A Creative Entertainment Companywith a Solid Foundation of TechnologyContents02 Sonys Purpose&Values04 Message from the CEO10 Special Feature:Increasing Content Value and Creating New Entertainment Experiences in Kando Spaces14 Value Creation Model16 Value Creation18 Key Drivers for Creating Value22 Message from the CFO26 Performance Highlights30 Sustainability34 Value Creation in Each Business 35 Messages from the Heads of the Businesses 36 Business Profiles 38 Game&Network Services 41 Music 44 Pictures 47 Entertainment,Technology&Services 50 Imaging&Sensing Solutions 53 Financial Services56 Corporate Governance64 Group Information2022 Sony Pictures Entertainment,Inc.All Rights Reserved.MARVEL and all related character names:&2022 MARVELUNCHARTED:2022 CTMG.“Lifeplanner”is a registered trademark of Sony Life Insurance Co.,Ltd.010203Evolution of the Sony Group Centered Around CreativityKenichiro YoshidaRepresentative Corporate Executive Officer,Chairman,President and CEOMessage from the CEO04Management with a Long-Term View Based on Our PurposeOur Purpose is to“fill the world with emotion,through the power of creativity and technology,”and our Corporate Direction is“getting closer to people”:the creators who create Kando and the users who experience it,as well as our employees who drive our businesses forward under our shared Purpose.Sony today is the result of a consistent managerial effort focused on Kando and people that began with our first mid-range plan in FY2012.Six Business Segments with Origins in CreativitySony has six business segments,all of which start with creativity.For the four years since I became CEO in 2018,we have been continuously investing in the growth of these segments,and we plan to continue active investment in content IP,direct-to-consumer(DTC)businesses,and technology.Over the four years since FY2018,Sony has made strategic investments of more than 1 trillion in three of our businesses Game&Network Services,Music,and Pictures including the acquisition of EMI Music Publishing in 2018,which is in the content IP area and,thus,close to creators.We also acquired Crunchyroll in 2021,which is in the DTC services area,where we connect directly to users.These three businesses have been growing continuously over the past decade,supporting creators and delivering their creations to users.The growth in these fields will play a vital role in building Sonys corporate value going forward.In FY2021,the combined sales of these three segments exceeded half of consolidated Sony sales for the first time,while their operating income accounted for two-thirds of consolidated operating income.Game&Network Services(G&NS)In G&NS,we are enhancing the creation of IP and DTC services.To create IP,we plan to continue collaborations and partnerships with third-party studios while simultaneously putting effort into reinforcing the production capabilities of our own PlayStation Studios.The segment reports over 1.8 trillion1 in sales from DTC services due primarily to the expansion of the PlayStation5(PS5TM)platform,which was introduced in 2020,and we are working to further grow the PlayStationTMNetwork(PSN),which has over 100 million2 active users per month.We have substantially revamped the PlayStationPlus(PS Plus)subscription service,and we are putting more effort into intra-Group collaborations,particularly with the Pictures and Music segments.Bungie,Inc.,which has strength in live service games,joined the Sony Group in July,2022.Going forward,we plan to expand our reach to multiple platforms beyond PlayStation by rolling out live games and first-party titles on PCs and mobile devices.1.G&NS sales via network for FY20212.As of March 2022MusicIn Music,we are aiming to become the company that is closest to artists and songwriters,providing them with support from the creative side.In the music market,which has been growing since 2014 thanks to the expansion of streaming services,the primary growth forces,aside from the major labels,are independent labels,independent artists,and diversifying distribution partners.In addition to enhancing services for independent labels through The Orchard,we are offering more support to independent artists via AWAL,which we acquired in May 2021.To strengthen relationships with artists in specific regions,we acquired Som Livre of Brazil in March 2022,started a new label in India,and are investing in artists in Africa.We provide our artists and creators with comprehensive support for all aspects of their careers,including wellness and counseling services,and a robust suite of payment/royalty management and insight tools,among other initiatives.In our business,we collaborate with distribution partners,as well as a range of platforms across areas like social media,games,and fitness,so that we can provide more opportunities for artists.PicturesIn the Pictures segment as well,support for creators and the creation and delivery of content IP are the core of our strategy.In Motion Pictures,our policy is to prioritize theatrical releases since theaters enhance the sensation of being present in the Message from the CEO05story in real time.We also find that this approach strongly motivates creators to come and work with us.The theatrical release of Spider-Man:No Way Home earned the third-largest3 cumulative box-office revenue record in U.S.history,and Morbius,released this past April,also did well,proving the high value of content based on Marvel characters and increasing our determination to further expand the world of the Sony Pictures Universe of Marvel characters.We are also putting effort into inter-business collaboration to build content value.A case in point is the success of the film Uncharted,based on a PlayStation title,which earned the third-largest3 box-office revenue in U.S.history among game-based films.Going forward,we plan to apply game IP to various media genres,including motion pictures and TV programs.As for digital streaming,we are increasing collaborations with many distribution partners,taking advantage of our position as an independent studio.While there are many communities of interest in the world,Sony focuses on delivering content directly in specific areas.A good example is anime,which spans several of our business segments and represents IP that we expect to expand in a multi-directional manner.In March 2022,we merged the Crunchyroll and Funimation services,affording a broader content lineup enabling us to enhance our anime DTC services.We also value culture-specific DTC services rooted in regional communities,and are working to further accelerate digital service businesses such as in the rapidly-growing Indian market.This illustrates Sonys long-term vision of directly connecting with 1 billion people,so that we can better learn from users and get closer to their desires for specific entertainment choices.3.As of June,2022Next,I would like to touch on our initiatives in the Entertainment,Technology&Services(ET&S)and Imaging&Sensing Solutions(I&SS)businesses,which provide technology,products and services to create and experience Kando content.At the core of this area are our electronics products and CMOS image sensors.Meanwhile,through our Financial Services business we provide people with peace of mind,a prerequisite for Kando.Entertainment,Technology&Services(ET&S)In ET&S,we plan to continue to focus on television and audio products as a means of delivering Kando,and to capitalize on our strength in using technology and services that support creators.To better deliver Kando,we recently introduced the earbuds LinkBuds series,which offer the new experience of overlaying online sound on the sound of the surrounding offline world.User reviews of the product have been very positive.As for technology that supports creators,one example is Virtual Production.By combining camera and display technologies like the VENICE digital cinema camera and the Crystal LED display,which faithfully reproduces images of the physical world,and real-time image-processing technology,we are fusing the virtual and physical domains,setting creators free of time and space constraints and greatly enhancing freedom of expression.Imaging&Sensing Solutions(I&SS)Smartphone mobile devices have turned users around the world into creators.CMOS image sensors,a primary component of these devices,are the core product in our PicturesET&SI&SSFinancial ServicesG&NSMusic06Message from the CEOI&SS segment.We have invested approximately 1 trillion in this field over the last four years,mainly in equipment to strengthen capacity for image sensor production in Japan,and we hold the leading share of the continuously growing image sensor market.Meanwhile,as a growth field for the future we are building a solutions business employing automotive image sensors and other technology for safe mobility,as well as intelligent vision sensors with AI processing.Financial ServicesWe made the Financial Services business a wholly-owned subsidiary,investing approximately 400 billion in 2020.I said previously that all of Sonys six businesses originate in creativity.Sony Lifes Lifeplanner sales specialists are creators that actualize peoples needs for peace of mind.Using Sony technology,we provide convenience in daily life and support through financial services to over 8 million customers in life insurance,non-life insurance,banking and other areas.Becoming the Brand Chosen by CreatorsIn this way,all six of our business segments are centered around creativity.While the way in which content is delivered changes over time and with the evolution of technology,we believe that creativity generates Kando,and that this will continue to be the case in the future.Consequently,at Sony we are focused on the creators of Kando and the users that enjoy their creations,and strive to be chosen as their most-favored brand worldwide.Initiatives in Kando Spaces,Our Future Growth FieldWe are exploring fields that can become growth centers in terms of creation and delivery of Kando.Among those fields,we are putting special focus on the metaverse and mobility.MetaverseThe means for delivering Kando are continually evolving.The current mainstay,entertainment over the internet,is broadly diversifying too,from downloading and streaming to more social,interactive experiences.Against a backdrop of technological progress,the experience of entertainment over the network is evolving into live experiences where time and space are shared with others.When people are connected in a live networked space,derived from game technology centered on real-time CG rendering,the result is an intersection of various genres,including games,movies,music and anime.In this way,Sony considers the metaverse simultaneously a social space and a live network space,where various forms of entertainment intersect and expand.In creating this new value,we are leveraging our unique strengths.On top of that,in social and live services,which are important in the metaverse,Sony is embracing the challenge of creating and delivering Kando spaces alongside partners with extensive 07Message from the CEOknowledge and experience in these areas.In games,we plan to enhance live service games by learning from Bungie.We also plan to launch more than ten live service games from PlayStation Studios by FY2025.In sports entertainment,in collaboration with Manchester City Football Club,we are reproducing the stadium and athletes in a networked space and developing new experiences.As for music,we are working to create new live entertainment experiences,such as virtual concerts and virtual space projects,using our volumetric capture technology.MobilityBy developing the Walkman,Sony created a new lifestyle in which people could take audio with them and enjoy it anywhere.Now,we are working to turn the mobility space into a new entertainment space.The combination of mobility with information and communication technology will make the 1 billion vehicles operating on streets worldwide into services over the long term.In other words,the functions of the vehicles will be defined by software and updated through services.There are three areas where Sony can contribute with this structural change in mind:safety,made possible by technology such as CMOS image sensors and SPAD depth sensors for LiDAR;entertainment,which transforms the mobility space into a Kando space;and adaptability,where we can apply our knowledge of cloud services to support the evolution of the vehicle.Through research and development for our VISION-S electric vehicle announced in 2020,we realized that to contribute to the evolution of mobility we need to commercialize the vehicle and present it to the world,but we cannot do this on our own.To address this challenge,we signed a Memorandum of Understanding with Honda Motor Co.,Ltd.in March 2022 to form a strategic alliance,and in June the same year signed a joint venture agreement to establish a new corporation,Sony Honda Mobility Inc.,to offer high-value-added electric vehicles and mobility services.By applying Hondas development expertise in mobility,and the technology and knowledge in vehicle production it has built over decades,to the three areas where Sony can contribute,we plan to begin selling a jointly-developed electric vehicle in 2025.Technology to Support GrowthTo enable Sony to continue growing and embracing challenges,we are focusing particularly on AI and sensing technology.Sensing technology that captures the physical world and AI technology that allows learning from that world are becoming more important than ever,playing a vital role in ADAS for safe mobility,and in the audio-visual and entertainment fields where Sony has been engaged for many years.Earlier,I introduced our initiatives in Virtual Production as an example of technology that supports creators.A technology that allows us to get closer to people,on the other hand,is PlayStationVR2(PS VR2),our next-generation virtual-reality(VR)system.VR is a key aspect of the live networked space that enables people in the physical realm to enter virtual space.Other examples of technologies that leverage our sensing and AI technology include the Gran Turismo SophyTM AI racing agent,which enhances the value of experiences in the game space,and aibo,which grows by exercising its innate curiosity and interacting with people.People,Society and the Earth:Our Responsibility and ContributionSony will continue to focus on management centered around Kando.For creators to produce Kando content and for users to enjoy it,it is necessary to create a society 08Message from the CEOin which everyone can live with peace of mind in a healthy global environment.We believe it is important for us to fulfill our responsibility to society and the environment,and to contribute through our technologies and businesses.Recent examples of our efforts in relation to this responsibility include our climate change initiatives,our use of recycled plastics,and development of packaging that is conducive to recycling.In terms of our Road to Zero environmental plan,which we have been pursuing since 2010 to achieve a zero environmental footprint,we are accelerating our target of achieving carbon neutrality across the Sony Group by ten years,from 2050 to 2040,and have also moved up our target for achieving 100%renewable energy in our own operations by ten years,from 2040 to 2030.In terms of our contribution,examples include our development of new environmentally conscious materials,the SynecocultureTM initiative,and our project to protect the earth by supporting environmental monitoring using AI and sensing technology.Corporate Culture Based on Our PurposeFor Sony to continue creating value,it is essential that our Purpose is shared among our approximately 110,000 diverse Group employees.I consider our Purpose to represent a promise to our employees,and a call to walk together on the path towards Kando creation,which is the reason for Sonys existence within society.As we invest in various companies and talent,the Groups corporate culture becomes even more vital.At Sony,our Purpose is now becoming established as our corporate culture,which I believe reinforces our capacity to create value and is directly linked to increasing our corporate value in the long term.I feel our Purpose is resonating across the Group because it is consistent with our management direction,and is becoming the established starting point when we think about business strategy.Please look forward to Sony continuing to create new value based on our Purpose:to“fill the world with emotion.”09Message from the CEOSpecial Feature:Increasing Content Value and Creating New Entertainment Experiences in Kando SpacesInitiatives to Increase Content ValueSony is working to increase the value of content it creates by getting closer to creators and users,primarily through three entertainment businesses Game,Music and Pictures while promoting the creation of new entertainment experiences in the Kando space as exploration for the future.To increase the value of its content,Sony supports the work of creators who build Kando,strengthen our capacity to both forge content IP,through strategies like pro-active investment,and develop it on multiple fronts through collaborations among Sony Group businesses.From the standpoint of communities of interest,in which diverse users and creators share Kando experiences and interests,Sony is enhancing its DTC model to directly connect with and deliver content to users.Moreover,to create new Kando spaces,Sony is promoting initiatives in the metaverse and mobility as areas for future growth,making the most of its capabilities in sensing,AI and other technologies.The metaverse,a live networking space built on shared time and space with integrated social elements,offers opportunities to leverage Sonys strengths in diverse businesses and technologies to create new entertainment experiences.As for mobility,Sony is actively exploring this sphere in line with its vision of evolving mobility spaces into entertainment spaces.To ensure sustainable growth in this area,Sony will take on the challenge of contribution to the evolution of mobility while striving to provide new customer experiences and value.Example 1:UnchartedIn 2019,PlayStation Productions was established to produce film and TV adaptations of PlayStation game titles.A collaborative effort between Sony Interactive Entertainment(SIE)and Sony Pictures Entertainment(SPE),it aims to build the value of Sony content.PlayStation Productions collaborated closely with SPE and video game developer Naughty Dog to debut their first film in February 2022,Uncharted.The film,starring Tom Holland and Mark Wahlberg,has since made over 148 million USD in the U.S.and 256 million USD internationally,for a worldwide total of 404 million USD as of June 2022.It currently stands as the 3rd highest-grossing video game adaptation in the U.S.and the 4th highest-grossing video game adaptation worldwide.Enjoying tremendous support from fans around the world,it has become a new franchise for SPE.The UNCHARTED game series is an outstanding,cinematic action-adventure experience.The game series stunning locations,combat sequences and great characters made it a natural fit for film adaptation.The film adaptation was written as a new story featuring the world and characters of the UNCHARTED series,rather than an outright adaptation of the series story.This represents a good example of creators enhancing content value by taking advantage of Sonys library of rich IP.Maximizing Value by Developing Content IP in Other DomainsFrom PlayStation Productions Asad QizilbashHead of PlayStation ProductionsSonys approach relies on hiring talented filmmakers and trusting them to apply their creativity and vision when adapting Sony game IP.There is no set formula for success,but by combining a story and characters that have already proven to resonate with millions of fans,with the strong creative vision of a filmmaker,there is great potential for making magic.Because many PlayStation game IPs have titles marked by impressive stories and characters,they are considered highly adaptable to film and TV.By collaborating with SPE,we endeavor to create films and TV series that can be enjoyed by gamers and film fans alike.10Crunchyroll Acquisition to Expand Direct-To-Consumer Anime ServicesMaximizing Value by Developing Content IP in Other DomainsTo enhance DTC services by getting closer to users and learning from them,in 2017 SPE acquired Funimation,which mainly distributes and streams Japanese anime abroad,and in conjunction with Aniplex has been strengthening its services as a film-music joint venture.In August 2021,Sony Pictures also completed the acquisition of Crunchyroll,a DTC anime service provider in the U.S.,with over 5 million subscribers to video-on-demand services.Crunchyroll is a pioneer in anime-streaming services,offering ad-based video-on-demand,mobile games,events and merchandise to more than 120 million registered users in over 200 countries and territories.The acquisition expands the streaming networks available for Funimation,Crunchyroll and their content partners,and increases opportunities for anime fans worldwide to experience anime,as well as for immensely talented creators to furnish excellent content.In March 2022,SPE integrated the Funimation and Crunchyroll services to focus on creating customer experiences through providing engaging content via unified anime subscriptions.The success of the Uncharted film kicked off Sonys expansion in game IP value.PlayStation Productions currently has nine other projects in the works,including film adaptations Ghost of Tsushima and Gran Turismo,and TV series based on The Last of Us and Twisted Metal.Going forward,it will continue to pursue efforts to increase content value.Example 2:Demon Slayer:Kimetsu no YaibaAniplex,part of the Sony Music Group(Japan),adapted the graphic novel series Demon Slayer:Kimetsu no Yaiba for TV anime,which led to the theatrical release of Demon Slayer-Kimetsu no Yaiba-The Movie:Mugen Train.The film drew record box-office revenue as of May 2021 for a Japanese release,and worldwide it pulled over 40 million people into theaters,grossing over 50 billion.With a theme song by a Sony Music artist,it carried the popularity momentum forward into a video package,a console game,and another hit TV series.Having decided to produce a TV anime out of the Demon Slayer:Kimetsu no Yaiba Swordsmith Village Arc Sony continues working to build its IP value.Comment from the President of CrunchyrollRahul PuriniCrunchyroll PresidentOver the past year,the teams of Crunchyroll and Funimation have come together focused singularly on bringing fans the ultimate anime experience.We have fused 1,000 global employees across two companies who are passionate about anime,and are now translating that passion into a 360-degree experience for fans through streaming,theatrical releases,games,events,publishing and home entertainment all under the Crunchyroll brand.Fans,licensors,partners and the media have all responded positively to the direction we are heading in.We are only just getting started on accelerating the growth of anime worldwide.Koyoharu Gotoge/SHUEISHA,Aniplex,ufotableDEMON SLAYER KIMETSU NO YAIBA THE HINOKAMI CHRONICLES COMMITTEEInitiatives to Increase Content ValueFilmsTheme SongsTV AnimeVideo Games11Special FeatureAs part of its work to apply technologies to expand communities of interest in sports,music,and other entertainment fields,Sony signed a partnership agreement with Manchester City Football Club in November 2021.Their joint initiatives have begun to create a new generation of fan communities online that will help maximize fan engagement.Combining the technology of Sony Group firms and the global IP of Manchester City,Sony is working to fuse virtual and physical spaces,for which it develops attractive new content that helps Manchester City fans worldwide feel closer to the club.It is also conducting a proof of concept to establish a new fan community.Specifically,Sony plans to virtually recreate Manchester Citys home,the Etihad Stadium,in the metaverse as a forum for experiential value creation,where fans can socialize as they share their feelings of loyalty to the players and team.In terms of technology,it is making the most of the SkeleTRACK tracking system from Hawk-Eye Innovations Ltd.,which became a Sony Group company in 2011.By analyzing the motion of players and balls,and reproducing high-definition imagery in real time,it is possible to develop new content that connects the physical and virtual domains.Sony is also exploring ways to develop new services by combining SkeleTRACK-collected data with graphics technology.By integrating cutting-edge Sony technology with Manchester Citys knowledge and experience in sports and fan engagement,Sony plans to create a new live networking community in which fans from all over the world can gather to interact with other fans,share time and space together,and explore their diverse passions.Collaboration with Manchester City FC for the Next-Generation Fan CommunityFrom a Representative of the New Business Exploration DivisionHawk-Eyes Tracking SystemsMasashige KomatsuExecutive Manager,Corporate Project Promotion DepartmentBusiness Incubation PlatformNew Business Exploration DivisionSony Group CorporationSony has various advanced sensing technologies,and can utilize sensing data to create new value in collaboration with professionals in many industries and markets.One such partner,Manchester City,has an immense global fan base and closely analyzes fan engagement data.Learning from its findings and knowledge,Sony uses the data collected from tracked athletes and virtual spaces to strengthen fan engagement for the club.In this way it hopes the Virtual Etihad Stadium can be accessible by all fans together beyond times when games are actually happening.For the future,it is also considering partnerships with other clubs and broader applications of sensing technology to other media,like music and anime.Hawk-Eyes officiating services lead the sports industry,and are currently used in 25 sports at over 500 venues in over 90 countries worldwide.Their flagship optical tracking system,SkeleTRACK,acquires and analyzes data collected by tracking players and ball movement,which,when combined with their HawkVISION system,can generate 3D images that virtually reproduce the action in real time.SkeleTRACK is unique in its capacity to generate a skeletal model of each player.This allows for detailed analysis of the direction and center of gravity of each players body shift,as well as specific movement,which is then visualized through HawkVISION and used to review athletes performance and to entertain fans.Sony and Hawk-Eye are working to create new user experiences and exploring avenues to monetize the collected data,as well as to apply that data to video games and other media content.Initiatives in Kando Spaces12Special FeatureVISION-S prototype,an SUV(VISION-S 02).VISION-S was developed around three concepts:safety,entertainment,and adaptability.The vehicle is equipped with 40 sensors,including CMOS image sensors and ToF sensors both inside and outside the vehicle,to provide advanced driving assistance,while network connectivity enables the vehicle to continuously evolve.Additionally,as a new space for entertainment,VISION-S offers in-cabin experiences of 360 Reality Audio,games and digital video services.Understanding that commercial operation is vital to the evolution of mobility experiences,Sony established the operating company Sony Mobility Inc.in April 2022.The new company develops EV service platforms without owning many assets,and we intend to focus on collaboration with partners to leverage their assets.Sony As an initiative to contribute to the evolution of mobility,Sony exhibited a prototype of the VISION-S electric vehicle(VISION-S 01)in January 2020 at CES.We believe the next megatrend to follow mobile communication will be mobility,and that the definition of the automobile is about to undergo a major change.The evolution of mobility will cause shifts in lifestyles and society,helping to resolve social and environmental issues by promoting the transition to electric vehicles,service-oriented businesses and smart grids.With its strengths of creativity and technology,Sony is fully embracing the challenge of redefining mobility.Since the VISION-S project began in 2018,we have been stepping up efforts,including prototype production and verification,testing on public roads,and verification tests of onboard 5G communication during high-speed driving.Our learnings from these exploratory experiences,as well as from collaborations with our partners,have been immense.At CES in January 2022,Sony exhibited its second has been collaborating with many partners,and in March 2022,we signed a memorandum of understanding with Honda Motor Co.,Ltd.on a strategic alliance to jointly develop and sell electric vehicles and provide mobility services.In June 2022,Sony and Honda signed joint venture agreement to establish new company,“Sony Honda Mobility Inc.”The new company is planned to begin the sale of EVs and provision of services for mobility in 2025.To support the earnings structure,we are also considering the introduction of a subscription system through service platform,on top of hardware sales.By making the most of our AI and robotics technology,Sony relentlessly pursues possibility in mobility experiences,to offer diverse,revolutionary solutions.Izumi KawanishiExecutive Vice President,Officer in charge of AI Robotics BusinessSenior General Manager,AI Robotics Business GroupRepresentative Director,President and CEO,Sony Mobility Inc.Contributing to the Evolution of MobilityInitiatives in Kando Spaces13Special FeatureValue Creation ModelSonys PurposePurpose explains the reason for our existence,for Sony Group employees to work together along the same vector and create value from a long-term perspective;in other words,why we existIdentityIdentity expresses how we want to be perceived from the outside;in other words,who we areCorporate DirectionCorporate Direction sets out where we are headedFill the world with emotion,through the power of creativity and technology.A Creative Entertainment Companywith a Solid Foundation of TechnologyGetting closer to peopleSonys Purpose,to“fill the world with emotion,through the power of creativity and technology,”defines why Sony exists,and guides the 110,000 Sony Group employees along the same vector to create value from a long-term perspective.Based on this Purpose,Sony presents its Identity to the world as a“creative entertainment company with a solid foundation of technology.”Its Identity and Purpose are two sides of the same coin.Finally,Sonys Corporate Direction is“getting closer to people,”specifically creators,employees and users.Based on these foundations,Sony pursues management centered on people and Kando over the long term through six business segments:G&NS,Music,Pictures,ET&S,I&SS,and Financial Services.Sony designates creativity,technology and diversity of employees and businesses as drivers for value creation,which are essential to evolve and grow diverse businesses,promote collaboration,and create new value.Through its businesses,Sony creates and delivers 14 Creativity Technology DiversityKey DriversValue CreationKey Drivers are the essential elements to realize value creationValue Created for people,society and the planet through diverse businesses1.Enriching peoples hearts through the delivery of emotional experiences2.Helping creators realize their dreams3.Contributing to society through the delivery of safety,health and reliabilityvalue to people,society and the planet to enrich peoples hearts through Kando experiences,help creators realize their dreams,and contribute to society through the delivery of security,health and peace of mind.Connecting people through shared Kando requires a healthy planet and a society that allows everyone to live with peace of mind.This is why Sony prioritizes its responsibility to society and the environment,and works to make contributions through its technologies and businesses.Among the various sustainability challenges we face,Sony focuses on climate change;diversity,equity and inclusion;respect for human rights;and technology for sustainability,considering them the most important and influential factors in the creation of value*.*For the most significant material topics related to sustainability,please refer to page 30.15Value Creation ModelValue CreationSony manages diverse businesses with the aim of sustainably creating value with people at the core,thereby serving our Purpose to“fill the world with emotion,through the power of creativity and technology,”under our Corporate Direction of“getting closer to people.”In pursuing our Purpose,Sonys value creation through our businesses can be roughly divided into categories based on three perspectives:users,creators,and the society in which people live.PurposeFill the world with emotion,through the power of creativity and technology.Value Creation123Enriching peoples hearts through the delivery of emotional experiencesHelping creators realize their dreamsContributing to society through the delivery of safety,health and reliabilityExamples from FY2021G&NS Release of new gaming content and experiences through PS5TM,including the highly anticipated first-party title Horizon Forbidden WestMusic Continuous production of music creating emotion(In 2021,SMP had a significant interest in 8 out of 10 songs on Spotifys year-end Top Global Tracks chart,Best Hip-Hop Songs chart,and Best Pop Songs chart)Pictures Provision of joy and excitement through global content such as Spider-Man:No Way Home,the renowned television series The Crown,and leading anime programming at CrunchyrollET&S Launch of LinkBuds:truly wireless earbuds enable new fused online-offline audio experiencesI&SS Development of worlds first 2-layer transistor pixel technology,supporting higher-quality smartphone imagesIn addition to generating content that moves peoples hearts,Sonys content businesses,including the Games,Music and Pictures businesses,and our DTC businesses,create communities where users can gather together and share creative experiences.Sonys Entertainment,Technology&Services businesses pursue technologies that offer“Reality,”“Real-time”and“Remote”to develop and provide environments for enjoying high-quality content and communication in order for people to be connected through emotion.The Imaging&Sensing Solution business provides key devices for smartphones used by people around the world to share emotions.Enriching peoples hearts through the delivery of emotional experiences116Examples from FY2021ET&S Expanding sales of ID7000TM Spectral Cell Analyzer,streamlined multicolor cell analysis with more than 44 colors Development of CGX10 Cell Isolation System,contributing to cell therapy advances I&SS Commercialization of stacked SPAD depth sensor for automotive LiDARFinancial Services Renewal of unique remote consulting systems(Sony Life)Free distribution of GOOD DRIVE app to help reduce traffic accidents(Sony Assurance)Offered special mortgage rates for environmentally-conscious homes(Sony Bank)Examples from FY2021G&NS Accelerated investment in content creators through studio acquisitions,including Bungie,Haven Studios,Firesprite,Housemarque,Bluepoint,Nixxes,and Valkyrie EntertainmentMusic Strengthening of support of activities of independent artists through acquisition of AWAL/Kobalt Neighbouring Rights(investment amount:430 million USD)Pictures Support for diverse talent and works from various backgrounds(creation of the Creative Diversity Fund,Diverse Writers and Directors Program,and increased diversity of content)ET&S Expansion of Virtual Production business through Crystal LED and digital cinema camerasI&SS Global offering of image sensors supporting smartphones,digital cinema cameras,and digital interchangeable-lens camerasSony crafts environments where creators can fully express their creativity and fulfill their potential by providing platforms,technologies and expertise,in addition to discovering,nurturing,and producing creators,and supporting Sony artists from all directions.Sony delivers the resulting content to move peoples hearts around the world across a variety of domains,including Games,Music and Pictures.Sony continues to contribute to maximizing the value of creators time through its electronic products,technologies and services that enable creators to express their vision,as well as providing remote solutions for content production and live events.Helping creators realize their dreams2Sony helps to create a society in which people can enjoy daily lives filled with emotion through its businesses that support people with safety,health and reliability.Sony aims to contribute to automobile safety and a better future for mobility with its CMOS image sensors and automotive-sensor technologies,while Sonys medical business aims to contribute to public health through applications in the fields of imaging,display and mechatronics technologies that we have cultivated over many years.In the Financial Services business,Sony focuses on providing customers with a sense of safety and assurance through pertinent advice,products and services that leverage a variety of information sources,while improving access to our services and promoting innovation for greater convenience in daily life.Contributing to society through the delivery of safety,health and reliability317Value CreationKey Drivers for Creating Value669887,314.8billionElectronicsInsurancePicturesMusicGamesFY200011139241671287,177.6billionDevicesHome Entertainment&SoundMusicGamesFinancial ServicesImaging Products&SolutionsMobile Products&CommunicationsPicturesFY20101523112711139,921.5billionGame&Network ServicesEntertainment,Technology&ServicesMusicFinancial ServicesImaging&Sensing SolutionsPicturesFY2021Consolidated Sales and Operating Revenue/Sales Composition by Segment(%)Note:Sales compositions exclude sales within All Other/Corporate and elimination.Endeavors to Create More ValueUnification of Value-Creation DriversLooking at its business portfolio,Sony has evolved into a corporation with strength in its diversity of businesses,all of which have established solid market positions.This can be seen as a result of long-term effort on the strength of value-creation drivers.The establishment of CBS/Sony Records Inc.in 1968 was the beginning of Sonys entertainment business.This laid the foundation for the Groups strategy going forward,that is,to develop software and hardware as the wheels on its drive axle,and led to its current principle of building on its strength of business diversity.The financial services segment,which is the origin of Sonys direct-to-consumer operations,is working to increase the value provided to customers through Sony Group technology and enhanced collaboration with other business segments,putting its Lifeplanner sales specialists,who from the beginning have always embodied its core value,at the center of operations.One of the worlds leading game ecosystems,PlayStation,was built on joint investment by Sonys music and electronics segments.It is a good example of continuous value creation unifying the three value-creation drivers.Focused Initiatives Sony puts weight on value-creation drivers when investing management resources.Since the start of the third mid-range plan in FY2018 strategic investment targets have been set on content IP,DTC services,technology,and Sony-owned equities.Over the four years since FY2018,Sony has invested more than 1 trillion in content IP,which is the product of creativity,and DTC as the means to deliver it.Sony is reinforcing technology and HR strategies for each business segment as well as the entire Group in accordance with the evolution of the business.Sonys People Philosophy,redefined in 2021 as“Special You,Diverse Sony,”clearly states that diversity is the foundation of Sony.Under Sonys Purpose,to“fill the world with emotion,through the power of creativity and technology,”and to ensure that all of its employees are on the same vector when it comes to creating value from a long-term perspective,Sony has established four Values that are shared by all employees:“Dreams&Curiosity,”“Diversity,”“Integrity&Sincerity,”and“Sustainability.”To generate Kando,Sony believes that it is essential to combine the creativity of creators,engineers and employees with continuously-evolving technologies,as well as to create new value organically across all business segments by bringing together diverse employees from various business areas,united by a shared Purpose and Values.Sony designates creativity,technology and diversity of employees and businesses as key drivers for value creation.Creativity Technology Diversity18 Sonys top priority in this context is greater unity of value-creation drivers.Collaboration across the Group is becoming standard practice,and efforts to build IP value through cross-Group utilization and promotion,as well as Group-wide projects for the shared application of technology,regardless of segment borders,are increasing.For continuing growth and development of the entire Group under the new Group architecture effective since April 2021,Sony is promoting initiatives to unify value-creation drivers structurally and permanently.Examples include Sony University,a program to train future Sony executives and global leaders who drive businesses;the Corporate Distinguished Engineer(DE)program,which certifies engineers who formulate and execute technology strategies,while identifying signals of change and supporting the development of talent to ensure Sonys sustainable growth;and the Technology Strategy Committees,which consist of technology-specific committees that transcend the boundaries of business segments and disseminate important technological information widely within the Group while training the next generation.A representative initiative is the Content Technology Strategy Committee,established in April 2021 as the tenth project of the Technology Strategy Committees.The purpose of this committee is to refine content-creation technologies that address issues and expand the future of Sonys entertainment business.A key characteristic is the collaboration between entertainment and technology groups to provide production-ready technologies.It has five working groups exploring content-related technologies,conducting verification tests of the latest technologies,making assessments and prototype applications of technologies,preparing content data,and handling other tasks.Results of these efforts have already been announced in and outside the Group,and some have even seen application in operations.Going forward,it plans to further accelerate these initiatives.From the Leader of the Content Creation Working Group and led by Sony PCL,and one in the U.S.led by Sony Pictures.The film was shot,edited and completed with no travel between the teams.Sonys Airpeak professional drone,the VENICE 2 digital cinema camera and the 7S III mirrorless interchangeable-lens camera were used for shooting,while Xperia 1 III/Xperia PRO 5G smartphones were sending cinema camera feeds and production site video live streaming between the U.S.and Japan in real time.Other original Sony technologies,including Ci Media Cloud Services and the 360 Virtual Mixing Environment utilizing spatial sound technology,were used in editing and other production processes.More than just a test of new technologies and proof of concept,the project was an excellent learning opportunity for engineers,who get few opportunities for direct involvement in film production,to share opinions with creators,collaborate,and expand on various possibilities.Going forward,the working group would also like to take on new challenges like deploying AI technology for sound and image processing as well as budget and schedule management through script analysis.To test new technologies and ideas on the actual production floor,the Content Creation Working Group of the Content Technology Strategy Committee recently produced a ten-minute short film,Kilians Game,along with a seven-minute behind-the-scenes video,in collaboration with Sony Group companies,affiliated firms and rising Hollywood creators.The short film,which echoes the beginning of a suspense drama,showcases new filmmaking techniques born from the combination of creator ideas and various Sony Group technologies.The team took full advantage of virtual production technology,displaying 3D background images synchronized with the camera work on a large Sony Crystal LED B-series screen.The production was a collaboration between two units,one based in Japan Key Drivers Unite to Produce a Short Film Example I carried this project forward with the conviction that“technology exists for the purpose of realizing a creative vision.”We believe it is best for filmmakers to try new tools based on their own interest,which can expand their imaginations and lead to great content for production.Both the U.S.and Tokyo unit directors oversaw production setup,lighting conditions and editing,and advised each other.This allowed the U.S.and Japan teams to share a creative vision,and helped them seamlessly complete the film.We are also confident that we established a new framework for virtual production flow in a completely remote context.We believe one of the most significant benefits of this initiative is that we own all rights related to the short film we created.Therefore,we can use it,for example,to evaluate new filmmaking technologies,such as AI dubbing.The behind-the-scenes footage is also an important asset,to be used as a learning tool in future film and sound productions.The Content Technology Strategy Committee,which has just started its second year,plans to use the knowledge gained from this project to take on new production challenges,such as sharing assets among diverse entertainment fields and content,including music videos and games.Yoshikazu TakashimaDistinguished EngineerSVP Advanced Technology,Sony Pictures Entertainment Inc.19Key Drivers for Creating ValueUp to three yearsTen years or moreFive to ten years Sony AIDevelopment of technologiesin field of AI/robotics andapplications for business Each business segmentTechnology developmentdirectly connected tobusinessesSony ComputerScience Laboratories,Inc.Creation of new technologiesand businesses Corporate R&DFundamental technologydevelopmentR&D Structure(Timeframes)Technologies Borne Out of Collaboration Within and Outside the GroupVirtual ProductionGran Turismo SophyTMSynecO,Inc.TechnologyIn line with its Purpose and Corporate Direction of“getting closer to people,”Sony works to deeply understand what motivates creators and users,and pursues related research and development based on that understanding.The Sony Group organizes its R&D efforts in terms of function and role along three timeframes that lead to achievement of the intended results(see chart below).Sony undertakes financially disciplined investment for corporate growth over the longer term,placing high priority on technologies that can be shared across businesses.Creation of new business is part of corporate R&D as well.Sony AI brings together the best and brightest talent from around the world,and embraces the challenge of giving free rein to human imagination and creativity through AI technology.It also promotes technological links and collaboration above and beyond organizational borders,producing positive results already apparent in the area of entertainment and mobility in particular.Sony is developing various content in the permanent Virtual Production studio established in February 2022,ranging from motion pictures to television commercials and music videos,making full use of its in-house technologies.Gran Turismo Sophy,an autonomous AI agent produced through collaboration among Sony AI,Polyphony Digital and SIE,is demonstrating breakthroughs in AI technology as well as its potential for building new value in the game experience.SynecO,a company established as a project of the Sony Innovation Fund:Environment,powers businesses specializing in environmental technology related to augmented ecosystems,such as SynecocultureTM,a research project of Sony Computer Science Laboratories,Inc.Going forward,Sony plans to strengthen inter-Group collaboration to build an R&D system that allows for seamless operations flowing from exploratory research to technology development,and the application of R&D results to products and services.Using technology to create synergy and accelerating business evolution in this way will enable Sony to continuously grow and develop.Message from the CTOHiroaki KitanoCorporate Executive Officer,Senior Executive Vice President and CTOOfficer in charge of R&DOfficer in charge of AI CollaborationPresident and CEO,Sony Computer Science Laboratories,Inc.Representative Director and CEO,Sony AI Inc.The global COVID-19 pandemic and geopolitical risks have led to enormous change in the environment for human civilization,with the accumulation of climate change and other problems of planetary scale.I think it is essential to address these problems through the application of technology,and thereby contribute to pushing civilization forward and making our planet sustainable.To that end,we support technological development that helps businesses grow and innovation that betters society and industry for the future.Our foundations for innovation are our diverse technologies and employees.Operating in systems where technology and employees connect organically,we respect diversity,equity and inclusion,deliver Kando to many creators and users,and strive to create new value that can contribute to the sustainability of society and the planet.20Key Drivers for Creating ValueDiversityDiversity and Value Creation Ever since Masaru Ibuka co-founded Sony with Akio Morita with the belief that“Innovation is born out of the intersection of diverse ideas,”Sony has continued to grow,becoming more diverse in every respect.Starting from the electronics business,which began with the hope of using technology to contribute to society,Sony has continued to evolve,expanding the breadth of its business to include semiconductors,music,finance,motion pictures and games.From the start,Sony has had its sights set on the world,and has not only developed virtually all of its businesses globally,but has headquartered four of the eight main companies in its six business segments in the U.S.,and conducts business on a global basis with an organizational structure optimized for each operation.These diverse businesses across varied regions are sustained by Sonys diverse employees,full of dreams and curiosity,who form the foundation for creative innovation.Sony has about 110,000 employees worldwide who are not only diverse in terms of nationality or race,but also,due to the expansion of Sonys business,range dramatically in terms of job types,a diversity which constitutes the driving force behind the growth of each business.With their diverse backgrounds and varied specialtiesincluding engineers,creators and even Lifeplanner sales specialiststhese employees connect and intersect across businesses and regions,fusing technology and creativity to create new value with the common purpose of delivering Kando to the world.Sonys Purpose&Values and People PhilosophySince its founding,Sony has respected the independence and challenging spirit of individuals,and cherished a corporate culture based on the partnership of choice between Sony and each individual employee,where each party is accountable for being responsive to the needs of the other.Sonys People Philosophy,“Special You,Diverse Sony,”conveys the wish that each unique individual who shares Sonys Purpose&Values,and Sony,which embraces diverse individuals,will continue to grow together,centered on this shared Purpose.Based on this People Philosophy,Sony defines its Group-wide HR strategy as,“attract,develop and engage talented individuals,”with responsibilities led by the top HR executives of each business in an appropriate and timely manner that best suits their respective business and region.Employee EngagementSony believes that the extent to which diverse individuals share common values and are able to maximize their individuality depends on their degree of empathy with Sonys Purpose,and on employee engagement.Sony regularly conducts employee surveys to verify both of these components,and considers engagement to be a particularly important management index,incorporating it as a component of the indices for assessing the top management of each business segment,including Sony Group Corporation executives.Employee engagement has been consistently high in recent years,and going forward,Sony will continue to advance initiatives that lead to greater employee engagement and understanding of its Purpose,thereby realizing sustainable growth.Purpose&Values(P&V):Reception and Empathy With continuous messaging from management,online talk events,and other initiatives to improve P&V reception and retention,the percentage of positive responses remained high.Employee Engagement IndexThe index hit an all-time high in FY2021,reflecting high employee trust in the company.Sony values these results as paths to ongoing dialogue and action in each organization.I understand the P&V20202021(FY)I support the P&V20202021I use the P&V asguidance in my daily work20202021 I agree I neither agree nor disagree/I disagree100uP%0%7p0%8p0%FY201988%FY202089%FY2021Note:Percentage of employees who did not answer unfavorably to the questions21Key Drivers for Creating ValueLooking Back on FY2021Sony is pursuing growth with a balanced focus on sales and profit under the fourth mid-range plans(FY2021-FY2023)theme of“Evolution of Sony.”To carry the plan forward,everyone in the Group is working along the same vector defined by the two themes“Exploitation and Exploration for Growth”and“Wise Pivot.”These themes together articulate our approach of maximizing profit in our existing businesses by responding flexibly to change,while transforming Sony into an even more resilient corporation by actively distributing management resources to new growth areas.FY2021,the first year of the new mid-range plan,was another year of constant change in our business environment,with the Covid-19 pandemic continuing to spread widely and geopolitical risk expanding beyond conflict between the U.S.and China.To Sony,however,it was also a second consecutive year of setting new records for sales and operating income,as all our businesses sharpened their sensitivity to change and executed strategies with flexibility and agility.ET&S,in particular,improved operations,reviewed suppliers and secured strategic inventory to report year-on-year revenue and profit growth despite tight supplies of parts and distribution disruptions throughout the year,as well as the impact of renewed COVID-19 spread in China and Southeast Asia.G&NS,ET&S and I&SS together succeeded with defensive collaboration,closely sharing information related to procurement and distribution as well as undertaking joint negotiations.In FY2021 our three entertainment segments(G&NS,Music and Pictures)together made up more than half the Groups consolidated sales for the first time,driving growth for the entire Group.I feel a strong sense of confidence resulting from the growth-oriented policies of each business segment and their efforts collaborating in the application of IP,such as through the creation of the hit film Uncharted.We will continue to actively pursue opportunities for Sonys longer-term growth,like the metaverse,through inter-business collaboration.While we can acknowledge the successes of FY2021,looking forward to FY2022,we also understand the need to do business with greater awareness of the risk of,for instance,a recession resulting from worldwide inflation,and we are facing these risks with heightened alertness.Message from the CFOHiroki TotokiRepresentative Corporate Executive Officer,Executive Deputy President and CFO22Third Mid-Range Plan(actual)Capital Expenditure2Dividends3Strategic Investments(Trillion yen)Carry-over from Third MRP1Debt Financing/Cash/Asset Sales2Operating CFThird Mid-Range Plan(actual)Fourth Mid-Range Plan Initial PlanLatest Projection4Note:Fourth mid-range plan covers FY2021-FY2023;third mid-range plan covered FY2018-FY2020.1.Improvements in cumulative operating CF for third mid-range plan from end of 3Q 2020 and delays in cash-outs related to strategic investments already decided2.Financial figures in fourth mid-range plan based on IFRS,while those in third mid-range plan are under U.S.GAAP.Thus,operating CF includes the effects of differences in accounting standards for principal payments for operating lease liabilities and purchases and sales of content assets.Capital expenditures also include increases in right-of-use assets related to operating lease agreements.3.Dividends in third mid-range plan were approximately 170 billion.4.Latest forecasts disclosed at FY2021 financial results briefing(May 10,2022)Capital Allocation(Excluding Financial Services)Breakdown of Capital AllocationSources of Allocated Capital2.82.8 3.8 3.8 4.0 4.01.40.40.30.40.3 2.0 2.0 3.3 3.12.60.21.51.71.2Fourth Mid-Range Plan Latest Projection4Initial Plan Over the medium term,I think it will be more important than ever to skillfully manage geopolitical risk.In a politically divided world with a highly complex global economy,it is vital to respond to geopolitical changes and consider their effects over a long timeframe.At Sony,which operates diverse businesses worldwide,the effects of geopolitical risk on the value chain and on changes to our economic sensitivity vary by business.From the standpoint of the entire Group,risks tend to be dispersed,but we recognize that,rather than being complacent,we should pursue advanced,well-balanced risk management built on the strength of our business diversity.It is essential that we evolve our risk-management systems through higher sensitivity and by constantly sharing the latest information available.Capital Allocation and Strategic InvestmentThe fourth mid-range plan,which puts highest priority on initiatives for long-term growth,emphasizes capital allocation as an important strategic theme for realizing this growth.Having updated the plan based on the results of FY2021,we allocated 2 trillion or more to strategic investment and 1.7 trillion to capital expenditures,out of the 4 trillion or more sources of capital we expect to generate mostly operating cash flow from the businesses excluding the Financial Services segment.By order of priority,the focus of strategic investments will remain as follows:IP and DTC,technology,and Sony in the form of share repurchases.Of the 2 trillion budgeted for strategic investment,1.06 trillion was either invested or earmarked for investment by the end of FY2021.I am encouraged by the fact that any delay in strategic investment amounts may lead to a postponement of growth or a reduction in the speed of future growth,so I am pleased that more than half of Sonys strategic investment budget for the entire three years of the mid-range plan has already been invested or earmarked in the first year.Strategic investments have gone forward as planned because the target areas for investment have been clearly determined based on Sonys Purpose and management direction,and because each business remains focused on growth markets and has identified appropriate investment targets.We are also implementing initiatives for all businesses to share best practices when it comes to M&A processes and learn from one another in order to build investment muscle.Of the capital invested or earmarked for investment by the end of FY2021,content IP accounts for the largest proportion,followed by DTC.As the means for delivering content to users evolve with the times,I believe the passion that creators put into their content,the Kando that content generates in users,and the value of that Kando will remain constant.Sony puts top priority on getting closer to creators,and this commitment shows in our investment figures.We believe that internal and external disclosures of where our capital is allocated make our portfolio strategy and its progress clearly visible,and we plan to continue this practice on a regular basis.In making strategic investment decisions,we set a minimum level of return to be achieved for each business area and currency as a target rate,and make decisions based on our capacity to exceed this rate,as well as whether the investment in question contributes to the long-term growth of the business.We carefully review the results of previous investments on a regular basis and pay close attention to changes in the external environment in an effort to improve investment returns.23Message from the CFOProgress with Strategic Investment under Fourth Mid-Range PlanProgress toward 2 trillion(As of May 10,2022)1.Cumulative total from April 1,2021 to April 30,2022 2.Excluding 100 billion invested in music catalog included in operating cash flow3.Excluding about$1.06 billion invested in Sony Pictures Networks India in preparation for merger with Zee Entertainment Enterprises Ltd.4.Other includes strategic investment in ET&S and I&SS segments and repurchases of Sony sharesMajor Investments Made or Earmarked(As of April 30,2022)AlreadyInvestedEarmarked forInvestmentCapital Allocation Balance 29$G%Breakdown of Total Strategic Investments Made or Earmarked1:about 1.06 trillion2,3(As of April 30,2022)G&NSMusic2Pictures332%Other430%Content IPDTC/Services68%Other9%Repurchase ofCommon Stock9%Breakdownby SegmentBreakdown byInvestment AreaCategoryInvestmentsIPAWAL acquisition(Music)Som Livre acquisition(Music)Alamo Records acquisition(Music)Investment in Scopely(Pictures)Lasengle acquisition(Music)Ultra Records acquisition(Music)Bungie acquisition(G&NS)Industrial Media acquisition(Pictures)Haven Entertainment Studios acquisition(G&NS)DTCCrunchyroll acquisition(Pictures)Investment in NetEase Cloud Music(Music)Ceremony of Roses acquisition(Music)OthersInvestment in JASM,a semiconductor foundry under TSMC(I&SS)Investment in Epic Games(G&NS)Repurchases of Sony shares In the third mid-range plan(FY2018-FY2020),we expended about 1 trillion of the total strategic investment fund of 1.4 trillion on business acquisitions,excluding minority shareholdings and repurchases of Sony shares.We project cumulative operating cash flow of 180 billion from these businesses over the three-year period from FY2021 to FY2023.Going forward,cash flow generated as a return from those investments will be allocated to further investment as a source of capital allocation,thereby expanding the cycle of investment return and growth investment.We repurchased Sony shares worth 300 billion during the third mid-range plan,and 97.4 billion as of April 2022 under the fourth mid-range plan.Another component of strategic investment is our plan to undertake flexible,agile repurchasing,taking into consideration our financial position and share price,within the 200 billion annual cap set in May 2022.Strategically Emphasized IndicatorsIn setting financial targets for the fourth mid-range plan,we prioritized indicators strongly associated with growth,choosing adjusted EBITDA as our benchmark.We made this choice for several reasons.First,EBITDA is a metric that can measure results for the entire Group,including the Financial Services segment.In addition,we believe it clearly shows returns on investment and promotes active investment.Finally,we believe it is considered highly compatible with techniques used to value businesses and corporations.We initially set a target of 4.3 trillion,an increase of 23%or 800 billion from the cumulative figure for the three-year period of the third mid-range plan,but,taking the results of FY2021 into account,we now project an additional 600 billion,for a total of 4.9 trillion.We also prioritize earnings per share(EPS),designating its growth as an important norm for management.To continuously increase EPS,beyond simply boosting profit,it is important to control the number of our shares through repurchases if needed.Since stock-based incentives are considered effective in attracting and retaining highly-specialized personnel,I believe that preventing dilution of our shares is particularly important.We also pay special attention to the operating income margin.We see it as an indicator of how customers value our products and services,as well as an indicator of our capacity for additional investment and adaptability to environmental change.Our operating income margin has been steadily increasing over the past decade,and I think the fact that we have 24Message from the CFOThird Mid-Range Plan2(FY2018-FY2020,US GAAP)Fourth Mid-Range Plan(FY2021-FY2023,IFRS)Actual(Reference)TargetLatest Projection31.Refer to Annual Securities Reports for adjusted EBITDA for FY2021.2.Sony calculates adjusted EBITDA by adjusting constituent line item amounts disclosed in Financial Statements,presentation materials for Earnings Announcement,Quarterly Reports,and Securities Reports,to the extent that Sony deems amounts nonrecurring.Despite accounting differences between US GAAP and IFRS,Sony believes that disclosure of actual results of adjusted EBITDA in third mid-range plan as reference may be useful information for investors.3.Latest projection disclosed in FY2021 Earnings Announcement of May 10,2022Fourth Mid-Range Plan Financial Targets3.54.34.9(Trillion yen)FY2021Results1.6Adjusted EBITDA1 Three-Year Cumulative Totalreported a double-digit figure consistently since FY2018 represents great progress.Sustainability StrategyThe fourth mid-range plan guides our actions with regards to sustainability issues in terms of the environment,human resources,and human rights,marking them as strategic challenges for our businesses when aiming for sustainable growth.Based on this approach,each business has identified its priority issues on its own initiative and drawn up plans to address those issues through a sustainability strategy.From an environmental standpoint,reducing greenhouse gas emissions from the production processes of the I&SS segment and from the use of ET&S products is a priority issue.And socially,we have identified diversity and inclusion as major topics for discussion.We will steadily pursue solutions to these themes over the long term,while at the same time disclosing and sharing our progress with a wide range of stakeholders by making the meaning and influence of our efforts tangible.In March 2022,the International Sustainability Standards Board of the IFRS Foundation delivered two proposals setting a comprehensive global baseline for sustainability disclosures.Initiatives of this sort,I predict,will encourage corporations to take similar action.Dialogue for GrowthOver the past decade,Sony has worked to secure and stabilize profitability through the course of three mid-range plans.Throughout this process,we have been committed to ongoing dialogue with various stakeholders,especially our customers and the capital markets.We have gained much insight into how to accelerate improvement,which we subsequently put into practice.Under our fourth mid-range plan,the goal of which is growth,we will continue to actively disseminate information about our growth strategies and progress in order to ensure that everyone understands and accurately assesses Sonys growth potential.Further,we will incorporate the feedback we receive in our plans,and we will continue to endeavor to implement a cycle that further improves both the quality and the likelihood of success of our growth strategy.We welcome your support of Sonys ongoing evolution towards greater growth.Past Mid-Range Plans First Mid-Range Plan (FY2012FY2014)Second Mid-Range Plan (FY2015FY2017)Third Mid-Range Plan (FY2018FY2020)In FY2011 Sony recorded a significant consolidated loss,primarily due to the impact of natural disasters and a decline in the profitability of the TV business.We built a foundation for growing profitability mainly by withdrawing from the PC business,splitting off the TV business as a separate subsidiary,and reducing headquarter overhead costs by 30%.In addition,we invested in the image sensor and game businesses as well as other priority areas.Nevertheless,we fell far short of some quantitative goals,such as operating income margin and ROE,as our response to changes in the business environment was inadequate.Under the theme,“Profit Generation and Investment for Growth,”we reorganized and split off some business units as separate subsidiaries,refocused management on awareness of profitability,realigned the profit structure through restructuring,and expanded recurring-revenue businesses.We made steady progress in new areas,including medical equipment,automotive,AI and robotics.We designated ROE as the most important quantitative index,achieved operating income and ROE targets,and reached new record highs.However,the Pictures and Mobile Communications segments fell short of planned targets,and profit structure improvement remained an issue.Setting the Corporate Direction as“getting closer to people,”we made steady progress under three policy initiatives:enhancing DTC services and content IP,making the branded hardware business a stable cash-flow generator,and investing in CMOS image sensors to secure profits.We far surpassed our target for cumulative three-year operating cash flow(excluding the Financial Services segment),and set a new record in FY2020,the plans final year.We reorganized the Groups architecture by establishing Sony Group Corporation for Group headquarters functions,and by making the Financial Services business a wholly owned subsidiary.25Message from the CFOReview of FY2021In FY2021,consolidated sales and financial services revenue grew by 10%year on year to 9,921.5 billion,while operating income grew by 26%to 1,202.3 billion.This increase is attributed mainly to growth in both theatrical and licensing revenues from digital streaming services for new film titles and a gain from business transfers in the Pictures segment,an improved product mix in the ET&S segment,and growth in revenues from streaming services in the Music segment.Excluding the Financial Services segment,consolidated operating cash flow totaled 813.3 billion.Meanwhile,net income attributable to Sony Group Corporation shareholders for the period was 882.2 billion,a decrease of 147.4 billion compared with the previous fiscal year,in which there was a reversal of a previous write-down of deferred tax assets amounting to 256.8 billion.Note:Since April 2022,the former Electronics Products&Solutions(EP&S)segment has been renamed the Entertainment,Technology&Services(ET&S)segment.This change has not resulted in any reclassification of businesses across segments.FY2021 Sales/Financial Services Revenue and Operating Income by SegmentPerformance HighlightsFY2021 Consolidated Financial Results(Billion yen)FY20201FY20211Year-on-year Change( /-)Sales and Financial Services Revenue8,998.79,921.5 922.9( 10%)Operating income955.31,202.3 247.1( 26%)Income before income taxes 998.01,117.5 119.5( 12%)Net income attributable to Sony Group Corporations stockholders1,029.6882.2 147.4(14%)Operating Cash Flow(excluding Financial Services)21,150.3813.3 337.0Investing Cash Flow(excluding Financial Services)2(542.2)(711.1)169.0Operating CF Investing CF(both excluding Financial Services)2608.1102.1 506.01.Average exchange rate for FY2020 was 1 USD=106.1 JPY and 1 EUR=123.7 JPY;that for FY2021 was 1 USD=112.3 JPY and 1 EUR=130.5 JPY.2.Operating cash flow(excluding Financial Services)and investing cash flow(excluding Financial Services)are not measures in accordance with IFRS.However,Sony believes that this disclosure may be useful information to investors.Note:Sony adopted IFRS starting in quarter ended June 30,2021,in lieu of the previously-applied generally accepted accounting principles in U.S.(U.S.GAAP).Results for FY2020 are also presented in accordance with IFRS(applies to all following pages).(Billion yen)Sales/Financial Services RevenueOperating IncomeMain Factors in Operating Income ChangeFY2020FY2021FY2020FY2021Game&Network Services2,656.32,739.8341.7346.1( )Decrease in loss resulting from strategic price points for PS5TM hardware set lower than manufacturing cost()Decrease in game software sales,mainly in non-first-party titles,including add-on contentMusic939.91,116.9184.8210.9( )Increase in Recorded Music and Music Publishing businesses streaming service revenues( )Positive impact of exchange rates()Absence of gain recorded on partial share sales and overseas business transfer in previous fiscal yearPictures753.01,238.979.9217.4( )Gain from transfer of GSN Games business( )Higher sales for Motion Pictures due to increased theatrical revenue for new film titles( )Gain from Seinfeld licensingEntertainment,Technology&Services2,068.12,339.2127.9212.9( )Improved product mix for digital cameras and televisions( )Positive impact of exchange ratesImaging&Sensing Solutions1,012.51,076.4145.9155.6( )Increase in unit sales of image sensors for digital cameras and industrial equipment( )Positive impact of exchange rates()Increased R&D and depreciation/amortization expenses()Decrease in sales of image sensors for mobile productsFinancial Services1,674.01,533.8154.8150.1()One-time loss recorded at a subsidiary of Sony Life( )Higher insurance premium revenue at Sony Life,reflecting increase in policy amount in forceNote:Due to organizational changes as of April 1,2021,from Q1 FY2021 Sony transferred some businesses and functions previously included within All Other and Corporate and elimination to the ET&S segment.On this page,sales and operating income(loss)for each segment for FY2020 are presented to conform to organizational structure for FY2021.262012201320142015201620172018201920202021(FY)2012201320142015201620172018201920202021(FY)10,0008,0006,0004,0002,0000Sales 1,5005001,0000201510(%)50Operating Income,Operating Income Margin Operating income(left scale)Operating income margin(right scale)(Billion yen)(Billion yen)6,795.57,767.38,215.98,105.77,603.38,544.08,665.78,259.98,998.7226.526.568.5294.2 288.7734.9894.2845.5955.31,202.33.30.30.83.63.88.610.310.210.61,200(Yen)4008000(800)(400)Cash Flow from Operating Activities,Cash Flow from Investing Activities(excluding Financial Services)8000400600200(200)Adjusted EPS(Net Income Attributable to Companys Stockholders per Share(diluted)38.5201220132014260.12015444.02016770.62017753.42018762.9257.2305.4(49.8)(332.4)(300.5)(164.0)(520.4)(363.1)(94.3)(103.7)201920202021(FY)1,150.3813.3(542.2)(711.1)2012201320142015201620172018201920202021(FY)Cash flow from operating activities Cash flow from investing activitiesNote:Information related to cash flow(excluding Financial Services)disclosed here is not in accordance with U.S.GAAP or IFRS,but Sony believes it may be useful information for investors.12.1354447436622640(102)2721151889,921.5Note:Adjusted EPS is the result of dividing adjusted net income attributable to Companys stockholders for each fiscal year(“Adjusted net income”)by the number of shares outstanding.The weighted-average number of shares on diluted basis in the Form 20-F for the fiscal year is used as the number of shares outstanding.For information on adjusted net income for FY2021,please refer to the Form 20-F.Adjusted net income for FY2017 to FY2020 is the“Adjusted Net Income Attributable to Sony Group Corporations Stockholders”given in the materials used in the Earnings Announcement for the corresponding year.Adjusted net income for FY2016 and the years prior is based on income before taxes for the corresponding year,adjusted with profit/loss that Sony has determined is non-recurring in nature and which is disclosed in specific figures in Form 20-F for the year,including profit/loss from write-downs of tangible and intangible assets,sales of assets and businesses,reevaluation of shares owned,expenses related to natural disasters,and the like,applying the statutory tax rate disclosed in Form 20-F for the year and reducing net income attributable to noncontrolling interests.Because the effective tax rate exhibited significant volatility between FY2012 and FY2016,the statutory tax rate is used instead to better display the trend during the period.Please refer to Form 20-F for each year to see differences between effective and statutory tax rates.(Billion yen)Changes in Key Financial Metrics Note:Figures for FY2012-19 based on U.S.GAAP,and those for FY2020-21 on IFRS.27Performance HighlightsLeft:FY2019;Middle FY2020;Right:FY2021Game&NetworkServicesMusic2,656.32,739.8Sales by Segment939.91,116.9753.01,238.92,068.12,339.21,012.51,076.4849.91,011.91,991.31,070.61,674.01,533.81,307.7100.798.8251.41,977.67.218.0All Other16.3All Other154.8150.1Financial Services129.6Financial Services145.9155.6Imaging&SensingSolutions235.6Imaging&SensingSolutions127.9212.9Entertainment,Technology&Services87.3Entertainment,Technology&Services79.9217.4Pictures68.2Pictures400341.7346.13002001000Operating Income by SegmentLeft:FY2019;Middle FY2020;Right:FY2021Game&NetworkServices184.8210.9Music142.3238.43,000(Billion yen)(Billion yen)2,0001,0000Performance Trends by Segment Note:Figures for FY2019 based on U.S.GAAP,and those for FY2020-21 on IFRS.Note:Since April 2022 the former Electronics Products&Solutions(EP&S)segment has been renamed the Entertainment,Technology&Services(ET&S)segment.This change has not resulted in any reclassification of businesses across segments.Note:Due to organizational changes as of April 1,2021,from Q1 FY2021 Sony transferred some businesses and functions previously included within All Other and Corporate and elimination to the ET&S segment.On this page,sales and operating income(loss)for each segment for FY2020 are presented to conform to organizational structure for FY2021.28Performance Highlights20172018201920202021(FY)2018201920202021(FY)20182019202020212022(year)(thousand tons-CO2)20172018201920202021(FY)(%)20172018201920202021(FY)120,000900,00060,00030,0000Number of Employees Percentage of Women in Workforce Percentage of Management Positions Held by Women Composition of executives Women Non-Japanese nationalsNote:As of end of August each year;2018-2020 figures for former Sony Corporation*Composition of executives:Chairman,Vice Chairman,President,Executive Deputy Presidents,Senior Executive Vice Presidents,Executive Vice Presidents,and Senior Vice PresidentsNote:As of end of August,2022Note:Totals based on data as of March 31 for each fiscal yearNote:Totals based on data as of March 31 for each fiscal year.Note that definition of“management”may vary by country,region and company.Scope 1 and 2(direct and indirect emissions)Scope 3(other emissions):Purchased goods and services Use of sold products OtherScope 3Percentage of Renewable Electricity Used at Own Business SitesComposition of Executives*Composition of Board of Directors20,00015,00010,0005,0000Greenhouse Gas EmissionsEmployees(Group-wide)Corporate Governance(Sony Group Corporation)Environment(Group-wide)50403020100Percentage of Women in Workforce and Percentage of Management Positions Held by Women28Executive directors7Outside directorsNon-executive directors43Women6MenNon-Japanese nationals117,300114,400111,70025.327.328.328.4109,700108,9004.64.66.618,31317,74216,24617,98617,35541414226265566233330.133.634.335.635.435.0151050(%)503020100Tenpersonsin totalTenpersonsin total14.66340Key Non-Financial Metrics29Performance HighlightsSustainabilityGeneral ApproachSony manages diverse businesses with people at the core,and aims for sustainable value creation based on such diversity and mid-to long-term growth in the Sony Groups corporate value under its Purpose to“fill the world with emotion,through the power of creativity and technology,”and its Corporate Direction of“getting closer to people.”In order to have people connected to each other through emotion,it is necessary to create a society in which everyone can live with peace of mind in a healthy global environment.Sony acts with due consideration of the impact of its business activities on stakeholders,including shareholders,customers,employees,suppliers,business partners,local communities and other organizations as well as the global environment,and focuses on building trust with stakeholders through dialogue.Through innovation and sound business practice,Sony endeavors to enhance its corporate value and contribute to the development of a sustainable society.Material Topics in SustainabilityIn FY2022,Sony reviewed material topics in sustainability from the standpoints of all its businesses.In that process,Sony designated creativity and technology,two components of its Purpose,as drivers for value creation along with diversity of employees and businesses,and defined materiality as“material topics that are related to sustainability,impact Sonys value creation,and are determined with longer-term social change and diverse stakeholder needs in mind.”Based on this thinking,Sony assessed the importance of various material topics related to sustainability from the perspectives of both the company and stakeholders,and specified climate change;diversity,equity and inclusion;respect for human rights;and technology for sustainability as the most important.For information on Sonys priorities and main initiatives related to sustainability,including the most important topics in the areas of focus,see the Sony Sustainability Report 2022 in addition to the table on page 31.Sustainability Report 2022https:/ Assessment StepsSony Group Material TopicsStep 1Identify and classify material topicsStep 2Assess topics from the perspective ofSony and its stakeholdersStep 3Identify the most important topicsImportance from Stakeholder PerspectiveImportance from Groups PerspectiveRespect forhuman rightsClimate changeDiversity,equity andinclusionTechnologyforsustainabilityMost importantImportantGreater importanceGreaterimportance30Note:Each of the following are essential across the Group,but those especially important for each segment are indicated inblue.Area of FocusKey FocusMaterial Topics Specific to Each Business Related MaterialsG&NSMusicPicturesET&SI&SSFinancial ServicesEnvironment Strive to achieve a zero environmental footprint throughout the lifecycle of Sonys products and business activities in order to realize a sustainable society Sustainability Report 2022 Environment Sustainability Report 2022 Addressing Social and Environmental Issues Sony Group Portal Website EnvironmentEmployees Respect and support each employees ambitions to grow and take on new challenges,and provide a range of experiences and opportunities for each diverse employee to make the most of their individual strengths,skills,abilities and creativity Sustainability Report 2022 Employees Sony Group Portal Website Diversity,Equity&Inclusion Sony Group Portal Website EmployeesRespect for Human Rights Continue reasonable efforts to avoid causing or contributing to adverse human rights impacts that may arise from our operations,products,services and/or business relationships Sustainability Report 2022 Respect for Human RightsResponsible Supply Chain Address risks to human rights,labor conditions,health and safety,and the environment throughout the electronics product supply chain Sustainability Report 2022 Responsible Supply ChainQuality and Customer Service Exceed customer expectations of product quality and customer service,pursue product safety,and improve usability and accessibility,thereby remaining a highly trusted partner to all customers Sustainability Report 2022 Quality and Customer Service Sony Group Portal Website Human-Centered Design Sony Group Portal Website AccessibilityCommunity Engagement Under the slogan“For the Next Generation,”contribute to the resolution of a wide range of global social issues in places where Sony does business around the world by fully utilizing Sony products,content,and technologies Sustainability Report 2022 Community Engagement Sony Group Portal Website Social ContributionEthics and Compliance Foster an ethical culture based on Sonys Values and the Sony Group Code of Conduct Continuously assess compliance risks in relation to Sonys business activities and review the compliance program based on the results of said assessment Strengthen and continue to run programs that address changes in the privacy environment and technological development Strengthen systems and initiatives that tackle AI ethics Sustainability Report 2022 Ethics and ComplianceCorporate Governance Establish and enhance corporate governance system that best suits the Sony Group Manage risks that may cause losses to the Sony Group Enhance information security management system and activities Comply with all applicable tax laws and regulations of each country and region where Sony conducts business as well as the common rules and guidance regarding international taxation Sustainability Report 2022 Corporate Governance Sony Group Portal Website SEC FilingsArea of Focus and Specific Actions for Sustainability31SustainabilityNote:Previous targets in grey*Suppliers equivalent to 10%of supply chain greenhouse-gas emissions will set their own targets in line with SBT.Focus Area:Accelerating Measures Against Climate Change Progress to Date and Acceleration of Achievement TargetsThe transition to a decarbonized society is a pressing issue for the global community.Sony is putting effort into measures against climate change from two perspectives:responsibility to aim to reduce greenhouse-gas emissions to zero,and contribution to innovation for industry and society.Since the early 1990s,Sony has been operating under environmentally-conscious policies and action plans.Road to Zero,an environmental plan established in 2010,is designed to reduce the Groups environmental footprint to zero by 2050 by following a specific road map including goals set from four perspective on environment,namely:climate change,resources,chemical substances and biodiversity.To address climate change,Sony has committed to reducing greenhouse-gas emissions to zero in both business operations and in its products throughout their life cycles.Sony sets medium-term environmental targets every five years,backcasting from the final goals of the plan for 2050,with each business pursuing its respective action plan to achieve them.The current mindset in society in response to the increasingly serious effects of climate change is to support requiring corporations worldwide to accelerate measures to address climate change.For example,the international Science Based Targets initiative(SBTi)now stipulates a global temperature rise of 1.5C above pre-industrial levels as the new target level,rather than the 2C target set by the 2015 Paris Agreement,as well as establishing standards for net zero targets.Under these circumstances,Sony announced in May 2022 that it will push forward its goal of achieving net zero throughout the entire value chain,moving the target year from 2050 to 2040.Specifically,this entails making direct and indirect emissions from its own operations(Scopes 1 and 2)carbon neutral by 2030.Sony has also accelerated its goal to achieve 100%renewable energy in its own operations by ten years,from 2040 to 2030(see the chart below).Moreover,Sonys net zero target for 2040 was approved as the net zero target for the Science Based Targets initiative in August 2022.Priority Initiatives to Achieve New TargetsTo achieve these new targets,the Sony Group will continue to make an across-the-board effort to promote the use of renewable energy at all its business sites while reducing energy consumption.One example is the new Fab5 building at the Nagasaki Technology Center for image sensor production,which commenced operations in April 2021.Here,AI-assisted advanced control technology has been employed in semiconductor production to operate clean-room chillers and boilers,along with a system to recycle waste heat from production equipment to drive boilers,resulting in clean-room energy consumption efficiency being improved by 30%compared to the FY2015 level.Across the entire life cycle of Sony products,greenhouse-gas emissions are highest when they consume electricity during customer use.With that in mind,Sony will pursue innovation in areas such as product design while accelerating initiatives promoting a net zero society.Specifically,Sony is exploring investment opportunities in startups working on technology for the environment,mainly through the Sony Innovation Fund:Environment,a corporate venture capital fund established in 2020,as well as through making proposals to national governments and industry associations worldwide.Carbon removal/fixation is a particularly vital challenge to meet in order to realize net zero carbon emissions by 2040.Going forward,Sony is looking into various technologies leading to solutions,such as exploring credit generation from carbon absorption associated with augmented ecosystem businesses such as SynecocultureTM being rolled out by a Group company,SynecO,Inc.Sony will contribute to carbon fixation via both technological removal and natural absorption by ecosystems.Road to Zero Road Map OverviewCarbon emissionsfrom product use:45%reduction(vs.FY2018)Supplierengagement targets*Carbon emissions fromentire product life cycle:ZeroCarbon emissions fromentire product life cycle:ZeroScope 12Scope 3OverallScope 12CarbonneutralCarbon emissions fromelectricity used inSonys operations:ZeroCarbon removal:IncrementalimplementationCarbon emissions fromelectricity used inSonys operations:ZeroCarbon emissionsfrom business site72%reduction(vs.FY2018)20302025203520402045205032SustainabilityFocus Area:Initiatives for People and SocietyDiversity,Equity and Inclusion(DE&I)Based on its Purpose,Sony works to create value for society.When employees from many different backgrounds come together,as they do at Sony,it is important to respect their diverse values,always remember the importance of equity and foster an inclusive organizational culture of mutual acceptance.Sony undertakes DE&I initiatives based on its People Philosophy,“Special You,Diverse Sony,”as well as the Sony Group Diversity Statement.While specific DE&I challenges vary by nation,region and industry,Sony takes a global approach to addressing gender diversity issues.At the end of FY2021,women comprised 35.0%of Sonys workforce and 30.1%of the Groups management positions.Sony has each Group company set goals for its respective initiatives going forward to facilitate creating working environments and systems that help every employee work comfortably,hiring diverse individuals and training more women for management posts,especially in Japan,where creating more career opportunities for women is an important social priority.Sony also hires and provides workplace support for individuals with disabilities.Beyond complying with the laws,rules and regulations of each nation and region in which it operates,Sony is devoted to creating inclusive workplaces where all employees,regardless of disability,can build careers.In December 2019,Sony joined the Valuable 500,an international initiative to help promote the active participation of people with disabilities in society,and has been named among the Iconic Companies,a list of companies that are leading the way in actively including people with disabilities.Respect for Diversity and Contributing to an Inclusive SocietyThe Sony Group as a whole makes promotion of DE&I a priority,and undertakes initiatives related to diversity and social justice.This is seen in Sonys endeavors to make its products and services more accessible using technology.Sony is accelerating collaboration with other companies in improving accessibility and inclusion for everyone.For instance,with the truly wireless headphones“LinkBuds,”whose open ring design allows the user to hear ambient sound,Sony has collaborated with Microsoft to implement voice navigation using 3D spatial audio allowing for a natural heads-up and hands-free experience when walking outside.In 2020 Sony established the Global Social Justice Fund,a 100 million USD fund to support organizations that promote social justice and the protection of human rights in order to foster diversity,equity and inclusion around the world.As part of its assistance through the fund,in June 2022 Sony Music Group established the Sony Music Group Global Scholars Program to provide career support to talented individuals in the music industry.Sony Corporation of America partnered with PolicyLink to fund its work in advancing racial and economic equity;and provided funding to The Steve Fund so that it may build a national platform connecting families and young people of color nationwide with mental health programs and services.Sony believes that respecting diversity,along with commitment from top management,is an important value for each and every employee to understand and work toward.By cultivating this kind of corporate culture,Sony will in turn continue its efforts to make society more inclusive.LinkBuds:Sonys truly wireless headphonesSony Music Group Global Scholars ProgramRace Forward,one of the Global Social Justice Fund grantees33SustainabilityValue Creation in Each Business34Jim RyanOfficer in charge of Game&Network Service BusinessPresident and CEO,Sony Interactive Entertainment LLCRob StringerOfficer in charge of Music Business(Global)Chairman,Sony Music GroupCEO,Sony Music EntertainmentShunsuke MuramatsuOfficer in charge of Music Business(Japan)President and Representative Director of the Board,CEO,Sony Music Entertainment(Japan)Inc.We represent more world class artists and songwriters whilst building innovative support services for their creativity.Our company keeps expanding through organic growth and acquisitions.We aim to base all our global activity on transparency,integrity and fairness.We will aim to continue to provide PlayStation content to gamers around the world and across more devices with innovative technology,cross-platform development,live services,and cloud streaming capabilities.In music and anime especially,we are strengthening talent and IP development capabilities to craft hit titles that we believe will fuel excitement among fans,while leveraging various solutions for providing new ways to enjoy entertainment.Messages from the Heads of the BusinessesG&NSMusicAnthony VinciquerraOfficer in charge of Pictures BusinessChairman and CEO,Sony Pictures Entertainment Inc.Kimio MakiOfficer in charge of Entertainment,Technology&Services BusinessRepresentative Director,President and CEO,Sony CorporationTerushi ShimizuOfficer in charge of Imaging&Sensing Solutions BusinessRepresentative Director,President and CEO,Sony Semiconductor Solutions CorporationMasashi OkaPresident and CEO,Representative Director,Sony Financial Group Inc.SPEs Four Pillar strategy is working.This year,we achieved record results while pursuing transformative M&As for future growth.We will aim to continue building on this momentum and provide audiences with deeper connections to our content.We continue to deliver Kando and Anshin to people and societies across the world through the pursuit of technology and new challenges creating the future together with content creators.We are working to have our various stakeholders understand and relate to our corporate slogan,“Sense the Wonder,”as well as to co-create new value,spark imaginations in people,and enrich society.With businesses from life and non-life insurance to banking and nursing care,and with our Lifeplanner sales specialists,SFG“stays close to people”and uses the“power of technology”to help customers enjoy peace of mind and realize their dreams.PicturesET&SI&SSFinancial Services35Value Creation in Each Business21531157HardwarePhysical Software 21Digital SoftwareAdd-on Content Network Services Other FY2021SalesBreakdown(%)4291011Recorded Music(Streaming)19Recorded Music(Others)Music Publishing(Streaming)9Music Publishing(Others)Visual Media&Platform(Mobile games)Visual Media&Platform(Others)FY2021SalesBreakdown(%)423424Motion PicturesTelevision ProductionsMedia NetworksFY2021SalesBreakdown5(%)Business ProfilesGame&Network Services(G&NS)Revenue SourcesIn FY2021,the second year since the release of PS5TM,G&NS enjoyed growth in hardware sales and continued carrying forward the earnings structure of the past few years,characterized by an upward recurring revenue trend via PSN due to the growth of network services and add-on content,in addition to strong software sales.The number of monthly active users of the entire line of PlayStation consoles and total game playing time,which together are the basis for the upward trend,are both increasing over time.Investment Areas1G&NS limits fluctuations in its assets within a certain range by outsourcing most hardware production and expensing most development costs for new consoles and software.It invests in M&A and strategic partnerships,mainly with game developers,as well as in R&D to strengthen content IP.In FY2021 G&NS announced the acquisition of Bungie,which has strength in live service games,as well as Firesprite and Haven Entertainment Studios.Revenue SourcesMusic production is a relatively capital-efficient business,as revenues from digital distribution and package sales are shared with artists and other related parties.Music publishing,with its immense music catalog,has a business structure that allows it to generate stable revenues from royalties and other sources over the long term,although ROIC4 is low.Visual media and platform are characterized by solid medium-term profitability due to multifaceted application of content IP.Investment Areas1The Music segment is actively engaged in discovering and cultivating new talent.It is also enhancing its support for independent and local artists,particularly as such artists account for a growing part of the market.In FY2021,the Music segment acquired AWAL and Som Livre,an independent Brazilian music label.The segment is also working to continuously enrich its music catalog,which is a collection of content with a high level of liquidity as an asset.It is also enhancing investment in anime content IP,which can be deployed and utilized across a wide variety of media.Revenue SourcesMotion pictures generate mid-to long-term revenue from digital distribution and television licensing in addition to box-office revenue.While theatrical film releases have been affected by the pandemic,income from streaming and licensing has been steadily increasing,and the overall value of content,including TV programs,is trending upward.Media networks offer two stable revenue sources,subscription fees and advertising fees,while niche-market DTC services offer stable growth potential for the communities of interest they can foster.Investment Areas1While content production and acquisition costs are capitalized as deferred film production costs,the recovery of funds tends to be over a longer period of time,resulting in a larger capital investment.Investment targets include firms that produce motion pictures and TV programs.In FY2021 Sony completed its takeover of Crunchyroll,one of the worlds largest anime distributors,and announced a merger with Zee Entertainment Enterprises Ltd.,a media content firm in India.Forerunner of Sonys entertainment businessRanks first2 globally in music publishing and second3 in music production(FY2021 operating CF:6
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2022Environmental,Social&Governance ReportTable of contentsThis is an interactive report.When you se.
