Plain-text annual report
When you need
to be sure
SGS 2023
Integrated
Report
Who we are
SGS brings together global teams
of highly qualified experts providing
specialized testing, inspection and
certification solutions across nearly
every industry.
See how we’re
Enabling progress
Watch our highlights film
What we do
We operate in the Testing, Inspection
& Certification (TIC) sector and provide
quality and safety control services:
Testing products ensures they meet
health, safety, and regulatory standards.
Inspection controls quantity and
quality to help our customers meet
regulatory requirements.
Certification provides assurance
that products, processes, systems, or
services meet standards and regulations.
Our societal impact
Our activities build trust and make a
positive contribution to the communities
in which we operate. We support you,
our stakeholders, when you need to
be sure.
IFC images
Laboratory technician, Health & Nutrition, Germany
Inspector, Natural Resources, Peru
Security evaluator, Connectivity & Products, Netherlands
Management
report
In this report
Management report
Introduction to SGS Group
Letter to stakeholders
Q&A with CEO, Frankie Ng
Q&A with CEO designate, Géraldine Picaud
Financial and non-financial results
Testing, inspection and certification industry overview
TIC in focus
Achievement from our 2020-23 strategic cycle
Our impact on sustainability
Corporate sustainability
Our contribution to the sustainable development goals
Stakeholder engagement
Our material topics
Risk management
Our principal risks
How we create value
Financial capital
Financial capital by business line
Manufactured capital
Intellectual capital
Human capital
Social and relationship capital
Natural capital
Financial and Non-Financial outlook
Corporate governance
Remuneration report
Financial statements
Non-financial statements
Appendix
Our integrated reporting approach
The Integrated Reporting framework aims to create
transparency. For the fourth consecutive year we have
integrated our financial, operational and sustainability
information in a single report – measuring our financial and
non-financial performance across the six capitals.
www.sgs.com/en/annual-report
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190
Financial statementsCorporate governanceRemuneration reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 2
Introduction
to SGS Group
We provide specialized testing, inspection and
certification services in 116 countries and deliver them
through five business lines. Connectivity & Products,
Health & Nutrition, Industries & Environment and
Natural Resources sit under testing and inspection
while Business Assurance (prev. Knowledge)
represents our certification business.
Testing & Inspection
Sales by business line (%)
Industries & Environment
We enable organizations to be safer,
greener and smarter by ensuring the
integrity, safety and reliability of their
equipment and operations as they
transition to a more sustainable future.
Enhancing wind farm inspections
through digital innovation
Read more at
www.sgs.com/en/integrated-report/
business-performance
SDG
impact
Natural Resources
We are a global network of trusted,
independent and committed experts who
deliver pivotal solutions to the agricultural,
mining, oil, gas and chemical industries,
supporting quality, efficiency and
sustainability goals across the supply chain.
Growing need for raw materials
to power the energy transition
Read more at
www.sgs.com/en/integrated-report/
business-performance
SDG
impact
Connectivity & Products
We are the experts who support brands,
manufacturers, retailers and governments
across the supply chain with the performance,
safety, security and quality of their products
and services. We help make products
better and safer for an increasingly
connected world.
Improving safety in the
automotive industry
Read more at
www.sgs.com/en/integrated-report/
business-performance
SDG
impact
Health & Nutrition
We assure quality, safety and sustainability
in the health, wellness and nutrition
industries, helping our customers to
meet stringent standards throughout
their supply chain and, ultimately,
improving the quality of life in society.
Certification
Supporting the growth opportunity
in the nutraceuticals market
Read more at
www.sgs.com/en/integrated-report/
business-performance
SDG
impact
Business Assurance (prev. Knowledge)
We have the global expertise and
knowledge, and the people, processes
and tools to help organizations improve
their results, manage risk, comply
with regulatory changes, adopt best
practice and meet increasingly stringent
sustainability requirements.
Harmonizing Iveco’s supply chain
Read more at
www.sgs.com/en/integrated-report/
business-performance
SDG
impact
Industries & Environment
Natural Resources
Connectivity & Products
Health & Nutrition
Business Assurance (prev. Knowledge)
33%
24%
19%
13%
11%
Adjusted operating income
by business line (%)
Industries & Environment
Natural Resources
Connectivity & Products
Health & Nutrition
Business Assurance (prev. Knowledge)
26%
23%
27%
8%
16%
Management reportSGS | 2023 Integrated Report Sales by geography (%)
North America
12%
of total SGS sales
Latin America
9%
of total SGS sales
3
Europe
36%
of total SGS sales
Africa & Middle East
9%
of total SGS sales
Asia Pacific
34%
of total SGS sales
We follow six key business principles
1
Integrity
Integrity is the foundation of SGS. As leaders
in our industry we hold ourselves to the
highest standards of professional behavior
as embedded in our Code of Integrity.
The trust of our customers and stakeholders
is the key to our success.
2
Health & Safety
Our long-term success and sustainability
depend on our ability to remain a recognized
leader and a reference for all Health &
Safety matters.
4
Respect
We are engaged to treat all people
fairly and respect human rights and take
responsibility for creating a working
environment that is grounded in dignity,
equal opportunity and mutual respect.
We promote diversity in our workforce
and do not tolerate discrimination
of any kind.
5
Sustainability
We use the scale and expertise of SGS
to enable a more sustainable future and
add long-term value to society. Ensuring
our impact on the environment is
minimized throughout the value chain,
we are good corporate citizens, investing
in our communities and enabling a better,
safer and more interconnected world.
3
Quality & Professionalism
We act and communicate responsibly.
We embody the SGS brand and its
independence in our everyday behavior
and attitude. We are customer-centric
and committed to excellence. Always
clear, concise and accurate, we strive
to continually improve quality and
promote transparency. We respect client
confidentiality and individual privacy.
6
Leadership
We work together to leverage our expertise
and think ahead. Our teams are passionate
and innovative with a relentless desire
for improvement. Working in an open
culture, where smart work is recognized
and rewarded, we foster teamwork
and commitment.
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 4
Technical Division Manager, Health & Nutrition, France.
SGS | 2023 Integrated Report
Management report Letter to
stakeholders
5
A new chapter
for SGS
Earlier this year, SGS
announced its Strategy
2027: Accelerating
growth, building trust
I am very excited about this new chapter,
which will guarantee that SGS remains the
point of reference when you need to be
sure. The testing, inspection and certification
industry has significant growth potential,
and we are uniquely positioned to capture
this opportunity.
We belong to the gold standard solutions
providers in the industry with over 145
years of established history and experience.
We will keep our ambition to remain at the
forefront of the megatrends driving our
markets. These are focused on powerful
sustainability transition, ongoing innovation
in digital capabilities and new technologies,
ever-growing supply chain complexity and
increasing regulation and public awareness.
To fulfill this ambition, the Board of Directors
is delighted to welcome Géraldine Picaud
to the helm of our Group. She is an inspiring
leader bringing the right blend of strategic
vision and operational execution skills to SGS.
As our next CEO, she has the Board’s
full confidence in driving our upcoming
phase of growth and profitability. I take this
opportunity to express my sincere gratitude
to Frankie Ng for his leadership over the past
nine years. It is thanks to his vision that SGS
has become the world’s undisputed leader
in testing, inspection and certification.
I am proud of our roadmap (see page 48
for details) that we have set for the next
four years. Our financial targets provide
a foundation to clearly outperform the
industry growth and our sustainability
targets positively underline the contribution
of SGS to a better society.
Our customers and our people are at the
core of these objectives. Every day, our
employees strive to provide better services
to our customers. They lead the way in
bringing highly innovative testing, inspection
and certification solutions to market. We will
continue to embed agility and performance
in our culture, our actions and our decisions
to make sure that this momentum continues
unabated. By maintaining highly trained,
passionate and committed employees,
we will continue to drive a thriving and
sustainable business that provides real
value to all stakeholders.
In 2023, SGS delivered sales of CHF 6.6
billion, strong organic growth of 8.1% and
a significant increase in free cash flow.
I am proud of how our teams have navigated
the ever-increasing complexity of the world
we live in and managed to turn challenges
into opportunities.
Finally, I would like to give my sincere
thanks and gratitude to all our employees,
to my fellow members of the Board of
Directors, the Executive Committee and
to you, our Shareholders, for your trust
and continuing support.
This is a very exciting journey: together,
guided by our promise, ‘when you need
to be sure’, we will accelerate growth
and build trust.
Calvin Grieder
Chair of the Board of Directors
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 6
Q&A with CEO,
Frankie Ng
How do you reflect on SGS’s
performance in 2023?
2023 marked the end of our current strategic
cycle. We have made considerable progress
in all key strategic areas, strengthening our
Health & Nutrition service offering with
the acquisition of Nutrasource in North
America, and growing our market shares
in Connectivity & Products and Business
Assurance (previously Knowledge) through
focused resource and capital allocation.
With the digital laboratories program and
improved customer relations management
for salespeople, we are also making
significant advances in our goal of becoming
the most digital company in the TIC industry.
This progress has only been possible
through agile thinking and the efforts of
our colleagues across the network.
What challenges did SGS face in 2023?
Our challenges were the same as for
everyone – rising costs, global instability,
the climate crisis and shifting consumer
demand. As a company, we responded
in multiple ways.
Firstly, by taking care of our people.
We foster employee engagement by
providing motivating career paths as well
as training initiatives on key topics such
as employee well-being, health & safety,
integrity and information security.
Secondly, we focused on productivity and
process optimization with our world class
services (WCS) program. In fact, we have
become the first in our industry to obtain
the bronze level for two of our laboratories
located in Shanghai and Bangkok.
This is an exceptional accomplishment, and
I am very proud of the way this methodology
is being adopted by the network, with seven
laboratories joining the program in 2023.
Digitalization is central to our culture of
efficiency. I am pleased to report that
over 30% of laboratories are now digital,
our global server network is migrated to
a single cloud-based solution and through
applications such as Windgo, a wind farm
quality control solution, we are digitalizing
our fieldwork. The ability to harness the
vast amounts of data in our systems means
we are also now developing better value
propositions for our customers.
Thirdly, our strength lies in our geographic and
service diversity. In a volatile and uncertain
world, we can maintain growth trajectories
by shifting our focus to different industries,
services and/or geographies. For example,
as growth in Asia and Europe slows, we have
increased our North American footprint.
Finally, SGS continues to invest and innovate
in new areas of growth, such as the
implementation of global solutions relating
to sustainability, health and safety, PFAS1
and microplastics.
How is SGS responding
to climate crisis?
Sustainability is the foundation of our
business strategy, as demonstrated by our
commitment to 1.5ºC and net-zero targets
approved by the Science Based Targets
initiative. Our targets are ambitious, but this
is only right because, as market leader and a
global company, we must push the envelope
of what is achievable or we will fail to be a
part of the companies supporting a healthy
planet, society and business.
We have strengthened our focus on
four key areas to support our customers
in their sustainability journeys: carbon,
biodiversity, plastic and ESG assurance.
By developing industry-leading solutions,
we are helping our customers achieve
their own sustainability goals, improving
efficiency and accelerating growth.
Internally, we are making great progress in
our decarbonization strategy, with a special
focus on employee awareness through
campaigns such as Spot the Orange Dot.
While turning off one computer might
seem inconsequential, the benefits for the
environment are significant in a business
with 99 600 employees. We are also
focused on reducing emissions from
our owned and leased properties and
our vehicle fleet to reduce scope 1 and 2
emissions, and our supply chain through
procurement to address scope 3.
Now you are handing over your
CEO responsibility?
It has been an extraordinary journey for me
over the past 30 years during which I have
seen the Group transform into the company
it is today. Therefore, I am excited to hand
over the reins to Géraldine Picaud, whose
energy and passion will no doubt lead
SGS to new heights.
I will always hold fond memories of my
time here at SGS. All the fantastic people
I have met and worked with and all the great
events I have attended with customers
and investors across the world will remain
engraved in my memories.
I’d like to finish by directly addressing my
colleagues throughout SGS. You are the
beating heart of this company. I would like
to take this opportunity to thank you for
your hard work and dedication. It is your
resilience and dynamism that has allowed
us to achieve our goals.
Frankie Ng
Chief Executive Officer
Read more about our results
www.sgs.com/en/integrated-report
1. Perfluoroalkyl and Polyfluoroalkyl substances.
Management reportSGS | 2023 Integrated Report Q&A with
CEO designate,
Géraldine Picaud
7
What are your first impressions as
you embark on your new CEO role?
SGS is an iconic global leader in the testing,
inspection and certification industry, with
exceptional people and enormous future
potential. I am honored to assume the role
of Chief Executive Officer and build on the
strong foundation laid by Frankie. I look
forward to leading such a great company
and to driving positive change in this
dynamic industry.
What are the principal drivers of
the TIC industry and how is SGS
positioned to capture growth?
We operate in a healthy and growing
industry. Our market is experiencing
between 4% and 5% growth per year which
is driven by four megatrends: sustainability,
digital technologies, supply chain near
shoring and by an increasing number
of regulations.
What makes us unique in the industry is
our unrivaled network covering almost all
industries and geographies. We are really
a true partner to our customers whom we
support in complete independence across
their operations. But most importantly,
it is our people that make us unique.
Their commitment, their passion, their
expertise and their personal values. This is
why SGS is well positioned to capture all
the growth opportunities of the testing,
inspection and certification industry.
Can you give some more details
about the strategy 2027?
Our Strategy 2027: Accelerating growth,
building trust is based on three powerful
drivers: growth, performance and agility,
and the improvement of our financial profile.
We will invest in segments and regions
where greater opportunities exist, such as
sustainability, digital services and North
America. We will simplify our organization
to foster accountability, performance and
adaptability. In addition, we will enhance
our financial profile through disciplined
capital allocation. This will create value
for all our stakeholders.
Which values are most important
to you?
To improve our performance, we need
to make our business more agile and our
people more accountable. This requires
a solid mix of diversity, an open and
meritocratic environment to deliver on our
objectives and drive a high-performance
culture. These are the values that I want
to ingrain at SGS.
Géraldine Picaud
CEO designate
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 8
Financial and
non-financial
results
Financial highlights1
Sales
CHF 6 622M
+8.1% organic growth
A year of sustained growth competitiveness
as demonstrated by strong organic sales growth.
We continue to lead on corporate sustainability.
Adjusted operating
income
Adjusted operating
income margin on sales
CHF 971M
14.7%
Earnings per share
CHF 3.00
Free cash flow
CHF 604M
Change vs 2022 +25.6%
1. Refer to Alternative Performance Measures – Appendix to the 2023 full year results.
SGS | 2023 Integrated Report
Surveyors, Natural Resources, Belgium.
Management report 9
Sales
CHF 6 622M
+8.1% organic growth
Adjusted operating
income
Adjusted operating
income margin on sales
CHF 971M
14.7%
Earnings per share
CHF 3.00
Free cash flow
CHF 604M
Change vs 2022 +25.6%
Sustainability KPIs
Women in leadership
positions
Reduction in absolute
CO2 emissions
31.9%
-14%
in scopes 1 and 2 against 2019
Lost Time Incident Rate (LTIR)
Number of lost time incidents
per 200 000 hours worked
Volunteering hours
0.17
-31% against 2018
32 590
+89.5% against 2019
Our corporate sustainability awards
Fantastic recognition across the world
Volunteers planting trees, Hong Kong, China.
Member of DJSI World and
Europe, a leader of the professional
services industry in S&P Corporate
Sustainability Assessment (CSA) and
well over double the sector average
Low risk rating driven by our strong
management of material ESG issues
Gold medal, awarded to the top
5% of the evaluated companies
AAA rating, the highest ESG
rating awarded by MSCI, for
the fourth consecutive year
Prime distinction rating as recognition
for excellence in management of ESG
aspects among over 200 companies
in the same sector
Leadership position through score of
A- in CDP’s highly technical climate
change management assessment
Inclusion in the FTSE4Good
index for the sixth consecutive
year for our strong commitment
to sustainable practices
Included in the top 100 most
diverse and inclusive companies
in the prestigious Refinitiv Global
Diversity & Inclusion Index
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix
10
Testing, inspection
and certification
industry overview
Four interconnected megatrends are driving
regulation and outsourcing in the testing,
inspection and certification industry, providing
opportunities for growth.
The four megatrends
of the TIC industry
Powerful sustainability
transition
Higher demand from environment,
social and governance regulations
and societal expectations.
Innovation in digital capabilities
& new technologies
Strong growth driven by digital trust
needs and technological changes.
Near-shoring
of supply chains
New opportunities from growing
domestic demand and supply
chain proximity.
Increasing regulation
& public awareness
Structural expansion from tighter
legislation and expectations for
safety, health and well-being.
Management reportSGS | 2023 Integrated Report The testing, inspection and certification industry
Industry characteristics
Industry drivers
Societal benefits
11
The increasing complexity of the
regulatory landscape is driving
companies to search for specialized
services delivered by the TIC industry
Companies need reliable indicators
provided by the TIC industry in the
field of sustainability to avoid charges
of ‘greenwashing’
Spending on testing is expected
to increase due to country-specific
regulations and requirements
Geopolitical events and logistical
challenges are forcing companies to
assess their supply chains. Anything
that brings about change, such as
a new supply arrangement or change
of supplier, will drive further testing
and supply chain verification
The TIC market benefits consumers
who know the products and services
they use are safer, consistently reliable
and true to their advertised claims.
This makes it easier for them to
compare products and services
Businesses benefit from enhanced
demand from the trust and confidence
that the use of TIC services generate
in the marketplace. This enables
market entry and market access
with the assurance of higher levels
of regulatory compliance
Governments and policy makers
benefit from increases in the volume
of trade and an industry that can ensure
compliance with regulatory requirements
at a lower cost to the taxpayer
Scale matters and TIC companies
need a broad geographical footprint
to match those of their customers
Scale creates a virtuous circle and
supports margins, especially for lab-
based testing where high utilization
and volumes drive the ability to invest
in specialization, automation and
technology to improve turnaround
times. This in turn helps improve
customer retention and acquisition
Companies with scale and a global
footprint can leverage their capabilities
and expertise to bid for large multi-year
contracts. As the network expands,
the customer offer also increases,
creating a virtuous circle
Achieving accreditations from national
or industry bodies can take longer
than a year and requires investment in
equipment, technology and know-how.
Established companies with a long
history have amassed a vast number
of operating licenses, accreditations,
and government authorizations which
are difficult to replicate
Customer retention is strong.
For example, in certification areas such
as health and safety, and supply-chain
management, the cost to companies of
changing to a different supplier is high,
as it can involve retiring an existing
system and incurring significant costs
to start again. Changing a supplier also
carries a risk of reputational damage
while the financial benefits can be small
Industry size and structure
We value the addressable part of the TIC market
to be USD 160 billion in 2023, and expect it to grow
at 4-5% per annum to reach USD 190 billion in 2027
Addressable market growth
consistently exceeding GDP
2023
USD 160 BN
4% to 5%
Annually
2027
USD 190 BN
Source: TIC council, ISO association reports.
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix The vast breadth of TIC encompasses food
testing to monitor quality and conformity,
digital innovation to combat extreme weather
when inspecting sea cargos, and certification
around the implementation of AI.
Testing
What we do
Testing reduces risks, shortens
time to market and tests the
quality, safety and performance
of products against relevant
health, safety and regulatory
standards.
Inspection
What we do
Inspection controls quantity
and quality, and helps customers
meet all relevant regulatory
requirements across different
regions and markets.
What we do
Certification ensures services,
systems, processes or products
meet national and international
standards and regulations.
Certification
12
TIC in focus
SGS | 2023 Integrated Report
Management report 13
Food safety testing in North America
Our North American food team
provides a comprehensive range of
testing services to our clients to ensure
the safety of their products and is
looking to further expand capabilities
and capacities.
Through our network of laboratories in
North America, we perform microbiological
tests, most often for Salmonella and
Listeria pathogens, as well as a wide
variety of microbiological quality indicators.
Our experts also provide chemistry
testing, including proximate chemistry,
metals, minerals and vitamins, and
we aim to further expand our capabilities
and capacities in the region.
Our clients use the microbiological and
chemistry data we provide to monitor
their products’ quality and conformance to
product specifications and to ensure they
meet consumer expectations. We have to
perform these tests as quickly as possible,
allowing them to ship perishable products
to market once the tests are completed.
Digital innovation for employee safety and operations accuracy
Meet Haritz Solachi, Global Field Services
& Systems Manager, Spain. He explains
how his experience of inspecting cargo
on vessels in difficult and challenging
conditions spurred him to innovate
and create. ‘One of the most common
operations conducted by Natural
Resources is a draft survey, which is the
way we measure a vessel’s cargo. To do
this, inspectors are often exposed to very
extreme weather conditions and may have
to use very high ladders. Over the years
of doing this, I got thinking that there
must be a better and safer way.
I’ve always been passionate about
electronics and so combining this with
the problem, I created a prototype draft
survey tool which was made a reality!
Now, inspectors don’t have to tackle
these difficult working conditions.’
Curious about the DST tools?
Watch the video at
www.youtube.com/watch?v=t68j3IE4hT8
Aymeric Riverieulx, Global Head of Innovation and Information
Security, explains challenges of Artifical Intelligence
In response to the rise of AI, the ISO
and IEC have created the ISO/IEC 42001
standard. It provides a certifiable AI
management system (AIMS) framework
in which AI systems can be developed
and deployed as part of an AI assurance
ecosystem. The global standard specifies
the requirements for establishing,
implementing, maintaining and continually
improving an AIMS.
We offer a wide range of services to
help organizations and society benefit
the most from AI while reassuring
stakeholders that systems are being
developed and used responsibly.
From training, implementation or
certification, we support companies in
the implementation of AI, considering
security, safety, fairness, transparency
and data and AI system quality. As a
result, companies can benefit from
increased confidence in the performance
of their management systems internally
and externally, and greater customer
confidence and satisfaction, which,
in turn, can translate into increased
business.
Jodi M. Jurgens and Matt Keagle confirm
the presence of Listeria, USA.
Haritz Solachi using an innovative draft
survey tool to inspect vessel cargo, Spain.
Aymeric Riverieulx helps present our first FDIS ISO/IEC
42001 certificate to AI Clearing, Switzerland.
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 14
Achievements
from our 2020-23
strategic cycle
Our previous strategy cycle ran from 2020
to 2023 and included three pillars to further
align SGS to our customers’ requirements.
1
Invest to consolidate leadership position in selected business lines
Overview
At the end of 2023, we concluded our
2020-2023 strategic cycle meeting
several of our key objectives.
Achievements
Consolidated our industry leadership by achieving the number 1 position in Natural Resources,
Connectivity & Products and Business Assurance (prev. Knowledge)
Consolidated our leadership position in Cosmetics with the acquisition of proderm GmbH
last year and continued to integrate and derive synergies from this acquisition in 2023
Achieved a clear global leadership position in Industries & Environment, in all areas except
environmental testing
Acquisitions 2021-2023
Acquisition
Penumbra Security, Inc
Brightsight
Nutrasource
Industries & Environment
Natural Resources
Connectivity & Products
Health & Nutrition
Seafood Testing business of Asmecruz
Business Assurance (prev. Knowledge)
Industry Lab
proderm GmbH
C-Labs (Phase 2)1
Quay Pharmaceuticals Limited
IDEA Tests
Lab Facilities of International
Service Laboratory (ISL)
Analytical & Development Services (ADS)
Sulphur Experts Inc.
Metair Lab
The Lab (Asia) Ltd (Phase 2)1
Autoscope/CTOK
SSAL/ELI
Ecotecnos
AIEX
Gas Analysis Services
BZH GmbH Deutsches
Beratungszentrum für Hygiene
Maine Pointe, LLC (Phase 2)1
LeanSis Productividad (Phase 2)1
1. Acquisition of the remaining minority stake.
Jan
2021
April
2021
Jul
2021
Oct
2021
Jan
2022
April
2022
Jul
2022
Oct
2022
Jan
2023
April
2023
Jul
2023
Oct
2023
Management reportSGS | 2023 Integrated Report 15
2 Become the most digital company in the TIC industry
Overview
We made several strides to become the
most digital company in the TIC industry.
Our journey will continue as we move
into the next phase of our evolution.
Achievements
Exceeded our goal of moving 30% of our sales to our new Laboratory Information
Management System
Deployed seven new digital products to support internal and external customer facing
solutions thanks to our Digital Builders Organization, which helps identify new opportunities
in digital products
Consolidated the Group’s authority in the growing field of digital technology. In cybersecurity,
the range of industrial activities to support and protect client networks and data expanded.
In Artificial Intelligence, the first Artificial Intelligence Management System certification
in the industry was delivered and several highly respected SGS experts contributed to
the prestigious World Summit AI 2023
Case study
Transforming wind energy inspections with WindGo app
In the pursuit of clean and efficient
energy production, wind turbines
play a pivotal role. However, their
reliability depends on meticulous care
and timely inspections. Meeting this
challenge head-on, we have developed
WindGo, a cutting-edge mobile app
designed to digitalize and streamline
the entire inspection process.
WindGo revolutionizes the experience for both
our inspectors and customers. It empowers
inspectors to efficiently manage their schedules
while providing customers the ability to request
inspections and gain near real-time control.
By digitizing this critical process, we are not
only enhancing operational efficiency but also
elevating the customer experience.
With WindGo, inspectors receive assignments
directly on their mobile devices, saving valuable
travel time. This real-time connectivity enables
customers to stay informed about the ongoing
inspection, with immediate access to
comprehensive reports on their dedicated
portal. By providing transparency and flexibility
in our inspection services, we offer customers
full visibility into the status of their windfarms
reducing downtimes, maximizing production
and contributing to the transition to safe, clean
and reliable energy.
Discover other ways in which we are
accelerating digital growth and creating
value for our customers at
www.sgs.com/en/integrated-report/
business-performance
Erika Christ Aguilar, Value Realization Lead,
Information Technology, Spain.
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 16
Achievements
from our 2020-23
strategic cycle
continued
3 Supporting our customers to achieve their sustainability goals
Overview
We support and contribute to our
customers’ sustainability goals by
helping them in their transformational
change and implementation phases.
Achievements
Cross-business teams created to better serve our customers by providing a holistic portfolio
of sustainability services. These services enable value chain transparency and traceability
across industries aiming to tackle climate change, biodiversity loss, pollution and enhance
circular economy
New sustainability solutions in all business lines
85% of customers agree SGS services help them to meet their sustainability goals
We have setup a framework to help us provide more value to customers through a portfolio of sustainability services across four key topics:
Climate
Nature
Circularity
Business risk mitigation
Helping clients reduce
their greenhouse gas (GHG)
emissions through the
complete value chain.
From sampling and testing
to impact assessment,
we support companies
in responsible sourcing.
Pragmatic implementation
solutions that increase
resource efficiency and
waste reduction.
Supporting companies as
they ensure integrity along the
entire value chain for a more
sustainable impact on people,
climate and nature.
Leading services
Leading services
Leading services
Leading services
• SBTi assessment and
verification: helping
clients formalize a clearly
defined pathway to reduce
greenhouse gas emissions,
helping prevent negative
impacts of climate change
while also supporting future-
proof business growth
• IECQ: independent assurance
on carbon footprint reports in
accordance with international
standard ISO 14067, to
avoid greenwashing
• Supply Chain Biodiversity
• ISCC+ certification scheme:
Impact: for many companies,
the main impacts on
biodiversity lie in their supply
chain. We work with our
customers to establish
practical methods to source
data, paving the way for
more transparency of the
biodiversity impacts in
supply chains
• Ballast water testing: ballast
water sampling and testing
helps clients meet their
regulatory requirements and
protect marine environments
by reducing the transfer of
invasive alien species
offers different chain of
custody approaches to trace
material back along the supply
chain to its origins. It can
be applied to bio-based,
renewable and circular raw
materials and interconnects
the entire supply chain, from
cultivation and plastic recycling
to plastic manufacturers
and final products
• Life Cycle Assessments
(LCA): provide cradle
to gate, in commodity
supply chains around the
world in accordance with
the ISO 14040 and ISO
14044 standards
• EDGE Certification is a highly
recognized global standard for
diversity, equity and inclusion
(DE&I), focused on an intersectional
approach to gender and equity
in the workplace. We are proud
to be one of the approved EDGE
partners and Certification Bodies
to conduct third-party verification
of clients’ performance against
the EDGE Standards
• Social audits: support clients in the
identification and mitigation of risks
related to labor, ethics and human
rights practices in their operations
and supply chain
• Responsible Supply Chain
Assessment: our tool and
methodology are easily adaptable
for industry or sector specific
risks and impacts and can help
organizations to mitigate human
rights risks and adverse impacts
across supply chains
• Corporate Sustainability Reporting
Directive (CSRD): supporting
customers in their double materiality
assessment, gap analysis, training
and report preparation
Management reportSGS | 2023 Integrated Report Our impact on
sustainability
Our accredited testing is enabling innovation
by providing clients with data to monitor microplastics
and design solutions to reduce pollution.
17
Our impact in action: case study
Monitoring microplastics pollution
While plastic is one of the world’s most versatile
and useful materials, microplastics pose a growing
threat to ecosystems, and are a significant source
of pollution in water, air, food and cosmetics.
Watch the video at
www.sgs.com/en/integrated-report/
business-performance
Enabling
innovation
121 000
microplastic particles
estimated to be taken
in by an adult each
year through air,
food and beverages
>5.25
trillion
microplastic particles
estimated to be in
the ocean
What we do
To manage the risks associated with
microplastics effectively, it is important
to monitor the sources of pollution. That’s
why at SGS in Singapore we’ve integrated
the most reliable methodologies in our
laboratories to perform routine sampling
and analysis of microplastics in diverse
environments. Thanks to our ISO/IEC 17025
accredited testing services, our clients
have access to the trusted data they
need to monitor microplastics and design
better solutions to manage pollution.
Our impact
We support governments, scientists and
industries in carrying out their marine litter
and microplastic monitoring. The robust
data our people produce supports them
in developing new technologies and
modeling capabilities that can help predict
impacts and define science-based policies,
as governments worldwide pursue an
international treaty to combat plastic
pollution. Working with academia, we
further harmonize testing methodologies
and explore new areas such as tire and
road wear particles pollution.
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 18
Corporate
sustainability
Our Sustainability Ambitions 2030 cover the whole
value chain and set targets that take us to 2030.
Each year, we track progress against these targets
and define specific action plans to become a better
company for a better society and planet.
Strong sustainability governance
From the Board of Directors to our affiliates,
a strong governance structure ensures
that sustainability considerations are
embedded in all of our activities. Our
senior management is actively involved in
overseeing the delivery which is developed
by the corporate sustainability team.
The Sustainability Committee of the
Board assists the Board in evaluating
and supervising the Group policies and
strategies regarding the impact of the
Group’s activities on society and the
planet as well as the sustainability services
provided to our clients. The SGS Operations
Council is then mandated to take the
overall strategy forward, approving and
implementing more detailed programs,
policies and targets for operations across
the group.
Our regions and affiliates are responsible
for implementing various initiatives that
support the Group sustainability targets.
A network of regional sustainability
ambassadors translate them into regional
or local initiatives, cascading our corporate
programs and guidelines down to every
single SGS site.
Sustainability culture
We are constantly looking for ways to promote
our sustainability culture throughout the
network. To encourage our employees to
become an active part of our commitment,
we have worked on several initiatives in 2023:
• Joined the United Nations Global Compact
initiative, a voluntary leadership platform
for the development, implementation
and disclosure of responsible business
practices. By joining this initiative, we
stand united with thousands of forward-
thinking companies around the world
committed to taking responsible business
action to create a better world for present
and future generations
• Launched the Spot the Orange Dot
(STOD) campaign, a bottom-up campaign
designed to identify spots where energy,
water and waste can be reduced in
the daily life of SGS employees at the
workplace. Whether it is switching the
lights off or adjusting the temperature
at the office, our aim is to promote
sustainable behaviors that, multiplied
by more than 100 000 employees,
can have a great impact. The campaign
has already been launched in more
than 30 affiliates
• Launched an energy savings campaign,
to help our employees save energy both
at home and at work, teaching them
responsible behaviors and minimizing our
environmental impact. The winners of an
energy savings themed quiz won different
sustainable prizes that will help them
contribute to a better environment
• Organized the SGS People Challenge for
the fourth consecutive year, with more
than 50 countries participating in activities
that reinforce our sense of community.
We organized other activities for our
colleagues’ families, including recognition,
initiatives, volunteering and a drawing
contest for employees’ children
• Launched a new sustainability newsletter
for sustainability professionals across the
network through which we share news,
sustainability assets and good practices
• Provided mandatory sustainability training
to all new employees joining SGS.
The course explains our sustainability
commitment and strategy and provides
tips about how everyone can contribute
to the Group Sustainability Ambitions 2030.
In addition, we updated the mandatory
human rights training to align with
best practices
A strong network
As demand for specific sustainability-
related information continues to increase,
sustainability is an integral part of our
value proposition. We support colleagues
across our network to convey our
sustainability commitment to customers,
as they in turn place greater importance
on the environmental, social and
governance practices of their suppliers
and business partners.
We encourage close collaboration between
the sustainability professionals in our
network to help us share knowledge,
good practices and success stories, and
ultimately to provide a better service to
customers. Through the series of monthly
talks, ESG Spotlight, we aim to:
• Generate awareness in the network
about SGS’s sustainability culture
beyond our sustainability performance
• Promote new sustainability-related
services among the network
• Provide a platform for experts to share
insights and inspire other services to
collaborate and adopt new strategies
• Promote cross-selling opportunities
SGS team in Mauritius participating in a clean-up initiative. The team collected over 630 kg of waste and got to learn more about
the importance of marine and coastal environments.
Management reportSGS | 2023 Integrated Report 19
Over the period 2020-2023, we significantly increased our sustainability leadership position. Executive remuneration has been linked to
sustainability KPIs and a specific sustainability committee provides strong oversight at Board level. This, together with the achievements
in the areas listed below, has allowed us to maintain a leadership position in the main sustainability ratings.
1
Environment
Overview
While fundamentally a
non-polluting business, we have
very solid targets and programs
to make sure we lead the path
towards a net-zero future.
2
Social
Overview
We are a people business, and
our employees are essential to
our success. Everyday we work to
to attract and develop diverse talent,
while prioritizing wellbeing and
employee satisfaction. It extends
into our communities where we
aim to make a positive and long-
lasting impact.
3
Governance
Overview
Our commitment to the highest
standards of integrity and professional
excellence is the foundation from
which we work. This applies across
our entire value chain, from supplier
due diligence, to operations efficiency
and fair customer practices.
Achievements
• First TIC company to receive approval for our 1.5ºC and net-zero targets
from the Science Based Targets initiative
• 14% reduction in scope 1 and 2 absolute GHG emissions compared to 2019
• 97% of renewable electricity
• Initiated our journey towards our target of reducing our scope 3 emissions
by 28% in 2030
Achievements
• 31.9% women in leadership positions
• 31% and 22% reduction in LTIR and TRIR respectively since 2018
• 7.6 in employee engagement index
• Over 30 000 volunteering hours
Achievements
• 90.6% customer satisfaction score
• 27 labs now using World Class Methodology and two labs reaching Bronze award
• Significant progress towards extending our sustainability principles to our supply chain
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 20
Our contribution
to the sustainable
development
goals
Through our client services and our own operations,
we make a measurable contribution to the
Sustainable Development Goals (SDGs) which
we are committed to increasing year-on-year.
Here are some examples of our contribution.
Read more about our focus on sustainability online
www.sgs.com/en/sustainability/corporate-
sustainability/our-approach#89A
Maria Fernandes, one of our molecular biology expert technicians,
sequencing E-DNA from environmental samples, Lisbon.
Steven Du during the signing ceremony with UOB, Hong Kong, China.
Unlocking biodiversity
data with E-DNA
Transforming biodiversity analysis
with cutting-edge services
We leverage Environmental DNA (E-DNA) to transform
biodiversity assessments. E-DNA, released by organisms
into the environment through various sources, is analyzed
using advanced molecular techniques.
Our tailored field sampling and cutting-edge analytical services
enable swift and cost-effective biodiversity assessments.
Whether detecting rare species, invasive threats, or pathogens,
our E-DNA service delivers the most comprehensive insights.
E-DNA samples, easily collected non-invasively, facilitate
monitoring in diverse settings from green roofs to deep
marine sediments. Businesses can utilize E-DNA for impact
assessments and integrate findings into sustainability
reporting, supported by SGS’s seamless integration
with other environmental sampling programs.
SGS continues driving sustainable
finance verification
Combining strength and expertise
to drive sustainable financing
We have signed a ‘Memorandum of Understanding’
with the United Overseas Bank in Hong Kong to jointly
promote green and sustainable financing.
The collaboration will leverage the strengths of both entities
to offer services such as green finance certification, evaluation
and accreditation, as well as sustainable finance solutions.
The joint initiative aims to assist companies seeking to enhance
their environmental practices and progress towards a net-
zero future. Additionally, the partnership will contribute to the
development of sustainable finance in the Greater Bay Area,
reinforcing the city’s position as an international sustainable
financial hub.
This collaboration follows several other global banking
partnerships and represents a meaningful step towards
integrating sustainability into business and finance for
a healthier, more resilient world.
Contributing to:
Contributing to:
Management reportSGS | 2023 Integrated Report 21
Employees promoting the Spot The Orange Dot campaign with recycled
materials, Malaysia.
Employees supporting the theme #EmbraceEquity on International
Women’s Day 2023, India.
Spot the Orange
Dot initiative
Cultivating eco-friendly practices
in the workplace
We cultivate a sustainability culture where the goal is to
enhance eco-friendly practices by using fewer resources
and reducing our emissions.
In pursuit of this objective, we introduced Spot the Orange
Dot, an awareness initiative about identifying sustainability
action spots, where a real difference can be made, with
orange dots. These orange dots range from straightforward,
such as stickers near light switches, to inventive and abstract,
like an eco-driving course.
The campaign was deployed in 32 affiliates around the globe,
those with the highest energy consumption. More than 560
locations were impacted, and more than 52 000 employees
were reached.
Together, we are making a tangible impact in fostering
a greener future.
Demonstrating our
commitment to diversity
Providing diverse, inclusive and equal
opportunity employment in India
In India, we are working to enhance gender diversity, with
a current female representation of 15% overall and 32% at
leadership level. This includes actively implementing a Gender-
Neutral Workspace in collaboration with key stakeholders.
Our approach focuses on three key pillars: Talent Attraction,
Talent Retention and Talent Networking. Additionally, we
launched two ‘WE Lead’ Initiatives:
• YouINSPIRE: a quarterly platform fostering connections
among women staff at SGS India, featuring empowering
workshops on various topics like ‘It starts with You,’
‘Creating a lasting impression,’ ‘Actually, I said that first,’
to name just a few
• Actionable Ally Workshop for Managers on Women Talent:
a workshop designed to empower people managers to
actively support the transformation journey of women
talent at SGS in India
We are committed to creating a more inclusive
and diverse workplace.
Contributing to:
Contributing to:
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 22
Stakeholder
engagement
Maintaining continuous dialogue with stakeholders
is critical to our long-term success. These valuable
insights enable us to align our initiatives to
stakeholder requirements and ensure we deliver
value to society.
Customers
Consumers
Employees
Key topics discussed
• Quality of services
• SGS employees’ attitude,
expertise and responsiveness
• Quick turnaround times
• Sustainability services
Key topics discussed
• Product safety and quality
• Ethical behavior
Why we engage
Customers are at the heart of everything we
do. It is important to understand whether we
achieve our goals to make their businesses
more efficient, profitable and sustainable.
How we engage
• One-to-one meetings
• SGS hosted conferences, seminars
and webinars
• Customer surveys
• Knowledge and educational resources
• Customer portal
• Online and social media engagement
Why we engage
Our services ensure that consumers trust
the products they buy. Understanding our
end-consumers tells us if our services
support SGS’s reputation for delivering
confidence and assurance.
How we engage
• Certification and product labeling
• Direct marketing and communication
with certain B2C products
Why we engage
Key topics discussed
• Training, development and recognition
• Diversity and inclusion
• Well-being and work-life balance
• Health and safety
• Sustainability awareness, good
practices in labs and offices
Our people are essential to our business.
Discussing performance and providing
training and opportunities helps to develop
the potential of our talent and keep them
motivated and engaged.
How we engage
• Our global employee
engagement program
• SGS intranet portal and internal
social network
• SGS Life newsletter
• Training programs
• Line manager direct engagement
• Leadership townhalls
Management reportSGS | 2023 Integrated Report 23
Why we engage
Key topics discussed
Engaging with suppliers is key to ensuring
a smooth supply chain, boosting innovation
and strengthening sustainability in
our business.
How we engage
• Supplier self-assessment program
• Scope 3 emissions program
• Supplier relationship management (SRM)
• Sustainability criteria in sourcing events
• Supplier Code of Conduct commitment
• Sustainability requirements
to our suppliers
• Supplier tangible plans to reduce
CO2 emissions and their impact
on our business
• Human rights and ethics
Key topics discussed
• Community donations and
volunteering programs
• Human rights and ethical labor practices
• Sustainable business practices
Why we engage
The sustainability of our communities and
the planet is critical to our success. We
engage with our communities to continually
evaluate whether our sustainability ambitions
are fit for purpose and meeting their targeted
impact.
How we engage
• Multiple community projects across
the network
Why we engage
Governments and industries are often
moving in the same direction as SGS.
We need a clear picture of how
we contribute to driving innovation,
promoting sustainable development
and shaping markets.
How we engage
• SGS hosted conferences, seminars
and webinars
• Membership meetings and events
• Knowledge and educational resources
Why we engage
Investors are vital to our ongoing
success and growth. We constantly
review market analysis, and aim to be
assessed as both a sound investment
and a sustainable business.
How we engage
• Annual General Meeting
• SGS Capital Markets day
• Meetings with investors and analysts
• Answers to analyst questions
Key topics discussed
• Ethical behavior
• Risk management and
business continuity
• Data privacy and cybersecurity
• Product safety/quality
Key topics discussed
• Company performance
• Strategic vision
• Capital allocation
• Execution of action plans
• ESG credentials
Suppliers
Communities
and the planet
Governments
and industries
Investors
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 24
Our material
topics
Materiality assessment
Every two years we conduct a formal
materiality assessment. In 2022, we
integrated the results of our risk assessment
and kept in close contact with our
stakeholders through our regular channels,
such as meetings with investors, our investor
days, voice of the customer surveys, our
employee engagement survey and meetings
with local communities. This has further
contributed to our deep understanding
of the most material topics for the Group.
In 2023, we have developed our first double
materiality assessment according to the
Corporate Sustainability Reporting Directive.
The process has involved a full review of
our value chain, stakeholders’ prioritization,
and direct/indirect consultation to each
of them. During these consultations,
we have analyzed:
• Impact materiality: scale, scope
and remediability of the impact
• Financial materiality: likelihood
and magnitude of the financial effect
The process has been fully aligned with
our annual risk assessment in terms of
risk identification and assessment.
The outcome will be disclosed in
our website by mid-2024.
The SGS Business Materiality Matrix captures the
issues deemed by stakeholders to be materially
important to our organization. It is the outcome of a
rigorous process, including stakeholder consultation,
megatrend and risk analysis, and benchmarking
against international principles, including the
UN Sustainable Development Goals (SDGs).
The nine topics that are most important to the organization
1 Cybersecurity
6 Talent attraction and retention
2 Data privacy and protection
7 Customer relationship management
3 Ethical behavior
4 Health and safety
5 Risk management
8 Corporate governance
9 Sustainable supply chain
These are key topics which have helped to shape our group strategy. Although relatively
less material for SGS, all other topics remain an essential part of our sustainability
management systems. We systematically re-evaluate them to determine whether
they have become more material to the organization.
Other material topics
10 Adaption and mitigation of climate change
18 Local community support
11 Biodiversity
19 Preventing air pollution
12 Diversity in the executive team
20 Reducing and managing waste
13 Diversity and inclusion
14 Employee engagement
21 Responsible use of materials
22 Tax strategy
15 Executive compensation linked to sustainability
23 Training and development
16 Freedom of association
24 Water footprint
17 Innovation in services and operations
25 Well-being and work-life balance
5
2
1
3
4
6
8
9
7
10
12
15
24
18
20
23
13
14
25
17
21
22
16
19
11
Management reportSGS | 2023 Integrated Report Risk
management
During 2023 we have continued to focus on
and address the main prevailing risks facing
the organization, to ensure we can fulfill our
purpose of making the world better, safer
and more interconnected.
25
Risk governance
Our Board of Directors reviews risks to
ensure that the Company has a robust
strategic approach to mitigating them (see
page 61). However, the ultimate responsibility
for identifying risks and integrating their
management into key business planning
processes rests with our Operations Council.
The Group Risk Steering Committee
oversees our risk management framework,
and is chaired by the CEO. The Committee
comprises executive members, including
the Chief Financial Officer, Chief Compliance
& Legal Officer, Chief Operating Officer
representative and Chief Information
Officer, together with representatives from
departments including Risk Management,
Human Resources and Sustainability.
The Committee meets as necessary,
at least three times a year, and reports
directly to the Board.
Accountability for managing risk rests with
‘Risk Champions’ who are charged with
assessing risk in the jurisdictions for which
they have responsibility. In addition, SGS
integrates a broad array of risk categories
(see the charts below) directly into the
management process, under the oversight
of ‘Global Risk Category Owners’.
Risk management framework
During the year, SGS has continued to identify
and address the main prevailing risks facing
our organization. A number of risks have
been redefined, to emphasize where the
focal points are and the resources needed
to address these risks. This was further
enhanced by providing additional guidelines
to local affiliates on how to properly recognize,
measure and mitigate their local risks.
Our risk assessment process is designed
to make allowances for the size and profile
of each of our affiliates.
This allows SGS to ensure that the framework
is applicable worldwide, with key markets
and businesses appropriately involved.
The local risk management assessment
inputs provide further validation from a global
management perspective, contributing to
a comprehensive and insightful overview
of risk perception which is presented on
the risk heat map, page 27.
Risk oversight
To support our risk management framework,
the Group conducts risk assessments, using
a bottom-up approach, with identification
of potential risks, coupled with design and
implementation of mitigation actions and
action plans at a local level, where appropriate.
Additionally, at group level, SGS applies a top-
down approach to evaluate and conclude on
the country level results as well as to identify
and assess risks from the global perspective.
In defining and assessing risks, our
organization takes into account risk appetite
and tolerance levels. Risk appetite refers
to the level of risk that we are willing to
accept or take on in pursuit of our objectives
and goals. Risk tolerance, however, is a
more specific and quantitative measure
that represents the actual ability of our
organization to withstand losses or variations
in the value of its investments or decisions.
For instance, for the two examples of
emerging risks mentioned below, i.e. for the
risk of technological innovation, risk appetite
is considered to be low/medium, while for
the risk of acts of intentional harm the risk
appetite is stated as zero.
Risk management process
Enterprise Risk Management Framework
Places responsibility and accountability for managing risk close to our operations
Board of Directors and CEO
Review risks and ensure that the
Company has a solid strategic
approach to mitigating them
Audit Committee
Supporting the Board in risk
assessment and monitoring
Operations Council
Ultimately responsible for
identifying company risks and
integrating the management of
these risks into key business
planning processes
Group Risk Steering
Committee
Chaired by the CEO, the
Committee gathers executive
members, including the
CFO, CCO and CIO, together
with operational function
representatives
Group level
Top-down approach with
the objective of identifying
and assessing global risks
Macro
risk assessment
Reporting
platform
Local market level
– Affiliates
– Local business lines
– Operations
Own risks in local
jurisdictions applying
a bottom-up approach
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 26
Risk
management
continued
2023 risk assessment results
In 2023, we conducted risk assessments
in 58 of our main markets, applying a full
and limited scope approach. We assessed
133 specific risks (full scope) and 19 risks
(limited scope) within 44 risk categories
defined globally.
The assessment has confirmed a number
of prevailing as well as emerging risks,
particularly in relation to technological
innovations, cyberattacks, access and
security breaches, political instability and
military conflicts, continued global energy
challenges driving inflationary pressures
that adversely impact local and regional
economies, including sourcing operations,
coupled with continued environment
and climate changes. More details are
disclosed on pages 28-31.
As part of our assessment process,
we also identify emerging risks that are
likely to impact on our business in the
next three to five years.
An example of such risks is risk associated
with technological innovations, especially
investing in technology with limited value and
impact on customers, or losing opportunities
due to lack of innovation agility in serving
current and new markets. Such risk may also
be related to an inability to be adequately
prepared for market disruptions resulting
from new and emerging technologies.
We also recognize another emerging risk
which is associated with acts of intentional
harm, particularly in relation to business
disruption, asset loss or harm to employees
due to fraud, theft and abuse of integrity
of services.
For each of these risks, mitigation actions
are defined and monitored as per the risk
management process. The mitigation
actions are described on pages 28-31.
Business continuity
This year the world saw many disruptive
events across different regions, largely
driven by climate-led extreme weather
events, natural disasters and socio-political
crisis. These provide fresh reminders for
businesses of any size and industry to
be prepared to deal with disruption.
Our business continuity programs focus
on protecting our operations and critical
business processes, by identifying relevant
external and internal risks; minimizing their
occurrence where possible; and preparing
to respond and recover from such events,
to limit the adverse impacts and protect our
people, our business and our stakeholders.
We operate at the three levels – local,
regional and global – with our business
continuity officers, normally managers
or senior managers, who can influence
and drive continuous enhancement to
our business continuity capabilities.
Management reportSGS | 2023 Integrated Report 27
External risks
Communication & investor relations
Environment & climate change
Pandemic
Customer needs
Cyberattack
Economy & sovereign
Hostile civil or political environment
Technological innovation
Industry
Legal & regulatory
Political risk, war, crime, terrorism
Internal risks
Operational
risks
Process
Environment
(operations)
Health & safety
Pricing
Real estate
Service delivery
Sourcing
Supply chain
Non-operational
risks
Management
information
Human capital
Compliance
Technology
Treasury
Strategic
Budget & forecast
Compliance
Act of intentional harm
Access
Credit
Business model
External reporting
Reward
Business ethics
Availability
Foreign exchange
Business portfolio
Internal reporting
Talent acquisition
Tax
Talent management
Contract commitment
& claim
Data privacy
Information governance
Data integrity
Infrastructure
Reliability
Technological
capacity
Liquidity
Mergers &
acquisitions
Social responsibility
Heat map of risks with highest residual risk scores
High
5.0
4.0
t
c
a
p
m
I
3.0
2.0
Low
1.0
1 Technological innovation
2 Economy & sovereign
3 Talent management
4 Pricing
5 Cyberattack
6 Environment & climate change
7 Access to IT applications
8 Hostile civil or political environment risks
9 Business model
10 Sourcing
11 Legal & regulatory
12 Technological capacity
13 Acts of intentional harm
2
9
3
6
8
11
12 13
10
4
7
5
1
Low 1.0
2.0
3.0
Likelihood
4.0
High 5.0
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 28
Our principal
risks
The identification and management of risks
is aligned to our materiality assessment to help
us manage the principal risks. We endeavor
to have measures in place to mitigate those
risks to an acceptable level.
Risk description
Summary of impact
Mitigation measures
• Risk of investing in technological innovation
with limited value and impact on customers
• Execution of innovation initiatives, based on a thorough
understanding of the customer needs, problems and context
l Technological
a
n
r
e
t
x
E
innovation
• Risk of losing opportunities due to lack of
innovation agility in serving current and
new markets
• Risk of not being adequately prepared for
market disruptions resulting from new and
emerging technologies
• Continuous assessment and validation of innovation initiatives
and projects to ensure their organizational viability
• Ongoing business digitalization through strategic partnerships
on technology development to identify solutions to
mitigate operational risks, and to improve efficiency
and competitiveness
• Experiment and explore new business areas unlocked through
emerging tech disruptions (e.g. Generative AI, Trust in AI)
• Ongoing performance monitoring of SGS operations by region
and country in comparison to local economic environment
• Proactive pricing increases to address cost increases and
support SGS growth
• Take measures to adapt SGS capacity (and cost base) based
on market demand
• Balanced resources allocation to ensure adequate business
and geographical diversification
Economy &
sovereign
• Loss of sales (decrease in service demand/
economy)
• Risk of price pressure
management
l Talent
a
t
i
p
a
c
n
a
m
u
H
• Ineffective or inadequate training and
development programs for employees
• Lack of leadership alignment and
effectiveness, lack of qualified and
competent employees, lack of succession
planning of key personnel
• Our global employer value proposition drives our integrated
talent management, talent development programs and total
reward strategy, enhancing talent attraction, engagement
and retention
• Talent review and succession planning processes across the
organization strengthen talent management and development
• Risk of inefficient
performance management
• Using talent assessment and facilitated movement we aim to
significantly improve talent development
• Risk of workplace discrimination
• Our structured leadership development program is designed to
enhance leaders’ competencies
• Advancing our well-being program to improve employee
engagement and retention
• Dedicated diversity, equity and inclusion initiatives to foster a
more inclusive and diverse workforce
s Pricing
s
e
c
o
r
P
• Risk of incorrect pricing due to inadequate
• Implementation and monitoring of detailed operational pricing
pricing model
actions to offset inflationary pressures
• Risk of margin pressure and processing
• Ongoing review and implementation of pricing golden rules
inaccurate discounts
and value-based pricing strategy
• Risk of underutilized capacity due to too
• Execution of focused workstreams leveraging on relevant data
high pricing versus competition
(internal dashboards, segmentation, best practices)
Management reportSGS | 2023 Integrated Report
29
Risk description
Summary of impact
Mitigation measures
l Cyberattack
a
n
r
e
t
x
E
Environment &
climate change
l
y Access to IT
g
applications
o
o
n
h
c
e
T
• Financial losses resulting from
• Security Operations Center (SOC) continuous monitoring and
business disruption or interruption due
to cyberattacks
• Loss of certification accreditation
leading to significant reduction of
our certification business
• Loss of cyber insurance cover as a result
of cyberattacks, lack of internal knowledge
and adequate technology and security
controls and processes
• Reputational impact
response around-the-clock
• Constant evolution of use cases for security event correlation
and early warning
• Digital surveillance service and intelligence feeds
• Deployment of security solutions at different levels
and security layers (perimeter, datacenter, network
and workstations)
• Evolution and improvement of the antimalware platform
at a global level protecting workstations, servers and
kubernetes environment
• Reinforcement of user identity security measures
• Strong training and awareness program for all users with social
engineering tests
• Vulnerability management and pen testing program for
vulnerability detection and remediation
• Third-party monitoring (e.g. BitSight) as an additional source of
security posture improvement
• Implementation of security updates and patches in systems
and applications
• Cost (monetary and non-monetary) of
• Global CO2 reduction targets cascaded down to regions
transition to lower emissions technology to
achieve our CO2 reduction targets
• Reputational impact of misalignment with
global megatrends
and affiliates
• Execution of a vehicle analysis to optimize the fleet and
development of a mobility strategy
• Ongoing deployment of the Energy Efficiency in Buildings
program, with additional buildings in scope
• Periodic deployment of awareness campaigns to promote
sustainable behaviors among our employees, like the energy
savings or the Spot the Orange Dot campaigns
• Risk of unauthorized access to sensitive
information and resources, existence
of orphan accounts and use of
exfiltrated credentials
• Reinforcement of user access procedures and control
• Implementation of new identity governance initiatives
(WorkDay, SailPoint)
• Deployment of conditional access control to reinforce
security posture
• Enhancement of user identity security protocols to prevent
unauthorized access
• Early detection of threads by Digital Surveillance Service
• Advancing and broadening the scope of our Security
Information and Event Management (SIEM) system to
enhance our capabilities in detecting anomalous behavior
through refined event
• Various meetings and seminars during the year with the IT
community on governance, policies, best practices, etc.
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 30
Our principal
risks
continued
Risk description
Summary of impact
Mitigation measures
l Hostile civil
a
n
or political
r
e
environment
t
x
E
• Business disruption, asset loss or harm
to employees and physical property,
due to civil or interstate war, civil strife
(e.g. following a natural disaster),
political violence and terrorism and
external criminality
• Proactive assessment of country risk and area risk before
initiating business activities
• Integration of hostile environment contingency planning into
business and service delivery design, as well as location and
design or selection of facilities
• Development of appropriate level of understanding of
risk management for managers pertaining to their area
of responsibility
• Continuous active monitoring of the security risk environment
as business activities
• Contingency plans to minimize exposure to risk by avoiding
concentration of investments in a single territory to ensure
adequate levels of diversification if needed
• Crisis management system in place to oversee major
risk events
• Risk of not achieving the strategic
• Ongoing dialogue with stakeholders (clients, governments,
i
model
c Business
g
e
t
a
r
t
S
objectives and misalignment with the
strategic direction of the Company towards
mega trends resulting in potential loss
of market share and/or failure to capture
margin increase opportunities
s Sourcing
s
e
c
o
r
P
• Business slowdown and/or increased
operational costs due to impact of inflation
and supply chain disruptions
• Business slowdown and/or increased
operational costs due to supply chain
issues, inflation, increased transportation
costs and energy price spike
l Legal & regulatory • Risk of penalties, loss of business and
a
n
r
e
t
x
E
reputational risks
industrial associations, etc.) to ensure relevance of our
chosen megatrends
• Ongoing performance monitoring of SGS in comparison to
other significant TIC players
• Focused resources allocation on strategic business units
and markets
• Constant optimization of the organization to ensure fast and
agile reactions to changing market conditions
• Sourcing and supply chain related risks are regularly analyzed
and monitored by the global and local procurement teams,
especially for those categories with highest impact on
the business
• While monitoring market trends to address inflation, energy
and geopolitical potential risks, we define risks roadmaps by
country and implement mitigation plans to anticipate to such
risks, reducing our exposure and increasing our secureness
• Our mitigation plans include a diverse number of actions,
focused on fighting inflation (tendering and renegotiations,
contract clauses, rationalization and standardization of
products, etc.), and ensuring supply (alternative products,
vendors and markets, advanced ordering, safety stocks, etc.)
• Strong culture of compliance embedded in our Code
of Integrity
• Management actions and systematic training of employees
• Policies on prevention of risks, bribery and corruption, due
diligence and Know your Clients for customers, suppliers and
business partners
• Continuous review of activities in at risk areas
Management reportSGS | 2023 Integrated Report 31
Risk description
Summary of impact
Mitigation measures
Technological
capacity
e Acts of intentional
c
n
a
i
l
harm
p
m
o
C
• Risk of software or hardware obsolescence
• Migration of applications and infrastructure to the cloud
• Lack of resources to meet the technological
needs of the business
• Lack of procedures and/or tools for
IT management
• Business disruption, reputational damage,
asset loss, or physical and psychological
harm to employees due to fraud, theft,
intimidation, manipulation of processes and
abuse of integrity of services
(Azure) mitigating obsolescence or capacity limits (space or
computing capacity)
• Contracting outsourced IT management services to reduce
the risk of turnover or absence of skilled resources to operate
corporate IT
• Implementation of Information Technology Infrastructure
Library (ITIL) methodology and tools such as ServiceNow for
change, request, demand and incident management
• Proactive process security controls to deter, detect and
disrupt attempts to manipulate inspection, testing, auditing,
and other service delivery methods for the purposes of
crime or similarly undesirable behavior. Process security also
includes due diligence services and advice on suitability for
recruitment (vetting), as well as dealing with allegations of
falsification, adulteration and misuse of certificates, reports and
other documents
• Protective physical security controls to protect physical space,
equipment, consumables, people and processes from misuse
and criminal attack
• Travel security and remote working security to protect
employees on the move or working on client sites or other
locations away from SGS immediate control
• Investigations into security incidents, criminal attack and
alleged violations of the Code of Integrity or other standards
and rules
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 32
How we
create value
As the leader in the TIC industry we
create value by enabling a better, safer and
more interconnected world. We measure
total value creation using the six capitals.
Our inputs
Financial capital
The funds
available to us
Total equity
Profit (prior year)
CHF 528 M
CHF 630 M
Manufactured capital
Infrastructure,
equipment
and tools
Intellectual capital
Capex
Buildings and laboratories
CHF 298 M
2 600
Organizational,
knowledge-based
intangibles
Goodwill and other
intangible assets
Training hours
(millions of hours)
CHF 1 911 M
6.0 M
Human capital
The skills and
know-how of
our employees
Employees
SGS Rules for Life
99 600
9
Social and relationship capital
Our relationships
with our
stakeholders
Suppliers
Voice of the customer program
50 000
1
Natural capital
The natural
resources we
need to operate
Electricity consumed
Fuel consumed
496 GWh
452 GWh
Management reportSGS | 2023 Integrated Report 33
What we do
Our value
Financial capital
Testing
Our testing processes are delivered using a systematic
approach under controlled conditions on our customers’
products, services or systems. The objective is to
determine if they meet required safety standards, quality
norms and performance criteria set by regulatory bodies.
This may include stress tests, usability tests or functionality
checks. Testing helps verify if the product or service
can perform reliably under expected conditions, thereby
building trust with consumers and businesses.
Inspection
Our inspection processes provide detailed examinations
of products, systems or processes for our customers.
This involves checking whether they conform to specified
criteria, which could include safety regulations, quality
standards or performance benchmarks. Inspections
are conducted by trained professionals who assess the
condition, functionality or compliance of the subject matter,
helping to identify potential issues or non-conformities.
Certification
Our certification processes officially recognize that a
service, system, process or product meets specified
standards. These are carried out by an accredited
certification body after successful testing and inspection.
Certification provides assurance of safety, quality
and reliability, enhancing trust among consumers
and businesses. It also demonstrates compliance
with relevant regulations, which can be crucial
for market access.
CHF 3 316 million paid in wages to our employees
CHF 205 million taxes paid to governments
CHF 3.20 dividend per share proposed by the Board of Directors,
subject to the approval of a capital increase, where shareholders can
elect to receive the dividend in the form of shares or in cash
Manufactured capital
Delivering safe medicine to patients
Ensuring a safe, quality and sustainable supply chain
Creating great places to work to support our business growth
Intellectual capital
Enhancing career opportunities through training and innovation
Simplifying the customer journey through innovation
Ensuring information protection for us and our stakeholders
Human capital
Ensuring a diverse and inclusive workforce
Protecting the health and safety of employees
Reducing social risks by reinforcing human rights compliance
Social and relationship capital
Supporting the communities in which we operate
Improving how we work with our customers
Promoting sustainability across our supply chain
Natural capital
Committed to Net Zero by 2050
Minimizing resource depletion and protecting the environment
Supporting our customers in their sustainability journey
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 34
Financial
capital
Access to and management of financial
capital to support our strategy and deliver
returns to shareholders.
1 How we develop our financial capital
Outlook 2024
• Mid to high single-digit organic1 growth
• Relaunched M&A program
• Improvement in adjusted operating income margin1 on sales
• Strong free cash flow1 generation
2 Our inputs
Profit CHF million
Total equity CHF million
Total assets CHF million
2023
597
528
2022
630
763
6 761
7 122
2021
655
1 202
7 007
3 Progress during the year
Financial discipline
and focused capital
allocation
• Sustainability services delivered excellent growth across all business lines
• SGS holds a prime position in the growing cybersecurity market, illustrated by the strong double-digit
growth at Brightsight
• Business Assurance (prev. Knowledge) delivered a record performance with solid double-digit organic
sales growth and profitability. This was driven by new sustainability services including business health
checks and gap assessments as well as social audits and ESG assurance
• High single-digit growth in Industries & Environment driven by safety, supply chains, renewable
energy and sustainability services
• Accelerating demand for critical minerals and battery metal testing, as well as services to support
the energy transition, including biofuels, drove growth in Natural Resources to nearly 10%
at constant currency¹
• Strong sales momentum in Food for Health & Nutrition offset softness in Health Science
and Cosmetics & Hygiene
1. Refer to Alternative Performance Measures – Appendix to the 2023 full year results.
Management reportSGS | 2023 Integrated Report 35
3 Progress during the year continued
Financial discipline
and focused capital
allocation (continued)
Financial review
• Sales of CHF 6 622 million, up 8.1% organic1, were driven by double-digit growth in Business Assurance
(prev. Knowledge) and high single-digit growth in Natural Resources and Industries & Environment.
