Leonardo

The risk governance model is in line with national and international standards and best practices and is compliant with the Corporate Governance Code for Listed Companies, the Organisational, Management and Control Model and the Group's Anti-Corruption Code. It has three levels, provides for clear-cut roles and responsibilities for the various departments and ensures a suitable exchange of information flows, to guarantee effectiveness.

The operating risk management, which involves the entire organisation, is based on the identification, assessment and monitoring of the enterprise and project risks and the related mitigation plans. It is supported by specific methodologies, instruments and metrics for the related analysis and management. The processes underlying Project Risk Management and Enterprise Risk Management (ERM), which are in turn integrated into the company business and support processes, are regularly improved, with the aim of innovating and spreading an effective risk-based organisational culture. Risk management processes support, in fact, the risk owners, along the entire corporate value chain, in identifying and managing risks and opportunities, including those linked to ESG factors. In particular, the ERM methodology fosters the identification and management of the cause-effect link between ESG factors and the potential impact on the Company (strategic, operational, financial, compliance and reputational) and supports the preparation of the Industrial Plan, which also includes the strategic vision and sustainability initiatives.

Integration of sustainability-related performance in incentive schemes

Roles covered

The integration of sustainability-related performance in incentive schemes applies to:

• CEO and General Manager
• Co-General Manager
• Group executives and managers with strategic responsibilities (Top Management)
• Managers with Strategic Responsibilities
• Top Managers of Leonardo
• Population of approximately 1,070 Group executives (for Short-Term Incentive Plan - MBO)
• Population of approximately 250 Group executives (for Long-Term Incentive Plan)
• Middle managers in Italy (assigned a bonus target starting from 2021)
• All other employees (performance bonus linked to Group's results and individual performance)

Short-term incentive (STI) scheme

10% of short-term remuneration is linked to sustainability objectives:

Sustainability KPIs:

• Leonardo's inclusion in the Dow Jones Sustainability Indices (on/off payout)
• Accident frequency Index (injury rate) (on/off payout)

Performance achieved in 2024:

• Inclusion in the 2024 Dow Jones Sustainability Index: Confirmed
• Injury rate: 1.70 in 2024

Long-term incentive (LTI) scheme

10% of long-term remuneration is linked to sustainability objectives:

Sustainability KPIs:

1. Scope 1 and 2 market-based CO2 emission reduction (calculated as intensity on revenues)
2. Increased hiring of women with STEM degrees

Performance structure:

• Two payout ranges:
  • 50% minimum target
  • 100% full target

Performance achieved:

• Scope 1 + Scope 2 (Location Based) CO2 emission intensity / Revenues: 27.70 in 2023, 22.6 in 2024
• CO2 emission intensity Scope 1 + Scope 2 (Market Based) / Revenues: 13.5 in 2024
• % of female STEM degree hires out of total STEM degree hires: 22.6% in 2022-2024

Additional details

Alignment with long-term interests: The remuneration and incentive policy in 2024 was designed to ensure a balance between the variable component of remuneration and the fixed one, while establishing a balance between short- and long-term incentives, and an alignment of the remuneration and incentive system with the pursuit of long-term interests in terms of both economic-financial performance and ESG.

Shareholder approval: 97.4% favourable votes cast by the 2024 Shareholders' Meeting on Remuneration Policy.

CEO remuneration ratio: 37x ratio of total CEO remuneration to employees' median remuneration.

Integration of 5% LTI for decarbonization: As described in the Climate Change chapter, 5% of the long-term variable remuneration of the CEO and General Manager, Co-General Manager and Group executives and managers with strategic responsibilities is linked to the reduction of CO2 emission intensity (calculated as the ratio of Scope 1 and Scope 2 market-based emissions to revenues).

Employee-wide performance bonus: Under the Company Supplementary Agreement of 21 May 2021, a portion of the remuneration of all other employees was linked to a variable component (performance bonus) linked to the Group's results of operations and, depending on the levels, to individual performance.

The Group has set out a model of responsible business conduct aimed at preventing, identifying and responding to the risk of corruption.

Thanks to its model, Leonardo SpA has reached the highest level of Transparency International's Defence Companies Index on Anti-Corruption and Corporate Transparency (DCI), in addition to having its ISO 37001 certification, the first international standard on anti-corruption management system, confirmed. Leonardo was the first company in the world's top ten in Aerospace, Defence and Security to obtain this certification. The model also provides for the responsible management of the supply chain, through the qualification, selection and management of suppliers, as well as the adoption of a risk analysis tool within the scope of due diligence audits within the process of engagement assignation to sales promoters, and other third parties.

The Group systematically carries out due diligence activities before and after the completion of partnerships and joint ventures. At this purpose, the active involvement of its top management in any related operation is aimed, among other things, at directing its strategies and identifying and managing any critical issue in a timely fashion.

The risk governance model is in line with national and international standards and best practices and is compliant with the Corporate Governance Code for Listed Companies, the Organisational, Management and Control Model and the Group's Anti-Corruption Code. It has three levels, provides for clear-cut roles and responsibilities for the various departments and ensures a suitable exchange of information flows, to guarantee effectiveness.

The operating risk management, which involves the entire organisation, is based on the identification, assessment and monitoring of the enterprise and project risks and the related mitigation plans. It is supported by specific methodologies, instruments and metrics for the related analysis and management.

Business Model

Strategic Vision: Leonardo's Industrial Plan 25-29

Leonardo operates in 150 countries in the world offering customised solutions and innovative, value-added after-sales support services in order to be a trusted partner for its customers. It competes in the most important international markets by leveraging technology and product leadership in its business areas (Helicopters, Aircraft, Aerostructures, Electronics, Cyber Security and Space).

Business Sectors

Leonardo is organised into six business Sectors. It also operates through subsidiaries, such as Leonardo DRS (Defence Electronics), joint ventures and investees.

Main Trends Impacting Business Model

Geopolitical tensions - The continuation of ongoing conflicts in Ukraine and the Middle East, and potential hotbeds in Africa and the Indo-Pacific region are destabilising global geopolitical balances, thus leading to increased focus on security and defence issues in the political debate and the stated willingness to further increase the defence budgets of major countries.

Innovation and Sustainability - The global scenario sees a transition from an exclusively Defence need to a broader concept of Global Security where digital technologies will be increasingly decisive for the management of complex scenarios, strategic and sensitive information, the management of climate and environmental emergencies, and the optimisation of available resources.

Reducing strategic dependencies - Reducing strategic dependencies is a crucial issue in ensuring a country's economic and technological security.

Integrated sustainability and sustainable finance - Sustainability is increasingly being used as a reference framework to assess how a company creates and sustains long-term value, managing the risks and opportunities in an ever-changing environment.

New skills and inclusion - The implementation and management of ecological and digital transition requires widespread development of new skills, scientific and digital above all, on which the competitiveness of businesses depends.

Interests and views of stakeholders

Stakeholder engagement approach

Continuous engagement with internal and external, domestic and international, stakeholders is a core element of Leonardo's strategy to create shared value. The Company nurtures stable, long-lasting relationships based on integrity and transparency, by dialoguing with and involving its stakeholders, through organisational units established to understand their interests and expectations.

Stakeholder relations moments include:

• Employee engagement
• Materiality analysis
• Events dedicated to the financial community
• Participation in industry associations
• Collaborations within research and technology development programs
• Support of local projects
• Digital events

These are opportunities to strengthening its bond with the industrial, economic and social context while helping the company to improving its business management practices and increasing its knowledge level, in line with the new national, European and international regulatory framework.

Integration into strategy

Stakeholder opinions that emerged during the process of defining material topics are brought to the attention of the Sustainability and Innovation Committee during the annual sharing of the outcomes of the double materiality analysis and the process it implements.

Stakeholder engagement in materiality assessment

Impact materiality assessment process (2024):

The assessment of sustainability impacts contributing to impact materiality took place through a stakeholder engagement process, which involved, through an online questionnaire and, for the Group's Sustainability Managers, a dedicated workshop, 516 people, comprising:

• 69 key internal stakeholders (C-level; Board of Directors; Sustainability Managers)
• 447 key external stakeholders identified by the Sustainability Managers for each area of competence in Italy, the United Kingdom and the United States

Data collected from stakeholder impact assessments and through a data analytics system were prioritised by using significance and likelihood criteria. Subsequently, a statistical materiality threshold was applied to the impacts. Finally, impact materiality resulted in the aggregation of impacts into 14 material topics.

Industry association membership and contributions

In 2024, membership fees for trade associations, industry and business support organisations, technical interest bodies and think tanks totalled approximately €mil. 5.5 (approx. €mil. 5.7 in 2023, approx. €mil. 5.3 in 2022, approx. €mil. 5.8 in 2021, approx. €mil. 5.2 in 2020, approx. €mil. 5 in 2019 and approx. €mil. 5 in 2018).

Most significant contributions in 2024:

• Confindustria (associated local bodies): €mil. 2.5
• AIAD (Italian Industry Federation for Aerospace, Defence and Security): €mil. 1.15
• Gama (General Aviation Manufacturers Association): €211K

Key stakeholder collaborations on circularity and eco-design

IAEG – Leonardo is a member and part of the Board of Directors, participating in working groups including "WP 14 Circularity" and "WP 12 on Life Cycle Assessment" to ensure alignment with and maintain positioning on relevant strategic trends in the industry on the topic of circular economy.

AIAD (Italian Industry Federation for Aerospace, Defence and Security) – Leonardo has contributed, in coordination with AIAD, to the drafting of the "Guidelines for adaptation of military forces and equipment to climate change".

European Defence Agency (EDF) - The Group participates in the EDF's "Incubator Forum on Circular Economy in European Defence (IFCEED)" project, contributing to Working Groups dedicated to the topics of Ecodesign and Critical Raw Materials.

European Space Agency (ESA) - Leonardo, as a signatory to ESA's "Statement for Sustainable Space", is involved in Taskforces and Working Groups on Ecodesign and Life Cycle Assessment for the Space industry.

Material Impacts, Risks and Opportunities

Risks for the Group

The Group is subject to a number of risks that may affect its objectives and results. Therefore, risk analysis and management processes are implemented systematically, including any related treatment action, with specific methodologies and practices that consider the probability of occurrence and related impacts in accordance with international regulations and standards.

Main Risk Categories and Actions:

Conflicts and geopolitical tensions - The evolution of the high tensions related to the conflicts between Israel and the Palestinians, and between Russia and Ukraine, could lead to scenario instability and new geopolitical complexities.

Government expenditure impacts - The major customers of the Group are governments or public institutions. The Group is influenced by economic and geopolitical factors at global and regional level, the rating or risk profile of countries, the expense policies of the public institutions.

Innovation and skills management - Incessant technological innovation and the growing complexity of the Group's businesses require constant alignment of skills, in order to provide high added-value products and services.

Climate change and environmental protection - The transition to a low-carbon and lower environmental impact economy may entail risks for the company, induced by greater severity of environmental and climate policies.

Cyber security risks - Companies are required to face the risks associated with cyber resilience of their products and services and their digital infrastructure, taking into account the continuous evolution of cyber threats.

Supply chain dependencies - The Group purchases, in very substantial proportions with respect to its sales, industrial products and services, materials and components, equipment and subsystems; it may therefore incur liability to its customers for operational, legal or financial risks attributable to third parties.

The operating risk management, which involves the entire organisation, is based on the identification, assessment and monitoring of the enterprise and project risks and the related mitigation plans. It is supported by specific methodologies, instruments and metrics for the related analysis and management. The processes underlying Project Risk Management and Enterprise Risk Management (ERM), which are in turn integrated into the company business and support processes, are regularly improved, with the aim of innovating and spreading an effective risk-based organisational culture.

