Industrivarden: Industrivrden : Sustainability report 2024

O T H E R I N F O R M AT I O N - S U S TA I N A B I L I T Y R E P O R T 2 0 2 4 Sustainability Report 2024 Structure of the sustainability report Industrivärden's statutory sustainability report for the full year 2024 follows below. The sustainability work is a fully integrated part of the Company's operations. For a full understanding of this work, the formal sustainability report should therefore be read in combination with the descriptions of the Company's business model and operations on pages 10 -14 of Industrivärden's Annual Report 2024. The sustainability report has been examined by the Com- pany's auditor in accordance with FAR's recommendation RevR 12 Auditor's opinion regarding the statutory sustainability report , and an opinion on the sustainability report has been provided (page 94). Information about which parts of Industrivärden's business review and annual report are included in the formal annual report that has been submitted by the Board of Directors is provided on page 3. Industrivärden has signed the UN Global Compact, and Industrivärden's Communication on Progress (CoP) questionnaires for 2023/2024 are published on the UN Global Compact website (in March/April of the respective years). Industrivärden undertakes to continue to work for the principles of the UN Global Compact during 2024/2025. Industri- värden also reports yearly climate data, including the portfolio's carbon emissions, to the CDP, and reports its climate exposure (TCFD) in the sustainability report. To address the market's interest, general sustainability data is also reported to the largest sustainability databases, including S&P Global CSA and Sustainalytics. Industrivärden's Code of Conduct and an SASB index for 2024 has been published on Industrivärden's website. Industrivärden's portfolio companies prepare their own sustainability reports, which can be found on the companies' respective websites. Industrivärden's view of sustainability Industrivärden sets clear demands for its portfolio compa- nies. These include establishing strong market positions, good cash flows and financial strength, as well as a clear capacity for development. This forms a stable foundation for well-integrated sustainability work with innovations, products and services that contribute to sustainable develop- ment. By investing capital in operationally and financially sustainable companies and contributing to portfolio compa- nies' strategic sustainability work, Industrivärden takes responsibility for sustainable development. Particular focus is put on material sustainability risks and sustainability-related opportunities from risk mitigation and value-creation perspectives. Industrivärden's overarching ambition is to be a well-informed and demanding owner with a sustainability perspective that contributes to the long-term success of its portfolio companies, and to offer long-term and sustainable investment with an attractive total return at balanced risk. To materialize these ambitions, Industrivärden: Performs continuous analysis and follow-up of the respective portfolio companies in accordance with its integrated sustainability analysis; Formulates owner agendas for the respective portfolio companies and exerts influence in accordance with its business model; Conducts dialogues with selected stakeholders aimed at soliciting views in support of further development of its sustainability work. Industrivärden expects the portfolio companies to have a sustainable approach in all aspects of their operations. Central activities Continuously develop Industrivärden's sustainability work based on stakeholder dialogues Evaluate portfolio companies' sustainability- related risks and opportunities Ensure well-integrated sustainability work in the portfolio companies Make demands of and exercise influence in the portfolio companies Industrivärden's expectations Portfolio companies shall: View sustainability as a key strategic issue and conduct exceptional sustainability work Continuously develop their sustainability work in a structured way supported by relevant guidelines and measurable goals Monitor, evaluate and continuously communicate progress of their sustainability work 80 I N D U S T R I V Ä R D E N A N N U A L R E P O R T 2 0 2 4 O T H E R I N F O R M AT I O N - S U S TA I N A B I L I T Y R E P O R T 2 0 2 4 Direct and indirect sustainability influence From an overarching perspective, Industrivärden has the greatest sustainability influence through its role as an active owner of its portfolio companies. Against this backdrop, the sustainability perspective makes up an integral part of Industrivärden's company analyses and owner agendas. Particular emphasis is put on ensuring that portfolio companies have clear systems of corporate governance and adhere to good business ethics, maintain a transparent and well-integrated sustainability perspective, and offer attractive workplaces. The work shall be conducted according to current laws and regulations. Respective companies' boards and management teams are responsible for conducting quality and well-integrated sustainability work. In order to evaluate and exert owner influence in these areas, Industri- värden analyzes sustainability aspects such as governance and leadership, business culture, resource efficiency, climate impact, organization, diversity, etc. In doing so, Industri- värden has an indirect sustainability influence in its portfolio companies. In addition, Industrivärden has a direct sustainability influence through work that is conducted in its own operations in the listed company AB Industrivärden. The organization comprises approximately 15 employees at the office in Stockholm. Sustainability work encompasses all relevant aspects, although is primarily focused on being a responsible employer, striving for diversity and reducing the Company's own climate impact. Given its active owner role, Industrivärden seeks to serve as a model and to work pro- actively with a clear sustainability focus in its own operations. Further information about the direct sustainability work in Industrivärden's own operations is provided on page 87. Governance and execution Sustainability strategy and owner influence The principles for how Industrivärden is expected to act as a company and responsible owner are set out in the Code of Conduct, which is adopted by the Board of Directors and is revised yearly. Through its active ownership Industrivärden strives to ensure that these approaches permeate the companies in which it is an active owner. These guidelines stipulate, among other things, that: the overarching goal is to generate sustainable share- holder value while taking into account stakeholders' interests as well as the overall economic, environmental, climate and social impact of operations; good business ethics and clear corporate governance with a genuine sustainability perspective contribute to long-term value creation and sustainable development of society; the workplace shall be characterized by openness, responsiveness and mutual respect; the Company shall reject all forms of discrimination because diversity in all forms improves levels of knowledge, dynamism and quality in our operations; the Company shall uphold and integrate the ten princi- ples of the UN Global Compact in the areas of human rights, labor, anti-corruption and the environment. Industrivärden exercises its ownership influence based on extensive knowledge of its portfolio companies and the sectors in which they are active, mainly through representation on nominating committees and boards as well as in close dialogue with the companies. This work is an integral part of Industrivärden's overarching model for active ownership, thereby ensuring that Industrivärden's analysis, exertion of influence and follow-up are of high quality. The specific sustainability analysis is described below, and the process for exercising active ownership and ownership influence is described in more detail on pages 11-14. Organization and responsibility Industrivärden's board is responsible for the formulation of the Company's goals and strategy, how active ownership is exercised and the fundamental sustainability principles. Sustainability work is evaluated on a continuous basis within the framework of operations as a whole. Follow-up of and decisions on sustainability work within the own operations are conducted annually at a board meeting and when necessary. The CEO has overarching responsibility for the Company's Focus areas and overarching goals Based on Industrivärden's materiality analysis, its sustainability work has particular focus on the following areas which relate to the UN Sustainable Development Goals (SDGs): Responsible corporate governance Minimize negative climate and Sustainable and sustainable societal role environmental impacts production Good corporate governance, good Reduced climate impact Sustainable production business ethics and anti-corruption Good diversity Sustainable innovation Decent working conditions I N D U S T R I V Ä R D E N A N N U A L R E P O R T 2 0 2 4 81 O T H E R I N F O R M AT I O N - S U S TA I N A B I L I T Y R E P O R T 2 0 2 4 direct and indirect sustainability work and for integrating sustainability into analysis and ownership processes. The Head of Sustainability is responsible for Industrivärden's direct sustainability work, external communication on sustainability matters and internal collaboration in certain sustainability matters within the framework of the active ownership. Team managers are responsible for integrated sustainability analysis in respective portfolio companies. Sustainability analysis To be able to conduct a qualitative analysis of portfolio companies' sustainability work - and exercise influence when needed - Industrivärden needs to have a depth of knowledge about respective companies' operations and sustainability-related matters. The sustainability analysis is therefore an integral pa