Sustainability in business conduct (ESRS 2 GOV-1 to GOV-5)

The materiality assessment (double materiality assessment – DMA) identified material impacts (both positive and negative) as well as risks and opportunities associated with our business activities. Risks and opportunities are presented from a gross perspective in this Sustainability Statement as dictated by the ESRS, whereas the Opportunity and Risk Report presents net perspective.

The role of Board of Management and Supervisory Board (ESRS 2 GOV⁠–⁠1)

As a listed German stock corporation, DHL Group has a two-tier system. The Board of Management is responsible for managing the company. It is appointed, overseen and advised by the Supervisory Board. The Board of Management consists of eight members, of whom 75% are male and 25% are female. Thus, the average ratio of female to male members is 1:3.

The Board of Management is the key decision-maker in terms of setting the Group’s strategic direction in sustainability matters, whereas the divisions are responsible for the implementation of actions. The Board of Management identifies and assesses the opportunities and risks associated with sustainability and manages impacts via the various board departments. The progress achieved is regularly discussed within the Board of Management.

Sustainability matters are also regularly dealt with in the meetings of the Supervisory Board and its Strategy and Sustainability Committee, its Human Resources Committee and its Finance and Audit Committee.

Responsibility of the Board of Management departments and committees for sustainability

The chairperson of the Board of Management is responsible for setting the Group’s strategic direction, for stakeholder dialog and the implementation of decarbonization and occupational safety policies as well as for the Group’s corporate citizenship program and its cybersecurity standards. Sustainability matters are further developed in the corporate strategy and were reviewed at three meetings of the Sustainability Steering Board (SSB) in the reporting year. The SSB is composed of the Chief Executive Officer (CEO), the Chief Financial Officer (CFO) and the Chief Human Resources Offices as well as executives from central and divisional specialist departments.

The Human Resources (HR) Board department develops Group-wide policies for leadership and corporate culture and for nurturing talent and developing skills as well as guidelines for HR processes and services, for maintaining relationships with employee representatives and for ensuring respect for human rights among our employees. We have also established a Health & Well-Being Forum that is staffed with specialists and executives from all Group divisions. The forum advises the HR Board committee on the design and implementation of numerous actions aimed at fostering a working environment in which employees feel empowered and motivated to be their best – physically, mentally and socially. In addition, the Group’s Chief Medical Officer (CMO) offers advice on all matters of occupational health management, for example on policies for handling the risk of epidemics or pandemics. The main Group directives are presented in the section entitled policies.

The Finance Board department is in charge of sustainability reporting and controlling, opportunity and risk assessment, the integration of sustainability reporting into the internal control and financial systems, compliance management, data protection and performance of the materiality assessment.

The Global Business Services Board department is responsible, among other things, for developing Group-wide standards for sustainable sourcing and the supplier selection process as well as for insurance & risk management specifications and for Group real estate.

We have introduced special controls and processes to enable management to monitor and manage impacts, risks and opportunities. All performance indicators, metrics and targets have been integrated into our financial systems and reporting and planning processes as well as into our internal control system and opportunity and risk management process. A target/actual comparison of performance indicators is presented to the Board of Management for discussion each month, with the exception of the Employee Engagement indicator, which is calculated and discussed as part of the annual employee survey. In the event of deviations from targets, solutions are discussed and adopted. The Supervisory Board’s Finance and Audit Committee was informed of the performance of management indicators seven times during the year under review.

Corporate Internal Audit evaluates the effectiveness of our risk management system, our control mechanisms and our management and monitoring processes as well as compliance with Group policies, thereby contributing to their improvement. It does so by performing independent regular and ad hoc audits at all Group entities and at corporate headquarters on the authority of the Board of Management. The audit teams discuss the audit findings and agree on actions for improvements with the audited organizational units and their leaders. The Board of Management is informed of the findings on a regular basis. The Supervisory Board is provided with a summary once per year.

The Board of Management members bring professional expertise from a variety of fields, such as industrial engineering, physics, business administration, law and psychology. Moreover, Board of Management members deal with implementing sustainability targets on a daily basis. All Board of Management members possess the expertise, skills and experience to suitably comprehend the opportunities and risks inherent in sustainability matters and to consider those opportunities and risks when making business decisions. Operational responsibility has been delegated by topic to various central functions in the respective board departments. Not only our CEO, Tobias Meyer, but also our divisional board members Nikola Hagleitner, Oscar de Bok, Pablo Ciano, John Pearson and Tim Scharwath have acquired special sustainability expertise based on their education and their career paths, and they contribute that expertise in many different ways in carrying out their roles within the company. An external perspective on sustainability issues is provided at regular intervals by the Sustainability Advisory Council, which is made up of representatives from the sciences, politics and business.

