2019 Corporate Responsibility Report

CORPORATE RESPONSIBILITY REPORT 2019 TABLE OF CONTENTS

EXECUTIVE STATEMENT ...... 4 KA'S REFRESHED CR STRATEGY ...... 5 SUSTAINABLE DEVELOPMENT GOALS (SDGS) ...... 5

A GLOBAL COMPANY ...... 7

BUSINESS SEGMENTS ...... 8 MARKETS SERVED ...... 10

THE STORY OF KONGSBERG AUTOMOTIVE (KA)'S COMPANY GOVERNANCE STRUCTURE ...... 11 BUSINESS IS FUNDAMENTALLY A STORY OF ORDINARY COMPANY CULTURE PEOPLE CREATING AN EXTRAORDINARY COMPANY. NEW MISSION & PURPOSE STATEMENT AND CORE VALUES ... 12 KA CAN TRACE ITS ORIGINS TO DEFENSE CONTRACTOR ETHICS AND INTEGRITY ...... 12 KONGSBERG VÅPENFABRIKK. THE GROUP’S FIRST PRIORITIZING SUSTAINABILITY ISSUES ...... 14 COMMERCIAL AUTO SECTOR ORDERS WERE BRAKES AND STAKEHOLDERS ...... 14 DRIVE SHAFTS FOR VOLVO IN THE LATE 1950S. SINCE IMPORTANT STAKEHOLDER ISSUES ...... 14 THEN, KA HAS DEVELOPED FROM A SCANDINAVIAN ECONOMIC PERFORMANCE ...... 16 AUTOMOTIVE PARTS SUPPLIER TO A GLOBAL LEADER IN ONE OF THE MOST COMPETITIVE AND COMPLEX PEOPLE ...... 17 INDUSTRIES IN THE WORLD. A SKILLED WORKFORCE ...... 17 HEALTH & SAFETY ...... 18 LOCAL COMMUNITY ...... 19

PLANET ...... 21 CLIMATE CHANGE ...... 21 ENERGY USAGE ...... 22 WASTE ...... 24 WATER ...... 24 OTHER ENVIRONMENTAL PERFORMANCE ...... 24

PRODUCTS & SUPPLY CHAIN ...... 26 PRODUCTS ...... 26 PRODUCTS MAKING A SAFER SAFER DRIVING EXPERIENCE ... 26 PRODUCTS THAT SUPPORT CUSTOMERS TO MAKE GREENER VEHICLES ...... 27 SUPPLIER SUSTAINABILITY PROGRAM ...... 27 CONFLICT MINERALS ...... 28 REPORT CONTEXT ...... 28 EXECUTIVE STATEMENT

Today, more than ever before, societies and the environ- KA'S REFRESHED CR STRATEGY ment are facing unprecedented change. Global issues – In 2019, KA refreshed its CR strategy to ensure that the program focuses on the climate change, mass movements of people, availability areas of its business that are impacted by or have an impact on the global issues of natural resources, amongst others – are changing how challenging the industry and wider society, both today and into the future. people think about their ways of life today and the effects these could have on coming generations. Society better The work is grouped under the program’s three defined areas: understands how connected life is around the planet, > People - including Health & Safety, employee training & development, and expectations grow for people to be more socially local communities. and environmentally responsible. > Planet - including climate change, energy usage, waste. > Products & supply chains - including working practices in supply chains, At Kongsberg Automotive (KA) we understand the responsibility we have to products’ materials compliance with environmental legislation, products contribute to a more sustainable world. The automotive industry is one of those that support transition to hybrid and electric vehicles. at the forefront of the sustainable revolution. Traditional means of transportation are changing, end consumers increasingly expect vehicles with lower SUSTAINABLE DEVELOPMENT GOALS (SDGS) emissions. People expect companies to be custodians of their supply chains, In 2015, the UN launched “The 2030 Agenda for Sustainable Development”, ensuring working practices wherever their supply chains are located respect the adopted by all member states, that identified 17 goals (the SDGs) that provide rights of workers. Companies are expected to use resources efficiently and mini- “a shared blueprint for peace and prosperity for people and the planet, now and mize waste produced by their activities. into the future.” KA is committed to making products that support the journey to a more KA recognizes that the success of its business is inextricably linked to soci- sustainable future. In 2019, KA refreshed its CR strategy and strengthened its eties thriving and environments flourishing wherever KA, or its supply chains knowledge and management of a range of Corporate Responsibility related operate, or where KA products are sold. KA supports the adoption of the SDGs as issues, and will continue to build on this progress into 2020. KA worked to the best framework around and of which a more sustainable future can be built. understand in more detail about the carbon emissions created by its activities As part of the refreshed CR strategy the goals which KA has the most impact on and use of water. Further, KA developed its supply chain sustainability pro- were mapped. gram, working with its suppliers to improve their sustainability performance, and continued to design innovative products that support KA customers to These goals are: meet their strategic sustainability goals. KA also strengthened its employee > SDG 1: No Poverty personal development and training systems and continued supporting its local > SDG 3: Good Health & Well-being communities. > SDG 5: Gender Equality This new decade is of the utmost importance, one in which there is a greater > SDG 8: Decent Work and Economic Growth need for people to unite and take definitive and effective actions to ensure a > SDG 9: Industry, Innovation and Infrastructure more sustainable future for society and the planet. KA looks forward to making > SDG 11: Sustainable Cities and Communities a valued and positive contribution to this in the coming years. > SDG 12: Responsible Consumption and Production > SDG 13: Climate Action

