Climate Change Data

Environmental Metrics

ESG Focus Areas

• Safety
• Environmental Responsibility
• Community Engagement

Environmental Achievements

• 70 percent drop in lost-time accidents in the last five years
• 50 percent reduction in waste-to-landfill output in the last five years
• Water treatment program cleaning and recycling 7.8 billion gallons of water a year, reducing chemical usage by 90 percent and waste products by 2 million pounds annually, resulting in $30,000 annual cost savings.
• All steel making and value-add plants obtained ISO 14001 certification as of December 31, 2015

Social Achievements

• Employees set records with their generosity to United Way, the arts, Habitat for Humanity and other causes.
• Community engagement is part of the orientation for every new employee.
• Golden Glove Award implemented to eliminate preventable finger, hand and wrist injuries.

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Prolonged weakness in energy and some industrial markets due to low oil prices and deteriorating global commodity markets.
• Customer inventory corrections in the industrial base after strong purchases during the first quarter.
• Volatility in scrap markets, negative impact of currency, and pressure from imports.

Mitigation Strategies

• Staying close to customers, collaborating to improve product performance.
• Exercising flexibility in assets and labor to quickly scale to demand.
• Refining business structure, conserving cash, and reducing costs by more than $75 million.
• Taking out inventory faster than in previous economic cycles without impacting customer service.
• Suspending the company’s cash dividend in the fourth quarter (with a commitment to restore it when business conditions improve).
• Ensuring continued access to credit through an amendment and restatement of the revolving credit facility.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Established a scrap return supply chain with many customers.
• Operates a scrap processing company for improved access, reliability and cost.

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: ISO 14001

Certifications: ISO 14001

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• New grades of alloy steel with higher strength and toughness at lower cost
• TimkenSteel Certified Premium Air-melted steel (CPA steel) with lower inclusion concentrations for gear applications
• Modified 1026 carbon tubing with microalloy elements to perform like higher-strength steel

Awards & Recognition

• Two awards from the Ohio Environmental Protection Agency in 2015 for water treatment program

Environmental Metrics

ESG Focus Areas

• Not disclosed

Environmental Achievements

• Not disclosed

Social Achievements

• Not disclosed

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

Supply Chain Management

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used:

Certifications:

UN Sustainable Development Goals

• Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Environmental Stewardship
• Safety
• Community Investment

Environmental Achievements

• 14% decrease in waste to landfill per production ton in the last five years (11.9 pounds per ton in 2016)
• 1.2% reduction in carbon intensity in 2016
• Melted 1.1 million tons of scrap in 2016, saving 3.2 million tons of greenhouse gas emissions
• Annual energy savings of more than 20 million kilowatt hours

Social Achievements

• Top-quartile safety performance among industrial peers
• Initiated a renewed effort to engage employees in safety and environmental activities
• Employee-driven Golden Glove Awards program to improve safety
• More than 75 percent of top leaders serve as board members in the community
• Financial contributions from the TimkenSteel Charitable Fund and matching dollars to employee-selected charities

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Weak energy and industrial markets
• Seasonal automotive demand
• Less favorable sales mix
• High levels of steel imports into the U.S.
• Increased use of materials in substitution for steel products
• Fluctuations in raw material market indices
• Disruptions in the supply of raw materials
• Volatility in the capital markets and end markets
• Creditworthiness of suppliers and customers
• Potential liabilities associated with assumed obligations under the tax sharing agreement with Timken
• Extensive environmental, health and safety laws and regulations
• Unexpected equipment failures
• Work stoppages

Mitigation Strategies

• Aggressive cost management without sacrificing fundamental business elements
• Continuous improvement and innovation (e.g., sprint and rest production schedule)
• Expanded business through the supply chain, creating new channels to the end market
• Leveraged material and application knowledge and modern assets to deliver customer value
• Cost reduction initiative resulting in over $100 million in savings
• Renewed effort to engage employees in safety and environmental activities
• Employee-driven Golden Glove Awards program
• Supplier pricing agreements to establish purchase prices for certain inputs
• Raw material surcharge mechanism to mitigate the impact of raw material cost changes
• Use of derivative financial instruments to hedge exposure to price risk related to natural gas and electricity purchases
• Prudent capital allocation tactics (e.g., suspension of cash dividend, reduced capital expenditures)

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Established a scrap return supply chain with many customers
• Operates a scrap processing company for improved access, reliability, and cost

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Changes in environmental laws and regulations

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: ISO 14001

Certifications: ISO 14001

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Ultrapremium™ certified air-melt technology

