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Bu i l d i n g a Be t t e r F u t u r e T o g e t h e r 2022 A ma z o n S u s t a i n a b i l i t y R e p o r t I n t r o d u c t i o nS u s t a i n a b i l i t yP e o p l eA p p e n d i xCo n t e n t sIn t r o d u c t i o n 2 Ab o u t Ama z o n3 O p e n i n g Le t t e r Fr o m Ka r a H u r s t4 O u r B u s i n e s s5 2022 Y e a r i n Re v i e w 6 Go a l s S u mma r y S u s t a i n a b i l i t y 8 O u r S u s t a i n a b i l i t y Ap p r o a c hD r i v i n g C l i ma t e S o l u t i o n s 9 Ca r b o n22 Re n e w a b l e En e r g yR e d u c i n g P a c k a g i n g a n d Wa s t e 26 P a c k a g i n g 30 Wa s t e a n d Ci r c u l a r i t yP r o t e c t i n g N a t u r a l R e s o u r c e s 35 Wa t e r R e s p e c t i n g H u ma n R i g h t s 38 H u ma n Ri g h t s 42 Re s p o n s i b l e S u p p l y Ch a i nI n n o v a t i n g O u r P r o d u c t s a n d S e r v i c e s 48 P r o d u c t S u s t a i n a b i l i t y P e o p l e 55 En h a n c i n g t h e Ama z o n Emp l o y e e Ex p e r i e n c e6 0 I mp r o v i n g Emp l o y e e H e a l t h a n d S a f e t y6 3 Cr e a t i n g I n c l u s i v e Ex p e r i e n c e s70 I n c r e a s i n g S u p p l i e r D i v e r s i t y 72 S u p p o r t i n g Gl o b a l Co mmu n i t i e sA p p e n d i x 78 I mp a c t Re p o r t i n g To p i c As s e s s me n t79 En d n o t e s80 As s u r a n c e S t a t e me n t 81 D i s c l a i me r a n d Fo r w a r d-Lo o k i n g S t a t e me n t s Ama z o n e mp l o y e e s a t o u r h e a d q u a r t e r s i n S e a t t l e,Wa s h i n g t o n.A b o u t A ma z o nAma z o n i s a g l o b a l c o mp a n y w i t h a p p r o x i ma t e l y 1.5 mi l l i o n f u l l-a n d p a r t-t i me e mp l o y e e s w o r l d w i d e a n d o p e r a t i o n s i n Af r i c a,As i a-P a c i f i c,Eu r o p e,I n d i a,La t i n Ame r i c a,t h e M i d d l e Ea s t,a n d N o r t h Ame r i c a.We s t r i v e t o b e Ea r t h s mo s t c u s t o me r-c e n t r i c c o mp a n y,Ea r t h s b e s t e mp l o y e r,a n d Ea r t h s s a f e s t p l a c e t o w o r k i n t h e i n d u s t r i e s i n w h i c h w e o p e r a t e.Ev e r y t h i n g w e d o t o a c h i e v e t h e s e a mb i t i o n s i s g u i d e d b y f o u r p r i n c i p l e s:Cu s t o me r o b s e s s i o n r a t h e r t h a n c o mp e t i t o r f o c u s P a s s i o n f o r i n v e n t i o n Co mmi t me n t t o o p e r a t i o n a l e x c e l l e n c e Lo n g-t e r m t h i n k i n g O u r d e d i c a t i o n t o d e l i g h t i n g c u s t o me r s d r i v e s u s t o c o n s t a n t l y i n v e n t o n t h e i r b e h a l f a n d h a s l e d t o t h e l a u n c h o f ma n y i n n o v a t i o n s,i n c l u d i n g 1-Cl i c k s h o p p i n g,Al e x a,Ama z o n Ec h o,Ama z o n S t u d i o s,Ama z o n We b S e r v i c e s (AWS),Ca r e e r Ch o i c e,c u s t o me r r e v i e w s,Fi r e t a b l e t s,Fi r e TV,Fu l f i l l me n t b y Ama z o n,Ju s t Wa l k O u t t e c h n o l o g y,Ki n d l e,Ki n d l e D i r e c t P u b l i s h i n g,p e r s o n a l i z e d r e c o mme n d a t i o n s,P r i me,a n d Th e Cl i ma t e P l e d g e.Ama z o n w a s b u i l t o n t h e b e l i e f t h a t w i t h u n d e r s t a n d i n g,i n g e n u i t y,a n d i n n o v a t i o n,w e c a n mo r e e f f e c t i v e l y o v e r c o me a n y c h a l l e n g e w e f a c e.We b e l i e v e a d d r e s s i n g e n v i r o n me n t a l a n d s o c i e t a l c h a l l e n g e s r e q u i r e s t h e s a me mi n d s e t.We a i m t o h a v e a n e t-p o s i t i v e i mp a c t o n t h e w o r l d t h r o u g h s u s t a i n a b i l i t y b e c a u s e i t s g o o d f o r t h e p l a n e t,f o r o u r b u s i n e s s,f o r o u r c u s t o me r s,a n d f o r o u r c o mmu n i t i e s.A b o u t T h i s R e p o r tTh e 2022 S u s t a in a b il i t y Re p o r t is o u r f i f t h r e p o r t d e t a il in g p r o g r e s s a g a in s t o u r t a r g e t s,c o mmi t me n t s,a n d e n v ir o n me n t a l,s o c ia l,a n d g o v e r n a n c e t o p ic s.Al l f i n a n c i a l f i g u r e s a r e r e p o r t e d i n U.S.d o l l a r s ($),u n l e s s o t h e r w i s e s t a t e d.P l e a s e n o t e t h a t d a t a w i t h i n t h i s r e p o r t r e f l e c t s p r o g r e s s f r o m Ja n u a r y 1 t h r o u g h D e c e mb e r 31,2022,u n l e s s o t h e r w i s e i n d i c a t e d.H o w t o N a v i g a t e T h i s R e p o r tL o o k f o r t h e s e s y mb o l s t h r o u g h o u t t h e r e p o r t:A l i n k t h a t d i r e c t s y o u t o a w e b s i t eA l i n k w i t h i n t h e r e p o r tA l i n k t o a d o w n l o a dF r a me w o r k Di s c l o s u r e sAl o n g s id e t h is r e p o r t,w e s h a r e d e t a il s o f o u r a p p r o a c h t o s u s t a in a b il i t y g o v e r n a n c e a n d d is c l o s e o u r 2022 p e r f o r ma n c e a g a in s t r e p o r t in g f r a me w o r k s o n o u r w e b s i t e,in c l u d in g t h e S u s t a in a b il i t y Ac c o u n t in g S t a n d a r d s B o a r d (S AS B),t h e U n i t e d N a t io n s S u s t a in a b l e D e v e l o p me n t Go a l s (S D Gs),t h e Ta s k Fo r c e o n Cl ima t e-r e l a t e d Fin a n c ia l D is c l o s u r e s (TCFD),a n d t h e U n i t e d N a t io n s Gu id in g P r in c ip l e s (U N GP)Re p o r t in g Fr a me w o r k.L e a r n mo r e i n o u r 2022 S u s t a i n a b i l i t y Re p o r t i n g Fr a me w o r k S u mma r y.220 2 2 A ma z o n S u s t a i n a b i l i t y R e p o r t I n t r o d u c t i o nS u s t a i n a b i l i t yP e o p l eA p p e n d i xO p e n i n g Le t t e r F r o m Ka r a Hu r s tRe f l e c t i n g o n t h e l a s t y e a r,I m p r o u d o f t h e w o r k o u r t e a ms a r o u n d t h e w o r l d h a v e a c c o mp l i s h e d a n d I m e x c i t e d a b o u t w h a t s a h e a d.We h a v e t a k e n i mp o r t a n t s t e p s f o r w a r d i n o u r s o c i a l,c o mmu n i t y,a n d e n v i r o n me n t a l w o r k,w h i l e a l w a y s e x p a n d i n g o u r v i s i o n f o r t h e f u t u r e.At t h e c e n t e r o f i t a l l i s o u r c u s t o me r o b s e s s i o n.S u s t a i n a b i l i t y i s a n i mp o r t a n t i s s u e f o r o u r c u s t o me r s a r o u n d t h e w o r l d,a n d w e a r e c o n t i n u a l l y i n v e s t i n g,i n v e n t i n g,a n d i mp r o v i n g t o ma k e e v e r y c u s t o me r i n t e r a c t i o n mo r e s u s t a i n a b l e t h a n t h e l a s t.Th i s i s n t a d i s t a n t v i s i o n f o r t h e f u t u r e t h i s w o r k i s w e l l u n d e r w a y n o w.Ta k e o u r e-c o mme r c e b u s i n e s s.Fr o m t h e mo me n t a c u s t o me r c l i c k s “B u y N o w”t o w h e n t h e i r p a c k a g e a r r i v e s o n t h e i r d o o r s t e p,w e h a v e t e a ms o f s c i e n t i s t s a n d e n g i n e e r s w o r k i n g t o ma k e t h a t p r o c e s s mo r e s u s t a i n a b l e,a l l w i t h o u t c o mp r o mi s i n g o n s p e e d,s a f e t y,o r c o n v e n i e n c e.We a r e d e p l o y i n g n e w b u i l d i n g t e c h n o l o g i e s,s u c h a s l o w-c a r b o n c o n c r e t e,t o ma k e o u r f a c i l i t i e s mo r e s u s t a i n a b l e a s s e e n i n t h e l a u n c h o f o u r s e c o n d h e a d q u a r t e r s b u i l d i n g s,w h i c h s e t a n e w s t a n d a r d f o r s u s t a i n a b l e d e s i g n.We a r e i n v e s t i n g i n r e n e w a b l e e n e r g y a r o u n d t h e w o r l d,a n d w e a r e t h e l a r g e s t c o r p o r a t e b u y e r o f r e n e w a b l e e n e r g y i n t h e w o r l d f o r t h e t h i r d y e a r i n a r o w.O u r t e a ms a r e a n a l y z i n g r o u t e s a n d d i s t a n c e s t o b u i l d a l o g i s t i c s s y s t e m t h a t g e t s p a c k a g e s t o c u s t o me r s f a s t e r,w i t h f e w e r e mi s s i o n s.An d w e a r e t r a n s i t i o n i n g o u r f l e e t t o r o l l o u t 100,000 Ri v i a n e l e c t r i c d e l i v e r y v e h i c l e s b y 2030,w i t h t h o u s a n d s o n t h e r o a d n o w.An d t h a t s j u s t a s ma l l p a r t o f o u r s t o r y.Wh i l e o u r mo s t v i s i b l e s u s t a i n a b i l i t y w o r k ma y b e i n h o w w e d e l i v e r o r d e r s t o c u s t o me r s d o o r s t e p s,w e a r e mo r e t h a n a n e-c o mme r c e c o mp a n y.Ama z o n i s a n e n t e r t a i n me n t s t u d i o,c l o u d p r o v i d e r,g r o c e r,a n d mo r e a n d w e a r e ma k i n g s u s t a i n a b i l i t y a p r i o r i t y a c r o s s a l l o f o u r b u s i n e s s e s.Fo r e x a mp l e,s u s t a i n a b i l i t y mi g h t n o t b e t o p o f mi n d w h e n y o u t u n e i n t o w a t c h y o u r f a v o r i t e Ama z o n O r i g i n a l s e r i e s,b u t i t i s f o r u s.We a r e r e d u c i n g t h e u s e o f f o s s i l f u e l s f r o m o u r p r o d u c t i o n s t u d i o s,d e p l o y i n g b a t t e r y-e l e c t r i c g e n e r a t o r s,u s i n g s o l a r-p o w e r e d c a s t t r a i l e r s,a n d s c a l i n g t h e u s e o f e l e c t r i c v e h i c l e s o n o u r s e t s.We a r e d o i n g a l l o f t h i s i n t h e b a c k g r o u n d w h i l e d e l i v e r i n g e x c i t i n g n e w s h o w s f o r o u r c u s t o me r s.Cl o u d c o mp u t i n g a l s o p l a y s a r o l e i n r e d u c i n g o u r c u s t o me r s e n v i r o n me n t a l i mp a c t.Wi t h Ama z o n We b S e r v i c e s (AWS),c u s t o me r s n o l o n g e r r u n t h e i r o w n d a t a c e n t e r s,w h i c h o f t e n o p e r a t e a t l o w u t i l i z a t i o n r a t e s,l e a d i n g t o a l o t o f w a s t e d e n e r g y.I n s t e a d,c u s t o me r s c a n t a k e a d v a n t a g e o f t h e a d v a n c e d e n g i n e e r i n g o f AWS d a t a c e n t e r s t h a t u t i l i z e s o me o f t h e mo s t h i g h l y r e l i a b l e,s e c u r e,e n e r g y-e f f i c i e n t h a r d w a r e i n t h e w o r l d.AWS c a n l o w e r c u s t o me r s w o r k l o a d c a r b o n f o o t p r i n t s b y n e a r l y 80%v e r s u s o n-p r e mi s e s c o mp u t i n g w o r k l o a d,a n d w e e x p e c t t h a t n u mb e r t o i n c r e a s e o n c e AWS i s f u l l y p o w e r e d b y r e n e w a b l e e n e r g y.I n t h e c o mmu n i t i e s w h e r e w e o p e r a t e,w e a r e a l s o d o i n g o u r p a r t t o h e l p s o l v e r a p i d l y g r o w i n g c h a l l e n g e s f a c i n g t h e w o r l d t o d a y.Ta k e w a t e r s c a r c i t y a s a n e x a mp l e.Ami d u n p r e c e d e n t e d d r o u g h t s a r o u n d t h e w o r l d,w e c o mmi t t e d t h a t b y 2030,AWS d a t a c e n t e r s w i l l r e t u r n mo r e w a t e r t o c o mmu n i t i e s t h a n t h e y u s e i n t h e i r d i r e c t o p e r a t i o n s.N o ma t t e r t h e i n d u s t r y,f r o m e n t e r t a i n me n t t o g r o c e r y t o c l o u d c o mp u t i n g,w e a r e d e t e r mi n e d t o s h o w t h e w o r l d t h a t i f w e c a n d o t h i s,o t h e r s c a n t o o.I n ma n y c a s e s,o u r w o r k s e n d s i mp o r t a n t d e ma n d s i g n a l s t o t h e ma r k e t,w h i c h h e l p s d r i v e mo r e r e n e w a b l e e n e r g y,mo r e-s u s t a i n a b l e b u i l d i n g ma t e r i a l s,a n d o t h e r i n n o v a t i o n s t h a t h e l p b u s i n e s s e s a n d o r g a n i z a t i o n s a r o u n d t h e w o r l d r e d u c e t h e i r o w n i mp a c t o n t h e e n v i r o n me n t.S c a l i n g o u r p o s i t i v e i mp a c t i s u n d e r p i n n e d b y Th e Cl i ma t e P l e d g e a c o mmi t me n t t o b e n e t-z e r o c a r b o n b y 2040w h i c h w e c o-f o u n d e d i n 2019.Th e P l e d g e i n v i t e s e v e r y s e c t o r t h a t t o u c h e s o u r b u s i n e s s (a n d t h o s e t h a t d o n t)t o ma k e t h e i r o w n a mb i t i o u s c l i ma t e c o mmi t me n t s.We a r e c r e a t i n g a c o mmu n i t y t h a t i n s p i r e s e a c h o t h e r t o d o mo r e,a n d t o o u t-i n n o v a t e e v e n o u r s e l v e s a s w e k n o w w e c a n t d o t h i s a l o n e.M o r e t h a n 39 0 c o mp a n i e s a c r o s s 36 c o u n t r i e s s i g n e d t h e P l e d g e b y t h e e n d o f 2022,a n d w e a r e d e t e r mi n e d t o k e e p b r i n g i n g o n n e w p a r t n e r s t o h e l p c o mb a t c l i ma t e c h a n g e.We a r e a l s o c o mmi t t e d t o s u p p o r t i n g t h i r d p a r t i e s i n t h e i r o w n d e c a r b o n i z a t i o n e f f o r t s.Ama z o n h a s o n e o f t h e l a r g e s t v a l u e c h a i n s i n t h e w o r l d.As w e k n o w t h e f i r s t s t e p i n r e d u c i n g e mi s s i o n s i s t o u n d e r s t a n d t h e m,w e w i l l c o n t i n u e t o w o r k d i r e c t l y w i t h o u r s u p p l i e r s,a n d,s t a r t i n g n e x t y e a r,w i l l u p d a t e o u r S u p p l y Ch a i n S t a n d a r d s t o r e q u i r e r e g u l a r r e p o r t i n g a n d e mi s s i o n s g o a l s e t t i n g.We l l a l s o u s e o u r s c a l e,i n v e s t me n t,a n d i n n o v a t i o n t o d a t e t o p r o v i d e o u r s u p p l i e r s w i t h p r o d u c t s a n d t o o l s t h a t w i l l h e l p t h e m r e a c h t h e i r g o a l s w h e t h e r t h o s e a r e t r a n s i t i o n i n g t o r e n e w a b l e e n e r g y o r i n c r e a s i n g a c c e s s t o s u s t a i n a b l e ma t e r i a l s.We r e c o g n i z e t h a t s u s t a i n a b i l i t y d o e s n o t h a v e a n e x p i r a t i o n d a t e,a n d t h e r e w i l l a l w a y s b e mo r e t o d o.B u t t o d a y,w e a r e t a k i n g o n s o me o f t h e h a r d e s t p r o b l e ms i n t h e w o r l d t o s o l v e,w i t h a l o n g-t e r m v i e w,w h i c h i n v o l v e s n o s h o r t c u t s o r q u i c k f i x e s.We r e ma i n c o n f i d e n t i n o u r a p p r o a c h.Y o u mi g h t n o t s e e a l l o f t h e l a r g e-s c a l e c h a n g e s t h a t w e a r e ma k i n g r e f l e c t e d i mmi n e n t l y;o u r c o mp a n y t h i n k s i n t h e l o n g t e r m.We a r e w o r k i n g t i r e l e s s l y t o d e l i v e r o n o u r s u s t a i n a b i l i t y c o mmi t me n t s w i t h t h e i mp a c t a n d s c a l e o u r c u s t o me r s h a v e c o me t o e x p e c t f r o m u s,w h i l e b r i n g i n g e n t i r e i n d u s t r i e s a l o n g w i t h u s a n d t r a n s f o r mi n g h o w w e w o r k o n p l a n e t Ea r t h.Wh e n w e l o o k b a c k a t t h i s mo me n t i n t i me,my h o p e i s t h i s:t h a t o u r t e a ms a r e i mme n s e l y p r o u d o f t h e a mb i t i o u s c h a l l e n g e w e t o o k o n a n d t h e s o l u t i o n s w e i mp l e me n t e d,a n d t h a t w e h a v e c o n t i n u e d t o b u i l d o n o u r p r o g r e s s t o k e e p t h i n k i n g e v e n b i g g e r a n d mo v i n g e v e n f a s t e r.Th a t o u r c u s t o me r s s e e t h a t w e r e ma i n e d o b s e s s e d w i t h t a c k l i n g s o me o f t h e w o r l d s b i g g e s t s u s t a i n a b i l i t y c h a l l e n g e s o n t h e i r b e h a l f.An d t h a t w e w e r e w i l l i n g t o ma k e t h e b i g b e t s n e c e s s a r y e v e n i f w e w o u l d n t s e e r e s u l t s f o r y e a r s t o c o me t o e n s u r e t h e n e x t g r e a t c l i ma t e s o l u t i o n s c a n s c a l e f a s t t o h e l p s e t o u r p l a n e t b a c k o n t h e r i g h t t r a c k,a n d t h a t a l l f u t u r e g e n e r a t i o n s c a n l i v e i n h e a l t h y,t h r i v i n g c o mmu n i t i e s.Wi t h g r a t i t u d e,K a r a H u r s t V i c e P r e s i d e n t,Wo r l d w i d e S u s t a i n a b i l i t y,Ama z o n320 2 2 A ma z o n S u s t a i n a b i l i t y R e p o r t I n t r o d u c t i o nS u s t a i n a b i l i t yP e o p l eA p p e n d i xO u r Bu s i n e s sAma z o n i s c o mmi t t e d t o a d d r e s s i n g s u s t a i n a b i l i t y a t e v e r y s t a g e o f o u r v a l u e c h a i n.Our Supply ChainWe p r o c u r e ma t e r i a l s,c o mmo d i t i e s,c o mp o n e n t s,f i n i s h e d g o o d s,a n d s e r v i c e s f r o m a c o mp l e x s u p p l i e r n e t w o r k.We engage suppliers globally toalign our e x p e c t a t i o n s f o r r e s p e c t i n g h u ma n r i g h t s,ma i n t a i n i n g s a f e,i n c l u s i v e w o r k p l a c e s,a n d p r o mo t i n g s u s t a i n a b l e p r a c t i c e s.O u r O p e r a t i o n s We o f f e r a c c e s s t o a w i d e s e l e c t i o n o f p r o d u c t s s o l d b y u s a n d b y t h i r d p a r t i e s a c r o s s d o z e n s o f c a t e g o r i e s.We o f f e r p r o d u c t s a n d s e r v i c e s b o t h Ama z o n b r a n d e d a n d f r o m ma n y o t h e r b r a n d s a n d t h i r d-p a r t y s e l l e r s i n o u r Ama z o n s t o r e s,l e v e r a g i n g a d v a n c e d t r a n s p o r t a t i o n l o g i s t i c s t o d e l i v e r g l o b a l l y.We a l s o c r e a t e e n t e r t a i n me n t c o n t e n t a n d,t h r o u g h Ama z o n We b S e r v i c e s (AWS),p r o v i d e t h e w o r l d s mo s t w i d e l y a d o p t e d a n d c o mp r e h e n s i v e c l o u d o f f e r i n g.Our EmployeesTh e a p p r o x i ma t e l y 1.5 mi l l i o n p e o p l e i n Ama z o n s g l o b a l w o r k f o r c e a r e t h e k e y b e h i n d o u r s u c c e s s e s f r o m e n a b l i n g g l o b a l f u l f i l l me n t t o d e l i v e r i n g o n s u s t a i n a b i l i t y i n i t i a t i v e s.To s u p p o r t t h e m i n a d v a n c i n g t h e i r o w n c a r e e r g o a l s,w e o f f e r c o mp e t i t i v e p a y a n d b e n e f i t s,u p s k i l l i n g a n d e d u c a t i o n a l d e v e l o p me n t p r o g r a ms,a n d a w o r k p l a c e t h a t p r o mo t e s i n c l u s i o n a n d d i v e r s i t y.Our CommunitiesAma z o n h a s a p r e s e n c e i n c o mmu n i t i e s t h r o u g h o u t t h e w o r l d.We s e e k t o b e a g o o d n e i g h b o r w h e r e v e r w e o p e r a t e a n d t o s u p p o r t l o c a l p e o p l e a n d c h a r i t a b l e o r g a n i z a t i o n s t h a t me e t o n-t h e-g r o u n d n e e d s.I n p a r t i c u l a r,w e l e v e r a g e o u r s c a l e,r e s o u r c e s,a n d e x p e r t i s e t o a d d r e s s i s s u e s w h e r e w e c a n h a v e t h e g r e a t e s t i mp a c t n a me l y a f f o r d a b l e h o u s i n g,e d u c a t i o n,b a s i c n e e d s,a n d d i s a s t e r r e l i e f.O u r C u s t o me r s We c o n t i n u a l l y s e e k n e w a n d b e t t e r w a y s t o s e r v e c u s t o me r s,o f f e r i n g l o w e r p r i c e s,mo r e c o n v e n i e n t s e r v i c e s,a n d a l a r g e r s e l e c t i o n o f mo r e-s u s t a i n a b l e p r o d u c t s.We a l s o h e l p c u s t o me r s a d v a n c e b u s i n e s s e s a n d e n a b l e d i g i t a l t r a n s f o r ma t i o n t h r o u g h AWS,c o n t e n t d e v e l o p me n t s e r v i c e s,a n d a d v e r t i s i n g o p t i o n s.I n a d d i t i o n,w e s u p p o r t s ma l l b u s i n e s s e s w i t h a c c e s s t o Ama z o n t o o l s,r e s o u r c e s,a n d o u r n e t w o r k,h e l p i n g t h e m r e a c h c u s t o me r s a r o u n d t h e w o r l d.420 2 2 A ma z o n S u s t a i n a b i l i t y R e p o r t I n t r o d u c t i o nS u s t a i n a b i l i t yP e o p l eA p p e n d i x2022 Y e a r i n R e v i e wS u s t a i n a b i l i t y 7%D e c r e a s e i n c a r b o n i n t e n s i t y0.4%Re d u c t i o n i n a b s o l u t e c a r b o n e mi s s i o n s,a s y e a r-o n-y e a r n e t s a l e s g r e w 996S i g n a t o r i e s o f Th e Cl i ma t e P l e d g eWo r l d s l a r g e s t c o r p o r a t e p u r c h a s e r o f r e n e w a b l e e n e r g y f o r t h e t h i r d c o n s e c u t i v e y e a r 401Gl o b a l r e n e w a b l e e n e r g y p r o j e c t s a n n o u n c e d,g r o w i n g o u r c a p a c i t y to 20 gigawatts of cleanenergy14K Wo me n s u p p o r t e d t h r o u g h RI S E s i n c e 20198 2M M e a l s d o n a t e d i n t h e U.S.andEurope2.4B Li t e r s o f w a t e r e x p e c t e d t o b e r e p l e n i s h e d p e r y e a r t h r o u g h w a t e r-r e s t o r a t i o n p r o j e c t s c o mp l e t e d o r u n d e r w a y i n 20222M To n s o f d e l i v e r y p a c k a g i n g a v o i d e d s i n c e 201511%P a c k a g e s s h i p p e d i n t h e i r o r i g i n a l packagingglobally,up from 8%i n 2021818MCl i ma t e P l e d g e Fr i e n d l y productssold$50M Co mmi t t e d t o a c c e l e r a t e w o me n s c l i ma t e i n n o v a t i o n s b y Th e Cl i ma t e P l e d g e Fu n d$3MCo mmi t t e d t o t h e U.S.Ag e n c y f o r I n t e r n a t i o n a l D e v e l o p me n t (U S AI D)Cl i ma t e Ge n d e r Eq u i t y Fu n d90%El e c t r i c i t y c o n s u me d a c r o s s o u r o p e r a t i o n s a t t r i b u t a b l e t o r e n e w a b l e e n e r g y s o u r c e s P e o p l e39%I n c r e a s e i n B l a c k e x e c u t i v e s (d i r e c t o r o r a b o v e)s i n c e 202132%I n c r e a s e i n La t i n o/a/x e x e c u t i v e s (d i r e c t o r o r a b o v e)s i n c e 202166%I n c r e a s e i n w o me n e x e c u t i v e s (d i r e c t o r o r a b o v e)i n S TEM-f o c u s e d r o l e s s i n c e 2021$10BI n v e s t e d i n e mp l o y e e b e n e f i t s i n t h e U.S.$1BI n v e s t e d i n i n c r e a s e d w a g e s f o r U.S.f r o n t-l i n e w o r k e r s 24%I mp r o v e me n t i n g l o b a l Re c o r d a b l e I n c i d e n t Ra t e s i n c e 201953%I mp r o v e me n t i n g l o b a l Lo s t Ti me I n c i d e n t Ra t e s i n c e 201960K N e w p a r t i c i p a n t s i n Ca r e e r Ch o i c e,a n Ama z o n b e n e f i t t h a t o f f e r s s k i l l s t r a i n i n g,p r o f e s s i o n a l c e r t i f i c a t e s,l a n g u a g e l e a r n i n g,a n d c o l l e g e d e g r e e s3.2MS t u d e n t s r e a c h e d g l o b a l l y t h r o u g h Ama z o n Fu t u r e En g i n e e r,i n c l u d i n g mo r e t h a n 1.9million in the U.S.33.6KM i c r o l o a n s g r a n t e d b y t h e Wh o l e P l a n e t Fo u n d a t i o n a n d d o n o r s$3.3BS p e n t w i t h 375 c e r t i f i e d diversesuppliers$14MAw a r d e d i n c l o u d c r e d i t s t o a p p r o x i ma t e l y 9 0 h e a l t h-e q u i t y-f o c u s e d o r g a n i z a t i o n s g l o b a l l y s i n c e 2021$1.6BI n v e s t e d t o p r e s e r v e o r c r e a t e a f f o r d a b l e h o me s a c r o s s Wa s h i n g t o n s t a t e s P u g e t S o u n d r e g i o n;Wa s h i n g t o n,D.C.,a n d Ar l i n g t o n,V i r g i n i a;a n d N a s h v i l l e,Te n n e s s e e13MP e o p l e s u p p o r t e d w i t h f r e e c l o u d c o mp u t i n g s k i l l s t r a i n i n g s i n c e 2020 50 Co u n t r i e s p a r t i c i p a t e d i n Ama z o n s f i r s t Gl o b a l M o n t h o f V o l u n t e e r i n g828K S t u d e n t s f r o m p r i ma r i l y l o w-i n c o me f a mi l i e s i n I n d i a r e a c h e d t h r o u g h t h e Ama z o n Fu t u r e En g i n e e r p r o g r a m a c r o s s 5,000 g o v e r n me n t s c h o o l s520 2 2 A ma z o n S u s t a i n a b i l i t y R e p o r t I n t r o d u c t i o nS u s t a i n a b i l i t yP e o p l eA p p e n d i xGo a l s S u mma r yP e r f o r ma n c e Ke yM a k i n g P r o g r e s sAc h i e v e dG o a l2022 P r o g r e s sS t a t u sC a r b o n1 Re a c h n e t-z e r o c a r b o n e mi s s i o n s a c r o s s Ama z o n b y 2040.71.27M me t r i c t o n s CO2e*9 3.7 g CO2e/$GM STh r o u g h Th e Cl i ma t e P l e d g e,i n s p i r e a n d e mp o w e r o t h e r s t o j o i n u s o n a mi s s i o n t o r e a c h n e t-z e r o c a r b o n e mi s s i o n s b y 2040.39 6 s i g n a t o r i e s100,000 Ri v i a n e l e c t r i c d e l i v e r y v a n s o n t h e r o a d b y 2030.2,6 00 Ri v i a n s10,000 e l e c t r i c v e h i c l e s (EV s)i n o u r I n d i a d e l i v e r y f l e e t b y 2025.3,800 EV sR e n e w a b l e E n e r g y P o w e r o u r o p e r a t i o n s w i t h 100%r e n e w a b l e e n e r g y b y 2030.9 0%r e n e w a b l e e l e c t r i c i t yI n v e s t i n w i n d a n d s o l a r f a r m c a p a c i t y e q u a l t o t h e e n e r g y u s e o f Ec h o,Fi r e TV,a n d Ri n g d e v i c e s w o r l d w i d e b y 2025.100%c a p a c i t y p r o c u r e dP a c k a g i n g M a k e Ama z o n d e v i c e p a c k a g i n g 100%r e c y c l a b l e b y 2023.Ac h i e v e d f o r 79.5%o f p r o d u c t l a u n c h e sWa s t e Re d u c e f o o d w a s t e b y 50%a c r o s s U.S.a n d Eu r o p e o p e r a t i o n s b y 2030.82M me a l s d o n a t e d g l o b a l l yWa t e r Ac h i e v e w a t e r p o s i t i v i t y f o r Ama z o n We b S e r v i c e s b y 2030.Go a l s e t i n 2022G o a l2022 P r o g r e s sS t a t u sD i v e r s i t y,E q u i t y,a n d I n c l u s i o n I n c r e a s e t h e n u mb e r o f w o me n i n e x e c u t i v e (d i r e c t o r o r a b o v e)p o s i t i o n s i n S TEM-f o c u s e d r o l e s g l o b a l l y b y a t l e a s t 35%i n 2022.6 6%H i r e 100,000 U.S.mi l i t a r y v e t e r a n s a n d mi l i t a r y s p o u s e s b y 2024.75,800 v e t e r a n s a n d s p o u s e s h i r e dI n c r e a s e h i r i n g o f v e t e r a n s b y a t l e a s t 23%i n t h e U.S.120,500 v e t e r a n s h i r e d I n c r e a s e h i r i n g o f mi l i t a r y s p o u s e s b y a t l e a s t 15%i n t h e U.S.5%9,6 00 s p o u s e s h i r e dI n c r e a s e r e p r e s e n t a t i o n o f B l a c k a n d La t i n o/a/x e x e c u t i v e s (d i r e c t o r o r a b o v e)b y a t l e a s t 35%i n t h e U.S.B l a c k:39%La t i n o/a/x:32%I n c r e a s e r e p r e s e n t a t i o n o f B l a c k a n d La t i n o/a/x c o r p o r a t e e mp l o y e e s b y a t l e a s t 30%i n t h e U.S.B l a c k:25%La t i n o/a/x:27%T r a i n i n g a n d C a r e e r D e v e l o p me n t I n v e s t$1.2 b i l l i o n t o u p s k i l l o v e r 300,000 U.S.Ama z o n e mp l o y e e s b y 2025.110K e mp l o y e e sP r o v i d e 29 mi l l i o n p e o p l e g l o b a l l y w i t h f r e e s k i l l s t r a i n i n g b y 2025.13M p e o p l eC o mmu n i t y I mp a c t D e l i v e r$2 b i l l i o n t o p r e s e r v e a n d c r e a t e mo r e t h a n 20,000 a f f o r d a b l e h o me s i n t h r e e c o mmu n i t i e s w h e r e w e h a v e a h i g h c o n c e n t r a t i o n o f e mp l o y e e s:Wa s h i n g t o n s t a t e s P u g e t S o u n d r e g i o n;Wa s h i n g t o n,D.C.,a n d Ar l i n g t o n,V i r g i n i a;a n d N a s h v i l l e,Te n n e s s e e.$1.6 B c o mmi t t e d*Ca r b o n d i o x i d e e q u i v a l e n t.P r o g r e s s f r o m Ju l y 2021 t h r o u g h D e c e mb e r 2022.I n c r e me n t a l h i r i n g w a s s l o w e r t h e s e c o n d h a l f o f 2022,w h i c h i mp a c t e d o u r o v e r a l l h i r i n g r a t e s a n d p r o g r e s s t o w a r d o u r r e p r e s e n t a t i o n g o a l s.620 2 2 A ma z o n S u s t a i n a b i l i t y R e p o r t I n t r o d u c t i o nS u s t a i n a b i l i t yP e o p l eA p p e n d i xS u s t a i n a b i l i t yB e c o mi n g a mo r e s u s t a i n a b l e b u s i n e s s r e q u i r e s a defined,multifaceted approachone that considers a n d a d d r e s s e s b o t h e n v i r o n me n t a l a n d s o c i a l i mp a c t s.We a r e w o r k i n g t o s c a l e a n d c o l l a b o r a t e w i t h o t h e r s t o r e d u c e e mi s s i o n s,w a s t e,a n d w a t e r c o n s u mp t i o n w h i l e i n n o v a t i n g t o o p t i mi z e p a c k a g i n g a n d p r o d u c t p e r f o r ma n c e.Th r o u g h i t a l l,w e s e e k t o a c t i n w a y s t h a t r e s p e c t t h e h u ma n r i g h t s o f p e o p l e t h r o u g h o u t o u r s u p p l y c h a i n.I n T h i s S e c t i o n8 O u r S u s t a i n a b i l i t y Ap p r o a c h Dr i v i n g C l i ma t e S o l u t i o n s 9 Ca r b o n22 Re n e w a b l e En e r g yR e d u c i n g P a c k a g i n g a n d Wa s t e 26 P a c k a g i n g 30 Wa s t e a n d Ci r c u l a r i t yP r o t e c t i n g N a t u r a l R e s o u r c e s 35 Wa t e r R e s p e c t i n g H u ma n R i g h t s 38 H u ma n Ri g h t s 42 Re s p o n s i b l e S u p p l y Ch a i nIn n o v a t i n g O u r P r o d u c t s a n d S e r v i c e s 48 P r o d u c t S u s t a i n a b i l i t yD e n i s e H u g o,S e n i o r Re n e w a b l e En e r g y P r o g r a m M a n a g e r,l e d t h e d e v e l o p me n t o f Ama z o n s o f f-s i t e s o l a r p r o j e c t i n Al c a l d e Gu a d a r a,S p a i n.720 2 2 A ma z o n S u s t a i n a b i l i t y R e p o r t I n t r o d u c t i o nS u s t a i n a b i l i t yP e o p l eA p p e n d i xO u r S u s t a i n a b i l i t y A p p r o a c h D r i v i n g C l i ma t e S o l u t i o n sR e d u c i n g Wa s t e a n d P a c k a g i n gP r o t e c t i n g N a t u r a l R e s o u r c e sA d v a n c i n g H u ma n R i g h t sI n n o v a t i n g O u r P r o d u c t s a n d S e r v i c e sWe p u t o u r c u s t o me r s a t t h e h e a r t o f e v e r y t h i n g w e d o a n d r e l e n t l e s s l y i n n o v a t e t o me e t t h e i r n e e d s,e n r i c h t h e i r l i v e s,a n d ma k e e v e r y d a y b e t t e r.Wi t h o u r mi s s i o n t o b e Ea r t h s mo s t c u s t o me r-c e n t r i c c o mp a n y c o me s a n i n n a t e a s p i r a t i o n t o a d d r e s s t h e e n v i r o n me n t a l a n d s o c i a l c h a l l e n g e s o u r c u s t o me r s a n d c o mmu n i t i e s f a c e f r o m t h e i mp a c t s o f c l i ma t e c h a n g e t o s o c i a l i n e q u i t y.Wh i l e t h e s e i s s u e s a r e i n c r e a s i n g l y c o mp l e x,u r g e n t,a n d i n t e r c o n n e c t e d,w e b e l i e v e i n t h e p o t e n t i a l f o r s o l u t i o n s d r i v e n b y i n g e n u i t y a n d c o l l a b o r a t i v e a c t i o n.As a n o r g a n i z a t i o n s e r v i n g g l o b a l c o mmu n i t i e s,w e h a v e a b r o a d r e s p o n s i b i l i t y t o mi t i g a t e t h e i mp a c t s o f o u r b u s i n e s s,w h i l e h e l p i n g t o a d d r e s s t h e e n v i r o n me n t a l a n d s o c i a l c h a l l e n g e s w e c o l l e c t i v e l y f a c e.We u s e o u r s c a l e a n d c u l t u r e o f i n n o v a t i o n t o h e l p c r e a t e a mo r e s u s t a i n a b l 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d v a n c i n g H u ma n R i g h t sWe p r o mo t e t h e d i g n i t y a n d f u n d a me n t a l r i g h t s o f t h e p e o p l e c o n n e c t e d t o o u r b u s i n e s s a r o u n d t h e w o r l d.H u ma n Ri g h t s Re s p o n s i b l e S u p p l y Ch a i n In n o v a t i n g O u r P r o d u c t s andServicesWe i n v e n t,d e v e l o p,a n d d e l i v e r p r o d u c t s a n d s e r v i c e s t h a t h e l p o u r c u s t o me r s o n t h e i r s u s t a i n a b i l i t y j o u r n e y s.P r o d u c t S u s t a i n a b i l i t y 820 2 2 A ma z o n S u s t a i n a b i l i t y R e p o r t I n t r o d u c t i o nS u s t a i n a b i l i t yP e o p l eA p p e n d i xD r i v i n g C l i ma t e S o l u t i o n sC a r b o nCa r b o nTh e s c i e n c e i s c l e a r:t o a v o i d t h e mo s t s e v e r e i mp a c t s o f c l i ma t e change,humanity needs to reduce emissions quickly.Thats w h y w e c o-f o u n d e d Th e Cl i ma t e P l e d g e,a g o a l t o b e n e t-z e r o c a r b 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c t r i c i t y c o n s u me d b y Ama z o n a t t r i b u t a b l e t o r e n e w a b l e e n e r g y s o u r c e s,u p f r o m 85%i n 202129%Re d u c t i o n i n S c o p e 2 e mi s s i o n s f r o m purchasedelectricity7 N e w c o mp a n i e s i n v e s t e d i n t h r o u g h Th e Cl i ma t e P l e d g e Fu n d t o d e v e l o p b r e a k t h r o u g h l o w-c a r b o n t e c h n o l o g i e s t o h e l p t r a n s f o r m t h e i n d u s t r y145M P a c k a g e s d e l i v e r e d b y EV s i n t h e U.S.a n d Eu r o p e 111 N e w s i g n a t o r i e s o f Th e Cl i ma t e P l e d g e 920 2 2 A ma z o n S u s t a i n a b i l i t y R e p o r t|I n t r o d u c t i o nS u s t a i n a b i l i t yD r i v i n g C l i ma t e S o l u t i o n sC a r b o nP e o p l eA p p e n d i xO u r A p p r o a c hAt Ama z o n,w e t a k e o n g r a n d c h a l l e n g e s,ma k e b i g b e t s,a n d i n v e n t o n b e h a l f o f c u s t o me r s.Th a t s e x a c t l y h o w w e a p p r o a c h o u r c a r b o n-e mi s s i o n s r e d u c t i o n:b y ma k i n g a b i g b e t t o r e a c h n e t-z e r o c a r b o n 10 y e a r s a h e a d o f t h e P a r i s Ag r e e me n t,t h e n i n v e n t i n g n e w a p p r o a c h e s a c r o s s o u r b u s i n e s s t h a t w i l l h e l p u s g e t t h e r e a l l w h i l e ma i n t a i n i n g t h e s p e e d,c o n v e n i e n c e,a n d r e l i a b i l i t y t h a t c u s t o me r s e x p e c t f r o m Ama z o n.Th e s e a r e i n c r e d i b l y h a r d c h a l l e n g e s.M a n y o f t h e s o l u t i o n s r e q u i r e d t o a c h i e v e g l o b a l d e c a r b o n i z a t i o n d o n t e x i s t y e t.An d t h e c h a l l e n g e s a r e a l s o ma d e mo r e c o mp l e x b y t h e f a c t t h a t t h a n k s t o s t r o n g c u s t o me r d e ma n d w e a r e a b u s i n e s s t h a t c o n t i n u e s t o g r o w.M e e t i n g t h e n e e d s o f o u r c u s t o me r s w h i l e s i mu l t a n e o u s l y r e d u c i n g o u r i mp a c t w i l l t a k e t i me,a l o n g w i t h i n v e n t i o n a n d c o l l a b o r a t i o n f r o m a l l a r e a s o f o u r c o mp a n y.Te a ms a c r o s s e v e r y p a r t o f Ama z o n h a v e a d e c a r b o n i z a t i o n s t r a t e g y a s p a r t o f t h e i r l o n g-t e r m o r g a n i z a t i o n a l p l a n.We h o l d o u r s e l v e s a c c o u n t a b l e t h r o u g h g o a l s e t t i n g a n d r e g u l a r r e p o r t i n g.We a r e i n v e s t i n g i n b r e a k t h r o u g h t e c h n o l o g y,i n c l u d i n g p r o mi s i n g e a r l y-s t a g e d e c a r b o n i z a t i o n t e c h n o l o g y t h a t w e b a c k t h r o u g h o u r$2 b i l l i o n Cl i ma t e P l e d g e Fu n d.We c a n n o t d o t h i s a l o n e.We n e e d g o v e r n me n t s a r o u n d t h e w o r l d t o w o r k t o g e t h e r w i t h u s a s w e e n g a g e i n c l i ma t e p o l i c y t o d r i v e d e c a r b o n i z a t i o n a t s c a l e.We a l s o n e e d t h e s u p p o r t 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l,c o l l e c t i v e a p p r o a c h.As w e w o r k t o g e t h e r o n d e c a r b o n i z i n g e n t i r e i n d u s t r i e s,i t s d i f f i c u l t t o r e d u c e o r e l i mi n a t e e mi s s i o n s i n c e r t a i n a r e a s,b e c a u s e s u f f i c i e n t l o w-c a r b o n t e c h n o l o g i e s d o n o t e x i s t a t s c a l e.B u t w e a r e n o t w a i t i n g.We a r e w o r k i n g w i t h i n d u s t r y g r o u p s t o f i n d s o l u t i o n s f o r t h o s e h a r d-t o-a b a t e e mi s s i o n s,s u c h a s f r o m a i r f r e i g h t a n d c a r g o s h i p p i n g,a n d w e a r e e x c i t e d a b o u t w h a t s a h e a d.Th e S p h e r e s a t o u r h e a d q u a r t e r s i n S e a t t l e,Wa s h i n g t o n.1020 2 2 A ma z o n S u s t a i n a b i l i t y R e p o r t|I n t r o d u c t i o nS u s t a i n a b i l i t yD r i v i n g C l i ma t e S o l u t i o n sC a r b o nP e o p l eA p p e n d i xO u r A p p r o a c h f o r N e t-Z e r o C a r b o n Emi s s i o n s b y 2040We a r e c o mmi t t e d t o r e a c h i n g n e t-z e r o c a r b o n e mi s s i o n s i n t h e n e x t 17 y e a r s.To g e t t h e r e,w e h a v e s e t i n t e r i m g o a l s,i d e n t i f i e d k e y a r e a s o f o u r b u s i n e s s f o r d e c a r b o n i z a t i o n,a n d i d e n t i f i e d l e v e r s a n d a c c e l e r a t o r s t o h e l p u s g e t t h e r e.S c o p e 1 Ca r b o n i n t e n s i t y (g CO2e/$GM S)S c o p e 2 S c o p e 313.4054.9 87 1.272.895.765.5039.9 151.179.6 25.2745.7560.6412.1155.367 1.544.0710 0.8102.712 2.893.72020201920212022O u r F o c u s A r e a sD e l i v e r y a n d l o g i s t i c sB u i l d i n g c o n s t r u c t i o n a n d o p e r a t i o n sS e r v e r s a n d h a r d w a r eP a c k a g i n gP r o d u c t s a n d s e r v i c e sH o w We Wi l l G e t T h e r eCh o o s i n g l o w e r-c a r b o n a l t e r n a t i v e sTr a n s i t i o n i n g t o r e n e w a b l e e n e r g yEn g a g i n g s u p p l i e r sDriving efficiencyN e u t r a l i z i n g c a r b o nAccelerating Our EffortsI n v e s t i n g i n b r e a k t h r o u g h t e c h n o l o g yD e c a r b o n i z i n g t h r o u g h p o l i c y c h a n g eAc c e l e r a t i n g c r o s s-s e c t o r c o l l a b o r a t i o n t h r o u g h Th e Cl i ma t e P l e d g e En g a g i n g i n k e y p a r t n e r s h i p sA ma z o n s C a r b o n F o o t p r i n t (M M T CO2e*)2025I n v e s t i n w i n d a n d s o l a r f a r m c a p a c i t y e q u a l t o t h e e n e r g y u s e o f Ec h o,Fi r e TV,a n d Ri n g d e v i c e s w o r l d w i d e b y 2025We a r e o n a p a t h t o p o w e r o u r o p e r a t i o n s w i t h 100%r e n e w a b l e e n e r g y by 2025,five y e a r s a h e a d o f o u r 2030 g o a l10,000 e l e c t r i c v e h i c l e s i n o u r India delivery fleet by 2025Cl i ma t e P l e d g e F u n d:A$2 b i l l i o n v e n t u r e i n v e s t me n t p r o g r a m s u p p o r t i n g t h e d e v e l o p me n t o f s u s t a i n a b l 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a n d i s e s a l e s.1120 2 2 A ma z o n S u s t a i n a b i l i t y R e p o r t|I n t r o d u c t i o nS u s t a i n a b i l i t yD r i v i n g C l i ma t e S o l u t i o n sC a r b o nP e o p l eA p p e n d i xO u r P r o g r e s sA ma z o n s Ca r b o n F o o t p r i n tI n 2022,o u r a b s o l u t e c a r b o n e mi s s i o n s d e c r e a s e d b y 0.4%,e v e n a s o u r y e a r-o v e r-y e a r n e t s a l e s g r e w 9%.We a c h i e v e d t h i s i n l a r g e p a r t b y i mp r o v i n g e f f i c i e n c y a c r o s s o u r b u s i n e s s a n d c o n t i n u i n g o u r i n v e s t me n t i n r e n e w a b l e e n e r g y.I n f a c t,i n 2022,w e a n n o u n c e d t h a t w e g r e w o u r r e n e w a b l e e n e r g y c a p a c i t y b y 8 g i g a w a t t s,w h i c h w a s a r e c o r d f o r t h e mo s t a n n o u n c e d b y a c o mp a n y i n a s i n g l e y e a r a n d ma d e u s t h e w o r l d s l a r g e s t c o r p o r a t e p u r c h a s e r o f r e n e w a b l e e n e r g y f o r t h e t h i r d y e a r i n a r o w.O u r c a r b o n i n t e n s i t y d e c r e a s e d b y 7%f r o m 2021 t o 2022,a n d b y 24%s i n c e 2019.O v e r t h e l a s t f o u r y e a r s,o u r b u s i n e s s h a s c o n s i s t e n t l y b e c o me l e s s c a r b o n i n t e n s i v e,w h i c h f u r t h e r s h o w s w e a r e d e c o u p l i n g e mi s s i o n s g r o w t h f r o m o u r g r o w t h a s a b u s i n e s s.Ca r b o n i n t e n s i t y me a s u r e s g r a ms o f c a r b o n d i o x i d e e q u i v a l e n t (CO2e)p e r d o l l a r o f g r o s s me r c h a n d i s e s a l e s (GM S).Decarbonizing Delivery andLogistics U n l i k e ma n y o t h e r c o mp a n i e s i n t h e w o r l d s o f t e c h a n d r e t a i l,w e h a v e a l a r g e l o g i s t i c s n e t w o r k.D i r e c t e mi s s i o n s,s u c h a s t h e f u e l u s e d b y o u r d e l i v e r y f l e e t,a r e c o u n t e d i n S c o p e 1 e mi s s i o n s a n d ma k e u p j u s t u n d e r o n e-f i f t h o f o u r t o t a l e mi s s i o n s.I n 2022,S c o p e 1 e mi s s i o n s g r e w b y 11%y e a r-o v e r-y e a r.Th i s w a s d u e t o b u s i n e s s g r o w t h,i n c r e a s e d t r a n s p o r t a t i o n v i a Ama z o n Lo g i s t i c s r a t h e r t h a n t h i r d p a r t i e s,a n d a n i mp r o v e me n t i n t h e w a y w e c a l c u l a t e e mi s s i o n s,w h i c h f o l l o w s t h e l a t e s t a p p r o a c h e s t o s c i e n c e-b a s e d c o r p o r a t e a c c o u n t i n g o f e mi s s i o n s.We a r e ma k i n g g r e a t p r o g r e s s i n r e d u c i n g t r a n s p o r t a t i o n e mi s s i o n s w h e r e o p p o r t u n i t i e s e x i s t,s u c h a s b y i n v e s t i n g i n e l e c t r i c d e l i v e r y v e h i c l e s.I n 2022,w e h a d mo r e t h a n 9,000 o f t h e s e v e h i c l e s i n o u r g l o b a l f l e e t,a n d d e l i v e r e d mo r e t h a n 145 mi l l i o n p a c k a g e s i n t h e U.S.a n d Eu r o p e t o c u s t o me r s d o o r s t e p s w i t h t h e m.We h a v e i n s t a l l e d t h o u s a n d s o f c h a r g i n g p o i n t s a c r o s s o u r f a c i l i t i e s i n N o r t h Ame r i c a a n d Eu r o p e.We d e p l o y e d e-c a r g o b i k e s,s c o o t e r s,a n d o n-f o o t d e l i v e r i e s f r o m mi c r o mo b i l i t y h u b s,i n c l u d i n g i n M a n h a t t a n i n N e w Y o r k Ci t y,a n d i n 20 c i t i e s a c r o s s Eu r o p e,f r o m Lo n d o n a n d P a r i s t o M a r s e i l l e a n d M u n i c h.We ma k e f u r t h e r r e d u c t i o n s b y u s i n g a l g o r i t h ms t o d e v i s e t h e mo s t e f f i c i e n t r o u t e s a n d l o c a t i n g f u l f i l l me n t c e n t e r s a n d d e l i v e r y s t a t i o n s c l o s e r t o o u r c u s t o me r s.O u r p a c k a g i n g t e a m d e v i s e s s ma l l e r a n d l i g h t e r p a c k i n g o p t i o n s,w h i c h t a k e u p l e s s s p a c e t o t r a n s p o r t a n d t h e r e f o r e r e s u l t i n f e w e r e mi s s i o n s.I n f a c t,s i n c e 2015,w e h a v e r e d u c e d t h e w e i g h t o f o u t b o u n d p a c k a g i n g p e r s h i p me n t b y 41%o n a v e r a g e a n d a v o i d e d mo r e t h a n 2 mi l l i o n t o n s o f p a c k a g i n g ma t e r i a l.To d r i v e d o w n e mi s s i o n s f r o m l o n g-h a u l t r u c k i n g,w e l a u n c h e d o u r f i r s t e l e c t r i c h e a v y g o o d s v e h i c l e s (e H GV s)i n t h e U n i t e d Ki n g d o m(U K)a n d Ge r ma n y.Th e t r u c k s c a n w e i g h u p t o 40 me t r i c t o n s,s o t h e t r a n s i t i o n r e l i e s o n t h e r o l l o u t o f l a r g e-s c a l e c h a r g i n g i n f r a s t r u c t u r e,w h i c h a l s o o f t e n r e q u i r e s t h e o v e r h a u l o f l o c a l e l e c t r i c i t y g r i d s.We a r e t e a mi n g u p w i t h e H GV ma n u f a c t u r e r s t o a d v o c a t e f o r t h e c h a n g e s r e q u i r e d.We a r e n o t j u s t u s i n g mo r e EV s.We a l r e a d y h a v e mo r e t h a n 15,000 h y d r o g e n-p o w e r e d f o r k l i f t s o p e r a t i n g a t mo r e t h a n 70 f u l f i l l me n t c e n t e r s i n N o r t h Ame r i c a,a n d i n 2022,w e s i g n e d a d e a l f o r e n o u g h g r e e n h y d r o g e n (w h i c h i s g e n e r a t e d b y r e n e w a b l e o r l o w-c a r b o n p o w e r)t o f u e l 40,000 f o r k l i f t s a n n u a l l y b y 2025.A ma z o n s En t e r p r i s e w i d e C a r b o n F o o t p r i n t,2019 2022C a r b o n I n t e n s i t y2019202020212022Y o Y%C a r b o n I n t e n s i t y (g r a ms o f C O2e p e r$o f G MS)122.8102.7100.89 3.7-7%E mi s s i o n s C a t e g o r y (MMT C O2e)2019202020212022Y o Y%E mi s s i o n s f r o m D i r e c t O p e r a t i o n s (S c o p e 1)5.7 69.6 212.1113.4 011%F o s s i l f u e l s5.5 79.3 71 1.8 91 3.0 91 0%R e f r i g e r a n t s0.1 90.2 50.2 20.3 14 1%E mi s s i o n s f r o m P u r c h a s e d E l e c t r i c i t y (S c o p e 2)*5.5 05.274.072.8 9-29%E mi s s i o n s f r o m I n d i r e c t S o u r c e s (S c o p e 3)*3 9.9 14 5.7 55 5.3 65 4.9 8-0.7%C o r p o r a t e p u r c h a s e s a n d A ma z o n-b r a n d e d p r o d u c t e mi s s i o n s (e.g.,o p e r a t i n g e x p e n s e s,b u s i n e s s t r a v e l,a n d A ma z o n-b r a n d e d p r o d u c t ma n u f a c t u r i n g,u s e p h a s e,a n d e n d-o f-l i f e)1 5.4 11 6.7 01 9.0 92 1.3 91 2%C a p i t a l g o o d s (e.g.,b u i l d i n g c o n s t r u c t i o n,s e r v e r s a n d o t h e r h a r d w a r e,equipment,vehicles)8.0 11 0.5 21 5.3 71 2.8 8-1 6%O t h e r i n d i r e c t e mi s s i o n s (e.g.,t h i r d-p a r t y t r a n s p o r t a t i o n,p a c k a g i n g,u p s t r e a m e n e r g y r e l a t e d)1 2.4 41 5.7 71 8.0 01 7.4 2-3%LifecycleemissionsfromcustomertripstoAmazonsphysicalstores4.0 52.7 72.9 13.2 91 3%A ma z o n s T o t a l F o o t p r i n t5 1.176 0.6 47 1.5 47 1.27-0.4%*S c o p e 2 a n d 3 c a r b o n e mi s s i o n s a r e c a l c u l a t e d u s i n g a ma r k e t-b a s e d me t h o d.L e a r n mo r e a b o u t o u r c a r b o n me t h o d o l o g y .1220 2 2 A ma z o n S u s t a i n a b i l i t y R e p o r t|M u c h h a r d e r t o d e c a r b o n i z e a r e a i r f r e i g h t a n d c a r g o s h i p p i n g.Th i s i s b e c a u s e t h e n e t-z e r o t e c h n o l o g i e s r e q u i r e d t o mo v e l a r g e v o l u me s o f g o o d s o v e r l o n g d i s t a n c e s b y s e a a n d a i r d o n o t y e t e x i s t a t s c a l e,n o r d o t h e s u p p o r t i n g i n f r a s t r u c t u r e o r a c c o u n t i n g f r a me w o r k s.Y e t w e a r e d e t e r mi n e d t o a c c e l e r a t e p r o g r e s s.We a r e a c t i v e p a r t n e r s i n i n d u s t r y w i d e c o a l i t i o n s,i n c l u d i n g Ca r g o O w n e r s f o r Z e r o Emi s s i o n V e s s e l s (c o Z EV),w h i c h w e h e l p e d l a u n c h,a n d t h e S u s t a i n a b l e Av i a t i o n B u y e r s Al l i a n c e (S AB A),w h i c h i s f o c u s e d o n i n c r e a s i n g i n v e s t me n t i n s u s t a i n a b l e a v i a t i o n f u e l (S AF).I n t r o d u c t i o nS u s t a i n a b i l i t yD r i v i n g C l i ma t e S o l u t i o n sC a r b o nP e o p l eA p p e n d i xWe a r e o p t i mi s t i c t h a t e mi s s i o n s w i l l s u b s t a n t i a l l y f a l l a c r o s s t h e t r a n s p o r t a t i o n a n d l o g i s t i c s s e c t o r s o v e r t h e n e x t d e c a d e.El e c t r i c v e h i c l e p r o d u c t i o n i s b e c o mi n g ma i n s t r e a m.Al r e a d y,p o l i c y ma k e r s a r e e n c o u r a g i n g t h e i n f r a s t r u c t u r e t r a n s f o r ma t i o n n e e d e d t o s u p p o r t a n e w g e n e r a t i o n o f n e t-z e r o t r a n s p o r t a t i o n t h r o u g h me a s u r e s l i k e t h e B i p a r t i s a n I n f r a s t r u c t u r e La w a n d I n f l a t i o n Re d u c t i o n Ac t i n t h e U.S.,a n d t h e Eu r o p e a n Co mmi s s i o n s Gr e e n D e a l I n d u s t r i a l P l a n,w h i c h i n c e n t i v i z e i n v e s t me n t i n c l e a n e n e r g y.As t h e s e c h a n g e s t a k e e f f e c t,t h e y w i l l t r a n s l a t e i n t o l o w e r e mi s s i o n s f o r a l l c o mp a n i e s t h a t,l i k e Ama z o n,t r a n s p o r t l a r g e n u mb e r s o f i t e ms o v e r t h o u s a n d s o f mi l e s.In v e s t i n g i n R e n e w a b l e sWe a r e p r o u d t h a t o u r i n v e s t me n t s i n r e n e w a b l e e n e r g y,u s e d t o p o w e r o u r o p e r a t i o n s,h a v e r e s u l t e d i n a 29%d r o p i n c a r b o n e mi s s i o n s f r o m p u r c h a s e d e l e c t r i c i t y (S c o p e 2).Th i s n o w a c c o u n t s f o r l e s s t h a n 5%o f o u r t o t a l r e p o r t e d c a r b o n f o o t p r i n t.I n 2022,9 0%o f e l e c t r i c i t y c o n s u me d b y Ama z o n w a s a t t r i b u t a b l e t o r e n e w a b l e e n e r g y s o u r c e s,a n d w e r e ma i n o n a p a t h t o r e a c h 100%b y 2025.El e c t r i c i t y p o w e r s o u r d a t a c e n t e r s,f u l f i l l me n t c e n t e r s,p h y s i c a l s t o r e s,a n d c o r p o r a t e o f f i c e s,a s w e l l a s t h e EV s t h a t c h a r g e a t o u r d e l i v e r y s t a t i o n s.As a f i r s t s t e p,w e f o c u s o n e n e r g y e f f i c i e n c y t h r o u g h o u t o u r o p e r a t i o n s.We t h e n p u r c h a s e e l e c t r i c i t y f r o m r e n e w a b l e e n e r g y p r o j e c t s,t h r o u g h o n-s i t e s o l a r i n s t a l l a t i o n s a n d u t i l i t y-s c a l e,o f f-s i t e s o l a r a n d w i n d p r o j e c t s.We g r e w o u r t o t a l n u mb e r o f r e n e w a b l e p r o j e c t s t o 401 i n 22 c o u n t r i e s,w i t h a c a p a c i t y o f mo r e t h a n 20 GW.Th a t s e n o u g h c a p a c i t y t o p o w e r t h e e q u i v a l e n t o f 5.3 mi l l i o n U.S.h o me s e v e r y y e a r.Ke y t o ma k in g r e n e w a b l e e n e r g y mo r e imp a c t f u l is t o f in d w a y s o f s t o r in g i t f o r w h e n t h e w in d is n t b l o w in g o r t h e s u n is n t s h in in g.We c o n t in u e t o in v e s t in r e n e w a b l e e n e r g y p r o je c t s t h a t a r e p a ir e d w i t h e n e r g y s t o r a g e.Ad d i t io n a l l y,in 2022,Th e Cl ima t e P l e d g e Fu n d in v e s t e d in El e c t r ic H y d r o g e n a n d S u n f ir e,t w o p r o mis in g U.S.-a n d Eu r o p e-b a s e d d e v e l o p e r s o f e l e c t r o l y z e r s,w h ic h c o n v e r t w a t e r in t o g r e e n h y d r o g e n a n e n e r g y s o u r c e t h a t c a n b e s t o r e d f o r f u t u r e u s e.I t s a n o t h e r e x a mp l e o f t h e in v e s t me n t in in n o v a t io n t h a t Ama z o n is k n o w n f o r.R e d u c i n g O u r S c o p e 3 Emi s s i o n sAc t i v i t i e s t h a t t a k e p l a c e b e y o n d o u r d i r e c t o p e r a t i o n s a r e r e f l e c t e d i n o u r S c o p e 3 e mi s s i o n s.I n 2022,S c o p e 3 e mi s s i o n s w e n t d o w n b y 0.7%,d e s p i t e o u r y e a r-o v e r-y e a r g r o w t h.We s a w a d e c r e a s e i n S c o p e 3 e mi s s i o n s f r o m b u i l d i n g c o n s t r u c t i o n,l e a s e d b u i l d i n g s a n d e q u i p me n t,a n d t h i r d-p a r t y t r a n s p o r t a t i o n (a s mo r e g o o d s w e r e s h i p p e d b y Ama z o n s o w n l o g i s t i c s p r o v i d e r s v e r s u s t h i r d-p a r t y p r o v i d e r s).We k n o w t h a t t o f u r t h e r d r i v e d o w n e mi s s i o n s,w e mu s t e n s u r e t h o s e i n o u r s u p p l y c h a i n ma k e t h e o p e r a t i o n a l c h a n g e s n e c e s s a r y t o d e c a r b o n i z e t h e i r b u s i n e s s e s.To t h a t e n d,w e w i l l u p d a t e o u r S u p p l y Ch a i n S t a n d a r d s t o r e q u i r e s u p p l i e r s t o s h a r e t h e i r c a r b o n e mi s s i o n s d a t a w i t h u s,i n c l u d i n g s e t t i n g g o a l s t o r e d u c e e mi s s i o n s a s w e w o r k t o g e t h e r t o s e r v e o u r c u s t o me r s.We w i l l u s e o u r s i z e a n d s c a l e t o b e n e f i t b u s i n e s s e s t h a t a r e c o mmi t t e d t o d e c a r b o n i z i n g b y p r o v i d i n g p r o d u c t s a n d t o o l s t o b o t h t r a c k e mi s s i o n s a n d h e l p d e c r e a s e t h e m.An d w e w i l l c o n t i n u e t o l o o k f o r s u p p l i e r s t h a t h e l p u s a c h i e v e o u r d e c a r b o n i z a t i o n v i s i o n a s w e s e l e c t p a r t n e r s f o r b u s i n e s s o p p o r t u n i t i e s.Gi v e n o u r s u c c e s s a s t h e w o r l d s l a r g e s t c o r p o r a t e p u r c h a s e r o f r e n e w a b l e e n e r g y,w e w i l l s e e k t o h e l p s e l e c t s u p p l i e r s t r a n s i t i o n t o c a r b o n-f r e e e l e c t r i c i t y.O u r p o t e n t i a l f o r i mp a c t a c r o s s o u r s u p p l y c h a i n i s b i g b e c a u s e i t s p a n s b u i l d i n g ma t e r i a l s,t r a n s p o r t a t i o n,t e c h n i c a l e q u i p me n t,p r o d u c t s,a n d p a c k a g i n g,a n d w e l o o k f o r w a r d t o h a v i n g f u r t h e r i mp a c t i n s u p p l y c h a i n d e c a r b o n i z a t i o n.To r e d u c e i n d i r e c t e mi s s i o n s,i t s i mp o r t a n t t o b e a b l e t o me a s u r e t h e m a c c u r a t e l y.We s u p p o r t a n d f u n d i n d u s t r y p a r t n e r s h i p s t o g a t h e r mo r e a c c u r a t e d a t a,i n c l u d i n g t h e Emb o d i e d Ca r b o n i n Co n s t r u c t i o n Ca l c u l a t o r (EC3),w h i c h h e l p s me a s u r e e mb o d i e d c a r b o n i n b u i l d i n g s,a n d t h e S ma r t Fr e i g h t Ce n t r e s Gl o b a l Lo g i s t i c s Emi s s i o n s Co u n c i l (GLEC)Fr a me w o r k,a g l o b a l l y r e c o g n i z e d me t h o d o l o g y f o r me a s u r i n g f r e i g h t t r a n s p o r t a t i o n e mi s s i o n s.T h e R o a d t o 2040D e c a r b o n i z i n g o u r b u s i n e s s r e q u i r e s i n v e s t me n t t h a t w i l l n o t a l w a y s r e s u l t i n i mme d i a t e o u t c o me s.S o me o f t h e w o r k t h a t w e d i d i n 2022 t o r e d u c e e mi s s i o n s i s n o t r e f l e c t e d i n o u r e mi s s i o n s f i g u r e s f o r 2022,a n d w e ma y n o t s e e i t s i mp a c t f o r y e a r s t o c o me.Li k e o t h e r l a r g e c o r p o r a t e s a n d ma n y s i g n a t o r i e s t o t h e P l e d g e,w e d o n o t h a v e a l l t h e a n s w e r s t o d a y,n o t l e a s t b e c a u s e i n ma n y c a s e s t h e a n s w e r s d o n o t y e t e x i s t o r t h e y d o e x i s t b u t a r e n o t y e t a v a i l a b l e a t s c a l e.We a r e,h o w e v e r,s t e a d f a s t i n p u r s u i n g s o l u t i o n s a n d w o r k i n g c o l l e c t i v e l y t o f i n d t h e a n s w e r s a n d c r e a t e t h e d e ma n d s i g n a l s t o b r i n g n e w t e c h n o l o g i e s t o s c a l e.We r e ma i n f o c u s e d o n r e a c h i n g n e t-z e r o c a r b o n b y 2040,a f o c u s w e h a v e ma i n t a i n e d s i n c e w e f i r s t a n n o u n c e d Th e Cl i ma t e P l e d g e i n 2019.Th r o u g h i n n o v a t i o n,c o l l a b o r a t i o n,d e t e r mi n a t i o n,a n d a p r o mi s e t o d e l i v e r t h e b e s t f o r o u r c u s t o me r s,w e w i l l a c h i e v e o u r g o a l,a n d mo s t i mp o r t a n t l y,c o n t r i b u t e t o a f u t u r e o n a h e a l t h i e r p l a n e t.Tu r b i n e s g e n e r a t e c l e a n e l e c t r i c i t y a t a u t i l i t y-s c a l e Ama z o n w i n d f a r m.1320 2 2 A ma z o n S u s t a i n a b i l i t y R e p o r t|I n t r o d u c t i o nS u s t a i n a b i l i t yD r i v i n g C l i ma t e S o l u t i o n sC a r b o nP e o p l eA p p e n d i xT h e Cl i ma t e P l e d g eTh e Cl i ma t e P l e d g e i s a c o mmi t me n t t o r e a c h n e t-z e r o c a r b o n e mi s s i o n s b y 2040.Ama z o n c o-f o u n d e d Th e Cl i ma t e P l e d g e w i t h Gl o b a l O p t i mi s m i n 2019 a n d b e c a me t h e f i r s t c o mp a n y t o s i g n o n.Th e Cl i ma t e P l e d g e b r i n g s t o g e t h e r t h e w o r l d s t o p c o mp a n i e s t o a c c e l e r a t e j o i n t a c t i o n,c r o s s-s e c t o r c o l l a b o r a t i o n,a n d r e s p o n s i b l e c h a n g e.S i g n a t o r i e s a g r e e t o t h r e e a r e a s o f a c t i o n:R e g u l a r r e p o r t i n g:M e a s u r e a n d r e p o r t o n g r e e n h o u s e g a s (GH G)e mi s s i o n s o n a r e g u l a r b a s i s.C a r b o n e l i mi n a t i o n:I mp l e me n t d e c a r b o n i z a t i o n s t r a t e g i e s i n l i n e w i t h t h e P a r i s Ag r e e me n t t h r o u g h b u s i n e s s c h a n g e a n d i n n o v a t i o n s,i n c l u d i n g e f f i c i e n c y i mp r o v e me n t s,r e n e w a b l e e n e r g y,ma t e r i a l s r e d u c t i o n s,a n d o t h e r c a r b o n-e mi s s i o n-e l i mi n a t i o n s t r a t e g i e s.C r e d i b l e o f f s e t s:N e u t r a l i z e a n y r e ma i n i n g e mi s s i o n s w i t h a d d i t i o n a l,q u a n t i f i a b l e,r e a l,p e r ma n e n t,a n d s o c i a l l y b e n e f i c i a l o f f s e t s t o a c h i e v e n e t-z e r o a n n u a l c a r b o n e mi s s i o n s b y 2040.Wh i l e e a c h c o mp a n y w i l l t a k e i t s o w n p a t h t o n e t z e r o,s i g n i n g Th e Cl i ma t e P l e d g e r e i n f o r c e s t h e i r c o mmi t me n t t o s u s t a i n a b i l i t y.P r o g r e s s i n 2022As o f 2022 y e a r e n d,Th e Cl i ma t e P l e d g e s i g n a t o r i e s r e p r e s e n t:396S i g n a t o r i e s36Co u n t r i e s55I n d u s t r i e s9.3M Emp l o y e e s$3.68 T I n g l o b a l a n n u a l r e v e n u eWe h a v e s e t a g o a l t o r e c r u i t a d d i t i o n a l s i g n a t o r i e s e v e r y y e a r.I n 2022 a l o n e,111 c o mp a n i e s s i g n e d Th e Cl i ma t e P l e d g e.We a l s o f a c i l i t a t e d s i g n a t o r y c o l l a b o r a t i o n t o t a c k l e h a r d-t o-a b a t e e mi s s i o n s w h i l e p r o v i d i n g Th e Cl i ma t e P l e d g e c o mmu n i t y w i t h h e l p f u l i n f o r ma t i o n a n d p a r t n e r s h i p s t o d r i v e f o r w a r d mu l t i s e c t o r a l d e c a r b o n i z a t i o n i n i t i a t i v e s.L e a r n mo r e a b o u t Th e Cl i ma t e P l e d g e .T h e Cl i ma t e P l e d g e F u n dTh e Cl i ma t e P l e d g e Fu n d i s a$2 b i l l i o n v e n t u r e i n v e s t me n t p r o g r a m s u p p o r t i n g t h e a d v a n c e me n t o f s u s t a i n a b l e t e c h n o l o g i e s a n d s e r v i c e s t h a t w i l l e n a b l e Ama z o n t o me e t o u r n e t-z e r o c a r b o n g o a l.Th r o u g h o u t 2022,Th e Cl i ma t e P l e d g e Fu n d c o n t i n u e d i t s mi s s i o n t o s u p p o r t c o mp a n i e s w o r k i n g o n p r o mi s i n g d e c a r b o n i z a t i o n s o l u t i o n s.We ma d e n e w i n v e s t me n t s i n s e v e n c o mp a n i e s:El e c t r i c H y d r o g e n,S u n f i r e,a n d V e r n e,w h i c h a r e d e v e l o p i n g g r e e n h y d r o g e n p r o d u c t i o n a n d s t o r a g e me t h o d s;2 M o x i o n P o w e r a n d Amb i e n t P h o t o n i c s,w h i c h a r e a d v a n c i n g c l e a n e r e n e r g y s t o r a g e;a n d B r i ms t o n e a n d El e c t r a,w h i c h a r e w o r k i n g t o d e c a r b o n i z e c o n s t r u c t i o n.Th e s e i n v e s t me n t s b r i n g o u r p o r t f o l i o t o 20 t o t a l c o mp a n i e s a s o f t h e e n d o f 2022.Eq u i t a b l y S c a l i n g C l i ma t e TechSolutionsWo me n-f o u n d e d c o mp a n i e s t y p i c a l l y r e c e i v e a f r a c t i o n o f t h e t o t a l v e n t u r e c a p i t a l f l o w i n g i n t o c l i ma t e t e c h s t a r t u p s.3 I n N o v e mb e r 2022,Ama z o n ma d e a$53mi l l i o n c o mmi t me n t t o h e l p a d d r e s s t h i s g e n d e r i n e q u i t y.Th i s i n c l u d e s a$50mi l l i o n c o mmi t me n t t h r o u g h Th e Cl i ma t e P l e d g e Fu n d s n e w Fe ma l e Founder Initiativeto invest in women-founded and women-led c l i ma t e t e c h c o mp a n i e s.Ama z o n a l s o c o mmi t t e d$3 mi l l i o n t o t h e U.S.Ag e n c y f o r I n t e r n a t i o n a l D e v e l o p me n t (U S AI D)Cl i ma t e Ge n d e r Eq u i t y Fu n d.As a c o-f o u n d e r o f Th e Cl i ma t e P l e d g e,Ama z o n w i l l w o r k w i t h P l e d g e s i g n a t o r i e s a n d o t h e r c o mp a n i e s t o e n c o u r a g e t h e i r a d d i t i o n a l s u p p o r t a n d c o r p o r a t e i n v e s t me n t i n t h e Cl i ma t e Ge n d e r Eq u i t y Fu n d.Th r o u g h Th e Cl i ma t e P l e d g e Fu n d,w e i n v e s t i n c o mp a n i e s l i k e e l e c t r i c a i r c r a f t i n n o v a t o r B ETA Te c h n o l o g i e s t h a t a r e d e v e l o p i n g l o w-carbonsolutions.I n 2022,Ama z o n b e c a me a f o u n d i n g me mb e r o f t h e Cl i ma t e Re s o l u t e Co a l i t i o n,a mu l t i s t a k e h o l d e r o r g a n i z a t i o n f o c u s e d o n a d v a n c i n g w o me n s e c o n o mi c e mp o w e r me n t a n d c l i ma t e s o l u t i o n s i n g l o b a l s u p p l y c h a i n s.We a l s o w o r k w i t h v a r i o u s o t h e r o r g a n i z a t i o n s t o e n h a n c e e q u i t a b l e o p p o r t u n i t i e s f o r c l i ma t e t e c h e n t r e p r e n e u r s,i n c l u d i n g Gr e e n t o w n La b s a n d El e me n t a l Ex c e l e r a t o r.1420 2 2 A ma z o n S u s t a i n a b i l i t y R e p o r t|I n t r o d u c t i o nS u s t a i n a b i l i t yD r i v i n g C l i ma t e S o l u t i o n sC a r b o nP e o p l eA p p e n d i xA ma z o n s De l i v e r y a n d Lo g i s t i c s N e t w o r kWe r e l y o n a c o mp l e x t r a n s p o r t a t i o n n e t w o r k t o g e t p r o d u c t s f r o m ma n u f a c t u r e r s a n d s e l l e r s t o c u s t o me r s a r o u n d t h e g l o b e.O u r l o g i s t i c s n e t w o r k s p a n s e v e r y s t e p o f t h e j o u r n e y f r o m g l o b a l t r a n s p o r t a t i o n t o d e l i v e r y b e t w e e n d e l i v e r y s t a t i o n a n d c u s t o me r.To d e l i v e r p a c k a g e s a s q u i c k l y a n d e f f i c i e n t l y as possible,our logistics network uses differentmodes of t r a n s p o r t a t i o n,i n c l u d i n g s h i p s,p l a n e s,f r e i g h t t r a i n s,t r u c k s,v a n s,a n d b i k e s.As w e l l a s t r a n s p o r t i n g p r o d u c t s i n a s a f e,t i me l y,a n d e f f i c i e n t ma n n e r,w e a r e d e c a r b o n i z i n g t r a n s p o r t a t i o n a c r o s s o u r b u s i n e s s by:I n c r e a s i n g f l e e t e f f i c i e n c y a c r o s s i n b o u n d t r a n s p o r t a t i o n,mi d d l e mi l e,a n d l a s t mi l e S c a l i n g u s e o f EV s a n d a l t e r n a t i v e-f u e l v e h i c l e s I n c r e a s i n g u s e o f l o w-c a r b o n f u e l s P a r t n e r i n g o n i n i t i a t i v e s t o d e c a r b o n i z e t h e w i d e r t r a n s p o r t a t i o n industryWh i l e e me r g i n g t e c h n o l o g i e s i n s u s t a i n a b l e t r a n s p o r t a t i o n w i l l c o n t i n u e t o s c a l e i n t h e c o mi n g y e a r s,t h e mo s t e f f e c t i v e w a y t o r e d u c e o u r t r a n s p o r t a t i o n-r e l a t e d e mi s s i o n s i s t h r o u g h i mp r o v e d f u l f i l l me n t n e t w o r k e f f i c i e n c i e s a n d s u p p l y c h a i n o p t i mi z a t i o n.Fu l f i l l i n g i t e ms i n v e n t o r i e d a s c l o s e t o o u r c u s t o me r s a s p o s s i b l e r e d u c e s t h e d i s t a n c e s p a c k a g e s t r a v e l t o r e a c h c u s t o me r s,p a r t i c u l a r l y i n mi d d l e mi l e t r a n s p o r t a t i o n,w h e r e l o n g-h a u l t r u c k i n g i s a l a r g e e mi s s i o n s s o u r c e.S h o r t e r r o u t e s a l s o ma k e o u r n e t w o r k mo r e c o n d u c i v e t o i n t r o d u c i n g EV s a n d o t h e r l o w e r-i mp a c t t r a n s p o r t a t i o n mo d e s i n t h e l o n g t e r m.I n a d d i t i o n t o c l o s i n g t h e d i s t a n c e b e t w e e n f u l f i l l me n t a n d c u s t o me r,w e a r e w o r k i n g t o r e d u c e e mi s s i o n s p e r s h i p p e d u n i t b y i n c r e a s i n g t h e n u mb e r o f c u s t o me r o r d e r s d i s t r i b u t e d p e r t r i p.Fo r e x a mp l e,w e u s e ma c h i n e l e a r n i n g a l g o r i t h ms f o r e a c h o r d e r t o d e t e r mi n e t h e b e s t p a c k a g i n g s o l u t i o n t o e l i mi n a t e e mp t y s p a c e i n p a c k a g e s.Co mp u t e r v i s i o n a n d n a t u r a l l a n g u a g e p r o c e s s i n g g u i d e o u r s y s t e m t o p i n p o i n t t h e o p t i ma l p a c k a g i n g t y p e f o r e a c h i t e mf r o m b a g t o b o x d e p e n d i n g o n t h e l e v e l o f p r o t e c t i o n n e e d e d.Wh e r e p o s s i b l e,w e u s e l i g h t w e i g h t p a c k a g i n g b y p r i o r i t i z i n g f l e x i b l e p a p e r b a g s a n d e n v e l o p e s,w h i c h a r e u p t o 9 0%l i g h t e r t h a n s i mi l a r-s i z e d,r i g i d c o r r u g a t e b o x e s.We a l s o l o o k t o i n c r e a s e t h e n u mb e r o f i t e ms p e r o r d e r,w h e r e r e l e v a n t,e n c o u r a g i n g c u s t o me r s t o c o n s o l i d a t e i t e ms i n t o f e w e r o r d e r s b y c h o o s i n g a n “Ama z o n D a y”f o r d e l i v e r y t o mi n i mi z e t h e e mi s s i o n s a s s o c i a t e d w i t h f u l f i l l i n g t h e i r o r d e r.I n b o u n d T r a n s p o r t a t i o n:The first transportation leg,u s e d f o r t r a n s p o r t i n g s h i p me n t s a c r o s s i n t e r n a t i o n a l b o r d e r s.Ma n u f a c t u r e rP r o d u c t s a r e p r o d u c e d a n d a s s e mb l e d.I n b o u n dC r o s s D o c kWa r e h o u s e o p e r a t i o n c o n s o l i d a t e s l o a d s w i t h o u t i n t e r me d i a t e s t o r a g e.Mi d d l e Mi l e:Th e i n t e r me d i a t e t r a n s p o r t a t i o n l e g,w h e r e s h i p me n t s a r e mo v e d b e t w e e n Ama z o n f a c i l i t i e s.L i n e h a u lFulfillment CenterWa r e h o u s e s s t o r e p r o d u c t s a n d s e r v e a s d i s t r i b u t i o n c e n t e r s f o r a s s o c i a t e s t o p i c k,p a c k,a n d s h i p o r d e r s.L i n e h a u l,A ma z o n A i r,R a i l,a n d Ma r i t i me S h i p p i n gL i n e h a u l:I n t e r c i t y p o r t i o n a f t e r f r e i g h t i s p i c k e d u p.A i r:Ca r g o t r a n s p o r t a t i o n b y Ama z o n Ai r.R a i l:Ca r g o t r a n s p o r t a t i o n b y t r a i n.Ma r i t i me:O c e a n c a r g o t r a n s p o r t a t i o n.S o r t C e n t e rCe n t e r s s o r t a n d c o n s o l i d a t e p a c k a g e s t o d e l i v e r f o r s h i p me n t.L a s t Mi l e:The final transportation leg,where packages are d e l i v e r e d t o c u s t o me r s.L i n e h a u lPost OfficeD e l i v e r y S t a t i o nP a c k a g e s a r e r o u t e d t o c u s t o me r s t h r o u g h local post offices and d e l i v e r y s t a t i o n s.F i n a l D e l i v e r yC u s t o me rP a c k a g e s a r e d e l i v e r e d t o t h e c u s t o me r s d o o r.1520 2 2 A ma z o n S u s t a i n a b i l i t y R e p o r t|I n t r o d u c t i o nS u s t a i n a b i l i t yD r i v i n g C l i ma t e S o l u t i o n sC a r b o nP e o p l eA p p e n d i xIn b o u n d T r a n s p o r t a t i o nI n b o u n d t r a n s p o r t a t i o n t e a ms a i m t o o p t i mi z e t h e s p e e d a n d c o s t o f c r o s s-b o r d e r t r a n s p o r t a t i o n s o i t s a s s i mp l e,f a s t,a n d r e l i a b l e a s d o me s t i c t r a n s p o r t a t i o n.Ama z o n i s i n c r e a s i n g t h e u s e o f o c e a n f r e i g h t f o r t r a n s o c e a n i c t r a n s p o r t a t i o n,a n d r e d u c i n g a i r f r e i g h t w h e n p o s s i b l e.As a n a d d e d b e n e f i t,o c e a n t r a n s p o r t a t i o n h a s a l o w e r c a r b o n i n t e n s i t y t h a n a i r t r a n s p o r t a t i o n,a n d w e c o n t i n u e t o r e d u c e t h e e mi s s i o n s r e l a t e d t o o c e a n f r e i g h t t h r o u g h t h e u s e o f b i o f u e l s.4Co mp a r e d t o r o a d t r a n s p o r t a t i o n,r a i l a n d s e a t r a n s p o r t a t i o n a r e mo r e c a r b o n-e f f i c i e n t.D u r i n g 2022,i n N o r t h Ame r i c a a n d Eu r o p e,w e i n c r e a s e d o u r t o t a l r a i l l o a d v o l u me;w e c o n t i n u e t o g r o w i t a t a n a c c e l e r a t e d r a t e,w h i c h w i l l h e l p me e t o u r n e t-z e r o-c a r b o n g o a l s.Mi d d l e Mi l e M i d d l e mi l e t r a n s p o r t a t i o n g e n e r a l l y s t a r t s w h e n p a c k a g e s arrive atan Amazon facility,such as a cross dock,5and includes t h e j o u r n e y b e t w e e n f u l f i l l me n t c e n t e r s,s o r t c e n t e r s,a n d d e l i v e r y s t a t i o n s.Wh i l e s o me t r i p s ma y b e c o mp l e t e d b y a i r o r t r a i n f r e i g h t,mi d d l e mi l e t r a n s p o r t a t i o n i s u s u a l l y c o mp l e t e d b y t r u c k.Tr u c k i n g i s a c h a l l e n g i n g a r e a t o d e c a r b o n i z e,p a r t i c u l a r l y c o n s i d e r i n g l o n g-h a u l d i s t a n c e s a n d t h e r e q u i r e me n t s f o r h i g h-p o w e r EV c h a r g i n g i n f r a s t r u c t u r e a c r o s s t r a n s p o r t a t i o n r o u t e s.Th e r e i s c u r r e n t l y n o s i n g l e s o l u t i o n t h a t c a n b e s c a l e d f o r d e c a r b o n i z i n g mi d d l e mi l e t r u c k i n g.To h e l p a d d r e s s t h i s c h a l l e n g e,w e a r e e x p e r i me n t i n g w i t h l o w e r-c a r b o n o p t i o n s,s u c h a s t r u c k s p o w e r e d b y r e n e w a b l e n a t u r a l g a s (RN G),6 b a t t e r y-e l e c t r i c t r u c k s,a n d h y d r o g e n-p o w e r e d t r u c k s.In 2022,we piloteda number of electric delivery trucks across N o r t h Ame r i c a a n d Eu r o p e,w i t h p l a n s f o r mo r e i n 2023,a n d w e a r e d e v e l o p i n g c h a r g i n g i n f r a s t r u c t u r e.We a l s o p a r t n e r w i t h ma n u f a c t u r e r s t o t e s t a n d v a l i d a t e n e w EV mo d e l s b e f o r e s c a l i n g t h e t e c h n o l o g y.N o t a b l y,w e h a v e i n t r o d u c e d 20 f u l l y e l e c t r i c h e a v y g o o d s v e h i c l e s (e H GV s)i n Ge r ma n y,w h i c h w i l l r e p l a c e d i e s e l-f u e l e d r o a d mi l e s.Fi v e s i mi l a r v e h i c l e s h a v e b e e n a d d e d t o o u r U K f l e e t .I n 2022,w e j o i n e d C ALS TART,a n d w e a r e c o l l a b o r a t i n g o n t h e El e c t r i c Tr u c k Re s e a r c h a n d U t i l i z a t i o n Ce n t e r p r o j e c t t o a d v a n c e h i g h-p o w e r e d c h a r g i n g i n f r a s t r u c t u r e a l o n g k e y f r e i g h t c o r r i d o r s i n Ca l i f o r n i a a n d b e y o n d.Lo w-C a r b o n F u e l T e c h n o l o g i e sWe a r e i n v e s t i n g i n i n t e r i m w a y s t o r e d u c e t h e e n v i r o n me n t a l i mp a c t o f o u r mi d d l e mi l e t r u c k f l e e t,i n c l u d i n g e x i s t i n g l o w e r-e mi s s i o n o p t i o n s p o w e r e d b y RN G.We a r e a l s o i n v e s t i n g i n f u t u r e s o l u t i o n s,l i k e g r e e n s t e e l7 f o r ma n u f a c t u r i n g v e h i c l e s,a s w e l l a s r e n e w a b l y g e n e r a t e d g r e e n h y d r o g e n.Co mp r e s s e d n a t u r a l g a s (CN G)t r u c k s,e s p e c i a l l y w h e n p o w e r e d b y RN G c r e a t e d f r o m w a s t e s t o c k s,p r o v i d e a n i n t e r i m e mi s s i o n s-r e d u c t i o n t e c h n o l o g y w h i l e EV a n d h y d r o g e n f u e l c e l l t r u c k s c o n t i n u e t o d e v e l o p.We h a v e p r o c u r e d mi l l i o n s o f g a l l o n s o f RN G t o p o w e r CN G t r u c k s i n o u r N o r t h Ame r i c a n f l e e t,r e d u c i n g o u r r e l i a n c e o n f o s s i l-f u e l-b a s e d a l t e r n a t i v e s.We currently have 3,289CNG trucks in North America and are p a r t n e r i n g w i t h o t h e r c o mp a n i e s t o l a u n c h f u e l i n g s t a t i o n s t o s u p p o r t t h e m.I n Au g u s t,w e a l s o a n n o u n c e d a p r o c u r e me n t a g r e e me n t w i t h P l u g P o w e r.Th i s p a r t n e r s h i p w i l l s u p p l y Ama z o n with10,950tons of green hydrogen per yearenough to power 40,000forklifts annuallyfor transportation and b u i l d i n g o p e r a t i o n s,s t a r t i n g i n 2025.La s t Mi l e La s t mi l e t r a n s p o r t a t i o n r e f e r s t o t h e f i n a l p a r t o f t h e j o u r n e y,w h e n p r o d u c t s a r e t r a n s p o r t e d f r o m a p o s t o f f i c e o r d e l i v e r y s t a t i o n t o t h e c u s t o me r.Tr a d i t i o n a l l y,t h e s e t r i p s h a v e b e e n made by gas-poweredinternal combustion engine vehicles.Wh i l e t h e s e a r e s t i l l c o mmo n a c r o s s t h e i n d u s t r y,w e a r e w o r k i n g t o d e c a r b o n i z e o u r o w n l a s t mi l e f l e e t b y u t i l i z i n g l o w e r-e mi s s i o n o p t i o n s,i n c l u d i n g EV s,e l e c t r i c c a r g o b i k e s (e-b i k e s),a n d o n-f o o t d e l i v e r i e s.We a r e e x p a n d i n g o u r l o w-c a r b o n e l e c t r i c d e l i v e r y f l e e t w i t h thousands ofEVs.At the end of 2022,more than 2,600Rivian e l e c t r i c d e l i v e r y v a n s w e r e o n t h e r o a d i n t h e U.S.,a n d w e a i m t o h a v e 100,000 o n t h e r o a d b y 2030.Th r o u g h o u t 2022,w e h a d mo r e t h a n 9,000 EV s i n o u r f l e e t a n d d e l i v e r e d 145 mi l l i o n packagesto customers via EV across the U.S.and Europe.We a l s o s c a l e d EV a d o p t i o n i n I n d i a n o p e r a t i o n s,d e p l o y i n g o v e r 3,800 EV s i n o u r l a s t mi l e d e l i v e r y f l e e t,a s w e l l a s 158 mi d d l e mi l e EV s,b y t h e e n d o f 2022.I n 2022,w e a n n o u n c e d p l a n s t o i n v e s t o v e r 1 b i l l i o n t o d o u b l e o u r Eu r o p e a n z e r o-e mi s s i o n s f l e e t f o r mi d d l e a n d l a s t mi l e d e l i v e r i e s o v e r t h e n e x t f i v e years.Di d Y o u Kn o w?Ama z o n o f f e r s P r i me me mb e r s f a s t d e l i v e r y o p t i o n s,i n c l u d i n g S a me-D a y a n d O n e-D a y D e l i v e r y.We a l s o o f f e r t h e Ama z o n D a y d e l i v e r y o p t i o n,w h i c h g i v e s P r i me me mb e r s t h e a b i l i t y t o c h o o s e a d e s i g n a t e d d a y o f t h e w e e k t o r e c e i v e t h e i r o r d e r s.I n 2022,Ama z o n D a y s a v e d 115 mi l l i o n b o x e s.Mi t i g a t i n g Emi s s i o n s Wi t h Mi c r o mo b i l i t y S o l u t i o n sI n Eu r o p e,w e h a v e l a u n c h e d mi c r o mo b i l i t y h u b s i n mo r e t h a n 20 c i t i e s t o e n a b l e s h o r t e r d e l i v e r i e s o n f o o t o r b y e-b i k e.I n t h e U K s p e c i f i c a l l y,w e l a u n c h e d e-b i k e s i n M a n c h e s t e r a n d Lo n d o n.S i mi l a r h u b s h a v e b e e n i n s t a l l e d a c r o s s Fr a n c e a n d I t a l y,w i t h f u r t h e r mi c r o mo b i l i t y s o l u t i o n s p l a n n e d.I n t h e U.S.,w e c o n t i n u e t o i mp r o v e g r o c e r y mi c r o mo b i l i t y d e l i v e r y o p e r a t i o n s i n N e w Y o r k.O u r e f f o r t s t o d e l i v e r g r o c e r y o r d e r s o n f o o t o r v i a e-b i k e b e g a n i n 2019 a n d h a v e s i n c e expanded to cover over1.6 mi l l i o n o r d e r s (o v e r 9.1 mi l l i o n packages)in 2022.This was enabled,in part,by stocking i n v e n t o r y c l o s e r t o c u s t o me r s.D u r i n g 2022,w e a l s o i n t r o d u c e d n e w,h i g h e r-p a y l o a d e-b i k e t r a i l e r s d e s i g n e d t o c a r r y h e a v i e r p a c k a g e s.Th e s e r e d u c e o p e r a t i o n a l c o s t s b y c o n v e r t i n g s i t e s where deliveries are made on foot to use e-bikes andallowing mo r e d e l i v e r i e s t o b e c o mp l e t e d p e r b i k e r o u t e.We p l a n t o d e p l o y n e x t-g e n e r a t i o n mi c r o mo b i l i t y e q u i p me n t i n 2023.Ama z o n CEO,An d y Ja s s y,w i t h a n e w e l e c t r i c d e l i v e r y v e h i c l e a t Ama z o n s S e a t t l e h e a d q u a r t e r s.1620 2 2 A ma z o n S u s t a i n a b i l i t y R e p o r t|I n t r o d u c t i o nS u s t a i n a b i l i t yD r i v i n g C l i ma t e S o l u t i o n sC a r b o nP e o p l eA p p e n d i xP a r t n e r i n g f o r De c a r b o n i z e d T r a n s p o r t a t i o n D e c a r b o n i z i n g o u r t r a n s p o r t a t i o n b u s i n e s s w i l l r e q u i r e c r o s s-c o mp a n y p a r t n e r s h i p s,w h i c h i s w h y w e s e e k t o p a r t i c i p a t e i n mu l t i s t a k e h o l d e r i n i t i a t i v e s t o s h i f t t h e i n d u s t r y t o w a r d l o w e r-c a r b o n s o l u t i o n s.Fo r o u r t r a n s p o r t a t i o n d e c a r b o n i z a t i o n p a r t n e r s h i p s,w e l e v e r a g e t w o e n g a g e me n t p l a t f o r ms:t h e S u s t a i n a b l e Fr e i g h t B u y e r s Al l i a n c e (S FB A)a n d t h e O r g a n i s a t i o n f o r Ec o n o mi c Co-o p e r a t i o n a n d D e v e l o p me n t (O ECD)I n t e r n a t i o n a l Tr a n s p o r t Fo r u m.I n 2022,w e c o n t i n u e d t o s u p p o r t t h e S ma r t Fr e i g h t Ce n t r e,w i t h a f o c u s o n i d e n t i f y i n g a n d b u i l d i n g p a r t n e r s h i p s t h a t c a n a c c e l e r a t e t r a n s p o r t a t i o n d e c a r b o n i z a t i o n.Ama z o n i s a l s o p l a y i n g a n a c t i v e r o l e i n s e v e r a l i n d u s t r y i n i t i a t i v e s a n d g o v e r n me n t p a r t n e r s h i p s,i n c l u d i n g t h e c o Z EV n e t w o r k,t h e Fi r s t M o v e r s Co a l i t i o n,a n d t h e Cl e a n En e r g y D e ma n d I n i t i a t i v e.A i r Ai r f r e i g h t i s o n e o f t h e mo d e s o f t r a n s p o r t a t i o n w e u s e,a n d S AF i s o n e s o l u t i o n f o r r e d u c i n g a s s o c i a t e d l i f e c y c l e e mi s s i o n s.However,SAF represents less than 0.1%of global aviation fuel,b e c a u s e i t i s s t i l l c o s t p r o h i b i t i v e f o r mo s t c o mp a n i e s.8 D u r i n g t h e 2022 U n i t e d N a t i o n s Cl i ma t e Ch a n g e Co n f e r e n c e (CO P 27),S AB A a n n o u n c e d a d i g i t a l S AF c e r t i f i c a t e r e g i s t r y t h a t a i ms t o i n c r e a s e t r a n s p a r e n c y f o r e mi s s i o n s-r e d u c t i o n c l a i ms a n d a c c e l e r a t e S AF d e p l o y me n t.As a f o u n d i n g me mb e r o f S AB A,Ama z o n p l a y e d a k e y r o l e i n d e v e l o p i n g t h e r e g i s t r y,w h i c h w i l l launchlater this y e a r.O c e a nTo r e d u c e o u r o c e a n-f r e i g h t-r e l a t e d t r a n s p o r t a t i o n e mi s s i o n s,s h i p s u s e d t o t r a n s p o r t g o o d s mu s t t r a n s i t i o n t o u s i n g z e r o-e mi s s i o n f u e l s.I n e a r l y 2023,w e c o-f o u n d e d t h e Z e r o Emi s s i o n M a r i t i me B u y e r s Al l i a n c e (Z EM B A)t o g e t h e r w i t h t h e As p e n I n s t i t u t e,P a t a g o n i a,a n d Tc h i b o.I n M a r c h 2023,I n t e r I KEA Gr o u p a l s o j o i n e d t h e a l l i a n c e.Th r o u g h Z EM B A,f r e i g h t b u y e r s w i l l a c c e l e r a t e c o mme r c i a l d e p l o y me n t o f z e r o-e mi s s i o n s h i p p i n g,e n a b l e e c o n o mi e s o f s c a l e,a n d mi n i mi z e ma r i t i me e mi s s i o n s,h e l p i n g t o g e t z e r o-e mi s s i o n s h i p s o n t h e w a t e r b y t h e mi d-2020s.La n dH e a v y-d u t y t r u c k f r e i g h t i s a n o t h e r k e y,y e t e mi s s i o n s-i n t e n s i v e,c o mp o n e n t o f mo s t d e l i v e r y n e t w o r k s,a n d o n e w e a r e w o r k i n g t o d e c a r b o n i z e t h r o u g h s c a l i n g t h e u s e o f EV s.I n D e c e mb e r 2022,w e c o-f o u n d e d S FB A,a g r o u p c o mmi t t e d to decarbonizing freight operations.Members are working to i n c r e a s e d e ma n d f o r me d i u m-a n d h e a v y-d u t y b a t t e r y EV s a n d c h a r g i n g i n f r a s t r u c t u r e,a s w e l l a s a l i g n o n mo d e l s f o r f l e e t electrification.Bu i l d i n g Co n s t r u c t i o n a n d O p e r a t i o n sWe a s p i r e t o h a v e t h e mo s t s u s t a i n a b l e r e a l e s t a t e p o r t f o l i o i n the world.Today,our portfolio comprisesthousands of facilities in 66countries,including operations buildings(fulfillment c e n t e r s,d e l i v e r y s t a t i o n s,w a r e h o u s e s,a n d s o r t c e n t e r s),c o r p o r a t e o f f i c e s,d a t a c e n t e r s,a n d p h y s i c a l r e t a i l s t o r e s.We a i m t o r e d u c e e mi s s i o n s a c r o s s o u r p o r t f o l i o t h r o u g h i n c r e a s e d e n e r g y e f f i c i e n c y,e x p a n d i n g o u r u s e o f r e n e w a b l e e n e r g y,a n d r e d u c i n g e mb o d i e d c a r b o n i n c o n s t r u c t i o n b y u s i n g l o w e r-e mi s s i o n s ma t e r i a l s.We u s e a n En t e r p r i s e B u i l d i n g M a n a g e me n t S y s t e m(EB M S)t o ma n a g e f a c i l i t y e n e r g y u s e,s e e k i n g t o u s e e n e r g y a s e f f i c i e n t l y a s p o s s i b l e t o r e d u c e a s s o c i a t e d e mi s s i o n s.B y t h e e n d o f 2022,o u r EB M S w a s a c t i v e i n mo r e t h a n 1,000 f a c i l i t i e s g l o b a l l y.Th i s s t a n d a r d i z e d p l a t f o r m c o n t r o l s v a r i o u s b u i l d i n g s y s t e ms andhas alarms to proactively alert site teams to equipment f a i l u r e s.I n 2023,w e p l a n t o e x p a n d EB M S i mp l e me n t a t i o n a c r o s s o u r g l o b a l f a c i l i t i e s t o h e l p f u r t h e r r e d u c e emissions.C o r p o r a t e O f f i c e sTh r o u g h o u t 2022,o u r Gl o b a l Re a l Es t a t e a n d Fa c i l i t i e s t e a m ma d e p r o g r e s s i n e s t a b l i s h i n g f o u n d a t i o n a l p r a c t i c e s f o r b u i l d i n g a n d ma i n t a i n i n g s u s t a i n a b l e b u i l d i n g s.Gu i d e l i n e s w e r e developed and shared with internal teams for integratingmore-s u s t a i n a b l e p r a c t i c e s a c r o s s l e a s i n g,d e s i g n,c o n s t r u c t i o n,a n d o p e r a t i o n s.We a l s o g a t h e r e d c r u c i a l d a t a t o i n f o r m b u i l d i n g-s p e c i f i c c a r b o n-r e d u c t i o n r o a d ma p s a n d 2023 e n e r g y-r e d u c t i o n p r o j e c t s.U s i n g t h i s d a t a,w e p l a n t o b u i l d a t o o l t o e n h a n c e o u r u n d e r s t a n d i n g o f c u r r e n t e n e r g y a n d c a r b o n e f f i c i e n c i e s a n d t o e s t a b l i s h e n e r g y p e r f o r ma n c e targets.I n r e s p o n s e t o t h e e n e r g y s h o r t a g e i n Eu r o p e,w e q u i c k l y i mp l e me n t e d e n e r g y-r e d u c t i o n me a s u r e s t h a t w e p l a n t o s c a l e g l o b a l l y t o e n h a n c e e f f i c i e n c y a c r o s s o u r c o r p o r a t e buildings.P h y s i c a l S t o r e sI n a d d i t i o n t o d e s i g n i n g n e w s i t e s w i t h s u s t a i n a b i l i t y i n mi n d,w e u p g r a d e d e x i s t i n g s t o r e s w i t h t e c h n o l o g i e s t h a t d e l i v e r g r e a t e r e f f i c i e n c y a n d c a r b o n e mi s s i o n s s a v i n g s.P h y s i c a l s t o r e s i n c l u d e t h o s e f o r Wh o l e Fo o d s M a r k e t,Ama z o n Fr e s h,a n d Ama z o n Go.In t e r n a t i o n a l Li v i n g F u t u r e In s t i t u t e C e r t i f i c a t i o n Several of our Amazon Go stores areseeking Zero Carbon Ce r t i f i c a t i o n (Z CC)w i t h t h e I n t e r n a t i o n a l Li v i n g Fu t u r e I n s t i t u t e (I LFI).Th e c e r t i f i c a t i o n r e q u i r e s l o c a t i o n s t o l o w e r e n e r g y u s e,e l i mi n a t e o n-s i t e g a s c o mb u s t i o n,a n d b u i l d u s i n g l o w e r-c a r b o n ma t e r i a l s.I n a d d i t i o n t o d e mo n s t r a t i n g o u r c o mmi t me n t t o Th e Cl i ma t e P l e d g e,t h e s e c e r t i f i e d s i t e s s e r v e a s t e s t b e d s f o r t e c h n o l o g i e s t h a t w e c a n s c a l e a c r o s s o u r b u s i n e s s.1720 2 2 A ma z o n S u s t a i n a b i l i t y R e p o r t|I n t r o d u c t i o nS u s t a i n a b i l i t yD r i v i n g C l i ma t e S o l u t i o n sC a r b o nP e o p l eA p p e n d i xTh e t h o u s a n d s o f p a n e s o f g l a s s i n Th e S p h e r e s a r e d e s i g n e d t o ma x i mi z e l i g h t e x p o s u r e f o r p l a n t s w h i l e ma i n t a i n i n g a c o n s i s t e n t t e mp e r a t u r e i n s i d e.In c r e a s e d En e r g y Ef f i c i e n c y B y M a y 2022,Wh o l e Fo o d s M a r k e t i mp r o v e d e n e r g y e f f i c i e n c y p e r f o r ma n c e b y 21%f r o m a 2010 b a s e l i n e,a c h i e v i n g t h e U.S.D e p a r t me n t o f En e r g y B e t t e r B u i l d i n g s Ch a l l e n g e g o a l t w o y e a r s a h e a d o f s c h e d u l e.Th e s e i mp r o v e me n t s w e r e d r i v e n,i n p a r t,b y i n v e s t i n g i n a l t e r n a t i v e r e f r i g e r a n t s w i t h l o w e r g l o b a l w a r mi n g p o t e n t i a l (GWP);i n s t a l l i n g e n e r g y-e f f i c i e n t h e a t i n g,v e n t i l a t i o n,a n d a i r c o n d i t i o n i n g (H V AC)s y s t e ms;i mp l e me n t i n g r e t r o f i t p r o j e c t s;a n d l a u n c h i n g a n e n e r g y-a w a r e n e s s p r o g r a m f o r s t o r e o p e r a t i o n s.Ama z o n Fr e s h s t o r e s i n t h e U.S.a n d EU a l s o ma d e s t r i d e s o n e n e r g y e f f i c i e n c y t h r o u g h o u t 2022,u s i n g e f f i c i e n t l i g h t i n g a s s t a n d a r d i n a l l b u i l d i n g s a n d e x p a n d i n g t h e u s e o f d o o r s o n i n-s t o r e r e f r i g e r a t e d c a s e s.N a t u r a l R e f r i g e r a t i o n S e v e r a l r e t a i l l o c a t i o n s a r e p i l o t i n g n a t u r a l r e f r i g e r a n t s w i t h near-zeroGWP,as well as low-GWP refrigeration technologies.9 As o f t h e e n d o f 2022,45 Wh o l e Fo o d s M a r k e t s t o r e s h a d installed low-GWPrefrigeration systems.An additional 65 s t o r e s h a v e b e e n r e t r o f i t t e d t o u s e n e x t-g e n e r a t i o n S o l s t i c e N 40 r e f r i g e r a n t,w h i c h h a s a GWP a p p r o x i ma t e l y 6 8%l o w e r t h a n l e g a c y h y d r o f l u o r o c a r b o n r e f r i g e r a n t s.Al l U K Ama z o n Fr e s h s t o r e s o p e r a t e w i t h e i t h e r n a t u r a l o r l o w-GWP s y s t e ms.R e d u c i n g N a t u r a l Ga s U s e We a r e i n t r o d u c i n g t e c h n o l o g i e s t o e l e c t r i f y s y s t e ms t h a t t r a d i t i o n a l l y r u n o n n a t u r a l g a s,i n c l u d i n g k i t c h e n e q u i p me n t,w a t e r h e a t e r s,a n d H V AC s y s t e ms.Ama z o n Fr e s h s t o r e s i n t h e U K h a v e mo v e d t o f u l l y e l e c t r i c s y s t e ms,w h i l e i n t h e U.S.,w e a r e p i l o t i n g f u l l y e l e c t r i c k i t c h e n s i n s e v e r a l l o c a t i o n s.Ama z o n Go h a s e x p a n d e d e l e c t r i c H V AC e q u i p me n t i n Wa s h i n g t o n s t a t e a n d Ca l i f o r n i a.A d d r e s s i n g H a r d-t o-A b a t e C a r b o n Emi s s i o n sWe l o o k t o a d d r e s s o u r l a r g e s t r e ma i n i n g s o u r c e o f b u i l d i n g s e mi s s i o n s e mb o d i e d c a r b o n,10 p r i ma r i l y i n t h e c o n c r e t e a n d s t e e l u s e d i n c o n s t r u c t i o n.We u s e t h e Emb o d i e d Ca r b o n i n Co n s t r u c t i o n Ca l c u l a t o r (EC3)t o o l t o t r a c k e mb o d i e d c a r b o n i n o u r b u i l d i n g p r o j e c t s.I n 2022,w e t r a c k e d e mb o d i e d c a r b o n f r o m mo r e t h a n 400building projects through EC3.Th r o u g h o u t 2022,w e p a r t n e r e d w i t h v a r i o u s o r g a n i z a t i o n s t o i mp r o v e e mb o d i e d c a r b o n r e p o r t i n g.To g e t h e r w i t h I n t r o b a,w e d e v e l o p e d a me t h o d o l o g y f o r u n d e r s t a n d i n g a n d q u a n t i f y i n g e mb o d i e d c a r b o n i n ma t e r i a l h a n d l i n g a n d me c h a n i c a l,e l e c t r i c a l,a n d p l u mb i n g e q u i p me n t.Ad d i t i o n a l l y,w e c o l l a b o r a t e d w i t h t h e Ch a r t e r e d I n s t i t u t i o n o f B u i l d i n g S e r v i c e s En g i n e e r s t o d e v e l o p g u i d a n c e t o me a s u r e e mb o d i e d c a r b o n i n t e c h n o l o g i e s f o r t h e l o g i s t i c s s e c t o r.We l a u n c h e d a p r o g r a m t o f i n d a n d v a l i d a t e t r a n s f o r ma t i o n a l t e c h n o l o g i e s a s l o w e r-c o s t a l t e r n a t i v e s t o c a r b o n c r e d i t s11 i n t h e mo s t d i f f i c u l t-t o-a b a t e a r e a s o f o u r b u i l d i n g p o r t f o l i o.We h a v e a l s o i n t r o d u c e d a Te c h n i c a l Re v i e w Co mmi t t e e t o a s s e s s a n d r e c o mme n d p r o mi s i n g t e c h n o l o g i e s t o i mp r o v e r e s o u r c e p l a n n i n g.Th e i n t e r i o r o f M e t r o p o l i t a n P a r k i n Ar l i n g t o n,V i r g i n i a t h e f i r s t p h a s e o f Ama z o n s H Q 2,w h i c h o p e n e d i n M a y 2023.F u l f i l l me n t,Lo g i s t i c s,a n d Di s t r i b u t i o n C e n t e r sAl o n g s i d e p h y s i c a l s t o r e s,a n u mb e r o f f u l f i l l me n t,l o g i s t i c s,a n d d i s t r i b u t i o n s i t e s a r e p u r s u i n g Z CC s t a t u s t h r o u g h ILFIand ensuring they have access to tools and guidance t h a t h e l p t h e m r e d u c e c a r b o n e mi s s i o n s.O u r e f f o r t s t o r e d u c e S c o p e 1 a n d S c o p e 2 e mi s s i o n s b e g i n w i t h i n c r e a s i n g d a t a c o l l e c t i o n a c r o s s a l l b u s i n e s s a r e a s.Th r o u g h o u t 2022,Ama z o n Tr a n s p o r t a t i o n S e r v i c e s,Ama z o n Lo g i s t i c s,Ama z o n Fr e s h f u l f i l l me n t a n d d i s t r i b u t i o n c e n t e r s,a n d Cu s t o me r Fu l f i l l me n t i n b o t h N o r t h Ame r i c a a n d Eu r o p e e n h a n c e d d a t a c o l l e c t i o n t o h e l p i d e n t i f y o p p o r t u n i t i e s f o r g r e a t e r e f f i c i e n c y i n n e w a n d e x i s t i n g b u i l d i n g s.I n a d d i t i o n t o e f f i c i e n c y i mp r o v e me n t s,w e r e d u c e b u i l d i n g-r e l a t e d e mi s s i o n s t h r o u g h o u r c o r p o r a t e r e n e w a b l e p o w e r p r o g r a m.As o f t h e e n d o f 2022,237 Ama z o n f a c i l i t i e s h a v e o n-s i t e s o l a r.L e a r n mo r e a b o u t o u r r e n e w a b l e e n e r g y p r o g r e s s .We a r e a l s o f o c u s e d o n i n c r e a s i n g e n e r g y e f f i c i e n c y i n e x i s t i n g s i t e s t h r o u g h l i g h t i n g r e t r o f i t s,EB M S r e t r o f i t s,a n d r o o f t o p H V AC u n i t r e p l a c e me n t s.Th r o u g h l i g h t i n g r e t r o f i t s,w e h a v e s a v e d 1 b i l l i o n k i l o w a t t-h o u r s (k Wh)o f e n e r g y a n d a v o i d e d 709,000 me t r i c t o n s o f CO2e o v e r t h e l a s t s e v e n y e a r s.Th e u p g r a d e s i n c l u d e d c o n v e r t i n g a l l n o n-LED l a mp s t o h i g h-e f f i c i e n c y LED f i x t u r e s w i t h d i mmi n g c o n t r o l s.V a r i o u s b u s i n e s s u n i t s a r e w o r k i n g t o e n s u r e o u r b a s e l i n e b u i l d i n g d e s i g n s t a n d a r d s a r e o p t i mi z e d f o r l o w e r-c a r b o n c o n s t r u c t i o n.Fo r e x a mp l e,w e d e v e l o p e d b u i l d i n g d e s i g n s t r a t e g i e s t h a t e n a b l e e mi s s i o n s r e d u c t i o n s f o r Ama z o n Cu s t o me r Fu l f i l l me n t,Ama z o n Tr a n s p o r t a t i o n S e r v i c e s,a n d Ama z o n Lo g i s t i c s b u i l d i n g s.1820 2 2 A ma z o n S u s t a i n a b i l i t y R e p o r t|I n t r o d u c t i o nS u s t a i n a b i l i t yD r i v i n g C l i ma t e S o l u t i o n sC a r b o nP e o p l eA p p e n d i xMa k i n g H i s t o r y w i t h t h e Wo r l d s F i r s t ILF I Z e r o C a r b o n C e r t i f i e d F u l f i l l me n t C e n t e r O n e o f Ama z o n s n e w e s t S a me-D a y f u l f i l l me n t c e n t e r s i n S a c r a me n t o,Ca l i f o r n i a,i s s e t t o ma k e history as the firstfulfillment facility globally to a c h i e v e Z CC s t a t u s.Th e S a me-D a y s i t e w a s b u i l t u s i n g mo r e-s u s t a i n a b l e b u i l d i n g ma t e r i a l s l i k e l o w e r-c a r b o n c o n c r e t e,a f u l l y e l e c t r i f i e d H V AC s y s t e m,a n d h i g h-e f f i c i e n c y ma t e r i a l-h a n d l i n g e q u i p me n t.Th e b u i l d i n g i s s o l a r-r e a d y a n d d e s i g n e d t o h a v e a r o o f t o p s o l a r a r r a y t h a t c a n p o t e n t i a l l y g e n e r a t e a s mu c h a s 80%o f t h e f a c i l i t y s a n n u a l e l e c t r i c i t y n e e d s,w i t h t h e r e ma i n i n g b a l a n c e t o b e s u p p o r t e d b y Ama z o n s o f f-s i t e r e n e w a b l e e n e r g y p r o j e c t s.P a c k a g e s o n a c o n v e y o r b e l t i n Ama z o n s S a me-D a y s i t e i n S a c r a me n t o,Ca l i f o r n i a.A ma z o n We b S e r v i c e sWi t h mi l l i o n s o f u s e r s g l o b a l l y,Ama z o n We b S e r v i c e s (AWS)i s t h e w o r l d s mo s t c o mp r e h e n s i v e,b r o a d l y a d o p t e d c l o u d o f f e r i n g.12 To c o n t i n u e d e l i v e r i n g o p t i ma l s e r v i c e w h i l e b u i l d i n g a mo r e s u s t a i n a b l e b u s i n e s s,AWS i s d e s i g n i n g d a t a c e n t e r s i n c l u d i n g o u r s e r v e r s a n d h a r d w a r e f o r e f f i c i e n c y,r e s i l i e n c y,a n d a l o w e r c a r b o n f o o t p r i n t.En e r g y Ef f i c i e n c yRe s e a r c h s h o w s t h a t i n N o r t h Ame r i c a,AWS c a n l o w e r c u s t o me r s w o r k l o a d c a r b o n f o o t p r i n t s b y n e a r l y 80%c o mp a r e d t o o n-p r e mi s e s c o mp u t i n g w o r k l o a d s,a n d u p t o 9 6%o n c e AWS i s p o w e r e d w i t h 100%r e n e w a b l e energyatarget we are on a path to meet by 2025.13Wh e n s e r v e r s a r e i n u s e,t h e y p r o d u c e h e a t.I f t h e y p r o d u c e t o o mu c h h e a t,i t c a n i mp a c t t h e i r p e r f o r ma n c e a n d l i f e s p a n.Ai r c o n d i t i o n i n g s y s t e ms c a n b e e n e r g y-i n e f f i c i e n t,w h i c h i s w h y w e l o o k t o ma x i mi z e u s e o f n a t u r a l a i r f l o w t o l o w e r server temperatures and energy use requirements.When we d e s i g n AWS d a t a c e n t e r s,p a r t i c u l a r l y o u r d a t a h a l l s,w e u s e mo d e l s t h a t e x a mi n e h o w a i r mo v e s t h r o u g h s p a c e s.We t h e n c r e a t e a d i g i t a l r e p r e s e n t a t i o n o f t h i s mo v e me n t t o d e t e r mi n e p h y s i c a l p r o p e r t i e s s u c h a s t e mp e r a t u r e,p r e s s u r e,a n d v e l o c i t y a t a n y l o c a t i o n t h r o u g h o u t t h e d a t a h a l l.Th i s a l l o w s u s t o f u l l y u n d e r s t a n d h o w d a t a c e n t e r s w i l l p e r f o r m b e f o r e t h e y r e e v e n b u i l t,e n a b l i n g o p t i mi z a t i o n f o r h i g h e r s y s t e m r e l i a b i l i t y a n d e n e r g y e f f i c i e n c y.L e a r n mo r e a b o u t h o w w e o p t i mi z e d a t a c e n t e r c o o l i n g s y s t e ms .O n e o f t h e mo s t v i s i b l e w a y s w e a r e i n n o v a t i n g f o r p o w e r e f f i c i e n c y i s o u r i n v e s t me n t i n p u r p o s e-b u i l t AWS ma c h i n e l e a r n i n g c h i p s.O u r t h i r d-g e n e r a t i o n Ar m-b a s e d c h i p,AWS Gr a v i t o n 3,i s mo r e e n e r g y-e f f i c i e n t,a s Gr a v i t o n 3-b a s e d El a s t i c Co mp u t e Cl o u d i n s t a n c e s u s e u p t o 6 0%l e s s e n e r g y f o r t h e s a me p e r f o r ma n c e t h a n c o mp a r a b l e Ama z o n EC2 i n s t a n c e s.I n 2022,w e l a u n c h e d AWS Tr a i n i u m,a h i g h-p e r f o r ma n c e ma c h i n e l e a r n i n g c h i p d e s i g n e d t o r e d u c e t h e t i me a n d c o s t o f t r a i n i n g g e n e r a t i v e AI mo d e l s c u t t i n g t r a i n i n g t i me f o r s o me mo d e l s f r o m mo n t h s t o h o u r s.Th i s,i n t u r n,me a n s b u i l d i n g n e w mo d e l s r e q u i r e s l e s s mo n e y a n d p o w e r,w i t h p o t e n t i a l c o s t s a v i n g s o f u p t o 6 2%a n d e n e r g y-c o n s u mp t i o n r e d u c t i o n s o f u p t o 29%,v e r s u s c o mp a r a b l e i n s t a n c e s.I n f e r e n t i a i s o u r mo s t p o w e r-e f f i c i e n t ma c h i n e l e a r n i n g i n f e r e n c e c h i p.O u r I n f e r e n t i a ma c h i n e l e a r n i n g c h i p i s 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MONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report1TABLE OF CONTENTSSTRATEGY&PERFORMANCESummary3Chairman&CEO Letter4About Us5Our Purpose6Our Approach7How We Get It Done8Materiality9ESG Priorities10ESG Progress11Chief Impact&Sustainability Officer(CISO)Letter12MINDFUL SNACKINGOverview13Approach&Progress14Championing Portions&Mindful Behavior15Enhancing Our Ingredient&Nutrient Profile16Providing Consumers with Options17Marketing Responsibly&Inclusively18Food Safety19SUSTAINABLE SNACKINGOverview20Climate Risks21Action Toward Net Zero23Our Carbon Footprint24Energy27Logistics28Water29Waste30Social Sustainability&HumanRights31More Sustainable Packaging34More Sustainable Ingredients36Cocoa37Wheat47Dairy51Palm Oil53Hazelnuts55More Sustainable Sourcing56COLLEAGUE&COMMUNITYOverview57Leadership&Growth Culture58Diversity,Equity&Inclusion(DE&I)59Advancing Racial Equity&Equality60Advancing Gender Equity&Equality61Economic Inclusion&SupplierDiversity(EISD)62Colleague Health&Well-Being63Impact Investing64Humanitarian Support65Community Impact&EmployeeVolunteering66Workplace Safety68GOVERNANCEOverview69Corporate Governance70Compliance&Integrity Program74UN Sustainable Development Goals75CLOSING LETTERClosing Letter76ABOUT THIS REPORTOverview77About Our ESG Goals78Endnotes80Index82Forward Looking Statements84STRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITYGOVERNANCEABOUT THIS REPORTSummaryCEO LetterAbout UsOur PurposeOur ApproachHow We Get It DoneMaterialityESG PrioritiesESG ProgressCISO LetterMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report22023 HIGHLIGHTSGuided by our ambition to build a more sustainable snacking company,we take a strategic long-term approach as we strive to meet our Environmental,Social and Governance(ESG)goals.You can find additional details on our ESG goals under About Our ESG Goals sub-section within the About This Report section.MINDFUL SNACKING-CONSUMERS100%Maintained 4 years of continued internal manufacturing sites certified to food safety schemes that are benchmarked by the Global Food Safety Initiative(GFSI)62%net revenue delivered through mindful portions(1). 