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Sonys Purpose&ValuesPurposeFill the world with emotion,through the power of creativity and technology.ValuesDreams&CuriosityPioneer the future with dreams and curiosity.DiversityPursue the creation of the very best by harnessing diversity and varying viewpoints.Integrity&SincerityEarn the trust for the Sony brand through ethical and responsible conduct.SustainabilityFulfill our stakeholder responsibilities through disciplined business practices.The Sony Group Code of ConductApproach to SustainabilityThe Sony Group Code of ConductThe Sony Group Code of Conduct(the“Code”)sets forth the basic standards of ethical and responsible business conduct that must be followed by all Sony directors,officers,and employees(“Sony Group personnel”)in their daily work.The Code requires that we ask if our business conduct contributes to a better future,not only for Sony,but also for society as a whole.The Code provides a set of guiding principles to conduct our business activities on a principled path.Staying true to the Code helps ensure Sonys long-term success,which in turn is based on the trust of stakeholders.Sonys Purpose,which is to fill the world with emotion through the power of creativity and technology,challenges Sony Group personnel to create new value,as well as to contribute to stakeholders from a long-term perspective.In pursuing this Purpose,in accordance with our Values,it is crucial that we follow the Code.Sony manages diverse businesses with people at the core,and aims for sustainable value creation based on such diversity and mid-to long-term growth in the Sony Groups corporate value under its Purpose to“fill the world with emotion,through the power of creativity and technology,”and its Corporate Direction of“getting closer to people.”In order to have people connected to each other through emotion,it is necessary to create a society in which everyone can live with peace of mind in a healthy global environment.Sony acts with due consideration of the impact of its business activities on stakeholders,including shareholders,customers,employees,suppliers,business partners,local communities and other organizations as well as the global environment,and focuses on building trust with stakeholders through dialogue.Through innovation and sound business practice,Sony endeavors to enhance its corporate value and contribute to the development of a sustainable society.GRI Standards Content IndexData SectionCorporate GovernanceEthics and ComplianceCommunity EngagementQuality and Customer ServiceResponsible Supply ChainRespect for Human RightsEmployeesEnvironmentAddressing Social and Environmental IssuesSonys SustainabilityBusiness OverviewEditorial PolicyThe Sony Group Code of Conduct Approach to SustainabilitySonys Purpose&ValuesSustainability Report 2022002C o n t e n t sSonys Purpose&Values 001 Employees 064064 Management Approach065 Highlight066 Sonys People Philosophy067 Diversity,Equity and Inclusion071 Talent Development075 Employee Engagement079 Occupational Health&Safety084 Maintaining and Promoting Health Community Engagement 109109 Management Approach110 Highlight111 Policy,Framework and Key Areas of Community Engagement112 Results of Community Engagement Initiatives115 Disaster Relief and Humanitarian Aid116 Volunteer Systems for EmployeesData Section 147147 Datasheet153 Environmental Data Collection Methods and Rationale156 Independent Assurance StatementGRI Standards Content Index 157 Ethics and Compliance 117117 Management Approach118 The Sony Group Code of Conduct119 Sonys Ethics and Compliance Program122 Organizational Structure123 Responsible Business Conduct125 Privacy and Personal Information Management126 Responsible AI Corporate Governance 127127 Management Approach128 Corporate Strategy,Business Strategy and Other Policies128 Governance Framework139 Internal Control and Governance Framework144 Relationship with Shareholders and Other Stakeholders Respect for Human Rights 086086 Management Approach087 Highlight088 Human Rights Initiatives Responsible Supply Chain 090090 Management Approach091 Highlight092 Supply Chain Management098 Responsible Sourcing of Minerals Quality and Customer Service 100100 Management Approach101 Highlight102 Product Quality and Quality Management104 Improving the Quality,Safety and Long-Term Reliability of Products105 Customer Service106 Improving the User Experience107 AccessibilityThe Sony Group Code of Conduct Approach to Sustainability 002Editorial Policy 004Business Overview 005 Addressing Social and Environmental Issues 019019 Contributing via Technological Development021 Contributing via Business Support021 Research&Development Environment 022022 Management Approach023 Highlight024 Environmental Policies and Targets037 Contributions to Solving Environmental Issues039 Products and Services046 Supply Chain047 Sites057 Logistics058 Product Recycling062 Environmental CommunicationSonys Sustainability 006006 Organizational Structure007 Message from the Senior Executive in charge of Sustainability008 Materiality009 Summary of Actions013 Stakeholder Engagement016 SDGs and Sonys Contributions017 External Evaluation and RecognitionNavigation ButtonsBack to the contents pageBack to the previously viewed pagePrevious pageNext pageGo to the relevant page in this reportGo to the relevant external siteSustainability Report 2022003Editorial PolicyEditorial PolicySony started to issue its Environmental Report in 1994.The report was then issued as Sonys CSR Report from 2003 to 2017,and has been issued as the Sustainability Report since 2018.The Sustainability Report 2022 has been issued to provide a comprehensive and detailed report on non-financial information for a wide range of stakeholders.This report categorizes into eight areas of activity,and it focuses on activities in fiscal year 2021.It is issued with the approval of the corporate executive officer in charge of sustainability.Scope:Sony Group Corporation,consolidated subsidiaries and other companies within the scope of consolidationIn this report,“Sony”refers to the“Sony Group,”as distinct from Sony Group Corporation and Sony Corporation.“Headquarters”refers to Sony Group Corporation.The“Sony Group”refers to Sony Group Corporation(the parent company operating in Japan)and all consolidated subsidiaries in which Sony Group Corporation holds a capital stake of more than 50%.For a list of consolidated subsidiaries please see“Affiliated Companies”on Sonys website.Affiliated CompaniesPeriod CoveredFY2021(April 1,2021-March 31,2022)Some information on activities in April 2022 and after is also included.Date of IssueAugust 2022(Previous report issued:August 2021;issued annually)Referenced GuidelinesThe information in this report is presented with reference to the Global Reporting Initiative(GRI)Standards.This report also refers to the Environmental Reporting Guidelines(Fiscal year 2018 version)published by Japans Ministry of the Environment.GRI Standards Content IndexReporting Principles of MaterialitySony has defined materiality as“material topics related to sustainability that impact Sonys value creation and are based on mid-to long-term social changes and the needs of diverse stakeholders,”and conducted a materiality assessment from the perspectives of both the company and the stakeholders.MaterialityThird-Party VerificationFor a third-party report on the verification of environmental data,please use the link below.Independent Assurance StatementDisclosure and Communication of Financial and Non-Financial InformationSony understands the importance of appropriate disclosure to and communication with stakeholders.Since 2019,Sony has been issuing its Corporate Report to comprehensively communicate financial information and non-financial information,including policies for mid-to long-term value creation and business strategies.Sony also posts financial data,non-financial information and business summaries designed primarily for investors and shareholders on the Investor Relations section of its website.In addition,Sony issues its Sustainability Report to provide a wide range of stakeholders with non-financial information on topics such as activities related to sustainability and CSR.Disclosure of Financial and Non-Financial InformationCorporate Report Investor Relations WebsiteIntegrated report covering financial and non-financial information,such as business strategy and management policies for mid-to long-term value creation Message from the CEO Value Creation at Sony Value Creation in Each Business Corporate GovernanceA business overview,with financial and non-financial information,particularly relevant to investors and shareholdersBriefings for Investors Corporate Strategy Meeting Earnings Announcement Business Segment Briefings ESG/Sustainability BriefingFinancial Reports Securities Report(Japanese only)SEC FilingsCorporate Governance and Internal Controls Corporate Governance ReportSustainability ReportCovers non-financial information,such as activities related to sustainability and CSR,relevant to a wide range of stakeholders Approach to Sustainability Addressing Social and Environmental Issues Environment Employees Respect for Human Rights Responsible Supply Chain Quality and Customer Service Community Engagement Ethics and compliance Corporate GovernanceMedia Utilized for DisclosureReportsCorporate ReportCorporate Governance Report(in Japanese)Securities Report(in Japanese)Website LinksInvestor RelationsSustainabilityGRI Standards Content IndexData SectionCorporate GovernanceEthics and ComplianceCommunity EngagementQuality and Customer ServiceResponsible Supply ChainRespect for Human RightsEmployeesEnvironmentAddressing Social and Environmental IssuesSonys SustainabilityBusiness OverviewEditorial PolicyThe Sony Group Code of Conduct Approach to SustainabilitySonys Purpose&ValuesSustainability Report 2022004Business OverviewCorporate Data(as of March 31,2022)Company nameSony Group Corporation(trade name changed from Sony Corporation as of April1,2021)FoundedMay 7,1946Headquarters1-7-1 Konan,Minato-ku,Tokyo,108-0075 JapanCommon stock880.4 billion yenSubsidiariesSubsidiaries 1,521Affiliated companies 155Out of which 1,488 are consolidated subsidiaries(including structured entities),and 139 are equity-method affiliates(including jointly-controlled entities)Headcount(consolidated)108,900Listed stock exchangesTokyo Stock Exchange(Japan)New York Stock Exchange(outside Japan)Shares per unit100Fiscal year-endMarchOrdinary general meeting of shareholdersJuneNumber of shares issued1,261,081,781Number of shareholders399,144Data by Geographic SegmentData by SegmentDistribution by shareholder typeSecurities Report(in Japanese)Form 20-FNumber of EmployeesNumber of EmployeesSales and financial services revenueSales and financial services revenueOther Areas*600.8 billion yenAsia-Pacific*1,149.3 billion yenChina771.0 billion yenEurope1,870.1 billion yenAsia-Pacific:Southeast Asia,India,Oceania,Taiwan Region and South KoreaOther Areas:Middle East,Latin America,Africa and Canada9,921.5 billion yen(FY2021 Results)108,900(as of March 31,2022)Other Areas*3,600Asia-Pacific*17,300Mainland China and Hong Kong Region7,100Europe12,300United States13,500Japan55,100All Other 2,300Corporate employees 6,000Financial Services13,200Imaging&Sensing Solutions18,100Music10,800Pictures8,100Game&Network Services10,200Entertainment,Technology&Services40,200108,900(as of March 31,2022)Foreign institutions and individuals 58.6%Japanese financial institutions 26.3%Japanese individuals and others 10.6%Other Japanese corporations 1.1%Japanese securities firms 1.5%Treasury stock 1.9%Other Areas*600.8 billion yenAsia-Pacific*1,149.3 billion yenChina771.0 billion yenEurope1,870.1 billion yenUnited States2,766.0 billion yenJapan2,764.3 billion yenAsia-Pacific:Southeast Asia,India,Oceania,Taiwan Region and South Korea9,921.5 billion yen(FY2021 Results)Financial Services1,533.8 billion yenEntertainment,Technology&Services2,339.2 billion yenImaging&Sensing Solutions1,076.4 billion yenMusic1,116.9 billion yenPictures1,238.9 billion yenGame&Network Services2,739.8 billion yen9,921.5 billion yen(FY2021 Results)GRI Standards Content IndexData SectionCorporate GovernanceEthics and ComplianceCommunity EngagementQuality and Customer ServiceResponsible Supply ChainRespect for Human RightsEmployeesEnvironmentAddressing Social and Environmental IssuesSonys SustainabilityBusiness OverviewEditorial PolicyThe Sony Group Code of Conduct Approach to SustainabilitySonys Purpose&ValuesGRI Standards Content IndexData SectionCorporate GovernanceEthics and ComplianceCommunity EngagementQuality and Customer ServiceResponsible Supply ChainRespect for Human RightsEmployeesEnvironmentAddressing Social and Environmental IssuesSonys SustainabilityBusiness OverviewEditorial PolicyThe Sony Group Code of Conduct Approach to SustainabilitySonys Purpose&ValuesSustainability Report 2022005Organizational StructureOrganizational Structure for Sustainability InitiativesSonys organizational structure for sustainability initiatives is spearheaded by the Sustainability Section at Sony Group Corporation headquarters,which in turn operates under the supervision of the Senior Executive in charge of Sustainability,who is appointed by the Board of Directors.Sustainability Initiatives Formulate sustainability-related policies for the entire Sony Group Monitor sustainability-related activities Pursue sustainability activities in management and business units Disclose information to stakeholders and promote dialogue Raise employee awareness Report to the Board of DirectorsFormulating and Monitoring of Sustainability-Related PoliciesThe Sustainability Section formulates sustainability-related policies for the entire Sony Group,pursuing and monitoring sustainability activities.It also reports on various external inputs to the Senior Executive in charge of Sustainability,and ensures that these inputs are fed back to the management team and sections in charge of headquarters functions(including legal,compliance,corporate communication,environment,product quality,procurement,investor relations,human resources,and marketing).Accordingly,Sony addresses sustainability from a Group-wide perspective and incorporates issues into management action as necessary.The Sustainability Section and other sections in charge of headquarters functions then implement sustainability activities throughout the Group by ensuring that Sonys policies and initiatives are conveyed to business units and group companies around the world.Pursuing Sustainability Activities in Management and Business UnitsStarting from fiscal year 2020,Sony has adopted a key performance indicator for sustainability initiatives as part of the evaluation pertaining to the remuneration linked to business results for Senior Executives.In addition,from fiscal year 2021,Sony is incorporating initiatives that address sustainability issues into the mid-range plans of each of its businesses,such as measures related to employees and the environment identified as key to each respective business,and Sony has set KPIs for those initiatives as part of its business performance evaluations.Information Disclosure and Dialogue with StakeholdersThrough the issuance of various reports such as its Corporate Report and Sustainability Report,and through its ESG Briefing and websites,Sony communicates its approach to sustainability and information about initiatives regarding sustainability.Corporate ReportESG BriefingSustainabilityRaising Employee AwarenessSony recognizes the importance of boosting employee awareness of sustainability and engages in a variety of initiatives to do so.Sustainability Awards Events such as the Sustainability Forum Sustainability-themed sessions at global online meetings open to all employees Dissemination of information via intranet websites E-learning training programsReports to the Board of Directors for ReviewThe Sustainability Section submits quarterly reports on its activities to the Board of Directors.Once a year,in principle,it reports to the Board of Directors on the status of Sonys entire set of sustainability initiatives,and the Board reviews them.For matters of great importance,the senior executive and department in charge of a particular matter provide regular reports for the Board of Directors to review.Board of DirectorsSenior Executive in charge of SustainabilitySustainability Sectionat Sony Group CorporationRelated Sonyheadquarters departmentsBusiness units,Sony Group companiesGRI Standards Content IndexData SectionCorporate GovernanceEthics and ComplianceCommunity EngagementQuality and Customer ServiceResponsible Supply ChainRespect for Human RightsEmployeesEnvironmentAddressing Social and Environmental IssuesOrganizational StructureMessage from the Senior Executive in charge of SustainabilityMaterialitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityBusiness OverviewEditorial PolicyThe Sony Group Code of Conduct Approach to SustainabilitySonys Purpose&ValuesSustainability Report 2022006on sustainability as a key element of our management approach.I have particularly focused on integrating sustainability activities that were previously driven by Sony headquarters into the operations of each individual business,and the top management in Sonys various businesses are now taking the lead in promoting sustainability initiatives.Sustainability and ESG are positioned as important themes in board meetings,which are attended primarily by outside directors with diverse experience and expertise.The progress of the various sustainability initiatives is regularly reported to the Board,and the Board deliberates and approves sustainability policy.In order for Sony to also strengthen its governance from the viewpoint of sustainability,starting from fiscal year 2020,Sony has adopted a key performance indicator for sustainability initiatives as part of the evaluation pertaining to the remuneration linked to business results for Senior Executives.In addition,from fiscal year 2021,we are incorporating initiatives that address sustainability issues into the mid-range plans of each of our businesses,such as measures related to employees and the environment identified as key to each respective business,and we have set KPIs for those initiatives as part of our business performance evaluations.Sony is making various efforts regarding the global environment from the two perspectives of responsibility and contribution.Sony has pursued environmental initiatives in accordance with its environmental principles since the early 1990s.And in 2010,we announced the Road to Zero,a long-term global environmental plan that aims to realize a sustainable society by achieving a zero environmental footprint throughout the life cycle of Sonys products and business activities by the year 2050,and drew and carried out a comprehensive roadmap to achieve the goals of the plan.The Road to Zero plan symbolizes Sonys responsibility for the global environment.However,as climate change risks become more apparent and serious worldwide,and the transition to a decarbonized society has become an urgent issue,Sony decided in May 2022 to accelerate its environmental impact reduction activities in the climate change area and to bring forward the target year of achieving a zero environmental footprint in this area by ten years.It aims for carbon neutrality of all emissions,including those covered by Scope 3,by 2040.Sony has also accelerated the goal of achieving 100%renewable electricity used at its own sites by ten years,from 2040 to 2030.To this aim,Sony will implement measures such as continuing to reduce environmental impact at its own sites,further promoting the energy efficiency of its products,encouraging its partners to take action and contributing to carbon removal and fixation.Sony is also actively working to contribute to the global environment through its own technologies and businesses,as well as through co-creation with partners.Intelligent vision sensors are one example of this.Using AI to analyze and process images reduces the amount of data uploaded to the cloud,while also addressing security and privacy concerns and enabling a reduction in power consumption.Sony is working with various partners to develop and deliver next-generation solutions that utilize its intelligent vision sensors.In recent years,corporations are facing ever more complex and diverse human rights issues.Sony respects the human rights of all stakeholders involved in its business operations and strives to prevent and mitigate potential adverse impact on human rights.Sonys goal is to create value for society through an array of businesses centered on people.Sony is fostering diversity,equity and inclusion(DE&I)throughout the entire Group,where differences in background,gender and ability are viewed as strengths.The Group is also promoting initiatives aimed at fostering diversity and social justice in its engagement with greater society.In 2020,Sony established the Global Social Justice Fund to support initiatives that promote social justice and human rights and foster DE&I around the world.We also established the Sony Global Relief Fund for COVID-19 to support those around the world affected by COVID-19.In order to provide humanitarian aid for people impacted by the conflict in Ukraine and those who have taken refuge in neighboring countries,in March 2022 Sony made donations to relevant international organizations and NGOs,and employees held fund-raising initiatives.Regarding human rights risks in the supply chain of electronics products,we are strengthening our efforts to implement the Sony Supply Chain Code of Conduct,and we are also working collaboratively with global companies and other stakeholders.Sony actively discloses its sustainability-related initiatives through ESG briefings,the Corporate Report and the Sustainability Report.We also place great importance on dialogue with our stakeholders.Sony Group employees are also important stakeholders,and,in addition to top managements commitment to sustainability initiatives,Sony strives to foster a corporate culture in which each employee recognizes that sustainability is an issue that affects them personally.Sony has established sustainability awards as an in-house award system to encourage initiatives in each business and region.We also strive to boost employee awareness of sustainability by sharing information at online meetings for all Sony Group employees and by holding forums.Going forward,Sony will continue to engage in dialogue with various stakeholders,develop our sustainability initiatives even further,and fulfill our responsibility and contribution to society and the global environment.Sonys responsibility and contribution to Society and the Global EnvironmentSony develops diverse businesses globally in alignment with its purpose to“fill the world with emotion,through the power of creativity and technology”and corporate direction of“getting closer to people.”The Sony Group Code of Conduct states,“It is the core corporate responsibility of Sony to society to pursue its corporate value enhancement through innovation and sound business practices and contribute to developing a sustainable society.”For Sony to continue to provide emotion and create social value,it is necessary for the society and global environment in which we live to be healthy.Our daily lives,and Sony Group businesses,are being significantly impacted by the COVID-19 pandemic,extreme weather events around the world,and various social issues including those related to human rights and diversity,providing a stark reminder that the health of the global environment and society is not something we can take for granted.It is our responsibility to directly acknowledge the environmental and social impact of our business operations and take appropriate action to minimize and redress them.At Sony,we can also make contributions to solving environmental and social issues through our technologies and businesses,and I believe this is becoming an increasingly important consideration.At Sony,ever since our founding,we have continued to uphold the principle of creating value for the society in which we operate.Since 2018,under the leadership of CEO Kenichiro Yoshida,Sony has focused Message from the Senior Executive in charge of SustainabilityShiro KambeSenior Executive Vice PresidentCorporate Executive OfficerOfficer in charge of SustainabilitySony Group CorporationGRI Standards Content IndexData SectionCorporate GovernanceEthics and ComplianceCommunity EngagementQuality and Customer ServiceResponsible Supply ChainRespect for Human RightsEmployeesEnvironmentAddressing Social and Environmental IssuesOrganizational StructureMessage from the Senior Executive in charge of SustainabilityMaterialitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityBusiness OverviewEditorial PolicyThe Sony Group Code of Conduct Approach to SustainabilitySonys Purpose&ValuesSustainability Report 2022007Step 1Identify and classify material topicsStep 2Assess topics from the perspective ofSony and its stakeholdersStep 3Identify the most important topicsMaterialityOverview and Purpose of Materiality AnalysisThe Sony Group develops diverse businesses globally.Sony recognizes that stakeholders expect it to maintain a well-defined stance and take action to address the issues facing society and the global environment,in addition to delivering emotional experiences through its business.In response to such expectations,and to various social and environmental changes,Sony reviewed material topics in sustainability from the standpoints of all its businesses in FY2022.In that process,Sony designated creativity and technology,two components of its Purpose,as drivers for value creation along with diversity of employees and businesses,and defined materiality as“material topics that are related to sustainability,impact Sonys value creation,and are determined with longer-term social change and diverse stakeholder needs in mind.”The Materiality Assessment ProcessStep 1:Identify and classify material topicsBased on internal and external information and documents,Sony selected material topics with high relevance.References included the Global Reporting Initiative(GRI)Standards and the Sustainability Accounting Standards Board(SASB)standards,which are global guidelines for sustainability reporting,the ISO 26000 international standard for corporate social responsibility,and the SDGs,which are globally agreed goals for building a sustainable world.Step 2:Assess the topics from the perspective of Sony and its stakeholdersThe topics identified and classified in the Step 1 were assessed from the perspectives of Sony and its stakeholders.The senior executives in charge of Sony headquarters functions assessed each topic from the angle of its mid-to long-term positive or negative impact on value creation at Sony to determine its importance from the companys perspective.The assessment of the importance of each topic from the perspective of stakeholders was based on information published by NGOs,investors,ESG rating agencies,the mass media and other sources.Step 3:Identify the most important topicsThe most important topics were specified after being reviewed by top management and the Board of Directors on the basis of the assessment conducted in Step 2.Analysis Results and Sony Group Material TopicsAs a result of the aforementioned assessment process,climate change;diversity,equity and inclusion;respect for human rights;and technology for sustainability as the most important.The Sustainability Report 2022 classifies Sonys material topics,including the above,into eight categories:environment,employees,respect for human rights,responsible supply chain,quality and customer service,community engagement,ethics and compliance,and corporate governance.Importance from Stakeholder PerspectiveImportance from Groups PerspectiveRespect forhuman rightsClimate changeDiversity,equity andinclusionTechnologyforsustainabilityGreater ImportanceGreaterImportanceMost ImportantImportantSony Group Material TopicsMateriality Assessment StepsGRI Standards Content IndexData SectionCorporate GovernanceEthics and ComplianceCommunity EngagementQuality and Customer ServiceResponsible Supply ChainRespect for Human RightsEmployeesEnvironmentAddressing Social and Environmental IssuesOrganizational StructureMessage from the Senior Executive in charge of SustainabilityMaterialitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityBusiness OverviewEditorial PolicyThe Sony Group Code of Conduct Approach to SustainabilitySonys Purpose&ValuesSustainability Report 2022008Summary of ActionsArea of focusKey focusAchievements in fiscal year 2021Future initiativesCoverageEnvironment Strive to achieve a zero environmental footprint throughout the life cycle of Sonys products and business activities in order to realize a sustainable societyClimate Change Annual energy consumption rate per product:Up 3.3%(compared to fiscal year 2018)Greenhouse gas emissions from sites:Up 8.4%(compared to fiscal year 2020)Use of electricity derived from renewable energy(renewable energy ratio):14.6%GHG emissions related to logistics between nations and within regions:Up 4.6%(compared to fiscal year 2018)Resource Conservation Use of virgin oil-based plastics per product unit:Down 3.1%(compared to fiscal year 2018)Use of plastic packaging per product unit:Down 15.2%(compared to fiscal year 2018)Amount of waste generated at sites:Worsened by approx.7.6%(compared to fiscal year 2020)Promoted the One Blue Ocean Project worldwide,and encouraged reduction of single use plastic use at Sony sitesChemical Substances Facilitated the use of alternative substances for PVC and BFR based on Sony standards for the management of chemical substancesBiodiversity Implemented education and awareness-raising initiatives on biodiversity conservation at all Sony sites as part of their community engagement Promoted the One Blue Ocean Project worldwide,and held community clean ups for plastic waste Expanded the Food for the Future project,distributed a guidebook detailing environmentally conscious food to employees,and provided meals that utilize environmentally conscious ingredients in Sony employee cafeterias Ramp up initiatives to achieve carbon neutrality by fiscal year 2040 and a zero environmental footprint by fiscal year 2050 Develop and leverage technologies that contribute to global environmental conservation Enhance supply chain engagement Strengthen environmental awareness-raising activities in the entertainment and other businesses Expand the adoption of renewable electricity by installing photovoltaic panels at Sony sites to achieve the target of sourcing 100%renewable electricity for worldwide operations by fiscal year 2030 Achieve carbon neutrality for direct and indirect emissions(Scope 1&2)in Sonys own operations by 2030 Further strengthen initiatives to achieve climate change targets by fiscal year 2035,which were approved as 1.5C science-based targets(SBTs)Research and contribute to carbon removal/fixation Reduce plastic packaging materials used for products and the use of virgin oil-based plasticsEnvironmentAddressing Social and Environmental IssuesSony Group Portal Website EnvironmentGRI Standards Content IndexData SectionCorporate GovernanceEthics and ComplianceCommunity EngagementQuality and Customer ServiceResponsible Supply ChainRespect for Human RightsEmployeesEnvironmentAddressing Social and Environmental IssuesOrganizational StructureMessage from the Senior Executive in charge of SustainabilityMaterialitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityBusiness OverviewEditorial PolicyThe Sony Group Code of Conduct Approach to SustainabilitySonys Purpose&ValuesSustainability Report 2022009Area of focusKey focusAchievements in fiscal year 2021Future initiativesCoverageEmployees Respect and support each employees ambitions to grow and take on new challenges,and provide a range of experiences and opportunities for each diverse employee to make the most of their individual strengths,skills,abilities and creativityDiversity,Equity and Inclusion Percentage of management positions held by women:10.5%(Sony Group in Japan,as of March 31,2022)Percentage of employees with disabilities:2.87%(Sony Group Corporation,as of March 31,2022)As one of the Iconic Companies of The Valuable 500,provided support for the Media Hub projectTalent Development and Employee Engagement Provided more accessible learning opportunities,including personalized content and online courses on a wide range of topics Promoted an environment where employees consciously build their own career and aim for self-growth Sony University,which supports the professional growth of key personnel,accepted entrants from all businesses and expanded its program to include various forms of participation by top management Employee survey response rate of 91%,employee engagement index of 89%(Percentage of employees who did not give an unfavorable response to four questions regarding employee engagement)Occupational health&safety Implemented OHS initiatives targeting zero injury and zero illness 23 sites from amongst our 50 sites worldwide have obtained comprehensive ISO 45001 certification Focus on“Diversity,Equity and Inclusion,”“Talent Development,”and“Employee Engagement”Build safe,healthy working environments Provide opportunities for employees to improve and make the most of their individual strengths,skills,abilities,and creativityEmployeesCorporate ReportSony Group Portal Website Diversity,Equity&InclusionRespect for human rights Continue reasonable efforts to avoid causing or contributing to adverse human rights impacts that may arise from our operations,products,services and/or business relationships Established areas of focus based on a human rights impact assessment,and specified“responsible supply chain,”“respect for diversity,equity and inclusion,”and“responsible development and use of technologies”to be priority action areas Established a working group to implement human rights due diligence,and reviewed and monitored necessary actions Supported social justice and human rights initiatives through the Global Social Justice Fund Continue to analyze and monitor human rights risks throughout Sony Groups business activities and value chains Continue to carry out human rights due diligence,and will further enhance initiatives to prevent or mitigate potential negative impact on human rightsRespect for Human RightsResponsible supply chain Address risks to human rights,labor conditions,health and safety,and the environment throughout the electronics product supply chain Conducted CSR assessment at 12 Sony manufacturing sites and at the plants of 796 new and existing suppliers Distributed a video about sustainability to all suppliers Donated to the RMAP Audit Program(a fund to help cover the costs of refinery audits)Enforce strict compliance with the Sony Supply Chain Code of Conduct in Sony and its suppliers operations In addition to training for employees,enhance awareness-raising activities through communication with suppliers.Continue to collaborate with various stakeholders to enhance measures regarding the sourcing of high-risk mineralsResponsible Supply ChainGRI Standards Content IndexData SectionCorporate GovernanceEthics and ComplianceCommunity EngagementQuality and Customer ServiceResponsible Supply ChainRespect for Human RightsEmployeesEnvironmentAddressing Social and Environmental IssuesOrganizational StructureMessage from the Senior Executive in charge of SustainabilityMaterialitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityBusiness OverviewEditorial PolicyThe Sony Group Code of Conduct Approach to SustainabilitySonys Purpose&ValuesSustainability Report 2022010Area of focusKey focusAchievements in fiscal year 2021Future initiativesCoverageQuality and customer service Exceed customer expectations of product quality and customer service,pursue product safety,and improve usability and accessibility,thereby remaining a highly trusted partner to all customers Maintained the quality management system and continued to improve the quality of products Continued with initiatives to ensure the safety,long-term reliability,and security of products Continued with efforts to improve customer satisfaction by improving customer information centers and other customer services As part of Sonys initiatives to enhance the user experience,continued to take action from the customers perspective by employing Human-Centered Design(HCD)processes,and launched a certification system for HCD experts Engaged with inclusive design in order to deliver products and services that take accessibility into account Strengthen preventive measures,product compliance systems,and compliance with the product security regulations,thereby improving quality from the perspective of customers and achieving quality that exceeds customer expectations Continue leveraging its worldwide network to collect and analyze information which can then be reflected in the next releases of products and customer services Strengthen the processes for Human-Centered Design(HCD)and develop new talent with HCD skills Continue to promote accessibility and inclusive designQuality and Customer ServiceSony Group Portal Website Human-Centered DesignAccessibilityCommunity engagement Under the slogan“For the Next Generation,”contribute to the resolution of a wide range of global social issues in places where Sony does business around the world by fully utilizing its products,content,and technologies Community engagement expenditures:approx.3.5 billion JPY Educational programs for children(Approx.2,600 workshops and roughly 290 thousand participants)Utilized the Sony Global Relief Fund for COVID-19 to provide support in the medical and educational fields,and for the creative community(Fiscal year 2021 expenditures:approx.1.6 billion JPY)Supported initiatives to promote social justice and human rights through the Global Social Justice Fund(Fiscal year 2021 expenditures:approx.2.7 billion JPY)Continue striving to make the most of Sonys products,content,technologies,strengths of employees,and stakeholder partnerships to help address global issues and to meet various needs in local communities Through the two global funds,continue to support activities that leverage the Sony Groups assets and expertise Implement awareness-raising initiatives for people in and outside the Sony Group to address global issues,and strengthen employee engagement Apply technologies to solve social issuesCommunity EngagementSony Group Portal Website Social ContributionEthics and compliance Foster an ethical culture based on Sonys Values and the Sony Group Code of Conduct Continuously assess compliance risks in relation to business activities and review the compliance program based on the results of the assessment Strengthen and continue to run programs that address changes in the privacy environment and technological development Strengthen systems and initiatives that tackle AI ethics Provide trainings and messaging on ethics and compliance via the Global Ethics&Compliance Network Operate the Sony Ethics&Compliance Hotline(Number of reports:407 in fiscal year 2021)Maintained and implemented anti-corruption programs based on the Sony Group Anti-Bribery Policy Enhanced the global privacy management system and ran programs in order to respond to key changes in the privacy environment Improved the efficiency of privacy assessment processes through the use of privacy management software Provided privacy training to all employees Launched an AI ethics assessment of the development life cycle of electronics products and services Boosted employee awareness of AI ethics Continue to improve training and to set the tone from the top in order to create a corporate culture that values integrity and to ensure that every employee acts in a way that is ethically responsible Continue to assess risks and programs related to Sonys business activities and review the compliance programs based on the results of the assessment Improve technology and processes to further streamline privacy-related operations Monitor compliance with privacy-related policies,ensure that training is given,and strengthen action to boost awareness Improve AI ethics assessment processes and streamline their operation Improve and continue activities to educate employees about AI ethicsEthics and ComplianceGRI Standards Content IndexData SectionCorporate GovernanceEthics and ComplianceCommunity EngagementQuality and Customer ServiceResponsible Supply ChainRespect for Human RightsEmployeesEnvironmentAddressing Social and Environmental IssuesOrganizational StructureMessage from the Senior Executive in charge of SustainabilityMaterialitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityBusiness OverviewEditorial PolicyThe Sony Group Code of Conduct Approach to SustainabilitySonys Purpose&ValuesSustainability Report 2022011Area of focusKey focusAchievements in fiscal year 2021Future initiativesCoverageCorporate governance Establish and enhance the corporate governance system that best suits the Sony Group Manage risks that may cause losses to the Sony Group Enhance information security management system and activities-Comply with all applicable tax laws and regulations of each country and region where Sony conducts business as well as the common rules and guidance regarding international taxationEnhanced corporate governance system Continuously made periodic reports to the Board on ESG/sustainability related matters Enhanced Boards supervision over risks regarding economic security and geopolitics Focused on information security continuously through maintaining the number of directors in charge of information security Held additional executive sessions Expanded disclosure regarding in the table showing experiences and expertise of Directors Continuously conducted visiting audits by Audit Committee members at Sonys business sites.Risk management Continued to implement measures to secure employee safety and minimize business impacts under the Sony Group crisis management framework,in response to COVID-19 pandemic Conducted reviews of basic action manuals and implemented drills,to maintain and strengthen the functions of the crisis management framework and reduce business disruption risksInformation Security Monitored and responded to security threats on a 24/7 basis via the global security operations center Constantly strengthened information security programs and provided information security training to all employeesTax strategy Continue to manage our tax affairs in line with business objectives and operations,as well as regular reporting and communication regarding tax with CFO,who is a board member,and the Audit Committee.Corporate governance Selection of director candidates to ensure diversity/continuity on the Board of Directors Intensively review and effectively supervise over the following material items:ESG/sustainabilityInformation security,including cybersecurityRisks regarding economic security and geopoliticsGrowing/new business domain Implement a new type of stock-based compensation and strengthen remuneration governance measures Continuously conduct visiting audits by Audit Committee members at Sonys business sites,and ensure effective cooperation with financial auditors and internal audit departmentsRisk management Strengthen cooperation with group companies in business continuity planning(BCP),conduct and continuously improve practical drills,thereby enhancing the effectiveness of crisis management and BCP Manage impact to global operations due to trade restrictions and economic sanctions imposed by certain countries and regions Reduce risk for buildings by optimizing facility renewal and repair plans Reduce fire risk at manufacturing sites,in accordance with Sony Group guidelinesInformation Security Periodically validate and revise information security standards based on industry best practices,review security risks,and drive improvement initiatives,thereby continuously strengthening security governance Examine increasingly sophisticated cyber-attacks on a daily basis,improve countermeasures,and identify new threats,thereby continuing to swiftly and appropriately respond to security issues Continuously secure and develop high-level security professionalsTax strategy Continue to build open and transparent relationships with governments regarding our tax affairs.Continue to provide support to governments and the OECD regarding tax reform efforts and tax policy to ensure any future rules are fair and administrable.Corporate GovernanceCorporate ReportSony Group Portal Website Internal ControlSecurities ReportGRI Standards Content IndexData SectionCorporate GovernanceEthics and ComplianceCommunity EngagementQuality and Customer ServiceResponsible Supply ChainRespect for Human RightsEmployeesEnvironmentAddressing Social and Environmental IssuesOrganizational StructureMessage from the Senior Executive in charge of SustainabilityMaterialitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityBusiness OverviewEditorial PolicyThe Sony Group Code of Conduct Approach to SustainabilitySonys Purpose&ValuesSustainability Report 2022012Stakeholder EngagementCommunication with StakeholdersSony recognizes that,by addressing issues that are of concern to its many stakeholders,it is strengthening its operating foundation,which is in turn vital to its business activities and the achievement of sustainable growth.Sony strives to earn the trust of all stakeholders by conducting its business responsibly and engaging in stakeholder dialogue.StakeholdersPrincipal GoalsMain Communication MethodsCustomers Provide products and services that deliver satisfaction,safety and peace of mind from the customers perspective Provide customer service that further enhances customer satisfaction Enhance usability and accessibility Customer Center(handles inquiries from customers),important notices regarding products and services,surveys of purchasers,trade shows,seminars,the Accessibility website,various social media sites,etc.Shareholders Ensure swift and appropriate disclosure Achieve continued growth in corporate value General meetings of shareholders and presentations on financial results,Business Segment Briefings and meetings for individual investors,ESG and Technology Briefings,Websites disclosing information for investors,Corporate Report(integrated report),etc.Business partners Ensure appropriate,transparent and fair procurement practices,in line with the Sony Group Code of Conduct and Sony Supply Chain Code of Conduct Ensure that procurement practices are in harmony with the environment and society(including labor issues,human rights and conflict minerals)Explanatory meetings for suppliers,audits and surveys related to CSR procurement,dedicated website for suppliers and a department established for handling their inquiries,regular consultations with suppliers,Sony Group Policy for Responsible Supply Chain of Minerals Hotline,etc.Employees Support employees with diverse backgrounds Hire diverse employees Nurture global business leaders and engineers who will drive growth in the future Support individual career-building efforts Promote dialogue through employee surveys and town hall meetings Town hall meetings,career counseling,employee surveys,Sony Ethics&Compliance Hotline,labor-management negotiations,Occupational Health&Safety Committee,in-house newsletters,in-house websites,etc.Local communities Promote initiatives that contribute to communities in fields where Sony is best able to do so Disaster relief and humanitarian aid Collaborate with NGOs and NPOs to help address social challenges Local volunteer initiatives,participation in events held by local organizations and governments,social contribution initiatives,etc.Global environment Reduce the environmental footprint of Sonys business activities and products throughout their life cycle to zero Activities for contributing to the community and reducing the environmental burden at each site,measures that take the environment into consideration over the lifecycle of products and services,environmental information provided through communication with various stakeholders,information provided on the Sony Group Portal Website“Environment”NGOs,NPOs and other organizations Collaborate with NGOs and NPOs to help address social challenges Participate in global frameworks Participate in CSR-related organizations and projects Activities held in collaboration with NGOs and NPOs,etc.GRI Standards Content IndexData SectionCorporate GovernanceEthics and ComplianceCommunity EngagementQuality and Customer ServiceResponsible Supply ChainRespect for Human RightsEmployeesEnvironmentAddressing Social and Environmental IssuesOrganizational StructureMessage from the Senior Executive in charge of SustainabilityMaterialitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityBusiness OverviewEditorial PolicyThe Sony Group Code of Conduct Approach to SustainabilitySonys Purpose&ValuesSustainability Report 2022013Partnership and Participation in Multi-Stakeholder FrameworksFor Sony,engaging and working together with various stakeholders is vital for pursuing sustainability initiatives.In addition to promoting stakeholder engagement,Sony participates in multi-stakeholder efforts to forge a global framework for sustainability.Organization/InitiativeDescriptionSony ActionsResponsible Business Alliance(RBA)An alliance dedicated to supply chain responsibility encompassing human rights,labor conditions,health and safety,and the environment Founding member(of the former EICC)Formulated the Sony Supply Chain Code of Conduct,which incorporates the provisions of the RBA Code of Conduct Member of the RBA Board of Directors since 2020Council for Better Corporate Citizenship(CBCC)Established under an initiative of Nippon Keidanren(Japan Business Federation)Helps Japan-affiliated companies engaged in business overseas to form good relations with various stakeholders Sony co-founder Akio Morita served as its first chairman Continues to be actively involved in its initiativesBSRA global non-profit organization with experts in CSR Member of the Human Rights Working Group and Sustainability Strategy Working Group organized by BSROrganization/InitiativeDescriptionSony ActionsSave the ChildrenAn international NGO that works in approximately 120 countries in a wide range of fields such as education and humanitarian response,aiming at making to make childrens rights to survival,development,protection and participation a reality worldwide.Jointly implemented projects and established a humanitarian fund in order to continuously support the children who lead the next generation.The Valuable 500An international initiative to promote participation by individuals with disabilities so that they can demonstrate their latent potential to bring value to business,society,and the economy Joined in 2019 Selected from among the 500 signatories as one of the Iconic Companies that are a driving force in their respective countries,regions,and industriesG20 EMPOWERAn alliance to increase the number of women who play a key role in the economy and business,and to empower women Participated as an advocate in 2020 to support action in JapanUnited Nations Office for Projects Services(UNOPS)A UN organization which specializes in projects that procure and deliver goods and services in areas such as infrastructure and medical supplies,equipment and vehicles Signed a collaboration agreement in 2020 Sony Startup Acceleration Program provides support in areas such as technological development and employee trainingResponsible Supply ChainCommunity EngagementEmployeesGRI Standards Content IndexData SectionCorporate GovernanceEthics and ComplianceCommunity EngagementQuality and Customer ServiceResponsible Supply ChainRespect for Human RightsEmployeesEnvironmentAddressing Social and Environmental IssuesOrganizational StructureMessage from the Senior Executive in charge of SustainabilityMaterialitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityBusiness OverviewEditorial PolicyThe Sony Group Code of Conduct Approach to SustainabilitySonys Purpose&ValuesSustainability Report 2022014Organization/InitiativeDescriptionSony ActionsTCFDThe Task Force on Climate-Related Financial Disclosures established by the Financial Stability Board Announced its endorsement of the TCFD Recommendations in 2019 Joined the TCFD ConsortiumRE100A global initiative led by The Climate Group in partnership with CDPParticipating companies set a goal of procuring 100%renewable electricity for power used in their global business operations Joined in 2018 Committed to procuring 100%renewable electricity for power used in its global business operations by 2030 Selected as a corporate member of the RE100 Advisory Committee in 2022Race To Zero CampaignAn international campaign by the United Nations Framework Convention on Climate Change(UNFCCC)calling for actions to achieve zero greenhouse gas emissions by 2050 Joined in 2021Business Ambition for 1.5CA call to set targets that keep the global temperature rise to 1.5C or less,led by the United Nations Global Compact,We Mean Business and SBTi Joined in 2020Organization/InitiativeDescriptionSony ActionsJapan Climate Initiative(JCI)A network committed to strengthening communication and information sharing among companies,local governments,NGOs and all other actors that are implementing climate actions in Japan Joined in 2018 Endorsed recommendations to the Japanese government Participates in dialogues between government representatives and companiesThe World Wide Fund for Nature(WWF)Climate Savers ProgrammeA programme where WWF partners with companies to formulate and implement plans to reduce emissions of greenhouse gases Has participated since 2006 Signed a three-year comprehensive corporate partnership agreement with WWF Japan in 2021 to collaborate in the field of promoting biodiversity through forest conservation as well as the field of climate changePlaying for the Planet AllianceAn international alliance to curb climate change established when the United Nations Environment Programme(UNEP)reached out to the gaming industry Sony Interactive Entertainment joined in 2019Music Climate PactA global platform initiated by the British Phonographic Industry(BPI)and Association of Independent Music to promote decarbonization throughout the music industry Sony Music Group signed up in 2021 through Sony Music Entertainment(UK)EnvironmentGRI Standards Content IndexData SectionCorporate GovernanceEthics and ComplianceCommunity EngagementQuality and Customer ServiceResponsible Supply ChainRespect for Human RightsEmployeesEnvironmentAddressing Social and Environmental IssuesOrganizational StructureMessage from the Senior Executive in charge of SustainabilityMaterialitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityBusiness OverviewEditorial PolicyThe Sony Group Code of Conduct Approach to SustainabilitySonys Purpose&ValuesSustainability Report 2022015SDGs and Sonys ContributionsSony develops diverse businesses centered on people in alignment with its Purpose of“fill the world with emotion,through the power of creativity and technology,”and its Corporate Direction of“getting closer to people.”In order to have people connected to each other through emotion,it is necessary to create a society in which everyone can live with peace of mind in a healthy global environment.Through innovation and sound business practice,Sony endeavors to contribute to the development of a sustainable society.Sony believes that its diverse business portfolio is very relevant to the 17 SDGs,and aims to contribute to the achievement of the SDGs through its technologies,products,services and content,as well as various partnerships.consumption from business activities and the life cycle of products and services,aiming to achieve zero emissions of greenhouse gases.Sony has also joined the RE100 initiative by making a commitment to sourcing 100%renewable electricity for the worldwide operations of the Sony Group by 2030.This concrete commitment is in line with securing renewable energy as sought by Goal 7(affordable and clean energy).To minimize inputs of virgin resources into its business activities,Sony identifies key resources and strives to achieve zero usage of those virgin materials.Furthermore,Sony endeavors to ensure the appropriate use of water,minimize waste from its business sites,and collect and recycle products from the market to contribute to Goal 12(responsible consumption and production).EnvironmentDiversity,Equity and Inclusion(DE&I)Sony leverages its diverse businesses and workforce as strengths in its business strategy.In order to further promote diversity as a key management strategy,in addition to promoting diversity in business and geography and hiring diverse human resources,Sony provides opportunities to think more deeply about diversity,whether it be in terms of race,nationality,disabilities,gender,sexual orientation,values,or work styles.These opportunities are also extended to other companies and external organizations.By promoting the message of diversity to society,Sony is promoting inclusive and sustainable economic growth,employment,and decent work for all,as outlined in Goal 8(decent work and economic growth).Sony is working to achieve gender equality and empower women as outlined in Goal 5(gender equality)by establishing action plans to increase career opportunities for women and implementing ongoing initiatives at group companies.Diversity,Equity and InclusionHuman Rights and DiversityAll stakeholders who are connected to the business activities of the Sony Group,including employees and creators,are important and help support Sony in its drive to contribute to social change that will help achieve the SDGs.Sony ensures that all employees are aware of the Sony Group Code of Conduct,in which its core principle of respecting human rights is made explicit.Sony also implements initiatives to advance social justice,protect human rights and promote DE&I through the Global Social Justice Fund it established in 2020.Via such initiatives,Sony is working to eliminate discrimination as addressed by Goal 10(reduced inequalities),as well as to secure equal opportunities by encouraging appropriate behavior and correcting inequalities in outcomes.Respect for Human RightsInitiatives throughout Supply ChainsSony works with its suppliers to secure compliance with the Sony Supply Chain Code of Conduct and Sony Group Policy for Responsible Supply Chain of Materials,applying the policies to its sites,suppliers and contract manufacturers.In this way,Sony and its suppliers are addressing issues in the supply chain including human rights,labor conditions,occupational health and safety,and the environment.Through this initiative,Sony is endeavoring to provide safe,decent,and humane work as called for by Goal 8(decent work and economic growth),and contribute to suitable and equitable skills development and economic activity as sought by Goal 10(reduced inequalities).By implementing such initiatives throughout the supply chain,Sony is aiming to realize peaceful and inclusive societies as described by Goal 16(peace,justice and strong institutions).Responsible Supply ChainCommunity EngagementUnder the slogan“For the Next Generation,”Sony is meeting community needs,focusing on the following areas:supporting education in various countries and regions,providing emergency relief and assistance for large-scale disasters.These activities contribute to Goal 4(quality education)and create a positive social impact while partnering with external sectors as prescribed by Goal 17(partnerships for the goals).Community EngagementSustainability Initiatives and SDGsResponsibilities toward the Global Environment and Positive ContributionsSony endeavors to reduce environmental impact and prevent pollution in its business activities and throughout the life cycle of its products.To address Goal 13(climate action),Sony is reducing energy GRI Standards Content IndexData SectionCorporate GovernanceEthics and ComplianceCommunity EngagementQuality and Customer ServiceResponsible Supply ChainRespect for Human RightsEmployeesEnvironmentAddressing Social and Environmental IssuesOrganizational StructureMessage from the Senior Executive in charge of SustainabilityMaterialitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityBusiness OverviewEditorial PolicyThe Sony Group Code of Conduct Approach to SustainabilitySonys Purpose&ValuesSustainability Report 2022016ESG External Evaluations and Inclusion in IndexesSony is consistently ranked highly for its ongoing efforts to promote sustainability by the worlds leading ESG evaluation institutions,and it has been chosen for inclusion in various ESG indexes.External Evaluation and RecognitionTHE USE BY SONY GROUP CORPORATION OF ANY MSCI ESG RESEARCH LLC OR ITS AFFILIATES(“MSCI”)DATA,AND THE USE OF MSCI LOGOS,TRADEMARKS,SERVICE MARKS OR INDEX NAMES HEREIN,DO NOT CONSTITUTE A SPONSORSHIP,ENDORSEMENT,RECOMMENDATION,OR PROMOTION OF SONY GROUP CORPORATION BY MSCI.MSCI SERVICES AND DATA ARE THE PROPERTY OF MSCI OR ITS INFORMATION PROVIDERS,AND ARE PROVIDED AS-IS AND WITHOUT WARRANTY.MSCI NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI.FTSE Russell(the trading name of FTSE International Limited and Frank Russell Company)confirms that Sony Group Corporation has been independently assessed according to the criteria of the FTSE4Good and FTSE Blossom Index Series and has satisfied the requirements to become a constituent of those index series.Created by the global index provider FTSE Russell,those index series are designed to measure the performance of companies demonstrating strong Environmental,Social and Governance(ESG)practices and used by a wide variety of market participants to create and assess responsible investment funds and other products.THE INCLUSION OF SONY GROUP CORPORATION IN ANY MSCI INDEX,AND THE USE OF MSCI LOGOS,TRADEMARKS,SERVICE MARKS OR INDEX NAMES HEREIN,DO NOT CONSTITUTE A SPONSORSHIP,ENDORSEMENT OR PROMOTION OF SONY GROUP CORPORATION BY MSCI OR ANY OF ITS AFFILIATES.THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI.MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.Inclusion in ESG IndexesESG External Evaluations and Inclusion in IndexesESG External Evaluations In CDP surveys,Sony Group Corporation received the highest A List rating for both climate change and water security(December 2021)Sony Corporation was selected as a Supplier Engagement Leader in CDPs Supplier Engagement Assessment in recognition of its climate change initiatives in cooperation with the supply chain(February 2022)Sony Group Corporation was chosen as one of the Worlds Most Ethical Companies for the fourth consecutive year by Ethisphere Institute,a US-based organization dedicated to the study and advancement of ethical business practices(March 2022)Sony Group Corporation received the highest AAA ranking in the MSCI ESG Ratings assessment for the third consecutive year(December 2021)GRI Standards Content IndexData SectionCorporate GovernanceEthics and ComplianceCommunity EngagementQuality and Customer ServiceResponsible Supply ChainRespect for Human RightsEmployeesEnvironmentAddressing Social and Environmental IssuesOrganizational StructureMessage from the Senior Executive in charge of SustainabilityMaterialitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityBusiness OverviewEditorial PolicyThe Sony Group Code of Conduct Approach to SustainabilitySonys Purpose&ValuesSustainability Report 2022017Major External Awards Received for Sustainability Initiatives*Organization names appear as they were at the time of award receipt.*Organizations with no country name given in“Awarded by”are in Japan.Fiscal Year 2021(in order received)Major External Awards Received for Sustainability InitiativesName of AwardRecipientAwarded byDateSustainable Materials Management Electronics ChallengeSony Electronics responsible recycling of electronic waste through certified recyclersUnited States Environmental Protection AgencyMarch 20222021 Worlds Most Ethical CompaniesSony Group CorporationEthisphere Institute(United States)March 2022AsiaStar 2021 Awards(Consumer Package)Sonys Original Blended Material for the WF-1000XM4 wireless headphones packagingAsian Packaging Federation(APF)February 2022WorldStar Awards 2022(Electronics)Sonys Original Blended Material for the WF-1000XM4 wireless headphones packagingWorld Packaging Organisation(WPO)February 2022Corporate Equality Index 2022(rates workplaces on equality for LGBTQ employees)Sony Pictures Entertainment,Sony Corporation of America,Sony Interactive Entertainment,Sony ElectronicsThe Human Rights Campaign Foundation(United States)February 20222021 Prime Ministers Industry Award for Environmental Quality ConservationSony Technology(Thailand)Co.,Ltd-Chonburi(STT-C)Ministry of Labour(Thailand)December 2021Gold Rating in the 2021 PRIDE IndexSony Group Corporation and 17 Group companies in Japanwork with PrideNovember 2021Special TEPIA Award in the 15th Kids Design Awardstoio Format Title“Lets play with music Picotons”(NPO)Kids Design AssociationSeptember 2021Electric Equipment Packaging Award,Japan Packaging Contest 2021Efforts to remove plastics from headphone packagesJapan Packaging Institute(JPI)August 2021Japan Package Design Association Award,Japan Packaging Contest 2021Sonys Original Blended Material for the WF-1000XM4 wireless headphones packagingJapan Packaging Institute(JPI)August 2021GRI Standards Content IndexData SectionCorporate GovernanceEthics and ComplianceCommunity EngagementQuality and Customer ServiceResponsible Supply ChainRespect for Human RightsEmployeesEnvironmentAddressing Social and Environmental IssuesOrganizational StructureMessage from the Senior Executive in charge of SustainabilityMaterialitySummary of ActionsStakeholder EngagementSDGs and Sonys ContributionsExternal Evaluation and RecognitionSonys SustainabilityBusiness OverviewEditorial PolicyThe Sony Group Code of Conduct Approach to SustainabilitySonys Purpose&ValuesSustainability Report 2022018Sony conducts its business around the axis of“emotion”and“people”.In order to have people connected each other through emotion,it is necessary to create a society in which everyone can live in peace of mind and a healthy global environment.Sony sees great value in contributing to solving social and environmental issues through technology and business.Contributing via Technological DevelopmentIntelligent Vision Sensors“IMX500”:Edge AI Solutions That Help Solve Social IssuesIn May 2020,Sony Semiconductor Solutions Corporation(SSS)announced the commercial release of its IMX500 intelligent vision sensors,the first image sensors in the world to be equipped with AI processing functionality.They feature a stacked configuration consisting of a pixel chip and logic chip,which are key technologies of SSS image sensors.The logic chip is equipped with SSSs original DSP(Digital Signal Processor)dedicated to AI signal processing,and embedded memory for the AI model.The spread of the IoT has made cloud AI processing systems commonplace.However there is a concern that this will lead to increased CO2 emissions as IP traffic and data center electricity consumption rise due to higher data volumes from a growing number of IoT devices.Edge AI processing addresses these problems by employing IoT devices that process and analyze data.SSS developed the IMX500 to be capable of outputting the desired metadata as semantic information.Because it only extracts necessary data,the data transmission latency,power consumption,and communication costs are reduced.Furthermore,privacy concerns are addressed by not outputting information that can identify an individual.One next-generation solution utilizing the IMX500 is an initiative to curb climate change.The issue being tackled is that most commercial buildings currently keep their heating,ventilation and air conditioning systems running whether people are present or not.Nomad Go is an American company that creates computer vision technology.With the aim of finding a solution to that issue,it utilized the IMX500 and Microsofts Azure AI to effectively develop an intelligent building solution.Computer vision technology detects whether people are present in a commercial space and,if so,how many for how long.It precisely adjusts the room air conditioning as necessary,reducing energy use and the associated greenhouse gas emissions.SSS also announced the launch of its AITRIOS*edge AI sensing platform in October 2021.AITRIOS is a one-stop platform that provides various partners involved in development with all the features they need to efficiently develop and deploy solutions.The platform supports partners in efforts to build optimal systems in which the edge and the cloud function in synergy and address global environmental issues,thereby helping to solve issues with cloud systems.*AITRIOS and AITRIOS logos are the registered trademarks or trademarks of Sony Group Corporation or its affiliated companies.News Release:Sony to Release Worlds First Intelligent Vision Sensors with AI Processing FunctionalityCo-Innovation Labs,a Collaboration with Microsoft:Climate change demands intelligent buildings.Heres one way to make them smarterAITRIOS|Edge AI Sensing PlatformIoT for a Sustainable Society:Sonys Earth MIMAMORI platformIn order to realize a sustainable society,it is necessary to constantly protect various regions such as mountain forests,satoyama(woodlands surrounding rural settlements),rivers,and coasts.Furthermore,it requires the detection of anomalies to prevent problems from arising,instead of addressing environmental issues after they have already arisen.Such systems can only be realized through the ability to acquire and transmit data in a global sensor network extending to mountainous and coastal areas not serviced by conventional mobile networks.They also require devices and networks that can function in areas where electricity service is difficult.Edge AI sensing platform“AITRIOS”Addressing Social and Environmental IssuesGRI Standards Content IndexData SectionCorporate GovernanceEthics and ComplianceCommunity EngagementQuality and Customer ServiceResponsible Supply ChainRespect for Human RightsEmployeesEnvironmentAddressing Social and Environmental IssuesSonys SustainabilityBusiness OverviewEditorial PolicyThe Sony Group Code of Conduct Approach to SustainabilitySonys Purpose&ValuesSustainability Report 2022019Synecoculture*and Augmented EcosystemsConventional agriculture largely focuses on increasing productivity from a single crop,by plowing top soil,spreading fertilizer,and applying agrochemicals.These practices damage ecosystems and cause environmental problems.Sony Computer Science Laboratories,Inc.(Sony CSL)successfully conducted demonstration tests for Synecoculture,a new agricultural practice that balances productivity and biodiversity,moving closer toward sustainability.Synecoculture is already being used in the Sahel region in Africa and has the potential to have a major global impact by contributing to desert greening and helping local economies around the world.Synecoculture eliminates the need for the plowing,fertilizing,and agrochemical use that impact the environment,by taking maximum advantage of the material cycling that occurs naturally in ecosystems,aiming to create rich ecosystems with a diverse mix of plants that coexist together and grow lushly.The importance of building ecosystems with a high degree of biological diversity and functionality is increasing in response to climate change,food crises,and pandemics.Synecoculture provides a fundamental solution to such global agenda.Sony CSL is also working to supply new value through augmented ecosystems,which expand the applications for Synecoculture beyond food production to the creation of ecosystems with diverse objectives and functions.The project supports education to enhance the understanding of natural environments and adds new value to the basic infrastructure of urban and living spaces.Building on this project,Sony founded SynecO Inc.to create sustainable environments and industries based on the renewable natural capital in which society should be rooted.*Synecoculture is a registered trademark of Sony Group Corporation or its affiliates.SynecocultureRenewing agriculture to rebuild a broken environment(Movie)News Release:New Company Founding:SynecO,Inc.STAR SPHEREIn August 2020,Sony announced the development of a nano/micro-satellite equipped with Sony camera equipment that can be operated by users to shoot images,and a joint development and technology demonstration agreement with the University of Tokyo and the Japan Aerospace Exploration Agency(JAXA).Up until now,space missions for industrial purposes such as planetary exploration or space communication and surveys have dominated,and only a few people,such as astronauts,have experienced manned space flights.Believing it important that ordinary people can experience the universe for themselves and see Earth in a new light,as a planet in space,if humanity is to create sustainable societies and find solutions to environmental issues,Sony,the University of Tokyo and JAXA founded STAR SPHERE,a project that takes“Unleash Space”as its motto.The three partners aim to launch a man-made satellite in 2022.The STAR SPHERE satellite will be highly maneuverable with 360 degree attitude control so that members of the public can explore and discover new aspects of the Earth and stars through the camera,such as the ever-changing hues of the aurora for example.Since half of the satellites orbit will be at night,it will be installed with Sony high-sensitivity image sensors to help boost its environmental efficiency in operations such as the visualization of night-time economic activity.Sony intends to deliver“an experience connecting space and reality”via images captured in real time by checking the live stream from the camera when the satellite passes over an antenna on the ground station.Up until now,satellites have been operated by specialized engineers,but Sony released a prototype shooting simulator in January 2022 that is simple and fun for laymen to use.Web content has been used to give the simulator intuitive operability,and Sonys Mapray 3D web map technology is leveraged for beautiful expression-the map data is optimized for 3D.The simulator can set shooting sequences as well as time frames for images to be shot.Space is also a place where we can learn about Earth,and Sony has launched the Space Inspiration Competition in tandem with schools and educational institutes to use the power of entertainment to expand peoples view of space.Going forward,Sony aims to help to make people aware of just how precious Earth is by letting them see it from space,and to contribute to building a sustainable society where that value is shared worldwide.Method of open-field agriculture and augmenting ecosystems by utilizing the self-organizing power of the ecosystemSony has a range of technologies to realize these systems.IMX500,intelligent vision sensor equipped with AI processing functionality Low-power edge AI devices such as SPRESENSE that offer advanced sensing in a battery-powered device Radio signal processing technology that enables low power and low bitrate data transmission with a range of over 1,000 km Prediction One,an analysis tool that makes useful predictions from the data collected And moreCombining these technologies enables sensing all around the world,even in locations where humankind is not active.The data from such sensing can be collected by low-orbit satellites and the necessary information relayed to human society via AI processing.Sony calls this concept“MIMAMORI”and is engaged in research and development to make this mechanism to change human behavior patterns a reality.Within frameworks such as a comprehensive alliance with the Japan International Cooperation Agency(JICA)and the Social Innovation Division for Planetary Boundary established at Hokkaido University,Sony is collaborating with external partners in joint research and demonstration tests at various locations around the globe.These projects will help to prevent environmental destruction and predict emergencies such as river flooding and wildfires,as well as increase agricultural and livestock productivity.“MIMAMORI,”a proposed global sensing solution to detect anomalies and take preventative actionSonys Earth MIMAMORI platformELTRESWireless Experiment System Compatible with Sonys Proprietary Low-Power Wide Area(LPWA)Communications Standard ELTRES Successfully Received Signal in Space(in Japanese)Prediction One(in Japanese)GRI Standards Content IndexData SectionCorporate GovernanceEthics and ComplianceCommunity EngagementQuality and Customer ServiceResponsible Supply ChainRespect for Human RightsEmployeesEnvironmentAddressing Social and Environmental IssuesSonys SustainabilityBusiness OverviewEditorial PolicyThe Sony Group Code of Conduct Approach to SustainabilitySonys Purpose&ValuesSustainability Report 2022020Contributing via Business SupportNew Business Support ProgramThe Sony Startup Acceleration Program(SSAP)was launched in 2014 to create Sony startups and support project operation.SSAP provides seamless support from ideation to visualization,business verification,social implementation,and expansion.Leveraging Sonys experience and expertise in creating new business internally and globally,SSAP also provides startup support services to external organizations including major corporations for their new business development,venture companies,SMEs,non-profits(NPOs),educational institutions,and research institutes.SSAP engages in open innovation with companies and organizations,and aims to bring peoples ideas to life and create an affluent and sustainable society.Sony Startup Acceleration Program(in Japanese)Corporate Venture CapitalSony has participated for many years in the global ecosystem for creating new businesses and supporting the business growth of venture companies.It established the Sony Innovation Fund in 2016,the Innovation Growth Fund in 2019,the Sony Innovation Fund:Environment in 2020 to support companies tackling global environmental issues,and in 2021 launched an innovative program to support ESG initiatives by companies it invests in.Sony Ventures Corporation,established in July 2021,launched Sony Innovation Fund 3 L.P.in February 2022.This new investment fund is for venture companies in industries that are expected to show strong growth.Sony Innovation Fund 3 L.P.is intended to contribute to social progress and the creation of sustainable societies via ESG-focused investment and support for venture companies.Sony Innovation FundNews Release:Sony Ventures Corporation Actively Investing New Investment Fund“Sony Innovation Fund 3 L.P.”Research&DevelopmentR&DIn Corporate R&D(Sony Group Corporations R&D organization),Sony invests resources based on established financial discipline while envisioning the future business portfolio of the entire Sony Group.Prioritizing technologies that are expected to have applications in a variety of businesses,Sony will focus on areas of technology such as the“3R Technologies”of Reality,Real-time and Remote,as well as AI,sensing and security.Corporate R&D carries out various research and development activities in collaboration with multiple R&D organizations located in Japan,China,India,Europe and the United States,utilizing the different characteristics and strengths of each area.While striving to attract skilled research personnel locally,Corporate R&D aims to promote further collaboration between the various businesses within the Sony Group.Additionally,Corporate R&D continues to strive to enhance ease of movement for management and personnel between each R&D organization and strengthen its R&D from more diverse perspectives.For cross-sectional projects such as those in the entertainment and financial services areas,Corporate R&D assembles teams with members from various organizations to promote R&D activities through the flexible and efficient collection of knowledge.Corporate R&D is also proactively taking part in open innovation,including collaboration with universities and other research institutions,in an effort to gain insight into the motivations of creators and users from a wider perspective to enhance the potential of its business.R&D CenterSony Computer Science Laboratories,Inc.