Board of Directors

The Board of Directors is composed of eight non-executive members, of whom 50% are independent. Three members are female, leading to an average ratio of female-to-male board members of 38%. The members have diverse educational backgrounds, including business administration, engineering, finance, law, marketing and psychology. They also represent a range of nationalities, including Belgian, German, Liechtensteinian, Norwegian and Swiss. Employees and other workers do not have a dedicated representative on the Board of Directors.

Executive Board

The Executive Board is composed of six members, all of whom are male. The members have diverse educational backgrounds, including business administration, engineering and economics. They represent diverse nationalities: Austrian, German, Indian/Swiss, Israeli/United States of America, Spanish and Swiss.

Activities and composition in 2024

In 2024, the Board of Directors and/or the Executive Board discussed the following material IRO clusters: decarbonization, sustainable energy consumption, circular operations and circular solutions, well-being of team members, safety of team members, contribution of team members and anti-corruption and anti-bribery. Further discussions conducted by the Board of Directors and the Executive Board focused on the upcoming sustainability reporting obligation and the approval of the double materiality assessment. In these meetings, sustainability-related trade-offs are generally taken into account when making strategic decisions. However, there are currently no specific guidelines to systematically address such trade-offs within the decision-making process.

Hilti's Board of Directors is the supreme executive body within the Hilti Group and is responsible for superintendence, supervision and control of the management. It adopts the fundamental strategic direction for the Group, including sustainability as a key component. As such, it also oversees the establishment of targets for, and the management of, the Group's material IROs. At least annually, the Board of Directors reviews the effectiveness of the Group's actions in addressing these IROs and achieving the associated targets. The Head of Corporate Sustainability hosts these IRO review meetings with the Board of Directors.

The Executive Board reports to the Board of Directors. It is responsible for implementing the Group's strategy, including sustainability as a key element. As such, the Executive Board is involved in setting targets and managing the Group's material IROs. It has direct responsibility for the Group's climate change, human rights in the value chain, corporate culture and supplier sustainability efforts. The responsibility for other material IROs is delegated to senior management. The Head of Corporate Sustainability organizes and coordinates at least one IRO review meeting a year for the Executive Board and senior management. These meetings serve as the basis for preparing the review of the material IROs with the Board of Directors.

Board of Directors incentive scheme

Sustainability-related targets or impacts, including performance assessment against greenhouse gas emission reduction targets, as referred to in the chapter Climate Change, or other sustainability-related performance metrics are not considered in the Board of Directors' incentive scheme.

Carbon pricing implementation

In 2024, the Hilti Corporation implemented a cross charge to its subsidiaries for expenses related to the procurement of green electricity and carbon offsetting projects, both key elements for Hilti's climate neutrality. The subsidiaries are charged a share of these costs based on the volume of their GHG emissions. The cross charge covers 64,369 tons of Scope 1 emissions, 51,387 tons of Scope 2 emissions and 19,027 tons of business travel emissions (part of Scope 3).

Information on the Group's due diligence processes is incorporated by reference in the chapter Notes to the Consolidated Sustainability Statements.

Information on risk management and internal controls over sustainability reporting is incorporated by reference in the chapter Notes to the Consolidated Sustainability Statements.

Business model and value chain

Construction is the largest industry globally. About 15% of global GDP is generated by construction and about 10% of global employment is in construction. Construction covers one of the basic human needs and touches practically everyone living on our planet. The Hilti Group ("Hilti" or "the Group") supplies this worldwide industry with technologically leading products, systems, software and services that provide sustained added value and is therefore making construction better.

Products and services

The Group's product range includes tools and systems covering demolition, drilling, sawing, cutting and grinding, direct and screw fastening, diamond coring and cutting, anchoring, firestop, installation, measuring and software construction services. These products and services provide professional end users with innovative and differentiated solutions. The development of new products, software and services is driven by ten business units.

Operations and structure

Sales operations are organized across country organizations to ensure a localized, customer-focused approach. Europe and North America are the largest markets. They are led by their strongest respective contributors: Germany and the United States. Overall, the Group has sales organizations in over 80 countries and has over 34,000 employees worldwide.

Value chain components

Creating Hilti's unique range of products and services involves a value chain that encompasses diverse activities across upstream, own operations and downstream stages:

Upstream value chain

• Extraction and sourcing of raw materials
• Processing of semi-finished and finished goods
• Upstream transportation of raw materials and goods
• Engagement of service providers in areas like energy, coating, packaging and assembly

Own operations

• Research and development on materials and products
• Sourcing of raw materials, semi-finished and finished goods
• Manufacturing
• Branding, marketing and sales

Downstream value chain

• Direct sales model supported by distribution and aftermarket services
• Product maintenance and repair
• Technical advice and training
• Disposal, reuse or recycling of end-of-life products from the Fleet Management program and Tool Park management service

Business model inputs and outputs

Inputs:

• Financial Capital: Investments, revenue streams, financial reserves
• Intellectual Capital: Patents and proprietary innovations
• Natural Capital: Sustainable resource management practices with focus on environmental responsibility
• Manufactured Capital: Virgin or recycled materials and efficient use of renewable energy
• Human Capital: Skilled and engaged team members
• Social and Relationship Capital: Trusted partnerships and ethical sourcing

Outputs:

• Hardware: Tools and systems covering demolition, drilling, sawing, cutting and grinding, direct and screw fastening, diamond coring and cutting, anchoring, firestop, installation, measuring
• Software: Asset, jobsite, business and workforce management solutions
• Services: Fleet Management, BIM services, value engineering

Value creation

Hilti's strategic objective is value creation through leadership, built on differentiation and direct customer relationships. Value creation goes beyond economic value. Hilti aims to create value not only for the Group's shareholder, but also for customers, suppliers and partners, team members and society as a whole.

