DIRECTORS’ REPORTCORPORATE GOVERNANCE REPORT
Sandvik AB has its head office in Stockholm and is the Parent Company of the
Sandvik Group, with subsidiaries in about 70 countries. The Group has about 40,000
employees and revenues in more than 150 countries. Sandvik AB is a public company
with its shares listed on Nasdaq Stockholm.
Corporate governance within Sandvik
is based on external rules such as
the Swedish Companies Act, theNordic Main Market Rulebook for
Issuers of Shares, the Swedish
Code of Corporate Governance (the"Code") and other relevant laws andregulations. The Code is available
at corporategovernance­board.se.
In 2022, Sandvik applied the Code
without deviating from any of its
regulations.

The Sandvik Way

Sandvik’s corporate governanceframework, The Sandvik Way, implements the external rules mentioned
above and also sets out the internal
rules and principles for governancethat apply specifically within Sandvik.
It is based on three building blocks,
as set forth in the model below, anddescribes how common ways ofworking have been implemented
throughout the entire organization.

down in the operational structure ofeach business area.

Governance structureThis block outlines how the Sandvik
Group is led and governed. The Boardof Directors, elected at the Shareholders’ Meeting, sets the strategic
direction for the Group. The President
carries this out through the Group
Executive Management whose members manage and oversee the operations of the Group. The main operational responsibility in the Group lies
with the business areas and divisions,with Group functions responsible forfunctional policies and processes
supporting the business.
The Sandvik Way is implemented in
the respective business areas, withadditional requirements cascaded

Operations
The detailed controls and risk frameworks common across the Groupare detailed in this part. This includes
many aspects such as strategy andrisk management, policies, financial
forecasting and scenario planning, as
well as compliance, internal controls
and audits. Performance management, controls and continuous
improvements provide a solid basis
for our ways of working.
Corporate culture
This block sets the foundation for
how we all shape our culture in thecompany and enable a customer
oriented and responsible business.
Our operational controls and risk

The Sandvik Way
GOVERNANCE STRUCTURE
Shareholders’Meetingand Board of
Directors

President andExecutive
Management

Business areas

Divisions

Business units, distribution
centers, production units,
sales areas, sales units

Group functions
OPERATIONS

Risk
management

Objectives and
Key Results

Policies andprocedures

Finance
forecastingand scenario
planning

External reporting

Sandvik
strategy

Performance
management

Complianceand Speak Up

Internal
controlInternal audit

External audit

Continuous improvements
CORPORATE CULTURE
PurposeCore values

Code of Conduct

Leadership model

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49

DIRECTORS’ REPORTCORPORATE GOVERNANCE MODELNOMINATION COMMITTEESHAREHOLDERS’ MEETING

EXTERNAL AUDITOR

AUDIT COMMITTEE

BOARD OF DIRECTORSREMUNERATION COMMITTEEINTERNAL AUDITPRESIDENT & GROUP EXECUTIVE MANAGEMENTACQUISITIONS ANDDIVESTITURES COMMITTEESPEAK UP &BUSINESS ETHICS

BUSINESS AREAS

GROUP FUNCTIONSDIVISIONS

frameworks are underpinned by the
ambitions and requirements of our
purpose, core values, Code of Conduct and leadership model.

Ownership structure

As of December 31, 2022, Sandvik’s
share capital amounted to SEK
1,505,263,107.60 represented by
1,254,385,923 shares. At year-end
Sandvik had about 143,000 shareholders and AB Industrivärden was
the largest owner with about 13.7
percent of the share capital. Of thetotal share capital at year-end, about
41 percent was owned by investors
outside Sweden.

Shareholders’ meeting

The General Meeting of Shareholders is the highest decision-­making
body. At the Annual General Meeting, the shareholders are given thepossibility to exercise their voting
rights in relation to, for example, theAnnual Report, dividends, electionof the Board and appointment ofauditor, and other matters stipulated
in the Companies Act, the Articles of
Association and, where applicable,
the Code.
All shareholders who have beenentered in the share register andhave informed the company of their
participation within the time limit
stated in the notice of the General
Meeting are entitled to participate
at the General Meeting and voteaccording to the number of shares
held. Shareholders are also entitled50

to be represented by a proxy at a
General Meeting. According to the
Articles of Association, the Board
may also decide to allow shareholders to exercise their voting rights
through postal voting before theGeneral Meeting.
All shares in Sandvik carry equal
voting rights with one vote per share.

Ten largest shareholders,
December 31, 2022, %2022 Annual General Meeting
Shareholders representing 57.5
percent of the share capital and votes
participated at the Annual General
Meeting held on April 27, 2022. Resolutions included the following:– Dividend of SEK 4.75 per share– Distribution to the shareholdersof all shares in wholly-owned subsidiary Alleima AB (business area
Sandvik Materials Technology)– Re-election of Board members
Jennifer Allerton, Claes B­ oustedt,
Marika Fredriksson, Johan Molin,
Andreas Nordbrandt, Helena
Stjernholm, Stefan Widing and
Kai Wärn as well as re-election ofJohan Molin as Chairman of theBoard– Re-election of Pricewaterhouse­­
Coopers AB as auditor– Approval of the Board of Directors’
remuneration report– Adoption of a long-term incentive
program in the form of a performance share program for about
350 senior executives and key
employees in the Group– Authorization for the Board to
decide on acquisition of theInvescoS A N DV I K | A N N UA L R EP O R T 2022

AB Industrivärden

13.7

Swedbank Robur Funds

3.9

Alecta Pension Insurance
Vanguard

BlackRock

Lundbergföretagen AB
SEB Funds

Handelsbanken Funds
Norges Bank

4.8
3.0
2.8
2.8
1.7
1.5
1.4
1.4

Source: Monitor by Modular Finance AB­ ompany’s own shares up to acmaximum of 10 percent of all theshares in the company– Amendments to the Articles of
Association regarding the numberof Board members that may beelected by the General Meeting
For additional information about theAnnual General Meeting, including
the minutes, visit home.sandvik.
2023 Annual General Meeting
The next Annual General Meeting
will be held in Sandviken, Sweden,on April 27, 2023. More information
can be found in the notice convening
the General Meeting and at home.
sandvik.

Nomination Committee

The Nomination Committee is apreparatory body that prepares proposals for, among other things, theelection of the Board of Directors, theChairman of the Board and auditors
as well as fees for adoption at theGeneral Meeting. The Annual General

The 2022 Annual General Meeting
was held at the Göransson Arena in
Sandviken, Sweden.

Meeting has adopted an instruction
for the Nomination Committee, which
includes a procedure for appointing
the Nomination Committee, valid
until a General Meeting resolves ona change. In accordance with this
instruction, the Nomination Committee shall consist of members
appointed by each of the four largest
shareholders in terms of the numberof votes on the final business day
in August plus the Chairman of theBoard (convener).
Nomination Committee for2023 AGM
For the 2023 Annual General Meeting,
the Nomination Committee consists of Fredrik Lundberg, Chairman(Industri­värden), Anna Magnusson(Alecta), Marianne Nilsson (­Swedbank
Nomination Committee’s tasks
ahead of the 2023 Annual General
Meeting– Proposal concerning the Chairmanof the Meeting– Proposal concerning the number ofBoard members– Proposal concerning remunerationof each Board member– Proposal concerning the Board andChairman of the Board– Proposal concerning auditor andremuneration of the auditor– If deemed necessary, proposal
for changes to the Nomination
Committee’s instruction concerning
the procedure for appointment of
the Nomination Committee for theforthcoming Annual General Meetingand its assignment

Robur Funds), Lars Pettersson (Lundbergs) and Johan Molin (Sandvik’s
Chairman of the Board).
Up to the date of this Annual
Report, the Nomination Committee
met on three occasions. The Nomination Committee was informed of
the results of the Board’s own evaluation. The Committee met with the
President and CEO who presented
the company’s strategy. The Nomination Committee discussed thegeneral criteria that Board members
should fulfill, including the independence requirement, and reviewed
the number of Board assignmentsthat each Board member has inother companies. The Nomination
Committee applied rule 4.1 of theCode as the diversity policy. This
rule states that the Board shall havean appropriate composition in viewof the company’s operations, phaseof development and other relevant
circumstances, display diversity andbreadth in terms of qualifications,experience and background of theBoard members elected by the General Meeting and that the company
shall strive for gender balance.

Board of Directors

The Board of Directors is responsible
for the company’s organization andthe management of the company’sbusiness. The Board is required tocontinuously monitor the company’s
and the Group’s financial position.
The Board is to ensure that thecompany’s organization is designed

in a way that ensures that the financial statements, the management ofassets and the company’s financial
condition in general are controlled ina satisfactory manner.
The President is appointed by the
Board and is responsible for the daily
operations pursuant to guidelines
and instructions issued by the Board.
The distribution of responsibilities
between the Board and the President
is laid down in the Board’s Procedural
Guidelines which are reviewed andadopted each year. The review isbased on such aspects as the Board’s
evaluation of the individual and collective work that the Board performs.
In addition to financial reporting
and the monitoring and follow-up
of daily operations and profit trend,
Board meetings address the goals
and strategies for the operations, significant acquisitions and investments,
as well as matters relating to the capital structure. Senior executives reportbusiness plans and strategic issues
to the Board on an ongoing basis.
Composition
As of December 31, 2022, Sandvik’s
Board consisted of eight members
elected by the Annual General Meeting. The Nomination Committee communicated before the 2022 Annual
General Meeting that the Nomination
Committee had applied rule 4.1 of theCode as the diversity policy. The current Board composition is the resultof the work of the Nomination Committee prior to that General Meeting.

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51

DIRECTORS’ REPORTThe Board consists of members withexperience from different geographic
areas and different industry sectors.
Excluding the President, 43 percentof the Board members elected by theGeneral Meeting are women.
Pursuant to Swedish legislation,
trade unions are entitled to representation on the Board and they haveappointed two members and two
deputies.
The Board members are presented
on pages 56–57.
Independence
Marika Fredriksson and Helena
Stjernholm are not regarded as independent in relation to major shareholders in the company and Stefan
Widing is not regarded as independent in relation to the company andits executive management. The otherfive Board members elected by theGeneral Meeting are all independent in relation to Sandvik and its
executive management, as well as
the company’s major shareholders.
Accordingly, the composition of theBoard complies with the independence requirements of the Code.
Board proceedings during 2022
During the year, the Board held 17
meetings. The Presidents of all
business areas presented their goals
and strategies and the Board also
reviewed the strategies and resultsfrom a number of the divisions. The
Board addressed matters related
to the overall Group strategy, IT
strategy, new financial targets, issueof Euro Medium Term Note (EMTN)
program, revolving credit facility,
enterprise risk management, succession planning and talent management, compliance related matters,
investments and operational restructuring and review of previously madeinvestments. This year there was aspecial focus on handling the effectsof the war in Ukraine on Sandvik’s
business and the sanctions against

Attendance at Board and Committee meetings in 2022
MemberFunction

Thomas Andersson

Member2)

Marika Fredriksson

MemberJennifer Allerton
Claes Boustedt
Fredrik Håf

Erik Knebel

Thomas Lilja

Member17

Thomas Andersson

16

Claes Boustedt

17

Marika Fredriksson

17

Fredrik Håf1)

Audit
Committee
6

Remuneration
Committee
36Acquisitions
and Divestitures
Committee
4410Erik Knebel

17

Tomas Kärnström2)

5Thomas Lilja

17

Andreas Nordbrandt

16

Johan Molin

Helena Stjernholm
Stefan Widing

17

6

3

4

17

6

3

4

17

Kai Wärn

17

3

1) A
 ppointed deputy employee representative in April 2022.
2) Resigned as employee representative in April 2022.