Significant FX headwinds led to a reported -0.3% variation compared to prior year
• Adjusted operating income (AOI)1 reached CHF 971 million, an increase of 6.2% at constant
currency1 compared to prior year. A significant strengthening of the Swiss Franc against the majority
of currencies led to a decline of 5.1% compared to 2022. The adjusted operating income margin on
sales was 14.7%, representing a decline of 0.7 percentage points compared to prior year, of which
0.5 percentage points was attributable to adverse currency impact
• An effective tax rate (ETR) of 26% reflected a normalization of non-tax-deductible expenses
• Profit attributable to equity holders achieved CHF 553 million compared to CHF 588 million
in prior year, a reduction of 6.0% driven by the strengthening of the Swiss Franc
• Basic earnings per share2 was CHF 3.00, a decrease of 4.8% compared to prior year
• Free cash flow (FCF)1 of CHF 604 million compared to CHF 481 million in 2022, driven by lower
net working capital requirements and capital expenditures
• Return on invested capital (ROIC)1 remained stable at 22% compared to 2022, representing an
industry-leading level of returns
• Net debt1 at 31 December 2023 amounted to CHF 2 839 million including lease liabilities, an increase
of CHF 16 million compared to December 2022. SGS successfully refinanced maturing debt, by issuing
a 4-year bond of CHF 240 million and an 8-year bond of CHF 260 million in November 2023
4 Outcomes
Sales CHF billion
Free cash flow1 CHF million
Adjusted operating income margin1 %
2023
6.6
604
14.7
2022
6.6
481
15.4
2021
6.4
610
16.5
1. Refer to Alternative Performance Measures – Appendix to the 2023 full year results.
2. On 28 March 2023, the Annual General Assembly approved a 25-1 stock split that went into effect on 12 April 2023. This split increased the number of shares issued,
from 7 495 032 to 187 375 800, and reduced the nominal value per share, from CHF 1 to CHF 0.04. As a result, for comparability purpose, the Group recalculated
the weighted average number of shares as well as the basic and diluted earnings per share (EPS) as of December 2022. Please refer to note 11 of the consolidated
financial statements (page 110).
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix
36
Financial capital
by business line
In 2023, all business lines contributed
to strong growth, and we drove additional
returns through portfolio management.
Strong growth driven by
energy, safety and reliability
Business performance
• Double-digit organic growth in field
services and inspection, safety, supply
chains and government mandates
• High single-digit organic growth
in environmental testing
• Margin improvement driven
by pricing and business mix
Market-leading business
performance
Business performance
• High single-digit growth in trade and
inspection, and strong performance
in lab testing, driven by critical minerals
and sustainability
• Strong double-digit growth in metallurgy
and consulting
• Margin improvement driven by improved
efficiencies, adoption of automated
solutions and pricing
Testing & inspection
Industries & Environment
Natural Resources
Wind turbine inspector, Industries & Environment, Belgium.
Technical developer XRF analyzers, Natural Resources, The Netherlands.
Management reportSGS | 2023 Integrated Report 37
Solid growth and market
share gains
Business performance
• High single-digit growth in connectivity,
partly driven by very strong performance
from Brightsight
• Mid single-digit growth in softlines
• Margin decline mainly due to softer
activity in wireless testing and a positive
one-off in 2022
Organic sales growth in a
challenging environment
Business performance
• High single-digit growth in food testing
driven by regulations, network expansion
and pricing
• Positive underlying growth for health
science (excluding Covid related testing)
despite challenging market conditions
• Margin decrease primarily due to the
change in business mix and slowdown
in project outsourcing
Record performance in 2023
Business performance
• Double-digit growth in management
system certification, ESG assurance
services and customized audits
• Very strong double-digit growth
in consulting
• Margin improvement driven by the
strong sales growth and business mix
Connectivity & Products
Health & Nutrition
Certification
Business Assurance (prev. Knowledge)
Test engineer, Connectivity & Products, Finland.
Laboratory manager, Health & Nutrition, Germany.
Security auditor, Business Assurance (prev. Knowledge), Switzerland.
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 38
Manufactured
capital
Our manufactured capital represents the effective
and efficient use of assets, such as laboratories
that SGS owns or has control of to deliver testing,
inspection and certification to our customers.
1 How we develop our manufactured capital
We invest in
and maintain our
testing laboratories
• Our laboratory network is the largest in the TIC industry and the equipment and services required
to operate them drives one of our largest procurement categories. Our job is to negotiate the right
commercial terms for the business need as well as ensure they are fit for purpose, high quality and
delivered on time anywhere in the world
We create great
places to work
that support our
business growth
• We manage our large corporate real estate (CRE) portfolio proactively with the aim of 100% accuracy
of our database, with no expired contracts. This enables us to operate in full compliance with group
policy and deliver workspaces that are fully sustainable, energy efficient and correctly priced. With 85%
of our portfolio leased, it is important that we start (re)negotiating early on, approximately 24 months
ahead of a lease expiry or the initiation of a new project, to guarantee the best leverage for SGS
2 Our inputs
Capital expenditure CHF million
Operating expenditure CHF million
2023
298
2022
329
2021
336
1 511
1 493
1 364
3 Progress during the year
We invest in
and maintain our
testing laboratories
• Significant investments of CHF 298 million were made to expand and evolve our service offerings in
areas including connectivity, automotive and battery testing in Asia; health and safety and environmental
in North America; as well as global investments in IT transformation and energy efficiency to meet our
digital and sustainability objectives
• In May, we expanded our Health & Nutrition capabilities in North America with the acquisition of
Nutrasource. The Company provides clinical trial management, full regulatory support, testing services,
and product development
We create great
places to work
that support our
business growth
• The negotiation process continues to be guided by our CRE golden rules, helping them to put best-in-
class deals in place and to protect us against high inflation. Where possible, we also further consolidated
our office space by implementing work from home policies, which have improved employee work-life
balance, as well as delivering cost reductions through space reduction and lower energy consumption
• More than CHF 3 million of capex has been dedicated to improving the energy efficiency of our
buildings, including investments in high efficiency systems and onsite renewable energy installations
4 Outcomes
• Exceeded our target, set in 2020, to reduce depreciated costs over the length of lease agreements of CHF 40 million
• Greatly improved compliance with our CRE policy, achieving 100% compliance at the end of the year and maintaining this through the year
• On data accuracy, we achieved 98% compliance
• By the end of 2023, we had delivered CHF 12.8 million of savings on real estate projects
Management reportSGS | 2023 Integrated Report Intellectual
capital
Our intellectual capital is the development of
processes, protocols, knowledge, insights,
systems and data, to support and enhance
our business activities.
39
1 How we develop intellectual capital
We build capabilities
that will enable
us to deliver on
our strategy
• World Class Services (WCS) is our distinctive continuous improvement and operational system. It is
based on the World Class Manufacturing (WCM) methodology that we apply in our laboratories and
operational network. We empower colleagues and increase their level of knowledge and engagement
by deploying our business principles on the shop floor. This strengthens our culture, and ensures that
every single person in the organization can contribute to our continuous improvement process as their
ideas and suggestions make our laboratories more efficient and better, creating a safer place to work
• Our Digital Builders Organization designs and develops technology-based solutions such as the
WindGo application to support field workers and customers for SGS’s business units that they can
bring to market quickly. Through agile development methodology and close collaboration with the
business units, we aim to create solutions that bring real value and can easily scale from regional
to global
We innovate for
our customers
• A forward-thinking approach to emerging technologies translates into strategic initiatives and programs
that drive productivity improvements, increase customer satisfaction and leverage growth opportunities
in a responsible and ethical way
• Within our operations we are applying emerging technologies such as Generative AI to empower our
employees to harness this technology and realize productivity improvements
• We are also exploring the need for new services to assess the trustworthiness of new technologies
when our customers use or develop them. This will help SGS and our customers comply with new
regulations such as the EU AI Act
• The ability of our people to innovate is integral to our success. We build on existing initiatives to
inspire and encourage them to innovate and deploy new ideas. Our business environment stimulates
innovation, delivers top-tier training and development, encourages cross-functional collaboration,
and establishes a culture of feedback and continuous improvement. Together, these provide a strong
foundation for growth
• We have clear policies and procedures for protecting intellectual property generated through innovation.
This includes patents, trademarks, domain names, copyrights and trade secrets
• Continuously analyzing market trends and identifying improvements to be implemented at SGS
to reduce information security risks is part of the DNA of our information security team
• Our Global Data Privacy Policy and the corresponding standards and procedures define our principles
for processing personal data. This approach allows us to achieve a high level of data protection for
our employees, contract partners, customers and suppliers
• Group wide, our understanding of data privacy is based on European legislation, in particular the
European Union General Data Protection Regulation (EU GDPR). We are also taking steps to meet
local data privacy requirements, where they are more strict than our global standards
We inspire and
encourage our
people to innovate
and generate new
intellectual capital
We secure our
information and
know-how
We are committed
to maintaining
customer trust
by protecting all
personal data
provided to or
generated by us
2 Our inputs
Goodwill and other intangible assets CHF million
Training hours million of hours
2023
1 911
6.0
2022
2 105
5.3
2021
2 160
4.3
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 40
Intellectual
capital continued
3 Progress during the year
We build capabilities
that will enable
us to deliver on
our strategy
• Seven new laboratories have been added to our World Class Services program – in countries throughout
the world including India, Kazakhstan, China, Sweden, Russia, Australia and Portugal. With 13 laboratories
added since 2021, we have exceeded our SA 2030 target of at least 10 new sites by 2023
• 28 World Class Manufacturing external audits were completed in 2023. Two of our laboratories, located
in Shanghai, China and Bangkok, Thailand achieved a World Class Manufacturing bronze award scoring
over 50 points
• Seven new technology-based products, designed to improve business results through increased sales
or efficiency, and one proof of concept were successfully deployed. In addition, we have
six products in development, as well as four proof of concepts expected to go live in 2024
We innovate for
our customers
• Significant progress has been made in embracing emerging technologies, in particular AI, through
numerous pilots. We have further demonstrated our dedication to this area by working to increase
awareness and enhance skills in the AI domain throughout our organization
• An internal SGS ChatGPT has been developed to unleash the potential of Generative AI in daily routine
tasks, and to explore new services around trust in artificial intelligence. We also completed the first audit
for AI management systems
• Dedicated policies and guidelines for the ethical and responsible use of Generative AI have been
developed and deployed
• Investment in our workforce, and the development of awareness campaigns and training initiatives
continues. This will equip employees with the skills and knowledge they need to excel in the
AI landscape
We inspire and
encourage our
people to innovate
and generate new
intellectual capital
• A new partnership has been established with a leading learning provider, granting our employees access
to more diverse learning resources from top-tier business schools that will foster continuous learning
and innovation, and contribute to their personal and professional growth
• A Global Business Partner organization has been created to facilitate collaboration between HR and
our business units to improve the overall understanding of finances, business objectives, competition,
market trends and company culture. This has helped us create effective solutions across the organization
through analyzing, developing, implementing and monitoring specific HR programs and solutions
We secure our
information and
know-how
• All planned projects were successfully completed in 2023 including the implementation of more than
90 new security operation center monitoring use cases, as well as the migration and optimization of
the EDR platform. Progress in the global deployment of Network Access Control (NAC) and the maturity
of the Security Operations Center (SOC) processes have made it possible to avoid any security incidents
during the year
• Implementing a Zero Trust Strategy has been crucial to enhancing our cybersecurity posture and
protecting sensitive data from evolving threats. We have improved in a wide range of areas, including:
identity and access management (IAM), with the enforcement of strong authentication methods,
such as multi-factor authentication (MFA), for all users; micro-segmentation, enabling us to isolate
a single workstation to a whole country or region through the enhancement of our SD-WAN and
NAC technologies; and continuous monitoring, detecting suspicious activities or deviations from
normal behavior in real time by our SOC 24/7/365
Management reportSGS | 2023 Integrated Report 41
3 Progress during the year continued
We are committed
to maintaining
customer trust
by protecting all
personal data
provided to or
generated by us
• A SGS Privacy Management program that aligns with our Sustainability Ambitions 2023 has been
developed. It allows us to take a structured approach to privacy management, provides transparency
on data privacy compliance, and boosts trust in us as a responsible and ethical user of data. This program
is built on four pillars: leadership and management, risk management, reporting and monitoring, and
learning and communication
• New Data Privacy Officers (DPOs) have been appointed in Vietnam, Japan and in the French
African region
• The SGS Data Privacy brand has been refreshed and strengthened to communicate our data privacy
function’s message and purpose
• New blended learning initiatives have been deployed:
– The Data Breach Response Toolkit, eLearning combined with a 20-minute webinar, which
together provide employees with the necessary knowledge and skills to effectively respond
to data breaches
– The Data Privacy Spotlight, an employee data privacy quarterly newsletter that provides
SGS employees with relevant and easy to understand insights, practical tips and updates
on data privacy delivered directly to their inboxes
– The DPO Dispatch, a newsletter tailored to local DPO needs, helping them stay informed on
the latest developments in data protection and privacy, new SGS processes and procedures,
as well as relevant learning opportunities and timely communication that can be locally deployed
• As AI and machine learning are growing rapidly and have introduced new risks for data subjects
as well as new challenges for DPOs, we have created new SGS DPO AI FAQ Guidance to provide
a starting point local DPOs can use to navigate the critical and complex world of AI
4 Outcomes
Training ratio (% of total employment cost spent on training) (includes safety training hours)
Number of WCS laboratories
2023
3.6
27
2022
3.2
26
2021
2.6
22
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 42
Human
capital
Our people are vital to our success and human
capital represents their behaviors, engagement and
well-being.
1 How we develop our human capital
We work
with integrity
• Being trusted is a prerequisite of everything we do as a business. Our people do not engage in any form of
bribery or corruption, and we adhere to the legal requirements of every country where we operate. The SGS
Code of Integrity applies to all employees, as well as affiliated companies, contractors, subcontractors, joint
venture partners and agents
We respect
human rights
We attract,
develop and
retain the
best talent
We commit
to diversity
and equal
opportunities
• Our Code of Integrity is reinforced through mandatory annual integrity training, and we require all new
permanent employees to complete the same training within three months of joining SGS
• Our absolute commitment to human rights is grounded in our SGS Code of Integrity and our SGS business
principles. It is also reflected in our human rights policy, supplier code of conduct and other relevant policies
• As part of our ongoing efforts, we have integrated human rights considerations into our policies, principles,
and due diligence processes. Through this we aim to ensure their effective implementation and to prevent
any potential adverse impacts on human rights that may be caused or contributed to by our operations
• Our global Employer Value Proposition (EVP) of #Bethechange and #BeSGS is our guiding principle in
attracting, engaging and retaining talent in a challenging labor market. These are reinforced by our integrated
talent management, robust talent development programs and total reward strategy. Our commitments
to talent development and continuous learning strengthen our organization and enable strategic objectives
by releasing people’s potential
• Our culture of diversity and inclusion enhances our competitiveness and creates value for our customers,
investors and employees. We are dedicated to diversity and equal opportunities, and this is embedded in our
business principles, Code of Integrity, human rights policy, and anti-discrimination and dignity at work policy.
We firmly believe that integrating these principles into our policies and practices is the most effective means
of fostering a culture where diversity and inclusion are fundamental values that influence decision making
across all levels of the organization
• We have zero tolerance for any form of discrimination and take pride in being recognized as an inclusive
employer. We are proud to have achieved the 45th rank among the top 100 publicly traded companies
recognized for their diverse and inclusive workplaces in the 2023 Refinitiv Diversity and Inclusion Index
• We are committed to ensuring equal pay for equal work and regularly conduct analyses to uphold this commitment
We engage
with and care
for our people’s
well-being
• We are dedicated to cultivating a workplace culture that empowers our employees to thrive, both personally
and professionally. Our commitment to promoting well-being is driven by our belief that a healthy, happy
and engaged workforce will have a positive impact on individuals, teams and the organization as a whole.
To achieve this, we foster a workplace that values and supports well-being as a fundamental aspect of
our organizational culture. We also highly value feedback and actively encourage employees to voice their
opinions via our voluntary annual employee engagement survey
We provide a
safe and healthy
environment
• Our employees’ safety is our top priority. As part of our operational integrity (OI) mission, we promote safety
initiatives around eight areas:
– Visible leadership
– Risk management
– Training and awareness – Digitalization
– Communications
– Resources and skills
– Performance management
– Health, safety and environmental (HSE) compliance
• We run a bi-annual health and safety (H&S) survey to check that safe operations and practices are in place
in workplaces and facilities. It is an opportunity to assess how employees and contractors perceive the value
of H&S initiatives and for us to identify improvements opportunities
• In addition to our Group Security Risk Management Policy, Corporate Security continue to promote an agile,
consistent, yet adaptive approach to the protection of people, workspaces, assets and processes from
intentional harm. The strategy is to encourage the implementation of appropriate preventive and deterrent
controls throughout the value chain
2 Our inputs
• 99 600 employees
• Nine SGS Rules for Life
Management reportSGS | 2023 Integrated Report 43
3 Progress during the year
We work
with integrity
• A network of regional compliance managers has been established across our regions. Following the update
to our Code of Integrity and various integrity policies, a number of micro-learnings were launched and webinars
conducted to promote and drive awareness throughout the network
We respect
human rights
We attract,
develop and
retain the
best talent
We commit
to diversity
and equal
opportunities
We engage
and care for
our people’s
well-being
• Our Human Rights Task Force further developed our Human Rights Due Diligence Program, making
significant progress. One notable achievement was the creation of a Human Rights Due Diligence Checklist
specifically designed for use during social compliance audits within our own operations. The development
of this checklist was a collaborative effort, with valuable support from experienced compliance auditors from
our own responsible business services. We believe that it will help us to reduce operational risk, reinforce
our commitment to responsible business practices, and foster positive stakeholder engagement
• The first phase of mySGS, our new global human capital management system, was successfully launched.
MySGS helps our employees and managers, enhancing employee experience and operational efficiency
and supports better decision making
• A new talent review and succession planning process using mySGS technology rolled out. The new process
will significantly improve our approach to identifying talent and leveraging global organization capability to
support business growth
• Now operational in 60 countries, the expansion of our talent acquisition tool continues. The use of AI predictive
analytics has significantly enhanced our recruitment processes, leading to reduced time-to-hire, increased
quality of hire and overall improved service levels
• Within our global eLearning platform, SGS Campus, we have now registered 96 650 employees. This platform
delivers tailored learning and training programs to both local employees and global teams
• Our commitment to diversity and inclusion extends to our Board, with 33% of positions held by women.
Additionally, our women in leadership percentage stands at 31.9%, reflecting a positive trend compared
to 31.1% in 2022
• To accelerate progress in enhancing our diversity, equity and inclusion (DE&I) we conducted surveys, one-on-one
interviews and held workshops with our leaders. This feedback will guide the development of our DE&I program.
An additional benefit of our new human capital management system, mySGS, is that it has been instrumental
in advancing our global job architecture initiative. Leveraging the system’s functionalities, we have successfully
hosted job data, including job grading. This enables us to conduct comprehensive data analysis, such as gender
pay gap analysis, and promptly identify any disparities, allowing us to take corrective actions. This integrated
approach establishes a robust foundation for providing fair and competitive remuneration packages across all
the markets in which we operate
• As part of our new global employee well-being strategy, titled ‘Together We Thrive: Cultivating a Culture of Well-
Being,’ we organized global mental health webinars for people managers, with more than 1 000 participants.
We also conducted a global communication campaign in celebration of International Mental Health Day, raising
awareness and encouraging employees to destigmatize this vital issue
• To empower our employees on their well-being journey, we established a global well-being eLearning channel,
providing a comprehensive range of resources
• A new Employee Voice & Engagement platform launched. The first pilot survey reached more than 25 000
employees globally, generating an 81% response rate and providing valuable feedback. The survey revealed an
overall employee engagement score of 7.6/10 and an overall manager support score of 8.3/10. These results
underscore our strengths in goal setting, emphasizing that employees clearly understand their expectations and
how their work contributes to team goals, whether they work onsite, in a hybrid setup, or remotely. Additionally,
we have excelled in the areas of safety, ethics and integrity, indicating that our employees feel safe, are
encouraged to maintain ethical conduct, and are fully aware of their right to report integrity concerns. To further
enhance employee engagement, action plans tailored to each country have been developed and are actively
being executed by our affiliate teams
We provide a
safe and healthy
environment
• The Safety LeaderSHIFT initiative for managers was deployed in six countries across three regions, with
more than 580 managers trained in Chile, South Africa, Brazil, Cameroon, Spain and France, in addition
to the 250 managers we trained in 2022 (in Peru, Belgium, Germany, Spain and France)
• A new partnership with the Royal Society for the Prevention of Accidents allows all SGS employees
to access checklists, articles and posters designed to help prevent different types of accidents (covering
everyone from kids under five to elderly people)
• An additional 20% of operational sites obtained independent certification to ISO 45001 and ISO 14001
bringing the cumulative total to 644 sites
4 Outcomes
Lost Time Incident Rate (LTIR)
SGS Code of Integrity: % employees trained to SGS Code of Integrity1
Human rights training: % employees trained on human rights
Women in leadership: % of women at CEO-3 level
1. The calculation is based exclusively on permanent employees who completed the annual integrity training.
2023
0.17
99.9
86
31.9
2022
0.19
99.9
78
31.1
2021
0.22
99.0
39
29.0
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 44
Social and
relationship capital
Our social and relationship capital represents
the strength of our working relationships with
key stakeholders including customers, suppliers
and communities, supporting and strengthening
our brand and reputation.
1 How we develop our social and relationship capital
our market position as the world’s leading TIC company
We engage with
our customers
• We constantly seek to employ innovative marketing and communications solutions to ensure we solidify
• We expand and enhance our Voice of the Customer program every year to support our long-term
customer satisfaction targets
We collaborate
with suppliers
• We collaborate with more than 50 000 global, regional and local suppliers worldwide, enabling
us to prioritize our sustainability and innovation goals. While maintaining solid partnerships with
our key strategic suppliers to generate long-term growth, we also work closely with local suppliers.
This allows us to seek new opportunities for development and collaboration, which will support
and benefit the communities where we operate
We use procurement
to drive
sustainability
• Procurement plays a key role in supporting our sustainability ambitions through effective collaboration
with our suppliers, which drives growth, innovation and productivity. Our supply chain is an
important part of our value chain and we are committed to engage with our suppliers to further
our sustainability ambitions
We support
our communities
• We are committed to investing in the communities where we operate, and do so across three pillars:
empowerment, education and environmental sustainability. Through our community program, we help
to tackle global challenges such as poverty, equal opportunities, health, education, climate change and
environmental degradation
– SGS Community Program
2 Our inputs
3 Progress during the year
We engage with
our customers
– More than 50 000 suppliers
– Voice of the Customer program
• A project to move all local corporate websites to a new single platform was completed. This delivers on
our goal to create a consistent yet flexible platform that enables compelling experiences that boost lead
generation and support business growth. The sites are outperforming all key competitors, as measured
by third-party data, as well as reducing cost and mitigating security risks. The new single platform
achieved strong external recognition, being named as a finalist in both the Drum Awards for marketing,
and the European Excellence Awards for communications and PR
• To help build awareness in the sustainability sector, we ran the ‘Changing Conversations Sustainability
Summit,’ an innovative, customer-centric virtual event. This has helped to solidify our reputation as a
sustainability leader: 85% of customers agree that SGS services help them to meet their sustainability
goals. This global summit brought together 41 speakers from 18 countries to deliver valuable sessions
that were streamed live to more than 43 000 people
• AI has been integrated into our marketing and communications content creation processes, increasing
efficiency and broadening the range of people who can create content for SGS, while focusing on
governance to ensure the tools are used responsibly and effectively
• An advanced platform to measure customer satisfaction has been implemented. The platform has
enabled us to automate processes, providing survey results in real-time, which allows us to respond
quickly to unsatisfied customers thanks to a close-the-loop process. It also uses artificial intelligence
to analyze free-form comments to quickly identify key pain points or areas of satisfaction
• A simple and consistent survey approach across business lines was built for our Voice of the Customer
program to analyze the drivers of customer satisfaction and better identify areas for improvement.
We also maintained a large geographical coverage of the program with 27 affiliates
Management reportSGS | 2023 Integrated Report 45
3 Progress during the year continued
We collaborate
with suppliers
• Although the challenges faced last year due to bottlenecks in the supply chain and high inflation have
decreased in 2023, we continued to collaborate with our suppliers to ensure business continuity and
alleviate price increases. Monitoring market conditions and the potential risks closely has allowed us
to establish mitigation plans that have decreased our exposure and increased our security of supply.
We have been able to anticipate problems and draw up action plans for the products we depend on
the most. Looking ahead, we are working on rationalization projects to avoid the impacts of future
market disruptions
• Managing CHF 2 billion third-party spend, our procurement team started a transformation journey in
2023 to support SGS business in a more impactful way, focusing on agility, a collaborative mindset
and the impact they could have on SGS financial performance. This transformation journey reinforces
our efficiency and introduces a new way of working and collaborating among our global, regional and
local procurement teams, as well as with our suppliers. We have put the focus on more strategic
activities by restructuring our operating model, developing category management and transferring
transactional activities to our shared service centers
• New procurement tools to increase efficiency include Workday and Sievo – dashboards that increase
visibility to help us make better decisions
• Our internal stakeholder satisfaction survey has been enriched to better understand a business’s
need for added value, and to guarantee that we can provide it in collaboration with our suppliers
• Contributing to the SGS IT transformation journey, procurement supported the development of
strategic agreements with multinational market leaders in technology, nurturing links between
cutting-edge innovation and SGS operational efficiency and business development. A new ecosystem
partnership is also being developed to strengthen the agility and business value of new innovation-
based ideas and business models built on emerging technologies, such as artificial intelligence or
augmented reality
• A Supplier Relationship Management program has been launched with some of our most strategic
suppliers, to discuss and align our common interests. As part of this, we have created steering
committees to develop initiatives that strengthen strategic relationships, and bring greater efficiency,
innovation and sustainability to both organizations
• Our focus has been on reinforcing our sustainability commitment with our suppliers in relation to
our SA2030
• The SGS Self-Assessment Questionnaire (SAQ) Program for suppliers has been implemented.
This enables us to guarantee that all our suppliers comply with the highest standards in environment,
carbon footprint, human rights, cybersecurity and data privacy, to ensure a sustainable supply chain
in all countries
• Sustainability criteria (the mandatory signing of the Code of Conduct and criteria related to carbon
footprint, human rights, environment, health and safety and diversity) are now included in our
supplier selection processes and tools, to guarantee that we select suppliers that are aligned
with our sustainability principles
• By initiating a switch from a spend-based model to a hybrid model that will be complete next year, our
commitment to reducing our CO2 emissions is reinforced. We are working to increase our data accuracy
and analysis to better identify categories, countries and suppliers which have more impact on our scope 3
emissions to actively reduce our carbon footprint through tangible actions on higher impact suppliers
We use procurement
to drive
sustainability
We support
our communities
• The community policy which establishes the foundations of our community strategy has been
updated. We now provide clearer definitions of inclusions, exclusions, and roles and responsibilities
• Specific guidelines for each type of contribution: from a starter guide for affiliates willing
to put a community program in place, to a disaster relief guideline, have been deployed
• We have worked with our regional and local sustainability network to promote community
programs with a special focus on volunteering and pro-bono initiatives
• SGS Academy for the Community provided support and training for people in Pakistan, Türkiye,
Ghana, India, Brazil and Morocco. The Academy provides high-quality technical training to people
earning less than the average living wage in the communities where we operate. The aim of this
pro-bono initiative is to support local economic development by enhancing access to and the quality
of employment. Since the beginning of the program, over 1 100 people have received training in
several disciplines such as quality management systems, food safety and sustainability
4 Outcomes
Customer satisfaction score (CSAT)1
Donations to the community CHF million2
Percentage of suppliers locally sourced %
Customers that agree SGS services help them to meet their sustainability goals3 %
2023
90.6
1.72
99
85
2022
84.5
1.85
98
2021
88.0
1.38
98
1. This is a satisfaction score on a 0-100% scale. The data sources used are the global VoC program in 2022-2023 and the Laboratory Excellence Program for 2021.
2. On a constant currency basis.
3. 2023 is the first year we have included this question in the Voice of the Customer survey.
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 46
Natural
capital
Natural capital considers our access to and
stewardship and use of scarce natural resources.
It measures our impact on the environment.
As a professional services company it is relatively
low, and comes mainly from energy consumption
in our offices and laboratories.
1 How we manage our natural capital
Our decarbonization
strategy
• Our decarbonization strategy focuses on three pillars:
1. Reducing energy consumption at source: our main sources of CO2 emissions are our buildings
portfolio and vehicle fleet – we have specific programs such as the Energy Efficiency in Buildings
(EEB) program and the vehicle emissions policy to address these
2. Using renewable energy whenever possible
3. Off-setting all residual emissions
Our employees are an essential part of the journey we are on, and the environmental awareness initiatives
that we develop are an important part of this. We encourage employee participation to strengthen their
and our commitment and we are keen to take their initiatives and suggestions into account.
Aligned with the 1.5ºC objective from the Paris Agreement, we have committed to reach net-zero
greenhouse gas (GHG) emissions across the value chain by 2050. To achieve this objective, we have
approved near- and long-term science-based emissions reduction targets with the SBTi:
Near-term targets:
• We commit to reduce absolute scope 1 and scope 2 GHG emissions 46.2% by 2030 from a 2019
base year
• We also commit to reduce absolute scope 3 GHG emissions 28% by 2030 from a 2019 base year
Long-term target:
• We commit to reduce absolute scope 1, 2 and 3 GHG emissions 90% by 2050 from a 2019 base year
In addition to the above targets, all residual emissions will be neutralized in line with SBTi criteria before
reaching net-zero emissions by 2050.
We have been carbon neutral since 2014, meaning that so far, while reducing our absolute emissions
year-on-year, we have compensated our residual emissions using avoidance offsets. In our sustainability
journey, while prioritizing the reduction of absolute emissions, we aim to gradually transition from using
avoidance offsets to exclusively removal offsets.
We promote the
circular economy
• While we produce relatively little waste, we do need to carefully consider the way we handle
chemicals, test samples, paper, plastic and organic waste at our offices and laboratories to preserve
natural resources
2 Our inputs
Electricity consumed GWh
Fuel consumed GWh
2023
496
452
2022
487
460
2021
480
448
3 Progress during the year
We lead the
decarbonization
path following SBTi
Our focus has been to communicate our global GHG emissions reduction targets to each region and
affiliate. In this context, the global targets have been cascaded down to regions and affiliates by using
a multi-criteria methodology that considers their weight, intensity and trend. Each of the identified key
affiliates is developing a local decarbonization plan with the objective of reaching its assigned target by
focusing on its major contribution, whether this is buildings or vehicles.
Evaluating and managing the risks associated with climate change remains a priority for us, and we are
supporters of the Task Force on Climate-related Financial Disclosures (TCFD). We are well ahead of the
mandatory implementation of the TCFD recommendations, and we have adopted their recommendations
around governance, strategy, risk management, and metrics and targets. In 2023, we have assessed
direct physical risks in our key owned buildings. The result of this analysis is available in our TCFD
appendix to this report.
Management reportSGS | 2023 Integrated Report 47
3 Progress during the year continued
We reduce energy
consumption
• The Energy Efficiency in Buildings (EEB) program is our flagship program to target and act on our
major source of energy consumption. In 2023, we continued providing the network with tools to help
them manage and visualize data as well as to make informed decisions. We also engaged with the
identified key affiliates to discuss potential energy efficiency actions in buildings and how to approach
them. This has now become part of the local decarbonization plans, currently under development by
the affiliates
• By focusing energy reduction efforts on our highest consumption buildings, we have demonstrated that
we can make a significant impact on our energy levels. The 722 buildings currently in our EEB program
account for 84% of our electricity and non-transport fuel consumption. In 2023, we have continued to
provide access to global capex that supports financing of energy efficiency measures in buildings and
incentivizes local investment. This has contributed to a decrease in our electricity intensity per sales
of 6% compared to last year. We continued to strengthen our commitment to onsite solar systems,
reaching 3 981 MWh produced onsite this year
• For new buildings and major renovations of existing ones, we apply the SGS green building guidelines,
which enable us to rate facilities based on KPIs spanning energy, water, waste, building materials and
employee well-being, among others. This allows us to incorporate sustainability criteria in the capex
decision-making process. In 2023, the tool was updated so that the outcomes are presented in a
simple traffic light format to top management
• We continued to implement our vehicle emissions policy, promoting greater use of low-carbon
technologies, including full electric, plug-in hybrid, hybrid and ethanol vehicles
• After buildings and vehicles, energy use across our IT infrastructure and data centers is an important
priority. Our sustainable IT activation plan has promoted optimization in cloud migration, hardware and
e-waste management in support of our Sustainability Ambitions 2030 to reduce energy use. In 2023,
we have developed a new IT Strategy 2026, which embeds the actions for sustainability into our
strategic initiatives and organizational roadmaps, to make sustainability a part of everything we do.
As a result, we will decommission the activation plan as we strive to make sustainability part of our
normal IT operations
• 10 000 end user devices (laptops/desktops) have been replaced with more efficient models and our
purchase catalog optimized by the introduction of new units from manufacturers like HP and Lenovo
that are more aligned with our sustainability standards
• To fit in with our power reduction policy we have designed a new Power Profile to save energy when
a user is not actively working. The profile means a device will go into sleep mode after 15 minutes of
inactivity (previously this did not happen at all) and the screen will be turned off after seven minutes
(previously 20 minutes). Critical devices, kiosks, digital signage and devices in meeting rooms are
excluded from the new Power Profile
• Investments have been made in both onsite self-generation facilities (solar panels) and renewable
electricity certificates. So far, 97% of the electricity consumed by SGS comes from renewable sources,
and we are working towards closing that gap as far as possible
• Waste reduction and recuperation initiatives, ranging from strengthening the employee culture around
waste management to engaging with key affiliates to identify areas for improvement has been further
developed. We have also continued to work towards embedding the circular economy into our
operations – keeping resources in use for as long as possible, extracting the maximum value from
them, and recovering and regenerating products and materials at the end of their service life
• Various initiatives help us monitor the amount of water we use and minimize consumption across all our
operations. As a company, we are not a highly intense consumer of water, so this is not such a material
topic. However, we remain committed to ensuring that efficient water management strategies are in
place. Within our EEB program, which is primarily focused on our energy reduction efforts, we also
assess water consumption and installations, so that site-specific water efficiency recommendations
can be made
We reduce waste
and conserve water
4 Outcomes
CO2e thousand metric tons*
EEB program energy conservation measures identified (cumulative)
2023
2022
2021
112 029
116 505
115 309
904
786
708
* Scopes 1 and 2 market-based figures. Excludes district heating and refrigerant gases emissions due to unavailability of data. 2021 data is recalculated and no longer
includes business travel category of scope 3 in line with our new SBTi targets.
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix
48
Financial and
Non-Financial
outlook
On 26 January 2024, we officially launched our Strategy
2027: Accelerating growth, building trust, to
drive profitable growth, streamline the organization and
deliver attractive returns for stakeholders. To ensure
the achievement of these targets a new simplified
Executive Committee was announced in January 2024.
Financial targets
Learn more about Strategy 2027 in the SGS 2023 Full Year Results Earnings Release
and the SGS 2023 Results and Strategic Updates Presentation.
Read more in our 2023 full year
results releases
www.sgs.com/en/investor-relations/
reports-and-presentations
1. Refer to Alternative Performance Measures -
Appendix to the 2023 full year results.
2. Free cash flow/(EBITDA – leases).
Refer to Alternative Performance Measures.
Sales
5-7%
organic growth1
annually
Adjusted
Operating Income
Margin on sales1
1.5pp
Significant
improvement
at least 1.5 percentage
points by 2027
Free cash flow
After leases and interests
>50%
Cash conversion1,2
by 2027
SGS | 2023 Integrated Report
Laboratory technicians, Health & Nutrition, Spain.
Management report
49
Spot the Orange Dot project, Corporate Sustainability, Chile.
Sustainability targets
Read more online
www.sgs.com/en/sustainability/
corporate-sustainability/sustainability-
ambitions-2030
Environment
Environmental
leadership
28%
Material improvement
towards 28% reduction
in scope 3 emissions
Governance
Responsible
business
93%
customer
satisfaction score
Social
Diversity, equity
and inclusion
at least 1/3
of leadership positions
held by women
Education
7million hours
of training per year
to employees, clients
and communities
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 50
This Corporate Governance report informs
shareholders, prospective investors and society on
SGS’s policies in matters of corporate governance,
such as: the structure of the Group, shareholders’
rights, the composition, roles and duties of
the Board of Directors and its committees and
management, and internal controls and audits.
This report has been prepared in compliance with
the Swiss Exchange (SIX) Directive on Information
relating to Corporate Governance of 29 June 2022
(in force since 1 January 2023) and with the Swiss
Code of Best Practice for Corporate Governance.
The SGS Corporate Governance framework aims
to achieve an efficient allocation of resources
and clear mechanisms for setting strategies
and targets, in order to maximize and protect
shareholder value. SGS strives to attain this goal
by defining clear and efficient decision-making
processes, fostering a climate of performance and
accountability among managers and employees
alike and aligning employees’ remuneration with
the long-term interests of shareholders.
Corporate governanceCorporate governanceSGS | 2023 Integrated Report 51
52
52
52
52
53
53
53
53
53
53
53
53
54
54
58
58
58
58
58
59
60
60
61
62
62
63
63
63
5. Compensation, shareholdings
64
5.1.
5.2.
and loans
Content and method of determining the
compensation and the shareholding programs
Rules on approbation by the annual
shareholders’ meeting of executive pay
5.2.1. Rules on performance-related pay and
allocation of equity-linked instruments
5.2.2. Rules on loans, credit facilities and
post-employment benefits
5.2.3. Rules on vote on pay
6. Shareholders’ participation rights
6.1. Voting rights and representation restrictions
6.1.2. Rules on instructions to the independent
proxy and electronic participation in the
annual shareholders’ meeting
6.2. Statutory quorums
6.3. Convocation of General Meetings of Shareholders
6.4.
Inclusion of items on the agenda
6.5. Registration in the share register
7.
Change of control and
defense measures
7.1. Duty to make an offer
7.2. Clauses on change of control
8. Auditors
8.1.
Duration of the mandate and term of office
of the lead auditor
8.2. Audit fees
8.3. Additional fees
8.4.
Information instruments pertaining to the
external audit
9.
Information policy
10. Quiet periods
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
65
65
65
65
65
65
65
1.
1.1.
1.2.
1.3.
Group structure and shareholders
Group structure
Significant shareholders
Cross-shareholdings
Capital structure
Issued share capital
Conditional share capital
2.
2.1.
2.2.
2.3. Changes in capital
2.4.
2.5. Dividend-right certificates
2.6.
Shares and participation certificates
Limitations on transferability and admissibility
of nominee registrations
Convertible bonds and warrants/options
2.7.
3. Board of Directors
3.1.
3.2.
3.3.
3.4.
3.5.
Members of the Board of Directors
Other activities and vested interests
Limits on external mandates
Elections and terms of office
Internal organizational structure
3.5.1. Allocation of tasks within the Board of Directors
3.5.2. Members’ list, tasks and area of responsibility
for each Committee of the Board of Directors
3.5.3. Working methods of the Board and
its committees
3.6.
3.7.
Definition of areas of responsibility
Information and control instruments vis-à-vis
the management
4. Operations Council
4.1.
4.2.
4.3. Limits on external mandates
4.4. Management contracts
Members of the Operations Council
Other activities and vested interests
Financial statementsCorporate governanceRemuneration reportManagement reportNon-financial statementsAppendixSGS | 2023 Integrated Report
52
1. Group structure and shareholders
1.1. Group structure
At 31 December 2023, the business lines
are organized as follows:
1.1.1. Operational group structure
SGS SA, registered in Geneva (CH), also
referred to as the ‘Company,’ controls
directly or indirectly all entities worldwide
belonging to the SGS Group, which provides
independent testing, inspection and
verification services.
The shares of SGS SA are listed on the
SIX Swiss Exchange and are traded on SIX
Europe (Swiss Security Number: 249745;
ISIN: CH0002497458).
At 31 December 2023, the operations of the
Group were divided into seven regions, each
led by a Chief Operating Officer responsible
for the SGS businesses in that region and for
the local implementation of group policies
and strategies.
At 31 December 2023, geographic
operations were organized as follows:
• North America
• Latin America
• Africa & Western Europe
• North & Central Europe
• Eastern Europe & Middle East
• North East Asia
• South East Asia & Pacific
The Group is structured into five business
lines with each responsible for the global
development of group activities within
its own sphere of specialization and the
execution of strategies with the support
of the Chief Operating Officers.
• Industries & Environment (I&E)
• Natural Resources (NR)
• Connectivity & Products (C&P)
• Health & Nutrition (H&N)
• Business Assurance (BA)
(prev. Knowledge)
Each business line was led by an Executive
Vice President. Chief Operating Officers and
Executive Vice Presidents are members of
the Operations Council, the Group’s most
senior management body.
1.1.2. Listed companies in the Group
None of the companies under the direct
or indirect control of SGS SA have listed
shares on any stock exchange.
1.1.3. Non-listed companies in the
Group
The material legal entities consolidated
within the Group are listed on pages 155
to 157 of the annual report, with details of
the share capital, the percentage of shares
controlled directly or indirectly by SGS SA
and the registered office or principal place of
business. The list of legal entities is limited
to entities whose contribution to the group
sales in 2023 represent at least 1% of the
consolidated sales and includes the main
operating entity in the jurisdictions where the
Group is active, even when annual sales do
not reach 1% of consolidated sales.
This definition of materiality excludes
dormant companies, pure sub-holding
companies or entities used solely for
the detention of assets.
Details of acquisitions and disposals made
by the SGS Group during 2023 are provided
in note 3 of the consolidated financial
statements included on page 105 of this
annual report.
1.2. Significant shareholders
To the knowledge of the Company the
shareholders owning more than 3% of its
share capital as at 31 December 2023, or
at the date of their last notification as per
Article 120, al. 1 of the Financial Market
Infrastructure Act (FinMIA) were Groupe
Bruxelles Lambert (acting through Serena
SARL and URDAC) with 19.31% (December
2022: 19.11%) of the share capital and voting
rights of the Company, BlackRock Inc.
with 5.18% (December 2022: 5.18%) and
UBS Fund Management (Switzerland) with
3.03% (December 2022: below 3%). As at
31 December 2023, the SGS Group held
1.64% of the share capital of the Company
(December 2022: 1.68%). During 2023, the
Company has published regularly on the
electronic platform of the Disclosure Office
of the SIX Swiss Exchange Ltd all disclosure
notifications received from shareholders
of transactions subject to the disclosure
obligations of Article 120, al. 1 of FinMIA.
During 2023, the Company published a total
of two reports regarding the composition of
its significant shareholders to the Disclosure
Office of the SIX Swiss Exchange Ltd at
www.sgs.com/en/investor-relations.
1.3. Cross-shareholdings
Neither SGS SA nor its direct and indirect
subsidiaries have any cross-shareholding
in any other entity, whether publicly traded
or privately held.
Group structure
Regions
Functions
Chief Executive
Officer
Africa &
Western Europe
North &
Central Europe
Eastern Europe
& Middle East
North East Asia
Finance, Corporate
Sustainability, Investor
Relations, Corporate
Communications,
Procurement, Corporate
Development, IT,
Digital and Strategic
Transformation
Business lines
Connectivity
& Products
Health
& Nutrition
Industries
& Environment
Natural
Resources
Latin America
South East Asia
& Pacific
Human Resources
Business
Assurance (prev.
Knowledge)
North America
Legal, Compliance
& Corporate Security
Corporate governanceSGS | 2023 Integrated Report 53
2.6. Limitations on transferability
and admissibility of nominee
registrations
SGS SA does not limit the transferability
of its shares. The registration of shares
held by nominees is not permitted by the
Company’s articles of association, except by
special resolution of the Board of Directors.
By decision of the Board, the Company’s
shares can be registered in the name of a
nominee acting in a fiduciary capacity for an
undisclosed principal, provided however that
shares registered in the names of nominees
or fiduciaries may not exercise voting rights
above a limit of 5% of the aggregate share
capital of the Company. This rule was made
public on 23 March 2005. The Company has
a single class of shares and no preferential
rights have been granted to any shareholder.
2.7. Convertible bonds
and warrants/options
No convertible bonds have been issued
by the Company or by any entity under
its direct or indirect control. In 2023, no
options or similar instruments have been
issued by the Company or by any of the
Group’s subsidiaries.
The Board of Directors is the highest
governing body within the Group. It is the
ultimate decision-making authority except
for those decisions reserved by law to the
Annual General Meeting.
2. Capital structure
2.1. Issued share capital
The share capital of SGS SA is
CHF 7 495 032 as of 31 December 2023
and comprises 187 375 800 fully paid-in,
registered shares of a par value of
CHF 0.04. On 31 December 2023, SGS
SA held 3 064 685 treasury shares through
an affiliate company (2022: 125 978).
At the 2023 Annual Shareholders Meeting,
the shareholders approved a division of
the par value of the shares from CHF 1
to CHF 0.04. Consequently each share
was divided and replaced by 25 shares
of a CHF 0.04 par value.
2.2. Conditional share capital
The shareholders have conditionally
approved an increase of share capital by
an amount of CHF 1 100 000 divided into
27 500 000 registered shares with a par
value of CHF 0.04 each. This conditional
share capital increase is intended to
obtain the shares necessary to meet the
Company’s obligations with respect to
employee equity-based remuneration
plans and option or conversion rights
of convertible bonds or similar equity-
linked instruments that the Board is
authorized to issue. If increased by the
maximum amount of the conditional
share capital, the existing share capital of
187 375 800 shares would increase by
approximately 14.7% to 214 875 800 shares.
The conditional capital is not limited in time.
The right to subscribe to such conditional
capital is reserved to beneficiaries of
employee share option plans and holders of
convertible bonds or similar debt instruments
and therefore excludes shareholders’
preferential rights of subscription. The Board
is authorized to determine the timing and
conditions of such issues, provided that
they reflect prevailing market conditions.
The term of exercise of the options or
conversion rights may not exceed 10 years
from the date of issuance of the equity-
linked instruments.
Until 23 March 2023, the Company had an
authorized share capital of CHF 500 000
which was not renewed beyond this term.
2.3. Changes in capital
In 2023, the nominal value of the registered
shares of the Company was divided by a
factor of 25, consequently the number of
shares in issue was multiplied by 25, whilst
the share capital remained unchanged.
The share capital of the Company was
reduced in 2021 to cancel shares purchased
by application of share buyback programs
initiated by the Company. In 2021, the
shareholders approved a reduction of the
share capital, by cancellation of 70 700
shares (corresponding to 0.9% of the
share capital). No other changes in the
share capital of the Company were made
in the course of the last three years.
2.4. Shares and participation
certificates
All shares, other than treasury shares
held by SGS SA, have equal rights to the
dividends declared by the Company and
have equal voting rights. Treasury shares
owned directly or indirectly by the Company
do not earn dividend. The Company has not
issued any participation certificates (bons
de participation/Partizipationsscheine).
2.5. Dividend-right certificates
The Company has not issued any
dividend-right certificates.
Financial statementsCorporate governanceRemuneration reportManagement reportNon-financial statementsAppendixSGS | 2023 Integrated Report 54
3. Board of Directors
3.1. Members of the Board
of Directors
This section presents the members of
the Board of Directors of the Company
with their functions in the Group, their
professional backgrounds and all their
material positions held outside the Group
in governing and supervisory boards,
management positions and consultancy
functions, official tenures and political
commitments, both in Switzerland
and abroad.
The Board has set out criteria for the
selection of new Directors and has
conducted a search which results in periodic
changes to the composition of the Board
of Directors. The aim of this exercise is to
ensure that the Board is continuously in
a position to provide leadership, strategic
oversight and guidance and contribute to
setting ambitious targets for the Group and
meeting long-term value creation objectives.
The competencies sought by the Group for
its Board of Directors include experience of
senior executive leadership in international
businesses, strategic planning, finance,
technology and innovation.
When selecting candidates to the Board of
Directors, the Company has due regards to
the experience, professional qualifications,
areas of expertise, age, gender and national
background as well as leadership style,
so that at all times, the Board and its
committees have the required skills.
At the Annual Shareholders Meeting of
March 2023, Jens Riedl was appointed to
the Board of Directors. Paul Desmarais,
Jr. did not stand for re-election.
Biographical information on former members
of the Board of Directors is available in the
corporate governance reports of prior years.
The members of the Board of Directors at
31 December 2023 were as follows:
Board members, key industry experience based on the Global Industry Classification Standard (GICS):
Industrials
Consumer
discretionary
Consumer
staples
Healthcare
Financials
Information
technology
Communication
services
Calvin Grieder
Sami Atiya
Phyllis Ka Yan Cheung
Ian Gallienne
Tobias Hartmann
Shelby R. du Pasquier
Jens Riedl
Kory Sorenson
Janet Vergis
Corporate governanceSGS | 2023 Integrated Report 55
Sami Atiya
Nationality: German
Year of birth: 1964
Appointment: March 2020
Function in SGS
• Board of Directors
• Nomination Committee
• Chair: Remuneration Committee
Key experience
• Robotics
• Automation
• Medical technology
• Software and logistics
• Transportation
• Risk management
Phyllis Ka Yan Cheung
Nationality: Chinese
Year of birth: 1970
Appointment: March 2022
Function in SGS
• Board of Directors
• Sustainability Committee
Key experience
• Retail and consumption
• Digital and data driven organization
• Growth in Asian markets
• Enterprise level risk management
• Change management
• Talent and workforce management
Professional history
2016 to present: ABB Ltd (CH, SE)
1997 to 2014: Siemens Group
1995 to 1997: Harald Balzer & Partner
1994 to 1995: Robert Bosch – Blaupunkt
1988 to 1993: Fraunhofer Institute Karlsruhe
Institute of Technology
Education
• Master of Business Administration (MBA),
Massachusetts Institute of Technology (MIT),
USA
• Master’s degree in Electrical Engineering and
Automation, Karlsruhe Institute of Technology,
Germany
• PhD in Electrical Engineering (Robotics,
Artificial Intelligence and Sensors),
University of Wuppertal/Karlsruhe Institute
for Technology, Germany
Professional history
2015 to present: McDonald’s China; CEO
2012 to 2014: McDonald’s Singapore
and Malaysia
2000 to 2011: McDonald’s China
1998 to 2000: Leo Burnett, Hong Kong
1997 to 1998: Momentum Strategy Consultant,
India
1992 to 1997: Saatchi & Saatchi,
J Walter Thompsons, Hong Kong
Education
• Bachelor of Arts, The University of Hong Kong,
China
• Executive MBA, The Chinese University
of Hong Kong, China
Other activities and functions
Fellow, Aspen China Fellowship (CN)
Member, Aspen Global Leadership Network (CN)
Calvin Grieder
Nationality: Swiss
Year of birth: 1955
Appointment: March 2019
Function in SGS
• Chair: Board of Directors
• Chair: Nomination Committee
• Sustainability Committee
Key experience
• Automation and control technology (USA)
• Telecom and digital services
• System engineering and services
• Food processing
• Risk management
Professional history
2001 to 2016: Bühler (CH); CEO
1999 to 2000: Swisscom (CH & DE)
1994 to 1998: SIG (CH)
1991 to 1994: Mikron (CH)
1984 to 1990: Bürkert (DE & USA)
1980 to 1983: Georg Fischer (CH & USA)
Education
• Master of Science in Process Engineering,
ETH Zurich
• Advanced Management Program (AMP),
Harvard University
Other activities and functions
Givaudan SA*, Vernier (CH),
Chairman of the Board
Bühler Group AG, Uzwil (CH),
Chairman of the Board
Carivel7 AG, Zurich (CH), Owner
Eraneos Group AG, Zurich (CH),
Chairman of the Board
Avenir Suisse, Zurich-Oerlikon (CH),
Member of the Board of Trustees
Advisory Board ETH – Department of
Mechanical & Process Engineering (CH)
* Listed company.
Financial statementsCorporate governanceRemuneration reportManagement reportNon-financial statementsAppendixSGS | 2023 Integrated Report Tobias Hartmann
Nationality: German, American
Year of birth: 1972
Appointment: March 2020
Shelby R. du Pasquier
Nationality: Swiss
Year of birth: 1960
Appointment: March 2006
Function in SGS
• Board of Directors
• Audit Committee
Key experience
• Retail
• Technology
• Logistics and operations
• eCommerce and marketplaces
• IT
• Cybersecurity
• Risk management
Professional history
2018 to present: Scout24 SE; CEO
2017 to 2018: Hellofresh SE
2011 to 2015: eBay Enterprise
(part of eBay Inc.)
Education
• MBA, Clark University, USA
• Bachelor of Arts (BA), Clark University, USA
Function in SGS
• Board of Directors
Key experience
• Corporate law
• Banking, stock exchange
and financial regulation
• Private equity
• M&A
• Risk management
• Sustainability
Professional history
1994 to present: Lenz and Staehelin; Partner
Education
• Geneva University Business School
and School of Law
• Columbia University School of Law (LLM)
Other activities and functions
Swiss National Bank* (CH), Member of the
Board since 2012, Chair of the Risk Committee
Pictet and Cie Group SCA (CH), Chairman
of the Supervisory Board since 2013
56
Ian Gallienne
Nationality: French, Belgian
Year of birth: 1971
Appointment: March 2013
Function in SGS
• Board of Directors
• Remuneration Committee
• Nomination Committee
Key experience
• Strategy
• M&A
• Finance
• Risk management
• Consumer/retail management
Professional history
2012 to present: Group Bruxelles Lambert; CEO
2005 to 2012: Ergon Capital Partners
1998 to 2005: Rhône Capital LLC
Education
• MBA from INSEAD, France
Other activities and functions
adidas* (DE), Vice Chairman of the Supervisory
Board, Member of the General Committee
Imerys*, Paris (FR), Member of the Board,
Chairman of the Strategic Committee,
Member of the Compensation Committee,
Member of the Appointments Committee
Pernod Ricard SA*, Paris (FR), Member of the
Board, Member of the Strategic Committee
and Member of the Remuneration Committee
Carpar SA (BE), Member of the Board
Compagnie Nationale à Portefeuille SA (BE),
Member of the Board
Financière De La Sambre SA (BE),
Member of the Board
Société Civile du Château Cheval Blanc (FR),
Member of the Board
* Listed company.
Corporate governanceSGS | 2023 Integrated Report 57
Jens Riedl
Nationality: German
Year of birth: 1973
Appointment: March 2023
Function in SGS
• Board of Directors
Key experience
• TIC
• Strategy
• M&A
• Finance and financial risk management
• Industrials and business services
• Transportation and logistics
Professional history
2022 to present: Groupe Bruxelles Lambert;
Investment Partner and Head of DACH
2019 to 2021: Permira
1999 to 2018: Boston Consulting Group
Education
• MBA from University of St. Gallen, Switzerland
• PhD in Finance from European Business
School (EBS), Germany
Other activities and functions
GEA Group*, Düsseldorf (DE),
Member of the Supervisory Board,
Member of the Presiding and
Sustainable Committee, Member of the
Nomination Committee
Sanoptis, Zug (CH)/Berlin (DE),
Member of the Supervisory Board
Canyon, Koblenz (DE),
Observer to the Supervisory Board
EMarketing Munich (DE),
Member of the Supervisory Board
SecureSystem Munich (DE),
Member of the Advisory Board
Janet Vergis
Nationality: American
Year of birth: 1964
Appointment: March 2021
Function in SGS
• Board of Directors
• Audit Committee
Key experience
• Healthcare (pharmaceuticals,
biotechnology and device)
• US leadership across large, complex
and heavily regulated businesses
• R&D background
• Board governance and CPG knowledge
• M&A
• Strategy
Professional history
2013 to 2019: various private equity firms
2010 to 2012: OraPharma, Inc.; CEO
1988 to 2009: Johnson & Johnson
Education
• Bachelor of Science in Biology,
Pennsylvania State University, USA
• Master of Science in Physiology,
Pennsylvania State University, USA
Other activities and functions
Teva Pharmaceutical Industries* (USA), Member
of the Board, Chair of Compliance Committee
Member of the Human Resources/
Compensation Committee, and Member of
the Nominating and Governance Committee
Dentsply Sirona* (USA), Member of the Board,
Chair of the Science & Technology Committee
Church and Dwight Company* (USA), Member
of the Board, Chair of Governance Committee,
and Member of the Compensation and
Human Capital Committee
The Pennsylvania State University (USA),
Biotechnology Advisory Board Chair
The Pennsylvania State University (USA),
Corporate Engagement Advisory Board Vice-
Chair
Kory Sorenson
Nationality: British
Year of birth: 1968
Appointment: March 2019
Function in SGS
• Board of Directors
• Remuneration Committee
• Chair: Audit Committee
• Chair: Sustainability Committee
Key experience
• Financial risk management
• Audit and control
• Capital markets
• M&A
• Remuneration (executive and wider workforce)
• Governance
• Sustainability
Professional history
2005 to 2010: Barclays Capital;
Managing Director
2001 to 2005: Credit Suisse
1998 to 2001: Lehman Brothers
1997 to 1998: Morgan Stanley
1995 to 1997: Commerz Financial Products
1992 to 1995: Total SA
Education
• Post-graduate (DESS) degree in corporate
finance, l’Institut d’études politiques de Paris,
France
• Master’s in applied economics, University
of Paris-Dauphine, France
• Bachelor’s in econometrics and political
science, American University, USA
• Governance programs from Harvard
Executive Education, INSEAD and the
Stanford Graduate School of Business
• Professional certificate IBM
Cybersecurity Fundamentals
Other activities and functions
Pernod Ricard SA*, Paris (FR), Member
of the Board and Chair of the Remuneration
Committee, Member of the Audit Committee
Bank Gutmann, Vienna (AU), privately owned,
Member of the Supervisory Board
Comgest, Paris (FR), Chair and an independent
member of the Board of Partners
AA Limited, Jersey (UK), Member of the Board
and Chair of Audit and Risk Committee
Premium Credit Limited (UK), Member of the
Board and Chair of Audit and Risk Committee
* Listed company.
Financial statementsCorporate governanceRemuneration reportManagement reportNon-financial statementsAppendixSGS | 2023 Integrated Report 58
The Board of Directors considers
the following criteria to assess the
independence of its members:
1. The Director must not have been
employed by the Company in an
executive capacity within the last
five years
2. No family member of the Director
is employed or was employed during
the past three years by the Group
in any management capacity
3. Neither the Director nor a family member
has received any payments from the
Group other than board remuneration
approved by the Annual General Meeting
4. The director is not acting (and must
not be affiliated with a company that
is acting in material manner) as an
advisor or consultant to the Company
or a member of the Company’s
Operations Council
5. The Director must not be affiliated
with a significant customer or supplier
of the Company
6. The Director must have no personal
services contract(s) with the Company
or a member of the Company’s
Operations Council
7. The Director must not be affiliated
with a not-for-profit entity that
receives significant contributions
from the Company
8. The Director must not have been
a partner or employee of the
Company’s external auditor during
the past three years
9. The Director must not have any other
conflict of interest that the Board
determines to mean they cannot
be considered independent
10. Any Director who has served for more
than 12 consecutive terms is no longer
considered as independent
3.4. Elections and terms
of office
The articles of association of SGS SA
provide that each member of the Board
of Directors, and among them the Chair of
the Board of Directors and the members
of the Remuneration Committee, is elected
annually by the shareholders for a period
ending at the next Annual General Meeting.
Each member of the Board is individually
elected. There is no limit to the number
of terms a Director may serve. The initial
date of appointment of each board member
is indicated in Section 3.1.
3.5. Internal organizational
structure
The duties of the Board of Directors and its
committees are defined in the Company’s
articles of association and in its internal
regulations, which are reviewed periodically.
They set out all matters for which a decision
by the Board of Directors is required.
In addition to the decisions required by
Swiss company law, the Board of Directors
approves the Group’s strategies and key
business policies, investments, acquisitions,
disposals and commitments in excess of
delegated limits.
3.5.1. Allocation of tasks within
the Board of Directors
The Chair of the Board is elected by the
Annual General Meeting. He or she plans
and chairs the board meetings, defines
the agenda of the meetings and conducts
the deliberations of the Board of Directors.
All members of the Board of Directors
participate in deliberations of the Board
and participate equally in its decisions.
Within the limits permitted by law or by
the articles of association, the Board of
Directors can decide to delegate certain of
its tasks to standing or ad-hoc committees.
With the exception of the members of the
Remuneration Committee, who are elected
by the shareholders, the members of other
committees are appointed by the Board.
The Board has concluded that its members
are independent on the basis of these
criteria, with the exception of Shelby du
Pasquier (whose tenure exceeds 12 yearly
terms), Ian Gallienne and Jens Riedl (both
being representatives of a significant
shareholder owning more than 10%
of the shares of the Company).
None of the members of the Board of
Directors exercise nor have they exercised
an executive role or operational management
tasks for the Company or any entity of the
Group. None of them have any significant
business connection with the Company
or the Group.
The remuneration of the members of
the Board of Directors is detailed in the
Remuneration report. The Chair of the
Board, jointly with members of the Board
of Directors, assesses periodically the
performance of the Board as a whole,
of its committees and of each of its
individual members.
On the basis of this periodic assessment,
changes to the composition of the board
membership are regularly proposed to the
Company’s Annual General Meeting.
This periodic performance evaluation is
designed to ensure that the Board is always
in a position to provide an effective oversight
and leadership role to the Group.
3.2. Other activities
and vested interests
Other activities and vested interests
of the members of the Board of Directors
are indicated in Section 3.1.
3.3. Limits on external mandates
The Company’s articles of association limit
the number of mandates permissible to
board members.
These rules limit the number of mandates
that board members can accept to no more
than 10 board memberships in entities
outside the Group, of which a maximum
of five memberships may be in boards of
companies whose shares are traded on a
stock exchange. Mandates assumed at the
request of a controlling entity do not count
towards the maxima defined in the articles
of association.
In addition, the articles of association limit
to 10, the permissible participations in
boards of association and other non-profit
organizations. All board members have
confirmed that they comply with these rules.
Corporate governanceSGS | 2023 Integrated Report 3.5.2. Members’ list, tasks and area of responsibility for each committee of the Board of Directors
The following chart describes the committees and their membership as at 31 December 2023:
Remuneration
Audit
Sustainability
Nomination
59
Calvin Grieder
Sami Atiya
Phyllis Ka Yan Cheung
Ian Gallienne
Tobias Hartmann
Shelby R. du Pasquier
Jens Riedl
Kory Sorenson
Janet Vergis
Chair
Member
The Chair of the Board of Directors attends
the meetings of the Remuneration and
Audit Committees, with a consultative vote.
