Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate and Energy Management
• Responsible Sourcing
• Diversity, Equity, and Inclusion
• Corporate Governance
• Ethical Business Conduct

Environmental Achievements

• Launched formal greenhouse gas (GHG) emissions inventory accounting process across global operations.
• Entered into renewable electricity contracts for more than 40 sites, with over 35 sites now covering 100% of their annual electricity usage with renewable sources.
• Expanded Easton, Pennsylvania factory to scale up production of SiC substrates and epitaxial wafers.
• Developed highly differentiated process for EV battery recycling delivering >95% recovery of critical metals with zero liquid discharge.

Social Achievements

• Globally, approximately 49% of workforce is female.
• Implemented Diversity, Equity, and Inclusion (DEI) Policy.
• Launched Coherent Leadership Academy programs.
• Expanded responsible minerals program to include cobalt.

Governance Achievements

• Established Environmental, Social, and Governance (ESG) Committee at the Board level.
• 82% of Board of Directors are independent.
• 55% of Board members are women or ethnically diverse.
• No reported incidents of corruption.

Climate Goals & Targets

Environmental Challenges

• Water risks may escalate in many areas due to climate change.
• Need to integrate supplier performance on GHG emissions into sourcing decisions.

Mitigation Strategies

• Engaged a third-party sustainability partner to quantify water footprint and identify areas of opportunity.
• Preparing for deployment of supply chain decarbonization initiative in FY23.

Supply Chain Management

Supplier Audits: 85% of 3TG suppliers completed due-diligence survey.

Responsible Procurement

• Due-diligence program to uphold human rights and responsible sourcing practices.
• Conflict Minerals Policy.

Climate-Related Risks & Opportunities

Opportunities

• Development of energy-efficient products (SiC power devices).

Reporting Standards

Frameworks Used: SASB

Certifications: ISO 9001 (36 of 37 manufacturing sites), ISO 14001 (16 of 37 manufacturing sites)

Sustainable Products & Innovation

• SiC power devices
• EV battery recycling solution

Awards & Recognition

• Forbes America’s Best Mid-Sized Companies (FY 2021)
• Environmental Protection Outstanding Contribution Award (Wuxi, China, FY 2021)
• Fujitsu Supply Chain Excellence Award (February 2021)
• Excellent Partner Awards, Sumitomo Electric Industries, Ltd. (September 2021)
• ECOC Most Innovative Product/Optical Integration Award (October 2021)
• Excellent Supplier Award from Han’s Laser (January 2022)

Environmental Metrics

ESG Focus Areas

• Climate Change
• Environmental
• Social
• Governance

Environmental Achievements

• Increased renewable energy share from 26% in 2021 to 38% in 2022.
• Implemented 35 energy efficiency projects in China, saving over 6,000,000 kWh per year.

Social Achievements

• Launched an all-hands energy awareness program across multiple sites.

Governance Achievements

• Established board-level oversight of climate-related issues through the ESG Committee.

Climate Goals & Targets

Environmental Challenges

• Potential revenue loss due to customer demands for Net Zero targets (Scope 1 & 2 by 2030/2040/2050 and 50% Scope 3 reduction by 2030).
• Increased cost of raw materials due to supplier decarbonization efforts.
• Increased indirect costs due to acute physical risks (flooding) at the Fuzhou, China site.

Mitigation Strategies

• Developing a plan to decarbonize internal operations (Scope 1 & 2) and engage upstream suppliers.
• Analyzing Scope 3 upstream emissions and developing a plan to engage suppliers on decarbonization.
• Maintaining a flood risk mitigation plan at the Fuzhou site.

Supply Chain Management

Supplier Audits: 1% of suppliers assessed for ESG performance

Responsible Procurement

• ESG performance featured in supplier awards scheme

Climate-Related Risks & Opportunities

Physical Risks

• Flooding
• Extreme weather events

Transition Risks

• Changing customer behavior
• Increased cost of raw materials
• Regulatory changes

Opportunities

• Development of energy-efficient products (Silicon Carbide technology)
• Energy efficiency projects

Reporting Standards

Frameworks Used: Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (Revised Edition), Greenhouse Gas Protocol: Scope 2 Guidance

Third-party Assurance: Third-party verification for energy data and emissions calculations (72% of Scope 1, 99% of Scope 2)

Sustainable Products & Innovation

• Silicon Carbide technology

Environmental Metrics

ESG Focus Areas

• Climate action
• Water usage
• Waste minimization
• Human rights
• Diversity, equity, and inclusion
• Compliance with all laws and regulations
• Operating with the highest ethical standards

Environmental Achievements

• Set a net-zero Scope 1 and Scope 2 greenhouse gas emissions target of FY2040
• Obtained over 50% of global energy needs from renewable energy sources in FY2023, mitigating over 175,000 metric tons of CO2 emissions
• Obtained 100% of electricity needs for all sites in Europe from renewable energy sources
• Completed multiple energy-efficiency projects saving an incremental 14 million kWh per year

