Burkhalter : Climate reporting in accordance with TCFD 2024

Climate reporting in accordance with TCFD

As a full-service provider of building technology that spans all trades, the Burkhalter Group assumes that demand for its services in the area of energy-efficient buildings will increase because of Switzerland's 2050 net-zero target. As part of its climate transition plan, the company has defined a climate target for its own vehicle fleet and is therefore focusing on where most of the company's own greenhouse gas emissions are generated.

In the reporting year, the Burkhalter Group analysed and assessed the climate-related risks and opportunities identified in 2023 in greater detail by carrying out a qualitative scenario analysis. Since 2024, the company has fully integrated climate-re-lated risks into risk management as a separate category. In 2024, the focus remained on the systematic collection of energy and emissions data and refining the climate transition plan in line with the Swiss Federal Government's 2050 net-zero target.

Governance

At the Burkhalter Group, the Board of Directors has overall responsibility for the sustainability strategy and therefore also for strategic climate issues. Once a year, the CEO in-forms the Board of Directors about the progress and chal-lenges in achieving the targets.

The Burkhalter Group's management team takes the strate-gic decisions on climate issues and creates the necessary framework to implement the climate protection measures. The management team is also responsible for monitoring greenhouse gas emissions and reviewing the achievement of targets.

In the local Group companies, the managing directors are re-sponsible for implementing climate protection measures.

The Burkhalter Group's current environmental engagement is aimed at replacing the vehicle fleet with electrically pow-ered vehicles. At over 92%, this is responsible for the largest proportion of the company's own greenhouse gas emis-sions. The Group Head of Procurement/Fleet Management is responsible for planning and implementing this goal.

Strategy

Climate-related physical risks manifest themselves as acute or chronic changes in the climate due to the increasing con-centration of greenhouse gas emissions in the atmosphere. The impacts of these risks can disrupt the company's own operations and/or supply chains. Transition risks, on the oth-er hand, arise from political, social and market changes in connection with the transition to a lower-emission world. While physical risks require protective measures and are as-sociated with costs, the transition to a climate-friendly world can also create opportunities for companies thanks to new products or services.

In 2023, the Burkhalter Group's management team identi-fied climate-related risks and opportunities. In 2024, the company took a closer look at these and analysed the asso-ciated impacts, taking into account two qualitative climate scenarios. Scenario analyses make it possible to assess the risks and opportunities, taking into account various develop-ments in society and the environment, and therefore plan for the future. The Burkhalter Group used the so-called SSP scenarios here (shared socio-economic pathways). These are based on scientific findings on greenhouse gas emission concentrations (representative concentration pathways, RCPs) and combine environmental, socio-economic and po-litical changes. The following table summarises the most im-portant elements of the scenarios selected by the Burkhal-ter Group.

Physical risk SSP1, 1.5 °C scenario

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Countries enact laws focusing on climate protection and the circular economy

• - Sustainable development and climate protection are a priority for politicians, organisations and society

• - Political frameworks enable countries and companies to realise climate protection projects and projects to adapt to climate change

• - Global trend away from fossil fuels and towards renewable energies

• - Circular economy is at the centre of economic and social values

• - Transition risks are increasing

• - Physical risks are becoming smaller

SSP3, > 3.6 °C scenario

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The lack of a political framework makes it difficult to adapt to climate change and implement climate protection measures

• - Sustainable development and climate protection are not a priority for politicians, organisations and society

• - Heavy use of and dependence on fossil energy sources

• - Linear economy in the foreground

• - Transition risks of secondary importance

• - Physical risks are high and lead to damage to the environment and nature as well as adverse effects on human health

This climate report presents the effects of the main cli-mate-related risks and opportunities under the climate sce-narios outlined above and highlights the strategic measures that the Burkhalter Group is implementing to minimise the risks and exploit the opportunities.

