Alfen

Oversight of sustainability performance and strategy rests with the Supervisory Board, which considers sustainability impacts, risks and opportunities in major transactions and risk management. The Supervisory Board operates specific committees, two of which carry sustainability responsibilities: the Audit Committee, which meets more regularly and is updated on sustainability progress, and the HR Committee, which sets the sustainability-related short and long-term incentives for the Executive Committee. The Executive Committee shapes the sustainability strategy, integrates it with company strategy and monitors progress, with the CEO as lead responsible. Responsibility for the Alfen Sustainability Program is shared among Executive Committee members and linked to their portfolios. The Executive Committee is supported by a Sustainability department that reports to the CEO and leads the program, working with a multi-disciplinary group of leaders and subject matter experts from Strategy, R&D, Procurement, Operations, Marketing, HR and Finance. During 2024 both bodies received CSRD and sustainability training from an external specialist. Alfen currently has no direct representation for employees or other workers in its management and supervisory bodies.

The Executive Committee is informed on sustainability matters on a monthly basis, while the Supervisory Board is updated at least twice a year. Information reaches the Executive Committee through monthly updates from the supporting Sustainability department, which tracks progress on individual sustainability metrics, targets and strategy execution using both qualitative and quantitative indicators. Key decisions to progress Sustainability Initiatives are made with the Executive Committee during monthly meetings. Alfen has processes to inform both the Executive Committee and Supervisory Board of the views and interests of affected stakeholders, as many interactions take place across the wider organisation. During 2024 the Supervisory Board received a walkthrough of the entire double materiality assessment process, then reviewed and endorsed its outcome. The Audit Committee, which meets more regularly, is updated on sustainability progress, and validated the materiality outcome. Going forward the Supervisory Board will review targets and performance related to impacts, risks and opportunities on an annual basis. The Executive Committee reviews the double materiality assessment outcome and associated impacts, risks and opportunities annually.

Alfen has had short and long-term sustainability-related performance incentives for its Executive Committee members since 2020, as it regards this as core to the business. The HR Committee of the Supervisory Board determines these incentives. For 2024 the sustainability-related short-term incentives were based on CO2 footprint reduction as a share of average FTE, reflecting environmental performance over the year, and on the evaluation of CSRD implementation, covering milestones such as governance structure, data collection, KPIs, action plans and the auditors' opinion. The sustainability-related long-term incentives were based on CO2 footprint reduction relative to average FTEs measured over a three year period, and on an evaluation of health and safety matters over a three year period using qualitative criteria complemented by quantitative indicators. Both the short-term and the long-term sustainability incentives are equal for all Executive Committee members and each make up 23.34% of the total short-term incentives per individual. Climate-related considerations are currently not factored into Supervisory Board remuneration. For 2025 the HR Committee will consider performance benchmarks aligned with ESRS metrics, targets and definitions.

Alfen describes its sustainability due diligence as an ongoing process to identify, prevent, mitigate and account for how it addresses actual and potential positive and negative impacts on the environment and on people connected with its business, together with the risks and opportunities that arise from sustainability matters. These efforts encompass the entire value chain and inform the assessment of material impacts, risks and opportunities, which may in turn trigger changes to the business model and strategy. Where changes are considered, Alfen prioritises based on severity, scope and likelihood of the impact. Rather than presenting a single mapping table, the statement directs readers to the sections where the core due diligence elements are described, including stakeholder engagement, the materiality assessment process, the overview of material topics, the section on board and management roles and responsibilities for sustainability, the stakeholder dialogue, and workers in the value chain. For information on actions taken to address negative impacts, the statement points to the strategy, governance and action plan paragraphs of each material topic.

Alfen recognises that its sustainability reporting is exposed to the risk of material misstatement from human error, incomplete data or fraud, and has implemented internal processes so that relevant information is captured and accurately represented. Sustainability information is collected from various departments, mainly Finance, Sustainability and HR, and internal control processes are in place and executed by the Finance department. In 2024 Alfen performed its first double materiality assessment under the ESRS and chose to integrate the identified risks into its general risk management process described elsewhere in the annual report. To ensure consistency, sustainability data is aligned with financial reporting where appropriate: environmental data derives from the same source as financial reporting, and most social data comes from the payroll systems used in the financial statements. Data collection currently combines data management platforms, such as the Alfen data management system and Smart Trackers, with manual processes such as meter readings, and Alfen plans to investigate a platform to further automate collection. A multidisciplinary team led by the Strategy director, drawing on Finance, HR and Strategy, was set up to ensure compliance in this first year of limited assurance.

