Innofactor Plc

Reference: page 37

Innofactor's key sustainability bodies are the Board of Directors, the Group Executive Board, the sustainability steering group and the sustainability committee, supported by external consultants when needed. The Board has overall responsibility for sustainability reporting and resource allocation, approves the sustainability strategy and risk management principles, and confirms targets annually. The Executive Board reviews and presents the strategy, report and annual targets to the Board, with the CFO responsible for annual sustainability reporting. In 2024 the Board first comprised Anna Linden (chair), Sami Ensio, Risto Linturi and Heikki Nikku, then from October 11 Antti Kummu (chair), Sami Ensio, Timo Larjomaa and Risto Linturi; female representation fell from 25 percent to zero. The Executive Board (CEO Sami Ensio and others) shifted from 14 to 20 percent women. The seven-member steering group (57 percent women) covers HR, Communications, Legal and Finance. The Board has broad IT business expertise but no specific sustainability backgrounds, relying on Executive Board, steering group and external experts.

Reference: page 41

The sustainability steering group regularly assesses sustainability impacts, risks and opportunities under Innofactor's internal risk management principles. Group management prepares a quarterly risk assessment for the Board of Directors and Executive Board, which in 2023 and 2024 included sustainability-related risks: availability of competent personnel, personnel turnover, data protection and data security risks, and legal compliance risks (such as corruption and anti-competitive behavior) with potential exclusion from public procurement. Each assessment gives the status of every identified risk and a summary of planned remedies if a risk threshold is exceeded, and the Board uses this as a basis for decision-making. During the reporting period the Board approved the sustainability strategy, and the steering group addressed the material impacts, risks and opportunities described in SBM-3 on an ongoing basis. The Board was also informed of employee satisfaction figures and the status of data security and data protection. The Executive Board indirectly addressed sustainability themes as part of Innofactor's strategy reform.

Reference: page 41

At Innofactor, all employees are covered by an incentive scheme that the Board of Directors approves annually based on proposals from the Remuneration Committee. The key elements common to all participants are growth and profitability, and for customer-facing experts the amount of customer work is also a factor. For management, sustainability-related performance is linked to the bonus scheme through customer satisfaction and employee satisfaction. If employee satisfaction or customer satisfaction decreases compared to the preceding performance period, or falls below target, it has a decreasing effect of 10 percent on management's incentives for each of the two variables. Management's incentives do not include climate-related targets, which have not been considered relevant so far due to the nature of the company's operations.

Reference: page 41

Innofactor's operations are managed through pre-defined core processes and standards. The company's quality system defines its business model and is divided into eight documented business processes and eight support service processes. The support service processes relating to risk management, legal issues and financial reporting, and the business processes related to personnel and resource allocation, define the main issues and procedures with regard to sustainability. Innofactor does not have a separate due diligence process concerning sustainability. Instead, sustainability is taken into account in accordance with the established strategic priorities within each process relevant to a sustainability theme, for example personnel well-being in the HR process. Compliance with processes and their implementation is monitored through process metrics and internal audits, and each process has a designated owner.

Reference: page 42

A general description of Innofactor's risk management is provided in IRO-1, and the same procedure applies to risks related to sustainability reporting. Sustainability reporting is part of each applicable process, such as HR, and the reporting process can be audited internally as part of Innofactor's quality system audits. The report is audited annually in connection with the external verification of sustainability reporting. Risks related to sustainability reporting are monitored as part of the company's ordinary monitoring under the risk management process. The sustainability steering group has identified personnel turnover among persons responsible for reporting and resource allocation as key short-term and medium-term risks, and access to reliable information on the value chain as a risk when the transition period ends. However, these risks have not been considered material for the time being.

Reference: page 42

Innofactor updated its business strategy during the reporting period, with operations under the new strategy and structure starting January 1, 2025; the new strategy did not bring changes with significant impacts on the business model, value chain or material themes. The strategy focuses on solutions implemented on Microsoft platforms, covering cloud solutions, digitalization and AI-driven solutions. Innofactor is a system integrator and software development company whose core enabler is competent personnel. It offers planning of business-critical IT solutions, project deliveries, implementation support, maintenance, and develops its own software and services. The most significant categories were Digital Services, Business Solutions, Information and Case Management, Cloud Infrastructure, Data, Analytics and AI, and Cybersecurity. Around 1,000 private and public sector organizations in the Nordic countries use its solutions; companies were 51 percent of the customer base and public administration including the third sector 49 percent. Key value chain participants include own personnel, technology partners, IT hardware suppliers, subcontractors and end-users.

