Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental responsibility
• Social responsibility
• Business ethics

Environmental Achievements

• Increased use of biofuel to 9% (from 4%)
• Two units received ISO 14001 certification
• Ten products phased out or use reduced
• Energy savings of 11.5 MSEK (7.5 MSEK previously)
• Successful implementation of ISO 50001 energy management system at some facilities
• Significant reduction of CO2 emissions in Sri Lanka due to biomass boiler

Social Achievements

• Implementation of a new Supplier Sustainability Guideline
• Many positive contacts with local societies
• Enhancement of the whistleblowing system
• Development of a leadership development program
• HEXPOL Gold Key received the Best Workplace award
• Total training hours of 76,000 (55,000 previously)

Governance Achievements

• Update of “Materializing Our Values”, including clearer communication on whistleblowing
• Introduction of Group-wide guidelines for evaluating supplier sustainability
• No cases of whistleblowing registered during the financial year
• No breaches concerning corruption identified during the year

Climate Goals & Targets

Environmental Challenges

• Increase the efficiency in the use of resources such as materials and energy
• Reduce risks at the workplaces
• Implement the new Supplier Sustainability Guideline
• Continually be recognised as a good citizen and an attractive employer
• Further develop environment-friendly polymer compounds and other products
• Soil contamination at some sites
• Higher energy consumption due to expansion and increased production volumes
• Increased water consumption due to higher production, new equipment testing, and leakages

Mitigation Strategies

• Energy saving measures (installation of energy-efficient equipment, LED bulbs, steam traps, insulation, etc.)
• Implementation of preventive technical measures and training to reduce workplace accidents
• Formulation of a Group-wide Supplier Sustainability Guideline (to be implemented in 2015)
• Ongoing dialogue with supervisory authorities and actions to reduce negative environmental impacts (e.g., odor)
• Development of more environmentally compatible products
• Investigations and risk-preventive measures taken for underground tanks at recently acquired facility
• Implementation of measures to reduce water consumption (leak searches, training, technical measures)

Supply Chain Management

Supplier Audits: Nearly 170 suppliers evaluated concerning the environment and social responsibility in 2014

Responsible Procurement

• Supplier Sustainability Guideline (to be implemented in 2015)

Climate-Related Risks & Opportunities

Physical Risks

• Flooding (three plants)
• Extreme windy conditions (two facilities)

Transition Risks

• Development of environmental legislation and environmental policies

Opportunities

• Development of more environment-friendly rubber compounds and other products

Reporting Standards

Frameworks Used: GRI G4 Guideline

Certifications: ISO 9001, ISO 14001, ISO 50001, OHSAS 18001

Third-party Assurance: Ernst & Young AB (brief audit of sustainability data)

Sustainable Products & Innovation

• EPDM rubber with low electrical conductivity
• Rubber compounds with recycled polymers
• Rubber gaskets for plate heat exchangers
• Porous rubber material
• Recyclable TPEs
• TPEs with environmentally compatible flame retardants
• TPEs combined with natural materials (cork)
• Polyurethane wheels with long service life

Awards & Recognition

• HEXPOL Gold Key: Best Workplace award
• Statesville plant: Top 15 Workplace in North Carolina
• Statesville plant: HEXPOL Company of the Year (4th time)
• Middlefield unit: Top 100 Work Places Award

Environmental Metrics

ESG Focus Areas

• Business ethics
• Energy consumption
• Climate impact
• Product development
• Safe workplaces
• Supplier Sustainability

Environmental Achievements

• Successful implementation of biomass boilers in Sri Lanka, resulting in a substantial reduction of fossil carbon dioxide and sulfur dioxide emissions.
• Increased use of biofuels and green electricity, reducing greenhouse gas emissions.
• Energy-efficiency projects resulting in savings of 14.1 MSEK.
• DryFlex Green product line launched, based on raw materials from renewable sources.
• Development of low-electrical conductivity EPDM rubber to reduce corrosion in automotive applications.
• Increased use of recycled polymers in rubber compounds.

Social Achievements

• Implementation of the Supplier Sustainability Guideline, evaluating over 800 suppliers.
• Group-wide training in business ethics conducted.
• Continued focus on competence development, with 88,600 training hours.
• Positive employee survey results.
• Social engagement activities, including open houses, school collaborations, and community support.