Alfen operates at the heart of the energy transition through three business lines: Smart Grid Solutions, which develops and assembles transformer substations for distribution grid operators and private networks; EV Charging Equipment, which produces smart connected chargers for homes, retail, workplaces and public locations across Europe; and Energy Storage Systems, which delivers stationary and mobile battery storage for applications such as load balancing, peak shaving, grid frequency control and energy trading. Alfen is a pure B2B player whose main customers include utilities, charge point operators, system integrators, retailers, wholesalers, independent power producers and flexibility service providers. The company is headquartered in Almere, the Netherlands, where it occupies eight buildings with production facilities, with further production in Belgium and Finland and sales offices in Germany and France. Alfen has a workforce of 1,043 FTEs and a presence in 13 countries, serving the rest of Europe through partners and resellers, with most sales in its core markets of the Netherlands, Belgium, Finland and Sweden. Its activities are allocated to ESRS sector C27, manufacturing of electrical equipment, and there were no significant changes to the product portfolio during 2024.

In 2023 Alfen adopted its stakeholder dialogue policy and has since reported on stakeholder engagements in its annual report. As part of the policy it mapped its key stakeholders as employees, customers, investors, suppliers, local communities and society, selecting them on the basis of who has the greatest influence on Alfen's activities and who is most affected. The statement explains why each group matters: employees provide the knowledge and performance that underpin value creation; satisfied customers form the basis for long-term sustainable growth; investors are the owners of the company and increasingly view sustainability as an investment factor; suppliers provide the raw materials and components on which solutions depend; and local communities and society sustain connections with innovation partners, schools and employee satisfaction. Alfen also scanned ESG rating agencies for its own performance and as a proxy for investor priorities. During 2024 it held direct engagements with investors and employees, and as part of the double materiality assessment it consulted select key stakeholder groups, including the Works Council, on sustainability-related impacts, risks and opportunities. For future engagement it aims to increase involvement of customers, suppliers, local communities and broader society.

Alfen describes sustainability as inextricably linked to its operations, since all three business lines contribute to society's electrification by replacing higher-impact alternatives. It cites proof points including EU taxonomy revenue alignment of 99.5% and decarbonisation targets aligned with the Paris Agreement and validated by the Science Based Targets initiative. Because the business model operates on the basis of the energy transition, Alfen considers it has a built-in resilience and capacity to address its material impacts, risks and opportunities. All material topics are assessed as applicable in the short term, so the statement draws no distinction between current and anticipated effects of these topics on the business model, value chain, strategy and decision-making. Alfen estimates there is no significant risk of a material adjustment within the next annual reporting period to the carrying amounts of assets and liabilities in the related financial statements arising from the current financial effects of its material topics' risks and opportunities. During 2024 no material changes were made to the business strategy, with the outcome of restructuring and strategy validation efforts expected to materialise in 2025. Alfen applies the phase-in provision for disclosing anticipated financial effects under ESRS 2 SBM-3 paragraph 48(e).

Alfen carried out a double materiality assessment in 2023 and 2024, following ESRS principles, to identify material impacts, risks and opportunities across environmental, social and governance matters from two perspectives: impact materiality, covering effects on people and the environment, and financial materiality, covering effects on financial performance, with the entire value chain considered. The process ran through six steps. It began with understanding the context via desk research across all ESRS topics to sub-sub-topic level, so that no entity-specific topics were added and no sector-specific disclosures exist for Alfen's sector. A cross-functional team then identified actual and potential impacts, risks and opportunities through workshops and interviews with internal experts from Sustainability, Finance, HR, Strategy, Procurement and Legal, before incorporating stakeholder perspectives. Impacts were scored on scale, scope, irremediability and likelihood, applying a threshold of 7 out of 12 for negative and 5 out of 8 for positive impacts, while financial materiality used a five point revenue-based scale multiplied by likelihood with a threshold of 3 out of 5. Material IROs were then determined, integrated into strategy and reporting, and will be reviewed annually. An external specialist supported the methodology, and outcomes were validated by top management and the Audit Committee.

