GN has set Board-approved science-based GHG emission reduction targets to manage our climate-related impact and risks by decarbonizing in line with the scientific consensus on the urgency of addressing climate change and the degradation of nature. We are committed to reduce absolute GHG emissions (metric tons CO2eq) in Scope 1 and 2 by 80% and in Scope 3 by 25% by 2030 from a 2021 baseline. GN is also committed to reaching net-zero GHG emissions by 2050 at the latest, meaning 90% reduction with neutralization of unabated emissions to reach net zero. These targets cover all GHGs stipulated in the GHG Protocol and all activities in GN’s own operations and value chain globally. Our near-term targets have been set using the Science Based Targets initiative’s (SBTi) Criteria v5.0 with the absolute contraction approach and the cross-sector pathway, which is based on the P1 scenario in the IPCC Special Report on Global Warming of 1.5°C. It has been assumed that GN’s core business activities will not change by 2030. We have aligned our net-zero target to the SBTi’s cross-sector absolute reduction method for long-term targets.

As a globally operating manufacturing company that produces and transports millions of products a year, climate change is naturally a material topic for GN. Driven by our climate targets, we are committed to playing our part in reducing emissions in line with the scientific consensus on the required pace of decarbonization, while ensuring business continuity in a world in which the effects of climate change are increasingly impacting all industries and regions. To meet this commitment, we have a climate transition plan in place, consisting of an overarching policy, science-based targets, climate-related incentives for our CEO and CFO (see pages 67-69) and several decarbonization initiatives. The Board of Directors has approved the policy, targets, and incentives.

We have identified three IROs, all impacts, related to climate change, reflecting that we are a globally operating manufacturing company which inherently leads to carbon emissions because of the use of fossil fuels across our value chain (see page 52). We have identified one actual negative impact related to energy use for our own operations and value chain respectively, as well as two actual negative impacts related to climate mitigation, for own operations and value chain respectively because of the carbon emissions resulting from this.

Our Environmental Policy covers our approach to climate change. It includes our commitment to reduce our greenhouse gas (GHG) emissions in line with the scientific consensus on the urgency of addressing climate change and the degradation of nature, manifested in our science-based targets for 2030 and commitment to be net-zero no later than 2050.

For our Scope 1 and 2 emissions, where electricity consumption constitutes a major part of our footprint, we prioritize sourcing renewable energy through instruments that ensure local generation and newly or not yet commissioned projects (e.g., through a power purchase agreement). The policy also states that opportunities to improve energy efficiency, such as replacement of machinery and equipment, process optimization and heating, ventilation, and air conditioning (HVAC) system setting adjustment are identified, evaluated and implemented on an ongoing basis.

As the vast majority of our emissions are in our value chain (Scope 3), the policy also includes our expectations of suppliers, also captured in our Supplier Code of Conduct, to provide accurate carbon data to enable us to take a data-driven approach to our decarbonization strategy.

The policy also sets out significant decarbonization levers and the key criteria we employ in prioritizing decarbonization initiatives: impact and GN’s degree of influence. Finally, the policy states that we do not consider carbon offsetting as an alternative to carbon reduction, and that we will only engage in carbon removal that is independently certified, and that we will not claim any carbon avoidance claims related to our products as part of meeting our climate targets. This policy is approved by our Board of Directors, and our Executive Management is accountable for implementation.