Independentin acc. with
the Code

Member
Deputy2)

Yes

Yes

No3)

Deputy2)Member2)

Chairman

Helena Stjernholm

MemberNo3)

Kai Wärn

MemberYes

Stefan Widing

17

Jennifer Allerton

Johan Molin

Andreas Nordbrandt

Board

Total number of meetings

Composition of the Board as of December 31, 2022
Name

Russia, as well as the continued
recovery and reconstruction due tothe COVID-19 pandemic. Further, theBoard handled matters relating to the
distribution and listing of the Sandvik
Materials Technology business area
and a number of acquisition projects,
including the acquisitions of themining related business of Schenck
Process Group as well as Deswik,
Frezite and Sphinx.
The Remuneration Committee,
Audit Committee and the Acquisitions and Divestitures Committee
reported from their respective meet-

MemberMember

Yes

Yes

No3)

Shareholding,number1)
Dec 31, 2022

Elected0

2012

10,00050,000

2,500
2

2015
2015
2017

Audit
Committee

Remuneration
Committee

ChairmanAcquisitions
and Divestitures
Committee

Member

2022

1

2021

950,0004)

2015

MemberChairman

Chairman

5,000

2016

MemberMemberMember

12,000

2020

4,840

8,527

57,554

2016
2021

2020

Member1) Pertains to own and closely related persons’ shareholdings in Sandvik AB.
2) Employee representatives (both members and deputy members participate in Board meetings). Thomas Lilja (member) and Erik Knebel (deputy)
represent Unionen/Ledarna/Swedish Association of Graduate Engineers. Thomas Andersson (member) and Fredrik Håf (deputy) represent IF
Metall.
3) Marika Fredriksson and Helena Stjernholm are not regarded as independent in relation to major shareholders in the company and Stefan Widing
is not regarded as independent in relation to the company and its executive management.
4) In addition 1,000,000 call options in Sandvik AB.

52

S A N DV I K | A N N UA L R EP O R T 2022

DIRECTORS’ REPORT

ings. With respect to the Audit Committee, reported matters included
accounting principles, financial
outcome, ERM, compliance, Speak
Up and Code of Conduct, internal
control and internal audit as well as
the result of the external audit. The
Committees also submitted matters for resolution by the Board andthe minutes and reports from thesemeetings were made available to theBoard members.
In the autumn of 2022, the Board
visited Sandvik’s operations in Svedala, Sweden, and Lahti, Finland.
Remuneration of the Board
As resolved at the 2022 Annual­General Meeting, the fee to the­Chairman of the Board was SEK
2,750,000 and the fee to each of
the non-executive Board members
elected by the General Meeting was
SEK 740,000.
In addition, SEK 325,000 was paid
to the Chairman of the Audit Committee and SEK 185,000 to each of theother Committee members, in total
SEK 695,000. The Chairman of theRemuneration Committee was paid
SEK 155,000 and each of the otherCommittee members SEK 122,000,
in total SEK 399,000. The Chairmanof the Acquisitions and Divestitures
Committee was paid SEK 210,000
and each of the other Committee
members SEK 155,000, in total SEK
520,000.
For more detailed information on
remuneration of the Board members,
see note G4.
Evaluation of the work of the Board
To ensure the quality of the work of
the Board and to identify the possible
need for further expertise and experience, the work of the Board and its
members is evaluated annually. In
2022, the evaluation, which was led
by the Chairman of the Board, wascarried out by way of each Board
member responding anonymously toan online questionnaire. The Chairman also held separate evaluation
discussions with all Board members.
The compiled results of the evaluations were presented to the Board aswell as to the Nomination Committee.

Board Committees

The tasks of the Committees andtheir work procedures are stipulated
in written instructions issued by the
Board. The Committees’ primary task
is to prepare issues and present themto the Board for resolution.
Remuneration Committee
During 2022 the members of theRemuneration Committee were
Johan Molin (Chairman of the Committee), Helena Stjernholm and Kai
Wärn. The tasks of the Remuneration Committee are, among others,
those prescribed by the Code, which
include preparing proposals regarding guidelines for remuneration ofsenior executives and long-term
incentive programs for senior
executives.
Based on the recommendationsof the Remuneration Committee,
the Board decides the remunerationand terms of employment for the
President, who in turn decides on
the remuneration to be paid to theGroup Executive Management in
consultation with the Remuneration
Committee.
For guidelines, remuneration andother benefits payable to the Group
Executive Management, refer to the
Guidelines for the remuneration ofsenior executives on pages 44–46
and note G4.
During 2022 the Remuneration
Committee held three meetings.
Audit Committee
During 2022 the members of the
Audit Committee were Claes Boustedt (Chairman of the Committee),
Johan Molin and Helena Stjernholm.
Areas addressed by the Audit Committee mainly related to:– Monitoring the financial reportingand ensuring its reliability– Effectiveness of the system ofinternal control and internal audit– Planning, scope and follow-up of
the internal and external audit for
the year– Assistance to the Nomination
Committee with regards to proposal for auditor– Monitoring of the external auditor’s
independence and objectivity
vis-à-vis the company, including

the extent to which the auditor provides other services than auditing
services to the company– The Group’s systematic processes
for overall corporate risk management, as well as more detailed risk
management matters including
legal disputes, compliance, corporate investigations, IT security,
Group Digital Security Improvement, accounting procedures, taxation, treasury, finance operations,insurance coverage and pension
issues– The development and effectiveness of compliance processes,with special focus on ensuring
operational stability of the compliance program, the ComplianceHouse– Sandvik’s Code of Conduct,
Sandvik’s global whistleblowing
system, some specific cases
managed through Speak Up as wellas the overall effectiveness of thesystem– Sandvik’s sustainable businessstrategy and materiality analysis
During 2022 the Audit Committee
held six meetings at which Sandvik’s
external auditor and representativesof the company’s management were
present.
Acquisitions and Divestitures
Committee
During 2022 the members of theAcquisitions and Divestitures Committee were Johan Molin (Chairmanof the Committee), Claes Boustedt
and Helena Stjernholm. The purposeof the Committee is to provide a
better process for preparing major or
strategically important acquisitions
and divestitures for Board decisions.
The Committee meets on an ad hoc
basis, at the request of the President
and CEO in consultation with the
Chairman of the Board.
During 2022 the Acquisitions andDivestitures Committee held four
meetings. The Committee reviewed
matters mostly related to the distribution and listing of the Sandvik
Materials Technology business area
and the acquisition of the mining
related business of Schenck Process
Group.

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DIRECTORS’ REPORT

President and Group
Executive Management

The President is accountable forGroup decision-making in all areasdelegated by the Board. In order toensure a full Group perspective inthese matters, the President has
appointed the Group Executive
Management as an advisory forum,
focusing on how to achieve Grouptargets, strategies, structure andorganization. The Group Executive
Management meets each monthand its members are accountablefor implementing the President’s
decisions.
In 2022, the Group Executive Management consisted of:– Stefan Widing, President and CEO,and President of Sandvik Manufacturing and Machining Solutions, aswell as acting President of Sandvik
Mining and Rock Solutions (June
17– September 31, 2022)– Cecilia Felton, Executive Vice President and Chief Financial Officer(as from February 1, 2022), acting
Chief Financial Officer (November
1, 2021– January 31, 2022) and Vice
President Group Control (up until
March 31, 2022)– Nadine Crauwels, President of the
Sandvik Machining Solutions business area segment– Christophe Sut, President of the
Sandvik Manufacturing Solutions
business area segment– Henrik Ager, President of Sandvik
Mining and Rock Solutions (up until
June 17, 2022)– Mats Eriksson, President of
Sandvik Mining and Rock Solutions(as from October 1, 2022)– Anders Svensson, President of
Sandvik Rock Processing Solutions(up until September 31, 2022)– Richard Harris, President of
Sandvik Rock Processing Solutions(as from October 1, 2022)– Göran Björkman, President of­Sandvik Materials Technology (upuntil August 31, 2022)– Jessica Alm, Executive Vice President and Head of Group Communications and Sustainability– Johan Kerstell, Executive Vice
President and Head of Human
Resources– Åsa Thunman, Executive Vice
President and General Counsel

54

The members of the Group Executive
Management are presented further
on pages 58–59.

Business areas

The Sandvik organizational modelis based on a decentralized business model. Since the spin-off of
the Sandvik Materials Technology
business area in August 2022, there
are three separate business areas –Sandvik Mining and Rock Solutions,
Sandvik Rock Processing Solutions
and Sandvik Manufacturing andMachining Solutions – each basedon distinct product offerings. Eachbusiness area has full responsibility
and accountability for its respective
business results.
Sandvik Manufacturing andMachining Solutions is divided
into two business area segments– Sandvik Machining Solutions andSandvik Manufacturing Solutions.
Further, each of the three businessareas is organized in a number ofdivisions based on product offeringor brand. The division is the highest
operational level in the Sandvik organizational structure. Certain divisions
that are based on a product offering
are also divided into business units
representing a defined part of the
product offering.
For an overview of Sandvik’s organizational model, refer to page 2 andvisit home.sandvik for more detailed
information relating to the Group’sbusiness activities and productportfolios.

Group functions

There are five Group functions within
Sandvik: Communications and Sustainability, Finance, HR, Legal and IT.
Group functions specifically focus
on setting the appropriate enabling
structures and processes that arecommon for the Group or cover a
specific area for which the Group is
responsible.

External auditor

At the 2022 Annual General Meeting,the audit firm PricewaterhouseCoopers AB was re-elected auditor of
Sandvik AB for the period until the2023 Annual General Meeting. Peter
Nyllinge is the auditor-in-charge.

S A N DV I K | A N N UA L R EP O R T 2022

The auditor continuously audits
and monitors the company’s generalaccounting and the execution by
the Board and the President of theirrespective responsibilities.
The progress of the audit isreported regularly during the year to
the management teams of individual companies and the businessareas, the Audit Committee and theBoard. The auditor meets with theBoard at least once a year without
the President or any other memberof the Group Executive Management
attending.
The independence of the external
auditor is guaranteed by the Audit
Committee having determined theprinciples for allowing non-audit
services to be provided by the auditor
and, in some cases, pre-approving
non-audit services.
Audit fees are paid continuously
over the period in office on an
approved current account basis. For
detailed information on fees paid tothe auditor, see note G5.