The double materiality assessment determined which ESRS disclosure requirements apply to Alfen's sustainability statement. Alfen identified four material topics: E1 Climate change, S1 Own workforce, S2 Workers in the value chain, and G1 Business conduct. The statement provides a reference table mapping disclosure requirements and data points to the sections where they are addressed, and uses incorporation by reference to avoid duplication, notably for ESRS 2 corporate governance disclosures on the composition, competencies and skills of the Executive Committee and Supervisory Board, and for parts of risk management. Alfen applies several phase-in provisions under Appendix C of ESRS 1. For all entities it uses the phase-in for anticipated financial effects on its financial position under ESRS 2 SBM-3 paragraph 48(e), and for anticipated financial effects from material physical and transition risks and climate-related opportunities under ESRS E1-9. For its Alfen Elkamo entity it applies the phase-in for two S1-13 data points, the percentage of employees that participated in a performance review and the average number of training hours per employee, which were recorded only in HQ administration during 2024.

Alfen's transition plan, approved by its Executive Committee, explains how planned decarbonisation levers will be used to ensure its SBTi targets are met. The plan is implemented by the Sustainability department alongside a multi-disciplinary group depending on the specific lever, and it takes the whole value chain and all geographies into account. It is built around a climate scenario compatible with limiting global warming to 1.5 degrees Celsius and achieving net zero by 2050, in line with the Paris Agreement. Alfen sets out five decarbonisation levers, ranked from highest to lowest impact: improving energy efficiency in the product use phase, decarbonising purchased components and goods, reducing its own fossil fuel energy consumption, reducing packaging and waste, and improving logistics and decarbonising transport. Alfen states it will further quantify these levers in 2025. For its 2025 budget, approximately 0.7 million euro of CAPEX has been planned for the transition plan, with key items including a battery energy storage system for a production site, heater replacements and increased factory insulation. Alfen has validated SBTi mid- and long-term targets and participates in the UN Global Compact programme.

Alfen manages its material climate change mitigation and adaptation impacts, risks and opportunities through a continuous improvement approach to reducing energy consumption and greenhouse gas emissions, an ambition stated in its Environmental Management Policy Statement. The Sustainability department is responsible for implementing this policy, which covers all of Alfen's value chain emissions and is publicly available online. The statement forms part of the Alfen Integrated Management System (AIM), which includes processes meeting the requirements of two adopted environmental management standards: ISO 14001:2015 with annex 2 CO2 reduction management for environmental management, and ISO 50001:2018 for energy management. Both standards apply to all Alfen entities except Alfen Elkamo, which has its own management system and certification. The embedded policies address climate change mitigation, energy efficiency and renewable energy deployment. Alfen states it uses 100 percent renewable electricity contracts and is taking initiatives at existing locations to replace gas heating with electric heating. Alfen also participates in the UN Global Compact and MVO Netherlands to demonstrate its commitment to a sustainable future.

To date, measures embedded in the AIM system to reduce emissions include improving building energy efficiency, increasing the use of self-generated renewable energy through a 6,000 plus solar panel installation and 150 plus BEV charge points across all sites, electrifying building climate systems, investing in a new BREEAM certified headquarters, and electrifying the company fleet and equipment. Alfen's new headquarters has incorporated more than 3 MWp of solar panels to reduce demand from the grid. In its 2025 budget, Alfen has planned approximately 0.7 million euro of CAPEX for the transition plan, with key items being a battery energy storage system for a production site, heater replacements and increased insulation in one factory. It has also budgeted approximately 1.3 million euro of OPEX excluding labour costs, which includes its company EVs. In 2025 Alfen will further detail the allocation of financial resources to the transition plan. It states that all identified current and future financial resources allocated to this action plan are not contingent on any specific preconditions. The five decarbonisation levers detailed in the transition plan serve as Alfen's climate change mitigation and adaptation actions.