He chairs the Nomination Committee
and is a member of the Sustainability
Committee. Each committee acts within
terms of reference established by the
Board of Directors and set out in the internal
regulations of the Company. The minutes of
their meetings are available to all Directors.
Remuneration Committee
Members of the Remuneration Committee
are elected individually during the Annual
General Meeting, with the Chair of the
Committee designated among them by
the Board of Directors. The Remuneration
Committee is focused on matters of
executive remuneration. The Remuneration
Committee acts in part in an advisory
capacity to the Board, and in part as a
decision-making body on matters that the
Board has delegated to the Committee.
The Committee advises the Board of
Directors on matters regarding the
remuneration of the members of the Board
of Directors and management, and on
general policies relating to remuneration
applicable to the Group. The Committee
defines the conditions of share-based
remuneration plans or other variable
compensation plans, issued from time
to time by the Company. The Committee
reviews and approves the contractual
terms of the employment of the Chief
Executive Officer and the other members
of the Management. The Committee
reviews regularly, at least once a year,
the compensation of each member of
the Operations Council. The Committee
drafts the SGS Remuneration report.
Audit Committee
Sustainability Committee
The Audit Committee supports the Board of
Directors in discharging its duties in relation
to financial reporting and internal controls.
Such duties include consideration of the
appropriateness of accounting policies,
the adequacy of internal controls, risk
management and regulatory compliance.
It exercises oversight over the major
risks identified by the Board of Directors.
This includes specifically the risks of
cybersecurity. It receives regular reports
on cybersecurity incidents and measures
taken by management to address this risk.
The Audit Committee is assisted in this task
by the Board digital advisory committee
which provides advice on matters of digital
technology. The Audit Committee is also
responsible for the supervision of the internal
and external auditors of the Group, each
of which provides regular reports to the
Committee on findings arising from their
work. The Committee reports regularly
to the Board of Directors on its findings.
A dedicated Sustainability Committee
was established in 2022 in response to
the growing importance of sustainability
to the Company and its stakeholders.
The Committee plays an important role
in supporting the Company to develop its
sustainability plans and act accordingly.
The Committee oversees sustainability-
related issues that may affect the Group
and its customers, including reputational
and non-financial risks.
Nomination Committee
The Nomination Committee assists the
Board in the succession planning, selection
and nomination of candidates to positions
to the Board of Directors and to the
Operations Council of the Group.
The Board of Directors and its committees
hold physical meetings as well as meetings
by videoconference. The table below does
not make any distinction between physical
and remote meetings of the Board and
its committees.
Meetings of
Board of Directors
Remuneration Committee
Audit Committee
Sustainability Committee
Nomination Committee
Frequency
Average duration
6 times
5 times
5 times
4 times
3 times
4 hours
2.5 hours
3 hours
2 hours
2 hours
Financial statementsCorporate governanceRemuneration reportManagement reportNon-financial statementsAppendixSGS | 2023 Integrated Report
60
Attendance at board and committee meetings
The Board of Directors expects its members to attend and participate actively in its meetings and meetings of its committees and has set
a minimum target of attendance at 75% of meetings. The chart below summarizes the attendance by each board member in 2023 at the
meetings of the Board and the respective standing committees.
Member
Calvin Grieder
Sami Atiya
Phyllis Ka Yan Cheung
Ian Gallienne
Tobias Hartmann
Shelby R. du Pasquier
Jens Riedl1
Kory Sorenson
Janet Vergis
Paul Desmarais, Jr.2
Board meetings
Remuneration
Audit
Sustainability
Nomination
6/6
6/6
6/6
5/6
6/6
6/6
4/4
6/6
5/6
N/A
5/5
4/5
5/5
5/5
5/5
4/5
3/3
3/3
2/3
4/4
4/4
4/4
1. Elected to the Board in March 2023.
2. Did not stand for re-election in 2023.
3.5.3. Working methods of the
Board and its committees
The Board of Directors and each committee
convene regularly scheduled meetings
with additional meetings held as and
when required, in person or by phone
conference. The Board and the committees
may pass resolutions by written consent.
Each board member has the right to request
that a meeting be held or that an item for
discussion and decision be included in the
agenda of a meeting.
Board and committee members receive
supporting documentation in advance of the
meetings and are entitled to request further
information from the Management in order
to assist them to prepare for the meetings.
The Board and each of the committees
can request the attendance of members of
the management of the Group. The Board
and each of the committees are authorized
to hire external professional advisors to
assist them in matters within their sphere
of responsibility.
To be adopted, resolutions need a majority
vote of the members of the Board or
committee, with the Chair having a
casting vote.
The Board and its committees convene
as often as required. In principle the
Board meets at least four times a year,
i.e. once every quarter. The Audit Committee
meets at least three times a year, i.e.
once before the publication of the annual
and half-year results, and once outside
these periods, to review and approve
the scope of internal and external audit.
The Sustainability Committee and the
Remuneration Committee meet at least
once a year.
3.6. Definition of areas
of responsibility
The Board of Directors is responsible
for the ultimate direction of the Group.
The Board discharges all duties and
responsibilities that are attributed to
it by law. In particular, the Board:
• Leads and oversees the conduct,
management and supervision of
the Group
• Determines the organization
of the Group
• Assesses risks facing the business
and reviews risk management and
mitigation policies
• Appoints and removes the Group’s
Chief Executive Officer and other
members of management
• Defines the Group’s accounting
and control principles
• Decides on major acquisitions,
investments and disposals
• Discusses and approves the Group’s
strategy, financial statements and
annual budgets
• Prepares the General Meetings
of Shareholders and implements
shareholders’ resolutions
• Notifies the judicial authorities in the
event of insolvency of the Company,
as required by Swiss law
In accordance with the Company’s internal
regulations, operational management of
the Group, a function which the Board of
Directors has delegated, is the responsibility
of the Operations Council. The Operations
Council has the authority and responsibility
to decide on all issues that are not attributed
to the Board of Directors. In the event of
uncertainty on a particular issue regarding
the separation of responsibility between
the Board of Directors and the management,
the final decision is taken by the Chair
of the Board.
The Chair of the Board is regularly informed
of the activities of the Operations Council
by the Chief Executive Officer, the Chief
Financial Officer and the General Counsel.
The Operations Council is chaired by the
Chief Executive Officer and consists of those
individuals entrusted with the operational
management of the Group’s activities,
as follows:
• The Chief Operating Officers (COOs)
are responsible for operations in the
Group’s seven regions (see Section 1.1.)
• The Executive Vice Presidents (EVPs)
are entrusted with the management
and development of the Group’s five
business lines (see Section 1.1.)
• The Senior Vice Presidents (SVPs)
represent the principal group
support functions (Finance, Human
Resources, Corporate Communication,
Sustainability & Investor Relations
and Legal and Compliance)
The composition, role and organization of the
Operations Council are detailed in Section 4.
Corporate governanceSGS | 2023 Integrated Report 61
E. Risk assessment
The Board conducts on a yearly basis an
assessment of the risks facing the Group.
This process is conducted with the active
participation and input of the management.
Once identified, risks are assessed according
to their likelihood, severity and mitigation.
The Board deliberates on the adequacy
of measures in place to mitigate and
manage risks and assigns responsibility to
designated managers for implementation
of such measures. As part of this process,
the ownership of and accountability for
identified risks are approved by the Board.
The risks identified and monitored by the
Board fall broadly into three categories:
first, environment risk, which includes
circumstances outside the Group’s direct
sphere of influence, such as competition
and economic or political landscape;
second, process risks that include risks
linked to the operations of the business,
the management of the Group and the
integrity of its reputation in the marketplace;
and third, risks associated with information
and decision making.
For each of the risk categories and within
these categories, for each significant
risk identified, the Board deliberates on
proposed mitigation, risk avoidance or risk
transfer measures and approves action
plans designed to control such risks.
3.7. Information and control
instruments vis-à-vis the
management
A. Responsibility of the Board
The Board of Directors has ultimate
responsibility for the system of internal
controls established and maintained by
the Group and for periodically reviewing
its effectiveness. Internal controls are
intended to provide reasonable assurance
against financial misstatement and/or loss,
and include the safeguarding of assets,
the maintenance of proper accounting
records, the reliability of financial information
and compliance with relevant legislation,
regulation and industry practice.
B. Governance framework
The Group has an established governance
framework, which is designed to oversee
its operations and assist the Company in
achieving its objectives. The main principles
of this framework include the definition of
the role of the Board and its committees,
an organizational structure with documented
delegated authority from the Board to
management, and procedures for the
approval of major investments, acquisitions
and other capital allocations.
The Chief Executive Officer and the Chief
Financial Officer attend the meetings of the
Board of Directors and the Audit Committee.
The group controller and the head of the
internal audit function attend the meetings
of the Audit Committee.
The Senior Vice President of Human
Resources attends the meetings of the
Remuneration Committee and Nomination
Committee, and the General Counsel and
Chief Compliance Officer attend all meetings
of the Board of Directors and its committees.
The other members of the Operations
Council and other members of management
only participate in the Board and committee
meetings by invitation. The Board and each
of its committees meet from time to time
in private sessions, outside of the presence
of management.
C. Information to the Board
The Board of Directors is constantly
informed about the operational and financial
results of the Group by way of detailed
monthly management reports, which
describe the performance of the Group and
its business lines.
During each board meeting, the Chief
Executive Officer and the Chief Financial
Officer present a report to the Board of
Directors on the operations and financial
results, with an analysis of deviations from
prior year and from current financial targets.
During board meetings, the Board is updated
on important issues facing the Group.
The Chief Executive Officer, the Chief
Financial Officer and the General Counsel
and Chief Compliance Officer (hereafter
‘Operations Council’) attend all of the
Board of Directors meetings, while other
Operations Council members attend from
time to time to discuss matters under their
direct responsibility. The Board of Directors
meets regularly with the members of the
Operations Council.
During board meetings or committee
meetings, board members can request any
information concerning the Group. The Board
reviews and monitors regularly and formally
previous acquisitions and large investments
as well as the implementation of related
group strategies.
The Group has a dedicated Internal audit
function, reporting to the Chair of the
Audit Committee, which assesses the
effectiveness and appropriateness of
the Group’s internal controls. The Audit
Committee approves the audit plan of
the internal audit, receives its reports and
deliberates on audit findings and is updated
on implementation of corrective actions
identified by the internal audit. The Audit
Committee approves the audit plan of
the internal audit, receives its reports and
deliberates on audit findings and is updated
on implementation of corrective actions
identified by the internal audit.
D. General Counsel and
Chief Compliance Officer
Furthermore, the Group has a compliance
function, headed by the General Counsel
and Chief Compliance Officer, who reports
to the Audit Committee and the Board
of Directors and has direct access to
the Chair of the Board.
The compliance function supports the
implementation of a compliance program
based on the SGS Code of Integrity, available
in 30 languages. The goal of the program
is to ensure that the highest standards of
integrity are applied to all of the Group’s
activities worldwide in accordance with
international best practices. The General
Counsel and Chief Compliance Officer
reports violations of compliance rules every
semester to the Sustainability Committee.
The Committee is informed about
violations of compliance standards and
the implementation of corrective actions,
including disciplinary actions taken.
Financial statementsCorporate governanceRemuneration reportManagement reportNon-financial statementsAppendixSGS | 2023 Integrated Report 62
4. Operations Council
Until 31 December 2023, the management
of the group was placed under the
responsibility of an Operations Council
(as defined in Section 1.1.). The Company
has announced in January 2024 the evolution
of the group management structure, with
the ultimate management responsibility
to be entrusted to a simplified Executive
Committee. The following section describes
the Operations Council in its composition
and role at the end of December 2023.
4.1. Members of the
Operations Council
The members of the Operations Council
at 31 December 2023 were as follows:
Frankie Ng
Nationality: Swiss/Chinese
Year of birth: 1966
Function in SGS
• Chief Executive Officer
Joined SGS in 1994
Education
• BA in Economics and
Electronics Engineering
Previous responsibilities
2011-2015: EVP, Industrial Services
2005-2011: EVP, Consumer Testing Services
2002-2004: Managing Director, US Testing
Géraldine Picaud
Nationality: French
Year of birth: 1970
Function in SGS
• Chief Financial Officer
Joined SGS in 2023
• Appointed CEO Designate
as of 26 January 2024
Education
• MBA from the Superior School
of Commerce de Reims
Previous responsibilities
2018-2023: Holcim, Switzerland,
Chief Financial Officer
2011-2018: Essilor, France,
Group Chief Financial Officer
2008-2011: Volcafe Ltd., Switzerland,
Chief Financial Officer
Olivier Merkt
Nationality: Swiss
Year of birth: 1962
Function in SGS
• Chief Compliance Officer
Joined SGS in 2001
Fabrice Egloff
Nationality: French
Year of birth: 1969
Function in SGS
• COO, Africa & Western Europe
Joined SGS in 1995
Education
• Doctorate in Law, admitted to the bar
in Switzerland
Education
• Master of Business Administration
in International Business Affairs
Previous responsibilities
2006-2008: VP, Corporate Development
2001-2006: Senior Counsel
Teymur Abasov
Nationality: Azerbaijani
Year of birth: 1972
Function in SGS
• COO, Eastern Europe & Middle East
Joined SGS in 1994
Education
• Degree in Electrical Engineering
Previous responsibilities
2007-2023: COO Eastern Europe & Middle East,
Managing Director Russia
2006-2007: Managing Director, Kazakhstan
and Caspian Sub-Region
2004-2006: Managing Director, Azerbaijan
and Georgia
2003-2004: Managing Director, Georgia
Olivier Coppey
Nationality: Swiss
Year of birth: 1972
Function in SGS
• EVP, Health & Nutrition
Joined SGS in 1994
Education
• MSc Economics
Previous responsibilities
2015-2020: EVP, Agriculture Food and Life
2013-2015: EVP, Agriculture
2009-2013: Vice President Seed and Crop,
Agricultural Services
Steven Du
Nationality: Chinese
Year of birth: 1972
Function in SGS
• COO North East Asia
Joined SGS in 1999
Education
• MSc Logistics & Supply Chain Management
Previous responsibilities
2019-2021: Managing Director
Mainland China and Hong Kong SAR
2016-2019: Managing Director Mainland China
2014-2016: Managing Director Vietnam
Previous responsibilities
2017-2019: COO Africa
2009-2017: Managing Director, France
2004-2008: Managing Director, Hong Kong
Luis Felipe Elias
Nationality: Peruvian
Year of birth: 1959
Function in SGS
• COO, Latin America
Joined SGS in 2004
Education
• Industrial Engineering Degree and MBA
Previous responsibilities
2012-2018: Managing Director, Ecuador and Peru
2004-2012: Deputy Managing Director, Peru
Derick Govender
Nationality: South African
Year of birth: 1970
Function in SGS
• EVP, Natural Resources
Joined SGS in 2002
Education
• Diploma in Analytical Chemistry
• Postgraduate in Business Management
Previous responsibilities
2015-2020: EVP Minerals Services
2014-2015: Minerals Manager, Chile
2010-2014: VP Minerals, Africa
Jessica Sun
Nationality: American
Function in SGS
• SVP, Human Resources
Joined SGS in January 2022
Education
• Bachelor’s degree in Law from the China
University of Politics & Law Science
• EMBA from the Chinese Europe International
Business School (CEIBS)
Previous responsibilities
2016-2021: Haier, USA, CHRO Global Appliances
2013-2016: Mallinckrodt Pharmaceuticals, VP of
Human Resources, International Mallinckrodt
2012-2013: Eaton Corporation, USA, HR Director,
Global CET Business
Corporate governanceSGS | 2023 Integrated Report 63
4.2. Other activities
and vested interests
The following list presents all material
activities in governing and supervisory
boards, management positions and
consultancy functions, official tenures and
political positions held by each member of
the Operations Council outside the Group,
both in Switzerland and abroad.
Frankie Ng
Member of the Board of Directors,
Chair of the Compensation Committee
of Logitech SA, Switzerland.
Géraldine Picaud
Member of the Board of Directors and
Chairperson of the Audit Committee
of Danone SA, France
Member of the CFO Coalition for the
Sustainable Development Goals (SDGs),
United Nations Global Compact
Derick Govender
Member of IPMI (International Precious
Metal Institute)
4.3. Limits on external mandates
The articles of association of the Company
limit the number of mandates permissible
to members of the Operations Council,
to no more than four board memberships
in entities outside the Group, of which
a maximum of one membership may
be in the board of companies whose
shares are traded on a stock exchange.
Mandates assumed at the request of
a controlling entity do not count towards
the maxima defined in the articles
of association.
In addition, the articles of association
set limits to participations in boards
of association and other not-for-profit
organizations to no more than 10
such memberships.
4.4. Management contracts
The Company is not party to any
management contract delegating
management tasks to companies
or individuals outside the Group.
Charles Ly Wa Hoi
Nationality: French
Year of birth: 1966
Malcolm Reid
Nationality: British
Year of birth: 1963
Function in SGS
• EVP, Connectivity & Products
Function in SGS
• COO, South East Asia & Pacific
Initially joined SGS in 1992, rejoined in 2008
Joined SGS in 1987
Education
• Degree in Electronics Engineering
from ENSEIRB-MATMECA
Education
• BSc Chemistry
Previous responsibilities
2018-2020: EVP Consumer and Retail Services
2016-2018: Vice President of Retail Solutions
and European Business Development,
Consumer and Retail
2013-2016: Global Head of Materials
and Manufacturing, Industrial Services
2009-2013: Vice President of Strategic Global
Accounts, Consumer Testing Services
Jeffrey McDonald
Nationality: Australian/American
Year of birth: 1964
Function in SGS
• EVP, Business Assurance (prev. Knowledge)
Joined SGS in 1995
Education
• Postgraduate Diploma in Education
Previous responsibilities
2015-2020: EVP Certification
and Business Enhancement
2007-2015: COO, North America
2004-2007: EVP, Systems and
Services Certification
2003: Global Project Manager,
Systems and Services Certification
Stephen Nolan
Nationality: American/Irish
Year of birth: 1960
Function in SGS
• COO North America, since January 2021
Joined SGS in 2019
Education
• B.Comm in Finance
Previous responsibilities
2013-2018: Chief Executive Officer/Chief
Financial Officer, Hudson Global
2004-2012: Chief Financial Officer, Adecco
North America
Previous responsibilities
2012-2015: EVP, Consumer Testing Services
2007-2011: EVP, Systems and
Services Certification
2005-2007: Managing Director, Australia
Alim Saidov
Nationality: Azerbaijani/Canadian
Year of birth: 1964
Function in SGS
• EVP, Industries & Environment
Joined SGS in 1993
Education
• PhD in Science
Previous responsibilities
2013-2020: EVP, Oil, Gas and Chemicals
2007-2013: EVP, Oil, Gas and Chemicals
Services and Environmental Services
2005-2007: COO, Eastern Europe
and Middle East
2004: COO, North America and
Managing Director, Canada
Wim van Loon
Nationality: Belgian
Year of birth: 1966
Function in SGS
• COO Northern & Central Europe
Joined SGS in 1989
Education
• Engineering degree in Industrial Electro
Mechanics and Master’s degree in
Business Management
Previous responsibilities
2018-2020: EVP, Industrial Services
2015-2018: Managing Director, Benelux
2011-2015: Executive Director, Industrial
Services, Benelux
2003-2015: Business Manager for Industrial,
Minerals and Consumer Testing Services, Benelux
During 2023, Dominik de Daniel,
CFO and Toby Reeks, SVP Corporate
Communications, Sustainability, and Investor
relations left the Operations Council.
Biographical information on former members
of the Operations Council may be found in
prior years’ Corporate Governance reports.
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5. Compensation,
shareholdings and loans
5.1. Content and method of
determining the compensation
and the shareholding programs
The Group’s overriding compensation
policies are defined by the Board of
Directors. The objectives of these policies
are twofold: 1) to attract and retain the
best talent available in the industry, and 2)
to motivate employees and managers to
create and protect value for shareholders
by generating long-term sustainable
financial achievements.
In line with these principles, board members
are entitled to a fixed fee, which takes
into account their level of responsibility.
Members of the Operations Council receive
a fixed remuneration and are entitled to
a performance-related annual bonus and
a Long-Term Incentive plan.
The Annual General Meeting approves the
compensation payable to the Board and
the Operations Council. The rules on the
vote on pay applicable in the Group are
explained below.
The ultimate responsibility for defining
remuneration policies and deciding on all
matters relating to remuneration rests with
the Board of Directors, subject to decisions
that require binding resolutions of the Annual
General Meeting. The Board of Directors
is assisted in its work by a Remuneration
Committee, which is elected by the
Annual General Meeting.
5.2. Rules on approbation
by the annual shareholders’
meeting of executive pay
5.2.1. Rules on performance-related
pay and allocation of equity-linked
instruments
The Company’s articles of association define
the principles of the variable remuneration
and the allocation of shares or equity-
linked instruments to the members of the
Operations Council. Please refer to the
Remuneration report pages 69 to 70 for
a description of the Company’s rules in
the matter.
In the event of changes in composition of
the Operations Council occurring after the
approval by the Annual General Meeting
of the remuneration of the executive team,
the Board is authorized to increase up to
a maximum of 40% the amount authorized
by the shareholders for that purpose.
5.2.2. Rules on loans, credit facilities
and post-employment benefits
Loans granted to members of the governing
bodies of the Company may not exceed one
year of remuneration and must be granted at
market conditions. As at 31 December 2023
(same as at 31 December 2022), no loan or
advance is granted by the Group to members
of the Operations Council.
5.2.3. Rules on vote on pay
The Annual General Meeting approves
the following matters related to the
compensation of the Board and
Operations Council:
• It approves the fixed fees payable
to the Board of Directors until the
next Annual General Meeting
• It approves in advance a prospective
maximum fixed remuneration to the
Operations Council during the next
financial year
• It approves the total aggregate amount
payable to the Operations Council for
the performance-related annual bonus
related to the prior year
• It approves the maximum amount
payable under Long-Term Incentive
plans to be introduced by the Company
• Resolutions of such matters are binding
to the Board of Directors. In addition, the
Annual General Meeting is invited to cast
a non-binding vote on the Remuneration
report that describes the Company’s
remunerations policies. This allows
shareholders to express a view on the
overall policies of the Group in relation
to remuneration
6. Shareholders’
participation rights
All registered shareholders receive a copy
of the half-year and full-year results upon the
publication of such results by the Company.
They can request a copy of the Company’s
annual report and are personally invited
to attend the Annual General Meeting.
The Company’s annual report and press
releases are publicly available on its website.
6.1. Voting rights and
representation restrictions
All registered shareholders can attend the
General Meetings of Shareholders and
exercise their right to vote. A shareholder
may also elect to grant power of attorney
to an independent proxy appointed by the
Company and elected in advance by the
General Meeting of Shareholder or to any
other representative holding a written
power of attorney.
There are no voting restrictions, subject
to the exclusion of nominee shareholders
representing undisclosed principals,
as detailed in Section 2.6.
6.1.2. Rules on instructions to the
independent proxy and electronic
participation in the annual
shareholders’ meeting
Shareholders have the opportunity to give
general or specific voting instructions to the
independent proxy, who is elected by the
General Meeting of Shareholders.
Shareholders can give specific or generic
voting instructions to the independent
proxy on all matters on the agenda of
the General Meeting of Shareholders.
These instructions can be issued in written
form, or by electronic transmission.
The voting of resolutions by electronic votes
is authorized by the articles of association,
within the modalities defined by the Board
of Directors.
6.2. Statutory quorums
The General Meeting of Shareholders
can validly deliberate regardless of the
number of shares represented at the
meeting. Resolutions are adopted by
the absolute majority of votes cast
unless Swiss company law mandates
a special majority.
6.3. Convocation of General
Meetings of Shareholders
The rules regarding the convocation of
General Meetings of Shareholders are
in accordance with Swiss company law.
6.4. Inclusion of items
on the agenda
The agenda of the Annual General Meeting
is issued by the Board of Directors.
Shareholders representing shares of at least
0.5% of the company’s shares may request
the inclusion of an item on the agenda of
the Annual General Meeting, provided that
such a request reaches the Company at
least 40 days prior to the meeting.
6.5. Registration in the
share register
The Company does not impose any deadline
for registering shares prior to an Annual
General Meeting. However, a technical
notice of two business days is required
for processing the registration in the
share registry.
7. Change of control
and defense measures
No restriction on changes of control
is included in the Company’s articles
of association.
7.1. Duty to make an offer
In the absence of any specific rules in
the Company’s articles of association,
any investor or group of investors acquiring
more than 33.3% of the shares and voting
rights of the Company has the duty to
make a public offer in compliance with
the applicable Swiss takeover rules.
7.2. Clauses on change of control
There are no general plans or standard
agreements offering specific protection
to board members, Operations Council or
employees of the Group in the event of a
change of control, subject to the standard
rules regarding termination of employment.
However, long-term incentive plans issued
by the Company may include rules allowing
acceleration of vesting of benefits in the
event of a change of control.
Corporate governanceSGS | 2023 Integrated Report 65
The group website has a section fully
dedicated to investor relations, where all
financial information and presentations
are available. This includes an updated
version of the articles of association, current
information on share buyback programs
and minutes of shareholders’ meetings.
SGS meets regularly with institutional
investors, holds results presentations,
roadshows and presentations at broker-
sponsored country or industry conferences,
and attends one-on-one meetings.
The Group publishes consolidated half-year
unaudited and yearly audited results in print
and online formats. The annual report is
published in English and is available upon
order from the Group’s website. The current
list of publication dates is available on the
Group’s website. The Group acknowledges
the directives on the independence of
financial research issued by the Swiss
Bankers Association. In addition, the Group
complies with rules regarding information
and reporting of the Federal Act on stock
exchange and securities trading, and
the ordinance on stock exchanges and
securities trading. The address of SGS’s
main registered office and contact details
by phone and email can be found on
page 204 of this report.
10. Quiet periods
Members of the Board of Directors,
Operations Council and other employees
having access to material non-public
information are banned from trading in SGS
shares during quiet periods, preceding
publication of yearly and half yearly results.
These periods are set between
31 December until and including the date
of publication of the full year results and
between 30 June until and including the date
of the publication of the half year results.
In addition to these fixed quiet periods,
the Company institutes additional trading
bans from time to time, prior to the
release of material non-public information,
such as major acquisitions or disposals,
or trading updates.
8. Auditors
8.1. Duration of the mandate and
term of office of the lead auditor
PwC was elected as auditor of the Company
and the SGS Group. The auditors of the
Company are subject to re-election at
the Annual General Meeting every year.
PwC with Guillaume Nayet as the lead
initially took up office in 2021 in relation
to the 2021 financial statements and have
audited the Company and Group 2023
financial statement.
The Company requires the lead auditor to
be changed at the latest after completion
of seven annual audit cycles, in line with
Swiss law.
The Audit Committee reviews annually the
desirability to renew the annual mandate of
its external auditors before proposing to the
Board and the Annual General Meeting the
re-election of the auditors.
8.2. Audit fees
Total audit fees paid to the auditors for
the audit of the Company and the Group
financial statements in 2023 amounted
to CHF 6.3 million (2022: CHF 6.1 million).
8.3. Additional fees
An aggregate amount of CHF 1 million
was paid to PWC (2022: CHF 1 million)
for other professional services, unrelated to
the statutory audit activity, mainly composed
of tax compliance services, non-statutory
and other assurance services.
8.4. Information instruments
pertaining to the external audit
The Audit Committee is responsible for
evaluating the external auditor on behalf
of the Board of Directors and conducts
assessments of the audit services provided
to the Group during its regular meetings.
The audit committee meets with the
auditor at least four times per year,
including in private sessions without
the presence of management.
In 2023, the Audit Committee met five
times with the external auditors.
The Committee considers and approves
the proposed audit plan, conducts
assessment of the performance of the
auditor and approves audit fees on the
basis of the amount of work required
in order to perform the audit.
The Audit Committee reviews with the
group auditors the significant financial
statement risk areas arising from the audit,
including the key audit matters referred
to in the statutory auditor’s report.
When evaluating the performance of the
auditors, the Audit Committee assesses the
effectiveness of the audit based on Swiss
Law, their understanding of the business
of the Group and how matters of significant
importance for the group internal control and
financial reporting are identified, reported
and resolved. The Audit Committee reviews
also how the group auditors interact with the
component audit firms in charge of auditing
the main subsidiaries of the Group, and the
relevance and timeliness of issuance of
statutory audits and management letters.
The Audit Committee places great emphasis
on the independence of the external
auditors, and on the absence of conflict
of interests, both at the group level and
at the level of individual subsidiaries.
It reviews carefully the type of other services
which are provided by the auditors, in
addition to the audit, to ensure that such
ancillary services could not endanger the
independence of the audits. The audit
Committee has issued a policy on non-
audit services which define restrictively
the type of admissible services excluding
from the admissible scope most tax
advisory services and services related
to prospective acquisitions and disposal.
The policy also sets an approval process
requiring prior approval of the Audit
Committee for any assignment for non-
audit services above defined thresholds.
The audit fees are approved on the basis of
a negotiated budget agreed with the group
auditors taking into account the complexity
of the audit, the structure of the Group
and its internal control systems and the
responsibility of the auditors. The duties
of the Committee include consideration
of the audit plan, regular assessment of the
performance of the auditor and approval
of audit fees on the basis of the amount of
work required in order to perform the audit.
The Audit Committee reviews with the
group auditors the significant financial
statement risk areas arising from the audit,
including the key audit matters referred
to in the statutory auditor’s report.
The auditor regularly presents its findings,
both during the deliberations of the Audit
Committee and in written reports, to the
attention of the Board of Directors that
summarize key findings.
9. Information policy
The policy of the Group is to provide
individual and institutional investors,
directly or through financial analysts,
business journalists, investment consultants
(financial community) and employees
with financial and business information
in a consistent, broad, timely and
transparent manner.
Financial statementsCorporate governanceRemuneration reportManagement reportNon-financial statementsAppendixSGS | 2023 Integrated Report 66
The SGS Remuneration report provides an
overview of the SGS remuneration model, its
principles and programs and the related governance
framework. The report also includes details on
the remuneration of the Board of Directors and
of the Operations Council related to the 2023
business year. The SGS Remuneration report has
been prepared in compliance with the new Code
of Obligations, in effect as of 1 January 2023, the
Swiss Exchange (SIX) Directive on Information
relating to Corporate Governance, revised on
29 June 2022 and in effect as of 1 January 2023,
the Swiss Code of Best Practice for Corporate
Governance of economiesuisse, revised on
14 November 2022, and according to the articles
of association of SGS SA, as revised and
approved by the shareholders at the Annual
General Meeting in 2023.
Remuneration reportRemuneration reportSGS | 2023 Integrated Report 67
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85
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Introduction by the
Remuneration Committee
68
5.
Remuneration awarded to the
Operations Council members
5.1. AGM vote on remuneration
5.2. Fixed remuneration (audited)
5.3. Short-term variable remuneration (audited)
5.4. Long-term variable remuneration
5.4.1.
5.4.2.
2023-2025 PSUs long-term incentive
grant (audited)
Vesting of the 2021-2023 PSUs and
cash long-term incentive plans
5.5. Total remuneration (audited)
5.6. Remuneration mix (audited)
5.7. Other compensation, loans and credit facilities (audited)
5.8. Shares and options held (audited)
5.9. Gender representation (audited)
5.10. Other activities (audited)
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Report of the statutory auditor
90
1.
2.
Remuneration policy
and principles
2.1. Remuneration general principles
2.2. Remuneration policy for the executive management
2.3. Remuneration governance
2.3.1. Remuneration Committee
2.3.2. Shareholders’ engagement
2.3.3. Changes in remuneration governance
3. Remuneration model
3.1. Structure of remuneration of the Board of Directors
3.2. Structure of remuneration of the Operations Council
3.2.1. Fixed remuneration: annual base salary
3.2.2. Fixed remuneration: benefits
3.2.3. Short-term variable remuneration
3.2.4. Long-term variable remuneration
3.2.5. Changes to the long-term incentive plan
3.2.6. Remuneration mix
3.2.7. Shareholding ownership guidelines
3.2.8. Employment contracts
3.2.9. Timeline of remuneration
69
69
69
69
70
70
70
71
71
71
72
72
72
75
76
77
77
77
78
79
4.
Remuneration awarded to the
Board of Directors
4.1. AGM vote on remuneration
4.2. Details of remuneration (audited)
4.3. Other compensation, loans and credit facilities (audited)
4.4. Shares and options held (audited)
4.5. Gender representation (audited)
4.6. Other activities (audited)
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81
81
81
Financial statementsCorporate governanceRemuneration reportManagement reportNon-financial statementsAppendixSGS | 2023 Integrated Report
68
1. Introduction by the Remuneration Committee
On behalf of the Remuneration Committee, I am pleased to present
the SGS Remuneration report for the year ended in December 2023.
During the AGM 2022 to AGM 2023 mandate, the Remuneration
Committee sustained its commitment to enhancing clarity and
transparency for shareholders and stakeholders concerning
the management of governing bodies’ remuneration at SGS.
Furthermore, the Committee supported the Board of Directors in
its initiatives to simplify and streamline the Company’s governance.
A primary aspect related to transparency is associated with the
implementation of the new Code of Obligation in 2023, replacing
the ordinance against excessive compensation (OaEC) at listed
joint-stock companies, effective as of 1 January 2014. This update
incorporates and specifies provisions related to the management
and disclosure of governing bodies’ remuneration. In this
remuneration report, the Remuneration Committee adhered to the
new formulation of these provisions, aiming to interpret both their
letter and spirit in the light of completeness and transparency,
in the best interest of shareholders and stakeholders.
The Long-Term Incentive 2021-2023, a transition plan from a scheme
based on a grant every three years to one based on annual grants,
concluded its performance period in 2023 and reached vesting.
Details regarding the vesting of the plan are explained in Section
5.4.2. of this report.
The Remuneration Committee continues to evaluate the Long-Term
Incentive to ensure that the structure of the plan aligns with our
business strategy and shareholders’ interests. The modifications
of the plan are outlined in Section 3.2.5. of this report.
The Committee also scrutinized the structure of the AGM votes
on remuneration matters. In order to simplify governance and align
with prevalent market practices, the Committee proposed to the
AGM to change the timing of the vote on the value of the grants
awarded under the long-term incentive plan to the Operations
Council members from the current fiscal year to the next fiscal year.
Details on this are disclosed in Section 2.3.3. of this report, and
the necessary modifications of the Articles of Association are
submitted to the AGM for its approval.
As disclosed in Section 4 of the Governance of this report, a new
leadership structure was announced in January 2024. As this
Remuneration Report refers to the 2023 business year, we have
kept reference to the past leadership structure (Operations Council
and Senior Management). We make reference to the new leadership
structure (Executive Committee) only in regards to future events.
Since 2015, the Board of Directors has implemented the
consultative vote on the remuneration report and the binding
vote on compensation amounts at the Annual General Meeting.
The Committee received significant support in its activities and
direction through positive votes at the Annual General Meeting
2023, and will continue with the same ‘say-on-pay’ vote structure
at the forthcoming Annual General Meeting 2024:
• Consultative vote on the remuneration report
• Binding vote on the prospective maximum remuneration amount
of the Board of Directors until the next Annual General Meeting
• Binding vote on the retrospective short-term variable
remuneration amount of the Executive Committee members
for the business year 2023
• Binding vote on the prospective maximum fixed remuneration
amount of the Operations Council members for 2025
• Binding vote on the prospective maximum value of the grants
awarded under the long-term incentive plan to the Executive
Committee members in 2024 and 2025, following the change
in the timing of the vote on this matter described above
On the following pages, you will find detailed information about
our remuneration model, its principles and programs, and the
remuneration awarded to the Board of Directors and the Operations
Council related to the business year 2023. I hope that you find
this report informative. The Committee has sought to promote
a remuneration environment that is fully aligned with the purpose
and the strategy of the Group, its short-term and long-term
performance, the interests of our shareholders, and relevant
market practices and trends.
I look forward to your support on the 2023 annual remuneration
report at the AGM.
Sami Atiya
Chair of the Remuneration Committee
The table below summarizes the votes of the Annual General Meeting on remuneration matters in the last five years.
(% of votes for)
Consultative vote on the remuneration report
Binding vote on the prospective maximum remuneration
amount of the Board of Directors
Binding vote on the prospective maximum fixed remuneration
amount of the Operations Council members
Binding vote on the retrospective short-term variable remuneration
amount of the Operations Council members
Binding vote on the value of the grants awarded under the long-term
incentive plan to the Operations Council members1
1. Until 2020, the SGS Long-Term Incentive plan provided a grant every three years.
2023
95.41
2022
83.94
2021
92.70
2020
93.05
2019
94.50
98.10
97.81
95.51
98.13
98.09
95.34
96.11
94.37
95.58
80.28
98.16
97.02
96.95
97.39
97.17
96.08
96.88
96.40
–
–
Remuneration reportSGS | 2023 Integrated Report 69
2. Remuneration policy and principles
2.1. Remuneration general principles
The general principles of remuneration of the members of the
Board of Directors and the members of the Operations Council
are defined in the articles of association (Art. 28, Art. 29, Art. 30,
Art. 31 and Art. 32).
The remuneration of the members of the Board of Directors is
defined with two main objectives: (i) to compensate their activities
and responsibilities as the highest governing body of the Group and
their participation in the committees established within the Board
of Directors, and (ii) to guarantee their independence in exercising
their supervisory duties towards the executive management.
The remuneration of the members of the Operations Council is
defined with two main objectives: (i) to attract and retain the best
talents available in the industry, and (ii) to motivate them to create
and protect long-term sustainable value for our shareholders
and society.
The members of the Board of Directors receive a fixed
remuneration only.
The members of the Operations Council receive a fixed
remuneration and a variable remuneration linked to short-term
and long-term results.
Remuneration
component
Board of Directors
(non-executive)
Operations Council
(executive)
Fixed remuneration
Short-term variable
remuneration
Long-term variable
remuneration
2.2. Remuneration policy for
the executive management
The Company’s remuneration policy applicable to the executive
management (Operations Council members) is defined by the
Board of Directors in support of the Company’s business strategy
to deliver profitable growth, and in line with its business principles:
integrity, health and safety, quality and professionalism, respect,
sustainability, leadership and innovation.
The remuneration system for the Operations Council members
operates according to four main principles:
• Market competitiveness
– Remuneration levels are in line with competitive
market practices
• Internal equity
– Remuneration programs link remuneration to the level of
responsibility and the skillset required to perform the job
• Pay for performance
– A substantial portion of remuneration is directly linked
to business and individual performance
• Long-term value creation and alignment to shareholders’ interests
– Part of remuneration is delivered in equity subject to a multi-year
vesting period
In line with its anti-discrimination and dignity at work policy, SGS
is committed to promoting equal opportunity for all employees
and an environment in which all members of the workplace treat
all individuals both in the workplace and in other work-related
settings at all times with dignity, consideration and respect.
All employment-related decisions, including compensation, benefits
and promotions, will be solely made on the basis of an individual’s
qualifications, performance and behavior or other legitimate business
considerations. SGS does not tolerate any discriminatory practices,
in particular based on age, civil partnership, disability, ethnicity, family
status, gender, gender identity, ideological views, marital status,
nationality, political affiliation, pregnancy, religion, sexual orientation,
social origin or any other status that is protected as a matter of
local law.
Method of determination of remuneration levels
– benchmarking
SGS is a global company, operating in a broad range of sectors;
the determination of the remuneration levels of the Operations
Council members must consider both global and local practices.
We periodically compare our compensation practices with those
of similar global organizations:
• Competitors in the testing, inspection and certification industry:
ALS, Applus+, Bureau Veritas, Eurofins, Intertek, Mistras, Team
(the peer group of companies considered for the performance
conditions of the long-term incentive plan, see Section 3.2.4.)
• The SMI and SMIM-listed companies belonging to the SLI
index, not belonging to the capital markets, insurance and
pharmaceuticals sectors of comparable size (-50% / +100%
in terms of sales)
The elements of executive remuneration benchmarked include
annual base salary and benefits, short-term and long-term incentives.
To ensure proper benchmarking, we use a proprietary job evaluation
methodology. Since half of our Operations Council members
are based outside Switzerland, we use information published
by reputable data providers, including Mercer and Willis Towers
Watson, related to both the Swiss market and the other markets
where the Operations Council members are based.
As a reference point, SGS targets the median compensation
level of the peer group.
The Company has not used external paid advisors to perform salary
benchmarks since 2015, relying instead on available market data.
No third-party services provider was engaged to perform such
benchmark in 2023.
2.3. Remuneration governance
The Annual General Meeting approves every year the maximum
aggregate amount of remuneration of the Board of Directors.
Within that limit, the Board of Directors is responsible for determining
the remuneration of the Chair and the Directors. It also decides on
the remuneration and terms of employment of the CEO. In addition,
the Board of Directors defines general executive remuneration
policies, including the implementation and terms and conditions
of long-term incentive plans, as well as the financial targets
relevant to any incentive plan.
Financial statementsCorporate governanceRemuneration reportManagement reportNon-financial statementsAppendixSGS | 2023 Integrated Report 70
2.3.1. Remuneration Committee
The Board of Directors is assisted in its work by a Remuneration
Committee (the Committee), which consists of non-executive
Directors. The Committee acts in part in an advisory capacity to
the Board of Directors, and in part as a decision-making body on
matters that the Board of Directors has delegated to the Committee.
The Committee reviews regularly, at least once a year, the
compensation of each member of the Operations Council (including
the CEO) and decides on all matters relating to the remuneration
of these executives.
The following chart summarizes the authorization levels for the main
decisions relating to the compensation of the Board of Directors and
the Operations Council members. When reviewing and deciding
on executive remuneration policies, the Committee and the Board
of Directors have access to group human resources staff and may
use third-party consultants that specialize in compensation matters.
In 2023, neither the Committee nor the Board of Directors had
recourse to such external advisors.
Subject matter
Aggregate remuneration amount of the Board of Directors
Individual remuneration of the members of the Board of Directors
including the Chair of the Board
Aggregate fixed remuneration amount of the Operations Council
Aggregate short-term variable remuneration amount of the
Operations Council
Setting of annual financial targets for short-term variable
remuneration of Operations Council members
Establishment of long-term incentive plans
Aggregate value of the grants awarded under the long-term
incentive plan to Operations Council members
Individual remuneration of the Operations Council members
Remuneration report
Recommendation
Approval
Binding vote
Consultative vote
The following Directors served on the Committee during their
mandate from Annual General Meeting 2023 to 2024:
• Sami Atiya (Chair)
• Ian Gallienne
• Kory Sorenson
In 2023, the Committee met five times and handled several matters
pertaining to remuneration outside scheduled meetings. The Chair of
the Remuneration Committee reports to the Board of Directors after
each meeting on the activities of the Committee. The minutes of
the Committee meetings are available to the members of the Board
of Directors. Generally, the Chair of the Board attends the meetings
of the Committee, except when matters pertaining to his own
compensation are being discussed.
Selected members of the Operations Council, the CEO, the senior
vice president of human resources and the global head of total
reward may be asked to attend the meetings in an advisory capacity.
They do not attend the meeting when their own compensation
or performance are being discussed.
CEO
Remuneration
Committee
Board of
Directors
Annual
General Meeting
2.3.2. Shareholders’ engagement
As has been the case since the 2015 Annual General Meeting, and
as of 2023 in accordance with the requirements defined by the new
Code of Obligations (art. 735), the Company will continue to submit
the remuneration report to a consultative shareholders’ vote at the
Annual General Meeting, so that shareholders have an opportunity
to express their opinion about our remuneration model.
In addition, as required by the new Code of Obligations (art. 735),
the aggregate amounts of remuneration to be paid to members
of the Board of Directors and the Operations Council are subject
to the approval of the shareholders in the form of a binding vote
on remuneration.
The procedure on the vote is defined in the articles of association
and foresees separate votes on (i) the maximum remuneration of
the Board of Directors for the period until the next Annual General
Meeting, (ii) the maximum fixed remuneration of the Operations
Council for the next calendar year, (iii) the short-term variable
remuneration awarded to the Operations Council in respect of the
previous calendar year, and (iv) the maximum amount to be granted
to the Operations Council under any long-term incentive plan during
the current calendar year.
2.3.3. Changes in remuneration governance
The Board of Directors believes that three separate votes on the
three elements of remuneration of the Operations Council give great
transparency and say-on-pay power to the AGM, and intend to align
the timing of the prospective votes on fixed remuneration and on
long-term incentive grants, proposing to the AGM to vote on both
maximum amounts for 2024 as well as 2025 with regards to the
long-term incentive grants.
Remuneration reportSGS | 2023 Integrated Report 71
3. Remuneration model
3.1. Structure of remuneration of the
Board of Directors
Members of the Board of Directors receive a fixed remuneration only.
They are entitled to a fixed annual board membership fee (annual
board retainer) and additional annual fees for the participation in board
committees (committee fees). The annual board retainer of the Chair
of the Board includes his or her attendance to any committee of
the Board, whether as a voting member or in an advisory capacity.
By agreement with the relevant tax authorities, part of the remuneration
of the Chair of the Board may be settled as representation fees.
Directors do not receive additional compensation for attending
meetings and do not receive any variable remuneration.
The table below summarizes the remuneration elements of the
members of the Board of Directors.
Annual
Board retainer
Committee fees
(per Committee)
Representation fees
(subject to agreement with
relevant tax authorities)
Chair
Board
members
awarded after the Annual General Meeting during which the board
member is elected to their position. The number of restricted shares
awarded will be determined by dividing the cash value of 25% of the
annual board retainer by the average closing share price during the
20-day period following the payment of the dividends after the Annual
General Meeting. Fractions will be rounded down to the nearest whole
number; the balance, if any, will be settled in cash, payable with the
next installment of the fees. Such restricted shares may not be sold,
donated, pledged, or otherwise disposed of to third parties during the
three-year restriction period. In case of change of control or liquidation,
or in case a member of the Board ceases to exercise their mandate
following death or permanent disability, the restriction period of the
shares lapses. The shares remain restricted in all other instances.
The portion of remuneration settled in cash is paid in two installments,
in June and December of the calendar year.
Members of the Board of Directors do not hold service contracts
and are not entitled to any termination or severance payments.
They do not participate in the Company’s benefit schemes and the
Company does not make any contributions to any pension scheme
on their behalf.
Board members are required to accumulate during their tenure a
number of shares equivalent in value to two years of remuneration.
The remuneration to the members of the Board of Directors is subject
to employer social charges according to Swiss legislation.
The amounts of the remuneration elements for the Chair and the
other board members are defined by the Board of Directors every
year. The maximum total amount is subject to the binding vote
of the Annual General Meeting.
In determining the amounts of the compensation elements, the Board
of Directors considers the prevailing practices of the Swiss publicly
traded companies belonging to the SMI or SMIM indexes, with market
capitalization of similar size, and not belonging to the capital markets,
insurance and pharmaceuticals sectors.
Each board member receives 25% of the annual board retainer in
the form of shares restricted for a period of three years ending on
the third anniversary of their award. The restricted shares will be
3.2. Structure of remuneration of the
Operations Council
The members of the Operations Council receive a fixed remuneration
and a variable remuneration linked to short-term and long-term results.
The fixed remuneration includes an annual base salary and benefits,
in the form of employer’s contributions into pension funds, health
insurances, life and disability insurances, other contributions
and allowances according to local practices in their country of
employment, and in the form of benefits in kind.
The variable remuneration consists of a short-term incentive, settled 50%
in cash and 50% in equity, and a long-term incentive, settled in equity.
The table below summarizes the various components of the
remuneration of the Operations Council members.
Remuneration
vehicle
Drivers
Performance
measures
Purpose
Plan period
Remuneration
element
Fixed remuneration
Annual base salary
Benefits
Variable remuneration
Short-term incentive
Cash
Contributions to pension
plans and insurances,
other contributions,
allowances, benefits
in kind
50% cash
50% restricted shares
Position and experience,
market practice
(benchmarking)
Market practice
n/a
n/a
Annual financial
performance, individual
performance against
leadership competency
model and ESG1 metrics
Group sales, group NPAT2,
group ROIC3, group
free cash flow, regional
and business line profit,
regional and business line
NWC4, leadership multiplier
Relative TSR5,
ESG1 metrics
Long-term incentive
Performance share units
(PSUs)
Long-term financial and
non-financial performance
Attract and retain
key executives
Continuous
Protect executives
against risks, attract
and retain
Continuous
Pay for performance 1-year
performance
period
3-year deferral
period
3-year
performance
period
Reward for long-term
performance, align
compensation with
the interests of the
shareholders
1. ESG: environmental, social and governance.
2. NPAT: net profit after tax.
3. ROIC: return on invested capital.
4. NWC: net working capital.
5. TSR: total shareholder return.
The remuneration of the members of the Operations Council is subject to employer social charges, according to the legislation in force
in their country of employment.
Financial statementsCorporate governanceRemuneration reportManagement reportNon-financial statementsAppendixSGS | 2023 Integrated Report 72
3.2.1. Fixed remuneration: annual base salary
The base salaries of the CEO and each Operations Council
member are reviewed annually based on market data for similar
positions in those companies and geographies against which the
Group benchmarks itself. In addition to individual performance
and contribution and business performance and results, the
deciding body considers the scope and complexity of the areas
of responsibility of the position, skillsets, experience required to
perform the job, and relevant market practice in the industry.
3.2.2. Fixed remuneration: benefits
Benefits include the employer’s contributions to pension plans, the
employer’s contributions to insurances for health, life, disability and
other risks, other cash contributions and allowances, and benefits in
kind. They are awarded in accordance with prevailing practices in the
country of employment of the members of the Operations Council.
Swiss-based Operations Council members participate, on the same
basis as other Swiss employees of the Group, in the company’s
pension scheme. Each participant can choose between three levels
of employee contributions (‘standard’, ‘plus 2’ and ‘maxi’), defined
based on the participant’s age; the Company contributes an amount
equal to one and a half times the participant’s contribution at the
‘standard’ level. Flexibility is granted to employees who wish to
fund a potential retirement before the normal age, and to those
who wish to continue working after the age of 65.
3.2.3. Short-term variable remuneration
The CEO and the other members of the Operations Council are
eligible to a performance-related annual incentive (the ‘short-term
incentive’). The short-term incentive is designed to reward the
CEO and the other members of the Operations Council for the
annual financial performance of the Group and its businesses,
and for the demonstration of leadership behaviors in line with the
SGS competency model and the Group’s sustainability ambitions.
The short-term incentive plan is reviewed annually to ensure its
alignment with the Group’s business strategy and value to society
ambitions. For the performance year 2023, a change in the pay-out
curve of the financial KPIs was implemented, with the objective to
provide a better reward to the CEO and the OC members in case
of overachievements. The maximum financial performance pay-out
factor, set at 200% of the incentive opportunity (unchanged from
previous year) is reached at 120% performance versus target (it was
reached at 133.3% performance versus target the in previous year).
The target incentive is expressed as a percentage of the annual base
salary and varies depending on the role. For the CEO, the target
incentive amounts to 100% of annual base salary, while the target
incentive for the other members of the Operations Council varies
between 50% and 90% of annual base salary.
The table below summarizes the annual incentive opportunity for the
CEO and the other members of the Operations Council.
Incentive frequency
Minimum incentive opportunity
CEO
Annual
Other Operations
Council members
Annual
as % of base salary
as % of target incentive opportunity
0%
0%
0%
0%
Target incentive opportunity
as % of base salary
100%
50%–90%
Maximum incentive opportunity1
as % of target incentive opportunity
as % of base salary
250%
250%
250%
125%–225%
1. The maximum incentive opportunity is the result of the maximum financial performance
payout 200% times the maximum leadership multiplier 125%.
Annual financial performance
Each year, an annual business plan is derived from the long-term
strategic plan and sets the business objectives to be achieved
during the year.
The key performance indicators used in the short-term incentive
to measure the annual financial performance of the Group and its
businesses include measurements of growth (top-line contribution),
profitability (bottom-line contribution), cash generation and
efficient use of capital, and thus reflect the financial performance
of the Company in a balanced manner. Those financial metrics
are cascaded consistently throughout the organization to ensure
collective alignment. The CEO and the heads of corporate functions
(SVPs) are measured on the financial performance of the Group,
while the other members of the Operations Council are measured
on the financial performance of the Group and on the financial
performance of their own business line (EVPs) or region (COOs).
At the beginning of each year, based on a recommendation
by the CEO, the Board of Directors sets the target values of
the key performance indicators used in the short-term incentive,
in line with the annual business objectives.
The table below summarizes the key performance indicators
applicable to the CEO and the other members of the
Operations Council.
Group
results
Profitability
(bottom-line)
Growth
(top-line)
Efficient use
of capital
Cash generation
Business line
results
Profitability
(bottom-line)
Regions
results
Cash generation
Profitability
(bottom-line)
Cash generation
CEO
Group NPAT
25%
Group sales
25%
Heads of Corporate
Functions (SVPs)
Heads of business
lines (EVPs)
Heads of Regions
(COOs)
Group NPAT
25%
Group sales
25%
Group NPAT
25%
Group sales
25%
Group NPAT
25%
Group sales
25%
Group ROIC (organic)
25%
Group ROIC (organic)
25%
Group free cash
flow (organic)
25%
Group free cash flow
(organic)
25%
Business line profit
40%
Business line NWC
10%
Regional profit
40%
Regional NWC
10%
Remuneration reportSGS | 2023 Integrated Report
73
For each key performance indicator, a pay-out curve is defined according to the following principles:
• A threshold (minimum level of performance to trigger a pay-out, and below which the pay-out is zero), a target (expected level
of performance that triggers a pay-out equivalent to the target incentive), and a maximum (level of performance that triggers
the highest pay-out, and above which the pay-out is capped) are defined
• The lowest pay-out (triggered by the threshold performance) and the highest pay-out (triggered by the maximum performance)
are defined
• The pay-out for performances between threshold and target and between target and maximum are calculated by linear interpolation
The chart below shows the pay-out curves for the group net profit after taxes (NPAT), group sales, group return on invested capital (ROIC),
group free cash flow (FCF), business line profit, regional profit.
Bottom-line, top-line, ROIC and FCF performance (pay -out curve)
250%
200%
%
t
u
o
-
y
a
P
150%
100%
50%
0%
80%
100%
120%
200%
Performance %
The pay-out curve for regional and business line net working capital (NWC) is defined by the CEO at the beginning of the performance year
together with the objectives for each performance metric.
At the end of the performance period, the results for each key performance indicator are assessed against the pre-defined target and the
pay-out curve to determine a pay-out factor. The weighted average of the pay-out factors of each key performance indicator corresponds
to the overall financial performance pay-out factor.
An example of the calculation of the financial performance pay-out factor for an executive vice president is described in the chart below.
Financial performance pay-out factor for an executive vice president
Group NPAT
weight 25%
Group sales
weight 25%
Business net
working capital
10%
Business profit
weight 40%
Financial
performance
pay-out
Performance
96%
Performance
110%
Performance
100%
Performance
102%
Pay-out
80%
80%
x 0.25
Pay-out
150%
150%
x 0.25
Pay-out
100%
100%
x 0.10
Pay-out
110%
110%
x 0.40
111.5%
Leadership multiplier
The members of the Operations Council are also rewarded for the demonstration of leadership behaviors in line with the SGS competency
model and with the SGS sustainability ambitions.
The leadership multiplier is determined for each executive based on an assessment of their behaviors against: i) the leadership competency
model of SGS in the areas of innovation, people management and change management, and ii) environmental, social and governance (ESG)
metrics aligned with the Group’s sustainability ambitions. These criteria encompass a broader range of values than the three metrics used for
the determination of vesting of the long-term incentives (LTI). The assessment of the CEO is conducted at year end by the Board of Directors,
while the assessment of the other members of the Operations Council is conducted by the CEO and approved by the Remuneration
Committee. The assessment leads to a leadership multiplier that can range between 70% and 125%. Their final incentive payout factor
is calculated by multiplying the financial performance pay-out factor by the leadership multiplier.
Financial statementsCorporate governanceRemuneration reportManagement reportNon-financial statementsAppendixSGS | 2023 Integrated Report
74
An example of the calculation of the final incentive amount for an OC member is described in the chart below.
Final incentive amount for an OC member
Target
incentive
Financial performance
pay-out factor
Leadership
multiplier
Final incentive
amount
CHF 100 000
111.5%
120%
CHF 133 800
Settlement of the short-term incentive
Once the final incentive amount is determined, it is settled 50%
in cash and 50% in restricted shares, to strengthen the link
between the compensation of executives and the interests of
the shareholders.
The cash component is paid and the restricted shares are allocated
after the shareholders’ approval at the Annual General Meeting
of the following year.
The number of restricted shares to be allocated is determined by
dividing 50% of the final incentive amount by the average closing
share price during the 20-day period following the payment of
the dividends after the Annual General Meeting, and the result is
rounded up to the nearest integer. They are restricted for a period
of three years during which they may not be sold, transferred or
pledged. In case of change of control or liquidation or termination
of employment following retirement, death or disability, the
restriction period of the shares lapses. The shares remain
restricted in all other instances.
The Group does not issue new shares to be allocated to
employees for equity-based compensation plans, but uses
treasury shares instead, acquired through share buyback programs.
Detailed information on the overhang and burn rate are disclosed
in note 29 of the consolidated financial statements.
Termination of employment
In case of termination of employment for any reason except for
cause, if the last day of employment is on or after 31 December
of the respective business year, the executive is eligible for the
full annual incentive payment. The annual incentive is paid fully
in cash after the approval of the Annual General Meeting.
In case of termination for cause before the date of payment,
irrespective of whether the last day of employment is before or
after 31 December of the respective business year, the executive
has no entitlement to receive any annual incentive payment.
In case of resignation, and if the last day of employment is before
31 December of the respective business year, the participant has
no entitlement to receive any annual incentive payment.
If employment ceases due to death or disability before 31 December
of the respective business year, the annual incentive payment is
calculated pro-rata (calendar days) based on the Board of Directors’
best estimate of the performance on the last day of employment.
The annual incentive is paid fully in cash shortly after the last day
of employment, as soon as administratively possible.
In case of retirement or termination not for cause before
31 December of the respective business year, the annual incentive
payment is calculated pro-rata (calendar days) based on actual
performance at the end of the performance year, and it is paid
fully in cash after the approval of the Annual General Meeting.
The table below summarizes the rules in case of termination
of employment.
Clawback provisions
A clawback policy applies to any variable remuneration awarded to the
members of the Operations Council. Under this policy, the Company
may reclaim the value of any variable incentives paid, in cash or
shares, in the following cases: i) any fraud, negligence or intentional
misconduct was a significant contributing factor to the Company
having to restate all or a portion of its financial statements; ii) a serious
violation of the SGS internal regulations and/or Code of Integrity; iii)
any violation of law within the scope of employment at the Company.
Last day of employment
before 31 December
Last day of employment
between 31 December and AGM
Incentive
opportunity
(target
incentive)
Incentive
pay-out
Payment
date
Payment
vehicle
Incentive
opportunity
(target
incentive)
Incentive
pay-out
Payment
date
Payment
vehicle
Termination
reason
Termination
for cause
Zero
Zero
Resignation
Zero
Zero
–
–
–
–
Death or
disability
Retirement,
termination
not for cause
Pro-rated
on calendar
days
Pro-rated
on calendar
days
Based
on estimated
performance
Shortly after
the termination
date
100%
cash
Based
on actual
performance
After AGM
approval
100%
cash
Zero
Zero
–
–
Full
Full
Full
Based
on actual
performance
After AGM
approval
100%
cash
Based
on actual
performance
Shortly after
the termination
date
100%
cash
Based
on actual
performance
After AGM
approval
100%
cash
Remuneration reportSGS | 2023 Integrated Report 3.2.4. Long-term variable remuneration
The CEO and the other members of the Operations Council are
eligible for a performance-related long-term incentive (the ‘long-
term incentive’). The long-term incentive is designed to motivate the
leadership team to achieve the long-term objectives of the Group
and to align their remuneration with the interests of the shareholders.
The long-term incentive consists of a grant of performance share
units (PSUs).
The value of the grants, defined as the number of PSUs granted
multiplied by the average share price of the 20 trading days preceding
the grant date, is expressed as a percentage of the annual base salary
and varies depending on the job.
The value of the grant is 167% of the annual base salary for the CEO,
and between 100% and 133% of the annual base salary for the other
members of the Operations Council.
The table below summarizes the value of the incentive opportunity
for the CEO and other OC members.
Incentive frequency
Minimum incentive opportunity value
as % of base salary
as % of target incentive opportunity
Target incentive opportunity value
as % of base salary
Maximum incentive opportunity value
as % of target incentive opportunity
as % of base salary
CEO
Annual
Other Operations
Council members
Annual
0%
0%
0%
0%
167%
100%–133%
150%
250%
150%
150%–200%
The PSUs granted under the long-term incentive vest after a
performance period of three years, conditionally upon the achievement
of pre-defined performance objectives and subject to continuity
of employment of the beneficiaries during the vesting period.
The long-term incentive plan is reviewed annually to ensure its
alignment with the Group’s business strategy and value to society
ambitions. No change in the structure of the long-term incentive
plan was implemented in 2023.
Relative TSR vesting formula
75
Performance conditions
The performance conditions of the long-term incentive consist
of the following key performance indicators:
• Relative Total shareholder return (rTSR1) (relative SGS
performance compared with the peer group), accounting
for 80% of the incentive opportunity
• Environmental, social and governance (ESG) metrics,
accounting for 20% of the incentive opportunity
The TSR of the Group will be compared to the TSR of a group of
seven peer companies, selected by the Board of Directors as the
main listed competitors in the testing, inspection and certification
industry. The intention of indexing performance against a peer group
of companies is to reward the relative performance of the Company,
where market factors that are outside the control of the executives
are neutralized.
The list of the peer group companies is illustrated in the table below.
ALS
Intertek
Applus+
Mistras
Bureau Veritas Eurofins
Team
The vesting level for the TSR is defined as follows: 150% vesting
if SGS is ranked first among the eight companies (including SGS)
composing the peer group, 125% vesting if SGS is ranked second,
100% vesting if SGS is ranked third, 50% vesting if SGS is ranked
fourth, and zero vesting if SGS is ranked fifth or worse.
The ESG metrics have been selected by the Board of Directors
in line with the Company’s sustainability ambitions, in the areas
of diversity and inclusion (women in leadership positions), health
and safety (lost time incident rate) and environment protection
(greenhouse gas (GHG) emissions).
The vesting level for the ESG metrics is defined based on the
Company’s achievements against pre-defined performance levels
and can range between zero (in case the performance of two
of the metrics is below target) and 150% (in case the performance
of all three metrics is at maximum or above).
The graphics below summarize the key performance indicators
of the long-term incentive and their vesting levels:
%
g
n
i
t
s
e
V
150%
125%
100%
75%
50%
25%
0%
8th
7th
6th
5th
4th
3rd
2nd
1st
ESG metrics vesting formula
Relative TSR Ranking
%
g
n
i
t
s
e
V
150%
125%
100%
75%
50%
25%
0%
2 or all 3 metrics
below target
2 metrics at target
all 3 metrics at target
(or 2 metrics above target)
all 3 metrics at max
1. Total shareholder return: (Ending stock price – Beginning stock price) + Sum of all dividends received during the measurement period.