Description and classification of the risk	Impacts in a 1.5 °C scenario	Impacts in a 3.6 °C scenario	Measures to minimise risks
More frequent and more intense temperature extremes (heat waves) and chronically higher summer temperatures - Acute physical risk (heat waves, extreme temperatures) - Chronic physical risk (increasingly high temperatures in the summer) - Own operation - Short term KPIs: Number of heat wave days	- Because temperature extremes hardly ever occur in the 1.5 °C scenario, health problems for employees working outdoors are rare - Climate has no impact on the popularity of professions at the Burkhalter Group - Financial impact: low	- Severe impairment of the health and performance of employees working in construction due to chronic heat and acute heat waves - Popularity of professions at the Burkhalter Group negatively impacted - Exacerbated shortage of skilled labour - Financial impact: high	- Protective measures for employ-ees to make working in the heat more bearable and to protect them from temperature extremes and the associated health problems - Adjustments to working hours to avoid heat extremes - Innovative technical solutions such as AI or robotics could take over activities and therefore minimise the risk - Project planning with considera-tion of heat extremes

Transition risks

Description and classification of the risk	Impacts in a 1.5 °C scenario	Impacts in a 3.6 °C scenario	Measures to minimise risks
Official regional bans on work where workers are exposed to extreme heat in certain cantons of Switzer-land - Transition risk - Politics and law - Own operation - Short to long term KPIs: Number of days off due to construction site closures and financial losses	- Heat extremes are rarer than today, so the Burkhalter Group's activities are hardly affected by work bans imposed by the authorities - Financial impact: low	- Frequent delays in customer projects - More difficult project planning - Financial impact: high	- The Burkhalter Group's room for manoeuvre is restricted by overriding official requirements - Technological solutions can replace employee activities, resulting in fewer interruptions to construction sites - Advanced planning of projects to account for the risk of heat-relat-ed bans on working in certain cantons in summer

Transition risks

Description and classification of the risk	Impacts in a 1.5 °C scenario	Impacts in a 3.6 °C scenario	Measures to minimise risks
Fluctuating and rising raw material prices for metals (copper, alumini-um, steel) and plastic due to increas-ing energy prices - Transition risk - Market risk - Short to long term (variable, depending on the materials, their origin and supply chain) KPIs: Purchase price of the most relevant individual materials in terms of volume	- Volatility of raw material prices is not due to climate-related changes (e.g. electricity price) but to other factors such as geopoli-tics - Financial impact: low to medium	- Limits on the range of services available due to material shortag-es - Increases in the cost of services that are passed on to customers - Financial impact: medium	- Keep stocks of critical materials to guarantee availability and minimise the impact of fluctuat-ing prices - Focus on suppliers based in Switzerland (90% of materials are sourced from Switzerland) - Broad supplier base instead of exclusivity - Future innovative technological solutions cushion raw material shortages and price fluctuations

Transition opportunity

Description and classification of the opportunity	Impacts in a 1.5 °C scenario	Impacts in a 3.6 °C scenario	Measures to capitalise on the opportunity
Due to the global climate targets, the Swiss 2050 net-zero target and the associated bans on fossil-fuelled heating systems in some cantons, the demand for the Burkhalter Group's services delivering ener-gy-efficient solutions and modern building technology is rising. - Technology - Products and services - Short to medium term: individual Swiss cantons are already banning fossil-fuelled heating systems; others will follow	- Increasing demand for services to reduce energy consumption and greenhouse gas emissions in the Swiss building stock - Financial impact: very high	- Because the Burkhalter Group offers a wide range of building technology services, there would be no climate-related opportunity under a 3.6 °C scenario, but the demand for other services would remain (e.g. installation of heating systems based on fossil energy sources) - Financial impact: low	- Focus on high-quality orders centred on renewable energy and energy efficiency - Training on professional installa-tion of latest technologies - Promotion of technical knowl-edge in day-to-day business (e.g. Energy specialist group) in order to be able to offer and implement forward-looking services that focus on decarbonising the building stock