Alfen has set GHG emissions reduction targets that have been approved by the SBTi as being in line with a 1.5 degree Celsius trajectory. Its near-term targets commit, by 2030, to reduce absolute scope 1 and 2 GHG emissions by 48.4 percent from a 2019 base year, to reduce scope 3 GHG emissions by 51.6 percent per euro of value added from a 2021 base year, and to source all electricity consumption from renewables through to 2030. Its long-term targets commit, by 2050, to reduce absolute scope 1 and 2 GHG emissions by 90 percent from a 2019 base year and to reduce scope 3 GHG emissions by 97 percent per euro of value added from a 2021 base year. The 2019 base year was selected for scope 1 and 2 because it was the first year the Finnish entity Elkamo was included, while 2021 was chosen as the scope 3 base year due to the impact of the COVID-19 pandemic. Alfen will restate historical emissions in accordance with SBTi if data quality enhancements or methodological changes cause a deviation exceeding 5 percent. Removals and carbon credits are not under consideration.

In 2024 Alfen directly consumed 8,384 MWh of energy, up from 7,031 MWh in 2023. Of this, total fossil energy consumption was 3,981 MWh and total renewable energy consumption was 4,403 MWh, giving a fossil share of 47 percent and a renewable share of 53 percent, the same proportions as in 2023. There was no consumption from nuclear sources. Fossil consumption comprised 2,137 MWh from crude oil and petroleum products, 1,265 MWh from natural gas, and 580 MWh of purchased electricity, heat, steam and cooling from fossil sources. Renewable consumption comprised 551 MWh of fuel from renewable sources including biomass, 3,183 MWh of purchased electricity, heat and cooling from renewable sources, and 669 MWh of self-generated non-fuel renewable energy. Alfen also produced 797 MWh of renewable energy through its solar panels in 2024, more than double the 386 MWh produced in 2023. On a net revenue basis, Alfen consumed 17.2 MWh per million euro of net revenue, based on net revenue of 487.6 million euro. All new lease car agreements are with BEVs, and Alfen expects total energy consumption to continue increasing as it grows.

Alfen measured its GHG footprint in accordance with the Greenhouse Gas Protocol. In 2024, gross scope 1 emissions were 714 tCO2eq, up from 875 in 2019. Scope 2 is reported on both bases: gross market-based emissions were 134 tCO2eq and gross location-based emissions were 830 tCO2eq in 2024. Relative to its 2019 baseline, Alfen reports an absolute reduction of 18 percent in scope 1 and 29 percent in scope 2 market-based emissions. Total scope 3 emissions were 341,128 tCO2eq in 2024, compared with 384,247 tCO2eq in the 2021 baseline year, reflecting Alfen's move to measuring its full scope 3 footprint with annual figures provided going forward. Category 11, use of sold products, is by far the largest at 277,268 tCO2eq, and around 81 percent of scope 3 arises from efficiency losses during product use. Other categories reported include purchased goods and services, capital goods, fuel and energy related activities, upstream transport, production waste, business travel, employee commuting, upstream leased assets, downstream transport and end-of-life treatment. Categories 10, 13, 14 and 15 are not in scope. Less than 1 percent of scope 3 emissions derive fully from primary data. Total emissions were 341,976 tCO2eq market-based and 342,672 tCO2eq location-based.

Alfen anchors its workforce policies in the UN Guiding Principles for Business and Human Rights and the OECD Guidelines for Multinational Enterprises, whose six due diligence steps form its basis. The Code of Conduct and Supplier Code of Conduct set expectations for safe, respectful and equitable working conditions, while the Diversity and Inclusion Policy covers both employees and non-employees. Health and safety is governed by an incident management policy embedded in the Alfen Integrated Management System, and a training policy supports mandatory and elective learning. Alfen states it does not have specific policies capturing adequate wages above CLA minimums, social dialogue, or equal pay, noting these are instead reflected in general practice, transparent remuneration and collective bargaining arrangements. All internal policies are made available on the intranet accessible to the workforce, and where appropriate policies are published on the website to inform external stakeholders.