Outcomes and stakeholder benefits:

• Shareholder: Consistent profitability and growth driven by innovative and sustainable business practices
• Customers: We aim to be our customers' best partner for productivity, safety and sustainability
• Employees: Employer of choice and great place to work based on caring and performance-oriented corporate culture
• Suppliers and Business Partners: Long term relationships fostering stability, collaboration and innovation in the value chain

Key stakeholders identification

Hilti puts great emphasis on regular communication and dialogue with the internal and external stakeholders. The Group's key stakeholders are customers and employees. Other relevant stakeholders are the Group's large base of suppliers.

Customer engagement

Direct and regular on-site contact with customers is a key element of the Group's business model. In Hilti's sales model, there are typically no intermediaries between the company and end users, fostering long term relationships with customers. In addition to direct contact through account managers, Hilti interacts with customers on a daily basis via customer service, by phone and e-mail, in Hilti Stores and through digital channels like the Group's Hilti Online website and social media.

Hilti systematically asks for customers' opinions as part of regular customer surveys, which include specific questions on sustainability. Engagement on sustainability-related topics with key accounts has intensified, supported by a dedicated corporate Sustainability Business Development Team and regional or local customer sustainability managers. These roles were newly established in recent years. Insights from these numerous customer exchanges help Hilti better understand evolving needs and trends and contribute to the Group's goal of being the customers' best partner for sustainability.

Employee engagement

Regular exchanges with employees are promoted not only in the daily working environment, but also through various internal media and event formats. Hilti conducts its annual Global Employee Opinion Survey (GEOS), covering topics such as team members' engagement, perception of working conditions, equal treatment and opportunities and sustainability efforts. GEOS is an anonymous online survey facilitated by an external provider, with results segmented by teams, departments and functions for targeted insights. Open-ended comments are analyzed globally, and leadership teams define action plans based on findings, ensuring continuous and transparent updates on the implementation of employee feedback. The action plans are globally guided to ensure a uniform approach. It is recommended that three key focus areas are identified, with teams sharing their primary concerns. Together with the manager, the teams will define measures to address issues effectively. The Head of Global Human Resources oversees the survey process, and the results are presented to the Executive Board and the Board of Directors. GEOS serves to better understand employees' needs, concerns and overall engagement with Hilti. Additionally, Hilti encourages employee involvement through events and open dialogues.

Supplier engagement

Internationally, Hilti works with many suppliers and business partners. It is important for Hilti to build partnerships on equal terms and to engage in regular personal discussions. Cooperations are based on the highest ethical standards, which are set out in the Group's Code of Conduct for Suppliers. Before embarking on a business relationship with Hilti, suppliers must contractually agree to follow Hilti's principles against bribery, corruption and the violation of human rights, and to be in favor of humane working conditions and minimum wages, as well as environmental protection and the correct handling of hazardous substances. Regular audits are conducted to assess compliance with this Code of Conduct and the Sustainable Sourcing Policies.

Stakeholder view consideration

The views and interests of the Group's key stakeholders regarding sustainability-related impacts were considered during Hilti's double materiality assessment. Based on the stakeholder engagement, the Group does not currently plan to significantly amend its strategy or business model.

Material impacts, risks and opportunities overview

Hilti's identified material IROs are summarized in clusters within the following topical standards:

Integration with strategy and business model

At Hilti, sustainability has been a core value for decades. However, the growing challenges posed by climate change and societal issues demand a greater commitment. Recognizing these needs, Hilti has significantly intensified its sustainability efforts to meet the rising expectations of stakeholders – including customers, society, regulators and team members.

Hilti recognizes the pivotal role of the construction industry, one of the largest industries globally, in driving economic growth and providing essential infrastructure. As one of the largest contributors to global carbon emissions and a sector facing significant work-related health and safety challenges, the construction industry is transforming. Sustainability is becoming a key factor for business success while health and safety are increasingly prioritized. Hilti's customers are thus looking for a partner in this transformation.

Hilti is ideally positioned to be this partner. With a focus on innovation, the Group helps customers to do things better. That is why Hilti has defined "Making Construction Better" as its purpose. Better means improved productivity, safety and sustainability. Hence, Hilti's commitment to sustainability is deeply integrated in its corporate strategy and reflected in its customer promise. To realize the ambition of being its customers' best partner for sustainability, Hilti is accelerating its existing activities to become a more sustainable company while placing increased emphasis on making customers' businesses more sustainable.

Sustainability strategy framework

The Group's sustainability strategy is based on the three pillars Environment, People and Society, under the overarching purpose of "Making Construction Better".

Value2Society™ model insights

Since 2022, Hilti has used the Value2Society™ model to better understand and quantify its impacts across its upstream value chain and own operations. The V2S model highlights that Hilti's most significant positive impacts stem from both direct and indirect contributions to economic welfare, including job creation, salaries, taxes and retained profits. Further positive impacts relate to employee well-being, created through benefits like voluntary insurance and pension plans and opportunities for development and volunteering for team members employed at Hilti. The analysis also indicates possibilities for improvement. Leveraging these insights, Hilti is committed and continuously works to further improve its V2S.

Financial materiality considerations

While the systematic identification and assessment of sustainability-related opportunities and the Group's overall sustainability risk profile are being developed (including the use of a sustainability risk assessment tool) as part of the overall management process, the management of identified material opportunities is already integrated into Hilti's sustainability governance. The double materiality assessment emphasizes gross impacts and risks; Hilti's risk management system adopts a net risk perspective. Sustainability-related risks are not prioritized over other types of risk.

