DOUBLE MATERIALITY ASSESSMENT (DMA) METHODOLOGY

FORCIT Group applied the European Financial Reporting Advisory Group (EFRAG) guidelines to its double materiality assessment (DMA) methodology. The DMA scope covered FORCIT’s Explosives and Consulting business areas. The project was conducted in collaboration with an external sustainability consulting partner and consisted of five key stages:

1. Understanding the context and building on current information

2. Identification of sustainability impacts, risks and opportunities

3. Stakeholder views and expectations

4. Prioritization of material topics

5. Final results and management approval

Defining the scope and understanding the context

In the first phase, we defined the scope and context of the DMA. This involved mapping FORCIT Group’s value chain across its business activities (Explosives and Consulting) and identifying key ESG-related stakeholders. The mapping was conducted with subject-matter experts, ensuring a broad perspective on FORCIT’s operations.

The assessment covered FORCIT’s suppliers and upstream activities, internal operations, as well as customers and downstream activities. Various background materials informed the analysis, including business strategy, previous annual and sustainability reports, financial reporting, sustainability and carbon neutrality programs, prior materiality and ESG risk assessments, product and customer segment data, sourcing reports, and the results of our previous stakeholder survey.

Identification of sustainability impacts, risks, and opportunities

FORCIT identified sustainability impacts, risks, and opportunities through interviews with key representatives and subject-matter experts across multiple functions. Nine management and expert-level professionals participated, representing:

• Group management (CEO)

• Group HR

• Group sustainability

•FORCIT Explosives (sourcing, logistics, production, product development, R&D, country representatives, sales, and customer relations)

• FORCIT Consulting (management)

The data collected during the initial phase was analyzed to consolidate a long list of identified impacts, risks, and opportunities. These were mapped across the value chain and categorized under ESRS sustainability matters and entity-specific topics to provide the identification of impacts, risks and opportunities was not limited to the ESRS standard classification, but also company/entity and sector-specific issues were considered.

Identification of stakeholder views and expectations

FORCIT previously conducted a stakeholder assessment in 2022, establishing a strong understanding of stakeholder views and expectations. Therefore, in this assessment, additional engagement was limited to employees. Existing stakeholder insights were reviewed and updated through expert interviews. The validated stakeholder priorities were incorporated into the materiality assessment.

Double materiality assessment and prioritization of material topics

The fourth phase assessed the materiality of sustainability topics and their related impacts, risks, and opportunities. This was done in two parts:

Impact Materiality Assessment

An online survey was conducted with the project’s core team, including relevant subject-matter experts. The severity/benefit (actual impacts) and likelihood (potential impacts) of identified impacts were evaluated on a scale of 1-5. This produced a preliminary list of material topics based on impact materiality.

Financial Materiality and Prioritization of Material Topics

To assess the impact materiality assessment and assess the financial materiality of related risks and opportunities, a workshop was held with FORCIT Explosives management and key representatives. Financial impact and likelihood were evaluated (scale 1-5), ensuring sustainability-related financial risks were assessed relative to other business risks. The workshop outcomes finalized the prioritization of material topics.

For FORCIT Consulting, a separate workshop was not conducted. Instead, prioritization was based on insights from internal interviews and the impact materiality assessment.

Documentation and approval by FORCIT Group management

Following the prioritization, the final material topics were linked to ESRS standards and presented to FORCIT Group management for approval. The material topics were grouped from FORCIT’s business perspective and mapped to the relevant ESRS standards and sub-topics. Additionally, a double materiality matrix was developed to illustrate the findings.

FORCIT Group management reviewed and approved the consolidated proposal. A final report was prepared in accordance with ESRS guidelines.

Governance and internal control

To ensure internal oversight, various internal stakeholders, including FORCIT Group management, were engaged throughout the process. FORCIT’s Chief Sustainability Officer (CSO) and an appointed project team oversaw execution, ensuring that each phase produced actionable results.

Integration of SWOT and risk analysis

FORCIT integrates SWOT analysis into business decision-making, incorporating stakeholder perspectives, sustainability issues, and key topics identified in the DMA. In risk assessments for technical facilities, environmental and safety scenarios are systematically evaluated.

FORCIT’s Explosives business unit follows an operational excellence process, applying rigorous evaluation criteria for explosion risk assessments. Feasibility studies are conducted in collaboration with experts before implementation.

Alignment with ESRS standards

Upon completing the DMA process, material sustainability topics, impacts, risks, and opportunities were mapped in the context of ESRS standards. Each topic was linked to the corresponding ESRS standard, sub-topic, and sub-sub-topic. Furthermore, material sub-topics were aligned with specific data points and application requirements to determine the material information to be disclosed. The requirements outlined in ESRS 1, Section 3.2, were considered in this process. FORCIT remains committed to ongoing evaluation and integration of sustainability considerations into its business strategy, ensuring compliance with regulatory frameworks and best practices in corporate sustainability reporting.