Strategy, business model, value chain, interests and views of stakeholders, and material impacts, risks and opportunities (ESRS 2 SBM-1 to SBM-3)

We view sustainability and sustainable business practices above all as an opportunity that we recognize as a meaningful factor in differentiating ourselves from the competition. The long-term success of our company also depends on the degree to which we meet the needs of our key stakeholder groups, minimize the environmental impact of our business, offer a safe, secure and motivating work environment, act as trustworthy business partners and minimize the impact of our business activities on the climate and the environment.

Strategy, business model and value chain (ESRS 2 SBM⁠–⁠1)

As we continue to pursue the strategic objectives of being the “Provider of Choice” for our customers, the “Employer of Choice” for our staff and the “Investment of Choice” for our stakeholders as outlined in our Strategy 2030 (“Accelerating Sustainable Growth”), we have added a fourth bottom line of “Green Logistics of Choice.” By adding this bottom line, we have embedded the decarbonization measures and targets of our ESG Roadmap into our Strategy 2030.

The ESG Roadmap published in 2021 will therefore become an even more integral part of our strategy in that it will be merged with our strategy in terms of the bottom lines. The previous strategic approaches relegated to the environmental area (E) will be moved to the new, fourth bottom line of “Green Logistics of Choice.” The strategic approach in the area of social responsibility (S) will be integrated into the bottom line of “Employer of Choice” with the goal of offering a safe, secure and motivating work environment. Governance (G), which ensures transparent and legally compliant business practices across the Group, will be depicted under “Investment of Choice.”

Steering-relevant performance indicators

In the year under review, we monitored our progress versus our sustainability targets using the following steering-relevant performance indicators: logistics-related GHG emissions, Realized Decarbonization Effects, Employee Engagement, the share of women in middle and upper management, the accident rate (lost time injury frequency rate, LTIFR) per million hours worked, valid certificates of compliance training in middle and upper management and the cybersecurity rating. Realized Decarbonization Effects, Employee Engagement and the cybersecurity rating were additionally relevant for remuneration purposes in the year under review. We have described the calculation bases for these performance indicators and the outlook for fiscal year 2025 in our Group Management Report, steering metrics and expected developments.

Business model and value creation

Under the DHL and Deutsche Post brands, DHL Group provides a wide-ranging portfolio of services comprising international express shipping, freight transport, supply chain management, e-commerce and post and parcel services. The Group is organized into five operating divisions: Express; Global Forwarding, Freight; Supply Chain; eCommerce; and Post & Parcel Germany. In terms of management structure, each of the divisions is managed by its own divisional headquarters and subdivided into functions, business areas and regions for reporting purposes. Group management functions are centralized in the Corporate Center. The internal services that support the entire Group are consolidated in our Global Business Services (GBS) unit. Customer Solutions & Innovation (CSI) is the Group’s cross-divisional account management and innovation unit. The Group parent is Deutsche Post AG, which operates as a holding company for all Group divisions and also encompasses the majority of the Post & Parcel Germany division’s operating activities.

In the upstream value chain, transport services are rendered by subcontractors (suppliers). We also purchase goods and services from our suppliers that we need to provide our own services, including vehicles, aircraft, buildings, energy and fuel and work uniforms.

Our business model is resilient thanks to its diversified nature and the global reach of our Group as well as our sustainable financing measures and careful use of resources and technologies. Global supply chains are nonetheless exposed to any number of risks and are often the target of criminal activity. Our security experts identify potential security risks for the Group worldwide, analyze them with regard to their potential impact and take appropriate steps to mitigate them. In our efforts to protect our employees and sites, and to secure business continuity, we utilize a risk-based security management system that is in compliance with all applicable national, international, legal and regulatory specifications as well as with ISO 28000. We have also conducted a materiality assessment at our sites to identify physical climate risks, materiality assessment.

In the year under review, the Group generated revenue of €84,186 million with 601,723 employees at year-end, report on economic position. This includes revenues from the transport of fossil fuels to a lesser extent.

We describe our products and services and our markets and customers in the general information section of the Group Management Report. The breakdown of total revenues is presented in the Segment Report, note 10 to the consolidated financial statements.