17percentage pointsCLIMATE&ENVIRONMENTScience Based Targets Initiative(SBTi)-validated end-to-end carbon emissions targets(7).Approximately-3.7%GHG emissions reduction across our value chain(vs.2018)(7).Reduced food wastefrom distribution by about-69%vs.our 2018 baseline.Sourced48%Electricity at manufacturing sites from renewables,up from 40%in 2022(22).SUSTAINABLE INGREDIENTSConfirmed aim to seek no deforestation across primary commodities by 2025.Distributed approximately 8,589,000trees to Cocoa Life communities(25).256,000Cocoa Life farms mapped(41).Trained around 225,000farmers in Good Agricultural Practices(25).99%of wheat volume needed for our European business biscuits production grown under the Harmony Charter(6).Maintained approximately100%Roundtable on Sustainable Palm Oil(RSPO)-certified palm oil sourcing(3).PACKAGINGApproximately96%of our packaging was designed to be recyclable(11).Founding investor in a Circulate Capital initiative in Latin America aimed at reducing plastic waste.Co-lead the Consumer Goods Forums Plastic Waste Coalition of Action Flexibles Working Group,focused on developing Ethylene Propylene Rubber(EPL)as a more sustainable source of flexibles and innovation in packaging.DIVERSITY,EQUITY&INCLUSIONEmployee satisfaction score of80based on annual global employee engagement survey.Score is in top quartile of external benchmark.participationross the workforce and an all-time high for 2023.42%of global management roles held by women(30).Nearly3XTripled diverse placements from Historically Black Colleges and Universities(HBCUs)to our early career program in the U.S.since 2020(32).Reached total spend of around$880Mwith minority and women owned suppliers(17).Approximately29,000volunteer hours spent by our people giving of their time,talents and in service to their communities.STRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITYGOVERNANCEABOUT THIS REPORTSummaryCEO LetterAbout UsOur PurposeOur ApproachHow We Get It DoneMaterialityESG PrioritiesESG ProgressCISO LetterMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report3CHAIRMAN&CEO LETTERDirk Van de PutChairman&CEO,Mondelz International“We are committed to make snacking right for everyone our business touchesfrom the farmers and communities that produce our ingredients to the consumers who enjoy our snacks.We are proud to report that we are executing against our clear 2025 goals,which put us on the path to pursue our bold long-term ambitions.”I am incredibly proud of our work in 2023 to continue meeting evolving consumer preferences and delivering strong results while making meaningful progress against our Environmental,Social and Governance(ESG)priorities.We made this progress despite ongoing global inflation and economic uncertainty,a testament not only to the power of our iconic brands,but also to our focused and strategic approach to sustainable growth and the passion of our amazing 91,000 colleagues around the world.This year we strengthened and refined our portfolio with substantial investments in our beloved brands through innovation,renovation and reformulation.This is coupled with acquisitions of companies such as Clif Bar&Company(Clif),whose commitment to well-being and the environment closely aligns with our mission and supports our purpose of empowering people to snack right.Furthermore,we continued to advance communication on Mindful Snacking and achieved quantifiable progress against the sustainability goals detailed in this report.From reducing our climate impact through tangible actions,like transitioning to renewable energy sources across many of our manufacturing facilities,to scaling regenerative agricultural practices across our sustainable ingredient sourcing programs,we continue to build on progress against our 2025 ESG goals.I am pleased to say this years Snacking Made Right report demonstrates measurable action against our long-term ambitions,including the aspiration to reach gender parity across our business leadership teams and realize a goal of net-zero carbon emissions by 2050.Particularly amid a dynamic environment that faces rising inflation,we remain focused on more sustainable sourcing.Prices of cocoa,a key ingredient for many of our brands at Mondelz International,have risen considerably as a result of declining supply of cocoa over the course of this calendar year,largely due to weathers impact on crop yield.Our sourcing strategies and our Cocoa Life signature sustainable sourcing program continue to address these challenges and build a more resilient supply of this important ingredient.Through Cocoa Life,we have been investing to lift up people and restore landscapes where cocoa grows as we,and our sector more broadly,plan for the future.We have prioritized industry and sector-wide collaboration,partnerships and advocacy as essential to deliver against our long-term ambitions.As such,we work in partnership with suppliers and across our value chain,and we play a leadership role in industry coalitions,including the Consumer Goods Forum(CGF)which I Co-Chair and the World Cocoa Foundation(WCF)which my Chief Sustainability&Impact Officer Chairs.Im delighted to note that our sustainability efforts have earned us high-profile recognition.In 2023,Barrons placed us on its list of the 100“Most Sustainable U.S.Companies,”and Newsweek named us one of“Americas Most Responsible Companies.”We have earned this recognition while continuing to win the loyalty of our consumers.The wide range of choices we offer as part of our Snacking Made Right mission,along with our strategic focus on chocolate,biscuits and baked snacks categories we aim to represent 90%of our portfolio as part of our long-term growth strategy strongly aligns with current consumer priorities.Our diverse portfolio and focused categories keep us at the forefront of snacking,where,as leaders,we continue to pave the way in proving the resiliency of our brands despite disruptions,challenges and emerging trends,including the advent of weight-loss drugs.We can confidently say snacking is here to stay and believe we are well positioned for long-term sustainable business growth.We know there is a continued place for mindful indulgence in a balanced lifestyle.Our chocolate portfolio in particular,including beloved brands such as Cadbury,Toblerone and Milka,is well-attuned to the 85%of consumers polled in 2023 who confirm they are likely to savor an indulgent snack.And our portfolio offers choice,featuring healthier alternatives such as belVita biscuits and whole-grain snack bars,as well as portion-control products that contain less than 200 calories and now generate nearly 20%of our sales.Our focus on mindful snacking is being applied across our entire portfolio in support of our mission to offer the right snack,for the right moment,made the right way.By 2025 we aim for up to 100%of our net revenue from our snacking portfolio through Mindful Portion Snacks,those in either individually wrapped mindful portion serving sizes or with mindful portion labeling.Driving against our ESG goals is fundamental to enabling our long-term growth,holding our leadership position in snacking and advancing a business that will remain resilient for many years to come.At the heart of this lies the winning growth culture we continue to create in support of our people who lie at the center of these efforts.We continue to map our disclosures against existing frameworks,including the Sustainability Accounting Standards Board(SASB)and Task Force on Climate-Related Financial Disclosures(TCFD),in response to stakeholder feedback,and we continue to assess new frameworks and conventions for potential adoption.In 2024,we remain focused on further empowering people to snack right by honing our portfolio,strengthening our brands and continuing to execute with excellence and innovation.I believe that these efforts are setting us up for years of high-quality sustainable growth and I remain humbled to advance the important work of Snacking Made Right for generations to come.STRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITYGOVERNANCEABOUT THIS REPORTSummaryCEO LetterAbout UsOur PurposeOur ApproachHow We Get It DoneMaterialityESG PrioritiesESG ProgressCISO LetterMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report4ABOUT US2023 Highlights(18)LEADING THE FUTURE OF SNACKINGAs one of the worlds largest snack companies,we live and breathe snacks andwewant to make them right for people and the planet.MARKET LEADING ACROSS CORE CATEGORYBiscuits,Protein/Energy Snack Bars#1 iN KEY SNACKS MARKETS(18)Biscuits,Cakes&PastriesChocolateBiscuitsChocolateNET REVENUES BY CATEGORYBiscuits&BakedSnacks49%Chocolate30%Gum&Candy12%Cheese&Grocery6verages3%OUR BRANDSWe aim to deliver a broad range of delicious,high-quality snacks that nourish lifes moments,made with more sustainably sourced ingredients and delivered in packaging that more consumers can feel good about.Our portfolio includes snacking brands such as Milka,Lacta,Cadbury,Cte DOr and Toblerone chocolate;Oreo,7 Days,CLIF,Kinh Do,LU,Ritz,Nabisco and Chips Ahoy!biscuits and baked snacks.Our brands span five product categories and we are optimizing our portfolio prioritizing our fast-growing core categories of chocolate,biscuits and baked snacks.BAKED SNACKS INCLUDINGBISCUITS INCLUDINGCHOCOLATE INCLUDINGNET REVENUES BY REGIONOUR REACHWe operate in approximately 80 countries.91KOur approximately 91,000 employees bring our brands to life every day by making and baking our delicious products.150 Our products are enjoyed in over 150 countries around the world.STRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITYGOVERNANCEABOUT THIS REPORTSummaryCEO LetterAbout UsOur PurposeOur ApproachHow We Get It DoneMaterialityESG PrioritiesESG ProgressCISO LetterMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report573a9%NON-U.S.DEVELOPED MARKETSEMERGING MARKETSNorthAmerica31%Europe36%LatinAmerica14%AMEA19%$36B2023 NET REVENUESOUR PURPOSEWHAT DRIVES USOUR PURPOSE is to empower people to snack right.OUR MiSSiON is to lead the future of snacking by offering the right snack,for the right moment,made the right way.OUR VALUES guide how we make snacking right.Across Mondelz International,we all strive to:Love our consumers and our brands.We deeply know our consumers and understand their desires for personal well-being and thoughtful care for our planet.It shapes how we share delightful and sustaining snacks with them.Grow every day.In everything we do,were thinking of one thing growth.We operate with speed and efficiency instead of focusing on perfection.Our people are at the heart of everything we do.They are the driving force behind our growth.Do whats right.Always.We treat everyone with care and integrity.Our diverse,inclusive and connected community makes us stronger and secures our steps forward on the right path.We follow through on our commitments,doing what is right for our consumers,right for our partners,right for our brands and right for the environment.OUR FOUR STRATEGIC PRIORITIES SUPPORT OUR PURPOSE,MISSION AND VALUES,AND GUIDE OUR GROWTH STRATEGY.GROWTHEXECUTIONAccelerating Consumer-centric GrowthDriving Operational ExcellenceCULTURESUSTAINABILITYBuilding a Winning Growth CultureScaling More Sustainable SnackingSTRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITYGOVERNANCEABOUT THIS REPORTSummaryCEO LetterAbout UsOur PurposeOur ApproachHow We Get It DoneMaterialityESG PrioritiesESG ProgressCISO LetterMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report6OUR APPROACHOur ESG priorities are based on our Snacking Made Right framework and designed to deliver on our mission:to lead the future of snacking by offering the right snack,for the right moment,made the right way.Our strategic approach to Snacking Made Right,alongside our long-term growth strategy represented by the four pillars of growth,execution,culture and sustainability helps us drive innovative,sustainable business growth.PRIORITIZING FOR GREATER IMPACTMORE SUSTAINABLE INGREDIENTSMORE SUSTAINABLE PACKAGINGSOCIAL IMPACTSnacking Made Right focuses on the following social and environmental areas in which we believe we can deliver greater long-term positive impact.Our strategy and goals in addressing these key focus areas support our growth,and are underpinned by our broader focus on promoting a culture of safety,quality,inclusivity and equity.We develop signature sourcing programs across key raw materials,including cocoa,wheat,and palm oil,to help build greater end-to-end resilience in these supply chains.We aim for reducing and evolving packaging and improving systems to support our vision of a more circular pack economy.We promote human rights across our value chain and help to enable empowered and inclusive communities.CLIMATEDIVERSITY,EQUITY&INCLUSIONCONSUMER/MINDFUL SNACKINGCOLLEAGUE WELL-BEINGWe help combat climate change through science-based targets,using natural resources end-to-end more efficiently and renewably.We champion diversity,equity and inclusion for our colleagues,culture and communities.We aim to empower consumers with contemporary well-being options and choices,Mindful Snacking habits and portion balance.We build a culture that focuses on the safety,physical and mental well-being of our colleagues.STRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITYGOVERNANCEABOUT THIS REPORTSummaryCEO LetterAbout UsOur PurposeOur ApproachHow We Get It DoneMaterialityESG PrioritiesESG ProgressCISO LetterMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report7HOW WE GET IT DONEENSURING STRONG GOVERNANCEOur comprehensive governance structure provides strong oversight of our ESG efforts.Our Board of Directors oversees our ESG-related risks,strategy,progress,alignment with purpose,stakeholder interests and strategic risks and opportunities.It also reviews progress and challenges on evolving our growth culture and our diversity,equity and inclusion(DE&I)goals.Specific responsibilities are delegated to our Board committees,which are composed solely of independent directors.Our Governance,Membership and Sustainability Committee(GMSC)oversees our ESG policies and programs related to corporate citizenship,social responsibility and public policy issues that are significant to us.These issues include sustainability and environmental responsibility;food labeling,marketing and packaging;philanthropic and political activities and contributions;and the Boards ESG education and capabilities.The People and Compensation Committee oversees our DE&I priorities,as well as workplace safety,employee wellness,pay equity,talent sourcing strategies,talent management and development programs,and ESG Strategic Progress Indicator(SPI)goals for incentive plans.The Audit Committee oversees our safety priorities,goals and performance,as well as our ESG-related disclosure in SEC filings,including controls and assurance.Our ESG goals are part of our risk and strategic planning processes and are considered as part of our annual incentive compensation program for our leadership.Business leadership teams and our Board regularly reviews progress toward these programs and priorities.EMBEDDING SUSTAINABILITY INTO OUR BUSINESS OPERATIONS Our local-first and consumer-centric business model means that while ESG goals are set in five year increments globally,business transformation requires a balance across global scale and local operations to deliver progress against these goals.Our GMSC Committee oversees programs to integrate ESG policies and programs at the local business level across all of Mondelz Internationals business units.INVOLVING OUR PEOPLEWe integrate sustainability into how we do business and empower our employees across every function to play a role.We do this by providing our colleagues with the information to drive action,the motivation to make changes and the opportunities to make sustainability part of every business decision.InformIn 2023,we invested in an education program to upskill employees more deeply about issues facing the planet,like climate change,and the changes that need to happen across our business to address them.It focused on three key areas:fundamental issues,strategy,and execution,alongside education on evolving regulatory requirements around sustainability.To deliver the program,we used a variety of tools,including informational videos,academy training workshops and a dedicated information hub and share a variety of ESG-related materials with our customers and suppliers.InspireWe focus on leading where it matters most and driving change where the world needs it most.Our Global Sustainability Team sits in a prominent place in the business,within the Corporate&Legal Affairs function.And it collaborates cross-functionally to implement a range of sustainability programs.Leaders from all functions share information about our sustainability work to engage employees and inspire them to think and work more sustainably.InvolveSustainability touches every part of our business,so we offer initiatives that every employee from leaders to frontline workers can participate in.More than 10,000 colleagues around the world took part in our first Green Week learning and engagement session in 2023.And our Changemakers community volunteering program invites each employee to make a pledge that makes a difference across in our ESG focus areas.WORKING IN COLLABORATION Collaboration is essential to transforming our business and delivering progress against our long-term goals.Thats why we both participate in and lead many industry coalitions,including the Consumer Goods Forum(CGF)and the World Cocoa Foundation(WCF).CGF:Our Chairman and CEO,Dirk Van de Put,has co-chaired the CGF at the Board level since June with a two-year mandate alongside Frans Muller,President and CEO of Ahold Delhaize.We are an active member of the Forums Forest Positive Coalition of Action.We also co-sponsor the Forums Global Food Safety Initiative,have co-chaired its Human Rights Coalition of Action since June as well as the Plastic Waste Coalition of Action.We are poised to support the Forums work to accelerate its members aspirations to transition to net zero emissions through the newly formed Net Zero Coalition of Action.In May,our Chief Impact&Sustainability Officer,Christine Montenegro McGrath,was appointed as WCFs chairperson.Since then,we have further supported the Foundations vision to catalyze a thriving and equitable cocoa sector that collaborates to help improve farmer income,reverse deforestation and combat child labor.COMMUNICATING WITH STAKEHOLDERSAt Mondelz International,we communicate to internal and external stakeholders on our environmental,social and governance programs through a variety of ESG-related materials.Externally,our program progress is shared through a variety of ESG reporting frameworks and on our website.Internally,employees receive an annual Health,Safety and Environmental(HSE)training manual which covers topics such as human rights,food safety,security and environmental topics.Annually we publish our Human Rights Due Diligence Report made available on our website.Additionally,environmental management issues are shared,escalated and solved with internal stakeholders through a variety of channels including monthly regional meetings,global forums and through our sustainability hub team.We continue to seek two-way dialogue with our stakeholders and are completing our Double Materiality Assessment in accordance with the EUs Corporate Social Responsibility Directive(CSRD).ESG REPORTING We discuss our ESG goals and programs in detail in our annual Snacking Made Right report available on our website.We provide an ESG data sheet and are aligned with the SASB and TCFD reporting frameworks.We also provide our annual CDP Climate Change,Water Security and Forests disclosure.STRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITYGOVERNANCEABOUT THIS REPORTSummaryCEO LetterAbout UsOur PurposeOur ApproachHow We Get It DoneMaterialityESG PrioritiesESG ProgressCISO LetterMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report8DIGGING DEEPER INTO OUR MATERIALITYWere in the process of our materiality assessment in line with upcoming regulatory requirements(laws,regulations,standards and rules).Results anticipated in due course.Internal and external advisors are helping us review the impact environmental and societal issues have on our business and shape our strategic response and action plans.We consider the materiality of these issues to our business.We consider the perspectives,priorities and asks of shareholders and other stakeholders as we shape long-term goals and associated action plans,and have these goals and plans validated by external advisors.To advance our disclosure and promote transparency,we also engage with multiple ESG ratings organizations and indices.Our two-way dialogue informs our ESG approach,which defines our assessment of the environmental and social issues most significant to us.FOCUSING IN ON PRIORITY TOPICS.Some of the processes and materials that guide our ESG strategic planning and ongoing assessment include:Our Enterprise Risk Management(ERM)process that we use for identifying,assessing,prioritizing,mitigating and monitoring risks;external analysis of stakeholder and regulatory issues;our Companys total greenhouse gas(GHG),land and water footprint;consumer insights data;and publicly available data on societal issues,including statistics and reports from government authorities,non-governmental organizations(NGOs)and peer companies.The social and environmental issues that we believe are among those that are material to building a successful and sustainable snacking company include:SAFETYPromote the safety of our people and products.ENVIRONMENTAL&SOCIAL SUSTAINABILITY Aim to reduce environmental and societal impact across operations,landscapes and communities including the sourcing of our primary ingredients,product packaging and manufacturing.SUPPLY SECURITYFocus on key agricultural commodities and social challenges in the supply chain,including more sustainable agriculture and promoting human rights within our signature programs and approaches for cocoa,wheat and palm oil.CONSUMER&COLLEAGUE WELL-BEINGSupport well-being through portfolio enhancements,Mindful Snacking messaging and community partnerships.Advance a diverse workforce and create an inclusive culture for employees providing equity of opportunity.STRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITYGOVERNANCEABOUT THIS REPORTSummaryCEO LetterAbout UsOur PurposeOur ApproachHow We Get It DoneMaterialityESG PrioritiesESG ProgressCISO LetterMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report9OUR ESG PRIORITIESWe have set clear 2025 goals that put us on the path to pursue bold long-term ambitions.Our strategic focus areas,goals and ambitions map to the areas of our business best positioned to drive progress,and are aligned to what we believe is significant to our long-term business success.They also support our vision to lead the future of snacking and our aim to reduce our environmental footprint and have a positive lasting impact on people and communities as we continue to grow.These goals include more sustainable sourcing of key ingredients,reducing our environmental footprint,promoting the rights of people across our value chain and evolving our portfolio to offer a broader range of high-quality snacks that address consumer needs,while encouraging consumers to snack mindfully.Guided by our ambition to build a more sustainable snacking company,we take a strategic long-term approach as we strive to meet our ESG goals.You can find additional details on our ESG goals under About Our ESG Goals sub-section within the About This Report section.MORE SUSTAINABLE INGREDIENTSCLIMATEMORE SUSTAINABLE PACKAGINGSOCIAL IMPACT100%-35%-50%Goal by 2025:100%of cocoa volume for chocolate brands sourced through Cocoa Life by 2025.Goal by 2030:35%end-to-end CO2e emissions reduction by 2030 from 2018 baseline.By 2025:10solute water usage reduction in priority sites and 15%food waste reduction in internal manufacturing sites from 2018 baselines.Goal by 2025:Aim to reduce virgin plastic by 5%and virgin rigid plastic by 25%from 2020 baseline.Goal by 2025:Aim to have approximately 98%or more of our packaging designed to be recyclable.Goal by 2025:Aim to cover all Cocoa Life communities in West Africa with Child Labor Monitoring&Remediation Systems.DIVERSITY,EQUITY&INCLUSIONCONSUMER/MINDFUL SNACKINGSUPPLIER DIVERSITYNO DEFORESTATION2X100%$1BNODEFORESTATIONGoal by 2024:Aim to double representation of women in executive leadership roles(defined as Mondelz Leadership Team 1)from 2018 base of 18%.Aim to double U.S.Black representation in management from 2020 base of 3.2%.Goal by 2025:Aim for up to 100%of net revenue through Mindful Portion Snacks those in either individually wrapped mindful portion serving sizes or with mindful portion labeling.Goal by 2024:Aim to spend$1 billion with minority and women owned businesses.Seek no deforestation across our primary commodities following a phased approach that begins with our European Business and rolls out to other regions.STRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITYGOVERNANCEABOUT THIS REPORTSummaryCEO LetterAbout UsOur PurposeOur ApproachHow We Get It DoneMaterialityESG PrioritiesESG ProgressCISO LetterMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report10OUR ESG PROGRESSGuided by our ambition to build a more sustainable snacking company,we take a strategic long-term approach as we work to meet our ESG Goals.OUR AIM2023 PerformanceSnacking More MindfullyUpto100%ofournetrevenuethroughMindfulPortionSnacks,thoseineitherindividuallywrappedmindfulportionservingsizesorwithmindfulportionlabeling(1)62%Sustainable SnackingIngredients100%cocoavolumeforchocolatebrandssourcedthroughCocoaLifeby2025(2)85%Maintain100%palmoilvolumeRoundtableonSustainablePalmOil(RSPO)certified(3)1000gefreeeggsgloballyby2025(excludingRussia,Ukraine&Vietnam)(4)(37)52irysupplysourcedfromsupplierswithformalanimalwelfarestandards(5)670%wheatvolumeneededforEuropebusinessbiscuitsproductiongrownundertheHarmonycharterby2022(6)99%Environment35%end-to-endCO2eemissionsreductionby2030(vs.2018)(7)(38)(3.7)%COeemissionsreductionsacrossourmanufacturingoperationsby2025(vs.2018)(8)(34)solutewaterusagereductioninprioritysitesby2025(vs.2018)(9)(15)%foodwastereductionininternalmanufacturingsitesby2025(vs.2018)(10)(28)P%foodwastereductionfromdistributionby2025(vs.2018)(69)%PackagingApproximately98%ormoreofourpackagingdesignedtoberecyclableby2025(11)(39)96%5%reductioninvirginplasticby2025(vs.2020)(11)(2.3)%reductioninrigidvirginplasticby2025(vs.2020)(11)9%5%recycledplasticcontentby2025(11)1.4%Colleague&Community Social100%manufacturingsitescompletedSMETAauditwithinthepast3years(12)910%prioritizedsuppliersitescompletedSMETAauditinpast3years(13)90%ChildLaborMonitoring&RemediationSystems(CLMRS)cover100%CocoaLifecommunitiesinWestAfricaby2025(14)75&IDoubleU.S.Blackrepresentationinmanagementby2024(2020baseof3.2%)(15)6.3%Doublerepresentationofwomeninexecutiveleadership(definedasMondelzLeadershipTeam 1)rolesby2024(2018baseof18%)(16)42%Spend$1billionwithminorityandwomenownedbusinessesby2024(17)$880MWorkplace SafetySeverityandTotalAccidentRate(TAR):ContinuedfocustoreduceSeverity1safetyincidentstozero(23)%We aim to regularly and transparently report our progress.You can find additional details on our ESG goals under About Our ESG Goals sub-section within the About This Report section.STRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITYGOVERNANCEABOUT THIS REPORTSummaryCEO LetterAbout UsOur PurposeOur ApproachHow We Get It DoneMaterialityESG PrioritiesESG ProgressCISO LetterMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report11CISO LETTERChristine Montenegro McGrathSVP,Chief Impact&Sustainability Officer,Mondelz International“The world is changing rapidly,demanding that we change with it.We are committed to working collaboratively on interrelated systemic issues across the sector to deliver impact.”With 2030 on the horizon and 2025 quickly approaching,Im genuinely inspired by the progress the Mondelz International team has made over the past year to drive our upcoming goals and have a clear plan to achieve our long-term ambitions.Over the past year,weve done critical work to reduce our climate impact.This includes developing a time-bound,net-zero carbon emissions roadmap and reduction plan linked to targets independently validated by the SBTi,scaling regenerative agricultural practices across our signature sourcing programs,and reducing carbon emissions at scale across our owned operations.This work lays the necessary groundwork for Mondelz International to make progress against our long-term net-zero target,an aspiration I am so proud to see our Company deliver measurable progress against.This important work and the progress detailed in this report would not have been possible without our committed people,our partnerships with suppliers and NGOs and our collaboration with industry coalitions,including the World Cocoa Foundation and Consumer Goods Forum.We are committed to work in genuine partnership to deliver impact.The world is changing rapidly,demanding that we change with it,and we are committed to working on interrelated systemic issues.Particularly as supply of cocoa has been hindered this year largely due to weather with lower production causing a rise in the price of this important input,we have continued our focus on our cocoa sourcing program,Cocoa Life,to support our goal of a thriving and equitable cocoa sector that collaborates to combat interrelated system issues like deforestation,farmer poverty and child labor.Through perseverance and diligence,we have built an end-to-end carbon emissions reduction roadmap,leveraging both tried-and-true programs as well as new pilots associated with SBTi-validated emissions reductions targets.These efforts are helping us meaningfully reduce our emissions and give us a clear path forward as we progress against our long-term ambition.Weve also made strong progress toward our 2025 environmental and social goals,some of which we have already achieved or exceeded.Some highlights from 2023 Im particularly proud to share include:a.Scaling regenerative agricultural practices across our signature sourcing program,Cocoa Life,where our programs continue to make an impact to help eliminate deforestation and contributes to our Scope 3 carbon reductions.b.Sourcing approximately 99%of wheat volume needed for our European business biscuits production grown under the Harmony Charter(6).c.Sourcing nearly half of electricity at manufacturing sites from renewables,up from more than 40%in 2022(22).d.Slashing food waste from distribution by an impressive approximately(69)%.This work creates value for our business and helps enable our future growth by making our business more resilient.Looking ahead,we aim to further sharpen,amplify and accelerate our impact across our priority areas.We are also focused on evolving to meet expanding regulatory requirements and remain committed to transparency in sharing our progress.I am grateful for the passion,drive and ownership Mondelz International team members bring to their roles every day.I am proud to work alongside them and the many others we collaborate with to drive positive impact at scale and continue to make progress in 2024.Christine Montenegro McGrathSVP,Chief Impact&Sustainability Officer,Mondelz InternationalSTRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITYGOVERNANCEABOUT THIS REPORTSummaryCEO LetterAbout UsOur PurposeOur ApproachHow We Get It DoneMaterialityESG PrioritiesESG ProgressCISO LetterMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report12MINDFUL SNACKING OVERVIEWWe believe every snack can be enjoyed in a mindful way.As proud makers of chocolate,biscuits and baked snacks loved the world over,we are thoughtful in the way we make and manage our evolving portfolio of brands.Through our Mindful Snacking Strategy,we aim to support consumer well-being on four fronts:1Championing portions and mindful behavior through individually wrapped pre-portioned packs and mindful portion label information.2Enhancing our ingredient and nutrient profile while continuing to deliver delightful brand experiences.3Providing options to our consumers that meet their evolving expectations.4Marketing responsibly in line with high ethical standards.Our Mindful Snacking Strategy is underpinned by a 2025 Mindful Portions goal and multiple global and local initiatives.In 2023,we made solid progress on all pillars of our Mindful Snacking Strategy,advancing our ambition to help consumers enjoy our delicious snacks.STRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITY GOVERNANCEABOUT THIS REPORTOverviewChampioning Portion&Mindful BehaviorEnhancing Our Ingredient&Nutrient ProfileProviding Consumers with OptionsMarketing Responsibly&InclusivelyFood SafetyMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report13“As a snack company dedicated to empowering people to snack right,the integration of mindfulness into our brand experiences not only accentuates the pleasure and satisfaction our consumers feel when they enjoy our delicious snacks;it helps our consumers develop a more balanced approach to snacking and provides guidance to how we build our brands.”Jennifer HullSenior Director,Global Mindful Snacking and Category Strategy,Mondelz InternationalOUR APPROACH&PROGRESSBelow is a summary of our four Mindful Snacking Strategy pillars and progress in 2023.CHAMPIONING PORTIONS AND MINDFUL BEHAVIORTo help consumers savor our snacks while they manage their calorie intake,we are expanding our range of individually wrapped Mindful Portion packs of 200 calories or fewer.For products that are not pre-portioned,our aim is to provide Mindful Portion information on the pack.We strive to further embed mindfulness into our brand experiences and to promote broader awareness through our collaborations with health and nutrition professionals.We also partner with expert organizations,such as the Portion Balance Coalition,British Nutrition Foundation,International Food Information Council(IFIC),and non-governmental organizations(NGOs)like Save the Children,whom we collaborate with on issues such as hunger and food access.2023 PROGRESSOur Mindful Portions goal aims to deliver up to 100%of our net revenue by the end of 2025 through Mindful Portion snacks,meaning those in either individually wrapped Mindful Portion serving sizes of no more than 200 calories or featuring Mindful Portion labeling.In 2023,approximately 62%of our net revenue came from Mindful Portion snacks,and we remain on track to achieve our 2025 goal(1).ENHANCING OUR INGREDIENT AND NUTRIENT PROFILEWe continually strive to enhance the nutrient and ingredient profile of our snacks portfolio through efforts to reduce sugar,sodium and saturated fat content and use more whole grains,increasing fiber and micronutrients as appropriate.We do this while continuing to deliver delightful brand experiences.As part of these efforts,we work independently and with partners to advance technologies that support nutrient and ingredient enhancements.2023 PROGRESSWe continued to evaluate and enhance the ingredient and nutrient profile of our snacks portfolio through renovations to our existing products.The percent of volume of our products meeting the International Food&Beverage Alliance(IFBA)Pledge is progressing as planned.In India,we reduced sugar content by approximately 15%in our Bournvita biscuits and by about 5%in Oreo Chocolate.In the Middle East and Africa,we reduced sodium content in Oreo by around 5%in Morocco,and by approximately 30%in Saudi Arabia and UAE.In Brazil,we reduced sugar content anywhere from around 22-33pending on the variety.In the U.S.,the Honey Maid brand now meets the 2025 IFBA sodium pledge due to an approximately 10%reduction in sodium on the Honey Maid low fat offering.In the U.K.,our belVita biscuit offerings have reduced sodium content,including the Honey&Nut variety,which achieved an approximately 75%reduction in sodium,and about 15%reduction in sugar,while increasing fiber.PROVIDING OUR CONSUMERS WITH OPTIONS Consumer trends are evolving,and it is vital we keep pace with consumers changing dietary needs and expectations.We continue to grow existing nutrition-forward brands such as belVita,Triscuit,and our snack bars portfolio.In response to consumer trends,we also innovate in key spaces including gluten-free and low/no sugar.2023 PROGRESSWe continued to grow our existing offerings in this space through marketing investment and innovation.At the same time,we innovate our brands in areas identified by consumers,such as functional benefits and specific dietary needs.MARKETING RESPONSIBLY We recognize the need to provide accurate and appropriate information that helps consumers make informed dietary decisions.Our public Responsible Marketing Position reinforces that our marketing and labeling not only complies with all regulations and standards,but also helps our consumers snack right.We have a strong global Marketing to Children Policy that applies to every market where we do business.We do not advertise our products in any media where 30%or more of the total viewing audience is under the age of 13.As a founding member of the IFBA,we work with others across the industry to support responsible marketing,including underrepresented communities,and have made a global pledge to the World Health Organization(WHO)in the areas of nutrition and responsible food marketingIn addition,we have external and internal food marketing standards in place that provide additional guidance and are in line with the International Chamber of Commerce(ICC)Code of Advertising and Marketing Communication Practice and the ICC Framework for Responsible Food and Beverage Communications.2023 PROGRESSWe continue to maintain our high food marketing standards,including those set out in our Marketing to Children Policy and industry pledges.We participate in local pledges in several countries including Australia,New Zealand,Belgium,Brazil,Canada,France,Germany,India,Malaysia,Mexico,the Philippines,Singapore,South Africa,Spain,Turkey,UAE,the U.S.and the EU(EU Pledge).STRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITY GOVERNANCEABOUT THIS REPORTOverviewChampioning Portion&Mindful BehaviorEnhancing Our Ingredient&Nutrient ProfileProviding Consumers with OptionsMarketing Responsibly&InclusivelyFood SafetyMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report14CHAMPIONING PORTIONS&MINDFUL BEHAVIORWe aim to help consumers enjoy our products more mindfully by empowering them to choose the right snack,for the right moment,made the right way.By inspiring mindful eating,we believe people can experience more enjoyment and satisfaction in snacking.62%net revenue delivered through mindful portion snacks,those in either individually wrapped mindful portion serving sizes or with mindful portion labeling(1). 17percentage points2025 MINDFUL PORTIONS GOALBy 2025,we aim to deliver up to 100%of our net revenue through Mindful Portion snacks,those in either individually wrapped Mindful Portion serving sizes of 200 calories or less,or with Mindful Portion labeling(1).WHAT IS SNACKING MINDFULLY?For many years we have encouraged consumers to apply mindfulness principles to help them enjoy the snacking experience as part of a more balanced lifestyle.It is acknowledged that mindful snacking is:RelevantMore and more people practice mindfulness across multiple facets of their lives to help achieve wellness and balance.AccessibleMindful eating can be practiced by anyone,anywhere and with any snack.Effective There are multiple benefits of mindful eating,including increased satisfaction.SIX MINDFUL SNACKING BEHAVIORSThere are six behaviors that can help people snack mindfully and better enjoy their overall snacking experience as they aim to achieve a more balanced lifestyle.1Know what you want(emotional and functional needs).2Be aware of portion size&moderate it.3Enjoy&appreciate the snack with all your senses.4Be present in the moment.5Be aware of your hunger,fullness&satisfaction level.6Reflect on your whole eating experience.HELPING OUR CONSUMERS SNACK MINDFULLYOur pre-portioned packs encourage people to manage their calorie intake while Mindful Portion labeling provides calories-per-portion-of-product on pack with a visual depiction of one portion,helping consumers better understand how to make more informed snacking choices.Brand-inspired tips,digital resources and mindful eating education programs are available on our website.We have also partnered with renowned mindful eating expert,Dr.Susan Albers,Psy.D.,to provide consumer-friendly videos that explain the importance of snacking mindfully and how to practice it as part of a balanced approach to snacking.“Through our partnerships with credible science-led organizations such as the British Nutrition Foundation,we help drive awareness around the benefits of mindful snacking including through portions.We continue to offer actionable guidance on how snacks can be enjoyed by consumers as they aim to achieve a more balanced lifestyle.This is a great example of how we continue to help educate and empower our consumers.”Rimi Obra-RatwatteEuropean Lead,Nutrition Strategy and Communications,Mondelz InternationalPARTNERSHIPS FOR INCREASED AWARENESS AND UNDERSTANDINGWere not alone in our mindful eating journey.We continue to partner with reputable nutrition professionals to help spread awareness and understanding of the practice and benefits of snacking mindfully.This includes participating in nutrition events centered on eating behaviors,as well as publishing summaries of panel discussions or practical approaches in scientific journals to increase understanding and application of mindful eating amongst the scientific community.We provide nutrition professionals with educational material on mindful eating for them to use with consumers.We also have volunteer employee programs in place that share mindful snacking behaviors in various forums.Specific partnerships include those with science-led organizations including the British Nutrition Foundation and IFIC.We also partner with the Portion Balance Coalition,a multi-sector collaborative dedicated to developing and raising awareness of portion strategies and innovations to help support more balanced lifestyles.LOOKING AHEADFor Mondelz International,championing portion size and mindful snacking behavior is not just a goal.It is integral to our Mindful Snacking Strategy.We will continue to work with our consumers to identify new insights to help us further embed mindfulness into our future brand experiences.STRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITY GOVERNANCEABOUT THIS REPORTOverviewChampioning Portion&Mindful BehaviorEnhancing Our Ingredient&Nutrient ProfileProviding Consumers with OptionsMarketing Responsibly&InclusivelyFood SafetyMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report15ENHANCING OUR INGREDIENT&NUTRIENT PROFILEWe are thoughtful about how we design and make our products,and our efforts to enhance their nutritional quality.“We support our consumers to mindfully enjoy snacks as part of a more balanced lifestyle.Our work to reduce sugar,sodium and saturated fat content in our snacks is an important part of our strategy,and we work to shift,toward more whole grains,fiber and micronutrients.We strive to enhance the ingredient and nutrient profile of our portfolio while continuing to provide delightful taste experiences for our consumers.”Jennifer SallitVice President,Scientific&Regulatory Affairs&Nutrition Strategy,Mondelz InternationalGUIDING OUR PORTFOLIOS NUTRIENT AND INGREDIENT PROFILEAs a founding member of the IFBA,we are part of its Global Sodium Reduction Commitment,a groundbreaking collective pledge made by the food industry in 2021.Through IFBA,we publicly pledged to reduce sodium in key categories of our global portfolio by 2025 and 2030.We also have category-based nutrition guidelines to guide new product development and enhancement of existing products.We also use brand-specific guidance to help drive further nutrition enhancements across our portfolio.MAKING PROGRESS ON OUR NUTRIENT PROFILES Through product renovations across the world,we work to reduce levels of ingredients like sugar and sodium.Below,are some of examples of our efforts to enhance the nutrient profile of products across our portfolio in 2023(19)(20).In India we reduced sugar content by approximately 15%in our Bournvita biscuits and by about 5%in Oreo Chocolate.In the Middle East and Africa we reduced sodium content in Oreo by around 5%in Morocco,and by approximately 30%in Saudi Arabia and UAE.In Brazil we reduced sugar content anywhere from around 22-33pending on the variety.In the U.S.the Honey Maid brand now meets the 2025 IFBA sodium pledge due to an approximately 10%reduction in sodium on the Honey Maid low fat offering.In the U.K.our belVita biscuit offerings have reduced sodium content,including the Honey&Nut variety,which achieved an approximately 75%reduction in sodium,and about 15%reduction in sugar,while increasing fiber.In Argentina we introduced Tang Balance in two flavors(lemonade and orangeade)without sugar or sweeteners,providing 100%of daily recommended Vitamins C&D.LEVERAGING ENHANCED INGREDIENTSThanks to our baking expertise and research and development programs,we are well-positioned to bring our consumers the tasty snacks that they desire with enhanced ingredients like whole grains,fibers,and micronutrients.Our iconic brands that already contain whole grains include Triscuit,CLIF,belVita and Prince.In 2023 we provided over 8 billion servings of whole grains through biscuits and baked snacks(19).Weve also increased fiber content across multiple brands in 2023:Approximately 23%of our biscuits and baked snacks contained a minimum 3g of fiber per 100g(20).In the Netherlands we increased the fiber content of our Liga Milkbreak brand within a range of around 10 to 20pending on the product offering.In Brazil three of our belVita biscuit flavors have increased fiber by more than 100%.Micronutrient fortification is a proven,safe and cost-effective way to enhance nutrient content and help support dietary needs.We use this approach to add vitamins and minerals to certain products expected by our consumers and in accordance with applicable regulations,general dietary guidance and evidence-based data.In 2023,we enhanced the nutrient profile of certain brands through fortification.They include:Kinh Do mini savory cakes now enriched with Vitamin A and Zinc.Tang now delivers approximately 100%of the recommended daily allowance of Vitamin C in India and the Philippines.ENHANCING THE BENEFITS OF BOURNVITA Bournvita is a cereal-based powdered beverage crafted in partnership with nutritionists.In 2023,we launched an enhanced formula in India that delivers about 50%of the recommended daily allowance of key micronutrients of public health importance for children between the ages of 7 and 9.These include iron,iodine and zinc,as well as vitamins A and D.The new formula also delivers nutrients that help support physical,mental and immune well-being,including calcium,magnesium and vitamin C.To further enhance the nutrition composition,the formula has almost 15%less added sugar compared to the prior formula.ADVANCING TECHNOLOGIES,TODAY AND INTO THE FUTUREWith experts in nutrition and scientists in our world-leading research centers in the U.S.and U.K.,we focus on identifying next-generation solutions to help drive continuous nutritional enhancements.These experts work with world-leading research universities and institutes in the U.S.,U.K.,Europe and Australia,innovative food-tech startups and ingredient suppliers to deliver consumer-inspired breakthrough technologies.We know technology plays a big role in helping to advance this journey.Together with our partners,we are working to discover new ways to enhance our brands with nutrient and ingredient options that delight our consumers while helping to support a more balanced lifestyle.STRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITY GOVERNANCEABOUT THIS REPORTOverviewChampioning Portion&Mindful BehaviorEnhancing Our Ingredient&Nutrient ProfileProviding Consumers with OptionsMarketing Responsibly&InclusivelyFood SafetyMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report16PROVIDING OUR CONSUMERS WITH OPTIONS Its important to us to offer a broad range of snacks that not only taste good,but provide benefits our consumers are looking for.Some of those benefits include sustenance,functional ingredients,or options to help them meet their dietary needs.ELEVATING OUR BRANDS THROUGH INVESTMENT&INNOVATIONWe continuously grow and invest in brands that offer benefits,such as functional ingredients as part of their brand promise.Mindful that consumers have diverse needs,we constantly innovate to meet evolving dietary needs and lifestyle choices.In 2023,we did the following across our portfolio of brands:Oreo a brand loved by many,offers reduced-sugar options or variants with alternative ingredients in some parts of the world.In 2023,we expanded our U.S.Oreo gluten-free range with a mint flavor.In China,Oreo Thins Zero(sugar)launched a Dark Chocolate flavor.Triscuit developed and launched a campaign to celebrate how the product“starts with three simple ingredients”highlighting how the crackers are baked in the USA with American-grown wheat.Pacific which offers a source of fiber to help support digestive health,launched Pacific Oats Bite-Sized Cookies,made with 39%whole grain oat.It also launched the Pacific Milk Cookie,specially designed to help provide a rich source of protein(about 13 grams).Gourmet Foods invested approximately$25 million since acquiring the brand to increase production of Olinas Bakehouse Artisan crackers range by around 35%,driving demand for Australia-sourced ingredients.Grenade high protein,low sugar snacks that partnered with Oreo to launch an Oreo snack bar variety.Perfect Snacks a pioneer in the fresh-snacking category,introduced nostalgia with the launch of Perfect Bar Layers in two classic flavor pairings:Crispy Peanut Butter&Chocolate,and Crispy Peanut Butter&Berry.CLIF purposely crafted foods which help energize before or after activity launched its Spiced Pumpkin Pie and Peppermint White Chocolate seasonal flavors,bringing consumers more excitement throughout the year.OFFERING ALTERNATIVE INGREDIENTSWe have worked to develop great-tasting,gluten-free choices within our popular brands to meet evolving consumer demands from savory to sweet biscuits to new flavor launches and snack bar options.Four of our brands Oreo,Tates Bake Shop,Good Thins and LUNA saw an opportunity to educate consumers during Novembers Gluten-Free Diet Awareness Month in the US by thoughtfully engaging supermarket dietitians.We also launched our first-ever comprehensive gluten-free platform activation:“Gluten-Free,Flavor Full.”This multi-faceted program included in-store promotions,such as end-cap displays,sampling and digital campaigns.STAYING CLOSE TO CONSUMERS TO GUIDE OUR FUTUREWe take pride in staying close to our consumers.As we look ahead,our portfolio will continue to cater to their diverse and evolving needs.We continue to sharpen our category and brand strategies,our approach to innovation and renovation,and our thinking on merger and acquisition opportunities.In doing so,we seek to maintain a deep and integrated understanding of our consumers needs,today and in the future.STRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITY GOVERNANCEABOUT THIS REPORTOverviewChampioning Portion&Mindful BehaviorEnhancing Our Ingredient&Nutrient ProfileProviding Consumers with OptionsMarketing Responsibly&InclusivelyFood SafetyMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report17MARKETING RESPONSIBLY&INCLUSIVELYOur labeling and marketing helps our consumers to snack right.People need simple and straightforward information to help them make dietary decisions that they believe are best for them and their families.So,we:Provide nutrition labeling on our products across global markets,according to applicable local laws and regulations.Where space permits and when permitted by law,include information on eight key nutrients:calories(energy),protein,carbohydrates,sugars,fat,saturated fat,fiber,and sodium.Deliver meaningful information at a glance through front-of-pack(FoP)and calorie labeling on relevant products.Call for a harmonized approach to food labeling and collaborate with industry peers,consumers,and health authorities.NUTRITION LABELINGOur nutrition labeling is in line with international standards,including Codex Alimentarius(Codex)and as prescribed by applicable law and regulation.We provide nutrition labeling on products,displaying the amount per serving and/or per 100 grams(depending upon local regulations)on key nutrients.Labels usually include the percentage that a nutrient provides of a persons recommended daily intake,such as Daily Value or Dietary Reference Intake.We also place calories on FoP on eligible products globally.Unless laws and regulations require alternative elements,our FoP calorie labeling depicts calories(energy)per serving or per pack for single serve individually-wrapped snacks.We believe a uniform,industry-wide approach to FoP labels can help consumers make more informed choices and eat mindfully.We support a common approach that fits local market needs and regulations and gives consumers meaningful information at a glance.At the same time,we work with industry peers and stakeholders to explore effective and pragmatic new labeling options for consumers.We participate in voluntary nutrition information initiatives,such as Facts Up Front and SmartLabel in the U.S.,and Be Treatwise in the U.K.and Australia.NUTRITION AND HEALTH CLAIMSWe base our nutrition and health claims on reliable and sound scientific evidence and comply with applicable local laws and regulations.For countries where regulatory standards have not been established,we use standards set out by Codex,which serves as our baseline when making nutrition and health claims.RESPONSIBLE MARKETINGOur global Marketing to Children Policy applies to every market where we do business.We do not advertise our products in any media primarily directed to children under age 13.Our policy prohibits any advertising where 30%or more of the total viewing audience is under the age of 13.Our approach applies to advertising in TV,print,radio,Internet(both our own websites and third-party websites),digital,advergaming,mobile,word of mouth,DVD/video,streaming media,and in cinemas.Our communications on packaging and in-store materials are directed to adults,and we have guidelines on the use of premiums and on-pack promotions.We prohibit all in-school marketing in both primary and secondary schools(prior to university level)which is an industry leading practice.We have food marketing standards in place that provide additional guidance and are in line with the ICC Code of Advertising and Marketing Communication Practice and the ICC Framework for Responsible Food and Beverage Communications.Additionally,we participate in a number of global and local pledge programs that rigorously monitor and report on our processes.Learn more on our website.WORKING TOGETHERWe work with industry members to support responsible marketing and are a founding member of the IFBA.Along with other IFBA members,we made a global pledge to the World Health Organization(WHO)to either not advertise products to children under age 13 or only advertise products that meet specific nutrition criteria to children under age 13 and to monitor those efforts.EMPLOYEE TRAINING ON RESPONSIBLE MARKETINGMondelz International employees are also trained on responsible marketing and advertising practices.Responsible marketing training includes a multi-part online training module complete with video,case studies and practice scenario evaluation questions.PROMOTING DIGITAL SAFETYWe care about brand safety and have consistent principles across all digital platforms and media about the environments and contexts in which we advertise.Thats why we are active participants in the Global Alliance for Responsible Media(GARM),a unique partnership of agencies,advertisers,platforms,and trade organizations that works collaboratively to identify actions and standards to better protect consumers online.We help to advance work towards a media environment where hate speech,bullying,and disinformation are challenged,where personal data is protected and used responsibly,and where everyone,especially children,is better protected from harmLEADING IN RESPONSIBLE AND INCLUSIVE MARKETINGWe continue to support underrepresented communities not only through our focus on responsible food marketing,but also through our efforts to improve DE&I representation in commercial activities,both in front of and behind the camera.As a founding member of the IFBA,we have made global pledges to the WHO in the areas of nutrition and responsible food marketing.We also implement internal advertising review systems/processes to make sure our advertising is aligned with practices supported by the World Federation of Advertisers.This organization,which we are members of,focuses on creating more effective social ecosystems through cross-sector initiatives such as helping to prevent the monetization of hate speech.To support DE&I within the broader marketing and advertising industries,we participate in the Unstereotype Alliance,which works to champion the end of bias in advertising through positive cultural change,as well as the FREE THE WORK initiative,a talent-discovery platform connecting advertisers with underrepresented talent.Today,approximately one-third of our U.S.marketing content uses Black,Indigenous and People of Color or female director talent.Please refer to the Our Positions portion of our website for additional information.REGULAR TRAINING AND REVIEWS We offer employees training on our Advertising and Marketing Policy and Marketing to Children Policy.In addition,training is provided at the local level.We also utilize internal advertising review processes to make sure our advertising is reviewed at the local level for compliance with current policies and applicable laws and regulations.STRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITY GOVERNANCEABOUT THIS REPORTOverviewChampioning Portion&Mindful BehaviorEnhancing Our Ingredient&Nutrient ProfileProviding Consumers with OptionsMarketing Responsibly&InclusivelyFood SafetyMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report18MAKING OUR SNACKS MINDFULLYOur snacks are made safely,responsibly and mindfully.Its how our consumers can feel confident that the snacks they consumer and enjoy are safe and high quality.In 2023,we continued having a high percentage of our manufacturers and suppliers certified to food safety schemes that are benchmarked by the Global Food Safety Initiative(GFSI).This further supports our ability to offer consumers safe,high-quality snacks they can enjoy and feel good about.2023 PROGRESS2020202120222023InternalmanufacturingcertifiedGFSI 100000%ExternalmanufacturingcertifiedGFSI 94%RawmaterialsuppliercertifiedGFSI 100000%FoodcontactpackagingsupplierscertifiedGFSI 97%MAINTAINING HIGH STANDARDSWe design consumer safety into all our products right from the outset so they are safe for consumption.To do so,we use a comprehensive quality management system to set standards that ensure the integrity of our snacks and their ingredients.This includes advanced,science-based risk identification and management processes that help us assess and control factors that could potentially compromise processes and finished products,covering ingredients and packaging alike.Our management standards covering raw materials,processes and end products are of the highest quality.And our food safety systems are based on the internationally recognized and recommended Hazard Analysis and Critical Control Point(HACCP)system.Altogether,our comprehensive approach to safety means our consumers can continue to trust our products.REGULAR TRAINING AND REVIEWSGiving our people ongoing training is an important aspect of embedding our standards into our business.In 2023,we trained approximately 8,800 employees and approximately 4,200 suppliers on issues concerning food quality and safety.And auditors of our manufacturing sites and suppliers alike review training records to confirm that all relevant training is completed and recorded.We review our product quality policies every year based on industry benchmarking and best practices.We also make our own supplier quality expectations publicly available.GLOBAL FOOD SAFETY SCIENTISTSMany of our food safety scientists are subject matter experts on the boards of global standard-setting organizations such as the Food Allergy Research and Resource Program(FARRP),European Hygienic Engineering and Design Group(EHDG)and the GFSI.CHAMPIONING GLOBAL FOOD SAFETYWe are proud to be part of the GFSI as it continues to benchmark and raise food safety standards around the world.Since joining the GFSI in 2006,we have implemented its schemes at all of our plants and expect our suppliers to do so as well.We promote our participation in GFSI with our stakeholders and across the industry.We support food safety at the highest level of our organization:Our Chairman and CEO is currently co-chair of the CGF Food Safety Coalition,which helps steward the food safety agenda across the world.STRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITY GOVERNANCEABOUT THIS REPORTOverviewChampioning Portion&Mindful BehaviorEnhancing Our Ingredient&Nutrient ProfileProviding Consumers with OptionsMarketing Responsibly&InclusivelyFood SafetyMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report19SUSTAINABLE SNACKINGUnderstanding and improving our impact on the environment is important for the long-term growth and success of our business and for all our stakeholders.To make snacking more sustainable,we strive to understand risks and their potential impact,focus on opportunities to lead where we matter most,and drive change where the world needs it most.We set goals in these areas and add new ones over time to enhance our ambition,impact and delivery atscale.(34)%COe emissions reductions across our manufacturing operations in 2023(vs.2018)(8).48%In 2023,about half of the electricity used in our manufacturing sites was renewable,compared to 40%in 2022(22).96%In 2023,approximately 96%of our packaging was designed to be recyclable,on track for our goal of approximately 98%or more by2025(11).CLIMATE,ENVIRONMENT&COMMUNITIESWe understand how people and planet are inextricably connected.Thats why weve designed our strategies to be holistic,covering the social,economic and environmental factors that drive sustainable change.And its why we follow a value stream approach.Starting with people and communities as the foundation of positive change,we focus on key issues like social responsibility and human rights in our value chain.We also consider climate change and how we can go beyond reducing our own carbon emissions and help contribute to resilient landscapes and communities.We aim to use natural resources more efficiently and sustainably,with a specific focus on sourcing key raw materials in ways that help minimize impact and contribute to biodiversity while reducing our use of virgin plastic packaging and promoting a circular pack economy.STRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITYGOVERNANCEABOUT THIS REPORTOverviewClimate RisksSocial Sustainability&Human RightsSustainable PackagingSustainable IngredientsCocoaWheatDairyPalm OilHazelnutsSustainable SourcingMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report20Key focus areas include helping to build resilient landscapes;taking action on climate change by reducing our carbon emissions;managing our water and waste more effectively;aiming to make our packaging light and right;and sourcing our key ingredients more sustainably,so that we can keep making the snacks people love and help to promote social sustainability and prosperity in the communities our business touches.Our approach to delivering progress is two-pronged,it starts with transforming our business operations,including working closely upstream and downstream in our supply chain and playing a leadership role in industry and sector partnerships focused on driving collaboration and collective action.Notably we not only participate in but we chair the CGF and the WCF.CLIMATE RISKSOur approach to climate change is broad,interconnecting our goals across areas like responsible sourcing,social sustainability and human rights.Our approach also links our carbon emission-reduction goals,our leadership in sourcing ingredients more responsibly,and our commitment to social sustainability and human rights across our value chain.Every element of our approach reinforces the other.Indeed,our ingredient-sourcing programs are where most of our carbon emissions-reduction work and social sustainability efforts live.So as part of our signature sourcing programs for our key ingredients,such as cocoa and wheat,we are working towards supporting more resilient landscapes,communities and robust human rights to help provide lasting economic,environmental and social benefits for the communities involved.CLIMATE RISKS AND RESILIENT COMMUNITIESFor us at Mondelz International,more sustainable snacking is part of a future where people and planet thrive together.Operating at global scale means we can have a meaningful positive impact by encouraging practices that respect land rights and investing in innovation and technology to increase transparency and measure impact at scale across our supply chain.Identifying and managing climate change-related risks is part of our ERM process,enabling us to expand and deepen our understanding of our impact on the planet,inform our strategies and ultimately sharpen and enhance our approach.Find out more in Corporate Governance.Our climate strategy encompasses our goal to decarbonize our end-to-end supply chain by 2050 in line with the SBTi guidance and following recognized carbon accounting standards(GHG Protocol).As such,we are focusing on the reduction of our Scope 1,2 and 3 GHG emissions.Our metrics are aligned with the SBTi requirements across our value chain including Scopes 1,2 and 3 reduction targets as well as breaking emissions out into FLAG(Forest,Land and Agriculture)and non-FLAG related emissions.We report on our metrics and goals annually in our Snacking Made Right report and CDP Climate disclosure.Our approach has followed the recommendations set by the TCFD.We continue to monitor this space so that our approach remains relevant and transparent,and continue to strive to provide our stakeholders with relevant information on climate-related issues.CLIMATE CHANGE-RELATED RISKS THAT INFORM OUR STRATEGIESPhysical risks include the increasing frequency of extreme weather events and natural disasters,effects on water availability and quality,and biodiversity loss.These impacts increase risks to the global food production and distribution system,and to the safety and resilience of the communities where we live,work and source our ingredients.They could also further decrease food security for communities around the world.Transition risks include increased focus by federal,state and local regulatory and legislative bodies around the world regarding environmental policies relating to climate change,regulating GHG emissions(including carbon pricing or a carbon tax),energy policies,disclosure obligations and sustainability,including single use plastics.For more details please visit our Annual Report.OUR CLIMATE RISK STRATEGIESKey strategies that help to make us more resilient:1.ENHANCING SOCIAL SUSTAINABILITY AND RESPECTING HUMAN RIGHTSWe strive to make sure that the rights of people in our value chain are respected and promoted,and that the communities where we operate are more resilient.To this end,we focus on key areas for greater impact,including addressing human rights risks in sourcing key commodities,and working to improve living wage and due diligence in our own operations.Find out more in Social Sustainability&Human Rights.2.OUR APPROACH TO NET ZERO CARBONWeve been on a path to reduce our carbon emissions for several years now,and took a key step in 2021 to set our long-term target of net-zero GHG emissions across our full value chain by 2050.Most recently,our end-to-end emissions reduction targets of 35%by 2030 and net-zero target by 2050 have been validated by SBTi.This follows our submission of a time bound plan within SBTis timeframe,consistent with the 1.5C protocol which includes providing documentation of our carbon accounting,aligning to new standards and guidelines,continuing to transform our business operations and supply chains,and transparently reporting progress.Find out more in Our Carbon Footprint.STRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITYGOVERNANCEABOUT THIS REPORTOverviewClimate RisksSocial Sustainability&Human RightsSustainable PackagingSustainable IngredientsCocoaWheatDairyPalm OilHazelnutsSustainable SourcingMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report213.AIM TO SEEK NO DEFORESTATION ACROSS PRIMARY COMMODITIES BY 2025Deforestation doesnt only contribute to global climate change it also has a serious impact on local communities and ecosystems.At Mondelz International were aiming for the end of deforestation across our primary commodities over the next two years.Our phased approach means we aim for cocoa,palm,soy,and paper materials placed on the market after December 30,2024 and used by our European business,to be deforestation free with our goal for other regions to follow by December 31,2025.The cutoff date is December 31,2020 in accordance with EU regulations and SBTi guidance.This is the date after which deforestation is counted in a companys supply chain,meaning that products have to be produced on land that has not been subject to deforestation or forest degradation after 31 December 2020.When it comes to deforestation,two of the commodities we source cocoa and palm are regarded as at-risk.We work closely with our key cocoa and palm suppliers to supply us with deforestation-free cocoa and palm.We also call on our suppliers,including those of soy,pulp and paper,to take steps to end deforestation in their own supply chains.Our full deforestation free position is available on our website.CocoaIts been a decade since we launched our signature sustainability program,Cocoa Life,which takes an integrated approach to help tackle the root causes behind the social,economic and environmental challenges faced by cocoa farming.Weve carefully monitored its progress,mapping the farms registered and partnering with Global Forest Watch to monitor the forests via satellite technology.Cocoa Life continues to grow,and were aiming to source all the cocoa volumes we need for our chocolate brands via the program by 2025.Cocoa Life isnt the only example of our leadership in this area.It was in 2015 that Mondelz International first raised the issue of cocoa-driven deforestation at COP21 in Paris.Two years later,we became a founding member also with the Governments of Cte dIvoire and Ghana and 36 other chocolate and cocoa companies of Cocoa and Forests Initiative(CFI).Today,CFI is a leading public-private partnership to help address deforestation and restore forests in cocoa growing areas.Find out more in Cocoa Life.Palm OilWeve been RSPO certified since 2013.We gather information on the mills where our direct suppliers source from,which we make public,while at the same time we continue to engage with our direct suppliers to help tackle environmental and social challenges in the supply chain.The Palm Oil Action Plan(POAP)we have in place makes our suppliers responsible for preventing deforestation in their own operations or supply chains.This requires them to map and monitor all plantations and engage with any that fail to comply.At Mondelz International we only account for a small fraction of the total demand for palm oil.To help drive wider change,were involved with many other organizations that are also committed to improving the palm oil supply chain across the world.These include bodies like the Consumer Goods Forum Forest Positive Coalition(CGF FPC),the Consumer Goods Forum Human Rights Coalition(CGF HRC),the Palm Oil Transparency Coalition(POTC),the Palm Oil Collaboration Group(POCG)and the Roundtable on Sustainable Palm Oil(RSPO).Find out more in Palm Oil.SoyThe comparatively low levels of soy that we buy means we have little direct influence over the sector.That said,we apply CGF sourcing guidelines to purchasing of this ingredient.We also track indirect emissions from the dairy industry that arise from the use in cattle food of raw ingredients such as soy grown in deforested areas.That gives us the insight we need to buy most of our dairy ingredients from suppliers whose farmers are selective about what they feed their cows.It also helps us engage openly with our suppliers on the need to provide dairy products based on deforestation-free cattle feed.Pulp and PaperFor pulp and paper,we require the mills and printers that supply us to be Forest Stewardship Council(FSC)certified.As part of our strategy implementation by end of 2025,we aim to leverage chain of custody certification programs to confirm that the virgin paper packaging we use is sourced from sustainably managed forests.Ending deforestation needs sector-level transformation.We support an approach in which key players along the value chain work collectively to tackle systemic issues at the industry,country and landscape-level.One example is the CGF FPC.Find out more in Sustainable Packaging.Raw Materials-CocoaOur signature program,Cocoa Life,was created in 2012 to help tackle the complex,interconnected challenges in the cocoa value chain.In 2023,our Cocoa Life program reached around 243,000 cocoa farmers(24),and approximately 85%of the cocoa volume for our chocolate brands was sourced through the program(2).Two key elements drive our cocoa emissions reduction:agroforestry and farming practices.Conserving the land and forests is important for future generations.Forests help stabilize the climate:They regulate ecosystems,protect biodiversity,drive more sustainable growth and play an integral part in the carbon cycle.We support farming communities with the right on-and off-farm tree planting activities and apply farm mapping technologies and agroforestry techniques to monitor progress.Building on our work from 2022,were continuing to expand our list of defined customized emission factors that will help us to reduce our carbon emissions intensity.In doing so,were using data to translate our interventions in deforestation prevention and agroforestry as well as farming practices into custom emission factors.In our major sourcing countries,this approach is resulting in lower emissions per tonne of product than we would obtain with generic emission factors.Find out more in Protecting&Restoring Forests.Raw Materials-DairyDairy is an area in which we have limited scale within the industry,but an important focus area in our footprint.To maximize our efforts,we have taken a two-pronged approach to help reduce carbon.Find out more in Dairy.4.INCREASING REGENERATIVE AGRICULTURAL PRACTICESTo help improve agricultural resilience,were helping to transform agricultural production into regenerative systems while reducing carbon.We are focusing on agroforestry landscapes,biodiversity and regenerative practices across our key ingredients,including cocoa and wheat.This involves participation in sector-wide initiatives and coalitions with multiple stakeholders.Find out more in Protecting&Restoring Forests.“Our climate strategy builds on the foundation of many years of community collaboration,as is seen for example in our signature sourcing programs for key raw materials such as Cocoa Life and Harmony Wheat.It is the combination of social,economic and environmental objectives that we believe holds the key to success.”Michael WeberSenior Director,Climate&Environment,Mondelz InternationalSTRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITYGOVERNANCEABOUT THIS REPORTOverviewClimate RisksSocial Sustainability&Human RightsSustainable PackagingSustainable IngredientsCocoaWheatDairyPalm OilHazelnutsSustainable SourcingMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report22OUR 2050 NET-ZERO EMISSIONS GOALAt Mondelz International,we are part of a broad movement across our sector that aims to bring about more sustainable ways of growing a business.For us,this involves aiming to reduce our environmental impact while helping to support resilience across our supply chains and the communities our business touches.Our near-term 2030 goal vs 2018 base year aims for:-35%GHG emissions reduction across our value chain(21).Our long-term 2050 goal vs 2018 base year aims for:NET-ZERO GHG emissions reduction across our value chain(7).We focus on areas where we believe we can make the greatest positive difference for the long term.This includes aiming to reduce our impact on the environment across key focus areas including our operations,our supply chain and our communities.We have signed the SBTis Business Ambition for 1.5C,aligning our long-term emissions mitigation targets with the Paris Agreements aim of limiting temperature rise.Weve also joined the United Nations“Race to Zero”campaign to help build momentum toward a decarbonized economy.In April 2024 the SBTi(Science Based Targets initiative)successfully validated our near-term net-zero target resulting in the approval of our full value chain goal to reduce absolute end-to-end GHG emissions 35%by 2030 and net-zero by 2050 from a 2018 base year.Find out more on SBTis website.Our carbon footprint is assessed end-to-end encompassing emissions from field to shelf and we are addressing approximately 90%of these emissions in our goal boundary(7).OUR NET-ZERO ROADMAP FOLLOWS THE SBTI REDUCTION PATHWAYWe are implementing the SBTi reduction pathway following distinct phases.Our near-term goal is to reduce our end-to-end CO2e emissions by approximately 35%by 2030 compared to a 2018 baseline,in line with the SBTis Net-Zero Standard.Along with our Scope 1,2 and 3-related goals,this includes the break out of emissions driven by Forest,Land and Agriculture(FLAG)inline with the SBTis FLAG guidance for land-intense sectors(7).As we have set a near-term goal by 2030 aligned with our net-zero validated target,we are incorporating the approach and learnings of our previously validated end-to-end CO2e emissions 2025 goal into our updated roadmaps.Confirm&executefocusareas,runpilotsScaleup&expandgeographically,nextgenerationpilotsDrive&adoptsystemchangeAchievenet-zeroSTRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITYGOVERNANCEABOUT THIS REPORTOverviewClimate RisksSocial Sustainability&Human RightsSustainable PackagingSustainable IngredientsCocoaWheatDairyPalm OilHazelnutsSustainable SourcingMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report23REDUCING CARBON:THREE KEY DRIVERSAt Mondelz International,we focus our strategic efforts on three prominent drivers of carbon emissions at play in the food and beverage sector:the changing use of land,including deforestation;emissions related to farming;and use of fossilfuels.Thats why we regard deforestation-free,regenerative agriculture and the avoidance of fossil fuels as key focus areas to help cut our emissions.Today,were focused on what really matters:shifting our ingredient supply chains away from sources where deforestation has any role to play;focusing on regenerative agriculture that uses ecological principles to sustain and restore degraded soils;and embracing renewable energy sources and low-impact,more sustainable packaging.To effectively bring these three strategies to life we have identified our main focus areas and created reduction roadmaps for each.LAND CONVERSIONFARM PRACTICESFOSSIL FUEL USECarbon SourcesLand Conversion driven by agricultural production Cattle digestive emissions,cattle feed,farming inputs,soil depletionFuels used for combustion(Energy)and materials(Pack)AimDeforestation FreeRegenerative AgricultureReduce/replace fossil fuelsFocus AreasScope333331,2,3213OUR CARBON FOOTPRINTWeve been applying the principles of the Greenhouse Gas(GHG)Protocol to our business for more than a decade.Drawing on the input of functions throughout the business including Manufacturing and Logistics,Finance and Procurement and working with external partners and our suppliers toward a framework for more consistent carbon reporting across our Scope 1,2 and 3 emissions.2023 PROGRESSApproximately-3.7%GHG emissions reduction across our value chain(vs.2018)(7).DEFINING OUR SCOPES 1,2 AND 3 EMISSIONS(7)For Scope 1,we identify and report on the combustion of fuels taking place in our own facilities and mobile operations,as well as any fugitive emissions from our sites.Measuring Scope 2 emissions involves assessing indirect emissions associated with the electricity,heat and steam we buy for our own facilities.And for Scope 3,we measure the indirect emissions generated within our value chain,such as the emissions generated from materials and services we buy,emissions generated from activities associated with fuel and energy,and emissions generated from finished goods storage and transportation,as well as business travel and investments.COMPLETENESS AND CONSISTENCY(7)To help ensure that our carbon footprint reporting is more consistent,we expose our data to external verification and align our internal processes with the GHG Protocol standards.As part of this,we published our formalized carbon accounting manual during 2023.And we continued to increase the internal processes we use to promote consistency of approach,in the form of a growing range of Standard Operating Procedures(SOPs).We continue to keep our carbon inventory up to date,now including the recently acquired Clif Bar&Company and excluding our more recent divestiture in gum.Further,we have updated our emissions factors to incorporate the most recent World Food Life Cycle Assessment Database(WFLDB 3.9)and Ecoinvent 3.9,which led to some updates vs prior years data.Overall,our emissions continue to reduce over the years as we continue transitioning our materials to a number of new customized emissions factors,allowing us to reflect the strategic efforts following our three focus areas to reduce our emissions.Find out more in Reducing Carbon:Three Key Drivers.Our end to end emissions are aligned with SBTi guidelines where we focus on our most impactful and actionable GHG emissions across the value chain(approximately 90%of our end to end CO2e emissions in base year 2018).Carbon Footprint Breakdown:RawMaterials73%Manufacturing5%Logistics4%Packaging5%Other13%Our end-to-end footprint has reduced by approximately(3.7)%compared to our 2018 baseline or approximately(4.1)%compared to emissions in the prior year.Our Scope 1 and 2 emissions continue to decrease,reflecting our progress in renewable electricity and energy efficiency.We reduced our Scope 1 and 2(market-based)emissions by approximately(31)%compared to our 2018 baseline and approximately(14)%compared to emissions in the prior year.Our Scope 3 emissions have decreased by approximately(2.2)%compared to our 2018 baseline,or approximately(3.7)%compared to emissions in the prior year as we continue to capture the positive effects of our various roadmaps,with the biggest impact coming from Cocoa.Our carbon reduction strategy is based on our focus areas,which each have a distinct roadmap.2023 PROGRESS(7)2018202120222023%changevs2018%changevs2022Scope1(direct)emissions(COeMetricTonnes)904,000862,000779,000(31)%(14)%Scope2(energyindirect)emissions(COeMetricTonnes),market-based805,000512,000406,000Scope3(otherindirect)GHGemissions(COeMetricTonnes)30,469,00030,942,00029,793,000(2.2)%(3.7)%TotalEmissions32,178,00032,316,00030,978,000(3.7)%(4.1)%Raw Materials Carbon Footprint Breakdown:35%7%4%3%2%1%5%CocoaDairyPalmOilSugarWheatOtherOilsNutsAllotheringredientsSTRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITYGOVERNANCEABOUT THIS REPORTOverviewClimate RisksSocial Sustainability&Human RightsSustainable PackagingSustainable IngredientsCocoaWheatDairyPalm OilHazelnutsSustainable SourcingMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report24WHERE OUR CARBON FOOTPRINT COMES FROMSimilar to other food manufacturers,we see about 73%of our footprint driven by raw materials.Cocoa and dairy are the two largest contributors in our footprint driven by our portfolio followed by:palm oil,sugar,wheat,other oils,nuts and all other ingredients.The remaining approximately 27%are broken out across internal and external manufacturing,our packaging used to keep our products safe and protected during transportation and handling,logistics operations linked to storage and transportation of finished goods,and various other categories.Other includes emissions related to investments,external manufacturing raw materials,services,upstream fuel and energy-related activities,business travel and small categories.REDUCING OUR CARBON FOOTPRINT IN OUR SUPPLY CHAINMANUFACTURINGWere focusing on increasing both our energy efficiency and our use of renewable energy(with a focus on electricity),so that we can go further in reducing our carbon emissions and our costs.In 2023,about 48%of the electricity we used in our manufacturing sites was renewable,compared to around 40%in 2022(22).We are also continuing to make adjustments to how we operate.We are leveraging improved processing designs for enhanced efficiency.For example,we are replacing some natural gas baking ovens with low-carbon fuels or electricity.Find out more in Energy.LOGISTICS OPERATIONSWe are working to reduce the emissions across our logistics operations.Efforts include investing in new and energy-efficient mobility solutions,as well as switching to renewable energy sources in our warehouses.Were also optimizing routes,reducing travel distances and improving the ways in which we use trucks and containers.Find out more in Logistics.PACKAGINGWe continue to strive to make our packaging“Light and Right.”This means working towards reducing the virgin plastic material used in our packaging,while not compromising the quality and integrity of our products.We have deployed more sustainability design requirements across our global business.These requirements are aligned with industry guidelines such as the CGFs Golden Design Rules to promote consistency with contemporary good practice.By designing our packaging to be recyclable,evolving to more sustainable materials and increasing our use of recycled content,we are working towards improving carbon intensity across our portfolio.Find out more in Sustainable Packaging.RAW MATERIALS-COCOAOur signature program,Cocoa Life,was created 11 years ago to help tackle the complex,interconnected challenges in the cocoa value chain.In 2023,our Cocoa Life program reached around 243,000 cocoa farmers(24),and approximately 85%of the cocoa volume for our chocolate brands was sourced through the program(2).Two key elements drive our cocoa emissions reduction:agroforestry and farming practices.Conserving the land and forests is important for future generations.Forests help stabilize the climate.They regulate ecosystems,protect biodiversity,drive more sustainable growth and play an integral part in the carbon cycle.We support farming communities with the right on-and off-farm tree planting activities and apply farm mapping technologies and agroforestry techniques to monitor progress.Building on our work from 2022,were continuing to expand our list defining customized emission factors that will help us to reduce our carbon emissions intensity.In doing so,were using data to translate our interventions in deforestation prevention and agroforestry as well as farming practices into custom emission factors.In our major sourcing countries,this approach is resulting in lower emissions per tonne of product than we would obtain with generic emission factors.Find out more in Protecting&Restoring Forests.RAW MATERIALS-DAIRYDairy is an area in which we have limited scale within the industry,but an important focus area in our footprint.To maximize our efforts,we have taken a two-pronged approach to help reduce carbon intensity in dairy:We work directly with farmers supplying our core brands Cadbury Dairy Milk and Milka,and we closely collaborate with strategic processors.Thanks to first tracking their CO2e emissions and then developing action plans to reduce them,some strategic suppliers have successfully completed their baselines and are delivering lower carbon intensity compared to their base year.Find out more in Dairy.RAW MATERIALS-PALM OILWe have much less global share in palm compared to cocoa.Our aim to seek no deforestation builds upon the companys POAP which was first issued in 2014.It takes into account learnings and experience realized in the companys efforts to collaborate with suppliers to source deforestation-free palm oil and applies those learnings across primary commodities.In the future this plan will also take into account current and impending regulation,as well as insights from external frameworks such as the SBTi and collaborative organizations such as Consumer Goods Forum Forest Positive Collation of Action(CGF FPC)and Palm Oil Collaboration Group(CGF POCG).Find out more in Palm Oil.RAW MATERIALS-WHEATAnother example of our efforts to help curb our supply chain footprint is our Harmony sustainable wheat program for our biscuits in Europe.We started the program 16 years ago with just a handful of farmers in France for our LU biscuit brand,and today we collaborate with more than 1,100 farmers,cooperatives and millers in seven countries in Europe.Our goal is to grow 100%of the wheat volume needed for our European biscuits production under our expanded Harmony Regenerative Charter by 2030.Harmony includes a results-based charter of 20 mandatory practices plus 17 best practices built in close collaboration with agronomic experts,NGOs and,of course,our wheat supply chain.We have started to translate those interventions into customized emission factors for our footprint.Find out more in Wheat.STRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITYGOVERNANCEABOUT THIS REPORTOverviewClimate RisksSocial Sustainability&Human RightsSustainable PackagingSustainable IngredientsCocoaWheatDairyPalm OilHazelnutsSustainable SourcingMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report25PARTNERING AND INNOVATING TO HELP REDUCE OUR CARBON FOOTPRINTSUPPLIER PARTNERSHIP PROGRAMSIn the last year,we have continued to build two major partnerships that are helping us better understand our broader Scope 3 emissions,while recognizing their level of alignment with our net-zero plans.First,we continue working with EcoVadis,a leading provider of business sustainability ratings,to better understand,monitor,and increase transparency of our supply chain sustainability maturity.Second,we are a partner of Supplier Leadership on Climate Transition(Supplier LOCT),a consortium of world-leading businesses aiming to reduce supply chain emissions with an initial focus on our top suppliers to encourage them on their own journey to Net Zero.For those suppliers we identify as needing additional support,we will be offering access to the courses of the Supplier LOCT platform which aims to support them with creating their Scope 3 footprint,setting COe reduction goals and reporting outcomes in line with the SBTi.Investment ApproachWe are always considering our investments looking in particular at how these affect our overall carbon footprint and as such reflect interactions including reduction of holdings in our analysis.INNOVATIONDuring 2023,weve worked on many areas of innovation,which are aimed at helping us reduce our carbon emissions.Key examples include:Cocoa Enhancement:Working with the Alliance of Biodiversity International and CIAT(Centro Internacional de Agricultura Tropical)in a research collaboration to explore the feasibility and potential scale of using biochar as a carbon dioxide removal technology.Additionally,we are working with CIAT in a program called Landscapes for Sustainable Cocoa Livelihoods(C4SL)developing and piloting a scalable community-based Payment for Ecosystem Services(PES)model for the conservation of forests and ecosystems services in Ghana.Wheat Pilot:Developing a three-year baseline alongside Michigan State University Extension to initiate a regenerative agriculture program in 2024 looking at the use of regenerative agriculture in wheat for Triscuit recipes.Dairy Research:Our R&D organization has collaborated with the International Farm Comparison Network(IFCN)Dairy Research Network and the Scienta Group to keep abreast of developments and help us reach our ambitions for 2030 and beyond.EcoDesign Development:R&D colleagues throughout our business now have access to a digital EcoDesign tool to help them build reduced environmental impact into product and process innovations,reformulations and portfolio shifts.We also use our eQoPack,a packaging assessment tool developed by Quantis to help us design more sustainable packaging.Reformulation Research:We are piloting a digital dashboard to help us capture the carbon-reduction potential available through reformulation.Were also funding a project with The National Food Lab,Inc.to test the potential for taking dairy ingredients out of selected baked products with no negative impact on cost,taste or nutrition.STRATEGY&PERFORMANCEMINDFUL SNACKINGSUSTAINABLE SNACKINGCOLLEAGUE&COMMUNITYGOVERNANCEABOUT THIS REPORTOverviewClimate RisksSocial Sustainability&Human RightsSustainable PackagingSustainable IngredientsCocoaWheatDairyPalm OilHazelnutsSustainable SourcingMONDELZ INTERNATIONALSnacking Made Right 2023 ESG Report26ENERGYDriving down our energy emissions is an important part of reaching our long-term goal relating to net-zero carbon.And were focusing on three key areas to make it happen.First,were working hard to improve energy efficiency within our internal operations.Next,were taking action to electrify our operations and aiming for all the electricity were using across our manufacturing sites by 2030 to be renewable by transitioning from fossil fuels to renewable electricity and electrification.Third,were increasing our use of renewable electricity.2023 PROGRESS2018202120222023Totalenergyconsumed(GJ)(22)17,252,000 17,382,00017,134,00016,771,000Totalrenewableelectricity(%)(22)33H%ManufacturingCOeemissionsfromenergy(COemarket-basedmetrictonnes)(8)1,325,000 1,077,0001,005,000871,000COeemissionsreductionsacrossourmanufacturingoperations(vs.2018)(8)(19)%(24)%(34)%OUR OPERATIONSImproving Energy EfficiencyFocusing in our operations,we are working to make our manufacturing plants more efficient by continuously investing in advanced energy-management systems and energy efficient technologies.Were drawing on the“eliminate,substitute,reuse,recycle”principles of the circular economy to progressively reduce our operations carbon intensity and drive carbon absolute reduction.Solutions already in place are energy efficiency improvements to biscuit ovens and steam boilers,including heat recovery.We also invest in higher-efficiency equipment.Transition to Renewable Electricity and ElectrificationWe have been working towards shifting away from fossil fuels as the primary source of the power we use and transferring to biofuels and renewable electricity.Electrification combined with our transition to renewable-sourced electricity are drivers of our decarbonization strategy.We implemented onsite solar panels,and signed long-term wind and solar Power Purchase Agreements(PPAs)in several sites globally supporting new project implementation.Increasing the Use of Renewable ElectricityWere working closely with governments and suppliers to promote renewable energy wherever we operate either bought using PPAs or generated on our facilities with onsite solar panels.This approach is working.About half of the electricity we used in 2023 came from various renewable sources,increasing from the approximately 40hieved in 2022(22).2023 IN REVIEWThroughout 2023,we continued to make the important changes needed to help drive down our energy-related emissions.Our aim to deploy renewable electricity solutions aligns seamlessly with the broader sustainability agenda in our long-term growth strategy by driving decarbonization across our manufacturing footprint,making a major step forward in working towards achieving our sustainability goals.Collaborations are vital to help deliver our carbon reduction goals and build a more sustainable snacking company and thats why in 2023 we continued and increased our efforts t
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The 2023Impact SummaryBuilding a responsible futureOctober 2023 2Unlocking opportunity We are living.