4 KONGSBERG AUTOMOTIVE CORPORATE RESPONSIBILITY REPORT 2019 // EXECUTIVE STATEMENT 5 A GLOBAL COMPANY

Kongsberg Automotive provides world- class products to the global vehicle industry. Our products enhance the driving experience, making it safer, more comfortable and sustainable. NA SEEN With revenues of approx. EUR 1.1 billion and approximately 10,900 employees in 19 countries, Kongsberg Automotive is truly a global supplier. The company is headquartered in Zürich, Switzerland and has more than 25 production U AN facilities worldwide. The product portfolio includes seat CANAA comfort systems, driver and motion control systems, fluid TE NETEANS SVAIA assemblies, and industrial driver interface products developed for global vehicle manufacturers. ANCE UNA USA AAN CINA SAIN SITEAN EMAN MEXIC INIA SUT EA

AI 10,908 EMPLOYEES IN

19COUNTRIES WORLDWIDE

6 KONGSBERGKONGSBERG AUTOMOTIVE AUTOMOTIVE CORPORATE CORPORATE RESPONSIBILITY RESPONSIBILITY REPORT REPORT 2019 2019 // E//XECUTIVE A GLOBAL STATEMENT COMPANY 7 BUSINESS SEGMENTS

POWERTRAIN & CHASSIS The P&C division of Kongsberg Automotive is a global leader in the design, manufacture and testing of custom powertrain and chassis solutions that enhance driver control. KA engineers great products for world-leading makers of passenger cars and commercial vehicles. Its engineering presence now extends from primary design centers in Europe to the Americas and Asia.

> GEAR SHIFTERS FOR AUTOMATIC AND MANUAL TRANSMISSIONS > SHIFT CABLES AND TOWERS > GEAR AND CLUTCH CONTROL SYSTEMS INCLUDING ACTUATORS > CHASSIS STABILIZERS

INTERIOR Kongsberg Automotive develops and supplies a world-class range of interior comfort systems and light-duty cables & actuators for the passenger car, commercial vehicle and off-highway markets. The business segment’s innovations offer car makers easy integration, customization and real cost advantage. KA Interior is the only supplier in the world that develops and delivers a complete range of seat comfort products.

> SEAT CLIMATE SYSTEMS > SEAT SUPPORT SYSTEMS > LIGHT-DUTY CABLES > ELECTRO-MECHANICAL ACTUATORS > PANEL HEAT SYSTEMS FOR ELECTRIC CARS

SPECIALTY PRODUCTS Kongsberg Automotive’s Specialty Products segment comprises three business units: Off-Highway, Couplings and Fluid Transfer Systems. These niche product business streams are driven by an entre- preneurial focus on innovation and fitment rates. Designing and delivering engineered solutions for the world’s premier commercial and off-road vehicle makers helps keep KA atop the global automotive supply chain.

> AIR COUPLINGS > FUEL TRANSFER SYSTEMS INCLUDING SPECIALIZED HOSES, TUBES, AND ASSEMBLIES > OFF-ROAD PRODUCTS FOR VARIOUS INDUSTRIES, INCLUDING STEERING COLUMNS, DISPLAYS, PEDALS, AND HAND CONTROLS > OTHER NEW INNOVATIVE PRODUCTS UNDER DEVELOPMENT

8 KONGSBERG AUTOMOTIVE CORPORATE RESPONSIBILITY REPORT 2019 // A GLOBAL COMPANY COMPANY GOVERNANCE STRUCTURE

MARKETS SERVED The Board of Directors of Kongsberg Automotive ASA has Kongsberg Automotive is proud to serve leading OEMs and Tier 1 suppliers in established a set of general principles and guidelines for the automotive, commercial-vehicle, and off-highway markets globally. corporate governance.

These principles cover the Board of Directors’ responsibility for determining the Group’s risk profile, approving the organization of the business, allocating responsibility and authority, as well as providing requirements with respect to reporting lines and information, risk management and internal control. The tasks and responsibilities of the Board of Directors and the CEO are laid out in separate directives covering the Board of Directors and the CEO respectively. Kongsberg Automotive’s corporate governance structure and governing documents are available for reading and download here >>> The Board of Directors comprises five independent Directors, including the Chairman, and three employee representative Directors. An overview of the members of the Board of Directors and Executive Management team are available here >>> For Corporate Responsibility, the Board of Directors and Global Leadership Team (GLT) are the main bodies responsible for the Kongsberg Automotive’s strategic direction. The Board and GLT regularly review material issues that are raised through either the different business segments (operational issues) or by the corporate teams (strategic issues). The Executive Vice President of Human Resources, Communications & HSE is responsible on a day to day basis for Corporate Responsibility and is a member of the GLT and reporting directly to CEO. CR performance is discussed on a monthly basis between the HR and HSE team - HSE Director and senior HR managers - and the plants.