Risk management processes support, in fact, the risk owners, along the entire corporate value chain, in identifying and managing risks and opportunities, including those linked to ESG factors. In particular, the ERM methodology fosters the identification and management of the cause-effect link between ESG factors and the potential impact on the Company (strategic, operational, financial, compliance and reputational) and supports the preparation of the Industrial Plan, which also includes the strategic vision and sustainability initiatives.

The examination of risks and consequent actions reported below is supplemented by the more detailed information provided in Note 37 of the Consolidated Financial Statements for the component of merely financial risks, and by the information provided in the specific section of the Consolidated Sustainability Statement for sustainability risks and opportunities linked to financial materiality.

The ESRS and SASB content indices in the section of the Annex attached to the "Report on Operations – Notes to the CSS" allow you to identify content requested by the respective standards and recommendations.

The Report on Operations includes the Consolidated Sustainability Statement (CSS) pursuant to Legislative Decree 125/2024, which transposes in Italy the European Directive CSRD (Corporate Sustainability Reporting Directive).

Leonardo's decision to adopt an integrated approach to its Report, has anticipated what is envisaged by the Corporate Sustainability Reporting Directive, which requires companies to publish sustainability disclosures in the Report on Operations starting from Reports issued in 2025.

Transition plan for climate change mitigation

Scope of the plan

Leonardo's climate change strategy, aligned with the new Industrial Plan and part of the Sustainability Plan, is approved by the Board of Directors. The strategy leverages digitalisation, consumption efficiency and technological advances, and data management as the main catalysts for reducing the Group's GHG emissions while promoting the development of innovative and sustainable products and services.

The transition plan covers:

• Entities: Leonardo Group operations globally
• Geographies: Sites across Europe (Italy, United Kingdom, Poland), United States, and other international locations. The physical risk analysis in 2024 screened the entire operational network, identifying 61 priority sites where 84% of the Group's total employees work
• Value chain segments: Direct operations (Scope 1 and 2), supply chain (Scope 3 Cat. 1&2), and product use phase (Scope 3 Cat. 11)

Net zero target year and decarbonisation milestones

SBTi-validated targets (validated in 2024):

Additional commitment:

• Leonardo UK is committed to achieving Net Zero by 2050 across the entire value chain, including intermediate targets as reported in the Leonardo UK Carbon Reduction Plan. Scope 1 and 2 emissions have decreased by 68% since 2018 (baseline).

Progress to date (2024 vs 2020 baseline):

• Scope 1 and 2 market-based emissions: -43% (from 423 ktons CO2e in 2020 to 240 ktons CO2e in 2024)
• Direct emissions reduced by 183 ktons CO2e compared to baseline
• Over the past four years, the Group has reduced its direct and indirect (Scope 1 and 2 market-based) emissions by 43% compared to the baseline of 2020

Paris alignment and SBTi validation

• Leonardo's near-term goal of reducing GHG Scope 1 and 2 emissions has been classified by SBTi as in line with keeping global warming within the 1.5°C threshold
• The decarbonisation targets were validated by the Science-Based Targets Initiative (SBTi) in 2024
• Leonardo is not excluded from the EU Paris-Aligned Benchmarks
• The two Scope 3 targets have been defined to cover at least 67% of the total Scope 3 emissions of Leonardo

Key decarbonisation levers and actions

Scope 1 & 2: Four key pillars

1. Energy efficiency

Full Potential Lighting Programme:

• 2021-2024 investments: approximately €29 million completed
• Savings when fully operational: about 27 GWh/year, equal to more than 8,000 tons of CO2e avoided per year
• Previous installations (2014-2020): 6,000 tons of CO2e avoided per year
• Total programme investment: approximately €31 million (of which more than €5 million in 2024)
• Estimated total reduction: about 31 GWh/year, equivalent to about 10,000 tons of CO2e avoided per year
• Programme completion expected: 2025
• ISO 50001 energy certification obtained for six production sites

2. Efficiency of energy transformation plants and processes

Thermal Energy Consumption Efficiency:

• New thermal plant at Vergiate factory replacing current steam generators
• Investment: more than €6 million (€3.4 million in 2024)
• Gas consumption reduction: about 900,000 m³ per year
• CO2e avoided: about 1,800 tons per year
• Operational: 2026
• 2024: Work commenced on efficiency analysis of additional thermal power plants at main Leonardo sites
• 2025 onwards: Detailed design on 2 pilot sites in Aerostructures Division (Nola and Pomigliano)

3. Rebalancing the energy mix and use of renewable sources

Energy Self-Production Programme:

• 19 agreements in place for construction of photovoltaic plants
• Total installable capacity: approximately 43 MWp
• Nola photovoltaic plant completed in 2024: 7.8 MWp installed capacity (approx. 20% of total), self-consumption of about 2,500 MWh in 2024
• Addendum for further plant expansion: additional 2 MWp capacity
• Status of other plants: 1 site awaiting activation, 7 sites with construction operations started, 10 sites with design and permitting activities in progress
• Estimated self-consumed PV energy when fully operational: more than 55 GWh/year
• CO2e avoided: about 17,500 tons per year

Renewable Electricity:

• Investment in 2024: more than €1.6 million
• 86% of electricity purchased by the group covered by Guarantees of Origin certifying renewable sources (up from 85% in 2023, +1 p.p.)
• Total renewable energy consumption: 591,027 MWh (39.6% of total energy consumption in 2024)

4. Other projects

SAFs for Internal Testing and Acceptance Flights:

• All Leonardo helicopter models currently compatible to fly with SAF blend of up to 50%
• Successful flight of AW139 using 100% SAFs without performance degradation
• Partnerships under consideration with SAF manufacturers to increase use during in-house pre-delivery flight activities

Scope 3: Supply chain and product decarbonisation

Supply chain engagement:

• Involving 58% of suppliers (in terms of Scope 3 Cat. 1&2 emissions) to set science-based targets by 2028
• Community of over 500 suppliers
• Awareness-raising and training programmes on sustainability reporting
• Support for suppliers in adopting SBTi targets
• 2024 achievement: approximately 21% advance over target (42% of suppliers already engaged)

Product decarbonisation:

• Focus on Scope 3 Cat. 11 (use of products sold), which constitutes more than 40% of total carbon footprint
• Development and market introduction of low-impact products (e.g., AW09 helicopter)
• Virtualisation of offering, particularly with state-of-the-art simulators
• SAF compatibility: all helicopter models compatible with up to 50% SAF blends, AW139 tested with 100% SAF
• Work on energy efficiency and alternative materials in product design

Other Scope 3 categories:

• Business travel and employee commuting: defined decarbonisation pathways
• Logistics (inbound Cat. 4 and outbound Cat. 9): monitoring and reduction initiatives
• Waste treatment/disposal (Cat. 5): improvement programmes

CapEx and investment commitments

Energy efficiency and decarbonisation investments:

• Full Potential Lighting Programme: approximately €31 million total (€29 million completed 2021-2024, more than €5 million in 2024)
• Thermal plant efficiency (Vergiate): more than €6 million (€3.4 million in 2024)
• Renewable electricity procurement: more than €1.6 million in 2024
• Energy self-production (PV plants): 19 agreements for approximately 43 MWp capacity

General sustainability investments:

• In 2024, Leonardo achieved the objective of having more than 50% of investments in support of the SDGs out of a total investment value of approximately €900 million, including capitalised R&D expenses, capital expenditures (CapEx), Tooling and other investments in intangibles
• Main impacts linked to SDG 13 "Climate Action", SDG 9 "Industry, Innovation & Infrastructure" and SDG 12 "Responsible Consumption and Production"
• R&D expenses increased by approximately 13% compared to 2023

ESG-linked financing:

• At the end of 2024, 64% of the total sources of financing available to the Group are linked to ESG parameters, including:
  • First ESG-linked Revolving Credit Facility: currently €1.8 billion
  • First ESG Term Loan: €600 million
  • First ESG-linked loan from European Investment Bank: €260 million
• All sources linked to specific KPIs, including reduction in CO2 emissions through eco-efficiency of industrial processes

Integration in Industrial Plan:

• Leonardo's near-term goal is being pursued through financial planning and investment decisions that take into account environmental parameters
• Share of investments referring to Full Potential LED Lighting Program, installation of electric charging stations and digital energy monitoring falls under scope of economic activities covered by Taxonomy Regulation (reported in Capex and Opex KPIs)
• Business plans used to assess recoverability of capitalised assets consider additional investments related to search for innovative solutions in sustainable business, reduction of emissions and decarbonisation

Locked-in emissions and stranded asset analysis

With regard to "locked-in" emissions, the company is currently evaluating and aligning its in-house methodologies and data collection practices to meet the additional information required by the ESRS standard. Although the necessary information is not yet available, the company is committed to making progress toward full alignment with the reporting requirements in the future.

Use of carbon credits and removals

Carbon credits:

• Leonardo has no GHG emission offset or mitigation projects financed with carbon credits
• No nature-based solutions are used at present
• Leonardo did not use offsets in its action plans (biodiversity context)

Internal carbon pricing:

• Leonardo makes use of the shadow price scheme
• Value determined by reference to that of European Emissions Trading Scheme (ETS) allowances
• Used for investment evaluation and decision-making purposes

Governance integration

Remuneration linkage:

• 10% of long-term variable remuneration of CEO, Co-General Manager and executives linked to:
  • 5% to reduction of CO2 emission intensity (Scope 1 and 2 market-based emissions to revenues)
  • 5% to increased hiring of women with STEM degrees
• 10% of short-term variable remuneration linked to Leonardo's inclusion in DJSI and accident frequency index
• Population involved in Short-Term Incentive Plan (MBO): about 1,070 Group executives
• Population involved in Long-Term Incentive Plan: about 250 Group executives

Board oversight:

• Climate change strategy approved by Board of Directors
• Sustainability and Innovation Committee reviews decarbonisation strategy and progress
• 2024: Analysis of sustainability strategy and Sustainability Plan 2024-2028, progress of sustainability projects and goals, and Group's decarbonisation strategy

Scenario analysis and resilience

Transition risk scenarios:

Three IEA scenarios evaluated:

• IEA NZE (Net Zero Emissions) 2050: most ambitious decarbonisation scenario
• IEA APS (Announced Pledges Scenario): full implementation of all climate commitments announced by governments, intermediate trajectory between NZE and STEPS
• IEA STEPS (Stated Policies Scenario): conservative assumption of mere implementation of existing policies

Physical risk scenarios:

Two climate pathways (SSP-RCP) used:

• RCP 8.5 ("Business-as-usual"): temperature increase of between 3.3°C and 4.5°C
• RCP 2.6 (accelerated transition): limited increase of between 1.5°C and 2.0°C

Analysis conducted in 2024 through preliminary screening of entire operational network, identifying 61 priority sites where 84% of Group's total employees work. Assessment of 8 reference climate hazards: fire, flood, extreme wind, heat, drought, intense precipitation, hail, and cold.

Key findings:

• Heat and drought identified as climate emergencies of the future
• Drought has potential to cause disruption of production activities at sites with water-dependent industrial processes
• Flood and extreme wind are most relevant acute hazards
• Two specific analyses started:
  • Drought risk analysis for sites with higher water vulnerability
  • Climate risk assessment on some industrial sites through technical surveys and detailed analysis

Industry context and alignment

ASD strategic priorities for sector decarbonisation:

• Reducing GHG emissions from operations (Scope 1 and 2), in line with 1.5°C target under Paris Agreement
• Collaborating with supply chain to minimise Scope 3 emissions
• Harnessing technology and innovation to decarbonise platforms and products

Leonardo is committed to strengthening its leadership in security and technology that can promote sustainability and climate action, aiming to avoid the most impactful effects of climate change and increase the competitiveness of the sustainable business proposition.

Policies related to climate change mitigation and adaptation

Leonardo addresses climate change mitigation and adaptation through its overarching Sustainability Management Policy framework, which is referenced in relation to E1-2. However, the excerpts do not provide the specific name of a dedicated climate change policy, nor do they disclose detailed policy-level information such as formal approval processes, scope definitions, or public availability.