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F I SC A L 20 23STARBUCKS GLOBALreportM M X X I I IO U RP A R T N E RE N V I R O N M E N TA LFA R M E RC O M M U N I T YC U S T O M E RS H A R E H O L D E RP R O M I S E S2023 Global Impact Report 22024 Starbucks Corporation.Starbucks has always been a different kind of company.Were on a journey to unleash the limitless possibilities of human connection.In fact,our new mission,launched in 2023,is centered on this With every cup,with every conversation,with every community,we nurture the limitless possibilities of human connection.In pursuit of this mission,we established ambitious promises to all our critical stakeholders.These represent the mutual success we commit to,together.As this report details,when Starbucks is at its best,we promise:To bridge to a better future for our partners.To uplift the everyday for our customers.To help ensure the future of coffee for all for our farmers.To contribute positively to each of our communities.To give more than we take from the environment.To generate enduring long-term returns for our shareholders.Our mission,these promises,and our values all underscore our commitment to a new era of Starbucks,which will go even further to serve our partners and the world around us.For more than 20 years,we have reviewed our performance with the Starbucks Impact Report.We approach this work with the same commitment to transparency,intentionality,and accountability our partners bring to their work every single day.M E SSAGE FROM LAXMAN2023 Global Impact Report 32024 Starbucks Corporation.As we report on the companys environmental and social impact in FY23,we are proud of the progress we have made.More than ever,we can be a force for positive action.From investing in our partners through world-class benefits and programs to making it easier for our customers to use reusable cups and working with farmers to support a healthy coffee future,we see an opportunity to evolve and modernize the core of who we are as a brand and a business.And an opportunity to better meet the needs of today and of our future.With gratitude and optimism,Laxman Laxman Narasimhan chief executive officerThis report provides an overview of our environmental and social impact strategies and annual progress during fiscal year 2023(FY23).While this report is not an exhaustive summary of our efforts,it helps demonstrate the integration between our business and our promises to our most important stakeholders:partners(employees),the environment,farmers,communities,customers,and shareholders.This report also includes data tables that reflect our progress against our goals.A comprehensive view of our progress and reports since 2001 is available here.OU R 2023 GLOBAL IMPACT REPORT2023 Global Impact Report 42024 Starbucks Corporation.TA B L E OF CO NTENTS2023 Global Impact Report 5our partner promiseour environmental promiseour farmer promiseour community promiseour customer promiseour shareholder promise61217212528Progress Report Data Tables 34Environmental Footprint Data Tables 47Human Rights Data Tables 52Environmental,Social and Governance Priorities 55About This Report 59External Verification Assurance Letters 61 G LO B A L I M PACT R E P O RT2023 Global Impact Report 62024 Starbucks Corporation.F I SC AL 202 3B R I D G E T O A B E T T E R F U T U R EpromisePARTNERourS TA R B U C K SS TA R B U C K S G LO B A L I M PACT R E P O RT2023 Global Impact Report 72024 Starbucks Corporation.F I SC AL 202 3OU R PA RTN E R PROMISEAt our best,we are building a bridge to a better future for our partners(employees)through thoughtful and intentional investments rooted in partner feedback and experiences.We are furthering our mission,promises and values by creating an elevated partner experience around the world.We are committed to being a leading retail employer and to uplift,inspire and engage our team members by supporting their careers and lives from industry-leading benefits to our expansive training and development programs to our commitment to inclusion,diversity and equity.Investing in our partners is what drives our success.Creating opportunities for partners to grow is important to the foundation of the Starbucks brand and builds long-term value for all our stakeholders.And our top priority is to ensure partners feel supported and empowered through robust safety trainings,clear policies and procedures and by creating safe and welcoming stores.In FY23,Starbucks took meaningful action to expand our partner offerings.We continued to invest in world-class benefits,programs and initiatives that reflect partner feedback and best support their individual well-being and goals.To build a more consistent and high-quality work experience,we support internal growth,ensuring our partners have flexibility and training to develop their careers,supported by their managers.We want our partners to bring their authentic selves to their work,so we strive for a diverse and inclusive workplace that fosters a strong sense of belonging.Put simply,we help partners access quality healthcare,attend college,contribute to their communities,plan for retirement,save for emergencies,support their families and more.Our promise is to offer a bridge to a better future that supports each partners individual journey at Starbucks and beyond.Together,we are creating the future of Starbucks,building on a long,rich heritage that has endured for more than 50 years.2024 Starbucks Corporation.2023 Global Impact Report 8OU R PA RT N E R P ROM I S EBridge to a better futureFor decades,Starbucks has offered U.S.retail hourly partners the best benefits and perks in the industry.For eligible part-time and full-time partners in company-operated U.S.stores,this includes comprehensive medical,dental and vision coverage for partners and their families,industry-leading gender-affirming care,Family Expansion Reimbursement Assistance,free therapy sessions through Lyra Health,100 percent upfront tuition coverage for those seeking first-time bachelors degrees,equity in the company through annual Bean Stock Awards and reimbursement of the biennial fee required for Deferred Action for Childhood Arrivals(DACA)recipients to stay in the DACA program.The comprehensive benefits package provided by Starbucks goes well beyond the industry average*and is set apart by its accessibility to a broad subset of its retail hourly workforce including anyone working an average of 20 hours a week.We also offer global Starbucks partners locally-relevant benefits that help address unique needs in different parts of the world.In 2017,Starbucks China introduced a first-of-its-kind program to provide critical illness insurance for parents of eligible partners.In 2022,it launched“14th Month Pay,”a pioneering initiative giving retail partners an additional months salary as a bonus on top of the 13th month pay they are eligible for,to be paid out at the end of every financial year.Last year,in Japan,we increased wages and continue to offer unique healthcare benefits for partners.Key initiatives in the U.K.and Europe,Middle East&Africa(EMEA)regions include free food on shift and an extra holiday.Across our global markets,our licensed and joint venture partners also provide locally-relevant benefits,including in India,which became the first food and beverage company to establish a company-wide,five-day work week for all partners.The company also provides meaningful opportunities and comprehensive benefits for partners including providing a graduation support program to all full-time and part-time partners.The company offers many health and wellness programs including free mental and emotional counseling to partners and their family members,and an optional company-subsidized parental insurance program.In 2021,the Two-Wheeler Mobility Support Program was inaugurated in India to help partners purchase a two-wheeler vehicle for professional or personal use,enhancing their independence and commuting experience.Benefits&CompensationWe have made significant ongoing investments of more than$1 billion since FY22 to uplift the overall partner and store experience.This investment includes bringing the average hourly pay at Starbucks in FY23 to nearly$17.50/hour nationally with a range of$15-23/hour,compared to a federal minimum wage of$7.25/hour and industry average hourly wage of$13.53/hour.*Factoring in the value of Starbucks benefits,that number can rise by up to$10 for a total compensation,with benefits,of approximately$27/hour,if our partners choose to participate in all of our benefits.Higher wages,expansion of hours and increased benefits have resulted in an increased hourly total cash compensation of nearly 50 percent since FY20,and a positive shift in hourly turnover rates,which are now below pre-pandemic levels.By the end of FY25,Starbucks in the U.S.expects to double hourly income as compared to FY20 through more hours and higher wages.*According to the results of a recent Benefit Index analysis conducted by Aon,Starbucks continues to deliver more valuable benefits for retail hourly partners than any of the more than 50 other U.S.companies included in the study,inclusive of Fortune 200 and Fortune 500 companies.*Fast Food and Counter Workers mean hourly wage,U.S.Bureau of Labor Statistics,May 2022.COMPENSATIONFY23Average hourly wage for U.S.hourly partners($/hour)17.42%U.S.hourly partners earned above minimum wage100%TURNOVERFY23FY22Total employee turnover(U.S.and Canada)58e%B R I D G E TO A B ET T E R FU TU R E2024 Starbucks Corporation.2023 Global Impact Report 9The reason we are an industry leader in benefits and compensation is because these investments are informed by the feedback and ideas we receive from our partners.In our constantly evolving economic and social landscape,we prioritize direct engagement with our partners and routinely create the space for open and honest two-way conversations.We have established a cross-functional Support Partner Experience team,made up of partners across business units.This team focuses on key areas of opportunity that partners have identified and deploy regular engagement surveys.The team also hosts design brainstorms on specific topics shared in collaboration and learning sessions.The partner surveys leverage a census approach,with all U.S.and Canada company-operated partners invited to participate and paid time for retail partners,including hourly partners,to complete the survey.The feedback from these surveys is used to inform the overall partner experience and create opportunities for partners to grow.PARTNER ENGAGEMENT SURVEYSFY23%partners completed the Partner Experience SurveyU.S.store partners65nada store partners53%North America non-store partners92%We offer several signature programs that support our partners growth,development and long-term success.For example,through the Starbucks College Achievement Plan(SCAP),partners can earn their bachelors degree online from Arizona State University(ASU)with 100 percent tuition coverage.In FY23,our largest Starbucks SCAP class graduated from ASU,and since the launch of the program,more than 10,000 partners have graduated with their bachelors degree through SCAP.More than 23,400 partners participated in the program during FY23.The bridge to a better future includes our partners financial health.Starbucks employees are called“partners”for a reason we offer every eligible partner the opportunity to share in our financial success through equity stock,company match for retirement funds and access to financial wellness programs to help manage student loan debt and save for short-term needs and long-term planning.Our competitive Future Roast 401(k)retirement plan includes a generous company match,and we offer partners discounted company stock(S.I.P.)as well as participation in our equity reward program,Bean Stock.In addition,we help partners save for the unexpected with help from My Starbucks Savings,with cash incentives for eligible partners at key savings milestones.Benefits&CompensationOU R PA RT N E R P ROM I S EBridge to a better future2024 Starbucks Corporation.2023 Global Impact Report 10Talent Attraction,Development&TrainingOur training and educational resources are designed to demonstrate Starbucks as one of the very best employers in the global retail industry.We are proud to attract,hire,develop and retain partners who are passionate about furthering our mission,vision and values.To ensure that our partners can thrive at work,we provide extensive training programs including on the job training hours that support partners from the moment they join our team.For example,the Barista First 30 program is a 41.5-hour training program that partners complete in the first 30 days of employment.This training covers all the foundations of being a Starbucks partner,from mission and culture to the skills needed to serve customers in our stores.Continuous learning opportunities include 90-and 180-day check-ins that empower partners to succeed.Another big,recent investment is the return of our Coffee Master program for retail partners in North America.In the last year,more than 10,000 partners have earned the coveted Black Aprons,which signifies their deep passion and knowledge for coffee,and their completion of the Starbucks Coffee Academy course.Coffee Masters in North America who meet all eligibility requirements can apply for an Origin Experience trip in Costa Rica.Other Origin Experience opportunities include Rwanda and Indonesia.During these trips,partners can fully immerse in the story of coffee“at the first ten feet”on the farms.We focus on providing our partners with the training,experiences,resources and autonomy that they need to succeed,and we are proud that in FY23,69%of U.S.retail leadership positions were filled by partners advancing in their careers within Starbucks.TRAINING AND DEVELOPMENTFY23#training hours for baristas(“Barista First 30”)(hours per barista)41.5%U.S.retail leadership roles filled from internal partners 69%OU R PA RT N E R P ROM I S EBridge to a better future2 0 2 3 G L O B A L I M P A C T R E P O R T2024 Starbucks Corporation.2023 Global Impact Report 11We pride ourselves in living our mission and values with a clear approach:real inclusion and belonging requires intent and is not defined only by metrics.Were on a journey to create environments globally where everyone is welcome and feels a sense of belonging.Our culture has been built on the efforts of a long line of partners who dared to make Starbucks a different kind of company.Through their commitment to their communities and one another,partners have demonstrated anything is possible when we nurture the limitless possibilities of human connection.We continue to make improvements and changes that are necessary to ensure Starbucks remains a diverse,inclusive,equitable and accessible company.In the U.S.,our goal is to achieve racial and ethnic diversity of at least 30 percent at all corporate levels and at least 40 percent at all retail and manufacturing roles by 2025.We also aim to achieve at least 50 percent women working across all corporate levels,55 percent women working across all retail roles and 30 percent women working in manufacturing roles.We are proud of the positive strides weve made but know we cannot lose momentum and must move faster to accelerate the changes necessary for Starbucks to remain a company where everyone belongs.Inclusion,Diversity&EquityREPRESENTATION IN RETAIL ROLES(U.S.)FY23RolePOCWomenregional vice president38R%regional director37Q%district manager36%store manager42h%shift supervisor48qrista54s%Goal:At least 40%People of Color(POC)representation and 55%women in all retail roles(regional vice president,regional director,district manager,store manager,shift supervisor,barista)by 2025REPRESENTATION IN ENTERPRISE ROLES(U.S.)FY23RolePOCWomensenior vice president 33G%vice president33X%director29%manager32U%individual contributor41V%Goal:At least 30%POC representation and 50%women for all enterprise roles(senior vice president ,vice president,director,manager,individual contributor)by 2025REPRESENTATION IN MANUFACTURING ROLES(U.S.)FY23RolePOCWomendirector14%manager28%individual contributor473%Goal:At least 40%POC representation and 30%women in all manufacturing roles(director,manager,individual contributor)by 2025REPRESENTATION ON BOARD OF DIRECTORSJANUARY 2024%board members identifying as POC55%board members identifying as female27%OU R PA RT N E R P ROM I S EBridge to a better futureEditors note:Here we detail progress against our 2025 hiring aspirations.With the expiration of our 2025 aspiration and as our Fiscal Year 2025 begins weve set a new goal.Read more here.TW E N TYTW E N TY T H R E E2023 Global Impact Report 122024 Starbucks Corporation.STA R BU CKSG I V E M O R E T H A N W E TA K EpromiseENVIRONMENTALourP R O G R E S S U P D AT E TW E N TYTW E N TY T H R E ESTA R BU CKSP R O G R E S S U P D AT E2023 Global Impact Report 132024 Starbucks Corporation.OU R E N V I RO NMENTAL PROMISEAt Starbucks,we promise to give more than we take from the planet.Our comprehensive approach is built on our commitment to build a more sustainable,equitable and resilient future for coffee,farmers,communities and our planet.Across our company,we are testing and scaling innovative solutions to support partners,farmers and communities in the face of global climate change.Our work to fulfill our promise includes driving key investments to help farmers adapt to climate change impacts and conserving or replenishing water.Our global footprint requires a global approach that leverages the expertise and experiences of our partners,farmers,customers and stakeholders.Its why we continue our decades-long work with industry experts,leveraging their insights to create and propel scalable solutions across our global operations,like in our efforts to support the long-term health of the dairy industry.Its why we are continuously working towards our bold promise to our planet in collaboration with suppliers,non-profit organizations,industry partners,government,farmers and customers.And its why we take the lead of our partners who carry forward our promise to the planet every day in our stores by helping to make every single Starbucks store more sustainable by addressing our climate,water and waste footprints.To support ongoing collaboration across sectors,Starbucks is a founding member of Transform to Net Zero,established in FY20.The initiative works to accelerate the transition to a net zero global economy no later than 2050 by developing and delivering research,guidance and roadmaps to guide businesses in achieving net zero emissions.These efforts showcase our decades-long commitment to find solutions to mitigate the impacts of climate change and ensure a sustainable future of coffee for all.2024 Starbucks Corporation.2023 Global Impact Report 14OU R E N V I RO N M E N TA L P ROM I S EGive more than we takeOur vision for the future is to become resource positive.From storing more carbon than we emit,to reducing and conserving more freshwater than we use and eliminating waste,we set targets to cut our climate,water and waste footprints in half by 2030,compared to a FY19 baseline.Our goals:Climate:50solute reduction in scope 1,2 and 3 greenhouse(GHG)emissions representing all of Starbucks direct operations and value chain.Water:50%of water withdrawals will be conserved or replenished across Starbucks direct operations,stores,packaging and agricultural supply chain,prioritizing action in high-risk water basins while supporting watershed health,ecosystem resilience and water equity.Waste/Packaging:50%reduction in waste sent to landfill from stores and direct operations;customer packaging to be 100%reusable,recyclable or compostable.As part of our work to refine and update our 2030 goals in FY23,we added specific targets for packaging,including updating 100%of Starbucks customer packaging to be reusable,recyclable or compostable.2030 GoalsWe set ambitious goals because were committed to creating a more sustainable and resilient future for the planet and the communities we serve.We are focused on identifying and testing innovative solutions that we can scale across our global operations and engaging with our value chain while improving our measurement systems.During the same time period(FY19 to FY23),Starbucks total net revenues have increased by 36%.*PROGRESS TOWARD 2030 CLIMATE,WATER AND WASTE/PACKAGING GOALS ClimateWaterWaste/Packaging8%increase in total emissions compared with FY19 baseline9crease in total water withdrawal compared with FY19 baseline13%increase in waste sent to landfill compared with FY19 baseline14%of customer packaging is reusable,recyclable or compostable(20crease in emissions per$of revenue*compared with FY19 baseline)(33crease in water withdrawal per$of revenue*compared with FY19 baseline)(16crease in waste sent to landfill per$of revenue*compared with FY19 baseline)Sustainable Future of CoffeeA healthy supply of coffee requires a healthy planet,but climate change is making it increasingly difficult for farmers to grow high-quality coffee.To help ensure the sustainable future of coffee,we are focusing on reducing our carbon footprint and conserving water at“the first ten feet”starting on coffee farms.We do this by equipping farmers with precision agronomy tools that help reduce carbon and greenhouse gas emissions.We are also promoting and distributing climate-resistant coffee tree varietals,while protecting and restoring at-risk forests in key coffee landscapes.See Our Farmer Promise for more information about this work.*Calculated as total emissions per$of consolidated net revenues,expressed as the percentage change from FY19 to FY23.*Calculated as water withdrawal per$of consolidated net revenues,expressed as the percentage change from FY19 to FY23.*Calculated as waste sent to landfill per$of consolidated net revenues,expressed as the percentage change from FY19 to FY23.*Source:Starbucks 2023 10-K,Starbucks 2019 10-K.G I V EMO R E T H A N W E TA K E*In FY23,we launched a new hot cup in the U.S.that includes 30 percent post-consumer recycled fiber and will continue to roll out this hot cup across U.S.stores.2024 Starbucks Corporation.2023 Global Impact Report 15Cups&PackagingStarbucks is on a mission to lead the charge in reducing single-use packaging,and were taking bold steps,leveraging our test-and-learn approach to redefine convenience for our customers.Our vision is clear:we aim to empower our customers to make environmentally conscious choices during every Starbucks visit around the world,whether theyre enjoying their coffee in the caf,zooming through the drive-thru or using mobile order and pay.Making it easier for customers to use reusable cups is one of the ways Starbucks plans to reduce single-use cup waste in our stores.Were working towards a future where every Starbucks customer can order and enjoy a beverage served in a reusable cup either one they bring or one we provide.Starting in 2024,customers in all Starbucks stores across the U.S.and Canada will be able to use their personal reusable cup wherever they order,including in caf,drive-thru or mobile order and pay.Inspired and informed by partners around the world,Starbucks has also conducted reusable cup tests in more than 25 markets around the world with more planned in the year ahead.In FY23,Starbucks tested a 100 percent reusable and returnable cup model in 12 stores in California.This program provides customers with a store-issued returnable cup to enjoy their drink wherever they wish,then return the cup to a kiosk at participating Starbucks locations.The cup will be professionally washed and sanitized,ready to be used again.In addition to testing and implementing models for reusable cups,we are making progress to improve the sustainability of our single-use cups.In FY23,we launched a new hot cup in the U.S.that includes 30 percent post-consumer recycled fiber.Less paper is used to make the cup,and less plastic is used to line it.From recycling to reusables,our sustainability journey has been driven by bold aspirations and a comprehensive approach.Weve set an ambitious goal for our customer facing packaging to be 100%reusable,recyclable or compostable;sourced from 50%recycled materials;and made using 50%less virgin fossil fuel derived sources by 2030.Our ambitions,business and goals for reducing waste are global.To bring about sustainable change for our planet,we have joined the Business Coalition for a Global Plastics Treaty.The Coalition,led by World Wildlife Fund(WWF)and the Ellen MacArthur Foundation,is supporting the development and negotiations of a United Nations Global Plastics Treaty to accelerate progress around the world.PROGRESS TOWARD SUSTAINABLE PACKAGINGFY23%of customer packaging that is reusable,recyclable or compostable14%of customer packaging made from recycled or renewable materials24%change in virgin fossil fuel derived materials in customer packaging from FY19 baseline 11%post-consumer(PCR)fiber in hot cups(U.S.)*30%OU R E N V I RO N M E N TA L P ROM I S EGive more than we take2024 Starbucks Corporation.2023 Global Impact Report 16Greener StoresA Starbucks store is certified as a“Greener Store”when it meets robust standards,as verified by a third-party auditor,across eight environmental impact areas:water stewardship,partner engagement,energy efficiency,waste diversion,renewable energy,responsible materials and sites and communities.The standards were developed in partnership with World Wildlife Fund(WWF)and SCS Global Services.In FY23,we certified 6,091 Greener Stores.We are proud to announce significant international expansion of our Greener Store program in 2023,with the aim to have 10,000 Greener Stores across our global business in 2025.The inaugural global Greener Stores of the Year is awarded across our six regions to celebrate stores exceeding in innovation and environmental impact.The 2023 regional winners will be announced in the Spring of 2024.Our promise to support our planet goes beyond our own business.Thats why we launched the Greener Store Practitioner course on the Starbucks Global Academy to make the Greener Stores program accessible to retailers and the general public around the world.The course features educational content on sustainability that is broadly applicable and shares the fundamental structure of Greener Stores.Starbucks will translate the course into multiple languages through 2024 and is committed to sharing insights through the Starbucks Global Academy platform as we continue to scale the program globally.Renewable electricity projects at our Greener Stores represent just one way we are working to support the growth of green energy.We work to spur development of new renewable electricity and energy storage facilities through direct investment and long-term contracts that ensure project financing.We also purchase renewable energy certificates from new and existing facilities.For example,in October 2023,Starbucks announced a partnership with NineDot Energy in New York City in support of the states goal to deploy 1,500 megawatts of battery storage by 2025.The projects will deliver cleaner air to the citys communities by displacing generation from peaking power plants.In FY23,Starbucks also expanded its roster of onsite solar and hosted electric vehicle charging stations that provide familiar,reliable,clean and safe places to recharge for our customers and their battery-powered vehicles.PROGRESS OF GREENER STORES PROGRAMFY23#Greener Stores certified in North America5,488#Greener Stores certified in international regions603#total Greener Stores certified globally6,091Goal:Build and operate 10,000 Greener Stores globally by 2025.PROGRESS ON RENEWABLE ELECTRICITY USE*FY23%renewable electricity use globally(company-operated facilities globally)77%*In previous years,we reported this metric as“renewable energy”.Weve updated to“renewable electricity”to clarify its original scope.OU R E N V I RO N M E N TA L P ROM I S EGive more than we take G LO B A L I M PACT R E P O RTSTA R BU C KS2023 Global Impact Report 172024 Starbucks Corporation.E N S U R E T H E F U T U R E O F C O F F E E F O R A L LpromiseFARMERourF I S C A L 2 0 2 3 G LO B A L I M PACT R E P O RTSTA R BU C KSF I S C A L 2 0 2 32023 Global Impact Report 182024 Starbucks Corporation.OU R FA RM E R PROMISEWe work with more than 450,000 farms that grow the highest quality Arabica coffee in the world.Our promise to farmers is that we will always work to ensure a sustainable future of coffee for all,underscoring the decades-long commitment that weve made to coffee farmers and farming communities.As we move to become a truly global company,we have a unique opportunity to enhance lives by promoting ethical and sustainable practices globally.Driven by our industry-leading Coffee and Farmer Equity Practices(C.A.F.E.Practices)verification program,with over 450,000 participating farms,we help support farmers and their families and ensure that our supply chain promotes sustainable and transparent growing practices.Coffee farmers and farming communities are already feeling the impacts of climate change and our warming planet.We are proud to invest in regenerative agriculture,reforestation,forest conservation and water replenishment to support a healthy coffee future.With that in mind,Starbucks is focused on helping farmers get the financing they need to support their businesses and families in rapidly changing conditions.We also provide coffee trees that can help farmers adapt to the impacts of climate change and increase their productivity over the long-term.We are also working to conserve and restore the forests that are critically important to agriculture systems.At our best,we promise to ensure a sustainable future of coffee for all through a comprehensive approach that centers and respects our farming communities and the planet we share.2024 Starbucks Corporation.2023 Global Impact Report 19OU R FA RM E R P ROM I S EEnsure the future of coffee for allEthical Sourcing of CoffeeGlobal Farmer SupportWe are proud to have developed one of the coffee industrys first set of ethical sourcing standards in 2004 in collaboration with Conservation International.C.A.F.E.Practices is a verification program that measures farms against economic,social and environmental criteria,all designed to promote transparent,profitable and sustainable growing practices while also protecting the well-being of coffee farmers,their families and their communities.C.A.F.E.Practices helps Starbucks work with farmers to create a long-term supply of high-quality coffee while positively impacting the lives of coffee farmers and their communities.Starbucks future is directly linked to the livelihoods of farmers,their families and their communities,so we take seriously our responsibility to care for the people who are part of the coffee journey.Starbucks operates ten Farmer Support Centers in coffee-producing countries around the world.Our agronomists work with farmers to learn and implement the latest findings and best practices in agronomy,quality and social responsibility.Through the Farmer Support Centers,farmers gain access to updated water conservation methods,new varietals of disease-resistant coffee trees and advanced soil management techniques,including promotion of coffee shade canopy.Working one-on-one with farmers in the field,supporting co-ops and suppliers,Starbucks agronomists build upon traditional growing methods to help the next generation of farmers improve the quality,productivity and profitability of their crops while supporting the implementation of C.A.F.E.Practices across Starbucks coffee supply chain globally.Since first offering financing in 2000,the Starbucks Global Farmer Fund has supported the business financing needs of farmers to help ensure a sustainable,long-term source of coffee.Farmers often cannot access traditional business loans because of excessive interest rates and stringent minimum qualifications.The loans offered through our Global Farmer Fund enable farmers to plant new trees,enhance their infrastructure and bolster their financial stability in the face of changes in climate and markets.Our goal is to supply$100 million in farmer loans by the end of 2025.FARMER SUPPORT CENTERSFY23#Farmer Support Centers10#people trained with advanced agronomy techniques56,000#Model Farms(cumulative as of FYE)120ETHICAL SOURCING OF COFFEEFY23%Starbucks coffee ethically sourced and verified through C.A.F.E Practices99.7%GLOBAL FARMER FUNDFY23$loans deployed from the Global Farmer Fund since inception(as of FYE)($millions)80.8$loans deployed from the Global Farmer Fund since FY18(as of FYE)($millions)65.82 0 2 3 G L O B A L I M P A C T R E P O R T2024 Starbucks Corporation.2023 Global Impact Report 20Sustainable Future of CoffeeWater stewardship and soil health are important parts of our strategy.To achieve this,we are supporting the transition to sustainable eco-wet mills to separate the fruit of the coffee cherry from the coffee bean while conserving water and increasing efficiency for farmers.We are also working alongside farmers to gain deeper knowledge about soil nutrition requirements by promoting soil sample analysis and tailoring recommendations about soil nutritional needs.These efforts have the potential to reduce on-farm carbon emissions and increase the productivity of crops.Climate-resistant coffee trees are a critical part of our effort to help farmers adapt to climate change.Since making the commitment to distribute 100 million coffee trees by 2025,Starbucks has now distributed more than 80 million of the next generation of climate-resistant coffee trees in El Salvador,Guatemala and Mexico.Additionally,in Colombia,we provide coffee seedlings to farmers and have delivered more than 53 million seedlings as of FY23.By 2030,Starbucks is aiming to achieve carbon-neutral green coffee and conserve water usage in green coffee processing by 50%.Our work in FY23 focused on refining the methods we use to calculate the carbon and water footprint of green coffee.This foundational work is crucial for accurately tracking our progress in the years ahead.Protecting and restoring forests addresses a serious threat to coffee farms and communities around the world.In FY23,Starbucks continued its efforts to protect and restore forests that are impacted by land-use change and deforestation.These agroforestry efforts will help remove carbon and support a carbon neutral pathway while also benefiting freshwater ecosystems and coffee communities.Sustainable agricultural practices include preserving and enhancing biodiversity.To further advance our transparency,we will conduct a material biodiversity impact assessment with respect to our coffee supply chain,to be completed by the end of our 2025 fiscal year and performed in accordance with the Taskforce on Nature-related Financial Disclosures framework.SUSTAINABLE AGRICULTUREFY23#soil samples processed(cumulative as of FYE)30,800Goal:Achieve Carbon-Neutral Green Coffee by 2030.#eco-wet mills contracted(cumulative as of FYE)1,500Goal:Conserve water usage in green coffee processing by 50%by 2030.OU R FA RM E R P ROM I S EEnsure the future of coffee for all 2 0 2 3 R E P O RTP RO G R ES S U P DATE2023 Global Impact Report 212024 Starbucks Corporation.C O N T R I B U T E P O S I T I V E LYpromiseCOMMUNITYourS TA R B U C K SP RO G R ES S U P DATES TA R B U C K S 2 0 2 3 R E P O RT2023 Global Impact Report 222024 Starbucks Corporation.OU R COMMU NITY PROMISESince the beginning,Starbucks has been about more than coffee.We are a people company,driven by our belief in the limitless power of human connection.Thats why we have made a promise to contribute positively to every community we serve,through our 38,000 stores across 86 markets around the world.Our new mission to nurture human connection recognizes that connecting with each other is a fundamental human need.Study after study indicates high rates of loneliness as a public health concern,and theres a desperate need for togetherness.This promise comes to life in our communities through our partners who know their neighborhoods best,and our customers who bring their knowledge and ideas as community members.We support every partner to take action as a champion in their communities,from serving and giving to learning and advocating-recognizing that our partners are local community leaders who contribute positively and meaningfully to thousands of communities around the world.We remain committed to addressing food insecurity and hunger.We build purpose-defined stores that reflect the communities we serve and help uplift communities through unique programming and in-store features.We support small businesses by increasing access to capital and working with diverse suppliers across our supply chain.And we invest in The Starbucks Foundation to drive impact around the world.2024 Starbucks Corporation.2023 Global Impact Report 23OU R COMMU N I TY P ROM I S EContribute positivelyCommunity Champions&Giving Match Our Stores in the CommunityOur partners are Community Champions who bring our Community Promise to life in and around our stores.Through civic engagement,volunteerism,community events,donations and more,Starbucks partners work in big and small ways to make a positive impact for people and the planet.The Starbucks Community Champion courses on the Starbucks Global Academy help anyone interested in making a difference in their communities develop an action plan for good.We aim to multiply the positive contributions our partners make in their communities.One way we do this is through the Starbucks Giving Match program in the U.S.and Canada,which amplifies eligible financial donations and volunteer time partners make to community organizations.All active Starbucks full-and part-time partners can request up to$1,000 in matching funds per fiscal year,using any combination of volunteer hours and financial donations to qualified nonprofit organizations.Community Stores sit at the heart of our mission to nurture the limitless possibilities of human connection.These stores are purpose-defined to better support our partners,our customers and our communities in ways that meaningfully drive lasting connection.To enhance the well-being of all who connect within our stores,our goal is to reach 1,000 Starbucks Community Stores globally by 2030.Community Stores provide economic opportunity,empower farmers,youth and women as well as create relevant community programming.For example,our Military Family Stores aim to uplift the everyday for active military personnel,Veterans,their families and surrounding communities.These stores are located on or near major military bases and help provide a sense of connection and support for military families who are often far from their loved ones.In Starbucks Signing Stores,we work to ensure that our efforts to uplift the everyday and the Starbucks Experience are inclusive for our partners and customers.These stores are run by store partners who are proficient in sign language and provide a space for the Deaf and hard of hearing community to connect and celebrate Deaf culture through sign language.In India and Saudi Arabia,female-led stores are a part of our ongoing work to provide opportunities for women.These stores reaffirm the companys ongoing commitment to promoting an inclusive and diverse workforce by empowering women leaders.OUR STORES IN THE COMMUNITYOPENED IN FY23TOTAL OPEN AS OF FY23#Community Stores(U.S.)1139#Community Stores(international markets)1635#Military Family Stores(U.S.)17130#Signing Stores(globally)420Food Waste Reduction&Hunger ReliefStarbucks is committed to reducing food waste within its operations and supporting hunger relief in communities.Starbucks FoodShare food donation program was launched in the U.S.in 2016 and Canada in 2019,in partnership with Feeding America,Second Harvest Canada and other hunger-relief organizations.As part of our promises to give more than we take and contribute positively to the communities we serve,we divert food from waste streams and donate it to help alleviate hunger.We also work around the world to support innovations in food waste reduction and scalable sustainable solutions that increase equitable access to nutritious food in high need and underserved communities.2024 Starbucks Corporation.2023 Global Impact Report 24Economic OpportunityWe are working to advance economic opportunity in our communities by working with a diverse range of suppliers across our business,increasing access to capital for small business owners and elevating public-private partnerships that address economic disparities.Since 1998,Starbucks has created an environment where diverse suppliers have equal opportunity to compete for our business.Our sourcing teams engage with a diverse set of suppliers who share our commitment to advancing ethical sourcing and social and environmental standards.The Starbucks Supplier Diversity and Inclusion program drives inclusion of qualified businesses with a focus on suppliers of all sizes and categories,including small businesses.In 2021,Starbucks invested$100 million to launch the Community Resilience Fund to advance racial equity and environmental resilience in neighborhoods with historically limited access to capital.As of FY23,we have contributed over$40 million to the fund.We are working with Community Development Financial Institutions(CDFIs)and other mission-driven financial institutions because of their deep experience serving underserved communities.The Fund provides access to long-term loans intended to support small businesses and neighborhood projects,including those addressing the inequitable impacts of climate change.In 2022,Starbucks continued to leverage the power of public-private partnerships and joined the Economic Opportunity Coalition to address economic disparities and accelerate economic opportunity in historically marginalized communities by developing and collaborating on new services,programs and products that will support deploying resources where they are most needed.The Starbucks FoundationEstablished in 1997,The Starbucks Foundation is a distinct Section 501(c)(3)charitable organization under U.S.law and receives funding primarily from Starbucks Corporation.The Starbucks Foundations mission is to strengthen humanity by transforming lives across the world,with a focus on enabling community resiliency and prosperity,and uplifting communities affected by disaster.Through this work,the Foundation supports domestic and international nonprofit organizations that deliver impact to coffee growing regions,in Starbucks local hometown of Seattle and in neighborhoods around the world where Starbucks partners live and work.In coffee-,tea-and cocoa-growing communities,Foundation grants address critical needs such as access to water,sanitation and hygiene and economic opportunities.The Neighborhood Grants and Global Community Impact Grants programs accelerate hyper-local impact by inviting Starbucks partners across North America and Starbucks international business partners to nominate locally-relevant charities for grants,while inspiring additional support through local connections,volunteerism and co-investment.Youth grants support underrecognized youth by investing in programs focused on diversity,equity and inclusion;mentorship and career readiness opportunities;and addressing the current state of social and emotional health in young people.And when disaster strikes,from the earthquake in Trkiye to wildfires in Maui,The Starbucks Foundation supports immediate relief and longer-term recovery needs while also investing in resiliency efforts to ensure communities are prepared in advance of the next storm.Learn more about The Starbucks Foundations work.THE STARBUCKS FOUNDATIONFY23$total grants awarded($millions)24OU R COMMU N I TY P ROM I S EContribute positively O U R P RO G R E S S U P DAT ESTA R BU C KS F I SC A L 2 0232023 Global Impact Report 252024 Starbucks Corporation.U P L I F T T H E E V E R Y D AYpromiseCUSTOMERour2 0 2 3 O U R P RO G R E S S U P DAT ESTA R BU C KS F I SC A L 2 0232 0 2 32023 Global Impact Report 262024 Starbucks Corporation.OU R CU STOMER PROMISEFrom the original third place to the newest Starbucks stores,were all about connecting and meeting our customers where they are.Our promise to our customers is to uplift the everyday,providing a superior coffee and customer experience every time they visit us.We celebrate our customers by offering a variety of drinks and food choices that are as unique as every customer we meet.Our global stores serve menus that reflect and respect the people we serve and their beverage traditions.We are building inclusive and accessible design elements in our stores that help every customer enjoy their Starbucks experience.And we are witnesses to countless moments of kindness through the windows of more than 38,000 stores around the world.We share these moments to uplift the everyday,and to help build a kinder,braver world.U P L I FT T H E E V E RY DAY2024 Starbucks Corporation.2023 Global Impact Report 27OU R C U STOM E R P ROM I S EUplift the everydayUplifting the Every Day Through Kindness Third PlaceInclusive&Accessible Design We aim to not only celebrate coffee,but also to foster positive connections in our communities.We have the privilege to see our partners,customers and communities connect over everyday moments of kindness in ways both big and small.To help communities recognize kindness that is all around them,while also reinforcing Starbucks commitment to creating a culture of belonging where everyone is welcome,Starbucks invited customers and partners to uplift the everyday through stickers,cards and kind notes in store and via an augmented reality experience.Our mission and promises come to life in our stores,a third place where everyone is welcome,feels a sense of belonging and where we can uplift one another over coffee.Our priority is to create environments in our stores that are safe,welcoming and kind for our partners and customers.Through the Third Place Policy,we ask everyone in our stores to treat others with respect and dignity,free of bias and discrimination.As a company,we routinely review the partner and customer experience in our stores,to ensure the store is thriving,partners are feeling supported,and that we are meeting customer and community needs.Starbucks is committed to developing,testing and scaling inclusive design standards and experiences with and for people who have lived experience with disability.We are working to expand this effort across our store portfolio,starting in the U.S.and then globally,with the goal of ensuring that physical and digital Starbucks environments will meet an elevated standard of accessibility by 2030.Because we are in the business of fostering human connection,we are regularly creating more ways for customers and partners to communicate both visually and audibly,while also offering more tools to help customers and partners navigate our physical store environments.For example,since 2021 Starbucks has offered the Aira service free of charge to our customers who are blind or have low vision.Customers can use the app to connect with trained visual interpreters who provide visual information about their surroundings.Starbucks also offers multiple formats of the menu including large-print and Braille menus in all stores in the U.S.and Canada.TW E N TYTW E N TY T H R E EG LO BA L I M PACT REP ORT2023 Global Impact Report 282024 Starbucks Corporation.G E N E R AT E L O N G-T E R M R E T U R N SpromiseSHAREHOLDERourS TA R B U C K S TW E N TYTW E N TY T H R E EG LO BA L I M PACT REP ORTS TA R B U C K S2023 Global Impact Report 292024 Starbucks Corporation.OU R S HA RE HOLDER PROMISEOur six promises guide our work at every level of the company.It is our partner promise to help bridge to a better future;for our customers,we promise to uplift the everyday;for our farmers,we promise to ensure the future of coffee for all;for our community,we promise to contribute positively;for our environment,we promise to give more than we take.In doing all these things,we generate long-term returns for our shareholders.Each of the six new promises is interrelated and interchangeable,ensuring mutual success for all.2024 Starbucks Corporation.2023 Global Impact Report 30OU R S H A R E H O L D E R P ROM I S EGenerate long-term returnsCorporate GovernanceStakeholder EngagementOur Environmental and Social Impact goals are closely tied to our companys overall strategy.Our Board of Directors assesses our impact agenda as part of their broader review and oversight of our business and strategy.In November 2023,we announced the formation of a new Environmental,Partner and Community Impact Board Committee(Impact Committee).The Impact Committee will support the Board in fulfilling its oversight responsibilities required to respond to shifting regulations and standards,and drive accountability across the environmental,partner,community impact,farmer and customer promises.The Impact Committee also has oversight of internal and external reporting tools and assessments,including the annual publication of this report,and initiatives to strengthen partner engagement and revitalize partner culture.In conjunction with the Board and its other committees,the Impact Committee will oversee certain applicable risks.More information about Corporate Governance on environmental and social topics is available online and in our Proxy Statement.In FY23,we continued implementing our executive compensation programs,which were updated in 2021 to emphasize our focus on environmental sustainability and building diverse teams.To align with our goal of giving back more to the planet,the FY23 annual bonus program allocated 7.5 percent of the overall bonus payout for senior vice presidents and above to results that indicate we are fulfilling our promise to the planet.Another 7.5 percent was tied to creating an inclusive environment across our company,emphasizing the importance of diversity in our workforce for our global success.In FY23,we engaged in a comprehensive third-party evaluation to identify and prioritize key environmental,social and governance topics most important to the company and external stakeholder groups.This process aimed to guide Starbucks in focusing our strategy to advance our mission,promises and values.To do this,we conducted surveys and interviews across global stakeholder groups to assess the importance of environmental,social and governance topics for Starbucks.Rooted in our commitment to transparency,we are sharing our environmental,social and governance priorities publicly with our stakeholders.Understanding and addressing these key issues are integral to meeting the expectations of our stakeholders and ensuring alignment between our business performance and environmental,social and governance impacts.While there is work being done across all topics,these results will help inform our program strategies and ESG reporting priorities going forward.Global Human RightsFor decades,Starbucks has committed to respecting and protecting human rights.In 2004,Starbucks joined the U.N.Global Compact the worlds largest corporate sustainability initiative that commits signatories to implement sustainability principles and support U.N.goals.We also remain committed to the U.N.Guiding Principles on Business and Human Rights;OECD Guidelines for Multinational Enterprises;International Bill of Rights;ILO Core Labor Standards;Womens Empowerment Principles;Childrens Rights and Business Principles;and Framework Principles on Human Rights and the Environment.In 2020,Starbucks released our Global Human Rights Statement,which informs the decisions we make that impact our relationships with each other,our customers,our business partners and our communities.In FY23,Starbucks completed an independent,third-party Human Rights Impact Assessment.Starbucks engaged Article One,a specialized strategy and management consultancy with expertise in human rights,responsible innovation,and sustainability,to conduct the Human Rights Impact Assessment of Starbucks policies,procedures and initiatives related to human rights.The results of that assessment are available here.This assessment represents the next step in our journey to identify and assess salient human rights risks and make key investments to support our partners,farmers,communities and the environment.As we have in the past,we look forward to continuing to update our stakeholders on our human rights journey and human rights due diligence program in the years to come.2024 Starbucks Corporation.2023 Global Impact Report 31Working Directly with our PartnersStarbucks is actively collaborating with all partners to fulfill our Partner Promise to build a bridge to a better future.As a company,we respect our partners right to organize,freely associate,engage in lawful union activities and bargain collectively without fear of reprisal or retaliation.Importantly,we are committed to engaging in good faith collective bargaining for each store where a union has been appropriately certified and have shared our aim to reach ratified contracts for union-represented stores in 2024.As part of our commitment to our partners,all managers are provided training to help deepen their understanding of labor issues,National Labor Relations Act(NLRA)requirements and the rights of our partners to engage in protected activitiesand are supported by a nationwide labor relations team established in 2022 to reinforce best-practices and ensure our adherence to company policies and compliance with applicable labor and employment laws.As of the end of FY23,343 U.S.stores had certified union representation.To provide timely and accurate information and resources on labor activities,we launched the website,which is designed to assist anyone seeking up-to-date information and resources related to labor initiatives.In FY23,Starbucks Board of Directors retained an independent third-party expert to complete an assessment of its adherence to the principles of Freedom of Association and the Right to Collective Bargaining.The assessment found that Starbucks has shown consistent progress since organizing began,and that strategic investments in a stronger governance process,more on-the-ground support,a dedicated labor relations team and more bespoke management training have had a tangible impact on the Companys adherence to commitments made.The full results of the assessment are available here.OU R S H A R E H O L D E R P ROM I S EGenerate long-term returns2024 Starbucks Corporation.2023 Global Impact Report 32Ethics&ComplianceStarbucks Ethics&Compliance program aligns with our mission and values by fostering an environment dedicated to ethical leadership and business conducted with integrity.We created our Ethics&Compliance program to ensure it is a trusted resource for partners.Our training and communications approach begins with onboarding new partners tailored to their role and level.Quarterly training for all partners covers various Ethics&Compliance topics and risk areas,such as Anti-Harassment,Anti-Discrimination,Insider Trading and Conflicts of Interest.In FY23,we launched more than 60,000 online courses to our corporate partners in 20 countries,which included ten different risk areas.All corporate partners receive training annually on our Standards of Business Conduct and Harassment Prevention.As part of retail onboarding,all partners discuss and review the Standards of Business Conduct and Speaking Up resources in a one-on-one meeting with their manager.Upon hire,all new retail management partners also receive Anti-Harassment training,which must be completed in the first 30 days.Retail managers in the U.S.and Canada receive annual online renewal training of risk-relevant topics and in 2023 achieved a 99%completion rate on a custom Harassment Prevention course.We also newly launched training to partners in our Farmer Support Centers in seven different countries.Starbucks Global Anti-Bribery Standard and related policies and procedures provide critical guidelines regarding doing business with third parties,government officials,and state-owned/controlled companies,and set forth clear expectations regarding bribery and corruption.We reinforce this through regular partner communications,and last year we provided online training to partners globally.Partners are empowered to ask for guidance and voice concerns when they experience or see conduct that is inconsistent with our Standards of Business Conduct,company policies or Mission and Values.An independent third party manages our Ethics&Compliance Helpline and Webline,both of which allow partners and others to ask questions and voice concerns 24 hours a day,seven days a week,with interpreters available.Reports may be made anonymously and are treated in a confidential manner.We are committed to providing safe,confidential and accessible channels to all individuals connected to Starbucks,while maintaining a strict Anti-Retaliation Policy in compliance with our Global Human Rights Statement.Starbucks captures concerns raised and assigns cases to be investigated by or with the oversight of an Ethics&Compliance investigator.The Ethics&Compliance investigations team strives to bring cases to closure within 45 to 60 days,based on complexity.In FY23,Ethics&Compliance completed investigations of 4,731 inquiries and concerns received primarily through our Helpline and Webline.Of the investigations completed,45 percent were substantiated as a violation of standard or policy.When an investigation is complete,Ethics&Compliance shares findings with the individual(s)who reported the concern.Depending on the findings of the investigation and the severity of any substantiated wrongdoing,there are a number of possible outcomes to an investigation,including coaching,retraining,written documentation or separation from employment.Ethics&Compliance topics are regularly reinforced through leadership messages,our online community and other cross-functional channels.Regular reports are made to the Audit and Compliance Committee of the Board of Directors,including formal sessions multiple times each year.OU R S H A R E H O L D E R P ROM I S EGenerate long-term returns2023 Global Impact Report 332024 Starbucks Corporation.G LO B A L I M PACT R E P O RTS TA R B U C K SFISCAL 2 0 2 32023 Global Impact Report 342024 Starbucks Corporation.progress report data tables2024 Starbucks Corporation.2023 Global Impact Report 35OU R PA RT N E R P ROM I S EBridge to a better futureprogress report data tablesBenefitsCOMPENSATIONFY23FY22Average hourly wage for U.S.hourly partners($/hour)17.4217.00%U.S.hourly partners earned above minimum wage1000%STARBUCKS COLLEGE ACHIEVEMENT PLAN#partners graduated with college degree(during FY)2,100Goal:Graduate 25,000 Starbucks partners from Arizona State University(ASU)by the end of 2025.#partners graduated with college degree(since program inception,as of FYE)9,100#partners participating(as of FYE)23,40023,000Training&DevelopmentTALENT ATTRACTION,DEVELOPMENT&TRAININGFY23FY22Total number of baristas hired in the U.S.160,000%of U.S.retail leadership roles filled from internal partners 69%Total employee turnover(U.S.and Canada)58e%#training hours for baristas(Barista First 30)(hours per barista)41.542#partners selected to travel to Hacienda Alsacia for Origin Experience900800STARBUCKS GLOBAL ACADEMYCoffee Masters#enrollments7,0002,500#course completions(earned the Black Apron)(during FY)6,8001,500#course completions(earned the Black Apron)(since inception,as of FYE)4,500STARBUCKS GLOBAL ACADEMY|CONTINUEDFY23FY22Community Champion#course enrollments1,600#course completions15,30015,000#course completions9,2009,900Starbucks Coffee Academy#course enrollments153,50094,90096,900Third Place Development Series#course enrollments2,6003,000#course completions300To Be WelcomingGoal:100,000 total enrollees in To Be Welcoming to cultivate inclusion,diversity and equity awareness.#course enrollments21,000We exceeded our goal of enrolling 100,000 cumulative learners in FY22,and remain committed to offering the course to partners,customers and community members through the Starbucks Global Academy.#course completions25,60012,000%enrollees who are partners61 24 Starbucks Corporation.2023 Global Impact Report 36OU R PA RT N E R P ROM I S EBridge to a better futureprogress report data tablesPartner EngagementPARTNER ENGAGEMENT SURVEYSFY23FY22%partners completed the Partner Experience SurveyU.S.store partners65Cnada store partners53T%North America non-store partners92%PARTNER NETWORKS#Partner Networks(globally)3226#Partner Networks(U.S.)1312Active regional chapters(U.S.)116114CIVIC ENGAGEMENT RESOURCES#partners using civic education resources(via Starbucks FuelOurD site)17,000Inclusion,Diversity&EquityRACIAL&SOCIAL EQUITY GOALS&REPRESENTATION*FY23FY22Representation of women in retail roles(U.S.)Goal:At least 55%women in all retail roles(regional vice president,regional director,district manager,store manager,shift supervisor,barista)by 2025.regional vice president52c%regional director51P%district manager60a%store manager68h%shift supervisor71qrista73s%Representation of POC in retail roles(U.S.)Goal:At least 40%People of Color(POC)representation in all retail roles(regional vice president,regional director,district manager,store manager,shift supervisor,barista)by 2025.regional vice president381%regional director372%district manager363%store manager429%shift supervisor48Grista54S%Our commitments to achieving diverse representation in our retail,manufacturing and corporate roles and equity in pay across race and gender in the U.S.and globally in company-operated markets reinforce our promises to build bridges and create environments where all are welcome.There is still more to be done,and we are committed to taking further actions toward tangible and lasting change.*Use our interactive tool to view additional demographic data of Starbucks partners.2024 Starbucks Corporation.2023 Global Impact Report 37OU R PA RT N E R P ROM I S EBridge to a better futureprogress report data tablesRACIAL&SOCIAL EQUITY GOALS&REPRESENTATION|CONTINUEDFY23FY22Representation of women in enterprise roles(U.S.)Goal:At least 50%women for all enterprise roles(senior vice president ,vice president,director,manager,individual contributor)by 2025.senior vice president 47W%vice president58U%director60Y%manager55U%individual contributor56U%Representation of POC in enterprise roles(U.S.)Goal:At least 30%POC representation for all enterprise roles(senior vice president ,vice president,director,manager,individual contributor)by 2025.senior vice president 33%vice president330%director29%manager321%individual contributor418%Our commitments to achieving diverse representation in our retail,manufacturing and corporate roles and equity in pay across race and gender in the U.S.and globally in company-operated markets reinforce our promises to build bridges and create environments where all are welcome.There is still more to be done,and we are committed to taking further actions toward tangible and lasting change.RACIAL&SOCIAL EQUITY GOALS&REPRESENTATION|CONTINUEDFY23FY22Representation of women in manufacturing roles(U.S.)Goal:At least 30%women in all manufacturing roles(director,manager,individual contributor)by 2025.director14%manager27)%individual contributor333%Representation of POC in manufacturing roles(U.S.)Goal:At least 40%POC representation in all manufacturing roles(director,manager,individual contributor)by 2025.director14)%manager280%individual contributor47C%Our commitments to achieving diverse representation in our retail,manufacturing and corporate roles and equity in pay across race and gender in the U.S.and globally in company-operated markets reinforce our promises to build bridges and create environments where all are welcome.There is still more to be done,and we are committed to taking further actions toward tangible and lasting change.Representation of age in total workforce retail(U.S.)under 308205016ove 502%3%Representation of age in total workforce enterprise(U.S.)under 30905070aove 5022 24 Starbucks Corporation.2023 Global Impact Report 38OU R PA RT N E R P ROM I S EBridge to a better futureprogress report data tablesRACIAL&SOCIAL EQUITY GOALS&REPRESENTATION|CONTINUEDFY23FY22Representation of age in total workforce manufacturing(U.S.)under 301705057Rove 50262%board members identifying as POC558%board members identifying as female27%GLOBAL EQUITY IN PAYGoal:100%gender and racial pay equity in the U.S.*%gender pay equity in the U.S.(for similar work)1000%racial pay equity in the U.S.(for similar work)1000%gender median pay ratio in the U.S.960%racial median pay ratio in the U.S.1000%Goal:100%gender equity in pay globally for company-operated markets.%gender pay equity in global company-operated markets(for similar work)In FY23,in our global company-operated markets,we have achieved gender equity in pay in Canada,Japan,Switzerland and Austria.SUPPORTING LGBTQIA2 PARTNERSRepresentation of U.S.workforce self-identifying as LGBTQIA2 retail76%enterprise%manufacturing%Score on the Human Rights Campaign Corporate Equality Index1000%DISABILITY INCLUSIONFY23FY22Score on the Disability Equality Index1000%Representation of U.S.workforce self-identifying with disabilityretail%enterprise%manufacturing%REFUGEE SUPPORTGoal:Hire 10,000 refugees globally by 2022.#Refugees hired in U.S.,Canada and EMEA(during FY)1,100#Refugees hired in U.S.,Canada and EMEA(cumulative as of FYE)5,5004,000While we did not meet our goal of hiring 10,000 refugees globally,we remain committed to the refugee community and staying transparent with partners,customers and stakeholders on our progress.Our support goes beyond employment opportunities to include funding to support humanitarian assistance,resources and services that help refugees find safety and rebuild their lives.VETERANS&MILITARY FAMILIESGoal:Hire 5,000 Veterans and military spouses annually in the U.S.#Veterans and military spouses hired2,8001.11%Goal:Starbucks customer packaging will be sourced from 50%recycled materials by 2030.%of customer packaging made from recycled or renewable materials24#%Goal:100%of Starbucks customer packaging will be reusable,recyclable,or compostable by 2030.%of customer packaging that is reusable,recyclable or compostable14%Goal:50%reduction in virgin fossil fuel derived sources for customer packaging from FY19 baseline by 2030.%change in virgin fossil fuel derived materials in customer packaging from FY19 baseline11 24 Starbucks Corporation.2023 Global Impact Report 40OU R E N V I RO N M E N TA L P ROM I S EGive more than we takeprogress report data tablesPLASTICS ELLEN MACARTHUR FOUNDATION GLOBAL COMMITMENTFY23FY22Goal:Take action to help eliminate problematic or unnecessary plastic packaging by 2025.Reducing plastic packagingWe have deployed several initiatives to reduce our waste footprint as part of the Ellen MacArthur Foundation Global commitment.Building on Starbucks elimination of traditional plastic straws across retail stores globally in FY21,Starbucks completed the roll-out of straws made from polyhydroxyalkanoate(PHA),a non-fossil fuel derived plastic that is home compostable,in the U.S.in FY22.In Canada,Starbucks rolled out wood cutlery and paper straws in FY22 and continued research and development to bring new products to market in FY23-25.Goal:Take action to move from single-use towards reuse models where relevant by 2025.Moving from single-use towards reuse modelsGoal:Take action for 100%of plastic packaging to be reusable,recyclable or compostable by 2025.%of plastic packaging reusable,recyclable or compostable27%Goal:Use 10%recycled content across all plastic packaging by 2025.%post-consumer recycled content used in plastic packaging4%4%Goal:20%reduction of virgin plastic packaging by 2025(compared to FY19).%change in virgin plastic packaging materials from FY19 baseline3%-1%Greener StoresGREENER STORESFY23FY22Goal:Build and operate 10,000 Greener Stores globally by 2025.#Greener Stores certified in North America5,4883,508#Greener Stores certified in international regions6034#total Greener Stores certified globally6,0913,512RENEWABLE ELECTRICITY USE*Goal:100%renewable electricity for global operations by 2020.%renewable electricity use globally(company-operated facilities globally)77q%U.S.company-owned facilities powered by renewable electricity1000nada company-owned facilities powered by renewable electricity1000%EMEA company-owned stores powered by renewable electricity1000%Japan company-owned facilities powered by renewable electricity100%*In previous years,we reported this metric as“renewable energy”.Weve updated to“renewable electricity”to clarify its original scope.2024 Starbucks Corporation.2023 Global Impact Report 41OU R FA RM E R P ROM I S EEnsure the future of coffee for allprogress report data tablesCoffeeFARMER SUPPORT CENTERSFY23FY22#Farmer Support Centers1010#people trained with advanced agronomy techniques56,00031,000#Model Farms(cumulative as of FYE)12070CLIMATE-RESISTANT COFFEE TREESGoal:Provide 100 million trees to farmers by 2025.#climate-resistant coffee trees distributed globally(millions)11.15333.6*CHILDCARE CENTERS FOR FARMING FAMILIES#new childcare centers opened(during FY)5*5GLOBAL FARMER FUNDGoal:Supply$100 million in farmer loans by the end of 2025.$loans deployed from the Global Farmer Fund(cumulative as of FYE)($millions)80.880.8$loans deployed from the Global Farmer Fund(since FY18)(as of FYE)($millions)65.865.8SUPPLIER LISTSList of coffee suppliersList of tea suppliersList of cocoa suppliersTo advance our transparency,for the first time,Starbucks has published its coffee,tea and cocoa supplier lists.The lists represent suppliers that supplied to Starbucks during FY23.DIGITAL TRACEABILITYFY23FY22#bags of coffee traced using online traceability tool43,000#unique visitors accessing online traceability tool122,000ETHICAL SOURCING OF COFFEEGoal:Committed to source and verify 100%of Starbucks coffee ethically through C.A.F.E.Practices.%Starbucks coffee ethically sourced and verified through C.A.F.E.Practices99.7.2%Average#farms participating in C.A.F.E.Practices450,000400,000CARBON REDUCTION IN GREEN COFFEEGoal:Achieve carbon-neutral green coffee by 2030.#soil samples processed(cumulative as of FYE)30,800 14,700We continue to refine the methodology we use to calculate the carbon and water footprint of green coffee.This work is critical to our goals and connects directly with industry efforts to reduce carbon and water use in coffee processing.WATER CONSERVATION IN GREEN COFFEEGoal:Conserve water usage in green coffee processing by 50%by 2030.#eco-wet mills contracted(cumulative as of FYE)1,300We continue to refine the methodology we use to calculate the carbon and water footprint of green coffee.This work is critical to our goals and connects directly with industry efforts to reduce carbon and water use in coffee processing.FOREST CONSERVATION&RESTORATIONHectares of forests protected300200#native trees distributed by Global Farmer Support Centers156,20038,000*FY22 value has been restated.*FY23 value represents new centers operating during FY23.2024 Starbucks Corporation.2023 Global Impact Report 42OU R FA RM E R P ROM I S EEnsure the future of coffee for allprogress report data tablesOther Goods&ServicesRESPONSIBLE SOURCING FOR TEAFY23FY22Goal:Committed to 100%responsibly sourced tea.%tea sourced by the global tea sourcing team that is Rainforest Alliance certified99.7.7%As our sustainability journey continues,99.7%of Tea(Camelia Sinensis)sourced by our global tea sourcing team was from Rainforest Alliance Certified tea gardens,while investing directly in projects in tea communities that support gender empowerment,water,sanitation and hygiene(WASH),youth education and environmental sustainability.RESPONSIBLE SOURCING FOR COCOAGoal:Committed to responsibly sourced cocoa.Total weight of Rainforest Alliance certified and segregated cocoa beans sourced directly from Cargill and indirectly through OFI(metric tons)21,79012,000*We are proud to increase the amount of responsibly sourced cocoa in our supply chain in FY23.We remain committed to supporting resilient livelihoods for cocoa producers and their families,and collectively working towards eliminating the risks of child labor and cocoa-driven deforestation.Read more about Starbucks cocoa sustainability efforts here.RESPONSIBLE SOURCING FOR MANUFACTURED GOODS&SERVICES#factory assessments conducted400300#factories in program1,500%transparency into factories assessed95%#factory workers 87,000SUSTAINABLE DAIRY$invested in U.S.Dairy Net Zero Initiative(during FY)($millions)22$invested in U.S.Dairy Net Zero Initiative(cumulative as of FYE)($millions)64Starbucks is committed to invest$10 million in the U.S.Dairy Net Zero Initiative.ANIMAL WELFAREFY23FY22Goal:100ge-free eggs and egg products in company-operated stores globally.ge-free eggs(U.S.and Canada company-operated stores,inclusive of branded products supplied to licensee business partners)1000ge-free eggs(EMEA and U.K.company-operated stores)99.9.9%In Asia markets where Starbucks operates,such as China and Japan,cage-free egg production is limited and supply is not yet widely available.Starbucks remains committed to increasing cage-free egg supply in all company-operated stores globally,in partnership with industry stakeholders.Goal:Serve only poultry raised without the routine use of medically important antibiotics in all company-operated U.S.stores by 2020.%poultry raised without routine-use of medically important antibiotics (U.S.company-operated stores)99.90%Goal:We anticipate meeting our stated goal of 100%group-housed pork by 2024 for Starbucks-branded products in the U.S.and Canada,including those supplied to our licensee business partners in the U.S.and Canada.Starbucks is phasing out the excessive use of gestation stalls for the sows(mother pig)in our supply chain by 2030.%pork defined as“group housed”(U.S.and Canada company-operated stores,inclusive of branded products supplied to licensee business partners)76%We are committed to making progress in service of our animal welfare-friendly practices and aspirations and will continually reevaluate our sow housing commitment with key stakeholders in support of our 2030 goal.Goal:We are committed to improving conditions for broiler chickens and are working with our suppliers,licensees,and others in the industry to help ensure that by 2024 the chicken we buy for our U.S.stores is produced in alignment with Global Animal Partnership(GAP)standards as assessed by a third-party auditor.Broiler chickensWe are actively reviewing our broiler chicken commitment to identify the best path forward for implementation within our supply chain.*Reported value for FY22 includes volumes sourced directly from Cargill.2024 Starbucks Corporation.2023 Global Impact Report 43OU R COMMU N I TY P ROM I S EContribute positivelyprogress report data tablesThe Starbucks FoundationOVERALL GRANTSFY23FY22$total grants awarded($millions)2417.5ORIGIN GRANTSGoal:Empower 1 million women and girls in coffee,tea and cocoa growing communities by 2030.#women and girls in origin communities positively impacted(cumulative as of FYE)474,000340,000$grants awarded in support of women and girls in origin communities($millions)710,0006,000$hyperlocal grants awarded to nonprofits nominated by Starbucks partners ($millions)5.14.5#nominations by Starbucks partners39,00029,000YOUTH GRANTS#youth impacted(cumulative as of FYE)375,000$grants awarded to U.S.organizations serving youth nationally($millions)31.2GLOBAL COMMUNITY IMPACT GRANTSFY23FY22Goal:Award 25,000 hyperlocal grants to support nonprofits by 2030 through the Neighborhood Grants and Global Community Impact Grants portfolios.#hyperlocal grants made to nonprofits(cumulative as of FYE)1903.9*3.2#international markets reached 4642DISASTER PHILANTHROPY$grants awarded to promote resilience and uplift communities impacted by disaster($millions)4.61.11.3These donations reflect support for refugee communities which are included in the overall grant total.$donations to support LGBTQIA2 communities700,000700,000These donations reflect support for LGBTQIA2 communities which are included in the overall grant total.*This value includes donations from licensee business partners amounting to$900,000.2024 Starbucks Corporation.2023 Global Impact Report 44OU R COMMU N I TY P ROM I S EContribute positivelyprogress report data tablesCompany Programs for Community SupportCOMMUNITY STORESFY23FY22Goal:Open 100 U.S.Community Stores by 2025.#Community Stores in the U.S.opened in FY117#Community Stores in the U.S.opened cumulatively as of FYE3928#Community Stores in International Markets opened in FY168#Community Stores in International Markets opened cumulatively as of FYE3519MILITARY FAMILY STORESGoal:Open 250 Military Family Stores by 2025 with 100 of these new stores on military bases(U.S.).#Military Family Stores opened in FY1733#Military Family Stores opened cumulatively as of FYE130*111SIGNING STORES#Signing Stores globally opened cumulatively as of FYE2016FOOD WASTE REDUCTION&HUNGER RELIEFGoal:Reduce food waste by 50%by 2030.%company-operated stores in the U.S.with FoodShare food donation program available1000%company-operated stores in Canada with FoodShare food donation program available 1000%weight of food diverted from waste streams in the U.S.(millions lbs)9.413#meals donated in the U.S.(millions)(1.2 lbs=1 meal)7.81.31#meals donated in Canada(millions)(1 lb=1 meal)1.31Goal:Reinvest$100M into hunger relief efforts by 2030.$invested in hunger relief efforts in FY($millions)11.610$invested in hunger relief efforts cumulatively since FY16(as of FYE)($millions)60.9COMMUNITY RESILIENCE FUNDGoal:Invest$100 million in 12 cities by 2025.$invested in the Community Resilience Fund(cumulative as of FYE)($millions)4021OUTREACH WORKER PROGRAM#cities(cumulative as of FYE)88#customer engagements12,000#referrals to stabilizing programs2,6001,8002024 Starbucks Corporation.2023 Global Impact Report 45OU R COMMU N I TY P ROM I S EContribute positivelyprogress report data tablesCOMMUNITY CHAMPIONS PROGRAMFY23FY22#partners engaged as Community Champions(U.S.and Canada)*17,00017,000#community events participated in(U.S.and Canada)5,400153,80071,000#partners engaged as Community Champions(international)21,30026,000#community events participated in(international)1,000#partner volunteer hours(international)72,000GIVING MATCH PROGRAM$donated by Starbucks to nonprofit organizations through the Giving Match program($millions)1.810.9$spend with Tier 1 diverse suppliers-cumulative since 2000,as of FYE($billions)108,6007,200$labor income:total direct,indirect and induced economic impact from supplier diversity program($billions)1.5Goal:Allocate 15%of paid media investment to minority-owned and targeted media companies.%of paid media investment with minority-owned and targeted media companies22%*In the U.S.and Canada,engaging as a Community Champion is defined as taking action by participating in a community event,volunteering time or making a personal financial donation to a nonprofit.2024 Starbucks Corporation.2023 Global Impact Report 46OU R S H A R E H O L D E R P ROM I S EGenerate long-term returnsprogress report data tablesCOMPANY POLICIES&RESOURCESFor additional company policies and resources,please visit the ESG Reporting Hub.ETHICS&COMPLIANCEFY23FY22%completion of Harrassment Prevention training by retail management(U.S.and Canada)99%#completed investigations of inquiries and concerns4,700%investigations substantiated as a violation of standard or policy45%WORKING DIRECTLY WITH OUR PARTNERS#union represented stores(U.S.)343232 G LO B A L I M PACT R E P O RT2023 Global Impact Report 472024 Starbucks Corporation.S TA R B U C K SF I SCAL 20 23environmental footprint data tables2024 Starbucks Corporation.2023 Global Impact Report 48environmental footprint data tablesAnnual update of environmental performance:1,2,3 The following metrics represent detailed reporting of Starbucks environmental performance in FY19,the baseline year for our 2030 environmental targets,FY22,and FY23.Methodological updates and data improvements reflected in the FY23 metrics were applied to the FY19 and FY22 results,which will differ from the data previously reported.ENERGY CONSUMPTION(MWh)FY19FY22FY23Total Energy Consumption,direct operations42,528,2462,590,5982,695,583Total purchased electricity,direct operations1,938,962 1,993,9362,095,815Percent renewable71qw%Total fuel consumed,direct operations5589,284 596,662599,768GREENHOUSE GAS EMISSIONS(MTCO2e)6,7FY19FY22FY23Scope 18376,745 404,148401,722Scope 2market-based324,451 294,242285,989location-based 806,148 789,425835,477sub-total scope 1 2 market-based emissions701,196698,390687,7111 The scope of these data is global unless otherwise noted;Direct operations refers to an operational control boundary,inclusive of company owned stores,corporate offices,and manufacturing and distribution facilities;This includes global wholly-owned and partially-owned subsidiaries over which Starbucks has management and operational control.Direct operations excludes licensed stores.2 We have updated the methodologies used to develop our environmental inventories;These updates included improved data quality and availability,changes to emissions and water factors,and other methodological changes.3 Where possible,reported data aligns with our fiscal year.In some cases,for example utility bills,the data aligns to the nearest month rather than the exact fiscal year end and start dates.4 In gigajoules,total energy consumption in FY23 equals 7,544,934 GJ,and total fuel consumed in FY23 equals 2,159,164 GJ.5 Fuel types consumed include natural gas,stationary diesel and gasoline,propane,aviation fuel,and mobile vehicle fuel.6 Starbucks calculates greenhouse gas emissions in accordance with The Greenhouse Gas Protocol:A Corporate Accounting and Reporting Standard(The GHG Protocol)and uses global warming potential(GWP)values from the Intergovernmental Panel on Climate Change(IPCC)Fourth Assessment Report(AR4);Some Scope 3 GHG emission factor sources utilize IPCC Fifth Assessment Report(AR5)GWP values.More detailed climate-related disclosures are available in Starbucks CDP Report.7 FY23 data have been third-party verified by Burns and McDonnell;Their report is available on page 62.8 Global refrigerant emissions exclude emissions associated with global offices and non-retail facilities outside the United States and Canada.2024 Starbucks Corporation.2023 Global Impact Report 49environmental footprint data tablesGREENHOUSE GAS EMISSIONS(MTCO2e)6,7|CONTINUEDFY19FY22FY23Scope 391 Purchased goods and services10,117,630,1137,830,6337,580,0452 Capital goods144,036168,238188,8553 Fuel-and energy-related activities176,953175,861195,1534 Upstream transportation and distribution640,946683,336659,6925 Waste generated in operations262,850275,811299,0986 Business travel1229,34313,29226,5667 Employee commuting615,170707,180579,5578 Upstream leased assets13Not relevant9 Downstream transportation and distribution293,096510,801542,48010 Processing of sold products167,793162,823175,81511 Use of sold products59,77257,81746,07512 End-of-life treatment of sold products175,345167,255170,09013 Downstream leased assets14Not relevant14 Franchises2,355,2772,928,4683,084,93915 Investments213,820304,167343,722subtotal scope 3 emissions 12,764,51413,985,68113,892,085Total emissions(scope 1 2 market-based 3)13,465,71014,684,07114,579,796Percent of total GHG emissions from fluid dairy purchases1518%Percent of total GHG emissions from green coffee purchases1615%Percent change in total emissions from FY19 baseline8%9Scope 3 emissions utilitize Scope 2 location-based emissions values.10 Category 1 emissions include land use change(LUC)emissions for purchases of coffee,tea,cocoa,dairy,food,and other beverage ingredients.11 Category 1 emissions include the emissions from the goods and services purchased by Starbucks Corporation;Purchases made by licensees for key commodities are included in category 14 as recommended by the GHG Protocol.12 Category 6 emissions increased between FY22 and FY23 as global business travel began to rebound to pre-pandemic levels.13Starbucks upstream leased assets are considered de minimis.14Starbucks downstream leased assets are considered de minimis.15 Total GHG emissions from fluid dairy purchases are inclusive of fluid dairy categorized in scope 3 category 1 and category 14,and include estimated LUC GHG emissions associated with these purchases.16 Total GHG emissions from green coffee purchases are inclusive of estimated LUC GHG emissions associated with these purchases included in scope 3 category 1.2024 Starbucks Corporation.2023 Global Impact Report 50environmental footprint data tablesWATER WITHDRAWALS(MEGALITERS)7FY19FY22FY23Total water withdrawal5,634,3375,113,174 5,132,983 Direct operations17,1822,853 23,818 24,021 Percent water withdrawn from high-risk basins19Not calculated290%Indirect:licensed stores1717,52522,245 24,484 Percent water withdrawn from high-risk basins19Not calculated45F%Indirect:packaging and agricultural commodities purchased20,215,593,958 5,067,111 5,084,478 Percent change in total water withdrawal from FY19 baseline-9%OPERATIONAL WASTE(THOUSAND METRIC TONS)7,22FY19FY22FY23Total weight of non-hazardous operational waste1,163 1,236 1,367Direct operations generated238459161,018Percent organic52SR%Percent diverted2428)1%Indirect:generated in licensed stores25318 320 349 Percent organic56WX%Percent diverted2420!%Percent total non-hazardous operational waste,diverted2426( Water withdrawal from stores is calculated using both primary data and estimations;Where primary data are not available,water withdrawal is estimated by applying an average water withdrawal factor derived from withdrawal at U.S.and Canada company-owned stores.18 Starbucks withdraws water strictly from local water utilities or similar relevant entities,and as such,all of our water withdrawals are categorized as sourced from third-party water.19 Refers to water withdrawals from facilities located in regions of high or extremely-high baseline water stress as defined by WRI Aqueduct tool,which was used to conduct our global water risk assessment.20 Water withdrawal from packaging and agricultural commodities is estimated using country-level or regional water scarcity data from the World Food Lifecycle Database(WFLDB).Reporting of this category aligns with our GHG inventory,scope 3,category 1.21 Water withdrawals for green coffee are based on direct water withdrawals and water consumption factors from WFLDB.22 We are not reporting on waste discarded by customers out of our stores and instead have expanded our reporting of packaging materials.23Reporting of this category aligns with the GHG inventory,scope 3,category 5.24 We measure waste diverted away from landfill or incineration as waste materials recycled,remarketed,composted,donated,or sold to be processed into animal feed.25 Licensed store non-hazardous waste generation is estimated based on company-owned store information;This does not include construction and demolition waste or electronic waste;Reporting of this category aligns with the GHG inventory,scope 3,category 14.2024 Starbucks Corporation.2023 Global Impact Report 51environmental footprint data tablesPACKAGING MATERIALS(THOUSAND METRIC TONS)26FY19FY22FY23Total weight of packaging material 319330345Percent of packaging made from recycled or renewable materials25)(%Percent of materials recyclable,compostable or reusable48GI%Direct:total weight of packaging materials purchased by Starbucks Corporation27208220226Indirect:total weight of packaging materials purchased by licensees for Starbucks retail operations28110109119Total weight of plastic packaging materials29125130137Total weight of virgin plastic packaging materials118117122Percent change in virgin plastic packaging materials from FY19 baseline3%Percent of plastic packaging that is reusable,recyclable or compostable3030%Percent of post-consumer recycled content used in plastic packaging 3%4%4%Total weight of customer packaging31145167172Total weight of customer packaging-paper707778Total weight of customer packaging-plastic758992Total weight of customer packaging-other32011Percent of customer packaging that is reuseable,recyclable,or compostable10%Percent of customer packaging made from recycled or renewable materials19#$%Percent change in virgin fossil fuel derived materials in customer packaging from FY19 baseline3311& Data represent packaging materials used in our direct operations and licensed stores and all other packaging materials purchased by Starbucks Corporation.This aligns with our GHG Inventory and Ellen MacArthur Foundation Global Commitment reporting boundaries.Starbucks branded products sold outside of our stores is part of a licensed model of the Global Coffee Alliance with Nestl,while our global ready-to-drink businesses operate under collaborative relationships with PepsiCo and others.The Starbucks branded packaging used by Channel Development business partners are part of their commitments and reporting.27 Reporting of this category aligns with packaging materials reported in the GHG inventory under scope 3,category 1.28 Reporting of this category aligns with packaging materials reported in the GHG inventory under scope 3,category 14.29 FY19 and FY22 inventories have been recalculated to align with methodology changes and data quality improvements made as part of the FY23 inventory;These results may differ from what has been previously submitted to Ellen MacArthur Foundation Global Commitment and WWF ReSource Plastic and we anticipate restating these metrics in our 2023 reporting to these organizations.30 In assessing the recyclability of our portfolio,Starbucks has aligned with the New Plastics Economy 2022 Recycling Rate Survey results.31Customer packaging is packaging designed to accompany a customer transaction.32 In reporting for this category,“other”material includes aluminum,steel,glass,textile,and wood.33 Starbucks defines virgin plastic packaging material as any plastic material that is neither biobased nor made with recycled content.G LO B A LI M PACT R E P O RT2023 Global Impact Report 522024 Starbucks Corporation.S TA R B U C K SFISC AL 2 0 2 3human rights data tables2024 Starbucks Corporation.2023 Global Impact Report 53human rights data tablesZERO-TOLERANCE INDICATORFY23FY22#Nonconformities related to wage practices8989#Nonconformities related to traceability requirements4268#Nonconformities related to child labor5954#Nonconformities related to labor intermediaries413#Nonconformities related to transparency requirements21#Nonconformities related to banned pesticides5623#Nonconformities related to forced labor,abuse,or unethical recruitment practices513#Nonconformities related to deforestation127Total#nonconformities269268%of FY22 nonconformities that have been remediated or closed by the end of the fiscal year880%*The FY22 remediation%has been restated to align with fiscal year dates.%of FY23 noncomformities that have been remediated or closed by the end of the fiscal year34%CoffeeStarbucks ethical sourcing program for coffee,C.A.F.E.Practices,requires each supply chain to undergo reverification regularly.Today the program represents more than 450,000 farms around the world.A nonconformity as reported in this table is a breach of any one of Starbucks zero tolerance indicators.Multiple nonconformities could be identified in a single location.The number of participating entities change year to year,which may impact the number of reported nonconformities on an annual basis.For each zero tolerance non-conformity brought to our attention through C.A.F.E.Practices,we require swift action by our suppliers and our on-the-ground,third-party partners to pursue corrective actions,including,where appropriate,providing remedy for the impacted individuals.Due to the seasonal nature of coffee production,some zero tolerance indicators may only be closed during the harvest period when the majority of temporary workers are present and therefore fully closing these indicators may require waiting until the next coffee harvest.In the event a zero tolerance indicator cannot be resolved in a timely and comprehensive manner,a supply chain will be considered Non Compliant and not eligible for C.A.F.E.Practices approval until resolution is possible.2024 Starbucks Corporation.2023 Global Impact Report 54human rights data tablesZERO-TOLERANCE INDICATORFY23FY22#Nonconformities related to wage practices2021#Nonconformities related to transparency requirements66#Nonconformities related to access denial into facilities for audits and inspections21#Nonconformities related to health and safety,including direct and immediate endangerment00#Nonconformities related to environmental impact20#Nonconformities related to forced labor16#Nonconformities related to child labor51#Nonconformities related to abuse and harassment00Total#nonconformities3635%of FY22 nonconformities that have been remediated or closed by the end of the fiscal year80&%*The FY22 remediation%has been restated to align with fiscal year dates.%of FY23 noncomformities that have been remediated or closed by the end of the fiscal year42%Manufactured Goods&ServicesOur ethical sourcing program includes our standards for manufactured goods and services,including beverages,food,merchandise,equipment,furniture and logistics providers.Our program includes on-site factory assessments to identify potential or actual violations.Commitment to continuous improvement is the cornerstone of our program and we work with our suppliers to remediate identified violations.G LO B A L I M PACT R E P O RT2023 Global Impact Report 552024 Starbucks Corporation.S TA R B U C K SF I SCAL 20 23environmental,social and governance priorities2024 Starbucks Corporation.2023 Global Impact Report 56environmental,social and governance prioritiesIn FY23,we engaged in a comprehensive third-party evaluation to identify and prioritize key environmental,social and governance topics most important to the company and external stakeholder groups.This process aimed to guide Starbucks in focusing our strategy to advance our mission,promises and values.To do this,we conducted surveys and interviews across global stakeholder groups to understand the importance of environmental,social and governance topics for Starbucks.The assessment was conducted in addition to Starbucks Enterprise Risk Management(ERM)program.While stakeholders viewpoints on the relative importance of environmental,social and governance issues may be informed in part by risks for Starbucks to manage,the purpose of this assessment is to identify priority topics on which Starbucks should focus.While Starbucks believes that the environmental,social and governance issues described in this Impact Report are important,we currently do not believe that such issues are material to our financial results and results of operations,except to the extent referenced in our Annual Report on Form 10-K and subsequent 10-Q filings.This Impact Report also contains human capital measures or objectives that may be different from or are in addition to the human capital measures or objectives that Starbucks is required to disclose in its Annual Report on Form 10-K.For a discussion on human capital measures or objectives that Starbucks focuses on in managing its business,please see the“Human Capital Management”section in our most recent Annual Report on Form 10-K.Understanding and addressing these key issues are integral to meeting the expectations of our stakeholders and ensuring alignment between our business performance and environmental,social and governance impacts.While there is work being done across all topics,these results will help inform our program strategies and reporting priorities going forward.Our PrioritiesClimate strategy and resilienceEnvironmentally-responsible sourcing practicesGreenhouse gas emissions and energy efficiencyPackagingWasteWater stewardshipCommunity support and engagementDiversity,equity and inclusionHuman rights within Starbucks operationsHuman rights within Starbucks supply chainNutrition and transparencyPartner attraction,development and culturePartners(OHS),community and customer safetyPartner relationsProduct quality and safetyCorporate governanceCybersecurity and data privacyEthics and complianceResearch,development and innovationTransparency and stakeholder communication2024 Starbucks Corporation.2023 Global Impact Report 57environmental,social and governance prioritiesEnvironmental TopicsTERMDEFINITIONClimate strategy and resilienceForecasting and adapting to physical transition risks and opportunities posed by climate change(such as disruptions to supply chain,physical risk,price of carbon and natural resource availability)and to help ensure a sustainable future for coffee.Environmentally-responsible sourcing practicesEngaging with suppliers,including coffee farmers we source from,to manage planetary impacts within the supply chain,including:coffee,fairly produced materials(consider including specific topics-e.g.,cocoa,timber),reforestation,regenerative agriculture,waste reduction,and carbon footprint.Greenhouse gas emissions and energy efficiencyManaging energy efficiency throughout the value chain through processes and operations and utilizing renewable energy;managing,measuring and reducing greenhouse gas emissions across production,operations,facilities and supply chains.PackagingImproving the sustainability of packaging by transitioning to packaging that is reusable,recyclable,compostable,or contains recycled content.This also includes partnering with suppliers and industry organizations to develop innovative solutions to reduce or eliminate single-use packaging and improve end-of-life treatment and adapt to local packaging and circularity regulations.WasteManaging the waste generated as a result of our operations,and use of products,maximizing the recycling and reuse of materials,and reducing food waste in our operations.Water stewardshipWater stewardship is a set of practices to be used by businesses,utilities,communities,and others that promotes and fosters the sustainable and equitable management of freshwater resources.Water stewardship practices range from water use efficiency at an organizations own operations,to engagement with suppliers,to long-term multi-stakeholder river basin projects,and beyond(UN CEO Water Mandate).Social TopicsTERMDEFINITIONCommunity support and engagementFostering relationships and promoting social vitality in communities by investing in community-based initiatives such as corporate giving and community service.Managing relations and engaging with communities that are impacted economically,socially and/or environmentally by our operations in an effort to provide benefits to local communities,including minority groups.Diversity,equity and inclusionAttract and retain a diverse workforce and create an inclusive workplace culture to foster a sense of value and belonging for all partners,including those
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Yum!Brands 2022 Global Citizenship&Sustainability ReportFEEDING THE FUTUREGROWTHFEEDING THE FUTURETABLE OF CONTENTSAPPROACH CEO Message .5Yum!Brands Global Reach.62022 Good Growth Highlights .7Our Recipe for Good Growth .8Corporate&Sustainability Governance.9Reporting&Disclosures .104Performance Summary .43UN SDGs.46Materiality.47Stakeholder Engagement.48GRI Index.49SASB Index.65About This Report.69People Summary .12Our Team&Business.13Employees .14Franchisees .17Suppliers .17Communities&Society .19Social Impact .19Community Impact .21Food Summary.23Food Safety.24Balanced Choices .25Animal Welfare.26Limiting Antibiotic Use .27Planet Summary.29Less Carbon.30Deforestation.38Better Packaging.39Water Security.41PEOPLE11FOOD22PLANET28APPENDIX42APPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXOur Recipe for Good GrowthCorporate&Sustainability GovernanceReporting&DisclosuresOverview4APPROACH We Feed the FutureA recipe is more than just a list of instructions.Its a way of putting care into key ingredients,so that they become something much more than the sum of their parts.When executed well,a recipe can bring people together across time and distance,unite cultures,form the foundation of lasting memoriesand present each element in its best form.In much the same way,Yum!Brands Good Growth strategy,also known as our Recipe for Good Growth,is transformative in its potentialand it guides us in every aspect of what we do.This strategy is grounded in the idea that our business will only endure if our brands are inclusive,sustainable and reflective of evolving employee,franchisee and other stakeholder needs.By focusing on our Growth priorities of a people-first culture,bold restaurant development,unmatched operating capability and relevant brands,we achieved industry-leading unit growth in 2022.As we grow,were identifying synergies with our Good priorities of our People,Food and Planet,and doing so with social responsibility,risk management and sustainable stewardship at the forefront.The more we explore,the more we learn that Good and Growth are mutually reinforcing and capable of creating benefits for multiple stakeholders.For example,our four brands provide incomes and career pathways for more than a million restaurant team members worldwide.Through our social impact work,including the Unlocking Opportunity Initiative,we continue to support individuals to earn an education,gain employment and launch new businesses.Its hard to overstate the impact this has on local economies and among underrepresented populations.Were also seeing the potential of Good Growth in how we construct and operate new energy efficient and low-carbon restaurants,and in our supply chain,where we are partnering with suppliers to explore solutions for emissions reduction and packaging innovation.As 2022 marked our 25th year as a public company,were proud to be a resilient,diversified business with distinctive brands that are well-positioned for the future.When we harness the collective power of Good and Growth,theres no limit to what we can accomplish.We look forward to continuing to share whats possible with you.Thanks for your support.David Gibbs A MESSAGE FROM DAVID GIBBSDavid GibbsChief Executive Officer Yum!Brands,Inc.When we harness the collective power of Good and Growth,theres no limit to what we can accomplish.5APPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXOur Recipe for Good GrowthCorporate&Sustainability GovernanceReporting&DisclosuresOverview6Overview Yum!Brands is building the worlds most loved,trusted and fastest-growing restaurant brands for today and tomorrow.Were doing so by following a mindful recipe:one with Good priorities that influence long-term Growth,and Growth drivers that accelerate the Good we can accomplish.This recipe continues to evolve alongside the changing needs of our employees,franchisees and other stakeholders.YUM!BRANDS GLOBAL REACH4 ICONIC BRANDS 55,000 RESTAURANTSaround the worldRestaurants in 156 COUNTRIES AND TERRITORIES 98%of restaurants are owned by franchisees 1M equity and franchise employees 25 JOBS CREATED by each new restaurant$59B system sales 1,500 franchiseesPEOPLEFOODPLANETNote:Figures based on 2022 data.APPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXOur Recipe for Good GrowthCorporate&Sustainability GovernanceReporting&DisclosuresOverview7Launched business employee resource groups(BERGs)for women in 10 countries,and in 6 countries for LGBTQ employees and allies Strengthened our ability to unlock opportunity by supporting social impact programs across our four brandsJoined the Consumer Goods Forum,and set a goal to have all suppliers achieve 100%Global Food Safety Initiative(GFSI)Recognized Certification,the most widely accepted food safety benchmark globally Offered food that todays consumers crave,including plant-based menu items,balanced options and simple ingredients Recent Recognition Named to 2022 Dow Jones Sustainability North America Index Ranked on Newsweeks Americas Most Responsible Companies 2023Listed on 3BL Medias 100 Best Corporate Citizens of 2022Named to 2023 Bloomberg Gender-Equality Index Scored 100 on 2022 Human Rights Campaign Foundations Corporate Equality IndexAchieved A-Score on 2022 CDP Water Security,B Score on Climate and Forests2022 GOOD GROWTH HIGHLIGHTSAchieved goal of removing antibiotics important to human medicine from chicken used for wings at all of Pizza Huts U.S.restaurants Piloted new sustainable restaurant features around the world,including net-zero designs,zero-waste pilots and new building conservation solutionsEngaged protein suppliers to set emissions-reduction goals and invested in strategic sector engagements Partnered across brands to introduce more sustainable packagingAPPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXCorporate&Sustainability GovernanceReporting&DisclosuresOverviewOur Recipe for Good Growth8Our Recipe for Good Growth Many aspects of what we today call Good Growth have long been part of our business.Our global citizenship&sustainability strategy,formerly called our Recipe for Good,has three priority pillars:People,Food and Planet.We elevated this framework in 2020 as a complement to our Recipe for Growth.Together,Yum!s integrated strategy ensures were building the worlds most loved,trusted and fastest-growing restaurant brands,and achieving our purpose of unlocking opportunity.Guided by this strategy,weve galvanized our teams to make progress in each of these important areas,accelerating new restaurant development worldwide and building a strong and diversified business.Increasingly,we recognize that neither Growth nor Good can exist on its own.Todays businesses are expected to operate sustainably,protect and preserve natural resources and create value for all stakeholders.Our attention to these priorities allows us to remain brands of choice for our customers and maintains our license to operate,ultimately fueling our growth for the future.In turn,business growth gives us the resources to reinvest in sustainable practices and a strong culture.Yum!Brands Good Growth strategy reflects who we are today,demonstrating how both halves of the whole are being embedded into every aspect of how we think and operate.This strategy allows us to mitigate risks inside and outside our businessrelated to regulations,resource scarcity and costas well as to increase relevance among the growing number of customers and employees for whom these issues are a top concern.Weve set a number of bold goals spanning our three pillars of People,Food and Planet,with a focus on the following areas that are core to our business and therefore present the greatest potential for positive impact:Less CarbonReducing greenhouse gas(GHG)emissions from our restaurants and our supply chain.For restaurants,its about improving energy efficiency and shifting to renewable or low-carbon power.Within our supply chain,were focused on supporting responsible agricultural practices for our core proteins of beef,dairy and poultry.Better PackagingReducing our overall waste footprint by finding packaging solutions that are reusable,recyclable or compostable,while also eliminating unnecessary single-use plastics and chemicals of concern.More EqualityTackling the systemic drivers of inequality to unlock opportunity for our employees,and frontline workers and their communities,all over the world.You can learn more about our progress on each of these focus areas throughout this report.GOOD GROWTH STRATEGYGoodGrowthWe believe our growth and brand relevance will only be enduring if theyre inclusive,sustainable and reflective of evolving employee,franchisee and stakeholder needs.APPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXOur Recipe for Good GrowthReporting&DisclosuresOverviewCorporate&Sustainability Governance9Corporate&Sustainability GovernanceGood corporate governance is a critical factor in achieving business success,and we embrace practices that align with management and shareholder interests.The Yum!board of directors consists of 10 directors,nine of whom are independent,based on New York Stock Exchange rules for director independence.In 2022,the board was led by an independent,nonexecutive chair.Our board maintains its independence and oversight of management through a strong independent chair or lead director and through the boards composition,committee system and policy of having regular executive sessions of nonemployee directors.The board has three independent committees:Audit Committee Management Planning&Development Committee Nominating&Governance CommitteeOnly independent directors serve on the Audit,Management Planning&Development and Nominating&Governance Committees in accordance with our Corporate Governance Principles.The board has instituted an annual self-evaluation process,led by the Nominating&Governance Committee,through which directors assess how the board can better contribute to the company.Our Audit,Management Planning&Development and Nominating&Governance Committees conduct similar self-evaluations.BOARD DIVERSITYA diverse range of experiences and perspectives among our directors helps our board advise our company regarding our complex,varied global brands.When recruiting new directors,we look for leaders from different backgrounds who combine a broad spectrum of experience and expertise with a reputation for integrity.For complete selection criteria and policies,please see our corporate governance principles.Currently,three of our 10 directors are women,and three are people of color.We continue to integrate sustainability and business decision-making more tightly,in line with our Good Growth strategy.Last year we clarified how our Good priorities factor in executive compensation.In 2023,we began evaluating executive performance against more targeted environmental,social and governance(ESG)-centric goals,which combine talent commitments previously captured in the Unrivaled Culture and Talent goal and certain People,Food and Planet commitments.Our Good Growth strategy also informs how we support and engage with franchisees.For example,we connect franchisees with suppliers of food,packaging,marketing materials and restaurant equipmentand we provide guidance on how they can operate their restaurants more sustainably.Reduction in franchisee restaurant emissions is a component of Yum!s science-based emissions-reduction target.Some franchisees have set their own GHG reduction targets,and we continue to work closely with our franchisees to bring them along and share data on this journey.GOOD GROWTH ROLES&RESPONSIBILITIES Who They AreHow They EngageYum!Brands Board of DirectorsUltimate oversight for citizenship and sustainability issuesReceives briefings at least once a year from Audit Committee and through business updates.In January 2023,new charters were approved outlining sharpened roles and responsibilities of the board when it comes to this work.Global Leadership TeamRegularly engaged with and informed on material topicsESG CouncilTeam that helps shape strategy,made up of senior leaders,including:chief operating officer&chief people officer chief financial officer chief corporate affairs officer chief sustainability officer chief strategy officer chief food safety officer chief equity&inclusion officer chief legal&franchise officer&corporate secretary chief food innovation officer chief development officer vice president,supply chainBrand-Level LeadershipChief sustainability officers and/or steering committees within our brands allow each brand to connect with its own markets and franchisees and drive rapid progressAPPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXOur Recipe for Good GrowthCorporate&Sustainability GovernanceOverviewReporting&DisclosuresReporting&Disclosures Regular reporting,in a variety of formats and for a range of stakeholders,is a critical way we share our progress and show transparency around our Good Growth practices.In addition to publishing annual updates in this report,which is completed in accordance to the Global Reporting Initiative(GRI)Universal Standards standards,we respond to the Sustainability Accounting Standards Board(SASB)framework for the Food&Beverage sector and Restaurant industry.Regular materiality assessments help us identify and prioritize our most significant citizenship and sustainability impacts,risks and opportunities.We also participate in comprehensive,voluntary disclosures such as the Bloomberg Gender-Equality Index;CDP Climate Change,Forests and Water Security;the Dow Jones Sustainability Index;and the Roundtable on Sustainable Palm Oil(RSPO)Annual Communication of Progress.We align our priority areas of work with the United Nations Sustainable Development Goals(UN SDGs).Yum!also discloses our climate-related risks and opportunities through a Task Force on Climate-related Financial Disclosures(TCFD)report.The results of our TCFD assessment,conducted in 2021,provide an analysis of the physical and regulatory risks that directly impact our restaurants and supply chain across regions and brands.Our TCFD work continues to guide the prioritization of our work in addressing and mitigating risks of climate issues.In addition to our TCFD assessment,Yum!reports on other priority areas,including workforce diversity and operating a responsible supply chain.We continue to monitor other emerging frameworks for reporting on and responding to the risks we face,including the Taskforce on Nature-related Financial Disclosures.UN SUSTAINABLE DEVELOPMENT GOALSThe UN SDGs are an ambitious,global vision for ending poverty,reducing inequalities and tackling climate change by 2030.As a business that operates in a majority of the worlds countries and touches all types of communities,aligning with the 2030 Agenda makes sense for Yum!.We share many priorities,including tackling climate change and providing access to good jobs and opportunities for economic development.We have identified specific SDGs that align most closely with our three priority pillars of People,Food and Planet.Read more about how were making progress toward targeted SDGs in the Appendix.TRANSPARENCY&VERIFICATION Attention to Good Growth issues,such as addressing climate change and inequality,must be part of any companys approach to enterprise risk management(ERM),and Yum!is no exception.This allows us to sharpen our top Good Growth issues from an ERM perspective and prioritize them according to their importance to our business and stakeholders.High-integrity data is a key element in our ability to make progress against our commitments and continue regular,transparent disclosures.Investments in digital capabilities are helping us further enhance the quality and timeliness of the data we collect.Our data collection tool regularly captures information gathered from teams across our systemincluding food safety,supply chain and sustainabilityproviding a comprehensive picture of our business.All data included in this report is accurate according to the information available to us.10APPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXOur Team&BusinessCommunities&Society People Summary11PEOPLE We Unlock OpportunityAPPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXOur Team&BusinessCommunities&Society People Summary12People SummaryHOW WERE DRIVING GOOD GROWTH This work begins within our businessincluding our corporate workforce,our supply chain and the company-owned and franchise restaurants that employ over 1 million frontline workers worldwideand extends into the many communities and other spheres of influence where we operate.We make a difference across the full spectrum of impact,from immediate response to disasters and crises,to corporate and employee grants and donations,to programs that drive systemic change.For example,when we develop strong teams,we deliver exceptional customer experiences,driving restaurant performance,which builds economic security and empowers the community around us.And when we help ensure people of all backgrounds feel included,with equal opportunity to thrive and pursue their goals,we improve our collective productivity and ability to achieve greater success.KEY TAKEAWAYS We continued to make significant investments in our equity,inclusion and belonging(EIB)function to build capacity and capabilities.Yum!is among OneTen Coalitions highest-performing partners in terms of the number of new hires and promotions at our company-owned restaurants and corporate offices.As of the end of 2022,we have committed approximately$50 million to help fund more than 30 social impact programs in 11 countries.We continue to create opportunities for people interested in franchising through the Yum!Center for Global Franchise Excellence and Yum!Franchise Accelerator.MATERIAL ISSUES Equity,Inclusion&Belonging Employee Health&Safety Talent Attraction,Engagement&Retention Community&Philanthropy Human Rights&Labor PracticesALIGNED UN SDGsHarvest,Yum!s food donation program,continues to feed people through donations to hunger relief organizations.Education is one of the focus areas of our social impact work,through which we make investments to help system employees and community members grow their skills.Our franchise restaurants provide jobs for more than 1 million people worldwide,and were constantly evaluating opportunities to support our franchisees and determine how to address the development needs and aspirations of system restaurant teams and leaders.Our social impact programs are designed at a market level to address the localized root causes of inequality.APPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXCommunities&Society People SummaryOur Team&Business13Unlocking Opportunity for Our Team&in Our Business ETHICS&HUMAN RIGHTSAt Yum!,we understand our long-term success and growth is predicated on operating a resilient and socially responsible business that creates value for all stakeholders.A key component of this is the high standard of ethical conduct we set for ourselves and our stakeholders,particularly franchisees and suppliers.We reference many leading frameworks in building our policies and procedures,including the UN Guiding Principles(UNGPs)on Business and Human Rights and the International Labour Organisation(ILO)Declaration on Fundamental Principles and Rights at Work.Our commitments and expectations around these standards are expressed in our Global Code of Conduct.All employees are required to certify their acceptance of the Code as part of annual compliance training,which also covers anti-discrimination and harassment.When it comes to interacting with one another,employees are expected to demonstrate mutual respect.Sexual,racial,ethnic,religious or any other type of harassment has no place at Yum!.It is our policy to deal fairly with employees;provide equal opportunity in recruiting,hiring,developing,promoting and compensating without regard to race,religion,color,age,gender,disability,genetic information,military or veteran status,sexual orientation,gender identity and/or expression,citizenship,national origin or other legally protected status;maintain a professional,safe and discrimination-free work environment;and recognize and compensate employees based on their performance.We encourage employees to raise any ethical or other concerns relating to our operations.Yum!employees have 24/7 access to an independent,third-party-operated ethics hotline and online portal,known as The Speak Up Helpline.Translation services in nine different languages are available.The Audit Committee of our board of directors has additional procedures for handling employee concerns related to accounting and auditing matters.Any person may also use the Yum!corporate citizenship email address listed on Y to raise citizenship and sustainability-related issues.APPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXCommunities&Society People SummaryOur Team&Business14EMPLOYEES Culture&Talent Culture and talent are our competitive advantage.When we hire great people and bring out the best in them through collaboration and recognition,we cultivate strong teams and satisfied customers that enable our business to grow.Yum!Brands people-first culture is characterized by our newly refined values and an EIB mindset.We have invested significantly in our EIB function over the past few years so that we can move further and faster in this space.We now have EIB leaders across our brands.Additionally,leaders at the senior director level and above are also accountable to help us make progress on our aspirations,including increasing representation of women in leadership and people of color in the U.S.Whether in our board rooms or our four brands restaurants,were making room for all people and voices at our tables.In addition to internal aspirations,cross-sector partnerships help inspire us to make further progress.Yum!Brands remains committed to the Hispanic Promise,a national pledge to hire,promote,retain and celebrate Hispanics in the workplace,and the CEO Action for Diversity&Inclusion.As a member of the OneTen Coalition,we are partnering with other U.S.businesses to create career mobility and advancement opportunities for 1 million Black/African American individuals over 10 years.In 2022,Yum!was among OneTens highest-performing partners in terms of the number of new hires and promotions at our equity-owned restaurants and corporate offices.Also in 2022,we partnered with OneTen and edtech company Multiverse to offer a 1218-month apprenticeship program that gives restaurant employees the opportunity to learn technology skills needed to pursue full-time roles in our corporate digital and technology function.DEVELOPING WOMEN IN LEADERSHIPWomen make critical contributions at all levels of our business:as franchisees,restaurant general managers(RGMs),restaurant team members and corporate employees.We want our leaders to reflect this gender diversity,which is why weve set an aspirational goal to achieve gender parity in leadership globally by 2030 in alignment with Paradigm for Parity.43%of Yum!s senior leaders are womenWere moving quickly toward our goal,due to efforts like the Next Generation of Women(NOW)Program,which launched in 2022.KFC launched NOW to accelerate womens professional development and retention.The program helps advance women to the director level and above through equitable recruiting practices and a structured plan utilizing insights from Heartstylesone of our leadership development programs,executive coaching and mentorship.NOW has been so successful it is being rolled out to the other brands.APPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXCommunities&Society People SummaryOur Team&Business15MAKING SPACE FOR ALL We believe in creating pathways for people from historically underrepresented backgrounds to succeed.One way we do this is by helping people of color already on our teams feel valued,connected and supported.In 2023,Yum!held its second Refresh Inspire Spark Engage(RISE)event,formerly called the New Legacy Summit.This in-person gathering unites Black and Hispanic employees at the director level and above,along with Yum!s executive leadership team.This program is designed to help create community and understanding and build future leaders throughout the organization.We also have a program called MidRISE,which is a bridge to RISE,for select underrepresented people of color at mid-level manager roles.MidRISE cohorts begin with two days of professional development and community-building and continue throughout the year with additional skill development and group mentoring opportunities.Sharing stories is another way we build a culture of inclusion and belonging.At Pizza Hut,the Slice Of series is about recognizing and celebrating the diverse life experiences that make our employees unique.The program invites individual employees to share their personal story with teammates and has proven to be a powerful platform for building empathy,connection and a community where people feel valued for who they are.BERGs are a way for communities of employees and their allies to learn and grow,receive personal and professional development and make an impact in the community.These groups are strategically important to our business,contributing to our recruitment,employee engagement and marketing efforts.In 2022,our womens and LGBTQ -focused BERGs launched international chapters,extending their reach beyond our U.S.