TCFD Report 2024

In conformity with the Swiss Ordinance on Mandatory Climate Disclosures, Rieter has been implementing reporting on climate-related matters in alignment with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) since January 1, 2024. This report outlines how Rieter identifies and manages the physical and transitional risks and opportunities associated with climate change that could have a financial impact on the Group. The eleven disclosures, as recommended by the TCFD, are divided into the following sections: Corporate Governance, Strategy, Risk Management, and Key Figures and Targets.

Corporate governance

Oversight of Board of Directors

The Board of Directors of Rieter Holding Ltd. defines the company’s sustainability strategy at the Group level and sets objectives and priorities. Climate-related matters are embedded in Rieter’s sustainability strategy and were discussed at three Board meetings in 2024. Beginning in financial year 2025, sustainability issues, including climate-related matters, are to be specifically addressed in at least three Board meetings.

In 2024, the Board of Directors mandated the Group Executive Committee to establish a Sustainability Committee to develop the conceptual framework for the implementation of the sustainability strategy. Climate-related matters are embedded in these activities. The Committee includes leaders from the areas of supply chain, finance, legal, occupational safety and environmental protection, communications, human resources and sustainability. Under the leadership of the CEO of Rieter, the Committee met five times in 2024. Beginning in 2025, it is planned that the Committee will meet every two months to assess progress on sustainability initiatives.

For more information on Board oversight, see the Sustainability Strategy section under Governance Sustainability.

Role of the Group Executive Committee

The Group Executive Committee is responsible for implementing the sustainability strategy at the operational level and for monitoring the achievement of sustainability goals. Climate-related matters are embedded in Rieter’s sustainability strategy and goals and were discussed at Group Executive Committee meetings in 2024 as needed. From 2025, sustainability issues, including climate-related matters, will be specifically addressed in at least three meetings of the Group Executive Committee.

For more information on the role of the Group Executive Committee, see the Sustainability Strategy section under Governance Sustainability.

Strategy

Climate-related risks and opportunities

Rieter continuously identifies, monitors and manages climate-related risks and opportunities on a short-term (one year), medium-term (two to five years) and long-term (more than five years) basis. Two categories of climate-related risks and opportunities are differentiated: physical risks and opportunities associated with changing climatic conditions, and risks and opportunities associated with the transition to a low-carbon economy. The risks and opportunities identified by Rieter are summarized in the subsequent table.

Impact of climate-related risks and opportunities

Physical risks and opportunities include on one hand the effects of short-term, acute extreme weather events such as severe storms, heavy rain/flooding, wildfires and landslides. These can result in damage to the Group’s own infrastructure or disruptions in the supply chain, such as supply bottlenecks, or can significantly impact logistics due to disrupted transportation routes. On the other hand, the physical risks and opportunities also include the longer-term chronic, localized effects of climate change. These include the effects of rising average temperatures and/or sea levels, as well as increased and longer periods of heat and drought.

Transitional risks arise from new political, legal, technological, social, market and reputational developments triggered by climate change. These include the pricing of CO₂, compliance with new climate change legislation and regulations to protect the climate, the reliability of energy supply in the context of the energy transition, changing customer preferences towards sustainable products, the development of sustainable technologies, and the redirection of capital flows towards sustainable investments.

The climate-related risks and opportunities identified by Rieter, their impact on the company and the measures taken are described in the following table. A distinction is made between the impacts, risks and opportunities for in-house production (own environmental footprint) and for Rieter’s customers and suppliers (supply chain).