Composition of the Supervisory Board and its committees

The Supervisory Board consists of 20 members, ten of whom are shareholder representatives and ten of whom are employee representatives. The shareholder representatives are elected by the Annual General Meeting (in individual voting) and the employee representatives are elected by our own employees. A total of 60% of the Supervisory Board is male and 40% is female. Thus, the ratio of female to male members was 2:3 in the reporting year. All shareholder representatives on the Supervisory Board (50% of members) are independent as required by the German Corporate Governance Code.

The Supervisory Board has formed six committees that are made up of its members: the Executive Committee, the Human Resources Committee, the Finance and Audit Committee, the Strategy and Sustainability Committee, the Nomination Committee and the Mediation Committee. The members of the aforementioned committees prepare resolutions for the full Supervisory Board and perform the duties incumbent upon them by virtue of the law, the company’s Articles of Association and the Supervisory Board’s Rules of Procedure. The Strategy and Sustainability Committee discusses sustainability strategy, the Finance and Audit Committee discusses the progress made in the area of sustainability, ESG risks and the materiality assessment, and the Human Resources Committee discusses employee concerns.

New Supervisory Board members are offered comprehensive training to familiarize them with specific topics quickly. Supervisory Board members are able to participate in selected external training events and obtain trade journals, and they are also provided with insight into conditions at the Group’s sites to ensure that they have a full picture of operating processes and actions for sustainability. Directors’ Day, which takes place twice per year, moreover enables the members of the Supervisory Board to deepen their understanding of current topics and developments that are relevant to the company, including those related to sustainability.

Diversity on the Board of Management and the Supervisory Board

Diversity is a key factor in the financial success of the Group. That also goes for the members of the Board of Management and the Supervisory Board. When selecting Board of Management members, the Supervisory Board considers factors such as diversity along with achieving a good balance of members in terms of their personalities, qualifications, abilities, place of origin and experience. Long-term succession planning in all divisions ensures that qualified internal candidates will continue to be available going forward. The early selection of women for leadership positions plays a critical role in this. In addition, the composition of the Board of Management reflects the international orientation of the Group. Our Board of Management members have a great deal of experience in many European countries as well as in the United States, Asia, Latin America and Australia by virtue of their ethnic and cultural backgrounds as well as based on having spent extended periods working abroad or being in charge of foreign operations. As of December 31, 2024, the average age of members of the Board of Management was 54, with the youngest member being 48 and the oldest 61.

Addressing sustainability matters (ESRS 2 GOV⁠–⁠2)

The materiality assessment was performed in accordance with the ESRS. The impacts, risks and opportunities identified in the process were discussed with the Board of Management, as was the implementation of due diligence. The Supervisory Board was informed of the results of the materiality assessment and the associated adjustments to the reporting structure.

Each division holds quarterly business review meetings with members of management – once per year with the full Board of Management and three times per year with the Chair of the Board of Management (the CEO) and the Board of Management member responsible for finances (the CFO). In addition to financial performance, the development of the sustainability targets over time were also discussed. Separate ESG business performance meetings were established in the year under review, chaired by the CFO. These meetings are also held quarterly in order to keep close track of our sustainability performance. Moreover, all board departments have Board of Management committees in which decisions are made on the general strategic direction of the respective board department as well as on direction-setting topics. Finally, decisions on investments and real estate and M&A projects are made by the responsible committees on the basis of defined decision-making and approval processes.

The results of the effectiveness assessments of our internal control system are documented in a central reporting tool and shared with the Board of Management and the Supervisory Board annually. This information is analyzed further to identify potential opportunities for improvement.

The Supervisory Board and the relevant Strategy and Sustainability Committee as well as the Finance and Audit Committee are provided with quarterly reports from the Board of Management detailing material impacts, risks and opportunities, the implementation of due diligence, and the results and effectiveness of the policies, actions, metrics and targets adopted. These committees account for impacts, risks and opportunities when monitoring strategy implementation and assessing key transactions and risks. The Strategy and Sustainability Committee consists of three shareholder representatives and three employee representatives, and the Finance and Audit Committee consists of four shareholder representatives and four employee representatives.

The Executive Committee deals with succession planning for Board of Management members, clarifies questions of corporate governance and prepares resolutions of the full Supervisory Board on the appointment of Board of Management members, the provisions of their employment contracts (including remuneration), the remuneration system for Board of Management members, the establishment of targets for variable remuneration, the calculation of variable remuneration in line with the degree of target achievement, the review of the appropriateness of remuneration and the annual Remuneration Report. Supervisory Board members receive a fixed annual retainer in addition to attendance fees and reimbursement of expenses pursuant to the Articles of Association of Deutsche Post AG. The Annual General Meeting decides on remuneration for the Board of Management and the Supervisory Board.

Material impacts, risks and opportunities are also accounted for when developing strategy, in the context of acquisitions and divestments, in risk management and in the internal control system.

In the year under review, the execution and the results of the materiality assessment and the contents of the Sustainability Statement were presented and discussed at the December meetings of the Finance and Audit Committee, the Human Resources Committee and the full Supervisory Board.