-based offices.Recent activities organized by our BERGs include:An educational series on privilege and microaggressions,hosted by our multicultural BERG Conversations on mental health in the wake of recent mass shootings in the U.S.,jointly organized by two of our multicultural BERGs and our BERG for parents and caregivers Pride parades,civic engagement,presentations to Live Ms Scholars and connections to LGBTQ -aligned organizations by our LGBTQ BERGsPAYING EMPLOYEES EQUITABLY We are committed to paying our employees fairly and equitably for their work.In the U.S.,where most of our corporate team members live,we annually analyze pay to confirm that pay disparities by gender and ethnicity do not exist when taking into account all job and performance-related pay factors.We are proud to say that our recent analysis showed no statistically significant pay discrepancies by gender or ethnicity.APPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXCommunities&Society People Summary16Training&Education People at Yum!Brands and our restaurants lead with smart,heart and courage.Being effective and inclusive leaders means always seeking out ways to improve.For many years,the Heartstyles leadership development program,Leading with Heart,has been a cornerstone of our training and development approach.A key component of the program is the Heartstyles Indicator,an assessment and action plan that helps individuals cultivate positive and constructive attitudes,thinking and behaviors to help them in life and at work.The Indicator is available in 26 languages,and we offer Leading with Heart to franchisees and RGMs at all four Yum!brands worldwide.Since Yum!Brands acquired Heartstyles in 2020,more than 600 Certified Practitioners have been trained,and 30,000 Indicators have been completed across six continents.Recent research at KFC restaurants in multiple geographies revealed that locations that have implemented Heartstyles have lower staff turnover,reduced onboarding costs and greater customer satisfaction,compared to restaurants that have not.Other important programs include Coach Academy,a global,virtual program for managers on how to be an effective leader and coach;and Leadership Accel,a transformational experience that enables employees to grow as inspirational leaders and strategic thinkers.We assess employees satisfaction with the work environment weve created with biennial engagement surveys.The survey we conducted in 2021 revealed record-high levels of engagement,well above industry benchmarks.We continue to roll out Inclusive Leadership,a training program designed to challenge perceptions and demonstrate the holistic benefits that inclusion brings to our operations.The program,developed in partnership with Heartstyles,has been offered to corporate employees,RGMs and franchisees,and we expect to have it rolled out globally by the end of 2025.In addition,we expect every above-restaurant team member to make a personal commitment to EIB and to revisit their goals during regular performance reviews.All employees also have the opportunity to broaden their mindsets through reverse mentoring arrangements.These intentional relationships between employees at different levels and from different backgrounds have been known to create deep connections between mentors and mentees.The program is designed to last for six months,but many mentor/mentee pairs continue to meet long after the formal program ends.KFC now offers this program globally.Our brands also support employees in developing their skills outside of work.For example,in the U.S.,KFC is putting college degrees in reach for its restaurant employees.Team members who apply and enroll can now earn degrees at Western Governors University(WGU)with tuition 100%covered.They can choose from more than 60 different bachelors and masters degree programs and certification programs across business,information technology,education and healthcare.Eligibility begins from day one on the job.WGU also offers rolling start dates,so prospective students can enroll at any time and begin online courses as soon as theyre ready.Our Team&BusinessAPPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXCommunities&Society People Summary17FRANCHISEESYum!s approximately 1,500 franchisees are an incredibly important part of our business.As of the end of 2022,over 98%of Yum!Brands restaurants were franchise-owned.Our franchises are highly sophisticated businesses,some of which are publicly traded companies,and exemplify our 3C model of being committed,capable and well-capitalized.While franchisees control how they recruit and train team members,what benefits to provide and how to compensate their employees,we offer tools to help increase team member engagement and retention.Yum!and our brands are also committed to helping franchisees excel at the practice of franchising itself.We provide industry-leading incentives for new development,assistance with site selection and design,and flexible asset formats to meet a variety of needs.The Yum!Center for Global Franchise Excellence at the University of Louisville(the Center)provides existing and potential franchisees multiple levels of online education focused on the franchising model across industries.During the 20212022 school year,170 students completed the Yum!Franchise Management Certificate Program.Through the Yum!Franchise Accelerator,a one-of-a-kind MBA elective opportunity,the Center focuses on recruiting and educating underrepresented people of color and women.In Spring 2022,the Center welcomed MBA students from the University of Louisville and Howard University to its latest cohort.All 10 students received a$10,000 scholarship from Yum!Brands and the opportunity to learn about franchising with Yum!.For those interested in becoming Taco Bell restaurant leaders,the Taco Bell Business School is a six-week program designed to give them a head start.This program recently completed its fourth cohort.The Center is not the only way for aspiring franchisees to connect with ownership opportunities.In early 2023,the impact-based investment firm Lafayette Square announced plans to lend up to$50 million to new and existing underrepresented Yum!franchisees as part of a new financing program called Franchise Fast Start.SUPPLIERS Yum!sources food,packaging materials,restaurant equipment and other goods and services from suppliers around the world.In partnership with our exclusive supply chain management organization in the U.S.,Restaurant Supply Chain Solutions,we have built a robust corporate supplier diversity program.We actively seek qualified underrepresented suppliers for all possible product and service needs and encourage our majority-owned suppliers to do the same when they are choosing vendors,subcontractors and distribution services.Since 2015,we have presented an annual Supplier Diversity Award to honor a supplier demonstrating significant leadership in diversity and inclusion.Yum!welcomes certified suppliers of the following designations:Minority-Owned Business Enterprise Woman-Owned Business Enterprise LGBTQ -Owned Business Enterprise Business Enterprise Owned by People with Disabilities Veteran-Owned Business Enterprise Disabled Veteran-Owned Business Enterprise Small Business Administration 8(a),SDB,HUBZoneSUPPORTING DIVERSE CREATIVE PARTNERS Diversity matters,not only in our offices and restaurants,but also in our advertising ecosystemin front of the camera,behind it and in all aspects of content creation and production.Yum!is a member of the Publicis Media Once&For All Coalition,a multiyear,cross-industry collaboration to support ethnically diverse media suppliers,creators and partners,with an initial focus on Black and Hispanic suppliers.Our U.S.Multicultural Marketing Leadership Council drives cross-brand implementation of our multicultural marketing strategies and partnerships and is committed to significantly increasing our marketing spend with agencies owned by people from underrepresented communities.We aspire to increase our spend with these agencies by 2%year over year.Our Team&BusinessAPPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXCommunities&Society People Summary18Supply Chain Responsibility&Human RightsWe view our suppliers as key stakeholders within our wider system.At a minimum,suppliers are required to abide by all applicable laws,codes or regulations and to conform their practices to the published standards for their industry.Following our Supplier Code of Conduct is mandatory for all suppliers seeking to work with Yum!Brands.It clearly articulates our expectations of compliance with operational standards,ethics and human rights.In addition,we have commitments in areas with elevated risk,including palm oil through our membership to the RSPO and fresh produce as part of the U.S.Fair Food Standards Council.Our suppliers have always been subject to assessments,audits and inspections to verify compliance with critical aspects of our Supplier Code of Conduct and the terms of their contract.Where corrective action is required,we collaborate with suppliers to address areas of concern and effect real change,but reserve our right of termination.During 2022,we increased the transparency in this area by publishing a Responsible Sourcing infographic that discloses key challenges identified in our supply chain and the steps we took to remediate.While responding to identified issues is important,we are committed to building a more proactive response to managing ethical risks within our supply chain.Yum!has a global membership with Sedex,one of the worlds leading ethical trade membership organizations that works with businesses to create more responsible and sustainable business practices.Sedex leverages the Ethical Trading Initiative Base Code to assess risk at each supplier site,across four main areaslabor standards,health and safety,business ethics and environment.It uses a combination of industry and country-related risk factors,self-assessments and third-party,ethical audits to determine both potential and actual exposure.Gaining this additional visibility further strengthens our existing supply chain auditing capabilities,adding increased focus on human rights and labor practices,within responsible sourcing more broadly.To date,the KFC U.K.&Ireland,KFC Western Europe and KFC South Pacific markets continue to lead the way in their use of Sedex and its related risk management tools.Having undergone a rigorous supplier onboarding process over several years,these markets are now using data to identify responsible sourcing risks and responses as part of standard business operations.We are using insights from these markets to further develop a plan to drive system wide adoption.We are also creating a Responsible Sourcing playbook and a Sedex Implementation playbook.In the interim,we continue to have ongoing dialogue with markets regarding the onboarding process.Supplier Engagement Due Diligence ApproachOur focus remains on core direct food suppliers in higher-risk markets where we believe we can have the most impact,as informed by our inherent risk assessment.This assessment,across approximately 6,000 supplier sites,indicated potential areas of concern in developing geographies and within the manufacturing and agriculture,forestry and fishing industries,specifically meat packing and processing,palm oil and hand-picked produce.For supply chains across the world,general awareness of human rights issues,including modern slavery,child labor and the rights of migrant workers,continues to rise.Yum!and our franchisees have the opportunity to make a positive impact on these issues,particularly through collaboration with suppliers.Our brands are working to improve their own due diligence processes and build awarenesswith the Australian and U.K.markets leading in the development of dedicated training materials.Using benchmarking feedback and review of the latest guidelines,we have also updated our Global Human Rights&Labor Practices Policy.The updated policy reflects the clarified role of the Board in addressing human rights concerns,documents our understanding of inherent risks within our value chain and includes stronger language around our commitments.CommitTrack&MonitorActionIdentify&AssessCommunicate&ReportStakeholderEngagementGrievance&RemedyOur Team&BusinessAPPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXOur Team&BusinessPeople SummaryCommunities&Society 19Unlocking Opportunity in Communities&Society As a major employer,community member and corporate citizen,Yum!supports people in many ways.We aim to provide both local and global support across a spectrum of needs,from emergency relief to robust programming to target systemic sources of inequality.Each of our brands has maintained programs designed to address systemic issues,such as hunger and barriers to literacy and higher education,all over the world.SOCIAL&COMMUNITY IMPACT FRAMEWORKSOCIAL IMPACT Yum!recognizes our role in helping to address some of societys greatest systemic challenges.We have a long history of running highly effective social impact programs in key markets to deliver meaningful change to local communities.Through the Unlocking Opportunity Initiative(UOI),a$100 million commitment over five years that was announced in 2020,we have expanded our social impact reach,enabling more markets to develop localized,impactful programs,and driven other key initiatives at the corporate level.UOI has three focus areas:Equity&InclusionDeepening our investments in efforts related to EIB across all aspects of our brands and throughout our franchise businesses and beyond EducationExpanding access and funding of education and skills training to empower restaurant team members and other frontline workers to build their best lives and also uplift our communities EntrepreneurshipCreating pathways to entrepreneurship for restaurant employees wanting to lead a business,franchise or social enterprise,as well as for small businesses and social entrepreneurs looking to make a meaningful difference in their communitiesAs of 2022,we have committed approximately$50 million of UOI funds,helping to fund more than 30 social impact programs in 11 countries.COMMUNITY IMPACTSOCIAL IMPACTMatching Employee Gifts&TimeCommunity PartnershipsEmployee Donation RequestsLONG-TERMONE-TIMEEquity&InclusionEntrepreneurshipEducationSystemic ChangeGood CitizenshipDisaster ReliefMemorial SupportImmediate ResponseSHORT-TERMPartnership|Volunteering|Funding Pizza Hut:An Equal Slice for EveryonePizza Hut is committed to providing opportunities for allno matter their background or life circumstances.Over the past year,the brand has activated its social impact work in many parts of the world.For example,in Delhi,India,Pizza Hut recently opened a fully women-run restaurant.Every restaurant function,from food preparation and customer service to day-to-day management,is carried out by women.Similar initiatives are in place in Bangladesh and in Ethiopia.Pizza Hut South Africa is also helping create jobs for women through the LeadHERship Initiative.This program matches women ages 1824 from marginalized communities with 12-month job placements in health services,creative fields,literacy and education roles.Throughout the year,women participate in monthly catchups with program facilitators and have access to mentors and short courses to deepen their learning.At the end of the 12 months,they exit with a curriculum vitae,reference letter and experience that they can leverage into their next career move.In 2022,the program placed more than 100 womenmany of whom have already secured full-time jobs.In the U.S.,Pizza Hut has operated the BOOK IT!reading program for students since 1984.The program fosters a lifelong love of reading and has helped increase literacy rates across the country.During the 20212022 school year,more than 3.5 million students enrolled in BOOK IT!.The brand continues to offer the BOOK IT!Bundle,a meal deal that donates$1 from every purchase to its nonprofit literacy partner,First Book,to provide access to books and educational resources,raising over$2.4 million during the past year.APPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXOur Team&BusinessPeople Summary20KFC:Feeding Peoples PotentialKFCs recent efforts have focused on creating opportunities for restaurant team members,both prospective and existing,to further their careers.The brands U.K.business recently pledged that by 2030,one-third of new hires will be young people who have faced barriers to employment.In partnership with the charity UK Youth,KFC will provide training and work experience to help 6,000 young people get job interviews.In Germany,KFC has partnered with socialbee to create job opportunities for refugee women.With skills and language training,mentoring and other forms of support,the program matches women with stable jobs at KFC restaurants.KFC France has partnered with the cole de la 2e chance(Second Chance School),which helps unemployed youth gain job skills.Taco Bell:Fueling Bold AmbitionsThe Taco Bell Foundation has been breaking down barriers to education for 30 years.In 2022,the nonprofit worked with franchise owners to award$10 million in grants to charities focused on youth education in communities where Taco Bell team members live and work.These Community Grants support direct services like college and career exploration,mentorship,financial literacy and more.The Taco Bell Foundation also announced more than$8 million in Live Ms Scholarships to over 770 Taco Bell restaurant team members and consumers and held its first in-person summer conference designed to offer 100 Live Ms Scholars a dedicated space to network and share their passions with likeminded individuals.To wrap up the year,the Taco Bell Foundation and Taco Bell launched the Ambition Accelerator,a competition for budding social impact entrepreneurs in partnership with Ashoka(see sidebar).CREATING A LAUNCHPAD FOR AMBITION“My background is in fashion design and sociology,so Im always looking at the systemic aspect of thingswhy things are the way they are,”says Chicago native Sparkle Whitaker.“I wanted to use design as a space to conquer injustices,specifically around criminal justice rehab.”Whitaker turned her passions into reality by creating the Onyx Incubator,a free,virtual program offering workshops on creativity to youth who have experienced incarceration or qualify for alternatives to detention centers.At just 23 years old herself,Whitaker recently became the first grand prize recipient of Taco Bell Foundations inaugural Ambition Accelerator program.In the programs first year,applicants shared nearly 300 submissions for enacting community and global-level change,with particular focus on addressing inequities.Of the total pool,26 teams were selected to attend an immersive experience at Taco Bells headquarters.Attending teams sharpened their changemaking skills,learning everything from budgeting breakdowns to social media tips.Each received$1,500 in seed funding for their social venture,while five final teams were invited to a pitch competition for a chance to secure the top award of$25,000.Whitaker,a previous Live Ms Scholar,wowed the judges with her concept for helping young people discover new skills and prepare for life after high school.The$25,000 prize money will help Onyx Incubator expand its course offerings and provide physical materials in community centers so students participating in the classes can learn tangible skills,like fashion design.“Its epic to receive this funding,”Whitaker says.“Im super grateful and cannot wait for the impact this will have.”Communities&Society APPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXOur Team&BusinessPeople Summary21COMMUNITY IMPACTIn addition to our long-term efforts to create transformational,systemic change,we are also responding to urgent needs that many communities face.One of these critical issues is hunger,which,as a food company,Yum!is well-positioned to address.Since 1992,Pizza Hut has donated surplus food to food banks and other organizations through the Harvest Program,with KFC starting the program in 1999.In 2022,KFC in the U.K.&Ireland evolved this work through a new partnership with FareShare.KFC surplus,including much-needed proteins like cooked chicken,is packaged into a donation bag and frozen at the end of its holding time,allowing it to be stored for up to 60 days.Donation bags contain information on storage,cooking,ingredients and allergens so that community partners can prepare food safely.Through this program,1,000 KFC restaurants donated over 144,000 meals to people in need.The Habit has a long-term partnership with No Kid Hungry.Guests have the option of rounding up their bills to support the nonprofit,raising$270,000 in the fourth quarter of 2022.The Habit also donates to local food banks,particularly in its southern California hometown.In partnership with Community Action Partnership Orange County,the Habit supports pop-up pantries in communities identified as food deserts.The 15 pantries provide food boxes,produce and household items to families with young children.2022 also marked 20 years of partnership between Yum!and Dare to Care Food Bank,which has resulted in more than 51 million meals made possible for kids,families and seniors in Kentucky and the surrounding area.Each year,the Yum!Brands Foundation responds to disasters that affect our employees and franchisees in all parts of the world with direct relief as well as matching gift programs to multiply the support these causes receive.During the COVID-19 pandemic,we established a Global Medical Relief Fund that made one-time grants to corporate and franchisee employees in 85 countries affected by coronavirus and a memorial program to cover funeral or medical costs for employees who passed away.To further engage employees in our community impact work,we match employees contributions to nonprofits.Whether a corporate employee donates money or time,we match their gifts.In October 2022,we activated our volunteer credit program,enabling employees to earn a$10 donation credit for each volunteer hour given,available for use toward an eligible charity of their choice.Volunteer credit is a great complement to the existing employee donation-matching program,as it serves to recognize the valuable contribution of time.The Habit:Crafting a Brighter Future The Habit Burger Grill recently launched its first social purpose committee to further its own initiatives to unlock opportunity.Its recent community engagement work has focused on bringing people together around food,from making donations to relieve hunger to supporting culinary education.The Habit also supports kids who aspire to work in restaurants.The brand was the 2022 national sponsor of the ProStart Cup,a restaurant entrepreneurship and culinary competition hosted by the California Restaurant Association(CRA)that awards more than half a million dollars in scholarships.The Habit will sponsor the event again in 2023 and also provided volunteer support to the CRAs job training program known as Force in Training.Yum!Brands:Unlocking Opportunity In addition to the work done at the corporate level,Yum!focuses on tackling systemic drivers of inequality in our headquarters city of Louisville,Kentucky.We partner with Cardinal Bridge Academy(CBA),which increases college enrollment and completion for students from low-to moderate-income families and for first-generation college students,reaching over 200 students per year.After applying to CBA,students can begin earning college credit from the University of Louisville while still in high school.They also receive college admission counseling,scholarship prep and career mentorship and can earn early admission to the University of Louisville College of Business.Another Yum!partner,the AMPED Russell Tech Business Incubator(RTBI),is working to create generational wealth for Black entrepreneurs.It has provided hundreds of small business owners with business development training,seed capital and technical assistance to help them launch and grow their entrepreneurial ideas.With Yum!s help,RTBI will address systemic barriers to business ownership.In addition to providing the grant,employees mentor high school students through regular in-person meetings to share expertise and learnings from their educational and professional journey.Communities&Society APPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXFood SafetyBalanced Choices Animal WelfareLimiting Antibiotic Use Food Summary22FOOD We Serve Food People TrustAPPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXFood SafetyBalanced Choices Animal WelfareLimiting Antibiotic Use Food Summary23Food Summary HOW WERE DRIVING GOOD GROWTH Great food is what keeps consumers coming back for moreand what has made Yum!Brands the largest restaurant company in the world.There is so much we can do to offer food that is not only craveable,but also good in so many other ways.We take a multifaceted approach to this work.A robust food safety program is the cornerstone of our food strategy,which is why we use real-time data to manage potential risks related to food safety and quality,helping us earn and maintain consumer trust.When it comes to animals that are raised for food,were partnering across the industry to make continuous improvement on standards in animal welfare and antibiotic use.Another key area of focus is our menu offerings.We stay abreast of what ingredients consumers want to see on our menus,like plant-based proteins,and we are transparent about the nutritional content of our food.Underpinning the work is advanced technology that helps us gather in-depth insights and stay ahead of consumer trends.KEY TAKEAWAYS We returned to fully in-person engagement with suppliers on food safety in 2022,including audits,market visits,colleges and summits.KFC has rolled out its global chicken welfare platform,and published chicken welfare reports for both the U.S.and Western Europe.Pizza Hut continues to make progress on plant-based offerings worldwide,with plant-based protein toppings available in 17 countries and vegan cheeses available in select markets including Europe.Taco Bell is engaging across the beef supply chain to reduce the use of antibiotics important to human health in its U.S.and Canada beef sourcing.The Habit lowered its footprint by the CO2 equivalent of approximately 13.1 million miles of driving by selling Impossible burgers made from plants.MATERIAL ISSUES Food Safety Choice&Nutrition Food Technology&Genetically Modified Organisms(GMOs)Responsible Marketing Animal WelfareALIGNED UN SDGsHarvest,Yum!s prepared food donation program,continues to feed people through donations to hunger relief organizations.Harvest also allows us to address the challenge of food waste by diverting food from landfills and reducing GHG emissions.APPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXBalanced Choices Animal WelfareLimiting Antibiotic Use Food SummaryFood Safety24Food Safety Maintaining food safety and quality is foundational to protecting customers and upholding their trust.Food safety is not a competitive advantage,but rather a public health imperative.Over the course of the pandemic,Yum!was highly effective in assessing both restaurants and suppliers,using technology to gain robust visibility,despite restrictions.In 2022,we returned to fully in-person engagement,including audits,market visits,colleges and summits.The past year was a time of getting back to basics,being hands-on with our teams and simplifying systems and processes to reduce administrative activity,decrease risk and improve quality.Moving forward,we will continue to make the best use of both virtual and in-person connections.For example,using virtual tools to review documentation in advance allows us to make better use of time spent at supplier sites.This hybrid approach allows us to advance and democratize food safety and quality worldwide.In 2022,Yum!joined the Consumer Goods Forum,which manages the GFSI.GFSI benchmarks food safety standards and provides governance that supports accredited third-party certification systems around the world.GFSI is the most widely accepted benchmarking program in the world,reducing duplication with a“once certified,accepted everywhere“approach.More than 50%of Yum!approved suppliers have achieved GFSI Recognized Certification to date,and over the next several years,Yum!will:transition to 100%GFSI Recognized Certification for all suppliers and distributors.This bold goal will increase our internal teams ability to focus on risk management and supplier development,rather than the administrative tasks associated with managing an internal audit scheme.USING TECHNOLOGY TO ADVANCE FOOD SAFETYFrom consumer-facing apps to back-of-house systems,innovation is a top priority at Yum!.Today,we are exploring a variety of technologies to help ensure food safety in our restaurants.Yum!uses a risk-sensing tool that constantly scans for potential risks to food,packaging or people,and notifies us of hazards and their potential impacts to our suppliers or business.Yum!s global supply chain team uses the tool to track the impact of concerns such as global weather events and labor shortages.The tool relies on predictive analytics and will become even more effective over time.RISK-SENSINGDIGITAL CHECKLISTSOPPORTUNITY TRACKINGTEMPERATURE SENSORSSensors can be used to ensure safe cooking and holding temperatures for all of our products.They can also identify inefficiencies and ways for us to reduce energy use.In the U.S.,Pizza Hut is piloting the use of new functionality added to its Hutbot tool to allow food safety teams to capture areas for improvement,make recommendations and track follow-up actions to reduce food safety risk.Transitioning from paper checklists to digitized ones makes restaurant team members jobs easier and helps food safety risk managers evaluate and reduce food safety risk more effectively.We use a third-party tool to transform data stored across multiple databases into focused reports,dashboards and charts.APPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXFood SafetyAnimal WelfareLimiting Antibiotic Use Food SummaryBalanced Choices 25Balanced ChoicesYum!is proud to serve some of the worlds favorite pizza,chicken and tacos,as well as made-to-order chargrilled burgers.To continue to lead in these categories,we must stay ahead of consumer trends regarding ingredients,flavors and nutritional content and delight consumers with menu innovations they crave.Here are a few ways we continued to provide transparency and offer choice to consumers worldwide:OFFERING CONSUMERS BALANCED CHOICES IN THE U.K.KFC is helping consumers choose balanced menu items through the power of suggestion.The brand recently teamed up with Bite Back 2030,a U.K.-based nonprofit focused on healthy food systems;Deliveroo,a food delivery app;and the University of Durham on a project to determine how to shift purchasing behaviors toward healthier choices.The team hypothesizes that featuring a menu item in KFCs hero image on the Deliveroo app will increase sales of that item.During a series of trials,when consumers in a certain area search for KFC on the Deliveroo app,they will see images of recommended lower-calorie menu items such as Southern Sweet Chilli Twister Wrap.The trials will be conducted throughout 2023.Once complete,the team will gather and interpret their findings.Simplicity and labelingWe continue making progress in our efforts to remove artificial colors,artificial flavors and partially hydrogenated oils from core food ingredients globally by 2025 and are 94%,88%and 95%of the way there,respectively.In addition,many of our brands and geographies also offer nutrition facts and ingredient and allergen information online.For the U.S.,details can be accessed here:KFC,Pizza Hut,Taco Bell,The Habit Burger Grill.Beverage optionsIn 2022,Taco Bell U.S.met its goal of offering at least 50%of its medium(20 fl oz)fountain beverages at 100 calories or less and 20 grams of sugar or less,with new beverage options including Brisk Dragon Paradise Sparkling Iced Tea and Dole Lemonade Strawberry Squeeze.Plant-forward menu itemsPlant-based options remain a priority for consumers in many parts of the world.In 2022,23%of menu items sold at Taco Bell were vegetarian.The brand continues to test new menu items,including a Crispy Melt Taco with a proprietary seasoned plant-based blend.Offerings across our other brands include plant-based toppings at Pizza Hut restaurants in 17 countries,vegan cheeses in a limited number of Pizza Hut markets,including Europe,and Impossible burgers at The Habit Burger Grill.Consumer choiceWe encourage consumers to make meals their own,customizing their orders to suit their dietary preferences.Pizza Hut offers a“create your own”pizza option worldwide.At Taco Bell,consumers can choose to make menu items vegetarian,order“fresco-style”to lower calories and fat or use the brands nutrition calculator to evaluate other possible ways to customize.APPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXFood SafetyBalanced Choices Limiting Antibiotic Use Food SummaryAnimal Welfare26CAGE-FREE EGGSYum!is on track toward our commitment to transition to 100ge-free eggs for 25,000 restaurants by 2026,including the U.S.,Western Europe and other leading markets,across all brands and for all menu items and ingredients;and to transition to 100ge-free eggs worldwide by 2030.Going forward,Yum!will be creating transition plans,in partnership with our supply chain and key partners,that identify all menu items with egg ingredients and the suppliers associated with each.For our 2030 global markets,we will review sourcing data and research during 2024 and 2025,and plan to begin disclosing progress and a potential path forward after 2026.Yum!is on track toward our commitment to transition to 100ge-free eggs for 25,000 restaurants by 2026Over the past year,highly pathogenic avian influenza(HPAI)has significantly affected egg-laying birds in many places around the world.To date,KFCs business has not been significantly impacted by this issue.The brand attributes this to its deep bench of suppliers in multiple geographies,as well as to our biosecurity expectations of suppliers,which are designed to protect birds from disease.Yum!continues to monitor HPAI outbreaks and responds as necessary to ensure supply continuity and protect our consumers.Animal Welfare We have a responsibility to be a good steward of the animals raised for food throughout our supply chain.Our approach is articulated in our Global Animal Welfare Policy and guided by our Sustainable Animal Protein Principles.Yum!also supports the Five Freedoms for all animals used for food.OUR FOCUS ON CHICKEN KFC is the largest of our brands by sales volume.And given KFCs focus on chicken,the welfare of chickensboth those who lay eggs used in products and broiler chickens used for meatis the greatest focus of our animal welfare programs.Regarding broiler chicken welfare,we are working to increase transparency in our supply chain,create consistency across our brands and around the world,and improve data collection so we can better communicate progress and challenges to our stakeholders.In 2022,KFC rolled out a global chicken welfare platform that summarizes its stance on key welfare issues,the principles it follows and how it evaluates suppliers.Also in 2022,KFC U.S.published its first chicken welfare report,and KFC Western Europe(including the U.K.and Ireland)launched its third annual report and continued deep engagement on chicken welfare issues.In its most recent report,the market provided details on both its overall performance and that of its main individual geographies.KFC Western Europe also implemented a supplier welfare scorecard,with supplier leaders invited to join quarterly review sessions to discuss audit findings and areas for improvement.KFC Western Europe market was proud to achieve 100%compliance on its annual chicken welfare audits&corrective action plans.Audits for KFC Western Europes supply chain are now conducted by NSF International.These reports and plans are integrated in TrueView to allow for real-time visibility,with data updated monthly and at a more granular level than was previously available.APPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXFood SafetyBalanced Choices Animal WelfareFood SummaryLimiting Antibiotic Use 27Limiting Antibiotic Use Keeping farm animals healthy occasionally requires the use of antibiotics.Yum!shares concerns regarding the rising threat of antimicrobial resistance(AMR)and supports the thoughtful and judicious use of these treatments.We also support One Health,a holistic and multisector long-term effort to combat AMR by the United Nations World Health Organization(WHO),the Food and Agriculture Organization,the World Organisation for Animal Health and other key stakeholders.In addition to our long-standing alignment with globally recognized frameworks,we are encouraged by recent guidance in the U.S.from the Federal Drug Administration(FDA)and the positive impact it will have on overall antibiotics reduction efforts.This guidance includes stopping the availability of over-the-counter(OTC)livestock antibiotics through traditional retail channels and now requiring a prescription from a licensed veterinarian.In 2022,Pizza Hut reached its goal of removing antibiotics important to human medicine from chicken used for wings in the U.S.This builds on a previous commitment,achieved by KFC,Pizza Hut and Taco Bell,to reduce antibiotics important to human medicine in their U.S.poultry supply chains.Taco Bell continues to work toward its goal of reducing antibiotics important to human health in its U.S.and Canada beef sourcing by 25%by 2025.In much the same way that we are working to reduce the emissions impact of our animal protein supply chain,we are making progress through sector engagements.Our partners include the U.S.Roundtable for Sustainable Beef and the International Consortium for Antimicrobial Stewardship in Agriculture(ICASA).ICASA is a public-private partnership created by the Foundation for Food&Agriculture Research to advance research on antimicrobial stewardship in animal agriculture.ICASAs research promotes the judicious use of antibiotics,advances animal health and wellness and increases transparency in food production practices.Through ICASA,Taco Bell is funding research to help develop a system for beef producers to better evaluate and report their antimicrobial usage.Taco Bells project is one of nine ICASA grant-funded projects investigating novel and potentially high-impact solutions to promote targeted antibiotic use and advances in animal health and welfare.Due to the complicated nature of the beef industry,isolating the volume of antibiotics used in any one businesss supply chain is complicated.However,we are encouraged to see a reduction in antimicrobial use in the animal protein industry overall.Over the past five years,there has been a 32%reduction in antibiotic use industrywide.DECREASE FROM 2016 THROUGH 2021 IN DOMESTIC SALES OF MEDICALLY IMPORTANT ANTIMICROBIAL DRUGS APPROVED FOR USE IN CATTLE 201620213,605,5432,460,766Source:U.S.FDA 2021 Summary Report on Antimicrobials Sold or Distributed for Use in Food-Producing AnimalsEstimated Annual Totals(kg)332%reductionindustrywideAPPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXPlanet SummaryLess CarbonBetter PackagingDeforestationWater Security28PLANET We Grow SustainablyAPPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXLess CarbonBetter PackagingDeforestationWater SecurityPlanet Summary29Planet SummaryHOW WERE DRIVING GOOD GROWTH Good Growth means addressing climate change and resource scarcity for the benefit of the planet,our business,employees franchisees and local communities that we serve.Taking action to reduce our environmental footprint enhances brand relevance by aligning with growing demands for sustainability among consumers,investors and nongovernmental organizations(NGOs)while also helping to mitigate risk.We are investing in advanced technologies that will allow us to operate our restaurants more efficientlysaving energy and water and generating less waste while reducing costs.Given the scale of our business and the fact that we are largely franchise-operated,making progress on emissions reduction also means looking deep into our supply chain.Yum!is strengthening our supplier engagement and data management capabilities,giving us the insights we need to drive progress on emissions reduction as well as human rights,food safety and other supply chain issues.In each of our areas of impact,were leaning into multistakeholder partnerships,seizing opportunities to both learn from and educate others.KEY TAKEAWAYS We achieved a 57solute reduction in corporate restaurant and office emissions(Scope 1&2)compared to 2019.We achieved a 28%reduction in per-restaurant emissions in franchisee restaurants(Scope 3)compared to 2019.Weve conducted a global renewable energy prioritization study covering key markets and are developing a roadmap for transitioning our restaurants.Pizza Hut reached its goal of sourcing 50%of the dairy used to make its pizza cheese in the U.S.from dairy farms enrolled in an environmental stewardship programtwo years ahead of schedule.Taco Bell announced a partnership with Cargill and the National Fish and Wildlife Foundation(NFWF)to address the environmental impacts of cattle grazing.KFC Western Europe engaged with poultry suppliers to map and identify gaps in its soy supply chain and released its findings in a report for KFC U.K.&Ireland,with a plan to publish a report for all of the Western European markets in 2023.Our packaging policy,harmonized across all four brands,is helping drive focus on our packaging priorities.MATERIAL ISSUES Climate Impact Operational Waste&Recycling Packaging Sustainable Sourcing WaterALIGNED UN SDGsAt Yum!,our restaurants have taken steps to reduce water use,and weve conducted a global water risk assessment to better understand our footprint.In 2021,we announced new science-based targets(SBTs),which give us a roadmap for reducing GHG emissions to levels aligned with the Paris Agreement.Yum!partnered with FAI Farms to identify and eliminate deforestation risk in our supply chain.APPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXPlanet SummaryBetter PackagingDeforestationWater SecurityLess Carbon30Less CarbonOne of Yum!Brands greatest opportunities for positive impactand therefore one of the top priorities for our businessis reducing GHG emissions from our restaurants and supply chain.Weve been on a journey to reduce our carbon footprint for more than 15 years and continue to elevate our climate ambitions.In 2021,our near-term climate target was approved by the Science Based Targets initiative(SBTi).Using 2019 as our baseline year,these SBTs commit us to:Reduce absolute Scope 1 and 2 GHG emissions 46%from corporate restaurants and offices by 2030Reduce Scope 3 GHG emissions 46%per franchise restaurant by 2030 Reduce Scope 3 GHG emissions 46%per metric ton of beef,poultry,dairy and packaging by 2030APPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXPlanet SummaryBetter PackagingDeforestationWater Security31ActionsFocus AreasClimate Transition PathwayActionsFocus AreasBeef&DairyImproved feed practices:Improved health monitoringFeed additives storage covering Increased milk production Feed additives:Tannins and nitrate addition Improved waste practices:Manure management Manure digesters PoultryImproved feed practices:Optimized diets Sustainable soy and cornImproved waste practices:Manure management Land Use,Biodiversity&Agricultural PracticesDeforestation and land use change:Pilot and implement practices such as regenerative agricultureWork with suppliers to end deforestation and land conversion Renewable EnergyExplore and implement renewable energy through a mix of on-site virtual power purchase agreements(vPPAs)and energy attribute certificatesGOALS:Reduce absolute Scope 1 and 2 GHG emissions 46%from corporate restaurants and offices by 2030Reduce Scope 3 GHG emissions 46%per franchisee restaurant by 2030GOAL:Reduce Scope 3 GHG emissions 46%per metric ton of beef,poultry,dairy and packaging by 2030 Climate Transition StrategyBuilding EfficiencyReduce electricity,natural gas and hydrofluorocarbons(HFCs)consumption with focus on heating,ventilation and air conditioning(HVAC),exhaust hoods,equipment,refrigeration and lightingSupply ChainYum!Climate Transition Action PlanRestaurants Oversight from board,global leadership,ESG Council and brand steering committees Improve tracking of building efficiency,grid greening and integration of renewable energy Engage with industry groups and trade associations for tracking life cycle emissions from beef,poultry and dairy to improve monitoring,reporting and verification Commitment to transparency through continued CDP Climate,Forest,Water disclosures and alignment to TCFD framework Third-party verification of annual GHG dataGovernance,Data&Transparency To achieve our SBTs,we need a clear plan.Yum!s climate action plan,detailed below,illustrates where we will focus in the coming yearsand how much we expect each area to contribute to emissions reduction.The reduction pathway is grounded on baseline data from 2019 that was used when setting our approved science-based targets.We recognize that our strategy and supporting actions will likely evolve based on a number of factors such as improved economics,technology and innovation.192021222324252627282930500P02021222324252627282930Emissions ReductionEmissions ReductionBUILDINGEFFICIENCYNO ACTION TAKENGRID GREENINGRENEWABLEENERGYNO ACTION TAKENPOULTRYBEEF&DAIRYLAND USE,BIODIVERSITY&AGRICULTURAL PRACTICESTECHNOLOGY&INNOVATIONLess CarbonAPPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXPlanet SummaryBetter PackagingDeforestationWater Security32CORPORATE RESTAURANTS&OFFICESReduce Absolute Scope 1&2 GHG Emissions by 46%by 2030 Compared to 2019Our Scope 1 and 2 emissions cover our corporate-owned restaurants in addition to our corporate offices.Since 2019,weve decreased energy consumption at corporate restaurants by 57%through restaurant energy conservation measures like high-efficiency HVAC systems,kitchen equipment,refrigeration equipment,lighting and building management systems.Beyond reducing the amount of energy used,we must also transform the types of energy we source.We have used renewable energy for our U.S.-based offices through open market renewable energy certificates since 2019.We continue to transform the types of energy we source and look at alternative options to further contribute to the development of new forms of renewable energy.mtCO2e192021222324252627282930200K150K100K50KReduction target is 101,802 mtCO2e by 2030.This is an absolute reduction,based on 2019 emissions.Note:Baseline year 2019 has been restated and received external assurance to account for acquisitions,divestitures and required updates,in accordance with the GHG Protocol.All figures are market-based emissions.For a full breakdown,view our ESG Library.Less CarbonAPPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXPlanet SummaryBetter PackagingDeforestationWater SecurityAs a next step on our decarbonization journey,in 2022 we worked with a third-party organization on a global study of renewable energy markets.Through this study,we examined renewable energy opportunities and challenges in 10 key markets worldwide in terms of cost,complexity,risk,scalability and impact.We also explored possible solutions for each unique market dynamic,including physical and VPPAs,on-site solar installations and energy attribution certificates.Franchisee input was an important part of the process,and our next steps involve finding more ways to engage franchisees in bringing the renewable energy roadmap to life.Emerging government regulations and technological advances are also helping drive the transition to renewable energy.For example,a franchisee in Indonesia has entered into a joint partnership with a national solar power company to add rooftop solar panels to its entire portfolio of restaurants.33FRANCHISEE RESTAURANTS Reduce Scope 3(Per Franchisee Restaurant)GHG Emissions by 46%by 2030 Compared to 2019Since 2019,franchisee GHG emissions decreased by 28%per restaurant on average,which gives us a good start toward meeting our 2030 goal.Yum!has a long history of designing,building and operating sustainable and efficient restaurants,having opened our first green building,certified using the U.S.Green Building Councils Leadership in Energy and Environmental Design(LEED)program,more than a decade ago.KFC has adopted proven approaches into a collection of must-have processes that serve as a common baseline for global development.Pizza Hut has also adopted a list of must-haves for its restaurants in its focus countries.Take Pizza Hut in Brazil,where the brand has adopted and implemented elevated standards for its HVAC equipment,lighting and water use.A franchisee in India built a new Pizza Hut restaurant which generates solar power,practices rainwater harvesting,uses wastewater from reverse osmosis for cleaning purposes and deploys an environmental management system to control power usage.These projects serve as a roadmap for franchisees in reaching their environmental and business goals,including reducing GHG emissions.We also continue to investigate building conservation measures such as automation technologies and Internet of Things(IoT)-based solutions,including connected temperature sensors for coolers and fryers that will help franchisees reduce their footprints,keep food safe and deliver a great customer experience.mtCO2e/restaurant20015010050Reduction target is 96.2 mtCO2e per restaurant by 2030.This is an intensity reduction,based on 2019 emissions.Note:Baseline year 2019 has been restated and received external assurance to account for acquisitions,divestitures and required updates,in accordance with the GHG Protocol.All figures are market-based emissions.For a full breakdown,view our ESG Library.192021222324252627282930Less CarbonAPPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXPlanet SummaryBetter PackagingDeforestationWater SecuritySolar powerBoth KFCs corporate and franchise-owned restaurants are adding solar panels to their rooftops and now have them on every continent where the brand operates.Locations include France,India,Indonesia,LA&C,Philippines,South Africa,South Pacific and the U.S.In the U.S.,a KFC franchisee has also installed a solar-powered drive-thru canopy.34SUSTAINABLE RESTAURANTS AROUND THE WORLDOur brands have emissions-reduction activities taking place at restaurants across the world and are hopeful that these improvements and innovations can be applied across the Yum!network.A few ways were making progress include:Electric vehicles(EVs)In the U.K.and Ireland,KFC is adding EVs to its delivery fleet.In select U.S.states,a Pizza Hut franchisee piloted a delivery EV with a dedicated,insulated cabin for product.Net-zero restaurants KFC U.K.&Ireland is reviewing the carbon footprint of its restaurants with the goal of making future restaurants net-zero carbon through sustainable design,operations and integration of renewable energy technology.University partnershipsPizza Hut is working with undergraduate and graduate students to gather data and develop concepts for more sustainable restaurant design,which could inform future builds.Zero-waste initiatives KFC Thailand has opened multiple“Green Stores,”which are built with zero-waste material and offer plant-based poultry menu items.Sustainable furnishings The Habit Burger Grill continues to incorporate sustainable upholstery,lighting and equipment into its restaurants,including energy-saving technology in walk-in coolers,ENERGY STAR and Green Guard-certified machines and fixtures and floor tiles made of recycled content.Similarly,KFC is developing a new line of restaurant furniture made of lightweight,recovered materials.Less CarbonAPPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXPlanet SummaryBetter PackagingDeforestationWater Security35SUPPLY CHAINReduce Scope 3 GHG Emissions 46%per Metric Ton of Beef,Poultry,Dairy and Packaging by 2030 The majority of Yum!s GHG emissions come from the food we purchase,namely our core proteins of poultry,beef and dairy.When we set our SBTs,we prioritized these proteins,along with packaging,as areas for action.When it comes to calculating the emissions,we use standardized factors from Agri-footprint.Agricultural industries are continuing to refine approaches to calculating emissions.In 2019,our combined intensity for our primary GHG emitters was 6.2 mt CO2e per mt of product purchased.In 2022,our emissions intensity was 6.4 mt CO2e per mt of product purchased based on recently updated emissions factor updates.Making continued progress on our supply chain goal requires a multipronged approach:partnering with our suppliers to address emissions from land use to animal feed and working across the industry to align on the data and reporting behind agricultural and packaging emissions.As you will see on the following page,emissions from our key proteins can range greatly depending on several factors,including land use and feed efficiency.BeefPoultryDairyFiberPlastic432!%3%1 22 Key Supply Chain GHG EmittersLess CarbonAPPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXPlanet SummaryBetter PackagingDeforestationWater Security36ACTING ON CLIMATE IN OUR SUPPLY CHAINTracking and calculating emissions in food systems is difficult,especially in regard to above ground carbon cycles.However,we continue to work on gathering complex data from our protein and packaging supply chain to estimate emissions.Currently,our reporting approach uses standardized emissions factors applied to the quantities of commodities procured for beef,dairy and poultry,as well as packaging.However,we know the approach of using averages has limitations and we continue to look for ways to address them.Data developmentTargeted pilotsStrategies for reducing emissions will vary by core proteins and the regions they are sourced from,as well as producers and production models.We are working with partners on specific projects to define pathways for emissions reduction.Sector engagementsClimate action in our supply chain will require partnering with industry peers,as well as processors,farmers and retailers,to advance awareness and align on areas of focus and desired results.BEEF EMISSIONSPOULTRY EMISSIONSSource:WWF Measuring and Mitigating GHGs-Beef and WWF Measuring and Mitigating GHGs-ChickenResearch from the World Wildlife Fund(WWF),shown in the below charts,gives a breakdown of emissions when it comes to beef and poultry sourcing and supports our focus areas of land use,enteric fermentation and feed.Their research also affirms that Yum!is sourcing primarily from highly efficient regions that have lower emissions such as North America.Global emissions averages are approximately 76 kgCO2E/kg edible weight(EW)for beef and 7 10 kgCO2E/kg EW for poultry.For North America,one of our largest sourcing regions,beef averages 40 kgCO2E/kg EW and poultry(meat)averages 4 kgCO2E/kg EW.Per below,land use and feed can more than double the entire life cycle emissions of beef or poultry.TOTAL:16 360 avg.76kgCO2e/kg EWTOTAL:2.6 21 avg.7 10kgCO2e/kg EWLess CarbonAPPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXPlanet SummaryBetter PackagingDeforestationWater Security37Engaging SuppliersThrough participation in the Supplier Leadership on Climate Transition(Supplier LoCT)consortium,Yum!suppliers gain access to classes where they can learn to calculate GHG emissions,set their own SBTs and access climate roadmaps and playbooks.We follow up on the progress they are making by conducting an annual sustainability survey and are seeing an increase in target-setting as a result of this program.To date,40%of our suppliers of poultry,beef and dairy in the U.S.,Canada,Western Europe and Australia have set emissions-reduction goals or have joined the Supplier LoCT program.Reducing Emissions on the Farm How will farmers meet the goals they set?Pizza Hut U.S.is partnering with the Dairy Farmers of America(DFA)to provide the technology and data needed to help answer that question.Over the past year,Pizza Hut has been working alongside DFA and dairy suppliers to conduct farm-level GHG and energy assessments through the Farmers Assuring Responsible Management and Environmental Stewardship(FARM ES)evaluation.The brand set a goal to source 50%of the dairy used to make its pizza cheese in the U.S.from dairy farms enrolled in the FARM ES program by 2025,and met this goal in 2023,achieving 60%sourcing from enrolled farms.One of the most significant ways farmers can reduce emissions is changing animals diets.The brand is helping them do this by providing all FARM ES-enrolled farmers with a SCiO cup,a lab-grade dry matter analyzer.The SCiO cup is a handheld device that resembles a large coffee mug.Farmers place a scoop of cattle feed into the cup as a sample,and the SCiO Cup uses near-infrared spectroscopy to determine levels of dry matter in the feed,which affects cows methane output.Using this information,farmers will be able to deliver precise nutrition to their cows,leading to a reduction in methane emissions and waste.In addition,Pizza Hut is helping implement farm-level projects such as cover crop planting and energy-efficient lighting and ventilation equipment.In 2023,Taco Bell announced an exciting new partnership with long-time supplier Cargill and NFWF to address the environmental impacts of cattle grazing.Cargill and Taco Bell will jointly commit$2 million and leverage an additional$2 million in federal funds to provide grants to beef producers in the U.S.Intermountain West.These grants will equip ranchers with the technical and financial tools to expand their regenerative ranching practices,from conserving grassland ecosystems to improving river water quality and biodiversity,with the goal of sequestering up to 44,000 metric tons of CO2e per year by 2030.Less CarbonAPPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXPlanet SummaryLess CarbonBetter PackagingWater SecurityDeforestation38DeforestationLIMITING DEFORESTATION THROUGH SOURCING PRACTICES Beyond producing methane emissions,another way that raising animals for food can contribute to climate change is by accelerating deforestation.When forests are cleared to make room to grow crops or raise animals,sequestered carbon is released.Deforestation can also impact biodiversity by destroying the habitats that native animals and plants depend on and has been linked to human rights violations against indigenous peoples.We seek to minimize or avoid sourcing livestock that is raised and feed that is grown in areas at risk of deforestation.Many other businesses source the same commodities as we dotherefore,the primary way we are tackling this issue is through collaboration.It will take all parties,including NGOs,companies,governments and more,to move successfully in this area.Examples of our engagement include endorsing the New York Declaration on Forests(NYDF)and the private-sector goal of eliminating deforestation from the production of agriculture commodities such as palm oil,soy,paper and beef products and striving to end natural forest loss by 2030.We also recognize that there are increasing demands to move even faster and continue to monitor what this means for us.Yum!is a member of the Tropical Forest Alliance and UK Roundtable on Sustainable Soya(KFC U.K.&Ireland).We are also tracking the newly released Forest,Land and Agriculture Guidance from the SBTi.Due to the complexity of our supply chains,this work is more straightforward for some commodities than for others.For example,soy,which is a primary ingredient in poultry feed,has a supply chain involving soybean farmers,processors,feed mills,poultry suppliers and finally Yum!restaurants.While our business is at least five steps removed from the soybean field,we continue to work across our supply chain to achieve greater levels of visibility and accountability.Through our 2022 feed mill audit,we determine that 100%of our feed mills in Brazil are aligned with the Amazon Soy Moratorium.In 2022,we expanded our data collection process to better understand the use of soy by our supply chain partners.Given that we are not buying soy for animal feed,it is challenging to measure.All global soy information is shared through our CDP reporting as a part of Yum!s global disclosure.In addition,annual data of Brazilian feed mill performance,reflecting the production of poultry in Brazil relative to the Amazon Soy Moratorium,is reported annually as a part of the Yum!sustainability reporting process.KFC Western Europe has made progress by incorporating a soy sourcing policy into its Sourcing Code of Practice,aiming for 100%sustainable soy by 2030(2025 for KFC U.K.&Ireland).The market also conducted a soy mapping exercise with poultry suppliers to identify gaps in its soy supply chain and released its findings in its first soy report for the KFC U.K.&Ireland market,with the aim to extend disclosure for the entire region in 2023.Additionally,in line with our Accountability Framework initiative(AFi)plan,KFC Western Europe has engaged suppliers on sustainability programs,including their soy sourcing strategy.Assess 20192020Conducted risk assessment for soy and beef sourced in Brazil,an area known to have a higher risk for deforestation.The assessment was conducted by our third-party partner,WWF.Plan&Research 20202022Drafted AFi plan with WWF guidance,recognizing the industry challenges including traceability across a complicated soy supply chain,especially for downstream actors.Followed common steps and guidance of AFi to outline overall deforestation and conversion-free(DCF)workstream including:Implement2022CurrentWe continue to execute against the AFi plan and revise as needed.This includes engaging with suppliers on their soy sourcing strategy and reviewing our soy mapping.In addition,we consult with and learn from other organizations facing similar supply chain challenges.We are also working to ensure responsible sourcing of other raw materials whose cultivation can contribute to deforestation,including palm oil and fibers used for packaging(read more about our Better Packaging efforts).As a member of the RSPO,we are committed to sourcing all palm oil used for cooking from responsible and sustainable sources and give preference to suppliers that are certified by the RSPO.In 2022,volatile markets and disruptions,especially from global conflicts,created significant challenges and slightly reduced our use of RSPO-certified palm oil.Still,our supply chain and sustainability teams remain dedicated to partnering on this issue.We use satellite technology to review palm mill exposure to deforestation risks and continue to look for opportunities to reduce the environmental footprint of our palm oil use.NAVIGATING OUR DEFORESTATION JOURNEYDCF AlignmentRisk ProfileInternal OperationsSupplier EngagementMonitoring,Reporting&VerificationAPPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXPlanet SummaryLess CarbonDeforestationWater SecurityBetter Packaging39Better Packaging Another important way we can make a positive environmental impact is by transitioning to more sustainable packaging for the food we serve.In 2022,Yum!introduced a harmonized packaging policy that built upon our brands existing packaging goals,providing an aligned aspiration for all brands to work toward by 2025 and beyond.To develop this policy,we engaged with brands,NGOs,investors and regulators to ensure our goals capture the full complexity of packaging opportunities at the local,national and global levels.YUM!S SUSTAINABLE PACKAGING FOCUS AREAS As part of our harmonized packaging policy,Yum!established four focus areas and goals within each to achieve by 2025.Our focus areas are:Eliminating unnecessary packagingBy removing products with Styrofoam and expanded polystyrene(EPS)and reducing overall packaging materials and use Shifting materialsBy transitioning to reusable,recyclable or compostable content and removing substances of concern Supporting better recovery&recycling systemsBy forming partnerships to improve local infrastructure Investing in circularityBy exploring concepts like reusability and repurposing of materials that would otherwise go to wasteAPPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXPlanet SummaryLess CarbonDeforestationWater Security40This harmonized policy recognizes that while our brands vary in their menu items,and therefore in the types of packaging they use,there is still much they can learn from each other.Since setting the policy,we have identified areas in which our three largest brands can lead,tasking each brand with exploring more sustainable packaging solutions.Each brand will share its learnings with the others,allowing us to move faster toward solutions than any brand could on its own.Yum!is evaluating progress toward our goals with a self-assessment scorecard for each market and across all of our focus areas.We are proud of the progress weve made to date in each area over the past year,including:Eliminating Unnecessary PackagingUnrecoverable plastic items,including straws,cup lids,stirrers and cutlery,are prevalent around the world due to their convenience and low cost.But they are too small for recycling facilities to process,which makes them a key focus area of Yum!s new policy,as well as of emerging legislation worldwide.We have phased out 99%of Styrofoam and EPS from our brands packaging,marking the third year in a row with the remaining amounts being de minimis.We will keep working to remove the remaining levels in our system.Now,many of our markets are finding ways to remove other unrecyclable items.For example,Pizza Hut restaurants in India,Australia and Japan have eliminated plastic straws,plastic cups and plastic cutlery.Shifting MaterialsAs we remove unrecoverable plastics and other compounds from our packaging,we are making a transition to materials that use recycled content and are compostable or recyclable.In many cases,this means using paper fibers,which can be recycled and reused many times over.In 2022,70%of our fiber-based packaging and servicewares were from certified virgin or recycled paper sources.Our strategy is to continue to work toward our published goals to prevent deforestation,in line with our endorsement of the NYDF.Taco Bell has transitioned to recyclable paper wraps in the U.S.and is piloting a 30 oz polypropylene beverage cup made with 10%recycled content.At Taco Bell restaurants in Brazil and the South Pacific,new fiber-based products include paper straws,wraps and bags and wooden cutlery.The Habit Burger Grill transitioned to-go bags from plastic to paper,eliminating 330,000 pounds of plastic.In 2023,the Habit is testing molded fiber packaging for salad bowls and exploring paper-based packaging solutions.Pizza Hut is focused on making its packaging,primarily made up of corrugated cardboard,more recyclable.Pizza boxes in Australia are made from 100%recycled content,while that number is up to 70%in the U.K.Supporting Better Recovery&Recycling SystemsFor packaging to actually be recycled or composted,municipalities must have recovery infrastructures,and consumers must understand how to recycle or compost properly.Yum!is a member of How2Recycle,the leading recycling labeling system in North America,which provides instructions on packaging to enable more and better recycling.We have begun the journey to implement How2Recycles standardized labeling system on our packaging and continue work to apply to more of our packaging suite.As a member of the NextGen Consortium,Yum!stays current on what materials are most widely recyclable and has the opportunity to work with other companies to support the development of sortation and recycling infrastructure.Globally,it is estimated that at least 27%of plastics used in our consumer packaging are considered widely recyclable.For example,in 2022,polypropylene rigid containers,a material used in our brands packaging,were upgraded to be considered“widely recyclable”in the U.S.Taco Bells corporate-owned restaurants have added three-stream recycling bins to provide in-restaurant access to consumers in efforts to collect as much material as possible for recycling.Investing in CircularitySupporting a truly circular economy means considering what happens to materials at the end of their life.Taco Bell continues its partnership with TerraCycle in the U.S.to upcycle used sauce packets.Most recently,the brand elevated the program scope beyond Taco Bell sauce packets and now accepts condiment packets from any brand.KFC South Pacific has partnered with a supplier in Australia who manufactures sustainable,affordable and high-performance building materials made from hard-to-recycle packaging.Materials like milk and juice cartons are upcycled into a construction board that has been installed in a new KFC restaurant for testing.We are also learning from reusable dishware and silverware programs for dine-in customers in locations such as California and France.Better PackagingAPPROACHYum!Brands 2022 Global Citizenship&Sustainability ReportPEOPLEFOODPLANETAPPENDIXPlanet SummaryLess CarbonBetter PackagingDeforestationWater Security41Water Security Yum!uses water to prepare our food and keep restaurants clean and safe.We have a long history of working to reduce water consumption and are 40%of the way toward our 2025 goal of reducing average restaurant water consumption by 10%from our 2017 baseline.We also continue to focus our efforts on areas of high water stress.We conduct a regular risk assessment using the World Resources Institutes Aqueduct tools to determine areas at highest water risk.We evaluate both water access and water quality due to their importance to restaurant operations and food production.For the first time in 2021,we included a portion of our supply chain assessing risks to our beef,poultry,dairy and fiber suppliers and found that 82%of our supply chain components have low to moderate risk.The assessment also concluded which brands and countries have the highest level of water risk.For more information,see our latest CDP Water Security response.Yum!Brands 2022 Global Citizenship&Sustainability ReportUN SDGsMaterialityAbout This ReportStakeholder EngagementPerformance SummaryGRI IndexSASB IndexAPPROACHPEOPLEFOODPLANETAPPENDIX42APPENDIX Yum!Brands 2022 Global Citizenship&Sustainability ReportUN SDGsMaterialityAbout This ReportStakeholder EngagementGRI IndexSASB IndexAPPROACHPEOPLEFOODPLANETAPPENDIXPerformance Summary43Performance SummaryPeopleGOALPROGRESSOur TeamSignificantly increase the number of women in senior leadership globally and achieve gender parity in leadership globally by 2030 in alignment with Paradigm for Parity.In 2022,43%of global corporate leadership roles were held by women,and approximately 52%of our global workforce was comprised of women.Significantly increase diverse representation of people of color in the U.S.among corporate employees.Yum!is among OneTen Coalitions highest-performing partners in terms of the number of new hires and promotions at our company-owned restaurants and corporate offices.Yum!remains committed to the Hispanic Promise and the CEO Action for Diversity&Inclusion.Continue rolling out Inclusive Leadership training across our system including company-owned and franchise restaurants.We expect to have the program rolled out globally by the end of 2025.Provide system employees with training and development that builds world-class leaders and business results.Employees participated in almost 260,000 training instances in 2022.Nearly 5 million hours of operational training were completed.Since Yum!acquired Heartstyles in 2020,more than 600 Certified Practitioners have been trained and 30,000 Indicators have been completed across six continents.KFC U.S.is putting college degrees in reach for its restaurant employees with team members able to earn degrees at Western Governors University(WGU)with tuition 100%covered.Measure our employee engagement.Yum!s last biennial employee engagement survey,which was conducted in 2021,revealed an engagement level of 88%for all corporate employees,well above industry benchmarks.Remain committed to our Global Code of Conduct and Supplier Code of Conduct,which addresses guidelines for working conditions consistent with frameworks such as those of the International Labour Organization and the United Nations Guiding Principles on Human Rights.Published updated version of Yum!s Human Rights&Supply Chain policy.Through Yum!s membership with Sedex,a leading ethical trade membership organization that works with businesses to improve working conditions in global supply chains,6,000 core category supplier sites were pre-screened for indicators of inherent re
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ESG is an opportunityESG REPORT 2022-23 ESG REPORT 2022-23 Mapping with UN SDGsOur ESG ambitions con.
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1AXA Tax Transparency Report Tax Year 2023Tax Transparency ReportTax Year 2023Published in June 2024 2AXA Tax Transparency Report Tax Year 2023With more than 11Bn intax contribution to society in 2023,AXA performance is at the service of shared value.AXA recently unveiled its 2024-2026“Unlock the Future”strategy in which commitment is one of its three pillars:the Group will continue to play a responsible role in society.CONTENTSTHOMAS BUBERLAXA Group Chief Executive OfficerINTRODUCTION3Welcome32023 Tax environment4-5GROUP TAX POLICY6Our Tax commitments7Tax risk management and internal governance8Tax aspects in relation to AXA as a multinational company9Tax aspects of the Groups activities10Tax aspects of products offered by the Group11TRANSFER PRICING12Clarifying key concepts13AXA locations worldwide14AXA presence in low-tax countries and EU black/grey lists at year end 202315TOTAL TAX CONTRIBUTION16Total tax contribution by tax category17Total tax contribution by flagship country18IFRS corporate income tax figures -Clarifying key concepts19IFRS corporate income tax figures 2023 Breakdown20Main other taxes by flagship country21COUNTRY-BY-COUNTRY INFORMATION22Country-by-Country Report Clarifying key concepts23Glossary24AXA 2023 Country-by-country information25-283AXA Tax Transparency Report Tax Year 2023I am pleased to present the sixth edition of the Tax Transparency Report for AXA Group.In this report,we provide insight into our tax strategy,highlighting the key principles that guide our approach to tax.We also give an overview of the Total Tax Contribution of the Group as well as outline our Country-by-Country reporting(CbCR).At AXA,we recognize the vital role taxes play in contributing to the societies in which we operate.We firmly believe that paying taxes not only fulfills our legal obligations,but also serves a crucial role in supporting public services,infrastructures and social welfare programs.This report reflects our dedication to fostering trust and sustainable value creation through responsible tax practices.As a multinational operating in many countries,AXA is committed to taking its responsibility to pay its fair share of taxes to the countries where it is does business.The Group is committed to being a responsible taxpayer that works closely and continuously with experts,auditors and tax authorities to consider both the letter and the spirit of the law and to ensure it pays the right amount of taxes in the right place and at the right time.AXAs tax commitment precludes the use of any non-cooperative jurisdictions to avoid taxes on any activities performed elsewhere.In 2023,AXA had a total tax contribution of more than 11 billion euros.This contribution,which goes beyond corporate income tax,is composed of the amounts the Group owed directly on its operations and the amounts it collects on behalf of local tax authorities.In the current challenging landscape of evolving tax regulations and reporting requirements,we are actively monitoring and adapting to changes,particularly with the implementation of the global minimum tax under Pillar 2 due to go into effect in France on January 1st,2024.We acknowledge that tax is a complex evolving area and therefore welcome your thoughts and questions on the content of this report,as we pursue our ambition towards greater tax transparency.ALBAN DE MAILLY NESLEGroup Chief Financial OfficerMember of the Group Management CommitteeWELCOME2023 Group Activity HighlightsDespite the significant increase in overall risks,in 2023 AXA once again demonstrated its strength,dynamism,and the relevance of its purpose:to“Act for human progress by protecting what matters”.2023 also marks the end of a strategic cycle for AXA with the closure of our“Driving Progress 2023”plan and the completion of an intense transformation.Over the past few years,the Group has undertaken a significant refocusing on technical risks,built its global leadership in large corporate risks through the acquisition of XL,and strengthened its positions in high-potential markets.In 2023,AXA also reinforced its presence in Europe upon completing the acquisition of the Spanish activities of Groupe Assurances du Crdit Mutuel and of Laya Healthcare Limited,a leading insurer in the Irish health market.Building on these solid results,we unveiled our new“Unlock the Future”plan in early 2024 setting AXAs strategic priorities up to 2026.INTRODUCTIONCOUNTRY-BY-COUNTRY INFORMATIONTRANSFER PRICINGTOTAL TAX CONTRIBUTIONAXA GROUP TAX POLICY11BNof total tax contribution in 20234AXA Tax Transparency Report Tax Year 2023INTRODUCTIONCOUNTRY-BY-COUNTRY INFORMATIONTRANSFER PRICINGTOTAL TAX CONTRIBUTIONAXA GROUP TAX POLICYFocus on Bermuda Corporate Income Tax EnactmentOn December 27,2023,the Bermuda Corporate Income Tax Act 2023 was enacted.The CITs primary provisions:Go into effect for fiscal years beginning on or after January 1st,2025;Apply to Bermuda-based Multinational Enterprises(MNEs)with an annual revenue of 750 million or more in at least two of the four preceding fiscal years;Base the corporate income tax at 15%,subject to reductions for foreign tax credits;Introduce an economic transition adjustment(ETA)to allow for an increase or decrease in the tax basis of the assets and liabilities(excluding goodwill),held as September 30,2023,to fair value.Provide for an opening tax loss carryforward based on amounts generated after September 30,2023,unless an entity elects to disregard the ETA.If so,the statute provides for the net losses incurred in the five fiscal years preceding the effective date to be carried forward.Tax losses can be carried forward indefinitely.AXA considered disregarding the ETA and therefore booked a 142m deferred tax asset in 2023 accounts based on the net tax losses carryforward from the 2020-2024 period.Starting fiscal year 2025,the AXA XL entities that are tax residents in Bermuda,will be subject to this new 15%corporate income tax.2023 Tax EnvironmentThe European Union introduced or proposed several significant tax measures for corporations that reflect the EUs ongoing commitment to enhancing tax transparency and ensuring fair taxation across countries.These primary measures are:OECD BEPS 2.0 the introduction of a 15%global minimum tax rate:(see details page 5);Business in Europe:Framework for Income Taxation(BEFIT)proposal to introduce a common system to compute the tax base of multinational companies across the EU;Anti-Avoidance Directive(ATAD)amendments that include stricter rules on hybrid mismatches,controlled foreign company(CFC)rules,and interest limitation rules;Debt Equity Bias Reduction Allowance(DEBRA)proposal to address the tax-induced bias favoring debt over equity financing by providing a tax deduction for increases of equity;Directive Facilitation Access to Services of Taxpayers in the European Region(FASTER)project to simplify and harmonize tax procedures across EU member states;Foreign Subsidies Regulation(FSR)entry into force,a new regime dedicated to preventing foreign subsidiaries from distorting competition on the EU market.In France,following its introduction in the 2021 Finance bill and the modification of the scope of the VAT cost sharing exemption(Article 261B of the French tax Code),the first AXA VAT Group was put in place on January 1st,2023.The VAT Grouping is optional and once elected,it is in place for at least a 3-year period.In the rest of the World,the main new tax measures that impacted the AXA Group were the enactment of a corporate income tax in Bermuda(see insert)and the adoption of the Qualified Domestic Minimum Top-Up Tax subsequent to the introduction of the OECD Pillar 2 Minimum Tax in several countries where AXA operates (see details page 5).In 2023,the global tax environment continued to change in response to various initiatives in the European Union,domestic tax reforms in countries where AXA operates,and the implementation of the OECD Pillar 2 initiative(see page 5).Furthermore,the unstable political environment and the increasing requirements of tax administrations around the world gave rise to complex challenges for Multinational companies like AXA.5AXA Tax Transparency Report Tax Year 20232023 Tax Environment OECD Pillar 2 Minimum taxINTRODUCTIONCOUNTRY-BY-COUNTRY INFORMATIONTRANSFER PRICINGTOTAL TAX CONTRIBUTIONAXA GROUP TAX POLICYRegulatory updatesThe OECD Model Rules,published on Dec 20,2021,have to date been completed by administrative guidance in 2022,2023 and 2024.On Dec 16,2022,the EU minimum tax Directive was issued.France adopted the Directive and implemented it on December 21,2023.Theses rules apply to the fiscal years beginning on or after Dec 31,2023.Accordingly,this new regulation is mandatory for AXA SA(the parent company of the AXA Group)starting January 1,2024.The tax return for 2024 must be filed by June 30,2026.Many countries where AXA operates have already enacted a Qualified Domestic Minimum Top-Up Tax(QDMTT).When fully compliant with OECD rules,the domestic QDMTT will trigger some additional local tax instead of the IIR top-up tax at the level of the ultimate parent.In 2023,many countries where AXA operates enacted the OECD Pillar 2 minimum tax into their domestic law.Indeed,members of the European Union had until the end of the year to transpose the EU directive into their domestic law.In addition,countries like the United Kingdom,Switzerland or Hong Kong also passed similar laws for application in 2024 or 2025.It is to be noted that the United States and China currently have no plan to introduce this minimum tax.As to the US this mainly stems from their “GILTI”legislation that provides for a minimum tax on foreign income.The minimum tax under Pillar 2,also known as the“Global Anti-Base Erosion”(GloBE),establishes a coordinated set of rules to ensure that multinational enterprises(MNEs)pay a minimum level of tax on their profits,regardless of where these profits are generated.These rule thus prevent MNEs from shifting profits to low-tax geographies and ensure they pay their fair share of taxes in the jurisdictions where they generated profit.Where do we stand at AXA?Throughout 2023,AXA Group Tax experts,along with other AXA Group accounting,data and IT experts,continued to carefully assess the impact of the minimum tax for the Group and to ensure its readiness.Project updates were regularly shared with the entities and auditors.As required under the IAS12 amendment,AXA disclosed in its 2023 consolidated financial statement that,based on ongoing analysis,Ireland,Hong Kong and Bermuda were the main jurisdictions where the group might have an exposure(see note 1”accounting principles”).As to Bermuda,because of the implementation of Corporate Income tax in 2025,the Bermuda profits that will be realized in 2024 will give rise to a top-up tax in France.For 2024,based on AXA Groups projected results(which will be subject to refinement),the estimated amount disclosed in note 1 was 0.1 billion.The global minimum tax consists of:the Income Inclusion Rule(IIR)top-up tax that imposes a top-up tax on the ultimate parent entity of a low-taxed foreign subsidiary and;the Undertaxed Payment Rules(UTPR),secondary taxing rules that are designed to operate as a backstop to the IIR top-up-tax if the ultimate parent company is located in a jurisdiction where Pillar 2 has yet to be implemented.In France,AXA SA,the ultimate parent company,will be subject to the IIR top-up tax.6AXA Tax Transparency Report Tax Year 2023AXA Group Tax Policy is available here7AXA Tax Transparency Report Tax Year 2023Being a responsible taxpayerINTRODUCTIONAXA GROUP TAX POLICYCOUNTRY-BY-COUNTRY INFORMATIONTRANSFER PRICINGTOTAL TAX CONTRIBUTIONOur commitmentsESG criteria CONTRIBUTE by paying our taxes at the right time and at the right placeOPERATE as a transparent and collaborative partner with tax authorities and statesMANAGE our tax organization to ensure full complianceMONITOR our limited risk appetite through an adequate governance and appropriate processes INCLUDE tax as a key contributor to ESG Group policyTESTIFY to transfer pricing compliance with taxation of profits where activities are performedCOMMITGovernanceEnvironnementalAs an insurer,we are generally neither subject to environmental taxes(like the carbon or plastic tax)nor a beneficiary of green subsidies or incentives.Being immaterial,these constitute no part of the total tax contribution for the Group.SocialWith around 114,000 AXA employees worldwide,the total social charges borne both by AXA employees and AXA as an employer amounted to 2.5bn in 2023.AXA is committed to paying its fair share of tax to contribute to the financing means of the countries where it operates.At AXA,in accordance with the Group Management Committee,we have implemented several Group level processes(Internal Control Framework,Group Tax Policy,Tax Code of Ethics,)to make sure we have the right monitoring on tax topics and to ensure tax risks are appropriately identified and managed.8AXA Tax Transparency Report Tax Year 2023Tax risk management and internal governanceTo ensure effective tax risk management,a number of measures and processes are in place throughout the Group to identify,assess and monitor tax risks such as:Handling tax-related topics by highly qualified in-house tax experts who are provided with ongoing training and access to external advice when neededEnsuring consistent practices on technical matters as well as adherence to guidelines pertaining to tax risks and tax audits.An International Tax Committee and an International Tax conference gather various senior tax executives throughout the different entities of the Group.The last conference held in September 2023.Implementing a uniform and well-established reporting of the uncertain tax positions the local entities regularly provide to the Group Tax DepartmentMonitoring changes in tax laws and their impacts on AXA and the industry Updating the Group Audit Committee of the Board of Directors on the significant tax risks on a regular basis(last update in December 2023)Including internal controls on tax processes in the Groups internal finance control program and operational risk processMaintaining a limited tax risk appetite through efficient controls and external advice,when neededSeeking,when necessary,certainty in advance from tax authorities to confirm an applicable tax treatment based on full disclosure of all relevant facts and circumstancesDefining Group standards for tax compliance,and ensuring their full satisfaction,particularly for cross-border life business,and more globally for compliance with tax regulationsThe Group is additionally actively involved in tax regulation discussions through its membership in various national and international business and insurance associations in the countries where it operates.These memberships allow the Group to ensure an ongoing transparent exchange on tax-related matters with a variety of stakeholders.The Group Tax Department of the AXA Group is part of the central Finance function and is therefore under the responsibility of the Group Chief Financial Officer.It is led by the Group Head of Tax who directly and regularly reports to the Group Chief Financial Officer to keep him abreast of tax-related matters.The Group Tax Department is accountable and responsible for the Groups:tax positions and group-level tax strategytax policies,controls,and instructionsglobal transfer pricing modelThe local entities tax teams are accountable and responsible for tax compliance and the day-to-day tax matters under the Group Tax Departments guidance.AXA Group has a strong corporate tax Governance inspired by the best existing standards(GRI,B-Team Principles)as laid out in the AXA Group Tax Policy.This Policy is validated annually by the Group CEO and published in the Universal Registration Document.We consider tax risk management fundamental to maintaining efficient and effective operations,as well as to ensuring full compliance with tax regulations.Government authorities may offer tax incentives to support business sectors,create employment or foster their economic development.AXA carefully considers these incentives and only claims those that are aligned with our business operations and fit with our investment or business strategy.We refrain from discretionary tax arrangements.In addition,the current AXA Group whistleblowing procedure allows all stakeholders(employees,business partners,etc.)to share their concerns without any delay and/or to report any practice,action,or behaviour that they consider inappropriate,illegal,or unethical(speak-).INTRODUCTIONAXA GROUP TAX POLICYCOUNTRY-BY-COUNTRY INFORMATIONTRANSFER PRICINGTOTAL TAX CONTRIBUTION9AXA Tax Transparency Report Tax Year 2023In the countries where it operates,AXA is both a taxpayer and a tax collector,given that many specific taxes are levied on insurance and reinsurance policies and collected from our customers as part of the insurance and reinsurance revenues while others are remitted to the various state and federal administrations around the world.The tax function is organized within the Group to ensure full compliance with all tax legislation in the countries where AXA operates.In addition to the Group Tax Department based in France,all key operational entities/countries/geographic zones have a tax team in charge of ensuring that tax regulations are well understood and satisfied by the entities.As part of the global internal risk assessment,a specific tax internal control program is implemented.These controls must be reported and documented by each team in scope to ensure full compliance.A Tax Code of Ethics,agreed between the Group Tax Department and local tax teams,highlights the key principles guiding the actions of the various tax teams:to remain up to date with respect to applicable laws and regulations;to comply with tax laws and regulations;to maintain a good relationship with the local tax authorities and,when possible,to adhere to cooperative compliance programs or similar initiatives depending countries and;not to engage in aggressive tax-driven transactions that could compromise the good reputation of the Group.The satisfaction of this Code of Ethics is a prerequisite of the activities performed by all AXA tax teams and gives rise to a formal annual certification by each head of tax,which is provided to the Group tax team.ln addition,a bi-annual tax review process of each key entity or business line is performed by the Group Tax Department in connection with each local team.During these reviews,specific attention is given to tax audits and associated tax risks as well as market positions on tax matters that may impact AXA.These reviews offer a global framework for the tax teams to identify,analyze,control,and report tax risks.Lastly,an International Tax Committee composed of various senior tax executives within AXA tax teams meets every quarter to ensure consistency in approach on some technical topics,as well as agreements on guidelines,when necessary,connected to specific items.Tax aspects in relation to AXA as a multinational companyINTRODUCTIONAXA GROUP TAX POLICYCOUNTRY-BY-COUNTRY INFORMATIONTRANSFER PRICINGTOTAL TAX CONTRIBUTION10AXA Tax Transparency Report Tax Year 2023The Groups activities are subject to strict regulations and rigorous control in each territory in which AXA operates.ln addition to these regulations,AXA has developed a set of detailed internal standards that applies to all Group entities that are managed or controlled by AXA,regardless of the activities undertaken by the entity or its ownership structure.According to these internal standards,Chief Executive Officers must ensure that staff are fully conversant,and comply with applicable laws,mandatory Codes of Conduct,rules and regulations(including applicable tax laws and regulations)relevant to their area of operations.This means that local senior management must appreciate the tax implications of the activities in their entity.The main considerations are:compliance with the taxation of employees in the territory in which they are employed;compliance with the taxation of business undertaken in the territory(including levies and sales taxes);and cross-border tax issues.A specific focus on transfer pricing is made in application of these standards,to ensure that the pricing of our intra-group activities is consistent with the OECD arms length principle as well as with local transfer pricing rules to pay adequate tax on profits where the value is created.ln particular,Chief Financial Officers must ensure that insurance and reinsurance policies entered into represent a true transfer of risk and that their status as insurance or reinsurance contracts could not be subject to challenge.Business between Group companies must be transacted at market prices where a market price exists,or in the absence of market prices,must be supported by formally documented justification for the charge made.Tax aspects of the Groups activitiesINTRODUCTIONAXA GROUP TAX POLICYCOUNTRY-BY-COUNTRY INFORMATIONTRANSFER PRICINGTOTAL TAX CONTRIBUTION11AXA Tax Transparency Report Tax Year 2023AXA products are not designed to allow or encourage tax evasion.Tax aspects of products offered by the GroupThe Group has set up a validation framework to ensure that new products undergo a thorough approval process before they go to market.The local decision to launch a new product must result from a documented approval process that complies with the AXA Groups standards in terms of product features,pricing,asset-liability management and aspects related to legal,compliance,regulatory,accounting and reputation.Moreover,AXA has established strict policies regarding its cross-border activities and knowledge of its customers,in order to ensure that our products and services are not misused for money laundering or tax evasion purposes and are governed by specific rules according to which cross-border Life insurance proposals must be presented to the Group Tax and Compliance Departments for validation.While all Group entities must in any case comply with local regulations,the Group Tax Department can veto a product if this product is not compliant with internal rules.Pursuant to Directive(EU)2018/822(DAC 6),AXA may,as a provider of investments and savings products,have tax reporting obligations with respect to certain cross-border products it designs or implements.Hence,certain investments and savings products with no specific tax driver may be reportable under the above-mentioned Directive.INTRODUCTIONAXA GROUP TAX POLICYCOUNTRY-BY-COUNTRY INFORMATIONTRANSFER PRICINGTOTAL TAX CONTRIBUTIONResource:AXA 2023 Integrated report12AXA Tax Transparency Report Tax Year 202313AXA Tax Transparency Report Tax Year 2023Clarifying key conceptsWhat is transfer pricing?Transfer pricing refers to the terms and conditions of transactions within a multi-national company.It concerns the prices charged for inter-company transactions(i.e.,transfer of goods and services)between associated enterprises established in different countries.Since the prices are set within connected entities belonging to the same group,these may fail to reflect an independent market price.What is the arms-length principle?Under international standards,any transaction undertaken by an entity with another connected entity in the same worldwide group,must be carried out in the same manner as with a third party.This is the“arms length principle”defined by the provisions of article 9 of the OECD model Tax convention.It states that the price of a transaction between connected entities cannot in principle differ from one between third parties and must thus be documented for that purpose.What are the main cross border intercompany transactions in AXA Group?Cross-border flows common to all industries such as:IT,management expenses,loans and guarantees,trademark fees.Insurance-specific business cross-border flows:reinsurance is a mechanism through which insurers can manage insurance risk by shifting or ceding one or more insured risks to internal or external reinsurers in exchange for payment of premiums and commissions.It is an insurers fundamental risk and capital management tool.What is the documentation required for transfer pricing?Following the OECDs recommendations,especially in its BEPS action 13,many countries have adopted the three-tiered transfer pricing documentation requirements that include:The Master file presenting the companys business,its organizational structure,an overview of the companys business processes,its intangibles,and a description of its intragroup financial transactions.The Local file,in compliance with Local Transfer Pricing Regulations,presenting a breakdown of intragroup transactions with foreign jurisdictions.The Country-by-country Reporting presenting aggregated tax jurisdiction-wide information on various KPIs such as current tax indicators(i.e.,tax paid and accrued)and a list of the controlled entities registered in each tax jurisdiction where the Group operates.The CbC report is to be filed by the parent company of a Group to its local Tax Authority which,according to information exchange agreements,is in charge of sharing it with other foreign tax authorities.More details on the CbC Report are available on page 22.AXA Group is committed to complying with the regulations of every tax jurisdiction in which it operates in accordance with Transfer Pricing documentation and notification requirements.INTRODUCTIONAXA GROUP TAX POLICYCOUNTRY-BY-COUNTRY INFORMATIONTRANSFER PRICINGTOTAL TAX CONTRIBUTION14AXA Tax Transparency Report Tax Year 202310 flagship countries representing nearly 84%of AXA Group third-party revenues in 2023France,Belgium,Germany,Hong Kong,Italy,Japan,Spain,Switzerland,the United Kingdom and the United Statesmore than 50 countrieswhere AXA Group operatesExisting AXA locationsNot present in this locationAXA locations worldwideFlagship countriesAXA has no licensed insurance or operating business activities in the countries specifically identified as non-cooperative jurisdictions under French and European rules(see below),except in Panama and Russia(see page 15).Presence in these jurisdictions is purely driven by operational purposes.More globally,AXA does not use non-cooperative jurisdictions to avoid taxes on operational activities performed elsewhere.Any presence in countries in which AXA operates with tax rates lower than France are driven by business operations.INTRODUCTIONAXA GROUP TAX POLICYCOUNTRY-BY-COUNTRY INFORMATIONTRANSFER PRICINGTOTAL TAX CONTRIBUTIONAny presence in countries in which AXA operates with tax rates lower than France are driven by business operations.Situation as of February 2024EU blacklistThe jurisdictions that have either not engaged in a constructive dialogue with the EU on tax governance or failed to deliver on their commitments to implement reforms to comply with the EUs criteria on time.Anguilla,Antigua and Barbuda,Fiji,Guam,Turks and Caicos Islands,US Virgin Islands,Palau,Russia,Samoa,American Samoa,Seychelles,Trinidad and Tobago,Vanuatu.EU Grey listThe jurisdictions with pending commitments and deadline extensions granted to enable them to pass the necessary reforms to deliver on their commitments.Armenia,Belize,Costa Rica,Curaao,Eswatini,Malaysia,Seychelles,Turkey,Vietnam,British Virgin IslandsFrench blacklistThe jurisdictions qualified as non cooperative based on 3 criteria:the absence of exchange of tax information,facilitating the creation of offshore structures or arrangements,non-compliance with other EU criteria.Anguilla,Antigua and Barbuda,Bahamas,Belize,Fiji,Guam,Turks and Caicos Islands,US Virgin Islands,Palau,Russia,Samoa,American Samoa,Seychelles,Trinidad and Tobago,Vanuatu15AXA Tax Transparency Report Tax Year 2023(1)See definition in previous page.RUSSIA(EU and French blacklists)TURKEY(EU Grey List)MALAYSIA(EU Grey List)BERMUDA(low-tax country)According to the French and European Union laws at the end of 2023,Bermuda is not considered a non-cooperative jurisdiction.It is a low-tax jurisdiction,a center of expertise,and one of the key locations of the worldwide reinsurance market.Bermuda has enacted a 15%corporate income tax taking effect in 2025.Since acquiring XL Group in September 2018,AXA has a material presence and substance in Bermuda with more than 150 AXA XL employees based there.Our presence is mainly driven by Bermudas local capital management regulation that enables flexibility on the required capital for(re)insurance activities.AXA supports the Economic Substance legislation enacted in this country.BARBADOS(low-tax country)PANAMA(EU and French blacklists)Turkey is maintained on the October 2023 EU Grey list as the country has exchanged no financial account information with the EU Member States.In early 2023,AXA acquired Groupamas life and non-life insurance activities in Turkey that have been merged with local AXA entities.At the end of 2023,AXA holds several operating entities in Turkey providing general insurance services(P&C),life insurance(L&S),credit lifestyle protection and assistance.Malaysia has remained on the October 2023 EU Grey list because of its harmful foreign-source income exemption(FSIE)regime that it has pledged to amend or abolish.In Malaysia,AXA holds several entities providing reinsurance,assistance,and IT services.Russia was included in the October 2023 Blacklist because it offers a preferential tax regime to international holding companies re-domiciling from outside of Russia into one of its special administrative districts,a practice,which is considered harmful.In Russia,AXA holds a minority financial investment in Reso Garantia,a Russian insurance company.AXA has no operational or management control over this company.Panama has remained on the October 2023 EU Blacklist due to its lack of commitment to repealing or amending its harmful foreign-source income exemption(FSIE)regime.AXA still holds two non-consolidated operating companies in Panama with a total of around 40 employees at the end of 2023.One provides assistance services to local customers and the other delivers health claims services.Barbados no longer figures on the EU Grey list according to the October 2022 update on non-cooperative jurisdictions.At the end of 2023,AXA holds a Barbados-based reinsurance entity,inherited from the 2018 acquisition of XL Group.This entity is in the process of liquidation,pending regulator approval.AXAs presence in low-tax countries and EU black/grey lists(1)at year end 2023INTRODUCTIONAXA GROUP TAX POLICYCOUNTRY-BY-COUNTRY INFORMATIONTRANSFER PRICINGTOTAL TAX CONTRIBUTION16AXA Tax Transparency Report Tax Year 202317AXA Tax Transparency Report Tax Year 2023Total tax contribution by tax categories94 MillionCustomers worldwide114 ThousandEmployees(Open-ended and fixed-term contracts)8.6 BillionProfit before tax103 BillionGross written premium and other revenuesINTRODUCTIONAXA GROUP TAX POLICYCOUNTRY-BY-COUNTRY INFORMATIONTRANSFER PRICINGTOTAL TAX CONTRIBUTION2023 tax contributions worldwide11.3 BnCorporate income tax paidOther taxes(i.e.Stamp duties,property taxes,financial transactiontaxes)Social charges(Borne both by employees and by employers)Insurance premium tax collectedVAT/GST paid5.42.01.12.50.318AXA Tax Transparency Report Tax Year 2023France:4.1 BnUnited Kingdom:1.3 BnGermany:1.4 BnSpain:0.5 BnBelgium:1.0 BnJapan:0.2 BnSwitzerland:0.7 BnItaly:0.7 BnAXA Group total tax contribution in its 10 flagship countries amounted to 10.2Bn in 2023These figures include corporate income tax paid,the insurance premium tax collected,social charges borne both by employees and employers,VAT/GST paid and other taxes(i.e.,property taxes,excise taxes,financial transaction taxes)Hong Kong:0.04 BnTotal tax contribution by flagship countryUnited States:0.4 BnINTRODUCTIONAXA GROUP TAX POLICYCOUNTRY-BY-COUNTRY INFORMATIONTRANSFER PRICINGTOTAL TAX CONTRIBUTION19AXA Tax Transparency Report Tax Year 2023IFRS corporate income tax figures-Clarifying key concepts What is income tax accrued?In IFRS,according to IAS 12,income tax accrued encompasses current and deferred income tax.It also integrates the repercussions of tax disputes and any penalties and interest for late payments arising from such disputes.Current income tax refers to the amount of income tax payable or receivable for a given periods taxable profit or loss.Its assessment is based on the countrys applicable local tax legislation for that period.Deferred income tax is recognized when the reporting period for income or expenses differs from financial statements and the tax return.What is the effective tax rate?It is the ratio of corporate income tax accrued(current and deferred tax)compared to the IFRS profit(or loss)before tax.Every year,the theoretical tax rate and the effective tax rates reconciliation figures are provided in the Annual Reports Tax Note(Note 19 of the Consolidated Financial Statements).Why do the tax basis and the accounting basis often differ?It is because they are built on different principles,meaning that,if the difference is temporary,the recognition of a tax and its accounting occur in different periods.In this case,a deferred income tax asset or liability is booked in the IFRS consolidated accounts.Deferred tax hence allows to reconcile the tax and accounting basis in the same financial period and prevents volatility in the financial statements.Why does the current income tax accrued differ from the current income tax paid?Current income tax accrued corresponds to the tax amount impacting an accounting periods results.Current income tax paid represents all the(in or out)cash flows between the company and the Tax Administration in an accounting period.These two amounts are often disconnected as:in most countries,entities pay instalments based on the prior years taxable results and a balance payment occurs the year after.after a tax audit or a claim,the Tax Administration can either refund or require an additional payment on the prior years accounting periods.Why does the effective tax rate differ from the corporate tax rate?The effective tax rate differs from the corporate tax rate any time an IFRS income/expense is either non-taxable or non-deductible according to the local tax regulation(called a permanent difference).All jurisdictions have their own rules triggering specific permanent differences.In an insurance company,financial transactions represent a significant part of the results and therefore,the main permanent adjustments come from:dividends that are partially or totally non-taxable non-taxable capital gains/non-deductible capital lossesINTRODUCTIONAXA GROUP TAX POLICYCOUNTRY-BY-COUNTRY INFORMATIONTRANSFER PRICINGTOTAL TAX CONTRIBUTION20AXA Tax Transparency Report Tax Year 2023The table below provides the breakdown of our significant countries-91%of the total tax charge and of the Groups effective tax rate as reported in the Group IFRS Financial Statements(Universal Registration Document 2023-note 17.1.2).Sign convention:Income( )/Expense(-)IFRS Corporate Income Tax Figures 2023 BreakdownThe differences between the applicable corporate income tax rate and the effective tax rate(ETR)mostly stem from incomes or expenses that are either treated as non-taxable or non-deductible in the countries tax regulations.The elements below explain why the ETR in the following jurisdictions is more than 5%lower than the standard corporate tax rate:France:the low effective tax rate is mainly due to significant non-taxable financial incomes.The net positive amount of corporate income tax paid is connected to the 2023 refund of the 2022 tax years instalments,following the closure with a loss-making position of the AXA SA tax grouping in 2022.Bermuda:in the context of the upcoming 2025 implementation of a corporate income tax starting in Bermuda,a deferred tax asset of 142M has been booked in 2023 accounts in accordance with the law,triggering a negative effective tax rate.The 2023 profits do not generate any taxation:the corporate income tax paid corresponds to withholding tax.Germany:the low effective tax rate is mainly due to a correction on prior year tax provisions and adjustments following a tax audit settlement.Hong Kong:the taxable profits of a life insurance business are deemed to be 5%of the net premiums.Rest of the world:the effective tax rate is due to the country mix with both profitable and loss-making countries,with various standard corporate income tax rates.INTRODUCTIONAXA GROUP TAX POLICYCOUNTRY-BY-COUNTRY INFORMATIONTRANSFER PRICINGTOTAL TAX CONTRIBUTIONMProfit before taxIncome tax accrued(Current and deferred)Effective tax rateCorporate income tax rateCorporate income tax paidFrance1 421(232)16,4%,8Australia121(37)30,80,0%(13)Belgium578(125)21,6%,0%(91)Bermuda574140-24,3%0,0%(4)Germany877(118)13,52,0%(182)Hong Kong629(25)4,0,5%(19)Ireland257(78)30,2,5%(31)Italy298(106)35,60,8%(33)Japan811(222)27,4(,0%(10)Mexico133(37)27,60,0%(99)Spain212(76)35,7%,0%(44)Switzerland1 028(150)14,6,0%(169)Turkey117(49)41,80,0%(30)United Kingdom217(59)27,0#,5%(55)United States858(200)23,3!,0%(216)Rest of the world476(139)29,2%N/A(79)TOTAL8 609(1 513)17,6%N/A(1 065)21AXA Tax Transparency Report Tax Year 2023VVVInsurance premium taxes collectedAccrued Social Chargesborne by AXA and its employeesValue Added Taxes(VAT)and Gross Sales Taxes(GST)paid Figures reported in millionThe Insurance Premium Tax(IPT)is an indirect tax levied in some countries on gross written premium issued by insurers and allocable to the country where the risk is located.The IPT is usually charged to the policyholder and remitted to the local tax administration.The applicable IPT rate depends on the type of insurance contract,the risk covered and the country.In most countries where AXA Group operates,insurance products are VAT and GST exempt(main exception is Mexico for insurance business).When the Group cannot fully recover its VAT and GST,the non recoverable VAT/GST paid is a cost that fully impacts the P&L of the Group.These social contributions are paid to the government where entity employees reside to give them access to future social benefits such as unemployment insurance,pensions,medical services.Contributions are levied on both AXA employees(868m)and AXA as an employer(1.625m).Main other taxes by flagship countryINTRODUCTIONAXA GROUP TAX POLICYCOUNTRY-BY-COUNTRY INFORMATIONTRANSFER PRICINGTOTAL TAX CONTRIBUTIONFrance2 181 Belgium507 Germany896 Hong KongN/A Italy363 Japan16 Spain247 Switzerland142 United Kingdom755 United States104 Rest of the world214 TOTAL5 425 France1 237 Belgium182 Germany200 Hong Kong19 Italy32 Japan99 Spain65 Switzerland231 United Kingdom181 United States56 Rest of the world191 TOTAL2 493 France574 Belgium72 Germany116 Hong KongN/A Italy230 Japan83 Spain127 Switzerland127 United Kingdom261 United States-Rest of the world425 TOTAL2 014 22AXA Tax Transparency Report Tax Year 202323AXA Tax Transparency Report Tax Year 2023Country-by-Country Report-Clarifying key conceptsWhat is the Country-by-Country Report?In 2013,the OECD and G20 adopted the Base Erosion and Profit Shifting(BEPS)action plan to counter tax avoidance and profit shifting by multinational corporate groups.This plan consists of 15 action points and sets out to prevent tax-aggressive structures;Action 13 is the implementation of a Country-by-Country report.In May 2016,the European Union modified its directive DAC 4 so as to implement the OECD BEPS Action 13 CbCR requirement in the EU.In December 2016,the CbCR requirement is transposed into French tax law through the adoption of the 2016 Finance bill.Large multinationals(“MNE”)are to file a CbC report breaking down the financial and tax indicators of their economic activities in each tax jurisdiction in which the MNE group does business to the tax authority of the country where the MNE is headquartered.This only applies to MNE groups with annual consolidated group revenues of 750 million or more in the preceding fiscal year.The CbC Report provides three tables detailing the groups global activities and financial characteristics:Table 1 sets out the global allocation by tax jurisdiction of an MNE groups third-party revenues,related party revenues,profit before tax,current tax paid,current tax accrued,stated capital,accumulated earnings,number of employees,and tangible assets.Table 2 lists all constituent entities of the MNE group by tax jurisdiction,together with their main business activities.Table 3 allows for the provision of additional information by the MNE group in the form of free text to facilitate the understanding of the information contained in Tables 1 and 2.Is AXA preparing a Country-by-Country report?As a Multinational Group with a consolidated revenues of more than 750 million,AXA has been required to prepare a Country-by-Country report and to submit it to the French Tax Authorities since 2017(based on 2016 data).Accordingly,AXA prepared and filed its seventh CbCR in December 2023.Is the Country-by-Country report a public document?In compliance with the OECD guidelines and the French tax code(article 223 quinquies C),the Country-by-Country report submitted to the French tax authorities is not a public document.Nonetheless,the EU public CbCR Directive adopted in November 2021(Directive n2021/2101)will be changing this ruling and making CbCRs data public as of 2025.It will require disclosing the data on EU Member States and on the countries figuring on the so-called“grey-list”or“blacklist”of non cooperative jurisdictions(NCSTs)for two consecutive years.The CbCR data relating to third countries and non-NCSTs will have to be published on an aggregated basis.Is AXA making its Country-by-Country Report public?For several years,and particularly since the publication of its first tax transparency report in 2019,AXA has committed to greater tax transparency.To this end,AXA has been publishing its CbCR data on a voluntary basis since 2021,two years ahead of the EU Directives entry into force.AXA is continuing to go a step further by taking the initiative to publish some of its flagship countries CbCR data in the present 2023 report.INTRODUCTIONAXA GROUP TAX POLICYTRANSFER PRICINGTOTAL TAX CONTRIBUTIONCOUNTRY-BY-COUNTRY INFORMATION24AXA Tax Transparency Report Tax Year 2023GlossaryStated CapitalStated capital of all Constituent Entities resident for tax purposes in a relevant tax jurisdiction.The stated capital of Constituent Entities is aggregated so the stated capital invested through a sequence of companies can be counted more than once.Revenues As disclosed in the consolidated statement of profit or loss in the 2023 Universal Registration document(note 6.2 page 294),the 87.152m revenues include the 83.627m revenues of all activities and the 3.525m net financial result.Third-party revenues:generated from transactions with independent parties fully reconcile with the published financial statements.Related party revenues:generated from transactions with associated parties.Total Revenues:sum of third-party revenues and related party revenuesProfit(Loss)before tax In line with the OECD guidelines for the Country-by-country reporting,this is the IFRS profit(loss)before tax after elimination of internal dividends and before other consolidation eliminations(triggering an 890m difference with the 2023 IFRS profit before tax in the financial statements-see page 20-where consolidation eliminations are considered).As,according to local tax legislation,the IFRS are often not the accounting standards used to compute the corporate income tax,the IFRS profit can significantly differ from the taxable income driving corporate income tax.Income tax paid(on a cash basis)This is the amount of the corporate income tax actually paid during the fiscal reporting year.This includes installments for the forecasted taxable profit of the year,the previous years current tax balance and payments for the previous years reassessments or refunds.It also includes withholding tax.Income tax accrued(current)Current tax accrued only reflects operations in the current year,irrespective of whether or not the tax has been paid.The basis of the current tax is the taxable result,that usually differs from the IFRS.It does not include deferred taxes or provisions for uncertain tax liabilities.Accumulated earningsAccumulated earnings is the sum of a companys profits,after dividend payments,and since the companys inception.In the event of accumulated losses,the amount can be negative.The accumulated earnings of Constituent Entities are aggregated so the accumulated earnings invested through a sequence of companies can be counted more than once.EmployeesIt is the number of employees on a full-time equivalent(FTE)basis of all the Constituent Entities residing for tax purposes in the relevant tax jurisdiction.The number of employees on page 17 is based on the legal number at the closing and includes entities consolidated under the equity method which are left out of the CbCR.Tangible AssetsIt is the book value of the tangible assets as per the IFRS financial statements.It does not include cash or cash equivalents,intangible assets or financial assets.In AXA,it mainly represents own-used real estate and equipment.INTRODUCTIONAXA GROUP TAX POLICYTRANSFER PRICINGTOTAL TAX CONTRIBUTIONCOUNTRY-BY-COUNTRY INFORMATION25AXA Tax Transparency Report Tax Year 2023AXA 2023 Country-by-country informationFigures reported in thousandsRevenues Main ActivitiesThird-Party Revenues Related-Party Revenues Total Revenues Profit Before Tax Income Tax Paid(cash basis)Income Tax Accrued(current)Stated Capital(1)Accumulated Earnings Number of Employees Tangible Assets CommentsMember States of the European UnionFrance P&C/L&S/AM/ASS/REINS/OTH23 734 3483 472 97927 207 327843 03711 433(60 307)17 798 68028 575 12920 791314 094The taxable profit is lower than the IFRS profit due to timing differences adjustments triggering deferred taxes in IFRS.The net positive amount of corporate income tax paid is triggered by the refund of advance 2022 tax payments in which the French tax group was in a loss-making position.AustriaP&C/OTH381 50916 311397 820(20 088)(1 632)(894)-10 360108269The loss before tax in IFRS is made up of a consolidation of profit-making and loss-making entities.Such a consolidation for tax purposes is impossible in Austria,however.Belgium P&C/L&S/ASS/OTH3 541 163146 8543 688 018578 173(90 842)(125 749)1 420 3432 935 1023 416156 799Czech RepublicASS75 504(5 569)69 9341 755(3 369)(405)812193331 289DenmarkP&C/L&S 8 713-8 7134 201(1 771)169-5-FinlandP&C/L&S70 639-70 639(893)(6 913)(422)-347-The corporate income tax paid mainly represents a correction on the prior years.Germany P&C/L&S/AM/ASS/OTH10 531 626473 78511 005 410898 415(182 387)52 7213 715 3359 266 4178 800268 872The positive amount of current tax accrued is triggered by a correction on the prior years tax provision.GreeceP&C/L&S/ASS14 167-14 167(404)1 562960-12The loss before tax in IFRS is made up of a consolidation of profit-making and loss-making entities.Such a consolidation for tax purposes is impossible in Greece,however.The net positive amount of corporate income tax paid is triggered by a refund following a tax audit.(1)No Stated Capital when AXA is only operating through branches in the country Flagship CountriesACTIVITIES P&C:General Insurance L&S:Life Insurance REINS:Reinsurance AM:Asset Management ASS:Assistance OTH:Others(administrative,holding,investment funds,)INTRODUCTIONAXA GROUP TAX POLICYTRANSFER PRICINGTOTAL TAX CONTRIBUTIONCOUNTRY-BY-COUNTRY INFORMATION26AXA Tax Transparency Report Tax Year 2023(1)No Stated Capital when AXA is only operating through branches in the country Flagship CountriesACTIVITIES P&C:General Insurance L&S:Life Insurance REINS:Reinsurance AM:Asset Management ASS:Assistance OTH:Others(administrative,holding,investment funds,)Revenues Main ActivitiesThird-Party Revenues Related-Party Revenues Total Revenues Profit Before Tax Income Tax Paid(cash basis)Income Tax Accrued(current)Stated Capital(1)Accumulated Earnings Number of Employees Tangible Assets CommentsMember States of the European UnionIrelandP&C/L&S/AM/ASS/REIN1 871 94848 9091 920 857257 438(30 898)(23 625)2 504 2273 430 2441 76726 859Italy P&C/L&S/AM/ASS3 332 18997 0923 429 280270 915(33 318)(31 552)1 416 6101 645 4502 28940 968The low current tax accrued and income tax paid relates to the use of the tax groups prior year losses.LuxembourgP&C/L&S/AM390 306(8 901)381 405(51 666)(14 065)(12 857)207 830213 25132519 255Under IFRS,the loss before tax is made of a consolidation of profit-making and loss-making entities.Such a consolidation is impossible for tax purposes in AXA XL entities in Luxembourg because of the presence of a non-EUentity in the holding chain.NetherlandsP&C/AM337 42354 837392 260(221 585)(5 765)(12 611)38(923 871)782 238The profit before tax includes a significant non-deductible provision,leading to a profitable taxable result in the Netherlands.PolandP&C/L&S/ASS154 12910 118164 24811 234(2 672)(2 039)460(967)7746 168PortugalP&C/L&S/ASS94 06067594 7351 514(885)(441)1501 0604622 233Spain P&C/L&S/ASS/OTH3 218 82738 8633 257 690204 791(44 070)(67 140)725 9953 406 3883 88725 335SwedenP&C/L&S266 8493 893270 74223 801(1 098)(5)92 147601 138INTRODUCTIONAXA GROUP TAX POLICYTRANSFER PRICINGTOTAL TAX CONTRIBUTIONCOUNTRY-BY-COUNTRY INFORMATIONAXA 2023 Country-by-country informationFigures reported in thousands27AXA Tax Transparency Report Tax Year 2023Revenues Main ActivitiesThird-Party Revenues Related-Party Revenues Total Revenues Profit Before Tax Income Tax Paid(cash basis)Income Tax Accrued(current)Stated Capital(1)Accumulated Earnings Number of Employees Tangible Assets CommentsOther flagship and significant countries(other than EU Member States)AustraliaP&C/AM/OTH519 9879 602529 589121 189(12 984)(34 686)234 003(159 900)21710 261Hong Kong P&C/L&S/AM2 503 39044 7782 548 168626 408(18 654)(27 151)1 221 9232 817 4301 73158 016In Hong Kong,life insurance companies are taxed on a net premium basis.Japan P&C/L&S/OTH2 605 35866 7412 672 100800 760(10 380)(195 888)14 111 5391 706 1783 94635 677The net positive amount of corporate income tax paid is triggered by the refund of advance tax payments for the 2022 tax year.MexicoP&C/L&S/OTH2 869 874201 2473 071 120132 714(99 180)(35 739)495 852131 8344 82024 757Switzerland P&C/L&S/REINS7 182 715231 3767 414 0911 028 070(169 426)(177 919)603 5208 997 2954 764415 370The profit before tax in IFRS is made up of a consolidation of profit-making and loss-making entities.Such a consolidation is impossible in Switzerland,however.United Kingdom P&C/REINS/AM/ASS9 258 507347 8449 606 352217 322(55 418)1 2552 307 4535 131 04211 288319 992The current income tax accrued is low due to the utilization of prior year losses.United States P&C/AM/ASS7 455 7294 028 19411 483 923857 690(215 567)(193 432)2 451 995(639 577)2 603101 589(1)No Stated Capital when AXA is only operating through branches in the country Flagship CountriesACTIVITIES P&C:General Insurance L&S:Life Insurance REINS:Reinsurance AM:Asset Management ASS:Assistance OTH:Others(administrative,holding,investment funds,)INTRODUCTIONAXA GROUP TAX POLICYTRANSFER PRICINGTOTAL TAX CONTRIBUTIONCOUNTRY-BY-COUNTRY INFORMATIONAXA 2023 Country-by-country informationFigures reported in thousands28AXA Tax Transparency Report Tax Year 2023(3)Although Barbados and Bermuda are not included in the EU Grey/Black list of non-cooperative jurisdictions,they are shown in a dedicated line as they are low-tax country(2)EU grey and black list as of December 31,2023.See detail on the list on page 14.Revenues Main ActivitiesThird-Party Revenues Related-Party Revenues Total Revenues Profit Before Tax Income Tax Paid(cash basis)Income Tax Accrued(current)Stated Capital(1)Accumulated Earnings Number of Employees Tangible Assets CommentsCountries in the EU Grey/Black list of non-cooperative jurisdictions(2)MalaysiaP&C/ASS/REIN 29 60452730 131(1 469)-(315)240(1 058)170-TurkeyP&C/L&S/ASS937 29225 451962 742117 435(30 145)(31 608)253 132116 9301 03945 654 Other countriesBarbados(3)OTH1-1(315)-1 132259-The only entity present in Barbados is in the process of liquidation.Bermuda(3)REINS/OTH1 325 4142 233 5163 558 929592 161(4 127)(4 922)92 1842 693 06215961 844Corporate income tax paid and accrued correspond to withholding taxes.Rest of the world4 440 49783 9084 524 405426 650(42 171)(78 666)2 369 108178 47322 448156 180Main countries contributing are Australia,Brazil,Canada,China,Morocco and South Korea.TOTAL87 151 76711 623 02798 774 7947 719 255(1 064 741)(1 063 268)51 931 84069 533 24396 2772 094 865ACTIVITIES P&C:General Insurance L&S:Life Insurance REINS:Reinsurance AM:Asset Management ASS:Assistance OTH:Others(administrative,holding,investment funds,)INTRODUCTIONAXA GROUP TAX POLICYTRANSFER PRICINGTOTAL TAX CONTRIBUTIONCOUNTRY-BY-COUNTRY INFORMATIONAXA 2023 Country-by-country informationFigures reported in thousands29AXA Tax Transparency Report Tax Year 2023Socit Anonyme(a public company under French law)-Share capital:5,198,732,365.74-Registered office:25,avenue Matignon 75008 Paris France-Paris Trade and Company Register 572 093 920AXA SA,the Groups holding company,is a French corporation organized in accordance with the laws of France.The AXA Group Organization chart is available on our website hereThe list of the main consolidated subsidiaries of AXA Group is available in our Annual Report(Note 2 Scope of consolidation,Consolidated financial Statements).DISCLAIMERThis report has not been audited and signed off by groups external auditors.The total tax contributions are only disclosed for our flagship countries(France,Belgium,Germany,Hong Kong,Italy,Japan,Spain,Switzerland,United Kingdom and United States)and are based on the individual reporting of the most significant subsidiaries.Tax Transparency Report-Tax Year 2023Head of Publication:AXA Group Tax DepartmentWe warmly invite all our stakeholders to provide feedback and comments on our Tax Transparency Report:
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Our progress towards net zero#PoweringProgressShell plcEnergy Transition Progress Report 2022ContentsDesign and production:Friend Implementation:nexxar Print:Toppan MerrillIntroduction02Chairs message04Chief Executive Officers introduction06The path to net zero07Our progress towards net zero08Carbon performance at a glanceOur performance10Absolute emissions10Absolute emissions progress11Net carbon intensity13Reducing carbon intensityDecarbonising our portfolio16Transforming the energy system17Electricity18Hydrogen19Biofuels20Conventional fuels21In focus:Carbon capture and storage21In focus:Carbon credits22Energy transition in actionFinancial framework24Investments and returns25Investing in net zeroPolicies and governance27Climate policy engagement27Climate governance28A just transition28Climate standards and benchmarksLitigation and activism31Climate litigation and activismIntroductionand summaryWelcome to Shells Energy TransitionProgress Report.This report aims toupdate shareholders and wider society onhow Shell has progressed in 2022against the energy transition strategy weannounced in 2021.02Chairs message04Chief Executive Officers introduction06The path to net zero07Our progress towards net zero08Carbon performance at a glanceIntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 01Shell Energy Transition Progress Report 2022Chairs messageSir AndrewMackenzieChairOur second Energy Transition Progress Report comes as the Russian war in Ukraine continues to have a devastating effect on the lives of many.The conflict has also highlighted the need for a global supply of secure and affordable energy.Amid this period of heightened uncertainty,wehave worked hard to keep energy flowing to households and businesses around the world.In 2022,I witnessed first-hand how our staff diverted energy supplies to where they were most needed.In total,we delivered 194 cargoes ofliquefied natural gas to Europe almost five times our usual average.This work helped to avert the threat of blackouts and to build up energysupplies ahead of next winter.Against this backdrop,we made good progress in putting our energy transition strategy into action.As we delivered the oil and gas the worldneeds today,we reduced carbon emissions from our operations by 30%by the end of 2022,compared with 2016 on a net basis.This is morethan halfway towards our target of a 50%reduction by 2030.Global energy-related carbon emissions increased by around 4%over the sameperiod.AWe continued to work towards becoming a net-zero emissions energy business by 2050 by making significant investments in solar and windpower,biofuels and hydrogen.For example,we made our biggest acquisition in the energy transition yet with the purchase of Denmarks NatureEnergy for around$2 billion.This acquisition makes us Europes largest producer of renewable natural gas,which is made from agricultural,industrial and household waste.Renewable natural gas can be used by customers in sectors such as commercial road transport and shipping.This is part of the work we areundertaking,sector by sector,to identify the low-and zero-carbon products that our customers need to reduce their emissions.We continued to build infrastructure to help our customers switch to low-and zero-carbon energy.In 2022,for example,we increased thenumber of electric vehicle chargers we owned or operated by 62%to around 139,000,compared with the previous year.The development of new technologies is vital to decarbonising our own operations,as well as reducing the emissions for our customers.In 2022,we launched the Energy Transition Campus Amsterdam in the Netherlands,which creates an opportunity for Shell and other companies toresearch new technologies for the energy transition.Engaging with shareholdersThe continued support of our shareholders is critical to Shells success as a company.In 2021,shareholders supported our energy transitionstrategy with 89%of the votes.In contrast,a resolution by shareholder group Follow This calling for a different energy transition strategyreceived 30%of the votes.Shareholders will get the opportunity to vote again on our strategy in 2024.In 2022,80%of our shareholders voted in support of the progress we had made in 2021 in implementing our energy transition strategy.Alongwith other Board members,I met many of our largest investors following that vote,including during investor engagements in September.I amgrateful for their time and feedback,and look forward to our next engagements in April 2023.The publication of annual progress reports,along with the advisory votes,have resulted in a more informed dialogue with our institutionalinvestors.We heard,for example,that some large investors did not follow the Boards recommendation to vote in support of Shells progress in2022,because they mainly focused on Shells energy transition strategy overall,and not on our progress.Some shareholders also indicated thatsocietal pressure,potential media coverage,and expectations from investors in their funds were reasons for not following the Boardsrecommendation.Other investors told us they would like Shell to introduce medium-term targets to reduce absolute Scope 3 emissions produced by customerswhen they use our products.The Board has considered setting a Scope 3 absolute emissions target but has found it would be against thefinancial interests of our shareholders and would not help to mitigate global warming.IntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 02Shell Energy Transition Progress Report 2022This year,we are again asking shareholders to vote at our Annual General Meeting on the progress we have made in 2022 as we implement ourenergy transition strategy.As in previous years,this vote on our progress measured against our targets and plans is purely advisory,and notbinding for our shareholders.The legal responsibility for approving or objecting to Shells strategy lies with the Board and Executive Committee.We believe the progress we have made in line with our energy transition strategy has been to the benefit of our customers,our shareholders andwider society.The Board recommends that you vote in favour of Resolution 25 in support of the energy transition progress that Shell made in2022,as described in this report and in our Annual Report and Accounts 2022.A According to our analysis and data from the International Energy Agency.IntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 03Shell Energy Transition Progress Report 2022Chief Executive Officers introductionWael SawanChief ExecutiveOfficerThe Russian invasion of Ukraine has had significant effects on the global energy system,with many countries needing to replace the supplies ofnatural gas that previously came from Russia.Governments acted swiftly.The European Unions REPowerEU plan and the Inflation Reduction Act in the USA gave strong support to renewableenergy.In Germany,two floating storage and regasification terminals were up and running by the end of the year,allowing the country toimport more of the liquefied natural gas(LNG)it needs.But the energy system still faces huge challenges as high energy prices continue to contribute to a cost-of-living crisis for many people.Thesechallenges have highlighted the need for a balanced energy transition:one in which the world achieves net-zero emissions,while still providing asecure and affordable supply of energy.Supplying vital energyIn this report,we show the progress we have made towards becoming a net-zero emissions energy business by 2050,as we continue to supplythe vital energy the world needs during a time of great volatility.I am especially proud of the progress we have made in reducing carbon emissions from our operations,with a 30%reduction by the end of2022,compared with 2016 on a net basis.That puts us more than halfway towards our target to reduce them by 50%by 2030.We also continued to change the energy mix of our portfolio.By the end of 2022,the net carbon intensity of the energy products sold by Shellhad fallen by 3.8%,compared with 2016.Our analysis,using data from the International Energy Agency,shows the net carbon intensity of theglobal energy system fell by around 2%over that time A.Beyond our immediate performance against our targets,we have taken other important steps to advance our strategy.In LNG,for example,weexpanded what is already a world-leading business.We expect that LNG will play a key role in a balanced energy transition.It produces fewergreenhouse gas emissions than coal when used to generate electricity,and fewer emissions than petrol or diesel when used as a fuel fortransport.In 2022,we joined two exciting projects in Qatar,including what will be the largest LNG project in the world.These projects will use carboncapture and storage,helping to reduce emissions.Investing in low-carbon projectsAt the same time,we made significant moves to increase our supply of low-and zero-carbon energy,in line with our strategy.In 2022,weinvested$1.6 billion in Indian renewable power developer Sprng Energy.We also announced the acquisition of Denmarks Nature Energy,whichproduces renewable natural gas from agricultural,industrial and household waste,for around$2 billion.Our Powering Progress strategy is designed to transform Shell into a net-zero emissions energy business,while generating strong returns for ourshareholders.We will use the strength of our brand,customer relationships and balance sheet to add value to these acquisitions.With Nature Energy,for example,we expect to make strong returns from our investment because we already have customers for biofuels incommercial road transport and shipping,and the trading expertise to connect opportunities in supply and demand.Similarly,the strength of our integrated portfolio gives us confidence in our investment in Holland Hydrogen 1 in the Netherlands,which will beEuropes largest renewable hydrogen plant.The power for the electrolyser will come from an offshore wind farm that is partly owned by Shell.The renewable hydrogen will be used at the Shell Energy and Chemicals Park Rotterdam to help decarbonise the production of products likepetrol,diesel and aviation fuel.Renewable hydrogen can also be used for commercial road transport,a sector where we already have a leadingposition in Europe.IntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 04Shell Energy Transition Progress Report 2022Building on our strengthsIn 2022,we invested$8.2 billion in low-carbon energy and non-energy products,around a third of our total cash capital expenditure.Of that,we invested$4.3 billion in low-carbon energy solutions,including biofuels,hydrogen,charging for electric vehicles and renewable powergeneration.The remaining$3.9 billion was spent on non-energy products such as chemicals,lubricants and convenience retail,which do notproduce emissions when they are used by our customers.As we invest in the energy transition,we will continue to build on our competitive strengths.We will earn the trust of investors and the right togrow these emerging businesses by demonstrating that we can deliver strong returns.Shareholder supportIn 2021,89%of shareholders at our Annual General Meeting voted in favour of Shells energy transition strategy,which centres on our target tobecome a net-zero emissions energy business by 2050.As you will read in this report,we have made good progress in the first two years of thatstrategy by reducing emissions from our operations,and by making more low-and zero-carbon products available to our customers.Today,I askour shareholders for their continued support,by voting in favour of the progress we are making on our journey to net-zero emissions.A For more details see performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 05Shell Energy Transition Progress Report 20222023Increased the weighting of the energy transition performance metric in the long-term incentive plan from 20%to 25%.2022Achieved our target to reduce the net carbon intensity of the energy products we sell by 3-4%compared to 2016.Made significant investment decisions and portfolio changes.These include Nature Energy,a renewable natural gasproducer,Holland Hydrogen 1,and renewable power developer Sprng Energy.Invested$4.3 billion in low-carbon energy solutions and$3.9 billion in non-energy products.Introduced three new metrics in the annual bonus scorecard,to more fully reflect Shells role in the energy transition.For the first time offered shareholders an advisory vote on the annual progress made in implementing our energy transitionstrategy.Simplified our share structure,allowing us to manage our portfolio with greater agility in the energy transition.2021Launched our Powering Progress strategy setting out how we will transform into a net-zero emissions energy business.Offered shareholders an advisory vote on our energy transition strategy.They overwhelmingly supported the strategy.Set a new target to reduce absolute emissions from our operations(Scope 1 and 2)by 50%by 2030,compared to 2016 on anet basis.2020Announced target to become a net-zero emissions energy business by 2050.Extended the energy transition performance metric to around 16,500 employees through the Performance Share Plan(PSP).2019Published our first Industry Associations Climate Review,which reviewed the alignment between our climate-related policypositions and those of 19 key industry associations of which we are a member.2018Signed a joint statement with institutional investors on behalf of the Climate Action 100 investor group announcing steps thatShell has taken to demonstrate alignment with the goals of the Paris Agreement on climate change.2017Announced ambition to reduce the carbon intensity of the energy products we sell by around half by 2050,including the fulllife-cycle emissions from the use of our energy products by customers.Steps on the path to net-zero emissionsIn 2023,for the second time,we are offering shareholders an advisory vote on ourprogress in implementing our energy transition strategy.This vote is part of our continuingdialogue with shareholders as we work to become a net-zero emissions energy businessby 2050.Shareholders supported our energy transition strategy in 2021.IntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 06Shell Energy Transition Progress Report 2022Our progress in 2022 towards net zeroReduced Scope 1 and 2absolute emissions by 30%More than halfway towards our targetto reduce them by 50%by 2030,compared to 2016 on a net basisReduced net carbonintensity by 3.8hieved 2022 target of 3-4%reduction,making progress towards reducing ournet carbon intensity by 20%by 2030and 100%by 2050,compared to 2016Invested$4.3 billionin low-carbon energysolutions,and$3.9 billionin non-energy productsProvidingour customerswith moreelectricityIncreased electric vehicle charge pointsby 62%to around 139,000More than doubled renewablegeneration capacity to 6.4 GWAcquired Sprng Energy,a leadingrenewable power platform(India)Integrated Savion,a solar and energystorage developer(USA)Won offshore wind bids(NL,UK,USA)DevelopingrenewablehydrogenTook final investment decisionfor Holland Hydrogen 1 in theNetherlands(200 MW electrolysercapacity)Added 20 MW electrolyser capacityin ChinaGrowingour biofuelsportfolioBlended 9.5 billion litres of biofuels(6%of global consumption)Acquired Nature Energy(Denmark),the largest producer of renewablenatural gas in EuropeSigned large,long-term agreement tobuy ethanol made from sugar-canewaste from Razen(Brazil)ProvidingconventionalfuelsSelected as partner in 2 largeLNG projects with carboncapture and storage in QatarDelivered 194 LNG cargoesto Europe(almost five timesour usual average)IntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 07Shell Energy Transition Progress Report 2022(million tonnes CO1,6451,3752016 B20211,2402022More than halfway towards our target to reduceScope 1 and 2 emissions by 50%by 2030Read more in Absolute emissions.Net carbon intensity reduction target achievedfor two consecutive years.We believe our total absolute emissions peaked in 2018at 1.73 gigatonnes of carbon dioxide equivalent(GtCORead more in Net carbon intensity.A Operational control boundary.B Reference year.C Our target is to eliminate routine gas flaring from the upstream assets we operate and to have kept methane emissions intensity of Shell-operated assets under 0.2%by 2025.D Shells NCI is the average intensity,weighted by sales volume,of the energy products sold by Shell.Estimated total greenhouse gas(GHG)emissions includedin NCI(net)correspond to well-to-wheel emissions associated with energy products sold by Shell,on an equity boundary,net of carbon credits.This includes thewell-to-tank emissions associated with the manufacturing of energy products by others that are sold by Shell.Emissions associated with the manufacturing and useof non-energy products are excluded.E 2021 target 2-3%reduction,2022 target 3-4%reduction,both achieved.F There was a decrease in 2020 from 2019 related to volumes associated with additional contracts being classified as held for trading purposes with effect from January 2020.We estimate that netting of oil products sales volumes resulted in a reduction in GHG emissions of 102 million tonnes COActualTargetKeyCarbon performance at a glanceOur carbon targets for absolute Scope 1 and 2 emissions and net carbon intensityIn 2022,we continued to make progress towards our 2030 targets.By the end of 2022,we had reduced our Scope 1 and 2 emissionsfrom our operations by 30%,compared with our 2016 reference year on a net basis.The net carbon intensity of the energy products wesell decreased by 3.8%,compared with our 2016 reference year.This reduction in net carbon intensity reflects an increase in sales oflow-and zero-carbon energy,helping our customers to decarbonise their energy use.Scope 1&2 operational emissions AReducing Scope 1 and 2 emissions under our operational controlReducing emissions associated with our customers use of energy productsEstimated total GHG emissions included in NCI(net)D F2e)Net carbon intensity(NCI)D(g CO2e/MJ)2021202320242025203079-2.5%E-6-8%-9-12%-9-13%-20 35-45 50-100%-3.80222016 B2e).2e(million tonnes CO2e)8368584102016 B202120222030205050%target reductionby 2030Routine flaring A C(million tonnes hydrocarbons flared)Methane intensity A C(%)0.20.060.1202120220.0520212022Net carbon intensity(NCI)D(g CO2e/MJ)IntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 08Shell Energy Transition Progress Report 2022OurperformanceRead about our performance against ourclimate targets and how we are workingto achieve net-zero emissions by 2050.10Absolute emissions10Absolute emissions progress11Net carbon intensity13Reducing carbon intensityIntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 09Shell Energy Transition Progress Report 2022Absolute emissionsReducing our absolute Scope 1 and 2 emissionsTo achieve net-zero emissions by 2050,we are transforming how we produce energy.In October 2021,we set a target to halve the emissionsfrom our operations(Scope 1),plus the energy we buy to run them(Scope 2),by 2030 compared with 2016 levels on a net basis.To decarbonise our operations,we are focusing on:If required,we may choose to use high-quality carbon credits to offset any remaining emissions from our operations,in line with the mitigationhierarchy of avoid,reduce and compensate.The chart below shows our progress since 2016 in reducing our Scope 1 and 2 emissions and gives an indication of how we expect to achieveour target in 2030.The actions we will take to achieve our target will depend on the evolution of our asset portfolio and the continueddevelopment of technologies which reduce carbon emissions.Following divestment activity in 2022,we expect that on a net portfolio basis,newinvestments across our portfolio will increase our Scope 1 and 2 emissions between 2023 and 2030 and that they will exceed reductionsassociated with planned divestments and natural decline.Our investments in producing low-carbon energy such as biofuels will increase ourScope 1 and 2 emissions,while reducing the net carbon intensity of the products we sell.Subsequent reductions in our emissions are reflected inthe mechanisms outlined below and reflect an expected path to meeting our target in 2030.Working to reduce our absolute Scope 1 and 2 emissionsScope 1 and 2 emissions in million tonnes per annum A BScope 2Scope 1abTargetc-50Ac6858718083ab727011108863607512030Carboncredits CCarboncaptureand storageUse ofrenewablepowerEnergy and chemicals park transformationEfficiencyimprove-mentsPortfoliochanges20212022202020192016-30%A The 2016 Base Year was not recalculated in 2022.The 2016 Base Year may be recalculated in future years if an acquisition or a divestment has an impact of more than 10%on the totalScope 1 and 2 emissions.B Operational control boundary.C Including nature-based solutions.Absolute emissions progressIn 2022,our total combined Scope 1 and 2 absolute greenhouse gas emissions(from assets and activities under our operational control)were58 million tonnes on a CO2equivalent basis,a 15%reduction compared with 2021,and a 30%reduction compared with 2016,the referenceyear.Our direct greenhouse gas emissions(Scope 1)decreased from 60 million tonnes of carbon dioxide equivalent(CO2e)in 2021 to 51million tonnes CO2e in 2022.This reduction was achieved through divestments in 2021 and 2022(such as the Deer Park and Puget Soundrefineries in the USA)and the handover of operations in OML 11 in Nigeria in 2022;shutdowns or conversion of existing assets,including theshutdown of some units at the Shell Energy and Chemicals Park Singapore;greenhouse gas abatement projects and purchase of renewableelectricity.These decreases were partly offset by the commissioning of Shell Polymers Monaca.making portfolio changes such as acquisitions and investments in new,low-carbon projects.We are also decommissioning plants,divestingassets,and reducing our production through the natural decline of existing oil and gas fields;improving the energy efficiency of our operations;transforming our remaining integrated refineries into low-carbon energy and chemicals parks,which involves decommissioning plants;using more renewable electricity to power our operations;anddeveloping carbon capture and storage(CCS)for our facilities.IntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 10Shell Energy Transition Progress Report 2022Our Annual Report and Accounts 2022 provides more details of how we reduced our Scope 1 and 2 emissions.To date,we have not usedcarbon credits to achieve our Scope 1 and 2 emissions reductions.Scope 1 and Scope 2 greenhouse gas emissions changes from 2016 to 2021 and from 2021 to 2022million tonnes carbon dioxide equivalent(CO2e)AcquisitionsabDivestmentscReduction activities and purchased renewable electricity B C D EdEmissions AChange in output FeOtherf7060655520162021202275808590835.0(9.2)6.6(15.4)(2.3)680.0(2.0)(0.9)(7.5)0.458abdecfabdecfaA Total Scope 1 and Scope 2 emissions,rounded to the closest million tonnes.Scope 2 emissions were calculated using the market-based method.B In addition to reductions from GHG abatement and energy efficiency projects,this category also includes reductions from permanent shutdown of Convent and Tabangao refineries and theimpact of transformational activities at our Shell Energy and Chemicals Park in Singapore.C Excludes 5.80 million tonnes of CO2captured and sequestered by the Shell-operated Quest CCS facility in Canada in 2016-2021.Scope 1 and 2 GHG emissions from operating Quest areincluded in our total emissions.D Excludes 0.97 million tonnes of CO2captured and sequestered by the Shell-operated Quest CCS facility in Canada in 2022.Scope 1 and 2 GHG emissions from operating Quest areincluded in our total emissions.E Of the 2,010 thousand tonnes of reduction activities and purchased renewable electricity in 2022,80 thousand tonnes related to purchased renewable electricity.F Change in output relates to changes in production levels,including those resulting from shutdowns and turnarounds as well as production from new facilities.Methane emissionsMethane emissions are included in our Scope 1 and 2 emissions reporting.In 2022,we reduced total methane emissions from our operations by27%to 40,000 tonnes,compared with 55,000 tonnes in 2021.Our target to keep methane emissions intensity below 0.2%was met in 2022with Shells overall methane emissions intensity at 0.05%for facilities with marketing gas and 0.01%for facilities without marketing gas.Routine flaringIn 2022,routine flaring from our upstream operations fell to 0.1 million tonnes of hydrocarbons from 0.2 million tonnes of hydrocarbons in theprevious year.Our aim is to eliminate routine gas flaring from our upstream operations by 2025.We undertake external verification of our greenhouse gas emissions annually.Our Scope 1 and 2 greenhouse gas emissions from assetsand activities under our operational control and emissions associated with the use of our energy products(Scope 3)included in our netcarbon intensity have been verified to a level of limited assurance.Net carbon intensityWe use net carbon intensity A to show our progress in changing the mix of energy products we sell to customers.Net carbon intensitymeasures emissions associated with each unit of energy we sell.It reflects changes in sales of oil and gas products,and changes in sales of low-and zero-carbon products and services-such as biofuels,hydrogen and renewable electricity.Net carbon intensity measures the transformation that is happening in our portfolio as we implement our energy transition strategy.Achievingnet-zero emissions by 2050 is the same as achieving 100%reduction in net carbon intensity.Unlike Scope 1 and 2 emissions,reducing the net carbon intensity of the products we sell requires action by both Shell and our customers,withthe support of governments and policymakers to create the right conditions for change.A Shells net carbon intensity is the average intensity,weighted by sales volume,of the energy products sold by Shell.It is tracked,measured and reported using our Net Carbon Footprint(NCF)methodologyIntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 11Shell Energy Transition Progress Report 2022Aligning our targets with ParisShells target is to become a net-zero emissions energy business by 2050.We also have short-,medium-and long-term targets to reduceour carbon intensity,measured using our net carbon intensity metric.We believe these targets are aligned with a 1.5C pathway derivedfrom the scenarios used in the IPCC Special Report on Global Warming of 1.5C(SR 1.5),most of which show the global energy systemreaching net zero between 2040 and 2060.There is no established standard for aligning an energy suppliers decarbonisation targets with the temperature limit goal of the ParisAgreement.In the absence of a broadly accepted standard,we have developed our own approach for demonstrating Paris alignment bysetting carbon intensity targets within a pathway derived from the IPCC SR 1.5 scenarios.This pathway is aligned with the more ambitioustemperature goal of the Paris Agreement to limit global average temperature rise to 1.5C above pre-industrial levels by 2100.When constructing the pathway,we started by filtering out certain scenarios to ensure that Shells targets are aligned with earlier actionand low-overshoot scenarios.Overshoot refers to the extent to which a scenario exceeds an emissions budget and subsequently relies onsinks to compensate for the excess emissions.Next,we calculated the carbon intensity(grammes of CO2/MJ of energy)for each of theremaining scenarios by dividing net emissions by total final energy consumption,with electricity represented as a fossil fuel equivalent.To set a starting point,we then indexed the resulting carbon intensities to a common value of 100 in 2016 to remove the impact ofdifferences between Shells historical net carbon intensity and the intensities calculated from the IPCC scenarios.Finally,the pathway wasconstructed using the range of carbon intensity reductions over time.Outlying values at the top and bottom of the range were removed,which had the effect of narrowing the final pathway.By using the 1.5C pathway produced by this approach to set our targets,we aligned them with the necessary reduction in carbonintensity shown in the 1.5C scenarios.This is illustrated in the table,which shows that our targets are positioned within the range of the1.5C pathway.The upper and lower limits represent the upper and lower boundaries of the 1.5C pathway derived using the approachdescribed above.Shells Paris-aligned targets202320242025203020352050IPCC-derived upper range-4%-5%-7%-15%-34%-68%IPCC-derived lower range-10%-13%-17%-36%-64%-104%Shell target range6-8%9-12%9-13 E0%Until 2035,our calculation of the total net emissions of each scenario includes only the expected mitigation actions by Shell,such ascarbon capture and storage and offsetting using natural sinks.Any use of offsets included in the carbon-neutral energy products we offerour customers is also part of our calculation.After that date,we include mitigation actions taken separately by our customers.This isbecause we expect that customers will need to take action to mitigate their emissions from the use of our products if society is to achievethe goals of the Paris Agreement.To account for reductions in emissions across full energy value chains it is necessary to build new protocols to include mitigation actions byboth energy suppliers and users.Currently,energy suppliers report the Scope 3 emissions from the use of their products,which areequivalent to the Scope 1 emissions reported by the users of those products.However,when users of energy products mitigate their Scope1 emissions by the use of carbon capture and storage or offsets there is no protocol for reflecting a corresponding reduction in the Scope 3emissions reported by the energy supplier.We will continue to engage stakeholders on these carbon protocols and will seek to align withnew frameworks as they evolve.As an energy provider,Shell has set a target to reduce the net carbon intensity of the energy products it sells by 20%by 2030.Webelieve that this target is aligned with a 1.5C pathway derived from the IPCC SR 1.5 scenarios.We also believe that the pace of changewill vary around the world by region and by sector,taking into consideration the time needed for energy users to invest in large-scaleequipment,and the energy infrastructure changes needed for Shell to deliver more low-and zero-carbon energy.In focusIntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 12Shell Energy Transition Progress Report 2022Reducing carbon intensityThe biggest driver for reducing our net carbon intensity is increasing the sales of and demand for low-carbon energy.The chart below illustrateshow changes in the volume of products and services we sell could result in net carbon intensity reductions through to 2030.The change in oursales of these products and services will also reflect the development and adoption of new technologies and infrastructure,and the adoption ofpublic policies designed to encourage the energy transition.Working to reduce our net carbon intensityNet carbon intensity in gCO2e/MJ A6377792030CarboncreditsFCarboncaptureand storageELow-carbonfuels salesDElectricitysalesCHydrocarbonsalesB202220212016Grow powersalesGrow biofuels,develophydrogenDevelop CCSHigh-qualitycarbon credits-20%-3.8vbaTargetabActualA Grams of carbon dioxide equivalent per megajoule.B Hydrocarbon sales reflect the effect of lower sales of oil products,and higher sales of natural gas.Emissions associated with gas are lower than those of oil products.C Electricity sales show the expected growth of our integrated power business and increasing sales of renewable electricity.D Sales of low-carbon fuels reflect higher sales of biofuels and hydrogen,which are low-and zero-carbon products.E Carbon capture and storage(CCS)reduces carbon emissions by capturing them at source.F Carbon credits such as nature-based solutions can be used to offset remaining carbon emissions,particularly in hard-to-abate sectors such as aviation and industries including cement andsteel.IntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 13Shell Energy Transition Progress Report 2022Carbon intensity performanceIn 2022,Shells net carbon intensity was 76 grams of carbon dioxide equivalent per megajoule of energy(gCO2e/MJ),a 1.3crease fromthe previous year and a 3.8%reduction compared with 2016,the reference year.The decrease in Shells net carbon intensity in 2022 wasprimarily due to an increased proportion of renewable power and corresponding reduction in the carbon intensity of our power sales.Shells2022 net carbon intensity includes 4.1 million tonnes of carbon credits,compared with 5.1 million tonnes which were included in Shells 2021 netcarbon intensity.The net carbon intensity only includes carbon credits that are retired against energy products.Share of energy delivered per energy product type A-F2022202120202016Gas(carbon intensity in 2022 was 65 gCO2e/MJ)abLiquefied natural gas(LNG)(carbon intensity in 2022 was 70 gCO2e/MJ)cBiofuels(carbon intensity in 2022 was 39 gCO2e/MJ)dbaced14$%7%1T%1!%1%1G D%Oil products and gas-to-liquids(GTL)(carbon intensity in 2022 was 91 gCO2e/MJ)Power(carbon intensity in 2022 was 58 gCO2e/MJ)e12%E%A Percentage of delivered energy may not add up to 100cause of rounding.B Total volume of energy products sold by Shell,aggregated on an energy basis,with electricity represented as fossilequivalents.This value is derived from energy product sales figures disclosed by Shell in the Annual Report and theSustainability Report.C Lower heating values are used for the energy content of the different products and a fossil-equivalence approach is used toaccount for electrical energy,so that it is assessed on the same basis as our other energy products.D The net carbon intensity calculation uses Shells energy product sales volumes data,as disclosed in the Annual Report andSustainability Report.This excludes certain contracts held for trading purposes and reported net rather than gross.Business-specific methodologies to net volumes have been applied in oil products and pipeline gas and power.Paper trades that do notresult in physical product delivery are excluded.Retail sales volumes from markets where Shell operates under trademarklicensing agreements are also excluded from the scope of Shells carbon intensity metric.E Emissions included in the carbon intensity of power have been calculated using the market-based method.F The carbon intensity of biofuels provided in the graph“Share of energy delivered per energy product type”reflects theglobal average for biofuels sold by Shell for 2022.IntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 14Shell Energy Transition Progress Report 2022Decarbonisingour portfolioRead how Shell is helping customersreduce their emissions.16Transforming the energy system17Electricity18Hydrogen19Biofuels20Conventional fuels21In focus:Carbon capture and storage21In focus:Carbon credits22Energy transition in actionIntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 15Shell Energy Transition Progress Report 2022Transforming the energy systemTo help to transform the energy system,we:Our integrated energy portfolio AAviationMarineCommercialroad transportPersonalmobilityLight industry/commercialHeavyindustryElectricityHydrogenBiofuelsConventionalfuelsEnergy solutionsCustomer sectorsCarbon capture and storage(applicable across all sectors)Carbon credits B(applicable across all sectors)A Graphic shows our portfolio of energy solutions and the sectors we can help to decarbonise over time.It does not include other products such as chemicals and lubricants.B Including nature-based solutions.provide more electricity to customers,while also driving a shift to renewable electricity;develop low-and zero-carbon alternatives to traditional fuels,including biofuels,hydrogen,and other low-and zero-carbon gases;work with our customers across different sectors to decarbonise their use of energy;andaddress any remaining emissions from conventional fuels with solutions such as carbon capture and storage and carbon credits.IntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 16Shell Energy Transition Progress Report 2022ElectricityElectricity supply and sectorsCustomer sectorsSupplyEnergysolutionElectricityCommercialroad transportMobilityLight industry/commercialHeavyindustryOnshorerenewablesResidentialOffshorerenewablesElectricitygridGas-fired powergenerationIn 2022,we sold 243 terawatt hours(TWh)of electricity,and we took significant steps to invest in renewable generation and grow our electricvehicle charging network.We more than doubled our solar and wind generation capacity in operation,under construction and/or committed for sale to 6.4 gigawatt(GW),from 3 GW in 2021.This includes 2.2 GW in operation and 4.2 GW in development.We also have a further 45 GW of renewablegeneration capacity in our pipeline of future projects.Our single biggest investment was the$1.6 billion acquisition of Sprng Energy,a solar and wind platform in India.It added 2.3 GW to ourrenewable generation capacity and 7.5 GW to our pipeline of future projects.We have integrated Savion,a solar and energy storage companyin the USA,into our business after acquiring it in 2021.We also won bids with our partners to build two offshore wind farms in the UK,one in the USA and one in the Netherlands.These will have thepotential to generate around 7.3 GW(Shell share 3.7 GW).The UK joint venture will develop two of the worlds first floating wind farms off theeast coast of Scotland,which are expected to be operational in the early 2030s.In 2022,we also made strong progress in rolling out our electric vehicle(EV)charging network to 28 countries,making it easier for motoristsaround the world to reduce their emissions.We increased the number of EV charge points we own or operate by 62%to around 139,000 in2022,up from around 86,000 the previous year.In November 2022,we completed our acquisition of German company SBRS GmbH,whichprovides electric charging services for buses,trucks and vans.It will allow us to offer more charging services to business customers who need todecarbonise their fleets and improve their depot charging capabilities.Renewable power generation and the marketing and trading of power sit within our Renewables and Energy Solutions business segment.Mobility,including electric vehicle charging services,sits within Marketing.Read more about our power business at our customers reduce their emissionsWe are helping software company SAP move to an emissions-free global car fleet by 2030 in support of its net-zero targets.Through ourAccelerate to Zero programme,Shell is providing on-the-go and home charging for electric vehicles,as well as other fleet solutions,forSAP employees in several countries.At SAPs headquarters in Walldorf,Germany,we are working to build solar generation capacity tohelp the company decarbonise and become more self-reliant in its energy use.In 2022,we also helped wine producer Treasury Wine Estates get closer to achieving its net-zero target and become a renewable energyproducer by installing 9,500 solar panels on rooftops and on the ground at two of its Australian sites.These solar panels are expected togenerate more than 5,500 megawatt-hours of electricity a year.Shell Energy is working with Treasury Wine Estates,which has 13,000hectares of vineyards around the world,to provide renewable energy across the companys operations.A further 9,000 solar panels arebeing installed at its California vineyards.Read more about how we help our customers decarbonise and meet their net-zero commitments on our website: focusIntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 17Shell Energy Transition Progress Report 2022HydrogenHydrogen supply and sectorsSupplyRenewables ElectrolysersCustomer sectorsMarineAviationCommercialroad transportMobilityHeavyindustryLight industry/commercialEnergysolutionHydrogenHydrogen can play a crucial role in helping the world reach net-zero emissions.It is particularly suitable for use in hard-to-electrify sectors likeheavy-duty transport,heavy industry,shipping and aviation because of its high energy density.We are increasing our investment in theproduction and supply of hydrogen.In July 2022,we took the final investment decision to build Holland Hydrogen 1 in the Netherlands,which will be Europes largest renewablehydrogen plant once operational.The 200 MW electrolyser will produce up to 80 tonnes of renewable hydrogen a day,enough to meet up to10%of the annual hydrogen demand from Shell Energy and Chemicals Park Rotterdam.Holland Hydrogen 1 could also meet future demand forrenewable hydrogen from the transport and industrial sectors.This adds to our 20 MW hydrogen electrolyser project in Zhangjiakou,China,which was completed in time to supply renewable-basedhydrogen to the 2022 Winter Olympics in February.By the end of 2022,our total electrolyser capacity was 30 MW.This is about 6%of theglobal capacity of installed electrolysers in 2021,according to the International Energy Agency(IEA).Hydrogen is not yet widely used by motorists or commercial road transport customers.We have more than 50 hydrogen retail sites in Europeand North America,where drivers can fill up their vehicles with hydrogen fuel.To encourage some commercial road transport customers to gainexperience with hydrogen,we ordered 25 hydrogen trucks in Germany.The trucks will be rented out in a pay-per-use system,allowing us tobetter understand what it will take to increase the uptake of hydrogen by commercial drivers.Hydrogen sits within our Renewables and Energy Solutions business segment.Read more about our hydrogen business at new technologies behind the energy transitionWe continue to invest in the research and development of new technologies that will help to decarbonise our operations and reduceemissions for our customers.In 2022,research and development expenditure on projects that contributed to decarbonisation was around$440 million,representing about 41%of our total research and development spend.We launched our Energy Transition Campus Amsterdam,creating opportunities for others to join us in finding solutions to the worldsenergy challenges.One such project is a collaboration between Shell and Dow,an American chemicals company,to electrify steamcracking furnaces with renewable energy.Steam cracking is one of the most carbon-intensive processes in petrochemical production.E-cracking furnaces operated using renewable electricity have the potential to reduce Scope 1 emissions from steam cracking by up to 90%.Shell invests in start-ups that develop new technologies and business models which have the potential to accelerate the energy transition.Globally,Shell Ventures is one of the most active venture capital investors in climate technology and mobility.In 2022,Shell Venturesinvested in more than 20 start-ups,including Statiq,a company that is building a charging network for electric vehicles in India;the Dutchcompany enie.nl,which installs solar panels on roofs in the Netherlands and Africa;and Li-Industries,an American company that hasdeveloped a unique technology to recycle lithium batteries.Read more about the role technology plays at and focusIntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 18Shell Energy Transition Progress Report 2022BiofuelsBiofuels supply and sectorsMarineAviationCommercialroad transportMobilityCropsOrganicwasteProcessingSupplyCustomer sectorsIndustrialwasteEnergysolutionBiofuelsBiofuels such as renewable natural gas(RNG),sustainable aviation fuel(SAF),biodiesel and bioethanol can help customers reduce theiremissions without having to change their aeroplanes,cars,trucks,or ships.Shell is already one of the worlds largest traders and blenders of biofuels.In 2022,around 9.5 billion litres of biofuels,which is around 6%ofthe global biofuels consumption,went into Shells fuels worldwide.This is up from 9.1 billion litres in 2021 and includes sales made by Razen,ournon-operated joint venture in Brazil(Shell interest 44%).We continued to grow our biofuels business in 2022 through projects and acquisitions.We acquired Nature Energy for around$2 billion,ourbiggest acquisition in the energy transition to date.Nature Energy is the largest producer of renewable natural gas in Europe,with 14 biogasplants.The company also has around 30 new plant projects in the pipeline in Europe and the USA.This acquisition complements our growingRNG business in the USA.Our Brazilian joint venture Razen is one of the worlds largest biofuels producers.In November 2022,Shell announced an agreement withRazen to buy 3.25 billion litres of ethanol made from sugar-cane waste.Razens second-generation ethanol technology can produce about50%more ethanol from the same amount of land.The low-carbon fuel is expected to be produced by five plants that Razen will build in Brazil,bringing its total portfolio of ethanol facilities to nine.Earlier in the year,we began construction of a bio-LNG plant at the Energy and Chemicals Park Rheinland in Germany to make liquefied naturalgas from biological waste.Once operational,the plant will produce 100,000 tonnes of bio-LNG each year.In the Netherlands,Shell becamethe first fuel retailer to offer bio-LNG blended with regular LNG to all its customers.Trucks using this blend emit around 30%less CO2.In the aviation sector,we became the first company to supply SAF to customers in Singapore in February 2022.By the end of the year we weresupplying SAF to airlines at seven airports around the world.We also acquired Malaysian waste oil recycling firm EcoOils,securing long-termaccess to advanced biofuels feedstock that will enable the production and supply of low-carbon fuels like SAF to customers.Biofuels is part of our Marketing business segment.Read more about our biofuels business on: performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 19Shell Energy Transition Progress Report 2022Conventional fuelsConventional oil and gas supply and sectorsOilSupplyNatural gasCustomer sectorsMarineHeavyindustryAviationCommercialroad transportMobilityLight industry/commercialEnergysolutionFuelsLiquefied natural gasOil and gas currently meet more than half of the worlds energy needs,according to the International Energy Agency(IEA).The volatility causedby Russias war in Ukraine has highlighted the need for a global supply of secure and affordable energy.We continue to supply the conventionalfuels needed to help meet this demand,including natural gas and traditional fuels(such as fuel oil,gasoline,diesel and jet fuel),while loweringemissions from our own operations.Natural gasIn 2022,as one of the worlds largest suppliers of liquefied natural gas(LNG),we shipped natural gas to where it was needed most.Wedelivered 194 cargoes of LNG to Europe almost five times our usual average.In total,we sold 66 million tonnes of LNG in 2022 comparedwith 64.2 million tonnes in 2021.LNG plays an important role in enabling countries to replace coal-fired power generation with a lower-carbon alternative.For example,combined-cycle gas turbines emit about 50%less CO2per unit of electricity generated than an average coal-fired power plant,according to theIEA.LNG also helps to decarbonise shipping operations and commercial road transport.In 2022,we completed more than 250 ship-to-shipLNG bunkering operations.We provide LNG to ships at 15 ports in 10 countries.We also expanded our LNG refuelling network to more than60 operated sites,bringing the number of sites where Shell customers can access LNG in Europe to more than 160.Shell was selected as a partner in two projects in Qatar:the expansion of the North Field East,which is the largest LNG project in the world,and the North Field South project A.By using carbon capture and storage,these landmark projects will help provide LNG with a lower carbonfootprint to our customers.Shells share of these two projects will be around 3.5 million tonnes per annum(mtpa)of LNG when production startslater in the decade.In 2022,we also took final investment decisions to develop offshore gas projects in Malaysia,the UK and Australia.One of them,the Rosmari-Marjoram project,situated 220 kilometres off the coast of Malaysia,will mainly be powered by renewable energy.Traditional fuelsFrom exploration to refining and distribution,traditional fuels continue to play a key role in the energy system.We estimate that our oilproduction peaked in 2019.In 2022,our crude oil and natural gas liquids production available for sale was 13%lower than in the previous year.This larger than usual decline was mainly driven by portfolio changes,including the sale of our Permian business in late 2021 and thederecognition of volumes related to Sakhalin in Russia.In 2022,we continued the transformation of our integrated refineries into Energy and Chemicals Parks.This involves developing new facilitiesand converting or dismantling existing units.We plan to process less crude oil and use more renewable and recycled feedstocks such ashydrogen,biofuels and plastic waste.In the USA,we completed the sale of our Mobile refinery in Alabama and of our interest in the Deer Parkrefinery in Texas.We have implemented a variety of measures to reduce the energy use and increase the energy efficiency of our operations,with estimated totalsavings of around 1,155 million kilowatt hours(kWh).Please refer to the Our journey to net zero section in our Annual Report and Accounts2022 for examples of the measures we took in 2022.Our conventional fuels activities are part of our Upstream,Marketing,Integrated Gas and Chemicals and Products business segments.A Shell participation in the North Field South project remains subject to clearance of remaining customary conditions precedent.IntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 20Shell Energy Transition Progress Report 2022Carbon capture and storage(CCS)Shell continues to work with governments,customers and partners to unlock the potential for CCS to reduce emissions where there arecurrently few viable low-carbon alternatives.In 2022,Shells spending on CCS opportunities(operating expenses and cash capital expenditure)amounted to around$220 million,anincrease of 51%from the$146 million invested in 2021.Shells equity share of captured and stored CO2was around 0.4 million tonnes in2022,in line with the 2021 amount.In Norway,our Northern Lights CCS joint venture(Shell interest 33%)signed a letter of intent on cross-border CO2transport and storagein August.Under this agreement,some 800,000 tonnes of CO2will be captured,compressed and liquefied at a Yara ammonia andfertiliser plant in the Netherlands from early 2025.The CO2will then be transported to Norway for permanent storage 2,600 metresbelow the seabed in the North Sea.In November 2022,construction started on the first two ships that will be used to transport CO2tothe Northern Lights facilities.We are making progress in other CCS projects in our portfolio.In Canada,for example,the Alberta government selected the AtlasSequestration Hub(with Shell as 50%partner)to move to the next stage for further evaluation in April 2022.CCS is part of our Renewables and Energy Solutions business segment.Read more about CCS on our website:https:/ focusCarbon credits,including nature-based solutions(NBS)Carbon credits may be used by Shell and our customers to compensate emissions in line with the mitigation hierarchy of avoid,reduce andcompensate.We are clear that carbon credits need to have a robust carbon benefit but also deliver a positive impact on ecosystems andcommunities.We work closely with local partners to ensure that the carbon credits projects we invest in are of a high quality.In 2022,we invested$69 million in nature-based projects and$23 million in technology-based projects,such as fuel-efficient cookstoves.The nature-based projects include reforestation and the prevention of landscape degradation and destruction.The spend on nature-basedprojects includes a$40 million investment in Brazilian carbon credit developer Carbonext.This companys portfolio protects more than 2million hectares of the Amazon rainforest.We offer carbon credits to drivers and business customers who wish to compensate for the life-cycle CO2-equivalent emissions of the Shellproduct they buy.In 2022,this offer was extended to motorists at more than 4,000 service stations in Austria,Canada,Denmark,Germany,Hungary,the Netherlands,Switzerland and the UK.We delivered 11 carbon-compensated liquefied natural gas(LNG)cargoes to our customers across the globe,and for the first time,aGHG-neutral LNG cargo in line with the GIIGNL Framework A.We also launched our Avgas carbon-compensated offer for aviationcustomers in selected markets in Europe and in Singapore,through our airport network.In 2022,we retired 5.8 million carbon credits,including 4.1 million credits included in our net carbon intensity,and 1.7 million carboncredits associated mainly with the sale of non-energy products and with Shells business travel.One carbon credit represents theavoidance or removal of 1 tonne of CO2.We carefully source and screen the credits we purchase and retire from the market,and workwith multiple certification standards and ratings agencies to check that our requirements are met.Carbon credits,including nature-based solutions,are part of our Renewables and Energy Solutions business segment.Read more about how we ensure high-quality carbon credits on our website: focusA This framework,published by the International Group of Liquefied Natural Gas Importers,provides a common source of best practice principles in the monitoring,reporting,reduction,offsetting and verification,of GHG emissions associated with a delivered cargo of LNG.IntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 21Shell Energy Transition Progress Report 2022Energy transitionin actionA selection of 2022 developments AA These developments include acquisitions,investments,projects and divestments/withdrawals,at various stages of maturity and with different levels of Shell interest,from minority investment to full ownership.KeyChemicalsBiofuelsHydrogenLiquefiednatural gasDivestmentsAmericasBrazilCarbonextRazenCanadaChemicals Park ScotfordTrinidadandTobagoColibriUSANY BightShell Polymers MonacaAera EnergyDeer Park RefineryMobile RefineryShell EnergySavion integration(acquired Dec.2021)DenmarkNature EnergyItalysolar-konzept ItaliaGermanySBRS GmbHNetherlandsHollandse Kust westHolland Hydrogen 1Shell Energy RetailNorwayNorthern LightsSpainGreen Tie CapitalWebatt EnergiaUnitedKingdomScotWindFour solar projectsEuropeNigeriaDaystar PowerAfricaMiddle EastQatarNorth Field East&SouthAsia-PacificAustraliaPowershopWestWindKondininChinaElectrolyserIndiaSprng EnergyMalaysiaBaram DeltaRosmari-MarjoramPhilippinesMalampayaRussiaSakhalin-2(intention to withdraw)SalymSingaporeEcoOilsAmericasAfricaMiddle EastAsia-PacificEuropeElectricityCarbon credits(includingnature-based solutions)Carbon captureand storageIntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 22Shell Energy Transition Progress Report 2022FinancialframeworkRead about our investments through theenergy transition and our targetedreturns.24Investments and returns25Investing in net zeroIntroductionOur performanceDecarbonising ourportfolioFinancialframeworkPolicies andgovernanceLitigation andactivism 23Shell Energy Transition Progress Report 2022Investments and returnsSince the first quarter of 2022,we have reported separately on the performance of our five business segments A:For all these businesses,our target returns consider the risks and uncertainties associated with our investments,and the scale of spending that isrequired to develop opportunities.For example,in our Upstream business,they reflect the costs of exploration,feasibility studies andconstruction,as well as risks linked to commodity prices.In 2022,our cash capital expenditure C was around$25 billion and our operating expenses were around$39 billion.The table below showshow much we spent and the cash flow from operations in 2021 and 2022 across our businesses.2022 deliveryNet debt end 2022$45 billionCash capital expenditureAOperating expensesACash flow from operations(CFFO)$billion202220212022202120222021Marketing20! %2.45.0Renewables and Energy Solutions14%9%7%(6.4)B0.5Integrated Gas17.713.2Chemicals and Products16(.93.7Upstream332)2).621.6A Excluding Corporate segment.Operating expenses include exploration expenses.B Negative CFFO primarily driven by net cash outflows related to derivatives and working capital outflow partly offset by Adjusted EBITDA.Our Marketing business has targeted returns of 15-25%.It comprises Mobility,Lubricants,and Sectors and Decarbonisation.Mobilityoperates Shells retail network,including electric vehicle charging services.Lubricants produces,markets and sells lubricants for road transport,and machinery used in manufacturing,mining,power generation,agriculture and construction.Sectors and Decarbonisation sells fuels,speciality products and services,including energy solutions that help customers reduce emissions in the aviation,marine,commercial roadtransport and agricultural sectors,among others.Our Renewables and Energy Solutions business has targeted returns of more than 10%B.It includes renewable power generation,themarketing and trading of power and pipeline gas,as well as carbon credits,and digitally enabled customer solutions.Renewables and EnergySolutions also includes the production and marketing of hydrogen,development of commercial carbon capture and storage hubs,investmentin nature-based projects that avoid or reduce carbon emissions(Nature-based solutions),and Shell Ventures,which invests in companies thatwork to accelerate the energy and mobility transformation.Our Integrated Gas business has targeted returns of 14-18%.It includes liquefied natural gas(LNG),conversion of natural gas into gas-to-liquids(GTL)fuels and other products.It includes natural gas and liquids exploration and extraction,and the operation of the upstream andmidstream infrastructure necessary to deliver these to market.Integrated Gas also includes the marketing,trading and optimisation of LNG,including LNG as a fuel for heavy-duty vehicles.Our Chemicals and Products business has targeted returns of 10-15%.It includes chemicals manufacturing plants with their own marketingnetwork,and refineries which turn crude oil and other feedstocks into a range of oil products.These are moved and marketed around theworld for domestic,industrial and transport use.The business also includes pipelines,trading of crude oil,oil products and petrochemicals,andoil sands activities,which involves the extraction of bitumen from mined oil sands and its conversion into synthetic oil.Our Upstream business has targeted returns of 20-25%.It explores for and extracts crude oil,natural gas and natural gas liquids.It alsomarkets and transports oil and gas,and operates the infrastructure necessary to deliver them to the market.Shells Upstream business deliversreliable energy from conventional oil and gas operations,as well as deep-water exploration and production activities.We are focusing ourUpstream portfolio to become more resilient,prioritising value over volume to provide the energy the world needs today whilst funding theenergy system of tomorrow.A On January 31,2023,we announced that our Integrated Gas and Upstream businesses will be combined to form a new Integrated Gas and Upstream Directorate.The Downstreambusiness will be combined with Renewables and Energy Solutions to form a new Downstream and Renewables Directorate.These changes are expected to take effect on July 1,2023 and willnot affect Shells financial reporting segments in 2023.Please refer to the“Our organisation”section in the Annual Report and Accounts 2022.B The IRR target for Renewables and Energy Solutions covers Integrated Power only.The target of more than 10%relates to the integrated value chain returns over time and includes equityreturns from minority investments.C Please refer to the Annual Report and Accounts 2022 for the definitions of cash capital expenditure and operating expenses.IntroductionOur performanceDecarbonising ourportfolioFinancialframeworkPolicies andgovernanceLitigation andactivism 24Shell Energy Transition Progress Report 2022Investing in net zeroIn 2022,we invested$8.2 billion in low-carbon energy and non-energy products,around a third of our total cash capital expenditure A of$25billion.Of that,we invested$4.3 billion in low-carbon energy solutions,an increase of 89%compared with the previous year.This includescapital spending on biofuels,hydrogen and charging for electric vehicles,as well as wind and solar power B.The remaining$3.9 billion wasinvested in non-energy products such as chemicals,lubricants and convenience retail,which do not produce emissions when they are used by ourcustomers.Our investment in non-energy products decreased by 9%compared with 2021.These investments advance a central part of our strategy which is to sell more products with low-carbon emissions to help both Shell and ourcustomers meet their climate targets.Two-thirds of our capital spending in 2022 was on maintaining supplies of the vital energy the world needs today.We invested$4.2 billion inliquefied natural gas(LNG)as well as gas and power marketing and trading,an increase of 17%compared with the previous year.We expectLNG will remain an important part of the energy mix for many years to come because of its role in reducing emissions from power generationand transport.We also increased our investments in oil production and oil products by 30%to$12.5 billion.This includes investments of$8.1 billion in ourUpstream business,helping maintain our assets and make up for the natural decline in oil and gas production.It also includes investments inrefining and trading,as well as fuels marketing,which are important to maintain supplies of fuels for motorists,commercial road transport,aviation and industry.Investing through the energy transitionTotal cash capital expenditure of$25 billion in 2022A Products for which usage does not cause Scope 3,Category 11 emissions:Lubricants,Chemicals,Convenience Retailing,Agriculture&Forestry,Construction&Road.B E-Mobility and Electric Vehicle Charging Services,Low-Carbon Fuels(Biofuels/HEFA),Renewable Power Generation(Solar/Wind),Environmental Solutions,Hydrogen,CCUS.We define low-carbon energy products as those that have anaverage carbon intensity that is lower than conventional hydrocarbon products,assessed on a lifecycle basis(includingemissions from production,processing,distribution and end use).C LNG Production&Trading,Gas&Power Trading,and Energy Marketing.D Upstream segment,GTL,Refining&Trading,Marketing fuel and hydrocarbon sales,Shell Ventures,Corporate segment.Read more about our outlook for 2023 and beyond in the Annual Report and Accounts 2022Non-energy products A$3.9 billionLow-carbon energy solutions B$4.3 billionLNG,gas and power marketing andtrading C$4.2 billionOil,oil products and other D$12.5 billionA Please refer to the Non-GAAP measures reconciliations section of the Annual Report and Accounts 2022 for the definition of cash capital expenditure.B The$4.3 billion investment does not include the acquisition of Nature Energy for around$2 billion,which closed at the beginning of 2023.IntroductionOur performanceDecarbonising ourportfolioFinancialframeworkPolicies andgovernanceLitigation andactivism 25Shell Energy Transition Progress Report 2022Policies andgovernanceRead about our climate-relatedgovernance and policy engagement,and our disclosures linked to climatestandards and benchmarks.27Climate policy engagement27Climate governance28A just transition28Climate standards and benchmarksIntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 26Shell Energy Transition Progress Report 2022Climate policy engagementNational and international climate and energy transition policies play an increasingly important role in steering and enabling the energytransition.Shell engages with governments,regulators and policymakers in different ways to help shape policy,legislation and regulation.We advocate directly to governments and policy makers,offering relevant information,views,and policy recommendations on new proposals.For example,Shell supports the European Unions Fit for 55 package,which aims to enable the EUs transition to climate neutrality by 2050.Aspart of our engagements with the EU institutions in 2022,we called for binding targets in the Renewable Energy Directive to accelerate the useof renewable hydrogen in hard-to-abate sectors such as industry and transport by 2030.We engage governments and policymakers indirectly,for example through our participation in coalitions and industry associations.Werecognise that industry associations may represent many members and sometimes we may have different views on a topic.We join coalitionswhere there is likely to be a common advocacy objective.In the USA,for example,Shell supported the US Inflation Reduction Act,which was signed into law in 2022.We advocated different cleanenergy provisions,such as expanded tax credits for carbon capture utilisation and storage,and the creation of a tax credit for hydrogenproduction.We engaged with Members of Congress and the Biden Administration directly,as well as through advocacy coalitions,including theCEO Climate Dialogue,the Clean Hydrogen Future Coalition and the Carbon Capture Coalition.In India,we continued to engage with the government,industry partners,think tanks and academic institutions to collectively find ways topromote low-carbon energy choices.In 2022,we launched a carbon capture utilisation and storage industry coalition with our partners.It aimsto encourage the creation of government policies to support the development of carbon capture and storage projects in India.We also aim to help shape the wider debate around the energy transition in other ways,including through speeches and articles.Ahead of ameeting of the EU Parliament in June 2022,for example,Shell published an opinion piece on the European news website Euractiv.We supportedthe proposal to ban the sale of new petrol and diesel cars and vans in the European Union from 2035,which was agreed a few months later.We aim to be at the forefront of the drive for greater transparency around climate and energy-transition-related policy engagement.We set outour approach,policy and advocacy positions,and information about our industry association memberships,on our website.In March 2023,weplan to publish our first Climate and Energy Transition Lobbying Report.This report reviews our lobbying in 2022 and our memberships ofindustry associations.We continue to work to ensure our memberships of industry associations support our climate and energy transition policypositions.Read more at governanceOur climate governance ensures our strategy,processes and incentives are aligned to drive our progress in the energy transition.In 2022,theBoard continued to consider energy transition matters throughout the year when reviewing and guiding the implementation of our PoweringProgress strategy,assessing the risk management policies in place,and challenging and endorsing the business plans and budgets-includingoverseeing major capital expenditures,acquisitions and divestments.To foster the delivery of our strategy,we have further aligned staff remuneration with progress in the energy transition,by making changes to theannual bonus scorecard,which helps determine bonus outcomes for most Shell employees,including Executive Committee members.From 2022,we introduced new metrics to the measure called Shells Journey in the Energy Transition(15%of the annual bonus scorecard).These are:We also introduced a customer excellence measure on the annual bonus scorecard,to emphasise the importance of building ever strongercustomer relationships in the energy transition.Our Long-term incentive plan(LTIP)and Performance share plan(PSP)tie pay for around 16,500employees directly to achieving our strategic ambitions for the energy transition.From 2019 onwards,we have included an energy transitionperformance metric in our LTIP.This element vested for the second time in 2022,at 180%of target,based on performance between 2020 andthe end of 2022,reflecting our progress in transforming Shells business for a lower-carbon future.The weight of this metric will be increased from20%to 25%for the most senior employees for the upcoming LTIP cycle(2023-2025).For further details see“Governance of climate-related risks and opportunities”in our Annual Report and Accounts 2022.Selling lower carbon products we help customers to reduce their emissions by supplying low-carbon products.We measure our success bythe earnings share of our Marketing activities from low-carbon energy products as well as non-energy products and convenience retail.Reducing operational emissions our target is to achieve a 50%reduction by 2030;and this measure is based on reducing our Scope 1 and2 operational emissions.Partnering to decarbonise we seek to collaborate with our customers to help them reduce their emissions.In 2022,we measured success inthis area in terms of our progress in rolling out our electric vehicle charging network.IntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 27Shell Energy Transition Progress Report 2022A just transitionShell supports the Paris Agreement on climate change,which recognises the importance of a just transition.A just transition means a fairerdistribution of the costs and benefits of the worlds transition to a net-zero emissions energy system.Our aim is to contribute to a just transition by making a positive impact on the communities where we operate,our customers and our workforce.This is part of our strategic goal to power lives.In 2022,we pledged 100 million to help communities in the UK develop skills and find jobs linked to the energy transition.This includesestablishing educational skill centres,part of a wider aim to help 15,000 people find employment by 2030.Shell continues to work with governments and our partners,such as Energy for a Just Transition,facilitated by Business for Social Responsibility(BSR),and Ipiecas Just Transition Taskforce.We are committed to respecting human rights,as set out in the United Nations Universal Declaration of Human Rights and the InternationalLabour Organization Declaration on Fundamental Principles and Rights at Work.We continue to help our own staff learn new skills needed for the energy transition.In 2022,around 4,000 Shell employees up from 1,700 in2021 completed courses on a range of subjects,including hydrogen production,carbon capture and storage,and greenhouse gas and energymanagement.You can read more about our approach at standards and benchmarksClimate standards and benchmarks play a key role in supporting Shells efforts in the energy transition.They promote an ongoing dialoguebetween interested parties and highlight areas of progress against externally established criteria.Task Force on Climate-related Financial Disclosures(TCFD)Shell welcomes the recommendations of the Task Force on Climate-related Financial Disclosures(TCFD).The TCFD is a global initiative to getcompanies across all sectors to assess climate-related risks and opportunities.The TCFD recommends disclosure of qualitative and quantitativeinformation aligned to its four core elements:governance,strategy,risk management,and metrics and targets.Please refer to our Annual Reportand Accounts 2022 for Shells disclosures related to recommendations by the TCFD,in the Our journey to achieving net zero section.Climate Action 100 Net Zero Company BenchmarkSince the publication of Shells Energy Transition Strategy in 2021,Shell has continued to engage with the Climate Action 100 investor group.The table below shows how Shell was assessed in the October 2022 Climate Action 100 Net Zero Company Benchmark.CriteriaAssessment of Shell Plans March 2022Assessment of Shell Plans October 20222022 ProgressNet zero by 2050Meets all criteriaMeets all criteriaNo changeLong-term greenhouse gasreduction targetPartial,meets some criteriaMeets all criteriaImprovedMedium-term greenhouse gasreduction targetPartial,meets some criteriaPartial,meets some criteriaNo changeShort-term greenhouse gasreduction targetPartial,meets some criteriaPartial,meets some criteriaNo changeDecarbonisation strategyPartial,meets some criteriaPartial,meets some criteriaNo changeCapital allocation alignmentDoes not meet any criteriaDoes not meet any criteriaNo changeClimate policy engagementMeets all criteriaMeets all criteriaNo changeClimate governanceMeets all criteriaMeets all criteriaNo changeJust transitionn/an/an/aTCFD disclosurePartial,meets some criteriaMeets all criteriaImprovedIntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 28Shell Energy Transition Progress Report 2022The Climate Action 100 (CA100 )benchmark uses assessments by the Transition Pathway Initiative(TPI).In its assessment,TPI highlights that ithas recalculated Shells net carbon intensity according to its own methodology.It also highlights that Shell has set further targets to reduce itsnet carbon intensity,but they were not included in this assessment as it was not possible to make them consistent with TPIs methodology.We are pleased to see that our ratings have improved in two areas in the latest assessment,but we continue to be disappointed with certain keyaspects of the assessment due to differences in the methodologies used.We will continue our engagement with CA100 and TPI with the aim ofensuring that our current targets and disclosures are reflected in their Benchmark and hope we can continue to improve the outcome in theirassessment.IntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 29Shell Energy Transition Progress Report 2022Litigation andactivismRead about our position on climatelitigation and activism.31Climate litigation and activismIntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 30Shell Energy Transition Progress Report 2022Climate litigation and activismDuring the past decade,environmental activists have increasingly used litigation to hold governments and companies accountable for the effectsof climate change on individuals and communities around the world.Shell is involved in more than 20 such court cases worldwide.In March 2022,we appealed a ruling by the District Court of The Hague in the Netherlands from May 2021,which requires Shell to reduceemissions further and faster than even the most ambitious energy scenarios published for the sectors in which we operate.As we wait for theoutcome of the appeal,we are taking active steps to comply with the ruling.We believe the actions we are taking to deliver our energy transitionstrategy are consistent with the court ruling and its end of 2030 timeline.This includes the investments we are making in low-carbon fuels,renewable power,and hydrogen;in addition to making changes to our upstream and refinery portfolios.In February 2023,environmental law group ClientEarth filed a claim with the High Court in England against Shell plc and the current Board ofDirectors challenging the boards decision-making regarding Shells climate strategy.This is a derivative action brought by shareholders onbehalf of the Company.The High Court must grant permission for ClientEarth to proceed with the claim.Investors representing less than 0.2%ofShells total shareholder base have sent letters supporting the claim.We do not accept ClientEarths allegations.We believe our directors havecomplied with their legal duties and have,at all times,acted in the best interests of the Company.We agree there is an urgent need to change the worlds energy system.We believe it is for governments to determine the right trade-offs forsociety and to put in place the policies that bring about fundamental changes in the way society consumes energy.Litigation does not enablethe global cooperation required to change both supply and demand for energy,as well as the infrastructure supporting the use of energy.Shell is determined to play its part in helping to change the worlds energy system.We believe our climate targets are aligned with the moreambitious goal of the UN Paris Agreement on climate change:to limit the increase in the global average temperature to 1.5oC above pre-industrial levels.Importantly,we have already delivered results:Shell reduced Scope 1 and 2 emissions under our operational control in 2022 by30%compared with 2016.Some shareholders,such as Follow This,have also called on us to set even more ambitious targets to reduce Scope 3 emissions.This is also afocus of some of the climate litigation against us.Shell would,among other things,have to decrease its sales of oil products and gas to reduce its Scope 3 emissions in line with the Follow Thisresolution.Doing so,without changing demand and the way our customers use energy,would effectively mean handing over customers tocompetitors.This would materially affect Shells financial strength and limits its ability to generate value for shareholders.It would also reduceour ability to play an important role in the energy transition by working with customers to reduce their emissions.We are making progress in implementing our energy transition strategy,which we believe is the best for society,our customers and ourshareholders.Read more about why Shell has appealed the District Court ruling(in Dutch and English)www.shell.nl/media/nieuwsberichten/2022/waarom-shell-in-hoger-beroep-gaat.IntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 31Shell Energy Transition Progress Report 2022Cautionary noteThe companies in which Shell plc directly and indirectly owns investments are separate legal entities.In this Report“Shell”,“Shell Group”and“Group”are sometimes used for conveniencewhere references are made to Shell plc and its subsidiaries in general.Likewise,the words“we”,“us”and“our”are also used to refer to Shell plc and its subsidiaries in general or to those whowork for them.These terms are also used where no useful purpose is served by identifying the particular entity or entities.“Subsidiaries”,“Shell subsidiaries”and“Shell companies”as used inthis Report refer to entities over which Shell plc either directly or indirectly has control.Entities and unincorporated arrangements over which Shell has joint control are generally referred to as“joint ventures”and“joint operations”,respectively.“Joint ventures”and“joint operations”are collectively referred to as“joint arrangements”.Entities over which Shell has significant influencebut neither control nor joint control are referred to as“associates”.The term“Shell interest”is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in anentity or unincorporated joint arrangement,after exclusion of all third-party interest.Forward-looking statementsThis Report contains forward-looking statements(within the meaning of the U.S.Private Securities Litigation Reform Act of 1995)concerning the financial condition,results of operations andbusinesses of Shell.All statements other than statements of historical fact are,or may be deemed to be,forward-looking statements.Forward-looking statements are statements of futureexpectations that are based on managements current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results,performance orevents to differ materially from those expressed or implied in these statements.Forward-looking statements include,among other things,statements concerning the potential exposure of Shell tomarket risks and statements expressing managements expectations,beliefs,estimates,forecasts,projections and assumptions.These forward-looking statements are identified by their use ofterms and phrases such as“aim”,“ambition”,“anticipate”,“believe”,“could”,“estimate”,“expect”,“goals”,“intend”,“may”,“milestones”,“objectives”,“outlook”,“plan”,“probably”,“project”,“risks”,“schedule”,“seek”,“should”,“target”,“will”and similar terms and phrases.There are a number of factors that could affect the future operations of Shell and could cause thoseresults to differ materially from those expressed in the forward-looking statements included in this Report,including(without limitation):(a)price fluctuations in crude oil and natural gas;(b)changes in demand for Shells products;(c)currency fluctuations;(d)drilling and production results;(e)reserves estimates;(f)loss of market share and industry competition;(g)environmentaland physical risks;(h)risks associated with the identification of suitable potential acquisition properties and targets,and successful negotiation and completion of such transactions;(i)the risk ofdoing business in developing countries and countries subject to international sanctions;(j)legislative,judicial,fiscal and regulatory developments including regulatory measures addressingclimate change;(k)economic and financial market conditions in various countries and regions;(l)political risks,including the risks of expropriation and renegotiation of the terms of contractswith governmental entities,delays or advancements in the approval of projects and delays in the reimbursement for shared costs;(m)risks associated with the impact of pandemics,such as theCOVID-19(coronavirus)outbreak;and(n)changes in trading conditions.No assurance is provided that future dividend payments will match or exceed previous dividend payments.All forward-looking statements contained in this Report are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.Readers should not place undue relianceon forward-looking statements.Additional risk factors that may affect future results are contained in Shell plcs Form 20-F for the year ended December 31,2022(available at and www.sec.gov).These risk factors also expressly qualify all forward-looking statements contained in this Report and should be considered by the reader.Each forward-lookingstatement speaks only as of the date of this Report,March 16,2023.Neither Shell plc nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-lookingstatement as a result of new information,future events or other information.In light of these risks,results could differ materially from those stated,implied or inferred from the forward-lookingstatements contained in this Report.In the event of any discrepancy or inconsistency between this Report and Shell plcs Form 20-F for the year ended December 31,2022,such discrepancy or inconsistency is unintended,and theinformation included in Shells Form 20-F controls.Shells net carbon intensityAlso,in this Report we may refer to Shells“net carbon intensity”,which include Shells carbon emissions from the production of our energy products,our suppliers carbon emissions in supplyingenergy for that production and our customers carbon emissions associated with their use of the energy products we sell.Shell only controls its own emissions.The use of the term Shells“netcarbon intensity”is for convenience only and not intended to suggest these emissions are those of Shell plc or its subsidiaries.Shells net-zero emissions targetShells operating plan,outlook and budgets are forecasted for a ten-year period and are updated every year.They reflect the current economic environment and what we can reasonably expectto see over the next ten years.Accordingly,they reflect our Scope 1,Scope 2 and Net Carbon Intensity(NCI)targets over the next ten years.However,Shells operating plans cannot reflect our2050 net-zero emissions target and 2035 NCI target,as these targets are currently outside our planning period.In the future,as society moves towards net-zero emissions,we expect Shellsoperating plans to reflect this movement.However,if society is not net zero in 2050,as of today,there would be significant risk that Shell may not meet this target.Forward-looking non-GAAP measuresThis Report may contain certain forward-looking non-GAAP measures such as cash capital expenditure and divestments.We are unable to provide a reconciliation of these forward-looking non-GAAP measures to the most comparable GAAP financial measures because certain information needed to reconcile those non-GAAP measures to the most comparable GAAP financialmeasures is dependent on future events some of which are outside the control of Shell,such as oil and gas prices,interest rates and exchange rates.Moreover,estimating such GAAP measureswith the required precision necessary to provide a meaningful reconciliation is extremely difficult and could not be accomplished without unreasonable effort.non-GAAP measures in respect offuture periods which cannot be reconciled to the most comparable GAAP financial measure are calculated in a manner which is consistent with the accounting policies applied in Shell plcsconsolidated financial statements.The contents of websites referred to in this Report do not form part of this Report.We may have used certain terms,such as resources,in this Report that the United States Securities and Exchange Commission(SEC)strictly prohibits us from including in our filings with the SEC.Investors are urged to consider closely the disclosure in our Form 20-F,File No 1-32575,available on the SEC website www.sec.gov.Additional informationAs used in this Report,“accountable”is intended to mean:required or expected to justify actions or decisions.The accountable person does not necessarily implement the action or decision(implementation is usually carried out by the person who is Responsible)but must organise the implementation and verify that the action has been carried out as required.This includes obtainingrequisite assurance from Shell companies that the framework is operating effectively.“Responsible”is intended to mean:required or expected to implement actions or decisions.Each Shellcompany and Shell-operated venture is responsible for its operational performance and compliance with the Shell General Business Principles,Code of Conduct,Statement on Risk Managementand Risk Manual,and Standards and Manuals.This includes responsibility for the operationalisation and implementation of Shell Group strategies and policies.CO2compensation does notimply that there is no environmental impact from the production and use of the product as associated emissions remain in the atmosphere.CO2compensation is not a substitute for switching tolower emission energy solutions or reducing the use of fossil fuels.Shell businesses focus first on emissions that can be avoided or reduced and only then,compensate the remaining emissions.“carbon neutral”or CO2compensated indicates that Shell will engage in a transaction where an amount of CO2equivalent to the value of the remaining CO2e emissions associated with theraw material extraction,transport,production,distribution and usage/end-of-life(if Lubricants or other non-energy product)of the product are compensated through the purchase andretirement of carbon credits generated from CO2compensation projects.Although these carbon credits have been generated in accordance with international carbon standards,thecompensation may not be exact.CO2e(CO2equivalent)refers to CO2,CH4,N2O.IntroductionOur performanceDecarbonising ourportfolioFinancial frameworkPolicies andgovernanceLitigation andactivism 32Shell Energy Transition Progress Report 2022Read the entire reporting suite at Report and AccountsThe Annual Report provides a comprehensive account of Shells operational and financial activities forthe year to December 31.It outlines Shells business strategy,summarises financial results,and explains how the component parts ofShell plc and its subsidiaries operate.It also outlines the social andenvironmental challenges we face,including our approach to tackling climate change,and provides detail on the steps we are taking to provide the energy the world needs,now and in the future.It gives details of how our Chief Executive Officer and Chief Financial Officer are paid,and serves as Shells Annual Report and Accounts in accordance with UK law.More at: ReportThe Sustainability Report details Shellssocial,safety and environmental performance for the year to December 31.It outlines the key sustainability challenges Shell faces and the many ways the company is responding.To help inform our decisions about the reports content,we consider the views of various groups including non-governmental organisations,customers and investors,to understand concerns about Shells impact.The report provides a detailed account of Shells performance,taking into account the concerns raised.It also explains how Shell supports global efforts to tackle climate change,and the role we are playing in the energy transition to a lower-carbon world.It includes an introduction from Shells Chief Executive Officer and an evaluation of the reports content by a review panel of independent experts.The Sustainability Report is an online-only publication.More at: Contribution Report The Tax Contribution Report is our main source of external messaging regarding tax on an annual basis.Each year we also publish our Payments to Governments Report,Annual Report,Sustainability Report and Energy Transition Progress Report which all contain references and details regarding our tax position.More at: to Governments ReportOur operations generate revenue through taxes and royalties for governments around the world.These taxes and royalties are often used by governments to fund essential public services like education,transport and health care.Since 2016 Shell has made mandatory disclosures under the UKs Reports on Payments to Governments Regulations 2014(amended December 2015).We have published the revenues that our operations generate through taxes and royalties on a voluntary basissince 2012.We believe that being open about our tax payments helps people to understand how much wepay and why.More at: Shell Energy Transition Progress Report describes our progress as we transform into a net-zero emissions energy business.It shows how we have performed against our climate targets in the short term,and how we are working to achieve our medium-and long-term targets.Shell annual publicationsShell Energy Transition Progress Report 2022Check our latest news Follow Shell on Twitter our reports are available online atS Comprehensive financial information on our activities throughout 2022 Detailed information on Shells taxes Report on our progress in contributing to sustainable development Update on our climate and energy 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Wells Fargo Sustainability&Governance Report Published July 2023 Table of contentsIntroduction.3About Wells Fargo.4A letter from the Chief Executive Officer.5Foreword by the Chief Sustainability Officer.6Sustainability.8Support financial health.9Promote housing access and affordability.15Develop small business growth.16Scale clean energy.19Increase sustainability where we live and work.22Advance climate finance and innovation.27Support an equity-focused transition.30Measure our progress.33Employee support and corporate governance.41Live our expectations.42Support for employees.43Corporate governance and ethics.50Disclaimer and forward-looking statements.64Appendix.67Alignment with the United Nations Sustainable Development Goals.68Sustainability Accounting Standards Board(SASB)index.69Global Reporting Initiative(GRI)content index.75Sustainable Finance Eligibility Criteria.84Independent Accountants Review Report.91Managements assertion.93 Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 3 Introduction About Wells Fargo.4 A letter from the Chief Executive Officer.5 Foreword by the Chief Sustainability Officer.6 4 Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix About Wells Fargo Wells Fargo&Company(NYSE:WFC)is a leading financial services company that has approximately$1.9 trillion in assets.We proudly serve one in three U.S.households and more than 10%of small businesses in the U.S.,and we are a leading middle market banking provider in the U.S.Wells Fargo provides a diversified set ofbanking,investment,and mortgage products and services,as well as consumer and commercial finance,through our four reportable operating segments:Consumer Banking and Lending,Commercial Banking,Corporate and Investment Banking,and Wealth&Investment Management.Wells Fargo ranked No.47 onFortunes 2023 rankings of Americas largest companies.In the communities we serve,the Company focusesits social impact on building a sustainable,inclusive future for all by supporting housing affordability,smallbusiness growth,financial health,and a low-carbon economy.Cautionary notes:This document contains forward-looking statements about our future activities,plans,objectives,expectations,and other future conditions.More information about factors that could cause actual results to differ materially from our forward-looking statements is available on Disclaimer and Forward-Looking Statements.Data herein is as of December 31,2022,unless otherwise indicated.Wells Fargo has provided external links within this document for your convenience,but Wells Fargo does not endorse and is not responsible for the content,links,privacy policy,or security policy of these websites.5 Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix A letter from the Chief Executive Officer Im pleased to share Wells Fargos latest Sustainability&Governance Report.In this report,youll find an overview of the work we are doing to build a sustainable,inclusive future in the communities we serve.These efforts span housing affordability,small business growth,financial inclusion,sustainability,and other initiatives.Making a difference in these areas requires a sustained effort,and we are committed to this work for the long-term.As a company,we are balanced in our approach to environmental,social,and governance,or ESG,issues,and we recognize that consumers and businesses want to do business with a company that has a strong reputation.A strong reputation is achieved not just from strong financial performance,but from actively supporting employees,customers,and communities especially those most in need.As I look back at 2022,Im proud of the progress weve made on these priorities,and I feel even better about the opportunities ahead.I hope you enjoy reading about our progress and where were focused in the pages to follow.Charlie Scharf Chief Executive Officer Wells Fargo&Company 6 Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix Foreword by the Chief Sustainability Officer Nothing in the banking industry stands still,and Wells Fargos journey in sustainability is further proof of this.We established sustainability goals in 2021 and this past year,we continued our progress toward these goals.Along the way,we uncovered opportunities,established a framework of impact areas,and enhanced governance to sustain momentum.This years report illustrates our accomplishments and continued path forward.Progress toward goals Our goal to deploy$500 billion in sustainable finance by 2030 is well underway.In the first two years of tracking,weve originated,committed,advised,or facilitated approximately$129 billion,funding a growing demand for products and services that are building the low-carbon economy and strengthening community resilience.In addition,since announcing in March of 2021 our goal of net-zero greenhouse gas,or GHG,emissions by 2050,including financed emissions,Wells Fargo has taken meaningful steps forward.Across our footprint,we are working to minimize use of energy,water,and other resources,reduce GHG emissions in our operations,and have set refreshed operational sustainability goals for 2023.And we set interim emissions-based targets to guide the alignment of our financing portfolios with our net-zero goal.Impact area framework After establishing our sustainability goals in 2021,we saw a need and an opportunity to establish a framework around the areas where Wells Fargo can create the greatest impact.The framework serves as a way to align and prioritize our collective efforts.Wells Fargo reviewed its business profile,competitive position,client base,and footprint.These elements were mapped alongside the United Nations Sustainable Development Goals,as well as global challenges and opportunities related to sustainability and stakeholder expectations.Our analysis included significant external factors,such as geopolitical impacts on global energy needs and new U.S.incentives for clean energy manufacturing,that are expected to reshape several industries.This assessment helped us identify several cross-cutting sustainability impact areas where we can best apply our expertise,size,and scale to make a positive difference.They highlight opportunities to collaborate across our own operations and with strategic community impact organizations.These areas include:7 Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix Underlying our sustainability impact areas,we maintain a focus on vulnerable communities access to the opportunities associated with a transition to a low-carbon economy.By aligning our sustainability efforts with the framework,we believe we can make an effective impact within Wells Fargo and with our stakeholders.Weve used it to share our progress in the first part of this report.Governance This report also includes details on employee support and corporate governance.Effective governance helps ensure that Wells Fargo is managed responsibly,incorporating appropriate oversight and risk management aimed at creating long-term value for shareholders.The following report is a snapshot of our sustainability journey,which is a path that supports our business,customers,and communities transition to a resilient,equitable,and sustainable future.Robyn Luhning Chief Sustainability Officer Wells Fargo&Company Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 8 Sustainability Support financial health.9 Promote housing access and affordability.15 Develop small business growth.16 Scale clean energy.19 Increase sustainability where we live and work.22 Advance climate finance and innovation.27 Support an equity-focused transition.30 Measure our progress.33 9 Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix Support financial health Wells Fargos approach to helping transform and improve the financial health of our communities is a key component of our focus on social impact.We have made long-term philanthropic and commercial investments in low-to moderate-income communities to help move individuals from financially vulnerable positions to positions of better financial health,where they have improved financial security and freedom of choice now and in the future.We collaborate with key industry and community groups to practice healthy financial living for the long term.As part of Wells Fargos focus on building an inclusive economy where people have equitable access to economic opportunity,we provide a variety of resources and products to enable individuals to increase their savings,reduce debt,secure healthy credit,and acquire assets in pursuit of their financial goals.Many of these resources are available through the Financial Health hub.Examples of our commitment to supporting financial health include the following programs and initiatives.Hands on Banking is Wells Fargos free financial education program intended to teach money management skills for all life stages,where users can learn at their own pace.The program provides tools to help teachers and nonprofit financial counselors.In support of this initiative,Wells Fargo employee volunteers deliver financial education in schools and communities.Our Debt-to-Income Ratio Calculator allows users to enter income and debt payments,then helps them understand more about what that ratio can mean in their financial health journey.CollegeSTEPS was created by Wells Fargo to help college students manage their money.Through this website,college students and recent graduates can access free guidance and resources on relevant topics,such as paying for college,finding scholarships,understanding credit,managing money,and preparing for the next steps in their financial journey after college.Wells Fargo AssistSM offers a variety of options and support to customers facing financial hardship related to credit cards,home loans,other loans,and other accounts.Our Credit Close-UpSM tool provides personalized tips to help customers manage their FICO Scores and has been leveraged by over 11 million customers.As part of our efforts to support customers on their journey to financial health,Wells Fargo provides customers with free access to their FICO Scores.As shown in the table below,in 2022 we helped over 11 million customers access their FICO Scores.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 10 Accessing free FICO Score1Unit 2020 2021 2022 Customers with free access to FICO Score2#(in millions)10.8 11.3 11.2 Wells Fargo provides products and services that give our customers choice and flexibility in meeting their financial health needs and tools to help manage their accounts.Online,mobile,and text banking tools allow customers to monitor account activity,transfer funds,and help avoid overdrafts.Services include automatic zero-balance alerts that notify online banking customers by email if their account balances drop to zero or below.In addition,we made several changes in 2022 to help millions of customers avoid overdraft fees and meet short-term cash needs.These efforts included:Elimination of Overdraft Protection fund transfers fees and nonsufficient funds fees.Early Pay Day makes eligible direct deposits available up to two days early.Extra Day Grace gives customers an extra business day to make deposits to avoid overdraft fees.Flex Loan is a new digital-only,small-dollar loan that provides eligible customers convenient andaffordable access to funds.The above actions build on services Wells Fargo has introduced over the past several years,including Clear Access Banking,a consumer banking account with no overdraft fees.As of year-end 2022,we now have over 1.7 million of those accounts,up 48%from a year ago.Digital and mobile active customers Unit32020 2021 2022 Digital(online and mobile)active customers#(in millions)32.0 33.0 33.5 Mobile active customers#(in millions)26.0 27.3 28.3 1 Totals in this figure and others in this report may not add correctly due to rounding.2 Results represent distinct customers who actively viewed their FICO Score in the stated calendar year.3 Digital and mobile active customers is the number of consumer and small business customers who have logged on via a digital or mobile device,respectively,in the prior 90 days.Digital active customers includes both online and mobile customers.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 11 For more information about initiatives to support financial health,please see our annual Diversity,Equity,and Inclusion Report,which can be found on our Goals and Reporting website.Banking Inclusion Initiative Wells Fargos Banking Inclusion Initiative,launched in 2021,is a 10-year commitment to help more people who are unbanked gain access to affordable,mainstream accounts and provide easier access to financial education and guidance.In low-to moderate-income community census tracts,weve introduced Community Connections Branches designed around the needs of the diverse communities we serve.Starting in 2022,in designated branches,we redesigned spaces created to deliver one-on-one consultations,improve digital access,and offer financial health seminars.Also,as part of the Banking Inclusion Initiative,we announced our collaboration with Operation HOPE4 to launch HOPE Inside centers(which feature Operation HOPE financial coaches)within diverse and low-to moderate-income neighborhoods.“You have no idea how relieved I feel.I felt stuck and I hated living paycheck to paycheck.I finally feel like I am able to afford a savings account,and I always hear your voice in the back of my head before I spend a dollar telling me,Do you really need it,if your life doesnt depend on it,I dont know why youre buying it.Youre setting yourself up,and shes right,I was setting myself up for financial stress.I am finally ready to build my wealth.”Financial Coaching Client of Alejandra Lozano,HOPE Inside Financial Well-being Coach(Wells Fargo HOPE Inside Los Angeles)More information about our impact in 2022 can be found on our Banking Inclusion Initiative website and in our annual Diversity,Equity,and Inclusion Report,which can be found on our Goals and Reporting website.4 Operation HOPE is a 501(c)(3)organization that helps individuals of all ages by offering financial education,one-on-one coaching,courses on credit score improvement,as well as pathways toward homeownership and starting a business.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 12 Philanthropic programs enabling financial inclusion5The Wells Fargo Financial Capability Grant Program focuses on helping low-to moderate-income populations set their own financial goals,build savings,reduce debt,acquire financial assets,and establish or improve their credit through one-on-one financial coaching and counseling.In 2022,we invested$5.4 million in this program across a variety of agencies,including the Cities for Financial Empowerment Fund,International Rescue Committee,Local Initiatives Support Corporation,or LISC,and others.In 2022,our investments in this program helped individuals save$14.1 million and reduce debt by$17.4 million,assisted over 9,500 people in establishing or increasing their credit score,and supported more than 9,800 individuals in acquiring financial assets.Local Initiatives Support Corporation testimonials Keyonna,mother of two,used LISCs Twin Accounts tool to build credit and save money at the same time.With assistance from her Financial Opportunity Center coach at HumanKind,a LISC partner in Richmond,Virginia,supported by Wells Fargo,Keyonna was able to follow a savings plan,pay off her car loan,and build a brighter financial outlook for her family.“It is the most amazing sensation,knowing homeownership will be possible,”shared Edith,who once believed her dream of becoming a homeowner might be out of reach.Thanks to her hard work and guidance from coaches at The Alliance TX,a LISC partner in Houston,this dream is becoming a reality.Edith built both her credit and savings through engaging in this program.5 Figures related to savings,debt reductions,and individuals assisted and supported are self-reported to Wells Fargo by organizations and as such,Wells Fargo cannot guarantee the accuracy of the totals.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 13 Helping people through our Credit Building Grant Program6Wells Fargos Credit Building Grant Program works with nonprofit lenders with a focus on small-dollar,credit-building loans,rent reporting,credit education,and credit rehabilitation to help low-to moderate-income people establish or build their credit successfully to ultimately grow savings and reduce debt.In 2022,we enabled individuals to reduce debt by$10.1 million and helped 10,500 people establish or increase their credit score.A key partner in this program,Grameen America,serves diverse women entrepreneurs through microloans that help women business owners establish or increase their credit.One recipient of the Credit Building Grant Program in partnership with Grameen America is Meregilda,who came to the U.S.from the Dominican Republic.After moving to Brooklyn over 25 years ago,Meregilda opened a restaurant to share her love of traditional Latin dishes from the Caribbean.Meregilda has been a Grameen America member since 2014.Shes proud of the growth shes seen in both her credit score and her business after multiple loan cycles.To date,Grameen America has provided over$35,000 to Meregildas restaurant through 13 microloans.Meregilda hopes to leverage her savings and good credit to open a second restaurant in Staten Island.“With my loans,I have been able to pay the salaries of new employees,which has allowed me to bring on the extra help I needed at the restaurant.My credit score is better than it has ever been.”Meregilda,Credit Building Grant Program recipient6 Figures related to debt reductions and microloans credit scores are self-reported to Wells Fargo by organizations and as such,Wells Fargo cannot guarantee the accuracy of the totals.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 14 Partnering with the International Rescue Committee In collaboration with the International Rescue Committee,or IRC,Wells Fargo supports immigrants and refugees newly settled in the U.S.as they navigate the U.S.banking system.Wells Fargo provides funding for the IRCs financial coaching and lending(credit building loan)programs.The staff at the IRC speaks multiple languages to provide financial coaching and counseling to immigrants and refugees from around the world.The organization also provides access to certain financial products,including a credit building ladder loan to help new citizens build their credit for the first time.In 2021,Inam arrived in Baltimore,Maryland,from Pakistan.Inam attended credit information sessions offered through IRC Baltimores financial capabilities program and signed up for an IRC credit building loan.Inam and his financial coach met several times to devise a plan to pay down his credit card debt.Inam bought a truck in March 2022,about one year after arriving in the U.S.Using it to transport himself and his tools,he has built a successful contracting business and can now employ two other builders.Inam also used his extra income to clear his debts,and with help from his credit-building loan,he has gone from having a poor to an excellent credit ranking in under one year.Supporting the Bank On program Wells Fargo supports the Bank On program,which is led by the Cities for Financial Empowerment Fund.This organization educates unbanked Americans about the benefits of having a bank account and connects consumers to affordable accounts without common barriers,like overdraft fees.Wells Fargo funds the Bank On program both nationally and locally and provides local engagement and expertise to coalitions in regions across the country to pilot new strategies and approaches that help overcome barriers to banking access in several markets with high concentrations of unbanked households.This,in turn,helps develop a more seamless path for unbanked communities to navigate the traditional banking system.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 15 Promote housing access and affordability Wells Fargo is working to increase access to quality,affordable places to live,especially for individuals and families historically excluded from the housing market.Since the beginning of 2019,we have donated more than$525 million to help support available and affordable rentals,homeownership,and housing stability.Additionally in 2022,Wells Fargo announced an expansion of its Dream.Plan.Home closing cost credit,which provides borrowers with an income at or below 80%of the median income in the area where the property is located up to$5,000 to use toward closing costs.The credit is available in certain counties within 20 markets.Another Wells Fargo program is Wealth Opportunities Realized Through Homeownership,or WORTH,a$60 million national philanthropy effort to address systemic barriers to homeownership for people of color.Nationally,WORTH aims to help 40,000 new homeowners of color in eight markets by the end of 2025.Additionally,the Wells Fargo Foundation announced a$40 million Growing Diverse Housing Developers initiative focused on expanding the growth and success of real estate developers of color,including Black-and Latino-owned firms.More information about our commitment to housing affordability and opening new pathways to housing is available in our annual Diversity,Equity,and Inclusion Report,which can be found on our Goals and Reporting website.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 16 Develop small business growth Small businesses strengthen communities,drive economies,and provide millions of jobs across the U.S.Wells Fargo is committed to supporting small businesses and providing access to capital that can help them turn entrepreneurial dreams into successful realities.Our goal is to be the bank of choice for all small businesses.To advance that goal,we develop deep relationships and personalized solutions for the small businesses we serve today and catalyze philanthropic programs to help enable equitable access to capital for diverse-and women-owned small businesses.Open for Business Fund meets the needs of diverse business owners7Launched in 2020,the multiyear Open for Business Fund,or OFB,delivered approximately$420 million in grants to nonprofits focused on serving small businesses at the community level,with an emphasis on meeting the specific needs of diverse small business owners.Funded organizations deeply understand the circumstances and needs of small businesses in their communities,and were able to leverage their OFB grants to raise a total of$1.8 billion in grants and debt to meet demands for affordable financial services and technical support for small businesses.Between 2020 and the end of 2022,OFB grant recipients have supported over 188,000 small businesses that provide nearly 236,000 jobs.Approximately 79%of these went to diverse-owned small businesses.Que Bonito Mexican and Fashion in Houston is one example of a small business that received critical support.When the owner,Diana,wanted to grow her business,she joined the Open for Business for Women Entrepreneurs program,led by the Houston Community College Office of Entrepreneurial Initiatives in partnership with the Houston Mexican Consulate,and funded by the OFB.“It was a blessing,”Diana said about the knowledge she gained that helped her grow her business.“For me,its not a new beginning,but having the confidence to go to the next level.Being a small business owner means freedom.”7 Figures related to the Open for Business Fund are self-reported to Wells Fargo by grant recipients and as such,Wells Fargo cannot guarantee the accuracy of the totals.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 17 Open for Business Fund program impact Unit Results through 20228 Businesses served#of businesses 188,320 Jobs created or preserved#of jobs 235,900 Businesses served that are racially or ethnically diverse owned%of businesses 79%Businesses served that are women owned%of businesses 54%Businesses served that are owned by low-to moderate-income individuals%of businesses 72%Hours of technical assistance provided#of hours 738,530 Making connections through the Small Business Resource Navigator In 2022,Wells Fargo announced the Small Business Resource Navigator,an online portal helping connect small business owners to potential financing options and technical assistance through Community Development Financial Institutions across the U.S.The portal was launched in collaboration with the nonprofit Community Reinvestment Fund,USA and was made possible by a Wells Fargo OFB grant.Since its launch,the Small Business Resource Navigator has introduced nearly 1,200 small businesses,a majority of which self-identify as diverse,to potential credit opportunities and technical assistance services provided by Community Development Financial Institutions.This online tool is designed to simplify and streamline the capital process for time-strapped entrepreneurs,helping them quickly and effectively identify their best options.By visiting 9 and completing a short questionnaire,business owners can connect to relevant Community Development Financial Institutions or business advisory resources in their area.8 OFB grant recipients report on cumulative impact data for up to three years following receipt of an OFB grant.Impact data will continue to be tracked through early 2025.9 Wells Fargo has provided external links within this document for your convenience,but Wells Fargo does not endorse and is not responsible for the content,links,privacy policy,or security policy of these websites.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 18 Supporting women-owned businesses with Connect to More Wells Fargo increased our support for women-owned businesses,announcing plans to provide mentorship opportunities for 1,000 women in 2022 through our Connect to More program.Developed in partnership with the Nasdaq Entrepreneurial Center,this initiative provides women entrepreneurs with complimentary access to the Centers signature 12-week Milestone Circles10 mentorship program where they collectively received roughly 13,000 hours of mentorship support.Connect to MoreSM participants reported tremendous benefits as a result of the program.More information about supporting women-owned businesses is available at Wells Fargos Connect to More for Women Entrepreneurs site and in our annual Diversity,Equity,and Inclusion Report,which can be found on our Goals and Reporting website.“Through my 12 weeks in the Milestone Circles program,I was able to document a lot of processes and standard operating procedures that enabled me to onboard four new team members and step out of being directly involved in every single client deliverable.This has allowed me to scale my business from$9,000 in revenue to$20,000 in revenue monthly and to a team of 11 amazing humans.”Rachel Pereyra,owner of Mastermind Business Services“The Milestone Circles program really blew me away with its approach to bridging vision with goals.The team created an environment for success with exercises that challenged me to really dig deep into our vision,which opened up so many opportunities.I was able to clearly consider our desired funding journey and received expert feedback from mentors.As a result,our company has identified funding partners that support our vision and mission.The future of FeaturesFirst Auto is a lot brighter with more clarity and funding!”Lisa Bailey,owner of FeaturesFirst Auto 10 Figures related to Milestone Circles are self-reported to Wells Fargo by grant recipients and as such,Wells Fargo cannot guarantee the accuracy of the totals.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 19 Scale clean energy Wells Fargo believes there is a path forward in the transition to clean energy,which will take time,commitment,and capital to pave.We are a leading capital provider for the clean energy economy,supporting manufacturing and deployment of key technologies like solar and wind power.Our finance and tax equity teams support projects ranging from residential rooftop solar to community projects to large utility-scale developments.For our own operations,we have met 100%of our global electricity consumption with renewable energy since 201711,and we aim to continue to transition to long-term contracts for new renewable energy sources to meet our future needs.We expect this approach to provide a more permanent and sustainable path to clean energy and serves as a catalyst for large-scale development that will provide new clean energy sources for Wells Fargo and beyond.Renewable energy12 Unit 2020 2021 2022 Total electricity consumed13 MWh 1,654,354 1,550,417 1,579,854 Total renewable energy purchased14 MWh 1,666,777 1,673,872 1,584,509 Renewable energy%of total electricity15use1 108 100 Total capacity from long-term agreements supporting new sources of renewable16energyMW 186 210 210 11 Since 2017,Wells Fargo has secured enough Renewable Energy Certificates to meet or exceed our annual consumption of purchased electricity.12 Environmental and energy use data included in this report are subject to measurement uncertainties resulting from limitations inherent in the nature and the methods used for determining such data.The selection of different but acceptable measurement techniques can result in materially different measurements.In this report,we are not using such terms“material”or“materiality”as they are used under the securities or other laws of the U.S.or any other jurisdiction,or as they are used in the context of financial statements and financial reporting.Materiality,for the purposes of this document,should not,therefore,be read as equating to any use of the word in other Wells Fargo reporting or filings.The precision of different measurement techniques may also vary.Consumption is based on raw data.When raw data is unavailable,the Company estimates consumption based on a square foot extrapolation of the average consumption from the most comparable facilities.Third-party data(such as electricity and fuel usage)has been obtained from sources believed to be reliable,but the suitability of the design and effectiveness of the third-party systems and associated controls over the accuracy and completeness of the data has not been independently assessed.13 Includes purchased electricity and self-supplied electricity generated through Wells Fargos on-site solar program.14 Total renewable energy purchased includes self-supply renewable energy where Wells Fargo generates renewable energy from on-site solar installations,power purchase agreements,which are contracts for the purchase of power and associated Renewable Energy Certificates,as well as Unbundled Renewable Energy Certificates,which are sold,delivered,or purchased separately from the electricity generated from the renewable resource.15 Wells Fargo secures enough Renewable Energy Certificates to meet or exceed our annual consumption of purchased electricity.16 New sources of renewable energy are defined as assets where commercial operation was achieved no earlier than 12 months prior to contract execution.This data includes cumulative new renewable energy generation capacity contracted by Wells Fargo.Some assets have not yet achieved commercial operation and are under construction.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 20 Deploying clean energy across our operations Wells Fargo promotes clean energy usage across our facilities.Reductions from base year to our Scope 2 GHG,emissions which result primarily from purchased electricity,are supported in part by adding on-site solar.Wells Fargo made progress in 2022 in installing solar energy arrays at our facilities.Cumulatively through the end of 2022,solar energy facilities had been commissioned at nearly 60 locations in eight U.S.states and two non-U.S.countries.A highlight of our 2022 progress was“flipping the switch”on a 2 megawatt solar installation at our Jordan Creek campus in Iowa.Wells Fargo is continuing to develop and install an additional approximately 10 megawatts of new,on-site solar generation assets at nearly 30 corporate and retail locations in California,Arizona,and Minnesota through a vendor relationship with Ameresco.In addition,through the end of 2022,we have entered into over 210 megawatts of long-term agreements supporting new sources of renewable energy across 13 U.S.states and two non-U.S.countries,helping to create new jobs and advance the resiliency of communities in the process.Wells Fargo signed multiple clean-energy contracts that not only help to meet our own energy needs,but also support projects to deliver new clean options for businesses and households at a regional level.Highlights include:Wells Fargos off-site solar contract with Salt River Project came online in 2022,supporting our operationsin Arizona.An 8 megawatt subscription agreement signed in 2022 with US Solar in Colorado to build five newcommunity solar gardens,which are projected to generate enough energy to power almost 100 WellsFargo properties.Our relationship with US Solar provides early access for Wells Fargo employees to signup for US Solars community solar program through Colorado employees local utility.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 21 Financing clean energy In 2022,Wells Fargo built on its status as a significant capital provider for clean energy in the U.S.Our Renewable Energy&Environmental Finance team had its largest year ever,deploying$2.7 billion of tax equity capital for renewable power and storage projects,bringing its total lifetime investment to$15.9 billion.In addition,our renewable energy and asset finance business continued to grow its portfolio of project loans to support a range of renewable energy technologies.Financed projects include large-scale solar installations,as well as distributed projects like commercial and community solar.Some of these community solar projects are developed to specifically serve low-to moderate-income households.In addition to expanding existing businesses,in 2022 we entered new clean energy markets.For example,Wells Fargo entered the residential solar loan market for the first time,closing a$200 million solar warehousing line with a leading residential solar loan originator.This financing will allow households to save money through rooftop solar with little or no money down.Also in 2022,Wells Fargo supported the continued development of battery storage technology and deployment,which is critical to advancing clean energy adoption.This included providing loans to several renewable energy projects that incorporated storage.We also invested in storage projects with our tax equity capital to further support this growing market.