The sustainability information included in KONE’s Sustainability Statement is based on the double materiality assessment (DMA), conducted under the CSRD framework. KONE has identified sustainability-related risks and opportunities most relevant to KONE’s business and stakeholders, and KONE’s broader societal impacts on people and environment.
KONE’s double materiality assessment (DMA) approach consisted of four phases to determine material topics and provide input for the strategy development. These phases included value chain mapping, impact assessment, financial assessment, and final materiality determination. The DMA was completed in 2024. The DMA results will be reviewed annually and updated when necessary. KONE’s earlier materiality assessment, human rights impact assessment and third-party due diligence process, non-financial risk assessment, and climate change scenario analysis, which have been integrated into KONE’s risk management processes, were used as a starting point for the DMA.
The results of the DMA including the material impacts, risks and opportunities (IROs) were reviewed by a management steering group consisting of KONE Executive Board members and other management members. These members were selected based on their ownership, roles and responsibilities in the area of sustainability and reporting. The results of the DMA were reported to the Audit Committee of the KONE Board of Directors. Internal control over the DMA process was ensured through the reviews of the results and the adopted systematic assessment methodology.
In the initial phase of the DMA, KONE mapped its value chain and listed the main business activities across upstream, own operations, downstream, and cross-cutting activities through interviews with key internal stakeholders. The geographical locations and key external stakeholders affected by these activities were identified for each, in line with the reporting principles. Specific geographies, high-risk areas, and at-risk functions were taken into account.
The impacts, risks, and opportunities were evaluated by KONE’s subject matter expert teams on a scale from 1 to 5, aligning with the ESRS criteria. These results can be easily compared with KONE's risk management process and tool, allowing for the consideration of sustainability risks alongside other business risks in terms of relative position and priorities. The views of KONE’s stakeholders were provided through summarized input by the involved subject matter experts through their interaction with affected stakeholders and engagement with the users of KONE’s Sustainability Statement.
During the impact assessment phase, KONE evaluated, scored, and prioritized the various impacts (positive or negative) and activities within its value chain that could affect people or the environment based on their scale, scope, likelihood, and irremediability, which was considered for negative impacts. In case of a potential negative human rights impact, the severity of the impact was prioritized over its likelihood.
The financial assessment phase included identification of key risks and opportunities posing financial implications, together with an assessment of their magnitude and likelihood, as well as the timeframe.
The following scales were applied:
Likelihood of occurrence:
- Highly unlikely to occur: >0–1%
- Unlikely to occur: >1–10%
- Possible to occur: >10–30%
- Likely to occur: >30–60%
- Highly likely to occur: >60–100%
Magnitude of financial impacts:
- Nominal financial impact
- Moderate financial impact
- High financial impact
- Significant financial impact
- Critical financial impact
Timeframe:
- Short <1 year
- Medium 1–5 years
- Long >5 years
The connections between impacts, and dependencies with the risks and opportunities, were considered as part of the identification of IROs, mainly in relation to geographical locations and IRO contents in the subtopics, however not systematically cross-referencing all connections and dependencies. Each prioritized risk, opportunity or impact is assigned to a risk owner. The risk owner appoints a person in a relevant role to be responsible for the specific IRO. The responsible person implements the necessary IRO treatment actions, and reports regarding progress to the risk owner.
As a result of the DMA, a comprehensive overview of KONE’s IROs relating to each sustainability topic was formed. When an impact and/or risk or opportunity score of any topic exceeded a certain threshold, the topic was identified as material to KONE. The treatment of such IROs were prioritized to meet KONE's strategic sustainability objectives and ensure alignment with stakeholder expectations. In principle, all mandatory data points have been included and disclosed following the materiality principle of the ESRS standard. No material entity specific IROs were identified.
Material ESRS topics
KONE has identified material risks and negative and positive impacts related to climate change and energy, negative health and safety impacts related to own employees, value chain workers and end-users, and positive impacts related to corporate culture, protection of whistle-blowers and corruption and bribery. IROs, relevant for each ESRS topic, are described in summary tables in the beginning of topical sustainability sections accompanied by the relevant information on time-horizon, value chain information and the management actions taken to address the IROs.
Current financial effects of KONE’s material risks and opportunities do not expose KONE’s financial position, financial performance or cash flows to significant risks for material adjustments to the carrying amounts of assets and liabilities. During 2024, KONE’s strategy and business models showed resilience in harnessing the material opportunities and addressing material impacts and risks stated in this report, mainly driven by healthy geographic and business line mix, supported by robust supply chain. The conclusion was supported by a qualitative assessment based on KONE reaching the set strategic targets and KPIs during the reporting period.
Progress in strategy execution and performance in strategic sustainability KPI’s is monitored and as part of quarterly reporting in line with KONE’s governance structure. KONE Risk Management Policy defines the roles and responsibilities for The Executive Board and the Board of Directors. These roles and responsibilities apply when they oversee and monitor the material impacts, risks and opportunities related to KONE's strategy implementation and targets. KONE’s material impacts, risks and opportunities have been considered thoroughly in the planning of the new strategy and during strategy implementation in 2024.
To find our reports from previous years, please go to the archive list on News & Insights > Publications.