Internal control over financial
reporting

The Sandvik organization manages awell-established financial reporting
process aimed at ensuring a highlevel of internal control.
The internal control system aligns
with the conceptual frameworkof COSO, which is based on five
key components that provide aneffective framework for describing
and designing the internal control
system implemented in the organization. The five components areControl Environment, Risk Assessment, Control Activities, Information
and Communication, and Monitoringand Follow-up. The application of
the COSO framework is described
below.
Sandvik’s Board of Directors is
ultimately responsible for the governance of risk management including internal control over financial
reporting.
Control environment
Sandvik internal control over financial
reporting forms an integral part ofthe operations, described in The
Sandvik Way, which also includes risk

DIRECTORS’ REPORT

assessments, policies, procedures
and compliance.
The Sandvik Financial Reporting
Policies and Procedures govern control over financial reporting. These
documents contain detailed instructions regarding accounting policies
and financial reporting procedures
to be applied by all Sandvik reporting
entities.
A Sandvik Financial Internal Control
Framework has been developed andincludes key components such as
well-defined roles and responsibilities, internal control procedures andthe risk and control matrix which
defines a mandatory minimum ofcontrol activities that contribute to
the mitigation of risks to acceptablelevels. Internal control implementation projects managed by GroupInternal Controls were completed
during the year. Future implementations (including new acquisitions) will
be managed and implemented by therespective business area.
Risk assessment and risk
management
The Enterprise Risk Management(ERM) process at Sandvik includes
the area of financial reporting. Read
more about the Enterprise Risk Management (ERM) program on page 60.
Key risks noted in local assessments and observations made byInternal and External Audit are also
taken into consideration to ensurethat adequate controls exist to mitigate these risks.
Control activities
Mandatory control activities include
business process controls, IT
controls and corporate governancecontrols focusing on compliancewith policies and procedures. Internal controls are tailored per each
operational entity based on risks andapplicability. Entity management andprocess owners are responsible for

ensuring that internal controls areoperated as per agreed design.
At Group level, Group Control manages the reporting process to ensure
the completeness and accuracy offinancial reporting and compliancewith IFRS requirements.
Controllers in the divisions andbusiness areas perform analyticalreviews and investigations, conductbusiness trend analyses and update
forecasts.

potential deficiencies and suggested
actions.
The Board reviews all quarterlyinterim reports as well as the Annual
Report prior to publishing. The Audit
Committee reports to the Board
regarding internal control matters
including matters for resolution.
Minutes from Audit Committee
meetings are made available to Board
members.

Information and communication
Policies and procedures related tofinancial reporting are updated andcommunicated on a regular basis to
all entities.
Results of monitoring and statusof improvement activities related
to internal controls are included in
the CFO report which is part of theagenda for the Audit Committee
meetings.
Quarterly interim reports are
published externally and are supplemented by investor meetings
attended by members of the Group
Executive Management.

Internal Audit is subordinated to the
Audit Committee and the Vice President of Internal Audit reports to the
Audit Committee.
Internal audits include, as a basis,the Group’s policies for corporate
governance, risk management andinternal control regarding areas suchas financial reporting, compliancewith the Code of Conduct and IT.
The outputs of the audits include
action plans and programs for
improvement. Findings are reported
to the business area management
and to the Audit Committee.
Internal audit interacts with
External audit on a periodic basis to
discuss and share audit plans andaudit results.

Internal audit

Monitoring and follow-up
Entity management as well as local
and global process owners are
responsible for testing the effective­
ness of internal controls throughself-assessments on a quarterly basis
and according to the requirements in
the Sandvik Internal Control Framework. Results of the self-assessment
testing of controls including test evidence are reported and consolidated
in a Governance, Risk and Compliance
IT tool. The tool also requires reporting of action plans with the purpose toremediate ineffective controls.
Business areas and divisions are tomonitor the remediation of ineffective controls. The Audit Committeemonitors the effectiveness of internal
controls related to financial reporting presented by management with

A N N UA L R EP O R T 2022 | S A N DV I K

55

DIRECTORS’ REPORTBOARD OF DIRECTORSJOHAN MOLIN

Born 1959. Chairman of the Board since 2015.
Chairman of the Remuneration Committee andAcquisitions and Divestitures Committee andmember of the Audit Committee.
Education and business experience:
M.Sc. in Business and Economics, Stockholm
School of Economics. President and CEO of
Assa Abloy 2005–2018. President and CEO of
Nilfisk-Advance 2001–2005 and various positions within Atlas Copco 1983–2001.
Current board assignments: –Shareholding in Sandvik (own and closely
related persons): 950,000 as well as 1,000,000
call options.

JENNIFER ALLERTON

Born 1951. Board member since 2015.
Education and business experience:
M.Sc. in Physics and B.Sc. in Mathematics, Physical Sciences and Geosciences. Chief Information
Officer at F. Hoffmann-La Roche Ltd 2002–2012,
Technology Director at Barclaycard 1999–2002
and various positions at ServiceNet, USA, BOC(now Linde), Cable & Wireless Business Networks
and Unilever plc.
Current board assignments: Board member ofIron Mountain Inc. and Barclays Bank Ireland plc.
Shareholding in Sandvik (own and closely
related persons): 10,000.

CLAES BOUSTEDT

Born 1962. Board member since 2015. Chairmanof the Audit Committee and member of theAcquisitions and Divestitures Committee.
Education and business experience:
M.Sc. in Business and Economics, Stockholm
School of Economics. Executive Vice Presidentof L E Lundbergföretagen AB since 1997 andPresident of L E Lundberg Kapitalförvaltning AB
since 1995.
Current board assignments: Board member of
Hufvudstaden AB, Förvaltnings AB Lunden andAlleima AB.
Shareholding in Sandvik (own and closely
related persons): 50,000.

MARIKA FREDRIKSSON ANDREAS NORDBRANDT HELENA STJERNHOLM
Born 1963. Board member since 2017.
Education and business experience:
Master of Business Administration. CFO andGroup Executive Vice President of Vestas Wind
Systems A/S 2013– 2022. CFO of Gambro AB
2009–2012, CFO of Autoliv Inc. 2008–2009
and various positions within Volvo 1996–2008,
including CFO and Senior Vice President Financeand Strategy at Volvo Construction Equipment
Corporation.
Current board assignments: Chairman of theboard of Emagine A/S and board member of AB
Industrivärden, A.P. Møller-Mærsk A/S., Saxobank A/S and Ecolean AB.
Shareholding in Sandvik (own and closely
related persons): 2,500.

Born 1971. Board member since 2021.
Education and business experience:
M.Sc. in Mechanical Engineering and Hydraulics.
Co-owner of Mälarvillan AB since 2018. Presidentof the Underground Rock Excavation Division
within the Epiroc Group 2018. Various positions
within the Atlas Copco Group 1995–2018,
including President of the Underground Rock
Excavation Division, President of the Rocktec
Division, Vice President Service Operations andOperations Manager Business Line Manager,
Service Division, Atlas Copco Mining and Rock
Excavation Australia.
Current board assignments: Chairman of theboard of Alleima AB and board member ofTrenig AB.
Shareholding in Sandvik (own and closely
related persons): 8,527.

Born 1970. Board member since 2016.
Member of the Audit Committee, Remuneration
Committee and Acquisitions and Divestitures
Committee.
Education and business experience:
M.Sc. in Business Administration. President andCEO of AB Industrivärden since 2015. Investment
manager and subsequently partner at IK Investment Partners 1998–2015 and consultant at Bain
& Company 1997–1998.
Current board assignments: Deputy chair of
the board of Telefonaktie­bolaget LM Ericssonand board member of AB Industrivärden and AB
Volvo.
Shareholding in Sandvik (own and closely
related persons): 5,000.

Changes in the Board of Directors

Information regarding Board assignments and holdings of shares as of December 31, 2022.
Current Board assignments refer to assign­ments in companies or organizations outside the
Sandvik Group.

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S A N DV I K | A N N UA L R EP O R T 2022

In April 2022, Tomas Kärnström, employee
representative, left the Board, and was
succeeded by Thomas Andersson,previous deputy employee representative.
Fredrik Håf was appointed new deputy
employee representative.

DIRECTORS’ REPORTEMPLOYEE REPRESENTATIVESSTEFAN WIDING

THOMAS ANDERSSONTHOMAS LILJA

KAI WÄRNFREDRIK HÅF

ERIK KNEBELHONORARY CHAIRMAN

BOARD SECRETARY

AUDITOR

Born 1941. Chairman of the Board of Sandvik AB
1983–2002.

Born 1969. Secretary to the Board since 2014.
Executive Vice President and General Counsel,
Sandvik AB, since 2014.

Born 1977. Board member since 2020.
Education and business experience:
M.Sc. Applied Physics and Electrical Engineeringand Bachelor of Business Administration. President and CEO, Sandvik AB, and President of the
Sandvik Manufacturing and Machining Solutions
business area since 2020. Various positions
within the Assa Abloy Group 2006–2020, including Executive Vice President HID Global division
2015–2020, Director of Product Management
and General Manager of Shared Technologies Unit. Various positions in the Saab Group
2001–2006.
Current board assignments: –Shareholding in Sandvik (own and closely
related persons): 57,554.

Born 1959. Board member since 2020. Memberof the Remuneration Committee.
Education and business experience:
M.Sc. in Mechanical Engineering, the RoyalInstitute of Technology, Stockholm, Sweden.
President and CEO of Husqvarna AB 2013–2020.
Operations partner at IK Investment Partners
Norden AB 2011–2013, President and CEO of
Seco Tools AB 2004–2010 and various positions
within ABB 1985–2004.
Current board assignments: Chairman of
the board of Electrolux Professional AB and
SunStreet Energy AB (as from January 2023) andboard member of Mälarhamnar AB.
Shareholding in Sandvik (own and closely
related persons): 12,000.

PERCY BARNEVIK

Born 1962. Board member since 2022, deputy
Board member 2012–2022 (employee representative, IF Metall).
Education and business experience:
Chairman of the Union Committee, Metal Workers’ Union, Sandvik Coromant, Gimo. Various
operator positions at Gimoverken, Sandvik
Coromant, since 1984. Construction firm Anders
Diös 1980–1984.
Current board assignments: –Shareholding in Sandvik (own and closely
related persons): 0.

Born 1983. Deputy Board member since 2022
(employee representative, IF Metall).
Education and business experience:
Chairman of the Union Committee, Metal
Workers’ Union, division Rock Tools, Sandviken,
Sweden. Various operator positions at division
Rock Tools, since 2002.
Current board assignments: –Shareholding in Sandvik (own and closely
related persons): 2.

ÅSA THUNMAN

Born 1975. Board member since 2016 (employee
representative, Unionen/Ledarna/Swedish Association of Graduate Engineers).
Education and business experience:
Technical College Graduate – Mechanical Engineering. Chairman Trade Union, Unionen Sandvik
Sweden and Unionen Coromant and Machining
Solutions. Various purchasing positions within
Sandvik 2000–2010 and production and logistics
positions within Scania 1995–2000.
Current board assignments: –Shareholding in Sandvik (own and closely
related persons): 4,840.