Physical risks and opportunities

Type	Impacts on Rieter: risks and opportunities	Measures
Acute
Extreme weather events (storms, flooding, landslides, wildfires)	Risks Own production Damage to the Group’s own infrastructure can result in unforeseen costs for repairs or replacements, or in production downtime and the associated loss of sales. Supply chain Supply bottlenecks due to damage at suppliers can result in production downtime and the associated loss of sales. Opportunities Supply chain Rieter can assist its customers in assessing the damage and provide appropriate advice. Rieter can expedite repairs and inspections of damaged machines. Rieter can assist its customers in restoring production capacity.	Risk mitigation and exploitation of opportunities Own production Rieter ensures that dealing with extreme weather events is integrated into the contingency plan at all sites. Rieter maintains its critical infrastructure on a regular basis. Own production and supply chain To ensure the resilience and stable management of the supply chain, Rieter conducts regular risk assessments in accordance with an annual audit plan.
Earthquake	Risks Own production Damage to the Group’s own infrastructure can result in unforeseen costs for repairs or replacements, or in production downtime and the associated loss of sales. Supply chain Supply bottlenecks due to damage at suppliers can result in production downtime and the associated loss of sales. Disruptions to sea and road transportation routes can result in higher costs due to rescheduling and delays. Opportunities Supply chain Rieter can assist its customers in assessing the damage and provide appropriate advice. Rieter can expedite repairs and inspections of damaged machines. Rieter can assist its customers in restoring production capacity.	Risk mitigation and exploitation of opportunities Own production Rieter ensures that dealing with extreme weather events is integrated into the contingency plan at all sites. Rieter maintains its critical infrastructure on a regular basis. Own production and supply chain To ensure the resilience and stable management of the supply chain, Rieter conducts regular risk assessments in accordance with an annual audit plan.
Chronic
Long-term local impacts (rising average temperature and sea level, more frequent and prolonged heat waves)	Risks Own production and supply chain Rising average temperatures can lead to higher energy requirements for cooling machines and workplaces in the summer. This can result in higher operating and capital costs and increased greenhouse gas (GHG) emissions. Rising sea levels may lead to the relocation of the Group’s own sites, such as in the Netherlands, as well as the relocation of suppliers’ and customers’ sites at or near sea level. This can result in higher operating and capital costs. In addition, supply bottlenecks may occur, which could have a negative impact on the Group’s sales. More frequent and longer heat waves can have a negative impact on the availability and quality of cotton, resulting in higher procurement costs and/or a shortage of cotton. In addition, heat waves can affect the availability and quality of drinking water and water levels needed for cotton production. Opportunities Own production and supply chain Rising average temperatures reduce the need for heating in winter. This can result in cost savings and reduced GHG emissions. A shortage of cotton on the world market may lead to increased demand for resource-efficient technologies and Rieter’s recycling solutions. Rieter’s technological expertise can help to develop new fiber types and further expand the company’s market leadership.	Risk mitigation and exploitation of opportunities Own production Regular assessment of chronic physical risks as part of the risk management system ensures resource efficiency, energy-efficient production, and maintenance of business continuity. Supply chain In addition, annual supplier risk assessments increase resilience by requiring diversification of the supplier base and identifying alternative transportation routes.
Biodiversity	Risks Own production and supply chain Increasing textile consumption has a negative impact on biodiversity due to resource intensity, the global supply chain and water intensity during the use phase. Opportunities Own production and supply chain Collaboration with various stakeholders in the industry strengthens the company’s ability to innovate, which in turn underscores Rieter’s leading role in sustainability. Supply chain If demand for sustainable products increases, Rieter is able to supply the appropriate technology.	Risk mitigation and exploitation of opportunities Own production and supply chain Increased collaboration with industry and academia will help to facilitate a circular textile industry.

Transitional risks and opportunities

Type	Impacts on Rieter: risks and opportunities	Measures
Regulatory and legal
Pricing of greenhouse gases (e.g. in the form of a CO₂ tax on fossil fuels)	Risks Own production and supply chain CO₂ pricing can lead to higher direct and indirect operating costs, as well as increased investment in renewable technologies. Opportunities Supply chain Thanks to its energy- and emission-efficient product range, Rieter can help its customers to reduce any CO₂ taxes and further expand their market share.	Risk mitigation and exploitation of opportunities Own production In line with its strategy to achieve net-zero emissions by 2040, Rieter plans to switch to renewable energies to further improve energy efficiency, and thus reduce emissions at its production sites. Supply chain The aim is to improve the energy efficiency of all Rieter spinning systems by achieving corresponding targets. The optimized design of Rieter machines and components helps to reduce the CO₂ footprint.
Introduction of new regulations and changes to existing regulations at the local, national or global level	Risks Own production and supply chain Increasing regulatory requirements may increase direct and indirect operating costs through taxes, etc., or capital costs due to mandatory conversion to renewable energy. Opportunities Supply chain Thanks to its energy- and emission-efficient product range, Rieter can help its customers to reduce any CO₂ taxes and further expand their market share.	Risk mitigation and exploitation of opportunities Own production In line with its strategy to achieve net-zero emissions by 2040, Rieter plans to switch to renewable energies to further improve energy efficiency, and thus reduce emissions at its production sites. Supply chain The aim is to improve the energy efficiency of all Rieter spinning systems by achieving corresponding targets. The optimized design of Rieter machines and components helps to reduce the CO₂ footprint.
Market
Changing customer needs and preferences	Risks Supply chain New customer expectations and trends are identified too late and therefore cannot be met (e.g. in recycling). Competitors catch up with sustainable products. Both can lead to a decline in sales volume and a reduction in market share. Opportunities Supply chain Rieter can respond quickly to changing demand with its broadly diversified product portfolio, which enables the economically optimal processing of natural and man-made fibers as well as their blends.	Risk mitigation and exploitation of opportunities Supply chain In the context of strategic development, Rieter uses customer surveys to regularly assess customer needs and preferences.
Reputation
Stakeholder expectations	Risks Own production and supply chain Rieter is not sufficiently perceived as a leader in sustainability because it expresses difficulties in meeting its climate targets. This could result in damage to its reputation, which could adversely affect sales, access to suppliers and service providers, personnel and capital. Opportunities Own production and supply chain Rieter is strengthening its position as a leading company in the areas of sustainability and the fight against climate change, and can therefore increase its attractiveness among key stakeholders.	Risk mitigation and exploitation of opportunities Own production and supply chain The company ensures transparent communication on climate-related issues throughout the Group.
Technology
Market penetration of new technologies for energy efficiency and the reduction of GHG emissions in our own production and product range	Risks Own production The need to purchase new production equipment as part of the strategy to achieve net zero by 2040 may result in higher capital expenditures. Under certain circumstances, production processes may need to be modified. Opportunities Supply chain As the market leader, Rieter has the technological expertise and product range of energy-efficient and climate-friendly spinning systems to strengthen its market position.	Risk mitigation and exploitation of opportunities Own production Rieter is constantly renewing its infrastructure and investing in the latest technologies to achieve carbon neutrality. Supply chain Rieter regularly reviews its research and development strategy and adapts it to the latest technological requirements. Rieter is continuously improving the energy efficiency of its range of spinning systems.