Climate Change Strategy and Approach

The company's climate change strategy is described as follows:

• Governance and approval: The climate change strategy is approved by the Board of Directors as part of the Industrial Plan and Sustainability Plan
• Key content: The strategy leverages digitalisation, consumption efficiency, technological advances, and data management as main catalysts for reducing GHG emissions while promoting development of innovative and sustainable products and services
• Alignment with standards: Leonardo's near-term goal for reducing Scope 1 and 2 emissions has been classified by SBTi (Science Based Targets initiative) as in line with keeping global warming within the 1.5°C threshold
• Integration with Paris Agreement: Leonardo is not excluded from EU Paris-Aligned Benchmarks and actively adheres to ESG principles, aligning its activities with the goals of the Paris Agreement
• International frameworks: The strategy considers the EU Climate Law (Regulation (EU) 2021/1119) and follows SBTi validation protocols

Policy Implementation and Monitoring

• Responsibility: Implementation of policies is the responsibility of Managing Directors, heads of Business Units, and CEOs of subsidiaries identified by the Board of Directors
• Processes: The identification of roles and responsibilities is described in specific procedures of the integrated management system that Leonardo has adopted
• Incentive integration: 5% of long-term variable remuneration of the CEO and General Manager, Co-General Manager, and Group executives and managers with strategic responsibilities is linked to the reduction of CO2 emission intensity (Scope 1 and 2 market-based emissions to revenues ratio)
• Certification: Leonardo is ISO 27001 certified (for cyber security) and has obtained ISO 50001 energy certification for six production sites

Climate Risk Management

Leonardo takes a systematic approach to identifying and assessing climate-related risks and opportunities:

• Physical risks: Assessed through scenario analysis using two climate pathways (RCP 8.5 and RCP 2.6), involving analysis of 61 priority sites representing 84% of the Group's total employees
• Risk mitigation: The Group puts measures in place against possible acute or chronic physical risks and has specific insurance cover against possible consequences of disastrous climatic or natural events
• Transition risks: The Group addresses transition risks through its industrial strategy aimed at environment protection and improving efficiency of production systems and processes

While Leonardo has a comprehensive climate change strategy and approach integrated into its business model, the excerpts do not disclose a specific standalone climate change policy document with details on public availability, formal scope definitions, or links to specific international frameworks beyond SBTi and the Paris Agreement.

Actions and resources in relation to climate change policies

Overview of Climate Change Strategy

Leonardo's climate change strategy is approved by the Board of Directors and leverages digitalisation, consumption efficiency and technological advances, and data management as the main catalysts for reducing the Group's GHG emissions while promoting the development of innovative and sustainable products and services. The strategy is part of the Sustainability Plan and aligned with the new Industrial Plan.

Capital Allocation

Timeframe: 2024
Resources: Total investment value of approximately €900 million, including capitalised R&D expenses, capital expenditures (CapEx), Tooling and other investments in intangibles
Scope: Own operations and value chain
Outcome: Achieved objective of having more than 50% of investments in support of the SDGs. Main impacts linked to:

• SDG 13 "Climate Action"
• SDG 9 "Industry, Innovation & Infrastructure"
• SDG 12 "Responsible Consumption and Production"

Actions to Reduce Scope 1 and 2 Emissions

EU Taxonomy-aligned Investments

Actions include:

• Full Potential LED Lighting Program
• Installation of electric charging stations
• Digital energy monitoring

Scope: Own operations (8 Italian sites subject to EU ETS as of December 2024, down from 12 in 2013)
Classification: These investments fall under EU Taxonomy economic activities:

• 7.3 Installation, maintenance and repair of energy efficiency equipment
• 7.4 Installation, maintenance and repair of charging stations for electric vehicles in buildings
• 7.5 Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy performance of buildings

Note: Share of these investments reported in eligibility/alignment percentages of CapEx and OpEx KPIs under Taxonomy Regulation

Actions to Reduce Scope 3 Supply Chain Emissions

Supplier Engagement Programme

Scope: Upstream value chain (supply chain)
Actions:

• Training, awareness and support for sustainability reporting planning
• Bringing supplier decarbonisation path into line with SBTi standards
• Development of specific skills through targeted training programs, workshops, and advice
• Involving experts and industry leaders to promote sustainable solutions

Target: Engage suppliers to support them in setting science-based decarbonisation targets (SBTi-validated goal)

IAEG Collaboration Initiative (2023-2024)

Scope: Upstream value chain
Action: Voluntary adoption of shared standard for measuring ESG performance of suppliers in AD&S sector via EcoVadis platform
Scale:

• 12 major AD&S groups joined
• Pool of more than 5,000 companies in the sector
• More than 750 Leonardo suppliers assessed (relating to legal entities or large groups, corresponding to more than 1,100 individual suppliers in Leonardo's register)

Actions to Reduce Scope 3 Product Use Emissions

Virtualisation for Pilot Training

Scope: Downstream (use of sold products)
Action: Implementation of simulators enabling virtual pilot training
Impact: Significantly reduces need for flights on real platforms, reducing fuel use and climate-altering emissions
Features:

• Embedded Training Systems allow online training with real and/or virtual actors
• Tactical scenario sharing between aircraft, ground simulators and monitoring/control stations
• Real-time data exchange through data links and communication networks

EU Taxonomy Status: Production of simulators is an activity under the Taxonomy regulation for climate change mitigation objective; verification of compliance with significant contribution criteria still in progress

Product Innovation

Scope: Downstream (use of sold products)
Actions:

• Use of alternative materials
• State-of-the-art fossil fuel substitutes

Target: Enable customers to reduce emissions generated in the use phase (aligned with SBTi-validated target)

Climate Change Adaptation Solutions

Scope: Products and services
Solutions provided:

• Earth observation and monitoring products
• Solutions for monitoring climate trends
• Products capable of dealing with extreme events and emergency situations
• Global monitoring solutions for "Search & Rescue" missions
• Products capable of operating in most extreme conditions

Strategic approach: Leverages technological assets and integrated, multi-domain approach

Other Scope 3 Reduction Initiatives

Areas of action identified:

• Employee mobility
• Waste
• Logistics (inbound category 4 and outbound category 9)

Integration in Incentive Schemes

Scope: Own operations
Resource: 5% of long-term variable remuneration
Applicable to: CEO and General Manager, Co-General Manager and Group executives and managers with strategic responsibilities
KPI: Reduction of CO2 emission intensity (ratio of Scope 1 and Scope 2 market-based emissions to revenues)

Carbon Pricing for Investment Decisions

Tool: Carbon price based on EU ETS allowances
Application:

• Assess cost-effectiveness of investments to reduce emissions from installations subject to EU ETS
• Assess installations in countries where ETS-like tools may be applied in future
• Identification of energy efficiency projects
• Investments underpinning decarbonisation pathway for Scope 1 and Scope 3 upstream emissions (categories 1 and 2)
• Identification of business opportunities
• Directing R&D activities

Status: Leonardo is not excluded from the EU Paris-Aligned Benchmarks

Climate Change Targets

The decarbonisation process continued with the reduction of Scope 1 and 2 (market-based) CO2 emissions in line with the commitment to the Science-Based Targets Initiative. The further reduction of 4.4% was achieved, despite the increase in business volumes, mainly thanks to the progressive replacement of SF6 gas with a gas with a lower environmental impact, energy efficiency initiatives and the increase in the share of energy from renewable sources purchased by the network.

Energy consumption and mix

Total energy consumption and intensity

Total energy consumption (2024): 5,377 TJ (+1.2% vs 2023)

Energy intensity: 0.30 MJ/€ revenue (2024), down 13% vs 2023 (0.35 MJ/€)

Denominator: revenues reported in the Leonardo Group's consolidated financial statements.

Energy consumption by source (2024):

• Natural gas: 46%
• Purchased electricity: 45%
• Other sources (including self-generated electricity): 9%

Electricity consumption by source (2024):

• Renewable sources: 86%
• Non-renewable sources: 14%

Purchased electricity: 2,443 TJ (679 GWh) in 2024, +6% vs 2023, of which 86% from renewable sources.

Natural gas consumption: 2,469 TJ (68.6 million m³) in 2024, +1% vs 2023, mainly used for heating.

Other sources (including self-generated electricity): 465 TJ in 2024, -17% vs 2023.

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E1-5 Energy consumption and mix – ESRS disclosure requirements

Scope: 129 sites globally (2024), covering companies consolidated on a line-by-line basis. Joint ventures over which Leonardo does not exercise operational control are excluded.

Methodology: Data obtained through direct measurements (meters, consumption measurement systems), calculations (bills, invoices), or estimates based on number of employees and/or activities. Emission factors reported in ESRS content index (E1-6).

High climate impact sectors: The primary NACE code (C30.3 – Aerospace, Defence and Security) falls within high climate impact sectors; 100% of Leonardo's energy consumption and revenues relate to activities of this type.

Gross Scopes 1, 2, 3 and Total GHG emissions

Scope 1 GHG emissions

Scope 1 emissions breakdown by source (2024):

• Energy consumption: 81%
• SF6: 7%
• Other: 12%

Methodology note: Scope 1 emissions are calculated from primary data (energy consumption) reported through the Group's web-based system by direct measurement, calculation (utility bills, invoices), or estimates based on number of employees and/or activities conducted. The emission factors used are reported in the ESRS content index (E1-6). Leonardo does not exercise operational control over Joint Ventures and unconsolidated companies, so their emissions are not included in Scope 1 or Scope 2.

Scope 2 GHG emissions

Scope 3 GHG emissions

Methodology notes:

• (2) Not Applicable: Leonardo manages and pays for delivery directly, so downstream transportation is tracked under upstream (Cat. 4).
• (3) Negligible - around 0.05% of total Scope 3 emissions.
• (4) Negligible - around 0.01% of total Scope 3 emissions.
• (5) Not applicable: Leonardo's business is based on selling products, not leasing them.
• (6) Not applicable: Leonardo does not have franchises.
• (7) Negligible - around 0.5% of total Scope 3 emissions.
• Cat. 11 note: The reduction of Scope 3 cat.11 emissions does not affect the SBTi target boundary and related KPI. Leonardo's business is cyclical; a +/- 15% YoY variability between 2020 and 2030 is forecast on Cat. 1 and 11 emissions (reducing to +/-6% in 2027-2030 timeframe).

Total GHG emissions

GHG intensity

Methodology note: The denominator for all intensity KPIs is equal to the revenues reported in the Leonardo Group's consolidated financial statements (€17,763 million in 2024).

Scope 1 and 2 emissions by source (market-based, 2024)

Total Scope 1 + 2 (MB): 239,824 tCO2e (-4% compared to 2023)

• Scope 1: 185,446 tCO2e (-5% vs 2023), of which 16,096 t connected with the use of SF6 gas (-23% vs 2023)
• Scope 2 Market-based: 54,378 tCO2e (-1% vs 2023)

Regulated emissions (EU ETS)

Leonardo operates 8 Italian sites subject to EU ETS (down from 12 in 2013). In 2024, 56% of Scope 1 GHG emissions came from regulated ETS installations (52% in 2023).

Biogenic CO2 emissions

Not separately disclosed in the excerpts provided.

Multi-year trend (Scope 1 + 2 market-based intensity on revenues, g/€)

Baseline and target: Leonardo has set a SBTi-validated target to reduce Scope 1 and 2 market-based emissions by 53% by 2030 compared to 2020 baseline (423 ktCO2e in 2020). As of 2024, the Group has achieved a 43% reduction (240 ktCO2e in 2024), confirming the trend toward the 2030 target.

Scope 3 emissions trend (Cat. 3–8 & 11 per equivalent flight hour)

Target: 52% reduction in Scope 3 Cat. 3–8 & 11 emissions (tCO2e per flight equivalent hour) by 2030, compared to 2020 baseline (1.94 tCO2e/FHe). Progress as of 2024: 1.25 tCO2e/FHe (-36%).