Materiality assessment process

Hilti performed a double materiality assessment as a key step in developing its sustainability framework and strategic priorities. The double materiality assessment entails the analysis of both impact materiality (positive and negative impacts) and financial materiality (financial risks and opportunities). In line with the European Sustainability Reporting Standards (ESRS), Hilti's entire value chain was considered.

The double materiality assessment was conducted in the following steps:

1. Value chain identification

The Corporate Sustainability Team, with the support of internal subject matter experts, outlined the Group's value chain.

2. Stakeholder identification

The Corporate Sustainability Team identified stakeholders that are users of sustainability information and are also affected by the Group's business activities. They were grouped based on their relevance, with defined appropriate engagement approaches suitable to the respective stakeholder group. Key stakeholder groups identified for Hilti are customers and employees.

3. Impacts, risks and opportunities identification

The Corporate Sustainability Team identified and defined more than 300 group-specific impacts, risks and opportunities (IROs) along the value chain for all topics covered by the ESRS.

4. Impacts, risks and opportunities evaluation

Hilti subject matter experts reviewed, refined and evaluated the list of IROs, considering the perspective of relevant stakeholders based on their experience and business interactions. The evaluation criteria for impacts were based on severity, defined through scale, scope and remediability, multiplied by likelihood of occurrence. For risks and opportunities, the criteria included magnitude of financial impact multiplied by likelihood of occurrence. For assessments related to Hilti's key stakeholders, the subject matter experts' evaluation was further informed by insights gained from stakeholder surveys. To determine material IROs, the Corporate Sustainability Team defined and applied thresholds: "significant and above" for impact materiality and "substantial and above" for financial materiality.

5. Impacts, risks and opportunities validation

The Corporate Sustainability Team presented consolidated overviews of material IROs to senior management, who validated the evaluation. The validation was enhanced with Hilti's Value2Society™ (V2S) model, enabling an objective and impartial comparison with the help of monetized impacts and risks.

6. Impacts, risks and opportunities approval

The Corporate Sustainability Team presented a consolidated overview of material IROs to the Group's Executive Board and Board of Directors, both of which approved the results of the double materiality assessment.

Changes in approach

Hilti's process for approaching the materiality assessment changed compared to last year's sustainability reporting. Previously, reporting was prepared voluntarily with reference to the Global Reporting Initiative (GRI) standards, using a materiality matrix focused on the Group's impact materiality. For the first time, this year's reporting is based on a double materiality assessment aligned with the ESRS. This approach considers both impact and financial materiality. All material IROs identified and reported in this statement are covered by the ESRS disclosure requirements, and no entity-specific disclosures are included.

Review schedule

The next review of the double materiality assessment is planned for the year 2025.

Climate-related IRO identification

The identification and assessment of climate-related IROs is linked to Hilti's Scope 1, 2 and 3 emissions, which are calculated following the GHG Protocol.

For impacts, Hilti identified the main sources of emissions along the value chain. Next, in line with the ESRS, Hilti evaluated these climate-related impacts based on their severity and likelihood of occurrence. To determine the severity of impacts, Hilti monetized the Scope 1, 2 and 3 emissions by multiplying them with the social cost of carbon. This assessment showed that Hilti has material-negative impacts in the medium to long term across the entire value chain.

Physical risk analysis

For climate-related risks, Hilti performed a physical risk analysis for its own manufacturing locations and a transition risks analysis for its own manufacturing locations and the supply chain in 2022.

The assessment for manufacturing locations was performed using different scenarios of global emission development, based on the latest climate science. This includes the Intergovernmental Panel on Climate Change (IPCC)'s assumptions on the key forces and drivers of climate change. The scenarios applied encompass a wide range of GHG concentrations and policy developments. Despite the inherent uncertainties within these scenarios, their broad coverage and diversity yield relatable results. Key factors include the policies and their implementation. However, the scenarios are constrained by the intrinsic limitations of complex climate models.

The following publicly available scenarios were used for an analysis that covered the period from 2022 to 2100:

• Network for Greening the Financial System (NGFS): NGFS net-zero 2050 and NGFS delayed transition
• Climate Action Tracker (CAT): CAT current policies
• Representative Concentration Pathways (RCP): RCP 2.6, RCP 4.5, RCP 6.0, RCP 8.5

The physical risk and transition risk for the manufacturing locations under the above scenarios was calculated considering their location (based on postal code), a statistical model for heat stress, river flooding and tropical cyclones, and financial loss due to damages and decreased productivity.

Hilti did not identify any material climate-related physical risks.

Transition risk analysis

The assessment for manufacturing locations and the upstream supply chain considered price developments based on materials purchased and their countries of origin, taxes on fossil fuels and different scenarios of Hilti's GHG development. The analysis covered the time horizon from 2022 to 2030.

This risk assessment was one input for the double materiality assessment, which was further supplemented by engagement with internal subject matter experts. Hilti identified only material climate-related transition risk.

Climate-related opportunities were evaluated based on engagement with internal subject matter experts, supplemented with insights gained from customer surveys.

Resource use and circular economy IRO identification

For impacts, Hilti initially identified the main areas of resource consumption along its value chain. Next, in line with the European Sustainability Reporting Standards, Hilti evaluated these resource-related impacts based on their severity and likelihood of occurrence. To determine the severity of impacts, Hilti assessed the amount of resources used and the applicability and integration of circularity principles across processes. This assessment highlighted material negative impacts, particularly in the short and medium term, within the upstream value chain and Hilti's own operations.

Hilti conducted a comprehensive resource cost and availability risk analysis targeting its supply chain, as well as a reputational risk analysis for its downstream supply chain:

Risks related to availability and costs of resources

Hilti assessed the potential for supply constraints in critical materials and examined how fluctuations in raw material costs could affect operational stability. A key methodology involved analyzing market trends and geopolitical factors to assess sourcing risks, particularly for high-demand resources or materials sourced from regions with high regulatory or political volatility. Hilti also factored in resource scarcity trends due to increased global demand, which could elevate costs and impact operational efficiencies over time.