Reference: page 43

Innofactor's key stakeholders are customers, personnel, partners and subcontractors, and investors and analysts. Customers matter because Innofactor's success is linked to theirs, and engagement occurs through steering groups, follow-up meetings and a regular customer satisfaction survey. Personnel are central to success, engaged via the processes described in S1-2. Partners and subcontractors affect performance in helping customers succeed and are engaged as part of normal relationship maintenance. Investors and analysts influence company value and views of financial risks, engaged through regular investor information. In the double materiality assessment, Innofactor also identified public authorities, local communities, educational institutions, researchers and media as relevant. Key stakeholders participated in the 2023 stakeholder survey, whose results informed the identification of material themes and strategy priorities. The steering group continuously assesses who the key stakeholders are. In 2025 Innofactor will assess the need for a regular stakeholder survey and its interval. The strategy reform is not expected to materially change stakeholder relations.

Reference: page 45

Innofactor presents its material impacts, risks and opportunities by theme, with management measures described under each reported standard. For environment and climate change (medium and long-term), negative impacts include GHG emissions from own operations and supply chain and possible mitigation costs; positive impacts include supporting customers' emission reduction; risks include value chain impacts on IT equipment availability and transition costs; opportunities include promoting digital and energy-efficient solutions and new sustainability data business. For own employees (short and medium-term), themes cover workload, equality, working conditions and terms, with risks of availability of competent professionals and turnover, and opportunities for growth and a responsible employer image. Workers in the value chain involve indirect impacts on working conditions and human rights among subcontractors. Business conduct concerns ethical operations, anti-corruption and public procurement exclusion risk. Data security and data protection concerns unauthorized access, leaks and ransomware. No material financial effects from these risks were identified in 2024, and no climate resilience analysis was conducted.

Reference: page 48

Innofactor's sustainability steering group assesses, at least once per reporting year, the company's material sustainability-related impacts, risks and opportunities across the sustainability themes. The assessment considers whether new risks, opportunities or impacts have been identified, whether new sustainability-related risks should be added to the risk register or business development opportunities identified, the risks and opportunities arising from actual and potential impacts of operations, whether a new stakeholder survey is needed, and whether an external expert should verify the assessments. Innofactor applies a risk management process within the scope of ISO9001, ISO27001, AQAP2110 and ISO13485 certification, covering all functions rather than specific functions, business relationships or geographical areas, and taking account of impacts connected through own operations or business relationships. Stakeholder feedback also informs the assessments. For each identified risk or opportunity, Innofactor defines the category, likelihood, financial effect, owner and management measures. Innofactor does not prioritize sustainability-related risks separately, applying the same process to all risks, and reviews its Group-level risk register regularly.

Reference: page 49

A list of the disclosure requirements reported by Innofactor is included in the table of contents of the sustainability report, and a list of data points based on other EU legislation is available in the section IRO-2 List of Datapoints Based on Other EU Legislation. Innofactor has assessed E1 Climate change, S1 Own workforce, S2 Workers in the value chain (on a preliminary basis) and G1 Business conduct as material. It applies a transitional provision for ESRS S2 and, under transitional provisions, its 2024 reporting does not include Disclosure Requirement E1-9 on anticipated financial effects from material physical and transition risks and potential climate-related opportunities. Environmental topics such as pollution, water and marine resources, resource use and circular economy, and biodiversity and ecosystems (E2 to E5), as well as affected communities (S3) and consumers and end-users (S4), were not considered material. Data security and data protection, while material to Innofactor, fall outside the scope of the ESRS disclosure requirements and are discussed in a dedicated report section.

