Embla Medical

The role of the administrative, management and supervisory bodies

Organizational Structure

According to the Articles of Association, Embla Medical is managed by Shareholders' Meetings, the Board of Directors (the Board), and the Chief Executive Officer (CEO). Their roles and responsibilities are described below.

Shareholders' Meetings

The supreme authority in Embla Medical's affairs is in the hands of lawful Shareholders' Meetings, within the limits provided for in the Articles of Association and law.

Resolutions at Shareholders' Meetings generally require a simple majority. However, resolutions to amend the Articles of Association generally require two-thirds of the votes cast and capital represented.

At each Annual General Meeting the Shareholders:

• Confirm the Consolidated Financial Statements and decide on the distribution of the net profit
• Approve the Remuneration Policy
• Decide on the remuneration for the Board of Directors
• Elect the Board of Directors
• Elect an auditor

Other resolutions are made on an ad-hoc basis, such as:

• Amendments to the Articles of Association:
  • Capital reductions
  • Authorizations for the Board of Directors to increase the share capital
• Authorizations to the Board of Directors:
  • Purchase own shares
  • Initiate share buyback programs

Board of Directors

The Board of Directors is the supreme authority in Embla Medical's affairs between Shareholders' Meetings. The Board shall operate in accordance with the Articles of Association and the Board's Rules of Procedure.

The Board of Directors' work, role and responsibilities are further described in the Board's Rules of Procedure, which are reviewed annually by the Board and updated as necessary.

Composition

The Board of Directors is composed of six members, all elected by the Shareholders at the Annual General Meeting for a term of one year. The Board shall be represented by at least 40% of each gender. Currently, there are three men and three women on the Board. Half of the Board has served for several years, which ensures consistency and good insights into Embla Medical's business and markets. Three of the Board Members are considered independent in accordance with the Danish Recommendations on Corporate Governance.

The Chair and the Vice Chair of the Board of Directors are elected each year following the Annual General Meeting. The Chair's main responsibility is to ensure that the Board performs its duties in an orderly and efficient manner. In the absence of the Chair, the Vice Chair performs their duties. Niels Jacobsen has served as the Chair since 2006 and Svafa Grönfeldt as the Vice Chair since 2021.

Board Members:

Roles and Responsibilities

The Board has various roles and responsibilities:

• Establish goals for Embla Medical and formulate the policy and strategy to achieve those goals
• Hire a CEO to manage the daily operations, supervise activities and ensure that Embla Medical's organization and operations are in proper order
• Ensure adequate surveillance of the accounting and financial management
• Evaluate the capital structure
• Evaluate the performance of the Board and the CEO

Board of Directors' Annual Schedule

Quarter 1:

• January Meeting:
  • Full-year results
  • Corporate Governance Statement
  • Capital Structure and Capital Allocation Policy
  • Agenda for the Annual General Meeting
• Annual General Meeting
• March Meeting:
  • Election of Chair and Vice Chair
  • Appointment of the Audit Committee
  • Review of Internal Rules

Quarter 2:

• April Meeting:
  • Quarterly results

Quarter 3:

• July Meeting:
  • Half-year results
• September Meeting:
  • Strategy

Quarter 4:

• October Meeting:
  • Quarterly results
• December Meeting:
  • Strategy and forecast
  • Performance evaluation

Audit Committee

The Audit Committee's main objective is to ensure a competent and independent audit of Embla Medical and supervise the internal control system and risk management. The Audit Committee's responsibilities are further described in the Audit Committee's Terms of Reference, which are reviewed annually by the Board of Directors and updated as necessary.

The Audit Committee is composed of three Board members. The majority of the Audit Committee shall be independent of Embla Medical, the CEO and the Auditor.

Audit Committee members shall possess the knowledge and expertise needed to perform the tasks of the Audit Committee. At least one Audit Committee member shall have solid knowledge and experience in the field of financial statements or auditing. Arne Boye Nielsen has served as the Chair of the Audit Committee since 2012.

Audit Committee Members:

Roles and Responsibilities

The Audit Committee has various roles and responsibilities:

• Ensure a competent and independent audit
• Submit proposals to the Board on the nomination of an auditor candidate at the Annual General Meeting
• Submit proposals to the Board on an agreement with the Auditor, containing e.g. provisions on the audit fees as well as the general scope of the Auditor's non-audit services
• Monitor and evaluate the Auditor's work, including the audit of statutory audit of the financial statements and annual report, taking into consideration the results of the most recent quality control
• Report the result of the statutory audit, including the financial reporting process, to the Board
• Monitor and assess Embla Medical's internal control systems and enterprise risk management systems and perform other related tasks and duties
• Monitor the financial and sustainability reporting process and report to the Board on significant accounting policies, significant accounting estimates, related party transactions and uncertainties and risks, including in relation to the outlook, prior to the Board's approval of financial statements
• Assess the need for an internal audit function taking into consideration the scale and complexity of Embla Medical's activities, risk factors and cost/benefit considerations
• Monitor Embla Medical's Speak-Up Line
• Monitor Embla Medical's Tax Policy
• Monitor the progress made on sustainability targets and report the result to the Board

Audit Committee's Annual Schedule

Quarter 1:

• January Meeting:
  • Audit report (presented by the Auditors)
  • Review of Q4 and full year results
  • Related party transactions
  • Report on external lending
  • Compliance & Security update
  • Internal Control update

Quarter 2:

• April Meeting:
  • Election of Chair
  • Annual Schedule
  • Review of Q1 results
  • Related party transactions
  • Internal Control and Risk Management update
  • Status of entities integration and systems implementation
  • ESG/CSRD reporting update

Quarter 3:

• July Meeting:
  • Audit plan and fees for the coming year (presented by the Auditors)
  • Review of Q2 results
  • Related party transactions
  • Internal Control and Risk Management update
  • Report on external lending
  • ESG/CSRD reporting update

Quarter 4:

• October Meeting:
  • Report on valuation methods on significant accounting estimates
  • Review of Q3 results
  • Related party transactions
  • Internal Control and Risk Management update
  • Status of entities integration and systems implementation
  • Tax update
  • ESG/CSRD reporting update
• December Meeting:
  • Meeting with the Auditors (including private session)
  • Report on Internal Control and Enterprise Risk Management
  • Security update
  • Code of Conduct update
  • Speak-Up Line status
  • Assessment of the need for an internal audit
  • ESG/CSRD reporting update
  • Financial forecast assumptions and risk
  • Proposal to the Board on nomination of auditors and auditor's agreement

Nomination Committee

A Nomination Committee was established in 2022. The Nomination Committee's main objective is to prepare recommendations to the Board in relation to the composition, development, and succession of the Board. The Nomination Committee's responsibilities are further described in the Nomination Committee's Terms of Reference, which are reviewed annually by the Board of Directors and updated as necessary.

The Nomination Committee is composed of the Chair of the Board and the Chair of the Audit Committee.

Remuneration Committee

A Remuneration Committee was established in 2022. The Remuneration Committee's main objective is to prepare recommendations to the Board in relation to the remuneration policy and remuneration for the Board, the CEO, and the Executive Management. The Remuneration Committee's responsibilities are further described in the Remuneration Committee's Terms of Reference, which are reviewed annually by the Board of Directors and updated as necessary.

The Remuneration Committee is composed of the Chair of the Board and the Chair of the Audit Committee.

Board Performance Evaluation

The Board of Directors conducts a performance evaluation each year. The Chair oversees the evaluation process and proposes actions to be taken, if any. The Chair seeks external assistance at least every three years. The Board performance evaluation for 2024 was discussed by the Board in December 2024.

The topics discussed included the following:

• Size and composition of the Board
• Board collaboration and the Chair's leadership
• Board meetings and Board material
• Board responsibilities and focus areas
• The Executive Management's performance and collaboration with the Board

The main conclusion of the performance evaluation for 2024 was that the Board performs at a high level and contributes to Embla Medical's growth and value creation.

Chief Executive Officer

The CEO is responsible for Embla Medical's daily operations and is obliged to follow the Board of Directors' policy and directions, within the limits provided for by the Articles of Association and law. The daily operations do not include measures that are unusual or extraordinary, which may generally only be taken if specially authorized by the Board.

The CEO is not a Board member, but shall attend Board Meetings and has the right to participate in discussions and put forward proposals, unless otherwise decided by the Board in specific instances.

The Board of Directors evaluates the CEO's performance each year. Subsequently, the Chair of the Board and the CEO have a meeting to discuss the results of the evaluation and the actions to be taken, if any.

Executive Management

Embla Medical also has a wider Executive Management consisting of the CEO, the CFO and Executive Vice Presidents.