Reputational risks

The reputational risk analysis considered the potential impact of Hilti's resource use and waste management practices on its brand perception. This included reviewing the alignment of its practices with industry benchmarks and circular economy principles. Hilti analyzed feedback from stakeholders, including customer surveys, to gauge brand reputation in relation to environmental responsibility, sustainable resource management and waste reduction efforts. The review also incorporated regulatory compliance trends, evaluating how failing to meet future sustainability requirements could damage Hilti's reputation among environmentally conscious consumers and investors.

This risk assessment formed a core input for Hilti's double materiality assessment, which was informed by engagements with internal subject matter experts. Based on materiality thresholds, Hilti did not identify material resource-related risks.

To identify circularity-related opportunities, Hilti engaged internal subject matter experts and supplemented their insights with findings from customer surveys. These engagements focused on potential benefits, such as cost savings through resource-efficient production, enhanced customer loyalty through sustainable practices and the potential to access new markets by adopting circular economy practices.

For the IRO assessment, Hilti conducted consultations with its key stakeholders, employees and customers.

Information on the list of disclosure requirements complied with is incorporated by reference in the chapter Notes to the Consolidated Sustainability Statements.

Transition plan for climate change mitigation

To meet the aspirational goal of keeping global warming below 1.5° Celsius above pre-industrial levels, as outlined in the 2015 Paris Agreement, GHG emissions globally must be significantly reduced. In 2022, Hilti committed to contributing to this effort by setting GHG emission reduction targets that are aligned with the Science Based Targets initiative (SBTi). In 2024, Hilti's targets were validated by SBTi. Besides having set ambitious medium term targets until 2032, Hilti aims for net-zero emissions by 2050. The Group's targets align with limiting global warming to 1.5°C.

Climate change mitigation plan

The Group developed a climate change mitigation plan to fulfil its SBTi commitment. This plan defines absolute emission reduction targets across the organization and identifies key levers to reduce Scope 1, 2 and 3 emissions and actions to achieve these targets:

Reducing Scope 1 and 2 emissions in sales and manufacturing

Hilti's sales organizations and manufacturing sites are key functions for reducing the Group's Scope 1 and 2 emissions. Key levers and actions are the following:

Transitioning to low-emission and renewable energy sources:

• Internal combustion engine vehicles in Hilti's sales operations are replaced with low-emission vehicles
• By purchasing green electricity certificates globally, the Group ensures that electricity used is from renewable sources
• Fossil fuel sources used for heating and manufacturing activities are replaced with alternatives using renewable energy
• Investing in energy-efficient buildings: Newly constructed buildings owned by Hilti need to meet, at minimum, the international gold standard of the German Sustainable Building Council (DGNB)

Reducing Scope 3 emissions from product development, sourcing and use

Hilti's business units play a key role in reducing Scope 3 emissions, which largely arise from sourcing raw materials, semi-finished goods and finished goods. Their contributions fall under the categories of directly purchased goods and use of sold products. Key levers and actions are the following:

• Shifting to input materials with a lower carbon footprint: Product design incorporates recycled materials instead of high-emission alternatives
• Optimizing product design: Material footprint is lowered by designing lighter products, using less material where possible and optimizing product designs for sustainability
• Scaling circularity initiatives: Tools, spare parts and components that are collected from Hilti's Fleet Management Program are reused for repairs to prevent new materials being used for this purpose
• Decarbonizing supply chain: Procurement is shifted towards suppliers with low-emission practices and strong business partnerships are established with suppliers to ensure that raw materials have a reduced carbon footprint
• Electrification in product use: Fewer emissions in the products' use phase are primarily achieved through the electrification of Hilti's product portfolio, transitioning the remaining fuel-powered tools to electric. While Hilti's tools are already highly energy efficient, achieving full climate impact relies on the continued decarbonization of the electricity grid

Reducing Scope 3 emissions from logistics

Key levers and actions to reduce logistics-related emissions are the following:

• Shifting to low-emission transportation options: High-emission transport options, such as air freight, are shifted to lower-emission alternatives like rail transport. Last-mile delivery is transitioned to fossil-free last solutions, such as trucks powered by HVO fuel or other renewable sources
• Leveraging digital means: The enhancement of digitalized processes and the implementation of digital tools to optimize transport routes, frequency of deliveries and replenishment procedures leads to lower emissions
• Optimizing packaging: Optimized packaging to support multiple uses and the reduction of single-use packaging reduces both emissions and waste

Supporting customers' emission reduction efforts

Hilti helps customers to simplify their CO2 reporting and compliance documentation by providing CO2 data for over two-thirds of its product portfolio (measured by net sales) via Life Cycle Assessments (LCAs). Additionally, Hilti provides environmental product declarations for its solutions to support customers in securing specific levels of green building schemes like Leadership in Energy and Environmental Design (LEED), Building Research Establishment Environmental Assessment Method (BREEAM) and DGNB.

Engaging stakeholders for emissions reduction beyond the value chain

Another key lever for reducing emissions lies in building partnerships and participating in sustainability networks to foster dialog and create engagement beyond Hilti's own value chain. Key actions within this lever are the following:

• The Group collaborates with a variety of research institutes and universities
• Hilti is engaged in sustainability-related associations and working groups. The Group is an active member of the United Nations Global Compact (UNGC) Switzerland/Liechtenstein and of the World Business Council for Sustainable Development (WBCSD)

Target rollout and education

To ensure effective implementation of these levers and actions, and to progress in line with the SBTi commitment, the Group defined targets across all relevant organizational units: sales organizations, manufacturing, business units and logistics. While several levers have advanced in recent years, like transitioning to electric vehicles, reusing spare parts and sourcing materials more sustainably, many others are in earlier stages.