10 KONGSBERG AUTOMOTIVE CORPORATE RESPONSIBILITY REPORT 2019 // A GLOBAL COMPANY KONGSBERG AUTOMOTIVE CORPORATE RESPONSIBILITY REPORT 2019 // COMPANY GOVERNANCE STRUCTURE 11 COMPANY OUR MISSION & PURPOSE STATEMENT IS TO BE THE GLOBAL PARTNER OF CHOICE FOR OUR CUSTOMERS, EMPLOYEES AND CULTURE STAKEHOLDERS BY PROVIDING ADVANTAGEOUS SOLUTIONS THAT ENHANCE THE DRIVING EXPERIENCE.

NEW MISSION & PURPOSE STATEMENT AND CORE VALUES Kongsberg Automotive renewed its Mission and Purpose statement and core values in the beginning of 2019. They were successfully rolled out during the second quar- ter across all locations worldwide, further developing a unifying culture. The new mission clearly expresses KA's ambitions towards its stakeholders and by what means they will be reached. The new core values express how KA wants to ful- fill its Mission and Purpose Statement and they serves as guides to everyday life, work relations and day-to-day deci- sion making.

ETHICS AND INTEGRITY Kongsberg Automotive places the highest importance on integrity and ethical conduct. The ethical standards expected of a top tier automotive supplier are set out and maintained by a set of policies and procedures. The Code of Conduct is a key document in setting the tone of KA’s ethical performance. It is available in thirteen languages and has been communicated to everyone in the company. The Code of Conduct sets out how employees are expected to act when performing their work and representing the company. Training and guidance on the Code of Conduct are available to all employees. Through classroom style training, workshops, and an e-learning program, the training focuses on relevant ethical dilem- mas to ensure that employees understand the Code and their responsibilities. KA maintains a dedicated whistleblowing service, available through internal reporting channels or our website, for anyone to report any suspected misconduct relating to that set out in our Code of Conduct in a confidential and anonymous manner, without retaliation. All reports or concerns are investigated by the KA Compliance Committee. In 2019, there were no material violations of law or ethical principles.

12 KONGSBERGKONGSBERG AUTOMOTIVE AUTOMOTIVE CORPORATE CORPORATE RESPONSIBILITY RESPONSIBILITY REPORT REPORT 2019 2019 // E XECUTIVE// COMPANY STATEMENT CULTURE 13 PRIORITIZING SUSTAINABILITY ISSUES

STAKEHOLDERS Kongsberg Automotive has five key stakeholder groups, grouped as per the table HIGH below. Engagement with these stakeholders is designed depending on the issue FINANCIAL being discussed. PERFORMANCE REDUCING PRODUCT PRODUCT GREENHOUSE QUALITY SAFETY WORKPLACE HEALTH, GAS EMISSIONS & DELIVERY KEY STAKEHOLDER SOME ENGAGEMENT SAFETY & SECURITY GROUP PLATFORMS/METHODS INTEGRITY PRODUCT > ANNUAL GENERAL MEETING & ETHICS INNOVATION HIGH > CAPITAL MARKETS DAY INVESTORS > QUARTERLY RESULTS PRESENTATIONS PRIVACY & HUMAN RIGHTS INFORMATION & LABOR PRACTICES > INVESTOR PRESENTATIONS FINANCIAL PROTECTION PERFORMANCE

> INFORMAL AND FORMAL BRIEFINGS PRODUCT ENVIRONMENTAL REDUCING PRODUCTRISK > KA-DIALOG (INITIATIVE STRENGTHENING GREENHOUSE QUALITY SAFETY COMPLIANCE & MANAGEMENT WORKPLACELEADERSHIP HEALTH, GAS EMISSIONS & DELIVERY EMPLOYEE AND MANAGEMENT PERFORMANCE SAFETY& TALENT & SECURITY EMPLOYEES COMMUNICATION IN OUR PLANTS) DEVELOPMENT RESPONSIBLE & SUPPLY CHAIN > INTRANET INTEGRITY PRODUCT SUSTAINABLE MANAGEMENT & ETHICS INNOVATION > TAILORED ENGAGEMENT ON SPECIFIC ISSUES (I.E. SOURCING HEALTH & SAFETY)

PRIVACY & HUMAN RIGHTS INFORMATION & LABOR PRACTICES

> MEETINGS STAKEHOLDERS TO IMPORTANCE PROTECTION > CUSTOMER PORTALS CUSTOMERS > CUSTOMER AUDITS, INCLUDING FOR CORPORATE ENVIRONMENTAL RISK RESPONSIBILITY COMMUNITY ENGAGEMENT COMPLIANCE & MANAGEMENT INVESTMENTSLEADERSHIP IN NEW PERFORMANCE PRODUCTION CAPACITY, DIVERSITY & TALENT NEW FACILITIES > FACE TO FACE MEETINGS & INCLUSION DEVELOPMENT RESPONSIBLE & SUPPLY CHAIN SUPPLIERS > SUPPLIER WORKSHOPS AND EVENTS SUSTAINABLE MANAGEMENT > KA SUPPLIER SUSTAINABILITY PROGRAM SOURCING