Scope 3 Cat. 1 & 2 supplier engagement target: Involving 58% of suppliers (in terms of Scope 3 Cat. 1&2 emissions) to develop and set science-based decarbonisation targets by 2028. Progress as of 2024: 12% of suppliers (in terms of Cat. 1&2 emissions) have science-based targets.

Climate-Related Financial Effects

Physical and Transition Risks

Climate change impacts - The impact of climate changes exposes the Company to an increased frequency of acute weather events, such as floods, storms and wind, as well as droughts and fires, which can endanger industrial sites and making it necessary to extend the ranges of product operating requirements.

Transition risks - The transition to a low-carbon and lower environmental impact economy may entail risks for the company, induced by greater severity of environmental and climate policies, disharmony in the regulations of different countries with related competitive asymmetries between companies, the progress of the relevant technology or the changing confidence of investors and lenders in the relevant business.

Risk Management Actions

The Group pursues an industrial strategy aimed at the environment protection and improving the efficiency of its production systems and processes on an ongoing basis. By participating as a partner of excellence in major European research and innovation programmes, it develops technological solutions with a lower environmental impact and functional to climate change adaptation.

The Group puts measures in place against any possible acute or chronic physical risks and has specific insurance cover against the possible consequences of disastrous climatic or natural events.

Financial Integration

ESG-linked financing: 64% of sources of financing linked to ESG parameters demonstrate the integration of sustainability performance into Leonardo's financial credibility and funding access.

Policies related to pollution

Leonardo does not disclose a dedicated, named policy specifically addressing pollution (E2-1) in the excerpts provided.

The company's annex table cross-references ESRS E2-1 to the "General information – Sustainability management policy" section, indicating that pollution-related policies are addressed within the broader sustainability management framework rather than through a standalone pollution policy.

No specific policy name, scope, governance structure, key principles, public availability, linkages to international standards, or monitoring mechanisms for pollution management are disclosed in these excerpts.

Pollution Management

SF6 Gas Replacement

The decarbonisation process continued with the reduction of Scope 1 and 2 (market-based) CO2 emissions mainly thanks to the progressive replacement of SF6 gas with a gas with a lower environmental impact.

Hexavalent Chromium Phase-out

Preparatory activities were started for the phase-out of hexavalent chromium from 84 production lines in line with the requirements of the European REACH regulation.

Waste Management

Target: % reduction in the amount of waste produced: -15% by 2030 (baseline 2019: 38,499 tons). Current progress: 32,555 tons (-15% vs baseline) - target achieved.

Substances of concern and substances of very high concern

Leonardo, whose business is at the end of the supply chain, is committed to managing chemicals and mixtures deemed harmful to human health and ecosystems through material procurement and supplier qualification stages. The management of such substances is complex both because of the stringent performance, safety and certification requirements of its products and because some hazardous substances are not universally identified as such in materials entering production processes.

Leonardo has identified the hazardous substances used in industrial processes, started a rationalisation of the substances purchased, in compliance with the restrictions and exceptions provided for by the REACH Regulation, and provided for mitigation plans for each division, as well as specific objectives for the reduction, and, where technically possible, the elimination of hazardous substances from products while also taking advantage of eco-design initiatives that make it possible to identify alternatives with lower impact right from the design phase. Substitution projects involve operating expenses that are incurred from essentially in-house sources. In addition, in some cases Leonardo collaborates, when useful, with third-party business partners to identify, develop and test together alternative solutions, including within the framework of national and European research and funding programs, and involves suppliers in the management of hazardous substances and compliance with REACH regulations through contractual clauses and training courses on the subject.

In compliance with the REACH Regulation and the RoHS Directive, Leonardo targets the reduction of the use of hexavalent chromium in processes for hard coatings of parts with high thermomechanical strength and a need for corrosion protection in very challenging environments. The Group has also started an analysis of PFAS (Per- and Polyfluoroalkyl Substances) in the supply chain, which are present in paints or insulation and elastic materials for a gradual reduction of their use in its processes and products. During 2024, the "Phase out of CrVI" project planned an investment of €mil. 6.86 for the complete substitution of hexavalent chromium with alternative substances in all of the Group's approximately 80 industrial processes by 2034, and the elimination or replacement of CrIV was achieved for some processes as early as in 2024.

Collaboration with stakeholders on the use of hazardous substances

ASD - Leonardo participates and leads the working group of the European Aerospace and Defence Association (ASD) on REACH and chemical substances, supporting the actions towards the European Commission and Parliament and the dialogue with the European Defence Agency (EDA).

AIAD (Italian Industry Federation for Aerospace, Defence and Security) - Leonardo also chairs AIAD's REACH Working Group to coordinate dialogue with the Italian Ministry of Defence and political counterparts.

MoD UK – Leonardo participates in the UK Ministry of Defence's Sustainable Procurement Working Group to share best practices in managing industry policies, including REACH regulations and GHG protocols.

ADCR - Leonardo participates in the Aerospace and Defence Chromium ReAuthorisation Consortium (ADCR), contributing to specific reports, including a socio-economic analysis in which it involved over 70 key suppliers that could be impacted by the substitution plans, in order to mitigate the risk of discontinuity in the business particularly linked to the substitution of some chromates with alternative solutions.

RINA-Centro Sviluppo Materiali – Within the working group on Critical Raw Materials, Leonardo has activated collaboration with RINA-Centro Sviluppo Materiali, one of the research and development partners, concerning alternative coating creation techniques, preferring chemical processes with reduced environmental impact.

Quantitative disclosure

Leonardo is equipped with specific tools for collecting and reporting information related to substances of very high concern (SVHC) and substances of concern (SoC) to ensure compliance with current regulations. In Leonardo, the use of these tools, combined with the strong working synergy, therefore allow a proactive assessment and management of the impacts on both health and environmental matrices, as well as, through appropriate mitigation plans, a minimisation of risks related to the use of these substances. Likewise, the Group requires its suppliers to comply with current regulations related to the use of these substances, enhancing these best practices towards end customers as well.

Anticipated financial effects from pollution-related impacts, risks and opportunities

Phase-in exemption

Leonardo has decided to use the phase-in clause for this Disclosure Requirement, as required by ESRS 1 "Appendix C: List of phased-in Disclosure Requirements".

Policies related to water and marine resources

Leonardo does not disclose a specific named policy dedicated to water and marine resources in the provided excerpts.

The company cross-references the disclosure requirement E3-1 to the section "General information – Sustainability management policy" (as shown in the mapping table on page 377), but the excerpts provided do not contain the content of that referenced section.

The excerpts describe:

• A water management strategy with two pillars (network efficiency and water circularity)
• Management systems that monitor production growth and water consumption
• Projects through the Sustainability Plan aimed at mitigating water scarcity risks
• Specific implementation actions (Water Audit Cycle, Smart Water Programme, treatment plant upgrades)
• A 25% water withdrawal reduction target by 2030

However, these appear to be strategic approaches, actions, and targets rather than formally documented policies with defined scope, governance, approval mechanisms, or links to international standards. The document structure indicates that policy information should be found in the "Sustainability management policy" section, which is not included in the provided excerpts.

Water Consumption

Target: % reduction in water withdrawals: -25% by 2030 (baseline 2019: 5,653 ML). Current progress: 4,492 ML (-21% vs baseline).

Performance: Work continued to improve efficiency in water consumption through circularity and optimisation and revamping of supply networks, achieving more than 130 Megaliters of water withdrawals reduction per year.

Anticipated financial effects from material water and marine resources-related impacts, risks and opportunities

Leonardo has decided to use the phase-in clause for this Disclosure Requirement, as required by ESRS 1 "Appendix C: List of phased-in Disclosure Requirements".

Transition plan and consideration of biodiversity and ecosystems in strategy and business model

Integration into corporate strategy and business model

Leonardo has designed a strategy aimed at decoupling business growth from resource consumption and mitigating impacts on environment and biodiversity, which leverages its technological capabilities and focuses on:

• monitoring and control of ecosystems both local at the sites where it operates and global
• promoting circular businesses throughout the value chain
• reducing the use and recycling of raw materials (including critical materials and water), and replacing them with innovative technological processes

During 2024, Leonardo started the first stages of the LEAP framework process with a view to continuous deepening and improvement in line with the Group's strategy of decoupling business growth from the use of natural resources.

Use of frameworks

In identifying targets, metrics, actions and plans to be implemented for biodiversity protection, the Group considers:

• the "EU Biodiversity Strategy for 2030"
• the "EU Nature restoration Law"
• the "Kunming-Montreal Global Biodiversity" framework

Leonardo applies the TNFD (Taskforce on Nature-related Financial Disclosures) recommendations and the LEAP approach (Locate site specific interactions, Evaluate Impacts and Dependencies, Assess Risks and Plan Actions).

Biodiversity targets and approach

In accordance with the data-driven approach that informs the Group's sustainability strategy, the biodiversity transition plan will be designed on the basis of measurable KPIs and objectives.

Leonardo deploys actions that in some cases produce a reduction in impacts on biodiversity, such as those for decarbonisation and optimisation of environmental resources while in others they enable biodiversity gains, as in the case of actions for active regeneration of ecosystems.

Leonardo did not use offsets in its action plans.

Geographic and value-chain scope

In 2024 Leonardo started a biodiversity assessment based on its own operations, applying the LEAP approach. Specifically, the assessment involved the 35 largest production sites that account for 38% of the Group's industrial footprint.

The analysis started during 2024 focused on the Group's direct operations, with the aim to gradually extend the scope of the analysis to the upstream and downstream value chain in the coming years. Specifically, the supply chain was only considered in the analysis of biodiversity impacts related to the procurement of technical and natural raw materials.

Linkage to nature-related risk assessment

In adopting a multidisciplinary approach, Leonardo has:

• identified material impacts and dependencies for manufacturing activities through an on-desk analysis by using the ENCORE tool
• assessed physical and reputational risks based on the geographical area of manufacturing sites by using the WWF Filter software tool
• analysed ecosystems and prioritised sites through the IBAT software (Integrated Biodiversity Assessment Tool), based on criteria of materiality of business impacts and sensitivity. The latter in particular measures the vulnerability and reparability of ecosystems for species through the STAR methodology

Main impacts identified:

• emission of toxic pollutants to water and soil
• disturbance factors such as noise, EM radiations, and light from facilities
• abiotic resource extraction related to use in the Critical Raw Materials Group
• use of land

Main dependencies identified:

• resilience of ecosystems to extreme weather events such as storms and floods
• water purification, ensuring water quality including in reservoirs used for water withdrawal at sites
• solid waste remediation through decomposition and metabolisation
• climate regulation and cultural education
• biomimicry-based technology research activities

Physical risks identified:

• change in the use of land, related to the size of Leonardo production sites
• pollution

Reputational risks identified:

• the impact on protected/conserved areas and local communities

From the analysis of the results of the work performed, a list of the sites whose interdependencies are found to be the greatest has been prepared and will be investigated in further steps of analysis.

Actions and investment commitments

Leonardo implements numerous actions to protect biodiversity, referring to the specific features of the geographical area in which the various production sites are located. Examples include:

• Reforestation of forests with native species (specifically, at the Cameri site as a remedial action at newly-built facilities and at the Foggia site)
• Specific development projects to assess and minimise the acoustic, luminous and electromagnetic impacts of products in the electromagnetic sensor domain for the environment and air transport, as well as the dispersion of harmful materials and substances
• At the Vergiate airport, Leonardo implements practices to minimise the impact on local flora and fauna by combining them with the safety of helicopter testing operations
• In the United Kingdom, more than 50 employees and suppliers participated in the reforestation project consisting of planting 10,000 native shrubs to create hedges at two sites, which are crucial because they provide food and habitat for pollinators

Biodiversity assessment pilot project at the Nerviano site:

The Nerviano site, with the highest potential for ecosystem restoration among those analysed, was the subject of a specific assessment project conducted by 3Bee and involving a team of specialists. The aim is to extend this type of assessment and cover other priority sites.

