DSV Annual Report 2022

36 DSV Annual Report 2022 Corporate governance and shareholder information = III Commercial Failure to execute on organic growth strategy - Risk description With the acquisitions of UTI in 2016, Panalpina in 2019 and GIL in 2021, DSV has grown significantly over few years, more than tripling our revenue and the number of employees of the Group. Our network and market position have been strengthened, but growth also carries challenges. While we integrate acquired companies and grow as a business, we must make sure to maintain a strong commercial focus and stimulate collaboration across the organisation. Most important of all, we must retain our focus on customer needs, know how to adapt to market changes and develop our services to ensure that our value proposition is clear. If we fail to deliver in these areas, our ability to execute on our organic growth strategy will be impaired, and this will influence our long-term financial results. Mitigation strategies Managing our commercial risk is anchored with the Executive Board and the Group Executive Committee. In this forum, strategic initiatives are aligned and our commercial threats and op- portunities are explored. For each of our business areas, we define the overall strategy and purpose, our value proposition and which customer segments we target. Through regular business reviews with divisions and our operational companies in each country, Executive Management ensures that each division and country is aligned with the Group's strat- egy and policies. These reviews include financial performance, market situation, organisation, local strategic initiatives, etc. Risk assessment During 2022, we estimate that DSV has taken market share across most of the markets we operate in. For the coming years, we maintain our target of achieving organic growth above the market. A number of strategic projects are in place to support our organic growth ambitions. In 2022, we implemented a more systematic approach to managing and prioritising these projects. The initiatives are anchored with our COO and include enhancing our digital capabilities, deepening our vertical expertise, improving our green logistics services and strengthening the cooperation across divisions. We go into 2023 with a stronger network and market position than ever. Still, we assess that the current macroeconomic slowdown will limit our short-term growth potential and intensify the competition across our industry. Based on this, we esti- mate that the potential impact from commercial risk for 2023 has increased slightly. Climate - The long-term impact from climate change Risk description The long-term negative effects of climate change (as forecasted by the UN IPCC and others) have the potential of significantly impacting our industry. As such, it is a risk that we monitor closely. Associated risks may manifest themselves as physical disruptions of our logistic sites and operations or other forms of disruption in the global sup- ply chains, triggered by an increase in the number of extreme weather events. Increasing climate regulations, taxations and customer requirements may also impact the financial results of our company - for example as a result of higher fuel costs or tax on emissions - to the extent that we are not able to transfer the associated costs to our customers. Finally, increasing consumer climate awareness may also lead to changes in global supply and demand patterns, resulting in supply chains moving clos- er to home markets. This could have a dampening effect on the long-term growth potential on the more profitable intercontinental transport lanes. Mitigation strategies Oversight and management of climate-related risks is anchored with the Board of Directors. To support the Board of Directors in this role, we have established a Sustainability Board, headed up by the Group CEO. The Sustainability Board takes the lead when it comes to identifying, assessing and reporting on the development in climate-related risk. To address the longer-term risk from climate change, we have committed to the Science Based Targets initiative. We aim to achieve our CO2 emission reduction targets through a number of initiatives, such as making lower-emission transport alternatives available to our customers and investing in modern and energy-efficient infrastructure. As part of our mitigation strategy, we include the potential impact from climate changes when we plan our physical infrastructure. For example, new warehouses and logistic centres are de- signed to withstand more extreme weather conditions; and when deciding on placement, loca- tions with lower risk of flooding is also taken into consideration. Furthermore, our asset-light business model allows us to adapt to changes in the market, as we have not invested in specific transport equipment. For additional details and results on our 2022 TCFD climate risk assessment, please see the DSV Sustainability Report 2022: https://www.dsv.com/en/sustainability-reports Risk assessment Climate change and sustainability continue to move up on our agenda. In 2022, we have among other initiatives - increased our ambitions and introduced a net-zero target for carbon emissions. And to support innovation and ensure that our sustaina- bility ambitions are embedded in our operations, we established an Operational Sustainability team, headed up by our COO. We continue to develop our climate risk assessment framework based on guidelines set by the Task Force on Climate-related Financial Disclosures (TCFD). As reflected in the risk map, it is our current assessment that the overall climate risk to our company is unchanged from last year, with a potential low-to-moderate im- pact on our business, should unmitigated risks materialise. Making projections on the long-term effects of climate change on our business in- volves a high degree of uncertainty, hence our assessment may change in the future.

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