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 22 Increase sustainability where we live and work Across our footprint,we are working to minimize use of energy,water,and other resources,and reduce GHG emissions in our operations.Advancing progress across our operations Wells Fargo has set refreshed operational sustainability goals for 2030:Reducing GHG emissions(Scope 1 and 2)from 2019 levels by 70%.Reducing energy usage from 2019 levels by 50%.Reducing total waste stream from 2019 levels by 50%.Reducing water usage from 2019 levels by 45%.Driving new renewable energy projects to meet 100%of annual purchased electricity needs.17Wells Fargo plans to achieve these goals by continuing to work to reduce our energy and water consumption,and total waste stream,while maintaining our commitment to the health and well-being of our employees and a positive workplace experience.Across our footprint,we made progress in 2022 toward our ongoing efforts to transition to more renewable energy sources.We also announced plans to consolidate our office space in the Dallas area with a new 22-acre campus that is expected to produce more energy at that site than it consumes.More than 3,000 employees will report to the new Dallas campus,expected to open in 2025.17 Wells Fargo has been meeting 100%of its electricity consumption with renewable energy primarily with unbundled Renewable Energy Certificates from existing assets,with a goal to transition to long-term agreements that directly support new sources of renewable energy.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 23 For our new Dallas campus and other construction projects,Wells Fargo continues to use the U.S.Green Building Councils Leadership in Energy and Environmental Design,or LEED,certification framework as a benchmarking tool and to help guide best practices.The new state-of-the-art campus at the Las Colinas Urban Center will include rooftop solar panels,electric vehicle charging stations,east-west orientation,exterior shades,electrochromic glass,grey water/storm water reclamation,sustainable building materials,and native plantings that minimize the need for irrigation and fertilizer.We are focused on consolidating our real estate assets in a way that reduces our environmental impact.Wells Fargo is also continuously exploring programs that allow us to reduce waste and increase diversion from landfills by expanding efforts like composting,recycling,and other ways to achieve a positive impact.One example is our long-running program to donate used office furniture to nonprofit groups across the country.From 2014 through 2022,we diverted nearly 12,000 tons of used furniture from landfills by making nearly$3 million worth of in-kind donations to more than 600 community organizations.This extended the useful lives of desks,chairs,and other furniture that may otherwise have been discarded.Removing carbon Wells Fargo works closely with a third-party expert to purchase carbon removal credits18 for Scope 1 and 2 of our operational GHG emissions.These credit purchases are evaluated against a set of specific quality criteria such as additionality,baseline,and carbon accounting methodology for credit issuance,alongside our potential negative impact on surrounding ecosystems and the length of time carbon is stored.In addition to the purchase of high-quality carbon credits,Wells Fargo recognizes the importance of supporting the advancement of carbon removal through our philanthropic efforts.We have made grants to help to fund regenerative agriculture,soil health research,forest carbon program advancement,ocean carbon research,and many other meaningful and measurable activities.For example,a$200,000 grant from Wells Fargo to the Soil Health Academy is helping to advance the adoption of soil health-focused regenerative agriculture throughout the U.S.18 For 2022,a portion of these credits are Verified Carbon Standard certified and have also achieved the add-on Climate,Community and Biodiversity certification and are therefore Verified Carbon Standard Climate,Community and Biodiversity certified.The remaining portion is certified by the Climate Action Reserve.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 24 Financing a greener future Many lines of Wells Fargos business finance activities promote sustainability in our day-to-day lives either at home or at work.Included in the Companys efforts is our significant consumer EV auto lending business,which now represents nearly 10%of the auto loan portfolio by volume and helps customers across the country move toward clean transportation.We were also the sole lender on a combined$35 million deal to support Orange EV,a manufacturer and servicer of electric yard trucks used by freight transportation and warehousing companies to move trailers around their properties.Orange EV is a leader in the heavy-duty EV space with over 700 trucks deployed with more than 170 fleets.19 In 2022,Wells Fargo also led the financing for Washington,D.C.to replace approximately 75,000 of its city lights(i.e.,streetlights,lighting along paths,etc.)with energy-efficient LED technology and install wireless access points for broadband.The lights are also being equipped with remote monitoring and control.Switching to LED lights is expected to reduce energy consumption by more than 50%,while eliminating 38,000 metric tons of GHG emissions annually.20 We also advance sustainability by supporting green buildings21.Real Estate Capital Europe named Wells Fargo the runner-up for its Sustainability Financing Deal of the Year:Europe for a sustainability-linked refinancing deal in London.Also,Wells Fargo led a$3.5 billion sustainability-linked revolving credit facility for CBRE,a leading global commercial real estate firm.The terms of the facility are linked to CBREs pledge to increase LEED-certified square footage and to convert its fleet of vehicles to electric power.Supporting our employees to make an impact Wells Fargo appreciates the passion and generosity of our employees and the positive community impact they make through their time,talent,and monetary gifts to multiply the Companys efforts.To support the volunteer efforts of our employees,we provide eligible employees with up to 16 hours of paid volunteer time each year to serve the communities where they live and work.Employees are empowered to dedicate their resources to the unique causes they care about most.19 Figures related to fleet vehicles are self-reported to Wells Fargo and as such,Wells Fargo cannot guarantee the accuracy of the totals.20 Figures related to lighting and related efficiencies are self-reported to Wells Fargo and as such,Wells Fargo cannot guarantee the accuracy of the totals.21 For details about Green Building standards,please see our Sustainable Finance Eligibility Criteria in the Appendix.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 25 Volunteering in 2022:highlights Global,location-based Employee Impact Teams were created within Wells Fargo in spring 2022 by integrating two internal groups,Green Teams and Volunteer Chapters.Fifty-two Employee Impact Teams keep interested employees connected to local volunteer opportunities in their communities,resulting in over 700,000 hours volunteered in 2022.Our Community Care Grants program recognizes employee gifts of time,talent,and treasure.Through personal giving or service activities,employees may qualify for up to$2,000 in Community Care Grants per year for their preferred eligible charities.Employees directed over$14 million in Community Care Grants to charities in 2022.The Welcome Home Program,introduced in 2022,is a month-long employee volunteer initiative focused on the intersection of affordable housing and sustainability across Wells Fargos global footprint.In 2022,over 90 different charity partners received direct volunteer support from employees.In a single month,the program saw more than 5,000 employees log more than 24,000 hours of volunteer time across 274 volunteer events.Due to the outstanding success of this initial program,we plan to continue and scale this initiative in 2023.The Global Fellows Program provides Wells Fargo employees an opportunity to donate their time and professional skills in support of nonprofits in the U.S.and beyond to solve business challenges for selected organizations.Since 2014,nearly 250 Global Fellows have provided consultation to more than 30 organizations.In 2022,the program expanded to support 14 projects,including seven projects on behalf of nonprofit grantees of the Wells Fargo Foundation,with fellows completing a total of more than 2,400 volunteer hours.For example,one team of five Global Fellows volunteered for a project on behalf of the Association for Enterprise Opportunity and Bankers Without Borders and was tasked with evaluating,analyzing,and reporting on the current operations at Association for Enterprise Opportunity to recommend improvements to the organizations operations to foster growth and efficiency.“Global Fellows came at such a great time in my career.I feel re-energized about my profession and the ways my career experience translates to solve other industry challenges.This program has also been helpful in recommitting to why I have stayed with Wells Fargo for 18 years.”Global Fellows participant Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 26“This master class of six sigma experts significantly elevated our organizations strategy to a new progressive level of operations.”Connie Evans,President&CEO,Association for Enterprise Opportunity Many Wells Fargo employees are active in nonprofit board service in the communities where they live and work.In 2022,we published a board resource guide and partnered with BoardSource,a leading industry organization on board governance,to further support employee board participation.Employees have access to a host of free resources on board service,interpreting financial information,fundraising,and finding a board thats right for each individual.Volunteering to support housing access Wells Fargo donated to the Veterans Community Project to build tiny houses in St.Louis for veterans in need of transitional housing.In addition to a grant of$100,000,Wells Fargo employees volunteered their time to help build these homes for veterans in need.Our offices in St.Louis also hosted an event to assemble hygiene kits with basic necessities for veterans in the area.Employee service and impact Unit 2020 2021 2022 Global employee participation in volunteer activities22#of hours(in thousands)640 600 700#of employees 26,951 19,182 33,513%of employees 10 7 14 Employee giving23 USD(in millions)15.8 15.3 13.9 22 Wells Fargos COVID-19 safety protocols prohibited in-person,Wells Fargo-sponsored group volunteerism from 2020 to 2021 though individuals volunteered virtually.The pause on in-person volunteering was lifted in Q2 of 2022.23 In 2020,Wells Fargo transitioned from an annual giving campaign to year-round giving for more flexible employee giving options.This adjustment is reflected in the 2020 and 2021 employee giving results for the respective fiscal years.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 27 Advance climate finance and innovation Many of the financing tools and technologies needed to transition to a low-carbon economy already exist and are commercially viable.However,innovation and advancement are still needed.In some cases new financing mechanisms must be paired with policies and updated market practices.And new companies and technologies must be nurtured to push innovation forward and provide the full set of solutions society needs to transition to a low-carbon economy.Moving climate finance forward Today,Wells Fargo offers a range of financing tools to support customers voluntary adoption of low-carbon solutions.But barriers remain that can make it difficult for some customers to transition.One example of this is regarding multifamily and affordable housing.In 2022,we teamed with RMI(formerly Rocky Mountain Institute)to convene key industry experts and practitioners,including leading developers,lenders,policy influencers,and others,to engage in interactive workshops to address the challenges impeding the advancement of affordable low-carbon multifamily housing.Several strategies emerged from the workshops,including providing guidance on how to improve existing climate-related data reporting and benchmarking systems,and deploying grants to technical assistance programs.An integrated approach across the solar value chain Wells Fargo is a leading tax-equity investor in solar projects.With our broad range of capabilities and financing solutions spanning markets and customer segments across the globe,Wells Fargo goes beyond project deployment to support the entire solar value chain.Today,Wells Fargo serves clients that manufacture,distribute,and install solar panels and solar components around the world.We also provide a suite of financing and investment tools including construction finance,bridge lending,long-term asset-based loans,asset-backed securitization,and tax-equity investment.This work supports everything from large utility-scale projects to community-solar and individual rooftop projects.This ecosystem-based approach is enabled by close coordination among multiple Wells Fargo teams.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 28 Contributing philanthropically The Wells Fargo Foundation dedicates resources to support philanthropy related to our sustainability priorities.These initiatives are intended to support an equity-focused transition to a low-carbon economy with an emphasis on mitigating climate impacts and expanding sustainable finance solutions.We partner with nongovernmental organizations such as RMI that help advance climate finance solutions,including those focused on low-and moderate-income communities.We also support the acceleration and adoption of clean technologies,working with partners nationally,like our collaboration with the National Renewable Energy Laboratory through the Wells Fargo Innovation Incubator,or IN2,program.Collaborating with the Los Angeles Cleantech Incubator One example of our philanthropic approach to climate finance is the Wells Fargo Foundations support for the Los Angeles Cleantech Incubator,or LACI.In 2022,LACI announced the launch of its nationwide LACI Cleantech Debt Fund,a first-of-its-kind green loan program to scale early-stage cleantech startups and accelerate equitable climate action.LACI aims to help underrepresented business founders overcome some of the institutional and historical barriers they face in accessing capital to grow their companies.The Debt Fund provides non-dilutive capital to early-stage startups.Unlike most traditional loans,LACI does not require personal collateral or personal credit scores for underwriting.To support this important work,Wells Fargo provided grant funding to cover LACIs initial operating costs and loan loss reserves.Advancing progress through the Wells Fargo Innovation Incubator Another philanthropic venture is the Wells Fargo Innovation Incubator program,a$50 million collaboration between the Wells Fargo Foundation and the U.S.Department of Energys National Renewable Energy Laboratory.IN provides technical assistance and validation to promising cleantech startups with a goal to quickly and successfully drive innovative technologies to market that lower carbon emissions and better position them for investment.The IN portfolio includes 65 companies that each receive up to$250,000 in nondilutive capital and research support.In 2022,IN launched the programs first all-demonstration cohort,meaning each of the five startups chosen will complete the program with an actual demonstration of their technologies.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 29 To boost impact,IN fosters an ecosystem of expertise and support.The IN Channel Partner network includes more than 60 incubators,accelerators,and universities that mentor and refer companies to the program.The Wells Fargo IN board of directors reviews applicants,providing a business perspective as part of the decision-making process.Two external advisory boards,the Commercial Buildings and Housing Board and the Sustainable Agriculture Board,select the final participants.The Farmers Business Network,an IN2 partner,provides field trial opportunities and exposure to commercial markets to agtech startups.In 2016,IN launched the$5 million Channel Partner Award program to support events,strategic meetings and trainings,and large collaborative initiatives between the Channel Partners.The program expanded in 2020 and will deliver an additional$5 million in Channel Partner Awards through 2024.Wells Fargo Innovation Incubator(IN)Unit 2020 2021 2022 Grant dollars awarded USD 3,119,457 1,971,000 3,155,000 Organizations supported#of organizations 74 24 24 Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 30 Support an equity-focused transition As part of Wells Fargos commitment to sustainability,we maintain a focus on vulnerable communities,helping them mitigate climate impacts and gain access to sustainable finance solutions.Enabling sustainable-affordable housing through philanthropy Multifamily and single-family housing contribute significantly to overall emissions from the building sector,however;efforts to reduce emissions in affordable housing are nascent and complex.To help address this challenge,Wells Fargo has provided grants to support and accelerate efforts that couple climate-related principles with affordable housing.This combination helps improve community and individual household resilience in the face of volatility brought on by climate change,extreme weather events,and increases in utility costs.For example,a$1.5 million grant from Wells Fargo to the Inclusiv Smart-E Loan program will help community development credit unions accelerate affordable sustainable financing for low-and moderate-income communities in Arizona,New Mexico,and Texas.The Smart-E Loan program vets contractors and potential sustainable projects,and provides technical assistance to community development credit unions to help expand lending to their customers.An important goal of the program is for low-income households to access energy efficiency and decarbonization projects that help improve their homes and lower utility costs.In another example,the Stewards of Affordable Housing for the Future leveraged a grant from Wells Fargo to create a tool that allows affordable housing portfolio owners to calculate their annual GHG emissions.With this calculator,Stewards of Affordable Housing for the Future hopes to equip partners and other affordable multifamily portfolio owners with the necessary tools to establish credible baselines of their GHG emissions footprint and make informed decisions on how to reduce their overall emissions.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 31 Advancing climate resiliency in communities across the U.S.Wells Fargo recognizes that the impact of climate change can affect some communities more than others.As part of Wells Fargos focus on climate resiliency,we collaborated with the Institute for Sustainable Communities and the Tides Foundation to launch the Dismantling Energy Inequity in Communities of Color program in 2022(announced in early 2023).The initiative was enabled by a$2.85 million grant from the Wells Fargo Foundation to create more equitable access to clean and affordable energy and improve climate resiliency in historically excluded communities.From this initiative,the Institute for Sustainable Communities created a national cohort across 10 U.S.cities,leveraging the expertise of Black-,Brown-,and Indigenous-led community-based organizations to develop weather-resilient,solar-powered community centers,known as resilience hubs.These hubs will serve as gathering places for community members in times of joy with support through educational and social programs and in times of climate-related and severe-weather crisis including flooding and power outages as cooling centers in the summer and heat shelters in the winter.Wells Fargo also provided a grant to The Greenlining Institute to support the California Strategic Growth Councils Transformative Climate Communities program implementation in the city of Stockton,California.The grant will support the community-driven application of Stocktons Sustainable Neighborhood Plan,which includes water efficiency upgrades,urban tree canopy development to mitigate heat island effects,and energy efficiency upgrades for low-income households.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 32 Wells Fargo Institute for Sustainable Finance In 2021,we launched the Wells Fargo Institute for Sustainable Finance,which supports clients and communities in accelerating the transition to an equitable,lowcarbon economy.The Institute publishes research,surveys,and articles,and convenes subject matter experts for roundtables and workshops.The goal is to identify proven and emerging approaches to increase sustainable financing and community investment opportunities,including the deployment of$500 billion in sustainable financing by 2030.The Institute also serves as a resource for employees,hosting employee learning sessions and webinars and publishing content relevant to their professional and personal lives,such as a briefing on how the federal Inflation Reduction Act can create potential business opportunities for our bank.Working with mayors to advance resilient cities Through a year-long collaboration with the U.S.Conference of Mayors,Wells Fargo embarked on an initiative to educate mayors and business leaders on best practices to address and reduce the impacts of climate change in their communities.Following a series of engagements with mayors and a workshop with city representatives and public and private sector organizations,the U.S.Conference of Mayors published a white paper,“Investing in Resilient and Equitable Neighborhoods,”exploring how multisector efforts can reduce emissions and prepare communities for future risks.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 33 Measure our progress Wells Fargo is making progress on our goals and actions while driving impact along the journey to a resilient,equitable,and sustainable future.Focusing on communities At Wells Fargo,we strive to align our resources and expertise to make a positive impact in communities,address complex societal issues,and help build a more inclusive,sustainable future for all.We aspire to strengthen historically underserved communities by investing in pathways to economic advancement and generational wealth.We provide grants to nonprofit organizations working to strengthen the resiliency of our communities and our planet with a focus on supporting nonprofits that strategically align with our funding priorities:financial health,housing access and affordability,small business growth,and sustainability.Total philanthropic giving24 Unit 2020 2021 2022 Total philanthropic giving USD(in millions)390 280 300 24 Does not include grants distributed through the Open for Business Fund.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 34 2022 philanthropic giving by focus area25,26 Focus Area Percentage Housing Access and Affordability 41%Small Business Growth 20%Financial Health 14%Sustainability 7%Human and Social Services 7ucation 5%Civic Engagement 2%Workforce Development 2%Arts and Culture 1%Other 2%Wells Fargos second Inclusive Communities and Climate Bond,a$2 billion bond,supported sustainable finance efforts for projects and programs that contribute to housing affordability,economic opportunity,renewable energy,and clean transportation.The Company was recognized at the 8th Climate Bonds Awards for the Largest Financial Corporate Sustainability Bond of 2022 by the Climate Bonds Initiative.More information about the Inclusive Communities and Climate Bond is available in our annual Diversity,Equity,and Inclusion Report,which can be found on our Goals and Reporting website.Deploying sustainable finance In 2022,Wells Fargo continued to leverage its broad range of products,solutions,and capabilities across our lines of business to drive financing toward sustainable activities.This included using existing financing tools that have long been a strength of Wells Fargo,including commercial and consumer lending,equipment finance,and debt underwriting.We also drove capital through business units built from the ground up to serve sustainability objectives.These include Community Lending&Investment,Renewable Energy&Environmental Finance,and Sustainable Finance&Advisory.25 Priority focus areas are bolded.Focus area categorization is based on the primary assigned focus area of each grant at the time of application.Grants with multiple focus areas are shown only under their primary area of focus.26 For the purposes of this table,Sustainability totals are inclusive of grants supporting climate resiliency in vulnerable communities,enabling finance focused on climate including vulnerable communities,support of cleantech,as well as those grants that are made and categorized by team members across the Wells Fargo Foundation.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 35 As Wells Fargo grows its sustainable finance activities,we strive to produce transparent and accurate reporting.To that end,we provide a breakdown of sustainable finance volume(see below),and measure progress toward our$500 billion goal based on our Sustainable Finance Eligibility Criteria(the criteria),which is included in the Appendix of this report.Our criteria evolve as industry best practices change and mature and are built around two key premises:Wells Fargo defines sustainability to include both environmental and social transactions.The criteria are designed to capture transactions where the funds are used for sustainable activities,including transactions with features that encourage qualifying sustainable activities.These premises align with the Companys continued focus on delivering benefits to our clients,customers,and communities.During the calendar years 2021 and 2022,Wells Fargo originated,committed,advised,or facilitated approximately$129 billion in sustainable finance activities,representing approximately 26%of our commitment to deploy$500 billion of sustainable finance between 2021 and 2030.Wells Fargos sustainable finance activity is divided into three categories:standard-aligned sustainable finance,environmental finance,and social finance.Approximately 57%of our progress through 2022 supported standard-aligned sustainable finance,while close to 28%went to environmental finance,and around 15%supported social finance.For each of our first two years of progress toward our$500 billion goal,we obtained limited assurance27 on our assertion of the total amount of sustainable finance activities originated,committed,advised,or facilitated that meet the criteria28.27 See Independent Accountants Review Report in the Appendix of this report for more details.28 Our 2022 Sustainable Finance Criteria was updated for calendar year 2022 related to Green Buildings(inclusion of additional green building certification schemes),Housing Affordability(inclusion of financing that meets government and government-sponsored enterprise definitions of affordable housing),and Standard-aligned Sustainable Finance(inclusion of transactions not captured by Dealogic or Bloomberg and reviewed internally).See Sustainable Finance Eligibility Criteria in the Appendix for more details.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 36 Sustainable finance*(2021-2022)In 2022,the U.S.passed the Inflation Reduction Act,one of the largest climate and clean energy policies in the world.The Inflation Reduction Act provides an estimated$369 billion in federal incentives to support clean energy deployment,vehicle electrification,cleantech manufacturing,industrial decarbonization,and commercialization of key new energy solutions like green hydrogen and carbon capture,utilization,and sequestration.These incentives are expected to mobilize more than$1 trillion of private investment this decade.Clients across sectors have already reached out regarding potential financing solutions and information related to obtaining Inflation Reduction Act benefits on new projects.We are providing briefings to clients and teams internally to raise awareness.The Company is also directly engaging with policymakers to inform program design and encouraging effective implementation.We will continue to monitor Inflation Reduction Act developments,keep clients informed,and look for opportunities to serve clients and participate in these growing markets.*See Sustainable Finance Eligibility Criteria in the Appendix of this report for more details.Showing 2021-2022 sustainable finance activities that have been originated,committed,advised,or facilitated that meet the Sustainable Finance Eligibility Criteria.Totals may not sum due to rounding.Showing categories with$0.1B Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 37 Improving our operational and business sustainability As noted earlier in this report,Wells Fargo is working to employ tactics to drive efficiencies and responsible resource use.Through our ongoing efforts,we aim to reduce the GHG emissions,water and energy consumption,and waste associated with our operations.Notably,in 2022,we saw increases in our resource usage and emissions output as more people returned to the office after the height of the COVID-19 pandemic.Wells Fargo continues efforts to consolidate our real estate portfolio and employ additional steps to minimize waste and conserve energy as we work to meet our refreshed operational sustainability goals.Common factors used to measure relative environmental performance Unit 2020 2021 2022 Employees29#of employees 268,531 249,435 238,000 Revenue USD(in billions)74.3 78.5 73.8 Square footage30#of square feet(in millions)82.6 78.2 75.4 Energy usage Unit 2019(baseline)2020 2021 2022 Fuel(includes fuel oil,propane,and fuels for fleet vehicles)MWh 24,713 16,979 20,330 23,712 Natural gas MWh 383,277 353,183 310,483 321,539 Electricity31MWh 1,816,629 1,654,354 1,550,417 1,579,854 District heating32MWh 13,518 13,211 12,911 13,269 Total energy consumption MWh 2,238,137 2,037,727 1,894,141 1,938,375 Reduction in total energy consumption(from 2019 baseline)%9 15 13 29 Data is based on active employee headcount as of Dec.31 for each calendar year.Numbers may differ from other Wells Fargo reports that count employees based on full-time equivalent methodology.30 Includes square footage from Wells Fargo-owned and-leased facilities worldwide,as well as its network of ATMs in the U.S.Excludes square footage from land and parking lots.31 Includes purchased electricity and self-supplied electricity generated through Wells Fargos on-site solar program.32 District heating includes purchased steam.LEED buildingsUnit2019(baseline)202020212022Total square feet of LEED-certified projects33#of square feet43,896,57744,521,60544,941,22646,779,524Total number of LEED-certified projects#of projects834907912917Recycled paper usageUnit202020212022Copy paper made from 30%post-consumer waste34w7667WasteUnit2019(baseline)202020212022General recycling:plastic,metal,and cardboardShort tons5,5365,7913,9923,678Other recycling/waste diversion35Short tons6,9804,3765,0704,648Paper recycled Short tons40,09224,35621,20321,624Total recycling Short tons52,60834,52330,26529,950Total waste to landfillShort tons28,58224,64719,87422,399Total waste streamShort tons81,19059,17050,13952,349Reduction in total waste stream(from 2019 baseline)$3835WaterUnit2019(baseline)202020212022Total water consumption(municipal water use)Cubic meters7,729,7536,678,8495,454,8396,326,450Reduction in water consumption(from 2019 baseline)3018Wells Fargo|Sustainability and Governance ReportIntroductionSustainabilityEmployee support and corporate governanceAppendix3833 Includes certifications and recertifications under all LEED rating systems for relevant leased and owned spaces.34 In 2022,6.4%of Wells Fargos paper purchases(by weight)were Forest Stewardship Council certified.35 Weight from plastic deposit bags moved to Other recycling/waste diversion.In previous years,the deposit bags and confidential paper shred weight was reported together.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 39 Greenhouse gas emissions Wells Fargo calculates our operational Scope 1 and Scope 2 GHG emissions in accordance with the Greenhouse Gas Protocol.Scope 1 emissions are direct emissions that occur from sources that are controlled or owned by an organization.Scope 2 emissions are indirect GHG emissions associated with the purchase of electricity,steam,heat,or cooling,and are a result of the organizations energy use.Scope 1 and Scope 2 emissions(location and market based)36,37 2019 Unit38(baseline)2020 2021 2022 Total Scope 1 MTCO2e 86,602 78,087 73,319*77,476*Total Scope 2(location)MTCO2e 771,327 694,011 569,633*593,495*Total Scope 2(market)39 MTCO2e 4,988 3,614 1,792*4,424*Total Scope 1 and 2(location)MTCO2e 857,929 772,098 642,952*670,972*Total Scope 1 and 2(market)MTCO2e 91,591 81,701 75,111*81,901*Carbon offsets purchased40 MTCO2e 98,981 92,019 81,809*82,414*Remaining Scope 1 and 2(market)41 MTCO2e 0 0 0*0*Reduction in total Scope 1 and 2(location)GHG emissions(from 2019 baseline) 25 22*Wells Fargos Statement of Greenhouse Gas Emissions,which can be found on our Goals and Reporting website,has been reviewed by an independent accountant for the years ended December 31,2021,and 2022.36Totals in this figure and others in this report may not add correctly due to rounding.37Environmental and energy use data included in this report are subject to measurement uncertainties resulting from limitations inherent in the nature and the methods used for determining such data.The selection of different but acceptable measurement techniques can result in materially different measurements.The precision of different measurement techniques may also vary.Consumption is based on raw data.When raw data is unavailable,the Company estimates consumption based on a square foot extrapolation of the average consumption from the most comparable facilities.Third-party data(such as electricity and fuel usage)has been obtained from sources believed to be reliable,but the suitability of the design and effectiveness of the third-party systems and associated controls over the accuracy and completeness of the data has not been independently assessed.38 MTCO2e stands for metric tons of carbon dioxide equivalent.39 A location-based method reflects the average emissions intensity of grids on which energy consumption occurs(using grid average emission factor data).A market-based method reflects emissions from electricity that Wells Fargo has purposefully chosen.It derives emission factors from contractual instruments,which include any type of contract between two parties for the sale and purchase of energy bundled with attributes about the energy generation,or for unbundled attribute claims.40 In 2022,Wells Fargo purchased carbon offsets from projects that remove and store carbon.A portion of these credits are Verified Carbon Standard(VSC)certified and have also achieved the add-on Climate,Community and Biodiversity(CCB)certification and are therefore VSC CCB certified.The remaining portion is certified by the Climate Action Reserve(CAR).41 As part of its journey toward net zero,Wells Fargo has implemented carbon reduction strategies and purchased energy attribute certificates and carbon offsets sufficient to cover its total Scope 1 and Scope 2(market-based)emissions for 2022.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 40 Scope 3 emissions42 Unit43 2020 2021*2022*Category 1:Purchased goods and services MTCO2e 1,639,281 1,429,619 1,300,698 Category 2:Capital goods MTCO2e 358,268 348,249 293,289 Category 3:Fuel and energy-related activities(not included in Scope 1 or 2)MTCO2e 123,970 121,357 123,938 Category 5:Waste generated in operations MTCO2e 7,622 13,058 12,730 Category 6:Employee business travel(air travel only)MTCO2e 14,111 4,795 27,403 Category 7:Employee commuting(excluding remote work)MTCO2e 313,757 218,795 289,051*Wells Fargos Statement of Greenhouse Gas Emissions,which can be found on our Goals and Reporting website,has been reviewed by an independent accountant for the years ended December 31,2021,and 2022.Increasing engagement with suppliers Wells Fargos Supplier Code of Conduct,which can be found on our Goals and Reporting website,outlines our expectation that suppliers not only comply with applicable laws,regulations,and contract terms,but also conduct themselves with the highest standards of ethical business practices.We encourage our suppliers to join us in implementing systems designed to minimize negative impacts on the environment.Wells Fargo works with suppliers to understand their environmental and social considerations.As an example,the below table shows our engagement of certain suppliers to report their environmental data through CDPs questionnaires to better understand their emissions profile and approach to climate resiliency.Integrating ESG into supplier selection and engagement Unit 2020 2021 2022 Suppliers invited to participate in CDP survey#of suppliers 198 188 34444 Supplier CDP survey participation#of suppliers 142 139 227 Responding suppliers who have self-reported science-based targets for Scope 1 and Scope 2 emissions#of suppliers 69 88 130 42 This report includes relevant Scope 3 categories for which Wells Fargo had calculated emissions for the year ended 2022.43 MTCO2e stands for metric tons of carbon dioxide equivalent.44 Wells Fargo increased the scope of suppliers invited to participate in the survey causing the year-over-year increase.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 41 Employee support and corporate governance Live our expectations.42 Support for employees.43 Corporate governance and ethics.50 Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 42 Live our expectations Wells Fargo is committed to a culture that attracts and retains the best people who help us become a better,stronger company.Our culture is reinforced by a set of core expectations that play a vital role in our transformation journey.These Company Expectations apply to all employees at Wells Fargo they reinforce the highest standards of integrity and operational excellence and guide how we collaborate and execute as a team;embrace our differences;simplify and improve the work that we deliver;and develop,recognize,and inspire our employees to achieve performance excellence.Wells Fargo Expectations Employee feedback has contributed significantly to enhancing our culture and improving the employee experience in recent years.Employees can share their voices and valuable insights in several ways throughout the year including town hall meetings with leaders,surveys,and an employee feedback platform called Loudspeaker,which was introduced in 2021.To date,employees have submitted thousands of ideas and recommendations,many of which have been implemented,leading to efficiencies and innovation,and furthering employee engagement.Diversity,equity,and inclusion Wells Fargo is committed to advancing diversity,equity,and inclusion with a belief that a companys workforce should reflect the customers they serve and the U.S.population more broadly.In addition to focusing on diversity across our workforce,we support strategic opportunities that include diverse suppliers in competitive sourcing and procurement opportunities within our supply chain,along with efforts to support diverse customers.More information about our commitment to diversity,equity,and inclusion,including data on our representation,hires,promotions,turnovers,and support for diverse customers,is available in our annual Diversity,Equity,and Inclusion Report,which can be found on our Goals and Reporting website.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 43 Support for employees Wells Fargo believes it takes the best talent available to deliver the best the industry has to offer.And that means focusing on every aspect of being an employer of choice.Wells Fargo delivers a broad range of benefits designed to support employees when and where they need help most.We provide compelling opportunities for employees to connect and work together to strengthen themselves and their communities.And we actively work to instill a culture where individuals matter,teamwork is rewarded,flexibility is valued,and people are respected.Compensating employees competitively Competitive and fair compensation is a priority for Wells Fargo and our employees.We provide clear and simple guidelines on how compensation is determined:Wells Fargo pays for performance.Compensation is linked to Company,business group,and individual performance,including meeting regulatory expectations and creating long-term value consistent with the interests of shareholders.Wells Fargo promotes effective risk management.Compensation promotes effective risk management and discourages imprudent or excessive risk-taking.Wells Fargo is focused on attracting and retaining talent.Compensation helps to attract,motivate,and retain people with the skills,talent,and experience to drive superior long-term Company performance.Pay equity Wells Fargo is committed to fair and equitable compensation practices and,since 2015,has conducted an annual pay equity review through engagement with a third-party expert.The review analyzes employee compensation,taking into account gender,race,and ethnicity,and factors such as role,tenure,and geography.The review process can include compensation adjustments in the event we identify pay gaps.The 2022 review,modified for adjustments as described,showed that globally,women at Wells Fargo earn more than 99 cents for every$1 earned by their male peers,and U.S.employees who are racially/ethnically diverse earn more than 99 cents for every$1 earned by their white peers.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 44 Employee benefits Wells Fargo provides eligible full-time and part-time employees with a comprehensive set of benefits designed to support their physical,mental,and financial health.We also provide employees with a variety of competitive employer-paid financial protection benefits,including life insurance,short-and long-term disability coverage,and business travel accident insurance.In some countries,we provide additional plans that extend health insurance coverage and long-term disability coverage,as well as flexible benefits options,such as personal accident coverage.Employees in the U.S.have an opportunity to participate in the 401(k)Plan and receive up to a 6%match to help save for the future.Employees earning less than$75,000 a year receive an automatic 401(k)Plan contribution of 1%of pay.U.S.employees may also participate in a stock purchase plan and take advantage of discounts on financial products,home mortgages,and more.Well Life.In 2022,Wells Fargo launched Well Life,a new employer brand strategy to attract and retain high-performing talent.Well Life promotes holistic living that improves overall quality of life.It fosters a sense of community among coworkers by providing support and motivation to work toward common well-being goals.“The Well Life is for and about Wells Fargo employees!Its the expression of the passion,dedication,and spirit that our employees bring to work every day and all the good things that come from being a part of this great Company.Its our hope that employees see themselves reflected in the Well Life.”Deborah Hyman,Wells Fargo Enterprise Communications&Employer BrandPhysical health.Wells Fargo offers comprehensive and competitive medical benefits,as well as dental and vision benefits in many countries.U.S.medical plans offer preventive care services covered at 100%,prescription drug benefits,and a network of doctors and hospitals to help employees and their families maintain their health.Employees enrolled in certain U.S.medical plans can earn up to$800 in health and wellness dollars annually for completing wellness-related activities.Eligible spouses and domestic partners can earn an additional$400 in health and wellness dollars.In addition,Wells Fargo contributes up to$1,000 into a health savings account for U.S.employees earning less than$45,000 who are enrolled in certain medical plans.Employees earning$45,000 to$100,000 who are enrolled in certain medical plans receive up to$500 in a health savings account.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 45 Mental health.Wells Fargo is committed to creating a safe,inclusive environment where differences are respected and embraced.In 2022,we launched a comprehensive campaign designed to reduce the stigma around mental health,support employee well-being,and promote mental health resources available to employees and their families.The campaign began with a focus on managers,offering tips,educational information,and a conversation guide to help managers normalize the topic.While resources available to employees vary across the globe,in the U.S.and in some other countries these include a mental health mobile app,one-on-one wellness coaching,and in-person and virtual counseling through Wells Fargos medical plan benefits.Employees in all countries have access to counseling support available through the Employee Assistance Program.Family.Wells Fargo provides extensive benefits for employees who are starting families.U.S.benefits include maternity support,up to$35,000 in support for fertility treatments,up to$5,000 in reimbursement for costs related to adoption,and free breast milk shipping for employees who are traveling on Company business.Additionally,we understand the importance of flexibility in addressing family needs.In the U.S.we provide up to 16 weeks of paid time off following the birth or adoption of a child.Market-competitive paid time off following the birth or adoption of a child is also offered internationally.Backup childcare programs are available in the U.S.and in some other countries.In addition,the U.S.and some other countries provide up to five days of paid critical caregiving leave to care for a seriously ill family member or for emergency back-up care.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 46 Employee Resource Networks Wells Fargo supports 10 Employee Resource Networks,which provide opportunities for employees with varied backgrounds and interests to connect with each other.More information about the Companys Employee Resource Networks is available in our annual Diversity,Equity,and Inclusion Report,which can be found on our Goals and Reporting website.Retirement plansDiscounts and savings*Health benefitsTuition reimbursement*and scholarshipsParental and critical caregiving leavesPaid time offCommuter benefits*Adoption reimbursement*Available in U.S.and some international countries*U.S.only Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 47 Training and development Wells Fargo supports,encourages,and substantially invests in employee and manager training and development.In 2022,our training and development investment was approximately$200 million,spanning an array of functional training,regulatory compliance,leadership,and early career development programs for employees.Our Learning and Development team is focused on training employees“wherever they work”by extending our virtual training sessions instituted during the COVID-19 pandemic.Our Learning and Development efforts earned four industry awards45 recognizing the achievements in technology innovation,supporting change transformation,corporate university strategy,and diversity,equity,and inclusion training.Training and development Unit 2020 2021 2022 Total annual investment in employee learning and development USD(in millions)200 205 200 Manager Advisory Manager Advisory was launched in September 2022 as part of an effort to provide an enhanced level of support and skill development to managers at Wells Fargo.Manager Advisory works with managers within the U.S.who dont have a directly aligned contact for their general HR needs.This team provides access to experienced HR professionals who help to educate,equip,and empower managers to more effectively lead their teams.Support includes interpretation and application of HR related policies,and strategies for coaching and managing employee performance,talent management,and optimizing team dynamics.45 Awards received from Brandon Hall Group:Category:Best Strategy Corporate Learning University Gold recipient;Category:Best Launch Corporate Learning University Bronze recipient;Category:Best Learning Program Supporting a Change Transformation Business Strategy Gold recipient;Category:Best Learning Program that Supports and Promotes Diversity,Equity,and Inclusion(DE&I)Silver recipient Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 48 Employee protections Caring for employees in times of transition As Wells Fargo continues transforming our businesses,we recognize that employees may be impacted,and we provide transparent communication about the programs and opportunities they can access for support.In some cases,organizational restructuring results in employee displacements or job eliminations because of economic or operational factors.In the event of displacements in the U.S.,we support employees and provide tools to assist them with career transitions,including:Wells Fargos Displacement Policy requires that all displaced employees in the U.S.are provided a 60-day notice period,unless otherwise required by federal,state,or local laws.Regardless of working or nonworking status,employees are still considered employed during the entire notice period.Employees are eligible for a minimum of eight weeks of severance and up to 52 weeks,based on their completed years of service,during which they will also have continued access to health coverage.We also offer displaced employees access to career transition services through a third-party service provider that offers career coaching,professional resume writing,connections to hiring managers and recruiters,and interviewing practices.In countries where we operate outside of the U.S.,the practices of managing redundancies and workforce restructuring vary based on legal and regulatory requirements and local market practices.International support may include enhanced severance pay arrangements,employee assistance programs,and career transition services.Prioritizing employee safety and health Wells Fargo recognizes the importance of providing a safe and healthy environment for employees,customers,and others on our premises.This is supported by our Risk&Insurance Management Policy and our Safety&Health Program,which provide details on our training and objectives covering all our employees.We have designed and implemented programs to help reduce the frequency and severity of injuries and illnesses,and also make special accommodations available to help injured employees return to work when they are able.We are required to comply with applicable facility-related,legally-mandated standards for workplace safety and health in the countries and communities in which we operate.Employees are responsible for following safe work practices and reporting unsafe working conditions.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 49 Newly hired employees are expected to complete safety and health training,and certain employee groups have quarterly refresher training requirements.Additionally,managers are expected to provide training on job-specific hazards at the time of an employees initial assignment and provide retraining whenever:New substances,processes,procedures,or equipment are introduced into the workplace that represent a potential new hazard.The manager is made aware of a new or previously unrecognized safety or health hazard.An employee is given a new job assignment and has not received training for that assignment.Given the nature of Wells Fargos business,injuries that occur as a result of repetitive activity,slips,trips,and falls are the most common workplace injuries.We provide and encourage utilization of our ergonomics program,with training and awareness resources on these and other topics accessible for all employees internally through our intranet site.Anti-harassment and anti-discrimination Wells Fargo is dedicated to providing a workplace free from harassment and discrimination based on an individuals race,ethnicity,age,gender,or other protected characteristics.This includes,but is not limited to,on company property or company communication systems,during remote work or business travel,at company-sponsored events,or otherwise in connection with company business.Any such harassment or discrimination is against Wells Fargo policy,may violate the law,and will not be tolerated.In the event of harassment or discrimination,employees are required to promptly report it using a reporting channel described in the Resources to report potential misconduct section.Training on harassment and discrimination is provided annually to employees.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 50 Corporate governance and ethics Commitment to sound and effective corporate governance practices46 Wells Fargo and its Board of Directors is committed to sound and effective corporate governance practices.Our Board has adopted Corporate Governance Guidelines,which provide the framework for the governance of our Board and Company,including maintaining the independence of a significant majority of the directors on the Board,and all members of the Audit,Governance and Nominating,Human Resources,and Risk Committees.Additionally,the Board adopted Director Independence Standards,which are appended to the Corporate Governance Guidelines.These Director Independence Standards consist of the New York Stock Exchanges“bright line”standards of independence,as well as additional standards.At the Board level,the Governance and Nominating Committee is responsible for overseeing corporate governance practices,and the Corporate Responsibility Committee provides primary oversight for significant strategies,policies,and programs related to social and public responsibility.The Chief Sustainability Officer provides periodic updates on climate and sustainability initiatives to the Corporate Responsibility Committee of the Board of Directors.At the Company level,management councils and committees provide senior leadership guidance on sustainability initiatives,with formal governance provided by our risk and control management committees.46 Further information related to the Corporate Governance Guidelines,the Governance and Nominating Committee,and the Corporate Responsibility Committee can be found on our Leadership and Governance website.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 51 Board and committee oversight of ESG issues Ownership of sustainability initiatives At Wells Fargo,the responsibility for driving sustainability action and impact is shared by a number of individuals,teams,governance bodies,and other forums.While we actively integrate sustainability across the Company,Enterprise Sustainability helps to steer the Companys broader sustainability strategy,including monitoring and driving progress toward our climate and sustainability goals,making sustainability-focused grants,and leading the Institute for Sustainable Finance.This team provides expertise and actively engages with others across the Company to execute on sustainability initiatives,including managing the Climate Implementation Initiative(established in 2021).For example,the Sustainability team coordinates with dedicated teams within Corporate Properties and Supply Chain,respectively,that lead efforts to drive energy,water,and waste efficiencies,and engage suppliers on sustainability-related matters.Sustainability is also embedded in parts of our customer-facing businesses,working to directly support clients transition to a low-carbon future with expertise on sustainable finance and participating in the cross-enterprise Climate Implementation Initiative.For more information about the transition to a low-carbon future,please see our Task Force on Climate-Related Financial Disclosures Report,which can be found on our Goals and Reporting website.Board and committee oversight of ESG issuesBOARD OVERSIGHT OF SUSTAINABILITY,SOCIAL,AND DE&IRisk CommitteeOversees our companywide risk management framework and independent risk management functionCorporate Responsibility CommitteeOversees our significant strategies,policies,and programs on social and public responsibility matters,including environmental sustainability and philanthropy,and community impactHuman Resources CommitteeOversees DE&I efforts and engages in DE&I discussionsMembers of our senior leadership team have specific areas of oversight related to sustainability,social,and DE&I matters:Head of Diverse Segments,Representation and InclusionReports to the CEO and is responsible for advancing DE&I efforts in the marketplace and the workplaceChief Sustainability OfficerLeads progress toward our enterprise sustainability and climate goals,drives ESG-related engagement and reporting,and manages the Institute for Sustainable FinanceHead of Philanthropy and Community ImpactLeads community engagement and enterprise philanthropy,including the Wells Fargo Foundation Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 52 Executive compensation The Human Resources Committee47 of the Board oversees Wells Fargos performance management and incentive compensation programs and approves all compensation for Operating Committee members.As part of this oversight,the Human Resources Committee establishes the Companys performance goals to incentivize Operating Committee members to deliver on our strategic priorities.More information about the Company and individual Named Executive Officer performance for 2022 and Human Resources Committee engagement with shareholders is available in the 2023 Wells Fargo Proxy Statement,which can be found on our Annual Reports and Proxy Statements website.Board diversity The Governance and Nominating Committee and our Board of Directors believe it is essential that the composition of our Board reflects the diversity of the communities we serve.As described in the Corporate Governance Guidelines and the Governance and Nominating Committees charter,the Governance and Nominating Committee will consider,in identifying or evaluating first-time candidates or nominees for director,the current composition of our Board and the candidates or nominees experience,education,skills,background,gender,race,ethnicity,and other qualities and attributes in relation to the other Board members.Over the past few years,the Board has undergone significant refreshment to enhance the financial services,regulatory,financial reporting,business operations,and corporate governance skills and experiences represented on the Board.The Boards current composition is a result of a thoughtful process informed by the Boards own evaluation of its composition and effectiveness,and feedback received from shareholders and other stakeholders.47 https:/ Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 53 Board diversity48Unit 2021 2022 2023 Executive directors49#of directors 1 1 1 Independent directors50#of directors(%)11 of 12(92)13 of 14(93)12 of 13(92)Total number of directors#of directors 12 14 13 Average tenure of independent directors#of years 2.4 3.5 4 Women on Board of Directors#of directors(%)3 of 12(25)5 of 14(36)5 of 13(38)Racial/ethnic diversity on Board of Directors#of directors(%)3 of 12(25)4 of 14(29)3 of 13(23)Directors with Environment/Social Responsibility qualifications/experience51#of directors(%)1 of 12(8)4 of 14(29)9 of 13(69)Directors with financial services risk expertise#of directors(%)5 of 12(42)6 of 14(43)5 of 13(38)References:Corporate Governance Guidelines can be found on our Leadership and Governance website.48 Data regarding board diversity relates to directors included in Wells Fargo&Companys Proxy Statement for the respective year.49 Executive directors are employees of the Company serving in an executive function(for example,CEO)who also serve on its Board of Directors.50 Independent directors are determined under the Companys Director Independence Standards,which are appended to the Companys Corporate Governance Guidelines.These Director Independence Standards consist of the NYSEs“bright line”standards of independence,as well as additional standards known as categorical standards of independence,adopted by the Companys Board of Directors.51 Environmental,Social Responsibility,and Governance(ESG)was noted as a single skill category in 2021 and 2022.In our 2023 Proxy Statement we have redefined the skill as Environmental and Social Responsibility,including combining Community Affairs into the skillset.Wells Fargo|Sustainability and Governance Report Introduction Sustainability Employee support and corporate governance Appendix 54 Code of Conduct The Wells Fargo Code of Conduct(Code),which can be found on our Goals and Reporting website,applies to all employees,including executive officers.Employees
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MU FGSustainability Report2022Editorial P olicySustainability Report/Website Editorial P olicyThe Sustainability Report is a P DF version of Mitsubishi U FJ Financial G roup s（MU FG）website（Sustainability）to provide stakeholders with a summary of MU FG s sustainability initiatives.This report and website are designed to provide stakeholders with a better understanding of MU FG s sustainability initiatives aimed at realiz ing a sustainable environment and society and sustainable growth.We also aim to continuously expand our information disclosure.P lease refer to our website,along with the MU FG Report 2022（JG AAP）for more information on our sustainable?P ublication inf ormationP eriod Subj ect to ReportingFY2021（April 1,2021 to March 31,2022）（I ncludes some information from FY2022）?e?n?t?ons o?S?ec?c?erms?se?n?s Re?ort?MU FG/The G roupMU FG Bank,L td.?The BankMitsubishi U FJ Trust and Banking C orporation?The Trust BankMitsubishi U FJ Securities H oldings C o.,L td.and its subsidiaries?The SecuritiesMitsubishi U FJ Morgan Stanley Securities C o.,L td.?MU MSSMitsubishi U FJ N I C O S C o.,L td.?N I C O S?ontact?oncern?ng?s Re?ortMitsubishi U FJ Financial G roup,I nc.7-1,Marunouchi 2-C home,C hiyoda-ku,Tokyo 100-8330,JapanTelephone:81-03-324 0-8111U RL:https:/www.mufg.j p/english/?E?itorial?oli?EEnvironmentSSocialGGovernanceContentsMessage f rom th e CEO?1Sustainability High ligh ts?3Sustainability Management?7P olicies and Guidelines?1 7P riority IssuesP rocess of I dentifying and Resolving P riority I ssues?20C limate C hange Measures&E nvironmental P rotection?22Response to Aging P opulation&L ow Birthrate?29I nclusion&Diversity?34Developing Social I nfrastructure?39Supporting I ndustrial Development&I nnovation?4 1E nsuring E qual Access to Financial Services?4 7P romoting Workstyle Reforms?4 9Response to P overty?5 2Reduction of E ducational Disparities?5 4O vercoming Threats to H ealth?5 7EnvironmentDisclosure Based on TC FD Recommendations?6 0The E quator P rinciples?120N atural C apital and Biodiversity?125Reducing the E nvironmental I mpacts of O ur Business Activities?131SocialRespecting H uman Rights?135H uman Resources Strategy?14 2I nclusion&Diversity?15 6C reate a Workplace?183P romoting for C ustomer Satisfaction?188C orporate Social Responsibility Activities?19 6GovernanceC orporate G overnance?219C ompliance?225Risk Management?228G lobal Financial C rimes P olicy Statement?235Basic Stance toward Tax?238P rotection of P ersonal I nformation?24 0P articipation to Initiatives?2 4 1External Evaluation?2 4 7V arious Reports/Data/Index?2 5 3?ontent?EEnvironmentSSocialGGovernanceAddressing Environmental and Social IssuesWe believe that empowering members of society to effectively confront environmental and social issues is an integral part of our mission as a financial institution.Pursuing All-Out Efforts in Climate Change MeasuresThe ongoing trend toward decarbonization is expected to result in major changes in global industrial structure which,in turn,will position MUFG and its customers to address risks affecting their business continuity as well as seize opportunities for growth.Aiming to realize smooth transition to a decarbonized society and creating a sustainable society by fostering a virtuous cycle between the environment and economy,we have been promoting our climate change-related initiatives at a robust pace since announcing the MUFG Carbon Neutrality Declaration in May 2021.In April 2022,we published the MUFG Progress Report and announced interim targets to achieve net zero greenhouse gas（GHG）emissions from our financed portfolio in the power and oil&gas sectors.In June,all MUFG companies in Japan shifted contracted electricity to 100%renewable energy.To realize carbon neutrality,it is important not only to achieve net zero GHG emissions in our own operations but also support the decarbonization efforts of our customers.Thus far,MUFG has furthered customer engagement with about 550 companies in Japan and overseas to identify the challenges and needs of each customer.Through these engagement efforts,we have simultaneously been reinforcing a diverse range of services to respond to identified needs,such as helping calculate their GHG emissions and TCFD-disclosure consulting services.In September,we drafted the MUFG Transition White Paper to bundle extensive information about decarbonization initiatives at Japanese companies,the environment surrounding energy policy in Japan,and other such topics,in addition to engaging in an exchange of ideas with policymakers overseas.By genuinely supporting customers tackle their challenges,I hope MUFG can drive decarbonization efforts together.As a leading global company,MUFG engages and plays our part in international initiatives that meet pressing issues head-on.The Net-Zero Banking Alliance（NZBA）is one such initiative in which we are committed to communicating our views as an Asian representative in the Steering Group.We are also a member of its six working groups and chair of one,where we are directly involved in developing an international framework for transition financing.MUFG will continue to contribute to decarbonization initiatives globally through engaging with clients,supporting technological advances that promote decarbonization,establishing rules,commercialization,market creation,and many other such measures.Message from the CEOHironori KamezawaPresident and Group CEOMessage from the CEO1EEnvironmentSSocialGGovernanceResponding to Social Issues“Response to the aging population&low birthrate”is a challenge with particularly strong ties to MU FG business?Aiming to Become Resilient?（?）”.?P romoting Sustainability Management?across the globe.?e?a?e?ro?t?e?E?2EEnvironmentSSocialGGovernanceSustainability High ligh ts Sustainable FinanceC umulative amount of execution between FY2019 to FY2030 is 14.5 trillion yen,a progress rate of approx.4 1%Set an Interim 2 0 3 0 Targets f or th e P ower and O il&Gas SectorsWith an eye to achieving net-z ero G H G emissions from our financed portfolio by the end of 205 0,we have set interim targets for 2030.Result(2 0 1 9)Target(2 0 3 0)P ow er sector3 4 9gCO2e/kWh1 5 6-1 9 2gCO2e/kWhO il&gas sector8 3MtCO2eBase year 2 0 1 9Reduction rate1 5-2 8Set a Target to Reduce th e Balance of Corporate Finance f or Coal-Fired P ower GenerationI n addition to pursuing our conventional reduction target for the credit balance targets for coal-fired power generation projects,we have set a target to reduce the balance of corporate finance for coal-fired power generation.1 4.5trillion 3 5 trillionFY 2 0 3 0TargetC umulative results up to FY2021GHG Emissions f rom O ur O w n O perations(Scope1,2)C ompletely shift to 100%renewable energy for the electricity procured in JapanFY2020Target2 0 3 0:Net z eroRevision of th e MU FG Environmental and Social P olicy Framew orkP eriodic reviews of the policy framework in response to changes in business activities and the business environment to materializ e environmental and social considerations.Environment-Related SectorsMining(coal)P alm oilO il&gasRevision of th e MU FG Environmental Disclosure Based on TCFD RecommendationsExpansion of Disclosure Sectors SteelMaritimeAirTransportMaterial and buildingAgriculture,f oods,f orestry productsE nergyU tilitiesE nergyU tilitiesAutomobileScenario AnalysisCarbon-Related AssetsEngagement Activities Japanese and non-Japanese customersapproximately5 5 0Materializ e Measures f orNatural Capital and BiodiversityStarted collecting information,participating in discussions on formulating a framework,and analyz ing risks related to natural capitalEndorsement of TNFD(Taskf orce on Nature-related Financial Disclosures)C ompiled G H G emission data on a global group-wide in preparation for net z ero in 20302 4 9th ousand tonsDomesticO verseasFY2021（preliminary figures）3 4 3 th ousand tonsFY 2 0 2 0FY 2 0 2 1TargetP roj ect f inanceU S$3.7 7 billionU S$2.9 5 billionReduce to z ero byFY2 0 4 0Corporate f inanceApproximately 1 2 0.0 billionApproximately 9 0.0 billionReduce to z ero byFY2 0 4 0?u?taina?ilit?i?li?t?EEnvironmentSSocialGGovernanceRatio of Women in Management in J apanH aving achieved our fiscal 2023 target of raising the ratio of women in management to 18.0%ahead of schedule,we have upwardly revised the target to 20.0%in fiscal 2022.?101214161820201720182019202020212023（FY）（）Target2 0.01 8.0%MU FG Employee Survey6 45 98 6Recommend MU FG as a w onderf ul w orkplaceManaged in a speedy mannerWilling to take on ch allengesMU FG Way My Waywe held MU FG Way I ntegration Sessions with the obj ective of encouraging employees to discover how relevant the MU FG Way is to their day-to-day tasks and actions.Involved more th an5 0,0 0 0employees.Number of J ob Ch allenge P rogram ApplicantsThe Job C hallenge program offers opportunities for eachapplicant to take on tasks within the G roup in a way that alignswith their desiresregardlessof the entitytheybelongto.FY2020FY20212,2 7 87 7 3Education and Training ExpensesN urturing E mployees and E ncouraging Them to P ursue P ersonal TransformationApprox.3,0 9 0millionO f th is,expenses f or digital literacy training:Approx.5 4 0 millionExpenses f or Social Contribution Activities ESG Evaluation(As of September 2 0 2 2)MSCIS&P Dow J onesCDPFTSESustainalyticsA7 4B3.91 8.4Toyo K eiz ai SDGs Corporate Ranking 5 0 02nd O verall1st in Financial InstitutionsNikkei SDGs Management Survey(h igh est rating)（Sum of results for the Bank,the Trust Bank and MU MSS）8.1 5O vercoming Threats to H ealth3.8 9billion yenReduction of E ducational DisparitiesC limate C hange Measures&E nvironmental P rotectionO thersJ apan and overseasBreakdow n of domestic expenditures（P ercentile rank）billion yen?u?taina?ilit?i?li?t?4EEnvironmentSSocialGGovernanceEnvironmentDisclosure Based on TCFD RecommendationsGovernance?The Board of Directors and other various committees deliberate on initiatives to achieve carbon neutrality?For management who evaluates and manages risks and opportunities related to climate change,we hold opinion exchange meetings with external advisors and study sessions with experts?Strategy?Report（April 2022）?Setting and disclosure of interim targets for 2030 for the power and oil&gas sectors?Shift to 100%renewable energy for the electricity procured domestically by the Bank,the Trust Bank,the?（?）?（?）?to other industries.?（?）?（?）?to discussions on common principles and standards necessary to achieve a“realistic and gradual energy transition in Asia.”?2022 for the proportion of assets under management?response policies as well as the status of initiatives,and reports them to the Board of Directors?customers Strengthen sustainable business through engagement activities with Japanese and non-Japanese customers?opportunities?Steel,air and maritime transportation sectors were added to transition risk analysis targets（?）?（?yen）Risk Management?（?）?strengthened and revised policies for the climate-related sectors（palm oil,mining（coal）,and oil and gas sectors）.?u?taina?ilit?i?li?t?5EEnvironmentSSocialGGovernanceMetrics and Targets?reductions.?operations,and completed shift to 100%renewable energy for electricity procured domestically.Measurement of the actual results for FY 2021（?）?（credit amounts）disclosure sectors（addition of transportation,materials&buildings,agriculture,food,and forest products sectors）?Setting of a new target to reduce the balance of credits amounts related to coal-fired power generation（corporate finance）?generation decreased year-on-year in FY 2021.Natural Capital and Biodiversity?（?）?natural capital risksSocialHuman Resources Strategy?professionals/reskilling,improvement in employee engagement,and promote inclusion&diversity?to develop their career paths.Disclosure of education and training expenses,etc.as indicators of human capital?Inclusion&Diversity（I&D）?From FY2022,we added inclusion&diversity targets to qualitative assessment indicators for determining the?From FY2022,the target for the ratio of women in management is raised from 18%to 20%?as well as people with disabilitiesCorporate Social Responsibility Activities?Governance?protect personal informationExternal Evaluation?（?）?u?taina?ilit?i?li?t?EEnvironmentSSocialGGovernanceApproach to Sustainability Promotion of Sustainability Sustainable Finance Stakeholder EngagementApproach to SustainabilitySustainability ManagementWith the conviction that environmental and social sustainability are essential to achieving sustainable growth forMUFG,we will engage in value creation employing an integrated approach in which the execution ofmanagement strategies goes in tandem with the pursuit of solutions for social issues.MUFG Way and Code of ConductMUFG WayMUFG Way serves as the basic policy in conducting our business activities,and provides guidelines for all groupactivities.MUFG Way also is the foundation for management decisions,including the formulation of managementstrategies and management plans,and serves as the core value for all employees.Our Purpose,Committed to empowering a brighter future.expresses our determination to help all ourstakeholders take the next step forward.It is our view that our Purpose,as the starting point for all businessactivities,gives direction and force to the strategies included in our Medium-term Business Plan,allowing us tocontribute further to realizing a sustainable society.MUFG WaySustainability Management?u?taina?ilit?ana?e?entA?roa?to Sustainability7EEnvironmentSSocialGGovernance?u?taina?ilit?ana?e?entA?roa?to Sustainability8EEnvironmentSSocialGGovernanceCode of ConductThe Code of Conduct encapsulates the standards that guide employees conduct and decision-making in ourday-to-day business activities under the MUFG Way.The Code of Conduct is organized into three chapters.Code of ConductChapter 1Customer FocusChapter 2Responsibility as a Corporate CitizenChapter 3Attitudes and Behaviors in the Workplace?u?taina?ilit?ana?e?entA?roa?to Sustainability9EEnvironmentSSocialGGovernancePositioning in the Medium-term Business Plan(FY2021-FY2023)MUFG strives to thoroughly address the issues of all stakeholders,including society and clients,and works tosolve the issues in order to stay true to the purpose of MUFG to be committed to empowering a brighter future.In the medium-term business plan that started FY2021,we set our target to become The premier businesspartner that pioneers the future through the power of f inance and digital services and placed sustainabilitymanagement as one of three themes for change along with digitalization and speed and new challenges,which isthe state we aim to achieve in three years.We will promote business strategies,risk management,and socialcontribution activities starting with our ten environmental and social issues that we will work on as our priorities tocontribute to solving the environmental and social issues.Overall of MUFGs Sustainability Management?u?taina?ilit?ana?e?entA?roa?to Sustainability10EEnvironmentSSocialGGovernanceSustainability Promotion StructureMUFG Under the supervision of the Board of Directors,MUFG has established a system to promotesustainability centered on the Sustainability Committee.This committee is chaired by the Group Chief Sustainability Off icer(CSuO),who is a member of the Board ofDirectors and is responsible for all sustainability initiatives.The CSuO also serves as the Group Chief StrategyOfficer(CSO)in charge of corporate planning and strategy.In principle,MUFG convenes the Sustainability Committee at least once a year to check and discuss the statusof sustainability initiatives and to report the contents to the Executive Committee and the Board of Directors,which supervise the Committee.In addition,two external advisors have been invited to provide expert opinionson sustainability issues and risks at any time.These advisors exchange opinions with the members of the Boardof Directors and provide advice and recommendations from their professional standpoints on MUFGssustainability initiatives.Roles of Each Position and DepartmentGroup Chief Sustainability Officer(CSuO)The Group Chief Sustainability Officer is responsible for all initiatives to promote sustainability management.TheGroup CSO,a member of the Board of Directors,becomes the CSuO.External advisorThe external advisor regularly exchanges views with the management in order to make use of externalknowledge for sustainability management.Sustainability Office,Corporate Planning DivisionThe Sustainability Office is responsible for developing the foundation of MUFGs sustainability management aswell as planning and promoting strategies for solving environmental and social issues while achieving sustainablegrowth.Sustainable Business DivisionAn organization dedicated to promoting sustainable business.By integrating MUFGs expertise in sustainabilityboth in Japan and overseas,the Division supports the sustainable growth of customers by providing varioustypes of information and solutions from the standpoint of solving environmental and social issues.Promotion of Sustainability?u?taina?ilit?ana?e?ent?romotion of Sustainability11EEnvironmentSSocialGGovernanceSustainable FinanceTarget and ProgressWe have set our accumulated sustainable finance amount as of fiscal year 2030 as a sustainable finance targetfor solving environmental and social issues.Our accumulated sustainable finance amount as of fiscal year 2021was 14.5 trillion(of which,5.4 trillion is environmental area),and was proceeding steadily towards this target.Progress in Sustainable Finance GoalsDefinition of Sustainable FinanceThe term Sustainable Finance refers to the provision of finance for the following businesses(including loans,equity investment in funds,arrangement of project finance and syndicated loans,underwriting of equities andbonds,and financial advisory services)with reference to the relevant external standards(e.g.the Green LoanPrinciples,Green Bond Principles,and Social Bond Principles).Environmental AreaSustainability Promotion StructureMUFG Under the supervision of the Board of Directors,MUFG has established a system to promotesustainability centered on the Sustainability Committee.This committee is chaired by the Group Chief Sustainability Off icer(CSuO),who is a member of the Board ofDirectors and is responsible for all sustainability initiatives.The CSuO also serves as the Group Chief StrategyOfficer(CSO)in charge of corporate planning and strategy.In principle,MUFG convenes the Sustainability Committee at least once a year to check and discuss the statusof sustainability initiatives and to report the contents to the Executive Committee and the Board of Directors,which supervise the Committee.In addition,two external advisors have been invited to provide expert opinionson sustainability issues and risks at any time.These advisors exchange opinions with the members of the Boardof Directors and provide advice and recommendations from their professional standpoints on MUFGssustainability initiatives.Roles of Each Position and DepartmentGroup Chief Sustainability Officer(CSuO)The Group Chief Sustainability Officer is responsible for all initiatives to promote sustainability management.TheGroup CSO,a member of the Board of Directors,becomes the CSuO.External advisorThe external advisor regularly exchanges views with the management in order to make use of externalknowledge for sustainability management.Sustainability Office,Corporate Planning DivisionThe Sustainability Office is responsible for developing the foundation of MUFGs sustainability management aswell as planning and promoting strategies for solving environmental and social issues while achieving sustainablegrowth.Sustainable Business DivisionAn organization dedicated to promoting sustainable business.By integrating MUFGs expertise in sustainabilityboth in Japan and overseas,the Division supports the sustainable growth of customers by providing varioustypes of information and solutions from the standpoint of solving environmental and social issues.?u?taina?ilit?ana?e?entSustainable?inan?e12EEnvironmentSSocialGGovernanceBusinesses contributing to the development of startups,job creation,and poverty alleviationBusinesses contributing to the energizing of local communities and regional revitalizationFundamental service businesses,including those involved in basic infrastructure such as public transport,waterworks,and airports,and essential services such as hospitals,schools and police.(e.g.Emerging Industrial Technology Support Program,loans for regional revitalization projects such asMUFG Regional Revitalization Fund,arrangement of loans and project finance for public infrastructure,underwriting and distribution of social bonds).Responding to Funds-Supplying Operations to Support Financing for ClimateChange Responses(Climate Response Financing Operations)at the Bank of Japan.MUFG Bank and Mitsubishi UFJ Trust and Banking have been selected as counterparties of Funds-SupplyingOperations to Support Financing for Climate Change Responses(Climate Response Financing Operations)at theBank of Japan.The following include the criteria for eligible investment or loans for Climate Response FinancingOperations by MUFG Bank and MUFG Trust and Banking.MUFG BankCriteria for eligible investment or loans for Climate Response Financing Operations and disclosure of specificprocedures for judgement on suitability（in Japanese）（PDF/90KB）MUFG Trust and Banking CorporationCriteria for eligible investment or loans for Climate Response Financing Operations and disclosure of specificprocedures for judgement on suitability（in Japanese）（PDF/121KB）Issuance of Green,Social and Sustainability BondMUFG is the only issuer in Japan with a track record of issuing green,social,and sustainability bonds as thelargest private issuer in Japan.The proceeds from bonds issued by MUFG will be used for sustainability-relatedfinancing.Green,Social,and Sustainability BondsSustainable FinanceTarget and ProgressWe have set our accumulated sustainable finance amount as of fiscal year 2030 as a sustainable finance targetfor solving environmental and social issues.Our accumulated sustainable finance amount as of fiscal year 2021was 14.5 trillion(of which,5.4 trillion is environmental area),and was proceeding steadily towards this target.Progress in Sustainable Finance GoalsDefinition of Sustainable FinanceThe term Sustainable Finance refers to the provision of finance for the following businesses(including loans,equity investment in funds,arrangement of project finance and syndicated loans,underwriting of equities andbonds,and financial advisory services)with reference to the relevant external standards(e.g.the Green LoanPrinciples,Green Bond Principles,and Social Bond Principles).Environmental AreaBusinesses contributing to the adaptation to and moderation of climate change,including renewable energy,energy efficiency improvement,and green buildings(e.g.arrangement of loans and project finance forrenewable energy projects,underwriting and distribution of green bonds).Social Area?u?taina?ilit?ana?e?entSustainable?inan?e1?EEnvironmentSSocialGGovernanceMUFG will continue to actively engage in constructive dialogs with stakeholders in order to gain new insights anddeepen mutual understanding.We strive to build a relationship of trust and cooperation with our stakeholders byresponding appropriately to their concerns and issues,and to help MUFG achieve sustainable growth andenhance its corporate value over the medium to long term.Stakeholder EngagementStakeholderIn these rapidly changing times,all of our stakeholders are overcoming challenges to f ind a way to thenext stage,toward sustainable growth.We at MUFG will make every effort to help realize these goals.This willbe our unchanging purpose now,and into the future.Key Stakeholder GroupsPolicies for Improving Corporate Value and Fiscal 2021 AchievementsCustomers and partners Customers at home and abroadExternal corporations acting as our businesspartnersExtend financial support to help customers resolve challenges they are confronting through businessoperations that precisely align with changes in the business environment and leverage MUFGsstrength Customer feedback volume:Approximately 180,000 instances,including 165 inputs utilized toimprove servicesEngagement with customers for decarbonization:Approximately 550 corporate clients at home andabroadInitiatives of each business groupCommunities and societyNPO/NGOLocal communitiesMunicipalitiesServe as a component of the financial infrastructure supporting society by offering stable funding andmaking our solid operations and systems available to customers while contributing to the socialtransition to digital technologies Number of dialogues held with NPOs/NGOs:35Response to aging population&low birthrateSupporting business efforts and innovation-oriented endeavors aimed at resolving social issuesCyber security-related initiativesFuture generationsThe environmentYounger peopleDiscover opportunities from the pressing need to solve environmental and social issues,therebybecoming a pioneering company blazing a path into the coming era Moving towards Carbon NeutralityPromoting sustainable businessesDisclosure based on TCFD recommendations Participation in various global initiativesMUFG Employees Number of employeesApproximately 170,000Promote corporate culture reforms focused on“speed”and“new challenges”by winning employeeempathy toward“Corporate Transformation”via dialogue Career Challenge System,Nurturing Human ResourcesSpark Xnew business incubation programMUFG Way Integration Sessions Held on more than 3,000 occasions at home and abroad and attended by more than 50,000employees Held town hall meetings attended by top management members on more than 1,000 occasionsShareholders and investorsNumber of shareholders Approximately 810,000Maintain highly transparent information disclosure and engagement in constructive shareholderdialogue while reflecting shareholder feedback in business management and strategies Number of attendees at the General Meeting of Shareholders 412(a total of 1,121 shareholderswatched the meeting online)Number of presentation meetings held for institutional investors and analysts 10Dialogue between outside directors and institutional investorsNumber of individual meetings with institutional investors 317(173 meetings with overseas investors)Number of online seminars held for individual investors 3(a cumulative total of 2,100 viewers)(note)（note）The Bank,the Trust Bank,MUMSS,NICOS and ACOM?u?taina?ilit?ana?e?entSta?e?ol?er En?a?ement14EEnvironmentSSocialGGovernanceDistributing Information and Having Dialogues with StakeholdersHosted an Engagement Seminar for Realization of a Carbon-Neutral SocietyPlease see Disclosure Based on TCFD Recommendations“Strategy”for details.MUFG Wealth Management Presents Wealth Management Forum-Rethinking AssetManagement,Asset Succession,and Business Succession in an Era Focusing onSustainabilityTo increase general publics awareness of the MUFG Wealth Managementbrand and promote sales activities,a large-scale Web seminar for ourbanking,trust,and securities customers was held with The YomiuriShimbuns sponsorship.President Kamezawa had a keynote talk session with Mr.Norichika Kanie,a leading authority on the SDGs in Japan,who joined the session remotelyfrom Washington,D.C.and exchanged opinions on a wide range of topics,including MUFGs sustainability management in relation to the SDGs andindividual companies sustainability management examples,relatedbusiness opportunities,and ESG investment.We held town hall meetings for employees.In fiscal 2021,these meetings were alsoheld at overseas bases.In fiscal 2021,we held more than 1,000 town hall meetings between executive officers and employees.In April2022,Group CEO Kamezawa flew to the United States for the first time in three years to host a town hallmeeting.While approximately 200 Group employees operating in the Americas physically attended the meeting,around 180 individuals took part in the event online.Addressing the attendees,Mr.Kamezawa shared his joy of visiting his colleagues in the United States,where hepreviously resided as an expatriate and worked as part of a local team.He also expressed his gratitude to allthose who worked so hard on the sale of MUFG Union Bank as well as all those who contributed to the localcommunities.Furthermore,the Group CEO stressed that MUFGs commitment to its Americas business willremain unchanged even after the above sale,and that the Group will continuously push ahead withtransformation into a speedy and flexible organization.Comments voiced by attendees included“The meetingwas held in a relaxed atmosphere,and I felt that I was a member of the same team”and“Mr.Kamezawasemphasis on the Americas as a key growth region outside of Japan was very encouraging.”?u?taina?ilit?ana?e?entSta?e?ol?er En?a?ement15EEnvironmentSSocialGGovernancemeeting.While approximately 200 Group employees operating in the Americas physically attended the meeting,around 180 individuals took part in the event online.Addressing the attendees,Mr.Kamezawa shared his joy of visiting his colleagues in the United States,where hepreviously resided as an expatriate and worked as part of a local team.He also expressed his gratitude to allthose who worked so hard on the sale of MUFG Union Bank as well as all those who contributed to the localcommunities.Furthermore,the Group CEO stressed that MUFGs commitment to its Americas business willremain unchanged even after the above sale,and that the Group will continuously push ahead withtransformation into a speedy and flexible organization.Comments voiced by attendees included“The meetingwas held in a relaxed atmosphere,and I felt that I was a member of the same team”and“Mr.Kamezawasemphasis on the Americas as a key growth region outside of Japan was very encouraging.”We enhanced the content of information disclosure associated with our initiatives torealize carbon neutrality and held special briefings for investors.Since fiscal 2021,MUFG has stepped up its commitment to addressingenvironmental and social issues.In May 2021,we announced the MUFGCarbon Neutrality Declaration and,in the following month,hostedseminars with themes that focused on the specific milestones set forinitiatives being undertaken to realize this declaration and promotesustainable businesses.We have since pushed ahead with these initiatives,taking a groupwideapproach and rallying Group members across the globe.In April 2022,weissued the MUFG Progress Report,which summarizes our progress overthe course of the past year.At the same time,we held an investorseminar,with Group CSuO Miyashita and General Manager Nishiyama(Sustainable Business Division)addressing questions from attendees.Comments from investors who joined the event included“I found thecontent of the Progress Report to be wellorganizedin terms of explaininghow MUFG set its interim targets and showcasing examples ofengagement.Moreover,attending the seminar helped me betterunderstand these matters.”and“I have high expectations for Mr.Nishiyama,who joined MUFG as a mid-career hire,as he will contributehis robust expertise to help MUFG realize synergies arising from thecombination of new insights and its traditional strengths.”?u?taina?ilit?ana?e?entSta?e?ol?er En?a?ement1?EEnvironmentSSocialGGovernanceEnvironment Social GovernanceEnvironmentSocialMUFG Environmental Policy StatementMUFG Environmental and Social Policy FrameworkMUFG AM Responsible Investment PolicyMUFG Human Rights Policy StatementMUFG Environmental and Social Policy FrameworkMUFG AM Responsible Investment PolicyPolicies and Guidelines?oli?ie?an?ui?eline?Environment17EEnvironmentSSocialGGovernanceGovernanceMUFG Human Resources PrinciplesApproach to Purchasing ActivityModern Slavery Act 2015 and Commonwealth Modern Slavery Act 2018Activities against Cluster BombsPersonal Information Protection PolicyCyber Security Management DeclarationMUFGs Thinking on Inclusion&DiversityMUFG Group Code of ConductPolicy for Conflicts of Interest ManagementBasic Policy regarding Anti-Social Elements?oli?ie?an?ui?eline?So?ial18EEnvironmentSSocialGGovernanceMUFG Basic Policy for Fiduciary DutiesMUFG Corporate Governance PoliciesRisk Management:Basic PolicyCompliance:Basic PolicyGlobal Financial Crimes Policy StatementMUFG Group Disclosure PolicyMUFG Tax PolicyEfforts to Prevent Bribery?oli?ie?an?ui?eline?overnan?e19EEnvironmentSSocialGGovernanceProcess for Identifying 10 Priority IssuesWe have de fined 10 priority issues that must be tackled to help achieve environmental and social sustainability inlight of our newly established Purpose,Committed to empowering a brighter future.with an eye to better fulf-illing societys expectations in areas where MUFGs capabilities can be brought to bear.STEP1Assessing a broad range of environmental and social issues(218 issues)Identified 218 issues by assessing environmental and social issues at home and abroad with reference totheUnited Nations Sustainable Development Goals(SDGs),stakeholder feedback regarding ESG issues andtherequirements set out in the various guidelines listed belowGRI Standards,United Nations Global Compact,SASB Standards,ISO26000,UN Department of Economicand Social Affairs(After COVID-19),Issues selected by the Cabinet Office,etc.STEP2Screening,integrating and narrowing-down(123 issues)Integrated the 218 issues into the 123 issues based on duplications or similarities,with the Sustainability Officeundertaking the primary screeningSTEP3Extracting(12 issues)Identified 12 major issues based on employee feedback gleaned via questionnaires and interviewsItems included in questionnaires or asked at interviewsIssues respondents are currently addressing or willing to address through their business dutiesIssues respondents think that are addressed by companies considered to be good corporate citizenSTEP4Deliberation and determination(10 issues)Process of Identifying and Resolving Priority IssuesDetermined the 10 priority issues after multiple rounds of management discussion that took into accounttheopinions of external advisors,input from outside directors and the global trend toward sustainability,withaneye to better fulfilling societys expectations in areas where MUFGs capabilities can be brought to bearFlow of MUFGs Process of Reviewing the 10 Priority IssueInitiatives(As of October 2022)?riorit?ue?ro?ess of I?entifyin?an?esolvin?riority Issues?roce?or?enti?in?riorit?e?20EEnvironmentSSocialGGovernanceDetermined the 10 priority issues after multiple rounds of management discussion that took into accounttheopinions of external advisors,input from outside directors and the global trend toward sustainability,withaneye to better fulfilling societys expectations in areas where MUFGs capabilities can be brought to bearFlow of MUFGs Process of Reviewing the 10 Priority IssueInitiatives?riorit?ue?ro?ess of I?entifyin?an?esolvin?riority Issues?lo?o?G?roce?o?evie?in?t?e?riorit?e?nitiative?21EEnvironmentSSocialGGovernanceMUFG recognizes that addressing climate change and environmental conservation is one of the most importantmanagement issues.We will respond to them by regarding them as business opportunities and riskmanagement.During this period,the movement to combat climate change gained tremendous global momentum.MUFG hastaken another step forward by announcing the MUFG Carbon Neutrality Declaration in May 2021.Guided by thisdeclaration,MUFG is implementing group-wide environmental measures globally,aiming to achieve net zerogreenhouse gas(GHG)emissions from the financed portfolio by 2050 and net zero GHG emissions from our ownoperations by 2030.Main InitiativesMoving towards Carbon NeutralityIn May 2021,the MUFG Carbon Neutrality Declaration was announced.In line with this declaration,we areaiming for net zero GHG emissions from our financed portfolio by 2050 and net zero GHG emissions from ourown operations by 2030.Moreover,in April 2022,we released the MUFG Progress Report to update our stakeholders on our efforts toachieve the above targets.MUFG Carbon Neutrality DeclarationMUFG Progress ReportMain Initiatives Since the Carbon Neutrality DeclarationClimate Change Measures&Environmental Protection?riorit?ue?limate?an?e?easures?Environmental?rote?tion?ain?nitiative?22EEnvironmentSSocialGGovernanceNet Zero Emissions from theFinanced PortfolioDecarbonizationthrough Financial ServicesNet Zero GHG Emissionsfrom Own OperationsNet Zero Emissions from theFinanced PortfolioDecarbonizationthrough Financial ServicesNet Zero GHG Emissionsfrom Own OperationsSet interim targets for thepower and oil&gas sectors Determined the power andoil&gas sectors as prioritysectors.Measured actualresults(2019)and set interimtargets for 2030Plans call for setting interimtargets for financing in othersectorsProviding solutions tosupport decarbonization,based on customers needs Set corporate financetargets for coal-fired powergeneration Set corporate finance targetto reduce the credit balance tozero by fiscal 2040Shifted to 100%renewableenergy for electricityprocured domestically bythe Bank,the Trust Bank,the Securities,NICOS,andACOM by June 2022Decarbonizationthrough Responsible InvestmentParticipation in InitiativesOther EffortsJoined the Net Zero AssetManagers initiative(NZAM)Promoting engagement withinvesteesSet interim targets for 2030by October 2022Leading the discussion onthe development of a globalframework Appointed as Chair of theFinancing&EngagementSubcommittee of the Net-ZeroBanking Alliance(NZBA),which is responsible fordeveloping a framework fortransition financeKrungsri(Bank ofAyudhya),a partner bank inThailand,announced theirCarbon Neutral Vision Revision of the MUFGEnvironmental and SocialPolicy FrameworkRoadmap for Achieving Carbon Neutrality-Transition Plan for a DecarbonizedSocietyTo achieve carbon neutrality,we are working to achieve net zero GHG emissions in our financed portfolio,decarbonization through finance,and net zero emission from MUFG.We are working to achieve the targets setfor 2030,2040,and 2050.Net Zero Emissions from the Financed PortfolioDecarbonization through Financial ServicesNet Zero GHG Emissions from Own OperationsSet interim targets for the power and oil&gas sectors Determined the power and oil&gas sectorsas priority sectors.Measured actual results(2019)and set interim targets for 2030Plans call for setting interim targets forfinancing in other sectorsProviding solutions to supportdecarbonization,based on customersneeds Set corporate finance targets for coal-firedpower generation Set corporate finance target to reduce thecredit balance to zero by fiscal 2040Shifted to 100%renewable energy forelectricity procured domestically by theBank,the Trust Bank,the Securities,NICOS,and ACOM by June 2022Decarbonization through ResponsibleInvestmentParticipation in InitiativesOther EffortsJoined the Net Zero Asset Managersinitiative(NZAM)Promoting engagement with investeesSet interim targets for 2030 by October 2022Leading the discussion on the developmentof a global framework Appointed as Chair of the Financing&Engagement Subcommittee of the Net-ZeroBanking Alliance(NZBA),which is responsiblefor developing a framework for transition financeKrungsri(Bank of Ayudhya),a partner bankin Thailand,announced their Carbon NeutralVision Revision of the MUFG Environmental andSocial Policy FrameworkMUFG recognizes that addressing climate change and environmental conservation is one of the most importantmanagement issues.We will respond to them by regarding them as business opportunities and riskmanagement.During this period,the movement to combat climate change gained tremendous global momentum.MUFG hastaken another step forward by announcing the MUFG Carbon Neutrality Declaration in May 2021.Guided by thisdeclaration,MUFG is implementing group-wide environmental measures globally,aiming to achieve net zerogreenhouse gas(GHG)emissions from the financed portfolio by 2050 and net zero GHG emissions from our ownoperations by 2030.Main InitiativesMoving towards Carbon NeutralityIn May 2021,the MUFG Carbon Neutrality Declaration was announced.In line with this declaration,we areaiming for net zero GHG emissions from our financed portfolio by 2050 and net zero GHG emissions from ourown operations by 2030.Moreover,in April 2022,we released the MUFG Progress Report to update our stakeholders on our efforts toachieve the above targets.MUFG Carbon Neutrality DeclarationMUFG Progress ReportMain Initiatives Since the Carbon Neutrality DeclarationClimate Change Measures&Environmental Protection?riorit?ue?limate?an?e?easures?Environmental?rote?tion?ain?nitiative?2?EEnvironmentSSocialGGovernanceGlobal Structure to Promote Sustainable Business on a Global BasisMUFG provides solutions to assist our customers innovate and to make structural changes to their businessmodel in order to solve environmental and social issues.In July 2021,we established the Sustainable Business Division to further promote businesses that will help solveenvironmental and social issues as a Group.We established a global structure to gather intelligence and capturebusiness opportunities through assigning ESG heads in each region EMEA,Americas and APAC who areresponsible for promoting the provision of sustainable financing solution and customer engagement,and havingactive discussions through global forums such as the Global ESG Conference.In addition,by collectinginformation from various perspectives through international initiatives,we are promoting rulemaking,commercialization,and market creation globally to capture future business opportunities.The Energy Transformation Strategy Project TeamIn December 2021,the Japanese Corporate&Investment Banking Business Group launched the EnergyTransformation Strategy Project Team(EX Strategy PT).In order to support the customers energy transformation,the team is exploring how the financial sector as awhole can contribute to customers,while engaging in dialogs with customers,industry associations,andgovernment agencies.As an initiative,MUFG holds monthly meetings with about 300 employees from salesdivisions under the theme of energy transformation and promotes each effort while improving our response toissues throughout the MUFG Group.Solutions Designed to Assist Customers in Their Decarbonization EffortsThrough engagement with our customers in each region,we try to understand their challenges and needs.Infiscal 2021,we engaged in dialogue with approximately 550 domestic and foreign clients,regarding the status oftheir sustainability and decarbonization initiatives and the solutions provided by MUFG.Responding to their needs for solutions,we have started providing diverse solutions designed to assist them intheir decarbonization efforts.These solutions include GHG emission measurement and financial support.?riorit?ue?limate?an?e?easures?Environmental?rote?tion?ain?nitiative?24EEnvironmentSSocialGGovernancePromotion and Popularization of Renewable Energy UseEstablishment of Z Energy Co.,Ltd.for Renewable Energy Fund CreationIn September 2021,with eight partner companies,the Bank established ZEnergy Co.,Ltd.as a fund management company with the aim ofbuilding an independent renewable energy market,based on a conceptthat covers all facets of renewable energy from creation to consumption.In March 2022,we established the first Carbon Neutral Fund operated byZ Energy Corporation,and have started investing in renewable energypower generation projects.MUFG has established an impact assessment system with Z Energy as apractice of impact investment,and has been selected as a model projectunder the Ministry of the Environments“2021 Green Finance Model CaseCreation Project.”(note1)(note2)Press release(September 1,2021):MUFG Establishes a Company with theAim of Creating a Renewable Energy Fund Press release(December 1,2021):Investment in Carbon Neutral Fund 1Investment Limited Partnership(in Japanese)(note1)(note2)Source:Bloomberg New Energy Finance ASSET FINANCE/Lead Arrangers LEAGUE TABLERenewable Energy Project FinanceMUFG is one of the worlds top performersin the global project finance sector,asshown in the Lead Arrangers League Tablerelated to renewable energy projects.InMay 2021,MUFG set a target of reducingCO emissions through project finance forrenewable energy projects by a cumulativetotal of 70 million tons from FY 2019 to FY2030.This is equivalent to the annual COemissions of about half of the householdsin Japan.Reduction of CO emissions from FY 2019to FY 2021 was 26.83 million tCO.2222Source:Bloomberg New Energy Finance ASSET FINANCE/Lead Arrangers LEAGUE TABLENet Zero GHG from Own OperationsBy November 2021,the Bank,the Trust Bank,and the Securities completed switching to 100%renewable energy for their own domesticelectricity contracts.Since the release of the MUFG Carbon Neutrality Declaration in May 2021,we have reduced domestic emissions byapproximately 60%(approximately 30%of global emissions).In addition,we have also completed switching to renewable electricity at somesites in Europe and Asia.In June 2022,NICOS and ACOM also completed switching to 100%renewable electricity.As a result,we were ableachieve 100%renewable electricity among all MUFG consolidated subsidiaries in Japan for their own-contracted electricity,ahead of our initialschedule.Contributing to Global InitiativesMUFG has participated in initiatives to recognize our position from a global perspective and to reflect a highly-standardized and transparentmethodologies when setting GHG emission targets for our financed portfolio.As a leading financial institution in Asia,we are committed tocommunicating our views.GFANZ（Glasgow Financial Alliance for Net-Zero）Through the GFANZ working groups,MUFG has been discussing net zero initiatives across financial sector as well as recommendations fromthe financial industry to other industries.GFANZ plans to use these discussions to make policy recommendations to the G20 and COP27.Net-Zero Banking Alliance（NZBA）In June 2021,we became the first Japanese bank to join the NZBA and have been contributing as an Asian representative in the SteeringGroup.In December 2021,we were appointed Chair of the Financing&Engagement working group.MUFG leads the development of a globalframework for transition finance.Net Zero Asset Managers initiative（NZAM）An asset management company initiative to achieve net zero GHG emissions by 2050,in line with international efforts to limit the globaltemperature increase to 1.5C.MUFG will set an interim target for 2030 by October 2022 for the proportion of assets under managementconsistent with achieving net zero GHG emissions by 2050.(note2)?riorit?ue?limate?an?e?easures?Environmental?rote?tion?ain?nitiative?25EEnvironmentSSocialGGovernanceSource:Bloomberg New Energy Finance ASSET FINANCE/Lead Arrangers LEAGUE TABLENet Zero GHG from Own OperationsBy November 2021,the Bank,the Trust Bank,and the Securities completed switching to 100%renewable energyfor their own domestic electricity contracts.Since the release of the MUFG Carbon Neutrality Declaration in May2021,we have reduced domestic emissions by approximately 60%(approximately 30%of global emissions).Inaddition,we have also completed switching to renewable electricity at some sites in Europe and Asia.In June2022,NICOS and ACOM also completed switching to 100%renewable electricity.As a result,we were ableachieve 100%renewable electricity among all MUFG consolidated subsidiaries in Japan for their own-contractedelectricity,ahead of our initial schedule.Contributing to Global InitiativesMUFG has participated in initiatives to recognize our position from a global perspective and to reflect a highly-standardized and transparent methodologies when setting GHG emission targets for our financed portfolio.As aleading financial institution in Asia,we are committed to communicating our views.GFANZ（Glasgow Financial Alliance for Net-Zero）Through the GFANZ working groups,MUFG has been discussing net zero initiatives across financial sector aswell as recommendations from the financial industry to other industries.GFANZ plans to use these discussions tomake policy recommendations to the G20 and COP27.Net-Zero Banking Alliance（NZBA）In June 2021,we became the first Japanese bank to join the NZBA and have been contributing as an Asianrepresentative in the Steering Group.In December 2021,we were appointed Chair of the Financing&Engagement working group.MUFG leads the development of a global framework for transition finance.Net Zero Asset Managers initiative（NZAM）An asset management company initiative to achieve net zero GHG emissions by 2050,in line with internationalefforts to limit the global temperature increase to 1.5C.MUFG will set an interim target for 2030 by October 2022for the proportion of assets under management consistent with achieving net zero GHG emissions by 2050.Asia Transition Finance Study Group（ATFSG）ATFSG was launched under the Asia Energy Transition Initiative(AETI)with a focus on majorfinancial institutions active in ASEAN countries.Leading by MUFG,this study group is discussing the commonprinciples and standards,etc.necessary to have a realistic and gradual energy transition in Asia.?riorit?ue?limate?an?e?easures?Environmental?rote?tion?ain?nitiative?2?EEnvironmentSSocialGGovernancefor the proportion of assets under management consistent with achieving net zero GHG emissions by 2050.Asia Transition Finance Study Group（ATFSG）ATFSG was launched under the Asia Energy Transition Initiative(AETI)with a focus on majorfinancial institutions active in ASEAN countries.Leading by MUFG,this study group is discussing the commonprinciples and standards,etc.necessary to have a realistic and gradual energy transition in Asia.Risk ManagementInclusion of Climate Change-Related Risks in the Risk Appetite StatementIn FY 2021,we included climate change-related risks in our Risk Appetite Statement.This move is intended tohelp develop,maintain and upgrade our structure for appropriately managing climate change-related risks.Positioning of Climate Change-Related Risk in Enterprise Risk ManagementMUFG has positioned climate change-related risk as one of the Top Risks that it must pay close attention to forthe year ahead and going forward.Management of Environmental and Social Risks in the Course of FinancingIn line with the MUFG Environmental Policy Statement and the MUFG Human Rights Policy Statement,we haveestablished the MUFG Environmental and Social Policy Framework,with the aim of properly assessing andmanaging environmental and social risks that may arise in the course of financing.In addition,we are engaged indue diligence based on the Equator Principles in its efforts to contribute to environmental and socialsustainability.Strengthened Policies on the Sectors Related to the Environment,Including Climate ChangeSince its establishment in May 2018,the MUFG Environmental and Social Policy Framework has beenperiodically reviewed in response to changes in business activities and the business environment.The most recent revision,made in April 2022,strengthened and revised policies for the climate-related sectors(palm oil,mining(coal),and oil and gas sectors).Environment-related policies in the MUFG Environmental and Social Policy FrameworkNatural Capital and BiodiversityMUFG Environmental Policy Statement,MUFG Environmental and Social PolicyFrameworkIn MUFG Environmental Policy Statement and the MUFG Environmental and Social Policy Framework,MUFGhas established the following policies:?riorit?ue?limate?an?e?easures?Environmental?rote?tion?ain?nitiative?27EEnvironmentSSocialGGovernanceIn MUFG Environmental Policy Statement and the MUFG Environmental and Social Policy Framework,MUFGhas established the following policies:MUFG Environmental Policy Statement(extract)Maintenance and protection of the biodiversity which supports our society is the foundation for therealization of a sustainable society.MUFG supports businesses that protect biodiversity through the provision ofproducts and services.Each group company also takes appropriate measures to prevent negative impacts onbiodiversity associated with our products and services.MUFG Environmental and Social Policy FrameworkIn light of the nature and severity of environmental and social risks or impacts,businesses that have a negativeimpact on Ramsar-designated wetlands,businesses that have a negative impact on UNESCO World Heritagesites,and businesses that violate the Convention on International Trade in Endangered Species of Wild faunaand Flora(Washington Convention)are defined as Prohibited Transactions,In addition,as Transactions ofHigh Caution,we have identified businesses that have a negative impact on areas with high conservation valueand sectors such as mining(coal),oil and gas,large-scale hydroelectric power generation,forestry,and palm oil.When considering financing,we check the implementation status of environmental and social considerations byour customers,including their impact on the ecosystem and how they are responding.Endorsement of Taskforce on Nature-related Financial Disclosures(TNFD)ForumThe TNFD is an international initiative launched in June 2021 by theUnited Nations Environment Programme Finance Initiative(UNEP FI),theUnited Nations Development Programme(UNDP),the World Wide Fundfor Nature(WWF)and Global Canopy.TNFD aims to shift global financialflows toward nature-positive outcomes through disclosure of nature-related information by companies.The TNFD Forum is a stakeholderorganization to provides information and technical support related toTNFD.In February 2022,MUFG joined the TNFD Forum to promote initiatives fornatural capital and biodiversity across the Group.We also participated in ameeting of the TNFD Consultation Group of Japan established in June2022.In addition,referring to the LEAP approachpresented in theframework beta version,we have started to analyze natural capital riskstogether with Mitsubishi UFJ Research and Consulting,a member of theforum.As a member of the forum,we will continue to actively participate indiscussions to further contribute to the realization of a sustainableenvironment and society.(note)LEAP approach:An approach proposed as a practical risk assessmentmethod for natural capital and consists of four steps:Locate the contactpoint between the company and nature,Evaluate the impact anddependence on nature,Assess the risks and opportunities related to nature,and Prepare business strategies and disclosures according to those risksand opportunities.Please see Environment for details.(note)?riorit?ue?limate?an?e?easures?Environmental?rote?tion?ain?nitiative?28EEnvironmentSSocialGGovernanceMUFG strives to enhance its financial products and services backed by comprehensive capabilities afforded bythe Group to meet evolving and diversifying customer needs in the face of changes in social structure due to theaging population and low birthrate.We also engage in research and social contribution activities for the samepurpose.Moreover,we are developing channels specifically designed to make access to our services easier for elderlycustomers.At the same time,we constantly work to enhance customer convenience by upgrading our apps andother digital-driven tools supporting non-face-to-face channels to improve their operability and design.Main InitiativesMain Initiatives in Each Issue CategoryResponse to Aging Population&Low Birthrate?riorit?ue?es?onse to A?in?o?ulation?o?irt?rate?ain?nitiative?29EEnvironmentSSocialGGovernanceSuccession of Businesses and AssetsEmploying functions afforded by the Group as well as networks offered by our alliance partners,we deliverproposals regarding M&A,inheritance,real estate and asset management by taking a groupwide,integratedapproach.Through these endeavors,we support the succession of assets and businesses worth more than 1trillion on an annual basis Furthermore,we began offering foreign currency-denominated insurance with a lump-sum premium for people seeking protection after bereavement.This insurance is equipped with a joint policyand thus provides an effective solution for secondary inheritance,which often becomes an issue in the course ofasset succession.In these and other ways,we strive to enhance our lineup of products and services designed tosupport the smooth succession of businesses and assets.(note)A type of insurance enabling two individuals to be insured with a single policyDevelopment of the MUFG Wealth Management Digital Platform(WMPF)MUFG Wealth Management aims to be atrusted brand that can serve as a goodpartner to support customers lives forgenerations to come and to provide Group-wide comprehensive solutions,from bankingand trust to securities,to our customers sothat they can achieve true wealth at variousstages of their lives.Utilizing the WMPF,a digital tool released inFebruary 2022 which is used throughout theentire Group,we will come to understandcustomers life goals and propose optimalsolutions based on their total assets usingthe Groups comprehensive strengths to meet the diverse needs of individuals,their families,and businesses,such as asset succession,business succession,and asset management.MUFG Inheritance Research Institute(note)The Trust Bank has established the MUFG Inheritance Research Institute in order to conduct research studies onasset management for an aging society and on smooth transfer of assets to the next generation.In fiscal 2021,we held our first inheritance symposium based on an awareness survey on inheritance with thetheme of asset succession in the era of the 100-year life society.We also exchanged opinions on future initiativesincluding IT utilization in industry,government,and academia,focusing on the issues that an aging society faces,such as deterioration in cognitive and judgmental functions.Going forward,we will continue to provide practicalinformation from a neutral standpoint with the aim of resolving social issues,such as smooth asset managementand asset succession,through symposiums and the publication of various reports and columns.?riorit?ue?es?onse to A?in?o?ulation?o?irt?rate?ain?nitiative?0EEnvironmentSSocialGGovernanceThe Trust Bank has established the MUFG Inheritance Research Institute in order to conduct research studies onasset management for an aging society and on smooth transfer of assets to the next generation.In fiscal 2021,we held our first inheritance symposium based on an awareness survey on inheritance with thetheme of asset succession in the era of the 100-year life society.We also exchanged opinions on future initiativesincluding IT utilization in industry,government,and academia,focusing on the issues that an aging society faces,such as deterioration in cognitive and judgmental functions.Going forward,we will continue to provide practicalinformation from a neutral standpoint with the aim of resolving social issues,such as smooth asset managementand asset succession,through symposiums and the publication of various reports and columns.Started Tsunageru Toshin Service(Gift During Life/Asset Succession)In July 2022,the Trust Bank started new TsunageruToshin service(gift during life/asset succession)designed for individual customers.It is a new service that contributes to the realizationof long-term asset management through twoapproaches:Gift during life,which allows theyounger generation without sufficient funds toinvest due to education and housing expenses,tostart investing in investment trusts early on by usinggifted funds;and asset succession,which allowsthe next generation to continue managinginvestment trusts without having to convertinherited investment trusts into cash at time of inheritance.Response to the ElderlyToday,the value of financial assets held by elderly citizens has grown bigger than ever before,while anincreasing number of people suffer from dementia.Aware of these circumstances,we offer not only trustproducts that serve as solutions for testament formulation and the advancement of assets but also robustservices to help mitigate our customers looming sense of anxiety at the prospect of a possible aging-relatedcognitive deterioration.For example,in 2019 we released Tsukaete Anshin,a trust product with proxy withdrawalfunctions.The number of applicants for this product is now in excess of 8,000.Moreover,we endeavor to ensure that elderly customers can always enjoy access to safe and secure services.To this end,we promote training aimed at securing employee capabilities to accommodate customers withdementia.Today,more than 23,000 employees have been certified as dementia supporters.