Strategy resilience

It is planned to review the resilience of Rieter’s sustainability strategy in relation to climate change in the financial year 2025.

The faster climate change progresses, the greater the impact of physical risks. To slow global warming accordingly, various measures are needed, which tend to lead to higher transition risks.

In a net-zero scenario, transition risks such as policy, regulatory and legal risks dominate.

Physical risks, such as extreme weather events, storms, hurricanes and rising sea levels dominate in a low decarbonization and adaptation scenario.

Risk management

Process to identify and assess climate-related risks

The climate-related risks and opportunities described in the table were identified by the Corporate Risk and Insurance Management department and reviewed and confirmed by the Sustainability Committee. They were then integrated into existing workflows across all three divisions.

A financial assessment of the identified risks and opportunities is to be developed starting in financial year 2025. The same calculation criteria used to assess Rieter’s general risks and opportunities is to be applied.

Processes for managing climate-related risks

The measures identified to manage climate-related risks are described in the table. The goal is to fully integrate by 2025 the identified risks and opportunities into the Group-wide risk management process described in the section below.

Integration of processes to identify, assess and manage climate-related risks

Rieter has a risk management process that is governed by the “Rieter Risk Management System” directive. The directive defines the important risk categories on which risk management is based, and the offices that deal with the various risks within the Group. In addition, the directive sets out the procedures for the identification, reporting and handling of risks, the criteria for qualitative and quantitative risk assessment, and thresholds for reporting identified risks to the competent management levels.

Once a year, in a workshop directed by the General Counsel, the identified risks and the necessary risk management measures are evaluated in terms of their probability of occurrence and their impact on the Rieter Group.

Key figures and goals

Key figures to assess climate-related risks and opportunities

Rieter assesses its environmental footprint using the following key figures:

Greenhouse gas (GHG) emissions scope 1, scope 2 and partially scope 3,
energy consumption and energy sources or carriers used,
amount of waste generated during production and its further processing and
water consumption.

Water consumption in production has a smaller impact on Rieter’s environmental footprint than GHG emissions, energy consumption and waste volumes, as most processes are not water intensive. However, climate change has a significant impact on water resources and water quality at Rieter sites around the world. Water is becoming an increasingly critical issue worldwide due to rising average temperatures, heat waves and flooding, which is why Rieter continues to collect and evaluate key figures in this area.

GHG emissions and associated risks

Scope 1 GHG emissions include direct greenhouse gas emissions from sources owned or controlled by Rieter, such as emissions from a gas-fired heater or a gasoline-powered company vehicle.

Scope 2 GHG emissions include indirect GHG emissions from the generation of acquired or received electricity, steam, heat or cooling, such as emissions from purchased electricity.

Scope 3 GHG emissions include all indirect GHG emissions not covered by scope 2 that occur in Rieter’s upstream and downstream value chain.

Rieter has been assessing and publishing key figures for scope 1 and scope 2 GHG emissions for several years. This reporting was expanded in 2024 to include market-based scope 2 GHG emissions. In 2024, Rieter also began to compile an overview of scope 3 GHG emissions. The goal is to reduce GHG emissions in the supply chain and set appropriate targets. Reporting of scope 1, scope 2 and especially scope 3 emissions will continue to evolve in 2025.

Climate-related risks and opportunities

To reduce its own environmental footprint, Rieter has set targets in the following climate-related areas for the financial year 2025:

Reduction of energy consumption at own locations,
reduction of GHG emissions (scope 1 and scope 2),
reduction of waste in the production of Rieter spinning systems and
reduction of water consumption.

As part of the corporate strategy to achieve net-zero carbon emissions by 2040 and with the participation in the Science Based Targets initiative (SBTi), Rieter is developing new, ambitious targets to reduce its own environmental footprint. The intention is to continue to assess energy, GHG emissions, waste and water. Rieter intends to define targets for the supply chain. The plan is to publish the new targets in the 2025 Annual Report.