, accidents, fatalities or illness) are assessed as Not material.

The company does have a workplace accident prevention policy or management system in place (referenced on pages 86-87), which includes risk assessment processes, health and safety instructions, safety walks and talks, training, and accident investigation management.

Compensation metrics

Pay gap

Not disclosed.

Demant acknowledges the requirement to report gender pay gap data under ESRS S1-16. In the 2024 sustainability statement, the company states:

"Demant is committed to provide transparent information on the gender pay gap within our organisation. However, for the 2024 reporting period, the specific data required is not available. A project to develop the required information in our HR data management system is launched and is expected to be completed during 2025."

Remuneration ratio

CEO remuneration ratio

In 2024, the CEO remuneration ratio decreased by 6 points to 41 compared to 2023.

Methodology

CEO remuneration ratio calculation: The CEO remuneration ratio is calculated as the CEO's total remuneration (numerator) divided by the average remuneration of all Group employees (denominator) instead of the median Group employee. Demant is committed to enhancing data quality on this topic in future reporting periods.

For further details on remuneration, the company refers to its separate Remuneration Report 2024.

Incidents, complaints and severe human rights impacts

Discrimination and harassment incidents

In 2024, Demant received 11 submissions to its whistleblower hotline related to discrimination and/or harassment. These cases were handled internally according to the Whistleblower Policy and Investigation Guideline. Having been addressed by the relevant internal organisation in collaboration with the affected individuals, 8 out of 11 claims have been closed.

Status of complaints

Severe human rights impacts

There were no severe human rights incidents in the period, and therefore no fines, penalties or compensation were paid.

Value chain workers

No severe human rights impacts or incidents connected to our upstream or downstream value chain were reported to Demant in 2024.

Methodology note

Cases were handled internally according to the Whistleblower Policy and Investigation Guideline, in collaboration with affected individuals.

Policies related to value chain workers

Demant has policies in place designed to identify, document and manage potential impacts on workers in the value chain and to mitigate associated risks.

Third Party Compliance Code

• Scope: All new direct suppliers and business partners. The Code is included as an appendix in all new contracts with suppliers.

• Key content and principles: The Code outlines Demant's expectations toward suppliers and business partners regarding:

  • Working conditions for workers in the value chain
  • Core International Labour Organization (ILO) standards on working conditions
  • Workplace health and safety
  • Freedom of association
  • Forced/child labour
  • Non-discrimination

• Link to international standards: The Code is based on core International Labour Organization (ILO) standards. According to the datapoints table, Demant has due diligence policies on issues addressed by the fundamental International Labour Organization Conventions 1 to 8.

• Compliance requirements: All new direct suppliers are expected to comply with this Code.

Risk assessment and due diligence processes

In 2024, Demant established an updated and more extensive sustainability supplier risk assessment process to identify and document the potential impacts that workers in the supply chain are exposed to, based on the countries and sectors in which the workers of suppliers operate. The risk assessment process is based on quantitative and qualitative analysis, using recognised databases, indices and reports.

Demant takes a risk-based approach to identifying and managing the interests, views and rights of value chain workers, prioritising resources to identify and mitigate the most significant negative impacts first.

Incident response

If a negative impact is reported to or identified by Demant, the company engages directly with the supplier in question to urge them to prevent and mitigate the impact, while clearly communicating the expectation that the supplier provides remedies towards the affected value chain workers.

No severe human rights impacts or incidents connected to the upstream or downstream value chain were reported to Demant in 2024.

Taking action on material impacts on value chain workers

Supplier engagement programme ("Sustain")

Description and scope: In 2024, the Hearing Aids business area launched a new supplier engagement programme called "Sustain" to collect primary data from the category of purchased goods and services (phase one) and to set a supplier target for improvement of the environmental performance of this category (phase two).

Time horizon:

• Phase one: Started in 2024
• Phase two: Expected to start in 2025
• Once decarbonisation targets have been agreed with suppliers, the expected avoided GHG emissions will be quantified

Scope:

• Upstream value chain (direct suppliers in Hearing Aids business area)
• Global (determined by the location of the suppliers onboarded to the programme)

Objectives:

• Collaborate more closely with suppliers on decarbonisation and addressing human rights impacts in the supply chain
• Integrate sustainability into partnerships

Link to policy: Linked to Third Party Compliance Code, which outlines expectations toward suppliers regarding working conditions, including core ILO standards on working conditions, workplace health and safety, freedom of association, forced/child labour and non-discrimination.

