1About this ReportAbout XiaomiBoard StatementStakeholder EngagementMateriality AssessmentTechnology Created to Better LivesXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceCharimans Address2About this ReportAbout XiaomiBoard StatementStakeholder EngagementMateriality AssessmentTechnology Created to Better LivesXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceCharimans AddressContentCharimans AddressAbout this ReportAbout XiaomiBoard StatementBoard StatementMateriality AssessmentKey Performance01020304050683Exploration and Accessibility of TechnologyProduct and Service QualityData Security and Privacy ProtectionPrivacy ProtectionTalent NurturingSustainable Supply ChainSocial Welfare and Community EngagementClimate Mitigation and AdaptationWaste Management and Circular EconomyNatural Resources and BiodiversityCorporate GovernanceBusiness Ethics122227305361703442497780Technology Created to Better LivesShared Success for PartnersXiaomis Zero Carbon PhilosophyGovernance and Compliance01About this ReportAbout XiaomiBoard StatementStakeholder EngagementMateriality AssessmentTechnology Created to Better LivesXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceCharimans AddressCharimans AddressIn August 2023,we announced an upgrade to our technology strategy,selecting technology areas that offer long-term value to human civilization and committing to sustained long-term investment.As a global technology company,Xiaomis success is no longer confined to short-term economic gains but is founded on the harmonious coexistence of environmental,social,and governance(ESG)factors.The ESG practices have become a crucial driving force in our strategic upgrade,steering us towards a more sustainable and responsible development path.In this era of globalization and booming information technology,environmental responsibility has become indispensable to corporate operations.We solemnly pledge that by 2040,our existing operations will achieve carbon neutrality and use 100%renewable energy.This commitment reflects our firm determination and demonstrates Xiaomis proactive stance as a responsible technology company in addressing global climate change challenges.To achieve the Paris Agreements goal of limiting global warming to 1.5C,Xiaomi steadfastly adheres to a technology-driven core philosophy.We prioritize achieving carbon neutrality by enhancing energy efficiency,employing clean technologies,and promoting smart manufacturing innovations.Simultaneously,we actively lead the green and low-carbon transformation of the entire value chain,committed to providing our partners with greener,more innovative,and more sustainable products and services to build a brighter,low-carbon future collectively.Regarding social responsibility,we uphold the fundamental principles of helping the needy,talent empowerment,and technological innovation.We actively practice our founding mission to give back to society and ensure that the benefits of technological progress reach everyone.We are well aware that Xiaomis success is intertwined with societal support.Therefore,we are committed to continually contributing to society and realizing Xiaomis social value.From the governance level,we have deeply integrated ESG management into our business operations and management systems,treating it as a core strategic element for driving the companys continuous development.We are committed to becoming a leader in cutting-edge global technology,recognizing the critical role of natural resources in our products and services.We strengthen mutually beneficial relationships with partners and adhere to principles of compliant operations to ensure the companys robust growth.We deeply implement Xiaomis sustainability philosophy and aspire to contribute more to global sustainable development.Herein,I extend my heartfelt gratitude to every partner and user for their unwavering support and trust.We shall collectively look forward to Xiaomis exciting innovations and breakthroughs under the auspices of its technological prowess.Together,Let us forge a more prosperous,splendid,and harmonious future through clean and inclusive technology,exceptional products and service experiences,and optimized corporate operations.01Founder,Chairman and CEO Jun Lei 02Charimans AddressAbout XiaomiBoard StatementStakeholder EngagementMateriality AssessmentTechnology Created to Better LivesXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceAbout this ReportAbout this ReportThis is the sixth environmental,social,and governance(ESG)report published by Xiaomi Corporation(“Xiaomi,”the“Group,”or“we/us”),with an aim to present,on an objective and impartial basis,the ESG strategy,management,and implementation progress of Xiaomi and its subsidiaries included in the Annual Report in 2023.The Report was prepared in accordance with Appendix C2 Environmental,Social and Governance Reporting Guide to the Listing Rules of the Stock Exchange of Hong Kong Limited(HKEx),with reference to the Global Reporting Initiative(GRI)sustainability reporting Standards(2021),the Hardware Sustainability Accounting Standard of the Sustainability Accounting Standards Board(SASB),and the Recommendations of the Task Force on Climate-related Financial Disclosures(TCFD),and the United Nations Sustainable Development Goals(UNSDGs).In preparation for the Report,we adhered to the reporting principles of Materiality,Quantitative,Balance,and Consistency,while taking into account Accuracy,Balance,Clarity,Comparability,Completeness,Timeliness,Verifiability,and Sustainability Context to define our reporting boundary and ensuring proper presentation of our reported information.The Group entrusted BSI Management Systems Certification(Beijing)Co.,Ltd.to perform reasonable assurance on selected ESG KPIs in accordance with the international assurance standards,AA1000 Assurance Standard V3,and the GRI sustainability reporting Standards(2021).For more detailed assurance procedures and assurance report conclusions,please refer to the attachment“Independent Assurance Statement.”This Report covers the period from January 1,2023,to December 31,2023(“this year”or“the reporting period”)and presents information over a wider time frame spanning before or after 2023 to enhance data comparability and continuity.The information and cases within the Report are primarily cited from the Groups statistical reports,official documents,and financial statements in 2023.Unless otherwise specified,all currencies and amounts mentioned in this report are measured in RMB.The Group undertakes that there are no false records or misleading statements in this Report,and takes responsibility for the authenticity,accuracy,and completeness of the information in this Report.It is recommended to read this Report in conjunction with the section titled Corporate Governance Report as contained in the Annual Report,as well as the Sustainability page(https:/ the Groups official website,and Xiaomi Corporations TCFD Report 2023.This Report is published in both Chinese and English in April 2024.In the event of discrepancies between the Chinese and English versions,the Chinese version shall prevail.If you have any suggestions or comments about this report,please contact Xiaomi by the following means:E-mail:mi-03About this ReportCharimans AddressBoard StatementStakeholder EngagementMateriality AssessmentTechnology Created to Better LivesXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceAbout XiaomiAbout XiaomiXiaomi is a consumer electronics and smart manufacturing company with smartphones and smart hardware connected by an IoT platform at its core,with smartphone shipments among global top 3.In December 2023,the global monthly active users(MAU)of Xiaomi1 reached 641 million,representing a year-on-year increase of 10.2%.Xiaomi has also established the worlds leading consumer AIoT2 platform,to which 740.0 million smart devices had been connected(excluding smartphones,laptops,and tablets)as of December 31,2023.In 2023,we continued to make significant progress in our smartphone premiumization strategy.The Xiaomi 14 Series,our flagship smartphone launched in October 2023,garnered widespread acclaim for its leading-edge technology,exquisite design,exceptional imaging,and excellent user experience.1 Note:Including smartphones and tablets.2 AIoT:Artificial Intelligence of Things.In August 2023,we introduced our new goal for 20202030,which was to invest in foundational core technologies and to become a global leader in the evolving realm of cutting-edge technologies.In October 2023,we upgraded our corporate strategy to“Human Car Home”and unveiled our new operating system,“Xiaomi HyperOS”.In December 2023,we held our Xiaomi EV Technology Launch event,unveiling Xiaomi EVs five core self-developed technologies E-Motor,Battery,Xiaomi HyperCasting Technology,Smart Cabin,and Autonomous Driving.We also officially debuted the Xiaomi SU7 Series.In the pursuit of our strategic goal,we always adhere to our commitment to enriching and improving users life experiences.We are constantly promoting technological innovation,aiming to build a platform of excellence in the international arena of smart technology,lead the new trend of industry development,and present a richer and more colorful smart life experience for users around the world.04About this ReportCharimans AddressAbout XiaomiStakeholder EngagementMateriality AssessmentTechnology Created to Better LivesXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceBoard StatementBoard StatementXiaomi has implemented effective strategies to balance its environmental and social impacts with business goals and promote sustainable development of the Group.The Board of Directors of Xiaomi(the“Board”)firmly believes that continuous advancement of the ESG management framework is crucial to the sustainable development of the Group.Xiaomi should continue to accelerate business growth by reducing ESG risks and increasing ESG opportunities,and contribute to a sustainable society through its business.Therefore,all members of the Group are committed to continuously exploring and improving the ESG system and driving Xiaomi towards a more sustainable future.To this end,the Board has appointed the Corporate Governance Committee(the“CGC”)to oversee ESG issues at Xiaomi,with the assistance of the Groups Sustainability Committee(the“SC”).In addition,the Group has integrated key ESG risks into its comprehensive risk management system.Senior management and business directors are engaged in assessing key ESG risks related to the business.By identifying and assessing the probability,impact,and trend of key ESG risks,Xiaomi Corporation has developed corresponding risk response measures.The Board reviews key ESG-related risks on a regular basis and advises on risk management approaches.Xiaomi Corporation continues to develop and improve the Groups ESG strategy system based on its existing ESG strategy.On a bi-annual basis,the Board collects and analyzes data required for assessing ESG risks,and synchronously discusses and reviews relevant strategies and measures.In this manner,it evaluates the comprehensive impact of various ESG strategies on the Groups overall finances through scenario analyses of the performance of the strategies,ensuring alignment with the Groups development strategy.During the reporting period,the Board actively participated in the assessment of ESG risks and opportunities and identified important matters.It focused on supply chain risks,product and service quality risks,among others.The Audit Committee assisted the Board and senior management in overseeing the Groups risk management practice,as well as the design,implementation,and management of its internal control system.Details can be found in the“Corporate Governance Report”section of the Groups Annual Report,which has been reviewed and approved by the Board.The Board prioritizes gender diversity in Board membership and equality and inclusion undertakings.It continues to promote a diverse perspective on corporate governance,higher gender awareness,and gender equality within the organization.In January 2024,the Board reviewed,scrutinized,and approved the appointment of a female director.For details,please refer to the“Corporate Governance Report”in the Annual Report.In 2023,the Board looked into ESG issues that substantially impacted business and closely concerned Xiaomis stakeholders,including the ESG strategy and the progress of sub-issues.The assessment process and results are detailed in the“Stakeholder Engagement”and“Materiality Assessment”sections of this Report.This year,the Board reviewed the Greenhouse Gas(GHG)emission reduction target of Xiaomi Corporation.For details,please refer to the“GHG Emission Reduction Target and Carbon Footprint”section of this Report.The Board also reviewed and evaluated Xiaomis operational environmental targets for its delivery progress and the latest adjustment of these targets and provided recommendations for changes accordingly.Details can be found in the“Environmental Target Setting and Review”section of this Report.This Report was reviewed and approved by the Board on March 19,2024.0405About this ReportCharimans AddressAbout XiaomiBoard StatementMateriality AssessmentTechnology Created to Better LivesXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceStakeholder EngagementStakeholder EngagementAt Xiaomi,we actively listen and respond to the expectations of our stakeholders,uphold transparent disclosure,and release updates throughout the year on our Sustainability page(https:/ have established effective communication mechanisms and diverse communication channels with stakeholders on material issues to ensure that their opinions and recommendations are being integrated into our decision-making process.We endeavor to strengthen our positive relationships with stakeholders and strive for mutual benefits and win-win outcomes on sustainability issues.Key StakeholderIssues Most ConcernedMain Communication ChannelsUsersProduct and service qualityData security and privacy protectionSci-tech innovationData inclusionSales channels,the official website and applications,product information disclosure,user service channels,feedback and communication channels,product launch events,social media,and Xiaomi Fan activitiesShareholders and InvestorsRisk managementCorporate governanceSci-tech innovationCorporate strategy and business returnsSustainability indicatorsAnnual general meetings,annual reports/interim reports,earnings announcements,investor meetings and events,the official website,press releases/announcements,surveys,and questionnairesEmployeesEmployee rights and communicationEmployee development and talent nurturingEmployee wellbeingCorporate cultureInclusion and diversityWork environmentWork communication meetings,the employee feedback email box,internal office software,the labor union,employee service channels,organizational ability surveys,training,internal announcements,and whistleblowing channelsSuppliersLabor rightsBusiness ethicsCompliance and stewardshipSupply chain continuityEnvironmental and social issuesExecutive dialogues,suppliers conferences,business and technical collaboration,supplier audits,empowerment and training,surveys,dialogue and reporting mechanismsKey StakeholderIssues Most ConcernedMain Communication ChannelsOperatorsProduct qualityTechnological innovationInformation security and privacy protection Sustainability indicators esponsible purchasingExecutive dialogues,synergy and collaboration,sustainability seminars,survey and questionnaire responses,and third-party auditsRegulatorsEconomic impactLegal and regulatory compliance Business ethicsOccupational health and safety Fair competitionRegular inquiries,policy consultations,executive meetings,reporting procedures,on-site inspections,opinion contributions,and meetings and communication with government agenciesInternational organizations and non-governmental organizations(NGOs)and associationsClimate change and environmental impactsHuman rights and stewardshipInformation disclosureCommunity engagementCircular economyNatural resources and biodiversitySocial media,industry conferences,forums and working groups,seminars,project-based collaboration,and survey and questionnaire responsesMediaInformation disclosureBusiness strategiesData security and privacy protectionSustainability strategyThe official website,social media,press conferences,press releases/announcements,and media interviewsCommunityEnvironmental impactsLocal employment and economic GrowthCommunity welfare and engagement Natural resources and biological diversityCommunity activities,press conferences,job fairs,charity works,and social media06About this ReportCharimans AddressAbout XiaomiBoard StatementStakeholder EngagementTechnology Created to Better LivesXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceMateriality AssessmentMateriality AssessmentDefining Objectives and ScopeWe conduct an annual review and analysis of our material issues.Our major stakeholders in this materiality assessment include investors,the Board of Directors,senior management,partners,employees,and other key representatives from internal and external roles and organizations.To ensure that Xiaomi is adaptable to the rapid changes in these issues,any emerging issues,and sustainability demands in the longer term,we have established an ongoing review and analysis process.It serves as an integral component of our materiality assessment and analysis mechanism to ensure continued relevance and responsiveness.Throughout the review and analysis of these issues,we have adhered to the“double materiality”principle.It dictates that if a sustainability issue poses a significant impact on society or the environment,and also on Xiaomis strategic goals,value drivers,competitive position,and long-term value creation for shareholders,it will be considered as a material issue with potential ESG attributes.Our materiality review and analysis aim to identify and consider key sustainability risks and opportunities and to achieve the following objectives:Organizational scope and boundaries:061.Identifying key sustainability risks and opportunities related to Xiaomis business operations,cash flows,legal or regulatory responsibilities,and access to capital;2.Optimizing our sustainability strategy and aligning it with our business targets;3.Providing sustainability information for Xiaomis broader business strategy,with a focus on sustainable growth;4.Determining the core issues to be included in our risk management,sustainability,and annual operations;5.Engaging internal and external stakeholders to collect diverse opinions;6.Predicting sustainability issues that may impact Xiaomis development trajectory;and7.Setting targets to enhance Xiaomis business performance and efforts in sustainable development.Our materiality review and analysis keep a global perspective as well as an eye on operations in specific regions.The review and analysis cover various business units,including smartphones,the Internet of Things(IoT)and lifestyle products,and Internet services,across the Group.We take into account key issues throughout the value chain,including our own operations,the upstream(such as sustainable supply chains),and the downstream(such as waste management and the circular economy).07About this ReportCharimans AddressAbout XiaomiBoard StatementStakeholder EngagementTechnology Created to Better LivesXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceMateriality AssessmentIn the initial stage of the materiality assessment,the ESG team,the risk management team,and senior management collaborated to conduct a comprehensive review of information sources to create a broad list of potential material issues.During the process,we considered:3 The Paris Agreement:https:/unfccc.int/sites/default/files/resource/parisagreement_publication.pdf4 Guiding Principles on Business and Human Rights:https:/www.ohchr.org/sites/default/files/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf5 G20/OECD Principles of Corporate Governance:https:/doi.org/10.1787/ed750b30-enWe have given comprehensive evaluation of the risks and opportunities within Xiaomis context arising from material issues and relevant external trends.This includes assessing the risk of increased green transition costs associated with the issue of waste management and the circular economy,identifying the opportunity of potential cost savings and efficiency enhancement in the issue of product and service quality,and recognizing the potential for new revenues generated by green products and sustainable practices in the issue of climate mitigation and adaptation.Moreover,we value the engagement of external stakeholders.We have effectively defined and explained the issues in communication to solicit valuable feedback.This process entails identifying stakeholders who have a significant impact on Xiaomi,with a special focus on those who exert the most influence on us,such as investors,users,supply chain partners,and the media.Identifying Potential IssuesRisks and opportunities at all levels from business operations to the Group;Industry practices and comparison with industry benchmarks;Internal data reflecting business operations and sustainability impacts in the year;International standards,conventions and demands of major regulators,including the Paris Agreemen3,the Guiding Principles on Business and Human Rights4,and the G20/OECD Principles of Corporate Governance5;Influential evaluation indices for corporate ESG performance,such as the Dow Jones Sustainability World Index,and ESG disclosure frameworks and scoring methodologies,such as that of the Carbon Disclosure Project(CDP);More extensive ESG trends and challenges around the globe;andMedia reports on Xiaomis business areas.08About this ReportCharimans AddressAbout XiaomiBoard StatementStakeholder EngagementTechnology Created to Better LivesXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceMateriality AssessmentWe strongly believe that utilizing business strategies to address ESG issues is a fundamental approach to achieving sustainable development.To gain deeper insights into these issues,we have engaged in extensive communication with internal and external stakeholders.During the process,we utilized various methods,such as questionnaire surveys(with 2,046 valid responses collected in this survey),on-site visits,essential meetings,telephone consultations,and online platform communication.These efforts have allowed us to further refine the list of material issues and ensure a balanced and comprehensive representation of Xiaomis sustainability issues from a contemporary perspective.In the mid-stage of the materiality assessment,we placed particular emphasis on the internal relationships and potential overlaps between material topics,their alignment with Xiaomis business growth targets,and potential interactions.By gaining insights into these complex relationships,we accurately identified potential systemic risks and opportunities.Additionally,we took a holistic view to examine how each issue interacts with other factors,thus affecting both Xiaomis business operations and the well-being of stakeholders.This process includes:Demonstrating the relationships between each issue and relevant business roles,designing and implementing a quantitative review and analysis mechanism;Identifying the stakeholders associated with each issue and assessing the significance of the impact,with a focus on the impact on Xiaomis value creation;Assessing the strategic importance of each issue in implementing strategies,responding to current and future risks,identifying market opportunities,and fostering business development.Assessing and quantifying to the utmost the actual and potential sustainability impacts of each issue,as well as their relevance to the Groups major risks.In this way,we have determined the material issues and their priorities:Collating,Determining,and Prioritizing IssuesMaterial IssueGovernance and Key Business Areas DemonstratedProduct and service qualitySmartphones,IoT and lifestyle products,and Internet servicesExploration and accessibility of technologySmartphones,IoT and lifestyle products,Internet services,and innovative businessSustainable supply chainSmartphones,IoT and lifestyle products,and innovative businessClimate mitigation and adaptationSmartphonesData security and privacy protectionSmartphones,IoT and lifestyle products,and internet servicesTalent developmentManagement infrastructureCorporate governanceManagement infrastructureBusiness ethicsManagement infrastructureWaste management and the circular economySmartphones and IoT and lifestyle productsNatural resources and biodiversityManagement infrastructureSocial welfare and community engagementSmartphones,IoT and lifestyle products,and innovative business09We have also determined the following three key issues and analyzed their strategies and measures:We believe in the symbiotic relationship between ESG considerations and business growth.Xiaomi excels at solving problems through business and efficiency.We have integrated the material issues identified into the Groups risk management strategy to ensure the applicability and consistency of the analysis results of them.Material IssueCommitmentImportance to Xiaomis Long-Term ValueStrategyProduct and service qualityAs always,we are oriented by quality and strive to be the industrys first in quality and reputation.We treat users wholeheartedly,place users at the center,and make friends with them.We provide users with direct and effective solutions and warm service.We emphasize quality in every aspect,including R&D,manufacturing,marketing,sales,delivery and service.Product and service quality is the key to achieving long-term value and enhancing industry competitiveness.Superior quality can improve user experience and reduce resource waste and environmental impact caused by product damage.We continue to deepen the quality reform,adhere to the principle of quality first,pursue industry benchmarks,and place users at our core.In this way,we ensure that every product meets the high standards of the Xiaomi brand and drive the Companys long-term development and brand reputation enhancement in the global market.Sustainable supply chainWherever our suppliers operate,we seek to cooperate responsibly for win-win outcomes.We actively support the business and sustainability objectives of our global suppliers throughout our business and technology partnerships.We focus on the social and environmental impacts of our supply chain and respect the communities and ecosystems in which we operate.We ensure that we agree with our suppliers on protecting the environment,safeguarding employee rights,promoting employee health and well-being,improving production quality,and complying with business ethics.We also collaborate to address social and environmental issues arising from the use of raw materials.The ultimate efficiency pursued by Xiaomi cannot be separated from the outstanding performance of its global supply chain partners.Sustainable supply chain management can effectively reduce Xiaomis operating risks and enhance the stability and adaptability of its supply chain.We have reached a consensus with our supply chain partners to focus on key areas such as protecting the environment,guarding employee rights,promoting employee health and benefits,improving production quality,and observing business ethics.We also collaborate to address social and environmental issues arising from the use of raw materials.We continuously adjust and optimize our supply chain business strategies and practices and urge our suppliers to improve their governance and risk management.We collaborate with suppliers by supervising,assisting,and communicating with them and promote the implementation of effective management Programs by suppliers.In this way,we ensure that Xiaomis sustainable supply chain commitments are met and that the products and services delivered by Xiaomi to its users are in line with the Groups ESG strategy.Exploration and accessibility of technologyAt Xiaomi,we spare no efforts in practicing the mission that we relentlessly build amazing products with honest prices to let everyone in the world enjoy a better life through innovative technology.In 2023,we released a new technology strategy.We will put efforts into the underlying technology,adhere to long-term investment,deeply integrate software and hardware,and seek empowerment of Artificial Intelligence(AI)(Software X Hardware)AI.To achieve long-term value for Xiaomi,it is necessary to promote innovation in all its business lines.To this end,we will continue our investment in research and development(R&D)and pursue more breakthroughs in self-developed technological innovation to provide customers with experiences at honest prices.We are dedicated to technology fields with long-term value to human civilisation and insist on long-lasting continuous investment.We encourage innovation and the pursuit of technological excellence by articulating the Engineer Culture,and we advocate teamwork and the professional growth of engineers.Xiaomis technology R&D presence has entered 12 technology areas and 99 segments,including self-developed operating systems,self-developed basic chips,and 5G mobile communication technology.09About this ReportCharimans AddressAbout XiaomiBoard StatementStakeholder EngagementTechnology Created to Better LivesXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceMateriality Assessment10About this ReportCharimans AddressAbout XiaomiBoard StatementStakeholder EngagementTechnology Created to Better LivesXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceMateriality AssessmentDuring the reporting period,the Groups Board of Directors and senior management team looked back on the materiality review and analysis process and fully discussed the results.Subsequently,they gave replies and provided recommendations for sustainable development actions based on a broader business strategy.Additionally,we took into account feedback from key stakeholders and industry experts regarding the results of the materiality review and analysis.We have implemented an ongoing communication mechanism to ensure the continual strength of our materiality review and analysis process.Participation of Management and Crucial Feedback11About this ReportCharimans AddressAbout XiaomiBoard StatementStakeholder EngagementMateriality AssessmentXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceTechnology Created to Better LivesTechnology Created to Better LivesExploration and Accessibility of TechnologyProduct and Service QualityData Security and Privacy ProtectionPrivacy Protection0112About this ReportCharimans AddressAbout XiaomiBoard StatementStakeholder EngagementMateriality AssessmentXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceTechnology Created to Better LivesExploration and Accessibility of TechnologyAt Xiaomi,we regard the innovative technological core of our products and services as an crucial aspect of sustainable business operations.The development of Xiaomis technology system began with an integrated technological innovation,progressed into autonomous technological innovation,and further delved into disruptive technological innovation to attain mastery and dominance of key technological domains.We continually push the boundaries of technology,seeking optimal solutions for technology and interaction.We have established an overall technical architecture with wide coverage,great span,and depth around six levels:Perception,Communication,AI,System,Computation,and Output.With the support of an improved technological framework,we are committed to integrating multiple technological capabilities,increasing R&D investment,and providing users with more convenient,affordable,and widely applicable products and technologies.Xiaomis technology R&D endeavors now span across 12 technology areas,including 5G mobile communication technology,big data,cloud computing,and AI.Furthermore,leveraging smart manufacturing,our efforts have expanded into robotics,unmanned factories,and smart electric vehicles(EVs),totally 99 segments.By the end of 2023,we had established 10 R&D centers and employed an R&D team of 17,800,accounting for 53%of our total workforce.Meanwhile,our R&D expenses reached RMB19.1 billion in 2023,up by 19.2%compared with the previous year.We plan to invest more than RMB100 billion in R&D over the next five years(20222026).we had established 10 R&D centersR&D team of 17,800accounting for 53%of our total workforceour R&D expenses reached RMB19.1 billion in 2023up by 19.2%compared with the previous yearSimultaneously,we are committed to collaborating with partners to broaden technology education opportunities for a wider audience to promote digital inclusion,in addition to technological equality through extensive technological R&D as well as application efforts.Over the past decade,we have continuously delivered leading technology products to a growing user base,driven by deep underlying technological innovation and optimal efficiency throughout the entire chain.Through the Xiaomi Ecosystem product portfolio,we have also made unique contributions to global digital inclusion and technological equality development,establishing the worlds leading consumer AIoT platform.To this end,we have upgraded Xiaomis technology strategy,focusing on technology fields of long-term value to human civilization and insisting on long-lasting continuous investment.1213About this ReportCharimans AddressAbout XiaomiBoard StatementStakeholder EngagementMateriality AssessmentXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceTechnology Created to Better LivesExploration of TechnologyProduct InnovationXiaomi HyperOSIn the era of everything interconnected,IoT devices involve a huge number of complex operating system branches.The presence of various systems and protocols often poses challenges to connectivity between ecosystems.In response to this challenge,in 2023,we consolidated the underlying operating systems of four systems Xiaomi MIUI,Vela,Mina,and CarOS into a unified solution known as Xiaomi HyperOS,a human-centered operating system for the“Human Car Home”smart ecosystem.The system is committed to achieving the following goals:Xiaomi HyperOS,with a reconstructed underlying structure,maximizes the efficient utilization of the device hardware capabilities of Xiaomis diverse product range.With underlying support for more than 200 processor platforms and more than 20 common file systems,Xiaomi HyperOS caters to hundreds of device categories and thousands of commodities,significantly enhancing the single-end performance of a device.Through precise hardware resource scheduling,Xiaomi HyperOS optimizes device performance and efficiency.On lightweight devices with limited arithmetic power,Xiaomi HyperOS delivers to users a smoother operating experience and superior energy performance with its advanced performance scheduling.Xiaomi HyperOS facilitates seamless connection and real-time interconnection between devices,eliminating barriers between various hardware and harmonizing all connected devices.Xiaomi has independently developed Xiaomi HyperConnect,a cross-end interconnection framework that operates atop the core system.Xiaomi HyperConnect enables real-time networking and collaboration among ecological devices and also supports swift cross-device communication.Additionally,it offers features such as network discovery,data transmission,and message distribution,thereby providing users with an unprecedented Internet experience.Xiaomi HyperOS deeply integrates large language model(LLM)technology and creates eight major subsystems including the AI subsystem.These subsystems establish an intelligent operating environment,in which the core AI subsystem bolsters individual devices AI capabilities and makes the entire ecosystem smarter.This advancement enables devices to proactively comprehend user needs and respond accordingly.Leveraging LLM technology,the system can understand user habits across devices and offer personalized automation suggestions.Xiaomi HyperOS is committed to the principle of openness and strives to foster an open smart ecosystem.We open the cross-end interconnection framework capabilities of Xiaomi HyperConnect to all application developers and smart hardware manufacturers.At present,over 9,000 smart hardware device manufacturers across more than 200 categories have access to this system.Xiaomis self-developed Xiaomi Vela is also open-sourced for all IoT developers6 to support the global developer community.For more information,please refer to the Xiaomi HyperOS Technical White Paper7.6 Xiaomis IoT developers platform:https:/ Xiaomi HyperOS Technical White Paper:https:/cdn- OS 技术白皮书 V1.0.pdfXiaomi HyperOSOptimal performance ofindividual devicesefficient connectivityMore convenient and An open ecosystemStrong privacy security acrossAI empowerment-becoming theintelligent brain of the entire ecosystemthat provides proactive services to usersdevices and systems14About this ReportCharimans AddressAbout XiaomiBoard StatementStakeholder EngagementMateriality AssessmentXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceTechnology Created to Better LivesEverything InterconnectedIn our strategic practice of the“Human Car Home”smart ecosystem,we have established the worlds largest consumer-grade AIoT platform,leading global smart living through innovative models and continual enhancement of interconnectivity.Since the development of the Xiaomi ecosystem in 2013,our team has dedicated a decade of effort to harnessing algorithms in smartphones and AIoT devices.Our achievements include the bionic quadruped robot and MiLM-6B,our self-developed 6B large language model(LLM),which has been ranked first among LLMs with the same parameter scale in the reputable Chinese review lists C-EVAL and CMMLU.Xiaomis smart hardware is entering countless homes and penetrating various life scenarios.With the introduction of smart home products in dozens of categories,such as Xiaomi Smart Speaker,robot vacuums,and smart TVs,we have touched upon every aspect of users lives.Xiaomi has become the worlds largest consumer IoT platform,with 740 million devices(excluding smartphones,tablets,and laptops)connected to our AIoT platform,a year-on-year increase of 25.5%.The number of users possessing five or more devices(excluding smartphones,tablets,and laptops)connected to Xiaomis AIoT platform has reached 14.5 million,a year-on-year increase of 25.3%.Moreover,the Xiaomi AIoT platform is the smart hardware ecosystem with the most comprehensive category coverage.It encompasses more than 200 major categories of smart home appliances that cater to more than 95%of life scenarios,continuously spreading intelligence.The interconnection of smart home products has delivered the utmost convenience and an unparalleled smart living experience to users around the world.While leading the industry with our AIoT technology,we are committed to fostering technological innovation and advancement within our ecological chain partners.In November 2023,we hosted the IoT Ecosystem Partner Conference,where we unveiled the Open-source Sharing Program with our IoT ecosystem partners.Through initiatives such as the open-sourcing of Vela and the introduction of the Xiaomi HyperOS Connect technology brand,we strive to empower smart ecosystem partners,practitioners in the home industry,and individual developers to integrate seamlessly into the Xiaomi AIoT ecosystem and join hands to build the worlds largest“Human Car Home”smart ecosystem.141415Xiaomi EVIn December 2023,we unveiled our groundbreaking progress in five key technologies of smart EVs:E-Motor,Battery,Xiaomi HyperCasting Technology,Xiaomi Pilot Autonomous Driving,and Smart Cabin.We are reimagining the technology stack that defines the automotive industry,starting with the underlying core technologies,to ensure that Xiaomi EV leads in all aspects of the transportation industrys evolution to a more sustainable future.Collaborating with globally leading teams,we have developed Xiaomis HyperEngine series,V6,which is featured in Xiaomis first full-size high-performance eco-technology sedan,Xiaomi SU7 Series.The Xiaomi HyperEngine V6 delivers a maximum power output of 220 kW and a maximum torque of 400 Nm,while the Xiaomi HyperEngine V6s achieves a maximum power of 275 kW and a maximum torque of 500 Nm.The two HyperEngines boast a speed of 21,000 rpm,positioning them at the forefront in the world.We have developed a new super 800-V silicon carbide high-voltage platform,with a maximum voltage of 871 V.With whole-link and no-dead-angle thermal safety protection,we have adopted the worlds most stringent thermal failure safety standards:At a temperature of 55C,a fully charged battery can prevent heat dispersion,even in the absence of an operational water cooling system,thereby optimizing energy efficiency.For quality assurance,we have established our own battery pack factory to guarantee the performance and quality of the battery from the source.Xiaomis self-developed 9100t Xiaomi HyperCasting Technology Cluster represents a significant advancement in production efficiency and energy conservation compared to traditional automobile manufacturing,thus maximizing material efficiency.Collaborating with a national key laboratory of materials,we have developed Xiaomi Titans Metal,the Xiaomi Hyper Die-Casting alloy material,using our self-developed Multi-Material Performance Simulation System through tens of thousands of simulation experiments.This alloy ensures robust structural components of the vehicle and guarantees stable performance for the body.These achievements demonstrate Xiaomis unwavering commitment to environmental protection,efficiency,and safety in automobile manufacturing.Leveraging Xiaomi HyperCasting Technology,Xiaomi EV prompts a new era of sustainable development as an environmental pioneer in the industry.In the Xiaomi Pilot Autonomous Driving,we have developed three key perception technologies for smart driving,Adaptive BEV Technology,Road-Mapping Foundational Model,and Super-Res Occupancy Network Technology.Our Adaptive BEV Technology is the first of its kind in the industry,which facilitates more precise parking scenarios and wider urban scenarios.Our Road-Mapping Foundational Model learns complex road conditions and drivers driving habits to draw more rational driving trajectories.Our Super-Res Occupancy Network Technology can identify an extensive range of irregular-shaped obstacles.Based on Xiaomi HyperOS,Smart Cabin has built a unified visual interaction system and created a comprehensive shared ecosystem spanning from software to hardware,which provides users with the most convenient driving experience.The Smart Cabin marks that Xiaomis“Human Car Home”smart ecosystem has officially closed the loop.15About this ReportCharimans AddressAbout XiaomiBoard StatementStakeholder EngagementMateriality AssessmentXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceTechnology Created to Better Lives16About this ReportCharimans AddressAbout XiaomiBoard StatementStakeholder EngagementMateriality AssessmentXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceTechnology Created to Better LivesSmart ManufacturingThe rise of smart manufacturing and digital technology is driving greater efficiency in resource utilization,reducing waste reductions,and facilitating ecological restoration.As an industry spearhead,Xiaomi is committed to delivering innovative solutions to the manufacturing industry,enabling a fully digitalized management system across the entire value chain.By implementing precise product operations and management,we not only reduce costs but also increase productivity,highlighting the crucial role of digital efficiency in bolstering business competitiveness.Xiaomi actively participates in the intelligent transformation of the manufacturing industry through practice,investment,and collaborations.In the year,Phase II of Xiaomi Smart Factory was completed and delivered as a whole.By 2024,upon the completion of the installation and commissioning of all production lines,the company will have a capacity of up to ten million smartphones annually.Our Smart Factory,equipped with automated production lines,has achieved fully automated lights-out production across various processes including production management,mechanical processing,packaging,storage,and transportation.Our smart production line systems and technologies are highly self-developed.As of December 31,2023,Xiaomi had obtained more than 520 patents in the field of smart manufacturing worldwide.Xiaomi Smart Factory also serves as an“experimental field”for new processes,new materials,new technological pre-research,smart equipment R&D,and automated production.We have been exporting our smart manufacturing solutions to empower our partners in the manufacturing sector.Several of our supply chain partners have already adopted the full set of Xiaomis smart production process and operation system to facilitate their transition towards a highly efficient,low-energy,and intelligent manufacturing hub.We remain committed to leveraging our unique experience in smart manufacturing to drive positive change.While enhancing the upstream manufacturing sector,we will collaborate with numerous downstream eco-chain companies to support Chinas transition and upgrade towards smart manufacturing with Internet efficiency.From Smart Factory to Smart ManufacturingXiaomi had obtained more than 520 patents in the field of smart manufacturing worldwideXiaomi Smart Factory implements an innovative“module platform”approach,effectively tackling some of the industrys most intractable challenges and highlighting the immense potential of fully automated production lines.The Smart Factory is specifically designed to match the needs of different materials and manufacturing processes,allowing for flexible production and quick assembly line alterations at the user end.The solution offers tremendous flexibility and allows for quick adaptation to the constantly changing market requirements.This creates a standardized manufacturing platform that could be adopted to accommodate diverse production needs and dynamic market demands.By combining modules in different ways,over 180 types of process equipment have been installed in the assembly line which led to a reduction in line-alteration costs and an expedition to the delivery cycle.The equipment module reuse rate has increased from 50%to over 80%.In this agile production model,the first-pass yield rate has been raised by over 5%compared to the conventional process,with a production efficiency boost of approximately 60%,while significantly reducing unit equipment processing capacity and energy consumption.Case17About this ReportCharimans AddressAbout XiaomiBoard StatementStakeholder EngagementMateriality AssessmentXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceTechnology Created to Better LivesDigital efficiency has gradually become a key differentiating factor in enhacing the competitiveness of the Group and the country.At Xiaomi,we have developed a range of advanced digital tools,including the AIoT platform,retail management platform,and smart manufacturing and supply chain management platform.These technologies enable us to create a data loop across the“supply chain and manufacturing distribution product user”cycle.Utilizing big data and AI algorithms to build a central control platform,we apply intelligence in coordination,prediction,and operations in multiple scenarios,enhancing the overall efficiency of the industry.We establish a data-based factory by integrating data across“equipment industrial control data acquisition and monitoring operational management enterprise.”This approach enables automated production,enhances production efficiency,and reduces material and energy consumption in product processing.In the production stageDigital and Smart OperationsExtreme efficiency empowering climate actionsDigitalization and data analysis:We leverage advanced data analytics to optimize resource allocation,reduce energy consumption,and minimize waste generation.In the future,we will further strengthen data-based resource efficiency models,including climate-related indicators and analysis,to guide sustainable decision-making and operations.Smart inventory management:Leveraging AI and big data analysis for smart inventory management ensures efficient stock levels to meet consumer demands while minimizing excess inventory and emissions related to storage and waste generation.Guiding consumers toward making sustainable choices:By providing transparent digital flow data about products,we offer information on environmental footprints and incentives for consumers to foster sustainable consumption choices and behavior and create a more enjoyable customer experience.Product lifecycle management:Through end-to-end digitalization,we take a“cradle-to-cradle”approach to managing product lifecycle,reducing the generation of waste and minimizing the demand for new and virgin resources.Value chain climate adaptation:By utilizing AI-based stock allocation models,we can meet consumer demands and enable big-data-based product selection,smart stock allocation,and one-click sourcing.We can also predict and mitigate the impact of climate-induced disruptions on our supply chain.By optimizing logistics operations and improving inventory turnover and shipping efficiency,we reduce carbon emissions and help our suppliers adopt climate-resilient initiatives.Xiaomi values close collaboration with our ecosystem partners,including parts suppliers,manufacturers,logistics companies,and more.Together,we develop a digitalized management system to facilitate information sharing and synchronized operations,optimizing the efficiency of the entire value chain.In the supply chainXiaomis new retail model has revolutionized the industry by fully digitizing every aspect of the entire process and all underlying elements,encompassing people,goods,stores,rewards,promotions,and training.We have implemented the traffic models,and user management models to establish an end-to-end digitalized closed loop,empowering data-driven decision-making and business growth.Our new retail model employs a unified set of pricing,models,and systems capable of addressing diverse levels,industry trends,and market demands,successfully integrating digital infrastructure into sustainable development innovation solutions(Ecomagination).In the retail end18About this ReportCharimans AddressAbout XiaomiBoard StatementStakeholder EngagementIndustry-University CooperationXiaomis Accessibility of TechnologyAt Xiaomi,we have long been committed to fostering deep integration of industry,academia,and research,and cooperated with universities and colleges to nurture young students professional strength,innovation ability,and problem-analysis and problem-solving capabilities.Through the establishment of the Xiaomi Workshop in partnership with many universities and colleges across China,we focus on seven key cooperation areas(including the Xiaomi Lecture,technology competitions,joint innovation training,university-level forums for master and doctoral students,and collaborative industrial research).These initiatives aim to empower student employment,incubate innovation and entrepreneurship projects as well as the transformation of industrial research outcomes,and advance new engineering disciplines based on the integration of industry and education.We have developed series of bionic robot for consumers and developers.By the end of 2023,Xiaomis bionic robot series had been granted more than 140 valid patents worldwide.More than 270 applications are under review,among which Humanoid Drummer and the bionic robot have been showcased in leading industry journals such as IEEE Spectrum.Throughout the year,the Xiaomi Robotics Team collaborated with universities and colleges to organize numerous robotics competitions and engage in joint research on the intelligent control and intelligent perception of quadrupedal robots.Additionally,we have been active in voicing at international conferences such as the World Robot Conference 2023 to bolster industry development.In the midst of the burgeoning digital era,we remain steadfast in our mission to“let everyone in the world enjoy a better life through innovative technology”and“bridging the digital divide and making information accessible for all.”Driven by these guiding principles,we are dedicated to building an equal and inclusive digital ecosystem.Over the years,we have been unwavering in our commitment to maintaining our hardware net profit margin below 5%,thus reducing the price threshold for technological products and making technology accessible.With our business footprint spanning over more than 100 countries and regions around the world,we strive to dismantle economic and geographic disparities,ensuring that the benefits of technological advancement reach every corner of the globe.At Xiaomi,we embrace the values of inclusivity,diversity,and equality.We endeavor to make our products as equal,inclusive,friendly,and accessible as possible,enabling everyone to benefit from the support of Xiaomis technology and enjoy a better life.For more than a decade,we have prioritized inclusive technology.With continued efforts in accessibility features and adaptations,our focus has expanded from product accessibility to a human-centered support system for people with disabilities.Furthermore,recognizing the information barriers faced by people with disabilities,we are committed to creating a barrier-free digital world for this group by providing easy-to-use smart terminals and accessible information services.At Xiaomi,we uphold the concept of inclusive technology and have always been committed to promoting the mission of inclusive technology through technological development and application.Our goal is not only to enable people with disabilities to benefit from technology but also to offer technology experiences and tools that cater to the needs of users facing difficulties in life due to social exclusion,and situational disabilities8.We prioritize the development of a Human-centered Accessibility Support System,aim to gain insights into the inconveniences caused by various disabilities in life from a more diverse perspective,and constantly deepen our understanding of the needs of people with disabilities and their situational contexts.Leveraging AI technology,Xiaomi HyperOS now offers comprehensive services for people with disabilities from three aspects:vision,hearing,and body with auxiliary features such as accessibility haptic feedback,Xiaomi Ambient Sound Recognition,and AI Dialing Assistant,we provide a richer experience for users personalized needs.The Human-centered Accessibility Support System has been integrated into Xiaomi HyperOS,providing users with an all-around barrier-free interaction experience.With rich ecological connections and the voice control of AI Assistant,it also serves as a conduit for breaking down barriers and promote social integration.RoboticsVision for Accessibility of TechnologyInclusive Technology8 Situational disabilities:The term refers to disabilities that arise from specific situations or environments that affect peoples ability to interact with technology.18Materiality AssessmentXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceTechnology Created to Better Lives19About this ReportCharimans AddressAbout XiaomiBoard StatementStakeholder EngagementMateriality AssessmentXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceTechnology Created to Better LivesCaseHearing InclusionVision InclusionAccessibility Application in Smart HomesContinued Innovation in Inclusive TechnologyBody InclusionAt Xiaomi,we have been dedicated to solving communication challenges in hearing impairment scenarios.Relying on speech-to-text technology,the Xiaomi Sound Recognition Function(real-time subtitle)and the AI Dailing Assistant solve the communication inconvenience in daily face-to-face communication scenarios such as traveling and shopping,as well as in call scenarios,thus significantly improving users communication experience.Moreover,the Ambient Sound Recognition function effectively supplements users with a hearing impairment in perceiving ambient sound information.This technology recognizes 14 key ambient sounds,including fire alarms,baby cries,and kettle boiling sounds,providing critical safety and warning information to users with a hearing impairment.We have extended this feature to smart home devices(for example,Xiaomi Smart Family Screen),which allows users to monitor sounds of concern to users in their homes and send real-time notifications.This provides additional security for users with a hearing impairment in their homes.At Xiaomi,we have put efforts into enhancing independent and private information processing technology for visual impairment scenarios,catering to users operational needs.Our OCR9 image-and text-reading technology solutions empower users with a visual impairment to access text information from paper documents or product packaging with simplicity and precision.We have also streamlined the interaction of our text-reading technology,implementing automatic reading and segmented reading to simplify the text detection process.These enhancements improve the efficiency and accuracy of users screening and processing of information in visual impairment scenarios.To better cater to the needs of users with a visual impairment,we have provided accessibility functions such as Read Aloud with Selection,Screen Zoom,and Text Contrast.We have introduced the new Xiaomi HyperMind technology in Xiaomi HyperOS,revolutionizing smart homes with its“Active Intelligence”innovation and significantly enhancing the convenience of life for people with complex disability needs.Transcending the limitations of the traditional command-based smart home,HyperMind leverages its perceptual capabilities encompassing the environment,vision,hearing,and behaviors upon the users permission to learn the users habits and preferences,based on which it makes autonomous decisions using AI and proactively delivers services in appropriate scenarios.For users with limited perception,memory,judgment,and decision-making abilities,HyperMind serves as an active assistant even before the user realizes the need or when the user fails to complete the operation due to physical limitations.This proactive assistance alleviates the users difficulty in adapting to the operation of the smart home and enhances the autonomy of life.Leveraging Xiaomis multifaceted and diversified leading technologies,we hosted the fourth Hackathon Technology Competition of the Group this year.With a deep understanding of societal needs,Xiaomis engineers contributed Xiaomi wisdom to tackling accessibility challenges.They introduced AI Identification Glasses that feature multi-modal recognition and developed ambient sound detection technology and gesture interaction intelligent control technology,practically satisfying the needs of users with disabilities.Xiaomis engineers remain committed to innovating and applying accessibility technology to benefit millions of people with disabilities through technological advancements.At Xiaomi,we harness the capabilities of a technology company to assist people with a physical impairment in overcoming life barriers and lead convenience and a fun life.We have launched the first Android phone with voice control support,empowering users with a physical impairment to control their mobile phones through converting hand operation movements into voice commands.This innovation make it easier for them to navigate their daily lives.We have also provided an accessible“Touch and Hold Delay”feature.It ensures that extended taps will not be mistakenly recognized as long presses,alleviating difficulties in operating mobile phones in situations involving physical impairments.Xiaomis product design covers a wide range of usage scenarios for people with a hearing impairment.For users unable to use the voice interaction function,the gesture control feature of the Mijia DreamE Light allows for customized control of smart home devices through simple gestures,providing an efficient and easy-to-use alternative.Users with a hearing impairment can easily control smart home devices,free from voice commands or cumbersome smartphone operations.9 OCR:Optical Character Recognition.It refers to the technology for printed characters that optically converts the characters in a paper document into black-and-white dot-matrix images and then converts the characters in the image into texts using recognition software.20About this ReportCharimans AddressAbout XiaomiBoard StatementStakeholder EngagementMateriality AssessmentXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceTechnology Created to Better LivesTechnology Ethics and Digital InclusionTechnology EthicsAt Xiaomi,we place significant emphasis on gender,religious,and cultural inclusion in the application of AI technology.This approach guides us in designing products and services that prioritize the needs of all users.Under the guidance and supervision of the AI Ethics Committee,we are dedicated to upholding ethical guidelines and adhering to regulatory requirements that promote digital equality in the application of AI technology.We have established and implemented the Xiaomi AI Ethical Principles,which address AI law,privacy,security,transparency,and accountability,and apply to Xiaomis product development and applications.Through comprehensive and systematic training,we have raised the awareness of digital inclusion in every employee.In the field of AI,we have established the standards of Xiaomi Corporation for products accessing LLM algorithms.These standards are designed to govern the development and application process to foster the healthy,ethical,and secure development of Xiaomis products accessing LLM algorithms and to prevent the security,privacy,and compliance risks in the development and application process.The standards are aligned with the Cybersecurity Law of the Peoples Republic of China,the Data Security Law of the Peoples Republic of China,the Personal Information Protection Law of the Peoples Republic of China,and the Law of the Peoples Republic of China on Scientific and Technological Progress.We:Implement compliance processes for algorithms compliance assessment and pre-launch security testing;Formulated comprehensive security compliance requirements covering LLM sources,algorithm development process,training data10,model application and deployment,as well as specific requirements to safeguard users rights and interests with respect to the handling and transparency of users personal information;Remove biased and hate data during the raw data cleaning phase;Collect data from different sources and scenarios to increase the diversity of data sources and avoid possible data bias and discrimination;Utilize annotated data to train specialized security models to assess whether the generated content exhibits bias and discrimination,and continuously iterate LLMs by means of reinforcement learning;andEvaluate model performance using multiple metrics in across various dimensions,prioritizing not only the accuracy and utility of the generated content but also on its security and fairness.10 Training data:All data that are directly used as inputs for model training,including input data from training processes such as pre-training,supervised fine-tuning,and reinforcement learning.21Xiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceElderly Friendly RetrofitsProtection of MinorsAt Xiaomi,we are actively bridging the digital gap for the elderly cross,facilitating their integration into the digital era and enabling them to reap the benefits of digital advancements.Tailoring our solutions to their specific needs,we have introduced numerous elderly-friendly retrofits across our mobile phones,smart TVs,and smart home devices.For users going out or facing difficulties in the use of mobile phones,features such as Family Guardian offer invaluable support.Moreover,we simplified the operation path of the software system,making it smoother and simpler to use smart devices.Through features such as High Volume Mode,Triple-Click Zoom,and Read Aloud with Selection,our elderly-friendly design delivers a new experience for elderly users to comfortably navigate smart devices.At Xiaomi,we always put the protection and healthy development of minors in the first place.As per the Law of the Peoples Republic of China on Protection of Minors,the Cybersecurity Law of the Peoples Republic of China,the Personal Information Protection Law of the Peoples Republic of China,and other pertinent laws,we have developed the Xiaomi Account Rules on the Protection of Childrens Personal Information,which outline that when collecting,using,transferring,or disclosing the personal information of minors,it is mandated for us to inform and obtain the consent of their guardians.These rules also delineate the information collected and its usage on smartphones,smart TVs,and audio devices.CaseIn the Chinese mainland,Xiaomi TVs Kids Channel adheres to the mission of“creating a childrens platform for fun companionship and learning through play to ensure that every child enjoys a wonderful childhood”and focuses on the four value aspects:safety,growth,fun,and companionship.With refined service design and technological innovation,it ensures the safe and healthy development of minors in the digital world.Our“Pure Mode”and rated and age-graded design customize our content recommendations to ensure that we accurately locate appropriate content that meets childrens cognitive and comprehension abilities.In the year,we launched the Museum Cinema popular science channel,enlightenment courses,interactive thinking exercises,digital illustrated books,and other quality resources.For details,please refer to the“Support for Education”section in this Report.In the Chinese mainland this year,we upgraded the content of Xiaomi Kids Channel under the guidance of the industrys first Blue Paper on Film and TV Viewing Guides for Minors jointly developed by a university.The upgrade,which covered our five major hardware products,namely,smartphones,smart TVs,tablet PCs,stereos,and childrens watches,further enhanced guardians guidance and supervision on minors digital behaviors.We have also launched anti-addiction functions,such as film viewing time control,eye protection mode,the child lock,and posture reminder,to protect childrens physical and mental health in an all-around way.11 Xiaomi Account Rules on the Protection of Childrens Personal Information:https:/ this ReportCharimans AddressAbout XiaomiBoard StatementStakeholder EngagementMateriality AssessmentTechnology Created to Better LivesTechnology Created to Better Lives22About this ReportCharimans AddressAbout XiaomiBoard StatementStakeholder EngagementMateriality AssessmentXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceTechnology Created to Better LivesProduct and Service QualityProduct QualityProduct Quality ManagementWe advocate the Big Quality Concept of User-centric,Integrating Product Quality,User Experience and Service Quality,with Full Participation and Closed-loop Management Across the Lifecycle,and always implement the management concept of Quality Is the Lifeline of Xiaomi.We have established a comprehensive quality management system for our quality management targets,as our relentless pursuit is to deliver the ultimate product quality and service experience to our users.The Quality Committee of Xiaomi Corporation(the“Quality Committee”)coordinates the quality management of the whole Group and formulates the Groups quality policy,objectives,quality management mechanism and requirements.Building upon this foundation,each business line continuously improves its quality management methods and measures,adhering to the ISO 9001 quality management system standards.Throughout the year,our business units of smartphones,tablets,laptops,home appliances,smart TVs,and IoT products either obtained or maintained ISO 9001 management system certification.At Xiaomi,we always insist on providing amazing products with honest prices.We continuously strive to maximize product quality and user experience by refining the quality management system,improving the management process,and performing procedure-based,standardized,and IT-based quality management.In 2023,we reinitiated the quality reform,upgrading the focus to“raising the bar and striving to be an industry benchmark.”As part of this effort,we have issued the Quality Organization Construction Guidelines of Xiaomi Corporation and guided each business unit to set up a Business Quality Committee.In this way,we established a robust quality management organization for the business units and ensured standardized and procedure-based quality undertakings.We have established a quality management system with distinct Xiaomi characteristics in light of Xiaomis business model.This year,we introduced an updated program document,the Group Quality Manual 2.0,adding strategic elements such as quality planning and medium-and long-term objectives.Aligned with the Groups development strategy of the“Human x Car x Home”smart ecosystem,we have devised a three-year quality plan with specific targets.Our objectives include enhancing comprehensively improving the maturity of our business quality management,establishing an industry-leading business high-quality delivery system and a high user experience assurance system,listening to and understanding users needs,improving quality expertise across the business chain,and continuing to foster a quality culture that puts“quality first”among all employees.We have adopted and optimized the IPD12 process system establish Mi-IPD,a closed-loop system aimed at enhancing whole-link hardware quality and experience.The system is designed to expedite the product cycle,from conceptualization to market launch,through cross-departmental collaboration and refined project management.Throughout this process,we remain committed to continuous improvement in product quality and user experience.We deeply integrate key departments such as marketing,development,supply,manufacturing,service,finance,and procurement,creating a flexible and efficient cross-functional project team.In terms of quality management,the cross-departmental team conducts predictive analyses of fault feedback ratios(FFRs),effectively identifying and preventing potential homogeneous problems.This approach enables issues to be resolved before launch,thereby reducing product risk and improving customer satisfaction.By leveraging the EWP(Early Warning Program)alongside with medium-and long-term closed-loop analysis,we monitor every aspect of the product from design to production for quality and continuous improvement,fortifying our quality management system.Xiaomis quality responsibility division and review mechanism ensures individual accountability for problem resolution and the development of targeted quality improvement strategies.This accountability-to-individual management approach improves the efficiency and accuracy of our problem-solving efforts.In addition,the seamless coordination between our R&D and service ensures that direct transfer of customer feedback to the quality assurance team,allowing for precise product quality enhancements that align with market and user needs.With these measures,we have created an all-around quality management closed loop from early warning to problem-solving,from responsibility tracing to continuous improvement.This robust closed-loop system enables swift responses to market and user feedback,reduces the likelihood of quality accidents,and enhances internal management efficiency and effectiveness,thus propeling us towards higher quality management objectives.During the year,we received 32 external awards for quality,including a CAQ Quality Technical Award from the China Association for Quality and three Business Improvement Case Awards from the China Quality Club.During the reporting period,Xiaomis products did not experience any product quality accidents due to health or safety issues,and the Group did not experience any product recall events in domestic or international markets.12 IPD:Integrated Product Development.The IPD management system encompasses the complete process of product planning,development,and lifecycle management from customer requirements to product retirement.23About this ReportCharimans AddressAbout XiaomiBoard StatementStakeholder EngagementMateriality AssessmentXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceTechnology Created to Better LivesProduct Quality Improvement InitiativesIn 2023,we completed 249 product quality improvement projects,including the Global Continuous Quality Improvement Project for Redmi Products,the Mobile Phone Manufacturing Yield Improvement Project,the Notebook Quality Improvement and Enhancement Project,the Critical Quality Improvement Project for Cabin Voice,and the Tumble Washer Noise Improvement Project.These projects cover smartphones,tablets,laptops,major appliances,smart TVs,and IoT products.We have implemented a smartphone hardware quality system that integrates the four dimensions of design,simulation,testing,and after-sales in a closed loop.This structured approach has enabled a science-based and sound quality index system.During the year,We have achieved a positive feedback rate of over 99%on e-commerce platforms,and the net promoter score(user experience surveys based on product quality)has increased by over 20%for three consecutive generations.Through comprehensive enhancements to our camera structure reliability simulation process,we have developed science-based and leading reliability analysis methods and analysis capabilities,effectively pre-empting reliability risks.We have completed the construction of simulation systems in key areas such as touch control on smartphone displays and device structure.These systems have been integrated into the project development process with continuous iteration and upgrading.As of the end of 2023,Xiaomis smartphone simulation system had undergone over 2,000 simulation iterations and intercepted over 450 risks.We have established an abnormality management mechanism for all product lines to address challenges in product line problem management.We performed closed-loop management in design,testing,production,materials,and processes.Furthermore,we have proposed special studies on various technologies to address different hardware issues and fully implemented them.We focus on developing and optimizing the quality index system.By establishing information technology and intelligent standards,we have continuously optimized our R&D quality.As a result of these efforts,the overall FFR of our smartphone products decreased to 36%compared to the previous year.Quality Awareness EnhancementWe prioritize the development of employee quality awareness.This year,we launched online and offline quality training courses covering the Groups quality system,product safety compliance requirements,quality management system,and quality management tools.These courses aim to instill Xiaomis core values in quality within our workforce and improve their quality awareness and professional capabilities.In 2023,we conducted general and specialized quality courses and tests for the quality staff and core position holders,along with core specialized courses for international business personnel.During the reporting period,we introduced the Group Quality Manual 2.0 and organized a“Quality Quiz for Everyone.”A total of nearly 28,000 people completed and passed the quality assessment.The continued growth of Xiaomi hinges on our professional quality management team.Therefore,we have accelerated the cultivation of quality management professionals through the certification of quality managers of the China Association for Quality(CAQ),Six Sigma Black Belt and Green Belt,and Performance Excellence Self-Assessors.For smartphone products13 90%:The battery cell presents a capacity retention rate 90%for 1,000 heavy-duty long cycles under a standard laboratory environment.The data is derived from the Xiaomi Lab,and the actual operation may vary slightly depending on the test environment,conditions,and other factors.14 Heavy-duty scenario:It refers to the higher discharge current generated when the high energy consumption features of a smartphone are in use.To extend the battery life,we have optimized the degradation of the core system materials by implementing a multi-scenario battery health maintenance strategy.We have developed a battery cycle aging estimation strategy.Through the integration of Xiaomis self-developed Starfish algorithm and big data models,we effectively enhanced battery quality and smartphone endurance.We introduced the Xiaomi Starfish algorithm.The Redmi K70E smartphone achieves 90 battery capacity retention under heavy-duty scenarios14.We have undertaken several projects aimed at optimizing pain points and improving hardware and software quality.These projects target Bluetooth rate,battery life,app experience,charging and discharging,and switching on and off.As a result,the FFR of our watch series decreased by an average of 57%during the year.In 2023,We have launched a battery quality improvement project.In 2023,For wearable products24About this ReportCharimans AddressAbout XiaomiBoard StatementStakeholder EngagementMateriality AssessmentXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceTechnology Created to Better LivesService QualityAt Xiaomi,we are committed to providing user-centered service.We take multiple measures to continuously expand our service offerings and always prioritize the swift and effective resolution of user issues.To enhance service quality and bolster each departments service quality management,we have instituted special performance indicators for the service department.Adhering to the SMART(Specific,Measurable,Achievable,Relevant,and Time-Bound)criteria,we have fortified our service quality management across multiple dimensions.In the process of determining and handling quality incidents,we integrate service quality management with business quality improvement.We summarize lessons from quality accidents and promote the experience of service quality improvement,thereby comprehensively enhancing the quality awareness of all employees and service providers.In terms of the process system,we have established and optimized the Issue-To-Resolution(ITR)process system15 to streamline our response to user feedback and enhance problem resolution efficiency.This system facilitates closed-loop quality management from identifying problems to resolving them,thereby delivering Xiaomis quality service to customers and significantly improving user experience.For user inquiries and complaints,we adopt the approach of immediate responses and mobilize resources from all departments to ensure efficient response and accurate,prompt,and reasonable resolution of all user issues.We review customer complaints every week and analyze them across multiple channels and dimensions,take improvement measures,and monitor their effectiveness.To facilitate user communication,we have established multiple channels,including online tools and stores,to actively address all customer concerns.Leveraging the ITR process system,we address user issues to continuously improve the user experience.In terms of IT,we have implemented targeted measures to elevate the customer service experience through technological innovation.Recognizing the growing demand for consultation and warranty,we have meticulously developed an online service system with processes for display and inquiry.Our goal is to provide users with a straightforward and easy-to-use platform,where they can easily access the required product information,solutions,and warranty status.In 2023,we displayed details of refunds and charges and corresponding explanations to customers on our official website,ensuring transparency of customer service information.This has resulted in a 33%reduction in customer complaints over refund information and relevant issues.In our stores,we made face-to-face interactions with users through user symposiums and exchanges as well as visits by product/R&D engineers to gather and address user concerns while refining our service offerings.Throughout the year,we organized 18 user forums,gathered 307 pieces of user feedback,solved more than 230 practical problems,and gained insight into the real needs of users.We also focus on catering to the personalized user needs and invite users to engage with Xiaomis business departments to explore future design possibilities.We always adhere to the spirit of“making friends with users”to enhance the overall service awareness of our employees and improve the service quality of the Group.By integrating the ITR process into Xiaomis service process and personnel training,we ensure that our service team can swiftly respond to user needs.We proactively track and quickly address user needs,optimize user experiences,actively explore service solutions,and achieve consistent and intensive service coverage.Moreover,we provide tailored product technical guidance and regular training to continuously enhance the professionalism and service of Xiaomis service team.We go beyond promoting the quality of our employees services to a high standard.We have established and implemented a system of rewards and penalties to incentivize our partners in terms of service quality and attitude.We offer rewards to outstanding partners who deliver top-notch services.Conversely,for partners who fail to maintain service quality,we will impose graded penalties based on the severity and impact of the incident,aiming to reduce the complaints stemming from partners.15 The ITR process system:The construction method and management process for an Issue-To-Resolution customer service system.Specifically,it refers to a customer-centered service process from problem identification to problem resolution,thus creating a closed loop of service in an end-to-end manner.25About this ReportCharimans AddressAbout XiaomiBoard StatementStakeholder EngagementMateriality AssessmentXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceTechnology Created to Better LivesAt Xiaomi,we have maintained our commitment to enhancing the user in-store experience and have achieved significant progress in sales and service integrated operations.Throughout the year,we have witnessed a 36.6%increase in the number of our sales and service integrated stores in the Chinese mainland that have full-service capabilities such as sales,returns and exchanges maintenance,and recycling.We have continually refined the management of store operational quality,establishing clear standards for store operations to ensure the healthy and robust growth of sales and service integrated operations.We have calibrated store targets,formulated subsidy policies for new stores,instituted mechanisms for monitoring store operations and evaluating outstanding stores,and issued the Sales and Service Operations Manual.These measures have facilitated the efficient conversion of sales and service,driving overall enhancement in the sales and service capabilities of our frontline store teams.In markets outside the Chinese mainland,we have introduced warranty policy differentiation,VIP customer service,and trade-in targeted subsidies for Xiaomis flagship models.Retail ServicesWe have continuously strengthened the service capabilities of our offline stores,expanded our service network coverage,and enhanced the accessibility of our user services.Throughout the year,we created a refined management system for store service indicators and established a closed-loop management mechanism from service quality monitoring to improvement.In addition,by improving trainer management and the store training mechanism,we deeply integrated the training content with frontline business operations.Moreover,we introduced a store risk control management system and developed the Xiaomi Service Store Compliance Code of Conduct,laying a robust foundation for operational compliance and capacity enhancement in our stores.These efforts ensure that Xiaomi stores continually refine and elevate their service standards while delivering exceptional services.By the end of the reporting period,in the Chinese mainland,Sales and Service Integrated OperationsIn-Store and Send-In Repair ServiceAt Xiaomis offline stores and service points,users have access to exchange,overhaul,and repair services.We continuously expand our service coverage and offerings.Throughout the year,we introduced new services such as insurance business access,out-of-warranty exchange for IoT products,and repair services for motherboards and screens of smartphones and laptop devices in the Chinese mainland,broadening our service scope.Additionally,we have bolstered our repair service capabilities by establishing service points.Over the reporting period,we established 3,778 stores offering in-store repair service and 124 stores offering send-in repair service in the Chinese mainland.We consistently meet user needs with an enhanced service network,strengthened repair service capabilities,and expanded range of business.We have also launched a new one-on-one“flash”delivery service in the Chinese mainland market,realizing instant delivery and repair in the same city.Consumers and users can enjoy a smooth and worry-free shopping and after-sales service experience through the“Store Flash Delivery”delivery and repair feature in Xiaomi Store.We had a total of 1,793 offline retail storesThe user service satisfaction survey showed an improvement of 4.5%compared to 2022;andThere are 5,108 engineers holding Xiaomis professional technical qualification certificates stationed in offline storesThe offline store service network had covered 91.86%of the cities in the Chinese mainlandWe hosted 2,789 engineer training sessionsproviding a total of 10,123 hours of trainingcovering 316 prefecture-level citiesan increase of 1.45%compared with 2022Warranty policy differentiation services encompass an international warrantya 2-year warranty and a complimentary replacement for a broken screenVIP services include one-time access to airport VIP loungesexclusive customer service,and an exemption from out-of-warranty labor fees,and special subsidies for trade-inIn some marketswe also offer fixed-price discounts for trade-ins26About this ReportCharimans AddressAbout XiaomiBoard StatementStakeholder EngagementMateriality AssessmentXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceTechnology Created to Better LivesOn-site(Door-to-Door)ServicesDelivery ServicesWe have expanded the coverage area of our on-site services by accelerating the construction of on-site(door-to-door)service points.As of the end of this reporting period,in the Chinese mainland,To achieve the optimal distribution of spare parts warehousing and to reduce turnaround times and logistics transport durations,we have established 25 spare parts storage centers across the Chinese mainland.This setup facilitates a short-distance and rapid spare parts storage network.We have also established a device warehousing and distribution network covering the whole Chinese mainland to further optimize the warehousing and distribution network.During the year,we achieved next-day delivery for 80%of our orders in the Chinese mainland.In 2023,we launched a pilot program for the integrated model of air-conditioner delivery and installation in the Chinese mainland.In the model,the delivery and installation process has been simplified,and rapid delivery is provided to meet users demand for immediate installation upon delivery.The delivery and installation time has been reduced by a total of 50 hours.We received 100%service satisfaction from our pilot customers.This model has covered 106 cities nationwide,with a total of 282 outlets,greatly enhancing the user experience.The one-time solution of delivery and installation achieves efficient synchronization of logistics and after-sales service as well as real-time and accurate mutual transmission of time information,which further shortens the logistics and installation time.Based on the integration capability of delivery and installation,Xiaomis integrated model for dismantling,delivery,and installation innovatively blends in after-sales service to provide users with a one-stop service from dismantling the old to installing the new.The successful trial of the integrated service model of delivery and installation has significantly improved our service efficiency and promoted Xiaomis continuous innovation in product service and user experience.Trial of the Integrated Model of Air-Conditioner Delivery and InstallationWe have built a total of 7,725 on-site service points.These on-site(door-to-door)service points are staffed by 32,058 engineers holding Xiaomi professional technical qualificationsThese engineers consistently deliver quality and fast services for on-site products.Our on-site service capability for home appliances has extended to over 2,000 district and county-level jurisdictions.2627About this ReportCharimans AddressAbout XiaomiBoard StatementStakeholder EngagementMateriality AssessmentXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceTechnology Created to Better LivesQuality Management for the Automobile Business LineData Security and Privacy ProtectionProduct safety is fundamental pillar in the Total Quality Management(TQM)system for Xiaomis automobile business line.Our aim is to guarantee that our products are not only safe and dependable but also of superior quality and in full compliance with legal and regulatory standards.The system covers the entire product lifecycle,with stringent testing procedures in place at every stage from R&D to production.To achieve this goal,Xiaomis automobile business line has established a TQM system that consolidates all procedures,management practices,quality standards,specifications,and operating guidelines pertaining to quality and safety for the Groups automobile and related business.By focusing on product features and problem management,Xiaomis automotive business line has built a quality management system.This system not only meets the basic requirements for access and the mass production system but also addresses the demands of each new product project in terms of product features and validation.It also ensures that all projects can be fully safeguarded by process and standard specifications.In addition,Xiaomis automobile business line has devised and implemented the development,trial operation,operation,and rapid iteration of digital management platforms,models,and processes,aimed at boosting the efficiency and efficacy of quality management.As at the end of the reporting period,Xiaomi EVs preventive quality system has fully completed,passed the trial operation validation,and officially entered the operational phase.Protecting user data privacy has always been one of Xiaomis core values.We consistently uphold international regulations and standards in our practices of data security and privacy protection.We develop and update Xiaomis privacy policy based on core principles contained in global privacy frameworks(such as those published by the OECD and the APEC)and privacy laws(such as the Personal Information Protection Law of the Peoples Republic of China,the EU General Data Protection Regulation(GDPR),and the General Personal Data Protection Act of Brazil),ISO standards,and regional industry guidelines(such as the guidelines of the European Data Protection Board(EDPB).Furthermore,we have been actively studying international trends to provide users with a privacy protection system that is in line with the development of modern technology.In the past year,we took steps to enhance information openness and transparency.We published or updated the MIUI 14 Security White Paper,the MIUI 14 Privacy White Paper,the Xiaomi IoT Privacy White Paper,the Xiaomi IoT Security White Paper,and the Xiaomi Transparency Report 2022.Our annual Xiaomi Transparency Report offers details about the data access requests received from law enforcement and government agencies worldwide,along with our responses to these requests.For more information on Xiaomis data security and privacy management,practices,reports,and policies,please refer to:Xiaomi Trust Centre https:/ Security Centre https:/ Privacy https:/ solid underlying core R&D technology provides a quality guarantee for the high range and high safety of Xiaomi SU7 Series.Battery safety and range performance:Xiaomi SU7 Series incorporates Inverted Cell Technology,which surpasses traditional solutions in heat dissipation and thermal insulation.It has passed the worlds most stringent battery safety testing.Additionally,it features 14 layers of robust physical protection and Xiaomis interconnected vehicle safety warning system,ensuring comprehensive battery safety.Active and passive safety:Xiaomi SU7 Series boasts an armor-cage-styled steel-aluminum hybrid body that effectively absorbs and disperses impact forces,thereby to enhance collision safety.It fully complies with the five-star safety standards of both China and the EU.Equipped with 16 active safety configurations,it prevents accidents at critical times.Moreover,we provide stringent privacy security protection to ensure users personal information and data security.Case2728About this ReportCharimans AddressAbout XiaomiBoard StatementStakeholder EngagementMateriality AssessmentXiaomis Zero Carbon PhilosophyShared Success for PartnersGovernance and ComplianceKey PerformanceTechnology Created to Better LivesData Security and Privacy Protection Governance StructureData SecurityAt Xiaomi,we believe that protecting user data privacy is paramount to fostering a secure and quality user experience while building trust with our users.We continuously iterate our data security and privacy protection management system and establish reasonable and effective management procedures and standards.The Group has established an Information Security and Privacy Committee(the“Security Privacy Committee”),which focuses on developing and implementing rules,managing security risks associated with personal privacy,advancing privacy technology capabilities,and enhancing risk response abilities.This year,we completed the change of term and reorganization of the Security Privacy Committee.Each business department now operates a Security and Privacy Working Group,contributing to a more mature data security system for the Group and effectively empowers the secure development of smartphones and other business lines.Xiaomis Board places great importance on data security and privacy protection.The Security Privacy Committee reports to the Board periodically on the Groups progress in this area and assists the Board in assessing risks in data security and privacy protection,countermeasures,and their efficacy.Based on these assessments,the Board offers management recommendations.In 2023,100%of the sites of our technology operations received certification under the ISO 2700116 for information security management systems(ISMS).This year,Xiaomi did not receive any validated complaints about data security and privacy protection.Data security and privacy protection is the core of Xiaomis continuous pursuit.We are steadfast in safeguarding users personal data and daily lives through the establishment of a leading security architecture and the adoption of powerful security technologies.Leveraging Xiaomi HyperOSs global security technology and the unified security capabilities of our IoT platform,we have established a set of technical requirements and management mechanisms covering smartphones,IoT devices,and Internet services.These measures utilize Transport Layer Security(TLS)and encryption algorithms to protect user data security.We effectively communicate our objectives and requirements of data security and privacy protection to our supply chain partners.We rigorously examine and manage the data security and privacy protection capabilities of our supply chain partners and develop emergency response measures for data security incidents.By doing so,we minimize potential risks and uphold our users data security privacy rights.We also protect the security of users personal information and data through software system security updates and security vulnerability fixes.Our smartphones and IoT products receive regular security updates,and we continuously disseminate security recommendations and notifications to inform users of newly identified security vulnerabilities,their potential impacts and remediation options,thereby helping users cope with the ever-changing security risks.We actively receive security vulnerabilities of Xiaomi products submitted by users and security researchers in the Xiaomi Security Centre.By receiving and validating vulnerabilities,determining the extent of their impact,determining vulnerability fix solutions,and promptly following up,we enhance the security of Xiaomi products and services.Xiaomis Data Security TechnologySecurity Strategy for the“Human x Car x Home”Smart EcosystemAt Xiaomi,we place a paramount emphasis on addressing users concerns regarding data security and privacy protection.We have incorporated them into the development of Xiaomi HyperOS.Xiaomi HyperOS has reconstructed its security and privacy architecture to establish an underlying foundation with the self-developed TEE17 as a security subsystem to reduce potential risks and improve the overall security of the system.Xiaomi TEE is an isolated security operating system running on isolated hardware,purpose-built to handle sensitive information securely and cater to the security requirements of different devices and application scenarios.Xiaomi HyperOS leverages different TEE solutions to construct a trusted security base tailored to different hardware environments.Building upon this security base,it bolsters the capabilities of device trustworthiness,universal key management,and cross-end authentication at the framework layer,providing trusted conn