We have opted not to disclose the financial impact of the material impacts, risks and opportunities relating to our business model, our upstream value chain or our strategy for the first year of ESRS reporting (phase-in option).

Involvement of stakeholders (ESRS 2 SBM⁠–⁠2)

DHL Group places priority on exchanging views with stakeholders. Such exchanges take place on a regular basis, particularly with stakeholders such as customers, our employees/potential employees, trade union and works council representatives and investors, as laid out in our Stakeholder Engagement Policy.

We take note of our stakeholders’ demands and take them into consideration when developing our strategy and organizing our business model. Stakeholder views and evaluations are also taken into account in the materiality assessment. Moreover, we employ a variety of interaction platforms in developing solutions to future societal and business challenges. In addition, our Sustainability Advisory Council regularly contributes its expertise and adds an external perspective. Eight experts from the sciences, business and politics regularly advise the Board of Management and thus play an important role in implementing sustainability in Strategy 2030.

We are also involved in numerous United Nations initiatives in addition to supporting the UN’s Sustainable Development Goals (SDGs). Our commitment is most closely aligned with the goals of Quality Education (SDG 4), Gender Equality (SDG 5), Decent Work and Economic Growth (SDG 8), Sustainable Cities and Communities (SDG 11), Climate Action (SDG 13) and Partnerships for the Goals (SDG 17). In addition, we take part in various sustainability initiatives, for example to promote the development of sustainable fuels and technologies, and we are working with our transport partners on reducing fuel consumption and greenhouse gas emissions (GHG). We also participate in committees of institutions such as EFRAG or the International Sustainability Standards Board with the objective of developing European and global sustainability reporting standards.

Material impacts, risks and opportunities (ESRS 2 SBM⁠–⁠3, IRO⁠–⁠1, IRO⁠–⁠2)

In carrying out the materiality assessment, we considered financial materiality as well as the materiality of impacts. We identified and evaluated impacts, risks and opportunities (IROs) and their interaction with our strategy, business model and upstream value chain. Based on that we classified the ESRS topics of climate change, own workforce, workers in the value chain and business conduct as material along with the entity-specific topic of cybersecurity, materiality assessment process. The risks and opportunities identified in this process did not negatively impact our financial result in the year under review, nor were any impacts on the recoverable amounts of our assets identified. The aforementioned topics also served as the basis for our Strategy 2030. The Board of Management and the Supervisory Board reviewed and confirmed the Group’s strategic direction in 2024.

We disclose our material IROs in the respective sections of this Sustainability Statement in order to establish a direct link to our policies and actions.

ESRS standards E2 Pollution, E3 Water and Marine Resources, E4 Biodiversity and Ecosystems, S3 Affected Communities and S4 Consumers and End Users were found to be immaterial; E5 Resource Use and Circular Economy was in the threshold area and also deemed immaterial.

Processes to identify and assess material impacts, risks and opportunities (ESRS 2 IRO⁠–⁠1, IRO⁠–⁠2)

In 2023, we designed and executed our first materiality assessment based on the new ESRS requirements for materiality. This involved identifying and assessing IROs in internal meetings of experts and carrying out in-depth assessments. The findings were discussed with both internal and external stakeholders. The materiality assessment also takes account of the results of previous materiality analyses undertaken in line with the GRI standards. The findings from the materiality assessment for 2023 were confirmed in the year under review, and we plan to re-validate them each year.

Identifying impacts, risks and opportunities

Our starting point was to gain an understanding of the correlations between the impacts and dependencies of our business activities, our business relationships, our stakeholders and the sustainability matters set out in the ESRS. We additionally considered findings from previous materiality analyses, the Risk Management Report and information from the risk management system, findings from analyses of the German Act on Corporate Due Diligence in Supply Chains (LkSG) and the EU’s Corporate Sustainability Due Diligence Directive (CSDDD), capital market requirements and voluntary sustainability reporting standards. We then identified actual and potential impacts along with financial risks and opportunities.