Awards & Recognition

• Ohio Environmental Protection Agency recognition for water treatment plant

Environmental Metrics

ESG Focus Areas

• Environmental
• Safety
• Social
• Governance

Environmental Achievements

• Cut waste-to-landfill per production ton by more than 8 percent
• Recycled 1.7 million tons of scrap steel, saving 2.4 million tons of greenhouse gas emissions
• Reduced the amount of electricity (kilowatt hours per ship ton) used in steelmaking operations by 10 percent
• Harrison and Faircrest Steel plants ranked among the 10 lowest-emitting plants of 90 participating steel companies by the WorldSteel Organization
• Cleaned and recycled more than 8 billion gallons of water
• Recycled 1,336 tons of used tires through industry-leading tire recycling program

Social Achievements

• Reached a new four-year labor agreement with the United Steelworkers
• Improved employee benefits (flexible work schedules, parental leave, additional vacation, physical and mental wellbeing programs)
• Awarded $145,000 in scholarships to employees' children and community grants
• Received the American Legion’s Large Employer of Veterans Award

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Competition in the steel industry
• Global overcapacity in the steel industry
• High levels of steel imports into the U.S.
• Fluctuations in raw material market indices
• Disruptions in the supply of raw materials
• Dependence on key customers
• Weakness in global economic conditions
• Cyclical nature of customer businesses
• Risks associated with the creditworthiness of suppliers and customers
• Potential inadequacy of capital resources
• Product liability, warranty, and product quality claims
• Volatile market conditions for electricity and natural gas
• Changes in environmental laws and regulations
• Potential restructuring and impairment charges
• Extensive environmental, health, and safety laws and regulations
• Equipment failures and operational disruptions
• Risks relating to information technology systems and cybersecurity
• Work stoppages
• Domestic and foreign laws and regulations
• Inability to attract and retain key personnel
• Difficulties in integrating acquired businesses
• Limitations on the use of net operating loss and credit carryforwards
• Substantial debt
• Fluctuations in the price of our common shares
• Provisions in corporate documents and Ohio law that could prevent a change in control
• Potential issuance of preferred shares that could dilute common shares
• Continuing contingent liabilities from the spinoff from The Timken Company

Mitigation Strategies

• Supplier pricing agreements to establish purchase prices for certain inputs
• Raw material surcharge mechanism to mitigate the impact of raw material cost changes
• Cost reduction initiatives
• Continuous improvement projects
• Strategic capital allocations
• Robust quality management system
• Reinforced safety program
• Documented environmental management system
• ISO 14001 certification
• Environmental compliance audit program
• Established reserves to cover environmental expenses
• Regular evaluation of access to equity and debt capital markets
• Insurance coverage
• Financial instruments to hedge exposure to price risk related to natural gas and electricity purchases
• Negotiated new collective bargaining agreements

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Established a scrap return supply chain with many customers
• Operate a scrap processing company

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Changes in environmental laws and regulations

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: ISO 14001

Certifications: ISO 14001

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Endurance family of steels

Awards & Recognition

• American Legion’s Large Employer of Veterans Award
• American Iron and Steel Institute’s Finalist Award

Environmental Metrics

ESG Focus Areas

• Safety
• Environmental Stewardship
• Employee Wellbeing
• Sustainability

Environmental Achievements

• 27% increase in base sales in our most profitable products
• Decrease in waste-to-landfill in 2018
• Recycled 9.7 billion gallons of water in 2018
• Recycled 18,870 tons of electric arc furnace dust in 2018
• All TimkenSteel manufacturing plants are ISO 14001 Environmental Management System (EMS) certified.
• Steel products are made from nearly 100% post-consumer scrap metal.

Social Achievements

• Safest year in operating history
• Improved retention and employee engagement
• Recognized as one of the best places to work in Northeast Ohio
• 95% of top talent surveyed felt their work was meaningful and fulfilling
• 92% retention rate
• Employee resource groups growing (women, multicultural professionals, veterans, young professionals, working parents, wellness)

Governance Achievements

• Two excellent additions to the board and leadership team in 2018 (Marvin Riley and Kristopher Westbrooks)

Climate Goals & Targets

Environmental Challenges

• Steep increases in demand in 2017 carried into early 2018, bringing some challenges.
• Unplanned maintenance events led to inefficiencies in operations that affected delivery and, combined with inflation in our supply chain, impacted financial performance.

Mitigation Strategies

• Supply chain and manufacturing teams took action, working together to make changes needed to break production constraints, more strategically schedule and creatively partner with suppliers.