To support the progress, the Group has launched an internal education program on its sustainability learning platform. This platform helps to raise employee awareness, expands knowledge of sustainability-related topics and showcases measures everyone can take to contribute towards achieving the target.

Financial planning

Sustainability is one of the core elements of the Group's overall strategy. Strategic decisions, including financial planning, reflect this commitment. Each organizational unit within the Group considers sustainability-related investments and expenses needed to implement the key levers and achieve the Group's GHG emission reduction targets in their financial planning. In line with these targets, no material capital expenditures were invested in coal, oil and gas-related economic activities during the reporting period.

The Group is not excluded from the EU's Paris-aligned benchmarks.

Locked-in GHG emissions

While Hilti has set emission reduction targets and identified key levers to reach them, some emissions may remain locked in. This primarily affects heating systems that rely on fossil fuels, particularly natural gas. The Group distinguishes between owned and rented real estate assets when addressing these emissions.

For buildings and plants owned by the Group, more ambitious measures are either planned or underway to replace fossil systems, which are already at a low level, with renewable energy sources. In several of the Group's plants, heating systems are being upgraded to electric heat pumps, district heating or biogas.

In rented properties, fixed GHG emissions are lower, since lease contracts eventually end, creating an opportunity to switch to buildings equipped with non-fossil fuel systems. The Group's guidelines take into account regional differences in the availability of highly sustainable rentable buildings.

For new buildings, the Group aims for DGNB gold-standard certification to prevent locked-in GHG emissions from the outset. Additionally, investors constructing for or leasing buildings to the Group are encouraged to adopt high sustainability standards for similar objectives.

Due to relatively short development cycles, the locked-in effect of Hilti's products is immaterial. Emission improvements can be implemented in each development cycle. Nevertheless, Hilti's core sustainability principles are applied to address any potential locked-in GHG emissions.

Policies related to climate change

The Group has established policies that address the material IROs related to decarbonization, sustainable energy consumption and low carbon footprint solutions. These policies focus on key areas such as climate change mitigation, energy efficiency and renewable energy. They include the Environmental Policy and the Sustainable Sourcing Policies for both direct and indirect procurement.

Environmental Policy

The Environmental Policy elaborates on Hilti's Code of Conduct sections regarding sustainability and reaffirms the Group's commitment to reducing its ecological footprint. For example, it outlines measures to reduce raw material and energy consumption.

Sustainable Sourcing Policies

The Sustainable Sourcing Policies for direct procurement and indirect procurement build on Hilti's Code of Conduct principles related to sustainability and human rights. These policies provide guidance on embedding sustainability into procurement processes, such as assessing suppliers based on environmental and social criteria.

Actions and resources related to climate change

Hilti's climate change mitigation efforts are structured around key levers to reduce Scope 1, 2 and 3 emissions across the organization, with specific actions and resource allocation to achieve science-based targets.

Resources to achieve targets

Achieving the ambitious GHG reduction targets requires a dedicated allocation of resources, including significant investment in research, innovation and infrastructure to support the transition to low-carbon solutions. This involves allocating substantial operational expenditures and capital to enable systemic changes across Hilti's value chain, from sourcing and production to transportation and operations. Additionally, financial commitments to energy-efficient technologies and sustainable practices, alongside enhanced funding for the development of new, environmentally responsible products and infrastructure, are essential to drive meaningful progress toward reducing Hilti's carbon footprint.

GHG Emissions Reduction Pathway

The following visual representation outlines Hilti's pathway to achieving its climate targets, starting from the 2022 baseline of GHG emissions covered by the SBTi near-term target and progressing through 2030. It captures both the anticipated impact of activity growth on emissions and the reductions enabled by key GHG reduction activities within Hilti's climate strategy.

Key actions include:

• Transitioning Hilti's vehicle fleet to low-emission alternatives
• Reducing the carbon footprint of products through innovations in product design and using fewer or recycled input materials
• Scaling circularity initiatives like reusing spare parts to reduce the need for new materials
• Decarbonizing the supply chain by working with low-emission suppliers and cutting emissions in energy-intensive industries
• Emission reductions in the product use phase stem from further electrifying Hilti's product portfolio and relying on a cleaner electricity grid
• Optimizing logistics with low-emission transportation

These initiatives collectively enable significant progress toward Hilti's near-term SBTi-aligned target for 2032 and the ultimate goal of achieving net-zero emissions by 2050.

Hilti identified its decarbonization levers and actions independently of the use of climate scenarios.

Climate targets overview

In 2023, Hilti achieved CO2 neutrality within its own operations, marking a significant milestone in its commitment to reducing carbon emissions. Hilti's broader climate strategy is guided by emission reduction targets validated by the SBTi.

Long term commitment: Net-Zero by 2050

The Hilti Group aims to reach net-zero GHG emissions across its entire value chain by 2050, with 2022 as the base year. The commitment includes:

• Scope 1 and 2 GHG emissions (approximately 5% of Hilti's total emissions): A 90% absolute reduction
• Scope 3 GHG emissions (approximately 95% of Hilti's total emissions): A 90% absolute reduction covering the following categories: purchased goods and services, capital goods, fuel and energy-related activities, upstream transportation and distribution, waste generated in operations, business travel, employee commuting, upstream leased assets, downstream transportation and distribution, use of sold products and end-of-life treatment of sold products

Near-term targets for 2032

To drive near-term progress, Hilti has set interim science-based targets for 2032, with 2022 as the base year:

• Scope 1 and 2 GHG emissions: A 50.4% absolute reduction
• Maintaining 100% renewable electricity sourcing
• Scope 3 GHG emissions: A 30% absolute reduction covering the following categories: direct purchased goods and services, fuel and energy-related activities, upstream transportation and distribution, business travel and use of sold products

The target boundary includes land-related emissions and removals from bioenergy feedstocks.