This involved arranging workshops with experts from a range of specialist functions and business areas to discuss the topics at hand and to establish links between regional circumstances and the unique features of various business models. Matters of business conduct were also discussed, including with respect to legal requirements and the requirements set forth in our internal policies. In addition, separate workshops were held with experts from Corporate Procurement (for the upstream value chain) and from Sales & Marketing (for the customer perspective). One key focus of the analysis was on business relationships with heightened potential for negative impacts and risks. We also undertook a comprehensive location-based analysis of biodiversity aspects. This was followed by a thorough comparison with the risk management system, including the individual sustainability-related risks and opportunities contained therein. In addition, we interviewed stakeholders to ascertain their expectations and then incorporated the results into our analysis, stakeholder engagement.

Assessing impacts, risks and opportunities

Sustainability experts from our divisions assessed the materiality of the identified IROs using a standardized, additive, points-based scoring method. The divisional assessments were aggregated and taken into account based on the division’s share in Group revenue and subsequently evaluated in terms of quality. Where sufficient data was available at Group level, it was included in the assessment of the relevant material IROs. The assessment of the upstream value chain was conducted in collaboration with representatives from Corporate Procurement, taking into account findings from existing due diligence processes.

The results were then validated after considering stakeholder interviews and further analyses of environmental factors (“nature as a silent stakeholder”).

Determining materiality thresholds for sustainability matters, impacts, risks and opportunities

Following the assessment, normalization and validation of individual IROs based on the quantitative assessment, an additional qualitative assessment is performed – for example, to account for cumulative impacts or findings from stakeholder interviews.

The material sustainability matters to be included in this report were selected in a two-step process: First, an assessment was conducted at the sustainability matter level using aggregated IROs. Next, we assessed the extent to which individual IROs (outside of the sustainability matters identified as material in the first step) are material in their own right.

The concept of double materiality means that a sustainability matter is considered material if it exceeds the materiality thresholds set by the Group from either a financial perspective or from the impact perspective. To account for the ordinal nature of the point scale applied, a threshold zone was introduced ranging around 50% of the maximum score on each axis, results of the materiality assessment. Specific IROs relating to non-material topics were assessed separately by the Board of Management; sustainability matters or IROs assessed as being above the threshold were generally deemed to be material.

The sustainability matters and specific IROs deemed material for reporting purposes were set after final validation and examination for completeness by the Board of Management. Although the assessment of impacts is fundamentally subject to discretion, our step-by-step methodology and the numerous validations accompanying the process largely rule out distortions based on subjective assessments while ensuring that uniform standards are applied.

Special processes for specific sustainability matters

The steps in the materiality assessment process described above were applied to all ESRS sustainability matters. The following ESRS sustainability matters were additionally assessed using the methods described.