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2024 EDITIONFutureRisksReportAXA FUTURE RISKS REPORT 2024ContentsForeword from Thomas Buberl 3Executive Summary 45 Future Risks and strategies for prevention 38Experts say public awareness and authorities preparedness must both improve 39In a world where insurability is questioned,innovation is key 41The role of insurers 42About the research 432 Bold thinking is needed to tackle both demographic shifts and climate change 19In an era of polycrisis,the future costs of climate change are hard to predict 20The cost of aging puts pressure on the resources needed for the ecological transition 21Our industry must cover new risks to unlock the transition 22Investment in mitigating climate change can also bring health benefits 24Questions relating to public authorities preparedness to cope with climate change and shifting demographics 253 Geopolitical instability,social tensions and security threats form a new nexus of risk 26A fragmented world entails a lot of agility for global companies 27 1 Top risks 9What are the top risks in 2024?10Evolution of the top 10 future risks 11New competencies are crucial 12How do experts and the general public differ?14Global risks call for global solutions 15How do risk perceptions compare across regions?17Technological advances are an opportunity to tailor our approach 18Both experts and the general public are concerned about geopolitical instability 28Public authorities must build confidence in their ability to tackle rising social tensions 30Technological change is shaping new security threats 314 AI-powered misinformation is a rising threat to our democracies 32Many people are overconfident in their ability to spot misinformation 33Disinformation has reached an unprecedented level 34Misinformation could influence votes and lead to election results being challenged 35People want governments to act on misinformation 36AI is turbocharging misinformation but could also help to address it 37AXA FUTURE RISKS REPORT 2024For the 11th consecutive year,Im very proud to welcome you to AXA Future Risks Report.This study gives you a global overview of the future risks perceived by a panel representing both the general public and industry experts.This encompasses the responses of over 23,000 respondents in four regions of the world:Europe,America,Africa and Asia-Pacific&Middle East.Over the years,this report has come to be a reference for all our stakeholders and has demonstrated our commitment to enabling them to anticipate,prevent,and reduce risks.The 2024 edition provides a wealth of insights.Once again,it underlines the polycrisis now gripping the world.Some of these insights may echo previous years,while others reveal emerging trends.For the third consecutive year,climate change,geopolitical instability and cybersecurity top the list of concerns experts expressed.And like in 2023,the risk posed by artificial intelligence comes in a close fourth.Moreover,fake news is identified as a new emerging risk intricately connected with every other.It poses yet a challenge as the world goes through an unprecedent election year in 2024.Fake news has been identified as a factor that directly contributes to driving social tensions and geopolitical instability as it quickly goes viral through our growing digital tools,social media algorithms and now artificial intelligence.Even though regional regulations are being enacted and measures adopted,it is only through international cooperation that we will achieve the right balance between protecting our freedoms and discrediting fake news.This study lastly shows a sharp rise in a prevailing feeling of global vulnerability that is increasingly palpable in our daily lives.The effects of climate change are now ever present in our environment,our homes,and our health.At the same time,the rapid progress of new technologies is raising concerns about how they will contribute to shaping our world.Faced with this growing sense of vulnera-bility,we need to remain realistic,but not fatalistic.Admittedly,we may still have a long way to go to make our world a safer one to live in,but together we must seize this opportunity to develop new solutions that mitigate future risks.Insurers are core actors in the global response to these major challenges.Our survey shows that 91%of experts and 72%of the general public believe that we have a crucial role to play in protecting people against emerging risks going forward.And,we will be there.Wherever in the world the Group operates,AXA will continue to strive for its purpose:to act for human progress by protecting what matters.CEO OF AXAAXA FUTURE RISKS REPORT 2024“The fact that these future risks are interconnected makes them more threatening,and in some instances systemic.To be confident in moving forward,our response must be equal to this challenge.AXA FUTURE RISKS REPORT 2024Executive SummaryThis year,the perception is that the world is continuing to become more vulnerable,as the global polycrisis persists and deepens.The Future Risks Report 2024 highlights the growing complexity of managing risks,making decisions and tackling challenges in a world marked by rapid technological advances and increasingly interconnected risks,from geopolitics to security and misinformation.It also underlines how insurers can play a role in preventing and mitigating these risks in an evolving environment.The Future Risks Report 2024 is based on our annual surveys of two groups:experts,drawn from AXA and our professional networks;and members of the general population across the globe.1058The future is in our hands87%of experts believe that the world is more vulnerable to risks than it was five years ago.Insurers have always played an important role in supporting resilience against risks.In our survey,91%of experts stress the importance of the role of insurers in protecting people against new kinds of risk that are emerging today.At AXA,we believe that the future is in our hands.We should not be fatalistic about rising vulnerability,but instead see it as an even greater responsibility to fully deploy our expertise to address and mitigate potential risks.Read more in our manifesto:Why should the future be a risk?4EXECUTIVE SUMMARYIn last years Future Risks Report,we argued that humanity finds itself in a polycrisis situation.The results of this years survey strengthen that impression.In a new question,we asked if respondents believe there has been an increasing number of crises in recent years:92%of experts said yes,as did 90%of the general population.Similar numbers(93%and 91%respectively)believe that these crises are having an increasingly significant impact on peoples lives.Our survey shows that people seem to be overconfident in their ability to discern truth from falsehood.When we asked respondents if they are confident in their own ability to assess the reliability of information on social media,80%of experts and 78%of the general public said“yes”.However,when we asked if they think people generally have this ability,75%of experts and 60%of the general public said“no”.These figures suggest that most people are aware that misinformation and disinformation are a problem Some risks are firmly entrenched:for the third year in a row,climate change,geopolitical instability and cyber security are the top three risks that concern experts over a five-to-ten-year timeframe.For the second consecutive year,the experts top four is completed by risks related to artificial intelligence.Other risks are dropping or rising the rankings.Having topped the experts lists in 2020,pandemics and infectious diseases now ranks only 9th.Energy risks have fallen from 4th in 2022 to 7th this year.Risks moving up the rankings include social tensions and movements(from 8th last year to 5th this year)and new security threats and terrorism(8th,from outside the top ten last year).As many of these top-ranking risks are interconnected,they require a coordinated response that addresses common elements.One example is disinformation:an often-used tool in geopolitical conflict,made more impactful by artificial intelligence,it amplifies but also that many people may have a blind spot about their own vulnerability to being manipulated and misled.In a year with many important elections,effective strategies to tackle misinformation and disinformation have never been more urgent.However,potential approaches such as promoting social media literacy,preventing the spread of disinformation,and regulation of social media platforms are complex.They require a comprehensive and global approach.the risk of social tensions and undermines the societal cohesion necessary to fight various challenges such as climate change.AXA FUTURE RISKS REPORT 2024Key Lesson 1 Impacts of the global polycrisis are becoming more visible in everyday lifeKey Lesson 2Collaboration is needed to tackle misinformation and disinformation5EXECUTIVE SUMMARYPeople are keenly aware that they are becoming more vulnerable to a range of risks.For each of the top five risks they chose,we asked respondents if they feel more vulnerable to that risk in their daily life.Remarkably,the proportion of the general public who said“yes”was higher than in last years survey for every single one of the 25 risks.Among experts,the figure increased for 13 of the risks,with a further three unchanged.Despite this heightened perception of vulnerability,the survey found largely stable levels of confidence in the capabilities of a range of institutions such as academics and international institutions to tackle emerging crises.To maintain this trust,public authorities need to take action by investing in prevention and mitigation,implementing regulations and raising risk awareness.Collaboration with the private sector,especially insurers,plays a critical role:as well as 91%of experts,72%of the general public consider the role of insurers in managing risks to be important.AXA FUTURE RISKS REPORT 2024Key Lesson 3Insurers continue to play a critical role in addressing risksAt AXA we stand ready to play our part AXA has always been dedicated to supporting individuals,businesses and societies to thrive by protecting against risks.AXA is committed to the fight against climate change consistently ranked as the worlds highest risk by supporting the climate transition through its investments and insurance activities.of experts and91r%of the general public consider that insurers play an important role in managing risks.35122210 Read more in our Climate and Biodiversity ReportJuly 2024Roadmap to a Climate Transition Plan2024 AXA Group Climate and Biodiversity ReportIn line with recommendations from the Task Force on Climate-Related Financial Disclosures and the Taskforce on Nature-Related Financial Disclosures6EXECUTIVE SUMMARYAXA FUTURE RISKS REPORT 2024GEOPOLITICALINSTABILITYCYBER SECURITYRISKS23RISKS RELATEDTO AI AND BIG DATA4SOCIAL TENSIONSAND MOVEMENTS5CLIMATE CHANGE1NATURALRESOURCES ANDBIODIVERSITY RISKS6ENERGYRISKS7NEW SECURITYTHREATS ANDTERRORISM8PANDEMICS AND INFECTIOUS DISEASES9FINANCIALSTABILITY RISKS10Global top 10 EMERGING RISKS ACCORDING TO EXPERTS IN 2024AXA FUTURE RISKS REPORT 20247EXECUTIVE SUMMARY2024 Experts risks rankingsby geographyEurope1.Climate change2.Geopolitical instability3.Cyber security risks4.Social tensions and movements5.Risks related to AI and big data6.Natural resources and biodiversity risks7.Energy risks8.Risks related to changing demographics9.New security threats and terrorism10.Macro-economic risksAsia Pacific and Middle East1.Climate change2.Cyber security risks3.Risks related to AI and big data4.Geopolitical instability5.Financial stability risks6.Pandemics and infectious diseases7.Energy risks8.Pollution9.Natural resources and biodiversity risks10.Ethical risks regarding the use of technologyAmerica1.Climate change2.Cyber security risks3.Risks related to AI and big data4.Geopolitical instability5.Natural resources and biodiversity risks6.Social tensions and movements7.Energy risks8.Pandemics and infectious diseases9.New security threats and terrorism10.Monetary and fiscal policy risksAfrica1.Climate change2.Cyber security risks3.Geopolitical instability4.Risks related to AI and big data5.Financial stability risks6.Energy risks7.Macro-economic risks8.Natural resources and biodiversity risks9.Pandemics and infectious diseases10.Monetary and fiscal policy risks8EXECUTIVE SUMMARYAXA FUTURE RISKS REPORT 2024AXA FUTURE RISKS REPORT 2024Top risks,FROM POLYCRISIS TO MISINFORMATION1.All staff are included,rather than only those with expertise in specific areas.2.For more details about the methodology,please refer to“About the research”,page 43.3.This means responses predate news events such as the French National Assembly elections,the CrowdStrike outage,and President Bidens announcement that he would not seek re-election.THE FUTURE RISKS SURVEY IN A NUTSHELLFor this 11th edition,the Future Risks Survey again asked people from around the world to rank their top five future risks,based on their potential impact on society over the next five to ten years.We asked respondents to choose from a selection of 25 risks.This year,we surveyed more than 3,000 experts from 50 countries.As in previous years,the experts were drawn from AXA1 and our professional networks.We also partnered with Ipsos to survey close to 20,000 individuals who make up a representative sample from 15 countries2,with samples drawn from populations aged 18 and above in each country.The survey was conducted from May 14th to June 27th,20243.The Future Risks Survey allows for comparisons:between regions over time,and between the perceptions of experts and the general public.1AXA FUTURE RISKS REPORT 2024AXA FUTURE RISKS REPORT 2024AXA FUTURE RISKS REPORT 2024What are the top risks in 2024?CLIMATE CHANGE1Climate change remains the top concern of experts on every continent.Meanwhile,awareness of its impact continues to increase:77%of the general public who selected this risk in their top five say they feel vulnerable to it in their everyday life,up from 73%in last years survey and tied for first place with the risk of pollution in 2024.GEOPOLITICALINSTABILITY2Geopolitical instability is worrying more experts.Second overall,it was ranked as the top risk by 16%of experts compared to 9%in 2023.This increase is likely linked to the ongoing crisis in the Middle East,combined with the continuing conflict in Ukraine and a heightened global atmosphere of tensions,defiance and protectionism.CYBER SECURITYRISKS3Cyber security continues to be seen as a major threat.Although it falls to 3rd place from 2nd last year,cyber security featured in the top five risks of more experts.Concern about this risk is likely closely linked to geopolitical instability,alongside continued progress in the capabilities of artificial intelligence and increasing dependency on large providers.EVOLUTION OF SELECTION PERCENTAGE OF TOP RISKS BY EXPERTS(2018-2024)Stability in the top 10 risks is a call to actionExperts rankings of the top 10 risks have been remarkably stable over the last four years.Every year,climate change has topped the list,cyber security risks has ranked 2nd or 3rd,and geopolitical instability has ranked 2nd,3rd or 4th.The general publics top 10 is similarly stable:this years top 10 has nine risks in common with the previous years,which itself comprised the same ten risks as the year before.111 TOP RISKSAXA FUTURE RISKS REPORT 2024Evolution of the top 10 future risks This top 10 is a ranking of all risks;it has been calculated the same way since 2018.When a risk is ranked 1st,it gives it 5 points,2nd 4 points,etc.up to 5th 1 point.The ranking is based on the total number of points per risk.201820192020202120222023202412345678910CLIMATE CHANGECYBERSECURITY RISKSGEOPOLITICAL INSTABILITYNATURAL RESOURCES RISKSSOCIAL TENSIONSAI AND BIG DATANEW THREATS TO SECURITYPOLLUTIONMEDICAL ADVANCESPANDEMICS/INFECTIOUS DISEASESCLIMATE CHANGECYBERSECURITY RISKSGEOPOLITICAL INSTABILITYSOCIAL TENSIONSNATURAL RESOURCES RISKSAI AND BIG DATAPOLLUTIONPANDEMICS/INFECTIOUS DISEASESNEW THREATS TO SECURITYMACRO-ECONOMIC RISKSPANDEMICS/INFECTIOUS DISEASESCLIMATE CHANGECYBERSECURITY RISKSGEOPOLITICAL INSTABILITYSOCIAL TENSIONSNEW THREATS TO SECURITYMACRO-ECONOMIC RISKSNATURAL RESOURCES RISKSFINANCIAL STABILITY RISKSPOLLUTIONCLIMATE CHANGECYBERSECURITY RISKSPANDEMICS/INFECTIOUS DISEASESGEOPOLITICAL INSTABILITYSOCIAL TENSIONSNATURAL RESOURCES RISKSNEW THREATS TO SECURITYFINANCIAL STABILITY RISKSMACRO-ECONOMIC RISKSAI AND BIG DATACLIMATE CHANGEGEOPOLITICAL INSTABILITYCYBERSECURITY RISKSENERGY RISKSPANDEMICS/INFECTIOUS DISEASESSOCIAL TENSIONSNATURAL RESOURCES RISKSFINANCIAL STABILITY RISKSMACRO-ECONOMIC RISKSMONETARY AND FISCAL POLICY RISKSCLIMATE CHANGECYBERSECURITY RISKSGEOPOLITICAL INSTABILITYAI AND BIG DATAENERGY RISKSNATURAL RESOURCES RISKSFINANCIAL STABILITY RISKSSOCIAL TENSIONSPANDEMICS/INFECTIOUS DISEASESMACRO-ECONOMIC RISKSCLIMATE CHANGEGEOPOLITICAL INSTABILITYCYBERSECURITY RISKSAI AND BIG DATASOCIAL TENSIONSNATURAL RESOURCES RISKSENERGY RISKSNEW THREATS TO SECURITYPANDEMICS/INFECTIOUS DISEASESFINANCIAL STABILITY RISKS121 TOP RISKSAXA FUTURE RISKS REPORT 2024New competencies are crucialINTERVIEWFRDRIC DE COURTOIS AXA GROUP DEPUTY CEO“Curiosity is key in our industry,as it fosters a proactive approach to understanding the evolving risk environment.”Frdric de Courtois Are the effects of the polycrisis becoming more apparent in the daily activities of insurers?Frdric de Courtois:Indeed,the effects of the polycrisis are becoming increasingly noticeable.With 2024 being a major electoral year,for example,we are witnessing a rise in acute social and geopolitical risks that are contributing to the complexity of the insurance landscape.These risks have far-reaching implications.They affect everything from financial markets to regulatory aspects and our ability to operate.They are aggravated by the emergence of new technological risks,such as those pertaining to cybersecurity and artificial intelligence.It is crucial for insurers to maintain the agility to navigate increasingly dynamic environments and ensure the protection of their operations and their clients.We must also anticipate the problem of aging,which goes beyond pensions.Growth and productivity are affected by decreases in the working-age population,and issues of dependency and health will become more acute.We need to conceive new solutions tailored to different stages of life.The evolution of financial risks in sophisticated new directions,with inflation and interest rates still high on the macroeconomic agenda,adds layers of intricacy to this landscape.On the environmental side,summer 2024 was the northern hemispheres hottest on record.Climate change continues to trigger a surge in various risks.We are not only talking about natural catastrophes but also profound impacts on human health,with diseases spreading into new areas and extreme weather compromising the human bodys ability to recover.Insurers also need to address emerging environmental concerns such as“forever pollutants”.What are the key considerations for insurance professionals in this evolving landscape of complex and interdependent risks?F.D.C.:As risks have grown more intricate,the insurance sector needs to cultivate new competencies and take a more comprehensive approach to underwriting and risk management.This may involve adopting innovative underwriting methodologies in portfolio management,or advanced risk management tools such as capital and catastrophe models.The acquisition of new competencies in areas such as engineering and green technologies is also crucial to enhance underwriting capabilities.Curiosity is key in our industry,as it fosters a proactive approach to understanding the evolving risk environment.Additionally,the collaborative nature of work in cross-disciplinary teams has become more pivotal than ever,enabling a comprehensive and nuanced understanding of multifaceted risks.At AXA,our commitment to multidisciplinary research through the AXA Research Fund further strengthens our ability to anticipate future risks.8234Gender gap:Women are more likely to prioritize health-related risksBreaking down the survey responses by gender reveals that men are less likely than women to be concerned by health-related risks.Among the general public,for example,women rank pandemics and infectious diseases 3rd and chronic illnesses 6th,while men rank them 6th and 12th respectively.Among experts,women rank them 9th and 13th and men rank them 11th and 16th.Technological risks are the new pandemic Every year our survey asks experts and the public about the speed at which they perceive risks to be emerging:slowly,rapidly,or already fully emerged.Experts and the general public consider risks related to artificial intelligence and big data to be emerging most quickly,followed by disruptive technologies.131 TOP RISKSAXA FUTURE RISKS REPORT 2024FOCUS1813“To live a long and fulfilled life,a healthy mind is just as important as a healthy body.At AXA,we want to break the stigma around mental well-being and drive action to encourage healthcare professionals,policymakers,and companies to invest in mental health.”PATRICK COHEN AXA CHIEF EXECUTIVE OFFICER EUROPEAN MARKETS&HEALTH Read more in our AXA Mind Health ReportMindYour Healthin TheWorkplace 2024 Mind health reportSolar storms could make headlines in 2025For the first time,space and planetary risks rank in last place 25th of 25 for both experts and the public.Only 2%of experts and 6%of the public included this risk among their top five.However,severe solar events could significantly impact not only satellite navigation systems as already happened in 2017 and 2021 but also communication systems and electricity grids.While solar events are hard to predict,the risk may be heightened as the Sun approaches the peak of its 11-year magnetic activity cycle in July 20251.Among both experts and the general public,those who selected space and planetary risks were most likely to cite the disruptive potential of solar storms as their main concern.When we asked experts who chose this risk whether they believe the general public are aware of it,only 15%said yes by some margin the lowest number for any of the 25 risks.Meanwhile,58%of the public believe that authorities are well prepared for the emergence of this risk the second-highest figure in the sample.Their confidence may be put to the test in the coming year.New security threats and terrorism rise in both rankings but worry the public more.The general public have consistently ranked new security threats and terrorism high up their list,and this year the experts are starting to catch up they ranked it 8th,a leap from 16th last year.Experts are more concerned about risks related to artificial intelligence and big data.This risk enters for the first time the general populations top 10,in the 10th place.The only difference in composition of top tens is which environmental risk to prioritize.Both groups put an environmental risk climate change in top spot.The public then have pollution in their top ten while the experts are more concerned about natural resources and biodiversity risks.GENERAL PUBLICS AND EXPERTS TOP 10 LIST1.Source:Nasa.141 TOP RISKSAXA FUTURE RISKS REPORT 2024How do experts and the general public differ?The results of the 2024 survey suggest a growing alignment between the perceptions of experts and the general public:this year the top ten of each group has nine risks in common,compared to only eight in each of the previous years.RISK UNDER THE RADAREXPERTSGENERAL POPULATIONClimate change 1Climate change 1Pandemics and infectious diseases 9Energy risks9Social tensions and movements5Pandemics and infectious diseases5Natural resources and biodiversity risks 6Geopolitical instability6Energy risks7Financial stability risks7New security threats and terrorism8 Pollution8Financial stability risks10Risks related to AI and big data10Risks related to AI and big data4 Social tensions and movements 4Geopolitical instability2New security threats and terrorism2Cyber security risks3Cyber security risks3 At the countries level At the cities level At global level At the continents levelEXPERTS47%OPINION ON GLOBALIZATION AND RISKSEXPERTS50P%GENERAL POPULATION56D%GENERAL POPULATION48)%6%THE MOST EFFECTIVE LEVEL OF DECISIONS WHEN FACING FUTURE RISKS171 TOP RISKSAXA FUTURE RISKS REPORT 2024Global risks call for global solutionsShortly after the 2024 survey had closed,the CrowdStrike outage1 provided a stark demonstration of global vulnerability to cyber security risks:Windows computers crashed around the world,causing over a billion dollars worth2 of economic disruption.This incident raised widespread awareness among all stakeholders about the cyber risk and showcased how widely the world has come to depend on just a few providers of technology services.Geopolitical tensions continue to hamper any attempt for cooperation at global level.This years survey sees a slight uptick in the proportion of experts(50%)and members of the public(44%)believing that globalization will slow down as countries try to protect themselves from risks rather than work toward collective solutions.Both figures are up one percentage point on last year.Global risks call for global solutions,and this years survey again found that a plurality of experts(47%)and the general public(48%)believe that decisions about future risks would be most effectively taken at global level.These figures are nonetheless down on last year especially among experts,with an increase in the number preferring city-level decision-making.Globalization will slow down over time,as most countries in the world will try to protect themselves from global risks Globalization will increase over time,as most countries will try to find collective solutions to global risks14231.Blogs Microsoft2.Edition CNNOPINION ON THE IMPACT OF CRISES Rather disagree Totally disagree Totally agree Rather agreeEXPERTS55%AGREE38%6%1%1%GENERAL POPULATION43H%7%2%2%AGREEEnvironmental awareness and technological confidenceYoung people from the general public are more concerned than older generations about a range of environmental risks.While every age group put climate change at the top of their list,survey respondents aged under 25 also ranked pollution in 3rd(compared to 8th for the public as a whole),with natural resources and biodiversity risks in 9th (vs.12th).Conversely,younger respondents appear to have more confidence in humanitys ability to master technological risks.Under-25s ranked cyber security risks in 6th place (3rd for the public as a whole)and were also marginally less concerned about AI risks(11th vs.10th).FOCUS ON YOUTH161 TOP RISKSPEOPLE FEEL MORE VULNERABLE TO EVERY KIND OF RISK THAN LAST YEARLast years report highlighted the idea that the world has entered a new era of“polycrisis”.We checked this perception in a new pair of questions in this years survey.A large majority of both experts(92%)and the general public(90%)agreed with the statement that in recent years there has been an increasing number of crises.Similarly high percentages(93%and 91%respectively)agreed that these crises are having a more important impact on peoples lives.Respondents from the general public are more likely than last year to say they feel vulnerable in their daily lives to the risks they chose in their top five.GLOBAL RISKS CALL FOR GLOBAL SOLUTIONSAXA FUTURE RISKS REPORT 2024Percentage of experts and general population answering the question “Would you say that in recent years crises have had a more and more important impact on peoples life”3445TOP 10 FUTURE RISKS PER CLUSTER171 TOP RISKSAXA FUTURE RISKS REPORT 2024How do risk perceptions compare across regions?Experts and the public across all regions are unanimous:climate change is the main risk.Still,the strength of feeling differs between regions:in Europe,67%of experts and 49%of the public put the risk in their top five,compared to 43%and 38%respectively in the United States.Europeans are particularly concerned about societal and political risks.Europe is the only continent where geopolitical instability,social tensions and movements,and new security threats and terrorism are all in the top 10 for both public and experts.Chronic illnesses are a particular concern for the public in Africa and America.They rank it 5th and 8th respectively,while the European and Asian publics rank it 11th.Experts in Africa rank economic risks higher than their peers on other continents.Africa is the only continent where two economic risks appear in the experts top 10:financial stability risks in 5th,the joint highest of any list,and macro-economic risks in 7th.Pandemics and infectious diseases remains a particular worry in Asia.The general public in Asia,as in Africa,still put this risk in their top three.Experts in Asia rank it 6th,higher than experts on any other continent.In Europe,the risk is no longer in experts top 10.Climate changeClimate changeClimate changeClimate changeClimate changeClimate changeClimate changeClimate changeCyber security risksCyber security risksCyber security risksCyber security risksCyber security risksCyber security risksCyber security risksCyber security risksArtificial Intelligence and big dataNew security threats and terrorismNew security threats and terrorismNew security threats and terrorismNew security threats and terrorismNew security threats and terrorismNew security threats and terrorismArtificial Intelligence and big dataArtificial Intelligence and big dataArtificial Intelligence and big dataArtificial Intelligence and big dataNatural resources and biodiversityNatural resources and biodiversityNatural resources and biodiversitySocial tensions and movementsSocial tensions and movementsSocial tensions and movementsSocial tensions and movementsGeopolitical instabilityGeopolitical instabilityNatural resources and biodiversityRisks related to changing demographicsGeopolitical instabilityPandemics and infectious diseasesPandemics and infectious diseasesPandemics and infectious diseasesPandemics and infectious diseasesPollutionPollutionGeopolitical instabilityGeopolitical instabilityGeopolitical instabilityPollutionEthical risks regarding the use of technologyPandemics and infectious diseasesPandemics and infectious diseasesFinancial stability risksFinancial stability risksFinancial stability risksChronic illnessesChronic illnessesPandemics and infectious diseasesArtificial Intelligence and big dataArtificial Intelligence and big dataArtificial Intelligence and big dataMacro-economic risksMacro-economic risksFinancial stability risksFinancial stability risksSocial tensions and movementsEnergy risksSocial tensions and movementsEnergy risksEnergy risksEnergy risksEnergy risksEnergy risksEnergy risksNatural resources and biodiversityNatural resources and biodiversityNatural resources and biodiversityNatural resources and biodiversityMonetary and fiscal policy risksMonetary and fiscal policy risksEXPERTSAMERICAAMERICAAFRICAAFRICAEUROPEEUROPEASIA PACIFIC AND MIDDLE EASTASIA PACIFIC AND MIDDLE EASTGENERAL POPULATION181 TOP RISKSDo you think that managing risks has become more complex than before?Franoise Gilles:While theres a certain stability in the risks we have identified over the years,the environment in which we operate is becoming more fast paced.Risks are tending to spread more quickly across geographies and to get more intertwined and connected to one another,ultimately amplifying their potential impact.Take the example of cyber-attacks.We increasingly observe that they not only disrupt businesses,public services and individuals but can also be orchestrated in a political effort to achieve higher goals.These goals include informational warfare and social momentum,which increases geopolitical threats and social unrest,and so on.Managing risks from the perspective of a company has never been an easy task.The founding principles of risk management remain the same as ever,from the initial identification of risks to evaluating the way they may impact our operations,the determination of how acceptable they are and how relevant monitoring and mitigation actions may be implemented.I believe the growing complexity in risk management lies in the need to constantly rechallenge our approach,questioning the way we identify,assess,prioritize,monitor and mitigate risks.It is not just about keeping pace with our environment.We must also make sure we are equipped with the capacity to get a sense of emerging trends,find relevant indicators,and come up with a plan to address risks,not in a silo,but in relation to one another.Technological advances are an opportunity to tailor our approachINTERVIEWFRANOISE GILLES AXA GROUP CHIEF RISK OFFICER“Our aim is not only to build our capacity to react,but also to better anticipate and prevent risks from occurring,and minimize the impact on the lives of our clients.”Franoise GillesHow does a global insurer such as AXA contribute to developing global solutions to tackle future risks?F.G.:As a global insurer,our strengths lie in our peoples expertise and in our network footprint around the world.This allows us to get a comprehensive,early-on picture of our risks in any given geography or industry and to assess their potential as they develop.We build strong networks of experts in our various locations,and partnerships with academics and scientists to enhance our knowledge around emerging risks and always be one step ahead.Our aim is not only to build our capacity to react,but also to better anticipate and prevent risks from occurring and minimize the impact on the lives of our clients.Technological advances are not only a source of risk,they are also an exciting opportunity to better tailor our approach to our customers needs.With AXA XL Risk Consulting,we not only provide our clients with insights and support from our engineers,we also equip them with our online platforms to better identify,monitor and manage their risks globally.Tackling future risks is about identifying,prioritizing,and measuring risks and keeping on looking for new approaches,both internally and externally,to develop the solutions needed when and where it matters for our clients,staff and shareholders.2810AXA FUTURE RISKS REPORT 2024Jason DurantEarthJasonDurant#fakenewsBold thinking IS NEEDED TO TACKLE BOTH DEMOGRAPHIC SHIFTS AND CLIMATE CHANGEThe increasing financial burden of an aging population will strain governement budgets,making it more challenging to allocate much needed funds for the ecological transition.Governments must develop comprehensive strategies,which may involve reimagining both social support systems and incentives for more sustainable practices and technologies.Effective communication will be critical to promote intergenerational dialogue and collaboration.1345AXA FUTURE RISKS REPORT 20242202 BOLD THINKING IS NEEDED TO TACKLE BOTH DEMOGRAPHIC SHIFTS AND CLIMATE CHANGEAXA FUTURE RISKS REPORT 2024In an era of polycrisis,the future costs of climate change are hard to predictWhile mitigating climate change will urgently require massive investment,failing to invest will store up much greater costs.According to recent estimates by the Potsdam Institute for Climate Impact Research1,climate change is on course to cause anywhere from 19 trillion to 59 trillion dollars worth of damage to the global economy every year by 2050.Exact predictions are difficult because it is hard to be confident how severely climate change will exacerbate other risks.When we asked survey respondents who chose climate change to identify their main concern,for example,only 5%of experts and 6%of the general public mentioned“climate migration”a new option in the 2024 survey.There is clear potential,however,for climate change to force migration on a scale that dramatically worsens other risks,such as social tensions and geopolitical instability.One way it could do so is through scarcity of food and water (see box).For the third year in a row,climate change is the top-ranked risk for experts and the general public alike,with 63%of experts and 45%of the public choosing it as one of their top five risk.For the second year in a row,it occupies the top slot for both groups on every continent.Climate change fuels social tensions through water scarcitySurvey respondents who chose social tensions and movements among their top five risks were more likely than last year to say they were motivated by concern about large-scale migration(14%for experts,up three points,and 19%for the public,up two points).Water scarcity is linked to 10 percent of increases in migration within countries between 1970 and 2000,according to the World Bank2,with climate change set to cause more severe droughts.FOCUSWith the World Meteorological Organization stating that 2023 was the hottest year on record“by a clear margin”,people feel increasingly personally threatened by climate change:77%of respondents from the general public who chose this risk in their top five say they feel vulnerable to it in their daily life.77%1.Potsdam Institute for Climate Impact Research2.World Bank GroupWe often hear about the impacts of climate change on meteorological phenomena.What are you observing in your professional capacity?Florent Lobligeois:The impacts differ from region to region,but there is a clear and obvious trend of natural perils strongly correlated to overall rising temperatures.Most directly we see this in droughts,heatwaves,or wildfires.In addition,a warmer climate fuels the atmospheric dynamics(global and regional-scale circulation,convection,tropical and extratropical cyclones).It changes the physical properties of the air and the water:a warmer atmosphere contains more water and the volume of seawater increases due to thermal expansion.This leads to sea level rise but also more severe coastal floods.More intense precipitation is raising the risk of flash floods.And changes in patterns of convection are manifesting in hailstorms,tornadoes and straight-line winds.How might long-term meteorological models evolve in the future due to climate change?F.L.:The climate is a coupled non-linear chaotic system,which means that accurate long-term prediction is simply not possible:small errors in the initial conditions of a forecast grow rapidly,with stronger atmospheric dynamics leading to even more uncertainty.The Intergovernmental Panel on Climate Change brings together diverse models to try to predict possible future states,but all that can be said with confidence is that the occurrence of extreme and mid-size natural events will increase in the future.212 BOLD THINKING IS NEEDED TO TACKLE BOTH DEMOGRAPHIC SHIFTS AND CLIMATE CHANGEAXA FUTURE RISKS REPORT 2024The cost of aging puts pressure on the resources needed for the ecological transitionInvesting more now to limit global warming would pay off many times over:according to the Potsdam Institutes research,each dollar invested would likely avert six dollars worth of future costs.However,resources are currently limited by other urgent priorities such as increasing pressure on healthcare,social welfare and pension budgets as societies grow older.When we asked respondents who chose risks related to changing demographics in their top five to select their main motivation,the most common response was“healthcare and pensions burden on public finances”.However,more experts than last year(27%vs.19%)chose“rising intergenerational imbalance and tensions between generations”.Governments may need to be increasingly alert to this risk,as younger workers not only face the need to fund healthcare and pensions,but also become frustrated by a lack of climate investment.Demographic shifts offer opportunities as well as vulnerabilities:while some countries are aging quickly,others particularly in parts of Africa and Asia have rapidly growing youth populations.Policymakers will need to foster inclusive and sustainable strategies that address the needs of diverse age groups,promote intercultural understanding,and create opportunities for all.“Risks related to changing demographics”rose slightly in the rankings this year,though it remains overshadowed by more visible risks.Experts ranked it 11th(up two places on last year,and as high as 8th in Europe)while it came in 16th with the general public(up one place).11th“More intense precipitation is raising the risk of flash floods.”FLORENT LOBLIGEOIS GROUP HEAD OF NATURAL PERILS RISK MANAGEMENT 1345 222 BOLD THINKING IS NEEDED TO TACKLE BOTH DEMOGRAPHIC SHIFTS AND CLIMATE CHANGEAXA FUTURE RISKS REPORT 2024This year,again,climate risk represents the greatest threat according to experts and the general public.What are AXAs levers for action?Ulrike Decoene:In 2024 we announced our new strategic plan,“Unlock the Future”,with a strong focus on on climate and inclusion.To tackle the twin challenges of transition and adaptation,AXA has set out an ambitious 2026 roadmap to support its customers,the economy and society.It begins with a premium target of 6 billion euros by 2026 to support the transition by providing property and casualty insurance in key sectors such as construction and transportation.AXA will also provide more than 9,000 adaptation solutions and services to business customers by 2026.As an investor,we hit our target of 30 billion euros in green investments between 2019 and 2023.We now aim to reinvest 5 billion euros a year in financing the transition.Additionally,as a company,we have reduced our carbon footprint by 34tween 2019 and 2023.And because the push back against climate change goes hand in hand with social commitment,we are dedicating a section of our strategy to inclusive insurance for vulnerable customers worldwide to access appropriate cover.AXA is taking its ambition to a new level,but cannot act alone.So more generally,how do you see the role of insurance in combating climate change?U.D.:Our industry has a crucial role to play.Without insurance,the transition will not keep pace with global warming.According to a recent study from Howden and BCG,“19 trillion dollars in investment has already been committed to financing the climate transition through to 2030”.While this level of investment could accelerate the transformation across entire swathes of our economies,the same study estimates that additional insurance coverage for up to 10 trillion dollars of this investment will be required.Our industry must therefore learn how to analyze,price and cover new risks to unlock the transition and meet the challenge of the century in sectors such as energy and construction.At AXA,for example,we collected nearly 250 million euros in renewable energy-related premiums last year.Every day,global warming becomes more powerful in amplifying threats such as natural disasters,biodiversity loss,famine and global migration.Can a world like this actually remain insurable?U.D.:At AXA,we are profoundly convinced that the world can remain insurable.First,we need to focus on risk prevention to minimize the consequences of losses.Next,we need to be able to set the right price for insurance against climate risks;here,our expertise in risk modeling and anticipation gives us a decisive edge.Lastly,we must encourage and build partnerships between public authorities and private companies,through schemes such as CatNat.In this way,we can make sure that the world remains insurable and continue to protect our customers.Our industry must cover new risks to unlock the transitionINTERVIEWULRIKE DECOENE AXA GROUP CHIEF COMMUNICATION,BRAND&SUSTAINABILITY OFFICER“Our industry has a crucial role to play,because without insurance,the climate transition will not be able to accelerate at the pace global warming is setting for us.”Ulrike Decoene 1345Total population(billions)WORLD POPULATION(1950-2100)TOTAL POPULATION219501975200020252050207521003456789101112Year95%prediction interval0.019501975200020252050207521000.51.01.52.02.53.03.54.04.55.05.56.0POPULATION BY BROAD AGE GROUPSTotal population(billions)95%prediction interval25-640-1465 15-24Year232 BOLD THINKING IS NEEDED TO TACKLE BOTH DEMOGRAPHIC SHIFTS AND CLIMATE CHANGEAXA FUTURE RISKS REPORT 2024THE COST OF AGING PUTS PRESSURE ON THE RESSOURCES NEEDED FOR THE ECOLOGICAL TRANSITION1.Source:“World population prospects 2024”,United NationsHow global aging will unfold over the rest of the centuryWorld Population Prospects 20241 forecasts that the global population will continue to grow until the mid-2080s,with over-65s being the fastest-growing age group,as rising life expectancy continues to outstrip falling fertility.FOCUS ON“I urge everyone to advocate for change and help make informed health choices so that together we can tackle the non-communicable disease epidemic.”What is your research about?What are the three main drivers of the non-communicable diseases(NCD)epidemic identified in the research?Lara Dugas:My research sheds light on the urgent issue of NCDs such as obesity and type 2 diabetes among vulnerable African-origin populations.Because of rapid economic development and urbanization these diseases now affect all regions of the world,particularly those experiencing major demographic shifts.They constitute the main cause of death worldwide.We have identified three main drivers of the NCD epidemic.First,the nutrition transition notably,the availability of highly processed foods and sugar-sweetened beverages.Second,climate change in particular,heat disrupting sleep.Third,lack of access to healthcare due to limited resources.Why is raising awareness and taking action crucial in addressing this global health issue?L.D.:To address these issues,we need comprehensive solutions aimed at the individual,the community,and at the societal level.This includes making healthy food more accessible,implementing food labeling and taxation policy,developing innovative solutions to mitigate the impact of climate change,and adopting approaches to healthcare that consider the social environment.How does the AXA Research Fund support the fight against the NCD epidemic?L.D.:Its crucial to raise awareness and take action to combat the silent NCD epidemic.The AXA Research Fund helps by supporting research in key risk areas to inform public and private decision-making based on science.It strengthens the transdisciplinary exploration of emerging risks to implement innovative formats for the dissemination of scientific knowledge.Both societal aging and climate change add to healthcare costs.One important element of a comprehensive approach to these challenges could therefore be to emphasize the health benefits of investment in mitigating climate change.Climate change affects health through extreme weather events,such as heatwaves,and by expanding the geographical areas in which some vector-borne diseases can flourish.Among those who included pandemics and infectious diseases in their top five risks,31%of experts and 20%of the public said they were motivated by how patterns of infectious disease are changing.242 BOLD THINKING IS NEEDED TO TACKLE BOTH DEMOGRAPHIC SHIFTS AND CLIMATE CHANGEAXA FUTURE RISKS REPORT 2024Investment in mitigating climate change can also bring health benefitsProfessor LARA DUGAS AXA CHAIR IN NON-COMMUNICABLE DISEASE EPIDEMIOLOGY“As climate change advances,the patterns of disease will change.We need to be prepared for new challenges to healthcare systems.At AXA,we leverage science and global partnerships to tackle this issue.Our collaborations and data-driven insights drive us to secure a healthier and sustainable future for all.Together,we can make a difference.”NILS REICH CHIEF EXECUTIVE OFFICER AXA GLOBAL HEALTHJust 14%of experts believe that public authorities are well prepared to tackle either climate change or changing demographics.When asked what are the most important actions authorities can take to address these risks,the most popular answer for climate change was investing in prevention and mitigation.For demographic risks,the recommended strategy is raising awareness to increase stakeholder engagement in policy processes.252 BOLD THINKING IS NEEDED TO TACKLE BOTH DEMOGRAPHIC SHIFTS AND CLIMATE CHANGEAXA FUTURE RISKS REPORT 2024Questions relating to public authorities preparedness to cope with climate change and shifting demographics“Mitigating the impact of the rising frequency of extreme climate events demands increased collaboration and partnership between the private and public sectors.These alliances must extend beyond financial considerations to encompass comprehensive risk management,prevention,and mitigation strategies.The insurance sector is ready to contribute its expertise in these areas.It is through such partnerships that we can effectively reduce the repercussions of extreme climate events.”5423PATRICIA PLAS AXA HEAD OF PUBLIC AFFAIRSAt AXA,our approach encompasses engaging with clients and partners to facilitate the transition,fostering the development of innovative green solutions,and supporting renewable energy and sustainable mobility.Spearheading the movement toward a more sustainable,eco-conscious future benefits the company and its stakeholders as well as the broader global community.AXA FUTURE RISKS REPORT 2024Geopolitical instability,SOCIAL TENSIONS AND SECURITY THREATS FORM A NEW NEXUS OF RISKWe live in an increasingly complex and multipolar world.Inter-state tensions are on the rise,often intersecting with new kinds of security threat and spilling over into growing tensions within societies.With around half of the worlds population nearly 70 countries due to vote in national elections in 2024,there is considerable potential for further division and destabilization.AXA FUTURE RISKS REPORT 20243273 GEOPOLITICAL INSTABILITY,SOCIAL TENSIONS AND SECURITY THREATS FORM A NEW NEXUS OF RISKAXA FUTURE RISKS REPORT 2024What are the economic impacts of geopolitical instability for consumers,businesses,states?Gilles Moc:In contrast to the Cold War era,when the separation of the blocks meant geopolitical instability had very little economic impact,the ramifications of tensions between the US and China can be huge.Geopolitical instability is hampering cooperation on global regulatory progress,for example on financial affairs,and leading to a return of trade barriers around the world.Exports are vital for China,as domestic demand remains weak.However,wariness of China now transcends political boundaries in the US,as the Biden administration did not unwind the tariffs imposed by the Trump administration.As a result,Chinese producers are shifting their focus to other markets,which are also imposing tariffs.For example,the EU Commission slapped compensatory tariffs on Chinese electric vehicles.Indonesias decision in June 2024 to raise tariffs on Chinese products has been largely ignored in the West,but we think it is an important signal that the return of trade barriers cannot be solely understood as a“North/South”issue.All of this means global companies need to think about the location of their production centers not only in terms of cost and proximity to markets,but also political alignment.They must consider diversifying suppliers across geographies to minimize the risk of sudden stops in trade flows.This will raise their overall cost base,which ultimately passes to consumers just as it is consumers who will pay,in the end,for increases in tariffs.In this pivotal election year,what effects are political movements having on the global economy?G.M.:Election results in the UK and Europe have been encouraging.The UK now has a more EU-friendly government,and while we do not expect spectacular institutional change on the EU-UK relationship,more political convergence appears highly likely.In Europe,elections have not dramatically altered the capacity of mainstream political forces to shape the agenda in Brussels.However,the big uncertainty remains the US election.Donald Trump has proposed raising tariffs on imports into the US to 10%,with a special 60%rate for China.Does the period of geopolitical instability that we are going through mark the start of a new world order?G.M.:It is difficult to think in terms of a clearly organized“world order”,as we see cracks across all blocks.The EU-US relationship,for example,is strained by disputes on trade and the financial burden of defense.The idea of a Global South under Chinese leadership is,in our view,largely an empty concept given the internal disagreements within this group such as the rivalry between India and China and the deep economic difficulties of member countries such as South Africa.Navigating this fragmented world will entail a lot of agility for global companies.A fragmented world entails a lot of agility for global companiesINTERVIEWGILLES MOC AXA GROUP CHIEF ECONOMIST“Companies need to think about the location of their production centers not only in terms of cost and proximity to markets,but also political alignment.They must consider diversifying suppliers across geographies to minimize the risk of sudden stops in trade flows.”Gilles Moc5228Since last years survey,the conflict in Ukraine has continued and a new war has broken out in the Middle East.With trade tensions persisting between the US and China,it is no surprise that both experts and the general public were more likely to be concerned by geopolitical instability this year it ranked 2nd(up from 3rd)overall for experts,and 6th(up from 9th)for the public.Scientists are still the most trusted figures but trust in the army and police is on the riseEvery year our survey asks experts and the general public to imagine that a new global crisis occurs,and rate their level of trust in a range of institutions such as civil society,academia,the private sector or international organizations to limit its consequences.Scientists remain 1st in the ranking,with 84%of experts and 70%of the general population expressing confidence in their ability to mitigate the consequences of a new global crisis,maintaining the same level of trust as last year.Increasingly,members of both groups are looking to the army and police.Among experts,74%trust the army and police up six percentage points on last year,and ten points in three years.Among the public,the figure is 68%up three points on last year,and six points in three years.National elections are scheduled or expected in at least 64 countries,as well as the European Union,which all together represent almost half the global population.THE ULTIMATE ELECTION YEAR AROUND THE WORLD IN 2024283 GEOPOLITICAL INSTABILITY,SOCIAL TENSIONS AND SECURITY THREATS FORM A NEW NEXUS OF RISKAXA FUTURE RISKS REPORT 2024Both experts and the general public are concerned about geopolitical instabilitySource:Elections Around the World in 2024,TIMEFOCUSHow would you define political risk?What is your role within AXA as a political risk expert?Rafael Docavo-Malvezzi:Political risk refers to potential losses or disruptions due to regulatory changes,nationalization,civil unrest,armed conflict,or sanctions.My role is to assess these risks and help our clients mitigate their exposure.How have political risks evolved in recent years,particularly with new technologies?R.D.-M.:Political risk was traditionally linked to developing countries with weak institutions.However,civil conflict and policy unpredictability are rising even in established democracies.Social media,generative AI,and deepfake technologies have made it easier to spread misinformation,manipulating public opinion and amplifying the speed,scale,and complexity of threats.What are the tools for a company like AXA to anticipate and protect against political risks?R.D.-M.:We use risk assessment tools,advanced analytics,and global intelligence networks.We collaborate with colleagues in crisis management,marine,aerospace,and cyber to better understand political risks.Internally,we provide insights to inform AXAs risk governance,while our insurance solutions help safeguard businesses against unpredictable political events.When we asked respondents who chose this risk to identify the aspect that most concerned them,a majority cited“resurgence of military conflicts”.It was chosen by 52%of experts and 50%of the general public,in both cases a rise from 42%in last years survey.In second place among members of the public was“nuclear threat”.Experts placed“decline of multilateralism and resurgence of blocs”in second place,ahead of“disruption of supply chains”.Geopolitical risk has a range of impacts for insurers,from underwriting and claims to investments,operations and supply chains,cyber security,sanctions and reputation.Rising geopolitical instability may help to explain why fewer people believe that the global level is the most effective means of addressing future risks a view expressed by 47%of experts and 48%of the general public,down from 54%and 52%respectively in last years survey.Even if effective global approaches may be preferable in theory,they are becoming more challenging in practice.293 GEOPOLITICAL INSTABILITY,SOCIAL TENSIONS AND SECURITY THREATS FORM A NEW NEXUS OF RISKAXA FUTURE RISKS REPORT 2024 American experts are especially concerned about geopolitical instability.When asked if they feel vulnerable to this risk in their daily life,54%of them said“yes”.Only 16lieve that public authorities are adequately prepared to manage this risk.54139BOTH EXPERTS AND THE GENERAL PUBLIC ARE CONCERNED ABOUT GEOPOLITICAL INSTABILITY“Political risk was traditionally linked to developing countries with weak institutions.”RAFAEL DOCAVO-MALVEZZI GLOBAL CHIEF UNDERWRITING OFFICER FOR POLITICAL RISK,CREDIT&BOND,AXA XL Experts ranked social tensions and movements in 5th place this year,up from 8th.Among the general public the risk ranked 4th,unchanged from last year.In both groups,respondents from Europe were especially concerned the risk ranked 4th with European experts,and 3rd with the general public likely reflecting exposure to the conflicts in Ukraine and the Middle East.Only 13%of experts believe that public authorities are well prepared for the emergence of tensions and social movements,compared to 32%of the general public,who are generally more confident on this issue.This is the joint-lowest level of preparedness according to the general public,on par with climate change and AI and big data risks.The risk of social tensions boiling over into violent protests is exacerbated by the growing impact of misinformation,as explored in Section 4 below.In a new survey question this year,we asked if respondents What motivates concern about social tensions and movements?When we asked respondents who selected social tensions and movements among their top five risks to identify one element of the risk that especially concerns them,experts were most likely to choose“failure of institutions and declining levels of democracy”while the general public pointed to“increasing inequalities and cost of living crisis”.More experts than last year chose social violence,while large-scale migration is a growing concern for both groups.Rising inequalities and cost of living drive protestsUnder-25 respondents to our public survey ranked social tensions and movements in 2nd place overall,compared to 4th for the sample as a whole.When asked why they chose this risk,younger respondents were more likely than older respondents to select rising inequalities and the cost of living crisis.This result chimes with other research1 that suggests young people are challenging democratic institutions:just 57%of those aged 18-35 said they prefer democracy to other forms of governance,compared to 71%of those aged 56 and above.A recent report by UNICEF Youth,Protests and the Polycrisis2 finds that young people are turning away from traditional forms of civic engagement,such as joining political parties or voting.They increasingly prefer more direct,informal and tech-enabled approaches,such as protests and online activism.ExpertsGeneral public1Failure of institutions and declining levels of democracyIncreasing inequalities&cost of living crisis2Increasing inequalities&cost of living crisisFailure of institutions and declining levels of democracy3Social violence (i.e.,riots)Large-scale migrationsbelieve there is a significant risk that upcoming elections in their countries could be followed by violent protests by people who believed deliberately false information.A majority of experts(62%)and the general public(69%)agreed,with those in the USA(90%and 85%respectively)perceiving the risk as particularly high.FOCUS ON YOUTH303 GEOPOLITICAL INSTABILITY,SOCIAL TENSIONS AND SECURITY THREATS FORM A NEW NEXUS OF RISKAXA FUTURE RISKS REPORT 2024Public authorities must build confidence in their ability to tackle rising social tensions FOCUS1.Source:Open Society Foundations 2.Source:UNICEF-Youth,Protests and the PolycrisisNew security threats and terrorism rose strongly up the risk rankings in this years survey.Among experts,this risk ranked 8th up from 16th last year.When asked whether they consider this risk to be emerging slowly or rapidly or already there,a third of experts said“already there”up from a quarter in last years survey.The general public has consistently ranked new security threats and terrorism higher than the experts,and the same was true this year it“At AXA,we believe that security is not merely a technical function;it is a strategic imperative.”How do evolving risks impact security?Arnaud Tanguy:As Chief Security Officer,I witness firsthand how security risks are amplified by a range of factors from geopolitical shifts and conflicts to climate change and social unrest.Threats are becoming increasingly interconnected and sophisticated.Hackers are becoming more professionalized,but also more notoriety-seeking and politically motivated.The use of AI for malicious purposes is posing a new level of threat.Ransomware risk has increased substantially,for example,with$1.1 billion paid to hackers in 2023 nearly double the figure from 20221.The health sector is especially affected.What role can AXA play in this evolving risk landscape?A.T.:At AXA,we believe that security is not merely a technical function;it is a strategic imperative.Security professionals must adopt a proactive,collaborative approach to equip individuals and organizations with the tools and knowledge to anticipate and mitigate emerging risks.While continuously strengthening our own security foundations,we are committed to fostering a strong ecosystem of partnerships,notably through our involvement in Frances Campus Cyber.We have an unprecedented opportunity to rethink the way we approach security.By sharing best practices,we can leverage collective expertise to address the common challenges we face.I am confident that,by being proactive,agile and collaborative,we can navigate these challenges and emerge stronger than ever.ranked in 2nd place with the public,up from 6th last year.When we asked people who chose this risk to select which aspect most concerned them,responses differed by region.In Africa and America,most selected“mass murdering and active shooting”.In Europe,“evolving forms of terrorism”was the top answer.Respondents in Japan were more likely to select“malicious use of new technologies(e.g.3D printing,drones)”.313 GEOPOLITICAL INSTABILITY,SOCIAL TENSIONS AND SECURITY THREATS FORM A NEW NEXUS OF RISKAXA FUTURE RISKS REPORT 2024Technological change is shaping new security threats 2512ARNAUD TANGUY AXA GROUP CHIEF SECURITY OFFICER1.Source:Fisher PhillipsAXA FUTURE RISKS REPORT 2024AI-powered misinformation IS A RISING THREAT TO OUR DEMOCRACIESBoth disinformation(which is deliberately intended to mislead)and misinformation(which includes false information spread by those who mistakenly believe it)are as old as humanity itself.However,technology is dramatically expanding their potential consequences.We asked new questions in this years survey to explore how experts and the general public view the problem.AXA FUTURE RISKS REPORT 20244ARE YOU ABLE TO SPOT MISINFORMATION?DO YOU BELIEVE THAT PEOPLE GENERALLY ARE ABLE TO SPOT MISINFORMATION?EXPERTS18%2c%YESGENERAL POPULATION18%No,not really No,not at all Yes,partly Yes,absolutely78%YESEXPERTS17X%3%GENERAL POPULATION31H%9%YES3%YES334 AI-POWERED MISINFORMATION IS A RISING THREAT TO OUR DEMOCRACIESAXA FUTURE RISKS REPORT 2024Many people are overconfident in their ability to spot misinformationOur survey found evidence of the Lake Wobegon effect a tendency to over-estimate ones own abilities relative to those of others when it comes to spotting misinformation.Most experts(80%)and members of the public(78%)were confident in their own ability to differentiate between true and false information on social media platforms.When we asked if they believe people generally share this ability,however,only 25%of experts and 40%of the public agreed.This neglect of their own potential weakness is all the more worrying since the consequences of misinformation can be very serious.2877344 AI-POWERED MISINFORMATION IS A RISING THREAT TO OUR DEMOCRACIESAXA FUTURE RISKS REPORT 2024In your book“The Information War”,you talk about how fake news is used as a weapon of war.Why?David Colon:Since the end of the Cold War,the information space has become a major battlefield between democracies and authoritarian regimes.The former sees the free global circulation of information as a vector of progress,while the latter sees it as an existential threat.Strategic use of fake news aims to undermine democratic regimes from within by amplifying divisions,encouraging mistrust,and eroding the ability of citizens and organizations to differentiate whats true from whats false.You talk in terms of a“global cyberwar”.How would you say misinformation has evolved with the emergence of new digital tools?D.C.:The advent of smartphones,social media and artificial intelligence has taken disinformation to an unprecedented level in both its scope and reach.By its nature,the business model of major online platforms-dedicated to maximising advertising revenues has encouraged the proliferation of fake news and conspiracy theories.In parallel,many companies use of programmatic advertising has resulted in their unwittingly and frequently funding unreliable websites.With todays convergence of influencers,algorithms and digital crowds,our information space has become more volatile than ever before.Is there an effective way of countering fake news?Do you believe we can actually be resilient in the face of this mounting risk?D.C.:Some progress has been made not only in raising awareness of these issues,but also in adopting measures to address them.France has led by example in launching the Information and Democracy Partnership in 2019,setting up the Viginum agency to detect digital interference from foreign entities,and more recently in passing legislation to counter foreign interference.The EU Digital Services Act marks a significant advance for Europe,and the OECDs significant report entitled Facts not Fakes1 makes a series of practical recommendations to protect the integrity of our information space internationally.Provided that we tackle the subject,I have no doubt in our societys resilience.This is particularly true for businesses,for they too,have a democratic responsibility.The Brazilian Supreme Court recently deplatformed X in Brazil to“combat fake news”.So,can democracy coexist with freedom of expression?D.C.:My view is that,firstly,such measures are ineffective:suspending the media platform in Brazil was circumvented by X,just as the European Commissions suspension of RT was circumvented in 2022.Secondly,they are counter-productive,because they appear,albeit falsely,to attack freedom of expression.All too often,our democracies try to combat fake news by containing freedom of expression,freedom of opinion or freedom to inform.Along with other researchers,I advocate for an approach that involves regulating how content is disseminated,rather than the nature of the content.Making a malicious statement is one thing,but instantly making it public is quite another.As Rene DiResta has written:“Freedom of speech is not freedom of reach.”Disinformation has reached an unprecedented levelINTERVIEWDAVID COLON PROFESSOR AND RESEARCHER AT SCIENCES PO PARIS“Strategic use of fake news aims to undermine democratic regimes from within by amplifying divisions,encouraging mistrust,and eroding the ability of citizens and organizations to differentiate whats true from whats false.”David Colon 17651.Source:OECDWith around half the worlds population due to vote in national elections in 2024,this years survey set out to gauge concern about the potential electoral impact of misinformation.A large majority of both experts(90%)and the general public(83%)expect attempts to use misinformation on social networks to influence the vote in upcoming elections.Our survey also found that 66%of experts and 69%of the public see a significant risk of election results being challenged due to misinformation.Asia stands out from other regions on misinformationExperts in Asia are much more likely than those in other regions to express confidence in the publics ability to distinguish true from false information (38%in Asia versus 22%in Europe,18%in America,and 9%in Africa).Among the general public,respondents from Japan are notable for their modesty:only 50lieve they have this ability,compared to 78%globally.Perceptions also differ about the most serious impacts of misinformation.While respondents elsewhere are more likely to mention“violence and hatred”,the top responses in Asia were“the functioning of political institutions”for experts and“the safety of property and people”for the public.Finally,experts in Asia are more likely than those on other continents to say they prioritize curbing misinformation over protecting freedom of expression(70%versus 56%in Europe and 54%in America).They are more likely to support government measures such as temporary internet restrictions(71%vs.57%in Europe and 51%in America).354 AI-POWERED MISINFORMATION IS A RISING THREAT TO OUR DEMOCRACIESAXA FUTURE RISKS REPORT 2024Misinformation could influence votes and lead to election results being challenged More broadly,88%of experts and 78%of the general population agree that misinformation has serious consequences for the functioning of political institutions.8865FOCUSThe next most popular ideas were penalizing misinformation by holding people accountable for spreading fake news(supported by 91%of experts and 87%of the public),and enforcing stricter rules and penalties for platforms(90%of experts and 85%of the public).The most controversial idea though still supported by 59%of experts and 70%of the public was government interventions,such as temporary restrictions on the internet or directly removing content during crisis situations.A majority of the public in every country expressed their agreement,with support ranging from 62%in Switzerland to 89%in China.OPINION ON THE STANCE TO ADOPT ABOUT MISINFORMATION AND FAKE NEWSEXPERTS59A%GENERAL POPULATION628%The most important thing is to ensure that misinformation and“fake news”do not circulate and influence citizens,even if this reduces freedom of speech.The most important thing is to guarantee freedom of expression for all citizens,even if this can lead to misinformation and“fake news”circulating more easily.364 AI-POWERED MISINFORMATION IS A RISING THREAT TO OUR DEMOCRACIESAXA FUTURE RISKS REPORT 2024People want governments to act on misinformation of experts and 70%of the public supported the idea of government interventions to help tackle misinformation,such as temporary restrictions on the internet or directly removing content during crisis situations.59%We presented survey respondents with five ideas that have been put forward as having the potential to help tackle misinformation,and asked if they agreed or disagreed with each.The proposal which commanded most support(96%of experts and 88%of the general public)was teaching social media literacy in schools to help children learn how to fact-check and form their own opinions.3443Generative AI enables bots to publish content that looks original and is hard to distinguish from content posted by real people.AI also facilitates the dissemination1 of disinformation to a targeted audience at scale.Governments around the world are attempting to understand how best to respond.Although it exacerbates the problem of fake news,AI could also become part of the solution:82%of experts and 75%of the general public agree that using AI to identify and combat fake news can help to prevent the spread of misinformation.Researchers are currently working to develop tools that can improve transparency,in combination with other approaches.374 AI-POWERED MISINFORMATION IS A RISING THREAT TO OUR DEMOCRACIESAXA FUTURE RISKS REPORT 2024AI is turbocharging misinformation but could also help to address it32781840 of experts and 75%of the general public agree that using AI to identify and combat fake news can help to prevent the spread of misinformation.82%1.Source:Cabridge University Press AXA FUTURE RISKS REPORT 2024In a new question this year,we asked:“When you think about the risks that worry you most,would you say they could be avoided with strong preventive action?”Large majorities of both experts(88%)and the general public(84%)said“yes”.Future risksAND STRATEGIES FOR PREVENTION5AXA FUTURE RISKS REPORT 2024If risks are to be prevented,public authorities must be prepared for them and the general public must be aware of them.In both cases,the experts in our survey are more likely than the general public to believe that there is much work to do.For each of the top five risks they chose,we asked survey respondents how aware of the risk they believe the general public to be.Across all 25 risks in our sample,experts were more likely than members of the public to say that people are not sufficiently aware of the risk.Only in the case of two risks climate change and geopolitical instability did a majority of experts say they thought the general public is aware.FOR 23 OF 25 RISKS,ONLY A MINORITY OF EXPERTS CONSIDER THE GENERAL PUBLIC TO BE AWARE OF THE RISK Experts General population31a95 FUTURE RISKS AND STRATEGIES FOR PREVENTIONAXA FUTURE RISKS REPORT 2024Experts say public awareness and authorities preparedness must both improve392035f%Risks related to evolving regulation and litigation27Y%Risks related to medical advances and innovations24Q%Long terms exposure to harmful substances22E%Risks related to Artificial Intelligence and big data29T%Natural resources and biodiversity31U%Ethical risks regarding the use of technologyRisks related to changing health pratices and new occupational diseases22Y%Disruptive technologies23U%Tech-related economic risks34S%Financial stability risks15b%Space and planetary risks53#%Risks related to smart and autonomous systemsPercentage of selection by those who selected the risk in their top 5:“Given the current knowledge of this future risk,how would you rate the awareness of the general public?Similarly,when we asked“Would you say that public authorities are well prepared for the emergence of this risk?”,experts are much more pessimistic than members of the public.For the general public,the lowest score for any risk(32%)was higher than the highest score for any risk among experts(22%).Members of the public have become generally more confident in authorities preparedness for risk,with scores averaging 1.5 points higher than in last years survey.Among experts,there is hardly any overall change.Experts in Europe and America tend to be more critical of authorities level of preparedness than their peers in the Asia-Pacific region.PREPAREDNESS OF PUBLIC AUTHORITIES FOR FUTURE RISKS22Q 9XYVD22A26%Experts General population405 FUTURE RISKS AND STRATEGIES FOR PREVENTIONAXA FUTURE RISKS REPORT 20247890EXPERTS SAY PUBLIC AWARENESS AND AUTHORITIES PREPAREDNESS MUST BOTH IMPROVERisks related to changing health pratices and new occupational diseasesRisks related to smart and autonomous systemsRisks related to changing demographicsRisks related to Artificial Intelligence and big dataDisruptive technologiesSpace and planetary risksRisks related to evolving regulation and litigationLong terms exposure to harmful substancesClimate changeMonetary and fiscal policy risksNatural resources and biodiversitySocial tensions and movementsPercentage of experts and of the general population answering“yes”to the question:“Would you say that public authorities are well prepared for the emergence of this risk?”415 FUTURE RISKS AND STRATEGIES FOR PREVENTIONHow can product innovation address concerns about climate change?Nancy Bewlay:As an insurer,our priority is always to provide coverage that answers to our customers needs and problems.That means we must adapt to new and evolving risks,constantly reinventing and improving ourselves.In a world where insurability is increasingly questioned,innovation is key.When it comes to how climate change is increasing the frequency and severity of natural disasters,we need to move beyond the traditional approach of looking solely at the past to predict future risks.For example,in partnership with Kayrros,a global environmental intelligence firm,we recently launched a new service to allow corporate customers in France to understand their exposure to the risk of wildfires.It uses innovative predictive engineering,based on satellite imagery and combining more than 20 risk factors,to support our clients in making informed decisions about risk management and risk transfer measures.Climate change also impacts peoples health,from wildfire smoke worsening respiratory illnesses to the spread of tropical infectious diseases into new areas and the rise in heat-related mortality among the elderly.Climate-related health risks are disproportionately felt by the most vulnerable and disadvantaged:women,children,ethnic minorities,poor communities,migrants or displaced persons,older populations,and those with underlying health conditions.For years AXA has been addressing this need by developing insurance specifically for low-to-middle income customers.We recently renamed our service as AXA EssentiALL,to emphasize the universality of our mission to cover the essential needs of our customers all around the world.How can advanced data analytics support insurers in making well-informed decisions to handle future risks?N.B.:We hear from our customers,individual and corporate alike,that they have two main priorities.First,they want to pay a fair price for insurance.Second,they want more from insurers than simply paying out claims.They want personalized support to help them prevent risks.Access to data is obviously essential to achieve this level of personalization.Data and analytics are a part of our culture.We use them to develop scenarios for strategic decision making,making predictions about future risks and monitoring them against changing conditions and early warning indicators,which allows us to pivot quickly when needed.This is how we shape our overall portfolio to achieve sustainable and long-term profitability.Our constant work on developing advanced and non-biased analytical tools is also how we develop more personalized,efficient and predictive insurance solutions for our customers.For example,AXA has recently partnered with Mistral AI,a French start up specialized in generative artificial intelligence,marking a milestone in developing AI applications for the entire insurance value chain.In a world where insurability is questioned,innovation is keyINTERVIEWNANCY BEWLAY AXA GROUP CHIEF UNDERWRITING OFFICER“Data and analytics are a part of our culture,guiding our strategic underwriting and risk decision-making.”Nancy Bewlay 5623AXA FUTURE RISKS REPORT 2024425 FUTURE RISKS AND STRATEGIES FOR PREVENTIONAXA FUTURE RISKS REPORT 2024Not only 91%of experts but also 72%of the general public believe that insurers role in safeguarding against emerging risks will be crucial in the future.To fulfill their role,insurers must be transparent and communicate effectively to build trust with people during times of crisis.Insurers build advanced models and data analytics to quantify and evaluate emerging risks,and can apply their expertise to assist individuals,businesses,and the public sector to enhance their resilience to a range of emerging risks.Insurers are also important as institutional investors,with around 9.5 trillion assets under management1 in Europe alone and a long-term business model that lends itself to supporting the transition to more sustainable economies.The role of insurers5182Our survey asked respondents from AXAs corporate clients and commercial partners to choose their main expectations of insurers in relation to future risks.The top three answers were risk management and transfer for innovative solutions(74%),knowledge sharing and education on risks(71%)and support in prevention and resilience building(63%).AXA remains committed to protecting individuals and assets from emerging risks,while collaborating with all stakeholders to provide value to our clients and partners.This includes advocating for collective action when necessary and dedicating time and resources to future generations.1.Source:Insurance Europe ExpertsWe surveyed 3,012 experts in 50 countries from May 14th to June 27th,2024.The average age of respondents was 45;55%of respondents were men and 44%women,with 1%preferring to self-describe.Most of our experts come from the insurance industry:87%worked at AXA,with distribution/marketing and risk management the most represented professions.The remaining 13%were drawn from AXAs professional networks,primarily working in the financial services sector and for large companies.The global spread comprised:Europe:1,354(top countries:France 530;United Kingdom 222;Belgium 124)Asia-Pacific:867(top countries:Indonesia 345;Japan 135,Thailand 95)Americas:749(top countries:Colombia 399;Mexico 161;United States 137)Africa:35General publicWe surveyed 19,003 members of the public in 15 countries between May 14th and June 15th,2024.Respondents were sampled among people aged 18 and over to be representative in terms of age,gender and occupation,with countries chosen by region and market size.We surveyed 5,000 people in the United States,and 1,000 in each of Australia,Belgium,China,France,Germany,Hong Kong,Italy,Japan,Mexico,Morocco,Nigeria,Spain,Switzerland and the United Kingdom.Country results were weighted to produce the global and regional results.The 25 risksWe presented survey respondents with 25 risks,divided into five categories,and asked them to choose their top five.We ranked the results by assigning 5 points to each top answer,4 to the 2nd answer,etc.Health and medicine:chronic illnesses;long-term exposure to harmful substances;pandemics and infectious diseases;risks related to changing health practices and new occupational diseases;and risks related to medical advances and innovations.Environment and energy:climate change;energy risks;pollution;space and planetary risks;natural resources and biodiversity risks.Technology and data:cyber security risks;disruptive technologies;ethical risks regarding the use of technology;risks related to smart and autonomous systems;risks related to artificial intelligence and big data.Economics,finance and business environment:financial stability risks;macro-economic risks;monetary and fiscal policy risks;risks related to the future of work;tech-related economic risks.Society,politics and regulation:geopolitical instability;new security threats and terrorism;risks related to changing demographics;risks related to evolving regulation and litigation;social tensions and movements.AXA FUTURE RISKS REPORT 2024About the research The AXA Future Risks Survey 2024 was conducted by Ipsos on behalf of AXA.It involved presenting online questionnaires to two distinct groups:experts and members of the public.323943ABOUT THE RESEARCH AXA FUTURE RISKS REPORT 2024Copyrights:ric Avenel-David Atlan-Chris Barber-ric Bobrie-Mikael Lafontan-Seignette Lafontan-Joe Pak-Getty-MidJourney.All rights reserved.Creation:.
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2023 SUSTAINABILITY REPORTTABLE OF CONTENTSTo review other related documents,please visit the new Disclosure and Transparency Hub on our website.2023 At-a-glance 32023 Summary 4Letter from Our President and Chief Executive Officer 5Letter from Our Safety and Sustainability Committee Chair 7Overview 9Public Sustainability Targets 11Our Business 16Our Approach to Sustainability 19Leadership Reflections 29Suzy Retallack,Executive Vice President and ChiefSafetyand Sustainability OfficerNatascha Viljoen,Executive Vice President and ChiefOperating OfficerKaryn Ovelmen,Executive Vice President and ChiefFinancial OfficerGovernance 33Corporate Governance 35Business Integrity and Compliance 36Risk Management System 39Sustainability Compliance and Assurance 41Responsible Sourcing 45Social 47Health,Safety and Security 49People and Culture 53Human Rights 56Social Acceptance 64Environment 69Energy and Climate Change 71Water Stewardship 72Tailings Management 82 Biodiversity 86Closure and Reclamation 89Materials 92Economic 94Value Sharing 96Performance Data 104Reporting Index 106About This Report 108Cover Photo:British Columbia,CanadaFor details on the scope of this report(i.e.,sites and locations included or not included and references to the Goldcorp and Newcrest acquisitions),please see the About This Report section.HOW TO USE THIS REPORTThis report uses interactive features to link to various parts of the report or access additional content online.Access Table of Contents Hyperlink to specific content in the report Link to more information on our website Link to priority topic PDF Link to online leadership video Link to 2023 performance dataHyperlinks within content to references externally or withinthis report2023 Sustainability ReportNewmont Corporation22023 AT-A-GLANCEA Transformative Year Shaping Newmonts FutureThe close of the Newcrest acquisition in November 2023 demonstrates our commitment todeliver on one of our key value propositions to establish a newsustainability standard inresponsible gold and coppermining.This report reflects the transformation Newmont is undergoing,including the following:SHIFT TO MANDATORY REPORTINGThe new U.S.Securities and Exchange Commission climate disclosure rules and other anticipated regulations require strong internal controls and procedures.We discuss how we are preparing to comply with these new regulations in the Sustainability Compliance and Assurance section.PERFORMANCE FOCUS This report focuses on our 2023 performance.Information about the governance,risk management,and our strategy and management approach for eachmaterial issue,which has previously been included in the report,is now available on our new Disclosure and Transparency Hub onour website.NEWCREST INTEGRATIONContinuing our journey toward industry-leading sustainability practices involves integrating systems and aligning on standards,performance metrics and targets.We began this effort in 2023 and will continue throughout 2024.Details of the Newcrest disclosures included in this report and our 2023 Performance Data tables are in About This Report.2023 Sustainability ReportNewmont Corporation32023 Sustainability ReportPhoto:Cerro Negro,Argentina2023 SUMMARYFulfilled commitment to contribute$20M to support host communities and countries addressing theimpacts of the COVID-19 pandemic Conducted investigation into fatality at our Brucejack mine and began applying the lessons learned across the enterprise Fully met three,mostly met five and missed two annual public targets$4.7Bin direct economic contributions,including salaries,taxes,royalties,payments to governments and community contributions Committed to being an early adopter of the Taskforce on Nature-related Financial Disclosures(TNFD),a new framework for disclosing nature-related risks and opportunities Completed self-assessments for all 11priority facilities to support ongoing conformance with Global Industry Standard on Tailings Management 42023 Sustainability ReportNewmont CorporationPhoto:Cerro Negro,ArgentinaLETTER FROM OUR PRESIDENT AND CHIEFEXECUTIVE OFFICER“The year demonstrated our teams unwavering commitment to long-term goals,prioritizing sustainable solutions over short-term gains.Thisquality sets Newmont apart,reflecting the depth of character within our organization.”TOM PALMER,President and Chief Executive OfficerDear Stakeholders,Reflecting on 2023,it stands out as a remarkable year for Newmont marked by transformational change that touched the lives of every one of our team members.What I am particularly proud of is the consistent display of resilience and thoughtful decision-making amidst significant challenges and uncertainties.RECOMMITTING TO A FATALITY-FREE WORKPLACEOur most important measure of success is,and must always be,keeping everyone who works at Newmont healthy and safe.Sadly,we recently lost four of our colleagues over a four-month period Adam Kennedy at our Brucejack mine,Ike Cobbinah Morrison at our Ahafo North project,and Rosana Ledesma and Daniel Ochoa at our Cerro Negro mine.These tragic incidents remind us of the inherent risks in mining and underscore the importance of constant vigilance and adherence to the critical controls that must be in place before undertaking a task.Along with conducting thorough investigations into these incidents and ensuring we learn and hardwire those learnings back into our systems,we have intensified our efforts to strengthen our visible felt leadership,our Fatality Risk Management(FRM)system and fundamental safety tools and practices.With humility and determination,we renew our commitment to providing a workplace free of fatalities,injuries and illnesses.CREATING THE WORLDS LEADING GOLD MINING BUSINESSThis year involved navigating changes and uncertainties associated with Newmonts acquisition of Newcrest.This historic transaction combined two top gold producers,setting a new standard for responsible gold and copper mining.Our combined portfolio now includes high-quality operations,projects and reserves concentrated in low-risk jurisdictions that are poised to deliver lasting returns while supporting best-in-class sustainability performance.Recognizing the need for strong and experienced leadership during this transformative period,we made significant leadership appointments to ensure our purpose and values guide our decision-making and problem-solving during integration activities.In October,Natascha Viljoen joined Newmont as Chief Operating Officer(COO),responsible for our Australia,North America and Papua New Guinea business units with Rob Atkinson serving as our COO for our Africa,Latin American and Caribbean(LATAC)and Peru business units and global projects.Natascha assumed full accountability for all business units in the COO portfolio on March 1,2024,leading a team of Managing Directors,each responsible for one of our six business units.Given our growing presence in Australia,we appointed a member of our Executive Leadership Team,Suzy Retallack,to be based in Australia and lead our policy development and advocacy,strategic initiatives and engagement with industry bodies to further enhance Newmonts standing in the region.Suzy also serves as our Chief Safety and Sustainability Officer.These changes reinforce an organizational structure that can effectively manage our expanded portfolio and embrace opportunities on the horizon.Post-transaction close in November,our focus shifted to integrating Newcrests team members and assets into Newmonts established operating model.We prioritized investing in our workforce and continuing our journey toward industry-leading sustainability practices.2023 Sustainability ReportNewmont Corporation5DEMONSTRATING OUR VALUESOne of the biggest challenges we faced during the year was at our Peasquito operation in Mexico.In June,the union representing employees at the mine,initiated a strike demanding the Company pay additional profit sharing,equivalent to double the amount agreed upon the previous year during the collective bargaining negotiation cycle,and alleging other violations of the agreement.In October,we reached a resolution with the union and focused on the safe return of our teams to work and restart of operations.Throughout the period of the strike action,we held steadfast to our values,honoring the collective bargaining agreement in place and protecting the long-term value of the mining operation for our workforce,local communities and all stakeholders.This strike action caused significant hardship for many people,and I commend everyone who navigated the challenges and made decisions aligned with Newmonts values.In contrast to the difficulties posed by the strike,we advanced the opportunity to transform our workplace culture by addressing harassment,discrimination,bullying and racism.Building on insights from hundreds of interviews and conversations with employees throughout 2022,we have designed a multi-year program aimed at fostering a workplace environment where everyone feels physically and psychologically safe and is treated with respect.STAKEHOLDER ENGAGEMENT Our commitment to collaborating with communities to address challenges and create business and career opportunities is implemented through various initiatives.For instance,the Stope School,launched in 2020 at our Musselwhite operation in Canada,provides essential mining skills training for local Indigenous candidates,offering a meaningful career path.In 2023,295 applicants vied for 10 spots,with 80 percent from signatory and affiliate First Nations communities in the Musselwhite and Mishkeegogamang Agreement.In Ghana,Newmonts Local Economic Diversification Support(LEDS)program invested nearly$4 million to establish the Asutifi Processing and Services Centre(APSC)pepper and ginger factory at Ahafo.The center,inaugurated in 2023,collaborates with over 1,000 farmers and 80 farmer-based organizations,processing chili peppers and ginger for local and export markets.In Peru,Yanacochas foundation,Los Andes de Cajamarca Association(ALAC),partnered with the United Nations World Food Program to empower local communities through financial inclusion and entrepreneurship.The partnership builds on the success of the 2008 UNICA initiative(a micro-credit program),and today over 530 credit unions serve more than 9,000 community members,of whom 58percent are women.The partnership directs resources to enhance local capacity for nutrition,food security and economic independence.ADVANCING ENVIRONMENTAL STEWARDSHIP PRACTICESBeing responsible stewards of the environment means adopting elevated standards and pursuing innovative opportunities.The Global Industry Standard on Tailings Management(GISTM)sets intentionally high benchmarks for tailings management in the mining industry,incorporating social,environmental,economic and technical factors at every facility.The standards overarching goal is zero harm to both people and the environment.We completed self-assessments for our 11 priority facilities(those with“extreme”or“very high”consequence classification)to support ongoing conformance to GISTM.We will continue to focus on enhancing the Companys level of conformance for priority facilities in parallel with activities to achieve conformance for non-priority facilities by August 2025.As the momentum grows for adopting nature-positive approaches that enhance various aspects of the environment,we announced in January 2024 our commitment to be an early adopter of the Taskforce on Nature-related Financial Disclosures(TNFD)guidelines.These guidelines encompass land,fresh water,ocean and non-greenhouse gas air emissions and require organizations to establish nature metrics and targets.We aim to disclose our results against this framework,starting with our 2025 reporting.To advance our water stewardship goals and climate strategy,we established a partnership with Piteau Associates to develop industry-leading predictive water balance models across all sites.This work integrates the climate projections we developed with the National Center for Atmospheric Research(NCAR)into site water balance models to enhance project planning and bolster site resilience.We also continued to advance our strategic alliance with Caterpillar(CAT)to develop innovative emissions reduction solutions.CAT successfully completed its first prototype for a battery electric underground mining truck in 2023,a pivotal step demonstrating progress in our collaboration.At our Cripple Creek&Victor site,we started the groundwork and pre-work for the anticipated arrival of Caterpillars prototype battery electric haul truck in the second half of 2024,marking a significant milestone.These are exciting developments in our progress to reduce greenhouse gas emissions and achieve net-zero carbon by 2050.As part of our activities to integrate our new-to-Newmont operations,we have started work on reviewing and recalculating our baseline data.In May of this year,we will provide an update on our climate performance,largely focused on activities before the Newcrest acquisition.Then later this year,we plan to publish a more detailed report that includes a rebaselining of our 2030 emissions reduction targets to reflect our current operating portfolio and an update on the climate scenario analyses we use to test Newmonts resilience to potential risks and opportunities associated with climate change.LOOKING AHEADThe year demonstrated our teams unwavering commitment to long-term goals,prioritizing sustainable solutions over short-term gains.This quality sets Newmont apart,reflecting the depth of character within our organization.This is a very exciting and transformative time for Newmont and all our stakeholders.Our diversified portfolio reflects a steadfast commitment to do more than gold producing the essential metals for the transition to a low-carbon future and making a meaningful difference for stakeholders and the world.As we move forward,we aim to build on the successes of 2023 and uphold the principles that demonstrate Newmonts resilience,integrity and excellence.Tom Palmer,President and Chief Executive Officer2023 Sustainability ReportNewmont Corporation6Letter from Our President and ChiefExecutive OfficerLETTER FROM OUR SAFETY AND SUSTAINABILITY COMMITTEE CHAIRDear Stakeholders,As Chair of the Safety and Sustainability Committee,I am honored to provide an update on the Committees actions in 2023 to support the Board of Directors in overseeing Newmonts safety and sustainability performance.While acknowledging the many accomplishments achieved through the hard work of individuals and teams across Newmont,it is crucial to recognize the shifting social,political and environmental challenges facing the Company,the broader industry and the world.The ever-evolving landscape requires a deep and agile understanding of sustainability risks,trends and stakeholder perspectives coupled with robust strategies and plans.In 2023,the Committees quarterly meetings covered a comprehensive agenda,discussing with management a diverse range of matters related to health,safety,security,external relations,social performance and environmental management performance.These meetings also included in-depth examinations of key programs,strategies and challenges,and updates on integration activities related to the Newcrest acquisition.Committee members also participated in three out-of-cycle meetings to review specific strategies,such as the Companys evolving energy,climate and decarbonization strategy,and to review and approve the Companys suite of sustainability reports alongside meetings with the PwC team that provided external limited assurance on these.HEALTH,SAFETY AND SECURITYWe are deeply saddened by the loss of four colleagues over the past year Adam Kennedy,Ike Cobbinah Morrison,Rosana Ledesma and Daniel Ochoa.Management promptly briefed the full Board on each incident and continues to share the lessons learned from internal and external investigations and the actions being taken to prevent a reoccurrence of these tragic events.Newmont has made significant strides in its safety journey,but these tragedies serve as a reminder that maintaining a fatality-free workplace requires constant chronic unease and commitment to verifying and testing the critical controls that must be in place and implemented at all times to prevent potential or actual fatalities.We commend the Company for expanding its Fatality Risk Management program to address the health risks associated with exposures to dust and fumes.Furthermore,Newmonts$94 million investment in fatigue detection technology and camp accommodation improvements since 2020 has reduced fatigue-related incidents to near zero.Due to security challenges at some sites,including national political unrest,worker strikes,and small-scale mining activities,the Committee received regular updates on current and changing security threats and vulnerabilities.These updates also included information on the efforts to enhance defensive technology systems that predict,monitor and control these risks to our employees and communities.The Committee also received updates on the Companys implementation of the Voluntary Principles on Security and Human Rights.SOCIAL PERFORMANCEExpectations of the corporate responsibility to respect human rights continue to evolve,moving from voluntary norms,disclosures and best practices to more prescriptive regulatory requirements.This includes the new Modern Slavery Act in Canada,following existing Modern Slavery Acts in the United Kingdom and Australia,and the proposed EU Corporate Sustainability Due Diligence Directive that mandates human rights due diligence.Management provided updates on how the Company is aligning its human rights and related programs to comply with new regulations and meet growing corporate responsibility expectations.“The Companys resilience and ability to achieve most of its safety and sustainable targets in a challenging and transformative year is a testament to managements commitment to fulfilling Newmonts purpose to create value and improve lives through sustainable and responsible mining.”JANE NELSON,Chair,Safety and Sustainability Committee2023 Sustainability ReportNewmont Corporation7Demonstrating the Companys proactive approach to respecting human rights,the Committee reviewed the independent assessment that Newmont commissioned to evaluate actual,potential and perceived human rights impacts associated with the resettlement process at the Ahafo North project.We were also kept apprised of developments during the four-month-long strike at the Peasquito operation,focusing on Newmonts commitment to respecting the collective bargaining agreement and freedom of association.Artisanal and small-scale mining(ASM)taking place on or near Newmonts mining concessions continued to present safety,security,environmental and social challenges.Newmonts multi-pronged approach to ASM includes partnering with small-scale miners to improve their safety,processing and environmental outcomes as well as providing alternative livelihood opportunities.Implementing this multi-pronged approach is crucial in addressing ASM risks as it not only offers individuals viable and legal economic alternatives but also contributes to the broader goal of sustainable development and environmental conservation.The special credit facility that Newmont and the Suriname National Development Bank began offering to Pamaka small-scale miners in 2023 is one example,and an important step toward cultivating new small business opportunities for the communities near the Merian operation.ENVIRONMENTDuring the year,the Committee reviewed and discussed the Companys evolving energy and decarbonization strategy and received strategic updates on other sustainability priorities and commitments.Each quarter,the Committee reviewed and discussed the Companys environmental performance and risk management across our operations,including:Key activities that are advancing Newmonts transition to a low-carbon economy and helping achieve its 2030 goal to reduce greenhouse gas emissions and achieve net-zero carbon emissions by 2050.Improvements to Newmonts governance and risk management around the safe design,construction,operation and closure of tailings facilities throughout the mine lifecycle.Efforts to reduce water consumption,improve water governance and implement predictive tools to support planning for water management across all sites.Tracking of external trends for the shift to nature positive and alignment with the future reporting requirements for the Taskforce on Nature-related Financial Disclosures(TNFD).Details on the Companys updated Closure Strategy and five-year strategic plan.Continued advancement of the Path to Zero Cyanide Spills program including reduction in number ofevents and potential consequence.ADVANCING INDUSTRY LEADERSHIPThe acquisition of Newcrest in 2023 was another transformational milestone for Newmont,further expanding our presence in major mining jurisdictions and creating new expectations,risks,and opportunities for the Companys industry-leading sustainability performance.Areas of particular focusduring integration include safety,health and hygiene,security risk management,operating in newjurisdictions,managing different types of environmental challenges,and building respectful andinclusive workplaces.Following the acquisition close in November,we were pleased to welcome Sally-Anne Layman to the Committee.She brings extensive experience in the mining sector and financial markets.Her deep understanding of Australias business climate will be invaluable given Newmonts expanded presence inthe country.I also want to express our Committees gratitude to Nick Cotts,Senior Vice President of External Relations,who retired from Newmont in July 2023 after nearly 30 years of service.Nick played a defining role in enhancing our community and environmental practices and was integral to our industry-leading approach to sustainability.In addition,we would like to thank Peter Toth,who served as Newmonts Chief Strategy and Sustainability Officer until assuming the role of Chief Development Officer in June 2023.He continues to advance Newmonts environmental and social performance as a core component of our corporate strategy and business development,and we anticipate ongoing discussions with him and his team on external relations matters.We welcome the appointment of Suzy Retallack as Newmonts Chief Safety and Sustainability Officer.Suzy and the Committee have already worked together extensively in her previous role as Senior Vice President of Health,Safety and Security,and we look forward to working with her and her team in her expanded position to further strengthen Newmonts position as an industry leader in sustainability.The Companys resilience and ability to achieve most of its safety and sustainable targets in a challenging and transformative year is a testament to managements commitment to fulfilling Newmonts purpose to create value and improve lives through sustainable and responsible mining.Atthe same time,the tragic fatality in Canada,and the growing complexity of the safety and sustainability risks,opportunities and stakeholder expectations that we face as a company and as anindustry point to the necessity of continued rigor and commitment in meeting the responsibilities and specific duties outlined in our Committees Charter.Thank you to my fellow Committee membersfor their contributions during 2023.Jane Nelson,Chair,Safety and Sustainability Committee2023 Sustainability ReportNewmont Corporation8Letter from Our Safety and Sustainability Committee ChairOur business is anchored in our values and guided by our purpose:to create value and improve lives through sustainable and responsible mining.Our commitment to environmental,social and governance(ESG)principles is fundamental to achieving our purpose.2023 Sustainability ReportNewmont CorporationPhoto:Porcupine,Canada9OVERVIEWPublic Sustainability Targets 11Our Business 16Our Approach to Sustainability 19Leadership Reflections 29Suzy Retallack,Executive Vice President andChief Safety and Sustainability OfficerNatascha Viljoen,Executive Vice President andChief Operating OfficerKaryn Ovelmen,Executive Vice President andChief Financial OfficerRanked 2nd among 110companies across the extractive and apparel industries in the2023 Corporate Human Rights Benchmark assessment Assessed and identified 33 highly material sustainability issues on which we focus our public disclosures Over 63%of Board members are gender or ethnically diverse Achieved critical milestones in our strategic alliance with Caterpillar to standardize all-electric and autonomous surface and underground mining solutions Photo:Ahafo,Ghana2023 Sustainability ReportNewmont Corporation10PUBLIC SUSTAINABILITY TARGETSPublic sustainability targets underscore a commitment to transparency,serve as an effective mechanism for managing risks,and provide insights into performance with respect to sustainability impacts.At Newmont,we have shared our performance against our public sustainability targets since 2015.2023 Public Sustainability Target PerformanceOur public sustainability targets gauge progress in the areas where we strive for continuous improvement.Business units,functions and senior leaders provide input into the targets,and the Board of Directors Safety and Sustainability Committee reviews and approves any changes or additions.For 2023,out of our 10 annual targets,we fully met three,mostly met five(i.e.,most sites achieved the target but some fell short)and did not meet two.Progress toward the two longer-term goals female representation and climate isongoing.A detailed performance breakdown is provided in the accompanying table.An overview of our targets performance is discussed in the accompanying table,with more details provided in the respective sections of this report.2023 PUBLIC SUSTAINABILITY TARGETS Met Mostly met Ongoing Not metSocialTarget definition2023 PerformanceCommentaryMore informationSafetyZero fatalitiesTragically,in December 2023,our colleague Adam Kennedy who worked at our Brucejack mine in British Columbia,Canada,was fatally injured while completing shotcreting activities(i.e.,spraying concrete/mortar onto a surface)underground.We are applying lessons learned from our investigation into this incident.Health,Safety and SecurityFemale representationAchieve gender parity in senior leadership*roles by 2030*Defined as those in Level 4 and up to Newmonts President and CEO(Level 7),including the Executive Leadership Team.This is an aspirational goal that Newmont is striving to achieve,in compliance with applicable law.Newmont is an equal employment opportunity employer and does not make employment-related decisions based on gender.As of the end of 2023,female representation in senior leadership roles was 33%,up from 31%at the end of 2022.People and Culture2023 Sustainability ReportNewmont Corporation11OverviewSocialTarget definition2023 PerformanceCommentaryMore informationHuman rights and the supply chainImplement risk mitigation plans for 100%of contracts with suppliers*identified as having an elevated likelihood of impacting human rights*Applies to new suppliers and suppliers due for contract renewal at sites where Newmonts Supplier Risk Management program has been implemented.Across the seven sites and office locations where SRiM is in place,we engaged 90%(183)of identified suppliers in training,falling just short of our target.Human RightsCommunity complaints and grievancesAll sites achieve target to respond to,address,track and,if necessary,escalate 100%of tier 1 complaints within 30 daysAcross all tier 1 complaints received in 2023,100%of complaints were responded to,addressed and/or escalated within 30 days.Social AcceptanceIntegrate the root-cause analysis methodology into site stakeholder management systemsWe integrated the root-cause functionality into our stakeholder management system and entered data from the pilot test in 2022 into the system.Community commitmentsAll sites complete 100%of community commitments on or before due dateOf our 12 operating sites,eight completed 100%of commitments on or before due dates as captured in the commitment registers at each site.Ahafo South,Boddington,Cerro Negro and Merian were late on one or more commitments.Social Acceptance Met Mostly met Ongoing Not met2023 Sustainability ReportNewmont CorporationOverview|Public Sustainability Targets12EnvironmentTarget definition2023 PerformanceCommentaryMore informationClimateAchieve the following by 2030*:Reduce absolute GHG emissions(Scope 1 and 2)by 32%Reduce GHG emissions intensity(Scope 1 and 2)by 32%Reduce absolute Scope 3 emissions(i.e.,joint venture assets and supply chain)by 30%*Compared to 2018(Scope 1 and 2)and 2019(Scope 3)baselineDetails about our energy use and greenhouse gas emissions performance by site and over the past five years will be included in our 2023 Climate Performance disclosure,which will be published in May 2024.Energy and Climate ChangeWater stewardshipAll sites achieve annual site targets,including action plans,for participating in multi-stakeholder watershed governance bodies that support collective action/management of water,and improving water quality and quantityAcross all 12 sites,82 of 103 action plans(around 80%)were completed in 2023.Three were canceled due to no longer being relevant,and the remaining were deferred to 2024.Water StewardshipWater efficiencyAll sites to achieve annual water efficiency targets that support an overall reduction in fresh water of more than 5%,with sites in water-stressed areas to reduce overall fresh water consumption by at least 10%*From the 2018 baselineAll but one site(Cerro Negro)achieved their annual site-specific water efficiency targets.Overall,Newmont has reduced fresh water consumption at our 12 operating sites by 26%from the 2018 baseline.Although three of our four water-stressed sites(CC&V,Peasquito and Tanami)achieved their annual water efficiency targets,Cerro Negro fell short due to requiring additional water to restore the pond levels needed to operate the reclaim barge pump operation,and we did not meet our target to reduce overall fresh water consumption at these four sites by 10%compared to our 2018 baseline.Water StewardshipClosure and reclamationAchieve 95%of planned reclamation activities/associated actions across the CompanyOur target was to complete at least 143 hectares of concurrent reclamation,and we reclaimed 165 hectares during the year.Nine of our 12 operating sites met or exceeded theirreclamation activity targets for 2023.Peasquito missed its target due to the four-month-long strike that suspended operations.Both Akyem and Musselwhite completed 90%of their planned reclamation activities.Closure and Reclamation Met Mostly met Ongoing Not met2023 Sustainability ReportNewmont CorporationOverview|Public Sustainability Targets13Value SharingTarget definition2023 PerformanceCommentaryMore informationLocal/Indigenous employmentAll sites achieve local/Indigenous targets as defined in formal community agreements or defined by siteOf the 11 operating sites with a local or Indigenous employment target,five met or exceeded their target.Value SharingLocal/Indigenous procurementAll sites achieve spend target with local/Indigenous suppliersGlobally,Newmont spent$1.4 billion with local/Indigenous suppliers,exceeding our overall target of$1.209 billion.Nine operating sites met or exceeded their target while three fell short.Value Sharing Met Mostly met Ongoing Not metPhoto:Ahafo,GhanaOverview|Public Sustainability Targets142023 Sustainability ReportNewmont Corporation2024 Public Sustainability TargetsAn important part of both our Corporate Strategy and Sustainability Strategy involves ongoing improvement and meeting evolving stakeholder expectations.Most of our public sustainability targets are annual.The exceptions are our long-term goals related to female representation and science-based climate targets.Further details on our future targets are provided in relevant sections of this report.2024 PUBLIC SUSTAINABILITY TARGETSSocialTarget definitionMore informationSafetyZero fatalitiesHealth,Safety and SecurityFemale representation in senior leadership rolesAchieve gender parity in senior leadership*roles by 2030*Defined as those in Level 4 and up to Newmonts President and CEO(Level 7),including the Executive Leadership Team.This is an aspirational goal that Newmont is striving to achieve,in compliance with applicable law.Newmont is an equal employment opportunity employer and does not make employment-related decisions based on gender.People and CultureHuman rights and the supply chain1Implement risk mitigation plans for 100%of contracts with suppliers*identified as having an elevated likelihood of impacting human rights*Applies to new suppliers and suppliers due for contract renewal at sites where Newmonts Supplier Risk Management program has been implemented.Human RightsStakeholder complaints and grievances1All sites achieve target to respond to,address,track and,if necessary,escalate 100%of tier1 complaints within 30 daysSocial AcceptanceCommunity commitments1All sites complete 100%of commitments on or before due dates as captured in registerSocial AcceptanceEnvironmentTarget definitionMore informationEnergy and climate change2Achieve the following by 2030*:Reduce absolute GHG emissions(Scope 1 and 2)by 32%Reduce GHG emissions intensity(Scope 1 and 2)by 32%Reduce absolute Scope 3 emissions(i.e.,joint venture assets and supply chain)by 30%*Compared to 2018(Scope 1 and 2)and 2019(Scope 3)baseline.Energy and Climate ChangeAchieve our goal of net-zero carbon emissions by 2050Water stewardshipAll sites achieve annual site targets,including action plans,for participating in multi-stakeholder watershed governance bodies that support collective action/management of water,and improving water quality and quantityWater StewardshipWater efficiencyNewmont sites prior to the acquisition of Newcrest aim to maintain a greater-than-5%reduction in fresh water consumption,and sites in water-stressed areas aim to reduce by at least 10%*From the 2018 baselineWater StewardshipClosure and reclamationAchieve 95%of planned reclamation activities/associated actions across the CompanyClosure and ReclamationValue SharingTarget definitionMore informationLocal/Indigenous employment1All sites achieve local/Indigenous targets as defined in formal community agreements or defined by siteValue SharingLocal/Indigenous procurement1All sites achieve spend target with local/Indigenous suppliersValue Sharing1 Sites acquired through the Newcrest transition in late 2023 will not be included in this public sustainability target for 2024 due to extended transition timelines;however,they will be included beginning in the 2025 reporting year.2 Due to the integration of our new-to-Newmont operations,we intend to publish a comprehensive report toward the end of 2024 with updated 2030 emissions reduction targets,which will reflect recent changes to our operating portfolio.2023 Sustainability ReportNewmont Corporation15Overview|Public Sustainability TargetsOUR BUSINESSNewmont is the worlds leading gold company and a producer of copper,zinc,lead and silver.The Companys world-class portfolio of assets,prospects and talent is anchored in favorable mining jurisdictions in Africa,Australia,Latin America and Caribbean,North America and Papua New Guinea(PNG).Newmont is the only gold producer listed in the S&P500 Index and is widely recognized for its principled environmental,social and governance(ESG)practices.The Company is an industry leader in value creation,supported by robust safety standards,superior execution,and technical expertise.Newmont was founded in 1921 and has been publicly traded since 1925.On November 6,2023,we completed the acquisition of Newcrest Mining Limited(“Newcrest”)(“the Newcrest transaction”).Select results of Newcrest for the period November 6December 31,2023,are included in the 2023 Performance Data tables.The successful acquisition of Newcrest was a standout moment in our history,positioning Newmont as the worlds largest gold mining company with an outstanding portfolio of Tier 1 assets and a clear pathway to becoming a global-scale copper producer.We remain grounded in our values and guided by our purpose,holding ourselves and the industry accountable as we continuously work to set the standard for responsible mining.Photo:Cajamarca Region,PeruRead more about our operations and projects around the world on our website and in our 2023 Form 10-K.2023 Sustainability ReportNewmont Corporation16OverviewNewmont Corporation16Overview2023 Sustainability ReportRed ChrisBrucejackMusselwhitelonorePueblo Viejo4MerianAhafo NorthAhafoAkyemCerro Negro District Expansion 1Cerro NegroNevada Gold Mines3Cripple Creek&VictorPeasquitoLihirTanami Expansion 2 TanamiCadiaBoddingtonCadia Block CavesOperationProject in executionJoint ventureDenotes a world-class asset(Tier 1)5PorcupineYanacochaTelferNEWMONT OPERATIONS AND PROJECTS1,21 As of February 2024.See cautionary statement.2 On February 22,2024,Newmont announced its intention to divest six non-core assets,including lonore,Musselwhite,Porcupine,CC&V,Akyem and Telfer,within the next 12 months.3 Newmont holds a 38.5 percent ownership interest.4 Newmont holds a 40 percent ownership interest.5 Tier 1 Asset is defined as having,on average over such assets mine life:(1)production of over 500,000 GEOs/year on a consolidated basis,(2)average AISC/oz in the lower half of the industry cost curve,(3)an expected mine life of over 10 years,and(4)operations in countries that are classified in the A and B rating ranges for Moodys,S&P and Fitch.For the definition of GEOs and AISC,see Newmonts annual report on Form 10-K on file with the SEC.With respect to other assets in the industry,such terms and metrics are as published in public filings of the third-party entities reporting with respect to those assets.Our methods of calculating operating metrics,such as AISC,and those of third parties may differ for similarly titled metrics published by other parties due to differences in methodology.2023 Sustainability ReportNewmont CorporationOverview|Our Business17Corporate StrategyAt Newmont,we take pride in being a values-driven organization with a clear purpose to create value and improve lives through sustainable and responsible mining.Read more about our five core values safety,integrity,sustainability,inclusion and responsibility on our website.Our Corporate Strategy aligns key external industrymegatrends with our core capabilities andcompetitive advantages.Our three strategic pillars are:1Responsible gold production;2Industry consolidation;and 3Commodity diversification.The strategy,integral to Newmonts purpose,isbuilton our:Commitment to leading ESG practices:Our Fatality Risk Management program supports efforts to provide a workplace free ofillnesses,injuries and fatalities.Newmont is consistently recognized as the goldsectors sustainability leader.Industry-leading portfolio:Two-thirds of our gold production comes from Tier 1 assets.Approximately 80 percent of our gold and copper production comes from the Americas and Australia.Our assets produce around 150,000 tonnes of copper with additional exposure through reserves and resources.Proven operating model:The team includes experienced leaders with aproven track record.Since 2014,our Full Potential continuous improvement program has delivered more than$5 billion in cost savings.Disciplined capital allocation strategy:By sustaining an investment-grade balance sheet,we maintain financial flexibility.We reinvest in our business through exploration and organic growth projects.Our industry-leading dividend provides compelling returns to shareholders.NEWMONTS STRATEGIC FRAMEWORK SOCIETY&INVESTORSRESPONSIBLE MININGTECHNOLOGYCONSOLIDATIONGEOPOLITICSDIVERSIFICATION20232033Copper portfolioCopper project pipelineSafe productionPortfolio optimizationOperating modelOrganization designNewcrest integrationDivestments2023 Sustainability ReportNewmont CorporationOverview|Our Business18OUR APPROACH TO SUSTAINABILITYAs a core value,sustainability is integrated throughout Newmont,influencing and guiding all our business processes,decisions and activities.Our global strategies,notably those related to Sustainability,People,and Health,Safety and Security,aim to showcase leadership in environmental stewardship,safety,social performance and good governance.With clear targets,meaningful engagement and transparent reporting,we strive for continuous improvement to meet the evolving expectations of investors,governments,communities and other key stakeholders,and to contribute to a sustainable future for all.SUSTAINABILITY AND THE MINE LIFECYCLESOCIALENVIRONMENTALECONOMICEXPLORATIONDEVELOPMENT&DESIGNCONSTRUCTIONPRODUCTIONCLOSUREPOST-CLOSUREMineLifecyclePhoto:Boddington,AustraliaNewmont Corporation19Overview2023 Sustainability Report19OverviewOur Sustainability StrategyNewmonts Sustainability Strategy aligns with the evolving landscape of environmental,social and governance(ESG)practices.Recognizing ESG as a business imperative,the strategy goes beyond a“dono harm”approach,encompassing actions that address global challenges such as climate change,modern slavery,human rights and impacts on nature.Stakeholders rightfully expect increased transparency,public stances on global issues and adherence to leading ESG practices.Our Sustainability Strategy not only incorporates these expanded imperatives but also standardizes governance,aligns business practices with sustainability and ESG standards,and integrates feedback from extensive engagement and consultation.The strategy is aimed at realizing the Companys purpose of creating value and improving lives through sustainable and responsible mining.More information on this strategy is included throughout this report.Our Health,Safety and SecurityStrategyNewmonts Health,Safety and Security Strategy supports our pursuit of a workplace free from fatalities,injuries and illnesses.Recognizing progresswhile emphasizing the need for continuedimprovement,the strategy focuses onthree key themes:1Acting on risk to control outcomes;2Actively caring by engaging and supporting employees and partners;and3Applying knowledge to foster innovation.The approach involves tracking efforts to build,embed and expand health,safety and security programs,with a commitment to consolidating data,utilizing technology and fostering effective communication to ensure a proactive and agile response to evolving risks.More information on this strategy is included in OurApproach to Health,Safety and Security.Our People StrategyNewmonts People Strategy recognizes the substantial changes in the workplace over recent years,encompassing shifts in workforce demographics,operating models and transformedworkplaces.Additionally,it considers the impact of technology automation on talent in both mine site and office settings.The strategys three pillars include:1Leadership aiming to grow and attract exceptional leaders;2Inclusion,Diversity and Equity focused on cultivating an inclusive,diverse and engaged workforce through bold actions;and 3People Experience seeking to foster a meaningful work experience that enables the flourishing of our culture and strategy.The strategy also emphasizes respecting workforce rights and ensuring a living wage for those working on our behalf.More information on this strategy is included in OurApproach to People and Culture.All our policies,as well as select standards,are posted on our website(available in English,Spanish,Dutch and French).DOCUMENTATION GOVERNANCE FRAMEWORK 2023 Sustainability ReportNewmont CorporationOverview|Our Approach to Sustainability20CODE OF CONDUCTSets out expectation of behavior for Newmont employees,officers and directors and for our partners,vendors and third-party workers when they are working with us or on our behalf.POLICIESBroad encompassing statement of business intentions,aspirations and/or commitments.GLOBAL STANDARDSSpecifies minimum acceptable requirements for behaviors,decisions and/or performance.Identifies roles and responsibilities for managing risk.GLOBAL STANDARD IMPLEMENTATION GUIDESAND SUPPORTING DOCUMENTSProvides the approach for how requirements outlined in a Standard need to be implemented.BUSINESS UNIT OR SITE PROCEDURESSupports the implementation of global standards;ensures uniformity and the fulfillment of program requirements at the business unit level;also used to define practical,specific work tasks and assign responsibilities.