The Executive Management generally meets every week and collectively prepares and implements Embla Medical's strategic plans. The CEO is responsible for the work and results of the Executive Management.

The CEO evaluates the performance of other members of the Executive Management each year and discusses the results of the evaluation with each member and the actions to be taken, if any.

Sustainability Governance

The Role of Our Management (GOV-1)

Our management plays a central role in ensuring the governance processes, controls, and procedures that are necessary to monitor, manage, and oversee sustainability-related impacts, risks, and opportunities. The Chief Financial Officer (CFO) is responsible for enterprise risk management by establishing a process for identifying, assessing, managing, and reporting risks that may affect the achievement of the company's strategic objectives. This includes ESG control systems to ensure the accuracy of the company's sustainability reporting and compliance with relevant laws and regulations.

Sustainability is embedded into our strategy and throughout our organization, and our Responsible for Tomorrow® program ensures clear departmental ownership and responsibilities for metrics and targets. In 2024, the program's focus was on science-based emissions reduction targets and reporting inspired by the new EU Corporate Sustainability Reporting Directive (CSRD). The program included six workstreams, three of which explicitly focused on reducing our emissions and supporting our science-based targets, one on environmental and CSRD compliance, one on awareness and communication, and one on ESG and GHG emissions accounting. We anticipate that this program will encompass other aspects of our sustainability commitments in the coming years, reflecting the evolving nature of this important topic.

The Program Steering Committee, chaired by the Executive Vice President of People, Strategy & Sustainability, sets our sustainability strategy and ensures its execution throughout the organization. The committee meets at least quarterly and reports to the Executive Management team, led by the Chief Executive Officer (CEO).

The Internal Control & Risk team ensures that the results of the Double Materiality Assessment are incorporated into the annual Enterprise Risk Assessment. Identified material risks are reported to the Steering Committee of the Responsible for Tomorrow program to validate their prioritization and create mitigation action plans to address the prioritized risks.

The sustainability reporting process is overseen by the Audit Committee. According to the Terms of Reference for the Audit Committee of Embla Medical hf., the Committee monitors the financial and sustainability reporting process, makes recommendations to ensure integrity, monitors progress on sustainability targets, reports results to the Board, and assesses the company's internal control and enterprise risk management systems. The status of sustainability reporting is reported to the Audit Committee four times a year.

Integration of sustainability-related performance in incentive schemes

Overview

Including sustainability performance in management incentives is crucial as it aligns executive actions with long-term corporate goals and stakeholder expectations, driving meaningful progress and accountability for sustainability initiatives.

Roles Covered

In 2024, Embla Medical included social-related sustainability metrics in the Executive Committee Incentive Scheme.

Sustainability KPIs Tied to Remuneration

Embla Medical has incorporated social-related sustainability metrics in the Executive Committee Incentive Scheme.

Climate-Related Performance

Embla Medical has not yet incorporated climate-related performance into its incentive schemes.

Strategy, Business Model and Value Chain

Embla Medical's business is about improving people's mobility so they can live a Life Without Limitations®. We develop and manufacture a wide range prosthetic, neuro orthotic and bracing & supports solutions in addition to serving patients in need of various mobility solutions in our patient care facilities across the globe.

The company operates within three business segments: Prosthetics & Neuro Orthotics (49% of total sales), Bracing & Supports (17% of total sales), and Patient Care (34% of total sales).

Business Model Components

Innovation: New product introductions every year. Embla Medical develops and manufactures prosthetic, neuro orthotic and bracing & supports solutions, from an idea to a finished product. We aim to deliver cost effective medical solutions that provide value for patients and the healthcare system.

Manufacturing: Off-the-shelf and customized solutions. Manufacturing of prosthetic solutions takes place in Iceland, Scotland, United States and Mexico. Neuro orthotics are manufactured in Germany, and manufacturing of bracing solutions takes place in Mexico with outsourcing of soft goods to China.

Sales and Marketing: Mainly direct sales but also distribution. Products are delivered through healthcare providers who specialize in assisting individuals who suffer from impaired mobility. We have operations in 36 countries and largely sell our products through our own direct sales network.

Patient Care: Own O&P clinics and independent providers. Embla Medical products are serviced through a global network of patient care clinics. In selected countries, Embla Medical manages its own Patient Care facilities under the ForMotion brand.

Prescribers and Payers: Over 90% of products and services reimbursed. Prescribers include healthcare professionals who prescribe products and services. Payers include healthcare systems, insurance companies and individuals. Around 90% of Embla Medical's product sales and services are estimated to be reimbursed by a third party.

Strategy: Growth'27

Embla Medical introduced its five-year Growth'27 strategy in 2023. The focus is to reach more people in need of mobility solutions and addresses key industry themes while supporting transformation into an increasingly patient-centric company.

The three growth drivers are:

1. Patient Reach: Connecting directly with patients and reaching out to payers and prescribers
2. Innovative Solutions: Embracing innovation in all actions, providing innovative and patient-centric solutions combining product and service
3. O&P Value Creation: Offering business solutions to customers, including O&P clinics enabling seamless service and close partnership

Financial Ambition for Growth'27 Period

• Sales Growth: 7-10% local currency growth p.a. on average = 5-7% organic growth + 2-3% acquisitive growth
• EBITDA Margin: Gradually increase EBITDA margin before special items
• Capital Allocation: Prioritize growth opportunities, value-adding investments and acquisitions, while maintaining a healthy balance sheet with target range of 2.0-3.0x NIBD/EBITDA before special items

Interests and views of stakeholders

We value feedback from our stakeholders and strive to understand their perspectives, expectations and concerns regarding our sustainability efforts. Our key stakeholders are our employees, healthcare professionals, patients, suppliers, shareholders/investors and payers.

Key stakeholder groups and engagement

The following table highlights how Embla Medical engages with these stakeholders to ensure their interests and views are considered in our strategy and business model.

Material impacts, risks and opportunities and their interaction with strategy and business model

Overview

The Double Materiality Assessment (DMA) results were that 8 out of 12 ESRS standards are material to Embla Medical, consistent with the DMA result in 2023. Besides ESRS 2 on General Disclosure, the material standards identified are: E1 Climate Change, E2 Pollution, E5 Resource Use and Circular Economy, S1 Own Workforce, S2 Workers in the Value Chain, S4 Consumers and End-Users, and G1 Business Conduct. The results align with and reinforce our sustainability strategy. We strive to reduce our greenhouse gas emissions, have a clear focus on our resource use and strive to move from a linear to a circular economy. We are a global company with a clear strategy on the safety of our own workforce, workers in our value chain, and our patients. Additionally, we maintain a strong focus on diversity, equity and inclusion, and practice transparent and ethical business conduct.

Material Impacts, Risks and Opportunities

In the table below we have listed all identified material Negative and Positive Impacts, Financial Risks and Opportunities across our operations and value chain related to sustainability topics.

Double Materiality Assessment Outcome

The materiality matrix shows material topics plotted by Impact Materiality (x-axis) and Financial Materiality (y-axis):

Material Topics (Impact and Financially Material):

• Climate Change (E1) - Negative Impact & Financial Risk
• Circular Economy (E5) - Negative Impact & Financial Risk
• Workers in the Value Chain (S2) - Negative Impact & Financial Risk

Impact Material Topics:

• Health and Safety at Work (S1) - Negative Impact
• Product Quality (S4) - Positive Impact
• Employee Engagement, Retention and Attraction (S1) - Negative Impact
• Product Quality (S4) - Negative Impact

Financially Material Topics:

• Substances of Concern (E2) - Financial Risk
• Business Ethics (G1) - Financial Opportunity
• Business Ethics (G1) - Financial Risk
• Data Privacy (S4) - Financial Risk
• Supplier Relations (G1) - Financial Risk
• Regulatory Changes (G1) - Financial Risk
• Climate Change (E1) - Financial Opportunity
• Circular Economy (E5) - Financial Opportunity

Non-material topics:

• Water and Marine Resources (E3)
• Biodiversity and Ecosystems (E4)
• Affected Communities (S3)

Interaction with Strategy and Business Model

Reflecting the results from the Double Materiality Assessment, our key sustainability-related goals focus on developing quality products and services that improve people's mobility, reducing our greenhouse gas emissions to meet our science-based targets, and enhancing the well-being and development of our employees within an inclusive and safe workplace.

Our primary sustainability challenge today is climate action. Embla Medical faces a dilemma: while expanding our operations to reach more patients and enhance their quality of life is crucial, this growth is currently linked to increased greenhouse gas emissions due to global infrastructure constraints. Our main challenge is to decouple our growth from these emissions.

