18/02/2025 - OC Oerlikon Corporation AG Pfäffikon: Sustainability Report 2024

Continued to invest in sustainable products: ~81% of R&D expenditure.

Improved on operational environmental targets: +35 sites with energy management systems, i.e. a total of 123 sites, accounting for 74% of total operational sites.

Reduced total accident frequency rate by 43% to 0.50 vs. baseline (0.88), marking the achievement of our 2030 target six years ahead of schedule.

Increased percentage of women in high-potential programs to 26%. Continued strengthening diversity through programs, such as International Women's Day, Pride Month, Diversity Conference and Employee Resources Groups.

Improved employees' access to learning and data with digital tools: ULearn (e-Learning) and uDoc (employee documents).

Covered 50% of our mapped spending with key and strategic suppliers using EcoVadis. 70% of our suppliers improved their overall EcoVadis score in 2024.

A CONVERSATION WITH OERLIKON EXECUTIVE CHAIRMAN, MICHAEL SUESS, AND OERLIKON CHIEF SUSTAINABILITY OFFICER (CSO), GEORG STAUSBERG.

GRI 2-22

How would you describe Oerlikon's sustainability strategy?

Suess: For Oerlikon, our sustainability strategy is an inherent part of our business strategy. Our purpose has always been to empower customers with sustainable technologies. Technologies that can help them increase their efficiency and minimize their environmental footprint.

In parallel, we invest in our operational excellence to achieve the same goals - increase production efficiency, save energy and costs, reduce waste and emissions. Equally import- ant, we work at creating a strong employee culture, making health and safety a priority and upholding an unwaveringly commitment to integrity, compliance and governance.

Stausberg: In our 2024 report, we have covered our climate-related strategy, together with the climate-related governance, risk management and targets in line with the TCFD recommendations. We completed the assessment of our climate-related physical and transition risks and opportunities and conducted our climate scenario analy- sis. In the report, we have shared our key findings, including mitigation measures. Based on the IPCC1- defined worst-case climate scenario, the impacts of climate -risks are not considered to be material, and Oerlikon is well prepared to deal with the challenges.

Can you elaborate on your sustainable products?

Suess: Our DNA is strongly entrenched in innovation. Our technological innovations have always been focused on empowering our customers to increase their efficiency and improve their environmental footprint, be it in saving energy, reducing waste or lowering emissions.

We have often shared about how just two of our coating solutions - one for tools and the other for jet engines - lead to an avoidance of CO2 emissions that exceeds the total annual CO2 emissions in Switzerland. We have a lot more other examples, such as how our reconditioning solutions can provide 50% cost savings by extending the tools' lifespan or how our PVD coatings are more environmentally friendly and can generate up to 97% less waste compared to prevailing electroplating.

We are also proud to say that our Oerlikon Barmag's e-save program has resulted in over 15 million tons of CO2 saved over the past 20 years for fiber and yarn man- ufacturers.

Stausberg: To further strengthen our portfolio of sustainable products, we have committed to invest 100% of our R&D expenditure in sustainable products by 2030. In 2024, 81% of our R&D expenditure was spent on sustainable products.

Extending tool life, reducing automotive and aerospace fuel consumption and improving the efficiency of textile and coating machinery, as well as working toward increasing the recycling of fibers and materials remain the key benefits that we will offer to customers with our sustainable products. In addition, we are exploiting digital solutions, such as artificial intelligence (AI) applications to support us in our innovations.

Our investments are not limited to developing and enhancing our equipment, products and materials. We are also applying the same approach in our own operations. Our aim is to excel in our operations, reduce our environmental footprint and improve our diversity, equity and inclusion performance as we advance toward our 2030 targets.

What milestones did Oerlikon achieve in environmental sustainability in 2024?

Stausberg: We are making very good progress in the implementation of our energy management systems (EnMs).

In 2024, we added another 35 sites, bringing the total number of sites with EnMS to 123, or 74% of our operational sites. At this rate, we expect to meet our target of having 100% of our sites with EnMS in the next few years, ahead of our 2030 deadline.

We are pleased to report for the first time on our Scope 3 emissions. With an external partner, we have calculated the Scope 3 emissions generated along our value chain. The results confirm that the main contributor of our Scope 3 emissions is the Use of Sold Products by cus- tomers. This is consistent with a technology-leading engineering company that provides reliable, high-quality and long-lasting plant-size filament and non-filament machinery, hot runner solutions, as well as high-pefor- mance and durable metal-based surface coating equip- ment. Unfortunately, this also results in cumulative higher emissions over the years.

We have mapped out a climate transition plan and identified the measures that will help us in reducing our Scope1, 2 and 3 emissions.

In our 2023 report, we communicated that we planned to set and commit to a Science Based Targets initiative (SBTi) target in 2024. Following our announcement to take the final step in our pure-play strategy, we have adapted our plans and intend to commit and submit to SBTi latest after the separation.

Suess: We also want to highlight our achievement in our supply chain. To date, in partnership with EcoVadis, we already cover 50% of our mapped spending from key and strategic suppliers (up from 30% in 2023). Moreover, 70% of our suppliers improved their overall 2024 EcoVadis score.