> FAMILY DAYS IN OUR PLANTS LOCAL

> SUPPORTING LOCAL EDUCATION INSTITUTES ON STAKEHOLDERS TO IMPORTANCE COMMUNITIES ENGINEERING RELATED SUBJECTS

LOW COMMUNITY ENGAGEMENT INVESTMENTS IN NEW PRODUCTION CAPACITY, LOW DIVERSITYINFLUENCE ON BUSINESS SUCCESS HIGH NEW FACILITIES & INCLUSION IMPORTANT STAKEHOLDER ISSUES As a part of refreshing KA’s CR strategy, the prioritization of CR-related issues originally performed in 2016 was reassessed. The matrix is available below. The prioritization or importance of any issue never remains fixed. At any moment, there are a number of internal and/or external factors that can raise or lower the importance of a particular issue. As such, the updated prioritization matrix will be one of a number of tools that KA uses to shape the CR program LOW over the coming months. LOW INFLUENCE ON BUSINESS SUCCESS HIGH

14 KONGSBERG AUTOMOTIVE CORPORATE RESPONSIBILITY REPORT 2019 // PRIORITIZING SUSTAINABILITY ISSUES 15 ECONOMIC PERFORMANCE PEOPLE

KA’s success is made through the hard work and skills of all its employees. The diversity and cultural differences in the workforce are key strengths, and KA continuously works to create safe workplaces where diversity is valued.

As part of KA’s succession planning, annual reviews consider the gender balance of the workforce. Women currently make up 48% of the total workforce and 15% of the GLT. KA’s Board of Directors consists of three (37.5%) women and five (62.5%) men, with 40% (2/5) of the organization’s shareholder-elected directors being female.

A SKILLED WORKFORCE Developing employees’ skills and providing opportunities for continuous learning is a focus area. In a fast-changing industry such as automotive, upskilling of a workforce is important to maintain success and create various career opportunities for the employees. KA’s training program covers multiple content areas, is organized according to the company’s needs and is offered in various formats. KA’s employees have access to a portfolio of functional oriented trainings, technical qualifications, cultural enablement and leadership development. In addition, employees are ensured the opportunity to learn on the job from more experienced colleagues, practical experience being valuable for employees to learn technical skills. In KA plants, local trainers engage with the various teams and provide education on critical skills. Leadership development has a significant focus in KA. Early in 2019, leaders from across the business were brought together at the Global Leadership Con- ference to learn, discuss, develop and experience the most relevant topics for the future strategy and success through workshops, lectures, group discussions, and talks. This event was also the starting point for KA’s new global core values roll out. In 2019, KA invested in the best-in-class platform, SAP-SuccessFactors, as the company’s global cloud-based People Management Solution. This platform provides easy access to employee master data, personalized e-learning content, improved talent management, and allows better alignment of learning outcomes with performance goals. It is an important step in our digital HR transformation strategy to implement a modern HR tool tailored to the need of INFORMATION ON KONGSBERG AUTOMOTIVE’S all stakeholders. In 2020, the new HR Talent Development function will focus on an inte- FINANCIAL PERFORMANCE IN 2019 IS AVAILABLE IN THE grated Talent Management approach, rolling out development programs ANNUAL REPORT, DOWNLOADABLE HERE >>> for high potential young professionals, talented university graduates and senior executives.