Alfen engages its workforce through several channels. A Works Council of 10 members represents employees of Alfen N.V., Alfen BV and Alfen ICU BV and temporary personnel in the Netherlands, acting under the Dutch Works Council Act, and in the Netherlands at least four meetings are held annually with employee representatives to share information and, in certain cases, obtain approval or advice, including on the interests of vulnerable or marginalised groups. In Finland engagement occurs through a union representative who is part of the workforce. Management holds town hall meetings, with business line specific town halls introduced quarterly and Q&A opportunities, and Alfen Elkamo employees join monthly town halls. Engagement surveys run at least once every two years and include questions on unwanted behaviour, supported by exit surveys. The CHRO holds operational responsibility for employee engagement, assisted by an internal communications manager. The Works Council validated material topics in the double materiality process.

Alfen provides grievance mechanisms for its workforce, including non-employees, to report concerns or abuse. Employees are encouraged to contact a confidential counsellor or the whistleblower counsellor, and guidance is available to report abuse via an external hotline. Reporting procedures are set out in the Reporting policy and the Personnel Manual. An initial conversation with the counsellor takes place in a non-judgmental way without requiring a formal complaint, after which the counsellor provides advice, guidance and support and can assist in filing a formal complaint. All incidents are logged, followed up and reported. In more severe instances an investigation may be initiated by the CEO, CHRO or Supervisory Board, with an independent research team appointed; smaller offences may result in a formal warning. During 2024 Alfen appointed a second confidential counsellor to give people a choice of who to turn to, created a dedicated intranet page for the confidential and whistleblower counsellors, and set up an anonymous channel for employees to submit questions.

In 2024 Alfen implemented an organisational right-sizing effort communicated in October that reduces the workforce by around 15 percent, with impacted employees notified in November and most implications becoming visible in 2025. In November Alfen reached agreement with union parties FNV, de Unie and CNV on a Social Plan for impacted employees holding Dutch contracts. Alfen increased its social dialogue efforts during the year, supported by an internal communications manager, dedicated restructuring communications, town halls with the CEO, CHRO and Executive Committee, and Q&A sessions. On health and safety it operates the Alfen Integrated Management System certified to ISO 45001:2018, using the PDCA cycle, risk assessments and the RI&E process. Diversity actions include refined recruitment for gender neutrality, a requirement from 2025 for agencies to present at least two female candidates for selected roles, and unconscious bias training. From 2025 HR leadership will annually review social metrics and formulate actions, presented to the board with Works Council engagement. Alfen states it currently has no action plans requiring significant financial resources.

Alfen sets several workforce targets. For diversity, its 2025 target is to increase the share of women in the organisation by 1 percentage point from 17.7 percent to 18.7 percent, and to raise the share of women in top management (the sub-top) from 19 percent to 20 percent, while aiming to maintain the Supervisory Board 50/50 split and the Executive Committee ratio reached at the end of 2024. For health and safety, the 2025 targets are a Lost Time Injury Frequency Rate of 1.50 and a Total Recordable Incident Rate of 5.00. For training and performance, Alfen aims to increase performance cycle participation to 88 percent, onboard 100 percent of new Netherlands employees through its standardised program, and increase average training hours from 29 to 31 per employee. Alfen states it does not have specific targets for social dialogue, the gender pay gap or the internal pay ratio, and will investigate social dialogue measurements in 2025.

At year-end 2024 Alfen had 1,083 employees, a 12 percent increase in headcount from 964 in 2023, of which 79 percent held a permanent contract, up from 76 percent, primarily because temporary contracts were not renewed at the start of the restructuring. Employees are defined as all colleagues with an employment relationship with Alfen, excluding people hired via third parties. By country, 945 employees (87 percent) worked in the Netherlands and 138 (13 percent) elsewhere. By gender, 192 were female (18 percent) and 891 male (82 percent), with none reported as other or not reported. By contract type, 854 held permanent contracts (79 percent) and 229 temporary contracts (21 percent). In 2024, 165 people left Alfen, down from 178 in 2023, including both voluntary and involuntary leavers, equivalent to a turnover rate of 15.3 percent compared with 18.4 percent, calculated as leavers divided by year-end headcount. Non-guaranteed hours contracts are generally used only for students. Alfen expects headcount reductions and elevated turnover in 2025.