(note)Including applications for Tsukaete Wrap Special Contract.This additional wrap contract enables the customers proxy towithdraw funds from wrap accounts via surrender and deposit these funds into Tsukaete Anshin accountsFinancial GerontologyThe Trust Bank is conducting research on financial gerontology,the study of how changes in cognitive functiondue to aging affect economic activity and financial behavior,and is researching services that enable the elderly to(note)use their assets in the way they desire.Through this research,we will develop products that prepare for cognitivedecline and contribute to the health and longevity of our customers.In addition,we are working to commercialize new products and services designed to deliver solutions to issuesarising from an aging society so that we can deliver even better services to our customers in the future.Theseefforts include the development of technologies to assess cognitive functions and a system to verify testamentcontent comprehension.To that end,we launch a verification testing project by fiscal 2022 as part of an industry-academia research collaboration.?riorit?ue?es?onse to A?in?o?ulation?o?irt?rate?ain?nitiative?1EEnvironmentSSocialGGovernanceuse their assets in the way they desire.Through this research,we will develop products that prepare for cognitivedecline and contribute to the health and longevity of our customers.In addition,we are working to commercialize new products and services designed to deliver solutions to issuesarising from an aging society so that we can deliver even better services to our customers in the future.Theseefforts include the development of technologies to assess cognitive functions and a system to verify testamentcontent comprehension.To that end,we launch a verification testing project by fiscal 2022 as part of an industry-academia research collaboration.Excellent ClubAs peoples lifespan increases,customers specific situations and needs related to their life plans are becomingmore diverse,and financial institutions are expected to respond not only with financial services but also withcomprehensive responses,including alliances with non-financial service providers.With this backdrop,in August 2022,the Bank launched the MUFG Bank Excellence Club,a free membershipservice based on the concept of“making 100 years of life 100 years of happiness.”In addition to providinginformation such as bulletins and seminars,as well as providing MUFG financial services,we also offer non-financial services that enrich our customers daily lives and support healthy lifestyles.Please click the link below for service details and membership conditions:MUFG Bank Excellence Club(in Japanese)The Trust Bank has already developed a similar membership service,“Excellent Club,”which is used by its370,000 members and many others.The Trust BankExcellent Club(in Japanese)MUFG has positioned each Excellent Club as a platform for providing solutions for the elderly and will contributeto solving the issues faced by the aging society.Asset BuildingMUFG offers consulting on asset management for customers from diverse age groups while offering an extensivelineup of pension asset management and consulting functions for corporate clients.In June 2021,we released“D-Canvas,”a smartphone app enabling persons enrolled in the defined contributionpension plans of our corporate clients to confirm the balance of plan assets and change products under ouradministration.In December 2021,we also released“Money Canvas,”a one-stop platform through which userscan enjoy access to a diverse range of financial products supporting asset building.Going forward,we willenhance UI/UX offered through our services and otherwise upgrade our service infrastructure.By doing so,wewill empower all our customers,irrespective of their age,to gain smooth access to our asset building solutions.?riorit?ue?es?onse to A?in?o?ulation?o?irt?rate?ain?nitiative?2EEnvironmentSSocialGGovernanceMUFG offers consulting on asset management for customers from diverse age groups while offering an extensivelineup of pension asset management and consulting functions for corporate clients.In June 2021,we released“D-Canvas,”a smartphone app enabling persons enrolled in the defined contributionpension plans of our corporate clients to confirm the balance of plan assets and change products under ouradministration.In December 2021,we also released“Money Canvas,”a one-stop platform through which userscan enjoy access to a diverse range of financial products supporting asset building.Going forward,we willenhance UI/UX offered through our services and otherwise upgrade our service infrastructure.By doing so,wewill empower all our customers,irrespective of their age,to gain smooth access to our asset building solutions.Money CanvasMoney Canvas(in Japanese)MUFG Financial Education InstituteThe Trust Bank established the MUFG Financial Education Institute for the purpose of providing practical andeffective information on asset building and asset management from a neutral standpoint.In fiscal 2021,we conducted surveys on the topics of“Awareness of Sustainability and Consumption/InvestmentBehavior”and“Changes in Behavior and Investment Conditions during the COVID-19 Pandemic”.In order tomake the survey results widely available to customers,we disseminated information through various means,including the publication of research reports on our website and by holding a symposium.The symposium,which was held in February 2022,introduced the results of the survey and provided anopportunity to think together with experts about what is expected to the financial institutions from the perspectiveof asset formation and investment dissemination as society moves toward sustainability(SDGs,ESG,etc.).Inaddition,the panel discussed other topics,such as sustainable investment that resonates with individualcustomers and the nature of a trusted financial institution.In the questionnaire provided on the day of theseminar,about 80%of the respondents answered that the seminar was“Very helpful/Helpful.”Support for Next GenerationTaking full advantage of its financial expertise,MUFG provides financial and economic educationto young people.At the same time,we are activelysupporting the sound upbringing of children andassisting students in their pursuit of highereducation through donations and other means.For example,MUMSS has been upholding a policyof contributing to society through the provision offinancial and economic education,to this endoffering on-demand classes at junior and seniorhigh schools.Recently,MUMSS developed a neweducational program for use in elementary schoolsand has started providing the program to enhance the capacity of children,who will be leaders of the futuregenerations.Financial and Economic EducationSupport for EmployeesMUFG is working to create a workplace where both male and female employees can balance work with theirchildcare,nursing care,and fertility treatment.Inclusion&Diversity(As of October 2022)HomeSustainabilityPriority IssuesResponse to Aging Population&Low Birthrate Mitsubishi UFJ Financial Group,Inc.?riorit?ue?es?onse to A?in?o?ulation?o?irt?rate?ain?nitiative?EEnvironmentSSocialGGovernanceDiversity is an important value that gives us the resilience we need to cope with times of change.At MUFG,weare working to create a workplace where diverse employees can work with vitality and fulfillment.We are alsocontributing to the promotion of Inclusion&Diversity in the world through our financial functions.Main InitiativesInclusion&Diversity InitiativesMUFG focuses on Inclusion and Diversity as one of the 10 Priority Issues in sustainability management.In 2006,MUFG established a dedicated department to promote diversity as a corporate management strategyunder the commitment of the top management.In particular,we consider the promotion of diversity from theviewpoint of gender to be an important issue,and we are working to develop the ability of women and promotetheir appointment in higher positions.Our three main subsidiaries,the Bank,the Trust Bank and the Securities,set joint targets and report progressregularly at the executive committee.In 2018,the Group started the integrated operation of the corporate center function.The three companies gatherand work together to promote inclusion&diversity within the Group.At the annual HR exchange meetings,people from HR departments of about 40 Group companies gather toshare best practices and issues.By doing so,the Group companies are in full coordination and promote inclusion&diversity effectively.In addition,we have assigned staff in charge of promoting Inclusion&Diversity in each region to effectivelyaddress each issue under global cooperation.Inclusion&Diversity?riorit?ue?In?lusion?iversity?ain?nitiative?4EEnvironmentSSocialGGovernanceMUFGs Thinking on Inclusion&DiversityAt MUFG,our vision for promoting Inclusion&Diversity is identified as Enlighten,Encourage,Empower-Worktogether as a Group to exceed customer expectations.A chemical reaction occurs as diverse employees respect each others differences,make the most of eachothers characteristics,and grow with each other.New ideas and behavioral patterns born from this chemicalreaction will help us create a free and vigorous culture and value that exceed the expectations of society andcustomers.In order for MUFG to be committed to empowering a brighter future,we believe that investment in Inclusion&Diversity is essential.Our history of Inclusion&Diversity InitiativesOur initiatives since 2006 are as shown below.Initially,our main objective was to improve the job satisfaction offemale employees,However,since 2010,we have expanded the scope of our initiatives with the aim of improvingthe job satisfaction of not only female employees but also diverse employees.Moving forward,we will furtherfocus our efforts on creating workplaces where all employees of the Group can demonstrate their uniquestrengths and make diversity empower a brighter future.Representative Initiatives by Group Companies?riorit?ue?In?lusion?iversity?ain?nitiative?5EEnvironmentSSocialGGovernanceEncouraging Male Employees to Participate in ChildcareIn order to create workplace environments that allowemployees to balance work and childcare regardless ofgender,MUFG Group companies are carrying outinitiatives to encourage male employees to take childcareleave,thereby raising awareness on more balanced workstyles and promoting better understanding of colleagueswho are working while raising children.Since FY2019,wehave begun encouraging male employees to takechildcare leave of about one month,among otherinitiatives.MUFGs compensation system for Executives,etc.is not only aimed at ensuring the achievement of short-termperformance targets but also intended to better incentivize these individuals to contribute to a medium-to long-term improvement in corporate value and encourage them to take on the challenge of driving innovation.In FY2022,we also added inclusion&diversity targets to qualitative assessment indicators for determining theamount of bonuses vis-vis the execution status of the recipients duties,in order to facilitate managementefforts to promote and secure the robust employee understanding of inclusion&diversity.Corporate GovernanceRaising the Target for the Ratio of Women in Management in Japan from 18%to 20%At the Bank,the Trust Bank and the Securities,our jointnumerical goal is to raise the ratio of women holdingpositions of line manager or higher to 20%in Japan by theend of March 2024.This figure is to reflect diverseperspectives and values in areas closer to management,and serves as a milestone to achieve at least 30%in themedium-to long-term.In addition to the joint numericaltargets of the three companies,each company has set itsown numerical targets to promote the appointment offemale employees.*Ratio of women in line manager or higher positions.MUFGs compensation system for Executives,etc.is not only aimed at ensuring the achievement of short-termperformance targets but also intended to better incentivize these individuals to contribute to a medium-to long-term improvement in corporate value and encourage them to take on the challenge of driving innovation.In FY2022,we also added inclusion&diversity targets to qualitative assessment indicators for determining theamount of bonuses vis-vis the execution status of the recipients duties,in order to facilitate managementefforts to promote and secure the robust employee understanding of inclusion&diversity.Corporate GovernanceRaising the Target for the Ratio of Women in Management in Japan from 18%to 20%MUFGs compensation system for Executives,etc.is not only aimed at ensuring the achievement of short-termperformance targets but also intended to better incentivize these individuals to contribute to a medium-to long-term improvement in corporate value and encourage them to take on the challenge of driving innovation.In FY2022,we also added inclusion&diversity targets to qualitative assessment indicators for determining theamount of bonuses vis-vis the execution status of the recipients duties,in order to facilitate managementefforts to promote and secure the robust employee understanding of inclusion&diversity.Corporate GovernanceRaising the Target for the Ratio of Women in Management in Japan from 18%to 20%MUFGs Thinking on Inclusion&DiversityAt MUFG,our vision for promoting Inclusion&Diversity is identified as Enlighten,Encourage,Empower-Worktogether as a Group to exceed customer expectations.A chemical reaction occurs as diverse employees respect each others differences,make the most of eachothers characteristics,and grow with each other.New ideas and behavioral patterns born from this chemicalreaction will help us create a free and vigorous culture and value that exceed the expectations of society andcustomers.In order for MUFG to be committed to empowering a brighter future,we believe that investment in Inclusion&Diversity is essential.Our history of Inclusion&Diversity InitiativesOur initiatives since 2006 are as shown below.Initially,our main objective was to improve the job satisfaction offemale employees,However,since 2010,we have expanded the scope of our initiatives with the aim of improvingthe job satisfaction of not only female employees but also diverse employees.Moving forward,we will furtherfocus our efforts on creating workplaces where all employees of the Group can demonstrate their uniquestrengths and make diversity empower a brighter future.Representative Initiatives by Group CompaniesCompensation SystemActive Participation of People with DisabilitiesWe are expanding roles for employees with disabilities by establishing special subsidiaries that offer suitablework options.Currently,about 1,400 employees with disabilities are playing an active role within MUFG and theGroups employment rate is 2.56%in Japan(as of June 1,2022).(note)The employment rate in Japan is calculated from the number of employees with disabilities at the Bank,the Trust Bank(for these two companies,special subsidiaries and the Group companies to which the exception rule applies areincluded),the Securities,NICOS and ACOM using the statutory formula set in the Employment Rate System for Personswith Disabilities(note)?riorit?ue?In?lusion?iversity?ain?nitiative?EEnvironmentSSocialGGovernanceMUFG clearly prohibits any harassment or discrimination on the basis of sexual orientation and/or genderidentity,aiming to create workplaces where all employees can stay true to themselves,regardless of sexualorientation,gender identity,etc.Through initiatives such as providing training opportunities,publishing a handbook,and introducing a same-sexpartnership recognition program,we are promoting understanding of LGBTQ within MUFG and are also workingto raise awareness of society in cooperation with other financial institutions.Active Participation of Senior PersonnelMUFG actively supports the creation of workplaces where senior personnel can flourish,continuing to make themost of their wealth of experience and abilities while supporting their own career development.For employeeswho have reached a particular age,we have introduced training and programs to facilitate skill development withthe aim of supporting future career development based on diverse values.For motivated employees aboveretirement age,we have established a continuous employment system with flexible work arrangements toprovide stable work opportunities and respond to diverse employment needs.Nurturing Global Human ResourcesToday,the MUFG Group has expanded into more than 50 countries around the globe,and approximately 58%ofits entire workforce is accounted for by overseas employees(as of May 31,2022).Based on the concept ofinclusion&diversity,which is one of MUFGs priority issues,in order to recruit and develop a diverse range ofprofessionals,it is necessary to foster our corporate brand both in Japan and overseas so that people will want towork for MUFG.MUFG is expanding opportunities for employees to play an even more active role by operating a market-standardand globally unif ied human resources platform for title management,employee evaluation,wage determinationand other human resources practices.External EvaluationAs a result of various initiatives,MUFG was chosen for the Bloomberg Gender-Equality Index developed byBloomberg LP,Nadeshiko Brand and Semi-Nadeshiko Brand under the program sponsored by the Ministry ofEconomy,Trade and Industry and the Tokyo Stock Exchange,as well as the Gold and Best Practice in LGBTQinitiative evaluation PRIDE Index.Promoting Understanding of LGBTQ?riorit?ue?In?lusion?iversity?ain?nitiative?7EEnvironmentSSocialGGovernancePromotion of Inclusion&Diversity Initiatives through Financial Functions andSocial Contribution ActivitiesIssuance of Gender Bonds by Krungsri(Bank of Ayudhya)Krungsri(Bank of Ayudhya),our Partner Bank inThailand,has issued social bonds(gender bonds)to support the financial needs of womenentrepreneurs.Proceeds from the bond issuance are used tofinance women-led small and medium-sizedenterprises in Thailand.Through the issuance ofthese bonds,the bank provided opportunities forthe underserved women in SME segment to accessfinancial services and contributed to thedevelopment of the fast-growing social bond marketin Asia.Through the provision of these bonds,Krungsri waspresented with multiple awards and recognition as below.Best Bank for Women Entrepreneurs at the Global SME Finance Awards 2021(International FinanceCorporation)1st Runner-Up for the UN Women 2021 Thailand WEPs Awards in the Gender-Responsive MarketplaceCategory(UN Women)Donations for Supporting Womens HealthAs part of our efforts to support womens health,wemade a donation to the Japan Society of FertilityPreservation in order to spread accurateinformation on breast cancer and cervical cancer(methods for early detection and prevention,etc.).In recent years,cancers specific to women havebecome more common among younger ages,withan increasing number of cases occurring in their20s to 40s.Amongst them,breast cancer is themost common followed by cervical cancer.Continuous medical examinations are important forearly detection of cancer.In particular,the medicalexamination rate of cervical cancer,which occurs among those in their 20s and requires screening at a youngage,is as low as 25.7%.Also,the HPV vaccination rate is low.MUFG believes that it is important to realize a society in which women can build life plans with peace of mind andplay active roles in various situations.Through the Japan Society of Fertility Preservation,MUFG will promoteearly detection and prevention methods such as continuous medical examinations for cancer among youngwomen.Please see Inclusion&Diversity for details.?riorit?ue?In?lusion?iversity?ain?nitiative?8EEnvironmentSSocialGGovernanceTo help develop a social infrastructure that is resilient against disaster and vitalize regional communities,MUFGis engaged in project finance and the formulation of funds,accommodating funding needs associated with thestrengthening of aged infrastructure at home and abroad as well as the development of social infrastructure,especially in emerging countries.Moreover,in the wake of the rapid popularization of digital technologies,we are striving to develop a solidfinancial system equipped with enhanced cyber security measures and capable of offering higher customerconvenience.In this way,we are contributing to the safe and secure social transition to digital technologies.Main InitiativesSolving Social Issues Using Social LoansMUFG is extending social loans,which require borrowers to use funds for projects aimed at resolving socialissues via,for example,the development of railway infrastructure to mitigate traffic jams and reduce exhaust gas,the development of water-related infrastructure,and the construction of hospitals.Contribution to Development of Social Infrastructure,Including Autonomous Driving andAdvanced Driver-Assistance SystemsThe Bank has entered into a social loan agreement with Dynamic MapPlatform Co.,Ltd.,which generates,maintains,and provides high-precision 3D map data(HD maps)for a variety of applications,includingautomotive and smart city applications.As its medium-to-long-term vision,the company aims to realize a 3D location information platform thatcontributes to Society 5.0.In addition to autonomous driving andadvanced driver-assistance systems,the company is developing highly(note)Developing Social Infrastructureaccurate 3D data that can be used for social infrastructure development,including infrastructure maintenance and management systems as well asdisaster prevention and mitigation systems.Since the loan will be used todevelop an HD map that contributes to Society 5.0,MUFG is contributingto solving social issues through the provision of funds.High-precision 3D map data(HD map)imageProvision of Support in the Field of Electricity Transmission and Distribution toMitigate Environmental Impact in Saudi ArabiaBased on its national growth strategy,Saudi Vision 2030,Saudi Arabia is shifting from the oil-dependenteconomy.As part of this effort,Saudi Electricity Company(SEC)has been promoting projects that contribute tothe expansion of renewable energy and the improvement of energy efficiency.Now,SECs challenge is toenhance its electricity transmission and distribution network for stable supply of renewable energy source toconsumers.Through a united loan framework developed by the Japan Bank for International Cooperation(JBIC)to supportGlobal action for Reconciling Economic growth and Environmental preservation(GREEN),MUFG has providedUS$5 million in co-financing to support an environmental impact mitigation project in the field of electricitytransmission and distribution by SEC.Moving forward,we will continue to support our customers decarbonization efforts through collaboration withgovernment-affiliated financial institutions.Contribution to Development of Water Infrastructure in Saudi ArabiaAs a response to the rapid economic and population growth in Saudi Arabia,the government of Saudi Arabia hastendered the construction and operation of several new sewage treatment plants.One of MUFGs key clients together with its consortium partners were awarded with the concession to build and operate three of thelargest sewage treatments plants in the country,which converts wastewater into usable water for agriculturalpurposes.MUFG was awarded the role of ESG Coordinator due to its relationship with the sponsors and MUFGs focus onsustainable projects.In this role,MUFG wrote the Green Loan Framework and successfully arranged a SecondParty Opinion for the consortium.MUFGs other roles included Market Hedge Provider,Global Facility Agent,Conventional USD Facility Agent,Offshore Security Trustee and Offshore Account Bank on all three projects,contributing to the development of water infrastructure in Saudi Arabia.First Sustainability Bond Issued by a Company in the Transportation Sector inSoutheast AsiaKrungsri(Bank of Ayudhya),our Partner Bank in Thailand,has underwritten the first sustainability bond issued bya company in the transportation sector in Southeast Asia in April 2021.A part of the proceeds from the issuance will be used for equity investment in one of the issuers transportationprojects.(As of October 2022)HomeSustainabilityPriority IssuesDeveloping Social Infrastructure(note)Society 5.0:A human-centered society that balances economic development and theresolution of social issues through a highly integrated system of cyberspace(virtual space)andphysical space(real space).High-precision 3D map data(HD map)imageProvision of Support in the Field of Electricity Transmission and Distribution toMitigate Environmental Impact in Saudi ArabiaBased on its national growth strategy,Saudi Vision 2030,Saudi Arabia is shifting from the oil-dependenteconomy.As part of this effort,Saudi Electricity Company(SEC)has been promoting projects that contribute tothe expansion of renewable energy and the improvement of energy efficiency.Now,SECs challenge is toenhance its electricity transmission and distribution network for stable supply of renewable energy source toconsumers.Through a united loan framework developed by the Japan Bank for International Cooperation(JBIC)to supportGlobal action for Reconciling Economic growth and Environmental preservation(GREEN),MUFG has providedUS$5 million in co-financing to support an environmental impact mitigation project in the field of electricitytransmission and distribution by SEC.Moving forward,we will continue to support our customers decarbonization efforts through collaboration withgovernment-affiliated financial institutions.Contribution to Development of Water Infrastructure in Saudi ArabiaAs a response to the rapid economic and population growth in Saudi Arabia,the government of Saudi Arabia hastendered the construction and operation of several new sewage treatment plants.One of MUFGs key clients together with its consortium partners were awarded with the concession to build and operate three of thelargest sewage treatments plants in the country,which converts wastewater into usable water for agriculturalpurposes.MUFG was awarded the role of ESG Coordinator due to its relationship with the sponsors and MUFGs focus onsustainable projects.In this role,MUFG wrote the Green Loan Framework and successfully arranged a SecondParty Opinion for the consortium.MUFGs other roles included Market Hedge Provider,Global Facility Agent,Conventional USD Facility Agent,Offshore Security Trustee and Offshore Account Bank on all three projects,contributing to the development of water infrastructure in Saudi Arabia.First Sustainability Bond Issued by a Company in the Transportation Sector inSoutheast AsiaKrungsri(Bank of Ayudhya),our Partner Bank in Thailand,has underwritten the first sustainability bond issued bya company in the transportation sector in Southeast Asia in April 2021.A part of the proceeds from the issuance will be used for equity investment in one of the issuers transportationprojects.(As of October 2022)HomeSustainabilityPriority IssuesDeveloping Social Infrastructure(note)Society 5.0:A human-centered society that balances economic development and theresolution of social issues through a highly integrated system of cyberspace(virtual space)andphysical space(real space).?riorit?ue?evelo?in?So?ial Infrastru?ture?ain?nitiative?9EEnvironmentSSocialGGovernanceaccurate 3D data that can be used for social infrastructure development,including infrastructure maintenance and management systems as well asdisaster prevention and mitigation systems.Since the loan will be used todevelop an HD map that contributes to Society 5.0,MUFG is contributingto solving social issues through the provision of funds.Provision of Support in the Field of Electricity Transmission and Distribution toMitigate Environmental Impact in Saudi ArabiaBased on its national growth strategy,Saudi Vision 2030,Saudi Arabia is shifting from the oil-dependenteconomy.As part of this effort,Saudi Electricity Company(SEC)has been promoting projects that contribute tothe expansion of renewable energy and the improvement of energy efficiency.Now,SECs challenge is toenhance its electricity transmission and distribution network for stable supply of renewable energy source toconsumers.Through a united loan framework developed by the Japan Bank for International Cooperation(JBIC)to supportGlobal action for Reconciling Economic growth and Environmental preservation(GREEN),MUFG has providedUS$5 million in co-financing to support an environmental impact mitigation project in the field of electricitytransmission and distribution by SEC.Moving forward,we will continue to support our customers decarbonization efforts through collaboration withgovernment-affiliated financial institutions.Contribution to Development of Water Infrastructure in Saudi ArabiaAs a response to the rapid economic and population growth in Saudi Arabia,the government of Saudi Arabia hastendered the construction and operation of several new sewage treatment plants.One of MUFGs key clients together with its consortium partners were awarded with the concession to build and operate three of thelargest sewage treatments plants in the country,which converts wastewater into usable water for agriculturalpurposes.MUFG was awarded the role of ESG Coordinator due to its relationship with the sponsors and MUFGs focus onsustainable projects.In this role,MUFG wrote the Green Loan Framework and successfully arranged a SecondParty Opinion for the consortium.MUFGs other roles included Market Hedge Provider,Global Facility Agent,Conventional USD Facility Agent,Offshore Security Trustee and Offshore Account Bank on all three projects,contributing to the development of water infrastructure in Saudi Arabia.First Sustainability Bond Issued by a Company in the Transportation Sector inSoutheast AsiaKrungsri(Bank of Ayudhya),our Partner Bank in Thailand,has underwritten the first sustainability bond issued bya company in the transportation sector in Southeast Asia in April 2021.A part of the proceeds from the issuance will be used for equity investment in one of the issuers transportationprojects.(note)Society 5.0:A human-centered society that balances economic development and theresolution of social issues through a highly integrated system of cyberspace(virtual space)andphysical space(real space).?riorit?ue?evelo?in?So?ial Infrastru?ture?ain?nitiative?40EEnvironmentSSocialGGovernanceMUFG is tackling business incubation and supporting innovationby providing growing industries and venturestartups with avariety of business opportunities.Main InitiativesSupporting Every Business StageHosting of“MUFG ICJ ESG Accelerator,”the First ESG Accelerator Program inJapans Banking IndustryIn tandem with Inclusion Japan,Inc.,which is engaged in ESG investment in the venture field,we held“MUFGICJ ESG Accelerator,”the first ESG accelerator program in Japans banking industry.This program is aimed atfacilitating collaboration across a range of players from startups and business corporations to venture capital andSupporting Industrial Development&Innovationother investors in order to accelerate business development endeavors toward the realization of carbon-neutraland circular economies.Of 98 venture startups applying for this program,14 companies were selected asfinalists.MUFG has since engaged these companies in discussions alongside its cosponsoring partners to co-create new businesses.Going forward,MUFG will help startups move forward steadily toward the commercialization of their endeavors,working in tandem with them to assist their efforts to discover growth opportunities and launch innovativebusinesses.?riorit?ue?Su?ortin?In?ustrial?evelo?ment?Innovation?ain?nitiative?41EEnvironmentSSocialGGovernanceother investors in order to accelerate business development endeavors toward the realization of carbon-neutraland circular economies.Of 98 venture startups applying for this program,14 companies were selected asfinalists.MUFG has since engaged these companies in discussions alongside its cosponsoring partners to co-create new businesses.Going forward,MUFG will help startups move forward steadily toward the commercialization of their endeavors,working in tandem with them to assist their efforts to discover growth opportunities and launch innovativebusinesses.Holding the Nineth Rise Up FestaAs part of these efforts,since 2014 we have heldRise Up Festa inwhich we take full advantage ofour network and abundant knowhowinmanagement support and other fields to assistventurestartups that take on novel or uniquebusiness endeavors over themedium-to long-term.At the 9th Rise Up Festa in 2022,we solicited awide range of business proposals in fields that areexpected to grow in the future.Of the more than150 business plans submitted,eight plans wereawarded for their originality and appeal.Offering of a Business Platform for Corporate CustomersIn partnership with BusinessTech Co.,Ltd.,NTT Data Corporation,and Salesforce Japan Co.,Ltd.,MUFG Bankbegan offering a business platform for corporate customers aimed at regional financial institutions in June 2022.The business platform for corporate customers is a new comprehensive financial service platform that provides,in addition to the financial solutions and information content having been provided by financial institutions so far,solutions that contribute to solving issues in non-financial areas,such as DX,ESG,and regional revitalization.Byutilizing this platform,regional financial institutions will be able to provide solutions easily and collectively to thevarious management and social issues faced by their business partners.Through provision of this platform,we aim to solve corporate management and social issues and contribute toindustrial development and innovation creation.Advantages of offering a business platform for corporate customersPromoting Financing for Overseas Startups?riorit?ue?Su?ortin?In?ustrial?evelo?ment?Innovation?ain?nitiative?42EEnvironmentSSocialGGovernanceMars Growth CapitalMars Growth Capital,a joint venture established by the Bank and an Israel-based fintech company LiquidityCapital,provides debt finance to startups in Asia Pacific and Europe by utilizing a unique AI credit scoring model.Growing start-ups often have difficulty borrowing from financial institutions due to their short business history andloss-making nature in their growth stage.However,Mars Growth Capital uses AI to evaluate a companys growthpotential and make loans possible.Since its launch in 2020,Mars Growth Capital has grown steadily with twofunds currently in operation:The first fund is for mid-stage companies(US$200 million)and the second fund forlate-stage companies(US$300 million).MUFG Ganesha FundIn March 2022,we established the MUFG Ganesha Fund with an investment commitment of US$300 milliondesigned for startups in India.Through this fund,the Bank will invest in middle-to late-stage Indian startups.India,aided by strong economic growth,has seen an increase in the number of startups leveraging digitaltechnology,given the rise of young digital natives in the country,the rapid spread of the Internet,and thepromotion of governmental policies that support digitalization.We will further contribute to the development of new industries and the sustainable development by financiallysupporting the growth of startups that use technology to solve environmental and social issues.Support for Regional RevitalizationMUIC Kansai Innovation Center Recognized as an Outstanding Initiative”of aFinancial Institution that Contributes to Regional RevitalizationIn February 2021,MUFG opened MUIC Kansai in Osaka,a membership-based innovation center,as an initiativeto solve issues in the tourism industry and revitalize the Kansai economy.The core function of MUIC Kansai is a“problem-solving programs”aimed at creating innovation,and MUICKansai provides a platform that can identify social issues to be solved,conduct a PoC,and implement thesolutions in society in an integrated manner.In addition,the facility is equipped with co-working spaces andshared offices,available forvarious relevant events to provide opportunities for new business matching for co-creation from the perspective of both hardware and software.As a result of these efforts,MUIC Kansai was recognized as an outstanding initiative*”of a financial institutioncontributing to regional revitalization by the Council for the Realization of the Digital Rural City State Concept,Cabinet Secretariat and MUFG received an award from the Minister of State for Special Missions(regionalrevitalization representative).(note)“Outstanding initiative”:A case study that the Japanese government recognizes as a collaboration effort and apioneering initiative by financial institutions to contribute to regional revitalization in collaboration with local governments.MUIC KansaiOffering of a Business Platform for Corporate CustomersIn partnership with BusinessTech Co.,Ltd.,NTT Data Corporation,and Salesforce Japan Co.,Ltd.,MUFG Bankbegan offering a business platform for corporate customers aimed at regional financial institutions in June 2022.The business platform for corporate customers is a new comprehensive financial service platform that provides,in addition to the financial solutions and information content having been provided by financial institutions so far,solutions that contribute to solving issues in non-financial areas,such as DX,ESG,and regional revitalization.Byutilizing this platform,regional financial institutions will be able to provide solutions easily and collectively to thevarious management and social issues faced by their business partners.Through provision of this platform,we aim to solve corporate management and social issues and contribute toindustrial development and innovation creation.Advantages of offering a business platform for corporate customersPromoting Financing for Overseas Startups?riorit?ue?Su?ortin?In?ustrial?evelo?ment?Innovation?ain?nitiative?4?EEnvironmentSSocialGGovernanceTo help the industry take on these challenges,the ALL JAPAN Tourist Area Regeneration/Revitalization Fundwas instituted in April 2018.The first domestic private fund of its kind,this megafund is uniquely designed tofacilitate investment that transcends regional boundaries.Alongside other leading business corporationsrepresenting various industries,MUFG will collaborate with regional financial institutions to operate the fund,thereby promoting a thriving tourism industry and invigorated regional economies in all 47 prefecturesnationwide.By doing so MUFG will actively contribute to Japans industrial development and economic growth.As of the end of August 2022,the number of investment projects totaled 33(14 real estate investments and 19venture investments).Some of these projects are listed below.We are also currently considering theestablishment of a second fund.KAI Izumo(Izumo City,Shimane Prefecture)Renovation of hot spring accommodation facilities located in thetourist area of Hinomisaki.”By attracting Hoshino Resorts,whichare
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508-06/28/22-mh2022 Annual Sustainability ReportPUTTING OUR STAMP ON A GREENER TOMORROWTable of ContentsA Message to Our Readers.1USPS at a Glance.2Sustainability Management Approach.4Diversity,Equity,Inclusion and Accessibility .5Postal Service Podcast.6Strategic Business Partnerships and Initiatives.7Environmental Commitment Letter.8Encouraging Market Relevance and Innovation.9A Conversation with Postmaster General and CEO Louis DeJoy and Jennifer Beiro-Rveill,Senior Director,Environmental Affairs and Corporate Sustainability.11Materiality Assessment.13Goals Snapshot.14Operations.15Environmental Management.18Emissions.19Energy.21Water.24Recycling and Minimizing Waste.26Climate Risk Adaptation.30GRI Index.31United States Postal Service|2022 Annual Sustainability Report1A Message to Our ReadersPutting our Stamp on a Greener TomorrowDespite ongoing challenges and disruptions dealt by the COVID-19 pandemic,the United States Postal Service remains focused on improving our organization.Our customers and partners are always looking for us to be more efficient,reliable and sustainable.We have redoubled our efforts to do just that.Were committed to binding the nation together and continuing to improve the lives of our employees and all Americans who depend on our services,while also doing our part to champion sustainable and environmentally responsible solutions.We believe implementing sustainable practices improves our operations.Building supply chain resilience,increasing clean energy use and reducing waste are just some examples of actions were taking that will have positive effects for our employees,customers,environment and communities we serve.Its our responsibility to emerge from the pandemic as a sustainability leader.Our Annual Sustainability Report raises awareness of our efforts to integrate sustainability into our practices.It describes our social,economic and environmental impacts,as well as our progress towards our wide-ranging sustainability goals as we continue to push ourselves towards becoming a greener organization.This report provides an overview of our organization and sustainability mission.We discuss these sustainability topics:operations,environmental management,emissions,energy,water,and recycling and minimizing waste.The Postal Service takes pride in reporting our successes and areas for continued improvements and goal setting.We take our role as sustainability leaders seriously and are always seeking feedback from the public.Please email us at sustainabilityUSPS.gov and help us continue to meet the needs of our customers and the planet.We will continue to move aggressively toward our targets to reduce greenhouse gas emissions,energy,fuel and waste in the coming year.Look for updates on our endeavors at and LinkedIn.Thank you for joining us and putting a stamp on a greener tomorrow.Judy de Torok Vice President,Corporate AffairsThis report covers fiscal year 2021 (Oct.1,2020,through Sept.30,2021)and follows the report released for FY2020.This report has been prepared in accordance with the GRI Standards:Core option.External assurance was not pursued for FY2021.For any questions regarding the report,please contact:UNITED STATES POSTAL SERVICE ENVIRONMENTAL AFFAIRS AND CORPORATE SUSTAINABILITY,ROOM 2801 475 LENFANT PLAZA SW WASHINGTON,DC 20260 202-268-2000 SUSTAINABILITYUSPS.GOVUnited States Postal Service|2022 Annual Sustainability Report2USPS at a GlanceThe mission of the United States Postal Service is:To serve the American people and,through our universal service obligation,bind our nation together by maintaining and operating our unique,vital and resilient infrastructure.To provide trusted,safe and secure communications and services,connecting our government,and the American people,businesses and their customers,and the American people with each other.To serve all areas of our nation,making full use of evolving technologies.The Postal Service shall have as its basic function the obligation to provide postal services to bind the Nation together through the personal,educational,literary and business correspondence of the people.It shall provide prompt,reliable and efficient services to patrons in all areas and shall render postal services to all communities.Source:Title 39 U.S.Code 101(a)Facts and FiguresThe Postal Service is the core of the nations$1.58 trillion mailing industryMailpieces processed and delivered annually 128.9 billion46%of the worlds mail volume handled by the Postal ServiceHeadquarters Washington,DC163,139,167 city,rural,PO Box and highway delivery points150,377,788 residential delivery points12,761,379 business delivery pointsTotal expenses$81,999,000,000Total retail revenue$14,600,000,000Total operating revenue$77,069,000,000United States Postal Service|2022 Annual Sustainability Report3Sustainability is a core commitment of the Postal Service.As we invest in new vehicles and technology,we will champion sustainable and environmentally focused solutions.34,223 Post Offices stations,outlets,and branchesUSPS Fleet of Feet:6,614 letter carriers who deliver mail entirely on foot232,368 VehiclesThe Postal Service operates a fleet of 33,705 alternative fuel-capable vehicles most of which are equipped to use ethanol.There are electric,hybrid,compressed natural gas and liquid propane gas vehicles in the fleet as well.4,800 addresses are added to our delivery network in one day at the Postal Service98,356 changes of address processed in FY2021653,167 total career and non-career employees79%total career employees93%total career employees covered by collective bargaining agreementsUSPS Employee Diversity/Representation52%Minorities 38%Senior management47%Women 37%Senior management10%Veterans 10%Senior managementWere multilingual.The Postal Service offers translations in Spanish and Simplified Chinese.13 billion U.S.postage stamps printed in FY2021The Postal Service has a renewable energy generation system consisting of more than 25,000 solar panels at our Los Angeles mail processing facility.United States Postal Service|2022 Annual Sustainability Report4Sustainability Management ApproachThe Postal Service strives to provide prompt,reliable and efficient services to our customers and all communities to achieve our mission.Sustainability is integral to making sure we can carry out this mission today and in the future.We strive to create a culture of conservation by integrating sustainable business practices among our employees,across our organization,and with our suppliers and customers.We leverage the depth of our organization and our strategic partnerships to make sustainability-focused decisions throughout our daily operations.We also innovate to identify new ways to conserve our resources and more efficiently move the mail.We understand the direct impact we have on the communities we serve and the importance of our role as a sustainability leader.Employee EngagementOur more than 650,000 employees are key to the success of our sustainability initiatives.Employee engagement and outreach are core components of our sustainability program.Our employee engagement strategy incorporates tools to identify sustainable solutions to common problems and track sustainability indicators,provide educational materials on environmental compliance topics and how to increase facility sustainability,and distribute newsletters and internal articles highlighting sustainability actions and successes.Employee resources are all available on an internal sustainability website.Without the support and enthusiasm of our employees,we would not have the culture of conservation that has led us to achieve the progress towards our sustainability goals that we share in this report.United States Postal Service|2022 Annual Sustainability Report5Diversity,Equity,Inclusion and Accessibility The Postal Service defines diversity as“the richness of cultures,perspectives,experiences and backgrounds.”USPS recognizes the value of a diverse workforce and is one of the leading employers of minorities and women.As part of Delivering for America:Our Vision and Ten-Year Plan to Achieve Financial Sustainability and Service Excellence,we launched the Executive Diversity Council to advise,assist and recommend on diversity,equity and inclusion matters and champion key initiatives to build leadership and organizational capabilities.The council is composed of an experienced,diverse group of senior executive leaders.The Postal Service also created a National Steering Committee to advance key focus areas identified by the council.Both groups are committed to increasing diversity in leadership positions.Additionally,the Postal Service created a new team dedicated to integrating diversity,equity and inclusion practices into our employee programs and processes to drive the necessary cultural changes needed throughout the organization.Currently,minorities are 52%and women are 47%of the total USPS workforce.Further,minorities make up 38%and women are 37%of senior USPS management positions.More than a quarter of Postal Service workers are African American(29%)Hispanic American(13%)Asian American(8%)In contrast,according to 2018 Census Bureau data of the national workforce:Total U.S.workers are African American(13%)Hispanic American(17%)Asian American(6%)USPS is the leading employer of veterans with just over 10%of its workforce.nearly double the national rate of 5.7%,according to the Bureau of Labor Statistics.United States Postal Service|2022 Annual Sustainability Report6Postal Service PodcastIn September 2021,the Postal Service launched our official podcast,Mailin It!The podcast,hosted by employees Yasmine Di Giulio and Dale Parsan,explores the rich history of the Postal Service,goes behind the scenes of our innovations,and discusses our dynamic future with organization and industry leaders.It also highlights the role of the Postal Service in the American experience and shares historical facts and unique facets about our organization,like our underground stamp cave.Mailin It!is available at the Postal Service newsroom website or any podcast streaming platform.Left to right:Yasmine Di Giulio,Postmaster General Louis DeJoy,Dale ParsanUnited States Postal Service|2022 Annual Sustainability Report7Strategic Business Partnerships and InitiativesThe Postal Service maintains partnerships with international,federal and private organizations to further our sustainability efforts.These include:International Post Corporation The Climate Registry How2Recycle Association of National Advertisers National Postal Forum Mailers Technical Advisory Committee Postal Customer Councils EPA WasteWise EPA Federal Green Challenge EPA SmartWayUnited States Postal Service|2022 Annual Sustainability Report8Environmental Commitment LetterLouis DeJoy Postmaster General and Chief Executive OfficerThe Postal Service is committed to advancing our sustainability goals to reduce greenhouse gas emissions,energy,fuel and waste.In support of this effort,Postmaster General Louis DeJoy signed a commitment to environmental excellence with a focus on incorporating environmental,sustainability and climate adaptation priorities into business planning and leading by example within the federal sector.DeJoy asks every postal employee to take ownership and responsibility for the environment,including compliance with environmental laws and regulations.United States Postal Service|2022 Annual Sustainability Report9Encouraging Market Relevance and InnovationThe scale of our operations requires continuous improvement and innovation.We encourage our employees to always consider how we can more efficiently,effectively and sustainably move the mail.Reducing greenhouse gases,conserving energy and other sustainability initiatives are important parts of our Delivering for America plan.USPS also recognizes individual environmental stewardship efforts through our annual Sustainability Excellence Awards program.Delivering for AmericaOur strategic vision for change is centered on our goal of achieving service excellence and financial sustainability.Were confident that implementation of the complex change initiatives detailed in our Delivering for America plan will make a significant positive impact on service performance and operations,including our finances.The initiatives are managed through a robust and best-in-class process led by the Postmaster General,members of the Executive Leadership Team and other senior executives.During the strategic planning phase,the Postmaster General and Executive Leadership Team,in consultation with the Board of Governors,establish corporate goals,develop a baseline forecast,and research,select and assign initiatives for executives.Each initiatives metrics,targets and milestones are recorded in an enterprise-wide strategic initiative performance monitoring system.The system has a dashboard that shows the status of each initiatives risk,schedule and outcome variance as red,yellow or green,depending on the degree of variance to the established target value or completion date.The Postmaster General and Executive Leadership Team lead regular status review meetings with key executives and conduct extensive and thorough deep dive reviews of the initiatives.Sustainability Excellence AwardsOur Sustainability Excellence Awards recognize functions,areas,districts,facilities and teams who contribute to a sustainable workplace and illustrate their commitment to environmental stewardship.Being leaner,greener and faster as we push for innovation continues to be an important business driver for the Postal Service.This year we recognized the importance of engaging the Executive Leadership Team in a collaborative opportunity to highlight our corporate-wide focus on environmental and sustainability stewardship.Each executive nominated a project to be considered for the highest accolade the Postmaster General Sustainability Excellence Award.This year,that honor goes to the Asset Management Groups Investment Recovery Team for their solution for dealing with unusable plastic mail processing trays.Details about their winning effort are below,as well as additional projects cited for their successful sustainability solutions.CHIEF FINANCIAL OFFICER AND POSTMASTER GENERAL SUSTAINABILITY EXCELLENCE AWARDRecycling USPS Mail Processing TraysIts the circle of life for plastic trays.When they no longer can be used in Postal Service mail processing facilities they go back to the facility where they were made and become new products.Credit for this eco-friendly solution goes to the Supply Management/Asset Management Groups Investment Recovery Team.Previously,unusable trays were funneled to the Material Distribution Center in Topeka,Kansas,and then sent on to a local vendor for shredding or recycling.However,that vendor was unable to find a viable downstream solution to keep the trays out of the landfill.A fresh approach was needed.Now the original manufacturer of the trays takes the unwanted plastic to be recycled.Over six months,the Postal Service kept over 46,000 trays out of a landfill.The plastic in the trays is a valuable commodity in the plastic recycling market which generated approximately Continued on next pageUnited States Postal Service|2022 Annual Sustainability Report10$9,000 in revenue for the Postal Service.Theres no cost to the Postal Service to ship the trays to Topeka using our backhaul process,and the vendor picks up the cost for shipping the trays from the Material Distribution Center to their local recycling plant.Its a round trip that benefits the environment as well as the USPS bottom line.CHIEF RETAIL AND DELIVERY OFFICER SUSTAINABILITY EXCELLENCE AWARDEnergy Efficient Lighting Upgrade at Spokane,Washington,Vehicle Maintenance FacilityChanging a lightbulb can be a big deal when there are several hundred of them to maintain.When the Spokane,Washington,Vehicle Maintenance Facility was built in 2004,high-bay metal halide fixtures and fluorescent tube lights were part of the design.Over the years the lighting deteriorated,and USPS maintenance employees were regularly replacing bulbs and repairing fixtures.To reduce energy costs and work hours replacing those bulbs,all interior lighting at the facility was upgraded with high efficiency light emitting diode(LED)fixtures and bulbs.This included replacing 57 high-bay fixtures in the vehicle repair shop and 386 lamps in the remaining parts of the facility.LED lighting means longer bulb lifespans and savings on energy and maintenance costs.After the upgrade,the facilitys electric usage dropped 14,144 kilowatt hours compared with the same period in 2018,a savings of$1,461.Even better,this was a no-cost project the local power company provided rebates that covered 100%of the cost of the LED fixtures and bulbs.This project shows the benefits that green thinking and effective partnerships can bring to our business providing a better and more efficient working environment,using less energy and generating less universal waste.CHIEF LOGISTICS AND PROCESSING OPERATIONS OFFICER SUSTAINABILITY EXCELLENCE AWARDRecycling at the Oklahoma City Processing and Distribution CenterTheyre more than just“OK”at recycling.The Oklahoma City Processing and Distribution Center(P&DC)is a role model.Recycling is an integral part of the facilitys efforts to improve organizational efficiency,ensure safety and eliminate waste.The P&DC is guided by the principles of 6S Lean Workplace sorting,setting in order,shining,standardizing,sustaining and ensuring safety and the core values of continuous improvement.As a part of this focus,the workplace is cleaned daily,providing clear and safe passages for employees,and the recyclable materials area is immaculate by the end of each business day,with credit going to the custodial staff.Primary sources of recyclable materials are plastic,cardboard and mixed paper.Other recycled products include batteries,fluorescent lamps,electronic parts and small components.Among its many successes,the facility generated$33,000 in revenue from recycled mixed paper and cardboard boxes.The P&DC also serves as a recycling hub and outlet for offices throughout the state.The recycling program plays a vital part in the health and safety of employees,benefits the environment and has a direct impact on USPS success.CHIEF TECHNOLOGY OFFICER SUSTAINABILITY EXCELLENCE AWARDReduction in Manual Change of Address FormsCost savings.Improved address quality.Reduced carbon footprint.All delivered!Thanks to the Address Technology group in the Chief Technology Office which introduced an automated process for completing a certain Official USPS Change-of-Address(COA)Form.Carriers and other USPS employees can now use their mobile delivery devices and in-office devices to submit the“Moved,Left No Address/PO Box Closed,No Forwarding Order”form.In the next phase of deployment,the“Notice of Address Correction”form also will be automated.Completing both forms electronically saves costs,reduces waste and reduces our carbon footprint because they no longer need to be produced,processed and transported.Entry of COA information is also critical for address quality and reducing undeliverable-as-addressed mail.This new procedure will assist business customers in correcting their mailing lists.Since this new tool was added to handheld devices,USPS has seen significant declines in submissions of paper“Moved,Left No Address”forms.Cost savings of$4.4 million annually are expected from this switch to digital submissions.United States Postal Service|2022 Annual Sustainability Report11A Conversation with Postmaster General and CEO Louis DeJoy and Jennifer Beiro-Rveill,Senior Director,Environmental Affairs and Corporate SustainabilityWhat are the opportunities and challenges for sustainability and environmental management at the Postal Service?Postmaster General and Chief Executive Officer Louis DeJoy talks with Jennifer Beiro-Rveill,Senior Director for Environmental Affairs and Corporate Sustainability,about how the Postal Service is working every day to put its stamp on a greener tomorrow.Weve heard you say that one of the most important ways that the Postal Service can contribute to climate change challenges is by improving its transportation logistics.What improvements has the Postal Service made to its surface and air transportation network?Louis DeJoy:Thats correct our surface and air transportation network is a key priority in our Delivering for America plan.Simply put,the most important thing we can do is to have our trucks full of mail and packages before they leave the facility.We have a legacy operating plan that does not optimize density in our containers and trucks.Moving forward,letter and flat products will be merged into streamlined,shape-based mail flows within our processing and distribution centers.This effort will allow us to increase density in our containers and trucks and facilitate greater use of our ground transportation assets.Ground transportation is less emissions intensive than emissions associated with transporting packages by air,so we expect to see a notable reduction in our overall emissions due to this change.We will continue to optimize our transportation logistics as we strive to meet our service commitments.The bottom line here is this improved trip utilization means fewer truck trips and fewer truck trips equates to less emissions in our carbon footprint.Jennifer Beiro-Rveill:Agree that transportation optimization is an operational and environmental success story-efficient surface routes and increased capacity utilization means fewer trucks and decreased emissions.Its notable that nearly 7,000 of our routes are conducted on foot,and this year weve been testing electric bicycles on some carrier routes,thus producing no emissions.As stated in our Commitment to Environmental Excellence we prioritize sustainable and environmentally focused solutions.What sustainability challenges has the Postal Service faced this year?Louis DeJoy:COVID-19 has been a massive shockwave across the globe and,like people and businesses everywhere,the Postal Service has felt its impacts.As noted in our 10-year strategic plan,Delivering for America,the dramatic evolution of the mailing and shipping industries over the past decadeaccelerated by the COVID-19 pandemicrequires a new business model and a reorientation of the Postal Services management,network,and processes.The COVID-19 pandemic has emphasized the importance of adaptable policies and practices and preparing for future challenges.Were confident that we can continue to make sustainability strides without compromising our responsibility to efficiently deliver our products and services to the American people.What sustainability successes has the Postal Service seen this year?Jennifer Beiro-Rveill:Weve used this time as an opportunity to educate and train our employees for potential future challenges and install resilient business models.These education opportunities include training provided to our internal and external business partners ranging from environmental compliance training to recycling training among many other informational exchanges.We also continue to pursue a variety of clean energy solutions.Were especially proud of our recycling efforts.We buy over$392 million worth of products containing recycled material every year and reduce waste by recycling 277,000 tons of material annually.These improvements Louis DeJoy Postmaster General and Chief Executive OfficerJennifer Beiro-Rveill Senior Director,Environmental Affairs and Corporate SustainabilityContinued on next pageUnited States Postal Service|2022 Annual Sustainability Report12will provide benefits throughout our operations.We believe we can come out of the pandemic as a more resilient and effective organization,as we continue to make a positive impact on the communities we are committed to serve.What is the Postal Service doing regarding climate risk and adaptation?Louis DeJoy:Climate risk poses challenges to our business in many forms ranging from increased wildfires and drought to more frequent hurricanes and flooding.Addressing these concerns will be crucial,just as reliable and timely delivery is essential to our business.Because the Postal Service is an organization with over 34,000 Post Offices,stations and branches across the nation and U.S.territories,we must be prepared for a dynamic and uncertain future.Without a holistic approach to climate action planning that integrates adaptation and resilience measures across all our strategic,operational,facility and procurement policies,we remain at risk.We take this on as seriously as we take on the other changes planned in our Delivering for America Plan.Jennifer Beiro-Rveill:The risk of inaction over time is great.Weve been addressing the recent presidential executive order on Tackling the Climate Crisis at Home and Abroad through initiatives detailed in our Climate Action Plan,many of which will begin in fiscal year 2022.Priorities include developing climate-ready adaptations across both Postal Service facilities and our supply chains,identifying key vulnerabilities throughout our operations,and addressing our need to integrate climate planning into all our policies to be better prepared for a changing planet.These initiatives are just pieces of the framework that will allow us to take even more ambitious action in the coming years.What areas of sustainability will USPS focus on in the coming year?Louis DeJoy:We are laser focused on the most dramatic modernization of our vehicle fleet in three decades as we work to invest in 50,000 to 165,000 Next Generation Delivery Vehicles(NGDV)over the next 10 years.These vehicles will include advanced safety and comfort features and can be equipped with modern drivetrain technology,contributing to our organizations commitment to environmental sustainability.We are also working diligently toward achieving our ambitious goals to reduce water and energy usage,as well as our greenhouse gas emissions.Everything we do to improve our operations new facilities,better transportation utilization and delivery route refinements,helps reduce our carbon footprint.Why are sustainable practices important to USPS?Jennifer Beiro-Rveill:The Postal Service has long been committed to sustainable leadership and we have confidence in our ability to reduce our environmental footprint.Were aware of the importance of implementing sustainable practices both for our business model and for the well-being of our employees and our communities.Through our efforts to provide environmentally responsible packaging products,reduce energy use and create more reliable supply-chain networks,we believe sustainable practices and policies elevate our business,not hinder it,resulting in a more resilient organization.Solutions that we provide to environmental challenges make us more efficient,robust and pragmatic while being responsive to the expectations of our customers.How do employees contribute to the culture of sustainability at the Postal Service?Louis DeJoy:Our employees are an integral part of the communities they serve and they care about the environment where they live and work.When we talk about leading the way in environmental stewardship,were talking about the example we set as an organization through our actions and policies,such as increasing our diversion of waste from landfills through our national recycling program,increasing our green purchasing power,implementing cleaner and more efficient technologies,and continuously driving efficiencies in our operations.Were also talking about the positive impact that our employees make through simple steps like recycling or using more efficient lightbulbs.Jennifer Beiro-Rveill:Exactly!We have employee teams at our facilities across the country that focus on finding ways to adopt green practices at no cost or low cost to the Postal Service.Im proud of the commitment of many postal employees to finding,and implementing,environmentally friendly solutions that contribute to a sustainable future for the Postal Service and the customers we serve.Closing thoughts?Jennifer Beiro-Rveill:Weve made improvements to our report this year based on feedback from our 2021 Annual Sustainability Report readers,such as highlighting our goals more effectively and including more sustainability success stories.We welcome your comments at sustainabilityUSPS.govLouis DeJoy:On behalf of our more than 650,000 employees who take great pride in serving the nation and our customers reliably,securely,affordably,universally and sustainably we hope you find our 2022 Annual Sustainability Report to be both informational and inspirational.We appreciate your interest in learning about our focus on the environment,and I thank you for supporting the United States Postal Service.United States Postal Service|2022 Annual Sustainability Report13Materiality AssessmentFor the information in our sustainability report to be meaningful,it must reflect the most significant economic,environmental and social impacts for our stakeholders and our organization.In FY2020,we engaged stakeholders from across the Postal Service to conduct a materiality assessment to identify the economic,environmental and social topics most relevant to our employees and customers.We issued a survey to self-selected and targeted internal stakeholders,including representatives from our facilities,finance,government relations,information technology,legal,marketing,safety,strategic planning,supply management,sustainability and transportation groups.While the survey did not engage external stakeholders such as business customers or the general public,we requested that respondents answer the survey questions from the perspective of both employees and customers.To ensure external stakeholder input was reflected in our materiality assessment,we integrated input from prior year surveys into our results.We still find the FY2020 stakeholder engagement process to be relevant to this years report.The survey requested that respondents assess the importance of various topics to our employees and customers,as well as the impact of USPS actions on the U.S.economy,environment and society.The survey assessed 14 topics listed in the following table.These topics were selected as a result of extensive research into existing guidelines,examples from other organizations and learning from past USPS stakeholder engagement and materiality assessments.In addition,they are guided by our Ready-Now Future-Ready Five-Year Strategic Plan FY2020-FY2024.The survey also requested respondents to list any additional topics they consider important to customers and employees.The results of the survey indicated that both the targeted and self-selected internal stakeholders viewed all topics with similar importance.In addition,all additional topics that respondents considered important aligned closely with the 14 topics already assessed.Therefore,for the purposes of this report,all 14 topics are considered material topics.This report covers each topic in the following sections and includes specific goals towards six of the topics.For additional information and resources related to each material topic,review the GRI Index on Page 33.SectionMaterial TopicSustainability GoalsSustainability Management Approach Market relevance and innovation Strategic business partnerships Supply chain resilienceOperations Worker and customer safety Customer satisfactionEnvironment Management Environmental managementEmissions Responsive to climate risk Scope 1 and 2 emissions Scope 3 emissionsEnergy Renewable energy Facility energy efficiency Fleet efficiency Contract transportation fleet efficiency Energy intensityWater Water stewardship Water intensityRecycling and Minimizing Waste reduction Packaging footprint Waste diversion Secure destruction Green purchasingUnited States Postal Service|2022 Annual Sustainability Report14Goals SnapshotGreenhouse Gas EmissionsGoal Reduce Scope 1 and 2 emissions 25%from FY2019 by FY2030 Reduce Scope 3 emissions 30%from FY2008 by FY2025ProgressScope 1 and 2 Emissions FY2021 Scope 1 and 2:7.3%reductionScope 3 Emissions FY2021 Scope 3:14.4%reductionFY2025 GOAL30%reduction from FY2008FY2030 GOAL25%reduction from FY2019 Water IntensityGoal Reduce potable water intensity 20%from FY2019 by FY2030Progress FY2021:13.6%increaseFY2030 GOAL20%reduction from FY2019Energy IntensityGoal Reduce facility energy intensity 25%from FY2019 by FY2030Progress FY2021:6.7%reductionFY2030 GOAL25%reduction from FY2019Waste DiversionGoal Achieve a 75%diversion rate by FY2030Progress FY2021:64.5%waste diversion rateFY2030 GOAL75%waste diversionUnited States Postal Service|2022 Annual Sustainability Report15OperationsFor the Postal Service to successfully deliver prompt,reliable and efficient services,its important that our employees and customers are safe,our customers are satisfied,our supply chain is resilient to any potential service disruptions,and we increase environmental sustainability across our operations.Worker and Customer SafetyThe Postal Service has more than 650,000 employees performing over 2,500 different jobs within the organization.Our employees drive trucks,delivery vehicles and powered industrial vehicles.They also operate machinery and equipment ranging from sorting machines to handheld scanners used in delivery and retail operations.Maintaining safety standards for such a diverse workforce is a complex task but vitally important to our employees and the communities in which we operate.The mission of the USPS Safety Program is to create a culture of engaged employees who own their safety,health and wellness through standardized policies,procedures and initiatives.The goal is to provide education,awareness and training opportunities throughout the organization.This creates a work environment that is healthy and safe while preventing accidents and injuries.In addition,we prioritize ensuring injured employees receive prompt and accurate payment of benefits and are able to return to work as early as feasible.Prevention is the guiding principle and the underlying philosophy of the USPS Safety Program.Each year our employees receive more than 500,000 hours of safety training on topics as diverse as safe driving,slip,trip and fall prevention and office ergonomics.Training is delivered online and in person through“stand-up talks.”In FY2021,our employees received more than 180,000 hours of training on electrical safety and 80,000 training hours on emergency response and cleanup for unexpected releases of hazardous substances.Annually,we promote initiatives such as National Dog Bite Awareness Week,a campaign to promote responsible pet ownership,as well as the Heat Illness Prevention Program to educate employees in preventing heat-related illnesses.We have a dedicated team of 780 safety and health professionals who assist with on-the-job training,industrial hygienists who assess our workplace and occupational health nurses who offer on-site assistance and evaluations.Risk assessment and management are fundamental in preventing and controlling risks to safety and health in the workplace.In FY2021,the Safety Leadership and Vision Award program recognized seven districts for their exceptional safety performance.These safety leaders were acknowledged for their innovative and dedicated Continued on next pageUnited States Postal Service|2022 Annual Sustainability Report16efforts that inspire and engage our workforce in promoting a strong safety culture.Their best practices enable every employee to do what they do best every day get the mail delivered on time and at the end of the workday safely return home to their families.COVID-19In March 2020,the Postal Service established our COVID-19 Response Command Team to ensure proactive management of the pandemics effect on employees,operations and customers.The team continues to monitor the daily effects of the pandemic and identify potential and actual impacts across the nation.The team also recommends and implements policies,plans and procedures to ensure continued high-quality service to the public,while also meeting employee and customer safety needs.In addition,our COVID-19 Supplies Command Center remains dedicated to ensuring that Postal Service facilities have adequate supplies to keep employees safe and meet ongoing facility cleaning needs throughout the pandemic.Core responsibilities of the COVID-19 Response Command Team include:Reinforcing proper workplace behaviors regarding safety precautions such as social distancing and wearing face coverings.Implementing contact tracing and other COVID-19 tracking procedures.Updating cleaning and ventilation policies.Monitoring USPS leave policies for employees affected by the COVID-19 pandemic.Expanding telework capabilities for most administrative employees and ensuring adequate communication to and safeguards for employees who have returned to the office.Issuing stand-up talks,articles,videos and other communications to ensure employees have the latest information.Maintaining steady communication with residential customers and business mailers regarding postal facility disruptions and delivery impacts through USPS Service Alerts at Postal Service takes a holistic view of employee wellness.In FY2021,to support employees during the continuing COVID-19 pandemic,a robust communications effort called Wellness was launched to increase health and wellbeing webinars and classes via Zoom.Wellness provided over 35 webinars on a variety of topics,including stress,working from home,financial wellness,health and retirement.Virtual meditation and chair yoga classes were offered two to three times a week to provide greater opportunities for self-care and stress management.Another key component of employee wellness is engagement research shows that higher levels of employee engagement correlate to healthier work environments,successful teams and positive business outcomes for organizations.Wellness held three virtual challenges to keep employees engaged and encouraged to nourish their overall wellbeing.USPS aims to provide employees with an engaged workplace,one in which teams,individuals and leaders thrive and perform at high levels.For Postal Service employees,wellness includes physical and emotional health,financial security,connections with others in the community and feeling fulfilled at work.COVID-19 Test Kits“The United States Postal Service is proud to fulfill its mission of service to the nation by delivering COVID test kits as part of this important public health initiative of the Biden Administration(COVIDtests.gov-Free at-home COVID-19 tests).The 650,000 women and men of the United States Postal Service are ready to deliver and proud to play a critical role in supporting the health needs of the American public.We have been working closely with the Administration and were well prepared to accept and deliver test kits on the first day the program launched.”Postmaster General Louis DeJoyContinued on next pageUnited States Postal Service|2022 Annual Sustainability Report17The Postal Service is proud of its ability to provide a trusted,valued service to the American public,while safeguarding employees and customers during the continuing national public health emergency.Find more information on our approach to COVID-19 on our Delivering for America during COVID-19 webpage.Customer Experience and SatisfactionCustomer experience and satisfaction are important to the overall sustainability of our organization.The Postal Service measures customer satisfaction through a series of seven surveys(Delivery,Retail,Customer360,Customer Care Center,USPS.com,Business Service Network and Business Mail Entry Unit)at every primary interaction point touchpoint with a business or residential customer.In FY2021,more than 6.3 million survey responses were collected to understand trends in customer satisfaction and identify ways to improve customer experience.This was an increase of more than 830,000 responses from the prior fiscal year.The Postal Service had an overall customer experience composite index score of 68.49%,down from FY2020(72.40%).There was an improvement in one of seven touchpoint scores,however,the composite index target(76.90%)was not achieved.Our customers also have an opportunity to leave feedback on the surveys.We analyze this data to determine what matters to customers and other factors affecting their satisfaction with the Postal Service.In addition,our 2021 Annual Sustainability Report included a survey seeking opinions from customers on current and future reporting topics and methods of information sharing.These methods aid our understanding of customer needs and help create an improved customer experience as we move forward in our sustainability journey.Supply Chain Resilience The Postal Service maintains supplier relationships accounting for more than$12 billion in expenditures and$6 billion of inventory each year.Our Supply Management organization implements best practices for supply chain oversight including strategic planning,policy modernization,process improvement,strategic sourcing,strengthening of supplier relationships and diversity,technology enhancements and inventory management.A focus is supply chain resiliency and risk mitigation,attributes that have been tested during the COVID-19 pandemic.Responding to the crisis,Supply Management established the COVID-19 Supplies Command Center to ensure that USPS facilities nationwide have an adequate stock of gloves,masks,hand sanitizer,and cleaning and disinfecting products to keep employees safe and meet ongoing facility cleaning requirements.To track supplies,the Supply Management group collaborated with our Enterprise Analytics organization to develop several supply visibility dashboards that measure and predict the volume of COVID-19 supplies required at each facility based on its number of employees.Inventories are monitored daily to identify facilities that are low on supplies or where surplus supplies could be redistributed to other locations when needed.While the pandemic is unprecedented,the Supply Management team regularly plans for supply chain challenges.Given the Postal Services national footprint,annual weather issues can require emergency and significant continuity of operations responses from our supply chain.Working with a geospatial supplier,we created an emergency notification system that uses data feeds about weather hazards,hurricanes and rainfall amounts,as well as public announcements from the National Oceanic and Atmospheric Administration,Federal Emergency Management Agency and National Weather Service.Customized warning messages can be issued to Supply Management and other USPS managers who can then take early action by contacting suppliers and developing a plan of action.The system also keeps track of actions taken so the Postal Service has a record of best practices to follow in the future.Supply chain planning can make the difference in continuity of our operations it ensures that Supply Managements internal business partners receive the supplies they need when they need them,and that our customers receive the mail they expect each delivery day.United States Postal Service|2022 Annual Sustainability Report18Environmental ManagementThe Postal Service is committed to meeting or exceeding all applicable environmental laws and regulations.Environmental compliance is the foundation of the Postal Services commitment to sustainability.We strive to be good stewards of the environment and minimize our impact by establishing programs and practices to comply with applicable federal,state and local environmental regulations.Environmental Compliance The Postal Service conducts internal environmental compliance reviews of our facilities to evaluate site-level compliance and provide hands-on assistance to address findings.These evaluations follow a standardized protocol to assess site compliance and provide a platform to directly engage with our employees on important compliance resources.When necessary,we mandate corrective actions and track them to completion.We use the information gathered from site reviews to enhance our compliance program and improve overall environmental performance.In 2022,well continue maintaining environmental compliance throughout all Postal Service operations.We plan to conduct site reviews at one-third of our highest-priority sites as part of our commitment to reviewing environmental compliance at all our priority sites every three years.Employee Training and CommunicationsIn addition to on-site compliance assistance,our priority strategies for achieving environmental compliance include employee training and communications,as well as innovation to improve site-level compliance.The Postal Service provides training on applicable regulations and procedures for environmental management.In FY2021,we provided compliance training for approximately 3,300 employees through our online training system on topics including hazardous and universal waste management,stormwater permitting,spill management planning and underground storage tank operations.The Postal Service maintains a comprehensive environmental information management system that houses site-specific data,action items and important environmental records.This system is an important tool for approximately 7,200 users to monitor and manage environmental compliance requirements for regulated equipment and activities.In support of these efforts,our mobile application enables compliance review teams to record observations in real time while on site,streamlining reporting and improving accuracy.To ensure employees are informed,the Postal Service provides easy-to-access and readily available environmental compliance bulletins on a dedicated environmental management website.These bulletins serve as quick references for environmental compliance requirements and other best practices for environmental stewardship.The Postal Service will continue to seek innovative ways to monitor its environmental impacts and improve site-level compliance with federal,state and local environmental regulations.Well build on established programs to manage both ongoing and emerging environmental issues to ultimately reduce our environmental footprint.Clean Air ActIts USPS policy to comply with federal,state and local air requirements,which include regulations from the Clean Air Act.As an example,the Act regulates cooling systems containing both ozone depleting substance refrigerants and other refrigerants.By complying with Clean Air Act requirements and adopting other best practices,the Postal Service ensures that our systems are functioning efficiently to prevent unwanted air emissions that could be costly to both USPS and the environment.Our policy on refrigerant management aligns with EPA requirements regarding proper training for handling,inspecting and disposing of refrigeration units,as well as protocols on leak detection and correction for both regulated and unregulated refrigerants.United States Postal Service|2022 Annual Sustainability Report19EmissionsAs a sustainability leader,USPS has a responsibility to address the risk of a changing climate by reducing our greenhouse gas(GHG)emissions.We partner with internal and external stakeholders to identify and implement opportunities across the organization that reduce our Scope 1,Scope 2 and Scope 3 emissions and improve our efficiency,productivity and resource use.The Postal Services GHG emissions goals and progress are shown below:FY2030 GoalScope 1 and 225crease by FY2030 compared to FY2019FY2025 GoalScope 330crease by FY2025 compared to FY2008We achieved our previous goal of decreasing Scope 1 and Scope 2 emissions by 25tween FY2008 and FY2025 several years early.As a result,we set new goals in 2019 which is our updated baseline year.The new goal extends through FY2030 and leverages a refreshed commitment from stakeholders to further reduce our emissions through improvements to facility and vehicle energy efficiency.A revised Scope 3 emissions goal is in development as the Postal Service reevaluates our transportation optimization strategy.USPS emissions totals include carbon dioxide,methane,nitrous oxide and fugitive fluorinated gases expressed as metric tons of carbon dioxide equivalent(MTCO2e)and use the operational control consolidation approach.Scope 1 and Scope 3 biogenic emissions emissions from natural sources are provided separately.Our emissions calculations are based on the Federal Greenhouse Gas Accounting and Reporting Guidance,Council on Environmental Quality(Jan.17,2016)and use the Department of Energy Federal Energy Management Programs Annual Energy Management Data Report workbook for comprehensive reporting of fiscal year energy,costs,square footage and associated operational data.Emissions totals are calculated using this workbook with current Environmental Protection Agency Center for Corporate Climate Leadership emissions factors and Global Warming Potential values.In FY2021,Postal Service GHG emissions included:*Scope 3 emissions from contract transportation and buildings with fully serviced leases are not included in the Postal Services Scope 3 goal or calculation but are determined separately and tracked.Scope 3 emissions from contract transportation are 7,302,572 MTCO2e and Scope 3 emissions from buildings with fully serviced leases are 38,238 MTCO2e.Information on the sources of our Scope 1,Scope 2 and Scope 3 emissions,as well as the strategies and actions were taking to achieve our goals,are detailed on the following pages.Greenhouse Gas ReportingIn addition to submitting a federal GHG inventory,the Postal Service submits annual GHG inventories to the International Post Corporation and The Climate Registry.These efforts enable transparency and comparability.Our performance is benchmarked against data from postal services and other organizations throughout the world.Continued on next pageUnited States Postal Service|2022 Annual Sustainability Report20Scope 1 EmissionsOur Scope 1 emission sources include stationary combustion including building heating(natural gas,fuel oil and propane)and generators,mobile combustion including owned fleet vehicles and small equipment and fugitive emissions such as refrigerants.To manage Scope 1 emissions,USPS is focused on improving building and vehicle fuel efficiency,as discussed further in the Energy section.Scope 2 EmissionsOur Scope 2 emission sources include purchased electricity and purchased steam.To manage Scope 2 emissions,were focused on installing and purchasing renewable energy,as discussed further in the Energy section.Scope 3 EmissionsScope 3 emissions from contract transportation and buildings with fully serviced leases are not included in the Postal Services Scope 3 goal or calculation but are determined separately and tracked.Scope 3 emissions from contract transportation are 7,302,572 MTCO2e and Scope 3 emissions from buildings with fully serviced leases are 38,238 MTCO2e.Our Scope 3 emission sources include employee business travel,employee commuting,contract transportation,contracted solid waste disposal and wastewater treatment,buildings with fully serviced leases,and transmission and distribution losses from electricity purchases.USPS has various initiatives and programs to manage Scope 3 emissions:Employee Business Travel:The Postal Service manages emissions from business travel by strengthening our information technology platform to allow for remote working,web meetings and virtual conferences.The Postal Service currently has more than 19,000 active remote users.Many were added to accommodate teleworking due to the COVID-19 pandemic.Employee Commuting:We offer a commuter benefits program to employees that incentivizes the use of alternative modes of transportation(e.g.,walking,cycling and public transportation)and reduces single-employee vehicle commute trips.Contract Transportation:The Postal Service uses contract routes to transport mail between processing facilities and delivery locations.Our Dynamic Route Optimization Program reduces highway contract route miles by scheduling transportation based on predicted volume rather than on a fixed schedule.Additionally,we right-size transportation equipment,reducing the number of empty USPS vehicles on the road.This reduces the number of miles driven and the amount of fuel used for transportation.USPS plans to shift away from contract air transportation in favor of ground transportation due to economic factors and cost savings of ground transportation.Contracted Solid Waste Disposal and Wastewater Treatment:The Postal Service has recycling initiatives and goals across the organization to increase recycling performance and reduce the waste volume sent to landfills,in turn reducing GHG emissions associated with waste.See the Recycling section to learn more about our recycling initiatives.Wastewater treatment emissions are managed through our water consumption and water quality efforts.See the Emissions section to learn more about these efforts.USPS BlueEarthWe know that protecting the environment is a commitment shared by many businesses and consumers.We help our customers reduce waste,increase recycling and improve their carbon footprint through our BlueEarth programs.One example is our BlueEarth Carbon Accounting Service which helps major mailers determine and manage their Scope 3 emissions through an online report that provides the emissions for their mailing and shipping activity.This information can be used for their corporate inventory or to purchase carbon credits to offset and provide carbon neutral shipping for their customers.United States Postal Service|2022 Annual Sustainability Report21EnergyThe Postal Service operates an extensive network of more than 34,000 facilities and 232,000 vehicles throughout all 50 states and U.S territories.We manage facility energy use,facility energy intensity and vehicle fuel usage to reduce the Postal Services GHG emissions and conserve resources.Facility EnergyThe Postal Services facility energy intensity goals are:FY2030 GoalFacility energy Intensity25crease by FY2030 compared to FY2019Energy consumption is calculated using the DOE Federal Energy Management Programs Annual Energy Management Data Report workbook and the U.S.Energy Information Administrations Monthly Energy Review for conversion factors.The energy intensity calculation includes energy consumption at USPS buildings subject to the Energy Policy Act of 2005,including electricity,fuel oil,natural gas,steam,on-site renewable electricity and off-site green energy purchases.All consumption is converted to British thermal units and divided by the associated facility gross square feet.The Postal Services approach to reducing energy consumption and intensity focuses on monitoring energy consumption and increasing facility renewable energy and energy efficiency.Monitoring Energy ConsumptionWe offset our utility accounts in FY2021 by over$1.7 million through refunded utility overages identified by the Utility Management System(UMS),Enterprise Energy Management System(EEMS)and Clean Energy Credits.The Postal Service relies on our UMS and EEMS to closely monitor our facility energy consumption.UMS identifies variances in utility use based on prior month and prior year data,allowing us to act when overages are identified.For FY2021,a total of$337,017 was recouped through the UMS program from utility service providers.The chart below indicates recovered funds and Clean Energy Credits.Management SoftwareWe are currently updating UMS training for enhancements made to the software.Our goals are twofold:1.Train area and district coordinators and local site contacts on how to meet their roles/responsibilities using the enhanced software.USPS Utility Account Offsets in FY20212.Empower UMS users to find new ways of reducing consumption and improving efficiency by analyzing reports and using advanced tools available in UMS.EEMS collects data daily from UMS and combines it with other internal data to enable skilled technicians to remotely monitor and control certain HVAC units,ensuring theyre operating efficiently and reducing maintenance costs.From FY2015 through FY2021,424 of 1,073 maintenance requests were evaluated by remote technicians and determined to be within standards,eliminating the need for a technician to visit the site.The system also was used to identify 1,550 specific rooftop units that required repair by an on-site technician.This ensures we send technicians to sites only when needed.EEMS also evaluates data for normalizing usage based on weather conditions.This allows us to compare our non-weather impacted energy use from year to year and accurately determine the success of our energy-saving efforts.Renewable EnergyIn FY2020,USPS added to its on-site renewable energy production with a solar installation at the Bellmawr,New Jersey,Processing and Distribution Center.This project includes installation of over 13,000 solar panels,with a capacity of 4.26 megawatts(MW).Its expected to generate 7,150 megawatt hours(MWh)annually,which is enough electricity to power 986 homes each year.In FY2021,USPS continued to focus on the implementation of on-site solar photovoltaic Continued on next pageUnited States Postal Service|2022 Annual Sustainability Report22systems at the Bellmawr facility in addition to an existing system at our Anaheim,California,processing and distribution facility.This system has 2,465 modules and will produce approximately 1,500 MWh annually.This equates to the energy used by 134 homes in one year.In addition to on-site renewable energy production,the Postal Service has begun purchasing renewable energy in the form of credits.In 2019,we entered negotiations with energy suppliers in 13 states and the District of Columbia to request that suppliers provide 25%of our power from renewable energy sources including wind,hydro and solar installations.This resulted in a purchase of over 883,000 MWh of green power over a four-year period.In CY2020,we purchased over 221,087 MWh of green power as a result.Well continue to evaluate opportunities to include green power in new utility contracts.Energy EfficiencyUSPS conducts regular preventive maintenance to ensure the continual operations of all facilities.As part of this program,many items are regularly checked,replaced and/or repaired,which increases the overall efficiency of the operation of the facilities.This includes replacing belts and filters,checking refrigerant levels,cleaning indoor and outdoor coils,lubricating motors and bearings,testing control functions and calibration,cleaning and maintaining cooling towers and more.Vehicle EnergyVehicles play an important role in Postal Service operations.We seek to improve fuel efficiency in our vehicles while upholding our universal service obligation to deliver mail and packages to more than 163 million address points in the United States,six and often seven days a week.Our goal is to obtain and operate vehicles that will incorporate new technology,accommodate a diverse mail mix,enhance safety,improve service,reduce emissions and produce operational savings,while enabling employees to perform their jobs safely.On Feb.23,2021,the Postal Service announced the award of a 10-year contract for our Next Generation Delivery Vehicle.This contract will include U.S.-built postal delivery vehicles that will drive the most dramatic modernization of the USPS fleet in three decades.The contract is the first part of a multibillion-dollar,10-year effort to replace the Postal Services delivery vehicle fleet,which includes many vehicles that have been in service for 30 years.As a generally self-funded entity,the Postal Service is strongly incentivized to track vehicles to reduce fuel consumption,accidents and fraud.As an example,USPS is currently utilizing a telematics system on our semitrailer fleet to validate opportunities to improve safety,reduce fuel consumption and lower our maintenance costs.We have also performed pilot testing of several different telematics systems on our light duty and passenger vehicles in order to evaluate the return Columbus Lighting ProjectThe Columbus,Ohio,Processing and Distribution Center upgraded its parking lot lighting with LED devices.Each year,the maintenance department at the facility experienced significant expenses maintaining the exterior lighting,such as ballasts,capacitors,bulbs and the cost of renting a lift.An employee familiar with another installation prepared and presented a proposal outlining the benefits and savings the facility would gain by converting to LED lighting.By achieving approval for this project,the Columbus P&DC was able to convert all exterior lighting to LED(including the parking lot,building lights,walkways,canopy and docks.)This project created a more efficient,safer and economic way to maintain lighting at the facility.The benefits of converting to LED bulbs include:No more ballasts or capacitors.Longer life bulb.Reduced heat emission from bulb.Less energy usage.Cleaner illumination with consistent color.The Columbus P&DC facility is estimated to save almost$500,000 over the next 10 years in energy and maintenance costs.Continued on next pageUnited States Postal Service|2022 Annual Sustainability Report23on investment.We have not made a final decision on implementation of a fleet-wide system but were in the process of performing the financial evaluation and the best method to implement a telematics system.An additional opportunity to reduce our fuel emissions is alternative fuel vehicles.Nearly 34,000 of our over 232,000 vehicles can be powered with alternative fuel,including ethanol,electric,compressed natural gas,liquid propane,biodiesel and hybrid.Weve issued guidance for postal drivers to use alternative fuel in alternative fuel capable vehicles in line of travel.We provide missed-opportunity reports to our facilities that indicate instances when conventional fuel was purchased by a driver using an alternative fuel capable vehicle at a location where alternative fuel is available and could have been purchased.These reports help emphasize the availability of alternative fuel and the importance of using it when available.We plan to continue to work to incorporate alternative fuel requirements into our contracts to reduce our Scope 3 emissions.We also have 6,614 walking routes and 51 biking routes to reduce vehicle use when possible.USPS has a rigorous vehicle preventive maintenance program.Vehicle maintenance is performed on a scheduled basis to provide the least interruption of regular mail transportation and delivery service.We provide training to vehicle personnel to ensure efficient and professional performance of all duties assigned and initiate quality control in maintenance procedures to maximize vehicle performance and ensure the highest level of vehicle safety and appearance.We also perform annual evaluations of USPS-owned vehicles,including emissions control systems,and our vehicles are subject to state and local emissions testing regulatory requirements.Next Generation Delivery VehicleUnited States Postal Service|2022 Annual Sustainability Report24WaterThe Postal Service manages water consumption and water quality to forecast usage and costs,identify emerging and existing issues with high-use facilities,and tackle future challenges.Water is not a primary input for our operations.However,our operations have the potential to impact water quality and as environmental stewards we find it important to conserve water.Water ConsumptionFY2030 GoalWater Intensity20crease by FY2030 compared to FY2019As we have achieved several years early our initial goal of decreasing water consumption 36%by FY2025 compared to 2007,we set a new goal with a FY2019 baseline.The new goal is to reduce potable water intensity by 20%from FY2019 levels and extends to FY2030.In FY2021,the Postal Service consumed 2.6 billion gallons(9,842 megaliters)of water across all operations.This data is compiled using and in accordance with Federal Energy Management Program reporting requirements.The Postal Service manages water consumption by actively identifying St.Louis Rain GardenDuring final construction of the South County Vehicle Maintenance Facility in St.Louis,Missouri,a unique approach to controlling the sites stormwater runoff was incorporated into the property design.Its called a rain garden.The problem?Every time it rains,stormwater flows down roofs,driveways and other impervious surfaces.This runoff can pick up loose soil,pesticides and other contaminants,which can then enter storm drains that transport them to local streams and lakes,often without any treatment.Think of a rain garden as a large environmentally friendly sponge thats designed to soak up and treat much of this runoff before it can cause any potential environmental impact.The garden starts with a bowl-shaped bed consisting of loose soil,sand and gravel layers.The garden is then planted with deep-rooted native trees,bushes,flowers and other plants that help absorb the collected water and excess nutrients.Rainwater runoff is now filtered through the various layers of soil before finally entering a shallow groundwater supply or local stormwater system through an underdrain perforated pipe.Rain gardens also work to slow runoff and prevent flooding during storm events.In this small way,this facility will continue contribute to cleaner water for the greater St.Louis area into the foreseeable future.Continued on next pageUnited States Postal Service|2022 Annual Sustainability Report25opportunities to conserve water in our facilities and by tracking consumption through our Utility Management System to identify any significant variances(greater than 25%)in water usage.We compare the current periods water usage and costs with the prior period and same period last year to identify significant variances.In addition to monitoring water consumption,the Postal Service conducts audits at our facilities and implements water-saving measures,such as installing low-flow aerators,where the return on investment is at least 30%.USPS conducted approximated 50 audits in FY2020 as part of utility-supported programs.However,following these initial audits,USPS paused new audits in order to reevaluate the process while continuing to install low-flow aerators at processing facilities based on previously completed audits.Water QualitySome Postal Service locations have on-site fueling operations,storage tanks,emergency generators,wastewater pretreatment systems,septic systems or vehicle maintenance and washing,all of which can contaminate water if proper procedures are not followed.The Postal Service monitors and assists these sites to ensure compliance with spill prevention requirements,release reporting and stormwater permitting regulations.We typically conduct on-site water quality reviews to evaluate compliance with permit conditions,regulatorily required plans and USPS zero discharge policies.These reviews mitigate the potential for spills and prevent contamination of stormwater and groundwater.Storage Tank ManagementThe Postal Service has a comprehensive program focused on improving and maintaining tank systems to avoid contaminating the environment.We remove and replace tanks that pose a liability for USPS because theyre approaching industry acceptable lifespans or warranty limits.Since the inception of the program,the Postal Service has removed 194 aging underground storage tank systems,reducing the number of federally regulated underground storage tanks by just over 60%and the associated risks of releases.Replacement tanks are installed only where necessary.These new tank systems are centrally monitored and designed to prevent and quickly detect leaks to avoid soil and groundwater contamination.United States Postal Service|2022 Annual Sustainability Report26Recycling and Minimizing WasteThe Postal Service set a goal of diverting 75%of its waste from landfill by 2030.The information below provides progress toward our goal.FY2030 GoalWaste Diversion rate75%by FY2030Recycling and reducing waste to landfill promote conservation,material reuse and natural resources stewardship.Increasing recycling and eliminating waste are recognized business opportunities.Reducing trash volume not only reduces disposal costs but also provides opportunities to generate recycling revenue from materials previously incurring disposal costs.The Postal Service has a unique mail class known as USPS Marketing Mail that is not returned to the sender if addressed improperly.This undeliverable mail generates paper waste in Post Offices.Our goal is to manage this in a sustainable way.By using our reverse transportation logistics capabilities between our Post Offices and processing facilities,were currently recovering over 175,000 tons of undeliverable USPS Marketing Mail every year for recycling.USPS has engaged independent third parties in performing studies to help identify new business opportunities for this recyclable material.This data is important to the fiber recovery industry which could find use for the material in manufacturing new products made from recyclable content.USPS BlueEarth Mail Services The Postal Service offers a suite of services,under the USPS BlueEarth umbrella,designed to promote sustainability with customers and employees.USPS BlueEarth Secure DestructionThis mail service was created in response to business customer requests to reduce handling costs associated with return-to-sender mail that contains personally identifiable information.Secure Destruction identifies and intercepts undeliverable-as-addressed mail being returned to the sender and securely shreds and recycles it to protect any confidential or sensitive information.The service is free,secure and convenient.The program also provides a stronger security profile for participating mailers by ensuring confidential and sensitive information is securely removed from the mail stream and destroyed with fewer touchpoints than if it was returned to the sender.To improve efficiency and build participation in the program,were regularly improving our processes and conducting marketing and outreach efforts with new mailers.In FY2021 the Secure Destruction mail service intercepted,destroyed and recycled over 111.7 million pieces of First-Class Mail that would have otherwise been returned to the sender.USPS BlueEarth Federal Recycling ProgramThis program makes it easy for federal agencies and their employees to properly dispose of unwanted small electronics and empty ink and toner cartridges.Participating federal agencies and their employees can recycle official agency assets and personally owned property for free,online.Items sent to the Federal Recycling Program Secure Destruction Recycling MetricsMetricProgram LifetimeFY21FY2021 TargetFY2021 VarianceMailpiece volume497,945,259111,758,62698,133,65613,624,970Potential metric tons of GHG emissions avoided19,976.94,503.83,925.3578.5Metric tons of paper recycled12,775.62,891.52,503.8387.7Continued on next pageUnited States Postal Service|2022 Annual Sustainability Report27are remanufactured,remarketed or recycled,and agencies can access reports with measurable results to help track these items.As of the end of FY2021,there were 37 agencies(including USPS)signed up for the recycling program.Our goal is to increase this number and encourage greater participation among agencies that are already signed up by spreading awareness of the program and its benefits.In FY2021,over 118,000 pounds of unwanted small electronics,ink and toner cartridges and other office equipment were reused and over 268,000 pounds were recycled.USPS BlueEarth Carbon AccountingWe know that protecting the environment is a commitment shared by many businesses and consumers.We help our customers reduce waste,increase recycling and improve their carbon footprint through our BlueEarth programs.One example is our BlueEarth Carbon Accounting Service which helps major mailers determine and manage their Scope 3 emissions through an online report that provides the emissions for their mailing and shipping activity.This information can be used for their corporate inventory or to purchase carbon credits to offset and provide carbon neutral shipping for their customers.How2RecycleThe Postal Service is in its second year of partnership with How2Recycle.This is a consumer-oriented package labeling system that uses Federal Trade Commission guidance to help customers properly recycle.Weve made great strides in identifying our products that can include a How2Recycle label.As we deplete our current inventory and produce new stock,were now seeing a How2Recycle label attached to those items.How2Recycle labels communicate to customers precise instructions,including how to prepare for recycling,type of recyclable material such as plastic or paper,and packaging format such as bottles and boxes,to make recycling easier.Cereal boxes,soup cans and other pantry items often carry How2Recycle guidance.In addition to our Priority Mail,Priority Mail Express and ReadyPost packaging we have expanded How2Recycle guidance to postcards,posters and certain printed paper products.Continued on next pageUnited States Postal Service|2022 Annual Sustainability Report28Pollution PreventionAs part of our effort to manage waste,the Postal Service is focused on pollution prevention eliminating waste at the source before its generated.Our pollution prevention policy focuses on integrating sustainability into our supply chain through the identification and availability of environmentally preferable products(EPP).These types of products have a reduced negative effect on human health and the environment when compared with competing products that serve the same purpose.USPS defines EPP as products that contain high levels of post-consumer content recycled materials,are made of bio-based materials,are energy efficient,are water efficient and have ecolabel certifications from reputable organizations.The Postal Service includes clauses in our contracts with suppliers that encourage them to provide products that meet our EPP criteria.The offices of Sustainability and Supply Management work together to improve our ability to display and profile products available through our internal procurement website that have environmentally preferable attributes and increase the number of EPPs available to our employees.We also work in partnership with suppliers to integrate sustainability into the supply chain through contract clauses,evaluation factors and specifications.Hazardous and Regulated Waste ManagementPostal Service operations sometimes result in the generation of hazardous and regulated waste,including used oil,batteries,mercury-containing lamps and ink.We have programs and national contracts in place to ensure these wastes are properly recycled,or,if necessary,disposed of in accordance with regulatory requirements.Additionally,employees with hazardous waste management responsibilities are required to take waste management training annually in order to ensure proper procedures are followed.Used Oil Recycling The Postal Service vehicle fleet includes over 232,000 vehicles.Each vehicle requires regular maintenance,including oil changes.The Postal Service collects,stores and recycles this used oil to ensure it does not pollute soil and water.In FY2021,the Postal Service recycled over 361,000 gallons of used oil equivalent to saving over 15 million gallons of crude oil.Battery RecyclingThe Postal Service network has hundreds of thousands of wireless scanners powered by lithium-ion batteries along with numerous other batteries in our facilities and fleet.These batteries require special management at end-of-life to reclaim renewable materials and keep them out of landfills.Weve established procedures for recycling all types of batteries.This includes national contracts for on-site pickup and mail-back recycling available to all sites,so even the most remote locations can recycle batteries.In FY2021,the Postal Service recycled approximately 54,000 pounds of small lead-acid and dry cell batteries,including lithium-ion batteries.Looking ahead,were exploring options to make the battery recycling process more cost-effective for our smaller Post Office locations that recycle fewer batteries than our larger facilities.Poshmark:The Circular EconomyHave you heard of the circular economy?An organization is a member of the circular economy when it helps ensure products can be used,re-used and/or repaired.The life of the product is extended and resources that would otherwise be consumed by making a new product are conserved.We are a member of this economy.We transport parts that are used to repair items,materials to be recycled into new things,and items that can be reused by consumers.One example of a business focused on the circular economy is Poshmark,a social marketplace for new and secondhand style and a leader in the growing resale market.They help their customers,known as Poshers,extend the lifespan of clothing and other items and keep them from going to waste.Together with Poshmarks community of 80 million users,were helping Americans actively participate in the circular economy and we look forward to continuing our work together to offer consumers more sustainable choices.MailboxesMany are aware of the three Rs of sustainability reduce,reuse and recycle.Did you know the USPS purchased$429,915,920 in EPPs in FY2021.53.5%of applicable contract spending was on EPPs.Continued on next pageUnited States Postal Service|2022 Annual Sustainability Report29StampsThe Postal Service is best known for tiny little pieces of art known as postage stamps.But did you know these little beauties have a big sustainability story?The facestock the part of the stamp that customers see is printed on paper that is Forest Stewardship Council certified.This means the paper is sourced through a careful chain of custody that ensures the pulp comes from sustainably managed forests.Additionally,the adhesive on Postal Service stamps is a special recycling-compatible adhesive that allows stamps affixed to letters to be recycled with other paper products.For most customers in the U.S.,this means stamped envelopes can be placed directly in their recycling bin along with other paper products.Postal Service focuses on the principle of reuse with its iconic blue mailboxes?Our mailboxes have been around for more than 50 years,dating back to a time when USPS was known as the Post Office Department.The deep blue color included special reflective red and white decals featuring the words“U.S.Mail.”Today these iconic blue boxes are also“green.”The Postal Service has a national program in place to refurbish boxes that are damaged or worn.Refurbishing boxes is a sustainable choice in lieu of purchasing new materials to make new boxes.This program not only saves money it ensures the boxes are carefully maintained according to environmental principles.The boxes are stripped of the old paint through a special process that doesnt use chemicals,making it better for the environment.Since the Postal Service has more than 140,000 boxes nationwide,this program has a big impact on the environment.Boxes that are too worn to be repaired are destroyed and then the steel is recycled according to protocols that ensure the security of the boxes is upheld throughout.In fact,the Postal Service has not procured any new boxes in the last three years and has been able to keep up with demand by using refurbished boxes instead.How can you tell if your mailbox has been refurbished?Look for a green leaf logo on it.Straw Bale Post OfficeEveryone knows the fable of the three little pigs and the different building elements they used to build their houses.But can you guess which of the storybook animals materials the Post Office used to build a Post Office in New Mexico?If you guessed straw,youre correct.This durable and environmentally friendly material has been used in building construction for hundreds of years throughout the world.When a new Post Office was planned for Corrales,New Mexico,the Postal Service wanted to showcase our commitment to environmental excellence.In the Corrales Post Office,built in 1999,this commitment is hidden in the walls.The special insulation used in this office consists of nearly 900 straw bales.The Post Office is still standing strong and saving energy a proud testament to the Postal Services longstanding history of caring for the earth.United States Postal Service|2022 Annual Sustainability Report30Climate Risk AdaptationThe Postal Service published a Climate Action Plan in 2021 in response to Executive Order 14008,Tackling the Climate Crisis at Home and Abroad.The plan ensures were transparent in our management approach as we adapt to climate risk.For the purpose of the plan,the following definitions for adaptation and resilience are used(definitions from the Interim Instructions for Preparing Draft Climate Action Plans under EO 14008).Adaptation:The action of adjusting natural or human systems in anticipation of or response to a changing environment in a way that effectively uses beneficial opportunities or reduces negative effects.Resilience:The capacity to anticipate,prepare for and adapt to changing conditions and withstand,respond to and recover rapidly from disruptions.Developing and implementing a Climate Action Plan is a multiyear process for the Postal Service.It serves as our initial framework that will be built on in the years to come.This approach ensures well fulfill our commitment to voluntarily comply with EO 14008,provides us with the flexibility to build new capabilities and partnerships with key stakeholders,Congress,the presidential administration and the American public,and drives change at all levels of our organization.United States Postal Service|2022 Annual Sustainability Report31GRI IndexGRI 102:General DisclosuresORGANIZATIONAL PROFILEDisclosureDisclosure Title2021 Response102-01Name of the organization United States Postal Service102-02Activities,brands,products and services2021 Form 10-K Page 1 102-03Location of headquartersUSPS at a Glance:Page 2475 LEnfant Plaza SW,Washington,DC 20260102-04Location of operationsUSPS at a Glance:Page 2102-05Ownership and legal formUSPS at a Glance:Page 2102-06Markets servedUSPS at a Glance:Page 22021 Form 10-K,Pages 6 and 60102-07Scale of the organizationUSPS at a Glance:Page 22021 Form 10-K,Pages 4,8-9,19-20102-08Information on employees and other workersUSPS at a Glance:Page 22021 Annual Report to Congress,Page 292021 Form 10-K,Page 8 102-09Supply chainWebsite:Supply Chain Philosophy102-10Significant changes to the organization and its supply chainUSPS at a Glance:Page 2Energy,Page 212021 Annual Report to Congress,Pages 16,23,28102-11Precautionary principle or approachA Conversation with Postmaster General and CEO Louis DeJoy and Jennifer Beiro-Rveill,Senior Director,Environmental Affairs and Corporate Sustainability:Page 11Worker and Customer Safety:Page 152021 Annual Report to Congress,Page 42102-12External initiativesSustainability Management Approach:Page 4102-13Membership of associationsSustainability Management Approach:Page 4United States Postal Service|2022 Annual Sustainability Report32GRI Index continued.GRI 102:General Disclosures StrategyDisclosureDisclosure Title2021 Response102-14Statement from senior decision-makerA Conversation with Postmaster General and CEO Louis DeJoy and Jennifer Beiro-Rveill,Senior Director,Environmental Affairs and Corporate Sustainability:Page 11USPS Strategic Plan(2020-2024)Page 5GRI 102:General Disclosures Ethics and IntegrityDisclosureDisclosure Title2021 Response102-16Values,principles,standards and norms of behaviorSustainability Management Approach:Page 4 2021 Form 10K,Page 95GRI 102:General Disclosures GovernanceDisclosureDisclosure Title2021 Response102-18Governance structure2021 Form 10-K Pages 91-93GRI 102:General Disclosures Stakeholder EngagementDisclosureDisclosure Title2021 Response102-40List of stakeholder groupsMateriality Assessment:Page 13102-41Collective bargaining agreementsUSPS at a Glance:Page 2102-42Identifying and selecting stakeholdersMateriality Assessment:Page 13102-43Approach to stakeholder engagementMateriality Assessment:Page 13102-44Key topics and concerns raisedMateriality Assessment:Page 132021 Annual Report to Congress,Page 38Five Year Strategic Plan(2020-2024),Page 28 GRI 102:General Disclosures Reporting PracticesDisclosureDisclosure Title2021 Response102-45Entities included in the consolidated financial statements2021 Form 10-K,Pages 51,56-60102-46Defining report content and topic boundariesMateriality Assessment:Page 13102-47List of material topicsMateriality Assessment:Page 13United States Postal Service|2022 Annual Sustainability Report33GRI Index continued.DisclosureDisclosure Title2021 Response102-48Restatements of informationNot applicable for this report period.102-49Changes in reportingMateriality Assessment:Page 13102-50Reporting periodA Message for Our Readers:Page 1102-51Date of most recent reportA Message for Our Readers:Page 1102-52Reporting cycleA Message for Our Readers:Page 1102-53Contact point for questions regarding the reportA Message for Our Readers:Page 1102-54Claims of reporting in accordance with the GRI StandardsA Message for Our Readers:Page 1102-55GRI content indexThis GRI Content Index adheres to the requirements of this disclosure.102-56External assuranceA Message for Our Readers:Page 1GRI Management Approach and Topic Specific DisclosuresMATERIAL TOPIC:CUSTOMER SATISFACTIONDisclosureDisclosure Title2021 Response103-1,103-2 and 103-3Management approachFive-Year Strategic Plan FY2020-FY2024,Pages 20-23 and 28-322021 Annual Report to Congress,Pages 36-41MATERIAL TOPIC:RESPONSIVE TO CLIMATE RISKDisclosureDisclosure Title2021 Response103-1,103-2 and 103-3Management approachEmissions:Page 19Annual Report to Congress,Pages 11-12,52-53305-1Direct(Scope 1)GHG emissionsEmissions:Page 19305-2Energy indirect(Scope 2)GHG emissionsEmissions:Page 19305-3Other indirect(Scope 3)GHG emissionsEmissions:Page 19United States Postal Service|2022 Annual Sustainability Report34GRI Index continued.MATERIAL TOPIC:FACILITY ENERGY EFFICIENCY,RENEWABLE ENERGY,FLEET EFFICIENCY,CONTRACT TRANSPORTATION FLEET EFFICIENCYDisclosureDisclosure Title2021 Response103-1,103-2 and 103-3Management approachEnergy,Page 21Sustainability Reporting and Implementation Plan 2020,Pages 5-7 302-1Energy consumption within the organizationEnergy,Page 21302-3Energy IntensityEnergy,Page 21MATERIAL TOPIC:ENVIRONMENTAL MANAGEMENTDisclosureDisclosure Title2021 Response103-1,103-2 and 103-3Management approachEnvironmental Management:Page 18USPS FY2021 Annual Report to Congress,Pages 11-12MATERIAL TOPIC:MARKET RELEVANCE AND INNOVATIONDisclosureDisclosure Title2021 Response103-1,103-2 and 103-3Management approachSustainability Management Approach:Page 4 USPS Five-Year Strategic Plan FY2020-FY2024,Pages 13 and 22-23 USPS FY2021 Annual Report to Congress,Pages 34-36MATERIAL TOPIC:PACKAGING FOOTPRINTDisclosureDisclosure Title2021 Response103-1,103-2 and 103-3Management approachRecycling and Minimizing Waste:Page 26USPS 2020 Sustainability Report and Implementation Plan,Pages 15-16MATERIAL TOPIC:STRATEGIC BUSINESS PARTNERSHIPSDisclosureDisclosure Title2021 Response103-1,103-2 and 103-3Management approachSustainability Management Approach:Page 4 USPS FY2021 Annual Report to Congress,Pages 2-3 and 12-23 USPS Five-Year Strategic Plan FY2020-FY2024,Pages 10-11United States Postal Service|2022 Annual Sustainability Report35GRI Index continued.MATERIAL TOPIC:SUPPLY CHAIN RESILIENCEDisclosureDisclosure Title2021 Response103-1,103-2 and 103-3Management approachEmissions:Page 19Supplying Principles and Practices Supplier Diversity Corporate PlanUSPS Five-Year Strategic Plan FY2020-FY2024,Pages 17-18 and 23-25MATERIAL TOPIC:WASTE REDUCTIONDisclosureDisclosure Title2021 Response103-1,103-2 and 103-3Management approachRecycling and Minimizing Waste:Page 26Sustainability Reporting and Implementation Plan 2020,Pages 10-12 and 15-18306-3Waste generatedRecycling and Minimizing Waste:Page 26306-4Waste diverted from disposalRecycling and Minimizing Waste:Page 26MATERIAL TOPIC:WATER STEWARDSHIPDisclosureDisclosure Title2021 Response103-1,103-2 and 103-3Management approachWater:Page 24Sustainability Reporting and Implementation Plan 2020,Pages 7-8303-5Water consumptionWater:Page 24MATERIAL TOPIC:WORKER AND CUSTOMER SAFETYDisclosureDisclosure Title2021 Response103-1,103-2 and 103-3Management approachOperations:Page 152022 Annual Report to Congress,Pages 23,33 and 42-45USPS Five Year Strategic Plan FY2020-FY2024,Pages 28-32 and 352021 10-K Form,Page 10DIVERSITY AND EQUAL OPPORTUNITY DisclosureDisclosure Title2021 Response405-1Management approach2021 Annual Report to Congress,Page 132021 Form 10-K,Page 8United States Postal Service|2022 Annual Sustainability Report36The Eagle Logo,the trade dress of USPS packaging,the letter carrier uniform,trade dress of the round top collection box and the postal truck and the following word marks are among the many trademarks owned by the United States Postal Service:First-Class,First-Class Mail,Forever,Informed Delivery,Informed Visibility,USPS Marketing Mail,Post Office,Priority Mail,Priority Mail Express,Priority Mail Express International,Priority Mail International,United States Postal Inspection Service,United States Postal Service,U.S.Mail,U.S.Postal Service,USPS,USPS BlueEarth,.PUTTING OUR STAMP ON A GREENER TOMORROWAdditional trademarks:Forest Stewardship Council,Global Reporting Initiative,The Climate Registry.Year references:All references to a specific year refer to the Postal Service fiscal year(FY)ending Sept.30.However specific month and year references pertain to the calendar date.