Born 1965. Deputy Board member since 2021
(employee representative, Unionen/Ledarna/
Swedish Association of Graduate Engineers).
Education and business experience:
Technical College Graduate – Mechanical &Automation. Chairman of the Swedish Association of Graduate Engineers Sandvik Sweden
and Sandvik Coromant Gimo. Various positions
within Sandvik Coromant and Sandvik Machining
Solutions since 1990; Production, IT and Quality.
Current board assignments: –Shareholding in Sandvik (own and closely
related persons): 1.

PRICEWATERHOUSECOOPERS AB

Auditor-in-charge:
Peter Nyllinge, Authorized Public Accountant.
Other auditing assignments:
Saab AB, Getinge AB and AB Electrolux.

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57

DIRECTORS’ REPORTGROUP EXECUTIVE MANAGEMENTSTEFAN WIDINGJESSICA ALM

NADINE CRAUWELSMATS ERIKSSONCECILIA FELTONRICHARD HARRIS

Born 1977. President and CEO, Sandvik AB,
President of the Sandvik Manufacturing andMachining Solutions business area since 2020.
Education and business experience:
M.Sc. Applied Physics and Electrical Engineering and Bachelor of Business Administration.
Various positions within the Assa Abloy Group
2006–2020, including Executive Vice President
HID Global division 2015–2020, Director of
Product Management and General Manager of
Shared Technologies Unit. Various positions in
the Saab Group 2001–2006.
Current board assignments: –Shareholding in Sandvik (own and closely
related persons): 57,554.

Born 1962. President of the Sandvik Mining andRock Solutions business area since October 1,
2022.
Education and business experience:
B.Sc. in Computer Science. President of the Loadand Haul division 2016–2022. President andCEO of Cencorp Oyj 2010–2012 and Salcomp
Oyj 1998–2006 as well as leading positions forseveral other companies.
Current board assignments: Board member of
Sandvik Pension Fund in Finland.
Shareholding in Sandvik (own and closely
related persons): 206.

58

Born 1977. Executive Vice President and Headof Group Communications and Sustainability,
Sandvik AB, since 2013.
Education and business experience:
M.Sc. in Geological and Earth Sciences/Geosciences, and Journalism. Various positions within
Sandvik since 2006, including Vice Presi­d ent
Communication and Marketing at Sandvik
Coromant.
Current board assignments: –Shareholding in Sandvik (own and closely
related persons): 9,489.

Born 1984. Executive Vice President and Chief
Financial Officer, Sandvik AB, since February 1,
2022.
Education and business experience:
B.Sc. Environmental Policy with Economics.
Various positions within Sandvik since 2013,
including acting Chief Financial Officer November 1, 2021–January 31, 2022, Vice PresidentGroup Control and Director Group M&A and
Investments, and Director Group BusinessControl. Various positions within Ernst & Young,Operational Transaction Services, London,
2007–2013.
Current board assignments: Shareholding in Sandvik (own and closely
related persons): 2,802.

S A N DV I K | A N N UA L R EP O R T 2022

Born 1971. President of the Sandvik M­ achining
Solutions business area segment since 2020.
Education and business experience:
M.Sc. in Mechanical Engineering. President of
Sandvik Coromant 2017–2020. Various otherpositions within Sandvik Coromant since 2000,
including Vice President Customized Solutions
and Strategic Relations, and Sandvik Coromant
Manager Switzerland. Project Engineer and Consultant for the metal cutting industry at WTCM
(today Sirris) 1995–2000.
Current board assignments: Board member of
Rosti Group.
Shareholding in Sandvik (own and closely
related persons): 6,321.

Born 1970. President of the Sandvik Rock
­Processing Solutions business area since
October 1, 2022.
Education and business experience:
Bachelor of Engineering and Chartered Engineer.
Various positions within Sandvik since 2002,
including President of the Walter division
2019–2022, President of the Wolfram division
2016–2019 and different Supply and Production
Director roles. Previously various positions
within manufacturing companies, including
Production Manager at Land Rover and Plant
Manager at Keiper UK Ltd.
Current board assignments: –Shareholding in Sandvik (own and closely
related persons): 8,027.

DIRECTORS’ REPORTJOHAN KERSTELL

Born 1970. Executive Vice President and Head of
Human Resources, Sandvik AB, since 2016.
Education and business experience:
M.Sc. in Business and Economics. Various positions in Human Resources within Sandvik since2004 and consultant at Cap Gemini 1999–2003.
Current board assignments: –Shareholding in Sandvik (own and closely
related persons): 30,027.

CHRISTOPHE SUTBorn 1973. President of the Sandvik Manufacturing Solutions business area segment since 2021.
Education and business experience:
M.Sc. Marketing and Sales. Executive Vice President and Head of Assa Abloy Global Solutions
2016–2021. Other leading positions within Assa
Abloy 2012–2016 and 2001–2010. Global Strategic Marketing Manager within Niscayah Group
2010–2012. Leading positions within ITW Groupand SAM Outillage 1997–2001.
Current board assignments: –Shareholding in Sandvik (own and closely
related persons): 9,355.

ÅSA THUNMAN

Born 1969. Executive Vice President and GeneralCounsel, Sandvik AB, since 2014.
Education and business experience:
Master of Laws (LL.M), Sweden and the Netherlands. Various positions within Securitas
2009–2014, including General Counsel, Elekta
AB 1999–2009, including General Counsel, andLagerlöf & Leman law firm 1996–1999.
Current board assignments: Board member of
the Swedish Association of Listed Companies(Aktiemarknadsbolagens förening).
Shareholding in Sandvik (own and closely
related persons): 3,512.

Changes in the Group Executive
Management
Henrik Ager, President Sandvik Mining
and Rock Solutions, left Sandvik on June17, 2022, and was succeeded by Mats
Eriksson. Anders Svensson, President
Sandvik Rock Processing Solutions,left the Group Executive Management
Team on September 31, 2022, and was
succeeded by Richard Harris. Göran
Björkman, President Sandvik Materials
Technology left the company on August
31, 2022, in connection with the listing of
the business area as Alleima on Nasdaq
Stockholm. In February 2023 Sofia Sirvell
was appointed Chief Digital Officer andshe will be a member of the Group Executive Management as of March 1, 2023.
In February it was also communicatedthat Christophe Sut will leave Sandvik
on August 11, 2023 and Jessica Alm will
leave Sandvik no later than August 2023.

Information regarding board assignments andholdings of shares as of December 31, 2022.
Current board assignments refer to assign­ments in companies or organizations outside
the Sandvik Group.

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59

DIRECTORS’ REPORTRISK MANAGEMENTThe Sandvik risk management process aims to support our business in managing
and mitigating critical risks which may impact our ability to achieve our financial
targets and strategic objectives.
ERM – a part of our strategicwork

To effectively identify and manage risk is an important element ofbusiness success for all parts of
the Sandvik business. Sandvik has
implemented an Enterprise Risk
Management (ERM) program thatcovers all business areas, divisions
and functions within the Group.
The Sandvik Board of Directors
is ultimately responsible for thegovernance of risk management
and Sandvik’s Group Executive
Management ensures there is acommon and efficient process inplace. All management teams are
responsible for their own risk management. The teams must follow
the minimum requirements outlinedin The Sandvik Way, which requires
reviewing the strategic and operational risks at least annually. The ERM
methodology is also used as a toolfor decision-making, operationallyand within projects, as well as in thestrategy process in various levels of
the Group.

New strategic analysis

In 2022, we decided to complement
the bottom-up process with a strategic analysis at the Group Executive
Management level to more specifically identify key risk areas that are
tied to our ability to execute on our
Make the Shift Strategy on Grouplevel. The purpose was to get a more
focused and concrete risk landscapefor the Group to enable good follow-up of the different risk mitigating
activities in relation to the strategic
goals. This exercise resulted in the
Sandvik Key Risks map, presented on
page 17.

60

An ERM report, summarizing key
risks and mitigating activities
across our business, was provided
to Sandvik’s Audit Committee and
Board of Directors in December
2022. The Board of Directors’ and the
Audit Committee’s involvement in the
ERM process is further described on
pages 51–53.

Insurance as a risk
management tool

Sandvik has tailored insurance
programs that transfer the risks
associated with, amongst others,
the Group’s property, cargo andliability exposures. Insurable risks arecontinuously evaluated and actions
are taken to reduce these insurable
risks, as part of Sandvik’s loss-prevention strategy. Supported by ourloss-prevention procedure andguidelines, risk evaluations highlight
opportunities to reduce the potential for business interruption and toensure the Group’s ability to deliver
to its customers. In order to ensure
cost efficient and tailored insurance
solutions, selected risks are reinsured through the Group’s captive
insurance company.

Business continuity andcrisis management

The Global Risk Management Policy
and related procedures for business
continuity and crisis management
set the requirements for local management teams to ensure their ability
to successfully respond to disruptive
events and continue their business
operations on an acceptable level
when faced with challenges. Once arisk materializes, our crisis management priorities are to minimize harm

S A N DV I K | A N N UA L R EP O R T 2022

to people, to the environment, andto minimize damage to Sandvik’s
business, as well as ensuring a swift
return to normal activities and safeguarding the company brands.

Internal audit and internal­control in Sandvik’s risk work

The internal audit function regularly
follows up the implementation ofdifferent risk management programs
such as ERM, business continuity,
crisis management and the insurance programs. Sandvik applies
group-wide internal controls tomonitor risk mitigations. Read more
about the internal controls programat Sandvik on pages 54–55.

Sandvik Group risk profile

The Sandvik Group risk profile isbased on the bottom-up ERM process where the divisions, businessareas and functions first make theirassessment and the Group Risk Management Council makes recommendations for a new Group risk profile
based on the outcome of theseassessments. As earlier mentioned
the bottom-up ERM process was thisyear complemented with a strategic
analysis at the Group Executive Management level. This exercise resulted
in the Sandvik Key Risks map, readmore on page 17. The Sandvik Key
Risks map is also coupled with afollow-up model for tracking thedifferent initiatives that lead to betterrisk mitigation, which the Group
Executive Management team will
review and discuss every quarter,
thus creating a more dynamic andstrategically relevant risk management discussion at the highest levelsof the company. The outcome ofDIRECTORS’ REPORTERM PROCESSBusiness Area andGroup function ERM reports

ERM-report

ERM-report

ERM-report

ERM-report

Business Area Management
Risk evaluation

Group Executive Management
Risk evaluation

ERM Council
Aggregated report
ERM-report

ERM-report

Business area and Group function ERM reports are aggregated by the ERM Council and serve as input for the business areas’ and theGroup Executive Management team’s risk reviews. The result from this review, the Sandvik Key Risks map, is presented on page 17. An
ERM report, summarizing key risks and mitigating activities across our business, was provided to the Sandvik Audit Committee and Boardof Directors in December 2022.

these two processes is presented in
the table on page 62 together with
examples of what the identified risks
mean for Sandvik in different parts of
the organization and the mitigating
activities taken to manage them.