Supply Chain Management

Responsible Procurement

• Established a scrap return supply chain with many customers
• Operate a scrap processing company for improved access, reliability and cost

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: ISO 14001

Certifications: ISO 14001

Sustainable Products & Innovation

• Endurance family of steels

Awards & Recognition

• 2018 American Metal Market Steel Excellence award for best product innovation

Environmental Metrics

ESG Focus Areas

• Safety
• Sustainability
• Community Impact
• Corporate Governance

Environmental Achievements

• TimkenSteel ranks in the top 15% of the lowest-emitting EAF steel plants according to the World Steel Association
• 1,074,695 tons of 100% recycled scrap were delivered to TimkenSteel melt shops in 2019

Social Achievements

• Record on-time delivery of 94% at year end
• Reduced salaried workforce by 14 percent

Governance Achievements

• Implemented an aggressive profitability improvement plan
• Aligning pay with performance; no variable pay for executives in 2019 due to underperformance

Climate Goals & Targets

Environmental Challenges

• Weak end market demand
• Net sales and profitability fell short of expectations

Mitigation Strategies

• Implemented an aggressive profitability improvement plan resulting in $40 million in savings in 2019 and expected annualized savings of $70 million
• Refinancing of asset-based revolving credit facility
• Closure of TimkenSteel Material Services facility in Houston, Texas and divestiture of scrap processing facility in Akron, Ohio

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Lower customer demand in the industrial and energy end markets and the reduction of OCTG billet shipments.
• Decline in the No.1 Busheling scrap index and lower volumes.

Mitigation Strategies

• Restructuring of its commercial and technology organizations to drive innovation and focus on key growth areas.
• Implemented approximately 55 salaried position eliminations.
• Profitability improvement plans targeting reduction in salaried employees, lower professional services fees, and benefit costs.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• safety and health
• total wellbeing
• community impact
• resource conservation
• sound environmental management
• continuous improvement in environmental practices
• shareholder value
• corporate governance
• risk management

Environmental Achievements

• Maintained ISO 14001 Environmental Management System certifications for all domestic steel production facilities.
• Received Encouraging Environmental Excellence Award from Ohio EPA for metals reclamation at the company’s water treatment plant.
• Greenhouse gas emissions in 2019 were 0.9 tonnes of GHG per tonne of crude steel cast, well below World Steel Association averages.
• 802,278 tons of 100% recycled scrap were delivered to melt shops in 2020.

Social Achievements

• Lowest recordable injury rate since company’s founding in 2014.
• No operational shutdowns due to COVID-19 illness.
• Payout to employees of approximately 81.7 percent of target variable compensation.

Governance Achievements

• Non-executive Chairman of the Board.
• All directors, other than CEO, are independent.
• Annual Board and committee evaluations.
• Risk oversight by the full Board of Directors and its committees.
• Related-party transactions approval policy.
• Robust share ownership and holding requirements for executive officers and directors.
• Comprehensive director and employee code of conduct and ethics and compliance program.
• Independent Audit, Compensation and Nominating and Corporate Governance Committees.
• Regular executive sessions of independent directors.

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic negatively impacted end markets.
• Adjusted EBITDA fell below target for the year.

Mitigation Strategies

• Disciplined working capital management and efficiency initiatives generated strong operating and free cash flow.
• Systemic cost savings through workforce reduction and other actions.
• Improved capital structure with debt reduction and convertible note exchange.
• Optimization of product, service, and manufacturing portfolio.
• Expansion of value-added components facility.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Supplier code of conduct establishes expectations for ethical business practices.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: ISO 14001

Third-party Assurance: Not disclosed

Awards & Recognition

• Encouraging Environmental Excellence Award from Ohio EPA

Environmental Metrics

ESG Focus Areas

• Environmental Stewardship
• Governance
• Human Capital

Environmental Achievements

• Announced 2030 environmental goals: 40% absolute reduction in combined Scope 1 and Scope 2 greenhouse gas emissions; 30% absolute reduction in total energy consumption; 35% absolute reduction in fresh water withdrawn; 10% reduction in waste-to-landfill intensity

Social Achievements

• Ratified a new four-year contract with United Steelworkers Local 1123, offering wage increases, competitive benefits, and a focus on employee well-being and safe operations; maintained a voluntary turnover rate of approximately 9% in 2021 (aiming for 8% or less)

Governance Achievements

• Regularly review and update board committee charters, director selection criteria, board composition criteria, and various policies and procedures to ensure effective governance; adopted a code of conduct covering antitrust, corruption, conflicts of interest, and other ethical matters