(includes site/business unit work instructions,forms,operation procedures,etc.)GlobalGovernanceLibraryBusiness UnitControlledDocumentLibrariesSustainability GovernanceNewmonts Board of Directors(“the Board”)is responsible for providing oversight and accountability for the Company.The Board overseesthe Companys Corporate Strategy and maintains a sense of responsibility to Newmonts stockholders,customers,employees,suppliers,host communities and governments.BOARD OVERSIGHTThe full Board is responsible for providing oversight and holding management accountable for the Companys safety and sustainability performance.The Board delegates specific matters to each of the Boards committees to ensure sustainability considerations are integrated into the business at all levels of the organization and that our global standards,strategies,business plans and remuneration plans create the foundation for strong sustainability performance.Each Committee Chair meets with management before formal meetings,providing summaries afterward to the full Board,which reviews key sustainability matters,including health and safety,security,tailings management,social performance,energy and climate and talent management.Safety and Sustainability CommitteeAs stated in its charter,the Safety and Sustainability Committee advises and oversees matters related to health,safety,security,human rights,social and environmental performance and their related risks.The Safety and Sustainability Committees quarterly meetings include in-depth discussions on policies,standards and strategies to mitigate safety and sustainability risks;compliance with regulations and policies;performance against standards,commitments and public targets;and ESG-related incentive plan metrics.The Committee contributes to our annual materiality assessment to identify sustainability risks and concerns,and reviews and approves Newmonts Annual Sustainability Report and Climate Report.As of the end of 2023,the Safety and Sustainability Committee included five members Jane Nelson(Chair),Patrick Awuah,Emma FitzGerald,Sally-Anne Layman and Jos Manuel Madero.Audit CommitteeThe Audit Committee oversees the integrity of theCompanys financial statements,ensuring compliance with legal and regulatory requirements and enterprise-wide policies and controls.This includes reviewing our Business Integrity and Compliance program,charter and any material changes to the Companys Code of Conduct.The committee also oversees Newmonts annual Taxesand Royalties Contribution Report,which disclosesour tax strategy and significant economic contributions to host communities and governments in line with ourcommitment to creating shared value.Leadership Development and CompensationCommitteeThe Leadership Development and Compensation Committee develops and oversees the Companys executive compensation policies and programs.Thisincludes holding executives accountable for theCompanys health,safety and sustainability performance through an effective performance-based compensation structure.The committee alsooversees the leadership development,succession planning and talent management approach.It reviews the Companys People Strategy and efforts to create and maintain a more diverse and inclusive workplace.Corporate Governance and NominatingCommitteeThe Corporate Governance and Nominating Committee is responsible for ensuring the Board comprises qualified individuals who act in the best interests of shareholders and key stakeholders.Thisinvolves overseeing and advising on corporate governance issues,Board leadership and succession planning,including identifying individuals to serve on the Board with expertise in health,safety,environmental and social performance.More information about Newmonts Board members and committees is available in our 2024Proxy Statement.SAFETY AND SUSTAINABILITY COMMITTEEJane Nelson(director since 2011 and Chair ofthe Safety and Sustainability Committee since 2019)has a long and distinguished careeradvocating for sustainable business practices and is the Founding Director of the Corporate Responsibility Initiative at Harvard Kennedy School.Patrick Awuah(director since 2021)has extensive international experience and as Founder and President of Ashesi University,hebrings academic leadership to the Committee.Dr.Emma FitzGerald(director since 2021)is an experienced business executive in the energy and water industry,known for her thought leadership and deep understanding of these industries and for operating successfully in developing markets.Sally-Anne Layman(director since 2023)brings a wealth of international expertise in the mining sector and financial markets,having held various senior roles with multiple mining and resource companies.Jos Manuel Madero(director since 2021)has extensive experience as a finance,strategy and business development executive and as a consultant who advises global companies on managing matters related to regulatory,policy and social responsibility.2023 Sustainability ReportNewmont CorporationOverview|Our Approach to Sustainability21MANAGEMENT RESPONSIBILITIESNewmont management has primary responsibility for the daily implementation and management of sustainability matters.Newmonts President and CEO oversees alignment with the overall Corporate Strategy and delegates responsibility for executing the Sustainability and Health,Safety and Security strategies to the Chief Safety and Sustainability Officer.This role was enhanced in 2023 by combining the leadership of the Safety and Sustainability teams,elevating the focus on the Companys health,safety,security,environmental and social performance.All executives are actively engaged in managing sustainability and the associated risks.This includesresponsibility for the following programs and efforts:Our Chief Financial Officer oversees our Risk Management System and debt instruments,including our sustainability-linked bond,and engages with investors on ESG issues.Our Chief Legal Officer oversees our Business Integrity and Compliance program,and with the legal team,addresses key social and environmental matters.Our Chief People Officer oversees the People Strategy,workforce inclusion,diversity and equity performance,and talent management.Our Chief Development Officer oversees our government and external relations efforts.Our Chief Technology Officer is responsible for our efforts to identify and implement technologies that help us operate safer and more responsible mines and serves as the Accountable Executive(AE)responsible for thesafety of Newmonts tailings facilities.The AEdelegates responsibility for on-the-ground implementation at the business unit and site levels to the Corporate Tailings and Dams Team.Our Chief Operating Officer oversees the Managing Directors for each business unit and the site General Managers,who are responsible for on-the-ground implementation at the business unit and site levels.Contributing to our global strategies and programs are executive steering committees and/or cross-functional working groups that address issues like geopolitical risk,human rights,Indigenous peoples,water stewardship,tailings management,climate change and mine closure.To ensure ESG matters are timely and consistently disclosed to the investment community,our cross-functional ESG disclosure subcommittee evaluates existing and emerging matters of significance,such as the U.S.Securities and Exchange rule on climate disclosures,performance against key publictargets and reporting on greenhouse gas emissions data.SUSTAINABILITY GOVERNANCEBOARD OF DIRECTORSThe full Board oversees and holds management accountable for the Companys sustainability performance.The Board delegates specific matters to each of the Boards committees to ensure theintegration of sustainability considerations throughout the business.EXECUTIVE AND STRATEGIC LEADERSHIP TEAMSNewmont management holds the primary responsibility for the daily implementation and managementof sustainability matters.Although all executives actively engage in sustainability mattersand the associated risks,dedicated sustainability-focused leaders are part of our executiveandstrategic leadership teams.ENTERPRISE TEAMSNewmonts enterprise teams establish health,safety,security,people,governance,social performance and environmental standards and guidelines,provide shared services to all business units,and monitor business unit and site performance.BUSINESS UNIT/SITE TEAMS Newmonts Managing Directors and their teams at the business unit and site levels ensure workplace safety and the implementation of and compliance with Newmonts policies and standards,includingthose related to health,safety,security,people,governance,social performance and environment.Read more about how Newmonts 2023 sustainability performance impacted remuneration in the 2024ProxyStatement.2023 Sustainability ReportNewmont CorporationOverview|Our Approach to Sustainability22Stakeholder EngagementWe view anyone affected by our activities and vital to our success as a stakeholder.An overview of stakeholder groups,topics,engagement mechanisms and examples of how Newmont engages with each stakeholder group is posted on our website.Further details on our engagement with stakeholders are included throughout this report.MaterialityEach year,we conduct a materiality assessment to identify,assess and prioritize our current,near-term and emerging sustainability issues.Our assessment follows GRIs guidance for determining material topics and includes the Sustainability Accounting Standards Board(SASB)material topics for our sector.We assess priority issues in two ways:1.Assessing the issues where Newmont has or could have the potential to impact the environment,people and society(either negatively or positively)as seen on the Y-axis of the matrix.2.Assessing issues that impact or could impact Newmonts business and financial success(either negatively or positively)as seen on the X-axis on the matrix.This analysis differs from traditional financial materiality,which relates to thresholds that may influence investors and determines the disclosures in our public financial filings.Several issues including mine closure,community relationships,water management and climate change are considered material from both a financial and sustainability standpoint.We discuss these matters in this report and our 2023 Form 10-K(pp.9-12).For our 2023 materiality assessment process,we commissioned an independent research and advisory firm to help conduct the overall materiality assessment and gather direct feedback from external and internal stakeholders.The process for the assessment included the following:Initial mapping Starting with the prior years material issues,we validated the list of issues and incorporated new and emerging issues using a variety of methods,including current reporting requirements and frameworks,peer benchmarking,sector priorities,internal workshops,and the list of assessed issues from a third-party software analytics platform that identifies and monitors external risks including ESG-related risks.External perspectives We engaged external stakeholders through one-on-one interactive interviews to discuss the issues and obtain a ranking of each issue.In 2023,perspectives from academia,non-governmental organizations,investors,customers and industry organizations were included.Newmonts Safety and Sustainability Board Committee We interviewed each committee member to solicit feedback and incorporate this feedback into the overall analysis.Internal subject matter experts Through a quantitative prioritization survey,we engaged internal subject matter experts across the business to gather input that we incorporated into the overall analysis.Data-driven material issues prioritization In addition to the direct stakeholder inputs as detailed above,we incorporated data from the third-party software analytics platform on regulatory,media and corporate disclosure environments.Risk management evaluation Our leaders reviewed and evaluated the final materiality matrix to confirm there were no significant gaps between the material sustainability issues and the ranking of risks in our Global Risk Library identified through our risk management process.Leadership validation We reviewed the issues prioritization with functional leaders,executives and the Boards Safety and Sustainability Committee to confirm the final issue rankings that are displayed in the matrix.Our 2023 materiality assessment resulted in 33 total issues,all important and requiring focused attention from Newmont.Each issue demonstrates a relative prioritization and is shown in three tiers with 11 being the most impactful.Compared to previous years,theissues are largely the same;however,youll see amore granular level of detail in our issues this year.See the following materiality matrix and corresponding definitions on the following pages for more details.For 2023,Risk Management has been removed as astandalone topic and is now folded into ESG Governance and various individual material issues.No new issues were identified as part of the 2023 process.All material issues are addressed in this report mostly in the four main sections Governance,Social,Environment and Economic.Starting with this years report,we have provided information on our website about the governance,risk management,and our strategy and management approach for the material issues.This ensures the discussion and disclosures in this report concentrate on our performance for the reporting year.Key performance indicators for all issues shown on the 2023 materiality matrix are included in the 2023 Performance Data tables and are available on our website as downloadable ESG data tables.In addition to our materiality analysis is the concept of salience,which focuses on potential risks to people.Details on our salient issues are included on our website and in the Human Rights section of this report.Photo:Peasquito,MexicoOverview|Our Approach to Sustainability23Newmont Corporation2023 Sustainability ReportHUMAN AND LABOR RIGHTS IN SUPPLY CHAINCOMMUNITY INVESTMENTCHEMICAL AND HAZARDOUS MATERIALS USE AND WASTE MANAGEMENTHUMAN AND LABOR RIGHTS IN OPERATIONSCORRUPTION AND BRIBERYTAILINGS MANAGEMENT AND SAFETYENERGY USE AND RENEWABLESRESPONSIBLE SOURCING AND SUPPLY CHAIN MANAGEMENTMATERIALS REUSE AND RECYCLINGCYBERSECURITY AND DATA PRIVACYEMPLOYEE ATTRACTION,RETENTION,ENGAGEMENT AND DEVELOPMENTADVOCACY AND POLITICAL RESPONSIBILITYWORKER HEALTH,SAFETY,AND WELLBEING IN THE SUPPLY CHAINGEOPOLITICAL RISKWORKER HEALTH,SAFETY AND WELLBEINGCOMMUNITY RELATIONS,ENGAGEMENT AND CONSULTATIONWATER USE,REUSE AND REPLENISHMENTBUSINESS ETHICS,COMPLIANCE AND TRANSPARENCYBIODIVERSITY AND ECOSYSTEMSMINE CLOSURE AND RECLAMATIONGREENHOUSE GAS(GHG)EMISSIONSVALUE SHARING AND TAX CONTRIBUTIONARTISANAL AND SMALL-SCALE MINING(ASM)INNOVATION/TECHNOLOGY DEPLOYMENTNON-HAZARDOUS WASTE MANAGEMENTWORKFORCE DIVERSITY,EQUITY AND INCLUSIONCOMMUNITY HEALTH,SAFETY AND SECURITYCLIMATE CHANGE RISK,RESILIENCE AND ADAPTATIONLOCAL AND INDIGENOUS COMMUNITY RIGHTSWATER QUALITY AND POLLUTIONAIR POLLUTIONLOCAL AND INDIGENOUS COMMUNITY HIRINGESG GOVERNANCEBusiness ImpactEnvironmental/Societal Impact2023 MATERIALITY MATRIX2023 Sustainability ReportNewmont CorporationOverview|Our Approach to Sustainability24Material IssuesList of issues and definitionsIssueDefinitionAdvocacy and political responsibilityPublic policy and transparent political engagement that aligns with the Companys environmental,social and governance policies and position;Collaboration with public sector,peers and industry associations to advocate for better outcomes for people and planetAir pollutionRelease of material air pollutants,including nitrogen oxides(NOx),sulfur oxides(SOx),carbon monoxide(CO),mercury(Hg),Arsenic(As),Lead(Pb),Selenium(Se),Volatile organic compounds(VOCs)and particulate matter(PM10 and PM2.5);limit the impact on local communities,workers and ecosystemsArtisanal and small-scale mining(ASM)Engagement and consultation with local ASM operators to build constructive relationships;Identify,assess,prevent and mitigate impacts by business relationships,interactions,security practices,or co-location of mining with ASM;Support legitimate ASM activities through capacity building,negotiating allocated areas for ASM operators to mine and providing resources and technical assistanceBiodiversity and ecosystemsImpacts on biodiversity and ecosystems from own operations and value chain,including pollution of soil,living organisms and food resources,deforestation,loss of/restoration of plant and animal species;Impact of own operations on the physical environment through the lifecycle of the mineBusiness ethics,compliance and transparencyEthical business culture and practices;Compliance with laws and regulations issued by local,regional and national governments,regulatory authorities and public agencies;Transparent corporate behavior and policies,including payments to governments,rights of shareholders,etc.Chemical and hazardous materials use and waste managementChemical(including cyanide and mercury)and hazardous materials use and waste management;Safe practices and incidence avoidance in own operations and elsewhere in the value chain,including in storage and transportationClimate change risk,resilience and adaptationDisruptions and enhanced resiliency to financial,physical and regulatory impacts of climate change on own operations,the value chain and local communities;Support and promote solutions for a just transition to a lower carbon economyCommunity health,safety and securityHealth and safety impacts on communities from own operations,supply chain and own/third-party security practices;Programs and practices that assess,manage and mitigate health and safety impactsCommunity investmentEconomic contributions through local investment and capacity building;Economic diversification in local/host communities,including diversified jobs and careers;Philanthropic efforts and employee volunteeringList of issues and definitionsIssueDefinitionCommunity relations,engagement and consultationMeaningful engagement with communities near operations;Provision of grievance and remediation opportunities for communities to voice questions and concerns;Social inclusion of diverse community membersCorruption and briberyPrevention and detection of bribery,fraud,extortion,collusion,money laundering,corruption,etc.,through training,policies and standardsCybersecurity and data privacyProtection of internal systems and equipment(including operational safety systems),networks,devices,data,etc.from unauthorized access or criminal use;Safeguarding the privacy and personal data of customers,employees,workers and business partnersEmployee attraction,retention,engagement and developmentAttract,recruit and retain a skilled workforce;Employee engagement,transparency and collaboration;Training and development for employees to build capabilities,career opportunities and advance knowledge to ensure skills and talent pipeline for the future of miningEnergy use and renewablesEnergy use and intensity;Energy efficiency;Renewable energy use throughout own operations and value chainESG governanceESG integration and governance,including board composition/diversity,expertise,oversight,executive compensation,etc.;Publicly reporting on ESG-related issues,risks,opportunities,outcomes,policies,plans,performance and goals;Critical and systemic risk managementGeopolitical riskAssessment and avoidance of conflict-affected and high-risk areas;Robust due diligence to ensure human rights are respected and ensuring own operations and activities are not contributing to conflictGreenhouse gas(GHG)emissionsGHG emissions and intensity in own operations and value chain(Scope 1,2,3),including transportation/logistics;Invest in and implement alternative fuels for transportation,including employee travelHuman and labor rights in own operationsHuman rights and labor/working conditions of employees,third-party workers,or any workers of any entity that is controlled or managed by Newmont;Identification and addressing incidents and risks of modern slavery,child or forced labor;Prevention of discrimination,harassment and retaliation;Freedom of association and collective bargaining;Living wage,inclusive/competitive benefits,reasonable working hours,adequate housing;Access to grievance mechanisms2023 Sustainability ReportNewmont CorporationOverview|Our Approach to Sustainability25List of issues and definitionsIssueDefinitionHuman and labor rights in supply chainRespecting human rights and labor/working conditions of workers in the broader supply chain(training,policies and procedures);Monitoring for modern slavery,child or forced labor,discrimination,harassment and retaliation;Assessing suppliers for issues such as freedom of association and collective bargaining for workers,living wage/adequate pay,reasonable working hours,adequate housing;Awareness of and access to grievance mechanismsInnovation/technology deploymentDeployment of innovation and technology to improve environmental,safety and social outcomes;Identify,manage and mitigate negative impacts of new technology and innovations on own workforce,supply chain,community and the environmentLocal and Indigenous community hiringHiring from local and indigenous communities at all company levels;Develop and enable training and development to build capabilities for career opportunitiesLocal and Indigenous community rightsHuman,social,civil,political,economic and cultural rights of local communities and indigenous peoples,including free,prior and informed consent(FPIC),individual and collective rights,self-determination,rights to land,resources,education,health,employment,language,adequate housing and food,clean water and sanitation,etc.Materials reuse and recyclingRe-use and recycling of resources,products and materials in the mining process;Design and innovation for recycling/circularity(excluding water which is under a separate issue)Mine closure and reclamationEnvironmental,social and economic impacts from mine closure and decommissioning ofown operations;Engagement of workers,suppliers,local communities,governments andother stakeholders on closure planning and implementation,including post-mining land use;Rehabilitation of land during the life of mine and as land becomes available post-closureNon-hazardous waste managementNon-hazardous waste reduction,management and safe practices in operations and along the value chainResponsible sourcing and supply chain managementTransparent processes,systems and assessments to ensure suppliers uphold standards on environmental,social and ethical business practice issues;Ethical sourcing of materials and other supplies;Enablement of supplier sustainability with longer-term contracts and on-time paymentList of issues and definitionsIssueDefinitionTailings management and safetyResponsible tailings and waste rock management conforming with the Global Industry Standard on Tailings Management(GISTM)commitments;Transparent communication of risks to protect employees,local communities and the environment;Prevention of catastrophic failures of tailings facilitiesValue sharing and tax contributionDirect and indirect value sharing in host countries,regions and communities through investments,procurement spending,supporting/partnering with diverse local suppliers,commerce,regional development,infrastructure,fair tax contributions,etc.Water quality and pollutionWater quality and water pollutants from own operations;Availability of clean water in communities(i.e.,for drinking,agricultural use,etc.);Monitoring of water discharges throughout the value chainWater use,reuse and replenishmentWater use and increase water reuse and recycling in own operations;Water availability/access/security for communities,especially in water-stressed areas;Monitoring of water use throughout the value chainWorker health,safety and wellbeingHealth,safety and wellbeing(mental and physical)of employees,third-party workers,or any workers of any entity that is controlled or managed by Newmont;Provision of health and safety training,tools and standards;Implementation of policies and approaches avoid and address significant/critical health and safety incidentsWorker health,safety and wellbeing in the supply chainHealth,safety and wellbeing(mental and physical)of workers in the value chain;Partnering with suppliers who promote and enable health,safety and wellbeing of their workers;Implementation of a supplier management approach to avoid and address significant/critical health and safety incidents within their own businessesWorkforce diversity,equity and inclusionDiverse and inclusive workforce(employees,third-party workers,or any workers of any entity that is controlled or managed by Newmont),executive management team and board;Fair and equitable treatment,compensation and opportunities for all employees in the workforce2023 Sustainability ReportNewmont CorporationOverview|Our Approach to Sustainability26Responsible Mining Standards andDisclosuresNewmont actively participates in voluntary initiatives at the global,regional,national and local levels,demonstrating our commitment to collaboration,transparency and accountability.Our involvement in industry initiatives aligns us with global standards and allows us to influence and stay informed about emerging expectations,issues and risks.More details on our commitments,initiatives,memberships and disclosure frameworks can be found in the Responsible Mining Standards and Disclosures document on our website.UN SUSTAINABLE DEVELOPMENT GOALS(SDGS)Newmont actively supports the SDGs through various activities and initiatives.We recognize our impact on and the opportunity topositively contribute to all 17 SDGs.To amplify Newmonts influence in advancing these goals,wefocus on the following five SDGs that align with our business strategy,showcase leadership,and represent areaswhere we have the greatest potential to generate lasting and meaningful outcomes that improve lives:SDG 3 Good health and wellbeingSDG 5 Gender equality SDG 6 Clean water and sanitationSDG 8 Decent work and economic growthSDG 17 Partnerships for the goalsDetails on these five SDGs are posted on our website.We report on our efforts to advance these goals throughout this report and include specific alignments between our sustainability efforts and the SDGs in the GRI Index.Newmont Corporation1Updated March 2024Responsible Mining Standards and Disclosures Newmont actively participates in various voluntary global,regional,national and local organizations and initiatives,demonstrating our commitment to collaboration,transparency and accountability.We undergo independent assurance on an annual or rotating basis(depending on the framework requirements)for the following responsible mining standards frameworks:The International Council on Mining and Metals Performance Expectations and Position Statements;The Mining Association of Canadas Towards Sustainable Mining program;The World Gold Councils Responsible Gold Mining Principles;and The World Gold Councils Conflict-Free Gold Standard.Our active participation in industry initiatives allows us to inform and influence global standards and practices,as well as gain insight into emerging expectations,issues and risks.Notable commitments,initiatives,memberships and disclosure frameworks are detailed in the table below.Read more about the various voluntary global,regional,national and local organizations and initiatives in which Newmont actively participates.Newmont CorporationOverview|Our Approach to Sustainability272023 Sustainability ReportPhoto:Ghana,AfricaHOW NEWMONT USES TECHNOLOGY TO MINE SUSTAINABLY Newmonts commitment to operational excellence,safety and sustainability is driven by cutting-edge technology and innovation.Our cross-functional efforts evaluate a wide range of technological solutions andsystems that improve safety,reduce emissions,mitigate impacts and enhance productivity.Highlightsinclude the following:Automated,electrified mining ecosystem:Newmont and Caterpillar Inc.(CAT)have joined forces to revolutionize mining by developing a comprehensive set of standardized,all-electric and autonomous surface and underground mining solutions.The collaboration,initiated at Newmonts CC&V operation(surface)and Tanami operation(underground),aims to progress our decarbonization goals while enhancing safety and operational efficiency.This strategic alliance serves as a real-world proving ground for the mining ecosystem of the future.We will begin evaluating electrified autonomous haulage at CC&V and Tanami beginning in 2024 and 2025,respectively.Modernization Advances:Modernizing our operations is key to mitigating safety risks,reducing emissions and enhancing efficiencies.Newmont has successfully deployed modernization solutions such as autonomous haulage systems,automated load-haul-dump(LHD)vehicles,fully remote operations and next-generation fleet management solutions at various mining sites,including:In 2023,Tanami became the first underground stope mine to initiate testing and validation of the MineStar Fleet for Underground,a next-generation mine control platform.The platform is expected to significantly advance mine control and operational visibility for underground mining applications when it becomes the operations primary production system in mid-2024.We began replacing the legacy mine control system at Ahafo South with the current generation MineStar Fleet system.Leveraging our strategic alliance with CAT,we deployed the current generation Fleet mine control solution on next-generation hardware,facilitating field testing and scalability for the upcoming mine control solution.This system development initiative will continue through 2024.In 2022,Cerro Negro became the first underground mining operation in Argentina to use an automated LHD vehicle.Controlled and supervised by an operator in a control station,this autonomous solution has improved safety,operator comfort and efficiency.Through 2023 and into 2024,we are expanding the fleet of autonomous LHD vehicles at Cerro Negro,with one unit currently operational and four more coming online in 2024.Additionally,we have introduced two autonomous drills at Cerro Negro that are controlled remotely.Further expansions for both LHDs and drills are planned in the near term.In 2023,Tanami deployed three autonomous systems for its LHD equipment and ordered five more autonomous LHD machines.These five new diesel-electric machines have a notable 31percent improvement in fuel efficiency,increased payload capacity,a redesigned bucket for quicker cycles,reduced maintenance needs and extended component life.When paired with automation,these higher efficiency and more productive machines are expected to result in tangible safety and productivity improvements at Tanami.Transition to a low-carbon economy:To address the impacts of climate change and achieve our 2030 climate targets,Newmont formed a strategic alliance with CAT,investing$100 million in innovative solutions for emission reduction.This partnership includes testing early learner battery electric trucks,autonomous vehicles and other technologies.Highlights in 2023 included:With collaboration and support from Newmont,CAT successfully completed its first prototype ofa battery electric underground mining truck in 2023.This milestone represents a crucial steptoward demonstrating progress in our collaboration.The ongoing collaboration between Caterpillar and Newmontaims to establish a fully connected,automated and zero-carbon-emitting mining system,enhancing safety and sustainability across our operations.We commenced groundbreaking and pre-work for the Electric Operating Zone at our CC&V operation,finalizing the infrastructure design and layout and beginning the construction phase.This preparation is essential ahead of the expected arrival of the prototype battery electric haul truck,scheduled for the second half of 2024,marking a significant milestone.We continue to evaluate and work with key suppliers to understand lower-emission emulsion/ammonium nitrate-fuel oil,grinding materials and reagents;battery technology;andpower conversion and carbon sequestrationsolutions.Recognizing the importance of information technology and operational technology systems,Newmont continues to deploy high-tech solutions while prioritizing cybersecurity.Vigilant measures are taken to manage evolving cyber threats and security breaches.We discuss the management of cyber risks in our 2023 Form 10-K(page 21).Where opportunities arise,Newmont partners with mining and mineral processing peers through our various association memberships,including ICMM and World Gold Council,on the development and use of innovative technology and supports the promotion of these solutions across the industry.Astechnology continues to evolve,we remain dedicated to leveraging these advancements to drivesustainable mining practices,foster safety andcontribute to a low-carbon future.2023 Sustainability ReportNewmont CorporationOverview|Our Approach to Sustainability28Suzy Retallack serves as Newmonts Executive Vice President and Chief Safety and Sustainability Officer,bringing over 20 years of experience in the mining industry to her role.With Newmont for five years and in her current position since June 2023,Suzy reflects on Newmonts approach to sustainability.Natascha Viljoen joined Newmont in October 2023 as Executive Vice President and Chief Operating Officer.With more than 30 years of experience in the industry,Natascha shares her perspective on Newmont and the importance of sustainability to the business.Karyn Ovelmen,who joined Newmont in May 2023 as Executive Vice President and ChiefFinancial Officer,shares her thoughts on the highly complex,capital-intensive mining industry and how sustainability and financial performance are interconnected.LEADERSHIP REFLECTIONSWe asked three of the newest members of Newmonts Executive Leadership Team to share their perspectives on sustainability as it relates to their new role and what the transformative Newcrest transaction means for the Company.Watch the full video interviews on .Newmont Corporation29Overview2023 Sustainability Report“As a recognized sustainability leader,wealso do what we saywere going to do.We think that is a huge part of being more thanjust gold.”SUZY RETALLACK,Executive Vice President and Chief Safety and SustainabilityOfficer Watch the full video interview on .What aspects of your role as Newmonts Chief Safety and Sustainability Officer do you findmost compelling?Im proud to lead sustainability during this transformational time at Newmont,bringing my years of experience toreally make a difference.The Safety and Sustainability function includes several disciplines health,safety,security,environment,social performance and human rights,as well as the Respect at Work program,which is such an important program for both us and our industry to improve workplaces for everyone by eliminating harassment,discrimination,bullying and racism.What does“More Than Gold”mean to you?It signifies our transformation beyond being just a large gold producer.Now,were a large gold and copper producer that produces the critical minerals that are going to be a key part of the transition to a low-carbon future.As a recognized sustainability leader,we also do what we say were going to do.We think that is a huge partof being more than just gold.In your time as Chief Safety and Sustainability Officer,what insights have you gained?Every day,Im learning something new about the changing landscape that were operating in from an ESG perspective.Staying up-to-date on the new standards and reporting requirements is really important to ensure we hold ourselves accountable.Another important lesson is that regardless of whether theres an acquisition taking place,a severe weather event or a strike that is impacting people,we remain focused on peoples wellbeing,and everyone being treated with respect.How is Newmont innovating in responsible resource management and sustainability?It is important that we perform and rebuild the trust with stakeholders that has been impacted by multiple incidents in our industry.The work to improve our management of tailings,which was driven by some really tragic incidents,is an example of how we have collaborated well as an industry to develop robust standards andgovernance that improve accountability.How does Newmont differentiate itself in the industry when it comes to ESG?Our integrated approach,from the Board to our operations,ensures we are all talking about the same things when it comes to sustainability.We are committed to continuous improvement,whether its access to water,economic resilience beyond the life of the mine or keeping people safe so everyone goes home to their families atthe end of each day.It is a privilege to serve in this role and build on Newmonts strong legacy of valuing sustainability and responsible mining.2023 Sustainability ReportNewmont CorporationOverview|Leadership Reflections302023 Sustainability ReportNewmont CorporationOverview|Leadership Reflections31“We produce more thanjust gold,and ourexpansion into copper will provide a metal thats essential for a greener and healthier future.”NATASCHA VILJOEN,Executive Vice President and Chief Operating Officer Watch the full video interview on .What excites you most about being the Chief Operating Officer?Being the Chief Operating Officer at Newmont is incredibly exciting because I get to engage with everybody at Newmont.Working for more than 30 years in the mining industry has given me amazing opportunities to learn from those who are on the front lines and do the work every day.The absolute ethos that defines Newmont is evident in our purpose to improve peoples lives and make a positive impact.This ethos is evident in our values,how we treat every colleague on a daily basis and how we conduct business.Why did you decide to join Newmont?I was attracted to Newmont because of its purpose-led leadership.In times when the answer is unclear,that clear purpose guides our decisions.If were really grounded in why were doing what were doing,it helps us when we must make difficult decisions.What does“More Than Gold”Mean to you?It is about the broader value we generate for all stakeholders and the value we instill on a daily basis.We produce more than just gold,and our expansion into copper will provide a metal thats essential for a greener and healthier future.That is akin to who we are and Newmonts purpose.When you think about sustainability in mining,what comes to mind?When we look at our assets and how were going to extract value,it is important for us to consider how we are mining today as well as over the life of mine.We must consider what I call the silent stakeholder the environment,including our water and energy consumption.At the heart of it is to make sure we are responsibly extracting optimal value out of an ore body by considering all our environmental and social impacts.What makes Newmont a unique place to work?When comparing Newmont with the other mining companies Ive ever worked with,what sets Newmont apart isthe humility in the organization.This allows us to be impactful because with humility,we consider everybodys voice in the room,and bringing so many more peoples wisdom and experience into the room helps us make better decisions.Theres also humility in learning from mistakes and taking the opportunity to stand back,admitthat weve made a mistake and jointly learn from that.This was a pleasant surprise for me when I joinedthe Newmont family,and its great to be part of a company that has humility and commitment to continuousimprovement.2023 Sustainability ReportNewmont CorporationOverview|Leadership Reflections32“We are focused on creating long-term value and delivering on our clear and consistent strategy,all while contributing to a sustainable future.”KARYN OVELMEN,Executive Vice President and ChiefFinancialOfficer Watch the full video interview on .Why did you decide to join Newmont?Newmont aligns with many aspects that are important to me,and it has a great reputation in the sustainability space.I was interested in the challenge of working in a new industry,and Newmont is known for not just talking about the right things but also doing the right things.Newmont is committed to its purpose to create value and improve lives through sustainable and responsible mining in everything that it does.What does“More Than Gold”mean to you?To me,it means that although Newmont is the industrys leading gold mining company,we are so much more than that.We are a leading producer of essential metals critical to helping the world transition to a low-carbon future.Weare recognized for creating sustainable value that extends beyond the mine,benefiting all stakeholders.We are committed to being an industry leader in developing and delivering low-cost operations,environmental responsibility,and social performance,demonstrating that companies can have a positive impact on stakeholders and the world.What is your perspective on financing sustainability activities?At Newmont,doing the right thing is ingrained in our culture.Our core values of safety,sustainability,integrity,responsibility and inclusion underpin the way we operate.Prioritizing sustainability and allocating capital toward those efforts help us preserve our social license to operate by reducing environmental impacts,improving social performance and reducing risks.How does a strong financial framework support long-term value creation?When we look at our capital allocation strategy,prioritizing our sustainability commitments to support our values asan organization goes hand in hand with also supporting the return on investment for our shareholders.How does Newmont quantify the benefits of integrating sustainability practices into itsoperations?Quantifying the benefits of integrating sustainability practices into our operations is a complex and multifaceted approach.We use various metrics such as industry benchmarks,internal data analysis and cost savings.We also look at our market access and reputation.While these are not directly quantifiable,a strong sustainability performance can open doors to new markets and enhance our reputation with shareholders.What key financial challenges and opportunities does Newmont anticipate in the evolving mining landscape?Its a very exciting time at Newmont,and there are a lot of opportunities as well as challenges that we will need toaddress.Rising costs,financing and geopolitical risks are challenges,while the increasing demand for critical minerals and technological advancements present opportunities to attract investors and gain access to new markets.We are focused on creating long-term value and delivering on our clear and consistent strategy,all while contributing to a sustainable future.Our business is anchored in our values and guided by our purpose:to create value and improve lives through sustainable and responsible mining.Our commitment to environmental,social and governance(ESG)principles is fundamental to achieving our purpose.332023 Sustainability ReportNewmont CorporationPhoto:Peasquito,MexicoGOVERNANCECorporate Governance 35Business Integrity and Compliance 36 Risk Management System 39Sustainability Compliance and Assurance 41Responsible Sourcing 45More than 11,000 integrity and compliance employee interactions,bothonline and in-person,throughout theyearAdvanced Respect at Work program to eliminate disrespectful behaviors and foster a work environment where everyone is treated with respect and dignity More than 63%of Board members are gender or ethnicallydiverseNewmont Corporation3434Photo:Tanami,Australia2023 Sustainability ReportCORPORATE GOVERNANCEEffective corporate governance,rooted in positive stakeholder relationships and well-defined policies,standards,processes and responsibilities,is crucial for managing risks,upholding ethical conduct and guiding the Companys direction and operations.At Newmont,management accountability and proactive oversight by an experienced,diverse Board play a pivotal role in cultivating a culture ofintegrity,meeting stakeholder expectations and honoring our sustainability commitments.Board of DirectorsNewmonts Board of Directors(the“Board”)is responsible for providing oversight and accountability for the Company.The Board overseesthe Companys Corporate Strategy and maintains a sense of responsibility to Newmonts stockholders,customers,employees,suppliers andhost communities.Four standing committees Audit,Corporate Governance and Nominating,Leadership Development and Compensation,and Safety and Sustainability assist the Board in carrying out its oversight responsibilities such as reviewing major risks,ensuring high standards of ethical business conduct,discussing succession planning and talent management,and reviewing safety and sustainability performance.Guided by our purpose and values,the members of our Board leverage their diverse backgrounds,skills and experiences to oversee the Companys strategy and evaluate risk and performance for Newmonts long-term success.Our Board has a wide range of leadership and senior management experience in industry and specialized fields as well as across operating regions.More information about Newmonts Board members backgrounds,skills and qualifications is available in our 2024 Proxy Statement.Photo:Newmont leaders ring opening bell at ASX in Sydney on November 6,the day Newmont closed the transaction with Newcrest(from left to right:Suzy Retallack,Chief Safety and Sustainability Officer;Bruce Brooks and Sally-Anne Layman,Board members;and Tom Palmer,President and CEO)Read more about our Board of Directors,its bylaws,committee charters,guidelines and other governance practices on our website.2023 Sustainability ReportNewmont Corporation35Governance2023 Sustainability ReportNewmont CorporationBUSINESS INTEGRITY AND COMPLIANCEIntegrity is fundamental for building and preserving the trust that serves as a foundation for our business.Asa core value,integrity guides our daily actions,and our global Business Integrity and Compliance program establishes robust controls and cultivates a culture where all our relationships are based on integrity.We measure the effectiveness of our integrity and compliance risk management approach by benchmarking against regulatory and industry-leading practices,as well as monitoring several metrics and performance objectives.Integrity and Compliance PerformanceWe evaluate and investigate,as appropriate,instances of real or potential breaches of our Code of Conduct,related policies,standards and/or laws.Employees,contractors,suppliers,community members and others can anonymously seek guidance and/or report a concern through our third-party-run Integrity Helpline.Code of Conduct-related cases that originate through other channels,such as our People or Security functions,are also incorporated into the Integrity Helpline.Approximately 49 percent(184)of the escalated matters investigated and closed in 2023 resulted in substantiation of the allegations received.The substantiated cases resulted in either recommended changes in business processes or human resources-related actions.These actions involved employees across all levels of the organization who were counseled,disciplined and/or terminated.INTEGRITY AND COMPLIANCE INVESTIGATIONSIntegrity matters opened,substantiated and addressed in 20231NumberTotal new matters(all matters)captured in the Integrity Helpline 1,066 Total escalated matters addressed(substantiated unsubstantiated)375Total substantiated escalated matters184Nature of matters(all matters)received through Newmonts Integrity Helpline in20231,2Nature of casesNumberPercentageConcerns about fraud/corruption182%Concerns pertaining to environmental health and/or safety regulations 29 3%Conflicts of interest686%Incidents of discrimination474%Inquiries and compliance reviews34132%Misconduct or inappropriate behavior47845%Misuse of company assets474%Vendor/contractor issues222%Other types of matters162%TOTAL1,066100%1 The 2023 data includes matters received from former Newcrest locations resulting from the Newcrest acquisition for the period 11/06/2023 12/31/2023 only.2 Newmonts Code of Conduct and Business Integrity Policy,both available at N,outline our approach to preventing and addressing matters related to conflicts of interests,gifts,and bribery/corruption.Read more about Our Approach to Business Integrity and Compliance,including details on our governance,risk,strategy and management approach.Newmont Corporation1Our Approach to Business Integrity andComplianceIntegrity is fundamental for building and preserving the trust that serves as afoundation for our business.As a core value,integrity guides our daily actions,and our global Business Integrity and Compliance program establishes robust controls and cultivates a culture where all ourrelationshipsare based on integrity.GOVERNANCEOur global Code of Conduct(the“Code”)and the following six overarching policies form the foundation for our integrityexpectations:1.Asset and Value Protection 2.Business Integrity3.Health,Safety and Security4.Operations and Resource Development 5.People6.Sustainability and Stakeholder EngagementThese along with our standards on Anti-Corruption,Conflicts of Interest,Gifts and Entertainment and U.S.Export Compliance set the minimum requirements for honest and ethical conduct at Newmont.Our global Business Integrity and Compliance(BI&C)program actively supports adherence to these principles.Aglobal team led by our Group Head,Business Integrity&Compliance and composed of lawyers,auditors,systems experts,internal investigators and other compliance professionals oversees the programs day-to-day implementation,management and continuous improvement.Updated March 2024Read more about our business integrity and transparency events and performance in the 2023PerformanceData tables.2023 Sustainability ReportNewmont Corporation36GovernanceNewmont CorporationINTEGRITY CULTUREThere were more than 11,000 employee interactions with our online and in-person Business Integrity and Compliance(BI&C)training throughout the year.In 2023,we conducted our annual online integrity and compliance training during the third quarter,and 98percent of eligible employees(i.e.,those withcomputer access)completed the training.The training sessions covered a variety of our BI&C programs core elements,including anti-corruption,conflicts of interest,gifts and entertainment and inappropriate abusive behaviors.Recognizing the challenge of reporting misconduct,the 2023 training included a dedicated section to enhance transparency about Newmonts Integrity Helpline and internal investigations process.These efforts resulted in a 30percent increase in reporting compared to 2022(37 percent including matters received from former Newcrest locations after the acquisition on November 6,2023).Throughout the year,BI&C held several targeted,in-depth outreach sessions(including training)for higher-risk functions such as Safety and Sustainability,Supply Chain and high-risk contractors.Through the quarterly Organizational Justice and Integrity Dashboard(OJID),we raised awareness about Integrity Helpline case details,including outcomes and disciplinary measures taken.Each OJID shares lessons learned from actual cases and has a dedicated section aimed at demystifying Newmonts internal investigations process.This is complemented by a“Respect at Work”dashboard that provides details on cases related to disrespectful behaviors.We discuss this dashboard in more detail in the“Championing an Inclusive and Respectful Workplace”story on this page.Through our annual integrity award process,we recognize employees who exemplify our value of integrity and serve as role models for ethical behavior.In 2023,26 employees were nominated bytheir peers and four received the award.COMPLIANCE CONTROLSTo uphold our anti-corruption commitment,over 70business leaders including Executive Vice Presidents,Managing Directors,site General Managers,and key function leaders in areas like Supply Chain,Legal and Finance personally certified each quarter that their specific region or functional area maintained effective controls and that they were unaware of any interactions on behalf of Newmont,that would violate our Code of Conduct,policies,standards or applicable laws.We improved our process to centrally and consistently screen disclosures from internal and external applicants to open positions at Newmont related to conflicts of interest and government/political exposure.Any positive disclosures by candidates must be cleared by BI&C before advancing a candidate through the talent acquisitionprocess.POLITICAL CONTRIBUTIONS Newmonts U.S.political contributions totaled$35,000 in 2023.In 2022,Newmont began a systematic journey to improve its workplaces for everyone by eliminating harassment,discrimination,bullying and racism.We began the journey by conducting an internal review,gathering insights from our workforce to understand the systemic issues leading to disrespectful behaviors.In 2023,we appointed a dedicated Head of Respect at Work to drive meaningful change by engaging leadership,setting new standards and raising awareness.In 2023,key activities under the program included:Launching resources in the North America business unit,featuring an“Ask,Listen,Act”video series that shares perspectives and highlights Newmonts progress.Introducing a new Camp and Facilities Standard that outlines requirements and procedures for each site,covering areas such as video surveillance,adequate lighting,routine patrols,alcohol limits and provisions for internet access.Sharing trends and incident outcomes with all employees,through our quarterly Organizational Justice and Integrity Dashboard,protecting the privacy of those involved while providing a breakdown of Respect at Work incidents.In 2023,382 Respect at Work matters were received through our Integrity Helpline and other channels,with 264 assessed as escalated matters.Of the escalated matters,194 were closed during 2023 and another 94 non-escalated matters were transferred to management.The substantiation rate for closed escalated cases was 57 percent.The program allows business units to tailor actions to the local context.For example,in 2023,our Africa business unit implemented a confidential disclosure requirement for workplace romantic relationships.This aims to protect personnel and help the business provide appropriate guidance on these relationships.Through these efforts and more,Newmont strives to eliminate disrespectful behaviors,fostering a work environment where everyone is treated with respect and dignity.CHAMPIONING AN INCLUSIVE AND RESPECTFUL WORKPLACEPhoto:Ahafo,GhanaView our 2023 Policy Influence Disclosure.2023 Sustainability ReportNewmont Corporation37Governance|Business Integrity and CompliancePublic Policy PerformanceIn 2023,we engaged with government and regulatory officials in all our operating regions.Along with providi
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Published June 2024FY 2023Corporate Social Responsibility ReportThe value of partnership Our business is based on partnership,and we believe that valuable partnerships require responsible partners.Our corporate social responsibility(CSR)efforts are an expression of that philosophy.In a time of economic,geopolitical,social and environmental changes,we believe that partnership among responsible stakeholders can help move our industry,our communities and our world forward.This report details our ongoing CSR efforts over the last yearand into the next.Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate PracticesGRI/SASB Indexes EnvironmentFranklin Templeton FY 2023 Corporate Social Responsibility Report2ContentsReporting boundaries/dates:Franklin Templetons FY 2023 Corporate Social Responsibility Report provides data for fiscal year 2023(October 1,2022September 30,2023)unless otherwise noted.For additional information about this report,please see page 30.“Franklin Templeton”for the purpose of this report covers Franklin Resources,Inc.and its material subsidiaries and specialist investment managers except for Brandywine Global,Clarion Partners,ClearBridge Investments,Lexington Partners,Martin Currie,Royce Investment Partners and Western Asset unless specifically cited.This report does not include information about Putnam Investments,which Franklin Templeton acquired effective January 1,2024,unless specifically cited.Published June 2024.Edited July 2024.About Franklin Templeton4A message from CEO Jenny Johnson5Our corporate social responsibility reporting6Our six dimensions of corporate social responsibilityStewardship and Sustainable Investing7Environment11Diversity,Equity and Inclusion15Employee Experience19Community Engagement23Responsible Corporate Practices27About this report30GRI and SASB Indexes31 Contents3Franklin Templeton FY 2023 Corporate Social Responsibility Report IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate PracticesGRI/SASB Indexes EnvironmentWe are a global investment management organization.Our mission is to help people all over the world achieve the most important financial milestones of their lives.Our values Put clients first Build relationships Achieve quality results Work with integrityThrough our specialist investment managers,we bring extensive asset management capabilities in fixed income,equity,multi-asset solutions and alternatives.We offer our services and products under various brand names,including,among others:Franklin Templeton,Benefit Street Partners,Brandywine Global,Clarion Partners,ClearBridge Investments,K2 Advisors,Lexington Partners,Martin Currie,Putnam Investments,Royce Investment Partners and Western Asset.About Franklin Templeton1.As of January 1,2024,with the completion of our acquisition of Putnam Investments.1,500 investment professionals160 countries where clients are served10,000 employees in over 30 countries76years of investment experience$1.6tnin assets under managementBy the numbers1 Introduction4Franklin Templeton FY 2023 Corporate Social Responsibility Report ContentsStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate PracticesGRI/SASB Indexes EnvironmentIn my annual letter to Franklin Resources shareholders,I highlighted the power of partnerships.We see this in our firms approach to corporate social responsibility(CSR),which is successful through partnerships with our many stakeholders including our clients,shareholders,employees and others.These partners help inform and evolve the building blocks or“dimensions”of CSR at Franklin Templeton.This past year,Franklin Templeton once again conducted a materiality assessment to learn what matters most to our partners.Through this engagement,we reaffirmed our approach to CSR based on six dimensions:Stewardship and Sustainable Investing;Environment;Diversity,Equity and Inclusion;Employee Experience;Community Engagement;and Responsible Corporate Practices.We have achieved many accomplishments working together throughout our CSR journey.Over the past year,Franklin Templeton was ranked#50up from#73 in Barrons“Top 100 US Sustainable Companies in 2024”list,which evaluates the 1,000 largest US companies by market capitalization.2 And we were recognized in Pensions&Investments“2023 Best Places to Work in Money Management,”along with our specialist investment managers Clarion Partners and ClearBridge Investments.3In January,we were delighted to welcome employees from Putnam Investments with its long tradition of investment excellence.As Boston is an important location for us,we look forward to continuing their long-standing civic and philanthropic commitment in the region.Looking aheadThroughout our 76-year history,Franklin Templeton has been guided by Benjamin Franklins principle of“doing well by doing good.”This principle,alongside collaboration and continuous improvement,will be paramount in our CSR journey ahead.Amid the backdrop of the geopolitical landscape and market volatility,we continue to navigate the ever-evolving industry and regulatory environment.As we publish this report,Franklin Templeton is celebrating June Impact Days,our global month of service,with a theme focused on“I ACT”in IMPACT.This call to action builds on an 18-year tradition of harnessing the time,talent and compassion of our employees to partner with our local communities and many charitable organizations around the world.Our CSR principles and work are more reason Franklin Templeton is a powerful partner for today and tomorrow.I invite you to read our FY 2023 CSR Report,which includes detailed disclosure indexes,and I welcome your feedback via CSR.Sincerely,Jenny Johnson President Chief Executive Officer A message from CEO Jenny Johnson2.Barrons recognized Franklin Templeton in February 2024;more details here.Ranking is based on the period of January to December 2023.Franklin Templeton did not provide compensation for the ranking.3.Pensions&Investments recognized Franklin Templeton in December 2023;more details here.Submitted in June 2023,ranking is based on the FY 2022 data period.Franklin Templeton did not provide compensation for the ranking.Introduction5Franklin Templeton FY 2023 Corporate Social Responsibility Report ContentsStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate PracticesGRI/SASB Indexes EnvironmentOur corporate social responsibility reporting Stakeholder engagement and materialityAs a global investment management organization,we manage and address a broad range of environmental,social and governance issues.To inform this report,Franklin Templeton recently conducted a materiality assessment to refresh the process completed in 2019 and to identify and prepare for future opportunities and risks.In early 2024,we engaged internal and external stakeholders in a process to evaluate corporate social responsibility(CSR)materiality from both the impact and financial perspective.Through extensive surveys and interviews,industry benchmarking and a review of primary international reporting frameworks,we reaffirmed our six dimensions of CSR shown here.Our six dimensions of CSRStewardshipand SustainableInvestingEnvironmentEmployeeExperienceResponsibleCorporatePracticesDiversity,Equityand InclusionCommunityEngagementCorporate social responsibility is a key component of our strategy to deliver better outcomes.CSR is grounded in our corporate values of putting clients first,building relationships,achieving quality results and working with integrity.Our six CSR dimensions are interconnected and mutually supportive.Introduction6Franklin Templeton FY 2023 Corporate Social Responsibility Report ContentsStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate PracticesGRI/SASB Indexes EnvironmentStewardshipand SustainableInvestingAt Franklin Templeton,we believethat stewardship is an essentialelement of active management,serving as a key driver of long-termperformance and providing importantinsights into how the companiesin which we invest our clients capitalcan effectively produce sustainablelong-term results.Franklin Templeton FY 2023 Corporate Social Responsibility Report7Stewardship and Sustainable Investing Contents IntroductionDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate PracticesGRI/SASB Indexes EnvironmentOur approach to Stewardship and Sustainable InvestingWe recognize sustainability as one of the deep waves transforming global capital markets.As such,we developed a firm-wide Sustainable Investment Strategy to ensure that we are effective leaders in good stewardship and that we exercise our fiduciary duty to act with prudence,loyalty and care when investing our clients assets,providing vehicles of choice.We grounded this strategy on an economic model based on the effective consideration of the material impacts on financial,human and natural capital and their implications for performance.Clients entrust us with their capital and rely upon repeatable risk-adjusted returns for a wide range of vitally important goalsfrom retirement security to education,health,housing and savings.We believe that stewardship is an essential element of active management,that may serve as a key driver of long-term performance and providing important insights into how the companies in which we invest our clients capital can effectively produce sustainable long-term results.As one of the worlds largest asset managers,we understand the power of stewardship.We use our substantial market presence to foster productive dialogue with the companies we invest in,which allows us to advance their progress and ultimately contribute to the functioning of global financial systems.Through these long-standing and deep connections across the financial system and capital markets,we can gain better insights when building portfolios for our clients and encourage change across capital markets to maximize the productivity of financial,human and natural capital.Governance of sustainable investment Our overall structure is designed to encourage investment autonomy for our specialist investment managers(SIMs)while enabling collaboration and the sharing of best practices across the enterprise.Fiduciary duty and fulfilling our clients mandates are the objectives of the governance structures we have put in place,which serve to ensure each component of the firm has all the tools available to deliver the best outcome for each clients objective.At Franklin Templeton,overall responsibility for sustainability rests with the firms Board of Directors,where the Corporate Governance Committee has formal oversight for the program,as stated in the committee charter.In addition,we have established three governance bodies over stewardship and sustainable investing activities:the Sustainable Investment Governance Committee,the Stewardship and Sustainability Council and the Global Public Policy Council.These bodies are composed of leaders and senior stakeholders from across the firm,representing all aspects of Franklin Templetons business.Sustainable Investment Governance Committee(SIGC)To implement our firm-wide approach,the SIGCwhich reports to the Executive Committee and is chaired by the Global Head of Sustainabilityis a senior-level decision-making body charged with the oversight of progress on the firms Sustainable Investment Strategy,sustainability-related resource allocation and final determination on sustainability issues when opinions and approaches differ.It also provides a forum for consideration of initiatives,thought leadership and partnerships.The committee comprises senior representatives from across all aspects of the business,including investments,distribution,legal,enterprise risk,the Executive Committee,communications and sustainability.The committee ensures integration,clarity and coordination among the teams responsible for integrating sustainability considerations within their respective processes.Stewardship and Sustainable Investing8Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate PracticesGRI/SASB Indexes EnvironmentStewardship and Sustainability CouncilTo make the most of the wealth of expertise across our specialist investment teams,we established our firm-wide Stewardship and Sustainability Council(SSC)in 2021 to bring those teams together for dialogue and the sharing of best practices related to sustainable investing.The SSC includes investment professionals from across Franklin Templeton,representing both public and private markets.Global Public Policy CouncilTo ensure we are engaging with legislators and regulators across the markets,where we invest client assets,we established our Global Public Policy Council to focus on legislative and regulatory issues driving investment,with sustainability as a core theme.Including our CEO and CFO and chaired by our Deputy General Counsel/Global Head of Public Policy,the council closely monitors the global regulatory environment,sets the firms top policy priorities and articulates key messaging to the public and regulators.They are informed by our internal Global Public Policy Forum of business groups and investment teams who regularly review global public policy,legislation and tax concerns.Independent investment decision-making processes Our individual SIMs each employ an independent investment process that empowers them to evaluate sustainability factors from multiple perspectives,varying by asset class,regional focus and individual mandates.With over 20 different investment teams,relevant sustainability factors can vary greatlywhether by geography,asset class or specialization.This enables us to meet the needs of a wide range of clients.Our SIMs benefit from centralized support,with the data,analytical tools,opportunities for collaboration and resources to meet clients needs.We have built out our team of in-house staff to enhance the sustainability data sources available to our investment teams,which we consider essential tools to guide our stewardship efforts and fulfill our reporting obligations.We continue to develop and refine our use of risk and impact datasets to support our commitments toward the Net Zero Asset Managers initiative and the Task Force on Climate-Related Financial Disclosures(TCFD).Stewardship and engagement Asset stewardship is an essential part of our role in protecting and advancing our clients financial interests.Effective stewardship is long-term,collaborative and integrated,and it includes engagement with the companies and other issuers of the securities we invest in,as well as the exercise of voting rights.That is why we engage directly with approximately 500 securities issuers annually,and in 2023 we voted on over 97,000 ballots.4 Stewardship activities also include dialogue with regulators,policymakers and standard setters,where we use our insights as investors to advocate for more efficient and well-regulated markets.Voting and engagement are directly integrated into each investment teams responsibilities,forming part of their investment thesis.Franklin Templetons Stewardship Team supports our investment teams with in-depth research,engagement and recommendations.Operationally,the Stewardship Team is responsible for the administration of our proxy voting process and works with each investment team to implement their voting policies.4.Engagement and voting statistics apply to Franklin Templetons investment teams covered by the central Franklin Templeton policy framework on stewardship,representing 45%of Franklin Templetons total assets under management.Investment teams out of scope of this policy framework include Brandywine Global;Clarion Partners;ClearBridge Investments;Lexington Partners;Martin Currie;Royce Investment Partners and Western Asset.Several of these investment teams independently report comparable statistics as part of their respective reports,which can found here.Stewardship and Sustainable Investing9Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate PracticesGRI/SASB Indexes EnvironmentClimate disclosure We are a Capital Market signatory to CDP(formerly known as“Carbon Disclosure Project”),and we have disclosed our environmental impact through CDP since 2008.Our latest climate questionnaire response can be found here.Additionally,we have publicly supported the TCFD since 2021,believing that the economic consequences of climate change are best understood with a robust reporting framework that promotes comparable disclosure of material risks for the ultimate benefit of investors.Review our corporate TCFD report here.NZAM and goal progress Franklin Templeton and three of its managers5 became signatories to the Net Zero Asset Managers initiative(NZAM)in July 2021,which marks our commitment to enabling clients who seek such strategies to implement their goals.It also reflects our readiness to prepare our own business for the net zero transition.Our initial targets for 2030 are publicly available on the Net Zero Asset Managers website.As an NZAM signatory,we have committed to reporting the scale of assets under management in client strategies that consider alignment with net zero transition,the methodology by which we analyze that alignment and the targets by which we measure progress.Read here for further details on how we implement our commitment.In line with our commitment to NZAM,we have established several net zero working groups and educational sessions,facilitated by our Global Sustainable Strategy Team,that promote the sharing of best practices and thought leadership among our investment teams in analyzing the risks and opportunities presented by net zero for our clients portfolio investments.As of November 2022,5%of firm assets are categorized as being managed in line with net zero,principally those with an existing sustainability focus(e.g.,funds categorized under Article 8/9 of the European Unions SFDR).Importantly,we are guided by the most fundamental of our legal duties to our clients,which is our fiduciary obligation.We do not intentionally invest or conduct stewardship activities on climate-related topics in a way that undermines our fiduciary obligations or our ability to deliver long-term returns.Investment industry partnerships To lead by example,we work with a wide range of organizations that promote best practices for sustainable investing and analyzing sustainability-related risks.We are signatories to,or members of,many such organizations,including:UN Principles for Responsible Investment ASCOR Initiative Representatives Ceres Investor Network on Climate Risk and Sustainability IFRS:Investor Advisory Group of the International Sustainability Standards Board(ISSB)Net Zero Asset Managers initiative(NZAM)Climate Action 100 International Corporate Governance Network(ICGN)Council of Institutional Investors(CII)Official Monetary and Financial Institutions Forum(OMFIF)Human Capital Management Coalition(HCMC)Rankings and ratingsWe are proud of the results of our efforts as recognized by a range of organizations,including:Ranked#50 among Barrons 100 Most Sustainable US Companies 2024 MSCI ESG Rating of A6Thought leadership Visit our Insights page for a curated selection of topic papers on issues such as stewardship,water scarcity,food innovation,proxy voting with purpose,biodiversity and more.Additional resourcesWe invite you to review the Franklin Templeton Stewardship Report and other sustainability reports from our SIMs and investment groups posted here.5.Brandywine Global,ClearBridge and Martin Currie each became signatories in their own right.6.MSCI ESG ratings aim to measure a companys management of financially relevant ESG risks and opportunities.Rating of A is based on a scale of AAA-CCC.For more information,visit MSCIs website under Sustainable Investing,ESG Ratings.Stewardship and Sustainable Investing10Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate PracticesGRI/SASB Indexes EnvironmentEnvironmentThe health of our planet and the well-being of futuregenerations depend on humanitys ability to preserveour environment and its natural resources today.At Franklin Templeton,we are doing our part to addresssystemic threats to the environment by disclosing and reducing our footprint and encouraging environmentally responsible behavior throughout our operations.Franklin Templeton FY 2023 Corporate Social Responsibility Report11 Environment Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate PracticesGRI/SASB IndexesOur Environmental Policy Statement outlines our core goal of continually improving our environmental impact.Increased reporting on carbon and climateAs we have since 2008,we once again completed environmental disclosure through CDP(formerly known as“Carbon Disclosure Project”)and maintained a score of B in 2023above average for firms reporting in North America and globally.Additionally,we secured third-party verification of our greenhouse gas inventory for scope 1,scope 2 and select categories of scope 3.We have also publicly supported the Task Force on Climate-Related Financial Disclosures(TCFD)since 2021.We believe that the economic consequences of climate change are best understood with a robust reporting framework that promotes standardized disclosure of material risks for the ultimate benefit of investors.The latest corporate TCFD report is available here.7.Our emissions inventory and reporting to CDP in 2023 is based on fiscal year 2022 emissions.Scope 1,scope 2 and partial scope 3(purchased goods and services,capital goods and business travel)emissions were verified by an external third party.8.The 2019 baseline year reflects our business and organizational boundaries at that time;we continually evaluate to consider adjustments to the baseline year in the future.Leadership in Energy and Environmental Design(LEED)Building Research Establishment Environmental Assessment Methodology(BREEAM)German Sustainable Building Council(DGNB)PlatinumWarsaw and Poznan,PolandGoldDublin,Ireland London and Leeds,United Kingdom Luxembourg Warsaw,PolandPlatinumFrankfurt,Germany GoldBucharest,Romania Progress against target Franklin Templeton is committed to reducing scope 1 and 2 emissions by 50%by 2030 from a 2019 baseline.8 While we continued in 2023 to grow as a business,we also succeeded in reducing these emissions by 16%compared with a 2019 base yearthrough office consolidations and energy-reduction initiatives at firm-owned and leased facilities.Green certificationsWe are proud to have various green certifications for our owned and leased offices around the globe(see table below).Other major projects are underway to further reduce our real estate emissions.In New York City,we will be consolidating nine offices into a single location with less overall square footage,and in Stamford,Connecticut,we are consolidating three offices into one.In Baltimore,we recently moved to a new office location with a reduced footprint.All these locations will be LEED Silver certified or above.In our most recent emissions inventory,7 scope 1 and scope 2 market-based emissions totaled 11,655 and 22,096 tCO2e(metric tons of carbon dioxide equivalent),respectively,representing a 16%reduction from a 2019 baseline.Efficiency activitiesAll our real estate development and renovation projects include a goal of sustainability.We follow environmentally conscious business practices and maintain environmentally friendly building features across our global corporate footprint,aiming to minimize the impact of our business functions and to reduce the environmental footprint of our facilities.Emissions reduction efforts include higher-efficiency upgrades to infrastructure and lighting,office consolidations,operational reductions and renewable energy initiatives.Environment12Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate PracticesGRI/SASB IndexesAt our headquarters in San Mateo,California,we have upgraded our generators and building management system controls and further enhanced our water-efficient landscaping practices.This campus operates Bloom Energy fuel cells that represent an annual savings of 3.9 million kilowatt-hours.At our data center in California,we employed a more energy-efficient approach to design and invested in energy-efficient building improvements and hot and cold air management,reducing the need for energy-intensive cooling.Several of our buildings(Rancho Cordova and Stockton,California;St.Petersburg,Florida;and Poznan,Poland)include cool roof technology to reflect warming sunlight.Our building in Poznan was designed to LEED standards and certified as LEED Platinum,the highest rating available.We achieved significant optimization by modifying the HVAC system in this office.Our overall effort to efficiently manage the building led to a 40%year-over-year reduction in building electricity usage from 2022 to 2023.Overall,we monitor air quality and energy usage in our offices,use environmental management systems where feasible and monitor environmental regulations to ensure we meet or exceed all requirements.The real estate department has established a plastic elimination policy,green purchasing guidelines and a green leasing sustainability checklist for selecting office spaces.We strive to use sustainable materials and supplies,maximize recycling programs in our facilities and look for new ways to reduce water use in our daily operations.Furniture finds second lifeFollowing upgrades in three US offices,100%of the firms no-longer-needed furniture was diverted from the landfill through a partnership with an organization that resells,donates and recycles decommissioned office furniture and equipment.We focused on repurposing as much unused furniture as possible,donating to organizations that would benefit.This effort is expected to continue in future projects around the globe.Clarion PartnersOur real estate specialist investment manager Clarion Partners,one of the largest owners and developers of warehouse logistics properties in the US,achieved LEED certification for 39 industrial warehouse development projects under the US Green Building Councils(USGBC)LEED v4 for Warehouse and Distribution Volume program.9 In addition to these certifications,Clarion Partners has more than 21 million square feet of further industrial development under review by USGBC that is expected to achieve LEED certification.9.As of April 30,2024.Certain rating programs and industry awards require payment of submission,review or rating fees.LEED Building Design Construction Certifications are issued at the time of building development or major renovation and last in perpetuity.Properties must pay registration and review fees to pursue LEED certifications.We also completed energy-efficient LED lighting upgrades at many of our facilities including in the US(Rancho Cordova and San Mateo,California,and Fort Lauderdale and St.Petersburg,Florida);in the Europe,Middle East and Africa region(Edinburgh,London and Leeds in the UK,along with Bucharest and Cape Town);and in the Asia-Pacific region(Chennai,Delhi,Hyderabad and Mumbai,India,along with Hong Kong,Seoul,Singapore,Tokyo and Melbourne).In our Edinburgh office,an HVAC upgrade converted our buildings main heating source from gas boilers to air source heat pumps and new,energy-efficient air handling units and chillers.We also adjusted the time of system operation and installed occupancy sensors.In Hyderabad,India,we use solar water heaters.Environment13Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate PracticesGRI/SASB IndexesEarth Hour,Day and Month 2023In 2023,we ramped up for Earth Day by participating in Earth Hour on March 25,turning off lights and signs at all locations from 8:30 p.m.to 9:30 p.m.local time.Then,in April,we marked the 53rd anniversary of Earth Day with the theme“Invest in Our Planet.”We sponsored tree planting through a donation to WeForest,a nonprofit dedicated to locally led reforestation and conservation,and featured the organization in an employee matching gifts campaign for the month.From April 17 to April 23,many employees avoided using disposable items for the whole week.We also sponsored a“How to Go Green”wellness webinar where employees learned how to preserve the environment and promote good health.Additional employee engagementThroughout the year,we invited initiatives from employees who are passionate about environmental responsibility.Our Global Green Team encourages all employees to conserve resources to further awareness and progress.Our employees green initiatives are wide-ranging and include:Our long-running oyster gardening program,which helps to filter the Chesapeake Bay in Baltimore,Maryland.Tree planting by employees in partnership with a national nonprofit organization dedicated to planting and nurturing trees across Canada.Litter cleanup in Tokyos Marunochi district and Fort Lauderdale Beach in Florida.The race against plasticIn Stockholm,Sweden,Franklin Templeton employees joined another firm and over 30 clients for annual fundraising sporting events.Combined with a contribution from Franklin Templeton,the team raised over$6,000 for a nonprofit dedicated to protecting our oceans.Environment14Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate PracticesGRI/SASB IndexesFranklin Templeton FY 2023 Corporate Social Responsibility Report15DE&I is part of our growth storythinking moreholistically and with diverse perspectives isa driver of business success.Evolving all aspectsof diversity makes our firm a better place towork and a more resilient business.Integralto strong firm performance,we continue toembed and expand DE&I policies and actionsin all our practices.Diversity,Equityand InclusionDiversity,Equity and Inclusion Contents IntroductionStewardship and Sustainable Investing Employee Experience Community EngagementResponsible Corporate PracticesGRI/SASB Indexes EnvironmentInaugural DE&I Report At Franklin Templeton,our approach to DE&I is that it is more than just the right thing to do.DE&I is an opportunity rather than a problem to be solved.An inclusive culture enables us to better reach and meet our clients goals.We published our first DE&I Report,“Unlocking Our Growth Strategy.”An important milestone in our journey,the report signals our commitment to diversity,equity and inclusion.We invite you to read the report here to learn about our progress as an organization and our strategy for building on that progress as we move forward.Making progressWe are building a future where diversity,equity and inclusion are integral to our business strategy.We are committed to driving sustainable change that aligns with our core values and business objectives.Our Executive Committee and Chief Diversity Officer,who leads the Office of DE&I,along with three Regional DE&I Executive Councils,provide senior leadership accountability,cultural perspectives and alignment with our global strategies.The three regional councils Americas;Europe,Middle East and Africa(EMEA);and Asia Pacific(APAC)address specific diversity needs within each region and ensure that our focus and initiatives are culturally relevant and responsive to their local markets.Franklin Templeton DE&I philosophy and enterprise goalsDiversity,Equity and InclusionBuild an inclusive culture to innovate and drive firm growth for investorsand clients.Business partner of choiceEstablish asset management as the industry of choice for diverse talent and external stakeholders through strategic partnerships and equity initiatives.Industryof choiceEstablish Franklin Templeton as an employer of choice for top talent by increasing diversity at all levels of the firm.Employer of choiceDiversity,Equity and Inclusion16Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable Investing Employee Experience Community EngagementResponsible Corporate PracticesGRI/SASB Indexes EnvironmentAccountability mattersDiversity,equity and inclusion are not the responsibility of any one person or departmenttheyre an integrated enterprise-wide initiative and a formal part of how we organize ourselves.To ensure accountability at every level and to increase inclusive leadership skills,each of our employees is expected to set and pursue a DE&I goal as part of their annual performance measures.These goals,which are selected based on the DE&I competencies weve established,serve as a tangible demonstration of our commitment to fostering an inclusive culture.Working for a more inclusive industryThe Franklin Templeton Institute,a center for thought leadership and a forum to influence our industry,includes DE&I as a core area of study and exploration.The institutes Global DE&I web page hosts topic papers;webinars;and a byline from our Chief Diversity Officer,titled“Dimensions&Insights.”In 2023,we explored business growth resulting from DE&I practices centered on diverse workforces,consumers and communities,plus inclusive innovations in blockchain and digital assets.Franklin Templetons DE&I approach also extends to our specialist investment managers(SIMs).Among many internally facing programs,some in collaboration with Franklin Templeton,SIMs such as ClearBridge,Western Asset and Martin Currie collaborate with talent pipeline diversity programs including Toigo Foundation,Big Brothers Big Sisters,Cornell Women in Investing and others.ClearBridge has recently hired candidates introduced through these partnerships.PartnershipsIn addition to building our own DE&I infrastructure,we have forged strategic partnerships to influence macro change across the industry,such as with Nex Cubed to co-found the HBCU Founders Initiative,which supports entrepreneurs at historically Black colleges and universities.Other partnerships include Catalyst,a global organization that helps build inclusive and equitable workplaces for women,and Diversity Project UK,which aims to increase inclusion in the investment industry there.We are proud members of the Financial Alliance for Racial Equity(FARE),a partnership among leading financial service organizations,associations and HBCUs.Franklin Templeton is one of 27 member organizations in a diversity-driven collaboration called the Equity Collective,which is an industry-leading group Our eight employee-led business resource groups(BRGs)continue to help foster a culture of inclusion by providing employees with a greater sense of shared experiences and opportunities to impact business results.Our BRGs work to enhance the understanding of diversity in the workplace and in our broader communities and to enrich Franklin Templetons culture of mutual respect.Goals and strategic imperativesFranklin Templeton has established three strategic imperatives to organize and prioritize our DE&I efforts:People,Practices and Public Commitment.Under the heading of people,we work to empower diverse perspectives at every level and increase the diversity of our workforce.This means not only attracting,developing and retaining underrepresented talent,but also creating and maintaining a diverse leadership pipeline.Our second imperative focuses on practices that foster an inclusive culture through workplace behaviors and processes.We integrate equitable practices at all levels of our firm because we believe an inclusive culture fosters innovation and drives our growth.Publicly,we use our platform as one of the worlds largest asset managers to positively impact the diversity,equity and inclusiveness of our industry.We do this through strategic partnerships to influence change;implementing practices to reach the evolving identities of our clients;and launching initiatives to provide opportunities to underserved entrepreneurs,businesses and suppliers.Diversity,Equity and Inclusion17Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable Investing Employee Experience Community EngagementResponsible Corporate PracticesGRI/SASB Indexes Environmentof wealth management and asset management businesses that have come together to educate,empower and develop the next generation of diverse leaders in the finance industry.We sponsor the Envestnet Institute on Campus(EIOC)program,which provides the asset management industry with a diverse pool of workforce-ready interns and entry-level employees.We also have partnerships with Rock the Street,Wall Street,a program to bring gender and racial equity to the capital markets and spark the interest of high school girls in careers in finance,and the Toigo Foundation,whose impact starts on the education front with students earning their MBAs as Toigo Fellows and continues reaching a broad base of minority and women finance professionals.Key achievements Established global DE&I governance and transitioned to a regional approach with three Regional DE&I Executive Councils(Americas,APAC and EMEA).Set firm-wide goals,measures and key performance indicators across the strategic pillars of People,Practices and Public Commitment.Launched DE&I action planning in priority business lines.Began building out our approach to inclusive leadership development.Engaged a cross-functional team in the development of a global approach to voluntary employee self-identification.Published the inaugural Franklin Templeton DE&I Report.Became signatories of the CFA DE&I Code and the Diversity Project Europe.Top Score in 2023 Disability Equality Index(DEI)American Association of People with Disabilities(AAPD)and Disability:INStonewallAPAC 100 Women in Finance(100WF)Status:Highly CommendedAPAC 100 Women in FinanceAwards and recognitionCitywireGender Diversity Award Recognition for leading LGBTQ inclusive employers Diversity,Equity and Inclusion18Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable Investing Employee Experience Community EngagementResponsible Corporate PracticesGRI/SASB Indexes EnvironmentEmployeeExperience To remain an industry leader,our goal is to hire and develop the very best talent.To retain that talent,we continuously strive to engage employees through an open,supportive and inclusive workplace so that employees at all levels feel that their careers at Franklin Templeton are more than just a job.Franklin Templeton FY 2023 Corporate Social Responsibility Report19 Employee Experience Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Community EngagementResponsible Corporate PracticesGRI/SASB Indexes EnvironmentFrom our welcoming,inclusive and flexible culture to our global and diverse business,Franklin Templeton offers a wide range of opportunities for individuals to reach their potential while contributing to the success of our organization.Not only is employee retention key to our continued success,but we also care deeply about all our colleagues.We continuously develop and evolve strategies and initiatives with this in mind.Employee engagement and feedbackWe regularly gauge employee sentiment to make sure that we live our corporate values and cultivate our inclusive culture.Through the employee lifecycle,from the onboarding process through a departing employees exit survey,we seek to learn from our colleagues and understand their experiences.Open lines of communication occur through one-on-one discussions,team meetings,town halls,internal social media communities and sentiment check-ins,including an annual employee sentiment survey.The annual sentiment survey and regular“take the pulse”checks of our workforce give us real-time insight into firm-wide trends and a better understanding of our employees perspectives.We also encourage employee input through dialogue between employees and their leaders through town halls,live forums and ongoing discussion about goals and objectives.Leaders and employees also engage directly on a variety of topics in our Courageous Conversation events.Experience,exposure and education Continuous learning is key to long-term success,so our approach to professional development focuses on three pillars:experience,exposure and education.Our employees gain valuable professional experience learning through on-the-job activities.Through wider exposure to the organization,employees can benefit from opportunities to network,develop mentoring relationships and obtain feedback.We work to give all new employees a strong start.Through our New Employee Learning Series,new hires can access a wide range of resources about our firm and industry,including our culture and values.Structured educational opportunities are available to all employees and leaders for core and specific competency development.We help leaders build the necessary skills to be successful through a variety of leadership training opportunities.Our Strategic Leader Program equips leaders with the mindset,knowledge and skills needed to lead strategy,culture and people in a dynamic,evolving,global organization that is rooted in our values.We will soon introduce the Inclusive Leadership Learning Path,which is intended to help leaders build new capabilities to foster a more inclusive environment.We are evolving our global education assistance program to encourage employees to use external learning resources to take advantage of todays new ways of learning and further invest in our workforce.Mentoring is key to a positive employee experience,so in addition to informal mentoring opportunities,we also offer a range of formal mentoring channels.We support professional and personal development through functional teams,business resource groups,online social communities,internships,sponsorships and volunteer projects.We recently celebrated the 40th anniversary of our Futures Program.Established in 1983,this two-year rotation program gives recent college graduates exposure to multiple areas of the firm.Each participant,or Futures Associate,is assigned a management mentor.Many of our past Futures Associates are now long-term employees,including leaders in the firm.Our focus on employee experience helped Franklin Templeton and two of our specialist investment managersClarion Partners and ClearBridge Investmentsrank among the Best Places to Work in Money Management announced by Pensions&Investments.Employee Experience20Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Community EngagementResponsible Corporate PracticesGRI/SASB Indexes EnvironmentAt the intersection of our DE&I and mentoring efforts,we participate in the McKinsey Connected Leaders Academy,which advances racial equity by investing in future leaders.This program has development tracks for Asian,Black/African American,Hispanic and Latino leaders.We also recently launched a DE&I mentorship pilot that matches a cross section of high-potential talent with executive-level leaders across the global organization.Sales-focused employees and external business partners around the world benefit from award-winning,tailored learning provided by the Franklin Templeton Academy.The curriculum focuses on investment concepts and business-building practices.In the last five years through 2023,our Academy has trained more than 215,000 industry professionals in 30 countries and 16 languages.Recognizing our achievements Recognizing and celebrating individual successes and team achievements helps to reinforce our employees positive impacts on firm initiatives,their teams and colleaguesand in their communities.Throughout the year,we highlight the personal and professional achievements of teams and colleagues and promote peer recognition in various communications.The We Are Franklin Templeton program empowers all our employees to formally recognize each other for contributions to the firms success and demonstration of our core values.Our BENiversary program recognizes and celebrates our employees years of service at every five-year milestone,with a special award and recognition ceremony for 20 years of service.We also celebrate exceptional employee contributions through two annual awards that are showcased during our year-end All Employee Meeting.The Charles B.Johnson Award spotlights employees who live the firms core values and provide exceptional client service,and the Harmon E.Burns Award recognizes employees for extraordinary community service.Total rewards Our support for the whole person is reflected in our competitive mix of financial and nonmonetary rewards designed to recognize contributions and commitment,including:Fair,equitable and competitive compensa-tion that rewards employees at all levels of the organization for performance and contributions to the firms success.Business resource groups that promote inclusion,foster networking,collaboration and support new employees.Comprehensive health and wellness benefits to support and care for employees and their familiesRetirement savings,stock purchase and other incentive programs to help employees plan for the future.Ways to get involved and give back to our communities through the Involved global volunteer program,matching gifts and the volunteer paid time off benefit.Flexible work environment and inclusive culture.Support for pursuing certifications,continu-ous learning focus and an education assistance program available to full-time and part-time employees.Holiday and time off family-friendly benefits,employee programs that support work-life integration,global paid caregiver leave and a minimum of 12 paid weeks of family parental leave(birth/adoption/surrogacy).Employee Experience21Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Community EngagementResponsible Corporate PracticesGRI/SASB Indexes EnvironmentNew ways of working Helping our employees be their best means ensuring a work and life balance.We have incorporated this belief into our culture and the way we work.And we work to build on our belief in balance with new ways of working.We continue to introduce digital tools to support productive ways of working,provide easier access to skill development and help employees avoid burnout.Scheduling tools encourage setting aside focused time to get work done with reminders to take breaks during the workday.The effort is supported with action by our leaders,including our CEOs annual“no meetings”week,leaders and colleagues sharing stories of their hobbies and adventures,activity challenges and our month-long community involvement Impact Days.We continue to embrace flexibility,which supports our employees pursuit to be their best by ensuring a work and life balance.We reinforce our robust wellness programming with messaging from our leadership emphasizing the importance of self-care during the workday and after hours.Looking ahead This year,through external research and internal employee focus groups,we developed our employee value proposition(EVP):Say hello to progress.Yours and ours.The three messaging pillars of our EVP are:As we build our strategic plans for 2024,we look forward to seeing our EVP in action.We are committed to listening to feedback and to enhancing the employee experience.Franklin Templeton Recognized in Pensions&Investments Best Places to Work in Money Management AwardsWellness We take a holistic approach to well-being support,which is offered to employees at all levels.The concept of well-being goes beyond physical health to include five interrelated and interdependent aspects,or pillars,of wellness:emotional,physical,financial,social and purpose.An enterprise-wide wellness program provides daily tips for healthy habit building,live and virtual coaching,wellness workshops,financial education,smoking cessation and guidance for embracing diversity,reducing stress,caregiving,finding emotional balance and more.Employees can take part in enterprise challenges with peer participation to be more active and focus on their well-being.Our program includes fun healthy habit challenges and provides tools and resources to support mindfulness and meditation,as well as emotional intelligence and resilience.Additionally,in 2023,we added a new fitness and wellness instructor,offering a variety of both live and on-demand classes for all employees to participate.Help us shape the future of the global asset management industry.Experience a welcoming and inclusive culture to help you reach your professional and personal potential.Be part of a firm that respects your time and ways of working.Employee Experience22Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Community EngagementResponsible Corporate PracticesGRI/SASB Indexes EnvironmentCommunityEngagement At Franklin Templeton,we are proud of our commitment to support our communities where we live and work.Each year,we support hundreds of organizations around the world through charitable giving.We also support the volunteer work and activities of our employees worldwide.Franklin Templeton FY 2023 Corporate Social Responsibility Report Community Engagement Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee ExperienceResponsible Corporate PracticesGRI/SASB Indexes Environment23The Franklin Templeton Charitable FoundationTo formalize decades of charitable giving,we established the Franklin Templeton Charitable Foundation in 2021 with a focus primarily on youth and educationand secondarily on health and human services.The foundation provides community grants,funding for disaster relief and special campaigns and support for our employee giving programs.Through our community grants initiative,we have core partnerships with dozens of global and regional charitable organizations,many that are longtime partnerships,including JA(Junior Achievement)Worldwide,Jumpstart for Young Children,LifeMoves and many more.Employee volunteerism and giving We encourage our employees to make a difference in their communities,and our global volunteer program,known as Involved,amplifies their combined power.Involveds worldwide network of 30 chapters helps sustain our culture of community engagement and positive action.And,with every employee offered one paid day off each year for volunteer work,Franklin Templeton employee volunteers collectively take part in hundreds of community service projects annually.We also support employees in their personal charitable efforts with matching gifts of up to$1,000 per employee per year.And our Donations for Doers program rewards employees for volunteerism.For every 20 volunteer hours logged,employees can direct$250 to the eligible charity they choose up to twice annually.Every June,our Involved program sponsors Impact Days,Franklin Templetons global month of service.Last year,our Corporate Social Responsibility team invited colleagues around the world to participatein person or virtuallyin the firms tradition of service for the 17th year.Employees came together to support several worldwide projects:a global canned food drive with a structure build contest;a virtual mapping project to help map missing areas for humanitarian efforts;and a company-wide exercise and wellness campaign to unlock a firm-sponsored donation to a selected charity.Locally based projects included fundraisers for multiple causes,clothing and food drives,tree planting,home repair and maintenance and community cleanups.Across our annual Impact Days,Franklin Templeton employees in nearly 50 offices and remote work locations around Global Involved Impact Days108 90 50events and opportunitiescharities supportedoffices and remote work locationsnearlythe world took part in 108 events and individual opportunities supporting 90 charities.Involved holidays During the holiday season,employees in offices around the world showed their support for those in need.Through varied charitable projects,employees donated,collected and sorted gifts to distribute to children and families,hosted a coat drive and helped facilitate a holiday gathering for residents in a homeless shelter.Nonprofit Board Leadership Program We encourage our interested employees in the United States to volunteer their time and service as members of nonprofit boards through our Nonprofit Board Leadership Program.This program not only connects interested Franklin Templeton employees with nonprofit board service opportunities in their communities,but it also provides aspiring and current board members with resources and training for effective nonprofit board leadership,including group learning,shared forums and access to literature and resources on nonprofit governance best practices.Community Engagement24Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee ExperienceResponsible Corporate PracticesGRI/SASB Indexes EnvironmentHarmon E.Burns Award Every year since 2007,we have honored an employee who shows exceptional commitment to their community with the Harmon E.Burns Award.Named for longtime Franklin Templeton executive Harmon Burns,who was known for his generosity and championing of our culture of service,each years award goes to a winner chosen by internal judges from a wide range of nominations.We celebrate the winner and two runners-up at our annual,year-end employee meeting and then donate to their chosen organizations.In 2023,we honored our employee Prerna Nemali with the Harmon E.Burns Award for her extraordinary commitment to community service.Based in our Hyderabad office in India,in 2014,Prerna founded her own nonprofit:With You,Spreading Smiles.Under her leadership,With You has grown to an organization of 80 volunteers today.It provides critically important services and support to a wide range of underserved communities,from orphans and underprivileged students to older adults,homeless people and individuals with disabilities.Mann Deshi Foundation Franklin Templeton formed a new partnership with the Mann Deshi Foundation,providing grant funding for its Business School on Wheels program.The partnership provides digital literacy,financial literacy and entrepreneurship development training to thousands of women in Mhaswad,Maharashtra,India.Our CEO Jenny Johnson unveiled a co-branded bus in a ribbon-cutting ceremony in February 2024.Junior Achievement(JA)WorldwideFranklin Templeton is a longtime partner of JA Worldwide in support of its mission to prepare young people to succeed in the global economy.Through funding from our charitable foundation and more than 80 employee volunteers,the program delivers learning experiences to young students across the US,Canada,Hong Kong and Brazil.JA locations around the world work with our local offices to tailor the programming.Some experiences include“My Money,My Business”high school classroom instruction in Sao Paulo,Brazil,as well as student field trips to JA Finance Parks in Maryland,New Jersey and South Florida US locations.