Double materiality assessment
In the 2023/24 financial year, a full double materiality assessment (DMA) was performed involving over 100 internal and external participants. More information about last yearʼs DMA process and outcome can be found in the ESG Report 2023/24. Sonova performs a full DMA every third year, involving a wide range of stakeholders chosen for their interest in, or influence on, Sonovaʼs business model and strategy. In the intervening years, we conduct an internal review of the previous assessment. The 2024/25 DMA builds on the previous yearʼs efforts and results and includes an in-depth assessment of the positive and negative impacts that Sonova has, or could have, on society and the environment, and the sustainability-related risks and opportunities the company faces. It also includes a mapping of material issues to the value chain, and it highlights the elements of Sonovaʼs strategy and business model that relate to or impact on sustainability matters. The DMA covers the Sonova Group, including all businesses and its value chain.
In the 2024/25 financial year, we conducted the DMA by completing the following five steps:
1. List compilation: Building on the previous DMA, all potentially material short-listed topics were mapped to the European Sustainability Reporting Standards (ESRS) topics listed under Application Requirement (AR) 16 at sub-topic level. This resulted in some changes in scope and naming of topics.
2. Identification of impacts, risks, and opportunities (IROs): IROs were identified by the Corporate Sustainability team for each of the potentially material short-listed topics following extensive desk research. Sources for identifying the draft list of IROs included: Sonovaʼs ESG Report 2023/24, UN Impact Radar, World Economic Forum Global Risks Report, Organization for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises on Responsible Business Conduct 2023, United Nations Environment Programme Finance Initiative (UNEPFI), Rethinking Impact to Finance the SDGs (2018), World Wide Fund for Nature (WWF) Risk Filter suite and Science Based Targets Network (SBTN) Materiality Screening Tool. All identified IROs are directly linked to ESRS topics. No entity-specific IROs were identified.
Internal topic experts contributed to refining and completing the list of IROs to ensure comprehensiveness and relevance. They provided insight into whether IROs were actual or potential, and whether risks and opportunities were linked to identified impacts.
3. Internal stakeholder consultation and assessment of IROs: Building on the extensive stakeholder engagement in the 2023/24 DMA, this yearʼs DMA review involved interviews with 24 internal topic experts. For the IRO assessment, topic experts were provided with a scoring rubric for materiality with a scale of 1-5, 5 being the highest. The criteria considered for impact materiality were severity and likelihood, where severity is made up of scale, scope, and, for negative impacts, irremediability. The criteria considered for financial materiality (risks and opportunities) were magnitude and likelihood, whereby risks were assessed without taking into account existing or planned mitigating actions. This is in line with Sonovaʼs enterprise risk management (ERM) risk assessment process. Individual risk thresholds applied in the identification of sustainability risks also corresponded to the thresholds applied in ERM. In the process, connections between potential negative impacts and risks were discussed and analyzed with the topic experts.
4. Materiality calculation and expert calibration: To calculate severity of impacts, the average score was taken across scale, scope, and irremediability. We conducted a sense-check to ensure that no negative human rights impacts were masked by taking an average score, understanding that severity (with a particular focus on irremediability) should take precedence over likelihood. Further, results from existing due diligence processes were taken into account in both impact identification and assessment.
Topic scores were defined by the highest-scoring IRO related to each topic. The materiality threshold was defined to account for all topics that scored 'high' materiality on one of the two perspectives. This means that for IROs, the threshold was set at 20 and above, based on the relative distribution of topics to ensure the appropriate extent of disclosures.
Relative materiality across topics was reviewed in two calibration sessions by all topic experts. The final list of material topics resulted from these sessions. Representatives from Sonovaʼs enterprise risk management (ERM) unit participated in the calibration sessions. Upon conclusion of the DMA process, the material topics were mapped against the ERM risk landscape.
Material sustainability-related impacts, risks, and opportunities (IROs)
The table below summarizes the identified material IROs and topics. They relate to all of Sonovaʼs business units and geographies, except when mentioned otherwise. More detailed information can be found in the topical sections throughout this report.
