Climate change – E1

Impact, risks and opportunity management

Operations and the value chain generate CO₂ emissions from energy and fuel consumption, transport, raw material extraction, manufacturing and product use. This contributes to climate change. Only climate transition risks have been identified; no material opportunities have been determined. The risks include investments needed to phase out fossil fuels, higher costs due to carbon pricing and rising energy prices, and potential customer losses if climate targets are not met. Additional costs may also arise from modifications to installations so as to comply with laws and regulations. These risks are taken into account in Hydratec’s business model, but a comprehensive assessment has not yet been carried out.

Objectives

Hydratec has targets aimed at reducing greenhouse gas emissions. These form part of our sustainability strategy and policy, namely to reduce Scope 1 and 2 emissions by 50% and strive to reduce Scope 3 emissions by 2030 compared to the base year 2023. These targets are not fully in line with the Paris Agreement, which aims to limit global warming to an increase of 1.5°C. The targets are set for 2030 and use 2023 as the base year. Every attempt has been made to ensure the quality and accuracy of the information wherever possible in the process. Significant adjustments in the calculations in the coming years will be reported transparently.

Policy

Over the past year, policies have been developed to mitigate the material impact, risks and opportunities related to climate change mitigation. This policy focuses on identifying, assessing, managing and remediating climate-related issues. The issues covered by this policy are climate change mitigation and energy efficiency. Regarding climate change mitigation, the policy focuses on reducing greenhouse gas emissions and minimising our carbon footprint. In relation to energy efficiency, the policy aims to encourage initiatives within the entities that help to reduce energy and make energy consumption more efficient. This covers both own operations (Scope 1 and 2) and products and the wider value chain (Scope 3).

Actions

In 2025, actions on climate change mitigation are formulated. The purpose of these actions is to achieve climate-related targets and to prevent, mitigate and, where possible, remediate negative impacts. In formulating these actions, the potential for greenhouse gas emission reductions was identified, as well as the significant financial resources associated with implementing these actions. These resources are subdivided into operating expenses and capital expenditure. Below is a description of the key actions:

Scope 1 and 2

Hydratec will continue to work on reducing its Scope 1 and 2 emissions in 2026 by making its premises more sustainable, for example through insulation and energy-saving measures. In addition, Hydratec will focus on increasing its proportion of green electricity.

Scope 3

Within Hightech Components, the entities will start requesting specific emission factors for raw materials from suppliers. Based on this, conscious choices to reduce our Scope 3 emissions have been made. This can be achieved, among other things, by making agreements with suppliers or by opting for alternative raw materials with lower emissions.

Within Industrial Systems, the entities will calculate the actual energy consumption of machines and take action to reduce Scope 3 emissions. In addition, attention will be paid to reducing the number of journeys made to customers abroad, for example by making our logistics more efficient or using alternative means of transport with lower emissions.

Metrics

Energy consumption and mix

Gross Scope 1, 2 & 3 emissions and total greenhouse gas emissions

Methodology

Location-based: 
Location-based refers to the average power generation mix (green/grey) for a given location, including local, sub-national or national boundaries. To calculate location-based emissions, emission factors are used for the average grid mix (TTW) of the relevant locations for Scope 2. Chain emissions (WTT) are accounted for in Scope 3, category 3.

Market-based:
Market-based refers to the energy mix (green/grey) purchased by the company. Hydratec distinguishes between two different types of energy within the organisation: green and grey. To calculate market-based emissions, the average grey electricity (TTW) and green electricity (TTW) emission factors have been used for the relevant locations. Chain emissions (WTT) are accounted for in Scope 3, category 3.

Total Scope 1, 2 and 3 emissions:
Hydratec’s Scope 1, 2 and 3 emissions provide an overview of the CO₂ equivalents emitted within our operations and value chain in the reporting year. The carbon footprint has been calculated based on the European Sustainability Reporting Standards (ESRS), where the ESRS makes references to the Greenhouse Gas (GHG) Protocol. The methodologies used are derived from this standard. Furthermore, data from both internal and external sources and emission factors from different (academic) sources was used during the calculation.

Progress

Gross Scope 1 and 2 emissions decreased compared with the previous year, while gross Scope 3 emissions showed an increase. However, these increases observed from the previous year do not automatically lead us to modify our conclusions or issue restatements on our operations. They are mainly the result of the availability of more and better-quality data, which has led to a more accurate and substantiated understanding of emissions. The table below shows progress against the targets set out in the ESG strategy section. For Scope 1 and 2, Hydratec has set a target to reduce emissions by 50% compared to the base year 2023. A 40.5% reduction has now been achieved, making substantial progress towards the 2030 target. This development underlines the effectiveness of the measures deployed in our own operations, such as making buildings more sustainable and using green energy.

For Scope 3, Hydratec focuses on structurally reducing emissions in the value chain. A 19.8% reduction has been achieved against the base year of 2023. This development reflects the initial results of initiatives with suppliers and logistics partners, including improved understanding of emissions at suppliers and optimised logistics flows. While the comparison with the previous year shows an increase of 18.9%, the comparison with the base year shows a marked decrease. Year-on-year differences under Scope 3 may be influenced in part by further improvements in data quality and availability.

The management report as referred to in Part 9 of Book 2 of the Dutch Civil Code monitors the elements from the foreword to the historical summary inclusive. This version of the annual financial reporting of Hydratec Industries N.V. for the financial year ending on 31 December 2025 is not presented in the ESEF format as specified in the regulatory technical standards for ESEF (Delegated Regulation (EU) 2019/815). The set of ESEF reports can be downloaded at the download page.