Alfen hires two types of non-employees: self-employed contractors and temporary labour contracted via third party engagement, typically for short term work. In 2024 it engaged a total of 149 non-employees, of which around 90 percent were temporary labour hired through contracting agencies. The increase was roughly in line with the employee increase and mainly attributable to more direct labour in the Smart Grid Solutions business line. Measured by average FTE across each month at a 40 hour work week, temporary labour totalled 133 (116 direct and 17 indirect) and self-employed totalled 16 (all indirect), giving a total of 149, compared with 116 in 2023. Self-employed non-employees are generally taken on for short term assignments requiring specific knowledge, while temporary labour is mainly used for assembly roles in production that require rapid workforce adjustments. Alfen limits its scope for temporary labour to those whose manager is within the Alfen organisation and treats this flexible group as a talent pool for future hires.

In 2024, 95 percent of Alfen's employees were covered by a collective bargaining agreement, up from 94 percent in 2023, calculated as the number of employees covered divided by total employees and corresponding to all employees working in the Netherlands or Finland. In the Netherlands the Metalektro CLA applies, comprising a standard CLA and a CLA for senior staff, and for Alfen Elkamo Oy Ab the Technology Industry Union in Finland applies. Employees outside these countries are not covered only where no applicable bargaining agreement exists, and Alfen states it operates only in countries with strong labour law and robust social systems. In June 2024 the employers' organisation and trade unions reached agreement on the 2024/2025 Metalektro CLA, whose core is a 9 percent salary increase implemented in three steps. For employees not covered by the CLA, an annual inflation correction is made if warranted. Separately, 87 percent of the workforce is covered by the Works Council, unchanged from 2023, linked to the proportion working in the Netherlands.

Alfen reports gender distribution across the workforce and its governance bodies. Of 1,083 employees, 192 (18 percent) were female and 891 (82 percent) male, consistent with 2023. Alfen notes it operates in the male-dominated Metalektro sector, where the average share of female employees is 16 percent, and employs 54 nationalities. In top management (the sub-top, defined per the ESRS and comprising 58 employees, up from 47), 19 percent were female. The Executive Committee, expanded to 5 roles with the addition of the CHRO and COO, was 40 percent female, an improvement on the prior year when one of three members was female. The Supervisory Board had a 50/50 gender split of 2 women and 2 men, meeting the diversity quota of at least one-third of each gender. Alfen describes diversity initiatives spanning recruitment, retention, promotion of women to management, unconscious bias training and the Alfen Academy, which supports candidates from a wide range of backgrounds.

Alfen states that all of its employees are paid above the minimum wage in their respective countries. In countries where it operates that have no statutory minimum wage, such as Finland, it uses the Netherlands minimum wage as a benchmark, a calculation it describes as in line with EU Directive 2022/2041. Alfen goes beyond CLA thresholds, so that the lowest grade of its salary scales lies significantly above the lowest scale in the applicable CLAs. For CLA-eligible employees, adequate wages are guaranteed by the prescribed CLA increases, while for higher personnel a separate annual salary increase process is followed, with compensation benchmarked annually against sector peers and salary scales made transparent and available to all employees on the intranet. Alfen notes it does not have a specific policy capturing adequate wages above CLA minimum standards but that this is captured in general practice, framing adequate wages as important for attracting and retaining scarce technical talent and for employee loyalty, productivity and well-being.

Training and skills development are delivered through the Alfen Academy, the ADAPT platform, and a training policy covering functional mandatory, elective, personal development and organisation-wide training. In 2024 the average training hours came in at 29 hours per employee, with a total of 29,064 hours, split as 5,045 hours and 27.7 hours per employee for women and 24,019 hours and 29.4 hours per employee for men, with no material difference observed between genders. Because 2024 was the first full year tracking training hours, Alfen states it cannot present meaningful comparative data. On performance reviews, 85 percent of all employees participated in the performance cycle according to the ESRS definition, meaning at least one performance conversation, with women and men both at 85 percent and no difference between the proportions reviewed. Both the training hours and performance review figures reported at group level exclude Alfen Elkamo Oy Ab employees under a phase-in provision. Alfen also cites 22 Alfen Academy students receiving diplomas in 2024.

