Interaction of material impacts, risks and opportunities with strategy and business model, and financial effects (SBM-3)
Strategy and business model
DB Group’s core business comprises all activities relating to passenger and freight transport and the rail infrastructure required for this. The Strong Rail strategy forms the foundation of our focus and targets, and is a key element in making a sustainable contribution to climate change mitigation, mobility and economic strength in Germany and Europe. In view of the impacts of climate change, our business model is becoming increasingly important: rail transport has lower specific greenhouse gas emissions than other motorized modes of transport and, therefore, offers a significant opportunity to reduce overall emissions in the transport sector. In this way, our offer is intended to make a measurable contribution to achieving the climate policy targets of Germany and the EU.
How we address our material sustainability topics with policies, actions and targets is described in detail in the topic-specific chapters of our sustainability statement.
Environment
As part of our own business activities, transport activities have a material negative impact on climate change, particularly in connection with our greenhouse gas emissions and energy consumption. Closely related to this and just as relevant for us is the issue of air pollution control. Our own business activities are having a negative impact on biodiversity and ecosystems as a result of increasing construction activities to modernize infrastructure. Resource-intensive construction activities in infrastructure also have a material negative impact on the upstream value chain, particularly through greenhouse gas emissions, resource extraction and the associated impact on nature. Financial risks may arise in connection with climate change mitigation and climate change adaptation, for example in the form of increased expenses or loss of revenues as a result of inadequate climate change adaptation measures.
Social
Our core business is personnel-intensive, which can have a material negative and positive impact on our own employees, particularly in terms of working conditions, health and safety and data protection. In the upstream value chain, we have a large number of suppliers, particularly due to our high procurement volumes in the area of infrastructure, which is why we have identified health and safety as a material topic for DB Group. Our rail transport activities result in noise-related impacts on affected communities. Our customers are one of our most important stakeholder groups, for whom there are material negative impacts, particularly in connection with passenger information, personal security and data protection.
Governance
As one of Germany’s largest employers, a good corporate culture is a material topic for us. With the Federal Government as our owner and our capital-intensive business activities, some of which are subsidized by the Federal Government, political engagement represents a material financial opportunity. Due to our international and capital-intensive business activities, in particular, and the high procurement volumes involved, the issues of whistleblower protection, corruption and bribery are also material to us.
DB-specific topics
Our core business in Germany can make a significant contribution to shifting the mode of transport to rail. This results in material positive impacts in terms of climate change mitigation and financial opportunities for DB Group. Poor punctuality figures, on the other hand, have a negative impact on customers and, therefore, also entail financial risks for us.
Resilience to material risks
DB Group regularly conducts qualitative analyses of the resilience of its strategy and business model against material risks. Short-, medium- and long-term time horizons are taken into account and potential interactions between different risk areas considered accordingly. The evaluation is carried out on the basis of interdisciplinary assessments involving relevant specialist areas.
With our integrated approach, key risks and uncertainties are already addressed in the strategy and strengthen the resilience of our business model. In this way, our strategy contributes to the development of a sustainable, future-ready mobility system and to the performance capability of DB Group.
Environment
Dealing with the risks that are material for us is already anchored in our strategy: in the area of climate change, we are focusing on climate change mitigation and climate adaptation – we want to drive forward the transition to shift more traffic to rail and reduce our greenhouse gas emissions through, for example, more renewable energies in the DB traction current mix and alternative drives. At the same time, we are making targeted capital expenditures in the modernization of our infrastructure (e.g. more heat- and weather-resistant facilities), thereby strengthening our climate resilience, ensuring the performance capability of rail for a traffic shift and reducing financial risks from regulatory requirements and environmental regulations.
Social
The regular collective bargaining negotiationsµ f. are accompanied by social partnership and continuous, transparent dialog. The aim is to avoid labor disputes and limit financial burdens.
Governance
To minimize corruption and bribery risks, we have implemented a comprehensive compliance management system which includes regular training, clear guidelines and consistent monitoring. This system is designed to ensure that compliance risks are identified at an early stage and appropriate countermeasures are implemented. This effectively protects us from sanctions and exclusion from public contracts.
DB-specific topics
We deliberately manage the ongoing modernization and digitalization of our infrastructure in order to safeguard the performance capability of rail operations as effectively as possible despite the high level of capital expenditures. At the same time, we focus on the continuous optimization of our processes and the targeted use of digital technologies in order to increase punctuality, reliability and service quality and to minimize potential reputational and financial risks – for example, those arising from penalties or passenger rights claims.
Current financial effects of material risks
As part of the double materiality assessment, material financial risks were identified in the following areas: climate change adaptation, collective bargaining, corruption and bribery, infrastructure modernization and punctuality. Further information on the financial effects of the risks can be found in the opportunity and risk report.