Climate Goals & Targets

Environmental Challenges

• Competition in the steel industry, potential global overcapacity, high levels of steel imports into the U.S., weakness in global economic conditions, dependence on key customers, changes in customer demands, volatility in raw material costs and availability, unexpected equipment failures, technological change, product liability claims, extensive environmental regulations, capital intensity, volatile energy costs, work stoppages, geographic concentration of facilities, significant pension and retiree healthcare costs, potential restructuring and impairment charges, limitations on using tax carryforwards, risks associated with debt, fluctuations in common share price, and the impact of the COVID-19 pandemic

Mitigation Strategies

• Use of supplier pricing agreements and raw material surcharge mechanisms to manage commodity risks; cost reduction actions; collaborative efforts with employees, suppliers, and customers during transitions; rigorous safety policies and practices; competitive compensation programs; focus on employee engagement and retention; pandemic response team; steps to reduce greenhouse gas emissions; monitoring of tax laws and regulations; Amended Credit Agreement; share repurchase program; monitoring of COVID-19 impact

Supply Chain Management

Responsible Procurement

• Established a scrap return supply chain with many customers; Supplier Code of Conduct

Climate-Related Risks & Opportunities

Transition Risks

• Future climate change and greenhouse gas regulations

Reporting Standards

Frameworks Used: SASB

Certifications: ISO 14001

Environmental Metrics

ESG Focus Areas

• Climate action
• Waste & recycling
• Water conservation
• Product stewardship
• Health & safety
• Employee engagement
• Diversity, equity & inclusion
• Community engagement
• Corporate governance
• Business ethics & compliance
• Supply chain management
• Cybersecurity & data privacy

Environmental Achievements

• Scope 1 and 2 GHG emissions intensity decreased from 0.94 in 2020 to 0.81 in 2021
• Energy intensity decreased from 8.58 in 2020 to 7.56 in 2021

Social Achievements

• 45% of Board members identify as diverse in terms of gender, race or ethnicity
• 47% of leaders identify as diverse
• Long-standing member of the Ohio Diversity Council
• Internal DE&I advisory council driving initiatives
• Approximately 14% of workforce has served in the U.S. military

Governance Achievements

• Sustainability strategy overseen by Board of Directors, supported by leadership, ESG steering committee and core departmental working groups
• First sustainability report published in April 2022

Climate Goals & Targets

Environmental Challenges

• Concerns over recessionary environment
• Supply chain disruptions and labor issues
• Inflationary pressure on manufacturing input costs

Mitigation Strategies

• Mitigating actions are planned to manage potential headwinds

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• severe weather caused by climate changes

Transition Risks

• legislative and regulatory initiatives addressing global climate change or other environmental concerns

Reporting Standards

Frameworks Used: SASB

Environmental Metrics

ESG Focus Areas

• Climate action
• Waste and recycling
• Water conservation
• Product stewardship
• Health and safety
• Employee engagement
• Diversity, equity and inclusion
• Community engagement
• Corporate governance
• Business ethics and compliance
• Supply chain management
• Cybersecurity and data privacy

Environmental Achievements

• 40% absolute reduction in combined Scope 1 and Scope 2 GHG emissions (2018-2022, compared with a 2018 baseline)
• 30% absolute reduction in total energy consumption (2018-2022, compared with a 2018 baseline)
• 35% absolute reduction in fresh water withdrawn (2018-2022, compared with a 2018 baseline)
• 10% reduction in waste-to-landfill intensity (2018-2022, compared with a 2018 baseline)

Social Achievements

• 45% of Board members identify as diverse in terms of gender, race or ethnicity
• 47% of leaders identify as diverse
• Long-standing member of the Ohio Diversity Council
• Internal Belonging and Inclusion Advisory council driving initiatives
• Approximately 13% of workforce has served in the U.S. military

Governance Achievements

• Increased transparency with Global Reporting Initiative (GRI) reporting
• Enhanced safety training and commitment to improving safety culture
• Incentive compensation structure linked to safety performance

Climate Goals & Targets

Environmental Challenges

• Complexity of commodity supply chains
• Evolution of and adoption of new technology, including traceability practices, tools and processes
• Changes in laws, regulations, prevailing standards or public policy
• Alignment of the scientific community on measurement and reporting approaches
• Climate-related risks, including environmental and severe weather caused by climate changes, and legislative and regulatory initiatives addressing global climate change or other environmental concerns

Mitigation Strategies

• Targeted capital allocation for continuous improvement
• Embedded focus on sustainability across the company
• Invest in reducing greenhouse gas emissions and intensity, and achieve published 2030 environmental goals
• Continuously improve safety processes to maintain industry leading performance

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• severe weather

Transition Risks

• regulatory changes
• market shifts

Reporting Standards

Frameworks Used: GRI