Interim targets for 2030 are derived linearly from the 2032 SBTi near-term targets and align with these objectives to ensure alignment and continuity in progress.

Base year and GHG coverage

2022 was selected as a representative base year after COVID-19 disruptions. Hilti's targets cover all greenhouse gases defined under the ESRS, calculated in CO2 or CO2 equivalents.

Target alignment and validation

These targets align with Hilti's Environmental Policy objectives, reducing the Group's ecologic footprint while integrating sustainability into procurement processes.

Progress monitoring and stakeholder involvement

Performance is reviewed annually at multiple organizational levels, in alignment with Hilti's strategic targets. These efforts involve diverse internal and external stakeholders, including supply and development teams, who played a pivotal role in setting SBTi-aligned targets.

Future considerations

While future scenarios are considered, including shifts in sales volumes and customer preferences, all targets are consistent with limiting global warming to 1.5°C under the SBTi framework. These targets are independent from sectoral decarbonization pathways. The targets are validated by the SBTi.

Energy consumption and mix

Assured by PwC 2024 (limited assurance)

As Hilti operates in high climate impact sectors, the table above disaggregates the Group's total energy consumption from fossil sources.

Energy production and mix

The Group produced 8,405 MWh (2023: 6,708 MWh) of renewable energy via the photovoltaic systems installed globally.

Total GHG emissions disaggregated by Scopes 1 and 2 and significant Scope 3

¹ Interim targets for 2030 are derived linearly from the 2032 SBTi near-term targets and align with these objectives to ensure alignment and continuity in progress. ² The SBTi near-term target covers 78.86% of Scope 3 emissions from the base year 2022. ³ The 2023 values for Gross market-based Scope 2 GHG emissions were restated due to better data quality, increasing the emissions by 629t from 339t to 968t. ⁴ The 2023 values for Downstream transportation were restated due to better data quality, decreasing the emissions by 5,335t from 9,187t to 3,852t.

Assured by PwC 2024 (limited assurance)

Biogenic emissions

In 2024, gross biogenic emissions of CO2 from biomass used in Scope 1 GHG emissions amounted to 0 tCO2eq (in 2023: 0 tCO2eq). In 2024, gross biogenic emissions of CO2 from the combustion or biodegradation of biomass in Scope 2 GHG emissions amounted to 0 tCO2eq (in 2023: 0 tCO2eq). In 2024, gross biogenic emissions of CO2 from the combustion or biodegradation of biomass in Scope 3 GHG emissions amounted to 1,011 tCO2eq (in 2023: 821 tCO2eq).

Net-zero targets and residual emissions

The table above outlines the gross Scope 1, 2 and 3 emission targets for the year 2050. In accordance with the SBTi commitment, the Group aims to neutralize any residual emissions to achieve Net-Zero by 2050. The Group has yet to determine the specific removal activities and the points within the value chain where the residual emissions will be neutralized.

Scope 3 exclusions

The table excludes Scope 3 emissions from the following categories:

• Category 8 (upstream leased assets) due to the Group not having relevant activities in this category
• Category 10 (processing of sold products) due to the Group not selling intermediate products to end users
• Category 13 (downstream leased assets) due to the Group not renting out buildings. Products leased out by the Group are covered in Category 11 (use of sold products)
• Category 14 (franchises) due to not being part of the Group's business activities
• Category 15 (investments) due to immateriality for the Group

Data quality and methodology

In 2024, Scope 3 emissions are calculated using 22% supplier information, as well as literature-based data and data generated by a multi-regional input-output (MRIO), spend-based model. The preferred method is supplier information, followed by literature-based data. If these are unavailable, average-data or spend-based methods supported by the MRIO are used. Hilti is actively working on enhancing and extending the collection of supplier information to increase the accuracy of the GHG calculation in the future. No calculation tool is utilized for the time being.

GHG intensity based on net revenue

Net revenue is disclosed in the financial statements, with details being presented in Note 2.1 on Operating income.

Energy intensity

In 2024, the total energy consumption from activities in high climate impact sectors, per net revenue from activities in high climate impact sectors in MWh/CHF in million, amounts to 73 (2023: 74 MWh/CHF in million).

Net revenue reconciliation

The revenue-generating activities of Hilti are either directly related to the manufacture and trade of power tools, fastening systems and protective systems or support these objectives and therefore all fall into high climate impact sectors.

Carbon credits cancelled in the reporting year

Carbon credits are acquired through emission compensation projects developed exclusively for the Group in collaboration with the Hilti Foundation and an external partner. The emission savings are monitored and verified by external parties. All projects undergo third-party certification which is conducted in accordance with either the "Gold Standard" or the "Verra Verified Carbon Standard" for offsetting projects.

The total amount of carbon credits planned for cancellation under existing contractual arrangements is 438,000 tCO2eq until the reporting period 2028.

Carbon neutrality achievement

The Group's milestone of carbon neutrality within its own operations was reached by emission reduction, replacement of fossil energy sources, in-house production of green electricity and offsetting at the end of 2023. Compared to a scenario without mitigation measures, the Group saved 60% of Scope 1 and 2 emissions, compared to a 2019 baseline, and offset the remaining 40% with third-party verified carbon credits. In addition to Hilti's offsetting efforts, the Group provides substantial funding to support Beyond Value Chain Mitigation (BVCM) measures worldwide, such as boosting research and developing engineering standards for sustainable construction.