Sustainability and climatechangeAssessment and management ofsustainability risks, including climatechange, are integrated parts ofthe ERM program and are set out
in the Sandvik Key Risks map and
Risk Profiles in different parts of theorganization. During 2022 we conducted an assessment of current andfuture natural and climate change
related hazards for Sandvik locations
covering 285 individual sites and 94
percent of the overall Total Insured
Value (TIV). The assessment reflects
the current situation and models theevolution of Natural Hazards under
different climate change scenarios
and at different future time horizons.
The goals with the assessment
were to provide an overview of thephysical climate risks facing theportfolio of sites at different time
horizons and under different climatechange scenarios and to establish aranking of locations from high to low
climate risk based on climate dataand insured values. This will support
the identification and prioritizationof management actions, which may
include in-depth assessments ofsites and investment in resiliencemeasures, as next steps of Sandvik’s
climate resilience journey.

trend in both scenarios is identified
for precipitation, drought and heat.
Thunderstorm is also relevant and anincreasing trend.

Current natural hazard exposure
The Sandvik portfolio is currently
mainly exposed to Hail (with VeryHigh or High hazard levels for 26 percent of the total portfolio, followed bywind (19 percent), flood (13 percent),
lightning (13 percent) and storm
surge (8 percent).
Future climate change risks
The study was performed using
the SSP2–4.5 (middle-road) and
SSP5–8.5 (fossil fuel development)
scenarios for the 2030 (near term)and 2050 (long term) horizons.
Material exposure with increasing

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DIRECTORS’ REPORT

Strategic objective

Key risk

What does this mean?

Examples of what do we do (mitigation)

Geopoliticaldevelopment

Trends towards regionalization or nationalizationand trade wars

Reviewing regional strategies and footprint­distribution and supply chain

Securing Key
supplyPotential resource constraints around supply ofbatteries, green electricity and mineral supply

Different initiatives around sourcing and­business continuity planning

Acquisition value
creation

Business case delivery
Ensure efficient administrative integration

M&A Tracker/review process and score cards
Integration follow-up processes with business
reviews

Technology
must-wins

Electrification of the mine
Closed loop manufacturing
Execution of the digital shift and data driven
productivity

Careful performance management and execution of the strategy for M&A, product development and the 6 moves for enabling the digital
shift

Digital shift

Digital disruption

Efficient systems upgrades
Cyber security
Information security
Disruption by digital players

Careful project management and lessons
learned for implementation of new systems support, cyber security improvement program andthe six steps Sandvik has identified to enable thedigital shift

Sustainable shift

Being compliant

Ensuring an ethical culture
Increased regulatory complexity (e.g. Russia)
Stricter financing requirements

Learning and workshop initiatives across theorganization, digital journey and with a new Third
Party Management policy and process

Changing
regulatory
requirements

Sustainability reporting requirements
Trade sanctions
Product/safety requirements
Change to data driven processes

CSRD preparation project, compliance digitaljourney to increase agility

Managing
inflation

Price management
Leverage procurement capabilities

Strong focus on price management and tracking
price/volume growthDifferent sourcing initiatives to increase
flexibility/agility

Managing
downturn

Meeting target EBITA range
Timely execution of contingency plans

Contingency plans, strong performance management and agile decision process with decentralized approach for each part of the businessBusinessinterruption

Energy supply
Supply chain/logistics
Disruptive events (fires, natural disasters,
pandemic)

Energy supply mapping and mitigating activities, carefully managed and active managementof logistics/supply and business interruption
planning

Customer’s 1st choice

Understandchanging­customer needs

Timely adjustment to market transformation
Ensuring customer value

Customer satisfaction measurement with divisions, business units and sales areas taking
necessary actions

Employer of Choice

Key talent­attraction andretention

New talent (digital, sustainability)
Safeguard core talent supply (engineering,battery)
Re-skill existing workforce

Talent attraction and development projects in allparts of the business.

Shift to growth

Agile through cycle

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DIRECTORS’ REPORTSUSTAINABILITY GOVERNANCE
The Sandvik Group’s sustainability governance is based on its business strategy, business model and international frameworks. Relevant goals are set to address material
areas and to efficiently manage related impacts, risks and opportunities. Policies andmanagement systems have been set to ensure financial, environmental and social
compliance.
The Sandvik Board of Directors
has the overall responsibility forsustainability within Sandvik, monitored by the Audit Committee. The
implementation is delegated to the
President and CEO of Sandvik.
The Group Executive Management has the overall responsibility
for Sandvik’s sustainability strategy
and agenda while the businessareas and divisions are responsible
for the implementation and follow-up. The Communications andSustainability function is responsible for the coordination within theGroup. The business areas are also
responsible for the assessment andmanagement of sustainability risks
in their operations. KPIs are consolidated and reported to follow up on
goals at Group and business arealevels. Each year we evaluate our
performance and set targets andfocus actions for the coming year.
The Sustainability Council is aforum for cooperation and bestpractice sharing across Sandvik.
The Council is comprised of representatives from the business areas
and Group functions. The Sustainable Business function coordinates
the sustainability agenda together
with the business areas.
In 2022, the Board of Directors
approved a new Sustainability
policy and the targets for Science
Based Targets initiative validation.
During the year the Communication and Sustainability function
reported progress and informed
the Audit Committee on relevant
sustainability topics. The Audit
Committee and the Board of Directors have informed themselves andfurther discussed related topics,
such as SBTi and CSRD.

Materiality assessment

The 2022 Corporate Sustainability
Reporting Directive (CSRD) requires
companies to report their impact onvarious aspects of sustainability as
well as the financial consequenceof their impact. Sandvik initiateda double materiality assessment
to determine material topics. The
impact materiality assessment wasdone to be compliant with the GRI(Global Reporting Initiative) materiality assessment. We will continue
to develop the process and aim toinclude a complete double materiality assessment in the 2024 Annual
Report.
Sandvik based its materiality
assessment on the topics included in
the CSRD. The topics were evaluated from a severity and likelihood
perspective, based on a stakeholder
engagement process and external
input. The stakeholders identified
were ESG (Environment, Social, Governance) experts in our organization,
suppliers, shareholders/investors,
customers and NGOs. The stakeholder process included workshops
and interviews.
The assessment was also basedon external reports, legislation andframeworks. These included theOECD Due Diligence Guidance for
Responsible Supply Chains of Minerals from Conflict-Affected and HighRisk Areas, the OECD Due Diligence
Guidance for Responsible Mineral
Supply Chains and supplier risk
screening through EcoVadis. Basedon the gathered input, a thresholdvalue for the topics was defined,
above which the topics were deemedmaterial and as such a basis for our
GRI reporting.
Sandvik has a diversity of interactions across the value chain: suppliers, customers, our own operations

MATERIAL TOPICS– Anti-bribery andanti-corruption– Business ethics governance– Climate related opportunities(downstream)– Diversity, equity and inclusion– Employment and labor
relations– Employee health and safety– Energy consumption– Equal opportunities– Human rights– Materials sourcing– Opportunities within resource
use and circular economy– Reduction of GHG emissions– Scope 3 emissions– Waste management
A topic is material if the company
has an actual or potential significant
impact on people or the environment
connected to the topic. A topic is alsomaterial if it triggers financial effects
on the company that are likely to influ­
ence its future cash flow. Changes inmaterial topics from last year includes
addition of Materials sourcing.

and interactions related to the endof-life process. Our supply chain andgeographical footprint are examplesof factors that affect the value chain
and our impacts, risks and opportunities. Sandvik can have a positive or
negative impact on the value chain.
Our electric and autonomous mining
equipment as well as our digitalsolutions that improve productivity
and reduce energy usage and waste,
are examples of a positive impact.
Diesel-driven mining equipment generating greenhouse gas emissions(GHG) is an example of a negative
impact. Raw materials for the manufacturing of products represent themain negative impacts, both potential
and actual, in our supply chain.

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63

DIRECTORS’ REPORTSTRENGTHENING POSITIVE IMPACTS

Gender equality. We have set a goal that one third of our managers should be female by 2030. We partner with Female
Leader Engineers and in 2022 we entered a strategic partnership with the International Women in Mining organization. In
India, we encourage diversity and make it safer for women to work night shifts by, among other things, providing transportation to and from work. We offer daycare for employees’ children in India and Brazil. Decent work. The Sandvik Apprenticeshipprogram has invested in the development of technical skills for trackless mining in the Southern Africa region for the past 22
years. Through the Sandvik Southern Africa Academy in South Africa, more than 1,000 apprentices are being trained towards
a mining equipment trade in Zambia, Botswana, Zimbabwe, Tanzania and South Africa. In 2022, 29 percent of the participantsin the apprenticeship program and 50 percent of the internship program were women, respectively.

Raw materials

Logistics

Suppliers

MINIMIZING NEGATIVE IMPACTS

Own operations

Use of soldproducts

End of life/
disposalIndustry innovation. We aim to have a fully electric underground offering by 2030 and a 90 percent electric mobile crushingoffering by 2025. Already today we provide fully electrified stationary crushing equipment and trucks. Powder-based netshape technologies like additive manufacturing make it possible to merge several components into one – reducing assembly
steps and thereby energy consumption. Additive manufacturing also reduces waste and often minimizes the use of cutting
lubricants and cleaning fluids. Clean energy. We have signed agreements to purchase fossil-free energy in a number ofmarkets and we purchase clean energy for all our European sites. Renewable energy production on our own sites keeps onincreasing and we run a large number of Environmental Improvement Projects. Industry innovation, Responsible consumption and production. Sandvik has developed a process to separate tungsten inserts from the steel body of drill bits and webuy back the used drills for separation and recycling. The need for virgin material, transports and GHG emissions are reduced,
as well as the supply chain risk. The separation process can be made locally, creating job opportunities. Responsible
consumption and production. Waste circularity is a focus area within our 2030 targets. We continuously work to improverecycling and reuse at our sites. We have connected the heat recovery system in our manufacturing facility in Svedala to thesite’s ventilation system and installed a process heating system to reuse excessive heat from production processes. In 2022,
Walter started converting its product packaging to recycled plastic, so called PCR (Post Consumer Recycled), resulting in
95 percent secondary material in its packaging and reduced GHG emissions. Climate action. Sandvik submitted targets forvalidation to the Science Based Targets initiative in 2022, committing to net zero emissions by 2050 at the latest. We encourage our suppliers to set targets in line with the Paris Agreement through our Supplier Code of Conduct. Decent work. Oneof our long-term sustainability goals is zero harm to people. Our mining automation solutions increase the possibility to work
remotely, leading to a safer and healthier workplace. Good health and well-being. Our battery-electric underground offering
reduces heat and emissions underground, improving the working conditions while helping mining customers reach their sustainability targets and reduce ventilation costs. Health and well-being programs are in place at Sandvik locations.

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DIRECTORS’ REPORTThe process of extracting andrefining raw materials is linked to anumber of potential impacts andrisks: child labor, pollution of land, soil,
water and air, perilous working conditions, hazardous workplaces, exposure to hazardous chemicals, conflictand disputes in local communities
and GHG emissions. Some of these
are related to specific raw materials,
such as conflict minerals and cobalt.