(Sony CSL)Sony CSL was established in 1988 to pioneer new research fields and paradigms,as well as new technologies and businesses,for the good of humanity,society and our planet.Sony CSL gives free rein to its researchers and is committed to creating a better future via creative and imaginative research.Sony CSL is currently researching a diversity of themes at its laboratories in Tokyo,Paris,Kyoto and Rome,ranging from social issues in areas such as ecosystems,urban planning,and energy to augmentation of human capabilities and creativity.It strives to channel the fruits of its research back into society.Sony CSLSony AI Inc.Sony AI was established with the mission to“unleash human imagination and creativity with AI.”It aims to accelerate AI research and development,and to combine it with the Sony Groups imaging and sensing technologies,robotics technologies,and entertainment assets including movies,music,and games to drive transformation across business domains and contribute to the creation of new ones.In the long-term,Sony AI also envisions helping to solve global-scale issues beyond Sonys business domains.Recognizing the power and influence that AI can have on society,Sony AI aims to contribute by developing AI that is responsible,fair and transparent.Sony AI(some sections only available in English)STAR SPHERE Space Inspiration ProjectSeries Unleash Space!Background to the STAR SPHERE Project(in Japanese)Related LinksContributions to Solving Environmental IssuesTechnologyGRI Standards Content IndexData SectionCorporate GovernanceEthics and ComplianceCommunity EngagementQuality and Customer ServiceResponsible Supply ChainRespect for Human RightsEmployeesEnvironmentAddressing Social and Environmental IssuesSonys SustainabilityBusiness OverviewEditorial PolicyThe Sony Group Code of Conduct Approach to SustainabilitySonys Purpose&ValuesSustainability Report 2022021Amount of plastics packaging per product unit15%(compared to fiscal year 2018)Renewable electricity rate for sites14.6%Utilization of entertainment content to raise awareness on sustainability issuesOver 0.43 billion people totalEnvironmentMateriality RationaleSonys corporate activities are only possible if the earth,which sustains all life on earth,is healthy.This is why Sony is so determined to fight climate change,preserve resources,manage chemical substances,conserve biodiversity,and take other needed steps to protect the environment.True to this commitment,Sony conducts its business in a sustainable manner and provides environmentally conscious products and services,always seeking to deliver innovation and develop uniquely superior technologies.Sony also works hand-in-hand with stakeholders to help build a more sustainable society.The BasicsSince the early 1990s,Sony has pursued environmental initiatives in accordance with its environmental principles and targets.In April 2010,Sony announced the“Road to Zero,”a new global environmental plan,the goal of which is to realize a sustainable society by achieving a zero environmental footprint throughout the life cycle of its products and business activities by the year 2050.In May 2022,Sony made the decision to bring forward the target year of achieving a zero environmental footprint in the climate change area by ten years from 2050 to 2040.Working toward a zero environmental footprint,once every five years Sony sets concrete medium-term environmental targets for each stage of the life cycle for its products with respect to climate change,resources,chemical substances,and biodiversity.StructureSony is implementing and continually improving its globally integrated environmental management system with the aim of realizing the Sony Group Environmental Vision,achieving its medium-term environmental targets and complying fully with legal requirements,regulatory demands and internal policies established for the Group.In addition,Sony has set up specialized functions to handle individual areas of activity within headquarters environmental functions.Corporate Executive Officers oversee these functions as Sony Group Corporation senior management.Looking to the FutureActing on the basis of Green Management 2025,which sets medium-term environmental targets for fiscal year 2021-2025,Sony continues to strengthen its own internal initiatives,encourages business partners,consumers,and other stakeholders to take action and works together to build a sustainable society.By 2030,Sony will convert the electricity used at our manufacturing sites to 100%renewable energy and make direct and indirect emissions(scopes 1 and 2)of its own operations carbon neutral.By 2035,Sony will reduce GHG emissions for scope 3 products by 45%,and aim for net zero emissions for the entirety of scopes 1,2 and 3 by 2040.Moving forward,Sony will continue to strengthen our efforts to achieve a zero environmental footprint.Milestones1976:Company-wide Sony Environmental Conference established1993:Sony Global Environmental Policy and Environmental Action Program developed1995:Began to acquire ISO14001 certification at manufacturing sites in Japan2002:Green Partner Environmental Quality Approval Program introduced2006:Integration of environmental management systems at sites around the world completed2009:100%renewable electricity use achieved at all European sites2010:Road to Zero environmental plan announced2015:Approved as Science Based Targets(SBT)2018:Sony Joins RE100 Global Initiative2022:Sony announced the bringing forward of the target year of achieving a zero environmental footprint in the climate change area and“RE100”by 10 years Approved as a Science Based Targets(SBT)net zero targetFiscal Year 2021 ResultsEnvironmental Data“Road to Zero,”Sonys Global Environmental PlanGreen Management 2025Sony Group Portal Website“Environment”Management ApproachGRI Standards Content IndexData SectionCorporate GovernanceEthics and ComplianceCommunity EngagementQuality and Customer ServiceResponsible Supply ChainRespect for Human RightsEmployeesManagement ApproachHighlightEnvironmental Policies and TargetsContributions to Solving Environmental IssuesProducts and ServicesSupply ChainSitesLogisticsProduct RecyclingEnvironmental CommunicationEnvironmentAddressing Social and Environmental IssuesSonys SustainabilityBusiness OverviewEditorial PolicyThe Sony Group Code of Conduct Approach to SustainabilitySonys Purpose&ValuesSustainability Report 2022022HighlightAccelerating Measures Against Climate Change Progress To Date and Acceleration of Achievement TargetsThe transition to a decarbonized society is a pressing issue for the global community.Sony is putting effort into measures against climate change from two perspectives:responsibility to aim to reduce greenhouse-gas emissions to zero,and contribution to innovation for industry and society.Since the early 1990s,Sony has been operating under environmentally-conscious policies and action plans.Road to Zero,an environmental plan established in 2010,is designed to reduce the Groups environmental footprint to zero by 2050 by following a specific road map including goals set from four perspectives on environment,namely:climate change,resources,chemical substances and biodiversity.To address climate change,Sony has committed to reducing greenhouse-gas emissions to zero in both business operations and in its products throughout their life cycles.Sony sets medium-term environmental targets every five years,backcasting from the final goals of the plan for 2050,with each business pursuing its respective action plan to achieve them.The current mindset in society in response to the increasingly serious effects of climate change is to support requiring corporations worldwide to accelerate measures to address climate change.For example,the international Science Based Targets initiative(SBTi)now stipulates a global temperature rise of 1.5C above pre-industrial levels as the new target level,rather than the 2C target set by the 2015 Paris Agreement,as well as establishing standards for net zero targets.Under these circumstances,Sony announced in May 2022 that it will push forward its goal of achieving net zero throughout the entire value chain,moving the target year from 2050 to efficiency being improved by 30%compared to the FY2015 level.Across the entire life cycle of Sony products,greenhouse-gas emissions are highest when they consume electricity during customer use.With that in mind,Sony will pursue innovation in areas such as product design while accelerating initiatives promoting a net zero society.Specifically,Sony is exploring investment opportunities in startups working on technology for the environment,mainly through the Sony Innovation Fund:Environment,a corporate venture capital fund established in 2020,as well as through making proposals to national governments and industry associations worldwide.Carbon removal/fixation is a particularly vital challenge to meet in order to realize net zero carbon emissions by 2040.Going forward,Sony is looking into various technologies leading to solutions,such as exploring credit generation from carbon absorption associated with augmented ecosystem businesses such as Synecoculture being rolled out by a Group company,SynecO,Inc.Sony will contribute to carbon fixation via both technological removal and natural absorption by ecosystems.2040.Specifically,this entails making direct and indirect emissions from its own operations(Scopes 1 and 2)carbon neutral by 2030.Sony has also accelerated its goal to achieve 100%renewable energy in its own operations by ten years,from 2040 to 2030(see the chart above).Moreover,Sonys net zero target for 2040 was approved as the net zero target for the Science Based Targets initiative in August 2022.Priority Initiatives to Achieve New TargetsTo achieve these new targets,the Sony Group will continue to make an across-the-board effort to promote the use of renewable energy at all its business sites while reducing energy consumption.One example is the new Fab5 building at the Nagasaki Technology Center for image sensor production,which commenced operations in April 2021.Here,AI-assisted advanced control technology has been employed in semiconductor production to operate clean-room chillers and boilers,along with a system to recycle waste heat from production equipment to drive boilers,resulting in clean-room energy consumption Carbon emissions from product use:45%reduction(vs.FY2018)Supplierengagement targets*Carbon emissions fromentire product life cycle:ZeroCarbon emissions fromentire product life cycle:ZeroScope 1,2Scope 3OverallScope 1,2CarbonneutralCarbon emissions fromelectricity used inSonys operations:ZeroCarbon removal:IncrementalimplementationCarbon emissions fromelectricity used inSonys operations:ZeroCarbon emissionsfrom business site72%reduction(vs.FY2018)203020252035204020452050Note:Previous targets in grey *Suppliers equivalent to 10%of supply chain greenhouse-gas emissions will set their own targets in line with SBT.Road to Zero Road Map OverviewGRI Standards Content IndexData SectionCorporate GovernanceEthics and ComplianceCommunity EngagementQuality and Customer ServiceResponsible Supply ChainRespect for Human RightsEmployeesManagement ApproachHighlightEnvironmental Policies and TargetsContributions to Solving Environmental IssuesProducts and ServicesSupply ChainSitesLogisticsProduct RecyclingEnvironmental CommunicationEnvironmentAddressing Social and Environmental IssuesSonys SustainabilityBusiness OverviewEditorial PolicyThe Sony Group Code of Conduct Approach to SustainabilitySonys Purpose&ValuesSustainability Report 2022023Basic PolicySony reduces our environmental footprint and prevents environmental pollution throughout the lifecycle of our products and business activities by complying with all applicable environmental regulations and also by continually improving our global environmental management systems.Sony formulates the following goals in four key environmental perspectives and takes proactive actions to achieve those goals.Climate ChangeSony reduces energy consumption and strives to achieve zero emissions of greenhouse gases*generated throughout the lifecycle of our products,service and business activities.*Gases that raise the temperature of the earths surface by absorbing infrared radiation from reflected sunlight.Seven typical examples are carbon dioxide(CO2),methane,nitrous oxides,hydrofluorocarbons(HFC),perfluorocarbons(PFC),sulfur hexafluoride(SF6),and nitrogen trifluoride(NF3)Resources ConservationIn order to minimize resource inputs for our business activities,Sony identifies“Key Resources”and strives to achieve zero usage of those virgin materials.Sony also uses water efficiently,minimizes wastes from sites and maximizes our effort for take back and recycling products from markets.Management of Chemical SubstancesSony minimizes the risk of chemical substances that we use causing serious harm to human health and the environment.Sony maintains strict control over the chemical substances we use,while,in line with the precautionary approach,taking steps whenever possible to reduce,substitute and eliminate the use of substances that have potentially significant impacts on the environment even in the cases where scientific evidence is not fully proven.Biodiversity ConservationSony protects and utilizes ecosystem services in a sustainable manner,while actively promoting maintenance and recovery of biodiversity through our business and local contribution activities.In order to realize the Environmental Vision,Sony formulates targets and concrete plans and initiates actions to implement,while contributing to a better society through partnerships and communications with internal and external stakeholders.Environmental Plan“Road to Zero,”Sonys Global Environmental PlanAs stated in the Sony Group Environmental Vision,Sony strives to realize a sustainable society by achieving a zero environmental footprint throughout the life cycle of its products and business activities.It is this long-term goal that prompted Sony to name its new global environmental plan“Road to Zero.”Under this plan,Sony aims to bring its environmental footprint to zero by 2050 and works to achieve medium-term environmental targets toward this end.In May 2022,Sony made the decision to bring forward the target year of achieving a zero environmental footprint in the climate change area by ten years from 2050 to 2040.“Road to Zero,”Sonys Global Environmental PlanSony Group Environmental VisionThe Sony Group Environmental Vision presents a philosophy and principles for environmental management activities throughout the global Sony Group with the aim of contributing to the realization of a sustainable society.Since enacting the Sony Global Environmental Policy which is a predecessor of the Sony Group Environmental Vision and the Environmental Action Program,in 1993,Sony has pursued a broad range of environmental initiatives.Concurrent with the formulation of its Road to Zero global environmental plan,in 2010,Sony revised the Sony Group Environmental Vision.PhilosophySony recognizes the importance of preserving the natural environment that sustains all life on the earth for future generations and thereby ensuring that all humanity can attain a healthy and enriched life.In order to realize such sustainable society,Sony strives to achieve a zero environmental footprint throughout the lifecycle of our products and business activities.Environmental Policies and TargetsSony focuses on four environmental perspectivesGRI Standards Content IndexData SectionCorporate GovernanceEthics and ComplianceCommunity EngagementQuality and Customer ServiceResponsible Supply ChainRespect for Human RightsEmployeesManagement ApproachHighlightEnvironmental Policies and TargetsContributions to Solving Environmental IssuesProducts and ServicesSupply ChainSitesLogisticsProduct RecyclingEnvironmental CommunicationEnvironmentAddressing Social and Environmental IssuesSonys SustainabilityBusiness OverviewEditorial PolicyThe Sony Group Code of Conduct Approach to SustainabilitySonys Purpose&ValuesSustainability Report 2022024product packaging.Sony aims to reduce the number of parts derived from virgin resources to zero by identifying certain key resources*in terms of environmental impact due to the depletion,uneven distribution and mining of resources,loss of biodiversity due to mining,and the effects of these impacts on local communities.In terms of waste,Sony recycles waste generated from internal operations,with the goal of eliminating landfilled waste.Additionally,Sony designs products to facilitate recycling and implements ongoing programs to collect and recycle end-of-life products according to the needs of local communities,while also promoting advanced recycling with recycling companies.*At Sony,“key resources”are designated by taking the following factors into account:resource depletion,resource availability,environment impact of resource extraction,and loss of biodiversity and community impacts from resource extraction.Focus on Water UseAlthough water circulates around the earth continuously through the water cycle,the amount of water available for use by the planets inhabitants is limited.With population growth and other issues putting further pressure on water supplies,the importance of conserving this resource will increase in the years ahead.Taking into account the locations of its sites,as well as regional differences,Sony will continue taking steps to minimize its withdrawal of water and to ensure the water it returns to water sources is of a quality that does not negatively impact the environment.Focus on Paper ResourcesRecognizing that paper resources are limited,under the Sony Group Paper/Printed Material Purchasing Policy,Sony constantly works to reduce paper consumption while prioritizing the procurement of environmentally preferable paper,such as paper made from resources sourced from certified forests and recycled paper.Sony Group Paper/Printed Material Purchasing Policy PDF:427KBFocus on Chemical SubstancesSony endeavors to minimize the risk that chemical substances it uses might cause serious harm to human health and the environment.Chemical sub
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English versionMarch 2023More Energy,Less EmissionsSustainability&Climate 2023 Progress ReportSustainability&Climate 2023 Progress Report01TOTALENERGIES AMBITION IN SUPPORT OF SUSTAINABLE DEVELOPMENTTotalEnergies,becoming a global player in Sustainable Energy1 Low-carbon energy produced,or low-carbon energy sold(in energy unit)2 Energy consumption(in energy unit)and low-carbon energy consumption(in energy unit)3 Number of suppliers with local sales over$10,000 with a climate commitment,i.e.having a plan with climate goals(in number and in%of total number of suppliers)4 Number of innovative solutions that help us use less and better energy,or produce and sell more low-carbon energyThanks to our commitment to a just transition for our people5 The level of employee engagement measured once a year via TotalEnergies engagement index6 Number of hours of training per employee per year7 Share of women among NP14 (in%)and share of international staff among NP15 (in%)TotalEnergies saves natural resources8 Sum of weight of recycled waste and recycled feedstock(in tons)9 Number of biodiversity plans being deployedTotalEnergies creates shared value10 Share of spending with local stakeholders as a%of total spending=local wages local spend societal spend/opex capex(in%)TotalEnergies ambition to be a major player in the energy transition,on the road to net zero by 2050,together with society,will require the mobilization of our 100,000 employees.More than 27,000 TotalEnergies employees took part in workshops during 2022,to develop ten objectives and indicators aligned with the United Nations Sustainable Development Goals(SDGs).In 2023,every TotalEnergies site,business unit and affiliate worldwide will adopt an action plan with targets to be met by 2025.Each plan is based on actions that are directly related to the entitys local operations in the field.These plans form our SustainabALL program,in which TotalEnergies sets out its material contribution to sustainability.OUR KPIsOUR CONTRIBUTION TO SDGs1.https:/ 2.https:/ 3.https:/cop.unglobalcompact.org/view/8462TotalEnergies has been a member of the UN Global Compact since 2016 and supports the United Nations Sustainable Development Goals.Each year we issue a special report1 that details our progress in fulfilling the SDGs.That report supplements the Companys other voluntary reporting initiatives,including our GRI report2 and the Global Compact Communication on Progress3.10 KPIs COVERING THE PERIOD 2023-2025 IN SUPPORT OF OUR TRANSFORMATIONOur AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report02Table of contentsOUR 4 AXES OF SUSTAINABLE DEVELOPMENTOur AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsGovernance 06Focus onOur projects in Uganda and Tanzania 39Glossary 105Creating Shared Value 83Climate and Sustainable Energy 41Peoples Well-Being 61Care for the Environment 73Our Indicators 96Our Ambition 08Transforming Ourselves toReinvent Energy 22 01TotalEnergies Ambition to Support SustainabilityForeword by Patrick Pouyann 03 Chairman and CEOMessage from Marie-Christine 05Coisne-RoquetteLead Independent Director and Chair of the Governance&Ethics Committeeand continue to serve its customers around the world.The Company was able to do this because of its proactive,yearslong strategy to develop an integrated LNG portfolio.In 2022,TotalEnergies further accelerated its LNG strategy in response to Europes supply challenges.This involved diversifying supply sources,notably from the United States;bringing new regasification capacity on stream in Germany and France with floating storage and regasification units(FSRUs);investing in new production capacity,for example in Qatar,to prepare the future;all while using technologies that make it possible to achieve ever larger reductions in CO2 and methane emissions.Indeed,in electricity generation,natural gas offers the great advantage of emitting only half as much CO2 as coal,an energy on which many countries are still too dependent.At the same time,we have continued to reduce our methane emissions while taking action to encourage the entire oil and gas industry to aim for zero methane emissions by 2030.From a broader perspective,2022 made it more obvious than ever that the world still The year 2022 was a year of upheaval that will not soon be forgotten.War returned to Europe,sowing unacceptable horror in its path.Among the multiple international impacts of this war started by Russia,this conflict has clearly revealed just how crucial energy is as a resource and how much the energy markets are making countries interdependent.The stakes of supply security and energy prices have become just as important as the urgent need to decarbonize energy.In this environment,TotalEnergies did all it could to contribute to Europes energy security needs the energies available today,of which fossil energies account for more than 80%.For this reason,we will continue to invest in new oil projects.Not to grow,but simply to meet still expanding global demand,notably in developing countries.And also to anticipate the natural decline in our current fields output(4%per year)to ensure that our customers continue to have reliable access to energy at an affordable cost.Todays world also has a growing need for renewable electricity and new lowcarbon energies to address the climate challenge.Events in 2022,among them heat waves,agriculturaldrought,melting glaciers and more frequentandintense hurricanes,reminded us that urgent action must be taken to decarbonize oureconomies.The immediate focus must be on building the energy system of tomorrow while continuing to supply the energy the world needs today.This is why TotalEnergies chose to invest massively:close to$4 billion in 2022,or a quarter of our total capital expenditure,in electric-ity and low-carbon molecules,thereby lifting our gross production capacity for renewable electricity to 17 gigawatts,the equivalent ofMore Energy,LessEmissionsPATRICK POUYANN,MESSAGE FROM THE CHAIRMAN AND CEOThe immediate focus must be on building the energy system of tomorrow while continuing to supply the energy the world needs today.”Sustainability&Climate 2023 Progress Report03Our AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsWe are committed to ensuring that our businesses and projects create value and positive change.We are working towards that goal,in accordance with our Code of Conduct,in our interactions with all of our stakeholders:employees,customers and partners,host countries,local communities in our core territories,civil society,suppliers and shareholders.Our progress report is designed to describe,transparently,the implementation of our ambition to get to net zero by 2050,together with society,and the tangible advances made every day in deploying initiatives to promote a sustainable transition.It responds to the controversies we encounter with solid proof of our transformation.We cannot carry out this transformation alone,without the commitment of all our stakeholders.Our investments in the production and distribution of lowcarbon energies will only make a difference if we all decide to change the way we use energy.Thats the logic behind our approach of openness,discussion and exchange in our everyday interactions with our stakeholders.OUR STRATEGY WAS CONFIRMEDAND STRENGTHENED IN 2022In 2023,we will be even more aggressive in reducing our Scope 1&2 emissions with a new target in absolute value of 38MtCO2e by 2025.Thats two million tons lower than our previous target,while including our power activities that did not exist in 2015.This is possible thanks to the active involvement of all the Companys teams in a$1 billion program devoted to energy efficiency in 2023-2024.Fewer emissions,and lower energy costs as well.We are also strenghtening our objective for reducing Scope 3 emissions from our oil activities from 30%to 40%by 2030 in relation to 2015,and-30%by 2025.In addition,our objective for lowering the carbon intensity of the energy mix sold to our customers has been strengthened from 20%to 25%by 2030 in relation to 2015,and 15%by 2025.67 nuclear reactors.In 2023,we will invest around$5 billion in lowcarbon energies more than our investments in new gas and oil projects to move forward even faster.We are resolutely building the future today,by leveraging our strengths.Our 2022 results show that we have made the right strategic choices.These include continuing to provide oil competitively as long as there is demand,developing in LNG(a segment in which we generated$10 billion operating cash flow)and investing profitably in electricity markets(we posted income of$1 billion for the first time in our history).In 2022,TotalEnergies recorded the highest growth in net cash flow per share and achieved the highest return on capital employed among its peers.These 2022 results prove that we can combine the strongest profitability of all the majors with the highest multienergy investments among the majors to support and accelerate the transition.Beyond these financial results,we are proud of the tangible progress in our lowcarbon energy projects.We will meet our worldwide gross installed capacity goal for renewable electricity in 2025 and are already working on projects to achieve our objective of 100GW by 2030.Patrick PouyannBeyond these financial results,we are proud of the tangible progress in our low-carbon energy projects.”We are embarking on a profound transformation that requires all our energies society and citizens included.Every step counts on the road to the energy transition.Lets take that road together.Sustainability&Climate 2023 Progress Report04Our AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report05Delivering on CommitmentsMESSAGE FROM MARIE-CHRISTINE COISNE-ROQUETTE,LEAD INDEPENDENT DIRECTOR AND CHAIRWOMAN OF THE GOVERNANCEÐICS COMMITTEE.TotalEnergies is solidly committed to making the transition to low carbon energy while continuing to supply the energy our customers need.The 2022 invasion of Ukraine by Russia,which is the worlds second largest producer of oil and natural gas,sparked a human crisis at the heart of Europe as well as a global energy crisis that has affected every economy in the world,from homes to businesses.In view of evolving sanctions,the Board of Directors was mobilized throughout 2022 to support the actions to be taken by the Company in line with European governments and with our values and strategy,in order in particular to help secure Europes energy supply.This crisis demonstrated our resilience and our steadfast ambition to transform into a multienergy company,able to respond to the energy needs of today while preparing the as was the case for the Companys project in Uganda.To support our global transformation,the Board of Directors is strengthening our ranks by asking shareholders to approve the appointment of two new directors who will provide specific expertise in our growth drivers in electricity and renewables,as well as in todays energies,and further diversify the Boards international profile.We are proud to state that we are leading the field in our industry in the transformation toward a multi-energy model.decarbonized energy system of tomorrow.In 2023,for the third consecutive year and keeping up with our commitment,the Board invites our shareholders to express themselves on the progress made in 2022,in the light of our objectives and our implementation of the Companys strategy.With additional financial resources,TotalEnergies is,moreover,accelerating its ambition for sustainability and the energy transition toward carbon neutrality.This report is a live testimony on the Companys actions,undertaken in contribution to a transparent dialogue with shareholders and many other stakeholders.Every project submitted to the Board is examined from a financial perspective as well as an extra-financial perspective that includes the climate and CO2 emissions.Largescale operational projects are carefully reviewed for their impact on people and the environment,This crisis demonstrated our resilience and our steadfast ambition to transform into a multi-energy company.”Our AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report06met Larry Fink,Chairman&Chief Executive Officer of Blackrock,in addition to concrete work sessions on areas such as new energies for transport by 2030(road,sea and air).Compensation CommitteeFor the past several years,the Board of Directors has also incorporated climate issues into corporate pay structures(see infographic).The Audit Committee annually reviews the consolidated statement of non-financial performance,which includes information from the Companys climate and environmental reporting,the compliance and fairness of which is subject to a limited assurance review by an independent third party.To define its strategy and take into account the challenges posed by climate change,TotalEnergies relies on a clearly defined organizational structure and governance.Climate issues are addressed at the highest levels of the organization,by both the Board of Directors and the Executive Committee.Board of DirectorsTotalEnergies Board of Directors is dedicated to promoting longterm value creation.It defines the Companys strategic objectives and annually reviews opportunities and risks,such as financial,legal,operational,social and environmental risks,and the measures taken in response.It ensures that both the Companys strategy and the investment projects submitted for its consideration take account of climate concerns.To aid the Board in carrying out its duties,a continuous training program on climate was approved for the Directors in 2021.It includes a variety of modules on the following topics:energy,climate change and environmental risks,financial risks and opportunities.In 2022 the Directors took part in the Climate Fresk,a creative and collaborative scientific workshop designed to raise climate change awareness.Strategy&CSR CommitteeDuring their annual seminar in 2022,the members of the Strategy&CSR Committee GovernanceBOARD OF DIRECTORSCHIEF EXECUTIVE OFFICERAudit CommitteeGas,Renewables&PowerExploration&ProductionRefining&ChemicalsMarketing&ServicesStrategy&SustainabilityFinanceGovernance and Ethics CommitteeCompensation CommitteeStrategy&CSR CommitteeChairman andLead Independent DirectorExecutive CommitteeOneTech9 meetings of the Board of Directors98.4%attendance rate7 meetings of the Audit Committee100%attendance rate3 meetings of the Compensation Committee100%attendance rate1 executive session chaired by the Lead Independent Director4 meetings of the Governance&Ethics Committee94.4%attendance rate4 meetings of the Strategy&CSR Committee100%attendance rateSPECIALIZED COMMITTEES FOR ADDRESSING OUR STRATEGIC PRIORITIESOur AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report07VARIABLE COMPENSATION ALIGNED WITH THE COMPANYS STRATEGIC OBJECTIVES Safety performance1 GHG reduction1 Supervision of the transformation strategy1 Profitability of renewables1 CSR performance1 Financial performance1 Safety GHG reduction Diversity New in 2022 Individual performance2 Financial performance Financial performance GHG reduction61%6%6%8%8%Chairman&CEOcriteria account for 39%From the Chairman and CEO to all beneficiary employees3:criteria account for 30%Senior Executives:criteria account for 30p%ANNUAL VARIABLE PORTIONPERFORMANCE SHARE RECIPIENTS35%55%The Executive CommitteeThe Chairman&Chief Executive Officer of TotalEnergies,assisted by the Executive Committee,ensures that climate issues are taken into account and built into operational roadmaps.The Executive Committee is responsible for identifying and analyzing risks that could prevent TotalEnergies from reaching its objectives.The TotalEnergies Risk Management Committee(TRMC)assists the Executive Committee.The TRMCs primary duties are to ensure that the Companys risk mapping is updated on a regular basis and that its existing risk management processes,procedures and systems are effective(see p.17).The Strategy&Sustainability Division coordinates the Companys activities through the entities in charge of strategy and markets analysis,sustainability and climate,and safety,health and environment,relations with public authorities and civil society,and internal audit.Its president also chairs the Risk Committee(CoRisk),which is in charge of the Companys investments.The Finance General Directorate ensures an ongoing dialogue with investors,analysts and non-financial rating agencies on climate challenges and Environmental,Social and Governance(ESG)issues more broadly.In all,more than 250 ESG meetings were held in France and worldwide in 2022.1.Maximum percentage.2.According to the role.3.More than 12,000 employees.700%TOTALENERGIES RESPONSIBLE AND GRADUAL WITHDRAWAL FROM OPERATIONS IN RUSSIAIn the wake of Russias military aggression against Ukraine,TotalEnergies SE set out its principles of conduct in March 2022:ensuring strict compliance with EU sanctions,regardless of the impact on the management of its Russian assets;providing no further capital for the development of projects in Russia;taking no action that would subvert the goal of the sanctions by transferring value to Russian interests;helping to secure Europes energy supply;and not entering into new contracts or renewals for the purchase of Russian oil or petroleum products,in order to discontinue all purchases by the end of 2022.In accordance with these principles,TotalEnergies has continued to supply Europe with LNG from its Yamal LNG plant under long-term contracts,and has sold several assets that were not contributing to this supply,including its minority interests in the Kharyaga and Termokarstovoye fields.In December 2022,TotalEnergies decided to withdraw the Companys representatives from Novateks board,and accordingly ceased to equity account for its stake in Novatek in its accounts.The Company recorded total Russian impairments and provisions of$14.8 billion in 2022.COMMITMENTOur AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress ReportOur ambitionOFFSHORE WIND FARM.How Can We Respond to Current Energy Demand While Preparing for the Future?A Net Zero Company by 2050,Together With SocietyWhy Continue to Invest in Oil?2020-2030,A Decade of Transformation for Now and the FutureInvestments Aligned With Our Multi-Energy Strategy Just Transition:A Prerequisite for a Successful Energy TransitionOur Climate-Related RisksA Resilient Portfolio2022Taxonomy:A Company in TransitionMaking the Case for the Energy Transformation09 11 1213 14 16 171820 21Our AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report09The energy transition is well underway,but the world still uses fossil fuels to meet 81%of its energy needs.Keeping global warming well below 2C,in line with the Paris Agreement,requires that we drastically reduce consumption of fossil fuels(coal,oil,gas)and make the world energy system evolve by building the new lowcarbon energy system at a much faster pace.Our collective challenge which became evident in 2022 is to reconcile the energy transition with the need for energy security and concerns over its cost.When the supply of oil or natural gas is restricted while demand continues to rise the social impact is immediate and very high,due to the resulting increase in energy prices and insecurity of supply.To meet the challenge of the energy transition and still ensure that reliable energy is available in the short term at the lowest possible cost,the world needs to invest in two energy systems simultaneously so as to:ensure the current system continues to operate responsibly,and at the same time speed efforts to build a new system centered on lowcarbon energies(renewable electricity,biofuels and biogas,clean hydrogen and synthetic fuels,CCS solutions to offset residual fossilfuel emissions).Two other levers will also deliver immedaite results:replacing coal in energy use whenever possible,and investing heavily to improve energy efficiency.That,in a nutshell,is TotalEnergies strategy:to continue providing the energy the world needs now,notably natural gas to replace coal,while responsibly and sustainably accelerating the transition to low carbon energy solutions.This is how,in concrete terms,we support the goals of the Paris Agreement,which calls for a reduction in greenhouse gas emissions in the context of sustainable development and the fight against poverty,and which aims to keep the increase in average global temperatures well below 2C compared to preindustrial levels.The year 2022 has reinforced our confidence in our strategy.We are investing with discipline,at a time when our markets continue to evolve at an uncertain pace.Our portfolio of multi energy businesses gives us the flexibility and optionality to position ourselves as a leader in the energy transition,regardless of its speed.How Can We Respond to Current Energy Demand While Preparing for the Future?The Monein solar power plant in Pyrnes-Atlantiques(France),developed by TotalEnergies Renewables.“TotalEnergies,multi-energy company,supports the objectives of the 2015 ParisAgreement.”Our AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report10We Are Becoming a Multi-Energy Company The energy transition depends,first on electrifying energy use,which will require a massive increase in green electricity.TotalEnergies is expanding across the entire electricity value chain(intermittent renewable production,flexible gas-fired power production,storage,trading,customer sales)in a profitable way.Our goal is to build an Integrated Power business with a return on average capital employed higher than 10%and to rank among the worlds top five providers of solar and wind energy by 2030,with gross capacity of 100 GW and an interim target of 35 GW by 2025(17GW reached as of year-end 2022).Second,the energy transition depends on the development of new,lowcarbon energies(biofuels and biogas,clean hydrogen and synthetic fuels combining hydrogen and carbon)that TotalEnergies has the core skills to produce.We are expanding into these new markets by focusing on circular resource management and deploying less mature technologies at our own sites to test their business viability.For natural gas,a transition energy,TotalEnergies continues to expand across the liquefied natural gas(LNG)value chain to consolidate its position as the worlds thirdlargest player.LNG plays a key role in the netzero roadmaps of many coalconsuming countries.Its also a perfect partner for HOW IS NATURAL GAS KEY TO THE ENERGY TRANSITION?Natural gas can replace coal for numerous applications(power generation,manufacturing,etc.),so it has an immediate positive impact,since its carbon emissions are half those of coal.That should be a global priority.Flexible and easily dispatchable,natural gas is also an ideal partner for renewable energies,which are intermittent and seasonal by nature,for power generation.In order for gas to live up to its potential for the energy transition,methane leaks need to be eliminated from the gas value chain.TotalEnergies has already reduced its emissions and is committed to zero methane emissions.ENERGY TRANSITIONNEW ENERGIESIn addition,LNG has demonstrated its key role in connecting gas consuming countries with large natural gas resources available on a global scale.For these reasons,gas is a core component of roadmaps for getting to net zero in many coal-consuming countries,including the UK,the US,Germany,Japan,South Korea,China and elsewhere.Conversely,the crisis in the natural gas markets in 2022 has unfortunately triggered a boost in global demand for coal,which reached historic highs in 2022.The IEA reported in December 20221 that Europes demand for coal,primarily for power generation,rose 6%against a backdrop of serious disruption in the European electricity markets.1.IEA Oil Market Report,February 2023.intermittent renewable energies given that flexible and dispatchable CCGT plants provide a secure electricity supply in the context of weather events and fluctuations in demand.Regarding oil,the Company is highly selective and focuses its investments on projects with a low breakeven point and low emissions.This strategy enables us to take full advantage of global oil demand,which continues to grow but should begin to decline in the medium term,due to the electrification of transport;it ensures that our businesses will remain profitable and resilient over the long term.As they evolve,the energy markets are becoming increasingly interconnected and interdependent,particularly since electricity the energy at the center of the transition is a secondary energy,meaning that it depends on other energies and markets.Our integrated multienergy strategy and our solid financial base are strengths that allow us to be a major player in the sustainable energy the world needs and make the most of current developments including the potential price volatility they may cause.ACCELERATING THE MOVE TORENEWABLES AND STRENGTHENING POWER GRIDSElectrification of end-user demand thanks to clean power is one of the biggest drivers of the energy transition.Renewables,already the primary factor in decarbonizing the power mix,are experiencing accelerated growth.According to the International Energy Agency(IEA),solar and wind capacity increased threefold between 2015 and 2021(by 85GW and 246GW respectively).But this is not enough.TotalEnergies shares that view.As the penetration of intermittent renewable energies increases,massive investments to upgrade power transmission and distribution networks are also required,as well as storage solutions and flexible power plants.Global investments in renewables and power grids are already outpacing investment in oil and gas production by nearly 100%.Here too,we need to go further:we also share the IEAs belief that annual investment in low-carbon power must,at a minimum,double by 2030 to reach between$1.5 and$2 trillion,with half devoted to grids.TotalEnergies aims to reach 100GW in gross installed wind and solar capacity by 2030,and is among the ten major companies worldwide(including six Chinese firms)that are targeting triple-digit renewable energy generation over the course of the decade.Electrification is gaining pace,which is in turn taking carbon out of a growing number of applications especially transportation,the most oil-intensive industry.Our AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report11With regard to greenhousegas emissions,TotalEnergies is committed to lowering its carbon footprint from energy production,processing and delivery to our customers.First of all,the Company is executing an ambitious action plan to reduce the greenhouse gas emissions for which we are directly responsible(Scope 1 2 emissions at our operated assets)to the strict minimum.We are further investing in carbon storage and sequestration projects so as to“neutralize”our residual emissions and be able to offer those CCS solutions to our major industrial customers.Although the speed of the transition will depend on the pace of change in government policies,consumer behaviors and corresponding demand,TotalEnergies has embraced the A Net Zero Company by 2050,Together With Societyneed to offer our customers affordable,less carbonintensive energy products,and to lend support to our partners and suppliers with their own lowcarbon strategies.Drawing on the actions already taken to evolve our energy offerings and reduce carbon emissions from our operations,in 2022 TotalEnergies published an outline of what our businesses might look like as we become a carbonneutral energy company by 2050,together with society.By 2050,TotalEnergies would produce:about 50%of our energy in the form of lowcarbon electricity,with corresponding storage capacity,totaling about 500 TWh/year,on the premise that we develop about 400GW of renewable capacity.about 25%of our energy,equivalent to 50Mt/year of decarbonized fuels in the form of biogas,hydrogen,or synthetic liquid fuels from the circular reaction H2 CO2=efuels.about 1 Mb/day of oil and gas(about a quarter of the total in 2030,consistent with the decline envisaged in the IEAs 2021 Net Zero scenario),primarily liquefied natural gas(roughly 0.7 Mboe/day,or 25-30 Mt/year)with very lowcost oil accounting for the rest.Most of that oil would be used in the petrochemicals industry to produce about 10Mt/year of polymers,of which two thirds would come from the circular economy.That oil and gas would represent:about 10Mt of residual emissions annually,with methane emissions almost eliminated(below 0.1MtCO2e/year);those emissions would be offset in full by projects using naturebased solutions(natural carbon sinks).Scope 3 emissions totaling about 100 Mt annually.To get to net zero together with society,TotalEnergies would help“eliminate”the equivalent of 100 Mt/year of CO2 generated by our customers by developing:-a carbon storage service for customers that would store 50 to 100Mt/year of CO2;-an industrial e-fuels business that would prevent 25 to 50 million tons of CO2 for our customers through production with 100%green hydrogen,while offsetting the intermittent nature of renewable energies to make them a viable replacement for fossil fuels.TOTALENERGIES IN 2050:A VISION FOR A NET ZERO COMPANYScope 1 24Mt CO2eScope 35Mt CO2e20502050010100NBS10 Mt CO2eCCS:50-100 Mt CO2eCCU(e-fuels/e-gas)25-50 Mt CO2e59P%IEA NZE ENERGY1 MIX IN 2050TOTALENERGIES 2050 ENERGY PRODUCTION&SALES TOTALENERGIES NET ZERO19%IntegratedPowerDecarbonized electricity2500 TWh/yOil,LNG&GasOil,NaturalGas&Coal25-30 Mt/y0.2-0.3 Mb/d10 Mt/year polymersLow-carbonmolecules3Bioenergy50Mt/y-100S:7GtCO2eCCS:50-100 MtCO2eNet Zero lifecycle carbon intensity61.IEA WEO 2021-NZE scenario.2.Hydro,solar,wind and nuclear.3.Biofuels,biogas,hydrogen and e-fuels/e-gas.4.From operated facilities.5.From energy products used by our customers(GHG Protocol Category 11).6.Average carbon intensity of energy products used by our customers worldwide(Scope 1 2 3).Our AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report12Why Continue to Invest in Oil?In May 2021,the International Energy Agency(IEA)published its Net Zero Emissions(NZE)scenario outlining changes in world energy demand that would be compatible with a 1.5C scenario“without overshooting the related carbon budget.”The strict assumptions used for the evolution in energy demand between now and 2030 prompted the IEA to assert that the world had no need for new oil and gas projects.Indeed,under that“normative”scenario,demand for oil between 2020 and 2030 declines at the same rate as the natural depletion of fields,i.e about 4%a year.This scenario does not claim to forecast actual changes in energy demand,and since its publication the IEA has released several demand forecasts that reveal the extent to which the world is deviating from that normative outlook.Demand for oil is by no means declining in line with the depletion of existing fields;in fact,demand is rising.In February of this year,the IEA projected that demand The IEAs forecasts for shortterm oil demand are in line with TotalEnergies analyses:although we concur with the NZE scenario regarding oil demand in 2050,the demand curve for 20202030 put forward to achieve it is clearly very far from observed market trends.The IEA updated its scenarios in the World Energy Outlook published in October 2022.In the wake of the 2022 energy crisis,it acknowledged the importance of balancing supply and demand for the energies currently used throughout the world.Under its Announced Pledges Scenario(APS),which is compatible with the Paris Agreement,global oil demand would peak in 2030 and then subside,but at a slower pace than the natural rate of oil field WORLD OIL PRODUCTION FORECAST COMPARED TO IEA NZE AND APS SCENARIOS Production gap between IEA APS scenario and existing fields production TEO1 world oil supply of the existing fields,decline 4%/year Oil production of the NZE IEA 2022 Oil production of the APS IEA 202202040608010020302040205020222018Production Mb/dIEA APS 2022 1.7CIEA NZE 2022 1.5Cdecline.So new oil projects will be necessary.The chart below compares oil production in the APS scenario to the production capacity of existing fields(TotalEnergies assessment shown in red in the chart).The gray area indicates the shortfall in available production,meaning new projects that will need to be launched,even under the 1.7C scenario.That is why TotalEnergies believes new oil projects are needed to meet continued strong demand,maintain prices at an acceptable level and create the conditions for a“just”transition that gives people time to change their energy practices.1.IEA Oil Market Report of February 2023.in 2023 would exceed 2019 levels,rising to 102Mb/d(whereas the NZE scenario published in 2021 projected falling demand from 2019,to 93.5Mb/d in 2023).Tungsten Explorer,Moho North project(The Republic of the Congo).1.TotalEnergies Energy Outlook.Our AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report13ElectricityLNGPipelineGasLow-carbon moleculesOilThe vision of our potential transformation by 2050 is backed by an investment policy designed to accelerate lowcarbon solutions(electricity and renewable energies,biogas and biofuels,lowcarbon fuels,CCS)while we continue to meet the worlds current energy demand.The worlds population continues to grow and the inhabitants of emerging nations have legitimate aspirations to higher living standards,comparable to those of Western countries.The years 2020 to 2030 will mark TotalEnergies transformation into a true multienergy company.In practical terms,over the current decade 2030,TotalEnergies plans to:Increase our energy production from 14PJ/day to 20PJ/day to meet growing demand.Electricity(primarily renewable power)would account for half that increase,with target pow202220222025202520302030Oil Maintaining the cash flow engine Aligning sales to demand and productionGas Growing LNG production Integration along the LNG value chainIntegrated Power Creating value from integration in electricity Renewables:100 GW by 2030,ROE 10%Low-carbon molecules Growing biofuels(SAF),biogas,CCS business Developing low-carbon H2 for our refineries1020ENERGY PRODUCTION AND SALESPJ/d(excluding Russia)ENERGY PRODUCTIONENERGY SALES 4%/y50 0%er generation of about 130TWh,and liquefied natural gas would make up the balance,while oil production by 2030 will remain stable;Pursue efforts to decarbonize the energy products offered to end customers,by decreasing our sales of petroleum products by more than 30%to align those sales with a production of about 1.4 Mb/day.That reduction is consistent with our strategy of integration across value chains,and reflects the anticipated decline in fuel demand in Europe,where the shift to electric road transportation is well underway.As a result,oil will account for no more than approximately 30%of our total sales,compared to 55%in 2019.This expected evolution in our activities in 2030 underpins TotalEnergies carbon emissions commitments over that same period,which are described in the section on Climate and sustainable energy.2020-2030,A Decade of Transformation for Now and the FutureOur AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report142022 CAPITAL EXPENDITUREOUTLOOK 2030 Integrated Power Integrated Power Oil OilLNG&GasLNG&Gas Low-carbon molecules Low-carbon molecules4B$in low-carbon energiesNew projectsMaintain16.3 B$2022Investments Aligned With Our Multi-Energy Strategy The challenge posed by the energy transition is to move as quickly as possible from the current energy system(which is more than 80sed on fossil fuels)to a decarbonized system.For a company like TotalEnergies,that means continuing to supply our customers with the energy they need now,while accelerating our investment in the lowcarbon energies that will dominate in the future:we must invest in both systems simul-taneously and strike the right balance to ensure a just transition(see p.9).In 2022 our investments totaled$16.3 billion,including$4 billion in lowcarbon energies.In 2023,we expect that figure to increase to$5 billion.That sum exceeds our projected capital expenditure for new oil&gas projects($4.5 billion).In the coming years,investments in low-carbon energies will represent 1/3 of our investments,more than new oil&gas projects(30%).Consistent with our commitment to build a multienergy company,we have decided to publish financial indicators for the Integrated Power segment as of the first quarter of 2023 to demonstrate our ability to combine profitable growth and sustainable development while generating value for our shareholders.Continuing to invest with discipline:our decision criteria In a global economic context marked by inflation,it is essential to maintain our investment criteria to ensure the profitability and resilience of our portfolio.Each material investment project is evaluated in relation to the Paris Agreements objectives and on the basis of the following criteria:Project profitability is analyzed in a hydrocarbon price scenario compatible with the Paris Agreement(Brent at$50 per barrel according to the IEA APS scenario limiting global warming to 1.7C,and Henry Hub at$3 per MMBtu)and with a carbon price of$100 per ton(or the current price if higher in a given country).Seagreen(Scotland)offshore wind farm under construction.MaintenanceGasMaintenanceOil33%in low-carbon energies30%in new projects14-18 B$/yearthrough cyclesOur AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report152022 APPROVED OIL&GAS PROJECTSGHG emission intensity%vs.portfolio averageTechnical costs00100 00 $/boe For new oil and gas projects(greenfield and acquisitions),the intensity of Scope1 2 greenhouse gas emissions is compared,depending on their nature,to the intensity of the average greenhouse gas emissions of upstream production assets or that of various downstream units(LNG plants,refineries)of the Company.As of 2023,the threshold has been lowered for Upstream projects to 19kilograms of CO2e/boe,versus 20 kilograms of CO2e/boe previously evidence of the effectiveness of our criteria.For additional investments in existing assets(brownfield projects),the investment will have to lower the Scope1 2 emissions intensity of the asset in question.The goal is for each new investment to contribute to lowering the average intensity of the Companys Scope1 2 greenhouse gas emissions in its category.For projects involving other energies and technologies(biofuels,biogas,CCS,etc.),GHG emissions reductions are assessed based on the amount by which they will reduce the Companys emissions.Our investment decisions in 2022 In 2022,after an evaluation based on these criteria,43investments were approved.The most significant by category are as follows:Upstream Oil&Gas:expansion of the CLOV field and development of the Begonia oil field and Quiluma and Maboqueiro gas fields in Angola;the Snhvit compression project and development of Eldfisk North in Norway;the launch of Ballymore in the United States;the Fenix gas project in Argentina;Lapa South West in Brazil.Liquefied Natural Gas:Acquisition of an interest in NorthField East LNG and NorthField South LNG in Qatar for Upstream and two FSRUs in France and Germany.Petrochemicals:the Amiral project in Saudi Arabia.Integrated Power:a variety of solar,wind and BESS projects gained from the acquisition of Clearway Energy in the United States;acquisition of CoreSolar;the ACC giga factory in France.Low carbon molecules:Hydrogen:a network of hydrogen stations for trucks in Europe;biogas:South Fork in the United States,acquisition of PGB in Poland;SAF:new unit at Grandpuits,France(Galaxie project).Natural Carbon Sinks:Maya in Guatemala and Tambopata in Peru.CCS:acquisition of a storage licenses in Denmark and for Ichthys in Australia.For projects greenlighted in 2022:Profitability exceeds the internally defined threshold,in a scenario compatible with the Paris Agreements objectives,with the exception of natural carbon sink projects,which are evaluated on the basis of the actual cost of a ton of CO2.The Scope1 2 greenhouse gas intensity is below the average intensity of their category for new oil and gas projects and reduced for brownfield projects,additional measures to control emissions will be needed since the emissions intensity of certain upstream projects increases over time as production declines.Upstream gives precedence to value creation and cash generation over volume and puts a priority on developing lowcost(typically below$20/boe for operating and investment costs)or lowbreakeven and lowemissions projects(typically below$20/b for operating and investment costs)or lowbreake Technical costs include operating costs and investment costs.The break-even points include the taxation of the project and exclude the dividend.Break-even points 4 GW)Startup of Al Kharsaah in Qatar(800 MWp solar)Startup at AGEL in India(500 MW)Startup of Seagreen in Scotland Various projects in France and ChinaCreating value by integrating across the electricity value chain Developing flexible generation and storage capacitiesThe intermittence of solar and wind projects creates a need for flexible generation and storage capacity to ensure supply meets demand at all times and to guarantee grid stability.Flexible generation:We began building a dispatchable power generation portfolio in 2015 consisting of combinedcycle gas turbine(CCGT)plants.This portfolios capacity reached 5.6 GW1 in 2022 with the March 2022 commissioning of the CCGT in Landivisiau,France.With production of around 23TWh in 2022 versus 8.4 TWh in 2021,these units helped offset the impact of weather events and the reduced availability of Frances nuclear power plants.Ultimately,the CCGT units are targeted for decarbonization,either by changing their feedstock(biomethane or hydrogen)or by sequestering their emissions through carbon capture and storage(CCS).control using our project management and offshore development skills;mobilizing external financing at competitive rates and making partial divestments to accelerate cash flow generation and diversify our portfolios exposure.Executing our roadmap in renewablesOur gross installed capacity for renewables rose from 10 GW in 2021 to 17 GW in 2022.Our 2025 objective for gross installed capacity(worldwide)is secured;we are now working on projects to achieve our 2030 objective of 100GW.The move to gain 100%control of TotalEren in 2023 and its integration within the Company will help us meet that goal.35 GW1.From nine CCGT plants,two co-processing units and one gas-fired power and desalination plant.100 GWTradingStorageFlexible generationRenewablesOur AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report26Storage:We are leveraging the technological expertise at SAFT,which is also making the most of this fastgrowing market.In 2022,TotalEnergies commissioned a 25 MWh battery energy storage system(BESS)at the Carling complex and SAFT won significant contracts in New Zealand(100 MW BESS to enhance the stability of the national grid,which takes up a growing share of renewable energies)and Cte dIvoire(10 MW ESS to facilitate grid integration of the countrys first largescale photovoltaic solar plant).New objective for 2030:5 GW of storage capacity deployed worldwide.Diversifying our market exposureWe aim to build a portfolio with a good balance between regulated markets(mainly emerging countries)and deregulated markets(primarily OECD countries and Brazil).In the latter,which are often more competitive,we see electricity prices trending upward over the long term.We rely on a combination of longterm contracts(PPA2 and corporate PPA)and exposure to wholesale markets of up to 30%to make the most of the value created by price fluctuations.In 2022,we developed our electricity trading capacity,which is both crucial for managing this exposure and a competitive advantage for optimizing the value of our projects.Developing our customer portfolioOur integration across the electricity value chain goes all the way to sales to end customers,with packages tailored to consumers and businesses.In 2030,our objective is to serve nearly 10 million consumers in Europe and to sell 130TWh.We also aim to reach 150,000electric vehicle charge points in operations.For our industrial customers,we offer longterm corporate purchase power agreements(CPPAs)from our solar and wind farms,as well as distributed solar generation solutions.In France,TotalEnergies is the market leader in solar power on buildings,having been awarded projects totaling more than 250 MW in the French Energy Regulatory Commissions CRE4 call for tenders since 2017(see p.55).2.Power Purchase Agreement.3.Batteries,hydro,etc.GROSS INSTALLED CAPACITY FOR RENEWABLES AT END-2022In MWMaintenance operations on the Champagne Conlinoise wind farm(France).FOCUSOUR ACQUISITIONS IN 2022United States:TotalEnergies acquired 50%of Clearway Energy,the countrys fifth largest player in solar and wind.The acquisition lifted our renewables portfolio in the United States to more than 25 GW and added to our positions in solar(8 GW of projects with SunChase and Core Solar)and offshore wind(4 GW of projects off the coast of New York and North Carolina).Brazil:TotalEnergies created a joint venture with Casa dos Ventos,Brazils leading renewable energy company,to develop a 12 GW renewable energy portfolio that includes 6 GW already in operation,under construction or in an advanced stage of development(start-up within five years).Europe1,936 991 134 3,061 Oceania20 325 8 354 Americas2,426 3,307 62 5,796 Asia492 6,871 0 7,363 Africa0 239 15 254 Total4,875 11,734 219 16,829 Wind turbinesPhotovoltaicOther3TOTALOur AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report27OUR MAIN ELECTRICITY PROJECTS IN 2022Gross installed capacity of renewable power at end-2022 by country(in MW)5th largest renewable energies company in the U.S.,25 GW non-operated portfolio Major player in renewables in Brazil,partnership for 12 GW First large-scale solar power plant in Qatar,800 MWp non-operated United Kingdom,fixed-bottom wind farm,1.1 GW operated Combined cycle gas turbine plant 446 MW in FranceMajor acquisitions in 2022Startup of large renewable projectsCCGT startup1.CLEARWAY ENERGY2.CASA DOS VENTOS3.AL KHARSAAH4.SEAGREEN5.LANDIVISIAU1452 Below 50 MW 50-500 MW 500-5,000 MW Over 5,000 MW3Our AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report28Natural Gas:A Key Fuel for the Energy TransitionPursuing our growth in LNGIn the gas markets,TotalEnergies focuses on Liquefied Natural Gas(LNG),which can be shipped everywhere in the world.LNG accounts for around 11%of the total gas market and saw strong growth in 2022(up 6%)due to interrupted Russian pipe gas imports to Europe.The imbalance between LNG supply and demand led to a sharp price increase,from which we benefited.On the flip side,certain consumers have reduced their demand:Pakistan,for example,announced in February 2023 that it intended to build new power plants using coal rather than gas to meet future electricity demand.For LNG to fully play its role in the energy transition,it must remain affordable and the associated greenhouse gas emissions must be controlled across the value chain.We are working on that.With 48Mt sold in 2022,TotalEnergies has strengthened its position as the worlds third largest LNG company.99%of these LNG sales went to countries committed to net zero emissions by the midcentury,giving them an alternative to coal and fuel oil(see p.53).LNG:Contributing to Europes energy security in 2022We are the leader in regasification in Europe.We fully leveraged our capacities to offset the reduced deliveries from Russian gas pipelines by increasing the utilization rate from 50%in 2021 to 86%in 2022.The connection of our assets of two additional Floating Storage and Regasification Units(FSRUs)in Lubmin,Germany(late 2022)and Le Havre,France(planned for Q3 2023)will increase our total regasification capacity to more than 20 Mt in 2023.To supply these terminals,TotalEnergies is relying in particular on its position as the leading exporter of U.S.LNG to Europe(more than 10 Mt in 2022).1st loading of Enterprise LNG at the Cameron LNG liquefaction terminal in Louisiana(US).LNG PRODUCTIONMt/y0102030202120272030 40%including Russiaexcluding RussiaQatar NFEECA LNGNLNG T7 RussiaOur AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report29Qatar:TotalEnergies selected as partner on NFE projects in June and NFS in September(3.5 Mt/y).North America:Launch of Cameron Phase 2 FEED.Papua New Guinea:Launch of integrated FEED.TWO MAJOR SUCCESSES IN QATAR IN 2022 FOR TOTALENERGIESTwice in 2022,Qatar chose TotalEnergies as its first partner for LNG production projects:North Field East and North Field South.These extension projects will provide the Company with additional LNG production of 3.5 Mt/y and significantly enhance the global supply.In line with our strategy,they are among the most competitive in the world in terms of cost and will apply the highest standards to reduce GHG emissions intensity(including methane).Solutions include capturing and storing native CO2 and connecting to Qatars power grid,which is supplied with an increasing share of renewable electricity,thanks in part to the 800 MW Al Kharsaah solar power plant commissioned in 2022,in which TotalEnergies is a partner.QATARGROWING LNG REGAS CAPACITYIN EUROPEMt010202022 FSRU in Lubmin,Germany,since end-2022 FSRU in Le Havre,France,planned for 3Q232023 20Mt/y in 2023(15%market share)Use rate86%2 FSRUExisting capacityRas Laffan liquefaction terminal,Doha(Qatar).REDUCING OUR LNG VALUE CHAINS EMISSIONS INTENSITYOur LNG growth strategy requires an exemplary approach to GHG emissions across the value chain.Our priority is to eliminate methane emissions(see p.30).For example,the concept chosen for the integrated FEED launched for Papua LNG is based on four electric liquefaction trains(e-trains)and re-injection of the native CO2 produced into the reservoirs.FOCUS ONFOCUS ONAdnoc LNGECA LNG 1Cove Point LNGFreeport LNGCameron LNGSabine Pass LNGCorpusChristiArzewSkikdaMozambiqueLNG 2Angola LNGNigeria LNG T7 1Yemen LNG 2QatarPapua LNGIchthys LNGGladstone LNGSnhvit LNGYamal LNGQalhat LNG&Oman LNGELNGVista Pacifico1.Under construction.2.Force majeure.Equity Production Equity Production(subject to FID)Long-term supply Long-term sales Regasification terminals in operation or planned Bunkering hubLNG sales in 20221ST US LNG EXPORTER TO EUROPE1ST REGASIFICATION CAPACITY IN EUROPE48MtA GLOBAL AND INTEGRATED LNG TOP PLAYEROur AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report30EliminatingOur Methane Emissions 1.Around 12 years compared with centuries for CO2.Global Warming Potential of 80 over 20 years and 28 over 100 years(Source:IPCC 6th Assessment Report).2.IEA Global Methane Tracker 2023.3.Excluding biogenic methane.4.Methane emissions intensity in relation to com-mercial gas produced.Combustion Fugitive emissions Process venting Cold venting Flaring202020102021202220252030120644942Methane is a greenhouse gas with a global warming potential 28 times higher than that of CO2 and a much shorter atmospheric lifetime1.This makes reducing methane emissions a priority in efforts to mitigate global warming.To date,150 countries have signed the Global Methane Pledge launched in Glasgow in 2021,which aims to reduce methane emissions by 30%from 2020 levels by 2030.Anthropogenic methane emissions come from energy,waste and agriculture.Around 25%2 come from the oil and gas industry.TotalEnergies believes that it is the industrys responsibility to reduce methane emissions to near zero by 2030.We are working towards this goal through the Oil&Gas Climate Initiative(OGCI)and want our conduct to be exemplary.We have been working on this issue for many years and we have already halved our methane emissions between 2010 and 2020.A clear ambition:Zero methane and tangible objectivesIn early 2022,we set very ambitious,specific targets for the decade ahead that call for a 50%reduction from 2020 levels by 2025 and 80%by 20303.These targets cover all of the Companys operated assets and go beyond the 75%reduction in methane emissions from coal,oil and gas between 2020 and 2030 outlined in the IEAs Net Zero Emissions by 2050 scenario.The Company has also maintained its methane intensity target4 of below 0.1%for its operated gas facilities.In 2022,our methane emissions reached 42 kt,a 34%reduction compared to 2020 levels.In addition,TotalEnergies is working with its partners to implement best practices at its nonoperated assets.Deployment of AUSEA drones:From estimating to measuring methane emissionsMethane emissions have many dispersed sources.TotalEnergies is a pioneer in detecting and quantifying emissions in reallife conditions,thanks to the AUSEA(Airborne Ultralight Spectrometer for Environmental Application)drones deployed acrossMETHANE EMISSIONS(OPERATED)In CH4 kt-50%vs 2020-80%vs 20202010-2020-47%Analysis with the AUSEA drone at the Lapa Field(Brazil).Our AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report31Sustainability&Climate 2023 Progress Report31GOLD STANDARD20222021almost all our upstream operated sites world wide.In 2022,a campaign to detect and measure emissions on site in reallife conditions covered 95%of operated sites5 in the upstream sector.More than 1,200 AUSEA flights were carried out in eight countries to cover 125 sites.AUSEA detection technology,which consists of an ultralight CO2 and CH4 sensor mounted on a drone,was developed in cooperation with the French National Center for Scientific Research(CNRS)and Universit de Reims Champagne Ardennes.It is at the cutting edge of scientific research for detecting and quantifying methane emissions on site,with a high level of accuracy(1kg/h).TotalEnergies is in advanced discussions with some operators of its nonoperated assets to make this technology available to them and to carry out targeted detection campaigns on these assets.Targeted actions for each methane source,asset by assetEmissions reduction is a direct result of an 5.Calculated as a percentage of 100%operated production.6.2nd International Methane Emissions Observatory report.2020 to guide reporting on methane in the Oil&Gas industry.The framework encourages companies to continue improving their reporting of operated and nonoperated emissions and focuses on performing onsite measurements to verify that estimates are exhaustive and accurate.We are doing just that.action program at our facilities targeting each specific source of methane(venting,flaring,fugitive emissions and incomplete combustion)and adapted to the specific features of each asset.Leading the industry through OGMP 2.0In its“An Eye on Methane”report for 2022,the United Nations Environment Programme(UNEP)6 confirmed TotalEnergies Gold Standard status.Each year,this report reviews the deployment by Oil&Gas companies of the Oil&Gas Methane Partnerships OGMP 2.0 framework,which was created in DEPLOYMENT OF DRONESPATRICK POUYANNS CALL TO THE OIL&GAS INDUSTRY TO REDUCE METHANE EMISSIONS AT COP 27Invited by the Egyptian presidency of the COP27 climate conference to a discussion on implementing the Global Methane Pledge,Patrick Pouyann called on all Oil&Gas companies,national and international,to join the OGMP 2.0 and work toward zero methane emissions.U.-S.U.-K.BOLIVIABRAZILARGENTINAANGOLACONGOBRUNEIKAZAKHSTANDENMARKNETHERLANDSFRANCEITALYNIGERIAGABONBlock BAnguille,Torpille,OnshoreDungaNKossa,DeepwaterYanga/Sendji,DjenoBlock 17&32 TankoerGom,Halfdan,DanK6&K5LapaGryphon,SGP,ElginIncahuasiTierra del Fuego,NeuquenGRP assetsTempa RossaOML 58,99,100,102,130E&P Op.assets coverage(op.production%)2022DRONE MISSIONS95%COP27METEC Test Site Cameron LNGOur AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report32FPSO Block 17(Angola).Investments in Low-Cost,Low-Carbon AssetsIn light of global demand and the stakes of a just transition,our ambition is to maintain our oil production by 2030.This requires launching new projects to offset the natural decline in field output(see p.12).We approve projects on the basis of performance criteria,notably technical costs and carbon intensity(see p.14).We operate our fields in accordance with strict requirements concerning safety,emissions reduction and environmental impact.The cash flow generated by these activities helps to accelerate our investments in renewable energies.In Angola,several additional wells were drilled and brought on stream in 2022.These shortcycle projects make it possible to maintain the level of production of naturally declining fields.They include phases 2 and 3 of Clov and the startup of Begonia on Block 17.At the same time,emissionsreduction projects are being carried out on these assets to keep carbon intensity below 18kgCO2e/boe.20222023202420252026 Short-cycle projects Production 0200400Kboe/d(100%)PRODUCTION FROM ANGOLA B17In Brazil,we pursued our strategy of investing in lowcost,lowcarbon assets with the Mero field.A first floating production storage and offloading vessel(FPSO)was commissioned in May 2022,to be followed by three others through 2025.We are also expanding our offshore presence in the Atapu and Spia fields,with their lowcost,lowemissions reserves.In the United Arab Emirates,an agreement was signed in March 2023 to acquire a 20%interest in an offshore concession covering two major fields with a long production plateau(SARB and Umm Lulu)that also meet our lowcost,lowemissions criteria.In Uganda,the Tilenga and EACOP projects were launched in 2022 with a low technical cost and low carbon intensity.A largescale program to support the neighboring population and preserve biodiversity has also been rolled out(see p.39).TotalEnergies focuses its exploration investments on oil prospects with low technical costs,low greenhouse gas emissions and short lead times.In particular,it continued to assess discoveries made in 2020 on Surinames Block 58.In 2022,TotalEnergies made a significant discovery of light oil with associated gas in the Orange Basin offshore Namibia.In 2023,the Company is working on appraisal so it can quickly make a decision on production development.FOCUS ONOur AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report33Anticipating Changes in Demand by Adapting our Petroleum Product SalesWith its Green Deal and Fit for 55 legislative package,the European Union has taken practical steps toward achieving its ambition to become the first carbon-neutral continent,promoting the development of low carbon vehicles.These major trends are prompting us to pursue our strategy of reducing our sales of petroleum products by 40%by 2030,so that we do not sell or refine more fuel than we produce oil.On the flip side,this strategy is leading us to develop actively in new mobilities:in low carbon molecules,we have initiated the conversion of refineries into biorefineries in Europe.In electric mobility,we are accelerating our growth with a plan to deploy charging points player in 2022 for deploying highpower charge points on motorways to meet both government and motorist expectations.The Company confirmed that it will stop selling fuel oil for power generation by 2025.Developing non-energy uses of oil that emit less greenhouse gasIn addition to their use as fuel to produce energy,petroleum products are also used as materials or components.The share of nonenergy and lowemitting uses(petrochemicals and lubricants)in oil consumption will increase as mobility turns to decarbonized solutions such as electricity.This is why we are pursuing our growth strate1.International Sustainability and Carbon Certification.ISCC cer-tification indicates that traceability is ensured from collection of inputs(biomass or waste and residue)to the conversion process,in compliance with the ISCC standard.2019Oil productionRefining throughputPetroleum product sales01.01.50.52.02.520222030Mboe/dOIL PRODUCTION,REFINERY THROUGHPUT AND PETROLEUM PRODUCT SALES-40%Petroleum product salesvs 2019on major roadways and in large cities in Europe.In hydrogen,we are notably developing a European network of hydrogen stations for trucks in partnership with AirLiquide.In Europe,we continued to transform our service stations network into multienergy hubs(with highpower charge points and hydrogen,see p.51)and were more selective in our petroleum product sales.In March2023,we announced the sale of our service station networks in Germany and the Netherlands and the creation of a jointventure with CoucheTard to operate our networks in Belgium and Luxembourg.In France,TotalEnergies was the most active A WORLDCLASS INTEGRATED PETROCHEMICALS PROJECT IN PARTNERSHIP WITH SAUDI ARAMCOIn December 2022,TotalEnergies and Saudi Aramco announced that they intended to jointly invest$11 billion(of which$4 billion in equity,37.5%financed by TotalEnergies and 62.5%by Saudi Aramco)to develop Amiral,a petrochemicals complex in Saudi Arabia with an ethylene production capacity of 1.65 Mt/y.The project will integrate a steam cracker downstream of the SATORP refinery in Jubail,in which TotalEnergies holds a 37.5%interest alongside Saudi Aramco.It will capitalize on an existing asset that is both profitable and sustainable(first refinery in the region to obtain ISCC 1 certification)by making it possible to convert products from Saudi crude into high value-added polymers at the Jubail industrial park.Reducing the sites environmental footprint is a central aspect of the project,with the goal of capping greenhouse gas emissions by 2030 and building a wastewater treatment plant that will save up to 8 million cubic meters of water per year.AMIRALgy in petrochemicals by focusing on integrated complexes with favorable conditions for access to feedstock.2022:Startup of a new ethane cracker in PortArthur in the United States,with a production capacity of 1 Mt/y.Our AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report34New Low-Carbon Energies Electrification alone will not be able to meet all decarbonization needs,notably in aviation and heavy industry.The energy transition also requires the development of low carbon energies based on the conversion of biomass and waste or the production of efuels using renewable hydrogen and captured CO2.We are developing these new energies(biofuels,biogas,hydrogen and efuels).BiofuelsOver their lifecycle,biofuels emit 50%less CO2e than their fossil equivalents,making them a decarbonization pathway for liquid fuels.Because demand is strong,this is a highmargin market,but access to feedstock(plants,residues,sugar,etc.)is hampering growth.Among biofuels,TotalEnergies is putting a priority on producing sustainable aviation fuel(SAF)to decarbonize the aviation industry.Other decarbonization options besides biodiesel are available for road transportation,notably electricity.oil and animal fat)to more than 75%as from 2024.In 2022,we signed an agreement with SARIA to supply the future Grandpuits biorefinery with this type of feedstock(see p.36).BiogasBiogas,produced from the decomposition of organic waste,is a renewable gas consisting primarily of methane.Compatible with existing transportation and storage infrastructure,it has a key role to play in decarbonizing the use of gas products(for power generation and heating).As with biofuels,the roadblocks to development are the cost and local availability of feedstock.We are rapidly ramping up in this market,which is essentially local.After acquiring Fonroche Biogaz in France and creating a joint venture with Clean Energy in the United States in 2021,our biomethane production doubled in 2022 to 0.5 TWh.The BioBarn biogas plant came on stream in January 2023 with a planned capacity of 160 GWh per year,making it the largest in France.Our objective is to have 2 TWh/y of biomethane capacity by 2025 and 20 TWh/y by 2030 worldwide.To get there,we are forming strategic partnerships with the agricultural and wastewater treatment sectors to develop growth hubs in France and United States.The acquisition of Polands leading biogas producer PGB,announced in March 2023,should increase TotalEnergies capacity to 1.1TWh/y,making it Europes second largest biogas producer.(see p.51).To avoid competition for arable land,TotalEnergies is developing solutions based primarily on food industry waste and residues.The agricultural feedstock used to make these products complies with sustainability and traceability requirements concerning carbon footprint,nondeforestation and land use.We stopped sourcing palm oil and its byproducts in 2022 and have set a new target that raises the share of circular feedstock(used Refuelling truck on the tarmac at Le Bourget(France).Our AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report35Hydrogen and e-fuelsHydrogen.TotalEnergies focuses on decarbonizing the hydrogen used in its European refineries,a move that should reduce CO2 emissions by 3 Mt per year by 2030.In addition to our partnership launched in 2021 at the Normandy refinery,TotalEnergies and Air Liquide signed a partnership agreement in November 2022 to build an innovative,circular system at the Grandpuits biorefinery to produce and harness renewable hydrogen(see p.52).At La Mde,the Masshylia project to produce hydrogen in partnership with Engie is advancing.E-fuels.Soon,the use of CO2 as a feedstock will make it possible to decarbonize certain transportation subsectors even more broadly.Captured CO2 can be combined with green hydrogen to produce synthetic fuel or gas.TotalEnergies is staking out a position in this market.In early 2022,in the United Arab Emirates,the Company joined the initiative of Masdar and Siemens Energy to build a pilot renewable hydrogen plant that will be used to convert CO2 into sustainable aviation fuel(SAF).TotalEnergies is also developing pilot facilities near its Leuna refinery in Germany to use renewable hydrogen and captured CO2 to make inputs for sustainable aviation fuel.e-fuel(Electrolysis)Carbon captureH2OH2CO2GREEN HYDROGEN PRODUCTION TO MAKE SUSTAINABLE AVIATION FUELTHE TRANSFORMATION OF OUR INDUSTRIAL SITES FOR THE PRODUCTION OF NEW,LOW-CARBON ENERGIES2019End20222022NormandyStart of SAF production(coprocessing)GrandpuitsBiorefinery commissioning scheduled Capacity:210kt/y of SAFSAFProduction target of 1.5Mt/y(around 10%of the global market)CircularityPriority given to waste and residues 75%Clean Hydrogen/e-fuelsProduction of one million tons by 2030SustainabilityNo more sourcing of palm oil and derivativesLa MdeBiorefinery commissionedOperator at the Grandpuits zero crude platform.20242030Our AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report36Grandpuits,an Example of Circularity FO C USThrough its conversion into a zerocrude complex,Grandpuits is positioning itself as a forefront example of circularity by integrating several exemplary processes.These include:A biorefinery that will process more than 75%waste and residue for a second life as biofuel SAF in particular.-In 2022,TotalEnergies and Air Liquide signed a partnership agreement to create a hydrogen production unit with a capacity of more than 20,000 t/y,partially renewable thanks to recycling of residual biogas from the biorefinery,which will replace the natural gas traditionally used in the process.The unit will also be delivered with carbon capture technology that will help reduce the facilitys carbon footprint by capturing more than 110kt of CO2 a year for reuse in food and industrial applications.The renewable,low carbon hydrogen produced will primarily be used by the biorefinery itself to produce sustainable aviation fuel.The hydrogen could also be used to support sustainable mobility in the IledeFrance region.-In September 2022,TotalEnergies also signed a partnership agreement with SAR-IA,a European leader in the collection and conversion of organic waste into sustain-able products.This partnership is a major step in securing the supply of used cooking oil and animal fat for SAF production.It will increase the sites SAF production capacity to 210,000 tons per year,or 25%more than forecast when the initial project was announced in 2020.An advanced plastics recycling unit in partnership with Plastic Energy that will produce feedstock for making polymers and contribute to the Companys objective of producing 1Mt of circular polymers by 2030.A unit to produce polylactic acid(PLA),a biodegradable and recyclable bioplastic that also avoids the use of fossil-based inputs.PlasticwasteAdvancedrecyclingunitBio-basedpolymersunitBiorefinery TacoilSAF(aircraft)Low carbonrenewablehydrogen GasOther TotalEnergiespetrochemicalssitesPlastics Plastics BiomassWaste:animal fat,used cooking oil Sugar orwheat starch PLA(polylactic acid)PLAUses(food,medical,etc.)Reuse of CO2for agricultural andfood applications Collection andsorting ofplastic waste Residualbiogas Air LiquideH2 productionunitGreen H2for mobility(trucks,buses,cars)CarboncaptureunitTHE GRANDPUITS BIOREFINERY GOES ZERO CRUDEOperators in the western sector of the Grandpuits refinery.INDUSTRIAL SYMBIOSIS Industrial symbiosis is an inter-company organizational method based on exchanging or pooling resources.It refers to voluntary collective approaches in a given area to use resources such as water,energy and waste more sustainably or productively.FOCUS ONOur AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report37One Tech experts.Innovating to Accelerate the Energy TransitionEach year,TotalEnergies devotes around$1 billion to R&D and innovation and mobilizes more than 3,500 employees.R&D at TotalEnergiesIn 2022,58%of our R&D focused on new energies(renewable electricity,new molecules),batteries and reducing our environmental footprint(methane,CCUS,water,biodiversity etc.)compared to less than 30%in 2017.The figure stands at 65%in the 2023 budget.This realignment of our research and innovation towards new energies points to the Companys future.Innovating via OneTech One of the missions of our OneTech segment,created in 2021 to meet the Companys new challenges and mobilize the teams,is to provide solutions for reducing CO2 emissions and improving the energy efficiency of our projects from the design phase,as well as to accelerate innovation in all our assets.To that end,OneTech mobilizes integrated teams working on the design,construction and operation of our energy facilities,all the way through to R&D,reinforced by the development,testing and deployment of innovative external solutions at our assets to the problems raised in our operations.Methane,CCUS,Water,Biodiversity BatteriesNew EnergiesGas&Oil1.Budget excluding Hutchinson. 