Double Materiality Assessment
Driven by our vision to transform patient outcomes through life-changing science and innovation, we understand that our business actions impact both society and our financial performance.
Double Materiality Assessment
To determine our key goals and priorities, we conducted an impact materiality assessment in 2022, which enabled us to identify the topics most relevant to our internal and external stakeholders. The analysis provided insights into our potential impact on society and the world, allowing us to better monitor emerging business challenges and opportunities.
In 2023, to meet the requirement introduced by the European Corporate Sustainability Reporting Directive (CSRD), we completed a first iteration of the double materiality assessment by including, in addition to the impact materiality assessment, a financial materiality assessment. In 2024, we updated our double materiality assessment to reflect the business changes related to the transfer of the Jyseleca® business to Alfasigma as described below.
Our Global Value Chain
Assessing our value chain is a key element to our materiality assessment process and helps us better understand the broader impacts of both our upstream and downstream operations (see picture below). By identifying and collaborating with our value chain stakeholders (i.e., suppliers, partners, and other entities), we have gained valuable insights into key environmental, social, and economic impacts associated with our global operations. This collaborative approach enables us to identify areas where we can work together to reduce risks and identify opportunities. Additionally, by monitoring our value chain, we can align more closely with stakeholder expectations, support responsible sourcing and foster transparency, and establish a sustainable supply chain for our research and development activities in oncology. This integrated perspective allows us to make meaningful progress toward shared sustainability goals that extend beyond our own, immediate operations.
Our value chain map provides a foundation for better identifying and assessing our material impacts, risks and opportunities within the global value chain. Following the completion of the Jyseleca® activities transfer in 2024, we phased out the associated segment in the graphical representation of our value chain below.
Value chain mapping
To read more about our goal towards value creation, we refer to the strategy and portfolio and platforms section of this report.
Engaging with Our Stakeholders
To inform our double materiality process, we engaged with a diverse group of stakeholders, including patient organizations, patient experts, healthcare professionals, research and development partners, supply chain partners, investors, employees, and members of the Management Committee and our Sustainability Steering Committee.
Our engagement process involved structured interviews, surveys, and questionnaires designed to gather feedback from relevant stakeholder groups and to capture a wide range of perspectives regarding impacts, and risks and opportunities associated with our business. Internal and external stakeholders were invited to review a list of potential material topics via a survey to identify the five topics they considered most and least relevant to us and our core mission. They were also given the opportunity to suggest any additional material topics not included in the initial list.
In addition to the surveys and interviews conducted, we maintain an ongoing dialogue with our stakeholders through our sustainability and function leads. Our Board of Directors, Executive Committee, and Management Committee receive regular comprehensive updates on stakeholder expectations around sustainability topics, including ethical business conduct, social and environmental responsibility, ensuring that stakeholder concerns are considered in decision-making at all levels and reinforcing our commitment to sustainability.
The feedback we receive from our stakeholders through both the double materiality assessment and on an ongoing basis, serves as critical input to our sustainability strategy and all elements of our governance and sustainability program as part of our ongoing due diligence, enabling us to better align with our priority areas (as defined in the section Our Ambition), such as patient engagement and employee-related topics.
Assessing Our Results
Our stakeholder engagement process provided the basis for the impact materiality portion of our double materiality assessment. A team of internal experts collected and assessed the inputs and topics identified by stakeholders, scoring these based on severity (scale, scope, and likelihood of occurrence) for both positive and negative impacts, as well as the irremediable nature for negative impacts.
For the financial materiality aspect of the double materiality assessment, we assessed the financial risks and opportunities, including (potential) financial effects incorporated in our financial statements. We considered severity aligned with our financial materiality thresholds, as well as likelihood aligned with our internal risk register. This process was followed for all sustainability topics, including climate-related ones. As mentioned in E1-Climate change, we didn’t perform a detailed climate risk analysis.
In 2024, we updated our double materiality assessment to reflect the business changes related to the transfer of the Jyseleca® business to Alfasigma, which impacted the materiality thresholds with regard to our number of employees and financials. The graphic below presents an overview of all the topics that have been determined to be material for us:
Descriptions of the identified IROs are provided in the topical chapters of this report and are visually mapped to their respective positions in our value chain.
Sustainability due diligence
We are committed to responsible business conduct (as set out in G1-Business Conduct) throughout our value chain which is clearly aligned with our membership of the UN Global Compact. We have embedded due diligence into our governance, strategy and business model. We take steps to identify and mitigate any potential or actual impacts within our own workforce and these can be found in section S1-Own workforce. We also have in place the overarching elements of our compliance program, which are set out in the Governance section, and further strengthen our overall sustainability due diligence. Through engaging with affected stakeholders, we are working to ensure that all key steps of the due diligence process reflect their input, which was captured in our double materiality assessment process above. Given the nature of Galapagos as an EU-based company, with very limited operations outside of these countries, our sustainability due diligence approach is primarily focused on the activities of third parties in our supply chain.
Our more targeted approach to due diligence within our supply chain, is as a result of our double materiality assessment process, where we identified and assessed that our third parties pose the biggest potential risk and adverse impacts for us from both an environmental and social perspective. As such, we have taken actions to address those adverse impacts by establishing a number of processes which make up our supplier due diligence activities. We maintain a list of preferred vendors with whom we have established relationships and expectations and also a further list of Qualified Vendors who are approved to provide Good Practice ("GXP")-related goods/services to Galapagos.
We undertake a third party risk assessment process which is proportionate to the identified risk of the working relationship, based on elements that include the nature of the goods/services provided and the location in which the activities take place.
Our due diligence then considers questions of environmental sustainability, ethical business conduct, compliance with legislation including GDPR and Anti-Bribery laws, and also specific GXPs that are applicable throughout our business. This helps us to appoint third parties who will operate in line with the Galapagos expectations.
Once our suppliers and vendors are on board, we require that they comply with our Supplier Code of Conduct which sets out all the expected standards. During the ongoing relationship, and where relevant e.g. GXP suppliers, regular audits and/or monitoring activities are established to track the effectiveness of these efforts.
The table below maps out the core elements of our sustainability due diligence process, cross-referencing within the relevant disclosures in the sustainability statements.