Financial statementsCorporate governanceRemuneration reportManagement reportNon-financial statementsAppendixSGS | 2023 Integrated Report
76
The overall vesting level of the PSUs granted will be calculated as a weighted average of each of the respective vesting levels for relative
TSR (80%) and ESG metrics (20%), and ranges between 0% and 150%.
Settlement of the long-term incentive
At the end of the vesting period, the PSUs vest, subject to the performance conditions and the continuity of employment condition,
and shares are allocated to the participants based on the overall vesting level.
The number of shares to be allocated at vesting is calculated by multiplying the number of PSUs granted by the overall vesting level,
the result being rounded up to the nearest integer.
Number of
PSUs granted
Overall vesting
level (0-150%)
Number of shares
allocated at vesting
The Group does not issue new shares to be allocated to employees for equity-based compensation plans, but uses treasury shares instead,
acquired through share buyback programs. Detailed information on the overhang and burn rate is disclosed in note 29 of the consolidated
financial statements.
Termination of employment
In case of termination of employment, all unvested PSUs are as a rule immediately forfeited without value and without any compensation,
except in the following cases:
• In case of termination of employment as a result of disability or retirement, unvested PSUs vest on a pro-rata basis, based on the number
of full months of the vesting period that have expired until the termination date. The shares are allocated after the regular vesting date
and the vesting level is determined based on the performance during the entire regular performance period. There is no early allocation
of the shares
• Upon termination of employment as a result of death, unvested PSUs will vest immediately on a pro rata basis, based on the number of
full months of the vesting period that have expired until the termination date. The vesting level is based on an estimation of performance
by the Board of Directors
• In case of company-initiated termination not for cause, if the termination date occurs during the last 12 months of the vesting period,
and subject to the Board of Directors approval, PSUs unvested at the termination date may vest on a pro-rata basis, based on the
number of full months that have expired during the vesting period
• In the event of a corporate transaction or liquidation, unvested PSUs vest immediately. The vesting level is based on an estimation
of performance by the Board of Directors
The table below summarizes the vesting rules in case of termination of employment.
Termination reason
Vesting rule
Vesting time and shares allocation
Vesting level
Retirement or disability
Vesting on a pro-rata basis
At regular vesting date
Based on actual performance
Death
Vesting on a pro-rata basis
Immediate
Corporate transaction
or liquidation
Full vesting
Immediate
Based on an estimation of performance
by the Board of Directors
Based on an estimation of performance
by the Board of Directors
Other reasons1
Forfeiture
–
–
1.
In case of company-initiated termination not for cause, if the termination date occurs during the last 12 months of the vesting period, and subject to the Board of Directors approval,
PSUs unvested at the termination date may vest on a pro-rata basis, based on the number of full months that have expuired during the vesting period.
Malus and clawback provisions
A malus and clawback policy applies to any long-term incentive grant awarded to the members of the Operations Council. Under this policy,
the Company may forfeit any unvested equity compensation and/or reclaim the value of any vested equity compensation granted under
a long-term incentive plan, in the following cases: i) any fraud, negligence or intentional misconduct was a significant contributing factor
to the company having to restate all or a portion of its financial statements; ii) a serious violation of the SGS internal regulations and/or Code
of Integrity; iii) any violation of law within the scope of employment at the Company.
3.2.5. Changes to the long-term incentive plan
The Remuneration Committee, also considering market practices and aiming to enhance alignment with shareholders’ interests, has decided
to change the performance indicators for the next plans. While the focus on ESG objectives is maintained, the relative weight of the relative
TSR is reduced, and a new performance indicator, EPS growth, is added to the plan. The reason for this change is on the one hand to reduce
the risk of significant differences in the vesting level caused by small differences in TSR performance, given the small number of competitors
in the peer group and the large relative weight of the performance indicator, and on the other hand, to include in the plan a performance
indicator aligned with the long-term interests of the shareholders but closer to management’s line of sight. More details on the 2024
long-term incentive plan will be disclosed in the 2024 remuneration report.
Remuneration reportSGS | 2023 Integrated Report 77
3.2.6. Remuneration mix
The part of remuneration at risk (short-term incentive and long-term incentive) for the CEO represents, at target, 73% of their total
remuneration. The part of remuneration settled in equity instruments (restricted shares and PSUs) represents, at target, 59% of their
total remuneration.
For the other members of the Operations Council, the part of remuneration at risk represents, on average, 64% of their total remuneration.
The part of remuneration settled in equity instruments represents, on average, 50% of their total remuneration.
The part of the fixed remuneration linked to benefits is not considered in this analysis.
The charts below show the remuneration mix for the CEO and the other members of the Operations Council in three cases: at minimum
(both short-term and long-term incentives at zero pay-out), at target (both short-term and long-term incentives at 100% pay-out) and at
maximum (both short-term and long-term incentives at maximum pay-out).
Remuneration mix for the CEO and other Operations Council members in three cases (%)
CEO
Other Operations Council members (on average)
100
90
80
70
60
50
40
30
20
10
0
Minimum
Target
Maximum
100
90
80
70
60
50
40
30
20
10
0
Minimum
Target
Maximum
Base salary (cash)
Short-term incentive (cash)
Short-term incentive (restricted shares)
Long-term incentive (PSUs)
3.2.7. Shareholding ownership guidelines
A shareholding ownership guideline (SOG) in force since 2015, requires the members of the Operations Council to own at least a certain
multiple of their annual base salary in SGS shares, as follows:
• CEO: three times the annual base salary
• Other members of the Operations Council: two times the annual base salary
In the event of a substantial drop in the share price, the Board of Directors has the discretion to modify the SOG.
The determination of equity amounts against the SOG is defined to include vested shares allocated under the short-term and long-term incentive
plans and other shares that are owned by the Operations Council member directly or indirectly (by ‘closely related persons’).
The Remuneration Committee reviews compliance with the SOG on an annual basis. Until the minimum requirement is met, 25% of the shares
allocated under the short-term incentive plan and all shares allocated upon vesting of the PSUs under the long-term incentive plan are blocked.
3.2.8. Employment contracts
Employment contracts of the Operations Council members have no fixed term and can be terminated at any time by either party, provided a notice
period of six months is respected. For the CEO, the notice period is 12 months. The executive contracts do not provide for any severance payments
(beyond the minimum legally required in the country of employment) and are subject to applicable legislation in the country of employment.
Financial statementsCorporate governanceRemuneration reportManagement reportNon-financial statementsAppendixSGS | 2023 Integrated Report 78
3.2.9. Timeline of remuneration
The following chart outlines the timeline of payment of each remuneration element that was earned in 2023:
• The annual base salary is paid during 2023
• The cash portion of the short-term incentive is paid shortly after the 2024 Annual General Meeting
• The share portion of the short-term incentive is allocated in Q2 2024 and will be unblocked in Q2 2027
• The PSUs granted under the long-term incentive in 2021 were earned over the performance period from 2021 to 2023, and vested, subject
to performance conditions and continuity of employment, on 1 February 2024; shares will be allocated to the participants in Q1 2024
• The PSUs granted under the long-term incentive in 2023 will be earned over the performance period from 2023 to 2025 and will vest,
subject to performance conditions and continuity of employment, in Q1 2026
Timeline of remuneration
Timeline (performance period, time of payment)
2021 Long-term
incentive grant
2022 Long-term
incentive grant
Vesting
50% in
restricted
shares
50% in
cash
2023 Long-term
incentive grant
Short-term
incentive
Annual base
salary and
benefits
Vesting
Vesting
Performance KPIs
Relative TSR (80%)
ESG metrics (20%)
Unblocking
Group sales (25%)
Group NPAT (25%)
Role specific profit, cash generation,
efficient use of capital (50%)
Multiplied by leadership multiplier
Fixed
remuneration
2021
2022
2023
2024
2025
2026
2027
Shareholding Ownership Guideline
Remuneration reportSGS | 2023 Integrated Report
79
4. Remuneration awarded to the Board of Directors
4.1. AGM vote on remuneration
The table below summarizes the vote of the AGM on the remuneration of the members of the Board of Directors.
AGM
Remuneration element
Vote type
Period
Approved amount
CHF thousand
Actual amount
CHF thousand
2023
Aggregate total remuneration
Prospective
AGM 2023 to AGM 2024
2 700
2 655
The table below summarizes the proposed amount for the vote at the 2024 AGM.
AGM
Remuneration element
Vote type
Period
2024
Aggregate total remuneration
Prospective
AGM 2024 to AGM 2025
Proposed amount
CHF thousand
2 700
4.2. Details of remuneration (audited)
For the mandate from Annual General Meeting 2023 to 2024, the annual board retainer is CHF 665 000 for the Chair of the Board and
CHF 200 000 for the other Board of Directors members (unchanged from prior mandate). The Chair of the Audit Committee is entitled
to an additional fee of CHF 70 000; Directors serving as Audit Committee members are entitled to an additional fee of CHF 50 000
(unchanged from prior mandate). The Chair of the Remuneration Committee is entitled to an additional fee of CHF 40 000; Directors
serving as Remuneration Committee members are entitled to an additional fee of CHF 30 000 (unchanged from prior mandate). The Chair
of the Sustainability Committee is entitled to an additional fee of CHF 30 000; Directors serving as Sustainability Committee members
and Directors serving on the Nomination Committee are entitled to an additional fee of CHF 30 000 (unchanged from prior mandate).
(CHF thousand, gross)
Chairmanship
Membership
Board
Retainer
Audit
Committee fee
Remuneration
Committee fee
Nomination
Committee fee
Sustainability
Committee fee
665
200
70
50
40
30
–
30
30
30
Each board member receives 25% of the annual board retainer in the form of shares restricted for a period of three years ending on the third
anniversary of their award; the remaining portion is settled in cash. The cash part is paid partly in the current fiscal year and partly in the next
fiscal year, on a pro-rata temporis basis. The restricted shares are awarded in the current fiscal year, after the Annual General Meeting during
which the board member is elected to their position.
The total remuneration of the Board of Directors for the mandate from Annual General Meeting 2022 to 2023 was equal to CHF 2 655 000,
within the amount approved by the Annual General Meeting 2022 (CHF 2 700 000).
The table below details the remuneration elements and the settlement vehicle of the Directors for the mandate Annual General Meeting 2023
to 2024.
(CHF thousand, gross) Chairmanship
Board
membership
Audit
Committee
membership
Remuneration
Committee
membership
Nomination
Committee
membership
Sustainability
Committee
membership
Total
remuneration
To be
settled
in cash
To be settled
in restricted
shares1
Calvin Grieder
Sami Atiya
Phyllis Ka Yan Cheung
Ian Gallienne
Tobias Hartmann
Shelby R. du Pasquier
Jens Riedl
Korey Sorenson
Janet Vergis
Total
665
–
200
200
200
200
200
200
200
200
–
–
–
–
50
–
–
70
50
665
1 600
170
1. Restricted shares were granted during fiscal year 2023.
–
40
–
30
–
–
–
30
–
100
–
30
–
30
–
–
–
–
–
60
–
–
30
–
–
–
–
30
–
60
665
270
230
260
250
200
200
330
250
500
220
180
210
200
150
150
280
200
165
50
50
50
50
50
50
50
50
2 655
2 090
565
Financial statementsCorporate governanceRemuneration reportManagement reportNon-financial statementsAppendixSGS | 2023 Integrated Report 80
The table below details the remuneration elements and the settlement vehicle of the Directors for the mandate Annual General Meeting
2022 to 2023.
(CHF thousand, gross)
Chairmanship
Board
membership
Audit
Committee
membership
Remuneration
Committee
membership
Nomination
Committee
membership
Sustainability
Committee
membership
Total
remuneration
To be
settled
in cash
To be settled
in restricted
shares1
Calvin Grieder
Sami Atiya
Phyllis Ka Yan Cheung
Paul Desmarais, Jr.
Ian Gallienne
Tobias Hartmann
Shelby R. du Pasquier
Korey Sorenson
Janet Vergis
Total
665
–
–
–
–
–
–
–
–
–
200
200
200
200
200
200
200
200
–
–
–
–
–
50
–
70
50
–
40
–
–
30
–
–
30
–
665
1 600
170
100
1. Restricted shares were granted during fiscal year 2022.
–
30
–
–
30
–
–
–
–
60
–
–
30
–
–
–
–
30
–
60
665
270
230
200
260
250
200
330
250
500
220
180
150
210
200
150
280
200
165
50
50
50
50
50
50
50
50
2 655
2 090
565
The remuneration of the Board of Directors is subject to employer social charges according to Swiss legislation.
The following table details the remuneration elements granted to each of the Directors for their tenure in fiscal year 2023. It includes both
pro-rata temporis elements of remuneration for the mandate Annual General Meeting 2022 to 2023 and pro-rata temporis elements of
remuneration for the mandate Annual General Meeting 2023 to 2024.
(CHF thousand, gross)
Calvin Grieder
Sami Atiya
Phyllis Ka Yan Cheung
Paul Desmarais, Jr.1
Ian Gallienne
Tobias Hartmann
Shelby R. du Pasquier
Jens Riedl2
Korey Sorenson
Janet Vergis
Total
Board
retainer
Representation
fees
Committee
fees
Total
remuneration
Cash
Restricted
shares value3
Restricted
shares NB
Employer
social charges
667
201
201
37
201
201
201
164
201
201
2 275
–
–
–
–
–
–
–
–
–
–
–
70
30
–
60
50
–
–
130
50
390
667
271
231
37
261
251
201
164
331
251
502
221
181
37
211
201
151
114
281
201
165
2 003
50
50
–
50
50
50
50
50
50
607
607
–
607
607
607
607
607
607
10
23
19
2
22
–
17
14
27
21
2 665
2 100
565
6 859
155
1. Until the AGM 2023.
2. As of the AGM 2023.
3. Based on the average closing share price of the 20 trading days preceding the grant date.
The following table details the remuneration elements granted to each of the Directors for their tenure in fiscal year 2022. It includes both
pro-rata temporis elements of remuneration for the mandate Annual General Meeting 2021 to 2022 and pro-rata temporis elements of
remuneration for the mandate Annual General Meeting 2022 to 2023.
Board
retainer
Representation
fees
Committee
fees
Total
remuneration
(CHF thousand, gross)
Calvin Grieder
Sami Atiya
Phyllis Ka Yan Cheung1
Paul Desmarais, Jr.
Ian Gallienne
Tobias Hartmann
Shelby R. du Pasquier
Korey Sorenson
Janet Vergis
Total
656
197
163
197
197
197
212
288
197
2 304
–
–
–
–
–
–
–
–
–
–
–
60
23
–
59
49
–
98
49
656
257
186
197
256
246
212
386
246
338
2 642
1 921
Cash
493
209
138
149
208
198
115
213
198
Restricted
shares value2
Restricted
shares NB3
Employer
social charges
163
48
48
48
48
48
97
173
48
721
65
19
19
19
19
19
38
68
19
10
22
16
14
22
–
18
32
21
285
155
1. As of the AGM 2022.
2. Based on the average closing share price of the 20 trading days preceding the grant date.
3. Prior to the share split implemented on 12 April 2023.
The overall remuneration paid to the Board of Directors in 2023 is in line with the overall remuneration paid in 2022.
Remuneration reportSGS | 2023 Integrated Report 4.3. Other compensation, loans and credit facilities (audited)
In 2023, no other payment was made to any member or former member of the Board of Directors (unchanged from prior year).
As at 31 December 2023, no loan, credit or outstanding advance was due to the Group from members or former members of the Board of
Directors or related parties (unchanged from prior year).
4.4. Shares and options held (audited)
The following table shows the shares held by members of the Board of Directors as at 31 December 2023:
81
Name
Calvin Grieder
Sami Atiya
Phyllis Ka Yan Cheung
Ian Gallienne
Tobias Hartmann
Shelby R. du Pasquier
Jens Riedl
Korey Sorenson
Janet Vergis
No options were held by members of the Board of Directors as at 31 December 2023.
The following table shows the shares held by members of the Board of Directors as at 31 December 2022:
Name
Calvin Grieder
Sami Atiya
Phyllis Ka Yan Cheung
Paul Desmarais, Jr.
Ian Gallienne
Tobias Hartmann
Shelby R. du Pasquier
Korey Sorenson
Janet Vergis
Shares
14 128
3 382
1 082
1 082
1 082
2 257
607
3 207
1 082
Shares1
485
111
19
56
20
19
66
104
19
1. Prior to share split implemented on 12 April 2023.
No options were held by members of the Board of Directors as at 31 December 2022.
4.5. Gender representation (audited)
For the mandate from AGM 2023 to AGM 2024, the gender representation at the Board of Directors is as per the below table.
Period
AGM 2023 to AGM 2024
Female
Male
Number
%
Number
%
3
33.3%
6
66.7%
4.6. Other activities (audited)
The functions of the members of the Board of Directors in other undertakings are disclosed in Section 3.1 of the Corporate Governance
section of this report.
Financial statementsCorporate governanceRemuneration reportManagement reportNon-financial statementsAppendixSGS | 2023 Integrated Report
82
5. Remuneration awarded to the Operations Council members
This section sets out the remuneration that was paid to the Operations Council as a whole, to the Operations Council members who make
up senior management and to the CEO in 2023. All amounts disclosed in this section include the short-term incentive cash amount and
restricted shares that will be granted in Q2 2024 with respect to performance in 2023 (disclosure according to the accrual principle).
5.1. AGM vote on remuneration
The table below summarizes the votes of the AGM on the remuneration of the members of the Operations Council relevant to 2023.
AGM
Remuneration element
Vote type
Period
2022
2023
2023
2023
Aggregate fixed remuneration
Prospective
Calendar year 2023
Aggregate short-term variable remuneration Retrospective Performance year 2022
(paid after the 2023 AGM)
Aggregate long-term variable remuneration Prospective
Calendar year 2023
Aggregate fixed remuneration
Prospective
Calendar year 2024
Approved amount
CHF thousand
Actual amount
CHF thousand
12 500
4 432
13 500
9 728
4 432
13 0911
12 500 Will be reported
in the 2024
Remuneration
report
1. Value of the Performance Share Units at the time of their grant (CHF thousand 8 727), assessed at the maximum possible vesting level under the plan rules (150%).
The table below summarizes the proposed amounts for the vote at the 2024 AGM.
AGM
Remuneration element
Vote type
Period
2024
Aggregate short-term variable remuneration Retrospective Performance year 2023
(paid after the 2024 AGM)
2024
2024
2024
Aggregate long-term variable remuneration Prospective
Calendar year 2024 (transition)1
Aggregate long-term variable remuneration Prospective
Calendar year 2025
Aggregate fixed remuneration
Prospective
Calendar year 2025
Proposed amount
CHF thousand
4 956
12 000
12 000
10 500
1. As explained in Section 2.3.3. of this report, the prospective vote on the aggregate long-term variable remuneration will be aligned to the next fiscal year.
5.2. Fixed remuneration (audited)
The table below summarizes the fixed remuneration paid to the Operations Council, senior management and the Chief Executive Officer
in 2023.
(CHF thousand, gross)
Operations Council (including senior management)
Base
salary
Other cash
allowances
Contributions
to pension plans
Other contributions
and benefits in kind
Total fixed
remuneration
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
Senior management (including CEO)
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
Chief Executive Officer
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
7 753
–
–
7 753
2 444
–
–
2 444
1 200
–
–
1 200
973
–
–
973
190
–
–
190
63
–
–
63
–
755
–
755
–
284
–
284
–
116
–
116
–
292
–
292
–
24
–
24
–
9
–
9
8 726
1 047
–
9 773
2 634
308
–
2 942
1 263
125
–
1 388
Remuneration reportSGS | 2023 Integrated Report 83
The table below summarizes the fixed remuneration paid to the Operations Council, senior management and the CEO in 2022.
(CHF thousand, gross)
Operations Council (including senior management)
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
Senior management (including CEO)
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
Chief Executive Officer
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
Base
salary
Other cash
allowances
Contributions
to pension plans
Other contributions
and benefits in kind
Total fixed
remuneration
7 499
–
–
7 499
2 325
–
–
2 325
1 200
–
–
1 200
867
–
–
867
142
–
–
142
64
–
–
64
–
748
–
748
–
271
–
271
–
112
–
112
–
343
–
343
–
21
–
21
–
8
–
8
8 366
1 091
–
9 457
2 467
292
–
2 759
1 264
120
–
1 384
The increase in fixed remuneration compared with 2022 reflects the change in the pay-mix decided by the Remuneration Committee for
some of the Operations Council members.
5.3. Short-term variable remuneration (audited)
The short-term variable remuneration of the members of the Operations Council is determined by the achievement of financial targets and by
their leadership behaviors.
In 2023, the achievement of financial targets at group level, in the businesses and in the regions ranged from 63.8% to 126.7% (2022: 74.8%
to 123.6%).
The chart below summarizes the 2023 performance achievements against targets for the financial objectives (sales, profitability, cash
generation and capital efficiency) used in the short-term incentive.
2023 performance achievements against targets
Performance KPI
Pay-out %
Threshold
Target
Maximum
Group sales
Group NPAT
Group ROIC
Group free cash flow
111.4%
55.8%
37.3%
93.8%
Regional and business profit
79.9% 0.0% 200.0%
Regional and business cash generation
87.0% 36.3% 154.6%
Avg
Min
Max
Achievement
Average achievement
Performance range
The overall short-term incentive pay-out amounts to 82.0% of the target incentive opportunity for the CEO (2022: 63.5%) and ranged from
48.3% to 142.7% of the target incentive opportunity for the other members of the Operations Council (2022: 49.4% to 113.1%). For the
purpose of the short-term incentive, targets and performance achievement are measured at constant currency exchange rates.
Financial statementsCorporate governanceRemuneration reportManagement reportNon-financial statementsAppendixSGS | 2023 Integrated Report 84
The table below details the 2023 short-term incentive for the CEO.
CEO 2023 STI pay-out
KPI description
Sales (CHF million) NPAT (CHF million)
ROIC (organic) (%)
FCF (CHF million)
Group financial KPIs
Pay-out
Target
Actual
Actual vs Target %
Pay-out %
Weight
Financial KPIs pay-out %
Leadership multiplier
Total pay-out %
Pay-out (CHF thousand, gross)
6 475
6 622
102.3%
111.4%
25%
606
553
91.2%
55.8%
25%
26
22
87.5%
37.3%
25%
612
604
98.8%
93.8%
25%
74.6%
110%
82.0%
984
The table below details the 2022 short-term incentive for the CEO.
CEO 2022 STI pay-out
KPI description
Target
Actual
Actual vs Target %
Pay-out %
Weight
Financial KPIs pay-out %
Leadership multiplier
Total pay-out %
Pay-out (CHF thousand, gross)
Sales (CHF million)
NPAT (CHF million)
ROIC (organic) (%)
FCF (CHF million)
Group financial KPIs
Pay-out
6 623
6 642
100.3%
100.8%
25%
630
588
93.3%
66.6%
25%
20.5
19.0
92.7%
63.4%
25%
677
507
74.8%
0.0%
25%
57.7%
110%
63.5%
762
In settlement of the equity portion of the short-term incentive 2023, SGS restricted shares will be allocated to the members of the Operations
Council in Q2 2024, after the approval of the total short-term incentive amount by the Annual General Meeting (in Q2 2023, 26 921 restricted shares
were granted in settlement of the equity portion of the short-term incentive 2022). The number of restricted shares to be allocated is calculated by
dividing the equity portion of the short-term incentive by the average closing price of the share during a 20-trading day period following the payment
of the dividends after the Annual General Meeting, rounded up to the nearest integer, and are restricted for a period of three years.
The table below summarizes the short-term variable remuneration awarded to the Operations Council, senior management and the CEO for the
2023 performance year, and its comparison with the incentive opportunity.
(CHF thousand, gross)
Operations Council (including senior management)
Minimum
Target
Maximum
Actual short-term
variable remuneration
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
Senior management (including CEO)
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
Chief Executive Officer
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
–
–
–
–
–
–
–
–
–
–
–
–
3 195
–
2 500
5 695
1 433
–
738
2 171
600
–
600
1 200
7 988
–
6 250
14 238
3 583
–
1 845
5 428
1 500
–
1 500
3 000
2 737
–
2 219
4 956
1 135
–
617
1 752
492
–
492
984
The total short-term remuneration amount will be submitted for approval to the Annual General Meeting of 2024, and the settlement for both
the cash and the equity part will be implemented shortly after.
The table opposite summarizes the short-term variable remuneration awarded to the Operations Council, senior management and the CEO
for the 2022 performance year, and its comparison with the incentive opportunity.
Remuneration reportSGS | 2023 Integrated Report (CHF thousand, gross)
Minimum
Target
Maximum
Operations Council (including senior management)
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
Senior management (including CEO)
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
Chief Executive Officer
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
–
–
–
–
–
–
–
–
–
–
–
–
3 106
–
3 106
6 212
1 080
–
1 080
2 160
600
–
600
1 200
7 765
–
7 765
15 530
2 700
–
2 700
5 400
1 500
–
1 500
3 000
85
Actual short-term
variable remuneration
2 216
–
2 216
4 432
662
–
662
1 324
381
–
381
762
The total 2022 short-term remuneration amount was approved by the Annual General Meeting of 2023, and the settlement for both the cash
and the equity part were implemented shortly after.
The increase in short-term variable remuneration compared to 2022 reflects the higher pay-out achieved against the financial targets in 2023
compared to 2022.
5.4. Long-term variable remuneration
5.4.1. 2023-2025 PSUs long-term incentive grant (audited)
In 2023, the Group implemented a long-term incentive plan for the performance period 2023-2025. Under the long-term incentive plan 2023-
2025, a total of 105 045 performance share units (PSUs) were granted to the members of the Operations Council; this includes 41 153 PSUs
granted to senior management, of which 24 074 PSUs granted to the CEO.
The PSUs awarded under the long-term incentive 2023-2025 vest after the three-year performance period 2023-2025, in early 2026, subject to
the performance conditions (relative total shareholder return and environmental, social and governance metrics; see Section 3.2.4. of this report for
detailed explanations on the performance conditions) and to continuity of employment of the beneficiaries during the vesting period.
The number of PSUs granted is calculated dividing the value of the grant, as disclosed in Section 3.2.4. of this report, by the average closing price
of the share during a 20-trading day period preceding the grant date, rounded up to the nearest integer.
In 2022, the Group implemented a long-term incentive plan for the performance period 2022-2024. Under the long-term incentive plan 2022-2024,
a total of 3 296 PSUs1 were granted to the members of the Operations Council; this includes 1 301 PSUs granted to senior management, of which
769 granted to the CEO.
A cash long-term incentive plan was implemented in 2022 for one Operations Council member who was newly appointed, as part of his total
compensation. This incentive mirrors the long-term incentive PSUs plan 2021-2023, with the exact same vesting and performance conditions,
from the date of the appointment to 31 December 2023.
The table below summarizes the value of the long-term variable remuneration awarded to the Operations Council, senior management and the
CEO in 2023.
Number of PSUs
granted2
Total value of the grant3
(CHF thousand)
Operations Council (including senior management)
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
Senior management (including CEO)
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
Chief Executive Officer
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
–
–
105 045
105 045
–
–
41 143
41 143
–
–
24 074
24 074
–
–
8 727
8 727
–
–
3 418
3 418
–
–
2 000
2 000
1. Prior to the share split implemented on 12 April 2023.
2. After the share split implemented on 12 April 2023.
3.
The value of the grant for the equity part is defined as the number of PSUs granted multiplied by the average closing price of the share during a 20-trading day period preceding the grant date.
Financial statementsCorporate governanceRemuneration reportManagement reportNon-financial statementsAppendixSGS | 2023 Integrated Report 86
The table below summarizes the value of the long-term variable remuneration awarded to the Operations Council, senior management and
the CEO in 2022.
Number of PSUs
granted1
Total value of the grant2
(CHF thousand)
Operations Council (including senior management)
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
Senior management (including CEO)
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
Chief Executive Officer
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
–
–
3 296
3 296
–
–
1 301
1 301
–
–
769
769
618
–
8 577
9 195
–
–
3 386
3 386
–
–
2 001
2 001
1.
2.
Prior to the share split implemented on 12 April 2023.
The value of the grant for the equity part is defined as the number of PSUs granted multiplied by the average closing price of the share during a 20-trading day period preceding the grant date.
5.4.2. Vesting of the 2021-2023 PSUs and cash long-term incentive plans
On 1 February 2024, the 2021-2023 PSUs and cash long-term incentive plans vested, according to the vesting and performance conditions.
The assessment of the performance conditions has been performed by the Board of Directors, based on the recommendation of the
Remuneration Committee.
The charts below show the achievements on relative TSR and ESG metrics.
Relative TSR
%
g
n
i
t
s
e
V
150%
125%
100%
75%
50%
25%
0%
8th
7th
6th
5th
4th
3rd
2nd
1st
Relative TSR Ranking
ESG metrics
%
g
n
i
t
s
e
V
150%
125%
100%
75%
50%
25%
0%
2 or all 3 metrics
below target
2 metrics at target
all 3 metrics at target
(or 2 metrics above target)
all 3 metrics at max
Remuneration reportSGS | 2023 Integrated Report
87
The table below presents the details of the vesting.
Relative TSR
ESG metrics
Total
GHG Emissions
Lost Time Incident Rate
Women in leadership
Weight
80%
20%
100%
Vesting level
0%
150%
30%
The table below details the vesting of the 2021-2023 PSUs and cash long-term incentive plan for the Operations Council, the senior
management and the CEO.
Number of PSUs
granted in 20211
Value at grant2
(CHF thousand)
Number of PSUs
outstanding at vesting date1
Number of
shares allocated
Value at vesting3
(CHF thousand)
Operations Council (including senior
management)
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
Senior management (including CEO)
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
Chief Executive Officer
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
–
–
150 075
150 075
–
–
61 550
61 550
–
–
37 025
37 025
1 000
–
16 216
17 216
–
–
6 651
6 651
–
–
4 001
4 001
–
–
137 325
137 325
–
–
61 550
61 550
–
–
37 025
37 025
–
–
41 202
41 202
–
–
18 466
18 466
–
–
11 108
11 108
289
–
3 304
3 593
–
–
1 481
1 481
–
–
891
891
1. Restated after the share split of implemented on 12 April 2023.
2. For the equity part: based on the average closing share price of the 20 trading days preceding the grant date.
3. For the equity part: based on the closing share price at vesting date.
5.5. Total remuneration (audited)
The tables below present all components of the remuneration earned in 2023 and 2022 by the Operations Council, senior management and
the CEO. The employer social charges are reported separately in the last column of the table.
Total remuneration 2023
(CHF thousand, gross)
Total fixed
remuneration
Total short-term
variable
remuneration
Total
remuneration
before LTI
Total long-term
variable
remuneration
Total
remuneration
Employer
social
charges
Operations Council (including senior management)1
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
Senior management (including CEO)2
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
Chief Executive Officer
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
1. 17 FTE (Full-Time Equivalent).
2. 3 FTE.
8 726
1 047
–
9 773
2 634
308
–
2 942
1 263
125
–
1 388
2 737
–
2 219
4 956
1 135
–
617
1 752
492
–
492
948
11 463
1 047
2 219
14 729
3 769
308
617
4 694
1 755
125
492
2 372
–
–
8 727
8 727
–
–
3 418
3 418
–
–
2 000
2 000
11 463
1 047
10 946
23 456
–
1 222
–
1 222
3 769
308
4 035
8 112
1 755
125
2 492
4 372
–
312
–
312
–
156
–
156
Financial statementsCorporate governanceRemuneration reportManagement reportNon-financial statementsAppendixSGS | 2023 Integrated Report 88
Total remuneration 2022
(CHF thousand, gross)
Total fixed
remuneration
Total short-term
variable
remuneration
Total
remuneration
before LTI
Total long-term
variable
remuneration
Total
remuneration
Employer
social
charges
Operations Council (including senior management)1
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
Senior management (including CEO)2
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
Chief Executive Officer
Cash (including allowances)
Contributions and benefits in kind
Equity
Total
1. 18 FTE (Full-Time Equivalent).
2. 3 FTE.
8 366
1 091
–
9 457
2 467
292
–
2 759
1 264
120
–
1 384
2 216
–
2 216
4 432
662
–
662
1 324
381
–
381
762
10 582
1 091
2 216
13 889
3 129
292
662
4 083
1 645
120
381
2 146
618
–
8 577
9 195
–
–
3 386
3 386
–
–
2 001
2 001
11 200
1 091
10 793
23 084
–
1 390
–
1 390
3 129
292
4 048
7 469
1 645
120
2 382
4 147
–
418
–
418
–
220
–
220
5.6. Remuneration mix (audited)
In 2023, the part of remuneration at risk (short-term incentive and long-term incentive) for the CEO represents 71% of the total remuneration
(2022: 70%); the part of remuneration settled in equity instruments (restricted shares and PSUs) represents 60% of the total remuneration
(2022: 60%). For the other members of the Operations Council, the part of remuneration at risk represents, on average, 62% of the total
remuneration (2022: 62%); the part of remuneration settled in equity instruments represents, on average, 49% of the total remuneration
(2022: 51%).
The part of the fixed remuneration linked to benefits is not considered in this analysis.
The charts below show the remuneration mix for the CEO and for the other members of the Operations Council in 2023 and 2022.
Remuneration mix of the CEO and other Operations Council members (%)
CEO
100
90
80
70
60
50
40
30
20
10
0
Other Operations Council members (on average)
100
90
80
70
60
50
40
30
20
10
0
2022
2023
2022
2023
Base salary (cash)
Short-term incentive (cash)
Short-term incentive (restricted shares)
Long-term incentive (PSUs)
Remuneration reportSGS | 2023 Integrated Report
89
5.7. Other compensation, loans and credit facilities (audited)
Severance payment for a total amount of CHF 194 334 was made in 2023 to one member of the Operations Council who left the Group
in 2023, according to the legislation in force in his country of employment (2022: no severance payments).
As at 31 December 2023, no loan, credit or outstanding advance was due to the Group from members or former members of the Operations
Council or related parties (unchanged from prior year).
5.8. Shares and options held (audited)
The following table shows the shares and restricted shares held by senior management as at 31 December 2023:
Name
F. Ng
G. Picaud
O. Merkt
Corporate responsibility
Chief Executive Officer
Chief Financial Officer (from 1 December 2023)
General Counsel and Chief Operating Officer
No options were held by senior management as at 31 December 2023.
Restricted shares
14 726
–
3 001
The following table shows the shares and restricted shares held by senior management as at 31 December 2022:
Name
F. Ng
D. de Daniel
O. Merkt
Corporate responsibility
Chief Executive Officer
Chief Financial Officer
General Counsel and Chief Operating Officer
1. Prior to share split implemented on 12 April 2023.
No options were held by senior management as at 31 December 2022.
Restricted shares1
648
406
144
Shares
95 000
500
8 750
Shares1
3 556
1 165
287
5.9. Gender representation (audited)
As at 31 December 2023, the gender representation at the Operations Council is as per the below table.
Period
31 December 2023
Female
Male
Number
%
Number
2
12.5%
14
%
87.5%
The Board and Leadership team are very committed to drive gender diversity, and we have continued to make progress on increasing
the number of female representatives at the Operations Council over the last two years.
5.10. Other activities (audited)
The functions of the members of the Operations Council in other undertakings are disclosed in Section 4.2 of the Corporate Governance of
this report.
Financial statementsCorporate governanceRemuneration reportManagement reportNon-financial statementsAppendixSGS | 2023 Integrated Report 90
Report of the statutory auditor
to the General Meeting of SGS SA
Geneva
Report on the audit of the remuneration report
Opinion
We have audited the remuneration report of SGS SA (the Company) for the year ended 31 December 2023. The audit
was limited to the information pursuant to article 734a-734f CO in the tables marked 'audited' in sections 4 and 5 (pages
79 to 89) of the remuneration report.
In our opinion, the information pursuant to article 734a-734f CO in the remuneration report for the tables marked ‘au-
dited’ in sections 4 and 5 complies with Swiss law and the Company’s articles of incorporation.
Basis for opinion
We conducted our audit in accordance with Swiss law and Swiss Standards on Auditing (SA-CH). Our responsibilities
under those provisions and standards are further described in the 'Auditor’s responsibilities for the audit of the remunera-
tion report' section of our report. We are independent of the Company in accordance with the provisions of Swiss law
and the requirements of the Swiss audit profession, and we have fulfilled our other ethical responsibilities in accordance
with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other information
The Board of Directors is responsible for the other information. The other information comprises the information included
in the annual report, but does not include the tables marked 'audited' in the remuneration report, the consolidated finan-
cial statements, the financial statements and our auditor’s reports thereon.
Our opinion on the remuneration report does not cover the other information and we do not express any form of assur-
ance conclusion thereon.
In connection with our audit of the remuneration report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the audited financial information in the remuner-
ation report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Board of Directors' responsibilities for the remuneration report
The Board of Directors is responsible for the preparation of a remuneration report in accordance with the provisions of
Swiss law and the Company's articles of incorporation, and for such internal control as the Board of Directors determines
is necessary to enable the preparation of a remuneration report that is free from material misstatement, whether due to
fraud or error. It is also responsible for designing the remuneration system and defining individual remuneration pack-
ages.
PricewaterhouseCoopers SA, avenue Giuseppe-Motta 50, case postale, 1211 Genève 2, Switzerland
Téléphone: +41 58 792 91 00, www.pwc.ch
PricewaterhouseCoopers SA is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity.
Remuneration reportSGS | 2023 Integrated Report
91
Auditor’s responsibilities for the audit of the remuneration report
Our objectives are to obtain reasonable assurance about whether the information pursuant to article 734a-734f CO is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
Swiss law and SA-CH will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of this remuneration report.
As part of an audit in accordance with Swiss law and SA-CH, we exercise professional judgement and maintain profes-
sional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement in the remuneration report, whether due to fraud or error, de-
sign and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropri-
ate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or
the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropri-
ate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's in-
ternal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and re-
lated disclosures made.
We communicate with the Board of Directors or its relevant committee regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safe-
guards applied.
PricewaterhouseCoopers SA
Guillaume Nayet
Licensed audit expert
Auditor in charge
Geneva, 21 February 2024
Louise Rolland
Licensed audit expert
2 SGS SA | Report of the statutory auditor to the General Meeting
Financial statementsCorporate governanceRemuneration reportManagement reportNon-financial statementsAppendixSGS | 2023 Integrated Report
92
Financial statementsFinancial statementsSGS | 2023 Integrated Report 93
134
140
140
141
142
142
142
142
143
143
144
144
144
144
145
146
147
151
151
152
153
153
154
155
Report on the audit of the
consolidated financial statements
Income Statement
2. SGS SA
2.1.
2.2. Statement of Financial Position
2.3. Notes
1. Significant accounting policies
2. Subsidiaries
3. Corporate bonds
4. Total equity
5. Share capital
6. Financial income and financial expenses
7. Extraordinary losses
8. Guarantees and comfort letters
9. Remuneration
10. Shares and options held by members
of governing bodies
11. Significant shareholders
Report on the audit of the
financial statements
3. Historical data
3.1.
3.2.
SGS Group – Five-Year Statistical Data
Consolidated Income Statements
SGS Group – Five-Year Statistical Data
of Financial Position
SGS Group – Five-Year Statistical Share Data
3.3.
3.4. SGS Group share information
3.5.
Closing prices for SGS and the SMI 2022-2023
4. Material operating companies
and ultimate parent
94
94
94
95
96
97
98
98
98
105
106
108
108
108
108
109
109
110
111
112
113
115
116
116
116
116
117
118
118
122
123
124
130
130
130
131
132
133
133
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to Consolidated Financial Statements
Significant accounting policies and exchange rates
Information by business and geographical segment
Sales from contracts with customers
1. SGS Group
1.1.
1.2.
1.3.
1.4.
1.5.
1.6.
1. Activities of the Group
2.
3. Business combinations
4.
5.
6. Government grants
7. Other operating expenses
8. Financial income
9. Financial expenses
10. Taxes
11. Earnings per share and dividend per share
12. Property, plant and equipment
13. Right-of-use assets and lease liabilities
14. Goodwill
15. Other intangible assets
16. Other non-current assets
17. Trade receivables
18. Other receivables and prepayments
19. Cash and cash equivalents
20. Cash flow statement
21. Acquisitions
22. Financial risk management
23. Share capital and treasury shares
24. Loans and other financial liabilities
25. Defined benefit obligations
26. Provisions
27. Trade and other payables
28. Contingent liabilities
29. Equity compensation plans
30. Related-party transactions
31. Significant shareholders
32. Approval of financial statements
and subsequent events
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 94
1. SGS Group
1.1. Consolidated Income Statement
For the years ended 31 December
(CHF million)
Sales
Salaries and wages
Subcontractors’ expenses
Depreciation, amortization and impairment
Gain on business disposals
Other operating expenses
Operating income (EBIT)1
Financial income
Financial expenses
Share of profit of associates and joint ventures
Profit before taxes
Taxes
Profit for the period
Profit attributable to:
Equity holders of SGS SA
Non-controlling interests
Basic earnings per share (in CHF)2
Diluted earnings per share (in CHF)2
Notes
4
12 to 15
3
7
4
8
9
10
11
11
2023
6 622
–3 316
–400
–545
7
–1 511
857
29
–86
2
802
–205
597
553
44
3.00
2.99
1.
2.
Refer to note 4 for analysis of non-recurring items.
2022 restated for comparability following share split on 12 April 2023 – refer to note 11 and to the Alternative Performance Measures – Appendix to the 2023 full year results.
1.2. Consolidated Statement of Comprehensive Income
For the years ended 31 December
(CHF million)
Actuarial gains/(losses) on defined benefit plans
Income tax on actuarial gains/(losses)
Items that will not be subsequently reclassified to income statement
Exchange differences
Items that may be subsequently reclassified to income statement
Notes
25
10
Other comprehensive (loss) for the period
Profit for the period
Total comprehensive income for the period
Attributable to:
Equity holders of SGS SA
Non-controlling interests
2023
50
–8
42
–238
–238
–196
597
401
364
37
2022
6 642
–3 331
–399
–521
–
–1 493
898
20
–71
2
849
–219
630
588
42
3.15
3.15
2022
–20
5
–15
–148
–148
–163
630
467
430
37
Financial statementsSGS | 2023 Integrated Report 1.3. Consolidated Statement of Financial Position
At 31 December
(CHF million)
Assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Goodwill
Other intangible assets
Investments in joint ventures, associates and other companies
Deferred tax assets
Other non-current assets
Total non-current assets
Current assets
Inventories
Unbilled sales and work in progress
Trade receivables
Other receivables and prepayments
Current tax assets
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Capital and reserves
Share capital
Reserves
Treasury shares
Equity attributable to equity holders of SGS SA
Non-controlling interests
Total equity
Non-current liabilities
Loans and other financial liabilities
Lease liabilities
Deferred tax liabilities
Defined benefit obligations
Provisions
Total non-current liabilities
Current liabilities
Trade and other payables
Contract liabilities
Current tax liabilities
Loans and other financial liabilities
Lease liabilities
Provisions
Other creditors and accruals
Total current liabilities
Total liabilities
Total equity and liabilities
95
Notes
2023
2022
12
13
14
15
10
16
5
17
18
19
23
24
13
10
25
26
27
5
24
13
26
823
506
1 636
275
16
185
191
907
577
1 755
350
20
153
125
3 632
3 887
57
223
940
213
127
1 569
3 129
6 761
7
723
–271
459
69
528
3 040
384
73
66
91
3 654
634
221
176
841
143
41
523
2 579
6 233
6 761
59
210
988
223
132
1 623
3 235
7 122
7
954
–279
682
81
763
2 833
442
79
47
96
3 497
671
228
165
1 009
162
58
569
2 862
6 359
7 122
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 96
1.4. Consolidated Statement of Cash Flows
For the years ended 31 December
(CHF million)
Profit for the period
Non-cash and non-operating items
(Increase) in working capital
Taxes paid
Cash flow from operating activities
Purchase of property, plant and equipment and other intangible assets
Disposal of property, plant and equipment and other intangible assets
Acquisition of businesses
Proceeds from disposal of businesses
Cash paid on other non-current assets
Proceeds received from investments in joint ventures, associates and other companies
Interest received
Cash flow used by investing activities
Dividends paid to equity holders of SGS SA
Dividends paid to non-controlling interests
Transaction with non-controlling interests
Cash paid on treasury shares
Proceeds from corporate bonds
Payment of corporate bonds
Interest paid
Payment of lease liabilities
Proceeds from borrowings
Payment of borrowings
Cash flow used by financing activities
Currency translation
(Decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
(Decrease)/increase in cash and cash equivalents
Cash and cash equivalents at end of year
Notes
20.1
20.2
21
20.3
20.3
20.3
20.3
20.3
20.3
19
2023
597
824
–55
–243
1 123
–298
15
–12
22
–1
8
24
–242
–590
–44
–34
–10
500
–501
–82
–178
105
–5
–839
–96
–54
1 623
–54
1 569
2022
630
812
–162
–250
1 030
–329
8
–67
2
–3
1
19
–369
–599
–43
–9
–268
500
–251
–64
–183
469
–
–448
–70
143
1 480
143
1 623
Financial statementsSGS | 2023 Integrated Report 97
Total
equity
1 202
630
1.5. Consolidated Statement of Changes in Equity
For the years ended 31 December
(CHF million)
Share
capital
Treasury
shares
Capital
reserve
Attributable to:
Cumulative
(losses)/gains
on defined
benefit plans
net of tax
Retained
earnings
and group
reserves
Cumulative
translation
adjustments
Equity
holders of
SGS SA
Non-
controlling
interests
Balance at 1 January 2022
7
–8
130
–1 342
–190
2 520
1 117
Profit for the period
Other comprehensive income
for the period
Total comprehensive income
for the period
Dividends paid
Share-based payments
Movement in non-controlling interests
Movement on treasury shares
–
–
–
–
–
–
–
Balance at 31 December 2022
7
–
–
–
–
–
–
–271
–279
–
–
–
–
18
–
–4
–
–143
–143
–
–
–
–
Balance at 1 January 2023
7
–279
144
–1 485
–205
2 500
144
–1 485
–205
2 500
Profit for the period
Other comprehensive income
for the period
Total comprehensive income
for the period
Dividends paid
Share-based payments
Movement in non-controlling interests
Movement on treasury shares
–
–
–
–
–
–
–
–
–
–
–
–
–
8
Balance at 31 December 2023
7
–271
–
–
–
–
24
–
–4
164
–
–231
–231
–
–
–
–
–1 716
–163
2 438
–
588
588
85
42
–15
–15
–
–
–
–
–
–158
–5
–163
588
430
37
467
–599
–599
–43
–642
–
–8
–1
18
–8
–276
682
682
553
–
2
–
81
81
44
18
–6
–276
763
763
597
–
553
42
–
–189
–7
–196
42
553
364
37
401
–
–
–
–
–590
–590
–44
–634
–
–25
–
24
–25
4
459
–
–5
–
24
–30
4
69
528
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix
98
1.6. Notes to Consolidated Financial Statements
1. Activities of the Group
SGS SA and its subsidiaries (‘the Group’) operate around the world under the name SGS. The head office of the Group is located
in Geneva, Switzerland.
SGS is the global leader in inspection, verification, testing and certification services supporting international trade in agriculture, minerals,
petroleum and consumer products. It also provides these services to governments, international institutions and customers engaged
in the industrial, environmental and life science sectors.
2. Significant accounting policies and exchange rates
Basis of preparation of the financial statements
The consolidated financial statements of the Group are stated in millions of Swiss Francs (CHF million). They are prepared from the financial
statements of the individual companies within the Group with all significant companies having a year end of 31 December 2023.
The consolidated financial statements comply with the accounting and reporting requirements of the IFRS Accounting Standards as issued
by the International Accounting Standards Board (IASB) and Swiss law.
The accounting conventions and accounting policies are the same as those applied in the 2022 consolidated financial statements,
except for the Group’s adoption of new IFRSs effective 1 January 2023.
The financial statements are prepared on an accruals basis and under the historical cost convention, modified as required for the revaluation
of certain financial instruments.
Geopolitical instability
Recent geopolitical events have impacted the economy and financial markets. Many industries are facing challenges, including supply-chain
disruption, inflation, deteriorating credit and liquidity concerns.
Consequently, these 2023 consolidated financial statements were prepared with particular attention to the below specific areas:
• Impairment of non-current assets: the Group has recognized a CHF 40 million impairment loss on tangible and intangible assets
(2022: 18 million)
• Impairment of Goodwill: CHF 18 million impairment was recognized (2022: nil)
• Appropriateness of expected credit loss allowance for trade receivables, unbilled sales and work in progress: applying the simplified
approach for IFRS 9 expected credit loss model, the Group reviewed its impairment matrix to ensure it continues to reflect current
and future credit risks and assessed it as adequate
• Accounting for government grants: at 31 December 2023, the Group recognized CHF 9 million as deduction of salaries and wage
expenses (2022: CHF 12 million)
Developments in international taxation
The Group is subject to income taxes in numerous jurisdictions and monitors developments which could affect the Group’s tax liability.
In particular, the Organisation for Economic Co-operation and Development (OECD) published the Global Anti-Base Erosion Model Rules
(Pillar Two). The Pillar Two model framework introduced a global minimum tax rate concept of 15%, which is achieved through a system
of top-up taxes in jurisdictions where tax rate would be lower.
As at 31 December 2023, Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions where the Group operates.
The legislation will be effective for the Group’s financial year beginning 1 January 2024.
The Group has performed an assessment of its potential exposure to Pillar Two income taxes, based on the most recent tax filings, country-
by-country reporting and financial statements of its constituent entities. Based on this assessment, the Pillar Two effective tax rates in most
of the jurisdictions in which the Group operates are above 15%. There are a limited number of jurisdictions where the transitional safe harbor
relief does not apply. In those jurisdictions, the Pillar Two effective tax rate is close to 15% and the Group does not expect a material impact.
In addition, in accordance with IAS 12 amendments published on 23 May 2023 and 27 June 2023, the Group applied the mandatory
exception from accounting for deferred tax arising from Pillar Two as at 31 December 2023.
Stock-split
On 28 March 2023, the Annual General Assembly approved a 25-1 stock split that went into effect on 12 April 2023. This split increased
the number of shares issued, from 7 495 032 to 187 375 800, and reduced the nominal value per share, from CHF 1 to CHF 0.04. As a
result, for comparability purposes, the Group recalculated the basic and diluted earnings per share (EPS) as of December 2022 and
discloses it in note 11.
Adoption of new and revised International Financial Reporting Standards and Interpretations
Several new amendments and interpretations were adopted effective 1 January 2023 but have no material impact on the Group’s
consolidated financial statements. There are no IFRS standards or interpretations which are not yet effective and which would be
expected to have a material impact on the Group.
Basis of consolidation
Subsidiaries
The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the Group.
Control is achieved when the Group:
• Has power over the investee
• Is exposed, or has the right, to variable return from its involvement with the investee; and
• Has the ability to use its power to affect its return
The Company reassesses whether or not the Group controls an investee if facts and circumstances indicate that there are changes
to one or more of the three elements of control listed above.
Financial statementsSGS | 2023 Integrated Report 99
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control
of the subsidiary.
The principal operating companies of the Group are listed on pages 155 to 157.
Non-controlling interests
Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. Initially they are measured at the non-
controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets. Subsequently to the acquisition, the
carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share
of subsequent changes in equity.
Associates
Associates are entities over which the Group has significant influence but no control or joint control over the financial and operating policies.
The consolidated financial statements include the Group’s share of the earnings of associates on an equity accounting basis from the date
that significant influence commences until the date that significant influence ceases.
Joint ventures
A joint venture is a contractual arrangement over which the Group exercises joint control with partners and where the parties have rights
to the net assets of the arrangement. The consolidated financial statements include the Group’s share of the earnings and net assets on
an equity accounting basis of joint ventures that it does not control, effective from the date that joint control commences until the date
that joint control ceases.
Joint operations
A joint operation is an arrangement whereby the parties that have joint control have separable specific rights to the assets and the liabilities
within the arrangement. When a group entity undertakes its activities under joint operations, the Group as a joint operator recognizes in
relation to its interest in a joint operation:
• Its assets, including its share of any assets held jointly
• Its liabilities, including its share of any liabilities incurred jointly
• Its revenue from the sale of its share of the output arising from the joint operation
• Its share of the revenue from the sale of the output by the joint operation; and
• Its expenses, including its share of any expenses incurred jointly
Investments in companies not accounted for as subsidiaries, associates or jointly controlled entities
Investments in companies not accounted for as subsidiaries, associates or jointly controlled entities (normally below 20% shareholding levels)
are stated at fair value through profit and loss. Dividends received from these investments are included in financial income.
Transactions eliminated on consolidation
All intra-group balances and transactions, and any unrealized gains and losses arising from intra-group transactions, are eliminated in preparing
the consolidated financial statements. Unrealized gains and losses arising from transactions with associates and jointly controlled entities are
eliminated to the extent of the Group’s interest in those entities.
Foreign currency transactions
Transactions in foreign currencies are recorded at the foreign exchange rate prevailing at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies at the balance sheet date are translated at the foreign exchange rate prevailing at that date.
Exchange differences arising on the settlement of monetary items or on reporting monetary items at rates different from those at which
they were initially recorded during the period or in previous financial statements, are recognized in the income statement.
Consolidation of foreign companies
All assets and liabilities of foreign companies that are consolidated are translated using the exchange rates in effect at the balance sheet
date. Income and expenses are translated at the exchange rate at the average exchange rate for the year, or at the rate on the date of the
transaction for significant items. Translation differences resulting from the application of this method are recognized in other comprehensive
income and reclassified to profit or loss on disposal. Average exchange rates are used to translate the cash flows of foreign subsidiaries
in preparing the consolidated statement of cash flows.
Sales recognition
IFRS 15 Revenue from Contracts with Customers establishes a five-step model to account for sales arising from contracts with customers.
Under IFRS 15, sales are recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for
transferring services to a customer. The standard requires entities to exercise judgment, taking into consideration all of the relevant facts
and circumstances when applying each step of the model to contracts with their customers.
The Group recognizes sales based on two main models: services transferred at a point in time and services transferred over time.
• The majority of SGS’ sales are transferred at a point in time and recognized upon completion of performance obligations and measured
according to the transaction price agreed in the contract. Once services are rendered, e.g. a report issued, the customer is invoiced
and payment is due
• Services transferred over time mainly concern long-term contracts, where sales are recognized based on the measure of progress.
When the Group has a right to consideration from a customer at the amount corresponding directly to the customer’s value of the
performance completed to date, the Group recognizes sales in the amount to which it has a right to invoice. In all other situations, the
measure of progress is either based on observable output methods (usually the number of tests or inspection performed) or based on
input methods such as the time incurred to date relative to the total expected hours to the satisfaction of the performance obligation.
These invoices are usually issued per contractually agreed installments and prices. Payments are due upon invoicing
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 100
Segment information
The Group reports its operations by business segment, according to the nature of the services provided.
The Group operates in five business segments:
• Connectivity & Products (C&P): end-markets covered include Electrical and Electronic goods, Softlines, Hardlines and Trade Facilitation
• Health & Nutrition (H&N): end-markets covered include Food, Crop Science, Health Science and Cosmetics & Hygiene
• Industries & Environment (I&E): end-markets covered include Field Services and Inspection, Technical Assessment and Advisory,
Industrial and Public Health & Safety, Environmental Testing and Public Mandates
• Natural Resources (NR): end-markets covered include Trade and Inspection of minerals, oil and gas and agricultural commodities,
Laboratory Testing, Metallurgy and Consulting and Market Intelligence
• Business Assurance (prev. Knowledge): end-markets covered include Management System Certification, Customized Audits,
Consulting and Academy
The chief operating decision maker evaluates segment performance and allocates resources based on several factors, of which sales,
adjusted operating income and capital expenditures are the main criteria.
For the Group, the chief operating decision maker is the senior management, which is composed of the Chief Executive Officer,
the Chief Financial Officer and the General Counsel.
All segment sales reported are from external customers. Segment sales and operating income are attributed to countries based
on the location in which the services are rendered.
Capital additions represent the total cost incurred to acquire land, buildings and equipment as well as other intangible assets.
Property, plant and equipment
Land is stated at historical cost and is not depreciated. Buildings and equipment are stated at historical cost less accumulated depreciation.
Subsequent expenditures are capitalized only if they increase the future economic benefits embodied in the related item of property and
equipment. All other expenditures are expensed as incurred. Depreciation is calculated on a straight-line basis over the estimated useful
life of the assets as follows:
• Buildings 12–40 years
• Machinery and equipment 5–10 years
• Other tangible assets 5–10 years
Right-of-use assets
The Group recognizes right-of-use assets at the commencement date of the lease. Right-of-use assets are measured at cost, less any
accumulated depreciation and impairment losses. They are adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets
includes the amount of lease liabilities recognized, initial direct costs incurred and lease payments made at or before the commencement
date, less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the
lease term, recognized right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease
term. Right-of-use assets are subject to impairment.
Lease liabilities
At the commencement date of the lease, the Group recognizes lease liabilities measured at the present value of lease payments to be made
over the lease term. The lease payments include fixed payments less any lease incentives receivable, variable lease payments that depend
on an index or a rate, and amounts expected to be paid under residual value guarantees. The Group elected to use the practical expedient
to account for each lease component and any non-lease components as a single lease component. The lease payments also include the
exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease,
if the lease term reflects the Group exercising the option to terminate.
In the case that the implicit rate cannot be readily determined, the Group uses an incremental borrowing rate considering the country and
the lease duration. The rate is estimated by the combination of the reference rate, the financing spread and any asset-specific adjustment
when required.
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interests and reduced for the lease
payments made. Subsequently, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term,
a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset. The Group applies
the short-term lease and low-value recognition exemptions. Lease payments on short-term leases and leases of low-value assets are
recognized as expenses on a straight-line basis over the lease term.
Goodwill
In the case of acquisitions of businesses, the acquired identifiable assets, liabilities and contingent liabilities are recorded at fair value.
The difference between the purchase price and the fair value is classified as goodwill and recorded in the statement of financial position
as an intangible asset.
Goodwill arising from business combinations is measured at cost less any accumulated impairment losses.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the
Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the
measurement period, or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances
that existed at the acquisition date that, if known, would have affected amounts recognized at that date.
Goodwill arising on the acquisition of a foreign entity is recorded in the relevant foreign currency and is translated using the end of period
exchange rate.
On disposal of part or all of a business that was previously acquired and which gave rise to the recording of acquisition goodwill,
the relevant amount of goodwill is included in the determination of the gain or loss on disposal.
Goodwill acquired as part of business combinations is tested for possible impairment annually and whenever events or changes
in circumstances indicate their value may not be fully recoverable.
Financial statementsSGS | 2023 Integrated Report 101
For the purpose of impairment testing, the Group has adopted a uniform method for assessing goodwill recognized under the acquisition
method of accounting. These assets are allocated to a cash generating unit or a group of cash generating units (CGU) which are expected
to benefit from the business combination. The recoverable amount of a CGU or the group of CGUs is determined through a value-in-
use calculation.
If the value-in-use of the CGU or the group of CGUs is less than the carrying amount of its net operating assets, then a fair value less costs
to sell valuation is also performed with the recoverable amount of the CGU or the group of CGUs being the higher of its value-in-use and
the fair value less costs to sell.
The key assumptions for the value-in-use calculations are those regarding the discount rates, growth rates, operating margins and expected
changes to selling prices or direct costs during the period. Pre-tax discount rates used are based on the Group’s weighted average cost
of capital, adjusted for specific risks associated with the CGUs or the group of CGUs’ cash flow projections. The growth rates are based
on industry growth forecasts.
Expected changes in selling prices and direct costs are based on past practices and expectations of future changes in the market.
For all CGUs or groups of CGUs, a value-in-use calculation is performed using cash flow projections covering the next five years and
including a terminal growth assumption. These cash flow projections take into account the most recent financial results and outlook
approved by management.
If the recoverable amount of the CGU or of the group of CGUs is less than the carrying amount of the unit’s net operating assets,
the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets
of the unit. An impairment loss recognized for goodwill is not reversed in a subsequent period.
Even if the initial accounting for an intangible asset acquired in the reporting period is only provisional, this asset is tested for impairment
in the year of acquisition.
Other intangible assets
Intangible assets, including software, licenses, trademarks and customer relationships are capitalized and amortized on a straight-line basis
over their estimated useful lives, normally not exceeding 20 years. The following useful lives are used in the calculation of amortization:
• Trademarks 5–20 years
• Customer relationships 2–20 years
• Computer software 3–5 years
Other intangible assets acquired as part of an acquisition of a business are capitalized separately from goodwill if their fair value can be
measured reliably. Internally generated intangible assets are recognized if the asset created can be identified, it is probable that future
economic benefits will be generated from it, the related development costs can be measured reliably and sufficient financial resources
are available to complete the development. These assets are amortized on a straight-line basis over their useful lives, which usually
do not exceed five years. All other development costs are expensed as incurred.
Impairment of assets excluding goodwill
At each balance sheet date, or whenever there is an indication that an asset may be impaired, the Group reviews the carrying amounts
of its tangible and intangible assets to determine whether they have suffered an impairment loss. If indications of impairment are present,
the assets are tested for impairment. If impaired, the carrying value of the asset is reduced to its recoverable value. Where it is not possible to
estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the CGU to which the asset belongs.
The recoverable amount of an asset is the greater of the fair value less cost of sale and its value-in-use. In assessing its value-in-use,
the pre-tax estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time-value of money and the risks specific to the asset.
Reversal of impairment losses
Where an impairment loss on assets other than goodwill subsequently reverses, the carrying amount of the asset or CGU is increased
to the revised estimate of its recoverable amount, but not in excess of the carrying amount that would have been recorded had no
impairment loss been recognized. A reversal of an impairment loss is recognized as income immediately.
Government grants
IAS 20 sets out the principle for the recognition, measurement, presentation and disclosure of government grants. Government grants
that are not related to assets are credited to the income statement as a deduction of the related expenses. Government grants are
recognized when there is a reasonable assurance that the grant will be received and all attached conditions will be met.
Trade receivables
Trade receivables are recognized and carried at original invoice amount less an allowance for any non-collectible amounts. An expected
credit loss allowance is made in compliance with the simplified approach using a provision matrix (expected credit loss model). This provision
matrix has been developed to reflect the country risk, the credit risk profile, as well as available forward looking and historical data. The Group
considers a trade receivable to be credit impaired when one or more detrimental events have occurred such as:
• Significant financial difficulty of the customer; or
• It is becoming probable that the customer will enter bankruptcy or other financial reorganization
Unbilled sales and work in progress
Unbilled sales are recognized for services completed but not yet invoiced and are valued at net selling price.
Work in progress is recognized for the partially finished performance obligations under a contract. The measure of progress is either
based on observable output methods or based on input methods. A margin is recognized based on actual costs incurred, provided that
the project is expected to be profitable once completed. Similarly to receivables, an allowance for unbilled sales and work in progress
is made in compliance with the simplified approach using a provision matrix (expected credit loss model).
Cash and cash equivalents
Cash and cash equivalents include cash and deposits held with banks with an original maturity of three months or less and are subject
to an insignificant risk of changes in value. Bank overdrafts are included within current loans.
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 102
Derivative financial instruments and hedging
The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational,
financing and investment activities. In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments
for trading purposes. Derivatives are accounted for on a mark-to-market basis.
Derivative financial instruments are initially recognized at fair value and subsequently remeasured at fair value at each balance sheet date.