172021025507510020222023Guidance28HXe%R&D ALLOCATION1Our AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report38Leveraging digital technology to reduce our emissionsTotalEnergies Digital Factory brings together around 300 developers,data scientists and other digital specialists to develop digital solutions to optimize our industrial resources(environmental impact,availability and costs)and offer new services to customers.For example,the“E”digital solution provides a realtime estimation of energy consumption by the different equipment in a drilling rig,along with the related greenhouse gas emissions.The solution was deployed on the Maersk Voyager1 in 2020,resulting in fuel savings of around 7%and 1,000 tons of reduced CO2 emissions over one year.E was deployed on two additional rigs in 2022.IMPROVING BATTERY RELIABILITY Rapid charging for electric vehicles,used notably when traveling over long distances,heats the battery cells,thereby creating a potential safety risk.To remove this roadblock to widespread EV adoption,our Solaize R&D team developed a fluid with SAFT that improves ultra-rapid charging and overall safety of the battery pack.The innovation tapped into our long-standing expertise in lubricants,using products that were modified to produce a cooling effect in contact with electrochemical cells and to withstand temperatures exceeding 400C.These eco-designed fluids are non-toxic,biodegradable and more energy efficient than traditional products.This patented solution is already being tested by a worldclass automotive parts manufacturer and gives us a substantial competitive advantage.OPTIMIZING BIOREFINERY EFFICIENCYTo close the gap between tight production and very dynamic demand for biofuels,our biofuel teams are developing innovative approaches for chemical kinetics modeling.The objectives are to improve feedstock selection(e.g.type of cooking oil)to achieve better yields in our biorefineries.The first model was deployed at the La Mde biorefinery in 2022.The teams are working on a twin version for our units in Gonfreville,Antwerp and Grandpuits.100200300TotalEnergiesExxonMobilENIShellBPChevronConocoPhillips Photovoltaics,Batteries,Wind turbines,Fuel Cells and Hydroelectric Tech Area Energy-OtherNumber of patent families published1 2019-2022 Teamwork at The TotalEnergies Digital Factory.Manufacturing batteries at Saft Bordeaux(France).Fuel Department Laboratory-CRES(France).1.Deepwater drillship.1.Source:Top innovator according to Cipher https:/cipher.ai/insights/energy-transition-oil-and-gas/.CREATION OF A CENTER OF EXCELLENCE IN DECARBONIZED ENERGIES IN DENMARKDenmark is one of the most advanced countries for decarbonized energies.In 2022,we teamed up with the Technical University of Denmark(DTU),recognized worldwide for its expertise in renewable energies(specifically floating offshore wind),to create a center of excellence in low carbon energies.The center will allow us to improve our performance,test tomorrows technologies and train our employees.As from 2023,it will have access to an industrial-scale pilot site comprising wind turbines,a solar power plant and batteries for conducting research with DTU on hybrid systems or the integration of renewables in power grids.THREE FLAGSHIP R&D PROJECTSOur AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsTOP INNOVATORSSustainability&Climate 2023 Progress Report39Our projects in Uganda and Tanzaniaaccess to cleaner and more efficient energies than the wood and charcoal that most currently use every day 3,at an affordable price.In 2022,TotalEnergies also signed a memorandum of understanding with the Ugandan and Tanzanian governments to develop local wind and solar projects to provide power to the local population.SUPPORT FOR THE PEOPLE CONCERNED BY THE PROJECTS The TilengaEACOP project is being developed in a sensitive social environment and requires the implementation of land acquisition programs with a strong emphasis on respect for local communities rights.This process,which will lead to the acquisition of 6,400 hectares of land,is being conducted on behalf of the Ugandan and Tanzanian governments,and in strict compliance with national legislation,the United Nations Guiding Principles on Business and Human Rights,and with the performance criteria established by the IFC 4.Special attention is given to protecting the most vulnerable persons and womens rights by ensuring they are present and involved at each critical stage of the process.Ugandas Lake Albert region has significant oil resources.Uganda has made the sovereign decision to develop its resources,and has called on TotalEnergies to operate the Tilenga project and CNOOC to operate the Kingfisher project.These are major industrial projects for Uganda and Tanzania.The oil they produce will be transported to the port of Tanga in Tanzania via a 1,400 kilometer pipeline,built and operated by EACOP1.The February 2022 launch materialized the Companys commitment to responsibly and sustainably develop these projects in a lowcarbonintensity manner,to foster a net gain in biodiversity and to generate value for the two countries and their local communities.Civil engineering work started in 2022,and the first drilling rig has already arrived at the Tilenga site.These projects have raised several questions and have been challenged.TotalEnergies has answered these questions in full transparency(see p.40).CLIMATE AND ENERGYThe Tilenga project and EACOP pipeline constitute a hydrocarbon development project,consistent with our strategy of only approving new projects if they lower the average carbon intensity of our upstream portfolio (see p.14).They include concrete emission reduction measures such as solarized pumping stations along the pipeline in Tanzania and the construction of an LPG2 extraction unit at Tilenga,providing local communities with Lake Albert(Uganda).FOCUS ONOur AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report40members to receive new career training as machine operators,plumbers or mechanics,for example.To ensure that we honor and deliver on these commitments,socioeconomic monitoring of the population is now underway among the 622households concerned by construction of the Tilenga industrial zone.Grievance mechanisms5 and a complaints tracking register are accessible and fully transparent.As of December 31,2022,1,420 grievances about the Tilenga project had been logged in the register,93%of which have been resolved.For EACOP6,1,130 grievances have been logged and nearly 93%have been resolved.CARE FOR THE ENVIRONMENT The regions in which TotalEnergies is operating are home to a wealth of environmental and ecological resources,and we are committed to not only restoring that environment,but to leaving it in better condition than before the project began,with a“net gain in biodiversity.”Our first action was to reduce the scope of these projects to limit the footprint on the territory to the strict minimum(see S&C 2022 Progress report).In 2022,we then launched a“Net Gain”program at Tilenga7 with the aim of:Reducing human pressures on the Murchison Falls National Park,by providing equipment and training to Uganda Wildlife Authority rangers,especially in their fight against poaching(more than 1,000 traps were removed in 2022);Protecting the forests integrity and connectivity:350 hectares of forest corridors have been replanted in collaboration with neighboring communities,with support from the nonprofit Ecotrust.Raising community awareness of chimpanzee protection,led by Chimp Sanctuary,an NGO.CREATING SHARED VALUEThe development of oil resources will have a significant impact on the Ugandan and Tanzanian economies.The Ugandan government,which became a member of the Extractive Industries Transparency Initiative(EITI)in 2022(see p.93),is intending to invest these new revenues in infrastructure development(roads,education,healthcare).Nearly 80,000 direct and indirect jobs will be created during the projects construction phase,and three million hours of training will be provided during that time.Those skills are destined to expand the local job market in the two countries and strengthen the local industrial infrastructure.Nearly$2 billion in contracts will be awarded to local businesses(subcontractors and suppliers).Over 42,000 direct and indirect jobs will be created during the operation phase.Our FiguresFor Tilenga:94%of compensation agreements have been signed and 92%had been paid out as of the end of 2022.For EACOP:91%of compensation agreements have been signed and 85%had been paid out as of the end of 2022.Of the 775 households that have been relo-cated,involving approximately 5,000 people,about 97%chose to be rehoused in a newly constructed home nearby.As of March 1,2023,204 houses had been delivered.Our constant priority is support for the local populations,and action plans have been carried out to ensure that,once the property has been transferred,we can:Provide temporary support for those affected until the household has regained a stable livelihood,which has generally and traditionally been based on agriculture.Offer longterm support(for a minimum of three years)with three components:Training,mainly in farmingrelated activities(specifically to improve crop yields),or to start new activities such as nurseries or beekeeping;Support for budget management;Developmental assistance to help small businesses diversify their income.The projects have enabled a number of community 1.East African Crude Oil Pipeline,whose shareholders are TotalEnergies(62%),UNOC(15%),TPDC(15%)and CNOOC(8%).2.A fuel used by local communities for their daily needs that causes health problems and deforestation in the country.3.International Finance Corporation,part of the World Bank.4.Livelihood restoration program based on IFC standards.5.Each project at each site has its own grievance mechanism.Any expression of discontent,by any means and no matter how serious,regarding a specific impact,whether real or perceived,resulting from the affiliates activities is considered a grievance.6.830 grievances have been logged in Uganda;nearly 96%have been resolved.In Tanzania,289 grievances have been filed and nearly 85%have been resolved.7.In accordance with strict IFC standards.8.Civil Society Coalition on Oil and Gas,a network of 60 Ugandan NGOs working toward sustainable governance of oil resources.HUMAN RIGHTSCOMMITTED TO DIALOGUE AND RATIONAL DEBATEOur dedicated teams in the field maintain a daily dialogue with communities and local governments to keep them informed and respond to their questions and concerns.More than 150 public meetings were held with local communities about the Tilenga project in 2022.At a national level,our teams hold quarterly meetings with NGOs(either individually or through the CSCO),community representatives and traditional chiefs,to discuss sensitive or ongoing topics(compensation schedules,attention to the most vulnerable groups).In2022,our Ugandan affiliate hosted more than 50outside delegations in the field,religious leaders,legislators,United Nations and European Union representatives,national and international media outlets,etc.At the international level,discussions have been held with NGOs and investors,as well as French and European political leaders.In September 2022,the European Parliament adopted a resolution condemning the alleged violation of human rights in connection with the oil projects in Uganda and Tanzania.TotalEnergies,which was named in the resolution,denounces the fact that it was not approached for a prior discussion and had no opportunity to inform the Parliament that some of its information was factually inaccurate or based on unfounded allegations,some being quite serious.On September 22,the Company sent and published a letter to that effect to the President of the European Parliament.Our AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress ReportClimate and Sustainable Energy CUSTOMER USING A FLEET CARD AT A CHARGING POINTWhat is at Stake?Our 2022 Progress and 2025-2030 ObjectivesHow TotalEnergies 2030 Objectives Compare to the IEA ScenariosEvaluation of our Trajectory by Third PartiesReducing Our Scope 1 2 Emissions,Using the Best Technologies Available$1 Billion Over Two Years for Faster Energy Efficiency ResultsOur Actions to Reduce Indirect Emissions,Together with SocietyTotalEnergies Scope 3 EmissionsReducing Scope 3 Oil Emissions and Guiding Our Customers Toward Low-Carbon Mobility Scope 3 Gas Emissions:Contributing to Lower Emissions from Electricity and Industry Helping Our Industrial and Commercial Customers Decarbonize Their OperationsExpanding Geological Carbon Storage to Reduce Our Emissions and Those of Our CustomersOffsetting Residual Emissions with Natural Carbon SinksWorking With Our Partners on Non-Operated AssetsKey Takeaways4243 44 45 46 48 49 5051 53 55 56 58 59 60Our AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report42out of sync with demand,triggering inflation and aggravating social inequalities.Governments,producers and consumers will therefore need to mobilize collectively to ensure the emergence of a planetwide market for decarbonized energy sources.A final challenge,at the heart of the transi-tion,is transparency.The success of the transition will require appropriate,understandable benchmarks so as to communicate a clear picture of a companys emissions trajectory and progress and provide accurate information to investors,regulators and stakeholders as a whole.The first challenge posed by climate change is the need to act.The scientific community has spoken with one voice,notably in the IPPC Sixth Assessment Report published in 2022,in affirming the crucial role played by cumulative GHG emissions three-quarters of which originate in the production or use of energy in heating our planet,and their impact on our environment and communities.Scientists have reiterated the need to take action to reduce those emissions and collectively reach carbon neutrality.That requires a sweeping transformation of our energy systems.The second challenge arises from the speed and distribution of the required effort.Although it is clear that we must aim for drastic reductions in the worlds use of fossil fuels if we are to curb global warming,there is no single path toward meeting that objective.Multiple viable scenarios are compatible with the goals of the Paris Agreement:acting on demand,reducing emissions,capturing residual emissions.On one hand,the planets path to net zero,as envisioned in the Paris Agreement,will require a differentiated commitment by developed and emerging nations and will hinge on whether people accept the pace of the transition.At the same time,energy sources will need to evolve in accordance with their GHG emissions intensity and the availability of effective,affordable lowcarbon alternatives for consumers.The reality is that fossil fuels still comprise 81%of the worlds current energy mix,and global energyrelated CO2 emissions continue to rise,climbing to 36.8Gt CO2 in 20221.Cooperation is the third challenge we face,in order to tackle those tasks.Every member of civil society must make reducing its direct emissions(Scope1 2)a priority.CO2 emissions reductions and the energy transition are not just a matter of energy supply;they require action on demand,as energy is an essential good for both consumers(since it affects their standard of living)and businesses(since it affects their competitiveness).Reducing the supply of all fossil fuels indiscriminately,across the board,without first developing capacity for lowcarbon alternatives,would put supply Mahakam Delta,mangroves with livestock plots(Indonesia).WHAT IS AT STAKE?Every member of civil society must make reducing direct emissions,at a pace compatible with the Paris Agreements objectives,a priority.1.IEA 2022,CO2 emissions(https:/www.iea.org/reports/co2-emis-sions-in-2022).Our AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report43Our AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples well-beingCare for the EnvironmentCreating Shared ValueOur IndicatorsOur continued progress in 2022,in line with and often ahead of our objectives for 2030,demonstrates our firm commitment year after year to our Companys transformation in pursuit of our 2050 ambition:Emissions connected with our operated facilities have fallen by more than 13%since 2015.That figure includes 7million tons of emissions from our CCGT plants,pursuant to our new strategy of flexible power generation capacity;the emissions reduction for operated oil and gas activities is actually closer to 30%.Scope 3 indirect emissions associated with customer use of our products have declined since 2015.For the use of petroleum products specifically,the decline was more than 27%.The carbon intensity indicator for the energy products we sell has dropped 12%since 2015,making TotalEnergies the leader among our peers in decarbonizing our energy mix.1.Including carbon sinks.2.From energy products used by our customers(GHG Protocol Category 11).3.Excluding Covid impact for first half 2022.New goals.Our emissions(Scope 1 2)Scope 1 2(operated)Mt CO2e464038 -40%1Scope 1 2 Oil&Gas(operated)Mt CO2e4633vs 46 Mt in 2015-29%Methane emissions(operated)kt CH49442-34%-50%-80%vs 64 kt in 2020Routine flaringMm3/d2,30,5-10%-25%-20%Scope 3 Oil World2Mt CO2e2543-27%-30%-40%-30%vs 350 Mt in 2015Scope3 World2Mt CO2e4103893 400 4002030201520222025OUR 2022 PROGRESS AND 2025-2030 OBJECTIVESOur AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report44How TotalEnergies 2030 Objectives Compare to the IEA ScenariosReducing both the GHG emissions at our operated facilities(Scope 1 2)and the life cycle carbon intensity of the energy products we sell are key to our ambition to supply more energy while curbing GHG emissions.Our objective of cutting net Scope 1 2 emis-sions from our operated activities by 40%is consistent with the target reductions in the European Unions“Fit for 55”program(a 37crease between 2015 and 2030)and the IEAs 2022 Net Zero Emissions scenario(a 35crease between 2015 and 2030).Our new targets for lowering the lifecycle carbon intensity of our energy sales(a 15%reduction by 2025 and a 25%reduction by 2030)place the Company on a trajectory comparable to the Announced Pledges Scenario(APS)in the IEAs World Energy Outlook 2022,which assumes that nations party to the Paris Agreement fulfill all of their net zero objectives.SCOPE 1 2 FROM OPERATED FACILITIESIn line with IEA 2C scenarios1In%-60-60-30-30-40-40-50-50-20-20-10-10 10002015201520202020202520252030203020352035 TotalEnergies1 Scope1 2 emissions TotalEnergies-Former 2025 objective TotalEnergies-New 2025 and 2030 objectives(incl.NBS)TotalEnergies-2030 Objective(excl.NBS)STEPS(2.5C in 2100)STEPS(2.5C in 2100)APS(1.7C in 2100)APS(1.7C in 2100)NZE(1.5C in 2100)NZE(1.5C in 2100)LIFECYCLE CARBON INTENSITY2In%TotalEnergies actual TotalEnergies-Former 2025 and 2030 objectives TotalEnergies-New 2025 and 2030 objectives1.Based on IEA WEO 2022 global CO2 emissions from energy combustion and industrial processes.Excluding Covid impact in 2020 and 2021 for TotalEnergies GHG emissions.2.TotalEnergies lifecycle carbon intensity and the change in carbon intensity of the worlds energy,calculated as the ratio of the worlds CO2 emissions from fossil fuels(in Mt CO2)to the total primary energy supply in the IEAs World Energy Outlook 2022.A replacement factor of 2.63(38%)is used to obtain a fossil equivalent for the renewable power generation(wind,solar and hydroelectric)modeled in those scena-rios for purposes of comparison with TotalEnergies lifecycle carbon intensity.Our AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report45Evaluation of our Trajectory by Third PartiesIn 2022,the NGO Transition Pathway Initi-ative evaluated TotalEnergies and awarded the Company its highest score for its efforts in managing both its emissions and transitionrelated risks and opportunities.TPI confirmed,as it had in 2021,that the Companys long-term objectives were sufficiently ambitious to achieve Net Zero by 2050 and remain aligned with their 1.5C criterion.That same analysis was used by CA100 ,a coalition of investors,to conclude that the longterm ambition set by TotalEnergies was aligned with the objective of capping the global temperature rise at 1.5C.1.Oil&gas peers Shell,BP,ExxonMobil,Chevron,Equinor,Eni,Repsol(data at December 31,2022).CCC0Severe riskD-D-/FESG ratingESG Risk ratingCorporate ratingCSAClimate ChangeAAA100Negligible riskA AESG RATINGSInvestors increasingly expect companies to 1.disclose their GHG emissions,2.set shortterm(2030)and 3.longterm(2050)emissions reduction targets and 4.develop a decarbonization strategy to meet those targets.In its Net Zero Alignment model,ISS assessed TotalEnergies as one of three companies in the sector to achieve the highest performance level among these four categories,and therefore to receive the“Net Zero Overall Alignment Status:Aligning.”AA46,77730.133,7C B-PrimeA-B-Average peersOil&gas1Our AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report46Reducing Our Scope 1 2 Emissions,Using the Best Technologies AvailableIn early 2019,TotalEnergies made public our aim to reduce our net Scope 1 2 emissions from our operated activities by at least 40%from 2015 levels.We are moving aggressively to curtail emissions at our operated sitesIn 2022,GHG emissions from our operated assets were 13%lower than in 2015,standing at close to 40 million tons of CO2e.Our objectives include emissions generated by the growth strategy in electricity we have pursued since 2015,which has prompted us to create a flexible power generation portfolio of CCGT plants.Across the 2015 scope of our oil and gas activities,emissions from our operated assets fell by more than 29%from 2015 levels,dropping from 46 to 33MtCO2e in 2022.In 2022,with more than 110GHG emissions reduction projects coming to fruition,we Antwerp refinery(Belgium).reduced our emissions by 0.8 million tons of CO2e across our operated assets.Examples of our emissions reduction projects in 2022:Upstream:Emissions reduced by about 70ktCO2e annually thanks to improvements in gas turbine efficiency and refinements to water injection pumps in Angola(Block 17).Refining:Emissions reduced by about 200ktCO2e annually through improvements in energy use and recovery(Normandy,Antwerp).New 2025 Objective vs 40Mt CO2e/year previously38Mt CO2e/yearSCOPE 1 2 FROM OPERATED OIL AND GAS FACILITIES20152022-29%vs 2015330204046Oil&GasSCOPE 1 2 100%OPERATEDNew objective20152025-2 Mt4638CCGTOil&Gas02040Mt CO2eMt CO2eIn September 2022 the Company decided to launch a twoyear,$1 billion plan to accelerate our energy efficiency initiatives with the goal 38Mt CO2evs 40 Mt CO2eOur AmbitionTransforming Ourselves to Reinvent EnergyClimate and Sustainable EnergyPeoples Well-BeingCare for the EnvironmentCreating Shared ValueOur IndicatorsSustainability&Climate 2023 Progress Report47Mt CO2eOUR LEVERS FOR REDUCING EMISSIONS AT OUR OPERATED SITES0204020154625-302030Net emissions2-40%vs 2015CCGTPortfolionet change Emissions reduction initiatives(incl.CCS)Carbon sinks based on natureOil&Gas2.Net of nature-based carbon sinks.Normandy Refinery in Gonfreville lOrcher(France).Mm3/dROUTINE FLARING203020107.520152.320210.720220.5Objective2010-2022-93 250.10.1 Mm3/d in 2025Zero in 2030of saving nearly 2MtCO2e across our oil and gas operations(see p.48).Thanks to that plan,we are accelerating our target emissions reduction for 2025 by 2MtCO2e annually:our new 2025 objective is to reduce Scope1 2 emissions at our operated facilities to less than 38MtCO2e.Our 2030 objective remains unchanged at 40%in 2030 compared to 2015,net of 5-10Mt of natural carbon sinks.To reach our objective for 2030,we are mobilizing every tool at our disposal to prevent and reduce emissions from our operations.Compensation from natural carbon sinks will begin in 2030,to offset residual emissions in pursuit of our objective.2030 Objective consistent with Paris AgreementOur objective of a 40%reduction in net emissions of from Scopes1 and 2 is in line with the reduction target of the European Unions Fit for 55 program(37tween 2030 and 2015)and the IEAs Net Zero Emissions 2022(35tween 2015 and 2030).of reduction in net emissions by 2030,vs 2015.-40%OUR PROGRESS TOWARDELIMINATING ROUTINE FLARINGCurbing routi
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2022#WeAreWBAMore Joyful Lives Through Better HealthEnvironmental,Social and Governance(ESG)Report2Environmental,Social and Governance Report 2022OverviewGovernanceAppendicesHealthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceHealthy Communities About This Report 3A Message to Our Stakeholders 4Q&A With Our ESG Committee Chair 5 Our Purpose,Vision and Values 6At a Glance 6 Fiscal 2022 Achievements and Recognition 7Our Approach to ESG 8ESG Materiality 10 Commitments and Progress 13Stakeholder Engagement 15OVERVIEWGovernance 20Health and Safety 23Information Security 27Privacy 28GOVERNANCE A Letter From Alethia Jackson 30Health Access and Awareness 31Prescription Misuse Prevention 45Partnerships for Good 46Giving Back:Corporate Donations and Supporting Causes 5201HEALTHY COMMUNITIESA letter from Una Kent 71Energy and Emissions 72Waste 78Plastics 8203HEALTHY PLANETA Letter From Annie Murphy 85 Our Owned Brands 86 Responsible Sourcing 88 Sustainable Materials 91 Sustainable Packaging 9404SUSTAINABLE MARKETPLACEGRI Content Index 98Sustainability Accounting Standards Board(SASB)Index 110Task Force on Climate-Related Financial Disclosures(TCFD)Response 111United Nations Global Compact Index 116Management Assertion Table 117Assurance Report 119Basis of Presentation 121Legal Notice 128APPENDICESWalgreens Boots Alliance,Inc.(Walgreens Boots Alliance or WBA”or the Company)is an integrated healthcare,pharmacy and retail leader serving millions of customers and patients every day,with more than 170 years of heritage of caring for communities.References in this Environmental,Social and Governance(ESG)Report to the Company,“WBA,”“we,”“us”or“our”refers to Walgreens Boots Alliance,Inc.and its subsidiaries,and in each case do not include unconsolidated minority-owned entities and majority-owned subsidiaries acquired during the fiscal year.02A Letter From Holly May 56 Diversity,Equity and Inclusion 57Employee Engagement and Development 64Employee Health and Well-Being 68HEALTHY AND INCLUSIVE WORKPLACE3Environmental,Social and Governance Report 2022OverviewGovernanceAppendicesHealthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceHealthy Communities About This ReportMORE INFO For additional information or inquiries on this report,please contact us at ESG.Walgreens Boots Alliance,Inc.publishes this report to illustrate its ESG activities and achievements.The Company produces an ESG Report on an annual basis.This report includes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.See cautionary note regarding forward-looking statements on page 128.Reporting standards Our ESG Report has been prepared in accordance with the Global Reporting Initiative(GRI)Universal Standards.The Report also contains disclosures following the Sustainability Accounting Standards Board(SASB),the Task Force on Climate-Related Financial Disclosures(TCFD)reporting standards and definitions,and this report serves as the Companys Communication of Progress as a participant of the United Nations Global Compact(UNGC).Data ManagementReporting periodOur fiscal year ends on Aug.31,references herein to fiscal 2022 refer to our fiscal year that ended Aug.31,2022.The reporting period spans fiscal 2022 and references select programs and campaigns noted by calendar year.Reporting boundariesThe performance and other data contained in this report focus on the achievements and plans of Walgreens Boots Alliance,Inc.and its subsidiaries.More on our approach to ESG reporting can be found on page 9.Reporting assuranceDeloitte&Touche LLP reviewed specified indicators within this report in accordance with attestation standards established by the American Institute of Certified Public Accountants(AICPA).Deloitte&Touche LLP is appointed as our independent registered public accounting firm at our annual meeting of stockholders.Their assurance report can be found on pages 119-120.GRI 2-3,2-5Data management processWe have a company-wide approach to recording,measuring and reporting ESG performance,including a set of reporting criteria and a set of ESG measures and performance indicators.Across all of our businesses,we capture data on corporate giving,carbon emissions,energy use,waste by disposal,employee retention and diversity,and use the data to inform and assist in the development of individual ESG programs.In addition,in the United States segment we capture data on employee race and ethnicity,and for our owned brands we collect data on palm oil and packaging.The data presented within this report reflect the ongoing operations of the company during fiscal 2022 and were produced in accordance with the Walgreens Boots Alliance ESG Performance Data Basis of Presentation,which can be found on pages 121-127 of this report.Our Statement of Greenhouse Gas(GHG)Emissions for fiscal 2022 and its external assurance from Deloitte&Touche LLP can also be found on pages 119-120.ESG performance data are collected comprehensively on an annual basis.All submissions by individual businesses are prepared by local finance teams and local ESG champions and are reviewed by senior finance leaders.In fiscal 2016,WBA collected environmental and social data across its operations for the first time,forming the baseline for our fiscal 2017 and fiscal 2018 CSR Reports.In our fiscal 2019 report,we reset baselines for our environmental performance metrics because,for the first time we included energy and waste data from 1,932 Rite Aid stores acquired the previous year.This was done to provide meaningful comparatives as required by the GHG Protocol.Every effort is made to ensure that we report accurate data,and our processes are designed to support this.In cases where we become aware of updates to data from previous years,we consider providing updated data in subsequent reports if the changes result in a discrepancy that is material.In these cases,we provide details in the footnotes of our data tables.Environmental,Social and Governance Report 2022OverviewGovernanceAppendicesHealthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceHealthy Communities A Message to Our StakeholdersGRI 2-224It is truly inspiring and gratifying each year at this time to see the tremendous impact Walgreens Boots Alliance continues to make in the communities we serve and beyond.In October 2021,WBA unveiled a new purpose,vision and values,which unite us as an organization and help to inform our actions and decision-making.In particular,our purpose of“more joyful lives through better health”is the guiding light that signifies the difference we want to make in the world,and youll see it reflected throughout our Environmental,Social and Governance(ESG)Report for fiscal 2022.During this critical time for the planet and our communities,weve made great progress across each of the four pillars of our health-centered ESG strategy:Healthy Communities,Healthy Planet,Healthy and Inclusive Workplace and Sustainable Marketplace.Among the highlights from fiscal 2022 is the major role WBA has continued to play in combating the COVID-19 pandemic.Our pharmacy staff administered more than 69 million vaccines and more than 45 million COVID-19 tests through August 31,2022,with more than one-third of the COVID-19 vaccines provided in socially vulnerable communities.Weve also made further strides in our commitment to health equity by improving health access and education through a number of initiatives.One example is the launch of our clinical trials business in the U.S.,which aims to increase engagement among diverse populations while addressing barriers to participation in underserved areas.Of course,none of our work would be possible without the unwavering dedication of our people around the globe.To understand and respond fully to our customers needs and challenges,we believe its imperative to employ a workforce that reflects the many communities we serve.Additionally,WBA continues to build on our strong commitment to diversity,equity and inclusion,as well as accountability.This past year,were proud to have increased the representation of people of color in leadership roles,while also exceeding another goal to spend more than$625 million with Tier 1 diverse suppliers.Beyond our trusted retail locations,support center and many other facilities,our focus on health and well-being is truly global and we know the health of our planet has a direct impact on all of us.We are progressing well on our targets to reduce carbon emissions by 30 percent by the year 2030 from a 2019 baseline,and among other initiatives,we also launched a recycling Take-Back program across 700 Boots UK stores.We are also pleased to have signed onto the Champion of the Sustainable Procurement Pledge,an international nonprofit organization driving awareness and knowledge on responsible sourcing practices to empower procurement professionals.Through this,we took notable steps,including minimizing plastic packaging and expanding our commitment to responsible sourcing,product transparency and traceability of ingredients.Lastly,we recognize the importance of governance and transparency as we continue to expand our ESG efforts,programs and partnerships.As a result,this report follows the new GRI Universal Standards to reflect human rights impacts and due diligence obligations.As we reimagine local healthcare and well-being for all,we are very proud of our impactful ESG efforts.We look forward to continuing to work closely with our partners to build a better,healthier world for generations to come.January 25,2023Environmental,Social and Governance Report 2022Rosalind G.BrewerChief Executive Officer Walgreens Boots Alliance,Inc.Stefano PessinaExecutive Chairman Walgreens Boots Alliance,Inc.Environmental,Social and Governance Report 2022OverviewGovernanceAppendicesHealthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceHealthy Communities Q&A With Our ESG Committee Chair 5Environmental,Social and Governance Report 2022GRI 2-22So much has happened over the past year within WBA.What are you most proud of?There is much to be proud of,but as always,I am most proud of our teams.The way our team members have continued to support each other,while also caring for our patients and our customers in the midst of ongoing social,political and environmental change and uncertainty has been exemplary.Our people are unwavering in their dedication and commitment to create healthy communities,such as our recent milestone of reaching 350 million women and children through our partnership with Vitamin Angels.WBA team members have also continued to help foster a healthy and inclusive workplace,and were proud to have achieved our goal to increase leadership numbers for people of color.In our ongoing efforts to make our planet healthier,we continue to make progress toward our goal of reducing Scope 1 and Scope 2 global carbon emissions by 30 percent compared to a 2019 baseline,thanks to a 7.5 percent reduction in fiscal 2022.Lastly,we are empowering a sustainable marketplace through supplier initiatives that reduce waste in packaging.Speaking of WBA team members,there is an increased emphasis on health and well-being in the workplace.Why is that a priority?The health and well-being of our team members has always been a priority at WBA,and even more so at a time when so many are still looking for support,having gone through the events of the past few years.The role we play as a large global employer has never been more critical when it comes to meeting the healthcare needs of our employees.Its vital we provide additional resources to help them manage their health and well-being,such as increased access to mental health resources,a new business resource group focused on working parents and caregivers,and more tools and programs that aim to help our team members live more joyful lives.I am so glad to see these resources being embraced.WBA is being intentional about transparency and accountability,especially in disability inclusion and ESG goals.Can you explain some of the programs you have in place?We already had a diversity goal as part of our Leadership Accountability Model,which tied a portion of bonus incentives to certain diversity goals.We have also recently added health equity goals to that model for fiscal 2022 because we know everyone can have an impact on the environment and affect ways to keep our planet and communities healthy.We have also included a goal to increase the number of team members with disabilities.We believe in being accountable across all aspects of ESG and diversity,equity and inclusion(DEI),and felt it was important to add these new goals as part of our commitment.In what ways is ESG being ingrained into every aspect of the company?Our owned brands are an inspiration due to their focus on delivering what our customers need,expect and want.In fiscal 2022,our owned brands continued to progress on increasing sustainability in our products,packaging and supply chain.We expect our suppliers to do the same and have implemented a rigorous and detailed assessment tool to weigh their progress on and adherence to sustainability.One of our most impactful moves was to unveil our Global Minimum Requirements for Product Sustainability,which applies to our owned brand products in Asia,the U.S.and the UK.We track this data through our Product Sustainability Hub,where suppliers share sourcing material and other information.I am proud to see our owned brands leading the way in accountability and sustainable products.Whats next for WBA and ESG?I have seen WBA progress so much over the past few years,and the growth can only continue.Our team members are innovating in ways that are both impactful and inspiring,from recycling schemes to community health partnerships to health equity incubators.We will continue our journey to becoming a consumer-centric healthcare company with a purpose to enable our customers and patients to live more joyful lives through better health.Ornella BarraChief Operating Officer,International and Chair of the Environmental,Social and Governance Committee6Environmental,Social and Governance Report 2022OverviewGovernanceAppendicesHealthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceHealthy Communities GRI 2-22Our Purpose,Vision and ValuesOUR PURPOSE:Creating more joyful lives through better health.OUR VISION:To be the leading partner in reimagining local healthcare and well-being for all.OUR VALUES AND BEHAVIORS:Walgreens Boots Alliance takes seriously its aim of creating more joyful lives through better health,which is reflected in our core values:CONNECTEDReflecting the communities we serve,understanding the needs of others and innovating togetherCOURAGEOUSChallenging the status quo,addressing conflict directly and driving informed risk-takingCOMMITTEDLeading with integrity,building on our legacy and striving boldly toward the futureCURIOUSContinuously learning and adapting,following the science and the data,and creating paths where none existedGRI 2-1,2-2,2-6,3-3,201-1 At a GlanceWalgreens Boots Alliance is an integrated healthcare,pharmacy and retail leader serving millions of customers and patients every day,with a more than 170-year heritage of caring for communities.WBA is a trusted,global innovator in retail pharmacy,with more than 13,000 locations across the United States(U.S.),Europe,Latin America and Asia.Walgreens Boots Alliance plays a critical role in the healthcare ecosystem.Through dispensing medicines;improving access to a wide range of health services;providing high-quality health and beauty products;and offering anytime,anywhere convenience across its digital platforms,the Company is shaping the future of healthcare.Effective as of the first quarter of fiscal 2022,the Company is aligned into three reportable segments:U.S.Retail Pharmacy,International and U.S.Healthcare.In the fourth quarter of fiscal 2022,the Company changed the name of two reportable segments to better align with the Companys business activities,structure and strategy.The“United States”segment was renamed“U.S.Retail Pharmacy”and the“Walgreens Health”segment was renamed“U.S.Healthcare.The segment name changes did not result in any change to the composition of the segments;therefore,no change was made to the historical results of segment operations.The information for these segments for all periods included in this Environmental,Social and Governance Report has been presented using the new names.Our retail and business brands include Walgreens,Duane Reade,Boots,Farmacias Benavides,and Farmacias Ahumada as well as highly regarded and long-established product brands,including No7,Boots health and beauty lines,and numerous Walgreens products across a range of brand names and categories.For more on WBA owned brands,see page 86.Headquartered in Deerfield,IllinoisA presence in nine countriesMore than 325,000 employeesMore than 13,000 retail stores and clinics globally 8 microfulfillment centers,1 prescription mail service facility and 43 principal office facilitiesSales of$132.7 billion in fiscal 20227Environmental,Social and Governance Report 2022OverviewGovernanceAppendicesHealthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceHealthy Communities Fiscal 2022 Achievements and Recognition Our ESG strategy is concentrated on four focus pillars:healthy communities,healthy and inclusive workplace,healthy planet and sustainable marketplace.These pillars help us deliver on our purpose of creating more joyful lives through better health.Healthy Communities Healthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceExpanded the Walgreens Health Equity Incubator to 15 more storesPAGE 33Eliminated wet wipes that include plastics at Boots UK stores,replacing with plant-or wood fiber-based alternativesPAGE 94PAGE 34Established the Boots Health Equity Champions network PAGE 94Reduced plastic wrap thickness for Walgreens owned brand water bottle cases,saving 204 metric tons of plastic in fiscal 2022Raised a total of 1,000,000($1,306,000)in fiscal 2022 for Boots and Macmillan Cancer Support partnership and was named one of the Most Admired Corporate-NGO Partnerships in the C&E BarometerPAGE 48PAGE 34Administered approximately 36 million COVID-19 vaccinations and boostersDonated over$25 million to the Susan G.Komen and The Leukemia&Lymphoma Society through lifetime of the partnershipPAGE 47Walgreens ranked 40 on the 2022 DiversityInc Top 50 Companies for DiversityPAGE 57Boots implemented a reimbursement initiative for team members experiencing menopausePAGE 68PAGE 65Introduced new Business Resource Groups(BRGs),including Working Parents,Valor UK and Women of WBA Chile,our first BRG in Latin AmericaPAGE 57Boots awarded Company of the Year at British Diversity AwardsPAGE 88Became a Sustainable Procurement Pledge Champion,driving awareness and knowledge on responsible sourcing practicesPAGE 94Expanded the number of Boots and No7 Beauty Company owned brands products made from recycled-content or recyclable or natural materialsCompleted first climate scenario analysisPAGE 111PAGE 80Walgreens won the WasteWise award from the EPA in the Very Large Business,Partner of the Year categoryPAGE 81Expanded the Recycle at Boots scheme to over 700 stores nationwide in the UKExpanded Boots Be More initiative helping customers select products with more sustainable attributes,including plastic free,recycled,reusable,vegan and cruelty freePAGE 81PAGE 74Achieved 21.2 percent carbon emissions reduction compared with the 2019 baseline yearCO2Removed nearly 30 million plastic bags,equivalent to over 370 tonnes of plastic,from Boots UK online deliveries since 2018PAGE 82Expanded U.S.mental health and well-being platform,Be Well ConnectedPAGE 69GRI 3-3,413-18Environmental,Social and Governance Report 2022OverviewGovernanceAppendicesHealthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceHealthy Communities Our Approach to ESG GRI 2-5,3-3A healthy and inclusive planet for all negative impacts on the planet and improve on our responsible sourcing practices.More information on this can be found in the Sustainable Marketplace section of the report.Our ESG strategy includes permanent,ongoing consultations with a range of stakeholders who have joined us in agreement that we can have a profound impact on the world by working to improve health access and affordability,with a particular emphasis on health equity.We are increasingly aware of the links between the environment,climate change,equity and health.Our sustainability targets on emissions and plastics support a healthy planet and healthy communities.In fiscal 2022,WBA renamed“Walgreens Health”segment as U.S.Healthcare business segment dedicated to bolstering an interconnected,consumer-centric healthcare platform across U.S.communities.Through strategic majority investments in Village Practice Management Company LLC(VillageMD),Shields Health Solutions Parent LLC(Shields),and CCX Next LLC(CareCentrix),WBA furthered its ability to offer a personalized,equitable,and accessible healthcare experience on both individual and community levels.This commitment to advancing our strategic partnerships and consumer-centric technology enables WBA to offer a more seamless pharmaceutical and retail experience,from vaccinations to chronic care and specialty management.You can read more about the U.S.Healthcare segment in the Healthy Communities section of this report.We continue to build on the long-standing history of corporate citizenship built over more than a century in our legacy Walgreens and Boots businesses.Our drive to deliver healthcare and support for local and global communities stems from our business values and is evidenced through our day-to-day operations.These essential commitments shape our approach to ESG,which is central to fulfilling our purpose to help people live more joyful lives through better health.Healthcare is at the center of our ESG framework,reflecting our operations and our corporate vision to be the leading partner in reimagining local healthcare and well-being for all.Our corporate responsibility efforts are embedded in our business strategy,which includes commitments to serve the needs of every community and create greater access to care.This is especially notable as COVID-19 has amplified and exacerbated many risks and issues related to community and global health.We remain committed to health equity especially through vaccine equity and have delivered more than 69 million COVID-19 vaccinations and over 45 million COVID-19 tests as of Aug.31,2022.WBA operates a fast-changing global business that continues to affect the health and social landscape.In the past three fiscal years,we have continued to provide essential products and services while remaining diligent in our responsibility to keep our people and customers safe,as well as updating our ESG programs to reflect the changing needs of global communities.As demand for sustainable products continues to grow,we have expanded our goals across No7 Beauty Company and within owned brands to reduce Thanks to WBAs continually evolving digital technology and global footprint,the Company impacts millions of lives around the world on a daily basis.Customers,patients,and caregivers have ease of access to dispensed medications and essential items,advice,and services,as well as an extensive range of health,wellness,and beauty products through our conveniently located retail stores and innovative digital platforms.Our more than 13,000 retail pharmacies and clinics in the U.S.,the UK,the Republic of Ireland,Thailand,Mexico and Chile are embedded in local communities.9Environmental,Social and Governance Report 2022OverviewGovernanceAppendicesHealthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceHealthy Communities Our approach to reporting GRI 2-5Global Reporting Initiative(GRI)Our fiscal 2022 report has been prepared in accordance with the new GRI Universal Standards to reflect human rights impacts and due diligence requirements.Task Force on Climate-Related Financial Disclosures(TCFD)In this ESG Report,we are reporting in alignment with Task Force on Climate-Related Financial Disclosures(TCFD)recommendations.To meet these guidelines,we are actively analyzing scenarios to identify and assess climate-related risks and opportunities,as well as evolving our governance,strategy,risk management,metrics,and targets accordingly.United Nations Global Compact(UNGC)WBA is a participant in the UNGC,a voluntary leadership platform of responsible business practices.The UNGC is a call for companies to align their operations and strategies with 10 universally accepted principles in the areas of human rights,labor,environment,and anti-corruption,and to take action in support of goals and issues embodied in the United Nations Sustainable Development Goals(SDGs).Sustainability Accounting Standards Board(SASB),part of the International Financial Reporting Standards(IFRS)FoundationNow part of the IFRS Foundation,we disclose metrics in alignment with the SASB Industry Standards for Drug Retailers.The boundary on our disclosures in the Drug Retailers Standard is applied to the U.S.Retail Pharmacy segment of our business.WBA continues to enhance the transparency and credibility of its ESG disclosures through the use of widely accepted sustainability reporting standards that provide confidence in our ongoing corporate responsibility efforts and progress.10Environmental,Social and Governance Report 2022OverviewGovernanceAppendicesHealthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceHealthy Communities ESG MaterialityGRI 2-25,2-29,3-1,3-2,3-3WBAs ESG materiality assessment was completed during fiscal 2021.We systematically surveyed a range of global stakeholders to understand the issues they see emerging over the next decade that will potentially impact WBA and their interaction with the Company.Through this exercise,we also gauged how the changing context of public health,racial equity issues,impacts on human rights and rising concerns about climate change were affecting views of ESG impacts throughout our operations.Combining the results of stakeholder interest and business significance,we prioritized 32 issues,of which 24 were categorized as very high or high importance.For more on our latest materiality assessment process and topic definitions,see our fiscal 2021 ESG Report.Keeping with best practices in sustainability reporting,WBA conducts a materiality assessment at least every three years to understand our impacts,encourage insightful stakeholder dialogue,inform our sustainability strategy and form the basis for our ESG reporting.We review this assessment on an annual basis to ensure the material topics continue to represent our most significant impacts.11Environmental,Social and Governance Report 2022OverviewGovernanceAppendicesHealthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceHealthy Communities 1 Importance rankings are based on the weighted average from four sources of stakeholder input:consumer survey(50%),internal stakeholder survey(20%),external stakeholder survey(20%),Datamaran inputs(10%).Importance to Stakeholders1Very HighHighModerate PrioritySignificance of Walgreens Boots Alliances Impacts1235698301011122813161718323119212229232625242720714154Access to affordable and quality healthcareProduct safetyReduce negative impacts of plasticResponsible and ethical supply chainsEmployee health,safety and well-beingData privacy and securityEmployee wages and hiring practicesProduct packagingEnvironmental impacts of materialsCustomer responsibilityProduct labeling and transparencyCancer care and preventionTobacco salesPublic policy practicesCorporate governanceProduct end-of-lifeChemical use and managementAnimal testingSupplier diversity and inclusivityTalent and developmentStakeholder transparencyInnovation and digitalizationGeopolitical events and trendsDiversity,equity and inclusionPrescription drug abuseConsumer health education and marketingEnergy use and climate impactsCommunity engagement and partnershipsHealthcare antimicrobial stewardshipHuman rightsWaste managementWater consumption and useMateriality matrixThe matrix at the right shows the results of our 2021 materiality assessment that identify the issues most material to the business from an ESG perspective.Sustainable MarketplaceGovernance and EconomicHealthy and Inclusive WorkplaceHealthy PlanetHealthy CommunitiesGRI 2-2512Environmental,Social and Governance Report 2022OverviewGovernanceAppendicesHealthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceHealthy Communities 1 Access to affordable and quality healthcare2 Product safety3 Reduce negative impacts of plastic4 Responsible and ethical supply chains5 Employee health,safety and well-being6 Diversity,equity and inclusion7 Data privacy and security8 Waste management9 Human rights10 Prescription drug abuse11 Consumer health education and marketing12 Community engagement and partnerships13 Energy use and climate impacts14 Employee wages and hiring practices15 Product packaging16 Environmental impacts of materials17 Product labeling and transparency18 Cancer care and prevention19 Corporate governance20 Product end-of-life21 Customer responsibility22 Chemical use and management23 Supplier diversity and inclusivity24 Innovation and digitalization24 priority material topics13Environmental,Social and Governance Report 2022OverviewGovernanceAppendicesHealthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceHealthy Communities Commitments and ProgressOur TargetsOur Targets Fiscal 2022:By Fiscal 2024:Walgreens:Donate$5 million worth of flu shot vouchers.Achieved.WBA:Increase women in leadership by 3 percentage points year over year.Partially achieved.Healthy Communities Improve societal health and well-being through:Access to affordable,quality healthcare with a specific focus on health equity Long-standing partnerships and investments in our communities with a focus on cancer care and research,youth empowerment and hygiene povertyHealthy and Inclusive WorkplaceTreat our people with dignity and respect by:Cultivating a positive workplace environment that reflects the diversity of perspectives,backgrounds and cultures in the communities where we live and work Ensuring a healthy,safe and secure working environment for all employeesWBA:Provide 100 million vaccinations for children in developing countries through Get a Shot.Give a Shot.and the UN Foundation.On track.By fiscal 2025:WBA:Help 500 million women and children by providing vitamins and minerals through Vitamin Angels.On track.Walgreens:Increase persons of color in leadership by 2 percentage points year over year with 60 percent attributed to Hispanic/Latino and Black/African American.Achieved.WBA U.S.Retail Pharmacy for ethnicity and WBA for gender:Compliance with diverse slates of candidates and compliance with diverse interview panels.Achieved.Walgreens:Increase spend with Tier 1 diverse suppliers to$625 million,from$521.5 million in fiscal 2021.Achieved.Walgreens:Contribute more than$25 million to Susan G.Komen and The Leukemia&Lymphoma Society.Achieved.14Environmental,Social and Governance Report 2022OverviewGovernanceAppendicesHealthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceHealthy Communities Commitments and ProgressHealthy PlanetReduce the environmental impact of our business by:Ensuring efficient use of energy in our operations and in stores while working to transition our business to renewable and low carbon energy sources Reducing the negative impacts of plastics and waste in our operations and seeking opportunities to increase reuse,recycling,recycled content and recovery to enable circular systemsSustainable MarketplaceManaging the life cycles of our owned brand products to increase traceability and transparency into our supply chain and address environmental and social impacts.Boots UK:Maintained 100 percent plastic free in online deliveries.Achieved.Our TargetsOur Targets Boots UK and No7 Beauty Company:Source all mica in our finished products from a member of the Responsible Mica Initiative,Responsible Minerals initiative,or a supplier that provides an appropriate independent third-party audit report or certificate to demonstrate that responsible sourcing practices are aligned with the OECD Guidance.Achieved.Achieved in Fiscal 2022:Walgreens:Source 100 percent of palm oil from Roundtable on Sustainable Palm Oil(RSPO)certified sources,physically certified and credits,increasing the proportion that is physically certified by 5 percent each following year.On track.By fiscal 2023:Embedded in Fiscal 2022:WBA:Reduce absolute Scope 1 and Scope 2 global carbon emissions by 30 percent,as compared with 2019 baseline.On track.By fiscal 2030:Boots UK:Reduce food waste by 50 percent from the 2015 baseline,as part of WRAP Food Waste Reduction Roadmap.On track.By fiscal 2040:By fiscal 2025:Boots UK and No7 Beauty Company:Reach The UK Plastics Pact 2025 goals:100 percent of plastic packaging reusable or recyclable by consumers and achieve 30 percent average recycled content across plastic packaging.On track.By fiscal 2030:Walgreens:Achieve 30 percent reduction in plastic packaging compared with fiscal 2020 baseline;100 percent of plastic packaging reusable or recyclable by consumers;and achieve 30 percent average recycled content across plastic packaging.On track.British Retail Consortium Climate Roadmap,Boots UK:Support the UKs wider net zero transition by collaborating with other UK retailers on a roadmap for the industry to achieve complete net zero emissions by 2040,including net zero Scope 2 emissions by 2030 and Scope 1 emissions by 2035.On track.15Environmental,Social and Governance Report 2022OverviewGovernanceAppendicesHealthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceHealthy Communities Stakeholder EngagementGRI 2-12,2-28,2-29,3-1,3-3Engaging and collaborating with our stakeholders helps us address the most relevant ESG issues for our company and deliver products and services that make positive impacts throughout our business and the communities we serve.We regularly consult with our internal and external stakeholders across a range of sectors,geographies,and organization types and sizes to receive their feedback on our strategy and performance in the areas where we have the greatest impact.While each of these engagements seeks the stakeholders unique and valued opinion,there are many topics that are addressed across groups,given their propensity to touch every area of our business:health equity;diversity,equity,and inclusion;executive compensation;continued COVID-19 response;and prescription drug and opioid abuse.These topics have a broad impact across all business areas,so we require all stakeholders to provide feedback to our approach and management.GET IN TOUCHWe are always open to stakeholder feedback on our ESG reporting and strategy.Substantive issues brought to our attention by stakeholders are escalated to our ESG Committee.One way to reach us is by email at ESG.Nongovernmental organizationsStakeholders impacted by and who influence our business,such as customers,stockholders,and nonprofit groups,frequently approach us with issues during our regular engagements.During fiscal 2022,we meaningfully engaged stakeholders proactively on numerous matters where we can have significant impact and are aware of evolving expectations.This proactive engagement covered topics such as health equity;vaccine equity;plastic packaging;beauty industry sustainability;and diversity,equity,and inclusion.In fiscal 2022,we engaged individually with members of the Walgreens External Advisory Council to advise our U.S.Retail Pharmacy segment on ESG matters.In December 2021,select members of the council presented to Walgreens leadership on the evolving landscape of ESG regulations,climate challenges and creating business value,how Walgreens evolution to a health-centric business intersects with ESG strategy,and outcomes from the 2021 United Nations Climate Change Conference.On the following pages you will find the form and frequency of engagement with key categories of stakeholders during fiscal 2022 and their expectations,matters they raised and actions we have taken to address them.Our relationships with nongovernmental organizations(NGOs)and long-standing charity partnerships are cultivated in the areas we desire to make the greatest impact:removing barriers to access and identifying social determinants to improve health equity.Other topics we have engaged with partners on at the national and international level include poverty,disease prevention,mental health,dementia,and cancer.Through these partnerships that often span years,and even decades,we can define areas of need and advance our mutual goals.Through the support and interaction with NGOs and charity partners,we are prioritizing our efforts on the factors where we can have the most positive impact.Our engagement with stakeholders is done through regular surveys,conference participation and meetings.We met with key charity partners and NGOs at least quarterly in fiscal 2022.Discussions covered a range of topics including climate impacts and reduction strategies,our supplier diversity,product safety(labeling,ingredients,transparency),and community engagement and partnerships.These engagements translated to a number of actions,chief among them announcing a carbon emissions reduction target,a vaccine equity initiative in the U.S.to address vaccine hesitancy and expanded mental health training for employees and pharmacists.16Environmental,Social and Governance Report 2022OverviewGovernanceAppendicesHealthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceHealthy Communities Government bodies and agenciesInternal stakeholdersGovernment bodies and regulatory agencies are a priority stakeholder group for WBA.We frequently engage with government institutions and agencies across all levels national,international,and local around affordable access and quality healthcare,transparency,prescription drug abuse,affordability,sustainability,COVID-19 safety and workforce topics.We work closely with governments and municipalities to reach underserved communities and address accessibility barriers.These efforts are especially crucial at a local level where our collaboration with municipalities gets at the heart of improving health at personal levels.We focus on improving the health and well-being of our employees through comprehensive benefits,inclusive culture building,and opportunities for career development.We strive to mirror the communities we serve and know that the needs of our team members reflect those of their communities as well.To engage on issues that matter most,we keep an open dialogue with employees at all times through employee surveys and offer informal platforms for discussion.We also provide performance reviews and development programs and hold regular listening sessions.In practice,our internal engagement leads to training and upskilling,modifications to benefit offerings,and financial and mental health support.Our Business Resource Groups(BRGs)are another way we engage with internal stakeholders to directly tie back to the business.Employees can connect with others having similar experiences,which fosters a sense of community and creates additional leadership opportunities for team members to express insights to management.WBA conducts biannual employee feedback surveys and regular performance reviews and appraisals,in addition to quarterly town halls and regular email and bulletin board communications.Primary topics covered include employee health,safety and well-being,and talent development and compensation practices.Stockholders,investors and lendersWe hold frequent dialogue with stockholders,investors and lenders through regular outreach via our investor relations and governance teams,annual meetings and quarterly earnings calls.We also conduct proactive outreach to our financial stakeholders.Ahead of our annual proxy meeting,we conducted robust shareholder engagement to gain insight into institutional investors view of our ESG and compensation practices and to continue to strengthen the Companys relationships with key shareholders.Discussions centered around executive compensation,climate risk and transparency,leadership diversity,supplier inclusion,prescription drugs,and other pressing issues.A major part of these conversations focused on how we set priorities and goals,as well as identifying areas to drive impact and progress.Our engagement with these stakeholders reiterated the importance of many of our existing ESG programs and strategies.CommunitiesOur local communities are the foundation of our business;when they thrive,we thrive.Our ESG strategy is designed to improve societal health and well-being while providing economic opportunities in our communities.Our engagement with these priority stakeholders spans hundreds of grassroot organizations,pharmacy operations,partnerships with trusted institutions,and intentional outreach through ESG initiatives and media engagement.Our dialogue with these groups seeks to eliminate barriers to access and address the needs of communities,like prescription drug affordability and vaccine equity.Understanding the needs of and collaborating with these stakeholders is core to our success as a business.We rely on our communities to help us identify growth opportunities and support one another to overcome challenges by taking our listening exercises and engagements as seriously as possible.Our employees are also a key pillar of our community engagement due to their dedication to volunteering time and funding in the places where they work and live.17Environmental,Social and Governance Report 2022OverviewGovernanceAppendicesHealthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceHealthy Communities SuppliersOur desire for responsibility extends throughout our value chain.We pride ourselves on our close relationships with suppliers and how they reflect our values.We understand the link between ethical behavior,sustainability and respecting human rights when it comes to implementing our ESG strategy.As such,our Supplier Code of Conduct clearly outlines our expectations informed by regular assessments,policies and communications.Through our Global Supplier Sustainability Program,supplier conferences,regular surveys,and training/events,we routinely engage with these stakeholders on our goals for plastics,and greenhouse gas emissions,waste management,responsible sourcing,improving diversity,and operating as a responsible materials consumer.Responsible sourcing at WBA means collaborating with suppliers to respect and maintain human rights,in addition to prioritizing operational sustainability.Another crucial part of our engagement with suppliers is addressing facility safety and conducting good manufacturing practice audits to help ensure product and procedure safety.We consider this to be indicative of something more than a license to operate;we require this of all our supplier partners,whether evaluated in conjunction with a quarterly business review or an individual meeting.Peers and industry groupsWe are constantly engaging with our peers and industry trade groups to discuss pharmacy topics through collaborative projects,meetings and regular dialogue,individual interactions,and more.From solving industry challenges as a retailer to minimizing virgin plastics in supply chains,we lean on our peers and fellow industry groups to help us move forward.We are collectively pushing one another to improve our sustainability,access to healthcare,data privacy and security,removing barriers,and more.These engagements keep us accountable to one another and result in a more successful business operation and happier customers.AcademicsOur engagement with academics is primarily focused on building a stronger,more diverse pharmacy talent pipeline.Additionally,the research done by this group is a key factor in addressing the worlds most pressing health and well-being challenges.Whether supporting ongoing research partnerships,participating in conferences and roundtables,or supporting our product brands research and development,our academic stakeholder engagement is critical to achieving our ESG strategy.MediaMedia plays a critical role in educating the public about health issues and communicating accurate health and science information which is critical to public health and safety.As such,we prioritize close relationships with key media to properly reach customers and patients around the healthcare topics they need to know about.In addition to providing educational resources through our media contacts,these stakeholders also help us tell our business story to target audiences.We are in constant communication with media to properly disseminate our message and understand public sentiment through regular,proactive outreach conducted by our media and investor relations teams,in addition to individual meetings.Patients and customers We maintain regular contact with our patients and customers through purposeful stakeholder engagement and daily retail pharmacy interactions to understand what they need from us.These groups provide valuable insight into opportunities for us to foster trust while holistically serving the whole patient.Our interactions with these groups are a dialogue that gets to the heart of our purpose:creating more joyful lives through better health.Engagements focus on healthcare and service needs,front-of-store products,payment options and optimizing benefits from insurance providers.Through surveys,social media,retail pharmacy interactions and our ESG initiatives,these groups provide input on everything from our COVID-19 efforts and partnerships to healthcare accessibility and product transparency.18Environmental,Social and Governance Report 2022OverviewGovernanceAppendicesHealthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceHealthy Communities Memberships and associationsGRI 2-28WBA participates in numerous nongovernmental and advocacy organizations,industry associations,organizations and networks.This collaboration is central to our corporate responsibility and ESG agenda because we cannot make meaningful change on our own.Select memberships and associations include:AHC Group American Pharmacists Association American Society of Health-System Pharmacists(ASHP)Beyond 34:Scaling Circularity for a Sustainable Economy British Beauty Council British Retail Consortium(BRC)Business for Societal Impact(formerly the London Benchmarking Group LBG)Business in the Community(BITC)Business in the Community Ireland(BITCI)Business Roundtable CDP Company Chemists Association(CCA)The Conference Board Cosmetic,Toiletry and Perfumery Association(CTPA)Cosmetics Europe EcoBeautyStore Consortium ESG&CSR Board EuroCommerce Global Reporting Initiative(GRI)Green Chemistry&Commerce Council(GC3)Industry Council for Packaging and the Environment(INCPEN)International Federation of Pharmaceutical Wholesalers(IFPW)IFPW Foundation National Association of Chain Drug Stores(NACDS)National Council for Behavioral Health Palm Oil Transparency Coalition(POTC)Personal Care Products Council(PCPC)Pharmacist Advice and Support Service(PASS)Pharmacist Support Pharmacy Technician Certification Board(PTCB)Retail Energy Forum Retail Industry Leaders Association(RILA)Retailer Palm Oil Group Roundtable on Sustainable Palm Oil(RSPO)Sustainability Accounting Standards Board(SASB)Sustainable Beauty Council(SBC)Sustainable Medicines Partnership Sustainable Packaging Coalition Sustainable Packaging Initiative for Cosmetics(SPICE)Sustainable Procurement Pledge The Business Council The Sustainability Consortium UK Research and Innovation(UKRI)Smart Sustainable Plastics Packaging Challenge Fund Advisory Group United Nations Global Compact(UNGC)U.S.Chamber of Commerce Foundation U.S.Department of Energy(DOE)Better Buildings Challenge U.S.Environmental Protection Agency(EPA)SmartWay Program Waste and Resource Action Program(WRAP)GovernanceGovernanceOverviewHealthy Communities Healthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceAppendices 20Environmental,Social and Governance Report 2022GovernanceGRI 2-9,2-10,2-11,2-12,2-13,2-14,2-15,2-17,2-18,2-23,2-24,2-26,2-27,3-3,201-1Conducting a WBA-wide materiality assessment at least every three yearsTracking ESG-related long-term strategic partnerships and their impact Managing WBAs engagement with external stakeholders and other interested parties regarding ESG-related mattersIntegrating ESG processes into WBAs broader business,social,and environmental risk management program and reputation management prioritiesEnsuring WBA is taking appropriate measures to prioritize and implement ESG projects successfully Ongoing review of ESG-related policies and publication of policy statements Continuing limited assurance by Deloitte&Touche LLP for certain reported data and disclosuresParticipating regularly in various external ESG disclosure surveysAssessing the outcomes of our organizations impact on the economy,the environment and people in coordination with our WBA ESG committeeMonitoring and benchmarking industry best practices in ESGWe are committed to transparently reporting including when it comes to our ESG activities and sharing progress toward our goals.Our ESG strategy is a key pillar of our purpose and is overseen by the WBA ESG Committee,which reports on a biannual basis to the WBA Nominating and Governance Committee.The Nominating and Governance Committee oversees the ESG agenda on behalf of the board of directors(Board)and receives updates on the full range of activities undertaken by the Company,including but not limited to:GovernanceOverviewHealthy Communities Healthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceAppendices 21Environmental,Social and Governance Report 2022Corporate governance and risk managementOur commitment to employee and customer safety and privacy is clear through our in-depth governance and risk management processes.We are dedicated to continuously looking for ways to improve these practices because they are essential to achieving our objectives and being a responsible organization.Our board of directors is supportive of our efforts to strengthen our governance practices and procedures.They are actively engaged in oversight of the Companys strategic,operational and financial matters,including risks facing the Company.This engagement enables the Board to fulfill its fiduciary duties to our stockholders and steer the long-term success of the Company.More information on the Boards involvement in our governance practices,improvement processes,evaluation of performance and handling of Board-level conflicts of interest is included in the 2023 Notice of Annual Meeting and Proxy Statement.The Boards oversight extends to our ESG program.Biannually,the Nominating and Governance Committee reviews our policies and activities regarding ESG reporting and assesses our risk management in those areas.Members of the Nominating and Governance Committee are all independent directors.Additionally,the Audit Committee regularly reviews and discusses the key risks identified in the Companys Enterprise Risk Management(ERM)program with leadership,their potential impact on us and our operations,and our risk mitigation strategies and related disclosure matters.These risks may be related to climate change,sustainability and other ESG-related matters.We routinely enhance our risk mitigation activities,and when risks are identified above a certain threshold,WBA works to develop action plans with clear timelines and responsibilities to ensure progress is implemented,monitored,and reported.The WBA ESG Committee plays a key role in providing further oversight and governance of our ESG program.This committee meets four times a year to review our ESG program,policy statements,and progress toward achieving our ESG goals,including our goal to drive responsible sourcing practices throughout our supply chain,protecting human rights,and engaging with suppliers around ethical and environmental issues.The committee is chaired by Ornella Barra,chief operating officer,international.Senior executives from across our key businesses,as well as legal,human resources,accounting,marketing,public affairs and communications functions comprise its members.The WBA ESG Committee selects and approves GRI 2-9,2-10,2-11,2-12,2-13,2-14,2-17,2-18,2-23,2-24,3-3our internal and external ESG commitments and targets and oversees our progress toward achieving those commitments and targets.The committee also approves the outcome of our regular assessments,annual objectives and ESG Report.We recognize in our 2022 Annual Report that the long-term effects of global climate change present both physical risks(such as extreme weather conditions or rising sea levels)and transition risks(such as regulatory or technology changes),which are expected to be widespread and unpredictable.Over time,these changes could affect,for example,the availability and cost of products,commodities and energy(including utilities),which in turn may impact our ability to procure goods or services required for the operation of our business at the quantities and levels we require.In addition,many of our operations and facilities around the world are in locations that may be impacted by the physical risks of climate change,and we face the risk of losses incurred as a result of physical damage to stores,distribution or fulfillment centers,loss or spoilage of inventory and business interruption caused by such events.We also use natural gas,diesel fuel,gasoline and electricity in our operations,all of which could face increased regulation as a result of climate change or other environmental concerns.Regulations limiting greenhouse gas emissions and energy inputs may also increase in coming years,which may increase our costs associated with compliance and merchandise.These events and their impacts could otherwise disrupt and adversely affect our operations and could materially adversely affect our financial performance.In fiscal 2022,the Company engaged a third party to facilitate its first climate scenario analysis in alignment to the TCFD risks and opportunities taxonomy.We disclose more information on these risks and opportunities within the TCFD Index of this report on pages 111-115.The Company will monitor best practices for disclosing physical and transition risk and opportunities associated with climate change and will continue to evolve our reporting.DISCOVER More information on material risks is included in WBAs most recently filed 2022 Annual Report.PoliciesGRI 2-17,2-23,2-24,2-27,3-3WBA is committed to creating a clean,safe and respectful environment for our entire value chain.We understand good governance is underpinned by accessible,objective policies and clear behavior expectations that are consistent throughout the organization,regardless of geography or level.As such,we have outlined how we expect our people to behave through robust organization-wide and business segment-specific policies that incorporate internationally accepted human rights.These policies are how we hold ourselves to a high standard of conduct.GovernanceOverviewHealthy Communities Healthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceAppendices 22Environmental,Social and Governance Report 2022Code of conduct and ethicsOur Companys policies cover a range of topics,from environmental impact and compensation to data privacy and procurement practices.We are dedicated to upholding and implementing new policies where needed because clear guidance is a pillar of successful governance.New policies are developed in accordance with regular due diligence that cover a range of topics,including human rights.Internal policies are reviewed at least every two years,while external policies are reviewed annually.These documents are made available to all relevant parties through our intranet and corporate website,including external partners and suppliers.Functional Leadership within WBA for each of our internal policy commitments rests with designated employees at the executive level as delegated by the Board to the WBA Finance Committee,CEO and Global CFO,in addition to segment CFOs and other relevant management.Each business must also have executives at the Operating Committee level responsible for implementation and management of all internal policies.We require all team members to familiarize themselves and comply with requirements of all internal policies,in addition to following our Code of Conduct and Ethics,Ethical Trading Standards,Enterprise Risk Management Policy,and all published WBA internal controls relevant to their operational duties.We hold presentations and training with relevant parties,as stipulated in select policies,with frequency dependent on business and role.These accountability actions and our work with accredited third-party auditors and extensive organizational policy library available to relevant stakeholders are how we hold ourselves accountable.As a community pharmacy and healthcare provider,everything we do,everything we sell,every supplier we work with and everything in between has a far-reaching impact.We are committed to respecting and upholding the dignity,well-being,and human rights of every individual affected by our business activities,including our patients and customers,employees,suppliers,and local communities.This commitment applies to all Walgreens Boots Alliance affiliates and extends to respecting all internationally recognized human rights as detailed in the United Nations Guiding Principles.Our Human Rights Policy Statement is based on the International Bill of Human Rights and adopts the core labor standards from the United Nations International Labor Organization.This commitment also extends to fairly compensating our people by paying our employees a living wage.Please see page 101 for additional information.All of these values and more are explicitly laid out in our ESG Policy Statements,which are available on our website.These statements shape our approach to our sustainability and ESG activities and help ensure our segments and businesses are working within comparable parameters.The WBA Code of Conduct and Ethics is our compass for how we behave.It guides us as a company,a team,and individuals to make ethical decisions that stay true to our values while abiding by the laws and regulations in the places where we do business.We rely on our code to support us in doing what is right in the fast-paced,dynamic environments we operate in today.The code also supports strong governance of our behaviors and our approach to ESG.The code extends to our Board;Company officers;team members;team members of our subsidiaries;officers and employees of any business in which WBA or a subsidiary has a controlling interest;and parties acting on behalf of WBA or its subsidiaries,including