• Climate-related impacts, risks and opportunities
  To identify and assess climate-related impacts, risks and opportunities, we established a process that integrates the findings from our existing analysis of climate resilience, which was carried out in accordance with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) while taking the ESRS and EU Taxonomy into account and using a scenario analysis. The following time horizons were used as per the ESRS and our medium- to long-term strategic targets: short term (1 year), medium term (1 to 5 years) and long term (5 years or more). In the previous year, both physical climate risks and transition risks and opportunities were analyzed. Sustainability risks were incorporated into our standard risk management process, whereby significant changes versus the prior year were discussed with the responsible Board of Management member and assessed by the Risk Committee. We moreover evaluated our current and planned activities to identify GHG emissions and factors leading to additional climate-related impacts at our sites and in the upstream value chain. Our internal reports of GHG emissions served as the data basis, environment.
  Physical climate risks were considered within the context of an analysis of climate resilience. We identified potential short-, medium- and long-term climate-related hazards that could result from rising sea levels, for example, for our own business activities and sites. We also assessed our exposure and sensitivity, taking into account the likelihood of occurrence, magnitude and duration of the respective hazard and the geospatial coordinates of our sites. The analysis did not extend to the upstream or downstream value chains. Physical climate risks were analyzed at portfolio and location level for our main locations, with the climate risk data for location-specific geospatial coordinates being used as input. No material physical climate risks were identified.
  The analysis of resilience to physical climate risks was performed using a scenario analysis involving a high-emission climate scenario. The scenarios selected were the RCP scenarios (Representative Concentration Pathways) 2.6, 4.5 and 8.5 of the Intergovernmental Panel on Climate Change, which involve different concentrations of atmospheric GHG. The scenarios model an average global warming of less than 2, more than 2 or more than 4 degrees Celsius by the year 2100. The scenarios were selected due to their scientific basis, which results from the CMIP5 (Coupled Model Intercomparison Project – Phase 5) model comparison project and its use in science and industry. The analysis covered both current risk exposure as well as projected exposure to climate risk for the years or periods up to 2030, 2050 and 2100. The scenario analysis includes future projections and is subject to uncertainty regarding the assumed climate effects.
  We also focused on climate resilience when analyzing transition risks and opportunities. Our analysis identified potential short-, medium- and long-term climate-related transition events relating to our business activities and value chain and assessed our exposure to those transition events, taking into account the likelihood of occurrence and scale. Transition risks were identified and assessed at divisional level in internal workshops and as part of the materiality assessment and then aggregated at Group level. Significant changes versus the prior year were discussed as part of risk management with the responsible Board of Management member and assessed by the Risk Committee. Material transition risks were identified in the process, most of which related to GHG emissions. The material transition risks and impacts identified reflect the fact that DHL Group has to undertake decarbonization efforts operating in a high climate impact sector. However, we did not identify any assets or business activities that are incompatible with the transition to a climate-neutral economy. Our actions and additional expenditures for decarbonization act to counteract the main transition risks and demonstrate that not only assets such as vehicle fleets and buildings but also business activities can become climate-neutral. For more information on current decarbonization expenditures and the results thereof, please refer to environment.
  One component of our climate resilience analysis for transition risks was a scenario analysis, which included a scenario limiting global warming to 1.5°C in line with the Paris Climate Agreement. In performing the scenario analysis, we selected the Sustainable Development Scenario of the International Energy Agency (IEA) that focuses on the development and deployment of innovative technologies for the transition to energy from renewable sources as well as emissions-restrictive policies. The analysis drew on data about price trends for sustainable technologies and regulatory developments and was projected to 2025, 2030, 2040 or 2050. It found that the aforementioned scenario could negatively impact the Group in terms of the availability and pricing of decarbonization technologies or in the form of an increase in external carbon pricing. The scenario’s technology focus and applicability to DHL Group’s decarbonization strategy were the reasons for selecting it. Because scenario analyses include future projections, they are subject to uncertainty regarding the assumed climate effects and socio-economic consequences. The climate scenarios selected are consistent with the assumptions made for the climate-related valuation of our assets, note 8 to the consolidated financial statements.
• Pollution, water and marine resources, circular economy
  The calculation of impacts, risks and opportunities associated with additional environmental topics follows the same process as described for the materiality assessment. However, there was no need to screen individual sites in this context because of our business model. We did not consult with affected communities given that no material topics affecting such communities were identified.
• Biodiversity
  We inspected all of our sites having an area greater than 3,200 m² for potential negative impacts on biodiversity. We assessed any potential negative impacts on all of the biodiversity conservation areas located within 5 kilometers of our sites. The only negative impacts identified were of a limited scope, primarily noise and light pollution. No direct dependencies on biodiversity, ecosystems or ecosystem services were identified for our business model. Therefore, there are no relevant physical, transition or systemic risks. We did not consult with affected communities given that no material topics affecting such communities were identified.
• Workers in the value chain (S2)
  The first step was to identify which workers are value chain workers. Value chain workers are generally those workers who are under contract with our suppliers and are subject to the instructions of those suppliers, or workers performing outsourced services at our sites, e.g. tradespeople or external freight forwarders. Material impacts, risks and opportunities were identified using the findings from previous analyses by Corporate Procurement on the implementation of the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) and the German Supply Chain Due Diligence Act (LkSG). We are already obligated under those legal requirements to incorporate responsible action into our value chain, our business model and our strategy. Corporate Procurement has defined risk categories and allocated them to the respective procurement category, supplier relationship management.