We develop and manufacture a wide range of prosthetic, neuro orthotic and bracing & support solutions, and serve patients in need of various mobility solutions in our patient care facilities across the globe.

Our business model is patient centric. It includes innovation of new product solutions, manufacturing of both off-the-shelf and customized high-quality solutions, and sales and marketing through direct sales channels and distributors. We prioritize patient care through our own O&P clinics and independent providers, working closely with prescribers and payers. Notably, over 90% of our products and services are reimbursed by public healthcare systems and private insurance providers.

Innovation to address emerging patient needs drives our business model. Our goal is to deliver cost-effective, high-quality medical solutions that provide value for patients and the healthcare systems and minimize our environmental impact.

Time Horizons

Embla Medical has applied time horizons for material impacts, risks and opportunities as follows:

• Short term: current reporting year
• Medium term: 1-5 years
• Long term: more than 5 years

Value Chain Location

Material IROs are located across:

• Upstream (suppliers, purchased goods)
• Own Operations (manufacturing, distribution, patient care facilities)
• Downstream (customers, end-users, product use and disposal)

Resilience to Material IROs

Embla Medical manages material IROs through:

Climate Change (E1):

• Science-based targets validated by SBTi for near-term 2030 and long-term 2050 emissions reductions
• Certified environmental management system according to ISO 14001:2015 at largest manufacturing and distribution sites
• Annual climate risk assessments to identify physical and transitional risks
• Responsible for Tomorrow program with six workstreams focused on emissions reduction, compliance, and reporting

Circular Economy (E5):

• Launching pilot projects in 2025 to explore circularity integration into business practices
• Life Cycle Assessment (LCA) capability developed internally in 2024
• Robust waste management systems

Own Workforce (S1) and Value Chain Workers (S2):

• Defined set of HR policies
• Suppliers and Business Partners Code of Conduct
• Regular supplier questionnaires and monitoring
• Focus on diversity, equity, inclusion and health and safety

Product Quality and Data Privacy (S4):

• Quality control and complaint tracking systems
• Regular information security risk assessments
• MDR-compliant systems and processes

Business Conduct (G1):

• Code of Conduct
• Whistle blower mechanism
• Regular training and communication
• Supplier risk management and safety stock maintenance
• Active monitoring of regulatory changes

Description of the process to identify and assess material impacts, risks and opportunities

Double Materiality Assessment Process

The purpose of a Double Materiality Assessment is to identify, assess, prioritize and monitor potential and actual impacts on people and the environment (Impact Materiality) as well as business risks and opportunities arising from sustainability topics (Financial Materiality). At Embla Medical, the DMA is conducted by a cross-functional team with members from Internal Control & Risk, Global Sustainability, Finance, Operations, Human Resources and other relevant subject matter experts. Due to the extensive ESRS principles on double materiality assessment requirements, we limited the stakeholders involved in assessing our sustainability-related impacts and risks to internal subject-matter experts only.

Step-by-Step Methodology

The process begins with establishing a mutual understanding through business model mapping, value chain documentation, and stakeholder mapping. Then, IROs are identified and listed, and finally, the materiality of these listed IROs is assessed according to defined methodology.

Inputs to the Assessment

Climate Change (E1): When identifying IROs related to climate change (E1), Embla Medical has consistently reported our greenhouse gas emissions in accordance with the Greenhouse Gas Protocol and set Science-Based Targets validated by the SBTi. Therefore, climate change is material for us. In both 2023 and 2024, we conducted climate risk assessments as part of our Enterprise Risk Assessment. These assessments evaluated Physical Climate Risks and Transition Risks related to regulations, technology, reputation, and financial aspects. The main results in 2024 indicate a slight overall increase in all climate-related risks compared to the previous year, with the highest risks associated with technology and regulations. A climate scenario analysis is planned in 2025.

Pollution (E2): The material IROs related to Pollution (E2) is primarily due to the financial risk of potential restrictions on chemical substances used in our manufacturing. Embla Medical has a certified environmental management system at our largest manufacturing and distribution sites and has screened these locations to identify actual and potential pollution-related IROs in our operations. Pollution from our own operations was not deemed material, but we plan to evaluate the upstream value chain as part of our supplier management in the next 2-5 years. We have not conducted consultations with affected communities.

Water and Marine Resources (E3): IROs related Water and marine resources (E3) was not deemed material at Embla Medical. We have a certified environmental management system at our largest manufacturing and distribution sites and follow applicable local regulations. We have screened these locations to identify actual and potential water and marine resource-related IROs in our operations. We plan to assess water and marine resources in our upstream value chain as part of our supplier management in the next 2-5 years. We have not conducted consultations with affected communities.

Biodiversity and Ecosystems (E4): Embla Medical has not assessed the impact on Biodiversity and Ecosystems (E4). We acknowledge the growing concern about this topic, but until we have more information, it has not been deemed material. We foresee that with more knowledge about impacts in our upstream value chain and good collaboration with our suppliers, the outcome of the DMA may change for this topic.

Resource Use and Circular Economy (E5): We have screened our operations to identify actual and potential IROs related to Resource Use and Circular Economy (E5), both in our own operations and downstream value chain, and this topic has been deemed material. We have a robust waste management system and as a global market player, Embla Medical acknowledges the importance of circular solutions to reduce the use of virgin raw materials to lower greenhouse gas emissions. In 2024, we consulted with our customers, clinic employees, end-users, and business owners, while also examining emerging trends in payer and healthcare systems.

Business Conduct (G1): Embla Medical has screened its own operations, suppliers and business partners to identify potential risks and opportunities related to Business Conduct (G1). Key risks identified are corruption and bribery, both for reputational risk and financial risk. As a global medical device manufacturer and service provider, changes in regulatory environment and reimbursement systems for medical devices can have a negative impact on the company.

Scoring Criteria for Impact Materiality

The Impact Assessment contains assessment based on scale, scope, irremediability (together: severity) and likelihood with the use of scoring from 1 to 5 as shown in the table below. For environmental categories the scope is assessed with regards to how many sites and/or suppliers, products, immediate surroundings are relevant. For social and governance categories the scope is assessed with regards to number of rights holders affected.

Scoring Criteria for Financial Materiality

Financial Assessment is based on the potential financial effect on the company's revenue, costs, cash flows, and market position over short-, medium-, and long-term horizons. Financial Assessment contains assessment based on the size of the financial impact (risk) and likelihood (probability) with the use of scoring from 1 to 5 as shown in the table below.

Threshold for Materiality

Impacts, Risks and Opportunities are scored on a severity and likelihood scale to prioritize high-risk areas. Material risks are considered as those, which based on the severity and likelihood assessment, have been marked as high as shown in the table below.

Gap Analysis

The DMA outcome identified 488 material data points for Embla Medical, including phase-in and voluntary data points. The team then performed a gap analysis to identify missing data on material data points. Identified gaps were addressed through additional data collection, process adjustments, and validation to ensure comprehensive and accurate sustainability reporting. In 2024, we worked extensively on filling these gaps but are not reporting on all identified material data points for 2024. We acknowledge that more work is needed to align actions and targets across our operations, and we plan to develop these over the next two years.

DMA and Enterprise Risk Assessment

After risks are assessed, Embla Medical prioritizes them based on their potential financial impact and strategic significance. High-priority risks are managed with specific action plans, including mitigation strategies and resource allocation. Results of the DMA are incorporated into Enterprise Risk Management. The Steering Committee of the Responsible for Tomorrow program makes decisions on mitigation actions. In addition to risks, the company identifies opportunities that are integrated into the company's business model, aiming to leverage competitive advantages and enhance financial performance.

Embla Medical monitors the risks and opportunities through its enterprise risk management system, ensuring that emerging risks are identified and that mitigation strategies are adjusted. Risks that have been identified as material during Double Materiality Assessment are incorporated into the company's enterprise risk register. Updates are provided to the Executive Management and the Audit Committee to ensure alignment with the overall corporate strategy.

Frequency / When Last Reviewed

Our Double Materiality Assessment is reviewed and updated at least annually.

In 2024, the DMA results were that 8 out of 12 ESRS standards are material to Embla Medical, consistent with the DMA result in 2023. Besides ESRS 2 on General Disclosure, the material standards identified are: E1 Climate Change, E2 Pollution, E5 Resource Use and Circular Economy, S1 Own Workforce, S2 Workers in the Value Chain, S4 Consumers and End-Users, and G1 Business Conduct.

Use of Value Chain Mapping in the Process

The process begins with establishing a mutual understanding through business model mapping, value chain documentation, and stakeholder mapping.