Resilience of the Burkhalter Group, taking climate scenarios into account

The Burkhalter Group's corporate success is based on the technical expertise of its employees, who provide complex heating, cooling, ventilation, air conditioning, plumbing and electrical engineering services. Based on official climate models (such as those of the Intergovernmental Panel on Climate Change), the Burkhalter Group assumes that signifi-cant weather changes may occur under the 3.6 °C scenario. For example, the frequency and intensity of heat waves and the chronic rise in summer temperatures could put a strain on the physical health of employees working outdoors on construction sites and lead to dehydration or a deterioration in heart and lung function. The Burkhalter Group's room for manoeuvre in this respect is limited to adjusting working hours and providing protective measures. This risk poses a challenge to the Burkhalter Group's resilience. On the other hand, new, innovative technologies, such as those based on artificial intelligence, BIM and robotics may also be used to support the execution of work in this scenario. Such solu-tions could be used for partial steps, particularly in the event of heat waves, thereby reducing the time employees spend on construction sites and easing the strain on their health.

It cannot be denied that the Burkhalter Group is already feel-ing the effects of these climate changes on the popularity of its professions. This then exacerbates the shortage of skilled labour. The Burkhalter Group protects its employees from heat stress by providing them with protective clothing, cool drinks and sun cream, extending breaks where possible and providing shade in work and recreation areas. In the event of a 1.5 °C scenario, the Burkhalter Group assumes only a minor financial impact from physical climate risks.

In connection with the increasing temperature extremes during the summer months, there is a growing transition risk of the authorities in some Swiss cantons imposing work bans. The higher the temperatures rise and the more fre-quently heat waves occur, the more frequent and wide-spread work bans are likely to be imposed. The Burkhalter Group assumes that the financial impact of a sharp rise in temperatures will be high, as it will be difficult to complete customer projects on time and scheduling will become a challenge. The company's room for manoeuvre with regard to the work bans ordered by the authorities is limited to changing the project planning, although this may have an im-pact on employees' working hours. As already mentioned, the Burkhalter Group assumes that forward-looking techno-logical solutions can increasingly be expected on construc-tion sites. These solutions will require employees to be on site for shorter periods of time. This could reduce the Bur-khalter Group's risk exposure under a 3.6 °C scenario.

If the global temperature rise can be limited to 1.5 °C, there will be significantly fewer heat extremes and work bans im-posed by the authorities will remain rare.

Guido Keller, Head of Installations at Oberholzer AG, was responsible for the electrical engineering work at Switzerland's first residenti-al complex using straw bale buil-dings in Nänikon, ZH.

The Burkhalter Group purchases more than 100,000 differ-ent products and components from wholesalers every year in order to provide its services. In the Electrical Engineering division, the company procures cable trays, cables and wires made of copper, among other things. The most important goods in the HVACP division include plastic and metal pipes, ventilation ducts made of galvanised sheet steel and chrome steel pipes. In order to counter fluctuating or rising raw ma-terial prices or possible supply bottlenecks, the Burkhalter Group is diversifying its supply chain and procures 90% of its materials from wholesalers in Switzerland. On the one hand, the room for manoeuvre is limited by the fact that the mate-rials and products purchased are often part of long and com-plex supply chains. On the other hand, innovative solutions resulting from technological developments such as the use of artificial intelligence may provide opportunities to avoid price fluctuations.

Transition plan

The Burkhalter Group is developing its transition plan in ac-cordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and in line with

the Swiss 2050 net-zero target. The transition plan is an ele-ment of the corporate strategy that paves the way to a low-er-carbon economy. An effective transition plan includes cli-mate protection measures and also shows how a company strategically handles climate-related risks and opportunities.

The Burkhalter Group is committed to the Swiss Federal Government's 2050 net-zero target and intends to reduce its greenhouse gases accordingly. The company continues to focus on systematically expanding its greenhouse gas emissions footprint and is endeavouring to further improve data coverage and quality in the future so that there is a reli-able basis for future climate targets.

As the greenhouse gas emissions balance sheet for the re-porting year shows, the largest proportion (92%) of the company's own greenhouse gas emissions are attributable to the vehicle fleet. This is therefore the current focus of the Burkhalter Group's environmental engagement.

The Burkhalter Group is aiming to replace around half of all management vehicles with electrically powered ones by the end of 2025. The medium-term goal is also to increase this proportion to two thirds by the end of 2028.