Alfen manages health and safety through the Alfen Integrated Management System, certified to ISO 45001:2018, covering all employees, non-employees and everyone present on any Alfen site, supported by the PDCA cycle, the RI&E risk process and monthly reporting to the Executive Committee. The reported metrics cover both employees and non-employees. The Lost Time Injury Frequency Rate was 1.68 in 2024, improving from a restated 2.33 in 2023, against a 2025 target of 1.50. The Total Recordable Incident Rate was 6.28, up from a restated 5.12, against a target of 5.00. The number of days lost fell to 10 from 78, while recordable work-related incidents were 12 compared with 11. There were no fatalities in either year, giving a fatality rate of zero. The 2023 figures were restated due to a calculation error in the Annual Report 2023. All workplace accidents and near misses are documented, investigated and shared across the organisation to prevent recurrence.

Alfen reports a gender pay gap of 8.0 percent for 2024, an improvement from 11.2 percent in 2023, with no significant differences observed between countries. It is calculated by comparing the average hourly earnings of male and female employees, expressed as a percentage of the average male hourly pay, with calculations including cash benefits comprising base salary and cash allowances, bonuses, commissions, cash profit-sharing, other variable cash payments and long-term variable equity incentives. Alfen distinguishes this from pay equality at job level, where its own analysis shows no significant gap for employees performing comparable jobs, and states it does not have a target for the gender pay gap because it does not reflect its ambition. The total remuneration ratio, dividing the compensation of the highest paid individual, currently the CEO, by the median employee compensation, was 9.5x in 2024, down from 11.75x in 2023, a decrease attributed to below-target LTI 2022 compensation and zero STI 2024 payout. Alfen has no specific target for the internal pay ratio.

In 2024, 36 consultations were reviewed through Alfen's grievance mechanisms, significantly more than the previous year, which Alfen attributes to its efforts to promote the confidential counsellors. Of these, 6 consultations related to a form of discrimination, mainly harassment in the form of intimidation, unchanged from 6 in 2023, while 30 were other consultations, up from 12. None of the consultations led to formal complaints through internal or external channels, and no severe human rights incidents were reported. The total amount of fines, penalties and compensation for damages related to these incidents and complaints, and to severe human rights incidents, was nil. Alfen maintains a zero tolerance stance on discrimination and other undesirable behaviour, notes its low complaint figures may also indicate limited awareness of the channels, and states it will continue raising awareness in 2025. Consultations are counted as those following incidents through the confidential counsellors during the reporting period, and discrimination is defined to include harassment.

Alfen manages impacts on value chain workers through its Supplier Code of Conduct, which it treats as the single policy addressing forced labour, health and safety, and related topics together rather than separately. The Code is based on the Ruggie principles of the UN and on guidelines from the OECD and the ILO, and is publicly available on Alfen's website. It sets standards for ethical and fair business conduct and covers human rights, environmental practices, and fair business practices, including anti-discrimination, freedom of association and collective bargaining, labour conditions such as health and safety measures, and the use of child labour and modern slavery, including human trafficking and forced labour, in line with applicable ILO standards. The Code applies to all companies, individuals, and business partners that supply products or services to Alfen, and every entity that signs it is responsible for adherence. Enforcement is led by the Director of Purchasing. In 2024 Alfen did not find any severe human rights issues, incidents, or other negative material impacts for workers in its supply chain.

Alfen discloses that it has not yet adopted a general process to structurally engage with workers in the value chain about impacts. It also does not yet have channels for value chain workers to raise concerns, nor does it incorporate the perspectives of value chain workers into the activities aimed at managing actual or potential impacts on them or into its broader business model. Alfen states that its current Supplier Code of Conduct has been developed to reflect the interests of value chain workers, being aligned with the United Nations' Universal Declaration of Human Rights, guidelines from the OECD, and the working conditions formulated by the ILO. The company acknowledges that in 2025 it will review the feasibility and benefit of establishing such engagement processes and related targets, and notes that its future approach will be shaped by the Corporate Sustainability Due Diligence Directive.

Alfen states that it has not yet adopted a process to set up channels specifically for value chain workers to raise concerns, and identifies this as an area where it still has scope to improve. In practice, the company assesses concerns raised by third parties, such as media reports, upon which its Purchasing department takes appropriate disciplinary measures if needed. Alfen's Whistleblower policy, published on its intranet and website, offers both employees and third parties the opportunity to report irregularities or suspicions regarding violations of the Code of Conduct, the law, safety policies, or the environment without jeopardising their legal position. Third parties can report in complete anonymity through a prescribed website. Alleged violations of anti-corruption and anti-bribery rules can also be reported through the Whistleblower process and are investigated by an independent team. Whistleblower cases are handled by an investigation team, and the number and status of reports are reported quarterly to the Executive Committee and Supervisory Board.