16 KONGSBERG AUTOMOTIVE CORPORATE RESPONSIBILITY REPORT 2019 // A GLOBAL COMPANY KONGSBERG AUTOMOTIVE CORPORATE RESPONSIBILITY REPORT 2019 // PEOPLE 17 HEALTH & SAFETY The plant in Matamoros, Mexico, started working on a The Grand River and Suffield plants in the US offered The safety of any person working for or on behalf of KA is of to speak up and take action wherever they see a potentially health program with the Mexican Social Security Institute employees the chance to have free and confidential health the utmost importance. For a number of years, KA has had hazardous situation for either themselves or their col- providing pulmonary disease screening exams (infections screenings to help identify opportunities for better health. its own Health & Safety management system, designed in leagues. KA is proud that this campaign, on top of all the of the lower respiratory tract) for their employees. Many of KA’s plants host events for employees and their line with recognized best practices, in operation at all sites. hard work of the dedicated HSE professionals across the families. In 2019, the Ramos Arizpe plant in Mexico gave But to ensure that KA’s global operations are in line with company to train and engage the workforce, resulted in the Ergonomics family members the opportunity to have free eye tests, current best practice, targets have been set for all plants to best H&S performance in KA’s history. Workplace ergonomics has been identified as a factor medical check-ups for blood pressure and glucose, and den- achieve certification to the ISO 45001 standard for Occupa- In 2020, all employees will continue to be engaged on that contributes to improved employee wellbeing and tal examinations. tional Health & Safety by the end of 2020. The Brzesc plant Health & Safety, and the quality and effectiveness of the lower absence rates. Ergonomic risk assessments are now KA’s plant in Prithla, India, celebrated the Interna- in Poland was the first to become certified, in 2019. engagement will be measured using a specialist tool. The included as part of all equipment and facility risk assess- tional Day of Yoga by arranging a yoga class for employees In 2019, KA reported 24 injuries, an improvement of challenging target is, as it has always been, to achieve zero ments. KA also has a trained ergonomist in the company. and providing information on how doing yoga regularly 20% over 30 injuries reported in 2018. 15 of KA’s plants accidents. At the Shawinigan plant in Canada trialed the use of helps fitness. didn’t have an accident in 2019, an improvement from 9 a device worn by employees during work activities that plants in 2018. KA averaged one accident for every million Wellbeing monitored their movements, uncovering those that were LOCAL COMMUNITY person hours worked in 2019. Since 2015, KA has achieved a Kongsberg Automotive recognizes the duty of care it has at a higher risk of musculoskeletal injury. Through the trial Kongsberg Automotive believes that all businesses have a 52% reduction in the number of injuries. In 2019, the group regarding its employees’ wellbeing. KA aims to identify it became evident that modifications made to a work cell responsibility to support and help their local communities achieved a record four calendar months with zero accidents. areas of risk to wellbeing and take appropriate actions improved the ergonomics and reduced the risk of injury. to flourish. KA’s plants are significant employers in their Significant time and resources are invested on training of where necessary. areas, and all KA employees are encouraged to contribute employees in Health & Safety. Each plant has at least one In the UK, all KA employees now have access to a finan- Promoting healthy lifestyles their valuable time and support on local community causes dedicated H&S professional who delivers training to all new cial wellbeing service. Employees can access this service All KA plants arrange a minimum of one day each year ded- and needs. KA’s plants and employees perform a range of employees and training each month to existing employees and use the tools to plan budgets and manage debts, allow- icated to the health of employees. activities in their local communities, including: as per the training designed by our global H&S team. A spe- ing them to take control of their monetary situation and The Brzesc plant in Poland organized a dietician to cialist video streaming safety training platform is used to achieve their savings goals. come in and provide one-to-one information to employees Working for local good causes deliver targeted training to key employees on specific H&S Kongsberg Automotive’s plants in Normanton (UK), on diet and eating healthily. Kongsberg Automotive encourages the plants to support subjects. Our Corporate HSE team also provides bespoke Hvittingfoss (Norway) and Vrable (Slovakia) now have Employees in the Yangsan plant in Korea, as in most of good causes in their local communities however they can. training to employees across the business, including train- qualified Mental Health First Aiders. They are trained to the KA plants, received free medical checks and healthy liv- The effort they put into doing this is an inspiring. The ing 60 internal auditors on the ISO 45001 standard in 2019. understand the factors that can affect mental health, how ing advice. following are just a few examples of what KA plants did Two new areas were focused on in more depth in 2019. to spot the signs of psychological distress and mental ill- In the health event at the Normanton, UK, plant, two sta- in 2019: The wellbeing of KA employees and their families and ergo- ness and have the capabilities to be able to support people tionary exercise bikes were made available to the employees, > Colleagues in the Ramos Arizpe, Mexico, plant collected nomics in the workplace. who need help. and they were challenged to ride collectively the 1,675km and donated 160 toys for children with autism and Engagement of all employees on Health & Safety was Kongsberg Automotive’s Mexican plants have all between the plant and the sister plant in Épila, Spain. The Down's syndrome living at a local orphanage while they a focus in 2019. All plants have safety committees that been working to identify, analyze and prevent risks in team managed it in 32.75 hours, and the bikes were raffled wait to be adopted. include management and shop floor representatives to the workplace that could affect the mental health of their to two participating employees. The Normanton plant also > The Reynosa team in Mexico worked with a local talk about HSE issues. Corporate HSE continued to hold employees. As they learn about managing these risks, best provided a Lifestyle Checkpoint Health & Wellbeing kiosk orphanage for the second year running, supporting monthly meetings with dedicated HSE staff of each busi- practices will be disseminated to all our plants. for free use by all employees to measure a range of import- the children to learn important life skills that will help ness segment, meeting by teleconference, to discuss local In response to higher than normal summer tempera- ant health and wellbeing indicators, allowing them to be them as they come to take their first job. activities, challenges, best practices, and lessons learnt. tures KA’s Pruszkow plant in Poland took a number of better informed in managing their own health. > Colleagues in the Shawinigan, Canada, plant par- In 2019, a companywide ‘Zero Accidents’ campaign measures to look after employees’ health, including pro- In the health day in the Siofók plant in Hungary, the ticipated, along with nine other companies, in a was rolled out. It was designed to reinforce the culture of viding portable ventilation units at each workstation and a employees were given the opportunity to get a free flu vac- cook-a-thon to help a home that supports families in safety in the workplace, helping employees feel empowered mist curtain for employees to use. cination in preparation for winter. need of a helping hand.