Reference: page 50

Innofactor has started work on its transition plan for climate change mitigation. The company states the aim is to report on the transition plan in the sustainability report covering the year 2025, so a full transition plan is not yet in place for FY2024. The disclosure does not state a specific net-zero or carbon-neutral ambition or a target year. Disclosure requirement E1-8 Internal carbon pricing was assessed as non-material because Innofactor does not apply internal carbon pricing schemes. The company also reports under the EU Taxonomy that it has not identified activities aligned with the environmental objectives, so taxonomy-eligible activities account for 0 percent of net sales (EUR 77,576 thousand), capital expenditure (EUR 472 thousand) and operating expenditure (EUR 8,706 thousand).

Reference: page 54

Innofactor adheres to its own environmental policy and recognizes climate change mitigation as part of its sustainability strategy. The policy guides measures to respond to climate change challenges and reduce adverse environmental impacts across the company's own operations and the delivery of solutions to customers. Its principles include continuous development, improvement of preventative actions, and reacting to the changing operating environment. Office energy consumption is monitored regularly and reduced where possible; as premises are leased, the company can only partially influence electricity use, so it favors modern collaboration tools and online meetings over business travel. The policy applies to the entire Innofactor Group and is publicly available. It will be updated in 2025 to address deployment of renewable energy. The sustainability steering group, including the CFO and Chief People Officer, oversees implementation. Innofactor does not have policies aimed at climate change adaptation.

Reference: page 54

Innofactor's key 2024 climate change mitigation measures included a project to set emission reduction targets and create a transition plan (estimated five person-days, covering the entire Group), and the first-time use of renewable district heat for the Espoo Campus, which cut emissions from heating the company's premises by 57 percent versus 2023. Planned 2025 measures include continuing work on the Group-wide transition plan and setting emission reduction targets to be validated by the Science Based Targets initiative (SBTi) in 2025, including specifying measures, an implementation plan, and responsible parties. The implemented and planned measures did not require significant capital or operational expenditures during the reporting period, and current estimates indicate they will not require significant capital or operational expenditures going forward.

Reference: page 54

Innofactor joined the Science Based Targets initiative (SBTi) in March 2025. In 2024 the company began work on setting its own emission reduction targets, and once completed it will seek SBTi validation for them in 2025. Innofactor states it will disclose the emission reduction targets, the planned measures to achieve them, and the monitoring process in its sustainability report covering the year 2025. As such, no quantified GHG reduction target, base year, target year, or reduction percentage is reported for FY2024. In 2024 Innofactor did not separately monitor the effectiveness of its climate-related policies and actions, and it has not set targets related to climate change adaptation.

Reference: page 55

Innofactor reports total energy consumption of 1,917.5 MWh in 2024. Total fossil energy consumption was 174.1 MWh (9.1 percent of total). Consumption from nuclear sources was 22.1 MWh (1.2 percent). Total renewable energy consumption was 1,569.5 MWh, giving a renewable share of 81.8 percent of total energy consumption. The renewable total comprised fuel from renewable sources including biomass (6.6 MWh), purchased or acquired electricity, heat, steam and cooling from renewable sources (1,562.0 MWh), and self-generated non-fuel renewable energy (0.9 MWh). Energy intensity for activities in high climate impact sectors was 0.025 MWh per EUR 1,000 of net sales, calculated by dividing total energy consumption by the Group's net sales.

Reference: page 55

Innofactor's GHG emissions are calculated per the GHG Protocol Corporate Standard by an external provider, covering 15 Group sites across Finland, Sweden, Norway and Denmark. For 2024: Gross Scope 1 emissions were 9.7 tCO2eq (vehicle fuels 9.7, own energy production 0.1). Gross location-based Scope 2 emissions were 200.7 tCO2eq and gross market-based Scope 2 emissions were 80.5 tCO2eq. Total gross Scope 3 (indirect) emissions were 370.4 tCO2eq, comprising purchased goods and services 44.3 (IT procurement 38.5, cloud and data center services 5.9), waste generated in operations 14.1, business travel 155.5 (flights 93.2, car 39.6, hotel nights 22.6), and employee commuting 156.5. Total location-based emissions were 580.9 tCO2eq and total market-based emissions were 460.6 tCO2eq. GHG intensity was 0.007 (location-based) and 0.006 (market-based) tCO2eq per EUR 1,000 of net sales.