“People think charity takes money and time.It does not.Its just 15 minutes in our day.Look around and find so many people in need.Interact with people.Find out what they need.Whatever way you can contribute to those in need,do it.”Prerna Nemali 2023 Harmon E.Burns Award Winner Community Engagement25Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee ExperienceResponsible Corporate PracticesGRI/SASB Indexes EnvironmentHumanitarian reliefIn 2023,devastating wildfires caused extensive damage and tragic loss of life in Canada and Maui,Hawaii.Through our charitable foundation,Franklin Templeton made donations to help with humanitarian aid and efforts in the regions and activated matching gifts campaigns.In addition,the charitable foundation coordinated donations and matching gifts for regions in conflict and crisis to support emergency aid where most needed.And since we are not able to respond to all disasters,we donated to select humanitarian organizations,including Americares,to support their relief work around the world.Rise Against HungerFranklin Templeton employees have taken part in Rise Against Hunger events for several years.The organizations goal is to end hunger,rooted in the belief that“it starts with a meal.”We hosted meal-packing events in our US locations in New York City and San Mateo,California.Collectively,employees assembled 20,000 meals that were shipped to international communities in need.Jumpstart for Young ChildrenWe are proud to support Jumpstart for Young Children and its vision of every child entering kindergarten prepared to succeed.Jumpstart delivers high-quality learning programs to children in underserved communities and helps drive systemic change through teaching,advocacy and leadership.In addition to providing annual funding,Franklin Templeton takes part in Jumpstarts annual Read for the Record Day,which brings adult volunteers together with millions of children across the United States and Canada.In 2023,Franklin Templeton employees from seven offices read Jenny Torres Sanchezs With Lots of Love to more than 1,200 students,and the firm donated 2,000 copies of the book to students and schools.Community Engagement26Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee ExperienceResponsible Corporate PracticesGRI/SASB Indexes Environment Doing the right thing has been the bedrock of our business since our founding.Today,we remain a trusted partner to our clients and stakeholders through our firm-wide commitment to honesty,accountability and ethical behavior in all we do.ResponsibleCorporatePracticesFranklin Templeton FY 2023 Corporate Social Responsibility Report27Responsible Corporate Practices Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee Experience Community EngagementGRI/SASB Indexes EnvironmentOur Code of Ethics and Business Conduct is the foundation of our culture of trust and respect.Accountability for compliance starts with our executive leadership,extends throughout our organization and includes all employees.Our Board of Directors affirms governance practices and policies that cultivate and reinforce an environment of effective compliance.With support from senior management,our Regulatory Compliance Group oversees policies and programs and ensures that we have appropriate processes and procedures in place to comply with evolving rules and requirements wherever we operate.We conduct regular internal audits and reviews and have established a corporate ombudsman and a confidential compliance and ethics hotline operated by a third party.Our centralized Financial Crime Compliance(FCC)team has responsibility for financial controls,such as anti-money laundering(AML),anti-corruption,anti-terrorism financing and sanctions.In the past year,we expanded the AML policy and program to apply to our specialist investment managers,which includes requiring employees to complete our annual FCC training.Read our AML statement Risk management Clients trust us to maintain appropriate measures to manage risk of various kinds,from investment risk to enterprise risk and more.As responsible stewards of our clients assets,we promote and maintain a culture and operating model where risk management is every employees responsibility.More formally,our Enterprise Risk Management Committee(ERMC),composed of senior leaders representing all areas of our business,ensures that we proactively identify,assess,manage and monitor the firms most significant,or key,riskswhether they stem from strategic and ongoing business activities or from new and emerging sources.The ERMC works with support from the Enterprise Risk Management(ERM)team and program,and it reviews and discusses all key risks at least annually with the Board of Directors(or a board committee)and provides updates on the status of the ERM program to the Audit Committee.The ERM program and its standards are overseen by the ERMC,with further reporting to both our Executive Committee and Board of Directors(or a board committee).Because we are asset managers,investment risk is a fundamental element of our business.Effective management of investment risk is central to meeting our clients objectivesas well as our firms.Our centralized Investment Risk team,comprising 100 risk professionals across the globe,is responsible for firm-wide governance and oversight of the investment risk framework,standards and reporting to ensure appropriate review and challenge of our specialist investment teams across our global firm.The Investment Risk team also escalates issues to the CEO,CFO/COO and provides regular updates and reporting to both the Audit Committee and the boards of our individual investment funds.Global compliance Our Global Compliance team and program perform monitoring and reporting functions that set firm-wide and local standards.As our firm continues to grow around the world,we continue to expand and strengthen our Global Compliance team to make sure that we follow international and local regulatory requirements in all the countries where we operate.In some still-evolving markets,our team has even worked with local regulators to share global best practices in developing effective regulation.and our anti-corruption policy overview.Franklin Templeton was not named in a money laundering incident for FY 2023.The teams sanctions program includes five pillars:Learn more about our sanctions program.Establishing and implementing policies and procedures.Independent testing.Designation of an AML Compliance Officer.Ongoing training.Understanding the nature and purpose of our customer relationships,with risk profiles and ongoing monitoring.Responsible Corporate Practices28Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee Experience Community EngagementGRI/SASB Indexes EnvironmentCybersecurity and data privacyMaintaining the confidentiality,integrity and availability of our services and safeguarding our customers data is one of our highest priorities.Our Chief Security Officer and Chief Risk and Transformation Officer oversee our information security program and report to the Executive Committee,Board of Directors and Audit Committee at least annually.Our cybersecurity program is designed to continuously adapt to rapidly evolving technological capabilities,threat landscapes and regulatory requirements.Our cybersecurity program is designed to and aligns with industry standard frameworks.And our security operations teams deploy their extensive capabilities to identify,assess,detect and respond to cybersecurity risks and recover from potential incidents.We employ sophisticated prevention and detection measures to protect our systems,and we test their effectiveness through regular assessments,audits and reviews,conducted both internally and by independent third parties.Because all employees have a role in mitigating risk and preventing cyber-related issues,our Corporate Information Security Policy and Program includes annual training,at a minimum,for employees and contractors to preserve,improve and account for the confidentiality and integrity of the firms information.In addition to ongoing security awareness training,we use the high profile of Cybersecurity Awareness Month to increase security education and communications for employees,contractors and clients.We also continue to enhance and increase employee awareness of phishing tactics and trends through a progressively challenging testing program.Franklin Templeton has a Global Privacy Office under the direction of the Chief Privacy Officer.This office owns the firms Corporate Privacy Policy and global privacy program,which is designed to formulate and enforce a global approach to data privacy that ensures we comply with applicable data privacy laws and regulations across the globe;minimize privacy risks to our clients,employees and the firm;and ensure that privacy practices are aligned with our values.Our approach to safeguarding confidential informationincluding how our transfer agent manages our shareholders“nonpublic personal information”is outlined in our privacy notice,which is posted on our website and provided to new shareholders.The privacy notice includes information about what personal information we collect,how we use it,privacy rights(such as access,deletion and rectification),our disclosure policy,employee confidentiality and system security approach.We continue to monitor and enhance our third-party risk management oversight process to address existing and new outsourced service providers.Transparent and fair information to customersFranklin Templeton delivers a consistent,coordinated client experience.We offer a variety of channels to engage and inform customers,including an interactive website,online tools,routine publications,email communications,social media posts and a news site.Customers have access to dedicated email and telephone lines for additional support.We aim to provide information and assistance that is timely and accurate as a gateway to investment excellence.Related disclosures can be found in the SASB Index on page 47.Human rightsAs part of our firm-wide commitment to accountability,honesty,integrity and ethics,we are committed to upholding basic human rights.Franklin Templeton has a zero-tolerance approach to modern slavery and human trafficking if identified within any part of our business.Read our Human Rights Policy Statement here.Please visit the Corporate Social Responsibility page of our website for additional information.Responsible Corporate Practices29Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee Experience Community EngagementGRI/SASB Indexes EnvironmentAbout this reportThis Corporate Social Responsibility(“CSR”)report covers certain activities of Franklin Resources,Inc.and its consolidated subsidiaries(the“Company”)for fiscal year 2023(October 1,2022 through September 30,2023),unless otherwise noted.For the purpose of this report,references to“Franklin Templeton”cover Franklin Resources,Inc.and its material subsidiaries and specialist investment managers except for Brandywine Global,Clarion Partners,ClearBridge Investments,Lexington Partners,Martin Currie,Royce Investment Partners and Western Asset unless specifically cited.This report does not include information about Putnam Investments,which the Company acquired effective January 1,2024,unless specifically cited.This report does not address the performance or operations of our suppliers,contractors or partners.The information contained in this report has not been subject to external assurance from third parties unless specifically cited.Many of the targets,goals,impacts and programs described in this report are aspirational,and as such,no guarantees or promises are made that these goals and projects will be met or successfully executed.In this report we may use certain terms that the Global Reporting Initiative,Sustainability Accounting Standards Board or others refer to as“material”to reflect the issues or priorities of Franklin Resources,Inc.and its stakeholders.Used in this context,however,these terms are distinct from,and should not be confused with,the terms“material”and“materiality”as defined by,or construed in accordance with,securities or other laws and regulations.Accordingly,issues or priorities considered material for purposes of this report may not be considered material in the context of our financial statements,reporting with the US Securities and Exchange Commission(“SEC”),or our other public statements.This report includes certain non-financial data and information that may be collected and measured using a variety of acceptable methods.The use of alternative acceptable measurement techniques to those used by the Company could result in materially different measurements of the non-financial data and information presented in this report.This report contains forward-looking statements that are provided under the“safe harbor”protection of the Private Securities Litigation Reform Act of 1995,including statements regarding our targets,goals,impacts,programs,and other business plans,initiatives and objectives.Forward-looking statements include all statements that do not relate solely to historical or current facts and involve a number of known and unknown risks,uncertainties and other important factors that may cause actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements.Such risks,uncertainties and other important factors include,without limitation,the degree of support of our stakeholders for our CSR initiatives or other challenges to the success of our CSR initiatives,and those described in our recent filings with the SEC,including,without limitation,in Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended September 30,2023 and our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.If a circumstance occurs after the date of the applicable report that causes any of our forward-looking statements to be inaccurate,whether as a result of new information,future developments or otherwise,we undertake no obligation to announce publicly the change to our expectations,or to make any revision to our forward-looking statements,to reflect any change in assumptions,beliefs or expectations,or any change in events,conditions or circumstances upon which any forward-looking statement is based,unless required by law.30 Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate PracticesGRI/SASB IndexesFranklin Templeton FY 2023 Corporate Social Responsibility Report EnvironmentThis report was developed in reference to the Global Reporting Initiative(GRI)Sustainability Reporting Standards as well as the Sustainability Accounting Standards Board(SASB)Standards for the Asset Management and Custody Activities sector.The following indexes provide data for fiscal year 2023(October 1,2022September 30,2023)unless otherwise noted.GRI and SASB IndexesGRI/SASB Indexes31Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate Practices Environment31Disclosure#DisclosureReferences and ResponsesThe Organization and Its Reporting Practices21Organizational details,location,location of operations,ownershipFranklin Resources,Inc.(FRI)is a global investment management organization with subsidiaries operating as Franklin Templeton and is publicly traded on the New York Stock Exchange(NYSE:BEN).Through its specialist investment managers,the company offers specialization on a global scale,bringing extensive capabilities in fixed income,equity,alternatives and multi-asset solutions.With more than 1,500 investment professionals,and offices in major financial markets around the world,the California-based company has over 75 years of investment experience.For a description of our ownership,see:2024 Proxy Statement,p.25.One Franklin Parkway,San Mateo,CA 94403.We operate in 32 countriesArgentina,Australia,Austria,Bahamas,Belgium,Brazil,Canada,Chile,China,France,Germany,India,Ireland,Israel,Italy,Japan,Luxembourg,Malaysia,Mexico,Netherlands,Poland,Romania,Singapore,South Africa,South Korea,Spain,Sweden,Switzerland,Turkey,United Arab Emirates,United Kingdom,United States.Our top five markets include:United States,Japan,Australia,United Kingdom and Germany.Disclosure#DisclosureReferences and Responses22Entities included in the organizations sustainability reportingFranklin Templetons FY 2023 Corporate Social Responsibility Report provides data for fiscal year 2023(October 1,2022September 30,2023)unless otherwise noted.For additional information about this report,please see page 30,“About this report.”“Franklin Templeton”for the purpose of this report covers Franklin Resources,Inc.and its material subsidiaries and specialist investment managers except for Brandywine Global,Clarion Partners,ClearBridge Investments,Lexington Partners,Martin Currie,Royce Investment Partners and Western Asset Management unless specifically cited.This report does not include information about Putnam Investments,which Franklin Templeton acquired effective January 1,2024,unless specifically cited.See2023 10-K.23Reporting period,frequency and contact pointOctober 1,2022 through September 30,2023 unless otherwise specified in report.Annual.The publication date of this report is June 2024.Contact CSR.24Restatements of informationNot applicable.25External assuranceAs part of the firms carbon disclosure reporting process annually,Franklin Templeton obtains third-party assurance for emissions at the corporate level.Senior leaders and the Corporate Governance Committee(of the firms Board of Directors)are updated on this process.The assurance certification can be found at within the CDP 2023 Climate Change Response for Franklin Resources,Inc.FY 2022 emissions(Scope 1,Scope 2 and partial Scope 3Business Travel)included in the 2023 CDP submission received assurance by an external third party.The assurance level is limited.GRI 2:General Disclosures(per GRI 2021 Standards)GRI 1:Foundation(per GRI 2021 Standards)Disclosure#DisclosureReferences and ResponsesReporting Principles and RequirementsGlobal Reporting Initiative(GRI)IndexGRI/SASB Indexes32Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate Practices EnvironmentGRI Index(continued)GRI 2:General Disclosures(continued)Disclosure#DisclosureReferences and ResponsesActivities and Workers26Activities,value chain,and other business relationshipsFor a description of our activities,brands,products,and services,see:About us.Financial services products are regulated by governmental entities in each jurisdiction in which our products are offered and are subject to various regulatory requirements.For a description of the markets we serve,see:2023 10-K,Business,Our Business Structure pp.38.For our total number of operations,see:2023 10-K,Properties p.27.For our net revenues,see:2023 10-K,Results of Operations pp.3237.For a description of our value chain see 2023 10-K,Business p.5.For information on changes in our share capital structure,see:2023 Annual Report,Diversification and discipline benefit shareholders and clients p.4.27EmployeesTotal number of employees by region:RegionEmployees as of September 30,2023Asia2,430Canada243EMEA1,593Latin America151US(Including US Offshore)4,637Overall*9,054Disclosure#DisclosureReferences and ResponsesTotal number of employees by employment type(full-time and part-time),by gender:Full TimePart TimeGrand TotalFemale3,545763,621Male5,395105,405Prefer Not to Say2727Unknown11Grand Total*8,968869,054*Metrics are as of 9/30/2023 and represent permanent employees.Includes Legg Mason Specialist Investment Manager employees(Brandywine Global,Clarion Partners,ClearBridge Investments,Martin Currie,Royce Investment Partners and Western Asset)and Lexington Partners.28Workers who are not employeesSee GRI 27.Governance29Governance structure and compositionFor a description of our governance structure,see:2024 Proxy Statement,Corporate Governance p.14;2024 Proxy Statement,Information About the Board and Its Committees pp.1623.210Nomination and selection of the highest governance body2024 Proxy Statement,p.5.211Chair of the highest governance bodyThe CEO and the Chair are two separate individuals.See 2024 Proxy Statement,p.21.GRI/SASB Indexes33Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate Practices EnvironmentGRI Index(continued)GRI 2:General Disclosures(continued)Disclosure#DisclosureReferences and Responses212Role of the highest governance body in overseeing the management of impactsAccording to its Corporate Governance charter,the Corporate Governance Committee of the Board of Directors is responsible for assisting the board in overseeing the companys corporate responsibility and sustainability programs related to environmental,social and governance(“ESG”)matters(including reviewing stockholder engagement efforts related to ESG matters),except to the extent reserved to the full Board or another committee of the Board.213Delegation of responsibility for managing impactsSee Corporate Governance charter for committees responsibility for oversight of CSR and ESG matters.See Stewardship&Sustainable Investing p.8 for roles and responsibilities;See 2024 Proxy Statement,pp.2223 for responsibility of management of impacts.Relevant senior executives report regularly(up to five times a year)to the Corporate Governance committee of the Board of Directors who has responsibility for oversight of CSR and ESG matters.214Role of the highest governance body in sustainability reportingThe Corporate Governance Committee of the Board of Directors,which has oversight of ESG and CSR according to its charter,receives updates on the CSR report before publishing,which includes the organizations material topics.215Conflicts of interestSee Code of Ethics and Business Conduct,p.5.216Communication of critical concernsSee Code of Ethics and Business Conduct,p.5.Disclosure#DisclosureReferences and Responses217Collective knowledge of the highest governance bodyAt least quarterly,the Corporate Governance Committee of the Board of Directors,which has oversight of ESG and CSR matters according to its charter,receives updates on CSR and sustainability initiatives and informational sessions.As needed,external consultants are brought in to provide the committee with additional information around sustainability oriented topics.218Evaluation of the performance of the highest governance body2024 Proxy Statement,p.24 and pp.3036.219Remuneration policies2024 Proxy Statement,p.24 and pp.3036.220Process to determine remuneration2024 Proxy Statement,pp.2864.221Annual total compensation ratio2024 Proxy Statement,pp.2864.222Statement on sustainable development strategy2023 Stewardship Report;FY2023 CSR ReportLetter from CEO and President,p.5.GRI/SASB Indexes34Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate Practices EnvironmentDisclosure#DisclosureReferences and Responses226Mechanisms for seeking advice and raising concernsOur Code of Ethics and Business Conduct describes our values and standards of behavior for all employees.Employees are encouraged to seek advice from the following with any questions or concerns:Speak with your supervisor.Speak with your local Human Resources Department.Speak with your local Legal and Compliance resources.Contact the Compliance and Ethics Hotline(including option to submit report online).Contact the Franklin Ombudsman.Contact the General Counsel,the Director of Internal Audit or the Franklin Resources,Inc.Audit Committee,including to report any suspected,attempted,or actual fraud.Franklin Templeton will not allow retaliation to be taken against an employee who has made such a report in good faith.227Compliance with laws and regulationsFranklin Templeton reported no significant instances of non-compliance with laws and regulations,nor any significant associated fines,in 2023.Disclosure#DisclosureReferences and ResponsesStrategy,Policies and Practices223Policy commitmentsSee Code of Ethics and Business Conduct and Anti-Corruption Policy Overview.Franklin Templeton has a zero-tolerance approach to modern slavery and human trafficking if identified within any part of our business.See Responsible Corporate Practices section p.29.To manage the investments of our clients that maximizes their investments and assesses the economic,geopolitical risks and environmental considerations,see our Sustainable Investing and Stewardship Policies.Read our Human Rights Policy Statement here.224Embedding policy commitments See GRI 223.225Processes to remediate negative impactsSee Code of Ethics and Business Conduct.Consistent with our commitment to the Code of Ethics and Business Conduct,Franklin Templeton has established a company-wide Compliance and Ethics Hotline accessible to all employees.GRI Index(continued)GRI 2:General Disclosures(continued)GRI/SASB Indexes35Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate Practices EnvironmentDisclosure#DisclosureReferences and ResponsesIMVB Covenant of the Dutch Pension FederationInstitutional Investors Council Malaysia(IIC)Institutional Investors Group on Climate Change(IIGCC)Interfaith Center on Corporate Responsibility(ICCR)International Corporate Governance Network(ICGN)Investment Association(IA)Italian Stewardship Principles for the exercise of administrative and voting rights in listed companiesAssogestioniJapan Stewardship Code(Principles for Responsible Institutional Investors=Japans Stewardship Code)Korean Stewardship Code(Principles on the Stewardship Responsibilities of Institutional Investors)Malaysian Code for Institutional Investor(MCII)Net Zero Asset Managers initiative(NZAM)Official Monetary and Financial Institutions Forum(OMFIF)Operating Principles for Impact ManagementPartnership for Biodiversity Accounting Financials(PBAF)Pensions for PurposePrinciples for Responsible Investment(PRI)Responsible Investment Association(RIA)CanadaResponsible Investment Association Australasia(RIAA)SIFMA AMG(The Securities Industry and Financial Markets Association Asset Management Group)Singapore Stewardship Principles(SSP)Sustainable Development GoalsSweden:Guidelines for fund management companies shareholder engagement,issued by Swedish Investment Fund Association in Feb 2002 and revised in May 2019.The Access to Medicine IndexThe Forum for Sustainable and Responsible Investment(USSIF)The Taskforce on Climate Related Financial Disclosures(TCFD)The Urban Land Institute(ULI)Greenprint CenterTransition Pathway Initiative(TPI)UK Stewardship CodeFRCUK Sustainable Investment and Finance Association(UKSIF)USGBC(US Green Building Council)Ceres Valuing Water Finance InitiativeWaterfront PartnershipDisclosure#DisclosureReferences and Responses228Membership associationsWe actively engage with forums and associations to collaborate and stay abreast of CSR and sustainability related best practices,issues and developments.Asian Corporate Governance Association(ACGA)Asia Investor Group on Climate Change(AIGCC)ASIFMA AMG(Asia Securities Industry&Financial Markets Association)(Asset Management Group)Australia:Principles of Internal Governance and Asset StewardshipBoard Director Training Institute of JapanBoston College Center for Corporate CitizenshipCanadian Coalition for Good Governance(CCGG)CDP(formerly Carbon Disclosure Project)Ceres Investor Network on Climate Risk and SustainabilityClimate Action 100 Confederation of British Industry(CBI)Confluence PhilanthropyCouncil for Inclusive Capitalism(CIC)Council of Institutional Investors(CII)Ethical IntelligenceEuropean Fund and Asset Management Association(EFAMA)European Securities and Markets Authority(ESMA)European Sustainable Investment Forum(Eurosif)FAIRR(Farm Animal Investment Risk and Return)Financing a Just Transition AllianceFindatex(Financial Data Exchange Templates)Foro de Inversin Sostenible de Espaa(Spainsif)Forum per la Finanza Sostenible(ItaSIF)Global Impact Investing Network(GIIN)GPCA(Global Private Capital Association)Gratitude RailroadGRESB(formerly Global Real Estate Sustainability Benchmark“now cover real assets,including infrastructure,name is simply“GRESB”)Hong Kong,Hong Kong principle of responsible ownership,Securities and Future CommissionHuman Capital Management Coalition(HCMC)IAA(Investment Adviser Association)IFRS Sustainability Alliance ISSB International Sustainability Standards(incl,SASB standards)GRI Index(continued)GRI 2:General Disclosures(continued)GRI/SASB Indexes36Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate Practices EnvironmentDisclosure#DisclosureReferences and ResponsesStakeholder Engagement229Approach to stakeholder engagementWe engage with a broad spectrum of stakeholders,including clients,investors,employees,membership associations,industry bodies and charitable partners.The Corporate Social Responsibility office identified a list of key stakeholders who impact and/or are impacted by Franklin Templetons business and communities.For more information,see:Our Corporate Social Responsibility Reporting,Stakeholder Engagement and Materiality,p.6.230Collective bargaining agreementsLess than 1%of Franklin Templeton employees are represented by unions,in various countries outside of the U.S.Franklin Templeton determines the working conditions and terms of employment for employees in accordance with all applicable laws and regulations.GRI 3 Material Topics(per GRI 2021 Standards)31Process to determine material topicsStakeholder Engagement and Materiality,p.6.In early 2024,we engaged internal and external stakeholders in a process to evaluate CSR materiality at Franklin Templeton.Through extensive surveys and interviews,industry benchmarking and a review of primary international reporting frameworks,we reaffirmed Franklin Templetons six dimensions of CSR as listed in 32.32List of material topicsFranklin Templetons material topics,which we refer to as“our six dimensions of CSR,”are:Stewardship and Sustainable Investing.Environment.Diversity,Equity and Inclusion.Employee Experience.Community Engagement.Responsible Corporate Practices.Disclosure#DisclosureReferences and Responses228(continued)Membership associationsDiversity,equity and inclusion memberships and associations include:10,000 Black Interns100 Women in FinanceAscendAssociation for Wholesaling DiversityBlack CapitalBlack Professionals ScotlandRenamed Black Professionals UKBoys and Girls ClubsCareer ReadyCatalyst:Workplaces that work for womenCEO Action for Diversity&InclusionCFA Diversity,Equity,and Inclusion CodeCharte de le Diversit Letzebuerg(The Diversity Charter)Diversity JobsEnvestnet InstituteFARE(Financial Alliance for Racial Equity)Gain(Girls Are INvestors)Greater Baltimore Committee(and the Baltimore Womens Advisory Board)Investment 20/20Leonard CheshireMamo Pracuj FoundationNational Black MBA Association(NBMBAA)Nex Cubed Historically Black Colleges&Universities Founders ProgramOut&EqualSeramountStonewall Workplace Equality IndexTeam ImpactThe Diversity Project EuropeThe Diversity Project UKThe Equity CollectiveThe Robertson TrustToigo FoundationWomen in Finance(UK and Luxemburg Charters)GRI Index(continued)GRI 2:General Disclosures(continued)GRI/SASB Indexes37Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate Practices EnvironmentDisclosure#DisclosureReferences and Responses2013Defined benefit plan obligations and other retirement plansUS employees*receive an$.85 match for every dollar they contribute up to IRS limits.FY 2023 participation rate=93%*and FY 2023 match funding:$53,344,263.Employee can contribute up to 50%of their paycheck,100%of cash bonus.Employer contributes 85%of employees contribution.*We continuously refine our retirement plans globally to be competitive in the local markets.*The 401(k)Plan metrics are for US Franklin Templeton and participating SIMsClearBridge,Brandywine Global,and Martin Currie.The participation rate for Franklin Templeton and participating SIMs is determined by the number of eligible employees that participate in the Plan.2014Financial assistance received from governmentNot applicable.GRI 3 Material Topics:Indirect Economic Impacts(per GRI 2021 Standards)33Management of material topicsStakeholder Engagement and Materiality,p.6.For information about our management approach for this topic,see:Community Engagement pp.2326.2031Infrastructure investments and services supportedStakeholder Engagement and Materiality,p.6.For information about our management approach for this topic,see:Community Engagement pp.2326.As an example of infrastructure investments and services,Franklin Templeton has a longtime partnership with a charitable organization in India to install water treatment plants.Over the course of the partnership,the program has resulted in installation of 362 plants benefiting over 600,000 people.Disclosure#DisclosureReferences and ResponsesGRI 3 Material Topics:Economic Performance(per GRI 2021 Standards)33Management of material topicsStakeholder Engagement and Materiality,p.6.For information on our management approach for this topic see:2023 Annual Report,CEO Letter pp.13;2023 10-K,Business pp.315,Risk Factors pp.1626,Managements Discussion and Analysis of Financial Condition and Results of Operations pp.3054,Quantitative and Qualitative Disclosures About Market Risk pp.5556.GRI 201:Economic Performance(per GRI 2016 Standards)2011Direct economic value generated and distributedDirect economic value generated(GAAP values):Revenues,$7,849.4 million.Economic value distributed:Operating costs:$6,747.1 million.Employee wages and benefits:$3,494.0 million.Payments to providers of capital:Interest expense$123.7 million;dividends$611.4 million.Payments to government by country:Not available.Community investments:Community Engagement,p.23.2012Financial implications and other risks and opportunities due to climate changeFor information on our risks and opportunities from climate change,see:Franklin Templetons FY 2023 TCFD Corporate Report.GRI Index(continued)GRI/SASB Indexes38Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate Practices EnvironmentDisclosure#DisclosureReferences and Responses2052Communication and training about anti-corruption policies and proceduresA link to Franklin Templetons Anti-Corruption Policy Overview,which was amended effective December 16,2022,is available and communicated to 100%of employees and FRI subsidiaries.The policy is available to 100%of employees through various intranet sites,communicated periodically(email communication-Nov 2022;annual event post on Franklin Templeton employees site for International Anti-Corruption day-Dec 2023)and link also included in annual training for all employees.This is communicated to new SIMs(i.e.,to Putnam,new subsidiarys employees-Feb 2024)and policy updates shared with SIMs Compliance teams to be shared with the employees.High risk business relationships that do not have their own anti-corruption program will receive copies of our policy and a link to our statement,and contracts will contain respective anti-corruption clause.Please see also the information shared with vendors/suppliers:https:/ training for our Board took place in October 2022.Additionally,in December 2023,Anti-Corruption training was provided to external directors of Malaysia(2)and Saudi Arabia(2)Boards.99%of Franklin Templeton and SIMs employees have completed Anti-Corruption training.2053Confirmed incidents of corruption and actions takenFranklin Templeton had no reported incidents of corruption in 2023.GRI 3 Material Topics:Anti-Competitive Behavior(per GRI 2016 Standards)33Management approachStakeholder Engagement and Materiality,p.6.For information about our management approach for this topic,see:Responsible Corporate Practices,pp.2729;Code of Ethics and Business Conduct.Disclosure#DisclosureReferences and ResponsesGRI 205:Anti-Corruption(per GRI 2016 Standards)33Management of material topicsStakeholder Engagement and Materiality,p.6.For information about our management approach for this topic,see:our Anti-Corruption Policy Overview;Responsible Corporate Practices,pp.2729;Code of Ethics and Business Conduct,p.6.2051Operations assessed for risks related to corruptionAn assessment of corruption related risks is conducted on 100%of FRI operations(incl.SIMs)annually.Different risks(i.e.,government officials,third party,G&E,T&E)are assessed for all operations.Our corruption risks include business relationships with government entities in high risk countries,and introducer/finder relationships.See our Anti-Corruption Policy Overview for more information.GRI Index(continued)GRI/SASB Indexes39Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate Practices EnvironmentDisclosure#DisclosureReferences and Responses2074Country-by-country reportingThe entities included in our audited consolidated financial statements are generally resident in their local jurisdictions for tax purposes,with a few exceptions due to regulatory or operational reasons.Details are included with our tax returns filings.For material jurisdiction information,see:2023 10-K,Note 13 p.85.The covered period in question is for each fiscal year.These disclosures are part of the CBCR that we complete and file with the Companys consolidated US federal tax returns annually.GRI 3 Material Topics:Energy(per GRI 2021 Standards)33Management approachStakeholder Engagement and Materiality,p.6.For information about our management approach for this topic,see:Environment,pp.1114;CDP 2023 Climate Change Response,C0.3,C2(Risks and opportunities),C3(Business strategy),C4(Targets and performance);Environmental Policy Statement.Energy and Emissions data within this report represents FY 2022 data submitted in the most recent CDP submission(2023);once available,the FY 2023 data will be available on the companys CSR website.GRI 302:Energy(per GRI 2016 Standards)3021Energy consumption within the organizationConsumption of fuel(excluding feedstock)HHV(higher heating value)49,528 MWhConsumption of self-generated non-fuel renewable energy 0 MWhTotal energy consumption(renewable and non-renewable)82,527 MWhConsumption of purchased or acquired heat,cooling and consumption of purchased/acquired steam 0 MWhElectricity,heating,cooling and steam sold0 MWhTotal energy consumption(renewable and non-renewable)132,054.21 MWhGHG Protocol:ADCCEE(2022),AIB(2022),Defra(2022),Environment Canada(2022),Green-e(2022),IEA(2022),IPCC(2022),USEPA(2022),USEPA Emission Factors Hub(last modified:March 2020)Disclosure#DisclosureReferences and Responses2061Legal actions for anti-competitive behavior,anti-trust,and monopoly practicesFranklin Templeton had no anti-competitive litigation actions this year.GRI 3 Material Topics:Tax(per GRI 2021 Standards)33Management of material topicsStakeholder Engagement and Materiality,p.6.For information about our management approach for this topic,see:2023 10-K,Regulation p.9,Legal and Regulatory Risks pp.2426,Note 14 pp.8889;2024 Proxy Statement,Compensation Discussion&Analysis p.28.GRI 207:Tax(per GRI 2021 Standards)2071Approach to taxAs a company,we firmly believe in adhering to the tax rules and regulations in the jurisdictions that we operate or plan to operate in.We comply with the tax filing requirements when/where required.2072Tax governance,control,and risk managementTax risks are assessed as part of our quarterly tax provision cycles.Tax strategies and plans are developed in partnership with the relevant business teams or stakeholders.We hold discussions with stakeholders prior to execution of any plans.Our Tax team operates based on the established control process.The Internal Audit and Risk teams test the control process periodically.Concerns about tax behavior may be reported to our Ethics Hotline,whose contact information is located on the company intranet available to all employees.For more information about tax and assurance,see:2023 10-K,Report of Independent Registered Public Accounting Firm pp.5960,Note 13 pp.8587.GRI Index(continued)GRI 3 Material Topics:Anti-Competitive Behavior(continued)GRI/SASB Indexes40Franklin Templeton FY 2023 Corporate Social Responsibility Report Contents IntroductionStewardship and Sustainable InvestingDiversity,Equity and Inclusion Employee Experience Community EngagementResponsible Corporate Practices EnvironmentDisclosure#DisclosureReferences and ResponsesGRI 3 Material Topics:Emissions(per GRI 2021 Standards)33Management of material topicsStakeholder Engagement and Materiality,p.6.For information about our management approach for this topic,see:Stewardship and Sustainable Investing,pp.710;Environment,pp.1114;CDP 2023 Climate Change Response,C0.3,C2(Risks and opportunities),C3(Business strategy),C4(Targets and performance);Environmental Policy Statement;Sustainable Investing.Energy and Emissions data represents FY 2022 data submitted in the most recent CDP submission(2023);once available,the FY 2023 data will be available on the companys CSR website.GRI 305:Emissions(per GRI 2016 Standards)3051Direct(Scope 1)GHG emissionsGross direct(Scope 1)GHG emissions in metric tons of CO2 equivalent:11,655 MtCO2e.Gases included in the calculation;whether CO2,CH4,N2O,HFCs,PFCs,SF6,NF3,or all:CO2,CH4 and N2O were included.Biogenic CO2 emissions in metric tons of CO2 equivalent:None.Base year for the calculation:2019.Rationale for choosing it:Acquisition of Legg Mason.Emissions in the base year:11,804 MtCO2e.Context for any significant changes in emissions that triggered recalculat
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Kia Sustainability Report 2024Sustainable ProgressEnvironmental Environmental Management 86Natural Capital Management 89Social Human Rights Management 93Work Environment&Labor Management 96Information Security 99Governance Board of Directors 101Shareholder-Friendly Policy 105Tax and Accounting 106Enterprise Risk Management 107Stakeholder Engagement 109ContentsIntroductionCEO Message 3Company Overview 5About Kia 6Global Network 7ESG Major Achievements 8Material TopicsClimate Change 29Resource Circulation 42Employee 54Supply Chain 64Customer Safety&Quality 73Business Ethics 80ESG FactbookFinancial Data 111ESG Data 112GRI/ESRS/SASB/WEF Index 125Sustainable&Future FocusSustainable Future Mobility 10Social Contribution for a Better Society 13Strengthening Sustainability in Production Sites 16Our PrioritiesKia ESG Management Strategy 19ESG Governance 21Double Materiality Assessment 22READERS GUIDEREADERS GUIDE MOVE is the name of the Kia Sustainability Report,which refers to a movement that makes a positive change in the world through mobility.You can check more details by clicking the icon.GHG Assurance Statement 134Third-party Assurance Statement 138About Move 140CEO MessageIn 2023,Kia achieved its best results in history.Sales increased year-over-year,with solid growth in our key regions of Korea,the United States,and Europe.Our dedicated electric vehicles,EV6 and EV9,were recognized for their excellence in global markets,including being named North American Utility Car of the Year in 2023 and 2024.Even with these remarkable achievements,Kia has never stopped thinking about sustainability.In 2023,we established a new ESG Management Framework to further establish a concrete plan for sustainability that has been consistently emphasized through our corporate vision,philosophy,and brand strategy.We set Sustainable Movement for an Inspiring Future as our ESG vision,which envisages our determination to continuously move toward an inspiring future with various stakeholders.We are practicing ESG management that includes eco-friendliness,circular economy of resources,safety,stakeholder satisfaction,sound governance,and ethical management under the three core values of“Cleaner and Circular,”“Safe and Satisfying,”and“Transparent and Trustworthy.”In the Environmental aspect,to mitigate the global climate crisis,we are reducing carbon in all stages of supply,production,logistics,disposal,and use with the goal of achieving carbon neutrality by 2045.Moreover,to accomplish RE100 by 2040,we generate our own solar power at AutoLand India and AutoLand Hwaseong,and have signed the largest power purchase agreement in Korea to secure renewable energy.We have also been collaborating with Ocean Cleanup,a global environmental NGO,and began removing waste from the sea and recycling the collected waste plastic into resources.In the Social aspect,by improving product quality for customer safety and satisfaction,we were recognized for our competitive power for quality.In the J.D.Power U.S.Automotive Performance,Execution and Layout(APEAL)Study,seven of Kias vehicles ranked first in their respective classes.In addition,we provided support for electrification R&D and equipping carbon-neutral facilities to secure the future competitiveness of our suppliers.For local communities,in Korea,we expanded Green Trip a CSR program that supports travel for people with disabilities,and globally,Green Light Project(GLP),a CSR program that supports self-reliance in underdeveloped countries.In the Governance aspect,Kia strengthened our board accountability.The majority of the board consists of independent directors who have expertise in various fields,such as industry,technology,finance,and accounting.Additionally,we have reinforced our shareholder-friendly policies by constantly increasing dividends and repurchasing and retiring treasury shares to enhance corporate value.In acknowledgment of these efforts,Kia was included in the Dow Jones Sustainability World Index(DJSI)in 2023 for the second consecutive year.Sustainable Movementfor an Inspiring Future for AllWe are deeply grateful to our stakeholders for your encouragement and support in our transformation into a Sustainable Mobility Solutions Provider.Introduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG FactbookKia Sustainability Report 20243Sustainable Movement foran Inspiring FutureKia aims to continue our growth as a bettter company that resonates authentically by addressing global environmental and social issues.Cleaner&CircularTo mitigate climate change,Kia will reduce greenhouse gas emissions by accelerating our RE100 implementation,which involves expanding the self-generation of power to our maximum capacity and signing agreements to introduce renewable energy to AutoLands in Korea and abroad.Additionally,through our partnership with Ocean Cleanup,we will strengthen our resource circulation system by reprocessing marine plastic waste into new vehicle accessories for the EV3,to be released within the year.Furthermore,to expand the use of recycled plastic in our vehicles to over 20%by 2030,we will develop specific action plans,including material development and the establishment of a waste resource supply chain.Safe&SatisfyingKia aims to internalize a corporate culture centered around customers and people in its corporate values and actions.Additionally,We will strengthen the ESG management system of our suppliers by establishing a dedicated organization for secondary and tertiary suppliers to support them in building sustainable supply chains and reflecting the results of ESG assessments in our supply chain management strategies.To create a happy society for everyone,we plan to launch corporate social responsibility efforts for multicultural families and people with disabilities who suffer from a lack of social support and acceptance.Transparent&TrustworthyTo internalize the culture of ESG management across the company,we will emphasize the sustainability elements in managements KPI performance evaluation.In addition to ensuring diversity by increasing the proportion of diverse independent directors,we will constantly enhance the standards for review and decision-making on important matters to be implemented based on the varied expertise of our board members.We will further practice transparent management by raising employees awareness of compliance through actively deploying fair trade compliance activities and expand shareholder value by continuing repurchase and retirement of treasury shares.Dear valued stakeholders,In these times of uncertainty,Kia seeks to continue our transformation for unwavering growth.We will persist in our efforts for EV transformation to respond to the market environment,consolidate our position as a Tier 1 EV brand,and strengthen our PBV competitiveness to meet the needs of diverse customers.To exercise our global corporate citizenship,we vow to remain steadfast in our commitment toward sustainability for all.Through our sincere determination to address climate change,achieve shared growth with stakeholders,and conduct transparent and ethical management activities,we will pursue our ESG vision of Sustainable Movement for an Inspiring Future.We respectfully request your continued interest and support for Kia in our endeavors.Thank you.June 2024Ho-sung Song,CEO/President,KiaCleaner&CircularSafe&SatisfyingTransparent&TrustworthyIntroduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG FactbookKia Sustainability Report 20244Company OverviewSince its foundation in 1944,Kia has evolved into a global automobile brand with a relentless spirit of challenge.In 2021,we changed our company name and logo from Kia Motors to Kia and announced a new brand direction and vision,transforming from an automobile manufacturer to a mobility brand.Along our journey of transformation into a Sustainable Mobility Solutions Provider we will continue to strengthen our business capabilities,focus on sustainable growth,and we will remain committed to moving toward a future that inspires everyone.Morning|Ray|K3|K5|K8|K9Pegas|Ceed*Eco-friendly vehicles include EVs(Electric Vehicles),HEVs(Hybrids),and PHEVs(Plug-in Hybrids),while electrification includes only EVs(Electric Vehicles).*PBV:Niro PlusNiro|Stonic|Seltos|Sportage|Sorento|Mohave Carnival|Soul|Carens|KX1|Sonet Zhpo|XCeed|TellurideNiro|Niro Plus|EV5|EV6|EV9 Bongo3|Soul|RayK5|K8|Niro|Sorento|Sportage|CarnivalNiro|Sorento|Sportage|Ceed|Xceed EV HEVPHEVBongo3|GranbirdLine-up of KiaSedanRV(Recreational Vehicle)EV&PBV(Platform Beyond Vehicle)Commercial Vehicle&BusMajor Financial PerformanceNo.of vehicles soldNo.of eco-friendly vehicles soldRevenueOperating profit&operating marginRevenue from eco-friendly vehicles1Net income21,377.4487,1593,015,76211,607.9(11.6%)26,666.8575,77399,808.48,777.83,015thousand units KRW 11,607.9billion/11.6%KRW 26,666.8billion575,773unitsKRW 99,808.4billionKRW 8,777.8billion2022 2022 2,897,2557,233.1(8.4%)86,559.05,409.02022 2022 2022 2022 202320232023202320232023EV181,934unitsHEV305,585unitsPHEV88,254units(in retail)(in retail)(Unit:KRW billion)(Unit:KRW billion,%)(Unit:KRW billion)(Unit:KRW billion)(as of June,2024)1.Based on the management accounting standardsIntroduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG FactbookKia Sustainability Report 20245Brand StrategyAs a Sustainable Mobility Solutions Provider,Kia promises to always create new movements to make life better for our customers.for a better life.As a responsible mobility company,Kia is committed to providing Kia aims to be a brand that contributes to customers,communities,and the global society and environment by providing sustainable mobility solutions customers,communities,and the global society/environment.Corporate VisionWe established Plan S as a mid-to long-term strategy to achieve our corporate vision,realized through three pillars:Planet,People,and Profit.Planet focuses on leading environmental and social responsibility.People aims to deliver the highest customer value.Profit enhances future revenue by becoming an EV Tier 1 Brand,a PBV 1st Mover,and strengthening business fundamentals.Our goal is to foster a customer-oriented and people-oriented corporate culture.Company VisionCorporate StrategyCorporate CultureMovement Inspires IdeasWe create space and time inspiring new ideasBrand PurposeCustomer-oriented,people-oriented cultureSustainable Mobility Solutions ProviderCreate a new movement for a better lifePlan S PLANETShift Our SustainabilityPEOPLEShift Our MindsetPROFITShift Our BusinessConsistent New Kia BrandTotal Transformation Comprehensive changes based on the new CI and design philosophy Strengthening global brand presence through innovation in customer experience at touchpointsAspirational Solutions BrandGenerating values by interconnecting future business Developing autonomous driving technology based on SDV1 Creating synergies with future businesses,including building a sustainable mobility ecosystemPersonalized Mobility BrandPBV 1st Mover Pioneering the PBV market through the development of customized vehicles and solutions Providing customized mobility experiences to meet diverse customer needsDesirable EV BrandEV Tier 1 Brand Expanding EV lineup and securing competitiveness to become a EV Tier 1 Brand Enhancing customer convenience through advanced battery strategy and expanded charging infrastructureAbout KiaSince its brand relaunch in 2021,Kia has been transforming its entire business and has established a corporate vision system to drive its business more systematically.Kia believes in the power and value of movements that inspire new ideas and value of movements that inspire new ideas,and we exist to create spaces and times that enrich them.Based on this belief and brand purpose,Kia has established Sustainable Mobility Solutions Provider as its corporate vision.PrologueChapter 1Chapter 2Chapter 31.Software Defined VehicleIntroduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG FactbookKia Sustainability Report 20246KoreaAutoLand Gwabgmyeong(330,000 units)27AutoLand Hwaseong(530,000 units)AutoLand Gwangju(490,000 units)OverseasChina Yeomseong Plant(Yancheng,750,000 units)28Slovakia(Zilina,330,000 units)29Georgia,USA(Georgia,340,000 units)30Mexico(Pesqueria,400,000 units)31India(Andhra Pradesh,350,000 units)32KoreaHyundai Motor Group Technology Research Center(Hwaseong,Gyeonggi-do)27Environment Technology Research Center(Yongin,Gyeonggi-do)Uiwang Technology Research Center(Uiwang,Gyeonggi-do)OverseasR&D Center and Design CenterR&D Center USA Detroit,Chino,Irvine,CPG 33 Europe Ruesselsheim,Nurburgring 34 Japan Yokohama 35 China Yantai 36 India Hyderabad 37Design CenterUSA Irvine 38Europe Frankfurt 39ProductionKoreaSales sector 15 headquarters,283 direct sales branches,353 agencies,8 delivery centersService sector 18 direct service centers,761 comprehensive/specialized Auto QOverseasSales sector 23 sales corporations,165 agencies,4,537 dealerships Sales CorporationUSA 9/Canada 10/Germany 11/UK 12/Spain 13/France 14/Italy 15/Austria 16/Hungary 17/Czech Republic 18/Slovakia 19 Poland 20/Belgium 21/Sweden 22 Netherlands 23/Australia 24/New Zealand 25 Thailand 26 Sales and ServicesNorth America(Irvine,USA)2 Europe(Frankfurt,Germany)3Russia(Moscow)4Latin America(Miami,USA)5Middle East&Africa(Dubai,UAE)6Asia Pacific(Kuala Lumpur,Malaysia)7India(Gurgaon,India)8Regional Headquarters Head OfficeHead Office (Heolleung-ro,Seocho-gu,Seoul)1R&D(as of June.,2024)22242526322928363546871223211413151618192017109383325303113934113Global NetworkKia operates production bases,R&D centers,and design centers in major regions at Korea and overseas,strives to provide customized products and services through its global sales and service network.2737Introduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG FactbookKia Sustainability Report 20247ESG Major AchievementsKia has established an ESG vision titled Sustainable Movement for an Inspiring Future,emphasizing the importance of sustainable growth more than ever.We are strengthening our response to key ESG issues that are crucial for our sustainable growth and impactful to our stakeholders,solidifying the foundation of our ESG management system.ESG Evaluation AwardsS&P Dow Jones Sustainability IndicesWorld Index for 2 consecutive yearsGSMASustainability category for 6 consecutive years Hall of Fame inductionCDP Korea Climate ChangeWon Carbon Management Sector Honors AwardMajor Achievements in Various AreasEnvironmentalDriving solar power at domestic and overseasAutoLand Hwaseong(4MW),and Kia India(2MW)completed in 2023 Promotion of securing renewable energySigning Koreas Largest PPA Agreement(Introduction of a total of 219MW PPA by 2031)Expanding the use of Recycled PlasticEstablishing enterprise governance for over 20%application in 2030(Plastic Recycling Council)Eco-friendly materials in EV9Recycled plastic and bio-based eco-friendly materials,weigh about 34kg.(Based on EV9)SocialSupporting future competitiveness of suppliersFunding including R&D investment,Established an organization to support 2nd/3rd tier suppliersImproving supplier ESG management Conducting diagnostics for All 1st-tier suppliers and prioritized 2nd-tier suppliers,Establishing ESG compliance provisions in contractsReinforced safety and health at workplaceSecured ISO 45001 certification at all business sites,Expanding adoption of new safety technologiesExpanding Kias representative social contributionGreen Light Project in 3 new countries,established Green Trip Jeonju base,Confirmed site for restoration of tidal flatsGovernanceIncorporating ESG into CEO performance evaluationsOrganizing sustainability elements beyond business and finance(safety,culture,etc.)Expanded diversity and independence of the Board of Directors(BoD)Over 50%independent directors,60male independent directors(As of 2024)Enhanced shareholder-friendly policiesDividend:5,600 won per share( 60%YoY),Buyback:500 billion won,50%retired Additional 50%buyback planned upon Q3 24 financial target achievement.Evaluation of the effectiveness of the compliance control standardConducting an evaluation of the effectiveness of the compliance control standard through external experts once a yearChosun Biz 2023 THE ESGTHE ESG AWARDS Grand PrizeIntroduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG FactbookKia Sustainability Report 20248Sustainable&Future FocusCONTENTSSustainable Future Mobility 10Social Contribution for a Better 13 Society Strengthening Sustainability in 16 Production Sites Introduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook9Kia Sustainability Report 2024Sustainable Future MobilityPBV,the Key Momentum for Customer-Oriented Kia Kias customizable PBV integrates software and future technologies that will facilitate business operations and customers daily lives and differentiate their mobility experience.In this regard,Kia redefined PBV from“Purpose-Built Vehicle”to“Platform Beyond Vehicle.”As a“Platform Beyond Vehicle,”PBV will usher in a new era of business and lifestyle by providing extended experiential value.Through PBV,Kia will expand its B2B business and drive B2C demand,getting a foothold as the first mover in the global PBV market.IVI Solution(In-Vehicle Infotainment)Use AI to deliver useful information tailored to users travel goals Offer the IVI App Market where users can enjoy smartphone-like experience inside the vehicle Provide information on optimal charging schedules and charging stations considering customers PBV operational conditionsEV Charging Consulting Solution Collect and manage vehicle data of multiple PBVs through the API system for integrated vehicle management Maximize efficiency in business opera-tions through preventive maintenance based on vehicle condition,etc.FMS Solution(Fleet Management System)PBV Optimized for Customers Business and Lifestyle Platform Beyond Vehicle(PBV)is the future of personalized mobility.Its interior can be flexibly modified to meet the users purpose,whether its for passenger transportation,logistics,or leisure.If the traditional car is ready-to-wear,PBV can be likened to a tailored suit.With the recent boom in e-commerce,we expect to see steep growth in the B2B market mainly for transportation and delivery services.As a result,the B2B companies vehicle needs,including electrification,are expected to increase dramatically.Kias PBV products will help B2B customers improve the challenges they face in operating their existing fleet,contributing to their business efficiency and the environmental value of B2B companies.A Dedicated Platform for Skateboard-type PBVs to Reflect Different NeedsKia PBV has a specialized customer-oriented process where customers are directly involved from the product configuration stage to propose specifications,which are then incorporated into the development process.To effectively reflect various needs,we designed and applied a highly scalable,dedicated skateboard platform for PBVs,enabling excellent interior space utilization while maximizing customers vehicle utilization through interchangeable upper body modules.Kia PBV will also offer optimized options for body types,as well as interior and exterior layouts,door types,batteries,and more to accommodate customers needs and purposes.PBV solutions that will be available through an open platform are also underway to enhance customer convenience.Customers can choose from PBV-specific solutions,as well as their own business solutions and third-party solutions to best fit their business objectives.The solutions will be optimized for customers business journey,including fleet operations,vehicle maintenance,and fuel efficiency management.We have a mid-to long-term plan to apply next-generation autonomous driving technologies to transform our customers businesses together.We also aim to complete Kias PBV-specific ecosystem by securing capabilities and infrastructure for solutions such as various financing programs applicable at each stage of vehicle use,including purchase,use,and disposal,as well as charging and specialized after-sales support.Introduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook10Kia Sustainability Report 2024Sustainable Future MobilityPBVs Collaboration Plans with Various Industry Domains Kia is in discussions with more than 70 of its key global customers on specific PBV-related businesses,with a particular focus on collaborating with customers in the ride-hailing,delivery,and utility domains to ensure the successful launch and market entry of PV5 in 2025.In the ride-hailing domain,we work with companies like Kakao Mobility and Uber to provide convenient and hyper-personalized experience for their customers,drivers,and passengers.For the delivery domain,we are cooperating with CJ Logistics and LOTTE Global Logistics,among others,to increase business productivity and reliability.Finally,we are working to collaborate with various companies in the utility domain to develop corporate fleet optimized for maintenance services and provide real-time fleet management solutions.Flexible PBV Production System Kias PBV production system is based on the principles of 1)optimizing production for low-volume production of various products,2)applying environmentally friendly manufacturing methods,and 3)minimizing loss of raw and subsidiary materials during the manufacturing processes.We are building a PBV-dedicated factory,Hwaseong EVO Plant at AutoLand Hwaseong,where the first PBVs will be produced.The plant will feature a hybrid production line optimized for multi-variety production that combines the traditional conveyor production system with a flexible cell production system.In addition,Kia will systematically collaborate with various partners mainly through the conversion cluster being built near Hwaseong EVO Plant to efficiently develop PBV conversion models and ensure the quality.Partnership Kia Signs a PBV MOU with Uber Through a business agreement with global ride-sharing company Uber,Kia will provide PBVs based on its first dedicated PBV model,PV5,scheduled for mass production in 2025.Equipped with the first PBV-dedicated EV platform,PV5 offers more space and greater roominess than traditional passenger taxi models.It will also feature a driver-only application with an open infotainment system and a personalized travel experience for the convenience of passengers.In addition,we are actively collaborating on 1)PBV diagnosis and preventive maintenance services using KIA Connect,2)expansion of the KIA Flex service in North America by syncing it with Ubers platform,and 3)public and home charging infrastructure utilizing the global charging network to reduce charging inconvenience for Uber drivers.The two companies will continue to collaborate to develop and deliver user-oriented solutions enabled by software,data,and artificial intelligence(AI).This partnership confirms the value and role of PBVs as customized vehicles that meet diverse needs,while also contributing to Kias goal of providing total mobility solutions optimized for each customers business environment.Hwaseong EVO Plant(PBV Dedicated New Factory)ConversionClusterGlobal Conversion Certification SystemStandardmodel productionSpecialized options InstalledEfficient conveyor production lineFlexible cell method production Establishment of Partnership Certification Standards Establishment of Operation/Collaboration System Provision of Optimal Vehicles for Conversion Promotion and Sales SupportManufacturingLogisticsR&DClusterIntroduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook11Kia Sustainability Report 2024Sustainable Future MobilityIncreased Investment in New Technologies for Future Growth Building on our best-ever results in 2023,Kia will continue to invest for future growth.Over the next five years,our mid-to long-term investments will total KRW 38 trillion,up KRW 5 trillion from the five-year plan announced in 2023,demonstrating Kias commitment to actively allocate resources from improved earnings in existing businesses to invest in future growth.As a result,KRW 15 trillion is allotted for investment in future businesses,with 24%of that planned for PBV and Robotics/AAM.To this end,we are cooperating with specialized companies like Boston Dynamics and Supernal.We also continue to work on technological advancements in autonomous driving and PBV that can extend the future sustainability of our existing businesses.Application of Various Autonomous Driving TechnologyHyundai Motor Group is cooperating with Motional,a joint venture with Aptiv,a US autonomous driving company,to develop autonomous vehicles and service business models.Together,we are working on the application of autonomous driving technologies to PV5,Kias first PBV model,which is optimized for mobility enabled by flexible design and space layout that meets customer needs.Robotics,the Key to Unlocking the Unlimited Possibilities of Future MobilityIn 2021,Hyundai Motor Group acquired Boston Dynamics,a specialized robotics company,securing the growth engine for the robotics business to transform the mobility industry.In 2022,Boston Dynamics signed a KRW 18 billion supply contract with DHL and supplied the first commercialized versions of the logistics robot Stretch in February 2023 while an increased number of Spot,Kias factory safety service robot,being distributed at industrial sites in Korea and abroad.Kia plans to continue to explore new business opportunities,such as last-mile robot delivery services,utilizing its manufacturing and production capabilities as well as PBVs.AAM,a New Mobility Solution that Goes Beyond to the Road in the SkyAt CES 2020,Hyundai Motor Group unveiled the S-A1,its first future-oriented Advanced Air Mobility(AAM)concept aircraft,presenting a new conceptual mobility solution that provides seamless travel based on connectivity between AAM,PBV,and mobility transit hubs.HMG is developing electric vertical take-off and landing(eVTOL)aircraft led by Supernal,an independent company established in the United States in 2021,and shaping the future of air mobility for Hyundai Motor Group.Supernal is on track for mass production of eVTOL airframes in 2028,by unveiling a mock-up of its next-generation airframe,the SA-2,at CES 2024.Kia aims to complete multimodal mobility that connects ground and air through the PBV business.We plan to continue to explore new business opportunities such as multimodal service connecting ground to urban air mobility in collaboration with Supernal and mobility hub business with vertiport operators.33trillion38trillion3%PBVSDV TransitionOthersElectrificationAAM/Robotics65%8%5%Existing Five Year Investment Plan(20232027)New Five-Year Investment Plan(20242028)15trillionInvestment Allocation:40%Future Business Investment 5trillion( 14%)(Unit:KRW)Introduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook12Kia Sustainability Report 2024Social Contribution for a Better SocietyKia Value System of Social ContributionsKia actively responds to social issues such as the environment,the socially disadvantaged,and the changing demographics of society,and takes action for their practical solution.In particular,under our social contribution mission of“Contributing to the free and safe movement of humankind through sustainable mobility”,we focus our social contribution programs on three areas:Environment for climate change response and ecosystem protection,Mobility for free and safe movement,and Challenge for the growth and self-reliance of future generations.Social contribution missionKey areasRepresentativeprojectsWe contribute to the free and safe movement of humankind through sustainable mobility.Sustainable Mobility Solution ProviderGreen TripSupport mobility rights of people with disabilitiesTidal Flat RestorationProtect marine ecosystems and increase carbon absorptionENVIRONMENTFree and safe movementMOBILITYGreen Light ProjectSupport the growth and self-reliance of underdeveloped countriesGrowth and independence of future generationCHALLENGEIntroduction Video for Kia Social ContributionClimate change response/ecosystem protectionOcean CleanupMarine plastic collection and recycling coastal habitat restorationCorporate VisionIntroduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook13Kia Sustainability Report 2024Social Contribution for a Better SocietyKias Major CSR Social ContributionsEnvironmentClimate change response and ecosystem protectionMobilityFree and safe movementChallengeGrowth and self-reliance of future generationsKia has partnered with global environmental NGO Ocean Cleanup to help tackle ocean plastic pollution.We will continue to find innovative solutions for a cleaner world by leading the way in building a circular value chain to prevent plastics from being thrown back into the environment.Ocean Cleanup|Ocean plastic collection and resource circulationGreen Trip is a social contribution program that provides a safe and convenient mobility environment for people with disabilities to experience freedom of travel.We operate modified Carnivals and Ray vehicles that can accommodate motorized and manual wheelchairs,as well as those that users can drive on their own,depending on the level of disability.In 2023,we introduced vehicles with ramps to make it easier for people with disabilities on wheelchairs to board vehicles,and we opened an office in Jeonju,Jeollabuk-do to provide services in seven regions nationwide.*Total of 89,483 users(June 2012-June 2024)Green Trip|Enhancing the mobility rights for people with disabilities by supporting accessible travelGreen Light Project|Supporting the growth and self-reliance of underdeveloped countriesWe will make a number of genuine efforts,such as planting various halophytes on domestic tidal flats to preserve biodiversity,expanding their carbon absorption capabilities,and sponsoring research to ensure that the ecological and environmental value of excellent tidal flats is widely recognized by the international community.Tidal Flat Restoration|Protecting marine ecosystems and enhancing biodiversityIn line with government policies,Kia is planning a new social contribution project targeting multicultural youth to contribute to solving issues in our society.Our goal is to support the social and economic independence of multicultural youth and contribute to the development of Korea as a healthy society with more respectful and accepting attitudes toward diversity.New CSR Supporting Independence of Multicultural YouthNew vehicles with ramps introduced in 2023 1.Estimated impact creation multiplier based on GLP Africas 5 key facilities,multiplied by total investment excluding indirect expenses.Green Light Project is a project that provides opportunities for people facing limitations so that they can challenge themselves,and supports community growth and self-reliance.Since 2012,we have supported social infrastructure such as education,healthcare,and economy in 19 bases in 15 countries across Africa,Asia,and Europe.Over the past 11 years,Kias GLP projects have generated an estimated total of KRW 37.16 billion in social performance1.Introduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook14Kia Sustainability Report 2024Social Contribution for a Better SocietyMajor Social Contributions by Domestic and International Business SitesDomestic Business SitesInternational Business Sites Kia Frientoring Mentoring underprivileged college students Blue car eco-class Providing eco-education in societiesYangjae(Headquarters)Kia Gawon Supporting college student entrepreneurshipKia China Yancheng Plant St.Jude Hospital Supporting pediatric cancer research and treatmentKia America Kia Challenge ECO Project Environmental education for elementary,middle,high school,and college students Independence-Support Project Supporting independence of young individuals preparing for independenceAutoLand Hwaseong Kia Challenge Supporting culture and arts and mentoring Kia With Supporting various environmental enactment programsAutoLand Gwangju Kia Inspiring Class Supporting youth career education K-Mobility Care Helping welfare organizations and low-income families maintain older vehicles Welcome Wheel Donating portable ramps for people with disabilities ECO STARTUP Incubating eco-startupsDomestic business sites 1 Car 1 Tree Campaign Donation of 1 tree per vehicle Project D.R.O.P*Collecting and recycling waste plastic*Develop Responsible Outlook for PlasticKia India A.W.I.M*Science,technology,and math learning support*A World In MotionAutoLand Georgia K-Academy Learning and emotional support for low-Income youth K-School Providing afterschool programs for underprivileged teenagersAutoLand Gwangmyeong Gift Cars Campaign Public-interest mobility campaign (emergency safety training)CSR Projects in Partnership with Hyundai Motor Group Kids Auto Park Operating children traffic safety experience center Bike KIA Building bike roads and bike sharing infrastructures Spark Curiosity Science and Technology Education Center for YouthAutoLand Slovakia Kia Parks Creating green spaces in local communitiesKia Central&South AmericaIntroduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook15Kia Sustainability Report 2024Strengthening Sustainability in Production SitesKia established the AutoLand Sustainability Guideline(A.S.G.)in 2023 to apply to AutoLand plants to advance ESG at our production sites.These guidelines provide the foundation for moving from sustainability efforts at the individual plant level to a consistent system across all AutoLands.The ESG guidelines are expected to be highly effective with instructions specific to each production site,such as streamlining production facilities.“Global Top Tier Factory Sustainability”Eco-friendly AutoLandSustainable Production SystemA human-friendly workplace1.Build a renewable energy portfolio2.Systematize energy operations/management3.Establish a waste/pollution management system4.Standardize production facility management5.Improve work culture6.Build a production data management system 7.Advance the quality management system 8.Expand the integrated safety management system 9.Ensure organizational diversity 10.Build landmarksGovernanceROIKPIOrganizationBuilding a foundation for sustainability Standardize production facility management Establish a unified production facility systemImprove work culture Build engineer morale Enhance work environment on siteProduction Data Management System Energy metering infrastructure Analyze production efficiencyAdvance the quality management system Validate the use of vision AI Manage claims data Direction of Sustainability at AutoLand Sustainable Production System Strengthen responsiveness to change and customer demands by efficiently producing and managing risks Direction of Sustainability at AutoLand Building a Foundation for SustainabilityContinue to reform governance,organization,and KPIs2 to bring sustainability to the manufacturing sites Reestablish a governance structure Participate in company-wide councils Operate internal councilsBuild leadership/management organizations Establish cross-departmental R&R Raise sustainability awarenessReorganize investment decisions Apply non-financial values Review changes to ROI3 criteriaAdd KPI metrics Redefine assessment criteria Refine assessment items Direction of Sustainability at AutoLand Eco-friendlinessRequires management of energy use and environmental impact throughout product lifecycleBuild a renewable energy portfolio Generate self-powered solar energy Develop a predictive maintenance system1 for solar energySystematize energy operations/management Manage energy use efficiency Optimize energy generationEstablish a waste/pollution management system Strengthen waste recycling management Measure and manage contaminants real-timeExpand the integrated safety management system Proactively addressing safety in hazardous areas Climate Change Disaster Prevention SystemEnsure organizational diversity Building an inclusive culture Infrastructure for women and people with disabilitiesBuild landmarks Developing a visitor engagement program Creating spaces for customer experience Direction of Sustainability at AutoLand A Human-Friendly Workplace Meet internal and external societal needs,such as eliminating discrimination of employees and helping communities thrive 1.Predictive maintenance method that analyzes equipment data to detect and preempt anomalies.2.Key Performance Indicator(KPI):Objective measures to assess performance needed to achieve goals.3.Return on Investment(ROI):Net profit compared to investment cost.Introduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook16Kia Sustainability Report 2024Strengthening Sustainability in Production SitesTen strategic directions toward sustainability have been developed from the three directions of A.S.G(AutoLand Sustainability Guideline)eco-friendly AutoLand,a sustainable production system,and a human-friendly workplacewith and mid-to long-term goals have been established accordingly.1 Build a renewable energy portfolio We operate 100%on renewable energy and have our own power generation and storage capabilities.2 Systematize energy operations/managementOur production sites are certified as green buildings,contributing to energy conservation and reducing environmental pollution.3 Establish a waste/contaminant management system We systematically monitor and disclose emissions of carbon and other pollutants.8 Expand the integrated safety management system We create accident-free workplaces and prevent damage from natural disasters with smart safety equipment.9 Ensure organizational diversity We are a diverse group of people,and we respect each others differences and views.10 Build landmarksAs a local landmark,our production sites provide sustainable value to community members.4 Standardize production facility management We manage energy efficiency and operate automated facility systems based on the EMS(Energy Management System).5 Improve the work culture(Back to the Basics)Our production sites are maintained based work principles and work culture agreed between labor and management.6 Build a production data management system We monitor production efficiency(power usage,equipment operation,water usage)in real time and identify points of improvement.7 Advance the quality management system Quality control is driven by automated systems and reflects customer feedback.Eco-friendly AutoLandSustainable production systemsA human-friendly workplace1.The final process of installing interior and exterior parts such as instrument panels and seats,assembling core parts of automobiles such as engines,transmissions,and axles,and completing vehicles through electrical components,wiring,and piping.2.Compliance with the level stipulated by the revised Serious Accidents Punishment Act in January 2023Strategic Direction of AutoLand Image of Strategies Achieved2040 GoalsAchieve RE100Reduce production plant energy use by 20%,enable full process automation excluding assembly1Build company-wide monitoring control towers and establish dashboards for the process environmentAchieve zero serious accidents in production lines and below 3.0 at suppliers2Introduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook17Kia Sustainability Report 2024Our PrioritiesCONTENTSKia ESG Management Strategy 19ESG Governance 21Double Materiality Assessment 22Introduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook18Kia Sustainability Report 2024Mid-to Long-Term ESG Roadmap Kia has been strengthening our infrastructure and capabilities for sustainability management,including the creation of a dedicated ESG organization by 2022.Building on this,we have been working to improve our internal composition by establishing a mid-to long-term ESG strategy from 2023 and publicizing our ESG management activities.Based on these substantial ESG efforts,we plan to continue our sustainability efforts by creating ESG value in our business value chain starting in 2026 and achieving carbon neutrality by 2045.ESG Vision and Core ValuesKias ESG vision is Sustainable Movement for an Inspiring Future,which means we will constantly move toward an inspiring future together with our various stakeholders,including customers,shareholders,suppliers,communities,and the natural environment.To realize this,we have established three core values that cover aspects such as eco-friendliness,resource circulation,safety,stakeholder satisfaction,sound governance,and ethical management.Formulate ESG organizations(dedicated organization,Sustainability Management Committee,etc.)Improve response and level to major global ESG evaluationsReinforcing infrastructure/capabilities Establish mid-to long-term ESG strategies and promote key tasks Strengthening ESG data management and public disclosureImproving Internal constitution Create ESG value for each business value chain Achieve RE100,Achieve carbon neutrality by 2045,Realize mid-to long-term ESG goals,etc.Advancing ESG ManagementAs we transition into a provider of sustainable mobility solutions,we aim to continuously move towards a future that inspires various stakeholders.We will reduce negative impact on the environment and establish a sustainable environment through a circular economy of resources,such as reuse and recycling.We will become a partner that provides happiness and satisfaction as well as safety to all employees,customers,partner companies,and local communities.We will disclose our efforts and processes in a transparent manner for sustainability and build trust through continuous improvement.Sustainable Movement for an Inspiring FutureCleaner&Circular Safe&Satisfying Transparent&Trustworthy ESG VisionESG Core ValuesKia ESG StrategyIn 2021,Kia designated sustainable ESG management a key corporate direction and presented our corporate strategy,Plan S,declaring a shift toward eco-friendly,customer-centered,and future-oriented new businesses.In 2023,based on this vision and systematic management,we established a new ESG management system to emphasize Kias sustainable direction and values and are implementing ESG strategies and activities based on this system.20202022202320252026Introduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook19Kia Sustainability Report 2024Kia ESG StrategyThrough our ESG vision and strategy,Kia seeks to ensure that all employees are aware of what we do for sustainability.We are determined to implement sustainability activities that minimize the negative impacts of Kias business and enhance the positive impacts on our environment and society.Cleaner&CircularPlay a leading role in shaping green and circular economy for our planetSafe&SatisfyingCreate a safe and satisfying society for allTransparent&TrustworthyMake our governance transparent and reliableResponding to Climate Change through Building an Eco-Friendly Manufacturing Environment Achieving Carbon Neutrality Transition to Renewable Energy Creating Eco-Friendly Business SitesProducing Eco-Friendly Products through Building a Resource Circulation System Applying Eco-Friendly Materials Expanding the Use of Recycled MaterialsProtecting Everyones Lives through Prioritizing Safety Internalizing Safety Management Strengthening Product Reliability Realizing Win-Win Growth through Satisfying Stakeholders Protecting Customer Rights Protecting Human Rights Providing Fair Value Building a Sustainable Supply Chain Expanding Social Contribution ImpactBuilding a Robust Governance Structure through Transparent Management Ensuring Board Transparency Making Decisions Based on ESG(Environmental,Social,and Governance)Disclosing Transparent ESG InformationEnhancing Corporate Trust Based on Responsible Management Ethical/Compliance ManagementSustainable Movement for an Inspiring FutureIntroduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook20Kia Sustainability Report 2024ESG GovernanceTo strengthen ESG-conscious decision-making,Kia oversees ESG issues at the Sustainability Management Committee of the Board of Directors,the highest decision-making body,and discusses matters reviewed through Global ESG councils.We also establish ESG performance targets for each division based on our mid-to long-term ESG strategy and reflect them in key performance indicators(KPIs),and proactively prevent risks by monitoring the company-wide ESG status at all times via our ESG platform.ESG-Centered Decision-MakingTo strengthen ESG-conscious decision-making,the Sustainability Management Committee of the Board of Directors,Kias highest decision-making body,meets every quarter to review ESG issues.In addition,we operate a dedicated sustainability management organization,implement improvement tasks for each sector based on the newly established mid-to long-term ESG strategy,and monitor progress through the council.ESG Performance ManagementKia incorporates ESG into the performance evaluation of the top management and each division and business unit to ensure that work and decisions are made from a sustainability perspective.In particular,in 2023,we included building an ESG system in the purpose of operating KPIs and applied ESG to overseas sector KPIs for the first time,encouraging the implementation of ESG perspective-based work within the entire organization.ESG Data PlatformThe ESG data platform enables Kia to consolidate our various ESG management performance and disclose accurate information,as well as respond to global regulations and external assessments in an integrated manner.It is also being utilized to internalize ESG management by checking and diagnosing the ESG level of the entire company.We will continue to enhance our ESG data platform to provide accurate information to our stakeholders,including proactively preventing possible ESG risks by monitoring the ESG status of each sector at all times.Key Performance in Strengthening ESG Decision-MakingReviews and Decisions of the Sustainability Council in 2023Anti-CorruptionImplementation of the Employee Code of Ethics,compliance with fair trade,and support for complianceOccupational Health&SafetyAnnual occupational health and safety plan,ways to remediate serious accidents and enhance company-wide occupational safetyLocal communitiesCorporate social responsibility activities and donationsESG Action PlanKias mid-to long-term ESG strategy system Internal Transactions Approval of changes to internal transactions with or among affiliates,approval of transactions between directors and the company,and approval of the total transaction amount of the largest shareholder Business Plans for establishing a joint venture,progress of used car certification business,etc.Kia ESG Governance Board of Directors(Sustainability Management Committee)Corporate Strategy OfficeCEOSustainability Management TeamESG CouncilEnvironmental(E)Climate change Carbon neutrality Workplace environment Eco-friendly product Resource circulationSocial(S)Occupational safety and health Quality/safety Human rights/talent development Supply chain ESG Corporate social contributions and moreGovernance(G)Board operations Ethics/Compliance Shareholder policyAddition of Building ESG System to KPI operational purposeInternalize ESG company-wide through the performance assessment systemFirst to apply ESG to Overseas sector KPIsAssess greenhouse gas emissions,renewable energy use,electrification sales,and moreReview of ESG implementation through national and international ESG councilsShare and check ESG issues with relevant sectors in Korea and major overseas regions such as Europe and North AmericaIntroduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook21Kia Sustainability Report 2024Kia conducts an annual double materiality assessment to disclose its activities and performance on material issues to stakeholders,and reviews and enhances its sustainability strategy on these issues.The assessment process was guided by the implementation guidance for the European Sustainability Reporting Standard(ESRS2)issued by the European Financial Reporting Advisory Group(EFRAG1).Dual materiality refers to the degree to which a companys business activities can have a positive or negative impact on society and the environment(impact materiality)and the degree to which external sustainability-related factors can have a positive or negative impact on the companys financial position(financial materiality).Through the double materiality assessment,we identified prioritized ESG issues for enhancing sustainability management from the perspective of internal and external stakeholders.Kia will continue to enhance our double materiality assessment methodology under the global disclosure standards and drive substantive improvements through strategic assignments for identified material issues.OverviewDouble Materiality Assessment ProcessKia organized a pool of issues based on the sustainability issues suggested by the European Sustainability Disclosure Standard and activities in each issues value chain,and conducted in-depth interviews with internal and external stakeholders(March 18-29,2023,2 weeks).Based on the results of the interviews,we assessed impact materiality and financial materiality,and developed our ESG strategy based on the level of materiality.Overview of Assessment Methodology Assessment FactorsDouble Materiality AssessmentFinancial MaterialityKey stakeholders:InvestorsThe extent to which external sustainability-related factors may have a positive or negative impact on the companys financial conditionExample)Loss of assets due to natural disasters Outside-in perspectiveBusinessSocial and environmentalImpact on the businessImpact from the business1.European Financial Reporting Advisory Group 2.European Sustainability Reporting Standard Impact MaterialityKey stakeholders:customers,communities,employees,etc.The extent to which a companys operations may have a positive or negative impact on society and the environment.Example)Environmental pollution from greenhouse gas emissionsInside-out perspectiveThe Concept of Double MaterialityAssessment method In-depth interviews and surveys 5-point scale survey for each factor based on the interview Assessment target Consisting of internal and external stakeholders for each issue Issue-specific internal working-level staff and managers,external experts in the relevant fieldIssue pool selection method Segmentation by value chain based on ESRS sub-level topics Issue pool determined by peer companies,automotive industry,ESG initiatives,and media analysis Risks(Cost incurred/decline in revenue)Oppotunities(Decline in cost/increase in revenue)Financial impact assessment factorsSocio-environmental impact assessment factorsScaleLikelihoodScaleLikelihoodIn-depth stakeholder interviewsDouble materiality assessment(prioritization)Board reporting and reviewInternal stakeholders:working-level staff External ESG experts interviews are conducted on key issues and impact typesExternal stakeholders Negative impact:Scale/scope/irremediable character/likelihood Positive Impact:Scale/scope/likelihood Financial risks:Scale/likelihood Financial opportunities:Scale/likelihoodFinancial assessment factors Prioritizing issues by aggregating scores from the issue pool across two dimensions:Impact materiality and financial materiality Identify 12 critical issuesConfiguring the issue pool1.Identification of issue pool A list of 276 issues was identified in accordance with the European Sustainability Reporting Standard(ESRS).2.Assessment of Kia value chain relevanceEach issue and its relevance to the value chain(upstream,own operations,downstream)are assessed 3.Reflecting the nature of Kias businessA pool of issues was identified through peer companies,automotive industry,ESG initiatives,and media analysis to reflect the nature of Kias business environment Identifying the most relevant staff to the issue pool and interviewing relevant departments Interviewing administrative positions,including relevant executives,considering their roles and responsibilities in the issue pool Social/environmental assessment factors1.Material Issue Adequacy Review The adequacy of current materiality issue management strategies are reviewed by analyzing the financial and socio-environmental impact levels of the 12 material issues identified.2.Review by the Highest Decision-Making BodyDouble materiality assessment results,issue-specific management status,and advancement plans are reported and reviewed by the Sustainability Management Committee under the Board of Directors Negative impactPositive impactScaleScopeLikelihoodScaleScopeLikelihoodIrremediabilityIntroduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook22Kia Sustainability Report 2024Double Materiality Assessment ResultsWe assessed the financial and socio-environmental impacts of each issue,resulting in a total of 12 material issues.Material issues were selected based on the top 50%of quantified issue-specific impact scores.In the environment sector,seven issues related to climate change and the circular economy were identified.In particular,climate change-related issues encompass upstream,1 own operations,2 and downstream3 related topics,confirming the importance of managing the entire value chain of the issue.Kia has declared a supply chain-wide goal of carbon neutrality by 2045 and will continue to manage through Kias Climate Change Response Strategy to achieve this goal.In the social area,four material issues were identified:education and training of employees,health and safety of employees,human rights management in the supply chain,and safety and satisfaction of customers.We will expand our management of human rights and safety across our value chain,including our employees,supply chain,and customers.Finally,in the governance area,strengthening anti-corruption compliance management was ranked as a material issue.This report complies with the reporting format required by the IFRS4 sustainability reporting standard and is organized into four areas:governance,strategy,risk management,and metrics and targets,based on high-level topics that include material issues.AreasHigh-level topicsSubtopicsMaterial issuesValue chainImpact materialityFinancial materialityNegativePositiveNegativePositiveEnvironmentClimate changeClimate change mitigation Reducing carbon emissions at the vehicle operation stageDownstream Reducing carbon emissions across all business sitesOwn operations Inducing and supporting carbon reduction in the supply chain UpstreamEnergy Improving vehicle energy use efficiencyDownstream Switching to renewable energy at all business sitesOwn operationsResource circulationWaste Managing and reducing waste across business sitesOwn operationsResource inflows,including resource usage Using raw materials efficiently and increasing recyclingOwn operationsSocialEmployeesTraining and capacity building Fostering talent and expanding career development supportOwn operationsEmployee health and safety Ensuring employee safety and healthOwn operationsSupply chainOther work-related rights Monitoring and managing supply chain human rightsUpstreamCustomer safety and qualityConsumer health and safety Managing product safety risks and improving customer experienceDownstreamGovernanceBusiness ethicsCorruption and bribery Strengthening anti-corruption compliance managementOwn operationsFinancial impacts 50%Socio-environmental impacts 50%Resource Circulation(Own Operation)EEESSSEEClimate Change(Downstream)Climate Change(Own Operations)Resource Circulation(Downstream)Resource Circulation(Upstream)Waste(Downstream)Heath&Safety(Own Operation)Human Rights(Upstream)Heath&Safety(Downstream)Fair Wages(Own Operation)Diversity(Own Operation)Working Conditions(Upstream)Fair Treatment(Upstream)Climate Change(Upstream)Waste(Own Operations)Energy(Downstream)Energy(Own Operations)Business Ethics(Own Operation)Capacity Building(Own Operation)1.Steps to produce,process,and procure raw materials utilized in Kias business2.Steps taken at all business sites within Kias sphere of control3.Steps related to customers using Kia products and disposal and recycling after use4.International Financial Reporting StandardsGIntroduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook23Kia Sustainability Report 2024TopicsMaterial issuesBusiness importance of the issueKias responseFuture plans Report pageFinancial impactSocio-environmental impactClimate changeReducing carbon emissions at the vehicle operation stage Trends in eco-friendly vehicles such as electric and hydrogen vehicles as new engines of growth,and response to regulations such as vehicle fuel efficiency and greenhouse gas emissions Impact of climate change on consumption and usage and contributing to the formation of consensus on reducing carbon Increasing the sales of eco-friendly vehicles Improving products fuel and electricity efficiency through continuous R&D Reviewing and accelerating transition to green business portfolio31,34,3940-41Reducing carbon emissionsat all business sites Response and operational costs to carbon tax and emissions trading,legal sanctions related to emissions,and physical risks from extreme weather events Kias 2045 carbon neutrality goal and carbon reduction efforts Implementing carbon reduction plan Joining the K-EV100 and eletrification of business vehicles Continue advancing specific carbon neutrality action plans,including process efficiencies and energy savings 31-3235-3840-41Inducing and Supporting Supply Chain Carbon Reduction Response and operational costs to carbon tax and emissions trading,legal sanctions related to emissions,and reduced demand for carbon-intensive products The need to manage GHG across the supply chain,performing life cycle assessments(LCAs)on components,and carbon neutrality training for suppliers Conducting supply chain ESG assessments Supporting programs for supply chain carbon neutrality training Participating in CDP supply chain Including low-carbon items within supplier assessment criteria Expanding support for capacity building of low-carbon operations31,3340-41Improving Vehicle Energy Efficiency Decrease in demand for internal combustion engines and fuel inefficient products,increase in product delivery costs due to inefficient downstream supply chains Environmental impact of fossil fuel use in internal combustion engines Applying technologies to improve fuel efficiency of internal combustion engines Improving EV energy efficiency to improve the cost of ownership Enhancing quality and performance and expanding infrastructure to accelerate eco-friendly vehicles transformation3440-41Transition to Renewable Energyat All Business Sites Increase in operational costs due to energy supply and price fluctuations resulting in increased energy supply instability Environmental impact of fossil fuel use and energy consumption in business operations Establishing a roadmap for RE100 implementation Installing solar power generators at all business sites Purchasing/using renewable energy through(v)PPAs Strengthening management for timely introduction of renewable energy 3240-41Resource circulationManaging and ReducingSite-Wide Waste Disposal Higher costs for high-risk,non-recyclable waste disposal Increase in recycling rates and reduced waste disposal costs by changing waste disposal methods(incineration/landfill recycling)Building an eco-friendly corporate image and building a circular economy by complying with waste-related