Sustainability in Board of Management remuneration (ESRS 2 GOV⁠–⁠3)

Sustainability was factored into the annual bonus of Board of Management members in the form of the three performance indicators Realized Decarbonization Effects, Employee Engagement and cybersecurity rating, each of which is weighted at 10%. The decarbonization indicator serves to implement the objective of reducing greenhouse gas emissions and strengthening the Group’s range of low-carbon-emission logistics solutions. Employee Engagement measures our success in being an “Employer of Choice”. The cybersecurity rating provides for a neutral and transparent assessment of DHL Group’s position in cybersecurity matters. It measures the success of cybersecurity management and facilitates ongoing optimization in this area.

In the year under review, the proportion of recognized Board of Management remuneration linked to climate-related performance was 3.1%, note 48.3 to the consolidated financial statements. No target-related remuneration components have been defined for the Supervisory Board.

The remuneration system for Board of Management members is reviewed regularly by the Supervisory Board. The remuneration system is presented to the Annual General Meeting for approval whenever there are significant changes, or at minimum every four years. In the year under review, the Supervisory Board adopted a measure to include sustainability-related performance factors in the long-term remuneration components for the Board of Management starting in 2026. The revised remuneration system will be presented to the 2025 Annual General Meeting for approval, Remuneration.

Upper management

The above metrics are used to calculate performance-based remuneration for upper management. Upper-level executives are additionally assessed on the basis of Employee Engagement in their area of responsibility.

Statement on due diligence (ESRS 2 GOV⁠–⁠4)

We conduct our business in accordance with applicable law and pursuant to our self-imposed sustainability standards. DHL Group signed the UN Global Compact in 2006. The Ten Principles of the UN Global Compact, the Universal Declaration of Human Rights, the OECD Guidelines for Multinational Enterprises, the International Labor Organization’s (ILO) Declaration on Fundamental Principles and Rights at Work and the concept of social partnership are anchored in our Code of Conduct for employees and our Human Rights Policy Statement, and are described in greater detail in additional internal policies.

In terms of human rights, we focus on the rejection of child and other forced labor, working conditions (work hours, occupational health and safety), equal opportunity, data protection and the right to freedom of association. Our Supplier Code of Conduct requires suppliers and subcontractors to comply with our ethical, social and environmental principles and to implement them in their own supply chains. The Supplier Code of Conduct is generally a binding component of the Group’s relationships with our suppliers, including subcontractors. By signing the Supplier Code of Contact, suppliers agree to adhere to our standards within their own supply chains, supplier relationship management.

Our actions aimed at ensuring respect for human rights by our employees and in the supply chain follow the specifications of the German Act on Corporate Due Diligence Obligations in Supply Chains (Lieferkettensorgfaltspflichtengesetz, LkSG). Implementation of the actions is monitored by the LkSG Council. The Council is made up of executives in upper management from the Group functions of Human Resources, Corporate Strategy, Corporate Public Affairs, Legal Services and Global Compliance, Corporate Procurement and Corporate Internal Audit.

Our Code of Conduct and the Anti-Corruption Policy Statement derived therefrom provide all employees and executives with clear rules and standards on how they can contribute to the success of the Group in their working environment and in their area of responsibility in accordance with laws and regulations. All of our employees, but in particular our executives, play a key role when it comes to implementing our values and objectives. Thus, we have made the Code of Conduct an integral component of their employment contracts. The two codes of conduct and our Group policies are reviewed annually to ensure that they are complete and up to date.

Corporate Internal Audit is an essential component of the Group’s control and monitoring system. Using risk-based auditing procedures, Group Internal Audit regularly examines the application of Group policies – including with regard to respect for human rights – as well as the related processes and reports on its findings to the Board of Management.

Risk management and internal controls over sustainability reporting (ESRS 2 GOV⁠–⁠5)

Sustainability is taken into account Group-wide via the opportunity and risk management system, and sustainability reporting controls are implemented via the internal control system (ICS).

Opportunities and risks are identified and assessed decentrally at DHL Group. Reporting on possible deviations from projections as well as on long-term or latent opportunities and risks occurs primarily at the country or regional level. We provide a detailed description of the processes involved and the opportunities and risks identified in the Opportunity and Risk report, opportunity and risk management.

Our ICS was designed to follow the internationally recognized COSO framework for internal control systems (COSO: Committee of Sponsoring Organizations of the Treadway Commission) and is continuously updated and enhanced. Minimum requirements are defined on the basis of identified risks and control objectives and must be fulfilled by putting suitable controls in place in the control frameworks of the divisions. The essential control requirements for defining, capturing data on, calculating and reporting all sustainability indicators and governance processes have been established for sustainability reporting. We report on the main risks, mitigation strategies and corresponding controls in the section describing our accounting-related internal control system, internal control system.

In addition, Corporate Internal Audit evaluates the effectiveness of our risk management system, our control mechanisms, our management and monitoring processes and compliance with Group policies, thus contributing to their improvement. It does so by performing independent regular and ad hoc audits at all Group entities and at corporate headquarters on the authority of the Board of Management.