Code of Conduct

Sandvik puts ethics and sustainable business practices first.
Sandvik has a long historyof working in accordance withapplicable laws and internationallyrecognized principles, as well as inpartnership with our local communities. Our Code of Conduct isbuilt on our internal core values
and external principles, such as theInternational Bill of Human Rights,
the International Labour Organization’s Declaration on Fundamental
Principles and Rights at Work, theRio Declaration on Environmentand Development, and the United
Nations Convention against Corruption as outlined in the ten principles of the United Nations Global
Compact. We are also committed
to adhering to the OECD Guidelines
for Multinational Enterprises andthe UN Guiding Principles on Business and Human Rights.
The Code of Conduct is a vital
component in The Sandvik Way, ourgovernance framework. It shows
us how we need to act as individual
employees, as a company and what
ethical standards we should adhere
to in our day-to-day work, and it is an
important enabler for achieving our2030 Sustainability Goals.

Speak Up

Employees and external parties who
witness a violation of the Code of
Conduct, laws or our policies canreport the violation, anonymously,
through the global whistleblowing tool Speak Up. All reports are
assigned an investigator from therelevant business area that conducts the investigation. The Ethics
Office oversees the effectivenessof the Speak Up process. Reports,
investigations and remediations arerecorded, monitored and included inreporting to the Audit Committee.
No retaliation may be taken against
an employee or business partner
who, in good faith, voices their concern, as is outlined in the Speak Up
policy.
Sandvik’s reporting tool, Speak Up,
is publicly and directly accessibleby all stakeholders. They can raise
concerns about the organization’s
negative impacts on them, including human rights concerns, and theprocess allows for grievances to be
identified and addressed. In addition,certain countries have local grievance mechanisms and other mechanisms to support employees beyond
legal requirements, such as foundations that provide rehabilitation andfinancial support in relation to healthand well-being. The European Works
Councils and relevant local unions
have been involved in the setup of
local whistleblowing channels andappointment of investigators. In
2022, Sandvik interviewed Speak Up
users as part of its work to review
and improve the mechanism with aparticular focus on non-retaliation.

Compliance

The Sandvik Compliance System
includes four areas: Anti-Bribery andCorruption, Competition Law, ThirdParty Management and Data Privacy.
To emphasize the importance of afully embedded and agile Compliance
System within the business, the Compliance System is part of our 2030
sustainability goals (see page 7). The
purpose is to ensure a well-functioning structure with control over ourinternational business and to manage
compliance risks in all countries inwhich Sandvik operates. The compliance program requirements are set
by Group Compliance, including compliance risk identification, policies,
applicable training, controls, audits,
reporting and monitoring etc., andare implemented by each businessarea. The Group Compliance function
reports to the Sandvik Group GeneralCounsel and the Audit Committee.
To coordinate work, identify synergies and drive continuous improvements, a Compliance Functional
Council, consisting of representatives from Group and business areas,

has been established. The Council
has been in operation for several
years and normally meets quarterly.
Sandvik is active in countries andindustries with a high risk from a
corruption perspective and as such
could potentially have a significant
impact on both people and environment. Sandvik has an anti-corruption compliance program based on
zero-tolerance for corruption. Steering documents include the Code of
Conduct, an anti-corruption policy,
procedures for commercial intermediaries, administrative intermediaries
and gifts, hospitality, travel and entertainment. Requirements designed to
identify and prevent corruption are
also embedded in other steering documents such as the Sponsorship andCommunity Involvement procedureand M&A procedure. The Speak Up
policy and the underlying investigation procedure are other importantparts of the program.
All operational entities are required
to assess and, together with the compliance organization, work with its
own compliance risks and thus identify and prevent potential negative
impacts. Actions taken are reviewed
by both internal and external audit.
Negative impacts and weaknesses
are also identified and remediatedthrough the Speak Up process.
Targets and indicators to evaluate
progress are set annually through theCompliance Functional Council andhave included, for example, yearly
self-assessments, including anticorruption, to create action plans toclose identified gaps and to complete
those within deadlines.

Human rights and fair labor
conditions

Our commitment to human rights
and fair labor conditions is confirmed in our Code of Conduct andin our Supplier Code of Conduct inwhich we support, amongst others,
the International Bill of Human
Rights, the International Labour
Organization’s Declaration on Fundamental Principles and Rights at
Work and the UN Guiding Principles
on Business and Human Rights.
The Sandvik Code of Conduct,
supported by our core values, also
provides guidance in identifying,

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65

DIRECTORS’ REPORT

preventing and mitigating risks
related to human rights and fairlabor conditions.
To mitigate risks related to humanrights, we continuously work toensure compliance with national
legislation and internationallyagreed human rights standards andregulations. We regularly evaluate
our processes and procedures for
identifying, preventing and mitigating these risks in the Group’s
operations and in our value chain.
Our work on human rights and fairworking terms is integrated in our
regular processes and procedures
in different ways, for example, in our
Sustainable Supplier Management,
our safety work and in our diversity
and inclusion scheme. We havezero tolerance for forced labor,
slave labor or child labor.
We support children’s rights andthe right to education. All employees have the right, if they choose,to join a union and to be coveredby a collective agreement. We do
not accept any form of harassment
or bullying and believe in a diverse
workforce without any form of
discrimination based on gender
identity, ethnicity, national origin,age, disability, marital status, socialgroup or any other characteristics.

Employees

Sandvik offers a diverse and inclusive workplace, fair remuneration
and working terms that respect theneeds of the individual. Sandvik
has a People policy that reflects its
commitment to our employees andoutlines what employees can expectfrom us in relation to how we attract,develop and retain our employees
and where appropriate, manage theirexit from the business.

Leadership development

Our managers play a crucial role inenabling teams to grow and deliver
results. Our leadership model andour global leadership programs set
clear expectations on both leadership capabilities and behaviours.

66

Young talentThrough our Global Graduate Program we attract young professionals
and provide training at various partsof the Sandvik organization. One of
the main purposes with the programis to develop and prepare graduates
for future key positions, and after
the program they are deployed into
different roles within our business.

Diversity and inclusion

Diversity and inclusion are vital
aspects of our people strategy andpart of the 2030 Sustainability Goals(see page 7).
The responsibility for implementation and communication of the 2030
goals lies within the business andincludes securing resource needs
and taking appropriate measures toensure goal achievement. Sandvik
has a Diversity and Inclusion forumwith representatives from business areas and the Group, with the
purpose of working collaboratively
to develop a diverse organization
and a culture of inclusion. The
forum collaborates on joint initiatives and shares best practices andexperiences.

Environment, Health and
Safety (EHS)

Our EHS policy applies the principlesof the Code of Conduct and corevalues to achieve our Environmental, Health and Safety vision of Zero
Harm. We have Group EHS procedures targeting, for instance, hazard
identification and operational risk
management, incident reporting andinjury management, EHS performance measurement and monitoringand EHS training and competency.
Each procedure outlines roles andresponsibilities, as well as performance management indicators.
Compliance to legislation, policies
and procedures is reviewed via internal and external audits.
Our EHS policy, Group EHS objectives and the 2030 Sustainability
Goals drive our health and safety
activities. Each business area works
to meet these objectives according

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to their own plans. Targets are set
year on year to drive performanceon all organizational levels towards
the 2030 goals. In addition to ourown internal operations, the scope of
our EHS policy includes the services
that Sandvik provides at customer
locations.
The Sandvik EHS Council consistsof representatives from all businessareas with a primary aim to facilitate
collaboration across the company
that will enhance our progress
towards our EHS vision. While EHS
activities are decentralized within
the business areas, the EHS Council
is the forum for identifying, reachingconsensus on and implementing
common initiatives and procedures.
In addition, the Council drafts documents, such as the EHS policy andobjectives and targets, for the Group
Executive Management to consider
and approve. The council can appoint
working groups to work on specific
EHS issues, for example environmental working groups.
Our EHS management systems
are based on ISO 14001, ISO 45001,
ISO 50001, OHSAS 18001 or equivalent standards. Management of
individual topics follows the criteriaof these frameworks but can go
beyond. We have a common EHS
policy for the company and Group
procedures in areas where Sandvik
wants to set standards that go aboveand beyond the requirements of ourcertified management systems. Sites
with a lower risk profile do not haveto go through the process of external
certification. However, these sites will
be covered by the requirements in
the Group procedure for small sites
and offices.
Any specific issues of a more
local nature, for example, effluent
discharge limits or environmental permits, if not covered in legal
requirements, certifications or Group
procedures, will be local initiatives
adapted to the specific needs at eachproduction unit or business division.
The scope of the EHS management
systems also includes relationships
outside the company boundaries,DIRECTORS’ REPORT

and a responsibility to ensure highstandards where Sandvik is in control of the work environment. This
includes working with risk identification and mitigation in order to prevent
any incidents of work-related injuries
or occupational illnesses.
Environmental criteria are includedin the process for sustainable supplier management and environmental
and safety criteria are part of the
product development process.
Each Sandvik-controlled location
will implement and maintain formal
systems and processes for risk
assessments. All employees can andare encouraged to report the hazards
they observe. The system supports aprocess for handling all hazards adequately and following them through tocompletion. The most senior Sandvik
manager at each location is responsible for correct handling of theregistered hazard.
Each business area / location has
an Incident Reporting and Investigation system and is responsible for
ensuring the findings from incident
investigations are shared within theorganization. All employees haveaccess to a colleague in their immediate workplace or as part of theirorganization who represents the EHS
function within Sandvik.
Health and safety committees areorganized depending on the natureof the local organization and theissues within that region. Typically,
representatives are from local
management, employees and EHS
professionals.
Training is provided as part ofthe induction for all employees andin more depth to EHS professionals. Furthermore, EHS issues areintegrated in any training for certain
roles. Our training packages varyfrom classroom training in-house toexternal training and self-learning, forexample, e-learning.
Access to medical and healthcare
services is designed based on local
needs. It varies from having professional healthcare on site or agreements with external parties where our
employees have access to vaccina-

tions, health checks, etc. Health andwell-being programs are offered andmaintained for all employees. Enrollment is voluntary. The programs are
adapted to local needs and address awide range of issues such as fitness,
nutrition, mental health and disease
prevention.

Sustainable suppliermanagement

Sandvik is committed to sustainableprocurement practices that minimize
our negative social and environmental impacts, improve the sustainability
performance of our suppliers andcreate value for the business, ourcustomers and society at large. It is
important for us to partner with suppliers who understand and embrace
our sustainability standards in areas
such as environment, labor, humanrights, anti-corruption, circularity ofmaterials and carbon footprint. Our
requirements are part of our 2030
Sustainability Goals and are outlined
in our Supplier Code of Conduct. The
responsibility of development andimplementation of sustainable supplier management is decentralized
and lies within each division.

objectives with measurable results.
All activities must comply with our
Code of Conduct, which means that
we do not engage in any activities of apolitical or religious nature, or in projects that may be viewed as hazardous to health or the environment. Allof our project partners must sign the
Sandvik Supplier Code of Conduct
and undergo the same screening
process as our suppliers. As part ofour 2030 Sustainability Goals, we
encourage our sites to be engaged incommunity activities with a positive
impact on society.