18 KONGSBERG AUTOMOTIVE CORPORATE RESPONSIBILITY REPORT 2019 // PEOPLE 19 PLANET

> KA’s plants in Sweden, Slovakia and Hungary all gave Kongsberg Automotive’s vision is to reduce the employees the opportunity to donate blood by invit- environmental impacts of its business and make ing local blood donation services to the plants. As in a meaningful contribution to improving the long-term previous years, the response from the employees was environmental health of the planet. something to make KA proud. > KA’s plant in Épila, Spain, purchases 60% of its Personal CLIMATE CHANGE Protective Equipment and work clothes from a local KA aims to make a meaningful contribution to society’s efforts to tackle climate company established to give employment opportunities change and support our customers’ strategic goals to make more sustainable to disabled people. products. KA works to reduce the Carbon emissions created by its business > Amongst several KA plants, the Willis plant in the US operations, as well as through its products helping its customers meet their held various events to support Think Pink! Breast Can- ambitions of making lower emission producing end-products. KA also uses its cer awareness week. influence to create positive change in its supply chains and change working practices around the world to be more sustainable. Supporting local students KA reports annually through the Carbon Disclosure Project (CDP) on climate Many of KA’s plants actively support local education cen- change risks and the management of, and efforts to reduce, the Carbon emis- ters in various ways to promote engineering as a career sions created by its manufacturing activities. The full CDP report for 2019 is choice. Some provide the opportunity for students for prac- available here >>> tice and projects, while others participate in careers fairs. Other plants offer students the possibility to visit and see Climate change risks & opportunities manufacturing processes first-hand. The following details some key climate change related risks: The Ramos Arizpe, Mexico, plant held an event to cele- brate their employees’ children’s school grades achieved in > Changing market KA’s customers have a focus on lowering the emissions 2018/19. All the children were given a backpack with all the generated by their products. They require lighter and more efficient products school supplies they needed for the coming school year. from their supply chain. For any products designed a number of years previ- In 2020, KA plants will continue to work with local edu- ous there is a risk that the market may become restricted for them. cation institutes. A new initiative through the Normanton plant, UK, which KA will be supporting, is a scheme where > Disruption to supply chains by extreme weather With higher frequency employees mentor teams of students from a local school to and/or more severe extreme weather events globally there is a risk that sup- develop ideas and business case for solutions to sustain- ply chains are disrupted, which impacts production. KA monitors its supply ability-related problems that matter to the students. chains for the probability of disruption by extreme weather events. Where a high risk of disruption is identified KA works with our supplier on mitigation actions.

> Increased costs of energy and supplies Volatility in energy and commodity prices leads to higher prices and reduced profitability.

> Cost of carbon Risk that governments, in response to the need to act deci- sively to meet their Paris Agreement commitments, introduce a cost to carbon through legislation to incentivize businesses to achieve aggressive carbon emission reductions.

20 KONGSBERG AUTOMOTIVE CORPORATE RESPONSIBILITY REPORT 2019 // PLANET 21 INSTALLATION OF SOLAR PANELS AND ELECTRICAL VEHICLE CHARGING POINTS, PLANTING TREES ON AND AROUND KA’S PREMISES AND LOCAL ENVIRONMENTAL AWARENESS CAMPAIGNS ARE A FEW OF THE LOCAL 2019 INITIATIVES FOR REDUCING KA'S CARBON FOOTPRINT.

> Impact of greater changes in temperatures and 2019 CARBON EMISSIONS PERFORMANCE weather on manufacturing facilities There is a risk The majority of the KA’s emissions are associated with the that higher or lower temperatures than usually expected electricity used in manufacturing (Scope 2 or indirect emis- for different times of the year, more frequent hurricanes, sions). KA’s plants consume limited amounts of fuel directly higher levels of snowfall, etc. could impact manufactur- at site (Scope 1 or direct emissions), most commonly for ing facilities leading to CAPEX expenditure to ensure heating, forklifts, and in canteens. 34% of the electricity safe and efficient work environments. KA purchases is generated from renewable sources. Five of our plants - the four Scandinavian plants and the Brazilian Climate change opportunities plant - purchase 100% renewable electricity.

> Development of new products or services in response Scope 1 emissions: 3,054 tonnes CO2 to changes in customer requirements KA’s automo- (3,092 tonnes CO2 in 2018) tive customers have a focus on reducing the emissions generated by their products. This leads them to require Scope 2 emissions: 43,212 tonnes CO2 lighter and more efficient components for their prod- (39,467 tonnes CO2 in 2018) ucts from their supply chain that help achieve higher fuel efficiencies, reduce end-product weight and use less The increase in KA’s total emissions in 2019 was primarily energy. driven by a rise in absolute energy usage due to increases in production and restructuring changes. > Resource efficiency Reducing energy usage and waste Group CO2 emissions intensity remained constant in in manufacturing facilities leads to more efficient 2019 from 2018 at approximately 37 tonnes of CO2 per mil- processes and equipment being installed resulting in lion Euro of total product sales. reduced OPEX spend. In 2019, KA saw several local initiatives in contrib- uting to reducing KA's CO2 emissions footprint. Two of > Recycling The move to circular economies and a focus KA's plants installed solar panels on their premises which on reducing, reusing and recycling materials to elimi- are now supplying some of the energy they use. Also, KA's nate waste to landfill presents an opportunity to design Canadian plant in Shawinigan, Quebec, encouraged the products that require less raw material inputs. use of electric vehicles by installing eight EV charging points for employee use, an initiative which have been > Use of lower-emission sources of energy There is an implemented at other locations as well. opportunity to increase the amount of renewable energy In 2019, KA began to build knowledge of the indirect that KA uses. 34% of purchased electricity is generated emissions created by its value chains (Scope 3). This primar- from renewable sources. Five of KA’s plants – four in ily focused on starting to assess calculation methods, as well Scandinavia and the Brazilian plant – purchase 100% as the contribution different activities have to these emis- renewable electricity. Two facilities have installed solar sions. The Hvittingfoss plant has, with its value chain focus, panels that provide some of the energy they use. now in-sourced a surface treatment process which is esti- mated to result in an annual reduction of 180 tonnes CO2.