The in-depth on-site assessments carried out by 3Bee are based on satellite data from Copernicus and specific sensors installed on site, which detect the concentration of PM 2.5 and PM 10 particulate matter and the presence of pollinating insects through acoustics. Specific hives of bumblebees have also been installed, which promote the pollination of plant species, in addition to enabling their monitoring.

In this way, a biodiversity KPI was measured, which considers the impact of the change in the use of land (MSA-LU, Medium Species Abundance due to Land Use), as well as hydrogeological risk indices.

Business opportunities

Leonardo acts as a provider of services and a supplier of products for biodiversity protection, seizing its business opportunities. Technologies for monitoring and observing the evolution of local and global ecosystems, and protecting natural capital are mainly based on satellite monitoring and artificial intelligence.

Examples include:

• Natural emergency response and disaster recovery systems, including the C-27J Fire Fighter aircraft and IR camera sensors for monitoring warm-blooded animals and mainly mammals for research and wildlife reporting purposes
• In the oceanic domain: the OIC visible hyperspectral instrument for photosynthesis, natural process for CO2 capture, and pollution detection for NASA's PACE satellite platform
• In the terrestrial domain: ESA's satellite (FLEX - FLuorescence, EXplorer) to be launched in 2025 equipped with the high-resolution spectrometer Floris to detect fluorescence intensity from 800 km
• Satellite services for forest and agricultural monitoring and the development of solutions in the field of water and food insecurity within the framework of the CENTAUR project as part of the Copernicus services

Policies related to biodiversity and ecosystems

Leonardo has disclosed one specific policy related to biodiversity and ecosystems:

Biodiversity Policy

• Approval and oversight: Approved by the CEO in June 2024
• Scope: Group-wide, covering the value chain and involving external stakeholders
• Key content and principles:
  • Promoting business growth while aiming to reverse the trend with respect to the use of natural resources throughout the value chain
  • Reduction and mitigation of impacts on nature and the environment
  • Protection and regeneration of ecosystems and biodiversity starting from protected areas and/or high-biodiversity areas (KBAs) with critical habitats for flora and fauna species near production sites
  • Reducing the impacts of deforestation on site by promoting habitat protection and regeneration and reforestation projects
  • Encouraging the use of renewable energy sources and reducing climate-altering emissions to mitigate climate change, reduce pollution and preserve the habitats of flora and fauna in the areas surrounding production sites and in the context of product testing and training activities (airports)
  • Promoting the sustainable and traceable use of natural raw materials and water resources
  • Reducing the use of hazardous substances used in industrial processes
  • Leveraging technological innovation to also assess and mitigate impacts on biodiversity
• Public availability: Not specified
• Link to international standards: The policy references biodiversity impacts as defined by IPBES (Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services) and the Taskforce on Nature-related Financial Disclosures (TNFD) recommendations, covering: land-use change, freshwater and sea; exploitation of material resources; climate change; pollution; invasive species
• Monitoring implementation: Not disclosed

Related policies referenced

The document also references:

• Group HSE Policy (mentioned as a main reference document for the environmental part)
• Supplier Code of Conduct (mentioned as a main reference document for the environmental part)

Actions and resources related to biodiversity

Reforestation with native species

Description: Reforestation of forests with native species at production sites

Scope: Own operations

Sites/locations:

• Cameri site (remedial action at newly-built facilities)
• Foggia site (identified as one of the most impacted in analysis)
• Vergiate airport (practices to minimise impact on local flora and fauna combined with helicopter testing operations safety)
• Two sites in the United Kingdom (planting 10,000 native shrubs to create hedges)

Resources allocated:

• Non-financial: More than 50 employees and suppliers participated in UK reforestation project in 2024

Expected outcomes: Habitat protection and regeneration; food and habitat provision for pollinators (UK sites)

Link to policy: Biodiversity Policy (June 2024) - commitment to habitat protection and regeneration and reforestation projects

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Biodiversity assessment pilot project at Nerviano site

Description: Specific assessment project conducted by 3Bee involving specialist team using satellite data from Copernicus and on-site sensors to detect PM 2.5/PM 10 particulate matter and presence of pollinating insects through acoustics. Installation of bumblebee hives to promote pollination and monitoring.

Scope: Own operations

Site: Nerviano (identified as site with highest potential for ecosystem restoration)

Time horizon: Pilot project with intention to extend to other priority sites

Resources allocated:

• Non-financial: Partnership with 3Bee; team of specialists; specific sensors; bumblebee hives

Expected outcomes/KPIs: Biodiversity KPI measured considering impact of land use change (MSA-LU, Medium Species Abundance due to Land Use) and hydrogeological risk indices

Link to policy: Biodiversity Policy - commitment to reduction and mitigation of impacts on nature and environment, protection and regeneration of ecosystems

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Development projects to assess and minimise environmental impacts

Description: Specific development projects to assess and minimise acoustic, luminous and electromagnetic impacts of products in electromagnetic sensor domain, as well as dispersion of harmful materials and substances

Scope: Own operations (product development and testing)

Applications: Air transport and environmental monitoring products

Link to policy: Biodiversity Policy - commitment to leveraging technological innovation to assess and mitigate impacts on biodiversity

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Employee and supplier conservation actions (UK)

Description: Involvement of employees and suppliers in conservation actions to improve ecosystems in areas off sites

Scope: Own operations

Location: United Kingdom

Resources allocated:

• Non-financial: 50+ employees and suppliers participated in 2024

Expected outcomes: Ecosystem improvement in off-site areas

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Stakeholder collaborations

CSR Europe - Biodiversity Alliance

• Participation with leading global industry partners
• Aim: share best practices on ecosystem management, intercept biodiversity trends, propose improvements in EU Biodiversity regulation

NBFC Strategic Partnership

• Framework agreement with NBFC (National Biodiversity Future Center)
• Coordinated by National Research Council of Italy (CNR)
• Purpose: plan biodiversity regeneration actions; leverage business opportunities in nature tech market

Somerset Wildlife Trust Consultancy (UK)

• Partnership for on-site biodiversity audits
• Identify ecosystem enhancement opportunities based on planting
• Aligned with Biodiversity Net Gain regulations metrics

Link to policy: Biodiversity Policy - commitment to involve external stakeholders throughout value chain

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Technology and services for biodiversity protection (business opportunities)

Description: Provider of services and supplier of products for biodiversity protection based on satellite monitoring and artificial intelligence

Scope: Downstream value chain (products and services)

Technologies/products:

• Natural emergency response and disaster recovery systems (C-27J Fire Fighter aircraft, IR camera sensors for monitoring warm-blooded animals/mammals)
• Hyperspectral radar and EO technologies for vegetation health assessment and flora damage detection based on chlorophyll photosynthesis analysis
• OIC visible hyperspectral instrument for NASA's PACE satellite (oceanic domain: photosynthesis, CO2 capture, pollution detection)
• FLORIS high-resolution spectrometer for ESA's FLEX satellite (to be launched 2025, terrestrial domain)
• Satellite services for forest and agricultural monitoring (CENTAUR project within Copernicus services)
• Solutions for water and food insecurity

Link to policy: Biodiversity Policy - commitment to leveraging technological innovation

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Note on targets

Leonardo has not set specific biodiversity targets beyond those on climate change, water, pollution and waste. Relevant targets include:

• Reduction of water withdrawals (especially in water scarcity areas) to reduce competition between natural habitats and industrial systems
• Reduction of waste to reduce potential pollution during treatment and recycling phases

Site proximity metrics: 42.5% of total Leonardo site area is near or within protected areas and/or areas of high biodiversity value (75 sites within 5 km radius covering 19 km²; 30 sites within 5-20 km radius covering 3 km²)

Targets related to biodiversity and ecosystems

Not disclosed.

The excerpts indicate that Leonardo references "Environmental information – Biodiversity and ecosystems – Metrics" for E4-4 disclosure requirements, but no actual targets related to biodiversity and ecosystems are provided in the extracted sections.

Impact metrics related to biodiversity and ecosystems change

Sites near protected areas and Key Biodiversity Areas (KBAs)

The surface of Leonardo sites near or within protected areas and/or areas of high biodiversity value is about 42.5% of the total area.

Analysis scope and methodology

In 2024, Leonardo started a biodiversity assessment based on its own operations, applying the LEAP approach. The assessment involved the 35 largest production sites that account for 38% of the Group's industrial footprint.

The analysis included:

• Identification of material impacts and dependencies using the ENCORE tool
• Assessment of physical and reputational risks using the WWF Filter software tool
• Analysis of ecosystems and prioritisation of sites through the IBAT software, based on criteria of materiality of business impacts and sensitivity (using the STAR methodology)

The analysis started during 2024 focused on the Group's direct operations, with the aim to gradually extend the scope of the analysis to the upstream and downstream value chain in the coming years. The supply chain was only considered in the analysis of biodiversity impacts related to the procurement of technical and natural raw materials.

Restoration activities

In 2024, more than 50 employees and suppliers participated in the reforestation project consisting of planting 10,000 native shrubs to create hedges at two sites in the United Kingdom, which are crucial because they provide food and habitat for pollinators.

Main impacts and dependencies identified

Main impacts are related to:

• Emission of toxic pollutants to water and soil
• Disturbance factors such as noise, EM radiations, and light from facilities
• Abiotic resource extraction related to use in the Critical Raw Materials Group
• Use of land

Main dependencies are:

• Resilience of ecosystems to extreme weather events such as storms and floods
• Water purification, ensuring water quality including in reservoirs used for water withdrawal at sites
• Solid waste remediation through decomposition and metabolisation
• Climate regulation and cultural education
• Biomimicry-based technology research activities

Anticipated financial effects from biodiversity and ecosystem-related impacts, risks and opportunities

Leonardo has decided to use the phase-in clause for this Disclosure Requirement, as required by ESRS 1 "Appendix C: List of phased-in Disclosure Requirements".

Policies related to resource use and circular economy

Leonardo cross-references E5-1 to the "General information – Sustainability management policy" section of their report. However, the excerpts provided do not contain the actual content of that section or any specific named policies related to resource use and circular economy.

The excerpts indicate that:

• Leonardo has policies related to resource use and circular economy (as evidenced by the cross-reference)
• These policies are documented in the "Sustainability management policy" section
• The company provides data on resource inflows (26.7 ktonne of raw materials consumed in 2024) and resource outflows (waste)
• Targets on waste reduction were set on a voluntary basis

Without access to the "General information – Sustainability management policy" section referenced in the index, the specific policy names, scope, governance, content, public availability, and monitoring mechanisms cannot be identified from the provided excerpts.

Circular Economy Actions

Circular Supply Chains

Leonardo promotes circular supply chains for strategic materials, which through recycling for internal or external use of secondary raw materials reduce material costs and improve production resilience.

Circular Carbon Fiber

With research and development projects that place us as the first in Italy, work continued on the implementation of the circular carbon fiber supply chain for aerostructures application.

Digital Factory Transformation

An example of the transformation of production systems is NEMESI, with the first smart factory applied to an entire production line completed in 2024 at the Aerostructures division plant in Pomigliano.

Critical Raw Materials Recovery

Critical raw materials, such as lithium, aluminium, titanium or semiconductors and rare earths, are indeed essential for technological and industrial development, and recovering these resources through recycling not only reduces dependence on third-party suppliers, but also contributes to environmental sustainability by reducing the ecological impact of mining.

Resource Use and Circular Economy Targets

Target achieved: The waste reduction target of -15% by 2030 has been achieved in 2024.