consultants,agents,suppliers,intermediaries,or representatives.We expect everyone at WBA to read,understand and commit to complying with our code.As part of our“speak up”culture,our confidential Compliance and Ethics Hotline and online portal are available for any team member to raise concerns about inappropriate business conduct or unethical behavior.The hotline is managed by an independent third party and is available 24/7 in local languages.We expect our people to behave ethically and responsibly when acting on our behalf and as their own representative.This extends to all levels of our organization,including our Board,when it comes to conflicts of interest.Pursuant to WBA conflict of interest policies,our Board has strict duties of loyalty to the Company.This duty requires directors to avoid conflicts of interest when possible and,when any such conflict arises,disclose the conflict and take affirmative steps to handle the conflict appropriately.Further guidance on this topic can be found within section 16 of the WBA Corporate Governance Guidelines.Relationships where material conflicts of interest may arise are disclosed in the 2023 Notice of Annual Meeting and Proxy Statement.More information on our corporate governance guidelines and the code of conduct,including mechanisms for reporting suspected violations of the Code of Conduct and Ethics,concerns about ethics and questions about applying our code,can be found on our corporate website here.GRI 2-15,2-17,2-26,3-3GovernanceOverviewHealthy Communities Healthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceAppendices 23Environmental,Social and Governance Report 2022Health and SafetyCOVID-19 safety responseGRI 3-3,403-1,403-2,403-3,403-4,403-5,403-6GRI 2-26,3-3,403-1,403-2,403-3,403-4,403-5,403-6,403-7,416-1,416-2,417-1,417-2,417-3Workplace safetyGRI 2-26,3-3,403-1,403-2,403-3,403-4,403-7WBA is committed to creating and encouraging a safe environment for employees,customers,patients,contractors,and suppliers across all our business segments.We continuously work to improve our management of health and safety guided by the WBA Health,Safety and Environmental(HSE)Committee and WBA HSE policy.Within the WBA HSE policy,employees can find guidance on reduction and mitigation processes,in addition to guidance on determining corrective actions for workplace incidents and investigations.We encourage open dialogue and constructive feedback from our stakeholders,including employees,to help ensure we achieve best practices.We also require all segments,businesses and corporate functions to have formal governance processes in place for health and safety matters in the operations for which they are responsible.Please see page 15 for how we have engaged with priority stakeholders.To create a safe and productive workplace,employees across our businesses are provided avenues to report questions or concerns,including contacting management;calling a toll-free,confidential hotline;submitting an online report;contacting the compliance officer or department,and/or contacting human resources.How our organization manages COVID-19 is indicative of our commitment to prioritizing safety.Our HSE team,along with other cross-functional partners,continued to meet regularly throughout fiscal 2022,producing new policies and procedures to keep pace with an adapting virus.During fiscal 2022,Walgreens acted in compliance with the Centers for Disease Control and Prevention(CDC)and Occupational Safety and Health Administration(OSHA)regulations and guidelines,and local recommendations and mandates,updating policies and practices as guidelines evolved.Boots took similar actions in accordance with guidelines as outlined by Health Services and local government.These efforts continue to be a priority for the team as we look to foster a safety-first culture while addressing the needs of our employees,patients and the communities where we operate.A major part of our COVID-19 response was learning how to apply those best practices and processes to other communicable diseases.These insights are a key part of the ongoing support of current and future objectives across multi-functional teams and business segments.Through FAQs and training to address concerns promptly,WBA further promotes a culture of safety within and outside of our organization.We established medical and regulatory compliance reviews for all diagnostic testing models and provided additional resources to support safety requirements related to COVID-19 and beyond.GovernanceOverviewHealthy Communities Healthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceAppendices 24Environmental,Social and Governance Report 2022Safety campaignsGRI 3-3,403-1,403-2,403-3,403-5,403-7The safety of our employees is of the utmost importance to WBA.As such,we routinely look for ways to prioritize safety and education trainings.In 2022,Boots UK continued to evolve the new digital management system to improve usability and efficiency,while making better use of the rich data and insights available to improve levels of compliance across the business.Further checks were added to the system,allowing more procedures to move from local paper-managed processes into the digital platform.Boots team members continued to work with their safety,food and fire Primary Authorities in 2022,extending the suite of assurances in place.The partnerships work to develop policies that align with current and upcoming regulations to help ensure consistent application and implementation across the country.Maintaining a safe stockroom environment helps protect our Walgreens team members,which is the reason for implementing our Safety Focused Stockroom program.This program involves stores having a clean,neat,and organized stockroom and lowering product stored in the stockroom.Stores can effectively reduce the risk of an incident occurring and achieve a safety-focused stockroom environment.Walgreens has programs in place to support team members and customers through incident management.Our Customer Care Advocate Program proactively offers support to customers who have reported an in-store incident.Our Nurse Triage Program is an upstream process for team members that provides timely quality care following a workplace injury.It is a service in which team members with workplace injuries call and speak to a registered nurse to determine the appropriate first level of care.In Boots stores,routine safety inspections enable a real-time view of compliance.GovernanceOverviewHealthy Communities Healthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceAppendices 25Environmental,Social and Governance Report 2022Patient safety:pharmacy dispensingGRI 3-3,416-11,417-1 SASB HC-DR-260b.2Dispensing and distributing pharmaceuticals is the most significant part of our business,with 63 percent of our sales in fiscal 2022 coming from the sale and distribution of prescription medications and pharmacy-related services.Millions of people every day count on us to safely deliver and dispense medications.WBA is committed to the safe dispensing of medicines in our pharmacies,and patient safety lies at the heart of our management of pharmacy operations.We strive to be the industry leader by continuously seeking ways to minimize risks to patients in our dispensing and pharmacy services and advice.In fiscal 2022,our clinical decision support software continued to provide pharmacists new training on how to appropriately manage clinical considerations in patient drug therapy.All WBA pharmacy dispensing businesses annually review and evaluate pharmacy operations for compliance with our Pharmacy Operations Governance Policy.During fiscal 2022,the WBA Patient Safety Forum continued to convene representatives from all pharmacy dispensing businesses to share best practice operations,facilitate a culture of openness and shared learning,and develop innovative patient safety solutions.The forum included senior leaders and executives across the Company,including International Public Affairs,Pharmacy Quality and Patient Safety,and Ethics and Compliance,among others.Annual pharmacy operations reviews include the following:Mechanisms for compliance with standard operating procedures covering dispensing,pharmacist control checks,patient counseling,record keeping,management of controlled drugs and narcotics,medicines date checking,quality assurance,error management,and other issuesMonitoring procedures for the professional qualifications of pharmacists and employees in pharmacy-related positionsProcesses to facilitate compliance with professional development requirements for pharmacy staffProcesses to help ensure concerns about pharmacy professionals fitness to practice are referred to the appropriate regulatory bodyCompliance with safe storage,preparation,dispensing,compounding,and sale and supply of medicinal productsRecording,managing,and reporting of dispensing errors,including a formal review process and action planning to minimize the risk of such errors occurring1 GRI 416-1 required disclosures are within the Deloitte&Touche LLP review scope as detailed on pages 119-120.GovernanceOverviewHealthy Communities Healthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceAppendices 26Environmental,Social and Governance Report 2022There are also obligations on the pharmacists to confirm products are sourced via a licensed and legitimate supply chain.Our pharmacy systems are designed for the safe dispensing of medications.Our standardized dispensing processes detail each step in the fulfillment process,from receipt of prescription through consultation and dispensing of the medication.There are multiple digital safety checks,including bar code scanning,safety-enhancing automation processes and digital safety alerts utilizing cutting-edge technology.To help ensure patient safety,our prescription labels are designed to meet both regulatory requirements and our internal standards.Descriptions of medications are affixed to each prescription dispensed,and each prescription is dispensed with a patient leaflet that informs patients of the name and use of the medication,potential adverse reactions,information about drug interactions,safe medication disposal,and other important health information.At Walgreens,this information is available in 18 languages,and additional services are available for hearing and visually impaired patients.In fiscal 2022,we opened eight microfulfillment centers and are on track to have 17 by the end of fiscal 2024,driving significant efficiencies and cost savings over time.Investing in this program is one example of how we are supporting our pharmacists and transitioning work out of our store to free up team member time for additional services in the pharmacy.All WBA businesses must have documented processes in place to facilitate the collection of key performance metrics on health and safety,including pharmacy incidents.Safety performance is supported by robust systems such as continuous quality improvement(CQI)programs,procedures,and monitoring to reduce and prevent incidents.Our CQI programs support and uphold our long-standing patient safety culture by empowering and encouraging all team members to report pharmacy incidents,near misses,and overall safety opportunities to the Patient Safety Research Foundation,a patient safety organization listed with the Agency for Healthcare Research and Quality(AHRQ).Multiple safety data sources are reported and analyzed,and opportunities for process,systems,physical environment,and educational materials are constantly evaluated.Technology and process solutions as well as ongoing team member activities and training are developed based on the evaluation of results.Walgreens continues to maintain National Association of Boards of Pharmacy(NABP)accreditation for Durable Medical Equipment,Prosthetics,Orthotics and Supplies(DMEPOS).It is also accredited for Community Pharmacy,being recognized for an advanced level of patient care services,quality and safety.In addition,Walgreens has current chainwide Community Based Specialty(CBS)URAC accreditation for specialty pharmacy as well as ACHC accreditation for select CBS sites.URAC and ACHC are independent third-party organizations that provide healthcare accreditations based on industry standards.Product safetyAt WBA,product safety is a priority.We ensure our owned brand products which include health,beauty,home and cleaning products,food,paper goods and other categories are rigorously analyzed for compliance with all applicable laws and regulations along with our own high safety and quality standards.We understand our customers expect to feel confident in the transparency and safety of the products they purchase.Upon learning of potential noncompliance regarding the safety of products and services offered to customers and patients,we investigate and appropriately address those incidents based on established processes.Our product safety and quality programs are incorporated at every stage of our owned brand products life cycle,from product development through customer purchase and use.We require suppliers and factories for our owned brand products to use a third-party product testing lab that we select to validate safety and quality before our products reach shelves.Our suppliers are expected to implement best practices,including clearly defined and well-documented good manufacturing and quality processes,training,and record keeping.Through our rigorous supplier and vendor qualification process and factory assessment process,we can evaluate our suppliers and factories ability to deliver consistent,safe,and quality products.An industry standard good manufacturing practices(GMP)audit is a minimum requirement for production facilities in all regulated and nonregulated product categories.We have established a multistage product testing program to ensure products are tested during production through to on-shelf availability.Our program builds in required and periodic testing from independent third-party laboratories validating that quality,safety,compliance,and applicable regulatory standards have been satisfied,including but not limited to:analytical tests(chemical/composition),performance tests(durability/functionality),packaging validation(labeling),and flammability standards.See page 107 for additional information on our marketing and labeling practices.Our cross-functional leadership team helps ensure customer feedback is actively reviewed and analyzed.If we learn about an issue with one of our products,our quality incident process is activated and we systematically investigate;take corrective action;and,when necessary,quickly withdraw the product from our stores and e-commerce platforms.If a product needs to be withdrawn from the market,we ensure it is not sold by issuing a lock on the product at our distribution centers,at point of sale in the store and online.We take our customers safety seriously and are committed to providing information access for any recalled owned brand products.These details are available anytime on our website.GRI 3-3,416-11,416-2,417-1,417-2,417-31 GRI 416-1 required disclosures are within the Deloitte&Touche LLP review scope as detailed on pages 119-120.GovernanceOverviewHealthy Communities Healthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceAppendices 27Environmental,Social and Governance Report 2022Information SecurityGRI 3-3We place the utmost importance on ensuring the integrity of data and the protection of our customers,patients,employees,and Company information.The Companys security processes and controls for information technology(IT)systems and resources;our business;and employees,contractors,and third parties help ensure the confidentiality,integrity,and availability of our IT systems are maintained.During fiscal 2022,the global chief information security officer,who reports directly to WBAs chief information officer,oversees the security of the Companys computer systems,data,networks and other assets,with oversight from the Audit Committee.The chief information officer is a member of the Executive Management team and reports into the Audit Committee.The Company conducts multiple information security audits and vulnerability assessments on different sections of our IT systems,data,and networks on at least an annual basis.WBA also has an information security incident response team and maintains a data security event plan to effectively manage and respond to information security incidents.Our global information security policies,which are based on industry frameworks such as the National Institute of Standards and Technology and the International Organization for Standardization,set the compliance guidelines for our people,processes,and systems.At the request of our business partners,WBA also engages with HITRUST,a third-party organization,to assess the security and privacy controls around Walgreens patient data.HITRUST certification is valid for two years and was last renewed in 2021.WBA works with an independent assessor to conduct interim assessments to ensure continued adherence to HITRUST requirements.Additionally,Walgreens is subject to an annual Payment Card Industry(PCI)assessment that is performed by an external assessor and includes a review of our policies and procedures to protect Walgreens customer credit card data.Building and nurturing a culture of security is key to protecting information.New employees receive training on a variety of issues,including security and privacy.This training is embedded in our security fundamentals training,which is refreshed on an annual basis.This training applies to pharmacists,pharmacy technicians,retail team members and team members at our support offices.We also build awareness about phishing through regular employee campaigns.Training and information is available to employees on our corporate intranet sites.Additionally,we use posters to engage employees about the importance of being alert to cybersecurity risks.GovernanceOverviewHealthy Communities Healthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceAppendices 28Environmental,Social and Governance Report 2022PrivacyAs a global healthcare leader and retailer,personal information is provided to WBA through purchasing and filling prescriptions,enrolling in promotional and loyalty programs,registering on our websites,or otherwise communicating with us.We are committed to protecting patient and customer privacy and data with leading data protection standards.GRI 3-3,418-11 SASB HC-DR-230a.11The global chief privacy officer oversees the privacy of WBAs patient,consumer and employee data,with oversight from the Audit Committee.We conduct privacy impact assessments and data protection impact assessments on an annual basis,and results are routinely shared with the Audit Committee.We are transparent with our customers about how we use their data.Our posted statements on our websites include information about data usage and safeguards.We post our policies about individual rights requests regarding the use and deletion of personal information for customers who are California residents.We comply with EU and UK law on data protection and privacy.Our policy is to notify all data subjects of any impermissible disclosure,in accordance with applicable laws.In the U.S.,where approximately 80 percent of the WBA personal health data resides,our Health Insurance Portability and Accountability Act(HIPAA)privacy rule compliance program incorporates administrative,technical,and physical safeguards.Under our HIPAA policy,we receive written authorization from the data subject where required,and collection and processing is limited to the stated purpose.We also have a program to receive,investigate and respond to privacy complaints.Annual privacy training is mandatory for applicable team members,including pharmacy,retail and support office.Applicable U.S.contractors are legally obligated to receive privacy training.In Europe,supplemental privacy training is sent regularly to privacy champions throughout our businesses.We also have policies and procedures in place that govern data transfers to third parties,including appropriate methods and controls,such as standard contractual clauses.1GRI 418-1 and SASB HC-DR-230a required disclosures are within the Deloitte&Touche LLP review scope as detailed on pages 119-120.29Environmental,Social and Governance Report 2022OverviewGovernanceAppendicesHealthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceHealthy Communities We strive to be a leading partner in reimagining how local healthcare improves societal health and well-being.Our community-focused programs and initiatives bring to life our commitments to health equity and accessibility to affordable,quality healthcare for all.Our work reflects our long-standing partnerships and investments in critical health issues,contributing hundreds of millions of dollars in cash and in-kind donations to the causes our communities care about the most:cancer care and research,youth empowerment,mental health,vaccine and vitamin accessibility,and hygiene poverty.Healthy Communities0130OverviewHealthy Communities Healthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceGovernanceAppendicesEnvironmental,Social and Governance Report 202230fiscal 2022.The remarkable achievements coming out of Boots UKs new Health Equity Stakeholder Group and the investments made as part of U.S.Healthcare will further increase access to healthcare for those who need it most.When it comes to living joyful lives through better health,I want to make that happen for our customers,patients,the communities we serve and our WBA team.This is one of our chief responsibilities as a healthcare company and socially responsible employer.To that end,I will be diving in to diversify the ways we address environmental issues,advance our supplier diversity program,support our partnerships with organizations like Vitamin Angels,and empower our business resource groups in their ongoing expansion.We have also set a new goal to increase our spend with Tier 1 diverse suppliers by 12 percent to$700 million by fiscal 2023.I feel strongly about the impact the team can have on the health of the people and the planet.Together,lets make joy possible for more people everywhere.There is much to celebrate when reviewing the achievements of fiscal 2022,like the launch of the Chicago Health Equity Incubator,which is already seeing demonstrated success in its pilot neighborhoods,and revising some of our charitable targets due to their overwhelming results thus far.Im especially looking forward to seeing our investments in partnerships like Get a Shot.Give a Shot.and Susan G.Komen reach our goals in the near future.To me,this is proof that when we put the passion of our people behind initiatives that make the planet healthier,there is no ceiling to what we can achieve.Health equity efforts in the vaccine space will continue to be paramount for WBA,and my team and I are ready to build upon the progress made in As WBAs new senior vice president of ESG and chief DEI officer for the Walgreens business,our companys purpose to enable the world to live more joyful lives through better health is incredibly important to me.Health is a core component of equity within ESG and DEI,and it will be at the center of any strategy we put forth.It is a fundamental component of our lives and a determinant of so many things,including the world we live in,the bodies we move in,the minds we use,and the future we make for ourselves.A Letter From Alethia JacksonSenior Vice President of ESG and Chief DEI Officer,Walgreens Boots AllianceFiscal 2022 Progress By fiscal 2024:Walgreens:Donate$5 million worth of flu shot vouchers Achieved.Donated$5.8 million vouchers by the close of fiscal 2022.By fiscal 2025:WBA:Help 500 million women and children by providing vitamins and minerals through Vitamin Angels.On track.Through fiscal 2022,WBA distributed vitamins and minerals to over 350 million women and children.Walgreens:Contribute more than$25 million to Susan G.Komen and The Leukemia&Lymphoma Society.Achieved.Donated over$25 million through the lifetime of the partnership.WBA:Provide 100 million vaccinations for children in developing countries through Get a Shot.Give a Shot.and the UN Foundation On track.Funded over 80 million vaccinations through fiscal 2022.Environmental,Social and Governance Report 202231OverviewHealthy Communities Healthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceGovernanceAppendicesEnvironmental,Social and Governance Report 2022Health Access and AwarenessGRI 3-3,203-1,203-2,413-1Health equityWe strive to provide essential care to the communities in which we are embedded.As one of the worlds largest providers of pharmacy and other healthcare services,WBA is uniquely positioned to make an impact on healthcare access and affordability.Our endeavors to improve access to healthcare for millions of people are reflected throughout our business activities,advocacy work and ESG initiatives.GRI 3-3,203-1,203-2,413-132OverviewHealthy Communities Healthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceGovernanceAppendicesEnvironmental,Social and Governance Report 2022Walgreens addresses health equityThe Walgreens Health Equity Task Force convened a group of experts across departments and disciplines to work together to help ensure the COVID-19 vaccine is available and accessible,while promoting education to address hesitancy in areas with lower vaccination rates.We see our pharmacists as our frontline educators;they are not only accessible in the communities where they work,but are also often active and trusted members of those communities.Together with our frontline staff,the Health Equity Task Force established three pillars by which we would ensure our care remains accessible to communities,and our communities would remain protected from the effects of COVID-19:GRI 3-3,413-1The Vaccine Equity Task Force,established to address both issues of access and vaccine hesitancy,has made significant progress in protecting communities of color who were often disproportionately affected.Together with our partners,Walgreens built inroads into communities in need of the COVID-19 vaccine,whether for a booster shot or their first dose.Though U.S.vaccination rates have increased among both Hispanic and Black adults,both groups still remain less likely to have received a vaccine.Hesitancy stemming from medical mistrust or misinformation,and other social determinants of health,continue to contribute to disparities in vaccinations,particularly in the Black and African American community.To reach these communities,Walgreens continued its partnership with universities,community centers,local and faith-based organizations to administer doses throughout fiscal 2022.As students went back to campus in 2021,the Walgreens bus met them at 17 historically Black colleges and universities(HBCU)campuses,setting up mobile clinics to administer the COVID-19 vaccine and booster to students and members of the local community.Partnerships:We understand that to reach those who need the most help,we cannot work alone.The Company hosted nearly 2,100 events to address vaccine hesitancy and provide vaccines working with community organizers to faith-based organizations to major companies.These events and partnerships have been instrumental in breaking down barriers and providing the tools needed to engage communities and overcome obstacles to care.Access:78 percent of Americans live within 5 miles of a Walgreens pharmacy.For those who dont,we continued the effort to go the extra mile to reach medically underserved communities with our mobile clinics.Our coach buses outfitted for health providers traveled coast to coast,meeting people within their communities while adminstering thousands of vaccines and other services.Education and information:We are committed to ensuring our communities have access to the information necessary to promote good health outcomes.Because our pharmacists live and participate in the communities they serve,they are seen as a credible source of information among their community members.Our pharmacy team members are actively combating misinformation and encouraging healthcare access.33OverviewHealthy Communities Healthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceGovernanceAppendicesEnvironmental,Social and Governance Report 2022Walgreens Health Equity IncubatorThe Walgreens Chicago Health Equity Incubator is a pilot program designed to address health inequities and impact patient outcomes.Driven by a cross-functional team of individuals across pharmacy operations,data analytics and Chicago-area pharmacies,the program is designed to create direct lines of communication between patients in vulnerable communities and providers who can interpret feedback into actionable change.The pilot,which began in Chicago in August 2020 with one pharmacy,has expanded to 15 more pharmacies on the South and West sides of Chicago,addressing health disparities through pharmacist-provided patient-and community-centered healthcare services.GRI 3-3,203-1,203-2,413-1Using predictive analytic models,the cross-functional Walgreens team developed screening and intervention methods to address the following need areas:Pediatric asthma outreach and education:Given the high prevalence of pediatric asthma in Chicago,pharmacists conduct outreach to parents and guardians of children with asthma to provide education on the importance and proper use of asthma medications,review side effects,discuss asthma triggers and provide action plans in collaboration with healthcare providers as needed.Diabetes outreach:Pharmacists prioritize high-touch consultations for those living with diabetes to personalize solutions,address any barriers to taking medications and make recommendations for health screenings and vaccinations.Affordable access to medications:In addition to conducting outreach to patients who have not picked up filled prescriptions,resources were allocated to support free same-day prescription delivery to those experiencing barriers to medication access.Two years after the launch of the pilot,Walgreens is conducting surveys and interviews to determine best practices,as well as how these services and lessons learned can be adapted for additional markets.34OverviewHealthy Communities Healthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceGovernanceAppendicesEnvironmental,Social and Governance Report 2022Boots addresses health equityGRI 3-3,203-1,203-2,413-1At the start of the 2022 calendar year,we established a network of Health Equity Champions across Boots UK.These champions work across stores to help ensure new initiatives meet the standards of Boots efforts to address health inequities.Whenever we launch a new initiative,the champion will ask their Boots team members to complete a Health Equity Assessment Tool(HEAT)to test the accessibility of the service in a range of scenarios,ensuring it has the best chance of reaching all members of the community.Boots maintains its participation in the Hidden Disabilities Sunflower scheme,through which patients with autism,chronic pain,dementia,and visual or hearing impairments could wear a sunflower lanyard to alert Boots team members that they may need extra assistance to receive the vaccine.As part of the national vaccination process,the Sunflower scheme worked with the NHS and vaccine providers to highlight its purpose.We are also designing for accessibility and creating inclusive in-store initiatives to promote adherence like piloting dual-language dispensing labels for prescriptions.Store teams have been provided with a range of multilingual options for materials distributed in-store,and we are working to highlight our staff who can speak more than one language to increase the comfort of our customers who do not use English as their first language.As we expand the suite of digital services offered,we continue to eliminate barriers that might interfere with the user experience of a person with a disability as well as identify opportunities to address digital inequalities as more and more health services become digital.In 2022,Boots became the first retailer to provide an inclusive online shopping experience with Recite Me accessibility toolbar.At a local level,we encourage pharmacists to share ideas on how to increase accessibility for their own communities.To help address heath inequity in the communities we serve,Boots established the Health Equity Stakeholder Group in 2021.This group outlined four key themes that would guide store activities and internal initiatives to promote health equity across Boots UK:Making a difference in outcomesGRI 3-3,203-1As of Aug.31,2022,the Company administered more than 69 million doses of the COVID-19 vaccine and boosters in vaccine clinics across the U.S.,23 million of which were booster vaccines,and more than 45 million COVID-19 tests.In fiscal 2022 alone,WBA administered approximately 36 million COVID-19 vaccinations and more than 31 million COVID-19 tests.Walgreens also expanded vaccination models to ensure convenient access,including same-day and walk-in appointments,mobile clinics,employer partnerships and extended hours.In the UK,Boots delivered vaccines to patients from a total of 120 sites in fiscal 2022,including boosters.To support the UK booster program,Boots has 89 sites delivering boosters.Turning awareness into advocacy:Ensuring all Boots communications are written through the lens of promoting equity in its education programs and services.Black,Asian and Minority Ethnic(BAME)inequalities:Recognizing the disparities in access to healthcare among Black,Asian and ethnic minority communities in the UK and working to achieve parity,especially in the treatment and prevention of COVID-19.Digital inequalities:We are committed to improving digital access to healthcare.Recognizing that as of the latest Office for National Statistics(ONS)data published in 2020 four percent of UK households do not have internet access,Boots is committed to maintaining care options that do not exclude those without digital access.Local solutions:Our pharmacists live and work in their local communities.We want our local teams to keep us apprised of inequalities they may encounter and feel empowered to suggest their own ideas about how to tackle them.At the same time,we will continue to empower our team members with research from our partners,including the Kings Fund,and shared best practices to address inequities together.35OverviewHealthy Communities Healthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceGovernanceAppendicesEnvironmental,Social and Governance Report 2022Transforming accessGRI 3-3,203-1Furthering our commitment to increasing equitable access to care for everyone,the U.S.Healthcare segment was successfully launched in October 2021 to facilitate WBAs consumer-centric healthcare strategy in the communities we serve across the U.S.The new business segment,enabled by majority investment in VillageMD,Shields,CareCentrix and the Companys organically grown healthcare business,Walgreens Health plans to become a leading provider of local clinical care services by leveraging its consumer-centric technology and pharmacy network to deliver value-based care.The Company also plans to continue to transform its core pharmacy and retail business and its goal is to provide better consumer experiences,improve health outcomes and lower costs.This strategy is foundational to WBA as a leading provider of local clinical care services and addresses all dimensions of physical,emotional,and mental health.We will continue to leverage our consumer-centric technology,pharmacy network,and partnerships to deliver and enable others to deliver value-based care,including vaccinations,diagnostic testing,chronic care management,and specialty management.Walgreens Health Corners provide accessible,hyperlocal care.Locations offer services that range from preventive care and wellness checks to assistance with managing chronic conditions.Health advisors provide a range of health and clinical services that supplement care received from primary care physicians and specialists.By the end of fiscal 2022,the number of current Walgreens Health Corners expanded to approximately 100 locations throughout California,New Jersey and Ohio.Through the Walgreens and VillageMD coordinated care model,patients receive full-service primary care alongside convenient and cost-effective pharmacy services.In fiscal 2022,Walgreens expanded its primary care offering in the U.S.with the opening of new VillageMD locations in Massachusetts,New Hampshire,Arizona,Florida,Texas,Kentucky and Indiana.Over half of the new locations are in medically underserved areas,meeting WBAs goal of expanding healthcare access to underserved populations.In Mexico,WBA opened seven Benamedic clinics to make clinical care including general care,vision and diagnostic testing more accessible in the community,with plans to expand in fiscal 2023.In 2022,new developments with the National Health Service(NHS)have empowered Boots UK to better care for those in its communities with chronic conditions.In fiscal 2022,the NHS increased the number of chronic conditions it supports through the New Medicine Service from four to 16,which includes hypertension.Since April 2022,Boots has administered a 24-hour blood pressure tracker to more than 62,000 patients,allowing pharmacy teams to deliver hypertension analyses and promote better health outcomes for those at risk.In Germany,WBA works with renowned partners such as the German Hypertension League to train pharmacists across the country,providing them with educational materials to raise patients awareness of the necessity of blood pressure check-ups and supplying pharmacies with hypertension measuring devices.In February 2022,when Germany amended the Infection Protection Act to allow pharmacists to administer vaccinations for the first time,WBA stepped up to ensure the training program pharmacists were required to complete to assist the vaccination efforts was made available to all pharmacies in Germany regardless of whether they were current customers of WBAs subsidiary GEHE Pharma Handel and Alliance Healthcare Germany.WBA continues to play a key role in local communities through our response to COVID-19.The Company hosted nearly 2,100 events to address vaccine hesitancy and provide vaccines,working with diverse,community-based partners,and administering approximately 69 million COVID-19 vaccines with a special effort to reach underserved communities.Our pharmacists are trusted,expert voices who help people stay healthy and safe from the virus.As a touch point for our communities,our company educates and raises awareness about health issues and conditions,reaching people with vital information that can improve individual health and community resiliency.As we execute on our new healthcare strategy,the number of in-store health services increased significantly year over year with more than 310 new locations.In June 2022,the Company announced the launch of its clinical trial business in the U.S.to redefine the patient experience and increase access and retention in sponsor-led drug development research.We aim to provide another offering for patients with complex or chronic conditions in their care journey and address a common criticism of clinical trials the lack of diversity among participants by breaking through barriers to engage broader and more diverse communities.This effort will have real implications for the communities Walgreens serves;approximately 20 percent of drugs have variations in response across racial/ethnic groups,which is critical to address because more than three-quarters of clinical trial participants are white.36OverviewHealthy Communities Healthy and Inclusive WorkplaceHealthy PlanetSustainable MarketplaceGovernanceAppendicesEnvironmental,Social and Governance Report 2022We have committed to transforming access to healthcare in the communities we serve.In fiscal 2022,these are the key ways we are bringing critical services digitally and in-person to communities while raising awareness:We use market testing of new products and services,utilization,competitive analysis,health outcomes research and customer feedback to evaluate our approach.Our performance metrics on these topics are as follows:Thirty-five million consumers participated in health educat
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2022 Sustainability Report everybody in.IntroductionStrategyInnovationEnvironmentSocialGovernanceOur vision is of a world with zero crashes,zero emissions and zero congestion.At General Motors(GM),we have an innovative spirit and a commitment to action that will help us contribute to our worlds changing needs.Our investments in research and development(R&D),design and engineering,manufacturing,our supply chain and a new electric vehicle(EV)customer experience that is designed to be best in the industry will drive us forward.These ingredients will also help contribute to a safer,more inclusive and more sustainable future.In This Report Introduction 1 Our Sustainability Strategy 7 Innovation 17 Environment 29 Social 52 Responsible Governance 88 Sustainability Report Supplement This supplement contains our GRI,SASB and UN SDGs indices,our data center and additional About This Report Scope and Boundaries GM is committed to publicly reporting on sustainability-related topics on an annual basis,discussing the opportunities and challenges that we encounter as we work to enhance our performance and conduct business responsibly.This report has been prepared in reference to the Global Reporting Initiative(GRI)2021 Standards and includes responses to the Sustainability Accounting Standards Board(SASB)framework.Responses to sustainability-related frameworks and standards can be found in the 2022 Sustainability Supplement,which is available for download at .This report covers certain sustainability metrics and data for GM as of and during the year ended December 31,2022,as applicable,unless otherwise stated.In instances where select information is provided from an earlier period or early 2023,that is noted in the report.In some instances,certain data from an earlier period that was previously published in other locations has been updated in this report.The report is limited to General Motors Companys automotive operations conducted through certain of its consolidated subsidiaries.Unless otherwise stated,data related to GM Financial,our automotive financing services provider,and Cruise,our autonomous ride hail subsidiary,is not included in the report.In some instances,data has been included for operations in which GMs interest is through joint ventures(JVs),including our automotive China JVs.In these instances,the inclusion of that data is noted.Dollar amounts presented within this report are stated in U.S.dollars.Certain amounts may not add due to rounding.The information included in this report is current at the time of publication(April 28,2023).We have engaged an independent third party to verify a selection of the greenhouse gas(GHG)and certain sustainability data for our global automotive operations presented in this report.The verification statements and applicable data assertions can be found in the 2022 Sustainability Supplement.This report provides an overview of some of GMs long-term goals and aspirations,and efforts in support of them.Some of the statements and data in this report are derived from other GM publications and links are provided to those documents.With respect to goals,commitments and aspirational or otherwise forward-looking statements in this report,actual results may differ,possibly materially.The report also includes certain numbers that are estimates or approximations and that may be based on assumptions.We believe that the estimates employed are appropriate and reasonable;however,due to inherent uncertainties in making estimates and assumptions,actual results could differ from the original estimates.Solely for convenience,trademarks and trade names referred to in this report may appear without the or symbols.Such references are not intended to indicate,in any way,that we will not assert,to the fullest extent under applicable law,our rights or the right of the applicable licensor to these trademarks and trade names.Products Disclosure In this report,depicted products and features may be simulated,preproduction or concepts and are subject to change.Certain products are not currently available or are subject to limited availability.For vehicle availability and feature use and limitations,including details relating to advanced safety and driver assistance features,consult the brands website and product Owners Manual.Forward-Looking Statements Cautionary Note on Forward-Looking Statements:This report may include“forward-looking statements”within the meaning of the U.S.federal securities laws.Forward-looking statements are any statements other than statements of historical fact.Forward-looking statements represent our current judgment about possible future events.In making these statements,we rely upon assumptions and analysis based on our experience and perception of historical trends,current conditions and expected future developments,as well as other factors we consider appropriate under the circumstances.We believe these judgments are reasonable,but these statements are not guarantees of any future events or financial results.Our actual results may differ materially due to a variety of factors,many of which are described in our most recent Annual Report on Form 10-K and our other filings with the U.S.Securities and Exchange Commission.We caution readers not to place undue reliance on forward-looking statements.Forward-looking statements speak only as of the date they are made,and we undertake no obligation to update publicly or otherwise revise any forward-looking statements,whether as a result of new information,future events or other factors that affect the subject of these statements,except where we are expressly required to do so by law.12022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceAbout Us Why We Exist Our diverse global team of employees is working hard to turn our purpose and vision into reality.Our Purpose We pioneer the innovations that move and connect people to what matters.Our Vision Zero crashes,zero emissions and zero congestion.How We Act We aspire to be the worlds most inclusive company and to conduct ourselves with fairness and transparency.These are the values and behaviors by which we measure ourselves.Our Core Values Customers/Excellence Relationships/Seek Truth Our Behaviors Be Inclusive/Think Customer/Innovate Now/Look Ahead/One Team/Be Bold/Its On Me/Win With Integrity Where We Focus We have a passion for delivering world-class products and unrivalled customer experiences.Electrification Our new Ultium platform can help put everyone in an electric vehicle(EV),driving the world closer to an all-electric future.Vehicle Safety Research,technology and advocacy inform our holistic approach to engineering safety through a human lens.Path to Autonomous We believe that autonomous vehicles(AVs)have enormous potential to benefit society through increased safety and access to transportation.Social Impact We aspire to become the most inclusive company in the world and we will not stop until we get there.Who We Are Headquartered in Detroit,Michigan,GM is a company with global scale and capabilities.Operations in 29 countries 154,000 global employees1 Six vehicle brands2 Customers on six continents 1 Approximate total.Excludes employees of DMAX Ltd,which was founded in 1999 as a joint venture and became a wholly owned subsidiary of GM in May 2022.2 More information on the company and its subsidiaries,including OnStar,Cruise and BrightDrop,can be found at .(Second image above)Preproduction model shown.Actual production model will vary.Model Year 2024 Blazer EV SS shown available Fall 2023.22022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceA Message From Mary Barra,Chair and Chief Executive Officer When General Motors began the journey to an electric and autonomous future,our mission was to help create a better and safer future for all,guided by our vision of zero crashes,zero emissions and zero congestion.Choice is important to our customers and they will see more than a dozen new EVs from our brands,including the Chevrolet Silverado,Blazer and Equinox EVs;Buick Electra E5 in China;and the first of our Cadillac CELESTIQ bespoke sedans,to name just a few.These distinctive and stylish vehicles join Ultium EVs already in their hands,like the GMC HUMMER EV,Cadillac LYRIQ and BrightDrop Zevo 600.This industry-leading portfolio provides a wide variety of options for customers with a wide variety of needs.This is part of why 2023 will be a breakout year for GM.Just as importantly,it means we will be in the most high-volume vehicle segments where well make the biggest impact and,in the case of the Equinox EV,with incredible affordability.We are on track to produce 400,000 EVs in North America by mid-2024 and have built production capacity for 1 million units in North America in 2025and well continue scaling from there.We know EV customers want the freedom and confidence they can travel anywhere,anytime.Thats why we are investing nearly$750 million in home,workplace and public charging that will include more than 5,000 DC fast chargers in major metropolitan areas and along Americas highways.We are also working with our dealers to install 40,000 Level 2 charging stations in communities across the United States and Canada.To support this massive shift,we are working with our partners and suppliers to help secure a localized and sustainable supply chain,including three announced joint venture battery cell plants in the United States.Our first plant,in Ohio,is producing cells now,and a second plant in Tennessee will be operating by the end of the year.These facilities are creating exciting new jobs in our communities and supporting our EV acceleration.We remain committed to eliminating tailpipe emissions from new U.S.light-duty vehicles by 2035.Last year,we went even further,securing enough renewable energy to power our U.S.facilities by 202525 years earlier than we originally shared.Its a huge step toward making our business carbon neutral by 2040.At Cruise,the team will expand on last years incredible progress as it continues to safely expand ride hail and related deliveries to more cities,and launch the Cruise Origin.The brighter,more inclusive future we envision goes beyond our own walls.Last year,generous employees volunteered more than 158,000 hours in their communities and donated more than$5 million to causes that stir their passions.GM provided another$60 million to more than 400 U.S.-based nonprofits in education,road safety,community enrichment and climate initiatives.I invite you to learn more about what we are doing in this report,which follows established GRI Standards that comparably and credibly measure and assess our impact in several areas.I am proud to lead GMs talented and innovative team,intent on positively changing the world.Our commitments and investments reflect our sense of urgency to transform our vision into reality.Mary T.Barra Chair and Chief Executive Officer32022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceA Message from Kristen Siemen,Chief Sustainability Officer Our journey to a more sustainable,electric future has never been more important than it is today.We know climate change is an urgent priority,and we are advancing toward our bold goal to be carbon neutral in our global products and operations by 2040 so that we can be a part of the solution.As chief sustainability officer,my priority has been to ensure our sustainability strategy connects to our business strategyone that is focused on putting everyone in an EV.We know that it will take millions of new EVs hitting the road every year to reach the zero-emissions future were striving for,and were moving faster than ever.GM is pursuing multiple aspects of what it takes to help put more people in EVs.We are rapidly building out our own battery,software,manufacturing and customer experience capabilities to make that a reality,while also laying the critical foundations for customer EV education and EV charging infrastructure.At the same time,were moving forward with our investments in renewable energy.In 2022,we announced that weve secured 100%of the renewable electricity needed to power our sites in the United States by 2025 and we continue to work toward our plan to secure enough renewable electricity to do so globally by 2035.Additionally,we joined the First Movers Coalition through commitments to low-carbon concrete,cement,aluminum and steel,signaling a firm market demand for a net-zero transition and our dedication to a more resilient and sustainable supply chain.Weve also prioritized developing a more resilient and sustainable supply chain for EV battery raw materials,and developing a battery recycling strategy that can grow with us.Through collaborations with global and domestic partners,we have secured sources for enough battery raw materials to meet our 2025 goal of having 1 million units of annual EV capacity in North America.These are just a few of the many important steps we have taken in the last year to advance our business goals and our sustainability journey.Our sustainability strategy is weaved into our business strategy and both are focused on providing growth and long-term value.Though I am confident that we will reach our most ambitious goals,I recognize that we cannot,and will not,achieve them alone.Thats why were continuing to pursue collaborative opportunities with stakeholders across the globe,including suppliers,dealers,policymakers,climate thought leaders and others.In fact,we have invited all Tier I suppliers to sign our Environmental,Social and Governance(ESG)Partnership Pledge to embrace sustainability in a holistic manner,focusing on ESG practices.A shift this massive truly requires everybody in,working together toward a single goalan all-electric future.As we implement our sustainability strategy,we have an opportunityand an obligationto create a better future.The pursuit of a safe and sustainable world is a passionate movement within GM;one thats gaining momentum as our technologies reveal their increasingly profound potential.As a leader,engineer and mom,I am here to help break down barriers and advance our plans toward creating a world with zero emissions for generations to come.We will continue along this journey,recognizing that it is on us to lead positive change and implement inclusive solutions that bring everyone along.Our sights are set on continuing to excite and inspire people about the road ahead and we know that our culture,strong values,robust strategies and proven execution will allow us to accelerate toward our vision of a more sustainable,electric future together.Kristen Siemen Vice President Sustainable Workplaces&Chief Sustainability Officer42022 Sustainability ReportIntroductionStrategyInnovationEnvironmentSocialGovernance2022 Report Highlights Agreements in place to power 100%of our electricity for our U.S.sites from renewable sources by 202525 years ahead of our initial target of 20503 Provided$60M in grants to more than 400 U.S.-based nonprofits to help create inclusive solutions to social issues Opened our first Ultium Cells battery cell plant in Ohio,with a second plant opening in Tennessee in 2023 and a third in Michigan in 2024 Joined the First Movers Coalition through commitments to low-carbon steel,aluminum,concrete and cement,signaling a firm market demand for a net-zero transition Published our first disclosures for the Global Platform for Sustainable Natural Rubber(GPSNR)and Corporate Human Rights Benchmark(CHRB).In the 2022 CHRB,GM was placed in the top 10 out of 127 companies across three industries.Secured all EV battery raw materials for 1M units of North American capacity in 2025.Signed a number of agreements to build a more sustainable and resilient North America and free-trade-focused supply chain,including with Lithium Americas for lithium from the United States and POSCO for cathode-active material from Qubec Cruise became the first paid driverless ride-hailing service in a major U.S.city when it launched in San Francisco,followed by commercial expansion into the Phoenix area and Austin 3 Based on estimated forecasted global renewable energy sourced through currently executed agreements,subject to change depending on actual future electric usage in operations and actual future renewable generation.52022 Sustainability ReportOpened our firstUltium Cellsbattery cell plant in Ohio,with a second plant opening in Tennessee in 2023 and a third in Michigan in 2024Agreements in place to power100%of our electricity for our U.S.sites from renewable sources by 202525 years ahead of our initial target of 20503Secured all EV battery raw materials for1Munits of North American capacity in 2025.Signed a number of agreements to build a more sustainable and resilient North America and free-trade-focused supply chain,including with Lithium Americas for lithium from the United States and POSCO for cathode-active material from QubecCruise became the first paid driverless ride-hailing servicein a major U.S.city when it launched in San Francisco,followed by commercial expansion into the Phoenix area and AustinPublished ourfirst disclosuresfor the Global Platform for Sustainable Natural Rubber(GPSNR)and Corporate Human Rights Benchmark(CHRB).In the 2022 CHRB,GM was placed in the top 10 out of 127 companies across three industries.Provided$60Min grants to more than 400 U.S.-based nonprofits to help create inclusive solutions to social issues IntroductionStrategyInnovationEnvironmentSocialGovernanceAwards and Recognition Received the ENERGY STAR Sustained Excellence Award for the 11th straight year Listed in the DiversityInc Top 50 Companies for Diversity for the seventh successive year,ranking#36two places up from 2021 Ranked#18 in the Environmental Protection Agency(EPA)Green Power Partnership list Won the Environmental Initiatives Award at the SEAL Business Sustainability Awards Won the Sustainability Leadership Award from the Business Intelligence Group Named as the only original equipment manufacturer(OEM)automaker on Ethispheres Worlds Most Ethical Companies list for the fourth year in a row Received an A-on the CDP Climate Change and Water Security questionnaires Named on Fast Companys 2022 Brands That Matter list,which recognizes organizations leading on social action,sustainability and inclusivity Ranked as a leading OEM in North America in S&Ps Dow Jones Sustainability Index(DJSI),and listed in the 2022 Yearbook Ranked 1st in the Automobiles&Parts industry sector in the 2023 JUST 100 rankings62022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceOur Sustainability Strategy Our sustainability strategy supports our vision of an all-electric future,our carbon neutral goal and our growth strategy,which we believe can lead to greater revenue and margins.In This Section The External Landscape 8 Our Sustainability Journey 9 How GM Creates Value 11 Assessing Priorities 12 Progress Toward Our Goals 14 Our Priorities 15 “Our world is evolving in dynamic,complex and unexpected ways.To remain at the forefront of innovation,we must understand the future,embrace it and incorporate it into everything we do.”Katura Brown Global Foresight&Trends Manager evolving.72022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceThe External LandscapeOur sustainability strategy continues to evolve,informed by a range of external environmental,social and regulatory trends and pressures.Vehicle Regulations Legislation on vehicle emissions,fuel economy and safety is evolving,with varying standards being introduced at a local,regional and national level.GM and the Environmental Defense Fund have together recommended principles to guide the next generation of U.S.Environmental Protection Agency(EPA)vehicle emissions standards for Model Year 2027 and beyond.Focused on the shared vision of a zero-emissions,all-electric future,the proposals outline a challenging yet achievable framework that accelerates EV adoption and supports underserved and socially vulnerable communities.Supply Chain Constraints As our business shifts toward EVs,we face new sourcing challenges related to the limited availability of certain key minerals.Additionally,certain key mineral supply chains are at a high risk for environmental and human rights concerns.We are exploring ways to create a North-America-focused supply chain,as well as ways to reuse and recycle battery materials to reduce the need for mining.We have made investments to contractually secure all battery raw materials to support our goal of 1 million units of EV capacity in North America in 2025.These include a long-term supply agreement with Livent,which will see the processing of battery-grade lithium hydroxide move from South America to North America.We also continue to conduct responsible sourcing audits and engage with our supply base,inviting Tier I suppliers to sign our Environmental,Social and Governance(ESG)Partnership Pledge,with a focus on carbon emissions,labor and human rights,ethics and sustainable procurement.Climate Change Extreme weather events are increasing in frequency and severity,which can potentially impact local communities,the supply of raw materials and components,and vehicle production.In light of these changes,we continue to explore ways to reduce the carbon emissions of our operations and products,and take steps to increase the resilience of our business and our supply chain.Our facilities also depend on consistent water availability and quality,both of which are threatened by the effects of climate change.We are investigating and implementing water-conservation projects,both in water-scarce locations and those where future availability concerns are forecasted.Bringing Everyone Along We understand that climate change does not impact every community equally.Moving society toward an all-electric future is a major undertaking that risks leaving some communities behind.In an attempt to bring everyone along on the journey,we continue to retrain and upskill our workforce so that they can make a successful transition.We also doubled our initial$25 million commitment to invest in our Climate Fund,made in 2021,to$50 million,to help support the future of work and increase access to EVs and charging infrastructure.Making capital investments and supporting philanthropic ventures in these areas will help support the transition to EVs and other sustainable technologies.Lower-Carbon Transportation In support of our vision of zero crashes,zero emissions and zero congestion,we are making EVs more affordable and accessible,and developing tools and services that simplify the EV ownership process.We have also started to make mobility more accessible by commercializing zero-emissions driverless ride-hailing through Cruise,and last-mile delivery solutions through BrightDrop,in line with consumer and commercial demand for more sustainable transportation.(First image above)Simulated model shown.Actual production model will vary.See dealer for availability details.82022 Sustainability ReportVehicle Regulations Legislation on vehicle emissions,fuel economy and safety is evolving,with varying standards being introduced at a local,regional and national level.GM and the Environmental Defense Fund have together recommended principles to guide the next generation of U.S.Environmental Protection Agency(EPA)vehicle emissions standards for Model Year 2027 and beyond.Focused on the shared vision of a zero-emissions,all-electric future,the proposals outline a challenging yet achievable framework that accelerates EV adoption and supports underserved and socially vulnerable communities.Supply Chain Constraints As our business shifts toward EVs,we face new sourcing challenges related to the limited availability of certain key minerals.Additionally,certain key mineral supply chains are at a high risk for environmental and human rights concerns.We are exploring ways to create a North-America-focused supply chain,as well as ways to reuse and recycle battery materials to reduce the need for mining.We have made investments to contractually secure all battery raw materials to support our goal of 1 million units of EV capacity in North America in 2025.These include a long-term supply agreement with Livent,which will see the processing of battery-grade lithium hydroxide move from South America to North America.We also continue to conduct responsible sourcing audits and engage with our supply base,inviting Tier I suppliers to sign our Environmental,Social and Governance(ESG)Partnership Pledge,with a focus on carbon emissions,labor and human rights,ethics and sustainable procurement.Climate Change Extreme weather events are increasing in frequency and severity,which can potentially impact local communities,the supply of raw materials and components,and vehicle production.In light of these changes,we continue to explore ways to reduce the carbon emissions of our operations and products,and take steps to increase the resilience of our business and our supply chain.Our facilities also depend on consistent water availability and quality,both of which are threatened by the effects of climate change.We are investigating and implementing water-conservation projects,both in water-scarce locations and those where future availability concerns are forecasted.Bringing Everyone Along We understand that climate change does not impact every community equally.Moving society toward an all-electric future is a major undertaking that risks leaving some communities behind.In an attempt to bring everyone along on the journey,we continue to retrain and upskill our workforce so that they can make a successful transition.We also doubled our initial$25 million commitment to invest in our Climate Fund,made in 2021,to$50 million,to help support the future of work and increase access to EVs and charging infrastructure.Making capital investments and supporting philanthropic ventures in these areas will help support the transition to EVs and other sustainable technologies.Lower-Carbon TransportationIn support of our vision of zero crashes,zero emissions and zero congestion,we are making EVs more affordable and accessible,and developing tools and services that simplify the EV ownership process.We have also started to make mobility more accessible by commercializing zero-emissions driverless ride-hailing through Cruise,and last-mile delivery solutions through BrightDrop,in line with consumer and commercial demand for more sustainable transportation.IntroductionStrategyInnovationEnvironmentSocialGovernanceOur Sustainability Journey At GM,we are transforming the way we do thingsfrom the materials we source and the way we manufacture to the products we deliverand making progress toward our sustainability goals.In change,we see opportunity.It is our chance to lead;to provide the vehicles of tomorrow that we believe our customers are looking for today;to use our expertise,scale and experience to help solve some of societys greatest challenges.Growing Through Innovation At GM,we are always innovating.From pioneering the first electric starter to assisting drivers in emergencies with OnStar through our advanced software technologies,GM has always pushed the limits of engineering.Today,with Ultium as a driving force,we are enabling our EV strategy and our vision of zero emissions.Taking Environmental Action We have ambitious climate goals and we are committed to achieving them.To reach our goal of carbon neutrality in global products and operations by 2040,we will continue to prioritize creating a broad portfolio of EVs and enhancing the sustainability of our supply chain.We cannot do it alone,but we will lead based on our strengths.Everybody In Our role at GM is not just to direct our own companys transformation;it is also to bring everybody in on the journey to a safer,all-electric future,including our workforce and the communities in which we live and work.We are on a path to prove that technology and collaboration,driven by purpose,can help change the world.Driving Responsible Governance Leading with integrity is an essential part of working toward an all-electric future that is better for people and the environment.As GM drives impactful change by bringing EVs,mobility and connectivity to the next level,we have processes and policies in place to help guide responsible,ethical action.92022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceInvesting in an Electric Future We plan to make a number of strategic investments to help us progress toward our vision of a more sustainable future.These include:Announced investments of$11.7 billion across 14 sites in North America to support EV manufacturing Anticipated total annual capital spending and investments in battery cell manufacturing joint ventures of$11$13 billion through 2025 Planned investments of nearly$750 million in home,workplace and public charging infrastructure in the United States and Canada Signed agreements to build a more sustainable and resilient supply chain focused on North America and free trade partners,including a$650 million equity investment and supply agreement with Lithium Americas to develop the Thacker Pass lithium mine in Nevada Sustainable Finance Framework We have created a Sustainable Finance Framework to further align our financing activities with our sustainability strategy and commitments,thereby bringing us closer to achieving our vision.Proceeds from future issuances under the framework may be used to fund projects supporting clean transportation or socioeconomic advancement and empowerment.Under this framework,we issued$2.25 billion of investment-grade green bonds,our first capital markets activity that specifically supports our EV strategy.Our first Sustainable Finance Report will be published later in 2023 and will discuss the allocation of proceeds and certain estimated impacts of investments from our inaugural green bond issuance.“The overlap of my personal purpose and the companys purpose is the reason I love what I do.We make innovations come to life and impact peoples lives.”Mohammad Ehaab Manager,Innovation 2X$2.25B of investment-grade green bonds issued pursuant to our Sustainable Finance Framework102022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceHow GM Creates ValueOur Purpose is the foundation for creating long-term value for all our stakeholders.We use our core business strengths to find new opportunities that solve challenges for individuals,partners and society at large.The needs,preferences and expectations of our customers guide the decisions we make.2022 Value Creation Model Our Inputs Human Capital 154,000 global employees4 22 average annual training hours per employee Financial Capital$138.4B automotive assets$39.5B automotive liquidity$9.0B capital expenditures$88.2B approximate supply chain spend Infrastructure Capital 100 facilities$11.7B of announced investments in sites across North America to scale up EV production capacity 11,957 dealerships5 Intellectual Capital$9.8B research and development expenses6 Global Innovation Team Social Capital$50M committed through the Climate Fund7 Approximately$8M disbursed through the Inclusion Fund$60M grants to U.S.nonprofits Natural Capital 50,652,702 GJ energy used 27,325 ML water withdrawn Business Activities Our Vision Zero crashes Zero emissions Zero congestion 1 Design 2 Build 3 Sell 4 Software-Enabled Services Integration The Value and Long-Term Impacts We Create Employees We are building a diverse,equitable and inclusive working environment,where safety is an everyday priority.30%of top management positions(within two levels of the CEO)globally held by women,and 17%of top management positions in the United States held by people identifying as racially or ethnically diverse Shareholders We seek to maintain profitable growth and generate long-term returns for shareholders.$144.0B automotive net sales and revenue$9.9B net income6$19.1B net automotive cash provided by operating activities Customers We are optimizing vehicle safety and promoting advanced platforms and technology to transform our business in preparation for an all-electric future.We are also delivering a world-class customer experience and driving customer loyalty.5.9M vehicles sold globally GM EV drivers have access to 110,000 EV charging plugs in the United States and Canada through our vehicle brand apps8 35 models with advanced driver assistance systems9 Communities We are investing in communities,businesses and people.$4.4B and$2.5B approximate spend with North America diverse Tier I and Tier II suppliers respectively10 Supporting more than 400 U.S.-based nonprofit projects Environment We are working to minimize our environmental impacts.53%progress toward our goal of reducing Scope 1 and 2 operations emissions by 72%by 2035 against a 2018 baseline 1,977,727 MWh renewable energy for electricity used at our facilities globally in 202211 1.33M metric tons waste diverted from landfills,incinerators and energy recovery facilities in 2022 4 Approximate total.Excludes employees of DMAX Ltd,which was founded in 1999 as a joint venture and became a wholly owned subsidiary of GM in May 2022.5 The number of authorized dealerships and other agents performing similar functions was 4,639 in General Motors North America(GMNA)and 7,318 in General Motors International(GMI)at December 31,2022.6 Includes GM Financial and Cruise.7$25 million committed in 2021,and an additional$25 million committed in 2022.8 Available on select Apple and Android devices.Service availability,features and functionality vary by vehicle,device and the plan you are enrolled in.User terms apply.9 2023 Model Year Buick,Cadillac,Chevrolet and GMC models available in the United States.Excludes commercial vehicles.10 Spend with diverse suppliers in North America is limited to the United States and Canada.Tier II spend is self-reported by suppliers.11 Includes electricity generated from landfill gas sold to the grid for Orion and excludes on-site power purchase agreements(PPAs).|112022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceAssessing Priorities To prioritize the sustainability topics we address,we engage with our stakeholders through a formal assessment process.This helps us understand the topics that are most relevant to them and to our business,and that offer the greatest opportunity for GM to create shared value.We performed our most recent Sustainability Priority Assessment in 2021,and plan to conduct similar assessments every two years,taking emerging sustainability issues,global events and other trends into consideration.In collaboration with a third party,we undertook a four-part process aligned with the GRI materiality principle for sustainability reporting.Our Four-Part Process 1 Identify sustainability topics relevant to GM and the automotive industry 2 Understand stakeholder perspectives Survey GM employees Interview internal and external stakeholders Regularly engage with our shareholders 3 Score and prioritize the topics based on quantitative and qualitative inputs 4 Develop a tiered priority matrix(see page 13)(Left)Preproduction model shown.Actual production model may vary.Model Year 2024 Chevrolet Blazer EV available Summer 2023.122022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceThemes and Perspectives The placing of priorities into three categories reflects the range of different stakeholder perspectives.The 2021 assessment identified six topics as“highest priority”and therefore urgent for the company to manage.Some topics were not deemed as urgent because stakeholders and management view them as a GM strength today.For example,we have been working on operational waste,water and energy since 2010 and have robust management systems with a track record of good performance in these areas.Other“priorities”are seen more as emerging issues that could grow in importance over time.Through both the qualitative and quantitative inputs,several stakeholder themes emerged:The safety of employees and vehicles remains a top priority and a strength for GM.A changing employee and customer landscape calls for GM to focus on a transition to an all-electric future that brings everyone along.Both internal and external stakeholders support the companys vision of a world with zero crashes,zero emissions and zero congestion.There is an imperative for standardizing the EV ecosystem,underscoring priorities such as product GHG emissions and EV infrastructure.Responsible innovation should occur across the value chain as new advanced technologies create business opportunities.Sustainability Priority MatrixTopics are listed in alphabetical order within each priority category and do not represent specific ranking within the category.PriorityHigh PriorityHighest Priority Biodiversity&Ecosystem Health Community Development Freedom of Association&Expression Operational GHG Emissions&Efficiency STEM Education Supplier Diversity Supply Chain Environmental Impacts Supply Chain Labor Conditions Sustainability-Related Compensation&Incentives Tax Payments Waste Management Water Management Autonomous Technology&Ethics Circular Economy Cybersecurity Employee Health&Well-Being Employee Recruitment,Engagement&Development Human Rights Occupational Health&Safety Responsible Use of Data Socially Responsible Innovation Business Ethics Climate Risk&Resilience Diversity,Equity&Inclusion EV Infrastructure Product GHG Emissions Vehicle Safety Supply Chain People Environment Products Governance132022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceProgress Toward Our Goals We are on track to meet our sustainability goals and are proud of the progress we are making.The below graphs show the progress we have made toward our sustainability goals to date.53%of our goal Reducing Scope 1 and 2 operations emissions by 72%by 2035 against a 2018 baseline 5%of our goal Reducing energy intensity in our operations by 35%by 2035 against a 2010 baseline We plan to achieve these goals by improving the efficiency of our operations and increasing our use of renewable power for electricity.Energy intensity consists of base energy used and variable energy(production volume).With the investments in new plants and retooling of plants for EV production,there will be several opportunities to improve the energy intensity of our operations.One challenge in achieving these goals is finding alternatives to natural gas for the paint ovens in our plants,and heating our manufacturing and nonmanufacturing facilities.Operational Energy Efficiency 55%of our goal Power 100%of our electricity for our U.S.sites from renewable sources by 2025 Although we now have the agreements in place to meet our goal to source 100%of our electricity for all our U.S.sites from renewable energy by 2025,12 we will continue to support the growth of renewable power generation through direct investments,on-site power generation,green tariffs and power purchase agreements.The Transition to Renewable Energy 11%of our goal Reducing Scope 3 GHG emissions from the use of sold products of light-duty vehicles by 51%per vehicle kilometer by 2035 against a 2018 baseline 2%of our goal Eliminating tailpipe emissions from new U.S.light-duty vehicles by 2035 We remain focused on accelerating the transition from internal combustion engine(ICE)vehicles and offering EVs across a range of price points and segments.We are on track to produce 400,000 EVs in North America by mid-2024 and have contractually secured all battery raw materials to support our goal of having 1 million units of EV capacity in North America in 2025.Our investments in EV and battery cell manufacturing will allow us to rapidly scale our EV production footprint,leading to tangible progress toward this goal.An All-Electric Future Transforming Our Manufacturing Footprint 30%of our goal Reducing water intensity by 35%by 2035 against a 2010 baseline We will achieve this goal by addressing our highest water consumption areas,which include our paint shops and cooling towers.We will design water-saving measures into new processes and retrofit existing technology during facility upgrades.Water 100%of our goal Diverting more than 90%of our total operational waste from landfills,incinerators and energy recovery facilities by 2025 The waste program covers solid,containerized and hazardous waste generated by our operations.These efforts drive innovations that provide the greatest benefit to the environment.Waste 12 Based on estimated forecasted global renewable energy sourced through currently executed agreements,subject to change depending on actual future electric usage in operations and actual future renewable generation.142022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceOur PrioritiesThe topic areas in this report reflect the priorities identified through our Sustainability Priority Assessment.The table shows the alignment between our priorities and our topic areas,and summarizes the strategies and actions that are enabling us to work toward a more sustainable world.Topic Area Innovation EnvironmentPriority Areas Autonomous Technology&Ethics Climate Risk&Resilience EV Infrastructure Biodiversity&Ecosystem Health Circular Economy Climate Risk&Resilience Operational GHG Emissions&Efficiency Product GHG Emissions Supply Chain Environmental Impacts Waste Management Water Management Strategies and Actions Leading in the commercialization of AV technology with Cruise,which became the first paid driverless ride-hailing service in a major U.S.city when it launched in San Francisco Expanding our EV portfolio with a focus on our Ultium platform technology Developing urban,last-mile delivery solutions through BrightDrop electric vans and eCarts designed to help reduce carbon emissions and urban congestion Launching GM Energy LLC in the United States,a new business unit that plans to provide connected energy management solutions for residential,commercial and EV customers Leveraging our HYDROTEC fuel cell platform to transform a variety of transportation modes into all-electric products Investing nearly$750 million in home,workplace and public charging infrastructure in the United States and Canada Collaborating with strategic organizations on biodiversity and ecosystem health Aiming to reduce the carbon footprint of sourced materials in new GM vehicles by using materials made with innovative new processes Joined the First Movers Coalition through commitments to low-carbon steel,aluminum,concrete and cement,signaling a firm market demand for a net-zero transition Working to achieve carbon neutrality in global products and operations by 2040 Planning to eliminate tailpipe emissions from new U.S.light-duty vehicles by 2035 Planning to rapidly scale our annual capacity to 1 million EVs for North America and more than 2 million EVs globally in 2025 Opened our first Ultium Cells battery cell plant in Ohio,with a second plant opening in Tennessee in 2023 and a third in Michigan in 2024 Implementing projects that design out waste,and improve reuse and recycling at a local,regional and national level Designing water-saving measures into processes and technology during facility upgrades,focusing on areas of high consumption such as paint shops and cooling towers152022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceOur Priorities Topic Area Social Priority Areas Climate Risk&Resilience Community Development Diversity,Equity&Inclusion Employee Health&Well-Being Human Rights Occupational Health&Safety STEM Education Supplier Diversity Supply Chain Labor Conditions Vehicle Safety Strategies and Actions Using our Climate Action Framework to help guide our actions as our industry and company undergo a fundamental shift in mobility Pursuing an all-electric future by training our workforce,creating new career paths,supporting diverse suppliers and helping community members develop new skills Building diversity,equity and inclusion(DEI)maturity across the business by engaging with leaders and employees through our unconscious bias workshops,Inclusive Leadership Coaching and 12 Employee Resource Groups(ERGs)Forming a new ERG,GM Generations,to break down generational stereotypes and bias through cross-generational sharing and teamwork Expanding benefits for our employees and adding benefits for domestic partners in 2022 Updating our Human Rights Policy to reflect new provisions in the International Labour Organizations(ILO)Conventions regarding safe and healthy working environments,a commitment we expect our suppliers to share,as detailed in this policy and the Supplier Code of Conduct Participating in programs such as the Responsible Business Alliance(RBA),the Responsible Minerals Initiative(RMI),the Initiative for Responsible Mining Assurance(IRMA),the Responsible Sourcing Coalition(RESCO)and the Global Platform for Sustainable Natural Rubber(GPSNR)Continuing to invite our Tier I suppliers to sign our ESG Partnership Pledge,which focuses on commitments to ESG topics Continually developing a pipeline of safety and driver assistance features,such as Rear Cross Traffic Braking and Automatic Emergency Braking,which can avoid or reduce the harm caused by striking the rear end of a vehicle ahead Expanding our EV first responder training efforts in the United States and Canada,with a focus on how to safely approach and address emergencies involving EVs GovernanceBusiness Ethics Cybersecurity Responsible Use of Data Sustainability-Related Compensation&Incentives Integrating ESG responsibilities across Board committees Fostering our ethical performance culture through our refreshed Code of Conduct,Winning with Integrity Maintaining our ethics and compliance program,overseen by the Boards Audit Committee with support from the Global Ethics and Compliance Center(GECC)Enabling employees to report concerns using the independent GM Awareline and protecting them through Speak Up!,our Non-Retaliation Policy Incorporating robust cybersecurity and privacy protection policies and procedures as critical enablers of our digital transformation Adopting EV performance measures(including EV volume,launch timing and launch quality)for our long-term incentive plan to further align our executive compensation programs with our all-electric future and placing additional focus on GMs growth and ESG performance Being the first automaker to publicly support clean energy tax credit legislation,which incentivizes domestic production and sourcing of EVs and their components162022 Sustainability ReportIntroductionStrategyInnovationEnvironmentSocialGovernanceInnovation We focus on what matters:safety,accessibility,affordability and profitability.Our innovations around electrification and mobility include electric vehicles(EVs)and charging infrastructure,self-driving ride-hailing services and low-carbon delivery vehicles.This is the future and we are leading the charge.In This Section Advancing Electrification and Autonomy 18 Putting Customers First 27 “Ive seen many changes over my two decades with GM.Ive seen the plant transform to manufacture EVs,and what our future looks like with electric truck assembly.Adapting to change,and ultimately innovation,is key to our success.”Wilfredo Romero Body Shop Team Member ever-changing.172022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceAdvancing Electrification and Autonomy Our transition to EVs and autonomous vehicles(AVs)is a critical part of our growth strategy.As we continue on this journey,we remain committed to developing the technology and infrastructure for a safer,cleaner tomorrow.Accelerating Our EV Momentum As we prepare for an all-electric future,we continue to expand our portfolio across several segments,including affordable and accessible EVs,luxury models and software-defined vehicles,with a focus on building trust and understanding among our customers.This involves:Rolling out a comprehensive portfolio of EVs Building a robust charging network Integrating autonomy,ride-hailing and electrification into a single vehicle Creating new electric delivery solutions In the next three years,GM plans to move aggressively toward EV leadership as EV adoption is expected to approach 20%of U.S.industry sales in 2025.By then,we will have EVs in one-third of vehicle segments,representing nearly 70%of the U.S.industry by volume,and we will continue to grow from there.To achieve this,we are planning to rapidly scale our annual capacity to 1 million EVs for North America and more than 2 million EVs globally in 2025.Until now,we have focused on building platforms including Ultium and Ultifi.The next phase of our strategy,which we anticipate running until 2025,will see rapid growth in volume on these platforms,which will provide the scale necessary to significantly bring down costs.In the third phase,we expect to see even more volume and margin growth,as well as contributions from our high-margin software businesses.Leveraging the Ultium Platform We have more than 100 years of manufacturing expertise and over a decade of advanced lithium-ion battery research and development behind us.Our EV strategy is built on a flexible global platform,which centers on the Ultium propulsion architecture.Crucially,Ultium is not constrained by any one chemistry or even cell form factor,which will become even more important as we grow our EV lineup.We use energy-dense,NCMA(nickel,cobalt,manganese,aluminum)pouch cells in the United States,which are currently produced by Ultium Cells Holdings LLC,an equally owned joint venture with LG Energy Solution.In China,our Ultium vehiclesusing the same packs and modulesare powered by nickel-rich and lithium iron phosphate(LFP)cells that are better suited to the needs of the local market.By managing the early stages of our supply chain through vertical integration,we are planning to accelerate the production of our technology while reducing costs.Read about our relationships with key suppliers to secure critical materials for our batteries and learn more about how we refurbish,recycle or reuse the batteries returned to us.Recovering Waste Energy From EV Batteries In 2022,we announced a patented heat pump that recovers waste energy from EV batteries to power heating and propulsion,while providing up to 10%more range.13 Ultiums energy recovery technology reduces the need to power heating and other functions from energy stored in the battery,potentially allowing more power and range than vehicles with similarly sized batteries without such capabilities.With its active heating capabilities,Ultium vehicles can also potentially charge more efficiently by warming up the batteries before charging.Hydrogen Fuel Cells:The Potential to Electrify Everything GMs hydrogen fuel cell technology,HYDROTEC,allows us to extend electrification technologies to more industries and a broader range of applications,from transportation to mobile power generation.Fuel cell-enabled mobile power generation can help users provide fast charging at remote worksites and outdoor events,and can also deliver backup electricity during disruptions.Our focus on transportation modes includes work to make medium-and heavy-duty trucks more efficient while reducing carbon emissions.We are collaborating with the U.S.Department of Energy on its SuperTruck 3 program,supported by a$26 million grant that we will match over a five-year period.