22 KONGSBERG AUTOMOTIVE CORPORATE RESPONSIBILITY REPORT 2019 // PLANET 23 ENERGY USAGE WATER CO2 INTENSITY tonnes CO2/1M EUR KA’s business mainly focuses on assembling components Even KA’s business is not water intensive, KA understands provided by suppliers into the products provided to cus- its responsibility to use natural resources efficiently. Water 41 39 39 37 37 tomers. On this basis, KA’s operations aren’t significantly usage is measured at each plant, with each set a target energy intensive. reduce usage by 1% from the previous year. The plants KA’s plants collect monthly data on electricity con- worked to reduce water usage and realize conservation sumption. Each one had a target in 2019 to decrease energy opportunities, but changes in structure also resulted in consumption from 2018 levels by 1.0% relative to total a 1% increase in overall water usage. In 2019, KA mapped product sales (Energy Intensity). In 2019, Energy Intensity the locations of its plants on the WRI Aqueduct and WWF improved by 4% to 102 kilowatt-hours used in production Water Risk Filter tools to understand which plants are for every 1000 euro of total product sales in 2019 compared located in high risk areas of water stress and scarcity. Four 2015 2016 2017 2018 2019 to 105 kilowatt-hours used in in 2018. plants are in high risk areas for water stress (three in China While Energy Intensity was the primary key perfor- and one in Mexico) and one plant (India) is located in an mance indicator, manufacturing units did strive to reduce area assessed as being extremely high risk of water stress. overall energy consumption, but restructuring changes In 2020, KA will work with these plants to explore steps ENERGY INTENSITY and production increases resulted in absolute energy that could be taken to make further water usage reductions. kWh/1000 EUR use increasing in 2019 to 125 million kilowatt-hours from 122 131 127 105 102 approximately 120 million kilowatt-hours in 2018. OTHER ENVIRONMENTAL PERFORMANCE In 2019, various energy conservation initiatives were There were no significant spills or environmental penalties implemented in KA’s plants, such as the conversion to LED in any KA plants in 2019. lighting in many facilities, preventative maintenance of equipment, repairing compressed air leaks, amongst oth- Environmental initiatives ers. Two of KA’s plants also use energy generated from solar Many of KA’s plants took the opportunity to plant trees panels installed at their sites. on their land in 2019. The Jundiai plant in Brazil planted 50 trees and Koluszki plant in Poland began working 2015 2016 2017 2018 2019 WASTE towards their 2021 target to plant 4,000 trees and put up In 2019, KA’s aim was a reduction of 1% of the yearly 40 bird boxes. amount of waste sent to landfills or requiring special In celebration of International Earth day, the Nuevo treatment as compared to annual sales (Waste Index). KA’s Laredo plant in Mexico planted trees on their premises. plants sought opportunities to reuse and recycle. Notably, They also held seminars focused on raising environmental WASTE INDEX eleven plants were landfill-free in 2019. However, plant awareness amongst employees. kg/1000 EUR restructuring programs did affect the Waste Index, and this remained constant from 2018 at 1.58kg/1000€. These 1,35 1,29 1,16 1,58 1,58 programs also affected KA’s absolute amount of waste with a 6% increase from 1.8 million kilograms in 2018 to 1.9 million kilograms in 2019.