The gains and losses resulting from the fair value remeasurement are recognized in the income statement. The fair value of forward
exchange contracts is determined with reference to market prices at the balance sheet date.
Corporate bonds
The corporate bonds issued by the Group are measured at amortized cost using the effective interest method, with interest expense
recognized on an effective yield basis.
The effective interest method is a method of calculating the amortized cost of a financial liability and allocating interest expense over the
relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life
of the financial liability to the net carrying amount on initial recognition.
The Group uses financial instruments to economically hedge interest rate risks relating to its corporate bonds. The changes in fair value
of finance instruments are recognized in the income statement.
Liabilities related to put options granted to holders of non-controlling interests
Written put options in favor of holders of non-controlling interests give rise to the recognition of a financial liability at the present value of the
expected cash outflow. The present value is determined by management’s best estimate of the cash outflow required to settle the obligation
on exercise of the option, discounted by the Group’s cost of debt. The financial liability is initially recorded with the corresponding entry within
equity and in the absence of specific guidance in IFRS, subsequent changes in the valuation of the liability shall be recognized directly in
equity attributable to owners, including the unwinding of the discount.
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. The fair value of an asset or a liability is measured using the assumptions that market participants would use when
pricing the asset or liability, assuming that market participants act in their economic best interest.
• Level 1 fair value measurements are those derived from the quoted price in active markets
• Level 2 fair value measurements are those derived from inputs other than quoted prices that are observable for the asset and liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices)
• Level 3 fair value measurements are those derived from valuation techniques as it cannot be derived from publicly available information.
The assumptions and inputs used in the model take into account externally verifiable inputs. However, such information is by nature
subject to uncertainty, particularly where comparable market-based transactions often do not exist. External valuers are involved for
valuation for significant assets and liabilities
Employee benefits
Pension plans
The Group maintains several defined benefit and defined contribution pension plans in accordance with local conditions and practices in the
countries in which it operates. Defined benefit pension plans are based on an employee’s years of service and remuneration earned during
a predetermined period. Contributions to these plans are normally paid into funds, which are managed independently of the Group, except
in rare cases where there is no legal obligation to fund.
In such cases, the liability is recorded in the Group’s consolidated statement of financial position.
The Group’s obligations towards defined benefit pension plans and the annual cost recognized in the income statement are determined by
independent actuaries using the projected unit credit method. Remeasurement gains and losses are immediately recognized in the consolidated
statement of financial position with the corresponding movement being recorded in the consolidated statement of comprehensive income.
Past service costs are immediately recognized as an expense. Net interest expense is calculated by applying the discount rate at the
beginning of the period to the net defined benefit liability or asset. The retirement benefit obligation recognized in the statement of financial
position represents the present value of the defined benefit obligation reduced by the fair value of plan assets. Any asset resulting from
this calculation is limited to the present value of available refunds and reductions in future contributions to the plan. Payments to defined
contribution plans are recognized as an expense in the income statement as incurred.
Post-employment plans other than pensions
The Group operates some non-pension post-employment defined benefit schemes, mainly healthcare plans. The method of accounting
and the frequency of valuations are similar to those used for defined benefit pension plans.
Equity compensation plans
The Group provides additional benefits to certain senior executives and employees through equity compensation plans. An expense is
recognized in the income statement for shares and equity-linked instruments granted to senior executives and employees under these plans.
Trade payables
Trade payables are recognized at amortized cost that approximates the fair value.
Provisions
The Group records provisions when: it has an obligation, legal or constructive, to satisfy a claim; it is probable that an outflow of group
resources will be required to satisfy the obligation; and a reliable estimate of the amount can be made.
In the case of litigation and claims relating to services rendered, the amount that is ultimately recorded is the result of a complex process
of assessment of a number of variables, and relies on management’s informed judgment about the circumstances surrounding the past
provision of services. It also relies on expert legal advice and actuarial assessments.
Changes in provisions are reflected in the income statement in the period in which the change occurs.
Financial statementsSGS | 2023 Integrated Report 103
Contract liabilities
Contract liabilities arise upon advance payments from clients and issuance of upfront invoices.
Restructuring costs
The Group recognizes costs of restructuring against operating income in the period in which management has committed to a formal plan,
the costs of which can be reliably estimated, and has raised a valid expectation in those affected that the plan will be implemented and the
related costs incurred. Where appropriate, restructuring costs include impairment charges arising from the implementation of the formal plan.
Capital management
Capital comprises equity attributable to equity holders, loans and other financial liabilities, lease liabilities and cash and cash equivalents.
The Board of Directors’ policy is to maintain a strong capital base in order to maintain investor, creditor and market confidence, and to sustain
the future development of the business. The Board also recommends the level of dividends to be distributed to ordinary shareholders on an
annual basis. The Group maintains sufficient liquidity at the Group and subsidiary level to meet its working capital requirements, fund capital
purchases and small and medium-sized acquisitions.
Treasury shares are intended to be used to cover the Group’s employee equity participation plan, convertible bonds and/or cancellation
of shares. Decisions to buy or sell are made on an individual transaction basis by management.
There were no changes in the Group’s approach to capital management during the year.
The Group is not subject to any externally imposed capital requirements.
Taxes
Income taxes include all taxes based upon the taxable profits of the Group, including withholding taxes payable on the transfer of income
from group companies and tax adjustments from prior years. Taxes on income are recognized in the income statement except to the extent
that they relate to items directly charged or credited to equity or other comprehensive income, in which case the related income tax effect
is recognized in equity or other comprehensive income. Provisions of income and withholding taxes that could arise on the remittance of
subsidiary retained earnings are only made where there is a current intention to remit such earnings. Other taxes not based on income,
such as property taxes and capital taxes, are included within operating expenses.
Deferred taxes are provided using the full liability method. They are calculated on all temporary differences that arise between the tax base
of an asset or liability and the carrying values in the consolidated financial statements except for non-tax-deductible goodwill and for those
differences related to investments in subsidiaries where their reversal will not take place in the foreseeable future. Deferred income tax
assets relating to the carry-forward of unused tax losses and tax credits are recognized to the extent that it is probable that future taxable
profits will be available against which they can be used.
Current income tax assets and liabilities are off-set where there is a legally enforceable right to off-set. Deferred tax assets and liabilities
are determined based on enacted or substantively enacted tax rates in the respective jurisdictions in which the Group operates that are
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
Earnings per share
Basic earnings per share are calculated by dividing the Group’s profit by the weighted average number of shares outstanding during the
year, excluding treasury shares. For diluted earnings per share, the weighted average number of shares outstanding is adjusted assuming
conversion of all potential dilutive shares. Group profit is also adjusted to reflect the after-tax impact of conversion.
Dividends
Dividends are reported as a movement in equity in the period in which they are approved by the shareholders.
Treasury shares
Treasury shares are reported as a deduction to equity. The original cost of treasury shares and the proceeds of any subsequent sale are
recorded as movements in equity.
Significant accounting estimates and judgments
Use of estimates
The key assumptions concerning the future, and other key sources of estimation at the balance sheet date that may have a risk of causing
a material adjustment to the carrying amount of assets and liabilities within the next financial year.
Business combinations
In a business combination, the determination of the fair value of the identifiable assets acquired, particularly intangibles, requires estimations
which are based on all available information and in some cases on assumptions with respect to the timing and amount of future sales and
expenses associated with an asset. The purchase price is allocated to the underlying acquired assets and liabilities based on their estimated
fair value at the time of acquisition. The excess is reported as goodwill. As a result, the purchase price allocation impacts reported assets and
liabilities, future net earnings due to the impact on future depreciation and amortization expense and impairment charges. The purchase price
allocation is subject to a maximum period of 12 months adjustment.
Valuation of trade receivables, unbilled sales and work in progress
The balances are presented net of expected credit loss allowance. These allowances for potential uncollected amounts are estimated in
compliance with the simplified approach using a provision matrix (expected credit loss model), which has been developed to reflect the
country risk, the credit risk profile, as well as available historical data. In addition, an allowance is estimated based on individual client
analysis when the collection is no longer probable.
Impairment of goodwill
The Group determines whether goodwill is impaired at a minimum on an annual basis. This requires identification of CGUs and an estimation
of the value-in-use of the CGUs to which the goodwill is allocated. Estimating the value-in-use requires the Group to make an estimate of
expected future cash flows from the CGU or group of CGUs that holds the goodwill at a determined discount rate in order to calculate the
present value of those cash flows.
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 104
Estimations of employee post-employment benefits obligations
The Group maintains several defined benefit pension plans in accordance with local conditions and practices in the countries in which
it operates. The related obligations recognized in the statement of financial position represent the present value of the defined benefit
obligations calculated annually by independent actuaries. These actuarial valuations include assumptions such as discount rates, salary
progression rates and mortality rates. These actuarial assumptions vary according to the local prevailing economic and social conditions.
Income taxes
The Group is subject to income taxes in numerous jurisdictions. There are many transactions and calculations for which the ultimate tax
determination is uncertain.
In assessing how an uncertain tax treatment may affect the determination of the taxable profit (tax loss), the Group assumes that a taxation
authority will examine amounts and have full knowledge of all related information.
If the Group concludes it is not probable that a taxation authority will accept a particular tax treatment, the Group reflects the effect of each
uncertainty in determining the taxable profit (tax loss) by using one of the following methods:
• The single most likely amount
• The sum of probability-weighted amount in a range of possible outcomes
The Group recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due, including
estimated interest and penalties where appropriate. Where the final tax outcome of these matters is different from the amounts that
were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which
such determination is made.
Legal and warranty claims on services rendered
The Group is subject to litigation and other claims. Management bases its judgment on the circumstances relating to each specific
event, internal and external legal advice, knowledge of the industries and markets, prevailing commercial terms and legal precedent, and
evaluation of applicable insurance cover where appropriate. The process of estimation is complex, dealing with uncertainty, requiring the
use of informed estimates, actuarial assessment, evaluation of the insurance cover where appropriate and the judgment of management.
The timing of cash outflows from pending litigation and claims is uncertain since it depends, in the majority of cases, on the outcome of
administrative and legal proceedings. The Group’s legal and warranty claims are reviewed, at a minimum, on a quarterly basis by a cross-
functional representation of management. Any changes in these estimates are reflected in the income statement in the period in which
the estimates change.
Judgments
In the process of applying the entity’s accounting policies described above, management has made the following judgment that has a
significant effect on the amounts recognized in the financial statements.
Lease termination of contracts with renewal and exit options
The Group determines the lease term as the non-cancellable term of the lease together with any periods covered by an option to extend
the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not
to be exercised.
The Group has the option, for some of its leases to lease the assets for additional terms. The Group applies judgment in evaluating whether
it is reasonably certain to exercise the option to renew. That is, it considers all relevant factors that create an economic incentive for it to
exercise the renewal. After the commencement date, the Group reassesses the lease term if there is a significant event or change in
circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to renew.
Exchange rates
The most significant currencies for the Group were translated at the following exchange rates into Swiss Francs:
Australia
Canada
Chile
China
Eurozone
Korea
AUD
CAD
CLP
CNY
EUR
KRW
United Kingdom GBP
Russia
Taiwan
USA
RUB
TWD
USD
100
100
100
100
100
100
100
100
100
100
Statement of financial position
period-end rates
Income statement
period average rates
2023
57.38
63.53
0.10
11.83
93.02
0.06
107.16
0.94
2.74
84.11
2022
62.70
68.20
0.11
13.29
98.47
0.07
111.47
1.31
3.01
92.43
2023
59.73
66.59
0.11
12.70
97.17
0.07
111.69
1.07
2.89
89.87
2022
66.33
73.40
0.11
14.20
100.52
0.07
118.01
1.43
3.21
95.44
Financial statementsSGS | 2023 Integrated Report 105
3. Business combinations
The following business combinations occurred during 2023 and 2022:
Business combinations 2023
In 2023, the Group completed two business combinations for a total purchase price of CHF 9 million (note 21).
• 100% of Seafood Testing Business, from Asmecruz, a cooperative of mussels producers in Spain (effective 17 March 2023)
• 60% of Nutrasource, a company providing clinical trial management, full regulatory support, testing services as well as product
development R&D in Canada and USA (effective 1 May 2023)
These companies were acquired for an amount of CHF 9 million and the total goodwill generated on these transactions amounted to
CHF 9 million.
All the above transactions contributed a total of CHF 7 million in sales and CHF nil million in operating income in 2023. Had all acquisitions
been effective 1 January 2023, the sales for the period from these acquisitions would have been CHF 11 million and the operating income
would have been CHF 1 million.
None of the goodwill arising on these acquisitions is expected to be tax deductible.
Divestments 2023
In 2023, the Group completed three divestments, for a total consideration of CHF 22 million, resulting in a gain on disposal of CHF 7 million:
• Subsurface Consultancy business, in the Netherlands (effective 1 March 2023)
• Automotive Asset Assessment and Retail Network Services operations, in multiple countries (effective 1 July 2023)
• Powertrain Testing Operations, in North America (effective 1 October 2023)
On 18 December 2023, the Group announced the signing of an agreement to divest its crop science operations in several countries.
The transaction will be effective in the course of 2024 upon realization of completion conditions and does not impact the 2023 consolidated
financial results. Assets held for disposal are deemed immaterial.
Business combinations 2022
In 2022, the Group completed seven business combinations for a total purchase price of CHF 75 million (note 21).
• 100% of Gas Analysis Services (GAS), a company specialized in instrumentation and gas analysis testing in Ireland (effective
28 February 2022)
• 100% of Ecotecnos, a company providing sea monitoring and oceanography services in Chile (effective 6 May 2022)
• 100% of AIEX, a company providing technical and welding inspection services in the nuclear and marine industries in France (effective
9 May 2022)
• 100% of Silver State Analytical Laboratories and Excelchem Laboratories, companies providing quality analytical and microbiological
testing and support services for clients in the environmental, water, utility, engineering, construction, food processing, chemical, mining,
healthcare, resort and hospitality industries (effective 1 July 2022)
• 100% of proderm GmbH, a company conducting clinical studies from initial consultation to final reports in Germany (effective 7 July 2022)
• 100% of Penumbra Security, a recognized leader providing various types of information security conformance testing to government
standards and regulatory compliance for multinational companies in the USA (effective 31 August 2022)
• 100% of Industry Lab, a company offering a comprehensive range of microbiological analysis services, from enumeration of indicator
organisms to detection of foodborne pathogens, located in Romania (effective 3 November 2022)
These companies were acquired for an amount of CHF 75 million and the total goodwill generated on these transactions amounted to
CHF 52 million.
All the above transactions contributed a total of CHF 20 million in sales and CHF 3 million in operating income in 2022. Had all acquisitions
been effective 1 January 2022, the sales for the period from these acquisitions would have been CHF 32 million and the operating income
would have been CHF 5 million.
On 7 July 2022, the Group has acquired proderm GmbH, a clinical research organization, specialized in advanced solutions for cosmetics and
personal care as well as medical clinical studies. This acquisition further supports the group strategic expansion in cosmetics and hygiene.
proderm GmbH has contributed CHF 6 million to the Group’s sales and CHF 1 million to operating income in 2022. Had the company been
acquired on 1 January 2022 the sales for the year would have been CHF 12 million and the operating income would have been CHF 2 million.
None of the goodwill arising on these acquisitions is expected to be tax deductible.
Divestment 2022
In 2022, the Group disposed of its US Drilling operations in the USA for a total consideration of CHF 2 million.
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 106
4. Information by business and geographical segment
The information presented is disclosed by business line and focuses on sales, operating income, capital expenditures and employee numbers
because these are the performance measures used by the Chief Operating Decision Maker to assess segment performance.
Analysis of operating income
(CHF million)
Adjusted operating income1
Amortization and impairment of acquired intangibles
Restructuring costs
Goodwill impairment
Gain on business disposals
Transaction and integration costs
Other non-recurring items
Operating income
1. Alternative Performance Measures – Appendix to the 2023 full year results.
Analysis of sales and operating income
2023
2023
971
–55
–21
–18
7
–5
–22
857
2022
1 023
–37
–46
–
–
–13
–29
898
(CHF million)
Industries
& Environment
Natural Resources
Connectivity
& Products
Health & Nutrition
Business Assurance
(prev. Knowledge)
Total
Sales
2 190
1 583
1 246
857
746
6 622
Adjusted
operating
income1
Amortization
and impairment
of acquired
intangibles
Restructuring
costs
Goodwill
impairment
Gain on
business
disposals
Transaction
and integration
costs
Other non-
recurring
items
Operating
income by
business
248
228
262
80
153
971
–15
–1
–5
–31
–3
–55
–11
–18
–6
–1
–2
–1
–
–
–
–
–21
–18
3
–
4
–
–
7
–2
–
–1
–2
–
–5
–16
–2
–2
–
–2
–22
189
219
257
45
147
857
1. Alternative Performance Measures – Appendix to the 2023 full year results.
2022
(CHF million)
Industries
& Environment
Natural Resources
Connectivity
& Products
Health & Nutrition
Business Assurance
(prev. Knowledge)
Total
Adjusted
operating
income1
Amortization
and impairment
of acquired
intangibles
Restructuring
costs
Transaction
and integration
costs
Other non-
recurring
items
Operating
income by
business
Sales
2 157
1 583
1 311
892
699
224
225
313
119
142
6 642
1 023
–19
–1
–5
–9
–3
–37
–15
–10
–12
–6
–3
–46
–6
–1
–1
–4
–1
–29
–
–
–
–
–13
–29
155
213
295
100
135
898
1. Alternative Performance Measures – Appendix to the 2023 full year results.
Restructuring costs
The Group incurred a pre-tax restructuring charge of CHF 21 million (2022: CHF 46 million). Total restructuring costs comprised personnel
reorganization of CHF 15 million (2022: CHF 26 million) as well as fixed asset impairment of CHF 2 million (2022: CHF 2 million) and other
charges of CHF 4 million (2022: CHF 18 million).
Other non-recurring items
The Group reported as non-recurring items a charge of CHF 22 million in 2023 (2022: CHF 29 million), including intangible impairment of
CHF 16 million and other charges of CHF 6 million (2022: CHF 16 million of fixed assets impairment in addition to incurred personnel costs
for CHF 3 million and other charges for CHF 10 million).
Financial statementsSGS | 2023 Integrated Report Sales from external customers by geographical area
(CHF million)
Europe/Africa/Middle East
Americas
Asia Pacific
Total
2023
2 937
1 406
2 279
6 622
%
44.4
21.2
34.4
100.0
2022
2 944
1 364
2 334
6 642
107
%
44.3
20.5
35.2
100.0
Sales in Switzerland from external customers for 2023 amounted to CHF 155 million (2022: CHF 164 million). No country represented more
than 20% of sales from external customers in 2023 nor 2022.
Major customer information
In 2023 and 2022, no external customer represented 5% or more of the Group’s total sales.
Specific non-current assets by geographical area
Specific non-current assets directly attributable to geographical segment mainly include property, land and equipment, right-of-use assets,
goodwill and other intangible assets:
(CHF million)
Europe/Africa/Middle East
Americas
Asia Pacific
Total specific non-current assets
2023
1 973
744
593
3 310
%
59.6
22.5
17.9
100.0
2022
2 224
824
623
3 671
%
60.6
22.4
17.0
100.0
Specific non-current assets in Switzerland for 2023 amounted to CHF 155 million (2022: CHF 169 million). No country represented more than
20% of non-current assets in 2023 nor 2022.
Reconciliation with total non-current assets
(CHF million)
Specific non-current assets as above
Deferred tax assets
Retirement benefit assets
Non-current loans to third parties
Total
Capital additions¹ by business segment
(CHF million)
Industries & Environment
Natural Resources
Connectivity & Products
Health & Nutrition
Business Assurance (prev. Knowledge)
Total
2023
96
70
81
44
7
298
%
32.2
23.5
27.2
14.8
2.3
100.0
1. Capital additions represent the total cost incurred to acquire land, buildings and equipment as well as other intangible assets.
Average number of employees by geographical area
(Average number of employees)
Europe/Africa/Middle East
Americas
Asia Pacific
Total
Number of employees at year end
2023
3 310
185
133
4
3 632
2022
88
75
107
52
7
329
2023
39 986
20 702
37 857
98 545
99 589
2022
3 671
153
59
4
3 887
%
26.8
22.8
32.5
15.8
2.1
100.0
2022
39 906
19 370
37 483
96 759
98 152
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 108
5. Sales from contracts with customers
Group’s sales from contracts with customers by timing of recognition
(CHF million)
Industries & Environment
Natural Resources
Connectivity & Products
Health & Nutrition
Business Assurance (prev. Knowledge)
Total
Assets and liabilities related to contracts with customers
(CHF million)
Unbilled sales and work in progress
Trade receivables
Contract liabilities
2023
2022
Services
transferred at
a point in time
Services
transferred
over time
Services
transferred at
a point in time
Services
transferred
over time
71%
84%
86%
84%
89%
81%
29%
16%
14%
16%
11%
19%
71%
84%
86%
84%
90%
81%
2023
223
940
221
29%
16%
14%
16%
10%
19%
2022
210
988
228
Sales evolution, timing and project maturity are the main factors impacting assets and liabilities related to contracts with customers. In 2023,
SGS has recognized sales of CHF 170 million related to contract liabilities at 31 December 2022. In 2022, the sales recognized from contract
liabilities at 31 December 2021 amounted to CHF 159 million. Sales recognized from performance obligations satisfied in previous periods
were immaterial in 2023 and 2022.
The remaining performance obligations (unsatisfied or partially satisfied) expected to be recognized for long-term contracts amount to
CHF 978 million at 31 December 2023, out of which CHF 518 million are expected to be recognized in sales within one year, CHF 258 million
between one year and two years and CHF 202 million after the next two years.
SGS is applying the practical expedient IFRS 15.121 and does not disclose unsatisfied or partially unsatisfied performance obligations from
contracts with an original duration of one year or less or where SGS may recognize sales from the satisfaction of the performance obligation
in accordance with IFRS 15.B16. This paragraph permits as a practical expedient to exclude contracts where SGS has a right to payment for
performance completed to date.
Assets recognized from costs to fulfill a contract in 2023 and 2022 were not significant, while amortization and impairment losses were nil.
6. Government grants
Government grants for the period amount to CHF 9 million (2022: CHF 12 million), presented as a deduction of salaries and wages expenses.
The outstanding balance recognized in the statement of financial position amounted to CHF 1 million (2022: CHF 5 million).
7. Other operating expenses
(CHF million)
Consumables, repairs and maintenance
Travel costs
Rental expense, insurance, utilities and sundry supplies
External consultancy fees
IT expenses
Communication costs
Allowance for expected credit losses
Gain on disposal of property, plant and equipment
Miscellaneous operating expenses
Total
8. Financial income
(CHF million)
Interest income
Foreign exchange gains/(losses)
Other financial income
Net financial income on defined benefit plans
Total
2023
546
333
166
116
135
48
11
–3
159
1 511
2023
20
2
6
1
29
2022
546
314
168
115
116
53
22
–4
163
1 493
2022
11
5
3
1
20
Financial statementsSGS | 2023 Integrated Report 9. Financial expenses
(CHF million)
Interest expense
Loss on derivatives at fair value
Other financial expenses
Total
10. Taxes
Major components of tax expense
(CHF million)
Current taxes
Deferred tax (credit) relating to the origination and reversal of temporary differences
Total
109
2022
43
19
9
71
2022
227
–8
219
2023
70
13
3
86
2023
262
–57
205
The Group has operations in various countries that have different tax laws and rates. Consequently, the effective tax rate on consolidated
income varies from year to year. A reconciliation between the reported income tax expense and the amount that would arise using the
weighted average statutory tax rate of the Group is as follows:
Reconciliation of tax expense
(CHF million)
Profit before taxes
Tax at statutory rates applicable to the profits earned in the country concerned
Tax effect of non-deductible or non-taxable items
Tax effect on losses not currently treated as being recoverable in future years
Tax effect on losses previously considered irrecoverable, now expected to be recoverable
Non-creditable foreign withholding taxes
Minimum taxes
Prior period adjustments
Rate changes
Other¹
Tax charge
1. Other includes the tax impact of an internal legal reorganization and some write-offs.
Deferred tax after netting
(CHF million)
Deferred tax assets
Deferred tax liabilities
Total
Components of deferred income tax balances
(CHF million)
Right-of-use assets
Fixed assets
Trade receivable, unbilled sales and work in progress
Defined benefit obligation
Provisions and other²
Lease liabilities
Intangible assets
Tax losses carried forward
Deferred income taxes
2. Other includes the tax impact of an internal legal reorganization.
2023
802
147
13
18
–
41
5
24
1
–44
205
2023
185
–73
112
2022
849
162
10
17
–3
37
5
–10
–
1
219
2022
153
–79
74
2023
2022
Assets
Liabilities
Assets
Liabilities
–
41
21
6
105
111
3
54
341
109
8
8
22
16
–
66
–
229
–
44
25
7
56
126
3
54
315
122
11
8
14
11
–
75
–
241
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix
110
Net change in deferred tax assets/(liabilities)
(CHF million)
Net deferred income tax asset (liability) at 1 January 2022
Acquisition of subsidiaries
(Charged)/credited to the income statement
(Charged)/credited to other comprehensive income
Exchange differences and other
Net deferred income tax asset (liability) at 31 December 2022
Acquisition of subsidiaries
(Charged)/credited to the income statement
(Charged)/credited to other comprehensive income
Exchange differences and other
Net deferred income tax asset (liability) at 31 December 2023
The Group has unrecognized tax losses carried forward amounting to CHF 247 million (2022: CHF 194 million).
Unrecognized tax losses carryforwards at 31 December 2023
(CHF million)
Expiring in the next 3 years
Expiring in 4-10 years
Available without limitation
Total unrecognized tax losses
Total
72
–4
8
5
–7
74
–1
57
–8
–10
112
14
40
193
247
At 31 December 2023, the unrecognized deferred tax assets amount to CHF 66 million (2022: CHF 57 million).
At 31 December 2023, the retained earnings of subsidiaries and foreign incorporated joint ventures consolidated by the Group include
approximately CHF 2 212 million (2022: CHF 2 415 million) of undistributed earnings that may be subject to tax if remitted to the parent
company. As set out in note 22, the nature of the Group’s business requires keeping a significant part of the cash reserves in the operating
units. The Group takes the view that a deferred tax liability is required when it is probable that unremitted earnings will be distributed in the
foreseeable future.
11. Earnings per share and dividend per share
On 28 March 2023, the Annual General Assembly approved a 25-1 stock split that went into effect on 12 April 2023. This split increased
the number of shares issued, from 7 495 032 to 187 375 800, and reduced the nominal value per share, from CHF 1 to CHF 0.04.
As a result, for comparability purposes, the Group recalculated the basic and diluted earnings per share (EPS) as of December 2022
as follows:
Profit attributable to equity holders of SGS SA (CHF million)
Weighted average number of shares (million)
Basic earnings per share (CHF)
2023
2022 Restated
2022 Published
553
184
3.00
588
186
3.15
588
7
78.86
Diluted earnings per share are calculated as basic earnings per share except that the weighted average number of shares only includes the
dilutive effect of the Group’s equity compensation plans detailed in note 29. For the year ended 31 December 2023, the Group calculated
742 208 dilutive potential shares (2022 restated: 438 500 and 2022 published: 17 540):
Profit attributable to equity holders of SGS SA (CHF million)
Diluted weighted average number of shares (million)
Diluted earnings per share (CHF)
2023
2022 Restated
2022 Published
553
185
2.99
588
187
3.15
588
7
78.67
The SGS Board of Directors will recommend to the Annual General Meeting (to be held on 26 March 2024) the approval of an optional scrip
dividend of CHF 3.20 per share, subject to the approval of a capital increase, where shareholders can elect to receive the dividend in the form
of shares or in cash. Shares will be sourced from the issuance of new shares in the proposed capital increase. The shares will be delivered at
a discount, and the share dividend will be a tax- and cost-effective option for shareholders.
In 2022, the Board of Directors recommended the approval of a dividend of CHF 80 per share, equivalent to CHF 3.20 per share after the
stock-split.
Financial statementsSGS | 2023 Integrated Report 12. Property, plant and equipment
(CHF million)
2023
Cost
At 1 January
Additions
Disposals
Disposals from subsidiaries
Exchange differences and other
At 31 December
Accumulated depreciation and impairment
At 1 January
Depreciation
Impairment
Disposals
Disposals from subsidiaries
Exchange differences and other
At 31 December
Net book value at 31 December 2023
(CHF million)
2022
Cost
At 1 January
Additions
Acquisition of subsidiaries
Disposals
Exchange differences and other
At 31 December
Accumulated depreciation and impairment
At 1 January
Depreciation
Impairment
Acquisition of subsidiaries
Disposals
Exchange differences and other
At 31 December
Net book value at 31 December 2022
111
Land &
buildings
Machinery
& equipment
Other tangible
assets
Total
460
14
–18
–7
–22
427
269
16
–
–11
–6
–17
251
176
2 340
138
–79
–31
–180
2 188
1 837
173
3
–78
–25
–172
1 738
450
702
108
–36
–4
–111
659
489
50
–
–33
–3
–41
462
197
Land &
buildings
Machinery
& equipment
Other tangible
assets
463
11
4
–4
–14
460
267
17
–
–
–3
–12
269
191
2 327
154
2
–98
–45
2 340
1 826
184
17
1
–97
–94
1 837
503
719
126
4
–35
–112
702
491
52
1
2
–33
–24
489
213
3 502
260
–133
–42
–313
3 274
2 595
239
3
–122
–34
–230
2 451
823
Total
3 509
291
10
–137
–171
3 502
2 584
253
18
3
–133
–130
2 595
907
Included in the other tangible assets are leasehold improvements, office furniture and IT hardware, as well as construction-in-progress assets
amounting to CHF 47 million (2022: CHF 52 million).
At 31 December 2023, the Group had commitments of CHF 3 million (2022: CHF 6 million) for the acquisition of land, buildings
and equipment.
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 112
13. Right-of-use assets and lease liabilities
(CHF million)
At 1 January
Additions
Acquisition
Depreciation expense
Interest expense
Payment of lease liabilities and interests
Exchange difference and other
At 31 December 2023
Analyzed as:
Current liabilities
Non-current liabilities
Total
(CHF million)
At 1 January
Additions
Acquisition
Depreciation expense
Interest expense
Payment of lease liabilities and interests
Exchange difference and other
At 31 December 2022
Analyzed as:
Current liabilities
Non-current liabilities
Total
Right-of-use assets
Land &
buildings
Machinery
& equipment
Other tangible
assets
Total
Lease liabilities
502
103
2
–135
–
–
–41
431
69
48
–
–42
–
–
–6
69
6
3
–
–3
–
–
–
6
Right-of-use assets
Land &
buildings
Machinery
& equipment
Other tangible
assets
528
136
3
–139
–
–
–26
502
71
44
–
–42
–
–
–4
69
6
3
–
–3
–
–
–
6
577
154
2
–180
–
–
–47
506
Total
605
183
3
–184
–
–
–30
577
604
147
2
–
17
–193
–50
527
2023
143
384
527
Lease liabilities
636
174
3
–
21
–199
–31
604
2022
162
442
604
Included in machinery & equipment are mainly vehicles for CHF 63 million (2022: CHF 68 million).
Financial statementsSGS | 2023 Integrated Report The following table summarizes the main foreign currencies of the lease liabilities.
(CHF million)
Euro (EUR)
US Dollar (USD)
Renminbi Yuan (CNY)
Taiwan Dollar (TWD)
Australian Dollar (AUD)
Canadian Dollar (CAD)
Indian Rupee (INR)
Korean Won (KRW)
British Pound Sterling (GBP)
Chilean Peso (CLP)
Swedish Krona (SEK)
Singapore Dollar (SGD)
New Zealand Dollar (NZD)
Mexican Peso (MXN)
Other
Total
(CHF million)
IFRS 16 Other quantitative information
Expense relating to short-term leases
Expense relating to leases of low value assets
Total expense recognized in income statement
113
2022
241
93
63
24
17
18
13
12
8
7
4
6
5
5
88
604
2022
4
5
9
2023
219
71
52
21
19
16
11
9
7
6
6
5
5
4
76
527
2023
3
2
5
The Group leases mainly offices, laboratory spaces and vehicles. During the year ended 31 December 2023, an additional CHF 5 million
(2022: CHF 9 million) was recognized as an expense in the income statement.
14. Goodwill
(CHF million)
Cost
At 1 January
Additions
Consideration/fair value adjustments on prior years’ acquisitions
Impairment
Exchange differences
At end of the period
2023
2022
1 755
1 778
9
–
–18
–110
1 636
52
1
–
–76
1 755
The cash generating units (CGU) and groups of CGUs allocation has been done in accordance with IAS 36, which defines a CGU
as the lowest level of a group of assets generating cash inflows that are largely independent from other assets and groups of assets.
In the case of the following two business lines, the CGU covers the entire worldwide operations since customer activities executed
by the local entities, the clients and customers that they serve and the drivers of cash inflows are largely interdependent on a worldwide
basis across each business line:
• Connectivity & Products (C&P)
• Natural Resources (NR)
The Health & Nutrition (H&N) business line is split into two worldwide CGUs to reflect the global nature of customer activities and drivers
of cash inflows in each sub-business unit: Nutrition, Health Science and Cosmetics & Hygiene.
The Industry & Environment (I&E) business line includes Vehicle Compliance and Upstream activities. To best reflect the interdependency
of the cash inflows, Vehicle Compliance has been split into two distinct CGUs regrouping regulated services activities in Spain and
in France since customers in this sector are country specific. Upstream services is assessed as one separate CGU regrouping the
worldwide Upstream activities for which cash inflows are independent from the rest of the I&E activities.
For the remaining I&E activities (excluding Vehicle Compliance and Upstream services), business is driven primarily by regional or local
customer activities, therefore cash inflows are largely independent from each other. Consequently, a CGU organization by region has
been maintained, split regionally into four CGUs in line with the Group’s regional reporting structure.
The Business Assurance (BA) (prev. Knowledge) business line is split into two CGUs, one regrouping the Technical Consultancy business
in the USA for which cash inflows remain largely independent from the rest of the business line’s activities and the other regrouping the
remaining worldwide BA activities for which there are synergies across the Group’s network, generating interdependent cash inflows.
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 114
Allocation of goodwill to CGUs or group of CGUs
Goodwill allocated to the main CGUs or groups of CGUs, as of 31 December is broken down as follows:
(CHF million)
Industries & Environment1
Natural Resources
Connectivity & Products
Health & Nutrition2
Business Assurance (prev. Knowledge)3
Total
2023
833
105
155
452
91
2022
904
115
166
471
99
1 636
1 755
1. Within I&E, goodwill allocated to I&E Europe/Africa/Middle East CGU was CHF 437 million (2022: CHF 462 million).
2. Within H&N, goodwill allocated to Nutrition CGU was CHF 182 million (2022: CHF 184 million) and goodwill allocated to Health Science and Cosmetics & Hygiene CGU
was CHF 270 million (2022: CHF 287 million).
3. Within BA, goodwill allocated to Technical consultancy USA CGU was CHF 74 million (2022: CHF 82 million).
Goodwill impairment reviews have been conducted for all goodwill balances allocated to the CGUs as described above.
For Vehicle Compliance Spain CGU, the recoverable amount, determined based upon a value-in-use calculation, was CHF 122 million and
fell below the carrying amount by CHF 18 million, resulting in a goodwill impairment in 2023 for the same amount. This was mainly driven
by discount rate increase (+1.9 percentage points, to 10.9%) and unfavorable market conditions.
For each of the remaining CGUs, the recoverable amount, determined based upon a value-in-use calculation, is higher than its carrying
amount thus resulting in no additional goodwill impairment in 2023. Cash flow projections were used in this calculation, discounted at
a pre-tax rate depending on the business activities and geographic profile of each of the respective CGUs.
Pre-tax discount rate used in 2023 for the main CGUs or group of CGUs impairment testing
Industries & Environment1
Natural Resources
Connectivity & Products
Health & Nutrition2
Business Assurance (prev. Knowledge)3
2023
2022
8.4%-10.9%
7.6%-9.9%
8.6%
8.9%
8.5%
7.4%-8.8%
8.4%
8.4%
7.9%-8.0%
6.7%-8.2%
1. Within I&E, I&E Europe/Africa/Middle East pre-tax discount rate was 8.5% (2022: 7.8%).
2. Nutrition pre-tax discount rate was 8.5% (2022: 8.0%), while Health Science and Cosmetics & Hygiene pre-tax discount rate was 8.5% (2022: 7.9%).
3. Within BA, Technical consultancy USA pre-tax discount rate was 7.4% (2022: 6.7%).
The cash flow projections for the first five years were based upon financial plans, approved by the Group, for each CGU or group of CGUs.
The overall assumptions used in the cash flow projections are consistent with the expected average growth rates of the segments served
by the Group. For the subsequent years, the Group assumes a long-term growth rate in the range of 1%-1.7% (1% for CGUs where goodwill
allocated is significant), in line with market long-term inflation rates projections (2022: range of 1%-2%, 1% for CGUs where goodwill
allocated is significant), and stable operating margins depending on each CGU or group of CGUs.
Sensitivity to changes in assumption
Sensitivity analyses were conducted using the following key assumptions:
• Reducing the expected annual sales growth rates for the first five years by 2 percentage points
• Reducing the operating margin by 0.25 percentage points
• Increasing the discount rate assumption by 1 percentage point
For all impairment tests, changing the key assumptions retained in the scenario using the sensitivity analyses described above would not
result in any impairment.
Vehicle Compliance Spain goodwill impairment test assumptions
The following key assumptions have been used in the impairment test for this CGU, for which goodwill amounted to CHF 92 million
(2022: CHF 115 million):
• Pre-tax discount rate of 10.9% (2022: 9%)
• Expected average annual sales growth rate of 2.1% for the projected period 2024-2028 (2022: 3% for the projected period 2023-2027)
• Long-term growth rate of 1.7% after 2028 (2022: 2.0%)
Financial statementsSGS | 2023 Integrated Report 115
15. Other intangible assets
(CHF million)
2023
Cost
At 1 January
Additions
Acquisition of subsidiaries
Disposals
Disposals of subsidiaries
Exchange differences and other
At 31 December
Accumulated amortization and impairment
At 1 January
Amortization
Impairment
Disposals
Disposals of subsidiaries
Exchange differences and other
At 31 December
Net book value at 31 December 2023
(CHF million)
2022
Cost
At 1 January
Additions
Acquisition of subsidiaries
Disposals
Exchange differences and other
At 31 December
Accumulated amortization and impairment
At 1 January
Amortization
Acquisition of subsidiaries
Disposals
Exchange differences and other
At 31 December
Net book value at 31 December 2022
Trademarks
and other
Customer
relationships
Internally
generated
Purchased
Total
Computer software
and other assets
89
–
–
–
–
–5
84
68
7
–
–
–
–6
69
15
446
–
4
–3
–17
–24
406
199
27
21
–3
–14
–13
217
189
220
17
–
–10
–
8
235
176
21
14
–10
–
–4
197
38
205
21
–
–21
–
–14
191
167
13
2
–21
–
–3
158
33
960
38
4
–34
–17
–35
916
610
68
37
–34
–14
–26
641
275
Trademarks
and other
Customer
relationships
Internally
generated
Purchased
Total
Computer software
and other assets
92
–
–
–
–3
89
66
5
–
–
–3
68
21
454
–
17
–2
–23
446
176
32
–
–2
–7
199
247
202
17
–
–
1
220
159
18
–
–
–1
176
44
200
21
1
–6
–11
205
165
11
1
–6
–4
167
38
948
38
18
–8
–36
960
566
66
1
–8
–15
610
350
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 116
16. Other non-current assets
(CHF million)
Non-current loans or amounts receivable from third parties
Retirement benefit asset
Other non-current assets
Total
2023
4
133
54
191
2022
4
59
62
125
Other non-current assets are measured at fair value through profit and loss except non-current loans or amounts receivable from third parties
that are measured at amortized cost.
Depending on the nature of the balances, currency and date of maturity, interest rates on long-term balances or loans to third parties range
between 0.0% and 14.0%.
In 2023, other non-current assets included deposits for guarantees and restricted cash of CHF 34 million (2022: CHF 38 million).
Typical examples of restricted cash are cash deposits for performance bonds, rentals and other operating obligations.
At 31 December 2023 and 2022, the fair value of the Group’s other non-current assets approximates their carrying value.
17. Trade receivables
(CHF million)
Trade receivables
Allowance for expected credit losses
Total
The movement of allowance for expected credit losses is analyzed as follows:
(CHF million)
At 1 January
Acquisition of subsidiaries
(Increase) in allowance recognized in the income statement
Utilizations
Exchange differences
Total at 31 December
18. Other receivables and prepayments
(CHF million)
Accrued income, prepayments
Derivative assets
Other receivables
Total
2023
1 078
–138
940
2023
–161
–1
–9
16
17
–138
2023
83
17
113
213
2022
1 149
–161
988
2022
–162
–1
–16
10
8
–161
2022
86
12
125
223
The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties. Other receivables
consist mainly of sales taxes and other taxes recoverable as well as advances to suppliers.
19. Cash and cash equivalents
(CHF million)
Cash and short-term deposits
Total
2023
1 569
1 569
2022
1 623
1 623
Financial statementsSGS | 2023 Integrated Report 20. Cash flow statement
20.1. Non-cash and non-operating items
(CHF million)
Depreciation of property, plant and equipment
Impairment of property, plant and equipment and other intangible assets
Depreciation/impairment right-of-use asset
Amortization of intangible assets
Impairment of goodwill
ECL1 on trade receivables, unbilled sales and work in progress
Net financial expenses
(Decrease) in provisions and employee benefits
Share-based payment expenses
Gain on disposals
Gain on disposals of property, land and equipment
Share of results from associates and other entities
Taxes
Non-cash and non-operating items
1. Expected Credit Losses.
20.2. (Increase)/decrease in working capital
(CHF million)
(Increase) in unbilled sales and inventories
(Increase) in trade receivables
Decrease/(increase) in other receivables and prepayments
Increase in trade and other payables
Increase in other creditors and accruals
(Decrease)/increase in other provisions
(Increase) in working capital
Notes
12
12 and 15
13
15
14
8 and 9
3
10
117
2022
253
18
184
66
–
22
51
–13
18
–
–4
–2
219
812
2022
–53
–125
–25
7
25
9
–162
2023
239
40
180
68
18
11
57
–6
24
–7
–3
–2
205
824
2023
–43
–66
7
33
25
–11
–55
20.3. Changes in liabilities arising from financing and investing activities
Cash impact
Non cash impact
(CHF million)
2023
Corporate bonds
Bank loans
Put option on acquisition
Lease liabilities
Other financial liabilities
Total
1 January
Financing
cash flows
Investing
cash flows
Equity
movement
Acquisition
and disposals
New
leases
Other
movements1
31 December
3 310
469
29
604
26
4 438
–1
100
–12
–178
–
–91
–
–
–
–
–3
–3
–
–
7
–
–
7
–
5
–
2
–
7
–
–
–
147
–
147
–40
–16
–
–48
–1
–105
3 269
558
24
527
22
4 400
1. Other movements mainly include currency effects.
(CHF million)
2022
Corporate bonds
Bank loans
Put option on acquisition
Lease liabilities
Other financial liabilities
Total
1. Other movements mainly include currency effects.
Cash impact
Non cash impact
1 January
Financing
cash flows
Equity
movement
Acquisition
and disposals
New
leases
Other
movements1
31 December
3 100
5
33
636
26
3 800
249
469
–4
–183
–5
526
–
–
1
–
–
1
–
3
–
3
5
11
–
–
–
174
–
174
–39
–8
–1
–26
–
–74
3 310
469
29
604
26
4 438
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118
21. Acquisitions
Assets and liabilities arising from acquisitions
(CHF million)
Property, plant and equipment
Right-of-use assets
Intangible assets
Trade receivable
Other current assets
Cash and cash equivalents
Current liabilities
Non-current liabilities
Net assets acquired
Goodwill
Total purchase price
Acquired cash and cash equivalents
Consideration payable
Payment on prior year acquisitions
Net cash outflow on acquisitions
Total fair value
on acquisitions
December 2023
Total fair value
on acquisitions
December 2022
–
2
4
2
2
–
–3
–7
–
9
9
–
–
3
12
7
3
17
5
2
6
–9
–8
23
52
75
–6
–5
3
67
In compliance with IFRS 3, fair value on acquisition remains provisional for a 12-month period following the date of acquisition, during which
the Group can finalize the purchase price allocation.
The goodwill arising on these acquisitions relates mainly to the value of expected synergies and the value of the qualified workforce that do
not meet the criteria for recognition as separable intangible assets. Consideration payable relates mainly to environmental and commercial
warranty clauses and the fair value of contingent future earn-out payments.
The Group incurred transaction-related costs of CHF 2 million (2022: CHF 5 million) related to external legal fees and due diligence expenses.
These expenses are reported within other operating expenses in the consolidated income statement.
22. Financial risk management
Risk management policies and objectives
The Group’s activities expose it primarily to market, credit and liquidity risk. Market risk includes foreign exchange, interest rate and equity
price risks.
The risk management policies and objectives are governed by the Group’s policies approved by the Board of Directors.
The Group’s risk management policies are designed to identify and analyze these risks, to set appropriate risk limits and controls and to
monitor the risk and limits continually by means of reliable and up-to-date administrative and information systems.
The Audit Committee oversees how management monitors compliance with the Group’s risk management policies. The Audit Committee
is assisted in its oversight role by Internal Audit.
Risk management activities
The Group uses foreign exchange contracts to manage the Group’s exposure to fluctuations in foreign currency exchange rates.
These activities are carried out in accordance with the Group’s risk management policies and objectives in areas such as counterparty
exposure and economic hedging practices. Counterparties to these agreements are major international financial institutions with high
credit ratings and positions are monitored using market value and sensitivity analyses. The associated credit risk is therefore limited.
These agreements generally include the exchange of one currency for a second currency at a future date.
The following table summarizes foreign exchange contracts outstanding at year end. The notional amount of derivatives summarized below
represents the gross amount of the contracts and includes transactions, which have not yet matured. Therefore the figures do not reflect the
Group’s net exposure at year end. The market value approximates the costs to settle the outstanding contracts. These market values should
not be viewed in isolation but in relation to the market values of the underlying hedged transactions and the overall reduction in the Group’s
exposure to adverse fluctuations in foreign exchange rates.
Financial statementsSGS | 2023 Integrated Report Currently, the Group has certain exposure to interest and credit risks and no exposure to equity price risk.
(CHF million)
Foreign exchange forward contracts
Notional amount
Market value
2023
2022
2023
2022
119
Currency:
Australian Dollar (AUD)
Brazilian Real (BRL)
Canadian Dollar (CAD)
Chilean Peso (CLP)
Chinese Renminbi (CNY)
Colombian Peso (COP)
Euro (EUR)
British Pound Sterling (GBP)
Hong Kong Dollar (HKD)
Indian Rupee (INR)
Japanese Yen (JPY)
Kenyan Shilling (KES)
Korean Won (KRW)
New Zealand Dollar (NZD)
Philippines Peso (PHP)
Polish Zloty (PLN)
Turkish New Lira (TRY)
US Dollar (USD)
South African Rand (ZAR)
Other
Total
–9
–5
–13
–33
–22
–10
392
–114
17
1
–4
–2
1
–6
–11
–6
3
–307
–4
–36
–168
–15
–5
–5
–34
–22
–4
441
–119
18
1
–3
–
3
–6
–13
1
1
–268
–10
–38
–77
–
–
–
–1
1
–
1
–
–
–
–
–
–
–
–
–
–
9
–
–1
9
–
–1
–
–3
–
–
–
2
–
–
–
–
–
–
–1
–
–
7
–
–1
3
Credit risk management
Credit risk arises from the possibility that customers may not be able to settle their obligations as agreed. It arises principally from the Group’s
commercial activities. Trade receivable, unbilled sales and work in progress are subject to a policy of active risk management which focuses
on the assessment of country risk, credit limits and approval procedures. Due to its large geographic base and number of customers, the
Group is not exposed to material concentrations of credit risk on its trade receivable, unbilled sales and work in progress.
As at 31 December 2023, the Group has unbilled sales and work in progress of CHF 223 million (2022: CHF 210 million) which is net
of an allowance for expected credit losses of CHF 20 million (2022: CHF 20 million).
Receivables are recognized and carried at original invoice amount less an allowance for any non-collectible amounts. A credit loss allowance
is made in compliance with the simplified approach using a provision matrix (expected credit loss model). This provision matrix has been
developed to reflect the country risk, the credit risk profile and available historical data. Similarly to receivables, an allowance for unbilled sales
and work in progress is made using a provision matrix.
Set out below is the information about the credit risk exposure on the Group’s trade receivables using a provision matrix based on aging
of trade receivables as of invoice date at 31 December 2023:
(CHF million)
0 – 90 days
91 – 120 days
121 – 180 days
181 – 240 days
241 – 300 days
301 – 360 days
> 360 days
Total
Expected credit
loss range
Gross carrying
amount
Expected
credit loss
0%-5%
10%-25%
20%-50%
35%-75%
50%-75%
75%-100%
100%
866
46
39
20
14
9
84
1 078
3
9
14
11
9
8
84
138
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 120
Set out below is the information about the credit risk exposure on the Group’s trade receivables using a provision matrix based on aging
of trade receivables as of invoice date at 31 December 2022:
(CHF million)
0 – 90 days
91 – 120 days
121 – 180 days
181 – 240 days
241 – 300 days
301 – 360 days
> 360 days
Total
Expected credit
loss range
Gross carrying
amount
Expected
credit loss
0%-5%
10%-25%
20%-50%
35%-75%
50%-75%
75%-100%
100%
910
47
47
25
14
10
96
1 149
2
10
19
15
10
9
96
161
As part of financial management activities, the Group enters into various types of transaction with international banks, usually with a credit
rating of at least A. Exposure to these risks is closely monitored and kept within predetermined parameters. The Group does not expect any
non-performance by these counterparties. The maximum credit risk to which the Group is theoretically exposed at 31 December 2023 is the
carrying amount of financial assets including derivatives.
In addition, the Group has issued CHF 166 million (2022: CHF 181 million) financial guarantees to certain financial institutions that have
provided credit facilities and foreign exchange lines to its subsidiaries. Management believes the likelihood that a material payment will
be required under these guarantees is remote.
Analysis of financial assets by class and category at 31 December 2023:
Amortized
cost
At fair value
through Equity
At fair value
through P&L
Total
Fair value
(CHF million)
Carrying
amount
Fair
value
Carrying
amount
Fair
value
Carrying
amount
Fair
value
Carrying
amount
Fair
value
Cash and cash-equivalents
1 569
1 569
Trade receivables
Other receivables¹
Unbilled sales and
work in progress
Loans to third parties
– non-current
Derivatives
940
123
223
4
–
940
123
223
4
–
Total financial assets
2 859
2 859
–
–
–
–
–
–
–
1.
Excluding VAT and other tax related items.
Analysis of financial assets by class and category at 31 December 2022:
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
17
17
17
17
1 569
1 569
940
123
223
4
17
940
123
223
4
17
2 876
2 876
Amortized
cost
At fair value
through Equity
At fair value
through P&L
Total
Fair value
(CHF million)
Carrying
amount
Fair
value
Carrying
amount
Fair
value
Carrying
amount
Fair
value
Carrying
amount
Fair
value
Cash and cash-equivalents
1 623
1 623
Trade receivables
Other receivables¹
Unbilled sales and
work in progress
Loans to third parties
– non-current
Derivatives
988
132
210
4
–
988
132
210
4
–
Total financial assets
2 957
2 957
1.
Excluding VAT and other tax related items.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
12
12
12
12
1 623
1 623
988
132
210
4
12
988
132
210
4
12
2 969
2 969
In the fair value hierarchy, Level 1 measurements are those derived from the quoted price in active markets. Level 2 fair value measurements
are those derived from inputs other than quoted prices that are observable for the asset and liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices). Derivative assets (2023: CHF 17 million; 2022: CHF 12 million) qualify as Level 2 fair value measurement category
in accordance with the fair value hierarchy. Derivative assets consist of foreign currency forward contracts that are measured using quoted
forward exchange rates and yield curves derived from quoted interest rates matching maturities of the contract.
Financial statementsSGS | 2023 Integrated Report 121
Liquidity risk management
The objective of the Group’s liquidity and funding management is to ensure that all its foreseeable financial commitments can be met when
due. Liquidity and funding are primarily managed by Group Treasury in accordance with practices and limits set in the risk management
policies and objectives approved by the Board of Directors.
The nature of the Group’s business requires keeping a significant part of the cash reserves in the operating units.
Due to the significant cash position, liquidity risk is limited. The Group has various committed and uncommitted bilateral credit facilities
with its banks.
Analysis of financial liabilities by class and category at 31 December 2023:
Amortized
cost
At fair value
through Equity
At fair value
through P&L
Total
Fair value
(CHF million)
Trade payables
Other payables1
Loans and other
financial liabilities
Lease liabilities
Total financial liabilities
1.
Excluding VAT and other tax related items.
Carrying
amount
335
123
Fair
value
335
123
3 842
3 778
527
4 827
527
4 763
Carrying
amount
Fair
value
Carrying
amount
Fair
value
Carrying
amount
–
–
24
–
24
–
–
24
–
24
–
–
15
–
15
–
–
15
–
15
Fair
value
335
123
335
123
3 881
3 817
527
4 866
527
4 802
The corporate bonds qualify as fair value Level 1, which amounts to CHF 3 205 million (2022: CHF 3 124 million).
Other financial liabilities include CHF 24 million qualifying as fair value Level 3 (2022: CHF 29 million), which represents the estimated
present value of the redemption amount to acquire the remaining non-controlling interests of acquisitions if the put/call option is exercised.
Subsequent changes in the valuation of the redemption amount to acquire the remaining non-controlling interests of acquisitions if the
put/call option is exercised shall be recognized directly in equity attributable to owners, including the unwinding of the discount.
The remaining financial liabilities qualify as Level 2 determined in accordance with generally accepted pricing models.
Analysis of financial liabilities by class and category at 31 December 2022:
Amortized
cost
At fair value
through Equity
At fair value
through P&L
Total
Fair value
(CHF million)
Trade payables
Other payables¹
Loans and other financial
liabilities
Lease liabilities
Total financial liabilities
Carrying
amount
360
130
Fair
value
360
130
3 792
3 606
604
4 886
604
4 700
1.
Excluding VAT and other tax related items.
Carrying
amount
Fair
value
Carrying
amount
Fair
value
Carrying
amount
–
–
29
–
29
–
–
29
–
29
–
–
21
–
21
–
–
21
–
21
Fair
value
360
130
360
130
3 842
3 656
604
4 936
604
4 750
Undiscounted contractual maturities of financial liabilities including interest payments at 31 December 2023:
(CHF million)
Trade
payables
Other
payables¹
Gross settled
derivative
financial
instruments
outflows
Gross settled
derivative
financial
instruments
inflows
Loans and
Other financial
liabilities
Lease
liabilities
On demand or within one year
335
123
1 141
–1 134
Within the second year
Within the third year
Within the fourth year
Within the fifth year
After five years
1.
Excluding VAT and other tax related items.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
856
417
736
957
191
863
155
114
84
56
39
103
Total
1 476
531
820
1 013
230
966
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122
Undiscounted contractual maturities of financial liabilities including interest payments at 31 December 2022:
Gross settled
derivative
financial
instruments
outflows
Gross settled
derivative
financial
instruments
inflows
Other
payables¹
Loans and
Other financial
liabilities
Lease
liabilities
130
1 301
–1 299
1 014
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
283
409
716
747
771
173
125
89
64
45
135
Total
1 679
408
498
780
792
906
Trade
payables
360
–
–
–
–
–
(CHF million)
On demand or within one year
Within the second year
Within the third year
Within the fourth year
Within the fifth year
After five years
1.
Excluding VAT and other tax-related items.
The Group economically hedges its foreign exchange exposure on a net basis. The net position of the gross settled derivative financial
instruments of CHF 7 million (2022: CHF 2 million) represents the net nominal value expressed in CHF of the Group’s foreign currency
contracts outstanding at 31 December 2023.
Sensitivity analyses
The estimated changes in the value of net foreign currency positions are based on an instantaneous 5% weakening of the Swiss Franc
against all other currencies from the level applicable at 31 December 2023 and 2022 with all other variables remaining constant.
Sensitivity analysis based on net hedged positions at 31 December 2023 and 2022:
(CHF million)
US Dollar (USD)
Euro (EUR)
CFA Franc BEAC (CFA)
Russian Ruble (RUB)
Canadian Dollar (CAD)
U.A.E. Dirham (AED)
2023
2022
Income statement
impact income/(expense)
Equity impact
increase/(decrease)
Income statement
impact income/(expense)
Equity impact
increase/(decrease)
3
–1
2
–1
–
–1
–1
–
–
–
1
–
4
–2
2
–
–
–1
–2
–
–
–
2
–
Interest rate risk management
The Group is exposed to fair value interest rate risk because the Group borrows funds at fixed interest rates. Where appropriate, the risk
is managed by the Group using Interest Rate Swap contracts. Hedging activities are evaluated regularly to align with interest rate views
and defined risk appetite, ensuring the most cost-effective hedging strategies are applied.
If interest rates were 100 basis points higher/lower, the profit for the year ended 31 December 2023 would increase/decrease by
CHF 5 million (2022: CHF 5 million).
23. Share capital and treasury shares
Balance at 1 January 2022
Treasury shares released into circulation
Treasury shares purchased for equity compensation plans
Treasury shares purchased for cancellation
Balance at 31 December 2022
Treasury shares released into circulation
Balance at 12 April 2023 before share split
Shares in
circulation
7 491 672
3 381
–12 500
–113 499
7 369 054
1 964
7 371 018
Treasury
shares
3 360
–3 381
12 500
113 499
125 978
–1 964
124 014
7 495 032
–
–
–
7 495 032
–
7 495 032
Share split 25-1
176 904 432
2 976 336
179 880 768
Balance at 12 April 2023 after share split
184 275 450
3 100 350
187 375 800
Treasury shares released into circulation
Balance at 31 December 2023
35 665
–35 665
–
184 311 115
3 064 685
187 375 800
Total shares
issued
Total share capital
(CHF million)
7
–
–
–
7
–
7
–
7
–
7
Financial statementsSGS | 2023 Integrated Report
123
Issued share capital
On 28 March 2023, the Annual General Assembly approved a 25-1 stock split that went into effect on 12 April 2023. This split increased
the number of shares issued, from 7 495 032 to 187 375 800, and reduced the nominal value per share, from CHF 1 to CHF 0.04.
As at 31 December 2023, SGS SA has a share capital of CHF 7 495 032 (2022: CHF 7 495 032) fully paid. All shares, other than own
shares, participate equally in the dividends declared by the Company and have equal voting rights.
Treasury shares
On 31 December 2023, SGS SA held 3 064 685 treasury shares (2022 restated: 3 149 450 and 2022 published: 125 978 shares).
The shares purchased for cancellation are directly held by SGS SA, while the shares to cover the equity compensation plans are held
by a subsidiary company.
In 2023, 84 765 treasury shares were sold or given in relation with the equity compensation plans.
Authorized and Conditional issue of share capital
The shareholders have conditionally approved an increase of share capital in the amount of CHF 1 100 000, divided into 27 500 000
registered shares of a par value of CHF 0.04 each. This conditional share capital increase is intended to procure the necessary shares to
satisfy employee equity participation plans and option or conversion rights to be incorporated in convertible bonds or similar equity-linked
instruments that the Board is authorized to issue. The right to subscribe to such conditional capital is reserved for beneficiaries of employee
equity participation plans and holders of convertible bonds or similar debt instruments and therefore excludes shareholders’ preferential
rights of subscription. The Board is authorized to determine the timing and conditions of such issues, provided that they reflect prevailing
market conditions. The term of exercise of the options or conversion rights may not exceed ten years from the date of issuance of the
equity-linked instruments.
24. Loans and other financial liabilities
(CHF million)
Bank loans and commercial paper
Corporate bonds
Put option on acquisition
Other financial liabilities
Derivatives
Total
Current
Non-current
2023
558
3 269
24
22
8
3 881
841
3 040
2022
469
3 310
29
26
8
3 842
1 009
2 833
In 2023, the Group continued to issue commercial paper out of its EUR 1 billion Euro Commercial Paper (ECP) program, for an amount
of EUR 124 million (CHF 105 million) as at 31 December 2023.
Depending on the nature of the loan, currency and date of maturity, interest rates on long-term loans from third parties range between
0.125% and 8.00% and on short-term loans from third parties range between 0.00% and 14.00%.
The loans from third parties exposed to fair value interest rate risk amounted to CHF 3 825 million (2022: CHF 3 778 million) and the loans
from third parties exposed to cash flow interest rate risk amounted to CHF less than 0.7 million (2022: CHF less than 0.7 million).
SGS SA issued the following corporate bonds listed on the SIX Swiss Exchange:
Date of issue
27.02.2014
08.05.2015
03.03.2017
29.10.2018
29.10.2018
06.05.2020
05.09.2022
05.09.2022
17.11.2023
17.11.2023
Face value in
CHF million
250
225
375
225
175
325
150
350
240
260
Coupon
in %
1.750
0.875
0.550
0.750
1.250
0.950
1.250
1.700
2.000
2.300
Year of
maturity
Issue price
in %
Redemption
price in %
2024
2030
2026
2025
2028
2026
2025
2029
2027
2031
101.019
100.245
100.153
100.068
101.157
100.182
100.000
100.197
100.038
100.127
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
SGS Nederland Holding BV has issued the following corporate bond, which is guaranteed by SGS SA and which is listed on the Luxembourg
Stock Exchange:
Date of issue
21.04.2021
Face value in
EUR million
750
Coupon
in %
0.125
Year of
maturity
2027
Issue price
in %
99.761
Redemption
price in %
100.000
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 124
The currency composition of bank loans, corporate bonds and other financial liabilities is as follows:
(CHF million)
Swiss Franc (CHF)
Euro (EUR)
Singapore Dollar (SGD)
US Dollar (USD)
British Pound Sterling (GBP)
Canadian Dollar (CAD)
New Zealand Dollar (NZD)
Other
Total
Bank loans and corporate bond
Put option and other financial liabilities
2023
2 573
1 251
2
–
–
–
–
2022
2 574
1 201
3
–
–
–
–
1
3 827
1
3 779
2023
12
7
11
1
–
12
3
–
46
2022
12
20
13
1
1
4
3
1
55
25. Defined benefit obligations
The Group mainly operates defined benefit pension plans in Switzerland, the USA, the UK, the Netherlands, Germany, Italy, France, Belgium,
South Korea and Taiwan. Contributions to most plans are paid to pension funds that are legally separate entities.
The Group also operates post-employment benefit plans, principally healthcare plans, in the USA and Switzerland. They represent a defined
benefit obligation at 31 December 2023 of CHF 6 million (2022: CHF 5 million). The method of accounting and the frequency of valuation are
similar to those used for defined benefit pension plans. Healthcare cost trend assumptions do not have a significant effect on the amounts
recognized in the income statement.
There is a risk to the Group that adverse experience could lead to a requirement for the Group to make additional contributions to recover
any deficit that arises.
The Group’s material defined benefit plans are in Switzerland, the USA and the UK.
Switzerland
The Group jointly operates with the employees a retirement foundation in Switzerland. The assets and liabilities of the retirement foundation
are held separately from the Group. The foundation board is equally composed of representatives of the employees and representatives of
the employer. This foundation covers all the employees in Switzerland and provides benefits on a defined contribution basis.