Governance Achievements

• Implementation of the Supplier Sustainability Guideline.
• Group-wide training in business ethics conducted.
• Zero tolerance approach to bribery, corruption, and cartel formation.
• No breaches concerning corruption identified during 2015.

Climate Goals & Targets

Environmental Challenges

• Increase the efficiency in the use of materials, energy and other resources.
• Maintain a focus on competence development and developing our employees.
• Reduce risks at the workplaces aiming for zero accidents.
• Work further with the implementation of the Supplier Sustainability Guideline.
• Continue to apply sound ethics in a very competitive business environment.
• Continually be recognised as a good citizen and an attractive employer.
• Further strengthen our position as a developer and supplier of environment-friendly polymer compounds.

Mitigation Strategies

• Energy-efficiency projects implemented.
• Increased use of renewable energy sources.
• Activities to reduce risks in the workplaces.
• Development of products with enhanced environmental features.
• Contacts with local societies.
• Implementation of the Supplier Sustainability Guideline.

Supply Chain Management

Supplier Audits: More than 800 suppliers evaluated (2015)

Responsible Procurement

• Supplier Sustainability Guideline

Climate-Related Risks & Opportunities

Physical Risks

• Flooding
• Extreme windy conditions

Transition Risks

• Development of environmental legislation and environmental policies

Opportunities

• Development of more environment-friendly rubber compounds and other products

Reporting Standards

Frameworks Used: GRI G4 Guidelines

Certifications: ISO 14001, OHSAS 18001, ISO 50001, ISO 9001

Third-party Assurance: Ernst & Young AB (limited assurance for sustainability data)

Sustainable Products & Innovation

• Dryflex Green TPE compounds
• Low-electrical conductivity EPDM rubber
• Recycled polymers in rubber compounds
• Porous rubber material
• TPEs with flame retardant substances
• TPE combined with natural cork

Awards & Recognition

• Best Workplace award (Gold Key and Burton Rubber)
• Top Workplaces award (Burton and Gold Key campuses)
• Energy Right Program award (Jonesborough unit)

Environmental Metrics

ESG Focus Areas

• Environment
• Occupational Health and Safety
• Social Responsibility
• Business Ethics

Environmental Achievements

• Energy efficiency increased by about 25 percent since 2010.
• Reduced carbon dioxide emissions from energy consumption.
• Increased use of biofuels and fossil-free electricity.
• Over 90 percent of subsidiaries are ISO 14001 certified.
• Phased out or reduced the usage of more than ten hazardous chemicals.
• Launched Dryflex Green product line (TPE from renewable resources).

Social Achievements

• Continued systematic sustainability work through environmental, occupational health and safety and energy standards.
• Successfully met customer requirements concerning the environment, business ethics and social responsibility.
• Implemented many activities together with schools and universities.
• Good results from the NAFTA Safety Programme.
• Training and competency development totalled 94,200 h (79,000).

Governance Achievements

• Joined the UN Global Compact.
• Updated code of conduct (Materializing Our Values).
• Updated ISO 14001 systems at many sites.
• Group-wide training in business ethics conducted.
• Group objectives were linked to the UN Sustainable Development Goals.

Climate Goals & Targets

Environmental Challenges

• Ongoing development of environmental legislation and policies.
• Climate change and potential for additional legal and financial controls.
• REACH legislation requiring phase-out of certain hazardous substances.
• Varying health and safety requirements across different countries.
• Potential for soil contamination at some facilities.
• Presence of asbestos and PCB in some buildings.
• Climate-related risks such as flooding and extreme weather.
• Increasing customer demand for environmentally adapted products.
• Potential human rights violations in the supply chain (natural rubber).
• Risk of corruption in operations across various countries.

Mitigation Strategies

• Systematic analysis and implementation of changes in environmental legislation.
• Continuous monitoring of health and safety legislation.
• Regular assessments of soil contamination risk during acquisitions.
• Regular assessments of asbestos and PCB presence during acquisitions.
• Keeping informed of climate change risk analyses.
• Active role in environmentally friendly product development.
• Formal sustainability audits performed at natural rubber plantations.
• Code of conduct (Materializing Our Values) and UN Global Compact commitments.
• Whistleblowing system.
• Global Compact and business ethics guidelines.
• Compliance Programme and mandatory education for managers and employees.