ESRS E5-4 Resource Inflows

Leonardo discloses the following resource inflows for the reporting period 2024:

Total Materials Used

In 2024, Leonardo consumed approximately 26.7 ktonne of raw materials (compared to 25.3 ktonne in 2023), including:

• approximately 10.4 kton of iron and steel alloys (8.9 kton in 2023)
• about 0.8 kton of paper and cardboard including packaging (0.8 kton in 2023)
• approx. 0.143 kton of aluminium, bauxite and alumina (purchased critical raw materials)
• approx. 0.015 kton of magnesium (critical raw materials purchased)
• approx. 6.9kt of semi-finished products (7.1kt in 2023)

Formal E5-4 Disclosure Table

Context

Within its manufacturing processes, Leonardo uses raw materials and semi-finished products. In particular, it processes significant quantities of critical raw materials such as aluminium and titanium and high-value circular materials such as carbon fiber composites, down to small quantities of rare earths and conflict minerals for digital transition. Another significant type is materials with a packaging function. In 2024, Leonardo purchased a total of 23.6 ktonnes of materials. Among them, none related to reused or recycled secondary components.

Resource Outflows

Waste Management Performance

Target: % reduction in the amount of waste produced: -15% by 2030 (baseline 2019: 38,499 tons). Current progress: 32,555 tons (-15% vs baseline) - target achieved.

Circular Economy Initiatives

Work continued on the implementation of the circular carbon fiber supply chain for aerostructures application and initiatives aimed at encouraging the transition to a circular economic model.

Anticipated financial effects from resource use and circular economy-related impacts, risks and opportunities

Leonardo has decided to use the phase-in clause for this Disclosure Requirement, as required by ESRS 1 "Appendix C: List of phased-in Disclosure Requirements".

Waste

Total waste produced:

The environmental indicators related to water withdrawals and waste generated showed an improvement (by 5.7% and 1.5%, respectively), thanks to water network efficiency projects and waste reduction management measures, despite the increase in business volumes and the entry of the Telespazio Group into the scope of consolidation.

Waste data (2023-2024):

Waste recovery:

57% of waste recovered (as reported in the business profile section).

Waste management target:

Leonardo has set a target of 15% reduction in the amount of waste produced by 2030 compared to 2019 baseline (38,499 tons in 2019 to 32,555 tons target in 2030, representing a 15% reduction already achieved as of 2024).

Management approach:

Leonardo promotes a policy of reducing impacts through the efficiency of production processes, the implementation of waste reduction plans and circular economy programs. The Group is committed to reducing the use of hazardous substances and preparations. Leonardo's commitment to implementing the ISO 14001-certified HSE Management System at all Group sites ensures both compliance with the limits and restrictions imposed by environmental regulations and monitoring of the process of reducing impacts.

The gradual replacement of harmful chemicals used in aviation with REACH-compliant alternatives is underway, thus ensuring greater sustainability and a lower environmental footprint.

Note: The report does not provide detailed breakdown by waste type (hazardous vs non-hazardous), waste diverted from disposal vs directed to disposal, or specific waste treatment methods (recycling, recovery, landfill, incineration).

Policies related to own workforce

Leonardo has adopted multiple policies governing its own workforce, grounded in respect for human rights and aligned with international frameworks.

Code of Ethics

International alignment:
The Code of Ethics reflects Leonardo's commitment to respect human rights universally recognised in line with:

• United Nations' Universal Declaration of Human Rights
• International Labor Organisation (ILO) Conventions
• Organisation for Economic Co-operation and Development (OECD) guidelines
• Charter of Fundamental Rights of the European Union

Scope:
The Code extends to direct and indirect employees, suppliers, customers and anyone who has any kind of relationship with the company.

Key principles:
Leonardo's commitment to respect for human rights is expressed within its Code of Ethics.

Charter of Values

Key principles:
The Charter of Values reinforces Leonardo's vision regarding respect for human rights.

Scope:
Accessible to all stakeholders.

Group Policy on Human Rights

Approval and oversight:
Approved by the CEO.

Scope:
Accessible to all stakeholders.

Key principles:
Reinforces Leonardo's commitment to human rights protection. The policy lays out Leonardo's commitment to:

• Carry out activities in full respect of human rights
• Promote the culture of integrity outside the company
• Support dissemination among stakeholders
• Identify potential risk areas through periodic monitoring mechanisms
• Optimise effectiveness of prevention and mitigation actions

Monitoring:
Leonardo provides for:

• Dissemination of the contents through awareness-raising and training actions
• Verification of effective implementation through appropriate periodic monitoring mechanisms
• Continuous improvement of human rights protection

Grievance mechanism:
Leonardo makes available to all stakeholders specific mechanisms for the management of reports (signed or anonymous) through:

• Whistleblowing Management Guidelines
• Dedicated channel: humanrights@leonardo.com

Supplier Code of Conduct

Approval:
Approved by the CEO in 2024.

Basis:
Based on the International Forum on Business Ethical Conduct (IFBEC).

Scope:
Defines rules of conduct and fundamental principles that Leonardo expects of its suppliers.

Key commitments required from suppliers:

• Protection of the right to work and equal opportunities
• Promoting dignity, health, freedom, equality of all workers
• Rejecting all forms of discrimination
• Non-involvement in forced labour, human trafficking, and exploitation of child labour
• Payment of minimum wages and benefits legally mandated
• Working conditions, working time and fair compensation complying with laws
• Safety and protection of health in the workplace in compliance with Health & Safety regulations

Application:
100% of suppliers accept the Code of Conduct within the accreditation and pre-qualification process in Leonardo's supplier register and in Joscar.

Diversity, Equity and Inclusion Policy

Key principles:
The policy lays down the rules the Group has adopted in relation to:

• Respecting diversity
• Promoting a collaborative and inclusive working environment
• Preventing any type of discrimination

Group HSE Policy

Key principles:
The main reference document for environmental, health and safety management.

Related policies:
Leonardo has also adopted:

• A policy for the management of materials procured in conflict areas, with particular attention to due diligence on incoming materials concerning respect for human rights, including through the Human Rights Impact Assessment tool related to conflict minerals

Additional workforce-related policies and practices

Maternity and paternity protection (Italy):
In Italy, the rules governing permits and leave to protect maternity and paternity are mainly laid down in Legislative Decree 151/2001. For metalworking companies, the matter is also governed by the current National Collective Labour Agreement (CCNL). Specific better provisions on the subject for Leonardo employees are also laid down in the current Company Supplementary Agreement.

Work-life balance:

• Italy: 2 weeks of fully-paid secondary parental leave, plus 1 additional day offered by Leonardo
• United Kingdom, United States, and Poland: 2 weeks of fully-paid secondary parental leave

Social clauses:
Leonardo envisages social clauses to protect workers in the case of contract handovers. Additional safeguards are provided for the benefit of workers employed by contractor firms through the supplementary agreement, negotiated with trade union representatives. These safeguards range from health and safety, social security, union rights to employment guarantees.

Taking action on material impacts on own workforce

Gender Equality Strategic Plan (GESP)

Scope: Own operations
Time horizon: 2024-2028 (medium/long term)
Link to policy: Integrated into Leonardo's Sustainability Plan 2024-2028; supports achievement of Gender Equality certification UNI/PdR 125:2022

Description: The GESP addresses diversity and equal opportunity across multiple areas: culture and strategy, governance, training and growth opportunities, pay equity, parenting and work-life balance protection, and communication.

Core principles:

• Compliance with DE&I laws, rules and regulations
• Promotion of and respect for multiculturalism
• Active listening to people's needs
• Training initiatives and programs dedicated to women's empowerment and promotion of STEM study paths
• Promotion of better work-life balance, including programmes and tools to enhance parenting and care
• Strategies for managing needs of different generations
• Measures to foster inclusion and development of people with visible and invisible disabilities
• Training on unconscious bias for entire company population

Monitoring: Progress tracked through dedicated digital platform and periodic reporting campaigns monitoring milestones, costs, and KPIs.

Major DE&I Projects within GESP:

1. Springboard Programme

• International project for personal and professional development of women
• Aims to strengthen self-awareness, assertive style, positive thinking, goal achievement
• Outcome (2024): 4 international editions completed; community now consists of >250 women from different nationalities across Leonardo Group

2. LIFEED

• Digital programmes for parents with children aged 0-18 and caregivers
• Transforms life experiences into professional skills through life-based learning
• Challenges stereotype that career and private life are in conflict

3. Employee Resource Group (ERG)

• Scope: Italy and UK
• Outcome (2024): First 2 ERGs launched in Italy (gender equality and disability), joining 7 already active in UK
• Composed of ~40 Leonardo people in Italy translating DE&I plan into concrete actions based on DE&I 2024 Survey evidence

4. Disability programmes

• Outcome (UK): Leonardo UK accredited as Disability Confident Level 2 Employer
• Recognition of commitment to bring disability skills and talents to workplace

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Employer Branding and Talent Attraction

Time horizon: 2024 (short term, ongoing)

Actions include:

1. Induction and development programs

• Collaboration with Universities for best new graduate/undergraduate talent
• Named programmes: HR Graduate Program, Future Loading, Sustainability Excellence Program, DeepDive (thesis projects), Girls@Polimi (scholarships)

2. Partnerships for women in technology

• New partnerships to make high technology attractive to women
• Support inclusion and promotion of professional opportunities

3. Referral program

• Employees refer professionals and receive bonus if hired
• Strengthens attraction and recruitment strategy

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Skills Development and Training

Scope: Own operations
Approach: Lifelong learning, upskilling and reskilling with sustainable perspective

Key initiatives:

1. Skills mapping framework

• Revised in 2024 using Draup talent intelligence platform
• Enables analysis of emerging roles and competencies in Aerospace & Defence sector

2. Training platforms and programmes:

• Coursera training platform: MOOCs for continuous learning
• "UP" international advanced management training course
• Skillgym digital platform: Soft skill development
• Sustainability Excellence Programme: Development experience for Sustainability professionals and employees confronting sustainability issues

3. PM Academy

• New training course for project and program managers from all business sectors
• Participants (2024): ~300 PMs
• Includes soft skill training scenarios on SkillGym platform created specifically for Leonardo

4. Procurement & Supply Chain training

• Part of Supplier Engagement Plan
• Topics: GHG emissions measurement, Science-Based Targets, decarbonisation levers, supplier engagement
• Participants (2024): 209

5. Internal mobility - Job posting

• Ensures appropriate career plans and internal development
• Outcomes (2024): Internal filling of open positions: Italy 13%, Poland 13%, US 5%, UK 23%

Overall outcomes (2024):

• 61.5% of employees hold STEM qualification
• 42.54% of new hires hold STEM qualification
• ~1.4 million hours of training delivered
• 1,281 training courses activated with educational system (including stages, apprenticeship programs, traineeships, school-to-work alternation)

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Health and Safety

Policy link: HSE Management System certified to ISO 45001
Time horizon: Ongoing (short/medium/long term)

Actions:

1. Management system and audits

• Internal and external health and safety audits
• Aimed at maintaining certifications, compliance, continuous improvement plans
• Outcomes (2024):
  • 77% of employees work at sites with ISO 45001 certified H&S Management System
  • 2,016 audits conducted (1,896 internal, 120 external)
  • 1.7 injuries per million hours worked (-16.5% vs 2023)

2. Health programmes

• Supplementary healthcare
• Workplace Health Promotion initiatives for prevention and adoption of healthy behaviors

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Additional Information

Voluntary resignation rate (2024): 3.8% of total employees

Parental leave enhancements:

• Italy: +1 additional day of fully-paid secondary parental leave beyond statutory 2 weeks
• UK, US, Poland: 2 weeks fully-paid secondary parental leave (statutory)

Workforce Targets

Progress: We have continued to work to promote a work environment that values gender diversity, a commitment demonstrated by the increase in both female managers and the hiring of women with STEM degrees compared to 2023.