Each employee has a retirement account to which the employee and the Group contribute at a rate set out in the foundation rules based
on a percentage of salary. Every year, the foundation decides the level of interest, if any, to apply to retirement accounts based on the
agreed policy. At retirement, employees can elect either to withdraw all or part of the balance of their retirement account or to convert
it into annuities at pre-defined conversion rates.
As the foundation board is expected to eventually pay out all of the foundation’s assets as benefits to employees and former employees,
no surplus is deemed to be recoverable by the Group. Similarly, unless the assets are insufficient to cover minimum benefits, the Group
does not expect to make any deficit contribution to the foundation.
According to IFRS, the foundation has to be classified as a defined benefit plan due to underlying benefit guarantees and has to be accounted
for on this basis.
The weighted average duration of the expected benefit payment is approximately 12 years (2022: 12 years).
The Group expects to contribute CHF 5 million to this plan in 2024.
The Group also operates an employer fund. The assets are held separately from the Group. This foundation has unilateral power to provide
benefits and consequently has no obligations. Therefore, this foundation has no pension liabilities.
United States of America
The Group operates a non-contributory defined benefit plan, which is subject to the provisions of the Employee Retirement Income Security
Act (ERISA).
The assets of the plan are held separately from the Group by the trustee-custodian and the plan’s third-party pension administrator who
disburses payments directly to retirees or beneficiaries under the plan. Both the trustee-custodian and the administrator ensure adherence
to ERISA rules.
Funding valuations are calculated on an actuarial basis and contributions are made as necessary. The funding target is to provide the plan with
sufficient assets to meet future plan obligations.
Effective 16 March 2004, non-exempt participants ceased accruing any additional benefits; only exempt employees of certain SGS business
units in the USA are eligible for annual benefit accrual. In addition, the pension benefit was changed and is defined as a percentage of the
current year’s pensionable compensation; the cost of additional benefit accrual is evaluated annually. The Group reserves the right to make
future changes to the benefit accrual structure of the plan.
Eligible employees become participants in the plan after the completion of one year of service and after reaching the age of 21.
Participants become fully vested in the plan after five years of service.
The weighted average duration of the expected benefit payment is approximately 10 years (2022: 10 years).
The Group expects to contribute CHF nil million to this plan in 2024.
Financial statementsSGS | 2023 Integrated Report
125
United Kingdom
The Group operates a defined benefit plan through a trust, with the assets of the plans held separately from the Group and trustees who
ensure the plan’s rules are strictly adhered to. This plan has been closed to new entrants since 2002 and, effective 31 October 2020, all
remaining participants ceased accruing any additional benefits in the defined benefit plan. Employees are now offered membership in
defined contribution plans operated by the Group.
Funding valuations of the defined benefit plans are carried out and agreed between the Group and the plan trustees at least once every
three years. The funding target is for the plans to hold assets equal in value to the accrued benefits based on projected salaries. As part
of the valuation process, if there is a shortfall against this target, then the Group and trustees will agree on deficit contributions to meet
this deficit over a specified period.
The weighted average duration of the expected benefit payments from the combined plans is approximately 13 years (2022: 14 years).
The Group expects to contribute CHF nil million to this plan in 2024.
Other countries
The Group sponsors defined retirement benefits plans in other countries where the Group operates. No individual countries other than those
described above are considered material and need to be separately disclosed. The Group expects to contribute CHF 6 million to those plans
in 2024.
The assets and liabilities recognized in the statement of financial position at 31 December for defined benefit obligations and for
post-employment benefit plans are as follows:
(CHF million)
2023
Fair value of plan assets
Present value of funded defined benefit obligation
Funded/(unfunded) status
Present value of unfunded defined benefit obligation
Unrecognized asset due to asset ceiling
Net asset/(liability) at 31 December
(CHF million)
2022
Fair value of plan assets
Present value of funded defined benefit obligation
Funded/(unfunded) status
Present value of unfunded defined benefit obligation
Unrecognized asset due to asset ceiling
Net asset/(liability) at 31 December
CH
UK
USA
Other
Total
496
–395
101
–5
–
96
128
–111
17
–
–
17
145
–137
8
–2
–
6
75
–84
–9
–41
–2
–52
844
–727
117
–48
–2
67
CH
UK
USA
Other
Total
494
–357
137
–5
–98
34
134
–115
19
–
–
19
156
–150
6
–3
–
3
77
–79
–2
–41
–1
–44
861
–701
160
–49
–99
12
The net asset of CHF 67 million (2022: net asset of CHF 12 million) includes CHF 133 million (2022: CHF 59 million) of pension fund assets
recognized in the item other non-current assets in note 16 and CHF 66 million (2022: CHF 47 million) of pension fund liability recognized
in the item Defined Benefit Obligation in statement of financial position.
Amounts recognized in the income statement:
(CHF million)
2023
Service cost expense
Net interest income on defined benefit plan
Administrative expenses
Total expense due to defined benefit obligation at 31 December
Expense charged in:
Salaries and wages
Financial expenses
Total expense due to defined benefit obligation at 31 December
CH
UK
USA
Other
Total
5
–1
–
4
5
–1
4
–
–1
1
–
1
–1
–
–
–1
1
–
1
–1
–
7
2
–
9
7
2
9
12
–1
2
13
14
–1
13
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 126
(CHF million)
2022
Service cost expense
Net interest income on defined benefit plan
Administrative expenses
Total expense due to defined benefit obligation at 31 December
Expense charged in:
Salaries and wages
Financial expenses
Total expense due to defined benefit obligation at 31 December
Amounts recognized in the statement of other comprehensive income:
(CHF million)
2023
Remeasurement on net defined benefit liability
Change in demographic assumptions
Change in financial assumptions
Experience adjustments on benefit obligations
Actual return on plan assets excluding net interest expense
Asset ceiling
Total recognized in the statement of other comprehensive income
at 31 December
(CHF million)
2022
Remeasurement on net defined benefit liability
Change in demographic assumptions
Change in financial assumptions
Experience adjustments on benefit obligations
Actual return on plan assets excluding net interest expense
Asset ceiling
Total recognized in the statement of other comprehensive income
at 31 December
Change in unrecognized asset due to the asset ceiling:
(CHF million)
2023
Unrecognized asset at 1 January
Interest on unrecognized asset recognized in P&L
Other changes in unrecognized asset due to the asset ceiling
Unrecognized asset at 31 December
(CHF million)
2022
Unrecognized asset at 1 January
Other changes in unrecognized asset due to the asset ceiling
Unrecognized asset at 31 December
CH
UK
USA
Other
Total
8
–
–
8
8
–
8
–
–1
1
–
1
–1
–
1
–
1
2
2
–
2
6
–
–
6
6
–
6
15
–1
2
16
17
–1
16
CH
UK
USA
Other
Total
–
31
10
–1
–100
–60
–2
3
1
–
–
2
–
2
1
–6
–
–3
–
6
3
2
–
11
–2
42
15
–5
–100
–50
CH
UK
USA
Other
Total
–
–87
3
–21
98
–7
–
–68
7
99
–
38
–
–43
–1
50
–
6
–1
–34
3
14
1
–17
–1
–232
12
142
99
20
CH
UK
USA
Other
Total
98
2
–100
–
CH
–
98
98
–
–
–
–
–
–
–
–
1
1
–
2
99
3
–100
2
UK
USA
Other
Total
–
–
–
–
–
–
1
–
1
1
98
99
In 2023, the Group recognized a CHF 2 million asset ceiling (2022: CHF 99 million). The movement in 2023 was mainly made of a CHF 100 million
decrease (2022: CHF 98 million increase) for the SGS Swiss Pension Plan. The maximum economic benefit available in the SGS Swiss Pension
Plan was determined applying the common approach prescribed by IFRIC 14, and reflects the present value of reductions in future contributions
to the plan. In making this estimate, assumptions used for future service costs are consistent with those used to determine the defined benefit
obligation as at 31 December 2023.
Financial statementsSGS | 2023 Integrated Report Movements in the net asset/(liability) during the period:
(CHF million)
2023
Net asset/(liability) at 1 January
Expense recognized in the income statement
Remeasurements recognized in other comprehensive income
Contributions paid by the Group
Employer benefit payments
Exchange differences
Net asset/(liability) at 31 December
(CHF million)
2022
Net asset/(liability) at 1 January
Expense recognized in the income statement
Remeasurements recognized in other comprehensive income
Contributions paid by the Group
Employer benefit payments
Exchange differences
Net asset/(liability) at 31 December
Change in the defined benefit obligation is as follows:
(CHF million)
2023
127
CH
UK
USA
Other
Total
34
–4
60
6
–
–
96
19
–
–2
–
–
–
17
3
–
3
–
–
–
6
–44
–9
–11
8
2
2
–52
12
–13
50
14
2
2
67
CH
UK
USA
Other
Total
29
–8
7
6
–
–
34
61
–
–38
–
–
–4
19
4
–2
–6
7
–
–
3
–74
–6
17
13
3
3
–44
20
–16
–20
26
3
–1
12
CH
UK
USA
Other
Total
Opening present value of the defined benefit obligation
362
115
153
120
750
Current service cost
Interest cost
Plan participants’ contributions
Past service cost
Actual net benefit payments
(Gains)/losses due to changes in demographic assumptions
(Gains)/losses due to changes in financial assumptions
Experience differences
Exchange rate (gains)/losses
Defined benefit obligation at 31 December
(CHF million)
2022
5
7
5
–
–20
–
31
10
–
400
–
5
–
–
–6
–2
3
1
–5
111
–
7
–
–
–10
–
2
1
–14
139
6
4
1
1
–7
–
6
3
–9
125
11
23
6
1
–43
–2
42
15
–28
775
CH
UK
USA
Other
Total
Opening present value of the defined benefit obligation
456
194
197
159
1 006
Current service cost
Interest cost
Plan participants’ contributions
Actual net benefit payments
(Gains)/losses due to changes in demographic assumptions
(Gains)/losses due to changes in financial assumptions
Experience differences
Exchange rate (gains)/losses
Defined benefit obligation at 31 December
8
1
5
–24
–
–87
3
–
362
–
4
–
–7
–
–68
7
–15
115
1
6
–
–10
–
–43
–1
3
153
6
2
1
–9
–1
–34
3
–7
120
15
13
6
–50
–1
–232
12
–19
750
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 128
Change in fair value of plan assets is as follows:
(CHF million)
2023
Opening fair value of plan assets
Interest income on plan assets
Return on plan assets excluding amounts included in net
interest income
Actual employer contributions
Actual plan participants’ contributions
Actual net benefit payments
Actual admin expenses paid
Exchange differences
CH
UK
USA
Other
Total
494
10
1
6
5
–20
–
–
134
6
–
–
–
–6
–1
–5
156
8
6
–
–
–10
–1
–14
145
77
3
–2
10
1
–7
–
–7
75
861
27
5
16
6
–43
–2
–26
844
Fair value of plan assets at 31 December
496
128
(CHF million)
2022
Opening fair value of plan assets
Interest income on plan assets
Return on plan assets excluding amounts included in net
interest income
Actual employer contributions
Actual plan participants’ contributions
Actual net benefit payments
Actual admin expenses paid
Exchange differences
Fair value of plan assets at 31 December
CH
UK
USA
Other
Total
485
1
21
6
5
–24
–
–
494
255
5
–99
–
–
–7
–1
–19
134
201
6
–50
7
–
–10
–1
3
156
85
2
1 026
14
–14
–142
16
1
–9
–
–4
77
29
6
–50
–2
–20
861
There are no reimbursement rights included in plan assets. The actual return on plan assets was a gain of CHF 32 million (2022: loss
of CHF 128 million).
The major categories of plan assets at the balance sheet date are as follows:
(CHF million)
2023
Cash and cash equivalents
Equity securities
Debt securities
Assets held by insurance company
Properties
Investment funds
Other
Total plan assets at 31 December
(CHF million)
2022
Cash and cash equivalents
Equity securities
Debt securities
Assets held by insurance company
Properties
Investment funds
Other
Total plan assets at 31 December
CH
UK
USA
Other
Total
16
138
78
3
226
32
3
496
14
24
88
–
–
–
2
128
–
–
145
–
–
–
–
145
12
–
2
22
–
–
39
75
42
162
313
25
226
32
44
844
CH
UK
USA
Other
Total
26
136
68
3
217
44
–
494
12
15
106
–
–
–
1
134
–
17
138
–
–
–
1
156
18
–
1
21
–
–
37
77
56
168
313
24
217
44
39
861
Financial statementsSGS | 2023 Integrated Report 129
In 2023 and 2022, the Group did not occupy any property that was included in the plan assets.
Properties are rented at fair market rental rates. There are no SGS SA shares or any other financial securities used by the Group included
in the plan assets.
The plan assets are primarily held within instruments with quoted market prices in an active market, with the exception of the property
and insurance policy holdings.
The investment strategy in Switzerland is to invest, within the statutory and legal requirements, in a diversified portfolio with the aim of
generating long-term returns, which will enable the Board of the foundation to grow the accounts of the members of the pension fund,
whilst taking on the lowest possible risk in order to do so.
In the USA, the pension plan target policy is determined by both quantitatively and qualitatively assessing the risk tolerance level and return
requirements of the plan as determined by the Investment Committee. In 2023 the investment portfolio asset was shifted to 100% Liability
Driven Investment as the company decided to freeze the plan effective 31 December 2022. In the UK, the Trustees review the investment
strategy of the scheme and the plan on a regular basis in order to ensure that they remain appropriate. The last review for both the scheme
and plan was recently undertaken and is in the process of being implemented.
Actuarial assumptions vary according to local prevailing economic and social conditions. The principal weighted average actuarial assumptions
used in determining the cost of benefits for both 2023 and 2022 are as follows:
USA
Other
(Weighted average %)
2023
Discount rate
Mortality assumption
Salary progression rate
Future increase for pension in payments
Healthcare cost trend assumed for the next year
Ultimate trend rate
Year that the rate reaches the ultimate trend rate
(Weighted average %)
2022
Discount rate
Mortality assumption
Salary progression rate
Future increase for pension in payments
Healthcare cost trend assumed for the next year
Ultimate trend rate
Year that the rate reaches the ultimate trend rate
CH
1.4
UK
4.5
LPP 2020, CMI
2019 1.25%
SPA03M103%/
F99% CMI_2022
1.25%
1.7
–
–
–
CH
2.1
2.5
3.0
–
–
UK
4.7
5.1
PRI 2012 MP
2021
–
–
6.4
4.5
2030
USA
5.2
LPP 2020, CMI
2019 1.25%
SNA03M104%/
F94% CMI 2021
1.25%
PRI 2012 MP
2021
1.7
–
–
–
2.5
3.0
–
–
3.3
–
6.7
4.5
2030
4.2
–
3.1
0.4
–
–
Other
3.9
–
3.1
0.4
–
–
The weighted average rate for each assumption used to measure the benefits obligation is also shown. The assumptions used to determine
the end-of-year benefits obligation are also used to calculate the following year’s cost.
In Switzerland, a decrease in the discount rate of 0.5% per annum would, all other things being equal, increase the obligation by
CHF 26 million; a 0.5% increase in assumed salary would increase the obligation by CHF 1 million; and a one-year increase in members’
life expectancy would increase the obligation by approximately CHF 10 million.
In the USA, a decrease in the discount rate of 0.5% per annum would, all other things being equal, increase the obligation by CHF 6 million;
a 0.5% increase in assumed salary would not impact the obligation; and a one-year increase in members’ life expectancy would increase
the obligation by approximately CHF 2 million.
In the UK, a decrease in the discount rate of 0.5% per annum would, all other things being equal, increase the obligation by CHF 7 million;
a 0.5% increase in assumed salary would not impact the obligation; and a one-year increase in members’ life expectancy would increase
the obligation by approximately CHF 3 million.
These sensitivities have been calculated to show the movement in the defined benefit obligation in isolation and assume no other changes
in market conditions at the accounting date. This is unlikely in practice; for example, a change in discount rate is unlikely to occur without
any movement in the value of the assets held by the plans.
The amount recognized as an expense in respect of defined contribution plans during 2023 was CHF 80 million (2022: CHF 81 million).
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 130
26. Provisions
(CHF million)
At 1 January 2023
Charge to income statement
Release to income statement
Payments
Exchange differences
At 31 December 2023
Analyzed as:
Current liabilities
Non-current liabilities
Total
Legal and
warranty claims on
services rendered
Demobilization
and reorganization
Other
provisions
39
15
–6
–10
–2
36
60
27
–5
–28
–7
47
55
11
–9
–6
–2
49
2023
41
91
132
Total
154
53
–20
–44
–11
132
2022
58
96
154
A number of group companies are subject to litigation and other claims arising out of the normal conduct of their business that can be
best viewed as claims on services rendered. The claim provision represents the sum of estimates of amounts payable on identified claims
and of losses incurred but not yet reported. They therefore reflect estimates of the future payments required to settle both reported and
unreported claims. In the opinion of management, based on all currently available information, the provisions adequately reflect the Group’s
exposure to legal and warranty claims on services rendered. The ultimate outcome of these matters is not expected to materially affect
the Group’s financial position, results of operations or cash flows.
Demobilization and reorganization provisions relate to present legal or constructive obligations of the Group towards third parties, such
as termination payments to employees upon leaving the Group, which in some jurisdictions are a legal obligation. For specific long-term
contracts, typically with two to five years’ duration, the Group is required to dismantle infrastructure and terminate the services of personnel
upon completion of the contract. These demobilization costs are provided for during the life of the contract. Experience has shown that
these contracts may be either extended or terminated earlier than expected.
Other provisions include present legal or constructive obligations towards tax authorities for indirect tax exposure as well as other provisions
towards third parties.
27. Trade and other payables
(CHF million)
Trade payables
Other payables
Total
2023
335
299
634
2022
360
311
671
Trade accounts and other payables principally comprise amounts outstanding for trade purchases and ongoing operating costs.
At 31 December 2023 and 2022, the fair value of the Group’s trade accounts and other payables approximates the carrying value.
28. Contingent liabilities
In the normal course of business, the Group and its subsidiaries are parties to various lawsuits and claims. Management does not expect
that the outcome of any of these legal proceedings will have a material adverse effect on the Group’s financial position, results of operations
or cash flows.
Guarantees and performance bonds
(CHF million)
Guarantees
Performance bonds
Total
2023
186
191
377
2022
461
189
650
The Group has issued unconditional guarantees of CHF 186 million (2022: CHF 461 million), as well as performance bonds and bid bonds
of CHF 191 million (2022: CHF 189 million) to commercial customers on behalf of its subsidiaries. Management believes the likelihood that
a material payment will be required under these guarantees is remote.
Financial statementsSGS | 2023 Integrated Report 131
29. Equity compensation plans
Selected employees of the SGS Group are eligible to participate in equity compensation plans.
i) Grants to members of the Board of Directors
In 2023, a total of 6 859 restricted shares were granted to members of the Board of Directors, in settlement of part of their remuneration
for the Annual General Meeting 2023 to 2024 mandate. The restricted shares are blocked for a period of three years from the grant date,
until May 2026. The value at grant date of the restricted shares granted was CHF 564 839 (defined as the average closing price of the
share during a 20-day period following the payment of the dividends after the Annual General Meeting 2023).
ii) Grants to members of the Operations Council
In 2023, a total of 105 045 Performance Share Units (PSUs) under the long-term incentive plan 2023-2025 were granted to members of the
Operations Council. The PSUs vest after a three-year performance period 2023-2025, in March 2026, subject to performance conditions and
to continuity of employment of the beneficiaries during the vesting period. The value at grant date of the PSUs granted, being defined as the
average closing price of the share during a 20-day period preceding the grant date, was CHF 8 727 139.
More information on the long-term incentive plan for the members of the Operations Council is disclosed in the SGS Remuneration report.
In 2023, a total of 26 921 Restricted Shares were granted to members of the Operations Council, in settlement of 50% of the annual
incentive related to the 2022 performance. The Restricted Shares are blocked for a period of three years from the grant date, until May 2026.
The value at grant date of the Restricted Shares granted, being defined as the average closing price of the share during a 20-day period
following the payment of the dividends after the 2023 Annual general Meeting, was CHF 2 216 944.
50% of the Annual Incentive related to the 2023 performance will be settled in Restricted Shares. The grant of the Restricted Shares will
be done after the 2024 Annual General Meeting; the total number of Restricted Shares to be granted will be calculated dividing 50% of the
annual Incentive amount by the average closing price of the share during a 20-day period following the payment of the dividends after the
2024 Annual General Meeting, rounded up to the nearest integer. The Restricted Shares will be blocked for a period of three years from
the grant date, until May 2027.
More information on the short-term incentive for the members of the Operations Council in disclosed in the SGS Remuneration report.
iii) Grants to other employees
In 2023, a total of 184 464 performance share units (PSUs) under the long-term incentive plan 2023-2025 were granted to selected senior
managers. The PSUs vest after a three-year performance period 2023-2025, in March 2026, subject to performance conditions and to
continuity of employment of the beneficiaries during the vesting period. The value at grant date of the PSUs granted, being defined as
the average closing price of the share during a 20-day period preceding the grant date, was CHF 15 325 269.
In 2023, a total of 89 475 restricted share units (RSUs) were granted to selected key employees under the restricted share units plan 2023.
The RSUs vest three years after the grant date. The value at grant date of the RSUs granted, being defined as the average closing price
of the share during a 20-day period preceding the grant date, was CHF 7 433 583.
Performance share unit (PSU) and restricted share unit (RSU) plans
Granted
Forfeited
Description
SGS-PSU-21
SGS-PSU-22
SGS-PSU-23
SGS-RSU-20
SGS-RSU-21
SGS-RSU-22
SGS-RSU-23
Total
Vesting
period from
February 24
February 25
March 26
April 23
April 24
April 25
April 26
Units
outstanding at
31 December 2022
376 800
219 900
–
–
–
289 509
48 700
42 225
70 750
–
758 375
–
–
–
89 475
378 984
Units
outstanding at
31 December 2023
355 125
206 750
286 561
–
39 325
66 350
86 950
Vested
–795
–345
–
–48 475
–300
–900
–170
–20 880
–12 805
–2 948
–225
–2 600
–3 500
–2 355
–45 313
–50 985
1 041 061
The Group does not issue new shares to grant employees in relation to the equity-based compensation plans but uses treasury shares,
acquired through share buyback programs.
In total, as of 31 December 2023, the equity overhang, defined as the total number of unvested share units (1 041 061 units) divided by the
total number of outstanding shares (187 375 800 shares) amounted to 0.56%.
The Company’s burn rate, defined as the number of equities (shares, restricted shares and share units) granted in 2023 (412 764 units)
divided by the total number of outstanding shares, was 0.22%.
The Group recognized during the year a total expense of CHF 27 million (2022: CHF 20 million) in relation to equity compensation plans.
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 132
Shares available (required) for future plans:
At 1 January 2022
Repurchased shares
Granted SGS-RSU-22 plan
Granted SGS-PSU-22 plan
Shares for PSU forfeited
Shares for RSU forfeited
Shares used for Restricted Shares plan as settlement of Short-Term Incentive
At 31 December 2022
At 31 December 2022 restated after stock-split
Granted SGS-RSU-23 plan
Granted SGS-PSU-23 plan
Shares for PSU forfeited
Shares for RSU forfeited
Shares used for Restricted Shares plan as settlement of Short-Term Incentive
At 31 December 2023
At 31 December the Group had the following shares available to satisfy various programs:
Total
–18 323
12 500
–2 915
–8 907
991
461
–1 663
–17 856
–446 400
–89 475
–289 509
36 633
8 680
–33 780
–813 851
Number of shares held
Shares allocated for 2020 RSU plan
Shares allocated for 2021 RSU plan
Shares allocated for 2021 PSU plan
Shares allocated for 2022 RSU plan
Shares allocated for 2022 PSU plan
Shares allocated for 2023 RSU plan
Shares allocated for 2023 PSU plan
Shares required for future equity compensation plans
at 31 December
2023 Total
2022 Total Restated
2022 Total Published
227 210
–
–39 325
–355 125
–66 350
–206 750
–86 950
–286 561
311 975
–48 700
–42 225
–376 800
–70 750
–219 900
–
–
12 479
–1 948
–1 689
–15 072
–2 830
–8 796
–
–
–813 851
–446 400
–17 856
30. Related-party transactions
Transactions between the Company and its subsidiaries, which are related parties of the Group, have been eliminated on consolidation
and are not disclosed.
Compensation to Directors and members of the Operations Council
The remuneration of Directors and members of the Operations Council during the year was as follows:
(CHF million)
Short-term benefits
Post-employment benefits
Share-based payments1
Total
2023
2022
15
1
12
28
15
1
12
28
1. 2023 represents the value at grant of restricted share units and performance share units granted in 2023 while 2022 represents the value at grant of restricted share units and performance
share units granted in 2022.
The remuneration of Directors and members of the Operations Council is determined by the Nomination and Remuneration Committee.
Additional information is disclosed in the SGS Remuneration report.
During 2023 and 2022, no member of the Board of Directors or of the Operations Council had a personal interest in any business transactions
of the Group.
The Operations Council (including senior management) participates in the equity compensation plans as disclosed in note 29.
The total compensation, including social charges, received by the Board of Directors amounted to CHF 2 820 000 (2022: CHF 2 797 000).
The total compensation (cash and shares/options), including social charges, received by the Operations Council (including senior
management) amounted to CHF 24 678 000 (2022: CHF 24 474 000).
Financial statementsSGS | 2023 Integrated Report
133
Loans to members of governing bodies
As at 31 December 2023, no loan, credit or outstanding advance was due to the Group from members or former members of its governing
bodies (unchanged from previous year).
Transactions with other related parties
In 2023 and in 2022, the Group did not perform any activity generating sales for the other related parties.
During 2023 and 2022, neither related trade receivable balances unpaid nor expense in respect of any bad or doubtful debts due from these
related parties were recognized.
31. Significant shareholders
As at 31 December 2023, Groupe Bruxelles Lambert (acting through Serena SARL and URDAC) held 19.31% (December 2022: 19.11%) and
BlackRock Inc. held 5.18% (December 2022: 5.18%) and UBS Fund Management (Switzerland) AG held 3.03% (December 2022: below
3%) of the share capital and voting rights of the Company. At the same date, the Group held 1.64% of the share capital of the Company
(December 2022: 1.68%).
32. Approval of financial statements and subsequent events
The Board of Directors is responsible for the preparation and presentation of the financial statements. These financial statements were
authorized for issue by the Board of Directors on 21 February 2024, and will be submitted for approval on 26 March 2024 during the
Annual General Meeting. There are no subsequent events to be reported in these consolidated financial statements.
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 134
Report of the statutory auditor
to the General Meeting of SGS SA
Geneva
Report on the audit of the consolidated financial statements
Opinion
We have audited the consolidated financial statements of SGS SA and its subsidiaries (the Group), which comprise the
consolidated income statement and consolidated statement of comprehensive income for the year ended 31 December
2023, the consolidated statement of financial position as at 31 December 2023, the consolidated statement of cash flows
and consolidated statement of changes in equity for the year then ended, and notes to the consolidated financial state-
ments, including a summary of significant accounting policies.
In our opinion, the consolidated financial statements (pages 94 to 133 and pages 155 to 157) give a true and fair view of
the consolidated financial position of the Group as at 31 December 2023 and its consolidated financial performance and
its consolidated cash flows for the year then ended in accordance with IFRS Accounting Standards and comply with
Swiss law.
Basis for opinion
We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss Standards
on Auditing (SA-CH). Our responsibilities under those provisions and standards are further described in the 'Auditor’s
responsibilities for the audit of the consolidated financial statements' section of our report. We are independent of the
Group in accordance with the provisions of Swiss law and the requirements of the Swiss audit profession, as well as the
International Code of Ethics for Professional Accountants (including International Independence Standards) issued by
the International Ethics Standards Board for Accountants (IESBA Code), and we have fulfilled our other ethical responsi-
bilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our audit approach
Overview
Overall Group materiality: CHF 42 million
We concluded full scope audit work at 21 reporting units and audits of specific
balances were performed on a further 16 reporting units. Our audit scope ad-
dressed over 68% of the Group's sales.
As key audit matters the following areas of focus have been identified:
•
Testing the Vehicle Compliance Spain CGU for impairment
• Unbilled sales and work in progress (WIP)
•
Taxation
PricewaterhouseCoopers SA, avenue Giuseppe-Motta 50, case postale, 1211 Genève 2, Switzerland
Téléphone: +41 58 792 91 00, www.pwc.ch
PricewaterhouseCoopers SA is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity.
Financial statementsSGS | 2023 Integrated Report
135
Materiality
The scope of our audit was influenced by our application of materiality. Our audit opinion aims to provide reasonable
assurance that the consolidated financial statements are free from material misstatement. Misstatements may arise due
to fraud or error. They are considered material if, individually or in aggregate, they could reasonably be expected to influ-
ence the economic decisions of users taken on the basis of the consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall
Group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with
qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit
procedures and to evaluate the effect of misstatements, both individually and in aggregate, on the consolidated financial
statements as a whole.
Overall Group materiality
CHF 42 million
Benchmark applied
Three-years average profit before tax
Rationale for the materiality bench-
mark applied
We chose profit before tax as the benchmark because, in our view, it is the
benchmark against which the performance of the Group is most commonly
measured. The three-years average reflects current market volatility. Moreover,
profit before tax is a generally accepted benchmark for materiality considera-
tions.
We agreed with the Audit Committee that we would report to them misstatements above CHF 2 million identified during
our audit as well as any misstatements below that amount which, in our view, warranted reporting for qualitative reasons.
Audit scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consoli-
dated financial statements as a whole, taking into account the structure of the Group, the accounting processes and con-
trols, and the industry in which the Group operates.
Due to the nature of its business and its organisation, the Group has a decentralised structure and operates in 116 coun-
tries in three main regions (Asia Pacific, Europe/Africa/Middle East and Americas). We instructed audit teams in 17
countries to perform a full scope audit and audit teams in another 14 countries to perform an audit of specific balances
(principally sales, account receivable, work in progress and unbilled sales). These teams audit the respective account
balances as well as classes of transactions and report to us on their audit results in response to the audit instructions we
sent to them.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Testing the Vehicle Compliance Spain CGU for impairment
Key audit matter
How our audit addressed the key audit matter
The Group’s share of goodwill allocated to the Vehicle
Compliance Spain CGU (cash generating unit) amounts
to CHF 92 million as at 31 December 2023.
We identified the valuation and recoverability of goodwill
and other intangible assets allocated to the Vehicle Com-
pliance Spain CGU as a key audit matter because tech-
nical assumptions used in the determination of the CGUs
recoverable amount are highly sensitive to the current
We obtained the Group’s impairment test for the Vehicle
Spain Compliance CGU and, in particular:
• We assessed the appropriateness of the impairment
testing methodology;
• We reconciled the five-year projections to the financial
forecasts that were approved by management;
2 SGS SA | Report of the statutory auditor to the General Meeting
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136
economic situation. At the same time, the business is
highly dependent on the renewal of concessions in the
coming years.
The discounted cash flow model is based on the value-
in-use methodology and on a five-year plan.
The valuation and assessment in connection with the im-
pairment testing of the goodwill of Vehicle Compliance
Spain CGU were of particular importance. As a result of
this analysis, the goodwill of the CGU was written down
by CHF 18 million.
Management’s judgement is required to determine the as-
sumptions relating to the future business results, the long-
term growth rate after the forecast period and the dis-
count rate applied to the forecasted cash flows.
Refer to the corresponding accounting policy in note 2 –
Significant accounting policies and exchange rates and
note 14 – Goodwill in the notes to the consolidated finan-
cial statements.
• We challenged management to substantiate the key as-
sumptions used in the cash flow projections of the Vehi-
cle Compliance Spain CGU's business during the fore-
casted period;
• We obtained comfort over the appropriateness of cash
flow assumptions by corroborating them with external
market data;
• We tested, with the support of PwC's valuation experts,
the reasonableness of the long-term growth rate after
the forecast period and the discount rate;
• We tested the mathematical accuracy of the model;
• We assessed the quality of the cash flow projections by
comparing the actual results of the CGU to the prior
year's budget to identify in retrospect whether any of the
assumptions might have been too optimistic;
• We evaluated the Group’s sensitivity analysis of key as-
sumptions to ascertain the effect of changes in those
assumptions on the value-in-use;
• We assessed the adequacy of the disclosures included
in note 14 related to goodwill.
On the basis of the procedures performed, we consider
that the conclusions drawn by management regarding the
impairment test of the Vehicle Compliance Spain CGU was
reasonable.
Unbilled sales and work in progress (WIP)
Key audit matter
How our audit addressed the key audit matter
The amounts on the balance sheet related to unbilled
sales and work in progress total CHF 223 million.
Unbilled sales are recognised for services completed but
not yet invoiced and is measured at the net selling price.
WIP is recognised for partially completed performance
obligations under a contract. The measure of progress is
based on observable output or input methods. A propor-
tion of the expected margin on completion is recognised
based on the actual costs incurred in proportion to total
expected costs, provided that the project is expected to
be profitable once completed.
The assessment of the degree of progress and the esti-
mated margin requires judgement by management.
Given the significance and relevance of their impact on
the consolidated financial statements and because the
progress and the expected margin on completion must be
estimated at the end of each reporting period, we deemed
the measurement of unbilled sales and work in progress
to be a key audit matter.
Refer to the corresponding accounting policy in note 2 –
Significant accounting policies and exchange rates and to
note 5 – Sales from contracts with customers in the notes
to the consolidated financial statements.
We reviewed SGS's sales recognition policy and obtained
an understanding of how unbilled sales and WIP are ac-
counted for. Our audit approach consisted of the following
procedures, in particular:
• We assessed the design and implementation of the key
controls relating to the monitoring of unbilled sales and
WIP balances.
• We selected samples of unbilled sales and WIP bal-
ances and traced them to underlying contracts and in-
voices with customers.
• We obtained comfort over the degree of progress from
discussions with project managers and performed rec-
onciliations to actual numbers recognised in the finan-
cial statements in selected cases.
• We selected samples of unbilled sales and WIP bal-
ances recorded at the previous period-end and com-
pared them to subsequent invoices and cash received
from clients in order to evaluate the reliability of man-
agement's estimation process.
• We analysed the aging of the open balances and as-
sessed the appropriateness of provisions recognised in
accordance with the Group’s provision grid.
3 SGS SA | Report of the statutory auditor to the General Meeting
Financial statementsSGS | 2023 Integrated Report
137
•
For entities with significant unbilled or WIP balances not
subject to our Group audit, we performed central audit
procedures.
On the basis of the procedures performed, we consider
management’s estimates and disclosures regarding un-
billed sales and work in progress balances to be reason-
able.
How our audit addressed the key audit matter
Our audit approach consisted of the following procedures,
in particular:
• We assessed the existence of tax exposures by means
of inquiry with local and Group management.
• We discussed management’s process to assess the risk
of tax liabilities in the different jurisdictions as a result of
potential challenges to the tax positions, and tested the
measurement and timing of recognition of the provision
when applicable.
• With the support of PwC's internal tax experts, we ex-
amined the documentation outlining the matters in dis-
pute or at risk and the benchmarks relied upon for trans-
fer pricing, and used our knowledge of the tax laws and
other similar taxation matters to assess the available ev-
idence, management’s judgmental processes and the
provisions.
On the basis of the procedures performed, we conclude
that management’s tax estimates were reasonable.
Taxation
Key audit matter
The Group is subject to taxation in many jurisdictions and
management makes judgements about the incidence and
magnitude of tax liabilities that are subject to the future
outcome of assessments by the relevant tax authorities.
Accordingly, the calculation of tax expense and the re-
lated liability are subject to inherent uncertainty.
To make these judgements, the Group has a structured
process whereby management systematically monitors
and assesses the existence, development and settlement
of tax risks in each of its jurisdictions.
The Group’s main tax risks are i) that the tax authorities
might not accept the transfer prices applied and ii) poten-
tial adverse results of ongoing tax audits.
In accordance with its methodology, provisions for uncer-
tain tax positions are calculated and included within cur-
rent tax liabilities (CHF 176 million as at 31 Decem-
ber2023).
Refer to the corresponding accounting policy in note 2 –
Significant accounting policies and exchange rates and to
note 10 – Taxes in the notes to the consolidated financial
statements.
Other information
The Board of Directors is responsible for the other information. The other information comprises the information included
in the annual report, but does not include the financial statements, the consolidated financial statements, the remunera-
tion report and our auditor’s reports thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial state-
ments, or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Board of Directors' responsibilities for the consolidated financial statements
The Board of Directors is responsible for the preparation of consolidated financial statements that give a true and fair
view in accordance with IFRS Accounting Standards and the provisions of Swiss law, and for such internal control as the
Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free
from material misstatement, whether due to fraud or error.
4 SGS SA | Report of the statutory auditor to the General Meeting
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138
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group's ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
Swiss law, ISAs and SA-CH will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influ-
ence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Swiss law, ISAs and SA-CH, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrep-
resentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropri-
ate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal
control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and re-
lated disclosures made.
• Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty ex-
ists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evi-
dence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclo-
sures, and whether the consolidated financial statements represent the underlying transactions and events in a man-
ner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors or its relevant committee regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them regarding all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats
or safeguards applied.
From the matters communicated with the Board of Directors or its relevant committee, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in
our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
5 SGS SA | Report of the statutory auditor to the General Meeting
Financial statementsSGS | 2023 Integrated Report
139
Report on other legal and regulatory requirements
In accordance with article 728a para. 1 item 3 CO and PS-CH 890, we confirm the existence of an internal control sys-
tem that has been designed, pursuant to the instructions of the Board of Directors, for the preparation of the consoli-
dated financial statements.
We recommend that the consolidated financial statements submitted to you be approved.
PricewaterhouseCoopers SA
Guillaume Nayet
Licensed audit expert
Auditor in charge
Geneva, 21 February 2024
Louise Rolland
Licensed audit expert
6 SGS SA | Report of the statutory auditor to the General Meeting
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix
140
2. SGS SA
2.1. Income Statement
For the years ended 31 December
(CHF million)
Operating income
Dividends from subsidiaries
Total operating income
Operating expenses
Other operating expenses
Total operating expenses
Operating result
Financial income
Exchange gain, net
Financial expenses
Liquidation of subsidiaries, net
Financial result
Extraordinary losses
Profit before taxes
Taxes
Withholding taxes
Profit for the year
Notes
2023
2022
646
646
–6
–6
640
98
1
–79
–
20
–26
634
–
–8
626
696
696
–4
–4
692
48
30
–51
–
27
–67
652
3
–6
649
6
6
7
Financial statementsSGS | 2023 Integrated Report 2.2. Statement of Financial Position at 31 December
(Before appropriation of available retained earnings)
(CHF million)
Assets
Current assets
Cash and cash equivalents
Derivative assets
Amounts due from subsidiaries
Other receivables and prepayments
Total current assets
Non-current assets
Loans to subsidiaries
Other financial assets
Other assets
Investments in subsidiaries
Total non-current assets
Total assets
Shareholder's equity and liabilities
Current liabilities
Bank overdraft
Derivative liabilities
Trade and other payables
Amounts due to subsidiaries
Corporate bonds
Deferred income and accrued expenses
Total current liabilities
Non-current liabilities
Amounts due to subsidiaries
Corporate bonds
Total non-current liabilities
Shareholder's equity
Share capital
Legal reserve
Retained earnings
Treasury shares for share buyback
Reserve for treasury shares held by a subsidiary
Total shareholder's equity
Total shareholder's equity and liabilities
141
Notes
2023
2022
419
18
449
6
892
424
12
434
4
874
1 667
1 666
4
2
2 003
3 676
4 568
8
14
1
625
250
12
910
570
2 325
2 895
7
34
951
–250
21
763
4 568
5
2
2 008
3 681
4 555
9
9
10
590
500
12
1 130
623
2 075
2 698
7
34
907
–250
29
727
4 555
3
3
4 to 5
4 to 5
4 to 5
4 to 5
4 to 5
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 142
2.3. Notes
SGS SA (‘the Company’) is the ultimate parent company of the SGS Group which owns and finances, either directly or indirectly,
its subsidiaries and joint ventures throughout the world. The head office is located in Geneva, Switzerland.
The average number of employees is less than 10 people for this company (2022: less than 10).
1. Significant accounting policies
The financial statements are prepared in accordance with the accounting principles required by the provisions of commercial accounting
as set out in the Swiss Code of Obligations.
Investments in subsidiaries
Investments in subsidiaries are valued individually at acquisition cost less an adjustment for impairment where appropriate.
Foreign currencies
Balance sheet items denominated in foreign currencies are converted into Swiss Francs at year-end exchange rates with the exception
of investments in subsidiaries which are valued at the historical exchange rate.
Foreign currency transactions are translated using the actual exchange rates prevailing during the year. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at year-end exchange rates of assets and liabilities denominated
in foreign currencies are recognized in profit or loss.
Derivatives
SGS SA uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational,
financing and investment activities. In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments
for trading purposes. Derivatives are accounted for on a mark-to-market basis.
Derivative financial instruments are initially recognized at fair value and subsequently remeasured at fair value at each balance sheet date.
The gains and losses resulting from the fair value remeasurement are recognized in the income statement. The fair value of forward
exchange contracts is determined with reference to market prices at the balance sheet date.
Dividends from subsidiaries
Dividends are treated as an appropriation of profit in the year in which they are ratified at the Annual General Meeting and subsequently
paid, rather than as an appropriation of profit in the year to which they relate or for which they are proposed by the Board of Directors.
As a result, dividends are recognized in income in the year in which they are received, on a cash basis. Dividends are recorded in the
currency defined for each affiliate and converted at spot rate in the income statement.
Bonds
Bonds are recorded at nominal value.
2. Subsidiaries
The list of principal Group subsidiaries appears in the annual report on pages 155 to 157.
In 2020, SGS SA acquired 80% of the capital of Ryobi Geotechnique Pte Ltd in Singapore. The share purchase agreement includes an option
to acquire the remaining 20% of Ryobi Geotechnique Pte Ltd in 2025.
3. Corporate bonds
SGS SA made the following bond issuances:
Date of issue
27.02.2014
Short-term bonds
08.05.2015
03.03.2017
29.10.2018
29.10.2018
06.05.2020
05.09.2022
05.09.2022
17.11.2023
17.11.2023
Face value in
CHF Million
250
250
225
375
225
175
325
150
350
240
260
Coupon in
%
1.750
0.875
0.550
0.750
1.250
0.950
1.250
1.700
2.000
2.300
Year of
Maturity
2024
2030
2026
2025
2028
2026
2025
2029
2027
2031
Issue
price in %
101.019
100.245
100.153
100.068
101.157
100.182
100.000
100.197
100.038
100.127
Redemption
price in %
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
Long-term bonds
2 325
As at 31 December 2023, one bond in the above table is classified as short-term liabilities as the due date is less than a year.
On 17 November 2023, SGS SA issued two bonds, one CHF 240 million bond with a 2.000% coupon and one CHF 260 million bond
with a 2.300% coupon.
The Company has listed all bonds on the SIX Swiss Exchange.
Financial statementsSGS | 2023 Integrated Report 4. Total equity
(CHF million)
Balance at 1 January 2022
Dividends paid
Increase in the reserve for own shares
Share buyback program
Profit for the year
Balance at 31 December 2022
Dividends paid
Decrease in the reserve for own shares
Profit for the year
Balance at 31 December 2023
5. Share capital
Share
capital
7
Legal
reserve
34
–
–
–
–
7
–
–
–
7
–
–
–
–
34
–
–
–
34
Reserve for
treasury shares held
by a subsidiary
Treasury
shares for
share buyback
Retained
earnings
8
–
21
–
–
29
–
–8
–
21
–
–
–
–250
–
–250
–
–
–
–250
878
–599
–21
–
649
907
–590
8
626
951
143
Total
927
–599
–
–250
649
727
–590
–
626
763
Total shares
issued
Total share capital
CHF (million)
Balance at 1 January 2022
Treasury shares released into circulation
Treasury shares purchased for equity compensation plans
Treasury shares purchased for cancellation
Balance at 31 December 2022
Treasury shares released into circulation
Balance at 12 April 2023 before share split
Shares in
circulation
7 491 672
3 381
–12 500
–113 499
7 369 054
1 964
7 371 018
Treasury
shares
3 360
–3 381
12 500
113 499
125 978
–1 964
124 014
7 495 032
–
–
–
7 495 032
–
7 495 032
Share split 25-1
176 904 432
2 976 336
179 880 768
Balance at 12 April 2023 after share split
184 275 450
3 100 350
187 375 800
Treasury shares released into circulation
Balance at 31 December 2023
35 665
–35 665
–
184 311 115
3 064 685
187 375 800
7
–
–
–
7
–
7
–
7
–
7
Issued share capital
On 28 March 2023, the Annual General Assembly approved a 25-1 stock split that went into effect on 12 April 2023. This split increased
the number of shares issued, from 7 495 032 to 187 375 800, and reduced the nominal value per share, from CHF 1 to CHF 0.04.
As at 31 December 2023, SGS SA has a share capital of CHF 7 495 032 (2022: CHF 7 495 032) fully paid-in and divided into 187 375 800
(2022: 7 495 032) registered shares of a par value of CHF 0.04 (2022: CHF 1). All shares, other than treasury shares, participate equally
in the dividends declared by the Company and have equal voting rights.
Treasury shares
On 31 December 2023, SGS SA held 3 064 685 treasury shares, thereof 2 837 475 directly and 227 210 through an affiliate company.
In 2023, 84 765 shares were released into circulation.
On 31 December 2022, SGS SA held 125 978 treasury shares, thereof 113 499 directly and 12 479 through an affiliate company.
On 21 June 2022, SGS SA announced a CHF 250 million share buyback program for the purpose of capital reduction. The program ended
on 21 December 2022 and 113 499 shares were repurchased for a total amount of CHF 250 million at an average purchase price of
CHF 2 203 per share.
In 2022, 12 500 shares have been repurchased through an affiliate company for covering future equity compensation plans, whilst
3 381 shares were released into circulation.
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 144
6. Financial income and financial expenses
(CHF million)
Financial income
Interest income 3rd party
Interest income Group
Financial income
Financial expenses
Interest expenses 3rd party
Interest expenses Group
Other financial expenses
Financial expenses
2023
2022
5
93
98
–31
–41
–7
–79
1
47
48
–21
–14
–16
–51
7. Extraordinary losses
The extraordinary loss is composed of impairment respectively on investments in subsidiaries of CHF –27 million (2022: CHF –52 million) and
on loan to subsidiaries of CHF 1 million (2022: CHF –15 million).
8. Guarantees and comfort letters
(CHF million)
Guarantees
Performance bonds
Total
2023 issued
2023 utilized
2022 issued
2022 utilized
3 105
68
3 173
1 467
38
1 505
2 511
55
2 566
1 563
55
1 618
The Company has unconditionally guaranteed or provided comfort to financial institutions providing credit facilities (loans and guarantee
bonds) to its subsidiaries. In addition, it has issued performance bonds to commercial customers on behalf of its subsidiaries.
The Company is part of a VAT Group comprising itself and other group companies in Switzerland.
9. Remuneration
9.1. Remuneration policy and principles
This section appears in the SGS Remuneration report paragraph 2 in the annual report on pages 69 to 70.
9.2. Remuneration model
This section appears in the SGS Remuneration report paragraph 3 in the annual report on pages 71 to 78.
9.3. Remuneration awarded to the Board of Directors
This section appears in the SGS Remuneration report paragraph 4 in the annual report on pages 79 to 81.
9.4. Remuneration awarded to the Operations Council members
This section appears in the SGS Remuneration report paragraph 5 in the annual report on pages 82 to 89.
Financial statementsSGS | 2023 Integrated Report 10. Shares and options held by members of governing bodies
10.1. Shares and options held by members of the Board of Directors
The following table shows the shares held by members of the Board of Directors as at 31 December 2023:
Name
C. Grieder
S.R. du Pasquier
J. Riedl
P. Cheung
K. Sorenson
I. Gallienne
S. Atiya
T. Hartmann
J. Vergis
The following table shows the shares held by members of the Board of Directors as at 31 December 2022:
Name
C. Grieder
S.R. du Pasquier
P. Desmarais
P. Cheung
K. Sorenson
I. Gallienne
S. Atiya
T. Hartmann
J. Vergis
10.2. Shares and options held by senior management
The following table shows the shares and restricted shares held by senior management as at 31 December 2023:
Name
F. Ng
G. Picaud
O. Merkt
Corporate responsibility
Chief Executive Officer
Chief Financial Officer (from 1 December 2023)
General Counsel and Chief Compliance Officer
Restricted shares
14 726
–
3 001
The following table shows the shares and restricted shares held by senior management as at 31 December 2022:
Name
F. Ng
Corporate responsibility
Chief Executive Officer
D. de Daniel
Chief Financial Officer
O. Merkt
General Counsel and Chief Compliance Officer
1. Prior to share split implemented on 12 April 2023.
Details of the various plans are explained in the SGS Remuneration report.
Restricted shares1
648
406
144
145
Shares
14 128
2 257
607
1 082
3 207
1 082
3 382
1 082
1 082
Shares1
485
66
56
19
104
20
111
19
19
Shares
95 000
500
8 750
Shares1
3 556
1 165
287
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 146
11. Significant shareholders
As at 31 December 2023, Groupe Bruxelles Lambert (acting through Serena SARL and URDAC) held 19.31% (December 2022: 19.11%),
BlackRock Inc. held 5.18% (December 2022: 5.18%) and UBS Fund Management (Switzerland) AG held 3.03% (December 2022: below 3%)
of the share capital and voting rights of the Company.
At the same date, the SGS Group held 1.64% of the share capital of the Company (December 2022: 1.68%).
Proposal of the Board of Directors for the appropriation of available retained earnings
(CHF)
Profit for the year
Balance brought forward from previous year
Dividend paid2
Share buyback program
(Transfer to) / Reversal from the reserve for treasury shares
Total retained earnings available for appropriation
2.
No dividend is paid on own shares held directly or indirectly by SGS SA.
Distribution to shareholders
2023
2022
625 502 400
649 821 069
657 434 309
877 874 780
–589 608 000
–599 419 601
–
–250 000 741
7 846 448
–20 841 198
701 175 157
657 434 309
The SGS Board of Directors will recommend to the Annual General Meeting (to be held on 26 March 2024) the approval of an optional scrip
dividend of CHF 3.20 per share (CHF 590 million), subject to the approval of a capital increase, where shareholders can elect to receive
the dividend in the form of shares or in cash. Shares will be sourced from the issuance of new shares in the proposed capital increase.
The shares will be delivered at a discount, and the share dividend will be a tax and cost-effective option for shareholders.
Depending on the choices of the shareholders the above total amount of retained earnings will be reduced:
• By CHF 3.20 for each share for which a cash dividend is paid (no dividends are paid on treasury shares)
• By CHF 0.04 for each dividend share
The remaining amount will constitute the balance being carried forward.
Approval of financial statements and subsequent events
The Board of Directors is responsible for the preparation and presentation of the financial statements. These financial statements were
authorized for issue by the Board of Directors on 21 February 2024 and will be submitted for approval by the Annual General Meeting
to be held on 26 March 2024.
Financial statementsSGS | 2023 Integrated Report 147
Report of the statutory auditor
to the General Meeting of SGS SA
Geneva
Report on the audit of the financial statements
Opinion
We have audited the financial statements of SGS SA (the Company), which comprise statement of financial position as
at 31 December 2023, and the income statement for the year then ended, and notes to the financial statements, includ-
ing a summary of significant accounting policies.
In our opinion, the financial statements presented on pages 140 to 146, comply with Swiss law and the Company’s arti-
cles of incorporation.
Basis for opinion
We conducted our audit in accordance with Swiss law and Swiss Standards on Auditing (SA-CH). Our responsibilities
under those provisions and standards are further described in the 'Auditor’s responsibilities for the audit of the financial
statements' section of our report. We are independent of the Company in accordance with the provisions of Swiss law
and the requirements of the Swiss audit profession, and we have fulfilled our other ethical responsibilities in accordance
with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our audit approach
Overview
Overall materiality: CHF 42 million
We tailored the scope of our audit in order to perform sufficient work to enable
us to provide an opinion on the financial statements as a whole, taking into ac-
count the structure of the Company, the accounting processes and controls,
and the industry in which the Company operates.
As key audit matter the following area of focus has been identified:
•
Valuation of investments in subsidiaries
Materiality
The scope of our audit was influenced by our application of materiality. Our audit opinion aims to provide reasonable
assurance that the financial statements are free from material misstatement. Misstatements may arise due to fraud or
error. They are considered material if, individually or in aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of the financial statements.
PricewaterhouseCoopers SA, avenue Giuseppe-Motta 50, case postale, 1211 Genève 2, Switzerland
Téléphone: +41 58 792 91 00, www.pwc.ch
PricewaterhouseCoopers SA is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity.
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix
148
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall
materiality for the financial statements as a whole as set out in the table below. These, together with qualitative consider-
ations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to
evaluate the effect of misstatements, both individually and in aggregate, on the financial statements as a whole.
Overall materiality
CHF 42 million
Benchmark applied
Total assets
Rationale for the materiality bench-
mark applied
We chose total assets as the benchmark, because, in our view, it is the
benchmark against which the performance of the Company, which has limited
operating activities and which mainly holds investments in subsidiaries and
intra-group loans, is most commonly measured, and it is a generally accepted
benchmark for holding companies.
We agreed with the Audit Committee that we would report to them misstatements above CHF 2 million identified during
our audit as well as any misstatements below that amount which, in our view, warranted reporting for qualitative reasons.
Audit scope
We designed our audit by determining materiality and assessing the risks of material misstatement in the financial state-
ments. In particular, we considered where subjective judgements were made; for example, in respect of significant ac-
counting estimates that involved making assumptions and considering future events that are inherently uncertain. As in
all of our audits, we also addressed the risk of management override of internal controls, including among other matters
consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the fi-
nancial statements of the current period. These matters were addressed in the context of our audit of the financial state-
ments as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Valuation of investments in subsidiaries
Key audit matter
How our audit addressed the key audit matter
As at 31 December 2023, SGS SA's investments in subsidi-
aries amount to CHF 2,003 million.
We obtained the Company’s work on the valuation of
investments in subsidiaries, and we performed
the following procedures:
Given the significance of this amount in the financial state-
ments and because of the judgement used by management
in determining its value, we consider the valuation of invest-
ments in subsidiaries a key audit matter.
The Company measures individually the investment in
each subsidiary. The Company conducts an annual risk as-
sessment based on several impairment indicators to identify
investments with an impairment risk.
For those investments in subsidiaries with a higher identified
risk of impairment, the recoverable amount is determined
based on a five-year discounted cashflow forecast. The main
judgements applied by management relate to revenue and
margin growth throughout the period of the five-year plan,
the long-term growth rate beyond the detailed forecast pe-
riod and the discount rate.
An impairment is recognised if the recoverable amount of
an individual investment is lower than the associated carry-
ing value.
• We obtained an understanding of management's pro-
cess and controls relating to the valuation of investments
in subsidiaries.
• We tested the mathematical accuracy of the calculations
and reconciled the balances to the financial statements.
• We challenged the appropriateness of management’s
process to identify impairment indicators by comparing
the triggers used to common indicators such as historical
profitability and capacity to pay dividends.
• We also performed testing by calculating revenue and
operating profit multipliers based on the market capitali-
sation of the Group and comparing those to the respec-
tive multiples of the individual investments in subsidiar-
ies.
For those investments in subsidiaries with a higher identified
risk of impairment, we critically assessed the reasonable-
ness of the underlying key assumptions and
judgements applied by performing the following procedures
in particular:
• We assessed the quality of the five-year cashflow
forecast projections by comparing forecasted revenue
and margin growth to historical and market trends as
well as by holding discussions with group management
2 SGS SA | Report of the statutory auditor to the General Meeting
Financial statementsSGS | 2023 Integrated Report
149
Key audit matter
How our audit addressed the key audit matter
The results of management’s impairment testing
indicated that some investments in subsidiaries were im-
paired. As a result, management recognised an impairment
in the amount of CHF 27 million.
Refer to note 1 – Significant accounting policies
to assess their intention and ability to execute the strate-
gic initiatives.
• We evaluated, with the support of PwC's valuation spe-
cialists, the reasonableness of the discount rate and
long-term growth rate applied to those future cash flows.
We consider management's approach as an acceptable
and reasonable basis for the valuation of the investments
in subsidiaries.
Other information
The Board of Directors is responsible for the other information. The other information comprises the information included
in the annual report, but does not include the financial statements, the consolidated financial statements, the remunera-
tion report and our auditor’s reports thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assur-
ance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge ob-
tained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Board of Directors' responsibilities for the financial statements
The Board of Directors is responsible for the preparation of financial statements in accordance with the provisions of
Swiss law and the Company’s articles of incorporation, and for such internal control as the Board of Directors determines
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the Company's ability to con-
tinue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from ma-
terial misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law and
SA-CH will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic de-
cisions of users taken on the basis of these financial statements.
As part of an audit in accordance with Swiss law and SA-CH, we exercise professional judgement and maintain profes-
sional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, de-
sign and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropri-
ate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or
the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropri-
ate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's in-
ternal control.
3 SGS SA | Report of the statutory auditor to the General Meeting
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix
150
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and re-
lated disclosures made.
• Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence ob-
tained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease
to continue as a going concern.
We communicate with the Board of Directors or its relevant committee regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them regarding all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats
or safeguards applied.
From the matters communicated with the Board of Directors or its relevant committee, we determine those matters that
were of most significance in the audit of the financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits
of such communication.
Report on other legal and regulatory requirements
In accordance with article 728a para. 1 item 3 CO and PS-CH 890, we confirm the existence of an internal control sys-
tem that has been designed, pursuant to the instructions of the Board of Directors, for the preparation of the financial
statements.
We further confirm that the proposed appropriation of available earnings complies with Swiss law and the Company’s
articles of incorporation. We recommend that the financial statements submitted to you be approved.
PricewaterhouseCoopers SA
Geneva, 21 February 2024
Guillaume Nayet
Licensed audit expert
Auditor in charge
Louise Rolland
Licensed audit expert
4 SGS SA | Report of the statutory auditor to the General Meeting
Financial statementsSGS | 2023 Integrated Report
3. Historical data
3.1. SGS Group – Five-Year Statistical Data Consolidated Income Statements
For the years ended 31 December
(CHF million)
Sales
Salaries and wages
Subcontractors’ expenses
Depreciation, amortization and impairment
Gain on business disposal
Other operating expenses
Operating income (EBIT)
Financial income
Financial expenses
Share of profit of associates and joint ventures
Profit before taxes
Taxes
Profit for the year
Profit attributable to:
Equity holders of SGS SA
Non-controlling interests
Operating income margins in %
Average number of employees
2023
6 622
–3 316
–400
–545
7
–1 511
857
29
–86
2
802
–205
597
553
44
13
2022
6 642
–3 331
–399
–521
–
2021
6 405
–3 180
–385
–499
–
2020
5 604
–2 797
–352
–517
63
–1 493
–1 364
–1 206
898
20
–71
2
849
–219
630
588
42
14
977
16
–69
–
924
–269
655
613
42
15
795
12
–66
1
742
–237
505
480
25
14
98 545
96 759
93 297
89 098
94 494
151
2019
6 600
–3 357
–386
–548
268
–1 495
1 082
18
–79
–4
1 017
–315
702
660
42
16
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix
152
3.2. SGS Group – Five-Year Statistical Data Consolidated Statements of Financial Position
At 31 December
(CHF million)
Property, plant and equipment
Right-of-use assets
Goodwill
Other intangible assets
Investments in joint-ventures, associates and other
Deferred tax assets
Other non current-assets
Total non-current assets
Inventories
Unbilled sales and work in progress
Trade receivables
Other receivables and prepayments
Current tax assets
Marketable securities
Cash and cash equivalents
Total current assets
Total assets
Share capital
Reserves
Treasury shares
Equity attributable to equity holders of SGS SA
Non-controlling interests
Total equity
Loans and other financial liabilities
Lease liabilities
Deferred tax liabilities
Defined benefit obligations
Provisions
Total non-current liabilities
Trade and other payables
Contract liabilities
Current tax liabilities
Loans and other financial liabilities
Lease liabilities
Provisions
Other creditors and accruals
Total current liabilities
Total liabilities
Total equity and liabilities
2023
823
506
2022
907
577
2021
925
605
2020
872
590
2019
926
611
1 636
1 755
1 778
1 651
1 281
275
16
185
191
350
20
153
125
382
26
164
173
333
34
161
154
187
35
174
149
3 632
3 887
4 053
3 795
3 363
57
223
940
213
127
–
1 569
3 129
6 761
7
723
–271
459
69
528
3 040
384
73
66
91
59
210
988
223
132
–
1 623
3 235
7 122
7
954
–279
682
81
763
2 833
442
79
47
96
59
175
928
204
108
–
1 480
2 954
7 007
7
1 118
–8
1 117
85
1 202
2 889
481
92
84
90
57
160
856
188
77
9
1 766
3 113
6 908
8
1 282
–230
1 060
74
1 134
2 390
470
53
136
88
45
195
953
219
77
9
1 466
2 964
6 327
8
1 536
–30
1 514
81
1 595
2 199
490
23
151
91
3 654
3 497
3 636
3 137
2 954
634
221
176
841
143
41
523
2 579
6 233
6 761
671
228
165
1 009
162
58
569
2 862
6 359
7 122
687
221
169
282
155
60
595
2 169
5 805
7 007
658
189
140
863
151
85
551
2 637
5 774
6 908
638
155
145
38
154
74
574
1 778
4 732
6 327
Financial statementsSGS | 2023 Integrated Report 153
3.3. SGS Group – Five-Year Statistical Share Data
(CHF unless indicated otherwise)
2023
2022
2021
2020
2019
Share information
Registered shares
Number of shares issued
Number of shares with dividend rights
Price
High
Low
Year-end
Par value
Key figures by shares
Equity attributable to equity holders of SGS SA per
share in circulation at 31 December
Basic earnings per share1
Dividend per share ordinary
Total dividend per share
Dividends (CHF million)
Ordinary2
Total
187 375 800
184 311 115
7 495 032
7 369 054
7 495 032
7 491 672
7 565 732
7 469 238
7 565 732
7 552 390
94
72
73
0.04
2.49
3.00
3.20
3.20
590
590
3 076
2 002
2 150
1
92.56
78.86
80.00
80.00
3 059
2 595
3 047
1
2 843
1 974
2 670
1
2 689
2 213
2 651
1
149.20
141.91
200.37
81.91
80.00
80.00
64.05
80.00
80.00
87.45
80.00
80.00
590
590
599
599
598
598
604
604
1.
2.
Calculation of the basic earnings per share (weighted average for the year) is disclosed in note 11 of SGS Group Results.
The SGS Board of Directors will recommend to the Annual General Meeting (to be held on 26 March 2024) the approval of an optional scrip dividend of CHF 3.20 per share, subject to the
approval of a capital increase, where shareholders can elect to receive the dividend in the form of shares or in cash. Shares will be sourced from the issuance of new shares in the proposed
capital increase. The shares will be delivered at a discount, and the share dividend will be a tax- and cost-effective option for shareholders.
3.4. SGS Group share information
Share transfer
SGS SA has no restrictions as to share ownership, except that registered shares acquired in a fiduciary capacity by third parties may
not be registered in the shareholders’ register, unless a special authorization has been granted by the Board of Directors.