Community involvement

Sandvik is involved in a wide varietyof community relation projects
around the world. We have threefocus areas for our community
involvement projects: 1) Sustainability shift – projects related to climatechange, resources and waste orclean and sustainable developmentof communities, 2) Digital shift –projects building technical anddigital skills, supporting innovations
and new ideas that help the world
advance or introducing people to
new technologies, and 3) Societal impact – projects supporting
equality and inclusion, improving
health and well-being or supporting
infrastructure development andlocal communities where we havebusiness operations.
We view our community projects
as investments, for which we require
contracts, clear target groups and

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67

BOARD STATEMENT ON DIVIDEND PROPOSAL

BOARD STATEMENT ON DIVIDEND PROPOSAL
Board statement in accordance with Chapter 18, Section 4of the Swedish Companies Act.
The nature and extent of the company’s operations arestated in the Articles of Association and issued annual
reports.
Such nature and extent do not entail risks over andabove those inherent, or reasonably to be expected, in theindustry or otherwise inherent in business operations. For
information on significant events, reference is made to the
Directors’ Report.
The company’s financial position as of December 31,
2022, is apparent from this Annual Report. The proposed
dividend does not infringe on investments deemed to berequired.
In addition, the company’s liquidity reserve is in theform of an unutilized revolving credit facility amounting

to SEK 11,000 million, which means that the company
should reasonably be able to meet unexpected eventsand temporary fluctuations in cash flows of reasonableproportions. The company’s financial position supports
the assessment that the company will be able to continue
its business and meet its obligations in both the short andlong term.
In view of the above and based on what the Board is­otherwise aware of, the proposed dividend in the Board’s­opinion is justified considering the requirements which
the nature, extent and risks associated with the operations place on the size of the equity of the company, andalso t­ aking into consideration the company’s need tostrengthen its balance sheet, liquidity and financial position in general.

Stockholm, March 8, 2023
Sandvik Aktiebolag (publ)
BOARD OF DIRECTORS132

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PROPOSED APPROPRIATION OF PROFITSPROPOSED APPROPRIATION OF PROFITSThe Board of Directors proposes that the profits at thedisposal of the Annual General Meeting:profits carried forward
12,575,486,423
and result for the year
14,521,864,350
SEK27,097,350,773
be appropriated as follows:
a dividend of 5.00 SEK per shareto the shareholders
6,271,929,615
profits carried forward
20,825,421,158
SEK27,097,350,773
The proposed record date for dividends is Tuesday, May
2, 2023.
The income statements and the balance sheets of
the Group and of the Parent Company are subject to theadoption by the Annual General Meeting on Thursday,
April 27, 2023.

The Board of Directors and the President hereby certifythat the Annual Report has been prepared in accordancewith generally accepted accounting principles in Sweden,
and that the consolidated financial statements have been
prepared in accordance with the international financial
reporting standards referred to in the regulation (EU) no.
1606/2002 of the European Parliament and Council dated
July 19, 2002, pertaining to the application of international
financial reporting standards. The Annual Report and theconsolidated financial statements give a true and fair viewof the Parent Company’s and the Group’s financial position
and results. The Report of the Directors pertaining to the
Parent Company and the Group gives a fair overview of thedevelopment of the Parent Company’s and the Group’s
operations, financial position and results, and describes
the significant risks and uncertainties facing the Parent
Company and the companies included in the Group.

Stockholm, March 8, 2023

Johan Molin
ChairmanJennifer Allerton
Board member

Thomas Andersson
Board member

Claes Boustedt
Board member

Marika Fredriksson
Board member

Thomas Lilja
Board member

Andreas Nordbrandt
Board member

Helena Stjernholm
Board member

Kai Wärn
Board member

Stefan Widing
Board member
President and CEO
Our auditors’ report was submitted on March 9, 2023
PricewaterhouseCoopers AB

Peter Nyllinge
Authorized Public Accountant
Partner in charge

Anna Rosendal
Authorized Public Accountant

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133

AUDITORS’ REPORT

AUDITORS’ REPORT
Unofficial translation

To the general meeting of the shareholders of Sandvik AB(publ), corporate identity number 556000-3468
Report on the annual accounts andconsolidated accounts
Opinions
We have audited the annual accounts and consolidated accountsof Sandvik AB (publ) for the year 2022. The annual accounts andconsolidated accounts of the company are included on pages
42–133 in this document.
In our opinion, the annual accounts have been prepared inaccordance with the Annual Accounts Act and present fairly, in allmaterial respects, the financial position of parent company and theGroup as of 31 December 2022 and its financial performance andcash flow for the year then ended in accordance with the Annual
Accounts Act. The consolidated accounts have been preparedin accordance with the Annual Accounts Act and present fairly, inall material respects, the financial position of the Group as of 31
December 2022 and their financial performance and cash flow
for the year then ended in accordance with International Financial
Reporting Standards (IFRS), as adopted by the EU, and the Annual
Accounts Act.
A corporate governance statement has been prepared and is inagreement with the Annual Accounts Act. The statutory administration report and the corporate governance statement are consistent with the other parts of the annual accounts and consolidated
accounts.
We therefore recommend that the general meeting of shareholders adopts the income statement and balance sheet for theparent company and the Group.
Our opinions in this report on the annual accounts and consolidated accounts are consistent with the content of the additional
report that has been submitted to the parent company’s audit
committee in accordance with the Audit Regulation (537/2014)
Article 11.

our audits, we also addressed the risk of management override ofinternal controls, including among other matters consideration ofwhether there was evidence of bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient
work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of theGroup, the accounting processes and controls, and the industry inwhich the Group operates.
Sandvik conducts business via subsidiaries in many territories.
Operationally, the business is organized in divisions that are alignedwith the Group’s Business Areas. There are joint functions at various levels of the Group to support the operational activities of thedivisions.
In order to tailor our overall audit approach, we have updated ourunderstanding of how the Group’s business is organized, about
important systems and processes as well as the internal controls
put in place to provide comfort to management and the directors
with respect to precision of the financial reporting. For this purpose, we have held interviews with management at various levelsof the Group and heads of Group functions to discuss the businessand the Group’s strategy. We have also obtained and read management reports, policies, instructions and planning and steering
documents. In addition, we have had a close dialogue with bothGroup Internal Audit and Group Internal Controls in order to shareknowledge and coordinate activities when relevant.
With all of this as a starting point and for the purpose of expressing an opinion on the consolidated accounts, we tailored the Groupaudit scope consisting of the most important reporting units.
Most subsidiaries of the Group are also subject to statutory audit
requirements. The central team was responsible for the audit ofsignificant IT systems, processes, transaction flows and functions
including the consolidation and the parent company accounts. The
local teams were responsible for auditing items related to the operations in each reporting unit that emanates from local production
and sales activities.

Basis for Opinions
We conducted our audit in accordance with International Standards on Auditing (ISA) and generally accepted auditing standards
in Sweden. Our responsibilities under those standards are further
described in the Auditor’s Responsibilities section. We are independent of the parent company and the Group in accordance withprofessional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with theserequirements. This includes that, based on the best of our knowledge and belief, no prohibited services referred to in the Audit
Regulation (537/2014) Article 5.1 have been provided to the audited
company or, where applicable, its parent company or its controlled
companies within the EU.
We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinions.

Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether
the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are consideredmaterial if individually or in aggregate, they could reasonably be
expected to influence 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 Groupmateriality for the consolidated financial statements as a whole.
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 financial statements as awhole.

Our audit approach
Audit scope
We designed our audit by determining materiality and assessing
the risks of material misstatement in the consolidated financial statements. In particular,we considered where management
made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions andconsidering future events that are inherently uncertain. As in all of

Key audit matters
Key audit matters of the audit are those matters that, in our professional judgment, were of most significance in our audit of theannual accounts and consolidated accounts of the current period.
These matters were addressed in the context of our audit of, andin forming our opinion thereon, the annual accounts and consolidated accounts as a whole, but we do not provide a separate opinion on these matters.

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AUDITORS’ REPORTKey audit matter

How our audit addressed the Key audit matter

Revenue recognition in the appropriate period
The Group manufactures and sells products and services to its­customers globally, mainly through its own distribution network.
Sales contracts contain various performance obligations andother terms and the determination of when significant performance o­ bligations have been met varies albeit a specific point intime can often be established. The Group has analyzed its various
sales c­ ontracts and concluded on the principles for deciding inwhich period or periods the Group’s sales transactions should be­recognized as revenue.
Disclosures in notes G2, G3 and P2 provide additional information
on how the Group accounts for its revenue.

Our audit included but was not limited to the following activities:– Mapped and evaluated selected systems and processes forrevenue recognition and tested a sample of key controls.
– Evaluated whether the Group accounting principles for revenue
recognition comply with IFRS.
– Tested a sample of sales transactions for compliance with theGroup accounting principles.
– Performed data analytical procedures to identify and evaluate asample of manual and automatic journal entries.
– Traced disclosure information to accounting records and othersupporting documentation.

Measurement of goodwill and intangible assets with an indefinite
life including acquired intangible assets
The majority of Sandvik’s intangible assets have been acquired
externally, mostly through acquiring businesses, and represent­significant amounts. Assets with indefinite useful life such as goodwill are not subject to yearly depreciation. Instead, an annual test
will show whether the carrying amount for the cash generating unit
can still be supported. Sandvik has acquired several businesses­containing intangible assets during 2022.
There are a number of instances where management’s judgment
is decisive for the accounting treatment, both in connection withacquiring businesses and in connection with annual impairment
tests.
Note G13 contains additional information on the Group’s­intangible assets and the significant assumptions applied in theannual impairment tests. In note G31 there is additional information
about business combinations, accounting principles and acquired
intangible assets.

Measurement of inventory
Sandvik keep significant stock of raw materials, spare parts andwork-in-progress at its production units and stores of fi­ nished
goods mostly at its sales units and distribution centres. The­inventory balance is material and measurement of inventory isimportant for a fair presentation of gross margin. A due p­ rocessis required to prepare accurate reporting of the acquisition costwhen procurement, production and logistical processes are­complex. Establishing product costing requires many instancesof ­management ­judgment with effect on the reported values. This
includes assessing normal production levels, foreign currency,
prices of raw materials and allocation of other direct and indirect
costs. For finished goods, assessment is needed of obsolescenceand how sellable the ­products are. Finally, there is a complexity
in monitoring and measuring volumes particularly for some raw­materials and work in progress as well as eliminating effects fromintra Group transactions.
Notes G18 and P14 provide information about the the Group’s
accounting principles for measuring inventory and additional­information on the line item.

Our audit included but was not limited to the following activities:– Assessed the model used by the Group for impairment testing and evaluated the significant assumptions for establishing f­ orecasted cash flows and discount interest rates used for
calculating the value-in-use of the cash generating units. In
our evaluation, we have compared with the historic business­performance and the Group’s forecasts and strategic planning as well as with external data sources when possible andrelevant.
– Evaluated whether the purchase price allocations of the­significant acquisitions made during the year meet the­requirements of IFRS and have been prepared according
to generally accepted practices. Assessed that significant
assumptions used to measure values of acquired assets arereasonable. We have involved valuation specialists when­conducting our work.
– Traced disclosure information to accounting records and othersupporting documentation.