laws and regulations Environmental pollution concerns due to improper waste management Establishing vehicle disposal and battery circulation system Pursuing Zero Waste to Landfill verification at business sites Building cross-departmental collaboration and communication for responsible designs4347-4852-53Using Raw Materials Efficiently and Increasing Recycling Legal sanctions and the impact on brand image and consumer trust in the event of wasting resources or causing environmental damage Environmental and ecosystem impacts of overharvesting raw materials Recycling iron scraps in the press process Goal to use at least 20%recycled plastics by 2030 Reducing(new)raw material use and continuing R&D investments for increasing recyclability4345-4649-5152-53Management Status by Material IssueKia is strengthening its sustainable management by identifying the financial(risks and opportunities)impacts and socio-environmental impacts(positive and negative)for 12 material issues on Kias business and establishing future plans.Introduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook24Kia Sustainability Report 2024TopicsMaterial issuesBusiness importance of the issueKias responseFuture plans Report pageFinancial impactSocio-environmental impactEmployeesFostering Talent and Supporting Career Development Overall impact on financial and non-financial business capabilities Neglecting human resource management weakens business competitiveness across the board,acquiring the foundation for mid-to long-term growth through human resource development Organizational capacity building,Mobility Academy Data-driven customer care,DT/AI Academy Expanding training for the green business transition Preparing training to build capacity for customer-centric business55-57Ensuring employee safety and health Financial losses due to production downtime,fines/penalties,and penalties for executives and managers in the event of a major disaster Exposing employees to safety risks and deterioration of their health Preventing catastrophic events by building preemptive and preventive systems Establishing and implementing mid-and long-term directions for security assurance Establishing a safety management system using AI,etc.Enabling safety-related communication channels58-63Supply chainMonitoring and managinghuman rights in the supply chain Impact on brand image,legal sanctions,and human resource acquisition in case of labor rights issues of suppliers workers Social impacts of ensuring labor rights for suppliers workers,such as prohibiting child and forced labor Including labor and human rights as part of supplier assessment ESG assessment of domestic and international suppliers Advancing human rights assessment and monitoring of suppliers68-72Customer safety and qualityManaging product safety risks and improving customer experience The cost of litigation and compensation,impact on the brand image and consumer trust in the event of a harm Actual and potential safety impacts on product consumers and users,impact on social trust Driving a customer-centric safety strategy Applying driving assistance solutions Promoting the adoption of new safe driving assistance technologies Advancing follow-up process for product stewardship74-79Business ethicsStrengthening anti-corruption compliance management Causing operational damage from related legal actions and deterioration of reputation and trust with stakeholders;establishing internal controls to mitigate unpredictability Raising awareness on moral hazard and compliance based on operational results Self-compliance checks for impartial conduct of business(anti-graft,anti-bribery,etc.)Strengthening internal controls to minimize compliance issues 81-83Management Status by Material IssueIntroduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook25Kia Sustainability Report 2024Addressing Material Issues to Kia BusinessKia operates a response strategy for material issues related to our operations and products,and has established a more in-depth management system that includes reviewing goals and achievements and linking them to management KPIs.Reducing carbon emissions at the vehicle operation stageReducing carbon emissions across all business sitesEnsuring employee safety and healthMateriality of the IssueThe EU plans to reduce 100%of carbon emissions from passenger vehicles by 2035 and has banned the sale of new internal combustion engines from 2035.The market for electrified vehicles is expanding as internal combustion engine vehicles are phased out,and our technology and market leadership in electrified vehicles can help drive revenue growth.The automotive industry accounts for the largest share of carbon emissions in the operation of automotive vehicles,and to reduce carbon emissions in operation,we are undergoing electrification to mitigate climate change risks and turn them into opportunities.Production processes in the automotive industry consume a lot of energy.This energy use translates into carbon emissions,which can result in operational costs due to participation in carbon taxes and emissions trading programs,as well as legal sanctions related to emissions if carbon-related regulations become more stringent in the future.Kia recognizes this risk and is committed to reducing carbon emissions across our global business sites.As a manufacturing industry that relies on a large workforce of employees,occupational health and safety is an important issue.Especially with the strengthening of major accident penalty laws in Korea,there has been an increased legal responsibility on management.Safety issues not only lead to personal losses and damages but also impact product quality,highlighting the importance of safety and health management.Response StrategiesKias low-carbon mobility strategy can also be found in our 2045 Carbon Neutrality Strategy.In 2022,we launched our first dedicated electric car,the EV6,followed by the EV9,an all-electric SUV,in 2023.The EV9 is the worlds first SUV flagship EV with optimal EV power based on the E-GMP platform.Going forward,Kia will launch a total of 15 vehicles by 2027,giving customers the opportunity to choose from a wide range of EVs.In April 2022,we joined RE100,a global initiative that aims to transition 100%of the electricity used by businesses to renewable energy.We have a roadmap to accomplish this and plan to gradually transition all of our electricity to renewable energy by 2030 for our international business sites and by 2040 for all of our business sites.In particular,the development of the AutoLand Sustainability Guideline(A.S.G)in 2023 solidified our strategic framework for enhancing the ESG capabilities of our manufacturing operations.We are also launching and expanding dealerships across our global bases that are designed in accordance with Kias Store Sustainability Guidelines to make our sales locations more environmentally friendly.Kia has established a company-wide safety environment level diagnosis system(KIA SEMS)in accordance with the mid-to long-term direction of securing safety,and has implemented improvement activities every year.In 2023,we implemented a close support project for each organization to improve safety standards.Improved KIA SEMS metrics Established a multi-departmental plan to prevent accident recurrence Conducted support projects for two-unit plants for two weeks each under the three themes of identifying/improving obstacles through safety awareness diagnosis;the target plants showed improvement in KIA SEMS indicators.Compared to 2023,the 2024 outreach program will cover a wider range of themes and more departments.Goals and AchievementsGoalsTo sell 2.48 million eco-friendly vehicles in 2030(Increase the proportion of eco-friendly vehicles sold in key markets to 80 percent)GoalsTo reach renewable energy conversion rate 100%in 2040(12%in 2025,66%in 2030,82%in 2035)Goals To reduce 3-year average and year-over-year industrial accident rates To reduce combined accident rate compared to 3-year average To acquire safety and environmental system certifications and achieve 80 points on KIA SEMS in 2025 Achievementstatus576,000 eco-friendly vehicles sold in 2023 ( 18%y/y)AchievementstatusRenewable energy conversion rate Approximately 9%in 2023AchievementstatusScored 75.4 on SEMS in 2023 (target:73)Managing goals of top executives Kia is establishing KPIs and aligning executive incentives to address climate change.The KPIs of key organizational leaders include green car sales targets achievement status.Kias RE100 drive to transition to renewable energy is reflected in KPIs across the head of key divisions.We regularly check whether all domestic and overseas production subsidiaries have or plan to install solar power generation facilities and manage KPIs.Through Kia SEMS,Kia inspects the status of safety and health management annually and reflects the final evaluation results in executive and departmental KPIs to guide responsible safety management in each sector.Introduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook26Kia Sustainability Report 2024Addressing Material Issues with External StakeholdersWe identify key impacts of material issues relevant to external stakeholders and report output metrics and impact valuation results to quantify the social cost of those impacts.Reducing carbon emissions at the vehicle operation stageUsing raw materials efficiently and increasing recyclingKey impactsWith a growing number of regulations and initiatives to combat climate change,it is becoming an essential part of sustainable management for companies to adopt climate change mitigation strategies across their value chain.As such,Kia is aggressively embracing electrification in our automotive business and turning the risks posed by climate change into new opportunities.The electrification strategy is not only an effective way for the automotive industry,which has the highest on-road carbon emissions,to combat climate change,but it is also an important milestone in Kias progress towards a sustainable future.With global plastic production increasing by 42%over the past decade,and 72%of it ending up as waste,the importance of a circular economy is emerging as a serious issue.In 2023,the European Commission is proposing a draft of the End-of-Life Vehicle Regulation(ELVR),which will strengthen the obligations of producers of end-of-life vehicles from new vehicles to end-of-life disposal.Kia aims to minimize the environmental impact of plastic by using recycled materials in our products.We will continue to expand the use of materials such as water bottles,PET bottles,waste bumpers,waste fibers,and waste nonwovens,and apply the principle of using eco-friendly materials in all new vehicles in the future.Measuring Social CostsOutput metric:We continue to advance our LCA to estimate EV driving emissions reductions.Impact valuation:Upon comparing the carbon emissions of the EV6 model and its equivalent internal combustion engine model,the Sportage,over 200,000km of driving,the EV6s direct emissions were 11.36 tCO2eq and the Sportages emissions were 33.77 tCO2eq,resulting in a carbon reduction of 22.41 tCO2eq per vehicle.Improving carbon emissions reduces the social cost of carbon dioxide in the atmosphere.In a government service report submitted in February 2022,the researchers calculated the social cost of carbon at KRW 55,400 per ton.This is the social cost of an increase of one ton of carbon dioxide in the atmosphere,estimating resulting the environmental pollution and health damages.The EV6 is expected to sell 17,227 units domestically in 2023,which translates to a reduction of approximately 386,057 tCO2eq.This was approximately KRW 21,387,561,678(approximately KRW 21.4 billion)in social savings.Output metric:In order to quantify the results of minimizing environmental pollution through our plastic recycling business,we use the amount of plastic recycled as a metric.Impact valuation:Kia typically uses post-consumer plastics in about 2%of all vehicle parts.Considering that Kias total vehicle sales in 2023 will be 3,015,762 units,we estimate that each vehicle uses approximately 5.8 kg of plastic,resulting in a total savings of approximately 17,491,420 kg(approximately 17,491 tons).According to the World Wide Fund for Nature(WWF),the social cost of producing and disposing of the roughly 200 million tons of plastic made in a year is about$3.7 trillion,or$1,850 per ton(KRW 2.41 million).If Kias waste plastic savings were converted into social costs,the social cost savings would be approximately KRW 42,153,310,000(approximately KRW 42.2 billion).1.This measurement is based on data managed by the company and utilizes national statistics,research findings,etc.The monetary values used in the measurement are subject to change based on new research,and the completeness of the measurement results cannot be verified,so it cannot be considered as part of financial disclosure.Introduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook27Kia Sustainability Report 2024Material TopicsCONTENTSClimate Change 29Resource Circulation 42Employee 54Supply Chain 64Customer Safety&Quality 73Business Ethics 80Introduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook28Kia Sustainability Report 2024Material Topics 1Climate ChangeAs a global company,Kia is committed to taking responsibility for the climate crisis and taking concrete steps to improve.We are committed to reducing our carbon footprint by achieving RE100,accelerating electrification,and expanding life cycle assessment to achieve net zero carbon emissions at every stage of our products by 2045.We are also creating a collective value chain effort through various programs to help our suppliers become carbon neutral.Material IssueClimate Change Mitigation1.Reducing carbon emissions across all business sites2.Reducing carbon emissions at the vehicle using level3.Inducing and supporting carbon reduction in the supply chain Energy4.Switching to renewable energy at all business sites5.Improving vehicle energy use efficiencyIntroduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook29Kia Sustainability Report 2024Kia supports achieving the Paris Agreement goal of keeping the increase in global average temperature below 2C above pre-industrial levels,and is working to achieve Net Zero,including Scope 3,by 2045 as part of the governments carbon neutral policy implementation.Since 2021,we have been reporting on our progress in addressing climate change,and we report our progress and plans in accordance with the Task Force on Climate-related Financial Disclosures(TCFD)Reporting Framework.When we sponsor the activities of associations,including those related to climate change,and expects them to act in accordance with the Paris Agreement and its policy standards and framework.In the event that this is not the case,we annually review the activities of key business-related associations to which our operations are members and reconsider our membership to ensure that we are making a positive environmental impact in the long term.GovernanceGovernanceBoard-level Oversight of Climate Change Risks and Opportunities Kia manages company-wide ESG risks through the Sustainability Management Committee under the Board of Directors.The Sustainability Management Committee is required to meet at least once a year to report on the status of implementation of tasks related to climate change issues and plans for action.The Board of Directors is the final decision-making authority and accountability body for climate change,receiving reports on business performance and plans,including climate change and carbon neutrality,and making key decisions,and reports to the CEO who takes accountability.Leaderships Role in Assessing and Managing Climate-related Risks and Opportunities In 2022,Kia established a dedicated carbon neutrality team to analyze climate-related risks and manage the challenges of its net zero strategy.The Head of Corporate Strategy is assigned the role of oversight and accountability,and matters deemed to be key issues are reported to the Board and CEO.Climate-Related IncentivesKia is linking the environmental management performance to the KPIs of the CEO and major domestic division heads.The CEOs KPIs include internal and external ESG ratings,carbon neutrality,and ESG issues such as natural capital protection.The CEO is also evaluated on KPI achievement and incentivized annually through salary as well.Organizational leaders(executives)of major domestic and overseas organizations are evaluated on KPIs based on the rate of achievement of climate change mitigation tasks including CO2 regulation response and carbon emissions.Other metrics such as the number of electric vehicles produced and sales of electric vehicles are included in KPIs,and performance pay is compensated according to the degree of KPI achievement.Additionally,in an employee idea contest focused on greenhouse gas and energy reduction,we provided in-kind rewards for the winning proposal,which suggested improvements in greenhouse gas emissions and energy efficiency through plant and facility development.Key Elements of TCFD RecommendationsOrganizational ChartSustainability Management Committee(Board of Directors)ESG CouncilKey Climate Change Mitigation DepartmentsCEOEstablishing and leading ESG strategyResponding to ESG assessmentsProviding sustainability disclosures and moreSustainability Management TeamEstablishing a climate change strategyImplementing carbon neutrality/RE100Carbon Neutrality Strategy TeamPerforming life cycle assessments(LCA)Carbon Neutral Technology Innovation TeamReducing greenhouse gas emissions in business sitesManaging water and pollutant dischargesSafety Environment Support TeamBusiness Site Energy Management and OperationsEnergy Management Team/Facility Management TeamMetrics&TargetsRisk ManagementStrategyGovernanceDisclose the organizations governance around climate-related risks and opportunitiesDisclose the actual and potential impact of climate change-related risks and opportunities on the organizations business,strategic,and financial plansDisclose how the organization identifies,assesses,and manages climate-related risksDisclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities Key TimelineDecember 2020 Declared support for TCFDMarch 2021 Disclosed Kias climate data pursuant to the TCFD for the first timeNovember 2021Declared 2045 Carbon NeutralityApril 2022 Approved for RE100 initiativeJune 2017TCFD recommendations announcedIntroduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook30Kia Sustainability Report 2024Carbon Neutrality Roadmap In 2021,Kia declared our commitment to 2045 Carbon Neutrality to contribute to the development of our customers,communities,and international society.By 2045,we will achieve net-zero carbon emissions at every stage of the value chain,including the supply,production,use,logistics,and disposal of vehicles.As an automaker,Kia is most directly responsible for emissions from the production and use phases,which currently account for more than 80%of our total emissions.We aim to overturn this by building a greener manufacturing environment and aggressively transitioning to electrification.In the production phase,we will reduce carbon emissions through vehicle electrification and energy efficiency,and transition to renewable energy via self-generated solar power and PPAs.In the vehicle usage phase,minimizing carbon emissions is crucial for carbon neutrality.Under Plan S,we will expand electrification,aiming for all vehicles sold in Europe by 2035 and in major markets by 2040 to be electric.In the supply phase,we will reduce emissions by establishing a monitoring system for primary suppliers carbon emissions and gradually applying low-carbon steel to vehicles starting in 2030.Achieving carbon neutrality across the value chain is challenging for Kia alone.It requires close cooperation with various stakeholders,including suppliers of raw materials and components,partners involved in recycling end-of-life products,and government agencies.Kia is committed to creating a sustainable automotive industry by supporting suppliers carbon-free transition and expanding government and institutional partnerships.Strategy|Kias 2045 Value Chain Carbon Neutrality Declaration UpstreamKia OperationDownstreamStep 1 20222025 Self-generate solar power in domestic and international business sites Capacity Building for Supplier Response to Carbon Neutrality Purchasing Renewable Energy(PPAs,RECs)100%Electrification in Europe by 2035 100%Electrification of Major Markets by 2040 Expanding the use of low-carbon materials Residual Emission Offset ProjectStep 2 20262040Step 3 20412045Building a carbon-neutral founda-tionKia Carbon Neutrality Declaration (2021.11.11)Establishing a carbon neutrality initiative system(2022)Identifying value chain-specific goals and strategic tasks Advancing our carbon neutrality initiative strategy(until 2025)Establishing governance and international expansionBecoming a leader in carbon neutrality Achieving reduction targets by value chain Achieving RE100 in business sites (International 2030,domestic 2040)100%electrification of Europe and major markets Achieving carbon neutrality Driving decarbonization transition and offsets 100%electrification in global markets Expanding the use of green energy (such as hydrogen)Climate Change Introduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook31Kia Sustainability Report 2024Kia RE100 RoadmapKia joined the RE100 initiative in April 2022,which has launched by the UK-based nonprofit organizations The Climate group and CDP.We pledged to transition to 100%renewable energy for our business sites by 2040.In phases,we plan to transition all of our electricity to renewable energy by 2030 for our international business sites and by 2040 for all of our business sites,a decade ahead of the RE100 initiatives recommended transition to 100%renewable energy by 2050.Kia has revised the interim targets of RE100 road map upwards.We are installing 62MW of self-generation solar facilities at domestic and overseas business sites and introducing(v)PPAs in the United States,China,and India in a timely manner.Moreover,based on the largest PPA procurement agreement in Korea signed in December 2023,we plan to accelerate the transition to renewable energy at our domestic business sites and achieve the transition target raised by 3%point in 2030 and 4%point in 2035.Progress of RE100 ImplementationKia is pursuing a renewable energy transition centered on Solar power self-generation and(v)PPAs.We plan to directly generate and use 86 GWh of renewable energy annually through solar self-generation totaling 62 MW across our global business sites.Last year,we completed and operated a total of 6MW of solar self-generation facilities at our Hwaseong,Korea and India plants.This year,we plan to install 56MW of solar self-generation facilities at our Hwaseong,Gwangju,US,Slovakia,India,and Mexico plants.We are pursuing(v)PPAs for our plants in Korea,the U.S.,China,and India,and will sign contracts to introduce renewable energy(v)PPAs this year,furthering our transition to renewable energy.Strategy|RE100 ImplementationRE100 portfolio across all business sites1.PPA:Power Purchase Agreement 2.vPPA:Virtual Power Purchase Agreement 3.REC:Renewable Energy Certificate,Certificates that prove electricity is generated from renewable sources 4.GO:Guarantee of Origin,certification system for the origin of energy Roadmap to achieve RE1002025Recommendation level12hievedKia Plan203060hieved66hieved203582hieved204090hieved100hieved to be achieved in 2030Solar power,vPPA,RECUnited States to be achieved in 2030Solar power,RECMexicoRE100 achieved Solar power,GO4Slovakia to be achieved in 2030Solar power,PPA,RECIndiato be achieved in 2030Solar power,RECChinato be achieved in 2040Solar power,PPA1,vPPA2,REC3South Korea UpstreamKia OperationDownstream23 Roadmap24 Roadmap202512fcx0 3020352040 3%p 4%pClimate ChangeIntroduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook32Kia Sustainability Report 2024Strategy|Driving Carbon Neutrality in the Supply Chain Direction of Carbon Reduction in the Supply ChainKia is driving carbon reduction not only in our own business sites but also in our supply chain.Initially,we will support our suppliers in calculating and managing their carbon emissions,and in the future,we will encourage them to participate in carbon reduction by assigning reduction targets that consider their capabilities and characteristics.Kia will also reduce our carbon emissions from raw materials by expanding the use of low-carbon and recycled materials for steel and aluminum.To this end,Kia made Carbon Neutrality Guide for Suppliers that lays out what we expect from the suppliers we do business with,and we are investigating the carbon emissions of our first-tier suppliers operations and considering how we can support them in reducing their carbon emissions.Kia operates carbon neutrality training programs for employees of suppliers,carbon reduction equipment purchase support programs for small and medium-sized suppliers,and energy diagnosis consulting programs.We are also developing systems to help our suppliers systematically manage the emissions of their business sites and products and to help them respond to carbon-related regulations.Capacity Building for Supplier Carbon NeutralityKia joined the CDP Supply Chain in 2023 as part of our commitment to strengthening the climate change response capacity of our suppliers.This is one of the projects run by the CDP,a program that asks suppliers to disclose carbon-related information(climate change-related issues and strategies and carbon emissions)and diagnoses and evaluates their level of response.Kia has conducted in-person and online training for over 360 first-tier suppliers to help them respond to the CDP supply chain.We provided training on the meaning and importance of carbon neutrality,the theory and practice of calculating GHG emissions,and the contents of the CDP questionnaire and how to write a response.Kia will continue to provide training and support this year to diagnose the level of carbon neutrality response based on the responses of suppliers last year and to help them build a climate change response system.In addition,Kia has a LCA(Life cycle assesment)support program for products to help our suppliers calculate the carbon emissions of their products from raw material extraction to manufacturing to delivery to us.For this activity,we collaborate with an external expert organization to help our suppliers calculate their carbon emissions on an individual component basis and identify high-carbon processes to identify areas for reduction.Running a Supplier Carbon Reduction Support ProgramSupporting energy efficiency facilities for reducing carbon emissions at suppliers business sites Helping suppliers pay for equipment to increase energy efficiency,such as air compressors,high-efficiency inverters,LED lighting,and more.Joining the CDP Supply ChainJoining the CDP Supply Chain to request carbon-related disclosures from suppliers Enhancing supplier competitiveness to respond to global regulations and disclose information related to carbon neutrality and climate change Supply Chain Carbon NeutralityEstablishing a supply chain carbon emissions calculations and management systemEmpowering supplier to achieve carbon neutrality and driving carbon reductions for suppliersApplying low-carbon and recycled materialsUpstreamKia OperationDownstreamCreating the Carbon Neutrality Guide for SupplierCreating the Carbon Neutrality Guide for Suppliers Building a greenhouse gas response system Managing supply chain carbon reductions Disclosing greenhouse gas emissions information Defining supplier responsibilities and rolesCarbon Neutrality Guide for Suppliers Climate ChangeIntroduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook33Kia Sustainability Report 2024Improving Fuel and Energy Efficiency to Reduce End-of-use EmissionsDeveloping Technologies to Improve Fuel Efficiency Kia is enhancing fuel efficiency and reducing carbon emissions in its vehicles by improving aerodynamics and developing new technologies.These include optimizing the design of various car parts,improving cooling resistance,and creating the third-generation Smartstream powertrain for better fuel injection.Additionally,Kia employs integrated flow control valves,continuous variable valve duration systems(CVVD),and low-pressure exhaust gas recirculation(LP-EGR)to further reduce emissions.Enhancing the Credibility Of Fuel Efficiency Tests Kia complies with fuel efficiency laws and regulations in our major markets,including Korea,North America,and Europe,and conducts fuel efficiency certification tests according to each countrys standards.To improve the reliability of fuel efficiency and emissions measurements conducted under controlled conditions(on cycle),we have our fuel efficiency measurement facilities inspected by external expert organizations such as the Korea Laboratory Accreditation Scheme(KOLAS)and the Korea Automotive Technology Institute(KATECH).We also conduct fuel efficiency tests in collaboration with various national research institutes to ensure the credibility of our fuel efficiency measurement results.The results of the on-and off-cycle test comparative analysis are reported at least annually to the executive in charge of R&D.On-Road(Off-Cycle)Fuel Efficiency Test A vehicles fuel efficiency is affected by various variables,including internal factors such as gearshift,vehicle weight,and air conditioning,as well as external factors such as road conditions and traffic.As such,in addition to fuel efficiency testing under controlled conditions(on-cycle),we conduct off-cycle testing by applying driving profiles similar to real-world roads.Collaboration with Third-party Organizations Kia conducts a correlation analysis between our real-world fuel efficiency test results and those of other organizations.In the US market,we compare to fuel efficiency data published by third-party organizations such as the EPA,J.D.Power,and Consumer Reports,and in the European market,we compare to data from third-party organizations such as Green NCAP,Auto Bild,and Spritmonitor.We compare our fuel efficiency measurements with third-party organizations in each country to increase the credibility of our fuel efficiency test results.Energy Efficiency and Battery Efficiency Kia is committed to ensuring the reliability of high-quality batteries and improving the commercial value of our batteries.Kias EV batteries are designed to last up to 250,000 to 300,000 km at 70 to 80ttery performance,which translates to 12 to 15 years of cumulative use assuming customers drive 20,000 km per year.Contribution to Carbon Emission Reduction through the Launch of Excellent EV Productsfacilities to decreasing carbon emissions during product usage by producing high-quality electric vehicles.Kia continues to lead the domestic and global EV markets with successive launches of outstanding EV products.Moving forward,Kia aims to steadily increase sales and market share of EV vehicles.By enhancing its lineup and advancing technology efforts to satisfy a broader range of customers,Kia plans to expand the share of EV vehicle sales to 52%in key markets by 2030.Strategy|Carbon Neutrality Strategies in the Product Use PhaseStrategies to Become a Tier 1 EV BrandLong-Term EV Lineup PlanNew Line-up20232024202520262027Vehicles in Operation(2027)1EV3141113PBV-1-12EV Total3151215UpstreamKia OperationDownstreamExpanding charging infrastructure Korea:Targeting the construction of over 5,400 public superfast charging stations by 2030 International:Targeting the construction of over 30,000 charging stations in North America and 17,000 charging stations in Europe by 2030Enhancing the EV Lineup Launching 15 models by 2027(including PBVs)Expanding EV sales Targeting the international sales of 1.6 million EVs in 2030 Targeting the sales of 1.37 million EVs in key markets including Korea,North America,Europe,and China in 2030Strengthening the competitiveness of batteries Offering various battery options Ensuring the steady supply of batteries through purchase bids and expanding JVsFlagship EVBuilding an innovative image with the launch of EV6 and EV9Volume EVLeading the popularization of EV with EV3 and EV4 deploymentPBVCreating new business to acquire new growth engines1.Including vehicle models released from 2021 to 2022Climate ChangeIntroduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook34Kia Sustainability Report 2024Kia has identified risks and opportunities due to climate change,comprehensively analyzed causal factors and business impacts,and developed countermeasures to mitigate individual risks.Strategy|Climate Change-related Risks and Opportunities in the Short,Medium,And Long TermTypeIdentified riskPeriodKey potential financial impactsKias Response PlanPolicyRising prices of domestic emissions trading programsShort-termIncreased operational costsKia has been participating in Korean emissions trading scheme as an allocated company since 2015.We are obligated to comply with allocated emissions through the reduction activities of greenhouse gas and energy.For emissions that exceed the allocated amount,additional emissions allowances must be secured.If the purchase of emissions allowances is insufficient,a fine of three times the average price for the implementation year may be imposed according to the Enforcement Decree of the Act on the Allocation and Trading of Greenhouse Gas Emission Permits.In order to proactively respond to increasing financial burdens,such as stricter carbon emissions regulations and the purchase of emissions allowances,Kia predicts carbon emissions by major energy sources and sets target emissions through the Global Energy-Greenhouse gas Management System(GEMS)installed at AutoLand in Korea.Furthermore,we aim to minimize future financial burdens by preemptively implementing various reduction measures,such as developing and adopting new energy-saving technologies,switching to renewable energy,and self-generating electricity,including solar power.LegalTighter emissions standards for ICE(internal combustion engines)Vehicle in EuropeShort-termFines and litigation risksThe EU plans to reduce 100%of carbon emissions from passenger vehicles by 2035 and has banned the sale of new internal combustion engines from 2035.As the EUs emissions regulations for internal combustion engine vehicles are becoming stricter,the potential for fines and litigation risks for non-compliance is increasing.Kia plans to proactively respond to the 2035 internal combustion engine regulations by expanding the global EV sales share from the current 30%to 38%,and increasing the European EV sales share from the current 63%to 79%by 2030.TechnologyInstability of supplying raw materials for electric vehicle batteries Short-termDecreased salesAs the transition to EVs accelerates at major automakers,Securing the supply of battery raw materials is becoming increasingly important.Kia is already progressing with confirmed parts sourcing for current development models.Additionally,for the long term,Kia plans to expand its battery supply capacity from a mere 22GWh as of 2023 to 139GWh by 2030 by increasing joint venture partnerships and other stable supply strategies.ReputationIncreasing demands for climate change disclosureShort and mid-termDecreased enterprise value Increased response costsGlobal companies are increasingly being asked by a wide range of stakeholders to transparently disclose their climate change policies and responses,which are directly affects to their reputations.Non-financial information is increasingly being used as a key measure of a companys investment value alongside financial information by major global sustainability metrics such as the CDP and DJSI.In addition,investment in corporate social responsibility is a growing trend.As such,Kia recognizes the need for a more long-term and proactive approach to business management,considering not only financial factors but also non-financial factors that affect corporate sustainability,such as ESG factors.Since joining CDP in 2018,Kia has and will continue to disclose climate change information transparently to meet the high expectations of our stakeholders.Transitional riskUpstreamKia OperationDownstreamClimate ChangeIntroduction Sustainable&Future Focus Our Priorities Material Topics Sustainability Progess ESG Factbook35Kia Sustainability Report 2024Kia has identified risks and opportunities due to climate change,comprehensively analyzed causal factors and business impacts,and developed countermeasures to mitigate individual risks.TypeIdentified riskPeriodKey potential financial impactsKias Response PlanAcuteDamage to business from extreme weather Short-termIncreased operational costsWhen Kia assessed climate risks based on the location of our production sites,it was found that physical risks such as landslides and cyclones existed for seven out of eight sites.In response,Kia has established a proactive preparedness system in case of physical hazards such as floods and typhoons.In 2020,AutoLand Gwangju experienced flooding caused by torrential rains that shut down the line,resulting in 1,189 vehicles being flooded.The estimated damage recovery costs were approximately KRW 12 billion.As physical damages are likely to recur in the future and are considered a key risk,Kia has developed an emergency response manual and is identifying and managing expected risks in the event of a disaster through regular facility inspections and maintenance and thorough safety management.ChronicOperational disruptions due to changes in average precipitation Long-termIncreased operational costsDecreased salesIn preparation for a decrease in average precipitation,Kia is considering plans such as developing water recycling technologies and improving facilities,as well as building a zero-discharge system through internal deliberations.Difficulties in supplying water due to changes in average precipitation can affect operating costs by increasing the unit cost of water.If product quality is reduced due to poor water quality,there is the potential for lower sales resulting in lower revenues.Depending on the cause and magnitude of the damage,if presumed at 1%of total revenue,the damages are expected to be approximately KRW 998 billion.To counter this,Kia is installing a tertiary RO(reverse osmosis)membrane to recycle the wastewater through the RO system.AutoLand Gwangju has introduced RO systems at Plant 2,and AutoLand Gwangmyeong,Hwaseong,and Gwangju plants 1 and 3 have already completed construction in 2017 and 2018 to maximize the amount of wastewater recycled and used.We are also working to reduce water use by reviewing and improving our industrial water infrastructure,and we are monitoring water quality around the clock to ensure that our products
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2023SustainabilityReportFifth Third BancorpContentsIntroductionA Message from our Leaders3A Message from the Board of Directors5About This Report7Our Approach to Sustainability9Sustainable Financial Performance and Business Strategy14$100B Environmental and Social Finance Target 21 Strengthening our CommunitiesAccelerating Racial Equality,Equity and Inclusion23Community Impact28Financial Education,Access and Stability36Corporate Citizenship and Philanthropy43 Promoting Inclusion and DiversityFostering an Inclusive Culture49Employee Demographics50Multicultural Recruitment Strategy51Connecting and Serving53Supplier Diversity56Delivering our Commitment to EmployeesStrategic Priorities60Employee Voices Matter61Empowering Employee Development62Recruiting the Best and Brightest65Performance Management66Talent Management Process67Compensation68Caring for Employees69 Keeping the Customer at the CenterBusiness Segments73Innovative and Inclusive Products75Responsible Banking81 Addressing Climate ChangeClimate Strategy86Transition to a Sustainable Future87Climate Risk Management91Our Environmental and Carbon Footprint96Environmental Data103GovernanceCorporate Governance105Business Ethics109Public Policy and Government Relations111Enterprise Risk Management112Customer Privacy and Information Security115Third Party Management119 Appendix2023 Sustainability ReportContentsIntroductionCommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix1Introduction IN THIS SECTIONA Message from our Leaders3A Message from the Board of Directors5About This Report7Our Approach to Sustainability9Fifth Thirds Corporate Responsibility Office9Purpose and Vision9Stakeholder Engagement and Materiality Assessment11United Nations Sustainable Development Goals12Sustainability Priorities and Performance Metrics13Sustainable Financial Performance and Business Strategy14Corporate and Economic Profile14Markets Served15Strategic Planning16Sustainable Financial Performance17Awards and Accolades18$100B Environmental and Social Finance Target 21 2023 Sustainability ReportContentsIntroductionCommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix2A Message from our LeadersAt Fifth Third,we believe great banks distinguish themselves not by how they perform in benign environments,but rather by how they navigate challenging ones.In that sense,2023 was a good year to mark our progress against our ambition to be the One Bank people most value and trust.Great banks also deliver for their stakeholders:investors,communities,customers and employees.In 2023 we delivered top quartile profitability,the best core deposit growth and the best shareholder return among all regional peers who did not participate in a FDIC-assisted transaction.This allowed us to invest in our key priorities.When other institutions were cutting,we stayed strong.We are committed to consistent and strategic investments to generate long-term value for all our stakeholders.As we pursue our operating priorities of stability,profitability and growth,we do so in a way that enables a strong,stable future for our communities and the planet.Our sustainability priorities are guided by our intention to provide leadership across a range of critical,interconnected issues.At our core,were a relational company,which means our success begins and ends with personal connectionhow we interact with our shareholders,our customers,our communities and each other.Were a purpose-driven company,and were applying our head,heart and hustle to make an impact and drive positive change across our footprint.Strengthening Our Communities Strong banks need strong communities,and strong communities need strong banks.We provide financial support to our communities,but more than that,we believe its our responsibilityand frankly,our great privilegeto be the bank that catalyzes transformative,generational changes and creates economic mobility for the historically underserved across our footprint.We are focused on creating affordable housing,developing inclusive and sustainable economies,creating opportunities for financial access,providing education and stability,and developing the workforce.We continued our focus on funding investments and loans that support the creation and revitalization of housing properties.Many of these developments are providing homes to low-and moderate-income individuals and families and allowing seniors to age in place.As part of our$100 billion,10-year environmental and social finance target from 2021-2030,we provided over$2.6 billion of financing in eligible affordable housing last year.This commitment created and preserved over 3,684 units of housing.By the end of 2023,we delivered$199.1 million through our Empowering Black Futures neighborhood program,surpassing our original financial commitment in the second year of the three-year program.As a result,we also extended the technical assistance aspect of the program to a fourth year to ensure the work weve done with our nine neighborhoods is sustainable.We also laid the groundwork in 2023 for significant progress toward our financial education and workforce commitments,including a$1 million grant to the National Urban League to continue a comprehensive workforce development program.We reimagined our eBus,which has been providing credit counseling,job search help and financial education in underserved communities for 20 years.In 2024,the eBus will connect customers with immediate access to necessary social services and create financial access with immediate account opening capacity.Were also enhancing our digital Fifth Third Bank Finance Academy and other financial education programs to junior high schools and college students.Fifth Third also supports our communities through direct investment of time and resources.In 2023,our total philanthropicgiving was$35.3 million,and our employees logged 110,697 volunteer hours.We financed$19.6 billion in social projects as part of our$100 billion environmental and social target.This included over$177 million financed for essential services to low-and moderate-income communities and over$1 billion for employment generation.Promoting Inclusion Inclusion is essential to creating a future with equal access and opportunity for all to thrive.In 2023,we surpassed our$2.8 billion commitment to the Accelerating Racial Equity,Equality and Inclusion initiative through which we championed a more inclusive world by providing underserved communities with funding for strategic investments,access to capital,economic inclusion and financial education.We delivered a total of$3.7 billion in support of our aspirations under AREEI.2023 Sustainability ReportContentsIntroductionCommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix3Tim Spence,Chairman,CEO and PresidentKala Gibson,Chief Corporate Responsibility OfficerWe also continued our leadership in supplier diversity in 2023,with a combined spend across Tier 1 and Tier 2 categories of$189.2 million.Our Tier 1 spend has grown significantly from$7.5 million in 2014 to$122.52 million in 2023.We are proud to be named“Best of the Decade”for our supplier diversity program by Minority and Multicultural Business News.For the ninth consecutive year,the Bank received a 100%rating on the Corporate Equality Index,administered by the Human Rights Campaign Foundation.We were again listed on Forbes Best Employers for Diversity in 2023 and named as one of the Best Places to Work for People with Disabilities.Our business resource groups(BRGs)continue to be a vital way for employees to network,learn and volunteer in our communities.More than 5,100 of our employees participate in BRGs,a 13%increase since 2022.Our enterprise-wide Sustainability BRG,which debuted in August 2022,grew to over 1,000 members in its first 16 months.Delivering on our Commitment to EmployeesThe hallmark of Fifth Thirds success lies with passionate,diverse and talented employees who are united around our core values.We want employees to feel connected to their colleagues,to leadership and to our customers and communities as we collaborate,create and innovate to make a difference in the lives of others.Last year,we invested to strengthen our employee experience and value proposition.We increased opportunities for development and career mobility while continuing to offer competitive pay and benefits.In our 2023 Employee Viewpoints survey,91%of employees said we are meeting or exceeding expectations;79%would recommend Fifth Third as a great place to work;and 75%intend to stay at the Bank for more than three years.Keeping the Customer at the CenterFor our customers,we are committed to innovating with technology while building strong human relationships and connections.This means that we work to provide reasonably priced products that are accessible to all consumers in all markets,and that the right types of responsible products and services are offered with clear terms and disclosures.By doing so,we can build lasting customer relationships and meet our responsibility to help them prosper.Early this year,we were named one of Forbes Best Brands for Customer Service.Our client satisfaction scores across our key business lines are all above 93%.Retail satisfaction is at 93%,Commercial relationship manager satisfaction is at 97%,and our Private Bank satisfaction is at 96%.J.D.Power also named Fifth Third Bank No.1 for Retail Banking Satisfaction in Florida as part of its 2024 U.S.Retail Banking Survey early this year.We continue to enhance our award-winning Fifth Third Momentum Banking checking and savings accounts.The products Early Pay feature,which enables customers to get access to their paychecks up to two days early,was expanded in 2023 to include tax refunds.The feature enabled access to tax refunds up to five days early.Since 2021,800,000 customer accounts have benefited from Early Pay,representing early deposits of$30 billion.Also,Fifth Third Momentums Extra Time feature,which gives customers extra time to make a deposit and avoid overdraft fees,continues to help our customers.In 2023,$58 million in fees were avoided.Last year,we began offering Special Purpose Credit Programs to increase homeownership and access for low-income borrowers.In early 2024,we launched our own SPCP that is helping to open the doors of new homes for customers who once thought homeownership out of reach.Addressing Climate ChangeOur holistic approach to addressing climate change includes supporting a sustainable transition,managing climate-related risks,and managing our operations sustainably.Our$100 billion environmental and social finance target is designed to help our customers and communities transition to a lower-carbon future that is more inclusive and sustainable.As of Dec.31,2023,we delivered$15.6 billion in environmental financing and more than$2.3 billion in sustainable debt toward our goal.A sizeable portion of our environmental and social finance activity comes through Dividend Finance,a leading financial technology lender based in San Francisco,that we acquired in May 2022.Dividend provides homeowners with financing for residential solar and other energy-efficient home improvement projects.Dividend is the second largest residential solar lender in the United States,providing over$6 billion in renewable energy and energy-efficient lending toward our goal.Recognizing climate change as an emerging risk,we have grown our internal capacity to understand how climate-related risks impact our communities and our customers.This work involves engaging our clients to better understand the opportunities and risks they are facing so that we may continue to be a partner as they navigate the future.We also are making significant progress against our new,operational sustainability commitments to be achieved by 2030.These include reducing our location based scope 1 and 2 GHG emissions by 75%and continuing to purchase 100%renewable power.Recent achievements include expansion of our employee and customer electric vehicle charging network and solar panel installations at 20 financial centers.We made great strides in 2023 and earned significant recognition.Time Magazine named us among the Worlds Best Companies.Ethisphere included us on its list of the Worlds Most Ethical Companies for the fifth time,one of only four banks.And,for the second year,JUST Capital included us on its JUST 100 list in recognition of our commitment to our employees,customers,communities,the planet and shareholders.We are proud of our accomplishments in 2023 and recognize that there is still much more to do.Thank you for your continued confidence and for working with us to create a more inclusive and sustainable world for us all.Sincerely,Tim N.SpenceChairman,CEO and PresidentKala GibsonChief Corporate Responsibility Officer 2023 Sustainability ReportContentsIntroductionCommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix4A Message from the Board of DirectorsNOMINATING&CORPORATE GOVERNANCE COMMITTEEOversees the Companys Sustainability program,including practices and reporting related to environmental topics,governance practices and other corporate social responsibilities thatare significant to our business and stakeholders.“Our commitment to outstanding work in corporate sustainability is driven by our understanding of the role financial institutions play in our society.We are committed to our five sustainability priorities and a standard of excellence in our sustainability programs.They are fundamental to Fifth Thirds core values.”RISK&COMPLIANCE COMMITTEE Oversees risk management practices,including sustainability topics such as enterprise risk management,information security and data privacy.The RCC held 10 meetings in 2023.“Our core values and culture provide a foundation for supporting sound risk management practices.Weve built a strong foundation that allows us to provide better solutions for our customers in all economic environments,while ensuring regulatory and operational excellence.We are diligent in our efforts to assess and implement solutions that will best protect our stakeholders.”2023 Sustainability ReportContentsIntroductionCommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix5Nicholas K.Akins,Lead Independent Director“As a Board,we oversee Fifth Thirds corporate sustainability priorities,strategy and performance.Leading this effort is our Nominating&Corporate Governance Committee,which has direct responsibility for overseeing the sustainability practices that are fundamental to the Banks operations.This includes matters related to Fifth Thirds five corporate sustainability priorities,which are Board approved.In 2023,the full Board met seventeen times and the NCG Committee met four times.Topics discussed at length were the new proposed Securities&Exchange Commission rules related to climate disclosures,financed emissions reporting,and progress updates on major Fifth Third initiatives,including the Banks$100 billion environmental and social finance target.The NCG Committee also reviews Fifth Thirds sustainability-related publications,including this report and the Task Force on Climate-related Financial Disclosures Report.In addition,upon the NCGs recommendation,the Board approved the appointments of two diverse Directors in 2023:Laurent Desmangles and Kathleen Rogers.Our remaining committees are focused on sustainability through their specific areas of responsibility.All Board members are committed to excellence and to implementing strong policies,procedures and practices to ensure we are delivering value to all of our stakeholders.”Thomas H.Harvey,ChairMitchell S.Feiger,ChairAUDIT COMMITTEE Oversees the integrity of our financial reporting and governance programs.The Audit Committee met 12 times in 2023.“The Audit Committee provides oversight of Fifth Thirds policies,procedures and controls to ensure they meet our standard of excellence.This oversight is vital to foster accountability and transparency,a key part of commitment to leadership in corporate sustainability.”FINANCE COMMITTEE Exercises all the powers of the Board in management of business,properties and affairs during the intervals between meetings of the Board of Directors.Finance met twice in 2023.“Fifth Third Bank is committed to generating and maintaining sustainable value for all stakeholders.Through a collaborative,One Bank approach,we consistently validate the soundness and inclusivity of our strategic financial planning processes.”HUMAN CAPITAL&COMPENSATION COMMITTEE Oversees strategies and policies regarding compensation,talent management,and succession planning and other employment practices The HCC Committee met five times in 2023.“We are committed to delivering on our commitments to our workforce,including strengthening the employee experience and employee value proposition.We also are focused on career mobility and development opportunities and ensuring employees are rewarded competitively for their investments of their time and talent.”TECHNOLOGY COMMITTEE Oversees our technology,information security and data privacy strategies,which are critical to the interests of all stakeholders.In 2023,the Technology Committee met four times.“Protecting our customers financial and information assets is a top priority at Fifth Third.We are focused on continuous innovation in the assessment,monitoring and enhancement of technology to provide best-in-class security and peace of mind.”2023 Sustainability ReportContentsIntroductionCommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix6Eileen A.Mallesch,ChairGary R.Heminger,ChairMichael B.McCallister,ChairJorge L.Benitez,ChairAbout This ReportDelivering on our sustainability strategy,priorities and commitments is key to Fifth Thirds ability to generate long-term sustainable value for all our stakeholders.We are publishing the 2023 Sustainability Report to provide transparency into our progress.Since our 2019 ESG Report five years ago,we have been reporting in accordance with the Sustainability Accounting Standards Board sustainable industry classification system for Commercial Banks,Consumer Finance and Mortgage Finance.In addition,we have been reporting on Global Reporting Initiative Standards core option,which includes general disclosures as well as topic-specific disclosures relevant to Fifth Third.In December 2023,we published our third Task Force on Climate-related Financial Disclosures Report to continue disclosing progress made in our climate journey.In March 2024,we published our first Financed Emissions Disclosure fulfilling a commitment made when we joined the Partnership for Carbon Accounting Financials in 2021.We began reporting on Stakeholder Capitalism Metrics recommended by the World Economic Forum in our 2020 ESG Report.Refer to the Appendix for details.We make independent business decisions for the Company.We make business decisions to advance the long-term interests of our Company and its shareholders.This includes serving our clients,supporting our employees,helping our communities,and addressing climate change.We work with a broad array of organizations that may help advance those interests,even if we dont always support every position they take.Regardless,we make our own decisions,independently and based on our business principles.We manage risk.Managing risk is critical to the long-term success of our business and required by our regulators.We make risk-based assessments,including legal,credit,market,reputational and regulatory,to drive decisions and advance the interests of our constituencies.We want to compete.Our ability to compete,in both established and new markets,is critical to the long-term success of our business.We decide where and how we choose to compete by assessing risk and opportunity,not to further political or social agendas.We dont boycott any legal business.We support clients across industries,religions and political affiliation.We proudly serve more than 5.1 million consumer customers in the U.S.,320,000 small businesses and 19,000 Commercial and Business Banking clients.We consider each client and prospective client on an individual basis,considering risk to the Bank,financial return and our ability to meet the clients unique needs.We do not make decisions based on political or social agendas.We value engagement.We believe the best answers reside in engagement and discourse.When policymakers seek input to tackle challenges,we want to help.We know that our success requires working closely with government and stakeholders on sound public policy that grows the economy and lifts up communities.We have engaged with officials from all parties to address the most pressing needs of the businesses and communities we serve,and we look forward to continuing to do so.We are committed to accuracy and transparency.Our data governance process uses the three lines of defense methodology(see Page 114 for details)for accountability and managing risks.This includes certifications from the content contributors who constitute the first line of defense.The report is reviewed by legal and other second line of defense functions and it also is subject to review as part of the Companys audit program(third line of defense).The report is reviewed and overseen through governance committees,including the Sustainability Disclosure Council,Sustainability Committee,Nominating and Corporate Governance Committee and the Board of Directors.Data in this report covers Jan.1 through Dec.31,2023,unless otherwise noted,and the narrative may include updates in 2024 where applicable.2023 Sustainability ReportContentsIntroductionCommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix7A note on“materiality”.This report uses certain terms,including“material”topics,to reflect the issues of importance to Fifth Third and our stakeholders.Used in this context,these terms are distinct from and should not be confused with the terms“material”and“materiality”as defined by or construed in accordance with the securities laws or as used in the context of financial statements and reporting.A note on our goals&targets.We set targets to do our part in seeking a sustainable and inclusive future using our own independent assessment of what we determine is reasonable,achievable and will serve the best interest of our business and serving our clients.While we pursue these targets,we note that they are subject to other prerequisites and critical considerations,both within and outside our control.These include the necessity of technological advancements;data quality and availability;the evolution of consumer behavior and demand;the business decisions of our clients,who are responsive to their own stakeholders;the need for thoughtful public policies;the potential impact of legal and regulatory obligations;market conditions;and the challenge of balancing short-term targets with the need to facilitate an orderly transition and energy security.A note on the evolving state of sustainability disclosures.The state of ESG and sustainability disclosures is evolving.In the absence of a regulatory framework,we base our sustainability reporting on certain industry acknowledged reporting standards and frameworks.As such,certain information,including scope,definition and expectations regarding aspects of corporate sustainability may change,which in turn may trigger appropriate changes in our strategy,processes and practices.All information in this report is current as of the date of publication.We undertake no obligation to update the information in this report or otherwise notify the reader in the event that any views,opinions or facts stated in this report change or subsequently become inaccurate.A note on the use of this report.This report is for general informational purposes only and does not constitute an offer or sale of any securities issued by Fifth Third Bancorp.All such offers and sales shall be made only pursuant to an effective registration statement filed by Fifth Third Bancorp with the Securities and Exchange Commission and a current prospectus.The information in this report shall not be deemed to be incorporated by reference in any filing under the Securities Exchange Act of 1934 or the Securities Act of 1933,except as shall be expressly set forth by specific reference.This report is not comprehensive and contains only voluntary disclosures on important sustainability topics.For that reason,this report should be read in conjunction with our 2023 Annual Report on Form 10-K and our Form 10-Q for the quarter ended March 31,2024(particularly the“Forward-Looking Statements”and“Risk Factors”sections of both filings)and 2024 Proxy Statement,all of which can be found on .2023 Sustainability ReportContentsIntroductionCommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix8Fifth Third Supports Key Sustainability InitiativesRefer to our Investor Relations webpage for our SASB,GRI and SCM data as well as our latest TCFD Report.Our Approach to SustainabilityPurpose and VisionOur approach to corporate sustainability is rooted in our purpose:to improve the lives of our customers and the well-being of communities.We believe in the philosophy of doing well by doing good and focusing on generating long-term sustainable value for our stakeholders,including shareholders,customers,employees,communities and regulators.This continued focus drives us toward achieving our vision to be the One Bank people most value and trust,which is why we do what we do.Our core values guide how we act and interact with each other while working toward our vision.2023 Sustainability ReportContentsIntroductionCommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix9Fifth Thirds Corporate Responsibility OfficeOur commitment to sustainability is integrated across our Company and in our strategic planning.In March 2022,Fifth Third established the Corporate Responsibility Office led by Kala Gibson,executive vice president and chief corporate responsibility officer.The Responsibility Office works to create an inclusive and sustainable economy for all of Fifth Thirds stakeholders by delivering on the Banks five sustainability priorities.It accomplishes this through the work of five integrated teams:community impact banking,community development banking,inclusion,philanthropy and corporate sustainability.The Sustainability Office directs our corporate sustainability strategy,sustainability reporting and governance.The sustainability office is led by Pratik Raval,chief sustainability officer,who assumed the position in March 2024.Board of DirectorsTim SpenceChairman,CEO and PresidentKala GibsonChief Corporate Responsibility Officer Keith BurgessHead,Community Development Banking Group Jada Grandy-MockChief Community Impact Banking Officer Pratik RavalChief Sustainability Officer Stephanie A.SmithChief Inclusion OfficerSupport Partners Enterprise Risk Management.Enterprise Workplace Services.Finance.Human Capital.Legal.Lines of Business.Marketing&Communications.Technology&Information Security.MelissaBlount-GarnerHead,CRO Strategic Initiatives&Giving Introducing Fifth Thirds Chief Sustainability OfficerFifth Third Bank welcomed Pratik Raval as chief sustainability officer in March 2024.Raval joins Fifth Third with more than 20 years of global experience in corporate sustainability and environmental,social and governance,including business strategy,financial product and service innovation,design and technology integration,and reporting and communication.He was recognized by the Consulting Report as one of the Top 25 Sustainability Consultants&Leaders for 2022 and by CEO Magazine Global as among the Top 20 Thought Leaders in Sustainability from around the world.He also was named a World Economic Forum Expert in sustainability development,climate change and innovation.He previously held positions at Tata Consultancy Services(USA),American Express(USA),Massachusetts Institute of Technology(USA),Transsolar ClimateEngineering(Germany)and Mercedes Benz Group(Germany).“At its core,sustainability is a strategic approach for creating socioeconomic value for shareholders,business partners and communities in addition to communicating our values to these stakeholders,”said Raval.“Its a distinct privilege to join a Company that is as committed to a holistic approach to sustainability as Fifth Third.Companies that operate with strong socioeconomic purpose and a clear sustainability strategy can really do well by doing good.”Raval is a member of Fifth Thirds management committee and reports to Executive Vice President Kala Gibson,chief corporate responsibility officer.Sustainability CommitteeIn 2020,the Nominating and Corporate Governance Committee of the Board of Directors established the Sustainability Committee(previously named the Environmental,Social and Governance Committee)with a charter to provide oversight and review of the Banks policies,programs,practices,strategies and approach to relevant sustainability topics.In 2022,the Sustainability Committees membership was elevated to include the Chairman,CEO and President,as well as other members of the senior executive leadership team.Updates on sustainability topics are regularly given to the NCG Committee as well as to the Board of Directors throughout the year.Members of the Sustainability Committee:Chief Corporate Responsibility Officer(chair).Chief Community Impact Banking Officer.Chief Human Resources Officer.Chief Inclusion Officer.Chief Legal Officer.Chief Operating Officer.Chief Risk Officer.Chief Sustainability Officer.Head of Enterprise and Non-Financial Risk.Head of Commercial Bank.Head of Community Development.Group Regional President and Head of Wealth&Asset Management.Chairman,CEO and President.Senior Deputy General Counsel.Senior Director,Investor Relations.Chief Audit Executive(non-voting member).2023 Sustainability ReportContentsIntroductionCommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix10“Its a distinct privilege to join a company committed to a holistic approach to sustainability.”Pratik Raval,Chief Sustainability OfficerStakeholder Engagement and Materiality AssessmentIn 2020,Fifth Third completed our first stakeholder materiality assessment to determine which sustainability topics are most material to our Company.Based on the feedback we received from the stakeholder survey and through discussions with our executive leadership team,we identified and prioritized the sustainability topics below according to their relative degree of importance in our 2019 ESG Report.We used the results for our materiality assessment to guide our sustainability strategy,disclosures and reporting.In 2022,Fifth Third engaged a leading third party to update our materiality assessment through key stakeholder and company interviews and surveys.The materiality assessment was reviewed and approved by the Nominating&Corporate Governance committee of our Board of Directors.All topics below,it should be noted,are important to the Company.We continue to use the results from our prior materiality assessments and periodic stakeholder engagements on specific sustainability topics,such as a Community Needs Assessment that was deployed to community stakeholders early in 2024,to manage particular nuances related to strategy,disclosures and reporting for any of the five sustainability priorities.Fifth Third is committed to repeating the materiality assessment process on a periodic basis.In the interim,and additionally,we continue to engage with various stakeholder groups as identified in the table to the right.Each of the sustainability topics below are integrated into our business strategy and support our focus of delivering sustainable financial performance.2023 Sustainability ReportContentsIntroductionCommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix11StakeholderMethods of engagementShareholdersAnnual shareholder meeting,quarterly earnings calls,investor conferences and presentations,meetings with investor relations team and executive management,SEC filings and dedicated investor relations website.In addition to our regular and continuing meetings with shareholders and investors,since 2021,we reach out annually to our largest shareholders to engage on specific ESG topics including climate strategy,inclusion,corporate governance,executive compensation and other ESG topics.CustomersFocus groups,conversations through branch interactions and phone calls,satisfaction surveys,social media interactions,customer helplines and corporate website.EmployeesEngagement survey,executive leadership communications,learning programs,business resource groups and inclusion councils,performance and development initiatives,and corporate intranet.CommunitiesNational Community Advisory Forum,periodic Community Needs Assessments,financial education and outreach programs,philanthropic investments,civic memberships,volunteerism and nonprofit board engagement,and corporate website.RegulatorsExams,continuous monitoring and other meetings with senior management,interactions through regulatory affairs and government affairs teams,and regulator-sponsored events and initiatives.Other Methods of Ongoing Stakeholder EngagementCorporate citizenship&financial inclusionCustomer privacy&information securityBusiness ethics&responsible bankingThird-party managementEnvironmental sustainabilityInclusion&diversityPublic policy&government relationsEnterprise risk management&corporate governanceEmployee engagement&developmentUnited Nations Sustainable Development GoalsFifth Third has aligned our sustainability strategy and disclosures to recommendations from the United Nations.This includes supporting the fundamental principles of human rights across all our business activities,which are guided by the principles set forth in the United Nations Universal Declaration of Human Rights,as well as aligning our sustainability strategy and efforts with the Sustainable Development Goals beginning in 2020.These goals are a universal call to action to end poverty,protect the planet and improve the lives and prospects of all people.The 17 goals were adopted by all UN member states in 2015 as part of the 2030 Agenda for Sustainable Development,which set out a 15-year plan to achieve the goals.At Fifth Third,we believe we have a role to play in furthering all 17 goals.However,14 align especially well with our sustainability priorities,and we have taken actions to make progress on them:In June 2022,Fifth Third furthered our support for the United Nations by becoming one of the few U.S.commercial banks to sign on to the UN Global Compact,a voluntary initiative based on CEO commitments to implement universal sustainability principles and take steps to support UN goals.In addition to providing a communication on progress to stakeholders,this commitment includes an annual financial contribution to support the global and country-level operations of the UN Global Compact.These contributions are vital to the initiatives ability to provide a robust framework for corporate change and innovation around sustainability issues.2023 Sustainability ReportContentsIntroductionCommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix12Fifth Thirds Aligned Sustainable Development GoalsNo PovertyPages 23-48Zero HungerPage 46Good Health and Well-BeingPages 69-71Quality EducationPages 36-37,40-42,62-65Gender EqualityPages 48-58,68,81,105,110Clean Water and SanitationPages 88,90,96,100Affordable and Clean EnergyPages 21,87-89,96-100Decent Work and Economic GrowthPages 33,40-42,66-68Industry,Innovation and InfrastructurePages 88Reduced InequalitiesPages 23-26,48-58,75-81,110Sustainable Cities and CommunitiesPages 22-47,89-90Responsible Consumption and ProductionPages 87-90Climate ActionPages 86-102Partnerships for the GoalsPages 3-6,12Sustainability Priorities and Performance MetricsThrough stakeholder engagement and discussions with our senior executive leadership team,the Sustainability Committee identified five priorities.These priorities are incorporated into a qualitative review that can modify variable compensation plan funding for both executives and employees.The metrics below are reviewed regularly and represent key data points of these priorities,which are discussed in further detail in this report.Sustainability priorityPerformance metricUnit of measure202320222021GoalsPageReferencesEnvironmental and Social Finance TargetEnvironmental and Social Finance Target$(billions)$9.5$14.3$13.7$100(2021-2030)21Strengthening our CommunitiesCommunity Reinvestment Act ratingTextOutstandingOutstandingOutstanding28CRA-related small business lending(Revenue$1MM)1$(millions)$730$774$1,170CRA-related mortgage lending(LMI Borrower)$(billions)$1.4$3.2$4.0CRA-related mortgage lending(LMI geography)$(billions)$0.9$2.1$3.4Down payment assistance$(millions)$4.5$3.6$4.131Community development lending$(billions)$0.9$0.9$1.331-35Community development investments$(millions)$358.2$596.0$339.931-35Philanthropic donations$(millions)$35.3$38.8$40.643-47Meals provided to community#(millions)118.44.646People financially educated#162,001165,805164,00036-37Hours of community service#110,697117,68897,05843,46-47Promoting Inclusion and DiversityBoard Diversity Percentage2D65Women in workforceWXYPPay Equity for women(adjusted)0hPersons of color in workforce)(PPay equity for persons of color(adjusted)000hSupplier diversity%of addressable spending.2.0%8.6%by 202556-57Employees enrolled in at least one BRG or inclusion council#5,1924,5183,90954Delivering our Commitment to EmployeesFull-time equivalent employees#18,72419,31919,11214Employee Viewpoints Survey-Participationwra401(k)participationhMinimum wage$per hour$20$20$18Employee training hours#(thousands)78077676562-64Employee turnover.9!fAcknowledgement of Code of Conduct.9.4.0c,81,109-110Compliance training completed.9.9.9c,81Keeping the Customer at the CenterConsumer household growth%2.6%2.5%3.3-84Fifth Third Momentum Banking checking accounts#(thousands)1,8351,55141975Paychecks deposited early with Early Pay#(millions)27.927.66.875Overdraft fees avoided with Extra Time$(millions)$59.5$39.0$15.975Mobile banking users3#(millions)2.92.82.01Zelle transactions(total value)$(billions)$7.6$6.2$4.9Customer outreach calls#(millions)12.612.112.7Number of complaints per million households#71.165.365.183-84Electronic payments volume4$(trillions)14.616.114.6Client Risk Management Transaction Volume#130.60102.1085.80Addressing Climate ChangeRenewable energy lending and capital raising$(billions)$4.3$4.2$1.5$8 by 202587Sustainability bonds underwritten for clients#291221,74,88Sustainability-linked loans#552121,74Net GHG emissions from operations5Mt CO2e00096-101Scope 1 and 2(location-based)GHG emissions reductions6TPIu%reduction by 203096-101Renewable power purchased000%Purchase 100%through 203099Energy consumption reduction6E97%reduction by 203099Water consumption reduction657BP%reduction by 2030100Waste Diversion ratefXdu%diversion rate by 20301002023 Sustainability ReportContentsIntroductionCommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix131 Numbers restated for prior years.Restated numbers are based on a more focused definition of Small/Medium Enterprise.2 In terms of race or gender.As of June 1,2024,board diversity is 44.0%.3 Includes users who logged in at least once in the last 90 days.4 2023 ACH values decreased 11.16%(1.25T)from 2022 due to business process automation in Trust.5 Scope 1,Scope 2 and business travel under Scope 3 emissions.Includes impact from purchased carbon offsets and renewable energy certificates.6 Compared to 2014.Sustainable Financial Performance and Business StrategyBanks play a critical role in the economy and in the communities where we do business.As one of the largest banks in the United States,Fifth Third has supported our communities since 1848 through lending and investments,protecting our customers deposits and providing career opportunities.Corporate and Economic ProfileFifth Third is a bank thats as long on innovation as it is on history.Since 1858,weve been helping individuals,families,businesses and communities grow through smart financial services that improve lives.Our list of firsts is extensive,and its one that continues to expand as we explore the intersection of tech-driven innovation,dedicated people and focused community impact.With a commitment to taking care of our customers,employees,communities and shareholders,our goal is not only to be the nations highest performing regional bank,but to be the One Bank people most value and trust.Fifth Third Bank,National Association,is a federally chartered institution.Fifth Third Bancorp is the indirect parent company of Fifth Third Bank,and its common stock is traded on the NASDAQ Global Select Market under the symbol“FITB.”Investor information and press releases can be viewed at .2023 Sustainability ReportContentsIntroductionCommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix14$2.3 billion2023 full year net income*$215 billionin assets*$169 billionin deposits*18,724full-time equivalent employees*As of Dec.31,2023 unless otherwise noted.Markets ServedAs of Dec.31,2023,Fifth Third operated 1,088 full-service banking centers and 2,104 Fifth Third-branded ATMs in our retail footprint,which includes Ohio,Kentucky,Indiana,Michigan,Illinois,Florida,Tennessee,West Virginia,Georgia,North Carolina and South Carolina.Fifth Third provides customers access to over 40,000 fee-free ATMs across the United States.Outside of our retail footprint,we have middle market and corporate banking offices and provide indirect auto and mortgage lending across the United States.Footnotes1Strong footprint and leading position:No.2 in deposit share in Midwest MSAs and No.6 in high-growth,key Southeast MSAs.Gained or maintained market share rank in all 40 of our largest MSAs.Treasury management relationships with 32 Fortune 100 companies.Top 5 treasury management market share across several TM product categories.2023 Sustainability ReportContentsIntroductionCommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix151 Defined as MSAs with$5BN in capped deposits(branch deposits capped at$250 million per June 2023 FDIC data)Fifth Thirds Footprint1,088full-service banking centers2,104Fifth Third branded ATMs across regional footprint41,000fee-free ATMs nationwideRegional footprintMajor Fifth Third markets8 with a top 10 deposit shareMajor Fifth Third markets1 with a top 5 deposit shareOut-of-footprint middle market and corporate bankingStrategic PlanningStrategic planning is a critical aspect of Fifth Thirds ability to generate sustainable value for stakeholders and consistent financial outcomes.The strategic planning process is designed to deliver a shared understanding of our vision,objectives,tactics and target outcomes,while maintaining risk management excellence and strong governance mechanisms.That shared understanding spans from our Board of Directors to our management and front-line staff,guiding our strategic principles and investments.Our current strategic principles are stability,profitability and organic growth,in that order.Continuing to focus on these strategic principles will enable Fifth Third to continue to deliver sustainable value for our stakeholders,including:Consistent and strong financial results with top tier profitability and a peer-leading efficiency ratio.Consistent customer acquisition and increased satisfaction.Consistent employee engagement,experience and retention.Consistent strengthening of the communities we serve.2023 Sustainability ReportContentsIntroductionCommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix16Stability Run the Bank defensively.Maintain strong credit profile.Adapt quickly to regulatory changes.Profitability Execute at a high level consistently.Produce strong and diversified fee to total revenue mix.Maintain expense discipline through lean process automation and end-to-end value stream efforts.Organic Growth Strengthen our presence in high-growth Southeast markets.Leverage our footprint to capitalize on resurgence of domestic manufacturing and infrastructure spending.Tech-enabled product innovation.Sustainable Financial Performance($IN BILLIONS,EXCEPT PER SHARE DATA)SCALE:15%RETURN ON AVERAGE COMMON EQUITY13.914.513.16.412.813.714.22017201820192020202120222023SCALE:1.50CASH DIVIDENDS PER COMMON SHARE0.60.740.941.081.141.261.362017201820192020202120222023SCALE:$210.00BNAVERAGE ASSETS140.53142.18163.94194.23206.32206.93208.432017201820192020202120222023 SCALE:$175.00BNAVERAGE DEPOSITS102.66104.92121.37148.03162.95163164.182017201820192020202120222023SCALE:750.0COMMON SHARES OUTSTANDING693.8646.6708.9712.8682.8683.4681.12017201820192020202120222023SCALE:1.0%NET CHARGE-OFF RATIO0.320.350.350.420.160.190.3220172018201920202021202220232023 Sustainability ReportContentsIntroductionCommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix17Awards and AccoladesFifth Thirds efforts in sustainability earned recognition between Jan.1,2023,and June 30,2024.This recognition is a testament to the collaborative relationships we have with all of our stakeholders as we work to improve lives in the communities we serve.Honors received for multiple years are noted.Fifth Third Bank named Bank of the Year U.S.by The BankerThe Banker named Fifth Third“Bank of the Year U.S.”in 2023.The annual award program recognizes industry-wide excellence within the global banking industry.“Congratulations to Fifth Third Bank for outshining the competition to win the Bank of the Year award for the U.S.,”said Joy Macknight,editor of The Banker.“The judges were impressed by Fifth Thirds commitment to leveraging technology and innovation to serve its customers.Major achievements include the strengthening of its embedded payments offering and of its private banks Business Transition Advisory Team(BTAT),dedicated to preparing business owners for their succession planning.”In May 2023,Fifth Third announced the acquisition of Rize Money,Inc.,an embedded payments platform that provides payment infrastructure and risk management capabilities to fintechs and other technology companies that want to offer innovative financial products through a single application programming interface.Fifth Thirds win is also attributed to the evolution of its mobile app virtual assistant Jeanie.“I believe great banks stand apart from the rest by how they navigate challenging environments and deliver for their customers,”said Tim Spence.“That is when customers need our advice and support most,and when we can generate outperformance for shareholders.”Judges selected winning banks based on performance,innovation,adding customer value and leadership in society.The Banker selected one winning bank in each of the 120 countries judged.2023 Sustainability ReportContentsIntroductionCommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix18Ethisphere Worlds Most Ethical Companies,2024,2023,2022,2021,2019.Fifth Third Bank was recognized by the Ethisphere Institute,a global leader in defining and advancing the standards of ethical business practices.Fifth Third was recognized for the fifth time in 2024.Time World Best Companies,2023.The Worlds Best Companies 2023 ranking by TIME and Statista Inc.identified the top performing companies across the globe.Organizations were chosen based on three primary dimensions:employee satisfaction,revenue growth and sustainability.Fortune Worlds Most Admired Companies,2024.Fifth Third earned inclusion in this ranking of the worlds most admired companies based on investment value,quality of management and products,social responsibility and ability to attract talent.American Banker namesFourteen Fifth Third Leaders Namedto 2023 Most Powerful Women ListsFourteen of Fifth Thirds female leaders were named 2023 Most Powerful Women in Banking honorees by American Banker.The annual list highlights standout accomplishments of female executives in banking and finance.Most Powerful Women in Banking Bridgit Chayt,executive vice president,head of commercial payments and treasury management.Melissa Stevens,executive vice president,chief marketing officer.Most Powerful Team in Banking Kristine Garrett,executive vice president,group regional president and head,Wealth&Asset Management.Katelyn Browning,vice president and manager,Wealth&Asset Management strategy.Tricia Eltonhead,senior vice president and Private Bank sales practice leader.Jenny Franta,senior vice president,managing director,personal trust.Lori Frischer,senior vice president,managing director,shared services,investment advisers and institutional services.Heidi Jark,senior vice president,managing director,Foundation Office.Frieda Rakhman,senior vice president,managing director,Business Transition Advisory Team and family wealth services.Mary Ellen Reilly,senior vice president,managing director,investment management and trust.Mary Robbins,senior vice president and Fifth Third Wealth Advisors chief investment strategist.Lisa Tesarik,senior vice president,managing director,IMG administration and infrastructure optimization.Marcie Wright,senior vice president,managing director,Private Bank portfolio management.Most Powerful Women in Banking:Next 2023 Jessica Faris,senior vice president,director of credit risk management.2023 Sustainability ReportContentsIntroductionCommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix19JUST Capital Ranking of Americas 100 Most Just Companies,2024,2023.Forbes Best Brands for Customer Service,2024.Fortune Americas Most Innovative Companies,2023.J.D.Power U.S.Retail Banking Satisfaction Study,2024.Fifth Third was No.1 in Florida.Bloomberg Gender Equality Index,2023,2022,2020,2019.Dave Thomas Foundation for Adoption Best Adoption-Friendly Workplaces,2024,2021,2020,2019.Disability:IN,Disability Equality Index,2023,2022,2021,2020.Human Rights Campaign Foundation Corporate Equality Index,2024/2023,2022,2021,2020,2019.Forbes Best Employers for Diversity,2023,2022,2021,2019.Newsweek Americas Greatest Workplaces for LGBTQ ,2024.Global Finance,Best Private Bank Award,2024,2023,2022,2021,2020Global Finance,Best Private Bank for Entrepreneurs,2024.Global Private Banker Private Banking Innovation Awards:Best Private Bank for High Net Worth Clients,2024,2023,2022.WealthBriefing,Wealth for Good Award,Best Bank for ESG Communications Strategy-Americas,Fifth Third Private Bank,2024,2023,2022.WealthBriefing,Wealth for Good Award,Best Bank for ESG Thought Leadership-Americas,Fifth Third Private Bank,2023.Fast Company Most Innovative Company,Provide(a Fifth Third subsidiary),2023.U.S.Environmental Protection Agency Green Power Top 100 Partner Award for green power use,2023.Energage,Top Workplaces USA Award,2024,2023,2022.Celent Model Awards,Model Risk Manager award,2023.Medical Mutual Pillar Award for Community Service,Tim Spence,2024.Dynegy and Homefield Energy Leadership in Energy Innovation Award,2023.2023 Sustainability ReportContentsIntroductionCommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix20$100B Environmental and Social Finance Target After achieving our$8 billion renewable energy finance goal,Fifth Third expanded our aim in 2022 and announced a 10-year,$100 billion environmental and social finance target through 2030.2 The new target continues our commitment to accelerating the transition to and support for more sustainable and inclusive growth.The Fifth Third Environmental&Social Finance Framework provides our stakeholders clarity regarding our criteria for determining what services are eligible and the value of transactions toward our 2030 target.The framework establishes a consistent and comprehensive methodology for the classification and reporting of financial products and services as sustainable.Through 2023,Fifth Third provided over$37.6 billion in sustainable financing under both environmental and social eligibility criteria.Footnote on 2021 and 2022 data32023 Sustainability ReportContentsIntroductionCommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix212 Our commitment to the$100B sustainable finance target is directly related to our broader approach of finding new growth opportunities while facilitating a sustainable socioeconomic transition.Our commitment is not related to any strategy in response to material climate-related risks,which strategies and risks,if any,would be solely described in the Bancorps filings with the Securities and Exchange Commission(the SEC)as required by SEC rules.3 Our 2021 and 2022 data has been revised from previously reported.37.6%Renewable EnergyGreen BuildingsEnergy EfficiencyCircular EconomyClean TransportationPollution Prevention and ControlOther GreenAffordable HousingAccess to Essential ServicesEmployment GenerationHealthcare LeasingSustainability&Sustainability-linked BondsSustainability-linked LoansAsset-Backed Security202120222023$2,500$5,000$7,500$10,000$12,500$15,000AchievedAs of December 31,2023(in billions)Strengthening our CommunitiesFifth Third is a purpose-driven company with a history of innovation and commitment to community.By leaning into that natural foundation,we can unleash the talent and passion of our employees to improve lives and the well-being of our communities.We view this as our corporate responsibility as well as our privilege.We set the bar high for our corporate citizenship because it is critical to being the One Bank people most value and trust.We need to do more than just offer the right products and services to meet the financial needs of our stakeholders.We seek to be a trusted advisor in our communities and want to bring our social capital and commitment to bear on major projects and initiatives that will create affordable housing,spur inclusive and sustainable economic development,deliver financial access,education and stability,and advance workforce development,especially for underserved communities.IN THIS SECTION Accelerating Racial Equality,Equity and Inclusion23National Community Advisory Forum27Community Impact28Affordable Housing31Economic Development33Financial Education,Access and Stability36Workforce Development40Corporate Citizenship and Philanthropy432023 Sustainability ReportContentsIntroduction CommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix22Accelerating Racial Equality,Equity and InclusionAccelerating inclusion has always been a top priority for Fifth Third Bank.Our purpose,to improve the lives of others and the well-being of our communities,champions a more inclusive world that offers opportunities to build lasting relationships,businesses and connectivity among people and resources.The Bank surpassed its three-year,$2.8 billion commitment to accelerate racial equality,equity and inclusion(AREEI),which concluded in December 2023.Our commitment was to make progress over time as this aspirational goal was not a mandate.Across its three constituent groups:communities,customers and employees,the Bank delivered$3.7 billion from 2021-2023.Further,its signature initiative,the Fifth Third Empowering Black Futures neighborhood program,delivered over$199 million,surpassing its$180 million investment goal.The neighborhood program also has been extended another year to ensure program maturity and sustainability.Fifth Third met the goals we aspired to under the ARREI initiative.We met our philanthropic giving goal while exceeding goals for loan capital,community investments and financial accessibility.Announced in 2020,AREEI pledged to underserved communities significant funding for strategic investments,access to capital,economic inclusion and financial education.2023 Sustainability ReportContentsIntroduction CommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix23$2.8 B Loan CapitalGoal:$2.2 Billion$776 M Community InvestmentsGoal:$500 Million$69.3 MFinancialAccessibility Efforts Goal:$60 Million$40 M Philanthropic EffortsGoal:$40 Million$3.7BILLIONtoward the AREEI goalFrom 2021-2023,the Bank delivered“Our broad-based AREEI initiative has benefited all of Fifth Third stakeholders in an extremely meaningful way.Because we made this commitment,our employees better know how to communicate and relate to each other and have more opportunity in our own workplace.There is more access to economic opportunity for our consumer and small business customers.And neighborhoods across our footprint are being revitalizedan impact that has a significant ripple effect in all the markets we serve.”Employees For employees,Fifth Thirds efforts under AREEI focused on improving the recruiting process,employee career mobility and the employee experience to increase engagement and retention.We also worked to create a greater sense of belonging among employees and fostering a culture in which employees can learn,connect and share insights.RecruitingFifth Third continued to make meaningful enhancements to our recruiting process,including:Expanded inclusion and diversity recruiting strategies beyond HBCUs to broaden talent pools for campus hires.Strengthened partnerships with affinity groups,both with universities and partner organizations,to bolster the diversity of our talent pipeline.Improved career mobility by examining relevant performance management processes and practices to ensure consistency.Established a talent pipeline practice within Operations for more than 200 key positions.Listening StrategyIn 2023,Fifth Third completed its three-year employee listening strategy.In partnership with a leading marketing strategy and research organization,we facilitated 53 listening sessions with over 600 participants from Oct 2021 to Oct 2023.Thirteen sessions were conducted in 2023 with the other 40 sessions completed between October 2021 and December 2022.These sessions enabled employees to speak candidly about inclusion and diversity from a broad range of perspectives.Insights and sentiments gleaned from the sessions informed our path forward.Additionally,a root cause analysis was conducted to identify the key attrition drivers of employees voluntarily exiting and provided insights on how to reduce voluntary employee attrition.Critical ConversationsUnconscious Bias and Critical Conversations training continued to provide employees with the awareness,knowledge and tools to mitigate unconscious bias,be an ally in the workplace and practice more difficult and sensitive conversations.See page 63 for more information.For more information on our overarching inclusion strategy,see page 48.CustomersFor customers,we focused on addressing the racial wealth gap,developing end-to-end products and solutions with targeted marketing and outreach,and working with customers to achieve our lending commitments in home mortgage,small business and business banking.2023 Sustainability ReportContentsIntroduction CommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix24Stephanie A.SmithChief Inclusion OfficerProject REAChFifth Third joined the Office of the Comptroller of the Currencys Roundtable for Economic Access and Change(REACh)initiative in 2021.This collaborative effort involves leaders from banking,business,technology and national civil rights organizations to remove structural barriers to financial inclusion and increase broader participation in the national economy.The Banks work focused on four areas:affordable housing,minority depository institutions,alternative credit,and small and minority business opportunities.A key part of the programs customer focus was ensuring that Fifth Thirds neighborhood program communities received branch and banking options that met their specific needs,including the establishment of lending goals for each neighborhood.Special Purpose Credit ProgramIn 2023,Fifth Third began participating in the special purpose credit programs of Freddie Mac and Fannie Mae as well as other SPCP programs.It also worked toward developing its own proprietary program,which launched in early 2024.The programs overall aim is to increase lending to the underserved by 10%in key markets.See page 80 in the Innovative&Inclusive Products section for more information about our SPCP program journey.The program emphasizes loans for retail purchase,renovations and home equity in historically underbanked and underserved neighborhoods and for low-and moderate-income individuals.The program also features training programs for employees and the community.Fifth Third Invests$2 Million in Adelphi BankAdelphi Bank opened its doors in 2023 as a minority depository institution,or MDI.According to the Federal Deposit Insurance Corp.,Adelphi Bank is one of only 21 Black-owned banks and one of 145 MDIs in the United States.Fifth Third Bancorp,through its affiliate,invested$2 million into Adelphi Bank,making it one of Adelphis largest investors.Fifth Thirds investment was consistent with the Banks commitment to Project REACh.Adelphi Banks name and location pay homage to Adelphi Loan&Savings Co.,which was incorporated Feb.8,1921.That earlier bank was Central Ohios first Black-owned bank but it failed less than 20 years later during the Great Depression.The new Adelphi stands just a block from its predecessors home.“Our investment in Adelphi and other MDIs is critical to ensuring full economic participation by the historically underserved in our community,”said Francie Henry,regional president,Fifth Third Bank-Central Ohio.CommunitiesOur efforts in the community were designed to bring about systemic change by increasing access to financial centers and solutions for the unbanked and underbanked as well as expanding investments for neighborhood revitalization and workforce development.Neighborhood ProgramWith our Empowering Black Futures Neighborhood Program,the Bank invested$199.1 million in nine low-to-moderate income neighborhoods that have experienced decades of disinvestment,wealth extraction and income disparities.It is our commitment to support all members of underserved communities in their challenges,opportunities and goals.Fifth Third also is extending technical assistance related to the program through 2025 to ensure continued,sustained impact and progress.For more information on Fifth Thirds neighborhood program,see page 29.Strategic Investments Fifth Third surpassed its AREEI investment and lending goals by developing multiple new relationships with key developers across its footprint.Fifth Third and the Fifth Third Community Development Corp.(CDC)committed$497.7 million in strategic investments to accelerate inclusion in our retail footprint.Since January 2021,the CDC has invested$56 million in 11 CDFI-sponsored entities and led the investment of$4.5 million in two MDIs.Through Dec.31,2023,the Community Development Banking Group team closed 77 loans or investments for a total of$734 million and 160%of the program goal.More information about the work of the groups efforts can be found starting on page 31.2023 Sustainability ReportContentsIntroduction CommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix25Fifth Third Chairman,CEO and President Tim Spence and members of his team joined Jordan Miller,former Fifth Third regional president and current Adelphi Bank president,to celebrate Adelphis historic opening.In 2023,Fifth Third invested$1 million in the National Minority Supplier Development Council Business Consortium Fund,Inc.(BCF)to provide microloans and small business loans to support emerging and growing minority-owned business enterprises located in the cities of Atlanta,Charlotte,Chicago,Cincinnati,Detroit,Nashville and Tampa.Minority businesses often do not have access to capital.Our commitment is to support BCF in leveling the playing field for minority businesses to thrive and compete.BCF provides earlier-stage financing to support the critical growth stage of a Minority Business Enterprises business development,with special emphasis on those businesses requiring additional capital and support to perform under their supplier contracts.The BCFs main goal is to improve and expand its programs,financing products and services to meet the needs of todays MBEs.PhilanthropyThrough the Fifth Third Foundation,we met our program goal of$40 million in philanthropic grants over three years.The grants supported both the Foundations focus areas as well as the programs strategic pillars.The Fifth Third Foundation made a$1.6 million program-related investment in support of preserving 32 homes on Hoskins Street located in the Historic West End in Charlotte.The grant was combined with funds from the American Rescue Plan Act to help create generational impact in the neighborhood.In partnership with the West Side Community Land Trust,North Carolinas Mecklenburg County and others,Fifth Third was able to help prevent the sale of 32 homes at once and stave off a wave of gentrification.We also were able to make a significant impact by saving families from displacement and preserving affordable housing options in the Historic West End.Economic Inclusion&Financial EducationOur commitment to financial inclusion and education helps ensure that our consumers and business owners have access to the financial resources and education they need to be successful and grow.Fifth Third and the Fifth Third Foundation took significant steps through both a new workforce development program in collaboration with the National Urban League and a new certificate program Fifth Third established with the National Minority Supplier Development Council.See page 56 in the Promoting Inclusion&Diversity section for details.Fifth Third exceeded its commitment under ARREI to build de novo branches in low-and moderate-income and/or high minority tract areas.In 2023,it opened 11 branches.We are also in the process of opening or redesigning the remaining five branches in the nine communities within our neighborhood program.Our first location built from the ground up is projected to open in the Historic West End in Charlotte in the fall of 2024.2023 Sustainability ReportContentsIntroduction CommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix26Public,private and community leaders gathered together to celebrate the preservation of 32 homes on Hoskins Street in the Charlotte neighborhood of Historic West End.Members of Fifth Thirds Corporate Responsibility Office stand with Marc Morial,center(red tie),at the National Urban Leagues Women of Power Luncheon in 2023.The James Island Financial Center in South Carolina opened in 2023.National Community Advisory ForumFifth Third deeply understands that collaboration is key to its corporate sustainability efforts.Since 1992,Fifth Third has had a Community Advisory Forum comprised of industry and community leaders to inform,guide and affirm the Companys community commitments and strategic initiatives.In 2017,Fifth Third evolved the work of the CAF and has continued to progress its work and level of involvement with Fifth Thirds leadership.Early in 2024,Fifth Third revised the National Community Advisory Forum charter and instituted new membership for the 2024-2026 term.The charter states that members will offer Fifth Third a diverse perspective on various topics,including the financial needs of customers,businesses and communities as well as existing workforce trends as it relates to inclusion and diversity,the economic environment and impact on bank efforts.The National Community Advisory Forum focuses on community impact,inclusion and diversity,corporate sustainability(environmental,social and governance),and the Community Reinvestment Act.The National CAF works to help Fifth Third deliver on its five sustainability priorities,with particular emphasis on affordable housing,economic development,financial accessibility and workforce development.Kala Gibson,executive vice president&chief corporate responsibility officer,chairs the National CAF,which meets in person twice per year.In 2023,the National CAF met in Charlotte and Cincinnati.2023 Sustainability ReportContentsIntroduction CommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix27Fifth Thirds National CAF Members,2023Diane Ashley|DTA Diversity Counts|Edgewater,New Jersey.Patrick Briaud|Rockefeller Philanthropy Advisors|New York.Stephanie Byrd|American Red Cross|Cincinnati.Catherine(Katy)Crosby|National Community Reinvestment Coalition|Washington.Josh Earn|National Housing Trust|Washington.Mary Ehrsam|Operation Hope|Atlanta.Steven Hall|LISC|Chicago.Jill Houghton|DisabilityIn|Alexandria,Virginia.Susan Ifill|NeighborWorks America|Washington.Chris Kizzie|Enterprise Community Partners|Columbia,Maryland.Laura Levine|Jump$tart Coalition|Washington.Lori Little|National Affordable Housing Trust|Columbus,Ohio.Ying McGuire|National Minority Supplier Development Council|New York.Fred Mitchell|United Negro College Fund|New York.Carol Naughton|Purpose Built Communities|Atlanta.Pamela Prince-Eason|WEBENC|Washington.Aaron Seybert|Kresge Foundation|Detroit.Cherie Collins Sims|Prosperity Now|Washington.Luz Urrutia|Accion Opportunity Fund|Washington.Angela Williams|United Way Worldwide|Chicago.Fifth Third Chairman,CEO and President Tim Spence met with National Community Advisory Forum members in Cincinnati in October 2023.National CAF members Chris Kizzie of Enterprise Community Partners(far left)and Carol Naughton of Purpose Built Communities(middle right)sit with Fifth Thirds Jada Grandy-Mock(middle left)and Keith Burgess(far right)at the Banks National CAF meeting in 2023.Community ImpactBeing the One Bank people most value and trust means that Fifth Third has a real opportunity to catalyze transformative change in the communities we serve.We firmly believe that strong communities need strong banksa responsibility we enthusiastically and responsibly accept.Outstanding CRA RatingIn 2023,Fifth Third reported its receipt of an“Outstanding”performance rating,the highest possible,from its most recent Community Reinvestment Act exam conducted by the Office of the Comptroller of the Currency.Fifth Third received“Outstanding”ratings on each of the examinations three tests:Lending,Investments and Service.The rating period was Jan.1,2017 to Dec.31,2021.It is Fifth Thirds goal to maintain outstanding CRA ratings in each of its markets on a go-forward basis.Community Needs AssessmentTo ensure that we have a firm grasp on the issues of most importance to our community,we engaged with our stakeholders regularly.We embed ourselves into the communities we serve so that we can view the opportunities from the same perspective as residents and community leaders.We also conduct a regular Community Needs Assessment with community-based organizations.Our latest survey deployed in January 2024 and the results confirmed our focus on affordable housing,economic development,financial access,education and stability,and workforce development as areas of significant need.