2015 2016 2017 2018 2019

24 KONGSBERG AUTOMOTIVE CORPORATE RESPONSIBILITY REPORT 2019 // PLANET 25 PRODUCTS & SUPPLY CHAIN

PRODUCTS THAT SUPPORT CUSTOMERS can replace steel tube and rubber hoses and help reduce TO MAKE GREENER VEHICLES engine and vehicle weights and lower emissions. KA produces a variety of products that contribute in different ways to its customers’ goals to produce more > KA’s double barrier Nylon multilayer fuel lines are sustainable transportation. designed to restrict the evaporative emission of biofuels – some biofuels can be highly aggressive to the materials Automated Manual Transmissions (AMT) used in traditional fuel lines. Using biofuels lowers the lowering emissions emissions of passenger vehicles. These products combine the fuel economy and performance of a true manual transmission, with the driving > KA’s flexible Nylon battery coolant/heating lines allow comfort of an automated transmission. This transmission batteries space to be kept to a minimum meanwhile actuation technology can be developed for any MD and HD keeping the batteries at the required optimum working transmission application and can also be used in combi- temperature. Batteries power the driveline of hybrid nation with hybrid systems. The focus is on smart system and electrical vehicles. integration with clever packaging, fewer components, reduced weight and high durability. SUPPLIER SUSTAINABILITY PROGRAM Representing a significant step forward in design and As a global company KA understands the impact today’s versatility, these transmissions help to improve fuel econ- biggest sustainability issues can have on businesses, and PRODUCTS omy, reduce vehicle weight and lower emissions. Heavy how business can contribute to tackling these issues. KA’s The automotive industry is making big strides to con- This technology allows for innovative gear knob designs, Duty trucks are increasingly adapting to AMT technology aim is not only to ensure it acts in a sustainable and respon- tribute to a more sustainable world. Vehicles that create but more importantly the shift by wire solution enables a and our solutions contribute to truck OEMs being able to sible manner, but also that its supply chains do the same. less emissions are already a key focus for KA’s customers. safer vehicle with regard to human error, where software meet the toughest emission standards on the market. Before KA contracts with any supplier it requires them to Hybrid and electric vehicles are becoming more common can be programmed to automatically select gears when commit to a minimum level of sustainability performance and will continue to do so as countries and cities reach the certain conditions are met, i.e. park mode when there’s no Supporting the production of hybrid as set out in KA’s Supplier Sustainability Manual. KA also milestones they’ve set for restrictions to the sale and use pressure on the seat, the seatbelt is undone, door is opened, and electric vehicles require suppliers to provide it with information on how they of diesel and petrol vehicles. One of KA’s key strategic aims etc. As well as making vehicles safer these products enable KA has various hoses that help customers design manage a number of sustainability-related areas, including: is to be a global partner of choice for its customers, and as electrified and connected vehicles, help to reduce overall greener vehicles: such KA designs products that enable its customers to meet vehicle weight and lower emissions. > Working Conditions and Human Rights their strategic goals of moving people more sustainably. KA’s Rotafinity shift by wire shifter uses a dial shifter > KA’s high performance Fluoro-Comp™ hoses for fuel, > Business Ethics KA has a dedicated team of around 550 highly skilled where the Park, Reverse, Neutral and Drive positions are water coolant and oil systems allow engines to be down- > Environment and passionate engineers based in its global tech centers not fixed and assigned once the car is started using a KA sized, particularly helpful for vehicles such as hybrids > Management of their suppliers located in the US, Canada, China, Sweden and Norway. patented latch lock system. This allows forbidden shift where the double driveline gives packaging issues. > Responsible Sourcing of Raw Materials In 2019, KA expanded its electronic and software engi- movements to be blocked and ensures that when the vehi- Smaller engine sizes mean less fuel and lower emissions neering capabilities in its Interiors division by establishing cle is parked it automatically goes into the Park position. from the vehicle use. This information is assessed with improvement opportu- a technology center in India. This technology can be applied to all types of vehicles nities identified for the supplier’s management systems. – electrified vehicles, hybrids, and conventional combus- > KA’s high-performance Nylon hoses made from renew- KA works with suppliers to ensure they achieve the PRODUCTS MAKING A SAFER DRIVING EXPERIENCE tion engines. able biopolymer materials – polymers produced from expected performance and will only take goods from new KA’s shift by wire solution with shifters and bolt on actu- KA’s patented ARC rotary actuator supports park lock non-food plant-based materials rather than from pet- suppliers once they can show they meet KA’s sustainabil- ators form a complete system enabling conversion of most features for electric vehicles and enables conversion of rochemical feedstock – for fluid transfer applications ity requirements. conventional automatic transmissions to shift by wire. most conventional transmissions to shift by wire.

26 KONGSBERG AUTOMOTIVE CORPORATE RESPONSIBILITY REPORT 2019 // PRODUCTS & SUPPLY CHAIN 27 In tandem with this assessment of a supplier’s management CONFLICT MINERALS systems, KA also assesses the supply routes for potentially KA operates a due diligence process to identify risks and significant risks of disruption from extreme weather events take action to ensure 3TG minerals used in its products do and natural disasters. If significant risks are identified, KA not directly, or indirectly through the supply chain, finance works with the supplier to ensure that mitigation actions or benefit armed conflicts. In-scope suppliers are annually are in place before finalizing any contract. requested to provide information regarding used smelters In 2019, KA further developed its supplier sustainability or refiners for minerals. Reports from KA’s suppliers are program by trialing the use of an independent third-party consolidated into Kongsberg Automotive Conflict Miner- auditor to assess the management and performance of a als Report for sending to customers. In 2019, all identified small selection of suppliers on business ethics, working smelters and refiners were conflict free and had success- conditions and environmental protection. Recognizing the fully completed an assessment against the Responsible benefit to both KA and its suppliers in having this expanded Minerals Assurance Process, RMAP standard. sustainability-related perspective of KA’s supply chains the plan is to expand the number of external audits in 2020. REPORT CONTEXT Where issues are identified in the audits, KA works with In order to provide fuller and more transparent report- the supplier to ensure that appropriate corrective actions ing on CR, this report marks the beginning of the process are put in place. to align Kongsberg Automotive’s CR report content to the In 2019, KA strengthened its internal governance of requirements of the Global Reporting Initiative (GRI) supplier sustainability through implementing its Regional framework. and Global Sourcing Boards, comprised of senior and exec- Kongsberg Automotive reports annually on its CR per- utive managers, that meet regularly to assess awarding formance. The reports cover the entirety of KA’s activities new contracts to existing or new suppliers. The supplier’s and operations. No previously stated information has been sustainability-related management systems are one of the recalculated and restated in this report. key areas discussed in each contract award. KA also developed its Supplier Sustainability Committee, also comprised of executive and senior management, to focus strictly on Please contact James Hubbard, CR Expert at evaluating sustainability related risks in its supply chains [email protected] with any questions and setting the strategy for how to respond to these risks. regarding this report.

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