For climate risk assessment, key employees, identified as Subject Matter Experts from various functions, evaluate risks and opportunities across the entire value chain. This assessment covers physical, regulatory, technological, reputational, and financial dimensions, considering both the likelihood and impact on our operations.

Transition plan for climate change mitigation

Overview

Embla Medical has set Science-Based Targets (SBTs) on reduced greenhouse gas emissions following the methodology and requirements of the Science Based Targets initiative (SBTi). These targets align with the Paris Agreement's goal of limiting global warming to 1.5°C.

Scope

As a manufacturing company, Embla Medical's base year emissions profile indicates that around 90% of emissions come from the value chain (Scope 3), primarily from Purchased Goods and Services, and Transportation and Distribution. Direct emissions (Scope 1 and 2) represent around 10% of total emissions.

Embla Medical's largest manufacturing and distribution sites and clinics have a certified environmental management system according to ISO 14001:2015.

Target Years and Milestones

Science-based Targets:

Near-term 2030:

• Embla Medical commits to reduce absolute scope 1 and 2 GHG emissions by 79% by 2030 from a 2019 base year.
• Embla Medical also commits to reduce absolute scope 3 GHG emissions from purchased goods and services, fuel- and energy-related activities, upstream transportation and distribution, and downstream transportation and distribution 25% by 2030 from a 2021 base year.

Long-term 2050:

• Embla Medical commits to reduce absolute scope 1 and 2 GHG emissions by 90% by 2050 from a 2019 base year.
• Embla Medical also commits to reduce absolute scope 3 GHG emissions 90% by 2050 from a 2021 base year.

Progress on Targets

Scope 1 and 2 Progress:

In 2024, Scope 1 and market-based Scope 2 emissions were reduced by 66% compared to the 2019 base year. This significant reduction is primarily due to commitment to purchasing electricity from renewable energy sources.

Scope 3 Progress:

*CO2-equivalent emissions from purchased goods, fuel- and energy-related activities, and both upstream and downstream transportation and distribution of goods

In 2024, Scope 3 emissions increased by 9% compared to the 2021 base year.

Alignment with Paris Agreement / SBTi Validation

In 2024, Embla Medical received validation from the Science Based Target initiative (SBTi) for science-based targets aimed at reducing market-based emissions. These targets align with the Paris Agreement's goal of limiting global warming to 1.5°C.

Key Decarbonization Levers

Energy Efficiency and Renewable Energy:

• Energy efficiency projects
• Sourcing electricity from renewable energy sources (around 95% of purchased electricity from renewable sources)
• Transition to electric leased vehicles
• In 2024, share of renewable energy was 29% (up from 27% in 2023)

Product and Circular Solutions:

• Eco-design principles to reduce environmental impact while maintaining regulatory compliance for medical devices
• Life Cycle Assessment (LCA): In 2024, developed internal expertise and established procedure for conducting LCAs on products
• Circular solutions: Launching pilot projects in 2025 to explore circularity integration into business practices
• Maximize material utilization and increase material yield, reduce waste

Supply Chain:

• Strong collaboration with raw material suppliers
• Supplier environmental performance assessment: In 2024, Össur conducted survey with 64 suppliers representing 80% of direct goods spend (95% response rate)
• 25% of suppliers now in Engaged or Advanced categories (up from 15% in 2023), accounting for 30% of emissions from purchased goods

Transportation and Distribution:

• Enhanced efficiency in transportation and distribution of goods

Locked-in Emissions and Transition Risks

Main potential for locked-in GHG emissions lies in:

• Raw materials used in products
• Transportation and distribution

Products are medical devices and must adhere to strict regulatory requirements to ensure safety and reliability. Any innovation efforts to reduce environmental impact must align with these regulations, which can limit ability and pace of improvement. This poses a risk to achieving GHG emission reduction targets and may introduce transition risks.

Transition Plan Status

The transition plan is still under development, with a goal to finalize it by year-end 2025. This plan will outline objectives for aligning economic activities with science-based targets and include development of sub-targets to support science-based targets. The challenge is to decouple emissions from growth.

Use of Carbon Credits

As part of the commitment to mitigation beyond the value chain, Embla Medical partners with SoGreen to empower girls in developing countries through education. The company has contracted to purchase 500 pending avoidance credits per year for five years, totaling 2,500 credits. This method is currently in the certification process.

As part of science-based targets, Embla Medical is committed to achieving NetZero by 2050 by reducing emissions by 90% from selected base years. The remaining emissions will be neutralized through the purchase of carbon removal credits. Embla Medical did not purchase carbon removal credits in 2024. The avoidance credits from SoGreen will not be used to meet the NetZero target as they are not removal credits.

Policies related to climate change mitigation and adaptation

Embla Medical Environmental Policy

In 2024, the Embla Medical Environmental Policy was updated to align with the company's strategy reflecting the results from the Double Materiality Assessment.

Key content / principles:

• Aim to minimize negative environmental impact by reducing greenhouse gas emissions to mitigate climate change
• Adapting to climate change impacts
• Promoting energy efficiency and transitioning to renewable energy sources

Implementation context: Actions and resources in relation to climate change policies are managed under the company's Responsible for Tomorrow program, as explained in chapter GOV-1. The company's largest manufacturing and distribution sites and clinics have a certified environmental management system according to ISO 14001:2015.

Actions and resources in relation to climate change policies

Embla Medical's actions and resources in relation to climate change policies are managed under the Responsible for Tomorrow program. In 2024, the company focused on CSRD implementation, preparing for actions to reduce emissions, and advancing various initiatives.

1. Life Cycle Assessment (LCA)

Scope: Own operations / product portfolio

Description: In 2024, Embla Medical developed internal expertise and established a procedure for conducting LCAs on products. Previously, external consultants performed LCAs for key products.

Purpose: This internal expertise is crucial to ongoing efforts to map emissions across the product portfolio and serves as the foundation for implementing feasible design changes to reduce emissions and support efforts towards circular solutions.

Resources: Internal expertise development; previously external consultants were used.

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2. Circular Solutions

Scope: Own operations and downstream value chain

Description: Implementation of circular solutions that maximize material utilization and create opportunities for sustainable growth. The company engaged with customers, clinic employees, end-users, and business owners to explore circular business models.

Time horizon: Pilot projects launching in 2025; scaling in future years

Key insight: Linear transactions (product ownership transfer) are not always essential. Temporary, metered access to mobility-enhancing solutions may be preferred in some cases.

Expected outcomes:

• Validate the concept of circularity
• Set the stage for scaling initiatives in the future
• Seamlessly integrate circularity into business practices while enhancing mobility

Link to policy/target: Supports science-based targets by maximizing material utilization and reducing emissions through circular solutions

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3. Suppliers and Environmental Performance Survey

Scope: Upstream value chain (suppliers)

Description: Össur (the largest commercial entity of Embla Medical) conducted supplier environmental sustainability performance surveys to assess and encourage suppliers to join the sustainability journey.

Coverage:

• 2024: 64 suppliers invited, representing 80% of direct goods spend
• Response rate: 95%
• Suppliers categorized into four groups: Unaware (0-20%), Aware (20-50%), Engaged (50-80%), and Advanced (80-100%)

Progress/Results:

Response rate in 2024 was 95% compared to 89% in 2023

Outcomes: 25% of suppliers are now in Engaged or Advanced categories (compared to 15% in 2023), accounting for 30% of emissions from purchased goods.

Frequency: Annual survey

Link to policy/target: Critical for achieving science-based targets, as ~90% of emissions originate from the value chain, primarily from purchased goods

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4. Energy Efficiency and Renewable Energy

Scope: Own operations (facilities and vehicles)

Description: Implementation of decarbonization levers including energy efficiency projects and sourcing electricity from renewable energy sources.

Specific measures:

• Energy efficiency in largest facilities
• Purchase electricity from renewable energy sources
• Transition to electric leased vehicles

Expected outcomes: Meet 2030 science-based target for Scope 1 and 2 emissions (79% reduction from 2019 base year)

Progress: In 2024, Scope 1 and market-based Scope 2 emissions were reduced by 66% compared to 2019 base year (same as 2023). This significant reduction is primarily due to purchasing electricity from renewable energy sources.

Link to policy/target: Directly supports near-term 2030 science-based target to reduce absolute Scope 1 and 2 GHG emissions by 79% from 2019 base year

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Resources Allocated

EU Taxonomy-eligible CapEx and OpEx:

While specific totals for climate-related actions are not separately disclosed, the company reports Taxonomy-eligible activities including:

• CapEx numerator components (2024):

  • Right-of-use assets and leasehold improvements: 51%
  • Internally generated software: 48%
  • Business combinations: 1%
  • Most significant change: facility renovations and refurbishments (decreased from prior year)

• Eligible activities:

  • CCM 6.5: Transport by passenger cars (leasing)
  • CCM 7.2: Renovation of existing buildings
  • CCM 7.3: Installation, maintenance and repair of energy efficiency equipment

Note: In 2024, Embla Medical did not meet alignment requirements under EU Taxonomy, resulting in no aligned capital and operating expenditures reported.