Our audit included but was not limited to the following activities:– Mapped and evaluated selected systems and processes forinventory and tested a sample of key controls for establishingcost.
– Tested, on a sample basis, stocks of raw materials to actual
prices. Assessed the reasonableness of the product costing forwork in progress and finished goods.
– Participated in stock takes at many locations and tested thecut-off of deliveries in or out of inventory.
– Obtained the Group’s monitoring controls of slow movers andassessments of obsolescence as well as net selling prices.
– Traced disclosure information to accounting records and othersupporting documentation.

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Accounting for the separation and distribution of shares inAlleima Holding AB
The Annual General Meeting decided on April 27, 2022 to d
­ istributeall shares in Alleima Holding AB (former Business Area Sandvik Materials Technology) to the shareholders of Sandvik, whereby five sharesin Sandvik AB would entitle to one share in Alleima Holding AB.
The first day of trading of the Alleima shares was August 31, 2022,
on Nasdaq Stockholm. On distribution of the Alleima shares, Sandvik
recognized a net capital loss in discontinued operations, representing the difference between the fair value of Alleima and the carrying
value of Alleima’s net assets at the time of distribution.
Alleima has been presented since the first quarter 2022 as
discontinued operations in the consolidated income statement
separately from continuing operations with comparative ­numberspresented accordingly. Accounting for discontinued operations
requires identifying and separating the financial effects from­continuing and discontinued operations as well as ensuring that the­criteria in IFRS are fulfilled to account for discontinued operations.
In Note G32 there is additional information about the Group’s
accounting principles with regards to divestments, assets held forsale and discontinued operations.

Our audit procedures included, but were not limited to:– Assessed Sandvik’s policies and procedures for accounting for
discontinued operations in compliance with IFRS.
– Assessed the financial effects from the discontinued­operations and that they had been appropriately separated
from continuing operations.
– Evaluated the presentation of the net loss from the ­distributionof Alleima and its compliance with IFRS.
– Traced disclosure information to accounting records and othersupporting documentation.

Other Information than the annual accounts andconsolidated accounts
This document also contains other information than the annual
accounts and consolidated accounts and is found on pages 1–41
and 154–156, and the Statutory Sustainability Report and Sustainable Business Report on pages 7–9, 13–16, 63–67 and 138–152.
This other information also contains the Remuneration report that
we expect to receive after the release of the Auditors’ report. The
Board of Directors and the Managing Director are responsible forthis other information.
Our opinion on the annual accounts and consolidated accounts
does not cover this other information and we do not express any
form of assurance conclusion regarding this other information.
In connection with our audit of the annual accounts and consolidated accounts, our responsibility is to read the information
identified above and consider whether the information is materially inconsistent with the annual accounts and consolidated
accounts. In this procedure we also take into account our knowledge otherwise obtained in the audit and assess whether the
information otherwise appears to be materially misstated.
If we, based on the work performed concerning this information, conclude that there is a material misstatement of this otherinformation, we are required to report that fact. We have nothing
to report in this regard.

Auditor’s responsibility
Our objectives are to obtain reasonable assurance about whether
the annual accounts and consolidated accounts as a whole arefree from material misstatement, whether due to fraud or error, andto issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance, but is not a guaranteethat an audit conducted in accordance with ISAs and generally
accepted auditing standards in Sweden will always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these annual
accounts and consolidated accounts.
A further description of our responsibility for the audit of theannual accounts and consolidated accounts is available on Revisorsinspektionen’s website: www.revisorsinspektionen.se/revisornsansvar. This description is part of the auditor’s report.

Responsibilities of the Board of Director’s andthe President and CEO
The Board of Directors and the Managing Director are responsible for the preparation of the annual accounts and consolidated
accounts and that they give a fair presentation in accordancewith the Annual Accounts Act and, concerning the consolidated
accounts, in accordance with IFRS as adopted by the EU. The Boardof Directors and the Managing Director are also responsible forsuch internal control as they determine is necessary to enable thepreparation of annual accounts and consolidated accounts that are
free from material misstatement, whether due to fraud or error.
In preparing the annual accounts and consolidated accounts,
The Board of Directors and the Managing Director are responsible for the assessment of the company’s and the group’s ability tocontinue as a going concern. They disclose, as applicable, matters related to going concern and using the going concern basisof accounting. The going concern basis of accounting is however
not applied if the Board of Directors and the Managing Director
intend to liquidate the company, to cease operations, or has no
realistic alternative but to do so.
The Audit Committee shall, without prejudice to the Boardof Director’s responsibilities and tasks in general, among otherthings oversee the company’s financial reporting process.

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Report on other legal and regulatory requirements

The auditor’s audit of the administration of the company andthe proposed appropriations of the company’s profit or loss
Opinions
In addition to our audit of the annual accounts and consolidated
accounts, we have also audited the administration of the Board of
Director’s and the Managing Director of Sandvik AB (publ) for theyear 2022 and the proposed appropriations of the company’s profit
or loss.
We recommend to the general meeting of shareholders that the
profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of
Director’s and the Managing Director be discharged from liability
for the financial year.
Basis for Opinions
We conducted the audit in accordance with generally accepted
auditing standards in Sweden. Our responsibilities under thosestandards are further described in the Auditor’s Responsibilities
section. We are independent of the parent company and the groupin accordance with professional ethics for accountants in Sweden
and have otherwise fulfilled our 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 opinions.
Responsibilities of the Board of Director’s andthe Managing Director
The Board of Directors is responsible for the proposal for appropriations of the company’s profit or loss. At the proposal of a dividend,AUDITORS’ REPORT

this includes an assessment of whether the dividend is justifiableconsidering the requirements which the company’s and the group’s
type of operations, size and risks place on the size of the parent
company’s and the group’ equity, consolidation requirements, liquidity and position in general.
The Board of Directors is responsible for the company’s organization and the administration of the company’s affairs. This includes
among other things continuous assessment of the company’s andthe group’s financial situation and ensuring that the company´sorganization is designed so that the accounting, management ofassets and the company’s financial affairs otherwise are controlled
in a reassuring manner. The Managing Director shall manage theongoing administration according to the Board of Directors’ guidelines and instructions and among other matters take measures thatare necessary to fulfill the company’s accounting in accordancewith law and handle the management of assets in a reassuring
manner.
Auditor’s responsibility
Our objective concerning the audit of the administration, and thereby
our opinion about discharge from liability, is to obtain audit evidence
to assess with a reasonable degree of assurance whether any member of the Board of Directors or the Managing Director in any material
respect:– has undertaken any action or been guilty of any omission which cangive rise to liability to the company, or– in any other way has acted in contravention of the Companies Act,
the Annual Accounts Act or the Articles of Association.
Our objective concerning the audit of the proposed appropriationsof the company’s profit or loss, and thereby our opinion about this,is to assess with reasonable degree of assurance whether the proposal is in accordance with the Companies Act.
Reasonable assurance is a high level of assurance, but is not aguarantee that an audit conducted in accordance with generally
accepted auditing standards in Sweden will always detect actions
or omissions that can give rise to liability to the company, or that the
proposed appropriations of the company’s profit or loss are not inaccordance with the Companies Act.
A further description of our responsibility for the audit of theadministration is available on Revisorsinspektionen’s website: www.
revisorsinspektionen.se/revisornsansvar. This description is part of
the auditor’s report.

The auditor’s examination of the ESEF report

OpinionIn addition to our audit of the annual accounts and consolidated
accounts, we have also examined that the Board of Directors and theManaging Director have prepared the annual accounts and consolidated accounts in a format that enables uniform electronic reporting(the Esef report) pursuant to Chapter 16, Section 4 a of the Swedish
Securities Market Act (2007:528) for Sandvik AB (publ) for the financial year 2022.
Our examination and our opinion relate only to the statutory
requirements.
In our opinion, the Esef report has been prepared in a format that,in all material respects, enables uniform electronic reporting.
Basis for opinions
We have performed the examination in accordance with FAR’s recommendation RevR 18 Examination of the Esef report. Our responsibility under this recommendation is described in more detail in
the Auditors’ responsibility section. We are independent of Sandvik
AB (publ) in accordance with professional ethics for accountants in

Sweden and have otherwise fulfilled our ethical responsibilities inaccordance with these requirements.
We believe that the evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
Responsibilities of the Board of Director’s andthe Managing Director
The Board of Directors and the Managing Director are responsible for the preparation of the Esef report in accordance with the
Chapter 16, Section 4(a) of the Swedish Securities Market Act(2007:528), and for such internal control that the Board of Directors
and the Managing Director determine is necessary to prepare theEsef report without material misstatements, whether due to fraud
or error.
Auditor’s responsibility
Our responsibility is to obtain reasonable assurance whether theEsef report is in all material respects prepared in a format that meetsthe requirements of Chapter 16, Section 4(a) of the ­Swedish Securities Market Act (2007:528), based on the procedures performed.
RevR 18 requires us to plan and execute procedures to achievereasonable assurance that the Esef report is prepared in a format
that meets these requirements.
Reasonable assurance is a high level of assurance, but it is not aguarantee that an engagement carried out according to RevR 18 andgenerally accepted auditing standards in Sweden will always detect amaterial misstatement when it exists. Misstatements can arise fromfraud or error and 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 Esef report.
The audit firm applies ISQC 1 Quality Control for Firms that Perform
Audits and Reviews of Financial Statements, and other Assurance andRelated Services Engagements and accordingly maintains a comprehensive system of quality control, including documented policies andprocedures regarding compliance with professional ethical requirements, professional standards and legal and regulatory requirements.
The examination involves obtaining evidence, through various
procedures, that the Esef report has been prepared in a format thatenables uniform electronic reporting of the annual accounts andconsolidated accounts. The procedures selected depend on theauditor’s judgment, including the assessment of the risks of material
misstatement in the report, whether due to fraud or error. In carrying out this risk assessment, and in order to design procedures thatare appropriate in the circumstances, the auditor considers those­elements of internal control that are relevant to the preparation of theEsef report by the Board of Directors and the Managing Director, but
not for the purpose of expressing an opinion on the effectiveness of
those internal controls. The examination also includes an evaluationof the appropriateness and reasonableness of assumptions made by
the Board of Directors and the Managing Director.
The procedures mainly include a validation that the Esef reporthas been prepared in a valid XHTML format and a reconciliation of
the Esef report with the audited annual accounts and consolidated
accounts.
Furthermore, the procedures also include an assessment of
whether the consolidated statement of financial performance, financial position, changes in equity, cash flow and disclosures in the Esef
report has been marked with iXBRL in accordance with what follows
from the Esef regulation.
PricewaterhouseCoopers AB, Torsgatan 21, 113 97 Stockholm, wasappointed auditor of Sandvik AB (publ) by the general meeting of theshareholders on the 27 April 2022 and has been the company’s auditor since the general meeting of the shareholders on 27 April 2018.

Stockholm March 9, 2023
PricewaterhouseCoopers AB

Peter Nyllinge
Authorized Public Accountant
Partner in charge

Anna Rosendal
Authorized Public Accountant

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