Material ESG topics and descriptions of IROs (in order of ESRS):
Sonova topic | IRO (risk assessed as if unmitigated) | Occurrence | Expected time horizon | |||
|---|---|---|---|---|---|---|
Positive impact: Renewable energy use Increasing the share of renewable energy over conventional carbon emitting options reduces Sonova's and our suppliers' carbon footprint. | Entire value chain | Increase in short-term | ||||
Negative impact: Greenhouse gas emissions Greenhouse gas emissions from energy used for own operations and production by suppliers contribute to climate change, leading to further negative environmental impacts. | Upstream and own operations | Increase in medium- to long-term | ||||
Risk: Attraction and retention Lack of training and skills development as well as career and development opportunities could negatively affect talent recruitment and retention, hence negatively influence the ability to innovate, risking the viability of the business. | Own operations | Increase in medium- to long-term | ||||
Positive impact: Employee wellbeing Conducive working conditions and employee wellbeing initiatives can impact positively on employees and their families, therefore contributing to social stability in a community. | Own operations | No change | ||||
Positive impact: Improving the quality of life Access to hearing care improves the quality of life of individuals with hearing loss through the provision of social, emotional and cognitive benefits (e.g., via social inclusion, economic productivity). Family members and carers can also be positively impacted. | Downstream | Increase in short-, medium-, long-term | ||||
Positive impact: Addressing health care costs Untreated hearing loss can have harmful effects on health and wellbeing and is associated with high costs for our healthcare systems. By treating their hearing loss, users of hearing instruments and cochlear implants can maintain their health and wellbeing and potentially address the risk of health-related issues. | Downstream | Increase in short-, medium-, long-term | ||||
Positive impact: Social inclusion Reliable, well-functioning products of Sonova’s Cochlear Implants and Hearing Instruments businesses, as well as the service delivery through the Audiological Care business, can significantly contribute to the social inclusion of users of hearing instruments and cochlear implants. This, in turn, can also help raise awareness among other individuals with hearing loss who may also benefit from the technology. | Downstream | No change | ||||
Risk: Loss of consumer trust There could be a loss of sales and market share if customer and consumer trust is lost due to quality or safety concerns. | Downstream | No change | ||||
Risk: Product exchanges and recalls If faulty or unreliable products enter the market there is a risk of costly repairs, fines, or product recalls. | Downstream | No change | ||||
Risk: Product-related chemical requirements Legal requirements are becoming stricter and more fragmented, leading to a risk of non-compliance and subsequent fines. | Downstream | Increase in medium- to long-term | ||||
Positive impact: Sharing of reliable information By sharing reliable information on hearing health, Sonova raises awareness on the topic. This can encourage individuals to seek hearing care, which in turn can improve their quality of life. | Downstream | Increase in short-, medium-, long-term | ||||
Positive impact: Improved hearing care Well informed and trained hearing care professionals (HCPs) can lead to better health outcomes: Empowered HCPs can better contribute to a functioning health system by providing accurate information tailored to the individual client. This can lead to better health outcomes in communities overall. | Downstream | Increase in short-, medium-, long-term | ||||
Risk: Data protection Violation of privacy, particularly with respect to sensitive health-related data, can lead to reputational damage and fines. | Downstream | Increase in medium- to long-term | ||||
Risk: Sustainability regulations The sustainability-related regulatory landscape is quickly changing and becoming more fragmented. Not being able to comply with existing and upcoming regulations (in time) can lead to reputational damage and fines. | Entire value chain | Increase in short-, medium-, long-term | ||||
Risk: Ethical behavior Unethical behavior and non-compliance with legal requirements can lead to the loss of large contracts or key accounts. | Entire value chain | Increase in short-, medium-, long-term | ||||
Risk: Protection of whistleblowers Whistleblowers play an important role in maintaining ethical conduct. A lack of their protection can lead to reputational and legal risks. | Entire value chain | No change expected |
Non-material short-listed topics included the following: affected communitiesʼ rights, animal welfare, awareness raising on hearing health, biodiversity, circular economy, corporate citizenship, diversity and inclusion, occupational health and safety, pollution, public affairs, substances of concern, supplier relations, water and working conditions in the value chain.
The material DMA topics cut across Sonovaʼs businesses and strategy, further information can be found in the Strategy and businesses section. They can be mapped to the value chain as follows:
Changes since the previous reporting period
In the previous reporting period, sustainability matters were reported on a topic level, with no specific focus on IROs. It is therefore not possible to make an exact comparison of this yearʼs assessment to previous reporting periods. Changes in topics and materiality from 2023/24 to 2024/25 include the following:
- “Product safety” and “Product quality and reliability” were consolidated into “Product quality, reliability and safety”. The topic remains material.
- “Sustainable supply chain” was split into various topics, of which “Climate change” is material.
- “Employee wellbeing” was expanded to “Working conditions” to align with the ESRS. The topic remains material.