Are there any implications of your announced separation on sustainability?

Suess: We are on track with the implementation of this final transformation step and achieved an important milestone. As of January, 2025, Manmade Fibers (Polymer Processing Solutions excluding HRSflow) operates as a stand alone subsidiary and will adopt the traditional Barmag name.

Georg Stausberg will remain on the Executive Committee and as the Chief Sustainability Officer,

reporting directly to me. HRSflow will be reported as part of Surface Solutions.

In terms of sustainability strategy and products, there will be no major changes as both businesses have been and will continue to lead their markets and deliver sustainable and innovative products to customers that help save energy, reduce waste and lower emissions.

Stausberg: Operationally, both businesses are equally committed to reduce their environmental footprint, improve diversity, equality and inclusion and secure a sustainable supply chain. There is one difference worth mentioning following the split - the Scope 3 emissions in Manmade Fibers is, by nature of its business, much more heavily linked to the Use of Sold Products. This will be an area that we will work on, engaging with customers to motivate them in further reducing their emissions.

What were Oerlikon's social achievements in 2024?

Suess: In 2024, we further strengthened our diversity actions and initiatives. We organized multiple diversity events - our 4th Diversity Conference on Navigating Parenthood, Pride Month, International Women's Day and Nationality Day, among others. Our five Employee Resource Groups (ERGs), actively advocated for their groups and raised awareness at the workplace.

Stausberg: In 2024, we also launched digital solutions for employees with ULearn and uDoc. ULearn allows employees to have access to online learning anywhere, anytime and anyplace. uDoc provides access to all employees, even those who work in production, to have a digital ID and have digital access to their documents.

Are there any further impacts from regulations on Oerlikon's sustainability reporting?

Stausberg: As we have been reporting in accordance with the internationally recognized GRI Standards and the SASB Standards, we are compliant with the Swiss law, Art. 964a et seqq. of the Swiss Code of Obligations (CO). In the 2024 report, we have added disclosures according to the TCFD recommendations, in compliance with the Swiss Federal Government's Ordinance on Climate Disclosures.

Forthcoming regulations, such as EU Corporate Sustainable Reporting Directive (CSRD) and EU Taxonomy, will require additional disclosures and we are working on them.

Suess: German ministers have written to the EU com­ missioners and called for significant reduction of CSRD ­requirements and for a postponement by two years of its application. We understand the need for transparency and accountability, but we also see that the slew of new sustainability laws and regulations are weighing heavily on companies to ensure compliance. We would welcome a more aligned approach and streamlined requirements to give companies sufficient time for preparation, while not losing their focus on operational business.

How is sustainability governed at Oerlikon?

Suess: Sustainability is governed at the highest level, that is at the Board level. ESG topics are regularly on the meeting agenda of the Board of Directors and the Executive Committee, reflecting our leadership and commitment to sustainability.

As mentioned before, Georg is a member of the Executive Committee and remains our Chief Sustainability Officer until the separation. He is responsible for executing the sustainability strategy and plan, supported by the Sustainability Management Team and various functions.

To further anchor sustainability across the company, we plan to add an environmental key performance indicator (KPI) to the health and safety KPI in management and employees' short-term incentive program. We will run a pilot in 2025 to gauge its feasibility.

How do you engage with stakeholders?

Suess: Our technology leadership is built on innovation and understanding what our customers and markets need. Maintaining our leadership role is only possible when we are constantly engaging with our customers and partners, also in designing and developing technologies and solutions.

As for our employees, we will continue to communicate with them through our internal channels, such as letters from me, townhalls, engagement surveys, diversity, equity and inclusion (DEI) events and via our intranet.

Stausberg: With regard to suppliers, we have ongoing engagement with them in our audits and EcoVadis assessments to ensure that they respect and adhere to our Code of Conduct, which also strengthens our partnership with them.

In 2024, we started performing our Double Materiality Assessment (DMA) in line with the European Union's CSRD. We have obtained initial results from the comprehensive interviews and workshops with internal and external stakeholders, including investors, customers, suppliers and employees. The final results of the DMA, including the disclosure on the material topics and any new/adjusted targets will be published in the Sustainability Report 2025.

Is there anything else you would like to share?

Suess: As a group, we have performed well given the challenging market environment for both businesses. We delivered a strong operational performance in both businesses, increased our offering for new markets, such as luxury and semiconductors for Surface Solutions, and have successfully repositioned the additive manufacturing business. In Polymer Processing Solutions, our early and decisive action has paid off. Moreover, we are improving our longer-term competitiveness as we begin to shift some of our production to China.

And, we remain committed to progressing on our ESG initiatives and targets, both within Oerlikon and across our value chain. We are a sustainable company by virtue of our technology leadership and market reach. We are also equally committed to improving sustainability in our operations. We will continue to do our part in helping to reduce the global carbon footprint and contributing to society in terms of sustainability.

Both: On behalf of the Board and the Executive Committee, as well as the entire Oerlikon team, we would like to thank all our stakeholders for their support and for the trust they have placed in Oerlikon, in our sustainable strategy and in our technologies. As always, we are grateful for their collaboration and ­support as we progress together on our sustainability journey.