Supply Chain Management

Supplier Audits: More than 1,200 suppliers of raw materials assessed over the past three years.

Responsible Procurement

• HEXPOL Supplier Sustainability Guideline

Climate-Related Risks & Opportunities

Physical Risks

• Flooding
• Extreme weather

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: GRI G4 (Core option), CDP, UN Global Compact

Certifications: ISO 14001, ISO 9001, OHSAS 18001 (at some sites), ISO 50001 (at some sites)

UN Sustainable Development Goals

• Affordable and clean energy
• Climate action
• Industry, innovation and infrastructure
• Decent work and economic growth
• Responsible consumption and production

HEXPOL’s sustainability objectives are linked to the UN Sustainable Development Goals.

Sustainable Products & Innovation

• Dryflex Green
• RheVision
• HexLight
• EPDM rubber with low electrical conductivity
• Non-halogen fire protection mixtures
• TPE combined with natural material such as cork

Awards & Recognition

• Geauga Safety Council 2017 Group Award (Burton campus)
• 2017 Safety Award Winner (HEXPOL Compounding)
• 2017 Silver Achievement Award (HEXPOL Compounding – Burton Rubber Processing)
• Most Sustainable Supplier (HEXPOL Compounding Kennedale)

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance
• Human Rights
• Anti-corruption

Environmental Achievements

• Reduced energy use/net sales by approximately 30 percent since 2010.
• Reduced CO2 emissions/net sales in a five-year perspective.
• Increased use of biofuels and fossil-free electricity to 21 percent of energy use.
• 76 percent of plants are ISO 14001 certified.
• Phased out or reduced the usage of more than 15 hazardous chemicals.
• Launched Dryflex Green (bio-based TPE) and Dryflex Circular (recycled TPE) products.
• RheVision line of bio fiber reinforced polypropylene launched, reducing carbon footprint.

Social Achievements

• Conducted employee surveys with good results.
• Provided 171,400 hours of employee training (32 hours/employee).
• Conducted 2,960 employee development interviews.
• Implemented safety programs in US and Mexico, resulting in positive impact.
• Engaged in community activities through collaborations with schools and universities.

Governance Achievements

• Implemented a Supplier Sustainability Guideline and evaluated more than 800 suppliers.
• Linked Group objectives to the UN Sustainable Development Goals.
• Updated Materializing Our Values – whistle-blowing policy.
• No serious violations of laws and regulations occurred in 2019.
• No breaches concerning corruption were identified during 2019.

Climate Goals & Targets

Environmental Challenges

• Dependence on fossil raw materials in the polymer industry.
• Increased operations in countries with electricity derived from fossil sources.
• High accident rate at several units.
• High proportion of men in the workforce.
• Varying levels of collective agreement coverage across different countries.

Mitigation Strategies

• Continued energy efficiency projects, procurement of biofuels and fossil-free electricity.
• Implementation of additional actions (technical measures, training, follow-up) to reduce workplace accidents.
• Group-wide equal opportunity policy to increase the proportion of female employees.
• Ongoing efforts to improve health and safety, including risk analyses, training, and technical improvements.
• Continued efforts to develop environmentally adapted products and resource-efficient production methods.

Supply Chain Management

Supplier Audits: More than 500 supplier assessments performed in 2019, approximately 70 formal audits.

Responsible Procurement

• Supplier Sustainability Guideline

Climate-Related Risks & Opportunities

Physical Risks

• Flooding (at three units)
• Extreme weather (at five facilities)

Transition Risks

• Increased fees and taxes on climate-impacting activities
• Changes in customer demands for environmentally adapted products.

Opportunities

• Development of energy-efficient products
• Increased interest in environmentally adapted products.