(Left)Preproduction model shown.Actual production model may vary.Model Year 2024 Chevrolet Equinox EV available Fall 2023.13 Actual range will vary based on several factors including temperature,terrain,battery age,loading,use and maintenance.182022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceGoing Beyond GM Vehicles The modular and flexible nature of our Ultium and HYDROTEC technologies means they could pave the way for a range of zero-emission products beyond our own vehicles.GM is utilizing its Ultium platform to develop electrification solutions for many non-automotive applications,including airport ground support,personal all-terrain vehicles(ATVs),industrial equipment,delivery vehicles and farm equipment.GM and Wabtec Corporation are developing battery technology for Wabtec locomotives for orders from Class 1 and international railroad operators,and are exploring concepts for hydrogen fuel cell-powered locomotives.GM and Liebherr Aerospace are exploring how hydrogen fuel cells could provide auxiliary electrical power in commercial aircraft.With Lockheed Martin,GM is co-developing a Lunar Mobility Vehicle for exploring the lunar surface.We have entered a new joint development agreement with Nel Hydrogen U.S.,a subsidiary of Nel ASA,to help accelerate the industrialization of its proton exchange membrane(PEM)electrolyzer platform,to enable more cost-competitive sources of renewable hydrogen.“My job means moving the world,literally and figuratively,in the direction of zero emissions.I see a world with a bright future,based on the technologies we are commercializing.”Anil Bika Engineering&Business Operations Manager Global HYDROTEC,BEV2,Innovation&Defense Pure Watercraft GM acquired a 25%ownership stake in Pure Watercraft,a Seattle-based company that specializes in all-electric boating solutions.The collaboration advances a shared vision to expand zero-emissions mobility and reflects the holistic approach necessary for widespread EV adoption.The Pure Outboard from Pure Watercraft uses groundbreaking efficiency to benefit a boats performance while reducing environmental pollution.It also boasts much lower operating costs and maintenance than traditional marine propulsion systems.“GMs stake in Pure Watercraft represents another exciting opportunity to extend zero-emissions transportation beyond automotive applications.Building upon GMs existing efforts to strategically deploy our technology across the rail,truck and aerospace industries,our combined expertise should result in future zero-emissions marine product offerings,providing consumers with more choice.”Dan Nicholson Vice President,Strategic Technology Initiatives192022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceGM Defense With defense and government markets moving toward electric,autonomous and connected fleets,GM Defense LLCa wholly owned subsidiary of GMis helping lead this major transformation.GM Defense is leveraging GMs world-class manufacturing capabilities and global supply chain,to deliver customized solutions for global defense and government customers.The business plans to help the U.S.Department of Defense meet its climate strategy goals and use tactical electrification to enhance its capability.GM Defense has recently won two contracts that advance the U.S.militarys transition to a more electric future:Through the Jumpstart for Advanced Battery Standardization contract,the business is leveraging the Ultium platform to deliver an advanced battery pack prototype.This will help standardize battery technology across U.S.Department of Defense platforms.Under a separate contract,the business provided a commercial GMC HUMMER EV for analysis as the U.S.Army seeks to leverage battery electric vehicle(BEV)technology to reduce its reliance on fossil fuels.GM Defense has been showcasing EV capabilities in light military vehicles with its All-Electric Military Concept Vehicle since May 2021.Soldiers feedback on the concept vehicle,developed and built in only 12 weeks,will inform future electric solutions.The vehicle combines attributes of the proven Infantry Squad Vehicle with GMs commercially available battery electric technology.Understanding the need for a gradual transition to all-electric solutions for defense and government customers,the business is also developing a Tactical Series Hybrid Concept Vehicle for 2023.Beyond hybrid and all-electric solutions,GM Defense also leverages GMs experience in fuel cell technology for military applications.The business has been demonstrating how mobile and fixed fuel cell power systems can be used to charge and extend the range of EVs,supply worksites,data centers and flight lines,and provide emergency power during crises.“As a current Army Reservist,I understand the importance of delivering cutting-edge technology to support our military with first-time safety and quality in mind.I am proud to have been part of GM Defense,disrupting the future of military mobility.”Jhansi Nalla Former Assistant Program Manager,GM Defense;Engineering Group ManagerSDV Systems Engineering and Program;Veterans ERG DEI&Mentorship Lead202022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceOur Growing EV PortfolioU.S.EV Models We are building an entire portfolio of purpose-built EVs designed to serve the widest market at affordable price points,and we plan to offer nine models for sale in 2023 in popular segments across Cadillac,GMC and Chevrolet.The Chevrolet Bolt EV and Bolt EUV(electric utility vehicle)are already among the most affordable EVs on the market.14 Looking ahead,Buick and Cadillac are planning for an all-EV portfolio in North America by the end of the decade.2022 BrightDrop Zevo 600 This all-electric cargo van,built with safety,efficiency and driver comfort in mind,is designed to deliver goods and services over long ranges.2023 Cadillac LYRIQ The all-electric LYRIQ is a fully electric high-performance luxury SUV with an Environmental Protection Agency(EPA)-estimated,rear-wheel drive model range of 312 miles15 on a full charge.It will also offer Super Cruise,the first true hands-free driver assistance technology.2023 Chevrolet Bolt EV and EUV The Bolt is the most affordable EV in America.14 2023 Bolt EV and EUV have an EPA-estimated range of 259 miles15 and 247 miles15 respectively on a full charge.GMC HUMMER EV 2023 Pickup and 2024 SUV The worlds first all-electric supertrucks have fast-charging capability and are available with a 350 mile range16 for the pickup and 300 mile range16 for the SUV.2024 Chevrolet Equinox EV The Equinox EV is expected to be one of the most affordable EVs in its class and will offer up to a GM-estimated 300 miles of range on a full charge.17 2024 Chevrolet Silverado EV Chevrolets first all-electric Silverado will offer customers a GM-estimated range of up to 400 miles on a full charge,along with four-wheel steer,a multi-flex midgate and Super Cruise with trailering driver assistance technology on the Silverado EV First Edition RST.18 2024 Chevrolet Blazer EV The Blazer EV has the capability of an SUV with the standout styling of a sports car and will be available as an all-electric SUV in summer 2023.2024 Cadillac CELESTIQ The CELESTIQ is an ultra-luxury,custom commissioned EV that will be personalized to every owner and hand built in limited volume.This luxury sedan offers all-wheel drive,four-wheel steering and a Smart Glass roof that allows each occupant to set their own experience.The vehicles interior also incorporates socially conscious contemporary materials.2024 GMC Sierra EV Denali Edition 1 With fast-charging capability and a GM-estimated range of up to 400 miles19 on a full charge,the all-electric Sierra EV Denali Edition 1 electric truck comes with Super Cruise driver assistance technology.Available early 2024.14 Based on comparison of starting-at manufacturers suggested retail price(MSRP)of the 2023 Chevrolet Bolt EV 1LT and EUV LT with that of competing EVs.15 EPA estimated.Actual range will vary based on several factors,including temperature,terrain,battery age,loading,use and maintenance.16 GM-estimated.Actual range will vary based on several factors,including temperature,terrain,battery age,loading,use and maintenance.For the GMC Hummer EV 2023 Pickup,available on EV3X based on a full charge.For the GMC EV 2024 SUV,standard on Edition 1(not equipped with Extreme Off-Road Package),EV3X,and EV2x,and available on EV2 based on a full charge.17 GM-estimated range is based on current capability of analytical projection consistent with SAE J1634 revision 2017-MCT.GM-estimated range is based on a vehicle with a full charge.Actual range will vary based on several factors,including temperature,terrain,battery age,loading,use and maintenance.Performance targets,estimates and capability specifications based on computer-aided analysis and simulation using virtual engineering tools.EPA estimates not yet available.18 First-edition Silverado EV RST GM-estimated range on a full charge based on current capability of analytical projection consistent with SAE J1634 revision 2017MCT.Actual range may vary based on several factors,including temperature,terrain,battery age,loading,use and maintenance.EPA estimates not yet available.19 GM-estimated range on a full charge based on current capability of analytical projection consistent with SAE J1634 revision 2017MCT.Actual range may vary based on several factors,including temperature,terrain,battery age,loading,use and maintenance.212022 Sustainability ReportThe CELESTIQ is an ultra-luxury,custom commissioned EV that will be personalized to every owner and hand built in limited volume.This luxury sedan offers all-wheel drive,four-wheel steering and a Smart Glass roof that allows each occupant to set their own experience.The vehicles interior also incorporates socially conscious contemporary materials.on a full charge,the all-electric Sierra EV Denali Edition 1 electric truck comes with Super Cruise driver assistance technology.Available early 2024.IntroductionStrategyInnovationEnvironmentSocialGovernanceChina EV Models Leveraging our strong global expertise and growing local capabilities,we will provide a diverse EV portfolio in China20,21 to support a zero-emissions future.Beginning with the Cadillac LYRIQ,more than 15 Ultium-based models across Cadillac,Chevrolet and Buick are planned for rollout in China by 2025.Meanwhile,SAIC-GM-Wulings Global Small Electric Vehicle(GSEV)platform has become complementary to Ultium,enabling GM to build an EV for a range of price points and lifestyles in the worlds most dynamic vehicle market.Chevrolet Menlo The sporty-looking Menlo sedan is Chevrolets first all-electric vehicle in China.The 2022 Menlo EV has an extended NEDC22-estimated range of up to 518 kilometers on a single charge.Buick VELITE 6 EV Tailored for mainstream EV buyers,the VELITE 6 has a range of up to 518 kilometers on a full charge under China Light-Duty Vehicle Test Cycle(CLTC)conditions and delivers a smooth and dynamic driving experience with great energy efficiency.Baojun KiWi EV The KiWi EV is SAIC-GM-Wulings one-of-a-kind,all-electric mini under its Baojun brand.It provides two EV range options,with a maximum of 305 kilometers under CLTC conditions.The 2023 KiWi comes standard with DC fast charging,two 10.25-inch screens and supports over-the-air(OTA)updates.Wuling Hong Guang MINIEV Family The Wuling Hong Guang MINIEV family includes the special variants of Macaron,Gameboy and Cabrio,Chinas first convertible EV.Different EV range options are offered between 120 and 300 kilometers.As of January 2023,it has been the best-selling EV in China for 28 consecutive months since its launch.2023 Wuling Bin Guo The Bin Guo EV is SAIC-GM-Wulings first five-door,all-electric hatchback.It will be available in the first quarter of 2023,with EV range options of 203 kilometers and 333 kilometers under CLTC conditions.2023 Buick Electra E5 The large five-seat electric SUV,available in 2023,is the first Buick EV developed on the Ultium platform.It features Buicks all-new EV design,along with the latest Virtual Cockpit System and Super Cruise driver assistance technology that is designed to provide a safe,reliable and intelligent EV experience.2023 Cadillac LYRIQ The available LYRIQ all-wheel-drive model offers an all-new sports exterior package and an additional drive unit for a distinct persona and enhanced driving dynamics.With GMs state-of-the-art Ultium platform at its core,it delivers an EV range of over 600 kilometers under CLTC conditions.2023 Baojun Yep SAIC-GM-Wulings first all-electric SUV,the Yep,will be available in the first half of 2023.It offers an electric driving range of 303 km under CLTC conditions.The rear-wheel-drive model will bring a new choice of travel that is more personal and more fun.222022 Sustainability Report20 Vehicle pictures shown are simulated models.Actual vehicle specifications and features may vary on production models and are subject to further explanation by the manufacturers of respective EV models.21 The respective EV range and charging time of China EV models quoted above is based on publicly available information.The manufacturer of respective China EV models retains the right to provide further explanation.22 New European Driving Cycle.The Wuling Hong Guang MINIEV family includes the special variants of Macaron,Gameboy and Cabrio,Chinas first convertible EV.Different EV range options are offered between 120 and 300 kilometers.As of January 2023,it has been the best-selling EV in China for 28 consecutive months since its launch.IntroductionStrategyInnovationEnvironmentSocialGovernanceExpanding Our Energy Ecosystem At GM,we are committed to making the transition to EVs easy and convenient.From home and public charging to fleet management,we want every element of the ownership experience to be integrated,seamlessly.We are helping accelerate EV adoption through customer education and engagement,investing in smart charging products,helping create a comprehensive charging network and pioneering and developing innovative energy solutions to empower every person.GM Energy In 2022,we introduced GM Energy LLC in the United States,a new business unit that will provide a holistic ecosystem of energy management solutions for residential,commercial and EV customers.GM Energy expands our business opportunities beyond our vehicle portfolio.As part of this new energy ecosystem,we are introducing Ultium Home and Ultium Commercial,which,in combination with the existing Ultium Charge 360 holistic charging approach,will provide customers with access to a series of energy management solutions designed for homes,businesses and communities.Using EVs as Mobile Power Sources We believe the scale of GM Energys solutions will help us address challenges with grid infrastructure,energy storage and energy management through resilient and accessible energy solutions for all customers and the grid.We are working with several companies to deliver energy solutions to customers,including a vehicle-to-home(V2H)pilot project with Pacific Gas and Electric(PG&E).This aims to evaluate the effectiveness and scalability of using EVs as backup power sources for homes necessities in California during short-term power outages.We plan to demonstrate that innovative bidirectional charging technology and energy management software will allow our bidirectional-enabled vehicles to be used as reliable mobile sources of energy at times of disrupted supply.Simulated charger shown,subject to change.Show truck shown.Actual production will vary.Model year 2024 Silverado EV available Fall 2023.Ultium Charge 360 In line with our commitment to a zero-emissions future,we are working to create the largest integrated charging ecosystem.Ultium Charge 360 is our holistic approach to charging in the United States and Canada that provides broad charging access and simplifies the charging experience for EV drivers at home,in the community or on the highway.Ultium Charge 360 integrates networks,products and services to help bring a unified charging experience to GM EV customers.This involves:Working with charge station operators,electric utilities and government agencies to increase access to home,workplace,public and fleet charging points Updating the GM vehicle digital experience to help owners find charging stations,initiate charging and make payments Offering EV owners tailored charging products and home charging installation services Our EV Growth Operations(EVGRO)Team leads GMs efforts to drive the consumer adoption of EVs,combining startup agility with the broad strength of our wider company,as well as an array of external collaborations.EVGRO seeks to leverage cross-functional expertise,minimize complexity and develop a range of projects and solutions designed to address consumer needs and accelerate EV adoption.232022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceBuilding Momentum Charging Infrastructure In addition to expanding our portfolio of intelligent charging products and developing“turnkey”installation services for retail and commercial customers,we are investing nearly$750 million in home,workplace and public charging infrastructure in the United States and Canada.Home Charging We are providing GM EV customers with charging solutions that fit their lifestyles.Our home charging solutions in the United States include:Covered standard 240 volt outlet installation or$500 EVgo public charging credits for Chevrolet Bolt EV/EUV owners The choice between a$1,500 credit toward EV concierge installation or two years public charging with EVgo for Cadillac LYRIQ owners A referral to self-pay EV Concierge service for GMC Hummer EV customers and a complimentary Level 2 charger for GMC HUMMER EV Edition 1 customers23 Public Charging As of March 2023,we have integration relationships with 12 EV charging networks,giving GM EV drivers access to thousands of charging plugs throughout the United States and Canada.GM and Pilot Company are building a coast-to-coast fast-charging network in collaboration with EVgo.The program is targeting the installation of fast chargers at approximately 50-mile intervals across the United States,enabling long-distance corridor charging.This network of 2,000 charging stations will be open to all EV drivers at up to 500 Pilot Flying J travel centers.We are also working with EVgo to install 3,250 DC fast-charging stalls in more than 50 U.S.metropolitan markets.GMs Dealer Community Charging program,which was launched in December 2022,is expected to add up to 40,000 public Level 2 charging stations in local communities across the United States and Canada.Through the program,GM and its dealers are working together to expand charging access in communities,including underserved rural and urban areas where EV charging is often limited or nonexistent.These charging stations will be available to all EV drivers,not just GM EV customers.The first community charging stations for Chevrolet were installed in Wisconsin and Michigan in 2022,while Cadillac and Buick dealers began enrolling in early 2023.More than 1,000 GM dealers in the United States and Canada have already joined the program.Mobile Apps Through our vehicle brand apps,Ultium Charge 360 enables access to more than 110,000 charging plugs in the United States and Canada.24 GM EV drivers can find nearby charging stations,see real-time charger availability,plan routes,start charging sessions and more.Other possible features such as charger reservations,payments and discounts are under development.To make EV charging as simple,efficient and accessible as possible,we are adding a new Plug and Charge service that comes with the vehicle at no cost.25 Education and Engagement Our strategy to accelerate the transition to an all-electric future involves demystifying EV ownership by addressing the barriers to adoption and creating a network of highly trained EV experts at our dealerships.The initiatives and tools we have in place to support education and engagement26 include:EV Live,our interactive and immersive experience Explore EV,which offers our vehicle brand app users additional information about the benefits of EV ownership A new Electric Vehicle Experience(EVX)program that designates EV specialists for Chevrolet and GMC dealers,while Cadillac dealers promote learning and training through their own dedicated dealer program,Pinnacle A dedicated curriculum of EV courses,teaching dealership personnel how to navigate customers through the EV ownership experience A new gamified micro-learning app A collection of dedicated EV literature to support retail readiness EV Showroom,a purpose-built online tool for dealers to guide customer conversations and amplify EV learning,covering topics such as fuel savings and charging calculators An“EV Ready”dealership,including the training,tools,requirements and special equipment to support the sale and service of EVs Transparency in GMs advertised pricing to improve the shopping experience 23 See brand and model websites for current offers and additional information.Terms and conditions apply.24 Available on select Apple and Android devices.Service availability,features and functionality vary by vehicle,device and the plan you are enrolled in.User terms apply.25 GM EV drivers with an EVgo account,active OnStar connected services and the GM brand app for their vehicle must perform a one-time activation of Plug and Charge within the app.The customers payment information within the app will be linked upon activation,so that the customer simply needs to plug in to pay for charging.An OnStar subscription is not required.Plug and Charge will eventually extend across all compatible DC fast-charging stations on the Ultium Charge 360 network.26 Availability of these initiatives and tools may vary across the regions/countries that GM operates in.242022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceEV Live:Optimizing the Ownership Experience As part of our mission to make EV ownership accessible to all,we launched EV Live in the United States.This immersive,virtual experience allows anyoneGM employees,dealers,retail,fleet and commercial customers,utilities and third-party collaboratorsto connect with an EV Specialist from any internet-connected mobile or desktop device.These specialists will answer EV-related questions in real time and give virtual tours of the EV Live studio.This houses real vehicles and dynamic displays of home charging,public charging,battery technology,sustainability,commercial applications and apps.EV Specialists can also guide participants through the home charging installation process and refer them to certified installers.Super Cruise and Ultra Cruise:Advanced Driver Assistance Systems At GM,we are focused on safely deploying our advanced driver assistance systems(ADAS),like Super Cruise27 and soon,Ultra Cruise.28 These hands-free technologies are an important step in our journey toward our vision of a world with zero crashes and zero congestion.Super Cruise is the industrys first true hands-free advanced driver assistance technology.In 2022,we announced a doubling of the Super Cruise road network to more than 400,000 miles of compatible highways in the United States and Canada on select vehicles.Ultra Cruise will offer a destination-to-destination hands-free driving experience,designed to enable hands-free driving in 95%of all driving scenarios.At the end of 2022,GM customers had driven more than 50 million miles with Super Cruise engaged and the feature will be available on 22 GM vehicles globally by the end of 2023.Ultra Cruise will later be available on certain premium entries.Together,these technologies will bring ADAS to more customers on more vehicles,in more regions at more price points,playing an important role in GMs comprehensive path to autonomous mobility.“As a GM designer responsible for Super Cruise and Ultra Cruise radars,I get to create solutions that are changing the way we move and think about transportation.I am excited about the future and being part of it.”Jay Jones Senior Engineering Designer Cruise:Autonomous Vehicle Commercialization and Rapid Scaling With Cruise,our majority-owned autonomous vehicle(AV)technology startup,we are unlocking the full potential of self-driving technology.Cruise has been developing automated driving system(ADS)technology with safety front of mind since the company was founded in 2013.After its 2016 acquisition by GM,Cruise has continued developing and commercializing its self-driving ride hail and associated delivery services with zero tailpipe emissions.Over the past four years,Cruise has been operating a fleet of fully integrated AVs in the complex driving environment of San Francisco.Initially,they all operated with a human backup driver before advancing to fully driverless operations with passengers onboard.Cruise became the first company to operate a commercial,driverless ride hail service in a major U.S.city in June 2022,and has since completed thousands of paid driverless rides.Cruise has continued to expand the services area of coverage and hours of operation in San Francisco and in late 2022 also launched in Austin,Texas,and Phoenix,Arizona.Cruise is also expanding its collaboration with Walmart by building upon its initial grocery delivery pilot first launched in Scottsdale,Arizona.Local Walmart customers can now opt-in to autonomous deliveries and track their orders through a Cruise web app.29 This pilot completed more than 22,000 autonomous deliveries through the end of 2022,and is now being expanded to eight stores in the Phoenix area.27 Always pay attention while driving and when using Super Cruise.Do not use a hand-held device.Requires active Super Cruise plan or trial.Terms apply.Automatic Lane Change and Lane Change on Demand are not available while trailering.28 Ultra Cruise advanced driver assistance technology functionality is currently in preproduction and subject to change.Capability will evolve over time by way of over-the-air updates once functionality becomes available.More details about Ultra Cruise will be available closer to launch.Terms and conditions will apply.29 Available on select Apple devices.Service availability,features and functionality vary by vehicle,device and the plan you are enrolled in.User terms apply.252022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceIn addition to deliveries with Walmart,Cruise has delivered more than 2.3 million meals to San Francisco residents in need as part of its Cruise for Good social impact program.Cruise began this work at the height of the pandemic,in response to the needs of local partners at San Francisco-Marin Food Bank and SF New Deal.It has pledged to dedicate at least 1%of its all-electric fleet to help meet local community needs,everywhere it operates.Cruise Origin Encouraging passengers to ride together in shared electric vehicles has the potential to reduce urban congestion and pollution,serve more people and reduce fares.Thats why GM has developed the Cruise Origin in a collaboration with Cruise and Honda.This self-driving vehicle operates without a steering wheel,brake or accelerator pedals,allowing more space for passengers,luggage or goods.With a focus on accessibility and sustainability,some of the benefits of Cruises fleet and operations include being all-electric and designed to not only reduce congestion but also increase access to transportation for those facing barriers to mobility.BrightDrop:Decarbonizing Last-Mile Deliveries With the rapid growth in e-commerce putting more delivery vehicles on the road,logistics companies are looking for ways to meet consumer demand while reducing carbon emissions and congestion.At GM,electrifying our last-mile delivery fleet offerings is an important part of our carbon neutral ambition.Our solution is BrightDrop,a wholly owned subsidiary currently operating in the United States and Canada that primarily serves two markets:last-mile package deliveries and online grocery deliveries.Both grew quickly during the pandemic and are expected to maintain double-digit growth rates throughout the decade.BrightDrop aims to help businesses lower costs,maximize productivity,improve employee safety and increase freight security with a portfolio of electric delivery vans and smart,purpose-built electrically propelled carts,as well as the BrightDrop Core software platform.In 2021,BrightDrop launched the BrightDrop Zevo 600 all-electric light commercial vehicle(eLCV)and the BrightDrop Trace eCart,which helps couriers take goods the last step to the customer.The smaller BrightDrop Zevo 400 was also announced.In 2022,we launched the BrightDrop Trace Grocery,an eCart designed to help streamline order fulfillment and pickup for online grocery purchases.The BrightDrop Trace Grocery eCart is expected to be fully available in 2024.Our CAMI Assembly plant in Ontario,Canada,commenced full production of the BrightDrop Zevo 600 in 2023,and will scale up total Zevo production to a projected 50,000 units a year by 2025.With the speed to market and the levels of customer demand(see right),BrightDrop is on track to generate approximately$1 billion in revenue in 2023.“We are developing relationships with those that can help us expand our ecosystem of last-mile delivery solutions.For example,one such collaboration with Nauto offers an event-based safety system enabling better fleet management for our customers.”Robert Tiderington Head of Strategic Partnerships,BrightDrop The BrightDrop Zevo 600 received an honorable mention in Fast Companys 2022 Innovation by Design Awards Driving the BrightDrop Zevo 600,BrightDrops Stephen Marlin set the Guinness World Record for the longest distance traveled by an electric van on a single charge(nearly 260 miles from Manhattan to Washington D.C.)in April 2022 BrightDrop Customers FedEx Express Reserved priority production for at least 2,000 electric delivery vans over the next few years,adding to an initial reservation of 500 BrightDrop EVs announced in 2021 DHL Express Canada Plans to add BrightDrop Zevo electric delivery vans to its fleet in 2023,and is currently piloting BrightDrop Trace eCarts and software platform Hertz Plans to order up to 175,000 EVs,including BrightDrop vehicles,over the next five years Merchants Fleet Reserved 18,000 units(BrightDrop Zevo 600 and BrightDrop Zevo 400)Walmart Reserved 5,000(BrightDrop Zevo 600 and BrightDrop Zevo 400)electric delivery vans to support the retail giants growing last-mile delivery network and goal of operating a zero-emissions logistics fleet by 2040 Kroger Scheduled to add the BrightDrop Trace Grocery to its e-commerce operations262022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernancePutting Customers First Customers are at the center of GMs growth strategy.We deliver on that by producing high-quality,easy-to-use products,while offering an excellent customer experience.A Relentless Focus on Customer Experience The people who drive our vehicles are an extension of the GM family.Every day,we aim to understand their expectations and retain their trust by delivering positive experiences as well as vehicles,features and services they cannot live without.Through every interaction,we try to simplify the customer journey,making their lives easier and more enjoyable.We are committed to designing new and innovative solutions,including software-enabled services and features that allow us to continue enhancing the total vehicle ownership experience over time.By delivering excellence in every interaction,even in everyday moments,we can keep customers returning to GM.Listening to Our Customers One of the best ways to deliver exceptional experiences is to listen to customers.GMs Voice of Customer platform pulls in millions of comments from across all our communication channels,including phone calls,emails,social media posts and dealership surveys.Once aggregated and anonymized,we use these insights to proactively support customers,focus our efforts where we can have the biggest impact and inform the development of future products,features and services.Mobile App Meeting connected vehicle owners wherever they are on their digital journey is key to delivering an exceptional GM ownership experience.In fact,GM owners who use our vehicle brand mobile apps show a significantly higher recommendation rate than owners who do not.As we continue to adapt to customer expectations and preferences,select OnStar safety and digital services,including remote access enabled in the mobile app,will now be offered on most vehicles in the United States and Canada for three years,with the initial vehicle purchase.We are working to broaden our standard connected features to other markets.Additionally,we continue to listen to the needs of our customers and have redesigned the in-app“help”experience.This new functionality will include live chat,links to web support content and quick-start guides,which will make learning about and owning a new GM vehicle even easier.Recently,the GM mobile app team was recognized by Michigans Association of Customer Experience Professionals for“Customer Feedback&Continuous Improvement”during the Industry Best Practices Award program.Building for the Future The future is digital and we are reimagining experiences that can support this future.Our strategy is to create experiences that are both Digitally Human and Deliberately Human:digital experiences that are as easy and intuitive as interacting with a human,while preserving and enhancing interactions with people(dealers or advisors)in moments that have the most impact.We are determined to lead the future of the automotive customer experience as we create a first-class digital experience and continue to drive innovation to make the customer journey more convenient,simple,seamless and informative.Quality Assurance Our quality policies and culture of continuous improvement inform our customers product experience.GMs Quality Policy states that:“GM will be Quality Leaders in every market and every segment in which we compete through effective execution of all applicable requirements and through continual improvement.”Globally,we have achieved,and sustained,certification to the International Organization for Standardization(ISO)9001:2015 standard at all of our manufacturing facilities where required by region or country.As of the end of 2022,52 operations had completed certification.We intend to maintain ISO compliance by adapting our processes to meet any modifications to the standard.We have nine component plants that are certified to the International Automotive Task Force(IATF)16949 standards.Our Global Manufacturing System incorporates all IATF requirements,guiding the quality aspects of our business and,in some cases,driving more rigorous standards than external ones.As a result,GM brands and products regularly perform well in the leading product quality,reliability,vehicle safety and consumer satisfaction studies.Read more about Vehicle Safety and Quality.272022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceExternal Recognition We measure the quality and dependability of our vehicles,as well as customer satisfaction with our vehicles,sales and dealership service,through the following studies run by J.D.Power,a global leader in industry intelligence on customer interactions with brands and products for more than 50 years.Initial Quality For 36 years,the J.D.Power U.S.Initial Quality Study(IQS)has measured problems that customers have experienced with their new vehicles within the first three months.In 2022,ongoing disruptions caused by the pandemicmicrochip shortages and other supply chain issues,high vehicle prices and workplace dislocationmeant that problems across the industry reached a record high.Despite the challenges facing the industry,GM was the highest-ranked manufacturer in initial quality for the second time in three years.We received nine model awards,with the Chevrolet Corvette as the highest-ranked model in the industry,while Buick was ranked the leading overall brand.Additionally,our San Luis Potos facility in Mexico,which produces the Chevrolet Equinox and GMC Terrain,received the Platinum Plant Quality Award.GMs Ingersoll(CAMI)plant in Canada,which produced the Chevrolet Equinox,and Yantai Dongyue 2 plant in China,which produces the Buick Envision,both received Bronze Plant awards for their region.Vehicle Satisfaction The J.D.Power 2022 U.S.Automotive Performance,Execution and Layout(APEAL)Study examines how satisfied customers are with their new vehicles.In the latest study,Cadillac ranked third among premium brands and GMC ranked third among mass-market brands.Dependability In the 2022 U.S.Vehicle Dependability Study(VDS),which measures vehicle dependability after three years of ownership,Buick ranked#2 in the industry.GM secured five segment winners:Buick Encore(Small SUV),Buick Envision(Compact SUV),Chevrolet Impala(Large Car),Chevrolet Silverado HD(Large Heavy-Duty Pickup)and Chevrolet Suburban(Large SUV).Sales Satisfaction Buick was the highest-ranked mass-market brand in the 2022 U.S.Sales Satisfaction Index(SSI)Study,which measures customer satisfaction with the purchase experience among new-vehicle buyers and rejecters.Customer Service The J.D.Power Customer Service Index(CSI)Study measures satisfaction with dealer service.Cadillac ranked second among luxury brands and Buick ranked second among mass-market brands in the 2022 U.S.study.J.D.Power Studies:U.S.Segment Award Winners 2022 Initial Quality Study(IQS)Buick Encore GX(Small SUV)Cadillac Escalade(Large Premium SUV)Cadillac XT6(Upper Midsize Premium SUV)Chevrolet Corvette(Premium Sporty Car)Chevrolet Equinox(Compact SUV)Chevrolet Malibu(Midsize Car)Chevrolet Silverado(Large Light-Duty Pickup)Chevrolet Silverado HD(Large Heavy-Duty Pickup)Chevrolet Tahoe(Large SUV)Vehicle Dependability Study(VDS)Buick Encore(Small SUV)Buick Envision(Compact SUV)Chevrolet Impala(Large Car)Chevrolet Silverado HD(Large Heavy-Duty Pickup)Chevrolet Suburban(Large SUV)282022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceEnvironment To help create a more sustainable world,we aim to achieve carbon neutrality in global products and operations by 2040.We are working toward greater efficiency in our products and operations through our production processes and the resources we use.In This Section Emissions Reduction Plan 30 Our Energy Strategy 31 Designing for the Environment 41 “We cannot do it all alone;collaboration is key.So we continue to work closely with othersfrom governments and policymakers to partners,suppliers and customersas we take each step toward achieving our all-electric vision and our carbon neutral goal.”Kathi Walker Director,Global Sustainability Strategies everywhere.292022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceEmissions Reduction Plan Our goal is to achieve carbon neutrality in global products and operations by 2040.Where We Are Now Our increased sourcing of renewable energy,our growing electric vehicle(EV)portfolio and our Ultium battery all contributed to an overall reduction in our total greenhouse gas(GHG)emissions compared to our 2018 baseline.Our Global 2022 Footprint Scope 3Use of Sold Products Scope 3Purchased Goods and Services Scope 3Other Scopes 1 and 2 See more detailed performance in our Data Center.Our Targets To help us achieve carbon neutrality in global products and operations by 2040,we are committed to achieving the following milestones and Science Based Targets initiative(SBTi)-approved targets.Scope 3Use of Sold Products By 2025:Plan to rapidly scale our annual capacity to 1 million EVs for North America and more than 2 million EVs globally in 2025 By 2035:Reduce Scope 3 GHG emissions from the use of sold products of light-duty vehicles by 51%per vehicle kilometer by 2035 against a 2018 baseline Eliminate tailpipe emissions from new U.S.light-duty vehicles by 2035 Scopes 1&2 By 2025:Source 100%renewable energy at our U.S.sites By 2035:Reduce energy intensity in our operations by 35%by 2035 against a 2010 baseline Source 100%renewable energy globally Reduce Scope 1 and 2 operations emissions by 72%by 2035 against a 2018 baseline How We Will Get There Scope 3 emissions make up the vast majority of our GHG emissions,and are where we focus many of our initiatives and programs.Our Initiatives and Programs Scope 3Use of Sold Products Anticipating total annual capital spending and investments in battery cell manufacturing joint ventures to be$11$13 billion through 2025 Operating Factory ZERO,GMs first fully dedicated EV assembly plant,in Detroit-Hamtramck Investing nearly$750 million in home,workplace and public charging infrastructure in the United States and Canada Decarbonizing through hydrogen fuel cell technology Engaging in climate partnerships:Breakthrough Energy Catalyst:publicprivate partnership working to commercialize green hydrogen,long-term energy storage and sustainable aviation fuel TPG Rise Climate:helping the research community,investors and climate innovation accelerators develop clean energy,decarbonized transport and agricultural technologies Scope 3Purchased Goods and Services Inviting Tier I suppliers to sign the GM ESG Partnership Pledge and enhance emissions tracking Encouraging global Tier I suppliers to set carbon reduction goals using the GM Supplier Sustainability Goals Framework Monitoring participating global Tier I and Tier II suppliers sustainability performance through CDP and EcoVadis Contractually securing all battery raw materials to support our goal of having 1 million units of EV capacity in North America in 2025 Joining the First Movers Coalition through commitments to low-carbon steel,aluminum,concrete and cement,signaling a firm market demand for a net-zero transition Scopes 1&2 Reducing energy consumption by improving energy efficiency Successfully sourcing 100%of our electricity for our U.S.sites from renewable sources by 202530 Increasing our use of renewable power for electricity globally 30 Based on estimated forecasted global renewable energy sourced through currently executed agreements,subject to change depending on actual future electric usage in operations and actual future renewable generation.30 18u%6%1 22 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceOur Energy Strategy Our strategy to manage energy in our operations and reduce our Scope 1 and 2 emissions involves a combination of improved energy efficiency,using more renewable power,mitigating against intermittent supply and advocacy work.Improving Energy Efficiency Reducing overall energy use by lowering intensity levels and operational loads at our facilities Sourcing Renewable Energy Supporting the growth of renewable power through direct investments,on-site generation,green tariffs and power purchase agreements Addressing Intermittency Mitigating against gaps in supplies of renewable energy for electricity transmission Policy Advocacy Advocating for policies that support a resilient,carbon-free energy system,drive down renewable energy costs and increase availability of renewable energy assets“We continue to optimize our energy procurement process by evaluating renewable energy technologies.We also use tools that address intermittency and actively engage in policy efforts to ensure sustainable,reliable,cost-effective utility sourcing for our operations.”Rebecca Tody Energy,Procurement&Reliability Manager,Energy Strategy312022 Sustainability Report IntroductionStrategyInnovationEnvironmentSocialGovernanceOperational Energy Efficiency Our energy conservation and renewable energy program,guided by SBTi-approved targets,will help us achieve our long-term goal of carbon neutral operations and products by 2040.As part of our strategy to reduce Scope 1 and 2 GHG emissions,we are working to lower energy consumption by improving efficiency.We continue to work on improving energy efficiency at our facilities through a global energy management system(EMS).Driven by a determination to achieve our science-based targets,we are focusing our efforts on the areas of highest use,such as reducing electricity consumption and using less fuel from nonrenewable sources.In 2022,our energy intensity increased for a second consecutive year to 2.27 MWh per vehicle(see chart on page 33).We continue to invest in energy-efficiency projects around the world as we look to reduce energy consumption and drive energy efficiency.As global production volume stabilizes,we expect to see improved energy intensity that aligns with our long-term goals.Energy-Saving Programs and Initiatives Our approach to improve the sustainability of our operations includes aligning our business strategy with aggressive environmental goals and energy reduction targets,collecting accurate data and publicly reporting progress against those targets.We continue to use an energy metering tool to monitor and reduce the use of our heating,ventilation and air conditioning equipment.U.S.Department of Energy(DOE)To assess and improve our EMS,we have implemented the U.S.DOE 50001 Ready program across our business.50001 is a voluntary global standard for energy management systems in industrial,commercial and institutional facilities.As of December 2022,we had 28 sites in the United States recognized by the program,up from 27 in 2021.While not officially recognized by the U.S.DOE program,we have 16 other sites that have met the same criteria:three sites in Canada,four in Mexico,eight in South America and one in Korea.We are also participating in the DOE Better Buildings pilot program,exploring ways to achieve low-or zero-carbon operations.Awards and Recognition Received GM has received the ENERGY STAR Sustained Excellence Award for the past 11 years Won GM won the Sustainability Leadership Award from the Business Intelligence Group in August 2022 Won GM Chinas energy treasure hunt program won the Carbon Neutral Outstanding Practice Award at the International Green Zero-Carbon Festival in Beijing in August 2022 Awarded In 2022,GMs Flint Truck Assembly plant was awarded the Michigan Battle of the Buildings title in the Manufacturing/Industrial category U.S.ENERGY STAR Buildings certified by ENERGY STAR use less energy,save money and generate fewer GHG emissions.To be certified as an ENERGY STAR building,it must meet strict energy performance standards set by the Environmental Protection Agency(EPA)and outperform at least 75%of similar buildings nationwide.In 2022,we received four new certifications:Fort Wayne Assembly,Flint Assembly,Milford Enterprise Data Center and Arizona IT Innovation Center.In 2022,we met the EPA ENERGY STAR Challenge for Industry at seven sites by reducing energy intensity by an average of about 18%.To meet the EPA Challenge,industrial sites must reduce their source energy intensity by at least 10%within a five-year period.In total,71 GM manufacturing sites have met the EPA Challenge,with many sites achieving the goal multiple times for a total of 139 recognitions.In 2022,we conducted 13 on-site ENERGY STAR treasure hunts,through which we found 194 energy-saving opportunities that could save the company approximately$13 million.Read more about our energy-saving initiatives around the world in our Regional Reports.Goal Reduce energy intensity in our operations by 35%by 2035 against a 2010 baseline31 31 Energy intensity is a global calculation.It is a measure of global energy usage in relation to global assembly production.Regional variations in volumes can impact global intensity.322022 Sustainability Report 2010(Baseline)20192020202120222035(Goal)2.312.132.062.252.271.52018(Baseline)20192020202120222025(Interim Goal)2035(Goal)3#%0U3100%0IntroductionStrategyInnovationEnvironmentSocialGovernanceOur Global Energy and Emissions Progress We continue to invest in energy-
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OnwardsSustainability report 20222Bosch sustainability report 2022Contents 03 Contents 04 Foreword by the board of management 06 Company 08 Bosch Group profjle 10 Sustainability strategy and culture 19 Corporate governance and compliance 26 Products 28 Management approach 34 Sustainable products and services 42 Product responsibility 48 Supply chain 50 Management approach 52 Social and environmental requirements for suppliers 56 Supplier assessments 59 Further developing and strengthening cooperation 60 Environment 62 Management approach 64 Climate action and energy 77 Water and wastewater 80 Waste 82 Associates 84 Management approach 87 Employer of choice 94 Leadership and collaboration 97 Learning and development 102 Occupational health and safety 108 Society 110 Management approach 111 Corporate philanthropy 112 Corporate citizenship 115 Dialogue with stakeholders and political lobbying 120 Annexes 120 GRI content index 127 Independent auditors assurance report 130 About this report 131 Publication details3ContentsForeword by the board of management Dear readers,Anyone who has taken a glance at the news headlines knows that 2022 was another immensely challenging year on many fronts.Some would argue that climate action should take a back seat to many other acute prob-lems the world is facing,but from my perspective that would be a grave mistake.Not only because the climate crisis cant wait to be tackled,but because I believe the solutions to our most urgent problems are interlinked.Energy shortages are behind the current unsustainable rise in infmation:the best thing we can do to counter both is push forward with the transformation of our energy systems.By investing in and developing renewable energy sources,we can not only secure an affordable energy supply,we can also bring down the cost of living for people while making great strides toward putting our societies on a carbon-neutral footing.At Bosch,we pursued sustainability long before it made it to the top of the social agenda.As a result,in 2020 we became the fjrst global industrial enterprise to make our own operations carbon neutral.In 2022,we conducted the second installment of the Bosch Tech Compass,a global survey designed to gauge consumer attitudes to technology.The results were a clear affjrmation of con-sumer support for sustainable business practices.For example,a full 82 percent of respondents believe that the more a company commits to sustainable technolo-gies,the more economically successful it will be in the future.Whats more,83 percent believe that technology holds the key to combating climate change.At Bosch,we are investing heavily in sustainable technologies.When it comes to sustainable mobility,were continuing to strengthen our portfolio of solutions for electrifjed driving,while at the same time pushing forward with hydrogen technologies.Our mobile fuel-cell power trains,for example,started production in late 2022;we are manufacturing the stacks the core element of the hydrogen electrolysis system ourselves and setting up production facilities in the vicinity of our customers around the globe.4Bosch sustainability report 2022The transformation of home energy systems is also a top priority for us after all,a full one-third of all carbon emissions come from buildings.Our primary focus here is on heat-pump technology,which is set to play a key role in this transformation in the years ahead.Hydrogen also holds great promise in home heating systems,and we already produce hydrogen-ready boilers for residen-tial use.We fjrmly believe that a mix of technologies is the only way forward,since to succeed the transforma-tion must remain affordable.At Bosch we are convinced that sustainability must be a non-negotiable part of doing business.And it is our task to fjnd technology-based solutions to our current ecological challenges.The result will be a win-win for our planet and for companies like Bosch.Thank you for your interest and take care.Yours sincerely,Dr.Stefan HartungChairman of the board of management5Foreword by the board of managementCompany6Bosch sustainability report 2022Our ambition:By acting in an economically,environmentally,and socially responsible manner,we want to improve peoples quality of life and safeguard the livelihoods of present and future generations.Speak up!Global awareness campaign launched on the Bosch reporting system and the protection of whistleblowers.Once again best score Scored an“A”in CDPs“climate change”category for the third consecutive time.Group-wide commitment 215 teams took part in the internal Sustainability and EHS Awards more than ever before.7|Company|Products|Supply chain|Environment|Associates|Society1.1 Bosch Group profjleThe Bosch Group is a leading global supplier of technol-ogy and services.It employs roughly 421,300 associates worldwide(as of December31,2022).The company generated sales revenue of 88.2 billion euros in the 2022 business year.Its operations are divided into four busi-ness sectors:Mobility Solutions,Industrial Technology,Consumer Goods,and Energy and Building Technol-ogy.As a leading IoT provider,Bosch offers innovative solutions for smart homes,Industry4.0,and connected mobility.Bosch is pursuing a vision of mobility that is sustainable,safe,and exciting.It uses its expertise in sensor technol-ogy,software,and services,as well as its own IoT cloud,to offer its customers connected,cross-domain solutions from a single source.The Bosch Groups strategic objec-tive is to facilitate connected living with products and solutions that either contain artifjcial intelligence(AI)or have been developed or manufactured with its help.Bosch improves quality of life worldwide with products and services that are innovative and spark enthusiasm.In short,Bosch creates technology that is“Invented for life.”The Bosch Group comprises Robert Bosch GmbH and its roughly 470 subsidiary and regional companies in more than 60 countries.Including sales and service partners,Boschs global manufacturing,engineering,and sales network covers nearly every country in the world.With its more than 400locations worldwide,the Bosch Group has been carbon neutral since 2020.The company was set up in Stuttgart in 1886 by Robert Bosch(18611942)as“Workshop for Precision Mechan-ics and Electrical Engineering.”The special owner-ship structure of Robert Bosch GmbH guarantees the entrepreneurial freedom of the Bosch Group,making it possible for the company to plan over the long term and to undertake signifjcant up-front investments in the safe-guarding of its future.Ninety-fourpercent of the share capital of Robert Bosch GmbH is held by Robert Bosch Stiftung GmbH,a charitable foundation.The remaining shares are held by Robert Bosch GmbH and by a corpo-ration owned by the Bosch family.The majority of voting rights are held by Robert Bosch IndustrietreuhandKG,an industrial trust.The entrepreneurial ownership func-tions are carried out by the trust.Further information on the organization of the Bosch Group and the companys economic situation can be found in the current annual report.Research for greater sustainabilityBoschs innovative strength is the basis for the com-panys future growth.Bosch employs some 85,500asso-ciates in research and development at 136 locations around the globe.Sustainability is a central theme of Bosch research,with a focus on three fjelds of innovation:1 Without Germany01|HeadcountBosch Group by region,as of December 31,2022Americas 48,725Asia Pacifjc(including other countries,also in Africa)119,237Europe1 119,422421,338Germany 133,95402|Sales revenueBosch Group 2022 by region,in billions of eurosAmericas 16.2Asia Pacifjc(including other countries,also in Africa)27.7Europe 44.388.2Annual report 20228Bosch sustainability report 2022 Innovations for resource and energy effjciency:In view of the growing scarcity of resources,any sus-tainable development strategy must fjnd solutions for decoupling economic growth from resource consump-tion.We consider the circular economy to be a crucial element in the sustainable use of resources.When developing new products and updating existing ones,we increasingly apply design principles that allow closing the loop at parts or materials level.E-mobility and electrifjed systems:Electrifjcation in the mobility sector makes a signifjcant contribution to achieving climate targets.To this end,the company is developing concepts for electric drive vehicles and is working on integrated power trains at both system and component level.Chemical energy conversion:In the fjeld of chemical energy conversion,Bosch is already developing systems that will lower carbon emissions in the future.To secure a sustainable energy supply in the future,Bosch is conducting research into generating electric-ity from renewable energy sources and storing it in a climate-friendly way.Innovative technological solutions for mobile and stationary fuel cell systems and for the production of hydrogen as an energy carrier are called for.Mission statement and valuesWe are operating in an environment in which fundamen-tal changes are taking place.Technologies are being radically transformed by digitalization and the use of artifjcial intelligence.At the same time,markets are being shaped by the focus on climate action,new geopo-litical constellations,and fundamental societal trends such as increasing urbanization.As affjrmed in our“We are Bosch”mission statement,one of our strategic focal points is shaping change,taking into account the aspects of connectivity,electrifjcation,energy effjciency,automa-tion,and emerging markets.It is our ambition to play a part in molding the far-reaching changes in markets and technology.Apart from shaping change,our strategic focal points are customer focus and excellence.When putting our strategy into practice,we build on the Bosch culture,on our high level of innovation,which is also measured in terms of our research and development spending,on quality,and on our broad diversifjcation and global presence.Our actions are based on the Bosch values:future and profjtability focus,responsibility and sustainability,initiative and determination,openness and trust,fairness,reliability and credibility,legality,and diversity.Robert Bosch StiftungNot-for-profjt,independent,and impartial,Robert Bosch Stiftung GmbH works on the major social challenges of our time in relation to health,education,and global issues.As a force for positive change in civil society,it pursues initiatives in these three support areas.One of Europes major foundations associated with a private company,it has been fulfjlling the mission imparted on it by its founder Robert Bosch for almost 60 years by continuing his commitment to social and societal causes in a contem-porary form.To this end,the foundation maintains its own institutions,implements innovative projects,and works together with a wide range of partners,to which it provides support as needed.The foundation runs the Bosch Health Campus in Stuttgart,which draws together all the foundations institutions and activities in the fjeld of healthcare,including the Robert Bosch Hospital,Dr.Margarete Fischer-Bosch-Institute of Clinical Pharmacology,and Robert Bosch Center for Tumor Diseases.Robert Bosch Stiftung is also a shareholder of an international school in Freiburg im Breisgau,the Robert Bosch College UWC,and of the International Alumni Center(iac)in Berlin.Robert Bosch Stiftung holds roughly 94percent of the shares in Robert Bosch GmbH.It funds its work from the dividends it receives from this shareholding,and pursues its objectives independently from the company.Since its establishment in 1964,it has invested almost 2.2billion euros in charitable work.Mission statement“We are Bosch”9|Company|Products|Supply chain|Environment|Associates|Society|Bosch Group profjle|Sustainability strategy and culture|Corporate governance and complianceSustainability is frequently defjned as an equilibrium between economic,environmental,and social aspects.At the same time,sustainability has become an estab-lished concept on capital markets under the abbreviation ESG(environment,social,governance).Our understand-ing of sustainability combines both of these approaches:to us,sustainability means striking a balance between the economic,environmental,and social dimensions of our business activities as part of responsible corporate governance.Defjned as a group-wide task within the Bosch Group,sustainability is coordinated by the Sustainability and EHS(Environment,Health,Safety)corporate depart-ment.The business sectors pursue the jointly set goals on the basis of systematic sustainability management.The contents,tasks,and related controlling are anchored in the companys processes.1.2 Sustainability strategy and culture03|Overview of key stakeholder groups,forms of dialogue,and topicsStakeholder groupsForms of dialogueMaterial topicsAssociatesDialogue with associates and executives,surveys,internal media,Bosch Business Dialog Reducing carbon emissions across the value chain,particularly with regard to the Bosch Groups carbon neutrality and its scope3 target Reducing water withdrawal in regions with water scarcity Closing products and materials loops,using secondary materials and raw materials Environmental and social standards in supply chains,particularly for high-risk raw materials Health,including occupational health and safety and substances of concern Diversity,equity,and inclusion Implications of the mobility transformation Responsible corporate governance Customers Surveys,social media,trade fairs,mediaSuppliers and partnersSupplier days,training courses,supplier awards,supplier assessments,dialogue as part of industry initiatives AssociationsParticipation in committees and working groups,initiative and association member-ships Universities and research institutes Presentations,dialogue events,trade fairsPolicymakers Contact for questions from policymakers;involvement in committees organized by governments or ministries;dialogue events;one-on-one talks MediaPress releases,site visits,information events,trade fairs Local stakeholdersLocal community talks,plant visitsCivil society and NGOs Dialogue events,answering questions 10Bosch sustainability report 2022As a leading global supplier of technology and services,Bosch operates in a large number of markets around the world.Directly or indirectly,our business operations affect the interests of a wide range of stakeholders.To parse out what these interests are and take account of them in our activities,we actively seek to enter into dia-logue with our stakeholders.We address issues that are brought to our attention via the different communication channels as well as seeking dialogue on those issues that we ourselves want to raise in the social discourse.As a result,we hold a continuous exchange on a broad range of highly diverse topics from which all parties involved benefjt(see Fig.03).Vision sets the directionBack in 2018,we summarized the focus areas of our sustainability management in a vision that describes six dimensions.Each of these is specifjed and continuously elaborated further by reference to two focus activities with clearly defjned,medium-term targets.Derived from the megatrends of relevance to our company and the material topics,the dimensions set the framework for our actions.Our sustainability activities consider the entire value chain from materials and goods purchas-ing or manufacturing operations at Bosch sites to the use phase of products sold and right through to their end of life.New DimensionsSustainability 202504|Target visionCircular economy1|Materials effjciency2|Second lifeBosch is reducing its ecological footprint and striving to create social benefjt.In this endeavor,Bosch takes its lead from the circular economy principle.Climate action1|Reducing CO2 emissions2|Energy effjciency and renewable energiesIt is Boschs ambition to be a climate action pioneer advancing the expansion of renewables and striving continuously for energy effjciency.Human rights1|Responsibility2|TransparencyBosch takes on responsibility and is sensitive to human rights being respected along the entire value chain.Diversity1|Equity2|InclusionFor Bosch diversity,equity,and inclusion are key to long-term success in business.In addition,Bosch contributes to the common good in the communities at its locations.Water1|Water scarcity2|Water qualityFor Bosch,water is a resource to be treated sparingly.Regions in which water is scarce are a special concern.Health1|Occupational health and safety2|Substances of concernBosch contributes to human health with innovative products and services and by ensuring that people and the en-vironment do not come to harm through its production processes.Our ambition:by acting in an economically,environmentally,and socially responsible manner,we want to improve peoples quality of life and safeguard the livelihoods of present and future generations.11|Company|Products|Supply chain|Environment|Associates|Society|Bosch Group profjle|Sustainability strategy and culture|Corporate governance and complianceDimensionGoals2022 status UN SDGsClimate actionIt is Boschs ambition to be a climate action pioneer advancing the expansion of renewables and striving continuously for energy effjciency.Reducing CO emissions Operating climate neutral in scopes1 and 2 and continu-ously improving the mix of measures by 2030 Since 2020,Bosch and its over 400 company locations worldwide have been climate neutral(scopes1 and2).1 In 2022,we offset a total of 0.7 million metric tons of CO2 using carbon credits.This represents a decrease of 21percent on the previous years level(see the“Environment|Climate action and energy”section).Lowering absolute scope3 CO emissions by 15percent by 2030(baseline year 2018)Since 2018,we have reduced our scope 3 emissions by some 16percent to 382 million metric tons of CO in 2021.In this process,we are focusing on the categories that make up around 98percent of our scope3 emissions:upstream emissions in the Bosch value chain primarily concern purchased goods and services as well as logistics.Downstream emissions are mainly caused by the use of our products(see the“Environment|Climate action and energy”section).Energy effjciency and renewable energiesSaving 1.7TWh through increased energy effjciency by 2030 Since 2019,we have initiated over 4,000 energy-effjciency proj-ects worldwide,with some 1,000 new projects added in 2022 alone.With them,we have so far captured savings potential of 805GWh in total.This corresponds to a goal achievement level of 47percent.Increasing own renewable generation at our sites to 400 GWh and 100percent green electricity by 2030 In 2022,we generated 121GWh of power from renewable sources in-house at our company sites.Accordingly,we already reached 30percent of our target value.New photovoltaic installations went online at 31 company locations.In addition,95percent of the Bosch Groups global electricity demand was covered by green electricity(electricity purchased from renewable sources)(see the“Environment|Climate action and energy”section).WaterFor Bosch,water is a resource to be treated sparingly.Regions in which water is scarce are a special concern.Water scarcity Reducing absolute water withdrawal at company loca-tions in regions with water scarcity by 25percent by 2025 Since 2019,we have launched more than 260 projects and reduced water withdrawal by 24.2percent compared with 2017 at company locations in regions with water scarcity.The company locations were identifjed using the Water Risk Filter of the World Wildlife Fund for Nature(see the“Environment|Water and wastewater”section).Water quality Improving the quality of waste-water fmows In 2022,Boschs wastewater volume increased to 16.98 million m(previous year:14.75 million m3).We have defjned wastewater quality standards that are binding worldwide and established processes for monitoring their compliance(see the“Environment|Water and wastewater”section).Circular economyBosch is reducing its ecological footprint and striving to create social benefjt.In this endeavor,Bosch takes its lead from the circular economy principle.Materials effjciencyImproving materials effjciency For years,materials effjciency has been a fjxed criterion in the Bosch product development process,where it is anchored in our Design for Environment(DfE)principle(see the“Products|Man-agement approach”section).Second lifeExtending product life cycle and reusing materials and componentsTo identify the potential of the circular economy strategy in the various divisions,some 80 different product groups were analyzed,which together account for more than 80percent of Boschs sales revenue(see the“Products|Management approach”section).05|Goals and goal achievement12Bosch sustainability report 2022DimensionGoals2022 statusUN SDGsDiversityFor Bosch diversity,equity,and inclusion are key to long-term success in business.In addition,Bosch contributes to the common good in the communities at its locations.Equity Ensuring equitable opportu-nities and increasing the pro-portion of female executives to 25percent by 2030Globally,the share of women executives across all management levels within the group rose to 19.2percent in 2022(previous year:18.4percent)across all management levels(see the“Associates|Employer of choice”section).InclusionPromoting inclusion at Bosch and in the communities around company locationsIn 2022,the Bosch Group donated 27.4million euros to charita-ble causes worldwide(previous year:27.6 million euros).Some regional companies have established their own charitable institu-tions to carry out their CSR activities(see the“Society|Corporate citizenship”section).Human rightsBosch takes on responsibility and is sensitive to human rights being respected along the entire value chain.ResponsibilityEnsuring human rights are respected along the value chainTo further specify the requirements relating to environmental and social standards,we published an update of the Bosch Groups Code of Conduct for Business Partners in 2022.In addition,we have established a new management system to implement human rights and environmental due diligence obligations(see the“Sup-ply chain|Social and environmental requirements for suppliers”section).TransparencyIncreasing transparency about compliance with environmental and social standardsTo satisfy its due diligence requirements relating to human rights and environmental matters,a comprehensive risk analysis concept was developed in 2022.The analysis focuses on suppliers in coun-tries with a heightened risk.As of 2023,the risk analysis will be performed annually(see the“Supply chain|Social and environ-mental requirements for suppliers”section).HealthBosch contributes to peoples health with innovative products and services and by ensuring that people and the environment do not come to harm through its production processes.Occupational health and safetyReducing the accident rate to 1.45 accidents per 1million hours worked or less by 2025At 1.62 accidents per 1million hours worked,the accident rate is at the level of the previous year(see the“Associates|Occupational health and safety”).Substances of concernContinuously upgrading materials data managementBosch handles substances of concern responsibly.To effjciently manage prohibitions and restrictions on materials,we are con-tinuously upgrading our IT-based Material Data Management for Compliance and Sustainability(MaCS)system(see the“Products|Product responsibility”section).1 This report uses scopes1,2,and 3 in accordance with the Greenhouse Gas Protocol Corpo-rate Accounting and Reporting Standard.2 To enable comparability between the climate impact of the various greenhouse gases and substances of relevance for the climate,emissions are presented in CO equivalents.In this report,we have taken into account the effects of CO and of other greenhouse gases,as well as climate-relevant substances,to the extent that these are of relevance for the analysis.For ease of reading,we use the terms CO and CO equivalents synonymously.