Supplier risk assessment and due diligence

Description: In 2024, Demant established an updated and more extensive sustainability supplier risk assessment process to identify and document the potential impacts that workers in the supply chain are exposed to, based on the countries and sectors in which the workers of suppliers operate.

Methodology: The risk assessment process is based on quantitative and qualitative analysis, using recognised databases, indices and reports.

Coverage achieved in 2024:

• Diagnostics business area: 100% of direct upstream suppliers at Danish and Polish production sites were screened (based on 2023 supplier base)
• Hearing Aids business area: 31% of direct upstream suppliers were screened, covering 99% of total direct spend (based on 2023 supplier base)

Time horizon: During 2025, the risk assessment process will be implemented globally and due diligence efforts will be aligned according to risk categories.

Scope: Upstream value chain

Outcomes: No severe human rights impacts or incidents connected to upstream or downstream value chain were reported to Demant in 2024.

Direct supplier engagement on impacts

Description: If a negative impact is reported to or identified by Demant, the company engages directly with the supplier in question to urge them to prevent and mitigate the impact, while clearly communicating the expectation that the supplier provides remedies towards the affected value chain workers.

Current limitations: Supplier engagement does not yet involve direct engagement with workers in the value chain.

Link to policy: Third Party Compliance Code is included as an appendix in all new contracts with suppliers. The Code covers working conditions, workplace health and safety, freedom of association, forced/child labour and non-discrimination.

Continuous supplier evaluation

Description: Demant continuously evaluates actions through current practices, including direct supplier engagement, which is part of the routine responsibilities of the procurement functions.

Time horizon: Ongoing, with implementation of updated supplier risk assessment and due diligence processes in progress.

Targets related to value chain workers

Demant has explicitly disclosed that no targets have been set for managing impacts on workers in the value chain.

Company Statement

As stated in the S2-5 disclosure:

"In Demant, we continuously evaluate our actions through our current practices, including direct supplier engagement, which is a part of the routine responsibilities of the procurement functions in Demant. We are currently implementing updated supplier risk assessment and due diligence processes. Therefore, we have not yet set targets to manage impact on workers in the value chain. In 2025, we will explore options to do so."

Context

• Demant is currently implementing updated supplier risk assessment and due diligence processes
• The company established an updated and more extensive sustainability supplier risk assessment process in 2024
• Target-setting is planned to be explored in 2025

Policies related to affected communities

Demant has assessed ESRS S3-1 (Policies related to affected communities) as not material.

According to the materiality assessment table provided:

• ESRS S3-1, paragraph 16 (Human rights policy commitments): assessed as not material
• ESRS S3-1, paragraph 17 (Non-compliance with UNGPs on Business and Human Rights, ILO principles or OECD guidelines): assessed as not material
• ESRS S3-4, paragraph 36 (Human rights issues and incidents): assessed as not material

No specific policies related to affected communities are disclosed in the provided excerpts.

Business ethics are an integral part of conducting business in a global world with many stakeholders. We continuously expand and improve the Group's business ethics programme to reflect our all-important commitment to a high level of business ethics, including our Code of Conduct, a global whistleblower scheme as well as global policies and guidelines on business ethics.

Code of Conduct training to highly exposed employees: 76% in 2024.

2030 target: Code of conduct training to reach 100% of highly exposed employees.

Whistleblower reports: 87 reports in 2024, compared to 90 in 2023, 47 in 2022, and 48 in 2021.

Inclusion score: 4.27 on a scale of 1-5 in 2024, compared to 4.26 in 2023.

Engagement score: 4.13 on a scale of 1-5 in 2024, compared to 4.11 in 2023, 4.08 in 2022, 4.02 in 2021, and 3.93 in 2020.

Furthermore, our inclusion score reached 4.27 on a scale of 1-5, and in the coming years, we will keep focusing on diversity, equity and inclusion, the target being to take the employee experience of inclusion to be among the top-third of "best in class" by 2030.

Our employees are our most valuable resource, as they are critical to Demant's future success. Therefore, it is essential that we are a great company to work for. In driving this agenda, we firmly believe in a strong culture of inclusion and engagement. We want to ensure that everyone can contribute their strengths, regardless of their background.

Supplier engagement: We launched a new supplier engagement programme in 2024 to collect primary data and set targets for our suppliers to enhance their environmental performance.