$100 Billion Social Finance TargetFifth Third has committed to achieving a$100 billion finance target through 2030 that advances our goal to build inclusive and sustainable economies.From a social perspective,we are making investments in affordable housing,socioeconomic advancement and empowerment,access to essential services,employment generation and food securityall of of which line up to our key sustainability priorities.In 2023,Fifth Third delivered$3.9 billion in these areas against the target.More information about the$100 billion is available on page 21.Leading this work is our Corporate Responsibility Office,which in addition to addressing climate change(see page 9),is focused on strengthening our communities,promoting inclusion,and leading the philanthropy,partnerships and volunteerism that drive community impact results.The Responsibility Office leads the effort to reverse negative cycles among low-and moderate-income Americans to help build strong foundations for the future.2023 Sustainability ReportContentsIntroduction CommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix28Innovative Neighborhood ProgramFifth Thirds Empowering Black Futures Neighborhood program is helping to change the way banks are approaching community development.By focusing on specific neighborhoods and bringing all the right partners together to improve economic mobility for all,we are making significant and transformative changes that will lead to a sustainable and inclusive economy.The neighborhood program is a$180 million commitment to nine neighborhoods throughout Fifth Thirds footprint from 2022-2024.In 2023,Fifth Third exceeded our original commitment.By Dec.31,2023,we had delivered over$199 million.Fifth Third also extended the program for another year through 2025 to ensure that the program would be sustainable in each neighborhood.The neighborhoods are Avondale in Cincinnati,Ohio;South Chicago in Chicago,Illinois;Buckeye in Cleveland,Ohio;East Tampa in Tampa,Florida;Grove Park in Atlanta,Georgia;Arlington Woods in Indianapolis,Indiana;West End in Charlotte,North Carolina;Near East Side in Columbus,Ohio;and Russell in Louisville,Kentucky.“Our neighborhood program is focused on outcomes versus inputs.Were not just making big financial investments.We are creating real cross-sector partnerships that are enabling residents to age in place,revitalizing business corridors and creating safe places for community gatherings.”Goals for the Fifth Third Neighborhood ProgramThe Banks innovative place-based,people-first program seeks to:Create more equitable,connected systems.Strengthen links across stakeholder groups,including small businesses,the community and other institutions and organizations.The program aims to improve availability and delivery of Fifth Third lending products in underserved areas.Improve upward mobility among residents.Increase homeownership rates and reduce displacement of residents.Generate wealth and a higher sense of value,agency and belonging.Build an inclusive civic infrastructure.Strengthen the capacity of local stakeholders to sustain efforts and expand services and programs that support residents economic mobility.Promote prosperous small businesses.Increase entrepreneurship and achieve greater growth and retention of small businesses.Develop healthy,built environments.Reduce vacancies and abandoned buildings and develop plans for improved walkability of open spaces.The program also aims to cultivate investments and resources from additional stakeholders seeking to promote the economic mobility of residents in the neighborhoods.Neighborhood Program ResultsThrough Dec.31,2023,Fifth Third delivered the following results through our neighborhood program.Overall,Fifth Third has delivered$199.1 million against the original goal of$180 million,which includes:$39.8 million in Mortgage Lending.$13.5 million in Small Business Lending.$121 million in Community Investments.$18.8 million in Philanthropic Efforts.$6.0 millionin Program Related Investments(PRI).2023 Sustainability ReportContentsIntroduction CommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix29Jada Grandy-Mock,senior vice president and chief community impact banking officerImpact in the Historic West EndFifth Third has invested$76.7 million into the Historic West End in Charlotte over the past three years.Together with LISC-Charlotte,Historic West End Partners,For the Struggle,West Side Community Land Trust and other committed people and partners,Fifth Third is bringing positive change through the neighborhood program.We invested and helped finance the Historic Nathaniel Carr Senior Apartment development,which is enabling low-income seniors to age in place.We were part of a team that,through our use of program-related investments from the Fifth Third Foundation,helped save 32 homes at once through the Hoskins Neighborhood Housing Development.Were opening a new next generation financial center in the neighborhood,which is being constructed with 75%diverse suppliers.Were supporting small businesses,and in 2024,will provide$300,000 in grants to 10 legacy businesses and those moving into the corridor with structural and operational support.Were helping to expand a greenhouse project on the campus of Johnson C.Smith University,which will provide fresh produce to low-income seniors.Over$10 million in new leveraged investments have come into the corridor since our neighborhood program launched,and$1.6 million in program-related investments have been deployed.Fifth Third is helping to transform the lives of residents in the Historic West End for generations to come.It was because of this that Fifth Third Chairman,CEO and President Tim Spence toured the Historic West End in January 2024 to speak with residents,partners and small businesses to see the results of our efforts and understand how we can continue to help drive positive change in the neighborhood.Houses turned into Homes in South ChicagoIn the South Chicago neighborhood in Chicago,Fifth Third worked with lead community partner,Claretian Associates,to boost affordable housing in the area.Two new homes were able to be fully constructed and finished thanks to the capital brought through our neighborhood program.Fifth Thirds support enabled Claretian Associates to bring in additional funding partners to complete the project.The two dwellings had been abandoned since 2007 due to challenges related to appraisal gaps and then the housing crisis that followed.Today,the two unfinished houses have been turned into safe,affordable homes for families.The families have incomes ranging from 50 to 80%of the area median income and are working their way toward homeownership.These first four units of housing are just phase one of the project.Phase two will include the construction of 15 new homes.“Without this kind of housing development,many in our community would be at risk of homelessness,”said Angela Hurlock of Claretian Associates.Avondale Streetscape ProjectIn the Avondale neighborhood of Cincinnati,Fifth Thirds neighborhood program has helped assemble public and private partners willing to invest in the neighborhoods economic mobility plan initiative to improve streetscapes.There are now$2.5 million in funding commitments to improve three blocks in Avondale.These improvements are being made in close proximity to developments related to the neighborhood program,including Blair Lofts,a 64-unit multi-family affordable housing development.The Fifth Third CDC invested$15.5 million into Blair Lofts in 2021.Improvement on these three blocks includes the repair of sidewalks,removal of overgrown trees and shrubs,and addressing code violations and nuisance issues.These streetscape improvements are representative of how to create a healthy built environment and it is a collaborative approach to investing resources and stakeholders to drive equitable connected systemstwo of Fifth Thirds goals of the neighborhood program.The other three goals are to improve residents upward mobility,build an inclusive civic infrastructure and promote prosperous small businesses.Russell Hairston,executive director of the Avondale Development Corp.said,“Fifth Thirds neighborhood program has been a catalyst to bring key stakeholders together to solve important issues and invest in key projects that will impact Avondale residents.Their program has strengthened the respective stakeholders ability to leverage their impact for shared community goals.”2023 Sustainability ReportContentsIntroduction CommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix30Fifth Third President&CEO Tim Spence,For The Struggle Founder&Executive Director Alesha Brown,and Fifth Third Carolinas Regional President Lee Fite on a visit to the Sustainability Village greenhouse at Johnson C.Smith University,an HBCU in Charlotte.The greenhouse provides fresh produce to area seniors.Affordable HousingThe housing crisis in the United States is a persistent problem.Fifth Third is committed to developing solutions to help people in our communities obtain and maintain permanent housing for themselves and their families.Fifth Third views safe housing as a basic human right and has made solving the crisis one of our top priorities.It is a fact that the need for housing is great across the nationfrom subsidized,affordable,workforce,semi-permanent and permanent housing,both for rent and for eventual homeownership.Owning a home may still be the quintessential American dream but,for many,the dream is far from their present reality.Our Company is working to develop programs and deploy innovative problem solving tactics to turn the crisis into an opportunity for the people we serve.Fifth Third provides multiple affordable housing solutions for our customers and communities,including a new special purpose credit program for residential mortgages and other programs for low-and moderate-income communities.Loans and investments through our Community Development Banking Group are facilitating major housing developments.Our Company also is a sought-after resource for government,nonprofit and private funders committed to being a part of the solution to the problem.Affordable Residential MortgagesMortgages remain a key to boosting affordable housing.We provide residential mortgage products and programs for a wide range of borrowers,especially those who may not qualify for our traditional first-mortgage products and those who wish to purchase a home in an underserved and/or low-income census tract.In 2023,Fifth Third worked to develop the 53 Community Special Purpose Credit Program that launched early in 2024.As its name suggests,the 53 Community Special Purpose Credit Program is a special credit program for borrowers who need alternative terms to purchase a home.Fifth Third also participated in 2023 in the SPCPs of Freddie Mac and Fannie Mae and the Homeownership Council of Americas Equity DPA program in specific markets.We also now offer an Special Purpose Credit Program Home Equity Loan(HELOAN)product.See page 80 for more information.Fifth Third also offers home financing through multiple affordable programs,including loans through the Federal Housing Administration,Department of Veteran Affairs,and programs like Freddie Macs Home Possible and Fannie Maes HomeReady programs for very low to low-income purchase borrowers.In 2023,Fifth Third made loans through these and its own programs worth more than$279 million.Down Payment AssistanceFifth Thirds Down Payment Assistance Program helps eliminate one of the key barriers to homeownership,which is a down payment.In 2023,Fifth Third provided$4.5 million in DPA assistance,up from$3.6 million in 2022.Our down payment assistance program helped enable community members to purchase 1,278 homes last year.Fifth Third has provided over$12 million in DPA assistance since 2021.Fifth Third also helps borrowers access other down payment assistance programs that can be combined with our own.Early in 2024,Fifth Third made changes to our program to enable the lowest-income borrowers who qualify to receive up to$5,300 in down payment assistance if they purchase in a low income census tract.Qualified purchasers in a moderate income tract can receive up to$1,295.Community Development Banking Group Fifth Thirds Community Development Banking Group works to meet the unique banking and capital needs of leading for-profit and nonprofit developers of affordable housing.In 2023,the group closed on over$700 million in loans and investments to revitalize neighborhoods.This commitment includes the creation and preservation of over 3,684 units of housing.“Affordable housing developments,whether they be subsidized,workforce,senior,veteran or other types,all are a crucial part of our commitment to developing healthy,sustainable communities,”said Keith Burgess,senior vice president&head of Fifth Thirds community development banking group.“We have a team of excellent lenders and investors who not only provide access to capital but also their expertise,which has been cultivated through years of working with public,private and nonprofit partners in our communities.”InvestmentsFifth Third specializes in financing affordable housing developments that have received reservations of Low-Income Tax Housing Credits,or LIHTCs.The Fifth Third CDC also invests in federal,state and historic tax credits,new markets tax credits and equity equivalent investments.In October 2023,Fifth Third saw its investment in the Charlotte Housing Opportunity Investment Fund(CHOIF I)and its success result in the launch of a second iteration known as CHOIF II.Both funds,which 2023 Sustainability ReportContentsIntroduction CommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix31Keith Burgessare administered by the Charlotte office of Local Initiatives Support Corporation,support both new construction and existing affordable housing development to address the widening housing gap.To date,CHOIF I has supported more than 1,500 units of affordable housing for Charlotte families.Nearly 95%of the units are affordable to households earning 80 percent or less of the area median income($75,350 for a family of four),and the homes must remain affordable for 20-30 years.CHOIF II,like CHOIF I,is working closely with the City of Charlotte to align with the citys shared objective of increasing both the quality and quantity of affordable housing options,thereby fostering economic mobility for residents.Fifth Third Bank was the first to commit to the fund,catalyzing investments from its original and new partners.Fifth Thirds investment in each fund was$3 million for a total of$6 million to support affordable housing development.Fifth Third also is opening doors for community development work in Illinois and Michigan through a$5 million equity equivalent investment,or EQ2,to Cinnaire Lending Corporation,a certified community development financial institution.Cinnaire will leverage Fifth Thirds$5 million commitment to provide financing to developers for the rehabilitation and construction of affordable for-sale homes,multifamily housing and community facilities in Illinois and Michigan.Additionally,Cinnaire Lending and Fifth Third are partnering with emerging developers in both states to leverage the investment as a catalyst to further work in underinvested communities.LendingFifth Third participates in LIHTC construction and/or bond financing,15-year permanent financing,equity bridge financing,new market tax credit leverage lending,and syndicator bridge financing,all with the goal of helping to boost affordable housing in the markets served by Fifth Third Bank.We were proud to be the construction lender for Casa Di Francesco,a$42 million affordable housing project in Hillsborough County,Florida.It is being built by developer Blue Sky Communities on a 20-acre property belonging to St.Francis of Assisi Catholic Church.Construction on the project began in late 2023.When it is complete in early 2025,Casa Di Francesco will have 140 units,which will be reserved for people 62 and older.One hundred of the units will be one-bedroom with the remaining 40 being two-bedroom units.Five of them will be reserved for residents at 22%of the area median income,14 for residents at 33%AMI,and the remaining 121 units will be for those at 60%AMI.Father Edison Bernabas,pastor at St.Francis of Assisi Church,said,“Think about the situation of so many people,who after having worked hard all of their lives,still dont have access to decent housing.We are committed to helping seniors obtain decent housing and these 140 apartments are a solid step toward reaching that goal,”he said in an article on ModernG.The four-story building will be in walking distance of several grocery stories and a public park with amenities like a library and community garden.Also in 2023,Fifth Third made a$15 million LIHTC construction loan for Thrive Englewood,a mixed-use and mixed-income 62-unit housing development in the Chicago neighborhood of Englewood.Fifty-two of the 62 units will be for tenants with incomes 50-60%AMI.The project also includes 2,400 square feet of commercial space.Englewood is one of 10 Chicago communities slated for reinvestment in former Mayor Lori Lightfoots INVEST South/West program.The developer is DL3 Realty Advisors,LLC.Thrive Englewood builds upon the momentum that began next door with DL3s 2016 development of the Englewood Square Shopping Center.One of the first few new multi-family buildings to be constructed in Englewood in more than 50 years,Thrive Englewood will bring high-quality residential development designed to attract working families back to the neighborhood and revitalize the community.2023 Sustainability ReportContentsIntroduction CommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix32Fifth Third Bank was recognized as the 2023“Most Outstanding Lender”by HomeBase in Cincinnati.Pictured are HomeBase Board President Mike Kappel,Fifth Third Community Development Lending Director II Jennifer Snider,and HomeBase Executive Director Rosa Christophel.The groundbreaking in 2023 for Casa Di Francesco in Florida,The affordable housing project for low-income seniors will open in 2025.A rendering of Thrive Englewood in Chicago.Photo courtesy of DL3 Realty.Used with permission.Rendering by Architect Perkins Will.Economic DevelopmentWhile housing is a major factor in community revitalization,its not the lone issue.We also work in the communities we serve to support small businesses,revitalize neighborhoods by supporting business corridors and delivering other place-based essential services,and finance nonprofit and not-for-profit organizations to further their vital work.Developing inclusive economies that are thriving and sustainable is absolutely essential to improving lives and the well-being of communities.Small BusinessesIts no secret that small businesses are the backbone of the U.S.economy.Supporting them through lending,investments and technical assistance is a significant part of our commitment to economic development.We support small businesses in a multitude of waysfrom direct support in term of loans and other financing to indirect support through our investments in community development financial institutions,nonprofit organizations that provide technical assistance,and programming like workshops to aid small businesses.Fifth Third is a U.S.Small Business Administration Preferred Lender.The Bank continues to invest in the SBA program and in our ability to offer several types of SBA loans,including 7(a),Express,504 and commercial real estate 100%financing loans.Oftentimes,our work will enable us to provide financing as well as help clients secure alternate sources of funding,which can maximize impact.This was the case in Chicago where we made a$310,000 SBA Express loan to the owner of African Food Palace,a local restaurant.We also were able to work with the client to assist her in successfully applying for and receiving a$100,000 Small Business Improvement Fund grant from the city.The SBA Express loan helped the owner purchase an existing structure just two doors down from where she had been leasing space.This enabled her to become an owner of the real estate where she operates her restaurant versus being a tenant.Then,the SBIF grant from the City of Chicago enabled her to unlock capital for building improvements.Neighborhood Revitalization Fifth Third was the New Market Tax Credit investor for the Warsaw Avenue Creative Campus in Cincinnati,a$10 million mixed-use revitalization project in the East Price Hill neighborhood.Sponsored by Price Hill Will,a nonprofit community development corporation serving the neighborhoods of East,West and Lower Price Hill,the project consists of eight newly-renovated historic buildings,including 13 affordable apartments,six commercial storefronts,and the historical firehouse,which is now home to the MYCincinnati Youth Orchestra.WACC connects the Price Hill Will ARCO Arts Center with the historic Warsaw Avenue business district and amenities like the Price Hill Library,Recreation Center and Dempsey Park and Pool.The vision for WACC is“to create a place where youth and families learn and grow together via the arts and creative pursuits.”WACC had a ribbon cutting for phase 1a of the project in September 2023.Community Development Financial InstitutionsWe know there are times when small businessesand othersrequire additional assistance and guidance beyond what we can provide.Community development financial institutions,or CDFIs,help to fill that gap.These private institutions provide responsible,affordable capital to those who are unable to use traditional banking products or resources,and Fifth Third is committed to supporting them.We provide capital directly to CDFIs and CDFI funds.This money not only provides loans but invaluable coaching and technical assistance as well.We have strong working relationships with CDFIs in most of our markets.In 2023,we invested$2.5 million in Allies for Community Business in Chicago to support access to capital for small businesses located in Illinois and Indiana with a prioritization for minority,women and low-income entrepreneurs.See the feature in this section of the Report for additional information about the CDFIs supported by Fifth Third last year.Essential Services Essential services are necessary to help a communitys basic and emergent needs.Fifth Third works to ensure that essential services are included in as many of its community projects and programs as possible.It also is one of categories tracked as part of Fifth Thirds$100 billion environmental and social finance target.In 2023,Fifth Third provided financing of$177.1 million for essential services to low-and moderate-income communities.Also as part of our$100 billion target,we provide financial support for programs that fall under the categories of Access to Basic Infrastructure,Employment Generation,Food Security and Sustainable Food Systems and Socioeconomic Advancement and Employmentefforts that come from the Internal Capital Markets Association and are multifaceted and cross a multitude of our key focus areas.2023 Sustainability ReportContentsIntroduction CommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix33The Warsaw Avenue Creative Campus in Cincinnati is helping to revitalize the East Price Hill neighborhood.NonProfit Organization FinancingIn 2023 a Community Development Finance group was established with the primary goal of supporting the work of nonprofit and not-for-profit organizations in the communities we serve.Nonprofit organizations that have ready access to capital and the financing necessary to operate efficiently are able to have an significant impact on economic development,especially in the areas of housing,financial education and services like technical assistance to small businesses.Fifth Third supported Detroit PAL in 2023 with a$1 million line of credit to help unlock funding from a state grant.Detroit PAL is an organization with a mission to help youth find their greatness through athletic,academic and leadership development programs in partnership with the Detroit Police Department and community volunteers.The funding helped the organization expand their KIDS AND COPS Mentoring program across the state of Michigan.The Community Development Finance group closed$6 million in transactions in 2023.Fifth Thirds Support of CDFIs In 2023,Fifth Third made investments in nine CDFIs and/or CDFI-sponsored funds for a total of$31.5 million.In addition to investments in Cinnaire,Allies for Community Business and the National Minority Supplier Development Council Business Consortium Fund,Fifth Third made investments in the following CDFIs:Atlanta Neighborhood Development Partnership,Inc.Loan Fund in Atlanta that provides low cost capital to developers that create affordable housing,mixed-income and mixed-use properties primarily in the metropolitan Atlanta region.Village Capital Corporation in Cleveland to support low interest loans for the acquisition and rehabilitation of vacant homes in the Fifth Third Empowering Black Futures neighborhood of Buckeye.Ohio Capital Finance Corporation in Columbus to support the Linden Healthy Homes Fund II to provide funding for the acquisition,construction and/or rehabilitation of rental units in the South Linden Neighborhood of Columbus,Ohio.IFF in Chicago,Indianapolis,Detroit,Grand Rapids,Columbus and Cleveland to support flexible lending products and creative real estate solutions to help nonprofits such as human service agencies,supportive housing providers,schools,health clinics,art organizations and community centers to best serve their communities.The Catalytic Fund in Cincinnati and Northern Kentucky to support high-impact real estate projects in local neighborhoods that will result in job creation,development of community facilities,blight elimination,tax base growth and community revitalization.Opportunity CLE Loan Fund of Cleveland Development Advisors in Cleveland for the purpose of making capital investments to support transformative,strategic and catalytic projects that provide a positive social and economic return in targeted low-income communities across Northeast Ohio.2023 Sustainability ReportContentsIntroduction CommunitiesInclusionEmployeesCustomerClimateGovernanceAppendix34Detroit PAL CEO Fred Hunter,CFO Geri Mann andFifth Third Community Development Finance Group Head Jason Pauleteer on the Willie Horton Field of Dreams located on the famous former site of The Detroit Tigers Stadium.Fifth Third Community Development Corporation The Fifth Third CDC invests in real estate projects across our footprint to help communities thrive.These investments can include affordable housing,small business spaces or commercial projects.Often,the projects enable access to essential services for residents,including financial education,social programming and greenspaces for recreation.A Safe Haven for WomenEscaping domestic violence to find safe and secure shelter can often mean leaving everything behind.The Fifth Third CDC invested over$1.6 million in federal New Market Tax Credit equity in the YWCA of Cincinnatis efforts to develop an additional domestic violence shelter to serve surviving victims,children and pets.YWCA of Cincinnatis renovation of an existing building in Avondaleone of Fifth Thirds neighborhood program communitieswill bring an additional 21 units of domestic violence housing to the Cincinnati area.Renovation plans center around empowering women in all aspects of their lives.Something that seems simple,like lighting with dimmer switches,having an adjustable thermostat or a ceiling fan,can make a big difference in providing a soothing and supportive atmosphere to domestic violence survivors.The property will have clear visibility,flexible community and laundry areas,and express beauty to support healing through color,proportion,sensuous materials,light and nature.The location of the shelter is also vital to serving residents.Survivors and their families will have convenient access to bus routes,employment centers and downtown Cincinnati.The new shelter will serve about 600 adults and children annually,of which 99%will have income at or below the poverty line.The new shelter also will provide additional services and public transportation to help residents maintain existing work and school routines.A Manufacturing Innovation AcceleratorA$12.8 million new market tax equity investment from the Fifth Third CDC is helping to support the acquisition and renovation of an existing building that will facilitate the relocation of mHub,a HardTech manufacturing innovation accelerator in Chicago.The organization is a prominent economic development entity with a programmatic focus on recruiting,supporting,developing and launching minority-and women-owned businesses.The development will i
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ALLY CORPORATE SOCIAL RESPONSIBILITY REPORT2023fundamentally22023 CSR Report Welcome to the 2023 Ally CSR report.A message from Alison Summerville,Allys business administration executiveDo It Right is at the heart of our business;how we bring it to life at Ally is always changing to meet the current needs of our customers,our employees and our communities.Despite heightened volatility across the financial industry in 2023,our long-term strategic approach was well-positioned to withstand and deliver solid business growth,while remaining true to our values.To tackle the years hurdles,grounding ourselves in our culture was more important than ever.We focused on the key to our success:our people.We know the significance of taking care of our people.When we prioritize our team,they are able to fully show up for our customers and our communities;the success of our business follows.Even as we adapted our actions during the unprecedented year,we never lost sight of how we Do It Right.Im exceedingly proud of our accomplishments and honored to share those stories in the 2023 Ally Corporate Social Responsibility(CSR)report.We remain as committed to our employees financial well-being as they are to our customers and communities.As the first round of#OwnIt equity awards vested in 2023,we announced another year of the annual distribution of 100 shares of Ally stock for every eligible employee,empowering our team to act as owners of the company.Our team is as diverse as our customers and communities,and we celebrate those differences.We expanded our mental health and wellness benefits to prioritize the emotional health of our team and ensure we meet the needs of all of our employees and their families.At work,employee resource groups(ERGs)create spaces for team members with common backgrounds,giving them a place to connect and feel comfortable sharing their unique experiences.Almost 60%of our employees now belong to at least one ERG.We know investing in our people not only benefits our business but also the communities where we work and live.In 2023,we redefined our Giving Back volunteer initiatives to better distribute our efforts throughout the year.As always,our team rose to the challenge,giving their time to reach a record-setting 60,000 volunteer hours with nonprofits across the U.S.and Canada and taking full advantage of our donation matching program.Their generosity in giving and volunteering helped us collectively contribute$2.5 million to 2,000 organizations.Thats how you Do It Right.The Ally teams all-in dedication shone during the Habitat for Humanity 2023 Jimmy and Rosalynn Carter Work Project at Plato Price,a historic Black neighborhood in the Charlotte area.The week-long project brought together 39 Ally employees for 300 hours of work and built upon the Ally Charitable Foundations(ACF)$1 million cornerstone commitment to Plato Price.32023 CSR Report Since breaking ground in 2021,115 Ally team members have volunteered 900 hours at Plato Price.This community-building initiative is a small part of the Foundations mission to create affordable housing opportunities,one of its focus areas alongside workforce development and financial literacy.ACF celebrated its third anniversary in 2023.Since its launch,the Foundation has developed strong bonds with local,mission-driven organizations such as Detroit-based LISC.In 2023,we deepened our relationship with the nonprofit organization through a$1.5 million multi-year grant to support three initiatives,including the Welcome Home program,which provides workforce development opportunities to the formerly incarcerated.We are also forging new connections with groups like Ascent Housing.Our$3 million investment to its Housing Impact Fund II will help Ascent keep rent low for hundreds of low-income families in the Charlotte area.This past year,three was also the magic number for our Community Reinvestment Act(CRA)program,which earned its third consecutive Outstanding rating an achievement bestowed on only 12%of banks.Together,CRA and ACF drive much of our work to support low-and moderate-income communities,which included a commitment of almost$1 billion to affordable housing in 2023.The work of the organizations we support,including Enterprises Equitable Upward Mobility Fund,Homewise and ROC USA Capital,allows us to expand how we are an ally for our communities.Everyone deserves a safe place to live,and a home provides personal and financial stability two essential elements for economic mobility.The success and longevity of all of our CSR programs are a testament to the unwavering support of our team.The vitality of Moguls in the Making,which celebrated its fifth anniversary in 2023,enabled us to expand how we create opportunities for economic mobility.The entrepreneurial pitch competition for students from Historically Black Colleges and Universities provides mentorship and vital business skills and inspires students to create a better future for themselves and their communities.To mark the occasion,more than 100 Moguls alumni joined us in Detroit to celebrate the community and collaboration this program has fostered over the years.We cant wait to see whats next for this transformative program.Providing for our employees,customers and communities also extends to mitigating the impacts of climate change.Allys Sustainability Office,in collaboration with our Corporate Workplace team,are improving our operational sustainability through strategic initiatives,including the full renovation of our building in Lewisville,Texas.With the installation of an HVAC system that is 25%more efficient,a solar panel canopy that is estimated to generate nearly 90%of the buildings power and more,the facility will play a significant role in setting sustainability standards across our organization.What a year!While the readiness of our team to step up and Do It Right has always been who we are,their generosity never fails to inspire.Thank you for your interest in Ally and our CSR programs.We are proud of all we accomplished this year and are eager to build on those successes for our employees,customers and communities.42023 CSR Report Table of contents.06 About Fundamentally 09 2023 CSR highlights 12 Supporting our cities by investing in impact15 Snapshot:The Jimmy&Rosalynn Carter Work Project at Plato Price 17 Listen,learn,act:Making moments matter 23 Building social capital and improving access for HBCU students27 Snapshot:Digital skills for a digital world 29 Deepening connections with Supplier Diversity32 Snapshot:Bringing la cultura 34 Another Outstanding rating for CRA36 Snapshot:Committed to community38 Snapshot:A new game plan for womens sports 41 A better road to ownership for minority auto dealers 44 Evolving our environmental strategy 50 Governance 53 Conclusion 54 2023 CSR appendix55 Climate risks and opportunities:Allys alignment to TCFD73 Forward-looking statements 74 Defined terms 75 GRI content indexMeet your Ally.62023 CSR Report Welcome to the 2023 Ally Financial Inc.Corporate Social Responsibility Report(CSR).In this document,we share the programs,events and investments that made up our environmental,social and governance(ESG)initiatives in 2023.Since 2017,Ally(together with its consolidated subsidiaries unless the context otherwise requires,Ally,the Company,we,us or our)has formally documented our goals,work and results to achieve our mission to Do It Right for our customers,employees and communities.This report holds our organization accountable and provides transparency for our stakeholders(investors,customers,employees and communities).Governance is an essential part of Allys culture,business and CSR efforts.Through transparent reporting,we can create a lasting impact for our employees,customers,communities and stockholders.Allys CSR efforts have been guided by international ESG standards,including those of the Global Reporting Initiative(GRI)and the Task Force on Climate-Related Financial Disclosures(TCFD).These guidelines help advance Allys vision,social impact framework and culture.About Fundamentally.Ally makes regular,transparent disclosure of our Environmental,Social and Governance(ESG)efforts,and this summary contains highlights to bring our social impact to life.These guidelines influence Allys vision,social impact framework and organizational culture.We are incredibly proud of the accomplishments detailed in this report and Allys commitment to environmental and social impact,which extends far beyond these pages.Our social impact pillars72023 CSR Report Rooted in cultureDuring 2023,the banking industry faced extraordinary circumstances with the volatility caused by a series of bank failures and persistent inflation directly impacting the financial lives of our customers,employees and communities.We witnessed how they faced these challenges and sharpened our focus to act as a relentless ally for their economic well-being.The foundation of our efforts,as always,is our organizational purpose and alignment to our Do It Right ethos.These tenets define our culture,guide us and keep us grounded in our LEAD core values:Look externally We strive to meet and exceed the needs of our customers with agility,speed and innovation.We continually evolve,respond quickly and deliver a superior customer experience.Execute with excellence Good enough is never enough.With a focus on continuous improvement,our actions are driven by sound analysis and an intense focus on excellence.Act with professionalism We operate with integrity,hold ourselves and each other accountable,treat others with respect and embrace diversity and inclusion.This is the cornerstone to our long-term success and at the very foundation of what it means to be an ally.Deliver results We are passionate about winning for our customers,our teams and our company.Success is measured at both the outcome and the path to achieve it.82023 CSR Report Do It Right in actionWe continue to believe that our long-term success is underpinned by our purpose-driven Do It Right culture and relentless focus on delivering for our employees,customers and communities.For our employees,we expanded mental health resources,announced another year of our#OwnIt grant program and reached nearly 60%membership in our employee resource groups(ERGs),which all contributed to Allys continued top 10%ranking among engaged companies globally as measured in 2023 by our third-party provider.For our customers,we continued to provide industry-leading customer service and innovation,as demonstrated through our launch of spending buckets to support customers holistic financial goals.And in 2023,the Ally team gave its time and heart to numerous non-profit organizations and programs,continuing to home in on the areas where we can have the greatest influence:affordable housing,workforce development and financial literacy.This report shares some of those stories from across all four of our CSR pillars employees,customers,community and environment,including:2023 business growthRetail deposits of$142.3 billionNearly$40 billion of consumer autooriginations$1.3 billion in insurance written premiumsApproximately$1.0 billion in direct-to-consumer(DTC)mortgage originations in FY23Corporate finance core pre-tax income of$307 million,25%return on equity$10.9 billion held-for-investment(HFI)portfolio Supporting our cities by investing in impact Listen,learn,act:Making moments matter Building social capital and improving accessfor HBCU students Deepening connections with supplier diversity Another Outstanding rating for CRA A better road to ownership for minorityauto dealers Evolving our environmental strategyThis work represents just a fraction of the passion and effort of our team within our communities,but its effects are felt in full.We thank you,our stakeholders,for your interest in our CSR programs and hope you are as inspired by them as we are.92023 CSR Report 92023 CSR Report$24.8 million intotal givingNearly$1 billion committed to housing initiativesAlly employees volunteered over 60,000 hours3rd consecutiveOutstanding CRA ratingAchieved by only 12%of all banksThe Jimmy&Rosalynn Carter Work Project at Plato Price2023 highlights.When you are committed to caring for your teammates and giving back to the communities where you work and live,you can make a meaningful impact in just 365 days.$2.5 million=employeedonation dollars Allys match for donations and hours2,000 organizationsserved through employee giving and volunteer hoursAwarded$1.6 millionin grants to 65 non-profit organizationsProvided 850 community development volunteer service hours to various non-profit organizationsOriginated$1.3 billion in community developmentloans and investments11,600 #OwnIt awards grantedto employees10,600 employees received a 401(k)company match1 week2 country music superstars27 new homes39 Ally employee volunteers300 hours for Habitat for HumanityCRA Team:102023 CSR Report 102023 CSR Report 5th year of Moguls in the Making,an entrepreneurshippitch competition for students attending HBCUs,in collaboration with the Thurgood Marshall College Fund1st hybrid Supplier Symposium1st year achieved third-partyverification to a limited level of assurance for 2022 greenhouse gas emissions60 HBCU students2nd Earth MonthCentralized trash and composting programs launched to divert wastefrom landfills$200,000 awarded in scholarships 3 beehives installed at Envision Charlotte,offering innovative programming focused on biodiversity to the community53%of Ally employees at an Ally locationhave access to electric vehicle chargers2nd Supplier Diversity Month$176 million in Tier 1 spend with diverse-owned businesses31%increase in Tier 1 diverse spend 50%growth in Tier 1 spend with women-owned businesses in 202350%of Allys top suppliers by spend reported Tier 2 diverse spend Green Teams volunteered 3,500 hours 52%from 2022The Ally Charitable Foundation.A new startAfter being falsely imprisoned for almost 20 years,Donyelle Woodss sentence was commuted.To support Woods post-release,a friend referred him to SER Metro-Detroit,a LISC and Welcome Home partner organization,where Woods enrolled in ReBuild Detroit.The free eight-week training program is designed to prepare students for a career in construction trades or an apprenticeship,including key technical skills required in the modern job market.As one of the partner organizations that comprise the Welcome Home program,SER Metro-Detroit plays a key role in providing essential career training,without discrimination.Woods,who was simultaneously pursuing his college education,completed the ReBuild program in October 2023.Since then,hes used those skills to financially support himself through odd jobs while he continues to attend school.“The ReBuild Detroit program gave me the skills I needed to restart my career and my life,”Woods says.“No one judged me,and instead,asked for ways they could help me.”122023 CSR Report“How weve been able to grow our investments in our communities in just three years is truly incredible.The immediate impact of programs like HIF II and LISC motivates us to work even harder.”Alison SummervilleBusiness Administration Executive and Head of Corporate CitizenshipSupporting our cities by investing in impact.With the launch of the Ally Charitable Foundation(ACF or the Foundation)in 2020,Ally made a bold commitment to invest$30 million across our communities within three years.Impressively,we surpassed that milestone by investing over$58 million in three years.“The secret to our success is simple,”says Mike Rizer,president of the Ally Charitable Foundation.“Ally leadership has been a relentless champion of the Foundation from day one.When we set an ambitious goal,they went above and beyond to make sure we surpassed it.”Building upon that momentum continued in 2023,as the Foundation further expanded investments in its pillar areas affordable housing,financial education and workforce development with organizations throughout the U.S.,including$4.5 million for two very special programs in Allys hometowns of Detroit and Charlotte.Welcome Home:Digital workforce development in Detroit with LISCOur relationship with Local Initiatives Support Corporation(LISC),the nations largest community development organization,originated in 2020 with Allys three-year,$3 million commitment for workforce development and affordable housing.“Its rare to have a partner like Ally whos willing to make a multi-year investment,”says LISC Detroit Executive Director Camille Banks.“It takes some of the pressure off for us and our partners by providing invaluable support.”132023 CSR Report“In Detroit,we believe in second chances.We are a Ban the Box employer and actively create ways to help those who have made mistakes in their past make a fresh start.We are fortunate to have great partners like Ally to support LISC Detroits Welcome Home program,which helps hundreds of Detroiters transition from incarceration to gainful employment.”Mike Duggan Mayor of DetroitWith the success of our initial investment,we listened to LISC and its community partners regarding the need for workforce training for the formerly incarcerated.In addition to likely confronting prejudice when looking for work,those exiting the criminal justice system often lack the digital skills needed to secure employment.To help bridge the gap,in 2023 the Ally Charitable Foundation made an additional$1.5 million multi-year commitment to support three LISC initiatives,including Welcome Home,a program that provides workforce development opportunities for more than 600 people transitioning out of incarceration.Founded in 2017,the program is made up of 13 community partners and has a recidivism rate of just 8%.Without the intervention of programs like Welcome Home,recidivism is typically around 30%.Among other initiatives,Allys investment will enable LISC to hire two digital navigators.These dedicated coaches will provide digital skills and expand awareness of career opportunities within the technology sector,while ensuring at least 200 people gain employment each year.Banks says,“Ally heard about Detroits most pressing financial and social challenges and rose to meet those needs in a meaningful way.”The Housing Impact Fund II:Maintaining affordable rent with Ascent HousingNaturally-Occurring Affordable Housing(NOAH),unsubsidized properties that have modest rents due to lower market values,has become a scarce commodity in the U.S.Many developers buy older apartment communities,update them and then increase rent,pushing out low-income families.When Erskine Bowles,Nelson Schwab and Ascent Housing launched Housing Impact Fund in 2020,the partnership hoped to disrupt this troubling trend in the Charlotte metropolitan area and beyond.With$58 million raised,Housing Impact Fund successfully acquired,renovated and preserved affordable rents for 805 apartment units,providing homes to more than 2,000 residents.2023 CSR Report 14What is a mission-related investment?A mission-related investment,or MRI,is an investment in an organization or fund that promotes long-term social impact and also earns a return on the investment.When successful,Ally can reinvest its gains into the community,extending our impact.Following this achievement,Housing Impact Fund raised a second fund(HIF II)in 2023 with$67 million of impact capital from dozens of corporations,foundations and individual investors,including$3 million provided by ACF.With HIF II,Housing Impact Fund plans to acquire approximately 1,200 units,which will provide affordable,quality homes to 2,500 people.Allys contribution will help to keep rents stable for 20 years.Housing Impact Fund will also support its modest-income residents by providing supportive services on-site in the areas of education,health,workforce development and financial wellness.Ascent Housings Managing Principal Mark Ethridge says,“Allys significant contribution helps amplify our philosophy beyond our own efforts.When a company like Ally locks arms with us,we move one step closer to achieving our mission.”The investment in HIF II was Allys first mission-related investment,a strategy the Foundation hopes will further boost the reach of its community investments by ensuring those funds continue to circulate back where theyre needed most.Rizer says,“The impact weve been able to make in such a short time is a testament to how Ally truly lives by its ethos:Do It Right.”152023 CSR Report 152023 CSR Report The Jimmy&Rosalynn Carter Work Project at Plato Price.The Meadows at Plato Price is no stranger to historic moments.Plato Price School,which once stood on the affordable housing development site,provided early education to renowned members of Charlottes Black community for decades.In October 2023,it added another significant moment to its timeline:serving as the site of the 37th Jimmy&Rosalynn Carter Work Project.As the premier annual event for Habitat for Humanity,the Carter Work Project provides an international stage for the volunteerism and communities it supports,accelerating construction by attracting additional corporate support and celebrities like 2023 hosts Garth Brooks and Trisha Yearwood.During the Carter Work Project,volunteers and organizations worked on a total of 27 homes.Ally employees have worked with Habitat for Humanity on the Plato Price site since the project broke ground in 2021.The project is funded partly by a$1 million cornerstone commitment from the Ally Charitable Foundation.This year,we held the Groundbreakers Challenge,a volunteerism competition across our organization.The two employees from each of our five regions(northeast,southeast,central,west and pacific northwest)with the most service hours came to Charlotte to join the Carter Work Project.“The opportunity to bring together our employees to serve our community through this unique event was extraordinary,”says Ally Manager of Corporate Citizenship&Employee Philanthropy Brianna Alexander.“Our teammates always show up for our communities,and the Groundbreakers contest allowed us to reward that generous spirit.”During the build,Ally rallied around the future home of nursing student and single mom Keea Carroll.Throughout the week,Ally team members contributed more than 300 hours of work,working side-by-side with Carroll and her two daughters.“Im looking forward to sitting on my porch while the sun rises with my coffee in hand,and I will always think about the team that made it possible,”Carroll says.“It was extraordinary to see all these people from different backgrounds,races and socioeconomic statuses working together to make my dream of homeownership come true.”As The Meadows at Plato Price approaches completion in 2024,the Carter Work Project serves as a strong reminder of the power of community.Employees.172023 CSR Report Our purpose-driven culture and people-first approach has always been what sets us apart from the competition.From expanding benefits,investing in the future and providing safe places for teammates to find meaningful connections our employees feel supported professionally and personally in those key moments that matter.Listen,learn,act:Making moments matter.Mentally FitIn 2023,we expanded our commitment to the health and well-being of our employees with the launch of Mentally Fit a new benefit providing employees,their families and household members with personalized,confidential care for their emotional and mental health,how,when and where they need it.This additional benefit provides up to 16 free counseling sessions for each individual at no cost regardless of their participation in our medical plan,to address ongoing concerns over the cost and access to mental health care,helping to build resiliency among our employees.Easier access to mental health resources and credentialed professionals is just one aspect of our inclusive culture and improved offerings.We heard our employees,including many of our minority and LGBTQ team members,were struggling to find the right provider for their mental health needs.The quality of care can be significantly better when a patient sees a mental health professional who is the same race,gender or sexual orientation.Doing so can help prevent medical bias,which could lead to poor treatment and inaccurate or delayed diagnoses.So,we focused our efforts on finding a better solution.The new offering through Lyra allows employees to discover and select providers and schedule appointments all in one place.“Inclusive benefits need to account for all of our teams needs,”says Executive Director of Total Rewards Gwen Gollmer.“Mental health is an essential part of overall well-being and we are continually looking for ways to improve the resources we provide our team.”Since its rollout,more than 2,600 people(both Ally teammates and their loved ones)have registered for Mentally Fit and more than 1,300 have begun their care journey.“On the outside,I appeared to be handling my grief extremely well,but in reality,my life was turned upside down.When Ally introduced Mentally Fit,I was hesitant,but Im so glad I signed up.I meet with my coach every other week.She asks me what Im going through and gives me tools and homework to support the work we are doing in my sessions.”Deb OchsDigital Media Manager“We all have the stress and anxiety of everyday responsibilities and now,more than ever,its important to acknowledge that its okay to not be okay.The right mindset can help us take action,learn from setbacks and,quite simply,Be(Even)Better.Thats why caring for our employees mental health and implementing programs like Mentally Fit is a top priority for us.”Kathie PattersonChief Human Resources Officer2023 CSR Report 18Building belonging through DEIWe have worked intentionally to create a company culture that embraces diverse talents and backgrounds,where colleagues feel valued as both individuals and members of the team.We believe the best ideas come from a collective mixture of different voices and perspectives.Our DEI journey2016DEI role was established with a focus on building an inclusive organization2017 Launched the Diversity&Inclusion(D&I)Council and Strategy with eight ERGs( 1,650 members)Eliminated pay history in support of equal access to earning potential2018Launched diversity metrics and D&I scorecards2019Evolved fertility and family-building benefits,so every employee who wants to expand their family can2020 Established the supplier diversity program and the multicultural marketing team Issued first#Ownit grants Increased minimum wage to$20/hour2021Recognized as a“Top 50 Company”from DiversityInc and named among the top 10 for ERGs2022 Added equity to our DEI efforts Increased minimum wage to$23/hour2023 Increased ERG participation to 59%Expanded LGBTQ support through Inclusive Care192023 CSR Report Our Employee Resource Groups(ERGs)were launched in 2017 to recognize and embrace the differences that make us stronger,provide safe spaces to leverage unique perspectives and create opportunities to learn,grow and ultimately make connections that can create change for our employees,our communities and our customers.“Inclusion is our starting point,”says Chief Diversity Officer Reggie Willis.“To ensure our team feels connected,we need to meet them where they are at.”As we celebrated the sixth anniversary of our ERGs,employee participation grew to an impressive 59%of our workforce belonging to at least one group.With dedicated focus months,each ERG has delivered cultural education and awareness that expands understanding and collaboration.“I strongly believe ERGs are the grassroots powerhouses that drive positive change,spark innovation and cultivate a workplace where everyone has a voice.”Crystal WilliamsDirector,DEI ERGs and Partner ManagementWe also launched Conversations with Allies,an ongoing series designed to be a springboard for discussing how all teammates can be better allies to one another,for customers and in the community,hosted by several well-known experts from academia and workplace development and moderated by our senior leaders.Our commitment to inclusion also emphasizes representation transparency,accountability and action for our employees.At the end of the year,were proud to say that our gender representation was approximately 51%men and 49%women.We also nurtured an environment of inclusiveness and belonging with a score of 80,exceeding industry benchmarks of companies globally as measured by our third party-provider.202023 CSR Report Owning itIn 2020,Ally introduced our first#OwnIt grant to make all employees shareholders,and for the past four years,weve continued to do it.Why?Its about living our values,leading with heart and humanity,and inspiring an inclusive culture where everyone has a seat at the ownership table.The passion,protection and empowerment that come with an ownership mentality are not only good for business theyre transformational for employees.Key highlights:4 million restricted stock units to Ally teammates since program inception 6,700 Ally employees saw their first#OwnIt grant vest in 2023Ally supports the#OwnIt program with a robust financial education program that includes free sessions with certified financial planners,seminars and sessions geared for people across life stages and with different family needs.Improving access to financial benefitsAt Ally,creating equity for our employees takes many forms.As the first round of#OwnIt equity awards,our annually distributed 100 restricted stock units per eligible employee,vested in 2023,financial opportunities for our employees were top of mind.We discovered key financial benefits were being under-utilized by our team,especially among those in hourly positions.To address this gap we introduced a new,yet familiar financial literacy course for our employees:My Money Journey.“My Money Journey used existing resources and repurposed them in a format that was more useful for our employees,”Senior Director of Financial Health and Wellness Jacqueline Howard says.“We had the tools,but needed to make it more accessible.”We launched the six-month pilot program with two objectives:Help employees build their financial literacy confidence Better communicate Allys financial benefits and resourcesEach month,the cohort met twice virtually,and managers worked with leadership to make sure hourly employees could join during work hours.Thought leaders offered their time and expertise to lead sessions on budgeting,credit,debt,the psychology of money and more.Forty-two employees completed the course,putting more than 900 hours toward boosting their financial literacy.“The#OwnIt grant is the first time Ive been with a company where they gave me stock.Its really a great experience for people who may or may not have it within their pay to be able to purchase stock on their own.Its making me more confident as I get closer to retirement.Knowing I have something thats going to help towards your retirement,as a backup.”Lisa FloydAlly Customer Experience Team212023 CSR Report Doing culture rightWe have always and will continue to be a relentless ally for our teammates.Our journey to Be(Even)Better is a long one weve made significant strides in our DEI efforts,weve continually introduced improved and inclusive benefits,were striving to increase financial equity for all and while there is much more to do,we will never stop working to Do It Right for them.2023 workplace awards and recognitionMoguls in the Making.232023 CSR Report alumni at HBCUs feel when they come together.Seeing our Mogul alums reconnect with each other,some for the first time due to COVID,was an amazing experience.The bonds that our Moguls are making with each other will last a lifetime,and Ally is proud to be part of it.”For Moguls alum Andre Wilkes,the reunion was a homecoming.The Detroit native was a member of the winning Moguls team in 2021.Their pitch,Funnl,a middle-skill job certification and employment platform similar to LinkedIn,led to an Ally internship during which Wilkes helped develop the Moguls mentorship program:MogulMADE.“The MogulMADE panel at the reunion was energizing,”Wilkes says.“It is a huge confidence booster to see something I worked on come to life.”Today Wilkes is working for the NFL while pursuing a masters degree in Social Entrepreneurship at the University of Southern California.Sixty students,15 teams,four days and one challenge:Develop an innovative and impactful business solution to address economic mobility challenges.Launched in 2019 in collaboration with the Thurgood Marshall College Fund(TMCF)Moguls in the Making brings together students from Historically Black Colleges and Universities(HBCUs)to enhance their business and entrepreneurial skills through sessions with Ally leaders and business experts in entrepreneurism.It has become a pillar of Allys corporate social responsibility work,as well as a beloved annual tradition for Ally.In its first five years,Moguls has expanded to include more schools,mentor engagement and local and national business leaders sharing their experiences and expertise.As the program has grown,its mission has remained the same:To invest in the future of aspiring business leaders through innovative programming that will leverage their unique perspectives,provide approaches to challenges and discover opportunities that drive innovation,while helping them to realize their full potential.Building social capital and improving access for HBCU students.Where are they now?Moguls in the Making has given HBCU students new career paths and built social capital and a talent pipeline of future business leaders.Graduates have gone on to start their own companies,continue their education and/or joined the Ally team.To mark their successes and the fifth anniversary of the program,we welcomed approximately 100 HBCU students for a reunion weekend in Detroit featuring empowerment panels,financial workshops and a celebration with UnitedMasters artists Keely Crawford,Jay Pitts and Curtis Roach.Former Moguls shared stories of their experiences and reveled in the incredible community this program has created.Senior Director of Corporate Citizenship Natalie Brown says,“Moguls has only enhanced the business opportunities and family environment that students and Over the past five years,Moguls in the Making has had 270 participants and contributed over$900,000 in scholarships and awards.242023 CSR Report Where were goingAfter fielding a record number of applications,the fifth class of Moguls in the Making was already off to an incredible start,but we pushed ourselves and expanded the event to include more valuable experiences for the students.As with previous classes,students were tasked with presenting solutions to reduce barriers to economic mobility through the lens of a specific industry,but the class of 2023 got a deeper and up-close look at Charlottes economic mobility landscape through a tour led by Community Building Initiative(CBI).The students were able to take in Charlottes heritage,history and current financial obstacles in key areas like education,transportation and housing.This immersive element,along with guidance from Ally and industry mentors,served as the foundation for the business plans developed over the next three days.We were astounded by the participants ingenuity and the winning teams innovative,creative solutions:1st place N.C.A&T State University Greensboro,North CarolinaPrize:$20,000 scholarships for each studentPitch:Capital in Color Lending uses AI-driven products tailored for communities of color to create innovative approaches for accessing capital,taking into account alternative credit history,non-traditional income and financial behaviors to prove creditworthiness.2nd place North Carolina Central University Durham,North CarolinaPrize:$10,000 scholarships for each studentPitch:Food 4 Thought provides budget-friendly and healthy meal solutions for lower-income households and engages with the community through events centered around healthy lifestyles,nutrition and financial education.Prize:$5,000 scholarships for each studentPitch:Queensville is a community-centric and employee-owned grocery store that invests in its community by providing jobs and giving employees the option to share company profits through a wage-to-profit program.3rd place Texas Southern University Houston,TexasAs we experience every year,with the right tools,access and the right opportunities,these students deliver extraordinary work.Through our partnership with the Thurgood Marshall College Fund,we can and will continue to shine a light on the talents of HBCU students and celebrate their success.“As an HBCU Alum,it is an honor to support so many students through the first five years of this program,”Brown says.“The intelligence,creativity and curiosity of these young leaders year after year keeps us motivated to build a better Moguls in the Making program and deepen our engagement with HBCUs.“2023 CSR Report 25Moguls memoriesDeMari TynerMoguls class of 2019Chaz HolderMoguls class of 2020Andre Wilkes Moguls class of 2021Jamaun TatumMoguls class of 2022North Carolina A&T State University,class of 2020“I feel confident when I walk into any room because of Moguls in the Making.It completely changed my life,translating into an internship and job and turned me into a networker.”Moguls superlative:Most likely to networkAlabama A&M University,class of 2022“During Moguls in the Making,I first started to recognize the importance of putting the recipients at the center of the solution when youre problem-solving.This is true across industries and has been critical to my growth as an engineer.”Moguls superlative:Most inspiredHoward University,class of 2023“Moguls in the Making taught me how I can use business to solve global problems while remaining profitable.This interest in the intersection of social responsibility and business led me to pursue my Masters in Social Entrepreneurship at USC.”Moguls superlative:Most theatricalMorgan State University,class of 2024“Moguls in the Making was my first true experience in a corporate setting.It taught me truly valuable soft skills such as courage,determination and collaborative learning.”Moguls superlative:Most likely to talk first262023 CSR Report Moguls class of 2023Laia GarlandMoguls class of 2023Javen WashingtonMoguls class of 2023Nyla WardMoguls class of 2023North Carolina A&T State University,class of 2023“Moguls in the Making creates a space for Black and Brown students to flourish by changing the narrative around who can succeed in the business world.”Moguls superlative:Most likely to become a marketing executiveNorth Carolina A&T State University,class of 2024“Business acumen and an appetite for entrepreneurship need to be developed,and often,these skills arent learned in the classroom.They are caught,not taught.Moguls in the Making fosters that mindset.”Moguls superlative:Most likely to wake up earlyNorth Carolina A&T State University,class of 2026“Moguls in the Making bridged the gap between academic knowledge and practical skills.The human-centered design mindset has remained with me.”Moguls superlative:Class activist272023 CSR Report Digital skills for a digital world.As a digital bank,providing our customers and communities with the skills and resources they need to succeed in an increasingly technological world is a priority.Allys Bridging the Digital Divide(BDD)program works with organizations and initiatives that help close the digital equity gap for underserved and underrepresented communities.With the help of these community partners,weve made significant progress within each of BDDs three pillars:access,advancement and opportunities.Saturdays in the D,a free summer camp and adult skills enrichment experience,was supported in part by Allys BDD program in 2023.With our$150,000 donation and support from the City of Detroit,University of Michigan and Detroit Public School Community District,the beloved summer program returned in an expanded format after a three-year hiatus due to the pandemic.The 2023 program provided six weeks of STEM-based classes for 7th to 12th graders and introduced a four-session pilot program for adult learning.The curriculum included computer programming and writing for digital courses,as well as two Technically Speaking and financial education sessions led by the Ally team with money lessons tailored for adult participants.Ally technology and financial experts were also on-site every Saturday to provide personalized mentoring.Students and adults of all ages also had the opportunity to experience campus life at the University of Michigans Detroit Center and Ann Arbor campuses,where the events were hosted.By summers end,approximately 60 middle schoolers and more than 100 adults gained valuable exposure to new technology tools and developed new work and life skills that will have a positive impact on future career prospects.“Digital access and opportunities have become essential components of financial success,”says Ally Executive Director,Strategy&Enterprise Technology Dan Lemont.“Programs like Saturdays in the D that connect technology and money for kids and adults are doing incredible work to improve economic mobility.”“As a digital-first organization,we understand the doors that technology can open.Programs like Saturdays in the D help to bridge the digital divide and create personal and financial opportunities for underserved communities.”Sathish MuthukrishnanChief Information,Data and Digital OfficerSupplier Diversity.When Ally launched its Supplier Diversity program four years ago,our goal was to build an ecosystem of partners and suppliers who truly represented our communities.By fostering existing relationships and actively engaging new suppliers through events like our annual Supplier Diversity Symposium and Quarterly Supplier Spotlight events,we are continually moving forward with our objective.Through the work of our partners such as The Allen Lewis Agency(TALA),a women-and minority-owned marketing communications agency based in Detroit,were experiencing how critical and valuable these connections are.Deepening connections with Supplier Diversity.“For me,its all about our commitment to building authentic connections between brands and the communities they serve.Were proud to have the opportunity to partner with Ally as they deepen their relationships with multicultural audiences.”Jocelyn ColeyCo-founder and CEO at The Allen Lewis AgencySupplier Diversity milestones2nd Supplier Diversity focus month celebrated in July3rd annual Supplier Symposium hosted in FebruaryNamed a Greater Womens Business Council Top Corporation for 2nd consecutive yearReceived Disability:INs 2023 Top Corporation for Disability-Owned Businesses Award$176 million in Tier 1 spend with diverse-owned businesses 31%increase in Tier 1 diverse spend throughout 2023 50%growth in spend with women-owned businesses in 2023 50%of Allys top suppliers by spend reported Tier 2 diverse spend throughout 2023Initiated a new relationship with an independent sustainability ratings and assessment provider to begin evaluating the sustainability performance of third parties within our supply chain292023 CSR Report 302023 CSR Report Supplier terms,explainedDiverse supplier:A business owned by U.S.-based minorities,women,LGBTQ ,veterans and those with disabilities,and small or disadvantaged businesses defined by local,state or federal classificationsTier 1 suppliers:Organizations that enter into a direct contract with Ally to supply products and services Tier 2 suppliers:Businesses that have subcontracted opportunities with Allys Tier 1 suppliers In its first year working with Ally,TALA placed stories about Moguls in the Making in various multicultural publications,including a feature story from Essence,and secured an Ally-hosted financial discussion with Ebony.“Ally was doing incredible work with students attending Historically Black Colleges and Universities,”TALA Co-founder and CEO Jocelyn Coley says.“The opportunity to amplify programs such as Moguls,particularly with a Black audience,made growing our relationship an exciting prospect.”TALA transitioned from a Tier 2 supplier to Tier 1 in 2023,now working directly with the Ally multicultural marketing team.“From the beginning,TALAs success in forging connections between Ally and minority-owned media has greatly expanded the visibility of our brand to the audiences we most want to reach,”says Senior Director of Supplier Diversity and Sustainability TJ Lewis.“Strengthening our relationship was a natural next step.”In 2023,TALA expanded its role,leading the marketing and media outreach efforts for the fifth anniversary of Moguls in the Making,which included a special reunion event in Detroit.“We were excited to help Ally celebrate this milestone and build more interest in Moguls among diverse communities,”Coley says.“The chance to show off our hometown and its vibrant culture was an added bonus.”Beyond Moguls in the Making,TALA has leveraged its personal and professional connections and years of experience in multicultural marketing to identify new opportunities for Ally,such as the American Black Film Festival(ABFF).In its first year participating,Ally led a panel on financial education for filmmakers with TALA handling on-site execution and media outreach.“We witnessed Ally supporting creatives through relationships with UnitedMasters at events like Art Basel,”Coley says.“The American Black Film Festival felt like a natural fit with more explicit ties to the Black community.”Allys ABFF debut introduced our brand to a new audience,garnered coverage of Ally in Essence and created new opportunities for future conversations and collaborations.A strong startTo improve and expand our diversity,equity and inclusion programs,we aimed to obtain prominent coverage in Black and minority-owned media outlets in order to reach a larger and more diverse audience.TALA began as a Tier 2 supplier,working with us via another Ally marketing agency partner.TALAs relationships with Black-owned media outlets and its decades of experience in multicultural media outreach improved the diverse media coverage for Moguls in the Making(learn more about this program on page 23).312023 CSR Report Better togetherThe meaningful work TALA led in multicultural marketing earned the agency Allys Diverse Supplier of the Year Award and proved building a more diverse vendor ecosystem shouldnt be focused solely on metrics and bottom lines.It should also take into account the relationships that form its foundation.Whether it involves increasing our engagement with multicultural media or hiring more diverse suppliers,we strive to bring that spirit of collaboration and inclusivity to all of our relationships.Bringing la cultura.The Hispanic and Latino community in the U.S.represents a multitude of cultural backgrounds,each with its own unique traditions and history.Yet a common misconception exists that this community either sees themselves as 100%American or 100%Hispanic and Latino.This disconnect has led to a lack of authentic Hispanic and Latino representation,particularly in the financial services industry.It has also created a dynamic that can be detrimental to the financial futures of Hispanic and Latino people.Driven by its mission to bridge culture and finance,our multicultural marketing team set out to tell the story of duality and better connect with this incredibly diverse and often overlooked community.“The next generation embraces what makes them different,”Senior Director of Multicultural Marketing Erica Hughes says.“To better support them,we need to embrace diversity as much as they do.”To achieve this,the multicultural marketing team launched Biculturally,a multifaceted creative campaign that included:A digital ad campaign that brought the diversity of the Hispanic and Latino community to life Our first digital sponsorship of the Latin Grammys that put a spotlight on the financial lives of this community On Instagram,we worked with Latina superstar DJ VRYWVY(pronounced“very wavy”)who starred in a series of posts sharing her personal financial story in a fun and dynamic format Every element of the campaign came together to help us better engage with the Hispanic and Latino community.“The future is diverse,”says Hughes.“We must find tangible ways to connect authentically to build trust with all of our customers and enable better financial futures.”322023 CSR Report Community Reinvestment Act.Ally Lendistry:Startup spotlightLendistry provided capital to 1,325 startups in 2023,utilizing funding from Allys$35 million loan.Colsen,a Miami-based e-commerce business that sells a variety of home products including food storage solutions,heavy-duty extension cords and even portable fire pits,was among the companies receiving capital.Lendistrys loan has helped Colsen expand its product selection,and owner Armando Colimodio anticipates sales will double.“We have large plans to scale,but capital to facilitate it is critical,”says Colimodio.“By working with Lendistrys community lending,weve been able to better invest in our business.”342023 CSR Report Another Outstanding rating for CRA.The drive to deliver essential financial resources for LMI populations while meeting our strategic plan priorities was acknowledged by our federal regulators in 2023 through securing our third consecutive Outstanding CRA rating a designation achieved by only 12%of banks nationally.Were grateful for the recognition and inspired by the results were seeing in the communities we serve.How does a bank powered by culture approach its obligations under the Community Reinvestment Act(CRA)?We continually make meaningful investments in our communities that meet or exceed our strategic and regulatory commitments.CRA was put in place to ensure U.S.banks help meet the credit needs of their communities,with a primary focus on low-and moderate-income(LMI)areas.Its a mission thats at the heart of Allys brand and culture to Do It Right.Now the work continuesOur CRA team consistently looks to support organizations that prioritize the financial and overall well-being of their communities.In 2023,Ally originated$1.3 billion in community development loans and investments,including$35 million to Lendistry,a minority-led,technology-enabled Community Development Financial Institution(CDFI)and one of the most active and impactful small business lenders in the country.Lendistry Founder and CEO Everett K.Sands spent decades in the financial services industry and experienced first-hand how big banks often overlook a large segment of small business owners in need of capital,a majority of which are often minority-or woman-owned or who are located in LMI and rural communities.352023 CSR Report“For many of these businesses,CDFIs are their best loan option because theyre hyper-local,knowledgeable of the economic needs of their area and run by those living in the community theyre investing in,”Sands says.“But what about entrepreneurs in neighborhoods without CDFIs?Lendistry fills those gaps with a tech-forward approach.”To date,Lendistry has delivered$9.9 billion in small business loans and grants,supporting more than 600,000 organizations in underserved communities across the U.S.Despite this success,it was not easy to launch Lendistry.“We were doing something that hadnt been done,”Sands says.“Proving the value of this new model required the trust of our investors.”In 2022,Lendistry reached out to Ally for a line of credit to expand its capacity to make loans to small businesses.While the post-pandemic effects continued to impact financial markets and the overall economic environment,we were committed to supporting Lendistry and its mission.In total,Ally led the coordination efforts in helping Lendistry secure a$55 million loan,which includes Allys$35 million commitment and$20 million from another financial institution.The loan,which closed in Q2 2023,facilitates the origination of small business loans ranging from$25,000 up to$5 million with a primary focus on minority-and women-owned businesses and those operating in LMI areas.$1 billion for affordable housingWith home affordability at its lowest in 40 years,supporting organizations that make housing more accessible continues to be a top priority.Allys 2023 deployment of nearly$1 billion in loans and investments for affordable housing initiatives will support housing development and preservation across the U.S.As part of its broader commitment,Ally distributed more than$4 million in grants and investments in its hometowns and beyond to support the affordable housing objectives of 17 non-profit organizations,including:CharlotteDetroitAs the self-proclaimed“largest fintech CDFI Fund,”Lendistry is forging a new path by implementing the use of innovative technology to a sector thats still largely manual.By infusing effective and user-friendly technology into its suite of services providing technical assistance and loan products for entrepreneurs Lendistry removes barriers to access that analog approaches often perpetuate.“Lendistrys use of technology and commitment to meeting customers where theyre at while providing customized loan products for entrepreneurs who would otherwise not be able to access them makes them a natural partner for Ally,”says Ally CRA Senior Credit Manager Antonio Pizano.The impact of this funding extends far beyond underserved businesses.A thriving local economy benefits the entire community and provides increased opportunities for individuals and families to establish generational wealth.“Lendistry was a leap from traditional CDFIs,operating at a scale that had not been done before.Ally understands the value of investing in whats next and embraced our approach immediately,“Sands says.“We see the impact when we hear from these businesses and see their success.”National362023 CSR Report SoLa Impact FundWith Ally as the title sponsor,SoLa Impact officially launched Pathways to Homeownership,a financial education,empowerment and savings-match program that is intended to prepare and place renters on a pathway to homeownership.The three-to five-year program will use a combination of rent-forgiveness and savings match to help LMI Black,Hispanic and Latino renters accumulate savings to put towards a down payment or other costs associated with purchasing a home.The program also includes monthly financial education workshops that are facilitated by Ally team members.Allys$50,000 grant in each of the last two years builds on a relationship that began with a$25 million investment in SoLas Black Impact OZ Fund,which develops affordable and workforce housing in minority communities.“A safe place to live is a basic human need,”Executive Director&CRA Officer Jan Bergeson says.“With home affordability at historic lows,especially among minority communities,the work being done by organizations like SoLa Impact is more critical than ever.”AIN VenturesMany veterans possess entrepreneurial spirit and skillsets,but the startup space can be difficult for former military members.AIN Ventures is on a mission to ease the pathway to entrepreneurship by making seed-stage equity investments into dual-use technologies that have applications in both the private sector and government and in veteran-led startups.Former U.S.military officers founded AIN Ventures and leveraged the expertise of graduates from the U.S.Military Service Academy to create valuable connections and resources for their companies to grow and succeed.Allys$2 million investment in the organizations AIN Ventures Fund I,LP,will allow AIN Ventures to deepen these relationships and create more opportunities in the veteran startup space.Committed to community.Throughout 2023,Allys CRA group awarded$1.6 million in grants to 65 nonprofits tackling some of our communities most pressing social and economic challenges,from affordable housing to veteran affairs to sustainable energy.Snapshot372023 CSR Report Energy Impact Credit FundFrom 2018 to 2022,Energy Impact Partners,an investment firm focused on innovations that accelerate the clean energy transition,enabled savings of more than 18.9 million metric tons of CO2.This amount is the equivalent to one years worth of greenhouse gas emissions from 4.1 million cars.Through debt investments in small businesses decarbonizing the global economy,the firms Energy Impact Credit Fund II,LP(EICF II),will further its impact and build climate-related resilience among low-income communities.Allys$5 million investment will help EICF II enable growth across the clean energy value chain to support supply chain decarbonization,clean tech-enabled infrastructure,demand electrification and other key technologies to create a sustainable future.RBC Community Investments National Fund-35Allys$25 million Low Income Housing Tax Credit(LIHTC)equity investment in RBC Community Investments National Fund-35,LP is helping to finance 14 projects nationwide,including QHA Homes III,located on the Fort Yuma Indian Reservation in Winterhaven,California.The project involves significant rehabilitation of 26 single-family residences scattered within an approximate 10.7 acre site.Once completed,the units will be available for families earning at or below 30%,50%and 60%of the area median income.Allys investment in the fund also helped to finance the Liloa Hale 117-unit affordable senior housing project in Maui,Hawaii,which is scheduled to commence in 2024.Although the recent catastrophic fire in Maui caused additional construction challenges,the site is expected to be one of the first new affordable housing projects to be built post-disaster,giving a sense of hope and renewal to the community as well as desperately needed affordable housing for seniors on the island.Enable Ventures Enable Ventures is the first venture fund dedicated to closing the disability wealth gap.Allys$3 million investment will expand Enable Venturess capacity to support companies improving the lives of people with disabilities,offer resources to entrepreneurs with disabilities and provide support to people with disabilities who are unemployed or underemployed.382023 CSR Report From a historic broadcast deal for the National Womens Soccer League(NWSL)to a record-setting TV audience for the NCAA womens basketball final to a$1 billion valuation for the WNBA,2023 was an extraordinary year for womens sports.We celebrated these wins alongside millions of fans but also recognized the playing field was still far from level for female athletes.Nowhere is that more apparent than in broadcast media where womens sports accounted for less than 10%of coverage last year.With broadcast rights driving the majority of revenue for professional sports,this glaring gap is holding back the earning potential of female leagues and athletes.In 2022,we set our commitment to achieve 50/50 advertising spend for womens and mens sports by 2027.Through our NWSL sponsorship,work with the league and partnership with CBS to move the championship game to primetime,we set a new precedent and progress has been made.Since we made our pledge in May 2022,Ally has increased its spend on womens sports by 300%and reached a 55/45 split.To continue to close the gap in 2023 and beyond,we needed to remain intentional with our investments and encourage other brands to join in the movement.Our game plan tackles this challenge via three core pillars:A new game plan for womens sports.“Allys tireless dedication and commitment to advancing womens sports is phenomenal and directly benefits our student-athletes,sponsored sports and member institutions.We look forward to building upon our meaningful partnership and working collectively to further elevate our collective mission.”Jim J.Phillips,Ph.D.ACC Commissioner1.Work with legacy mediaAll too often womens sports are included as add-ons to mens media packages.To enact change,we challenged Disney and ESPN to create a first-of-its-kind media buying package anchored 90%in womens sports.The unprecedented deal upended traditional media buying directly increasing womens sports coverage and paving the way for other brands.The partnership included a ground-breaking collaboration with the Atlantic Coast Conference(ACC)and SportsCenter takeovers featuring all-female crews.“At Disney,we prioritize amplifying womens sports and collaborating with like-minded brands to tell diverse sports stories,”says Deidra Maddock,VP of Sports Brand Solutions at Disney Advertising.“Working alongside Ally has helped us further innovate how we increase access and visibility for womens sports.”392023 CSR Report Make it a team effortWe cant do this alone;we need other brands to pick up the playbook.To rally other organizations around the cause,we launched the Womens Sports Club in collaboration with market research firm Sports Innovation Lab.The cohort brings together sports media and sponsorship decision-makers with a shared goal to elevate investments in womens sports.Members include Google,Meta,Puma,Coca-Cola,Delta and more.We still have a long road ahead,but together,we are moving forward.Were excited to lead this movement and are energized by the change as we continue sprinting toward a more equitable future for women.“Womens sports have made incredible progress,but these athletes are still woefully undervalued by broadcast networks and the industry.50/50 is the only conclusion well accept for this crusade.”Andrea BrimmerChief Marketing and PublicRelations Officer2.Support emerging mediaRelationships with emerging media platforms that are female-owned and athlete-led like The GIST,Just Womens Sports,Re-Inc and GOALS,empowered Ally to support media focused exclusively on womens sports,connecting us with audiences hungry for more access to their favorite athletes and teams.3.Invest directly in playersTo help amplify the voices of the athletes,creators and visionaries,we formed Team Ally.This collective is a non-traditional ambassador program that was developed to drive the visibility of womens sports and assemble an advisory group for idea-sharing and decision-making.The roster includes NWSL and World Cup superstars Sophia Smith,Ashlyn Harris and Julie Foudy;WNBA two-time leading scorer Nneka Ogwumike;Paralympic swimmer Jess Long,Atlantic Coast Conference basketball player Deja Kelly and more.Auto.412023 CSR Report A better road to ownership for minority auto dealers.The next generation of auto dealers faces a multitude of challenges to remain competitive.In addition to the day-to-day management of a storefront,dealers must navigate online sales,be experts in digital marketing and keep up with the newest technological advancements in the automotive industry.“The leaders of the last generation had to be great at business,”says National Association of Minority Automobile Dealers(NAMAD)president Perry Watson.“Todays dealers have to be masters in everything.”Recent technological advances have provided new business opportunities to dealership owners,but this digital transformation has contributed in part to systemic inequality.Many auto dealerships are a family business.The keys are handed from parents to children and onto grandchildren,building legacy and generational wealth.In 2022,only 1,400 U.S.franchised light-vehicle dealerships out of more than 16,000 were owned and operated by a person of color.This gap prevents minorities from accessing the economic mobility the auto industry can provide.Paving the way to a more equitable futureSince 2018,Ally has partnered with NAMAD to create more opportunities for minorities across the automotive sector.Through our contributions to NAMADs NextGen program,we have helped the next generation of minority dealers better understand the financial requirements and responsibilities of the industry.In June 2023,Ally led a two-day NextGen dealership evaluation seminar at our headquarters in Detroit,providing attendees with essential administrative and financial information to consider when purchasing a car dealership.422023 CSR Report“One of the most difficult parts of buying a dealership has been understanding exactly what banks are looking for when considering a business loan,”says attendee Evan Hall,VP of operations and general manager of Royal Oak Ford in Michigan.“It was an incredibly valuable opportunity to speak directly with a bank and learn about the financial requirements for prospective auto dealers in granular detail.”During the course,our Ally Auto team shared their expertise on the importance of location,facility conditions,inheriting dated contracts from vendors,liens on equipment,lawsuits,understanding the essential details on financial statements and more.The sessions also included open discussions and brainstorming to allow aspiring dealers to ask questions and share their experiences and challenges.The training agenda included:Leadership exercises Buying a store brainstorms How to evaluate a dealership The financials of dealership operations Cash flow analysis The four levels of statement preparation How to build and maintain good credit Interactive sample dealership calculations Mock dealership decisions and sales“Establishing myself in the automotive business was challenging.I am a first-generation dealership worker,so I dont have family knowledge I can tap into,”says participant Lyman King,a general sales manager at Atkinson Toyota in Texas.