Reference: page 61

During the reporting period, Innofactor did not take measures to enhance natural sinks or apply technical solutions to remove GHGs from the atmosphere in its own operations or its upstream and downstream value chain. Instead, Innofactor finances carbon sequestration projects by purchasing carbon credits in certified GHG emission mitigation projects outside the company's value chain. In 2024 it purchased carbon credits corresponding to its 2023 GHG emissions, amounting to 444 tCO2eq (Resex Rio REDD+ Project, 222 tCO2eq, and Safe Water Project, Uganda, 222 tCO2eq). In 2025 Innofactor will purchase carbon credits corresponding to its 2024 market-based GHG emissions, amounting to 460.6 tCO2eq. A decision on financing of carbon sequestration projects is made annually.

Reference: page 61

Innofactor complies with local collective agreements and local legislation, and personnel policies are documented in the HR policy process description. Beyond legal compliance, the company is committed to ILO and UN principles on human rights as applicable. The Chief People Officer holds operational responsibility for implementing and developing personnel policies and for social responsibility relating to the workforce. KPIs for personnel-related risks are documented and monitored regularly as part of HR and business processes, at the level of the whole personnel, by country, and by business area. Reported figures are calculated per the standard and drawn mainly from the ERP system, employee satisfaction system, and the insurance company. Innofactor focuses on equal treatment of applicants; for example, applicants are not asked about gender during recruitment. In line with its sustainability strategy, the company aims to be inclusive, trains supervisors on inclusivity, and follows the Employee Value Proposition "Be the Real You" under a "People First" principle.

Reference: page 61

Innofactor maintains a culture of open dialogue that encourages feedback and information sharing through internal communications, news and briefings. Group-wide result briefings are held quarterly, and country-specific and business-specific briefings monthly, so personnel have a comprehensive picture of business issues. The Chief People Officer is part of the Executive Board, helping ensure the voice of personnel is heard throughout the organizational hierarchy. Innofactor conducts a weekly employee satisfaction survey giving everyone the opportunity to provide anonymous feedback and discuss matters with their supervisor, business management and HR. The shop steward and occupational safety delegate also serve as the mouthpiece of personnel towards the employer, and the company always complies with local legislation on employee representation.

Reference: page 61

Under Innofactor's HR policy there are several channels for giving feedback and raising concerns. Concerns can be expressed directly to one's supervisor, the HR function or personnel representatives, and are handled per internal processes depending on the nature of the matter. Concerns can be raised anonymously via the company's internal whistleblowing channel or the weekly employee satisfaction survey, which all employees can access through their work devices. Survey results are reviewed monthly in personnel briefings. To ensure anonymity, the survey is carried out by a third party and data processing is documented on the intranet. As part of induction training, each employee acknowledges in writing their commitment to zero tolerance and the obligation to report any observations of bullying, harassment and discrimination.

Reference: page 62

In line with its sustainability strategy, Innofactor puts people first, supports well-being and development, and promotes equality, diversity and inclusion. During the reporting period, measures included reduced working time arrangements, training for managers, an early intervention model, and tripartite co-operation between occupational health, supervisors and personnel. These aim, in the short and medium term, to minimize turnover, promote well-being, and address employees' ability to cope with work demands and life circumstances. Similar measures are planned for the next year. Innofactor provides ergonomic workstations at all locations, ensures necessary breaks, and monitors workplace well-being through the weekly satisfaction survey, adopting new practices based on feedback. Significant workforce impacts are monitored by the HR function, which employed an average of seven people in 2024. People Managers, who work as full-time supervisors in business units, also play a key role; there were 10 People Managers in 2024.

Reference: page 63

Innofactor monitors employee satisfaction and personal perceptions (weekly pulse), sickness-related absences, personnel turnover and competence development. In 2024, employee satisfaction was at a good level of 7.5/10 (2023: 7.4/10), and the target is to maintain satisfaction above 7.5/10. Sickness-related absences are monitored as a percentage of total hours worked; in 2024 the rate was 2.8% (2023: 2.2%), with a target to keep it low (less than 2.5%). Personnel turnover in 2024 was 11.5% (2023: 15.1%), with a target to keep it at a moderate level. These targets apply to the objectives of Innofactor's HR process and business operations and to the entire personnel. Targets are set annually, monitored on an ongoing basis, and set by the Chief People Officer with business management. Targets and outcomes are openly reviewed with personnel in briefings, taking into account prior-year feedback.