The company divides its vehicle fleet into three categories and prioritises the replacement of petrol-powered vehicles as follows:

- Category 1, management vehicles: Replacement with electric vehicles already underway (priority 1).

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Category 2, commercial and service vehicles: Because these vehicles have to carry a certain payload, the supply of electric vehicles is limited and the transition is corre-spondingly challenging (priority 2).

- Category 3, assembly vehicles: The Burkhalter Group uses these vehicles on construction sites. As many ma-chines and tools are also transported, larger cars such as estate cars are used here. Vehicles suitable for construc-tion sites with the desired range and practical space con-ditions are still hard to come by. This vehicle category also faces the challenge of a lack of charging facilities on con-struction sites. This severely restricts the room for ma-noeuvre with regard to replacement measures (priority 3).

The Burkhalter Group is constantly checking the availability of suitable models and is already implementing the switcho-ver to electric vehicles wherever technically and economi-cally feasible. From 2025, the Burkhalter Group will be test-ing a fully electric service vehicle in order to extend the electrification of the vehicle fleet to this vehicle category at a later date.

In addition to availability (e.g. second-hand market) and the associated loss of value, a challenge of replacing the vehicle fleet is that contracts with the fleet provider extend over several years and it is not economical to terminate them dur-ing the term. This further restricts the room for manoeuvre.

The Burkhalter Group is making a significant contribution to the 2050 net-zero target with its range of heating and cool-ing, ventilation and air conditioning, plumbing and electrical engineering services. The services it provides enable its cus-tomers to implement the Swiss Federal Government's Ener-gy Strategy 2050 and support them in achieving their climate targets. The Burkhalter Group is promoting the de-carbonisation of the Swiss and Liechtenstein building stock by replacing heating systems based on fossil energy sources and installing photovoltaic systems.

The global and Swiss climate targets, as well as the increased awareness of climate protection among many sections of the population, are increasing the demand from corporate customers and private owners for the Burkhalter Group's services and technical expertise.

The Burkhalter Group is aiming to use the Energy specialist group set up in the reporting year to increasingly support complete solutions for the decarbonisation of Swiss building stock (from private homes to large-scale projects). In the Group, project managers exchange views on current and fu-ture services relating to energy-efficient buildings and create the basis for innovative offerings in line with the Swiss 2050 net-zero target. Knowledge management is a core strategic issue for the Burkhalter Group. This is because imparting and promoting the exchange of technical expertise relating to cli-mate-friendly building technology will enable the Burkhalter Group to further expand the corresponding range of services in future.

Risk management

The Burkhalter Group's risk management policy distinguish-es between business-specific and internal risks. The Bur-khalter Group's management team identifies the risks on an annual basis. Based on the preliminary work of the Burkhal-ter Group's management team, the Board of Directors of the Burkhalter Group assesses and approves the risks on an an-nual basis. The Board of Directors also reviews the compa-ny's risk management policy at regular intervals and has it adjusted if necessary.

The Board of Directors delegates the implementation of risk minimisation measures to the management team. The man-agement team commissions the Group companies with de-signing and implementing risk reduction measures. Process, control and risk responsibility lies with the managing direc-tors of the Group companies.

Systematic risk management, clearly assigned responsibili-ties and supplementary systems, directives and regulations enable the Burkhalter Group to identify and manage the main risks and implement the appropriate measures. In addi-tion, the necessary checks can be implemented, any anoma-lies can be spotted quickly and the necessary action can be taken.

The Burkhalter Group's risk management policy categorises the corporate risks into the categories below. As part of the implementation of the TCFD requirements, risk manage-ment was expanded in the reporting year to include the cli-mate risks category.

• - Stock market risks

• - Market risks

• - Personnel risks

• - Information technology risks

• - Liability risks

• - Climate risks

Metrics and targets

Company-wide carbon accounting continues to pose a chal-lenge due to the different data collection systems in the Group companies.

Section 4.1 Greenhouse gases and climate protection shows the metrics collected and discusses the climate targets also addressed in this climate reporting, but goes into more detail on individual climate protection measures.

The current report can be viewed here: Non-Financial Report 2024