|Bosch Group profjle|Sustainability strategy and culture|Corporate governance and compliance13|Company|Products|Supply chain|Environment|Associates|SocietyClear responsibility for sustainabilityAt Bosch,the highest technical committee for sustain-ability is the Corporate Sustainability Board(CSB)under the aegis of Robert Bosch GmbHs CEO and the board of management member responsible for sustainability.The Sustainability and EHS corporate department is responsible for the CSBs organizational and content management.The CSB members are the heads of the corporate departments responsible for the relevant matters:Research and Advance Engineering,Purchasing and Logistics,Real Estate and Facilities,HR,Legal,Compli-ance,Finance,as well as Corporate Communications and Governmental Affairs.The CSB also includes the executive management of various divisions and further members when required.The CSB meets twice a year.Its main tasks are to defjne the sustainability strategy and targets for the Bosch Group,to adopt sustainability activities,to provide trans-parency and decide in the event of confmicting objectives,to monitor implementation of the sustainability strategy and activities,and to coordinate group-wide position papers on sustainability topics.Goal agreements and management reviews for all sustainability-related issues are the responsibility of the CEO and the board of man-agement member responsible for sustainability.The Sustainability and EHS corporate department is responsible for sustainability management,which mainly entails setting and tracking goals,designing and accompanying programs,preparing concepts for further development,and sustainability reporting.It is accountable for governance in all matters concerning sustainability and EHS and coordinates implementation of regulatory requirements throughout the group.The Corporate Communications and Governmental Affairs corporate department is responsible for sustainability communications and interaction with stakeholders around the world.Our global sustainability management is summarized in a central process that is based on the ISO standard pro-cess defjnitions,especially ISO31000.Responsibility for worldwide implementation of the sustainability strategy and monitoring the achievement of goals rests with the competent offjcers at headquarters and in the divisions.The structure we apply in sustainability management is one that has already served us well in other areas:strat-egy and framework conditions are defjned centrally,and the divisions focus on the specifjc implementation and certifjcation.The associates responsible in the regions and at the more than 400 Bosch sites worldwide have the task of putting the respective requirements into practice locally and ensuring compliance with the defjned frame-work conditions through established processes.In paral-lel,corporate headquarters regularly performs internal sustainability and EHS audits.The divisions have appointed coordinators for occupa-tional safety,energy effjciency,water and waste,as well as for Design for Environment.They offer professional support to the divisions on implementing strategies or establishing processes and rules.In addition,they review the effectiveness of the respective measures.In 2022,coordinators were also established for matters concerning sustainability,in order to cover the increas-ingly wide range of requirements and develop and imple-ment division-specifjc sustainability strategies.They also manage general sustainability topics across the entire value chain.06|How sustainability is organized at BoschSustainability management and sustainability report Stakeholder engagement and sustainability communicationHead of Sustainability and EHS Head of Corporate Communications and Governmental AffairsImplementation and monitoring of the sustainability strategy and targetsOffjcers responsible in the divisionsStrategic alignment and controlCorporate Sustainability BoardGoal agreement Management reviewCEO and member of the board of management responsible for sustainability14Bosch sustainability report 2022Competence development and trainingAt Bosch,executives are role models and,as such,mul-tipliers for sustainability worldwide.They are required to attend Web-based training to familiarize themselves with the sustainability strategy and the targets set.Since the training programs launch in 2014,a total of 32,000executives with and without team management responsibilities have already completed the course,with over 1,800executives taking part in 2022 alone.Their feedback serves as a basis for continuously refjning the course.Additionally,an awareness training was introduced for members of management at subsidiaries in 2022.The training focuses on legal and organizational duties relating to compliance,sustainability and EHS,as well as information security and data protection.Around 60executives have attended the eight-hour training course so far.Sustainability cultureFor Bosch,it is key to involve as many associates as pos-sible in sustainability management.Each and every one at Bosch is called on to contribute and advance sustain-ability in their individual sphere of infmuence.The aim is for sustainability to become a shared mindset within the company shouldered by each associate through their conduct and for a sustainability culture to emerge in which entrepreneurial value creation also produces added value for the environment and society.New,hybrid forms of working encapsulated at Bosch under the term“smart work”are empowering our associates to achieve more sustainability.Indeed,the new forms of organization and work are leading to ever more closely networked collaboration that transcends organizational boundaries and national borders and takes place less and less in a traditional offjce setting.At the same time,associates increasingly take ownership and enjoy greater individual latitude and consequently have greater potential to make a real difference in the transition to a sustainability culture(see the“Associ-ates|Employer of choice”section).Based on this understanding and after having success-fully implemented a group-wide sustainability manage-ment we began to initiate the corresponding cultural change and to promote it with specifjc impulses in 2021.The related activities are divided into seven areas(see Fig.07).Providing impetus for associates personal commitmentFigure based on:Network for Business Sustainability(2010)and Majka Baur(2016)07|Seven action areas for embedding sustainability culture Make manage-ment“walk the talk”Engage in active internal com-munication about sustainabilitySupport internal change pioneers and facilitators Recognize and value commitment Link sustainability to associates private livesCreate inspiring events within the company Keep an open dialogue with associates15|Company|Products|Supply chain|Environment|Associates|Society|Bosch Group profjle|Sustainability strategy and culture|Corporate governance and complianceThe following measures are examples of our activities in 2022:Award-winning commitment the Sustainability and EHS Award 2022Each year,outstanding projects within the Bosch Group are recognized with the Sustainability and EHS Award.A jury of experts chooses the three best projects in each category,and the board of management member respon-sible for sustainability presents the awards at an internal award ceremony.In 2022,the number of entrants reached a new record level.As many as 215teams from Bosch locations around the world competed for the prize,which is awarded in the categories“CO and energy effjciency,”“resource effjciency,”“occupational safety,”“sustainable products,”and“sustainability culture.”First place in the“CO and energy effjciency”category went to a team from Slovenia in 2022 that realized sub-stantial savings at the Bosch site in Nazarje.By installing 14 groundwater heat pumps and using the waste heat from the injection molding production process,they were able to cut the amount of energy used for heating,building cooling,and cooling water in the injection mold-ing process by around 75percent.In the“resource effjciency”category,the jury was impressed with a project at the site in Bursa,Turkey.Under the motto“stop scrapping,start repairing,”dam-aged transport packaging is repaired at the site instead of being disposed of.In preparation for the project,the different kinds of damage to reusable packaging were classifjed and new methods for repairing it developed on this basis.This made it possible to repair some 20,000items of transport packaging predominantly pallets and pallet covers in 2022,reducing the volume of plastic waste by around 100metric tons.The winning team from Bursa is sharing its experience with col-leagues worldwide and also outside the company as good practice.The winning team in the“occupational safety”category comes from Australia,where it set up a program to sup-port mental health,reaching more than 1,000 associates and covering the three pillars“leadership,”“training and awareness,”and“support and services.”The target group-specifjc training sessions are offered to executives and associates alike.The objective of the program is to raise awareness among associates for mental health and well-being and empower them to support their col-leagues in this respect.First place in the“sustainable products”category went to the Thermotechnology division in 2022,which impressed the jury with its innovative boiler systems for industrial steam and heat supply.Apart from the new electric steam boiler ELSB which generates steam for use in industry and commerce,the division also offers boiler systems that use hydrogen and biofuels,as well as hybrid solutions.This allows companies to source carbon-neutral steam and heat with the infrastructure available and according to their individual requirements.Moreover,it is possible to retool existing facilities accordingly.Since 2021,projects relating to“sustainability culture”are also eligible for the Sustainability and EHS Award.In 2022,the Green Heroes campaign took fjrst price.Using an innovative concept,Bosch has bridged the gap between workplace and private life.The idea was for associates to show their colleagues how they conserve energy and live more sustainably outside work.They were invited via the intranet to send in short videos for this purpose.In a short period of time,we received more than 140 entries from around the world from creative tips on putting waste to good use to shopping tips and household tricks.Five associates were nominated as Green Heroes for their projects.The winning videos were published on the intranet and met with great resonance worldwide.16Bosch sustainability report 2022 Sustainability Community MeetingGlobal and cross-divisional networking of EHS and sustainability experts is key to reaching the sustainability targets and this is supported by annual Sustainability Community Meetings(SCM).How can we take sustain-ability further at Bosch from a strategic perspective?And how can we intensify international collaboration in the process?These were the questions explored at the two-day event hosted by the Sustainability and EHS corporate department in Stuttgart in July2022.Besides the divisions coordinators and regional coordinators,additional internal stakeholders were invited to come and share their knowledge and experience.The in-person event was opened by the board of management member responsible for sustainability,who honored the fjve winners of the 2021 Sustainability and EHS Awards.Five external speakers held keynote speeches on topics including human rights and the future of sustainability reporting.Sustainability days at Bosch locations worldwideIn 2022,action days for sustainability and EHS were again held at Bosch locations around the globe.In Wernau,Germany,for instance,the Thermotechnology division in September invited to its Sustainability Day 2022.Around 350 associates came to fjnd out more about on-site environmental protection measures and activities related to physical and mental health as well as other topics at various stations.A safety check for bicycles was offered as well as the opportunity to make an insect hotel.Similar activities also took place at other locations,such as Manisa,Turkey,and Sorocaba in Brazil.The Mellansel site in Sweden also had a special anniversary to celebrate:it was its tenth annual EHS Day.All roughly 360 associates were invited to take part in workshops and practical exercises and attend presenta-tions.In 2022,the focus was placed on fjrst aid and how to effectively carry out cardiopulmonary resuscitation(CPR)and on ways to relax and recharge during the day.Climate Fresk workshops teaming up against climate changeAround 500 associates from Bosch in Germany and France attended over 40 Climate Fresk workshops in 2022 to learn about the reasons underlying climate change and its effects.In preparation,63 facilitators received training before setting out on a collaborative journey together with the participating teams.The goal is to empower participants to work together to identify what effects climate change is having on their business environment and to enable them to make informed deci-sions that take account of the associated opportunities and risks.Climate Fresk workshops involve interaction,collabora-tion,and mutual networking.Developed by a French non-governmental organization,the underlying concept is made available to citizens,public institutions,and businesses through a Creative Commons license.Commitment and cooperationWe want to make a relevant contribution to overcoming global social challenges,which is why we are involved in numerous initiatives.For instance,Robert Bosch GmbH has been a member of the United Nations Global Com-pact since 2004.We are committed to the ten Global Compact principles relating to human rights,labor standards,environmental protection,and anti-corruption measures.With this publication,we satisfy the related requirement to report on relevant progress we made in 2022 in this respect.We also support the United Nations Sustainable Development Goals(SDGs)adopted in 2015.Accordingly,we regularly benchmark our sustain-ability activities against the 17 SDGs(see Table05).Boschs diverse activities also support other UN goals.17|Company|Products|Supply chain|Environment|Associates|Society|Bosch Group profjle|Sustainability strategy and culture|Corporate governance and complianceTransparent reporting in accordance with international standards Our reporting makes Boschs commitment transparent.We support various reporting formats,such as CDP(for-merly“the Carbon Disclosure Project,”also see Fig.08)or the Standards of the Global Reporting Initiative(GRI).We are active in a large number of further sustainability-related initiatives though memberships including the Transparency International Deutschland e.V.which we have been supporting as a corporate member since 1995.We are also engaged in the executive board of the econsense association(Forum Nachhaltige Entwicklung der Deutschen Wirtschaft e.V.,also see the“Society|Dialogue with stakeholders and political lobbying”section).Commitment to the Value Balancing AllianceAs one of the seven founding members of the Value Balancing Alliance e.V.(VBA),Bosch has been working together with other internationally operating companies on developing and testing a global standard for the holistic evaluation of entrepreneurial activities since 2019.The Alliance aims to shed transparency and put a monetary value on the social,environmental,and economic impact of entrepreneurial activities as well as on the interdependencies along the value chain and how they affect corporate value.Several universities,non-governmental organizations,and audit fjrms are also involved in the project.08|Boschs positioning in selected sustainability ratings RatingRating 2022Rating 2021Rating 2020CDPClimate:Score“A”Water:Score“B”Climate:Score“A”Water:Score“B”Climate:Score“A”Water:Score“B”Ecovadis67/100 pointsGold medal63/100 points59/100 pointsISS ESGPrime statusB-Prime statusB-Prime statusB-Sustain-alytics14.0 points(low-risk category)14.8 points(low-risk category)18.7 points(low-risk category)18Bosch sustainability report 2022Bosch is expressly committed to taking responsibility,obeying the law,and behaving ethically.As our mission statement says:“We promise only what we can deliver,accept agreements as binding,and respect and observe the law in all our business transactions.”Responsible corporate governanceThe board of management of Robert Bosch GmbH defjnes the strategy for the entire company and leads the company as a whole.With the start of the 2022 business year,there was a generational change on the board of management,which was reduced to six members.The supervisory board of Robert Bosch GmbH appoints,monitors,and advises the board of management.In making appointments to the supervisory board,Robert Bosch GmbH is subject to the German Codetermina-tion Act(Mitbestimmungsgesetz).Owing to the com-panys size,the supervisory board has 20 members.Ten members are appointed by the shareholders with voting rights,the other ten members are elected by the employee representatives.The industrial trust Robert Bosch IndustrietreuhandKG acts as a shareholder.In line with the mission handed down in the will of the companys founder,Robert Bosch,the trust is responsible for safeguarding the com-panys long-term existence and,above all,its fjnancial independence.The aim is to guarantee that the company remains independent and able to act at all times.For further information on Robert Bosch GmbHs board of management and supervisory board,see pages 12 and 17 of the 2022 annual report.Risk managementIn the Bosch Group,risk management encompasses the entire company,including all essential operations,functions,divisions,and business sectors.It is thus a core responsibility for all managers on every level of the Bosch Group.To the extent possible,risks are identifjed and managed where they arise:in other words,mainly in the divisions and their regional subsidiaries.The latter are also primarily responsible for introducing measures to reduce or control risks.The corporate departments for compliance,risk manage-ment,and internal controls are responsible to govern the related systems,while specialist departments such as legal services and tax support,direct,and monitor the rules and priorities set.Internal auditing provides support in areas including assessing the appropriate-ness and effectiveness of the tasks described and,if necessary,proposes that Robert Bosch GmbHs board of management or the respective offjcers initiate improve-ment measures.The Bosch Groups risk management system is based on the standards ISO31000 and COSOIII(ERM),as well as IDWAuS340.It comprises the systematic detection and tracking of relevant risks and,where necessary,iden-tifjcation and monitoring of measures to manage these risks.In this context,the corporate coordinating offjce for the risk management system is responsible for con-tinuously refjning the system.Current priorities include further refjning analyses of risk capacity and measures to strengthen the risk culture.1.3 Corporate governance and compliance19|Company|Products|Supply chain|Environment|Associates|Society|Bosch Group profjle|Sustainability strategy and culture|Corporate governance and complianceA group risk management guideline sets out the princi-ples and responsibilities.In addition,a cross-functional risk committee is tasked with identifying signifjcant risk areas across the divisions and pinpointing potentially disruptive technological and strategic risks.For a description of signifjcant risks,see the annual report 2022(page95 et seq.).The main antitrust and legal risks are also described there.Compliance at BoschCompliance refers to the observance of legal require-ments and internal corporate policies and rules.At Bosch,this is an integral part of our corporate values.To this end,we have unequivocally defjned our position on legal requirements and ethical issues in a globally applicable Code of Business Conduct.Combined with the Bosch values,it provides the foundation for Boschs success in business.We feel that responsible and lawful conduct is important beyond company boundaries and have formulated our expectations of our business part-ners in codes of conduct(see the“Supply chain|Social and environmental requirements for suppliers”section).Accordingly,we continuously monitor current develop-ments and adjust our codes where necessary.Group-wide compliance management system The global compliance management system(CMS)constitutes an integral element of the operationalization of corporate governance in the Bosch Group and com-prises structures and processes for ensuring compliance at an organizational level.Based on auditing standard IDWAuS980,it aims to ensure compliance and thus con-tribute to our companys long-term success on the basis of integrity and value-based conduct.We are continuing to move away from rule-based compliance to a primarily values-based approach.It is our ambition to be a pioneer for values-based conduct that extends beyond mere compliance with the law and internal regulations.The CMS is preventive in nature and is designed to encourage all associates in the Bosch Group to identify compliance risks and violations at an early stage and to respond appropriately.The aim is thus also to reduce risks for the Bosch Group,its associates,and its corporate bodies.At the same time,we want to protect and cultivate the reputation of the Bosch Group,which is the basis of our business partners trust.The central guidelines governing the CMS set out the responsibilities for each area of compliance.Special-ists in the corporate departments are responsible for implementing corporate governance in their respective areas of responsibility,such as anticorruption,antitrust law,money laundering,labor and social legislation,product compliance,fjre prevention,and environmental protection.The compliance committee supports the implementation of the Bosch Groups CMS and coordinates compliance issues.In addition,it contributes to the risk-based fur-ther development of the CMS,for example by assessing the regulatory environment and other developments to identify new compliance risks.Chaired by the chief com-pliance offjcer,the compliance committee comprises the heads of the Compliance Management corporate department,Legal Services,the Internal Auditing depart-ment,and other members appointed by Robert Bosch GmbHs board of management.In 2022,the compliance committee set up a sanctions committee that decides on appropriate disciplinary measures in the event of mate-rial compliance incidents.The compliance committee offjce provides personnel and technical support to the compliance committee.The chief compliance offjcer also heads the Compli-ance Management corporate department,which is responsible for the specialist area of anti-corruption as well as information security and data protection and for overarching key elements of the Bosch Groups CMS(pliance training,operating and further develop-ing the reporting system for compliance-related matters,serving as point of contact for reports of misconduct,and conducting internal investigations).The chief com-pliance offjcer sets the goals for the Compliance Man-agement corporate department and reports on a regular and adhoc basis directly to the member of the board of management responsible for compliance.If necessary,the chief compliance offjcer is also entitled to contact the chair of the supervisory board directly.20Bosch sustainability report 2022In the Bosch Groups regions and divisions,compli-ance offjces have been set up as part of the Compliance Management corporate department.The core task of the compliance offjces is to support the regions and divisions to which they are assigned in fulfjlling their obligations under the CMS and in conducting internal investigations.For this purpose,they have unrestricted authority to demand information and perform audits,are independent in exercising their duties,and bound only by the instructions of the Compliance corporate depart-ment.Notwithstanding the constantly evolving environ-ment,we are intent on keeping our policies and proce-dures up to date.That is why we continuously review and refjne our compliance program,which falls within the area of responsibility of the Compliance Management corporate department.According to our regular cycle,we repeated our global analysis of corruption risks in 2021,combining it with the analysis of risks relating to antitrust law.The analysis covered 253 legal entities that were selected based on certain criteria such as headcount,sales revenue,and specifjc risk indicators(e.g.the current Corruption Per-ception Index published by Transparency International).In addition,we performed further in-depth analyses in selected divisions,corporate sectors,and service units.The fjndings were evaluated and appropriate measures initiated in 2022.These include,for example,activities to raise awareness among associates regarding individual risks,supplementary training sessions for specifjc target groups,or even sample-based checks of compliance with rules and processes.To document and track the measures,we use a central database that maps the cor-responding workfmows.In 2023,we plan to continue with the risk analyses.In a bid to digitalize our compliance processes further,we set up a new project organization in 2022.Our aim is to update and standardize core compliance processes and make them even more effjcient.The focus will be placed on data protection and information security,com-pliance audits and internal controls,business partner compliance,risk management,and reporting,among other areas.Implementation of corporate governance within the framework of the CMS is reviewed in the course of inter-nal audits performed by the Internal Auditing corporate department.In addition,we test our CMS in external audits and consulting engagements and always take the results as an opportunity to further develop and optimize our CMS.Code of Business ConductThe Code of Business Conduct provides guidance for all Bosch associates on values-based,ethical,and legally irreproachable conduct.It outlines the basic rules of conduct in the company and provides guidance on issues such as how to deal with insider information,whether to accept gratuities,and how to avoid confmicts of inter-est.Our aim is to set clear guidelines and,at the same time,to protect our associates,our company,and our business partners.We are in the process of revising our Code of Business Conduct to refmect new priorities and increase user friendliness,for example by giving it a new structure,making it more practical,and presenting it in a more interactive form.The Code of Business Conduct is specifjed in corre-sponding central policies and additional local regula-tions.These also set out specifjc requirements with respect to gratuities.In Germany,for example,the acceptance and issue of gratuities exclusively consti-tuting a personal benefjt is permissible up to a limit of 35euros,net,per year and recipient.So-called facilita-tion payments payments made to offjcials to expedite an administrative service to which the payer is generally legally entitled are explicitly not permitted.If associ-ates are pressured or forced to make such payments,for instance to avoid bodily harm to themselves or others and protect their health and safety,they are required to inform their superior and the respective compliance offjce at the earliest opportunity.21|Company|Products|Supply chain|Environment|Associates|Society|Bosch Group profjle|Sustainability strategy and culture|Corporate governance and complianceThe Code of Business Conduct also describes our social responsibility,including respecting human rights and the prohibition of forced or child labor.The document is available to all associates in 33languages and has additionally been communicated in a letter from Robert Bosch GmbHs CEO to all associates exempt from col-lectively bargained agreements worldwide.They have confjrmed their acknowledgment of the code.An abbre-viated version containing the key messages has also been provided to all associates.BSH Hausgerte GmbH has developed its own code of conduct.Both codes are publicly available on the Internet.We are additionally in the process of preparing a new,supplementary Anti-Bribery and Anti-Corruption(ABC)Policy as an umbrella regulation to harmonize and stand-ardize compliance rules on anti-corruption,focusing especially on gratuities(in kind)and invitations,spon-soring,donations,staff rotation,and confmicts of interest.Product Compliance CodeWe also follow clear guidelines in product development,which are summarized in our Product Compliance Code.Our actions are guided by the principle of legality and our“Invented for life”ethos.This guidance applies to all Bosch products and services,covering all stages of a products life cycle and taking precedence over custom-ers wishes.It is not permitted to develop functions for test recognition,nor is optimization solely for the purpose of offjcial test cycles permitted.If a customer does not observe these guiding principles,we do not take part in their invitations to tender.In the event of any non-compliance with the Product Compli-ance Code in the course of existing business relations,measures can extend to a delivery stop.Export controlSome of our products can also be used for military pur-poses.Extensive internal policies and procedures are in place within the group to ensure regulatory compliance including export controls.Compliance of business partners and company acquisitions Bosch takes a holistic approach to corporate social responsibility.Therefore,clear policies and procedures also apply with respect to our business partners.Our business partners are regularly subject to a standardized and risk-based compliance check.This encompasses both customers as well as suppliers,possible partners in the establishment of joint ventures,and potential acquisition and takeover targets.The depth and scope of the checks depends on various factors,such as the nature of the business relationship.Corporate and personnel structures can also play a role.Compliance checks focus on possible misconduct,for example non-compliance with the law or offjcial regula-tions such as applicable penal laws,environmental regulations,or human rights.We refer to information in the public domain for this purpose.The fjndings are assessed using a standard process and appropriate measures are defjned and introduced to the extent nec-essary.These can range from a more in-depth assess-ment right through to withdrawal from the business relationship or project.To further strengthen our risk-based approach,in 2022 we implemented an accompanying IT-based testing and monitoring process for selected business partners whose risk profjle is potentially heightened,and adjusted our internal regulations accordingly.Users received train-ing for the IT tool and the regulation and can continu-ously draw on advice and support from the compliance organization.In our Codes of Conduct for Business Partners,we have formulated what we expect from business partners in terms of compliance.The“Supply chain”section of this report describes in detail how we discharge our respon-sibility in the supply chain.22Bosch sustainability report 2022Code of Business Conduct of the Bosch GroupBusiness Conduct Guidelines of the BSH GroupTrainingWe use extensive training and communication meas-ures to sensitize our associates to compliance issues,including our social responsibility and the importance of human rights,among other matters.The compliance training program is available to our associates as Web-based training(WBT)or offered as classroom training or in webinars.Participation is mandatory for certain groups of associates,selected via a risk-based approach,including for example associates without collectively bargained contracts due to their special responsibility as specialists or managers,but also numerous other associates in selected areas or in special functions.In 2022,four existing WBT courses were revised and a new training program on software license management was issued.The latter is generally designed for all associates exempt from collectively bargained agreements and all associates involved in software development processes.Our minimum compliance training program covers fjve areas:business ethics,product compliance,anti-cor-ruption,antitrust law,and export control.The training content must be repeated regularly,usually at two-to three-year intervals.Our training courses are regularly refjned and updated to accommodate new content and developments.Feedback from training participants is always taken into account in the process.The minimum compliance training currently held worldwide has been completed over one million times to date.Over 80percent of associates in indirect functions have one or more minimum compliance training courses assigned to their learning curriculum.Compliance at Bosch is also an integral part of the annual goal and performance dialogue.Associates actively confjrm in the related documentation that they spoke about compliance and will act accordingly to the best of their knowledge.The status of the minimum compliance training courses is tracked using a dashboard,which also refmects partici-pants feedback as a basis for improving the quality of the training courses.In the event that training courses are overdue,reminders to complete the training are automatically sent to associates,executives,and HR business partners.Starting in 2021,this process is being introduced in stages in other countries.09|Areas covered by the global minimum compliance training programAreaTopicFormatBusiness ethicsCode of Business ConductWBT,documentDealing with classifjed informationWBTSoftware license managementWBTAnti-corruptionGratuities in dealings with third partiesWBT,classroom training/live online trainingProduct complianceProduct complianceWBT,classroom training/live online trainingProduct safety and product liabilityWBTAntitrust lawAntitrust lawWBT,classroom training/live online trainingExport controlExport controlWBT23|Company|Products|Supply chain|Environment|Associates|Society|Bosch Group profjle|Sustainability strategy and culture|Corporate governance and complianceInternal communication raises awareness for compliance We use all media formats available for internal commu-nication to draw attention to compliance issues from the intranet to internal social media or notices put up on-site.The compliance channel on the internal Bosch Tube video platform offers more than 100 audio and video fjles on the subject.The Bosch Compliance app has been pre-installed on the cell phones of some 90,000associates worldwide and offers quick access straight to the various compliance topics.It is also possible to directly contact the competent compliance offjcers in each country and division using the app.With the compliance dialogue,we enable intensive and open exchange between managers and associates on everyday issues relating to compliance topics.Supple-menting the mandatory training,the dialogue is a volun-tary offer that encourages teams to discuss and resolve specifjc dilemmas.The compliance dialogue is updated continuously to include new practical cases.In 2022,the focus was placed on how to report incidents and on whistleblower protection.By running a diverse range of campaigns every year,we increase the visibility of the topic of compliance and the pertinent contact persons within the company.In this connection,a global awareness campaign on the Bosch reporting system and the protection of whistleblowers was launched in 2022.It is aimed at all Bosch associ-ates worldwide and is intended to raise awareness of the issues of submitting reports and whistleblower protection.The campaign makes the work of the compli-ance organization transparent,thus helping to further strengthen the trust of associates in internal reporting and whistleblowing channels at Bosch.Under the motto“Speak up!”it also aims to encourage associates to report any suspicions of misconduct.The campaign is accompanied by additional measures from brochures and posters carrying the motto“Speak up!”to anonymized examples on the intranet right through to an interview with the chief compliance offjcer on the topic of whistleblowing.A fmyer on how to report incidents and on whistleblower protection was also sent to some 100,000 associates in Germany together with their payslip.The campaigns effectiveness is measured continuously.Evaluations for 2022 show that the number of reports has increased signifjcantly since the campaign was launched.We will continue the campaign in 2023.In 2022,we developed a survey for measuring our compliance culture the Integrity Thermometer and piloted it in Germany and France.One aim of the survey is to obtain a key indicator of how effective our compli-ance management system is.24Bosch sustainability report 2022Grievance mechanisms and reporting systemIf there is any suspicion of possible misconduct,such as a violation of applicable law or the Code of Business Conduct,associates as well as business partners and other third parties can use the whistleblower system to submit a report to the compliance organization also anonymously in accordance with legal requirements.For this purpose,we have set up the Bosch reporting system that is available in 19languages on the Internet and our intranet.To help users,the reporting system offers thematically predefjned reporting categories.The objective is to make it as easy as possible for whistle-blowers to submit reports.At the same time,it is made clear that the system is available without restriction for reports on the full spectrum of conceivable misconduct.In addition,BSH Hausgerte GmbH operates a reporting system of its own.Naturally,Bosch associates can also directly contact their superior or the individuals responsible in their divisions or regions compliance offjce.The compliance organization follows up all reports without delay and involves additional experts in individual cases.Progress and the corresponding assessment of the matter are recorded in a central database and monitored.Not all reports are necessarily handled by the compli-ance organization.Further processing can be handled by the respective compliance offjcers or specialist depart-ments.For instance,HR is responsible for handling cases of discrimination without implications under criminal law.Great importance is attached to the protection of whistleblowers throughout the process of handling cases.This concerns both identity protection and protection against possible discrimination.Protecting whistleblowers is already explicitly anchored in the Code of Business Conduct,for example.Any indications of disadvantage due to whistleblowing or of obstruction of whistleblowing are pursued as separate compliance cases.We have published the“Principles for reporting possible violations and processing reports at Bosch”on our companys website.In 2022,1,283reports(previous year:1,044)were recorded via the Bosch reporting systems.We have seen a steady increase in the number of reports over the last few years,a development we primarily attribute to the comprehensive measures in the fjeld of compliance and the resulting increased awareness of compliance issues.Reports have increased especially since the summer of 2022,in tandem with the launch of our global awareness campaign.25|Company|Products|Supply chain|Environment|Associates|Society|Bosch Group profjle|Sustainability strategy and culture|Corporate governance and complianceProducts26Bosch sustainability report 2022Our ambition:“Invented for life”products that fascinate,that improve quality of life,and that help conserve natural resources.Potential of the circular economy Analysis of around 80 product groups that account for more than 80percent of sales revenue.Hydrogen economy Bosch offers technology to enable the use of hydrogen in different sectors,thereby blazing the trail for a hydrogen economy.Carbon footprint reduced by more than 33percent Bosch Green Collection fridge-freezer combination features climate-friendly materials.27|Company|Products|Supply chain|Environment|Associates|Society2.1 Management approachBosch has a broad and highly diverse product portfolio.Our products ensure safe and sustainable mobility,are durable companions in the home,or control industrial machinery effjciently and reliably.As varied as our products are in detail,they share a common ethos:“Invented for life.”We want to spark peoples enthusi-asm,to improve their quality of life,and to help protect the environment.Circular economy strategyWith our circular economy strategy,we want to enhance the sustainability of our products throughout their entire life cycle from procurement and production to use,return,and remanufacturing,and right through to recy-cling and reuse of materials.To this end,we endeavor to either create loops directly within Bosch or close them outside the company using established recycling processes.This way,we reduce the amount of materials used and our products carbon footprint3 and contribute toward achieving our scope3 target.4 At the same time,we also avoid potential risks relating to compliance with environmental and social standards.Building a closed-loop system for materials has the particular advantage of eliminating parts of the value chain that are subject to risks(see Fig.10).As with climate neutrality,in our circular economy strategy we use a model comprising levers that can be applied across the entire value chain.Here,too,we have classifjed the measures according to their quality.On the one hand,quality is determined by each levers contribution toward goal achievement.On the other,we rate a levers quality higher the greater Boschs ability is to infmuence the magnitude of its impact compared with other levers.Lever 1:Materials effjciencyMeasures to increase materials effjciency are fjrst prior-ity after all,it is best for the environment to use less materials.Improvements in materials utilization reduce the carbon footprint and also cut the manufacturing cost of a product.Bosch can also directly infmuence the corresponding measures.For years,materials effjciency has therefore been a fjxed criterion in our product development process,where it is anchored in the Design for Environment(DfE)principle(for more on DfE,see the“Design for Environment”section).The materials eco-effjciency and the environmental and social effects of using certain raw materials are also considered.The objective is to keep the environmental impact of materi-als utilized to a minimum,while at the same time taking into account social aspects.Lever 2:Second lifeIn the second lever,we have grouped together those measures that Bosch can use to improve materials fmows or to close loops within the company.This is the most complex lever in our circular economy strategy as it includes measures with a whole range of different objec-tives and effects,while offering a maximum of autonomy and latitude in implementation.The concepts and activi-ties range from reusing products and their components to repairs and right through to remanufacturing in each case with the objective of extending product and component life cycles.While Bosch can reduce negative effects by closing the materials and products loop,the measures effectiveness also depends on there being suffjcient demand and this places demanding require-ments on product development.3 To enable comparability between the climate impact of the various greenhouse gases and substances of relevance for the climate,emissions are presented in CO equivalents.In this report,we have taken into account the effects of CO and of other greenhouse gases,as well as climate-relevant substances,to the extent that these are of relevance for the analysis.For ease of reading,we use the terms CO and CO equivalents synonymously.4 This report uses scopes1,2,and 3 in accordance with the Green-house Gas Protocol Corporate Accounting and Reporting Standard.28Bosch sustainability report 2022 Lever 3:Recycled materialsThe third lever of our circular economy strategy recy-cled materials covers all measures to close the loop in the economy for materials such as steel,aluminum,and plastics.This way,we can reduce the use of primary materials,and lessen our environmental impact as well as human rights risks from the extraction of raw materi-als.Key factors determining how effective the measures are include whether high-quality materials are available,as well as whether the percentage of recycled materials used can be verifjed,and whether they can be purchased cost-effectively.The use of recycled materials in production processes is long established practice at Bosch.Across all our products,the average percentage of recycled steel used is already around 56percent.At 35percent,the share of recycled aluminum matches the average level in the industry.For plastics,the percentage of recycled material that we purchase as raw material is around 5percent.We intend to increase this share substantially in the coming years.The purchase agreements for focus materials that we intend to conclude with key suppliers as part of our scope3 climate action activities should also play a role in this respect.The upcoming specifjca-tions for purchased goods and materials will include a material-specifjc CO cap which will be reduced over time and increasing the portion of recycling material will be an essential part to reaching these goals.Specifjc strategies combine impact and cost-effectivenessDepending on the markets in which our divisions oper-ate,the levers differ in their degree of effectiveness,are not equally applicable across the board,and therefore offer different development potential.Accordingly,it is vital for Bosch to develop a market-specifjc circular econ-omy strategy for each division and fjnd the optimum mix of the three levers in each case.Having determined how the levers work in general in a top-down analysis in 2021,in 2022 we analyzed the potential that the levers offer in the various divisions as well as key aspects relating to their use.This involved analyzing some 80 different prod-uct groups across all divisions that together account for more than 80percent of Boschs sales revenue.In 2023,we are drawing on the results of the analysis to derive specifjc road maps for the individual divisions depending on use case and technical feasibility.In a fjrst step,we are setting out detailed action plans for selected levers in the circular economy strategy.On this basis,we will conclude corresponding target agree-ments.This approach will allow us to make tangible progress in our circular economy strategy,and at the same time give the divisions the freedom they need to take into consideration the diverse product portfolio and conditions prevailing on the different markets.Two Bosch divisions already have specifjc strategies and corresponding road maps.Bosch Power Tools(PT)has decided in a fjrst step to focus on recycled materials as the primary lever.This decision was based on the realiza-tion that in PT unlike for Bosch as a whole a large part of its carbon footprint comes from procurement.For this reason,PT has set quantitative targets that extend through 2025 for the use of recycled materials in packag-ing and recycled plastic in product housings.By then,the division also wants to have life cycle assessments available for each product family.Even before the overall portfolio analysis,the Automotive Aftermarket division had analyzed its product portfolio in detail with respect to the potential it offers for the“second life”lever and decided to focus above all on remanufacturing,in other words reprocessing used products.10|Circular economy strategyRecycled materialsSecond lifeMaterials effjciency29|Company|Products|Supply chain|Environment|Associates|Society|Management approach|Sustainable products and services|Product responsibilityCircular economy activities in almost all divisionsAlthough the individual road maps have not yet been fjnalized,many activities in Boschs divisions already follow the principle of a circular economy,illustrating the different ways in which the levers in our circular economy strategy work.The following examples show how different the corresponding measures can be imple-mented in each division.Lever 1:Materials effjciency Micro-electromechanical systems(MEMS)New generations of sensors from Bosch for fjtness track-ers or for measuring particulate matter and altitudes are considerably smaller and more effjcient than previous generations.Take,for example,the programmable and AI-enabled sensor with accelerometer BHI360/BHI380 in fjtness trackers that adapts to the individual users move-ments,and at 7mm3 is only half the size of its predeces-sor and needs only half the amount of power.Reusing plastic sprueThe Bosch plant in Waiblingen has taken a big step toward improving materials effjciency.By reusing plastic sprue,the plant is able to save around 125 metric tons of polyamides each year.This was achieved by install-ing a new dosing system.In direct sprue recirculation,it permits more precisely dosing the proportion of recycled granulate.With this technique,it is possible to improve the consistency of the material added,and the recycled granulate mixes more easily with the new material.The recirculated material is mainly used to produce piping and plumbing fjttings.A review is currently underway for applying the technique in other product groups that offer a similar amount of potential for saving materials.The lessons learned in Waiblingen are shared within the group as an example of good practice,thereby allowing other Bosch sites as well to benefjt from the advantages the new process offers.Bosch Green Collection fridge-freezer combinationUsing less resources,reducing emissions,improving climate action:thats the principle BSH Hausgerte GmbH(BSH)has put into practice with the Bosch Green Collections new fridge-freezer combination.Nicknamed“Little Foot”in-house due to its small carbon footprint,the new refrigerator was designed from the outset with special attention to using low-carbon materials.For the side panels and other metallic paneling,low-CO steel is used that has a 70percent lower carbon footprint than the steel previously used.5 In addition,both the main component of the insulating foam and the entire interior are produced using bio-based,carbon-neutral materi-als.6 These measures have made it possible to reduce the fridges carbon footprint by more than 33percent to approximately 200kilograms of CO.5 To source larger quantities of“green steel”going for-ward,BSH has entered into a cooperation agreement with Salzgitter Flachstahl GmbH.The steelmaker is working on new technologies for a hydrogen-based steel production that is virtually CO-free,depending on how the hydrogen is produced,by 2033.Lever 2:Second life Customer support services extend product life cycleWith its customer support services,Bosch seeks to extend its products service life.The diverse services offered by the divisions range from service hotlines to online guides,online replacement part fjnders and replacement part service,and right through to repairs and maintenance,or even the modernization of entire systems.BSHs customer support is one of the largest in the industry,comprising some 12,400 service technicians and partners.More than 350,000 replacement parts are stocked at seven logistics centers in proximity to the production locations.Replacement parts are usually kept in stock over a period of more than ten years after the end of production for large appliances and over more 5 Comparison between Bosch Green Collection fridge-freezer combination(KGN39OXBT)and a current reference appliance(KGN39VXBT);calculated based on life cycle assessments(LCA)pursuant to ISO14040,cradle to gate(material,transport,production)6 Carbon-neutral materials without use of carbon offsets30Bosch sustainability report 2022than seven years for small appliances.Technicians can complete 82percent of repairs in the fjrst visit,refmecting the high quality of service.The range of services offered by Bosch Thermotechnology is similarly comprehensive.It spans from commissioning to maintenance and repairs for more than 7,500 products.Replacement parts are typically available over a period of 15years.Bosch Rexroth as supplier of components and systems in the areas of hydraulics and factory automation like-wise offers a broad spectrum of support services ranging from repairs and maintenance to the modernization of complex machinery.In the course of modernization work,it is possible to combine the core technology of machines with state-of-the-art automation and new tech-nologies.Such solutions not only prolong the machin-erys service life,they also enhance its safety,reliability,and energy effjciency.Austria:Second-hand washing machines As part of a pilot project launched in Austria in 2022 and running until March 2023,Bosch offers refurbished washing machines for sale with manufacturers warranty at prices that can be as much as 50percent lower than for a comparable new model.7 Extending the appliances service life helps to conserve resources and cut CO emissions.Experts decide which appliances are eligible for a“second life”on the basis of an extensive catalog of criteria.Then the appliances are subjected to a thorough inspection,cleaned,and overhauled with new compo-nents.After passing all quality controls,the washing machines are sold as“refurbished”in the online shop with a two-year manufacturer warranty.The pilot project in Austria rounds out already estab-lished activities of BSH to extend the product life cycle.With Blue Movement,BSH Huishoudapparaten B.V.in the Netherlands and BSH Hausgerte GmbH in Germany offer a lease-based model for household appliances.A similar BSH pilot project in Belgium,Papillon,adds to this offer a social component,helping underprivileged households to use energy-effjcient and cost-saving household appliances in cooperation with a partner(Samenlevingsopbouw West-Vlaanderen).Bosch eXchange For over 50 years,the Bosch eXchange program has been offering customers the option to have defective vehicle components replaced with remanufactured products at specialist workshops.Many customers take advantage of it,making the program a signifjcant factor in Boschs automotive aftermarket product portfolio today:around two million components are remanufactured here every year,thereby reducing the number of new products needed accordingly.This saves some 3,100 metric tons of material.Reusing factory equipment acting sustainably means acting cost-effectivelyFor the idea of a closed-loop or circular economy to reach its full potential,we need to consider the big picture.One good example is the reuse of factory equip-ment.This involves using,sharing,repairing,modifying,and reusing plant and machinery for as long as possible.This way,it takes only a few new parts to retool entire production lines for new product generations.After all,components such as machine housings,robots,switch-ing cabinets,or transfer systems can be used universally and effjciently adapted to handle new requirements and jobs.This also has economic advantages as demon-strated by Bosch Manufacturing Solutions with a recently retooled production line at the Suzhou site in China.By largely reusing old parts,it was possible not only to sig-nifjcantly reduce the environmental impact,but also to save 35percent of costs compared with installing a new assembly line.At the same time,the production special-ists were able to raise productivity by 5percent relative to comparable production lines on the market.7 The baseline value is a new appliance in the same series at the current price in the Bosch online shop.31|Company|Products|Supply chain|Environment|Associates|Society|Management approach|Sustainable products and services|Product responsibilityLever 3:Recycled materials Reducing the carbon footprint from product design through to packagingAs one priority area of its circularity activities,Bosch Power Tools is focusing on the use of recycled materi-als in packaging and product housings.Just by intro-ducing cases made of recycled plastics for DIY tools,Bosch Power Tools has been able to save more than 5,300metric tons of plastic raw materials since 2019.The new IXO7 cordless screwdriver also shows just how much can be achieved in terms of saving resources by consistently using recycled materials.The cordless screwdrivers product housing now contains 40percent recycled materials,for its storage box(including packag-ing material inside)the proportion of recycled materials is over 90percent.Thanks to these and other measures to save materials,the carbon footprint of the IXO7 throughout its product life cycle is 20percent lower than for the predecessor model.8 Recycling electric car batteriesIn order to recycle the batteries used in electric vehicles and to enable further use of the raw materials beyond the batterys end of life,the batteries need to be disas-sembled and fully discharged.Bosch Rexroth has set itself the task of largely automating these to date mostly manual processes to enable effjcient handling of the high volumes expected in the future.As a result,an automated process has been designed that permits discharging battery modules as quickly as possible with-out overheating them.Its development has given rise to several patent applications.The result is an innovative approach to handling as well as disassembly and discharging,based on Rexroth com-ponents and systems such as the ctrlX DRIVE system,the ctrlX CORE control platform,and the related transfer technology.Bosch Rexroth is thus opening up new opportunities for industrial,automated battery disas-sembly and discharging.Design for EnvironmentIn connection with the implementation of our circular economy strategy,we started revising the company-wide Bosch Design for Environment standard N33-6 in 2022.Anchoring the DfE principle in the product develop-ment process,the standard includes specifjc design and manufacturing rules for developers and product owners that cover the entire life cycle of products from materials used and effjciency in the product develop-ment process to recycling or environmentally compatible disposal at the end of the product life cycle(see Fig.11).Compliance with the standard is reviewed as part of the quality process(see the“Product responsibility|Our quality policy”section).11|Environmental aspects of Design for EnvironmentDesign and purchasing Materials effjciency Ability to repair Upgradeability Secondary and recycled material Renewable raw materials Avoidance of high-risk raw materialsManufacturing Emissions Waste Substances of concern Hot spot processesPackaging Type and quantity of materials Recyclability Reuse and take-back Transport Mode of transport Load capacity optimization Local purchasingEnd of life Reuse Remanufacturing RecyclingProduct life cycleUse Resource and energy consumption Emissions (including CO2,pollutants,noise)8 Comparison of IXO7(article number:06039E0000)and prede-cessor model IXO6(article number:06039C7100);CFP(carbon footprint of a product)calculated based on ISO14067,cradle to grave(material,production,transport,use,and recycling)32Bosch sustainability report 2022Specially trained DfE owners support the divisions involved,helping them with requirements and questions relating to green product design.In addition,all divisions are in contact with each other via the DfE network.A differentiated approach is taken in implementing the DfE principle in product development:besides a checklist in the product development process,life cycle assess-ments are also prepared.Life cycle assessments Based on the idea of a closed-loop or circular economy,we have been systematically conducting life cycle assessments(LCAs)for major product groups since 2017.This entails an evaluation of product-specifjc environmental aspects in each phase of the life cycle from purchasing to production and use right through to disposal.Among the evaluated aspects are,for example,the use of materials,the consumption of energy and resources in the manufacturing and use phase,recycling and the use of recycled materials,and remanufacturing at the end of the products life cycle.In principle,an LCA is performed only if it serves a particular purpose.Bosch has defjned clearly delimited use cases in this respect.For example,we differentiate between LCAs that are to deliver key insights for product development and those intended to reveal optimization potential for series products.Depending on the use case,we distinguish between two assessment meth-ods:the full-scale LCA,performed in compliance with ISO14040 and 14044,and the streamlined LCA,allow-ing faster assessment of specifjc issues and drawing on standard database values.In industry networks such as Catena-X,we are currently working on a common industry standard to enable effec-tively and securely communicating sustainability-related properties of materials and products along the value chain(also see the“Society|Dialogue with stakeholders and political lobbying”section).In using the LCAs,our attention still focuses on the products carbon footprint.We want to fjnd out which phase of the product life cycle and which materials create the biggest carbon footprint so that we can take dedicated action to reduce it in the product development process or in further development of series products.For illustration purposes,Fig.12 shows the carbon footprint of an eBike as certifjed by TV Rheinland in accordance with ISO14067:2019(cradle to grave).A look at the carbon footprint of each phase of the prod-uct life cycle reveals where the biggest savings potential lies.Around 75percent of CO emissions are attribut-able to materials and production,about 15percent to the products use phase,and the remaining roughly 10percent arise from transport,packaging,and recy-cling.Overall,a pedelec has a carbon footprint of 300kg CO on average,of which the eBike system,consisting of motor,battery,and display,accounts for around 120kg CO.Considering the eBike components separately from the rest of the bike,some 60percent of emissions are attributable to the battery.Building on this LCA,Bosch eBike Systems identifjed various possibilities for reduc-ing CO emissions within the product life cycle of the motor and the battery.In an effort to continuously identify further potential to save carbon emissions when developing new products,Bosch eBike Systems this year started using a propri-etary LCA processing tool.This permits an even faster,more detailed,and fmexible comparison of the carbon emissions of various product components,thereby sup-porting effjcient decision-making in the product develop-ment process.12|Carbon footprint of an eBikein kilograms of CO2298Distribution of CO2Materials and manufacturing:eBike systemMaterials and manufacturing:Bike componentsUseTransport,packaging,recyclingDrive unit38%Display 3ttery 59133|Company|Products|Supply chain|Environment|Associates|Society|Management approach|Sustainable products and services|Product responsibilityTrue to our“Invented for life”mission statement,we want our products to contribute toward sustainable development and we therefore support various Sustain-able Development Goals(SDGs)of the United Nations(see Fig.13).In this section,we take a closer look at our contribution with selected examples.Reducing scope3 emissionsAgainst the backdrop of our climate action strategy,we identifjed additional potential for reducing CO emis-sions in the use phase of our products in 2020.Our goal is to save 15percent of absolute CO emissions generated in the upstream and downstream stages of the value chain(scope3)by 2030(relative to the baseline year 2018).Roughly 90percent of scope3 emissions are produced in the product use phase,partly due to our products long service life.To lower the scope3 emissions further,our strategy is to concentrate our efforts wherever we can make the greatest contribution to protecting human life and the environment.We currently see the greatest potential for lowering CO emissions in those fjelds in which products require a signifjcant amount of energy,that is particularly in mobility,thermotechnology,industrial drive and control technology,and household appliances.The focus is on three leverage points in each case:boosting energy effjciency,shaping the product portfolio,and transforming the energy sector through the use of green electricity,hydrogen,and biogas(see the“Environment|Climate action and energy effjciency”section).Contribution to the mobility transformationWe fjrmly believe that the mobility of the future should have no negative repercussions in terms of global warm-ing and air quality,and should remain affordable for most people.With our product range,we are making an important contribution,while pursuing a holistic approach at the same time.First and foremost,it is the Mobility Solutions busi-ness sector that is driving this development.As systems supplier for highly effjcient drive systems,it plays a key role in advancing the development of electric drives with products such as the eAxle or improved thermal manage-ment for hybrid systems and electric power trains.Bosch has already invested more than fjve billion euros in elec-tromobility,and has successfully acquired some 170 pro-duction projects since 2018.The aim is to generate sales revenue of six billion euros or more from the associated products and services by 2026.At the same time,Bosch is investing in fuel cell technol-ogy and continuously developing digitalization solutions to enable further effjciency gains.Our business success in these fjelds will also increase the contribution we make to conserving resources and climate action while we move a step closer to our ambitious CO targets.Last but not least,through innovative vehicle technology Bosch can help vehicle manufacturers to contribute to improving air quality.Boschs latest diesel and gasoline technology makes it possible to signifjcantly lower nitro-gen oxide emissions and particulate emissions.The aim is to design internal combustion engines with emissions that no longer impact our cities air quality in any notable way.With the aim of making freight transport by road climate neutral,Bosch is working not only on continuously improving the diesel engine,but also on three climate-neutral drive options:batteries,fuel cells,and hydrogen engines.For battery-powered vans,the Advanced Driving Module,which combines eAxle,brakes,and steering sys-tem,is the most suitable solution.For trucks,we offer scalable electric motors that are designed for use with 2.2 Sustainable products and services34Bosch sustainability report 2022Product sectors and topicsUN SDGsMobilityContribution to the mobility transformationInnovative power train systems and electrifjed mobility:electric drives,fuel cells,hydrogen engine,eBike systemsMobility services:optimized battery management,connected charging solutions,connected parking,fmeet managementInvented for better air qualityAir quality solutions:immission measurement systems,scalable dispersion simu-lation of emission sources,real-time traffjc emission data,traffjc management,BMV080 MEMS sensor for accurate,localized air quality measurementInnovative vehicle technologies:power train technology for low-emission vehicles,long-life iDisc brake disc rotors,regenerative brakingRoad safety Driver safety systems:anti-lock braking system(ABS),electronic stability pro-gram(ESP),pedestrian protection system,occupant protection system Driver assistance systems:automatic emergency braking,adaptive cruise control(ACC),tram forward collision warning(TFCW),cloud-based wrong-way driver alertEnergy systems,industrial and building technologyImplementing distributed energy gridsIoT solutions for energy systems:balancing energy network,grid optimization management,gateway managerTechnology for the use of hydrogen:stationary fuel cell for decentralized power generation Effjcient industry effjcient use of resources Industry4.0 software platforms and sensors for analyzing data and controlling processes:Nexeed,Energy Platform,Transport Data Logger,Connected Indus-trial Sensor Solution Energy-effjcient machines and resource-conserving systems:cross-technology expertise by Rexroth4EE,electric steam boilersEnergy-effjcient buildingsRenewable energy:heat pumps,hydrogen boilers for industrial applications and residential buildings Intelligent energy management:Energy Manager in the smart homeSustainable homeConserving resources at home to live more sustainably Energy effjciency:Bosch tumble dryer with heat pump technology,PerfectDry dishwasherWater effjciency:i-DOS washing machines and dishwashers with ActiveWater technology Fresh for longer and conscientious shopping:fridge-freezer combinations with VitaFresh freshness system,Home Connect function,and integrated camera in the refrigerator compartmentDurability:Bosch Power Tools AdvancedDrill18 screwdriverHealthSmart farmingSustainable agriculture:Intelligent Planting Solution,Smart Spraying SolutionContribution to global healthcareHealthcare and medical technology:Vivalytic for molecular laboratory diagnos-tics,Vivatmo respiratory gas analysis equipment,high-performance ceramics for medical technology13|Contribution of Bosch products to selected SDGs35|Company|Products|Supply chain|Environment|Associates|Society|Management approach|Sustainable products and services|Product responsibilitysilicon carbide inverters.This combination can produce an effjciency level of up to 97percent an exceptional level for electric drives in commercial vehicles.Together with our partner,we are getting ready for series production of the fuel cell-electric drive.The aim is to have more than 40,000 vehicles equipped with our fuel cell systems on the road worldwide by 2025.Bosch also produces the corresponding stacks in-house the core of the hydrogen electrolysis system and is setting up production facilities around the world in close prox-imity to customers at the plants in Anderson(United States),Wuxi(China),and Bamberg(Germany).With the hydrogen engine,we offer a climate-neutral alternative for long-haul heavy trucking as well as agricultural and construction machinery.Although it has a lower effjciency level than the fuel cell for lower and medium loads,the hydrogen drive offers considerably more power at full load.Through our components,we are involved in over 100 technical hydrogen engine tests worldwide in India,we have already acquired a fjrst series production project.Invented for better air qualityTo support efforts to improve air quality,Bosch has developed an emissions measurement system.The com-pact monitoring boxes reliably deliver the required data.This enables the creation of real-time air quality maps that can be used for adopting appropriate measures.Monitoring boxes are in operation in the German towns of Erfurt and Ludwigsburg.Working together with the rel-evant authorities,Bosch also collects anonymous data for traffjc optimization to advise cities on traffjc planning and traffjc management.Appropriate measures can lower traffjc-related emissions by as much as 20percent on average.In many parts of the world,indoor air pollution is three to fjve times higher than outdoors.At the same time,we spend around 90percent of our everyday life indoors.This is why it is important to monitor indoor air quality.The particulate matter sensor BMV080 quite literally sets new standards in this respect,as it provides localized,real-time measurements of particulate matter concentra-tion and air pollution.The BMV080 sensing element is more than 450 times smaller than any comparable device on the market.Despite its minuscule size,it delivers real-time,accurate,and practical readings about particulate matter concentration in the air.This makes it possible to detect and reduce indoor air pollution,thereby improv-ing peoples health and well-being.At the same time,the fanless,non-intrusive design permits noiseless opera-tion so as not to disturb users in their sleep or while they are working.Road safetyWith its products in the vehicle safety segment,Bosch supports Vision Zero,which seeks to reduce the number of fatalities on roads to as close to zero as possible by 2050.New,innovative systems are continuously being added to the product portfolio.The Off-zone Crash Detection system,for example,uses a wide range of sensor data and new software algorithms to detect previ-ously neglected crash scenarios that commonly occur when changing lane,merging,and crossing intersec-tions.Thanks to additional zones of detection,airbags and safety restraints can be deployed in a timely manner if necessary.Besides personal transport,we also want to make public transport safer:with this in mind,Bosch has developed a driver assistance system for trams,the tram forward col-lision warning(TFCW)system.In the event of an impend-ing collision,it warns the tram driver with a signal fjrst.If the driver reacts too late or not at all in the situation,the system engages the brakes independently to stop the tram and avoid accidents or at least reduce the impact as much as possible.Today,some 1,200TFCW systems are successfully operating in trams in Europe,Australia,and North America.In one German city,for example,the number of accidents involving trams fell by more than 40percent after the system was installed,despite an increase over the same period in the number of trams in operation.Implementing distributed energy gridsBosch products also play a pivotal role in the energy transition,helping to achieve energy supply without fossil fuels in the long term.IoT solutions from Bosch Digital help utilities companies administer smart meter gateways,manage metering points and metering data,and steer grid roll-outs.These are an integral part of solutions being created for an energy market that has to manage the fmuctuating output of renewable energy sources.Smart systems for managing demand and supply permit smoothing of peaks in output or demand,36Bosch sustainability report 2022|Management approach|Sustainable products and services|Product responsibilityBosch is joining in the push to establish a hydrogen economy,offering technology for the use of hydrogen in different sectors:the company is developing fuel cells for mobile and stationary applications,equipping hydro-gen fjlling stations with compressors,and producing hydrogen at its own plants.In addition,Bosch plans to enter the electrolyzer components business.Our lead plant for Industry4.0 in Homburg plays a key role in this respect.Here,Bosch is already demonstrat-ing today what the hydrogen cycle could look like in the factory of the future:using renewable energy,an electro-lyzer produces green hydrogen.In future,hydrogen will be used for manufacturing operations and mobility,with fuel cell vehicles refueling with the hydrogen that Bosch technology has compressed.For industrial processes,a stationary fuel cell developed by Bosch converts hydro-gen to heat and electricity.Energy fmows at the Homburg plant are controlled in line with demand,using the Bosch Energy Platform.In addition,the Homburg plant is testing a solution developed by Bosch Rexroth together with a partner company that compresses hydrogen for fjlling stations,storage tanks,and pipelines.By 2030,the technology is planned to be made
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ourPART NERSourCO F FE EourCOMMUNI T I E SourPLA NETMM X X IIENVIRONMENTAL&SOCIAL IMPACTreportSTAR BU C KS 2 02 2GLOBALourPART NERSourCO F FE EourCOMMUNI T I E SourPLA NETMM X X IIENVIRONMENTAL&SOCIAL IMPACTreportSTAR BU C KS FISCAL 2 02 2GLOBALGlobal Environmental&Social Impact Report 2subsection title 2023 Starbucks Corporation.All rights reserved.SECTION TITLEGlobal Environmental&Social Impact Report 2 2023 Starbucks Corporation.All rights reserved.our fiscal 2022 reportINTRODUCTIONWhen Starbucks opened in 1971,our vision for success was to be a different kind of company.Starting in fiscal year 2022(FY22),we embarked on an ambitious journey to reinvent ourselves,building on more than 50 years of global impact.This journey includes making key investments in Environmental,Social and Corporate Governance(ESG)strategies that help us uplift our partners and customers,give back more than we take from our planet,create responsible growth for our company and operate in a manner that supports the resilience of our business.Our commitment to transparency,intentionality and accountability underpins all our efforts to share extensive data on our progress against our ambitious ESG goals,business practices,work in sustainability and our commitment to the communities we serve.Since 2001,we have proactively published this annual update on key ESG programs and progress.Investing in our PartnersBuilding a More Sustainable,Equitable and Resilient Future for Coffee,our Communities and our PlanetLeadership and Governance123THREE PRIORITIES GUIDE OUR ONGOING EFFORTS:As always,we are approaching our ESG priorities with the same creativity and consistency our partners(employees)bring to their work every single day.Through our ESG efforts,we are working to modernize and transform the Starbucks experience in our stores and recreate an environment that is welcoming and safe for all where we uplift one another with dignity,respect and kindness.MM X X II 2023 Starbucks Corporation.All rights reserved.Global Environmental&Social Impact Report 3table of contentsSECTION ISECTION IIIREPORT APPENDIXSECTION IIINVESTING IN OUR PARTNERSLEADERSHIP AND GOVERNANCESUPPORTING DOCUMENTS AND DATA TABLESBUILDING A MORE EQUITABLE,SUSTAINABLE AND RESILIENT FUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANET44856235 Partner Experience 17 Partner Engagement 22 Fiscal 2023 Highlights25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain 45 Fiscal 2023 Highlights45 Fiscal 2023 Highlights 46 Starbucks Accolades55 About This Report57 Goals Summary Scorecard 64 Our Planet:Data 68 SASB Reporting 72 Human Rights74 Occupational Health and Safety Standard 77 External Auditor Assurance LettersGlobal Environmental&Social Impact Report 4 2023 Starbucks Corporation.All rights reserved.SECTION IINVESTINGPARTNERSin ourGlobal Environmental&Social Impact Report 5 2023 Starbucks Corporation.All rights reserved.partner experienceMM XXI IAt Starbucks,we like to say that we are not in the coffee business serving people,but in the people business serving coffee.Here,our employees who we call partners are the heart of the Starbucks experience.Starbucks took significant action in FY22 to improve our partner experience through increased wages,additional training,equipment upgrades and expanded benefits.Our wage increases,training program expansion and equipment upgrades for U.S.retail partners in FY22 totaled$1 billion.Starbucks effort to improve our partners experience is founded on a deep commitment to advance inclusion,diversity and equityand the belief that we are at our best when we create inclusive and welcoming environments.INVESTING IN OUR PARTNERSGlobal Environmental&Social Impact Report 6 2023 Starbucks Corporation.All rights reserved.partner experienceINVESTING IN OUR PARTNERSStarbucks is proud to offer a wide range of benefits that allow our partners to choose the plans and programs that best support their individual needs and goals.In the U.S.,benefits provided to all eligible part-and full-time partners include comprehensive health coverage,annual Bean Stock grants,retirement savings matching,Lyra for mental health,commuter benefits,Spotify Premium,paid time-off,paid parental leave,fertility benefits and more.PROUDLY SERVING THE BEST BENEFITS IN THE U.S.FOR HOURLY RETAIL WORKFUTURE ROAST 401(K)Starbucks matches 100%of the first 5%contributed each pay period(regardless of whether the contribution is 401(k)pre-tax,Roth after-tax or a combination of both)STARBUCKS COLLEGE ACHIEVEMENT PLANPartners can earn their first bachelors degree online with 100%tuition and fees covered upfront through Arizona State Universitys online degree programsFAMILY EXPANSION REIMBURSEMENTFinancial assistance for partners who are growing their families through adoption,surrogacy or intrauterine insemination(IUI),up to$40,000 per partnerMEDICAL,DENTAL AND VISIONComprehensive medical,dental and vision coverage with choices for partners,their spouse or domestic partner and childrenBEAN STOCKYearly grant of restricted stock units,which vest over two yearsSTUDENT LOAN MANAGEMENTAccess to resources to help better manage student debtPAID PARENTAL LEAVEPaid leave for birth and non-birth parentsMENTAL HEALTH BENEFITFree mental health therapy for partners,their spouse or domestic partner and childrenGIVING MATCHStarbucks matches up to$1,000 per year per partner in volunteer hours and financial donations to qualified non-profit organizationsINCENTIVIZED SAVINGS PROGRAMIncentivized savings plan for short-term goals and unplanned financial challengesDACA FEE REIMBURSEMENTReimbursement for government-mandated DACA renewal feesPARTNER AND FAMILY SICK TIMEPaid sick time for partners to care for themselves and their familiesGlobal Environmental&Social Impact Report 7 2023 Starbucks Corporation.All rights reserved.partner experienceINVESTING IN OUR PARTNERSOur benefits reflect our mission and commitment to put our people first including more than 250,000 U.S.partners representing diverse communities.We offer the highest-rated benefits in the U.S.for hourly employees1 inspired by direct collaboration with partners.As an industry leader in compensation and pay equity,were constantly expanding benefits and opportunities.We proudly offer our world-class benefits to eligible part-time and full-time partners across retail,manufacturing and enterprise(corporate),including:Comprehensive health coverage(medical,dental and vision).A highly competitive 401(k)program with company match.Bean Stock Starbucks continues to be one of the only retailers to offer a stock program that includes part-time retail hourly partners.As part of the$1 billion in investments to improve our U.S.partner experience,our industry-leading core benefits package expanded and evolved in FY22 to meet their needs with plans for continuous improvement and updates in progress.We also offer global Starbucks partners 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.Just last year,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.Partners can also select from a wide array of innovative flexible benefits such as HPV vaccinations and pawternal care for new pets.Starbucks China partners also enjoy opportunities to pursue their coffee passion and career aspirations through initiatives such as talent exchange and barista championships.Key initiatives launched in the U.K.and Europe,Middle East&Africa(EMEA)regions include pay increases,maintaining a premium to national living wage,free food on shift and an extra holiday.Partners in these regions also received a“share of success”bonus in FY22,amounting to 4.3 million in bonus payments.Tata Starbucks Limited,a joint venture,became the first food and beverage company in India to establish a company-wide,five-day work week for all partners.The company also embraces flexibility through its connected workplaces program,where its non-retail support partners work in hybrid,field support and remote roles,and store partners can experience both part-time and full-time roles.Tata Starbucks also provides meaningful opportunities and comprehensive benefits for partners including providing a graduation support program to all full-time and part-time Tata Starbucks 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,Tata Starbucks inaugurated the Two-Wheeler Mobility Support Program to help partners purchase a two-wheeler vehicle for professional or personal use,enhancing their independence and commuting experience.1 As ranked by Aon,a leading global professional services firm,against other major retail employers.