Internal carbon pricing

In 2024, the Hilti Corporation implemented a cross charge to its subsidiaries for expenses related to the procurement of green electricity and carbon offsetting projects, both key elements for Hilti's climate neutrality. The subsidiaries are charged a share of these costs based on the volume of their GHG emissions. The cross charge covers 64,369 tons of Scope 1 emissions, 51,387 tons of Scope 2 emissions and 19,027 tons of business travel emissions (part of Scope 3).

Policies related to resource use and circular economy

Hilti's approach to resource use and the circular economy is structured around the Environmental Policy and the Code of Conduct for Suppliers and Sustainable Sourcing Policies, along with newly established guidelines for spare parts reuse. Together, these frameworks aim to reduce the ecological footprint across Hilti's operations and supply chain.

Environmental Policy

The Environmental Policy emphasizes minimizing the reliance on virgin materials through strategies such as material reuse and recycling, including initiatives like tool case and battery recycling, as well as supporting opportunities for reuse through circularity-focused design principles. The policy also promotes resource efficiency and circularity throughout the product life cycle.

Spare parts reuse guidelines

To support the objectives of the Environmental Policy, global process guidelines were introduced for the extraction, storage and replenishment of reusable spare parts within Hilti's repair supply chain. These guidelines standardize and scale up the reuse of spare parts, enhancing efficiency across the Group's repair processes. Based on best practices, it defines the Kanban-driven replenishment process within tool service centers and ensures adequate controls. The pre-sorting of inbound tools awaiting parts extraction supports an efficient extraction process, enabling the local-to-local reuse of parts.

Sustainable Sourcing Policies

The Sustainable Sourcing Policies for direct procurement and indirect procurement specify how sustainability is incorporated in direct and indirect procurement processes by, for example, providing guidance on how suppliers are assessed according to environmental and social criteria.

Code of Conduct for Suppliers

The Code of Conduct for Suppliers and Third-Party Intermediaries further reinforces these practices along Hilti's supply chain, requiring suppliers to minimize waste and emissions, prioritize material recycling and adhere to international standards for managing hazardous materials.

Actions and resources related to resource use and circular economy

Hilti advances resource efficiency and circularity by focusing on three key levers: reducing overbuying, maximizing the reuse of materials and advancing recycling processes. These actions support Hilti's objectives for circular design and are integral to the company's decarbonization strategy, reducing the material negative impact across the value chain and acting on the material opportunity.

Key levers

Hilti's circular economy approach emphasizes three primary areas:

Reduce

The focus is on minimizing wasteful overbuying and enhancing customer resource optimization through tool park optimization, as well as the tools on demand and loan tools offerings. This includes helping Hilti's customers manage and optimize their tool inventory to reduce unnecessary purchases.

Reuse

Processes prioritize intelligent reuse of tools, batteries and spare parts, leveraging the collection of Fleet Management tools to reuse these items, following stringent internal quality assessments, and ensure the highest degree of utilization possible.

Recycle

Recycling initiatives are continuously improved by working closely with partners to ensure that materials are returned into circulation.

Detailed reduction actions

Hilti's approach to minimizing resource outflows leverages durable product design, circular business models and tailored tool park solutions to reduce waste and optimize resource use.

Design for durability and longevity

Hilti products are engineered for long-lasting performance, built with high-quality materials and subjected to rigorous testing. This ensures durability and reliability in demanding applications, reducing resource inflows and outflows by minimizing the need for frequent replacements.

Circular business models

Hilti's Fleet Management Model and On!Track solution help customers optimize tool usage and inventory and avoid overconsumption. By enabling efficient asset tracking and inventory management, these services decrease the demand for new tools, lowering both resource inflows and outflows. Flexible short- and medium term use solutions provide additional ways for fleet customers to meet tool needs without unnecessary purchasing.

Tool park optimization service

Customers are offered an individually tailored tool inventory based on usage patterns and needs. Hilti's Nuron cordless tool platform collects and analyzes data to provide insights into tool utilization, helping customers maintain an optimal tool park.

Detailed reuse actions

Hilti's reuse strategies are supported by a high tool collection rate that allows the effective repurposing of returned items. Key activities within Hilti's reuse initiatives include:

Spare part reuse in repair

Based on strict quality guidelines and in collaboration with customers, spare parts from returned tools are extracted and reused to reduce the need for new parts where possible, contributing to resource conservation. This practice has become a standardized process in Hilti's tool service centers.

Battery reuse in warranty exchange

In 2024, a program was launched to reuse batteries that pass quality testing after they are returned by customers. A successful pilot in selected markets has been initiated.

Premium tool pool program

Returned tools that meet Hilti's quality standards are added to a premium loaner inventory, when possible. This ensures that functional tools continue to serve customer needs, reducing the demand for new tools while increasing tool utilization and longevity. A robust platform for scaling these processes is in place, with further improvements planned for efficiency and reliability in the coming year.

Tool donations

Donations of returned tools provide significant benefits to communities, educational institutions and humanitarian organizations. This initiative is underpinned by an operational process that will be rolled out globally.

Circularity factory

A new circularity-focused repair center is expected to be completed in the first half of 2025. With this facility Hilti intends to meet at least the gold certification criteria of the German Sustainable Building Council and support its sustainability and reuse targets.

Detailed recycling actions

Hilti prioritizes recycling initiatives to close the loop on materials and minimize waste from end-of-life products.

Recycling through partnerships

If reuse is not feasible, Hilti collaborates with high-quality recycling partners to ensure materials are recycled efficiently, with a high share of tool mass (primarily metals) recoverable through these efforts. Customers receive transparency regarding the circular impact of Hilti's solutions with customized circularity reports, including information on the recycled content in tools and second life usage of customers' tool parks.