Social Achievements

• Streamlined talent management processes
• Expanded diversity, equity, and inclusion efforts
• Harmonized practices and policies globally after acquisition

Governance Achievements

• Board members limited to serving on a maximum of four public company boards
• 13 of 14 Board members (93%) are independent
• 8 of 14 Board members (57%) are female and/or ethnically diverse
• Launched a new ESG webpage with links to ESG Report and policies

Climate Goals & Targets

Environmental Challenges

• Supply chain decarbonization
• Scope 3 emissions
• Water stress in some regions
• Achieving net-zero emissions by 2040

Mitigation Strategies

• Partnered with Siemens to accelerate decarbonization efforts
• Launched a supply chain decarbonization program with external consultant and university
• Conducting water-stress analysis of every Coherent location
• Developing water conservation plans and targets
• Implementing an internal carbon price mechanism

Supply Chain Management

Supplier Audits: 24 supplier facilities audited in FY2023

Responsible Procurement

• RBA Code of Conduct adopted as Supplier Code of Conduct
• Supplier ESG Standards statement issued
• ESG performance a factor in procurement decisions

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Regulatory changes, market shifts in renewable energy

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: SASB

Certifications: AS9100, ISO 13485, IATF 16949, TL9000, ISO 9001:2015, ISO 50001 (7 sites in Europe)

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Goal 5 (Gender equality)
• Goal 7 (Affordable and clean energy)
• Goal 9 (Industry, innovation, and infrastructure)
• Goal 12 (Responsible consumption and production)
• Goal 13 (Climate action)

Initiatives described throughout the report contribute to these goals

Sustainable Products & Innovation

• Uncooled semiconductor pump lasers
• SiC substrates and MOSFETs
• Scandium recovery technology
• Streamlined Hydrometallurgical Advanced Recycling Process (SHARP)

Awards & Recognition

• 2023 Top-Rated ESG Company – Sustainalytics
• Supplier Award for Sustainability Performance – Siemens
• Bronze Medal Sustainability Rating – EcoVadis
• ECOC 2023 Most Innovative Product
• Lightwave Innovation Reviews for three industry-leading products

Environmental Metrics

ESG Focus Areas

• Our Products
• Sustainable Procurement
• Environment
• People
• Governance

Environmental Achievements

• 78% of our electricity supply obtained from renewable sources, representing over 550 million kWh of renewable electricity per year, thereby avoiding 234,000 MTCO2e in FY2024.
• Introduced a global Fossil Fuel Equipment Policy that prohibits the purchase of any new fossil-fuel-powered equipment within Coherent operations, unless a specific exemption is approved.
• Recycled over 100kg of precious metals, including gold and platinum.

Social Achievements

• 43% of our total workforce completed voluntary diversity, equity, and inclusion (DEI) training.
• Named a Certification Champion at the Sapphire level by the Board of Certified Safety Professionals.
• Awarded scholarships to 73 students through the Coherent/II-VI Foundation.
• Committed $125,000 to the Optica Foundation Amplify Scholarship for Black scientists.

Governance Achievements

• Became a member of the Responsible Business Alliance.
• Welcomed two additional female directors to our Board of Directors. Women now comprise 28.6% of our Board.
• Rated in the Advanced tier by the cyber risk management firm Bitsight.

Climate Goals & Targets

Environmental Challenges

• Future growth and acquisitions may increase our emissions at times, temporarily exceeding our efforts to reduce them.
• Adapting to evolving net-zero standards, regulatory changes, and renewable energy market dynamics.
• Scope 3 emissions comprise a significantly larger component of our overall emissions than Scope 1 and Scope 2 emissions – and are much more complex to address.

Mitigation Strategies

• Procuring clean energy, reducing consumption, producing energy on-site, transitioning to electrification, addressing fugitive emissions and offsetting unavoidable emissions.
• Working with suppliers to quantify and reduce their emissions.
• Developing a global policy to mitigate emissions from SF6 gas use by FY2040.
• Implementing an internal carbon price mechanism.

Supply Chain Management

Supplier Audits: 23 supplier facilities audited

Responsible Procurement

• RBA Code of Conduct
• Responsible Minerals Policy
• Supplier Diversity Program

Climate-Related Risks & Opportunities

Physical Risks

• Increased severity of storms, flooding, extreme precipitation, wildfire, extended heat waves, and drought

Transition Risks

• Regulatory changes, potential carbon taxes

Opportunities

• Development of energy-efficient products
• Innovation in battery technology

Reporting Standards

Frameworks Used: SASB, TCFD, UN SDGs

Certifications: ISO 9001, ISO 14001, ISO 45001, ISO 50001, ISO 13485, IATF 16949, ANSI S20.20, TL 9000, ISO 17025, AS9100

Sustainable Products & Innovation

• Li-S battery technology
• SiC power electronics
• SHARP™ battery recycling technology

Awards & Recognition

• Newsweek Excellence 1,000 Index 2024
• Top-Rated ESG Company – Sustainalytics
• Bronze Medal Sustainability Rating – EcoVadis
• B score – CDP Climate Change