Reporting Standards

Frameworks Used: GRI Standards: Core option, UN Global Compact, CDP

Certifications: ISO 14001, ISO 9001, ISO 45001 (at some sites), ISO 50001 (at some sites)

Sustainable Products & Innovation

• Dryflex Green
• Dryflex Circular
• RheVision

Environmental Metrics

ESG Focus Areas

• Climate Change

Environmental Achievements

• Reduced absolute GHG emissions by 3.9% between 2021 and 2022
• Reduced GHG emissions intensity by 3.9% between 2021 and 2022

Climate Goals & Targets

Environmental Challenges

• Potential data quality issues related to faulty meters and outdated records

Mitigation Strategies

• Ongoing measures to enhance data quality by incorporating industry best practices, using the most recent resources, and prioritizing the use of primary data
• Implementing a calculator in the ERP system to refine the system for recording the origin of purchased raw materials

Supply Chain Management

Responsible Procurement

• Sustainability is an important factor for choosing raw material suppliers

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Preferred by Nature’s Carbon Footprint Management Standard

Environmental Metrics

ESG Focus Areas

• People
• Environment
• Business Ethics

Climate Goals & Targets

Supply Chain Management

Responsible Procurement

• Supplier Sustainability Guideline

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: UN Global Compact, ISO 26000

Certifications: ISO 14001

Environmental Metrics

ESG Focus Areas

• Climate change
• Resource use and circular economy
• Working conditions
• Business ethics and combating corruption

Environmental Achievements

• Reduced CO2 emissions from energy use by 57% since 2018/2019 base year (target is 75% by 2025)
• Increased capacity for recycling of polymer materials
• Three more production units certified according to ISCC Plus, bringing the total to four
• Launched HEXGREEN, a growing portfolio of rubber compounds with a reduced carbon footprint
• Reduced energy consumption/net sales by 5% compared to 2022

Social Achievements

• Continued development of products with a smaller climate footprint
• Increased capacity for recycling of polymer materials
• No human rights violations reported
• No violations of environmental and work environment legislation reported

Governance Achievements

• Implemented a bonus system for achieving the climate target
• Aligned sustainability reporting with the EU's Corporate Sustainability Reporting Directive (CSRD/ESRS)

Climate Goals & Targets

Environmental Challenges

• Limited supply and high prices of bio-based and recycled raw materials slowing down the transition to a low-carbon polymer industry
• Limited supply and rising prices of fossil-free energy
• Increased competition and price pressure
• Supply chain disruptions
• Global crises (pandemics, geopolitical situations)

Mitigation Strategies

• Well-established tools to ensure parallel supply and balanced purchases between local and global suppliers
• Flexible production that can adapt to changed customer requirements
• Focus on product development to maintain long-term profitability and sustainable competitiveness
• Well-defined acquisition strategy with due diligence processes
• Strong balance sheet providing a financial platform for future acquisitions
• Widely spread geographic operations and broad global customer base for risk diversification
• Continuous monitoring of global events by management and board

Supply Chain Management

Supplier Audits: 42 audits or site visits in 2023

Responsible Procurement

• Supplier Sustainability Guideline (includes requirements for compliance with legislation, environmental and work environment management, human rights, and anti-corruption)

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events
• Flooding
• Water shortages
• Rising temperatures

Transition Risks

• Increased regulations, taxes, and charges on fossil fuels and emissions
• Limited supply and high prices of bio-based and recycled raw materials
• Limited supply and rising prices of fossil-free energy
• Changing customer preferences towards low-carbon products

Opportunities

• Increased cost-effectiveness through energy efficiency
• Product development focused on bio-based and recycled raw materials

Reporting Standards

Frameworks Used: GRI Universal Standard

Certifications: ISCC Plus

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• SDG 7 (Affordable and clean energy)
• SDG 8 (Decent work and economic growth)
• SDG 9 (Industry, innovation, and infrastructure)
• SDG 12 (Responsible consumption and production)
• SDG 13 (Climate action)

The Group's sustainability goals and activities contribute to these SDGs through energy efficiency, reduced emissions, development of sustainable products, responsible resource management, and climate action.

Sustainable Products & Innovation

• Dryflex Green
• Lifocork
• Dryflex Circular
• Dryflex Circular MWR
• RheVision
• Anjaeco
• HEXGREEN
• HexLight

Awards & Recognition

• HEXPOL TPE received the ‘Bronze level Carbon Literate Organization’ certificate