Workforce Characteristics

Geographic Distribution:

• Italy: 36,704 employees
• United Kingdom: 8,957 employees
• United States: 7,782 employees
• Poland: 3,300 employees
• Rest of the World: 3,725 employees

Growth: In 2024 the workforce increased by 6,902 employees compared to 2023, including as a result of the consolidation of Telespazio on a line-by-line basis from 1 January 2024 (3,261 employees as at the date of consolidation). Growth is mainly divided between Italy (about +2,000), the United Kingdom (about +700), the United States (about +460) and Poland (about +390), thanks also to the stabilisation of the employment contracts.

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

Non-employee workers

Methodology

Non-employees' data are related to supervised workers, calculated as the number of people as of Dec. 31, 2024.

Collective bargaining coverage and social dialogue

Overall Coverage

Key Statistics

• 99% of employees in OECD countries
• 75% of employees under collective agreements
• 22% of employees are members of trade unions

Geographic Coverage - 2024

EEA Countries (>50 employees representing >10% total employees)

Non-EEA Countries (>50 employees representing >10% total employees)

Geographic Coverage - 2023

EEA Countries (>50 employees representing >10% total employees)

Non-EEA Countries (>50 employees representing >10% total employees)

Social Dialogue Arrangements

Leonardo guarantees political and trade union rights through its Human Rights Policy. The company promotes health and safety, workplace conditions, and diversity culture and inclusion through working groups formed by company and labour union representatives.

Employee perspectives and their representatives' views regarding risks and impacts on Leonardo's workforce related to sustainability issues are taken into account in the materiality analysis.

Leonardo has implemented various employee listening and engagement initiatives, including:

• Diversity, Equity & Inclusion survey 2024 (over 14,200 participants in Italy)
• Company Catering Survey 2024 (40 Leonardo Group locations in Italy, 54% response rate)

Collective Bargaining Developments 2024

Since January 2024, Leonardo began implementing measures from the Company Supplementary Agreement signed on 20 December 2023, including:

• Adjustments to pay schemes
• Strengthening of supplementary healthcare and pension model
• New forms of protection for death or permanent disability
• Leonardo Loyalty Bonus and birth bonus
• Additional forms of flexibility in working hours for parenting, frailty, inclusion, gender equality, care needs, and support for victims of gender-based violence

In 2024, Leonardo used social shock absorbers limited to the Grottaglie production unit, with an agreement signed with Trade Unions for the Ordinary Redundancy Fund scheme.

Diversity Metrics

Performance: We have continued to work to promote a work environment that values gender diversity, a commitment demonstrated by the increase in both female managers and the hiring of women with STEM degrees compared to 2023.

Targets:

• Women on total new hires: 32% by 2025 (current: 24.1%)
• Women on total new hires in STEM areas: 30% by 2025 (current: 23.2%)
• Women at managerial levels: 20% by 2025 (current: 17.7%)
• Women on total employees: 20% by 2025 (current: 20.3%) - target achieved

Adequate wages

Leonardo states it undertakes "the guarantee for fair and adequate wages (taking account, also through second level bargaining, inflation in the various geographical areas)". The company monitors working hours, overtime, involves workers' representatives to verify work conditions, and monitors any gap between male and female salaries. Social protection measures are provided in addition to what is mandated by national collective labor agreements.

For its value chain, Leonardo's Supplier Code of Conduct includes commitments regarding "payment of the minimum wages and benefits legally mandated, as well as working conditions, working time and fair compensation complying with the laws and the standards applicable in the countries where the supplier operates".

No living wage benchmark (e.g. Fair Wage Network, WageIndicator, Anker Methodology, or similar) is disclosed. The company references "fair and adequate wages" and considers inflation through second-level bargaining, but does not specify measurement against a living wage standard as defined by ESRS S1-10. For suppliers, only minimum wage compliance with local laws is referenced.

No coverage percentage of workforce assessed against a living wage benchmark is provided. No specific targets or methodology for ensuring living wage adequacy are disclosed.

Social protection

Coverage and approach

Leonardo applies the provisions of the relevant collective bargaining agreements in case of events related to illness, injury, maternity and retirement, in order to ensure adequate protections for its people.

Key initiatives (2024)

Since January 2024, Leonardo implemented measures from the Company Supplementary Agreement signed on 20 December 2023, including:

• Supplementary healthcare and pension model: Strengthened coverage for all employees
• Protection for death or permanent disability: New forms of protection activated
• Parental support: Birth bonus and additional flexibility in working hours for parenting needs
• Early retirement: Concluded the early retirement plan under Article 4 of Law no. 92/2012 (launched in 2022), with 105 employees voluntarily joining since January 2024

Geographic scope

Defined-benefit pension plans: The Group sponsors defined-benefit pension plans in the UK and the US, and other minor plans in Europe. Under these schemes, the Group is required to ensure a specific future retirement benefit level for participating employees.

Parental leave coverage

Fully-paid secondary parental leave provisions by country:

• Italy: 2 weeks mandated + 1 additional day offered by Leonardo
• United Kingdom, United States, Poland: 2 weeks fully-paid secondary parental leave

Social shock absorbers (2024)

In 2024, Leonardo resorted to social shock absorbers limited to the Grottaglie production unit, with recourse to the Ordinary Redundancy Fund scheme following a union agreement.

Persons with disabilities

Employees with disability

Employees with disability by gender

Training and Skills Development

Training delivered: 1.4 million hours of training delivered to employees

Training opportunities: 1,281 training opportunities including internship, apprenticeship, traineeship and school-to-work alternation programmes

New hires with STEM qualifications: 7,434 new hires, 42.5% hold a STEM degree, 50.5% under 30 and 24% women

Skills management: The Group monitors and manages competencies and professional skills by means of plans of action directed at attracting, retaining and motivating its human resources, managing talents, providing ongoing specialist training and reskilling/upskilling, insourcing core competencies and defining succession plans, with the gradual adoption of state-of-the-art tools of People Analytics and new Lifelong Learning development and training platforms for all personnel, particularly in the STEM (Science, Technology, Engineering & Mathematics) area.

Health and safety metrics

Coverage by health and safety management system (S1-14)

77% of employees work at sites with ISO 45001 certified Health and Safety Management System (2024).

Injuries and injury rate

Fatalities

Occupational diseases and lost days

Notes:

• The injury is defined if it has been communicated to the competent authorities and if it has caused the inability to work for one or more days.
• The Injury Rate (IR) is calculated using the formula: (Total injuries/Total worked hours)*1,000,000.
• Non-employee workers refer to the category of supervised workers.

Additional context

• 1.7 injuries per million of hours worked (-16.5% vs 2023)
• 2,016 audits conducted on health and safety, of which 1,896 internal and 120 external
• 16.5% reduction in the injury rate compared to 2023

Work-life balance metrics

Leonardo reports work-life balance metrics covering entitlement to and uptake of parental leave, disaggregated by gender.

Parental leave metrics (2023-2024)

Fully-paid secondary parental leave policy

In Italy, the number of weeks of fully-paid secondary parental leave is 2 weeks. Leonardo offers 1 additional day of fully-paid secondary parental leave. In the United Kingdom, the United States, and Poland, the number of weeks of fully-paid secondary parental leave is 2 weeks.

Work-life balance initiatives

In 2024, Leonardo strengthened its Welfare&Wellbeing strategy with the launch of the Family Wellbeing pillar, including:

• Leonardo Summer Camp: weeklong summer camp for children of employees aged 6-17, attended by more than 500 children
• Leonardo Care: counselling and guidance service for employee caregivers, enabling access at subsidised rates to in-home nursing services, companionship services, social-welfare and social-healthcare-workers

Compensation metrics

Pay gap

The gender pay gap as a percentage (unadjusted headline figure) is 98% for 2024 (unchanged from 2023).

Gender pay gap by remuneration quartile (2024):

The total median value of the remuneration ratio is 104%. 10% of employees with the highest remuneration is composed of 18% women and 82% men.

Gender pay gap by employee category (2024):

Remuneration ratio

The annual total remuneration ratio of the highest-paid individual (CEO) to the median employee is 37:1 for 2024 (compared to 36:1 in 2023).

The total compensation of the CEO remained unchanged against a percentage increase of 8% in the median total compensation of employees.

Methodology

Remuneration ratio is calculated on 96.5% of employees using the following formula: women average remuneration/men average remuneration.

For the calculation of the remuneration ratio, remuneration received by employees during the year, valued on a cash basis, was used.

Value Chain Worker Policies

Supplier management: The model provides for the responsible management of the supply chain, through the qualification, selection and management of suppliers, as well as the adoption of a risk analysis tool within the scope of due diligence audits.

Supply chain training: 198 key suppliers received training on sustainability issues in 2024, with a target of ≥ 500 by 2027.

ESG integration: 20% (in value) of major new tenders awarded include ESG criteria/requirements, with a target of >70% by 2028.

Supplier engagement: Leonardo has been pursuing its policy of strengthening and improving the supply chain for some years, leveraging a transparent and sustainable partnership relationship with the excellences in its Supply Chain, to give rise to a more innovative, integrated and resilient industrial eco-system.

Engagement with Value Chain Workers

Supplier development programs: In addition to the programmes already in place or completed (LEAP, ELITE Leonardo Lounge), the Company has defined a set of principles and rules for the assessment of key suppliers, specifically oriented towards the development and growth of the Supply Chain with a view to long-term sustainability (Leonardo Assessment and Development for Sustainability).

Training and collaboration: The cluster aims to engage suppliers to expand Leonardo's commitment to sustainability throughout the value chain. It encapsulates the collaboration, development and training initiatives of suppliers - mostly SMEs - on digital transformation, cyber security, and social and environmental responsibility.

Science-based targets engagement: In 2024, internal training activities were started to engage suppliers in defining their science-based decarbonisation goals, which is among Leonardo's SBTi-validated objectives.

Value Chain Worker Impact Management

Due diligence processes: The Group systematically carries out due diligence activities before and after the completion of partnerships and joint ventures. A due diligence is performed before dealing with a third party under an offset agreement, which is conducted according to the relevant international best practices.

Risk assessment: The Company has defined a set of principles and rules for the assessment of key suppliers, specifically oriented towards the development and growth of the Supply Chain with a view to long-term sustainability (Leonardo Assessment and Development for Sustainability).

Supply chain resilience: Third-party acquisitions of suppliers relevant to the Group could change the terms and conditions of contract renewals, with costs or timing being less convenient for the Company. Leonardo manages this through transparent and sustainable partnership relationships with excellences in its Supply Chain.

Value Chain Targets

Supply chain sustainability engagement: Internal training activities were started to engage suppliers in defining their science-based decarbonisation goals, which is among Leonardo's SBTi-validated objectives.

Policies related to affected communities

Leonardo does not disclose specific named policies dedicated to affected communities under ESRS S3-1. The company cross-references to the "General information – Sustainability management policy" section for policies related to affected communities.

Cross-referenced policy frameworks

The disclosure indicates that Leonardo's approach to affected communities is covered within its broader sustainability management policy framework. The company explicitly states:

• Link to international standards: The policies address human rights policy commitments aligned with:

  • United Nations Guiding Principles on Business and Human Rights (UNGPs)
  • ILO principles
  • OECD guidelines

• Additional note: The company references "See also chapters 'General Information', paragraph 'Due Diligence' and 'Social Information', paragraph 'Consumers and End Users'" suggesting policies are embedded in broader frameworks rather than specific standalone policies for affected communities.

Disclosure limitations

Leonardo has not established specific standalone policies exclusively addressing affected communities. The company relies on its general sustainability management policy framework and due diligence processes to address impacts on affected communities.

Community Impact Management

Local value creation: The creation of shared value for the communities in the vicinity of production sites has also been strengthened thanks to the activities organised with Plastic Free and the collaboration with the Banco Alimentare ETS Foundation, for the collection of surplus food from canteens.

Educational initiatives: Training and engagement activities were strengthened on sustainability and DE&I issues, as well as were activities aimed at promoting STEM subjects in support of the educational system and the local area. These include the Leonardo Constellation project, carried out in collaboration with Il Cielo Itinerante and 10 other associations that work on social change by sharing Leonardo knowledge and hosting children at the Italian sites.