Market capitalization
At the end of 2023 market capitalization was approximately CHF 13 370 million (2022: CHF 16 114 million). Shares are quoted on the
SIX Swiss Exchange.
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 154
3.5. Closing prices for SGS and the Swiss market index (SMI) 2022-2023
SGS SA
150
140
130
120
110
100
90
80
70
60
50
SMI
15 000
14 000
13 000
12 000
11 000
10 000
9 000
8 000
7 000
6 000
J
F M A M J
J
A
S
O
N
D
J
2022
F M A M J
J
2023
A
S
O
N
D
5 000
High price
Closing
Low price
Swiss market index (monthly close)
Financial statementsSGS | 2023 Integrated Report 4. Material operating companies and ultimate parent
The disclosure of legal entities is limited to entities whose contribution to the Group sales in 2023 represent at least 1% of the consolidated
sales, but includes, in addition, the main operating legal entity in every country where the Group has permanent operations, even when such
legal entities represent less than 1% of the Group consolidated sales. This definition of materiality excludes dormant companies, pure sub-
holding companies or entities used solely for the detention of assets.
155
Country
Albania
Algeria
Angola
Argentina
Australia
Austria
Azerbaijan
Bangladesh
Belarus
Belgium
Botswana
Brazil
Bulgaria
Name and domicile
SGS Albania, Tirana
SGS Qualitest Algérie SpA, Alger
SGS Serviços Angola SA, Luanda
SGS Argentina SA, Buenos Aires
SGS Australia Pty. Ltd., Bentley
SGS Austria Controll-Co. Ges.m.b.H., Vienna
SGS Azerbaijan LLC
SGS Bangladesh Limited, Dhaka
SGS Minsk Ltd., Minsk
SGS Belgium N.V., Antwerpen
SGS Botswana (Proprietary) Limited, Gaborone
SGS do Brasil LTDA, São Paulo
SGS Bulgaria Ltd., Sofia
Burkina Faso
SGS Burkina SA, Ouagadougou
Cambodia
Cameroon
Canada
Central African
Republic
Chile
China
China
Colombia
Congo
Croatia
SGS (Cambodia) Ltd., Phnom Penh
SGS Cameroun SA, Douala
SGS Canada Inc., Mississauga
SGS Centrafrique SA, Bangui
SGS Minerals S.A., Santiago de Chile
SGS-CSTC Standards Technical Services Co. Ltd.,
Beijing
SGS-CSTC Standards Technical Services (Shanghai)
Co., Ltd., Shanghaï
SGS Colombia SAS, Bogota
SGS Congo SA, Pointe-Noire
SGS Adriatica d.o.o., Zagreb
Czech Republic
SGS Czech Republic s.r.o., Praha
Denmark
SGS Analytics Denmark A/S, Nørresundby
Democratic Republic
of Congo
SGS Minerals RDC SARL, Lubumbashi
Ecuador
Egypt
Estonia
Ethiopia
Finland
France
Georgia
Germany
Germany
Ghana
Consorcio SGS – Revisiones Técnicas
SGS Egypt Ltd., Cairo
SGS Estonia Ltd., Tallinn
SGS Ethiopia Private Limited
SGS Fimko Oy, Helsingfors
SGS France SAS, Arcueil
SGS Georgia Ltd., Batumi
SGS Germany GmbH, Hamburg
SGS Institut Fresenius GmbH, Taunusstein
SGS Laboratory Services Ghana LTD, Accra
Great Britain
SGS United Kingdom Limited, Ellesmere Port
Greece
Guam
SGS Greece SA, Marousi
SGS Guam Inc., Guam
Guatemala
SGS Central America SA, Guatemala-City
Guinea-Conakry
SGS Mineral Services (Guinée) Sàrl Unipersonnelle,
Conakry
Issued capital
currency
Issued capital
amount
% held by
Group
Direct/
indirect
ALL
DZD
USD
ARS
AUD
EUR
USD
BDT
USD
EUR
BWP
BRL
BGN
XOF
KHR
XAF
CAD
XAF
CLP
USD
CNY
COP
XAF
HRK
CZK
DKK
CDF
USD
EGP
EUR
ETB
EUR
EUR
USD
EUR
EUR
GHS
GBP
EUR
USD
GTQ
GNF
15 100 000
50 000 000
30 000
1 139 599 536
200 000
185 000
100 000
10 000 000
20 000
35 995 380
1 000
648 683 068
5 010 000
601 080 000
4 000 000 000
10 000 000
20 900 000
10 000 000
29 725 583 703
3 966 667
180 000 000
135 546 166 036
1 510 000 000
1 300 000
7 707 000
506 000
46 144 617
25 000
1 500 000
42 174
15 000
260 000
3 172 613
80 000
1 210 000
7 490 000
13 501 602
8 000 000
301 731
25 000
14 568 000
50 000 000
100
100
49
100
100
100
100
100
100
100
100
100
100
100
100
98.9
100
100
100
85
85
100
100
100
100
100
49
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
D
D
I
D
I
D
D
D
D
D
D
D
D
D
D
D
D
D
I
I
I
D
D
I
I
I
D
I
D
I
D
I
I
D
I
I
D
I
D
D
D
D
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 156
Country
Hong Kong
Hungary
India
Indonesia
Iran
Ireland
Italy
Ivory Coast
Japan
Jordan
Name and domicile
SGS Hong Kong Limited, Hong Kong
SGS Hungária Kft., Budapest
SGS India Private Ltd., Mumbai
P.T. SGS Indonesia, Jakarta
SGS Iran (Private Joint Stock) Limited, Tehran
SGS Ireland Limited, Dublin
SGS Italia S.p.A., Milan
Société Ivoirienne de Contrôles Techniques
Automobiles et Industriels SA, Abidjan
SGS Japan Inc., Yokohama
SGS (Jordan) Private Shareholding Company, Amman
Kazakhstan
SGS Kazakhstan Limited, Almaty
Kenya
SGS Kenya Limited, Mombasa
Korea (Republic of)
SGS Korea Co. Ltd., Seoul
Kuwait
Kyrgyzstan
Lao (People's
Democratic Republic)
SGS Kuwait W.L.L, Kuwait City
SGS Bishkek LLC, Bishkek
SGS (Lao) Sole Co., Ltd., Vientiane
Latvia
Lebanon
Liberia
Lithuania
Luxembourg
Madagascar
Malaysia
Mali
Mauritius
Mexico
Moldova
Mongolia
Morocco
SGS Latvija Limited, Riga
SGS (Liban) S.A.L., Beirut
SGS Liberia Inc, Monrovia
SGS Klaipeda Ltd., Klaipeda
SGS Luxembourg, Windhof
Malagasy Community Network Services SA,
Antananarivo
Petrotechnical Inspection (Malaysia) Sdn. Bhd.,
Kuala Lumpur
SGS Mali Sàrlu, Kayes
SGS (Mauritius) LTD, Phoenix
SGS de Mexico, SA de C.V., Mexico
SGS (Moldova) SA, Chisinau
SGS-IMME Mongolia LLC, Ulaanbaatar
SGS Maroc SA, Casablanca
Mozambique
SGS MCNET Moçambique Limitada, Maputo
Myanmar
Netherlands
New Zealand
Nigeria
Norway
Oman
Pakistan
Panama
SGS (Myanmar) Limited, Yangon
SGS Nederland B.V., Spijkenisse
SGS New Zealand Limited, Auckland-Onehunga
SGS Inspection Services Nigeria Limited, Lagos
SGS Analytics Norway AS, Hamar
SGS Inspection and Testing Services SPC, Oman
SGS Pakistan (Private) Limited, Karachi
SGS Panama Control Services Inc., Panama
Papua-New-Guinea
SGS PNG Pty. Limited, Port Moresby
Paraguay
Peru
Philippines
Poland
Portugal
Qatar
Romania
Russia
SGS Paraguay SA, Asunción
SGS del Perú S.A.C., Lima
SGS Philippines, Inc., Manila
SGS Polska Sp.z o.o., Warsaw
SGS Portugal – Sociedade Geral de
Superintendência SA, Lisboa
SGS Qatar WLL, Doha
SGS Romania SA, Bucharest
AO SGS Vostok Limited, Moscow
Issued capital
currency
Issued capital
amount
% held by
Group
Direct/
indirect
HKD
HUF
INR
USD
IRR
EUR
EUR
XOF
JPY
JOD
KZT
KES
KRW
KWD
KGS
LAK
EUR
LBP
LRD
EUR
EUR
MGA
MYR
XOF
MUR
MXN
MDL
MNT
MAD
MZN
MMK
EUR
NZD
NGN
NOK
OMR
PKR
USD
PGK
PYG
PEN
PHP
PLN
EUR
QAR
RON
RUB
200 000
518 000 000
960 000
872 936
100
100
100
100
50 000 000
99.99
5 000
2 500 000
200 000 000
100 000 000
100 000
228 146 527
3 000 000
15 617 540 000
50 000
3 463 000
2 444 700 000
100
100
95
100
50
100
100
100
49
100
100
118 382
30 000 000
100
99.97
100
711 576
38 000
10 000 000
750 000
300 000 000
100 000
281 370 828
488 050
8 066 764 376
17 982 000
343 716 458
300 000
250 000
12 022 190
200 000
1 250 000
800 000
2 300 000
7 899 339
2
1 962 000 000
43 813 182
24 620 000
27 167 800
500 000
200 000
100 002
18 000 000
100
100
100
70
100
100
100
100
100
55
100
100
100
100
100
49
100
100
100
100
100
100
100
100
100
100
49
100
100
D
I
D
D
D
I
D
D
D
D
D
D
D
D
D
D
I
D
D
I
I
D
D
D
D
D
D
I
D
I
D
I
D
D
I
D
D
D
I
D
D
D
D
I
D
I
D
Financial statementsSGS | 2023 Integrated Report Country
Name and domicile
Saudi Arabia
SGS Inspection Services Saudi Arabia Ltd., Jeddah
Senegal
Serbia
Sierra Leone
Singapore
Slovakia
Slovenia
SGS Sénégal SA, Dakar
SGS Beograd d.o.o., Beograd
SGS (SL) Ltd., Freetown
SGS Testing and Control Services
Singapore Pte Ltd., Singapore
SGS Slovakia spol.s.r.o., Kosice
SGS Slovenija d.o.o. – Podjetje za kontrol blaga, Koper
South Africa
SGS South Africa (Proprietary) Limited, Johannesburg
Spain
Sri Lanka
Sweden
Switzerland
Switzerland
Taiwan
Tanzania
Thailand
Togo
SGS Tecnos, SA, Sociedad Unipersonal, Madrid
SGS Lanka (Private) Limited, Colombo
SGS Analytics Sweden AB, Linköping
SGS Société de Surveillance SA, Geneva
SGS SA, Geneva
SGS Taiwan Limited, Taipei
African Assay Laboratories (Tanzania) Ltd,
Dar Es Salaam
SGS (Thailand) Limited, Bangkok
SGS Togo SA, Lomé
Trinidad and Tobago
SGS Trinidad Ltd, San Fernando
Tunisia
Türkiye
SGS Tunisie SA, Tunis
SGS Supervise Gözetme Etud Kontrol Servisleri
Anonim Sirketi, Istanbul
Turkmenistan
SGS Turkmen Ltd., Ashgabat
Uganda
Ukraine
SGS Uganda Limited, Kampala
SGS Ukraine, Foreign Enterprise, Odessa
United Arab Emirates SGS Gulf Limited Dubai Airport Free Zone Branch
United States
SGS North America Inc., Wilmington
Uruguay
Uzbekistan
Vietnam
Zambia
SGS Uruguay Limitada, Montevideo
SGS Tashkent Ltd., Tashkent
SGS Vietnam Ltd., Ho Chi Minh City
SGS Inspections Services Ltd., Lusaka
157
Issued capital
currency
Issued capital
amount
% held by
Group
Direct/
indirect
SAR
XAF
EUR
SLL
SGD
EUR
EUR
ZAR
EUR
LKR
SEK
CHF
CHF
TWD
TZS
THB
XOF
USD
TND
TRY
USD
UGX
USD
–
USD
UYU
USD
USD
ZMK
1 000 000
35 000 000
66 161
200 000
20 100 000
19 917
10 432
452 000 500
92 072 034
9 000 000
1 018 250
100 000
7 495 032
62 000 000
2 000
20 000 000
10 000 000
1 000
50 000
6 550 000
50 000
5 000 000
400 000
–
73 701 996
1 500
50 000
288 000
16 944 000
75
100
100
100
100
100
100
100
100
100
100
100
100
100
99.99
100
100
50
100
100
100
100
–
100
100
100
100
100
D
D
I
D
D
I
I
I
I
D
I
D
Ultimate
parent
company
I
I
D
D
D
D
I
D
D
D
–
I
D
D
D
I
Financial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportNon-financial statementsAppendix 158
Our approach to
sustainability reporting
Our progress towards our sustainability ambitions 2030
Quantifying our value through six capitals
Databank
Compliance and integrity
Customer relationship management
Public policy
Sustainable procurement and supply chain
Human rights
Information security and data privacy
Workforce breakdown
Learning and development
Employee engagement
Talent attraction and retention
Remuneration
Operational integrity
Community donations
Climate change – energy consumption
Climate change – energy efficiency in buildings program
Climate change – greenhouse gas (GHG) emissions
Water and waste management
2023 Global Reporting Initiative
(GRI) content index
Sustainable Accounting Standards
Board (SASB) framework alignment
Non-financial matters required
by article 964b of the Swiss Code
of Obligations
Independent practitioner’s
limited assurance report
159
160
162
164
164
165
165
166
167
167
167
169
170
170
171
172
173
174
174
175
176
177
185
186
187
Non-financial statementsNon-financial statementsSGS | 2023 Integrated Report 159
Our approach
to sustainability
reporting
At SGS, we are committed to providing
stakeholders with accurate and timely updates
on our sustainability activities and performance,
and we strive to produce a report that is fair,
transparent and balanced, and meets the
needs of stakeholders.
Assurance and basis
of preparation
Each year, around 10% of our affiliates are
selected to be audited on all data reported
and procedures in place to collect and
consolidate data. Each audit is carried
out by a qualified Sustainability Report
Assurance (SRA) auditor.
External assurance of the sustainability
performance indicators and the non-financial
performance indicators is an important
part of our approach, and our sustainability
reporting has been independently assured
since 2011.
Since 2021, PricewaterhouseCoopers
SA (PwC) provides independent limited
assurance over certain sustainability metrics,
indicated with
in this report on pages 177
to 184. PwC’s Assurance Report describes
the work undertaken and their conclusion for
the reporting period to 31 December 2023.
Documents relating to independent external
assurance in the years prior to 2022 are
available in our website.
Please see Independent practitioner’s
limited assurance report
Pages 187 to 189
Data collection process
Robust data gathering is important to
set targets and monitor performance.
The majority of our data is collected locally
through centralized software then reviewed
and consolidated in a centralized manner.
The remaining data is gathered directly
from global functions.
All sustainability data is gathered on a
half-year basis. Remaining data is collected
annually at the full year.
External standards
We have published sustainability information
at SGS for more than 10 years, and since
2015, we have integrated sustainability
content into our integrated annual report.
We support the principles of integrated
reporting, and continue to move towards
a fully integrated reporting structure in line
with the Integrated Reporting Framework.
Since 2013, our non-financial information
has been developed using the guidelines
for the AA1000 Accountability Principles
Standard and the Global Reporting Initiative’s
Standards (GRI). We also align our reporting
with the Sustainability Accounting Standard
for the Professional & Commercial Services
Industry (SASB). Our reporting approach is
explained further in our Sustainability Basis
of Reporting.
For more information on our
Sustainability Basis of Reporting
www.sgs.com/en/sustainability/
corporate-sustainability/reporting-hub
Where GRI or SASB standards do not
provide a methodology for a sustainability
performance indicator, or their methodology
is not appropriate, we apply the methodology
provided in our Basis of reporting.
Scope and boundaries
The scope of the sustainability information
contained in this integrated annual report
covers all regions and business lines of the
SGS Group for the 2023 calendar year. A list
of SGS affiliates can be found on pages
155 to 157 of this report. Unless stated
otherwise, our reported data scope covers
the Group business and targets for the
period 1 January to 31 December 2023.
We have identified and prioritized the most
material impacts on our business and
on stakeholders across our value chain.
This integrated annual report includes
performance data for our direct operations,
as well as information on how we manage
the most material issues.
For more information on material issues
Page 24
We report key performance indicators
(KPIs) from all of our facilities, subsidiaries,
and other business units, as determined
by our reporting boundaries.
Under the financial control approach,
we account for 100% of the KPIs from
operations over which we have control.
We do not account for KPIs from operations
in which we own an interest but not a
control. Control is defined in financial terms.
We do not include a KPI in our accounting
or reporting if we do not have reliable
information about it. This omission is noted
in the report. As an example, we currently
do not account for district heating and
refrigerants in our total carbon dioxide
(CO2) emissions.
In this report, we present our historical
and current performance over a three-year
period. Sometimes historical data may differ
from that included in previous reports due
to the availability of more accurate data or
improved data gathering and/or reporting.
Variations in the data that are less than 5%
are usually considered not material in these
situations. Significant modifications to data
from previous years, however, are noted in
the report when they initially appear.
Non-financial statementsFinancial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportAppendix 160
Our progress
towards our
sustainability
ambitions 2030
1 Environment
2023 targets
Climate change mitigation
2023 marks the end of a strategic cycle
and we have taken the opportunity to reflect
on our achievements as we set new focus
areas for 2027.
2023 performance
Continue working towards our SBTi ambition by:
Achieved
•
Increase annually the number of energy efficiency measures
in our 100 most energy intensive owned buildings
14% reduction since 2019 in scope 1 and 2 absolute GHG emissions.
5% reduction compared to 2022 in scope 3 absolute GHG emissions.
Achieved
The coverage of our energy efficiency measures in these buildings has now
reached 85% of our consumption, representing a 10% increase compared
to 2022. The number of energy efficiency measures has increased by 12%.
• Reduce total car fleet CO2 average emissions by 10%
Achieved
compared to 2019
10% reduction in car fleet GHG emissions since 2019.
• Ensure 10% of our cars have low-carbon technologies
Achieved
•
Further adopt Task Force on Climate-related Financial Disclosures
(TCFD) recommendations
15% of cars have low-carbon technologies.
Achieved
See TCFD report on page 190.
2 Social
Human rights protection
• Achieve 30% women in senior leadership positions (CEO-3)
• Reduce our Total Recordable Incident Rate (TRIR) by 20% and
Lost Time Incident Rate (LTIR) by 10% compared to 2018
Achieved
31.9% women at CEO-3 level.
Achieved
LTIR of 0.17 and TRIR of 0.32, a 31% and 22% reduction respectively
compared to 2018.
• HSE Certify main operational sites to ISO 45001 and ISO 14001
On track
An additional 20% of operational sites obtained independent certification
to ISO 45001 and ISO 14001, bringing the cumulative total to 644 sites.
• Continue performing annual risk assessments on human right across the
Group, keep developing our human rights due diligence program to avoid
violations across our operations and train 100% of our employees on our
human rights principles annually
On track
See Human Rights report on page 197.
Knowledge and engagement
•
Increase by 10% the completion rate of job-related training
compared to 2020
•
Improve year on year our employee engagement and manager
effectiveness scores
Community
•
Increase our positive impact on our communities through
employee volunteering by 10% compared to 2019
Achieved
4.7 million hours and 48.1 hours per FTE of job-related training
(27% and 15% variation compared to 2020).
Achieved
7.6/10 employee engagement average score and 8.3/10 of management
support average score, an improvement compared to last year.
Achieved
CHF 1.7 million of community donations and 32 590 hours of volunteering
(22% and 89.5% increase respectively compared to 2019).
Non-financial statementsSGS | 2023 Integrated Report 161
3 Governance
2023 targets
Excellence
2023 performance
• Promote a culture of efficiency and excellence through our
WCS program, with 20% of WCS labs reaching WCM Bronze
On track
10% of labs reached Bronze level.
• Expand the program to at least 10 new sites considering
Achieved
2020 perimeter
Brand
13 additional sites adopted World Class Methodology.
• Achieve a customer satisfaction score of 85%
Achieved
90.6% customer satisfaction score.
Integrity
• Ensure 100% of employees are trained on our Integrity Principles
On track
on an annual basis
99.9% employees trained on our Integrity Principles.1
Digitalization, information protection and privacy
• Enhance the SGS Information Governance Framework, data privacy
framework and standardized information security management systems
Achieved
Security governance maturity has been improved and security
structure expanded.
• Harmonize processes for third-party vendors/processors
Achieved
for risk evaluation purposes
Supply chain
• >50% of our goods and services spend from suppliers who have
signed our Code of Conduct or commit to comparable standards
•
100% of the selected SGS strategic suppliers will have completed
our sustainability self-assessment questionnaire (SAQ)
•
75% of requests for proposals to be online and include the relevant SGS
sustainability criteria, enabling comparison and selection of suppliers
• Actively contribute to the reduction of our SGS CO2 footprint
by sourcing energy efficient solutions from our suppliers
•
Leverage SGS buying power to request strategic suppliers to report
their own CO2 footprint and subsequently target carbon reduction
in their own operations
The process of ‘Third party security assessments’ (TPSA)
has been formalized.
Achieved
65% of our goods and services spend now come from suppliers
having signed the Code of Conduct.
Achieved
We have extended the SAQ to all countries in scope (25 countries and
suppliers with over CHF 1 million spend).
Achieved
Sustainability criteria now embedded in new RFP tool as mandatory
fields for all online RFPs.
Achieved
New classification of spend and more accurate numbers embedded
in a new dashboard.
Based on new spend classification, suppliers with high CO2 intensity
are being identified. The next steps would be to work proactively
with those suppliers to reduce their footprint.
CO2 questionnaire included in SAQ to collect real footprint data.
1. The calculation is based exclusively on permanent employees who completed the annual integrity training.
Non-financial statementsFinancial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportAppendix 162
Quantifying our
value through
six capitals
Like all organizations we depend on various
capitals to be successful. We are one of a small
number of companies that measure value creation
by capital using our Impact Valuation Framework.
2022 SGS value to society (CHF million)
Financial
capital
Manufactured
capital
Human
capital
Natural
capital
Intellectual
capital
Social and
relationship
capital
Total value
to society
+621
-195
6 168
Our financial capital
results are impacted
by profit, sales,
employment costs
and taxes paid
to governments
Our manufactured
capital value measures
the improvement of
capital assets (directly
controlled and those
of our supply chain)
Our human capital
value is directly
influenced, among
others, by our risk of
having human rights
non-compliances in
our value chain and
by our suboptimal data
on gender equality
-380
+341
+82
6 637
The most negative
impact is related to
the footprint in the
value chain, especially
in our supply chain
Our intellectual
capital value is mostly
driven by our training
and development
programs
This capital is
positively impacted
by the way we create
trust to customers
and communities
The total value to
society of SGS direct
operations and supply
chain activities
Positive impacts
Negative impacts
Net impact
Supply
chain
Direct
operations
Supply
chain
Direct
operations
Financial capital
1 988
4 180
Industrial capital
482
Human capital
Natural capital
Intellectual capital
Social and
relationship capital
–
–
–
–
157
62
7
365
218
–
–
–120
–372
–
–
–
–18
–137
–15
–24
–136
6 168
621
–195
–380
341
82
The framework is based on six forms of capital,
as defined by the International Integrated
Reporting Council. We use it to help us to make
better decisions, by considering non-financial
as well as financial aspects of our business.
We measure our progress using 32 indicators
that support how we track our measurable
positive impact.
We created the majority of this value through
profit generation, the paying of taxes and
wages, and our investments in training
programs and information security.
The framework also shows that we generated
CHF 822 million of negative societal impacts,
arising from the environmental footprint of
our supply chain.
Applying our Impact Valuation Framework
methodology, we have calculated that our
total value to society calculated in 2023 for
2022 was +CHF 6 637 million, and that the
value of our positive benefit to society was
+CHF 7 459 million.
Non-financial statementsSGS | 2023 Integrated Report 163
Our value in action
Our SGS Impact Valuation Framework
allows us to quantify the effects of events
that occur within our operations and
throughout our supply chain. Furthermore,
we are dedicated to assessing the results
of the services we provide.
We worked across all five of our business
lines to identify services and their impacts in
order to develop a valuation approach based
on independently verified data and research.
We are then able to determine the impact
and monetize it using a combination of
research and input data.
This exercise helps us better understand
the impact of our services in terms of how
much value they add to the different capitals.
We have covered almost 50% of our sales
and our initial impact calculation shows a
significant positive impact in many different
areas. Among the main impact indicators
we have looked at so far are consumption of
energy and CO2 emissions avoided; water
consumption avoided; injuries avoided; and
lost disability-adjusted life years avoided.
Main impact indicators:
Avoided
energy consumption
(billion kWh)
+28
Avoided
injuries
(million)
+14
Avoided
water consumption
(billion liters)
+68
Avoided
CO2 emissions
(million metric tons)
+144
Example of how our valuation
methodology was applied to
green buildings services
1 Service or group
of services selected
2 Input
indicators
• Energy & Green Buildings
• Number of buildings audited
6 Impact
monetization
• Social cost
of avoided
CO2 emissions
• Increase in
natural capital
3 Identification
of impacts
• Reduced energy
consumption
• Avoided
CO2 emissions
5 Impact calculation
4 Valuation methodology
• CO2 avoided
• U.S. Energy Information Administration
research regarding the energy consumption
of commercial buildings
• World Green Building Council research about average
energy savings associated with green buildings
• Social cost of carbon
Non-financial statementsFinancial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportAppendix 164
Databank
Compliance and integrity
Integrity is one of our six business principles. Our Code of Integrity acts as a blueprint for our employees, affiliated companies, contractors,
subcontractors, joint venture partners and agents.
Any employee or third party can report violations through our Integrity Helpline. All the reports received are considered and evaluated.
Based on the data received we assess whether an investigation is needed or whether more information is needed. Reported issues might
be discarded only if the information provided was not sufficient or if the issue reported is not in the scope of the Code of Integrity.
Total number of integrity issues reported through integrity helplines¹
Total number of substantiated breaches of the Code of Integrity received through integrity helplines¹
Broken down by type of breach:
Integrity of services
Integrity of financial records
Conflict of interest
Employee relations
Fair competition
Compliance with laws
Gifts and entertainment
Confidentiality
Use of company assets and resources
Environment, health and safety
Bribery and corruption4
Intellectual property
External communication
Insider dealing
Political donations and charitable contributions
Consequences adopted during the reporting year, broken down by type2:
Termination
Disciplinary action
Corrective actions (including improvement in processes)
No action possible or needed
Under decision process
Percentage of employees signing the Code of Integrity
Percentage of employees trained on the Code of Integrity5
Percentage of operations analyzed for risks related to corruption
Number and nature of confirmed incidents of corruption identified through corporate helplines1, 3
Public legal cases regarding corruption brought against the organization/employees
2023
450
89
23
3
8
20
–
9
–
3
10
5
6
2
–
–
–
48
48
19
4
1
2022
374
73
23
3
12
10
–
7
–
2
2
7
7
–
–
–
–
38
29
12
18
–
2021
262
35
6
4
–
9
–
2
–
1
6
–
7
–
–
–
–
11
18
17
5
7
100.0%
100.0% 100.0%
99.9%
99.9%
99.0%
100.0%
100.0% 100.0%
6
–
7
–
7
–
‘Helplines’ means channels used by employees and external parties to report suspected violations of the Code of integrity and submitted online, by phone call, sent via fax, email or post.
Consequences adopted during the reporting year. Some of these consequences may refer to breaches confirmed in previous years.
Measures taken for these six cases were the following: service or employment contract termination (14) and disciplinary action (1).
1.
2.
3.
4. Breaches of integrity reported as bribery and corruption include also instances of SGS employees accepting improper advantages in the course of their duties (so-called passive corruption).
5. The calculation is based exclusively on permanent employees who completed the annual integrity training.
Non-financial statementsSGS | 2023 Integrated Report 165
Customer relationship management
How well we manage our customer relationships determines what we are able to achieve as a business, in the long term. That is why
we aim to anticipate and respond to customer needs as they arise. We track customer sentiment annually through our global Voice of the
Customer (VoC) program. Results are shared with all relevant stakeholders across the organization and corrective actions are developed to
increase customer satisfaction.
Customer satisfaction score
(% score)
Group's sales covered by Voice of the Customer surveys
(% of total sales)
Countries participating in Voice of the Customer survey
(# of countries)
Reponses in Voice of the Customer surveys
(# of responses)
2023
2022
2021
90.6%
84.5%
88.0%
84%
76%
34%
27
27
12
26 140
19 000
12 560
Public policy
We do not provide any financial or in-kind support, given directly or indirectly, to political parties, their elected representatives or persons
seeking political office. We support some industry associations, but the sum is not material, representing approximately 0.01% of our sales.
Lobbying, interest representation or similar
(CHF)
Contributions to local, regional or national political campaigns, organizations or candidates
(CHF)
Trade associations or tax-exempt groups (e.g. think tanks)1
(CHF)
Other (e.g. spending related to ballot measures or referendums)
(CHF)
Total contributions and other spending
(CHF)
Contribution to industry associations as % of sales
(% of sales)
2023
2022
2021
–
–
–
–
–
–
909 129 1 121 161
716 652
–
–
–
909 129 1 121 161
716 652
0.01%
0.02%
0.01%
1.
The main associations we contributed to in 2023 were: Association of Professional Social Compliance Auditors: CHF 269 154.46; TIC Council: CHF 74 119.43; Energy Institute:
CHF 59 811.58; Swissholding: CHF 50 000.
Non-financial statementsFinancial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportAppendix 166
Databank
continued
Sustainable procurement and supply chain
Our supply chain is diverse and covers over 100 countries from large industrial to small developing countries. These suppliers
are key stakeholders to SGS and we are committed to engage in an ongoing dialog to reach the highest social, economic and
environmental standards.
Spend analyzed for sustainability risks1
(%)
Tier 1 Suppliers analyzed for sustainability risks2
(% of total Tier 1 suppliers)
Number of local suppliers
(% of total suppliers)
Number of global suppliers
(% of total suppliers)
Spend of local suppliers
(% of total spend)
Spend of global suppliers
(% of total spend)
2023
2022
2021
100%
100%
100%
100%
100%
100%
99%
98%
98%
1%
2%
2%
89%
84%
82%
11%
16%
18%
1.
Potential sustainability risks identified in the supply chain in 2022 assessment (as a % of spend): − Economic risk: low: 59%; medium: 40%; high: 1% − Social risk: low: 65%; medium:
35%; high: 0 − Environmental risk: low: 49%; medium: 49%; high: 2%.
2. Tier 1 suppliers within the scope of the SAQ.
Spend by SGS supra-region
Spend by SGS category
Americas
Europe, Africa and Middle East
Asia Pacific
22%
43%
35%
Capex
External services
Material and supplies
General repairs and maintenance
Travel and vehicles
Other OPEX
13%
23%
21%
6%
17%
20%
Non-financial statementsSGS | 2023 Integrated Report 167
Human rights
Our human rights policy clearly sets out our commitment to treat everyone with whom we come into contact with fairness, dignity and
respect. It is in line with leading international human rights legislation and principles, and it applies to all those working for SGS or in our
supply chains.
Number of operations identified as having a significant risk of incidences of child labor, forced
or compulsory labor, or where the right to exercise freedom of association may be violated
Total number of proven incidents of discrimination
Number of grievances identified through helplines2 related to human rights1
Total number of employees trained on our Human Rights Principles
Percentage of employees trained on our Human Rights Principles
Percentage of employees covered by collective bargaining3
2023
2022
2021
–
2
3
–
4
4
–
–
–
88 885
79 893
39 137
86%
46%
78%
46%
39%
44%
1.
2.
3.
Measures taken for these three cases were the following: termination of employee (1) and disciplinary action (3).
‘Helplines’ means channels used by employees and external parties to report suspected violations of the Code of Integrity and submitted online, by phone call.
Employees covered by collective consultation/representation processes. The scope is limited to those affiliates where collective bargaining exists according to the International Labour
Organization database for coverage rate.
Information security and data privacy
Protection of personal data is key to every part of our business. It is at the heart of our commitment to our clients, our values, our principles,
our conduct and our success and is essential to maintaining trust. We are committed to conducting our business in accordance with all
relevant data protection and privacy laws of the countries in which we operate and in line with the highest standards of ethical conduct.
Number of complaints received from outside parties and substantiated by the organization
(# of complaints)
Substantiated complaints concerning breaches of data customer policy
(# of complaints)
Number of complaints from regulatory bodies
(# of complaints)
Workforce breakdown
Our workforce is characterized by diversity in generation, nationality and gender identity.
Type of contract
Number of employees at year end
(#)
Permanent workers
(% of total employees)
Casual workers1
(% of total employees)
Number of FTEs2 at year end
(#)
2023
2022
2021
–
–
–
–
–
–
–
1
–
2023
2022
2021
103 193
101 860
99 374
92%
92%
91%
8%
8%
9%
99 589
98 152
96 216
1. Casual employees are those people who are engaged for short periods of time (man-day, job by job basis).
2. Full-time equivalent employment is the number of full-time equivalent jobs, defined as total hours worked divided by average annual hours worked in full-time jobs.
Non-financial statementsFinancial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportAppendix 168
Databank
continued
Workforce breakdown continued
Gender, generation and other diversity indicators
Employees by gender (female)
(% of total employees)
Employees by gender (male)
(% of total employees)
Employees by age – under 30 years old (female)
(# of employees by ranges of age)
Employees by age – under 30 years old (male)
(# of employees by ranges of age)
Employees by age – 30 to 50 years old (female)
(# of employees by ranges of age)
Employees by age – 30 to 50 years old (male)
(# of employees by ranges of age)
Employees by age – over 50 years old (female)
(# of employees by ranges of age)
Employees by age – over 50 years old (male)
(# of employees by ranges of age)
Manager employees
(# of manager employees)
Manager by gender (female)
(% of managers)
Manager by gender (male)
(% of managers)
CEO-3 employees
# of CEO-3 employees
CEO-3 by gender (female) – 'Women in Leadership’
(% of CEO-3 employees)
CEO-3 by gender (male)
(% of CEO-3 employees)
Women in management positions in sales-generating functions
(% of women)
Women in STEM-related positions
(% of women)
Employees from vulnerable groups
With disabilities
Employees with disabilities – female
Employees with disabilities – male
With other vulnerabilities
Employees with other vulnerabilities – female
Employees with other vulnerabilities – male
2023
2022
2021
37.3%
37.0%
36.5%
62.7%
63.0%
63.5%
11 148
10 997
10 162
14 500
14 248
13 877
22 759
22 255
21 229
39 432
39 695
39 672
4 611
4 394
4 875
10 743
10 271
9 559
8 525
8 490
8 246
34.3%
33.9%
34.8%
65.7%
66.1%
65.2%
1 299
1 235
1 274
31.9%
31.1%
29.0%
68.1%
68.9%
71.0%
32.3%
31.8%
34.4%
34.3%
33.8%
31.1%
2 292
2 285
1 299
906
434
472
796
369
427
1 386
1 489
578
808
547
942
660
290
370
639
269
370
Non-financial statementsSGS | 2023 Integrated Report 169
2023
17.0%
5.6%
4.5%
3.7%
3.7%
14.9%
5.6%
4.8%
4.6%
4.1%
Workforce breakdown continued
Nationality
Employees by top five nationalities1
(% of share in total workforce)
Chinese
Indian
Spanish
German
Brazilian
Management workforce by top five nationalities1
(% of share in total workforce)
Chinese
Indian
French
German
Brazilian
1.
This data covers 97% of our employees as USA employees are not included in this breakdown.
Learning and development
Each year we invest in the upskilling our employees’ capabilities in line with our business priorities and growth strategy. We promote self-
directed learning, tailor our talent development programs to fit local markets, business needs and employee expectations, and invest in digital
tools for training and development.
Regarding performance reviews, we tailor the type of performance review to the job position and category. This includes management by
objectives, multidimensional performance appraisal, team-based performance appraisal or agile conversations. We encourage manager
positions to deliver ongoing feedback to their teams and we have a formal process for performance reviews once a year.
Training ratio1
(% of total employment cost spent on training)
Training hours per FTE
(# of hours per FTE)
Job related training hours per FTE
(# of hours per FTE)
Total training hours2
(# million of hours)
Job related training hours
(# million of hours)
Performance reviews
(% of employees who have received performance reviews out of the total eligible3)
2023
2022
2021
3.6%
3.2%
2.6%
61.2
54.7
45.8
48.1
43.3
38.9
6.0
4.7
5.3
4.2
4.3
3.6
79%
85%
88%
1.
2.
Training and hours spent cost per total employment cost, including safety training hours. On a constant currency basis.
Broken down by type of training: Management and leadership development: 2%; Apprentice & trainee training programs: 3%; Technical training: 14%; Non-Technical training: 3%;
Operational integrity training: 57%; Compliance training: 17%; Other: 4%
3. 62% of employees were eligible for performance reviews in 2023 .
Non-financial statementsFinancial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportAppendix 170
Databank
continued
Employee engagement
We value feedback and encourage employees to voice their opinions via our voluntary annual employee engagement survey. Each year we
survey different geographies, and we benchmark ourself against external norms; local management takes appropriate actions to improve our
scores. This year we have implemented a new Employee Voice & Engagement platform. The score is now shown in a scale out of 10.
Employees invited to participate in the employee engagement survey
(# of employees)
Response rate
(%)
Engagement index
(2023: average score out of 10; 2022 and previous: average score out of 100)
Actively engaged employees1
(%)
Management support index2
(2023: score out of 10; 2022 and previous: score out of 100)
2023
2022
2021
25 412
28 569
30 129
81%
79%
86%
7.6
69
75
79%
64%
73%
8.3
72
78
1.
2.
Employees that are Promoters and Passives (those that gave score from 10 to 7) based on employee NPS.
Management support index (formerly, ‘Manager effectiveness index’ before the new Employee Voice & Engagement platform) is calculated based on the combination of the two questions
of the engagement survey: ‘My manager provides me with the support that I need to complete my work’ and ‘My manager communicates openly and honestly with me.’
Talent attraction and retention
Our recruitment process is designed to enable us to select creative, innovative people who have passion, potential and integrity. We make
our selection based on a combination of candidates’ skills, competencies, experience and motivation. Through this approach and targeted
talent attraction strategies, we have welcomed 27 288 new hires (internal and external) in 2023.
New hires
(# of employees)
Internal new hires
(% of total new hires)
New hires (female)
(% of internal hires)
New hires (male)
(% of internal hires)
External new hires
(% of total new hires)
New hires (female)
(% of external hires)
New hires (male)
(% of external hires)
Voluntary turnover
(% of permanent employees)
Total turnover
(% of total permanent employees)
Total turnover female
(% of total female employees)
Total turnover male
(% of total male employees)
2023
2022
2021
27 289
28 430
29 486
16.3%
15.1%
14.8%
45.8%
50.3%
50.3%
54.2%
49.7%
49.7%
83.7%
84.9%
85.2%
36.1%
36.8%
35.2%
63.9%
63.2%
64.8%
12.7%
14.8%
14.7%
18.8%
20.3%
20.5%
18.3%
19.6%
20.1%
19.1%
20.8%
20.7%
Non-financial statementsSGS | 2023 Integrated Report 171
Talent attraction and retention continued
Internal new hires
External new hires
Employees that left on their own will
Male
Female
45.8%
54.2%
Male
Female
63.9%
36.1%
Male
Female
59.4%
40.6%
<30 years
28.5%
30-50 years 65.6%
>50 years
5.9%
Top
management 0.2%
Middle
management 5.5%
Junior
management 33.1%
Non-
management
positions
61.2%
<30 years
46.3%
30-50 years
47.0%
>50 years
6.7%
Top
management 0.1%
Middle
management
Junior
management
Non-
management
positions
1.7%
7.7%
90.5%
<30 years
38.0%
30-50 years 53.3%
>50 years
8.7%
Top
management 0.4%
Middle
management 2.5%
Junior
management 8.8%
Non-
management
positions
88.3%
Remuneration
Our goal is to offer our existing and future talent a competitive compensation package, to attract, engage, motivate and retain them.
We systematically assess the competitiveness of our reward practices in all the markets in which we operate.
Mean gender pay gap1
(% of difference between men and women employees)
Median gender pay gap1
(% of difference between men and women employees)
Mean bonus gap1
(% of difference between men and women employees)
Median bonus gap1
(% of difference between men and women employees)
CEO and mean employee compensation ratio2
2023
2022
2021
3.0%
2.4%
3.0%
–4.7%
–7.3%
–4.7%
21.4%
21.0%
17.3%
–4.0%
–6.3% –20.1%
31.9
28.5
40.6
1.
2.
This data has a coverage of 94.5% of all SGS employees. 0% means no gap, negative percentage benefits women and positive percentage benefits men.
To make the ratio comparable, we have implemented cost of living adjustments using the Purchasing Power Parity conversion rates and it is calculated based only on base salary
and bonuses (excluding pension funds and extra hours).
Non-financial statementsFinancial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportAppendix 172
Databank
continued
Operational integrity
Employee health and safety along with environmental protection are a priority. As detailed in our business principles, protecting employees
and the environment from harm are fundamental behaviors at SGS. In 2023, we have continued to make progress towards our target and
have achieved a further reduction in our incident rates.
Total Recordable Incident Rate (TRIR)¹
(occurrences per 200 000)
TRIR variation
(% against a 2018 baseline)
Number of recordable incidents²
(# of incidents)
Lost Time Incident Rate (LTIR)³
(occurrences per 200 000)
LTIR variation
(% against a 2018 baseline)
Sites certified to ISO 45001 and/or ISO 14001 standards
(number of sites)
Sites dual certified to ISO 45001 and ISO 14001 standards
(number of sites)
FTE covered by ISO 45001 standard
(number of FTE)
FTE covered by ISO 14001 standard
(number of FTE)
FTE covered by ISO 45001 and/or ISO 14001 standards
(number of FTE)
Safety training hours
(# of hours)
Operational Integrity training per employee
(# of hours per FTE)
2023
2022
2021
0.32
0.35
0.37
–22%
–16%
–9%
326
346
357
0.17
0.19
0.22
–31%
–25%
–14%
644
278
562
229
537
224
28 222
20 862
12 750
26 204
18 195
8 750
54 426
39 057
21 500
3 423 056 2 937 914 2 692 702
34.7
30.4
28.9
Total absence rate4
(% of days of sickness absence plus days lost per incidents with lost time per total days worked)
1.91%
2.22%
1.85%
Sickness absence rate
(% of days of sickness absence per total days worked)
Work-related absence rate
(% of days of days of lost time and restricted duty due to recordable incidents per total days
worked)
1.89%
2.20%
1.82%
0.02%
0.02%
0.03%
1.
2.
3.
4.
Number of lost time, restricted duty, medical treatment incidents and fatalities per 200 000 hours worked.
Number of lost time, restricted duty, medical treatment incidents and fatalities.
Number of lost time incidents per 200 000 hours worked.
Days of sickness absence and restricted duty per total days worked.
Non-financial statementsSGS | 2023 Integrated Report 173
Community donations
We are committed to give back to the communities where we operate, and we do so across three pillars: empowerment, education and
environmental sustainability. In doing so, we are helping to tackle global challenges such as poverty, equal opportunities, health, education,
climate change and environmental degradation. In 2023, we have almost doubled the number of volunteering hours.
Community donations1
(CHF thousands on constant currency basis)
Community donations variation
(% against a 2019 baseline)
Total community projects
(# of projects)
Community hours
(# of hours dedicated to community)
Community hours variation
(% against a 2019 baseline)
1. Community donations include: cash, donations in kind and volunteering hours.
2023
2022
2021
1 722
1 850
1 384
22.0%
43.4%
7.2%
595
526
382
32 590
18 691
9 284
89.5%
8.7% –46.0%
Donation per type
Donation per nature of contribution
Donations per pillar
Community donation
Occasional charitable donation
Philanthropic sponsorship
53.6%
40.0%
6.4%
Cash contributions
Volunteering contributions
In-kind contributions
Management contributions
55.5%
29.0%
8.3%
7.2%
Empowerment
Education
Environmental sustainability
Disaster relief
42.1%
30.2%
24.6%
3.1%
Non-financial statementsFinancial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportAppendix 174
Databank
continued
Climate change – energy consumption
As a sustainability leader that recognizes the threat posed by global climate change, we are setting the benchmark for reduced energy
consumption. Through initiatives such as our Energy Efficiency in Buildings (EEB) program, sustainable transport and Green IT, we are
actively reducing our own energy consumption at source. We are also moving away from fossil fuel based sources of energy by transitioning
to renewable energy.
Total energy consumption
(MWh)
Total energy consumption by use
(MWh)
Vehicle fuels energy
Non-transport fuels energy
Total electricity
Standard electricity1
Renewable electricity2
Total energy production
(MWh)
Non-renewable energy production
Renewable energy production
Total renewable electricity
(% of total electricity consumption)
Energy intensity per sales3
(MWh/CHF million)
Energy intensity per average FTE4
(MWh/FTE)
Electricity intensity per sales3
(KWh/CHF million)
Electricity intensity per average FTE4
(MWh/FTE)
2023
2022
2021
948 152
947 571
927 654
311 551
310 792
300 624
140 695
149 182
147 242
495 906
487 597
479 788
12 794
15 541
15 674
483 112
472 056
464 116
–
–
–
3 981
2 312
305
97%
97%
97%
143
9.6
155
149
9.8
9.9
74.9
79.6
77.1
5.0
5.0
5.1
1.
2.
3.
4.
Electricity bought from a non renewable tariff linked to Energy Attribute Certificates.
Electricity bought from local renewable sources of production and through Energy Attribute Certificates.
Being the denominator the sales on a constant currency basis. Energy consumption within the organization.
Being the denominator the average FTEs (see table ‘Average number of employees by geographical area’ on p. 107). Energy consumption within the organization.
Climate change – energy efficiency in buildings program
The energy used in our offices and laboratories worldwide accounts for 84% of our global energy consumption. It is therefore a key area of
focus for us to reduce energy use. In 2023, additional buildings were included in the program and further measures were identified across
the network.
Buildings covered by the EEB program
(# of buildings)
Energy consumption from buildings covered by the EEB program
(% of total energy consumed by SGS buildings)
Energy conservation measures identified
(# of measures identified since beginning)
Vehicle fleet average theoretical emissions
(gCO2/km)
1. 2022 vehicle fleet average theoretical emissions was updated following a fleet reclassification.
2023
722
2022
701
2021
694
84%
80%
83%
904
786
708
126.7
129.21
134.6
Non-financial statementsSGS | 2023 Integrated Report 175
Climate change – greenhouse gas (GHG) emissions
We have committed to reducing greenhouse gas emissions through the Science Based Targets initiative (SBTi), which advocates the setting of
targets and deadlines in line with climate science in order to future-proof growth. In 2023, we have continued our efforts towards these targets
by focusing on our major source of scope 1 and 2 emissions (vehicle emissions) and our scope 3 emissions associated to our supply chain.
Scope 1 GHG emissions1
Gross scope 1 GHG emissions (tCO2e)
Percentage of scope 1 GHG emissions from regulated
emission trading schemes (%)
Scope 2 GHG emissions2
Gross location-based scope 2 GHG emissions (tCO2e)
Gross market-based scope 2 GHG emissions3 (tCO2e)
Significant scope 3 GHG emissions
Total Gross indirect (scope 3) GHG emissions (tCO2e)
1 Purchased goods and services
2 Capital goods
3 Fuel and energy related activities
(not included in scope 1 and scope 2)
4 Upstream transportation and distribution
5 Waste generated in operations
6 Business travel
7 Employee commuting
8 Upstream leased assets
9 Downstream transportation and distribution
10 Processing of sold products
11 Use of sold products
12 End-of-life treatment of sold products
13 Downstream leased assets
14 Franchises
15 Investments
Total GHG emissions
Total GHG emissions (location-based) (tCO2e)
Total GHG emissions (market-based) (tCO2e)
Carbon off-setting credits
Voluntary carbon-offsetting CO2 credits retired4
(CO2e tons)
Carbon off-setting credits
Scope 1+2 intensity per sales market based1,2,3,5
(CO2e tons/CHF million)
Scope 1+2 intensity per average FTE market based2,3,6
(CO2e tons/FTE)
Scope 3 intensity per sales7
(CO2e tons/CHF million)
Retrospective
Milestones and target years
Base year
Comparative
N
%N / N-1
2019
2022
2023
2030
2050
113 443
108 046
104 760
–3%
61 033
11 344
0%
0%
0%
0%
0%
215 752
16 758
220 398
8 459
225 036
7 269
786 371
441 064
137 633
850 621
525 111
131 003
812 049
498 086
127 168
2%
–14%
-5%
-5%
-3%
–
116 075
9 016
–
423 067
237 292
74 047
76 354
87 454
72 932
–17%
41 078
–
10 531
29 647
91 142
–
–
–
–
–
–
–
–
–
19 128
18 125
69 800
–
–
–
–
–
–
–
–
–
19 045
23 003
71 815
–
–
–
–
–
–
–
–
0%
27%
3%
–
5 666
15 950
49 034
–
–
–
–
–
–
–
–
–
21 575
1 676
–
78 637
44 106
13 763
7 635
–
1 053
2 965
9 114
–
–
–
–
–
–
–
–
1 115 566
916 572
1 179 065
967 126
1 141 845
924 078
–3%
–5%
600 174
493 115
111 557
91 657
159 848
116 505
112 029
–4%
21.7
1.4
19.0
1.2
16.9
–11%
1.1
–6%
–4%
131.3
138.8
122.6
1.
2.
3.
4.
Refrigerant gas emissions are not included in this figure.
District Heating emissions are not included in this figure.
97% of total electricity consumption is linked to purchased electricity bundled with instruments: 66% I-RECs, 29% guarantees of origin, 2% RECs, and 3% other country-specific certificates.
100% of carbon credits retired are linked to carbon reduction projects verified against the Clean Development Mechanism standard.
The total amount of carbon credits purchased during 2023 were cancelled during the year, with no credits pending to be cancelled next year.
0% of carbon credits were issued from projects in the EU and 0% qualify as a corresponding adjustment under Article. 6 of the Paris Agreement.
2019 credits retired correspond to offsetting emissions of scopes 1, 2 and business travel (3.6) while in 2022 and 2023 credits were retired to offset scopes 1 and 2 only.
Being the numerator the total scope 1 + 2 market-based GHG emissions and the denominator the sales on a constant currency basis.
Being the numerator the total scope 1 + 2 market-based GHG emissions and the denominator the average FTEs (see table ‘Average number of employees by geographical area’ on p. 107).
5.
6.
7. Being the numerator the total scope 3 GHG emissions and the denominator the sales on a constant currency basis.
Non-financial statementsFinancial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportAppendix
176
Databank
continued
Water and waste management
While our water consumption and waste impact is relatively small compared to other industries, we monitor our impact and reduce our
resources’ footprint.
Water purchased
(m3)
Water use/average FTE2
(m3/FTE)
Weight of waste generated
(metric tons)
Weight of hazardous waste generated
(metric tons)
SGS offices and labs
Client samples
Weight of non-hazardous waste generated
(metric tons)
SGS offices and labs
Client samples
Weight of waste recovered
(metric tons)
Weight of hazardous waste recovered
(metric tons)
SGS offices and labs
Client samples
Weight of non-hazardous waste recovered
(metric tons)
SGS offices and labs
Client samples
Environmental incidents
(# of environmental incidents including significant spills)
2023
2022
20211
2 051 434 1 985 965 1 919 430
20.8
20.5
20.6
70 348
78 560
65 199
15 020
16 217
13 377*
8 598
10 829
9 710*
6 422
5 388
3 667
55 328
62 343
51 822*
29 448
36 558
29 829*
25 880
25 785
21 993
22 616
24 783
20 888
5 643
5 107
3 521*
2 792
2 851
2 343
2 764
2 435*
1 087
16 973
19 676
17 366*
8 018
8 943
9 374*
8 955
10 733
7 993
29
26
45
1. 2021 values were updated after a reclassification: 1.3 tons of SGS waste were reclassified from non-hazardous to hazardous waste resulting in a change of the figures marked with an *.
2. See table “Average number of employees by geographical area” on p. 107.
Non-financial statementsSGS | 2023 Integrated Report 177
2023 Global
Reporting
Initiative (GRI)
content index
SGS has reported the information cited in this
GRI content index for the period 1 January
2023 to 31 December 2023 with reference
to the GRI Standards.
GRI standard and disclosure
Reference
Assured quantitative indicators
Assurance
GRI 2: General Disclosures 2021
2-1
2-2
2-3
2-4
2-5
2-6
Organizational details
Page 98
Entities included in the organization’s
sustainability reporting
Pages 155-157 and 159
Reporting period, frequency and
contact point
Pages 159, 204, and 187-189
Restatements of information
Page 159
External assurance
Pages 65, 159 and 187-189
Activities, value chain and other
business relationships
Pages 2, 10-11, 32-33, 44-45, 52, 155, 157, 161, 166 and 202
2-7
Employees
Pages 42, 167-168
Information regarding the total number of non-guaranteed
hours employees, full-time employees and part-time
employees including its breakdown by gender and by
region is not disclosed. Information not broken down
by region as this is considered confidential information.
– Spend by SGS category1
– Spend by SGS supra-region1
– Number of employees at year end
(# of employees)
– Permanent workers
(as a % of total employees)
– Casual workers
(as a % of total employees)
2-9
2-10
2-11
2-12
2-13
2-14
Governance structure
and composition
Nomination and selection of
the highest governance body
Chair of the highest
governance body
Role of the highest governance
body in overseeing the
management of impacts
Delegation of responsibility
for managing impacts
Role of the highest governance
body in sustainability reporting
Pages 50-65
Page 54 and 58
Page 18, 55 and 60
Page 59-60
Page 18 and 59-60
Page 18 and 59-60
2-15
Conflicts of interest
Page 58 and 61
2-16
Communication of critical concerns Page 61, 164 and 203
– Total number of substantiated
breaches of the Code of Integrity
received through integrity helplines
and broken down by type of breach
– Total number of integrity issues
reported through integrity helplines
2-17
Collective knowledge of the
highest governance body
Pages 18 and 59
The sustainability committee receives regular information about
SGS sustainability programs and initiatives. New regulations
or requirements are analyzed during the regular meetings to
assess their potential impact in SGS operations, supply chain and
services. Specific analysis sessions are organized on demand
depending on the level of complexity of a given topic and
additional training needs are constantly evaluated.
2-18
Evaluation of the performance
of the highest governance body
Page 54, 58 and 66
2-19
Remuneration policies
Pages 66-91
2-20
Process to determine remuneration Pages 66-91
2-21
Annual total compensation ratio
Pages 66-91 and 171
The information is limited only to CEO and mean employee
compensation ratio as this is confidential information.
– CEO and mean employee
compensation ratio
2-22
Statement on sustainable
development strategy
Pages 5-7
2-23
Policy commitments
Page 3 and 199
Code of integrity
SGS Code of Conduct for Suppliers
1. Additional information to the GRI requirements.
Non-financial statementsFinancial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportAppendix 178
2023 GRI content
index continued
GRI standard and disclosure
Reference
Assured quantitative indicators
Assurance
2-24
Embedding policy commitments
Page 3, 61 and 202
2-25
2-26
2-27
Processes to remediate
negative impacts
Mechanisms for seeking
advice and raising concerns
Compliance with laws
and regulations
Pages 25-31 and 197-203
Page 203
As indicated in our Code of Integrity, SGS complies with
applicable laws in the countries where it does business.
During 2023 the SGS Group was not condemned to any
significant fines or penalties for non-compliance with any
kind of laws and regulations.
– Fines for non-compliance
with regulations
2-28 Membership associations
Page 165
2-29
Approach to stakeholder
engagement
Pages 22-23
2-30
Collective bargaining agreements
Page 167
We respect our employees’ right to have collective
representation and to enter into collective bargaining
agreements where this is accepted by local law.
– Contributions to trade
associations
– Customer satisfaction score1
(as a % score)
– Engagement index1
– Percentage of employees covered
by collective bargaining
GRI 3: Material Topics 2021
3-1
3-2
3-3
Process to determine
material topics
List of material topics
Pages 22-24, 159
Pages 24, 159
Management of material topics
Pages 24, 159
GRI 201: Economic Performance 2016
3-3
Management of material topics
Pages 34-37
201-1
Direct economic value
generated and distributed
– Total economic value generated: CHF 6 651 million
(Sales: CHF 6 622 million; Financial income: CHF 29 million)
– Total economic value distributed: CHF 6 697 million (Salaries
and wages: CHF 3 316 million; Subcontractors’ expenses:
CHF 400 million; Depreciation, amortization and impairment:
CHF 545 million; Other operating expenses (including other
taxes, community contributions and charitable donations):
CHF 1 511 million; Financial expenses: CHF 86 million;
Dividends distributed (expected): CHF 634 million; Income
taxes CHF 205 million)
– Total economic value generated
– Total economic value distributed
– Total economic value retained
201-2
201-3
201-4
Financial implications and other
risks and opportunities due to
climate change
Defined benefit plan obligations
and other retirement plans
Financial assistance received
from government
– Total economic value retained: CHF –46 million
Pages 190-196
Page 124-129
SGS does not receive any significant financial assistance from
governments, but we benefit from incentives in the form of
grants from certain government schemes, such as energy-
saving incentives. However, these benefits are of low value.
This information is based on our global information gathering
system. We are not aware of any significant incentives granted
by governments or any financial aid granted to political parties
at local level during 2023.
GRI 202: Market Presence 2016
3-3
Management of material topics
Page 171
202-1
Ratios of standard entry level
wage by gender compared to
local minimum wage
SGS is committed to comply with the applicable labor regulations
in the countries where we operate. Whenever possible, we
improve the minimum wages set by the local legislation.
The quantitative information breakdown is unavailable. The
deployment of our global HR data management tool is under
review. We are currently evaluating alternative reporting options
and expect to report in coming years.
1. Additional information to the GRI requirements.
Non-financial statementsSGS | 2023 Integrated Report 179
GRI standard and disclosure
Reference
Assured quantitative indicators
Assurance
GRI 203: Indirect Economic Impacts 2016
3-3
Management of material topics
Pages 32-33 and 162-163
203-2
Significant indirect
economic impacts
GRI 204: Procurement Practices 2016
Pages 32-33 and 162-163
3-3
Management of material topics
Pages 44-45
204-1
Proportion of spending
on local suppliers
Page 166
The percentage of global and local suppliers is calculated
considering 92% of the global spend.
We consider global suppliers those managed by Global
Procurement at corporate level and local suppliers those
managed by local procurement teams at affiliate/regional level,
regardless of where the supplier is based or the number of
affiliates where it provides its services/deliver its products.
– Number of local suppliers
(as a % of total suppliers)
– Number of global suppliers
(as a % of total suppliers)
– Spend of local suppliers
(as a % of total spend)
– Spend of global suppliers
(as a % of total spend)
GRI 205: Anti-corruption 2016
3-3
Management of material topics
Pages 42-43
205-1
Operations assessed for risks
related to corruption
Our non-financial macro risk assessment model analyzes
economic, political, social and environmental risks across 220
geographies and includes our own employees, suppliers,
indigenous people, migrant labor and local communities.
The analysis of economic and political risks includes the following
categories: government instability, policy instability, state failure,
recession, inflation, currency depreciation, capital transfer,
sovereign default, under-development, tax issues, corruption,
infrastructural disruption, energy security, cybersecurity
commitment, data protection and regulatory.
Our most recent risk assessment was performed in 2022 and
the results of that assessment resulted in the following risk
exposure:
– Direct operations (as a % of sales): Low 58%;
Medium 40%; High 2%
– Supply chain (as a % of spend): Low 59%;
Medium 40%; High 1%
205-2
Communication and training
about anti-corruption policies
and procedures
This selected indicator was externally assured by PwC as part
of the assurance of the 2022 Integrated Report.
Pages 42-43, 164, 203
Breakdown by gender and employee category is not reported
as this is considered confidential information.
The calculation is based exclusively on for permanent workers.
– Percentage of employees trained
on the Code of Integrity
205-3
Confirmed incidents of corruption
and actions taken
Page 164
In 2023, there were no public legal cases regarding corruption
brought against the organization or its employees.
– Number and nature of confirmed
incidents of corruption identified
through corporate helplines
GRI 206: Anti-competitive Behavior 2016
3-3
Management of material topics
We are committed to using competitive and fair practices. As
such, we do not engage in any understandings or agreements
that may improperly influence markets, or discuss pricing,
competitive bid processes, contractual terms, division of
territories or customer and market allocations with competitors.
We do not make disparaging or untruthful allegations regarding
competitors, or endeavor to obtain confidential information about
them using illegal or unethical means. Finally, our services and
capabilities are never advertised in any way that could appear to
be deceptive or misleading. We provide customers with detailed
quotes and invoices so that they are informed about every aspect
of our service, including pricing. Our Global Pricing Initiative,
developed through expert review of pricing practices across
the Group, ensures robust pricing processes and governance.
206-1
Legal actions for anti-competitive
behavior, anti-trust, and monopoly
practices
In 2023, we did not identify any legal actions related to anti-
competitive behavior, antitrust and monopoly practices.
This information is based on our global information gathering
system based on incidents reported via the SGS integrity
helplines. We are not aware of any significant incidents
of this type at a local level during 2023.
– Number of legal actions pending or
completed during the reporting period
regarding anti-competitive behavior and
violations of anti-trust and monopoly
legislation in which the organization
has been identified as a participant
Non-financial statementsFinancial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportAppendix 180
2023 GRI content
index continued
GRI standard and disclosure
Reference
Assured quantitative indicators
Assurance
GRI 207: Tax 2019
3-3
Management of material topics
Pages 109-110
GRI 302: Energy 2016
3-3
Management of material topics
Pages 46-47
302-1
Energy consumption
within the organization
Pages 46-47, 174
The information reported is limited to the total fuel
and the total electricity consumption broken down
by renewable and non-renewable electricity.
Heating consumption, cooling consumption and steam
consumption are not reported as it is not applicable to SGS.
302-3 Energy intensity
Pages 46-47, 174
302-4 Reduction of energy consumption Page 174
GRI 303: Water and Effluents 2018
3-3
Management of material topics
303-5 Water consumption
GRI 304: Biodiversity 2016
3-3
Management of material topics
GRI 305: Emissions 2016
3-3
Management of material topics
305-1 Direct (Scope 1) GHG emissions
Compared to 2022, our energy consumption
has increased by 0.06% in 2023. Variation in the energy
consumption is calculated as a gross percentage between the
total consumption of energy, within the organization in 2022
and 2023 (not based on SGS energy efficiency initiatives).
Not applicable. Given our activity, we are not a company with
high water consumption, hence why this is not a material topic
for us.
Page 176
The information reported is limited to the total
water consumption.
Not applicable. Being a service based company, SGS
does not have a significant impact on biodiversity.
Pages 46-47
Our base year is 2019 as, given the Covid crisis, we consider it
to be the most representative year in terms of business activity.
Pages 46-47, 175
We are currently improving our refrigerant gases collection
system to ensure the accuracy of the data. To date, reliable
data about refrigerant consumption is unavailable and therefore
they are excluded from the Group’s carbon footprint.