Reference: page 63

Innofactor monitors the number of active personnel, excluding employees on absences of more than three months; figures reflect the situation on the last day of 2024. Total personnel at year-end was 546. The gender split was 27% women and 73% men. By country: Finland 76%, Sweden 12%, Norway 10%, Denmark 2%. The detailed breakdown was: Finland 417 (73% male, 27% female), Sweden 68 (72% male, 28% female), Norway 52 (75% male, 25% female), Denmark 9 (78% male, 22% female). By contract type: permanent employees 541 (73% male, 27% female), temporary 5 (60% male, 40% female), hourly 5 (40% male, 60% female). Personnel turnover in 2024 was 11.5% (2023: 15.1%), with 77 employees leaving Innofactor in 2024. Among active personnel the average duration of employment was six years in 2024.

Reference: page 64

A total of 98 workers employed by subcontractors worked at Innofactor in 2024. The age and gender distribution of subcontractors' employees is not reported. Most of Innofactor's subcontracting agreements are flexible (hourly) and based on customer needs.

Reference: page 64

Innofactor's employees in Finland are subject to Innofactor's company-specific collective agreement, excluding management, with a coverage of 94%. Only one collective agreement is applied to personnel in Finland. Personnel in Sweden are subject to a local collective agreement with 96% coverage. The personnel in Norway and Denmark are not covered by a collective agreement. The collective agreement coverage for the entire personnel is 84%.

Reference: page 64

The gender diversity of the Executive Board is disclosed in the GOV-1 paragraph on the role of the administrative, management and supervisory bodies. The overall workforce gender split is 27% women and 73% men. The age distribution of the personnel in 2024 was: under 30 at 13%, 30 to 50 at 58%, and over 50 at 29%.

Reference: page 64

Innofactor pays all employees at least the minimum wage in accordance with the legislation of each country, as well as the minimum wage stipulated by the applicable collective agreements.

Reference: page 64

Innofactor's employees reside in the European Economic Area and are subject to the applicable national legislation regarding social security. Innofactor has employees in Finland, Sweden, Norway and Denmark.

Reference: page 64

Innofactor does not collect or process data on persons with disabilities for reporting purposes and does not consider the collection or processing of such data to satisfy the necessity requirement laid down in the Act on the Protection of Privacy in Working Life.

Reference: page 65

At Innofactor, learning takes place as part of day-to-day work, combined with self-study, training and certificates, and the company focuses on high-quality induction training. In line with the annual calendar, supervisors hold quarterly feedback discussions to review targets and outcomes. As part of the employee satisfaction survey, personnel are asked about their perceptions regarding opportunities for personal development, through the questions "Do you feel that you have the opportunity to learn and develop your skills" and "Do you feel that you receive sufficient training and development opportunities to perform your work". In 2024, both of these metrics were at a good level of 7/10 (2023: 7/10). Innofactor does not measure hours spent studying; the training metric monitored is the number of work-relevant certificates, which totaled 1,006 in 2024.

Reference: page 65

Innofactor complies with local legislation and collective agreements regarding occupational safety and health, and healthcare is arranged per local practices with each employee covered by healthcare services. Operations consist of office work, so occupational accidents primarily occur in connection with commuting. In 2024, the number of fatalities from work-related injuries and ill health was 0 (2023: 0). The number of occupational accidents was 1 (2023: 0), and occupational accidents during commuting numbered 6 (2023: 3). The number of incidents of work-related ill health (occupational diseases) was 0 (2023: 0). The number of lost days due to fatalities from occupational accidents, injuries or ill health was 0 (2023: 0). The rate of work-related injuries was 1 (2023: 0). The one occupational accident in 2024 did not lead to an absence or permanent harm or injuries. The sickness-related absence rate was 2.8% (2023: 2.2%).