Scope 3 emissions reduction: Demant aims to use less climate-intense transport modes to mitigate climate change. This target resulted in a 16% emissions reduction from transportation for Diagnostics in 2024.

Stability in sourcing and delivering high-quality manufactured goods on time is crucial for us to be able to fulfil the commitments we have made to our customers.

Strong relationships with component suppliers [are part of our input/resources].

Our targets are ambitious, not least the targets for our scope 3 emissions that relate to our value chain, so we depend on close collaboration with our suppliers to reach our goals.

Incidents of corruption or bribery

Confirmed incidents

Demant explicitly disclosed that the company had zero confirmed incidents of corruption or bribery in 2024:

"We have had no confirmed incidents of corruption or bribery in Demant in 2024."

Convictions and fines

As a direct consequence of having no confirmed incidents, Demant reported:

"Therefore, there have been no convictions or fines for violation of anti-corruption and anti-bribery laws in 2024."

Disciplinary actions and contracts terminated

No information was disclosed regarding employees dismissed or disciplined, or contracts with business partners terminated or not renewed due to corruption or bribery.

Investigation and speak-up procedures

Demant has established comprehensive mechanisms to prevent and detect corruption:

Whistleblower hotline: Demant operates a global whistleblower hotline that enables employees, business partners, and all other internal and external stakeholders to report concerns about serious and sensitive matters confidentially and anonymously. The hotline is managed by Group Legal & Compliance.

Investigation process: The company has developed an Investigation Guideline that describes step-by-step how an investigation into a concern raised by an employee is conducted. The process ensures that the investigator involved in a specific whistleblower case is independent from the chain of management involved in the matter.

Anti-retaliation protection: Demant is committed to ensuring that there will be no discriminatory or retaliatory action against any employee or third party who in good faith raises a concern through the whistleblower hotline. These anti-retaliation efforts comply with Directive (EU) 2019/1937.

Whistleblower reports received: In 2024, Demant received 87 submissions to its whistleblower hotline in total (covering all types of concerns, not limited to corruption/bribery). Of these, 11 submissions related specifically to discrimination and/or harassment, which were handled internally according to the Whistleblower Policy and Investigation Guideline. Having been addressed by the relevant internal organisation in collaboration with the affected individuals, 8 out of 11 claims have been closed.

Training and awareness: All employees globally were asked to complete Code of Conduct and whistleblower e-learning in 2024, which contains a deep dive into anti-corruption. In 2024, 76% of highly exposed employees (target group) completed the training, and 58% of all Demant employees completed the e-learning.

Due diligence: For third parties, Demant has a due diligence process to assess anti-corruption risk. In 2024, Demant conducted 53 due diligence screenings. Based on findings, the company implements appropriate mitigating measures, such as specific anti-corruption wording in contracts with third parties.

Political influence and lobbying activities

Political engagement approach

To support Demant's purpose of creating life-changing difference to people with hearing loss, we engage with international organisations, governments and local authorities to raise awareness about the importance of hearing health. Ensuring that more people test and treat their hearing loss can have a positive financial impact on Demant in the medium and long term.

When exerting political influence, we carry with us our principles of conducting business with integrity and high ethical standards. We engage in political activities through industry organisations, lobbying for a more advanced and better hearing healthcare infrastructure to ultimately ensure the best possible treatment for people with hearing loss.

We are transparent about our stance and advocate for topics directly linked to our company purpose and strategy. How we engage politically varies, depending on local conditions, as activities to promote hearing health depend entirely on country-specific legislation and hearing health infrastructure.

Ethical standards and guidelines

Our Anti-Corruption Policy (please refer to page 104) does not allow for political contributions which are defined as contributions to politicians, political campaigns and political parties. Any deviations from this Policy must be approved by our Group CEO.

Political contributions

In 2024, we did not make any political contributions.

Trade association memberships

We take active part in relevant industry organisations including, but not limited to, the following:

European Hearing Instrument Manufacturers Association (EHIMA) Demant is represented in the General Assembly and the Technical, Regulatory, Public Affairs and Sustainability Committees.

Hearing Industries Association (HIA) Demant is represented in the board of directors and the Technical and Regulatory, Market Insights, Market Analytics and Claims Committees.

Focus areas

Our advocacy efforts are closely intertwined with our objective of raising awareness about hearing healthcare and driven by our main purpose. We advocate for topics directly linked to our company purpose and strategy, focusing on promoting hearing health infrastructure and treatment for people with hearing loss.