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Climate Transition Plan Development

Time horizon: Plan to be finalized by year-end 2025

Scope: Will outline objectives for aligning economic activities with science-based targets and include development of sub-targets

Focus areas: Eco-design, circular solutions, collaboration with raw material suppliers, and enhanced efficiency in transportation and distribution

Targets related to climate change mitigation and adaptation

Science-Based Targets (SBTi-validated)

Embla Medical has set Science-Based Targets validated by the Science Based Targets initiative (SBTi) aligned with limiting global warming to 1.5°C.

Near-term 2030 Targets:

Scope 1 and 2 (market-based) target:

• Target metric: Absolute Scope 1 and 2 GHG emissions
• Target value: 79% reduction
• Target year: 2030
• Baseline year: 2019
• Baseline value: 7,660 tCO2e
• Target value (absolute): 1,610 tCO2e
• Scope: Own operations (company facilities and vehicles, purchased electricity, steam, heating, and cooling)
• Type: Absolute target
• Validation: Science-based, SBTi-validated
• Progress to date (2024): 2,600 tCO2e (66% reduction from base year)

Scope 3 target:

• Target metric: Absolute Scope 3 GHG emissions from purchased goods and services, fuel- and energy-related activities, upstream transportation and distribution, and downstream transportation and distribution
• Target value: 25% reduction
• Target year: 2030
• Baseline year: 2021
• Baseline value: 75,600 tCO2e
• Target value (absolute): 56,700 tCO2e
• Scope: Value chain (purchased goods, fuel- and energy-related activities, upstream and downstream transportation and distribution)
• Type: Absolute target
• Validation: Science-based, SBTi-validated
• Annual reduction target: 3%
• Progress to date (2024): 82,600 tCO2e (9% increase from base year)

Long-term 2050 Targets (NetZero):

Scope 1 and 2 (market-based) target:

• Target metric: Absolute Scope 1 and 2 GHG emissions
• Target value: 90% reduction
• Target year: 2050
• Baseline year: 2019
• Baseline value: 7,660 tCO2e
• Target value (absolute): 770 tCO2e
• Scope: Own operations
• Type: Absolute target
• Validation: Science-based, SBTi-validated

Scope 3 target:

• Target metric: Absolute Scope 3 GHG emissions
• Target value: 90% reduction
• Target year: 2050
• Baseline year: 2021
• Baseline value: 75,600 tCO2e
• Target value (absolute): 7,600 tCO2e
• Scope: Value chain
• Type: Absolute target
• Validation: Science-based, SBTi-validated

Other Targets

GHG emissions intensity target:

• Target metric: Total GHG emissions per net revenue
• Progress (2024): 99.6 tCO2e/USD million (market-based)
• Progress (2023): 101.8 tCO2e/USD million (market-based)
• Performance: 2% reduction in intensity from 2023 to 2024
• Type: Intensity-based
• Note: No specific quantified target value disclosed for this metric

Additional Information

• The company commits to neutralizing the remaining 10% of emissions by 2050 through carbon removal credits
• A climate transition plan is under development, to be finalized by year-end 2025
• In 2024, the company implemented a new GHG accounting software system and updated emission factors; plans to engage with SBTi in 2025 to review and update targets

Energy consumption and mix

E1-5 Energy Consumption and Mix

Embla Medical's total energy consumption in 2024 was 29,070 MWh, up from 28,010 MWh in 2023. The share of energy from renewable sources increased to 29% in 2024 from 27% in 2023. Total purchased electricity was 17,080 MWh in 2024, up from 15,350 MWh in 2023.

Energy Intensity

Methodology and Scope

Stationary Combustion (purchased gas): Monitored at eight manufacturing and distribution locations in Mexico, the US, the UK, and the Netherlands through invoices and the MySites service. Gas consumption in clinics is estimated from an established ratio of gas consumption per FTE and country-based statistics.

Mobile Combustion: Covers fuel consumption of over 300 owned and leased cars in Europe, Scandinavia, US, Mexico and emerging markets. Data collected from internal consumption data, leasing companies, and calculated from average distance traveled per car.

Purchased Electricity and District Heating: Monitored in manufacturing and distribution locations in Iceland, Mexico, the US, the UK, and the Netherlands. For patient care clinics worldwide, electricity consumption is tracked by establishing an emission factor per FTE based on available consumption data from Scandinavia, which is then extrapolated. Remaining consumption is extrapolated to ensure data completeness.

Net revenue in 2024 was USD 855 million (per Consolidated Income Statement).

Gross Scopes 1, 2, 3 and Total GHG emissions

Embla Medical reports greenhouse gas emissions in accordance with the Greenhouse Gas Protocol. The company has set Science-Based Targets validated by the SBTi.

In 2024, Embla Medical implemented a new GHG accounting software system and updated the source of emission factors. This change was applied to the base year and all subsequent years to ensure consistency and accurate comparisons. The updated emission numbers are reported below.

Scope 1 GHG Emissions

Scope 1 emissions cover stationary combustion (purchased gas), mobile combustion (fuel consumption of owned and leased vehicles), and fugitive emissions (refrigerants). For 2024, there were no refrigerant refills, so no fugitive emissions are reported.

Scope 2 GHG Emissions

Scope 2 emissions cover purchased electricity and district heating. According to the GHG Protocol Scope 2 Guidance, all electricity purchased with confirmed Energy Attribute Certificates (EACs) have an emission factor of zero under the market-based method.

Scope 1 and 2 Combined

Scope 3 GHG Emissions

Scope 3 emissions are reported for ten relevant categories. Four categories are included in the science-based targets (categories 1, 3, 4, and 9). The other six relevant categories are reported for transparency and monitoring.

Significant Scope 3 categories (within science-based targets):

Other relevant Scope 3 categories:

Total GHG Emissions

GHG Intensity

GHG intensity is measured per net revenue. Total GHG emissions covers total Scope 1, 2 (market-based) and significant Scope 3 GHG emissions.

Net revenue in 2024 for Embla Medical is USD 855 million.

Biogenic CO2 Emissions

Not disclosed.

Methodology and Scope Notes

Stationary Combustion: Monitored at eight manufacturing and distribution locations (Mexico, US, UK, Netherlands). Gas consumption in clinics is estimated using an FTE-based ratio and country statistics.

Mobile Combustion: Covers fuel consumption of over 300 owned and leased cars globally. Data collected from internal systems, leasing companies, and calculated from average CO2 emissions per kilometer from car manufacturers.

Fugitive Emissions: Arise from refrigerants in cooling systems in Iceland. No refills occurred in 2024.

Scope 2: Purchased electricity and district heating monitored at major sites. For patient care clinics worldwide, consumption is tracked by establishing an FTE-based emission factor from Scandinavian data, then extrapolated. All electricity consumption data is linked to relevant grid databases in the GHG accounting software.

Scope 3 Category 1 (Purchased goods): Categorized into raw materials, outsourced finished components, and outsourced finished goods. Emissions calculated using activity data (weight) and industry-average emission factors, or spend data with country-specific factors. Data represents 80% of spend; remaining 20% extrapolated.

Scope 3 Category 1 (Purchased services): Based on spend.

Scope 3 Category 2 (Capital goods): Based on spend, split into five categories (buildings/sites, machinery/equipment/automotives, fixtures/furniture, leasehold improvements, computer equipment).

Scope 3 Category 3 (Fuel- and energy-related activities): Upstream emissions from Scope 1 and 2 energy consumption.

Scope 3 Categories 4 & 9 (Transportation and distribution): Data from service companies on weight, transport mode, origin and destination for purchased goods, inter-company shipments, and finished goods distribution. Calculated on well-to-wheel (WTW) basis. A 70/30 split is applied: upstream = 70%, downstream = 30%.

Scope 3 Category 5 (Waste): Weight and categories of waste from largest manufacturing and distribution sites (Iceland, Mexico, US Philadelphia, UK Manchester, Netherlands Eindhoven). Where unavailable, extrapolated using FTE ratios.

Scope 3 Category 6 (Business travel): From global travel system (air, train). Covers ~60% of booked travel; remainder extrapolated. Calculated on WTW basis.