Community solutions: Leonardo has identified the issue as a priority both for the business and in terms of the materiality of its impacts, risks, and opportunities. The benefit of the solutions offered by the Group in the area of protecting territories, infrastructure and citizens, as well as in the area of emergency management, is recognised, even by stakeholders, as the most relevant impact generated by Leonardo on society, consistent with purposes and strategy.

Policies related to consumers and end-users

Leonardo has explicitly stated that at Group level, Leonardo has not set policies on these issues for the time being.

The company cross-references to its Sustainability management policy for general information, but does not indicate this policy specifically addresses consumers and end-users.

Reference to international standards

The disclosure references:

• UNGPs on Business and Human Rights
• OECD Guidelines for Multinational Enterprises

However, no specific policy implementation is described in relation to these frameworks for the consumers and end-users topic.

Complaint handling

For remediation processes (S4-3), Leonardo states that "The process for handling complaints is as described in the whistleblowing section," but this does not constitute a dedicated policy for consumers and end-users.

Consumer and End-User Impact Management

Global security solutions: Security has once again become a key issue on the agendas of many countries, and related investments increased, with the primary goal of protecting the building blocks of our society: people, institutions, natural resources, climate, territories, and infrastructure.

Multi-domain solutions: Leonardo has identified the issue as a priority both for the business and in terms of the materiality of its impacts, risks, and opportunities. The benefit of the solutions offered by the Group in the area of protecting territories, infrastructure and citizens, as well as in the area of emergency management, is recognised, even by stakeholders, as the most relevant impact generated by Leonardo on society.

Solutions portfolio: Solutions for security and progress in 150 countries - The solutions offered and developed by Leonardo include the most innovative global monitoring solutions, which, by integrating real-time data and information from multiple sources and multiple domains, and analysing it with AI algorithms, strengthen the ability to prevent, respond to, and manage any possible crises in increasingly complex scenarios.

Customer services: These include the gradual virtualisation of customer services that Leonardo has carried out in the aircraft field, through remote collaboration and online training that have reduced time and environmental impacts and increased the effectiveness and timeliness of customer support.

Business Conduct and Corporate Culture

Anti-corruption certification: Leonardo achieved the target set for 2024 by obtaining the renewal of ISO 37001:2016 certification in July. Annual renewal/maintenance of the ISO 37001:2016 "Anti-Bribery Management System" certification with maintenance targets for 2025 and 2026.

Leadership recognition: Thanks to its model, Leonardo SpA has reached the highest level of Transparency International's Defence Companies Index on Anti-Corruption and Corporate Transparency (DCI), in addition to having its ISO 37001 certification, the first international standard on anti-corruption management system, confirmed. Leonardo was the first company in the world's top ten in Aerospace, Defence and Security to obtain this certification.

Risk management model: The Group has set out a model of responsible business conduct aimed at preventing, identifying and responding to the risk of corruption. The risk governance model is in line with national and international standards and best practices and is compliant with the Corporate Governance Code for Listed Companies, the Organisational, Management and Control Model and the Group's Anti-Corruption Code.

Training and compliance: Among the key initiatives in 2024, Leonardo continued its efforts to train and raise awareness of trade compliance risks among its employees, involving more than 9,000 employees in more than 15,000 training hours.

Supplier Relationship Management

Supplier portfolio: More than 11,000 suppliers with 83% of purchases related to domestic markets

Supply chain strategy: Leonardo has been pursuing its policy of strengthening and improving the supply chain for some years, leveraging a transparent and sustainable partnership relationship with the excellences in its Supply Chain, to give rise to a more innovative, integrated and resilient industrial eco-system.

Supplier development: In addition to the programmes already in place or completed (LEAP, ELITE Leonardo Lounge), the Company has defined a set of principles and rules for the assessment of key suppliers, specifically oriented towards the development and growth of the Supply Chain with a view to long-term sustainability (Leonardo Assessment and Development for Sustainability).

Due diligence: The model provides for the responsible management of the supply chain, through the qualification, selection and management of suppliers, as well as the adoption of a risk analysis tool within the scope of due diligence audits within the process of engagement assignation to sales promoters, and other third parties.

ESG integration: 20% (in value) of major new tenders awarded include ESG criteria/requirements with a target of >70% by 2028.

Anti-Corruption and Bribery Prevention

ISO 37001 certification: Leonardo achieved the target set for 2024 by obtaining the renewal of ISO 37001:2016 certification in July. Target for annual renewal/maintenance through 2026.

Industry leadership: Leonardo was the first company in the world's top ten in Aerospace, Defence and Security to obtain this certification. Thanks to its model, Leonardo SpA has reached the highest level of Transparency International's Defence Companies Index on Anti-Corruption and Corporate Transparency (DCI).

Management system: The Group adopts and updates its organisational, control, procedural and training system to ensure fraud risk monitoring and compliance with any and all anti-corruption laws applicable in the domestic and foreign markets in which it operates.

Risk assessment: The model provides for the responsible management of the supply chain, through the qualification, selection and management of suppliers, as well as the adoption of a risk analysis tool within the scope of due diligence audits within the process of engagement assignation to sales promoters, and other third parties.

Training programs: Among the key initiatives in 2024, Leonardo continued its efforts to train and raise awareness of trade compliance risks among its employees, involving more than 9,000 employees in more than 15,000 training hours.

Incidents of corruption or bribery

Confirmed incidents

Leonardo reported zero confirmed incidents of corruption or bribery in 2024. The company explicitly states: "In 2024, there were no convictions issued as part of criminal proceedings against Group Companies, nor were there any cases of dismissals due to judicially established cases of corruption."

Convictions and fines

No convictions were issued against Leonardo Group Companies in criminal proceedings during 2024.

No fines were paid for violations of anti-corruption or anti-bribery laws in 2024. The SASB disclosure confirms: "In 2024, there were not convictions or compensation ordered to the Group's legal entities as part of criminal proceedings for corruption."

Disciplinary actions

No employees were dismissed due to judicially established cases of corruption in 2024.

Regarding whistleblowing investigations completed in 2024, three cases (25%) found elements of feedback, involving violations pertaining to potential conflicts of interest. The company notes: "there were no cases of bribery and concussion, discrimination and harassment, violation of customer privacy, and money laundering and insider trading."

Contracts terminated

Not disclosed.

Investigation procedures and speak-up mechanisms

Leonardo maintains a comprehensive whistleblowing system accessible to all stakeholders. In 2024, 72 reports were received (24% increase from 58 in 2023), of which 31% consisted of qualified reports. Reports are handled by the Management Audit & Whistleblowing O.U., operating within the Group Internal Audit O.U.

The company ensures:

• Anonymous reporting through a Whistleblowing Platform using encryption
• Discretion and confidentiality in the entire whistleblowing management process
• Protection of whistleblowers from retaliation, discrimination or penalization
• Multiple reporting channels including humanrights@leonardo.com and https://whistleblowing.leonardo.com/

Leonardo holds ISO 37001:2016 certification for its anti-bribery management system, which was renewed in 2024. The company maintains a "zero tolerance" principle for corruption and requires all parties with whom it has relations to act with rules and methods inspired by the same values.

In 2024, over 2,700 people were trained in anti-corruption and more than 4,500 people were trained in Legislative Decree 231/2001 (including crimes against Public Administrations). Training participation and e-learning courses are mandatory.

Political influence and lobbying activities

Political engagement approach

Leonardo carries out direct and indirect advocacy activities in accordance with the principles of transparency and Leonardo's Code of Ethics, as well as in compliance with current regulations and the principles and standards of conduct set forth in Leonardo's Code of Ethics, Anti-Corruption Code and other company rules. These activities are carried out with the support of a solid governance model based on well-defined responsibilities at all levels and specific processes and procedures.

Leonardo, through the appropriate corporate functions, carries out activities aimed at institutions to support its business reputation and strategy, present the company's position with respect to specific issues, and understand potential future business opportunities. These activities mainly consist of monitoring specific regulatory developments and organising meetings with government and parliamentary representatives on matters of interest.

Ethical standards and guidelines

Lobbying activities and the related risk of undue influence are managed through rules laid down in the Group Directive on Sales Promotion/Commercial Advisory, Lobbying and Distribution/Reselling. The ethical/reputational analyses conducted on the basis of this Directive are aimed at the prevention of risks related to the crime of undue influence provided for by Italian legislation and the regulations of the countries in which Leonardo operates.

According to the current wording of Article 346-bis of the Italian Criminal Code and in consideration of the lack of organic regulations on the subject of lobbying in Italy, company rules only provide for the possibility of conferring this type of assignment for non-Italian Subsidiaries, in those countries in which local regulations permit the signing of such contracts.

Leonardo's representatives who carry out lobbying activities are enrolled in special public registers.

Political contributions

As provided for in Leonardo's Code of Ethics, the Company does not contribute company funds to political and trade union parties, movements, committees and organizations, or to their representatives and/or candidates; therefore, Leonardo did not pay any political contribution in 2024.

The prohibition in the Code of Ethics on political contributions applies to all Group companies worldwide, including the United States.

Multi-year comparison:

• 2024: €0
• 2023: €0
• 2022: €0

Lobbying expenditure

In 2024, the expenses for lobbying activities carried out exclusively by the Group's non-Italian Subsidiaries in the countries in which it is permitted by the relevant regulations in force, amounted to approximately USDmil. 2.

Multi-year comparison:

The lobbying expenditure mainly related to the United States and, to a lesser extent, Germany and Poland.

Focus areas / advocacy topics

Among the main areas for which the non-Italian Subsidiaries made use of the support from lobbyists during 2024 are:

• Technologies related to optical recognition systems for infrastructure and transport for sale to government agencies and commercial customers
• The purchase and/or upgrade of helicopters on the part of government agencies and local authorities
• Research and development programmes for submarines, technologies for advanced protection systems, and naval, ground-based and satellite communication systems, lasers and sensors

Trade association memberships

In 2024, membership fees for trade associations, industry and business support organisations, technical interest bodies and think tanks totalled approximately €mil. 5.5.

Multi-year comparison:

Most significant contributions in 2024:

Key initiatives and collaborations

International Aerospace and Environment Group (IAEG) - Leonardo is a member and is part of the Board of Directors of the IAEG, an organisation including the industry's leading companies committed to advancing innovative environmental solutions and standards for aerospace. In 2024, Leonardo discussed environmental sustainability issues, including the development of alternative technologies and the reporting and management of GHG emissions.

Climate and Defence (C&D) Task Force – At the European level, Leonardo is a founding member of the Climate and Defence Task Force of the AeroSpace and Defence Industries Association of Europe (ASD) and its subgroups on Ecodesign and Sustainable Supply Chain.

European Round Table (ERT) - Leonardo participates in the Energy Transition and Climate Change group of the European Round Table (ERT), and is part of the Confindustria Environment Technical Group in Italy.

United Nations Climate Change Conference (COP 29) - Leonardo took part in COP29, showcasing the substantial contribution that the advanced technology solutions in its portfolio can make to the decarbonisation of cities and territories.

EU Transparency Register

Leonardo is enrolled in the Transparency Register of the Ministry of Businesses and Made in Italy (MIMIT) with the identification number 2016-64321218-138, among companies and trade, business and professional associations.

Leonardo is also enrolled in the European Transparency Register under code 02550382403-01.

Oversight

In 2024, 231 counterparties including sales promoters, commercial advisors, distributors, resellers and lobbyists had contracts in place. 704 due diligence and reputational risk analyses were carried out on counterparties and potential commercial partners. More than 150 hours of training were delivered to sales promoters, commercial advisors and lobbyists through 79 online courses.

Payment practices

The company makes monthly payments of all overdue and payable invoices, in order to meet its contractual commitments, which are not standardized and can vary from supplier to supplier and range on average between 60 and 90 days.

Legal proceedings

There are no legal proceedings currently pending due to late payment.