Closed loop tool case recycling

Hilti's tool case recycling program exemplifies closed-loop principles, using recycled materials in production. Tool cases from the European market are returned to a central facility where they are assessed for reuse or processed and reintegrated into manufacturing as recycled material.

Resources and implementation plans

To support the action plan for circular operations and circular solutions, a mix of current and future operational (Opex) and capital expenditure (Capex) are allocated across key projects. These resources aim to scale up capacities for the key levers while aligning with circular economy objectives.

Resource allocation

Personnel and project resources are designated to accelerate the repair and reuse of critical components, including fleet returns, batteries and spare parts. Additionally, investments in technological solutions are underway to enhance tracking and handling efficiency across the supply chain.

Current financial resources

Hilti has allocated substantial financial resources to support these initiatives, mainly in the financial categories of operating expenses. These allocations ensure the necessary operational support to lay the groundwork for implementing circular design principles in business activities.

Future financial resources

Future Capex will focus on scaling up circularity initiatives, with additional investments in greener technologies and materials projected over the next five years.

Hilti's ability to fully realize these objectives depends on specific external factors, such as policy developments in sustainable infrastructure and market evolution towards circular economy practices.

Targets related to resource use and circular economy

Hilti's approach to resource use and the circular economy is guided by strategic objectives rather than quantitative targets, focusing on maximizing reuse, minimizing overbuying and adopting sustainable sourcing practices. While Hilti has not set mandatory or legislated quantitative targets, initiatives are structured around core circular economy principles aimed at optimizing resource use and reducing primary raw material reliance. Specifically, the Group prioritizes:

Circular material use rate

By maximizing the reuse of tools, batteries and spare parts, and enhancing recycling processes, Hilti actively seeks to capture remaining utility and minimize material waste in alignment with circular economy objectives wherever possible.

Minimization of primary raw materials

Hilti's operations focus on intelligent reuse, recycling of high-value materials and designing products for durability, all of which reduce the demand for new raw materials and support decarbonization goals.

Sustainable sourcing of renewable resources

Hilti's commitment to responsible sourcing includes collaborating with suppliers to ensure the sustainable and traceable origin of materials.

These qualitative goals reflect Hilti's voluntary commitment to sustainable resource management and circularity. They are also supported by a robust set of initiatives designed to continually improve Hilti's reuse, recycling and resource optimization practices.

ESRS E5-4: Resource Inflows

Accounting Policies

Total weight of products, technical and biological materials

Total amount of materials sourced during the reporting period that was or will be used to manufacture Hilti's product offering. Total weight includes all raw materials, associated process materials and (semi-)manufactured goods or parts, including packaging. Hilti applies a consistent cut-off period and classification system globally.

Percentage of biological materials that are sustainably sourced

Proportion of biological material deemed sustainable based on the internationally recognized certification schemes: (i) Forest Stewardship Council (FSC); and (ii) Programme for the Endorsement of Forest Certification (PEFC). The proportion is calculated as the weight of biological materials deemed sustainable divided by the total biological material sourced.

Total weight and percentage of secondary reused or recycled components, secondary intermediary products and secondary materials

The total weight of previously used or recycled materials sourced. The preferred method to determine the metric is supplier information, followed by literature-based data (country and material averages).

Material Context

Hilti's operations utilize a diverse range of resource inflows, primarily for manufacturing and packaging, and the Group is committed to managing associated material IROs specifically related to critical raw materials (CRMs):

• Products and materials: Hilti's manufacturing relies on steel, chemicals, polymers, aluminium, battery cells, electronics, ceramics, copper, zinc, magnesium, paper (for instructions for use) and various other metals and minerals, including critical raw materials such as cobalt, tungsten and tantalum.

• Packaging: Hilti uses polymers, cardboard, paper and wood for packaging, focusing on sustainable sourcing and recyclability.

• Biological materials: In the category of biological material, Hilti is primarily sourcing cardboard, paper and wood.

Resource Inflows Metrics

Critical Raw Materials

Ensuring reliable access to critical raw materials (CRMs), as outlined in the EU Critical Raw Materials (CRM) Act, is vital to Hilti's operational resilience and aligns with emerging regulatory initiatives across G20 countries. Materials such as cobalt and tungsten have been identified as critical, given their supply risks and importance for technological advancement. Through investing in R&D projects, Hilti aims to minimize dependence on CRMs, thereby enhancing supply chain stability and reducing environmental impacts.

Resource outflows

Hilti's product and service offerings are designed to align with circular economy principles, emphasizing durability, reusability and recyclability throughout the production and life cycle:

Durability and Design

• Durable power tools: Hilti's high-quality power tools are engineered for long lifetimes, designed to endure demanding environments and manufactured with durable components to minimize premature obsolescence.

• Repair and reuse services: The Group offers comprehensive repair and maintenance services, enabling customers to maximize the useful life of their tools and equipment. This approach supports reuse and helps reduce waste associated with frequent replacements.

• Recyclable input materials: Hilti products are constructed with a high proportion of metal components, which are well suited for recycling. This choice of materials enhances recyclability at the end of the product's life, reducing the need for virgin resources.

• Sustainable packaging: Packaging incorporates high percentages of recyclable materials, ensuring that packaging waste is minimized and contributing to circularity by supporting recycling infrastructure.

Recyclability Metrics

Rate of recyclable content in products: 57.4% (2024), down from 57.8% (2023) – a change of -0.4 percentage points.

Rate of recyclable content in packaging: 93.4% (2024), up from 89.3% (2023) – a change of 4.1 percentage points.

Recyclability of products is calculated by combining their weight with their assigned recyclability percentage. Similarly, the recyclability of packaging is determined by factoring in both its weight and recyclability percentage.