Scope 3 Category 7 (Employee commuting): Annual desk study using statistics for five regions (Europe, Iceland, North America, South America, Asia). Parameters: number of employees, workdays, commuting distance, regional transport statistics, emission factors. Updated yearly.

Scope 3 Category 11 (Use of sold products): Covers energy consumption of bionic products (< 1% of total units sold). Based on units sold, estimated daily use hours, known electricity consumption per hour, and electricity grid emissions for sales areas. 2024 figures estimated from 2023 data adjusted by bionic product net revenue increase.

Scope 3 Category 12 (End-of-life treatment): Products and packaging categorized. Annual sales per unit used to calculate units placed on market by country/region. Disposal statistics for packaging (plastic/paper) by market used. All products assumed to landfill. 2024 figures based on 2023 data adjusted by net revenue percentage increase.

For transportation and distribution emissions (categories 4 and 9), the 70/30 split between upstream and downstream is applied to total transportation and distribution emissions.

All emissions are reported as CO2-equivalent (CO2, CH4, N2O).

Policies related to own workforce

Embla Medical has disclosed four main policies for managing material impacts on its own workforce. These policies apply globally to all employees and are communicated internally through training and awareness programs, and are accessible on the company website.

Human Rights Policy

Scope: All individuals employed by, or affiliated with, Embla Medical entities

Key principles:

• Pledges to operate in a manner that respects and promotes human rights, including labor rights, across all aspects of operations
• Designed to promote honest and ethical conduct
• Commitment to eradicating all forms of discrimination
• Provides a safe and healthy work environment
• Does not tolerate any form of modern slavery, including forced labor, child labor, compulsory labor, or human trafficking

Public availability: Available on the company website

Health and Safety Policy

Scope: All employees

Key principles:

• Safety is the first priority and integral to everything the company does
• Consistently adheres to relevant health and safety standards
• Ensures employees are committed to providing a safe and healthy work environment
• Commitment extends to continuous improvement and proactive measures to prevent accidents and incidents
• Fosters a culture of safety and well-being for all

Implementation monitoring:

• Safety Management System provides framework for managing safety risks
• Certified environmental management system according to ISO 14001:2015 in largest manufacturing and distribution sites and some patient care facilities
• Conducts Job Safety Analyses
• Performs quarterly fire safety audits
• Provides health and safety training
• Runs awareness campaigns
• Has reporting mechanism and response team for safety incidents
• Employees can submit suggestions on workplace safety improvements (755 implemented in 2024)
• 57% of workforce covered by Safety Management System in 2024

Public availability: Available on the company website

Diversity, Equity and Inclusion Policy

Scope: All levels of the organization

Key principles:

• Commitment to fostering an inclusive environment where every individual is valued and respected
• Aims to eliminate barriers and promote equal opportunities
• Ensures diversity is celebrated across all levels of the organization
• Creates a culture of acceptance and belonging
• Serves a diverse, global community

Implementation monitoring:

• Global and regional DE&I councils set targets, implement actions, and monitor progress
• Global DE&I council works on overall strategy and implementation company-wide
• Conducts regular salary audits to ensure equal pay for equal work
• Monitors diversity, inclusion, and non-discrimination through employee surveys
• Scored 8.2 on a 10-point scale for diversity and inclusion efforts in 2024

Public availability: Available on the company website

Code of Conduct

Scope: All employees globally, available in all main languages of Embla Medical's office locations and operations

Oversight: Monitored by the Audit Committee

Key principles:

• Grounded in core values of Honesty, Frugality, and Courage
• Outlines norms, rules, responsibilities, and proper practices at Embla Medical
• Guides employees in day-to-day activities
• Ensures compliance with all applicable laws and legislation
• Helps maintain and strengthen company culture
• Includes sections on human rights and labor rights

Implementation monitoring:

• All employees required to complete regular training on the Code of Conduct
• Integral part of onboarding process for new employees
• 99% of employees trained in Code of Conduct in 2024 (target >95%)
• Audit Committee monitors Code of Conduct updates

Public availability: Available on the company website

Speak-Up Policy

Scope: All employees and other stakeholders globally

Oversight: Operated and monitored by the Corporate Governance Office; can escalate to Audit Committee

Key principles:

• Encourages all stakeholders to report concerns of unethical behavior
• Everyone who reports an issue in good faith is guaranteed protection from retaliation
• All reports treated as confidential
• Anonymous reporting available
• Global whistleblower and helpline system available 24/7
• Hosted by independent external party to ensure compliance with local regulations and GDPR

Links to international standards:

• Subject to laws on Whistleblower protection based on Directive (EU) 2019/1937

Implementation monitoring:

• Audit Committee monitors the Speak-Up Line
• 4 cases submitted to Speak-Up Line in 2024
• Employees informed through Code of Conduct training
• Investigation procedures outlined in Investigation Management Manual

Public availability: Available on the company website

Competency Framework

Scope: All employees

Key principles:

• Defines behaviors driving successful performance and supports business strategy
• Core competencies are Collaboration, Communication, Driving Results, Customer Focus, and Change
• Annual performance reviews conducted
• Individual development plans created
• Regular check-ins between employees and managers encouraged
• Supported by Development Guide outlining training opportunities

Implementation monitoring:

• 97.9% of employees participated in performance reviews in 2024
• Average 5.8 training hours per employee in 2024

Taking action on material impacts on own workforce

Our commitment to our workforce is reflected in targeted actions that address key impacts, manage risks, and leverage opportunities, ensuring both employee satisfaction and organizational resilience. We place a strong emphasis on fostering and maintaining a diverse workforce, recognizing that diversity fuels better decision-making and innovation.

Diversity, Equity and Inclusion (DE&I)

DE&I Training Programs

• In 2024, we provided 350 courses, books, videos, and audiobooks for our employees in our comprehensive DE&I training programs, to build DE&I awareness among our employees and managers
• Resources are accessible through our eLearning platform
• Scope: Own operations
• Resources: 350 learning resources (non-financial)

DE&I Councils

• We have global and regional diversity, equity, and inclusion (DE&I) councils that set targets, implement actions, and monitor our progress
• The global DE&I council works on the overall DE&I strategy and implementation company-wide, deciding on initiatives such as employee survey questions, training, system data improvement, awareness campaigns, and more
• Scope: Own operations

Employee Survey Monitoring

• We continued to use our employee survey to monitor and measure employees' perceptions of diversity, inclusion, and discrimination
• Satisfaction with Embla Medical's efforts to support diversity and inclusion scored 8.2 on a 10-point scale
• In 2024, we doubled the frequency of employee surveys, included open comment sections, and placed increased emphasis on diversity, equity, and inclusion
• Scope: Own operations
• Expected outcomes: Track scores related to diversity, inclusiveness, and non-discrimination

Salary Audits

• We conduct regular salary audits to ensure equal pay for equal work, adhering to the Equal Employment Opportunity Commission (EEOC) standards
• Scope: Own operations
• Links to policy: Commitment to equal pay for equal positions and competences

System and Process Improvements

• Applicants and employees who do not identify as male or female can select non-binary as their gender in our human resource information system
• In 2024, we implemented bi-monthly new-hire networking events in the Americas, which are well-attended and appreciated for fostering inclusivity
• Scope: Own operations (Americas)
• Time horizon: Short-term (ongoing in 2024)

Recruitment Outreach

• As part of our recruitment outreach, we have contracted with large job recruitment-based websites
• Postings include targeted job boards which include job boards for Military Veterans of all services and job boards for people of color and women
• Scope: Own operations

Flexible Work Arrangements

• We prioritize the well-being and work-life balance of our employees by offering flexible work arrangements for roles that can be performed [remotely]
• Scope: Own operations

Talent Development

At Embla Medical, we emphasize the importance of attracting, retaining and actively engaging skilled and competent employees to sustain our success. We recognize that ongoing development is essential for maintaining a skilled workforce.

Learning and Development Programs

• Our commitment to professional development includes formal training programs, mentorship opportunities and skills development workshops among other learning and development opportunities
• This commitment extends beyond our employees; we offer digital development opportunities to our customers through our eLearning platform
• We also encourage employee-driven initiatives, enabling employees to propose new learning opportunities that align with their [interests]
• Scope: Own operations and downstream (customers)
• Resources: eLearning platform (non-financial)

Targets related to own workforce

Embla Medical has set the following targets on managing material negative impacts and advancing positive impacts on our own workforce.