“The entire process was completely foreign to me.NAMAD and Allys NextGen sessions gave me the tools and the courage to start.”Through programs like NAMADs NextGen,we aim to help create a more diverse future for dealerships and continue to prove ourselves as a true ally to the automotive industry.Ally Sees HerIn partnership with NAMAD,the 2023 Ally Sees Her award was presented to Gabrielle Abinion,a proud Filipina and the general manager of Fox Valley Volkswagen near Chicago.At just 25 years of age,Abinion is an emerging leader in the auto industry.She credits much of her early success to a mentor who taught her the value of challenging the industrys masculine norms and encouraged her to support the community through her dealership.Abinion embodies the spirit of the Ally Sees Her Award,which Ally and NAMAD established to recognize the significant achievements of women of color in the auto industry and their commitment to strengthening their communities.Through Abinions leadership,Fox Valley Volkswagen has donated 10 vehicles to graduates of the Naomis House program,which provides housing,workforce training and mental health services to victims of commercial sex trafficking.To further Abinions impact,Ally donated$5,000 on her behalf to Naomis House and an additional$5,000 to Cals Angels,an organization that supports pediatric cancer research and helps families affected by the disease.Environment.442023 CSR Report Our commitment to being a relentless Ally goes beyond banking.Thats why were focused on finding new and more sustainable ways to operate and reduce our impact on the environment.Since its launch in 2021,Allys Sustainability Office has helped guide the development and execution of our efforts across the enterprise to build a more sustainable and inclusive future for our stakeholders.The earliest tasks of the Sustainability Office were focused on the calculation of our carbon footprint and submission of the Climate Change questionnaire to CDP(formerly known as the Carbon Disclosure Project).These actions were key steps toward aligning with the recommendations from the Task Force on Climate-Related Financial Disclosures(TCFD)and foundational Evolving our environmental strategy.to establishing a baseline for impact.They also validated that,as a digital bank with no brick-and-mortar branches,we inherently have a smaller operational carbon footprint than many traditional banks.This is encouraging,but we recognize we can do more to mitigate the risks of climate change for our customers,employees and communities.GovernanceStrategyRisk managementMetrics and targetsBuilding on our established baseline for our environmental performance,Ally also achieved operational carbon neutrality for Scope 1 and 2 emissions for the third consecutive year.Then,for the first time,Ally obtained third-party verification to a limited level of assurance of 2022 greenhouse gas emissions(see page 70 for more information).2023 CSR Report 45Sustainable operationsAs we reimagine our facilities,we continue our focus on creating healthy work spaces,including the incorporation of Fitwel design standards in our renovation projects to support the health and well-being of our employees alongside sustainable project initiatives tied to the reduction of energy,waste and water at our owned sites.In 2023,Ally implemented several initiatives to drive our operational sustainability forward.These actions were informed by a number of environmental processes and technologies that were piloted across select facilities in 2022.1 Based on facility space under operational control as defined by the Greenhouse Gas Protocol 2 Emissions are calculated in alignment with the Greenhouse Gas Protocol.Details of our emissions calculations can be found in our CDP submission 3 Ally restated base year(2020)and 2021 emissions in accordance with the companys base year recalculation policy 4 Allys Scope 2 Market-Based emissions are zero metric tons CO2e since 2020 through the purchase of Green-e certified renewable energy credits(RECs)Greenhouse Gas(GHG)emissions metricsAlly recognizes the importance of measuring and reducing our environmental footprint,including our GHG emissions.Read more about our emissions trends and actions taken in the Appendix.Energy(MWh)1202020212022Natural Gas9,2224,3872,087Diesel1435716Motor gasoline7,46511,15515,690Purchased electricity20,56027,29529,958Total energy consumed37,39142,89547,751Greenhouse Gas Emissions(Metric Tons CO2e)2202020212022Scope 1 Emissions34,1394,4425,494Scope 2 Emissions(Location-based)47,8229,75810,019Total Scope 1 Scope 2 Emissions(Location-Based)11,96114,20015,513Total Scope 3 Emissions229,165210,050186,910Category 1(Purchased Goods and Services)195,082177,966164,924Category 2(Capital Goods)27,69428,6808,297Category 6(Business Travel)1,8242,4386,312Category 7(Employee Commuting)34,5659667,377Total Scope 1,2 and 3 Emissions241,126224,250202,423Furthermore,we continue to build capacity and expertise in climate risk management to assess and mitigate potential climate-related risks to our business and operations.This remains challenging due to rapidly evolving tools and methodologies and data limitations.Based on TCFD guidance,Ally is leveraging climate scenario analysis to consider potential physical and transition climate-related risk impacts.This type of analysis provides valuable insights into our potential climate risk exposure and helps inform future mitigation strategies.Read more about our enterprise sustainability strategy,informed by TCFD,and the progress we are making in the Appendix.2023 CSR Report 46What is centralized trash?Deskside bins can be more convenient,but they have a downside.When a trash can is within arms reach,less attention is given to what is being thrown away,resulting in more waste ending up in landfills.By shifting to a centralized approach,trash and recycling bins are placed in common locations,requiring employees to leave their desks and think about the appropriate bin for whats being thrown away.Why composting?A trash audit conducted at the Ally Charlotte Center found that it included a substantial amount of compostable material(up to 45%).Recycling organic waste into compost provides a range of environmental benefits:Diverts food waste from the landfill,where it can generate methane gas,a highly problematic greenhouse gas emission The application of compost greatly improves soil health,creating a nutrient rich resource for growing plants Prevents soil erosion Reduces greenhouse gas emissions(related to methane production)Recycles nutrientsCompleted renovation in Lewisville,Texas Implemented centralized trash and composting program Upgraded existing gas-powered HVAC system to a 25%more efficient electric system,reducing overall emissions Promoted biodiversity through landscape redesign that incorporates native species that attract pollinators and reduce water usage Installed solar panels that will generate renewable energy to offset almost 90%of the buildings electrical needs and provide weather protection to over 300 parking spacesAlly-owned sites Through a phased rollout,we installed additional EV charging stations as part of our goal to provide access to EV charging capabilities to vehicles parked at Ally-owned facilities,in line with guidance for LEED building standards and U.S.Green Building Council recommendations and commensurate with demand expectations Completed operational activities necessary to achieve our 55%LEED certification target(approved in February 2024).Set new goals for 2024 to be 71%LEED-certified and to occupy 64%WELL or Fitwel-certified space,up from 36%in 2023 Implemented centralized trash and composting programs,increasing our diversion rate(the percentage of waste that is diverted from a landfill)to 45%at the Ally Charlotte Center,the first facility to incorporate these programs.As additional facilities implement the programs,we will update diversion rates accordingly“The commitment to solar installation in Lewisville,Texas,reduces our energy consumption and utility costs while aligning with our overall sustainability focus.”Joan BurrellExecutive Director Corporate Workplace472023 CSR Report Driving sustainability awareness and building communityThroughout 2023,Green Teams,a network of Ally volunteers dedicated to environmental service,continued to celebrate the planet,sustainability and the power of individuals to make a positive impact on the environment by organizing events that provide opportunities to learn,grow and give back to our communities.Growing our Green TeamsGreen Teams served more than 3,500 volunteer hours in 2023,up 52%over 2022,assisting more than 30 community organizations.Green Teams support all areas of conservation through strategic partnership and volunteerism:Water use Preservation and management of water resourcesCatawba Riverkeeper Sponsored environmental education programming and field trips for over 1,800 K-12 studentsCommunity impact Availability and access to environmental benefits while increasing societal well-beingLand conservation Safeguard land in its natural stateAir quality Reduction of air pollutants to improve public healthArbor Day Foundation Planted over 75 trees across disadvantaged urban neighborhoods with limited access to natureRecycling Convert waste into reusable materialGreen Living Science Completed a trash audit of Ally Detroit Center in August 2023 to establish a baseline diversion rate and inform our recycling programBiodiversity Support habitats for all species and maintaining functioning ecosystemsBelle Isle ConservancySupported environmental education through continued sponsorship of the Axolotl tank at the historic Belle Isle Aquarium and volunteered approximately 400 hours through beach clean-ups,contributing to a record-breaking 2023 cleanup season for Belle Isle Conservancy with 8,936 pounds of litter collected482023 CSR Report Cultivating community-driven experiences focused on biodiversity “The community apiary project underscores Allys commitment to educate our communities on the critical importance of biodiversity conservation in preserving a sustainable future for all.”Kathleen Hebert PriceSustainability Risk ExecutiveAlly collaborated with Envision Charlotte and Bee Downtown to launch a community apiary,comprised of three beehives.The program facilitates lessons from nature through educational events and experiences that emphasize the importance of biodiversity in an era of climate change.The community apiary is located at Envision Charlottes Innovation Barn the first innovation center in the U.S.focused on the circular economy as a complementary addition to its hands-on learning and unique programming to improve sustainability,resilience,economic competitiveness and quality of life.The collaboration builds on Allys existing Green Teams activities with Envision Charlotte,with over 700 volunteer hours served with just this one organization last year.To create a welcoming home for the bees,the apiary features a mural by The Charlotte Street Art Collaborative,a woman-led non-profit organization with a mission to encourage and assist current and next-generation artists toward making a sustainable living in the arts.The Ally-branded beehives were unveiled at the Innovation Barn during a grand opening event to commemorate Earth Day for the community to learn about bees,enjoy local honey tastings and vote on names for the queen bee of each hive,which were submitted by Ally employees.The grand opening event came at the conclusion of Envision Charlottes Clean the Queen Event,a week-long effort to reduce litter on city streets,roadways and neighborhoods,during which Ally won:Most Volunteers Award with 56 volunteers Most Textiles Diverted Award for recycling hundreds of t-shirts into sound dampening panels More details about our enterprise sustainability strategy,informed by TCFD,and the progress we are making can be found in the Appendix.Governance.502023 CSR Report Governance.The Ally Board understands that strong corporate governance practices are critical to Ally achieving its strategic objectives and maintaining the trust and confidence of its stockholders,regulators,customers and other key stakeholders.Strong governance is an essential component of our Do It Right culture.LEADThe Board is responsible for establishing the proper“tone at the top”for the culture and values of Ally,including approving Allys Code of Conduct and Ethics and monitoring managements promotion of integrity,honesty,and ethical and legal conduct throughout Ally.The Code of Conduct and Ethics is grounded in our LEAD core values(Look Externally,Execute with Excellence,Act with Professionalism and Deliver Results)and is designed to help Ally employees and representatives understand the standards of conduct that Ally requires and to meet other fundamental obligations that are vital to Allys success.Creating clear expectations for ethical behavior is an essential component of our“Do It Right”approach to governance.Strong oversightThe Board is responsible for overseeing a clear strategy for Ally,including reviewing,advising management on,approving and monitoring performance against Allys strategic plan and objectives.Through its Risk Committee,the Board oversees Allys risk-management policies and global risk-management framework.The Board also oversees Allys financial performance and condition,and through its Audit Committee,monitors the integrity of Allys financial reporting and internal controls.The Board is dedicated to assembling directors who excel in fulfilling these responsibilities,exercise independent leadership and oversight of management,and operate in a cohesive and effective manner.59%of employees are members of an Employee Resource GroupEngagement versus all companies regardless of industry,as measured by our third-party provider in 2023 Top10Engagement score,two points higher than Top 10%Global Benchmarkof our director candidates are women and people of colorof our senior leadership team are women and people of colorof eligible women and people of color were promoted or moved into new roles to advance their career in 2023retention rate for women and people of color in 2023*Reflects data as of December 31st,202333SQ2023 CSR Report Diversity&inclusionWithin senior management,governance for diversity and inclusion resides with the Diversity and Inclusion Council,which includes ERG Chairs,as well as all Executive Council(EC)members.For example,in 2023,35%of Allys EC members were women,including the chief marketing and public relations officer,chief human resources officer,chief audit executive,business administration executive and president of consumer and commercial banking.Policies&chartersThe following key governing documents are available on the Companys website at of Conduct&Ethics Board of Directors Governance Guidelines Bylaws Audit Committee Charter Compensation,Nominating and Governance Committee Charter Technology Committee Charter Risk Committee CharterConclusion.532023 CSR Report Our eyes are always on whats ahead.The next monumental banking innovation.The next breakthrough for economic mobility.The next opportunity to Do It Right for our customers,employees and communities.This past year presented unexpected challenges to our industry and our business.Yet our culture and our people continued to propel us forward.None of these initiatives would be possible without the extraordinary individuals and community partners whose enthusiasm and generosity inspire us to push ourselves to be a better Ally.As we look ahead,well continue to adapt and adjust our CSR and ESG initiatives to further enhance our impact in our communities.We thank you for your interest in the 2023 Ally CSR Report.Were proud of everything our team has accomplished and cant wait to share whats next.For more information on our CSR,environmental,social and governance programs,policies and practices,please visit our website at or send your comments to and follow us on LinkedIn,Instagram and TikTok.Always an ally.Appendix.2023 CSR Report 55Climate risks and opportunities:Allys alignment to TCFD.Allys commitment to Do It Right extends to the conservation of environmental resources to promote a sustainable future for our customers,employees,shareholders and the communities in which we live and operate.We recognize the importance of understanding,preparing for and taking timely preventive action against potentially material climate-change impacts.Our strategy is informed by the recommendations of the Task Force for Climate-Related Financial Disclosures(TCFD),a framework that is intended to improve industry consistency and comparability around the complex topic of climate-related risks and opportunities.By aligning with TCFD,we are well positioned to adapt to evolving regulatory requirements,both federal and state,which are substantively based on TCFDs core recommendations.Our intentional focus on this industry framework helps us communicate our efforts in a language that resonates with our stakeholders with a goal of greater transparency and clarity on a topic that can be challenging to understand.Consistent with our brand promise,we are committed to ongoing communication regarding our environmental efforts and are excited to share our developments in this dynamic area.The four pillars of TCFDStrategy Disclose the actual and potential impacts of climate-related risks and opportunities on the companys businesses,strategy and financial planning where such information is material.Risk management Disclose how the company identifies,assesses and manages climate-related risks.Metrics and targets Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.Governance Disclose the companys governance around climate-related risks and opportunities.562023 CSR Report About this report All of the information presented in this Appendix is for the fiscal year ending December 31,2023,with the exception of greenhouse gas emissions data generated during the twelve months ending December 31,2022.This report has not been externally assured.However,we externally assure our Scope 1,2 and 3 greenhouse gas emissions on an annual basis using ISO 14064-3(limited assurance,greenhouse gas emissions assurance letter).Additional greenhouse gas emissions assurance details will be provided in our CDP Response.For greenhouse gas accounting,Ally uses the standards and guidelines of The Greenhouse Gas Protocol:A Corporate Accounting and Reporting Standard(Revised Edition,2004),The GHG Protocol Scope 2 Guidance(2015)and the Corporate Value Chain(Scope 3)Accounting and Reporting Standard(2011),which were developed by the World Resources Institute and the World Business Council for Sustainable Development.To learn more:2023 CDP ResponseAlly 2023 Annual Report2024 Proxy StatementMonitoring the regulatory landscapeAlly is committed to accountability and transparency through climate disclosures,and we continue to monitor the rapidly evolving regulatory landscape.In 2023,the International Sustainability Standards Board(ISSB)delivered the inaugural ISSB Standards,which incorporate TCFD recommendations,marking“the culmination of the work of the TCFD,”according to the Financial Stability Board.Following the release,the International Financial Reporting Standards Foundation will take over monitoring responsibilities from TCFD in 2024.U.S.regulation of climate-related issues Principles for climate-related financial risk management for large financial institutions jointly issued in October 2023 by the Office of the Comptroller of the Currency(OCC),Board of Governors of the Federal Reserve System(FRB)and the Federal Deposit Insurance Corporation(FDIC).Designed to promote consistent understanding of safe and sound management of exposures to climate-related financial risks for large financial institutions,recognizing climate risk as an evolving discipline.California State Government Action enacted three climate-related disclosure laws in October 2023 SEC Climate Disclosure final rule on mandatory climate disclosure requirements,including an accounting of Scope 1 and Scope 2 greenhouse gas emissions,released March 2024572023 CSR Report TCFD indexTCFD sectionOverviewOther source referencesGovernanceDescribe the boards oversight of climate-related risks and opportunities.The Board regularly reviews all risks including those related to climate change.The Compensation,Nominating and Governance Committee,Risk Committee and Audit Committee assist the Board in overseeing Allys climate-related strategies,risks and issues.2023 Proxy Statement Risk Committee Charter Compensation,Nominating and Governance Committee Charter 2023 CDP ResponseDescribe managements role in assessing and managing climate-related risks and opportunities.Executive management positions are responsible for both assessing and managing climate-related risks and opportunities,informed by periodic reports from the Chief Risk Officer and the Sustainability Risk Executive.2023 CDP ResponseStrategyDescribe the climate-related risks and opportunities the company has identified over the short,medium and long term.Ally uses climate risk scenario analysis to begin evaluating the extent to which climate risks could impact Allys business,augmenting our ability to assess,monitor and report on both short-and long-term potentially material climate-related risks and opportunities.2023 10-K Annual Report 2022 CSR 2023 CDP ResponseDescribe the impact of climate-related risks and opportunities on the companys businesses,strategy and financial planning.Ally has identified and defined climate-related risk as an emerging risk.Pursuant to our risk-management framework,emerging risks include those that have yet to create a material impact or would only arise during stressful or unlikely circumstances.2023 10-K Annual Report 2022 CSR 2023 CDP ResponseDescribe the resilience of the companys strategy,taking into consideration different climate-related scenarios,including a 2 C or lower scenario.As we continue to evolve and expand our climate scenario analysis approach and build capacity to evaluate additional perils,timeframes and locations,the results will inform our strategy.Describe the targets used by the company to manage climate-related risks and opportunities and performance against targets.As Ally continues to better understand operational trends and expands climate risk expertise and capacity,we will refine our ability to accurately project operational emissions and the potential for emission reduction strategies that will enable Ally to set a science-based emissions target in line with the Paris Climate Agreement.2023 CDP Response582023 CSR Report Risk managementDescribe the companys processes for identifying and assessing climate-related risks.Ally leverages the Enterprise Risk Management(ERM)framework to identify potential existing and emerging climate-related risks by conducting qualitative climate-related risk reviews to understand potential risk transmission channels that could impact operations,financial performance,employees,value chain,strategic decision-making and brand reputation.2023 10-K Annual Report 2022 CSR 2023 CDP ResponseDescribe the companys processes for managing climate-related risks.Climate Risk is currently defined as an emerging risk and is being evaluated for materiality and the appropriateness of risk management routines as outlined in the Enterprise Risk Management Policy.2023 10-K Annual Report 2023 CDP ResponseDescribe how processes for identifying,assessing and managing climate-related risks are integrated into the companys overall risk management.We have expanded our use of climate risk scenario analysis to begin evaluating the extent to which climate risk drivers could exacerbate or accelerate existing risks to better understand climate risk materiality to Ally.The results will inform our strategy to incorporate climate into our existing enterprise risk management framework in a manner consistent with safe and sound business practices.2023 CDP ResponseMetrics and targetsDisclose the metrics used by the company to assess climate-related risks and opportunities in line with its strategy and risk management process.We are still determining climate risk materiality at Ally which will inform our identification of relevant and actionable metrics to measure and monitor climate risks going forward.Disclose Scope 1,Scope 2 and,if appropriate,Scope 3 greenhouse gas emissions and the related risks.Scope 1 Emissions:5,494 MT CO2eScope 2 Emissions(Location-based):10,019 MT CO2eScope 3 Emissions(Categories 1,2,6 and 7):186,910 MT CO2e2023 CDP ResponseDescribe the targets used by the company to manage climate-related risks and opportunities and performance against targets.As Ally continues to better understand operational trends and expands climate risk expertise and capacity,we will refine our ability to accurately project operational emissions and the potential for emission reduction strategies that will enable Ally to set a science-based emissions target in line with the Paris Climate Agreement.2023 CDP Response592023 CSR Report Board oversight of climate matters The Compensation,Nominating and Governance Committee assists the Board in overseeing,in coordination with other committees of the Board as appropriate,Allys ESG strategies,initiatives and activities,including climate-related issues.The Risk Committee assists the Board in overseeing Allys climate-related risks commensurate with its structure,risk profile,complexity,activities and size.The Audit Committee assists the Board in overseeing Allys accounting and financial reporting,including in connection with any climate-related issues.GovernanceThrough transparent climate and environmental reporting,we can hold ourselves accountable and create a lasting impact for our customers,employees,shareholders and the communities we serve.Executive management across the enterpriseThe Enterprise Risk Management Committee is responsible for supporting the Chief Risk Officers oversight of senior managements responsibility to execute on our climate strategy in alignment with our enterprise risk framework,which recognizes Climate Risk as an emerging risk with transverse and dynamic risk characteristics.The Disclosure Committee is established by the Ally Chief Financial Officer,with the purpose to ensure that public financial and other disclosures,including voluntary and/or required climate-related disclosures,made by Ally and affiliates are accurate and complete,fairly present Allys financial condition and results of operations in all material respects and are made on a timely basis as required by applicable laws and SEC or other self-regulatory organization requirements.602023 CSR Report Climate risk Taking action to identify,measure,mitigate and report on the physical and transition risks driven by climate change and manage the integration of these risks into our existing enterprise risk management framework in alignment with the recommendations of TCFD.Led by the Sustainability Office in partnership with our business lines.Climate scenario analysis Introducing climate change concepts into existing risk management exercises and leveraging climate scenario analysis to better understand our potential physical and transition risk exposure.Led by the Sustainability Office in partnership with our business lines.Greenhouse gas emissions calculations Developing a solid data foundation to track and report on progress through enhanced disclosures and providing transparent,accurate and comparable climate change information.Led by the Sustainability Office in partnership with Corporate Workplace and our business lines.Green Teams A network of Ally employees specifically dedicated to environmental service,offering both training and volunteerism to drive sustainability awareness.Led by the Sustainability Office.Supplier Diversity and Sustainability Including climate-related factors for suppliers and focusing on supply chain decarbonization.Includes representatives from Supply Chain,Third Party Risk Management and the Sustainability Office.Sustainable operations Finding new and more sustainable ways to operate to reduce impact on the environment and to consume resources responsibly.Includes representatives from Corporate Workplace,Supply Chain and the Sustainability Office.External reporting Coordinating reporting and disclosure activities for climate-related information.Includes representatives from Accounting,External Reporting,Corporate Citizenship,Investor Relations,Corporate Workplace,Supply Chain and the Sustainability Office.Managing climate-related activities across the enterpriseSeveral teams at Ally work cross-functionally to integrate climate-related insights and build sustainability practices into our cultural fabric.612023 CSR Report Sustainable operations Testing environmental processes and technologies across Ally-owned facilities to identify emission,waste and water reduction initiatives and determine which will have the greatest impact Over 53%of employees at an Ally location now have access to EV chargers.As part of a phased rollout,we have installed additional EV charging stations to provide access to vehicles parked at Ally-owned facilities,in line with guidance for LEED building standards,U.S.Green Building Council recommendations and commensurate with demand expectationsStrategyAs Ally seeks to evolve and mature its environmental strategy,we are evaluating climate-related opportunities that deliver value for Allys stakeholders.These include exploring opportunities to develop products and services that create environmental and social benefits,a focus on more sustainable operations,employee engagement and training and evaluation of sustainable finance opportunities.We are working strategically to integrate climate-related insights into our decision-making where relevant and striving to help our suppliers do the same.2020202120222023Owned number of buildings(%of total square footage)2(13.8%)3(38.8%)4(51%)4(56.5%)Leased number of buildings(%of total square footage)36(86.2%)33(61.2%)28(49%)24(43.5%)%LEED-certified29.4A.2B.6B.4%WELL-certified.6%1.95.96.1%Ally operational footprint for 2020-2023 Facilitated an energy consumption test at Allys largest facility in Charlotte;efficiency and run time adjustments were made to the HVAC systems to reduce energy usage and associated emissions Centralized trash and composting to divert waste from landfills During the centralized trash pilot,the use of more than 38,000 plastic trash bags was avoided over 10 months To date,ACC has increased its diversion rate from the landfill to 45%.This does not include our relationship with Iron Mountain Paper Recycling which we estimate could increase our overall diversion rate by up to an additional 10b2023 CSR Report Enhanced strategic approach when identifying new office locations and/or renovation initiatives to include sustainability improvements,where possible.Our most recent renovation initiative in Lewisville,Texas,included the following sustainability enhancements:Implementation of centralized trash and composting program Planned installation of EV charging stations Installed solar panels that will generate renewable energy to offset almost 90%of the buildings electrical needs and provide weather protection to over 300 parking spaces Upgraded existing gas-powered HVAC system to a 25%more efficient electric system,reducing overall emissions Promoted biodiversity with the landscape redesign by planting native species that have a lower water intensity and will attract pollinatorsGrowing our Green Teams Launched in 2021 Over 5,800 volunteer hours served by Green Teams to date Funded six environmentally focused community relationships and worked alongside 24 different community organizations Supplier sustainability Joined the Sustainable Purchasing Leadership Council,a global community of purchasers,suppliers,advocates and experts dedicated to driving positive impact through sustainable procurement Membership enables access to resources,partnerships and capacity building tools as Ally takes steps to establish a supply chain sustainability program Initiated a relationship with a sustainability ratings provider to improve our ability to evaluate the sustainability performance of certain key third parties within our supply chainSustainable business strategy Collaborate across the enterprise to assess climate-related opportunities based on existing and emerging product lines broadly available to financial institutions Dealer Financial Services loan products available to assist dealerships with their electric vehicle infrastructure needs Vehicle service contract offering to provide coverage for EV drivers Host internal educational events to bolster awareness of environmental sustainability across the enterpriseGreen Teams Grew strategic relationships within our communities,hosting innovative programming and volunteer events across of our conservation focus areas land use,water use,community impact,air quality,biodiversity and recycling Launched a community apiary,consisting of three beehives in partnership with Envision Charlotte and Bee Downtown,cultivating community driven experiences focused on biodiversity.See page 48 for more information.Green Teams volunteered 3,500 hours,up 52%from 2022,supporting 30 environmental organizations632023 CSR Report Climate-related risk is generally categorized into two major categories:1.Risk related to the physical impacts of climate change(physical risk)2.Risk related to the transition to a lower-carbon economy(transition risk)This initial risk identification effort was an important first step in evaluating potential climate risk exposure,both physical and transition,and developing an appropriate risk mitigation strategy.As part of the qualitative climate-related risk reviews,we considered impacts from acute physical risk events,such as hurricanes and flood hazards,that have the potential to cause more frequent business disruptions and insured property exposure.For example,acute weather events can cause damage to Allys facilities and insured properties,impact employee travel and work schedules and increase data center downtime and outages across third-party services.We also considered impacts from flawed assumptions or poor s
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Part of Phoenix GroupPart of Phoenix GroupPart of Phoenix GroupSustainability Report 2023Phoenix Group Holdings plcWorking towards a better futureOur purpose is helping people secure a life of possibilitiesWe want to help people journey to and through retirement while investing in a better future.Our approach focuses on two key areas:PlanetPeopleSee pages 9 to 15See pages 16 to 22Were on a journey to becoming a net zero business by 2050 andwe have started taking actions to achieve this.Whilewecurrentlyinvest in high emitting companies and sectors,we have developed a climate action model to transition tonetzeroacrossour business,full details of which can be found in our Net Zero Transition Plan.1ContentsBackBuilding a sustainable businessAdditional informationPeoplePlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionIn this reportPlanet17 Planet overview18 Targets and progress19 Invest20 Engage21 Lead22 NatureAdditional information42 Our targets45 Assurance data methodology47 Assurance statement48 Cautionary statements49 GlossaryPeople10 People overview11 Our approach12 Inform13 Enable15 Inspire Building a sustainable business24 Supporting our customers26 Our approach to sustainable investing27 Sustainable operations28 Building a sustainable supply chain29 Supporting our colleagues32 Diversity,Equity and Inclusion34 Human rights and modern slavery36 GovernanceIntroduction3 2023 highlights4 At a glance5 Chief Executive Officer and Sustainability Committee Chair introduction6 Our purpose and strategy7 Materiality8 Looking aheadThis is Phoenix Groups 2023Sustainability Report.Itprovides an overview ofour progress on our sustainability strategy andfuture aims.Our reporting You can find out more about our activities,financialperformance,sustainability strategy andour progress towards becoming a net zerobusinessby 2050 by visiting our website Look out for these icons throughout the report:Reference to another page in thereportReference to reading in supplementaryreportReference to further reading onlineOur assuranceOur approvalsThe Sustainability Report was approved by theBoard of Directors on 21 March 2024 andsigned on its behalf byThe Group has appointed Ernst&Young LLP(EY)to providelimitedindependent assurance over selected disclosureswithin this report marked with.The assurance engagement was planned and performed in accordance withtheInternational Standard for Assurance Engagements(“ISAE”)3000 Revised,Assurance Engagements Other ThanAuditsor Reviews of Historical Financial Information.Alimited assurance opinion wasissued and is available on page47 ofthis report.Andy BriggsGroup CEOPeople9Introduction3Planet16Building a sustainable business23ESG Data AppendixClimate ReportAnnual ReportOnline Review2ContentsBackBuilding a sustainable businessAdditional informationPeoplePlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionPreparing for later lifeWe extended our Midlife MOT to help colleagues prepare for later life,regardless of age.It encompasses a digital self-assessment across the topics of work,wealth and wellbeing,workshops for colleagues closer toretirement and tailored recommended actions.Our supporting report was promoted through an open event with Phoenix Group CEO,Andy Briggs,and the UK Minister forEmployment.For more information view our Targets and commitments2023 highlightsc.12.5bn shareholder liquid credit portfolio withdecarbonisingstrategies in place.We are a founding signatory ofthe Mansion House Compact an expression of intent by pension funds tosecure better returns for savers by investing more in private assets.This supports our objective of investment in sustainable,transition and productive assets such as climate solutions2.83%reduction in operational emissions intensitysince2019Taskforce on Nature-related FinancialDisclosures(TNFD)pilot deliveredTogether to net zeroIn 2023,we published our first Net Zero Transition Plan setting out our journey to netzero by 2050.Successful collaboration todrive policy change is fundamental tousreaching this goal.We worked on a report3 that explores unlocking investment in climate solutions,which uncovered that,with the rightreforms on the right terms for pension savers,UK pension funds could quadruple their investment in UK climate solutions to upto 1.2trillion by 2035.For more information view our NetZeroTransition Plan 4m people reached by our LetsStartTalking brand campaign which inspired conversations about how we live,workandsave for our longer lives.1.5m customers provided with access to digitalfinancial wellnesstracking app Money Mindset.PeoplePlanetcampaign launched with leading careers and skills organisations.Midlife MOT delivered at scale to UK colleagues.1 AUA as at YE2021.2 Whilst ensuring the delivery of good customer outcomes.3 Unlocking Investment in Climate Solutions Report.3ContentsBackBuilding a sustainable businessAdditional informationPeoplePlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionGroup at a glanceOur family of brandsOur businessPhoenix Group is the UKs largest long-term savings and retirement business.We offer a broad range of savings and retirement income products to support people across all stages of the savings life cycle from18to 80 ,through our family of brands.Standard Life has been trusted tolook after peoples life savings and retirement needs for nearly 200years.Phoenix Life is a closed book consolidator that has grown froma series of acquisitions andpolicy transfers throughout their 200-year history.ReAssure is a major life and pensions consolidator in the UKmarket.SunLifes straightforward and affordable financial products andservices are designed to meetthe needs of the over-50s.c.283bntotal assets under administrationc.7,800colleagues as at 31 December 2023c.12mcustomersc.530mannual dividend paid to shareholdersFTSE 100and FTSE All WorldESG ratings and awardrecognitionA-leadership position on climateAArated as a leader by MSCI90th percentile of our peers in S&P Global Ratings Company of the Year Global Good AwardsImpact Company of the Year Better Society AwardsEthical Financial Services Provider of The Year MoneyAge AwardsAwardsRatings4ContentsBackBuilding a sustainable businessAdditional informationPeoplePlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionIm proud to lead a business that is playing a major role inimproving financial readiness and closing thepension savings gap.Delivering onour strategyWere living longer1,but unfortunately many of us arenot on track for the retirement income we expect.We all need to think differently about our futures,andIm proud to lead a business that is playing amajor role in improving financial readiness and closing the pension savings gap.Our think tank,Phoenix Insights,is helping us shine alight on under saving for retirement in the UK,and we continue to use our voice to encourage people to think and talk about their retirement.During 2023,my fellow Board members and I continued to oversee the Group sustainability ambition and progress on the issues most material to us.The sustainability landscape and our stakeholder expectations continue to evolve,and we refreshed our materiality review this year to ensure our strategy responds.This highlighted that our priority topics within People and Planet are still the right areas of focus,as well as the importance of robust governance to underpin this.Our activities this year included reviewing the Groups sustainability KPIs,ensuring tangible,measurable progress against the Groups sustainability strategy and continuing to monitor developments in sustainability emerging practice.Akey highlight was reviewing the Groups Net Zero Transition Plan prior to publication,and overseeing completion of our Taskforce on Nature-related Financial Disclosures(TNFD)pilot.Looking ahead,we will continue to monitor the Companys culture,how customers can be further supported using wider social and environmental initiatives,and the ways in which wider macro-economic factors will impact customers and colleagues.Karen GreenBoard Sustainability CommitteeChair1 The Longer Lives Index:A crisis of confidence.2 UK Stewardship Code.3 Mansion House Compact Signatories,City of London.4 Unlocking Investment in Climate Solutions.For more information view our AnnualReportWe want to help our customers feel empowered totake charge of their finances,and we have takensteps to provide tools that enable them to doso.Imlooking forward toseeing our work on financial wellbeing evolve alongside our innovative product offering,as we take further steps to help customers make the most of their money and plan fortheir futures.Alongside this,we recognise our responsibility as alarge asset owner in addressing the climate and nature emergencies.We are playing our part in supporting the transition to net zero,with a target ofachieving net zero across our entire business by 2050,while keeping good outcomes for customers atthe heart of ourapproach.In 2023,we published our Net Zero Transition Plan,outlining the tangible actions we will take to meet ourambitious targets.One important element is engaging with our investee companies to drive change.I am delighted that our approach to stewardship has been recognised by Phoenix becoming a signatory to the UK Stewardship Code2.Were also using our scale to drive wider system change.We were a founding signatory3 of the Mansion House Compact,which seeks to address some of the barriers to investing in alternative asset classes,which aligns with our objective to scale investment in climate solutions.We also published ourreport,Unlocking Investment in Climate Solutions4,that highlights the reforms that could enable pension funds to play a much bigger role infunding the transition to net zero by 2050.Looking ahead,Im truly excited by our plans forthenext stage of our journey to net zero by 2050,from accelerating the roll-out of actions to decarbonise our investment portfolio and delivering further thought leadership to drive wider system change,tocontinuing to decarbonise our operations and supply chain.Our colleagues are fundamental to our success asasustainable business,and Id like to take this opportunity to thank them all for their contributions this year.Andy Briggs Group CEO The sustainability landscapeandour stakeholderexpectations continue to evolve,and we refreshed our materiality reviewthis year toensure ourstrategy responds.5ContentsBackBuilding a sustainable businessAdditional informationPeoplePlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionGrowMeeting more of our existing customers needs andacquiring new customers.OptimiseOptimise our scale in-force business.EnhanceTransforming our operating model and culture.Building a sustainable businessWe are committed to embedding sustainability and best practice governance to maintain high standards of oversight,integrity andethics.pages 23 to 40For more information view our Annual Report and AccountsPeopleWe want to help people live better longer lives.This means tackling the pension savings gap and supporting people to have better financial futures through promoting financial wellness and the role of good work and skills.pages 9 to 15PlanetWe want to help shape a better future.This means delivering goodoutcomes for our customers,playing a key role in delivering anet zero economy by 2050 and reducing our impact and dependency on nature.pages 16 to 22Our strategic prioritiesOur sustainability strategyOur purposeHelping people secure a life of possibilitiesOur visionTo be the UKs industry-leading,retirement savings and income business.How we deliver our purpose-led business6ContentsBackBuilding a sustainable businessAdditional informationPeoplePlanetPhoenix Group Holdings plc Sustainability Report 2023Introduction578910111213141516172416322334455MaterialityIdentifying the most material sustainability issues for Phoenix GroupKey takeawaysAfter the refresh,we found that our four priority topics remain the same as in 2022.Read our 2022 Sustainability Report.PeopleFinancial wellness and inclusion5Longevity and evolving demographics6Empowering customers toconfidently manage theirfinances.Supporting people to stay in good work for longer.See pages 9 to 15See pages 23 to 40Financial materiality(impact on Phoenix Group)Impact materiality(impact of Phoenix Group)We want to ensure we are focusing oursustainability strategy on the most significant issues that could impact us and those onwhichwe can have an impact too.In order to understand stakeholder perspectives on these issues,in 2022 we carried out a full double-materiality review covering the full spectrum of known sustainability issues.Werefreshed that review in 2023.PlanetClimate change1Nature and biodiversity2Managing the opportunities and riskswhile prioritising our customers,as we transition tonet zero.Reducing our impact and dependency on nature.See pages 16 to 22Building a sustainable businessTo operate as a leading sustainable business,we are embedding all of the environmental,social and governance issues reviewed throughout our organisation andprocesses.MediumLowHighEnvironmentClimate changeNature and biodiversityResponsible products and investmentsCircular economySocialFinancial wellness and inclusionLongevity and evolving demographicsHuman rightsDiversity,Equity and InclusionLocal communities engagementGovernanceDigital innovationSelling practicesTalent managementData governance,privacy and cybersecurityCustomer centricityCorporate governanceTransparency and reportingCorporate and business ethics12345678910111213141516177ContentsBackBuilding a sustainable businessAdditional informationPeoplePlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionAs a purpose-led organisation wewant to help people live better,longer lives.We believe that we have a societal responsibility to address the climate emergency and play aleading role in supporting the transition to a net zero economy by2050 inaway that ensures good customeroutcomes and benefits allour stakeholders.This year,we refreshed our materiality assessment,and this will continue to drive our focus on the most important sustainability topics within our People and Planet themes during 2024.In 2024,we will move beyond getting people thinking and talking about retirement,and begin inspiring action,through a campaign aiming to influence at least one million people to act on under saving.Wewillcontinue to support people to and through retirement,bydeveloping innovative solutions that will improve our decision support services to help people manage their retirement income more effectively.To encourage more people to save for their retirement,we will continue to highlight the importance of Automatic Enrolment topolicymakers.And,we will continue to grow our Careers can change campaign,to inspire people to think differently about howtheir careers can support working for longer.Our climate ambition is to manage investment risk and optimise valuefor our customers,and play a key role in delivering a net zeroeconomy by 2050.In 2024,we will continue to progress towards our targetsby beginning to implement customised decarbonisation benchmarks to our listed equities.We have along-term aspiration toinvest up to 40 billion in sustainable,transition and productive1 assets,where we can overcome the barriers to doingso and deliver good customer outcomes.We willcontinue to work collaboratively todrive policy change that willallow greater investment in climate solutions,alongside a furtherprogramme of thought leadership2.In 2024,we plan to take further steps on nature,including building on the TNFD pilot we conducted in 2023 to further enhance our understanding of the risks andopportunities related to nature within our portfolio and implementing projects at our offices.Despite the good progress we have made,we know we must do moreto deliver on our climate targets.We believe we are on track to achieve our 2025 targets under most scenarios,but our 2030 target of 50%emissions intensity reduction for all assets under our control is less certain.Our ability to meet this goal,and the pace of change,isdependent not only on our actions but also a range of barriers andactions by others such as governments,regulators,and high transition risk sectors.We have detailed these in our Climate Report.Looking ahead,Im excited to see what we can collectively achieve for all of our stakeholders in 2024 and beyond.Looking ahead1 Productive Finance Working Group,convened in November 2020 bytheBankofEngland,HM Treasury and the FCA.Current guidance.2 Whilst delivering good customer outcomes.3 Subject to overcoming barriers,and in line with commercial objectives and delivering good customer outcomes.James WildeChief Sustainability OfficerNext stepsInform Increase awareness of the pension savings gap and inspire one million people totake action.Through Phoenix Insights,build and launch a Longer Lives Tracker to provide evidence and insight to policymakers.Enable Launch a social impact initiative and partnership with a charity.Continue to scope the development of a long-term social target.PeoplePlanet Scale tailored financial inclusion solutions to meettheneeds of different customer segments.Inspire Inspire people to manage andchange careers through extending the Careers can change campaign.Long-term ambitionTo help millions more people livebetter,longer lives.We will dothis by helping more people ontheir financial journey to and through retirement.Invest Begin implementing customised decarbonising benchmarks for our listed equities and create aroadmap for rolling-out decarbonising strategies across the remainder of our listed equity and credit portfolios2.Develop a roadmap forourambition to investupto40billion in sustainable,transition,and productive1 assets3.Continue 50-70%target range for shareholder illiquid asset origination to be sustainable ortransition assets.Engage Continue our programme ofthought leadership,collaboratively driving policy change to unlock investment inclimate solutions through roundtables and political manifesto recommendations.Lead Deliver a programme to engage colleagues to reduce our emissions from business travel.Long-term ambitionTo optimise returns for our customers and play a key role in delivering a net zero economy.8ContentsBackBuilding a sustainable businessAdditional informationPeoplePlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionPeopleIn the People section10 People overview11 Our approach12 Inform13 Enable15 InspireWe want to help people livebetter longerlivesThis means tackling the pension savings gapand supporting people to have better financial futures through promoting financial wellness and the role of good work and skills.9ContentsBackBuilding a sustainable businessAdditional informationPlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionPeopleOur priority themesWe are tackling this through three key areas of our approach:Inform,Enable,Inspire.Raising awareness and understanding of under saving.Helping more people journey toand through retirement.See page 12 See pages 13 to 14InformEnablePromoting the role of goodworkand skills for all.See page 15InspireFraming the challenge1 in 3people born today have a good chance of living to 100314%of defined contribution savers are on track foraretirement income that maintains a good standard of living458%of employers are less likely to hire someone over505Financial engagement in the UK is low,and most people are not getting the advice or guidance they require2.What is more,lack of access to good work means people are not always able to save as much as they need.This has led to a pension savings gap.As the UKs largest long-term savings and retirement business,we recognise that we have a responsibility to be a part of thesolution for ourcustomers,colleagues and the wider community.We are innovating to meet future customer needs and advocating for societal change so people can enjoy better longer lives.We are living longer1,but many are not on track for the retirement income they expect,so how wethink about employment,retirement and savings needs tochange.People:Overview1 The Longer Lives Index:A crisis of confidence.2 A Guiding Hand,Improving access to pensions advice and guidance.3 What are your chances of living to 100?4 Great Expectations:Are peoples retirement income expectations adequate andachievable?5 Employers shying away from hiring the over-50s despite labour crunch.Andy CurranChief Executive,Savings and Retirement,UK and Europe10ContentsBackBuilding a sustainable businessAdditional informationPlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionPeopleInformEnableInspireSee page 15See pages 13 to 14See page 12Raising awareness andunderstanding ofunder savingWe are campaigning to help people think differently about saving,work and retirement.Through our family of brands and in-house thinktank,Phoenix Insights,we aim to increase awareness of the pension savings gap and what isdriving it,and we will motivate people and policymakers to act.We are using our scale andposition to reach millions of people to encourage them to start thinking and talking about retirement.We know that for some people pensions are difficult to relate to or engage with,and this is driving the savings gap.So,through Phoenix Insights we are seeking to improve ourunderstanding of peoples knowledge ofpensions,what their expectations are for retirement,and how prepared they are.We are using our research to provide ongoing evidence to support key policy changes.Helping more people journey toand through retirementWe want to enable people to take the necessary actions to secure the financial future they wantthrough our family of brands.This meanssupporting people to access information,and decision support services at different times of their life as they transition to and through retirement.By launching innovative products,wemake sure customers are equipped to managetheir income across their life course.Bydeveloping digital tools we are helping people feel more in control of their finances.Wealso want to help remove any barriers peopleface in accessing their finances at alltimes in their life,including whenthey experiencevulnerability.Promoting the role ofgoodworkand skillsfor allTo be able to save for retirement,we all need tobe able to work for as long as we need to injobs that suit our lives.We believe good workissecure,rewarding,flexible to changing needs,sustainable over our longer lives and supportive of our wellbeing.We want to play arole in promoting this for society,through ourwork collaboratively influencing policy withgovernment.We also take action to be an exemplar age-inclusive employer,and encourage other employers to take action too,to recruit,retain andretrain workers in midlife and older.We want to inspire people to think differently about their work and retirement and support them to act.We want to help people live better longer lives.This means tackling the pension savings gap and supporting people to have better financial futures through promotingfinancial wellness and the role ofgood work and skills.We are focusing our efforts on three key themes:2023 ProgressTargetProvide access for 1.5 million Standard Lifecustomers toanintegrated financial wellness hub,Money Mindset.We surpassed this target by providing over 1.5 millionStandard Life customers access toour MoneyMindset solution,a digital platform that allowscustomers to monitor their financial position tohelp improve their financial wellbeing.TargetDeliver an awareness campaign reaching fourmillion peopleonlonger lives andunder saving for retirement.We surpassed this target with our LetsStartTalking campaign;reaching overfourmillion people.On social media platforms the campaign outperformed engagement targets by 120%.Read our full list of targetsPeople:Our approach11ContentsBackBuilding a sustainable businessAdditional informationPlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionPeopleRaising awareness of planning for later life with ourcustomersIn the UK,Standard Life produced theRetirement Voice report,shining alightonhow people are feeling about saving forretirement.We found that economic instability has led to many peoplebeing more cautious with their spending and thatpeople typically start taking a keener interest in planning for retirement at age36,but this may not be early enough.Increasing the provision of free financial education and guidance and making itpersonal,relatable and engaging isanecessary step in helping people to save for retirement.We continued to engage our Standard Life customers in Ireland on retirement planning through the Better with age advertisement.This creates awareness of the importance ofretirement planning,and forms part ofour ongoing Second Life campaign,whichencourages customers to re-think and unlock the opportunities that retirement can bring.We all need to consider the Cost of Dying,but research from SunLife found only 59%of those who have died put enough away tocover funeral costs,leaving one in five people organising funerals with notable financial concerns.SunLifes free funeral wishes tool was used by over 70,000 people during 2023 to help people thinkabout their funeral preferences.Next steps Increase awareness of the pension savingsgap and inspire onemillion people to take action.Through Phoenix Insights,build andlaunch a Longer Lives Tracker toprovide evidence and insight topolicymakers.Getting the UK talkingabout saving forlonger livesIn 2023,we launched our Lets Start Talkingcampaign to engage the UK public on thinking about how we live,work,and save for the longer lives were now leading.The campaign features people in conversation,sharing their stories and the challenges theyhave faced when trying to achieve theretirement they want.We exceeded ourtarget of reaching four million people.Raising awareness withpolicymakersThis year,Phoenix Insights undertook research on peoples retirement expectations and knowledge.Our report Planning for retirement:the pensions knowledge gap and attitudes to working longer found the majority of people surveyed have lowconfidence intheir knowledge of pensions,highlighting the importance of Automatic Enrolment to encourage people to save,where they can afford to do so.We also explored the topic of the state pension,which underpins many peoples secure retirement income,but since it was established weareliving longer and the way we work looks very different.We explored the adequacy of the system,and made recommendations to policymakers to engage the public.Read Planning for retirement:Thepensionsknowledge gap andattitudestoworkinglongerRead An intergenerational contract:Policyrecommendations for the futureofthestatepensionPeople:2023 performanceInformRaising awareness and understanding ofunder savingWe campaign to help people tothinkdifferently about saving,workandretirement.12ContentsBackBuilding a sustainable businessAdditional informationPlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionPeopleWealthWealthLifetimePeople:2023 performance continuedHelping more people journey to and through retirementWe aim to support our customers andwider society by providing innovative retirement income solutions,helping increase financial wellness throughout peoples lives andencouraging financial inclusion.EnableSaving for retirement Defined contribution workplace pensions.Retail savings for retirement.Legacy pensions and savingsproducts.Transitioning to retirement Pension and consolidation.Securing income in retirement Income drawdown andindividualannuities.Defined benefit pension income.Home equity release.13ContentsBackBuilding a sustainable businessAdditional informationPlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionPeopleSaving for retirement Helping customers takecharge of their financial wellbeing We want to use technology to empower people to take charge of their finances while they are saving for retirement.Standard Life partnered with Moneyhub,to help us build our Money Mindset digital app and dashboard,enabling access for more than 1.5 million workplace pension scheme members.This allows customers to link,track and monitor their finances all in one place with the aim of improving their financial wellbeing.Tools and support on Money Mindsetinclude:Pension finder tool to help customers identify and trace lost pensions.Budgeting feature to help customers manage their finances and build financialresilience.Benefits entitlement tool.Building emergency savings tool.Rent recognition tool,which helps boost credit score by recognising regular rent payments.Transitioning to retirementMaking our products and services more inclusive We want to remove any barriers people may faceasthey transition to and through retirement.Ourinclusion programmes focus on ensuring our products are tailored to the needs of all customers and our solutions are accessible for everyone.In2023,we focused on our digital presence,working alongside Plain English Campaign,whoaudited ourreadability.Also,the functionality of our digitalestate was audited by the Digital Accessibility Centre against the Web Content Accessibility Guidelines.In collaboration with the digital inclusion charity,Good Things Foundation,we launched Digital Skills Hubs,which include Howto videos on using our websites and apps across all our consumer brands.Our growing DigitalChampion Network supported customer and community members with in-person digital skills training in our Edinburgh office.Watch the video hereSecuring income in retirementInnovating for better retirement income managementWe are innovating and delivering new products to help customers build their retirement savings and manage their retirement income.Standard Life was the first new provider to enter the annuity market since pensions freedoms legislation came into effectin2015 with the launch of our Standard Life Pension Annuity.This product pays the customer a guaranteed income for the rest of their life,bought with some or all of the proceeds of their pension plan.SunLife found in our Life Well Spent report thathaving the freedom to spend on things that matter to our customers during retirement has animpact on their happiness.SunLifes Equity releasemortgage,which launched during 2023,aimsto provide customers with this flexibility.Read the reportSaving for retirement Transitioning toretirementSupporting vulnerable customersA significant amount of our customers across our family of brandscould displaycharacteristics that indicate vulnerability.Our vulnerability strategy provides support forthose most at risk of harm,andaims to continually raise standards across ourindustry.In 2023,we launched our Samaritans Listening Wheel training to our colleagues.This isan interactive and immersive e-learning module thatequips the learner with the skills tobecome anactive listener,based on 70 years of Samaritans expertise in training their own volunteers.We also hosted our Vulnerable Customer Summit incollaboration with Scottish Financial Enterprise,sharing best practice on how the industry can tackle the increasing issue of financial vulnerability in the UK.We discussed specific situations and customer calls as well as the Consumer Duty rules and how they will help firms support vulnerable customers.Read the whitepaperNext steps Launch a social impact initiative and partnership with a charity Continue to scope the development ofalong-term socialtarget.Scale tailored financial inclusion solutions to meet the needs of differentcustomer segmentsIt has helped meto become a better listener tounderstand theneeds and feelings of customers andcolleaguesColleague feedback from our ListeningWheeltrainingPeople:2023 performance continued Enable continued14ContentsBackBuilding a sustainable businessAdditional informationPlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionPeoplePeople:2023 performance continuedNext steps Inspire people to manage and changecareers through extending theCareers canchange campaign.Promoting the role of good workand skills for allWe want to help people work for longer in jobs that suit their lives and enable them to save for their future.InspireId never really thought about pensions before,or how I saw older life.It got me thinking on somany levels what body I wantto be in,ifIwould want totravel,would Ihavepaid offmymortgage?Funlola Allo,Programme Planner,Phoenix Group,participantin a Midlife MOT workshopBetter career support with our Careers can change campaignWe believe that better career support,at all ages,allows people to build and develop long,fulfilling careers.Phoenix Insights is leading the way with anew campaign to inspire people to see that their careers can change successfully,by small incremental shifts or total pivots.At the heart of this campaign is a new coalition of experts and partners enabling us to raise awareness of and connect people to good quality,accessible career support.The campaign launched at the Postcards from Midlife Live event in London,where we published new Careers advice for longer lives research Read the researchAt least 0.5m people aged 50-64 in the UK are not working butwant to work1We want to help people prepare for thechallenges that may be faced in laterlife.That is why we launched the Midlife MOT atscale to our UK colleagues.The self-assessments help colleagues,regardless of age,to determine the steps they can take to strike the right balance withwork,wealth and wellbeing.We also launched Making the Most of Later Life workshops to help colleagues think about and plan for the future,for those around ten years away from approaching retirement.1 Beyond the great retirement:Understanding and tackling economic inactivity amongst the over 50s.Helping colleagues prepare for later lifewithour Midlife MOTWe wanted to amplify its impact and inspire other employers to take similar actions to support older workers.Phoenix Insights published a report on how to design and deliver a Midlife MOT,using our roll-out as afoundation,alongside an employer guide offering advice for other organisations on how to develop a Midlife MOT.Read the reportWe want to make work better for everyone,so were playing our part in influencing policy direction and development.Our focus has been on raising awareness of later life issues,such as caring responsibilities and the impact of menopause,including our Good Work for Longer Lives report,which makes key recommendations on carers leave and flexible work.We are also advocating for the action needed to support people over 50 who want to return to work.We explore this topic in our report Beyond the great retirement:understanding economic activity amongst the over 50s.Influencing policy that supports goodworkIn 2023 the role of Menopause Ambassador was appointed by the government to represent the interests ofpeople going through the menopause.Aspart of his role as the Government Business Champion for Older Workers,Andy Briggs led a report on Menopause and Employment in 2021,which called forthe establishment of this role.It has now helped drive menopause policies across many industries.15ContentsBackBuilding a sustainable businessAdditional informationPlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionPeopleIn the Planet section17 Planet overview18 Targets and progress19 Invest20 Engage21 Lead22 NaturePlanetWe want to help shape abetter future This means delivering good outcomes forour customers,playing a key role indelivering a net zero economy by 2050and understanding our impact anddependency onnature.16ContentsBackBuilding a sustainable businessAdditional informationPeoplePhoenix Group Holdings plc Sustainability Report 2023IntroductionPlanetIn parallel,we are on a journey to decarbonise our own operations andsupply chain.Our climate change strategy is detailed in our Net Zero Transition Plan(NZTP),and our Climate Report summarises our disclosures made in line with the Taskforce on Climate-Related Financial Disclosures(TCFD)framework,and the progress we have made.The breadth and magnitude of the impacts of nature loss pose asignificant risk to global economic and financial stability.Climate change is both adriver and a consequence of the degradation ofnature and there isan increasing call to take an integrated approach to management andmitigation.Weare taking important initial steps to understand our impact and dependency on nature and are committed to developing ourapproach.Read our Nature StatementRead our Climate ReportRead our NZTPWe have committed to net zero across our investment portfolio,ownoperations and supply chain by 2050 or sooner.We have committed to net zero across our investment portfolio,own operations and supply chain by 2050 or sooner.As a purpose-led organisation we believe that we have a responsibility to help address the climate emergency.We want to play our part in delivering a net zero economy whilst delivering good outcomes for ourcustomers,and our actions are either directly or indirectly aligned with this goal.The primary driver for our actions is either to reduce customers exposure to climate-related risk and/or help them take advantage of the opportunities presented by the net zero transition.Our investment portfolio represents c.99%of our emissions and is therefore our primary focus.We are scaling up our actions to achieve real impact,and helping to drive wider system change through thought leadership,engagement and collaboration.We strive to use our position of influence to bring about positive change in our investee companies.Thats why we remain invested in high emitting sectors including oil and gas.Wecallthis our engagement first approach.Planet:OverviewSindhu KrishnaHead of Sustainable InvestmentsFraming the challenge2023was the hottest year on record12.4tninvestment required in the UK by 2035 to meet net zero255%of global GDP is dependent on the ecosystem services that nature provides3Our climate and nature strategyOur ambition to be net zero by 2050 is fully aligned to our core purpose of helping people secure a life of possibilities.Over time we expect our approaches to nature and climate to converge.Decarbonising our investment portfolio,effectivestewardship of our assets,and investinginclimate solutions Engaging with decision-makers and peers todrivewider system change,and engaging withcustomers and colleagues on climate action Leading by example;reducing our direct emissions,and reducing our wider impacts by working collaboratively with suppliersSee page 19 See page 20 See page 21InvestEngageLead1 2023:The warmest year on record Globally.2 Unlocking Investment in Climate Solutions.3 Managing nature risks:From understanding to action.See our Nature section on page 2217ContentsBackBuilding a sustainable businessAdditional informationPeoplePhoenix Group Holdings plc Sustainability Report 2023IntroductionPlanetAchieve net zero across entire businessPlanet:Targets and progress20202323202520302050Maintain75-85%intensity reduction vs 2019 baseline inoperational carbon emissions325%Reduce carbon intensity of our listed equity and credit assets by 25%0%Reduce carbon intensity of all assets by at least 50*nd reduce supply chain carbon intensity by 50%1 See assured data methodologies for ourcriteria on what constitutes being aligned/committed.2 Where we can exercise control and influence.3 In Scope 1 and 2 emissions from occupied premises perfull-time employee intensity market-based.4 In Scope 1,2 and Scope 3 business travel.Publish comprehensive NetZero Transition Plan50-70%of illiquid asset origination in the shareholder portfolio to be sustainable or transition assets We published our full NZTP,which was developed in line with the latest industry guidance from the Transition Plan Taskforce(TPT)and Glasgow Financial Alliance for Net Zero(GFANZ).We surpassed our target of 90%of key suppliers committed or aligned to SBTi or UN Race to Zero campaign,achieving 94%.We achieved an 83%intensity reduction vs 2019 baseline in operational carbon emissions3,maintaining our target.Key progress,challenges and dependencies related to our long-term targets We have set stretching interim targets for 2025 and 2030 across ourinvestment portfolio,operations and supply chain to ensure thatwe remain on track to deliver our commitment to achieve netzeroby 2050.Reducing our business travel emissions has been a key challenge asbusiness has returned to normal following COVID 19 and virtual ways of working.Future reductions will depend on the roll-out of our business travel reduction programme.We believe we are on track to achieve our 2025 targets under most scenarios.Our ability to achieve our 2030 target of 50%emissions intensity reduction for all assets under our control is less certain,andwill become increasingly dependent on action by others,in particular government,regulators and high transition risk sectors.Reducing our supply chain emissions is ultimately dependent on action from our suppliers,as well as good quality data.Read our targets table for progress on all of our targetsRead more in our Climate Report90%of key suppliers committed or aligned to SBTi orUNRace to Zerocampaignc.12.5bnImplement decarbonisation strategy for c.12.5billion shareholder liquid credit portfolio to meet our carbon reduction targetsAchieve Net zero in our own operations4Progress on our 2023 targets18ContentsBackBuilding a sustainable businessAdditional informationPeoplePhoenix Group Holdings plc Sustainability Report 2023IntroductionPlanetNext steps Begin implementing customised decarbonising benchmarks for our listed equities and create a roadmap for rolling out decarbonising strategies across theremainder of our listed equity and creditportfolios6.Develop a roadmap for our ambition toinvest up to 40 billion insustainable,transition,and productiveassets7.Continue 50-70%target range forshareholder illiquid asset originationto be sustainable or transition assets.Updating ourbaselineWe are committed to transitioning our investment portfolio to net zero by 2050 and hitting our ambitious 2025 and 2030 targets to cut emissions,all the while acting to provide good outcomes for ourcustomers.To effectively reach our targets,we need tounderstand our footprint across our fullportfolio.Thats why we are working tocontinually expand the scope of our baseline.In 2022,we included sovereign debt and real estate assets,and this year,wehave added illiquid credit assets to our baseline,which now covers 79%of AUA atyear-end 2023,and is responsible for 24.6 MtCO2e.We will continue to expand our carbon footprint baseline over time,in line with best practice,until it covers the entire investment portfolio.Reducing the carbon intensity of ourportfolioBuilding on progress with decarbonising our policyholder assets,in2023 we introduced a decarbonisation strategy for our c.12.5 billion shareholder corporate credit portfolio1 and intend to increase investments in net zero aligned assets to 40-50%of the portfolio by 2025,and 50-70%by 2030.We have worked with leading index providers to design customised equitybenchmarks which will apply a decarbonisation tilt to our listed equity portfolio,with implementation commencing in 2024 and continuing in 2025.Planet:2023 performanceWe are placing customers at theheart of ourinvestment approachWe believetheactions we are takingtodecarboniseour investment portfolioare fully aligned with delivering goodcustomer outcomes.Investment in climatesolutionsSince 2022 we have invested nearly 1.5 billion inclimate solutions including nearly 600 million of shareholder capital in 20232.For example,we committed 50 million into NS Groep,a provider of climate-neutral transport options3.We have made good progress towards the aspiration we set in 2021 to invest 10 billion indirect investments from our shareholder portfolio in sustainable assets4 by 2026(subjectto market conditions).Despite this progress,we are currently short of the rate needed to be on track,due to a range of external and internal constraints.We will now focus on our longer-term aspiration to invest up to 40 billion in sustainable,transition and productive assets.Invest1 AUA as at year end 2021.2 As a portion of 1.19 billion originated in sustainable and transition assets in YE2023.3 Transaction executed by abrdn on behalf of Phoenix Group.4 Our Sustainable Finance Classification Framework for PrivateMarkets provides greater clarity on our definition of sustainable assets.5 See page 9 of Climate Report for more information.6 Whilst delivering good customer outcomes.7 Subject to overcoming barriers,and in line with commercial objectives anddelivering good customeroutcomes.Decarbonising our investment portfolioWe continue to implement our stewardshipprogramme,engaging withinvestee companies and our assetmanagement partners on climate change.We engaged directly with 23 of ourhighest emitting companies,as part ofourclimate engagement programme,bothindividually and collaboratively,through organisations such as Climate Action 100 and the Net Zero Engagement Initiative(NZEI).After less than 12months of dialogue we have seen progress or commitments on nearly 40%of our engagement objectives5.In order to engage on the key themes,we analysed the voting behaviour of the asset managers of 100 target companies.Our analysis uncovered areas forimprovement on climate change and governance,and wehave engaged with our managers to enhance their alignment with our global voting principles.We became signatories to the UK Stewardship Code in 2023 and published our first Stewardship Report,which sets outour focus on effective stewardship,andhow we will have a positive effect andaction on climate change and other ESG priority topics.Read our Stewardship ReportEffective stewardship of our assets19ContentsBackBuilding a sustainable businessAdditional informationPeoplePhoenix Group Holdings plc Sustainability Report 2023IntroductionPlanetNext stepsPlanet:2023 performance Continue our programme of thought leadership,collaboratively driving policy change to unlock investment in climate solutions through roundtables and political manifesto recommendations.Engaging with decision-makers,customers and colleagues on climate actionWe know we cannot deliver net zero onour own,so we are vocal in calling foraction from others and using our scale to drive the wider system change needed to deliver net zero by 2050.Understanding our customers preferencesIn 2023,we continued to undertake research across our family of brands on our customers changing views2 to ensure that we provide solutions and communications that support their needs.We found that 75%of customers are taking actions to live more sustainably,yet many dontknow what role their pension can play insupporting sustainability efforts.For most customers(78%),the priority remains to grow their pension,but they want to avoid harm if theycan.67%would like to hear more about responsible investing,offering us an opportunity to engage them in their financial futures.Engage1.2tnthe amount pension funds could finance inclimate solutions by 20351 Unlocking Investment in Climate Solutions.2 Research conducted via an online survey with 2,052 customers across our Standard Life,Phoenix Life and ReAssure brands.Data weighted to reflect the distribution of customers across ourbrands(effective total base=1,752).Fieldwork:24th January-9th February 2024.This year,through several campaigns that helped bring sustainability to life for our customers,we achieved our target to reach 1.5 million customers to raise awareness about the impact of their investments.As part of Earth Day and Good Money Week,via our Standard Life social media channels,and the MoneyPlus platform,we produced articles for customers about the power of their pension and guides aimed athelping them to understand some of the jargon used across the industry.This formed part of our customer engagement strategy,which offers customers the opportunity to learn more about what theirinvestments do.On Earth Day we worked with not-for-profit organisation Rewired Earth to engage and inform customers and colleagues about sustainability and the impact of their investments.We worked with them to createa bespoke version of their innovative Demand Square.This uses the United Nations Sustainable Development Goals toexplain the wide-ranging aspects of sustainability,and it encourages people toconsider how important this is for theirpension.Raising awareness with our customers ontheimpact of theirinvestmentsWe produced a report exploring the crucialrole the pension industry can play intackling climate change,while continuing toprioritise good outcomes for savers.Pension funds could finance 1.2 trillion in climate solutions by 20351.Thats up to half of the investment needed to keep the UKs transition on track and provide savers with greater access to the investment potential.There is an opportunity to understand whyfunding for climate solutions is lacking,and how this can be increased.Wepartnered with Make My Money Matter to produce the report,which highlights the barriers related to both demand and supply for finance and identifies strategies to overcome them.This work supports conversations with government,regulators and our peers so that we can collectively help pension funds fulfil their potential in the nations journey tonet zero by 2050.Read the report Unlocking Investment in Climate SolutionsDriving policy change to unlock climatesolutions20ContentsBackBuilding a sustainable businessAdditional informationPeoplePhoenix Group Holdings plc Sustainability Report 2023IntroductionPlanetPlanet:2023 performanceNext steps Deliver a programme to engage colleagues in reducing our emissions from business travel.Change starts with usWe are taking action in our operations and supply chain to address climate change and support the transition to anet zero economy by 2050.Lead83%reduction in operationalemissions intensity since 2019Reducing our operating emissionsIn line with our Eliminate-Reduce-Substitute-Compensate strategy,we achieved our target of maintaining a 75-85%intensity reduction vs 2019 baseline in our operational carbon emissions.Our absolute Scope 1,2 and 3operational emissions increased by 3tween 2022 and 2023,largely driven by a significant increase in business travel.As aresult,a key focus going forward will be implementing aprogramme to reduce our emissions from business travel.In 2023 we continued the roll-out ofLED lighting at our core locations as partof amulti-year project,implementing aheatingand cooling policy to reduce energy consumption,and appointing a Plan Zero energy manager through our partners Mitie to help modernise buildings and equipment with smart technologies.This work builds on the steps we have already taken,including the installation of one of the largest rooftopintegrated photovoltaic(PV)glass installations in Europe at our Wythall office,which we completed during2023.We also joined the EP100 initiative,which brings together like-minded companies toshare learnings on energy efficiency.Collectively,we will drive progress towards our targets,show climate leadership and send a powerful signal to policymakers about the enormous climate potential of energy efficiency.Progress in our supplychainWe continue to make significant progress with our suppliers in engaging them on their sustainability commitments and how they contribute to achieving our targets.We increased the number of key suppliers committed or aligned to SBTi or UN Race toZero campaign1 from 48%in mid-2022 to94%in 2023,and 73%of suppliers submitted a disclosure to the annual Carbon Disclosure Project(CDP).This is a 236%increase in the number of our suppliers who participated in the CDP survey since 2022,which is above the industry average of 63%.These actions have led to much greater visibility of our top emitting suppliers,and will help to inform our approach to achieving our net zerotargets up to 2050.As highlighted in last years reporting,we have been undergoing an extensive exercise to enhance supply chain data,as well as spend data quality and categorisation,in order to calculate supply chain emissions more accurately.Through this work,we are ina position to publish updated indicative figures this year,with supply chain emissions successfully reconstructed from 2020 to 2023 based on the latest data.We expect to publish a validated emissions baseline for the supply chain in next years report.We are proud to have achieved ISO14001 certification for our Environmental Management System.This further demonstrates ourcommitment to continually improve the environmental performance of our operations andprotect the environment.Jackie Cowper Property DirectorReducing our carbon footprint through ISO14001 To implement our carbon reduction strategy,we must have a fit-for-purpose Environmental Management System(EMS)to support our operations.An EMS helps companies systematically manage their environmental responsibilities,with the aim of reducing the overall carbon footprint.This year,we certified our EMS with the voluntary ISO14001 standard,ensuring it isbest in class.1 See assured data methodologies for ourcriteria on what constitutes being aligned/committed.c.100%of renewable electricity procured across allofour occupied premises21ContentsBackBuilding a sustainable businessAdditional informationPeoplePhoenix Group Holdings plc Sustainability Report 2023IntroductionPlanetBuilding nature-friendly sitesWe want to understand the impact of our buildings upon nature,and have analysed where we can make site-specific improvements in a nature-friendly way.Our Wythall office issurrounded by acres of natural greenspace,making it the perfect environment for wildlife,such as,hedgehogs and the Lady Orchid.Weknow that increased plant-life alsoimproves our colleagues wellbeing and comfort indoors,so wewill be increasing planting in our Edinburgh,Telford and Wythall offices.Engaging our colleagueson natureWere taking steps to engage our colleagues on nature and,during 2023,we held our first education session with our Board.OurSustainability Network is one of our largest colleague networks,with over 230members.It engages colleagues onabroad range of sustainability topics,including nature.During 2023,we hosted three nature-themed sessions,including two in-person events held together withtheRSPB,with screenings of their WildIsles films.Collaborating onnatureIn our Nature Statement,we set out our commitment to multiply our impact on nature through collaboration.In 2023 wesigned the Finance for Biodiversity Pledge and Foundation,which includes five commitments for signatories:collaboration and knowledge sharing,engaging with companies,assessing impact,setting targets,and reporting publicly.We also joined Nature Action 100,a global investor engagement initiative focused on driving greater corporate ambition and action to reverse nature and biodiversity loss.Read our Nature StatementPlanet:2023 performanceWe are on a journeyWe want to improve our understanding of our exposure to nature-related impacts,dependencies and risks,andtoidentify possible investment opportunities.It is important to us that we drive positive change while providing good outcomes for our customers.Understanding nature-related risks,impacts anddependencies The TNFD is a voluntary framework for organisations to report and act on evolving nature-related risks,capturing the increasing financial impacts of biodiversity loss,ecosystem degradation and naturesrole in business stability.In 2023 the TNFD finalised its reporting framework.We led a project to pilot test the TNFDbeta framework for a selection of our investment portfolios,partnering with three of our asset managers and three data providers.This builds on our 2022 analysis of asubset of our investment portfolio to improve ourunderstanding of the potential materiality of portfolioexposures to nature-related impacts and dependencies.We subsequently identified nature as an emerging risk,which is a key component of our Risk Management Framework(RMF).We have already set out our nature-related expectations for investee companies,which will guideour dialogue with them either directly or through collaborative initiatives.Read our expectations of companies onkeysustainability issuesRSPB Scotland was delighted to be invited to thePhoenix Groups Edinburgh office to showcase theBusiness of Nature and Banking on a Wilder Tomorrow short films and answer questions from Phoenix Group colleagues about the nature crisis andthe role of business in saving nature.If we are toaddress the nature and climate crisis fully then businesses must play a key role,and it is heartening tosee a business begin to engage in saving nature.Wehope that this will be just the start of working together for a nature positive future.Seonaid Mason,Fundraising Manager,RSPBNatureIn 2023 we joined Nature Action 100Our Wythall office is surrounded by acres ofnatural green space making it the perfect environment for wildlife.22ContentsBackBuilding a sustainable businessAdditional informationPeoplePhoenix Group Holdings plc Sustainability Report 2023IntroductionPlanetBuilding a sustainable business In the Building a sustainable business section24 Supporting our customers26 Our approach to sustainable investing27 Sustainable operations28 Building a sustainable supplychain29 Supporting our colleagues32 Diversity,Equity and Inclusion34 Respecting human rights 36 GovernanceCommitted to embedding sustainabilityWe are committed to embedding sustainability and best practice governance to maintain highstandards of oversight,integrity and ethics.23ContentsAdditional informationPeoplePlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionBuilding a sustainable businessBackBuilding a sustainable business continuedResponsible product development and marketing Product Governance Framework The Product Governance Framework has been developed to help ensure that the delivery of good customer outcomes and fair value is central to the way in which we design and manage our products and propositions.The framework provides a clear structure for the identification,assessment and management of customer outcomes risk,ensuring that our products continue to meet customers needs and that we take appropriate action where risks of notproviding good outcomes or of foreseeable harm are observed.This framework is part of a wider risk framework;it defines our proposition risk culture andinforms governance processes.It forms part ofthe Customer Outcomes pillar of the Group Conduct Strategy.This governance applies to both where Phoenix develops and markets new products directly,andwhere it administers products which no longer allow new business.We assess product features and effectiveness throughout the lifetime of the product,going beyond the period in which the product is actively marketed and sold.Supporting our customersConsumer DutyThe new FCA Consumer Duty seeks to increase consumer protection in the retail market,foster effective competition in the interest of consumers,and to encourage the industry to do more to foresee and prevent harm before it happens.We have invested significantly in good customer treatment and outcomes across our businesses and our familyofbrands in recent years,and continue to doso,especially in the areas of vulnerability and protectedcharacteristics.The Duty will support ourfocus,particularly in key areas such as customer communications and customer understanding,including guidance and advice services.We support the direction and intent of the Consumer Duty as it isaligned to our strategy to help customers secure alife of possibilities.It also provides us with the opportunity to do even more to support customers and to help them improve their understanding of products and services we provide.Product reviewsWe have a robust product review and development process,which ensures all our products are developed and launched in line with regulations and standards,and assessed on the extent to which they deliver good customer outcomes.Product reviews are completed for both actively andnon-actively marketed products using a set of Product Review Metrics.These include Strengths,Weaknesses,Opportunities and Threats(SWOT)andPolitical,Economic,Social,Technological,Legal and Environmental(PESTLE)analyses,customer insight,operational performance and the concepts offoreseeable harm,fair value(both financial and non-financial)and delivering good outcomes.We also consider;the support we offer to customers in times of vulnerability;how the products are marketed and distributed;how distributors are informed;howwe communicate with customers(including thedigitalcapability we offer them to make it easier forcustomers to transact with us)and customer experience and satisfaction.As part of our implementation plan,we have identified key priorities to address to ensure we comply with the Consumer Duty requirements within the relevant timescales.This plan has been approved by the Board and shared with the FCA.Progress made:We assessed our Open products and services to meeta higher standard of consumer protection in linewith the regulatory deadline of July 2023.We strengthened our Product Governance Framework and Product Review Methodology to reflect the Consumer Duty.Looking ahead:Closed products and services assessments arecurrently underway to meet the regulatory implementation date of 31 July 2024.We are focused ondelivering good customeroutcomes.24ContentsBackAdditional informationPeoplePlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionBuilding a sustainable businessBuilding a sustainable business continuedSupporting our customers continuedCustomer satisfactionTo understand our customers satisfaction with theirinteractions with our family of brands,we send out surveys and provide them with the opportunity toleave comments.We then analyse the results in order to understand trends and drive improvements,reaching out to customers where we need to understand more.Customer satisfaction is tracked using the Product Satisfaction(PSAT)score.Our 2023 scores were 87%for telephone and 93%fordigital.Trained Complaints staff and Call Centre Agents identify and acknowledge complaints in accordance with the relevant policies and procedures to ensure good customer outcomes.Complaints are dealt withby a dedicated handler who will investigate andprovide personal contact details as we know thatcontact is key throughout the process.We operate an effective Root Cause framework to make sure that learnings are taken to address the causal factors of complaints and to ensure that wearecontinually strengthening our complaint handlingproposition.Responsible Marketing PolicyOur Responsible Marketing Policy outlines our commitments to ensuring our marketing and productinformation is accurate,easy to understand and transparent.Read our policySupporting vulnerablecustomersOur vulnerable customer strategy provides supportfor those most at risk of harm.It aims to driveup standards for the treatment of vulnerability across our family of brands and in wider society.It covers what vulnerability means in the context of our customers,colleagues and our products and services.We alsowant to help others improve their standards bysharing our insights and best practice.We have processes in place across all our communications channels to proactively identify triggers and drivers of vulnerability.We make it easyfor customers to tell us about their vulnerable circumstances and also create opportunities for themto tell us of concerns or issues they may have.The four drivers of vulnerability:Health.Life events.Resilience.Capability.We support colleagues to have a good understanding of vulnerability,focusing on three methods.Behavioural Working with Behavioural Scienceexperts Cowry Consulting to develop ouraward-winning colleague e-learning to help close the empathy gap.Our call centre training for handling vulnerable customer cases was externally accredited by the Institute for Customer Service.Physical Using accessibility simulation aids to help colleagues better understand the physical barriers that customers can face when trying to engage with our app or website.Virtual Creating an innovative and immersive experience through virtual reality that brings a real vulnerable customer story to life in a way that helps us understand the importance of how we care in the moments that matter.AwardsFor the third year running,Standard Life won theCCA Most Effective Customer Vulnerability Strategy award.Focusing on financial inclusionWe want everyone to have the opportunity to benefitfrom financial services,regardless of their means or abilities and whether or not they are vulnerable.To achieve this,we will deliver initiatives that can help toimprove financial inclusion,while also identifying newopportunities to fill gaps and support more customers.Read more on our inclusion actions on page 14One of the key customer groups our strategy focuseson is mid-career women.We know that women arelikely to be disproportionately impacted by a numberof events at this stage of life.They can occur simultaneously,and compound the impact on awomans ability to work and save.This leads to an increase in the gender pension gap and worsening womens retirement outcomes over time.Thats why this year,we undertook further action with mid-career women,delivering a series of financial education webinars to our Standard Life customers,focusing on these life moments,aiming to engage customers in their financial futures and improve financial decision-making.We explored the topics ofcaring,divorce,parenthood,menopause and debt.We are working throughout the business to incorporate the learnings of this pilot into future customer engagement and financial education activities,and to scale the number of customers benefiting from this and other programmes across Phoenix Group.External engagement andthought leadershipBy sharing our knowledge of customer vulnerability,collectively we can have a greater impact.This year,Riffat Tufail,our Head of Customer Vulnerability,spoke at the Global Insights Customer Engagement and Experience Conference,sharing how we use creative and innovative methods to bring vulnerability to life through our immersive virtual reality training experience.In June 2023,Standard Life hosted a joint summit with Scottish Financial Enterprise(SFE).This led to the report Evolving our response to the needs of vulnerable customers which Standard Life launched in conjunction with SFE at an FCA Roundtable.Building on Standard Lifes work with the Samaritans Training School initiative in 2022,Samaritans have trained Standard Life customer support colleagues toprovide better support for the most vulnerable customers,developing the listening wheel SHARE.The SHARE listening wheelSShow active listeningHHave patienceAAsk open questionsRRepeat it backEEmpathy 25ContentsBackAdditional informationPeoplePlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionBuilding a sustainable businessIt is therefore important to define what these assetsare,so we have developed our own internalsustainability framework,Sustainable FinanceClassification Framework for Shareholder investment in Private Markets,which draws upon theEU Taxonomy and other relevant taxonomies.The framework helps us identify eligible investments across both environmental and social contexts.Themes included within the framework cover,but are not limited to:renewable energy,energy efficiency,clean transportation andgreen buildings,as part ofour environmental framework;and as part of our social framework,weinvest in affordable housing,affordable basic infrastructure and services,and access to essential services.Engaging customersWe recognise the need to take our customers on a journey to build their knowledge and confidence in their product and investment solutions.We believe engaging our customers on the impact of their investments is important for helping engage them with their financial futures.Read more in our Climate ReportRead more about our customer research onpage 20Asset manager selection and monitoringAs an asset owner operating an outsourced investment management model,we recognise that thorough due diligence of our asset managers as wellas ongoing monitoring is vital to ensure that theassets are managed in line with the Groups approach,processes and expectations.Our minimum requirements for asset management partners are set out in our Approach to ESG Integration.Our in-house stewardshipactivitiesWe recognise the value of engaging with investee companies to promote best practices and will seek to do so where possible,either directly through our own activities or collaborative mechanisms,or indirectly through our asset management partners.We have detailed our approach to stewardship in our annual Stewardship Report.ExclusionsWhile our preference will always be to engage where possible in constructive dialogue with our investee companies to help improve their performance on ESG factors,we accept that this might not always be appropriate.This could be due to the nature of their business or because they fail to meet our expectations.At present,we have implemented investment exclusions in five key areas across all assets where we have direct control or influence of the investment mandate or solution1:Controversial weapons Thermal coal2 Oil sands3 Arctic drilling3 Tobacco producers4Read more in our Exclusions Policy1 Screening based on third-party data tool.2 Our threshold for exclusion is 20%of revenues from this source,and a waiver is adopted where companies have between 20-30%of revenues from this source and have Paris aligned science based targets approved by the SBTi.3 Our threshold for exclusion is 20%of revenues from this source.4 Our threshold for exclusion is 1%of revenues from this source.Principle 1We will incorporate ESG issues intoinvestment analysis and decision-making processes.Principle 2We will be active owners and incorporate ESG issues into our ownership policies and practices.Principle 3We will seek appropriate disclosure onESG issues by the entities in which we invest.Principle 4We will promote acceptance and implementation of the Principles withinthe investment industry.Principle 5We will work together to enhance oureffectiveness in implementing thePrinciples.Principle 6Building a sustainable business continuedWe will report on our activities andprogress towards implementing thePrinciples.Our approach to sustainable investingWe believe integrating ESGfactors into investment processes helps to deliver better risk management forour customers and shareholders.ESG integrationESG Integration refers to the process of environmental,social,and governance factors in investment analysis and decision-making.It is central to our approach as a long-term investor as we believe it helps to ensure better management of financially material risks for our customers and shareholders,making our portfolio more resilient over the long term.Read more on our approach to climate investingon page 19Sustainable Finance Classification FrameworkWe consider ESG factors in the design of investment strategies,manager selection and ongoing monitoring and reporting.We have committed to increase ourinvestment in sustainable,transition and productive assets,subject to the right regulatory andmarket conditions and to this delivering good customer outcomes.We aim to adhere to the UN Principles forResponsible Investment(PRI)signatoriescommitment and are continuingto embedthe six principles inourapproach toESGintegration:26ContentsBackAdditional informationPeoplePlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionBuilding a sustainable businessCircular economy andwasteWe want to avoid waste and pollution,and preserve the value of resources(raw materials,energy and water)for as long as possible.This is an important alternative to the use-make-dispose economy and plays a vital role in preserving global natural capital aswell as avoiding carbon emissions.We apply these principles to our own operations and during 2023 we developed our approach to further expand our commitment to a circular economy.Waste management is part of our wider resourcemanagement actions to help reduce ourenvironmental impact.We follow a waste management hierarchy that adopts the following principles listed in order of preference:First avoid and reduce waste by identifying efficiencies in the overall products used and purchased for the Group.Reuse waste by adopting processes to repair and donate resources.Recycle waste by adopting practices that encourage the procurement of more recyclable product alternatives.Recover energy through partnerships with waste contractors that use waste as energy.Dispose of and divert waste from landfill through our waste contractor agreements or resource donation programme.To understand better how to reduce waste and thebehaviours that lead our colleagues to make considered choices,we carried out waste audits in 2023 and will continue to do so in 2024.In response we have rolled out improved signage to support our colleagues to recycle more effectively,and we have introduced ways of increasing the number of types ofwaste that we can collect in our offices.We will continue to build on this using the results of the 2024analysis.All our core operational sites across the Company continue to have 100%waste diverted from landfill.Our sites reuse as much furniture and equipment aspossible to ensure minimum new material is purchased,and where purchase is necessary we choose sustainable and recycled materials.Where wecannot re-use,we support the circular economy by upcycling or donating equipment,for example,through The Waste to Wonder Trust,which manages the redistribution of good quality or refurbished equipment.The equipment we donated from our Wythall office site in 2023 represented a carbon saving of 115,132 kilogrammes1.This year,we consolidated our approach to catering across the business by partnering with the facilities management provider Mitie and catering provider CH&CO to deliver sustainable options.CH&CO havedemonstrated progress on their commitment tosustainability,including committing to net zero emissions,reducing food waste at their sites and carrying out ESG due diligence assessments within their supply chain.Through CH&CO,we continue to offer nature-friendly and,where possible,locally-sourced food atcatering facilities in our core offices and for our events.We have also expanded our plant-based offerings.As part of our ambition to minimise foodwaste,we work in partnership with Olio to re-distribute surplus food to the local community.We have taken steps to improve our packaging,including eliminating the use of single-use plastics and disposable coffee cups,and avoiding the use ofdisposable items wherever possible.With the help of Foodsteps,we also introduced carbon counting on menus at some of our sites.Environment championsOur growing colleague-led Environment Champion Network spans the UK and Ireland.It aims to raise awareness of environmental issues,drive change and inspire other colleagues to take action.Over the year,it has organised second-hand sales raising money foran environmental charity,tested and provided feedback on a sustainable travel app under development,and held educational sessions on a variety of environmental topics.The network has also raised awareness and inspired colleagues by sharing stories of cycling to work,running more sustainably,and volunteering for environmental initiatives.Read more on our operations on page 21Sustainable operationsWe are reducing our impact and engaging colleagues totake action.In addition to our primary focus on climate and nature,we take action tosupport the circular economy and engage ourcolleagues to support our environmental aims.Read more in our Climate ReportBuilding a sustainable business continued1 Carbon emissions savings provided by Waste to Wonder.100%waste diverted from landfill fromcoreoperationalsites27ContentsBackAdditional informationPeoplePlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionBuilding a sustainable businessBuilding a sustainable supplychainWe want to work with our supply chain to generate value for all our stakeholders and deliver positive impact.We are focused on putting best practice processes and disclosures in place across our supply chain,whenever possible.Specifically:Climate change:We aim to achieve a net zero supplychain by 2050 with an interim objective to halve carbon intensity by 2030.Read more on our supply chain on page 21Human rights and modern slavery:We are working with key suppliers to ensure that they adopt best practices in tackling and eliminating modern slavery from their own operations and supply chains.98%ofkey suppliers published an in date modern slavery statement during 2023.Building a sustainable business continuedESG supply chain standardsOur ESG Supply Chain Standards set out our approach to ESG within our supply chain,including key focus areas and how we work with suppliers todrive best practice.Our suppliers have differing business models and sizes,affecting the level of ESG integration they are able to reach,so we designed our standards with differing expectations proportionate to the supplier.Read our ESG Supply Chain StandardsSupplier management andoversightWe have integrated key ESG risk factors into our Supplier Management Model.This covers oversight of all key third parties so we can actively monitor theirperformance and ensure they are following therequirements set out in our Outsourcing Third Party Management Framework and our ESG Supply ChainStandards.Working through this Framework will ultimately enable us to monitor ESG progress viarelationship managers and business functions,alongside direct supplier engagement.Our supplier risk management and oversight approach is being refined in 2024 to ensure thatengagement is more consistently defined acrossPhoenix Group,and across the appropriate governance structures.Climate and social riskAs part of our 2023 data enhancement workstream we improved our location of service and product delivery data.This will enable us to improve our understanding of the physical and transition risks posed by climate change,as well as helping to develop a deeper understanding of social risk for ourkey suppliers.In line with this,we will undertake an updated gap analysis on Living Wage across key suppliers in 2024.Read more in our Climate Report28ContentsBackAdditional informationPeoplePlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionBuilding a sustainable businessColleague engagementWe want all colleagues to know they are listened to and empowered to speak openly and honestly about their experiences at work.Our monthly continuous listening survey,Peakon,gives colleagues the opportunity to tell usanonymously about their experience of working atPhoenix Group and say what is and isnt working well,sowe can change the things which prevent us from achieving our full potential.Our Phoenix Colleague Representation Forum(PCRF)is there to support colleagues1 throughout their working life,providing guidance and support through challenges they may be facing.The PCRFgathers views on topics that matter most to colleagues,and discusses the collective colleague voice with senior leaders across Phoenix Group.Theaim is toinfluence change and propose improvements.In 2023,PCRF won Best use ofinnovation in employee engagement at theEngageAwards for its industry-leading representation and partnership model.We are also an Employee Engagement AdvocatewithEngage for Success(EFS).EFSisagrowingvoluntary movement promoting employee engagement asabetter way to work forcolleagues,teams and organisations.Being an Employee Engagement Advocate means that we have pledged our commitment to the four enablers and principles ofcolleague engagement:strategic narrative;employee voice;engaging managers;and organisational integrity.We report on our colleague engagement through anemployee Net Promoter Score(eNPS),a broadly used and holistic metric that indicates how colleagues feel about working for Phoenix Group.We ended 2023 with an eNPS score of 32,our highest-ever eNPS score and 2 higher than our end-of-year 2022 score.We achieved this improvement through our continuous listening strategy,which enables us to respond and react to the moments that matter to colleagues,whenit matters to them.However,creating a great workplace goes beyond achieving this score.We consider the total colleague experience by providing colleagues with access to the support and resources they need to help make their time at Phoenix Group as successful as possible.PassionDifferenceResponsibilityCourageGrowthLeadDreamCreateBelongSupporting our colleaguesOur ambition is to make Phoenix Group thebest place colleagues have ever worked.DreamBuilding a sustainable business continuedWe want to be top of the list of places anyone could want to work;a place they dream to be.Itmeans being a Company with purpose;taking pride in our work,and creating an inclusive and flexible workplace.1 PCRF supports our UK colleagues.Colleagues in Ireland have access to Unite,and our colleagues in Germany,the German Works Council.SLOC colleagues have access to the SLOC UK EmployeeForum.CultureOur values underpin everything we do.We want our colleagues to feel this every day,demonstrated through our actions and behaviours.Our culture ambitions:Making Phoenix the best place any of us have ever workedCreateWe want Phoenix Group to be a place where colleagues share responsibility to fix things thatare not right.BelongWe want to create a sense of belonging as wework together,through shared values ofpassion,responsibility,growth,courage,anddifference.LeadWe want to create a culture where everybody can lead;whether through managing people orsetting an example in the work they do.Our values29ContentsBackAdditional informationPeoplePlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionBuilding a sustainable businessWellbeingOur colleague wellbeing programme is designed tohelp colleagues make better life choices,feel supported and be their best possible selves in an inclusive environment.We provide tools,skills and resources to promote and support a colleagues mental,physical and financial wellbeing across a range of life stages,both in and outside the workplace:Mental We strive to create a supportive wellbeing culture where everyone can talk openlyabout their mental health and improve ourcollective understanding.Physical We provide a varied programme of physical wellbeing activities,tools and resources tohelp our colleagues manage their individual lifestyle,and support our colleagues to make informed and healthy choices.Financial We support our colleagues to have abetter understanding of how they can manage their money,reviewing their day-to-day finances and preparing for possible future financial shock.All colleagues have access to our Employee Assistance Programme,which includes a confidential 24-hour helpline for colleagues to share problems and receive actionable advice,and legal information services,including debt and financial information.Mental and physicalsupportAll colleagues1 are automatically enrolled in our private healthcare offering from BUPA when they join Phoenix.As well as an online GP service,colleagues1 have access to online mental health support with BUPAs partners SilverCloud.This year we improved our offering,which is part of our extensive colleague benefit platform MyChoice,to include support for neurodiversity and fertility issues.To further support colleagues mental health,we have trained Mental Health First Aiders who play an important role in supporting,listening and helping colleagues.We want Phoenix to be the best place any of ushaveever worked,and a key part of that is supporting colleagues to balance their work andpersonal lives.Our new policy Phoenix Flex,introduced thisyear,supports this ambition by encouraging andcelebrating flexibility at work,embracing our differences and helping each of ustothrive.Our policy goes beyond the minimum requirements in legislation.Colleagues canrequest to work flexibly from day one,at all career levels and in every area ofour business.This covers both formal flexible working(for example part-time working or job sharearrangements)andinformal arrangements(forexample hybrid working or flexing working hoursaround caring responsibilities).Furthermore,colleagues are empowered to disconnect from work outside theirworking hours in line with our Right to Disconnect Promise.To reflect our commitment to operating a safe working environment,our UK business qualified forthe ISO45001 Occupational Health and Safety(OH&S)Management Systems certification at the start of 2024.ISO45001 helps us improve workplace safety via a risk-based approach,and ensures we havean effective and continually improving OH&S management system.Furthermore,99.8%of our colleagues complete annual mandatory training on health andsafety.We measure our health and safety performance against the Reporting of Injuries,Diseases and Dangerous Occurrences(RIDDOR)metrics and in2023,we had two reportable events.Our injury frequency rate(IFR),which confirms the number oflost time injuries per million hours worked was 0.386 in the year.The world-class measure for business is an IFR at 0.1 or below.We recorded a totalof six incidents of lost time;these were unrelated incidents,with the most common cause being slips,trips and falls related to distraction while moving around the building.We have taken steps to reduce these incidents,including an action plan and an awareness campaign for colleagues,including videoshighlighting hazards in the workplace and anincentive scheme to report them.We also know colleagues sometimes need time off work.UK colleagues can take six months sick leave atfull pay(service dependent)and after 52 weeks ofabsence may apply for Group Income Protection(GIP)at 50%of their salary.Building a sustainable business continuedSupporting our colleagues1 All references to colleagues within Mental and physical support refers to UK colleagues.2 Living Pension launched to provide security and stability inretirement.Financial supportWe offered tailored educational webinars to individual colleague groups,such as women,thoseintheir early career and carers.This included delivering over 20 seminars to over 1,300 colleagues,and partnering with Nudge to deliver personalised money news,tools and education.We were the first of six companies to sign up to the Living Pension Commitment from the Living Wage Foundation2,following on from our work on the pilot scheme.The commitment is a voluntary savings target of 12%of living wage salary,to help workers build upa pension pot that will provide enough income tomeet basic everyday needs in retirement.It is independently calculated based on the real cost of living.Phoenix offers a core pension contribution of 10%,with a further contribution of up to 2%to match voluntary contributions made by colleagues.Menopause supportWe aim to treat menopause as a normal part of life,rather than have it as a policy,and have taken the following actions:We have become a Menopause Supportive Employer,accredited byHenpecked.We have Menopause advocates bothmale and female,who are there to listen and talk,run wellbeing events for colleagues and offer access to dedicated medical advice.We work with line managers to increase their understanding of how menopause affects how colleagues show up to work,and their confidence levels.30ContentsBackAdditional informationPeoplePlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionBuilding a sustainable businessVolunteeringMany of our colleagues make a real difference to peoples lives by donating their time and skills to support a range of community-based groups.It is alsoa great way for colleagues to develop new skills.All colleagues across the UK and Ireland are entitled to three days volunteering during business hours forindividual activities or team volunteering.Ourcolleagues gave over 6,000 hours to volunteering during 2023.Training and development Colleague developmentWe enable the professional development and growth of colleagues during their time at Phoenix through our learning and development strategy,which is designed to support the delivery of our strategy andpurpose,attract and retain the best people,andcreate value.Our Thrive at Phoenix programme brings together allthe resources colleagues need to cultivate their own future,move forward in their career and reach their development goals.We offer a wide range of offerings for building skills and knowledge,from mentoring to virtual workshops,to leadership development programmes.Over the course of2023,colleagues have attended a total of 4,124programme places.The journey begins with Join and Thrive,our award-winning induction programme,which supportscolleagues in their first steps at Phoenix.892new joiners to the Company have completed theprogramme this year.Beyond this,specific training and mentoring is offered on a needs basis,with colleagues booked onto 1,254 training courses during 2023.In 2022,we launched a new dynamic,online mentoring platform,Connectr,which is open to all UKand Ireland colleagues.Mentees choose their mentors,and work with them on their objectives andbuild a network across our business.In 2023,486colleagues accessed the platform with 25%remaining in active mentoring relationships.The mainobjectives were career development and building self-confidence.We use our Leadership Capabilities Framework andresources to help develop the skills and mindsetsrequired to lead through our Lead and Thrive programme.In 2023,238 colleagues were promoted,demonstrating our commitment to supporting greatcareers.Building a sustainable business continuedSupporting our colleagues1 In line with our policy,no charities deemed political or benefiting asingle faith were supported in 2023.2 Donation and fundraising from colleagues3 Donation and fundraising from colleagues,Group matching andthird party donations.Community engagementGiving back is part of our culture and by fundraising,volunteering and sharing knowledge,we can help more people enjoy a life of possibilities.Phoenix HeroesIn 2023 we created the Phoenix Heroes programme,which celebrates colleagues who give what they can,including time,skills,knowledge,resources andfundraising,tohelp make a positive and lasting difference in ourcommunities.Fundraising and donating tocharityWe match fundraising donations colleagues make toapproved registered charities of their choosing,which are in line with our community approach,across the year.We also give our colleagues the opportunity to donate to registered charities across the UK and Europe through the payroll giving scheme Give as You Earn.Samaritans has been our UK corporate charity partner since 20211 and was extended to March 2024 as we continue to realise the benefits for our customers,colleagues and wider communities.In total we have raised over 155,0002 for Samaritans UK in 2023.Wealso support Samaritans Ireland in Ireland.During 2023,660 colleagues raised over 55,000 forCancer Research UKs Race for Life,with company and third party donations bringing the total to over115,000.Our colleagues in Europe support Hilfe fr krebskranke Kinder Frankfurt e.V.in Germany,andsterreichische Krebshilfe Wien in Austria.Together,we have donated nearly 725,0003 to charities across the Group during 2023 including colleague and third-party donations.Edinburgh litter pickColleagues in our Edinburgh office cametogether to collect rubbish from thestreets following the Edinburgh Fringeand Edinburgh International Festival.Ourcolleagues made a positive difference to the community by removing 80 bags totalling approximately 35 tonnes of waste.40%of our colleagues took part incommunity initiativesthroughout 2023.Midlife MOT Following our successful pilot in 2022,we launched our Midlife MOT to the majority of UK colleagues in 2023.Our colleague Midlife MOT has two elements:Digital self-assessment:Helping all colleagues,irrespective of age,to understand their balance across work,wealth and wellbeing.The digital self-assessment provides a tailored report and set of actions to help colleagues take relevant actions to improve their balance.Making the Most of Later Life workshop series:asa follow-on to the digital self-assessment,this workshop series is targeted at colleagues looking to retire within the next ten years.The outcome ofthe workshop is to support colleagues in understanding their work,wealth and wellbeing ata deeper level,creating an action plan to support their preparation for retirement.82%plan to take action as a result of taking aMidlifeMOT90%completion rate for those who started aMidlifeMOTThe questionnaire was easy to follow and complete,and made me think more about my confidence in pension/retirement planning.31ContentsBackAdditional informationPeoplePlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionBuilding a sustainable businessOur approach Our DEI activity has four main aims:1.Recruitment:ensuring our talent attraction and hiring practices are inclusive for people from all backgrounds and at all life stages.2.Progression:ensuring that opportunities for career progression are equitable and inclusive,helping our colleagues achieve the future they want.3.Leadership:equipping our leaders with the skillsthey need to deliver our strategy,purpose andculture.4.Becoming an industry leader in DEI:we want to bethe best place to work for colleagues,at the forefront of inclusive working practices that help shape wider UK society.Priority actions for 2023The five key areas of our 2023 Group DEI action plan:1.Increasing the inclusive capabilities of ourleaders 450 leaders attended a Leading Inclusively workshop.As a result,120 leaders joined one of our11 colleague networks and over 50 leaders shared their inclusion and belonging story.All Talent Acquisition Team members attended an InclusiveHiring workshop,with 100%passing the certification requirements.2.Enhancing our colleague diversity data collection We created a new diversity data collection form and integrated it into our internal HR system,allowing us to move from a once a year snapshot to a continual view of our workforce diversity.This will underpin all of our DEI programme of work in 2024 and beyond.3.Embedding a dedicated social mobility programme of work During 2023,we created an over-50s employability programme in partnership with the Department for Work&Pensions and Connectr.This included a jobs fair in Edinburgh attended by over 250 people,an insights day and a week-long Your New Future employability programme.We ran two Career Ready mentoring and work experience programmes for young people from under-served backgrounds and participated forthe second year running in the 10,000 Black interns programme.We successfully launched our first Social Mobility Forum and Champions group.Our work this year resulted in the Group rising from 24th to 14th in the Social Mobility Foundation Employer Index,and our CFO,Rakesh Thakrar winning the Silver Award for the Champion of TheYear at the UK Social Mobility Awards 2023.4.Building a dedicated race and ethnicity action plan Our progress this year includes recruiting a dedicated DEI Project Lead for Race&Ethnicity,the launch of a Black Colleagues Working Group to bring lived experience input into our plans,thecompletion of 100 conversations with the top100 on race and ethnicity,and the preparation to launch two new targets for leadership representation in January 2024.We sponsored Windrush75 and the British Future report,Why the Windrush matters today,the Black in Finance panel at UK Black Business Week,and the Windrush100 launch.5.A dedicated disability and neurodiversity programme of work We analysed our workplace adjustments processes and created a set of recommendations for improvements.Together with Exceptional Individuals,we launched our Managing Neurodiverse Teams and Introduction to Neurodiversity workshops.We also created a working group to bring lived experience input into our Disability&Neurodiversity action plan.Our age-inclusive actionsDuring 2022,we signed the Age-friendly Employer Pledge,a nationwide programme runby the Centre for Ageing Better.By signing the pledge we showed our commitment to older workers and to making our workplace age-friendly,allowing us to draw on a wider pool of applicants for each job.It means older workers can continue to thrive and contribute within our organisation,and we can benefit from a multigenerational workforce.That is why this year,we took action to improve our recruitment,retention and development of workers aged 50 and over inthe following ways:In advertising our job vacancies,we are careful about the words,imagery,and the places we promote the vacancies so they appeal to older workers.We were lead sponsors of National Older Workers Week 2023 and used this as an opportunity to engage colleagues through aseries of internal events and activities.We committed to double the number of apprenticeships offered to colleagues,whichare offered to colleagues over 40 asanopportunity to up upskill and re-skill olderworkers.Diversity,Equity and InclusionWe want Phoenix to be a diverse and inclusive place to work.We want Phoenix to reflect the customers we serve and the communities we operate in,to be diverse and inclusive,and a place where all colleagues are treated equally and with respect so they are able to bring their whole selves to work.This allows us to attract the best talent,broaden our skillsets and widen our thinking.Ultimately,it helps us deliver what is best for our customers.At Phoenix,we are all responsible for Diversity,Equity and Inclusion(DEI).It is overseen by our DEI Steering Committee,which comprises Executive Committee members and is chaired by our CEO Andy Briggs,and backed up by our dedicated team.The team issupported in the work it does by 11 colleague networks which aim to raise awareness,connect andsupport colleagues on a variety of DEI issues.We participate in a wide range of partnerships with external organisations and experts such as Working Families,Neurodiversity in Business,British Future,the Clear Company and Link,which is the LGBTQ insurance network.These partners help us to advocate,drive action and promote best practice.Building a sustainable business continuedInclusion ReportIn 2024,we are publishing our first InclusionReport,which is an evolution of ourcombined gender and ethnicity pay gap report and will contain information on our overall programme of DEI work including social mobility,age,disability and neurodiversity,and LGBTQ inclusion.32ContentsBackAdditional informationPeoplePlanetPhoenix Group Holdings plc Sustainability Report 2023IntroductionBuilding a sustainable businessOur DEI targets andprogressWe made strong progress against our end-of-2023 DEI targets,exceeding all targets apart from that relating to women in senior leadership.We missed our target of 40%women in senior leadership by just 0.9%.This target was ambitious;weextended it during 2022 from covering just the top 100 to all senior leadership roles,representing c.1,000 colleagues.Nevertheless,we have set ourselves an even more ambitious target for women in senior leadership for 2025.We have also increased our focus on creating gender balanced talent pipelines within our business.Our actions in this area include:Diverse shortlists