“Core to offering innovative benefits that truly make a difference in partners lives is us working together with our partners to evolve those benefits and co-create Starbucks future.I firmly believe that when we invest in our partners,we invest in the success of Starbucks.”SARA KELLY,EXECUTIVE VICE PRESIDENT AND CHIEF PARTNER OFFICERGlobal Environmental&Social Impact Report 8 2023 Starbucks Corporation.All rights reserved.partner experienceINVESTING IN OUR PARTNERSTotal Compensation and Retirement In FY22,Starbucks announced that the company:Increased minimum starting pay rate for all U.S.hourly partners to$15/hour.Achieved an average national pay rate for all U.S.hourly partners of nearly$17/hour.Provided Starbucks shares via the Bean Stock program to more than 230,000 partners in 21 markets.We are invested in the total health of our partners including their financial health.In FY22,we announced that the minimum starting rate for all U.S.retail hourly partners is$15/hour.On average,Starbucks hourly partners earned nearly$17/hour nationally,which has improved to$17.50/hour in FY23.Our eligible tenured hourly partners received at least a 5%raise for two to five years of service,and at least a 7%raise after five years.We help our partners save for emergencies,the future and retirement in an ever-changing economy.In FY22,we announced the addition of two new programs to help partners manage their savings and income.The Starbucks Financial Resilience Toolkit includes topics ranging from budgeting and short-term savings to long-term savings and retirement tips and guidance.We know that many of our partners have student debt,so a new program provided by Tuition.io provides partners with payment strategies,student loan management coaches and links to take action.The Starbucks Financial Resilience Toolkit and the Tuition.io initiatives join our robust savings and retirement benefits.Starbucks Future Roast,our signature 401(k)savings plan,allows partners to contribute pre-tax or Roth after-tax dollars,with a Starbucks match for contributions.In partnership with Fidelity,all eligible U.S.partners can now participate in My Starbucks Savings,a way to save for the unexpected,including a Starbucks match of$25 and$50 credits at key savings milestones up to a total of$250 per partner.We know that our partners are the foundation of our success,so we want them to share in that success through Starbucks stock ownership.Bean Stock began in 1991,on the same day Starbucks opened its 100th store.The landmark program that awards partners with company stock was the first of its kind in the retail industry.During FY22,more than 230,000 partners in 21 markets received Bean Stock,including Austria,Great Britain,Italy,Switzerland,Japan,China,Canada and the United States.Partners in North America can also take advantage of the Starbucks Stock Investment Plan(S.I.P.),a quarterly stock purchase plan that allows Starbucks partners to buy Starbucks stock at a 5%discount.Global Environmental&Social Impact Report 9 2023 Starbucks Corporation.All rights reserved.partner experienceINVESTING IN OUR PARTNERSPartner Experience Innovation CenterLaunched the Partner Experience Innovation Center to reimagine and improve the partner experience.Retail partners create thousands of meaningful moments each day for our customers,all around the world.At the same time,we know that our partners have endured a challenging few years from a global pandemic upending our day-to-day lives,to facing the ongoing impacts of a strained supply chain.In FY22,we announced approximately$1 billion in investments in wages,benefits,training and equipment to radically improve the U.S.retail partner experience the result of dozens of collaboration sessions across the country where hundreds of retail partners and leaders met to co-create the future of Starbucks.The newly-formed Partner Experience Innovation Center(PEIC)was created to reimagine the partner experience and build trust with our partners by addressing their biggest challenges.When we meaningfully invest in an experience that enables our partners to thrive,they become more engaged and better connected with our customers,which drives our business performance.Thriving partners are a catalyst to building a stronger Starbucks business and brand.Global Environmental&Social Impact Report 10 2023 Starbucks Corporation.All rights reserved.partner experienceINVESTING IN OUR PARTNERSInclusive HealthcareWe will always work to ensure that our partners have access to quality healthcare and the support services they need.In FY22,we added to our extensive healthcare benefits with a healthcare reimbursement program to ensure that all partners can receive reimbursement for travel expenses for abortion or gender-affirming procedures when they cannot legally access services in their state of residence and do not have a provider within 100 miles of their home.In FY22,we also broadened the Starbucks Family Expansion Reimbursement program,which assists partners with the costs of growing their families through adoption,surrogacy or fertility treatments.These efforts in FY22 build on our long-standing commitment to ensuring that our partners have access to quality healthcare regardless of where they live or what they believe.In 2018,Starbucks broadened its health insurance options for transgender partners beyond gender reassignment surgery(which had been covered since 2013),to include procedures that had previously been considered cosmetic.All U.S.partners who welcome a new child by birth,foster or adoption can access paid parental leave.Starbucks also provides all U.S.partners and qualified family members access to 20 free sessions a year with a mental health therapist or coach through Lyra Health,and free access to Headspace.We also offer all U.S.partners the option to work with Starbucks Advocates a team of individuals dedicated to working directly with partners year-round who are knowledgeable about healthcare coverage and available to help partners with complex health benefits questions.Starbucks College Achievement PlanNearly 2,150 partners graduated from college using Starbucks College Achievement Plan(SCAP),with more than 23,000 partners participating in the program in FY22.As part of our commitment to help our partners succeed in career and life even beyond Starbucks we offer 100%upfront tuition coverage for a first-time bachelors degree to eligible partners in the U.S.through SCAP,in partnership with Arizona State University(ASU).SCAP participants have access to more than 140 bachelors degree programs,and since the start of the program more than 9,100 partners have used SCAP to graduate from college.Starbucks also offers the Pathway to Admission program,an expansion of the SCAP benefit.Through this program,Starbucks and ASU provide an admissions pathway for partners who do not initially qualify for admission.Through Pathway to Admission,partners can take up to 10 college-level courses to earn their admission into the university,with credit conversion costs fully covered.Partners who are Veterans can extend an additional SCAP benefit to a qualifying family member.Global Environmental&Social Impact Report 11 2023 Starbucks Corporation.All rights reserved.partner experienceINVESTING IN OUR PARTNERSTraining and educational resources are designed to recruit and retain talented people and affirm Starbucks as one of the very best employers in retail globally.The way we hire,develop and advance our partners is a critical pillar in our journey to ensure that all of our partners have the opportunity to thrive at and beyond Starbucks.Barista First 30&Continuous Learning JourneyBaristas in the U.S.receive 42 training hours.As part of our$1 billion investment in improving the retail partner experience,we evolved the Starbucks training program known as Barista Basics into Barista First 30,a 42-hour training program to be completed in the first 30 days of employment that covers all the foundations of being a Starbucks partner from mission and culture to the skills needed to serve customers in our stores.Barista First 30 nearly doubles the number of training hours provided in the previous program and is followed by a continuous learning journey that coincides with the 90-day check-in and 180-day milestone.Our newly designed shift supervisors training program includes nearly 30 hours of training that provides the essential knowledge needed for the role.Taken together,our training ensures that Starbucks store partners can provide a great experience for customers while gaining the skills and information they need to thrive in their roles.In FY22,we also invested in coffee education through the Coffee Master Program.Starbucks partners are certified as Coffee Masters after completing coursework and an exploration of Starbucks coffees in Starbucks Coffee Academy.The Coffee Master program acknowledges partners knowledge and skill with the special designation of the black apron after they finish the robust curriculum.Partners who complete the Coffee Master program are eligible to attend Origin Experience trips trips to coffee-growing regions to experience coffee farms and meet farmers,suppliers and community members.More than 4,500 partners have completed Coffee Masters and earned the black apron since the re-launch in June 2022.In FY23,nearly 1,500 partners completed Coffee Masters,with an additional 1,000 partners enrolled in the program.Talent Attraction&Development More than 160,000 baristas were hired in the U.S.More than 60%of U.S.retail leadership roles were filled from internal partners.Starbucks has a long history as a leading company to attract and develop diverse talent.Starbucks is working side-by-side with partners to ensure that we remain at the top of our field for talent acquisition and development.In FY22,the total partner turnover in North America(U.S.and Canada)was nearly 65%,significantly lower than industry2 turnover rates.2 Defined by the“Bureau Labor Statistics Food and Accommodations Services”TRAINING&DEVELOPMENTGlobal Environmental&Social Impact Report 12 2023 Starbucks Corporation.All rights reserved.partner experienceINVESTING IN OUR PARTNERSWe are dedicated to creating a culture of warmth and belonging,where everyone is welcome and respected.Our work to advance inclusion,diversity and equity at Starbucks has already led to important policies,programs and initiatives.There is still more to be done,and we are committed to taking further actions toward tangible and lasting change.INCLUSION,DIVERSITY AND EQUITYGlobal Environmental&Social Impact Report 13 2023 Starbucks Corporation.All rights reserved.partner experienceINVESTING IN OUR PARTNERSWe are on a journey to advance racial and social equity for our partners,our community and our society.We are building on the work in our prior Civil Rights Assessments,conducted by Covington&Burling,to meet racial,ethnic and gender diversity representation goals across the company.Our goal is to achieve racial and ethnic diversity of at least 30%at all corporate levels and at least 40%at all retail and manufacturing roles by 2025.We also aim to achieve at least 50%women working across all corporate levels,55%women working across all retail roles and 30%women working in manufacturing roles.As disclosed in our 2023 Proxy Statement:Our Board of Directors has 38%person of color representation(three out of eight members)and 25%representation of women(two out of eight members).Goals and FY22 results3:3 Demographic percentages represented in this section have been rounded.regional vice president31c%regional director32P%district manager33a%store manager39h%shift supervisor47qrista53s%Representation of POC and women in retail rolesGoal: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 2025 ROLE POC WOMEN senior vice president 27W%vice president30U%director27Y%manager31U%individual contributor38U%Representation of POC and women in enterprise rolesGoal:At least 30%POC representation and 50%women for all enterprise roles(senior vice president ,vice president,director,manager,individual contributor)by 2025 ROLE POC WOMEN director29%manager30)%individual contributor433%Representation of POC and women in manufacturing rolesGoal:At least 40%POC representation and 30%women in all manufacturing roles(director,manager,individual contributor)by 2025 ROLE POC WOMENRepresentation of age in total workforce Under 30:820-50:15ove 50:3%Under 30:180-50:61ove 50:20%Under 30:170-50:52ove 50:32%RETAIL CORPORATE MANUFACTURINGRACIAL&SOCIAL EQUITY GOALS&REPRESENTATIONGlobal Environmental&Social Impact Report 14 2023 Starbucks Corporation.All rights reserved.partner experienceINVESTING IN OUR PARTNERSInclusion&Diversity Mentorship ProgramWhat began as a pilot in 2021 has quickly become a sought-after learning and development opportunity for partners.Designed to support partners who have been historically marginalized,including Veterans,women,LGBTQIA2 partners and those living with disabilities,the Starbucks Inclusion&Diversity Mentorship Program connects partners to senior leaders,providing 1:1 sessions and ongoing guidance.Global Equity in Pay4Starbucks has achieved and maintained 100%pay equity for women and men and people of all races performing similar work in the U.S.and maintained 100%gender equity in pay in Canada.In 2018,Starbucks achieved pay equity for all partners in the U.S.performing similar work and has maintained equity every year.In FY22,Starbucks once again maintained 100%pay equity for women and men and people of all races performing similar work in the U.S.As of the end of FY22,median pay ratio in the U.S.was 100%for women and partners of all races.We also maintained gender equity in pay in Canada and are working to leverage knowledge and lessons learned in markets where we have achieved pay equity to develop applicable principles for our global markets and share with other leading employers.We continue to work with licensed partners to prioritize pay equity for all partners in all markets.Supporting LGBTQIA2 PartnersStarbucks scored 100%on the Human Rights Campaign Corporate Equality Index for the 12th year in a row.Starbucks is committed to building a culture where everyone is welcome and continue our deep and long-standing commitment to remaining a top employer for LGBTQIA2 people.In FY22,we joined more than 170 organizations and the Human Rights Campaign in urging the U.S.Senate to pass the Respect for Marriage Act,which was signed and passed in December 2022,and we joined other businesses in an advocacy statement to address and oppose policy actions or legislation that discriminate against the LGBTQIA2 community.Our efforts were recognized in 2022,and Starbucks was listed once again as a Best Place to Work for LGBTQIA2 Equality by the Human Rights Campaign.The Starbucks Foundation donated more than$700,000 to support nonprofits serving LGBTQIA2 communities in FY22.We are working to implement our vision of an inclusive and equitable company for all through our work directly with our partners like our expanding benefits for our transgender partners to access gender-affirming care,regardless of where they live.At the same time,we are working to ensure our partners are supported through inclusive policies around the country.(79%response rate)36%(50%response rate)22%(43%response rate)11%RETAIL CORPORATE MANUFACTURING%of U.S.workforce:LGBTQIA2 (self-identification)“In every community we serve,Starbucks is committed to building a culture where all feel welcome.While each of our markets is unique,what unites us as partners is our values our commitment to diversity,equity and inclusion,and our shared goal of creating places of belonging for our partners and customers.”MICHAEL CONWAY,GROUP PRESIDENT,INTERNATIONAL AND CHANNEL DEVELOPMENT4 The geographic scope of this data point includes all company-operated stores in North America(which is inclusive of the U.S.and Canada).Global Environmental&Social Impact Report 15 2023 Starbucks Corporation.All rights reserved.partner experienceINVESTING IN OUR PARTNERSInclusive&Accessible DesignWe know that when we design with and for people who have lived experience with disability,it improves the experience for all partners,customers and communities.Thats why Starbucks is committed to designing,testing and scaling more inclusive design standards and experiences across our store portfolio,starting in the U.S.and then expanding standards globally,with the goal of ensuring that physical and digital Starbucks environments will meet an elevated standard of accessibility by 2030.These standards will provide customers with more options to enjoy both their in-store and digital Starbucks experiences by creating more ways to communicate both visually and audibly and by offering more tools to help customers navigate physical store environments.To advance these standards,Starbucks is testing technology solutions in select store locations including:Speech-to-text technology that provides a live visual display of speech for partners and customers to reference when placing or picking up an order.Order readiness notifications through a customer order status board that visually provides an update and confirms when an order is ready.These efforts build on other accessible design improvements over the last year.Since 2021,Starbucks has offered free Aira service,which connects people who are blind or have low-vision to trained,professional visual interpreters who provide instant access to visual information about the customers surroundings through a smartphone app.Starbucks also offers multiple formats of the menu including large-print and Braille menus in all stores in the U.S.and Canada.Globally,Starbucks operates 16 Signing Stores that provide a space for the Deaf and hard of hearing community to connect through sign language and celebrate Deaf culture.Disability Inclusion Starbucks scored 100%on the Disability Equality Index.Starbucks is recognized as one of the DEI Best Places to Work for Disability Inclusion.Over 1 billion people have a disability across the globe,and it is a strength.And at Starbucks,we believe it is our responsibility to raise the bar when it comes to creating a more inclusive environment for our partners and customers living with apparent and nonapparent disabilities.Together with our community partners,we are increasing accessibility resources and supporting the development of evolving employer practices on Access and Disability Inclusion.As a member of Disability:INs Inclusion Works program,a national forum for peer employers,Starbucks remains committed to Disability:INs pledge,Are You In committing to advance disability inclusion in the workplace.(88%response rate)14%(60%response rate)11%(60%response rate)13%RETAIL CORPORATE MANUFACTURING%of U.S.workforce:People with disability(self-identification)Global Environmental&Social Impact Report 16 2023 Starbucks Corporation.All rights reserved.partner experienceINVESTING IN OUR PARTNERSRefugee SupportMore than 1,100 refugees hired in the U.S.,Canada and EMEA in FY22,bringing the total of refugees hired to more than 4,000 since 2017.More than$1.3 million donated to support nonprofits serving refugee communities from The Starbucks Foundation.We have a longstanding history of creating opportunity and investing in the people who are a part of the communities where we do business.While we did not meet our 2022 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.In FY22,The Starbucks Foundation has awarded more than$1.3 million to support nonprofits providing humanitarian assistance and other programs to help refugees find safety and rebuild their lives.This includes support to more than 200 grassroots nonprofits across the U.S.and Canada that provide resources and services for refugees and where Starbucks partners are engaged.Veterans&Military Families5Hired an additional 4,580 Veterans and military spouses.Our goal is to hire 5,000 military Veterans and military spouses annually,and in FY22 we hired more than 4,500 Veterans and military spouses across U.S.Starbucks roles.These intentional hiring commitments are intended to welcome new partners from communities that may experience barriers to employment.Our support for Veterans and their families includes our partnerships with nonprofit organizations like Blue Star Families,which helped foster connections in over 200 military communities nationwide.In partnership with Operation Gratitude,we donated more than 5,000 comfort items to our nations Veterans and caregivers in military treatment facilities nationwide.And because coffee is at our core,Starbucks donated more than 6.8 million cups of coffee to our Veteran and military communities in FY22.We also support our military partners and their families with Military Family Stores.Please refer to Our Communities for more information on these specialized stores.5 In FY21,we reported that 7,720 Veterans and military spouses hired in FY21 across the U.S.We have identified an error in our data collection process that led us to incorrectly report the data for FY21.The correct data point is:4,704 Veterans and military spouses were hired in FY21 across the U.S.The data collection error was identified and corrected for our FY22 reporting.Global Environmental&Social Impact Report 17 2023 Starbucks Corporation.All rights reserved.partner engagementMM XXI IBeing a Starbucks partner means aspiring to become part of something bigger:inspiring positive change in the world and growing in career and in community.To make that vision a reality,we invest in our partners well-being,professional learning and community and civic engagement.INVESTING IN OUR PARTNERSGlobal Environmental&Social Impact Report 18 2023 Starbucks Corporation.All rights reserved.partner engagementINVESTING IN OUR PARTNERSPartner Surveys643%of U.S.store partners,54%of Canada store partners,and 86%of North America non-store partners completed the Partner Experience survey.Starbucks has a long history of direct engagement with our partners,and we make it a priority to 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 shared and will host design sprints on specific topics shared in collaboration sessions.The partner surveys leverage a census approach,with all U.S.company-operated partners invited to participate and paid time for hourly partners,including retail partners,to complete the survey.The feedback from these surveys is used to inform the partner experience.6 The geographic scope of this data point includes all company-operated stores in North America.Global Environmental&Social Impact Report 19 2023 Starbucks Corporation.All rights reserved.partner engagementINVESTING IN OUR PARTNERSStarbucks Global Academy is a free,open-access platform for Starbucks partners,customers,suppliers and community members worldwide to access top-quality educational content centered around Starbucks areas of passion and expertise.Developed in collaboration with Arizona State University,the Starbucks Global Academy offers learners the opportunity to expand their understanding of key Starbucks initiatives and select coursework from a collection of more than 100 carefully selected courses.To Be Welcoming7More than 21,000 people enrolled in the course with more than 12,000 completions.Our dedication to equal opportunity involves creating a workplace where diversity is celebrated and establishing a workplace culture that promotes inclusiveness.In 2018,we partnered with Arizona State University to develop the To Be Welcoming anti-bias program for our partners.In 2020,we made this 15-course curriculum available to the public for free.We exceeded our goal of enrolling 100,000 cumulative learners in FY22,reaching nearly 109,000 enrollments and more than 45,000 total course completions.Because the course is open to partners,customers and community members,our program helps individuals across our community engage with challenging subjects through research-based content.We are excited to report that 81%of people who have completed the course since 2018 are Starbucks partners and 19%are non-partner learners.Greener Apron7More than 15,500 partners enrolled in the course with nearly 9,000 completions.The Greener Apron course is open to partners and the public and equips learners with the information they need to learn about sustainability and the skills and tools to become changemakers at work,at home and in their communities.In FY22,the course was updated in partnership with the World Wildlife Fund and Intersectional Environmentalists to be shorter and more relevant and accessible to partners.Since its launch,nearly 52,000 people have enrolled in the course,with nearly 25,000 completions.Community Champions Course7Developed and launched new,open-source Community Champion Fundamentals course on Starbucks Global Academy.Starbucks empowers our partners,customers and communities to take action and make a difference at home and around the world as Community Champions.Community Champions serve their communities in big and small ways to make a positive impact for people and the planet.In FY22,we created a new Community Champion Fundamentals course on Starbucks Global Academy to help partners and community members understand how to identify community needs and then align those needs with their own passions and motivators for doing good.Starbucks Coffee AcademyNearly 150,000 enrollments and more than 96,000 course completions.The Starbucks Coffee Academy offers an in-depth review of the coffee industry and Starbucks pioneering role in responsible sourcing,roasting,blending,brewing and crafting.The modular learning format is open to everyone,and enables learners to select their coffee education journey.Since its launch,more than 285,000 people have enrolled in Starbucks Coffee Academy with more than 160,000 course completions.Third Place Development SeriesFour sessions designed and implemented,with nearly 3,000 people enrolled and more than 300 course completions.Starbucks seeks to create a third place a warm and inviting place where people can convene and connect.Through videos and discussion prompts,the Third Place Development Series intends to spark insights and confront biases as we strive to create more inclusive practices in our communities.Starbucks collaborates with external experts to discuss important issues and create a welcoming space for all to form meaningful connections and challenge our own biases through diverse lived experiences.Since its launch,nearly 3,000 people have enrolled in the course with more than 300 completions.STARBUCKS GLOBAL ACADEMY7 The geographic scope of this data point includes globally company-operated markets and licensed markets.Global Environmental&Social Impact Report 20 2023 Starbucks Corporation.All rights reserved.partner engagementINVESTING IN OUR PARTNERSPartner Networks8Partners are engaged in 12 Partner Networks and 114 regional chapters across the U.S.26 Partner Networks are available globally.Our Partner Networks launched in 1996 with the Pride Alliance partner affinity group.These partner-led groups bring together partners and have been celebrated across the global business community as a leading example of employee-led thought leadership.Through shared power,shared accountability and shared success,Partner Networks have helped us define the systems and programs that have proven critical to advancing a culture of equity and belonging.EST.2007Welcome,engage and empower Veterans,military spouses and advocates in cultivating a strong community that embraces Veterans in the workplace and enriches the Starbucks Experience.EST.2006Celebrate the Latinx culture,develop partners and positively impact our customers and communities.EST.2013Develop a global community contributing to the growth of the India market,celebrate Indian culture and support the growth of partners from the region.EST.2020Preserve and celebrate Indigenous cultural values and interweave communities by teaching and understanding our heritage.EST.2007Share the heritage of the African diaspora to develop partners,advise our business and enrich Starbucks contribution to our customers and communities.EST.2006Foster a community of awareness,inclusion and accessibility for partners with apparent and non-apparent disabilities.EST.2015Support and empower the next generation of Starbucks leadership.EST.1996Strive to cultivate an equitable,dynamic and supportive environment for LGBTQ partners,allies and customers.EST.2007Foster meaningful connections and elevate the impact of Pan-Asian partners and allies within Starbucks and the community.EST.2018Welcome,empower and advocate for refugee partners and allies while strengthening and enriching their global Starbucks Experience.EST.2021Educate,engage and empower partners to drive sustainable change.EST.2008Ignite the power of women to make an impact through partners,allies and community.U.S.PARTNER NETWORKS8 The geographic scope of this data point includes globally company-operated markets and licensed markets.Global Environmental&Social Impact Report 21 2023 Starbucks Corporation.All rights reserved.partner engagementINVESTING IN OUR PARTNERSCivic Engagement ResourcesIn FY22,more than 600 people,including customers and partners,accessed voter registration and election information(via Fuel Our Democracy)while more than 17,000 partners used civic education resources via Starbucks Partners Vote.To fulfill our commitment to civic engagement,Starbucks offers various tools and resources to our partners,enabling them to exercise their right to vote in every election.We provide voter education resources to help partners create a voting plan,and facilitate conversations between managers and partners to ensure that partners can participate in elections.Giving Match9Nearly$1.5 million donated to nonprofit organizations.Through the Starbucks Giving Match program,Starbucks recognizes and supports partners individual contributions of eligible financial donations and volunteer time to qualified nonprofit 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.At the end of FY21 and into FY22,our policy was enhanced to allow more access and equity to partners by reducing the minimum volunteering threshold from five hours to one hour($5 per hour in Giving Match)and more recently,by reducing the financial giving minimum threshold from$25 to$5.This change reflects Starbucks desire to support all of our partners in volunteering and giving whether their contributions are big or small.Because of the generosity of nearly 30,000 partners and increased engagement and utilization of the Giving Match,Starbucks donated nearly$1.5 million to nonprofit organizations in the U.S.and Canada in FY22 representing a 50%increase in Giving Match donations from FY21.9 The geographic scope of this data point includes all company-operated stores in North America.Global Environmental&Social Impact Report 22subsection title 2023 Starbucks Corporation.All rights reserved.SECTION TITLEGlobal Environmental&Social Impact Report 22 2023 Starbucks Corporation.All rights reserved.INVESTING IN OUR PARTNERSAchieved an average national pay rate for all U.S.hourly partners of more than$17.50/hour,with a range of$15 to$24/hour.Partner Investment:Origin ExperienceFrom January through March 2022,800 Starbucks partners(employees)from the U.S.and Canada traveled to Hacienda Alsacia the Starbucks research and development farm in Costa Rica for Origin Experience.Starbucks Origin Experience is an optional development incentive for eligible partners Coffee Masters who represent a variety of roles within the company,from barista to manufacturing to operations leaders to learn,see and experience the hard work,dedication and passion that goes into producing the coffee we serve every day in our stores.Partners see first-hand examples of how Starbucks is leading in the industry and hear from experts in agronomy,processing,buying,farmer support,quality and more throughout a learning visit during Costa Ricas coffee harvest season.Continued Commitment to Our HometownTo help alleviate the burden on partners of trying to address some of the challenges facing Seattle,Starbucks continued its commitment to a unique public-private partnership in Seattle Partnership for Zero.Starbucks will offer some of its downtown stores to be a safe,clean and welcoming space where Partnership for Zero System Advocates case managers with lived experience being homeless can connect with those needing to navigate social services,fill out paperwork and get on the path to permanent housing.Expanding Mentorship Across Starbucks Building on the initial success of Starbucks mentorship program,we announced the expansion of mentorship opportunities to include over 400 U.S.based retail partners,bringing the total number of participants to 1,395.fiscal 2023 highlightsGlobal Environmental&Social Impact Report 23 2023 Starbucks Corporation.All rights reserved.SECTION IIFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETbuilding a more equitable,sustainable and resilientGlobal Environmental&Social Impact Report 24 2023 Starbucks Corporation.All rights reserved.FUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETWe believe it is our responsibility to build a more sustainable,equitable and resilient future for coffee,our communities and our planet.We are working to create the future we dream of through the lens of humanity,with a deep commitment to globalhuman rights,responsible and ethical sourcing,community leadership from our partners and a focus on giving more than we take from the planet.Global Environmental&Social Impact Report 25 2023 Starbucks Corporation.All rights reserved.MM XXI IEvery day,across the globe,Starbucks works to enhance the well-being of all who connect with the brand,through actions and programs rooted in opportunity and inclusion.Our work is informed by our partners,who live and work in the communities we aim to support.From service projects to spreading messages of hope,together we are working to nurture the limitless possibilities of human connection.FUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETour communitiesGlobal Environmental&Social Impact Report 26 2023 Starbucks Corporation.All rights reserved.our communitiesFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETOUR STORESCommunity Stores10In the U.S.,seven Community Stores opened in FY22,bringing our total U.S.Community Stores to 28.In Asia,eight Community Stores opened in FY22,bringing our total international Community Stores to 19 stores.Starbucks Community Stores are spaces that aim to help uplift communities in locally relevant ways.The stores are inclusive of several store models from serving under-resourced and historically under-resourced communities,to empowering farmers,youth and women and creating impact in partnership with local nonprofit organizations.These store concepts led by partners who directly connect to the initiative or cause of that store provide intentional and dedicated programming and experiences that support economic opportunity in communities,create pathways to opportunity for Starbucks partners and amplify the positive impact of Starbucks partners and the Third Place.In FY22,15 new Community Stores opened across the nation and around the world.There are 28 Community Stores in the U.S.and 19 outside of the U.S.These stores have provided approximately 175 job opportunities in underserved communities in FY22,bringing overall employment in Community Stores to nearly 700 job opportunities to date.Community Stores also serve as a community gathering space.In FY22,our Community Stores provided four new community rooms,adding to our total of 28 community spaces across all Community Stores.Our goal is to open 100 Community Stores by the end of 2025 in the United States.Military Family StoresOpened 33 Military Family Stores,bringing our total Military Family Stores to 111 stores.Starbucks Military Family Stores serve as a central gathering place for active military personnel,Veterans,their families and surrounding communities.These stores,located near major military bases,provide a sense of connection and support for military families who are often far from their loved ones.Additionally,the stores collaborate with Veterans Service Organizations to link local Veterans and their families with important resources and services.At the end of FY22,111 total Military Family stores were open and serving our Veterans and their families.While we did not meet our goal to open 132 stores by 2022,we will continue to update on our progress annually and anticipate reassessing this goal in the coming fiscal year.Signing StoresFive new Signing Stores opened globally,bringing our total to 16 Signing Stores.Starbucks Signing Stores are staffed by store partners who are proficient in sign language.These stores provide a space for the Deaf and hard of hearing community to connect and celebrate Deaf culture through sign language.Starbucks opened 5 Signing Stores in FY22,and currently operates 16 Signing Stores worldwide.10 The geographic scope of this data point includes globally company-operated markets and licensed markets.Global Environmental&Social Impact Report 27 2023 Starbucks Corporation.All rights reserved.our communitiesFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETThe Starbucks Foundation11Provided$17.5 million in grants to nonprofit organizations.Established 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.With the mission to strengthen humanity by transforming lives across the world,The Starbucks Foundation provided$17.5 million to over 3,000 nonprofit organizations to enable community resiliency and prosperity in FY22.The Starbucks Foundation makes strategic investments from the first 10 feet in coffee-growing communities to the last 10 feet in neighborhoods where coffee is served,with hyperlocal grants in partnership with partners and licensees,to youth-focused initiatives and in disaster response and resiliency efforts.In addition to the grants made in these key areas,The Starbucks Foundation invested in programs creating a positive impact for people and communities,such as water,sanitation and hygiene(WASH)access,refugee support and to organizations delivering services in our hometown of Seattle.Origin Grants11Achieved our goal of empowering 250,000 women and girls in coffee,tea and cocoa-growing communities,three years ahead of schedule.Announced new goal to positively impact 1 million women and girls in coffee,tea and cocoa-growing communities by 2030.Women play a vital role in their families,on farms and in communities,and they are disproportionately affected by challenges like the climate crisis.To support this effort,The Starbucks Foundation Origin Grants promote womens leadership,advance economic opportunities and provide access to WASH in coffee-,tea-and cocoa-growing communities for women and girls.The Starbucks Foundation exceeded its original goal of empowering 250,000 women and girls by 2025 and now aims to empower 1 million women and girls by 2030.Since announcing its original aspiration in 2018,the Foundation has positively impacted nearly 340,000 women and girls in origin communities.In FY22,the Foundation awarded nine grants totaling nearly$3 million in seven countries,including its first-ever origin grants focused on women farmers in Brazil and Mexico.Neighborhood Grants12Awarded$4.5 million in Neighborhood Grants bringing our total invested in hyperlocal nonprofits to more than$10 million,thanks to more than 45,000 nominations from partners since program launch.The Starbucks Foundation provides Neighborhood Grants to nonprofit organizations nominated by Starbucks partners from the U.S.&Canada to help build sustained impact and inspire increased partner volunteerism in our communities.In FY22,the Foundation received nominations from nearly 30,000 partners and awarded$4.5 million through nearly 3,000 Neighborhood Grants to hyperlocal organizations making a difference in the communities where our partners live and work.Since the launch of the Neighborhood Grants program,the Foundation has awarded more than$10 million to nonprofit organizations.Youth Equity Grants251,715 youth impacted and$1.2 million provided in grants.In FY22,The Starbucks Foundation achieved its commitment to invest$5 million in organizations serving young people of color in the U.S.Over the last two years,The Starbucks Foundations Youth Equity Grants have supported organizations delivering diversity,equity and inclusion initiatives,youth mentorship and leadership development programs,and life skills for youth through national-and local-level programs.In partnership with organizations like Big Brothers Big Sisters of America,City Year,Covenant House and YWCA USA,the Foundations grants have supported more than 375,000 youth since 2020.11 The geographic scope of this data point includes globally company-operated markets and licensed markets.12 The geographic scope of this data point includes all company-operated stores in North America.Global Environmental&Social Impact Report 28 2023 Starbucks Corporation.All rights reserved.our communitiesFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETGlobal Community Impact Grants13Awarded over$3.2 million to nearly 90 nonprofits across 42 markets.In March 2022,The Starbucks Foundation announced a goal to invest$30 million by 2030 in a new Global Community Impact Grants portfolio designed to drive locally relevant impact in the communities where Starbucks operates around the world.To realize and scale the initiative,The Starbucks Foundation invites Starbucks licensees that operate Starbucks stores across its three international regions Asia Pacific;EMEA;and Latin America&the Caribbean to nominate local nonprofit organizations for grants and coinvest alongside the Foundation to drive additional impact around the world at the local and regional level.In FY22,The Starbucks Foundation grants and corresponding donations from licensees totaled over$3.2 million to nearly 90 nonprofits across 42 markets.In Indonesia,The Starbucks Foundation and PT.Sari Coffee Indonesia,which operates Starbucks stores in Indonesia,have worked with Prestasi Junior Indonesia since 2019 in support of teaching youth about entrepreneurship through experiential learning.In 2021,more than 450 volunteers were mobilized to conduct experiences with 1,250 students in six cities.Now one of the first recipients of a Global Community Impact Grant in 2022,Prestasi Junior Indonesia will continue to deepen impact through a creative youth entrepreneurship program that will support youth in gaining business skills and building their own micro-enterprises over the coming school year.Disaster Response13Awarded$3.75 million in grants and activated more than$400,000 in customer donations.As part of our mission to uplift communities affected by disaster,The Starbucks Foundation provides grants to help communities prepare for and respond to disasters,as well as build long-term community resilience.This includes national and global support to the American Red Cross and World Central Kitchen,along with local investments based on community needs identified in partnership with Starbucks partners and community-based nonprofits.In FY22,the Foundation responded to support impacted communities,ranging from the Jackson,Mississippi water crisis to the Uvalde,Texas shooting,and engaged customers to join us in supporting hurricane relief efforts in North America and the Caribbean and humanitarian relief efforts for Ukraine.13 The geographic scope of this data point includes globally company-operated markets and licensed markets.Global Environmental&Social Impact Report 29 2023 Starbucks Corporation.All rights reserved.our communitiesFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETStarbucks FoodShare and Hunger Relief14 Nearly 13 million pounds of food in the U.S.has been diverted from waste streams and donated to hunger-relief organizations which is the equivalent of nearly 11 million meals.15 More than 1 million pounds of food in Canada has been diverted from waste streams and donated to hunger-relief organizations which is the equivalent of more than 1 million meals.More than$10 million re-invested into hunger relief efforts in communities.Since 2016,Starbucks has been committed to supporting hunger relief through its innovative Starbucks FoodShare food donation program in partnership with Feeding America,Second Harvest Canada and other hunger-relief organizations.Since then,Starbucks has invested more than$60 million into hunger relief efforts in the U.S.,and in FY21 made a commitment to reinvest$100 million by 2030 in hunger relief initiatives.Since Starbucks FoodShare was launched in the U.S.in 2016,60 million pounds of food have been diverted from waste streams and donated to hunger-relief organizations which is the equivalent of 50 million meals.Starbucks FoodShare in Canada launched in 2019,and cumulatively through the end of FY22,nearly 2 million pounds of food have been diverted from waste streams and donated to hunger-relief organizationswhich is the equivalent of nearly 2 million meals.Programs to support hunger relief are also operating in international markets including the Dominican Republic,India,Japan,Mexico,New Zealand,Philippines,Singapore,Thailand and the United Kingdom.In FY22,we furthered our commitments to help increase equitable access to nutritious food.Since 2021,$3.3 million,including$1.6 million in FY22,has been invested with 16 Feeding America partner food banks to implement initiatives that address equity in food access by supporting households with individuals who are Black,indigenous,and people of color residing in communities experiencing high food insecurity rates.These 16 food banks are in metropolitan areas with Starbucks Community Stores.In FY22,Starbucks made a$1 million investment with No Kid Hungry to support sustainable and scalable solutions for schools and community organizations feeding children.The investment is aimed at increasing equitable access to nutritious food in high need and historically underserved communities.14 The geographic scope of this data point includes globally company-operated markets and licensed markets.15 According to the USDA,1.2 pounds is equivalent to one meal.Global Environmental&Social Impact Report 30 2023 Starbucks Corporation.All rights reserved.our communitiesFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETCommunity Resilience Fund$21 million invested through the Community Resilience Fund.In 2021,Starbucks established the Community Resilience Fund with the goal to invest$100 million in the expansion of small businesses and the development of community projects in communities of color.In December 2021 and January 2022,Starbucks invested$21 million in the first seven Community Development Financial Institutions(CDFIs)to receive funding from the Community Resilience Fund.The funds initial investments are centered around 12 metropolitan regions and their surrounding areas in the United States,including Atlanta,Detroit,Houston,Los Angeles,Miami,Minneapolis,New Orleans,New York City,Philadelphia,the San Francisco Bay Area,Seattle and Washington,D.C.Outreach Worker ProgramOutreach workers across eight cities made more than 12,000 customer engagements and more than 1,800 referrals to a stabilizing program and resources.The Outreach Worker program was introduced as a pilot in FY20 to connect partners with local street outreach and social workers who are skilled in directing individuals to stabilizing programs and resources.The program partners with local nonprofit organizations that specialize in connecting individuals facing homelessness,mental health issues and substance use disorders to relevant resources specific to their city.During FY22,the Outreach Worker program scaled to Denver and San Diego,in addition to continuing operations in Chicago,Los Angeles,New York City,Philadelphia,Seattle and Washington,D.C.In FY22,Starbucks announced nearly$500,000 in investments to advance solutions that support those experiencing chronic homelessness in our hometown-the greater Seattle region.These efforts include partnering with the We Are In Coalition to support Partnership for Zero,led by the King County Regional Homelessness Authority(KCRHA),expanding support for nonprofits providing dignified access to basic needs including bathrooms,showers and laundry services for individuals experiencing chronic homelessness,expanding its commitments to the chronically homeless population by supporting Plymouth Housing and extending its investment in Northwest Harvest as part of our Starbucks FoodShare program.Community Champions16Globally,more than 43,000 partners took action as Community Champions,volunteering more than 143,000 hours in support of more than 5,000 nonprofit organizations.As Community Champions,Starbucks partners make a difference in the communities where they live and work.Community Champions cultivate connections in and out of stores and create a positive impact for people and the planet through volunteerism,donations,acts of kindness and by learning more about ways to make a positive impact in their community.Starbucks provides partners with tools to engage as Community Champions,build local relationships with nonprofits and empowers partners to grow their impact through resources like a newly launched Community Champion course on Starbucks Global Academy,which is also open to the public.Every U.S.and Canadian partner can access the Community Champion Portal,an online platform that serves as a one-stop-shop for volunteering,giving,requesting a Giving Match,learning about community engagement opportunities and tracking contributions.Partners are taking action as Community Champions in 28 Starbucks markets outside of the U.S.,up from five global markets reported in FY21.In the U.S.,nearly 17,000 partners took action as Community Champions,volunteering more than 71,000 hours in support of nearly 4,000 nonprofits.Outside of the U.S.,more than 26,000 partners took action as Community Champions,volunteering more than 72,000 hours in support of more than 1,000 nonprofits.16 The geographic scope of this data point includes all company-operated stores in North America.Global Environmental&Social Impact Report 31 2023 Starbucks Corporation.All rights reserved.MM XXI IStarbucks strives to give more than we take from the planet and to cut our climate,water and waste footprints by half by 2030.We do so with a stronger than ever commitment to a more sustainable,resilient future for our planet and for our communities.We are proud to partner with global organizations like Conservation International,the World Wildlife Fund and the United Nations.Feedback from these groups is essential to our journey towards a sustainable future.To support ongoing collaboration across sectors,Starbucks is a founding member of Transform to Net Zero(TONZ),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.FUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETour planetGlobal Environmental&Social Impact Report 32 2023 Starbucks Corporation.All rights reserved.our planetFUTURE FOR COFFEE,OUR COMMUNITIESAND OUR PLANETClimate 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 50%reduction in waste sent to landfill from stores(including packaging that leaves stores)and direct operations,driven by a broader shift toward a circular economy.2030 GOALSGlobal Environmental&Social Impact Report 33 2023 Starbucks Corporation.All rights reserved.our planetFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANET2030 GoalsDriven by the passion of our partners,we have set ambitious goals to give back more than we take from the planet and to cut our climate,water and waste footprints in half by 2030,working from a FY19 baseline.We are continuously working towards this bold promise in collaboration with our stakeholders partners,suppliers,non-profit organizations,industry partners,government,farmers and customers.We are proud to partner with global organizations such as Conservation International and the World Wildlife Fund to accelerate collective action for environmental stewardship.Through membership in the United Nations Water Resilience Coalition(WRC),were helping preserve freshwater globally and as a founding member of Transform to Net Zero(TONZ)were collaborating across the private sector to drive the transition to a net zero global economy no later than 2050.Grounded in Starbucks Mission and Values,our climate goal was validated as science-based by the Science Based Targets Initiative(SBTi)in FY21.We govern our sustainability commitments through the Starbucks Global Environmental Council,which is comprised of senior leaders from across Starbucks whose compensation is linked to the achievement of our ambitious goals.We also receive input from our Board of Directors and seek advice from external advisors who are experts and leaders in the sustainability field.FY22 ResultsStarbucks is committed to cutting our climate,water and waste footprints in half by 2030.We set ambitious goals because our commitment to building a more sustainable and resilient future for our planet and our communities is stronger than ever.As we reflect on progress toward our 2030 goals,we are at a crucial point on our journey to becoming a resource positive company.We remain dedicated to collaborating with industry experts to advance scalable solutions across our global business,innovating to drive solutions at scale and working with our partners to engage our customers and communities in our efforts.Compared to our FY19 baseline,GHG emissions increased 12%,water withdrawals increased by 15%and operational waste sent to landfill increased 5%.At this stage in our sustainability efforts,increases in GHG emissions,water,and operational waste are expected as we see our business grow.We have seen positive progress in our waste diversion rate from 26%in FY19 to 28%in FY22,driven by increased in-store recycling.Broadly,to drive progress towards our 2030 targets,we continue to identify,test,and scale innovative solutions across our global operations,while increasing engagement with our value chain partners and developing our measurement systems.Please find Starbucks comprehensive environmental data and reporting on page 64.17 Please find comprehensive environmental data and reporting for FY22 on page 66.Global Environmental&Social Impact Report 34 2023 Starbucks Corporation.All rights reserved.our planetFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETUsing our test-and-learn approach,we set five key strategies to meet our 2030 goals that are rooted in science,grounded in Starbucks Mission and Values and informed by our stakeholders,along with comprehensive research and trials:Renewable Energy and Clean Technology18In FY22,Starbucks in the U.S.and Canada maintained 100%renewable energy for company-operated retail operations.Starbucks U.K.company-operated market has achieved the same since FY18.Renewable energy powered 72%of company-operated facilities globally.Starbucks U.K.company-operated market has achieved the same since FY18.For the first time in FY22,Starbucks achieved 100%renewable energy for all North America company-operated facilities,including offices and manufacturing facilities.We remain committed to our effort to expand renewable energy projects in Starbucks markets.Starbucks continues to support the growth of green energy through long-term electricity contracts,direct ownership and by contracting for renewable energy certificates from new projects.In FY22,Starbucks completed its investment in 20 new community solar projects in New York,which are supplying solar energy to more than 24,000 households,small businesses,nonprofits,churches,universities and Starbucks stores.By 2030,Starbucks aspires to lead the retail industry in decarbonization solutions,including electric vehicle charging and onsite solar availability at stores and in adjacent locations.For example,in FY22,Starbucks launched a pilot-program with Volvo Cars to electrify the driving route from the Colorado Rockies to the Starbucks Support Center in Seattle,providing a string of familiar,reliable,clean and safe places to recharge themselves and their battery-powered vehicles.Volvo-branded electric vehicle chargers,powered by ChargePoint,will be available at up to 15 Starbucks stores,roughly every 100 miles on the route,with the first EV chargers online at the Provo,Utah store.Shift away from single-use to reusable packaging Invest in regenerative agriculture,reforestation,forest conservation and water replenishment in our supply chainInvest in better ways to manage our wasteInnovate to develop more sustainable stores,operations,manufacturing and deliveryExpand plant-based menu options13524STRATEGIES FOR CHANGE18 The geographic scope of this data point includes globally company-operated markets and licensed markets.Global Environmental&Social Impact Report 35 2023 Starbucks Corporation.All rights reserved.our planetFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETGreener Stores19More than 3,500 Greener Stores are certified,including 88 internationally.The Starbucks Greener Stores Framework,which was announced in 2018 and developed in partnership with the World Wildlife Fund,aims to drive the transformation of retail towards stores with lower environmental impact.The framework includes performance-based standards that cover the entire lifecycle of a store and aim to reduce carbon emissions,water usage and landfill waste.With a goal to build and operate 10,000 Greener Stores globally by 2025,Starbucks verified 3,596 Greener Stores in FY22.In FY22,our work also focused on continuous improvement in the program,launch of innovation measurements and global expansion.Building on the success of our first Greener Store opening outside of North America in Shanghai,in September 2021,we opened Japans first Greener Store in Tokyo in November 2021,which will help inform Starbucks Greener Stores expansion across Japan,and the first Starbucks Greener Store opened in Chile in June 2022.As part of our commitment to open-source educational materials,Starbucks launched the Greener Store Practitioner course on Starbucks Global Academy in FY22 to make the Greener Stores program more accessible to retailers 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 work to continue to grow and scale the program globally.Starbucks has opened 52 Greener Stores in Latin America and the Caribbean,five in Europe,the Middle East and Africa,five in Asia-Pacific,18 in Japan and eight in China.The Greener Store of the Year is awarded annually to celebrate stores that work to meet the Greener Store parameters for essential energy,water and waste reduction efforts,along with key initiatives to support partners in their work and communities.The Starbucks Greener Store of the Year in FY22 was the Beverly and Atlantic store in Los Angeles,which features 100%renewable energy coverage,landfill diversion programming,solar panels water recycling and sustainable materials in its design.19 The geographic scope of this data point includes globally company-operated markets and licensed markets.Global Environmental&Social Impact Report 36 2023 Starbucks Corporation.All rights reserved.our planetFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETReducing Single-Use Plastics&Packaging Waste20Starbucks continues its efforts to shift away from single-use plastics.In FY22,Starbucks expanded its test-and-learn strategy to help make reusables more convenient for customers.The company piloted reusable or returnable cup programs through 20 tests across North America,EMEA and China Asia-Pacific.These tests focus on multiple reusable cup programs or operating models including Starbucks“Borrow-A-Cup”program,100%reusable operating models,financial incentives and promotions,new customer experience upgrades and an emphasis on personal cups and for-here ware.While COVID-19 challenged Starbucks aspirations to increase the use of personal reusable cups in stores,the company remains on track to meet its goal of ensuring customers have the option to use their own personal reusable cup for every Starbucks visit in the U.S.and Canada including in caf,drive-thru and mobile order and pay.Recycling is a key component to reducing single-use plastics and remains a priority for the company.To support that effort,Starbucks works with recycling and municipal stakeholders across the country to advance recycling access for our packaging.Through the NextGen Consortium with Closed Loop Partners,the Foodservice Packaging Institute and The Recycling Partnership,we are increasing access to recycling and our work to find a more sustainable cup solution continues.In FY22,Starbucks launched an improved and more sustainable hot cup that is easier to recycle,and beginning in FY22,customers in the U.S.can now recycle their hot cups in Columbus,Cleveland,Dayton,Memphis,Houston and Buffalo.Starbucks is also working to add waste services to stores where possible,ensuring we have recycling services where they are commercially available.As a founding member of the NextGen Consortium,Starbucks has been working to address single-use food packaging alongside leading food and beverage companies globally.In FY22,Starbucks and McDonalds announced a joint$10 million investment in the NextGen Consortium to identify,accelerate and scale commercially viable,circular foodservice packaging solutions.Starbucks committed an additional$5 million with NextGen Consoritum in FY22 to innovate to a more sustainable hot cup.The consortium works together to do research and development for more sustainable single-use cup options while also working with waste infrastructure stakeholders to advance the recovery of foodservice packaging.Starbucks has invested$15 million with NextGen Consortium since 2018.In FY22,Starbucks also launched a new Starbucks Partner Waste and Recycling App,developed by partners as part of the Greener Stores Innovation Challenge,to help partners navigate complex and unique store recycling guidelines.The app puts everything partners need to know to reduce waste and recycle in one place,and features store-specific information and notifications,a sorting guide and the option to create store-specific signage to help partners and customers reduce waste.As we work with stakeholders and continue to learn,we are working to ensure our waste goals align with our industry-leading standards and meet the expectations of our partners,customers stakeholders.20 The geographic scope of this data point includes globally company-operated markets and licensed markets.Global Environmental&Social Impact Report 37 2023 Starbucks Corporation.All rights reserved.our planetFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETForest Conservation&Restoration560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia.Land-use change and deforestation are among the greatest climate risks facing the coffee industry.We are committed to pursuing zero net deforestation across our coffee supply chain.Building on initiatives launched in FY21 with Conservation International in Huila,Colombia and San Martin,Peru,Starbucks continued its efforts to protect and restore critical forests that coffee communities depend on in FY22.Working with more than 16 coffee farming communities,Starbucks and Conservation International supported training and education for farmers on more sustainable practices and helped farmers monitor carbon and water impacts on and around their farms.The goal of these projects is not only to achieve carbon neutrality,but also to enhance freshwater ecosystems and biodiversity.Our support of farmers extends into the community as we work together to build capacity of local plant nurseries,advance community and stakeholder engagement,and work to improve the water quality in surrounding water sheds.Starbucks Farmer Support Centers also play an important role in coffee communities to promote biodiversity and support restoration activities.For example,the Columbia Farmer Support Center distributed 38,000 native trees to farms in FY22.These trees are critical to restore conservation areas,support improved shade management systems,and to protect water resources.We also engaged customers in Colombia by offering a promotion that donated a portion of the sales of packaged coffee to purchase tree seedlings for local coffee farmers.Through this promotion,1,500 native trees were donated to farmers located in Nario,Colombia.Plant-Based MenuOur goal is to provide our customers with a variety of food and beverage choices in addition to sustainable dairy,and we have collaborated with plant-based innovators so that today nearly all stores across our markets offer plant-based food and beverage menu items.Our customers can customize any beverage on the menu with a variety of plant-based dairy alternatives,including soymilk,coconutmilk,almondmilk,and oatmilk.There is currently no additional charge for customizing beverages with plant-based dairy alternatives in our Company-operated markets in the United Kingdom or Japan or licensed markets in France,Belgium,the Netherlands or Luxembourg.In the United States,adding a splash of any plant-based dairy alternative to Brewed Coffee,Iced Coffee,Cold Brew,and Americano beverages is offered to our customers free of charge.Water StewardshipIn FY22,we provided nearly$2 million to support new and ongoing water stewardship projects.As part of Starbucks holistic water strategy,we are investing in water replenishment and WASH projects in high-risk basins,to help support watershed health,ecosystem resilience and water equity.As part of this strategy,our goal is to empower 5 million people with enhanced water access,sanitation and hygiene through community-driven solutions with a focus on women,girls and marginalized groups.In FY22,we provided nearly$2 million to support new and ongoing water replenishment and WASH projects in Brazil,Colombia,China,Ethiopia,Guatemala,Mexico,Peru and several projects in the United States.Because collective action is critical to supporting sustainable watershed health and restoration,we continue to prioritize partnerships and projects through the United Nations Water Resilience Coalition(UNWRC)where Starbucks serves as a leadership committee member.In this capacity,Starbucks is working closely with other peer companies and key NGO partners including Water.org,WaterAid,The Nature Conservancy,and the World Wildlife Fund to accelerate progress in critical basins around the world.Grants from The Starbucks Foundation support nonprofit organizations working to expand access to clean water,hygiene and sanitation around the world.In FY22,The Starbucks Foundation supported programs to help expand household and community water access in coffee-growing communities,water towers installed by Starbucks partners in 10 countries in Asia and Latin America,mobile shower programs that bring hygiene and sanitation services along with other wraparound services to individuals experiencing homelessness in U.S.cities.Global Environmental&Social Impact Report 38 2023 Starbucks Corporation.All rights reserved.MM XXI IFrom the merchandise on our shelves,to the furniture in our stores and the aprons worn by our baristas,Starbucks cares about the way in which these products are made and about the workers who make them.Our sourcing teams work directly with a diverse set of suppliers who share our commitment to ethical sourcing and social and environmental standards.We are committed to conducting business responsibly and supporting the communities where we operate,from sourcing beans to delivering coffee to your cup.Helping people thrive helps ensure the long-term sustainability of the premium products we provide.Whether its arabica coffee,tea,cocoa or manufactured goods,were committed to offering ethically purchased and responsibly produced products of the highest quality.FUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETcoffee and our supply chainGlobal Environmental&Social Impact Report 39 2023 Starbucks Corporation.All rights reserved.coffee and our supply chainFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETCOFFEEEthical Sourcing Performance(C.A.F.E.Practices)98.2%of coffee ethically sourced and verified through C.A.F.E.Practices.More than 31,000 people trained in best practices in agronomy and social responsibility as per C.A.F.E.practices program through 10 Farmer Support Centers globally.More than 43,000 bags of coffee traced using the Digital Traceability tool with more than 122,000 unique visitors accessing the tool.Launched in 2004 in collaboration with Conservation International,Coffee and Farmer Equity Practices(C.A.F.E.Practices)is a verification program that assesses the supply chain based on economic,social and environmental criteria,aimed at promoting sustainable,profitable and transparent coffee-growing practices while ensuring the welfare of coffee farmers,workers,their families and communities.Since 2004,the program has grown to include the participation of more than 400,000 farmers in over 30 countries.Starbucks recently made several operational changes to strengthen the programs verification approach,including increasing the frequency of audits and incorporating unannounced audits.Our goal is to source and verify 100%of Starbucks coffee through C.A.F.E.Practices.In FY22,we achieved 98.2%ethically sourced coffee as verified through C.A.F.E.Practices.Despite the easing of challenges brought on by the pandemic to verify and transport coffee,we did see minor pandemic-related impacts continue in FY22 though significant improvements were seen from the previous year.In FY21,95%of coffee was verified through C.A.F.E.Practices.Farmer Support Centers21Starbucks operates 10 Farmer Support Centers(FSCs)as part of our work to assist farmers in coffee-producing countries and support the implementation of C.A.F.E.Practices across Starbucks coffee supply chain globally.These centers offer free training directly to farmers and to technical specialists through a train-the-trainer approach,benefiting over 31,000 people worldwide in FY22.Farmers receive the latest insights from Starbucks agronomists,including techniques that support farmer profitability and sustainable growing practices.To help demonstrate farming best practices,in FY22,FSCs launched a program called Model Farms,which serve as learning locations for the community to learn and teach sustainable practices.In partnership with suppliers and farmers,Starbucks FSCs have established more than 70 Model Farms.In FY22,the FSCs also developed an open-source manual on coffee quality to increase access to information on important practices after harvesting the coffee cherries to maintain quality.Starbucks FSCs are also supporting deployment of our environmental sustainability projects,like providing fertilizer recommendations based on soil analysis reports for optimized use of fertilizers and providing training related to new processing equipment to significantly reduce the water used during coffee processing.Digital Traceability22We know where our coffee comes from from the farmers who grow our coffee to the baristas who serve it with care and we want to share that journey with our customers.In 2020,Starbucks introduced its Digital Traceability tool in North American retail stores,giving coffee enthusiasts an opportunity to learn the stories of the people and places who grow and share the coffee we enjoy.Since the launch of our tool in 2020,nearly 400,000 unique users have visited our site to trace their coffee.Through digital traceability we aim to empower partners and customers with information about the people and places behind every cup.21 The geographic scope of this data point includes globally company-operated markets and licensed markets.22The geographic scope of this data point includes all company-operated stores in North America.Learn more about ethically-sourced coffee and our work with Conservation International.Global Environmental&Social Impact Report 40 2023 Starbucks Corporation.All rights reserved.coffee and our supply chainFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETSUSTAINABLE FUTURE FOR COFFEECarbon Neutral Green Coffee by 2030 Nearly 14,000 additional soil samples were processed across six priority countries.To date,contracted more than 1,300 eco-wet mills.To protect the resiliency of the coffee supply chain,the people that make it possible and the planet we all share,Starbucks set goals to achieve carbon neutral green coffee and conserve water usage in green coffee processing by 50%by 2030.In FY22,we worked to refine the methodology we use to calculate the carbon and water footprint of green coffee.This work is foundational to begin reporting progress in the years to come and connects directly with industry efforts,including the Sustainable Coffee Challenge.Precision agriculture in coffee farming has great potential to reduce our on-farm carbon footprint.Starbucks is working to identify innovative ways to better understand the specific nutrients and fertilizer needed to grow high-quality coffee while reducing carbon emissions.In FY22,we continued to provide financial support to promote soil analysis as a mechanism for farmers to understand soil nutrition requirements,replacing generic fertilizer recommendations with a specific recommendation for producers.Building on our efforts last year,13,811 additional soil samples were processed across six priority countries.Wet mills are used in C.A.F.E.Practices supply chains to separate the fruit of the coffee cherry from the coffee bean.By using eco-wet mills,Starbucks has an opportunity to conserve water by ensuring farmers have access to more environmentally-friendly machines,which also standardizes quality and increases processing efficiency for farmers.In FY22,Starbucks contracted additional centralized eco-mills,expanding the scope of the effort to additional countries including Honduras and Uganda.The preliminary results have demonstrated up to 90%water savings is possible in coffee processing using the new equipment.In FY22,we have been carefully studying and working with our suppliers to evaluate any impact that changes to processing may have on quality.Results are showing that eliminating traditional fermentation and the use of water saving equipment is not impacting coffee quality in the countries where we are deploying new equipment.Climate-Tolerant Coffee TreesMore than 9.5 million climate-tolerant coffee trees distributed globally through Starbucks 100 million tree commitment.Starbucks committed to a 10-year,100 million-tree initiative to boost the quality and output of coffee crops in El Salvador,Guatemala and Mexico by 2025.Starbucks has distributed nearly 70 million trees that are resistant to rust,a disease linked to climate change.We are working to help farmers improve their farms and increase their output and income.Since making the commitment in 2016,we have learned a lot along the way about deploying a program at this scale.One opportunity we identified was the material the containers are made of that are used to grow the seedlings,so in 2019,we began exploring the use of reusable and environmentally friendly pots for the coffee trees.Thanks to extensive research and piloting,in FY22 more than 1 million trees were produced using paper pots,and 1.6 million trees were produced in reusable tubes.Both the paper pots and reusable tubes protect seedling roots and are more efficient for transporting trees to farms.Global Environmental&Social Impact Report 41 2023 Starbucks Corporation.All rights reserved.coffee and our supply chainFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETIn addition to the 100 million tree commitment,Starbucks is focused on growing,transporting and distributing the next generation of coffee trees with an eye on sustainability for the entire sector:In FY21,we set a new target to distribute over 45 million coffee trees to C.A.F.E.Practice-verified farmers in Colombia by 2023.Working alongside the Colombian Federation of Coffee Growers(FNC),we provided more than 19 million seedlings in FY22.We have also provided financial support to ensure nutritional needs for seedlings are met when planted for early growth and tree success.Starbucks focus on sustainability for coffee trees goes beyond our supply chain to the entire coffee industry.We are developing and sharing research about coffee tree hybrids that provide resistance to pests and disease,increase productivity and have a good cup profile to help farmers adapt to climate change and support farmer profitability.Under our open-source strategy,we are donating more than 3 million seeds per year from our core collection at Hacienda Alsacia to farmers globally to help the coffee sector adapt to the impacts of climate change while we increase crop productivity and income for many coffee farming families.Childcare Centers for Farming FamiliesFive new childcare centers opened in Guatemala.Childcare centers help provide safe spaces for local and migrant workers children to continue their education during the coffee harvest season in Guatemala.For the 2022-2023 harvest season,we opened five new centers,bringing the total number of childcare centers supported by Starbucks in Guatemala to 14.Global Farmer Fund23Three new loans issued bringing total to$65.8 million in loans deployed since FY18 and$80.8M since inceptionThe Starbucks Global Farmer Fund was established to enhance the resilience of the supply chain and secure a long-term source of coffee by addressing the unfulfilled business financing needs of farmers.Farmers often cannot access traditional banking options for business loans due to excessive interest rates and an inability to meet 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.In FY22,we issued three new loans including a climate note to support farmers to adapt to the impacts of climate change and another directed to women in agriculture,both through Root Capital.23 The geographic scope of this data point includes globally company-operated markets and licensed markets.Global Environmental&Social Impact Report 42 2023 Starbucks Corporation.All rights reserved.coffee and our supply chainFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETResponsible Sourcing for Tea99.7%of tea sourced by the global tea sourcing team was verified as responsibly sourced.In FY22,the global tea sourcing team sourced 99.7%of its tea from Rainforest Alliance Certified tea gardens.Our tea suppliers and tea gardens are audited against rigorous human rights and environmental standards.In FY22,all of our tea suppliers were in the process of transitioning to the new Rainforest Alliance certification standard focused on greater impact,increased transparency and stronger assurance that farms are working towards a more responsible and sustainable future of tea.We are committed to transparency of our tea supply chain,and in FY22 we released a complete list of the tea gardens that supply our tea.In addition to buying certified tea,Starbucks invests directly in tea communities in projects that support gender empowerment,water,sanitation and hygiene(WASH),youth education and environmental sustainability,each responding to specific needs in tea communities.In FY22,we supported eight projects in Argentina,China,Indonesia,Kenya and Rwanda.We also believe that by working with others in the tea industry we can have greater impact.Starbucks has been a member of the Ethical Tea Partnership(ETP)for more than a decade.ETPs mission is to create a fairer,better and more sustainable tea industry for workers,farmers and the environment.Through the ETP platform,we engage with the global tea sector,international brands and buyers.Responsible Sourcing for CocoaThe companys global cocoa sourcing team directly purchased 12 million kilograms of Rainforest Alliance certified,segregated cocoa beans from Cte dIvoire.Our approach to sourcing cocoa responsibly is built on a foundation of traceability,responsible purchasing practices and a commitment to supporting resilient livelihoods for cocoa producers and their families,including reducing and collectively working towards eliminating the risks of child labor and cocoa-driven deforestation.We pay a sustainability premium per metric ton of cocoa sourced to implement activities with cocoa producers,cooperatives and communities.For example,in FY22 nearly 11,000 cocoa producers were trained in Good Agricultural Practices and more than 2,800 cocoa producers were informed,trained and/or consulted on the new forest code,law enforcement,forest protection and restoration.Four cocoa communities now have an active forest restoration and protection program to promote forest protection and restoration.By conducting deforestation risk assessments we are supporting no further conversion of any forest land for cocoa production.Over 70,000 multi-purpose trees were distributed for on-farm planting to promote sustainable livelihoods and income diversification for cocoa producers.We supported 30 Village Savings and Loan Association groups to promote financial inclusion and innovation to deepen farmers access to working capital and investments funds for production and farm renovation.Addressing the salient challenges across the cocoa industry requires aligned collective action.In FY22,Starbucks became a signatory member of the Cocoa&Forest Initiatives(CFI)framework to help end deforestation in Ivory Coast and a member of the International Cocoa Initiative(ICI)and the Swiss Platform for Sustainable Cocoa(SWISSCO)to evolve and strengthen our approach to responsibly-sourced cocoa.By engaging in these sector initiatives,we are committed to working with stakeholders to advance effective solutions and strengthen our contribution to the cocoa sector.In FY22,The Starbucks Foundation made its first grant to support cocoa communities in Cte dIvoire.The grant to CARE aims to reach 2,000 women in cocoa communities in Cte dIvoire with economic opportunities,increasing their access to resources and markets and integrating gender,nutrition,hygiene and sanitation.In FY23,we will continue to support all these efforts that support a more equitable,sustainable and resilient future for cocoa,communities and our planet.Global Environmental&Social Impact Report 43 2023 Starbucks Corporation.All rights reserved.coffee and our supply chainFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETResponsible Sourcing for Manufactured Goods and Services Maintained 97%transparency in factories assessed globally.Increased annual factory assessments to 306 from 213 in FY22.Our ethical sourcing program includes our standards for manufactured goods and services,including beverages,food,merchandise,equipment and furniture.We partner with manufacturing factories in 40 countries globally and hold our suppliers and ourselves accountable for more than 87,000 workers through stringent worker welfare conditions.Commitment to continuous improvement is the cornerstone of our program,and on-site factory assessments to identify potential or actual violations to our standard have been a key part of our strategy since 2006.As factories focused on COVID recovery,we increased our factory assessments from 213 in FY21 to 306 in FY22.We are proud that our third-party auditors confirm that we maintained 97%transparency in factories we have audited around the world,as defined by having full access to factory records,documents and operations.Please refer to our data tables at the end of this report to review the number and type of non-compliant items identified in FY22.Supplier Diversity and Inclusion24Nearly$900 million spent with Tier 1 diverse suppliers.25The Starbucks Supplier Diversity and Inclusion program drives inclusion of qualified businesses with a focus on suppliers of all sizes and categories.In January 2022,we expanded our commitment.In FY22,Starbucks spent nearly$900 million with Tier 1 direct diverse suppliers.In addition,our spending with diverse suppliers supports more than 7,200 jobs in the U.S.and Canada.Over the last two years we have expanded our program to include Tier 2 supplier26 program participation.We will continue to work with all suppliers in our program to exponentially affect increased economic impact and representation of diverse-owned suppliers in our supply chain.We know that our commitment to diversity and inclusion includes the way we communicate with our customers.In FY21,we committed to allotting 15%of our paid media budget to minority-owned and targeted media companies.We are proud to share that we exceeded our goal in FY22,investing 18%of our paid media budget to reach diverse audiences.24 The geographic scope of this data point includes all company-operated stores in North America.25 Tier 1 suppliers are companies from whom Starbucks directly purchases a given product or service.26 Tier 2 suppliers supply goods and services to other suppliers.Global Environmental&Social Impact Report 44 2023 Starbucks Corporation.All rights reserved.coffee and our supply chainFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETANIMAL WELFARECage-Free EggsIn our North American company-operated stores 100%of eggs are cage-free,inclusive of branded products supplied to our licensee business partners in North America.In our EMEA and U.K.company-operated markets,99.9%of eggs are cage-free.27In Asia markets where Starbucks operates,such as China and Japan,cage-free egg production is limited and supply is not yet widely available.We remain committed to increasing cage-free egg supply in all company-operated stores globally,in partnership with industry stakeholders.Antibiotics100%of poultry raised without routine use of medically important antibiotics.Starbucks engaged with our suppliers and set a goal to serve only poultry raised without the routine use of medically important antibiotics in all company-operated U.S.stores by 2020.We met that goal in 2018 and proudly continue to serve poultry raised without the routine use of medically important antibiotics.Broiler ChickensWe are actively reviewing our broiler chicken commitment to identify the best path forward for implementation within our supply chain.Over the next year,we will be setting baseline targets for implementation,which will be included in the FY23 GESI report.Sow Housing22%of pork is group-housed for U.S.and Canada.28Group housing significantly reduces a sows time in a gestation stall.We aim to phase out the excessive use of gestation stalls for mother pigs(sows)in our supply chain by 2030.This includes stalls where the pigs are unable to move freely.This commitment extends to all Starbucks branded products,including those supplied to our licensee business partners in the U.S.and Canada.To reach our goal of phasing out the excessive use of gestation stalls,we will specify 100%“group housed”pork as a requirement of our pork suppliers in the U.S.and Canada and take steps to ensure a“group housed”pork supply by 2024.Sustainable Dairy Piloted aspects of Starbucks new Sustainable Dairy Program across the U.S.,China,and U.K.-company-operated markets.Invested$2 million in the U.S.Dairy Net Zero Initiative as part of its$10 million commitment.As a company that works with and relies on the farming community every day,it is Starbucks responsibility to help drive solutions that support both people and our planet and that help ensure a sustainable future of dairy.In FY22,the United States,China and U.K.company-operated markets piloted key aspects of a new Sustainable Dairy Program to help refine and scale an approach to sustainable dairy and environmental stewardship for the betterment of people,planet and animals.These markets focused primarily on baselining GHG emissions on several dairy farms within their supply chains and piloted key aspects of a new on-farm holistic standard.Insights from these pilots will be applied in FY23 and FY24 as the program rolls out to several global markets.As Starbucks continues to offer more plant-based options on our global menus,dairy remains an important option for many customers.However,dairy is a significant contributor to our carbon and water footprints.To meet our 2030 planet goals,we are working to source dairy in a responsible and sustainable way.Starbucks is dedicated to providing farmers access to environmentally and economically sound practices and technologies,covering everything from feed production to cow care and energy efficiency.Starbucks has invested$4 million in the U.S.Dairy Net Zero Initiative since joining in FY21.2927 Cage-free egg data is as of November 2022.28 Sow housing baseline data is as of November 2022.29 In FY21,we reported that Starbucks invested$10 million in U.S.Dairy Net Zero Initiative.Starbucks has committed to investing$10 million to the U.S.Dairy Net Zero Initiat
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