Employee engagement, retention and attraction

Health and Safety at work

Notes:

• *Flexibility in gender split allows for non-binary gender, recognizing that some employees may not wish to be categorized
• **Includes all employees with Vice President role and higher management levels
• ***Includes all employees with people management role
• ****In 2024, a new survey system was implemented with a 10-point scale, compared to a 5-point scale used in 2023

Characteristics of the undertaking's employees

Total Headcount and FTE

At Period End:

Headcount by Gender Identity at Period End

Headcount by Employment Contract Type at Period End

Headcount by Country (Countries with >50 Employees)

Note: Thirteen countries have more than 50 employees, accounting for 94% of total headcount.

Headcount by Age Group

Employee Turnover

Non-Employees

In 2024, Embla Medical's non-employees' workforce primarily consisted of contractors, with a headcount of 290.

Accounting Policies

Employees: All Embla Medical subsidiaries are included in S1 data, also Fior & Gentz, except in S1-14 Health and Safety metrics. Employee headcount includes all active full-time and part-time contracts and includes all companies managed under Embla Medical. Both headcount and full-time equivalent (FTE) are calculated at the end of the reporting period. Headcount of non-employees is calculated at the end of the reporting period.

Gender: Gender is classified by gender identification, as reported by employees themselves, into three categories: male, female and other.

Average employee headcount: Calculation is based on headcount at the beginning and the end of the reporting period.

Employee turnover: Refers to the number of employees who have left Embla Medical within the reporting year, relative to the average headcount.

Note: As defined in note 6 in the Consolidated Financial Statements. Gender as specified by the employees themselves.

Characteristics of non-employees in the undertaking's own workforce

Non-Employee Headcount

In 2024, Embla Medical's non-employees' workforce primarily consisted of contractors, with a headcount of 290.

Methodology

Headcount of non-employees is calculated at the end of the reporting period.

Non-employees are not included in performance reviews or training hours calculations.

Collective bargaining coverage and social dialogue

Collective bargaining coverage

In 2024, Embla Medical employees covered by collective bargaining agreements are 30% of the total workforce compared to 29% in 2023.

Accounting policies

Ratio of employees covered by collective bargaining agreements shows the percentage of Embla Medical's total employees under such agreements in the reporting year, based on total headcount at the end of the reporting period.

Diversity metrics

Gender distribution at top management level

Top Management includes all employees with Vice President role and higher management levels.

Multi-year comparison:

Note: The 2024 value of 29% appears to be an annual target or reference figure, while the detailed breakdown shows 26.0% (13 out of 50).

Age band distribution of total workforce

Additional gender diversity metrics

Gender split among employees (total workforce):

Female managers (all employees with people management role):

Methodology notes

Gender is classified by gender identification, as reported by employees themselves, into three categories: male, female and other. Flexibility in gender split allows for non-binary gender, recognizing that some employees may not wish to be categorized.

Employee headcount is calculated at the end of the reporting period and includes all active full-time and part-time contracts.

Training and skills development metrics

Performance Reviews

In 2024, 97.9% of all employees participated in performance reviews, up from 96% in 2023.

Training Hours

In 2024, on average, our employees spent 5.8 hours in training, with females averaging 6.0 hours, males 5.6 hours, and others 2.3 hours.

Average training hours per employee:

• Overall: 5.8 hours
• Female: 6.0 hours
• Male: 5.6 hours
• Other: 2.3 hours

Methodology Notes

Performance reviews: Non-employees are not included in performance reviews and are therefore not included in these numbers. Calculation also excludes employees with less than 3 months of service. As a result, the total headcount for reviews is lower than the headcount reported in note 6 of the Consolidated Financial Statements.

Training hours are based on the total course duration time within the reporting period divided by total headcount, excluding non-employees in training hours.

Health and safety metrics

Coverage

In 2024, 57% of Embla Medical's workforce was covered by the Safety Management System.

Methodology notes

Recordable incidents are defined as work-related incidents that result in days away from work (more than the incident day), restricted work, transfer to another job, loss of consciousness or death. Recordable incidents only include those involving the company's own employees. Non-employees and workers categorized as remote workers are excluded. Data from Fior & Gentz, as well as clinics in the Netherlands, France, and the US is excluded from the incident count.

Total Recordable Incidents Rate (TRIR) is calculated by dividing the number of recordable incidents by total hours worked by own workforce covered by the safety management system, and multiplied by 1,000,000. This rate shows the number of incidents per one million hours worked, equivalent to incidents per 500 full-time employees annually. The average annual working hours is estimated to be 1,820 hours, based on a standard 40-hour workweek, adjusted for average public holidays and vacation days.

Compensation metrics (ESRS S1-16)

Pay gap

Not disclosed.

Embla Medical states a commitment to equal pay and regular salary audits but does not report the gender pay gap percentage for 2024.

Remuneration ratio

Embla Medical's total remuneration ratio is 13.4 in 2024.

Methodology

The annual total remuneration ratio is calculated by comparing the annual remuneration of Embla Medical's highest-paid individual, the CEO, which includes fixed salary, cash-based incentives, pension, and share-based payments (excluding other benefits), with the average FTE salary (excluding the CEO's remuneration and salary-related expenses apart from pension). Calculation is based on number reported in note 6 in the Consolidated Financial Statements.

Embla Medical explicitly states: "In 2024, Embla Medical is not reporting on pay gap."

Incidents, complaints and severe human rights impacts

In 2024, three discrimination and harassment cases were reported through our Speak-Up Line. The data concerning complaints and incidents of discrimination is currently based solely on reports made through this channel, as global data collection from the People function has not yet been implemented. This process is underway, and data from the People function is expected to be included in the 2025 report.

Incidents of discrimination and harassment

Fines, penalties and compensation

In 2024, Embla Medical paid no fines, penalties, or compensation for damages as a result of incidents and complaints related to discrimination, harassment, or severe human rights violations.

Severe human rights impacts

During the reporting period, there were no reported cases, fines, penalties, or compensation for damages associated with severe human rights incidents through the Speak-Up Line or any other channels within Embla Medical.

Methodology

Data on incidents, complaints and severe human rights impacts is taken directly from the Speak-Up Line. Data is currently based solely on reports made through the Speak-Up Line, as global data collection from the People function has not yet been implemented.

Business conduct policies and corporate culture

Embla Medical has implemented several policies to manage business conduct and corporate culture, grounded in the company's core values of Honesty, Frugality, and Courage. These policies guide ethical and transparent governance across the organization.

Code of Conduct

Scope: All employees globally; also applies to all individuals employed by or affiliated with Embla Medical entities

Oversight and approval: The President and CEO, along with top management, serve as key spokespersons. The Audit Committee monitors Code of Conduct updates.

Key content: The Code of Conduct outlines norms, rules, responsibilities, and proper practices at Embla Medical. It guides employees in day-to-day activities, ensuring compliance with all applicable laws and legislation. Together with company values, it maintains and strengthens company culture. The Code includes sections on human rights, labor rights, human trafficking, forced or child labor, and Third-Party relationships, including focus on working with business partners who support commitment to the UN Global Compact.

Public availability: Available on the company website at https://emblamedical.com/policies

Link to international standards: Embla Medical fully subscribes to Principle 10 of the UN Global Compact: "We will work against corruption in all its forms, including extortion and bribery"

Training and implementation: All employees are required to complete regular training on the Code of Conduct, which is also integral to the onboarding process for new employees. The Code is available in all main languages of Embla Medical's office locations and operations. In 2024, 99% of employees were trained in the Code of Conduct.

Human Rights Policy

Scope: All persons employed by or affiliated with Embla Medical entities; extends to operations and value chain

Key content: The company pledges to operate in a manner that respects and promotes human rights, including labor rights, across all aspects of operations. The policy is designed to promote honest and ethical conduct. Embla Medical is committed to eradicating all forms of discrimination, providing a safe and healthy work environment, and does not tolerate any form of modern slavery, including forced labor, child labor, compulsory labor, or human trafficking.

Public availability: Available on the company website

Application to suppliers: High-risk suppliers are required to acknowledge and sign the Embla Medical Code of Conduct, which includes sections on human rights, labor rights, human trafficking, forced or child labor.

Speak-Up Line Policy

Scope: Open to all employees, customers, and all third parties of Embla Medical

Oversight: Operated and monitored by the Corporate Governance Office in accordance with the Speak-Up Line Policy and Investigation Management Manual. The Audit Committee monitors the Speak-Up Line.

Key content: Global whistleblower and helpline system, hosted by an independent external party to ensure compliance with local regulations, GDPR and other privacy regulations. Everyone who reports an issue in good faith is guaranteed protection from retaliation, and all reports are treated confidentially. Reports can be made anonymously.