305-2
Energy indirect (Scope 2)
GHG emissions
Pages 46-47, 175
305-3
Other indirect (Scope 3)
GHG emissions
Pages 46-47, 175
305-4 GHG emissions intensity
Pages 46-47, 175
– Total energy consumption (MWh)
– Total energy consumption by use (MWh)
– Vehicle fuels energy (MWh)
– Non-transport fuels energy (MWh)
– Total electricity (MWh)
– Standard electricity (MWh)
– Renewable electricity (MWh)
– Total renewable electricity (as %
of total electricity consumption)
– Energy intensity per sales
(MWh/CHF million)
– Energy intensity per FTE
(MWh/FTE)
– Water purchased (m3)
– Gross scope 1 GHG emissions (tCO2e)
– Gross location-based scope 2
GHG emissions (tCO2e)
– Gross market-based scope 2
GHG emissions3 (tCO2e)
– Total Gross indirect (scope 3)
GHG emissions (tCO2e)
– Purchased goods and services
– Capital goods
– Fuel and energy related activities
(not included in Scope 1 and Scope 2)
– Waste generated in operations
– Business travel
– Employee commuting
– Scope 1+2 intensity per sales market
based (CO2e tons/CHF million)
– Scope 1+2 intensity per FTE market
based (CO2e tons/FTE)
– Scope 3 intensity per sales
(CO2e tons/CHF million)
Non-financial statementsSGS | 2023 Integrated Report 181
GRI standard and disclosure
Reference
Assured quantitative indicators
Assurance
305-5 Reduction of GHG emissions
Pages 46-47, 175
Scopes 1 and 2 absolute GHG emissions have decreased
by 14% since 2019.
Score 3 absolute GHG emissions have increased by 3.3%
since 2019.
Variation in GHG emissions is calculated as a gross percentage
between the total emissions, within the organization against a
2019 baseline (not based on SGS reduction initiatives).
– Scope 1+2 emissions variation (as a %
against a 2019 baseline)
– Scope 3 emissions variation (as a %
against a 2019 baseline)
– Weight of waste generated
(metric tons)
– Weight of hazardous waste
generated (metric tons)
– Weight of non-hazardous
waste generated (metric tons)
– Environmental incidents (as # of
environmental incidents including
significant spills)
– Weight of waste recovered
(metric tons)
– Weight of hazardous waste recovered
(metric tons)
– Non-hazardous waste recovered
(metric tons)
– New hires (# of employees)
– Voluntary turnover (as a %
of permanent employees)
– Total turnover by gender (as a %
of total permanent employees)
GRI 306: Waste 2020
3-3
Management of material topics
Pages 46-47
306-3
(2020) Waste generated
Pages 46-47, 176
306-3
(2016) Significant spills
Pages 46-47, 176
306-4 Waste diverted from disposal
Pages 46-47, 176
GRI 308: Supplier Environmental Assessment 2016
3-3
Management of material topics
Pages 44-45
308-2
Negative environmental
impacts in the supply chain
and actions taken
Page 166
The information reported is limited to the number of suppliers
assessed for environmental impacts.
Our most recent risk assessment was performed in 2022.
This selected indicator was externally assured by PwC as
part of the assurance of the 2022 Integrated Report
GRI 401: Employment 2016
3-3
Management of material topics
Pages 42-43
401-1
New employee hires
and employee turnover
Page 170-171
Information not broken down by region.
401-2
Benefits provided to full-time
employees that are not
provided to temporary
or part-time employees
401-3 Parental leave
We offer benefits such as healthcare plans and occupational
pension plans to our employees considering their type of
contract.
Many of our affiliates provide paid maternity and paternity
leave in excess of legally required minimum. For example,
SGS in Switzerland offers 16 weeks of maternity leave paid at
100%. SGS in Australia offers 8 weeks of paid maternity leave
in excess of the local legally required minimums and SGS in
South Africa, offers 5 paid days while local regulation provides
3 paid days. We also provide different childcare facilities in
many of our affiliates. Some of our offices count with special
rooms equipped with armchairs and freezers dedicated to
breastfeeding. We also offer our employees the possibility
of flexible working arrangements such as flexible check-in
and checkout, remote or part-time working to promote
worklife balance. No quantitative information available.
Non-financial statementsFinancial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportAppendix 182
2023 GRI content
index continued
GRI standard and disclosure
Reference
Assured quantitative indicators
Assurance
GRI 402: Labor/Management Relations 2016
3-3
Management of material topics
402-1
Minimum notice periods
regarding operational changes
We strictly adhere to tariff structures and arrangements
negotiated with trade unions, while we also inform and consult
employees on relevant business activities. We respect statutory
minimum notice periods and give reasonable notice of any
significant operational changes in line with local practices and
labor markets. Our affiliates’ communication and consultation
processes are tailored to local needs. Organizational changes
and relevant events that occur are formally communicated in
compliance with the different regulations that apply both globally
and locally as well as, when applicable, in accordance with what
is established in the collective bargaining agreements of the
group’s companies.
GRI 403: Occupational Health and Safety 2018
3-3
Management of material topics
Pages 42-43
403-1
403-2
Occupational health and safety
management system
Pages 42-43, 201
Hazard identification,
risk assessment, and
incident investigation
All site managers are expected to perform risk assessments
and to develop associated action plans. Employees have the
right to stop work at any time, without reprisal, if they consider
there to be a health, safety or environmental risk. Any such
instances are reported through our Crystal OI system.
Our OI management system defines the criteria to be met to
comply with our own requirements and with the local laws
and regulations. To ensure compliance, we audit regions and
countries centrally, while local OI managers audit our laboratories,
offices and facilities. The audit results go into our performance
reports, along with incidents and hazards information captured
in Crystal.
403-3 Occupational health services
Pages 42-43
403-4
Worker participation, consultation,
and communication on
occupational health and safety
Pages 42-43
Each role at SGS requires specific OI knowledge to support
the safety and well-being of our employees. All employees are
given training on site standard operating procedures, along with
regular training sessions on Group OI management systems
and Rules for Life. We also operate a behavior-based safety
peer-to-peer observation program.
Page 201
In line with our culture of care, we promote initiatives to
enhance the physical and mental well-being of our employees
so as to ensure their fitness for work. This includes the
provision of preventative health measures, such as vaccinations,
mental and physical health programs focused on awareness,
support and resilience.
Pages 42-43
403-5
Worker training on occupational
health and safety
403-6 Promotion of worker health
403-7
Prevention and mitigation of
occupational health and safety
impacts directly linked by
business relationships
403-8
Workers covered by an
occupational health and safety
management system
Page 172
We only report on the number of sites certified
and the number of employees covered by certified
management systems.
403-9 Work-related injuries
Page 172
2 fatalities occurred in 2023.
– FTE covered by ISO 45001 standard
(number of FTE)
– Total Recordable Incident Rate
(TRIR) (occurrences per 200 000)
– Lost Time Incident Rate (LTIR)
(occurrences per 200 000)
– Sickness absence rate (as a %
of days of sickness absence per
total days worked)
– Total absence rate (as a % of days
of sickness absence plus days lost
per incidents with lost time per total
days worked)
Non-financial statementsSGS | 2023 Integrated Report 183
GRI standard and disclosure
Reference
Assured quantitative indicators
Assurance
403-10 Work-related ill health
Page 172
Information not broken down by gender and employee
category. Number of fatalities as a result of work-related ill
health: 0
– The number of fatalities as a result
of work-related ill health
GRI 404: Training and Education 2016
3-3 Management of material topics
Pages 39-41
404-1
Average hours of training
per year per employee
Page 169
Information not broken down by gender
and employee category.
404-2
404-3
Programs for upgrading
employee skills and transition
assistance programs
Percentage of employees
receiving regular performance
and career development reviews
Pages 39-41
Page 169
GRI 405: Diversity and Equal Opportunity 2016
3-3
Management of material topics
Pages 42-43
– Training ratio (as a % of total
employment cost spent on training)
– Percentage of employees trained
on the Code of Integrity
– Performance reviews (as a
% of employees eligible to
performance review)
405-1
Diversity of governance bodies
and employees
Page 55-57, 62-63, 168
The Board of Directors is composed of 9 members
(6 men and 3 women).
The Operations’ Council is composed of 16 members
(14 men and 2 women).
– Percentage of employees by gender
– Percentage of managers by gender
– Percentage of women in leadership
positions (CEO-3)
– Diversity on the Board and Operations
Council by gender, nationality and age
405-2
Ratio of basic salary and
remuneration of women to men
Page 171
GRI 406: Non-discrimination 2016
3-3
Management of material topics
Pages 42-43, 201
406-1
Incidents of discrimination
and corrective actions taken
Pages 167, 203
GRI 407: Freedom of Association and Collective Bargaining 2016
3-3
Management of material topics
Page 167
– Total number of proven incidents
of discrimination
407-1
Operations and suppliers in
which the right to freedom
of association and collective
bargaining may be at risk
Page 167, 201
Our most recent risk assessment was performed in 2022. This
selected indicator was externally assured by PwC as part of the
assurance of the 2022 Integrated Report.
– Number of operations identified as
having a significant risk of incidences
of child labor, forced or compulsory
labor, or where the right to exercise
freedom of association may be violated
GRI 408: Child Labor 2016
3-3
Management of material topics
Page 201
408-1
Operations and suppliers at
significant risk for incidents
of child labor
Page 167, 201
Our most recent risk assessment was performed in 2022. This
selected indicator was externally assured by PwC as part of the
assurance of the 2022 Integrated Report.
– Number of operations identified as
having a significant risk of incidences
of child labor, forced or compulsory
labor, or where the right to exercise
freedom of association may be violated
GRI 409: Forced or Compulsory Labor 2016
3-3
Management of material topics
Page 201
409-1
Operations and suppliers at
significant risk for incidents of
forced or compulsory labor
Page 167, 201
Our most recent risk assessment was performed in 2022. This
selected indicator was externally assured by PwC as part of the
assurance of the 2022 Integrated Report.
– Number of operations identified as
having a significant risk of incidences
of child labor, forced or compulsory
labor, or where the right to exercise
freedom of association may be violated
GRI 413: Local Communities 2016
3-3
Management of material topics
Pages 44-45
Non-financial statementsFinancial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportAppendix 184
2023 GRI content
index continued
GRI standard and disclosure
Reference
Assured quantitative indicators
Assurance
413-1
Operations with local
community engagement,
impact assessments, and
development programs
Pages 44-45
We have implemented such programs in 53%
of our affiliates.
“Community investments” reported in previous years is now
reported as “Community donations”.
– Community donations (CHF thousands
on constant currency basis)
– Total community projects (# of projects)
– Community hours (# of hours dedicated
to community)
413-2
Operations with significant
actual and potential negative
impacts on local communities
Pages 44-45, 162-163
GRI 414: Supplier Social Assessment 2016
3-3
Management of material topics
Pages 44-45
414-2
Negative social impacts in the
supply chain and actions taken
Page 166
Our most recent risk assessment was performed in 2022. This
selected indicator was externally assured by PwC as part of the
assurance of the 2022 Integrated Report.
GRI 415: Public Policy 2016
3-3
Management of material topics
Page 165
415-1 Political contributions
Page 165
GRI 417: Marketing and Labeling 2016
3-3
Management of material topics
We provide customers with detailed quotes and invoices
so that they are informed about every aspect of our service,
including pricing. Our Global Pricing Initiative, developed
through expert review of pricing practices across the
Group, ensures robust pricing processes and governance.
417-2
Incidents of non-compliance
concerning product and service
information and labeling
In 2023, we were not issued with any significant fines or
penalties for non-compliance with regulations concerning
product and service information and labelling.
417-3
Incidents of non-compliance
concerning marketing
communications
In 2023, we were not issued with any significant fines or
penalties for non-compliance with regulations concerning
marketing communications.
GRI 418: Customer Privacy 2016
3-3
Management of material topics
Pages 39-41
418-1
Substantiated complaints
concerning breaches of
customer privacy and losses
of customer data
Pages 39-41, 167
The total number of identified leaks, thefts, or losses
of customer data is not reported.
– Contributions to local, regional
or national political campaigns,
organizations or candidates (CHF)
– Total number of incidents of non-
compliance with regulations and/or
voluntary codes concerning product
and service information and labeling
– Total number of incidents of non-
compliance with regulations and/or
voluntary codes concerning marketing
communications, including advertising,
promotion, and sponsorship
– Number of substantiated
complaints concerning breaches
of data customer policy
– Number of complaints from
regulatory bodies
– Number of complaints received from
outside parties and substantiated
by the organization
Non-financial statementsSGS | 2023 Integrated Report 185
Sustainable
Accounting
Standards Board
(SASB) framework
alignment
The following tables illustrate how the
Company’s sustainability disclosures align
with the SASB Disclosure Topics for the
Professional & Commercial Services industry,
and where specific information may be found.
Sustainability disclosure topics and accounting metrics
Topic
Code
Accounting
metric
Data
Security
SV-PS-230a.1
Description of approach to identifying and addressing data
security risks
Level of
disclosure
Page number(s)
and/or URL(s)
Disclosed
Pages 39-41
SV-PS-230a.2
Description of policies and practices relating to collection,
usage, and retention of customer information
Disclosed
Privacy at SGS
Privacy policy
SV-PS-230a.3
(1) Number of data breaches
(2) Percentage involving customers’ confidential business
information (CBI) or personally identifiable information (PII)
(3) Number of customers affected
Disclosed
Page 167
Workforce
Diversity &
Engagement
SV-PS-330a.1
Percentage of gender and racial/ethnic group representation for
(1) Executive management, and
(2) All other employees
Disclosed
Pages 55-57, 62-63, 168-169
SV-PS-330a.2
(1) Voluntary, and
(2) Involuntary turnover rate for employees
SV-PS-330a.3
Employee engagement as a percentage
Professional
Integrity
SV-PS-510a.1
Description of approach to ensuring professional integrity
Disclosed
Pages 170-171
Disclosed
Disclosed
Page 170
Page 42-43, 164
SV-PS-510a.2
Total amount of monetary losses as a result of legal
proceedings associated with professional integrity
Disclosed
Code of integrity
Privacy policy
In 2023, we were not issued with
any significant fines or penalties
for noncompliance with regulations
associated with professional integrity
Activity metrics
Activity metric
Number of employees by:
(1) Full-time and part-time
(2) Temporary, and
(3) Contract
Code
Level of disclosure
Page number(s) and/or URL(s)
SV-PS-000.A
Partial1
Page 167
Employee hours worked; percentage billable
SV-PS-000.B
Not available2
–
FTEs, number of employees and percentage of casual and permanent workers are disclosed. We are working on reporting the requested breakdown in future reports.
1.
2. We are working on reporting these figures in future reports.
Non-financial statementsFinancial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportAppendix 186
Non-financial
matters required
by article 964b of
the Swiss Code
of Obligations
In compliance with the new Swiss rules on
non-financial reporting (article 964b of the Swiss
Code of Obligations), Shareholders are invited
to approve a report on non-financial matters.
The Company publishes an integrated report, which
covers a larger scope than is strictly required by
legislation. The vote of the shareholders is limited to
the contents included in the following table.
Requirement
Sections in the Integrated Report
Description of the business model
Testing, Inspection and Certification industry overview
TIC in focus
Description of the policies adopted
in relation to the relevant matters
and measures taken to implement
these policies
Environmental matters
Social issues
Employee related issues
Natural capital
TCFD Report
Social and relationship capital
Human capital
Human rights report
Respect for human rights
Human capital
Combating corruption
Description of the main risks related
to the relevant matters and how the
undertaking is dealing with these risks
Human rights report
Our principal risks
Human capital
Our material topics
Risk management
Our principal risks
Main performance indicators
Our progress towards our sustainability ambitions 2030
Databank
Page number(s)
Pages 10 and 11
Pages 12 and 13
Pages 46 and 47
Pages 190 to 196
Pages 44 and 45
Pages 42 and 43
Pages 197 to 203
Pages 42 and 43
Pages 197 to 203
Page 30
Pages 42 and 43
Page 24
Pages 25 to 27
Pages 28 to 31
Pages 160 to 161
Pages 164 to 176
References to national, European
or international regulations
Our approach to sustainability reporting (External standards)
Page 159
2023 GRI content index
Pages 177 to 184
Sustainable Accounting Standards Board (SASB) framework alignment Page 185
Coverage of subsidiaries
Our approach to sustainability reporting (Scope and boundaries)
Page 159
Non-financial statementsSGS | 2023 Integrated Report 187
Independent practitioner’s limited
assurance report
on selected 2023 sustainability indicators presented in the non-financial
statements section of the 2023 Integrated Report to the Board of
Directors of SGS SA
Geneva
We have been engaged by the Board of Directors to perform assurance procedures to provide limited assurance on
selected 2023 sustainability indicators (including the GHG statement) of SGS SA and its consolidated subsidiaries
(‘SGS SA’) presented in the non-financial statements section of the Integrated Report (‘Report’) for the year ended
31 December 2023.
Our limited assurance engagement focused on selected 2023 sustainability indicators as presented in the 2023 GRI
Content Index of the Report on pages 177 to 184 as marked with the check mark
.
We do not comment on, nor conclude on any prospective or retrospective information nor did we perform any assurance
procedures on the information other than those marked with the check mark for the reporting period 2023, accordingly
we provide no assurance on other information.
The selected indicators (including statements on greenhouse gases) in the Report were prepared by SGS SA based on
the criteria disclosed on page 159 in the section ‘Our approach to sustainability reporting’ defining those procedures, by
which the related sustainability indicators are internally gathered, collated and aggregated. Further, this section
describes and defines the principles, processes as well as data collection and reporting. The section ‘Our approach to
sustainability reporting’ and the document ‘Basis of reporting’ have been developed using, among others, the GRI
Sustainability Reporting Standards (GRI Standards) published by the Global Reporting Initiative (GRI), Version 2021 and
the GHG Protocol Corporate Accounting and Reporting Standard, Corporate Standard, Revised edition (GHG Protocol
Standard). We evaluated the selected indicators 2023 against the GRI Standards and the GHG Protocol Standard
(‘reporting Criteria’).
Inherent limitations
The accuracy and completeness of the selected 2023 sustainability indicators (including the GHG statement) in the
Report are subject to inherent limitations given their nature and methods for determining, calculating and estimating such
data. In addition, the GHG quantification is subject to inherent uncertainty, because of incomplete scientific knowledge
used to determine GHG emissions factors and values needed to combine e.g. emissions of different gases. Our
assurance report should therefore be read in connection with the reporting Criteria.
Board of Directors’ responsibility
The Board of Directors of SGS SA is responsible for the preparation and presentation of the Report (including the GHG
statement) in accordance with the reporting Criteria. This responsibility includes the design, implementation, and mainte-
nance of the internal control system related to the preparation and presentation of the 2023 Integrated Report of SGS
that is free from material misstatement, whether due to fraud or error. Furthermore, the Board of Directors is responsible
for the selection and application of the reporting Criteria and adequate record keeping.
PricewaterhouseCoopers SA, avenue Giuseppe-Motta 50, case postale, 1211 Genève 2, Switzerland
Telephone: +41 58 792 91 00, www.pwc.ch
PricewaterhouseCoopers SA is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity.
Non-financial statementsFinancial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportAppendix
188
Independence and quality management
We are independent of the SGS SA in accordance with the International Code of Ethics for Professional Accountants
(including International Independence Standards) issued by the International Ethics Standards Board for Accountants
(IESBA Code). We have fulfilled our other ethical responsibilities in accordance with the IESBA Code, which is founded
on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional
behaviour.
PricewaterhouseCoopers SA applies International Standard on Quality Management 1, which requires the firm to design,
implement and operate a system of quality management including policies or procedures regarding compliance with
ethical requirements, professional standards and applicable legal and regulatory requirements.
Practitioner’s responsibility
Our responsibility is to perform a limited assurance engagement and to express a limited assurance conclusion on selected
2023 sustainability indicators (including the GHG statement) as presented in the 2023 GRI Content Index of the Report on
pages 177 to 184 as marked with the check mark
. We conducted our engagement in accordance with the International
Standard on Assurance Engagements (ISAE) 3000 (Revised) ‘Assurance engagements other than audits or reviews of
historical financial information’ and the International Standard on Assurance Engagements 3410, Assurance Engagements
on Greenhouse Gas Statements (‘ISAE 3410’), issued by the International Auditing and Assurance Standards Board. These
standards require that we plan and perform this engagement to obtain limited assurance about on whether anything has
come to our attention that causes us to believe that the selected 2023 sustainability indicators (including the GHG
statement) presented in the 2023 GRI content index of the Report on 177 to 184, as marked with the check mark
not, in all material aspects, prepared in accordance with the reporting Criteria.
, were
Based on risk and materiality considerations, we performed our procedures to obtain sufficient and appropriate assurance
evidence. The procedures selected depend on the assurance practitioner’s judgement. A limited assurance engagement
under ISAE 3000 (Revised) and ISAE 3410 is substantially less in scope than a reasonable assurance engagement in
relation to both the risk assessment procedures, including an understanding of internal control, and the procedures
performed in response to the assessed risks. Consequently, the nature, timing and extent of procedures for gathering
sufficient appropriate evidence are deliberately limited relative to a reasonable assurance engagement and therefore less
assurance is obtained with a limited assurance engagement than for a reasonable assurance engagement.
Summary of the work performed
Our limited assurance procedures included, among others, the following work:
•
•
•
•
•
Assessment of the section ‘Our approach to sustainability reporting’ in the Report and the SGS Group Sustainability
Manual and observing the application, including the criteria to determine whether they are appropriate when applied in
relation to the disclosures and indicators;
Interviewing SGS representatives at Group and at affiliate level in Brazil, Canada, China, Germany, New Zealand,
United Arab Emirates, United States and Taiwan responsible for the data collection and reporting;
Inquiries of personnel involved in the preparation of the Report regarding the preparation process, the internal con-
trol system relating to this process and selected disclosures in the Report;
Inspecting the relevant documentation on a sample basis;
Performing tests of details on a sample basis as evidence supporting the selected 2023 sustainability indicators
concerning completeness, accuracy, adequacy and consistency.
We have not carried out any work on data other than for those selected indicators as defined above. We believe that the
evidence we have obtained is sufficient and appropriate to provide a basis for our assurance conclusions.
Conclusion
Based on the work we performed, nothing has come to our attention that causes us to believe that the selected 2023
sustainability indicators (including the GHG statement) as presented in the 2023 GRI Content Index of the 2023
Integrated Report of SGS SA for the period ended 31 December 2023 as marked with the check mark
prepared, in all material respects, in accordance with the reporting Criteria.
are not
2 SGS SA | Independent practitioner’s limited assurance report
Non-financial statementsSGS | 2023 Integrated Report
189
Intended users and purpose of the report
This report is prepared for, and only for, the Board of Directors of SGS SA, and solely for the purpose of reporting to
them on the selected 2023 sustainability indicators (including the GHG statement) as presented in the 2023 GRI Content
Index of the Report as marked with the check mark
and no other purpose. We do not, in giving our conclusion, accept
or assume responsibility (legal or otherwise) or accept liability for, or in connection with, any other purpose for which our
report including the conclusion may be used, or to any other person to whom our report is shown or into whose hands it
may come, and no other persons shall be entitled to rely on our conclusion.
We permit the disclosure of our report, in full only and in combination with the reporting Criteria, to enable the Board of
Directors to demonstrate that they have discharged their governance responsibilities by commissioning an independent
assurance report over the selected 2023 sustainability indicators (including the GHG statement) as presented in the
2023 GRI Content Index of the Report as marked with the check mark
responsibility or liability to any third parties on our part. To the fullest extent permitted by law, we will not accept or
assume responsibility to anyone other than the Board of Directors of SGS SA for our work or this report.
without assuming or accepting any
PricewaterhouseCoopers SA
Guillaume Nayet
Maegan Gokarn
Geneva, 21 February 2024
‘The maintenance and integrity of SGS SA’s website and its content are the responsibility of the Board of Direc-
tors; the work carried out by the assurance provider does not involve consideration of the maintenance and in-
tegrity of the SGS SA website and, accordingly, the assurance providers accept no responsibility for any
changes that may have occurred to the selected 2023 sustainability indicators or reporting Criteria since they
were initially presented on the website.’
3 SGS SA | Independent practitioner’s limited assurance report
Non-financial statementsFinancial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportAppendix
190
TCFD
report
We are leading the way on climate change.
This report presents SGS’s governance,
strategy, management practices and metrics
in relation to climate change and its impact
on the organization. This report follows
Task Force on Climate-Related Financial
Disclosures (TCFD) recommendations and
methodology, which we will further adopt
going forward.
TCFD report
Introduction
Governance
Risk management
Strategy
Scenario analysis and quantification of financial impact
Metrics and targets
190
191
192
192
193
195
196
AppendixSGS | 2023 Integrated Report TCFD report
As a sustainability leader, SGS is committed
to a climate change strategy and to helping our
customers transition to a low carbon economy.
191
During the last three years, we have
worked on embedding climatic risks and
opportunities in our company decision
making. In 2022 we quantified the financial
impact of some of our key transition
risks and opportunities and in 2023 we
performed a quantitative assessment of the
direct impact of physical climate risks on a
selection of 80 buildings owned by SGS.
Introduction
To add to our industry leading sustainability
performance and reporting, and to meet
future reporting requirements, we are
publishing our TCFD report.
The purpose of the TCFD is to promote
international financial stability through
the provision of consistent information to
financial market participants that assess and
value climate-related risks and opportunities.
This increases our transparency and will
help our stakeholders make more informed
decisions when engaging with SGS. It also
aligns with the Swiss regulation, according
to which, from 2024, large Swiss firms
will be legally bound to report on climate
issues including climate-related risks
and opportunities.
Inspector, Industries & Environment, Belgium.
Non-financial statementsFinancial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportAppendix 192
TCFD report
continued
Governance
Board oversight
The SGS Board of Directors is ultimately
responsible for the direction of the Group.
This includes assessing risks facing the
business and reviewing risk management
and mitigation policies. The Board is
ultimately responsible for SGS’s group
strategy, mission and values, including
those related to climate change.
In 2023, the Sustainability Committee
met four times. During these meetings,
the members of the Board receive reports
on progress against our corporate targets
and information about specific projects
targeting key sustainability matters,
including climate-related issues.
The Board of Directors, the Sustainability
Committee and the Audit Committee
review, discuss and approve our climate
change risk strategy and assess the
effectiveness and appropriateness of the
Group’s risk management, internal controls
and governance processes as well as the
reliability of internal financial and operational
information. They also review and guide
our risk management policies and ensure
that the standards and policies of the Group
are respected. The cross-membership
organization of the board contributes to the
robustness of discussions and transparency.
By reviewing and guiding risk management
policies, the Board gets the information it
needs to follow up on climate change risk
issues and give direction to the organization,
as this information enables it to mitigate risks
and identify potential areas for improvement.
Management’s role
Our Operations Council, chaired by the CEO,
formulates, approves and implements group
strategy. It also approves and implements
more detailed strategies, policies and
targets through all operations across the
Group including those related to climate
change. During the Operations Council’s
monthly meetings, sustainability and climate
change are usually an agenda item and the
corporate sustainability team often attends
these meetings to present and discuss
sustainability and climate change topics.
The Operations Council is comprised
of a wide range of senior management
representing the full breadth of the
SGS Group:
• The chief operating officers provide
insight in terms of our operations at
a regional level (e.g. the impact that
a climate mitigation program could
have on the regions or how to best
implement it)
• The executive vice presidents provide
insight in relation to our services (e.g.
how to maximize the opportunities
that climate change brings in relation
to our service offer)
• The senior vice presidents provide
insight in relation to our functions
(for example, the chief compliance
and legal officer advises on the legal
implications of climate change and
associated regulation), processes
and risks, including those related
to climate change
These are monitored on an ongoing basis
by the Board of Directors with the approval
of the Operations Council.
Environment, social and governance
(ESG) metrics are included in the long-term
incentive scheme for all executive members
and local management teams across the
organization, accounting for 20% of the
incentive opportunity.
For more information,
please see pages 85-87
Risk management
Identifying and assessing risks
Climatic risks and opportunities are identified
through various channels:
• Climatic scenario analysis: through
climatic analysis models, market trends,
upcoming regulations and megatrends
• Our operations: they are up to date with
market changes that can result in risks
and/or opportunities
• Business continuity team: analyzes,
anticipates and prepares the organization
for potential business disruption, which
includes extreme weather events
Identified climatic risks include upstream
and downstream activities across the
supply chains for all our stakeholders,
which are input into our risk intelligence
tool for evaluation.
Managing impact
In addition to identifying and evaluating
potential risks, our operations and functions
at local, regional and global levels are
required to explain the associated
mitigation programs, in order to define
the residual risks. These residual risks
are then evaluated against SGS risk
appetite and risk tolerance level.
Executive vice presidents of each of our
business lines consider climatic risks when
defining the strategy of the business line
and in their financial planning. In most cases,
where a portion of the business could
be disrupted due to market or regulatory
changes, this includes diversifying into
other services or geographies, and investing
where new opportunities are likely to appear
or where there may be an increase in
demand for an existing service.
These risks and opportunities are prioritized
depending on this assessment.
Integration with risk management
We manage climatic risks in our operations
through our risk management framework.
For more information,
please see page 25
The objective is to ensure that the risks faced
by SGS are managed properly to reduce the
impact of negative risks while increasing the
impact of opportunities, and to provide a tool
for reporting risk to key stakeholders, senior
management, the Board of Directors and
our external community.
AppendixSGS | 2023 Integrated Report 193
Strategy
Main climate-related risks and opportunities
Time horizons
We have defined the following time horizons for climate-related risks and opportunities:
Time horizon
Short term
Time period
Present to 2024
Rationale
Our Sustainability
Ambitions 2030 set
short-term targets
Time horizon
Medium term
Time period
2024 to 2030
Rationale
Our Sustainability
Ambitions 2030 set
medium-term targets
Time horizon
Long term
Time period
2030 to 2050
Rationale
We are committed
to achieving Net
Zero by 2050
These horizons were chosen because they are aligned with our business and sustainability strategies.
Below are the main risks and opportunities that could have a financial impact on the organization:
Main climate-related risks identified
Risk category
& risk
Impact
description
price of carbon
y Increasing
r
o
t
a
l
u
g
e
R
Increased
compliance
costs
l
y Failing to adapt
g
to new low
o
carbon
o
n
technologies
h
c
e
T
An increase in the price of carbon off-sets (to maintain
our carbon neutrality) and an increase in carbon taxes
from governments.
Mitigation
Reduce our carbon emissions and energy
consumption through our climate change
mitigation strategy. Implement a strategy to
mitigate the increase in carbon offsets and
increase self-generation of renewables.
Time horizon
and geography
Medium term
Global
Higher operational costs to comply with climate
related legislation (e.g. EU Taxonomy, adoption
of TCFD recommendations, etc.)
We take a proactive approach and adopt
best-in-class practices towards climate
change mitigation and adaptation.
Short term
Global
Not adopting low carbon technologies (such as low
carbon vehicles, energy efficiency measures for our
buildings or renewable energy generation) would
reduce our competitiveness and affect our reputation.
Our climate change mitigation strategy ensures
that we continuously innovate, for example
through our Energy Efficiency in Buildings
program, or our vehicle emissions policy.
Medium term
Global
demand
t Shifts in service
e
k
r
a
M
Market changes due to climate change can have a
significant impact on client demand for SGS services,
either directly or indirectly. Some of the specific
potential shifts we have identified by business line are:
• Natural Resources: risks associated with coal
phaseout and different types of crops in several
regions, and with climate change regulation and
market demands
• Connectivity & Products: two potential risks
associated with carbon pricing and changes
in customer behavior
• Industries & Environment and Business Assurance
(prev. Knowledge): risks associated with transition-
related new markets
Medium term
Global
We are diversifying our market segment,
to increase sales from markets that
will be developing as a result of climate
change. Key to this are our sustainability
services, a wide range of services that help
organizations to implement better and more
efficient processes, address stakeholder
concerns, address risks and accomplish
their sustainability goals. The impact of
this mitigation measure is displayed as an
opportunity below, under “Main climate-
related opportunities.”
Non-financial statementsFinancial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportAppendix 194
TCFD report
continued
Risk category
& risk
Impact
description
Mitigation
reputation
n Climate
o
i
t
a
t
u
p
e
R
weather
l Extreme
a
c
i
s
y
h
p
e
t
u
c
A
l Increase
a
c
in mean
i
s
y
temperatures
h
p
c
i
n
o
r
h
C
Failing to address appropriately our impact on climate
change, or to comply with climate regulations, would
impact the value of our brand and imply the loss
of clients.
Our sustainability team ensures that our
approach to addressing climate change is best-
in-class and credible. Our sustainability and
legal teams ensure that we stay up to date
with legislation and comply with all regulations.
Extreme weather conditions, such as cyclones,
hurricanes or floods, can affect our business
performance and continuity, by forcing us to
close sites disrupting our logistics, etc.
Higher mean temperatures result in higher energy
consumption and usage of refrigerant gases,
which translate into CO2 emissions.
We have business continuity guidelines and
a global emergency management standard
which our affiliates must implement at local
level. This ensures that 100% of our sales,
as well as any new operations, are protected
against extreme weather-conditions.
Business continuity programs across SGS
define roles and responsibilities in case of crisis
and provide guidelines and group procedures
to organize a coordinated response in case
of emergencies.
Through our Energy Efficiency in Buildings
program we implement measures to
optimize energy consumption in our facilities.
Our energy efficiency in buildings program
covers our entire operations, ensuring
that 100% of our sales, as well as any
new operations, are protected against
the increase in mean temperatures.
We are also working on reducing the
fugitive emissions of refrigerant gases.
Time horizon
and geography
Long term
Global
Short, medium,
and long term
Global
Short, medium,
and long term
Global
Rising
sea levels
Our coastal facilities could be impacted, requiring
relocation. This also contributes to tidal flooding
and storm surges.
Given that rising sea levels is a slow
phenomenon, we continually assess when it
will be necessary to move affected facilities.
Long term
Global
Main climate-related opportunities identified
Opportunity category
& opportunity
Impact
description
Strategy to maximize
opportunity
l
y New and more
g
affordable
o
o
low carbon
n
h
technologies
c
e
T
Increased demand for low carbon technologies
is resulting in new technologies appearing, being
developed faster and being made more affordable,
in most cases.
Adopting these technologies will help us
implement our climate change mitigation
strategy, also reducing costs associated
with energy and carbon.
Time horizon
and geography
Medium term
Global
Cost savings
associated with
climate strategy
implementation
Reducing the energy that we consume in our
buildings, as well as the amount of employee travel,
will not only reduce our carbon emissions but also
the associated costs (such as the cost of energy,
the trip and carbon offsets).
Reducing our carbon emissions and energy
consumption through our climate change
mitigation strategy (including amongst others
our Energy Efficiency in Buildings program
and our vehicle emissions policy).
Short, medium,
and long term
Global
AppendixSGS | 2023 Integrated Report
195
Time horizon
and geography
Short, medium,
and long term
Global
Opportunity category
& opportunity
Impact
description
Strategy to maximize
opportunity
Through our sustainability services we will be
proactive about maximizing the opportunities
presented by climate change, enhancing
existing services and creating new ones.
t Shifts in
e
k
r
a
M
service
demand
Market changes due to climate change can have
a significant impact on client demand for SGS
services, either directly or indirectly. Some of the
specific potential shifts we have identified, by
business line, are:
• Natural Resources: opportunities associated
with energy and water efficiency, and several
opportunities associated with different types
of crops in Eastern Europe, the Mediterranean
region and North East Asia
• Connectivity & Products: several opportunities
associated with electric mobility, supply chain
certification and higher demand for product testing
• Industries & Environment and Business Assurance
(prev. Knowledge): opportunities to increase our
energy efficiency, carbon pricing, green building
and climate-related reporting services clients
Scenario analysis and quantification of financial impact
Scenario analysis
As part of our climatic risk and opportunity management process, we conduct scenario analysis to improve our strategic resilience
and explore climate vulnerabilities that might impact our business.
Analyses are carried out in accordance with TCFD recommendations, which indicate that at least two scenarios should be used.
These should include one scenario aligned with the Paris Agreement and another based on business as usual.
Scenario
RCP1 2.6
RCP1 4.5
RCP1 8.5
Temperature rise
Transition risks
Physical risks
Rationale
1.5-2°C
2-3°C
>3°C
All climate commitments made by governments for 2030 targets
and longer-term net zero and other pledges will be met
More conservative benchmark for transition risks, because it does
not take for granted that governments will reach all announced goals
Only current climate policies are implemented. Paris Agreement targets
are not met. It is an extrapolation of what could happen if no additional
measures were taken
1. Representative Concentration Pathway.
Transition risks
As transition risks and opportunities are those expected to have the largest impact on Group operations, we have quantified the estimated
financial impact of:
• Increasing price of carbon (risk)
• Cost savings associated to climate strategy implementation (opportunity)
• Shifts in service demand (risk and opportunity)
The estimated values presented in the table below represent the total discounted value of future sales and costs driven by transition risks
and opportunities, for the period from 2023 to 2050, using a weighted average discount rate of 7.4%.
The calculated financial impact on SGS is denominated in Swiss francs (CHF). Where financial projections were denominated in another
currency, these have been converted to CHF by using forward exchange rates from Oxford Economics.
Where projections were made in real terms, inflation expectations for Switzerland were considered, taken from Oxford Economics.
Non-financial statementsFinancial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportAppendix 196
TCFD report
continued
Risk category
& risk
Regulatory
Increasing price of carbon
Market
Shifts in service demand
Opportunity
category &
opportunity
Technology
Cost savings associated to
climate strategy implementation
Market
Shifts in service demand
IEA STEPS 2050
IEA APS 2050
Gross
financial impact
(CHF million)
Net
financial impact
(CHF million)
Gross
financial impact
(CHF million)
Net
financial impact
(CHF million)
–29
–6*
–25
–6*
IEA STEPS 2050
–54
–140*
–25
–140*
IEA APS 2050
Gross
financial impact
(CHF million)
Net
financial impact
(CHF million)
Gross
financial impact
(CHF million)
Net
financial impact
(CHF million)
0
515
0
510
419*
577*
656*
944*
* The financial impact related to shifts in service demand covers SGS’s services related to renewable energies, electric vehicles and minerals required for clean energy transition.
Physical risks
In 2023, we performed a physical risk
assessment considering our top 80 key
owned buildings, including offices, laboratories
and warehouses scattered around the
world. The results of this first quantitative
assessment will help us identify key assets
highly exposed and vulnerable to physical
risks, as well as their respective hazard(s)
of concern.
The analysis was limited to the property value
itself and therefore, no capital equipment
(within the building) was considered. We have
assessed the exposure and vulnerability
assessment of direct physical risks (direct
damage caused to the assets) and therefore,
indirect physical risks were not considered
(e.g. the loss of worker productivity due
to high temperatures).
The climate risk assessment was conducted
by analyzing:
a) Hazards: the probability of occurrence
of a hazardous event at a given intensity
b) Exposure: number of assets present
in a given location potentially affected
by the selected hazard, and
c) Vulnerability: expected value loss
of the asset, should an event of
a specific intensity occur
1. Qualitative results considering RCP 8.5 and time horizon 2050.
Qualitative overview of the results1:
• Europe is the region with the highest
exposure, primarily driven by floods
(fluvial, pluvial and tidal), as well as wind
and high temperatures, to a lower extent.
Finland, Belgium and the Netherlands
will be the countries most impacted
• North America is the region with the
second highest exposure, mainly
driven by pluvial and fluvial flooding
• Latin America is the region with the third
highest exposure, driven by floods (fluvial
and pluvial) in Brazil and Colombia
• Asia Pacific is the region with the
fourth highest exposure, driven by
floods (all types), as well as wind
and high temperatures
• Africa Middle East is the region least
exposed to hazards, which will be
driven by fire and high temperatures
Resilience strategy
In order to enhance our resilience, SGS’s
framework aims to minimize climatic risks
and maximize climatic opportunities.
To minimize risks, for each identified risk in
which the gross risk level is unacceptable
(i.e. the risk can have a significant impact
on business sales, profit margin, business
continuity, reputation or operations), mitigation
programs are defined in order to manage
them and bring the residual risk level to an
acceptable level.
In addition, our global business continuity
strategy aims to enable us to respond to any
disruption efficiently and effectively, while
minimizing the impact on our operations
in terms of our sites, processes and
service delivery.
For more information see our
risk management section, pages 25-27
Finally, each business line takes into
consideration identified risks and the results
of our scenario analysis to define our business
strategies and ensure that we anticipate any
market or regulatory changes and that we
also exploit any new opportunities.
Our resilience strategy also includes the
programs that we have in place to reduce
our CO2 emissions and our dependency
on energy. Some examples are our Energy
Efficiency in Buildings program and our
vehicle emissions policy.
Metrics and targets
The following information can be found
in the ‘Non-financial statements’ section
of this Integrated Annual Report:
• The key metrics used to measure
and manage climate-related risks
and opportunities
• Scope 1, 2 and 3 greenhouse gas (GHG)
emissions and the related risks provided for
historical periods to allow for trend analysis
• Key climate-related targets
AppendixSGS | 2023 Integrated Report Management
report
Corporate
governance
Remuneration
report
Financial
statements
Non-financial
statements
Appendix
197
Human
rights report
We are fully committed to supporting
human rights and preventing violations
across our global network.
At SGS, we commit to respecting human
rights – not just as an ethical obligation, but
as an important part of our role in society.
This report consolidates the principles,
policies and initiatives that demonstrate our
commitment to human rights. We aim to
improve transparency to our stakeholders
in everything we do, and to report on our
progress around these efforts.
Human rights report
Governance
Embedding human rights in our policies,
principles and due diligence processes
Delivering on our human rights commitments
197
198
199
200
SGS | 2023 Integrated Report
198
Governance
At SGS, human rights permeate the highest levels
of management. The SGS Human Rights Executive
Committee, formed in early 2017 and chaired by
the CEO, is ultimately responsible for and oversees
the application of our human rights commitments
across the Group.
Laboratory managers, Health & Science, Germany.
The Chief Compliance Officer is responsible
for managing compliance with the SGS Code
of Integrity, while the SGS supplier code
of conduct is jointly managed by our global
procurement and corporate sustainability
teams. Senior managers are expected to
demonstrate visible and explicit support for
human rights as defined in the SGS Code
of Integrity, the SGS business principles,
the SGS human rights policy and the SGS
supplier code of conduct.
Our human rights task force oversees
strengthening SGS’s human rights due
diligence program and ensuring it remains
suitable to the Company’s nature and
operations. This taskforce is integrated by
high-ranking representatives and steered
by corporate sustainability.
Lastly, a dedicated sustainability committee
of the Board has been appointed to reflect
the growing importance of sustainability,
including human rights, to all our
stakeholders and build on the substantial
work already achieved.
AppendixSGS | 2023 Integrated Report Embedding
human rights
in our policies,
principles and
due diligence
processes
199
Our unwavering commitment to respecting human
rights is grounded in our SGS Code of Integrity and
our SGS business principles, and reflected in our
human rights policy, supplier code of conduct and
other relevant policies.
Furthermore, we employ an extensive array
of controls to evaluate, avert and alleviate
risks associated with human rights violations
and more general labor rights violations
throughout our activities.
Our enterprise risk management system
incorporates relevant human rights issues
and brings accountability and responsibility
for risk management close to our operations.
In addition, we have integrated controls,
specifically targeting human rights related
risks in our group-wide internal control
framework. These controls include, but are
not limited to, compliance with minimum
wage requirements, overtime rules, changes
to pay, collective agreements, etc.
To further mitigate any adverse human rights
impact, SGS applies the four-eyes principle
in a rigorous manner to all employment-
related decisions.
All employment contracts and any changes
in an employee’s general conditions require
at least two levels of approval and the
validation of a human resources professional.
In our continuous effort to integrate human
rights considerations throughout our
operations, we have developed a Human
Rights Due Diligence Checklist, tailored for
use during social compliance audits within
our own operations. This initiative helps us
manage operational risks more effectively,
uphold our responsible business practices,
and foster positive engagement with
our stakeholders.
We continue our efforts to integrate human
rights into our group-wide policies and
control systems.
For more information see our
Human rights policy
Inspectors, Industries & Environment, Belgium.
Non-financial statementsFinancial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportAppendix 200
Delivering on
our human rights
commitments
To bring our human rights commitment to life,
we embrace and follow the principles of the
United Nations Global Compact and United
Nations Guiding Principles (UNGPs) on business
and human rights.
The UNGPs incorporate by reference
the rights and principles expressed in the
International Bill of Human Rights and in the
International Labour Organization Declaration
on Fundamental Principles and Rights
at Work with its eight core conventions,
all of which we respect.
SGS has put in place several policies,
procedures and plans to prevent and
reduce the risk of having a negative impact
on human rights as part of our ongoing
commitment to upholding such rights.
Unless specified otherwise, all policies,
programs and plans aimed at preventing
and mitigating human rights risks, as
described in this report, apply to all SGS
employees and over 2 600 offices and
laboratories operated by SGS.
Fair labor practices
As an employer, we impact the lives of
over 99 600 employees and their families.
We want our employees to be well and
thrive during their time with SGS. We embed
human rights in our policies, principles
and due diligence processes and invest in
programs and services to support human
rights throughout the entire employee
life cycle.
Embracing diversity in our
recruitment process
To ensure that we are increasing the
diversity of our hiring, we train our recruiters
on recruitment best practices and talent
acquisition, and our managers in recruitment,
interviewing and diversity best practices.
We are also measuring the gender diversity
of our applicants. SGS has a standardized
recruitment process. The process includes
the use of interview scorecards to
standardize the evaluation of our candidates
in the interview process. The proper and
consistent use of interview scorecards
helps us to remove potential interview bias,
create a quantitative standard for candidate
evaluation and to make better hiring decisions.
Furthermore, SGS designed a gender
bias toolkit to help us prevent using
gender-biased wording in job adverts.
Gender-biased words can be viewed
as discrimination towards male or female
candidates and could discourage people
from applying to work for SGS.
Enhancing our recruitment practices, we
have increased the use of AI predictive
analytics. By integrating AI tools, we are
able to analyze a wide array of candidate
data without prejudice, effectively removing
unconscious biases from the hiring process.
The utilization of AI in our recruitment
strategy reinforces our dedication to
promoting diversity by ensuring that hiring
decisions are based on merit and potential,
regardless of the candidate’s background.
Fair and competitive remuneration
SGS is committed to providing fair and
competitive remuneration packages in
all the markets in which we operate.
Our approach ensures a fair and competitive
remuneration package by utilizing a
globally recognized job architecture
methodology throughout the SGS Group.
This methodology evaluates each job based
on its contribution to our business success
as well as the knowledge, qualification,
skills and experience required to perform
the job. It allows us to benchmark our
remuneration packages against local
market practices, using data collected from
salary surveys conducted by reputable
professional service providers.
Salary adjustments are a reflection of the
employee’s contribution to our business
success as well as external factors such
as local legislation and collective bargaining
agreements where applicable.
The deployment of our new Human
Capital Management system, mySGS,
has significantly enhanced our ability
to manage and evaluate global job
architecture effectively. With mySGS,
we have centralized job data, including
job grades. This enables us to conduct
comprehensive data analysis, such as
gender pay gap analysis. It provides
immediate insight into pay disparities,
which we can address promptly through
corrective measures. This level of analysis
and proactive management ensures
our remuneration packages remain fair
and competitive while reinforcing our
commitment to equal pay for work of
equal value across the SGS Group.
Our consistent application of these
methodologies is a testament to our
dedication to promoting the principle
of equal pay and supporting diversity
within our global operations.
In adherence to our anti-discrimination
and dignity at work policy, we continue
to ensure that every employment-related
decision, including compensation, benefits,
recognition and promotions is based solely
on an individual’s qualification, performance
and behavior or other legitimate business
considerations without discrimination.
We rigorously respect minimum wages
defined by the local regulations and comply
with all the mandatory requirements defined
by local legislation or binding collective
bargaining agreements with regards to
wages and their evolution.
No cash policy
SGS recognizes that cash-based
wage payments are not only inefficient
for employers, but also risky and
disempowering for workers.
We therefore follow the recommendations
of the International Labour Organization and
the UN-based Better than Cash Alliance to
shift wage payments from cash to digital, in
order to promote respect of workers’ rights,
broaden financial inclusion and to make
payments safer and more transparent.
Our group policies require wages to be paid
digitally and not through cash or cheques.
Education and employability
SGS promotes the right to education by
offering continuous learning opportunities
to all our employees. Our employee online
learning portal offers a large portfolio
of learning opportunities, ranging from
technical knowledge to interpersonal and
management skills. It enables our employees
to fully customize their individual learning
path to their needs. We believe that helping
our employees embrace a lifelong learning
mindset will empower them to increase
their employability and help them be more
resilient to life challenges.
The recent integration of an auto-translation
tool into SGS Campus allows for course
materials to be translated into 72 languages,
significantly increasing the accessibility and
reach of these resources. This enhancement
ensures employees worldwide can engage
with learning in their native language,
promoting inclusivity and fostering a
learning environment that accommodates
a diverse workforce.
AppendixSGS | 2023 Integrated Report 201
Anti-discrimination and dignity
at work
As a global company, we consider that it
is our responsibility to stand up for human
rights and practice tolerance, inclusion and
respect to enable a better, safer and more
interconnected world.
We achieve this goal through the promotion
of greater debate and transparency, and the
exchange of different views, experiences
and perspectives.
The general obligation of every employee to
abide by the principles of anti-discrimination
is embedded in our SGS Code of Integrity
and our group policy on anti-discrimination
and dignity at work.
The latter aims to raise awareness of our
zero tolerance of any form of discrimination
and provide guidance on how to deal with
it. It supports our commitment to promoting
an equal opportunity workplace for all
employees and an environment in which
we treat everyone with dignity, consideration
and respect.
We encourage our employees to act
immediately and speak up if they encounter
discrimination. At SGS, there is no place
for any form of discrimination.
SGS’s commitment to an inclusive
workplace has earned significant
acknowledgment. We are proud to have
been ranked 45th among the top 100 publicly
traded companies in the 2023 Refinitiv
Diversity and Inclusion Index, which reflects
our unwavering commitment to promoting
diversity and inclusion throughout the Group.
Facilitating the freedom of expression
and opinion
At SGS, we are dedicated to fostering
an atmosphere where people can freely
engage in dialogue, offer ideas and voice
their opinions without worrying about facing
consequences. We place a high priority
on open communication. In order to foster
sharing, cooperation and engagement,
we are dedicated to fostering an open and
sincere relationship with our employees,
as stated in our business principle
on leadership.
To enable our employees to share their
honest feedback anonymously and to
help us understand how our employees
feel about working for SGS, we conduct
regular employee engagement surveys.
We use communication tools, such as
MS Viva Engage, as SGS’s private and
social collaboration network to foster open
dialogue. All our employees can join the SGS
private network on MS Viva Engage, ask
questions, share ideas, express their opinion,
and create and join communities.
Bonded labor, child labor and
forced labor
SGS does not engage in bonded labor,
child labor or forced labor.
As an inspection, verification, testing and
certification company, it is in the nature
of our business to employ workers with
a certain level of occupational qualifications
(e.g. inspectors, auditors, office workers,
laboratory personnel, etc.) In our own
operations, a large part of our activities
is therefore considered inherently low-to-
medium risk for bonded labor, child labor
or forced labor.
We believe the policies and procedures
in place mitigate any risks related to
bonded labor, child labor or forced labor.
Health and safety
At SGS, we recognize that our operations
can impact the health of our workforce.
Some of the harmful health risks and
agents in our workplaces include exposure
to noise, dust, chemicals, thermal and
musculoskeletal stressors.
In order to ensure early detection of potential
ill health, we conduct pre-employment
and periodic health surveillance on our
workforce. Through appropriate case
management, we support management
and recovery from illness resulting from
these exposures.
In line with our culture of care, we promote
initiatives to enhance the physical and mental
well-being of our employees to ensure their
fitness for work. This includes the provision
of preventative health measures, such as
vaccinations, and mental and physical health
programs focused on awareness, support
and resilience.
SGS advocates for educating and raising
awareness among its entire workforce as
a means of ensuring the health and safety
of all its employees and delivers around
3 million training hours on health and
safety per annum to our employees.
In addition, SGS has identified roles
and responsibilities of managers.
By establishing a clear mechanism for
clarifying responsibilities, managers are
encouraged to ensure the safest possible
working conditions for their employees.
Zero-recruitment-fee policy
Large recruitment fees can leave employees
in situations of debt bondage, a form of
forced labor in which a person’s labor is
demanded as means of repaying a loan,
trapping the individual into working for little
or no pay until the debt is repaid.
SGS applies a zero-recruitment-fee policy.
As part of this fair recruitment practice,
SGS never requires an administration fee
for processing job applications and never
requests money or financial information from
an applicant to secure a job as an employee,
intern, or to provide services as a contractor.
In recent years, it has come to our attention
that various individuals and organizations
have contacted people offering false
employment opportunities with SGS.
We have taken this matter seriously and
notified appropriate legal authorities in
an effort to stop such fraudulent schemes.
In addition, we have launched internal
and external communication campaigns to
prevent candidates from becoming victims.
We invite candidates to check the
legitimacy of a job offer or to report
potentially fraudulent job offers to our
corporate security department.
Home working
To mitigate the risks related to employees
working from home, a group policy is in
place outlining applicable rules, regulations
and norms governing home working.
The policy includes, but is not limited to,
guidance on health and workspace safety
at home, and rules to prevent potential
harassment or discrimination of employees
working from home. It also clarifies that the
requirements relating to absence, sickness
and recording of work time at home must be
observed in the same way by home workers
as by employees who work in the office.
To help our employees manage mental health
while working from home, we offer employee
assistance programs in different locations.
These include mindfulness sessions, stress
management training, virtual yoga, mental
health virtual talks, and much more.
Non-financial statementsFinancial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportAppendix 202
Delivering on
our human rights
commitments
continued
Vulnerable groups
Individuals from certain groups or
populations may be particularly vulnerable
to impacts on their human rights, such as
children, women and migrant workers.
SGS takes responsibility for paying
special attention to vulnerable groups
and recognizing the specific challenges
that they may face.
Children
SGS does not employ children under
the age of completion of compulsory
schooling and, in any case, under 16 years.
To ensure this, we closely monitor the
age of our employees and confirm a
potential candidate’s identity and right
to work through our global standards
on pre-employment screening.
Women
SGS strives to have proportional
representation of women in leadership
positions throughout the group.
We have included Women in Leadership
(CEO-1, CEO-2 and CEO-3 management
positions) as a non-financial KPI into the
long-term incentive plan of the SGS Group.
In addition, our gender-inclusive
recruitment process for leadership
positions requires that there is at least
one woman on every interview panel
and at least one female candidate on
every final shortlist for CEO-1, CEO-2
and CEO-3 positions.
In 2021, SGS became signatory of the
Women Empowerment Principles – a
United Nations private sector initiative
that offers guidance to businesses on
how to promote gender equality and
women’s empowerment in the workplace,
marketplace and community.
As an example of our efforts, in 2022,
SGS in Switzerland obtained Equal Salary
Certification, a symbol of excellence in
terms of equal pay for all its employees
in the country. After successfully passing
the statistical analysis of all salaries, The
company underwent an internal audit
entrusted to an external audit company
proving equal pay for women and men.
To further accelerate our progress in
diversity, equity and inclusion, we have
conducted surveys, one-on-one interviews,
and held workshops with our leaders.
This valuable feedback will guide the
development of our DE&I program.
Migrant workers
We realize the importance and extent of
the migration phenomenon and recognize
the vulnerable situation in which migrant
workers frequently find themselves.
We mitigate the risk of employing workers
who are non-documented or in an irregular
situation through our global standards on
pre-employment screening. Our global
standards include, but are not limited to,
the confirmation that the identity of our
candidates is genuine and that they have
a valid visa and work permit for the
country of employment.
SGS has also conducted a global
compliance review of cross-border
employment relationships. Each identified
cross-border case was reviewed, tailor-
made guidance was provided, and
corrective actions were implemented
where required. Following the compliance
review and, to mitigate any risks related to
cross-border employment relationships,
SGS set global standards. Through the
avoidance of cross-border employment
relationships, SGS ensures that employees
working in the same location have access
to the same rights and working conditions.
Supply chain
With a CHF 2 billion annual supply chain
spend, we have a significant opportunity to
extend our sustainability principles to many
more businesses and employees beyond our
own. As a responsible major purchaser, we
ensure that goods and services are sourced
sustainably and that our suppliers respect
human rights.
Code of conduct for suppliers
Our supplier code of conduct sets out the
basis of our responsible sourcing approach.
It defines not only the non-negotiable
minimum standards that we ask our suppliers
to respect when conducting business with
SGS, but also the values which are shared
throughout SGS, its various businesses and
affiliates. Every supplier that wants to do
business with SGS is required to sign the
SGS code of conduct to ensure that they are
aligned with our standards and commitments,
including those related to human rights. As part
of our commitment to sustainable sourcing, we
have also included specific questions related to
human rights in all our tender activities.
Supplier self-assessment questionnaire
In 2023, we have implemented the SGS self-
assessment questionnaire (SAQ) for our key
global and local suppliers operating in the top
25 countries.
This is a strategic program that aims to identify
potential sustainability risks in our supply
chain, especially those concerning human
rights and childhood protection, and take
action to mitigate these risks, towards a full
human right protected partnering.
This program is mandatory for all suppliers
in scope to ensure that our current/potential
partners comply with our standards.
By the end of 2024 we plan to include all
existing and new suppliers into the program
within the procurement scope.
Supplier diversity program
SGS knows that diverse supplier networks
bring uniquely rich insights and experiences
that are vital to our innovative edge. Therefore,
we are working to promote diversity and
inclusion across our supply chain.
As a result of these efforts, SGS in North
America is ensuring that minority-run suppliers
have fair opportunities in procurement tenders.
By doing so, SGS is not only improving the well-
being of underrepresented groups, but also
creating a positive socioeconomic impact on
society as a whole, as it supports small firms.
AppendixSGS | 2023 Integrated Report 203
Data privacy
SGS is committed to treating the right of
any individual to control their own personal
information and to decide about it. Privacy is
a fundamental human right and SGS has
adopted an approach that protects the
personal data of our customers, employees
and third parties from the moment we
collect it to the time we destroy it.
Data privacy is a key principle of our Code
of Integrity. SGS respects the privacy
and confidential nature of the personal
information of any individual we interact
with to the extent required for the effective
operation of its business or for complying
with legal requirements.
Our data privacy policy governs how we
collect, use, and manage the personal
data of customers, employees and third
parties. Moreover, we have developed a
management framework to allow us to
manage personal data in a manner that
is consistent with the data privacy policy
across all affiliates.
Aside from the policies, our data protection
officers provide continuous advice, identify
privacy risks, develop policies on specific
issues, and train employees on data privacy.
We also take data privacy into consideration
from the outset when developing new
services or processes. By following the
privacy by design approach, we aim to
avoid a ‘collect first, ask questions later’
approach to personal data. For those
projects that entail data privacy concerns,
our data protection officers work closely
with the relevant business and IT security
teams to undertake a data protection impact
assessment, documenting both the potential
risks to individuals and the measures being
taken to minimize them.
Finally, any individual who wants to exercise
their privacy rights can do so by simply
visiting our online privacy request form at
www.sgs.com. We will not discriminate
against individuals who choose to exercise
any of their rights. Specifically, SGS will not
deny goods or services, charge different
prices or rates, or provide a different level
of quality of services.
Empowering human rights
At SGS, we believe that people are
empowered when they understand
their human rights, know how to
raise concerns and are provided with
remediation consistent with local laws
and the United Nations Guiding Principles
(UNGPs) on business and human rights.
Human rights related training
We strive to build a culture of respect for
human rights at SGS. We offer training
on human rights related topics, because
we believe that raising awareness and
sharing values through training is crucial
to ensuring that our employees act
responsibly. Some examples of courses
related to human rights, in addition to
those described above, include:
• Human rights
• SGS Code of Integrity
• The integrity minute
• Health and safety
• IT security and data privacy
Grievance mechanism
We communicate extensively throughout
the Group on the different channels
through which employees, external
rights-holders and stakeholders can bring
any violations or risks of human rights
violations to our attention.
Our SGS integrity helpline is available
24/7 in multiple languages online and
by phone and is one way to report
concerns confidentially and anonymously.
The SGS integrity helpline is operated by
an independent service provider specialized
in dealing with compliance and ethics
concerns. Communications made to
this helpline are treated confidentially
and are reported to the SGS compliance
team which protects the anonymity of
the informant, where required.
SGS ensures that nobody faces any form
of retaliation or adverse consequences
for having sought advice or reported
any violations or risks of human rights
violations. Retaliation against a rights-
holder who has reported a violation in
good faith will result in disciplinary action.
More information on our grievance
mechanism can be found in the SGS Code
of Integrity and human rights policy as well
as our group policy on anti-discrimination
and dignity at work.
Remediation
We recognize that even with the best
policies and practices, SGS may cause
or contribute to an adverse human rights
impact that we have not foreseen or been
able to prevent.
When this occurs, SGS applies remediation
actions to ensure that the people who
were negatively affected receive an
effective remedy.
In line with the UNGPs, when an adverse
human rights impact is detected in our own
operations, SGS is committed to taking
transparent action to remedy the situation
in a fair and equitable manner. Should the
adverse impact be found in the supply
chain, SGS will encourage its suppliers
to respect human rights, either through
the development and implementation
of corrective action plans or governance.
We do not tolerate violations of the Code
of Integrity. Violations of the SGS code
will result in disciplinary action, including
termination of employment and criminal
prosecution for serious violations.
In 2023, there were three cases of human
rights grievance identified through the SGS
integrity helpline. These resulted in three
disciplinary actions and one termination.
Non-financial statementsFinancial statementsCorporate governanceRemuneration reportManagement reportSGS | 2023 Integrated ReportAppendix 204
Shareholder
information
Key dates and events
26 March 2024
26 April 2024
24 July 2024
25 October 2024
November 2024
11 February 2025
Stock listing information
Annual General Meeting
2024 Q1 sales update
2024 half year results
2024 Q3 sales update
Capital Markets Day
2024 full year results
Stock exchange listing
SIX Swiss Exchange, SGSN
Stock exchange trading
SIX Swiss Exchange
Common stock symbols
Bloomberg: Registered Share: SGSN.SW
Reuters: Registered Share: SGSN.S
Telekurs: Registered Share: SGSN
ISIN: Registered Share: CH0002497458
Swiss security number: 249745
Ariel Bauer
Group Vice President, Investor Relations,
Communications & Sustainability
t +41 (0)22 739 99 85
m +41 (0)79 863 49 23
Livia Baratta
Manager, Investor Relations
t +401 (0)22 739 95 49
m +41 (0)79 586 48 53
Magali Dauwalder
Global Head of Corporate Affairs
t +41 (0)22 739 95 51
m +41 (0)79 329 46 70
John Coolican
Group Head of Communications
Beatriz Cebrián López
Global Sustainability Manager
Key contacts
Investor relations
Media
relations
Project management
SGS SA
1 Place des Alpes
P.O. Box 2152
CH – 1211 Geneva 1
t +41 (0)22 739 91 11
e sgs.investor.relations@sgs.com
sgs.com
AppendixSGS | 2023 Integrated Report When you need to be sure
SGS Headquarters
1 Place des Alpes
P.O. Box 2152
1211 Geneva 1
Switzerland
sgs.com
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