To mitigate the likelihood of value chain workers facing material impacts, Alfen evaluates its suppliers regularly and has enhanced its Supplier Risk and Audit Approach. It operates on a denied party screening basis, whereby each new, ongoing, or to be re-activated trade partner is screened step by step against credit level, possible sanctions, the CPI Index, and other factors. The company uses the screening tool GraydonCreditsafe, which provides automatic screening against global sanction lists and Politically Exposed Persons lists during credit checks, and states this way of working will be formalised into a formal procedure in early 2025. For critical suppliers, audits are executed by the Purchasing department, increasingly in collaboration with the Sustainability department, with reports created after each audit and maintained internally. Alfen proactively conducts audits and can take disciplinary measures, including commercial leverage such as terminating a supplier relationship if no appropriate action is taken, though no supplier relationships have been terminated for this reason so far. Going forward, it will look at how to systematically identify, address, and track outcomes.

Alfen discloses that it currently does not have targets related to managing the identified negative impacts and risks affecting value chain workers, nor targets to track the performance of its suppliers on these topics. The company states that in 2025 it will review the feasibility and benefit of setting such targets. In connection with taking action on these impacts, Alfen also notes that it still has scope to improve in building a structured process to manage and act on material impacts on value chain workers, and that going forward it will look at how to systematically identify, address, and track the outcome of initiatives designed to address these impacts and risks. Its future approach will be shaped by the Corporate Sustainability Due Diligence Directive, which is expected to come into force in a few years.

Alfen has a Code of Conduct that applies to all employees and reflects the corporate culture the Executive Committee wants to embed in daily routines. Its core values relate to professional conduct, flexibility, reliability, integrity, and safety, and it covers topics such as acting with integrity, gifts, anti-bribery, corporate social responsibility, and health and safety. The Code is available on Alfen's intranet and website and its adherence is integrated into employees' labour agreements. Awareness is enhanced through e-learnings and physical courses for at risk functions. During FY2024, Alfen made the Code of Conduct e-learning, which also covers corruption, bribery, and insider trading, mandatory on an annual basis for all employees with an Alfen e-mail address, including the Executive Committee and Supervisory Board. The target group was 970 employees, with a compliance rate of 77 percent, while for at risk functions the target group of 8 employees reached 100 percent. The Code provides a complaint procedure and whistleblower policy. No violations with the Code of Conduct were reported in 2024, consistent with 2023.

Alfen identifies a potential risk of bribery and corruption because it operates a multinational supply chain and conducts business with countries higher on the Corruption Perceptions Index. To mitigate this, it has robust, zero-tolerance anti-corruption measures, with corruption and bribery policies incorporated into both the Code of Conduct and the Supplier Code of Conduct. Because most operations occur within European countries that are low on the CPI index, only departments directly operating in the multinational supply chain, namely Strategic Purchasing, are designated as at risk functions. During FY2024 the corruption and bribery e-learning, part of the Code of Conduct e-learning, was made mandatory for everyone with an Alfen e-mail address, including the Executive Committee and Supervisory Board. From a prevention perspective, Alfen does not intend to conduct business with governments, municipalities, or customers in high CPI countries linked to corruption and bribery, embedded via its Know Your Customer procedure. Detective measures related to corruption and bribery form an integral part of its annual fraud risk assessment. Alleged violations can be reported through the Whistleblower process and are investigated by an independent team.

Alfen reports that no violations or irregularities with its corruption and bribery policies were reported in financial year 2024, consistent with 2023 when no violations or irregularities were reported. Similarly, no convictions for violation of anti-corruption and anti-bribery laws were reported in 2024, and none in 2023. In the governance introduction, Alfen states that regarding its governance policies for corruption or bribery it did not find any incidents in 2024, and notes that these figures have not been validated by an external party other than its assurance provider. A preview section on the EU Taxonomy minimum social safeguards similarly states that in financial year 2024 no violations regarding corruption and bribery were raised, nor did the company have any court cases in this respect.