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2023 Sustainable Development Repor t The Next Frontier:Industrial Tech for Sustainable Impact|Schneider Electric 2023 Sustainable Development Report 2023 Sustainable Development Report 2In this sustainable development report An introduction by our Chief Sustainability and Customer&Quality Officer,Agustin Lopez Diaz 2 1 Sustainability for all 3 1.1 Strategic vision towards long-term positive impacts 4 1.2 6 long-term commitments and progress measurement tools 5 1.3 Contribution to the United Nations Sustainable Development Goals 10 1.4 Open dialogue with stakeholders 12 1.5 Materiality assessment 13 1.6 Main sustainability risks,opportunities,and impacts 15 1.7 Integrated and transverse governance of sustainable development 22 1.8 Global and local external partnerships to move forward collectively 25 1.9 Schneider Electric contribution to standardization 29 1.10 Measuring our contribution to a more sustainable world 31 1.11 Key external frameworks and ESG ratings 37 2 Driving responsible business with Trust 40 2.1 Trust,Foundation of Schneider Electrics business 42 2.2 Vigilance plan 49 2.3 Responsible Workplace 54 2.4 Employee health and safety 55 2.5 High standards for the quality and safety of our products 58 2.6 Digital trust and security 61 2.7 Zero-tolerance for corruption 64 2.8 Compliance with Competition Law 67 2.9 Compliance with tax regulations 68 2.10 Export Control and Sanctions 68 2.11 Human rights 70 2.12 Sustainable relationships with suppliers 72 2.13 Vigilance with project execution contractors 83 2.14 Ethical relations with downstream stakeholders 85 3 Leading on decarbonization 88 3.1 Climate risks,opportunities and impact management 90 3.2 Schneider Electrics greenhouse gas footprint 95 3.3 Schneider Electrics Net-Zero Commitment 98 3.4 Investing to achieve the Groups climate strategy and vision 100 3.5 Decarbonizing the Groups operations by 2030 101 3.6 Decarbonizing the Groups supply chain by 2050 108 3.7 Decarbonizing the Groups downstream emissions 113 3.8 Enabling customers to decarbonize through efficiency and digitization 115 1Life Is On|Schneider Electric|2023 Sustainable Development Report 4 Being efficient with resources 118 4.1 Governance and Environment policy 120 4.2 Minimize the Groups impacts and dependencies on nature 121 4.3 End-to-end Circularity 124 4.4 Source better 130 4.5 Manufacture better 135 4.6 Use longer and use again 141 5 Great people make Schneider Electric a great company 144 5.1 2025 people strategy and vision 146 5.2 Diversity,equity,inclusion,and well-being 150 5.3 Talent attraction and development 160 5.4 Compensation and benefits 168 5.5 Social dialogue 173 6 Delivering social impact for a just transition 176 6.1 Improving lives through access to green electricity 178 6.2 Investing for high social impact 180 6.3 The Schneider Electric Foundation 185 6.4 The Next Gen Academy 191 6.5 Future Ready Program 198 7 Methodology and audit of indicators 200 7.1 Methodology elements on the published indicators 200 7.2 Methodology elements on EU Taxonomy indicators 211 7.3 Sustainability Accounting Standard(SASB)Correspondence table 228 7.4 Task-Force on Climate Related Financial Disclosures(TCFD)correspondence table 230 7.5 Report of one of the Statutory Auditors,appointed as independent third party,on the verification of the consolidatead non financial statement 236 7.6 Reasonable assurance report from one of the Statutory Auditors on a selection of Schneider Electrics non-financial performance indicators as for the year ended December 31,2023 238 8 Indicators 240 8.1 Environmental and climate indicators 240 8.2 Social indicators 246 8.3 Societal indicators 255 This report is an extract from Schneider Electrics 2023 Universal Registration Document.|2Schneider Electric 2023 Sustainable Development Report 2023 Sustainable Development Report “Companies that want to do well,must also be good and vice versa.”Agustin Lopez Diaz Chief Sustainability and Customer&Quality Officer I took on the role of overseeing sustainability matters at Schneider Electric at the end of the hottest summer in recorded history.The climate crisis was and is leaving a trail of destruction across the globe,and the window to address it is rapidly closing.The good news is that readily available and cost-effective solutions exist,and can be deployed now by every one of us to deliver on common sustainability ambitions.At Schneider Electric,we have worked hard for many years to do so.And by the summer of 2023,wed reached the midterm point of our current five-year Schneider Sustainability Impact(SSI)program.SSI initiatives act as our sustainability roadmap,tracking our environmental,social,and inclusion transformation in line with six long-term commitments to climate,resources,trust,equality,people of all generations,and the local stakeholders with whom we work.Engaging for impact with all stakeholders As an Impact Company,we are committed to bringing everyone along employees,customers,and suppliers and to working closely with local communities to make a difference.And I couldnt be prouder of the impact we made in 2023.We continued to support our customers on their journey toward Net-Zero with digital,electrification,and automation technologies.As of December 2023,we were already more than halfway towards meeting our target of helping our customers save and avoid 800 million tonnes of CO2 emissions by 2025.Part of the work to get to Net-Zero across our end-to-end value chain involves maintaining the highest standards of quality.And as we continue to encourage our top suppliers to switch to cleaner energy and run more energy-efficient operations,were also tackling our own Scope 3 emissions.Were taking a similar approach to also ensure that our partners protect their employees rights and provide access to decent work.And were making good progress in eliminating single-use plastic from packaging and increasing the green material content in our products.Our long-standing efforts to address energy poverty and transform lives with affordable,reliable,and clean electricity also continued apace in 2023.Were well on our way to meeting our 2025 goal to expand energy access to 50 million people worldwide.Maintaining our sustainability commitments over the long run Continued recognition from external rating agencies including the Dow Jones Sustainability World Index,Euronext Vigeo,Ecovadis and CDP Climate Change,and many others,underlines our progress;none of which would be possible without the commitment of our employees.Meanwhile,the Schneider Electric Foundation celebrated its 25th anniversary in 2023.Thats a quarter of a century of creating educational and entrepreneurial opportunities and greater access to energy,and supporting the energy needs of local communities.The Foundation also provides vital support and disaster relief most notably in 2023 sending donations and essential goods to earthquake victims in Turkey,Syria,and Morocco.Sustainability initiatives are transformative,and not always quick wins.Theyre about continuously building on prior achievements and striving for long-lasting,positive impact.And thats what we will do for the rest of the 2021-2025 SSI program,and beyond.Agustin Lopez Diaz Chief Sustainability and Customer&Quality OfficerAn introduction by our Chief Sustainability and Customer&Quality Officer1 Sustainability for Life Is On|Schneider Electric|2023 Sustainable Development Report 3 In this section 1.1 Strategic vision towards long-term positive impacts 4 1.2 6 long-term commitments and progress measurement tools 5 1.3 Contribution to the United Nations Sustainable Development Goals 10 1.4 Open dialogue with stakeholders 12 1.5 Materiality assessment 13 1.6 Main sustainability risks,opportunities,and impacts 15 1.7 Integrated and transverse governance of sustainable development 22 1.8 Global and local external partnerships to move forward collectively 25 1.9 Schneider Electric contribution to standardization 29 1.10 Measuring our contribution to a more sustainable world 31 1.11 Key external frameworks and ESG ratings 37 Distinctions 2023 Moodys ESG Solutions Dow Jones Sustainability Indices Corporate Knights:A Global 100 Most Sustainable Corporation A LIST2023CLIMATERated2023by2023 highlights 6.13/1 0 Schneider Sustainability Impact score,outperforming 2023 target(6.00/10)63%Sustainable packaging for our products (vs.45%in 2022)553M Tonnes of saved and avoided CO2 emissions for our customers since 2018( 112 MT vs.2022)46.5M People have access to green electricity in 2023,since 2009 ( 6.9M vs.2022)1.1 Strategic vision towards long-term positive impacts The world is changing The world is facing multiple challenges that require a significant and rapid response from businesses.The climate crisis is causing flooding and droughts that have already resulted in billions of dollars in damage and mass population migrations.It is jeopardizing access to basic needs and services such as health,food,water,and energy for millions of people generating further social inequalities.The biodiversity crisis,driven by changes in the usage of land and sea,direct exploitation of natural resources,pollution,climate change,and invasive species will further destabilize our economies as the ecological services nature provides to an ever-growing population are degraded.Meanwhile,the digital revolution is completely changing the way people interact with one another,how we interact with machines,and the way machines interact with each other.In the past years,multiple geopolitical crisis have also set in motion a series of global events which have led to significant disruptions,many of which have impacts across the world.These include constrained labor availability,global shortages of raw materials and electronics,unreliable transportation,and reductions in energy availability.Supply chains across industries have been challenged by these outcomes.New expectations and practices have emerged to help the world adapt to,or mitigate the impacts of this disruption:Local dynamics in response to ecological and social considerations as well as supply chain disruptions;The mobilization of new generations,demanding a radical shift towards a more sustainable economy;The flourishing of new environmental,social,and governance(ESG)regulations for both financial and non-financial undertakings;New ways of working,which are more flexible and more digital;Circular business models to preserve the planets resources.Articulating the strategy around an Impact Company model While everybody governments,NGOs,investors,and individual citizens has an important role,companies can be crucial players.They can be both developers and users of new solutions with have the resources,talent,technology,and geographic footprint to make real and fast change and use it to drive sustainable financial performance.The foundation of Schneiders sustainability strategy and Impact Company model is the belief that investing in the transition to a more sustainable future in energy sobriety,gender equity,or low carbon solutions is about future-proofing the Company.It drives the Companys competitiveness,innovation,and resilience.It secures sustainable growth because any companys health is deeply interconnected with the health of the environmental and social systems it evolves in.It encompasses continuous improvement of environmental,social,and ethical dimensions across an organizations entire value chain and stakeholders.This holistic approach allows the Group to greatly mitigate risks and also brings tangible added value by being more attractive to stakeholders,while boosting innovation.The transformation of Schneider Electric reflects this.The adoption of an Impact Company model has seen the Company triple in size,growing from 9 billion in 2003 to 35.9 billion in revenues in 2023.Schneider Electric products,software solutions,and services help households,companies,buildings,data centers,infrastructure projects,and entire industries make the most of their energy and resources and bolster their energy resilience.With its solutions,the Group plays a major role in accelerating the energy transition and fighting the climate crisis,while making a long-term positive impact on the planet and society.A purpose to empower all to make the most of our energy and resources,bridging progress and sustainability for all This positive contribution is measured as Impact revenues,which represent 74%of the Groups total revenues in 2023.In addition,in order to further contribute to a new electric and digital world,100%of Schneider Electrics innovation projects are aligned with its purpose,more than 90ing either strictly green or neutral.On this journey for a better planet,the Group is convinced that no one should be left behind,and businesses should operate a just transition.Climate change,biodiversity loss and rising inequalities,are all issues that have long-term consequences and cannot be addressed with a short-term mindset alone;solving these issues requires a combination of a long-term vision and concrete short-term action presented Schneider Electric 2023 Sustainable Development Report|2023 Sustainable Development Report 4Carbon neutral in our operations 25solute reduction across our entire value chain and“Net-Zero ready”in our operations(SBTi)Carbon neutral across our entire value chain Net-Zero CO2 emissions across our entire value chain(SBTi)Objectives of the Schneider Sustainability Impact(SSI)and Schneider Sustainability Essentials(SSE)Provide access to energy to 100 million people 2025 2030 2040 2050 1 Sustainability for all1.2 6 long-term commitments and tools to measure progress In response to the societal,economic,and ecological worldwide transformations,expectations from its stakeholders,and aligned with its Purpose and the United Nations Sustainable Development Goals(UN SDGs),Schneider Electric has made six long-term commitments.By tracking its sustainability performance and publishing quarterly results,Schneider Electric upholds its commitments to the SDGs and industry leadership in corporate social responsibility.Our tools to measure progress The execution of the Groups 20212025 sustainability strategy is tracked through quantitative key performance indicators(KPIs),under two complementary tools:the Schneider Sustainability Impact(SSI)and the Schneider Sustainability Essentials(SSE).Collectively,the 11 SSI Global and Local Impact programs,as well as the 25 SSE programs,are the Groups short-term sustainability roadmap and our contribution to the 17 UN SDGs.The SSI is the translation of our six long-term commitments into a selection of 11 highly transformative and innovative programs.The programs are tracked and published quarterly,audited annually,and linked to short-term incentive plans(STIP)for more than 64,000 employees.The SSE reflects continuous improvement actions taken by the Group,complementing the SSI.This tool brings balance between the innovative transformation plans of the SSI and the need to keep making progress with other long-lasting programs.A notable addition to the 20212025 program is the local aspect,aiming to deploy local actions in the 100 markets where the Group operates in order to better empower all leaders and collaborators to unlock meaningful local impacts.Long-term commitments and tools Life Is On|Schneider Electric|2023 Sustainable Development Report 5Tool Schneider Sustainability Impact(SSI)Schneider Sustainability Essentials(SSE)Local Sustainability Impact programs (SSI# 1)KPIs 11 25 200 Scope Global Global Local Reporting Quarterly Annual Annual Assurance Yes Yes No Link to STIP Yes No No Read more on the SSI and SSE programs and scope on the next page and throughout the report.Read more on the local commitments on Act for a climate-positive worldby continuously investing in and developing innovative solutions that deliver immediate and lasting decarbonization in line with our Carbon Pledge.Be efficient with resourcesby behaving responsibly and making the most of digital technology to preserve our planet.Live up to our principles of trustby upholding ourselves and all around us to high social,governance,and ethical standards.Create equal opportunitiesby ensuring all employees are uniquely valued in an inclusive environment to develop and contribute their best.Harness the power of all generationsby fostering learning,upskilling,and development for each generation,paving the way for the next.Empower local communitiesby promoting local initiatives and enabling individuals and partners to make sustainability a reality for 1.2.1 The Schneider Sustainability Impact:a unique transformation tool Since 2005,Schneider Electric has measured its sustainability performance each quarter in a dashboard known as the“Schneider Sustainability Impact”(SSI).Schneider uses this tool to address its sustainability challenges and to improve each of the pillars of its strategy identified through its materiality matrix.Each SSI mobilizes the whole Company around holistic sustainability goals impacting its ecosystem,shares the Groups improvement plans with stakeholders,and creates system value.A single ESG performance score The SSI provides an overall measure of the Groups progress on its sustainability goals on a scoring scale of 10.This is achieved by converting each KPIs performance on a 10-point scale,considering that base year performance receives a 3/10 score,and the 2025 objective translates in a 10/10 score.For each KPI,the relevant score is obtained by linear interpolation and rounded down to the second decimal.The overall score of the tool is the average of each KPIs score with equal weight excluding the local commitment(SSI# 1).In 2023,the SSI achieved a great score of 6.13/10(vs.4.91/10 in 2022),exceeding its 6.00/10 target for the year,and is well on track to achieve its 2025 ambition.The 2024 objective is to keep accelerating and reach 7.40/10.Transparent quarterly progress disclosure The results of the SSI are published every quarter together with financial results and made available to all stakeholders via the Groups website.On these occasions,results are collated and presented to the Function Committee(previously known as Group Sustainability Committee),which makes decisions on any corrective actions that may be necessary to reach objectives.The Governance,Nominations&Sustainability Committee(previously known as Human Resources&CSR Committee)within the Board of Directors conducts an annual review of the Groups sustainability strategy,analyzing,in particular,the performance of the SSI.The results are also publicly presented to shareholders by Schneider Electrics CEO or CFO,demonstrating the Groups commitment to making sustainability part of the Companys long-term strategy.In addition,the results of the SSI are released in various external reports(such as the Universal Registration Document including the statutory auditors report),and are shared during customers and investors events.Internally the results are published on the intranet,and in various communications to employees(including a quarterly internal video featuring the CEO and the CFO on the quarters results).Schneider Electric 2023 Sustainable Development Report|2023 Sustainable Development Report 6Find all quarterly releases on the Financial Results page on Annual publication and external assurance The annual publication of the SSI results follows thorough internal data controls performed by each relevant team and supervised by the Sustainability team,as well as a complete“limited”external assurance from an independent third-party verifier for all of the SSI and SSE indicators(except SSI# 1 and SSE#12),in accordance with ISAE 3000 assurance standard.Progressively,Schneider Electric aims to obtain a reasonable assurance level on the SSI.In 2023,SSI#8 obtained a reasonable assurance level,as well as other energy,CO2 and safety KPIs(SSE#3,SSE#5 and SSE#14).Rewarding employees for performance Since 2011,the SSI score is included in the variable compensation of global functions and Company leaders.In France,since 2012,the SSI has also been included in the profit-sharing incentive plan for the French entities,Schneider Electric Industries and Schneider Electric France.From 2019,the weight of the SSI criteria has increased from 6%to 20%in the collective part of the annual short-term incentive,further highlighting the importance of sustainability on Schneider Electrics business agenda.In 2023,the SSI performance impacted the short-term incentive plans for 64,000 employees(20%of collective share),including the Executive Committee members and the CEO.SSI and Sustainable Finance In November 2020,Schneider Electric announced its first sustainability-linked convertible bond,due 2026,for a nominal amount of approximately 650 million.This bond issuance is linked with three programs of the SSI 2021-25(SSI#2,SSI#8 and SSI#11).In 2022,Schneider Electric signed 2.7 billion Syndicated Sustainability-Linked Revolving Credit Facilities with a margin indexed on the annual performance of the SSI.Find more information about debt and bonds on the Debt page on SSI creation process The SSI is a cyclical process taking place every 3 to 5 years.In 2020,a specific SSI Steering Committee was created,comprising around 50 members representing each Executive Committee member,and each geography,function,and business unit.Three all-hands workshops took place,and the Sustainability team organized individual follow up interviews with each member to define precise and measurable programs.The breadth of stakeholders involved in the design of the SSI,and the variety of analyses leveraged,makes it a powerful tool to move the Group forward on its major challenges.1 Sustainability for allThree scenarios may emerge from one SSI to the next:Programs are maintained and their targets are renewed or increased;New and more innovative or better-adapted indicators are implemented;Programs are removed,if for instance they have reached a threshold.Any former program may continue to be monitored internally if relevant.The Sustainability department presents a draft version of the new SSI to the Governance,Nominations&Sustainability Committee,which reports on its work to the Board of Directors,and to the Function Committee,for validation.This latter Committee includes seven members,who each have functional responsibilities and report directly to the CEO:the Chief Sustainability and Customer&Quality Officer;Chief Strategy Officer;Chief Human Resources Officer;Chief Global Supply Chain Officer;Chief Marketing Officer;Chief Governance Officer&Secretary General;and Chief Financial Officer.The new SSI is then approved by the CEO.During the deployment of the SSI,annual reviews take place organized by the Sustainability team together with internal experts and new or complementary programs may be launched or be evaluated in more depth.Notable SSI achievements and challenges in 2023 SSI#2 delivered 112MTCO2e saved and avoided for customers,a continuous improvement compared to 2022( 93MTCO2e),driven by good progress in Power Purchase Agreements services and Variable Speed Drives sales.The Zero Carbon Project(SSI#3)recorded a 27%progress(vs.10%in 2022)thanks to CO2 emissions efficiency gains in the operations of 1,000 top suppliers.The Group kept progressing on its transition to sustainable packaging,with 63%of primary and secondary packaging now free from single-use plastic,using recycled carboard(SSI#5),compared to 45%in 2022.This progress was possible thanks to the mobilisation of the teams worlwide,and particularly in Europe and North America.SSI#6 significantly progressed in 2023,with 85%of strategic suppliers committed to the Decent Work program,of which 21%are meeting the Decent Work expectations set by Schneider Electric.This represents an increase of 20 pts since its launch in 2022,but reaching the 2025 target remains a challenge due to the shorter timeframe to achieve it.The most significant progress was achieved by SSI#9 which delivered access to clean and reliable electricity to 6.9 million people in 2023 alone(vs.5.5M in 2022),thanks notably to the solarization of Health Centers in South Asia and Africa,and the delivery to Impact Investment Funds.One of the most challenging 2025 objectives will be to train 1 million people in energy management(SSI#11).Major progress was delivered in 2023 with close to 180,850 new people trained,more than twice than in 2022(close to 70,000 people).However,due to the delay caused by the pandemic,an acceleration will be needed in the coming years to reach the target.To achieve it,the Group is opening trainings to more OECD countries and supporting new types of programs for the youth.1.2.2 Schneider Sustainability Essentials The SSE reflects continuous improvement actions taken by the Group,complementing the SSI.This tool brings balance between the innovative transformation plans of the SSI and the need to keep making progress with other long-lasting programs.All SSE KPIs are externally assured each year like for the SSI.Notable SSE achievements and challenges in 2023 Schneider is committed to accelerating sustainable transformation in its own operations:In 2023,24 new sites were certified Zero-CO2 sites(SSE#1),for a total of 101 sites contributing to the Groups GHG emissions.Corporate vehicle fleet transformation(SSE#7)accelerated by 10 points in 2023,driven by a strong performance in Europe and a growing market maturity.The Groups ambition is to deploy local biodiversity conservation and restoration programs at 100%of its sites(SSE#8),and to deploy a water conservation strategy and related action plan at 100%of its sites in water-stressed areas by 2025(SSE#11).In 2023,66%of sites have put biodiversity programs in place(vs.18%in 2022),and 73%of sites in scope have adopted and implemented water conservation action plans(vs.48%in 2022).Improving CO2 efficiency in transportation(SSE#4)is a challenge as it is primarily driven by the mode mix of the Groups aggregate freight globally,to best serve its customers.With SSE#23,Schneider aims to provide access to meaningful career development programs for its employees during later stages of their career.67nefited from these programs in 2023(vs.43%in 2022).Finally,1,165 new suppliers were assesed in 2023 under Schneiders“Vigilance Program”(SSE#17),notably thanks to the increase of remote Vigilance assessments.Deploying a Social Excellence program through multiple tiers of suppliers is one of Schneiders 2021-25 objectives(SSE#12).This program is stilll in development.Local Sustainability Commitments A significant element of the 2021-2025 program is the local dimensions,which deploys local actions in the 100 markets where the Group operates in order to better empower all leaders and collaborators to unlock meaningful local impacts.100%of Schneider Electrics Country and Zone Presidents have defined three local commitments that impact their communities in line with our sustainability transformation.Close to 200 local programs have been deployed since 2021.In 2024,the local programs will be renewed or extended by setting more ambitious targets,with the aim of increasing local impact through employee engagement.All local sustainability leaders were involved in 2023 to prepare for the Life Is On|Schneider Electric|2023 Sustainable Development Report 7Discover Schneiders local sustainability commitments on the Empower local communities page on Schneider Electric 2023 Sustainable Development Report|2023 Sustainable Development Report 82023 score:6.13/1 0 vs.4.91/10 in 2022 and outperforming 6/10 target for the year Schneider Sustainability Impact 6 Long-term Commitments 11 1 targets for 2021-2025 Baseline(1)2023 Progress(2)2025 Target Climate Grow Schneider Impact revenues(3)1.2019:70t%Help our customers save and avoid millions of tonnes 2020:263M2.of CO2 emissions 553M800M Reduce CO2 emissions from top 1,000 suppliers operations 3.2020:0P%Resources Increase green material content in our products 4.2020:7)%Primary and secondary packaging free from single-use plastic,using recycled cardboard 50%5.2020:13c0%Trust Strategic suppliers who provide decent work to their employees 6.2022:1!%Level of confidence of our employees to report unethical conduct 100%7.2021:81% 1pt 10pts Equal Increase gender diversity in hiring(50%),front-line management(40%)and leadership teams(30%)8.2020:41/23/2441/28/29Provide access to green electricity to 50M people 50/40/30 9.2020:30M 16.6M50M Generations Double hiring opportunities for interns,apprentices and fresh graduates 10.2019:4,939x1.52Train people in energy management x2.00 11.2020:281,737578,709 Country and Zone Presidents with local commitments that impact their communities 1M Local 1.2020:000%(1)The baseline year is indicated in front of each SSI baseline performance.(2)Each year,Schneider Electric obtains a“limited”level of assurance on methodology and progress from an independent third party verifier for all the SSI and SSE indicators(except SSI# 1 and SSE#12 in 2023),in accordance with ISAE 3000 assurance standard(see Independent verifiers report on page 236).The 2023 performance is also discussed in more details in each section of this report.(3)Per Schneider Electric definition and methodology.For the reporting requirements under the European Taxonomy Regulation,please refer to pages 211 to 227.Read more about the SSI indicators methodology on pages 201 to 206.1 Sustainability for Life Is On|Schneider Electric|2023 Sustainable Development Report 9Schneider Sustainability Essentials 6 Long-term Commitments 25 targets for 2021-2025 Baseline(1)2023 Progress(2)2025 Target Climate 1.2020:30Decarbonize our operations with Zero-CO2 sites 101150 2.Substitute relevant offers with SF6-Free medium2020:26%voltage technologies 600%3.Source electricity from renewables2020:80%4.Improve CO2 efficiency in transportation 2020:0%1.6%Resources 5.Improve energy efficiency in our sites2019:0%6.G row our product revenues coveredwith Green Premium2020:77%7.Switch our corporate vehicle fleet to electric vehicles 2020:1$3%8.Deploy local biodiversity conservation andrestoration programs in our sites 2020:0f0%9.G ive a second life to waste inWaste-to-Resource sites 2020:120137200 10.Avoid primary resource consumption throughtake-back at end-of-use since 2017(metric tons)2020:157,588311,229420,000 11.D eploy a water conservation strategy and action planfor sites in water-stressed areas 2020:0s0%Trust 12.D eploy a Social Excellence program through multipletiers of suppliers(3)-In progress-13.T rain our employees on Cybersecurityand Ethics every year 2020:90.30.Decrease the Medical Incident rate to 0.38 or below 2019:0.790.510.38 15.R educe total number of safety recalls issued to 0 2020:2523016.B e in the top 25%in external ratings forCybersecurity performance 2020:Top 25%Top 25%Top 25.Assess our suppliers under our Vigilance Program2020:3743 248,4,000 3 248Equal 18.R educe pay gap for both females and males 2020:F:-1.73 20:M:1.00%-1.00%-.00 1%0 67%.1%0 67%10 events employer of choice and develop and retain the best process and track the candidate SSE#21:x1.55 employee-driven market leader for talent talent on the market,especially journey by stages development interactions in 2023 development for for critical skills,leads to:Annual performance and vs 2020 on the Open Talent everyone,everywhere,Cost of recruiting and development approach,with Market platform leading to greater talent onboarding fair,transparent and competitive SSE#22:78%performance in attractivityGaps in critical skills rewards and development digital upskilling through the Succession pipeline for A robust talent management Digital Citizenship program critical expert and system to review annually the SSE#23:67%of employees leadership positions development plans for all having access to meaningful Less positive brand employees,identify key talent career development programs perception by talent pool such as experts and high during later stages of their career potentials,prepare key(vs.43%in 2022)successions and developments Launched global candidate Grow the early talent pipeline through global program and country-specific initiatives Learning and Development programs for employees at different stages of their professional career and specific talent segments and critical skills Support employees to build a sustainable and meaningful career by democratizing access to development opportunities(internal mobility,project and mentoring)via Open Talent Market(OTM),and upskilling for today and tomorrow FlexibilityWork policy feedback tool to track recruitment experience SSI#10:Created more opportunities by hiring x1.52 early career talents vs.2019 Digital Boost was completed by almost 50K employees Functional and digital skills program(CoMET)deployed(40K employees)1.7 Integrated and transverse governance of sustainable development At Schneider Electric,sustainability is integrated in the processes and bodies that design and execute the Groups strategy at Board,management,and operational levels.Management oversight The Board of Directors In 2013,the Board of Directors extended the powers of the Governance&Remunerations Committee to include corporate social responsibility(CSR)issues.Since 2014,the Group has benefited from a specific Human Resources&CSRD Committee.In 2023,this Committee was renamed Governance,Nominations&Sustainability Committee.It meets at the initiative of its Chairperson or at the request of the Chairperson of the Board or CEO.The agenda is drawn up by the Chairperson,after consultation with the Chairperson of the Board.The Committee meets at least three times a year(6 meetings in 2023).The Committee may seek advice from any person it feels will help it with its work.Main responsibilities:Employee shareholding schemes and share allocation plans;Compensation of Group managers;Succession plan for key Group Executives;Human resources;CSR policy and results.The Function Committee In 2022,the Group Sustainability Committee(created in 2010)became the Function Committee.The committee is composed of the Executive Committee members in charge of key Functions:Governance,Global Marketing,Human Resources,Strategy,Sustainability,Finance and Digital.The committee meets quarterly.In 2023,this committee met 7 times.The Committee may seek advice from any person it feels will help it with its work.Main responsibilities:Decides the sustainability agenda;Sounding board for Functions;Escalation body for highly transversal programs,such as the Schneider Sustainability Impact(SSI);Informs the Board Governance,Nominations&Sustainability CThe Stakeholders Committee To reinforce its sustainability governance further with solid external insights,Schneider Electric created a Stakeholder Committee in 2021.The Committee comprises eight external members who share the Groups passion for sustainability,and its mission is to oversee the delivery of short and long-term commitments undertaken by Schneider Electric in accordance with its Purpose and Sustainability strategy.The Company strives to ensure diversity of the Stakeholder Committee members,in terms of origin,gender,and experience.The Stakeholder Committee meets three times a year and is chaired by Peter Herweck,CEO of Schneider Electric,while Agustin Lopez Diaz,the Chief Sustainability and Customer&Quality Officer of Schneider Electric,acts as its secretary.Coordination and monitoring The Group Sustainability department The Sustainability department was created in 2002.It has the following responsibilities:Schneider Electrics sustainability strategy and rollout of action plans at Group level with relevant entities;Central point of contact for internal and external stakeholders regarding sustainability at Schneider Electric;Organize and drive the work of Global Sustainability Committee It is organized around four areas:Access to energy,with responsibility for the Access to Energy program;Environment,with responsibility for deploying Group climate and environmental policies,actions and strategies;Group performance,in particular by steering the SSI,and external ESG reporting;Sustainability Transformation,in particular driving the ENGAGE and INVENT programs.Territory Sustainability Leaders(TSL)In 2021,Schneiders Country and Zone Presidents worldwide made 200 local commitments that impact their communities,in line with the Groups 6 long-term commitments.To manage these programs and to better answer the needs of local stakeholders,a new internal sustainability governance model was created with a network of 60 TSL.This new network meets once a month and works to further instill a culture of sustainability at every level of the Company,to empower every employee to act,and to innovate with disruptive sustainability actions.Diffusion SSI and SSE pilots and sponsors The execution of all Schneider Sustainability Impact and Schneider Sustainability Essentials programs is ensured by operational managers or“pilots”,and sponsors at SVP-level to ensure proper oversight and efficient program implementation.Other key organizations Several further Committees and organizations drive progress on all pillars of the sustainability strategy,including:Global Supply Chain organization,with responsibilities including safety and the environment;Human Resources organization;The Ethics&Compliance organization;The Corporate Citizenship department and the Schneider Electric Foundation.Schneider Electric 2023 Sustainable Development Report|2023 Sustainable Development Report 1 Sustainability for all22 Sustainability governance at Schneider Electric Life Is On|Schneider Electric|2023 Sustainable Development Report 23 Sustainability Fellows network,Volunteers,Schneider Electric Foundation delegates Board of Directors Governance,Nominations&Sustainability Committee Approve the sustainability strategy and SSI Approve LTIP and STIP for the CEO 360-degree ESG implementation Businesses,operations,and corporate functions Implement strategy and Company programs and policies Execute sustainability objectives(SSI,variable compensation)Support awareness Innovate 360-degree ESG vision SSI Pilots and Sponsors Establishes dialogue with the entire Company to boost ambition,innovation,and integrate all challenges Co-develops new SSI programs Representatives from Executive Committee,operational activities and central functions Network and expert committees Schneider Electric has expert committees*on dedicated and material topics,in particular:Climate Environment Human rights Governance Ethics Citizenship Diversity&Inclusion Executive Committee Function Committee Stakeholders Committee Validate strategy and alignment with the United Nations SDGs Challenge and monitor global sustainability performance and progress of initiatives Participate,challenge and oversee the execution of Schneiders Purpose,Sustainability strategy and delivery of long-and short-term commitments Sustainability Department and Global Sustainability Committee Coordinates and monitors the sustainability strategy and performance Manage innovation projects Lead the relationships between internal and external stakeholders Management oversight Diffusion Coordination and monitoring All employees*Non-exhaustive list:Access to Energy Committee,Carbon Committees,SERE(Safety Environment Real Estate)Committee,Ethics Committee&Fraud Committee,Duty of Vigilance Committee,Foundations Executive Committee&Schneider VolunteerIn Board,HR Committee,Diversity&Inclusion Committee,SSI pilots and sponsors.Invest in Sustainability talents To drive its Sustainability strategy,Schneider Electric has been investing for the past years in the development of its talents across ESG fields.While its talent pool continues to flourish,the Group redefined in 2023 its organization strategy to best harness its collective potential,resulting in the launch of the INVENT program and a Sustainability Academy.This latter acts as a key enabler to deploy the INVENT program and push the needle further on talent management and allow continuous growth across the organization.Engage Employees in Sustainability In 2022,the Group launched the ENGAGE initiative,with the ambition to make every employee an advocate for sustainability,thereby accelerating the Groups transformation and contribution to the UN SDGs.In complement,the Sustainability School was launched the same year to help employees and partners understand how they can act personally and professionally on sustainability through different learning paths covering a large range of environmental and social topics,including challenges of our decade and Schneiders detailed Sustainability The ENGAGE program builds on other initiatives already underway:The Sustainability Essentials training deployed for all employees;The“Act For Green”initiative,which aims at supporting all employees to pursue local environmental actions;The UN World Environment Day on June 5th has been celebrated on all sites since 2014.Communities of ambassadors facilitate e-learning and workshops(such as Climate Fresk);The Schneider Electric VolunteerIn initiative,as part of the Schneider Electric Foundation,enables employees since 2012 to participate in volunteering missions through partnerships with NGOs from all around the world.Internal governance model and policies Internal policies are the backbone of an organizations Compliance and Security program.They ensure employees understand how to implement critical tasks and meet behavior expectations.Regulators have made clear the need for effective policy development and management programs.It is no longer enough to merely document the existence of policies and procedures.Organizations must be able to demonstrate that employees know,understand and apply them.To that end,Schneider Electric has established a four tier form of documentation pyramid of norms,under the umbrella of its Code of Conduct called the Trust Charter,strengthened by policies,standards,procedures,and guidelines.Policies consist of formal statements produced and supported by the leadership team,that state where the organization stands on important issues.Schneider has around 85 global policies.The Schneider Electric Global Policy Management Policy provides the rules to be followed for global policies.Standards defined in these internal policies assign quantifiable measures and define acceptable levels of quality.Procedures establish the proper steps to take to operationalize a policy and/or standard.Finally,guidelines provide additional guidance with a set of recommendations to clarify expectations of a given procedure.Trust Char ter In 2021,Schneider Electric evolved its Principles of Responsibility to the Trust Charter,acting as its Code of Conduct and demonstrating its commitment to ethics,safety,sustainability,quality,and cybersecurity.It is an executive summary of our policies and a guide on how we work.It is available publicly on our website in 30 languages.Further details are provided on page 42.Schneider Electric 2023 Sustainable Development Report|2023 Sustainable Development Report 24 Discover Schneiders Trust Charter on Human rights and corporate citizenship Schneider Electric wrote a specific Human Rights Policy as part of a broader program on duty of vigilance in its value chain and in line with the United Nations Guiding Principles on Business and Human Rights(see page 70).The policy was updated in 2022.Human resources and safety The Groups Human Resources policies cover the following topics:diversity,equity and inclusion,health and well-being,safety,security and travel,employee engagement,family leave,anti-harassment,recruiting,international mobility,training,human capital development,talent identification,total remuneration,social benefits,and COVID-19.These apply to the Group and are accompanied by global processes.Ethical business conduct In addition to the Trust Charter,the Business Agents Policy specifies the rules to be followed when an external stakeholder is solicited to secure a deal and integrates the approval process of business agents.The Internal Fraud Investigation directive indicates the commitment to whistleblower protection.The Gifts&Hospitality Policy was approved by the Groups CEO in December 2015 and updated in 2021 before local deployment.It is supplemented by an anti-corruption Code of Conduct detailing related processes.Other policies cover social media management,competition law,conflict of interest,export control,etc.Cybersecurity,data privacy,and protection Schneider Electric developed a number of policies to reinforce its cybersecurity and respect personal data and privacy,such as IT asset management and usage,acceptable use of assets,general information security,data classification,global data privacy,user access management policy,email security policy,and many others.Climate and resources Schneider Electrics environmental policy aims to improve industrial processes,reinforce product EcoDesign and incorporate Group customers concerns about environmental protection by providing them with product and service solutions.It is bolstered by the Energy and Environment policies.These policies apply to the Group and are accompanied by global action plans.Responsible sourcing In 2016,Schneider Electric renewed the charter for its suppliers,called the Supplier Guide Book.It sets the Groups sustainability expectations in five areas:environment,fair and ethical business practices,sustainable purchasing,working conditions,and human rights.These requirements are detailed in a dedicated document called the Supplier Code of Conduct.In 2018,the Group adopted the Responsible Business Alliance(RBA)Code of Conduct for suppliers.In 2021,Schneider renewed its Supplier Code of Conduct whereby it requires all its suppliers to review their own operations,set ambitious targets,and initiate bold actions in the areas mentioned in this Supplier Code of Conduct.1 Sustainability for allProducts quality Schneiders priority is to satisfy its customers with outstanding end-to-end experience.Quality is every customers right and every employees responsibility.Experience is the most important for customers,defining the business relationships they sustain with suppliers and partners.The Groups customers place trust in its resilient,highly-personalized,multi-channel experience,and the superior quality of its products.Hence,the Company acts with agility,discipline,and good business sense throughout the offer lifecycle;from creation to supply,manufacturing,and delivery,when in operation and when being serviced.The Group has deployed a specific Quality Directive“Managing Customer Safety Risks”and a Quality Procedure“Offer Safety Review”to protect its customers.These are supported by the Quality Management System,which is improved continuously.It is in full alignment with the Trust Charter and the ISO 9001 standard.1.8 Global and local external partnerships to move forward collectively Schneider Electric works with more than 300 local and international organizations and associations on economic,social,and environmental issues to foster sustainability in cooperation with various players.The Group confirms its commitment to and participation in discussions on challenges related to climate change,social equity and ethics.The main memberships are presented in the following Life Is On|Schneider Electric|2023 Sustainable Development Report 25 Organization Description Key actions with Schneider Access to Energy Alliance for rural Alliance for rural electrification advocates In 2023,Schneider strengthened its sponsorship and took part electrification for a decentralized,sustainable and in several events such as the Energy Access Investment Forum inexpensive renewable energy sector that 2023(Abidjan),panels,webinars and newsletters,and generates local employment and inclusive collaborated on a position paper about Microgrid in Africa.economic growth.Solar Impulse The Foundation relies on innovation to Schneider has made a four-year commitment to the Solar Foundation propose solutions helping decision makers Impulse Foundation,which selects 1,000 solutions contributing All digital topics Information Technology Industry(ITI)Council harness the economic opportunities of the to the achievement of at least five SDGs.In 2023,they partner to ecological transition whilst reducing their host the exhibition 1000 Solutions for Cities in Schneiders environmental footprint.Grenoble site“Intencity”.The Group also works with the ITI Council is the trusted leader of innovation policy that drives sustainable,ethical,and equitable growth and opportunity for all.Foundation for its products certification.Through ITI,Schneider Electric contributes to provide inputs and influence national governments about global digital policy and regulations.ITI,in coordination with its members,submit feedback reflecting their input on various topics such as digitization,cybersecurity,data privacy,IT supply chains,and public procurement.Information ITIF is a non profit think tank whose mission In 2023,Scheider Electric collaborated closely with ITIF on Technology and is to formulate,evaluate,and promote policy various topics such as clean energy and data education for Innovation solutions that accelerate innovation and policy makers.Foundation(ITIF)boost productivity to foster growth,Circular Economy and product environmental performance opportunity,and progress.Ellen MacArthur The Ellen MacArthur Foundation works to Schneider has been a member of the Ellen MacArthur Foundation accelerate the transition to a circular Foundation since 2021.The goal for the Group is to gain Membership economy by developing and promoting this knowledge on circular economy,develop its network,identify new and innovative model.The Foundation best practices,challenge its circularity strategy and share works with business,academia,practices.policymakers,and institutions to mobilise systems solutions at scale,globally.Product PEP ecopassport program employs the Schneider is a founder of the association,chairing the Steering Environmental LCA approach and will be acknowledged as Committee and Technical committee to ensure the rules to Profile(PEP)a framework and method that are perform PEP are compliant with international standards and use ecopassport compatible with the PEF methodology in a consistent manner.In 2023,Schneider supported PEP created by the European Commission.PEP methodology through the Ecoplatform association and ecopassport will be a recognized body for participated to the Lifecycle Management Conference,among the EUs upcoming Sustainable Product other events.In 2023,80.6%of Schneiders products were Initiative.covered by PEP-Green PSchneider Electric 2023 Sustainable Development Report|2023 Sustainable Development Report 26 Organization Description Key actions with Schneider Climate Energy Transition Commission The Energy Transition Commission(ETC)is a global coalition of leaders from across the energy landscape who are committed to a Net-zero world by 2050 and focused on advancing the debate and solutions to climate change.Entreprises pour lEnvironnement(EpE)French association that brings together some sixty major French and international companies committed to lead their own and societys ecological transition.Schneider has collaborated with the Energy Transition Commission on multiple topics of research such as hydrogen and clean electricity all in the direction of Net-Zero.The Group contributed to the publication of several reports,notably on energy productivity,and the supply chain in the new energy economy.It also organized expert workshops and participated in major events such as the COP 2023.Schneider worked closely with EpE in 2023,notably on several publications such as the report“2030 Milestone for the Ecological Transition”,a report on Climate dialogue with stakeholders.and a joint tribune published ahead of the COP28 asking to accelerate the Climate transition.Cybersecurity and Data ISA Global Cybersecurity Alliance(ISAGCA)Confederation of Europe Data Protection Organizations(CEDPO)The Global Cybersecurity Alliance is a new organization aiming at influencing government policies in favor of the IEC 62443 suite of standards.Of late,they have set up helpful meetings with DHS(Department of High Security)and DOE(Department of Energy)officials.CEDPO contributes to promote the role of data protection officer,provide advice on balanced,workable and effective data protection,and contribute to better harmonization of data protection law and practice in the EU/EEA.In 2023,the ISAGCA and Schneider worked with the Cybersecurity and Infrastructure Security Agency(CISA)to map ISA/IEC 62443 to CISA Cross-Sector Cybersecurity Performance Goals.Through ISA/CEI,Schneider contributed to several publications and to the development of standards(primarily through ISA/IEC and aided by ISA GCA),and defended ISA/IEC 62443 cyber standard as the reference for OT cybersecurity.Schneider works closely with CEDPO,through working groups,contributing to the writing of documents such as“Ten questions at the intersection of AI/ML and data protection”,and by commenting on EU privacy laws.Diversity,Equity and Inclusion Valuable 500 The Valuable 500 is a worldwide corporate alliance of 500 CEOs and their organizations that collaborates on innovations for disability inclusion.International Labour Organization Global Business and Disability Network(ILO GBDN)Education HEC Paris-Movement for Social and Business impact The ILO GBDN is a platform dedicated to ensuring that the employment policies and practices of companies of all types are inclusive of people with disabilities worldwide.The goal of HEC Specialization“Movement for Social and Business”is to achieve a more inclusive economy,in which companies seek to maximize their social impact alongside their economic performance.Schneider Electric is committed to ensure that disability inclusion is on its senior leadership agenda,and that its commitment is shared with the business and the world.The Group is committed to reporting on the following 5 criteria:Workforce representation,objectives,training,ERNs,Digital accessibility.Schneider signed the ILO Charter on Business&Disability and has committed to applying these principles in its organization.In November 2023,the Group participated in a panel discussion during the ILO GBDN Summit“No social and environmental sustainability without disability inclusion”.With a view to continuous improvement,Schneider also benefits from peer-to-peer sharing on a quarterly basis.In 2023,HEC and Schneider have worked very actively together.They co-founded The Impact Company Lab,a new experimentation platform that harnesses the power of companies and the expertise of HEC Paris researchers to amplify the impact of business leaders just transition agendas.Furthermore,Schneider has engaged with climate entrepreneurs/innovators,as part of the Creative Disruption Lab,to support and promote technological start-ups with high growth potential.1 Sustainability for Life Is On|Schneider Electric|2023 Sustainable Development Report 27 Organization Description Key actions with Schneider to save Energy(EU-ASE)Energy Efficiency/Electric mobility/Digital Renewables European Alliance EU-ASE influences the Energy Efficiency Directive and the This coalition actively advocates to advance the European energy efficiency agenda,in Energy Performance of Buildings Directive and Hosted Energy particular through more stringent legislation Efficiency Day.It was an important participant in the Sustainable on energy efficiency and buildings.Energy Week organised by the European Commission.Comit Stratgique The Committee aims to turn the energy In 2023,Schneider participated in the definition of the new de Filires transition into an opportunity for organizations roadmap(2024-2027)and led the“I decarbonize”Nouveaux Systmes reindustrialization,by combining the efforts initiative,which consists in decarbonizing French industry and Energtiques of the Government,industrial companies,offer decarbonation solutions with a significant local content.Ethics Cercle dthique Schneider is actively involved in defining the challenges of des Affaires Ethics and Compliance in France,and to exchange with its and trade union players under a common roadmap.Its mission is to promote ethics and compliance in the management and governance of French companies by peers to better meet those challenges.In 2023,Schneider organising different meetings and focused on ethical challenges in artificial intelligence,internal discussions with multiple parties.speaking and inquiry,gift management and hospitality.Mouvement des MEDEF is the leading employers Schneider engages to establish private sectors position in all Entreprises de association acting in the interests of matters related to Ethics&Compliance within the dedicated France(MEDEF)businesses.It takes part in social Committee,particularly with regard to laws and regulations on Human rights Entreprises pour les droits de lHomme(EDH)negotiations and intervenes in tax and anticorruption,Human rights and whistleblowing,at French and regulatory decisions affecting companies.European levels.EDH aims to promote the understanding In 2023,Schneider worked in collaboration with the association and integration of human rights within and participated in the organization of several events such as companies through the deployment of workshops,learning and awareness sessions about Human vigilance approaches.rights.UN Global Compact Global Compact is a voluntary initiative Schneider is Patron of the UNGC Labour and Decent Work(UNGC)based on CEO commitments to implement program as well as Sponsor on Climate.In September 2023,universal sustainability principles and to Schneider committed to take action as an early mover of the take steps to support UN goals.UNGC Forward Faster initiative in the area of the living wage.Industry 4.0 and Smart Manufacturing OPC Foundation The OPC Foundation is an industry OPC and Schneider continued to work together in 2023,through consortium that establishes and maintains several technical working groups about the next generation of standards for automation,open systems industrial network with OPC UA FX as unified network for and equipment connectivity.controller to controller(C2C)and controller to Device(C2D).FDT Group FDT is the open standard for enterprise-In 2023,Schneider supported FDT Group technical work in wide connection that uses IIoT and Industry various project groups and contributed to the maintenance and 4.0 to integrate networks and devices for evolution of the international industry standard(“FDT-Field industrial automation.Device Technology”,IEC 62453/ISA 103).FieldComm Group FieldComm Group is in charge of industrial FieldComm and Schneider have been working together in 2023 Philanthropy protocols implemented in Process to reduce gap between Process automation and Factory Automation Systems(HART,FieldBus,FDI).Automation networks.Alliance pour le Coalition of French companies involved in The group has participated in the creation of a multi-enterprise Mcnat de volunteering of big companies employees.impact study about the social impact of skills-based comptences Schneider Electric 2023 Sustainable Development Report|2023 Sustainable Development Report 28 Organization Description Key actions with Schneider Smart Grids and Sustainable Cities T&D Europe T&D and Schneider have published a joint report on IEC 62443 T&D Europe is a grid technology providers association.It represents electricity adoption and promoted its representativeness in sectorial transmission and distribution equipment regulations.and services providers in Europe.Smart Energy SmartEn integrates consumer-driven clean Schneider and SmartEn have worked hand in hand to publish Europe(smartEn)energy transition solutions.It aims to create different position papers on renawable energy systems opportunities for companies to integrate efficiency and other related topics.increasingly renewable energy system.Sustainable governance and crossfunctional topics World Business The WBCSD is a community of over 200 of Participation in various workstreams such as Equity&Human Council for the worlds leading sustainable businesses Rights;PACT(Partnership for Carbon transparency)on carbon Sustainable working collectively to accelerate the accounting and avoided CO2 emissions;and SOS1.5,a Development system transformations needed for a cross-sectoral framework designed to assist businesses in(WBCSD)Net-zero,nature positive,and more modernizing their processes and preparing for a 1.5C equitable future.scenario.World Economic The World Economic Forum is a nonprofit Schneider worked jointly with the WEF on various subjects such Forum(WEF)organization that works to improve the as transforming energy demand,through public-private status of the world by bringing together collaboration and presenting use cases of Schneider buildings,influential figures from business,politics,Net Zero Industry,Zero Carbon Project,Smart Factories,via the academia,and other sectors of society to WEF Global Lighthouse Network.Schneider also collaborated help set priorities for the globe,individual with peers on the AI Governance Alliance launched in 2023,the regions,and various industries.Urban Decarbonization roadmaps of San Diego and the Global Parity Alliance and the Good Work Alliance.GIMELEC GIMELEC is a trade association grouping Schneider and GIMELEC work hand in hand on different topics digital electronics companies in France such as Energy Efficiency,Decarbonization,Digitization,promoting efficiency and electrification,Flexibility,Circular Economy,SF6-free,and Standardization.supported by digitization.It has 4 Markets Committees:Smart Building,Industry 4.0,Smart Grid&Infrastructures,Datacenters.National Electrical NEMA is a trade association that allows Schneider has been working closely with the NEMA to update Manufacturers electrical equipment manufacturers to the National Electric Code in the US.In 2023,8 US States Association(NEMA)provide feedback to relevant governments adopted this new Electric Code standard(NEC2023).on a variety of policy and standards.1 Sustainability for all1.9 Schneider Electric contribution to standardization With many experts actively participating in international and national standardization bodies,Schneider Electric is making a decisive contribution to the creation and distribution of standards that ensure the safety and reliability of electric facilities and equipment.These standards address environmental impacts throughout lifecycles to prepare for a better circular economy,support the new energy landscape with the goal of greener energy integration,ensure safer energy delivery and better integration of prosumers,support the digital transformation of the industry and any other customer values.At National level Schneiders experts are involved in National Committees in the US,China,India,and European countries.The French Electrotechnical Institute is a founding member of CENELEC(European standardization body)and IEC(International standardization body).Schneider Electric chairs many French standardization committees hosted by AFNOR(French standards organization)and sits on other national committees,such as the chair of the French and Swedish Committees for environmental standardization.Schneider was a major contributor to smart manufacturing initiatives such as the AIF(Alliance Industrie du Futur)in France.Notably,it is a member of the Council Board and of the IEC Conformity Assessment Board.At European level CENELEC(European Committee for Electrotechnical Standardization),CEN(European Standardization Committee),and ETSI(European Telecommunications Standards Institute)are the three official European standardization bodies.They have been officially recognized by the European Union,and by the European Free Trade Association(EFTA)as being responsible for developing and defining voluntary standards.European Commission DG Grow(Internal Market)decided to create a High-Level Forum for Standardisation to be launched in January 2024.Schneider Electric,through T&D Europe(European Association of Transmission&Distribution manufacturers)will represent the European Power System stakeholders,together with Grid Operators,Manufacturers,national Electricty Associations.The workstream is dedicated to propose strategic topics and standardisation moves,to better activate Energy Transition across Europe through Digitalization,Green and Resilience.CENELEC CENELEC is an association that brings together the National Electrotechnical Committees of 34 European countries.CENELEC prepares voluntary standards in the electrotechnical field,which help facilitate trade between countries,create new markets,cut compliance costs and support the development of a Single European Market.CENELEC supports standardization activities in relation to a wide range of fields and sectors including:electromagnetic compatibility,accumulators,primary cells and primary batteries,insulated wire and cable,electrical equipment and apparatus,electronic,electromechanical and electrotechnical supplies,electric motors and transformers,lighting equipment and electric lamps,low voltage electrical installations material,electric vehicles railways,smart grid,smart metering,and solar(photovoltaic)electricity systems.Most Schneider Electric activities and offers are covered by CENELEC,although CEN and ETSI also benefit.In addition,Schneider Electric experts are participating in the development of common works and standards through specific joint technical committees and joint working groups.At international level IEC International Electrotechnical Commission The IEC is a global,not-for-profit membership organization that brings together more than 170 countries and coordinates the work of 20,000 experts globally.The IEC publishes around 10,000 IEC International Standards which together with conformity assessments provide the technical framework that allows governments to build national quality infrastructure and companies of all sizes to buy and sell consistently safe and reliable products in most countries of the world.IEC International Standards serve as the basis for risk and quality management and are used in testing and certification to verify that manufacturer promises are kept.Schneiders experts contribute through joint technical committees and joint working groups to ISO and ITU.Smart grids and sustainable cities Schneider Electric participates actively in the standardization of smart grids,for which it leads the definition of standards and the standardization roadmap within the European smart grids coordination group,as well as the group in charge of standardizing the interfaces between smart buildings and smart grids.Schneider co-chairs the Smart Energy Grid coordination groupof the CEN-CENELEC-ETSI responsible for ensuring availabilityof an appropriate set of standards for the rollout of smart grids inEurope,as well as supporting the coming new legislative“CleanEnergy Package”.It chairs the group at the IEC level in charge of defining theroadmap of international standards to support the rollout of theSmart Energy sector(smart grids,in addition to interfaces withother energies).This roadmap also includes cybersecurity andresilience,as well as the impact of the IoT.It chairs and actively contributes to the definition of prosumerselectrical installations,installations integrating local productionsuch as PV,wind,and storage to ensure they are designed anderected with a high level of safety and efficiency.It chairs the IECs Advisory Committee for Energy Efficiency(ACEE)and chairs the Advisory Committee on Safety(ACOS)Life Is On|Schneider Electric|2023 Sustainable Development Report 29 Circular economy and product environmental performance To support high standards of health and safety,Schneider experts continuously contribute to standards around materials and substances.They provide standards on methodology and test methods,raising the bar on safety and protection against toxicity.Regarding environmental footprint,our experts ensure fair comparison,relevance of assumptions,consistency of approach,interoperability and meaningful content for our customers.They are developing standards around:Terminology and catalogue data;Product Category Rules for Life Cycle Assessment(LCA)dedicated to electrotechnical products;Product Specific Rules for high and low voltage equipment,low voltage switchgear and controlgear,and power electronics;Extension of Product Specific Rules and Environmental conscious design to cover material efficiency or digital format;Quantification of greenhouse gas(GHG)emission reduction and avoidance.Relating to Circular Economy and eco-design,Schneider chairs the Ecodesign Coordination Group(CEN-CLC/Eco-CG)and has contributed to the European Commissions Circular Economy package,and with CEN-CENELEC-ETSI developed a set of published standards assessing factors such as durability,repairability,reusability,recyclability,and ability to be remanufactured,which fall within the scope of the EcoDesign Directive and the new Ecodesign for Sustainable Products Regulation.Schneider continues to contribute to the evolution of those standards and their extended scope and has appointed active experts in each of the existing and new working groups.For example,our experts are highly involved in the development of the future standard on circular design:material efficiency within environmentally conscious design.As digitalization is a lever for circular economy and environmental performance,our experts are contributing to standards on terminology and digital Standardization to accelerate environmental transformation Since February 2007,Schneider has represented France on the IECs Advisory Committee for Environmental Aspects(ACEA).ACEA works to advise and coordinate the IECs efforts to tackle environmental issues.At the same time,Schneider Electric is actively present in ACTAD(Advisory Committee for Transmission and Distribution)to ensure electricity and environment are closely considered.Schneider is particularly heavily involved in the working groups on sustainability(chairing environment and circular economy groups,participating in working groups in product technical committees(TC)dealing with environmental aspects(IEC TC121,IEC TC17,CLC TC22X)and in the work on the rational use of energy.The Group chairs the IEC TC111 Committee on Environmental Standardization of Electric and Electronic Equipment and IEC TC 23 Electrical Accessories(protection devices,wiring devices,home and building control systems).The Group is the secretary of IEC SC23K on Energy Efficiency Products,Systems and Solutions.In 2018,Schneider led the UPS manufacturers group in the EU Commissions Product Environmental Footprint(PEF)pilots for defining rules to assess the PEF of products put on the EU market,prior to its implementation of the European policy.The Group chairs ISO/TC 184(Automation systems and integration).Digital transformation Digitization is the key driver for advanced manufacturing,optimizing production with more flexibility,more interoperability,more predictability,and continuity to provide a new level of system efficiency and sustainability.Further data,software,and tools enabling virtual descriptions known as digital twins and creating new capabilities and services are combined with Machine learning and Artificial Intelligence,while taking account of Safety and Cybersecurity.In Cybersecurity,Schneider is secretary of Joint Advisory Group between IEC TC65 and ISO/IEC JTC 1/SC 27 from Enterprise level to Field Devices and participates in several working groups bridging Regulation to Standardization(EU,US).The Group is particularly heavily involved in the working groups on Smart Manufacturing in ISO and IEC technical committees(Chair of ISO/TC 184,Secretary of IEC TC65,Chair of IEC SC65E).Schneider chairs Industrial Digital Twin Association(IDTA)to deep dive and deploy the Asset Administration Shell as standardized digital twin.The Group also chairs UniversalAutomation.org association to address a more functional and distributed approach for the orchestration of industrial systems.Schneider Electric 2023 Sustainable Development Report|2023 Sustainable Development Report 1 Sustainability for all30 1.10 Measuring our contribution to a more sustainable world Schneider Electric has been an early adopter of transparent disclosures on sustainable revenues and created its own methodology of“Impact revenues”(1)in 2019,consolidating revenues from offers bringing higher efficiency and sustainability to customers,and excluding revenues from carbon intensive segments and equipment with SF6.The Group uses this indicator to measure progress towards a low-carbon transition.In 2020,the EU adopted the Taxonomy Regulation aimed at driving investments towards environmentally sustainable activities,which the Group applauds and supports.Both methodologies are progressively converging(for example on the exclusion of revenues from fossil fuel industries and equipment that utilizes SF6),but currently differ in the scope of activities covered or in applicability of specific criteria.These methodological differences may be changed or reduced in the future,as new economic activities are gradually included in the EU Taxonomy framework.Early-adopter of transparent disclosures on sustainable revenues For nearly 20 years,Schneider Electric has led by example and transparently presented its ESG performance,and worked to develop new market practices,such as its saved and avoided CO2 methodology and biodiversity footprint assessment.In 2019,the Group was one of the first companies to proactively disclose information on the share of its Impact revenues,i.e.,revenues coming from offers bringing energy,climate,or resource efficiency to customers.In 2021,the Group took a step further by committing that Schneider Impact revenues reach 80%of Group sales by 2025 as part of its Schneider Sustainability Impact(SSI)program.The performance of the SSI impacts short-term incentive plans for 64,000 employees.Schneider Impact revenues can be split into four categories:1.Energy efficiency architectures bringing energy and/or resource efficiency to customers.2.Grid reinforcement and smart grid architectures contributing to electrification and decarbonization.3.Products with differentiating green performance,flagged thanks to our Green Premium program.4.Services that bring benefits for circularity(prolonged asset lifetime and uptime,optimized maintenance operations,repair,and refurbish)and energy efficiency(maintenance to ensure the operational performance of equipment and avoid a decrease of energy efficiency over time).Schneider Impact revenues exclude revenues derived from activities with fossil sectors.These encompass oil&gas,coal mining,and fossil-power generation,in line with prevailing corporate responsibility reporting and sustainable finance practices,even though Schneiders technologies deliver resource and carbon efficiency here as well.(1)Schneider Impact revenues are calculated using Schneiders own consistent methodology and are distinct from revenue eligible or aligned under the EU TLife Is On|Schneider Electric|2023 Sustainable Development Report 31 Climate SSI#1 Our 2025 Commitment Grow our Schneider Impact revenues to 80%As the data center industry has grown to keep pace with increasing digitization,major data center operators have made sustainability central to their strategy,setting bold targets for efficiency,waste,and decarbonization.Schneider Electric is proud to partner with its customers to realize their growth and sustainability ambitions simultaneously.Schneider provides digital solutions,efficient equipment,and expert consulting to address every part of the data center sustainability challenge.Digital Realty,a global provider of data center,colocation and interconnection solutions,is supported by Schneider Electric for renewable energy procurement in numerous global markets.It also uses EcoStruxure Resource Advisor to track the production and emissions associated with these investments,along with the energy use and expenditure in its facilities.Connected Schneider equipment gives Digital Realty the ability to optimize its efficiency in real time.Additionally,the two companies collaborated on a circularity pilot at one of Digital Realtys campuses in France,in which the companies conducted a joint inventory of Schneiders portfolio of equipment in the data center to evaluate and execute opportunities to extend equipment life,take back equipment at end-of-life,and maximize reuse and recycling.Our progress 2019 Baseline 2025 Target 2023 Progress 74p%In line with the Groups strategy to gradually substitute SF6 with air in its offers,SF6-containing switchgears for medium voltage applications are also excluded,as well as neutral technologies such as signaling,racks and enclosures,access control,or emergency lighting.2019 2021 20202023 Schneider Electric 2023 Sustainable Development Report|2023 Sustainable Development Report 32 EU Taxonomy Regulation adopted The Group reports on eligibility and alignment with all six EU Taxonomy environmental objectives,one year ahead of regulatory requirements First disclosure of Schneider“Green Revenues”Schneider Green Revenues renamed“Impact revenues”The Group commits to reach 80%Impact revenues by 2025 First reporting of EU Taxonomy indicators Out of all revenues of Schneider(as published in the financial statements),the total share of Schneider Impact revenues is 74%in 2023 vs.70%in 2019.In addition,to further contribute to a new electric and digital world,100%of Schneider Electrics innovation projects are aligned with its purpose,more than 90%qualifying as impact innovation under Schneiders definition,or neutral.This includes every innovation contributing to a decarbonized world,for instance energy and process efficiency,resource optimization,SF6-free projects,or Green Premium offers.The methodology to calculate this figure is similar to the Schneider Impact revenue methodology and should not be confused with capital expenditure(CapEx)and operating expenditure(OpEx)eligible or aligned under the EU Taxonomy.Reporting requirements under the EU Taxonomy Regulation The adoption of the Taxonomy Regulation(1)in 2020 establishes a EU-wide classification system to identify economic activities that are considered as environmentally sustainable as part of the EUs long-term plan to connect finance with its sustainability goals.Dedicated Delegated Acts(DA)specify for six identified environmental objectives(2),which economic activities are included in the EU Taxonomy(eligibility),as well as the screening criteria to determine if they are indeed making a substantial contribution to at least one of the environmental objectives,while also Doing No Significant Harm(DNSH)to the remaining objectives and meeting minimum standards on human rights,corruption,fair competition,and taxation(alignment).Pursuant to Article 8 of the regulation,the proportion of turnover,CapEx and OpEx resulting from products,systems,software,or services associated with economic activities considered sustainable is due to be reported progressively over the fiscal years(FY)2021 to 2024.In FY 2023,large undertakings are required to disclose those three KPIs for eligible and aligned activities for climate environmental objectives according to the EU Climate Delegated Acts published prior to 2023,as well as the eligible activities for“new”climate change activities and non-climate environmental objectives according to the amended Climate Delegated Act(3)and new Environmental Delegated Act(4)published in 2023.Schneider Electric is proactively going beyond this requirement and already reporting the eligibility and alignment of its economic activities under all six environmental objectives in its FY 2023 reporting,which is expected of large undertakings only from 2025(FY 2024).As a sustainability leader,the Group is committed to communicating transparently and consistently on its sustainable economic activities and preparing for upcoming requirements from the Corporate Sustainability Reporting Directive(CSRD).Disaggregated data is disclosed in section 7.2 on pages 211 to 227.Importantly,the phased application of reporting requirements as well as their evolving nature means that the KPIs disclosed in this report may evolve in line with changing regulatory and reporting requirements.Regular revisions of the Delegated Acts are expected in order to include missing activities and strengthen the technical screening criteria and DNSH requirements for existing activities,in line with technological developments,EU policy priorities,or usability challenges.This means that the share of eligible and aligned revenues of Schneider Electric is expected to gradually increase,as the EU Taxonomy framework gets closer to full maturity and companies improve their data collection and reporting capabilities.Notably,some provisions of the text are subject to differing interpretations,while the data needed to evaluate certain criteria remains unavailable or challenging to obtain;for example,the Group is unable to assess alignment of its remote monitoring and predictive maintenance systems with technical screening criteria for activity CE 4.1(provision of IT/OT data-driven solutions and software),as it does not have granular data on whether its systems or software are being used by customers to manage engines powered by fossil fuels.While the Group is in the process of collecting the relevant information,in such cases the Group has taken a conservative approach to interpreting and calculating its activities Taxonomy alignment.As such,the reported proportion of Taxonomy-aligned revenues may be lower than if full granularity on usage data had been available.(1)Regulation(EU)2020/852.(2)The six environmental objectives include two climate environmental objectives(climate change mitigation(CCM)and climate change adaptation(CCA),and four non-climate environmental objectives(sustainable use and protection of water and marine resources(WTR),transition to a circular economy(CE),pollution prevention and control(PPC),and protection and restoration of biodiversity and ecosystems(BIO).(3)Regulation(EU)2023/2485 amending Regulation(EU)2021/2139.(4)Regulation(EU)2023/2486.1 Sustainability for Life Is On|Schneider Electric|2023 Sustainable Development Report 33 2023 EU Taxonomy reporting covers all 6 environmental objectives Climate change mitigation(CCM)Transition to a circular economy(CE)Climate change adaptation(CCA)Pollution prevention and control(PPC)Protection of water and marine resources(WTR)Biodiversity and ecosystems protection(BIO)Climate environmental objectives Non-climate environmental objectives(1)16%of revenue are double counted due to non-compliance with the requirements of both Technical Screening Criteria and the DNSH(2)Due to the impact of rounding on individual elements within this disclosure table numbers may not exactly sum to the Group total.1.Illustration of Schneider Electrics eligible activities Energy efficiency equipment and services in buildings Energy efficient building automation and control systems Smart monitoring and regulation of electricity or heating systems Zoned thermostats and devices for the smart monitoring of electricity loads or heat loads Energy efficient cooling systems Service plans related to building management and power metering systems Technical consultations such as energy audits,simulations,and trainings Low CO2 mobility end segment Electric vehicle charging stations and grid reinforcement technologies Electrical infrastructure for urban and suburban public transport Port infrastructure for shore-side electrical power to vessels at berth and electrification and efficiency of ports operations Medium and low voltage equipment for electrical transmission and distribution Low voltage electrical products equipment,systems and services increasing energy efficiency SF6-free medium voltage switchgears and control gears Communication and control technologies for the controllability and observability of the electricity system Demand response and load shifting equipment,systems and services that increase flexibility of the electricity system and support grid stability Transmission and distribution wiring devices that improve energy efficiency and Tier 2 transformers Electrical and electronic equipment Manufacture of electrical and electronic equipment IT/OT data-driven solutions and software Asset performance management Remote monitoring and predictive maintenance systems Lifecycle performance management software Design and engineering software Services and activities supporting the circular economy Repairing,refurbishing,or remanufacturing products that have already been used Sale of spare parts beyond legal obligations Product-as-a-service and other circular use-and result-oriented service models Eligible activities 89%of revenue|86%of CapEx|48%of OpEx Alignment criteria Reference for details 2.Evaluation of eligible activities against alignment criteria Conclusions of the assessment 1.Substantial contribution to environmental objectives?47%of revenue not compliant with technical criteria Section 7.2 page 211 5%of revenue not compliant due to exclusions(revenues from fossil sector,products with SF6)(Technical Screening Criteria)Compliant Compliant Compliant 22%of revenue not compliant(1)Compliant Compliant Compliant 2.Compliance with DNSH?Climate change mitigation(CCM)Section 3 page 88 Climate change adaptation(CCA)Section 3.1 page 90 Sustainable use and protection of water and marine resources(WTR)Section 4.5.4 page 137 Transition to a circular economy(CE)Section 4.6 page 141 Pollution prevention and control(PPC)Section 7.2 page 211 Protection and restoration of biodiversity and ecosystems(BIO)Section 4.2 page 121 3.Compliance with minimum safeguards?Section 7.2 page 211 Aligned activities(complies with all 3 criteria)(2)31%of revenue|35%of CapEx|48%of OpESchneider Electrics support to the EU Taxonomy Schneider Electric supports the purpose of the EU Taxonomy.When fully developed,it will act as a tool for decision-making on sustainable investments and channel funding where it is needed to accelerate the transition to a sustainable economy.Schneider Electric has experienced both the value as well as the challenges of conducting a mapping of sustainable business activities early on and is leveraging this know-how to support the development of the EU Taxonomy.2023 saw the addition of over 35new economic activities across various sectors to the EU Taxonomy framework,an evolution that the Group has actively supported.Schneider Electric has engaged with the European Commission as well as with the Platform for Sustainable Finance directly and via trade associations.The Group joined the latter to help draft the technical screening criteria for the new activity CCM 3.20 on low,medium,and high voltage electric equipment for transmission and distribution.Schneider Electric will continue active involvement in the discussions to improve the framework on two fronts:speeding up the completion of the framework with missing sustainable technologies;and improving the usability and practical implementation of the technical screening criteria.Going forward,the Group will also continue to engage with its peers,through industry bodies,to discuss interpretation of the technical screening criteria.Calculation of Taxonomy-eligible and-aligned revenue Schneider Electric identified several Taxonomy-eligible business activities,contributing to at least one of the six environmental objectives defined in the corresponding Delegated Acts.The list of those activities is provided in our methodological notes on pages 277 and 293 of the 2023 Universal Registration Document.In 2023,Taxonomy-eligible and-aligned revenues amounted to 89%and 31%respectively,representing EUR 32,099 million and EUR 11,240 million respectively out of EUR 35,902 million total 2023 consolidated revenue,as disclosed in the consolidated statement of income on page 452 of the 2023 Universal Registration Document.Schneider Electrics Taxonomy-eligible revenues increased significantly compared to 2022,leveraging on the publication of additional activities complementing the climate objectives,and the new Environmental Delegated Act detailing the four non-climate environmental objectives.There are four reasons for the difference between Schneider Electrics Taxonomy-eligible and-aligned revenue.Firstly,challenges in assessing the alignment of economic activities with the technical screening criteria for manufacturing of electrical and electronic equipment(CE 1.2)led to a conservative disclosure whereby all revenues eligible under this activity have been declared as non-aligned(39%of total revenues).Challenges encountered include a lack of clarity of some terms used(e.g.,“superior recyclability”),and lack of applicable requirements of some criteria(e.g.,no clarifications on how hardware can qualify as being designed for long lifetime).Schneider Electric is continuously reviewing and improving its circular practices via its EcoDesign Way process and Green Premium program to further reduce the environmental impact of its products.See more details in section 4,on page 118.Secondly,SF6-insulated switchgears are eligible but not aligned due to non-compliance with technical screening criteria for activity CCM 3.20(manufacture of high,medium,and low voltage electrical equipment for transmission and distribution aimed at GHG emissions reductions).Notably,the exclusion of SF6 switchgears from Taxonomy-aligned revenues is in line with the Groups methodology for calculating Schneider Impact revenues(SSI#1).Thirdly,eligible revenues derived from activities with fossil fuel sectors are not aligned.This affects alignment under activities including but not limited to CCM 3.20(manufacture of high,medium,and low voltage electrical equipment for transmission and distribution aimed at GHG emissions reductions).This exclusion is also in line with the Groups Schneider Impact revenues methodology.Finally,non-compliance with some of the requirements listed in the generic criteria for DNSH to pollution prevention and control regarding use and presence of chemicals accounts for non-alignment of 22%of Schneider Electrics total revenues.This comprises exclusions on two grounds.9%are related to non-compliance with the EU Restriction of Hazardous Substances(RoHS)Directive or in the list of restricted substances(Annex XVII)to the Regulation concerning the Registration,Evaluation,Authorization and Restriction of Chemicals(REACH).13%are related to products with substances identified in the candidate list for inclusion in the list of substances subject to authorization from Annex XIV of REACH regulation and for which no exemption could be applied,i.e.,when no other suitable alternative substances or technologies were available.In both cases,substances that have been granted exemptions under the requirements of the RoHS Directive are not excluded.Schneider has deployed tremendous efforts to be able to measure and improve its proactive compliance to REACH and RoHS even outside of the EU,as part of its environmental programs.The Group is continuously working on substituting hazardous chemicals from its products,processes,and supply chain,and when substitution is not technically possible,ensures that risks posed by such chemicals are under control at all lifecycle stages to minimize any potential harm towards the environment and peoples health.All other eligible activities comply with technical screening criteria,do not cause any significant harm to any of the other environmental objectives and respect the minimum safeguards as specified in the respective Delegated Acts.Schneider Electric 2023 Sustainable Development Report|2023 Sustainable Development Report 1 Sustainability for all34 Calculation of Taxonomy-eligible and-aligned CapEx and OpEx In 2023,Taxonomy-eligible and-aligned CapEx amounted to 86%and 35%respectively,representing EUR 1,444 million and EUR592million respectively out of EUR 1,675 million total 2023 consolidated CapEx,as per EU Taxonomy definition.To compute the Groups Taxonomy-eligible and-aligned CapEx,CapEx related to assets,processes,and business combinations associated with Taxonomy-eligible and aligned activities were calculated with a high level of granularity using allocation keys of eligible and aligned revenue per business and operations,except for Research and Development(R&D)CapEx and IFRS 16 long-term leasing of buildings CapEx,which have been qualified through the prism of CapEx for eligible and aligned individual measures.The allocation keys methodology is considered a conservative approach as it is based on the current activity of each product line,which does not consider transformations driven by the product lines investments in the calculation of Taxonomy-eligible and-aligned CapEx KPIs.Meanwhile,CapEx associated with product-related R&D projects are considered Taxonomy-eligible and-aligned under the activity CCM 3.6(manufacture of other low carbon technologies).This is because each product-related R&D project of the Group enables a substantial carbon footprint saving through more efficient products and systems.Those improvements are measured with a lifecycle assessment(LCA)shared publicly in the Product Environmental Profile,aligned with ISO 14067 and verified by an independent third party.This is described more exhaustively in section 3.4,on page 100.The difference between eligibility and alignment in revenue,as explained in the previous section,also applies to CapEx.In addition,the fact that CapEx based on IFRS 16,related to long-term leasing of buildings,is fully eligible but not aligned also contributes to the difference between the Groups Taxonomy-eligible and-aligned CapEx.In 2023,Taxonomy-eligible and-aligned OpEx amount to 48%,representing EUR 844 million out of EUR 1,758 million total 2023 consolidated OpEx,as per EU Taxonomy definition.To determine the Groups Taxonomy-eligible and-aligned OpEx,only non-capitalized costs related to R&D are analyzed for the establishment of the numerator of the OpEx KPIs.This includes non-capitalized costs relative to product-related R&D projects but also,among others,costs incurred in relation with support and platforming,costs of IT global applications dedicated to R&D,and costs relative to continuous engineering costs for quality,productivity,and obsolescence.As mentioned for CapEx,each product-related R&D project of the Group demonstrates a substantial carbon footprint saving and therefore the numerators of the KPIs correspond to operating expenditure directly associated to Groups R&D projects.These OpEx are both Taxonomy-eligible and-aligned under activity CCM 3.6(manufacture of low carbon technologies)Life Is On|Schneider Electric|2023 Sustainable Development Report 35 Schneider Electric 2023 Sustainable Development Report|2023 Sustainable Development Report 1 Sustainability for all 36 Spotlight on EcoStruxure Microgrid Advisor:empowering efficient grids While the influx of decentralized renewable power(such as rooftop solar)is integral to both mitigating climate change and providing for growing electrification to customers and utilities,electricity grid operators must find ways to balance the hourly fluctuations of renewable electricity generation without compromising reliability and stability.To this end,microgrids can be leveraged,either by installation both in front of and behind the meter to incorporate these energy resources and maintain electricity service in case of wider grid outages.Schneider Electrics EcoStruxure Microgrid Advisor provides optimization of distributed energy resources and on-site energy demand alongside the grid through automatic and intelligent orchestration and control of when to consume,produce,or store energy on a single interface,thereby optimizing on-site energy usage.The software delivers energy cost efficiency by using electricity when it is lowest in cost and emissions,and on-site renewable energy when the cost is high.Optimization is made possible by leveraging behind-the-meter flexibility provided by battery storage or other flexible applications.In addition to greater energy efficiency and smooth integration of renewable energy,EcoStruxure Microgrid Advisor enables the facility to participate in demand response programs,helping to reduce strain on the grid in times of peak electricity demand.This qualifies the activity under EU Taxonomy activity CCM 3.20 for the provision of services essential to the functioning of microgrid management systems.For example,EcoStruxure Microgrid Advisor is deployed for customers as part of full microgrid solutions via Faith Technologies Incorporated(FTI),a leader in engineering,construction,manufacturing,and clean energy solutions.By implementing integrated microgrid solutions,FTI facilitates reduced energy usage and costs and increased resiliency to grid events,whilst supporting growing electrification needs such as EV charging infrastructure.Through their work to date,FTI has saved and avoided over 90 thousand metric tons of carbon emissions across industries.For enabling smarter and lower-carbon energy for customers,FTI was recognized as one of 6 winners of the Schneider Electric Sustainability Impact Awards for Partners,chosen from 241 award submissions.1.11 Key external frameworks and ESG ratings Life Is On|Schneider Electric|2023 Sustainable Development Report 37 External guidelines The United Nations Global Compact and Sustainable Development Goals(SDGs)Parties signing the UN Global Compact commit to 10 fundamental principles in four areas:human rights,labor rights,the environment,and anti-corruption.By signing the Global Compact in December 2002,Schneider Electric made a public commitment to these universal values.In line with the requirements of the Global Compact,Schneider publishes an annual Communication on Progress(COP)and meets the requirements of the Global Compact Advanced Level.Schneider Electric is committed to contributing to the 17 SDGs through its sustainability programs.Consult Schneiders latest COP on the Global Compact website www.unglobalcompact.org International Organization for Standardization(ISO)Schneider Electric has worked since 2012 to promote the adoption of the ISO 26000 principles with its suppliers.Schneider also adopts other ISO guidelines or certifications:see ISO 14001 and ISO 50001,page 135;ISO 45001,page 56;ISO 9001,page 58;ISO 27000,page 336 of the 2023 Universal Registration Document;and ISO 14025 and 14021,page 128.The Global Reporting Initiative(GRI)Schneider Electric has reported in accordance with the GRI Standards for the period from January 1 to December 31,2023.The Board of Directors has reviewed and approved the reported information,including the organizations material ESG topics,under Disclosure 2-14 in GRI 2:General Disclosures 2021.A reference table with its indicators and those proposed by the GRI is available on the Schneider Electric website.Consult Schneiders GRI reports on the Sustainability Reports page on The Sustainability Accounting Standards Board(SASB)The SASB Foundation was founded in 2011 as a not-for-profit,independent standards-setting organization.Schneider Electric provides information in alignment with SASB reporting guidelines for its sector(Electrical and Electronic Equipment).A correspondence table can be found in pages 294 to 295 of this
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