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2022 SUSTAINABILITY REPORTA Transformative Era of ActionBuilding a World that Works for TomorrowOur CommitmentWe build the technology that enables a more sustainable tomorrow.Energy Transition 30%of the worlds electricity generated with the help of GE technologyFuture of Flight3out of 4commercial flights powered by GE or partner1 enginesGlobal R&DWe invest in R&D to build a world that works for tomorrow:$4.2Bin 2022GE company-wide(inclusive of GE HealthCare),customer and partner funded.1 CFM International is a 50-50 joint company between GE and Safran Aircraft Engines;Engine Alliance is a 50-50 joint company between GE and Pratt&Whitney.2 CFM International is a 50-50 joint company between GE and Safran Aircraft Engines.RISE is a registered trademark of CFM.United StatesLowering emissions with carbon capture technology The U.S.Department of Energy awarded$5.7 million to GE Vernova to lead a carbon capture technology integration project targeting a 95%reduction of carbon emissions.The study will serve as a template for lowering carbon emissions for other 7F gas power plants worldwide.Learn more United StatesWorlds first for the future of hybrid electric flight GE Aerospace is the first to test a megawatt-class and multi-kilovolt hybrid electric propulsion system in altitude conditions that simulate single-aisle commercial flight.It is an important step in GEs work with NASA and Boeing to develop a hybrid electric propulsion system for flight tests later this decade.Learn more United States&FranceCFM International RISE2 ProgramAs part of CFM Internationals Revolutionary Innovation for Sustainable Engines(RISE)2 Program,plans were announced to flight test hydrogen combustion and open fan technologies with Airbus in the mid-2020s.The CFM International RISE Program will demonstrate and mature a range of new,disruptive technologies for future engines targeting at least 20%lower fuel consumption,which translates to 20wer carbon dioxide(CO2)emissions compared to todays engines.Learn more Puerto Rico Improving grid resiliencyGE Research,along with GEs Renewable Energy and Digital businesses,are working with the National Renewable Energy Laboratory,LUMA Energy and Sandia National Laboratories to develop and demonstrate an automated power system with sensors,software,distributed solar and storage,and other features that would enable grid operators to rapidly restore electricity following severe weather events.Learn more UkraineEmergency power when and where its most neededGE Vernova provided crucial support to Ukraine during the ongoing war,working with the United States Agency for International Development and Tetra Tech by delivering a GE TM2500 aeroderivative gas turbine.This mobile gas generator can power over 100,000 Ukrainian homes and can be trucked to a location within weeks.Learn more PolandSupporting Polands decarbonization targetsGEs 9HA.02 heavy-duty gas turbine will power Ostroleka C combined cycle power plant in northeast Poland.The flexible and efficient natural gas fired plant will enable Poland to increase its power supply security while continuing to phase out coal and expand the deployment of renewable and nuclear energy resources.Learn more ItalyNew European hybrid electric technology demonstratorAvio Aero launched a new hybrid electric technology demonstration program,called AMBER,that supports efforts to make air transport more fuel efficient by reducing CO2 emissions.The program is funded by the Clean Aviation Joint Undertaking,a public-private partnership between the European Commission and the European aeronautics industry.The demonstrator will study integration of hybrid electric components with fuel cells for rig testing in the mid-2020s using Avio Aeros advanced Catalyst turboprop engine.Learn more GreeceDigital twin technology for reliable energyGE Digitals Asset Performance Management Reliability application has been selected by the first independent energy producer in Greece,ELPEDISON S.A.,to improve the reliability of its combined cycle fleet.This makes ELPEDISON the countrys first energy producer to cover an entire combined cycle plant with digital twin technology.Learn more EgyptA hydrogen first for AfricaGE Vernova successfully operated a GE LM6000 aeroderivative gas turbine on hydrogennatural gas blended fuel at the Sharm El Sheikh Power Plant during the 27th Conference of the Parties to the United Nations Framework Convention on Climate Change(COP 27).In less than five months,the project overcame logistical and operational challengesgetting hydrogen to the plant and building the infrastructure for hydrogen distribution and blending at the siteall with a commitment to safety.Learn more United Arab Emirates A milestone for 100%Sustainable Aviation FuelEmirates operated the first demonstration flight in the Middle East using 100%Sustainable Aviation Fuel(SAF)in one of the two GE90 engines powering a Boeing 777-300ER.The flight supported collective industry efforts to help enable a future of 100%SAF flying and help advance the UAEs sustainability objectives.Learn more ChinaPumped hydro storageSupported by four GE 300 megawatt(MW)pumped storage turbines,a new hydro power plant in Jinzhai is now online and providing 1.2 gigawatt(GW)of power.The sustainable giant energy storage system will save up to 120,000 tons of coal and reduce 240,000 tons of CO2 emissions every year.Worldwide,more than 30%of hydro storage plants are equipped with GE technology.Learn more AustraliaIdentifying inefficiencies at 30,000 feet Qantas Airlines,which operates Australias largest commercial fleet,announced plans to implement GE Digitals Airspace Insight solution.By using this first-of-its-kind tool,which aggregates data from air traffic control(ATC),airlines,airports,airspace designers and communities,Qantas can better understand what is happening in their airspace from both a safety and efficiency perspective.Learn more II|GE 2022 SUSTAINABILITY REPORT GE 2022 SUSTAINABILITY REPORT|III FORWARD-LOOKING STATEMENTSThis report contains“forward-looking statements”that is,statements related to future events that by their nature address matters that are,to different degrees,uncertain.For details on the uncertainties that may cause our actual future results to be materially different than those expressed in our forward-looking statements,see https:/ well as our annual reports on Form 10-K and quarterly reports on Form 10-Q.We do not undertake to update our forward-looking statements.NON-GAAP FINANCIAL MEASURESIn this report,we sometimes use information derived from consolidated financial data but not presented in our financial statements prepared in accordance with U.S.generally accepted accounting principles(GAAP).Certain of these data are considered“non-GAAP financial measures”under the U.S.Securities and Exchange Commission rules.These non-GAAP financial measures supplement our GAAP disclosures and should not be considered an alternative to the GAAP measure.The reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures are included in our annual reports on Form 10-K,our quarterly reports on Form 10-Q and our earnings releases.FACING PAGE GEs next-generation 3.0-3.4 MW onshore wind turbine,designed specifically for the North America region.COVER Michael Whalen,Development Assembly Mechanic,GE Aerospace;Will Martin,Edison Engineering Development Program,GE Vernova;and Alejandra Aragon Gallegos,QA Site Leader,GE HealthCare.Dear Fellow Stakeholders,2022 marked the beginning of a new era for GE.One where we are unleashing our full potential as three independent industry leaders across energy,flight and health.Our 172,0003 employees served customers in 170 countries to drive decarbonization through the energy transition,create a smarter and more efficient future of flight,and enable precision care.With a commitment to embedding lean more deeply,and embracing a culture of humility,transparency and focus,we are living our purpose every day of rising to the challenge of building a world thatworks.We successfully launched GE HealthCare and are preparing for the separation of GE Vernova,our portfolio of energy businesses,and GE Aerospace sometime early in 2024.We did this while navigating inflationary pressure,geopolitical conflict and global supply chain challenges.And in the spirit of kaizen,change to make it better,we accelerated a culture of continuous improvement that ultimately allows us to better serve our customers.3 On January 3,2023,GE completed the planned separation of its healthcare business,launching GE HealthCare Technologies Inc.(GE HealthCare).As of December 31,2022,GE had 123,000 employees excluding GE HealthCare employees who are now part of the standalone company.GE 2022 SUSTAINABILITY REPORT|1 WE RISE TO THE CHALLENGE OF BUILDING A WORLD THAT WORKS“It all starts with our unique ability to innovate new technology the world needs to address the most pressing sustainability challenges.By sharpening our focus on the specific missions of each business,we gain more opportunity for GE Vernova to electrify and decarbonize the world,for GE Aerospace to invent the future of flight and for the newly independent GE HealthCare to create a world where healthcare has no limits.”H.Lawrence Culp,Jr.Chairman of the Board and Chief Executive Officer,GE Chief Executive Officer,GE AerospaceIn launching these three independent public companies,we are advancing our commitment to sustainability and to GEs more than 130-year legacy of lifting up the quality of life for people around the world.By sharpening our focus on the specific missions of each business,we gain more opportunity for GE Vernova to electrify and decarbonize the world,for GE Aerospace to invent the future of flight and for the newly independent GE HealthCare to create a world where healthcare has no limits.Ibrahima Ndiaye is helping to modernize the electrical grid at GE Researchs transformer lab in Niskayuna,New York.These are important missions that will have a lasting impact on our planet.We are focused on improving our impact on our people,communities and planet.Respecting human rights around the world has long been a part of our culture of unyielding integrity and is embedded in our environmental,social and governance priorities.We know the actions we are taking today within GE Vernova and GE Aerospace support our climate and sustainability goals over the near and long term.In this report,youll find more detailed discussions on those actions,including letters from Scott Strazik and myself addressing sustainability within GE Vernova and GE Aerospace,respectively.It all starts with our unique ability to innovate new technology the world needs to address the most pressing sustainability challenges.At GE Vernova,our technology helps generate approximately 30%of the worlds electricity and we have a meaningful role to help solve the trilemma of delivering more sustainable,reliable and affordable energy.Were working with customers like Kindle Energy in Louisiana to transition to hydrogen as a fuel source for power turbines traditionally powered by natural gas,and with countries like Vietnam to improve the reliability and stability of the electrical grid to support renewable sources of energy.Were bringing the worlds only 12 megawatt wind turbine with three years of operating experiencethe Haliade-Xto important new projects like the Dogger Bank offshore wind farm off the coast of England.Were deploying advanced nuclear technologies like our BWRX-300 small modular reactor,which produces no carbon during operation,in key markets including North America and Europe.And were modernizing electrical grids for clean energy integration,using our GridOS,the worlds first software designed for grid orchestration.At GE Aerospace,nearly 3 billion people flew with our technology under wing in 20224.We are continuing our efforts to support use of Sustainable Aviation Fuel(SAF),which is vital to enabling the aviation industry to meet its decarbonization goals.The revolutionary CFM RISE5 technology demonstration program,in partnership with Safran,is developing a new engine architecture and advanced materials with an aim to reduce fuel consumption and CO2 emissions by more than 20%compared with todays most efficient engines.Were also working with NASA and Boeing to mature and fly a megawatt-class hybrid electric propulsion system,and announced new flight test programs for open fan and for a hydrogen combustion engine with Airbus.And our Avio Aero team will lead a European project to test a hybrid electric motor powered by hydrogen fuel cells.4 Including GE and its joint venture partners.5 CFM International is a 50-50 joint company between GE and Safran Aircraft Engines.RISE is a registered trademark of CFM.We are united by a single,urgent purpose to help electrify and decarbonize the planet:because together,we have the energy to change the world.We have equipped90%of the worlds power transmission utilities with our technology.GE BY THE NUMBERS172,0006employees served customersreaching170 countries worldwide to drive decarbonization through the energy transition and create a smarter and more efficient future of flight.The GE team is excited for the path ahead.GE HealthCare is already well along its journey,and GE Vernova and GE Aerospace will follow sometime early in 2024.I am confident that we will achieve our full potential,thanks to our people.Our teams are motivated by the respective missions of each business,precisely because they are so important to creating a sustainable future for the world.GE Aerospaces Tatum Ross works on a Passport engine in Evendale,Ohio.GE Board Member and former U.S.Secretary of Defense Ash Carter sadly passed away last fall.We miss him every day and again express our deepest sympathies to his wife and family.Ash once said to me,“I like the ethos of GE,”and how GE sits on the same side of the table with customers when it comes to technology and efficient production.I couldnt agree more.We approach our work with our customers as“one team with one fight,”as Ash would describe it.That has been true for more than 130 years,and we will carry that ethos into our future.H.LAWRENCE CULP,JR.Chairman of the Board and Chief Executive Officer,GE Chief Executive Officer,GE Aerospace 6 On January 3,2023,GE completed the planned separation of its healthcare business,launching GE HealthCare.As of December 31,2022,GE had 123,000 employees excluding GE HealthCare employees who are now part of the standalone company.7 CFM International is a 50-50 joint company between GE and Safran Aircraft Engines;Engine Alliance is a 50-50 joint company between GE and Pratt&Whitney.We invent the future of flight,lift people up and bring them home safely.Every2 secondsa GE or partner7 powered aircraft takes off.2|GE 2022 SUSTAINABILITY REPORT GE 2022 SUSTAINABILITY REPORT|3 2022:A Transformative Era of ActionAs someone who has focused their career on the environment,energy,climate and sustainability for almost 30 years,Ive never experienced so much consensus from governments,companies and NGOs around one common themeaction.2022 marked a tipping point toward accelerating action.Throughout the year,weve seen three key transformations that are helping to solve some of the worlds most pressing sustainability challenges.And GEs own transformation is perfectly timed and aligned to ensure success.ROGER MARTELLAChief Sustainability Officer First,the relationship between governments and companies is rapidly reconfiguring toward partnership of shared goals.One key catalyst:the United States passage of its first climate change lawthe Inflation Reduction Actis one of the most impactful energy policies in decades and is bringing the government and companies together to solve for climate change,energy security and supply chain together.Another is the European Unions RePowerEU package,which is helping address the energy market disruption caused by Russias invasion and promote energy security while accelerating the energy transition.Importantly,this is not just a U.S.and Europe transformation.We are rapidly expanding our engagement with governmentsacross the Middle East,South America,Africa and Asiato help build a clean energy supply chain across the communities in which we operate.The work our GE Vernova team has done together to provide emergency power to Ukraine,documented on page 14,is perhaps the best example of a public-private partnership Ive seen.At GE Aerospace,were working with the European Commissions Clean Aviation program and the U.S.Federal Aviation Administrations Continuous Lower Energy,Emissions and Noise(CLEEN)program to innovate jet engine technologies and help decarbonize the aviation industry.Second,the urgency of electrification and energy security is creating additional incentives to act on climate change.In the last 12 months,weve seen more severe weather events threatening energy reliability,risks from cybersecurity,growing variability from renewable energy and the need to harden the grid so that other sectors can decarbonize through electrification.All these factors have ignited a sense of urgency of acting today on both power generation and grid modernization.While doing so within the context of electrification,these investments bring equal benefits to decarbonization and climate change goals.Thus,we are increasingly seeing action that solves both climate change and the energy trilemmagrowing access to more sustainable,reliable and affordable electricity for the nearly 775 million people who lack access.We launched GridOS,the worlds first grid orchestration software,which is designed to enable secure and reliable grid management while delivering the resiliency and flexibility needed by utilities worldwide.Third,weve seen a transformation and increasingly unified global action plan for climate change.For example,countries like Egypt and the United Arab Emirates(UAE)are now putting their climate commitments front and center in their economic plans.They are aggressively pursuing climate change investments as ways to advance their economies and inspire a new generation of diverse leaders and workforce.We were honored to work in Egypt to run a gas turbine on a hydrogen blend for the first time for the African continent in 2022,and were prioritizing our partnership with the UAE,which I believe will emerge in 2023 as one of the worlds leaders on innovating technology to decarbonize industrial and energy sectors.In addition,members of Air Transport Action Group,including GE Aerospace,previously adopted a goal of net zero CO2 emissions by 2050,confirming the aviation industrys support of the Paris Climate Agreement.We want to enable the world to be invested both in cleaner and more affordable energy,and the economic benefits with it.As I reflect on these transformations,I feel fortunate that GEs most significant transformation is aligning at this pivotal time.With our announcement in 2021 to launch three companies focused on critical,growing sectors in energy,aerospace and healthcare,we used last year to the fullestpreparing each company to independently continue and build upon the legacy of GEs established ESG program,including our climate commitments and ambitions.All GE companies operate from the principle that sustainability is a business imperative and a necessary condition for long-term growth and success.That includes GE Vernova and GE Aerospace,which are,respectively,uniquely positioned to lead the energy transition and the future of flight,and GE HealthCare,which successfully completed its separation in January 2023 and will release its own sustainability report detailing and further developing its own ESG strategy and goals.I am already a witness to how each of our three businesses are more strongly positioned to serve these three critical areas of energy,aviation and healthcare through focus.And,importantly,Im confident in their success both for their shareholders as a business and for sustainability in innovating the solutions the world most needs to accelerate action.2022 marked the beginning of a transformative era not only for sustainability,but also for GE.One where we are unleashing our full potential as three independent industry leaders.With a continued commitment to our sustainability priorities and innovation,and technology as our North Star,I am optimistic about the path to improve our impacts on our people,communities and planet.ROGER MARTELLAChief Sustainability Officer Contents1 CEO Letter4 CSO Letter6 Our Sustainability Priorities7 United Nations Sustainable Development Goals11 About This Report12 Key Metrics:Our Performance and Priorities14 GEs Commitment to the People of UkrainePART I15 Our Innovation and Technology:Propelling GE into a New Era16 Innovation Timeline:Tackling the Worlds Challenges for 130 Years18 Innovating Solutions for the Worlds Most Pressing Challenges20 Leading the Energy Transition:Electrification and Decarbonization36 Developing the Future of Flight:Defining Flight for Today,Tomorrow and the Future48 GE Research:Delivering Innovation to Build a More Sustainable WorldPART II50 Our Process:How GE Operates to Succeed in Our Mission51 Board Oversight54 Integrated Approach to Strategy,Risk and Sustainability58 Lean Management Supporting Sustainability Priorities60 Product Safety and Quality63 Culture:Leading with Integrity and The Spirit&The Letter65 Always with Unyielding Integrity:GEs Ethics&Compliance Program67 Privacy and Cybersecurity69 Human Capital:Investing in Our People72 Advancing Diversity,Equity and InclusionPART III81 Our Commitments:GE Respects Our People,Our Planet and Our Communities82 Safety85 Environment86 Climate Change104 Human Rights107 Freedom of Association108 The GE Foundation4|GE 2022 SUSTAINABILITY REPORT GE 2022 SUSTAINABILITY REPORT|5 Our Sustainability PrioritiesThroughout our more than 130-year history,GE has held a larger purpose of innovating technology to lift the quality of life for people around the globea core driver of sustainability.Sustainability priorities are woven into all that we do,including our business strategy,policies,leadership engagement,operating mechanisms,commitments and,ultimately,our products.From ensuring more people have access to more sustainable,reliable and affordable energy,to helping people thrive by staying connected to family,friends and economic opportunities,we are committed to making a substantial impact on people and the planet for the better.2022 marked the beginning of a new era for GE.One where we are unleashing our full potential as three independent industry leaders committed to energy,flight and health.Our mission to succeed in driving decarbonization through the energy transition and creating a smarter and more efficient future of flight is governed by core sustainability priorities built first and foremost on GEs unique culture of integrity in everything we do.As the world changes,we continuously adapt and improve our programs to ensure we succeed in these priorities.In the spirit of humility,we continuously engage with thought leaders and experts in various fields to learn from them and enhance our program.GEs strong foundation of integrity and lean-oriented culture frame how we make continuous improvements for people,our communities and the planet.As our 172,0008 diverse employees share a common mission to build a world that works,we are focused together on these priorities.The following pages highlight how our products and innovative technologies work to build a more sustainable world and how our foundational culture of integrity,forward-looking strategy and robust sustainability programs help bring these priorities to life.Culture of integrity in all that we doSAFETY OF OUR PEOPLEENVIRONMENTAL STEWARDSHIPCOMMITMENT TO HUMAN RIGHTSLIFTING UP OUR COMMUNITIES SMARTER AND MORE EFFICIENT FUTURE OF FLIGHTDRIVING DECARBONIZATION THROUGH THE ENERGY TRANSITION8 On January 3,2023,GE completed the planned separation of its healthcare business,launching GE HealthCare Technologies Inc.(GE HealthCare).As of December 31,2022,GE had 123,000 employees excluding GE HealthCare employees who are now part of the standalone company.How Our Strategy and Sustainability Priorities Align with the United Nations Sustainable Development Goals The United Nations(UN)Sustainable Development Goals(SDGs)are an interlinked agenda of 17 objectives to help nations address our most pressing global challenges,from climate change to inequality.GE continues to play a critical role in advancing sustainability and quality of life.We have been a signatory to the UN Global Compact since 2008,and we see close alignment between 11 of the 17 SDGs and our business strategy and sustainability priorities.On January 3,2023,GE completed the planned separation of its healthcare business,launching GE HealthCare Technologies Inc.(GE HealthCare).As an independent company,GE HealthCare embarks on its important mission to create a world where healthcare has no limits.Across GE,we remain committed to protecting the health and safety of our workforce and those doing work on our behalf across the globe.Through our global well-being program,HealthAhead,we support GE employees and their families in optimizing their health and well-being in diverse ways that are reflective of their local cultures.In recognition of our efforts to make the health and well-being of our employees one of our top priorities,we received the 2022 Best Employers:Excellence in Health&Well-being Award from the Business Group on Health.We were also one of four employers honored with the Excellence in Global Health&Well-being Award for demonstrating a commitment to equity reflected in our standard benefits offered to our global workforce.We have maintained appropriate COVID-19 precautions and procedures throughout the pandemic to ensure the health and safety of our employees.The GE Foundations Safe Surgery 2020 program and its partners continue to make an impact in Africa and Southeast Asia.Although the$25 million commitment concluded in 2020,the program continues to increase medical oxygen accessibility to patients,supports anesthesia training across East Africa,expands medical tele-education and tele-mentoring for in-service training,and strengthens health facilities through biomedical technician training.Business and Priority Alignment Safety Lifting Our CommunitiesLearn More 70 Human Capital:Global Well-Being82 Safety108 Our Commitments:The GE FoundationAt GE,our diversity,equity and inclusion(DEI)focus is rooted in the belief that diverse teams and perspectives are essential to building a worlds that works.By working together,we can foster an inclusive culture that ensures every employee feels accepted,respected and a sense of belonging.Gender equality is a critical component of GEs commitment to providing a safe,inclusive and respectful workplace.We continue to provide benefits that support our gender diverse workforce,including flexible work policies,parental leave and other family benefits.While we have improved gender pay equity over the past year,our goal remains 100%pay equity in each of our businesses.Our philanthropic efforts also focus on advancing gender equality by supporting women and underrepresented populations in science,technology,engineering and math(STEM)fields.GE is honored to be a founding partner of the Society of Women Engineers(SWE)Corporate Partnership Council for 20 years,and several GE senior leaders serve in leadership positions at SWE and on the Women of Color in Engineering Collaborative(WCEC).Many GE employees mentor new talent or advance their own education and networking through SWE,which also provides scholarship support.Together,SWE and GE are building a strong pipeline of female talent that will innovate the future with diverse experiences and perspectives.Similarly,in 2022,GE helped to empower young people by learning about STEM opportunities during two events in the Middle East,North Africa and Turkey(MENAT)region.Each event gave students a first-hand look at GEs technology,sustainability initiatives and STEM careers.In addition,students worked with GE employees to think through and identify innovative solutions around sustainability-related issues and topics.Events such as these often lead to GE mentoring of students,empowering their passion to work in careers that help people and the planet.Business and Priority Alignment Advancing Diversity,Equity and Inclusion Lifting Our CommunitiesLearn More69 Human Capital:Investing in Our People72 Advancing Diversity,Equity and Inclusion108OurCommitments:The GE Foundation6|GE 2022 SUSTAINABILITY REPORT GE 2022 SUSTAINABILITY REPORT|7 As a company whose technology helps generate approximately 30%of the worlds electricity,we are committed to decarbonizing the energy sector while increasing access to more sustainable,reliable and affordable electricity.We are committed to electrification and decarbonization in parallelgrowing access to electricity,particularly for the nearly 775 million people without access,while decarbonizing the energy,transportation and industrial sectors.With some of the most innovative onshore and offshore wind turbines,most efficient gas turbines,as well as advanced technology to modernize and digitize electrical grids,GE is uniquely positioned to collaborate internationally in a just transition to a clean energy economy.As we are helping our customers to decarbonize smartly and efficiently,we are ensuring we become carbon neutral in our own Scope 1 and Scope 2 greenhouse gas(GHG)emissions by 2030,en route to net zero by 2050 in our own operations as well as the Scope 3 emissions from the use of our sold products.As part of GE Vernovas commitment to helping our customers deliver more affordable and cleaner energy,weve invested in the GT26 High Efficiency(HE)Upgrade to provide up to a 2%combined cycle efficiency improvement.The upgrade lowers the fuel cost per MW and reduces CO2 by 5%,which is equivalent to taking 16,500 cars off the road.The upgrade also increases the capability of the GT26 to burn up to 40%hydrogen fuel,providing future potential to further reduce the carbon footprint.Business and Priority Alignment Energy Transition(GE Vernova)Environmental StewardshipLearn More20 Innovation:Energy Transition86 Our Commitments:Climate Change86 GEs Ambition To Be a Net Zero CompanyWe believe there is no such thing as sustainable economic growth without decent work.We treat everyone affected by our businesses and value chain with fairness and dignity.In addition to strict prohibitions on child,prison and forced labor,we have built strong and lasting relationships with our suppliers to ensure an ethical supply chain.GE subscribes to all prevailing work laws internationally regarding minimum wages.GE adopts the Employer Pays Principles and prohibits actions associated with the most common forms of modern slavery.We enforce compliance on working conditions at our work sites and conduct audits at supplier manufacturing sites through our Supplier Responsibility Governance program.The decent work of today begins with training for the jobs of tomorrow.We believe STEM careers,especially in energy and transportation,are helping to solve global challenges like climate change while also lifting up communities through economic opportunities.That is why GE continues to support educational advancements,mentoring and community assistance for students and communities at home and abroad.One key example of this support is the Advanced Manufacturing Training Expansion Program(AMTEP).Launched in 2019 with funding through 2025,the goal of AMTEP is to triple the training footprint by reaching more than 900 high school students and adult learners and building a more diverse,sustainable,ready-to-work pipeline across Massachusetts North Shore.We are committed to providing high school students and adult learners with the training and resources they need to succeed in STEM careers.Business and Priority Alignment Energy Transition(GE Vernova)Human Rights Future of Flight(GE Aerospace)SafetyLearn More20 Innovation:Energy Transition64 The Spirit&The Letter82 Safety104 Our Commitments:Human Rights105 Our Commitments:Ethical Supply ChainFrom the beginning,research has played a critical role in our business strategy.We continue to develop technologies that have raised the quality of life for people around the world.Today we are focused on innovating technologies that will propel the global energy transition and future of flight.For example,GE Research launched a new Technology Incubation team at its Niskayuna,New York,research campus to enhance our green innovation commercialization efforts in the private sector.The CAGE(Climate ActionGE)Lab is developing unique systems for post-combustion carbon capture and direct air capture(DAC),which remove carbon from flue gas and the air,respectively.The goal is to enable an economical,large-scale solution for helping customers and companies decarbonize.Looking to the future of flight,GE Researchs hybrid electric aviation team is partnering with the Advanced Research Projects Agency for Energy(ARPA-E)on three projects to develop the powertrain,power generation system and cabling to enable a carbon neutral hybrid electric propulsion system that is suitable for supporting a 150-200 seat narrow body commercial airplane.Our innovation doesnt end with creating breakthrough technologies.Our programs for redeveloping brownfields,Superfund and other contaminated sites are also creating the infrastructure of tomorrow by helping to turn idle properties into new hubs of economic growth,job creation,needed housing and more.For example,as part of GEs former Lighting manufacturing business,we leased a site near Yogyakarta,Indonesia,from the Sambirejo Village Administration for solid waste storage(i.e.,broken glass from lamp manufacturing).Following GEs exit from the site,we worked closely with regulators and the village to incorporate the construction of a soccer pitch into the final site restoration plans.Business and Priority Alignment Energy Transition(GE Vernova)Future of Flight(GE Aerospace)Environmental StewardshipLearn More15 Innovation48 GE Research:Delivering Innovation to Build a More Sustainable World85 Our Commitments:Environment101 Environmental Justice and BrownfieldsGEs respectful workplace policies are the foundation of our commitment to a diverse workforce and inclusive workplace.Through our membership with the Leadership Group for Responsible Recruitment,we also adopted the Employer Pay Principle to remove inequities and help prevent exploitation of vulnerable worker populations.We believe education is a significant driver of economic inclusion and continue to partner with multiple organizations to provide STEM training and education to diverse communities around the world.With a focus on increasing the diversity of young people in engineering,the GE Foundations Next Engineers program facilitated more than 8,300 student engagements in 2021 and 2022.The GE Foundations Developing Health Globally(DHG)program continues to provide benefits to underserved communities,helping to reduce global health inequalities.Since its launch in 2004,DHG has invested$145 million to train more than 2,000 healthcare workers in many disciplines,including biomedical technicians across 16 countries.Business and Priority Alignment Lifting Our Communities Human RightsLearn More15 Innovation72 Diversity,Equity and Inclusion104 Our Commitments:Human Rights108 Our Commitments:The GE FoundationGE 2021 Diversity ReportAs cities and communities around the world decarbonize,GEs diverse energy offerings help provide utilities,power producers,grid operators and policymakers with the technology and services they need to meet their climate and sustainability goals.We continue to advance our environmental,health,safety and other sustainability goals in the cities and communities in which our employees and customers live and work,while at the same time providing job opportunities that support community development.For example,GE Research,along with GEs Renewable Energy and Digital businesses,are working with the National Renewable Energy Laboratory,LUMA Energy and Sandia National Laboratories to develop and demonstrate an automated power system with sensors,software,distributed solar and storage,and other features that would enable communities in Puerto Rico to rapidly restore electricity following severe weather events.In 2023,GE launched GridOS,the worlds first end-to-end software portfolio designed to help create the clean energy grid of the future.The platform and application suite enable secure and reliable grid management while delivering the resiliency and flexibility needed by utilities worldwide.Business and Priority Alignment Energy Transition(GE Vernova)Environmental StewardshipLearn More20 Innovation:Energy Transition50 Our Process:How GE Operates to Succeed in Our Mission97 Our Commitment:Product Stewardship101 Environmental Justice and BrownfieldsIn 2021,we developed product stewardship and circularity goals to take responsibility for the impacts of our products across their full lifecycle.Over the last year,new Life Cycle Assessments(LCAs)were conducted and more than 100 personnel in over a dozen different functions assessed the progress of existing circularity and product stewardship initiatives and drafted objectives and roadmaps to further incorporate circularity and stewardship steps into the business strategy.For example,as part of the ZEBRA(Zero wastE Blade ReseArch)consortium,LM Wind Power produced its first 100%recyclable blade at the Ponferrada plant in Spain in early 2022.The 62-meter blade was built using a unique thermoplastic resin.The resin can be readily utilized in other industries as material compounds and can also be depolymerized and reused in the production of new blades.Business and Priority Alignment Product StewardshipLearn More97 Our Commitments:Product Stewardship101 Environmental Justice and Brownfields8|GE 2022 SUSTAINABILITY REPORT GE 2022 SUSTAINABILITY REPORT|9 We continue to make progress toward our goal of achieving carbon neutrality within our own operations(i.e.,Scope 1 and 2 emissions)by 2030.Our businesses continue to make operational investments in energy efficiency,reducing emissions from the grid through smart power sourcing and using lean practices to eliminate energy waste.As of 2022,Scope 1 and 2 greenhouse gas emissions are down 28%compared to the 2019 baseline.We are also progressing on our ambition to be net zero by 2050,including for the Scope 3 emissions associated with the use of our sold products.We continue to provide updates on the path to our net zero ambition across GE Vernova and GE Aerospace.At the same time,we continue to play an important role globally in helping our customers reach their climate and sustainability goals while working with partners to electrify and decarbonize as part of the global transition to a clean energy economy.Throughout 2022,we continued to engage in the public domain to advance thought leadership on how the energy sector can achieve climate goals in line with the Paris Climate Agreement(including participating in COP27)and to help formulate and support policies that advance a just transition and sustainability goals globally.Business and Priority Alignment Energy Transition(GE Vernova)Future of Flight(GE Aerospace)Environmental StewardshipLearn More20 Innovation:Energy Transition32,44 Scope 386 Our Commitments:Climate ChangeWe promote respect for fundamental human rights as outlined in our Human Rights Statement of Principles and the principles contained in the Universal Declaration of Human Rights.We released our GE Human Rights Report in 2022 to provide greater transparency into how we run our Human Rights program,from our suite of governance documents to our Supplier Due Diligence program.Our human rights and respectful workplace policies extend from our own employees to those of our suppliers and to the communities affected by our operations and business relationships.We treat everyone affected by our business and value chainincluding employees,suppliers and their workers,customers and communitieswith fairness and dignity.We believe access to more sustainable,reliable and affordable energy helps to strengthen infrastructure and promotes stable prosperous societies.For example,half of Indias new wind energy generation capacity in 2022 was powered by GEs locally developed and manufactured 2.7-132 wind turbine that is ideal for Indias low wind speed regime.A major portion of the additional 900 MW was set up to help industries in their decarbonization journey and has the potential to generate enough electricity to power over 290,000 Indian households.The 2.7-132 turbine was developed by engineers at our John F.Welch Technology Center in Bengaluru,and is manufactured at GEs multimodal factory in Pune in western India,with blades being manufactured at LM factories located in the states of Gujarat and Karnataka.Business and Priority Alignment Human Rights Culture of IntegrityLearn More63 Culture of Integrity104 Our Commitments:Human Rights2021 GE Human Rights ReportThe scale of our operations,combined with our longstanding partnerships with civil society groups,industry associations and governments around the world,allow us to advance sustainability globally.We are founding members of the Global Business Initiative on Human Rights and an active member in organizations such as the Leadership Group for Responsible Recruitment and the UN Global Compact(including the Human Rights and Business Dilemmas Forum).At COP27 in 2022,GE announced our founding membership in the Corporate Coalition for Innovation&Technology toward Net Zero(CCITNZ),which will help countries meet decarbonization and climate change goals through innovation and technology.We are joined by Bechtel,GM,Honeywell,Invenergy and Johnson Controls in this cross-sector business alliance.Following the adoption by the Air Transport Action Group(ATAG)of net zero emissions by 2050 ambition,the International Civil Aviation Organization,in 2022,adopted a similar long-term net zero by 2050 goal.GE and CFM International9 are funding members with representation on the Board of Directors of ATAG.GE Aerospace is also a member of the U.S.Aerospace Industries Association,which has a similar commitment for commercial aviation manufacturers to work with airline customers and governments to achieve net zero emissions by 2050.Business and Priority Alignment Energy Transition(GE Vernova)Future of Flight(GE Aerospace)Human Rights Environmental StewardshipLearn More86 Our Commitments:Climate Change104 Our Commitments:Human Rights2021 GE Human Rights Report9 CFM International is a 50-50 joint company between GE and Safran Aircraft Engines.About This ReportThis report covers the environmental,social and governance(ESG)activities of GE,primarily for 2022.In certain places,it also describes how we are propelling GE into a new era as we progress our plans to launch GE Vernova,our portfolio of energy businesses,and GE Aerospace as industry-leading,global,investment-grade public companies.This report allows us an opportunity to deepen existing conversations with our stakeholders about our sustainability programs.In addition to the UN SDGs,we have considered three key sustainability reporting frameworks as we developed this report:(1)the Task Force on Climate-related Financial Disclosures(TCFD)framework,(2)industry-specific standards from the Sustainability Accounting Standards Board(SASB)and(3)the Global Reporting Initiative(GRI)Standards(Core).TCFD,SASB and GRI indices can be found here.GEs Greenhouse Gas(GHG)Inventory follows the World Resources Institute/World Business Council for Sustainable Development(WRI/WBCSD)Greenhouse Gas Protocol:A Corporate Accounting and Reporting Standard,Revised Edition(the Protocol).GE utilizes the Protocol for all definitions,assumptions and calculations discussed in this document unless explicitly stated otherwise,reporting under the“operational control”approach.To learn more about our Greenhouse Gas Inventory and Energy Inventory process methodology,see Appendix I in our 2022 Sustainability ReportAppendices.As described below on page 51,the GE Board of Directors(Board)exercises oversight and provides direction on GEs sustainability strategy,and the Governance&Public Affairs Committee in coordination with the Audit Committee oversees external reporting on sustainability matters,including this report.While the contents within this report have not been externally assured,both internal and independent external resources have reviewed the information and data within for quality,completeness and accuracy.On January 3,2023,GE completed the previously announced separation of its healthcare business into a separate,independent publicly traded company,GE HealthCare Technologies,Inc.(GE HealthCare).This report covers GE Vernova and GE Aerospace only,except where otherwise noted.GE HealthCare will be releasing its own 2022 sustainability report.GE 2022 SUSTAINABILITY REPORT|11 10|GE 2022 SUSTAINABILITY REPORT Key Metrics:Our Performance and PrioritiesAs an active participant and signatory to the UN Global Compact since 2008,we understand we play a role in helping achieve a better future for all by creating a more sustainable world.To put this in action,we apply the UN Guiding Principles on Business and Human Rights to help frame our program and practices.Our ESG performance in 2022 and priorities for 2023 and beyond align with the identified UN Sustainable Development Goals(SDGs)to help address the identified societal challenges.In 2022,we are proud the suite of our key ESG metrics trended in positive directions.On January 3,2023,GE completed the previously announced separation of its healthcare business into a separate,independent publicly traded company,GE HealthCare Technologies,Inc.(GE HealthCare).This report covers GE Vernova and GE Aerospace only,except where otherwise noted.GE HealthCare is included in this section,the 2022 Key Metrics:Our Performance and Priorities.TOPICBASELINE202020212022UN SDGFinancial Performance($M)Total Revenues$75,833$74,196$76,555 Adjusted Revenues1$72,969$71,090$73,602 Profit(loss)(GAAP)2$5,970$(3,683)$1,412Adjusted Profit1$2,246$4,608$5,835 CFOA (GAAP)23$1,025$888$5,864Free Cash Flows1$635$1,889$4,758 Total Research and Development4Diversity and Inclusion (pages 72-80)5$3,820$3,685$4,242 GE U.S.Workforce,all employeesTotal Race&Ethnic Minority624.1$.2%.2%Asian8.7%8.5%8.5%Black/African American6.8%6.7%7.1%Hispanic/Latinx6.5%6.8%7.3%American Indian/Alaskan Native0.3%0.3%0.3%Native Hawaiian/Pacific Islander0.2%0.1%0.2%Multiracial1.6%1.7%1.9%Disability(U.S.)7U.S.Veteran Status710.1.2%3.7%3.2%Global Female Representation per Category Female Representation,All Employees21.9.3.8male Representation,Professional Employees826.2&.5&.9male Representation in Leadership926.0.2).5%Human Rights:Supplier Responsibility Program(pages 104-106)10Total Global Audits111,2861,1151,233Total Suppliers Approved121,0399661,014New Suppliers433220222Existing Suppliers553726772Supplier from AcquisitionTotal Suppliers Rejected12712644532020New Suppliers621330Existing Suppliers81314Supplier from AcquisitionTotal Findings137,3486,0316,482100Percentage of Findings per CategoryHealth&Safety2911%Environment3114%Emergency Preparedness21 %Human Rights&Labor16%Dormitory Standards1%1%1%Conflict Minerals2%1%1%Security/Other141%3%6%Audits per RegionChina4184%India28%North and South America13%Europe,Middle East&Africa9%8%8%Rest of Asia9%TOPICBASELINE202020212022UN SDGSafety(pages 82-84)Injury&Illness Total Recordable Rate150.530.600.47Days Away from Work Incident Rate160.290.320.21FatalitiesEmployees(Count)17300FatalitiesContractor Workers(Count)18443Environmental Stewardship(pages 32-35,44-47,85-88,100)Environmental PerformanceISO 14001 Sites97111148Global Penalties Paid(in$thousands)256313Spills&Releases(Count)242719Air Exceedances(Count)191013Wastewater Exceedances(Count)113518Climate Change and Energy20 GE Operational GHG Emissions(million metric tons of CO2 equivalent)(market based)212.271.901.811.63Scope 1 Emissions(million metric tons of CO2 equivalent)0.730.740.67Scope 2 Emissions(million metric tons of CO2 equivalent)(market based)1.161.070.96Direct SF6 Emissions(thousand metric tons CO2equivalent)138131105Scope 3 Net Emissions from sold products(million metric tons of CO2)(net,new units,absolute)GE Aerospace222834GE Vernova23477320GE Operational Energy Use(MWh)207,370,0005,870,0005,990,0005,670,000Total Electricity(MWh)3,040,0003,030,0002,950,000Renewable Energy Used(MWh)53,00063,100141,000Water Total Freshwater Use(billions of gallons)5.124.934.29Once-Through Cooling Freshwater(billions of gallons)1.851.691.30Lifting Our Communities(pages 108-116)($M)GE Company Contributions via GE Businesses and the GE Foundation$44.9$34.9$44.2 Employee and Retiree Contributions$16.8$9.4$9.1 Total GE“Family”Giving$61.7$44.3$53.3 Total Contributions as a Percentage of GE Revenue0.08%0.06%0.07%1 Non-GAAP financial measure.2 Generally Accepted Accounting Principles.3 Cash from Operating Activities.4 GE,customer and partner funded.5 Data representative of GEs workforce as of December 31,2022,inclusive of GE HealthCare,extracted January 12,2023.6 System exports show percentages out to several decimal points.Due to this precision,totals may not sum due to rounding differences.7 2021 first year reported.8 Professional accounts for all active non-production employees,excluding leadership.9 Leadership encompasses the most senior 1.5%of all active employees.10 Beginning with the 2020 metric year,our supply chain metrics reflect changes and improvements in GEs Supplier Responsibility Governance(SRG)program.11 The number of Total Global Audits is greater than total suppliers reviewed as some suppliers were audited twice(i.e.,desktop audit due to COVID-19 restrictions followed by on-site visits)or there were return visits to confirm corrective actions were completed.For more information on GEs Supplier Responsibility Governance(SRG)program,see pages 105-106.12 New metric reported in 2020 from Supplier Responsibility Governance program and audits.13 Findings identified vary from policy improvements to process changes.GE tracks all issues to closure with verification such issues were properly addressed.GE will suspend or terminate a relationship should the supplier fail to implement adequate measures as required by the corrective action plan.14 Other includes findings not allocated to a category or relate to quality findings identified during Supplier Responsibility Governance audit.15 Number of injury and illness cases globally per risk population year to date,based on 100 employees working 200,000 hours annually,as measured against OSHA recordability criteria.16 Days Away from Work Incident Rate uses the OSHA calculation for recordable days away from work cases(transfer or restricted cases are excluded),based on 100 employees working 200,000 hours annually.17 GE employees,leased workers,wholly owned affiliate employees and majority-owned,joint-venture employees.18 Workers under GE EHS coordination which may include GE-hired contract workers,consortium partner workers and sub-contractors.19 Increase from 2021 to 2022 due to minor,unrelated incidents across global operations.20 Per the WRI/WBCSD GHG Protocol,GE adjusts its 2019 base year GHG and energy data annually to reflect changes in structure or calculation methodology,improvements in accuracy of emission factors or activity data,and discovery of error.Interim years are not adjusted except upon discovery of significant error.21 Scope 1 and 2 emissions may not sum to total due to rounding.22 For more details on GE Aerospaces Scope 3 emissions for sold products and progress toward net zero ambition,see pages 44-47,Appendix II in our 2022 Sustainability Report Appendices.23 For more details on GE Vernovas Scope 3 emissions for sold products and progress toward net zero ambition,see pages 32-35,Appendix II in our 2022 Sustainability Report Appendices.GE 2022 SUSTAINABILITY REPORT|13 12|GE 2022 SUSTAINABILITY REPORT UkraineGEs Commitment to the People of UkraineA GE TM2500 aeroderivative gas turbine is delivered to Ukraine to provide emergency power.The resolve and courage of the Ukrainian people are an inspiration to the world.As a GE team,we proudly stand with our employees,our customers and all those impacted by the crisis.SUPPORTING THE UKRAINIAN GRIDAligning with our efforts to assist in maintaining and rebuilding Ukraines electric grid,a GE TM2500 aeroderivative gas turbine was shipped to Ukraine from Arizona on a Ukrainian Antonov cargo plane.The portable turbine was purchased by USAID,the United States governments humanitarian and foreign aid agency,to help support emergency power needs in the country.The mobile gas generator can generate enough electricity to power the equivalent of more than 100,000 Ukrainian homes and can be trucked to a location and attached to a damaged power plant,or hooked directly into the electrical grid,within a few weeks.This effort was made possible by a partnership between Ukraine and the U.S.,and GE was fortunate to contribute to this crucial cause.Learn more Ukrainian Minister of Energy German Galuschenko(right)with GE Chief Sustainability Officer Roger Martella at the Partnership for Transatlantic Energy and Climate Cooperation.SUPPORTING EUROPE AND EUROPEAN CUSTOMERSWhile the war in Ukraine is first and foremost a humanitarian catastrophe for the people in Ukraine,the Russian invasion has also caused an energy crisis,particularly in Europe.In May 2022,the European Union introduced the RePowerEU package to help address the energy market disruption caused by Russias invasion.The package is focused on saving energy,diversifying energy supply,accelerating clean energy rollout,and investment and reform measures to achieve independence from Russian fossil fuels by 2027.GE supported its customers and other European stakeholders on this significant shift.For example:Our Grid Solutions business unveiled innovative technology at the 2022 CIGRE Biennial Session in Paris,France,to showcase how we are helping address the biggest challenges facing the grid,specifically modernization,decarbonization,digitization and electrification.Learn more GE researchers developed a cutting-edge artificial intelligence/machine learning tool that could save the global wind industry billions of dollars in logistics costs over the next decade.Learn more Our Gas Power team worked with countries like Germany to evaluate current power market design and associated risks against climate target and energy security objectives.Learn more SUPPORTING UKRAINIAN COMMUNITIESThe GE family has also provided philanthropic support to the people of Ukraine,which includes more than$6 million in medical equipment,humanitarian support and contributions.Early in the conflict,GE HealthCare donated$4 million in healthcare equipment,including handheld ultrasound devices,mobile X-ray units,ventilators and patient monitors.In November 2022,GE HealthCare announced an additional$1 million donation of life-saving ultrasound and monitoring equipment to Ukraine.Learn more Through the GE Foundation,an independent charitable organization funded by GE,we made a$500,000 donation to two organizations to bring immediate and long-term support to refugees and relief organizations on the ground,including$400,000 to the International Rescue Committee and$100,000 to Airlink.Learn more Additionally,the GE Foundations Matching Gifts program enabled employees to contribute to relief efforts,doubling their support by matching their donations 1-to-1.As of May 2023,these funds increased our impact by nearly$520,000 including employee donations and matching gifts.SUPPORTING UKRAINIAN REFUGEESUnder an intensive six-month Ukraine Refugee Support program,GE offered cost reimbursements and paid time off to employees who opened their homes to refugees and helped provide necessities such as food,medicine and clothing.Approximately 360 GE employees made use of the program,amounting to more than$300,000 in reimbursements.GE VOLUNTEERS OPEN HEARTS AND HOMES TO UKRAINIANSGE employees across Europe have come together to establish a network of volunteers and design creative ways to help with the ongoing humanitarian crisis.Theyve gathered donations of food and hygiene products,supported local charities and even hosted Ukrainian families in their own homes.Learn more PART I OUR INNOVATION AND TECHNOLOGYPropelling GE into a New Era|For 130 years,people have counted on GE to“find out what the world needs and try to invent it,”as our founder Thomas Edison famously said.This has never been more important.From the first commercially viable lightbulb to the Haliade-X,the first offshore wind turbine certified at 14.7 MW,and the GE9X,the worlds largest and most powerful aircraft engine,GE has pioneered technologies spurring world-transforming changes and improving the lives of billions.2022 marked the beginning of a new era for GE.One where we are unleashing our full potential as three independent industry leaders committed to innovation and technology as our North Star.Our employees serve customers and communities in 170 countries and are passionate about solving the worlds most pressing sustainability challenges in energy and flight.This is the impact of GEevery day our people rise to the challenge of building a world that worksdriving decarbonization through the energy transition and creating a smarter and more efficient future of flight.14|GE 2022 SUSTAINABILITY REPORT GE 2022 SUSTAINABILITY REPORT|15 INNOVATION TIMELINETackling the Worlds Challenges for more than 130 YearsENABLING A BETTER QUALITY OF LIFE1879First commercially practical incandescent lampEdison invents the first commercially practical incandescent lamp.1896 X-ray machineA rich tradition of GE breakthroughs in medical imaging begins with the demonstration of stereoscopic Roentgenpictures.1910First electric rangeGE improves life in the kitchen with the first electric range.1927First home television receptionThe first home television reception takes place in Schenectady,New York,with a signal from GEs radio broadcaststation.1942First U.S.jet engine,the I-AGE builds the first U.S.jet engine,the I-A,which is used to power Americas first successful jet aircraft for military use,the Bell XP-59 Airacomet.INNOVATING TECHNOLOGIES AND REDEFINING WHATS POSSIBLE1957First U.S.licensed nuclear reactorGE reactor becomes first privately owned and operated nuclear power plant to deliver electricity to the grid in Vallecitos,California.1962Worlds first LEDBuilding on Robert Halls solid state laser,Nick Holonyak Jr.demonstrates the worlds first light emitting diode(LED)at GE Research in Niskayuna,New York.LEDs enable solid state lighting,which uses 85%less electricity than conventional lighting.1969Technologies for first moon landingGE supplies a variety of technologies for the first landing on the moon,including engineering support,test facilities and the silicone for Neil Armstrongs boots.1983MRIGE scientists develop the SIGNA 1.0 Magnetic Resonance Imaging(MRI)System,which produces images of soft tissues difficult to image by X-ray methods.1992Mars ObserverGE builds the Mars Observer for NASA,which will study Martian geology and climate while mapping the planets surface.1995GE90 aircraft engineGE introduces the GE90,the first certified jet engine to include components made of lightweight carbon fiber composites.The use of composites substantially reduces engine weight and enables higher standards for fuel burn and emissions.BUILDING A MORE SUSTAINABLE TOMORROW2002Wind power businessGE continues its focus on sustainable energy by entering the wind powerbusiness.2009VscanVscan,a handheld,pocket-sized ultrasound technology,helps doctors deliver expanded care to more people,including in rural regions.2015HA turbineGE introduces HA,the worlds largest and most efficient heavy duty gas turbine.The turbine offers industry-leading operational flexibility and builds upon the legacy of jet engine technology pioneered at GE Research during the early 20thcentury.2016Clinical Command CenterGE launches the first artificial intelligence(AI)powered,real-time optimization system at The Johns Hopkins Hospital.In 2020,the systems efficiency benefit at Tampa General Hospital was equivalent to taking 3,900 cars off theroad.CFM LEAP aircraft engineThe CFM LEAP1 engine application for single-aisle aircraft entered service with the first ceramic matrix composites and 3-D printed parts in the hot section of a commercial aircraft engine.The engines unique design and materials make it 15%more fuel efficient than its predecessor.It is also quieter and produces fewer emissions.2018Leading nuclear redesignGE Hitachi Nuclear Energy is selected by the U.S.Department of Energy to lead a team simplifying nuclear reactor design,reducing plant construction costs and lowering operations and maintenance costs for the BWRX-300,a 300 megawatt electric(MWe)small modular reactor.2019Offshore wind turbineThe first Haliade-X wind turbine prototype is installed in Port of Rotterdam in the Netherlands.In 2021,Haliade-X became the industrys first 14 MW offshore wind turbine.2020GE9X aircraft engineWith some of GEs most advanced engine technologies,the GE9X is certified and designed to deliver up to 10%greater fuel efficiency than its predecessor,with nitrogen oxide(NOx)emissions 55low current regulatory requirements.2021EdisonEdison Digital Health Platform is a vendor-agnostic hosting and data aggregation platform in development with an integrated AI engine.It will enable hospitals and healthcare systems to effectively deploy the clinical,workflow,analytics and AI tools to support the improvement of efficiency and care delivery.2022Onshore windGE introduced its next-generation 3.4 MW onshore wind turbine.Designed specifically for North America,it delivers high-capacity factor with balance of plant simplicity,improved logistics and reliable,bankable performance.2023World-first grid orchestration softwareGE launched GridOS,the worlds first end-to-end software portfolio designed to help create the clean energy grid of the future.The platform and application suite enables secure and reliable grid management while delivering the resiliency and flexibility needed by utilities worldwide.1 The LEAP engine is a product of CFM International,a 50-50 joint company between GE and Safran Aircraft Engines.LEAP is a registered trademark of CFM International.16|GE 2022 SUSTAINABILITY REPORT GE 2022 SUSTAINABILITY REPORT|17 Innovating Solutions for the Worlds Most Pressing ChallengesElectrification and DecarbonizationClimate change is an urgent global priority.Atthe same time,energy demand is increasing,the importance of energy security is elevated,and nearly 775 million people are without access to reliable power.As a company whose technology helps generate approximately 30%of the worlds electricity,we have a responsibility to lead the industrys decarbonization efforts and help solve the trilemma of delivering more sustainable,reliable and affordable energy.GE Vernova is committed to building and delivering state-of-the-art technology to help reduce emissions today while investing in breakthrough technologies for a lower carbon future.Our energy businesses provide powerful,integrated solutions with the most innovative onshore and offshore wind turbines,most efficient gas turbines,as well as advanced technology to modernize and digitize electrical grids.Beyond delivering technology the world needs today,we are equally focused on the important role of building the breakthrough technologies the world will need in the future,including small modular nuclear reactors,carbon capture,utilization and sequestration(CCUS),and low and zero carbon fuels,such as hydrogen,for new and existing gas plants.Unless otherwise noted,statistical references to“GE Vernova”refers to the sum of data and information from GEs Renewable Energy&Power reporting segments,without giving effect to eliminations and corporate adjustments.On a stand-alone basis,GE Vernova will include GEs portfolio of energy businesses and its Digital business.1 GE,customer and partner funded.2 Jointly developed with TerraPower.RENEWABLE ENERGYMISSION Making renewable power sources more affordable,reliable and accessible for the benefit of people everywhereUNITS Onshore Wind,Offshore Wind,Grid Solutions Equipment and Services,HydroSolutions,Hybrids SolutionsINSTALLED BASE 54,000 wind turbines and 7,500 hydro units equipped with GEtechnology,representing 400 GW of renewable energyEMPLOYEES 36,0002022 REVENUE$12,977M2022 R&D$540M1TECHNOLOGY SPOTLIGHT The first commercial scale offshore wind installation in the U.S.,Vineyard Wind 1,will be powered by GEs Haliade-X turbines,the only 12 MW offshore wind turbine that has been operating for over three years and is helping accelerate offshore wind growth in North America and Europe.GEs newest 3.4 MW onshore wind platform offers next generation innovation,ease of installation and reliability to bring more renewable energy to more places.GEs state-of-the-art high voltage direct current(HVDC)transmission system will transmit power from the Sofia Offshore Wind Farm,one of the worlds largest offshore wind farm projects,which will generate enough renewable energy to meet the electricity needs of almost 1.2 million average U.K.homes once operational.GEs pumped storage solutions represent more than 30%of the worlds pumped storage plants and more than 6,000 MW of projects are under development around the globe to create a path for more sustainable,reliable and cleaner energy generation.POWER MISSION Powering lives and making electricity more affordable,reliable,accessible and more sustainableUNITS Gas Power,Steam Power,Power Conversion,Nuclear&OtherINSTALLED BASE 7,000 gas turbines,representing 800 GW of gas power;41 nuclear power plants worldwide representing 40 GW carbon free power generation;over 1,200 hybrid and electric ship power systemsEMPLOYEES 32,0002022 REVENUE$16,262M2022 R&D$383M1TECHNOLOGY SPOTLIGHT World-record setting HA and Aeroderivative turbines are the most efficient gas turbines and key force multiplier to accelerate decarbonization.Leading Arabelle steam turbines in 53 GW of existing nuclear fleet generate 2%more power output than traditional configuration with 99.96%reliability.Developing advanced nuclear technology,like the BWRX-300 small modular reactor and Natrium,will provide carbon free electricity during operation,dependable base load and flexible capacity helping customers meet energy security and decarbonization goals.2 AEROSPACEMISSION Providing customers with engines,components,avionics and systems for commercial,military,business and general aviation aircraft,and a global service network to support these offeringsUNITS Commercial Engines and Services,Military,Systems&OtherINSTALLED BASE 40,900 commercial aircraft engines and 26,100 military aircraft engines3EMPLOYEES 45,0002022 REVENUE$26,050M2022 R&D$1,965M1TECHNOLOGY SPOTLIGHT The worlds largest and most powerful aircraft engine,the GE9X,is also the most efficient engine we have ever built on a per-pounds-of-thrust basis.The culmination of our renewed commercial engine product line,the GE9X is designed to deliver up to 10%greater fuel efficiency than its predecessor,with emissions of nitrogen oxides(NOx)55low current regulatory requirements.The CFM LEAP engine for single-aisle aircraft features the first ceramic matrix composites(CMCs)and 3-D printed parts in the hot section of a commercial aircraft engine.The engines unique design and materials make it 15%more fuel efficient and produce 15wer emissions than its predecessor.4 GE9X jet engine on GE Aerospaces flying test platform.Future of FlightGE Aerospace is helping define flight for the next generation with industry-leading technology to reduce GHGemissions.Advancements in aerodynamics,engine architecture and materials technology for GE and CFM International5 product lines have resulted in todays aircraft engines consuming 40%less fuel and emitting 40%less CO2 than engines manufactured in the 1970s and 1980s.However,we cannot be satisfied with the pace of progress from the past.We are currently developing the next suite of engine technologiesincluding advanced architectures such as open fan,hybrid electric and electric propulsion concepts,and advanced thermal management conceptsthat offer the potential to achieve at least a 20ditional improvement in fuel efficiency compared to todays state-of-the-art,single-aisle aircraft engines.For example,GE Aerospace and Safran unveiled a bold technology development program in June 2021 called the CFM RISE (Revolutionary Innovation for Sustainable Engines)Program,which will demonstrate and mature a range of new,disruptive technologies for future engines that could enter service by the mid-2030s.GE Aerospace is also supporting industry initiatives to approve and adopt 100%Sustainable Aviation Fuel(SAF)and is partnering on a flight demonstration program to test zero carbon hydrogen fuel combustion.63 Including GE and its joint venture partners.4 CFM International is a 50-50 joint company between GE and Safran Aircraft Engines.LEAP is a registered trademark of CFM International.5 CFM International is a 50-50 joint company between GE and Safran Aircraft Engines.6 CFM International is a 50-50 joint company between GE and Safran Aircraft Engines.RISE is a registered trademark of CFM International.18|GE 2022 SUSTAINABILITY REPORT GE 2022 SUSTAINABILITY REPORT|19 LEADING THE ENERGY TRANSITIONElectrification and DecarbonizationGEs portfolio of energy businesses,now called GE Vernova,is helping the energy sector solve for the energy trilemma of sustainability,reliability and affordability.As a company whose technology helps generate approximately 30%of the worlds electricity,we have a meaningful role to play in the energy transition and a strategic imperative to electrify and decarbonize the world.In 2023,there is tangible momentum to solve climate change and propel the energy transition forward.In the United States,the passage of the Inflation Reduction Act(IRA)and the Infrastructure Investment and Jobs Act(IIJA)provides policy support and tax credits designed to accelerate the energy transition and energy security.SCOTT STRAZIKCEO,GE Vernova As we work to decarbonize the energy sector with urgency,2022 elevated the importance of energy security with unexpected and painful clarity.From extreme weather events globally,the Russian invasion of Ukraine and global economic retrenchment,energy security has emerged to join aspects of the energy trilemma as the most critical elements for successful energy ecosystems.At GE Vernova,we see the goals of decarbonization and electrification as mutually inclusive.Any progress in advancing the energy transition and combatting climate change must also advance energy security at the same time.These policy and secular industry tailwinds will unlock a massive ramp of investment and execution,beginning now and increasing in the coming decade of actionand GE is uniquely positioned to work with our customers to lead this effort.GE believes the energy transition will require increased decarbonization and electrification of the power generation sector lowering the carbon intensity of electricity itself as other sectors such as heavy industry,transportation and buildings look to the grid to achieve their decarbonization goals.Gains in lower carbon power generation from wind,solar,nuclear,sequestered or hydrogen-powered gas turbines,hydroelectric power or other sources also rely on proper investment in the grid system to ensure we are locking in progress toward both goals.This electrification imperative is elevating the importance of investment in the electricity grid system itself,including both hardware and software enhancements,to deal with added stresses and opportunities to manage the variability of more renewable electrons,growing threats to the grid and increasing energy demand worldwide.GE Vernova is being built as a company to lead the energy transition and is on track to separate from GE sometime in early 2024.GE Vernova will be guided by its purpose statementthe energy to change the worldand is on the front lines of combatting climate change.GE Vernova will lead this effort through a dedicated board of directors,focused investor base and unified R&D mission.As a company,GE Vernovas businesses will include Power,Wind and Electrification,which will include our Digital business,reflecting the macrotrends present in our industry and our broader conviction that the energy transition will require a diverse suite of technologies and solutions.Within Power,our focus will be on delivering the reliable,dispatchable and increasingly sustainable electricity the world requires across our Gas Power,Hydro Power,GE Hitachi Nuclear Energy and Steam Power businesses.These businesses support technologies that provide a sizable percentage of the worlds dispatchable electricity capacity today and will continue to focus on decarbonizing and meeting the rapidly growing demand for electricityexpected to double by 2050.Importantly,these businesses include critical energy transition breakthroughs we must realize,from small modular nuclear reactors and hydrogen fuels,to carbon capture and gas turbine efficiency upgrades.Retooling and retrofitting thousands of power plants to provide reliable,lower-emitting electricity will require years of dedicated effort to extend the lives of these essential assets.For Wind,our focus will be to restore the financial vitality and stability of this business while meeting the unprecedented growth in demand for onshore and offshore wind turbines over the coming decades.At GE,we begin with the fundamental principles by leading first with safety and then with quality and we are doing so in Windparticularly as we move into the industrys ramping growth in the coming years.Whether working at heights or in our manufacturing settings,safety comes first for our team,our customers and our suppliers as wind energy moves toward greater industrialization,cost discipline and enhanced supply chain rigor to continue to grow stably to meet the climate challenge.Next,product quality means ensuring these machines run and produce the carbon free megawatts we need for years to come;to that end,we announced were simplifying and standardizing our onshore wind portfolio into what we call workhorse products,so we and our suppliers can implement more repeatable manufacturing processes,and thereby enhance overall product quality and reduce cost.To grow,we must ensure the long-term stability of the ecosystem of wind energy and position ourselves to deliver these crucial technologies at the massive scale that will be required.Electrification is often understated as a keystone of the energy transition;without massive investment in both the hardware and software infrastructure of the grid system,the necessary changes to generation will not be possible.At GE Vernova,our Electrification business will be focused on bringing together the innovations of the latest software to manage,monitor and improve the grid.As industries turn to electrification as a decarbonizing element,we must ensure the grid can reliably meet this added stress with enhanced resilience.For Digital,we deliver the platforms and intelligent applications necessary to accelerate electrification and decarbonization across the energy systemfrom where power is created,to how it is orchestrated,to how it is consumed.More than 20,000 customers around the globein industries such as energy,manufacturing and aviationuse our software to help plan,manage and optimize operations today for a more sustainable tomorrow.In 2022,we introduced GE Vernova to the world.Our efforts this yearand through the planned spin-off as an independent company in 2024will set up this energy transition leader to operate from a position of strength and deliver for our customers and communities.Our sustainability vision is to power the transition to a low carbon,resilient and fairer world.We believe our own carbon intensity,including efforts to reduce our Scope 1,2 and 3 emissions,will be a core key performance indicator of our own success as abusiness.We pursue these efforts not because we are compelled to,but because we must.We believe the electrification and decarbonization of the world is a noble cause.We must slow and ultimately reverse the effects of climate change.We think this is one of the worlds greatest challenges and,with it,one of the worlds greatest investment opportunities.To GE Vernovas customers,employees and stakeholders,we appreciate your support and full engagement in this generational challenge and opportunity.We look forward to leading with you.Our Technologies TodayAs a company whose equipment helps generate approximately 30%of the worlds electricity,we take seriously our role to lead the industrys decarbonization progress and help solve the trilemma of delivering more sustainable,reliable and affordable energy.THE ENERGY TRILEMMAThe energy trilemmaReliable(Resilient&Secure)AffordableSustainableOur energy businesses provide powerful,integrated solutions with some of the most innovative onshore and offshore wind and hydropower turbines,most efficient gas turbines,as well as advanced technology to modernize and digitize electrical grids.We strongly support the Paris Agreement commitments and other ambitious targets to reduce energy sector emissions.At GE,we are leading by example.We are making progress to become carbon neutral in our own operations by 2030(Scope 1 and Scope 2 emissions)and we set a further ambition for GE to be a net zero company by 2050 for the Scope 3 emissions from the use of sold products.For more information on the steps we are taking,see pages 86-88.GEs products and services are crucial to helping the world decarbonize.As utilities,power producers,grid operators and policymakers around the world set their own decarbonization goals for the power sector,GEs diverse offerings will help them achieve their targets.To that end,we are helping to reduce emissions today and driving deeper decarbonization by:Deploying renewables as fast as possible.We offer one of the broadest renewable energy portfolios in the industry and help grow capacity as rapidly as possible by continuing to bring down the cost of onshore and offshore wind energy and leveraging our offerings in battery storage and hydropower.Accelerating emissions reductions with state-of-the-art gas turbines.We look to the most efficient gas turbine technologywith strong methane controls on upstream developmentas providing a solid foundation that becomes a force multiplier for building a renewable energy infrastructure and a destination technology for certain markets in the energy transition.Supporting the existing global nuclear fleet.With innovative digital solutions and technology upgrades,we are increasing carbon free output while reducing costs.Modernizing,decarbonizing and digitizing the grid.We are modernizing the physical grid to enable the integration of more renewable energy,while meeting increased demand.We are also reinforcing the network to withstand the growing threat of more severe weather and cyber risks.Our software is also essential to building a modern and clean energy grid.For example,GridOSthe worlds first grid software portfolio designed for grid orchestrationintegrates energy data,network modeling and AI-driven analytics together across the grid to power a suite of composable applications that enable secure and reliable orchestration of electrons from generation through consumption.Innovating breakthrough technologies.GE is working with customers and partners to innovate a wide range of breakthrough technologies for a lower carbon future,including hydrogen as a fuel,carbon capture and sequestration systems,and small modular nuclear reactors to accelerate the energy transition.Our Ambition to Achieve Deep Decarbonization While Strengthening Power.We Can Succeed with These Mutually Achievable Goals.RAPIDLY REDUCE EMISSIONSDrive energy sector emissions down as quickly as possible by:Accelerating renewables to the fullest,fastest extent.Utilizing gas with methane controlsas a force multiplier for renewables.Innovating hydrogen and carbon capture to decarbonize gas.Developing small modular reactor and other breakthrough technologies.Enable more renewable deployment.Increase resilience from growing threats.Provide near-term jobs,economic opportunity.INCREASE GRID RESILIENCE:Decarbonizing energy and increasing grid resilience are mutually achievable through physical and digital solutions that:20|GE 2022 SUSTAINABILITY REPORT GE 2022 SUSTAINABILITY REPORT|21 GEs energy businesses work together toward meeting the worlds energy demand with less carbon intensity over time.Power includes Gas Power,Hydro Power,Nuclear and Steam Power.Gas Power is engineering advanced,efficient natural-gas-powered technologies and services,along with decarbonization solutions that will help electrify a lower carbon future.Hydro Power offers advanced technologies that harness the power of water to deliver reliable power to the worlds largest economies and remote communities.Nuclear is one of the worlds leading providers of advanced reactor technology,fuel and nuclear services.Steam Power is delivering a broad portfolio of technologies and services that help nuclear,industrial and coal power plants deliver reliable power as they transition to a lower carbon future.Wind includes Offshore Wind,Onshore Wind and Wind Turbine Blades.Offshore Wind is one of the worlds leading offshore wind energy and services provider,with proven performance up to 14MW.Onshore Wind is harnessing onshore wind energy potential with a comprehensive family of smart,modular turbines that are uniquely suited for a variety of wind environments.LM Wind Power is an industry-leading designer and manufacturer of advanced,high-quality,reliable rotor blades for onshore and offshore wind turbines with a global manufacturing footprint and blade services solutions.Electrification includes Grid Solutions,Power Conversion and Solar&Storage Solutions.Grid Solutions is a global provider to power utilities and industries for the critical equipment,systems and services they need to bring power reliably and efficiently from the point of generation to the point of consumption.Power Conversion is applying the science and systems of power conversion to help drive the electric transformation of the worlds energy infrastructure.Solar&Storage Solutions is integrating innovative technologies in renewable generation and energy storage to deliver flexible,reliable and intelligent solutions to enable the energy transition.Digital is enabling the digital transformation with software that accelerates grid modernization and decarbonization across the energy ecosystem from where power is created to where it is consumed.POWER HIGHLIGHTS SUPPORTING EMERGENCY POWER AND LOWERING EMISSIONS EVEN DURING EXTREME WEATHEREVENTS GE Vernovas portable aeroderivative gas turbines offer a range of possibilities to address growing energy security needs and risks to grid reliability.They can run on natural gas or diesel,as well as Sustainable Aviation Fuel blends.Six GE Vernova LM2500XPRESS aeroderivative gas turbines are expected to provide nearly 200 MW of fast emergency power to the Electricity Supply Boards existing North Wall Power Plant in Dublin,Ireland.The temporary reserve power plant will provide backup power for the next three years winter seasons(2023-2026).Learn more DRIVING THE COAL-TO-GAS TRANSITION TO REDUCE CO2 EMISSIONS Powered by two new GE Vernova 7HA.02 gas turbines and two GE Vernova H65 generators,Tampa Electric Company(TECO)completed the first phase of its coal-to-gas modernization strategy at the BigBendPower station in Florida.By replacing existing 50-year-old,coal fired units at the 1,090 MW power plant and switching to natural gas,Big Bend Power Stations CO2 emissions will be reduced by 67%per MWh of electricity generated,and lower emissions levels for other pollutants such as mercury,nitrogen oxides,sulfur oxides and particulate matter.Learn more DELIVERING MORE AFFORDABLE AND CLEANER ENERGY As part of GE Vernovas commitment to helping our customers deliver more affordable and cleaner energy,weve invested in the GT26 High Efficiency(HE)Upgrade to provide up to a 2%combined cycle efficiency improvement.The upgrade lowers the fuel cost per MW and reduces CO2 by 5%,which is equivalent to taking 16,500 cars off the road.The upgrade also increases the capability of the GT26 to burn up to 40%hydrogen fuel,providing future potential to further reduce the carbon footprint.Learn more ENABLING RENEWABLES INTEGRATION WHILE MAINTAINING STABLE POWER The 1,260 MW Dania Beach Clean Energy Center is powered by two of GE Vernovas 7HA.03 gas turbines,the largest,most efficient and flexible 60 hertz gas turbine currently in operation globally.Dania Beach Clean Energy Center replaced an aging power plant and now produces the equivalent electricity needed to power 250,000 South Florida homes with around-the-clock power,reducing emissions by 70%compared to the previous plant,and helping enable Florida Power&Light Company(FPL)to continue Americas largest solar expansion.Learn more WIND HIGHLIGHTS HALIADETM-X OFFSHORE WIND TURBINES GE Vernova has invested more than$400 million to develop its offshore wind turbine.Our Haliade-X prototype in the Netherlands has been operating for over three years and is the first turbine to receive a full type certificate at 14.7 MW.Learn more The ability to produce more power from a single turbine means fewer turbines need to be installed at each wind farm.The Haliade-X 14 MW will make its commercial debut at the Dogger Bank C offshore wind farm,more than 130 kilometers off the northeast coast of England.The Haliade-X is also the only 12 MW offshore wind turbine that has been operating for over three years,giving us tangible experience operating the turbine in different conditions at different output levels.Learn more In December 2022,we signed a strategic partnership agreement with Hyundai Electric to work together to serve the South Korean offshore wind market.Under the terms of the agreement,Hyundai Electric will serve as a manufacturing associate to help localize assembly of the Haliade-X offshore wind turbines and generators in South Korea.The agreement will enhance our ability to serve local customers,create significant local economic benefits,and establish a local supply chain ideally suited to serve the growing offshore wind market in South Korea and potentially beyond in the Asia Pacific region(APAC).Learn more ONSHORE WIND GE Vernovas newest onshore wind turbine was introduced in 2022.Designed specifically for the North America region,the 3.4 MW turbine is based on GE Vernovas bestselling 2 MW platform,which recently surpassed 30 GW of installed base globally.Offering next generation innovation,the turbine brings continued reliability and utilizes GE Vernovas revolutionary two-piece blade,designed to improve logistics and installation.From siting to execution to operations,this turbine is designed to offer customers continued quality and stability,helping them capture even more wind energy while also improving wind farm economics.Learn more ELECTRIFICATION HIGHLIGHTS GEs ROLE IN CONNECTING RENEWABLE ENERGY TO THE GRID GE Vernovas Grid Solutions business and BOND Civil&Utility Construction have been awarded a contract from Empire Offshore Wind,a joint venture between Equinor and bp,to supply a state-of-the-art digital onshore substation and high voltage electrical systems for the offshore substation for Empire Wind 1,one of New Yorks first offshore wind farm projects.Once operational,the wind farm will power more than 500,000 New York homes.Learn more HELPING IMPROVE GRID STABILITY IN GERMANY GE Vernovas Static Synchronous Compensator(STATCOM)technology will improve grid stability in Germany following an order from transmission system operator,50Hertz Transmission GmbH,for one of their substations in Bad Lauchstdt.This technology provides grid operators with reactive power compensation and an improved range of operational voltage,reducing the risk of grid disruptions.Learn more POWERING FORWARD TO BRING U.S.LNG TO THE GLOBAL MARKET GE Vernovas Grid Solutions and Power Conversion businesses will supply technology to energy technology company Baker Hughes for Venture Globals Plaquemines liquefied natural gas(LNG)export facility.GE Vernovas technology will power the overall liquefaction system Baker Hughes is providing for the Plaquemines export facility,Venture Globals second project to bring U.S.LNG to the global market.Learn more 22|GE 2022 SUSTAINABILITY REPORT GE 2022 SUSTAINABILITY REPORT|23 DIGITAL HIGHLIGHTS TAMPA ELECTRIC ACHIEVING EMISSIONS REDUCTIONS GOALS WITH SOFTWARE For Tampa Electric Company(TECO)to achieve its emissions reductions goals by 2025,solar is going to need to play a major role.The utility serves a region without resources like wind or nuclear energy,making solar the primary energy resource for achieving lower emissions in the future.The Asset Performance Management(APM)software from GE Vernovas Digital business provides TECO with data on the status of all their solar plants.It also allows TECO to prepare for weather events that may impact solar generation,like cold fronts and cloud cover.In addition,APM helps inform facility maintenance timetables and equipment availability across the utilitys fleet of utility-scale solar plants,resulting in less uncertainty and more reliability.Learn more TRANSFORMING SORGENIAS APPROACH TO MAINTENANCE The leading digital energy company in Sorgenia,Italy,uses our Asset Performance Management Reliability application deployed in the cloud to maximize the reliability and efficiency of its state-of-the-art,combined-cycle gas turbine power plants.According to the company,the software has given them insights to better plan maintenance around annual outages,specifically at their Termoli and Modugno plants.Doing so allows them to avoid unnecessary downtime on critical assets such as heat recover steam generators or condensers,which in turn allows them to operate at higher efficiency and satisfy their more than 450,000 customers need for electricity.Learn more HELPING UTILITIES ACCELERATE GRID MODERNIZATION Our Digital business signed a multiyear strategic collaboration agreement with Amazon Web Services,Inc.(AWS)aimed at helping utilities accelerate grid modernization.Through this collaboration,we plan to deliver intelligent grid orchestration solutions to help utilities digitally transform,modernize the power grid and accelerate the energy transition.With GridOS,our new grid operating software portfolio,we are working with AWS to enable cloud solutions designed to be secure,quick to deploy,and reduce operational and infrastructure costs for energy organizations.New Zealand-based Vector Limited has successfully deployed our Advanced Distribution Management Solution(ADMS)on Amazon Web Services Outposts.Learn more Thought Leadership in the Energy Transition DRIVING THE FUTURE DOCUMENTARY In 2022,we introduced a new three-part video series on the role hydropower plays in the energy transition called Driving the Future.For a look at what we are already doing with hydropower,renowned Swiss adventurer and clean energy advocate,Bertrand Piccard,teams with science journalist,Sam Pauly,to set out on an epic 1,000 kilometer journey across Switzerland.The duo travel the whole way using only electric vehicles and visit several of the hydropower plants that produce the countrys green electricity.This isnt simply a story about zero carbon vehicles and hydropower;its about reimagining the way we live,travel and consume,applying existing technology and accelerating the energy transition so we can overcome humanitys greatest challenge.Bertrand and Sams Swiss adventure proves the potential of this approach.AsBertrand puts it,“change is needed,and the solutions are already in our handsthe race is on!”Watch here ACCELERATOR HIGHLIGHTS GE ENERGY FINANCIAL SERVICES:PUTTING ITS MONEY IN ITS MISSION AS A LEADING INVESTOR IN WIND POWER PROJECTS THAT HELP DECARBONIZE THE GRID Achieving 2050 net zero goals cannot be done without simultaneous electrification and decarbonization.For example,zero carbon emitting electric vehicles and heat pumps can have a reduced impact if they are powered by fossil fuel electricity sources.To accelerate progress,we must lead by bringing more renewable energy generation sources online as fast and as feasible as possible.Beginning in 2006,GE Energy Financial Services(EFS),GEs energy investment franchise,was at the forefront of growing a very nascent wind industry and built a track record of investing more than$19 billion in renewable energy projects globally.This includes the delivery of over 125 million MWh of carbon free electricity from wind power to the U.S.grid,measured through earned production tax credits7,which now powers the equivalent of 735,000 homes per year.8 EFS is a leading tax equity investor in U.S.wind power with a portfolio today of over$1 billion,including 2022 investments that are estimated to generate over 5.7 million MWh8 of carbon free electricity.It is through activity like this that the wind industry collectively grows,expands and evolves.Each carbon free MWh generated by our investments helps create a cleaner electrical grid to be used by and for the benefit of all people.EFS has been and continues to be focused on this shared customer goal through its investment activity supporting the development,construction and operation of wind power generation projects.The passage of the Inflation Reduction Act is expected to result in an imbalance in supply and demand for tax equity,which we view as a barrier to growing the renewable energy industry and accelerating decarbonization efforts.EFS is working to bridge the financing gap for customers through direct investments,strategic partnerships and relationships that enable the financing and successful commercialization of renewable energy projects.Since inception,EFS has invested over$19 billion in renewables globally.GE ENERGY CONSULTING GEs power systems experts work with our customers to help solve some of the worlds toughest technical and economic problems,enabling technology integration and shaping the energy transition.With our cross-company resources,GE Energy Consulting is able to serve a diverse global client base with a strong local presence.From decarbonization planning and renewable technology integration,to energy investments and grid stability studies,our dedicated team of resources from across GE Vernova dive into the current and future challenges of our energy infrastructure,the implications of renewable penetration and the latest energy supply and delivery technologies.Learn more One recent example is the“Small Clean Power Plant Adaptation Study”for the New York Power Authority(NYPA).GE Energy Consulting and the Energy and Environmental Economics,Inc.(E3)examined the potential for battery storage development at NYPAs Small Clean Power Plant(SCPP)sites.The analysis builds off a growing body of literature that has examined opportunities to replace peaker plants with battery storage and detailed a first-of-its-kind approach to examining storage replacement opportunities over time as New York makes progress towards achieving the states Climate Act requirements.Learn more CUTTING CARBON PODCAST One of the most dynamic and informative conversations taking place on climate change technology is GEs Cutting Carbon podcast where co-hosts Dr.Jeffrey Goldmeer and Brian Gutknecht talk through the factors at play today as well as the journey ahead.The award-winning podcast sits on the iHeartRadios list of top podcasts in the“climate”category and has reached nearly 100,000 downloads since its inception.In 2020,we launched the podcast with our first four seasons focusing on climate change and the basics of decarbonization9,the pathways to decarbonize gas,complementary technologies contributing to the energy transition and how regions around the world are driving decarbonization.In December 2022,we launched season six to dive deeper into the energy transition landscape,examining the critical role infrastructure plays in supporting and sustaining innovative technologies.Over the course of the season,the team talked through Independent System Operators(ISOs)being the air traffic controllers of the power generation world,took a look back to move forward with lessons learned over the years from the digital grid,explored the worlds largest source of energy storage with pumped hydro,learned how captured carbon makes its way to a storable location,recognized the important role water plays in our energy systems,and tied it all together by examining the relationship between government policy and the energy industry.Listen here 7 Certain renewables projects qualify for federal income tax credits that are calculated based on electricity production measured in kWh;as evidenced by our tax filings,EFS has earned production tax credits for its investments over the years for 125 million MWh.8 Based on average U.S.home usage of 10,632 kWh per year(Source:US Energy Information Administration).24|GE 2022 SUSTAINABILITY REPORT GE 2022 SUSTAINABILITY REPORT|25 Innovating Breakthrough Technologies GE Vernova has one of the most important roles to play in delivering the technology the world needs to make progress today to reduce greenhouse gas emissions while simultaneously innovating breakthrough technologies to succeed in the energy transition.The achievement of deep decarbonization goals over the coming decades is likely to depend in part on technologies which are still being developed and have yet to be deployed or widely adopted.Together with our partners,we are working on hydrogen as a fuel,carbon capture and sequestration,advanced nuclear power and additive manufacturing.GEs history of innovation has prepared us to support the global energy transition in ways that are as equitable as they are efficient.DECARBONIZING GAS TURBINES THROUGH HYDROGEN AND CARBON CAPTURE ANDSEQUESTRATION GE Vernova is investing today in innovation to decarbonize gas turbines in the future.Decarbonizing a gas turbine requires the supply of a low carbon fuel(e.g.,hydrogen)and/or the capturing of carbon from the exhaust for transport offsite.GE Vernova is investing in both decarbonization pathways to ensure we have multiple solutions for our customers and the world to fulfill carbon reduction commitments.Our HA turbines can already work with up to 50%hydrogen/natural gas mix.We have more than 120 gas turbines worldwide using hydrogen blends for power generation with about 8.5 million operating hours in aggregate.Work is underway to extend the capability to 100%hydrogen in these machines by the end of the decade.There is significant and growing interest in hydrogen as a substitute for fossil fuels,driven by decarbonization goals.In 2022,we were awarded multiple funding grants from the U.S.Department of Energy(DOE)to accelerate the path towards 100%hydrogen combustion in gas turbines.In May 2022,we were awarded two projects totaling more than$12 million
2023-10-19
62页
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