Reference: page 65

All Innofactor employees are entitled to family-related leave in accordance with the social policy and/or applicable collective agreements. Persons on a director's contract are also entitled to family leave in accordance with the collective agreements. In 2024, the percentage of the entire personnel taking family leave was 9.7% (2023: 6.8%), of which 32% were women (2023: 33%) and 68% were men (2023: 67%). In addition, under Innofactor's company-specific collective agreement, the first 36 days of the parental leave period after pregnancy leave are compensated equally for the non-birthing parent.

Reference: page 65

Innofactor's pay policy is based on treating employees as equally as possible. Pay is influenced by the role and the demands of the job, as well as the person's experience and competence. Pay comparisons between the Nordic countries are challenging due to differences in currency and cost level, so only the figures for Innofactor's employees in Finland are reported in this section. The gender pay gap in 2024 was 6% (2023: 8%). The annual total remuneration ratio for Finland in 2024 was 38% (2023: 38%). The CEO's remuneration is described in the annual remuneration report.

Reference: page 66

Innofactor has zero tolerance for bullying, harassment and discrimination. In 2024, there were no reported incidents of discrimination (including harassment) or human rights violations at Innofactor, and the company was not subject to any fines, penalties or compensation for damages related to such incidents. Whistleblower reports are processed by independent persons and always in compliance with local legislation governing whistleblower protection. As a rule, whistleblower reports are processed without delay by the Group's lawyer, and the whistleblowing channel is accessible via Innofactor's intranet. If necessary, an independent committee is established to handle the matter, and external experts may be used. The opportunities of the personnel to raise concerns are also described in paragraph S1-3 on processes to remediate negative impacts and channels for own workers to raise concerns.

Reference: page 66

Transparent business in line with high ethical standards is the basis of all Innofactor operations. Business conduct guidelines are available to personnel through Innofactor's quality management system. Potential violations can be detected as part of internal quality audits. The Code of Conduct sets out the general principles and guidelines that all employees must commit to, and a Code of Conduct test is mandatory for new employees. No separate Code of Conduct training was organized in 2024. Innofactor also maintains anti-bribery and anti-corruption guidelines, having assessed that the largest risk group for bribery and corruption is the people responsible for sales. An internal whistleblowing channel allows employees to report any suspected misconduct or unethical activities, and reports can be submitted anonymously.

Reference: page 66

Innofactor has processes covering partners and subcontracting that set requirements for its suppliers. It does not have separate guidelines on payments to small and medium-sized undertakings; instead it adheres to the terms of each agreement. At the start of each procurement or partnership, the party approving the procurement is obligated to ensure the selected partner is committed to Innofactor's Code of Conduct, or that the partner otherwise meets the ethical business conduct standards Innofactor requires (for example through the partner's own Code of Conduct or similar policy). Innofactor has not identified its subcontracting chains or technology partners as particularly at-risk with respect to sustainability themes. However, it continuously evaluates this and reacts to deficiencies or risks observed in partners' operations as necessary.

Reference: page 66

Innofactor has zero tolerance for bribery and corruption. It maintains an anti-corruption and anti-bribery policy approved by the Board of Directors that supplements the Code of Conduct. In 2024, a concise briefing on the policy was arranged for the sales organization. The topic is also included in the Code of Conduct training aimed at all personnel and in the onboarding of new employees as part of induction training on the Code of Conduct. Innofactor does not separately monitor the number of regular participants in these training activities. In 2025, Innofactor will assess the need to target anti-corruption and anti-bribery training at the separately identified risk groups, having determined that sales staff represent the largest risk group.

Reference: page 67

In 2024, Innofactor did not receive any reports of suspected incidents of corruption or bribery. The number of confirmed incidents was zero.

Reference: page 67

In 2024, Innofactor did not make any direct or indirect financial or in-kind contributions to political purposes or lobbying activities. During the reporting period, none of the members of Innofactor's Board of Directors or Executive Board had held a comparable position in public administration in the two years preceding their appointment. Innofactor is registered in the EU Transparency Register (identification number 662561951167-22). Innofactor is a member of the following advocacy organizations: the Software Finland Association and Technology Industries of Finland.