Availability: Available 24 hours every day of the year in all languages of the countries in which Embla Medical and its subsidiaries operate

Compliance: Subject to laws on Whistleblower protection, based on Directive (EU) 2019/1937

Monitoring: In 2024, there were 4 cases submitted to the Speak-Up Line (including 3 harassment and discrimination cases). The Governance Office is responsible for investigations and can escalate matters to the Audit Committee.

Anti-Bribery and Anti-Corruption (ABAC) Policy

Scope: All employees

Key content: Bribery and corruption are strictly prohibited. Embla Medical does not authorize nor tolerate any business practice that violates anti-bribery and anti-corruption laws or regulations.

Training: All employees are informed of the ABAC policy through Code of Conduct training, with selected groups receiving more detailed ABAC training. Selected groups of employees deemed to be more exposed to corruption and bribery risks undergo more in-depth training. A process for ABAC is being developed and will be implemented in 2025.

Link to international standards: Fully subscribes to Principle 10 of the UN Global Compact on anti-corruption

Performance: In 2024, there were no confirmed or reported incidents of corruption or bribery, no convictions and fines for violation of anti-corruption and anti-bribery laws, and no confirmed incidents where own workers were dismissed or disciplined for corruption or bribery-related incidents.

Health and Safety Policy

Scope: All employees across operations

Key content: Safety is the company's first priority and integral to everything they do. The company consistently adheres to relevant health and safety standards, and ensures employees are committed to providing a safe and healthy work environment. Commitment extends to continuous improvement and proactive measures to prevent accidents and incidents, fostering a culture of safety and well-being for all.

Implementation: The company has a certified environmental management system according to ISO 14001:2015 in largest manufacturing and distribution sites and in some patient care facilities. A Safety Management System provides a framework for managing safety risks, including Job Safety Analyses, quarterly fire safety audits, and health and safety training.

Diversity, Equity and Inclusion Policy

Scope: All levels of the organization

Key content: Outlines commitment to fostering an inclusive environment where every individual is valued and respected. Aims to eliminate barriers, promote equal opportunities and ensure that diversity is celebrated across all levels. The company is committed to creating a culture of acceptance and belonging, while proudly serving a diverse, global community.

Implementation: The company provides DE&I training programs (350 courses, books, videos, and audiobooks in 2024) and has global and regional DE&I councils that set targets, implement actions, and monitor progress. Employee survey scores on diversity and inclusion efforts: 8.2 on a 10-point scale in 2024.

Quality Policy

Scope: All business entities that design, manufacture and sell medical devices

Key content: Ensures products meet the highest standards of quality and safety. Quality and safety are intrinsic parts of all processes.

Certifications: Embla Medical entities maintain certified Quality Management Systems (QMS) based on ISO standards, ensuring compliance with applicable medical device regulations. Specific certifications include ISO 13485 for Össur, Fior & Gentz, and College Park; ISO 9001 for some ForMotion Clinics.

Information Security Policy

Scope: Company-wide data handling and information security

Key content: Uses ISO 27001:2022 as the standard framework. The company has set clear targets of maturity in all controls that are part of the ISO 27001:2022 framework and conducts formal internal maturity assessments annually to measure progress in implementing controls.

Personal Data Protection Policy

Scope: All personal data collection and handling to conduct business and provide services to customers

Key content: Prioritizes treating data with utmost respect and confidentiality to ensure compliance with data protection legislation.

Tax Policy

Oversight: Monitored by the Audit Committee

Payment Policy

Scope: All suppliers

Key content: Fair payment terms to foster trust and strengthen relationships with suppliers. Net 60-day term payment policy with exceptions. In 2024, the average time to pay or close an invoice was 35.5 days.

Corporate Governance

The Board approves a Corporate Governance report that includes all information in the statutory statement referred to in Article 66 (c) of the Icelandic Act Annual Accounts no. 3/2006, as well as explanations, comments and information on each recommendation in the Danish Recommendation for Corporate Governance. The report is available on the company website.

Committee Oversight

The Audit Committee has various roles including monitoring the Speak-Up Line, Code of Conduct updates, internal control systems and enterprise risk management systems, ESG/CSRD reporting, and the Tax Policy.

Incidents of corruption or bribery

Confirmed incidents

In 2024, there were no confirmed or reported incidents of corruption or bribery within Embla Medical.

Convictions and fines

In 2024, there were no convictions and no fines for violation of anti-corruption and anti-bribery laws.

Disciplinary actions

There were no confirmed incidents where own workers were dismissed or disciplined for corruption or bribery-related incidents.

Contracts terminated

There were no incidents relating to contracts with business partners that were terminated or not renewed due to violations related to corruption or bribery.

Public legal cases

In 2024, there were no public legal cases regarding corruption or bribery brought against Embla Medical and its own workers during the reporting period.

Investigation and speak-up procedures

The Embla Medical Speak-Up Line is the company's global whistleblower and helpline system, hosted by an independent external party to ensure compliance with local regulations, the General Data Protection Regulation and other privacy regulations. The Speak-Up Line is operated and monitored by the Corporate Governance Office in accordance with the Speak-Up Line Policy and Investigation Management Manual. Subject matter experts tasked with investigating reported incidents receive appropriate training.

Everyone who reports an issue in good faith is guaranteed protection from retaliation, and all reports are treated confidentially as outlined in the investigation manual. Reports can also be made anonymously. The Speak-Up Line is available 24 hours every day of the year, to anyone wishing to file a report, ask a question, or make a complaint. The Speak-Up Line is open to employees, customers, and all third parties of Embla Medical, and is available in all languages of the countries in which Embla Medical and its subsidiaries operate. Embla Medical is subject to laws on Whistleblower protection, based on Directive (EU) 2019/1937.

If needed, investigations will be outsourced to an external party. The Governance Office is responsible for the investigations and can escalate matters to the Audit Committee.

Preventive measures

All Embla Medical employees receive annual awareness training through the Code of Conduct program, which is also a part of the onboarding process for new employees. Anti-Corruption and Anti-Bribery is included in this training. Selected groups of employees who are deemed to be more exposed to corruption and bribery risks, undergo more in-depth training. The process is scheduled for implementation in 2025. Consequently, the company will not provide quantitative data regarding the training program until then.

In 2024, 99% of employees were trained in the Code of Conduct. Four cases were submitted to the Speak-Up Line in 2024 (compared to eight in 2023).

Political influence and lobbying activities

Political engagement approach

It is Embla Medical's policy not to actively engage in political activity or publicly support, or advocate for, specific political parties in the communities or countries where the company operates. Likewise, Embla Medical does not make financial contributions to political parties, including for the year 2024.

While employees may participate as individual citizens in the political process, decisions to do so are entirely personal and voluntary, and they are personally responsible for their views and actions. Only the Embla Medical Executive Management team members or those selected by the CEO may publicly express the company's views on legislation, regulations, or government action. Other employees may communicate the company's views only with specific guidance from the CEO or Executive Management team members.

Ethical standards and guidelines

Public policy issues have the potential to impact Embla Medical's business, its employees, business partners, shareholders, and the communities in which Embla Medical operates. Embla Medical believes that in certain cases it may be appropriate, and in the company's best interests to contribute or pay membership fees to trade and industry associations and coalitions. The use of any company funds for contributions to Industry Associations must be approved by the head of the relevant business unit.

Political contributions

Embla Medical does not make financial contributions to political parties. No political contributions were made in 2024 or 2023.

Lobbying expenditure

Embla Medical does not engage in lobbying activities. No lobbying expenditure was incurred in 2024.

EU Transparency Register

Embla Medical is not registered in the EU Transparency Registry. No member of the Embla Medical management or Board has held a public administrative position in the 2 years before joining the company.

Accounting policies

As stated in the accounting policies section (G1-4/G1-5/G1-6):

Political Influence and Lobbying Activities: Embla Medical does not contribute to political activities. Embla Medical's policy on political involvement is to not actively engage in political activity or publicly support, or advocate for, specific political parties in the communities or countries where we do business.

Payment practices

Average time to pay invoices

In 2024, the average time it took to pay or close an invoice was 35.5 days.

Payment terms policy

Embla Medical is in the process of implementing a net 60-day term payment policy with exceptions for direct purchases with long invoice-to-receipt times (+30 days) which have a net 90-day term. The 60-day term is encouraged but in special circumstances, such as critical suppliers, a net 30-day term is allowed. Critical suppliers are defined as key silicone and bionic part providers and certain suppliers in Asia. Legal or local restrictions require careful consideration and approval.

Legal proceedings for late payment

At the end of the year, there were no legal proceedings outstanding for late payments.

Scope and methodology

The data for the average time to pay invoices, or to close them with credit notes, includes all entities fully incorporated into the centralized Embla Medical accounts payable process and represent 91% of purchases.